Annual Report 2021
Annual Report 2021
love your local
About Us
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardware love your local
At Metcash, we believe that it is important
to Australia that there is a sustainable,
independent, family‑owned business sector.
Independent retailers support their local
communities. We are at the heart of the
local community, sourcing a range of the
best products from national, international
and local suppliers.
Contents
About Us
Purpose, Vision and Values
Chairman’s Report
CEO’s Report
Strategic Direction
Financial Highlights
Food
Liquor
02
03
04
06
10
12
14
18
22 Hardware
26
Sustainability Report
38 Our People and Our Board
40 Directors’ Report
Financial Report
73
124 ASX Information
125 Corporate Information
1
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information About Us
About us
Metcash is Australia’s leading wholesale distribution
and marketing company with sales including
charge‑through of over $16bn in FY21. We believe
that it is important to Australia that there is a
sustainable, independent, family‑owned business
sector. Independent retailers are a vital part of their
local communities. We help them to be the ‘Best Store
in Town’ by providing merchandising, operational
and marketing support across our Food, Liquor and
Hardware pillars.
>$16bn
1
Record group sales
Our Pillars
Food
In Food, we are the largest supplier to
independent supermarkets in Australia,
with the widest distribution network and
unmatched reach and delivery frequency.
We support over 1,600 stores including
the well known IGA and Foodland brands.
Our retailers are conveniently located
and are known for being at the heart
of the local community. Our network
has significant representation in local
neighbourhoods, as well as regional and
remote areas where we are often relied on
as the only store in town.
Liquor
In Liquor, we are the second-largest
player in the market, supplying ~90% of
independent liquor stores in Australia.
Our Independent Brands Australia (IBA)
network is home to a number of successful
national brands including IGA Liquor,
Bottle-O and Cellarbrations. We also
supply over 12,000 liquor customers
through our Australian Liquor Marketers
(ALM) division which includes supply
agreements with contract customers in
retail and ‘on-premise’ market segments.
Hardware
In Hardware, we are the second-largest
player in the Australian hardware market.
Metcash’s Independent Hardware Group
(IHG) is a leader in Trade as well as having
a solid track record of servicing the DIY
market. IHG is home to the well-known
Mitre 10 brand. The business has a strong
track record of successful acquisitions
with Home Timber & Hardware joining the
group in 2016 and Total Tools coming under
the banner in 2020. This has taken the
combined Hardware network to over 700
stores located in metro and regional areas
across the country.
1. FY21 Group reported sales revenue (which excludes charge-through sales in accordance with AASB15) was $14.3bn
2 Metcash Annual Report 2021
2 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Our Purpose
Our Vision
Championing
successful independents
Our Values
We believe independence is worth
fighting for; in treating our people,
retailers and suppliers the way we like
to be treated; and in giving back to the
communities where we live and work.
Best store in town
Passionate about independents
A favourite place to work
Business partner of choice
Support thriving communities
Creating a sustainable future
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Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information About Us
Chairman’s Report
Chairman’s Report
Welcome to Metcash’s Annual Report for 2021. It has been an exceptional
year for the Company with record sales, a significant increase in earnings
and record operating cashflow.
The early success of our MFuture initiatives
laid the foundation for a very successful year
for both Metcash and our independent
retailers. The improved competitiveness
of our retailers was a key factor in their
retention of new and returning customers
gained through COVID which, together with
the continuation of an increased preference
for local neighbourhood shopping and the
migration from cities to regional areas, drove
strong sales growth.
All Pillars performed strongly, with the
Group continuing to successfully navigate
significant challenges and uncertainty
associated with COVID. I am particularly
proud of the achievements of our Metcash
teams and independent retailers in
continuing to drive the implementation of
our MFuture growth initiatives despite the
challenges they faced in managing
unprecedented levels of demand, border
restrictions and ever-changing
health regulations.
Financial results
Group revenue, including charge-through
sales, increased ~10% to a record $16.4bn,
with strong growth in all Pillars. Group EBIT
increased ~20% to $401.4m and underlying
profit after tax was ~27% higher at $252.7m.
This represents a ~13% increase in
underlying earnings per share to 24.7 cents.
The strong earnings, together with effective
working capital management, led to record
operating cashflows of ~$475m ensuring the
Company continued to be in a very strong
financial position at the end of the financial
year with net cash of ~$125m. Our Group CEO
Jeff Adams discusses the financial and
operating performance of the business in
more detail in his report.
Capital management
I am pleased to report that the strong Group
performance and financial position, together
with confidence over future operating
cashflows, will result in Metcash returning
~$354m 1 to shareholders since the payment
of last year’s final dividend.
The Board has a strong focus on shareholder
returns and is appreciative of the support
received from shareholders, particularly
through COVID.
The significant amount of capital being
returned represents the Board’s decision
to raise the target dividend payout ratio
from 60% to 70% of net underlying profit
after tax and the announcement of an
off-market buy-back of up to $175m.
Importantly all shareholders, whether or not
they participate in the buy-back, will benefit
through earnings per share and return on
equity accretive outcomes.
Shareholder dividends for the year increased
40% to 17.5 cents a share through the
increase in payout ratio and the strong
FY21 Group earnings.
Strategy
We are now two years into the MFuture
program designed to provide a pathway to
sustainable growth for Metcash, balanced
with cost efficiencies. This year significant
progress was made with key initiatives such
as our store upgrade programs, rolling out
new store formats, expanding our private
and exclusive label ranges and accelerating
our digital plans. We also sharpened our
strategic direction to include an increased
focus on customers and the community to
support our aim of further improving the
competitiveness of our retailers.
The early success of MFuture has provided
a strong foundation for the remaining three
years of the program, which includes
initiatives to retain new and returned
customers gained through COVID, as well
as attracting new shoppers to our
retail networks.
The program also includes pursuing
attractive growth opportunities, including
leveraging recent acquisitions such as Total
Tools Holdings (TTH) in Hardware and the
Kollaras private label portfolio in Liquor.
We were pleased to announce the
acquisition of a 70% stake in TTH in
September last year. TTH has the largest
professional tools network in Australia
with a network of ~90 stores, and it is
complementary to our Independent
Hardware Group of stores. In December TTH
acquired a majority interest in 12 Total Tools
joint venture stores, and in June we
increased our position in TTH to 85%.
TTH has a history of strong earnings and is
proving to be a great acquisition for Metcash.
Board update
We welcomed Christine Holman as a
non-executive director in September 2020.
Christine is an experienced ASX-listed
company director and has more than
25 years of commercial experience across a
broad range of areas including mergers and
acquisitions, finance, sales, technology,
digital transformation and marketing.
Christine’s extensive and diverse experience
is proving to be an asset to Metcash.
In May 2021 we announced that Tonianne
Dwyer would retire from the Board following
completion of our FY21 financial statements.
Tonianne has been a significant contributor
to Metcash and has played a key role,
particularly while Chair of the Audit, Risk and
Compliance Committee, in the oversight of
Metcash’s growth and governance. The
Board and I sincerely thank Tonianne for her
efforts and dedication to Metcash.
Also in May 2021, we welcomed Margie
Haseltine to the Board. Margie has over 30
years of experience spanning supply chains
and logistics, customer interface in the FMCG
sector, change management and
governance, and has over 12 years’
experience in board directorship. Margie’s
executive career includes 20 years at Mars
Inc. including five years as CEO of Mars Food
in Australia.
Remuneration and culture
Last year the Board took certain measures in
response to the uncertainty associated with
COVID including deferring scheduled
remuneration increases for executive Key
Management Personnel (KMP); determining
STI and LTI vesting outcomes based broadly
on pre-pandemic outcomes to avoid any
undue benefit; increasing the deferred
component of the FY20 STI award; and
deferring scheduled non-executive director
fee increases. Once the Group’s performance
stabilised in FY21, the previously approved
increases to KMP remuneration were applied
and KMP STI deferral percentages returned
to standard policy.
Remuneration for the Group CEO has not
changed since his appointment in 2017, and
while no increase was applied to his fixed
pay, there was an increase to his STI and LTI
opportunity to better align his pay mix to
market practice and increase the ‘at risk’
component of his total remuneration.
4 Metcash Annual Report 2021
4 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Environmental, Social and Governance (ESG)
The year included the Company further
improving its ESG credentials, expanding
its ESG disclosures and embedding
sustainability into the Metcash culture.
Our achievements this year, as well as the
expanded disclosures, are detailed in our
first Sustainability Report which is included
in this Annual Report commencing on
page 26. We expect to continue building
on this progress over the next few years,
including improving our safety performance
as commented on in the CEO’s and
Sustainability Reports.
Going forward
While it has been an exceptional year for
Metcash, shoppers are continuing to enjoy
visiting their local independent stores in our
Food, Liquor and Hardware network with
sales in the early part of FY22 continuing to
be elevated against pre-COVID levels.
Making our retailers more competitive has
proven to be the right strategy for Metcash.
Importantly, we continue to be well
positioned with a strong financial position
that includes flexibility to invest in our
growth plans. Our sharpened MFuture plans
for the next three years aim to further
improve our retailers’ competitiveness and
include a balance of good growth and cost
out initiatives.
While our Hardware pillar is already
positioned with leading digital technology,
we are stepping up our investment in digital
to accelerate the delivery of solutions for our
Food and Liquor retailers who now have an
increased interest in these solutions. We are
also investing in a new project named
‘Horizon’ which aims to drive efficiencies
through simplification, as well as growth
through making it easier to do business with
Metcash. This will be a staged program with
the first phase focused on simplification and
building a better future operating platform.
Thanks
To all our people, the Metcash leadership
team, our independent retailers, suppliers
and our shareholders, I would like to express
my thanks, and that of the entire Board, for
your ongoing support.
Finally, I would like to thank my fellow
Directors for their commitment and
contribution to Metcash over the past year,
and for their ongoing support in what has
been another challenging but very
successful year.
Rob Murray
Chairman
The remuneration package for the CEO of the
Food Pillar was increased, positioning him
slightly below his peer group benchmark.
Board fees increased 5% in FY21 and remain
below medians at between 81% and 99% of
peer group benchmarks. The Board will seek
shareholder approval at this year’s Annual
General Meeting to increase the Board fees
pool from $1.6m to $2.0m, which will provide
capacity to appoint an additional director in
the future. This will be the first time the
Board has sought an increase in the fees
pool since 2012.
STI outcomes for KMP ranged from 67% to
90% of maximum reflecting the delivery of
exceptional results in FY21. Our FY19 LTI
vested at 90% reflecting the underlying
earnings per share CAGR hurdle being met
and the TSR hurdle being exceeded by 6%.
For the third consecutive year Metcash was
awarded an Employer of Choice citation by
the Workplace Gender Equality Agency. This
is recognition of our deep commitment to
gender pay parity and gender equality in
the workforce. Metcash was also awarded
Gold level recognition under the Mental
Health First Aider Skilled Workplace
Program and was identified as a Flexready
Certified organisation, which recognises
leading employers who support flexible
work practices.
Pleasingly, our overall employee
engagement result continued to improve
in FY21, lifting a further ~20% to 57% through
the significant efforts of our people despite
facing many challenges such as the ever-
changing health regulations.
Further details on our remuneration
framework and outcomes for FY21 can
be found in the Remuneration Report
commencing on page 56.
$354m 1
Returned to shareholders
since FY20 final dividend
1. Reflects an off-market buy-back of ~$175m
and excludes any FY22 potential dividends.
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Chairman’s Report
CEO’s Report
CEO’s Report
As the Chairman noted, it has been an exceptional year for Metcash with
sales exceeding $16bn for the first time in our history, and this has driven
significant earnings growth and record operating cashflow.
Our Pillars have done an outstanding job in
continuing to manage through the many
challenges arising from COVID, particularly
those related to meeting elevated demand,
supply chain challenges and the need to
adjust our operations in response to the
ever-changing health regulations including
lockdowns, work from home requirements
and border restrictions.
I am extremely proud of our Pillars and
independent retailers who, despite these
challenges, continued to drive the
implementation of our MFuture initiatives
aimed at further improving their
competitiveness. We can see the benefits of
their efforts in the continuation of strong sales
well over a year after the commencement of
COVID in March last year. Shoppers are clearly
enjoying shopping locally and enjoying the
improved competitiveness of our retailers.
Group results
Group revenue, including charge-through
sales, increased 10.1% to $16.4bn, with
significant growth in sales volumes across all
Pillars. Group underlying EBIT increased
19.9% to $401.4m, reflecting the strong
volume growth, contribution from our
successful acquisitions and improved
leverage in all Pillars.
Group underlying profit after tax increased
27.1% to $252.7m and statutory profit after
tax was $239.0m (FY20: loss of $56.8m).
Underlying earnings per share increased
13.3% to 24.7 cents reflecting an increase
in profit after tax and the impact of the
Company’s capital raising in FY20.
Group operating cashflow was a record
$475.5m (FY20: $117.5m) which reflects the
higher earnings and a reduction in working
capital. The Group continues to be in a strong
financial position ending the financial year
with net cash of $124.6m (FY20: $86.7m).
The strong Group performance and financial
position, together with confidence over future
operating cashflows led to the announcement
of capital management initiatives. These
included an increase in the target dividend
payout ratio from 60% to 70% of net
underlying profit after tax, and an off-market
buy-back of up to $175m. The increase in the
dividend payout ratio was effective in FY21,
and together with the strong performance in
the year, led to a 40% increase in FY21
dividends to 17.5 cents per share.
As noted by the Chairman, the combination
of the FY21 dividend and the share buy-back
will result in ~$354m being returned to
shareholders since payment of the final
dividend for FY20.
ESG
This year has seen a significant step up in our
efforts to further improve our credentials and
performance in this important area. This
included amending Metcash’s Vision to
include “creating a sustainable future” and the
establishment of the Metcash ESG Council.
The Council is chaired by myself and includes
members from our Group Leadership Team
and will focus on embedding sustainability
into the organisation’s culture as well as
driving our ESG agenda. Other achievements
in the year include reducing our carbon
footprint, setting a science-based emissions
reductions target for 2030 which equates to a
42% reduction in emissions from 2020, further
progress towards alignments with the Task
Force on Climate-related Financial
Disclosures, reducing waste to landfill as well
as plastic wrapping. A full list of achievements
together with other relevant disclosures are
included in the Sustainability Report
commencing on page 26.
Safety
Metcash remains committed to the
continuous reinforcement of zero harm,
which includes preventing work-related injury
and illness for employees, visitors, contractors
and members of the public as well as zero
harm in relation to pollution in our
community. There were many safety
achievements in the year including
improvements in our leading indicator
metrics. These all trended positively in FY21,
with targets being exceeded by 29% for safety
engagement conversations, 95% for safety
communications, 57% for safety inspections
and 56% for hazards reported. Our key safety
measure of Total Recordable Injury Frequency
Rates (TRIFR) was slightly above the prior year
at 27.1 (FY20: 26.8) which is a reflection of the
increase in work complexity due to the
challenges of COVID and the cycling of higher
labour hours. The significant efforts of our
Safety team are however reflected in a ~30%
reduction in the TRIFR measure over the past
four years. We have plans in place designed to
improve our TRIFR performance in FY22.
6 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Operational performance
Food
Our Food pillar performed very well delivering
much higher underlying earnings while
continuing to support our retail customers
through the challenging environment.
Total Food sales, including charge-through
sales, increased 3.1% to $9.4bn, or 11.0%
excluding the impact of Drakes 1 and 7-Eleven 2.
In Supermarkets, total sales, including
charge-through sales, increased 10.0% to
$8.3bn, and were up 11.6% excluding the
impact of Drakes.
Strong sales growth was delivered in all
States, particularly Victoria where
demand was elevated by extended
COVID-related lockdowns.
The overall IGA network had a very strong
year, resulting in an improvement in the
financial health of our independent retailers,
with like-for-like sales up 10.5% even with
the impact of the panic buying period in
March and April last year. When comparing
against FY19, sales were up nearly 19% for
the year. Our IGA retailers continued to
benefit from the shift in consumer behaviour
including an increased preference for local
neighbourhood shopping, migration from
cities to regional areas, more flexible working
and cooking at home and the success of our
MFuture initiatives to retain new and
returning customers gained through COVID.
Total Food EBIT increased $9.7m or 5.3%
to $192.4m. On a normalised basis after
adjusting for factors such as Drakes, 7-Eleven
and increased earnings from our joint venture
partners, the year-on-year EBIT increase
would be ~$20m or ~11%. Overall, the Food
team did an excellent job managing their
operating costs, even with the pressures from
inflation and COVID-related costs.
The Food Pillar continued to make good
progress with its MFuture initiatives.
Store upgrades under the Diamond Store
Accelerator (DSA) program have reached
622, with ~45% of the IGA network now
refreshed. The average sales uplift for
DSA stores is greater than 10%, and we plan
to upgrade a further 100 to 130 stores per year
over the next five years.
1. Metcash ceased to supply Drakes in South Australia
from 30 September 2019. To enable comparison, sales in
the comparative period have been adjusted accordingly,
to exclude the impact of sales to Drakes.
2. The previous supply agreement with 7-Eleven concluded
on 17 August 2020. To enable comparison, sales in the
comparative period have been adjusted accordingly,
to exclude the impact of sales to 7-Eleven.
Liquor
Liquor sales, including charge-through sales,
increased a significant 19.2% in the year to
$4.4bn despite the adverse impact of
COVID-related restrictions on ‘on-premise’
sales, particularly in the first half of FY21.
Wholesale sales to the IBA banner group
increased over 22%, with strong growth
across all our banners. Like Food, the strong
demand was driven by the shift in consumer
behaviour together with other market factors
like reduced international travel and
duty-free sales. Retail like-for-like sales in the
IBA banner group increased 19.7% (FY20:
+3.2%) with strong growth continuing in the
second half of FY21 despite a recovery in
‘on-premise’ sales.
Liquor EBIT also increased significantly,
up $15.9m or almost 22% to $88.7m.
Progress with our Best Store in Town
initiatives resulted in a further 430 stores
refreshed and an additional 133 cool rooms
being upgraded. We also expanded our
Owned and Exclusive product range with the
acquisition of the Kollaras private label
portfolio which enables us to further drive
consumer value and quality while building
margin for our retailers. The initial focus with
our retailers has been expansion of the
Owned and Exclusive wine category.
The business continued to trial its Shop
My Local online offer that was launched
successfully ahead of time late last financial
year in response to the impacts of COVID.
A further online platform was trialled in FY21
for the Cellarbrations brand in Victoria, and
additional brand-based platforms are
expected to be added in FY22.
Under our brand clarity initiative, a new suite
of brands has been developed and endorsed
by our IGA retailers with ‘guard rails’ around
store standards, product ranges and pricing
to drive consistency of offer across each of
the brands. Alternate non-IGA brands are
available for retailers who elect to not meet
the IGA brand standards. Further detail on
the new brands can be found in the Food
Pillar section of this report commencing
on page 14.
Under our new store format trials, the first
Supa Valu large format store was opened in
Doonside, NSW in May last year, and a second
store was opened in Ballina, NSW in March
this year. The stores have been very well
received and we anticipate working with our
retailers to open more of these large format
stores over the coming years. Our Fresh
Pantry small format store trial has been
completed and we are now in the process of
embedding the learnings from the trial in our
future network plans.
We were excited to open our new distribution
centre (DC) in South Australia last December.
The new DC helps to improve the
competitiveness of our retailers in South
Australia through providing an expanded
range of products and from the delivery of
increased efficiencies. Our project team did
an amazing job in getting the new DC open
and operating in line with our expectations
despite the many challenges associated with
COVID, including lockdowns in South
Australia just prior to its opening.
Following the successful launch last year of
our IGA Priority Shop and IGA Shop Online,
further development was undertaken to
deliver a next generation eCommerce
platform for the IGA network. Trials of this
next generation platform commenced
towards the end of FY21 and we are looking
to roll this platform out to ~800 of our IGA
stores by FY25.
Inside new distribution centre in South Australia
7
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CEO’s Report
CEO’s Report continued
“Our Pillars have continued to benefit from the shift in consumer behaviour including
the increased preference for local neighbourhood shopping, as well as the success of
our MFuture program in improving the competitiveness of our independent retailers.”
Hardware
Total Hardware sales, including
charge-through sales, increased 24.7% to
$2.6bn with significant growth in DIY and a
return to growth in Trade sales. Total sales
in the Independent Hardware Group,
which excludes Total Tools, increased
17.9% (FY20: -1.3%).
Retail like-for-like sales in the IHG banner
group increased 11.4% (FY20: -0.7%), with
DIY sales up 25.1% and Trade sales up
~5%. The significant growth in DIY was
underpinned by a shift in consumer
behaviour to more home improvement
projects, gardening and maintenance
activity and the success of MFuture initiatives
to further improve the competitiveness of
the IHG retail network. Trade sales
strengthened in the second half of the year
supported by Government stimulus aimed
at driving increased renovation activity.
The growth in higher margin DIY sales led
to the sales mix changing to ~40% DIY and
~60% Trade (FY20: ~37% DIY and ~63% Trade).
Online sales were very strong, increasing
122% with Hardware’s advanced digital
capability helping optimise strong online
demand. A further ~160,000 loyalty members
were added in the year, with total loyalty
members now more than 1.2m.
The Hardware pillar also continued to make
good progress with its MFuture initiatives.
There are now 130 IHG stores that have
completed the Sapphire store upgrade
program. These stores have historically
reported sales growth after being upgraded
of more than 15% p.a., and this year they
continued to outperform non-Sapphire
upgraded stores with average retail sales
growth greater than 25%. Due to the success
of the program we increased the target
number of stores to be upgraded from
200 to 300 by 2025.
Hardware’s ‘Whole of House’ initiative is
expected to help further build on its leading
position in the Trade segment. The business
has now established national coverage from
nine Frame and Truss sites and has alliances
in place which ensures it is able to supply the
key stages of a house build including
Foundations, Frame and Truss, Lock Up,
Fix and Fit Out. IHG’s share of the supply
component of a house build increased from
~30% to ~35% in FY21 and there is potential
to grow this further.
8 Metcash Annual Report 2021
The business continued to accelerate its
investment in digital including its market
leading Trade Technology, DIY eCommerce,
Loyalty and Data Insights and Analytics.
Customer uptake increased significantly in
the year, partly reflecting the impact of COVID
and the related lockdowns.
We are excited over the significant growth
opportunities presented through the
acquisition of Total Tools Holdings. The
business has a history of strong growth, which
has continued since our acquisition of a
majority stake in September 2020. The
acquisition of a further 15% in June 2021,
together with the provision of loan facilities, is
expected to help progress its growth plans
including the addition of new sites and joint
venture stores.
Cost management
Metcash has a history of delivering on its
cost-out targets including achieving $125m of
savings through the Working Smarter program
which concluded in FY19, and ~$50m of
savings over the first two years of the MFuture
program. This year we launched project
Horizon, aimed at driving further efficiencies
through simplification, as well as growth
through making it easier to do business with
Metcash. In addition to these aims, the first
stage of this program will also include a focus
on Group technical infrastructure
consolidation and replacement, process
efficiency foundations and better alignment
of our infrastructure across the business. The
first stage of the project is expected to be
completed in FY23.
Digital
While IHG and our newly acquired Total Tools
business already have leading digital
technology, digital has generally been a low
priority for our Food and Liquor independent
retailers until the onset of COVID. The
acceleration of online sales and our
eCommerce platforms in Food and Liquor last
year has significantly increased interest from
our retailers in digital solutions.
We estimate the digital opportunity for our
retailers and Metcash is a very material ~$1bn,
and with our retailers well positioned with the
locations, customer base, strong well-known
brands, infrastructure and scale, we believe
now is the right time to invest and work with
our retailers to deliver these solutions.
Proven off-the-shelf technologies are now
available to lower development costs and
increase the speed at which we can deliver
these solutions. Importantly, the ‘last mile’
delivery cost hurdle for our retailers has now
been removed with many new providers
available, making online offers more
competitive and economic. Metcash is now
investing in Group-wide digital capability
which is aligned to the work of our Pillars to
expedite and enhance the delivery of digital
solutions for our retailers.
Going forward
When releasing our FY21 results in June, we
announced that there had been a strong start
to FY22 with sales in our Food, Liquor and
Hardware pillars in the first eight weeks
continuing to be well above the same period
in FY20, which is before the increase in
demand related to COVID. Our Pillars have
continued to benefit from the shift in
consumer behaviour including the increased
preference for local neighbourhood shopping,
as well as the success of our MFuture program
in improving the competitiveness of our
independent retailers.
Our MFuture strategy focused on
championing the success of our independent
retailers through further improving their
competitiveness continues to be the right
one. You can find more detail on our MFuture
plans going forward in the Pillar sections of
this report.
Thanks
I would like to extend my sincere thanks to our
independent retailers and suppliers, and the
entire Metcash team and Board, for their
support and encouragement throughout the
year. I am very proud of the way that we have
all continued to work together through
another challenging but successful year to
achieve our purpose of championing our
independent retailers.
Jeff Adams
Group CEO
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us 9
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Re-focused strategic direction
Customer and Community
Easy to do business with
Shopper‑led offer
Business partner of choice for suppliers
Lean, low cost operating model and supply chain
Increased retailer competitiveness driving shareholder value
10 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportFinancial HighlightsFoodLiquorHardwareAbout Us MFuture
A five year program launched in 2019 aimed at providing a pathway to sustainable growth,
balanced with cost efficiencies. Significant progress to date has provided a strong foundation
for the remaining three years of the program.
Focus for next three years
Continue supporting our retailers to further improve their competitiveness and retain
new and returned customers gained through COVID, as well as attract new shoppers.
Growth
Store upgrade
programs
Store formats
Ranging
and pricing
Private label
Accelerating
eCommerce
Pursuing attractive growth opportunities
through leveraging recent acquisitions
System
enhancement –
Project Horizon
Costs
1111
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Financial Highlights
Financial Highlights
Five year review
Financial Performance
Reported sales revenue ($m)
Underlying EBIT ($m)
Finance costs, net ($m)
Underlying profit after tax ($m)
Reported profit/(loss) after tax ($m)
Operating cashflows ($m)
Cash realisation ratio (%)
Financial Position
Shareholders’ equity ($m)
Net cash/(debt) ($m)
Gearing ratio (%)
Return on funds employed (%)
Share Statistics
Fully paid ordinary shares
Weighted average ordinary shares
Underlying earnings per share (cents)
Reported earnings/(loss) per share (cents)
Dividends declared per share (cents)
Dividend payout ratio (%)
Other Statistics
Number of employees (full-time equivalents)
2021
2020
2019 1
2018 1
2017 1,2
14,315.3
13,025.4
12,660.3
12,442.2
12,293.0
401.4
(42.6)
252.7
239.0
475.5
114%
1,291.1
124.6
(10.7%)
28.6%
1,022.4
1,021.9
24.7
23.4
17.5
71%
334.9
(52.0)
198.8
(56.8)
117.5
33%
330.0
(28.9)
210.3
192.8
244.9
92%
334.6
(26.4)
216.9
(148.2)
276.3
101%
304.8
(33.6)
194.8
171.9
304.6
118%
1,371.6
1,250.1
1,334.2
1,583.2
86.7
(6.7%)
24.9%
1,016.4
910.1
21.8
(6.2)
12.5
57%
(42.9)
3.3%
27.7%
909.3
928.6
22.6
20.8
13.5
60%
42.8
(3.2%)
24.4%
975.6
975.6
22.2
(15.2)
13.0
59%
(80.8)
4.7%
19.0%
975.6
958.8
20.3
17.9
4.5
22%
7,010
6,400
6,378
6,378
6,708
1. FY17 to FY19 financials are reported on a pre-AASB16 basis.
2. FY17 EBIT, profit after tax, shareholder’s equity and EPS have not been adjusted to reflect AASB16.
3
.
5
1
3
,
4
1
.
4
5
2
0
,
3
1
.
4
1
0
4
.
6
4
3
3
.
0
0
3
3
.
9
4
3
3
.
8
4
0
3
.
7
2
5
2
.
9
6
1
2
.
3
0
1
2
.
8
8
9
1
.
8
4
9
1
.
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.
6
2
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.
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1
2
.
3
0
2
.
7
4
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4
0
3
.
3
6
7
2
.
9
4
4
2
5
.
5
7
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.
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7
1
1
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0
6
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2
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,
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2
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4
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,
.
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3
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2
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,
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
Sales
($m)
EBIT (Underlying)
($m)
PAT (Underlying)
($m)
EPS (Underlying)
(cents)
Operating cashflows
($m)
12 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us A strong financial position
$252.7m
Underlying profit after tax
$401.4m
Group EBIT
17.5c
Total FY21 Dividends per share
$124.6m
Net cash position at year end
13
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Food
14 Metcash Annual Report 2021
14 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Food
We are the largest supplier to independent
supermarkets in Australia, with the widest distribution
network and unmatched reach and delivery frequency.
We support over 1,600 stores including the
well known IGA and Foodland brands, and
are a significant supplier to large
contract customers.
Our retailers are conveniently situated in
local neighbourhoods and are known for
being at the heart of the local community.
A large proportion of our stores are located
in regional and remote areas where we are
often relied on as the only store in town.
The IGA network provides shoppers with a
competitive offer across a broad range of
products, that in many cases is perfectly
tailored for local customers. Our stores are
community focused with support provided
to many local community groups through
our Community Chest program together
with other support from our retailers, and
local suppliers and businesses through
stocking locally sourced products.
Our Food pillar has distribution centres in
each major capital city and in several regional
locations. Our leading logistics and distribution
capabilities ensure we have an efficient, flexible
and responsive supply chain, and this
underpins our position as a partner of choice
for getting product to market. The strength and
flexibility of our operations have been
particularly evident through COVID with our
business managing exceptionally well through
unprecedented demand and supply chain
challenges associated with lockdowns, border
restrictions and other health regulations.
In Convenience, we support more than 90,000
customers nationwide. The businesses we
support include restaurants, coffee shops,
fresh food outlets as well as forecourt retail
and local convenience stores.
IGA national distribution network
Scott Marshall
CEO, Metcash Food
WA
NT
SA
QLD
NSW
MAJOR DISTRIBUTION CENTRE
REGIONAL DISTRIBUTION CENTRES
VIC
TAS
15
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Food
Food continued
A stronger foundation
A business reset in 2019 together with the
early success of MFuture initiatives delivered
positive momentum for the Food pillar
leading into the onset of COVID in 2020
and the subsequent changes in consumer
behaviour. Acceleration of our Diamond Store
Accelerator (DSA) program and continued
improvement in product ranges, prices and
supply chain efficiency helped drive a return
to underlying sales growth in supermarkets,
lift retailer satisfaction scores to record highs
and improve retailer relationships and trust.
The onset of COVID and related restrictions
led to the acceleration of many shoppers
rediscovering their local IGA stores and
enjoying the improved quality and
competitiveness of our store network.
Our retailers have benefited from a shift in
consumer behaviour including an increased
preference for local neighbourhood shopping,
more flexible working and eating at home,
migration from cities to regional areas and an
increased preference for branded products.
The improved competitiveness has
helped retain new and returning customers,
and our network is ideally positioned to
continue benefiting from the shift in
consumer behaviour.
Going forward
The remaining three years of our MFuture
program focuses on further improving the
competitiveness of our retailers and sales
growth. Key components are our ‘Network of
the Future’ program which includes refreshing
the network with national brand standards
and a more consistent offer by brand. It also
includes a continuation of our DSA store
upgrade program, new store formats, an
expansion of our private and exclusive label
range, and driving more value for shoppers
through ensuring we continue to have a
competitive core range and price position.
The second component focuses on
eCommerce and Loyalty initiatives including
the rollout of a next generation eCommerce
platform and further enhancement of our
loyalty program, IGA Rewards.
The remaining component is continuous
improvement of our supply chain processes
including investment in our systems, as well as
leveraging our new Distribution Centre in South
Australia which provides a greater range of
products and increased efficiencies for our
Foodland and IGA retailers in South Australia.
Network of the Future – new IGA brands
We are excited to be rolling out a new suite
of brands and channel blueprint specifically
tailored to target shopper preferences and
improve their shopping experience. There is
a brand for each of our retailers’ needs with
standards in place to ensure shoppers
experience a consistent offer for each brand
across each store in all States.
The new suite of brands has been agreed
with our IGA retailers and includes utilising
the existing IGA brand and the development
of new non-IGA branding for those retailers
that choose not to meet IGA brand
standards. Supa Valu is a new brand
developed for a larger footprint store with
lower prices suited to specific locations and
demographics. Two new stores under the
Supa Valu banner opened this year, both
being well received by the local communities
where they are operating. We plan to have
more of these stores in the coming years.
Supa Valu Ballina
In March 2021, the popular Ritchies Supa IGA in Ballina
underwent a multi-million-dollar transformation and
relaunched as Supa Valu Ballina.
The Supa Valu concept is part of IGA’s new format trials and
follows the launch of the Fresh Pantry brand in 2019. The
opening of Supa Valu Ballina follows the successful launch of the
first Supa Valu store in Doonside NSW in 2020.
The Supa Valu brand offers exceptional savings with low pricing
across the entire store and bigger deals on pallet buys in the
centre of the store. The store also offers convenient features
such as in-store butchers as well as freshly made bakery
products and sushi daily.
16 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us For the core of our network, we retained the
valued IGA brand and added IGA Fine Foods
branding to suit ‘inspirational’ stores in the
network that are particularly appealing to
‘foodies’. For our small format stores, we have
the IGA Local Grocer and Fresh Pantry brands
which will replace the IGA Xpress brand that is
being phased out. Village Grocer will be the
non-IGA alternate brand.
We expect the branding transition to be
completed by 2024 supported by store
upgrades facilitated through our DSA program.
Network of the Future –
DSA store upgrade program
We have continued to work closely with our
retailers to simplify our DSA program, and
they have responded with accelerated
demand for store upgrades and increased
investment in their stores. The program
provides a more modernised store and a
better experience for shoppers, driving
excellent returns for retailers and increased
sales for Metcash.
There have been 622 store upgrades under
the DSA program, generating on average
retailer sales improvement of over 10%,
excluding increased sales related to COVID.
Around 45% of the network has been
upgraded with some stores now going
through their second refresh. We are targeting
a further 100 to 130 store upgrades per year
over the next five years, which will result in
~90% of the network being upgraded by FY26.
Next generation eCommerce platform
IGA Priority Shop was established in April 2020
in response to the need for those in the
community who were vulnerable during the
COVID lockdowns to get access to essential
goods. This was followed by accelerating the
rollout of IGA Shop Online, an online IGA
shopping platform that can be accessed and
utilised by all our retailers.
IGA Rewards loyalty program
Our IGA Rewards loyalty program enables
retailers to better compete and communicate
with their customers on a personalised basis
using actual in-store shopping behaviour and
preferences. The program has been
successfully trialled in Western Australia and
Queensland and is live in ~200 stores, with
further rollout across the network underway.
A number of our retailers operate their own
loyalty programs and IGA Rewards is
complementary to these offers with our trials
showing it drives higher store visit frequency
and increased spending by members
compared with non-members.
The success of both IGA Priority Shop and IGA
Shop Online together with increased interest
from our retailers for digital solutions led to
further development to deliver a next
generation eCommerce platform for the
IGA network. New features provide a more
personalised experience for shoppers and
include a sophisticated in-store order
fulfilment solution with a store-specific picking
app. Importantly, the ‘last mile’ delivery cost
hurdle for our retailers has now been removed
with many new providers available, making
online offers more competitive and economic.
Trials of this next generation platform
commenced towards the end of FY21 and we
are looking to roll this platform out to ~800 of
our IGA stores by FY25.
South Everleigh IGA
In early 2021 the Romeo family opened a one-of-a-kind
IGA store located in the heart of Sydney’s new South Eveleigh
precinct. The state-of-the-art concept introduces an extensive
takeaway dining menu with a popular in-store pizza oven
and a served carvery. The ~1,200sqm store offers an in-house
fishmonger, butcher servery, in-store sushi chefs, a walk-in
cheese room with a selection of the world’s finest gourmet
cheeses and a huge range of fresh local fruit and vegetables.
The store also offers niche products from many local and
international producers including fresh Australian flowers
and gourmet produce.
17
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Liquor
Liquor
In Liquor, we are the second‑largest player in the market,
supplying ~90% of independent liquor stores in Australia.
Our Independent Brands Australia (IBA) network is home
to a number of successful national brands including
IGA Liquor, Bottle‑O and Cellarbrations.
The IBA retail network consists of ~1,950 tier
one bannered stores across Australia and
New Zealand. IBA supports these retailers
through its national buying capacity,
marketing support, promotional programs,
a portfolio of Owned and Exclusive brands
and network investment to provide the
‘Best Store in Town’.
The differentiated position of our IBA
retailers includes being positioned
conveniently in local neighbourhoods,
with local product ranges tailored to each
location and community, and bespoke
promotional programs.
We also supply over 12,000 liquor customers
through our Australian Liquor Marketers
(ALM) division which includes supply
agreements with large and small contract
banner groups, un-bannered liquor stores,
‘on-premise’ and eCommerce retailers.
Chris Baddock
CEO, Metcash Liquor
IBA network of tier one stores
WA
137
NT
24
SA
96
A national presence in Australia and NZ
through our network distribution centres
and independent retailers
DISTRIBUTION CENTRES
Stores numbers as at Oct 20
18 Metcash Annual Report 2021
QLD
264
NSW
356
VIC
631
TAS
115
NZ
325
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us 19
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Liquor
Digital transformation
Like our retailers in the Food pillar, the level of
interest and support from our Liquor retailers
in relation to eCommerce solutions rose
significantly post the onset of COVID. The
business accelerated the trial of its Shop My
Local marketplace with Click & Collect and
Click & Deliver options available. This was
followed by the trial of a Cellarbrations
branded online offer in Victoria with learnings
from both trials resulting in the business
moving forward on a branded eCommerce
solution which is currently being worked
through with retailers.
The Liquor eCommerce channel is a largely
untapped one for both our retailers and
Metcash. The size of the opportunity is large
at ~$1.3bn, and we look forward to rolling out
our branded eCommerce solution across
the network.
We are also working with our retailers to design
an appropriate banner-led Loyalty solution,
with the expectation that we’ll be ready to
launch the program by the end of FY22.
A key enabler of our new eCommerce and
Loyalty programs is our point of sale integration
project. We expect the majority of our IBA
network to be integrated with the system by
late 2021, leading to an enhanced experience
for shoppers and a significant increase in the
average eCommerce basket size.
Cellarbrations Glenorie
Cellarbrations in Glenorie, NSW opened less than
two years ago and is already extremely popular
with the local community. It is owner Alan
Reuben’s fourth consecutive store with the brand
and in each of his locations, he prides himself on
getting to know the local community and ordering
in special lines tailored to customer taste. Located
in a semi-rural area, the large parking area in the
back of the store makes it accessible for his
customers who often visit with their horse floats,
trucks and trailers in tow. Inside, the store has a
wide range on offer, from craft beers to an
extensive spirit selection as well as well-stocked
wine shelves. Alan even offers gas swaps and
firewood in response to local demand.
Liquor continued
Shift in shopper behaviour
The Liquor pillar has experienced strong
sales growth in the IBA network and with
ALM contract customers, through the shift
in shopper behaviour related to COVID and
the increased competitiveness of stores.
Underpinning this shift is an increased
preference for local shopping, home
consumption substituting ‘on-premise’
consumption, migration from cities to
regional areas (where our retailers are well
represented), and less overseas travel and
duty-free shopping.
Our ‘on-premise’ customers have been
adversely impacted through rolling lockdowns
and restrictions in Australia and New Zealand
related to COVID. Metcash provided support
to these customers by enabling stock to be
returned and through facilitating payment
plans and re-opening deals. Pleasingly, these
initiatives have helped strengthen relationships
and loyalty with our customers and attracted
new ‘on-premise’ customers to the business.
Sales to our retail bottle shop customers
continued to be strong in the second half of
FY21 despite a recovery in ‘on-premise’ sales.
MFuture program
Our focus continues to be on further
improving the competitiveness and success of
our independent retailers to help them retain
shoppers gained through COVID and to add
new customers. Our initiatives to drive this
under the MFuture program centre on digital
transformation including eCommerce and
Loyalty, Owned and Exclusive brands –
including leveraging our recent acquisition of
the Kollaras portfolio of brands, supply chain
flexibility and efficiency, and driving brand
awareness and appeal.
20 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Owned and Exclusive labels
Our IBA network has historically under-
indexed in the Owned and Exclusive labels
category, which presents an opportunity for
both sales and margin growth for our retailers.
We are targeting wholesale sales of Owned
and Exclusive brands growing to ~5% of total
IBA sales by 2024, which represents an
additional ~$100m of sales. Our recent
acquisition of the Kollaras private label
portfolio will help drive this growth, adding
quality and value for shoppers and
increasing the number of shoppers
visiting our retailers’ stores.
We now have 26 owned and 35 exclusive label
brands, with our initial focus on substantial
growth opportunities identified in the wine
category. The value beer category is also of
interest in our early growth plans, as it is a
driver of increasing the number of shoppers
coming into our IBA stores.
Supply chain flexibility and efficiency
Delivering greater choice and increasing
efficiencies for our retailers is key to further
improving their competitiveness. We are
partnering with our suppliers to generate
operational efficiencies through simplifying
processes and freeing up our retailers’ time
to look after their customers. We are also
working with suppliers to lower supply chain
costs to ensure our retailers can purchase at
the lowest possible prices.
Our initiatives include further evolving our
supply chain capability to support efficiency
improvements through introducing ‘One
Delivery, One Invoice’ for our retailers.
We will also be introducing ‘Endless Aisle’
product access through cross dock and
charge-through functionality to provide
flexibility for meeting changes in product
category consumption trends.
Brand awareness and appeal
Driving brand clarity for shoppers is an
important driver of sales, and achieves cost
efficiencies through reduced marketing
spend. We have a five-pronged strategy to
improve clarity and deliver these
improvements. These comprise: humanising
our brands – including highlighting our role in
local communities; positioning our brands to
drive differentiation for our retailers;
balancing our marketing with short-term
price/promotion and long-term brand
building; communicating one message
through multiple touch points; and smarter
buying and mix of media spend.
Customers should expect to see a notable
change in how we promote and build
awareness of our brands and what they
stand for.
21
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Hardware
22 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Hardware
In Hardware, we are the second‑largest player
in the Australian hardware market with a track
record of successful acquisitions.
Our Independent Hardware Group (IHG) is
a leader in Trade with a solid track record of
servicing the DIY market. IHG is home to the
well-known Mitre 10 brand, as well as the
Home Timber & Hardware brand following
our acquisition of the business in 2016. Our
Hardware pillar was expanded in September
last year with the acquisition of a majority
stake in Total Tools Holdings, franchisor to
the largest professional tools market in
Australia. This has taken the combined
IHG and Total Tools network to ~730 stores
located in metro and regional areas across
the country with sales of over $3.5bn.
The Hardware pillar performed extremely
well in FY21 with very strong DIY sales and
a return to growth in Trade. COVID-related
restrictions, including lockdowns, drove
increased consumer interest in DIY, with
many shoppers rediscovering their local
hardware store. The strong sales growth
was particularly evident in product
categories such as paint, garden, outdoor
and power tools.
The strong growth in DIY, and the retention
of many of the shoppers that chose to revisit
their local hardware store during COVID,
reinforces the improved competitiveness
of our stores. Driving this improvement has
been the success of our MFuture initiatives
including the Sapphire store upgrade program.
IHG national network of stores
Annette Welsh
CEO, Independent
Hardware Group
WA
39 33
1
NT
4
1
SA
51
27
M10 AND TRUE VALUE
HTH AND RELATED BRANDS
DISTRIBUTION CENTRES
QLD
103 38
1
NSW
95 79
VIC
75
70
1
TAS
24
3
23
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Hardware
Whole of House
The ‘Whole of House’ strategy is focused on
building our leading position in the Trade
segment through expanding our range and
offer to ensure we are able to supply the vast
majority of components used in the building
of a house.
This presents a significant growth
opportunity for IHG as currently we supply
~35% of what a builder requires to build a
house. By expanding our range and offer we
believe there is an opportunity to
significantly increase this, creating growth
for our own business while helping deliver
efficiencies and savings for our customers
and adding value for the builder.
We have developed a dedicated sales team
to work closely with our customers and
have alliances in place to ensure that our
supply offer includes the key components
of a house build including Foundations,
Frame and Truss, Lock Up, Fix and Fit Out.
We are developing a new showroom concept
(Design 10) that displays the many category
options that IHG can supply including
kitchens, appliances and laundry products
to ensure builders and their customers are
provided with a ‘Whole of House’ offer.
Leading digital capability
IHG has for several years invested in and
developed a digital platform which has seen
customer uptake grow strongly. This has
helped ‘future-proof’ the Trade business
and grow DIY, with leading initiatives such as
Click ‘N’ Collect and Click ‘N’ Deliver enhancing
our retailers’ competitive position. The benefit
of our investment in digital platforms was
particularly evident during the recent COVID
lockdown periods, which saw many new
customers utilise our digital platform.
Our website traffic in FY21 has seen up to
1.2m visitors per month, an increase of
~70% on the prior year. Online sales increased
122% with the number of transactions and
units sold online up significantly, giving us
confidence to continue accelerating the
investment in our digital platform and offer.
Harnessing our digital technology, including
the use of data, analytics and insight
information, as well as loyalty and customer
insights, enables our retailers to make the
best decisions for their businesses and their
stores. Our accelerated investment in digital,
especially in the execution of our Trade
technology, will enable us to enhance this
service to our retailers and their customers,
helping them to manage more effective and
efficient businesses.
Hardware continued
Strategic focus
Our focus over the remaining three years of
the MFuture program centres on further
building our position in Trade, growing DIY
and being a low-cost leading hardware
wholesaler with retail experience.
Our key growth initiatives include the
acceleration of our Sapphire store upgrade
program, our ‘Whole of House’ strategy aimed
at increasing our share of the supply
component of building a house, and the
acceleration of our leading digital capability.
Sapphire store upgrade program
The successful Sapphire program has been
designed predominantly to grow our DIY
business with a strong focus on store
refurbishments. Our objective is to ensure
stores across the IHG network are leading edge
and tailored to each store’s unique location
and the local community it serves. This
includes having the right product categories to
engage and support local shoppers with a
strong DIY range and service offer.
Late last year we celebrated a milestone for
the program with completion of our 100th
Sapphire Store upgrade. By the end of FY21,
we had completed 130 Sapphire store
upgrades, which is an outstanding result
given the additional COVID-related
challenges in the year for both our
Hardware team and IHG retailers.
Our original target was to have 200 stores
upgraded by 2022, however the success of
the program and the resurgence in DIY from
the home consumer has led to a significant
increase in demand from retailers to upgrade
their stores. We are now targeting to have
300 stores upgraded by 2025.
The Sapphire store program has delivered
strong returns for our retailers since its
inception. Average retail sales growth
following stores being upgraded through
the program has been greater than 17% p.a.,
which increased to over 25% in FY21
reflecting the impact of COVID on DIY sales.
Sunlite Mitre 10 Paddington
Sunlite Mitre 10 first opened in Paddington, Sydney in 2015.
The success of the store and the Sunlite Group more
broadly resulted in owner Steven Czeiger embarking on his
sixth Sapphire transformation project in 2021. Steven took
the opportunity to expand into the next-door building,
doubling the store’s footprint. The increased space has
provided the ability to offer a leading garden décor and
green life space as well as a new trade area. Conveniently
located on the high street the store is now home to three
floors of hardware retail.
24 Metcash Annual Report 2021
24 Metcash Annual Report 2021
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorAbout Us Total Tools National Store Network
Paul Dumbrell
CEO Total Tools Holdings
WA
9
NT
1
SA
6
QLD
19
VIC
31
NSW
20
ACT
1
TAS
2
Total Tools
We were excited to announce, in September
2020, the acquisition of a majority stake in
Total Tools Holdings (TTH), the franchisor
to the largest professional tools network in
Australia with ~90 bannered stores
across Australia.
The Total Tools business has been built by
franchisees and has operated for over 30
years. Starting out as a buying group of eight
stores, the business has grown to now be the
number one professional tools business in
Australia. It is a complementary business to
IHG, targeting tradies that use professional
tools for a living with an unrivalled range of
the best professional brands in the world,
together with professional service solutions
and advice. It is the retailer of choice for major
tool suppliers and has long-term relationships
with major tool suppliers such as Milwaukee,
Makita and DeWalt to name a few.
Total Tools has a very loyal customer base
with its Insider Rewards loyalty program
having over 1.2m members, representing
more than 86% of its sales base (excluding
commercial).
Its large format stores have, on average,
around 10,000 product lines with modern
store layouts and eye-catching signage for
easy customer navigation.
Like IHG, Total Tools has a store upgrade
program to further enhance customer
experience, with 64 stores completed to
date. Average store growth post
refurbishment has been on average >15%,
and it expects to refurbish a further 24 stores
over the next three years.
Total Tools has significant growth
opportunities through the expansion of its
store network and the acquisition of an
ownership interest in a select number of
stores. The store growth program was well
underway at the time of our acquisition, with
plans to open eight to 10 new stores each
year with a target network size of 130 stores
by 2025. The acquisition by Metcash provides
Total Tools with funds to support the store
expansion program, as well as the expertise
in running joint venture and company-owned
stores. Total Tools acquired a majority
interest in 12 joint venture stores in
December 2020 and there are plans in place
to convert more franchisee stores to joint
venture stores over the next three years.
Total Tools has a history of strong
performance, and this continued in FY21
post the acquisition. In June 2021, Metcash
announced that it had increased its holding
in Total Tools from 70% to 85%, and it has a
pathway to full ownership by the end of FY24.
25
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information Sustainability Report
1. HIGHLIGHTS
Greenhouse Gas
EMISSIONS REDUCED
14%
Waste to
landfill
REDUCED 11%
Business2Business
plastic wrapping
reduced by
100 t p.a.
Gender
PAY GAP
1%
DONATIONS OF
850,000
meals to food rescue
organisations
Metcash people
engagement survey
SCORE UP
~20%
Donations
to local community
ORGANISATIONS
~$3m via IGA
Community Chest
2030
aligned Science-Based
42% reduction
Target
IN GHG EMISSIONS
Awards - WGEA
Employer of Choice,
Mental Health
Australia, FlexReady
2025
target set for
100% reusable,
recyclable or
compostable
packaging
2. MESSAGE FROM GROUP CEO
I would like to welcome you to our first annual Sustainability Report. This new format report replaces our previous practice of having a more
abbreviated Corporate Social Responsibility section in the Annual Report.
Metcash has always prided itself on being a responsible business, and we acknowledge that this responsibility extends to all our stakeholders,
including investors, customers, suppliers, retail partners and the community. Together with our network of independent retailers, we are
committed to doing our part to create a sustainable future for ourselves and for future generations. Our team members want to be inspired to work
for a business that looks after its people and the environment, and our customers expect that the products we offer are sourced sustainably and
responsibly.
As a reflection of our commitment, this year we embedded sustainability into our corporate vision; and we are continuing to work on further
integrating sustainability into all aspects of our business including targets, metrics and transparency.
FY21 included significantly increasing the number of sustainability projects across the organisation, and I am pleased with how much we achieved
despite the additional time requirements and challenges associated with COVID. Some notable achievements included further reducing our carbon
footprint and waste to landfill, becoming a signatory to the Food and Grocery Code of Conduct, the setting of a 2030 science-based emissions
reduction target, materially improving our employee engagement score and further progress on people initiatives which led to receiving a number
of prestigious employer awards and citations.
Metcash and our independent retailers are well known for supporting local communities and this year was no exception with over $3m being
donated to ~1,450 local organisations through our Community Chest Program, which is in addition to the donations many of our retailers make in
their local communities.
From a reporting perspective, this year’s Sustainability Report represents the first step in our roadmap to a more holistic approach to sustainability
reporting. Going forward, we expect to be able to report in alignment with the Global Reporting Initiative (GRI) by 2023.
Further information on our sustainability initiatives and achievements this year is detailed in the following report. I trust you find it informative.
Jeff Adams
Group CEO
26 Metcash Annual Report 2021
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Sustainability Report
3. OUR PEOPLE
Diversity and inclusion
To fulfil our purpose of Championing Successful Independents and
becoming ‘A Favourite Place to Work’, we recognise that our people are
our most valued asset, with belonging and inclusion 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.
We maintain an unwavering focus on building and supporting a diverse
and inclusive culture to better serve our communities and customers.
We promote an environment where our people feel safe, recognised,
valued and able to bring their most authentic selves to work.
We are committed to championing and achieving diversity awareness,
gender equality, gender pay equity, promotion and leadership support,
flexible working as well as policies and initiatives that support all people
across the organisation.
We all have a part to play in promoting diversity and belonging,
supporting equal opportunity and respecting others. We have no
tolerance for unlawful discrimination, bullying, harassment or
victimisation which includes having no tolerance of gender-based
harassment and discrimination, sexual harassment and bullying.
We regularly analyse and report gender pay statistics to the People and
Culture Committee, with a firm commitment from the Board to address
like-for-like salary gaps via the dedicated gender pay equity budget, in
addition to the annual Pay Review. We analyse commencement salaries
by gender to ensure there are no pay gaps at the beginning of the
employee life cycle and consciously consider promotion salary
adjustments to mindfully manage pay parity. We conduct a final review
of pay equality as part of our annual remuneration review to avoid any
unconscious bias in pay decisions.
By investing in our leadership and developing constructive and mindful
leaders, we build leadership capability and leaders who role model our
Metcash expectations of behaviour in relation to a culture of inclusion.
We overlay this with a regular review of our talent pipeline in relation to
gender split to enable diversity of thought. Our talent acceleration
programs are designed to strengthen the talent pipeline and provide
mentoring support for all team members with mentors of any gender.
A range of programs have been implemented over recent years to
support diversity and enhance inclusion in our workplace. These include:
ظ Promotion and leadership support of flexible working arrangements,
including start/finish times, shift options, job sharing and working
from home
ظ Closing the gender pay gap to ~1%
ظ Establishing a Diversity and Inclusion Council and championing
gender equality across the business
ظ Tailored parental leave policies for all genders to support births,
stillbirths, surrogacy and adoption
ظ A campaign to attract a full range of candidates to traditionally
male-dominated roles such as logistics
ظ Group CEO being a Gender Pay Equity Ambassador with the
Workplace Gender Equality Agency (WGEA)
ظ A commitment to leadership development and acceleration with
programs in place for our top 500 leaders, including covering inclusivity
ظ Modification of any language that research has indicated will deter
a full range of candidates from applying for positions
This year Metcash received its third consecutive Employer of Choice
citation from the Workplace Gender Equality Agency, reflecting our
commitment to our people, our purpose and our vision.
We believe there is much to be proud of in how Metcash has addressed,
and continues to commit to, diversity, inclusion, gender equality,
gender pay equity and balance for all employees.
Metcash Careers Ambassadors
Eric Feng
Financial Controller, Metcash Liquor
Lindy Belleza
Service Delivery and Operations Specialist,
Metcash Food
27
Our People & Our BoardFinancial ReportDirectors’ ReportOther Information Sustainability Report continued
Culture and engagement
Our aim in employee engagement is to achieve continuous
improvement. We measure employee engagement annually using the
‘Say, Stay and Strive’ model which outlines how much our employees
advocate for us as an employer, their willingness to remain with us
and their willingness to put in discretionary effort to get the job done.
We measure six engagement questions, 45 experience questions,
three WGEA (Workplace Gender Equality Agency) and five
open-ended questions.
All of our team members are provided with the opportunity to
complete the survey and provide honest, anonymous feedback.
This year, all Pillars and functions were represented in the
4,595 people having their say (~80% of our people). Our overall
engagement score for FY21 improved ~20% to 57% and despite
challenging work conditions, a number of our teams recorded
scores in the ANZ top quartile.
Health and safety
While we are passionate about supporting successful independents,
we are just as passionate about health and safety and the role we all
have in creating safe and healthy workplaces. We believe that how we
perform our daily tasks can affect not just our own safety, but also the
safety of those around us.
Safety culture
Our actions and the way we do things shape the safety culture of
Metcash as an organisation.
Total Reportable Injury Frequency Rate (TRIFR)
Our key safety measure of TRIFR was slightly above the prior year
at 27.1 (FY20: 26.8) reflecting increased complexity associated with the
impacts of COVID and the cycling of higher labour hours. The significant
efforts of our safety team over the past four years are reflected in a
~30% reduction in the TRIFR measure. Plans are in place to further
improve our safety performance in FY22.
COVID-Safe
Metcash continues to work closely with all levels of government
in putting COVID-Safe plans in place at all of our sites, and regularly
reviews and updates procedures in line with public health orders.
Our focus on ensuring our essential workers remain safe at work has
varied during the year depending on the level of risk, but included:
ظ Implementing COVID-Safe into pre-shift checklists and procedures
ظ Increased cleaning for our high touch surfaces
ظ Hand sanitiser stations in our workplaces and stores
ظ Temperature checking
ظ Physical distancing measures implemented in our indoor areas such
as meeting rooms, offices and canteens
ظ Creating shift bubbles to reduce exposure
ظ Implementing face mask protocols where mask wearing became
mandatory
ظ Adapting quickly to safely support our team members who could
continue working from home, including ergonomic considerations
We remain committed to the continuous reinforcement of zero harm,
which includes preventing work-related injury and illness for
employees, visitors, contractors and members of the public, as well as
zero harm in relation to pollution in our community. Our SaferMe and
SaferMetcash programs acknowledge the role that each of us can play
in preventing workplace incidents and injury.
Regular communication with our people has focused on encouraging
them to follow protocols, including providing information on hygiene,
physical distancing, staying at home and getting tested if unwell and
providing wellbeing support. Our safety team has done an
extraordinary job by also providing additional safety, health and
wellbeing support to our independent retailers when needed.
Lead indicators
Targets for lead indicator activities have been set at all levels including
safety engagement conversations, safety communications, safety
workplace inspections, hazard reporting and rectification. Pleasingly,
our lead indicator metrics all trended positively in FY21 with metrics
exceeding targets by 29% for safety engagement conversations,
95% for safety communications, 57% for safety inspections and
56% for hazards reported.
Initiatives
We continue to invest in wearable technologies at 10 pilot sites to drive
a reduction in the risk of manual handling causing injuries to our team
members. This technology has assisted a number of sites to identify
manual handling injury risks. The pilot is being expanded in FY22 to an
additional two sites for further evaluation.
Significant work was undertaken in the year to reduce our transport
safety and chain of responsibility (COR) risks. This included investing
in new infrastructure and the replacement of a weighbridge at our
Laverton, Victoria Distribution Centre. The investment has delivered
improved efficiencies and compliance in using the weighbridges, with
trucks no longer needing to stop for their weigh ticket.
We continued to have a strong focus on pedestrian and mobile plant/
vehicle interactions, which historically have been high risk areas. This
year included investing in a pilot for wearable sensor technologies to
improve separation of forklifts and delivery drivers, and the installation
of state-of-the-art segregation technologies in our new Distribution
Centre’s in South Australia and Berrinba in Queensland.
28 Metcash Annual Report 2021
Health and wellbeing
To help our team members thrive, we have a best-in-class holistic
health and wellbeing program, HealthMet. The pillars of the program
aim to meet the health needs of our team by supporting physical
health, mental health, financial health and community purpose.
Together, the program helps our people bring their best self to work
by learning healthy habits to get healthy and stay healthy.
Metcash encourages and provides flexible working practices, onsite
gyms, online gym classes and partnerships with over 400 gyms and
studios across Australia so that our team members can continue to
be active.
Our people can access mental health support around the clock no
matter where they are. A new partnership was established with
Benestar, specialists in employee physical, social and psychological
wellbeing. Results to date have been very positive with improved
utilisation of the proactive support structures. We also extended this
support to our independent retail network.
More than 3% of our workforce has become, or is in the process
of becoming, Mental Health Accredited. A further 5% of our people
are participating in the Metcash Mental Health Program. These
initiatives helped Metcash be awarded Gold Accreditation by
Mental Health Australia.
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us
Sustainability Report
4. OUR PLANET
Energy and emissions
Metcash defines its operational boundary for the purposes of
calculating Scope 1 and 2 emissions as being any entity in which
Metcash or its subsidiaries have operational control, as defined by the
operating policies test under the National Greenhouse and Energy
Reporting Act 2007.
Metcash has 92 facilities over which it has operational control.
These include:
ظ Distribution Centres (5)
ظ Independent Hardware Group (42)
ظ Metcash Food (28)
ظ Australian Liquor Marketers (16)
ظ Corporate (1)
We calculate our GHG emissions using the Greenhouse Gas Protocol
and annually submit an Emissions and Energy Report to the Clean
Energy Regulator. Total emissions reported under National Greenhouse
and Energy Reporting System (NGERS) in FY21 were 72,948 tonnes
CO2-e, which represents a 14% reduction on the prior year (FY20: 85,433
tonnes CO2-e).
Emissions reported under NGERS in FY22 will incorporate sites related
to Total Tools Holdings and Total Tools joint venture stores following
their acquisition in FY21.
Total fuel consumption from non-renewable sources was 412,551 GJ.
Grid electricity use, our largest source of emissions, reduced 11% to
84,244 MWH in FY21 from 89,356 MWH in FY20 (as reported under
NGERS). Going forward, we intend to also report our emissions using a
GHG intensity per square metre of floorspace under operational control
measure. We will also be adopting processes to calculate our Scope 3
emissions, recognising that a significant proportion of our climate
change impact stems from these emissions.
Emissions targets
In FY20, Metcash set a target of a further 10% reduction in emissions by
FY25. Having exceeded this target in FY21, work was undertaken to
establish a 2030 science-based emissions reduction target.
Metcash supports Australia’s commitment to the Paris Agreement,
limiting global warming to 2 degrees above pre-industrial levels.
As part of this commitment, we investigated both a 1.5 degree and
a below 2 degree warming scenario for our own operations and
determined a baseline GHG emissions inventory using data collected
from our National Greenhouse Gas Reporting. The July 2019 to June
2020 NGERS emissions levels were chosen as the baseline year, as this
period is more in line with our normal business activities and largely
outside the influence of the COVID pandemic. A forecast was then
made as to the ‘business-as-usual GHG trajectory’ of existing sites
and operations out to 2030.
This work included a review of our reported emission sources, being
electricity, stationary fuels (natural gas, LPG and diesel), transport fuels
(diesel, ethanol E10, LPG and petrol) and refrigerant gases.
Our emissions profile
GHG emissions by type (tCO2-e,%)
Electricity: 92%
Transport fuel: 5%
Stationary fuel: 2%
Refrigerants: 1%
Electricity consumption is by far the largest source of Metcash’s
emissions, and therefore the main area of focus for emission reduction
opportunities. Distribution centres account for more than half of
Metcash’s total electricity consumption.
Electricity consumption (%) by division*
Distribution centres: 54%
Wholesale: 22%
Hardware: 11%
IGA: 9%
ALM: 3%
Corporate: 1%
*Includes:
ظ Distribution Centres: Capital City Food and Liquor DCs
ظ Wholesale: Campbells
ظ IGA: Supermarkets + Food operations
ظ Hardware: Hardware DCs + Mitre 10 + HTH + Total Tools
ظ ALM (including regional DCs)
ظ Corporate offices
29
Our People & Our BoardFinancial ReportDirectors’ ReportOther Information Sustainability Report continued
Subsequent to the scenario modelling, Metcash adopted a 1.5-degree
warming scenario target, resulting in 42% emissions reduction by 2030.
Metcash also developed an interactive net zero pathway tool to be
used in determining the appropriate blend of emissions reduction
opportunities, such as energy efficiency, renewable energy and carbon
abatement, required to reach the 2030 goal. Reduction opportunities
are ranked based on achievability and return on investment.
Identified emissions reduction opportunities include:
ظ Onsite Solar PV
ظ Refrigeration system optimisation
ظ LED retrofits at some remaining sites
ظ Lighting control opportunities including lux sensor and occupancy
sensor control
ظ High-GWP refrigerant phase out
ظ Natural gas elimination through electrification
ظ Further forklift electrification
ظ Improved batteries and battery charging technology for electric
forklifts
ظ Energy sub-metering
ظ Offsite renewables (via PPAs)
ظ Offsets
Net zero pathways for various emission sources
Other Fuels/emission sources
In December 2020, Metcash opened its new distribution centre in
Gepps Cross, South Australia replacing the Kidman Park, South
Australia warehouse. Metcash worked closely with the landlord,
Charter Hall, to ensure the new facility obtained a 5 Star Green Star
Design As-Built rating. In addition to a 1MW solar PV installation,
which abates 645 tonnes CO2e per annum, the facility has extensive
natural ventilation and light, end of trip facilities and wellness spaces.
Metcash is committed to operating the facility in line with Green Star
requirements, harvesting and utilising rainwater and ensuring at
least 50% of all site generated waste is diverted from landfill.
Climate risk
As Australia’s leading wholesaler and distributor we play a key role in
supplying and supporting a large network of independent retailers
across Australia. While we were not significantly impacted by flooding
events in regional New South Wales, cyclones in Queensland and
bushfires in multiple States, we recognise the potential impacts climate
change could have on our supply chain and our ability to service our
customers. We support the decarbonisation of our industry and
building the resilience of our business to adapt to a changing economy
and physical environment.
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Energy efficiency
and mitigation
OR
Electrification
Electricity
Energy
efficiency
Onsite
Solar PV
Offsite
Renewables
30 Metcash Annual Report 2021
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Sustainability Report
How we manage climate change
Governance
Establishing an appropriate governance structure is a pre-requisite
for embedding environmental, social and governance (ESG) factors
throughout Metcash. Our ESG Council will have accountability and
responsibility for reporting on and implementing climate change
initiatives at Metcash, as illustrated in the governance structure
below. The ESG Council will prepare a dashboard of progress against
its initiatives together with other relevant reporting data for regular
presentation to the Group Leadership Team (GLT) and the Board.
The newly formed ESG Council will comprise representatives from
all Pillars across key functions of the business, including corporate
responsibility, strategy, merchandise, marketing, risk, property,
logistics, finance, people and culture and health and safety.
The Council is chaired by the Group CEO.
Metcash Board
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(cid:10)(cid:23)(cid:25)(cid:14)(cid:13)(cid:17)(cid:30)(cid:22)(cid:10)(cid:16)(cid:13)(cid:26)(cid:18)(cid:30)(cid:22)(cid:20)(cid:25)(cid:29)(cid:7)(cid:22)(cid:14)(cid:25)(cid:17)(cid:25)(cid:18)(cid:13)(cid:17)(cid:25)(cid:27)(cid:26)(cid:22)
(cid:13)(cid:10)(cid:17)(cid:25)(cid:27)(cid:26)(cid:29)(cid:22)(cid:13)(cid:26)(cid:8)(cid:22)(cid:14)(cid:30)(cid:13)(cid:29)(cid:9)(cid:20)(cid:30)(cid:29)(cid:22)
(cid:25)(cid:26)(cid:17)(cid:27)(cid:22)(cid:17)(cid:16)(cid:30)(cid:22)(cid:24)(cid:9)(cid:29)(cid:25)(cid:26)(cid:30)(cid:29)(cid:29)
Strategy
The Metcash Climate Risk and Opportunities Register was established
in FY20 as part of our program to assess the impact of climate change
on our business. The program included a qualitative analysis of the
likelihood and consequence of climate risks and opportunities in our
value chain in alignment with Metcash’s Enterprise Risk Management
matrix. In line with the Intergovernmental Panel on Climate Change
(IPCC) for a medium-term time horizon of 2030, two climate scenarios
were used for this analysis as follows:
IPCC Representative
Concentration
Pathway (RCP)
Global
warming
scenario
Description
2.6
8.5
1.5°C
warming
4.3°C
warming
Ambitious mitigation with a peak
in emissions around 2020,
followed by a rapid decline.
Minimal mitigation with a
continuous rapid rise in
emissions.
The highest risk found was an increase in the frequency and severity
of acute physical climate change events which will likely result in rising
insurance premiums, leading to increased operating expenditures over
the short (1-3 years) and medium (3-10 years) term. In FY21, insurance
premiums increased partly due to the cost of catastrophe claims across
the insurance market. No transition risks were assessed as high risk due
to our efforts in managing our carbon footprint.
Additional steps in our climate risk response included:
ظ A ‘deep dive’ into the impact of a 1.5°C and 4.3°C scenario on our
physical assets based on our emissions and energy use. This will
include the development of climate risk mitigation plans for all key
physical assets
ظ Discussions with our landlords on their climate engagement plans
ظ Commissioning of solar panels at our new Greenstar facility in
South Australia
To further enhance our understanding of key risks and opportunities,
we will be undertaking quantitative scenario analysis and modelling.
This is expected to build on the scenario analysis conducted in FY20 to
qualitatively inform our strategy at a high level. Management of the
key risks and opportunities identified will be translated into
operational plans.
Risk management
Our Group Risk and Assurance team facilitates the process for
identifying and assessing Metcash’s risk profile, focusing primarily
on those strategic and operational risks that are most important for
Metcash. Strategic risks are typically considered over longer time
horizons, while operational risks are considered with shorter (1-10 year)
time horizons.
In our Climate Change Risk and Opportunity Register, inherent physical
and transition climate risks and opportunities are classified on a scale
from very low to extreme and are scored using the multiplication of
consequence and likelihood ratings. As we are in the preliminary stages
of embedding the climate risk and assessment process into our
strategic and operational risk assessment process, the climate-related
risks identified in our Climate Change Risk and Opportunity Register
have not yet been integrated into our existing risk management
systems and tools. This is planned to be incorporated and reviewed
by the Board in FY22.
Climate-specific risks and opportunities will be reviewed and updated
on an annual basis using the time horizons of short-term (1-3 years),
medium-term (3-10 years) and long-term (10-25 years).
Measuring our key climate risks will continue to be a complex and
challenging task. While increased insurance premiums will likely have
the highest impact on Metcash, there is currently no publicly available
predictive tool for isolating the impact of climate change. We will
continue to appraise and determine further metrics for assessing,
monitoring and managing our physical and transition impacts.
31
Our People & Our BoardFinancial ReportDirectors’ ReportOther Information Sustainability Report continued
Looking forward
Our roadmap for deepening our alignment with the Task Force on Climate-Related Financial Disclosures (TCFD) and furthering our understanding
and management of climate change impacts is shown below:
Action
Pre-Fy22
FY22
FY23
FY24
Governance
Align with internal stakeholders on level of climate ambition and the FY20
Climate Change Risk and Opportunities Register
Board and management capacity building activities
Clarify internal structure for climate-related accountabilities, including
accountabilities and responsibilities for risk management at each level
and establish an ESG Council
Strategy
Undertake climate scenario analysis and develop Climate Change Risk
and Opportunity Register
Study substitutes for key commodity groups
Physical asset deep-dive and development of climate risk mitigation plans
for all physical assets
Deep-dive analysis on extreme weather events, including modelling
Continue use of scenario analysis in strategic decision making
Risk management
Integrate climate risk into corporate risk register
Document risk owners, control owners and actions in the corporate risk register
Integrate climate risk management into existing enterprise risk management
framework, systems and tools
Treat and manage key risks
Metrics and
targets
Calculate and monitor Scope 3 emissions
Identify metrics for key risks
Establish targets for key risks and align to pillar and enterprise strategies
Monitor performance against targets and metrics
Obtain third party assurance over Scope 1, 2 and 3 emissions
Complete
Ongoing
Future activity
32 Metcash Annual Report 2021
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Waste and recycling
Metcash embarked on a range of new projects in FY21 to further
minimise waste to landfill. One of our largest waste generators is our
stretch film used for pallet wrapping. Metcash investigated and then
implemented new technology that employs thinner, yet stronger
materials, optimising pallet stability while reducing unnecessary plastic
and cardboard core waste. The new technology has reduced the waste
of this plastic by over 100 tonnes on a per annum basis.
Another waste reduction project involved re-designing the core of our
pallet wrap to include a reinforced edge. This enables the film roll to
withstand edge damage without losing its integrity, which is a common
contributor to plastic waste in warehouses. This added feature,
together with increased roll length, has resulted in 46,480 cardboard
cores being saved from recycling. The new stronger technology has
also led to less damage to product in transit, further reducing product
loss and waste.
Other waste initiatives in FY21 included:
ظ Improvements to signage in warehouses, commercial kitchens,
canteens and offices to encourage recycling and educate team
members on the recyclability of items
ظ Diverting timber pallets from general waste bins to timber recyclers
ظ Implementation of the ‘Simply Cups’ coffee cup recycling solution
A continued focus on keeping waste out of landfill resulted in the
diversion of 3,623 tonnes of material in FY21. An additional 417 tonnes
of food was diverted from landfill through the collection of edible
product by our food rescue partners OzHarvest, Foodbank and Food
For Change. Overall, our waste-to-landfill diversion rate improved by
10% in FY21 compared to the prior financial year.
Battery recycling
With over 300m household batteries ending up in landfill and a
considerable number of power tool batteries not being recycled,
our Hardware pillar is launching an in-store battery recycling drop-off
service. The rollout has commenced nationally in Total Tools and at
Mitre10 sites in Victoria and South Australia. The program is being
extended to IGA stores later this year.
Responsible sourcing
Metcash is committed to being a responsible member of the
communities in which we work and live, and we expect the same
of our suppliers. We are on a continual journey to improve our policies,
systems and targets associated with achieving this outcome. This
year we had further engagement with our retailers and sustainability
consultants to determine which issues are most important for our
retailers and communities. This helped guide our focus for responsible
sourcing commitments and the associated initiatives required to
ensure they are delivered. This included agreeing with our retailers
targets to ensure private label suppliers meet our strict requirements
across responsible practice and environment, and animal welfare.
A differentiating factor for our independent store networks is that each
store is able to source products from local suppliers and artisans within
their regional area. In addition to our private label initiatives, we are
supporting our retailers to work towards responsible sourcing goals
with their local suppliers by delivering toolkits and training to store
owners. The toolkits being generated include guidance on supplier
screening, renewable energy contracts, circular economy and recycling
opportunities to name a few. Through these programs, we are
also actively working with our suppliers to mitigate the social and
environmental impacts of their products.
33
Our People & Our BoardFinancial ReportDirectors’ ReportOther Information Animal welfare
We care about how the animals in our supply chains are treated and
we are committed to ensuring their good physical and mental health
is maintained. To help achieve this, specific targets have been set for
2025. The following targets relate to our private label products:
ظ Primary beef cuts and ingredients to be free of hormone growth
promoting agents
ظ Shell eggs to come from free range certified farms
ظ All egg ingredients to come from cage free systems
ظ Primary poultry cuts and ingredients are using RSPCA approved
chicken and turkey
ظ Primary pork cuts are using APIQ (Australian Pork Industry Quality
Assurance Program) approved sow stall free pork
We are working with shoppers and our suppliers to encourage the
making of choices aligned with animal welfare. This has included
supporting our suppliers to achieve more stringent certified animal
welfare standards and through the provision of in-store information.
Sustainability Report continued
Responsible practice and environment
We know that our biggest impacts on the environment come from the
products we source. We want to continue to provide the best quality
products for our customers, while also ensuring we are protecting the
ecosystems we rely upon and the livelihoods of those in our supply
chain. To help achieve these desired outcomes, we are working to
ensure the following in relation to our private label products:
ظ Food and drink products to support the production of sustainable
palm oil. All non-food products and pet food to support the
production of sustainable palm oil by 2028
ظ Seafood to be certified to either the Marine Stewardship Council,
Aquaculture Stewardship Council, GLOBAL GAP or Best Aquaculture
Practices, or be independently assessed against the Metcash
Responsibly Sourced Seafood Policy
ظ Single ingredient tea, coffee and cocoa to be independently certified
to either Rainforest Alliance/UTZ, Fairtrade or Cocoa Horizons by
2025
ظ Timber, pulp, and paper products to be sourced from plantations
independently certified by the Programme for the Endorsement of
Forest Certification (PEFC) or Forest Stewardship Council (FSC)
ظ All products to be sourced from Australian suppliers and farmers
first, unless the Australian product quality, supply or innovation is
insufficient to meet customers’ needs or there is a requirement for
international provenance
The year included implementing a number of new initiatives aimed at
ensuring we continue to improve and achieve our responsible sourcing
goals. These include:
ظ Investing in a state-of-the-art Quality Assurance database to capture
more granular product information on product ingredients and to
improve our reporting capability
ظ Launching our FAD-free private label tuna range
ظ Ensuring we source 100% FSC and PEFC certified timber products
in hardware
34 Metcash Annual Report 2021
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Sustainable materials and packaging
Metcash continues to be a contributor to the Australian Packaging
Covenant Organisation and supports the goals of phasing out
unnecessary single-use plastic packaging. We commenced the
rollout of the Australian Recycling Label (ARL) on our Black & Gold
and Community Co private label ranges in early 2020, and have
included the component-level recycling information on-pack on over
200 products in our Food business and will commence the rollout in
our Liquor business from September. The rollout will continue for all
new private label food and liquor products that are launched or have
their packaging redesigned.
We were pleased to participate in the ‘Check It Before You Chuck It’
program designed to inform shoppers more thoroughly on how to
responsibly dispose of, and recycle, packaging materials to ensure
less packaging waste ends up in landfill.
In FY21, we continued our partnership with OneHarvest to both
reduce plastic packaging and minimise food waste in our Community
Co packaged salad range. Our salad bowls have been redeveloped in
a first-to-market offer which includes the use of post-consumer
recycled content, reducing the reliance on virgin plastics. Our product
development team also worked with OneHarvest to convert all forks
to 100% recyclable and to introduce 50% post-consumer recycled
plastic materials. This equates to the removal of over 15 tonnes of
virgin plastic per annum. In addition, an ultrasonic sealing initiative
has been developed to reduce the length of plastic used in bagged
salads. Approximately 33% of bagging machinery has already been
converted with an expectation that this will increase to 77% coverage
by the end of 2022.
A Metcash cross-departmental working group was formed and
worked with external consultants to review the prevalence of
single-use plastics in our cutlery, takeaway containers, cups, plates,
meat trays, deli containers, bowls, stirrers, straws and bags range.
Our merchandise team then reviewed the availability of
biodegradable plastics, bioplastics, alternative materials and
plant-based fibres to enable the phase-out of unnecessary single-use
plastic products. To date, 38 single-use plastic products have been
substituted in our Food business.
5. OUR CUSTOMERS
Product quality health and nutrition
Metcash is committed to the promotion of living healthier and happier
lifestyles, and inspiring shoppers to take positive action for their
health and the health of their community. With our store network
reaching far and wide into regional and remote locations, we play a
vital role in servicing the nutritional and dietary requirements of all
segments of the community.
As part of our aim of making it easier for shoppers to make good food
choices, we are working to eliminate the following from our private
label food and drink:
ظ Artificial flavours and colours
ظ Added MSG
ظ Genetically modified ingredients
ظ Irradiation unless permitted by law or when it delivers scientific
benefit, by exemption only
ظ Mechanically separated, de-boned and recovered meat as well
as advanced meat recovery or extruded bone meat
ظ Mechanically desinewed meat
We are also working to reduce salt and sugar in line with the Healthy
Food Partnership targets, as well as ensuring our private label
products have a Health Star rating displayed in line with Australian
Government Guidelines.
Our IGA Local Matters Community Program includes providing shoppers
with healthy recipes, tips on healthy eating and information about other
healthy lifestyle behaviours such as exercise. The program includes:
ظ A partnership with nutritionists to provide factual and helpful
content on how to live healthy lifestyles
ظ Recipes focused on health considerations (e.g. heart health, immune
boosting, low GI)
ظ Promotions and competitions that help communities to thrive
ظ Inspiring shoppers with retailer stories on how they support the
community and healthy living
ظ Partnerships with suppliers or third parties that help promote
healthy living, communities, or the environment
We continued to add more healthy options for shoppers through the
expansion of our Community Co private label range. This included
adding new snacking options, as well as conveniently packaged fresh
salads. A portion of the sale of each Community Co product is donated
to the IGA Community Chest Program.
35
Our People & Our BoardFinancial ReportDirectors’ ReportOther Information Sustainability Report continued
6. OUR PARTNERS AND COMMUNITY
Community and charities
The IGA Community Chest Program (CCP) supports a wide range of
charities and grassroot community groups, including sporting clubs
and schools. Donations were made to ~1,450 community groups and
charities across Australia, totalling $2.94m. This brings total CCP
donations since inception of the program to ~$96m.
We also continued to support a number of charities including the
Special Olympics Australia, a charity we have proudly supported for
almost 30 years. This year we raised over $220k to empower people
with intellectual disabilities to participate in sport, helping them to
form lifelong friendships and develop skills.
This year we celebrated 12 years of partnership with the McGrath
Foundation, and we are proud to have raised over $186k in FY21 to
fund McGrath Breast Care nurses in our communities. This year we also
worked with the Humpty Dumpty Foundation to provide much needed
medical equipment for hospitals to help save children’s lives.
COVID relief
The impacts of COVID led to a significant increase in the number of
Australians seeking assistance from charities. Through our partnership
with Vinnies, we conducted an IGA Appeal to help those in our local
communities that were in need. The sale of IGA Appeal tokens and
Community Chest products led to ~$350k being donated to Vinnies to
assist those in need with basic costs such as rental and mortgage
payments, utility bills and food vouchers. Metcash staff donated an
additional $11k to Vinnies and participated in the annual Vinnies CEO
Sleepout which is held at venues across Australia.
Western Australia bushfire relief
Our IGA retail network responded quickly to help Western Australians
impacted by the devastating Wooroloo bushfires in February this year.
Ben Heptinstall, owner of Supa IGA Stratton, donated care packs to
families that were forced to evacuate their homes, while Metcash
supplied $45k of gift cards to those impacted. A further $85k was
donated to the Western Australia Vinnies bushfire recovery, through
supplier donations and sales from the $2 Bushfire appeal tokens.
Flood relief
We partnered with State Emergency Services to get deliveries to those
towns in NSW and South Queensland isolated by floods in the year.
Our IGA retailers in NSW partnered with Vinnies to quickly activate a
flood support campaign whereby funds raised were directed to those
in need through the Vinnies Flood Appeal. In Queensland, our IGA
retailers donated ~$60k to GIVIT and Drought Angels to support those
impacted by the devastating floods.
In March 2020 the IHG Emergency Assistance Fund (EAF) was launched,
with IHG matching member contributions to the fund dollar for dollar,
giving us a powerful national platform to support communities
impacted by natural disaster. The IHG National Advisory Council is the
authorising body for the release of all funds, made up of senior store
owners from each State.
In March 2021, IHG members voted to support BlazeAid and Drought
Angels as the official EAF charity partners. In April 2021, $300k was
released to support the New South Wales and South East Queensland
floods recovery effort, with $200k provided to Drought Angels and
$100k to BlazeAid.
Food rescue
We continued to expand our food rescue program at our Food
warehouses and across our independent retailer network, resulting
in 417 tonnes of food or more than 850k meals being provided by our
partners; Foodbank, OzHarvest and ‘Food For Change’ to those in need.
We expanded our partnership with ‘Food For Change’ in the year with
the program now operating in 60 IGA stores across New South Wales,
South Australia and Victoria. This has resulted in over 300k meals being
provided to those in need. The program includes stores being provided
with a customised app that connects them to their local food relief
agency. We expect to further expand the program in FY22 and continue
to collaborate with the New South Wales Environment Protection
Authority (EPA) and Green Industries SA to help fund and support the
rollout of this important food rescue program.
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Labour standards in the supply chain (Modern Slavery)
Metcash is committed to continuous improvement in addressing the
risk of modern slavery in our operations and supply chain. This year we
continued to build on the steps taken last year designed to understand
the extent of these risks and prepare a mitigation plan. This included
integrating our requirements in relation to modern slavery into supplier
contractual terms and conditions, ensuring our Speak Up Policy is
applicable to suppliers and their employees, publishing the Metcash
Anti-Slavery Policy and conducting further risk analysis and training,
including the development of online education modules.
To understand more about our suppliers’ risk profile for modern
slavery, we asked a selection of our suppliers (631) that were identified
in our risk assessment as having elevated risk to complete a
self-assessment questionnaire (SAQ). Feedback from the SAQ would
be used to evaluate each suppliers’ understanding of modern slavery
in their operations, including what policies, processes, audits and
third-party affiliations the supplier has.
From those contacted, 182 suppliers responded in full or provided
evidence of their own Modern Slavery Statements or due diligence
activities. Suppliers were assigned a further risk score to prioritise
actions for follow-up, with 11 suppliers flagged as high priority.
Level of
priority
Number of
suppliers
Supplier/Product Profile
Suppliers of Metcash’s private label products in the Food pillar were
requested to join SEDEX, one of the world’s leading ethical trade
membership organisations. Through SEDEX, members are required to
perform a self-assessment questionnaire and Metcash is provided with
access to independent third-party social audit reports of our suppliers’
production facilities. Currently ~85% of suppliers sites linked to
Metcash on SEDEX in FY21 have completed their self-assessment
questionnaire or have provided audits on their facilities. This covers
168 sites across 14 countries.
The third-party audit findings presented in SEDEX identified a number
of non-conformances, allowing our team to assess various critical
issues and to engage with these suppliers in relation to corrective
action. This process has resulted in a deeper understanding of our risk
profile and the appropriate action to take to address, manage and
reduce the risk of modern slavery.
Suppliers assessed as having critical, major and minor non-compliance
issues were deemed high risk suppliers, while suppliers that had other
non-compliance not related to human rights were categorised as
medium risk suppliers for the purpose of follow up activities.
The following table summarises the non-conformances.
Category issue
Critical Major Minor
Total
Non-Conformances
High
priority
Medium
priority
13
35
Low
priority
130
Supplier sources goods or services from
high-risk countries while having minimal
prevention processes
Supplier either sources goods or services
from high-risk countries and has modern
slavery mitigation policies and processes
in place; or does not source from high-risk
countries and has no knowledge of
modern slavery risks or prevention
processes in place
Supplier does not source from high-risk
countries and has a clear understanding of
modern slavery with adequate mitigation
policies in place
Follow-up activities include requesting suppliers to complete a more
detailed SAQ and/or provide further evidence and documentation that
enables us to establish how the supplier is mitigating potential risks.
Metcash is continuing to pursue those suppliers that have not yet
responded to the SAQ.
Children and Young Workers
Entitlement to Work
Health, Safety and Hygiene
2
Management Systems
Worker Grievances
Regular Employment
Wages
Working Hours
Total
1
1
17
1
1
2
2
1
1
27
2
2
2
3
5
8
1
1
1
5
2
16
25
43
Upskilling our staff and supporting our suppliers
Our people are at the forefront of Metcash’s efforts to reduce the risk of
modern slavery in our operations and supply chain. To support them in
implementing our Anti-Slavery Policy and the Metcash Speak Up Policy,
we developed a due diligence framework which serves to help identify,
assess and prevent the risk of modern slavery when sourcing and
onboarding our suppliers.
We also developed e-learning training modules tailored for internal and
external audiences to ensure that our employees, retailer partners and
our suppliers understand modern slavery. Our aim in the coming year is
to empower these audiences to be able to identify possible cases and
know what action they can take to mitigate modern slavery risk.
Reporting
Continuous improvement and learning are integral to the requirements
under the Commonwealth Modern Slavery Act 2018. Our reporting
framework and an evaluation of our progress, including the
effectiveness of our actions, will be included in our second Modern
Slavery Statement that is due for submission by 31 October 2021.
37
Our People & Our BoardFinancial ReportDirectors’ ReportOther Information
Our People
Jeff Adams
BA, Business Administration
and Management
Group CEO,
Metcash Group
Jeff has over 40 years of retail
experience across domestic and
international businesses in the
United States, Europe, Asia,
Central America and the Middle
East. Most recently, Jeff was
CEO of Operations for Turkey
at Tesco Kipa.
Our Board
Alistair Bell
B.Ec (Sydney), CA, MAICD
Scott Marshall
B.Business
Group CFO, Metcash Group
CEO, Metcash Food
Scott began his career with
Metcash in the ALM business over
28 years ago and was appointed
CEO of ALM in December 2013. In
March 2018 Scott was appointed
CEO, Metcash Food. His areas of
experience cover warehousing
operations and management,
sales, retail operations, State
general management and
marketing management.
Alistair joined Metcash in 2020 as
the Group CFO. He has extensive
capital-markets experience and
executive leadership in managing
international organisations with
portfolios of businesses. Alistair has
held various CFO, COO and strategy
positions in a range of industries with
ASX-listed, private equity and
multi-national corporations. Most
recently, he was the Group CFO of
GrainCorp for almost 10 years.
Alistair has broad experience as a
Non-executive Director, including
as Chairman of Audit and
Risk Committees.
Annette Welsh
CEO, Independent
Hardware Group
Annette joined Metcash in 2010
and held the roles of GM of
Operations and GM Merchandise
prior to being appointed CEO of
Independent Hardware Group in
2020. Annette has global
experience across retail and
wholesale and prior to joining
Metcash worked for Marks &
Spencer and IBM.
Robert Murray
MA Hons, Economics (Cantab)
Non-Executive Chairman
Chair of the Nomination Committee,
Member of the People and Culture
Committee.
Jeff Adams
BA, Business Administration
and Management
Group CEO, Executive Director
Peter Birtles
BSc Hons, FCA, MAICD
Tonianne Dwyer
BJuris Hons, LLB Hons, GAICD
Non-Executive Director
Non-Executive Director
Chair of the Audit, Risk and
Compliance Committee, Member
of the Nomination Committee.
Member of the Audit, Risk and
Compliance Committee, Member
of the Nomination Committee.
38 Metcash Annual Report 2021
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Chris Baddock
GradCertBus, GAICD
CEO, Australian
Liquor Marketers
Chris joined Metcash in July 2019
as CEO of Australian Liquor
Marketers (ALM). Chris has over 30
years of experience in FMCG
including Lion and Woolworths.
Most recently Chris was Director of
Pinnacle Drinks, a wholly owned
subsidiary of the Woolworths
Endeavour Drinks Group.
David Reeve
CIO, Metcash Group
David joined Metcash as Chief
Information Officer in July 2019.
He has over 20 years of experience
gained across a wide spectrum of
industries including Financial
Services, Education, Defence and
Airlines. Prior to joining Metcash
David was CIO of Macquarie
University. He was responsible for
the delivery of technology
capabilities that enhanced the
lives of students and staff as well
as the clinicians and patients
at MQHealth.
Penny Coates
BA Hons, Chartered Fellow
CIPD, GAICD
Chief People and Culture Officer,
Metcash Group
Penny joined Metcash in 2015 as
Chief People and 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
its Chief Customer Service and
Operations Officer.
Matt Havens
BA Hons, MBA
Chief Strategy and
Transformation Officer,
Metcash Group
Matt joined Metcash in April 2019
bringing over 25 years of
experience in strategy,
transformation and growth from
his work in the United States,
Europe and Asia. Prior to joining
Metcash, Matt was a Partner with
BCG Digital Ventures where he
specialised in customer-led
business transformation.
Christine Holman
MBA, PG Dip Mgt, GAICD
Murray Jordan
MPA, MACID
Helen Nash
BA Hons, GAICD
Non-Executive Director
Non-Executive Director
Non-Executive Director
Member of the Audit, Risk and
Compliance Committee and the
Nomination Committee
Member of the Audit, Risk and
Compliance Committee, Member
of the Nomination Committee,
Member of the People and
Culture Committee.
Chair of the People and Culture
Committee, Member of the
Nomination Committee.
Julie Hutton
B Asian Studies (Viet), LLB,
LLM, GAICD
Company Secretary
39
Sustainability ReportFinancial ReportDirectors’ ReportOther Information Directors’ Report
Directors’ Report
For the year ended 30 April 2021
Your Directors submit their report of Metcash Limited (the ‘Company’) and its controlled entities (together the ‘Group’ or ‘Metcash’)
for the financial year ended 30 April 2021 (‘FY21’).
OPERATING AND FINANCIAL REVIEW
1.
METCASH’S BUSINESS MODEL
Metcash is Australia’s leading wholesaler and distributor, supplying and supporting over 5,000 independent retailers which form part
of our bannered network and several other unbannered businesses across the food, liquor and hardware pillars. Metcash’s retail
customers operate some of Australia’s leading independent brands including: IGA, Foodland, Mitre 10, Home Timber & Hardware,
Total Tools, Cellarbrations, IGA Liquor and the Bottle-O.
Metcash operates a low-cost distribution model that enables independent retailers to compete against the vertically integrated retail
chains and other competitors. The Group’s core competencies include: procurement, logistics, marketing, retail development and
retail operational support. Metcash operates major distribution centres in all the mainland states of Australia which are
complemented by a number of smaller warehouses and a portfolio of corporate and joint venture stores.
The Group employs over 7,000 people and indirectly supports employment in the independent retail network.
2.
STRATEGIC OBJECTIVES
Metcash’s purpose is ‘Championing successful independents’. Metcash’s vision includes:
supporting independent retailers to be the best store in town;
being passionate about independents;
being a favourite place to work;
being a business partner of choice for suppliers and independents;
creating a sustainable future.
supporting thriving communities; and
The strategic vision is underpinned by a number of programs and initiatives across the three pillars (Food, Liquor and Hardware)
aimed at supporting our independent retailers. These were outlined at the Investor Day in March 2021 and include store upgrade
programs, new store formats and brand clarity, expanding private label brands, core ranging and pricing, marketing support,
accelerating eCommerce and system enhancements as well as training and development programs for independent retailers.
The Group commenced the MFuture program at the beginning of FY20. This five-year program spans all pillars and support functions
and adopts a balanced approach to revenue growth and cost savings. The program has a strong focus on accelerating successful
current initiatives, following the shopper into new growth areas, improving the Group’s infrastructure to enable simpler and cheaper
processes and ensuring a sustainable cost base into the future. The program aims to deliver competitive and successful independent
retail networks across all pillars and match store formats to customers shopping missions.
3.
KEY DEVELOPMENTS
Acquisition of Total Tools Holdings Pty Ltd and JV Stores (‘Total Tools Group’)
In September 2020, the Group acquired 70% of the shares of Total Tools for a total purchase consideration of $56.9 million. Total Tools
is the franchisor to the largest tool retail network in Australia with 82 bannered stores nationwide as at 1 September 2020. In December
2020, Total Tools acquired ownership interests of between 51% and 60% in twelve Total Tools independent retail stores (‘JV Stores’)
for $42.5 million. Put and call option arrangements exist which enable Metcash to acquire 100% of these businesses during FY24/FY25.
Further details are set out in note 13 of the financial report.
COVID-19 pandemic
The Group has achieved a significant increase in sales revenue across all pillars, stemming both from underlying growth initiatives
and also from the shift in consumer behaviour which was initially triggered by COVID-19. During FY21, Metcash was successful in
capitalising on these changes by retaining and growing our customer base.
Nevertheless, the Group continues to be subject to COVID-19 related volatility and uncertainty in its trading environment and
operations, as well as from the dynamic economic landscape. Metcash has retained a provision for COVID-19 related impairments of
$10.7 million as detailed in note 3 of the financial report.
40 Metcash Annual Report 2021
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Project Horizon implementation costs
Metcash has embarked on a three-year Project Horizon stage one program aimed at derisking our processes by replacing aged
technology whilst driving efficiencies and simplifying processes through the development of a single operating system across the
Group. In FY21, the Group incurred $17.3 million of capital expenditure and $7.9 million of expenses on the program as detailed in
note 3 of the financial report.
MFuture program, including South Australia Distribution Centre (‘SADC’)
The five-year MFuture program initiatives are focused on growth opportunities and maximising the effectiveness of the Group’s cost
of doing business (‘CODB’). In December 2020, the Group successfully opened the new distribution centre in South Australia (‘SADC’)
which will increase retailer competitiveness through a wider range and efficiencies.
Capital management initiatives
On 20 May 2020, Metcash announced the successful completion of its Share Purchase Plan (‘SPP’) which raised $13.5 million, net of
transaction costs and that resulted in 5,963,215 new shares being issued at $2.28 per share.
On 16 March 2021, Metcash announced an increase to the target dividend payout ratio from 60% to 70% of underlying profit after tax,
effective FY21.
Changes in key management personnel (KMP)
Alistair Bell joined Metcash on 1 September 2020 and was appointed Group Chief Financial Officer (‘Group CFO’) from 7 December
2020 following Brad Soller’s retirement from the role.
Christine Holman joined the Metcash Board as a Non-executive Director on 14 September 2020. Ms Holman joined the Audit Risk &
Compliance and Nomination Committees from her appointment date.
Margaret Haseltine joined the Metcash Board as a Non-executive Director on 3 May 2021. Tonianne Dwyer will retire from the Board
following the completion of the FY21 financial report.
Dividend declaration
The Board has determined to pay a fully franked final FY21 dividend of 9.5 cents per share, which together with the interim dividend
of 8.0 cents per share, represent a full year dividend payout ratio of ~71% of underlying profit after tax.
4.
KEY FINANCIAL MEASURES
Warehouse earnings
Metcash’s operations are designed to allow significant volumes to be distributed through its warehouse infrastructure at a relatively
fixed cost base. The ability to leverage volumes through the warehouse is a key driver of profitability for both Metcash and the
independent retail network.
In addition to warehouse revenue, earnings are impacted by product category mix and the proportion of the Group’s products bought
by the network. Warehouse revenue and related margins are driven by competitive pricing, promotional activities and the level of
supplier support through volumetric and other rebates.
Metcash has a number of key programs in place to drive sales and margins, including through pricing and promotion, product range,
retail operational standards and consumer alignment.
Cost of doing business
The Group’s profitability depends on the efficiency and effectiveness of its operating model. This is achieved by optimising the Group’s
cost of doing business (‘CODB’) which comprises the various costs of operating the distribution centres and the administrative support
functions. During FY21, the efficiency of the supply chain was impacted by COVID-19 Safe work practices implemented to align with
local health regulations.
The MFuture program includes initiatives aimed at both revenue growth and ensuring the Group has a sustainable cost base.
Funds employed and return on capital
The Group’s funds employed is primarily influenced by the seasonal working capital cycle. The Group has longer term capital
investments predominantly in relation to its supply chain capabilities, including warehouse automation technologies and software
development. In a number of instances, the Group invests alongside the independent retail network, mainly in the form of equity
participation or short-term loans.
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The Board’s intention is to continue to invest in the business for future growth while maintaining a strong financial position and
otherwise to assess returning surplus capital to shareholders.
Non-IFRS Information
The directors report contains IFRS and non-IFRS financial information. IFRS financial information is financial information that is
presented in accordance with all relevant accounting standards. Non-IFRS financial information is financial information that is not
defined or specified under any relevant accounting standards and may not be directly comparable with other companies’ information.
Non-IFRS measures are used by management to assess and monitor business performance at the Group and segment level and should
be considered in addition to, and not as a substitute for, IFRS information. Non-IFRS information is not subject to audit or review.
Impact of new IFRIC agenda decision on key financial measures
In April 2021, IFRIC published an agenda decision in relation to the accounting treatment of configuration and customisation costs
related to ‘Software as a Service’ (‘SaaS’) arrangements. The Group is currently assessing the impact the agenda decision will have on
its current accounting policy and whether previously capitalised costs may need to be derecognised. Accordingly, the potential impact
of the IFRIC agenda decision on the Group cannot be reliably estimated at the date of this report. The Group expects to complete the
implementation of the above IFRIC agenda decision as part of its 31 October 2021 reporting.
5.
REVIEW OF FINANCIAL RESULTS
Group overview
Sales revenue
Food
Liquor
Hardware
Corporate
Underlying earnings before interest and tax (‘EBIT’)
Net finance costs
Underlying profit before tax
Tax expense on underlying profit
Non-controlling interests
Underlying profit after tax (‘UPAT’) (a)
Significant items
Tax benefit attributable to significant items
Net profit/(loss) for the year attributable to members
Underlying earnings per share (cents) (b)
Reported earnings/(loss) per share (cents)
FY21
$m
FY20
$m
14,315.3
13,025.4
192.4
88.7
136.0
(15.7)
401.4
(42.6)
358.8
(103.7)
(2.4)
252.7
(17.0)
3.3
239.0
24.7
23.4
182.7
72.8
84.2
(4.8)
334.9
(52.0)
282.9
(82.5)
(1.6)
198.8
(268.5)
12.9
(56.8)
21.8
(6.2)
(a) UPAT is defined as reported profit after tax attributable to equity holders of the parent, excluding significant items identified in note 3(vii) of the financial
report.
(b) Underlying earnings per share (EPS) is calculated by dividing UPAT by the weighted average shares outstanding during the year.
Group reported revenue, which excludes charge-through sales, increased 9.9% to $14.3 billion (FY20: $13.0 billion). Including charge-
through sales, Group revenue increased 10.1% to a record $16.4 billion, with significant growth in sales volumes across all Pillars.
Group underlying EBIT increased 19.9% to $401.4 million with strong volume growth and improved leverage in all Pillars.
In Food, increased earnings were underpinned by higher sales volumes and an improvement in the contribution from joint venture
stores. This improvement was despite FY21 not including sales to Drakes in South Australia1, and substantially less sales to 7-Eleven2
following the ending of their previous supply agreement in mid-August 2020.
In Liquor, significant earnings growth was underpinned by strong demand in the retail network, partly offset by lower sales to ‘on-
premise’ customers due to the impact of COVID-19 trading restrictions.
In Hardware, exceptional earnings growth was driven by a significant increase in do-it-yourself (DIY) sales, a return to growth in Trade
sales and the contribution from acquisitions3.
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Group underlying profit after tax increased 27.1% to $252.7 million4 and statutory profit after tax was $239.0 million (FY20: a loss of
$56.8 million5). Underlying earnings per share increased 13.3% to 24.7 cents reflecting an increase in profit after tax and the impact of
the Company’s equity raising in FY20.
Group operating cashflow was a record $475.5 million (FY20: $117.5 million), which reflects the higher earnings, a reduction in working
capital and a cash realisation ratio of 114.2%6 (FY20: 33.0%). The Group ended the financial year with net cash of $124.6 million (FY20:
$86.7 million).
Segment results
Food
Liquor
Hardware
Corporate
Metcash Group
Food
Segment revenue
FY20
$m
FY21
$m
Segment underlying EBIT
FY20
$m
FY21
$m
8,316.3
4,374.3
1,624.7
-
14,315.3
8,121.6
3,670.3
1,233.5
-
13,025.4
192.4
88.7
136.0
(15.7)
401.4
182.7
72.8
84.2
(4.8)
334.9
Total Food sales (including charge-through) increased 3.1% to $9.4 billion (FY20: $9.1 billion) or 11.0% excluding the impact of Drakes1
and 7-Eleven2.
In Supermarkets, total sales (including charge-through) increased 10.0% to $8.3 billion (FY20: $7.5 billion) and 11.6% excluding the
impact of Drakes1. This included a 16.7% increase for the ten months to February 2021, and an 8.0% decrease in March/April 2021 sales
(ex-Drakes impact), compared with the same period in FY20 which included peak demand from the impact of COVID-19 related trading
restrictions. Compared with the same period in FY19, Supermarkets sales increased 15.6% in March/April 2021 (ex-Drakes impact).
Strong sales growth was delivered in all states, particularly Victoria where demand was impacted by extended COVID-19 related
lockdowns.
The IGA retail network continued to benefit from a shift in consumer behaviour, including an increased preference for local
neighbourhood shopping, migration from cities to regional areas, more flexible working and cooking at home, and the success of
MFuture initiatives to retain new and returning customers gained through COVID-19.
The IGA retail network performed strongly with ‘like for like’ (LfL)7 sales increasing 10.5% compared with the prior comparative year,
and 18.8% compared with FY19.
Food EBIT increased $9.7 million (+5.3%) to $192.4 million (FY20: $182.7 million) reflecting strong growth in sales volumes and an
increase in the contribution from joint venture stores. The improvement in EBIT was ~$20 million after adjusting for the impact of
Drakes in South Australia and 7-Eleven, a decline in the contribution from resolution of onerous lease obligations and the increased
contribution from joint venture stores.
The EBIT margin8 for Food was in line with the prior corresponding year at 2.0%, despite 2H21 including an increased weighting of
lower-margin charge-through and tobacco sales in the sales mix.
Liquor
Total Liquor sales (including charge-through) increased 19.2% to $4.4 billion (FY20: $3.7 billion) reflecting continued strong demand
in the retail network, partly offset by the adverse impact of COVID-19 trading restrictions on ‘on-premise’ customers.
Wholesale sales to the IBA retail banner group increased 22.6% with strong growth in Cellarbrations, the Bottle-O, IGA Liquor, Duncans,
Thirsty Camel, Liquor@, Big Bargain and Porters. The strong sales growth was buoyed by an increase in customer preference for local
neighbourhood shopping, home consumption substituting ‘on-premise’ consumption and less overseas travel and duty-free sales.
Retail LfL sales9 in the IBA retail banner group increased 19.7% (FY20: +3.2%), with strong growth continuing in 2H21 despite a recovery
in ‘on-premise’ sales.
Liquor EBIT increased $15.9 million (+21.8%) to $88.7 million reflecting the increase in sales volumes and the effective management
of costs. The EBIT margin for Liquor was in line with the prior corresponding year at 2.0% despite an increase in the weighting of lower-
margin categories in the sales mix.
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Hardware
Hardware sales (including charge-through) increased 24.7% to $2.6 billion (FY20: $2.1 billion) with significant growth in DIY sales and
a return to growth in Trade.
Total IHG sales (excluding Total Tools) increased 17.9% (FY20: -1.3%). This includes a 19.4% increase for the ten months ended
February 2021 and a 12.3% increase in March/April 2021 sales. Compared with FY19, March/April sales increased 25.4%.
Retail LfL sales10 in the IHG banner group increased 11.4% (FY20: -0.7%), with DIY sales up 25.1% and Trade sales 4.9% higher. The
significant growth in DIY sales was underpinned by a shift in consumer behaviour to more home improvement projects, gardening and
maintenance activity, and the success of MFuture initiatives to further improve the competitiveness of the IHG retail network. Trade
sales strengthened in 2H21 supported by Government stimulus to drive increased renovations activity.
The growth in higher margin DIY sales has resulted in a change in the sales mix to ~40% DIY and ~60% Trade (FY20: ~37% DIY, ~63%
Trade).
Online sales increased 122%, with Hardware’s advanced digital capability helping optimise strong online demand.
The Home Timber & Hardware teamwork score continued to increase finishing the year at ~72% (FY20: ~68%).
Hardware EBIT increased $51.8 million (+61.5%) to $136.0 million, reflecting a significant increase in sales volumes, an increase in the
contribution from company-owned / joint venture stores, and the earnings from acquisitions3 which included $24.0 million from the
Total Tools Group.
The EBIT margin for Hardware increased 130 basis points to 5.3% which includes the positive impact of Total Tools and the retail
margin from joint venture and company-owned stores.
Finance costs and tax
Net finance costs decreased during the year reflecting lower debt utilisation driven by strong operating cash generation and lower
interest rates. Tax expense of $103.7 million on underlying profit represents an effective tax rate of 28.9% (FY20: 29.2%).
Significant items
Significant items included Project Horizon implementation costs of $7.9 million and costs related to the MFuture program of $3.5
million. Significant items also included costs incurred in relation to the acquisition of Total Tools and finance costs from discounting
the Total Tools put option liabilities totalling $6.1 million and a reversal of the previously recognised COVID-19 allowance for
impairment loss of $0.5 million.
The FY20 significant items included an impairment expense of $242.4 million recorded against the carrying value of goodwill and other
assets in the Food segment following the loss of the 7-Eleven contract. Significant items also included an allowance for impairment
losses on receivables from customers and prepaid costs impacted by COVID-19 restrictions of $15.6 million and costs related to the
SADC and the MFuture program of $10.5 million.
Refer note 3 of the financial report for further information.
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Cash flows
Operating cash flows
Investing cash flows, net
Proceeds from equity raising, net of share issue costs
Dividends paid
Payments for lease liabilities, net and other financing activities
Increase in net cash
FY21
$m
475.5
(216.0)
13.5
(148.3)
(86.8)
37.9
FY20
$m
117.5
(81.6)
294.3
(118.2)
(89.8)
122.2
Group operating cash flows were significantly higher than in the prior corresponding period at $475.5 million (FY20: $117.5 million),
underpinned by strong sales and working capital management.
The cash realisation ratio for the year was 114.2%, reflecting strong operating cash flows and a reduction in working capital.
The Group had net investing outflows of $216.0 million, including capital expenditure of $85.6 million and acquisitions of businesses
of $143.1 million. The acquisitions were predominantly in the Hardware pillar and included a majority stake in Total Tools.
The Group paid $148.3 million (FY20: $118.2 million) in dividends during the current financial year. Total dividends paid in FY21 was
14.5 cents per share (FY20: 13.0 cents per share).
Financial position
Trade receivables
Inventories
Trade payables and provisions
Net working capital
Intangible assets
Property, plant and equipment
Equity-accounted investments
Customer loans and assets held for sale
Total funds employed
Lease balances (net)
Put option liabilities
Tax and derivatives
Net cash
Net assets/equity
FY21
$m
1,607.8
1,008.0
(2,234.4)
381.4
729.1
231.8
82.5
41.3
1,466.1
(179.9)
(212.5)
92.8
124.6
1,291.1
FY20
$m
1,559.0
1,032.2
(2,181.9)
409.3
581.8
214.0
77.6
56.3
1,339.0
(166.1)
(6.1)
118.1
86.7
1,371.6
Net working capital decreased by $27.9 million to $381.4 million, notwithstanding growth from acquisitions, reflecting working capital
management.
Capital expenditure of $85.6 million during the year included $17.3 million incurred in relation to Project Horizon.
Put option liabilities of $212.5 million have been recognised, predominantly in relation to the Total Tools Group (refer note 13 of the
financial report).
The Group was in a net cash position at 30 April 2021 of $124.6 million (FY20: Net cash of $86.7m). Metcash had $894.3 million in unused
debt facilities and $124.6 million of cash and cash equivalents available at the reporting date for immediate use.
COVID-19 uncertainty
The Group has incorporated judgements, estimates and assumptions specific to the impact of the COVID-19 pandemic in determining
the amounts recognised in the financial statements based on conditions existing at reporting date, recognising uncertainty still exists
in relation to the duration of the COVID-19 pandemic-related restrictions, the anticipated government stimulus and regulatory actions.
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Commitments, contingencies and other financial exposures
Put options, including in relation to Ritchies Stores Pty Ltd, are detailed along with other contingent liabilities in note 16 of the
financial statements.
Metcash has a relatively low exposure to interest rate risk and minimal foreign exchange exposures. Variable interest rate exposures
on core debt are hedged within a range, in accordance with treasury policy. At year end, the Group did not have any interest-bearing
debt. Further details are set out in note 16 of the financial statements.
Strategic risks
Strategic risks
Strategic risks
Strategic risks
Strategic risks
Strategic risks
6.
OUTLOOK
The Group has continued to benefit from the shift in consumer behaviour with strong sales in the first eight weeks of FY22.
In Food, sales in the first eight weeks of FY22 increased 13.7% compared with the same period in FY20, and decreased 1.4% compared
with the same period in FY21 (ex-Drakes1 and 7-Eleven2 impact). This reflects the success of MFuture in improving the competitiveness
of our IGA retail network and retaining new and returning customers gained through COVID-19. Including the impact of Drakes1 and 7-
Eleven2, total Food sales increased 1.1% compared with the same period in FY20, and decreased 8.2% compared with the same period
in FY21.
Supermarkets sales for the first eight weeks of FY22 increased 10.1% (+14.2% ex-Drakes1 impact) compared with the same period in
FY20, and were 2.4% lower than the same period in FY21.
The Food pillar is focused on the successful execution of the next phase of MFuture aimed at further improving the competitiveness of
our IGA retail network to support the continued retention and growth of its shopper base.
As previously announced, Food earnings in FY22 will include an estimated net adverse impact of ~$10.0 million from the loss of stock
profits11 due to there being no tobacco excise increase in September 2021. This is expected to be largely reflected in 1H22.
In Liquor, very strong sales have continued in the first eight weeks of FY22, increasing 26.0% compared with the same period in FY20,
and 17.3% compared with the same period in FY21. The significant uplift reflects continued strong demand across retail stores and an
improvement in sales to ‘on-premise’ customers. Sales to the IBA retail banner group in the first eight weeks of FY22 increased 23.1%
compared with the same period in FY20, and 2.8% compared with the same period in FY21.
The Liquor pillar is focused on progressing its MFuture growth initiatives in private and exclusive label, digital transformation, supply
chain flexibility and efficiency, and driving brand awareness and appeal.
In Hardware, sales for the first eight weeks of FY22 increased 29.1% compared with the same period in FY20, and 15.5% compared
with the same period in FY21. Total IHG sales12 for the first eight weeks of FY22 are up 15.1% compared with the same period in FY20,
and 3.1% compared with the same period in FY21. There continues to be a solid pipeline of residential construction activity despite
the Government stimulus program aimed at boosting renovation activity ceasing in March this year. Strong demand is continuing to
place some pressure on stock availability, particularly timber.
The Hardware pillar is continuing to progress MFuture growth initiatives aimed at growing Trade and DIY while also continuing to focus
on being a low-cost leading hardware and professional tools wholesaler with retail experience.
The Hardware pillar earnings in FY22 will include a full year of trading in Total Tools Group.
While the Group has managed well through the significant challenges associated with COVID-19 in FY20 and FY21, there continues to
be some uncertainty over the potential impact of any future COVID-19 related trading restrictions or changes in consumer behaviour.
FY22 will include a 53rd trading week.
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
7.
7.
7.
7.
7.
7.
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
COVID-19 risks
COVID-19 risks
COVID-19 risks
COVID-19 risks
COVID-19 risks
COVID-19 risks
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
the Group’s operations.
the Group’s operations.
the Group’s operations.
the Group’s operations.
the Group’s operations.
the Group’s operations.
Competition risks
Competition risks
Competition risks
Competition risks
Competition risks
Competition risks
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
Key brands risk
Key brands risk
Key brands risk
Key brands risk
Key brands risk
Key brands risk
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
46 Metcash Annual Report 2021
Metcash Group Financial Report FY21
7
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
8
8
8
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Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
MATERIAL BUSINESS RISKS
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
7.
7.
7.
7.
7.
7.
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
The following section outlines the material business risks that may impact on the Group achieving its strategic objectives and business
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
operations, including the mitigating factors put in place to address those risks. The material risks are not set out in any particular
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
order and exclude general risks that could have a material effect on most businesses in Australia under normal operating conditions.
Strategic risks
Strategic risks
Strategic risks
Strategic risks
Strategic risks
Strategic risks
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
Consumer behaviour and preferences continue to change and are influenced by factors such as economic conditions, digital and
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
technological development and disruption, healthy living trends and increasing choices in both online and in-store retail options.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
These changes may impact Metcash’s sales mix and earnings. Metcash’s strategy puts customers and consumers first, with ongoing
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
focus on our shopper-led range, e-commerce and loyalty, store quality and overall perception of value at checkout.
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
Metcash is planning to accelerate its investment in digital, expanding our capability and improving our delivery of digital solutions to
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
our retailers and shoppers. This will be achieved through investment in the ‘Metcash Digital Accelerator’, which is built on three key
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
principles: driving digital sales, investing in digital capability over time, and using funding more efficiently.
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
In executing its strategy, there is a risk that Metcash may experience project execution issues or may not realise the full benefits of
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
projects that underpin its strategic plan. There is also a risk that projects may experience scope, time or cost variability or overruns.
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
plans against market changes and, where necessary, modifies its approach.
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
plans against market changes and, where necessary, modifies its approach.
Metcash’s business operations and strategic priorities are subject to ongoing review and development. Management regularly reviews
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
plans against market changes and, where necessary, modifies its approach.
COVID-19 risks
COVID-19 risks
COVID-19 risks
COVID-19 risks
COVID-19 risks
COVID-19 risks
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
At the start of the COVID-19 pandemic there was a high degree of uncertainty as to the potential impact it may have on the broader
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
economy and on Metcash’s operations. As the pandemic progressed it was evident that Metcash’s Food business provides a critical
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
service to local communities across Australia, ensuring the continued supply of food and grocery products for people staying closer
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
to their homes. All of Metcash’s pillars have performed strongly during the pandemic, with some minor operational complexities
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
caused by supply chain disruption, quarantines, lockdowns, travel restrictions, and actions of health authorities.
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
The Group’s operations may be directly and indirectly impacted by any prolonged or ongoing period of COVID-19 and the resulting
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
economic uncertainty that may arise. In particular, continued restrictions such as social distancing, quarantines, travel restrictions,
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
work stoppages, health authority actions, lockdowns and other related measures may impact our operational and financial
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
the Group’s operations.
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
the Group’s operations.
performance. Further, the discontinuation of COVID-19 government assistance measures supporting the economy may also impact
the Group’s operations.
the Group’s operations.
the Group’s operations.
the Group’s operations.
Competition risks
Competition risks
Competition risks
Competition risks
Competition risks
Competition risks
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
Any increase in competitive activity from new or existing competitors (including in the form of a new market entrant with a wholesaler
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
model, where suppliers sell directly to the Group’s customers, where customers form their own buying groups to collectively negotiate
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
and purchase directly from suppliers or where indirect competitors change their business models to compete directly with the Group)
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
may have a detrimental effect on the Group’s operations, particularly if Metcash fails to respond effectively to that competitive activity
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
or its response is delayed (for example, as a result of the time required to engage with the Group’s independent retail network in order
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
to implement an initiative). Increased competition may also adversely impact Metcash’s long-term performance and profitability.
Key brands risk
Key brands risk
Key brands risk
Key brands risk
Key brands risk
Key brands risk
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
Metcash’s success in generating profits and increasing its market share is based on the success of the key brands it owns or licences.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
Reliance on key brands makes Metcash vulnerable to brand damage from negative publicity, product tampering or recalls,
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
unauthorised use of its brands or ineffective brand management by Metcash or its licensees, increasing the risk of asset write downs.
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
Operational and compliance risks
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
As Australia’s leading wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
programs to improve the health of the independent retail network and improving Metcash’s infrastructure to make it simpler to do
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
business. These programs aim to strengthen Metcash as the business partner of choice for both its suppliers and retailers. As with any
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
significant change, there is a risk that these transformation programs fail to deliver the expected benefits. Metcash has strengthened
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
projects are delivered and risks are addressed in a timely manner.
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
projects are delivered and risks are addressed in a timely manner.
its governance frameworks to manage these change programs through the establishment of dedicated project teams to ensure
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
projects are delivered and risks are addressed in a timely manner.
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
Metcash’s operations require compliance with various regulatory requirements including work health & safety, food safety,
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
environmental regulations, workplace industrial relations, public liability, privacy & security, financial and legal. Any regulatory
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
breach could have a material negative impact on the wellbeing, reputation or financial results of Metcash or its stakeholders. The
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
Group’s internal processes are regularly assessed and tested as part of risk and assurance programs addressing areas including; safety,
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
security, sustainability, chain of responsibility, quality and food safety. Metcash maintains a strong ‘safety-first’ culture and has
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
established standards and ‘Chain of Responsibility’ policies to identify and manage risk.
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
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Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information
Directors’ Report
For the year ended 30 April 2021
Social responsibility, environment and climate change risks
Metcash is committed to ‘Championing successful independents’ and a key element of this is underpinned by ensuring its operations
are conducted in a socially responsible manner.
Metcash has a moderate exposure to environmental risks. Metcash’s operations could be impacted by natural disasters, extreme
weather events or other catastrophic events which could materially disrupt its operations and supply chain. There is also a risk that,
with time, the frequency and intensity of natural disasters and extreme weather events may increase if anthropogenic climate change
accelerates or worsens.
As Australia’s leading wholesaler, Metcash is conscious of the impact its operations may have on the environment. Although our
operational footprint is broad with a presence in all states and territories, Metcash is not considered to be a large emitter of carbon
emissions, with total CO2 equivalent (Scope 1 and Scope 2 emissions) being not much above the 50Kt threshold for reporting under
the National Greenhouse and Energy Reporting Scheme. Metcash seeks to manage its environmental impact through programs and
initiatives to manage its energy consumption and waste.
During FY20, Metcash conducted a climate change risk assessment, which considered the physical and transitional risks of climate
change on the Group’s operations. The main drivers of physical climate change risk for Metcash are the potential increase in frequency
and severity of acute climate change events, such as bushfires, drought, extreme storms and cyclones. The assessment concluded
that the highest inherent rated risk is likely to be an increase in insurance premiums year on year. Other lower rated inherent rated
risks include: damage to facilities and equipment, a temporary increase in costs to service our retailers during these events, a
temporary disruption to our supply chain and distribution network, reduced availability and quality of fresh products, a decrease in
the availability of timber products due to the impact of bushfires. Regarding transitional risks, the assessment found there are medium
level transition risks, including potential reputational damage should Metcash not meet stakeholder expectations on climate
management, and additional compliance costs should government introduce new greenhouse gas emission regulations or laws. For
further information on how we manage environmental risks please refer to the Sustainability Report within our Annual Report.
Metcash has a low to moderate exposure to social risks. Our business and our people are driven by our purpose of ‘Championing
successful independents’, and Metcash is proud to support independent retailers who are at the heart of local communities across
Australia. At the core of our Purpose and Vision are our Values – we believe that independence is worth fighting for; in treating our
people, retailers and suppliers the way we like to be treated; and in giving back to the communities where we live and work.
We contribute to our local communities through the IGA Community Chest Program, disaster relief, and through our partnership with
Foodbank. Metcash meets the threshold for reporting under the Modern Slavery Act 2018 (Cth) with our most recent statement
available at modernslaveryregister.gov.au and our Anti-Slavery Policy is available on our website. Metcash is taking steps to
continually improve its exposure to modern slavery risks in its supply chain. Further, under pending reforms to the Security of Critical
Infrastructure Act 2018 (Cth), Metcash has been advised that it will be deemed a ‘critical food and grocery asset’, which will require it
to implement certain measures to meet compliance with the Act. For further information on how we manage social risks please refer
to the Sustainability Report within our Annual Report.
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
Inefficiency or failure within Metcash’s supply chain or in key support systems could impact the Group’s ability to deliver on its
Inefficiency or failure within Metcash’s supply chain or in key support systems could impact the Group’s ability to deliver on its
Inefficiency or failure within Metcash’s supply chain or in key support systems could impact the Group’s ability to deliver on its
Inefficiency or failure within Metcash’s supply chain or in key support systems could impact the Group’s ability to deliver on its
objectives. Metcash’s strategic planning process and ongoing monitoring of operations ensure its supply chain and support systems
Inefficiency or failure within Metcash’s supply chain or in key support systems could impact the Group’s ability to deliver on its
objectives. Metcash’s strategic planning process and ongoing monitoring of operations ensure its supply chain and support systems
objectives. Metcash’s strategic planning process and ongoing monitoring of operations ensure its supply chain and support systems
objectives. Metcash’s strategic planning process and ongoing monitoring of operations ensure its supply chain and support systems
are able to scale appropriately to respond to its business needs.
objectives. Metcash’s strategic planning process and ongoing monitoring of operations ensure its supply chain and support systems
are able to scale appropriately to respond to its business needs.
are able to scale appropriately to respond to its business needs.
are able to scale appropriately to respond to its business needs.
are able to scale appropriately to respond to its business needs.
Property and facilities risk
Property and facilities risk
Property and facilities risk
Property and facilities risk
Property and facilities risk
Metcash leases facilities for the wholesale distribution of grocery, fresh produce, liquor, hardware and other fast-moving consumer
Metcash leases facilities for the wholesale distribution of grocery, fresh produce, liquor, hardware and other fast-moving consumer
Metcash leases facilities for the wholesale distribution of grocery, fresh produce, liquor, hardware and other fast-moving consumer
Metcash leases facilities for the wholesale distribution of grocery, fresh produce, liquor, hardware and other fast-moving consumer
goods. Damage to or destruction of these facilities could result in the loss or reduction of distribution capability and hence adversely
Metcash leases facilities for the wholesale distribution of grocery, fresh produce, liquor, hardware and other fast-moving consumer
goods. Damage to or destruction of these facilities could result in the loss or reduction of distribution capability and hence adversely
goods. Damage to or destruction of these facilities could result in the loss or reduction of distribution capability and hence adversely
goods. Damage to or destruction of these facilities could result in the loss or reduction of distribution capability and hence adversely
impact Metcash’s financial results. While Metcash has in place insurances that it considers are sufficient for a business of its type and
goods. Damage to or destruction of these facilities could result in the loss or reduction of distribution capability and hence adversely
impact Metcash’s financial results. While Metcash has in place insurances that it considers are sufficient for a business of its type and
impact Metcash’s financial results. While Metcash has in place insurances that it considers are sufficient for a business of its type and
impact Metcash’s financial results. While Metcash has in place insurances that it considers are sufficient for a business of its type and
size, Metcash will be required to pay for the loss on any event up to the deductible and self-insurance retention.
impact Metcash’s financial results. While Metcash has in place insurances that it considers are sufficient for a business of its type and
size, Metcash will be required to pay for the loss on any event up to the deductible and self-insurance retention.
size, Metcash will be required to pay for the loss on any event up to the deductible and self-insurance retention.
size, Metcash will be required to pay for the loss on any event up to the deductible and self-insurance retention.
size, Metcash will be required to pay for the loss on any event up to the deductible and self-insurance retention.
Financial risks
Financial risks
Financial risks
Financial risks
Financial risks
Metcash’s ability to reduce its cost of doing business is critical to support independent retailers in remaining competitive in the
Metcash’s ability to reduce its cost of doing business is critical to support independent retailers in remaining competitive in the
Metcash’s ability to reduce its cost of doing business is critical to support independent retailers in remaining competitive in the
Metcash’s ability to reduce its cost of doing business is critical to support independent retailers in remaining competitive in the
continued challenging environment. Competitive trading conditions and broader adverse economic conditions can increase the credit
Metcash’s ability to reduce its cost of doing business is critical to support independent retailers in remaining competitive in the
continued challenging environment. Competitive trading conditions and broader adverse economic conditions can increase the credit
continued challenging environment. Competitive trading conditions and broader adverse economic conditions can increase the credit
continued challenging environment. Competitive trading conditions and broader adverse economic conditions can increase the credit
risk associated with the Group’s activities. Metcash’s strategy is to support successful independents through appropriate credit
continued challenging environment. Competitive trading conditions and broader adverse economic conditions can increase the credit
risk associated with the Group’s activities. Metcash’s strategy is to support successful independents through appropriate credit
risk associated with the Group’s activities. Metcash’s strategy is to support successful independents through appropriate credit
risk associated with the Group’s activities. Metcash’s strategy is to support successful independents through appropriate credit
management processes.
risk associated with the Group’s activities. Metcash’s strategy is to support successful independents through appropriate credit
management processes.
management processes.
management processes.
management processes.
Funding and liquidity risk continue to be relevant to the Group due to the need to adequately fund business operations, growth
Funding and liquidity risk continue to be relevant to the Group due to the need to adequately fund business operations, growth
Funding and liquidity risk continue to be relevant to the Group due to the need to adequately fund business operations, growth
Funding and liquidity risk continue to be relevant to the Group due to the need to adequately fund business operations, growth
initiatives and absorb potential loss events that may arise. Inability to adequately fund the Group’s business operations and growth
Funding and liquidity risk continue to be relevant to the Group due to the need to adequately fund business operations, growth
initiatives and absorb potential loss events that may arise. Inability to adequately fund the Group’s business operations and growth
initiatives and absorb potential loss events that may arise. Inability to adequately fund the Group’s business operations and growth
initiatives and absorb potential loss events that may arise. Inability to adequately fund the Group’s business operations and growth
plans may lead to difficulty in executing the Group’s strategy. Metcash maintains a prudent approach towards capital management,
initiatives and absorb potential loss events that may arise. Inability to adequately fund the Group’s business operations and growth
plans may lead to difficulty in executing the Group’s strategy. Metcash maintains a prudent approach towards capital management,
plans may lead to difficulty in executing the Group’s strategy. Metcash maintains a prudent approach towards capital management,
plans may lead to difficulty in executing the Group’s strategy. Metcash maintains a prudent approach towards capital management,
which includes optimising working capital, targeted capital expenditure, capital and asset recycling and careful consideration of its
plans may lead to difficulty in executing the Group’s strategy. Metcash maintains a prudent approach towards capital management,
which includes optimising working capital, targeted capital expenditure, capital and asset recycling and careful consideration of its
which includes optimising working capital, targeted capital expenditure, capital and asset recycling and careful consideration of its
which includes optimising working capital, targeted capital expenditure, capital and asset recycling and careful consideration of its
dividend policy.
which includes optimising working capital, targeted capital expenditure, capital and asset recycling and careful consideration of its
dividend policy.
dividend policy.
dividend policy.
dividend policy.
In addition, banking facilities are maintained with sufficient tenure, diversity and headroom to fund business operations. However,
In addition, banking facilities are maintained with sufficient tenure, diversity and headroom to fund business operations. However,
In addition, banking facilities are maintained with sufficient tenure, diversity and headroom to fund business operations. However,
In addition, banking facilities are maintained with sufficient tenure, diversity and headroom to fund business operations. However,
these is a risk that the Group may be unable to refinance or renew its banking facilities following expiry, or will only be able to refinance
In addition, banking facilities are maintained with sufficient tenure, diversity and headroom to fund business operations. However,
these is a risk that the Group may be unable to refinance or renew its banking facilities following expiry, or will only be able to refinance
these is a risk that the Group may be unable to refinance or renew its banking facilities following expiry, or will only be able to refinance
these is a risk that the Group may be unable to refinance or renew its banking facilities following expiry, or will only be able to refinance
or renew those facilities on terms that are less favourable to the Group than existing terms. Any inability to refinance banking facilities
these is a risk that the Group may be unable to refinance or renew its banking facilities following expiry, or will only be able to refinance
or renew those facilities on terms that are less favourable to the Group than existing terms. Any inability to refinance banking facilities
or renew those facilities on terms that are less favourable to the Group than existing terms. Any inability to refinance banking facilities
or renew those facilities on terms that are less favourable to the Group than existing terms. Any inability to refinance banking facilities
or obtain capital or financing generally, on favourable terms or at all, may have a material adverse effect on the Group’s financial
or renew those facilities on terms that are less favourable to the Group than existing terms. Any inability to refinance banking facilities
or obtain capital or financing generally, on favourable terms or at all, may have a material adverse effect on the Group’s financial
or obtain capital or financing generally, on favourable terms or at all, may have a material adverse effect on the Group’s financial
or obtain capital or financing generally, on favourable terms or at all, may have a material adverse effect on the Group’s financial
performance and position.
or obtain capital or financing generally, on favourable terms or at all, may have a material adverse effect on the Group’s financial
performance and position.
performance and position.
performance and position.
performance and position.
The Group’s financial risk management framework is discussed in further detail in note 16 of the financial statements.
The Group’s financial risk management framework is discussed in further detail in note 16 of the financial statements.
The Group’s financial risk management framework is discussed in further detail in note 16 of the financial statements.
The Group’s financial risk management framework is discussed in further detail in note 16 of the financial statements.
The Group’s financial risk management framework is discussed in further detail in note 16 of the financial statements.
Trading and customer risks
Trading and customer risks
Trading and customer risks
Trading and customer risks
Trading and customer risks
Metcash’s ability to operate efficiently is critical to support independent retailers in remaining competitive. A disruption to the
Metcash’s ability to operate efficiently is critical to support independent retailers in remaining competitive. A disruption to the
Metcash’s ability to operate efficiently is critical to support independent retailers in remaining competitive. A disruption to the
Metcash’s ability to operate efficiently is critical to support independent retailers in remaining competitive. A disruption to the
business could result in an increased cost to serve retailers and inability to meet customers’ requirements.
Metcash’s ability to operate efficiently is critical to support independent retailers in remaining competitive. A disruption to the
business could result in an increased cost to serve retailers and inability to meet customers’ requirements.
business could result in an increased cost to serve retailers and inability to meet customers’ requirements.
business could result in an increased cost to serve retailers and inability to meet customers’ requirements.
business could result in an increased cost to serve retailers and inability to meet customers’ requirements.
Tobacco sales represent a significant proportion of the products Metcash supplies to its independent retailers. In September 2020,
Tobacco sales represent a significant proportion of the products Metcash supplies to its independent retailers. In September 2020,
Tobacco sales represent a significant proportion of the products Metcash supplies to its independent retailers. In September 2020,
Tobacco sales represent a significant proportion of the products Metcash supplies to its independent retailers. In September 2020,
the Australian Government’s legislated annual 12.5% increase in customs and excise duties ceased. Consequently, Metcash’s earnings
Tobacco sales represent a significant proportion of the products Metcash supplies to its independent retailers. In September 2020,
the Australian Government’s legislated annual 12.5% increase in customs and excise duties ceased. Consequently, Metcash’s earnings
the Australian Government’s legislated annual 12.5% increase in customs and excise duties ceased. Consequently, Metcash’s earnings
the Australian Government’s legislated annual 12.5% increase in customs and excise duties ceased. Consequently, Metcash’s earnings
will no longer include a stock revaluation gain based on the value of tobacco stock on hand at the time of the excise duty and the
the Australian Government’s legislated annual 12.5% increase in customs and excise duties ceased. Consequently, Metcash’s earnings
will no longer include a stock revaluation gain based on the value of tobacco stock on hand at the time of the excise duty and the
will no longer include a stock revaluation gain based on the value of tobacco stock on hand at the time of the excise duty and the
will no longer include a stock revaluation gain based on the value of tobacco stock on hand at the time of the excise duty and the
related sales price increase. Metcash will continue to recognise tobacco stock revaluation gains from any increase in the consumer
will no longer include a stock revaluation gain based on the value of tobacco stock on hand at the time of the excise duty and the
related sales price increase. Metcash will continue to recognise tobacco stock revaluation gains from any increase in the consumer
related sales price increase. Metcash will continue to recognise tobacco stock revaluation gains from any increase in the consumer
related sales price increase. Metcash will continue to recognise tobacco stock revaluation gains from any increase in the consumer
price index during the year. Metcash has put in place mitigation strategies to support earnings performance following this impact.
related sales price increase. Metcash will continue to recognise tobacco stock revaluation gains from any increase in the consumer
price index during the year. Metcash has put in place mitigation strategies to support earnings performance following this impact.
price index during the year. Metcash has put in place mitigation strategies to support earnings performance following this impact.
price index during the year. Metcash has put in place mitigation strategies to support earnings performance following this impact.
price index during the year. Metcash has put in place mitigation strategies to support earnings performance following this impact.
In its Food pillar, Metcash services a number of large customers known as Multiple Store Owners (MSOs). These customers own and/or
In its Food pillar, Metcash services a number of large customers known as Multiple Store Owners (MSOs). These customers own and/or
In its Food pillar, Metcash services a number of large customers known as Multiple Store Owners (MSOs). These customers own and/or
In its Food pillar, Metcash services a number of large customers known as Multiple Store Owners (MSOs). These customers own and/or
operate more than one independent retail store, and in some cases can own and/or operate a sizeable number of stores (examples of
In its Food pillar, Metcash services a number of large customers known as Multiple Store Owners (MSOs). These customers own and/or
operate more than one independent retail store, and in some cases can own and/or operate a sizeable number of stores (examples of
operate more than one independent retail store, and in some cases can own and/or operate a sizeable number of stores (examples of
operate more than one independent retail store, and in some cases can own and/or operate a sizeable number of stores (examples of
larger MSOs include Ritchies Stores Pty Ltd (Ritchies) and Romeo Retail Group). In addition, Metcash supplies Foodworks stores under
operate more than one independent retail store, and in some cases can own and/or operate a sizeable number of stores (examples of
larger MSOs include Ritchies Stores Pty Ltd (Ritchies) and Romeo Retail Group). In addition, Metcash supplies Foodworks stores under
larger MSOs include Ritchies Stores Pty Ltd (Ritchies) and Romeo Retail Group). In addition, Metcash supplies Foodworks stores under
larger MSOs include Ritchies Stores Pty Ltd (Ritchies) and Romeo Retail Group). In addition, Metcash supplies Foodworks stores under
a supply agreement that is terminable by either party without cause on 12 months’ notice. If any one or more MSOs or Foodworks
larger MSOs include Ritchies Stores Pty Ltd (Ritchies) and Romeo Retail Group). In addition, Metcash supplies Foodworks stores under
a supply agreement that is terminable by either party without cause on 12 months’ notice. If any one or more MSOs or Foodworks
a supply agreement that is terminable by either party without cause on 12 months’ notice. If any one or more MSOs or Foodworks
a supply agreement that is terminable by either party without cause on 12 months’ notice. If any one or more MSOs or Foodworks
were to materially reduce or cease to source their inventory from Metcash for any reason (including vertically integrating their supply
a supply agreement that is terminable by either party without cause on 12 months’ notice. If any one or more MSOs or Foodworks
were to materially reduce or cease to source their inventory from Metcash for any reason (including vertically integrating their supply
were to materially reduce or cease to source their inventory from Metcash for any reason (including vertically integrating their supply
were to materially reduce or cease to source their inventory from Metcash for any reason (including vertically integrating their supply
chain, establishing an alternative buying group, purchasing from another source, entering into a Supply Agreement with a competitor
were to materially reduce or cease to source their inventory from Metcash for any reason (including vertically integrating their supply
chain, establishing an alternative buying group, purchasing from another source, entering into a Supply Agreement with a competitor
chain, establishing an alternative buying group, purchasing from another source, entering into a Supply Agreement with a competitor
chain, establishing an alternative buying group, purchasing from another source, entering into a Supply Agreement with a competitor
or closure of stores due to insolvency or poor performance), this would adversely impact Metcash’s long-term performance and
chain, establishing an alternative buying group, purchasing from another source, entering into a Supply Agreement with a competitor
or closure of stores due to insolvency or poor performance), this would adversely impact Metcash’s long-term performance and
or closure of stores due to insolvency or poor performance), this would adversely impact Metcash’s long-term performance and
or closure of stores due to insolvency or poor performance), this would adversely impact Metcash’s long-term performance and
profitability.
or closure of stores due to insolvency or poor performance), this would adversely impact Metcash’s long-term performance and
profitability.
profitability.
profitability.
In addition, there are certain large contract customers in the Liquor business whose contracts are renewed on a regular basis. If one
profitability.
In addition, there are certain large contract customers in the Liquor business whose contracts are renewed on a regular basis. If one
In addition, there are certain large contract customers in the Liquor business whose contracts are renewed on a regular basis. If one
In addition, there are certain large contract customers in the Liquor business whose contracts are renewed on a regular basis. If one
or more of these contract customers decided not to renew their supply contract this too could adversely impact Metcash’s long-term
In addition, there are certain large contract customers in the Liquor business whose contracts are renewed on a regular basis. If one
or more of these contract customers decided not to renew their supply contract this too could adversely impact Metcash’s long-term
or more of these contract customers decided not to renew their supply contract this too could adversely impact Metcash’s long-term
or more of these contract customers decided not to renew their supply contract this too could adversely impact Metcash’s long-term
performance and profitability. Further, the Liquor business also has a number of large suppliers and if one or more of these suppliers
or more of these contract customers decided not to renew their supply contract this too could adversely impact Metcash’s long-term
performance and profitability. Further, the Liquor business also has a number of large suppliers and if one or more of these suppliers
performance and profitability. Further, the Liquor business also has a number of large suppliers and if one or more of these suppliers
performance and profitability. Further, the Liquor business also has a number of large suppliers and if one or more of these suppliers
decided to no longer conduct business with Metcash, this too could adversely impact Metcash’s long-term performance and
performance and profitability. Further, the Liquor business also has a number of large suppliers and if one or more of these suppliers
decided to no longer conduct business with Metcash, this too could adversely impact Metcash’s long-term performance and
decided to no longer conduct business with Metcash, this too could adversely impact Metcash’s long-term performance and
decided to no longer conduct business with Metcash, this too could adversely impact Metcash’s long-term performance and
profitability.
decided to no longer conduct business with Metcash, this too could adversely impact Metcash’s long-term performance and
profitability.
profitability.
profitability.
profitability.
Information technology risks
Information technology risks
Information technology risks
Information technology risks
Information technology risks
Metcash relies on a number of complex information technology systems to support its warehousing and distribution, supply chain,
Metcash relies on a number of complex information technology systems to support its warehousing and distribution, supply chain,
Metcash relies on a number of complex information technology systems to support its warehousing and distribution, supply chain,
Metcash relies on a number of complex information technology systems to support its warehousing and distribution, supply chain,
customer service, marketing and finance operations. A severe disruption to the information technology systems may significantly
Metcash relies on a number of complex information technology systems to support its warehousing and distribution, supply chain,
customer service, marketing and finance operations. A severe disruption to the information technology systems may significantly
customer service, marketing and finance operations. A severe disruption to the information technology systems may significantly
customer service, marketing and finance operations. A severe disruption to the information technology systems may significantly
impact the operations and value of Metcash. Metcash is embarking on a business transformation program called Project Horizon which
customer service, marketing and finance operations. A severe disruption to the information technology systems may significantly
impact the operations and value of Metcash. Metcash is embarking on a business transformation program called Project Horizon which
impact the operations and value of Metcash. Metcash is embarking on a business transformation program called Project Horizon which
impact the operations and value of Metcash. Metcash is embarking on a business transformation program called Project Horizon which
will replace end-of-life technology, reducing operational risk and onerous maintenance costs.
impact the operations and value of Metcash. Metcash is embarking on a business transformation program called Project Horizon which
will replace end-of-life technology, reducing operational risk and onerous maintenance costs.
will replace end-of-life technology, reducing operational risk and onerous maintenance costs.
will replace end-of-life technology, reducing operational risk and onerous maintenance costs.
will replace end-of-life technology, reducing operational risk and onerous maintenance costs.
With expanding information privacy and security regulations, and an increasingly hostile cyber environment, Metcash recognises
With expanding information privacy and security regulations, and an increasingly hostile cyber environment, Metcash recognises
With expanding information privacy and security regulations, and an increasingly hostile cyber environment, Metcash recognises
With expanding information privacy and security regulations, and an increasingly hostile cyber environment, Metcash recognises
information privacy and cyber security as an increasing risk. Any breach by Metcash of privacy and security regulations could expose
With expanding information privacy and security regulations, and an increasingly hostile cyber environment, Metcash recognises
information privacy and cyber security as an increasing risk. Any breach by Metcash of privacy and security regulations could expose
information privacy and cyber security as an increasing risk. Any breach by Metcash of privacy and security regulations could expose
information privacy and cyber security as an increasing risk. Any breach by Metcash of privacy and security regulations could expose
Metcash to penalties (including financial penalties), which could adversely affect Metcash’s financial position or cause reputational
information privacy and cyber security as an increasing risk. Any breach by Metcash of privacy and security regulations could expose
Metcash to penalties (including financial penalties), which could adversely affect Metcash’s financial position or cause reputational
Metcash to penalties (including financial penalties), which could adversely affect Metcash’s financial position or cause reputational
Metcash to penalties (including financial penalties), which could adversely affect Metcash’s financial position or cause reputational
harm.
Metcash to penalties (including financial penalties), which could adversely affect Metcash’s financial position or cause reputational
harm.
harm.
harm.
harm.
48 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
9
9
9
9
9
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Social responsibility, environment and climate change risks
Metcash is committed to ‘Championing successful independents’ and a key element of this is underpinned by ensuring its operations
are conducted in a socially responsible manner.
Metcash has a moderate exposure to environmental risks. Metcash’s operations could be impacted by natural disasters, extreme
weather events or other catastrophic events which could materially disrupt its operations and supply chain. There is also a risk that,
with time, the frequency and intensity of natural disasters and extreme weather events may increase if anthropogenic climate change
accelerates or worsens.
As Australia’s leading wholesaler, Metcash is conscious of the impact its operations may have on the environment. Although our
operational footprint is broad with a presence in all states and territories, Metcash is not considered to be a large emitter of carbon
emissions, with total CO2 equivalent (Scope 1 and Scope 2 emissions) being not much above the 50Kt threshold for reporting under
the National Greenhouse and Energy Reporting Scheme. Metcash seeks to manage its environmental impact through programs and
initiatives to manage its energy consumption and waste.
During FY20, Metcash conducted a climate change risk assessment, which considered the physical and transitional risks of climate
change on the Group’s operations. The main drivers of physical climate change risk for Metcash are the potential increase in frequency
and severity of acute climate change events, such as bushfires, drought, extreme storms and cyclones. The assessment concluded
that the highest inherent rated risk is likely to be an increase in insurance premiums year on year. Other lower rated inherent rated
risks include: damage to facilities and equipment, a temporary increase in costs to service our retailers during these events, a
temporary disruption to our supply chain and distribution network, reduced availability and quality of fresh products, a decrease in
the availability of timber products due to the impact of bushfires. Regarding transitional risks, the assessment found there are medium
level transition risks, including potential reputational damage should Metcash not meet stakeholder expectations on climate
management, and additional compliance costs should government introduce new greenhouse gas emission regulations or laws. For
further information on how we manage environmental risks please refer to the Sustainability Report within our Annual Report.
Metcash has a low to moderate exposure to social risks. Our business and our people are driven by our purpose of ‘Championing
successful independents’, and Metcash is proud to support independent retailers who are at the heart of local communities across
Australia. At the core of our Purpose and Vision are our Values – we believe that independence is worth fighting for; in treating our
people, retailers and suppliers the way we like to be treated; and in giving back to the communities where we live and work.
We contribute to our local communities through the IGA Community Chest Program, disaster relief, and through our partnership with
Foodbank. Metcash meets the threshold for reporting under the Modern Slavery Act 2018 (Cth) with our most recent statement
available at modernslaveryregister.gov.au and our Anti-Slavery Policy is available on our website. Metcash is taking steps to
continually improve its exposure to modern slavery risks in its supply chain. Further, under pending reforms to the Security of Critical
Infrastructure Act 2018 (Cth), Metcash has been advised that it will be deemed a ‘critical food and grocery asset’, which will require it
to implement certain measures to meet compliance with the Act. For further information on how we manage social risks please refer
to the Sustainability Report within our Annual Report.
Metcash Group Financial Report FY21
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Work health and safety
While a strong emphasis is placed on the implementation of work health and safety standards, the risk of injury or fatality remains
possible. The occurrence of such events may have an adverse effect on the productivity, operations and reputation of Metcash.
Metcash is focused on the safety of its staff and customers. The Group’s safety processes have been reviewed in light of COVID-19 and,
where appropriate, additional processes and procedures have been implemented.
People and culture risks
The increasing competitive landscape and the ongoing need for market participants to remain agile in order to adapt to consumer
preferences continues to place pressure on the competition for talent. The ability to attract and retain talent with the necessary skills
and capabilities to operate in a challenging market whilst being able to effect transformation is critical to Metcash’s success. Metcash
competes in labour markets to attract and retain its employees and management team. The competitive nature of these labour
markets may result in the loss of key employees from time to time or make it difficult and costly to attract or retain employees. If
Metcash is unable to attract and retain high calibre employees, this may adversely affect the Group’s operations and overall financial
performance.
Interruptions at Metcash’s workplaces arising from industrial disputes, work stoppages and accidents may result in production losses
and delays. Renegotiation of collective agreements may increase Metcash’s operating costs and may involve disputes.
Metcash is committed to being a favourite place to work by unlocking the potential of its people through empowerment and ensuring
the Group’s cultural values align with their values. Integrity is the foundation of the ethical values and standards of behaviour set for
all employees through the Group’s Code of Conduct.
Metcash invests in its people through training and development opportunities, by promoting diversity and workplace flexibility and
maintaining succession planning. The short and long-term incentive schemes align the Group’s remuneration structure to
shareholders’ interests.
End of the Operating and Financial Review
1 Metcash ceased to supply Drakes in South Australia from 30 September 2019. To enable comparison, sales in the comparative period have been adjusted accordingly, to exclude
the impact of sales to Drakes.
2 The previous supply agreement with 7-Eleven concluded on 17 August 2020. To enable comparison, sales in the comparative period have been adjusted accordingly, to
exclude the impact of sales to 7-Eleven.
3 Acquisitions include Total Tools Holdings (8 months) and 12 Total Tools JV stores (5 months), Finlaysons, Wilsons HTH and in FY20, G.Gay & Co, Keith Timber and
Womersley’s.
4 Underlying profit after tax in FY21 excludes significant items: Total Tools Holdings acquisition costs and put option valuation adjustment of $6.1 million, Project Horizon
implementation costs of $5.5 million, MFuture implementation and other costs of $2.1 million (all post tax).
5 FY20 Statutory loss after tax includes an impairment of goodwill and other assets of $237.4 million (post tax).
6 Cash realisation ratio = Cash flow from operations/underlying NPATDA (depreciation and amortisation not tax effected).
7 Based on scan data from 1,103 IGA stores.
8 EBIT margin: EBIT/Total revenue (including charge-through).
9 Based on scan data from 536 IBA stores.
10 Based on a sample of 234 network stores that provide scan data (represents >50% of sales).
11 The estimated net impact is after anticipated mitigating actions including revised trading terms with suppliers and cost reductions.
12 Excludes Total Tools sales.
50 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Directors’ Report
Directors’ Report
For the year ended 30 April 2021
BOARD INFORMATION
The Directors in office during the financial year and up to the date of this report are as follows.
ROBERT A MURRAY (MA Hons, Economics (Cantab))
Independent Non-executive Chair
TONIANNE DWYER (B Juris (Hons), LB (Hons), GAICD)
Independent Non-executive Director
Robert (Rob) is the Chair of the Metcash Limited Board of
Directors and is also the Chair of the Nomination Committee and
a member of the People and Culture Committee. Rob was
appointed to the Board on 29 April 2015 and was appointed Chair
on 27 August 2015.
Rob has extensive experience in FMCG. He has held positions
with industry leaders, having been CEO of both Lion Nathan and
Nestle Oceania, and he therefore brings with him a deep
understanding of consumers and their requirements as well as
the issues faced by those supplying the industry.
As a former director of Dick Smith Holdings Limited (2014 to
2016), Super Retail Group Limited (2013 to 2015) and Linfox
Logistics, Rob also has experience in the logistics, electronics,
automotive, leisure and sports industries.
Rob is currently a non-executive director of Southern Cross
Media Group Limited (since 2014), Advisory Chairman of Hawkes
Brewing Company (since August 2019) and is a board member of
the not- for- profit charity, the Bestest Foundation.
JEFFERY K ADAMS
Management)
Group Chief Executive Officer, Executive Director
(BA, Business Administration and
Jeffery (Jeff) has over 40 years of retail experience across
domestic and international businesses in the United States,
Europe, Asia, Central America and the Middle East, giving him an
international perspective on the challenges and dynamics of the
Australian retail market. He has extensive experience in the food
and grocery industries, having worked for almost 20 years with
UK retailer Tesco, and brings a strong track record in developing
and executing growth strategies in difficult retail market
conditions.
Jeff was previously Chief Executive Officer of Tesco Kipa (Turkey).
He also served as an Executive Vice President of Operations at
Fresh & Easy Neighbourhood Market Inc. in the United States
from 2008. Before moving to Fresh & Easy, Jeff served as the
Chief Executive Officer of Tesco Lotus (Thailand) from 2004.
Tonianne joined the Board on 24 June 2014. She is a member of
the Audit, Risk and Compliance Committee and the Nomination
Committee.
Through her career and her experience on a number of boards,
Tonianne brings to the Board a breadth of understanding of
diverse industries.
Tonianne enjoyed a successful 20-year career in the UK,
investment banking and real estate. Since
focussing on
returning to Australia, she has continued her involvement with
real estate, being a director of Dexus Property Group and Dexus
Wholesale Property Fund (since 2011). This enables Tonianne to
bring insight and perspective to Metcash’s property portfolio
and risks.
Tonianne is also a non-executive director of Incitec Pivot
Limited (since May 2021), Oz Minerals Limited (since March
2017) and ALS Limited (since July 2016), and is a director of the
Sir John Monash Foundation (since November 2020), as well as
a director of Chief Executive Women and Deputy Chancellor of
the University of Queensland (both since 2017). Tonianne is a
former non-executive director of Queensland Treasury
Corporation (February 2013 to June 2020).
MURRAY P JORDAN (MPA and MAICD)
Independent Non-executive Director
since
Murray has been a member of
23 February 2016. He is also a member of the Audit, Risk and
Compliance Committee, the People and Culture Committee and
the Nomination Committee.
the Board
Murray has extensive experience in the independent retail sector,
bringing unique insight and perspective to the Board regarding
the challenges faced by independent retailers and the valuable
role they play in the community. Murray was previously
Managing Director of New Zealand business Foodstuffs North
Island Limited, a co-operative wholesale company, supplying
independently owned and operated businesses
the
supermarkets, food service and liquor sectors. He has also held
key management positions in property development and
investment.
in
Murray is a non-executive director of Metlifecare Pty Limited,
Asia Pacific Village Holdings Pty Limited and Asia Pacific Village
Group Pty Limited (each since November 2020), Sky City
Entertainment Group Limited
(since December 2016),
Stevenson Group Limited (since July 2016) and Chorus Limited
(since September 2015), each a New Zealand company. He is
also a trustee of the Starship Foundation in New Zealand that
raises funds for the National Children’s Hospital, a trustee of the
Foodstuffs member protection and co-operative perpetuation
trusts (since January 2019), a trustee of the Southern Cross
Health Trust (since August 2019) and a director of the Southern
Cross Medical Care Society (since January 2020).
Metcash Group Financial Report FY21
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For the year ended 30 April 2021
HELEN NASH (BA Hons, GAICD)
Independent Non-executive Director
CHRISTINE HOLMAN (MBA, PG Dip Mgt, GAICD)
Independent Non-executive Director
Helen was appointed to the Board on 23 October 2015. She is the
Chair of the People and Culture Committee (since August 2019)
and is also a member of the Nomination Committee.
Christine was appointed to the Board on 14 September 2020 and
is a member of the Audit, Risk and Compliance Committee and
the Nomination Committee.
Helen has more than 20 years executive experience across three
diverse industries: consumer packaged goods, media and quick
service restaurants.
Helen brings rounded commercial and consumer focused
experience to her role. She initially trained in the UK as a
Certified Management Accountant. 18 years in brands and
marketing allow her to bring a strong consumer lens to the Board.
She gained extensive strategic, operational and general
management experience in her role of Chief Operating Officer at
McDonalds Australia, overseeing business and corporate
strategy, store operations including all company and franchised
stores, marketing, menus, research and development and
information technology.
Helen is a non-executive director of Southern Cross Media Group
Limited (since April 2015) and Inghams Group Limited (since May
2017), and a former non-executive director of Blackmores
Limited (2013 to 2019).
PETER BIRTLES (BSc Hons, FCA, MAICD)
Independent Non-executive Director
Peter was appointed to the Board on 1 August 2019. He is Chair
of the Audit, Risk and Compliance Committee (since July 2020)
and a member of the Nomination Committee.
Peter has over 30 years experience in retail and consumer goods
industries, including 18 years with Super Retail Group Limited
where he was Managing Director and Chief Executive Officer
from 2006 to early 2019, and therefore brings a strong FMCG lens
to his role.
Peter's executive career also includes extensive experience in
accounting and finance having previously held the position of
Chief Financial Officer of Super Retail Group Limited, as well as
other senior financial roles during his 12 years with The Boots
Company in the UK and Australia.
Peter is a non-executive director of Universal Store Holdings
Limited (since October 2020) and GWA Group Limited (since
2010), and also a director of APG & Co Pty Limited and Apparel
Group Pty Limited (both since July 2019), as well as Good360
Australia Ltd (since August 2019). Peter was formerly a director
of Auto Guru Limited (2015 to 2019).
Christine has more than 25 years of commercial experience
across a broad range of areas including mergers and acquisitions,
finance, sales,
transformations and
marketing. She has held Chief Financial Officer roles with Telstra
Broadcast Services and Globecast Australia, as well as having
extensive experience in private equity.
technology, digital
Christine is a non-executive director of Collins Foods Limited
(since December 2019), Blackmores Limited (since March 2019)
and CSR Limited (since October 2016). She is also a director of
The McGrath Foundation (since July 2020), T20 Cricket World Cup
(since January 2018), Moorebank Intermodal Company (since
August 2019), The State Library of New South Wales Foundation
(since February 2017) and The Bradman Foundation (since
December 2016). Christine is a former non-executive director of
Wisetech Global Limited (December 2018 to October 2019) and
HT&E Limited (November 2015 to December 2018).
COMPANY SECRETARY
JULIE S HUTTON (B Asian Studies (Viet), LLB, LLM, GAICD)
Julie was previously a partner at law firm Baker & McKenzie
where she specialised in mergers & acquisitions, private equity
and corporate restructures. Julie is a Graduate of the Australian
Institute of Company Directors and was formerly a Non-
executive Director of AVCAL, a national association which
represents the private equity and venture capital industries in
Australia.
Indemnification and insurance of Directors and Officers
Under the Constitution of the Company, the Company
indemnifies (to the full extent permitted by law) current and
former Directors and Company Secretaries and such other
current and former officers as the Board may determine from
time to time against all losses and liabilities incurred as an officer
of Metcash or its related companies. The Company may enter
into a deed indemnifying such officers on these terms. The
Company enters into such deeds with each of its Directors and
Company Secretaries from time to time.
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.
52 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us Directors’ Report
Directors’ Report
For the year ended 30 April 2021
The following table presents information relating to membership and attendance at meetings of the Company’s Board of Directors
and Board committees held during the financial year. The information reflects those meetings held and attended during a Director’s
period of appointment as a Director during the year.
Appointed
Meetings
held
Meetings
attended
Ordinary shares held
at reporting date
84,005
547,858
60,000
57,441
40,000
51,189
30,000
Board of Directors
Robert Murray (Chair)(a)
Jeffery Adams
Tonianne Dwyer
Murray Jordan
Peter Birtles
Helen Nash
Christine Holman
Audit, Risk & Compliance Committee
Peter Birtles (Chair) (b)
Tonianne Dwyer
Murray Jordan
Christine Holman
People & Culture Committee
Helen Nash (Chair) (c)
Murray Jordan
Robert Murray
Nomination Committee
Robert Murray (Chair)
Tonianne Dwyer
Murray Jordan
Peter Birtles
Helen Nash
Christine Holman
29 Apr 2015
5 Dec 2017
24 Jun 2014
23 Feb 2016
1 Aug 2019
23 Oct 2015
14 Sept 2020
1 Aug 2019
24 Jun 2014
23 Feb 2016
14 Sept 2020
23 Oct 2015
31 Aug 2016
27 Feb 2020
29 Apr 2015
24 Jun 2014
23 Feb 2016
1 Aug 2019
23 Oct 2015
14 Sept 2020
5
5
5
5
5
5
3
7
7
7
4
5
5
5
1
1
1
1
1
-
5
5
5
5
5
5
3
7
7
7
4
5
5
5
1
1
1
1
1
-
(a) Mr Murray was appointed Chair of the Board on 27 August 2015.
(b) Mr Birtles was appointed Chair of the Audit, Risk & Compliance Committee on 1 July 2020.
(c) Ms Nash was appointed Chair of the People & Culture Committee on 1 July 2019.
From time to time, additional Board committees or working groups are established, and meetings of those committees and working
groups are held throughout the year, for example, to consider material transactions or material issues that may arise. The Board also
holds regular calls with the Group CEO to stay abreast of current matters. In addition, the Board and Group Leadership Team held a
strategy session over 2 days in October 2020. All Board members in office at that time attended the strategy session. These
committee/working group meetings, update calls and strategy sessions are not included in the above table.
Board and Committee meetings in FY21 occurred over 2 full days, with half a day allocated to Committee meetings and 1.5 days
allocated to the Board meeting. In April 2021, the Board adopted a new approach, with Committee meetings generally being held one
week in advance of the Board meeting, allowing half a day to now be allocated to a Board strategy session before the formal Board
meeting, which is still run over 1.5 days.
Metcash Group Financial Report FY21
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For the year ended 30 April 2021
For the year ended 30 April 2021
Directors’ Report
Directors’ Report
Directors’ Report
Remuneration Report
Remuneration Report
On behalf of the Board and the People and Culture
On behalf of the Board and the People and Culture
Committee, I am pleased to present our Remuneration
Committee, I am pleased to present our Remuneration
Report for the year ended 30 April 2021
Report for the year ended 30 April 2021
Helen Nash
Helen Nash
Chair, People and Culture Committee
Chair, People and Culture Committee
Our strong performance over the financial year could not have been
Our strong performance over the financial year could not have been
possible without the dedication and commitment of our people. We
possible without the dedication and commitment of our people. We
are proud of how our leaders, team members, retailers, suppliers and
are proud of how our leaders, team members, retailers, suppliers and
customers have responded to the evolving COVID-19 restrictions,
customers have responded to the evolving COVID-19 restrictions,
whilst managing an unprecedented level of demand across all our
whilst managing an unprecedented level of demand across all our
businesses. We are particularly proud of our frontline team members
businesses. We are particularly proud of our frontline team members
who have worked exceptionally hard to support our retailers and
who have worked exceptionally hard to support our retailers and
their communities during these challenging times.
their communities during these challenging times.
The health and wellbeing of our people was paramount in such a
The health and wellbeing of our people was paramount in such a
challenging year and we adapted readily to the dynamic and differing
challenging year and we adapted readily to the dynamic and differing
state health regulations. In response to the pandemic, we extended
state health regulations. In response to the pandemic, we extended
our flexible working arrangements, established a hardship fund to
our flexible working arrangements, established a hardship fund to
support team members who were forced to self-isolate for extended
support team members who were forced to self-isolate for extended
periods and actively supported mental wellbeing. I am also pleased
periods and actively supported mental wellbeing. I am also pleased
to say we continued to reward our people with pay increases,
to say we continued to reward our people with pay increases,
including applying Award increases at the customary time rather
including applying Award increases at the customary time rather
than to delayed timelines. We recognised our frontline Distribution
than to delayed timelines. We recognised our frontline Distribution
Centre team members’ contributions with additional payments via
Centre team members’ contributions with additional payments via
gift cards.
gift cards.
We did not access the Australian Government’s Job Keeper subsidy
We did not access the Australian Government’s Job Keeper subsidy
program. We did access the New Zealand Government wage subsidy
program. We did access the New Zealand Government wage subsidy
in the early phases of their lockdowns, but subsequently repaid this
in the early phases of their lockdowns, but subsequently repaid this
voluntarily.
voluntarily.
Our remuneration framework
Our remuneration framework
At Metcash we are passionate about ‘Championing successful
At Metcash we are passionate about ‘Championing successful
independents’, attracting, motivating and retaining key talent who
independents’, attracting, motivating and retaining key talent who
drive sustainable company performance while embodying our
drive sustainable company performance while embodying our
Purpose, Vision and Values. Our executive pay comprises Fixed Pay,
Purpose, Vision and Values. Our executive pay comprises Fixed Pay,
Incentive (‘LTI’)
Short-Term
Incentive (‘LTI’)
Short-Term
components and is designed to ensure that executives have a
components and is designed to ensure that executives have a
significant proportion of remuneration at risk, which is payable on
significant proportion of remuneration at risk, which is payable on
the delivery of positive outcomes for shareholders. No significant
the delivery of positive outcomes for shareholders. No significant
changes were made to our executive remuneration structure in FY21.
changes were made to our executive remuneration structure in FY21.
We undertake annually a detailed market benchmarking review of
We undertake annually a detailed market benchmarking review of
our director fees and executive pay, comparing fixed and variable
our director fees and executive pay, comparing fixed and variable
rewards, with data sourced through Aon Hewitt in their capacity as
rewards, with data sourced through Aon Hewitt in their capacity as
independent specialist remuneration data provider. Each
an
an
independent specialist remuneration data provider. Each
Metcash position is benchmarked against similar roles from our peer
Metcash position is benchmarked against similar roles from our peer
group, which includes 24 ASX listed organisations in a similar
group, which includes 24 ASX listed organisations in a similar
industry, both larger and smaller than Metcash, across measures of
industry, both larger and smaller than Metcash, across measures of
market capitalisation, revenue and assets. Our target position
market capitalisation, revenue and assets. Our target position
against our peer group is the 50th percentile, however our framework
against our peer group is the 50th percentile, however our framework
also enables us to reward deeply experienced high performing
also enables us to reward deeply experienced high performing
individuals.
individuals.
Incentive (‘STI’) and Long-Term
Incentive (‘STI’) and Long-Term
in shopper behaviour,
in shopper behaviour,
including rediscovering of
including rediscovering of
Our performance and outcomes
Our performance and outcomes
FY21 was a standout year for Metcash with record sales and
FY21 was a standout year for Metcash with record sales and
operating cashflow, and significant earnings growth. Our Pillars
operating cashflow, and significant earnings growth. Our Pillars
adapted quickly to the significant challenges associated with COVID-
adapted quickly to the significant challenges associated with COVID-
19, while continuing to execute our MFuture plans to further improve
19, while continuing to execute our MFuture plans to further improve
the competitiveness of our independent retail networks. While the
the competitiveness of our independent retail networks. While the
local
shift
local
shift
neighbourhood stores, was initially associated with the COVID-19
neighbourhood stores, was initially associated with the COVID-19
restrictions, management and our team members, led by KMP, have
restrictions, management and our team members, led by KMP, have
driven hard to ensure the success of MFuture and have underpinned
driven hard to ensure the success of MFuture and have underpinned
the retention of new and returning shoppers, as reflected in our
the retention of new and returning shoppers, as reflected in our
record sales performance for the year.
record sales performance for the year.
Group revenue (excluding charge-through sales) increased 9.9% to
Group revenue (excluding charge-through sales) increased 9.9% to
Including charge-through sales, Group revenue
$14.3 billion.
$14.3 billion.
Including charge-through sales, Group revenue
increased 10.1% to $16.4 billion with strong sales growth in all Pillars.
increased 10.1% to $16.4 billion with strong sales growth in all Pillars.
The uplift in sales, together with our strong focus on costs and the
The uplift in sales, together with our strong focus on costs and the
contribution of our very successful acquisitions, led to EBIT
contribution of our very successful acquisitions, led to EBIT
increasing a significant 19.9% to $401.4 million. Underlying profit
increasing a significant 19.9% to $401.4 million. Underlying profit
after tax increased 27.1% to $252.7 million, and was $239.0 million
after tax increased 27.1% to $252.7 million, and was $239.0 million
on a statutory basis. Underlying earnings per share increased 13.3%
on a statutory basis. Underlying earnings per share increased 13.3%
to 24.7 cents. Record operating cashflows of $475.5 million led to the
to 24.7 cents. Record operating cashflows of $475.5 million led to the
Company being in a net cash position of $124.6 million at year end.
Company being in a net cash position of $124.6 million at year end.
The Company announced capital management initiatives including
The Company announced capital management initiatives including
increasing the target dividend payout ratio from 60% to 70% of
increasing the target dividend payout ratio from 60% to 70% of
underlying profit after tax (commencing in FY21) and an Off-Market
underlying profit after tax (commencing in FY21) and an Off-Market
Buy-Back (‘Buy-Back’) of up to $175.0 million1. Total dividends for the
Buy-Back (‘Buy-Back’) of up to $175.0 million1. Total dividends for the
year increased 40% to 17.5 cents per share which, together with the
year increased 40% to 17.5 cents per share which, together with the
expected Share Buy-Back of ~$175.0 million, will result in ~$354.0
expected Share Buy-Back of ~$175.0 million, will result in ~$354.0
million2 being returned to shareholders.
million2 being returned to shareholders.
In addition to the standout financial performance, against very
In addition to the standout financial performance, against very
stretching targets, there was a significant improvement in the
stretching targets, there was a significant improvement in the
Company’s ‘Environmental, Social and Corporate Governance’ (ESG)
Company’s ‘Environmental, Social and Corporate Governance’ (ESG)
credentials as outlined in our Sustainability Report included in this
credentials as outlined in our Sustainability Report included in this
year’s Annual Report.
year’s Annual Report.
Last year the Board took several measures in response to the
Last year the Board took several measures in response to the
uncertainty associated with COVID-19. These included:
uncertainty associated with COVID-19. These included:
Deferring scheduled remuneration increases for executive Key
Deferring scheduled remuneration increases for executive Key
Determining STI and LTI vesting outcomes based broadly on pre-
Determining STI and LTI vesting outcomes based broadly on pre-
pandemic outcomes to avoid any undue benefit;
pandemic outcomes to avoid any undue benefit;
Increasing the deferred component of the FY20 STI award; and
Increasing the deferred component of the FY20 STI award; and
Deferring scheduled Non-executive Director (‘NED’) fee increases.
Deferring scheduled Non-executive Director (‘NED’) fee increases.
Management Personnel (‘KMP’);
Management Personnel (‘KMP’);
1 Metcash may vary the size of the Buy-Back depending on a number of factors including shareholder demand, market conditions and future capital requirements. If Metcash increases the
1 Metcash may vary the size of the Buy-Back depending on a number of factors including shareholder demand, market conditions and future capital requirements. If Metcash increases the
2 Reflects a Buy-Back of ~$175.0 million and excludes any FY22 potential dividends.
2 Reflects a Buy-Back of ~$175.0 million and excludes any FY22 potential dividends.
Buy-Back it will not buy back more shares than allowed within its 10% limit under the Corporations Act.
Buy-Back it will not buy back more shares than allowed within its 10% limit under the Corporations Act.
54 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
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GROUP REVENUE
$14.3
GROUP EBIT
$401.4
UPAT
$252.7
DIVIDENDS PER SHARE
17.5
billion
9.9%
INCREASE
FROM FY20
million
19.9%
INCREASE
FROM FY20
million
27.1%
INCREASE
FROM FY20
cents
40.0%
INCREASE
FROM FY20
TOTAL SHAREHOLDER RETURN SAFETY
55.6%
FOR THE 12 MONTHS
TO 30 APRIL 2021
+2.2%
IMPROVEMENT IN TOTAL
RECORDABLE INJURY
GENDER EQUALITY
EMPLOYER
OF CHOICE
AWARDED BY THE
WORKPLACE GENDER
EQUALITY AGENCY
EMPLOYEE ENGAGEMENT
+19%
IMPROVEMENT IN SURVEY
RESULTS FROM FY20
Once the performance of the Group stabilised, the previously
approved increases to remuneration were applied and KMP STI
deferral percentages reverted to standard policy.
Our FY19 LTI vested at 90%, as we exceeded our underlying earnings
per share CAGR target and exceeded our peer group index TSR by 6%
per annum over the three years ended 30 April 2021.
As part of the Aon Hewitt pay benchmarking review, some changes
to KMP remuneration occurred
in FY21. The Group CEO’s
remuneration has remained unchanged since his appointment in
2017 and, whilst no increase was applied to his fixed pay, there was
an increase to his STI and LTI opportunity to better align his pay mix
to market practice and increase the ‘at risk’ component of his total
remuneration. The change takes his total remuneration to within the
range of the market peer group benchmark. In keeping with our
competitive pay policy of recognising strong performance and deep
experience, an increase was applied to the CEO Food’s remuneration
package taking him to slightly below his position’s market peer
group benchmark.
Board fees remained below medians at between 81% and 99% of
peer group benchmarks. Fees for the Chair of the Board remain
within the good practice of between two-three times multiplier of a
director fees.
Fees were increased by 5% for FY21, with the increase for the Chair of
the Board delayed until December 2020. Fee increases since 2012
have remained below the average increases over the same period in
our peer group.
For the first time since 2012, the Board will seek shareholder
approval for an increase in the Board fees pool from $1.6 million to
$2.0 million. This would allow for the appointment of a further
director into the role that has remained vacant for some years. The
proposed fee pool would be positioned at the average of the peer
group of companies.
STI outcomes are based on KMP exceeding their already-stretching
pool and scorecard targets. The Board have scrutinised the quality of
the results and are satisfied management actions have strongly
supported the delivery of these exceptional results. This year’s STI
payments, which ranged from 67% to 90% of maximum are therefore
very appropriate. The Board also note that team members who
participate in the broader STI scheme, sales incentive plans and
other discretionary awards have been rewarded accordingly.
As a result of the COVID-19-related uncertainty in the early months of
the financial year, our FY21 LTI grant was postponed. As we did not
issue the grant until after the Annual General Meeting (‘AGM’) in
August 2020, the Group CEO’s FY21 LTI grant will be put to
shareholders for approval alongside the FY22 LTI grant at this year’s
AGM. Subject to shareholder approval, the same measures and
timeline will apply to the Group CEO’s FY21 LTI grant as all other
participants.
I am very pleased to advise that Metcash has again been awarded an
Employer of Choice citation by the Workplace Gender Equality
Agency. This is recognition of our deep commitment to gender pay
parity and gender equality in the workforce. This is the third
consecutive year we have received this citation. Metcash was also
awarded Gold level recognition under the Mental Health First Aider
Skilled Workplace Program and was identified as a Flexready
Certified organisation, which recognises leading employers who
support flexible work practices. Additionally, we saw a 19% increase
in our employee engagement results, which is particularly pleasing
given the challenges of COVID-19.
In summary, I believe our remuneration framework and outcomes for
the year deliver a balanced and equitable outcome for all
stakeholders.
We have restructured our Report this year to make it more reader-
friendly, without sacrificing our high level of disclosures. I trust you
will find the Report informative.
Helen Nash
Chair, People and Culture Committee
Metcash Group Financial Report FY21
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CONTENTS OF REPORT
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Overview of the Remuneration Report
Remuneration governance
Snapshot of executive remuneration policy
Incentive plan operation
Business Performance and At-Risk Remuneration Outcomes
FY21 remuneration outcomes
KMP service agreements
Non-executive Director remuneration
Statutory disclosures
56
57
58
59
63
64
68
68
70
1.
OVERVIEW OF THE REMUNERATION REPORT
The Directors present the Remuneration Report for the Company and its controlled entities (the ‘Group’) for the year ended 30 April
2021 (‘FY21’). This report forms part of the Directors’ Report and has been audited in accordance with section 308(3C) of the
Corporations Act 2001 and Australian Accounting Standards.
The report sets out the remuneration arrangements for the Group’s Key Management Personnel (KMP), comprising its
Non-executive Directors (‘NED’), Group Chief Executive Officer (‘Group CEO’) and Group Executives of Metcash, who together have the
authority and responsibility for planning, directing and controlling the activities of the Group.
The KMP in FY21 are listed below.
Name
Position
Non-executive Directors
Robert Murray
Peter Birtles
Tonianne Dwyer
Murray Jordan
Helen Nash
Christine Holman
Chair
Director
Director
Director
Director
Director
Term as KMP in FY21
Full year
Full year
Full year
Full year
Full year
Commenced 14 September 2020
Executive Director
Jeff Adams
Group Executives
Alistair Bell
Brad Soller
Chris Baddock
Scott Marshall
Annette Welsh
Group Chief Executive Officer (‘Group CEO’)
Full year
Group Chief Financial Officer (‘Group CFO’)
Group Chief Financial Officer (‘Group CFO’)
Chief Executive Officer, Australian Liquor Marketers (‘ALM’)
Chief Executive Officer, Food
Chief Executive Officer, Independent Hardware Group (‘IHG’)
Commenced 7 December 2020
1 May 2020 to 7 December 2020
Full year
Full year
Full year
For the remainder of this report, the Group CEO and Group Executives are referred to as KMP.
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2.
REMUNERATION GOVERNANCE
The following diagram illustrates Metcash’s remuneration governance framework.
BOARD
The Board is responsible for overseeing and approving recommendations from the People and Culture Committee and Audit,
Risk and Compliance Committee. The Board ultimately approves the remuneration outcomes for the Group CEO and other KMP.
AUDIT, RISK
AND COMPLIANCE
COMMITTEE (‘ARCC’)
The ARCC supports the P&CC
by reviewing the Group’s
financial results which form
the basis for STI and LTI
awards and providing advice
relating to material risk and
accounting issues that may
affect the Board’s
deliberations in determining
STI and LTI award outcomes.
PEOPLE AND CULTURE
COMMITTEE (‘P&CC’)
The P&CC is the key governing body in
respect of remuneration matters. In
addition to Non-executive Director and
executive remuneration, the P&CC
oversees major people
programs such as culture and diversity
and inclusion. The P&CC makes
recommendations to the Board based
on its review of proposals
received from management.
related
‑
MANAGEMENT
Provides information relevant to people
and remuneration decisions and makes
recommendations to the P&CC.
Undertakes work as directed by the
P&CC including obtaining information
from external advisers to assist the
Committee with decision making.
EXTERNAL ADVISERS
The Committee may commission external
advisers to provide information and/or
recommendations on remuneration. If
recommendations are sought in respect of
KMP remuneration, interaction with
external advisers is governed by protocol,
which ensures the Committee can obtain
independent advice. The Committee Chair
appoints and engages directly with external
advisers on KMP remuneration matters.
Further, remuneration recommendations
obtained from external advisers are used as
a guide, rather than as a substitute for the
Committee’s thorough consideration of the
relevant matters. The Committee considers
the recommendations, along with other
relevant factors, in making remuneration
decisions. Both the Committee and the
Board are satisfied that the existing
protocols ensure that remuneration
recommendations obtained from external
advisers are free from undue influence from
the KMP to whom the remuneration
recommendations apply.
The People & Culture Committee engages and considers advice from independent remuneration consultants where appropriate in
relation to remuneration matters and Non-executive Director fees. During the year, no remuneration recommendations as defined in
section 9B of the Corporations Act 2001 were provided.
Metcash Group Financial Report FY21
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3.
SNAPSHOT OF EXECUTIVE REMUNERATION POLICY
Our Remuneration Principles
Purpose, Vision & Values
Market competitive
Performance based
Shareholder alignment
Fair and simple
Enabling our people to
unleash their passion and
give local Independents
a fighting chance.
Attracting and retaining
people who can make
a difference in
‘Championing successful
independents’.
Rewarding the
individual contributions
made to empowering
our local Independents
who turn postcodes into
communities.
Standing side by side
with our local
Independents through
the generations, to
sustain long-term value
for shareholders.
Making it easy to see
how we recognise those
who make their mark
in our business.
Our Remuneration Framework
Fixed remuneration
Short-Term Incentive
Long-Term Incentive
Salary, superannuation and
salary sacrificed benefits. Fixed
Remuneration is set at a level that
is competitive in the market with reference
to comparably sized peers. Fixed
Remuneration is referred to as Total
Employment Cost (‘TEC’).
12-month performance period. STI pool is
distributed when threshold financial
performance is met and scaled based on
performance up to a prescribed maximum.
Performance is then assessed against
a scorecard of financial (60%) and
strategic (40%) objectives and modified
by a behavioural rating. 33% of the Group
CEO and 25% of Other
KMP’s vested awards will be deferred
for 1 year into Performance Rights.
3-year performance period.
Delivered in Performance Rights.
Performance is assessed against Return
on Funds Employed (ROFE) (50%)
and Absolute Total Shareholder Return
(TSR) (50%).
KMP Target Remuneration
KMP Target Reward comprises the three framework components above (Fixed or TEC in blue, STI in orange and LTI in grey) and is reviewed
annually in line with the above principles. A review may result in no adjustment to Target Remuneration.
KMP Total Reward
J Adams
A Bell
S Marshall
C Baddock
A Welsh
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
Relationship to Peer
Group Benchmark
Within Target Range
Below Target Range
Below Target Range
Above Target Range
Above Target Range
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4.
4.1
INCENTIVE PLAN OPERATION
‘At-risk’ STI plan
The ‘at-risk’ STI plan provides executives the opportunity to earn an incentive that is contingent upon performance against a combination
of agreed financial and non-financial performance targets, which are set by the Board in consultation with the Group CEO at the start of each
financial year.
Feature
Delivery
Description
Delivered in a combination of cash and deferred equity (33% for the Group CEO and 25% for other KMP).
Deferred equity comprises performance rights that convert into fully paid ordinary shares in Metcash, which only
become unrestricted at the end of the deferral period.
Performance period
1 May each year to 30 April the following year.
Eligibility
The Group CEO and all other KMP participate in the STI plan.
The Group CEO and Group CFO participate in the Group STI pool. The Pillar CEOs participate in their respective
Pillar STI pools which are determined by a combination of their respective pillar EBIT and the consolidated Group
EBIT.
Performance Measures
STI awards are paid out of the Group and Pillar STI pools. STI pools are only released for distribution when the
threshold Group or Pillar underlying EBIT budget result, as applicable, is achieved. The STI pools are generally
made available for distribution on the following basis:
Achievement
Distribution of STI pool
Below threshold 95% of budget EBIT
0% - no pool is available for distribution
Threshold 95% of budget EBIT
Budget or ‘Target’ EBIT
Over-achievement 105% of budget EBIT
50% of the respective STI pools
100% of the respective STI pools
150% of the respective STI pools
Once an STI pool is released for distribution and scaled as noted above, a participant’s individual STI award is
determined based on individual performance and behaviours. An individual’s overall performance rating is equally
weighted between their scorecard results and Metcash behaviours. Individual performance and behavioural
outcomes act as a multiplier against the pool reward by a factor of 0% to 150%. Individual results are also scaled
so that the collective individual participants’ results are distributed in a manner consistent with a normal
distribution curve and such that the aggregate STI payments across the pool do not exceed the STI pool amount.
The STI Balanced Scorecard performance measures vary for each KMP based on the budgets and strategies for their
respective pillars.
Balanced Scorecard
Financial & Value Creation
Objectives (60%)
Deliver Financial Results
Measure
Sales revenue1
UPAT
EBIT
ROFE
Cash conversion
Project Horizon
Group
Target
Group
Outcome
Threshold
$15.1 billion
$211.8 million
$349.2 million
24.5%
103.1%
- 2.5%
$16.4 billion
- 5.0%
$252.7 million
- 5.0%
$401.4 million
- 50bps
28.6%
114.2% - 1000bps
95% of stretch
targets
95% of stretch
targets
- 5.0%
Target
Budget
Budget
Budget
Budget
Budget
Budget
Stretch
+ 2.5%
+ 5.0%
+ 5.0%
+ 50bps
+ 1000bps
+ 5.0%
Strategic Objectives (40%) Measure
Our People
Safety (TRIFR)2
Engagement
Our Business
Business metrics3
MFuture program
Group Target
Improvement of 5% on FY20 result
Improvement of 5% on FY20 result
95% of stretch targets
95% of stretch targets
1 Sales revenue (including charge-through sales).
2 Total Recordable Injury Frequency
3 Examples of business metrics include Team Score (target = maintain FY20 result), Loyalty Programs (target = 12% uplift on FY20), Cost Management (target = achieve approved budget)
and IBA Store Count (target =10% uplift on FY20 result).
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Feature
Description
Behavioural ratings act to modify performance against scorecard objectives and can result in an increase for
exceptional behaviour, a decrease for unacceptable behaviour or no change for successful behaviours in the
overall performance rating.
Our Metcash Behaviours are:
Accountability
Continuous
Improvement
Team
Work
Think
Customer
I am open and honest,
accepting responsibility
and delivering on
promises. I act with
integrity.
I learn from success and
failure and seek out a
better way, and I
collaborate with others to
reach the best outcome.
I am responsible for the
strength and diversity of
my team, and I own my
development. I build a
strong culture.
I understand and
anticipate my customer /
retailer / supplier /
shopper needs and drive
innovation for mutual
benefit.
The maximum reward is only paid on achievement of ‘stretch’ outcomes, which include:
Maximum achievement against Group and/or pillar EBIT financial performance hurdles, as applicable
(‘STI pool’)
Maximum achievement in overall individual performance results against all financial and all non-
financial measures contained in the individual’s Balanced Scorecard; and
An exceptional or successful rating against Metcash’s behaviours framework.
With the commencement of a major program of work, Project Horizon, scorecard performance measures for
FY22 will include specific objectives in relation to its delivery. These will comprise quality and timing of the
deliverables, cost of the program and value of the benefits realised.
Challenging performance targets are set against each performance measure following a rigorous budget setting
process that considers many factors including market conditions. This process includes draft budgets being initially
prepared by leadership teams, followed by Pillar CEO and CFO reviews. Once these reviews are complete, including
the Pillar CEO and CFO being confident in them, these draft budgets are thoroughly reviewed and challenged by
the Group CEO and Group CFO. Following satisfaction at this level, each Pillar presents the draft budgets to the
Board during a two-day process during which they are challenged on all matters to ensure the Board is comfortable
that the budgets are sufficiently challenging and achievable.
Target setting
STI opportunities
The STI opportunities as a percentage of TEC for KMP are outlined below:
Position
Group CEO
Other KMPs
Below threshold
% of TEC
Threshold
% of TEC
Target
% of TEC
Maximum
% of TEC
0%
0%
17%
15%
68%
60%
153%
135%
The Group CEO’s pay mix reflects peer group practice for Group CEOs and is therefore different to other KMP.
Deferred vesting criteria The deferred performance rights are conditional and only vest if the executive remains employed by the Company
up to and including 15 April of the year following the performance period. Shares are issued to participants by 25
April and are then restricted from trading until the annual results release which typically occurs in late June.
Valuing deferred awards The number of performance rights issued to participants is calculated by dividing 33% (Group CEO) and 25% (other
KMP) of the STI award dollar value by the volume weighted average price (VWAP) of Metcash ordinary shares over
the 20 trading days prior to the end of the performance period which ends on 30 April.
Board discretion
The Board may exercise discretion to adjust the STI pool to more appropriately reflect the performance of the
Group or a specific Pillar. The Board also retains discretion to adjust vesting outcomes in any circumstances to
ensure they are appropriate.
Clawback
KMP STI awards are subject to clawback for cause or material misstatement of the Group’s financial statements.
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4.2
At-risk’ LTI plan
The Group’s LTIs are designed to enable Metcash to attract and retain key executives, whilst incentivising these executives to achieve
challenging hurdles aligned to shareholder value.
Feature
Delivery
Description
Delivered in Performance Rights. Each Performance Right is a right to acquire Metcash shares at no cost, subject to
the satisfaction of performance and service conditions.
Performance period
Three-year performance period.
Eligibility
The Group CEO and all other KMP participate in the LTI plan.
Performance measures
The Group had three active LTI plans operating in FY21.
Current year LTI grant:
FY21-FY23 LTI – this grant was issued to KMP (excluding the Group CEO) during FY21 and is subject to two
performance conditions: ROFE and TSR over a three-year period from 1 May 2020 to 30 April 2023.
Prior period LTI grants:
FY20-FY22 LTI – this grant was issued to KMP during FY20 and is subject to two performance conditions: ROFE
and TSR over a three-year period from 1 May 2019 to 30 April 2022.
FY19-FY21 LTI – this grant was issued to KMP during FY19 and is subject to two performance conditions: RTSR
and UEPS CAGR over a three-year period from 1 May 2018 to 30 April 2021.
FY20-FY22 and FY21-FY23 LTI grants
ROFE
ROFE is calculated as underlying EBIT divided by the average of funds employed at the beginning and end of the
financial year. The overall ROFE result will be determined as the average of the individual ROFE result in respect
of each of the three financial years over the performance period.
TSR
TSR is measured as the growth in share price over the performance period plus dividends paid to shareholders
and assumes dividends are reinvested when they are paid. The opening and closing share prices used in the
calculation are typically set with reference to the VWAP of Metcash shares over the 20 business days prior to the
end of the Metcash financial year. The Board may exercise discretion to include other share capital transactions,
including buybacks and otherwise adjust the calculation for capital transactions as deemed appropriate. The
TSR result is expressed as a percentage and reported as the compound annual growth rate over the performance
period.
FY19-FY21 LTI grant
Relative Total Shareholder Returns (‘RTSR’)
RTSR is measured against a group of selected peers, being consumer staples companies in the ASX 300 as at the
beginning of the LTI plan period on 1 May. The TSR of those peer companies is multiplied against an index
weighting. The sum of the weighted TSRs (‘Index TSR’) is the score against which Metcash’s TSR is compared.
Metcash Underlying Earnings per Share Compound Annual Growth Rate (‘UEPS CAGR’)
UEPS CAGR is calculated over the three-year performance period of the LTI against the base year UEPS at grant date.
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Feature
Vesting hurdles
Description
FY20-FY22 and FY21-FY23 LTI grants
The FY20-FY22 and FY21-FY23 LTI grants operate under the same terms.
ROFE
The rights vest against the ROFE hurdle as follows:
ROFE vesting scale
Threshold
Target
Stretch
Equal to or above maximum
Vesting %
25%
50%
75%
100%
Vesting occurs on a straight-line basis between each hurdle, with nil vesting below threshold. Full vesting will
only occur if Metcash achieves a ROFE of greater than 26% over the performance period.
TSR
The rights vest against the TSR hurdle as follows:
TSR vesting scale
Threshold
Target
Stretch
Equal to or above maximum
Vesting %
25%
50%
75%
100%
Vesting occurs on a straight-line basis between each hurdle, with nil vesting below threshold. Full vesting will
only occur if Metcash achieves a TSR CAGR of 10% or higher over the performance period. The opening VWAP in
relation to the FY20-FY22 LTI was $2.71 per share (VWAP to 30 April 2019) and the FY21-FY23 LTI was $2.58 per
share (pre-COVID-19 VWAP to 16 March 2020).
FY19-FY21 LTI grant
RTSR
The rights vest against the RTSR hurdle as follows:
RTSR vesting scale
Less than Index TSR
Equal to Index TSR
Between Index TSR and Index TSR + 10%
Index TSR + 10% or above
Vesting %
0%
50%
Straight-line pro-rata
100%
Full vesting will only occur if Metcash’s RTSR is 10% or higher than the peer companies over the performance
period. The opening VWAP in relation to the FY19-FY21 LTI was $3.26 per share.
UEPS CAGR
The rights vest against the UEPS CAGR hurdle as follows:
UEPS CAGR vesting scale
Base year UEPS (cents per share)
Threshold
Target
Stretch
Equal to or above maximum
UEPS CAGR
20.8
+1%
+2%
+3%
+4%
Vesting %
25%
50%
75%
100%
Vesting occurs on a straight-line basis between each hurdle, with nil vesting below threshold. Full vesting only occurs
if Metcash achieves an UEPS CAGR of greater than 4% over the performance period. The FY18 base year UEPS was
restated to 20.8 cents per share to reflect the application of the AASB 16 Leases accounting standard so that it is
consistent with the current accounting policy.
Board discretion
The LTI is subject to the Board’s absolute discretion at all times.
Clawback
KMP LTI awards are subject to clawback for cause or material misstatement of the Group’s financial statements.
62 Metcash Annual Report 2021
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5.
BUSINESS PERFORMANCE AND AT-RISK REMUNERATION OUTCOMES
The charts below show Metcash’s financial performance and percentage of maximum STI paid to KMP in the five-year period ended
30 April 2021.
Earnings per Share
Share Price
35
15
(5)
(25)
100%
4.00
80%
60%
40%
20%
3.00
2.00
1.00
0%
-
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Underlying EPS (cps)
Statutory EPS (cps)
% Maximum STI paid
Closing Share Price ($)
% Maximum STI paid
Net Profit
Return on Funds Employed (ROFE)1
300
200
100
-
(100)
(200)
100%
40.0%
80%
60%
40%
20%
30.0%
20.0%
10.0%
0%
0.0%
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Underlying NPAT ($m)
Statutory NPAT ($m)
% Maximum STI paid
ROFE (%)
% Maximum STI paid
1. ROFE is calculated based on average of opening and closing funds employed and based on underlying EBIT.
Other Group performance metrics over the last five years were as follows:
Financial year
Revenue ($b)
Cash realisation ratio (%)
Dividends declared per share (cents)
Average STI payments to KMP as a % of maximum
FY17
12.3
118%
4.5
36.0%
FY18
12.4
101%
13.0
47.0%
FY19
12.7
92%
13.5
FY20
13.0
33%
12.5
57.5%
43.0%
FY21
14.3
114%
17.5
84.1%
In FY21, the Group and the pillars have performed exceptionally well, delivering EBIT results against already stretching targets at a 19.9%
increase on FY20 outcomes in extremely challenging circumstances. Accordingly, the STI outcomes awarded to KMP ranged from 67% to
90% of maximum.
In FY20, whilst the Group and the Food pillar delivered strong EBIT results, the Board exercised its discretion to reduce the overall STI award
to the ‘on target’ level. The Liquor pillar was determined to have performed ‘on target’ and the Hardware pillar ‘below target’.
In FY19, the Group delivered EBIT results that were marginally above target level. The Food and Hardware pillars performed marginally
above target level and the Liquor pillar performed at target.
In FY18, Hardware and Corporate delivered EBIT results at or above the maximum hurdle. The Liquor pillar performed at target level and the
Food pillar performed between threshold and target.
In FY17, the Food pillar performed below threshold level, the Liquor pillar performed at target level and the Hardware pillar delivered
earnings in excess of target.
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6.
FY21 REMUNERATION OUTCOMES
Actual FY21 KMP remuneration
The table below reflects actual cash payments made or due to KMP in respect of performance during FY21. The table does not comply with
IFRS requirements. The required statutory disclosures are shown in section 9 of this report:
KMP
J Adams
A Bell4
B Soller (retired)5
C Baddock
S Marshall
A Welsh
Total
employment
cost
$
FY21
STI cash 1
$
FY20 STI
deferred 2
$
LTI 3
$
1,800,000
1,612,774
600,000
1,239,017
298,755
562,007
700,000
970,834
700,000
259,923
379,354
607,163
864,547
640,238
-
214,200
168,000
214,200
28,643
-
614,343
-
614,343
136,129
Total
$
5,251,791
558,678
1,769,904
1,475,163
2,663,924
1,505,010
1. Represents the cash component of the FY21 STI reward amount of 67% (Group CEO) and 75% (other KMP) payable in cash in July 2021. The deferred equity component
of the FY21 STI reward of 33% (Group CEO) and 25% (other KMP), is not presented above because the reward is conditional upon the executive being employed by
the Company on 15 April 2022. Shares are issued to participants by 25 April 2022 and are then restricted from trading until the close of 28 June 2022.
2. Represents the deferred equity component of the FY20 STI reward of 50% (Group CEO) and 40% (other KMP) which were deferred as equity. The KMPs have
subsequently met the continuity of employment service condition. Accordingly, the performance rights have vested and the shares were issued to the KMPs in April
2021. The shares are restricted from trading until the close of 28 June 2021. The amounts presented above are based on the number of rights vested multiplied by
the VWAP of Metcash shares over the 20 business days ending 16 March 2020 of $2.58 per share.
3. The FY19-FY21 LTI will partially vest during FY21 at 90%, subject only to the KMP remaining in employment until 15 August 2021. The amounts presented above are
based on the number of rights that will vest multiplied by the VWAP of Metcash shares over the 20 business days until 30 April 2021 of $3.74 per share.
4. Mr Bell commenced employment on 1 September 2020 and was appointed as Group CFO on 7 December 2020, with a fixed remuneration of $750,000. The amounts
disclosed above reflect Mr Bell’s total fixed remuneration and actual STI award for the period from 7 December 2020 to 30 April 2021 as KMP. In addition, Mr Bell
received total fixed remuneration of $201,245 and FY21 STI cash award of $175,086 as non-KMP relating to the period from 1 September 2020 to 7 December 2020.
5. Mr Soller retired as Group CFO on 7 December 2020 and will cease employment on 31 December 2021. The amounts disclosed above reflect Mr Soller’s total fixed
remuneration and actual STI and LTI award for the period from 1 May 2020 to 7 December 2020 as KMP. Mr Soller’s fixed remuneration was increased to $928,200 with
effect from 1 May 2020, in accordance with the customary annual review. In addition, Mr Soller received total actual FY21 remuneration of $613,374 as non-KMP
relating to the period from 8 December 2020 to 30 April 2021. In line with Metcash’s good leavers policy, Mr Soller retained (on a pro-rata basis) 175,946 and 115,542
of his FY20-FY22 and FY21-FY23 LTI performance rights, respectively, which will be tested in accordance with existing performance conditions.
FY21 STI outcomes
Metcash’s performance in FY21 exceeded expectations. This was driven by the exceptional performance of our executive team.
Performance against each financial STI measure comfortably exceeded ‘stretch’ targets, allowing each STI Pool to be funded to its maximum
level.
As outlined on the following page, these financial results combined with KMP exceeding expectations against their individual objectives,
resulted in overall STI outcomes ranging from 67%-90% of maximum.
The Board views these FY21 STI outcomes as an appropriate recognition of the KMP’s performance. This outcome also recognises that FY21
performance was reflected in strong outcomes for shareholders, customers and the broader workforce (who were also eligible for maximum
bonus payments in FY21).
Metcash invited KPMG to provide an independent view on the reasonableness of the STI outcomes. KPMG concluded Metcash’s FY21 STI
scorecard outcomes appear reasonable in the context of the Company’s:
• Financial position (strong balance sheet, FY21 performance exceeded stretch targets against all key financial metrics, no Job Keeper
assistance utilised, all assistance from NZ COVID-19 wage subsidy repaid);
• Shareholder outcomes (shareholder returns have been strong, and dividends have increased); and
• Workforce outcomes (pay increases occurred as normal throughout the organisation, bonuses and other incentives commensurate to
performance outcomes are to be paid for team members, employee engagement scores improved, and no major redundancies occurred
during the year).
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The FY21 STI outcomes against each of the KMPs Balanced Scorecards are summarised below:
Balanced Scorecard Outcomes
J Adams
Group CEO
A Bell
Group CFO
C Baddock
CEO ALM
S Marshall
CEO Food
A Welsh
CEO IHG
Financial & Value Creation Objectives (60%)
Sales revenue1
UPAT
EBIT
ROFE
Cash Conversion
Working Capital
Project Horizon Implementation Planning
Stretch
Stretch
Stretch
Stretch
Stretch
N/A
On target
Stretch
Stretch
Stretch
Stretch
Stretch
N/A
On target
Stretch
N/A
Stretch
Stretch
N/A
On target
On target
Stretch
N/A
Stretch
Stretch
N/A
Above target
On target
Stretch
N/A
Stretch
Stretch
N/A
On target
On target
Strategic Objectives (40%)
Our People
Strong & Positive Culture
Safety
Our Business
Improve Pillar Metrics
MFuture program
Finance costs (net)
Cost centre management
Behaviours
Overall rating
Stretch
Below target
Stretch
Below target
Stretch
Below target
Stretch
Below target
Above Target
Stretch
On target
Above target
N/A
N/A
N/A
N/A
Above target
On target
On target
Above target
N/A
N/A
On target
Above target
N/A
N/A
Above target
Stretch
N/A
N/A
Strong
Strong
Strong
Strong
Strong
Stretch
Stretch
Stretch
Stretch
Stretch
STI % of maximum awarded
87%
86%
86%
88%
90%
1. Sales revenue (including charge-through sales).
The table below reflects the KMP’s FY21 STI outcomes when compared against target and maximum potential STI:
KMP
J Adams
A Bell3
B Soller (retired)4
C Baddock
S Marshall
A Welsh
Target
potential STI
$
Maximum
potential STI
$
STI awarded
% of maximum
STI
cash1
$
STI
deferred2
$
Total STI
awarded
$
Maximum STI
forfeited
$
1,225,000
180,149
337,204
420,000
584,400
420,000
2,756,250
405,335
758,709
945,000
1,314,900
945,000
87.3%
85.5%
66.7%
85.7%
87.7%
90.3%
1,612,774
259,923
379,354
607,163
864,547
640,238
794,351
86,640
126,451
202,388
288,182
213,413
2,407,125
346,563
505,805
809,551
1,152,729
853,651
349,125
58,772
252,904
135,449
162,171
91,349
1 The cash component of the FY21 STI reward of 67% (Group CEO) and 75% (other KMP) is payable in cash in July 2021.
2 The deferred equity component of the FY21 STI reward of 33% (Group CEO) and 25% (other KMP) is deferred and released through the issue of Metcash performance
rights, conditional upon the executive being employed by the Company on 15 April 2022. Shares are issued to participants by 25 April 2022 and are then restricted
from trading until the close of 28 June 2022.
3 Mr Bell commenced employment on 1 September 2020 and was appointed as Group CFO on 7 December 2020, with a fixed remuneration of $750,000. The amounts
disclosed above reflect Mr Bell’s STI award for the period from 7 December 2020 to 30 April 2021 as KMP. In addition, Mr Bell received an STI award of $233,448 as
non-KMP relating to the period from 1 May 2020 to 7 December 2020.
4 Mr Soller retired as Group CFO on 7 December 2020 and will cease employment on 31 December 2021. The amounts disclosed above reflect Mr Soller’s STI award for
the period from 1 May 2020 to 7 December 2020 as KMP. In addition, Mr Soller received an STI award of $329,574 as non-KMP relating to the period from 8 December
2020 to 30 April 2021.
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FY20 STI deferred equity component outcomes
In FY20, the Group’s ‘at risk’ STI plan introduced a deferred equity component so that the majority of the KMP’s performance pay is delivered
in equity. The following table presents the vesting of the FY20 STI deferred equity component, following completion of the employment
service condition on 15 April 2021:
Participant
J Adams
B Soller (retired)
C Baddock
S Marshall
A Welsh
Vesting date
15 April 2021
15 April 2021
15 April 2021
15 April 2021
15 April 2021
No. of
rights held
No. of rights
vested
No. of rights
forfeited
232,558
83,023
65,116
83,023
11,102
232,558
83,023
65,116
83,023
11,102
-
-
-
-
-
The number of performance rights were calculated by dividing 50% (Group CEO) and 40% (other KMP) of the FY20 STI award dollar value by
the VWAP of Metcash ordinary shares over the 20 trading days ending 16 March 2020 of $2.58 per share. The FY20 STI deferred equity
component subsequently vested on 15 April 2021 following the KMPs completion of the service condition. These performance rights have
now been released as shares and are restricted for trading until the close of 28 June 2021.
Long-term incentives
Details of LTI grants made to KMP during the financial year
The following FY21-FY23 LTI grant was made to KMP during FY21:
Participant
Grant date
Hurdle
Vesting date
No. of rights
Fair value
per right
$
Grant
entitlement
(% of TEC)1
J Adams2
A Bell3
-
11 December 2020
B Soller (retired)4
11 December 2020
C Baddock
11 December 2020
S Marshall
11 December 2020
A Welsh
11 December 2020
-
ROFE
TSR
ROFE
TSR
ROFE
TSR
ROFE
TSR
ROFE
TSR
-
15 August 2023
15 August 2023
15 August 2023
15 August 2023
15 August 2023
15 August 2023
15 August 2023
15 August 2023
15 August 2023
15 August 2023
-
77,510
77,510
103,779
103,779
81,395
81,395
103,779
103,779
81,395
81,395
-
3.10
2.15
3.10
2.15
3.10
2.15
3.10
2.15
3.10
2.15
-
60%
60%
60%
60%
60%
1. The grant entitlement is expressed as a percentage of the face value of performance rights divided by the participants’ annual TEC at grant date.
2. As a result of the COVID-19-related uncertainty in the early months of the financial year, Mr Adams’ FY21-FY23 LTI grant was not put forward to shareholders for
approval at the 2020 AGM. Mr Adams’ FY21-FY23 LTI grant will be put to shareholders for approval at the 2021 AGM. Subject to shareholder approval, the same
measures and timeline will apply to Mr Adams’ FY21 LTI grant as all other participants. In accordance with AASB 2 Share-based payments, the fair value of the share-
based payment is to be determined at grant date (i.e., 2021 AGM date). For the purposes of this report, Mr. Adams’ LTI expense for his services rendered during FY21
has been based on an estimate of the fair value of the performance rights.
3. Mr Bell was appointed Group CFO on 7 December 2020.
4. Mr Soller retired as Group CFO on 7 December 2020 and will cease employment on 31 December 2021. In FY21, Mr Soller was issued 207,558 performance rights in
relation to the FY21-FY23 LTI grant. Mr Soller retained (on a pro-rata basis) 115,542 FY21-FY23 LTI performance rights, which remain on foot subject to existing
performance hurdles and timeframes. The number of performance rights retained was determined on a pro-rata basis up to the date of cessation of employment.
The balance of 92,016 performance rights were forfeited.
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FY19-FY21 LTI grant
The plan is expected to partially vest on 15 August 2021 at 90%, subject only to the active participants remaining in employment until 15
August 2021.
The FY19-FY21 LTI grant vesting results are set out below:
Performance condition
UEPS CAGR
Weighting
50%
RTSR
50%
Performance result
UEPS CAGR performance over the three-year
plan period was 5.2%
Vesting result (%)
100%
RTSR performance over the three-year plan
period was 6.0% above Index TSR
80%
The vesting of the FY19-FY21 LTI rights will be as follows:
Participant
J Adams
B Soller
S Marshall
A Welsh
FY20-FY22 LTI grant
Hurdle
UEPS CAGR
RTSR
UEPS CAGR
RTSR
UEPS CAGR
RTSR
UEPS CAGR
RTSR
No. of
rights held
No. of rights
expected to vest
No. of rights
expected to be forfeited
184,049
184,049
91,257
91,257
91,257
91,257
20,221
20,221
184,049
147,239
91,257
73,006
91,257
73,006
20,221
16,177
-
36,810
-
18,251
-
18,251
-
4,044
The ATSR component is currently performing at the maximum level on the vesting scale. This interim performance assessment is based on
a VWAP of $3.74 per share, measured across the 20 business days to 30 April 2021. In FY21, the Group provided for the ROFE component
based on the maximum level of performance.
FY21-FY23 LTI grant
The ATSR component is currently performing at the maximum level on the vesting scale. This interim performance assessment is based on
a VWAP of $3.74 per share, measured across the 20 business days to 30 April 2021. In FY21, the Group provided for the ROFE component
based on the maximum level of performance.
Remuneration mix
The chart below outlines the FY21 remuneration mix for KMP at the end of the year including the deferral of the 33% (Group CEO) and 25%
(other KMP) of STI ‘at risk’ equity component. Each remuneration component is shown as a percentage of total remuneration measured at
Target and at Maximum earnings opportunity. LTI values have been measured at grant date, based on the face value of incentives granted
in FY21.
The KMP remuneration weighting as a percentage of TEC during FY21 was as follows:
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7.
KMP SERVICE AGREEMENTS
Name
Agreement term
Executive notice
Metcash notice
Redundancy
J Adams1
A Bell
C Baddock
S Marshall
A Welsh
Four years (based on current 482 visa limitations)1
Ongoing unless notice given
Ongoing unless notice given
Ongoing unless notice given
Ongoing unless notice given
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
1. Mr Adams’ visa was renewed in February 2021 and was granted for a further four years.
In the event of cessation of employment, a KMP’s unvested performance rights will ordinarily lapse, however, this is subject to Board
discretion which may be exercised in circumstances such as death, disability, retirement, redundancy or special circumstances.
In some circumstances on termination of employment, the Group may require individuals to enter into non-compete arrangements with the
Group. These arrangements may require a payment to the individual.
Minimum shareholding guidelines
Minimum shareholding guidelines have been implemented for all KMP commencing as of the effective date specified below or upon the date
of appointment as KMP, whichever occurs later.
Position
Group CEO
Other KMP
Value
Time to achieve
Effective date
1 x TEC
0.5 x TEC
5 years
5 years
1 May 2018
1 May 2019
8.
NON-EXECUTIVE DIRECTOR REMUNERATION
Remuneration policy
The objectives of Metcash’s policy regarding Non-executive Director fees are:
To preserve the independence of Non-executive Directors by not including any performance-related element; and
To be market competitive with regard to Non-executive Director fees in comparable ASX-listed companies and to the time and
professional commitment in discharging the responsibilities of the role.
All Non-executive Directors are paid a fixed annual fee. In addition, Committee fees are paid to recognise the additional responsibilities
associated with participating on a Board Committee. The fixed fee to the Board Chair is to remunerate the Chair for all responsibilities,
including participating on any Board Committees.
To align individual interests with shareholders’ interests, Non-executive Directors are encouraged to hold Metcash shares. Non-executive
Directors fund their own share purchases and must comply with Metcash’s share trading policy.
Aggregate fee limit
Non-executive Director fees are limited to a maximum aggregate amount approved by shareholders. The Board intends to propose an
increase in the fee limit to $2,000,000 for approval by shareholders at the 2021 AGM. The proposed increase reflects an update on the existing
limit of $1,600,000 which was approved in 2012.
As a reasonableness test, this pool increase was assessed against comparison data provided by Aon Hewitt which indicated that the peer
group average pool limit was $2,000,000. Additionally, consideration was given to ‘fair fee’ criteria including the pool being no greater than
two times total NED annual fees. The Metcash fee limit of $2,000,000 sits within that criterion.
Minimum shareholding guidelines
Minimum shareholding guidelines have been implemented for all Non-executive Directors of one year’s base fees to be accumulated in five
years from the effective date of 1 May 2019 or upon their date of appointment as a Non-executive Director, whichever occurs later.
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Non-executive Director fee structure
Consistent with all executive remuneration practices in Metcash, extensive annual independent data benchmarking is undertaken on Board
fees. Averaged over the last eight years, the Board fees have increased by 2.25% per annum and this results in Metcash sitting below the
market benchmark of our peer group. An increase in fees to close the gap was made in FY21 which moves the position to between 81% and
99% of the market benchmark.
Board
Chair
Non-executive Director
Committee
Audit, Risk & Compliance
Chair
Member
People & Culture
Chair
Member
Nomination
Chair
Member
FY21
$1,2
451,474
153,007
36,558
16,444
36,558
16,444
-
-
1. Per annum fees as at the end of the financial year, including superannuation.
2. The increase in per annum fees was effective 1 May 2020 except for the Chairman of the Board which was effective 1 December 2020.
The Non-executive Directors did not receive a fee increase in FY20.
Non-executive Director remuneration
Name
R Murray
P Birtles
T Dwyer
M Jordan
H Nash
C Holman1
W Tang (resigned)
A Brennan (resigned)
F Balfour (retired)
Total
Financial
year
Fees
$
Superannuation
$
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
417,352
409,051
170,057
110,536
160,873
164,875
169,767
161,683
181,211
168,638
90,271
-
-
85,972
-
49,127
-
54,958
1,189,531
1,204,840
21,581
20,924
16,155
10,501
15,283
15,663
16,128
15,360
8,354
10,304
8,576
-
-
8,167
-
4,667
-
5,221
86,077
90,807
1. Ms Holman was appointed a Non-executive Director on 14 September 2020.
Metcash Group Financial Report FY21
FY20
$1
429,975
145,721
34,817
15,661
34,817
15,661
-
-
Total
$
438,933
429,975
186,212
121,037
176,156
180,538
185,895
177,043
189,565
178,942
98,847
-
-
94,139
-
53,794
-
60,179
1,275,608
1,295,647
69
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Directors’ Report
Directors’ Report
For the year ended 30 April 2021
Non-executive Director shareholdings
Name
Directors
R Murray
P Birtles
T Dwyer
M Jordan
H Nash
C Holman1
Balance at
1 May 2020
Acquired
during the year
Balance at
30 April 2021
Balance at
report date
84,005
40,000
60,000
42,651
37,431
-
264,087
-
-
-
14,790
13,758
30,000
58,548
84,005
40,000
60,000
57,441
51,189
30,000
322,635
84,005
40,000
60,000
57,441
51,189
30,000
322,635
1. Ms Holman was appointed a Non-executive Director on 14 September 2020.
9.
STATUTORY DISCLOSURES
Fixed and at-risk remuneration
KMP
J Adams
A Bell5
B Soller
(retired)6
C Baddock
S Marshall
A Welsh
M Laidlaw
(retired)7
Total
Total
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Fixed
remuneration
$
STI
cash1
$
STI
deferred 2, 3
$
Super-
annuation
$
LTI
(share-based
payments)
$
Leave4
$
Performance
- related
%
Total
$
1,800,000
1,800,000
290,113
-
548,940
871,575
678,419
548,421
949,253
871,575
678,419
158,083
-
729,075
4,945,144
4,978,729
1,612,774
600,000
259,923
-
379,354
321,300
607,163
252,000
864,547
321,300
640,238
42,964
-
360,000
4,363,999
1,897,564
697,176
300,000
43,320
-
170,326
107,100
185,194
699,492
251,191
107,100
130,360
4,990
-
-
1,477,567
1,218,682
-
-
8,642
-
13,067
20,925
21,581
17,503
21,581
20,925
21,581
5,251
-
20,925
86,452
85,529
69,099
90,464
35,208
-
167,528
69,178
(8,106)
43,253
29,275
15,347
22,340
66,470
-
18,855
315,344
303,567
1,385,992
373,174
47,614
-
502,350
146,547
280,130
28,880
570,642
133,212
212,481
6,652
-
152,199
5,565,041
3,163,638
684,820
-
1,781,565
1,536,625
1,764,381
1,589,549
2,686,489
1,469,459
1,705,419
284,410
-
1,281,054
2,999,209 14,187,715
9,324,735
840,664
66.4%
40.2%
51.2%
-
59.1%
37.4%
60.8%
61.7%
62.8%
38.2%
57.6%
19.2%
-
40.0%
62.3%
42.4%
1. The cash component of the FY21 STI reward of 67% (Group CEO) and 75% (other KMP) is payable in cash in July 2021. The cash component of the FY20 STI reward of
50% (Group CEO) and 60% (other KMP) was paid in cash in July 2020.
2. The deferred equity component of the FY21 STI reward of 33% (Group CEO) and 25% (other KMP) is deferred and released through the issue of Metcash performance
rights, conditional upon the executive being employed by the Company on 15 April 2022. Shares are issued to participants by 25 April 2022 and are then restricted
from trading until the close of 28 June 2022. The fair value of the deferred share component is amortised over the two-year performance period.
3. The deferred equity component of the FY20 STI reward of 50% (Group CEO) and 40% (other KMP) vested during the year. Shares were issued to participants in April
2021 and are restricted from trading until the close of 28 June 2021. The fair value of the deferred share component is amortised over the two-year performance
period. Mr Baddock’s FY20 STI deferred included a buy-out grant awarded to him upon commencement of his employment and appointment as CEO ALM.
4. Includes changes in annual and long service leave entitlements.
5. Mr Bell commenced employment on 1 September 2020 and was appointed as Group CFO on 7 December 2020, with fixed remuneration of $750,000. The amounts
disclosed above reflect Mr Bell’s remuneration for the period from 7 December 2020 to 30 April 2021 as KMP. In addition, Mr Bell received total remuneration of
$478,586 as non-KMP relating to the period from 1 September 2020 to 7 December 2020.
6. Mr Soller retired as Group CFO on 7 December 2020 and will cease employment on 31 December 2021. The amounts disclosed above reflect Mr Soller’s remuneration
relating to the period from 1 May 2020 to 7 December 2020 as KMP. In addition, Mr Soller received (a) total remuneration of $861,165 as non-KMP relating to the period
from 8 December 2020 to 30 April 2021 and (b) is expected to receive total remuneration of $1,028,722 as non-KMP relating to the period 1 May 2021 to 31 December
2021. The terms of Mr Soller’s employment prohibits him from accepting employment at a competitor company for six months following his cessation of employment
on 31 December 2021. In line with Metcash’s good leavers policy, Mr Soller retained 175,946 and 115,542 of his FY20-FY22 and FY21-FY23 LTI performance rights,
respectively, which will be tested in accordance with existing performance conditions.
7. Mr Laidlaw retired as CEO IHG on 30 April 2020.
70 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Directors’ Report
Directors’ Report
For the year ended 30 April 2021
KMP performance rights holdings
Name
J Adams
A Bell2
B Soller (retired) 3
C Baddock
S Marshall
A Welsh
Total
Balance at
1 May 2020
Granted
Vested/
Exercised1
1,278,706
-
567,338
154,982
539,806
121,480
2,662,312
232,558
155,020
290,581
227,906
290,581
173,892
1,370,538
(547,858)
-
(209,213)
(65,116)
(190,656)
(39,606)
(1,052,449)
Forfeited
(152,504)
-
(174,704)
-
(52,059)
(13,786)
(393,053)
Balance at 30
April 2021
Balance at
report date
810,902
155,020
474,002
317,772
587,672
241,980
2,587,348
810,902
155,020
474,002
317,772
587,672
241,980
2,587,348
1 As foreshadowed in the FY20 financial report, a total of 577,627 performance rights from the FY18-FY20 LTI plan partially vested on 15 August 2020. The vested
shares were acquired on market and allocated to the participants on 15 August 2020. In addition, a total of 474,822 performance rights were granted to the
KMPs and have then subsequently vested in relation to the deferred component of the FY20 STI plan.
2 Mr Bell commenced employment on 1 September 2020 and was appointed as Group CFO on 7 December 2020.
3 As set out in section 6, 164,263 performance rights held by Mr Soller in relation to the FY19-21 LTI plan are expected to vest on 15 August 2021. Mr Soller
retained (on a pro-rata basis) 175,946 and 115,542 of his FY20-FY22 and FY21-FY23 LTI performance rights, respectively, which will be tested in accordance
with existing performance conditions. The number of rights retained was determined on a pro-rata basis up to the date of Mr Soller’s cessation of employment
on 31 December 2021. The balance of the performance rights in relation to the FY20-FY22 and FY21-FY23 LTI plans were forfeited.
KMP shareholdings
Name
J Adams
A Bell
B Soller (retired)
C Baddock
S Marshall
A Welsh
Total
Balance at
1 May 2020
Acquired
during the year1
Other
adjustments2
Balance at
30 April 2021
Balance at
report date
-
-
184,927
221,400
196,713
32,603
635,643
547,858
-
209,213
65,116
190,656
39,606
1,052,449
-
-
(394,140)
-
-
-
(394,140)
547,858
-
-
286,516
387,369
72,209
1,293,952
547,858
-
-
286,516
387,369
72,209
1,293,952
1 Includes vesting of shares in relation to Metcash deferred STI and LTI plans.
2 Reflects changes in KMP composition following retirement or resignation.
This concludes the Remuneration Report.
Metcash Group Financial Report FY21
71
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Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information
For the year ended 30 April 2021
Directors’ Report
Directors’ Report
Directors’ Report
For the year ended 30 April 2021
Other disclosures
Other disclosures
Unissued shares under share options and performance rights
At the date of this report, there were 6,496,163 performance rights (6,463,229 at the reporting date). There were no share options on
Unissued shares under share options and performance rights
issue at the reporting date or at the date of this report. Refer to note 19 of the financial statements for further details regarding
At the date of this report, there were 6,496,163 performance rights (6,463,229 at the reporting date). There were no share options on
performance rights.
issue at the reporting date or at the date of this report. Refer to note 19 of the financial statements for further details regarding
performance rights.
Shares issued as a result of options and performance rights
During the year, a total of 1,022,632 shares and 619,892 shares were acquired on market in relation to the vesting of the FY18-FY20 LTI
Shares issued as a result of options and performance rights
grant and FY20 STI deferred equity component, respectively, and these shares were issued to employees and executives. There were
During the year, a total of 1,022,632 shares and 619,892 shares were acquired on market in relation to the vesting of the FY18-FY20 LTI
no other shares issued to employees or executives during or since the end of the financial year in respect of the exercise of options or
grant and FY20 STI deferred equity component, respectively, and these shares were issued to employees and executives. There were
performance rights.
no other shares issued to employees or executives during or since the end of the financial year in respect of the exercise of options or
performance rights.
Indemnification of Auditors
Pursuant to the terms of engagement the Company has with its auditors, EY Australia, the Company has agreed to indemnify EY
Indemnification of Auditors
Australia to the extent permitted by law and professional regulations, against any losses, liabilities, costs or expenses incurred by EY
Pursuant to the terms of engagement the Company has with its auditors, EY Australia, the Company has agreed to indemnify EY
Australia where they arise out of or occur in relation to any negligent, wrongful or wilful act or omission by the Company. No payment
Australia to the extent permitted by law and professional regulations, against any losses, liabilities, costs or expenses incurred by EY
has been made to EY Australia by the Company pursuant to this indemnity, either during or since the end of the financial year.
Australia where they arise out of or occur in relation to any negligent, wrongful or wilful act or omission by the Company. No payment
has been made to EY Australia by the Company pursuant to this indemnity, either during or since the end of the financial year.
Non-audit services
The following non-audit services were provided by the Company’s auditor, EY Australia. The Directors are satisfied that the provision
Non-audit services
of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
The following non-audit services were provided by the Company’s auditor, EY Australia. The Directors are satisfied that the provision
nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
The auditor’s independence declaration for the year ended 30 April 2021 has been received and is included on page 77.
nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
The auditor’s independence declaration for the year ended 30 April 2021 has been received and is included on page 117.
EY received or are due to receive $457,000 for the provision of non-audit services relating to tax compliance and advisory.
EY received or are due to receive $457,000 for the provision of non-audit services relating to tax compliance and advisory.
Subsequent events
On 28 June 2021, Metcash announced that it has increased its ownership in Total Tools Holdings (TTH) from 70% to 85% for an
Subsequent events
acquisition cost of $59.4 million. Metcash has also increased its debt facility to TTH from $40 million to $65 million. TTH has significant
On 28 June 2021, Metcash announced that it has increased its ownership in Total Tools Holdings (TTH) from 70% to 85% for an
growth opportunities and this increase, together with a portion of the consideration for the additional 15% holding, is expected to
acquisition cost of $59.4 million. Metcash has also increased its debt facility to TTH from $40 million to $65 million. TTH has significant
help fund TTH’s growth plans. This includes expansion of the store network and the acquisition of an ownership interest in a select
growth opportunities and this increase, together with a portion of the consideration for the additional 15% holding, is expected to
number of stores.
help fund TTH’s growth plans. This includes expansion of the store network and the acquisition of an ownership interest in a select
In addition, the Group also announced that it is undertaking an Off-Market Buy-Back (‘Buy-Back’) of up to approximately $175.0
number of stores.
million1. This follows the Board’s assessment of the Group’s ability to distribute excess capital to shareholders having regard to: an
In addition, the Group also announced that it is undertaking an Off-Market Buy-Back (‘Buy-Back’) of up to approximately $175.0
improvement in the level of economic certainty; its near-term capital expenditure and working capital requirements; opportunities to
million1. This follows the Board’s assessment of the Group’s ability to distribute excess capital to shareholders having regard to: an
grow and create shareholder value; while also maintaining a strong balance sheet with low gearing. Based on an expected Buy-Back
improvement in the level of economic certainty; its near-term capital expenditure and working capital requirements; opportunities to
of approximately $175.0 million, the Share Buy-Back, together with dividends for FY21, will result in approximately $354.0 million2
grow and create shareholder value; while also maintaining a strong balance sheet with low gearing. Based on an expected Buy-Back
being returned to shareholders.
of approximately $175.0 million, the Share Buy-Back, together with dividends for FY21, will result in approximately $354.0 million2
being returned to shareholders.
Other than matters disclosed in this report, there were 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.
Other than matters disclosed in this report, there were no events that have occurred after the end of the financial year that would
Rounding
materially affect the reported results or would require disclosure in this report.
The amounts contained in this report and in the financial statements have been rounded to the nearest $100,000 (where rounding is
Rounding
applicable) under the option available to the Company under ASIC Corporations Instrument 2016/191. The Company is an entity to
The amounts contained in this report and in the financial statements have been rounded to the nearest $100,000 (where rounding is
which the legislative instrument applies.
applicable) under the option available to the Company under ASIC Corporations Instrument 2016/191. The Company is an entity to
Signed in accordance with a resolution of the Directors.
which the legislative instrument applies.
Signed in accordance with a resolution of the Directors.
Jeff Adams
Director
Jeff Adams
Sydney, 28 June 2021
Director
Sydney, 28 June 2021
1 Metcash may vary the size of the Buy-Back depending on a number of factors including shareholder demand, market conditions and future capital requirements. If Metcash
increases the Buy-Back it will not buy back more shares than allowed within its 10% limit under the Corporations Act.
2 Reflects a Buy-Back of ~$175.0 million and excludes any FY22 potential dividends.
1 Metcash may vary the size of the Buy-Back depending on a number of factors including shareholder demand, market conditions and future capital requirements. If Metcash
increases the Buy-Back it will not buy back more shares than allowed within its 10% limit under the Corporations Act.
72 Metcash Annual Report 2021
2 Reflects a Buy-Back of ~$175.0 million and excludes any FY22 potential dividends.
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
33
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Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us
Financial Report
For the year ended 30 April 2021
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cashflows
Notes to the Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Corporate Information
Segment Information
Other Income And Expenses
Income Tax
Dividends
Trade Receivables And Loans
Right-Of-Use Assets, Lease Receivables And Lease Liabilities
Equity-Accounted Investments
Property, Plant And Equipment
Intangible Assets
Interest-Bearing Borrowings
12. Provisions
13. Put Options And Other Financial Liabilities
14. Contributed Equity And Reserves
15. Reconciliation Of Cashflows From Operating Activities
16. Financial Risk Management
17. Capital Management
18. Related Party Disclosures
19. Share-Based Payments
20.
Information Relating To Metcash Limited (The Parent Company)
21. Auditors Remuneration
22. Earnings Per Share
23. Business Combinations
24. Commitments And Contingent Liabilities
25. Subsequent Events
Appendix A – Summary Of Significant Accounting Policies
Appendix B – Information On Subsidiaries
Appendix C – Equity-accounted Investments
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
74
75
76
77
78
78
79
80
81
82
84
86
87
88
90
90
91
92
93
93
96
97
98
100
101
101
102
103
104
105
112
115
116
117
118
73
Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information FY21
$m
14,315.3
(12,834.0)
1,481.3
FY20
$m
13,025.4
(11,712.7)
1,312.7
Statement of Comprehensive Income
Statement of Comprehensive Income
For the year ended 30 April 2021
For the year ended 30 April 2021
Notes
2
3
8
3
3
3
3
3
3
4
Sales revenue
Cost of sales
Gross profit
Other income
Share of profit from equity-accounted investments
Employee benefit expenses
Depreciation and amortisation
Lease expenses
Provisions for impairment, net of reversals
Other expenses
Finance costs, net
Significant items
Profit before income tax
Income tax expense
Net profit/(loss) for the year
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income/(loss) for the year
Net profit/(loss) for the year is attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive income/(loss) for the year is attributable to:
Equity holders of the parent
Non-controlling interests
Earnings/(loss) per share attributable to the ordinary equity holders of the Company:
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
22
22
24.0
20.1
(727.2)
(163.7)
(69.2)
(42.9)
(121.0)
(42.6)
(17.0)
341.8
(100.4)
241.4
(1.8)
239.6
239.0
2.4
241.4
237.2
2.4
239.6
23.4
23.3
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
74 Metcash Annual Report 2021
Metcash Group Financial Report FY21
25.6
5.3
(651.4)
(157.2)
(73.0)
(28.3)
(98.8)
(52.0)
(268.5)
14.4
(69.6)
(55.2)
0.7
(54.5)
(56.8)
1.6
(55.2)
(56.1)
1.6
(54.5)
(6.2)
(6.2)
34
Chairman’s ReportCEO’s ReportStrategic DirectionFinancial HighlightsFoodLiquorHardwareAbout Us
Statement of Financial Position
Statement of Financial Position
As at 30 April 2021
As at 30 April 2021
Notes
FY21
$m
FY20
$m
ASSETS
Current assets
Cash and cash equivalents
Trade receivables and loans
Lease receivables
Inventories
Assets held for sale
Other financial assets
Total current assets
Non-current assets
Trade receivables and loans
Lease receivables
Equity-accounted investments
Net deferred tax assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Income tax payable
Put options and other financial liabilities
Total current liabilities
Non-current liabilities
Interest-bearing borrowings
Lease liabilities
Provisions
Put options and other financial liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings
Other reserves
Parent interest
Non-controlling interests
TOTAL EQUITY
6
7
6
7
8
4
9
7
10
7
12
13
11
7
12
13
14
14
124.6
1,622.4
41.5
1,008.0
11.0
2.8
2,810.3
15.7
239.0
82.5
125.8
231.8
618.9
729.1
2,042.8
4,853.1
2,094.7
146.6
139.7
31.9
21.9
2,434.8
-
888.0
44.4
194.8
1,127.2
3,562.0
275.1
1,578.2
55.6
1,032.2
11.4
1.5
2,954.0
25.7
237.1
77.6
120.0
214.0
485.4
581.8
1,741.6
4,695.6
2,064.1
173.4
116.3
1.7
7.2
2,362.7
188.4
712.7
58.1
2.1
961.3
3,324.0
1,291.1
1,371.6
867.0
414.6
(1.7)
1,279.9
11.2
1,291.1
853.5
505.5
(2.3)
1,356.7
14.9
1,371.6
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Metcash Group Financial Report FY21
75
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Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information
Statement of Changes in Equity
Statement of Changes in Equity
For the year ended 30 April 2021
For the year ended 30 April 2021
Contributed
equity
$m
Retained
earnings
$m
Other
reserves
$m
Notes
Owners
of the
parent
$m
Non-
controlling
interests
$m
Total
equity
$m
At 1 May 2020
853.5
505.5
(2.3)
1,356.7
14.9
1,371.6
Total comprehensive income/(loss), net of tax
-
239.0
(1.8)
237.2
2.4
239.6
Transactions with owners
Proceeds from equity raising, net of costs
Dividends paid
Recognition of put option liabilities
Share of associate’s adjustment on initial
adoption of AASB 16 Leases
Shares issued to employees
Share-based payments expense
At 30 April 2021
14
5
13
19
13.5
-
-
-
-
-
867.0
-
(148.3)
(172.6)
(9.0)
-
-
414.6
-
-
-
-
(6.3)
8.7
(1.7)
13.5
(148.3)
(172.6)
(9.0)
(6.3)
8.7
1,279.9
-
(1.4)
(4.7)
-
-
-
11.2
13.5
(149.7)
(177.3)
(9.0)
(6.3)
8.7
1,291.1
At 1 May 2019
559.2
680.5
(0.8)
1,238.9
9.6
1,248.5
Total comprehensive (loss)/income, net of tax
-
(56.8)
0.7
(56.1)
1.6
(54.5)
Transactions with owners
Proceeds from equity raising, net of costs
Dividends paid
Acquisition of a subsidiary
Shares issued to employees
Share-based payments expense
At 30 April 2020
14
5
19
294.3
-
-
-
-
853.5
-
(118.2)
-
-
-
505.5
-
-
-
(5.2)
3.0
(2.3)
294.3
(118.2)
-
(5.2)
3.0
1,356.7
-
(1.0)
4.7
-
-
14.9
294.3
(119.2)
4.7
(5.2)
3.0
1,371.6
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
76 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Statement of Cash Flows
Statement of Cashflows
For the year ended 30 April 2021
For the year ended 30 April 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Financing component of lease payments, net
Interest and dividends, net
Income tax paid, net of tax refunds
Net cash generated from operating activities
Cash flows from investing activities
Proceeds from sale of business and assets
Payments for acquisition of assets
Payments for acquisition of businesses, net of cash acquired
Receipts from subleases, excluding the financing component
Loans repaid by other entities, net
Net cash used in investing activities
Cash flows from financing activities
Proceeds from equity raising, net of costs
(Repayments of)/proceeds from borrowings, net
Payments for on-market purchase of shares
Payments for lease liabilities, excluding the financing component
Payment of dividends to owners of the parent
Payment of dividends to non-controlling interests
Net cash generated (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Add: opening cash and cash equivalents
Cash and cash equivalents at the end of the year
Notes
FY21
$m
FY20
$m
7
15
23
7
14
11
7
17,845.6
(17,256.7)
(30.3)
(4.2)
(78.9)
475.5
16,149.7
(15,905.1)
(28.5)
(16.5)
(82.1)
117.5
0.6
(85.6)
(143.1)
44.3
12.1
(171.7)
13.5
(190.9)
(5.2)
(122.0)
(148.3)
(1.4)
(454.3)
(150.5)
275.1
124.6
5.4
(61.5)
(29.7)
45.2
4.2
(36.4)
294.3
9.3
(3.3)
(129.7)
(118.2)
(1.0)
51.4
132.5
142.6
275.1
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Metcash Group Financial Report FY21
77
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
1.
CORPORATE INFORMATION
The financial statements of Metcash Limited (the ‘Company’) and its controlled entities (together the ‘Group’) for the year ended 30
April 2021 were authorised for issue in accordance with a resolution of the Directors on 28 June 2021.
Metcash Limited is a for profit company limited by ordinary shares incorporated and domiciled 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. The registered office of the Company is 1 Thomas Holt Drive, Macquarie Park NSW 2113.
The basis of preparation of the financial statements and the significant accounting policies applied are summarised in Appendix A.
2.
SEGMENT INFORMATION
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Chief Executive
Officer (the chief operating decision maker) in assessing performance and in determining the allocation of resources. Discrete financial
information about these operating segments is reported on at least a monthly basis.
The information reported to the CEO is aggregated based on product types and the overall economic characteristics of industries in
which the Group operates. The Group’s reportable segments are therefore as follows:
Food activities comprise the distribution of a range of products and services to independent supermarket and convenience
retail outlets.
Liquor activities comprise the distribution of liquor products to independent retail outlets and hotels.
Hardware activities comprise the distribution of hardware products to independent retail outlets and the operation of
company owned retail stores.
The Group operates predominantly in Australia. The Group has operations in New Zealand that represent less than 5% of revenue,
results and assets of the Group. The Group does not have a single customer which represents greater than 10% of the Group's revenue.
Sales between segments are based on similar terms and conditions to those in place with third party customers.
Segment results
Food
Liquor
Hardware
Segment total
Corporate
Group underlying earnings before interest and tax (‘EBIT’)
Finance costs, net (Note 3)
Significant items (Note 3)
Profit before income tax
78 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Segment revenue
Segment results
FY21
$m
8,316.3
4,374.3
1,624.7
FY20
$m
8,121.6
3,670.3
1,233.5
14,315.3
13,025.4
FY21
$m
192.4
88.7
136.0
417.1
(15.7)
401.4
(42.6)
(17.0)
341.8
FY20
$m
182.7
72.8
84.2
339.7
(4.8)
334.9
(52.0)
(268.5)
14.4
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
3.
OTHER INCOME AND EXPENSES
(i) Other income
Lease income - rent
Lease income - outgoings recoveries
Net gain from disposal of business and plant and equipment
(ii) Employee benefit expenses
Salaries and wages, incentives, and on-costs
Superannuation expense
Share-based payments expense
(iii) Depreciation and amortisation
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Amortisation of software
Amortisation of other intangible assets
(iv) Lease expenses
Property rent
Property outgoings
Equipment and other leases
(v) Provisions for impairment, net of reversals
Trade receivables and loans
Inventories
Property provisions
Other impairments (net)
(vi) Finance costs, net
Interest expense
Transaction fees in relation to customer charge cards (Note 6)
Deferred borrowing costs
Finance component of lease payments, net
Finance costs from discounting of provisions
Interest income
(vii) Significant items
Total Tools acquisition costs and put option valuation (Note 23)
Project Horizon implementation costs
MFuture implementation costs
COVID-19 impairments
Impairment of goodwill and other assets
Total significant items before tax
Income tax benefit attributable to significant items
Total significant items after tax
Metcash Group Financial Report FY21
FY21
$m
7.1
16.3
0.6
24.0
673.1
45.4
8.7
727.2
106.8
29.5
22.8
4.6
163.7
3.9
54.7
10.6
69.2
14.1
31.2
(6.8)
4.4
42.9
9.8
2.0
1.7
30.3
2.7
(3.9)
42.6
6.1
7.9
3.5
(0.5)
-
17.0
(3.3)
13.7
FY20
$m
8.3
16.8
0.5
25.6
606.1
42.3
3.0
651.4
103.1
26.4
23.0
4.7
157.2
3.9
58.6
10.5
73.0
13.2
22.2
(9.3)
2.2
28.3
16.9
5.4
1.0
28.5
3.5
(3.3)
52.0
-
-
10.5
15.6
242.4
268.5
(12.9)
255.6
79
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For the year ended 30 April 2021
For the year ended 30 April 2021
For the year ended 30 April 2021
OTHER INCOME AND EXPENSES (continued)
OTHER INCOME AND EXPENSES (continued)
OTHER INCOME AND EXPENSES (continued)
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
3.
3.
3.
Project Horizon implementation costs
Project Horizon implementation costs
Project Horizon implementation costs
Metcash has embarked on the three-year Project Horizon stage one program aimed at derisking the Group’s processes by replacing
Metcash has embarked on the three-year Project Horizon stage one program aimed at derisking the Group’s processes by replacing
Metcash has embarked on the three-year Project Horizon stage one program aimed at derisking the Group’s processes by replacing
aged technology whilst driving efficiencies and simplifying processes through the development of a single operating system across
aged technology whilst driving efficiencies and simplifying processes through the development of a single operating system across
the Group. In FY21, the Group incurred $17.3 million of capital expenditure and $7.9 million of expenses on the program. The project
aged technology whilst driving efficiencies and simplifying processes through the development of a single operating system across
the Group. In FY21, the Group incurred $17.3 million of capital expenditure and $7.9 million of expenses on the program. The project
expenses included resource costs, incremental accelerated amortisation of legacy software assets and incremental software licence
the Group. In FY21, the Group incurred $17.3 million of capital expenditure and $7.9 million of expenses on the program. The project
expenses included resource costs, incremental accelerated amortisation of legacy software assets and incremental software licence
and maintenance costs. These costs are separately disclosed within significant items to enable a better understanding of the Group’s
expenses included resource costs, incremental accelerated amortisation of legacy software assets and incremental software licence
and maintenance costs. These costs are separately disclosed within significant items to enable a better understanding of the Group’s
and maintenance costs. These costs are separately disclosed within significant items to enable a better understanding of the Group’s
results.
results.
results.
MFuture implementation costs
MFuture implementation costs
MFuture implementation costs
The five-year MFuture program commenced in FY20 and includes initiatives aimed at growth and maximising the effectiveness of the
The five-year MFuture program commenced in FY20 and includes initiatives aimed at growth and maximising the effectiveness of the
The five-year MFuture program commenced in FY20 and includes initiatives aimed at growth and maximising the effectiveness of the
Group’s cost of doing business (‘CODB’). During the current year, the Group incurred $3.5 million (FY20: $10.5 million) of
Group’s cost of doing business (‘CODB’). During the current year, the Group incurred $3.5 million (FY20: $10.5 million) of
implementation costs related to the MFuture program. The current year costs include redundancies and costs associated with the
Group’s cost of doing business (‘CODB’). During the current year, the Group incurred $3.5 million (FY20: $10.5 million) of
implementation costs related to the MFuture program. The current year costs include redundancies and costs associated with the
implementation costs related to the MFuture program. The current year costs include redundancies and costs associated with the
move to the new distribution centre in South Australia (SADC), which became operational in December 2020.
move to the new distribution centre in South Australia (SADC), which became operational in December 2020.
move to the new distribution centre in South Australia (SADC), which became operational in December 2020.
COVID-19 impairments
COVID-19 impairments
COVID-19 impairments
In FY20, an impairment charge of $15.6 million was recognised primarily in relation to expected credit losses from specific groups of
In FY20, an impairment charge of $15.6 million was recognised primarily in relation to expected credit losses from specific groups of
trade receivables impacted by the COVID-19 restrictions and the write-off of prepaid commitments for events. During the current year,
In FY20, an impairment charge of $15.6 million was recognised primarily in relation to expected credit losses from specific groups of
trade receivables impacted by the COVID-19 restrictions and the write-off of prepaid commitments for events. During the current year,
$6.2 million of the previously recognised allowance for impairment loss was utilised and an $0.5 million impairment reversal was
trade receivables impacted by the COVID-19 restrictions and the write-off of prepaid commitments for events. During the current year,
$6.2 million of the previously recognised allowance for impairment loss was utilised and an $0.5 million impairment reversal was
$6.2 million of the previously recognised allowance for impairment loss was utilised and an $0.5 million impairment reversal was
recognised. The Group continues to be subject to volatility and uncertainty in its trading environment and operations due to potential
recognised. The Group continues to be subject to volatility and uncertainty in its trading environment and operations due to potential
changes to COVID-19 related restrictions and resulting changes in consumer behaviour. Accordingly, the Group has retained provisions
recognised. The Group continues to be subject to volatility and uncertainty in its trading environment and operations due to potential
changes to COVID-19 related restrictions and resulting changes in consumer behaviour. Accordingly, the Group has retained provisions
for credit and inventory related COVID-19 impairments of $10.7 million at balance sheet date.
changes to COVID-19 related restrictions and resulting changes in consumer behaviour. Accordingly, the Group has retained provisions
for credit and inventory related COVID-19 impairments of $10.7 million at balance sheet date.
for credit and inventory related COVID-19 impairments of $10.7 million at balance sheet date.
4.
4.
4.
INCOME TAX
INCOME TAX
INCOME TAX
FY21
FY21
$m
FY21
$m
$m
FY20
FY20
$m
FY20
$m
$m
Major components of income tax expense
Major components of income tax expense
Major components of income tax expense
Current income tax charge
Current income tax charge
Current income tax charge
Adjustments in respect of income tax of previous years
Adjustments in respect of income tax of previous years
Adjustments in respect of income tax of previous years
Deferred income tax relating to origination and reversal of temporary differences
Deferred income tax relating to origination and reversal of temporary differences
Deferred income tax relating to origination and reversal of temporary differences
Total income tax expense
Total income tax expense
Total income tax expense
Reconciliation of income tax expense
Reconciliation of income tax expense
Reconciliation of income tax expense
Profit before income tax
Profit before income tax
Profit before income tax
At the Group’s statutory income tax rate of 30% (FY20: 30%)
At the Group’s statutory income tax rate of 30% (FY20: 30%)
At the Group’s statutory income tax rate of 30% (FY20: 30%)
Impairment of goodwill not allowable for tax purposes
Impairment of goodwill not allowable for tax purposes
Impairment of goodwill not allowable for tax purposes
Other assessable/(non-assessable) amounts – net
Other assessable/(non-assessable) amounts – net
Other assessable/(non-assessable) amounts – net
Adjustments in respect of income tax of previous years
Adjustments in respect of income tax of previous years
Adjustments in respect of income tax of previous years
Income tax expense
Income tax expense
Income tax expense
Components of net deferred tax assets
Components of net deferred tax assets
Components of net deferred tax assets
Provisions
Provisions
Provisions
Unutilised tax losses
Unutilised tax losses
Unutilised tax losses
Accelerated depreciation for accounting purposes
Accelerated depreciation for accounting purposes
Accelerated depreciation for accounting purposes
Other
Other
Other
Intangible assets
Intangible assets
Intangible assets
102.4
102.4
102.4
0.3
0.3
0.3
(2.3)
(2.3)
(2.3)
100.4
100.4
100.4
341.8
341.8
341.8
102.5
102.5
102.5
-
-
-
(2.4)
(2.4)
(2.4)
0.3
0.3
0.3
100.4
100.4
100.4
70.7
70.7
70.7
(1.3)
(1.3)
(1.3)
0.2
0.2
0.2
69.6
69.6
69.6
14.4
14.4
14.4
4.3
4.3
4.3
67.7
67.7
67.7
(1.1)
(1.1)
(1.1)
(1.3)
(1.3)
(1.3)
69.6
69.6
69.6
131.1
131.1
131.1
-
-
-
16.5
16.5
16.5
12.3
12.3
12.3
(34.1)
(34.1)
(34.1)
125.8
125.8
125.8
121.9
121.9
121.9
0.1
0.1
0.1
10.9
10.9
10.9
12.5
12.5
12.5
(25.4)
(25.4)
(25.4)
120.0
120.0
120.0
Movements in net deferred tax assets
Movements in net deferred tax assets
Movements in net deferred tax assets
117.3
Opening balance
117.3
Opening balance
117.3
Opening balance
Credited/(charged) to net profit for the year
(0.2)
Credited/(charged) to net profit for the year
(0.2)
Credited/(charged) to net profit for the year
(0.2)
(0.1)
Charged to other comprehensive income for the year
(0.1)
Charged to other comprehensive income for the year
(0.1)
Charged to other comprehensive income for the year
2.4
Tax benefit associated with share issue costs – net
2.4
Tax benefit associated with share issue costs – net
2.4
Tax benefit associated with share issue costs – net
0.6
Adjustments related to business combinations
0.6
Adjustments related to business combinations
0.6
Adjustments related to business combinations
120.0
Closing balance
Closing balance
120.0
Closing balance
120.0
The Group has unrecognised gross capital losses of $19.5 million (FY20: $20.8 million) that are available indefinitely for offset against
The Group has unrecognised gross capital losses of $19.5 million (FY20: $20.8 million) that are available indefinitely for offset against
The Group has unrecognised gross capital losses of $19.5 million (FY20: $20.8 million) that are available indefinitely for offset against
future capital gains.
future capital gains.
future capital gains.
120.0
120.0
120.0
2.3
2.3
2.3
-
-
-
(0.2)
(0.2)
(0.2)
3.7
3.7
3.7
125.8
125.8
125.8
80 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
40
40
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
4.
INCOME TAX (continued)
Tax consolidation
Metcash Limited and its 100% owned Australian resident subsidiaries 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.
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
standalone tax calculations 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.
5.
DIVIDENDS
Dividends paid on ordinary shares during the year
Final fully franked dividend for FY20: 6.5c (FY19: 7.0c)
Interim fully franked dividend for FY21: 8.0c (FY20: 6.0c)
Dividends determined (not recognised as a liability as at 30 April)
Final fully franked dividend for FY21: 9.5c (FY20: 6.5c)
FY21
$m
66.5
81.8
148.3
FY20
$m
63.6
54.6
118.2
97.1
66.1
On 28 June 2021, the Board determined to pay a fully franked FY21 final dividend of 9.5 cents per share, sourced from the profit reserve
established by Metcash Limited (Parent Company), with a record date of 2 July 2021 and payable in cash on 11 August 2021. The
Dividend Reinvestment Plan remains suspended with effect from 26 June 2017.
Franking credit balance of Metcash Limited
Franking account balance as at the end of the financial year at 30% (FY20: 30%)
Franking credits that will arise from the payment of income tax payable at the reporting date
Franking credits on dividends determined but not distributed to shareholders during the year
FY21
$m
216.8
16.5
(41.6)
191.7
FY20
$m
203.8
3.9
(28.5)
179.2
Metcash Group Financial Report FY21
81
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Sustainability ReportOur People & Our BoardFinancial ReportDirectors’ ReportOther Information
Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
6.
TRADE RECEIVABLES AND LOANS
Current
Trade receivables
Allowance for impairment loss
Trade receivables
Customer charge cards agreement (a)
Other receivables and prepayments
Trade and other receivables
Customer loans
Allowance for impairment loss
Customer loans
Total trade receivables and loans – current
Non-current
Customer loans
Allowance for impairment loss
Total trade receivables and loans – non-current
FY21
$m
1,294.7
(55.4)
1,239.3
211.9
156.6
1,607.8
15.8
(1.2)
14.6
1,622.4
16.4
(0.7)
15.7
FY20
$m
1,242.7
(58.9)
1,183.8
226.5
148.7
1,559.0
23.8
(4.6)
19.2
1,578.2
25.7
-
25.7
(a) Amounts receivable under the customer charge card agreements are fully offset by a corresponding amount included in trade and other payables and are
described below.
Movements in allowance for impairment loss
Opening balance
Charged as an expense during the year
Accounts written off as non-recoverable
Related to acquisitions and disposals of businesses and other movements
Closing balance
Weighted average interest
FY21
$m
63.5
8.0
(14.2)
-
57.3
FY20
$m
69.0
24.7
(31.4)
1.2
63.5
Trade and other receivables are non-interest-bearing and repayment terms vary by pillar. As at 30 April 2021, $4.7 million (FY20: $2.8
million) of customer loans are non-interest-bearing and $27.5 million (FY20: $46.7 million) of customer loans have a weighted average
annual interest rate of 5.9% (FY20: 7.4%).
Maturity of trade receivables
At 30 April 2021, 89.2% (FY20: 92.4%) of trade receivables are either due or required to be settled within 30 days, 9.5% (FY20: 7.0%)
have terms extending from 30 to 60 days and 1.3%(FY20: 0.6%) have terms greater than 60 days.
Customer charge cards agreement
Under an agreement between Metcash and American Express (Amex), eligible retail customers make trade purchases from Metcash
using their Amex customer charge cards. Metcash’s trade receivable is settled in full by Amex. Amex subsequently collects the amounts
outstanding on the customer charge cards directly from the retailers.
Under the agreement, in the event a customer defaults on their payment obligation to Amex, Metcash must reacquire the trade
receivable from Amex. The maximum amount payable by Metcash to Amex is limited to the actual face value of the outstanding trade
receivable and does not include any interest or any other costs incurred by Amex. Once reacquired, Metcash will seek to collect the
trade receivable from the retail customer through its normal credit processes.
The agreement operates on an evergreen basis until either Metcash or Amex provides a 12-month notice of cancellation. The earliest
date on which the agreement could be cancelled is 6 October 2021.
The customer charge cards agreement is presented as part of current trade and other receivables and a matching current liability of
$211.9 million (FY20: $226.5 million) is included within trade and other payables, with no impact to the Group’s net asset position.
82 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
6.
TRADE RECEIVABLES AND LOANS (continued)
Customer loan security
The Group has access to security against most customer loans in the event of default. Security held may include bank and personal
guarantees, fixed and floating charges and security over property and other assets. Due to the large number and the varied nature of
security held, their fair value cannot be practicably estimated. The fair value of the security against a loan is determined when the
loan is not deemed to be recoverable and an allowance for impairment loss is raised to cover any deficit in recoverability.
Ageing of unimpaired trade receivables and loans
Days overdue
At 30 April 2021
Neither past due nor impaired
Less than 30 days
Between 30 and 60 days
Between 60 and 90 days
Between 90 and 120 days
More than 120 days
Total
At 30 April 2020
Neither past due nor impaired
Less than 30 days
Between 30 and 60 days
Between 60 and 90 days
Between 90 and 120 days
More than 120 days
Total
Trade receivables (a)
%
$m
Customer loans
%
$m
Other receivables and
prepayments
%
$m
1,389.5
58.0
3.7
-
-
-
1,451.2
1,262.3
113.1
16.4
4.2
7.9
6.4
1,410.3
95.7%
4.0%
0.3%
-
-
-
100.0%
89.5%
8.0%
1.2%
0.3%
0.6%
0.4%
100.0%
23.4
0.2
0.4
0.3
0.5
5.5
30.3
33.0
0.4
0.2
0.3
0.6
10.4
44.9
77.2%
0.7%
1.3%
1.0%
1.7%
18.1%
100.0%
73.5%
0.9%
0.4%
0.7%
1.3%
23.2%
100.0%
156.6
-
-
-
-
-
156.6
148.7
-
-
-
-
-
148.7
100.0%
-
-
-
-
-
100.0%
100.0%
-
-
-
-
-
100.0%
(a) The ageing profile of trade receivables includes amounts receivable under the customer charge cards agreement.
The Group expects that the unimpaired trade receivables and loans presented above are fully recoverable.
Metcash Group Financial Report FY21
83
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
7.
RIGHT-OF-USE ASSETS, LEASE RECEIVABLES AND LEASE LIABILITIES
As at 1 May 2020
New and modified leases
Additions through business combinations
Leases exited
Lease remeasurements
Impairments, net
Depreciation
Reclassifications
Cash (receipts)/payments
Financing component of lease receipts/(payments)
As at 30 April 2021
Current
Non-current
As at 1 May 2019
New and modified leases
Leases exited
Lease remeasurements
Impairments, net
Depreciation
Reclassifications
Cash (receipts)/payments
Financing component of lease receipts/(payments)
As at 30 April 2020
Current
Non-current
Right-of-use assets (a)
Leasehold
properties
$m
Motor
vehicles and
equipment
$m
452.4
165.5
36.5
-
3.8
(0.4)
(92.6)
0.5
-
-
565.7
-
565.7
520.3
49.1
(12.0)
2.9
(1.2)
(89.0)
(17.7)
-
-
452.4
-
452.4
33.0
34.4
-
-
-
-
(14.2)
-
-
-
53.2
-
53.2
34.2
12.9
-
-
-
(14.1)
-
-
-
33.0
-
33.0
Lease
receivables
(b)(c)
$m
292.7
11.4
2.9
(1.3)
16.9
2.7
-
(0.5)
(57.6)
13.3
280.5
41.5
239.0
316.0
15.2
(6.1)
(4.0)
(0.9)
-
17.7
(59.8)
14.6
292.7
55.6
237.1
Total
$m
485.4
199.9
36.5
-
3.8
(0.4)
(106.8)
0.5
-
-
618.9
-
618.9
554.5
62.0
(12.0)
2.9
(1.2)
(103.1)
(17.7)
-
-
485.4
-
485.4
(a) The cost and accumulated depreciation and impairment of the right-of-use assets are presented below:
Cost
Accumulated depreciation and impairment
As at 30 April 2021
Cost
Accumulated depreciation and impairment
As at 30 April 2020
Right-of-use assets
Motor
vehicles and
equipment
$m
Leasehold
properties
$m
765.2
(199.5)
565.7
561.3
(108.9)
452.4
89.9
(36.7)
53.2
55.5
(22.5)
33.0
Lease
liabilities
$m
(886.1)
(211.0)
(39.5)
1.1
(21.1)
-
-
-
165.6
(43.6)
(1,034.6)
(146.6)
(888.0)
(946.5)
(77.2)
10.0
(2.1)
-
-
-
172.8
(43.1)
(886.1)
(173.4)
(712.7)
Total
$m
855.1
(236.2)
618.9
616.8
(131.4)
485.4
(b) As at 30 April 2021, lease receivables include a gross carrying amount of $299.3 million (FY20: $314.7 million) and allowance for
impairment losses of $18.8 million (FY20: $22.0 million).
84 Metcash Annual Report 2021
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
7.
RIGHT-OF-USE ASSETS, LEASE RECEIVABLES AND LEASE LIABILITIES (continued)
(c) The future minimum rentals receivable under non-cancellable finance leases are as follows:
Within one year
After one year but not more than five years
More than five years
Unearned finance income
Impairment of receivables
(d) The future minimum rentals receivable under non-cancellable operating leases are as follows:
Within one year
After one year but not more than five years
More than five years
(e) Lease cash receipts and payments are presented in the following lines of the statement of cash flows:
Receipts from subleases, excluding the financing component
Payment for lease liabilities, excluding the financing component
Financing component of lease payments, net
Net cash payments
FY21
$m
55.1
171.7
139.6
366.4
(67.1)
(18.8)
280.5
FY21
$m
2.1
5.8
6.8
14.7
FY21
$m
44.3
(122.0)
(30.3)
(108.0)
FY20
$m
57.4
178.9
150.9
387.2
(72.5)
(22.0)
292.7
FY20
$m
3.1
7.5
8.5
19.1
FY20
$m
45.2
(129.7)
(28.5)
(113.0)
(f) In FY21, the Group recognised rent expense of $14.5 million (FY20: $14.4 million) from short-term leases and variable lease
payments.
(g) Extension options are included in a number of lease contracts across the Group. These options are negotiated by management to
provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. The extension options are
exercisable only by the Group and not by the lessors. The present value of lease payments to be made under these options that are
considered reasonably certain to be exercised have been included in the lease liability balance at 30 April 2021. The undiscounted
potential future payments at current rental rates under options that are not considered reasonably certain to be exercised is
approximately $1.9 billion, which includes potential lease payments within the next five years of approximately $205.8 million.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
8.
EQUITY-ACCOUNTED INVESTMENTS
Nature and extent
Appendix C contains key information about the nature and extent of the Group’s equity-accounted investments.
Contingent liabilities and commitments
Refer note 16 for details of the Group’s contingent liabilities in relation to equity-accounted investments.
Share of investees’ profit
In aggregate, the Group’s share of profit after tax from equity-accounted investments during the year was $20.1 million (FY20: $5.3
million) which is net of a $8.6 million (FY20: $1.5 million) share of income tax expense incurred by the investees.
At the reporting date, the Group’s share of unrecognised gains or losses is not material.
Share of investees’ net assets
The following table is based on investees’ latest available financial information as at balance sheet date:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
FY21
$m
96.7
232.2
328.9
133.7
136.7
270.4
58.5
FY20
$m
71.1
151.8
222.9
105.3
63.4
168.7
54.2
86 Metcash Annual Report 2021
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
9.
PROPERTY, PLANT AND EQUIPMENT
Year ended 30 April 2021
Opening balance
Additions
Additions through business combinations
Disposals
Reclassifications
Depreciation
Closing balance
At 30 April 2021
Cost
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 April 2020
Opening balance
Additions
Additions through business combinations
Disposals
Impairment
Reclassifications
Depreciation
Closing balance
At 30 April 2020
Cost
Accumulated depreciation and impairment
Net carrying amount
Land &
buildings
$m
Plant &
equipment
$m
37.7
0.5
-
-
(1.1)
(0.3)
36.8
44.2
(7.4)
36.8
37.6
0.5
-
-
-
-
(0.4)
37.7
44.8
(7.1)
37.7
176.3
58.7
9.0
(4.7)
(15.1)
(29.2)
195.0
431.1
(236.1)
195.0
180.4
56.0
6.5
(2.4)
(15.7)
(22.5)
(26.0)
176.3
378.5
(202.2)
176.3
Total
$m
214.0
59.2
9.0
(4.7)
(16.2)
(29.5)
231.8
475.3
(243.5)
231.8
218.0
56.5
6.5
(2.4)
(15.7)
(22.5)
(26.4)
214.0
423.3
(209.3)
214.0
Additions to plant and equipment include $30.6 million (FY20: $41.7 million) of assets under construction. The closing balance of plant
and equipment includes $28.3 million (FY20: $33.0 million) of assets under construction.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
10.
INTANGIBLE ASSETS
Year ended 30 April 2021
Opening balance
Additions
Additions through business combinations
Adjustments to business combinations
Impairment
Disposals
Reclassifications
Amortisation
Closing balance
At 30 April 2021
Cost
Accumulated amortisation and impairment
Net carrying amount
Year ended 30 April 2020
Opening balance
Additions
Additions through business combinations
Adjustments to business combinations
Impairment
Disposals
Reclassifications
Amortisation
Closing balance
At 30 April 2020
Cost
Accumulated amortisation and impairment
Net carrying amount
Software
development
costs
$m
Customer
contracts
$m
Trade names
and other
$m
Goodwill
$m
55.5
24.6
-
-
(2.0)
(0.7)
16.2
(25.5)
68.1
231.7
(163.6)
68.1
55.0
5.0
-
-
(1.6)
(2.4)
22.5
(23.0)
55.5
191.6
(136.1)
55.5
44.3
-
-
-
-
-
-
(4.4)
39.9
176.1
(136.2)
39.9
49.0
-
-
-
-
-
-
(4.7)
44.3
176.1
(131.8)
44.3
40.3
2.0
31.7
-
-
-
-
(0.2)
73.8
77.2
(3.4)
73.8
40.3
-
-
-
-
-
-
-
40.3
43.4
(3.1)
40.3
441.7
-
103.9
1.7
-
-
-
-
547.3
1,529.7
(982.4)
547.3
649.2
-
20.7
1.2
(225.6)
(3.8)
-
-
441.7
1,424.1
(982.4)
441.7
Total
$m
581.8
26.6
135.6
1.7
(2.0)
(0.7)
16.2
(30.1)
729.1
2,014.7
(1,285.6)
729.1
793.5
5.0
20.7
1.2
(227.2)
(6.2)
22.5
(27.7)
581.8
1,835.2
(1,253.4)
581.8
Impairment tests for goodwill and intangibles with indefinite useful lives
Description of cash generating units
Goodwill acquired through business combinations is allocated to the lowest level within the entity at which the goodwill is monitored,
being the three cash-generating units (or ‘CGU’s) - Food, Liquor and Hardware. Indefinite life intangibles primarily comprise trade
names and licences.
Allocation to CGUs
The carrying amounts of goodwill and indefinite life intangibles are allocated to the Group’s CGUs as follows:
Allocated goodwill
FY20
$m
FY21
$m
214.3
148.3
184.7
547.3
214.3
120.3
107.1
441.7
Trade names and
other intangibles
FY20
$m
FY21
$m
2.1
13.1
58.6
73.8
0.2
12.9
27.2
40.3
Cash-generating units
Food
Liquor
Hardware
88 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Post-tax discount rates
FY20
FY21
%
%
10.6%
9.4%
9.4%
11.3%
10.1%
10.1%
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
10.
INTANGIBLE ASSETS (continued)
Assessment of recoverable amounts
The recoverable amounts were determined based on value-in-use calculations using cash flow projections covering a five-year period,
which are based on approved strategic plans or forecasts. Estimates beyond the five-year period are calculated using terminal growth
rates that are applicable to the trading environment in which the CGU operates.
Key assumptions used in assessment
The valuations used to support the carrying amounts of intangible assets are based on forward looking key assumptions that are, by
nature, uncertain. The nature and basis of the key assumptions used to estimate future cash flows and the discount rates used in the
projections, when determining the recoverable amount of each CGU, are set out below and in the table above:
Operating cash flows - Operating cash flow projections are extracted from the most recent approved strategic plans or forecasts
that relate to the existing asset base. For each CGU, the cash flow projections for a five-year period have been determined based
on expectations of future performance. Key assumptions in the cash flows include sales volume growth, costs of sales and costs
of doing business. These assumptions are based on expectations of market demand and operational performance.
Cash flow projections are based on risk-adjusted forecasts allowing for estimated changes in the business, the competitive trading
environment, legislation and economic growth whilst noting that uncertainties remain due to COVID-19 restrictions and any
potential changes to consumer behaviour. Other uncertainties surrounding macroeconomic indicators such as unemployment
and GDP growth and the timing and impact on the economy of the withdrawal of government support packages create future
uncertainty over the Group’s operating cash flows.
Discount rates - Discount rates are based on the weighted average cost of capital (‘WACC’) for the Group adjusted for an asset-
specific risk premium assigned to each CGU. The asset-specific risk premium is determined based on risk embedded within the
cash flow projections and other factors specific to the industries in which the CGUs operate.
The calculation of WACC is market-driven and key inputs include target capital structure, equity beta, market risk premium, risk-
free rate of return and debt risk premium. Pre-tax equivalents of the adopted discount rates are derived iteratively and differ based
on the timing and extent of tax cash flows. Pre-tax rates were 15.1% (FY20: 16.1%) for Food, 13.4% (FY20: 14.3%) for Liquor and
13.4% (FY20: 14.1%) for Hardware.
Terminal growth rates - Cash flows beyond the projection period are extrapolated indefinitely using estimated long-term growth
rates applicable to the trading environment in which the CGUs operate. A terminal growth rate of 1.5% was applied to all CGUs.
Results of assessment
Based on the FY21 assessment, no impairment of goodwill was identified in any of the Group’s CGUs.
Sensitivity to changes in key assumptions
At the assessment date, no reasonably likely change in key assumptions would cause the carrying amount of any CGU to exceed its
recoverable amount.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
11.
INTEREST-BEARING BORROWINGS
Bank loans – syndicated
Bilateral loan
Deferred borrowing costs
Financial covenants
FY21
$m
-
-
-
-
FY20
$m
190.0
0.9
(2.5)
188.4
See note 16 for details of the Group’s core borrowing facilities. The core borrowings of the Group must comply with two primary
covenants which apply to the syndicated bank facilities and the working capital facilities. In FY21, the definition of these covenants in
the facility agreements were revised to be on a post-AASB16 basis (FY20: pre-AASB16 basis). They include a Fixed Charges Cover Ratio
and a Senior Leverage Ratio. There were no defaults or breaches on the Group’s core borrowings in FY21 and FY20.
Fair value
The carrying amounts of the Group's borrowings approximate their fair value. The Group had nil borrowings as at the end of the
financial year. The weighted average effective interest rate on the syndicated and working capital loans, including interest rate swaps,
was 1.9% (FY20: 2.8%) over the financial year. These rates exclude line fees on unutilised facility balances.
12.
PROVISIONS
30 April 2021
Current
Non-current
30 April 2020
Current
Non-current
Employee
entitlements
$m
Property
provisions
$m
128.2
11.2
139.4
104.8
11.5
116.3
11.5
33.2
44.7
11.5
46.6
58.1
Total
$m
139.7
44.4
184.1
116.3
58.1
174.4
Property provisions include the value of certain retail store lease obligations recognised as part of the acquisition of Franklins in FY12.
The provision is initially recognised at the acquisition date fair value and subsequently utilised to settle lease obligations. The
provision related to an individual lease is derecognised when the Group has met or otherwise extinguished its obligations in full under
that lease.
Provisions are also recognised for obligations such as guarantees, property make-good and other costs. Depending on the nature of
these obligations, they are expected to be settled over the term of the lease, at the conclusion of the lease or otherwise when the
obligation vests.
Movements in property provisions
Opening balance
Reversals during the year, net
Utilised during the year
Resulting from acquisitions of businesses
Finance cost discount rate adjustment
Closing balance
90 Metcash Annual Report 2021
Metcash Group Financial Report FY21
FY21
$m
58.1
(6.8)
(9.3)
-
2.7
44.7
FY20
$m
85.0
(10.1)
(20.0)
(0.2)
3.4
58.1
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
13.
PUT OPTIONS AND OTHER FINANCIAL LIABILITIES
30 April 2021
Current
Non-current
30 April 2020
Current
Non-current
Put option liabilities
Total Tools Group put options
Put option
liabilities
$m
Other financial
liabilities
$m
17.7
194.8
212.5
6.1
-
6.1
4.2
-
4.2
1.1
2.1
3.2
Total
$m
21.9
194.8
216.7
7.2
2.1
9.3
In September 2020, Metcash acquired a 70% equity interest in Total Tools Holdings Pty Ltd (Total Tools), which is the parent entity in
the Total Tools Group comprising the franchisor operations, company-owned stores and subsequently, an ownership interest in 12
Total Tools independent retail stores (‘the JV Stores”).
The Total Tools put option agreement allows minority shareholders to sell their 30% equity interest in Total Tools Holdings Pty Ltd to
Metcash, exercisable between 1 November 2023 and 31 January 2024. Metcash has the right to acquire the remaining 30% equity
interest via a call option, exercisable at any time from 1 November 2023. The exercise price of the call and put option is based on a
multiple of the Total Tools Group EBITDA over the 12-month period ending on 29 October 2023, adjusted for a number of items,
including net debt and working capital.
The Group has recognised an initial liability of $122.2 million in respect of the put option held by minority shareholders in Total Tools
Holdings Pty Ltd (refer note 23).
In December 2020, Total Tools acquired ownership interests between 51% and 60% in 12 Total Tools independent retail stores.
Accordingly, Metcash holds an effective ownership interest of between 35.7% and 42% in these ‘JV Stores’.
The Total Tools JV Store put option agreements allow individual minority shareholders to sell their remaining equity interests in the
JV Stores to Total Tools, subject to the satisfaction of certain criteria, exercisable between 1 May 2024 and 31 July 2024. Metcash has
the right to acquire the remaining equity interests via call options, exercisable at any time. The exercise price of the call and put options
are based on a multiple of the respective stores’ EBITDA over the 12-month period ending on 30 April 2024, adjusted for a number of
items, including net debt and working capital.
The Group has recognised an initial liability of $69.4 million in respect of the put options held by minority shareholders in the Total
Tools JV Stores (refer note 23).
The above put option liabilities were initially measured at the fair value of the put option exercise prices estimated to be payable
under each option. The liabilities are subsequently remeasured at each reporting date at the estimated put option exercise price, with
any change in value recorded as a significant item within the Statement of Comprehensive Income, together with the net present
value interest unwind on the put option liability.
As a result of recognising the put options as a financial liability, Metcash has derecognised the minority shareholders’ non-controlling
interest in Total Tools Holdings Pty Ltd and the JV Stores and has ceased accounting for the non-controlling interests. Accordingly,
the Statement of Comprehensive Income includes 100% of the net profit of Total Tools and includes 100% of the net profits of the JV
Stores. Further details are set out in note 23 of the financial report.
Other put options
The Group has also recognised a liability of $17.7 million (FY20: $6.1 million) in respect of an additional three put options written over
non-controlling interests in non-wholly owned subsidiaries within the Hardware pillar. These put option arrangements allow minority
shareholders to sell their equity interests to Metcash, subject to specific terms and conditions. These put options are measured at the
present value of the redemption amount under the option.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
14.
CONTRIBUTED EQUITY AND RESERVES
Contributed equity
At 1 May
Issued under equity raising, net of share issue costs
At 30 April
Number of shares
1,016,399,606
5,963,215
1,022,362,821
FY21
$m
853.5
13.5
867.0
Number of shares
909,256,748
107,142,858
1,016,399,606
FY20
$m
559.2
294.3
853.5
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Shares have no par value.
In May 2020, Metcash issued 5,963,215 shares under its Share Purchase Plan (‘SPP’) at $2.28 per share which raised $13.5 million of
equity, net of transaction costs.
In April 2020, the Company issued 107,142,858 shares via an Institutional Placement at $2.80 per share which raised $294.3 million of
equity, net of $5.7 million transaction costs.
Other reserves
At 1 May 2019
Total comprehensive income, net of tax
Shares issued to employees
Share-based payments expense
At 30 April 2020
Movement in fair value of derivatives
Movement in foreign currency valuations
Total comprehensive income, net of tax
Shares issued to employees
Share-based payments expense
At 30 April 2021
92 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Share-based
payments reserve
$m
Foreign currency
translation reserve
$m
Cash flow hedge
reserve
$m
Total
other reserves
$m
4.8
-
(5.2)
3.0
2.6
-
-
-
(6.3)
8.7
5.0
(4.8)
(0.2)
-
-
(5.0)
-
(0.3)
(0.3)
-
-
(5.3)
(0.8)
0.9
-
-
0.1
(1.5)
-
(1.5)
-
-
(1.4)
(0.8)
0.7
(5.2)
3.0
(2.3)
(1.5)
(0.3)
(1.8)
(6.3)
8.7
(1.7)
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
15. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/(loss) for the year
Adjustments for:
Depreciation and amortisation
Provisions for impairment, net of reversals
Net gain from disposal of property, plant and equipment
Share-based payments expense
Other adjustments
Changes in assets and liabilities:
Increase in trade and other receivables
Decrease/(increase) in inventories
Increase/(decrease) in tax balances
(Decrease)/increase in payables and provisions
Cash flows from operating activities
16.
FINANCIAL RISK MANAGEMENT
Objectives and policies
FY21
$m
241.4
163.7
42.9
(0.6)
8.7
10.8
(30.7)
37.6
21.5
(19.8)
475.5
FY20
$m
(55.2)
157.2
286.3
(0.5)
3.0
7.6
(117.9)
(255.8)
(12.5)
105.3
117.5
The Group’s principal financial instruments comprise bank loans and overdrafts, leases, cash and short-term deposits and derivatives.
The main purpose of these instruments is to finance the Group’s operations. The Group also has various other financial assets and
liabilities such as trade receivables and payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are liquidity risk, 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. The objective of the Group’s risk
management policy is to support delivery of the Group's financial targets while protecting future financial security.
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 Appendix A.
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 extreme
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’s primary source of debt funding is a syndicated facility and working capital loans, of which 1.2% (FY20: 20.0%)
has been utilised at 30 April 2021. The Group monitors forecasts of liquidity reserves on the basis of expected cash flow.
Available credit facilities
At the reporting date, the Group had the following unused credit facilities available for its immediate use:
At 30 April 2021
Syndicated facility
Working capital, including guarantees
Total
facility
$m
675.0
230.0
905.0
Debt
usage
$m
Guarantees
& other usage
$m
Facility
available
$m
-
-
-
-
(10.7)
(10.7)
675.0
219.3
894.3
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Notes to the Financial Statements
For the year ended 30 April 2021
16. FINANCIAL RISK MANAGEMENT (continued)
Syndicated facilities
Syndicated bank loans are senior unsecured revolving facilities. The facilities are due to expire in May 2022 ($150.0 million),
May 2023 ($200.0 million), May 2024 ($100.0 million), September 2024 ($125.0 million) and September 2025 ($100.0 million).
Interest is payable on the facilities based on BBSY plus a margin. 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
11.
Working capital
Working capital bank loans are represented by two unsecured revolving facilities totalling $230.0 million. These facilities
mature in July 2021 ($100.0 million), September 2021 ($30.0 million) and February 2022 ($100.0 million). Interest payable on
any loans drawn under these facilities is based on BBSY or the RBA cash rate plus a margin. These bank loans are subject to
certain financial undertakings as detailed in note 11.
Maturity analysis of financial liabilities based on contracted date
The following table reflects the gross contracted values of financial liabilities categorised by their contracted dates of settlement.
Gross settled derivatives comprise forward exchange contracts that are used to hedge anticipated purchase commitments. Net settled
derivatives comprise interest rate swap contracts that are used to hedge floating rate interest payable on bank debt. Under the terms
of these agreements, the settlements at expiry include both a cash payment and receipt.
As at 30 April 2021
Trade and other payables
Financial guarantee contracts
Other financial liabilities
Put options written over non-controlling interests
Lease liabilities
Derivative liabilities – gross settled:
- Inflows
- Outflows
Net maturity
As at 30 April 2020
Trade and other payables
Financial guarantee contracts
Put options written over non-controlling interests
Lease liabilities
Bank and other loans
Derivative liabilities – net settled
Derivative liabilities – gross settled:
- Inflows
- Outflows
Net maturity
94 Metcash Annual Report 2021
Metcash Group Financial Report FY21
1 year
or less
$m
1 - 5 years
$m
More than 5
years
$m
2,094.7
0.4
3.8
17.4
189.9
30.4
(30.4)
2,306.2
1 year
or less
$m
2,064.1
0.7
6.1
177.7
3.5
1.0
1.1
(1.1)
2,253.1
-
-
-
191.6
526.1
-
-
717.7
-
-
-
-
570.0
-
-
570.0
1 - 5 years
$m
More than 5
years
$m
-
0.4
-
500.3
196.3
0.5
-
-
697.5
-
-
-
408.3
-
-
-
-
408.3
Total
$m
2,094.7
0.4
3.8
209.0
1,286.0
30.4
(30.4)
3,593.9
Total
$m
2,064.1
1.1
6.1
1,086.3
199.8
1.5
1.1
(1.1)
3,358.9
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Notes to the Financial Statements
For the year ended 30 April 2021
16. FINANCIAL RISK MANAGEMENT (continued)
Put options
The following put options are not included in the above maturity analysis table. These put options are recognised at their fair value of
nil.
Ritchies Stores Pty Ltd (Ritchies)
The Group has a put option with Ritchies Stores Pty Ltd (Ritchies). Metcash has a 26.4% (FY20: 26.0%) ownership interest in Ritchies,
which is recognised as an equity-accounted investment on the Group's balance sheet. The remaining shareholders in Ritchies have
the right to put their 73.6% (FY20: 74.0%) ownership interests to Metcash, via put option, subject to a margin related annual financial
hurdle (‘hurdle’) being achieved.
The put option can be exercised collectively by all shareholders during a prescribed period following the approval of Ritchies’ annual
audited financial report (‘group put option’ representing the remaining 73.6% shareholding) or in certain circumstances by individual
minority shareholders within a prescribed period (‘small shareholder put option’).
Should the hurdle be achieved and the shareholders elect to exercise any put option, the purchase consideration payable by Metcash
is based on a multiple of the prior year reported earnings, normalised for certain adjustments.
Whilst the financial hurdle was achieved in respect of Ritchies’ 2020 financial year, the group put option was not exercised in relation
to that year. Metcash estimates that the group put option consideration payable to Ritchies shareholders in respect of the 2020
financial year would have been between $240.0 million and $260.0 million.
Two small shareholders holding an aggregate of 2,000 shares (or 0.4% stake in Ritchies) exercised their option under the ‘small
shareholder put option’ in relation to Ritchies 2020 financial year, bringing Metcash’s share in Ritchies to 26.4%.
If any put options were to be exercised in future years, the exercise price will be determined with reference to Ritchies’ results for that
financial year and the consideration payable would reflect those results.
The put option agreement terminates when Metcash ceases to hold shares in Ritchies or if Ritchies lists on the ASX.
Other put options
The Group entered into put and call option agreements with two Total Tools independent retail stores without acquiring any present
ownership interest (‘Non-owned stores’). These options are exercisable in 2024 if certain operating performance conditions are met
and with an exercise price determined using a multiple of EBITDA.
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.
The Group's treasury policy requires core debt to be hedged between a range over certain maturity periods. Core debt is defined as
the minimum level of drawn debt which is expected to occur over the year. At 30 April 2021, Metcash has nil bank debt obligations and
has not entered into interest rate swap contracts (FY20: $130.0 million).
At the reporting 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 – syndicated
Bilateral loan
Less: Interest rate swaps notional principal value - designated as cash flow hedges
Gross exposure
Sensitivity analysis
FY21
$m
124.6
-
-
-
-
FY20
$m
275.1
(190.0)
(0.9)
130.0
(60.9)
As the Group’s treasury policy requires core debt to be appropriately hedged, there are no reasonably likely changes in interest rates
that are expected to have a material impact on the Group’s net profit after tax and other comprehensive income.
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
16. FINANCIAL RISK MANAGEMENT (continued)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a
financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing
activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade receivables and loans
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 obtain security over certain
assets of the customer wherever possible.
Receivables and loans are monitored on an ongoing basis and a formal review of all balances occurs every six months to measure
impairment losses. As identified in note 6, the current level of impairment provision represents 3.4% (FY20: 3.8%) of the Group’s
receivables and loans.
Lease receivables
The Group is exposed to credit risk on ‘back-to-back’ arrangements contained within its property leases where Metcash has subleased
properties to retailers. The Group regularly reviews material lease arrangements on an ongoing basis and a formal review of all leases
occurs every six months to measure impairment losses. Refer note 7 for further details.
Others
There are no other significant concentrations of credit risk within the Group.
Foreign currency risk
The Group is exposed to foreign exchange fluctuations on transactions and balances in respect of its business unit in New Zealand.
This operation represents less than 2% of the Group’s total sales and total profit after tax.
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.
17.
CAPITAL MANAGEMENT
For the purpose of the Group’s capital management, capital includes all accounts classified as equity on the Statement of Financial
Position. The Board’s intention is to continue to invest in the business for future growth while maintaining a strong financial position
and otherwise to assess returning surplus capital to shareholders.
On 28 June 2021, the Board determined to pay a fully franked FY21 final dividend of 9.5 cents per share. In March 2021, the Board
announced increasing the target dividend payout ratio from 60% to 70% of UPAT, effective FY21 and consistent with this, the FY21
final dividend represents a full year dividend payout ratio of ~71% of underlying profit after tax.
The Board and management set out to maintain appropriate Statement of Financial Position ratios. Certain Statement of Financial
Position ratios are also imposed under the Group’s banking facilities (refer to note 11).
Management monitor capital through the gearing ratio (net debt / net debt plus total equity). The gearing ratios at 30 April 2021 and
30 April 2020 were negative (10.7%) and negative (6.7%) (negative representing a net cash position), respectively.
No changes were made to the overall objectives, policies or processes for managing capital during the year other than the increase in
the target dividend payout ratio to 70%.
96 Metcash Annual Report 2021
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Notes to the Financial Statements
For the year ended 30 April 2021
18. RELATED PARTY DISCLOSURES
A list of the Group’s subsidiaries is included in Appendix B and a list of equity-accounted investments is included in Appendix C.
Material transactions and balances with related parties – Group
Transactions with related parties – equity-accounted investments
Sales revenue
Lease and other charges
Dividends received
Interest income from lease receivables
Balances with related parties – equity-accounted investments
Trade receivables – gross
Provision for impairment loss
Lease receivables – gross
Provision for impairment loss
Parent entity
Details of the parent entity are set out in note 20.
Compensation of key management personnel of the Group
Short-term
Long-term
Post-employment
Share-based payments
FY21
$
FY20
$
1,318,698,814
1,217,712
6,048,119
2,479,047
1,181,650,288
2,218,367
2,463,596
2,532,012
121,262,314
(148,148)
121,114,166
132,934,718
(473,661)
132,461,057
52,661,428
-
52,661,428
55,709,535
-
55,709,535
FY21
$
FY20
$
11,976,242
315,344
172,528
2,999,209
15,463,323
9,299,815
303,567
176,336
840,664
10,620,382
Other transactions with key management personnel
Mr Rob Murray is a director of Southern Cross Media Group Limited, Advisory Chairman of Hawkes Brewing Company and was a
former director of Linfox Logistics Pty Ltd.
Ms Tonianne Dwyer is a director of Dexus Property Group.
Ms Helen Nash is a director of Inghams Group Limited, Southern Cross Media Group Limited and was a former director of
Blackmores Limited.
Mr Peter Birtles is a director of GWA Group Limited.
Ms Christine Holman is a director of McGrath Foundation, Blackmores Limited and Collins Food Group Pty Ltd.
Metcash has business relationships with the above entities, including supply and purchase of trading goods and services, property
leases and property management. All transactions with the above entities are conducted on an arm’s length basis in the ordinary
course of business.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
19.
SHARE-BASED PAYMENTS
Description of share-based payment arrangements
In FY21, the Group had the following share-based incentive schemes for employees:
Scheme name
Description
Short-term incentives (STI schemes)
FY21 at-risk STI plan
– deferred component
The FY21 at-risk STI plan includes a 33% (Group CEO) and 25% (other KMP and senior executives) deferred
component which will be released through the issue of performance rights conditional upon the
executives remaining employed by the Company until 15 April 2022.
FY20 at-risk STI plan
– deferred component
The FY20 at-risk STI plan included a 50% (Group CEO) and 40% (other KMP and senior executives) deferred
component which was released through the issue of performance rights to executives who remained
employed by the Company until 15 April 2021.
Long-term incentives (LTI schemes)
FY21-FY23 LTI grant
This grant was issued to KMP and senior executives during FY21 and is subject to two performance
conditions: Return on Funds Employed (‘ROFE’) and Total Shareholder Returns (‘TSR’) over a three-year
period from 1 May 2020 to 30 April 2023.
FY20-FY22 LTI grant
FY19-FY21 LTI grant
This grant was issued to KMP and senior executives during FY20 and is subject to two performance
conditions: Return on Funds Employed (‘ROFE’) and Total Shareholder Returns (‘TSR’) over a three-year
period from 1 May 2019 to 30 April 2022.
This grant was issued to KMP and senior executives during FY19 and is subject to two performance
conditions: Relative Total Shareholder Return (‘RTSR’) and Underlying Earnings per Share Compound
Annual Growth Rate (‘UEPS CAGR’) over a three-year period from 1 May 2018 to 30 April 2021.
The STI (deferred component) and LTI schemes are also subject to service conditions, usually from grant date to the date of the
allocation of shares.
The FY19-FY21 LTI is expected to partially vest at 90%. These vested performance rights will be converted to shares and allocated to
the participants under the rights plan on 15 August 2021.
As foreshadowed in FY20, the FY18-FY20 LTI plan partially vested on 15 August 2020 at 67.4% which was equivalent to 1,478,780
performance rights. Each performance right entitled the participant to one Metcash share. Metcash acquired 1,022,632 shares on
market and allocated these to the participants on 15 August 2020. The balance relating to good leavers was settled in cash.
Measurement of fair values
FY21 at-risk STI plan – deferred component
The 33% (Group CEO) and 25% (other KMP and senior executives) components of the FY21 at-risk STI plan will be deferred and released
through the issue of Metcash performance rights conditional upon the executive remaining employed by the Company until 15 April
2022. The number of performance rights will be calculated by dividing 33% (Group CEO) and 25% (other KMP and senior executives)
of the STI award dollar value by the volume-weighted average price (VWAP) of Metcash ordinary shares over the 20 trading days ended
30 April 2021 of $3.74 per share. The FY21 expense for the FY21 at-risk STI plan - deferred component has been based on an estimate
of the fair value of the performance rights. The fair value per grant will be determined in accordance with AASB 2 Share-based
payments at grant date.
FY20 at-risk STI plan – deferred component
The 50% (Group CEO) and 40% (other KMP and senior executives) deferred components of the FY20 at-risk STI plan have been released
through the issue of Metcash performance rights to executives who remained employed by the Company on 15 April 2021. The number
of performance rights was calculated by dividing 50% (Group CEO) and 40% (other KMP and senior executives) of the STI award dollar
value by the volume-weighted average price (VWAP) of Metcash ordinary shares over the 20 trading days ended 16 March 2020 of $2.58
per share. The Board determined that it was appropriate to determine the VWAP during pre-COVID-19 period. The fair value per grant
was determined in accordance with AASB 2 Share-based payments at grant date.
98 Metcash Annual Report 2021
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
19.
SHARE-BASED PAYMENTS (continued)
Performance rights
The weighted average inputs to the valuation of the STI deferred component and LTI performance rights valued at grant date using
the Black-Scholes option pricing model are as follows:
Dividend yield
Risk free rate
Expected volatility
Days to vesting
Share price at grant date
Fair value at grant date
At-risk STI
deferred
FY20
LTI
FY21 – FY23
(ROFE)
LTI
FY20 – FY22
(ROFE)
LTI
FY19 – FY21
(UEPS)
4.2%
0.1%
37.0%
296
$2.87
$2.57
4.2%
0.1%
37.0%
977
$3.46
$3.10
4.8%
1.0%
31.0%
1,121
$2.81
$2.66
5.2%
2.0%
37.0%
1,121
$2.56
$2.23
The weighted average inputs to the valuation of performance rights valued at grant date by an external specialist using the Monte
Carlo option pricing model are as follows:
Dividend yield
Risk free rate
Expected volatility
Days to vesting
Share price at grant date
Fair value at grant date
LTI
FY21 – FY23
(TSR)
LTI
FY20 – FY22
(TSR)
LTI
FY19 – FY21
(RTSR)
4.2%
0.1%
37.0%
977
$3.46
$2.13
4.8%
1.0%
31.0%
1,121
$2.81
$1.23
5.2%
2.0%
37.0%
1,121
$2.56
$0.72
Service and non-market performance conditions attached to the grants were not taken into account in measuring fair value. Market
performance conditions associated with the grants have been reflected in the fair value measurement. Expected volatility is based on
an evaluation of the historical volatility of Metcash’s share price, particularly over the historical period commensurate with the
expected term. Performance rights are only exercisable on their vesting date.
Reconciliation of outstanding performance rights
The following table illustrates the movement in the number of performance rights during the year:
Outstanding at the beginning of the year
Granted during the year
Vested/exercised during the year
Expired/forfeited during the year
Outstanding at the end of the year
FY21
Number
FY20
Number
6,370,539
3,022,580
(2,098,672)
(798,284)
6,496,163
6,532,863
2,656,799
(1,779,903)
(1,039,220)
6,370,539
The outstanding balance of performance rights as at 30 April 2021 is represented by:
Scheme name
LTI FY21 – FY23
LTI FY20 – FY22
LTI FY19 – FY211
Others
Total outstanding at the reporting date
Vesting date
15 August 2023
15 August 2022
15 August 2021
15 August 2021
Total outstanding
(number)
2,363,928
2,219,333
1,874,142
38,760
6,496,163
Exercisable
(number)
--
-
-
-
Remaining
contractual life
2 years 4 months
1 year 4 months
4 months
4 months
1. The FY19-FY21 LTI performance rights plan is expected to partially vest on 15 August 2021 at 90% subject only to the employees remaining in employment
until 15 August 2021. These vested performance rights will be converted to shares and allocated to the participants under the Rights plan on 15 August 2021.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
19. SHARE-BASED PAYMENTS (continued)
Key terms and conditions
All performance rights associated with the above schemes are equity-settled performance rights and were issued under the Metcash
Executives and Senior Managers Performance Rights Plan (Rights Plan). Fully paid ordinary shares issued under this plan rank equally
with all other existing fully paid ordinary shares in respect of voting and dividend rights.
The key terms of the ‘LTI’ and ‘STI plan – deferred component’ plans include:
1. 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 the contractual life of the rights;
2. Performance rights which do not vest are forfeited;
3. Performance rights are offered at no cost to participants;
4. 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;
5. Ordinarily, in the event of cessation of employment, unvested performance rights will lapse; however, this is subject to Board
discretion, which may be exercised in circumstances including death and disability, retirement, redundancy or special
circumstances;
6. When testing performance conditions, the Board has full discretion in relation to its calculation and to include or exclude items
if appropriate, including to better reflect shareholder expectations or management performance;
7. Some or all of a participant’s performance rights may vest even if a performance condition has not been satisfied, if, using its
discretion, the Board considers that to do so would be in the interests of the Group; and
8.
If there is a change in control of the Group, the Board retains full discretion to vest or lapse some or all performance rights.
20.
INFORMATION RELATING TO METCASH LIMITED (THE PARENT COMPANY)
Statement of financial position
Current assets – amounts receivable from subsidiaries
Net assets
Contributed equity (note 14)
Accumulated losses
Profit reserve
Share-based payments reserve
Total equity
Statement of comprehensive income
Net profit for the year
Total comprehensive income for the year, net of tax
Profit reserve
FY21
$m
1,300.5
1,300.5
867.0
(1,265.4)
1,693.9
5.0
1,300.5
-
-
FY20
$m
1,432.8
1,432.8
853.5
(1,265.4)
1,842.2
2.5
1,432.8
-
-
The Parent Company established a profit reserve in FY17 within its separate financial statements, in accordance with the Company’s
constitution. During the current financial year, the FY20 final dividend of $66.5 million and the FY21 interim dividend of $81.8 million
were sourced and paid from the profit reserve.
Closed Group
The Parent Company has provided guarantees as part of the Closed Group arrangements as disclosed in Appendix C.
Contingent liabilities
The contingent liabilities in relation to the Parent Company are disclosed in note 24.
100 Metcash Annual Report 2021
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
21.
AUDITORS REMUNERATION
Amounts received or due and receivable by the auditor of the Parent Company and any
other entity in the Group for:
- Auditing the statutory financial report of the Parent Company covering the Group
and the statutory financial report of any controlled entities
- - Fees for other assurance and agreed-upon procedure services
- Fees for tax compliance and other
FY21
$
FY20
$
1,825,000
2,100,000
58,000
399,000
2,282,000
36,000
177,000
2,313,000
22.
EARNINGS PER SHARE
The following reflects the income data used in the basic and diluted earnings per share (EPS) computations:
Earnings used in calculating basic and diluted EPS
Net profit/(loss) attributable to ordinary equity holders of Metcash Limited
The following reflects the share data used in the basic and diluted EPS computations:
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilutive securities
Weighted average number of ordinary shares used in calculating diluted EPS
FY21
$m
FY20
$m
239.0
(56.8)
FY21
Number
FY20
Number
1,021,936,877
3,228,702
1,025,165,579
910,139,794
-
910,139,794
At the reporting date, 6,496,163 performance rights (FY20: 6,370,539) were outstanding, of which 3,267,462 (FY20: 6,370,539) were
not included in the calculation of diluted EPS as they are not dilutive for the periods presented. Refer note 19 for more details about
performance rights.
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
23. BUSINESS COMBINATIONS
Total Tools Holdings Pty Ltd (‘Total Tools’) and Total Tools JV Stores
In September 2020, Metcash acquired a 70% ownership interest in Total Tools Holdings Pty Ltd. Total Tools is the franchisor to the
largest tool retail network in Australia with 82 bannered stores nationwide as at 1 September 2020.
In December 2020, Total Tools acquired ownership interests of between 51% and 60% in twelve Total Tools independent retail stores.
Accordingly, Metcash holds an effective ownership interest of between 35.7% and 42% in these ‘JV Stores’.
Details of the purchase consideration and the provisional fair values of the net assets acquired at the date of acquisition are as follows:
Net assets acquired
Cash and cash equivalents
Trade and other receivables
Inventories
Trade payables and provisions
Property, plant and equipment
Intangibles
Lease liabilities (net)
Deferred tax assets (net)
Income tax payable
Net identifiable assets acquired
Non-controlling interest
Goodwill
Total purchase consideration
Total Tools Group
Total Tools
Holdings
$m
Total Tools
JV Stores
$m
8.4
17.0
15.8
(26.5)
3.5
31.4
(0.1)
(4.6)
(1.5)
43.4
(13.0)
26.5
56.9
3.3
8.5
21.9
(18.5)
4.4
-
-
-
-
19.6
(9.2)
32.1
42.5
Total
$m
11.7
25.5
37.7
(45.0)
7.9
31.4
(0.1)
(4.6)
(1.5)
63.0
(22.2)
58.6
99.4
From the respective dates of acquisition, the Total Tools Group has contributed $141.1 million of sales revenue and $24.0 million of
the earnings before interest and tax (EBIT) to the Metcash Group.
Put and call options written over non-controlling interests
In accordance with the AASB 10 Consolidated Financial Statements, the Group has recognised financial liabilities for the Total Tools
put option and the Total Tools JV Store put options at their provisional fair values totaling $191.6 million and has derecognised the
non-controlling interests of ($22.2 million) related to the acquisitions. Details of these put options are set out in note 13 of the financial
report. As at the date of acquisition, the net amount of $169.4 million has been recognised as an adjustment to retained earnings as
shown below:
Non-controlling interests derecognised
Adjustment recognised directly in equity (retained earnings)
Fair value of put options - recognised as a financial liability
Total Tools Group
Total Tools
Holdings
$m
Total Tools
JV Stores
$m
13.0
109.2
122.2
9.2
60.2
69.4
Total
$m
22.2
169.4
191.6
Any changes in the value of the put option financial liabilities that occur subsequent to initial recognition will be recognised in the
Statement of Comprehensive Income and will be disclosed within significant items. During the current year Metcash recognised an
expense of $3.2 million in relation to the interest unwind on the net present value of the put option liabilities and nil expense in relation
to other changes in the value of the put options.
102 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
23. BUSINESS COMBINATIONS (continued)
Purchase consideration – cash outflow
Cash consideration
Less: Cash and cash equivalents acquired
Net cash outflow – investing activities
Total Tools
Holdings
$m
Total Tools
JV Stores
$m
57.5
(8.4)
49.1
42.5
(3.3)
39.2
Total Tools Group
Total
$m
100.0
(11.7)
88.3
Costs of $2.9 million that were incurred in relation to the Total Tools Group acquisition are included in significant items in the
Statement of Comprehensive Income and in operating cash flows in the Statement of Cash Flows.
Other business combinations
In June 2020, Metcash acquired a private label brand portfolio from Kollaras & Co, which is a key accelerator of the Liquor pillar’s
private label growth strategy, for a total cash purchase price consideration of $26.2 million, of which $21.0 million is allocated to
goodwill.
During the year, the Group also entered into a number of other business combinations that were not material to the Group, individually
or in aggregate. The total cash purchase price consideration for these businesses was $28.6 million, of which $24.3 million is allocated
to goodwill.
The accounting for the above business combinations is provisional as at 30 April 2021.
24.
COMMITMENTS AND CONTINGENT LIABILITIES
Commitments
Capital operating expenditure
The Group had no material commitments for capital expenditure at 30 April 2021 (FY20: nil).
Contingent liabilities
Bank guarantees to third parties in respect of property lease obligations
Bank guarantees in respect of Work Cover
Financial guarantee contracts
FY21
$m
8.7
2.0
FY20
$m
16.6
2.7
The Group has granted a financial guarantee contract relating to the bank loan of a joint venture, Adcome Pty Ltd. Under the contract,
the bank has the right to require Metcash to repay the debt under certain prescribed circumstances of default. The estimate of the
maximum amount payable in respect of the guarantee, if exercised, is $37.2 million (FY20: $46.5 million).
Had the guarantee been exercised at 30 April 2021, the amount payable would have been $35.2 million (FY20: $39.1 million). The fair
value of the financial guarantee contract at the reporting date was $0.4 million (FY20: $1.1 million) and is recognised as a financial
liability.
Put options
Put options, including in relation to Ritchies Stores Pty Ltd, are detailed along with other contingent liabilities in note 16 of the financial
statements.
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
25.
SUBSEQUENT EVENTS
On 28 June 2021, Metcash announced that it has increased its ownership in Total Tools Holdings (TTH) from 70% to 85% for an
acquisition cost of $59.4 million. Metcash has also increased its debt facility to TTH from $40 million to $65 million. TTH has significant
growth opportunities and this increase, together with a portion of the consideration for the additional 15% holding, is expected to
help fund TTH’s growth plans. This includes expansion of the store network and the acquisition of an ownership interest in a select
number of stores.
In addition, the Group also announced that it is undertaking an Off-Market Buy-Back (‘Buy-Back’) of up to approximately $175.0
million1. This follows the Board’s assessment of the Group’s ability to distribute excess capital to shareholders having regard to: an
improvement in the level of economic certainty; its near-term capital expenditure and working capital requirements; opportunities to
grow and create shareholder value; while also maintaining a strong balance sheet with low gearing. Based on an expected Share Buy-
Back of approximately $175.0 million, the Buy-Back, together with dividends for FY21, will result in approximately $354.0 million2
being returned to shareholders.
Other than matters disclosed in this report, there were 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.
1 Metcash may vary the size of the Buy-Back depending on a number of factors including shareholder demand, market conditions and future capital requirements. If
Metcash increases the Buy-Back it will not buy back more shares than allowed within its 10% limit under the Corporations Act.
2 Reflects a Buy-Back of ~$175.0 million and excludes any FY22 potential dividends.
104 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
1.
BASIS OF ACCOUNTING
(b)
Australian Accounting Standards issued but not yet effective
The financial statements are 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 statements have been prepared using the historical
cost basis except for derivative financial instruments and share-
based payments which are measured at fair value.
The financial statements are 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
Corporations Instrument 2016/191. The Company is an entity to
which the legislative instrument applies.
The current financial year comprises the 52-week period that
commenced on 27 April 2020 and ended on 25 April 2021. The
prior financial year comprised the 52-week period that
commenced on 29 April 2019 and ended on 26 April 2020.
2.
STATEMENT OF COMPLIANCE
The financial statements comply with Australian Accounting
Standards. The
financial statements also comply with
International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB).
(a)
New or amended Accounting Standards and Interpretations
Several other amendments and interpretations apply for the first
time in FY21, but do not have an impact on the financial report
of the Group. These are as follows:
AASB 2018-6 Amendments to AASB 3 Definition of a Business
AASB 2018-7 Amendments to AASB 101 and AASB 108
Definition of Material
AASB 2019-3 Amendments to AASB 7, AASB 9 and AASB 139
Interest Rate Benchmark Reform on Hedge Accounting
AASB 2019-1 Conceptual Framework for Financial Reporting
AASB 2017-6 Amendments
to Australian Accounting
Standards (AASs) – Prepayment Features with Negative
Compensation
AASB 2020-4 Amendments to AASs - COVID-19-Related Rent
Concessions
AASB 2018-2 Amendments to AASs - Plan Amendment,
Curtailment or Settlement
In addition, in April 2021, IFRIC published an agenda decision in
relation to the accounting treatment of configuration and
customisation costs related to SaaS arrangements. The Group is
currently assessing the impact the agenda decision will have on
its current accounting policy and whether previously capitalised
costs may need to be derecognised. Accordingly, the potential
impact of the IFRIC agenda decision on the Group cannot be
reliably estimated at the date of this report. The Group expects
to complete the implementation of the above IFRIC agenda
decision as part of its 31 October 2021 reporting.
Metcash Group Financial Report FY21
A number of new accounting standards (including amendments
and interpretations) have been issued but were not effective as at
30 April 2021. The following are the pronouncements that the
in these financial
Group has elected not to early adopt
statements:
Amendments to AASB 101: Classification of Liabilities as
Current or Non-current
Amendments
Framework
to AASB 3: Reference
to Conceptual
Amendments to AASB 116: Property, Plant and Equipment:
Proceeds before Intended Use
Amendments to AASB 137: Onerous Contracts – Costs of
Fulfilling a Contract
AASB 9 Financial Instruments: Fees in the ’10 per cent’ test
for derecognition of financial liabilities
The above standards are not expected to have a significant
impact on the Group’s financial statements in the year of their
initial application.
3.
BASIS OF CONSOLIDATION
Controlled entities
The financial statements comprise the consolidated financial
statements of Metcash Limited and its controlled entities for the
year ended 30 April 2021. Refer Appendix B for a list of controlled
entities.
Controlled entities are all those entities over which the Group is
exposed to, or has rights to, variable returns from
its
involvement with the entity and has the ability to affect those
returns through its power over the entity.
Business combinations
The acquisition of controlled entities is accounted for using the
acquisition method of accounting. The acquisition method of
accounting
involves allocating the costs of the business
combination to the acquisition date fair value of net assets
acquired, including intangible assets, contingent liabilities and
contingent consideration.
Arrangements within certain business combinations entitle the
non-controlling interests to require the Group to acquire their
shareholding via exercise of a put option, subject to specific
terms and conditions. Where such an arrangement is deemed to
be part of the business combination, a financial liability is
recognised on the acquisition date measured at the present
value of the redemption amount under the arrangement. The
initial recognition of the put option liability is charged directly to
retained earnings and
is
derecognised.
the non-controlling
interest
The put option liability is subsequently remeasured at each
reporting date at the estimated put option exercise price, with
any change
in value recorded within the Statement of
Comprehensive Income, together with the net present value
interest unwind on the put option liability.
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
Consolidation procedures
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.
the consolidated
financial statements, all
In preparing
intercompany balances and transactions have been eliminated
in full.
Non-controlling interests are allocated their share of total
comprehensive income and are presented as a separate
category within equity.
The financial statements of controlled entities are prepared for
the same reporting period as the parent entity, using consistent
accounting policies. For those controlled entities 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.
Separate financial statements
Investments in entities controlled 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 income in the separate
financial statements of the parent entity, and do not impact the
recorded cost of the investment unless the dividends effectively
represent a return of capital.
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.
4.
SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
incorporated
judgements, estimates and
The Group has
assumptions specific to the impact of the COVID-19 pandemic in
determining the amounts recognised in the financial statements
based on conditions existing at balance date, recognising
uncertainty still exists in relation to the duration of the COVID-19
pandemic-related restrictions, the anticipated government
stimulus and regulatory actions.
(a)
Significant accounting judgements
In the process of applying the Group’s accounting policies, the
following judgements were made, apart from those involving
estimations, which have a significant effect on the amounts
recognised in the financial statements.
Charge-through sales
In addition to warehouse purchases, customers purchase goods
through the Group’s charge-through platform and have these
goods delivered directly to them from suppliers. The Group
earns a margin on these sales for providing procurement, cross-
docking and settlement services. The Group also bears credit risk
106 Metcash Annual Report 2021
Metcash Group Financial Report FY21
on the receivables from these sales with limited recourse to
suppliers.
The Group determined that it is an agent in these contracts as it
does not control the goods before they are being transferred to
customers.
Assessment of control and joint control
Determining the existence of control, joint control or significant
influence over the Group’s acquisitions. Where the Group
exercises significant influence or joint control, the acquisitions
are accounted for as joint arrangements (refer Appendix A.7);
and where the Group exercises control, the acquisitions are
accounted for as business combinations (refer Appendix A.3).
Supplier income
The recognition and measurement of supplier income requires
the use of judgement, due to a high degree of variability and
complexity in arrangements with suppliers, and due to timing
differences between stock purchases and the provision of
promotional services.
Purchase price allocation
Determining the acquisition date fair value of assets acquired
and liabilities assumed on acquisition of controlled entities.
Valuation of put options
Determining
consideration.
the Total Tools and Ritchies put option
Determination of lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
After initial recognition, the Group reassesses the lease term if
there is a significant event or change in circumstances that is
within its control and affects its ability to exercise (or not to
exercise) the option to renew.
(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:
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 10.
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
Property provisions
The Group recognises provisions for rental agreements on
acquisition (refer note 12 for further discussion). In measuring
these provisions, assumptions are made about future retail sales,
rental costs and in determining the appropriate discount rate to
be used in the cash flow calculations.
The Group has recognised a provision in accordance with the
accounting policy described in Appendix A.14. The Group
assesses obligations on property make-good, restructuring and
other costs. These estimates are determined using assumptions
on property-related costs, redundancy and other closure or
restructure costs.
Impairment of equity-accounted investments
The Group assesses the recoverable amount of its equity-
accounted investments when objective evidence of impairment
is identified. In assessing the recoverable amount, assumptions
are made about the growth prospects of the investment 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.
Provision for expected credit losses (ECL) of receivables
The Group uses a provision rate matrix to calculate ECLs for
receivables.
The provision rates are initially based on the Group’s historical
observed default rates. The Group will calibrate the matrix to
adjust the historical credit loss experience with forward-looking
information (e.g., any known changes in market conditions with
reference to the most recent gross domestic product data). At
every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are
analysed.
The assessment of the correlation between historical observed
default rates, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive to changes
in circumstances and of forecast economic conditions. The
Group’s historical credit loss experience and forecast of
economic conditions may also not be representative of
customer’s actual default in the future.
5.
TRADE AND OTHER RECEIVABLES
Trade receivables are measured at the transaction price
determined under Appendix A.17.
The Group recognises an allowance for impairment loss based
on ECL for its trade and other receivables. The Group has
established a provision matrix, under the simplified approach in
calculating ECL, that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to a
group of debtors and the economic environment.
Metcash Group Financial Report FY21
6.
DERIVATIVE FINANCIAL INSTRUMENTS
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. 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.
Instruments that meet the strict criteria for hedge accounting
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.
Fair value hedges
The change in the fair value of the hedged item attributable to
the risk hedged is recorded as part of the carrying value of the
hedged item and is also recognised in the income statement as
finance costs.
is derecognised, the
unamortised fair value is recognised immediately in profit or loss.
If the hedged
item
When an unrecognised firm commitment is designated as a
hedged item, the subsequent cumulative change in the fair value
of the firm commitment attributable to the hedged risk is
recognised as an asset or liability with a corresponding gain or
loss recognised in the profit and loss.
Cash flow hedges
The effective portion of the gain or loss on the hedging
instrument is recognised in other comprehensive income and
carried forward to the cash flow hedge reserve, while any
ineffective portion is recognised immediately in the income
statement as finance costs.
Amounts recognised as other comprehensive income are
transferred to profit or loss when the hedged transaction affects
profit or loss, such as when the hedged financial income or
financial expense is recognised or when a forecast sale occurs.
When the hedged item is the cost of a non-financial asset or non-
financial
recognised as other
comprehensive income are transferred to the initial carrying
amount of the non-financial asset or liability.
the amounts
liability,
If the forecast transaction or firm commitment is no longer
expected to occur, the cumulative gain or loss previously
recognised in equity is transferred to the income statement. If
the hedging instrument expires or is sold, terminated or
exercised without replacement or rollover, or if its designation
as a hedge is revoked, any cumulative gain or loss previously
recognised in other comprehensive income remains in other
comprehensive income until the forecast transaction or firm
commitment affects profit or loss.
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Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
Appendix A – Summary of significant accounting policies
Cash flow hedge reserve
Cash flow hedge reserve
The cash flow hedge reserve records the portion of the
The cash flow hedge reserve records the portion of the
unrealised gain or loss on a hedging instrument in a cash flow
unrealised gain or loss on a hedging instrument in a cash flow
hedge that is determined to be an effective hedge.
hedge that is determined to be an effective hedge.
Current versus non-current classification
Current versus non-current classification
Derivative instruments are classified as current or non-current or
Derivative instruments are classified as current or non-current or
separated into current and non-current portions based on an
separated into current and non-current portions based on an
assessment of the facts and circumstances including the
assessment of the facts and circumstances including the
underlying contracted cash flows.
underlying contracted cash flows.
EQUITY-ACCOUNTED INVESTMENTS
EQUITY-ACCOUNTED INVESTMENTS
7.
7.
The Group’s investments in joint ventures and associates are
The Group’s investments in joint ventures and associates are
accounted for using the equity method. Associates are those
accounted for using the equity method. Associates are those
entities over which the Group exercises significant influence, but
entities over which the Group exercises significant influence, but
not control or joint control, over the financial and operating
not control or joint control, over the financial and operating
policies. A joint venture is an arrangement in which the Group
policies. A joint venture is an arrangement in which the Group
has joint control, whereby the Group has rights to the net assets
has joint control, whereby the Group has rights to the net assets
of the joint venture. Joint control is the contractually agreed
of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when
sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous
decisions about the relevant activities require unanimous
consent of the parties sharing control.
consent of the parties sharing control.
Equity-accounted investments are carried in the statement of
Equity-accounted investments are carried in the statement of
financial position at cost plus post-acquisition changes in the
financial position at cost plus post-acquisition changes in the
Group’s share of net assets of the investee, less any impairment
Group’s share of net assets of the investee, less any impairment
in value.
in value.
For those associates and joint ventures with non-coterminous
For those associates and joint ventures with non-coterminous
year ends, management accounts for the relevant period to the
year ends, management accounts for the relevant period to the
Group’s reporting date have been equity-accounted. In the
Group’s reporting date have been equity-accounted. In the
opinion of the Directors, the expense of providing additional
opinion of the Directors, the expense of providing additional
coterminous statutory accounts, together with consequential
coterminous statutory accounts, together with consequential
delay in producing the Group’s financial statements, would
delay in producing the Group’s financial statements, would
outweigh any benefit to shareholders.
outweigh any benefit to shareholders.
INVENTORIES
INVENTORIES
8.
8.
Inventory cost is measured at purchase price, net of trade
Inventory cost is measured at purchase price, net of trade
rebates and discounts received, and including costs incurred in
rebates and discounts received, and including costs incurred in
bringing the inventory to its present location and condition.
bringing the inventory to its present location and condition.
Trade rebates include non-volumetric supplier income, which is
Trade rebates include non-volumetric supplier income, which is
systematically allocated against inventory cost using estimates
systematically allocated against inventory cost using estimates
based on expected purchase patterns and earn rates.
based on expected purchase patterns and earn rates.
Inventories are valued at the lower of cost or net realisable value.
Inventories are valued at the lower of cost or net realisable value.
Net realisable value is the estimated selling price in the ordinary
Net realisable value is the estimated selling price in the ordinary
course of business, net of estimated costs necessary to make the
course of business, net of estimated costs necessary to make the
sale.
sale.
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT
9.
9.
Recognition and measurement
Recognition and measurement
All classes of property, plant and equipment are measured at
All classes of property, plant and equipment are measured at
cost less accumulated depreciation and any accumulated
cost less accumulated depreciation and any accumulated
impairment losses.
impairment losses.
Depreciation
Depreciation
Depreciation is provided on a straight-line basis on all property,
Depreciation is provided on a straight-line basis on all property,
plant and equipment, other than freehold land and assets under
plant and equipment, other than freehold land and assets under
construction. Major depreciation periods are:
construction. Major depreciation periods are:
108 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
Freehold buildings
Freehold buildings
Plant and equipment
Plant and equipment
FY21
FY21
25-40 years
25-40 years
2-20 years
2-20 years
FY20
FY20
25-40 years
25-40 years
2-20 years
2-20 years
Derecognition
Derecognition
An item of property, plant and equipment is derecognised upon
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to
disposal or when no future economic benefits are expected to
arise from the continued use of the asset.
arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated
Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the
as the difference between the net disposal proceeds and the
carrying amount of the item) is included in the statement of
carrying amount of the item) is included in the statement of
comprehensive income in the period the item is derecognised.
comprehensive income in the period the item is derecognised.
is
is
in a business combination
in a business combination
INTANGIBLE ASSETS
10.
10.
INTANGIBLE ASSETS
Recognition and measurement
Recognition and measurement
in a business
Intangible assets acquired separately or
in a business
Intangible assets acquired separately or
combination are initially measured at cost. Following initial
combination are initially measured at cost. Following initial
recognition, the cost model is applied to the class of intangible
recognition, the cost model is applied to the class of intangible
assets.
assets.
Intangible assets (excluding software development costs)
Intangible assets (excluding software development costs)
created within the business are not capitalised and expenditure
created within the business are not capitalised and expenditure
is charged against profits in the period in which the expenditure
is charged against profits in the period in which the expenditure
is incurred.
is incurred.
initially
Goodwill acquired
initially
Goodwill acquired
measured at cost; being the excess of the cost of the business
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
combination over the Group’s interest in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities.
acquiree's identifiable assets, liabilities and contingent liabilities.
Trade names are acquired either through business combinations
Trade names are acquired either through business combinations
or through direct acquisition. Trade names are recognised as
or through direct acquisition. Trade names are recognised as
intangible assets where a registered trademark is acquired with
intangible assets where a registered trademark is acquired with
attributable value. Trade names are valued on a relief from
attributable value. Trade names are valued on a relief from
royalty method. Trade names are considered to be indefinite life
royalty method. Trade names are considered to be indefinite life
intangibles and are not amortised, unless there is an intention to
intangibles and are not amortised, unless there is an intention to
discontinue use of the name in which case it is amortised over its
discontinue use of the name in which case it is amortised over its
estimated remaining useful life.
estimated remaining useful life.
through business
Customer
through business
Customer
combinations. Customer contacts are recognised as intangible
combinations. Customer contacts are recognised as intangible
assets when the criteria specified in AASB 138 Intangible Assets
assets when the criteria specified in AASB 138 Intangible Assets
have been met. Customer contracts are valued by applying a
have been met. Customer contracts are valued by applying a
discounted cash flow valuation methodology with consideration
discounted cash flow valuation methodology with consideration
given to customer retention and projected future cash flows to
given to customer retention and projected future cash flows to
the end of the contract period. The amortisation has been
the end of the contract period. The amortisation has been
recognised in the statement of comprehensive income.
recognised in the statement of comprehensive income.
Software development costs incurred on an individual project
Software development costs incurred on an individual project
are capitalised at cost when future recoverability can reasonably
are capitalised at cost when future recoverability can reasonably
be assured and where the Group has an intention and ability to
be assured and where the Group has an intention and ability to
use the asset. Following the initial recognition of software
use the asset. Following the initial recognition of software
development costs, the asset is carried at cost less any
development costs, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses.
accumulated amortisation and accumulated impairment losses.
Any costs carried forward are amortised over the assets’ useful
Any costs carried forward are amortised over the assets’ useful
economic lives.
economic lives.
contracts
contracts
acquired
acquired
are
are
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
Derecognition
Gains or losses arising from derecognition 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 statement of comprehensive income when the
asset is derecognised.
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.
Useful lives
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.
The estimated useful lives of existing finite life intangible assets
are as follows:
FY21
FY20
Customer contracts
Software development costs
Other
15 years
5-10 years
10 years
15 years
5-10 years
10 years
market assessments of the time value of money and the risks
specific to the asset
Impairment
Comprehensive Income.
losses are recognised
in the Statement of
12.
EMPLOYEE LEAVE BENEFITS
Wages, salaries, incentives, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary
benefits, incentives, annual leave and accumulating sick leave,
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
due to be settled within 12 months of the reporting date are
classified as current liabilities. 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. Consideration
is given to expected future wage and salary levels, experience of
employee departures, and periods of service. Expected future
payments at the reporting date are discounted using market
yields on high-quality corporate bonds with terms to maturity
that match as closely as possible, the estimated future cash
outflows.
Useful lives are reassessed on an annual basis and adjustments,
where applicable, are made on a prospective basis.
13.
INTEREST-BEARING BORROWINGS
11.
IMPAIRMENT OF NON-FINANCIAL ASSETS
At each reporting date, the Group assesses whether there is any
indication that the value of a non-financial asset may be
impaired. Goodwill and indefinite life intangible assets are
tested for impairment at least annually and more frequently if
events or changes in circumstances indicate that the carrying
value may be impaired.
Where an indicator of impairment exists, the Group makes a
formal estimate of recoverable amount. Where the carrying
amount of a non-financial 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 pre-tax future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
All loans and borrowings are initially recognised at the fair value
of the consideration received net of issue costs associated with
the borrowing.
initial recognition,
interest-bearing borrowings are
After
subsequently measured at amortised cost using the effective
interest method.
Gains and losses are recognised in profit or loss when the
liabilities are derecognised.
14.
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.
If the effect of the time value of money is material, provisions are
measured at the net present value of the expected future cash
outflows using a current pre-tax rate that reflects the risks
specific to the liability. During each period the provision is
increased by an amount that is equal to the provision multiplied
by the discount rate. This increment, including any change in the
value of the provision as a result of a change in discount rate, is
treated as a finance cost.
Metcash Group Financial Report FY21
109
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
The Group assesses obligations for onerous contracts, lease
guarantees, property make-good, restructuring and other costs.
These estimates are determined using assumptions on property
related costs, redundancy and other closure or restructure costs.
15.
RIGHT-OF-USE ASSETS, LEASE RECEIVABLES AND
LEASE LIABILITIES
Group as a lessee
Right-of-use assets
The Group recognises right-of-use assets at the commencement
of a lease (i.e., the date the underlying asset is available for use).
The initial measurement of right-of-use assets includes the
amount of lease liabilities recognised, initial direct costs
incurred, and
lease payments made at or before the
commencement date, less any lease incentives received. Right-
of-use assets are subsequently measured at cost, less any
accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities.
Unless the Group is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the right-of-use
assets are depreciated on a straight-line basis over the shorter of
its estimated useful life and the lease term. Right-of-use assets
are subject to
impairment assessments under AASB 136
Impairment of Assets.
Depreciation
Depreciation is provided on a straight-line basis on all right-of-
use assets. Major depreciation periods are:
FY21
FY20
Leasehold properties
Motor vehicles and other equipment
1-30 years
4-5 years
1-30 years
4-5 years
Useful lives are reassessed on an annual basis and adjustments,
where applicable, are made on a prospective basis.
Lease liabilities
At the commencement of a lease, the Group recognises lease
liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable and amounts expected to be paid under
residual value guarantees. The lease payments also include
renewal periods where the Group is reasonably certain to
exercise the renewal option. Outgoings and other variable lease
payments that do not depend on an index or a rate are
recognised as incurred.
the
the
rate at
incremental borrowing
In calculating the present value of lease payments, the Group
uses
lease
commencement date if the interest rate implicit in the lease is
not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is a
change in the lease term, a change in the in-substance fixed lease
payments or a change in the assessment to purchase the
underlying asset.
110 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Group as a lessor
The Group enters into back-to-back lease agreements with
independent retailers where the terms of the lease transfer
substantially all the risks and rewards of ownership to the
sublessee and these are classified as a finance lease.
Amounts due from finance leases are recognised as lease
receivables at the amount of the Group’s net investment in the
lease. Lease receivables are subsequently remeasured if there is
a change in the lease term. Finance lease income is allocated to
reporting periods so as to reflect a constant periodic rate of
return on the Group’s net investment outstanding in respect of
the leases.
All other leases are classified as operating leases. Rental income
from operating leases is recognised on a straight-line basis over
the term of the relevant lease.
Short-term leases and leases of low-value assets
The Group applies a recognition exemption to leases that have a
lease term of 12 months or less from the commencement date
and do not contain a purchase option. It also applies a
recognition exemption to leases that are considered of low value.
Lease payments and rental income from short-term and low-
value leases are recognised on a straight-line basis over the lease
term.
16.
SHARE-BASED PAYMENT TRANSACTIONS
The Group provides a portion of senior executive and key
employee
share-based
remuneration as
payments, in the form of performance rights.
equity-settled
The value of the performance rights issued is determined on the
date which both the employee and the Group understand and
agree to the share-based payment terms and conditions (grant
date). The value at grant date is based upon the fair value of a
similar arrangement between the Group and an independent
third party and is determined using an appropriate valuation
model. The fair value does not consider the impact of service or
performance conditions, other than conditions linked to the
share price of Metcash Limited (market conditions). Details of
the valuation models used and fair values for each tranche of
performance rights issued are outlined in note 19.
(vesting date). This expense
The fair value of performance rights is recognised as an expense,
together with a corresponding increase in the share-based
payments reserve within equity, over the period between grant
date and the date on which employee becomes fully entitled to
the award
recognised
cumulatively by estimating the number of performance rights
expected to vest. This opinion is formed based on the best
available information at the reporting date. No adjustment is
made for the likelihood of market conditions being met as the
effect of these conditions is included in the determination of fair
value at grant date. Where the performance rights are cancelled,
any expense not yet recognised for the award is recognised
immediately.
is
The dilutive effect, if any, of outstanding performance rights are
reflected as additional share dilution in the computation of
earnings per share.
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix A – Summary of significant accounting policies
Share-based payments reserve
The share-based payments reserve is used to record the value of
equity benefits provided to executives as part of their
remuneration. Refer to note 19 for further details of these plans.
Once a performance right has lapsed the Group no longer has
any obligation to convert these performance rights into share
capital. The amount transferred to retained earnings represents
the value of share-based payments previously recognised as an
expense that have subsequently lapsed.
17.
REVENUE RECOGNITION
Sale of goods
The Group’s revenue principally arises from the sale of goods
within its wholesale distribution and retail operations, as
outlined in note 2. Sales revenue is recognised when the Group
has delivered goods to its customers, and it is probable that
consideration will be collected
is
measured based on the consideration expected to be received,
net of volumetric and other trade rebates.
in exchange. Revenue
Charge-through sales
The Group operates a charge-through platform whereby goods
are delivered directly to the Group’s customers by suppliers. The
Group retains the credit risk associated with these transactions;
however, the Group does not bear any material inventory risk or
exercise any material discretion in establishing prices. Charge-
through transactions are therefore reported on an agency or net
‘commission’ basis.
18.
FINANCE COSTS
to
Finance costs directly attributable
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.
Certain provisions are measured at their discounted value.
During each period the provision is increased by an amount that
is equal to the provision multiplied by the discount rate. This
increment, including any change in the value of the provision as
a result of a change in discount rate, is treated as a finance cost.
19.
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 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:
Metcash Group Financial Report FY21
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.
20.
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 are 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.
21.
COMPARATIVE INFORMATION
information was amended
Certain comparative
in these
financial statements to conform to the current year presentation.
These amendments do not impact the Group’s financial results
and do not have any significant impact on the Group’s balance
sheet.
111
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Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
For the year ended 30 April 2021
Appendix B – Information on subsidiaries
Appendix B – Information on subsidiaries
Metcash Limited is the ultimate parent entity of the Group. The consolidated financial statements include the financial statements
Metcash Limited is the ultimate parent entity of the Group. The consolidated financial statements include the financial statements
of Metcash Limited and the subsidiaries listed in the following table. All entities are incorporated in Australia except where specifically
of Metcash Limited and the subsidiaries listed in the following table. All entities are incorporated in Australia except where specifically
identified.
identified.
Entities within the Closed Group
Entities within the Closed Group
Action Holdings Pty Ltd
Action Holdings Pty Ltd
Action Supermarkets Pty Ltd
Action Supermarkets Pty Ltd
Australian Asia Pacific Wholesalers Pty Ltd
Australian Asia Pacific Wholesalers Pty Ltd
Australian Hardware Distributors Pty. Limited
Australian Hardware Distributors Pty. Limited
Australian Hardware Support Services Pty Ltd
Australian Hardware Support Services Pty Ltd
Australian Liquor Marketers (QLD) Pty Ltd
Australian Liquor Marketers (QLD) Pty Ltd
Australian Liquor Marketers (WA) Pty Ltd
Australian Liquor Marketers (WA) Pty Ltd
Australian Liquor Marketers Pty. Limited
Australian Liquor Marketers Pty. Limited
Big Bargain Bottleshops Australia Pty Ltd
Big Bargain Bottleshops Australia Pty Ltd
Capeview Hardware Pty Ltd
Capeview Hardware Pty Ltd
City Ice & Cold Storage Company Proprietary
City Ice & Cold Storage Company Proprietary
Limited
Limited
Clancy’s Food Stores Pty Limited
Clancy’s Food Stores Pty Limited
Composite Buyers Finance Pty Ltd
Composite Buyers Finance Pty Ltd
Composite Buyers Pty Limited
Composite Buyers Pty Limited
Community Co Australia Pty Ltd
Community Co Australia Pty Ltd
Danks Holdings Pty Limited
Danks Holdings Pty Limited
Davids Foodservices Pty Ltd
Davids Foodservices Pty Ltd
Davids Group Staff Superannuation Fund Pty. Ltd.
Davids Group Staff Superannuation Fund Pty. Ltd.
Echuca Hardware Pty Ltd
Echuca Hardware Pty Ltd
Foodland Properties Pty Ltd
Foodland Properties Pty Ltd
Foodland Property Holdings Pty Ltd
Foodland Property Holdings Pty Ltd
Franklins Pty Ltd
Franklins Pty Ltd
Franklins Supermarkets Pty Ltd
Franklins Supermarkets Pty Ltd
Fresco Supermarket Holdings Pty Ltd
Fresco Supermarket Holdings Pty Ltd
Garden Fresh Produce Pty Ltd
Garden Fresh Produce Pty Ltd
G Gay Hardware Pty Ltd
G Gay Hardware Pty Ltd
Global Liquor Wholesalers Pty Limited
Global Liquor Wholesalers Pty Limited
Hammer Hardware Stores Pty Ltd
Hammer Hardware Stores Pty Ltd
Hardings Hardware Pty Ltd
Hardings Hardware Pty Ltd
Himaco Pty Ltd
Himaco Pty Ltd
Home Hardware Australasia Pty Ltd
Home Hardware Australasia Pty Ltd
Home Timber & Hardware Group Pty Ltd
Home Timber & Hardware Group Pty Ltd
Homestead Hardware Australasia Pty Ltd
Homestead Hardware Australasia Pty Ltd
HTH Events Pty Ltd
HTH Events Pty Ltd
HTH Stores Pty Limited
HTH Stores Pty Limited
Hudson Building Supplies Pty Limited
Hudson Building Supplies Pty Limited
IGA Community Chest Limited
IGA Community Chest Limited
IGA Distribution (SA) Pty Limited
IGA Distribution (SA) Pty Limited
IGA Distribution (Vic) Pty Limited
IGA Distribution (Vic) Pty Limited
IGA Distribution (WA) Pty Limited
IGA Distribution (WA) Pty Limited
IGA Fresh (Northern Queensland) Pty Limited
IGA Fresh (Northern Queensland) Pty Limited
IGA Fresh (NSW) Pty Limited
IGA Fresh (NSW) Pty Limited
IGA Retail Services Pty Limited
IGA Retail Services Pty Limited
Independent Brands Australia Pty Limited
Independent Brands Australia Pty Limited
Independent Hardware Group Pty Ltd
Independent Hardware Group Pty Ltd
Jewel Food Stores Pty Ltd
Jewel Food Stores Pty Ltd
K&B Timber and Hardware Pty Ltd.
K&B Timber and Hardware Pty Ltd.
(previously Banner 10 Pty Ltd)
(previously Banner 10 Pty Ltd)
Keithara Pty Ltd
Keithara Pty Ltd
112 Metcash Annual Report 2021
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
FY21
FY21
%
%
FY20
FY20
%
%
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
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
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
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
Liquor Traders Pty Ltd
Liquor Traders Pty Ltd
Liquorsmart Pty Ltd
Liquorsmart Pty Ltd
M-C International Australia Pty Limited
M-C International Australia Pty Limited
Mega Property Management Pty Ltd
Mega Property Management Pty Ltd
Mermaid Tavern (Trading) Pty Ltd
Mermaid Tavern (Trading) Pty Ltd
Metcash Food & Grocery Convenience Division
Metcash Food & Grocery Convenience Division
Pty Limited
Pty Limited
Metcash Food & Grocery Pty Ltd
Metcash Food & Grocery Pty Ltd
Metcash Holdings Pty Ltd
Metcash Holdings Pty Ltd
Metcash Management Pty Limited
Metcash Management Pty Limited
Metcash Services Proprietary Limited
Metcash Services Proprietary Limited
Metcash Storage Pty Limited
Metcash Storage Pty Limited
Metcash Trading Limited
Metcash Trading Limited
Metro Cash & Carry Pty Limited
Metro Cash & Carry Pty Limited
Mirren (Australia) Pty Ltd
Mirren (Australia) Pty Ltd
Mitre 10 Australia Pty Ltd
Mitre 10 Australia Pty Ltd
Mitre 10 Mega Pty Ltd
Mitre 10 Mega Pty Ltd
Mitre 10 Pty Ltd
Mitre 10 Pty Ltd
Narellan Hardware Pty Ltd
Narellan Hardware Pty Ltd
National Retail Support Services Pty Ltd
National Retail Support Services Pty Ltd
Payless Superbarn (N S W) Pty Ltd
Payless Superbarn (N S W) Pty Ltd
QIW Pty Limited
QIW Pty Limited
Queensland Independent Wholesalers Pty
Queensland Independent Wholesalers Pty
Limited
Limited
Quickstop Pty Ltd
Quickstop Pty Ltd
Roma Hardware Pty Ltd
Roma Hardware Pty Ltd
SE Hardware Pty Limited
SE Hardware Pty Limited
South Coast Operations Pty Ltd
South Coast Operations Pty Ltd
South West Operations Pty Ltd
South West Operations Pty Ltd
Thrifty-Link Hardware Pty Ltd
Thrifty-Link Hardware Pty Ltd
Timberten Pty Ltd
Timberten Pty Ltd
UIAL NSW/ACT Pty Ltd
UIAL NSW/ACT Pty Ltd
UIAL Tasmania Pty Ltd
UIAL Tasmania Pty Ltd
Vawn No 3 Pty Ltd
Vawn No 3 Pty Ltd
W.A. Hardware Services Pty. Ltd
W.A. Hardware Services Pty. Ltd
Entities outside of the Closed Group
Entities outside of the Closed Group
Central Timber 10 Pty Ltd
Central Timber 10 Pty Ltd
Faggs Geelong Pty Ltd
Faggs Geelong Pty Ltd
Finlayson Installations Pty Ltd
Finlayson Installations Pty Ltd
Finlayson Timber & Hardware Pty Ltd
Finlayson Timber & Hardware Pty Ltd
Foodland Property Unit Trust
Foodland Property Unit Trust
Feldman Tools Pty Ltd1
Feldman Tools Pty Ltd1
Futura Machinery Sales and Service Pty Ltd1
Futura Machinery Sales and Service Pty Ltd1
Gympie Property Investment Pty Ltd
Gympie Property Investment Pty Ltd
Hardware Property Trust
Hardware Property Trust
IGA Retail Network Limited
IGA Retail Network Limited
Liquor Centres Auckland Limited (incorporated
Liquor Centres Auckland Limited (incorporated
in New Zealand)
in New Zealand)
FY21
FY21
%
%
100
100
100
100
100
100
100
100
-
-
100
100
FY20
FY20
%
%
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
90
90
100
100
100
100
100
100
42
42
42
42
84.7
84.7
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
100
100
100
100
100
100
100
100
50
50
90
90
-
-
-
-
100
100
-
-
-
-
84.7
84.7
100
100
100
100
-
-
72
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix B – Information on subsidiaries
Metoz Holding Limited (incorporated in South
Africa) (In liquidation)
Mitre 10 Mega Property Trust
NFRF Developments Pty Ltd
Northern Hardware Group Pty Ltd
Nu Fruit Pty. Ltd.
Produce Traders Trust
Rainbow Unit Trust
Rainfresh Vic Pty Ltd
Retail Merchandise Services Pty Limited
Sunshine Hardware Pty Ltd
Tasman Liquor Company Limited (incorporated
in New Zealand)
Tasmania Hardware Pty Ltd
Timber and Hardware Exchange Pty Ltd
Total Tools (Importing) Pty Ltd
Total Tools Commercial Pty Ltd
Total Tools Holdings Pty Ltd
Total Tools Industrial Pty. Limited
FY21
%
100
FY20
%
100
100
51
84.7
51
100
100
51
100
84.7
100
80
68.4
70
70
70
70
100
51
84.7
51
100
100
51
100
84.7
100
80
68.4
-
-
-
-
Total Tools Licensing Pty Ltd
Total Tools Moorabbin Store Pty Ltd
Total Tools New Zealand Limited
Total Tools Online Pty Ltd
Total Tools Stores Pty Ltd
TT Brookvale Pty Ltd
Total Tools Fyshwick Pty Ltd1
Toolshack Pty Ltd1
TT Brooklyn Pty Ltd1
TT Darwin Pty Ltd1
TT Geelong Pty Ltd1
TT Melton Pty Ltd1
TT South Melbourne Pty Ltd1
TT Adelaide West Pty Ltd1
TT Mackay Pty Ltd1
Wimbledon Property Trust
FY21
%
FY20
%
70
70
70
70
70
70
35.7
35.7
35.7
35.7
35.7
35.7
35.7
42.0
42.0
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
1. The Group has an indirect ownership of between 35.7% and 42% in these entities via its interest in Total Tools Holdings Pty Ltd. While the Group has beneficial
ownership of less than 50% of these entities, the Group has control over key operating and financial decisions in these entities. Accordingly, these entities are
accounted for as controlled entities.
Entities within the closed group as at 30 April 2021
Certain controlled entities of Metcash Limited, collectively referred to as the ‘Closed Group’, are party to a Deed of Cross Guarantee
which meets the requirements of ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Instrument). Pursuant to the
Instrument, entities within the Closed Group that have lodged an opt-in notice with ASIC within the requisite time limits are granted
relief from standalone financial reporting and audit requirements of the Corporations Act 2001. Under the Deed of Cross Guarantee,
the entities within the Closed Group, including Metcash Limited, have guaranteed to pay any outstanding debts or claims in the event
of a winding up of any other entity within the Closed Group.
Summary Statement of Comprehensive Income of the Closed Group
Distributions from subsidiaries outside the Closed Group
Other net income
Significant items
Profit before income tax
Income tax expense
Net profit/(loss) for the year
FY21
$m
4.6
302.7
(17.0)
290.3
(88.6)
201.7
FY20
$m
3.9
265.3
(268.5)
0.7
(66.2)
(65.5)
Metcash Group Financial Report FY21
113
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix B – Information on subsidiaries
Summary Statement of Financial Position of the Closed Group
Assets
Cash and cash equivalents
Trade receivables and loans
Lease receivables
Inventories
Other current assets
Total current assets
Investments
Lease receivables
Property, plant and equipment
Net deferred tax assets
Intangible assets and goodwill
Right-of-use assets
Other non-current assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Lease liabilities
Income tax payable
Provisions
Put options and other financial liabilities
Total current liabilities
Interest-bearing borrowings
Lease liabilities
Amounts due to related parties
Provisions
Put options and other financial liabilities
Total non-current liabilities
Total liabilities
FY21
$m
76.7
1,519.3
41.1
874.7
12.0
2,523.8
318.1
236.8
191.3
114.5
562.1
551.2
15.7
1,989.7
4,513.5
1,940.5
129.9
22.3
126.7
20.8
2,240.2
-
831.3
22.7
41.7
124.6
1,020.3
3,260.5
FY20
$m
251.8
1,528.3
55.6
976.3
12.1
2,824.1
189.0
239.1
185.8
115.8
520.1
457.7
25.7
1,733.2
4,557.3
1,986.4
165.4
1.8
109.0
7.2
2,269.8
188.4
690.9
41.6
56.6
2.1
979.6
3,249.4
Net assets
1,253.0
1,307.9
Equity
Contributed and other equity 1 May
Equity raised, net of costs
Contributed and other equity, 30 April
Other reserves
Retained profits/(accumulated losses)
Opening balance, 30 April (as previously stated)
Changes from the initial adoption of the new accounting standards
Opening balance, 1 May (restated)
Recognition of put option liability
Share of associate’s adjustment on initial adoption of AASB 16 Leases
Net profit/(loss) for the year
Dividends paid
Closing balance
Total equity
114 Metcash Annual Report 2021
Metcash Group Financial Report FY21
853.5
13.5
867.0
(1.7)
456.7
-
456.7
(113.4)
(9.0)
201.7
(148.3)
387.7
1,253.0
559.2
294.3
853.5
(2.3)
642.0
(1.6)
640.4
-
-
(65.5)
(118.2)
456.7
1,307.9
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Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 April 2021
Appendix C – Equity-accounted investments
Equity-accounted investments of the Group represent both associates and joint ventures and are structured through equity
participation in separate legal entities. Metcash invests capital to support the independent retail network, strengthen relationships
and fund growth. Relationships with co-investors are governed by contractual agreements which allow the Group to exercise either
significant influence or joint control over these entities. Where the Group exercises joint control, all key operating decisions are agreed
unanimously, regardless of ownership interest.
The principal place of business for all of the Group’s equity-accounted investments is Australia, with the exception of Metcash Export
Services Pty Ltd, which primarily deals with customers in China.
The following table presents key information about the Group’s interests in joint ventures and associates.
Investee
Associates
Ritchies Stores Pty Ltd
Dramet Holdings Pty Ltd
Metcash Export Services Pty Ltd
Joint ventures
Adcome Pty Ltd
BMS Retail Group Holdings Pty Ltd
Waltock Pty Limited
LA United Pty Ltd1
Liquor Alliance Pty Ltd1
Principal activities
Reporting date
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Hardware retailing
Liquor wholesaling
Liquor wholesaling
30 June
30 June
30 April
30 April
30 June
30 June
30 June
30 June
FY21
%
26.4
26.0
15.0
45.0
49.0
49.0
75.3
66.7
FY20
%
26.0
26.0
15.0
45.0
49.0
49.0
75.3
66.7
1. The Group has a direct ownership of 26.0% in LA United Pty Ltd, an indirect ownership of 49.3% via its interest in Liquor Alliance Pty Ltd. While the Group has
beneficial ownership of more than 50% of the entity, key operating and financial decisions require the unanimous consent of other joint venture partners.
Accordingly, LA United Pty Ltd and Liquor Alliance Pty Ltd are accounted for as joint arrangements.
Metcash Group Financial Report FY21
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Directors’ Declaration
For the year ended 30 April 2021
Directors’ Declaration
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 the consolidated entity’s financial position as at 30 April 2021 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;
b. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Appendix
A.2; and
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 2021.
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 Appendix B 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
Jeff Adams
Director
Sydney, 28 June 2021
116 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Metcash Group Financial Report FY21
Metcash Group Financial Report FY21
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Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
118 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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►
►
►
►
►
►
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Metcash Group Financial Report FY21
119
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►
►
►
►
►
►
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
120 Metcash Annual Report 2021
Metcash Group Financial Report FY21
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►
►
►
►
►
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Metcash Group Financial Report FY21
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
122 Metcash Annual Report 2021
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56 to 71
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Metcash Group Financial Report FY21
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ASX Information
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 2021:
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
10,001 – 100,000
100,001 and over
Total
Number of shareholders Percentage of shares
7,028
9,055
3,385
2,751
110
22,329
0.37%
2.34%
2.47%
6.19%
88.63%
100.00%
There were 760 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:
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
UBS NOMINEES PTY LTD
NAVIGATOR AUSTRALIA LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BUTTONWOOD NOMINEES PTY LTD
POWERWRAP LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS (NZ) LTD
CERTANE CT PTY LTD
BNP PARIBAS NOMS PTY LTD
UBS NOMINEES PTY LTD
Total
SUBSTANTIAL SHAREHOLDERS
The following is extracted from the Company’s register of substantial shareholders:
Pendal Group Limited
Allan Gray Australia Pty Ltd
The Vanguard Group, Inc
State Street Corporation
VOTING RIGHTS
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of shares Percentage of shares
396,918,993
187,655,733
144,906,365
70,962,218
17,282,775
16,575,099
15,106,070
5,654,398
3,518,256
3,269,001
3,237,213
2,617,030
2,366,603
2,107,336
1,779,825
1,775,721
1,639,463
1,630,417
1,397,322
1,393,191
38.82%
18.36%
14.17%
6.94%
1.69%
1.62%
1.48%
0.55%
0.34%
0.32%
0.32%
0.26%
0.23%
0.21%
0.17%
0.17%
0.16%
0.16%
0.14%
0.14%
881,793,029
86.25%
Number of shares
124,012,070
107,130,944
61,420,001
51,804,192
124 Metcash Annual Report 2021
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Directors’ Report
Financial Report
Other Information
Metcash Food (Head Office)
1 Thomas Holt Drive
Macquarie Park NSW 2113
PO Box 557
Macquarie Park NSW 1670
Telephone: 61 2 9741 3000
Australian Liquor Marketers (Head Office)
1 Thomas Holt Drive
Macquarie Park NSW 2113
PO Box 557
Macquarie Park NSW 1670
Telephone: 61 2 9741 3000
Independent Hardware Group (Head Office)
19 Corporate Drive
Heatherton VIC 3202
Telephone: 1300 880 440
Corporate Governance
A copy of the Corporate Governance Statement can be found on our website.
Visit www.metcash.com/corporateinformation/corporate-governance
Directors
Jeff Adams (Group CEO)
Peter Birtles
Tonianne Dwyer
Christine Holman
Murray Jordan
Robert Murray (Chair)
Helen Nash
Company Secretary
Julie Hutton
Share Register
Boardroom Pty Limited
GPO Box 3993
Sydney NSW 2001
Freecall: 1800 655 325
Telephone: 61 2 9290 9600
Auditor
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
Telephone: 61 2 9248 5555
Metcash Limited
ABN 32 112 073 480
1 Thomas Holt Drive
Macquarie Park NSW 2113
PO Box 557
Macquarie Park NSW 1670
Telephone: 61 2 9741 3000
Food
Liquor
Hardware
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