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Metcash Limited

ABN 32 112 073 480


50 Waterloo Road
Macquarie Park
NSW 2113 Australia

PO Box 6226
Silverwater Business Centre
NSW 1811 Australia
Ph: 61 2 9751 8200
Fax: 61 2 9889 1557
20 October 2009

The Manager, Companies


Australian Stock Exchange
Company Announcements Office
Level 4
20 Bridge Street
SYDNEY NSW 2000

Dear Sir/Madam

Attached is a copy of a presentation given this morning by Mr Andrew Reitzer,


Metcash CEO, to the Citi Inaugural Australian Investment Conference.

Yours faithfully

John Randall
Company Secretary
“Champion of the Independent Retailer” 2009

METCASH PRESENTATION
Citi Inaugural Australian Investment Conference
20 October 2009

Andrew Reitzer
Chief Executive Officer
Company Overview 2009

Listed on Australian Stock Exchange (“MTS”)


„ Capitalised at ~A$3.3bn
„ Ranked in top 80 of Australian companies by market capitalisation

Food and liquor wholesaler


„ Business – Marketing and distribution of food, liquor and other fast moving
consumer goods to independently owned supermarkets & liquor outlets
„ Geographic Footprint – Australia and New Zealand (liquor only)
„ Market Position – 3rd force in national grocery retailing market
„ Management Team – Most with Metcash since 1998 and have led business
transformation
„ Defensive business characteristics in event of a slow down of the economy

Core Competencies
„ Buying and merchandising
„ Marketing and brand building
„ Distribution logistics and warehousing
„ Championing the interests of the independent grocery and liquor sectors

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Corporate Structure and Divisional Overview 2009

METCASH LIMITED
Marketing and wholesale distribution company operating in Australia & NZ
„ Sales ~ A$11.0 bn
„ EBITA ~ A$382.5m
100% Owned

„ Sales ~ $6.7bn „ Sales ~ $2.6bn „ Sales ~ A$1.7bn


„ EBITA ~ $315.5m „ EBITA ~ $33.8m „ EBITA ~$33.0m

„ Includes IGA Fresh „ NSW, QLD, VIC, SA, WA, NT, „ NSW,QLD, VIC, SA, WA & NT
„ NSW, QLD, VIC, SA & WA TAS & New Zealand „ 4 distinct sub-divisions servicing
„ 6 major DC’s delivering (Dry, „ 18 major DC’s delivering wines, differing customer needs:
chilled, frozen + GM & HBC) spirits, RTD’s & imported / – Cash & Carry (22 DCs)
„ ~ 2,500 independent stores as boutique beers – Regional Wholesale (17
customers including ~1,270 IGA „ ~ 15,000 independent liquor DCs)
branded stores stores, hotels, pubs and other – CSD (4 stockless DCs & 4
„ Market share ~19% licensed premises confectionery DCs )
„ Competitive store comps ~9% „ ~1,600 stores marketed under – Foodlink (Foodservice)
„ 40 – 60 new stores p/a IBA umbrella’s 3 main store „ Supplies ~ 78,000 customers
brands
„ 60 – 70 major refurbs p/a

Note: All figures for the year ended April 2009


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Financial Highlights
- Divisional 2009

Wholesale Sales % by Division EBITA % by Division

Campbells Campbells
Wholesale A$1,660.4bn
A$1.7bn Wholesale
ALM A$33.0m
15% A$33.8m 9%
9%

$A2.6bn

ALM
24%

IGA>D
61%
A$6,674.4bn
A$6.7bn IGA>D
A$315.5m
82%

Note: All figures for the year ended April 2009


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Financial Highlights
- 5 Year Trend 2009

Market Share (MAT %) Total Sales Revenue ($m)

20.0% 18.8% 19.0% 12,000


18.5% 18.6% 10,982
10,116
9,695
10,000
16.0%
8,214
MAT

13.5%

$M
8,000 7,010
12.0%
6,000

8.0% 4,000
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

EBITA ($m) Cost of doing business/ Gross Profit (%)

420.0 80.00%
382.5
380.0
341.3
340.0 309.9 68.24%
70.00% 67.16% 66.86%
300.0 65.21%
$M

62.41%
260.0
223.7
60.00%
220.0 194.5
180.0
140.0 50.00%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

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Financial Highlights
- 5 Year Trend 2009

Profit after Tax ($m) Operating Cashflow ($m)


250.0

202.5 300.0
197.4
200.0 242.7 248.1
250.0
158.6 197.6
$M

150.0 200.0 177.5

$M
126.8
150.0 130.6
100.0 81.2
100.0

50.0 50.0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
2009 PAT before non-recurring item (NRI) was $219.7m. NRI of
$17.2 m post tax incurred from terminating interest rate collar in 1H09

Earnings per share (cents) Dividends per share (cents)


32.00 25.0 24.0
29.68
21.0
28.00 25.86 26.47 20.0
17.0
Cents

24.00
Cents
21.06
15.0
20.00 11.5
16.99 9.5
10.0
16.00

12.00 5.0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
2009 EPS calculated on PAT before non-recurring item (NRI) was 28.73 cents
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Our Business Pillars
- IGA>D 2009

About IGA>D
„ “Champion of the Independent Retailer”
„ Marketing and distribution specialists – supplies dry
grocery and fresh food to independent grocery
stores
„ 61% of Metcash sales revenue and 82% EBITA
„ 6 major DCs in NSW, QLD, VIC, SA & WA delivering
(dry, chilled, frozen + GM)
„ Supplies ~2,500 independent stores including
~1,270 IGA branded stores and ~745 FoodWorks
stores
„ Supported by 11 Fresh DC’s delivering fresh
produce, meat, bakery and deli products
„ Marketing and brand building:
Future Direction
„ 3 channels IGA branded independent stores
„ Implement Project LION strategies
to suit niche markets
(enhance IGA>D and IGA retailer model)
„ Retail standards, appraisals and marketing
„ Implement fresh food strategies to grow
programs
wholesale and retail sales
„ 2 distinct private label brands – Black & Gold
„ Reduce CODB
and IGA Signature
„ Grow retail area through new stores and
extensions
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Our Business Pillars
- IGA>D 2009

About IGA>D’s Fresh Operations


„ Strategic Rationale – to provide independent
retailers with complete, consistent and quality
Fresh food offer to meet customer needs

„ 4 key categories of Produce, Meat, Bakery and


Delicatessen serviced
„ National Produce network established with 11
fresh produce DCs and 2 meat processing facilities

„ Private label fresh produce range – Field Fresh

Bright Supa IGA, Victoria

Future Direction
„ Grow categories of existing customers
„ Increase number of customers serviced by national
network
„ Move to increased farm-gate purchasing

„ Retail ready (MAP) meats


„ Continue to drive quality and consistency of
retailers’ offer

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Our Business Pillars
- Australian Liquor Marketers (ALM) 2009

About ALM
„ Broad range liquor wholesaler
„ Operates 18 distribution centres in Australia
(NSW, QLD, VIC, SA, WA, NT & TAS) and NZ
„ Supplies ~15,000 customers including hotels,
liquor stores restaurants and other licensed
premises
„ ~1,600 stores marketed under Independent
Brands Australia’s (IBA) 3 main store brands
– Cellarbrations, IGA Plus Liquor and Bottle-O

Future Direction
„ Sales and equity growth for major IBA brands
under Cellarbrations, IGA Plus Liquor and
Bottle-O Najda’ Cellarbrations, North Geelong, Victoria

„ CODB reduction
„ Working with major suppliers to channel beer
volumes through ALM to maximise beer
distribution and consolidate delivery for
independent stores
„ Continue to strengthen Liquor Alliance
relationship and look to expand the Thirsty
Camel brand

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Our Business Pillars
- Campbells Wholesale 2009

About Campbells Wholesale


„ Focus on convenience, route and hospitality trade
channels
„ Food service and distribution
„ 4 sub-divisions based on customer segment

„ Campbells Cash & Carry (CCC) -


22 metropolitan warehouses

„ Campbells Wholesale
Cash & Carry, Bunbury, Western Australia
Distribution (CWD) - 17 regional
warehouses

„ Convenience Store Distribution


Future Direction
(CSD) – 4 warehouses
„ Continue to provide total supply chain solution to supported by specialist
modern petrol and convenience channel
confectionery distribution centres
„ Grow independent convenience sector through
the Lucky 7 banner „ FoodLink - foodservice
„ Expand food service offer nationally operations in QLD & WA
„ Continued confectionery growth
„ Expand convenience, hospitality and small
business markets
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Why Independent Retailers Succeed 2009

1. Metcash has formed: 2. “Bacon and Eggs Story”


„ Chain of independent retailers „ Committed
„ Think and behave like a chain „ Manager is the owner =>
„ But act locally − Lower costs &
− Higher service
„ ‘Energised’ independent sector
believes in its own future (~1/3rd
of profits reinvested)

4. Metcash provides: 3. Differentiated Offer


„ Dedicated wholesaler which „ Independent
doesn’t compete with its „ Give back to community
customers; focused on removing „ Able to scale store to specific
supply chain costs demographic profile of an area
„ Aggregated volume; engaged „ Convenient shopping – 20 minutes!
vendor community keen to invest „ Price – fair with great promotions
„ Ability to match market „ Store standards
developments eg: fresh / „ Friendly, personal service
refurbishments / technology „ Niche ranges

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Why Metcash Succeeds 2009

„ Stable, capable Management Team


„ Divisions aligned to service specific and differentiated needs of respective customer
segments
„ Model is focussed on group's core competencies
„ Marketing, merchandising and distribution logistics
„ No competition with customers
„ Retail-led model provides benefits of a virtual chain with considerably more flexibility
„ Brand building
„ Manufacturers keep us competitive with prices
„ Strong relationships + they want a strong vibrant independent sector
„ Our costs are less or comparable to the chains at DC and store level
„ Growth oriented both organically and via acquisitions
„ Strong balance sheet and operational cash flow allows for significant investment to fuel
growth aspirations

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2009

CORE COMPETENCIES
- LOGISTICAL EXCELLENCE
- MARKETING & BRAND BUILDING

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Logistical Excellence 2009

Composite DC’s Mini-loader / Voice Pick


Efficiencies driven through infrastructure Efficiencies driven through technology investment
investment

Cost to serve Operational Excellence

Put to Light / Mini-loader CODB Reduction


Adjusting the Logistics Solution to better serve World class benchmarked
customer needs Recognise need to constantly search for ways to
take costs out of the supply chain

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2009

CORE COMPETENCIES
- LOGISTICAL EXCELLENCE
- MARKETING & BRAND BUILDING

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Marketing and Brand Building
- Independent Grocers of Australia (IGA) 2009

Our Most Significant Point of Difference

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Marketing and Brand Building
- IGA Stores 3 channels 2009

IGA – world’s largest voluntary supermarket network

• Large format stores


• Full department offer

• Medium “top up” stores


• Selected department
ranging

• Convenience format
stores
• Targeted demographic
range

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Marketing and Brand Building
- Championing Independent Retailers 2009

Retail Actively growing our “We offer a chain store support structure for independents
with one major difference. We are consultative rather than
Operations retailers dictatorial”

We have developed a talent pool to cover all facets of the


industry
„ Business Managers

Offering the services „ Fresh Food Sales Managers


Our Structure „ State Operations Managers
of a chain
„ Retail Development
„ RMS – General Merchandise
„ Business Development

RSA ratings and performance


Retail ABS and demographic information
Ensuring our
MAP info – strategic growth
Excellence customers succeed
Property trust & development – actively looking for new stores
and development opportunities

Customers are confident in the brand and confident in their future

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Marketing and Brand Building
- Retail Standards & Support 2009

Store Standards

Look and Feel Product


„ Fit out „ Ranging – core
„ Displays grocery and fresh
„ Ambience food
„ Passion „ Stock levels

Service Community focus


„ Staff training & „ Staff sourced
knowledge locally
„ Merchandising „ Support local
and promotional events & charities
programs „ Sponsor sporting
„ Product quality teams
and availability

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Marketing and Brand Building
- Retail Development 2009

Focus on developing new stores and improving existing stores

Total Extensions & New Stores & Refurbishments


200 Total new ('000) sq metres

180
178
160
151
140
137 135
120 126

100 109
103
96
80
67
76 62 62
60 51 54

40 49
27 27

20 11
0 0
0
1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009

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Marketing & Brand Building
- IGA Marketing 2009

“Our vision is to make the IGA brand the single most valuable asset we have”

Our Marketing Programs include IGA Products

Community Chest: The IGA program supports Black & Gold


local communities by donating 1-2c per retail „ Meeting value customer needs
unit to "Community Chest".

IGA Signature - is our premium label range:

„ Benchmarked against the market leader quality at a lower


price.
„ Range designed to compete with market leaders by offering
a price advantage to customers and increasing IGA brand
recognition and store loyalty.
„ Marketplace point of difference
„ Communicates a quality image to our customers. The IGA
„ Annual donations of ~A$4M logo on our products links our products exclusively to IGA
nationally stores to promote store loyalty and create product
recognition
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Marketing & Brand Building
- Our Marketing Programs 2009

Other Marketing Programs to support


retailers include:
„ National TV ads (Local Hero tag line)
„ Magazines & Catalogues
„ Communication
„ Research
„ State and National Conferences / Expo
„ Retailer of the Year
„ Training & Development
„ Regional Meetings

More community themes:

IGA proudly supports:


„ The "Special Olympics" program assisting the
intellectually disabled to:
„ participate in sport, share skills and friendships
within their families and the wider community.
„ Little Athletics Australia
„ Community focused sports initiative
„ Opportunity for retailers in all towns and suburbs to
participate / promote
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2009

CONCLUDING REMARKS

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Concluding Remarks 2009

Defensive stock (non-cyclical)


„ Selling ‘basic essentials’ (groceries + liquor!) – no discretionary spend
„ Solid, steady earnings flow and high dividend pay-out
Strong Management Team
Focused on driving core businesses
„ IGA>D – Increased teamwork score via IGA Fresh + continue to drive store reinvestment with retailers
(new Project Lion structure to further drive growth)
„ ALM – Continue to grow retailers under IBA aligned brands
„ CW – Continue to expand market share in confectionery and organised petrol and convenience sector
+ Foodservice expansion
„ Continue to extract supply chain efficiencies across all divisions
Medium / Long Term Growth
„ Actively seeking bolt-on and new business opportunities

* Teamwork score = proportionate share of customer / retailers purchasing requirements

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Concluding Remarks 2009

Earnings Guidance
„ At AGM on 3 Sep 09, Management reconfirmed EPS (pre IA) growth range of 7%-10% for FY10
(based on FY09 EPS of 29.53 cps)
„ The trading environment remains strong but uncertainties continue to impact wealth and
discretionary consumer spending
„ Inflation has declined from previous highs with price deflation in some Produce categories
„ However given MTS’s focus on selling consumer essentials, no likely weakening is foreseen in
the markets served by the Group

Capital Management
„ The Board has undertaken to return high dividends to shareholders in the absence of alternative
uses for such funds (payout ratio >75% for last 3 years)
„ The Board continues to keep its capital management options under a watching brief

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2009

“Champion of the Independent”

“The Third Force”

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2009

For additional information contact:

Adrian Gratwicke, GM Finance

Phone: 61 2 9741 3248


Fax 61 2 9741 3027
E-mail adrian.gratwicke@metcash.com

Or visit our website:


www.metcash.com

Disclaimer

This presentation is for the general information of investors.

Metcash Limited gives no warranty and expressly disclaims all liability in relation to
the information contained in this presentation. Investors should seek relevant
advice to suit their specific objectives and circumstances.

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