Metcash Limited · ASX:MTS
Metcash — Investor Presentation (April 2020)
38 slides from Metcash's investor presentation, Apr 20, 2020
Slide 1: Equity Raising
Equity Raising 20 April 2020 Championing Successful Independents This slide must be copied from pre-formatted slide to retain the lines and logo.
Slide 2: Important notice
Important notice This investor presentation (Presentation) is dated 20 April 2020 and has been prepared by Metcash Limited (ACN 112 073 480) (Metcash). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation, you acknowledge and agree to the terms se
Slide 3: Important notice
Important notice Financial information All financial information in this Presentation is in Australian dollars ($ or AUD) unless otherwise stated. This Presentation includes certain pro forma financial information. Any such pro forma historical financial information provided in this Presentation is
Slide 4: Disclaimer
Disclaimer Disclaimer Macquarie Capital (Australia) Limited ABN 79 123 199 548 is acting as lead manager and underwriter to the Placement (Lead Manager). A summary of the key terms of the underwriting agreement between Metcash and the Lead Manager is provided in Appendix 3. To the maximum extent per
Slide 5: Championing Successful Independents
Our purpose Our vision Our values Best store in town We believe: Championing Independence is worth fighting Successful Passionate about independents for; in treating our people, retailers and suppliers the way we like to be treated; and in giving Independents A favourite place to work back to the co
Slide 6: Executive summary
Executive summary Metcash is seeking to strengthen its balance sheet and enhance liquidity to reflect the current heightened levels of uncertainty, and position the business to capitalise on potential opportunities that may arise which align with the Group’s strategic direction through: Up to a $3
Slide 7: Executive summary continued
Executive summary continued Impact of COVID-19 All Pillars are currently trading, albeit with some restrictions in Liquor as detailed below Food – strong sales and working with Government, suppliers and retailers to address demand / supply challenge Liquor – impacted by shutdown of New Zealand
Slide 8: About Metcash & investment rationale
About Metcash & investment rationale Investment rationale Leading market positions Track record of disciplined capital deployment • Food: Australia’s widest distribution network to independents • Track record of well executed acquisitions • Liquor: clear #2 market position with a national network •
Slide 9: Trading update – five months ended March 2020
Trading update – five months ended March 2020 Food • Total Food sales in the five months ended March 2020 increased 4.3% (up 7.6% ex Drakes)1,3 Supermarkets wholesale sales (ex tobacco) As reported Excluding Drakes (SA) • Supermarkets sales continued to improve in the five months ended March 2020 an
Slide 10: COVID-19 – update
COVID-19 – update Metcash priorities during COVID-19 restrictions • Protecting the health and wellbeing of our people • Keeping our supply chains open to ensure delivery of essential goods • Protecting our balance sheet We proudly support our independent retailers and believe “independence is worth
Slide 11: COVID-19 – update continued
COVID-19 – update continued Liquor • Sales adversely impacted by Government shutdown of New Zealand operations and Australian ‘on-premise’ market (pubs, clubs, restaurants) which took effect in the last week of March • Customer purchase limits introduced in April • Supporting impacted retailers • Ac
Slide 12: Outlook
Outlook Food • Sales in March / early April were significantly higher than the prior year comparatives. Sales moderated in April but remained well ahead of the same period in FY19 • The earnings benefit from the higher sales in March / early April has been partly offset by increased costs to service
Slide 13: Outlook continued
Outlook continued Hardware • The stronger DIY sales in March have continued into early April, particularly in the paint and garden categories • There is uncertainty as to how long COVID-19 related buying behaviours will continue to impact demand • COVID-19 trading restrictions have, to date, not mat
Slide 14: Funding uses and rationale
Funding uses and rationale EQUITY RAISING – SOURCES AND USES FUNDING RATIONALE Sources A$m Metcash seeks to raise equity and supplement its existing debt facilities to enable it to: Gross proceeds from Placement1 300 1. Support the independent retail network during the COVID-19 pandemic by investing
Slide 15: Existing liquidity position
Existing liquidity position EXISTING DEBT FACILITY LIMITS AND DRAWN DEBT COMMENTARY $m Facility Limit1 Drawn Debt2 Metcash’s debt levels vary significantly over the course of the financial year as a result of seasonal Facility Limit / Gross Debt @ 29 March 20203 860 345 working capital requirement
Slide 16: Proforma liquidity
Proforma liquidity LIQUIDITY COMMENTARY Drawn Debt Facility Headroom3 As noted, Metcash manages its debt levels and liquidity position $m Existing1 Proforma2 Existing4 Proforma5 with reference to the average and peak debt levels Gross Debt @ 29 March 2020 345 53 515 987 Following the introductio
Slide 17: Transaction structure
Transaction structure Up to $330m equity raising (Equity Raising) including o Fully underwritten institutional placement (Placement) to raise approximately $300m Equity Raising structure and size o Non-underwritten Share Purchase Plan (SPP) to raise up to $30m1 o The Placement is fully underwritte
Slide 18: Transaction timetable
Transaction timetable EVENT1 DATE Record date for the SPP 7:00pm (Sydney time), Friday, 17 April 2020 Trading halt and announcement of Equity Raising Monday, 20 April 2020 Placement bookbuild Monday, 20 April 2020 Announcement of outcome of Placement Tuesday, 21 April 2020 Trading halt lifted – trad
Slide 19: Appendices
Appendices 1. Risks 2. International Offer Restrictions 3. Underwriting Agreement Summary 4. Financials 18 Equity Raising
Slide 20: 1. Risks
1. Risks This section includes details of the key risks attaching to an investment in shares in Metcash. These risks may affect the future operating and financial performance of Metcash and the value of Metcash shares. The key risks are not set out in any particular order. Before deciding whether to
Slide 21: 1. Risks continued
1. Risks continued • protect the health (both mental and physical), safety and security of staff; and • comply with requirements under its debt financing arrangements, leases, and its regulatory framework (including in relation to corporate governance and financial reporting requirements). These eff
Slide 22: 1. Risks continued
1. Risks continued of duty increases should not impact earnings until FY22. Metcash is in discussions with tobacco suppliers to determine revised trading terms should the annual customs and excise duty increase be reduced or cease in 2021. In its Food business pillar, Metcash services a number of la
Slide 23: 1. Risks continued
1. Risks continued reviews the Group’s plans against market changes and modifies its approach (where necessary), such reviews and modifications may be ineffective in light of significantly changed conditions. If the Group fails to adjust its strategies to respond to changes in consumer behaviour and
Slide 24: 1. Risks continued
1. Risks continued Inefficiency or failure within the supply chain or in key support systems (including technology) could also impact the Group’s ability to deliver on its strategic objectives. While Metcash has comprehensive business continuity plans in place to address significant business interru
Slide 25: 1. Risks continued
1. Risks continued 1.9 People and culture The increasing competitive landscape and the ongoing need for market participants to remain agile in order to adapt to consumer preferences, has heightened the competition for talent. The ability to attract and retain talent with the necessary skills and cap
Slide 26: 1. Risks continued
1. Risks continued 1.11 Damage to facilities or dependence on timely delivery of new facilities 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
Slide 27: 1. Risks continued
1. Risks continued Exposure to disputes or litigation with third parties such as regulators (for example, the ACCC), employees, business associates, customers and suppliers (including as to the terms of supply arrangements), the holders of rental guarantees granted by Metcash (including where the gu
Slide 28: 1. Risks continued
1. Risks continued 1.17 Regulation The businesses of Metcash are highly regulated in many markets in which they sell their products. These regulations govern many parts of their operations, including the manufacturing, marketing, advertising, distribution and sales of their products. Examples of suc
Slide 29: 1. Risks continued
1. Risks continued • Australian and international economic conditions and outlook; • Changes in interest rates and the rate of inflation; • Change in government regulation and policies; • Announcement of new technologies; and • Geo-political stability, including international hostilities and acts of
Slide 30: 2. International offer restrictions
2. International offer restrictions This document does not constitute an offer of new fully paid ordinary shares (New Shares) of Metcash Limited (Metcash) in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not
Slide 31: 2. International offer restrictions continued
2. International offer restrictions continued The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional
Slide 32: 2. International offer restrictions continued
2. International offer restrictions continued Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA. This document has been given to you on the basis that you a
Slide 33: 2. International offer restrictions continued
2. International offer restrictions continued This document may be distributed in the UAE only to “qualified investors” (as defined in the SCA Board of Directors' Chairman Decision No. 37 RM of 2019, as amended) and may not be provided to any person other than the original recipient. No marketing of
Slide 34: 3. Underwriting agreement summary
3. Underwriting agreement summary Macquarie Capital (Australia) Limited (Lead Manager) is acting as sole bookrunner, lead manager and underwriter of the Placement. Metcash has entered into an underwriting agreement with the Lead Manager in respect of the Placement (Underwriting Agreement). The Under
Slide 35: 3. Underwriting agreement summary continued
3. Underwriting agreement summary continued • any regulatory body commences any public action against an officer of Metcash in his or her capacity as an officer of Metcash or an officer of Metcash is charged with an indictable offence or is disqualified from managing a corporation under the Corporat
Slide 36: 3. Underwriting agreement summary continued
3. Underwriting agreement summary continued • there is an event or occurrence, including any statute, order, rule, regulation, directive or request (including one compliance with which is in accordance with the general practice of persons to whom the directive or request is addressed) of any governm
Slide 37: 4. 1H20 financials by pillar
4. 1H20 financials by pillar 1H20 1H19 Change $m $m % Sales revenue (%) Sales revenue (including charge-through sales) (including charge-through) Food 4,381.1 4,330.9 1.2% Liquor 1,784.2 1,753.9 1.7% 14% Hardware 1,044.2 1,089.6 (4.2%) Food Total sales revenue (including charge-through sales) 7,209.
Slide 38: Championing Successful Independents
Championing Successful Independents