Strategic rationale for the acquisitions

C. Key Risks (cont'd) For example, the increasing cost of living pressures may result in cost conscious consumers reducing purchases made at independent retailers or substituting such goods with purchases made at other perceived lower price retailers. Separately, the cost of housing and housing construction is subject to variations in building costs, materials and home-building capacity. Affordability of housing construction is impacted in addition by interest rates. Economic conditions may also impact the viability of some building and construction customers. These factors may have an impact on the hardware and tools parts of Metcash's business. Further, geopolitical tensions and actions of nation states, including trade wars, territorial disputes, incursions, and war may adversely impact Metcash's operations and supply chain, resulting in delivery delays or the unavailability of certain products or inputs, increased cost of doing business and subsequent impact on Metcash's profitability. For example, Metcash's supply chain has experienced delays due to the current disruptions in the Red Sea and the ongoing industrial disputes impacting freight and logistics. Whilst there has been a marginal impact on operations, this has been offset in part by buffer stocks maintained by Metcash and/or its suppliers. There is a risk that if the disruptions continue, Metcash's and/or its supplier's buffer stocks may be depleted or shipping costs may increase due to longer routes being taken to avoid the region. This could adversely affect Metcash's operations and financial performance. 1.4 Operational risks As a wholesaler, Metcash is reliant upon the success of its suppliers and retailers. Metcash continues to invest in transformation programs to improve the health of the independent retail network and improve Metcash's infrastructure to make it simpler to do business. As with any significant change, there is a risk that these transformation programs fail to deliver the expected benefits, experience delays, scope variations or cost overruns. In addition, disruption to, or inefficiency or failure within Metcash's supply chain, product sourcing or key support systems could adversely impact the Group's operations, financial performance and ability to deliver on its objectives. 1.5 Key brands Metcash's success in generating profits and increasing its market share is based on the success of its key brands. 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. In addition, Metcash does not own the IGA brand, but rather licences it from IGA, Inc. While IGA, Inc. may only terminate the licence agreement in limited circumstances (including for insolvency and breach of the agreement), there is no guarantee that Metcash will continue to have the right to use the IGA brand in perpetuity. 1.6 Compliance risks Metcash's operations require compliance with various regulatory requirements including work health and safety, food and product safety, environmental, workplace industrial relations, public and product liability, modern slavery, privacy & security (including in relation to personal information of customers and employees, which Metcash is obliged to store in accordance with privacy regulations), financial, anti- money laundering, critical infrastructure and industry codes of conduct. Any regulatory breach could have a material negative impact on the operational performance, reputation or financial results of Metcash or its stakeholders. The Group has implemented internal processes and controls to manage and monitor compliance across areas including safety, security, sustainability, chain of responsibility, food safety and anti-money laundering. However, there is a risk that such internal processes may not be complied with. Further, Metcash has a strategy of driving growth by expanding through acquiring privately held retail stores as joint ventures. While Metcash will implement internal processes, as part of the operation of its joint ventures, to allow Metcash to monitor these joint venture stores, Metcash has less oversight over these stores compared to its corporate owned stores. Accordingly, compliance with Metcash's processes by joint venture stores and minority joint venture partners may be outside of Metcash's direct control and any such non-compliance may adversely affect Metcash's operational performance, reputation or financial results. Metcash regularly assesses modern slavery risks in its supply chain as part of modern slavery reporting requirements. Any identification of such modern slavery risks could not only negatively impact Metcash's supply chain operations, but cause material reputational harm. Melcash NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 52 62

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