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Highlights:
- Significant Proxy Counting Error: Metcash (ASX:MTS) miscounted over 310 million shares in its AGM results, impacting 43% of total votes.
- Repeated Financial Missteps: The company also disclosed a previous sales miscalculation in its first-half results, raising concerns over financial accuracy.
- Costly IT Overhaul: A tech upgrade originally budgeted at $80 million has now ballooned to $200 million, adding to operational concerns.
Metcash Ltd (ASX:MTS) has faced scrutiny following significant miscalculations in its shareholder voting results, raising concerns over its financial reporting accuracy and operational oversight. The wholesale and retail conglomerate, responsible for IGA supermarkets, Mitre 10, and Home Timber & Hardware, recently acknowledged that its 2024 AGM results contained major proxy voting errors due to miscounts by its securities registry provider, Boardroom.
The revised figures show a substantial discrepancy compared to the originally reported numbers. The company initially stated that its remuneration report received 398,694,330 votes in favor, 49,822,060 against, and 650,852 abstentions. However, the corrected figures indicate 644,827,035 votes in favor, 100,048,599 against, and 16,341,513 abstentions. The miscalculation resulted in an undercounting of over 310 million shares, affecting approximately 43% of total votes and nearly 28% of the company’s shareholding.
Delayed Response Raises Concerns
Despite the scale of the error, it took four months for the discrepancy to be identified and rectified. A Metcash spokesperson stated that the company relied on figures provided by Boardroom. However, questions remain regarding why it took so long to identify the issue. The incident follows a similar error in November when Metcash disclosed that its first-half results mistakenly double-counted sales in its tools segment. That discrepancy was caught within four weeks, yet the AGM miscount lingered unnoticed for several months.
The company has already been grappling with internal challenges, including a costly IT transformation project initially expected to cost $80 million but now forecasted at $200 million. The initiative, launched under former CEO Jeff Adams, aimed to consolidate nine different systems into a single Microsoft-based technology platform. However, implementation challenges and budget overruns have significantly increased the financial burden.
Governance Concerns and Board Reshuffle
Governance concerns have also surfaced. Prior to the 2024 AGM, director Christine Holman resigned from Metcash’s board due to disagreements over management’s bonus structure. Holman previously served as a director at WiseTech Global Ltd (ASX:WTC) before leaving in 2019 amid concerns over the handling of workplace allegations.
The repeated financial reporting errors, combined with cost overruns in its IT transition and governance disputes, have raised broader concerns regarding Metcash’s internal oversight and accountability. As the company navigates these operational hurdles, investor confidence may hinge on how swiftly and effectively these issues are addressed.
