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Metro, Inc.

Industry

Industry: Grocery Stores

Employees: 65,000

Metro, Inc. is a Canada-based food retailer and distributor. The Company operates 392 supermarkets under the banners Metro, Metro Plus, A&P, Dominion, Loeb, Ultra Food & Drug, and The Barn Markets. It operates 169 discount stores, which operate under the Super C and Food Basics banners. A large number of Metro and Metro Plus stores and some Loeb stores are operated by independent owners bound to the Company by leases or affiliation agreements. The Company acts as a distributor by providing small-surface food stores and convenience stores. It also acts as franchiser and distributor for the 184 franchised Brunet and Clini Plus drugstores, owned by independent pharmacists. Metro, Inc. also operates 78 drugstores under Pharmacy and Drug Basics banners. . During the fiscal year ended September 30, 2006, the Company disposed of its 14% interest in north-western Quebec food wholesaler, Achille de la Chevrotiere Limitee.

Trends in Industry:

- The Company realized net earnings of $67.9 million compared to

$32 million, an increase of 112.2%. Fully diluted net earnings per

share reached $0.58, up 107.1% from $0.28.

- Excluding non-recurring items recorded in the first quarters of 2007

and 2006, adjusted net earnings for the first quarter of 2007 would

have been $71.6 million, an increase of 44.4%, and adjusted fully

diluted net earnings per share would have been $0.62, an increase of

44.2%. Non-recurring items include integration and rationalization

costs of $5.6 million before taxes for the first quarter of 2007 and

$18.3 million before taxes for the first quarter of 2006, and an

additional tax expense of $5.3 million for the first quarter of 2006.

- Sales dipped 0.3% to $2,515 million. Excluding decreased sales of

tobacco products and lost sales due to the disposal, in the fourth

quarter of 2006, of our interest in a grocery wholesaler, sales would

have increased by 2.8%.

- Synergies of $19 million were achieved in the first quarter compared to

$7.9 million in the same quarter last year.

What are the Changes in the Industry:

Settlement with Employees

METRO announced that it has reached a long term agreement with the 315 employees of its Montreal grocery warehouse who went on strike on November 24, 2006. The settlement was ratified and the new collective agreement will be in force for nine years, thereby ensuring labour peace until 2015 under terms that will allow the company to

remain competitive in the industry.

New Accounting Policies

In the first quarter, Metro adopted three new accounting standards issued by the Canadian Institute of Chartered Accountants (CICA): section 1530, Comprehensive Income; section 3855, Financial Instruments - Recognition and Measurement; and section 3865, Hedges. These new standards establish standards for recognizing and measuring financial instruments, namely financial assets, financial liabilities and derivatives. Certain changes in the value of these financial instruments are presented in a new financial statement, they called Comprehensive Income. The application of these new standards had a somewhat negative effect on the Company's financial statements and financial position.

Subsequent Events to Their Last Releasing of First Quarter 2007 Financial Statements

In January 2007, Loblaws was named in a suit brought by beneficiaries of a multiemployer pension plan. They suit claims that plan assets were mismanaged and are seeking, among others, damages of $1 billion from the trustees and the employers. Loblaws is one of 443 employers affected by the suit.

Investment Activities

Investing activities