Woolworths Group Ltd · ASX:WOW
Woolworths — Merger or Acquisition (May 2021)
44 slides from Woolworths's merger presentation, May 10, 2021
Slide 1: Demerger of Endeavour Group - Briefing Presentation
10 May 2021 ASX Market Announcements Office Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 Demerger of Endeavour Group - Briefing Presentation Attached for release to the market is a presentation regarding the proposed demerger of Endeavour Group. Authorised by: Kate Eastoe, Group C
Slide 2: Demerger of Endeavour Group
E N D E A VO UR G R O U P D E M E R GER 1 Demerger of Endeavour Group Woolworths Group Limited ABN 88 00 014 675
Slide 3: Contents
Contents Overview and Woolworths Group 3 post demerger Endeavour Group post demerger 13 Endeavour Group financial overview 33
Slide 4: Woolworths Group Purpose
Woolworths Group Purpose What we mean by ‘we’ What we mean by What we mean by Our team and our partners ‘create’ ‘experiences’ We constantly innovate to make The moments we create in store and a positive impact on the lives of online for customers, communities and our customers and team shareholders
Slide 5: Completing the Endeavour Group Transformation
Completing the Endeavour Group Transformation E N D E A VO UR G R O U P D E M E R GER 4 Stage 1 Stage 2 Stage 3 Restructure ALH Merger Separation • Internal reorganisation of • Endeavour to acquire BMG’s • Separation of Endeavour Woolworths Group to create interest in ALH in exchange for Activity Gr
Slide 6: Rationale for the demerger
Rationale for the demerger E N D E AVOUR G R O U P D E M E RGER 5 Win-win Partnership o Simple and more Joint customer food o Simplified and customer- agile operating model and drinks offer in centric business store and online o Increased focus on Everyday Rewards o Clear purpose across growing
Slide 7: Creation of two independent and leading ASX-listed companies
Creation of two independent and leading ASX-listed companies E N D E A VO UR G R O U P D E M E R GER 6 (Post demerger) Australia and New Zealand’s leading food and everyday Australia’s leading retail drinks and hospitality business needs business Footprint of established food and everyday The leadin
Slide 8: Overview of the demerger
Overview of the demerger E N D E A VO UR G R O U P D E M E R GER 7 • Demerger to occur via a distribution of Endeavour shares Simplified structure of Woolworths Group and Endeavour Group immediately following the demerger • Eligible shareholders will receive one Endeavour share for every share held
Slide 9: Pro forma impact of the demerger
Pro forma impact of the demerger E N D E A VO UR G R O U P D E M E R GER 8 Pro forma post demerger Current $m (unless otherwise stated) Woolworths Group Woolworths Group Endeavour Group F20 revenue 63,675 53,131 10,624 F20 EBIT1 3,219 2,519 693 F20 NPAT1 1,646 1,303 328 H1 F21 net debt/ (cash)2 491
Slide 10: Woolworths Group's retail ecosystem with our customers and everyday needs at the core
Woolworths Group’s retail ecosystem with our customers E N D E A VO UR G R O U P 9 and everyday needs at the core D E M E R GER 1 2 B2C Food B2B Food Our cornerstone retail Expanding food food businesses, famous into new customer for good food, prices segments, channels and acts and always and marke
Slide 11: Ongoing win-win partnership with Endeavour Group
Ongoing win-win partnership with Endeavour Group E N D E A VO UR G R O U P D E M E R GER 10 Partnership agreements between Woolworths Group and Endeavour Group extend choice for customers to meet their everyday needs through both Woolworths Group’s businesses and partners Key anticipated benefits to
Slide 12: Woolworths Group post demerger capital management considerations
Woolworths Group post demerger capital management E N D E AVOUR G R O U P 11 considerations D E M E RGER Total net debt post demerger Pro forma operating cash flows2 Pro forma Woolworths Group 4,000 $m 3 Jan 2021 Cash (2,699) 3,000 Borrowings 2,624 2,000 $m Net debt / (cash) (75)1 1,000 Lease liabil
Slide 13: Demerger expected to create value for shareholders
Demerger expected to create value for shareholders E N D E A VO UR G R O U P D E M E R GER 12 Relative to other separation alternatives, Woolworths Group Board believes the demerger is the most value accretive path to separation for shareholders Woolworths Group is committed to ensuring Endeavour Gr
Slide 14: Endeavour Group Post Demerger
13 Endeavour Group Post Demerger Endeavour Group Post Demerger
Slide 15: Endeavour Group Board
Endeavour Group Board E N D E A VO UR G R O U P D E M E R GER 14 Peter Hearl Steve Donohue Holly Kramer Bruce Mathieson Sr Managing Director and Woolworths Group nominee, BMG nominee, Chairman Chief Executive Officer non-executive director non-executive director Duncan Makeig Joe Pollard Colin Storr
Slide 16: Endeavour Group senior leadership team
Endeavour Group senior leadership team E N D E A VO UR G R O U P D E M E R GER 15 Steve Donohue Managing Director and Chief Executive Officer Agnieszka Shane Gannon Peter Atkin Judith Powell Alison Merner Pfeiffer-Smith Chief Financial Officer Chief Strategy Officer Chief Legal Officer Chief Informa
Slide 17: Presenting today
Presenting today E N D E A VO UR G R O U P D E M E R GER 16 Steve Donohue • Steve was appointed Managing Director, Endeavour Drinks in January 2018 • Prior to this, Steve held a broad range of roles within the Woolworths Group drinks business, starting as a store manager in Dan Murphy’s at 19 years
Slide 18: Our purpose
E N D E A VO UR G R O U P Our purpose D E M E R GER 17
Slide 19: Endeavour Group investment highlights
Endeavour Group investment highlights E N D E A VO UR G R O U P D E M E R GER 18 • Leading brands - Dan Murphy’s and BWS are #1 and #2 preferred retail drinks brands in Australia1, and operate the largest network of 1,6301 stores with flexible, short duration leases Market leading • Largest hotels n
Slide 20: Endeavour Group - Australia's leading drinks and hospitality business
Endeavour Group - Australia’s leading drinks and E N D E A VO UR G R O U P hospitality business D E M E R GER 19 $10.6B $693M F20 Sales (F19 $10.3B) F20 EBIT (F19 $861M) Australia’s largest retail drinks business, with multi-format Operator of a portfolio of 332 licensed venues brand propositions an
Slide 21: Broad network footprint
Broad network footprint E N D E A VO UR G R O U P D E M E R GER 20 Retail store network growth over time Endeavour Group network footprint1 1,610 1,630 1,576 1,543 1,517 1,486 F16 F17 F18 F19 F20 H1 F21 Comparable sales 3.6% 2.3% 7.9% 17.5% growth % Hotels venue network growth over time 332 329 326
Slide 22: Operating in a growing drinks and fragmented hospitality market
Operating in a growing drinks and fragmented E N D E A VO UR G R O U P 21 hospitality market D E M E R GER Drinks retail market size (revenue) Hospitality market size (revenue) (Packaged liquor market including online and direct to consumer) (Pubs, bars and nightclubs) % Endeavour Group market share
Slide 23: A strong history of organic and strategic growth
A strong history of organic and strategic growth E N D E A VO UR G R O U P D E M E R GER 22 Revenue $B Note: Due to rounding, numbers presented in this chart may not add up to precisely to the totals presented
Slide 24: Market leading customer franchise
Market leading customer franchise E N D E A VO UR G R O U P D E M E R GER 23 Customer engagement and understanding, driving better experiences…and more engagement 78 Attract and Engage Dan Murphy’s Customers VOC NPS1 5.1m My Dan Murphy’s members Customer Enable Trust Meaningful Experiences Understan
Slide 25: Portfolio of trusted and innovative brands
Portfolio of trusted and innovative brands E N D E A VO UR G R O U P D E M E R GER 24 • One of Australia’s most trusted brands • One of the most convenient places to • Australia’s largest on-premise • Destination for drinks discovery – in buy drinks in Australia venue operator store and online • Int
Slide 26: Large hotel property portfolio with development potential
Large hotel property portfolio with development potential E N D E A VO UR G R O U P D E M E R GER 25 49 owned hotel properties 283 leased hotel properties • Opportunities for growth and capital • WALE of 14.41 years plus options recycling • Redevelopment rights and • Leverage ecosystem partnerships
Slide 27: Leading digital presence
Leading digital presence E N D E A VO UR G R O U P D E M E R GER 26 High customer engagement Largest share of category traffic Fast growing eCommerce sales Website visits per month (m) eCommerce sales 18m+ monthly Dec 20201 web and app visits $483m sales in H1 F21 in Dec 2020 7.0 50.2% growth yoy 5.
Slide 28: EndeavourX provides digital capabilities to power the Group
EndeavourX provides digital capabilities to power the Group E N D E A VO UR G R O U P D E M E R GER 27 • EndeavourX was created in 2019, and comprises the digital platforms and incubator businesses of the Group to build customer knowledge, leverage capability and drive growth • EndeavourX brings tog
Slide 29: Pinnacle Drinks is Endeavour Group's consumer brand and production business
Pinnacle Drinks is Endeavour Group’s consumer brand E N D E A VO UR G R O U P and production business D E M E R GER 28 Endeavour Group’s own and exclusive brand business Pinnacle Drinks engages in selective vertical integration Collection of award winning and premium • Largest supplier to Endeavour
Slide 30: Endeavour Group's ecosystem unlocks portfolio benefits
Endeavour Group’s ecosystem unlocks portfolio benefits E N D E A VO UR G R O U P D E M E R GER 29 Ability to generate more value from a liquor licence by leveraging both hotel and retail businesses Ability to leverage innovative Ability to distribute product and capabilities from our provide differe
Slide 31: Key areas of future growth opportunity
Key areas of future growth opportunity E N D E A VO UR G R O U P D E M E R GER 30 Growing digital engagement Strategic expansion of the network Expanding product range and reach • Increase eCommerce market share to align to • Accelerate acquisition, roll-up and • Respond to emerging trends bricks an
Slide 32: Highly experienced and engaged team
Highly experienced and engaged team E N D E A VO UR G R O U P D E M E R GER 31 One team 28,000+ 36% 38% team members female representation across reduction in recordable Endeavour Group senior leaders injuries to Dec 20 Highly Engaged Team • Passionate, knowledgeable and diverse team members, Sustai
Slide 33: Commitment to responsibility and community
Commitment to responsibility and community E N D E A VO UR G R O U P D E M E R GER 32 Approach to Responsible Service Responsibility Most responsible operating model based on tailoring community relevant voluntary initiatives over and above legal compliance • ID25+ • Choose to Drinkwise • Internatio
Slide 34: Financial overview
3. Financial overview Financial overview Endeavour Group Post Demerger
Slide 35: Endeavour Group financial highlights
Endeavour Group financial highlights E N D E A VO UR G R O U P D E M E R GER 34 Scale and growth Strong asset base $ Cash generative Financial flexibility $10.6b1 $3.2b2 $1.4b1 $2.5b F20 operating cash flow Debt facilities F20 revenue Net assets before finance costs and tax (3-5yr tenor) $693m1 $2.0
Slide 36: Endeavour Group historical financial performance
E N D E A VO UR G R O U P Endeavour Group historical financial performance D E M E R GER 35 Pro forma revenue by business ($bn) Retail • Solid Retail comparable sales growth in F18; softer market in 10.3 10.6 9.8 F19 1.7 1.3 1.6 • H2 F20 and H1 F21 materially impacted by COVID which drove 6.4 5.7 un
Slide 37: Summarised pro forma balance sheet
E N D E A VO UR G R O U P Summarised pro forma balance sheet D E M E R GER 36 Pro forma Endeavour Group $m 3 Jan 20211 • Finished goods held in stores, venues, warehouses and Cash and cash equivalents 566 bulk product held by Pinnacle Drinks Trade and other receivables 193 • Freehold land, warehouse
Slide 38: Cash flows and capex
$ Cash flows and capex E N D E A VO UR G R O U P D E M E R GER 37 Pro forma net operating cash flows ($m)1 Pro forma capex by business ($m)2 1,429 343 336 1,350 325 1,249 3 3 3 1,067 157 141 881 176 160 126 2 2 65 183 181 70 157 93 54 F18 F19 F20 H1 F20 H1 F21 F18 F19 F20 H1 F20 H1 F21 Retail Hotels
Slide 39: Anticipated capital structure and dividend approach
E N D E A VO UR G R O U P Anticipated capital structure and dividend approach D E M E R GER 38 Debt facilities • Total debt facilities of $2.5b $m • Pro forma F20 finance costs based on variable rate effective borrowing cost of 1.8% on drawn debt of 5-yr Syndicated revolving credit facilities 1,000
Slide 40: Summary
Summary E N D E A VO UR G R O U P D E M E R GER 39 Market leading brands and positions Advanced digital and product capabilities through EndeavourX and Pinnacle Ecosystem partnerships that reinforce portfolio benefits Growth momentum across all business units Commitment to purpose and responsible se
Slide 41: Appendix – Endeavour Group pro forma historical statements of profit or loss
Appendix – Endeavour Group pro forma historical statements E N D E A VO UR G R O U P 40 of profit or loss D E M E R GER
Slide 42: Appendix – Endeavour Group pro forma historical segment information
Appendix – Endeavour Group pro forma historical E N D E A VO UR G R O U P 41 segment information D E M E R GER
Slide 43: Thank you
E N D E A VO UR G R O U P D E M E R GER 42 Thank you
Slide 44: Disclaimer
E N D E A VO UR G R O U P 43 Disclaimer D E M E R GER Financial information included in this document are consistent with disclosures made as part of the Endeavour Group Demerger Booklet. This document should be read in conjunction with the Demerger Booklet as detailed notes, including the basis for