Endeavour Group Ltd · ASX:EDV
Endeavour — Investor Day (December 2023)
59 slides from Endeavour's investor day presentation, Dec 6, 2023
Slide 1: Endeavour Group Investor Day Presentations Part One
Endeavour Group Investor Day Presentations Part One 6 December 2023
Slide 2: Disclaimers
Disclaimers This presentation is dated 6 December 2023 and unless stated otherwise is current as at that date. This presentation contains summary and general information about Endeavour Group Limited and its controlled entities (together, Endeavour, the Group, or Endeavour Group), and Endeavour Grou
Slide 3: Introduction and Endeavour Strategy
Introduction and Endeavour Strategy Steve Donohue, CEO 3
Slide 4: Acknowledgement of country
Acknowledgement of country Artwork: Celebration Place by Riki Salam (Mualgal, Kaurareg, Kuku Yalanji)
Slide 5: Welcome to the Forest Hotel
Welcome to the Forest Hotel The Forest Hotel, Frenchs Forest, NSW
Slide 6: Agenda
Agenda Time Item Who 9:00-10:00 Introduction and Endeavour Strategy Steve Donohue, Chief Executive Officer 10:00-10:30 Capital Allocation Framework Kate Beattie, Chief Financial Officer 10:30-10:50 Pinnacle Drinks Steve Donohue, Chief Executive Officer 10:50-11:15 Morning tea 11:15-12:00 Understandi
Slide 7: Purpose and values: creating a more sociable future
oe aes #00 yf We connect people through our products and venues, enabling great experiences and positive, memorable moments. We're pioneering, entrepreneurial and always innovating. ~~ Creating a more sociable — future, together We work as one team to contribute to the communities we serve and colla
Slide 8: We are positioned to deliver value for shareholders
We are positioned to deliver value for shareholders Portfolio of leading brands and businesses Proven track record of growth and profitability Strategy that positions us for strong shareholder returns Ambitious performance targets Unlocking the next phase of growth Isabel Estate Winery, Marlborough,
Slide 9: We operate in stable and regulated markets that are complementary
We operate in stable and regulated markets that are complementary The markets we operate in are… Alcohol and gambling expenditure as a % of disposable income Defensive Regulated Complementary … and our core markets work together Shared infrastructure Integrated offers and capability Food Alcoholic b
Slide 10: We have a strong history of organic and strategic growth
We have a strong history of organic and strategic growth Takeover of Acquisition of Acquisition of +41 hotels Launch of My Acquisition of Endeavour Acquisition of Australian Taverner Hotel Langton’s, acquired Dan’s program Chapel Hill & Group listed Josef Chromy Leisure and Group +33 hotels Cellarma
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Slide 12: Our vision is to be the leading platform enabling social occasions
Our vision is to be the leading platform enabling social occasions Network Assets Digital & Analytics Team 12
Slide 13: Our strategy to deliver our vision and future growth
Our strategy to deliver our vision and future growth Leading customer Efficient end-to-end Capital allocation to One team living our Positive and offer and brands business drive growth purpose and values sustainable imprint Drive revenue growth Grow earnings ahead of Deliver growth and Attracting, r
Slide 14: We invest in our portfolio to respond to market trends
We invest in our portfolio to respond to market trends and serve customers across a wide range of occasions… Meaningful omnichannel Attract and engage customers experiences Customer proposition Understand our customers 14
Slide 15: … and in our business to drive sustainable earnings growth
… and in our business to drive sustainable earnings growth Delivering sustainable margin Deliver sustainable cost Simplify our business expansion reduction Balance sales growth and margin Zero-based approach to costs Simplifying our technology landscape expansion Optimising in-store and in-venue Str
Slide 16: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle 16
Slide 17: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Shareholder value creation Deliver long-term shareholder value of 10%+ per year from F26 2 17
Slide 18: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 19: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 20: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 21: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 22: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 23: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 24: Our Scorecard
Our Scorecard Measuring the value we deliver to shareholders through the cycle Leading customer Efficient end-to- Capital allocation to drive One team living our Positive and sustainable Shareholder value offer and brands end business growth Purpose and Values imprint creation Drive revenue growth t
Slide 25: Unlocking the next phase of growth
Unlocking the next phase of growth Earnings growth through a balance of sales growth, gross margin management, and cost control Disciplined approach to capital management Continuous focus on team and sustainability The Brook Hotel, Mitchelton, QLD 25
Slide 26: Leading customer offer and brands
Leading Building an efficient Optimising capital customer offer end-to-end allocation to drive and brands business growth 26
Slide 27: Capital Allocation Framework
Capital Allocation Update picture to Kate Framework Beattie Kate Beattie, CFO 27
Slide 28: Prudent capital allocation in line with Group Strategy
Prudent capital allocation in line with Group Strategy Clear capital management framework Flexible asset base provides optimisation opportunities Structured approach to allocating capital Highly cash generative business Capital funded from free cash flow Chapel Hill Winery, McLaren Vale, SA 28
Slide 29: Capital management framework supports growth and shareholder returns
Capital management framework supports growth and shareholder returns Operating cash flow (90-110% cash realisation) Targeting investment grade credit metrics ● Free cash flow deployed to dividends, Dividends Sustaining CAPEX capex, and debt reduction or returned 70–75% ● Stay-in One Endeavour to sha
Slide 30: ROFE expansion will be delivered through EBIT expansion and improved Funds Employed efficiency
ROFE expansion will be delivered through EBIT expansion and improved Funds Employed efficiency F23 Funds employed $9.6bn, ROFE 11.8% ● Unique combination of assets are a competitive advantage providing a platform for growth Intangible Assets (incl. $2.4b Liquor & Gaming licences; $1.8b Goodwill) ● F
Slide 31: Retail investments are focused on driving sales and expanding margins
Retail Investments are focused on driving sales and expanding margins Growth (F23: $138m) Capital Sustaining allocation (F23: $124m) Grow our portfolio and Sustainably grow trading Drive operational efficiency customer presence margin Build capability and agility to Strategic Protecting shareholder
Slide 32: Hotels investments are focused on unlocking further value from the portfolio
Hotels Investments are focused on unlocking further value from the portfolio Growth (F23: $101m) Capital Sustaining allocation (F23: $147m) Network expansion Network optimisation Drive operational efficiency Strategic Protecting shareholder Create compelling customer Unlocking the value of the Lever
Slide 33: Robust governance, benefits tracking, and capital management
Robust governance, benefits tracking, and capital management Capital management framework Investment Governance Supports business growth and delivery of Investments are subject to financial strong shareholder returns hurdles and a robust governance process Capital allocation cycle Benefits tracking
Slide 34: Growth capex prioritised based on risk/return profiles
Growth capex prioritised based on risk/return profiles, earnings impact and qualitative factors 1 2 3 Projects are assessed based Risk weighted capital allocation Capital allocation also on returns and risk profile to achieve Target EPS growth considers qualitative factors Return hurdles Target EPS
Slide 35: Sufficient cash generated to fund dividends and capital requirements
Sufficient cash generated to fund dividends and capital requirements F24 context Our areas of focus Target results Lower capital expenditure in F24 Investing behind our strategy Earnings growth ● Lower level of hotel acquisitions ● Capital allocation to drive short ● Targeting mid-to-high single ● F
Slide 36: Prudent capital allocation in line with Group Strategy
Prudent capital allocation in line with Group Strategy Clear capital management framework Flexible asset base provides optimisation opportunities Structured approach to allocating capital Highly cash generative business Capital funded from free cash flow Chapel Hill Winery, McLaren Vale, SA 36
Slide 37: Q&A
Q&A 37
Slide 38: Pinnacle Drinks
Pinnacle Drinks Steve Donohue, CEO 38
Slide 39: Scale, high growth drinks supplier
Scale, high growth drinks supplier Market-leading wine portfolio, profitable at all price points Deep customer insights delivering products customers love Unique end-to-end wine value chain Paragon Wine Estates driving strong returns, with further growth potential 39 Josef Chromy, Tasmania
Slide 40: Together we craft brands people love
Together we craft brands people love 40
Slide 41: Pinnacle is a scale, high growth drinks supplier
Pinnacle is a scale, high growth drinks supplier with a market-leading wine portfolio, delivering products customers love Pinnacle at a glance Sales mix2 RTD (2%) Cider (6%) $1.8b #4 60% A scale growth Total Sales1 Branded liquor Growth in business in F23 supplier in Australia Pinnacle sales2 (leadi
Slide 42: Leadership in wine requires deep understanding of consumer preferences
Leadership in wine requires deep understanding of dynamic consumer preferences and the ability to meet them efficiently Customers value choice and are willing to try new products 80% wine customers have a brand repertoire of 5+ vs. 90% of beer customers with brand repertoire of <5 brands Winning req
Slide 43: Our approach to branding and new product development is unique
Our approach to branding and new product development is unique Insights driven Agile approach to Unique approach fuels grape-to-shelf-to-glass innovation opportunities with approach and brand building external partners e.g. Cat Amongst the Pigeons e.g Paradox (no/low alc) e.g. Lobster Reef Lighter (
Slide 44: We have removed material risk from the winemaking value chain
We have removed material risk from the winemaking value chain, and deliver new products faster Scale internal & external Insight enabled, dynamic distribution network & customer led Leading capability, Rapid development of supply & production customer-led brands 44
Slide 45: Wine portfolio expanded into the luxury space
Our wine portfolio was built on the commercial and premium segments. We have now expanded into the high margin, fast growing, luxury space Segment1 F23 Pinnacle growth Our mix Model Brands Ownership of iconic 21% 7% Luxury brands and >$25 vineyards Mix of own assets Premium 13% 66% and partners $10-
Slide 46: Paragon Wine Estates
PARAGON WIMG ESTATES CHAPEL HILL JOSE CHROMY KRONDORF OAKRIDGE RIDDOCH SHINGLEBACK CAPE MENTELLE BLESSED BY REGION, CRAFTED WITH BRILLIANCE, 46
Slide 47: Our Paragon luxury portfolio was expanded to deliver even higher returns
Our Paragon luxury portfolio was expanded to deliver even higher returns Grow product Expand Build on winemaking range distribution excellence Existing export Cost capabilities synergies We apply our model to each luxury brand acquisition Notes: 1) IRI MarketEdge Retail Liquor Weighted, MAT to Janua
Slide 48: Isabel Estate and Chapel Hill have both grown to 3x sales
Isabel Estate and Chapel Hill have both grown to 3x sales and are consistently delivering 15%+ return on investment ‘Isabel Estate’ (acq. 2014) ‘Chapel Hill’ (acq. 2019) ● Premium & luxury Sauvignon Blanc ● Heritage brand (1972) ● Sauvignon Blanc represents Australia's largest white wine ● Grower re
Slide 49: 2" endeavour
2" endeavour “n° QFOUD
Slide 50: Morning tea
Morning tea 10:50-11:15 50
Slide 51: Understanding our network
Understanding our Update picture to Kate network Beattie Kate Beattie, CFO 51
Slide 52: Understanding our network
Understanding our network Our hotel and retail portfolios are deeply interconnected Investment decisions are made on the basis of all income that can be derived from a hotel licence Endeavour is uniquely positioned to maximise the returns from a hotel licence Good returns can be achieved across vary
Slide 53: Hotel licences support almost half of total group sales
Hotel licences support almost half (~45%) of total group sales Sales $ # Venues # Stores % of total Type F23 F23 F23 Standalone 257m Hotel 46 0 2% Attached 2,056m 166 174 ● Large portion (~45%) of group sales ALH Hotels Retail 17% from Hotels with associated liquor retail 349 venues1 stores ● Synerg
Slide 54: We are uniquely positioned to maximise the returns from Hotel licences
We are uniquely positioned to maximise the returns from Hotel licences Internal Retail brands & Operational scale Shared group Market leading Responsibility + + + + complementary + offer benefits capabilities digital enablers framework brands v Stronger retail Better margin and Strengthened Customer
Slide 55: All revenue drivers can deliver good returns
All revenue drivers can deliver good returns WA CGUs1 (non-gaming) Rest of Australia CGUs1 (full driver mix) National CGUs1 Total: $352m Total: $5,225m Total: $5,577m 2 2 Hotel : $132m (38%) Hotel : $1,847m (35%) Hotel2: $1,979m (35%) Bars Bars Bars 9.8% 10.7% 22.7% Food Food 7.6% 8.0% F23 Sales Gam
Slide 56: Majority of CGUs deliver moderate to leading returns
Majority of CGUs deliver moderate to leading returns, with overall portfolio uplift opportunities Number of Invested CGUs capital 2($m) Action Leading 173 (50%) 1,889 (46%) Capture learnings and apply to rest of portfolio Performance cohorts Moderate Performance interventions (e.g. adjust driver off
Slide 57: Understanding our network
Understanding our network Our hotel and retail portfolios are deeply interconnected Investment decisions are made on the basis of all income that can be derived from a hotel licence Endeavour is uniquely positioned to maximise the returns from a hotel licence Good returns can be achieved across vary
Slide 58: Summary of forward looking statements
Summary of forward looking statements Area Description Our strategy is focused on delivering long-term shareholder value of 10%+ per year from F26. We have shared a scorecard with targets covering our financial, sustainability and responsibility goals which reflect Scorecard our commitment to delive
Slide 59: Creating a more sociable future, together
Creating a more sociable future, together 59