Endeavour Group Ltd · ASX:EDV
Endeavour — FY2023 Earnings Presentation
43 slides from Endeavour's earnings presentation, Aug 16, 2023
Slide 1: F23 Results Investor presentation
F23 Results Investor presentation August 2023
Slide 2: Disclaimers
Disclaimers This presentation is dated 16 August 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, the Group or Endeavour Group), and Endeavour Group’s activitie
Slide 3: Acknowledgement of country
Acknowledgement of country Artwork: Celebration Place by Riki Salam (Mualgal, Kaurareg, Kuku Yalanji) 3
Slide 4: Overview
Overview Steve Donohue, CEO 4
Slide 5: Purpose and values: creating a more sociable future
We're pioneering, entrepreneurial We connect people through our products o4 and always innovating. and venues, enabling great experiences and positive, memorable moments. | Creating a more sociable / We do the right thing — build our We work as one team to contribute to the businesses sustainably, a
Slide 6: Our Strategy: bringing our Purpose to life to deliver value
Our Strategy: bringing our Purpose to life to deliver value One team living our purpose Positive and sustainable and values imprint ● Highly engaged team ● Continued progress in sustainability ● Purpose driven culture journey ● Focused on responsibility and compliance Leading customer offer An effic
Slide 7: F23 Results
F23 Results ● Strong financial performance demonstrates the resilience and stability of our businesses Sales $11.9b +2.5% ● Accelerating growth through prioritised capital investments EBIT $1,023m +10.7% ● Group wide optimisation program mitigating Profit after tax $529m +6.9% inflation Earnings per
Slide 8: Retail
Retail ● Sales momentum improved during F23 and continues ● Customers continuing to preference new and Sales $9.9b -1.8% premium products EBIT $658m -1.2% ● Leading customer metrics, supported by unique and unbeatable value propositions EBIT margin 6.6% +4bps ● Our brands span the spectrum of custom
Slide 9: Destination of choice for value, range and service
Destination of choice for value, range and service F23 Highlights Loved brand with a highly Nobody beats Dan Growing and innovative Large and profitable engaged customer base Murphy’s Lowest Liquor store network eCommerce business Price Guarantee Market +54 NPS Delivering ~2m Growing +8 to 266 Perso
Slide 10: Delivering value and convenience
Delivering value and convenience F23 Highlights The most convenient Doing drinks Fresh and innovative Digitally enhanced store network your way store formats customer shopping experience Largest network 1,435 Increased ‘Refreshingly Always 95 Store network facilitating of liquor stores Stores Brand
Slide 11: Innovating for our customers
Innovating for our customers F23 Highlights Trend leadership, quality Creating choice for our Investing in brands and Expanding industry and innovation Retail and Hotels production partnerships customers 730+ Innovative, owned 7/10 Retail customers Brand acquisitions 300+ Supplier and exclusive purc
Slide 12: Hotels
Hotels ● Hotels thriving as customers embrace value and social occasions ● Robust post-pandemic recovery boosted by renewals and acquisitions Sales $2.0b +31.0% ● Full service offering restored including EBIT $428m +35.9% return of entertainment EBIT margin 21.6% +78bps ● Strong momentum in initial
Slide 13: Creating pub experiences locals love
Creating pub experiences locals love F23 Highlights Creating Leading in memorable Responsibility Expanding and improving Enhancing and leveraging Leading in Responsibility moments for our guests our network Group capabilities At the centre 86,000 Expanding 11 new hotels Activity F24 Launch of of soc
Slide 14: Our Hotels investment strategy delivers growth and diversification of earnings
Our Hotels investment strategy delivers growth and diversification of earnings Renewals Acquisitions Redevelopments ● Restoring post period of ● $89m investment to acquire 11 ● The Brook Hotel reopened in May underinvestment hotels with 15 associated Retail ● Currently top 10 F&B Hotel in ● Increasi
Slide 15: Group optimisation program delivering material cost savings
Group optimisation program delivering material cost savings F24-F26 F23 F22 $200m+ Target ofsavings target $200m+savings $60m savings delivered $30m savings delivered Technology enabled Group wide program,targeting efficiencies across the Evolved into endeavourGO, a Center of end to end value chain
Slide 16: Progress in sustainability, focusing on responsibility
Progress in sustainability, focusing on responsibility ● Second annual Sustainability Report released ● Continuing progress against 2030 strategy, including core area of Player Protect is our commitment to leading the way in Responsibility and Community responsible gaming ● Evolution of the Group’s
Slide 17: Financial Results
Financial Results Kate Beattie, CFO 17
Slide 18: F23 Financial result highlights
F23 Financial result highlights Cash and Delivering Financial results capital foundations for shareholders $11.9b +2.5% YoY $767m F22: $949m 29.5c +6.9% YoY Sales Operating cash inflow Earnings per share $1,023m +10.7% YoY $820m 21.8c +7.9% YoY EBIT Debt headroom Dividend per share $529m +6.9% YoY $
Slide 19: Group financial performance
Group financial performance +6.9% ● Contribution to EBIT from Hotels and Increase in year-on-year profit after income tax Retail returning to normal post pandemic ● Optimisation program mitigating inflation (8) 113 (6) (45) (20) ● Continued execution and investment in $529m line with strategy $495m
Slide 20: Comparatives to Pre-Pandemic financial results
Comparatives to Pre-Pandemic financial results 1 Retail F23 F19 CHANGE 4 Year CAGR Sales ($M) 9,905 8,453 17.2% 4.0% ● First uninterrupted financial year of EBIT 658 538 22.3% 5.2% trading since F19 EBIT to Sales (%) 6.6% 6.4% +28 bps ● Strong growth in both segments ● Margin expansion in Retail dri
Slide 21: Retail financial performance
Retail financial performance ● Pandemic cycling impacting year on year comparatives F23 F22 CHANGE Sales ($m) 9,905 10,086 (1.8%) ● Gross profit margin strength continued EBITDA ($m) 954 944 1.1% ● Effective cost management, with optimisation Depreciation and amortisation ($m) (296) (278) 6.5% progr
Slide 22: Hotels financial performance
Hotels financial performance ● Swift recovery following pandemic restrictions F23 F22 CHANGE ● Sales composition rebalanced with Food, Bars Sales ($m) 1,979 1,511 31.0% and Accommodation rebounding EBITDA ($m) 705 561 25.7% ● Cost profile reflects return to full operations Depreciation and amortisat
Slide 23: Capital expenditure
Capital expenditure Delivering returns ROFE 11.8% (+35 bps vs F22) $11m $32m $18m $48m $6m $52m $52m Retail: Hotels: $72m $262m1 $61m $248m2 $95m $48m $15m Stay In Business Renewals Technology Pinnacle Network Property/ Digital, Data & Transformation Expansion Redevelopment eCommerce 1. Excludes $6m
Slide 24: Our 'One Endeavour' transition to standalone technology capabilities continues
Our ‘One Endeavour’ transition to standalone technology capabilities continues Strategic Rationale Progress update F23 F24 F25+ Completed and Inflight Transition and simplify technology landscape as a foundation for growth and innovation Spend Management Completed Property Lease Management ● Modern,
Slide 25: Cash and Net Debt
Cash and Net Debt Net debt of $1.9b increased by $706m, of which $237m was non-cash ● Bank debt rose $465m with the normalisation of tax payments and investment in working capital ● Non-cash debt increased by $237m with the renewal of Victorian Gaming entitlements Operating cash inflows of $767m and
Slide 26: Funding to deliver strategy
Funding to deliver strategy Long-term debt facilities in place Debt maturity profile ($ million)1 ● Healthy balance sheet consistent with investment grade credit metrics. Leverage ratio2 of 3.6x ● Committed undrawn debt facilities of $820m plus material cash balances ● Debt facilities increased by $
Slide 27: Strong returns to shareholders
Strong returns to shareholders Operating cash flow (high cash realisation) Targeting investment grade credit metrics Dividends Sustaining CAPEX ● Sustain the core ● Stay-in-business Since Demerger we have delivered: 70-75% ● ● Technology transition Renewals/EGMs Target full-year payout ratio ● Sales
Slide 28: F24 update, priorities and outlook
F24 update, priorities and outlook 28
Slide 29: Priorities for F24
Ready for reformatting Priorities Continue to deliver and create meaningful for F24 Leading customer offer and brands omnichannel experiences, driving growth in our core businesses Pursue disciplined cost management and Efficient optimisation that balances our short and end-to-end long term ambition
Slide 30: Summary
Summary A strong F23 performance reflecting the resilience and stability of the Group with: ● All businesses now trading in a stable post-pandemic operating environment ○ Retail delivering solid results including maintaining leading EBIT margin performance F24 outlook ○ Hotels back to full operation
Slide 31: Q&A
Q&A Steve Donohue Chief Executive Officer Kate Beattie Chief Financial Officer 31
Slide 32: Appendices
Appendices 32
Slide 33: Our network
1 Our network 266 +8 Dan Murphy’s stores 17 5 54 424 1,435 +18 BWS stores 26 147 137 28 1 19 97 39 354 +10 Hotels (incl. managed clubs) Key: 2 3 84 390 55 Dan Murphy’s BWS 80 325 85 1 6 +1 Wineries Hotels (incl clubs) Wineries 3 35 05 1 1 3 Bottling facilities Bottling facilities 1. As at 25 June 20
Slide 34: Our capital allocation aligns to our strategic priorities
Our capital allocation aligns to our strategic priorities F23 Capex1 Targeted ROI ● Consistent with previous year; efficiencies targeted through procurement and lifecycle Stay in Business $100m n/a management ● Initiation phase for multi-year transition ‘One Endeavour’ ● Group-wide spend system impl
Slide 35: Group financial performance
Group F23 F22 financial $ million (52 WEEKS) (52 WEEKS) CHANGE Sales Retail 9,905 10,086 (1.8%) performance Hotels Total sales 1,979 11,884 1,511 11,597 31.0% 2.5% Profit for the period Retail EBIT 658 666 (1.2%) Hotels EBIT 428 315 35.9% Other (63) (57) 10.5% Total EBIT 1,023 924 10.7% Finance cost
Slide 36: Balance sheet
Balance sheet F23 F22 $ million 25 JUNE 2023 26 JUNE 2022 Change Trade working capital 778 546 232 Lease assets 3,208 3,173 35 Property, plant and equipment 2,095 1,935 160 Intangible assets 4,260 3,830 430 Other liabilities (net) (731) (677) (54) Funds employed 9,610 8,807 803 Tax liabilities (net)
Slide 37: Cash flow
Cash flow F23 F22 $ million (52 WEEKS) (52 WEEKS) CHANGE EBIT 1,023 924 99 Depreciation and amortisation expenses 573 525 48 Changes in trade working capital (261) (63) (198) Changes in assets and liabilities and other non-cash items 67 26 41 Finance costs on borrowings paid (61) (45) (16) Payment f
Slide 38: Historical financial performance
Historical financial performance Pre COVID-19 COVID-19 COVID-19 unwind Retail H1 F19 H2 F19 H1 F20 H2 F20 H1 F21 H2 F21 H1 F22 H2 F22 H1 F23 H2 F23 Sales ($M) 4,564 3,889 4,777 4,509 5,690 4,488 5,657 4,429 5,446 4,459 EBIT 316 222 338 231 419 250 461 204 418 240 EBIT Margin (%) 6.9% 5.7% 7.1% 5.1%
Slide 39: Victorian gaming entitlement reconciliation
Victorian gaming entitlement reconciliation $310m in Victorian gaming entitlements were renewed during the year, resulting in the initial recognition of a $279 million liability owing to the Victorian Government. This represents the initial value of gaming entitlements less $31 million, which was pr
Slide 40: Summary of forward looking statements
Summary of forward looking statements Area Description Group optimisation We are targeting $200m of cost out initiatives across F24 - F26 to mitigate inflationary pressures and enable continued investment in line with strategy. One Endeavour The One Endeavour transformation and transition program co
Slide 41: Comparative figures
Comparative figures Normalised 52-week Equivalent F19 Information and Equivalent F20 Information Woolworths' Drinks and Hotels businesses were transferred to, and merged Normalised 52-week Equivalent F19 Information relates to the results of with, Endeavour Group Limited on 2 February 2020 (Restruct
Slide 42: Glossary
Glossary Term Description CAGR Compound annual growth rate Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Cost of doing business (CODB) Expenses which relate to the operation of the business eCommerce Online channels incl
Slide 43: Creating a more sociable future, together
Creating a more sociable future, together 43