Endeavour Group Ltd · ASX:EDV
Endeavour — Investor Presentation (February 2023)
43 slides from Endeavour's investor presentation, Feb 13, 2023
Slide 1: H1 F23 Results Investor presentation
H1 F23 Results Investor presentation February 2023
Slide 2: Disclaimers
Disclaimers This presentation is dated 13 February 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 activit
Slide 3: Acknowledgement of country
Acknowledgement of country Artwork: Celebration Place by Riki Salam (Mualgal, Kaurareg, Kuku Yalanji) 3
Slide 4: Creating a more sociable future
Creating a more sociable "4 endeavour Zs group
Slide 5: Overview
Overview Steve Donohue, CEO 5
Slide 6: Group highlights
Group highlights Solid performance with Christmas trading particularly upbeat ● Strong financial outcomes reflecting the resilience of the business and effective cost management Sales $6.5b +2.6% ● Uninterrupted trading across all channels EBIT $644m +15.8% post-pandemic Profit after tax $364m +17.0
Slide 7: Progress against our F23 priorities
What we said What we’ve done Progress Disciplined cost management ● Retail gross profit margin sustained against our and operational optimisation to offset inflationary pressures ● Managed the impact of wage inflation through productivity initiatives F23 priorities ● Completed 94 renewals Unlock pro
Slide 8: Drivers of H1 F23 Retail performance
Drivers of H1 F23 Retail performance Market and sales are stabilising ● Cycling elevated H1 F22 sales (pandemic-related) ● Customers returning to in-store shopping and socialising on-premise ● Improving momentum through the half including a strong festive season Sales $5.4b -3.7% Customer trends rem
Slide 9: H1 F23 Highlights (Retail)
H1 F23 Highlights Sales Customer Value and range Network Team Delivered the biggest Continued to grow My Beat over 900k prices Added four new stores Early and innovative Christmas week on Dan’s to over 4.9 in-store through our and completed five 'Hiring week" record million active member pricing ren
Slide 10: H1 F23 Highlights (BWS)
H1 F23 Highlights Sales Convenience Network Customer Team Positive sales momentum Continuing to elevate Added 17 (net) new Launched BWS Cool BWS Windradyne as customers shifted to our convenience stores and completed Room concerts awarded Store of the “local and convenient” offering with an average
Slide 11: Drivers of H1 F23 Hotels performance
Drivers of H1 F23 Hotels performance Robust recovery in H1, with a return to more stable trading following pandemic-related disruptions ● Hotels thrived as customers embraced the opportunity to socialise ● Sales mix has normalised following a period of volatility Sales $1.1b +55.3% Operational costs
Slide 12: H1 F23 Highlights (Hotels)
H1 F23 Highlights Return to stability Technology Team Network and range Responsibility Affordability and value Trialing new Hotels app Team availability levels Added five hotels and Ongoing rollout of our offerings resonating and loyalty program increased to more completed 34 renewals data driven al
Slide 13: Our new Hotels
Our new Hotels The Tower Hotel1 The Emu Hotel The Raven Hotel The Marine Hotel1 Magill, SA Morphett Vale, SA West End, QLD Cardwell, QLD Tandara Hotel Horse and Jockey Beach Hotel1 Leichhardt Hotel Sarina, QLD Hotel Seaford, SA Cloncurry, QLD Warwick, QLD 1. Hotels added post H1 F23 balance date 13
Slide 14: Enabling the omnichannel experience across the Group
Enabling the omnichannel experience across the Group Customers are increasingly engaged in omnichannel experiences $485m -19.6% YoY Retail online sales +50.6% 3 Yr1 ● Over 35% of Retail sales are digitally influenced ● 43% of Hotels food sales are enabled by order and pay at table technology 8.9% -1
Slide 15: H1 F23 Highlights (Brands and products)
15 H1 F23 Highlights 382 ‘Together, we craft brands people love’ New products launched 9 Best in Class trophies Sales remain robust supported by both our own brands and exclusive arrangements with independent suppliers ~35% Sales growth in Paragon Wine Estates portfolio Leading in trends and innovat
Slide 16: Sustainability: Our positive imprint
Sustainability: Our positive imprint Responsibility People Planet and Community Championing individuality, human and personal rights Reducing our impact on the planet Advocating responsible choices and supporting positive change in our communities ● We have become a Signatory to ● Working in partner
Slide 17: Financial Results
Financial Results Shane Gannon, CFO 17
Slide 18: H1 F23 Financial result highlights
H1 F23 Financial Cash and capital foundations result highlights $643m Operating cash inflow Financial results H1 F22: $932m Delivering for shareholders $6.5b $1.2b 20.3c Debt headroom +2.6% Earnings per share Sales YoY +14.2% 3 Yr¹ $205m $644m Capital expenditure (excl. Victorian gaming 14.3c Interi
Slide 19: Group financial performance
Group financial performance +17.0% Increase in year-on-year Group Profit result underpinned by profit after income tax ● Solid Retail performance as we cycle pandemic-related sales peaks ● Unrestricted trading in Hotels (43) 135 (4) (14) (21) $495m $364m ● Continued execution and investment in line
Slide 20: Retail financial performance
Retail financial performance Cycling unusually high H1 F22, which benefited H1 F23 H1 F22 CHANGE from pandemic-related impacts Sales ($m) 5,446 5,657 (3.7%) ● On a 3-year basis, sales were up 14.0% (CAGR of 4.5%)1 EBITDA ($m) 568 604 (6.0%) ● Continuation of Gross profit margin strength Depreciation
Slide 21: Hotels financial performance
Hotels financial performance Return to uninterrupted trading post-pandemic disruption H1 F23 H1 F22 CHANGE ● On a 3-year basis, sales were up 14.9% (CAGR of Sales ($m) 1,056 680 55.3% 4.7%)1 EBITDA ($m) 389 245 58.8% ● Stable Gross profit margin of 84.4% Depreciation and amortisation ($m) (133) (124
Slide 22: Half yearly Sales and EBIT margin track
Half yearly Sales and EBIT margin track +4.5% +4.7% Retail sales 3-year CAGR1 Hotels sales 3-year CAGR1 Retail Hotels Post Post Pre COVID-19 COVID-19 Pre COVID-19 COVID-19 COVID-19 COVID-19 1. 3-year CAGR is calculated as the compound annual growth rate between F23 and Equivalent F20 results. 2. Nor
Slide 23: Cash and liquidity
Cash and liquidity Debt maturity profile ($ million)2 Committed drawn Strong operational performance and disciplined cost Committed undrawn management generated operating cash inflows of $643m Uncommitted drawn3 775 Healthy balance sheet, including Leverage ratio¹ 3.3x, consistent with investment gr
Slide 24: Capital expenditure – Focus of H1 F23 investments
Capital expenditure – Focus of H1 F23 investments Retail 52.0% $205m1 Hotels 48.0% Capital expenditure of $205m excluding Victorian gaming entitlements Digital, data and ● Continued investment in growing our network of eCommerce stores, hotels and wine assets Property 9.5% redevelopments Stay in bus
Slide 25: Strong returns to shareholders
25 Strong returns to shareholders Operating cash flow (high cash realisation) H1 F23 outcomes Targeting investment grade credit metrics Strong financial outcomes reflecting the Dividends resilience of the business and effective ● Sustain the core Sustaining Capex ● Stay-in-business cost management 7
Slide 26: H2 F23 update, priorities and outlook
H2 F23 update, priorities and outlook 26
Slide 27: H2 F23 - First 5 weeks
H2 F23 - First 5 weeks Retail ● Continuation of trends we saw in H1 ● Stability and consistency in average weekly sales and basket size Hotels ● Hotels are now stable, back to full operations ● Comparisons to F22 demonstrate the impact of the pandemic, as Hotels trading in Q3 F22 were weakened by th
Slide 28: Priorities for H2 unchanged
Ready for reformatting Priorities Disciplined cost management and for H2 operational optimisation to offset inflationary pressures unchanged Unlock property opportunities in new sites, network renewal and redevelopments Accelerate improvement of customer experience with digital and data led transfor
Slide 29: Summary
Summary A solid H1 performance reflecting the underlying strength and resilience of our business with: ● All businesses now trading in a stable post-pandemic operating environment ● Customers maintaining their appetite for discovery and drinking better H2 F23 outlook ● Retail delivering solid result
Slide 30: Creating a more sociable future
3 2 c @ We're pioneering, entrepreneurial We connect people through our products Og and always innovating. and venues, enabling great experiences and positive, memorable moments. s Creating a more sociable We do the right thing — build our We work as one team to contribute to the businesses sustaina
Slide 31: Q&A
Q&A Steve Donohue Chief Executive Officer Shane Gannon Chief Financial Officer 31
Slide 32: Appendices
Appendices "6 endeavour Zs group 32
Slide 33: Our network
1 Our network 262 +4 Dan Murphy’s stores 16 04 53 423 1,434 +17 BWS stores 25 147 136 28 19 95 36 349 +5 Hotels (incl. managed clubs) Key: 02 03 84 392 55 Dan Murphy’s BWS 78 326 85 01 5 Wineries 2 Hotels (incl clubs) Wineries 03 35 05 01 01 3 Bottling facilities Bottling facilities 1. As at 1 Janua
Slide 34: Balance sheet
1 Balance sheet $ million H1 F23 F22 H1 F22 1 JAN 2023 26 JUNE 2022 2 JAN 2022 Trade working capital 545 546 238 Lease assets 3,164 3,126 3,132 Property, plant and equipment 1,973 1,935 1,898 Intangible assets 4,236 3,894 3,852 Other liabilities (net) (783) (677) (811) Funds employed 9,135 8,824 8,3
Slide 35: Cash flow
Cash flow $ million H1 F23 H1 F22 (27 WEEKS) (27 WEEKS) CHANGE EBIT 644 556 88 Depreciation and amortisation expenses 283 267 16 Changes in trade working capital (33) 248 (281) Changes in assets and liabilities and other non-cash items 127 136 (9) Finance costs on borrowings paid (28) (29) 1 Payment
Slide 36: Our capital allocation aligns to our strategic priorities
Our capital allocation aligns to our strategic priorities H1 Status and expectations H1 Capex Return time frame ● Consistent with previous year; efficiencies targeted through Stay in Business procurement and lifecycle management $47m (22.9%) Enabler ● Initiation phase for multi-year transition Techn
Slide 37: Indicative technology roadmap
Indicative technology roadmap Including transition from Woolworths H1 Progress // F23 Design and scope H2 Focus // F23 Design and scope F24 - F27 // Phased build and implement Group-wide spend management system Priority projects will continue. Scoping, Transition and simplify technology landscape as
Slide 38: Group financial performance
Group $ million H1 F23 (27 WEEKS) H1 F22 (27 WEEKS) CHANGE financial Sales Retail 5,446 5,657 (3.7%) performance Hotels 1,056 680 55.3% Total sales 6,502 6,337 2.6% Profit for the period Retail EBIT 418 461 (9.3%) Hotels EBIT 256 121 111.6% Other (30) (26) 15.4% Total EBIT 644 556 15.8% Finance cost
Slide 39: Historical financial performance
Historical financial performance COVID-19 Pre COVID-19 COVID-19 unwind Retail H1 F19 H2 F19 H1 F20 H2 F20 H1 F21 H2 F21 H1 F22 H2 F22 H1 F23 Sales ($M) 4,564 3,889 4,777 4,509 5,690 4,488 5,657 4,429 5,446 EBIT 316 222 338 231 419 250 461 204 418 EBIT Margin (%) 6.9% 5.7% 7.1% 5.1% 7.4% 5.6% 8.1% 4.
Slide 40: Victorian gaming entitlement reconciliation
Victorian gaming $310m in Victorian gaming entitlements were renewed during the half, resulting in the recognition of a $279 million liability owing to the Victorian Government. This represents the initial value of gaming entitlements less $31 million, which was prepaid in prior years. entitlement r
Slide 41: 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 42: Comparative figures
Comparative figures Equivalent F20 Information Woolworths' Drinks and Hotels businesses were transferred to, and merged This information has been sourced from the data used in the F20 with, Endeavour Group Limited on 2 February 2020 (Restructure) and 4 Woolworths Group Limited Annual Report, adjuste
Slide 43: Creating a more sociable future, together
Creating a more sociable future, together 43
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