Well, good morning, everyone, and welcome to everyone here in the room and also those that are joining us online. Thank you for attending our 2026 AGM today. My name is Tim Poole, and I am the Chair of the Board of Endeavour. Before we commence today, I would like to begin by acknowledging the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation. I pay my respects to their elders past, present, and emerging. Across Endeavour Group, our footprint spans many communities, and we acknowledge the traditional custodians of all the lands on which our venues, stores, and wineries are located. As a company, we remain committed to our reconciliation journey. I also extend this acknowledgment to all First Nations people joining us today here and online. As we have a quorum, I declare the 2026 Annual General Meeting open.
For those who cannot be with us here in person, we are pleased that technology allows us to connect with you through a live webcast as well as the online platform. If you have issues during the meeting, please call MUFG on 1-800-990-363. This number is also in the virtual meeting online guide. Before introducing my colleagues, I will outline the procedures for today's meeting. Only shareholders, proxy holders, and corporate representatives may speak and vote during the meeting. All others are welcome as observers. Shareholders have submitted some questions prior to the meeting, and we aim to include answers to most of those questions during our speeches. I will introduce each item of business separately and then invite questions. If you are in the room and you wish to ask a question, please move to the aisle to a microphone attendant who will introduce you.
Instructions to participate in today's meeting via the online platform, including how to vote and ask questions, are in the online meeting guide available on our website. For specific questions relating to your experience as an Endeavour customer, please speak to one of our customer service representatives at the desk located in the foyer. Following discussion on each item of business, valid direct and proxy votes will be displayed on the screen. I will then ask you to vote on the item. You can vote at any time once the poll is open. Shareholders, proxy holders, and corporate representatives can vote by marking for, against, or abstain on the voting card you were handed upon registration or through the online portal. For those in the room, yellow cards are for shareholders and proxy holders who may speak and vote.
Blue cards are for shareholders who may speak but not vote. All other attendees with a red visitor card or a green media card are welcome but may not address the meeting or otherwise participate. As Chair, I intend to vote all available undirected proxies in favor of items 2, 3, 4, and 5. The voting exclusions for items three and four are set out in the notice of meeting. Voting on the resolutions will be conducted by way of a poll, which I now declare open. The poll will close 10 minutes following the meeting's completion. Please place your voting card in the poll box as you leave the room, or if you are voting online, click the Submit Vote button to lodge your votes.
As the results of the poll will not be available before the meeting closes, they will be released on the ASX later today and also on our website. I would now like to introduce your board and the Company Secretary. From my left, your right, is Peter Hardy. Next to Peter is Duncan Makeig. Next to Duncan is Penny Winn, who is also Chair of our People Committee. Next to Penny is Mike Ihlein, Chair of our Audit, Risk and Compliance Committee. Next to Mike is Claire Hannon, our recently appointed Company Secretary. Next to Claire is Jayne Hrdlicka, our Chief Executive Officer. Joe Pollard and Rod van Onselen are unfortunately unable to be with us today. Also seated in the front row is Owen Wilson, who will join the board once regulatory approvals are received. Additionally, members of our management team are also present today.
They will be available to speak to you after the meeting, along with the Directors. Jacques Strydom from Deloitte, our Auditor, is available to respond to any specific questions you may have on the auditor's report or the conduct of the audit. A notice of meeting has been distributed, and I will take it as read. The agenda for today's meeting is as follows. Firstly, I will address the meeting, then our CEO, Jayne Hrdlicka, will speak, and after Jayne's address, we will proceed with the formal items of business as set out in the notice of meeting. Moving on to item one, which is my Chair's address. I joined the Endeavour Group Board because I believe in the company's long-term potential. We have unique assets and brands, including a leading retail portfolio and an unparalleled hotels network.
While Endeavour has clear strengths, we recognize that the company has not met the performance expected since listing on the ASX just over five years ago. Working closely with our Managing Director and CEO, Jayne Hrdlicka, and the new executive leadership team, the board undertook a comprehensive strategic business review during the 2026 financial year. This included a thorough assessment of the group's historical performance, key business drivers, competitive environment, and opportunities to improve execution, capital allocation, and financial performance across the business. From this, we developed a strategy centered on our customers, based on robust customer data and insights. While there is still considerable work ahead, the board believes the right foundations are now in place. We have a clear strategy, a renewed and experienced leadership team, and detailed plans to improve our operational and financial performance.
We are closely monitoring progress and are confident we can deliver against our strategic plans and improve shareholder returns over the medium term. Turning to the group's financial and operational performance. During the 2026 financial year, the group generated sales of AUD 12.2 billion, which was 1.3% up on last year. Group underlying EBIT decreased 8.7% to AUD 845 million, and group underlying profit for the year after income tax decreased 14.8% to AUD 363 million, reflecting in part our investment in price leadership in our retail business. Both excluded the impact of significant items relating to the strategic review and group-wide cost reduction program. In retail, during the 2026 financial year, sales increased by 0.7% to AUD 10 billion. Sales for Dan Murphy's and BWS increased by 1% to AUD 9.8 billion, with comparable store sales growth of 0.5%.
Sales momentum strengthened during the 2026 financial year as customers responded to our renewed focus on value and price leadership. In hotels, during the 2026 financial year, sales increased by 4.2% to AUD 2.2 billion, with comparable sales growing by around 4.4%. During the 2027 financial year, it will be a year of significant transformation in hotels as we simplify the way we operate, deliver targeted investment in renewals, and improve guest experience. Group operating cash flow remained robust at AUD 933 million, enabling the Board to approve a total dividend for the year of AUD 0.12 per share, fully franked. Also during the 2026 financial year, the group revised its targeted dividend payout ratio to between 50% and 75% of group underlying net profit after tax. This is to ensure we maintain appropriate funding flexibility to execute our strategy and prioritize growth investment.
Jayne will provide more details on our progress against our strategic priorities and our Q1 2027 financial year trading update in her CEO address in a few moments. Turning to board renewal. I'd like to thank Duncan for his leadership as Interim Chairman and for his continued service on our board. We also continued our board renewal during the year with the appointment of Mike Ihlein as a Non-Executive Director and Chairman of our Audit, Risk, and Compliance Committee. Mike brings extensive financial, operational, and governance experience from both senior executive and board roles in Australia and internationally. We are fortunate to have Mike join the board, and we are already benefiting from his insights and experience, and you'll hear from Mike a bit later in the meeting.
As noted earlier, we've also recently announced that Owen Wilson will join the board as a Non-Executive Director once regulatory approvals have been received. Owen has led successful customer and digital-focused strategies across a range of industries and will bring valuable skills and experience to Endeavour as we progress our strategic transformation. Rod van Onselen and Joe Pollard will retire at the conclusion of today's meeting. We sincerely thank Joe and Rod for their valuable contributions to Endeavour. Board renewal remains a priority, and the search for an additional director is progressing. Finally, I'd like to thank the Endeavour team. They have navigated a year of significant change while continuing to support our customers, guests, and communities with professionalism and commitment. On behalf of the Board, I'd like to thank you as shareholders for your continued support. We look forward to updating you on our progress during the coming year.
I'll now invite Jayne to address the meeting.
Thank you, Tim, and good morning, everyone. I would also like to acknowledge the traditional owners of the land on which we meet today and pay my respects to their elders, past, present, and emerging. I am pleased to be here for my very first Endeavour AGM, and let me start by saying and echoing really what Tim indicated, which is that the strategic assets in our business are exceptional. Iconic retail brands that are backed by unique and very high-quality physical assets. The underinvested hotels portfolio, which has a huge amount of potential embedded in it. Over 30,000 passionate people who are keen to do an exceptional job on your behalf, and more than 16 million customers. This unique combination of assets, from my standpoint, presents a very unique opportunity.
Since joining Endeavour, I have spent a lot of time out in the field listening to our teams and our customers, visiting stores and hotels, engaging with our partners, and reviewing every part of the business. That work has reinforced my confidence in our very significant potential. The added benefit of doing this sort of work is that it gives us the fact base to be super clear about what needs to get done, and the way in which it needs to get done, and to develop a very detailed plan to execute against that. Joining Endeavour has been something of a full circle moment for me. Early in my career, I spent time as a consultant to Woolworths, working with the liquor team on how to grow the liquor business. Later, I was on the Woolworths Group Board, and I stand before you today as the CEO of Endeavour.
The Endeavour business has grown dramatically during that period, which is very impressive and a huge asset for us today. But we are far from a high-performing business, and there is significant untapped potential across every single corner of the portfolio. Releasing this potential is going to be a combination of things, but it ultimately boils down to taking cost out of the business and growing revenue. There is opportunity for both in abundance. While there is significant work to do to reset the foundations and unlock the potential, we have talented people across both our retails and our hotels teams who care deeply about our customers, care deeply about our brands, and are hungry to succeed. To support them, we have strengthened our leadership team, bringing fresh perspective and extensive experience from top-tier consumer brands.
Together, we are building a more focused organization with the skills, clarity, discipline, and passion to deliver against our potential. In May this year, we outlined our strategy to shareholders. It is a strategy designed to strengthen the business and position Endeavour for its next phase of growth. Our strategy is based on deep customer insights and is built around three priorities. The first, we are strengthening our retail business by reinforcing Dan Murphy's's leadership in value and sharpening the distinct roles of Dan Murphy's's and BWS to better meet the needs of their unique customers. We are also resetting our focus on excellence in retail fundamentals and see very significant value in getting that right. Second, we are unlocking the full potential of our hotels business by simplifying the operating model and increasing the investment needed to fix the basics, improve performance, and enhance the guest experience.
We're focused on executing this very significant transformation as quickly as we possibly can without compromising on doing it well. Third, and perhaps importantly for both of the previous priorities, we're simplifying the way we work. By reducing complexity and optimizing the trapped and releasing trapped value in our asset base, finding ways to reduce cost, we will create greater capacity to invest where it delivers the strongest long-term returns. These priorities have already led to important decisions, including our AUD 300 million cost reduction program, the repositioning of our retail brands, increased investment in hotels, optimization of the Pinnacle Drinks portfolio, and a revised dividend policy. This is just the beginning of the list. These priorities have already led to outcomes that you can start to see in the performance of our retail business.
We have been very clear that FY 2027 is a significant year for investment and transformation as we build the platform for continued growth in the business. Together, these initiatives provide a clear roadmap to build a stronger, simpler, and vastly more competitive Endeavour. If we turn to our trading update and outlook. We're well into FY 2027, and for the first quarter, sales growth in our retail business continues, delivering sales of AUD 2.58 billion, which is an increase of 3%. Sales growth in our retail business has continued to outpace the overall liquor market as we reinvested in our best-in-market everyday low pricing in Dan Murphy's. We improved the value on offer in BWS and ensured that both Dan Murphy's and BWS customers will always find exceptional value.
Nobody beats Dan Murphy's on price, and if you are looking for convenience with a twist at great value, nobody delivers better or faster than BWS. In hotels, sales of AUD 603 million were up 1.9% versus the first quarter in FY 2026. In line with first seven weeks of FY 2027, softer trading has continued as cost of living pressure, which includes the increased cost of fuel, impacted discretionary spending. Gaming activity has moderated in line with market trends, with gaming revenue in Q1 flat versus the prior corresponding period. During the quarter, we continued to accelerate our investment in renewals, with 34 additional venues expected to be upgraded by the end of the first half. Looking ahead, we expect customers to continue to manage their spending carefully and prioritize value for money in their purchasing behavior, and we are ready for that.
The second quarter remains a key trading period for the Endeavour Group, with marquee events which include the Spring Carnival, Christmas festivities, New Year's, and of course, the extended school holiday period. We have comprehensive plans in place to ensure we are the destination of choice for customers and guests during this period, and to ensure we capitalize on the commercial opportunity of this most important season. There's a lot of anticipation building in the business as our teams look forward to serving the community distinctly well with passion, flair, and fun to bring joy during the holiday season. In closing, we have a clear strategy, leading brands, talented people, and a business with significant untapped potential. Our focus is now on execution, delivering against our priorities, investing with discipline, and continuing to simplify the business.
I want to thank our 30,000-plus team for their commitment and resilience throughout the year. It has not been an easy year. Their passion for our customers, our brands, and excellence gives me confidence in what we can achieve together. It is a privilege to lead Endeavour at this really important time, and I would also like to thank all of you for your patience and support as both our customer and our shareholder. Thank you.
Thank you, Jayne. We will now move to the first formal item of business, which is to discuss the financial report, the Director's report, the sustainability report, and the Auditor's report for the year ended 28th of June, 2026. While there is no resolution for this item, it is an opportunity for shareholders to ask general questions. This is a time for questions on the reports, the management and operations of Endeavour generally, and also the conduct of the audit. Prior to taking questions, I will respond to some questions and comments raised by shareholders ahead of the meeting. Several shareholders asked questions relating to Endeavour's performance and share price, and the timeframes for meaningful improvement. Our response is this. We acknowledge it has been another challenging year for Endeavour shareholders.
The Board also shares your frustration and disappointment that since listing on the ASX just over five years ago, Endeavour's financial performance and share price has not met expectations. As Jayne and I talked about, to address the underperformance during the 2026 financial year, the board and management undertook a comprehensive strategic business review. As we also mentioned, while there is still considerable work ahead, we believe the right foundations are now in place. In her address, Jayne spoke to the clear strategy, experienced leadership team, and the progress being made on the detailed plans to improve our operational and financial performance. We have a program in place aiming to reduce costs by AUD 300 million over three years, including AUD 100 million during the 2027 financial year. We also are seeing immediate but gradual improvements through reducing operational complexity in both retail and hotels.
We cannot commit to a timeframe, but we believe the steps we are taking now to improve how we operate and the additional investment we are making in the business will unlock untapped potential and deliver long-term value for shareholders. Several shareholders also asked why the 2026 financial year dividend is so much lower than the total dividend paid in the prior year. Our response to that question is, during the 2026 financial year, and after careful consideration, the Board revised its targeted dividend payout ratio to between 50% and 75% of the group underlying net profit after tax. This is to ensure we maintain appropriate funding flexibility to execute our strategy and prioritize growth investment. The Board then made the decision to reduce the total dividend payout ratio in the 2026 financial year to 59% compared to 79% in the prior year.
Several factors were considered, including the group's leverage and expected future capital expenditure. I now invite you to ask a question or make a comment relevant to this item of business. For those in the room, and we will start with those in the room, if you have a comment or question, please move to the closest microphone and show your yellow or blue card to the microphone attendant, who will introduce you to the meeting. I also invite shareholders and proxy holders to submit online questions. Can we first ask and see whether there are any questions in the room?
Chair, I would just like to introduce shareholder David Kingston.
Good. Thank you. A little bit unusual standing on the steps, Chair.
Yeah, I am looking up to you. Yeah.
That is fine. Appreciate this venue is saving some costs relative to the CBD venues. Welcome to Jayne Hrdlicka. Everyone is excited about the potential that you can make a change. Clearly, Endeavour has been a very disappointing company, as you have said, Chair. I did make a number of comments last year, and I was a little bit negative, but unfortunately, I was right. Endeavour shares are down another 10% in the past year. The group underlying EBIT continues to decline, which is a concern. In 2024, it was AUD 1.055 billion. In 2025, it was AUD 926 million. In 2025, it was AUD 926 million, and in 2026, it was AUD 845 million. There is a consistent downward trend, so I think Jayne has some challenges.
I did say last year that the forecast by previous management of long-term shareholder value growth of 10%+ per year from 2026 was a forlorn hope, and again, it looks some way off. I think that forecast has been withdrawn. Look, I think it is also interesting to note that retail continues to go down. It is a weak division. It has got structural headwinds. Hotels are solid, and they are going up, but they are starting to flatline. Interestingly, Chair, the underlying EBIT contribution from both is almost identical now, whereas in previous years, retail was far larger. So, retail, AUD 464 million, hotels, AUD 462 million. Look, it is a new era. If anyone can turn Endeavour around, which has been very disappointing, AUD 8 peak down to AUD 3.20, it is Jayne Hrdlicka. Fresh out of an outstanding Virgin turnaround. Well done. Brilliant.
Your message in the annual report is headed, "Endeavour is a unique and exciting platform for growth." I partly agree with that. The retail footprint is amazingly strong. You have got a huge market share. I will not use dominant, otherwise the ACCC may not like that. But you have got a brilliant market share, but it is a really tough sector. Pubs, which I know well, definitely the 350-odd pubs are an outstanding portfolio, but concerningly, there is a lot of rent to pay on that, a fair bit to David Harrison at Charter Hall. And it is one thing to rent your liquor stores where the rent is maybe 10% of turnover. The rent on pubs is huge. It chews up a lot of the turnover, and that is a concern, particularly as those rents are going to be going up 3% or 4% each year. But good luck to Jayne.
Personally, I doubt there will be much earnings growth at all in 2027. It is a flat environment. Appreciate the honesty that pubs are flat, only up one and a bit percent in the year to date, but your costs are up a lot more than that. And when you say that retail is up 3% revenue-wise, again, your costs are going up, and that is inflation's 4%, so if the revenue is only up 3%, that is disappointing. Couple of comments, and then I will have a couple of questions. But for 2026, as expected, very weak retail. EBIT down 17%, underlying EBIT. And as expected, the better division, hotels, are up 4%. Leave it there. It is great that some of the crazy investments in wineries have been exited. That was ludicrous when this company bought wineries. Way to lose money is boats, racehorses, and wineries.
Yeah.
Add divorce as well. Look, if we look at retail, ongoing headwinds. Rescue my phone, otherwise it will get ongoing headwinds for retail. Every age group is drinking less alcohol. It does not matter whether it is young kids or older people, we are all drinking less. Consumption per capita is continuing to fall. Terrific that Jayne is pulling out a lot of costs, but it is very hard to shrink to greatness. Clearly you are not just looking at costs, you are also looking at revenue growth. I think you are a genius if you can get revenue growth, but good luck. Pubs. Look, the revenue has been increasing, albeit finally the growth is slowing. The pubs require a lot of refurbishment CapEx. I know that sector well. You have really got to depreciate that 20% per annum because it is ongoing refreshing these pubs.
A lot of operational costs going up, labor, security, power, but also substantial rental costs on the lease of most of the pubs. The other issue with pubs is your heavy reliance on poker machine profits, Chair, which have a big exposure to regulatory changes. We have seen what has happened with the casinos. Fortunately, the hotel lobby is so powerful that the pubs and clubs have largely been left alone. Regulatory change is an issue. In my opinion, I would be interested in your comments, Chair or Jayne, pokies have a huge margin. You are not making much money out of accommodation. Food is basically flatline, you do not make much money there. You make a bit of money out of alcohol. I would estimate one-third of the total Endeavour Group EBIT would come from the poker machines, which is a huge exposure given the regulatory issues. I come to two questions.
Regarding retail, can Endeavour's revenue and cost initiatives offset the fundamental and ongoing structural decline in alcohol consumption per capita? I noted you are 3% up this financial year, but that is just in line with CPI. That is my first question. Do you want the second one, or should I wait?
No, let us deal with the first question first. Our strategy does not rely on market growth. Obviously, we would love to have some tailwinds as we execute our transformation strategy over the next three years. Every company would love to have tailwinds behind them. It is currently a very tough economic environment, as you highlighted in your remarks, and we also talked about in our remarks. Our strategy, just to be very clear, does not rely on the market growing. There is a very significant market for us to go after in both our retail and our hotel portfolios, and our strategy does not rely on market growth. There is a lot of runway for us. There is a lot of innovation. There is a lot of new things we can do. Our transformation plan is detailed and vast. It will be executed over the next three years, and it does not rely on market growth.
Is there anything you want to add to that, Jayne?
Yeah, I would just say that I said it in my remarks at the start, the market leadership that we have, we have not used well, enables us to do things that we otherwise couldn't do. We should be Australia's very best omnichannel retailer, and we are not today. We're not Australia's best retailer today, from the standpoint of the way we physically retail through our stores. We have a lot of work to do to get the fundamentals right, in addition to getting our experiences right to tap the full potential of the customers who are already shopping with us. Our strategy does not depend on market growth. Market growth would be nice. It's also our job to ensure that we're re-energizing the category.
Post-COVID, I think the entire industry was so busy trying to figure out what happened that not enough thinking was going into, how do we re-engage consumers post the trauma of COVID, post the re-engagement with the broader world? The industry was not thinking about, how do we capture the attention of consumers with innovation, and how do we think about the upcoming generations that had social challenges during COVID and didn't get to be out and about and doing things that you normally do when you're 17, 18, 19, 20? I think the industry has work to do to re-energize the category. We're not dependent upon that working, and the work that we have to do is quite clear to all of us, and we think there's a lot of runway with retail.
Hotels is a whole different ballgame, and there's plenty of runway with hotels.
But I think from memory, you have over 40% market share. I am not sure that you are going to be able to open up too many new bottle shops.
We do not need new stores.
Okay.
That is the key to it is, we do not need to open new stores. We need to run the stores that we have better, and we need to engage consumers differently.
And you are going to add extra products in the stores?
I'm not going to give a detailed blueprint of what we're going to do, but we're going to be very clear about what our customers want from us and ensure that we deliver against it.
Okay, thank you. Good luck. It's a challenging area, but if anyone can do it, you can. My second question is hotels. As you touched on, clearly, consumers' confidence is low. It's not just petrol prices. It's a small thing called interest rates, which are probably going to go up next Tuesday as well. Thanks for the honesty. Hotels have been growing consistently for several years, but they're now growing at less than the rate of inflation, whereas your costs in the hotels are growing at a much faster rate than the growth in revenue. Really just interested in your views. It does seem that underlying EBIT from hotels will, at best, flatline, but probably decline this year. I accept what you say that, it's an outstanding portfolio of hotels. Outstanding. It's the best in Australia, and it's a good sector.
Yes, I agree, you can run them better. I said that last year. I said that retail was a problem. Hotels were the opportunity. I think you definitely can improve on them. You can take a few costs out. You can streamline management. You can improve the way they're managed. But fundamentally, what concerns me is that most of your hotels, you're paying very large rental amounts to Charter Hall and other people. Those rental amounts, even if your revenue is flat, those revenue rental amounts are going to be going up 3% or 4% a year. Just interested in your view whether hotels are likely to flatline or decline this year. Secondly, if you could comment on your concerns about the regulatory issues. Obviously, there have been changes in Melbourne. There may well be some changes elsewhere. We've seen what's happened with casinos. They've been smashed.
Appreciate your thoughts on that. Thank you.
Yeah, I think in relation to the performance of our hotels business in the next 12 months, we're not going to provide any specific commentary or guidance in relation to what we're expecting in terms of performance. We'll keep the market updated, as we have today, in terms of trading performance. But I think the really important point to take away is this is a multi-year strategy, and we are at a moment in time. And the moment in time at the moment is, as you highlighted, David, the consumer is under pressure. And I think, actually, when you think of what's gone on in the macro space around interest rates and fuel prices and various other things, I actually think the consumer's actually hung on pretty well.
But it's clearly having an impact, and you've seen a range of other retailers that transact on a daily basis with consumers during this week come out with numbers which would suggest they are starting to see some slowdown and stress in the consumer. But as I say, it's very important that this is a moment in time, that we've got a three-year strategy. We've got a very clear strategy, as Jayne talked about. Reduce cost, reduce complexity, make our operations more simple, invest in our portfolio.
I haven't learned many things in my career, but one of the things I have learned is that when you're the number one player in a market, and we are the number one player in both markets that we operate in, if you invest through the cycle, when the cycle does turn, you come out of it way stronger, and in a much better way to compete for every customer, and delight every customer on the way through. So, that's our plan. Our plan is to There's so much improvement we can do in our hotels business, but we will invest through the cycle, and when we come out of it, we'll come out of it far stronger, and we're excited about what we can do in our hotel part of our portfolio. In relation to the regulatory environment, look, we don't set the rules.
It's very simple, and other people set the rules. Governments set the rules, but we have fabulous relationships with governments. We have fabulous relationships with our regulators. It's a very regulated industry, and we work very closely with those partners. Our job is to work within that framework and do the very best job at maximizing our opportunity in that framework. And we will continue to have good dialogue with our regulatory partners and our government partners, but our job is to work within that envelope and do the very best job we can inside that envelope. But thank you for your comments, and thank you for your continued interest in our company. Yes, thank you.
Chair, I have shareholder, Natasha Lee.
Thank you, Chair. Yes, as it's already been said, the results were somewhat disappointing. Getting to your strategy, part of it's already been said earlier, but there has been a long-term decline in alcohol consumption. That trend is not going to reverse or go away. What I see in the market is greater fragmentation and a more fickle market. Things are becoming more complex, and how, or is your strategy looking at the non-alcohol portion of your drinks market to deal with kind of emerging trends, given that some of these offerings, pretty much like fashion, might only last six months or a year, so you can't sort of get long-term runs of a particular product? But whether it's served in your bottle shops or in your hotels, are you addressing this, and how are you identifying these emerging trends?
Yeah, no, thank you. It's a really good point and a really good question. As Jayne just said, our job is to be incredibly close to the customer, incredibly close to customer demands and trends. We have got a job to do to re-energize the space, and we also have a job to look at other products outside the alcohol products. Low beverage or low alcohol categories are something that we're actively working on and is an opportunity for us. Indeed, the more moderate strength alcoholic beverages are also an opportunity. You'll also have seen innovation in our stores around bottle sizes and things like that.
Consumers, once upon a time, might have drunk more from one single bottle or a larger bottle, and now they want to have one glass or one and a half glasses a night, and so we're catering for those changing needs as well. Yeah, I mean, the essence of your question is, we are watching intently what's going on in the market and what our customers want from us, and we are looking. I mean, we see ourselves as a beverage company, so we'll look at all opportunities, and whether it's full strength, whether it's moderate, whether it's low, to develop our range in our stores.
Yes. Okay. No, that's sort of okay. I think that there seems to be sort of the obsession with the alcohol side of it and miss other opportunities is part of the point I was getting at. I noticed that your inventory obsolescence had increased to AUD 60 million from AUD 30 million, and I understand that some of the non-alcoholic beverages don't have as long a shelf life as alcohol, and that's potentially part of that fickleness where what was the hot offer last year is no longer so you've got some old stock sitting on your shelves. Is that your understanding, or what's your reasons behind that?
No, it's not. The increase in obsolescence in the last period is more to do with the refresh strategy. We announced in May a new strategy that Jayne and our management team spent a day talking to our shareholders about. Part of that strategy relates to changes to our merchandising. It also relates to changes to our own Pinnacle business, and some of the obsolescence provisions we took this year relate to discontinuing some of those lines of stock. It doesn't relate to the category in terms of low or full strength. It more relates to the types of products that we're going to continue going forward, prioritizing some and deprioritizing others.
So, we don't expect to see the increase or flatlining of the amount of obsolescence?
No, you shouldn't.
to decrease in future years?
No, that's right. Yep.
Okay. Yeah, I think that, as has been said, hotels are an opportunity. I was wondering, have you looked at, or are you looking at the sort of full potential in the refurbishment, particularly on the entertainment? I am not talking about poker machines. Seeing it as an entertainment venue to draw in the local community to visit the pubs and spend money there, obviously.
Yeah, absolutely. I mean, entertainment is a key part of our strategy, as is all of our revenue opportunities. So, whether it is food, whether it is beverage, whether it is entertainment, whether it is accommodation, which we see great opportunity in, or whether it is the gaming portfolio that we have, the refurbishment strategy cuts across all aspects of our hotels business, and we will be going very hard on all revenue streams, including entertainment, which, as you have highlighted, is an area of opportunity for us.
Yeah. Okay. And the final question in this area. You've increased your self-insurance reserve to AUD 79 million from AUD 39 million. Are there particular reasons, and how is that balanced? I can understand self-insurance. I was involved in that many years ago. But, how are you managing bigger risks? Have you got adequate reinsurance for big catastrophes and the like? I suppose, was this increase in the self-insurance driven by increases in the premiums payable, or were there other reasons?
No, look, I think the point that I'd like to make on this that you should take away is that we continually assess our portfolio of properties. We've got more than 2,000 properties across the country. We're constantly looking at the way we manage those properties. We constantly look at the risks around, as you'd expect, around flood or extreme weather events. Depending on how that portfolio of properties is being managed, we might adjust our insurance arrangements accordingly. We're always looking for opportunities to do things better, improve, reduce costs where we need to, and potentially take on some risks that we're happy to take on. That's just part of what you should expect from us in terms of managing a very diverse fleet of property across the country.
And the reinsurance has. Have you increased your risk there, or?
We don't do any specific reinsurance. We're not an insurance company, so
No, but you can take out reinsurance for large catastrophes.
Oh, so we have insurance for extreme weather events, and we have what we consider to be very appropriate insurance arrangements to deal with extreme weather events across our portfolio. Yes.
Okay, thank you very much.
Thank you. Yes?
Chair, I would like to introduce shareholder Roman Knizhnikov.
Thank you, Chair. Welcome, our new CEO. You did great job with Virgin. You know how to turn business around. I really hope you will succeed in your very hard task, because company getting nowhere at the moment, only going down every year. There is number of times something need to be done. Hopefully, you're the woman who can actually do it. Now to the question. How secure is our information, our customer information? There's a lot of hacks going around the world. In Australia, we're getting hit every time. How you guys secured? Because it's going to be major problem. Thank you.
Yeah, no, it's a good question. Before we had worries about data security and cyber risk and so on, I had dark hair. It's something that I worry about and my board colleagues worry about a lot. Jayne, do you want to talk about our approach to data security?
Sure. We've made significant progress, I think steadily over the last couple of years, in improving our cybersecurity, and we continue to make important investments there. I think we're in a new era with AI where it's very easy for bad actors to test and learn in terms of where your weak spots are. We have to not only worry about our own security, but the security of third parties that we use. We're very conscious of the risk. I think we're constantly going to be finding opportunities to improve. I'd say our base level of security now, thanks to Harinder and his team, is very good. But we're not done, and we won't ever be done.
This is a place we're going to need to continue to invest because the world's continuing to change, and the sophistication of those around us improves, and we've got to be ahead of it.
Thank you. Yes?
Chair, I have shareholder Mr. Carson.
Thanks very much. My experience with pubs is the local, when I was at the University of New South Wales. I mean, we used to go to the pub, which is okay. The services were a pie and, or a bangers and mash, and that was it. But looking further up, all you saw were lace curtains. And I thought, "Oh, I wonder what it's like," because the loos were really quite dreadful. So, if that was a reflection. Now, what I need to know is, how many rooms have you got altogether? They're probably in the annual report, but I've had the flu, so I haven't really looked at the detail. And how do those rooms offer value compared to some of the posh places, maybe just further up the street.
Yeah. Are you talking about accommodation rooms?
Yes.
Yes.
In the hotel status.
Yes. I actually don't have that number at hand. Jayne, do you know what the actual number is?
I don't. Am I on?
Yeah, you are.
I don't know the precise number of rooms, but what I will tell you is this, which is that our accommodation is performing exceptionally well. People love our accommodation. We're working hard to renew so that we don't have lace curtains and dreadful interiors. But people, I think, find exceptional value in our pub accommodation, and it's much better value than the opportunities up the road. The big chains extract a very high margin for their brand names. I think right now, we are really, really important to the community because we're very high value for good quality accommodation. Typically, we're more close to family that you're locally visiting. We're also appealing to a broad group of tradies who are on site for something, and they need to keep the cost down in the cost of their accommodation.
We found a sweet spot, which is really good, and we just don't have enough beds. We are working hard to ensure we get more accommodation nights in the portfolio, and that they are all in good form so that we have a consistent quality that we are delivering to the marketplace, and they can always count on an ALH pub for accommodation.
That sounds promising because I visited the two locals that I used to go to, which is the Regent and the Doncaster, and I noticed they have bistros. The quality and the diversity of food offered is terrific, and I assume accommodation, which is a growing part, is, I hope, also offering better value so that we can book progress on the non-alcoholic front. Thank you.
Thank you. Yes?
Chair, I have a shareholder, Mr. Lee.
Good morning. My name is Kevin Lee, and if you don't mind, I would like to sit down and talk to you.
Of course.
So that we can talk as friends rather than-
Of course.
-as a Q&A session. We are in the consumer business, and therefore, consumer experience is very important. I come today as the proxy of my wife. My wife, my son, and our family, SMSF, are shareholders of Endeavour. I would like to reflect my wife's recent experience with MUFG. My wife has not received the proxy form or the AGM notice of meeting. My wife called MUFG and asked for that. My wife also always receive her proxy in a letter, but MUFG changed that. They changed it by email without my wife's permission or consent. They just do it. When my wife called MUFG and asked for the form, they sent my wife the form through email, but the form is a general form. My wife had to put in her details. If that's a consumer experience, I would say that's frustrating.
What I would suggest is that if MUFG can allow a shareholder to nominate his or her proxy online, that would be very good. Failing that, then send the form in written form, in hard copy form, so that a shareholder can fill that in and mail it out. Or even still, better still, is to fax it rather than post it. That's my wife's experience, and that's my suggestion too. I've got another question with regard to the strategy. I welcome the strategy, and I would like the strategy to work out very good as a shareholder. May I ask, when will we see a tangible result in the form of net profit attributable to shareholders? I'm talking about the net bottom line, not the underlying profit. I would like to know the bottom line attributable to shareholders. When will we see some fruitful results?
Yeah.
Thank you.
Thank you. Just in relation to your first comment, I am sorry that you have had a frustrating experience with MUFG. There are a lot of MUFG people here today, so I strongly encourage you to seek someone out. Also, there is a lot of people from Endeavour here that can talk to you about your experience, and hopefully we can rectify that on behalf of your wife. In relation to your question, we said as part of our addresses that we are very confident about the next three years, and we are very confident about the progress we are making. Even the trading update today, the retail performance that you are seeing compared to our competition is encouraging. It is way too early to declare victory on that front, because we have got a long way to go, and we have got a very extensive transformation journey in front of us.
In relation to your specific question, as I said in answer to one of the online questions that we got in advance, it is not possible for us to give you a timeframe at this stage. I would love to be able to give you a timeframe on exactly when you are going to see net profit after tax turn around from its downward trajectory, but it is just not possible for us to give you that, and it would be irresponsible for us to give you that exact timeframe. What I can say, and what Jayne and I and our team really want you to take away from today is that we are very confident about our strategy. It is a three-year strategy to turn this business around. There are lots of initiatives underlying it. We have got a very good team in place to execute it, and we are very confident we can do it.
We just cannot give you that exact timeframe that you are looking for. Next question.
Yes, sir. Chair-
Actually, we might go this way, and then we will get you a microphone. Please.
Chair, I have a question from Mr. Coronan.
Thank you. Hi. Questions relating to retail liquor. As a general trend, there is an increase in liquor theft, and the market is interesting handling on liquor theft, and I am assuming the increased premiums associated with that kind of stuff. What is the strategy, or is there an increased provision for that kind of stuff? Just interested probably on the strategy on that kind of thing, because I think it is a big hole potentially that is increasing.
Yeah, I might make one comment and then pass to Jayne. But, you might have seen from our annual report, we had some very disappointing safety numbers over the last 12 months. Now, some of that is related to the stock build that we did during the year, and more stock means more manual handling and more slips and trips and falls, and so there is that. But a very big component of the safety performance in our business over the last 12 months has been relating to the exact issue that you talk about, which is
Employee engagement with theft
Yeah, theft in stores. That is apart from the question earlier about cybersecurity and data protection. The safety of our people is probably the other thing that keeps us all up at night. It is a very unsatisfactory situation, and it is something that we are spending, as a company, a lot of time thinking through. Jayne, you might just want to just go a little bit deeper on some of the strategies that we are executing at the moment.
Well, first, I guess it is important to acknowledge that it is a problem. It is less of an issue with respect to the cost of it, and more an issue with respect to the implications of it. Because for our people-
Employee safety, you mean?
Yeah. Because for our people, they need to feel like they are safe when they go to work every day.
Yeah.
They do not need to worry that somebody is going to come in with a baseball bat or come in with a machete. But those things do happen.
Yeah.
What are we doing about it? I guess, a couple things. One is, we are working with all the state governments to talk about mechanisms to fix the underlying issue and to protect our people. Having guards does not solve the problem. It just means that the guards are the ones that are going to get the exposure and the attack. It is not a security thing in terms of things we can do inside the store, but technology helps. Facial recognition, so that we can help CCTV and facial recognition, so we can help the police better understand who are the perpetrators. Then it is up to them to have the right ability to find the people and incarcerate people and ensure that there are consequences for bad actors.
Unfortunately, my expectation is that because people are doing it tough in the community, and there is a fair amount of desperation given the increased cost of everything and wages are not keeping pace with it, that we are going to see more bad behavior before we see less. It does not come from malice as much as it comes from desperation and people just feeling entitled to take because they are in such dire circumstances. We are working closely with governments, we are investing in technology, and we are really concerned for our people. The attitude we have and the policy position that we take is, nobody should fight it.
If somebody comes in the store with ill intent and they want to take product, you let them take product, and then we provide the data to the police to solve the problem, because that's the only way we can keep our people safe.
Yeah, the problem is the youth and the ability of law to treat youth.
That's part of it.
That's probably the bigger problem, not the adult, because you can react and punish them, but the youth just keep doing it 126 times.
It is an adult problem too, because the consequences are not significant enough.
Yeah.
Even if they get picked up by the police, they are out a couple hours later. There is a hierarchy of issues that every state has, and they are all different. The only thing that can be done is that the state governments work to address the issue, because it is a community issue. Because it means there are other people in the store that come in, and then you have a bad actor, and then other people are exposed to that risk too. It is a community problem.
Yeah.
We need to work closely with state and local governments to ensure that the underlying issue, which is that their consequences are not big enough. Whether it is youth or adults, that needs to get addressed.
Your provisions have to be greater, and your insurance premiums will be a little bit higher?
Yeah, these are the sorts of things you self-fund.
Yeah.
But the cost of it isn't the issue. It's the knock-on consequences of it that are the bigger problem.
Yeah.
Because you can imagine, we have 30,000-plus people.
Yeah, workers' compensation premiums, all kinds of stuff. Okay, thank you.
Thank you for your question.
Thank you.
Thank you. Yes.
Chair, I would like to introduce shareholder Edwin Cooney.
Sir, my name's Edwin Cooney, and I live in Perth, Western Australia. We have been a long-term shareholder in Woolworths and then in Endeavour. I buy my alcohol in the past from Dan Murphy's, and I have also used a very small subsidiary of what is now Endeavour to buy wine through somebody in Sydney whom I've never met, but I talk to her on the phone. About a year ago, Liquorland started to make offers of, "You spend AUD 200, we give you 20% off, we give you 15% off," and so on. My favorite tipple is Laphroaig single malt whiskey, when I can afford it. What has happened is that Liquorland, even though you say you will always beat everybody else's price, when you go into Dan Murphy's over in Western Australia, they'll beat Liquorland's price by AUD 0.05. Complete waste of time. Okay?
For the last 12 months, I've been buying my Laphroaig through Liquorland because it starts off at AUD 130 a bottle. It comes down as a special to AUD 92, I think it might have been. Might have been AUD 97. Then they offer you 10%, 15%, or 20% off if you spend so much money. Then recently, you don't have to spend that much money. They just say, "Buy a bottle, and you get 15% off over that extra price." This upset me because we're shareholders in your company. So, I wrote a letter of complaint to the person I buy wine from in Sydney, and I was assured that that was forwarded. I can't guarantee that, but I believe that that was the case. I haven't even had the courtesy of a reply to say, "Get stuffed." Nothing.
That particularly upset me because it says, if you can't do that, what else can you do at the marketing level? The only thing you've got going for you at the moment, as far as Liquorland is concerned, is that their stock control program is extremely poor. When I try and buy two bottles of Laphroaig from the one Liquorland outlet, and there are many in my area in Claremont, they tell me there's only one, and therefore I can't buy it because you got to buy two to get over AUD 200 or whatever it is to get the discount. You finally get there, and you buy the one bottle because it is 15% off, and you find that they've got plenty of bottles. I would like to know what you people are going to do about it at that low retail level. Thank you.
Yeah, in relation to the comment about your complaint letter, I apologize on behalf of the company. That hasn't got to our level, and that's a breakdown on us. So, I apologize that you took the time to write a letter, and we didn't respond. So, that's on us, and on behalf of the company, I sincerely apologize. We will look into that to understand the reasons for that. In relation to, we do a lot of customer interaction. We do a lot of work with our customers in terms of getting insights into customer behavior and what they're doing.
As Jayne said in her address, a key part of our initial turnaround strategy is re-engaging with the customer on price leadership and showing to our customers that we value them from a value perspective and making sure our offer, both in terms of range and everything else, but particularly around price, is absolutely competitive with the market. I hear your comments, and if we asked a thousand people, we'd get different but similar feedback in relation to what we're doing and what people's reflections are as customers. We take all that on board, but the one thing that you need to understand is we'll compete exceptionally hard on price. We've been doing that since September last year, and we will continue to do that. It's a key plank of our strategy going forward. I'm not sure whether you want to add anything to that.
Yeah, I do. Look, I think the issue that you experienced is the most frustrating thing for me about where our business got to, because we started to focus on margins and not on serving the customer. In Dan Murphy's in particular, the price benefit wasn't substantial enough to justify going to Dan Murphy's as opposed to your local Liquorland. Two things are true now. One is we're monitoring price multiple times a day in Dan Murphy's to ensure that there is a substantial difference between Dan Murphy's price and anybody else's. It's not just Liquorland. We're looking at all the major banners. The second thing is, we're also competing. When Liquorland does a promotion of 20% off site-wide online, you'll also find that promotion at Dan Murphy's. Benjamin's sitting here in the front row.
He rings me every week to say, "This is what they've done this week," and like, "How do we want to compete?" We compete. We're the market leader. There's no excuse for us not to be competing. No excuse. When we find opportunities to impress our customers with better pricing, we will always take them. We're working closely with our suppliers to make sure that we have sharp enough pricing from our suppliers that we can afford to do it. All I can do is apologize, because we lost our way.
Next question. Yes.
Chair, I have shareholder Mr. Weeks.
Mr. Chairman, you have reduced our income about 80% or 90%. How much have you reduced your income in the same time?
Yeah. I might catch up with you over a cup of tea later on and work out exactly. No, no. What I was going to say was to just do the maths in relation to the reduction of income. I certainly understand we've taken the dividend backwards in the 2026 financial year, as I spoke about. I think the important thing to remember is, the team in front of you today is the team that's in place to try and take this business forward and restore both parts of our business, the retail part of our business and the hotel part, to its former glory. We are charged with executing the turnaround. We have a team in place to execute the turnaround. Part of that turnaround, at some point in time, is increasing profits and increasing dividends.
As I said to the question before, I can't give you a timeframe around that, but that is why we're here. We are here to turn this business around, increase profits, and increase dividends, and that's what we intend to do, sir. Thank you.
Other point, you made a point, the dividend's up by 1.3%, but inflation is at 4.3%. You're going backwards still by 3%.
We absolutely understand the macroeconomic environment, and we understand that to increase profits, we need to get our revenue growing faster than our cost base. We absolutely understand that, and we have plans in place to do that over the next three years.
There's another point. You people are obviously not up to it.
Not sure there's a question there, so thank you for your comment, sir, and we'll move on to the next one. Is there another question here? No? Yes.
Chair, I have shareholder Mr. Hatfield.
I haven't read the annual report, as I only just received it. As the new CEO, part of your job is to sell off unprofitable businesses and reorganize staff, let's put it that way. How many bottle shops did you sell this year? Or did you sell any?
We did. We're net down a couple of BWS and net up a couple of Dan Murphy's. It's a normal and natural thing that we go through every year, is to look at the store footprint, figure out what's performing, what's not performing, and to take the end of the tail that we think we can't improve the value of, and to get rid of the end of the tail. There are also new places that we want to fill out that we aren't currently present, communities that we're not currently present in. Where we're at right now, though, is we have so much performance improvement to do across the entire portfolio.
If we decided to take surgery and take everything out that we thought was below the average, then you end up changing the dynamics of the total, and we should just be focused on improving the value of everything, and then figuring out what the performance of the portfolio is when it's being run well, before we take big decisions.
I live here in Sydney, and on the North Shore, it's probably your highest-selling bottle shop per square meter. Despite that's despite the fact the staff don't actually sell. They're really just order takers. There's nothing against young staff, but they just don't seem to have the knowledge to sell. If you go in there and say, "Where is the Cabernet Sauvignon," or something, they'll tell you where it is, and that's about it. You don't get much sort of feedback from them. I just feel that-
Is this Dan Murphy's or BWS?
Yeah.
Which one? BWS or Dan Murphy's?
Oh, well, the one that I live near is Kirribilli, but I wasn't necessarily referring to that. It's everywhere. The staff seem to change all the time. There's no sort of buildup, rapport between the people that work in the shop and the customers. I don't know exactly how you work, but I guess you have a manager. Managers of bottle shops, I don't know if they're anything like managers of McDonald's. They just put someone in as a day for the manager. Say, "Oh, you're the manager today." You probably have an area manager, rather than a permanent manager in the bottle shops.
Sir, thank you for your comments.
Oh, just one last thing.
Sure.
Is it that we have too many bottle shops, that it is time to get rid of some of the lower-performing ones? Either sell them, lease them out. I mean, you would not consider franchising them, but
As Jayne said before, it is a very regular process as part of our business, where we look at the performance of all of our retail businesses. And we do close ones that we think are not performing and should not be part of the network anymore, and we do open others. I think we opened net six Dan Murphy's stores and roughly seven BWS stores on a net basis last year. So, out of 1,739-odd stores, the portfolio is actually reasonably stable, but there is a few in, few out each year. But rest assured, that is absolutely part of our process, to look at the performance of each store, and does it have a role to play in the network going forward? And the other thing I would just say is, we have got our management team here. Please, over a cup of coffee afterwards, talk about your experience.
We have got the head of our BWS business and the head of our Dan Murphy's business here.
I would have loved to have done that, but unfortunately, I am looking after the grandson. I have got to leave in five minutes. Otherwise, I would definitely have stayed.
Well, next year maybe. We can organize that.
Yeah, that would be great.
Thank you for your comments, sir.
Okay, thank you.
Appreciate it. That looks like we've exhausted the questions. Oh, no, sorry.
Chair, I have shareholder, Mr. Watt.
Yeah. Andrew Watt, shareholder. This is in relation to the hotel business. I believe we have something like 351 hotels. My question, without notice, how many or what percentage would be freehold properties, as opposed to what we have at leasehold? Of those freehold properties, are there any proposals for developments, apartments, the like, on top of those freehold properties? Thank you.
Yeah. In relation to the second part of your question first, both in relation to freehold properties, but also leasehold, there are opportunities for us to look at developments in time. We certainly see that as an opportunity, and we certainly see as part of our three-year transformation program, an opportunity to do developments. It doesn't actually matter whether it's leasehold or freehold. It's slightly more complicated if it's leasehold, but there is opportunity across our portfolio to do developments and realize value for shareholders through that process. In relation to the split, the vast majority of our portfolio is leasehold. We do have some freehold in the portfolio, but the vast majority is leasehold. Jayne, I'm not sure whether you've got that number embedded in your brain, but
About 15% is freehold.
Yeah.
Thank you.
Thank you for your question. Sorry, yes?
Chair, I have shareholder, Mr. Blair.
Thank you very much. Chairman, my interaction with Endeavour is mainly Dan Murphy's and ordering online. The delivery service, of course, has been disgusting. There is no question about that. I waited four hours or more. More, actually. The four hours, the window, and then there was another hour kind of wasted waiting for a delivery of two bottles of wine last year. That is the past, and I will not go over it. You have a wonderful organization now where you order and you get a delivery within an hour, which is working very well indeed. My wife and I, it is in our super fund, and we are up three flights, and there is no lift. It is in Surry Hills. We are quite happy with that. But the guys from Uber, some of them are very sweet guys, but they are very spindly Indians.
Coming up three flights of stairs with boxes of wine, we have had neighbors help them up the stairs. It has been a collective neighborly effort to get the wine up. So, I just wonder if you could check with Uber that the men are well-structured, strong enough to lift several dozen bottles of wine up three flights in five minutes.
Thank you, sir. We will definitely take that feedback on board.
Good. Thank you.
We'll see whether it comes into Jayne Hrdlicka's STI scorecard next year or not. You must have enjoyed coming to the new venue for our AGM in Surry Hills. You haven't had to travel far.
No, that's why I'm here. I didn't have to get an Uber.
Terrific. Thank you. We'll take that on board. Thank you. Are there any other questions in the room before we head online? No? Maybe I can just ask. Oh.
No, wait.
Sorry. We do have one more.
Chair, I have shareholder, Mr. Hauser.
Thank you. We talk about a new scenario. What I am interested is this, I see plenty of gray hair in the boardroom. What efforts are you making to bring the team, management team, as well as the board, up to scratch? Artificial intelligence, cybersecurity. I remember a paper by Chris Argyris, "Teaching Smart People to Learn," in the Harvard Business Review, which is May/June 1991. I have reread it. I think it is very important, I am happy to give copies to anybody who is interested, but the attitude he takes is terrific. What I need to know is, do you have a special program to bring the board and management on an ongoing basis?
Yes, absolutely we do. I mean, one of the roles that I have is to make sure we have a diverse group of directors, and that is experience, it is gender, it is background, it is industry experience, it is across the different disciplines that we need to understand as a board. That is something that we talk a lot about, making sure we have the right skills around the table. The second element of that is making sure that the board, individually and also collectively, continues to educate themselves on emerging things like AI that you talked about, but also emerging things in our industry. There is a lot of technical things we need to come up to grips with that we do offline, and there is a lot of things that we do collectively around our industries to make sure that we are on top of what is going on.
Then Jayne does exactly the same thing with her team. Jayne's been, over the last nine months or so, rebuilding and changing her executive leadership team, and her executive leadership team have been doing the same throughout the business. It's making sure we've got the right skills, experience, diversity, and industry understanding to tackle the transformation program that we have ahead. So, it's a good point and something that we talk about and reflect on a lot. So, thank you.
Thank you.
All right. We might head to the web phone. Can I ask just whether there are any questions that have come in on the web phone?
Thank you, Chair. There are currently no questions on the phone.
Okay, so maybe we'll head to the online questions. Can I ask whether there are any online questions, please?
There are some questions online, Chair. The first question is from Gavin Fyfe. "The direction you have purveyed is to divest from winery assets. Noting a significant investment in Dorrien Estate Winery when there was clearly signs of an alcohol downturn, this was clearly a questionable decision as we look back on history. The business still has remaining assets in the wine sector, including Isabel Estate, Cape Mentelle, Josef Chromy, Dorrien Estate, and the Vinpac packaging facilities. Is there a plan for further divestment? What place do the remaining wineries play in the future of Endeavour Group?
Yeah, it's a good question, and something Jayne and the team have been very clear about back to May when we had our investor day. The repurposing of that part of our portfolio under Pinnacle is to purely serve our retail business. We've been very clear that we want that part of our business to be in service of our retail business, and it's been repositioned that way. We want it to be much more asset-light, and we want it to be much more simple, and we want the merchandising or the product coming out of that group to be what our customers want in our retail business. We've been very clear about making sure we align that strategy in trying to maximize our retail turnaround. But Jayne, is there anything you want to add to that?
Yeah, I would say that it's an important thing to understand that our Pinnacle business, which is where those assets are held, our Pinnacle business is our private label business, and it's a really important part of our ability to deliver very attractive returns from our retail business. The Dorrien Estate infrastructure, Vinpac infrastructure, that is very important for all of you because it enables us to do our private label wine production. We have sold off vineyards that we didn't believe were important to our private label business. They were premium or ultra-premium wine businesses that are really attractive wines, very high-quality wines, but not necessary for us to own those wines in order to deliver the returns that we can deliver through our private label portfolio to you.
The two wineries that we've held onto are Isabel Estate and Cape Mentelle, and that is because of the regional role they play in helping us procure in those communities. The economic benefit of that justified hanging on to the physical assets, and it's a rounding error in the context of our asset base. Those that we chose to keep, we chose to keep for a purpose because they generate enough economic value to have been justified in keeping them in the portfolio. Pinnacle and the products that we produce in Pinnacle Wine, in particular, but we also have private label beer, and we also have private label RTDs, and some spirits. That's a really important part of what we sell through retail.
We mentioned earlier that we've skinnying down what we produce so that we're only selling SKUs that move quickly through retail, and we're clear about Pinnacle just being in service of our own retail business. We're not doing anything else with it other than provide really attractive product to shareholders that we get a better margin for you. I mean, attractive products to customers that we get a better margin for you.
Thanks, Jayne. Next question online, please.
Chair, the next question is from Stephen Mayne. "Our largest shareholder and former Woolworths Hotel joint venture partner, Bruce Mathieson, is currently advertising his privately owned Melbourne pokies venue, the Manningham Club, for sale via Knight Frank." Does this mean we have declined an opportunity to buy it, so he is offering it to third parties? Under our arrangements with Mr. Mathieson, does he have first rights when we choose to sell a gaming venue, and do we have first rights if he chooses to sell one of his privately owned pokies venues?
Yeah. So, look, I am not going to comment on a specific transaction or a specific set of arrangements we may or may not have. It is just not appropriate to do that in a shareholder meeting. If any of those type of arrangements exist, they would be commercial in confidence. So, I do not propose to comment any further on that. Next question, please.
Chair, the next question is also from Stephen Mayne. Could Peter Hardy please comment on how he is finding life on the Endeavour board representing the Mathieson family? What are the protocols around what he can share with the Mathieson family, and who does he report to? As far as he knows, are the Mathiesons intending to remain our largest shareholders in the long term? Is Peter confident that there will be no further public blowups with the Mathieson family now that he is on the board representing their interests, and we have a new Chair and CEO who they support?
Yeah. Thanks for the detailed set of questions on that, Stephen. Given this is a shareholder meeting of Endeavour, it is not appropriate to comment or get Peter to comment on arrangements that he might have in relation to the Mathieson family, or to make any comments in relation to how the Mathieson family might view the current board, the current management team, or indeed what their intentions are in relation to their shareholding. But what I will say is I am absolutely delighted that Peter Hardy is on our board. He is a very hardworking and a very competent director. He has tremendous industry experience and insight, and it is of great value to Endeavour that we have Peter as one of our board colleagues. Next question, please.
Chair, the next question is from Stephen Mayne. Are you and Jayne prepared to finally lift the veil and disclose the true size of our gross gambling revenue, just as Star, Tabcorp, and SkyCity all do? The original sin of Endeavour was that former Woolworths Group CEO Brad Banducci created the impression when the demerger was announced in 2019 that gross gaming revenue from our 1,200+ poker machines at 300+ venues was only AUD 700 million. Everyone who has followed has had to fudge the number to avoid the embarrassment of admitting the true figure is more than double that. What is the number?
Yeah. So, I cannot comment on what has gone before me, because that was way before my time, and I would be very surprised if anyone was trying to avoid publishing a number for those sort of reasons that have been articulated or suggested. We do not believe the number is actually meaningful. We believe the number that is most meaningful is the revenue that Endeavour derives from its gaming portfolio. And in the last set of reporting for the 2026 financial year, we actually gave extra disclosure around how much gaming actually constitutes of our total sales. So, we have given more disclosure in our 2026 financial accounts, and we believe that is better disclosure, and we do not believe the turnover number is a number that is going to be of value to shareholders. Next question, please.
Chair, the next question is from Mr. Ashley Harris. You speak of restoring Endeavour Group to its former glory pre the Woolworths Group demerger. Why not revisit the corporate structure rather than maintaining an increasingly expensive corporate hierarchy and corporate overheads, arguably adding little value to frontline operations? The real value of this business is created at the operational level, not in corporate boardrooms or executive offices. What concrete steps will the board take to reduce corporate costs and restore an operationally focused management structure?
Yeah. Look, it is a really good point, and as Jayne talked about in her address, and as she has constantly talked to the market about since May, reducing the complexity and cost in our corporate head office is absolutely a key plank to our strategy. We need to reduce costs across the board, but reducing costs in our head office is absolutely part of our strategy. And we are on record about that, and we have said that a number of times. I also do want to say, though, that we can also get more out of our corporate costs. There is a job to be done making sure what we do spend at the corporate level is of great value to both our retail business and our hotels business, and that is also an area of opportunity for us, getting more out of what we spend corporately.
On the hotel side of our business, no one has been able to make a success of having a very significant portfolio of hotel assets in a listed, ASX-listed structure, and we think we can do that. We think we can get the benefits of the scale that we have got and the value that can be delivered through that, but also compete locally at every one of our 351 pubs across the country. So, that is what we are going to do, and that is what we plan to do over the next three years. Next question, please.
Chair, the next question is from Murray Hunter Jack. "Have you considered franchising some of the BWS stores?
Jayne, I might get you to answer that as part of the strategy work. Was that a question that ever came up?
Not really, because the stores that we operate, if the notion is that we would sell the existing stores to somebody else who would operate them as a franchisee, we don't see that providing any incremental value to you. It just adds more complexity and reduces the return that we get. If the question is, do we think we should be franchising BWS or Dan Murphy's to allow other people to grow the network, we also don't see that being a good way to grow profit for you. The economics just don't stack up. Adds complexity, and if there were opportunities for us to grow the brand portfolio in the eyes of the ACCC into places that we don't currently have a position, we would do that ourselves and get much higher return for you.
Thank you. Next question.
Chair, there are no further questions online.
Okay. Given there are no further general questions, I'll now move on to the next item on the agenda. Item two relates to the election of directors. Agenda item two is the election of myself, as well as Mike Ihlein as directors. The resolutions will be dealt with separately. The notice of meeting contains details of our background and experience, and we won't repeat all of those today. As I'm the first candidate for election, I'll now ask Duncan to come and chair the meeting for this item of business. Thank you.
Thank you, Tim. Item 2A is the election of Tim Poole, who, in accordance with the constitution, offers himself for election. Tim's been a member of the board since May 14, 2026. He is the Chair of the Board and the Nominations Committee. The Board considers Tim to be an independent Director. The Board, with Tim abstaining, recommends that you vote in favor of the election of Tim. I'll now invite Tim to briefly address the meeting regarding his candidacy.
Thanks, Duncan. As I mentioned earlier, I was appointed Independent Chair of the Endeavour Group in May this year. As I also mentioned in my address, I joined the Board as I believe in the company's long-term potential. I began my executive career in 1990 at PricewaterhouseCoopers before joining Hastings Funds Management in 1995, where I helped build Hastings into a global investor in private market assets and was the Managing Director of that business from 2005 to 2007. Since retiring from Hastings, I've been an investor and Non-Executive Director of a range of public and private companies in sectors including infrastructure, transport, property, financial services, and mining. Until recently, I was the Non-Executive Chair of Aurizon Holdings Limited, and I'm currently a Non-Executive Director of The Lottery Corporation Limited.
I believe my experience as an investor and company Director and Chair across a range of sectors will enable me to lead the Board and support management through the period of significant transformation we've talked about today. It is a privilege to stand before you, and I'll be grateful for your support. Thank you.
Thanks, Tim. Are there any questions on the election of Tim? We'll take questions in the room first. Please move to a microphone if you have a question or comment. Number two.
Chair, I have shareholder Natasha Lee.
Thank you. Natasha Lee, shareholder. I do not really know Tim that well personally, but I am sure he has got great qualifications for this job. I think the main point I wanted to make is that I understand that it is a relatively small board, but you are seeking another Director. I think that it is important that you have mentioned diversity. I think that the boards should better reflect the makeup of the community in general. As an aside, it has been noted that boards which do better reflect the community tend to perform better. Also make the point now that I know Mike Ihlein, and I support his reappointment, so I do not have to get up again. But, if you take on my point about being more mindful in attempting to better reflect the community, that would be great.
We agree. We agree. Thank you.
Are there any questions on the web phone?
Thank you, Chair. There are currently no questions on the phone.
Are there any questions online?
Chair, there is a question online. This question is from Stephen Mayne. "Could Tim Poole please summarize the selection process which saw him become our Chair? Who first approached him? Was a recruitment firm involved, and what is his history with the Mathieson family? Did they give their blessing to the appointment, and would he be here today if they objected to his appointment?" In other words, did the Mathiesons have veto rights, either formally or informally, on Tim Poole's appointment as the Chair of the company?
I can answer a bit of that, Tim. No shareholders have any veto right on the appointment of any Director, and I can assure you that wasn't the case. Tim came to the attention of the Board through a fairly formal and extensive recruitment process, followed up by a number of interviews by each of the Directors of all of the candidates. We were very, very happy that we were in a position to land someone of Tim's caliber to lead the company forward. So we're delighted to have Tim on board. He had gray hair when he joined, and it isn't a consequence of the last nine months. Thank you. Are there any other questions online?
Chair, there are no further questions online.
Okay. If there are no further questions, I now put the resolution to the meeting. Displayed on the screen are details of the direct and proxy votes received in relation to this resolution. For those in the room, please now mark your voting card in relation to item 2A, Tim's election. For those online, if you wish to cast a vote, please click the Submit Vote button now. I will now hand back to Tim to resume the meeting.
Thanks, Duncan. Thank you very much, Duncan. Item 2B is the election of Mike Ihlein, who, in accordance with the constitution, offers himself for election. Mike has been a member of the board since February 18, 2026 and is the Chair of our Audit, Risk and Compliance Committee, and a member of our People Committee, and also our Nominations Committee. The Board considers Mike to be an independent Director. The Board, with Mike abstaining, recommends that you vote in favor of his election. I now invite Mike to address the meeting.
Thanks, Tim. Seems like I might have to dye my hair, so I do not get any more comments about gray hair. Anyway, I will take that on notice if I am good enough to be elected today. Thanks very much, Tim, for the introduction, and good morning, fellow shareholders. I was appointed to your board, as Tim said, in February of this year, and I have already found it to be a very rewarding experience, including, as Tim said, as Chair of the Audit, Risk and Compliance Committee. While it has been a challenging year, the incredible pool of quality assets across retail and hotels, and the refreshed management team, stand the company in great stead for what I believe will be a wonderful future. I am very excited to be part of the transformation journey that the company has commenced.
My background originally, as some of you, I think, already know, is in finance, but I've also had extensive experience as a senior executive of major Australian-listed companies, including periods as Chief Financial Officer of Coca-Cola Amatil, as well as CFO and CEO of Brambles, one of the world's largest reverse logistics companies. I also serve on two other ASX-listed boards, being Ampol Limited and Eagers Automotive, and also a not-for-profit board. All of these three directorships provide me with additional perspectives that I think will add value to my contributions to the Endeavour board. I have the energy, I have the time, and also have the passion to devote to our company. I present myself today for election, and it would be an honor, subject to my gray hair, to have your support for my ongoing role as a Director.
Thank you very much for the opportunity to address you today, too. Thank you.
Well done. Thanks, Mike. Are there any questions in relation to Mike's election? We might start in the room first. There don't appear to be any questions, so can I ask whether there are any questions on the web phone, please?
Thank you, Chair. There are currently no questions on the phone.
Are there any questions online?
Chair, there are no questions online.
As there are no questions, I will now put the resolution to the meeting. Displayed on the screen are details of the direct and proxy votes received in relation to this resolution. For those in the room, please now mark your voting card in relation to item 2B, Mike's election. For those online, if you wish to cast a vote, please click the Submit Vote button. Let's move on to item 3. The next item on our agenda is the adoption of Endeavour's remuneration report for the year ended 28th of June 2026. In accordance with the Corporations Act, the vote on this item is advisory only. However, the directors will consider the outcome of the vote and feedback received from shareholders when considering our remuneration framework for the future. The remuneration report was included in our 2026 annual report. It outlines our remuneration framework and how it is governed.
The Board recommends that you vote in favor of this resolution. In advance of the meeting, some shareholders submitted questions querying the need for incentives to be paid to executives, and our response is this. Incentives are designed to ensure alignment of shareholder and management interests. The targets are linked to the successful execution of the group strategy, and achievement of those targets will be in the interests of the company and shareholders. If targets are not met, executives will not be rewarded. Market practice for ASX-listed companies is to include an incentive component in remuneration packages for executives, and it is therefore important to offer incentives to secure a high-quality management team. Let's see whether we have any questions in relation to this resolution. Can I check whether there are any questions in the room first, please? No.
Can I check and see whether there are any questions on the web phone?
Thank you, Chair. There are currently no questions on the phone.
Finally, are there any online questions?
Chair, there are no questions online.
Okay. Given there are no questions on the remuneration report, I will now put this advisory resolution to the meeting. Once again, on the screen are details of the direct and proxy votes received in relation to this resolution. For those in the room, please mark your voting card in relation to item 3, adoption of the remuneration report. For those online, if you wish to cast a vote, please click the Submit Vote button. All right, let's move on to item 4A, and this item on the agenda is the grant of performance rights to the Managing Director and CEO, Jayne Hrdlicka, under the 2026 LTI plan. Jayne was appointed to the CEO role in January 2026. Accordingly, subject to shareholder approval, Jayne has been offered a grant of securities under Endeavour's 2026 financial year LTI plan, prorated for the portion of the performance period that Jayne will serve.
The company is proposing to grant 829,620 performance rights to the CEO as her 2026 financial year LTI. While approval is being sought for the maximum potential award, the value that Jayne will receive from the performance rights is dependent on the satisfaction of performance conditions after the three-year performance period. The performance measures and weightings are described in detail in the notice of meeting and comprise total shareholder returns, or relative TSR, for 40%, return on funds employed, or ROFE, for 40%, and earnings per share for 20%. The Board considers that the grant of performance rights to the CEO is an integral part of effectively rewarding the CEO in a manner that aligns with shareholder interests and recommends, with Jayne abstaining, that you vote in favor of this resolution. Can I see if anyone's got any questions in relation to item 4A?
Again, we'll start in the room first. Can I check and see whether there are any questions from the web phone?
Thank you, Chair. There are currently no questions from the phone.
Can I check whether there are any online questions, please?
Chair, there are no online questions.
Given that there aren't any questions, I'll put the resolution 4A to the meeting. Again, on the screen are details of the direct and proxy votes received in relation to this resolution. For those in the room, please mark your voting card in relation to item 4A, and for those online, please click the Submit Vote button. The next item on the agenda is item 4B and relates to the grant of performance rights to Jayne Hrdlicka under the 2027 LTI plan. The company is proposing to grant 1,272,062 performance rights to the CEO as her 2027 financial year LTI. As noted in the last resolution, although approval is being sought for the maximum potential award, the value that Jayne Hrdlicka will receive from the performance rights is dependent on satisfaction of the performance conditions after the three-year performance period.
The performance measures and weightings are described in detail in the notice of meeting and differ from those for the 2026 financial year LTI. The company recently undertook a review of its remuneration framework and incorporated changes to the LTI measures and weightings for the 2027 financial year LTI award. The LTI measures for this year are relative TSR for 40%, measured against a peer group of ASX 200 companies in the consumer staples and consumer discretionary sectors, and underlying ROFE for 60%. The Board recommends, with Jayne Hrdlicka abstaining, that you vote in favor of this resolution. Once again, let's see if there are any questions in relation to item 4B. Again, can we see if there are any questions in the room first? Can we check and see whether there are questions on the web phone, please?
Thank you, Chair. There are currently no questions on the phone.
Can we check whether there are any online questions, please?
Chair, there are no online questions.
Given there are no questions, I will now put the resolution item 4B to the meeting. On the screen are details of the direct and proxy votes received in relation to this resolution. For those in the room, please mark your voting card in relation to item 4B, and for those online, please click the Submit Vote button. The next item on the agenda is the renewal of our proportional takeover provisions in the constitution. Endeavour's constitution contains provisions that deal with proportional takeover bid for Endeavour shares in accordance with the Corporations Act. The provisions assist shareholders to receive proper value for their shares if a proportional takeover bid is made for Endeavour and prohibit the transfer of shares under a proportional takeover bid unless the takeover bid resolution is passed by shareholders at a general meeting or by postal ballot approving the bid.
The provisions in the constitution are required to be renewed by shareholders every three years to continue to have effect. They are being considered now as they will expire on October 31st, 2026, which is tomorrow. This is a special resolution which requires the passing of 75% of the votes cast. If passed, the renewal of the proportional takeover provisions in the constitution will operate for three years from today. The Board recommends that shareholders vote in favor of this resolution. Can I see whether anyone in the room has a question in relation to this item of business? Can I check whether there are any questions on the web phone, please?
Thank you, Chair. There are currently no questions on the phone.
Finally, can I check whether there are any online questions, please?
Chair, there are no online questions.
Given there are no questions, I will now put the special resolution relating to the renewal of the proportional takeover provisions in the constitution to the meeting. Again, on the screen are details of the direct and proxy votes received in relation to this resolution. For those in the room, please mark your voting card in relation to item 5. For those online, if you wish to cast a vote, please click the Submit Vote button. Shareholders, that now concludes all the items of business on today's agenda. I declare that the poll will close 10 minutes after the meeting closes. Please complete your voting card for each resolution and submit it in the online portal or place it in the poll box with a share registry representative as you leave the room.
As mentioned earlier, the results of the polls will be released on the ASX later today and published on our website. A transcript of today's proceedings will also be available on the website in due course. On behalf of the board, I would like to thank you for your support and attendance today. For those in the room here in Sydney, please join my fellow directors and our senior executive team for light refreshments in our foyer. For those attending virtually, thank you for your participation in our meeting today. Can I also, before I close, say a special thank you to the Endeavour team? There is an awful lot of people working behind the scenes here today to put this on. On behalf of the board and our senior team, to those that have worked so hard to put this AGM on, thank you to those Endeavour staff members.
Thank you, everyone. I now declare the meeting closed.