The shareholder meeting was peppered with questions from groups such as the Foundation for Alcohol Research and Education and shareholder activist Stephen Mayne over Woolworths push to open a large Dan Murphys store in Darwin near vulnerable Indigenous communities, and also over its huge array of poker machines.
Pokies help bring in $700 million a year
Mr Cairns told the meeting gaming revenue at Endeavour was about $700 million, and was less than 50 per cent of total hotels revenue.
Woolworths came under fire in a report by Danny Gilbert, co-founder and managing partner of Gilbert+Tobin, who led an independent review of its pursuit of plans to open the Dan Murphys store despite overwhelming opposition from Northern Territory community and health organisations.
The independent review, released in early June, found Australias largest retailer had failed to take into account the challenges facing Aboriginal communities there, that it had put profits above public interest, had lobbied the NT government for law changes that led to fair processes being ignored, and did not meet the standards expected of a leading corporate citizen.
Mr Cairns told the meeting on Friday that Woolworths had responded and acknowledged its obligations and failings and that Endeavour Group had committed to consider the 24 findings more deeply. He and Woolworths chief executive Brad Banducci are flying to Darwin on Monday as part of the process.
Endeavour Group chairman-elect Peter Hearl told the meeting the new company would engage deeply with all the stakeholders. Mr Cairns reiterated that Endeavour Group took the issues very seriously.
Partially distancing itself from gaming
Im very confident they will behave in the appropriate way, Mr Cairns said.
Woolworths will have a 14.6 per cent stake in Endeavour Group and in the short term wants to retain the holding. But it has the option of eventually selling down over time.
Woolworths has negotiated a series of partnership agreements enabling Endeavour to access Woolworths supply chain, customer loyalty programs, technology, digital and media capabilities after the demerger.
The demerger will enable Woolworths to partially distance itself from the poker machines and gaming businesses, although Woolworths has said that was not the primary motivation for the split.
Mr Cairns said Endeavour Group had a large array of expansion opportunities in front of it. Their growth opportunities are unlimited, he said.
He also rejected any notion that Woolworths had previously been backing off from buying hotels with poker machines, saying we did not put a handbrake on acquisitions but had other investment priorities. We had to prioritise our capital spending, he said.
It was a much more sophisticated process than just applying a handbrake.
Pubs baron Bruce Mathieson will also hold a 14.6 per cent stake in Endeavour Group, which in financial 2020 posted $10.6 billion in sales, and $693 million in earnings before interest and tax.
The demerger got strong backing in proxy votes lodged before the meeting, with 98.6 per cent in favour and 0.15 per cent against. Open proxies totalled 1.27 per cent.
Mr Cairns said Woolworths would still be one of the top 20 companies on the ASX after splitting off the the liquor retailing and hotel operations.
Documents show revenue from hotels, which includes food and drinks, accommodation and gaming, fell to $1.3 billion in financial 2020, from $1.7 billion in 2019, because of COVID-19-related trading restrictions.
The demerger was proposed in July 2019 but was postponed when venues had to close because of the pandemic.
Independent expert Grant Samuel concluded the demerger, which would cost about $50 million (in addition to the original $230 million cost of merging Endeavour Drinks and the ALH Group) was in the best interests of shareholders.