19 questions lobbed at debut Endeavour Group AGM

October 24, 2021

There are the written questions lodged by Stephen Mayne at the Endeavour Group AGM held on October 21. Those that were ignored have been italicised.

1. The ABC reports the gambling industry made political contributions totalling $81m since 1999. The various divisions of the AHA have contributed >$10m of this & we are the largest AHA member. For instance the Victorian AHA gave Victorian Labor $741,000 in the lead up to the 2018 election after the govt issued new 20yr pokies licences in 2017. Has the board developed a policy on political donations both directly & through AHA? Would it consider resigning its AHA membership if it refuses to stop donating?

2. The annual report claims sales revenue jumped from $10.6b to $11.6b in 2020-21, even though our hotels business was impacted by lockdowns, particularly in Victoria. Do both those figures include state govt poker machine taxes or has the circa $450m in pokies tax that we pay each year been netted off the sales figure? In terms of our public reporting going forward, will we be reporting gambling revenue before all taxes or will be netting off taxes, such as GST, beer excise, corporate tax and pokies taxes?

3. The 2020-21 Woolworths annual report states that it has 367,852 shareholders, but Endeavour's inaugural annual report claims we have 466,897 shareholders, including 140,716 with an unmarketable parcel. Are we overstating the shareholder figure or is Woolworths understating? Are we going to do a mop up offer to unmarketables. Also, AFIC have publicly stated that they have exited Endeavour due to their dislike of poker machines. Are you aware of many other institutional or retail shareholders doing the same?

4. I'm a local government Councillor in the City of Manningham in Melbourne's east. 6 of our 7 pokies venues have a Mathieson family connection. 4 are operated by Endeavour Group where Bruce is the largest shareholder with 15%, 1 is 100% owned by Bruce Mathieson snr & 1 is owned by Bruce Mathieson's daughter & her husband. This is very untidy. Could Bruce explain why both of his daughters are in the top 10 pokies operators in Victoria competing against us & could he & the chair comment on how these conflicts are managed?

5. Could Peter Hearl please clarify if he is friends with Woolworths chair Gordon Cairns after first being nominated to chair the Woolworths petrol business and then, when that fell over, being nominated to chair Endeavour Group. Did they work together in the past? Also, what was the process by which Bruce Mathieson senior signed off on the appointment of Peter as Endeavour chair and given Peter is 70, is he intending to only serve 1 three year term?

6. Deloitte have audited Woolworths since at least the float in 1992-93. Did the board conduct a tender before proposing Deloitte as the Endeavour Group auditor & what is the likely timeframe before the audit function will next be tendered? Could Deloitte also please comment on how they intend to report poker machine revenue at Endeavour given the history where Woolworths under-reported the figure by netting off state government taxes & claiming it was only $700 million. Does Deloitte support this approach?

7. We've recently heard through the media about the Sydney man who died after being delivered three bottles of wine daily by Endeavour's Jimmy Brings division in the weeks before his death. Jimmy Brings has an automated RSA system that red-flags customer orders online that could be high risk, allowing for intervention. How many people are currently red flagged in this system & what happens to people who are red flagged? Are people who buy more alcohol targeted more by online marketing than those who buy less?

8. When Bruce Mathieson bought into whisky supplier Lark Distilling last year, the company's CEO Geoff Bainbridge said: "It's a good intro into the pubs that he's a part of.'' Now that Mr Mathieson is down to just 1 seat on the Endeavour board & his son is departing as ALH CEO in December, will he have any ongoing ability to influence supplier decisions & how will conflicts be managed when he part owns a supplier. Could Steve Donohue comment on whether Lark is currently a material Endeavour whisky supplier?

9. How many of the nearly 300 Endeavour pokies rooms has Peter Hearl visited and has he ever spent time in an ALH pokies room after midnight when a majority of the gamblers are on their own and often feeding a damaging gambling addiction which is inflicting considerable harm. Can he also explain what he understands about operant conditioning leading to addiction and whether he agrees that this is what poker machine manufacturers strive to achieve with the gambling customers of their revenue hungry clients?

10. As chair of the audit, risk & compliance committee, could Duncan Makeig comment on what he's done so far to familiarise himself with the risks around money laundering given we are Australia's largest pokies operator. Could the CEO comment on who manages our engagements with Austrac, which is currently taking action against the next 2 biggest pokies operators in Australia, Crown & Star. Are we under investigation by Austrac & how strong are our policies to avoid money laundering through our 12,400 pokies?

11. Holly Kramer re-election: Is it correct that Holly was the only Woolworths non-executive director who expressed an interest in representing Woolworths on the Endeavour Group board because of the taint of being associated with Australia's biggest poker machine operator. Why did Holly take a different view to the other Woolworths directors?

12. Why wasn't Anne Brennan appointed to the board with the other 7 directors as part of the Endeavour demerger and having announced the appointment on July 30, why wasn't she then put up for election at today's AGM rather aiming to have the appointment take effect from tomorrow. Which liquor or gaming regulator in particular has caused the delay in approving her appointment? Also, doesn't Anne have a conflict of interest being a Tabcorp director. How can someone sit on the board of two of Australia's 5 biggest listed gambling companies? Is the intention to appoint Anne chair of the audit committee given she has performed that role at multiple ASX-listed companies?

13. It was good to see some more mentions about gambling harm in last week's inaugural Endeavour Group sustainability report but, in my view after watching for 25 years, the Mathiesons have never taken responsible gambling seriously. The main Woolworths tactic was just to wheel out former AFL footballer David Schwartz at AGMs and pay him to give speeches about his past gambling addiction. Is he still on the payroll and in the post-Mathieson era, which individuals will be directly responsible for programs to divert addicted gamblers away from our machines and towards help?

14. We have made a $102m provision for potential payouts to underpaid staff. Could the chair & CEO comment on the idea of Endeavour making a similar provision to compensate addicted gamblers who have contributed to the circa $20b lost on our pokies since ALH was taken over in 2004. Many of these people have had their lives ruined & need assistance getting off welfare. Should we compensate where we've been irresponsible, such as by offering free liquor or excessive access to our large fleet of courtesy buses?

15. Victoria allows the longest pokies operating hours in Australia. If we really are responsible, why do around 50 of our 80 Victorian pokies venues operate the maximum 20 hours a day, usually from 9am until 5am. On what ethical basis do we provide widespread public access at 4am across Melbourne to some of the world's most addictive poker machines? Will the board consider adopting a more responsible policy of closing all company gaming rooms by 3am & not opening any gaming rooms before 9am? If not, why not?

16. When disclosing the outcome of the remuneration report vote and all other resolutions today, will the chair agree to publicly disclose how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholders sentiment on all resolutions and was a disclosure initiative recently adopted by Metcash and Southern Cross Media after their AGM. This request was also made in writing several days ago, with no response.

17. In the interests of full transparency and to share a full record of the discussion on the NED equity plan and all other items of business, will the board agree to continue the Woolworths practice of publishing a full transcript of today's proceedings on our website, along with an archived copy of the webcast? Publishing AGM transcripts has become best practice in recent years and is now done by the likes of ASX, Woolworths, Brambles, Crown Resorts, Westpac, IAG and AGL.

18. Could the CEO comment on whether he agrees that the more responsible a gambling operator is, the less profit they make. Given what's happened at Crown & Star, where licences to operate are under threat because both put profits ahead of responsibility & compliance, is he prepared to manage down the amount of losses we inflict on pokies gamblers in order to be more responsible. What sort of incentive will this LTI grant give him in terms of being a more responsible pokies operator?

19. Treasury Wine Estates has voluntarily moved to annual elections for directors in line with best practice that occurs in the US & UK. Dual listed companies like News Corp, BHP & Rio all do this due to these laws. What does Holly think about this idea & could the chair also comment on whether Endeavour will consider following suit by being more regularly accountable to shareholders. Also, wouldn't it have made more sense to put all directors up for election today, given that none have a shareholder mandate?