Viva Energy Group Ltd. · ASX:VEA
Viva Energy — Investor Presentation (November 2018)
60 slides from Viva Energy's investor presentation, Nov 22, 2018
Slide 1: Analyst Management Presentation
For personal use only 22 November 2018 Analyst Management Presentation Viva Energy’s presentation to analysts, delivered 22 November 2018, is attached. Further enquiries: Media Enquiries Investor Relations T: +61 438 954 729 Karla Wynne Head of Investor Relations and Strategy T: +613 8823 3479 E: in
Slide 2: About Viva Energy
For personal use only About Viva Energy Viva Energy (ASX: VEA) is one of Australia’s leading energy companies and supplies approximately a quarter of the country’s liquid fuel requirements. It is the exclusive supplier of high quality Shell fuels and lubricants in Australia through an extensive netw
Slide 3: Viva Energy Australia Analyst Presentation
Viva Energy Australia For personal use only Analyst Presentation 22 November 2018
Slide 4: Presenters
Presenters For personal use only Scott Wyatt Jevan Bouzo Chief Executive Officer Chief Financial Officer Thys Heyns Denis Urtizberea General Manager General Manager Geelong Refinery Commercial 2
Slide 5: Introduction to Viva Energy
Introduction to Viva Energy For personal use only
Slide 6: A significantly transformed established player
A significantly transformed established player For personal use only Entered into 10 year brand license agreement with Shell’s involvement Shell in Australia began - Acquisition of Shell bulk fuel facilities Coles Express Aviation Australia were commissioned Alliance by Shell Transport established a
Slide 7: Who is Viva Energy?
Who is Viva Energy? For personal use only A leading integrated downstream petroleum company in Australia of the Australian downstream petroleum market 24% (1) 1,215(2) service station sites nationwide in Viva Energy’s network 44 fuel import terminals and depots(3) nationally to support operations 52
Slide 8: Viva Energy ambition
Viva Energy ambition For personal use only To be one of Australia's most respected energy companies 1 Safe and reliable operations 2 Respect the environment and the communities where we operate 3 Expand and grow our markets to retain leading position 4 Premium offers and solutions for customers 5 Un
Slide 9: Commitment to Goal Zero
Commitment to Goal Zero For personal use only Personal Safety Process Safety Lost time injury frequency rate (LTIF) 1 Loss of containment (>1,000 KG) 1.5 5 1.0 4 4 3 0.4 0.4 GOAL ZERO 2015 2016 2017 1H2018 2015 2016 2017 1H2018 We believe every incident is preventable and we are committed to pursuin
Slide 10: Viva Energy Snapshot
Viva Energy Snapshot For personal use only The way we manage our business Retail, Fuels and Marketing Refining Supply, Corporate and Overheads Investments Retail Commercial Geelong Supply & Distribution Aviation Fuel Alliance Marine Agent Gas Terminals, aviation Joint Liberty/Westside Ventures, pipe
Slide 11: Viva Energy business overview
Viva Energy business overview For personal use only RETAIL, FUELS AND MARKETING REFINING SUPPLY, CORPORATE AND OVERHEADS (RETAIL & COMMERCIAL) Viva Energy fuel volumes sold by product (ML) Gross Profit (RC) by Segment (2017A) Viva Energy Group Underlying EBITDA 14, 748 14, 557 14, 151 $m Replacement
Slide 12: Strategic National Retail Network and Infrastructure
Strategic National Retail Network and Infrastructure For personal use only Highly integrated manufacturing, supply and distribution assets developed over 110 years Darwin Viva/ Cocos Islands Partner Branded Viva Energy Network Distribution Controlled1 Wholesale2 Total Alliance 666 45 711 19 Viva Ene
Slide 13: Business update
For personal use only Business update
Slide 14: Guidance update
Guidance update For personal use only Prospectus2 Updated Underlying Refining guidance update for FY2018 primarily due to $m Underlying EBITDA EBITDA (RC) Change 1 (RC) forecast FY2018 guidance FY2018 lower refining margins1 Retail 618 608 (10) Group volumes 1.0%-1.5% lower than Prospectus 2 primari
Slide 15: Proforma group financials
Proforma group financials For personal use only Underlying EBITDA $m Net Profit After Tax $m Historical Cost (“HC”) 483 394 626 207 212 355 Replacement Cost (“RC”) 634 361 6051 535 543 3241 455 280 244 255 323 176 FY2015A FY2016A FY2017A FY2018 FY2018F 1H2019F FY2015A FY2016A FY2018 FY2018F 1H2019F
Slide 16: Balance sheet and capital allocation
Balance sheet and capital allocation For personal use only Strong balance sheet provides financial flexibility Balance sheet Dividend policy3 Investments (equity accounted) Dividend Policy of $237.5m 60% Net debt (30 June for 12 month period to 2018)(1) 30 June 2019 50% 50% 38% Equity interest Equit
Slide 17: Industry Overview
For personal use only Industry Overview
Slide 18: Industry value chain
Industry value chain For personal use only Viva Energy participates across all stages of the value chain Procurement Domestic Primary Storage Secondary Fuels Marketing / Supply Refining Distribution Distribution Wholesale Retail sites Pipelines Pipelines Domestic and Distributors imported crude oil
Slide 19: Snapshot of the Australian downstream sector
Snapshot of the Australian downstream sector For personal use only Australian refined petroleum Australian refined petroleum Australian refined petroleum demand by product (2017) demand by sector (2017) demand by product (2005-2017) 2% 2% 2% 1,200 5% 4% Road 38% Diesel (Gasoil) 10% 7% Aviation 51% 1
Slide 20: Evolving fuels and convenience market
Evolving fuels and convenience market For personal use only Industry retail gross margins Australian Vehicles Registered by Fuel Type1 18 Total Distance Increased vehicle ownership Travelled2 (bn km) 232.5 CAGR: 2% 249.5 16 1 has offset efficiency and impact of EVs 14 (mm) 16.7 million CAGR: 3% 18.4
Slide 21: Key Australian market participants
Key Australian market participants For personal use only Viva Energy participates across the downstream value chain Integrated refiner / marketers Importers Retailers Own and operate refining assets National supply and distribution Import and buy domestically Supply agreements networks Import / refi
Slide 22: Retail, Fuels and Marketing: Retail
Retail, Fuels and Marketing For personal use only Retail
Slide 23: A leading retail network with strong brand recognition
A leading retail network with strong brand recognition For personal use only Strategically located network of 1,215 service stations developed over 110 years Viva Energy Service Station Northern Territory Distribution by State TAS NT SA 2% 2% 19 7% Queensland WA Western 13% NSW Australia 204 33% Sou
Slide 24: Coles Alliance
Coles Alliance For personal use only Retail alliance with one of the country’s largest supermarket operators Coles has been the retail operator of Viva 1 Energy’s prime service station network Collaboration since 2003 High quality network with strong brands, 2 quality fuel and convenience offering a
Slide 25: Retail Agent
Retail Agent For personal use only Emerging operating model to grow outside Alliance and access full value chain 1 Fills network gaps and access growth Retail upside to the core Alliance platform Agent - Network development - Short term commission based Participate in more of the retail value chain,
Slide 26: Liberty Oil (50% equity investment)
Liberty Oil (50% equity investment) For personal use only Growth in two distinctly separate businesses Wholesale and Commercial Liberty Retail Network 1 Independent fuel retailer and wholesale distributor 1 Growing retail network of prime sites with fresh retail offerings that focus on convenience w
Slide 27: Westside (50% equity investment)
Westside (50% equity investment) For personal use only Westside Petroleum Overview Rationale for strategic fit Retail business, supporting Viva’s strategy of growing in Retail Fuel and 1 Network of 53 service stations located mainly in New South Wales 1 Convenience and a small number in Victoria Str
Slide 28: Retail
Retail For personal use only Overview Retail Underlying EBITDA (RC) $m • FY2018 Underlying EBITDA (RC) expected to be lower than prospectus forecast for Retail by up to $10m1 • Volumes have stabilized, however marginal growth assumed into the end of FY2018 has not materialised Period on • Continued
Slide 29: Retail, Fuels and Marketing: Commercial
Retail, Fuels and Marketing For personal use only Commercial
Slide 30: Diversified commercial and specialty business
Diversified commercial and specialty business For personal use only AVIAT I O N MARINE RESOURCES TRANSPORT S P E C I A LT I E S - 37% market share of - 48% market share of - Major distributor of fuel and - Bulk diesel to an BITUMEN Australian aviation1 marine2 lubricant products extensive blue-chip
Slide 31: Aviation
Aviation For personal use only Leading market share underpinned by national airport footprint Coco Darwin Aviation Gross Profit Islands 1 Superior into-plane refuelling capabilities split (2017A) Others International partnership with Vitol Aviation General 3% 2 Aviation 25% 39% Brisbane Domestic 33%
Slide 32: Marine
Marine For personal use only 48%1 market share that leverages unique access in Sydney and Melbourne Melbourne The Geelong Refinery is the only supplier of Refuelling barge facilities shipping primarily marine fuel oil into Melbourne to lines and coastal ferries 1 Unique, leading infrastructure posit
Slide 33: Resources
Resources For personal use only Reliable supply through national infrastructure and supply chain 1 Major distributor of fuel and lubricant products to mining and industrial customers throughout Australia Proven technical services offering to enhance 2 customer performance and efficiency Robust busin
Slide 34: Transport
Transport For personal use only Integrated customer home base and on-road refuelling offer 1 Large and small deliveries to customer owned refueling facilities Access to nationwide network of Shell and Liberty branded 2 truck stops and retail service stations across the country Provide customers with
Slide 35: Specialties
Specialties For personal use only Diverse specialty product suite manufacturing capability at Geelong Refinery Bitumen Lubricants Solvents • Supply chain efficiencies and greater control over • Exclusive macro distributor of Shell lubricants and • 85% of product supply received from Geelong Refinery
Slide 36: Commercial
Commercial For personal use only Overview Commercial Underlying EBITDA (RC) $m • Reaffirm FY2018 prospectus forecast for Commercial1 • Sales volumes remain robust Period on 12% -1% period growth • Commissioned new Jet tank to grow Cairns Jet market position • Commissioned new bitumen import facility
Slide 37: Refining
For personal use only Refining
Slide 38: Australian refining market
Australian refining market For personal use only Australian refineries1 Australia is a net importer of refined Capacity products (2017A)1 Refinery Owner Location NCI2 (bbls /day) Geelong Viva Energy Victoria 120,000 9.44 Darwin Domestically Altona ExxonMobil Victoria 90,000 8.98 Refined Product 38%
Slide 39: Strategically positioned and profitable refinery
Strategically positioned and profitable refinery For personal use only The Geelong Refinery is embedded into the Victorian supply chain Darwin Geelong Refinery Supplied the equivalent of approximately 50% of Victoria’s demand in 2017 Melbourne JUHI Somerton Somerton Pipeline Brisbane Newport termina
Slide 40: Flexible operations
Flexible operations For personal use only Geelong Refinery key metrics Flexibility of crude Intake (2017)1 Operational availability (%) 94% 93% 1 120 kbbls/d capacity Local Crude and 36% 89% Condensate Other 86% 64% 2 9.44 Nelson Complexity index FY2015A FY2016A FY2017A 1H2018A White barrel producti
Slide 41: Geelong refinery process flow
Geelong refinery process flow For personal use only Illustrative Geelong Refinery process flow Refinery 2017 Output Jetty Crude Inflow Product Outflow Sydney 83% 16% Geelong Refinery receives crude oil and finished product, and ships refined product, Other 3% from four berths at the Geelong Port Ade
Slide 42: Geelong Gross Refining Margin
Geelong Gross Refining Margin For personal use only FY2015A-FY2017A Avg. Geelong Gross Refining Gross Refining Margin2 Margin (energy costs subtracted) 9.0 FY2015A-FY2017A Avg. Singapore FCC Margin1 5.5 Singapore Product Slate/ Freight Benefit Local Crude/ Geelong Gross Complex Gross Premia Condensa
Slide 43: Geelong Gross Refining Margin
Geelong Gross Refining Margin For personal use only Geelong Gross Refining Margin vs Singapore FCC Geelong Gross Refining Margin premium / (discount) to Singapore FCC Margin across the Period Margin (2013 to 2017) <US$0, #3 Months >=US$6, >=US$0, #7 Months #4 Months • On a monthly average basis the
Slide 44: Refining Margin: the Market
Refining Margin: the Market For personal use only Gasoline and Diesel Cracks1 (US$/bbl) Gasoline Crack Diesel Crack 25 • The gasoline and diesel crack refers to the difference between the regional quoted crude price and regional quoted ULP 92 gasoline or 20 diesel price, providing an approximate mar
Slide 45: Reliability of operations
Reliability of operations For personal use only Geelong refinery has a multi year program to improve reliability • Increased maximum usable draft at Geelong import facility 1 Crude logistics debottlenecking • First ever trial of crude lightering in Port Philip Bay • Potential to open up range of cru
Slide 46: Fuel specification changes
Fuel specification changes For personal use only Marine fuel sulphur specification change Petrol specification change • Implementation 1st January 2020 • Ministerial forum established in 2015 to coordinate Federal Government approach to reducing • IMO approved changes requiring ships to use fuel oil
Slide 47: Refining
Refining For personal use only Refining Underlying EBITDA (RC) Overview Geelong • FY2018 Refining EBITDA (RC) guidance revised to $150m (from $217m1) Refining Margin 11.8 7.9 10.2 8.3 8.0 9.7 primarily driven by lower refining margins and power outage in August (US$/bbl) • Geelong Refining Margin fo
Slide 48: Supply, Corporate and Overheads
Supply, Corporate and For personal use only Overheads
Slide 49: Strategic nationwide infrastructure
Strategic nationwide infrastructure For personal use only Highly integrated network of terminals, pipelines and oil refinery Darwin Cocos Islands Weipa 2017A Supply, Corporate and Overheads Underlying EBITDA (RC) ($561m) Cairns Broome Supply, Corporate and Overheads comprises Townsville
Slide 50: Viva Energy procurement operation
Viva Energy procurement operation For personal use only Advantages Viva Energy’s procurement team, based in Singapore, Geelong and Melbourne is responsible for sourcing of crude and refined product 1 One of the world's largest independent energy • Long-term security of supply of crude and products t
Slide 51: Supply, Corporate & Overheads
Supply, Corporate & Overheads For personal use only Accumulation of small gains across all segments driving performance Focus areas Supply Costs Costs associated with delivering product to terminals and coastal shipping movements • Continue to focus on cost discipline throughout the business • Maxim
Slide 52: Supply, Corporate and Overheads
Supply, Corporate and Overheads For personal use only Corporate and Overheads Supply Chain, Corporate and Overheads Underlying EBITDA • Supply Chain, Corporate and Overheads ahead of Prospectus Underlying EBITDA (RC) forecast by approx. (RC) $m $15m1 due to management of costs right across the busin
Slide 53: Appendix
For personal use only Appendix
Slide 54: Executive Leadership Team
Executive Leadership Team For personal use only Daniel Ridgway Scott Wyatt Jevan Bouzo General Manager, Retail Chief Executive Officer Chief Financial Officer Chief Operating Officer (from January 2019) Thys Heyns Denis Urtizberea Jodie Haydon General Manager, General Manager, General Manager, Geelo
Slide 55: Board of Directors
Board of Directors For personal use only Robert Hill Arnoud De Meyer Jane McAloon Sarah Ryan Dat Duong Hui Meng Kho Scott Wyatt Chairman Non-Executive Non-Executive Chief Executive Officer Director Director Independent Independent Independent Independent Non-executive Non-executive Non-executive Non
Slide 56: Our people and our culture
Our people and our culture For personal use only Number of Full Time Employees1 Employee Split by Business Units Gender Diversity The Viva Energy Culture 156 Centered on a high performance culture of being “driven by people” 1600 34% 81 380 Attract and retain a diverse range 1200 of employees with t
Slide 57: Refinery – margin analysis and key drivers
Refinery – margin analysis and key drivers For personal use only Metric FY2015A FY2016A FY2017A 3 Year Avg. A: AUD/USD FX 0.75 0.74 0.77 0.75 B: Crude and feedstock intake mmbbls 37.8 39.9 40.8 39.4 C: Refining Margin US$/bbl 11.8 7.9 10.2 10.0 D: Refining Margin = C / A A$/bbl 15.8 10.6 13.3 13.2 E
Slide 58: EBITDA (HC, RC and Underlying)
EBITDA (HC, RC and Underlying) For personal use only Historical Cost (“HC”) Net inventory gain/(loss) Represents the difference between the historical cost basis and Calculated in accordance with IFRS the replacement cost basis Cost of goods sold at the actual prices paid by the business using a fir
Slide 59: Important notice and disclaimer
Important notice and disclaimer For personal use only This presentation has been prepared by Viva Energy other financial product. The distribution of this prospective financial information contained within this representations contained in this presentation and Group Limited, ACN 626 661 032 (“Viva
Slide 60: Thank you
For personal use only Thank you
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