Viva Energy Group Ltd. · ASX:VEA
Viva Energy — H1 2021 Earnings Presentation
41 slides from Viva Energy's earnings presentation, Aug 24, 2021
Slide 1: Financial results Half year ended 30 June 2021
Financial results Half year ended 30 June 2021
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation has been prepared by Viva Energy Group presentation. All reasonable care has been taken in preparing upon as an indication or guarantee of future performance. Limited, ACN 626 661 032 (“Company” or “Viva Energy”). the information and assumptions cont
Slide 3: Contents
Contents 4 11 21 24 25 28 GROUP FINANCIAL CAPITAL RECONCILIATION HIGHLIGHTS PERFORMANCE OUTLOOK APPENDIX MANAGEMENT OF FINANCIAL -------------------- -------------------- -------------------- ACCOUNTS SCOTT WYATT JEVAN BOUZO SCOTT WYATT CEO CFO CEO Viva Energy Group Limited 1H2021 Results Presentati
Slide 4: Group Highlights
Group Highlights Scott Wyatt Viva Energy Group Limited 1H2021 Results Presentation 4
Slide 5: 1H2021 Highlights
1H2021 Highlights Strong recovery and performance across all parts of the business Retail growth Commercial recovery Bright outlook despite lockdowns across diverse sectors for Energy Hub • 23% increase in Retail fuel sales volume1 • 7% increase in non-aviation sales volume1 • Long-term Fuel Securit
Slide 6: Material changes to reposition the business
Material changes to reposition the business • Reduces downside risk to refining margins (reduces breakeven) Fuel Security • Refinery expected to benefit from proposed mandatory stock obligations Package1 • Provides capital support for critical infrastructure upgrades • Supports development of a broa
Slide 7: Safety performance
Safety performance Total recordable injury frequency rate1,2 • Workforce successfully protected from exposure to COVID- 19. Vaccination rates approaching 50% • Programs in place to support mental health and wellbeing 5.8 5.8 4.6 3.6 • Increased maintenance and operational activity driving an increas
Slide 8: Geelong Refinery benefiting from increased production and lower crude premia
Geelong Refinery benefiting from increased production and lower crude premia’s Refining production (%) Refining margin cracks1, GRM2 and Crude Premia3 (US$/bbl) FY2018 FY2019 FY2020 1H2021 18.0 10% 14% 25% 17% 16% 12% 3% 4% 13.0 Other Jet 36% 43% 39% 40% Diesel 8.0 Gasoline 38% 36% 36% 3.0 32% Intak
Slide 9: Solid sales volumes performance despite continued lockdowns
Solid sales volumes performance despite continued lockdowns Retail fuel volumes (BL)1 Retail network 3.7 3.7 3.7 Brand 1.3 1.3 1.5 Total 2.2 Alliance 716 - - 716 0.8 0.8 1.8 0.7 0.9 0.7 Liberty Oil 0.4 16 76 92 1.6 1.6 0.3 Convenience3,4 1.5 0.7 0.9 Dealer Owned and 287 217 20 524 FY2018 FY2019 FY20
Slide 10: Successfully delivering on key priorities despite COVID-19 disruption
Successfully delivering on key priorities despite COVID-19 disruption Retail, Fuels & Marketing Refining Cost and capital Geelong Recovery contribution management ‘Energy Hub’ • Continued strength of Retail business • Returned to positive EBITDA (RC) • Returned to positive NPAT (RC) • Progressing Ga
Slide 11: Financial Performance
Financial Performance Jevan Bouzo Viva Energy Group Limited 1H2021 Results Presentation 11
Slide 12: Strong performance across all segments delivering a $125M uplift to EBITDA (RC)
Strong performance across all segments delivering a $125M uplift to EBITDA (RC) 1H20212 1H20202 Retail, All financials in $M Fuels & Change Financial highlights unless noted Marketing Refining Group Group ($M) Gross Profit (RC) 673.3 115.6 788.9 674.5 114.4 • 1H2021 EBITDA (RC) increased by 95% to R
Slide 13: New segmentation provides better transparency of underlying cash performance
New segmentation provides better transparency of underlying cash performance 1H2021 Key segmentation changes to reporting1 Old reporting with 3. Reclass Old 1. Lease 2. SCO New 1. Lease costs: Now captured within relevant segment All financials in $M lease impacts & reporting Costs allocation Report
Slide 14: Retail: Resilient results despite disruption from lockdowns and rising oil price
Retail: Resilient results despite disruption from lockdowns and rising oil price Retail EBITDA (RC)1 ($M) Highlights 1H2020: previous HY2020:reporting previous 332.9 • 1H2021 EBITDA (RC) of $116.7M, broadly in line with 1H2020 Reporting changes Lease Costs (120.1) • Strong sales volume growth in our
Slide 15: Commercial: Strong sales and improved earnings through cost management
Commercial: Strong sales and improved earnings through cost management Commercial EBITDA (RC)1 ($M) Highlights 1H2020: HY2020:previous previousreporting reporting 135.7 • 1H2021 EBITDA (RC) of $105.9M, up $15.2M from the 1H2020 Reporting changes • Solid sales growth in sectors other than Aviation an
Slide 16: Refining: Returning to profit after a difficult 2020
Refining: Returning to profit after a difficult 2020 Refining EBITDA (RC)1 ($M) Highlights Reporting changes 1H2020: HY2020:previous previousreporting reporting (49.4) • 1H2021 EBITDA (RC) of $43.8M, up $110.6M from 1H2020 Supply and Corporate costs (17.4)(49.4) • 1H2021 Geelong Refining Margin of U
Slide 17: Strong underlying free cash flow supports resumption of dividend
Strong underlying free cash flow supports resumption of dividend Net cash flow ($M) (108.2) (60.8) (87.4) 480.9 (48.3) 1.7 (3.1) (25.1) 224.5 (47.8) 177.9 149.7 101.9 Profit before Changes in Repayment of Interest on Operating FCF Capex Other Net FCF before Finance Costs Income tax Net FCF available
Slide 18: Group capex in 2021 remains in-line with prior guidance
Group capex in 2021 remains in-line with prior guidance Capital Expenditure Profile ($M) FY2021 $M 1H2021 guidance Retail, Fuels & Marketing • Overall capital expenditure excluding major maintenance Sustaining 19.7 expected to be in line with historical average spend Growth 1.1 • Deferred capital ex
Slide 19: Determined a dividend of 4.1cps
Determined a dividend of 4.1cps, supported by continued strong performance in our Retail, Fuels and Marketing segment 1H2021 Dividend $M • Revised policy is as follows: Group Retail, Fuels Refining • The Directors intend to target a dividend payout ratio of between & Marketing 50% and 70% of Retail,
Slide 20: Strengthened balance sheet with capacity for capital management and investment
Strengthened balance sheet with capacity for capital management and investment Change in Cash / (Net Debt) ($M) 0.34x 31 December 2020 Net Debt (104.2) Net Debt:LTM EBITDA (RC)1 Capital management • Company has committed to returning $140M to shareholders through Free Cash Flow 144.0 a combination o
Slide 21: Outlook
Outlook Scott Wyatt Viva Energy Group Limited 1H2021 Results Presentation 21
Slide 22: Solid progress on our recovery plan
Solid progress on our recovery plan Area Priority Timeframe At end June 2021 Alliance maintained retail fuel market-share despite COVID- Retail • Stronger Alliance network performance 19 disruption • Development of Liberty Convenience retail channel ongoing Added 3 Liberty Convenience sites to n
Slide 23: The business is positioned to manage near-term impacts and risks of COVID-19
The business is positioned to manage near-term impacts and risks of COVID-19 2H2021 outlook • Capital city and state lockdowns look likely to continue through to the end of the year • Retail fuel volumes will continue to be suppressed but expected to recover quickly once restrictions ease • Alliance
Slide 24: Appendix
Appendix Viva Energy Group Limited 1H2021 Results Presentation 24
Slide 25: Capital management
Capital management Viva Energy Group Limited 1H2021 Results Presentation 25
Slide 26: Return of proceeds of $0.062 per share and share consolidation of 0.97
Return of proceeds of $0.062 per share and share consolidation of 0.97 shares for every one share held (i.e. 100 shares would become 97 shares), subject to shareholder approval Cash Return amount: $0.062 per share Return of capital – Components shareholder approved required 6.2 cents per share Tax i
Slide 27: Capital management – key dates
Capital management – key dates Item Date Notice of meeting lodged with ASX 24 August 2021 Following implementation of the capital reduction and On-market buy-back expected to be initiated commencement of trading in consolidated shares Shareholder meeting and potential approval of capital reduction a
Slide 28: Reconciliation of financial accounts
Reconciliation of financial accounts Viva Energy Group Limited 1H2021 Results Presentation 28
Slide 29: Reporting changes
Reporting changes Simplified reporting and better alignment of segment profitability with cashflow Segment level changes To provide improved transparency of underlying performance, The Group has revised the way segment results are reported. These changes include the recording of lease expense within
Slide 30: Explanation of adjustments
Explanation of adjustments Adjustments to segments 1. Lease adjustments Group level reporting changes a. Lease costs previously excluded from EBITDA (RC) under AASB16 are now 1. Underlying NPAT (RC) will be reported for each operating segment separately, incorporated into relevant segments with the
Slide 31: 1H2020 segment and group level changes
1H2020 segment and group level changes1 1 2 3 4 Old reported Lease Wholesale re- FX & New reported Retail, Fuels & segments adjustments SCO allocation classification derivatives segments Marketing g Refining g Retail 332.9 (120.1) a (70.8) d (23.6) e - 118.4 118.4 - Commercial 135.7 (2.5) a (66.0) d
Slide 32: 1H2021 segment and group level changes
1H2021 segment and group level changes1 1 2 3 4 Old reported Lease Wholesale re- FX & New reported Retail, Fuels & segments adjustments SCO allocation classification derivatives segments Marketing g Refining g Retail 347.1 (130.0) a (74.0) d (26.4) e - 116.7 116.7 - Commercial 137.4 (0.7) a (57.1) d
Slide 33: Proforma financials
Proforma financials Old reporting New reporting Old reporting New reporting Group EBITDA (RC) A$M A$M Refinery EBITDA (RC) A$M A$M 2018 774.6 531.5 2018 124.5 99.0 2019 644.6 392.9 2019 117.0 79.0 2020 519.5 244.6 2020 (95.1) (127.9) 1H2020 269.3 131.7 1H2020 (49.4) (66.8) 1H2021 403.2 256.3 1H2021
Slide 34: Additional information
Additional information Viva Energy Group Limited 1H2021 Results Presentation 34
Slide 35: Retail fuel margins
Retail fuel margins Industry retail fuel margins remain resilient despite strengthening oil price and softer diesel margins Industry fuel margin1 (cpl, ex-GST) 16.5 2014-2018 average fuel margin: 12.2cpl 12.6 12.9 12.2 12.5 11.7 11.9 2010-2013 average fuel margin: 9.0cpl 11.6 11.3 9.8 9.4 8.7 8.1 CY
Slide 36: The FSP provides certainty for continued investment at Geelong Refinery
The FSP provides certainty for continued investment at Geelong Refinery whilst minimising downside volatility of refining margins 1. Fuel Services Security 2. Minimum stockholding 3. Low-Sulphur Refinery Payment (FSSP) obligation upgrade • Payments commence from 1 July 2021 and are • Federal Governm
Slide 37: The FSSP would have provided full support for ~20% of the time over the last 10 years
The FSSP would have provided full support for ~20% of the time over the last 10 years Historical actual GRM and FSSP mechanism (A$/bbl) Mechanism 20.0 • The chart on the left provides an illustration of how the cap and collar mechanism is intended to operate 18.0 • It charts Geelong’s actual histori
Slide 38: Refinery – illustrative sensitivity analysis
Refinery – illustrative sensitivity analysis Refinery sensitivity analysis Pro forma EBITDA (RC) Pro forma NPAT Variable Increase/Decrease impact A$M (RC) impact A$M • For the purposes of tracking the financial performance of the Geelong +/- US$1.0 per GRM +27.7/(27.7) +19.4/(19.4) Refinery, a sensi
Slide 39: Refinery – margin analysis and key drivers
Refinery – margin analysis and key drivers Metric FY18 FY19 FY20 1H20 1H21 A: A$/US$ FX 0.75 0.69 0.69 0.65 0.77 B: Crude and feedstock intake mbbls 40.1 42.0 34.8 18.4 21.4 C: Geelong Refining Margin US$/bbl 7.4 6.6 3.1 2.9 6.1 D: Geelong Refining Margin = C / A A$/bbl 9.9 9.5 4.4 4.4 7.9 E: Geelon
Slide 40: Glossary
Glossary Replacement Cost (“RC”) EBITDA (RC) Historical Cost (“HC”) Geelong Refining Margin Viva Energy reports its performance Profit before interest, tax, depreciation Calculated in accordance with The Geelong Refining Margin is a on a “replacement cost” (RC) basis. and amortisation adjusted to re
Slide 41: Viva Energy
VIVA EnergyAustralia