Viva Energy Group Ltd. · ASX:VEA
Viva Energy — FY2018 Earnings Presentation
50 slides from Viva Energy's earnings presentation, Feb 27, 2019
Slide 1: 2018 Full Year Results
2018 Full Year Results 27 February 2019
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation has been prepared by Viva Energy This presentation has been prepared without taking information may materially change in the future. of any information, statements or representations Group Limited, ACN 626 661 032 (“Company” or into account the inves
Slide 3: Agenda
Agenda Results highlights and business update Scott Wyatt (CEO) Financial results Jevan Bouzo (CFO) Market update and outlook Scott Wyatt (CEO) 2018 Full Year Result 3
Slide 4: Results highlights and business update
Results highlights and business update Scott Wyatt (CEO) 2018 Full Year Result 4
Slide 5: Commitment to Goal Zero
Commitment to Goal Zero Personal Safety Process Safety Lost time injury frequency rate (LTIF)1 Loss of containment (>1,000 KG) 1.5 7 5 0.8 4 3 0.4 0.4 FY2015A FY2016A FY2017A FY2018A FY2015A FY2016A FY2017A FY2018A 2018 overview • In 2H2018, Geelong Refinery experienced its longest period free of re
Slide 6: Key financial results for 2018
Key financial results for 2018 FY2018 Underlying EBITDA (RC) $m Retail Commercial 608.8 323.8 $293m 15.1¢ Underlying NPAT (RC)1 Underlying Basic Earnings Per Total Retail, Fuels & Marketing 932.6 Share (RC) Refining 124.5 Supply, Corporate & Overheads (528.2) Group Underlying EBITDA (RC) 528.9 $0.2m
Slide 7: 2018 Snapshot
2018 Snapshot Total volumes sold by product (ML) Group Underlying EBITDA (RC) 14,748 14,557 14,151 14,046 700 634 2,975 3,196 3,350 3,345 600 529 535 1,179 1,118 455 1,030 1,082 500 276 15 125 400 143 326 $m 6,200 6,181 6,231 6,334 300 200 358 404 404 1,294 1,233 312 358 361 290 1,034 915 100 209 31
Slide 8: 2018 Snapshot
2018 Snapshot Retail, Fuels and Marketing Underlying EBITDA (RC) for FY2018 was $932.6m in line with guidance provided in November 2018 Retail, Fuels and 90 retail sites have been added to the network1 in the nine months since 31 March 2018, including the acquisition of 50% interest in 1 Marketi
Slide 9: Refining performance impacted by regional refining margins
Refining performance impacted by regional refining margins Geelong Refining Margin vs Singapore FCC Margin2 (2013 to 2018)3 16 • On a monthly average basis the Geelong Refinery has 14 achieved approximately a US$4.24 per barrel premium to the benchmark over the six year period to end 2018 before 12
Slide 10: Realignment of Alliance terms provides a platform for growth
Realignment of Alliance terms provides a platform for growth • Viva Energy and Coles Express extend the Alliance to 2029 under new arrangements which support future growth and cement the network as Australia’s leading fuel and convenience business • Viva Energy to take responsibility for retail fuel
Slide 11: A reinvigorated retail platform primed for growth
A reinvigorated retail platform primed for growth 2018 Full Year Result 11
Slide 12: Multi channel retail growth strategy
Multi channel retail growth strategy Dealer Company owned/ Total Controlled1 Branded Strategic priorities Wholesale2 Alliance including company controlled 701 196 8973 • Continue to grow company controlled network with renewed focus on Alliance network expansion with partner Coles Dealer owned/brand
Slide 13: Expansion of the retail strategy through acquisitions
Expansion of the retail strategy through acquisitions Westside Petroleum Acquisition (50% equity interest) 1. Network of 56 service stations located mainly in New South Wales 1 and a small number in Victoria 2. Strong growth pipeline focused on truck friendly or dual canopy sites 2 located on major
Slide 14: Expansion of the retail strategy through acquisitions
Expansion of the retail strategy through acquisitions Acquisition of remaining 50% of Liberty Oil’s 50% interest in Retail Joint Venture, Liberty Oil wholesale business Convenience 1 Independent fuel retailer and wholesale distributor, operated as a Significant retail network with a contemporary ret
Slide 15: Financial results
Financial results Jevan Bouzo (CFO) 2018 Full Year Result 15
Slide 16: 2018 Financial Highlights
2018 Financial Highlights 2018 2017 2018 2017 $m $m $m $m Volume (ML) 14,045.5 14,151.4 Working Capital 268.0 306.0 Net Debt 0.2 (74.6) Underlying EBITDA (RC) Net Working Capital 268.2 231.4 Retail, Fuels & Marketing 932.6 918.8 Long Term Assets Retail 608.8 607.3 Property, Plant & Equipment 1,471.3
Slide 17: Proforma group financials
Proforma group financials Underlying EBITDA $m Underlying Net Profit (RC) After Tax $m Historical Cost (“HC”) 483 394 626 435 207 212 355 228 Replacement 400 Cost (“RC”) 350 700 634 600 529 300 535 455 250 500 276 125 $m 400 200 326 143 404 $m 358 361 300 312 150 209 293 244 255 200 358 404 100 312
Slide 18: 2018 EBITDA Bridge
2018 EBITDA Bridge 700.0 Supply, Corporate & Overheads 8.7 13.8 • Efficiency gains, overhead 600.0 improvements, and property cost improvements ( 151.6 ) 500.0 32.4 ( 93.6 ) A$ million Refining 400.0 • Lower regional refining margins • Lower operational Availability 625.6 634.3 300.0 Retail, Fuels a
Slide 19: 2018 Cash Flow Bridge
2018 Cash Flow Bridge Non-cash items • Removes non-cash items in EBITDA (HC) such as share of 700.0 profit from associates of $63.5m, gain from sale of PP&E of $10.2m and unrealised gains on derivatives used for hedging of $23.9m Taxation adjustments 600.0 (95.5) 145.6 • Payment of FY17 income Clyde
Slide 20: 2018 Significant Items
2018 Significant Items Significant one off items during the period 2018 $m 1. $20.7 million in recoveries of capital expenditure incurred in relation Statutory profit after tax 579.6 to upgrading the Shell Brand and visual identity of retail service Add: Significant one off items 6.3 stations Add: N
Slide 21: Retail Overview
Retail Overview 2018 overview Retail Underlying EBITDA (RC) $m • FY2018 Underlying EBITDA (RC) of $608.8 million in line with guidance of $607.6 million provided in November 2018 Period on period growth 9% 12% 0% • Fuel sales slowed on weaker market conditions impacted by rising oil prices, and lowe
Slide 22: Commercial Overview
Commercial Overview 2018 overview Commercial Underlying EBITDA (RC) $m • FY2018 Underlying EBITDA (RC) of $323.8 million ahead of Prospectus forecast of Period on period 12% -1% 4% $318.3 million growth • Recontracted and extended a significant number of customer contracts, and secured new business
Slide 23: Refining Overview
Refining Overview 2018 overview Refining Underlying EBITDA (RC) $m • FY2018 Refining Underlying EBITDA (RC) of $124.5 million, impacted by lower regional refining margins and lower operational availability Geelong • Geelong Refining Margin US$7.4/BBL compared with Prospectus forecast of Refining Mar
Slide 24: Refining Operational Performance
Refining Operational Performance Geelong Refinery output production split1 Operational availability (%) 93% 94% 89% 88% 4% 3% 3% 3% 39% 38% 42% 41% 16% 14% 15% 17% FY2015A FY2016A FY2017A FY2018A Refinery intake (mmbbls) 40.0 41.0 40.1 36% 38.0 35% 35% 34% 4% 4% 5% 6% 1% 1% 1% 1% FY2015A FY2016A FY2
Slide 25: Refining EBITDA bridge
Refining EBITDA bridge Refining performance impacted by external factors including lower refining margins 300.0 Refining margins • Weakness in regional 250.0 refining margin • External disruptions to Volume operations • GRM US$2.77/bbl lower • Weather event in 1H18 200.0 (144.8) than FY17 • Power ou
Slide 26: Supply, Corporate and Overheads Overview
Supply, Corporate and Overheads Overview 2018 overview Supply, Corporate & Overheads Underlying EBITDA (RC) $m • SC&O Underlying EBITDA (RC) of ($528.2m), ahead of Prospectus by $19.3m and ahead of guidance provided in November 2018 • Various significant one-off savings were achieved including: FY20
Slide 27: Balance Sheet
Balance Sheet Strong balance sheet 31 Dec 31 Dec Difference 2018 2017 $m $m $m 1 1. Net cash (31 Dec 2018) of $0.2m Summary Balance Sheet 2 2. US$700mm Facility available to fund fluctuations in working capital. This Working Capital 268.0 306.0 (38.0) facility matures in April 2020, however the comp
Slide 28: Capital expenditure
Capital expenditure CDU3 Turnaround and RCCU Turnaround and furnace replacement new crude tank • Next CDU3 T/O CDU4/Platformer 3 expected in FY2024 FY2018 Turnaround • Next RCCU T/O expected in FY2020 $m • Next CDU T/O expected in FY2021 Capital Expenditure 309 New crude tank Retail, Fuels & Marketi
Slide 29: Dividend policy
Dividend policy Strong cash flow and balance sheet provides financial flexibility 2H2018A $m • Inaugural dividend determined for the six months ended 31 December 2018 of 4.8 cents per share, fully franked Underlying Net Profit After Tax (RC) 163.6 Add Lease straight lining 11.8 • Represents a payout
Slide 30: 2019 Guidance
2019 Guidance Scott Wyatt (CEO) 2018 Full Year Result 30
Slide 31: Strategic priorities
Strategic priorities 1 Safe and reliable operations Maintain strong focus on safety and cost efficiency across all business segments 2 Grow the Retail Alliance Leverage renewed Alliance agreement to improve fuel and convenience offers to grow fuel volumes to over 75 ML per week as marketing programs
Slide 32: 2019 Guidance
2019 Guidance Retail • Reaffirm 1H2019 Prospectus forecast Underlying EBITDA (RC) for Retail of $321.9m and expect 2H2019 to be in line with 1H2019 Commercial • Commercial expected to be in line with 1H2019 Prospectus forecast Underlying EBITDA (RC) of $164.5m. Commercial markets remain competitive
Slide 33: 2019 Guidance
2019 Guidance Refining • As disclosed in the Geelong Refining Margin (GRM) update released to the ASX today, the actual GRM for January 2019 was US$4.0/bbl. Refining margins in 2019 to date have continued to perform below the Prospectus forecast for 1H2019 of US$9.7/bbl • In the absence of a signifi
Slide 34: Capital expenditure and investment in growth
Capital expenditure and investment in growth 1H2019 Prospectus capex guidance maintained FY19 Investment in growth $m Retail • Coles Alliance reset $137.0 million 1H2019 capital expenditure • Liberty Oil Wholesale acquisition and establishment of Retail, Fuels & Marketing 37.2 Liberty Oil Convenienc
Slide 35: Q&A
Q&A 2018 Full Year Result 35
Slide 36: Appendix
Appendix 2018 Full Year Result 36
Slide 37: AASB 16: New lease accounting standard
AASB 16: New lease accounting standard • Viva Energy is well advanced for full implementation of AASB 16 for the half year ending 30 June 2019. The first full year impacted by AASB 16 will be the year ended 31 December 2019 • Under AASB 16 the majority of leases will be recognised on balance sheet a
Slide 38: Tax update
Tax update Income tax benefits • Listing on the ASX and the consequent election to form a new tax consolidated group resulted in an increase in the tax cost base of group assets • For the purposes of the Prospectus, the impact was estimated to be a one-off deferred tax benefit of $226.1 million. Fur
Slide 39: Strategic National Retail Network and Infrastructure
Strategic National Retail Network and Infrastructure Highly integrated manufacturing, supply and distribution assets developed over 110 years Dealer Darwin Company owned/ Cocos Islands Total Controlled1 Branded wholesale2 701 196 8973 18 444 258 302 213 494 7 56 Brisbane 156 Total 794 461 1,255 96 4
Slide 40: Viva Energy Terminal Network
Viva Energy Terminal Network Owned Terminal storage capacity (ML)1 Geelong Refinery 274.0 Birkenhead2 63.6 Newport 113.8 Port Lincoln 15.7 Total Victoria 387.8 Total South Australia 79.3 Clyde 274.7 Gore Bay 65.9 Devonport 23.8 Total NSW 340.6 Total Tasmania 23.8 Gladstone2 40.2 Pinkenba (excl solve
Slide 41: Refinery – illustrative sensitivity analysis
Refinery – illustrative sensitivity analysis • As disclosed in the Geelong Refining Margin Update lodged with the ASX on 25 January 2019, for the purposes of tracking the financial performance of the Geelong Refinery, a sensitivity table is provided below to illustrate the impact on 1H2019 Underlyin
Slide 42: Refinery – margin analysis and key drivers
Refinery – margin analysis and key drivers Metric FY2015A FY2016A FY2017A FY2018A 4 Year Average A: A$/US$ FX 0.75 0.74 0.77 0.75 0.75 B: Crude and feedstock intake mbbls 37.8 39.9 40.8 40.1 39.7 C: Geelong Refining Margin US$/bbl 11.8 7.9 10.2 7.4 9.3 D: Geelong Refining Margin = C / A A$/bbl 15.8
Slide 43: Refining Margin: the Market
Refining Margin: the Market Gasoline and Diesel Cracks1 (US$/bbl) Gasoline Crack Diesel Crack • The gasoline and diesel crack refers to the difference between the regional quoted crude price and regional quoted ULP 92 30.00 gasoline or D10 diesel price, providing an approximate marker for refining m
Slide 44: Singapore FCC Refining Margin (US$/bbl)
0 1 2 3 5 6 7 8 9 4 01/01/2013 Source: Bloomberg 01/03/2013 01/05/2013 2018 Full Year Result 01/07/2013 01/09/2013 01/11/2013 01/01/2014 01/03/2014 01/05/2014 01/07/2014 01/09/2014 01/11/2014 01/01/2015 01/03/2015 01/05/2015 01/07/2015 01/09/2015 01/11/2015 01/01/2016 44 01/03/2016 Singapore FCC Ref
Slide 45: Variables
0.65 0.67 0.69 0.71 0.73 0.75 0.77 0.79 0.81 0.83 01/01/2015 Source: Bloomberg 01/02/2015 01/03/2015 2018 Full Year Result 01/04/2015 Variables 01/05/2015 01/06/2015 01/07/2015 01/08/2015 01/09/2015 A$/US$ Exchange Rate 01/10/2015 01/11/2015 01/12/2015 01/01/2016 01/02/2016 01/03/2016 01/04/2016 01/
Slide 46: Board of Directors
Board of Directors Robert Hill Arnoud De Meyer Jane McAloon Sarah Ryan Dat Duong Hui Meng Kho Scott Wyatt Chairman Independent Independent Independent Head of Asia President & Chief Executive Independent Non-executive Non-executive Non-executive Pacific CEO, Vitol Asia Officer Non-executive Director
Slide 47: Executive Leadership Team
Executive Leadership Team Scott Wyatt Jevan Bouzo Daniel Ridgway Lachlan Pfeiffer Chief Executive Chief Finance Chief Operating Group General Officer Officer Officer Counsel and Company Secretary Megan Foster Denis Urtizberea Thys Heyns Jodie Haydon General Manager, General Manager, General Manager,
Slide 48: Our people and our culture
Our people and our culture Employee split by business unit Gender diversity The Viva Energy Culture 160 11. Centred on a high performance culture of being driven by people Senior 77 372 Leadership1 2. Attract and retain a diverse range 2 113 43% 2 of employees with the right skills for each role, pr
Slide 49: Definitions
Definitions Historical Cost (“HC”) Net inventory gain/(loss) Distributable NPAT (RC) Calculated in accordance with IFRS Represents the difference between the historical Represents Underlying NPAT (RC) adjusted to cost basis and the replacement cost basis remove the impact of for short term outcomes
Slide 50: ViVA
ViVA ergyAustralia