Viva Energy Group Ltd. · ASX:VEA
Viva Energy — FY2019 Earnings Presentation
36 slides from Viva Energy's earnings presentation, Feb 24, 2020
Slide 1: FY2019 Results Presentation
24 February 2020 The Manager Market Announcements Office Australian Securities Exchange Electronic lodgment FY2019 Results Presentation The attached announcement is for release to the market. Julia Kagan Company Secretary
Slide 2: Financial results
Financial results Year ended 31 December 2019 Helping people reach their destination Viva Energy Group Limited
Slide 3: Important notice and disclaimer
Important notice and disclaimer This presentation has been prepared by Viva Energy Group In preparing this presentation the authors have relied upon and Any forward-looking statements, including projections, guidance Limited, ACN 626 661 032 (“Company” or “Viva Energy”). assumed, without independent
Slide 4: Scott Wyatt, Chief Executive Officer
Scott Wyatt Chief Executive Officer Viva Energy Group Limited FY2019 results presentation 3
Slide 5: Sustainability
Sustainability Our various sustainability programs remain a strong focus of the company Health and Safety Environmental • 20% reduction in recordable injury rate • Lowest level of primary containment incidents in five years • Third consecutive year free of significant process safety • 65% of refinin
Slide 6: FY2019 scorecard
FY2019 scorecard Strong operational performance and disciplined capital management Operational Financial Balance Capital performance performance1 sheet management 14.7BL $644.5m $137.4m 4.7c Fuel sales volume Group Underlying EBITDA (RC) Net debt FY2019 dividend per share, up 4.6% pcp at top end of
Slide 7: Group performance
Group performance Challenging market conditions impacted EBITDA (down 17%) Total fuel volumes sold by product (ML) Underlying Group EBITDA (RC) ($m) 14,748 14,557 14,151 14,695 14,046 864 1,179 1,118 1,030 969 775 1,082 746 2,975 3,196 3,488 677 276 125 645 3,350 3,345 326 143 117 6,200 6,181 6,231
Slide 8: Performance drivers
Performance drivers Industry headwinds were a key driver of 2019 earnings Retail • Subdued retail / economic activity market • Significant change in competitive dynamics margins • Periods of higher oil prices Regional • Weaker regional demand growth refining • Disruptors to oil markets (sanctions, g
Slide 9: Year-on-year performance
Year-on-year performance Controllable EBITDA (from company factors) increased by $30m FY2018 vs FY2019 Underlying Group EBITDA (RC) variance ($m)1 Market-driven factors Company factors Total impact: ($137m) Total impact: $30m (99) Unrepeated one-offs (66) Total impact: ($22m) 103 9 (8) 25 9 (17) (18
Slide 10: Delivered key strategic priorities
Delivered key strategic priorities Company positioned for growth as market conditions improve Stronger retail platform Record levels of production Capital management focus Re-negotiation of Alliance Agreement Highest ever diesel production Low levels of Net Debt Took control of fuel pricing & market
Slide 11: Jevan Bouzo, Chief Financial Officer
Jevan Bouzo Chief Financial Officer Viva Energy Group Limited FY2019 results presentation 10
Slide 12: 2019 financial highlights
2019 financial highlights Maintained strong cash flow despite difficult trading conditions $m FY2019 FY2018 Comparison $m FY2019 FY2018 Comparison Volume (ML) 14,695 14,046 5% Working capital 197.4 268.0 (26%) Net Debt (137.4) 0.2 Nmf Underlying EBITDA (RC) Net Working Capital 60.0 268.2 (78%) Retai
Slide 13: Retail overview
Retail overview The renegotiation of the Alliance Agreement provides opportunity for sales and margin growth Retail Underlying EBITDA (RC) ($m) FY2019 overview on results 607 609 • FY2019 Underlying EBITDA (RC) of $564.3m was above the 542 564 guidance range of $548–$558m provided in December 2019 4
Slide 14: Retail fuel margins
Retail fuel margins Retail fuel margins in 4Q19 improved and are slightly below the 2014-2018 average Industry fuel margin1 (cpl) 2014-2018 average fuel margin: 12.5cpl 12.8 13.0 12.3 12.3 12.2 11.9 2010-2013 average fuel margin: 9.3cpl 11.4 11.4 11.4 9.7 10.0 8.9 8.4 CY10 CY11 CY12 CY13 CY14 CY15 C
Slide 15: Commercial overview
Commercial overview Rising ocean freight costs and contract margin compression impacted FY2019 results Commercial Underlying EBITDA (RC) ($m) FY2019 overview on results • FY2019 Underlying EBITDA (RC) of $296.5m was slightly below the top end of guidance of $292 – $297m provided in December 2019 321
Slide 16: Refining overview
Refining overview Strong operational performance offset a challenging margin environment Refining Underlying EBITDA (RC) ($m) FY2018 vs FY2019 Underlying EBITDA (RC) ($m) 29 (45) 17 (8) 125 126 118 117 326 FY2018 Refining FX Margin Cost FY2019 276 Underlying intake Underlying EBITDA (RC) EBITDA (RC)
Slide 17: Regional refining margins
Regional refining margins Weak Gasoline cracks and higher crude premiums impacted refining margins 5 year: gasoline, diesel & fuel oil cracks1 (US$/bbl) Regional refining margins 20.0 Gasoline market 5 year • Demand for gasoline was relatively subdued driven in part by slowing 15.0 average Chinese c
Slide 18: Supply, Corporate and Overheads overview
Supply, Corporate and Overheads overview Cost increases impacted by unwinding of prior year/one off benefits and costs Supply, Corporate & Overheads Underlying EBITDA (RC) ($m) FY2019 overview on results • FY2019 Underlying EBITDA (RC) of $(333.3m) was within the guidance range of $(335m) – $(330m)
Slide 19: Capital expenditure
Capital expenditure Total capex is forecast to be between $250-300m in FY2020 Capital expenditure profile ($m) 309 Capital expenditure ($m) FY2019 FY2020F 42 Retail, Fuels & Marketing 18 248 241 234 Refining (exclusive of turn- 28 30 50 45 around) 50 132 32 21 161 Supply, Corporate & Overheads 55 39
Slide 20: FY2019 cash flow bridge
FY2019 cash flow bridge FY2019 Underlying FCF FY2019 cash flow bridge ($m) 2019 Change in cash 11 Add back dividends paid 134 Deduct borrowings (147) FCF before dividends (2) (33) Add back changes in working capital 33 (54) Add back Alliance and Liberty payments 162 (162) Deduct net loans to Associa
Slide 21: Balance sheet
Balance sheet Viva Energy has maintained low levels of Net Debt to provide maximum financial flexibility Change in Net Debt (A$m) Strong balance sheet • Pro-forma balance sheet post Off-market Buy- (162) Back remains strong, with Net Debt position still providing maximum financial flexibility (158)
Slide 22: FY2019 Significant items, NPAT and dividend
FY2019 Significant items, NPAT and dividend Viva Energy returns 60% of Distributable NPAT to its shareholders Reconciliation of Underlying NPAT (RC) Distributable NPAT (RC) Significant one off items during the period FY2019 • Impact of a revision to the Group’s Asset Retirement Obligation $m provisi
Slide 23: Exit of investment in Viva Energy REIT and capital management programme
Exit of investment in Viva Energy REIT and capital management programme • Viva Energy sold its 35.5% security holding in Viva Energy REIT (VVR) for total of $734.3 million, and an estimated Divestment $112.9 million pre-tax profit on the sale of Viva • Viva Energy intends to return capital to shareh
Slide 24: Scott Wyatt, Chief Executive Officer
Scott Wyatt Chief Executive Officer Viva Energy Group Limited FY2019 results presentation 23
Slide 25: 2020 priorities
2020 priorities The Company remains committed and focused on its 2020 objectives Key priorities 1 Continued restoration of Alliance sales volumes and brand perception 2 Optimise sales volume and margin mix 3 Optimise crude selection and production to maximise refining margin 4 Complete efficient maj
Slide 26: Intended Off-market Buy-back
Intended Off-market Buy-back Viva Energy Group Limited FY2019 results presentation 25
Slide 27: Overview of proposed capital returns
Overview of proposed capital returns • Viva Energy intends to return all of the net after-tax proceeds from the divestment of the interest in Viva Energy REIT, to shareholders through capital management initiatives • Subject to obtaining the necessary regulatory and shareholder approvals1, the inten
Slide 28: Appendix
Appendix Viva Energy Group Limited FY2019 results presentation 27
Slide 29: AASB leases: pro-forma financials
AASB leases: pro-forma financials Summary of FY2019 pro-forma financials AASB 117 and AASB 16 Variance of FY2019 Underlying NPAT $m AASB 16 AASB 117 21.4 Retail Underlying EBITDA (RC) 564.3 563.3 (196.4) 257.4 Commercial Underlying EBITDA (RC) 296.5 291.3 Supply, Corporate & Overheads 443.7 (333.3)
Slide 30: AASB leases: impacts
AASB leases: impacts Balance sheet Income statement Cash flow statement Right of use assets Operating costs Operating cash outflow $2,328.1 million $257.4 million $260.8 million Lease liabilities EBITDA Investing cash flow (interest bearing $257.4 million $154.6 liabilities) $2,448.3 million Lease s
Slide 31: Refinery – illustrative sensitivity analysis
Refinery – illustrative sensitivity analysis Refinery sensitivity analysis Pro forma Pro forma EBITDA Underlying NPAT Variable Increase/Decrease (RC) impact A$m (RC) impact A$m • For the purposes of tracking the financial performance of the Geelong Refinery, a sensitivity table is provided here to i
Slide 32: Refinery – margin analysis and key drivers
Refinery – margin analysis and key drivers 5 Year Metric FY15 FY16 FY17 FY18 FY19 Average A: A$/US$ FX 0.75 0.74 0.77 0.75 0.69 0.74 B: Crude and feedstock intake mbbls 37.8 39.9 40.8 40.1 42.0 40.1 C: Geelong Refining Margin US$/bbl 11.8 7.9 10.2 7.4 6.6 8.7 D: Geelong Refining Margin = C / A A$/bb
Slide 33: Strategic national retail network and infrastructure
Strategic national retail network and infrastructure Highly integrated manufacturing, supply and distribution assets developed over 110 years Darwin Cocos Islands 24% of the Australian downstream petroleum market 1 1,292 service station sites nationwide in Viva Energy’s network fuel import terminals
Slide 34: Viva Energy terminal network
Viva Energy terminal network Owned terminal storage capacity (ML)1 Geelong Refinery 309.1 Birkenhead2 63.6 Newport (excl solvents) 107.9 Port Lincoln 15.7 Total Victoria 417.0 Total South Australia 79.3 Clyde 264.0 Gore Bay 84.9 Devonport 23.8 Total NSW 348.9 Total Tasmania 23.8 Gladstone2 40.2 Pink
Slide 35: Glossary
Glossary Underlying EBITDA Distributable NPAT (RC) Historical Cost (“HC”) Geelong Refining Margin Profit before interest, tax, depreciation Represents Underlying NPAT Calculated in accordance with The Geelong Refining Margin is a and amortisation adjusted to remove the (RC) adjusted to remove the IF
Slide 36: Viva Energy Group Limited
Viva Energy Group Limited