Viva Energy Group Ltd. · ASX:VEA
Viva Energy — Investor Day (November 2021)
71 slides from Viva Energy's investor day presentation, Nov 24, 2021
Slide 1: Investor Strategy Day Presentation
24 November 2021 The Manager Market Announcements Office Australian Securities Exchange Electronic lodgment Investor Strategy Day Presentation The attached presentation will be presented today at Viva Energy’s Investor Strategy Day. Authorised for release by: the Company Secretary Julia Kagan Compan
Slide 2: Viva Energy Australia: Leveraging our Diversity
Viva Energy Australia Leveraging our Diversity 24 November 2021
Slide 3: Important notice and disclaimer
Important notice and disclaimer This presentation has been prepared by Viva Energy Group or which has otherwise been reviewed in preparation of the upon as an indication or guarantee of future performance. Limited, ACN 626 661 032 (“Company” or “Viva Energy”). presentation. All reasonable care has b
Slide 4: Acknowledgment of Country
Acknowledgment of Country We acknowledge and pay respect to the past, present and future Traditional Custodians and Elders of this nation and the continuation of cultural, spiritual and educational practices of Aboriginal and Torres Strait Islander people. We particularly pay respects to the traditi
Slide 5: Viva Energy Executive Team
Viva Energy Executive Team Scott Wyatt Jevan Bouzo Amanda Fleming Chief Executive Officer Chief Operating and Financial Officer Chief People & Technology Officer Denis Urtizberea Megan Foster Dale Cooper Lachlan Pfeiffer Executive General Manager Executive General Manager Executive General Manager C
Slide 6: Investor strategy day agenda
Investor strategy day agenda Time Topic Presenter 1 9:00 – 9:20 Overview and Strategic Objectives Scott Wyatt 2 9:20 – 9:40 Fuel and Convenience Megan Foster 3 9:40 – 10:00 Commercial and Industrial Denis Urtizberea 10:00 – 10:45 Q&A / Break 4 10:45 – 11:05 Energy and Infrastructure Dale Cooper 5 11
Slide 7: Overview
Overview Scott Wyatt 6
Slide 8: Levering our Diversification for Growth
Investor day objective To share our confidence in the long-term outlook and growth opportunities for our businesses Retail Commercial Energy Hub Well positioned to outperform in our A unique, diverse and resilient set More sustainable and reliable traditional business and capture of businesses which
Slide 9: Safety performance
Safety performance Maintained strong safety performance and focus on people throughout the pandemic Total Recordable Process safety events1 Vaccination rates3 Injury Frequency Rate2 4 6.3 94% 5.8 77% 3 3 4.6 3.6 2 2018 2019 2020 3Q21* 2018 2019 2020 3Q21* First Dose Fully Vaccinated • Geelong Refine
Slide 10: Company overview
Company overview Viva Energy is a diversified Retail, Commercial and Energy business Coles Express Aviation Refining Liberty Transport and Strategic Dealer Owned Marine Specialties Convenience Agriculture Storage Retail Commercial Energy Hub Shell Bio and Fly Buys Lubricants Specialties LNG Terminal
Slide 11: Strategic positioning
Strategic positioning Viva Energy has unique positions which underpin the strength of our core businesses Retail Commercial Energy Hub • Largest single branded fuel and convenience • Strong market positions in key segments network (Shell and Coles Express) • Strategic position in one of country’s la
Slide 12: Infrastructure
Infrastructure Viva Energy has nationwide supply chain capability supported internationally by Vitol, one of the world’s largest independent energy trading companies Supply chain network Highlights Darwin • More than 1,100ML oil and fuel storage capacity1 Cocos Islands Weipa • Ownership of major pip
Slide 13: Underlying free cash flow
Underlying free cash flow Strong and consistent cash flows supports attractive dividend profile going forward Group Underlying free cash flow 200 • Strong cash generating Retail Fuels and Marketing 180 business 160 • 2020 cash flow impacted by COVID-19 impacts to 140 Refining 120 • Government Fuel S
Slide 14: Capital management
Capital management Strong record of returning cash to investors through dividends, capital returns and on-market buy-backs Capital management Capital returns 500 • Active management of portfolio resulted in divestment 450 of stake in Waypoint REIT 400 • Company has returned over $950M to shareholder
Slide 15: Strategic Objectives
Strategic Objectives Scott Wyatt 14
Slide 16: Australian fuel market
Australian fuel market Fuel demand expected to recover over next two years and remain an important part of the Australian transport fuel mix through the next decade Fuel demand scenarios Strategic implications 60 House view • Traditional fuel demand expected to remain strong through rest of the deca
Slide 17: Transition and growth strategy
Transition and growth strategy Our strategy is to develop and maximize the value of three discrete and unique businesses, with significant low-carbon growth potential Today Pathway Future Early foundations • Renegotiated Alliance agreement to fully control fuel offer leverage network • Established L
Slide 18: Strategic approach
Strategic approach We will continue to deliver reliable and attractive cashflow by maintaining discipline in our core business while progressing a focused diversification and extension strategy Acquire capability to accelerate proven opportunities Leverage diversity to develop new growth pathways •
Slide 19: People strategy
People strategy We have a strategy to achieve higher performance through an innovative approach to our people which we call “The Viva Way” Viva Energy Group Limited Investor Strategy Day 2021 18
Slide 20: Fuel and Convenience
Fuel and Convenience Megan Foster 19
Slide 21: Fuel and Convenience overview
Fuel and Convenience overview Viva Energy has the largest single branded Company Controlled network in Australia Coles Express Liberty Dealer Convenience Owned Fuel and Convenience Network Retail Shell Company Controlled Sites1 Fly Buys V-Power Shell Card Liberty 92 On The Run Highlights Puma • Larg
Slide 22: Strategic approach
Strategic approach Viva Energy aims to become a leading fuel and convenience retailer Fuel and Convenience Retailer Acquire capability to accelerate proven opportunities Leverage capability • Liberty acquisition (from 2025) • Coles Express (Alliance concludes 2029) to develop new growth pathways • H
Slide 23: Retail platforms
Retail platforms Dual brand and targeted platforms with partners providing differentiated offer, with strategic step in points to take full control of convenience businesses Coles Express Liberty Convenience Owner Dealer 716 92 524 sites sites sites • Largest single branded fuel and • Regional and h
Slide 24: Retail fuel market
Retail fuel market Pre-COVID fuel demand growth led by diesel and increased car ownership, with Viva Energy growing share of key segments Retail fuel demand1 Retail fuel margins2 Market share1 30 25 17 25% 25 20 15 Million Vehicles CAGR: 3.6% 20% 20 Billion Litres CAGR (Pre-COVID): ~ 2% 15 13 15% 15
Slide 25: Convenience market
Convenience market Convenience is delivering consistent and attractive growth in line with broader food and grocery market, with Alliance outperforming Australian convenience market1 Alliance convenience sales2,3 120 CAGR: 3.2% 10 CAGR: 5.3% 1,400 13.5% 115 Convenience ($B) 8 1,200 13.0% Grocery ($B
Slide 26: Convenience market landscape
Convenience market landscape Retail fuel and convenience sites are well placed to further extend and grow broader destination and on-road convenience offers to support growth Maingrade Vehicle Energy Services Postal and • Premium petrol and diesel remain key growth segments Premium Banking • Fast ch
Slide 27: Loyalty and digital
Loyalty and digital Our loyalty ecosystem supports a broader convenience offer with further potential for digital enablement Select Flybuys partners Flybuys • 8.6m members1, 20 partners2, >1000 rewards2 • Supports fuel & convenience offer through joint offers with other business partners • Leveragin
Slide 28: Marketing and sponsorships
Marketing and sponsorships Building and leveraging our brand to reach broader audiences through marketing and sponsorship programs A globally recognised brand Investment Coles Express store refresh in brand and premium fuel offer Investment in sponsorships Viva Energy Group Limited Investor Strategy
Slide 29: Network refreshment
Network refreshment Network refreshment is underway to support changing customer needs and further development of offering Larger stores with fresh food at seating Coles Express store refresh Larger forecourts with improved diesel offering Adjacencies to drive ‘destination’ visits Viva Energy Group
Slide 30: Network strategy
Network strategy Network growth will support opportunities to rationalise older and poorer performing sites over time Network distribution by fuel volume • Focused on closing network gaps and lifting convenience offer • Larger stores and improved diesel offerings • Skew towards regional and Rational
Slide 31: Financial performance
Financial performance Retail business has a proven track record of strong and consistent cash generation with a broad range of growth opportunities 250 235.4 Highlights 216.4 198.6 • Robust fuel demand with opportunities for market share growth 200 152.7 149.3 • Growing retail fuel margins supportin
Slide 32: Strategic priorities
Strategic priorities Retail strategic priorities focus on transitioning to a fully integrated convenience retailer by the end of the decade Recovery Growth Sustainability • Maintain fuel market share within the • Continued expansion of the Liberty Alliance and grow sales as market Convenience networ
Slide 33: Commercial and Industrial
Commercial and Industrial Denis Urtizberea 32
Slide 34: Commercial and Industrial overview
Commercial and Industrial overview Viva Energy is a trusted partner to many of the country’s largest commercial and industrial businesses Aviation Transport and Marine Agriculture Length of relationships Commercial Top 20 Customers1 Lubricants Specialties Resources Highlights • Leading market positi
Slide 35: Strategic approach
Strategic approach Viva Energy aims to provide a complete fuel and service offering to our commercial customers Commercial and Industrial Solutions and Services Acquire capability to accelerate proven opportunities Leverage capability • Acquire adjacent commercial to develop new businesses growth pa
Slide 36: Resources
Resources Market leading supplier of fuels, lubricants and associated services to the mining sector Resources supply chain • National supply chain servicing all key mining regions across Australia • Strategic partnerships with Vitol and Darwin Shell for world class technical and Weipa supply chain
Slide 37: Marine
Marine Market leading supplier of marine fuels and lubricants across Australia Marine network • Market leading position through nationwide network of marine refuelling locations Darwin Weipa • A reliable supplier of very low sulphur marine fuel oil (VLSFO) Oil and Gas Cairns HMAS Cairns Broo
Slide 38: Aviation
Aviation Market-leading network across Australia, including all major international airports Aviation network • Servicing more than 50 airports and airfields across the country Gove • Geelong Refinery the only Jabiru Darwin Weipa manufacturer of Avgas in Australia Cocos Island Katherine Kununurra Ca
Slide 39: Specialties
Specialties Only manufacturer of bitumen and hydrocarbon solvents in Australia Bitumen & chemicals supply chain • Strategically located supply chain across major population centres in the East Coast Darwin • Only manufacturer of bitumen and hydrocarbon solvents in Australia • Surplus refining capabi
Slide 40: Agriculture and regional Australia
Agriculture and regional Australia Local capability combined with nationwide refuelling network to support regional markets across the country Liberty Wholesale depots • Nationwide network and strategic partnerships with local distributors supporting regional markets across Australia Katherine • Com
Slide 41: Carbon solutions
Carbon solutions Building commercial opportunities with customers seeking to reduce their emissions Customer proposition Early progress • Certification for Carbon Neutral Jet A-1 fuel under the Climate Active on 1 July 2021 • Alliance Airlines flight QQ7242 was refuelled with Strategic Energy Lower
Slide 42: Financial performance
Financial performance Commercial business has a proven track record of strong and consistent cash generation with a broad range of growth opportunities Highlights 300 • 2021 seeing strong performance, returning to 243.4 250 growth post-pandemic with further recovery 200 186.2 • ~40%2 of earnings fro
Slide 43: Strategic priorities
Strategic priorities Commercial strategic priorities focus on leveraging our strong customer relationships and diversified sector exposure to create new growth pathways Recovery Growth Sustainability • Target profitable growth in Aviation as • Continued expansion of the Liberty domestic and internat
Slide 44: Energy and Infrastructure
Energy and Infrastructure Dale Cooper 43
Slide 45: Energy Hub overview
Energy Hub overview Geelong Energy Hub seeks to leverage the strategic position and capability we have in Victoria Refining Strategic Specialties Storage Energy Hub Bio and LNG Terminal Recycling Hydrogen Highlights • Strategic position in one of country’s largest and strongest growing markets (Vict
Slide 46: Strategic approach
Strategic approach Viva Energy aims to develop a diverse low-carbon energy and infrastructure portfolio Energy and Infrastructure Acquire capability to accelerate proven opportunities Leverage capability • Partner with key technology and to develop new customer participants growth pathways • Develop
Slide 47: Geelong Refinery
Geelong Refinery Geelong Refinery has several unique advantages which helps compete with regional refiners Local crude sourcing Specialties contribution to Production slate Freight advantages Geelong Refining Margin US$/bbl 38% 36% 6.0 34% 34% 14% 14% 23% 17% 11% 12% 3% 5.0 4% 43% 4.0 21% 38% 39% 41
Slide 48: Fuel Security Services Payment (FSSP)
Fuel Security Services Payment (FSSP) Protects earnings during periods of low refining margins providing for more certain and reliable cashflow Historical actual Geelong Refining Margin (GRM) No FSSP received FSSP is payable and FSSP Margin Marker (A$/bbl) when regional when the Margin refining
Slide 49: Gas Terminal Project: East Coast gas demand
Gas Terminal Project: East Coast gas demand A growing shortfall for Natural Gas on the East Coast of Australia Project opportunity • Federal government has identified security of gas supply as a critical issue for the economy • Forecast gas market supply deficit driven largely by Victorian demand ag
Slide 50: Gas Terminal Project: project highlights
Gas Terminal Project: project highlights Viva Energy’s Gas Terminal Project is best placed and leading project in Victoria Project highlights • Geelong provides the most efficient gateway for gas into the Victorian Transmission System • Proximity to demand provides advantaged cost of gas, avoiding p
Slide 51: Gas Terminal Project: commercial model
Gas Terminal Project: commercial model Viva Energy aims to primarily be an infrastructure owner and operator, but a range of additional energy projects and business extensions have been identified Peaking Capacity Commercial model • Combination of typical mid-stream infrastructure Gas style returns
Slide 52: Strategic priorities
Strategic priorities Refining business is well positioned for recovery in refining margins and additional income streams from new Energy Hub projects Recovery Growth Sustainability • Improvement in Geelong Refining Margins • Productivity and site efficiency as regional and global fuel demand improve
Slide 53: New Energies and Sustainability
New Energies and Sustainability Lachlan Pfeiffer 52
Slide 54: Sustainability Approach
Sustainability Approach We aim to support our customers to reduce their emissions, pursue opportunities in emerging and transition energies, and reduce our own emissions to net zero Carbon Intensity Energy Efficiency Reductions Projects Carbon Bundled Low New Energy Renewable and Viva Energy Carbon
Slide 55: Energy transition
Energy transition We have identified a range of emerging opportunities in line with our core strategic capabilities Hydrogen Fuel Cell Strategic Battery Electric Waste Carbon Electric Vehicle LNG Bio Capability Vehicle (BEV) Recycling Offsets (HFCEV) Retail • Fast charging • Truckstop network • E10
Slide 56: Battery electric vehicles
Battery electric vehicles Electric mobility is an evolving market which will mature through 2030’s and take off thereafter Drivers • Lower operating cost favours high mileage applications Our approach • Cheaper and more convenient to charge while parked at • Superior network: enhance our retail home
Slide 57: Hydrogen fuel cell electric vehicles
Hydrogen fuel cell electric vehicles HFCEV is a nascent yet emerging market with strong long-term growth potential Drivers • High energy density supports long distance and heavy freight Our approach • Refuelling supports high availability and utilisation applications • Customers: bring existing cust
Slide 58: Hydrogen refuelling
Hydrogen refuelling Working in partnership with OEM’s, customers, and planning to build hydrogen supply chain capability, Viva Energy is well placed to commercialise hydrogen in heavy transport applications Market opportunity • Back-to-base commercial refueling case-study assessment Viva Energy Hyzo
Slide 59: Bio-Fuels and Waste recycling
Bio-Fuels and Waste recycling Opportunities will evolve to leverage our refining and supply chain capability to partner with others to participate in the circular economy Opportunity • By 2030, waste-to-energy could be ~2-5% of Australian diesel demand • Offers near to mid-term growth potential, and
Slide 60: Strategic Priorities
Strategic Priorities Our plan to support the energy transition journey Electric Vehicle Hydrogen Emissions Low Sulphur Transition Energy Charging Refuelling Reduction Petrol Energies Security Optimising our Heavy vehicle Support our Lower sulphur Bio-fuels, green Leverage retail convenience transpor
Slide 61: Emissions Targets
Emissions Targets Targeting Net Zero in our non-refining operations and 10% reduction in refining emissions intensity by 2030, with an ambition for Net Zero by 2050 for all operations Retail, Fuels renewable purchasing and generation and ~52 kt CO2-e1 energy efficiency projects Net Zero Marketing ca
Slide 62: Emissions reduction measures
Emissions reduction measures There is a clear pathway to achieving Net Zero in our non-refining operations Renewable electricity PPAs / certificates Energy efficiency through optimisation Carbon Emissions1 and projects at operations Behind the meter renewables such as Lower electricity on-site solar
Slide 63: Refining emissions
Refining emissions Refining operations will remain energy and emission intensive over our commitment period, with transition requiring re-purposing and re-use of site over the period out to 2050 • Geelong Refinery is committed to the Government’s Fuel Security Package for the next 7 years (to mid 20
Slide 64: Capital Management
Capital Management Jevan Bouzo 63
Slide 65: Capital management framework
Capital management framework Viva Energy will maintain a disciplined approach to capital management Underlying capital expenditure Invest in existing businesses to mainting current earnings - Underlying earnings maintenance capital. Distributions to shareholders Target payout ratio of 50% to 70% NPA
Slide 66: Retail, Fuels and Marketing
Retail, Fuels and Marketing Underlying earnings and maintenance capital Retail, Fuels and Marketing 2018 2019 2020 1H21 Average per year Underlying EBITDA (RC) 1 437 324 382 218 Depreciation and Amortisation (67) (88) (96) (54) $210m Underlying Free Cash Flow Finance Costs (33) (29) (19) (5) Underly
Slide 67: Refining
Refining FSSP underpins expenditure profile for commitment period to end 1H28 with upside from stronger margins 2022 2023 2024 2025 2026 2027 1H28 Geelong Refining FSSP at A$10.20/bbl to A$7.30/bbl with GRM potential above Margin / FSSP Operating Refinery operating expenditure Expenditure Major CDU4
Slide 68: Balance sheet and target gearing
Balance sheet and target gearing A disciplined approach to deploying our excess cash and balance sheet capacity Growth Target Gearing Post Dividend • Existing business opportunities with short paybacks and returns well above WACC • Target long term gearing Free Cash Flow • Growth in non-fuel (conven
Slide 69: Why invest in us
Why invest in us ✓ • Retail Fuels and Marketing is a strong cash generating business with leading positions in the Australian transport energy market and supported by advantaged infrastructure positions •largest single branded and Fuel and operated network of ✓ Convenience convenience sites meeting
Slide 70: Conclusion / Q&A
Conclusion / Q&A Scott Wyatt 69
Slide 71: Viva Energy
VIVA EnergyAustralia