Viva Energy Group Ltd. · ASX:VEA
Viva Energy — H1 2019 Earnings Presentation
48 slides from Viva Energy's earnings presentation, Aug 26, 2019
Slide 1: 1H2019 Half Year Results
1H2019 Half Year Results 26 August 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. You should rely on your own independent assessment Group Limited, ACN 626 661 032 (“Company” or into account the inve
Slide 3: Agenda
Agenda Results highlights and business update Scott Wyatt (CEO) Financial results Jevan Bouzo (CFO) 2H2019 outlook Scott Wyatt (CEO) 1H2019 Result 3
Slide 4: Results highlights and business update
Results highlights and business update Scott Wyatt (CEO) 1H2019 Result 4
Slide 5: Commitment to excellence
Commitment to excellence Safety Environment Total Recordable Injury Frequency Rate (TRIFR)1 Loss of containment (>1,000 KG) 7 5.8 5 4 4.7 4.5 3.3 3 2.5 2 FY2015A FY2016A FY2017A FY2018A 1H2019A FY2015A FY2016A FY2017A FY2018A 1H2019A • TRIFR of 3.3, which represents a 40% reduction in recordable • L
Slide 6: Key financial results for 1H2019
Key financial results for 1H2019 AASB 1171 AASB 161 1H2019 $m AASB 1171 AASB 161 Underlying EBITDA (RC) (old standard) (new standard) $168.7m $168.7m Retail 283.3 283.3 Net debt Net debt Commercial 155.6 158.3 Total Retail, Fuels & Marketing 438.9 441.6 $50.9m $2,393.2m Lease liability Lease liabili
Slide 7: 1H2019 snapshot
1H2019 snapshot Total volumes sold by product (ML) Overview 1H2019 • Total volumes of 7,126 million litres, up 2.5% on 1H2018 volume of 6,955 million litres 14,748 14,558 14,151 14,046 • In contrast, total market volumes fell approximately 2.2% on the prior corresponding period1 2,975 3,196 3,350 3,
Slide 8: Retail overview
Retail overview 1H2019 highlights Retail Underlying EBITDA (RC) $m1 • 1H2019 Underlying EBITDA (RC) of $283.3 million, within the guidance range of $275m-$290 million provided in June 2019. There is no impact to the Retail 700 segment due to AASB 16 607 609 • The renegotiation of the retail Alliance
Slide 9: Commercial overview
Commercial overview Underlying EBITDA (RC) $m 1H2019 highlights AASB 117 (old standard)1 • Excluding the impact of AASB 16, 1H2019 Underlying EBITDA (RC) was $155.6 million, 400 in line with June 2019 guidance • Under the new leasing standard AASB 16, $2.7 million of operating lease expense has 300
Slide 10: Supply, Corporate and Overheads overview
Supply, Corporate and Overheads overview 1H2019 highlights Underlying EBITDA (RC) $m AASB 117 (old standard)1 • Excluding the impact of AASB 16, Supply, Corporate and Overheads delivered 0 Underlying EBITDA (RC) of ($285.7) million, in line with guidance provided in June 2019 -286 -200 • With the ad
Slide 11: Refining overview
Refining overview 1H2019 highlights Refining Underlying EBITDA (RC) $m1 • The Refining segment delivered Underlying EBITDA (RC) of $18.4 million, at the GRM (US$/bbl) 11.8 7.9 10.2 7.4 5.1 upper end of revised guidance provided in June 2019. There is no impact to the Refining segment due to AASB 16
Slide 12: Refining operational performance
Refining operational performance Geelong Refinery output production split1 Operational availability (%) 4% 3% 2% 93% 94% 94% 3% 3% 89% 88% 33% 41% 39% 38% 42% 15% 17% 16% 14% 15% FY2015A FY2016A FY2017A FY2018A 1H2019A 40% 35% 35% 34% 36% Refinery intake (mmbbls) 8% 2% 40.0 41.0 40.1 4% 1% 4% 1% 5%
Slide 13: Financial results
Financial results Jevan Bouzo (CFO) 1H2019 Result 13
Slide 14: 1H2019 financial highlights
1H2019 financial highlights 30 June 31 Dec 1H2019 $m 1H2018 $m 2019 2018 AASB 1171 AASB 16 AASB 117 AASB 162 $m $m Volume (ML) 7,126.1 7,126.1 6,955.0 6,955.0 Long term assets Property, Plant & Equipment 1,441.0 1,471.3 Underlying EBITDA (RC) Retail, Fuels & Marketing 438.9 441.6 474.4 477.1 Investm
Slide 15: AASB 16: New lease accounting standard
AASB 16: New lease accounting standard Viva Energy has adopted the new lease accounting standard (AASB 16) for 1H2019 results, in line with accounting standard requirements The transition to AASB 16 has no impact on the underlying economics of the business, cash flows nor on any of Viva Energy’s deb
Slide 16: AASB 16: Leases
AASB 16: Leases Operating costs D&A Interest Tax • Remove lease expense from • Increase amortization • Higher net finance • Lower profit before tax, operating costs within EBITDA cost from Right of costs based on lease results in smaller • Add back lease straight-lining Use Asset liability accountin
Slide 17: Group Underlying EBITDA (RC) $m
Group Underlying EBITDA (RC) $m AASB 117 (old standard)1 AASB 16 (new standard)2 Historical Historical Cost (“HC”) 483 394 626 435 176 Cost (“HC”) 693 616 856 676 301 Replacement 535 455 634 Replacement 746 677 864 529 172 770 297 Cost (“RC”) Cost (“RC”) 1,000 1000 900 900 800 800 700 700 276 125 60
Slide 18: Group Underlying Net Profit After Tax (RC) $m
Group Underlying Net Profit After Tax (RC) $m AASB 117 (old standard)1 AASB 16 (new standard)2 Historical Historical Cost (“HC”) 207 212 355 228 81 Cost (“HC”) 122 135 285 163 54 450 450 400 400 350 350 300 300 250 250 $m $m 200 200 361 150 293 150 291 244 255 229 100 100 178 159 50 78 50 51 0 0 FY2
Slide 19: 1H2019 EBITDA bridge – AASB 117 (old standard)
1H2019 EBITDA bridge – AASB 117 (old standard) 400.0 Retail, Fuels and Marketing Supply, Corporate & • Lower retail market fuel margins Overheads • Higher supply chain costs and • Higher pipeline and distribution 300.0 margin compression on contract costs renewals • One-off costs relating to Liberty
Slide 20: 1H2019 cash flow
1H2019 cash flow Inventory & other items Share options exc. & div Finance costs 1H2019 Underlying FCF • Net inventory gain 4.0 from assoc. • Increase due to adoption of • Adjusting for one-off payment to 400.0 • Share of profits from associates 16.1 • Shares acquired on the market AASB 16 Leases, wh
Slide 21: 1H2019 significant items
1H2019 significant items Significant one off items during the period 1H2019 $m 1. Significant one-off items of $15.8 million relating to tax consolidation Statutory profit after tax 69.5 adjustments. Note this is in addition to the $345.5 million tax Add: Net inventory loss net of tax at 30% (2.8) c
Slide 22: Balance sheet
Balance sheet 30 June 31 Dec Difference 2019 2018 $m Strong balance sheet $m $m Summary balance sheet 1. Net debt of $168.7 million at 30 June 2019, including one-off payment of 1 $137m to Coles Express to effect the reset of the Alliance partnership Working capital 348.0 268.0 80.0 Property, Plant
Slide 23: Capital expenditure and investment in growth
Capital expenditure and investment in growth FY19 capex Retail, Fuels & Marketing • The prior corresponding period included additional capex relating to tank 1H18A 1H19F 1H19A 2H19F replacements and network refresh of the Shell Brand. In 1H2019, fewer $m $m $m $m retail sites were developed, with th
Slide 24: Dividend policy
Dividend policy Strong cash flow and balance sheet provides financial flexibility 1H2019A $m • Dividend determined for the six months ended 30 June 2019 of 2.1 cents per share, fully franked Underlying Net Profit After Tax (RC) 50.9 Add Impact of AASB 16 50.2 • Represents a payout ratio of 60% of Di
Slide 25: 2H2019 outlook
2H2019 outlook Scott Wyatt (CEO) 1H2019 Result 25
Slide 26: 2H2019 outlook
2H2019 outlook Group volume • Total sales volumes in 2H2019 are expected to remain broadly in line with outlook sales volumes achieved in 1H2019 • Viva Energy remains committed to competitive retail fuel prices with the objective of meeting its medium term target of lifting sales volumes through the
Slide 27: 2H2019 outlook (cont’d)
2H2019 outlook (cont’d) Supply, corporate • Cost improvement across all areas of the business will remain a focus in & overheads 2H2019 • Improvements in regional refining margins in July and August 2019 have been supportive of the Geelong Refining Margin (GRM). • The actual GRM for July 2019 is US$
Slide 28: Q&A
Q&A 1H2019 Result 28
Slide 29: Appendix
Appendix 1H2019 Result 29
Slide 30: Tax update
Tax update Income tax benefits • Listing on the ASX and the consequent election by the Company to be a single taxpayer resulted in an increase in the tax cost base of company assets reflecting the amount subscribed by investors under the IPO • For the purposes of the FY2018 Accounts, the impact was
Slide 31: AASB leases: Proforma financials
AASB leases: Proforma financials AASB 117 AASB 16 AASB 117 AASB 16 $m $m1 $m $m1 Group Underlying EBITDA (RC) D&A 2015A 535.2 745.9 2015A (69.7) (258.7) 2016A 455.4 677.2 2016A (80.6) (269.7) 2017A 634.3 864.4 2017A (111.5) (300.5) 2018A 528.9 770.0 2018A (129.7) (318.7) 1H2019A 171.6 297.4 1H2019A
Slide 32: Strategic national retail network and infrastructure
Strategic national retail network and infrastructure Highly integrated manufacturing, supply and distribution assets developed over 110 years Darwin 24% of the Australian downstream petroleum market1 Cocos Islands 1,266 service station sites nationwide in Viva Energy’s network2 44 fuel import termin
Slide 33: Strategic national retail network
Strategic national retail network Dealer Company owned/ Viva Energy network distribution by state Total Controlled1 Branded wholesale2 1% 2% 7% 697 207 9043 NT 32% 12% TAS 534 252 305 SA WA 504 7 57 QLD Total 800 466 1,266 17% VIC NSW Sites leased by Viva Energy from Viva Energy REIT 439 27% Sites b
Slide 34: Coles Alliance
Coles Alliance 1H2019 Result 34
Slide 35: Diversified commercial and specialty business
Diversified commercial and specialty business AVIATION MARINE RESOURCES TRANSPORT SPECIALTIES • 35% market share of • 43% market share of • Major distributor of fuel • Bulk diesel to an BITUMEN Australian Aviation1 marine2 and lubricant products extensive blue-chip Only manufacturer of • Nationwide
Slide 36: Viva Energy terminal network
Viva Energy terminal network Owned terminal storage capacity (ML)1 Geelong Refinery 280.6 Birkenhead2 61.9 Newport 86.3 Port Lincoln 15.7 Total Victoria 366.9 Total South Australia 77.7 Clyde 266.1 Gore Bay 65.9 Devonport 21.7 Total NSW 332.0 Total Tasmania 21.7 Gladstone2 40.2 Pinkenba (excl solven
Slide 37: Strategically positioned and profitable refinery
Strategically positioned and profitable refinery The Geelong Refinery is embedded into the Victorian supply chain Flexibility of Crude Intake (1H2019)2 Production slate (1H2019) Operational availability (%) 1 120 kbbls/d capacity 2% 2% 8% 93% 94% 94% 2 9.44 Nelson Complexity Index1 Other 89% 88% Gas
Slide 38: Refinery – illustrative sensitivity analysis
Refinery – illustrative sensitivity analysis • For the purposes of tracking the financial performance of the Geelong Refinery, a sensitivity table is provided below to illustrate the impact on 2H2019 Underlying EBITDA (RC) and Underlying NPAT (RC) of each US$1.0 move in GRM along with movements in f
Slide 39: Refinery – margin analysis and key drivers
Refinery – margin analysis and key drivers Metric FY2015A FY2016A FY2017A FY2018A 1H2019A 4.5 Year Average A: A$/US$ FX 0.75 0.74 0.77 0.75 0.71 0.75 B: Crude and feedstock intake mbbls 37.8 39.9 40.8 40.1 21.4 40.0 C: Geelong Refining Margin US$/bbl 11.8 7.9 10.2 7.4 5.1 8.9 D: Geelong Refining Mar
Slide 40: Refining performance impacted by regional refining margins
Refining performance impacted by regional refining margins Geelong Refining Margin1 vs Singapore FCC Margin2 (2013 to 1H2019)3 16.0 14.0 • On a monthly average basis the Geelong Refinery has achieved approximately a US$4.10 per barrel premium to the 12.0 benchmark over the six and a half year period
Slide 41: Refining margin: the market
Refining margin: the market Gasoline and diesel cracks1 (US$/bbl) Gasoline Cracks Diesel Cracks • The gasoline and diesel crack refers to the difference between the regional quoted crude price and regional quoted ULP 92 30 gasoline or D10 diesel price, providing an approximate marker for refining ma
Slide 42: Singapore FCC Refining Margin (US$/bbl)
Singapore FCC Refining Margin (US$/bbl) 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Source: Bloomberg ticker CUSGFCDF 1H2019 Result 42
Slide 43: Variables
Variables A$/US$ exchange rate 0.83 0.81 0.79 0.77 0.75 0.73 0.71 0.69 0.67 0.65 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Source: Bloomberg ticker AUDUSD 1H2019 Result 43
Slide 44: 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 45: Executive Leadership Team
Executive Leadership Team Scott Wyatt Jevan Bouzo Daniel Ridgway Lachlan Pfeiffer Chief Executive Chief Financial Chief Operating Executive General Officer Officer Officer Manager, Legal and External Affairs Megan Foster Denis Urtizberea Thys Heyns Amanda Fleming Executive General Executive General
Slide 46: Our people and our culture
Our people and our culture Employee split by business unit Gender diversity The Viva Energy culture 169 11. Centred on a high performance 360 culture of being driven by people 74 Senior leadership1 2. Attract and retain a diverse range 2 2 135 44% of employees with the right skills for each role, pr
Slide 47: 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 48: ViVA
ViVA ergyAustralia