Annual Report 2020
Helping people reach their destination
Our purpose
Helping people reach
their destination
Who we are
Viva Energy is a leading energy company with
more than 110 years of operations in Australia.
We make, import, blend and deliver fuels,
lubricants, solvents and bitumen through our
extensive national and international supply
chains. We are the exclusive supplier of
Shell fuels and lubricants in Australia and in
2020, we supplied approximately a quarter
of Australia’s liquid fuel requirements to a
national network of retail sites and directly to
our commercial customers. We also operate
a nationwide fuel supply chain, including the
strategically located Geelong Refinery, an
extensive import, storage and distribution
infrastructure network, including a presence
at over 50 airports and airfields.
Our values
Integrity
The right thing always
Responsibility
Safety, environment, our communities
Curiosity
Be open, learn, shape our future
Commitment
Accountable and results focused
Respect
Inclusiveness, diversity, people
Viva Energy Group Limited – ABN 74 626 661 032
01
Viva Energy Group Limited – Annual Report 2020 Contents
About us
Chairman and Chief Executive Officer’s report
Board of Directors
Executive Leadership Team
Operating and financial review
Sustainability
Remuneration report
Directors’ report
Auditor’s independence declaration
Financial report
Consolidated financial statements
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
Disclosures
Additional information
Historical financial information
Corporate directory
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Title: Wa-ngal yalinguth, yalingbu, yirramboi
Created by: Dixon Patten, Yorta Yorta and Gunnai, Bayila Creative
Acknowledgement
Viva Energy acknowledges and pays 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 peoples. We particularly pay
respects to the Traditional Custodians of the land,
across the nation where we conduct business.
We also acknowledge our gratitude that we share
this land today, our sorrow for the costs of that sharing
and our hope and belief that we can move to a place
of equity, justice and partnership together.
Viva Energy Group Limited – Annual Report 2020 About this Annual Report
This Annual Report contains information on the operations, activities
and performance of the ‘Viva Energy Group’ for the year ended
31 December 2020 (unless otherwise stated) and its financial
position as at 31 December 2020. The Viva Energy Group comprises
Viva Energy Group Limited (ACN 626 661 032) (the ‘Company’) and
its controlled entities.
In this Annual Report, references to ‘we’, ‘us’, ‘our’, and ‘Group‘ are
references to the Viva Energy Group.
Printed copies of this Annual Report will be posted to those
shareholders who have requested to receive a printed copy. Otherwise,
shareholders are notified when the Annual Report becomes available
and provided details of where the report can be accessed electronically.
Corporate Governance Statement
You can find our 2020 Corporate Governance Statement on the Investor
Centre section of our website at www.vivaenergy.com.au.
See the rest of our 2020 annual reporting suite at
www.vivaenergy.com.au
• Annual Report 2020
• Taxes Paid Report 2020
• Modern Slavery Statement 2020
• Corporate Governance Statement 2020
03
Viva Energy Group Limited – Annual Report 2020 About us
Our operations
We source crude oil (domestic and international)
for domestic refining, and refined products from
international refineries.
Sourcing
Domestic and
imported crude oil
Imported
refined products
Domestic
refineries
We refine crude oil into usable
products – including petrol, diesel,
jet fuel and specialty products.
We transport refined product to bulk
storage fuel terminals by pipe or ship.
Pipelines
Shipping
1. Procurement/Supply
2. Domestic Refining
3. Primary Distribution
Our year at a glance
Terminals are typically located
near major metropolitan,
industrial and mining centres
(closer to end customers).
Pipelines
People and community
Wholesale
distributors
Commercial
customers
Safety and environment*
We sell bulk fuel
products directly
to commercial
customers.
Shipping
Trucking
Terminal
storage
1,419
We transport product from terminal to
retail sites and commercial end customers.
4. Storage
Employees
5. Secondary Distribution
41%
of senior leaders are women
70%
Employee engagement score
$550K
Contributions to the national
bushfire relief
04
3.61
Retail
customers
Fuels are sold to
retail customers
through a network
of over 1,300 service
station sites.
Retail sites
Total recordable injury frequency
rate (per million hours worked)
6. Fuels Marketing
FY2019: 4.55
1.14
Lost time injury frequency rate
(per million hours worked)
FY2019: 1.41
34%
Reduction in LOPCs>100kg
from 2019
Process Safety Events
1
2
API Tier 1 Events
API Tier 2 Events
FY2019: 0
FY2019: 2
* Excludes performance of Liberty Oil Holdings.
Viva Energy Group Limited – Annual Report 2020 We source crude oil (domestic and international)
for domestic refining, and refined products from
international refineries.
Sourcing
Domestic and
imported crude oil
Imported
refined products
Domestic
refineries
We refine crude oil into usable
products – including petrol, diesel,
jet fuel and specialty products.
We transport refined product to bulk
storage fuel terminals by pipe or ship.
Pipelines
Shipping
1. Procurement/Supply
2. Domestic Refining
3. Primary Distribution
Terminals are typically located
near major metropolitan,
industrial and mining centres
(closer to end customers).
Pipelines
Wholesale
distributors
Commercial
customers
Shipping
Trucking
Terminal
storage
We transport product from terminal to
retail sites and commercial end customers.
Retail sites
Retail
customers
We sell bulk fuel
products directly
to commercial
customers.
Fuels are sold to
retail customers
through a network
of over 1,300 service
station sites.
4. Storage
5. Secondary Distribution
6. Fuels Marketing
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Financial performance
Financial performance
Balance sheet and
working capital
Capital management
$614.5M
Non-Refining Underlying
EBITDA (RC)
Up 16.5% on FY2019
$104.2M
Net Debt
0.8¢
Dividend per share1
Down from Net Cash of $480.9M
as at 30 June 2020
No final FY2020 dividend declared
($95.1)M
$87.1M
Refining Underlying EBITDA (RC)
Underlying FCF (RC)
Down $212.1M on FY2019
~$580.0M
Returned via Capital Management
program2 with $100M of
Waypoint REIT sale proceeds
remaining to be returned
($35.9)M
$89.9M
Underlying NPAT (RC)
Working Capital
$158.5M
FY2020 capex3
Down $171.7M on FY2019
Down from $162.5M
as at 30 June 2020
Reduced from original guidance
range of $250M–$300M
1. Excluding the special dividend of 5.94¢ per share.
2. Capital Management program of ~$580M includes Capital return ~$415M, Share buy-back ~$50M and Special Dividend ~$115M.
3. Includes major maintenance capital expenditure.
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Viva Energy Group Limited – Annual Report 2020
Chairman and Chief Executive Officer’s report
Robert Hill
Chairman
Scott Wyatt
Chief Executive Officer
Despite the reduction in fuel demand, the Company delivered
strong underlying performance in our Retail, Fuels and Marketing
(the non-refining) business, reporting non-refining Underlying
EBITDA (RC) of $614.5M in 2020, up 16.5% on 2019.
Performance
The COVID-19 pandemic has been a defining event for the
Australian and global economy and society during 2020.
Our priority has been the health and safety of our people
and ensuring that we continued to operate safely and reliably
to serve our customers and the broader community through
one of the most challenging years in Viva Energy’s history.
Our teams moved swiftly in early 2020 to implement
effective health and operating measures to protect our
people and operations from exposure to COVID-19, and
achieved a 20% reduction* in the number of recordable
injuries compared to 2019. We achieved a 34% reduction in
incidents involving loss of primary containment greater than
100kg*, and safely completed significant maintenance work
on the Residual Catalytic Cracker Unit despite the challenges
associated with management of COVID-19.
While total demand for transport fuel fell 16% from 2019,
the Company achieved growth in diesel sales, improved our
premium fuels penetration and maintained total fuel market
share in our key markets. The Company took the decision to
bring forward and extend the major maintenance program
so that the refinery was able to reduce production and
manage the impacts of substantially lower demand in
Victoria as a result of the extended stay at home restrictions
in place at that time.
Despite the reduction in fuel demand, the Company
delivered strong underlying performance in our Retail,
Fuels and Marketing (the non-refining) business, reporting
non-refining Underlying EBITDA (RC) of $614.5M in 2020,
up 16.5% on 2019. This performance was driven by strong
diesel sales, improved retail fuel margins and a robust
performance in our broader commercial specialty businesses.
Our group results were, however, heavily impacted by
performance in our refining business. Weak regional refining
margins due to the substantial decline in global oil demand
coupled with substantial short term reductions in domestic
demand due to extended lockdown restrictions in Victoria
led to an Underlying Refining EBITDA (RC) loss of $95.1M for
the year. At a group level, we recorded a Group Underlying
EBITDA (RC) of $519.4M (down 19.4% on 2019) and a Net Profit
After Tax (RC) loss of $35.9M (down from a profit of $135.8M
in 2019).
While this is a disappointing outcome given the strong
performance of the broader non-refining business, the
Company took appropriate steps to mitigate the COVID-19
related impacts that were largely out of our control and
refining performance has improved since returning to full
production at the end of 2020. While the outlook for refining
remains challenging, the Company has also taken steps
towards improving long term sustainability by working closely
with the Federal Government to develop a framework that can
provide critical assistance for the refining sector. This has led
to an interim production payment that will apply for the first
six months of 2021, and we expect a longer term package to
follow once this concludes.
During the year, the Company also made significant progress
on a number of strategic priorities, including divesting the
Company’s stake in Viva Energy REIT (now Waypoint REIT),
returning the majority of these proceeds to shareholders,
and announced plans to establish an Energy Hub at Geelong.
* Performance excludes Liberty Oil Holdings.
06
Viva Energy Group Limited – Annual Report 2020 We have made significant progress with our consortium
partners on the development of the proposed Gas Terminal
Project, and recently announced an alliance with HYZON Motors
to work together on the development of hydrogen for heavy
vehicle applications. These projects and others aim to leverage
the position and capability at Geelong and more generally
support our development of new energy opportunities.
Capital management
We entered the crisis in a strong net cash position as a result
of strong financial discipline and the earlier divestment of
our stake in Waypoint REIT. The majority of these proceeds
were returned to shareholders by way of a $115M special
dividend, a $415M capital return, and $50M of on-market
buy-back, with the Company finishing the year with a low net
debt of just over $100M. We remain committed to returning
the remaining $100M of the proceeds of the Viva Energy REIT
divestment in 2021.
The Company declared an interim dividend of $15.5M for
the first half of 2020, but with a Distributable NPAT loss of
$1.5M in the second half of 2020, the Board did not declare
a final dividend for the six months ended 31 December 2020.
It is a key priority for the Company to return to a positive
distributable NPAT in the first half 2021.
Sustainability
During 2020 we have further considered the risks and
opportunities associated with climate change and how
this impacts our businesses strategy. In particular, we have
developed a range of climate change scenarios and assessed
impacts in accordance with recommendations of the Taskforce
on Climate-related Financial Disclosures (TCFD). These will
guide the development of our business strategies and ensure
long term sustainability of our business.
Last year we announced plans to transform our refining
business at Geelong into an Energy Hub which can support a
range of new energy projects which provide potential future
earnings and assist the Company’s transition to lower carbon
energies. We have made good progress on the development
of an LNG Regasification Terminal to support an emerging
shortfall in Victorian gas supply and announced alliances with
a range of high-quality partners to develop this and other
projects such as Hydrogen manufacturing and refuelling
capability. We are adding battery electric vehicle recharging
stations to several retail service stations, and actively pursuing
other opportunities to build our understanding of new
energies and technologies.
Our people
More so than any other year we relied on our people to
safely maintain critical business operations throughout
the pandemic and ensure our customers had access to the
products and services they needed without disruption in the
interests of the Company, our shareholders and the broader
community. The Board would like to thank our people for
their significant contribution.
In 2020, we welcomed Dale Cooper as EGM Refining.
Dale brings over 30 years’ experience in the refining sector.
We also announced that Thys Heyns has made the decision
to retire from the Company in March 2021. Thys joined Viva
Energy shortly after the business was acquired from Shell,
initially leading the refining business and more recently in
the role of Chief Operating Officer. The Board extend their
appreciation to Thys for his significant contribution to the
business over his six years with the Company. With Thys’
departure, Jevan Bouzo will be appointed to the expanded
role of Chief Operating and Financial Officer, assuming
responsibility for supply Chain operations in addition to his
existing accountabilities.
Looking forward
We have launched a business recovery plan to deliver sustained
improvement in performance through 2021 and beyond.
Disciplined capital and cost management has preserved
cash and helped us enter 2021 with a strong balance sheet
and capacity for recovery and growth. In 2021, we will
continue to develop our core retail channels, position the
business to capture recovery in commercial segments
impacted by COVID-19, and will progress opportunities
to strengthen our supply chain as the industry adjusts to
Australian refinery closures. We are working to return the
Refining business to positive earnings in the short term
and, over the longer term, aim to return refining to delivering
reliable and material cash contributions to our business.
We expect to further develop the Geelong Energy Hub
projects, and maintain the strong capital discipline that
has served us well over the last year.
The Board would like to thank our shareholders for your
continued support.
We present an update on our sustainability program as part
of this Annual Report.
Robert Hill
Chairman
Scott Wyatt
Chief Executive Officer
and Executive Director
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Viva Energy Group Limited – Annual Report 2020
Board of Directors
Scott Wyatt
Chief Executive Officer
and Executive Director
BCA
Arnoud De Meyer
Independent Non-
Executive Director
MSc.E, MSc.BA, PhD
Management, Hon Phd
Jane McAloon
Independent Non-
Executive Director
BEc(Hons), LLB, GDip
CorpGov, FAICD
Term of office
Appointed as CEO on
13 August 2014. Appointed
to the Board on 7 June 2018.
Skills and experience
Scott Wyatt has more than
30 years’ experience in the
oil and gas sector and has
held various leadership
roles within Viva Energy’s
downstream oil and gas
business (formerly Shell)
including strategy, marketing
(consumer and commercial)
and supply and distribution.
After a long career with Shell
in New Zealand, Australia and
Singapore, Scott was appointed
as CEO in August 2014.
Scott serves as Chairman of
the Australian Institute of
Petroleum (since January 2020)
and is a former Board member
of Viva Energy REIT (now
Waypoint REIT) (2016 to 2019).
Board Committee memberships
• Member of the Investment
Committee
Term of office
Appointed to the Board on
18 June 2018.
Term of office
Appointed to the Board on
18 June 2018.
Skills and experience
Jane McAloon has over 25 years
of business, government and
regulatory experience at senior
executive and board levels
across the energy, infrastructure
and natural resources sectors.
Jane was an executive at BHP
Billiton and AGL. Prior to this, she
held positions in government in
energy, rail and natural resources.
Jane is currently a Non-Executive
Director of Energy Australia
(since 2012), Home Consortium
(since 2019), United Malt (since
2020) and Allianz Australia (since
2020). She is a former board
member of Healthscope Limited
(2016 to 2019), Cogstate Limited
(2017 to 2019), Civil Aviation
Safety Authority (2018 to 2019),
Port of Melbourne (2018 to 2020)
and GrainCorp (2019 to 2020).
Jane is also a board member
of the Allens Advisory Board.
Board Committee memberships
• Chair of the Sustainability
Committee
• Member of the Audit and
Risk Committee
• Member of the Investment
Committee
Skills and experience
Arnoud De Meyer is a former
President of Singapore
Management University (SMU)
and was previously a Professor
in Management Studies at the
University of Cambridge and
Director of Judge Business
School. Arnoud was also
associated with INSEAD as a
professor for 23 years, and was
the founding Dean of INSEAD’s
Asia Campus in Singapore.
Currently he is part-time
University Professor at SMU.
Arnoud currently serves on the
boards of Banyan Tree Holdings,
Singapore Symphonia Company,
INSEAD and the Ghent University
Global Campus and he is the
Chair of Temasek’s Stewardship
Asia Centre. He was previously
an Independent Director of
Dassault Systèmes (2005 to 2019)
and served as an independent
director for the Department
for Business Enterprise and
Regulatory Reform (UK) and
the Singapore Economic
Review Committee. Arnoud
also served on the boards of
Singapore International Chamber
of Commerce and Temasek
Management Services.
Board Committee memberships
• Chair of the Investment
Committee
• Member of the Remuneration
and Nomination Committee
Robert Hill
Independent
Non-Executive Director
and Chairman
LLB, BA, LLD(Hon), LLM,
DPolSc(Hon)
Term of office
Appointed to the Board on
18 June 2018. Formerly an
Independent Non-Executive
Director of Viva Energy Holding
Pty Limited (5 February 2015
to 17 July 2018).
Skills and experience
The Hon. Robert Hill is a
former barrister and solicitor
who specialised in corporate
and taxation law and who
now consults in the area of
international political risk.
He has had extensive
experience serving on boards
and as chairman of public
and private institutions,
particularly in the environment
and defence sectors.
Robert Hill was previously
Australia’s Minister for Defence,
Minister for the Environment
and Leader of the Government
in the Senate during his time
as a Senator for South Australia.
He served as Australia’s
Ambassador and Permanent
Representative to the United
Nations in New York. Robert
is a former Chancellor of the
University of Adelaide. In 2012,
he was made a Companion
of the Order of Australia for
services to government and
the parliament.
Robert is currently Chairman
of Re Group Pty Limited and a
former Chairman of the NSW
Biodiversity Conservation Trust.
Board Committee memberships
• Chair of the Remuneration
and Nomination Committee
• Member of the Sustainability
Committee
• Member of the Investment
Committee
08
Viva Energy Group Limited – Annual Report 2020 Former Director
Hui Meng Kho
Former Non-
Executive Director
BSc (Chemical
Engineering) (Hons)
Term of office
18 June 2018, resigned with
effect on 1 October 2020
Hui Meng Kho served as a
non-executive director on
the Board and a member
of the Remuneration and
Nomination Committee and
the Investment Committee
until his resignation, effective
on 1 October 2020. Up until
that time, Hui Meng was the
President and CEO of Vitol
Asia Pte Ltd and a member
of the Vitol Group Board
of Directors. Hui Meng
joined Vitol in 1987 and had
been the head of Vitol Asia
since 1999. Prior to joining
Vitol, Hui Meng was with
Esso Singapore, involved in
logistics, planning, trading
and refinery operations.
Dat Duong
Non-Executive Director
BBA, CFA
Michael Muller
Non-Executive Director
BA (Econ.Geography)
Term of office
Appointed to the Board on
7 June 2018. Formerly a
Non-Executive Director of
Viva Energy Holding Pty Limited
(1 January 2017 to 17 July 2018).
Skills and experience
Dat Duong is the Head of
Investments for Vitol in Asia
Pacific.
Dat joined Vitol in 2010, prior
to which he was an Associate
Partner at Leopard Capital,
an investment fund focused
on Asia’s frontier and
emerging markets.
Dat has extensive international
investment banking experience,
including with Merrill Lynch in
the Global Energy and Power
Investment Banking Group in
both Hong Kong and Canada,
where he led multiple landmark
downstream oil transactions.
Dat commenced his career
at Esso Imperial Oil in Canada
as a business analyst.
Board Committee memberships
• Member of the Audit and
Risk Committee
• Member of the Remuneration
and Nomination Committee
• Member of the Investment
Committee
Term of office
Appointed to the Board on
1 October 2020.
Skills and experience
Mike Muller joined Vitol in
London in 2018 and moved
to Singapore in 2019 where
he took on the role of Head
of Vitol Asia Pte Ltd on
1 October 2020.
Prior to Vitol, Mr Muller was
an executive with Shell in the
UK, Australia and Singapore.
A member of Shell’s Global
Trading Leadership since 1999,
he coordinated global supply
of chemical feedstocks and
led various oil trading desks
both physical and derivatives.
In 2013, Mr Muller was appointed
Vice President, Global Crude
Oil Trading and Supply. In this
role he was a Director of Shell
Trading International Ltd,
Chairman of Shell Western
Supply & Trading Ltd and of
Shell Trading Russia BV, and
a member of global Trading
Risk, Credit and Compliance
committees.
Mike is currently a Director
of Boustead Petroleum
Marketing Sdn. Bhd. (formerly
BP Malaysia) and a Director
of Arq Limited (UK).
Board Committee memberships
• Member of the Sustainability
Committee
• Member of the Investment
Committee
Sarah Ryan
Independent Non-
Executive Director
PhD (Petroleum Geology
and Geophysics), BSc
(Geophysics) (Hons 1),
BSc (Geology), FTSE
Term of office
Appointed to the Board on
18 June 2018.
Skills and experience
Sarah Ryan has over 30 years
of international experience in
the energy industry, ranging
from technical, operational and
leadership roles at a number of
oil and gas and oilfield services
companies, to a decade of
experience as an equity analyst
covering natural resources.
Sarah is a Fellow of the
Australian Academy of
Technological Sciences and
Engineering (ATSE), a Fellow of
the Australian Institute of Energy,
a Member of the Australian
Institute of Company Directors,
a Member of Women Corporate
Directors and a Member of Chief
Executive Women. She serves
as a member of ASIC’s Director
Advisory Panel, as non-executive
director of the Future Battery
Industries Cooperative Research
Centre, and is Deputy Chair of
the ATSE Energy Forum.
Sarah is currently a Non-
Executive Director of Woodside
Petroleum Limited (since 2012),
Aurizon Holdings Limited (since
2019), Akastor ASA, a company
listed on the Oslo Stock
Exchange (since 2014), and MPC
Kinetic Pty Ltd (since 2016). She
is a former director of Central
Petroleum Limited (2017 to
2018) and Aker Solutions ASA
(2010 to 2014). Sarah is also a
member of the ASIC Corporate
Governance Consultative Panel.
Board Committee memberships
• Chair of the Audit and Risk
Committee
• Member of the Sustainability
Committee
• Member of the Investment
Committee
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Viva Energy Group Limited – Annual Report 2020
Executive Leadership Team
Scott Wyatt
Chief Executive Officer
Jevan Bouzo
Chief Financial Officer
Thys Heyns
Chief Operating Officer
Scott Wyatt has more than
30 years’ experience in the oil
and gas sector and has held
various leadership roles within
Viva Energy’s downstream oil
and gas business (formerly
Shell) including strategy,
marketing (consumer and
commercial) and supply
and distribution.
After a long career with Shell
in New Zealand, Australia and
Singapore, Scott was appointed
as CEO in August 2014.
Scott holds a Bachelor of
Commerce and Administration
from Victoria University of
Wellington.
Prior to joining Viva Energy,
Jevan Bouzo worked at Ernst
& Young in assurance and
business services, where he
led assurance and business
improvement projects for
clients in the energy and retail
sectors as well as a number
of ASX-listed companies.
Since joining Viva Energy,
Jevan has overseen corporate
finance, business finance and
credit, treasury and a number
of strategic projects culminating
in his appointment as Chief
Financial Officer.
Jevan is a Chartered
Accountant and holds a
Bachelor of Commerce
(majoring in Accounting
and Finance) from Monash
University.
From the end of March 2021,
Jevan will assume the role
of Chief Operating and
Financial Officer.
Thys Heyns has more than
30 years’ experience in the
oil and gas industry. Prior to
joining Viva Energy in 2015,
Thys was with BP for 28 years
in an international career across
four continents that covered
Supply Chain, Oil Trading
and Refining.
Thys is an experienced Refining
executive with his most recent
roles including Executive
General Manager of the 120kb/d
Geelong Refinery, General
Manager of the 400kb/d BP
Rotterdam Refinery and the
140kb/d BP Kwinana Refinery
in Western Australia. Prior to
that, Thys was the Commercial
General Manager for BP’s global
refining portfolio.
Thys holds a Master in Business
Administration and a Bachelor
of Commerce (Hons) in
Accounting and Economics.
Thys has attended executive
education programs at Stanford
University, Cambridge University
and Massachusetts Institute
of Technology (MIT). He has
held leadership roles in various
industry associations and is
currently a Director of the
Geelong Manufacturing Council.
Dale Cooper
Executive General
Manager, Refining
Dale Cooper has over 35 years’
experience in the oil and gas,
refining and transportation
industries. Dale spent over 20
years with Irving Oil in Canada
where he has held refining and
commercial roles, most recently
as General Manager of the
320 kb/d Saint John Refinery.
Prior to this, Dale held roles
as General Manager, Mid-
Continent Crude and leadership
roles in Rail Logistics, Supply
Chain Operations, Refinery
Operations and Project
Management. Prior to joining
Irving Oil, Dale held operational
and engineering roles with
Saudi Aramco and Esso
Petroleum Canada.
Dale holds a Bachelor of
Science, Chemical Engineering
from the University of New
Brunswick and a Masters
of Business Administration
from the University of New
Brunswick. He has attended
executive education programs
at Harvard Business School,
Queen’s University and
Babson College.
Executive changes
Dale Cooper joined the team in 2020 as Executive General Manager,
Refining and brings over 30 years’ experience in the refining sector.
Dale succeeded Thys Heyns, who took on the role of Chief Operating
Officer in June 2020.
Viva Energy announced the following executive leadership changes that
will take effect from the end of March 2021.
After a long and successful career, Thys Heyns has made the decision
to retire from the Company. Thys joined Viva Energy shortly after
the business was acquired from Shell, initially leading the refining
business and more recently in the role of Chief Operating Officer.
The Board extends its appreciation to Thys for his significant
contribution to the business over the past six years and wishes
him well in his next endeavours.
10
Jevan Bouzo will be appointed to an expanded role of Chief Operating
and Financial Officer, assuming responsibility for supply chain operations
in addition to his existing accountabilities. Bringing together finance and
operations will help drive stronger financial and commercial focus across
our Supply, Corporate and Overheads segments.
Lachlan Pfeiffer will be appointed to an expanded role of Chief Business
Development and Sustainability Officer. In this role he will continue to be
responsible for assurance functions, which support good governance,
but will also lead the broader business development opportunities and
our sustainability strategy and associated initiatives.
Viva Energy Group Limited – Annual Report 2020
Amanda Fleming
Chief People and
Technology Officer
Megan Foster
Executive General
Manager, Retail
Lachlan Pfeiffer
Executive General Manager,
Legal and External Affairs
Denis Urtizberea
Executive General
Manager, Commercial
Amanda Fleming has over
20 years of experience
across Retail, Fast Food and
FMCG leading business-
wide transformations, as
well as Human Resources,
Merchandise, Operations
and Commercial functions.
Prior to Viva Energy, Amanda
was the Chief Transformation
Officer (CTO) and Managing
Director, Commercial, for Super
Retail Group, the owners of
Super Cheap Auto, Rebel,
Boating, Camping, Fishing
(BCF) and MacPac. Previously
Amanda has held executive
roles including Director of
Human Resources for Coles
Group in the Wesfarmers
organisation, Chief Operations
Officer and Chief People Officer
for Pizza Hut USA, and Human
Resources Director for Mars in
Australia (where she also served
as European Organisational
Development Manager for
Mars in the UK and Europe).
Amanda holds a Masters of
Organisational Change from
Hult International Business
School and a Bachelor of
Business from Deakin University.
Megan Foster has over 30 years’
experience in retail across
FMCG, Grocery, Specialty,
Food, and general Retail.
Megan brings with her extensive
senior executive experience
across Marketing and Brand,
Digital, Sales, Property and
Development, Operations,
Merchandise and M&A.
Prior to joining Viva Energy,
she led the Retail division
for QIC, responsible for the
retail product strategy across
Australia and its 22 Australian
assets. Previously she has held
general management positions
with Myer and Sass and Bide
after an earlier career with
Woolworths and Unilever, and
running a highly successful
retail consultancy.
Megan holds a Bachelor of
Commerce from University
of Western Sydney.
Lachlan joined the business
in 2014, and has held roles
with the Group including as
General Counsel. From 2018
to 2020, he also served as
a Non-Executive Director
of Viva Energy REIT (now
Waypoint REIT). Prior to
joining Viva Energy, Lachlan
Pfeiffer worked in mergers
and acquisitions for Skadden,
Arps, Slate, Meagher and
Flom (UK) LLP, based in London
for seven years. Lachlan
started his career in Melbourne
working for Norton Rose
Fulbright (Australia).
Lachlan is a legal practitioner
and holds a Bachelor of
Commerce from Melbourne
University and a Bachelor of
Laws (Hons) from Monash
University. He is also a member
of the Australian Institute of
Company Directors.
From the end of March 2021,
Lachlan will assume the role of
Chief Business Development
and Sustainability Officer
Denis Urtizberea joined Viva
Energy Australia in 2015,
bringing 25 years of experience
in the oil and gas industry.
He developed a passion for
customer centricity through
a number of diverse sales and
marketing leadership positions,
primarily in the business to
business arena.
Starting his career in a small
subsidiary of Total, moving then
to BP/Castrol Group before
joining Puma Energy and finally
Vivo Energy and Viva Energy
Australia, Denis has had the
opportunity to build a strong
international culture through
negotiating deals in more than
100 countries across the globe.
Denis holds a qualification
in engineering (Physics and
Chemistry).
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11
Viva Energy Group Limited – Annual Report 2020
Operating and financial review
Company overview
Viva Energy is one of Australia’s leading energy companies.
In 2020, Viva Energy supplied over 11 billion litres of petroleum
products (approximately one-quarter of Australia’s liquid fuel
requirements) through a national network of retail service
stations and directly to commercial customers. The Group
owns and operates an oil refinery in Victoria together with
an extensive import, storage and distribution infrastructure
network, including a presence at over 50 airports and airfields
across the country. Crude oil and refined products are
procured and imported by Vitol, one of the world’s largest
independent energy commodity trading companies.
Retail, Fuels and Marketing – Retail
Viva Energy supplies and markets quality fuel products
through a national network of over 1,300 Shell and Liberty
branded retail service stations with over 700 of the sites being
operated by Coles Express under the Coles Alliance. Viva
Energy also supplies other retail operators and wholesalers.
Retail, Fuels and Marketing – Commercial
Viva Energy is a significant supplier of fuel, lubricants and
specialty hydrocarbon products to commercial customers
in the aviation, marine, transport, resources, construction,
agriculture and manufacturing industries. Viva Energy’s strong
position across many segments is underpinned by national
infrastructure and long-standing customer relationships.
Refining
Viva Energy owns and operates the country’s second largest
and most complex refinery in Australia, located at Geelong
in Victoria. Refineries play an important role in processing
Viva Energy is a significant
supplier of fuel, lubricants and
specialty hydrocarbon products
to commercial customers in
the aviation, marine, transport,
resources, construction, agriculture
and manufacturing industries.
Australian and imported crude oil into petroleum products
which meet Australian specifications and help to enhance
fuel supply security for the country. Geelong Refinery
supplies more than 10% of Australia’s total fuel requirements
(more than 50% of Victoria’s fuel demand) and is the only
manufacturer of bitumen, Avgas for use in piston engine
aircraft, and hydrocarbon solvents.
Supply, Corporate and Overheads
Viva Energy owns or contracts access to a national
infrastructure network comprising import terminals, storage
tanks, depots and pipelines positioned across metropolitan
and regional Australia in all states. The Group operates barges
which provide marine fuels to cruise and container shipping
industries in Sydney and Melbourne, and also contracts with
a number of fuel transport companies to distribute fuels to
customers throughout the country. Through its wholly owned
subsidiary, Liberty Wholesale, Viva Energy also operates it’s
own fuel delivery fleet of over 80 vehicles.
12
Viva Energy Group Limited – Annual Report 2020 C
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13
Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Our strategy
As a large and diverse country, Australians rely on affordable
energy to move around, transport products to every corner
of the country and beyond our shores, and produce the
goods and services that drive the economy. Petrol, diesel,
jet and fuel oils have provided this energy for more than
110 years and remain an important part of every Australian’s
daily life. Through our extensive retail network, commercial
business, national terminal and pipeline infrastructure
position and strategically located refinery in Geelong, Victoria,
Viva Energy supplies approximately 23% of Australia’s liquid
fuel requirements.
During 2020, the business was impacted by the global
response to the COVID-19 pandemic with Retail, Aviation
and Refining most affected. Retail fuel demand has recovered
as stay at home restrictions have been relaxed, and we expect
domestic aviation demand to recover as domestic borders
are opened. International travel is not expected to resume in
any material way until international borders are open around
the world. The Refining business has been heavily impacted
by the decline in global oil demand affecting refining margins,
and the short term fall in local demand impacting production
during 2020. Significant losses were incurred in the refining
sector and the permanent closure of two refineries in Australia
have been announced.
We believe that the refining industry plays a vital role in
Australia’s economy, and are working closely with the
Australian Federal Government to implement a long term
Fuel Security Package which will provide important support
to the refining sector. We are also progressing a number of
projects at Geelong which have potential to transform the
site into a strategic Energy Hub and support the Company’s
longer term aspirations to expand into other forms of energy
such as natural gas, hydrogen and renewable electricity.
These have potential to diversify earnings in this part of our
business, and together with the benefits expected from
the Fuel Security package, help improve the long term
sustainability of the refining business.
As we look further ahead, we expect to see accelerating
changes in the energy markets as Australia and the world
move toward a lower-carbon economy. This transition
will progress at differing rates in different sectors, and
presents both risks and opportunities to our Company.
Our strategy is to remain a key player in the energy sector,
and particularly energy for transport. While this energy
transition will present new opportunities for investment
and encourage new products and services which will drive
future growth, hydrocarbon derived fuels will also continue
to be a very important part of the energy mix. As a leading
energy company with significant presence across all
geographies and sectors, Viva Energy can play a very
important role in meeting these changing customer needs
and benefiting from the new opportunities that emerge.
Viva Energy’s strategy is to remain focused on our core
business and outperform our competitors while at the same
time develop opportunities for new growth in emerging
products and services, and explore new horizons for growth
in new markets and aligned businesses.
14
In support of these key strategies, we aim to maintain a
lower capital operating model and minimise exposure to
high levels of fixed costs and volatility where this is possible.
For example, our retail business operates under a leasehold
model to reduce capital allocated to real estate, but at the
same time shares the fixed lease costs with our partner Coles
under the Alliance agreement. Our partnership with Vitol
provides access to a competitive supply of crude oils and
refined products while more effectively managing traditional
risks associated with procuring significant volumes on the
open market.
Most importantly, we maintain a strong commitment to
safe and reliable operations. We believe every incident is
preventable and are committed to pursuing the goal of no
harm to people and protecting the environment. We call
this ‘Goal Zero’. To achieve this we manage safety in a
systematic way and we believe that providing a safe workplace
and ensuring safe outcomes is an ethical responsibility.
We seek to achieve this through effective management of both
personal and process safety, as well as focused asset integrity
management and proactive health and wellness initiatives.
Viva Energy Group Limited – Annual Report 2020 2020 business performance summary
During 2020 the response to the COVID-19 pandemic had
a significant impact on our business and our customers.
As always, our priority has been the health and safety of our
people and ensuring that we continue to operate safely and
reliably to serve our customers and the broader community.
While fuel sales were impacted by the ‘stay at home’ and
border restrictions that were in place around the country
at various times in 2020, our Non-Refining Underlying
EBITDA (RC) increased by approximately 16.5% over the prior
year. This result was particularly supported by resilience in
diesel sales through both retail and commercial channels
(2.5%), improved retail fuel margins, and a strong Specialty
business performance.
Retail sales volumes are recovering as the country settles
into a ‘covid-normal’ state, and while aviation sales volumes
remain down 66.0% in December 2020, compared to
December 2019, our regional aviation business and other
commercial businesses have continued to perform well.
The Refining business has been heavily impacted by the
substantial decline in both domestic and global oil demand.
The Company made the decision to bring down some
processing units in late April 2020 to reduce production
and bring forward the planned major maintenance work
which was completed in November 2020. All processing
units have been restarted, and with the recovery in Victorian
fuel demand following the relaxation of ‘stay at home’
restrictions the refinery has returned to full production.
While Geelong Refining Margins have improved over the
final quarter of 2020 with the increase in production, the
refining outlook remains challenging given the longer-term
impact to global oil demand from the pandemic. The Fuel
Security Package announced by the Federal Government in
September 2020, and the commencement of the six month
interim Refinery Production Payment from 1st January
2021, provides important support to the refining business.
The Company continues to work closely with the Federal
Government on the design and implementation of the
longer-term Fuel Security Package beyond the conclusion
of the interim Refinery Production Payment.
Overall, the Group has performed well during 2020 given
the difficult trading conditions. The Non-Refining businesses
have delivered significant growth over the prior year, and
while the Group results have been impacted heavily by the
global weakness in the refining sector, we have taken steps
to minimise the cash impacts from this event. We continue
to work closely with Government to improve the longer-term
outlook for this part of the business. The Group has returned
the bulk of proceeds from the divestment in Viva Energy REIT
to shareholders and retains a strong balance sheet to pursue
market growth as it potentially returns in 2021.
Our personal safety performance improved on the previous
year, with a more than 20%* improvement in recordable injury
frequency compared to the injury frequency recorded in
2019, including a 50% reduction in recordable injuries across
both the logistics and facilities operations. The business
recorded three API Tier 1 / 2 process safety events* during
2020 compared with two process safety events in 2019.
* Performance excludes Liberty Oil Holdings.
Our personal safety performance
improved on the previous year,
with a more than 20%* improvement
in recordable injury frequency
compared to the injury frequency
recorded in 2019.
Overall there was a significant reduction in large spills or
loss of containment events, with a 34% reduction* in loss
of containment incidents greater than 100kg compared to
2019. In 2021 the focus will be on implementing enhanced
programs to manage the integrity of our assets as effectively
as possible and drive reductions in loss of containment events,
given the process safety, environmental and reputational
implications of such events.
Viva Energy Consolidated Results for
the Full Year ended 31 December 2020
The Group Net Loss After Tax on a historical cost basis
(HC) for FY2020 was -$36.2 million (M). After adjusting
for significant one-off items and net inventory gain/(loss),
Underlying Net Loss After Tax on a replacement cost basis
for the period was -$35.9M. A reconciliation from Statutory
Loss After Tax (HC) to Underlying Net Loss After Tax (RC)
is summarised in the table below.
Reconciliation of Statutory Loss After Tax
to Underlying Net Loss After Tax (RC)
Statutory Loss After Tax
Add: Significant one-off items net of tax
Add: Net inventory loss net of tax
Underlying Net Loss After Tax (RC)
(A$M)
(36.2)
(179.3)
179.6
(35.9)
The Underlying Net Loss After Tax (RC) result is in line with the
guidance update provided to the market on 18 December 2020.
Historical cost is calculated in accordance with IFRS and
shows the cost of goods sold at the actual prices paid by
the business using a first in, first out (FIFO) accounting
methodology. As such, HC accounting includes gains and
losses resulting from timing differences between purchases
and sales of inventory and the rise and fall of oil and product
prices during that time. Gains and losses arising from the
rise and fall of oil and product prices are typically offset by
a change in working capital because of the higher or lower
cost to replenish inventory. Replacement cost is a non-IFRS
measure under which the cost of goods sold is calculated on
the basis of theoretical new purchases of inventory instead
of the historical cost of inventory. As a result, it removes the
effect of timing differences to enable users of the financial
information to more consistently assess the underlying
performance of the business.
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Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Summary Statement of Profit and Loss
(A$M)
Revenue
Cost of goods sold (RC)
Gross Profit (RC)
Retail, Fuels & Marketing
Retail
Commercial
Refining
Supply, Corporate and Overheads
1. Total Underlying EBITDA (RC)
Retail, Fuels & Marketing
Retail
Commercial
Refining
Supply, Corporate and Overheads
2. Share of profit from associates
Net gain/(loss) on other disposal of assets
3. Revaluation gain on FX and oil derivatives
4. Depreciation and amortisation
Profit before interest and tax (RC)
5. Net finance costs
Profit before tax (RC)
6.
Income tax benefit/(expense)
7. Underlying Net (Loss)/Profit After Tax (RC)
8. Significant one-off items (net of tax)
One-off deferred tax benefit including tax consolidation
Net Profit After Tax (RC)
9. Net inventory loss
6. Net inventory loss tax benefit
Net (Loss)/Profit After Tax (HC)
Statutory earnings per share (HC)
Underlying earnings per share (RC)
31 December
2020
31 December
2019
12,409.9
(11,082.9)
1,327.0
16,541.6
(15,025.8)
1,515.8
Variance
(4,131.7)
3,942.9
(188.8)
828.2
449.0
50.3
(0.5)
519.4
670.8
238.3
(95.1)
(294.6)
10.6
(1.9)
2.4
(388.8)
141.7
(185.5)
(43.8)
7.9
(35.9)
179.3
-
143.4
(256.6)
77.0
(36.2)
(1.9)
(1.9)
688.5
545.8
299.8
(18.3)
644.5
564.3
296.5
117.0
(333.3)
60.2
(1.9)
43.1
(355.7)
390.2
(188.2)
202.0
(66.2)
135.8
4.0
8.2
148.0
(49.5)
14.8
113.3
5.8
7.0
139.7
(96.8)
(249.5)
17.8
(125.1)
106.5
(58.2)
(212.1)
38.7
(49.6)
(0.0)
(40.7)
(33.1)
(248.5)
2.7
(245.8)
74.1
(171.7)
175.3
(8.2)
(4.6)
(207.1)
62.2
(149.5)
(7.7)
(8.9)
16
Viva Energy Group Limited – Annual Report 2020 Summary Statement of Profit and
Loss analysis
1. Underlying EBITDA (RC)
Retail
The Retail segment comprises a national network of over
1,300 retail fuel and convenience sites which are operated
through various channels such as Coles Express under a long
term alliance (‘the Alliance’), Liberty Convenience, and sites
operated by independent dealer owners. Retail also includes
sales to wholesalers and independent retail operators.
During the year the Group acquired the remaining 50%
interest of Westside Petroleum Pty Ltd (Westside) and
continues to hold a 50% interest in Liberty Oil’s retail business
(Liberty Convenience).
Petrol sales volumes were heavily impacted during 2020
following the ‘stay at home’ restrictions, with sales volumes
down approximately 12% on 2019. Retail fuel sales have
recovered as restrictions have been relaxed across Australia,
with weekly fuel sales in the retail Alliance channel reaching
an average of 59 million litres per week in the final quarter
of 2020, up 13% on the quarter ended 30 September 2020.
Improved Retail fuel margins have more than offset the
decline in retail sales volumes, with Retail Underlying EBITDA
(RC) of $670.8M up $106.5M when compared with $564.3M
achieved in 2019. The Company continues to grow and
enhance its retail network, with the total branded network
(including independently owned and operated) now
exceeding 1,300 service stations.
Commercial
Commercial consists of the supply of fuel, lubricants and
specialty products to commercial customers in the aviation,
marine, bulk transport, resources, government, construction
and manufacturing industries.
Commercial sales volumes for 2020, excluding Aviation,
remained resilient with total volumes down approximately
4% on 2019. Aviation sales volumes were down approximately
57% compared to 2019 as a result of border restrictions in
place since the start of the pandemic, and Aviation volumes
are expected to continue to be impacted by domestic and
international travel restrictions. Lower supply chain costs
reflective of the lower sales volumes and actions to reduce
fixed costs have helped to mitigate the impact on the Group’s
EBITDA. The Aviation business received $5.8M by way of the
Government JobKeeper grant.
Marine business profitability remained strong and in line with
2019 despite the temporary cessation of cruises to Australia.
The Group has taken steps to retire two of the barges that
were dedicated to this work and is preparing to reinstate
capacity when activity recovers. Despite some weaker demand
from the coal sector, sales of fuel and lubricants to the broader
resources sector held up well during the year. The Group
worked closely with its customers to successfully manage
credit exposure and has not experienced any material loss.
Overall, Commercial achieved an Underlying EBITDA (RC)
of $238.3M down $58.2M when compared with $296.5M
achieved in 2019, which reflects the robustness of the diverse
portfolio of our business to business activities.
Refining
Refining relates to the earnings from the refinery located in
Geelong, Victoria (‘The Geelong Refinery’) which is owned
and operated by the Group and converts imported and locally
sourced crude oil into petroleum products including gasoline,
diesel, jet fuel, aviation gasoline, gas, solvents, bitumen and
other specialty products.
Refinery operations during the year were very challenging,
with oil markets exceptionally weak due to three major
global events occurring in the past twelve months – the
International Maritime Organisation (IMO) 2020 marine fuel
specification change, OPEC moving from an initial supply war
to production discipline and the unprecedented COVID-19
oil demand destruction.
Early in the year the transition to IMO2020 initially led to a
sharp increase in sweet crude premia which weighed heavily
on refining margins as diesel margins failed to increase and
compensate as expected. The oversupply of crude caused
initially by increased OPEC production, and further impacted
by refinery run cuts due to COVID-19 demand destruction,
then led to a substantial reduction in these premia.
The outbreak of COVID-19 had immediate impacts on the
refinery, with local demand for gasoline and jet products
significantly reduced and weaker regional refining margins
due to lower global demand. In response to this environment,
refinery production was reduced and the refinery operated in
a hydro-skimming mode with its Residual Catalytic Cracking
Unit (RCCU) unit shut down between May 2020 and November
2020. This enabled the refinery to feasibly manage gasoline
and jet production, and reduce exposure to weak jet and
gasoline margins. As a result of the change in operating mode,
intake was reduced to 34.8.MBBLS for the year compared to
42.0MBBLS in 2019.
Since the processing units were restarted in November
2020, Geelong Refining Margin (GRM) has improved, with
November 2020 achieving US$5.0/Barrel (BBL) on refining
intake of 2.8MBBLs and December 2020 US$4.9/BBL on
refining intake of 3.2.MBBLs. Overall for the 12 month period,
GRM was US$3.1/BBL on intake of 34.8MBBLs.
Despite lower production, costs were broadly in line with
last year with the refinery largely operating with a full
workforce. The Refinery also received $19.1M by way of the
Government JobKeeper grant. For the 2020 financial year,
the Refinery delivered an Underlying EBITDA (RC) of ($95.1M),
lower than the FY2019 Underlying EBITDA (RC) of $117.0M.
Operational availability (taking into account the above-
mentioned shutdowns) in 2020 was 91.9%, an identical
result to the 91.9% achieved in 2019.
The RCCU maintenance project commenced in July 2020
was completed over 128 days compared to the original
55-day plan. This approach was undertaken to best manage
workforce risks associated with COVID-19 and to reduce event
costs. An associated maintenance project on the Hydrofluoric
Acid Alkylation unit has been deferred for planned completion
during the second half of 2021. Total capital expenditure for
the RCCU project in 2020 was $92.3M, within the forecast
range of $85.0M–$100.0M.
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Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Summary Statement of Profit and
Loss analysis continued
1. Underlying EBITDA (RC) continued
Supply, Corporate and Overheads
Supply, Corporate and Overheads consists of Viva Energy’s
integrated supply chain of terminals, facilities, depots,
pipelines and distribution assets located across Australia,
as well as site maintenance costs and all head office costs.
Supply, Corporate and Overheads delivered an Underlying
EBITDA (RC) of ($294.6M) in FY2020, an improvement of
$38.7M compared with ($333.3M) achieved in 2019. Supply
chain costs reduced relative to 2019, reflective of lower sales
volumes, reductions in non-essential maintenance costs
and improvements in demurrage and ocean freight costs.
Corporate cost reductions and overall savings were achieved
from lower site maintenance and an internal focus on cost
management across all parts of the business, offsetting
increased insurance costs.
2. Share of profit from associates
Share of profit from associates includes two months share
of profit from Viva Energy REIT (now called Waypoint REIT)
compared to 12months in the prior comparable period
as the Group sold its security holding in this investment at
the end of February 2020. Also included in this line item is
the Group’s 50% share of profit/(loss) from Liberty Convenience
(12 months) and Westside (eight months to the end of
August 2020, being the timing of the acquisition of the
remaining share of Westside).
3. Revaluation gain on FX and oil derivatives
Revaluation gain/(loss) on FX and oil derivatives is impacted
by realised and unrealised foreign exchange and associated
hedges, flat oil price hedges and refinery margin hedging.
During the year a gain of $2.4M was recognised primarily as a
result of favourable oil price hedges taken out over the course
of the year, offset by the impact of the increase in the US /
AUD exchange rate, particularly in the second half of the year.
4. Depreciation and amortisation
Depreciation and amortisation includes $216.2M of
depreciation on the Group’s right of use assets (increased
by $17.1M compared to 2019), $140.2M of depreciation on
property, plant and equipment (increased by $12.1M) and
$32.4M of amortisation expense (increased by $3.9M).
Supply, Corporate and Overheads
delivered an Underlying EBITDA
(RC) of ($294.6M) in FY2020, an
improvement of $38.7M compared
with ($333.3M) achieved in 2019.
The increase in depreciation on right of use assets is driven
by the inclusion of a full year of Liberty Wholesale results
(acquired on 1 December 2019), the inclusion of Westside
Petroleum results since acquisition on 31 August 2020 and
the impact of new sites entered into part way through 2019
and in 2020.
Depreciation on property, plant and equipment increased
year-on-year primarily as a result of the impact of a full
12 months of charges from the large number of assets
under construction capitalised during the course of 2019.
Amortisation charges have increased primarily due to an
additional two months of amortisation relative to the prior
comparative period from the one off payment of $137.0M
made to Coles Express upon extending the Alliance
agreement (effective 1 March 2019). Amortisation of brand
and customer contract intangibles recognised on acquisition
of Liberty Oil Holdings has also contributed to the period
on period increase.
5. Net finance costs
Net finance costs of $185.5M were $2.7M lower than the prior
comparative period and consisted of interest income of $4.4M,
interest expense on borrowings, amortised transaction costs
and fees associated with trade finance instruments of $12.5M,
finance costs associated with leases of $171.0M and the
unwinding of discount on balance sheet provisions of $6.4M.
The decrease of $2.7M is due primarily to the Group being
in a net cash position for most of the period following the
sale of the Group’s investment in Viva Energy REIT (now called
Waypoint REIT). Offsetting the reduction in net cash related
finance costs is an increase in lease related charges
reflecting the additional leases forming part the acquisition
of Liberty Oil Holdings on 1 December 2019 and Westside
on 31 August 2020.
6. Income tax benefit
Viva Energy is subject to income tax expense on the basis
of historical cost earnings (NPAT HC) rather than replacement
cost earnings (NPAT RC).
The underlying income tax benefit of $84.9M ($7.9M before
tax on net inventory loss/gain) for the period represents
an effective tax rate of 28.3%. This does not include the
impact of tax relating to significant one-off items (refer to
section 8 below).
7. Underlying Net (Loss)/Profit After Tax (RC)
The Underlying Net Loss After Tax (RC) of -$35.9M
(compared to a $135.8M profit in FY2019) is a reflection of
the difficult conditions the Refinery operated in during the
year combined with the impact of the significant reduction
in aviation activity. Offsetting these reduction in part are
the improved result for Retail and for Supply, Corporate
and Overheads. Below EBITDA, reduced share of profit
from associates due to the sale of the Group’s investment
in Viva Energy REIT (now called Waypoint REIT), lower
gains on revaluation of FX and oil derivatives and higher
depreciation and amortisation due to the inclusion of full
year of Liberty Wholesale’s results also negatively impacted
the Group’s underlying Net Loss After Tax for the year.
The Underlying Net Loss After Tax (RC) result is in line
with the guidance update provided to the market on
18 December 2020.
18
Viva Energy Group Limited – Annual Report 2020 C
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8. Significant one-off items (net of tax)
In February 2020 the Group sold its 35.5% security holding
(276,060,625 stapled securities) in Viva Energy REIT (now called
Waypoint REIT) for an average of $2.66 per security by way of
a fully underwritten block trade, and a sale to each of Charter
Hall Group and the Charter Hall Long Wale REIT.
The significant one-off gain of $179.3M relates to this sale,
reflecting the pre-tax gain of $113.9M and a favourable write-
back of the $112.3M associated deferred tax liability, partially
offset by the tax expense associated with the sale of $46.9M.
The deferred tax liability of $112.3M was based on the
expected tax outcomes relating to the continued holding
of the securities. Once the securities were sold, the deferred
tax balance could be released.
Summary Statement of Financial Position
(A$M)
1. Working capital
2. Property, plant and equipment
3. Right-of-use assets
4.
5.
Intangible assets
Investment in associates
6. Net cash / (debt)
7.
Lease liability
8. Long-term provisions, other assets and liabilities
9. Net deferred tax asset
10. Total equity
9. Net inventory loss
Net inventory loss relates to the effect of movements in
oil price and foreign exchange on inventory recorded at
historical cost using the first in, first out (FIFO) principle
of accounting.
The loss of $179.7M (net of tax) recorded for 2020 reflects the
decrease in oil prices experienced during the period, with
the largest, most significant falls experienced during March
2020 with global macroeconomic factors affecting oil prices.
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31 December
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Variance
89.9
1,478.1
2,321.5
646.7
15.4
(104.2)
(2,534.3)
(181.8)
325.8
2,057.1
197.4
1,474.8
2,328.1
657.0
641.8
(137.4)
(2,448.3)
(155.5)
166.0
2,723.9
(107.5)
3.3
(6.6)
(10.3)
(626.4)
33.2
(86.0)
(26.3)
159.8
(666.8)
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Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Summary Statement of Financial
Position Loss analysis
1. Working capital
Working capital decreased primarily as a result of a reduction
in average benchmark crude and refined product prices of
A$31.2/BBL between December 2019 and December 2020.
2. Property, plant and equipment (PP&E)
Property, plant and equipment relates to freehold terminal
property, leasehold retail and terminal improvements,
plant and infrastructure such as tanks and pipelines held at
terminals, airports and retail sites and the Geelong Refinery
land and equipment.
Property, plant and equipment (PP&E) increased year-on-year
primarily due to the acquisition of Westside Petroleum during
the year, with non-essential capital expenditure deferred or
re-assessed. The most significant project undertaken during
the year was the major maintenance of the refinery’s Residual
Catalytic Cracking Unit (RCCU). The planned maintenance
of the Hydrofluoric Acid Alkylation unit which was scheduled
to be completed at the same time has been deferred for
potential completion during the second half of 2021.
The increase of $3.3M represents additions of $165.4M being
capital expenditure of $157.4M, asset retirement obligation
additions of $1.2M and land purchased for resale of $6.8M.
Also, leading to an increase in PP&E is the impact of a change
in the discount rate used to value Asset retirement obligations
of $4.5M and PP&E acquired through the acquisition for the
remaining 50% of Westside Petroleum of $6.0M. Offsetting
these increases were depreciation of $140.2M, disposals of
$17.1M, transfers of completed software projects to intangibles
and leased assets to Right of Use assets of $15.3M. A breakdown
of capital expenditure by segment is outlined below.
(A$M)
FY2020
FY2019 Variance
a. Retail, Fuels and
Marketing
b. Refining
Major Maintenance
Other Refining
c. Supply, Corporate
and Overheads
18.6
18.4
0.2
92.3
25.0
21.5
49.5
39.0
54.8
42.8
(14.0)
(33.3)
Capital Expenditure
157.4
161.7
(4.3)
a. Retail, Fuels and Marketing
Retail, Fuels and Marketing capital expenditure of $18.6M
increased slightly on FY2019 spend of $18.4M. Expenditure
during the year was focused on essential projects required
to ensure asset integrity, branding of new sites acquired
during the period, opening of new sites to the network and
the transition of sites previously operated by the Group
into the Alliance network.
The most significant project
undertaken during the year was the
major maintenance of the refinery’s
Residual Catalytic Cracking Unit.
b. Refining
Major Maintenance
The Group incurred $92.3M of capital expenditure in relation
to the Major Maintenance of the refinery’s RCCU. This work
was undertaken in line with the unit’s maintenance cycle
(four yearly major maintenance). Major maintenance work
undertaken in the prior year related to the refinery’s sulphur
recovery units.
Other refining capital expenditure
Other refinery capital expenditure of $25.0M relates to the
finalisation of the Distributed Controls Systems project
(upgrading the computerised controls system for automated
processes at the refinery) and of the Bitumen Manufacturing
Complex project (to improve the efficiency of the bitumen
plant and deliver the full benefits of the Bitumen Import/
Export facility). Other work undertaken included a catalyst
change to hydrogen sulphide unit (HDS2) and general
essential tank and asset integrity projects.
c. Supply, Corporate and Overheads
Supply Chain and Corporate capital expenditure of $21.5M
was lower than FY2019 predominantly due to deferral and
re-assessment of planned projects. Expenditure during the
year was focused on essential projects required to ensure
asset integrity including works undertaken at the Gore
Bay facility to upgrade wharf piles and fenders and work
maintaining the terminals tanks and equipment.
3. Right-of-use assets
The right-of-use assets balance at year-end was $2,321.5M,
a decrease of $6.6M from the prior comparative period.
Impacting this balance during the year were lease extensions,
new leases and the impact of lease payment escalations
totalling $122.2M (net of the impact of terminations), additional
leases due to the acquisition of Westside Petroleum of $76.5M
and reclassifications from PP&E of $10.9M. Depreciation
charges of $216.2M were recognised during the year.
4. Intangible assets
Intangible assets decreased by $10.3M during the year
primarily due to amortisation charges of $32.4M offset in part
by the recognition of Goodwill ($19.2M) on acquisition of the
remaining 50% of Westside Petroleum. Also contributing to
the year-on-year movement is the capitalisation of software
projects (+$4.5M), additions of ($1.1M) and a reduction
in Goodwill recognised on the 2019 acquisition of Liberty
Wholesale (-$2.8M).
20
Viva Energy Group Limited – Annual Report 2020
5. Investment in associates
Investments in associates decreased by $626.4M during the
period primarily due to the sale of the Group’s 35.5% security
holding in Viva Energy REIT (now called Waypoint REIT) in
February 2020.
9. Net deferred tax asset
Net deferred tax assets relate to the tax effected
difference between the carrying value of assets and liabilities
recorded for accounting purposes, and those recorded for
tax purposes.
Also impacting this balance is the recognition of the Group’s
50% of profit/(loss) from Liberty Convenience and Westside.
Share of profit/(loss) from associates is recorded against this
investment offset by distributions or dividends received.
6. Net debt
Net debt relates to Viva Energy’s Revolving Credit Facility (RCF)
which is used as a working capital facility to fund fluctuations
in working capital, net of cash at bank. Viva Energy does not
hold any long term structural debt. Net debt drawn for the full
year was close to nil driven primarily by the change in working
capital and the management of stock levels throughout the
second half of the year.
7. Lease liability
The lease liability balance at year-end was $2,534.3M, an
increase of $86.0M from the prior comparative period with
lease extensions, new leases and lease escalations of $122.2M,
additional leases due to the acquisition of Westside Petroleum
of $85.3M and reclassifications from trade payables of $3.3M.
Payments of lease principal totalling $124.8M were made
during the year.
8. Long-term provisions, other assets
and liabilities
Long-term provisions, other assets and liabilities
predominantly relate to: (i) long-term provisions associated
with asset retirement obligations required by accounting
standards and (ii) long-term environmental provisions.
The increase in the net liability of $26.3M during the year
primarily represents a decrease in post-employment benefits,
the unwinding of the discounting on the Group’s long-term
payable and the elimination of the loan to Westside Petroleum
due to the acquisition of the remaining 50% of the associated
during the year.
The increase in net deferred tax assets of $159.8M was primarily
due to adjustments in the current period connected with the
Group’s sale of its 35.5% security holding in Viva Energy REIT
(now called Waypoint REIT) along with recognition of the tax
loss generated during the year.
Prior to the sale of its security holding in Viva Energy REIT,
the Group held a deferred tax liability of $112.3M based on
the expected tax outcomes of the Group continuing to hold
the securities. Once the securities were sold, the deferred
tax balance could be released.
Given the significant impact on the Group’s business resulting
from the COVID-19 pandemic, the Group generated a tax
loss with a tax effect of $70.8M in the 2020 year. That loss is
available to be carried forward and it is considered probable
that future taxable profit will be available against which the
tax loss can be utilised.
Also impacting the balance during the period are the typical
movements in deferred tax due to origination or reversal of
temporary differences between taxable income and profit
during the year, along with movements posted directly to
equity or other comprehensive income.
10. Total equity
Total equity decreased by $668.8M primarily due to the
Capital Management activities undertaken during the year
being a capital return of $414.4M, a Special Dividend of
$114.4M1, and the Share Buy-Back program ($50.3M).
Also impacting equity during the year was the net loss after
tax of $36.2M, the payment of dividends ($66.1M)1 and other
transactions relating to: the Group’s share-based incentive
plans, the recycling of the fair value of cash flow hedges,
tax adjustments relating to the IPO transaction costs and
the purchase of treasury shares.
1. Net of the impact of treasury shares.
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Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Summary Statement of Cash Flows
(A$M)
Profit before interest, tax, depreciation and amortisation (HC)
before significant items
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Decrease)/Increase in trade and other payables
(Decrease)/increase in provisions
1. Changes in working capital
2. Non-cash items in profit before interest, tax, depreciation
and amortisation
31 December
2020
31 December
2019
Variance
273.9
696.4
(422.5)
456.3
497.9
9.0
(859.6)
(6.9)
96.7
5.5
(8.1)
(172.9)
5.9
162.1
(19.9)
(32.9)
(54.5)
464.4
670.8
3.1
(1,021.7)
13.0
129.6
60.0
Operating free cash flow before capital expenditure
376.1
609.0
(232.9)
Payments for PP&E and intangibles
Proceeds from sale of PP&E
Coles Express Alliance payment
3. Proceeds from sale of investments
4. Payment for treasury shares (net of contributions)
5. Share buy-back
6. Dividends received from associates
Net free cash flow before financing, tax and dividends
Loan to Westside Petroleum
Finance costs
Net cash consideration paid for step acquisition of associate
7. Net Income tax refund/(payments)
8. Dividends paid
9. Capital return
Repayment of lease liability
Net cash flow before borrowings
Net (repayment)/drawings of borrowings
Net cash flow
Opening net debt
Net debt acquired – Westside Petroleum
Amortisation of borrowing costs
Reclassification of borrowing costs
Closing net debt
Change in net debt
(158.5)
15.0
-
730.1
(8.8)
(50.3)
19.8
923.4
-
(177.6)
(1.0)
11.8
(180.5)
(414.4)
(124.8)
36.9
(107.2)
(70.3)
(137.4)
(2.2)
(1.4)
(0.1)
(104.2)
36.9
(161.7)
0.3
(137.0)
-
(20.0)
-
40.8
331.4
4.1
(180.3)
(24.8)
(26.2)
(134.2)
-
(106.2)
(136.2)
147.1
10.9
0.2
-
(1.4)
-
(137.4)
(136.2)
3.2
14.7
137.0
730.1
11.2
(50.3)
(21.0)
592.0
(4.1)
2.7
23.8
38.0
(46.3)
(414.4)
(18.6)
173.1
(254.3)
(81.2)
(137.6)
(2.2)
-
(0.1)
33.2
173.1
22
Viva Energy Group Limited – Annual Report 2020 Summary Statement of Cash
Flows analysis
1. Changes in working capital
Inventory decreased as a result of a decrease in average
benchmark crude and refined product prices of A$31.2/BBL
offset in part by increased closing stock levels.
2. Non-cash items
Profit before interest, tax, depreciation and amortisation
(HC) before significant items includes certain non-cash items,
comprising share of profit in associates of $10.6M, profit on
sale of assets of $5.5M, offset by unrealised losses on foreign
exchange and derivatives of -$10.8M, a non-cash adjustment
on the Westside step-acquisition (-$7.4M) and transactions
relating to employee share-based payments and other
minor amounts.
3. Proceeds from sale of investments
In February 2020, the Group sold its 35.5% security holding
(276,060,625 stapled securities) in Viva Energy REIT (now called
Waypoint REIT) for an average of $2.66 per security by way of
a fully underwritten block trade, and a sale to each of Charter
Hall Group and the Charter Hall Long Wale REIT. Total proceeds
of $734.3M were received and $4.2M of transaction costs
were incurred which resulted in net proceeds of $730.1M.
4. Payment for treasury shares
(net of contributions and capital returns)
During the year 6,545,012 shares were purchased at an average
price of $1.43 per share ($9.3M) and received purchase
contributions from employees of $0.5M.
5. Share buy-back
As announced on 18 March 2020, the Company commenced
an on-market buy-back program during the period.
Purchasing of shares under the buy-back program
commenced on 18 June 2020 with 27,397,847 shares
purchased by 31 December 2020 at an average price
across the period of $1.8250 per share. Transaction costs
of $0.3M were also incurred.
6. Dividends received from associates
The Group received payment of Viva Energy REIT’s (now called
Waypoint REIT) 2019 final dividend prior to the sale of its
investment in the company.
7. Net Income tax refund/payments
The net income tax cash refund of $11.8M for the year
represents a $41.1M tax refund received in August 2020 from
the ATO post-lodgement of the Group’s 2019 financial year
income tax return (whereby instalments paid during the prior
year exceeded the Group’s final tax liability), tax instalments
of $23.9M paid by the Group in the current year to the ATO,
and tax payments of $5.4M by the Group on behalf of its
Singapore tax resident entity (Viva Energy S.G. Pte Ltd) to
the Singapore tax authority.
8. Dividends paid
On 15 April 2020 the Company paid a fully-franked dividend
of 2.6 cents in relation to the six months ended 31 December
2019 ($50.6M) and on 16 September 2020 paid a fully-franked
dividend of 0.8 cents in relation to the six months ended
30 June 2020 ($15.5M). In addition, the Company paid a
special dividend of 5.94 cents per share on 13 October 2020
as part of the Group’s capital management program totalling
$114.9M. Included in the $181.0M of dividends determined
and paid during the year was $0.5M in dividends relating
to treasury shares on hand.
9. Capital return
On 13 October 2020, the Company returned $415.1M to
shareholders by way of a capital return of 21.46 cents per
share as part of the Group’s capital management program.
Of this payment, $1.0M related to the Group’s treasury share
holding at the time of payment. Transaction costs of $0.3M
were incurred.
Risk management
Our growth and success depends on our ability to understand
and respond to the challenges of an uncertain and changing
environment. This uncertainty generates risk, with the
potential to be a source of both opportunities and threats.
By understanding and managing risk, we provide greater
certainty and confidence for all our stakeholders.
Our Enterprise Risk Management (ERM) Framework and
related risk management policies and procedures are
designed to identify, assess, monitor and manage risk and
where appropriate, keep relevant stakeholders informed
of material changes to the Group’s risk profile.
The Board considers risk management fundamental
and pertinent to the success of the Group and takes
ultimate responsibility for its oversight and stewardship.
Notwithstanding, risk oversight and management is a
responsibility shared by all in the Group.
The Group articulates its tolerance levels for risk that it is
prepared to accept in the execution of its strategic and
business objectives. Management regularly demonstrates
to the Board that the Company is operating with due regard
to its risk appetite.
We identify:
• Those risks, being operational, financial and regulatory
that have the capability of impacting achievement of the
Group’s strategy and goals (strategic risks).
• Those risks that have the capability to cause harm to
people, the environment, assets or our reputation as a result
of Viva Energy undertaking its operations (Health, Safety,
Security and Environment (HSSE) risks).
Some risks are both strategic and HSSE in nature.
Executive management and the Board regularly review the
risks identified, challenge how they are mitigated and assess
the assurance activities directed toward the key controls
over each of the risks.
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23
Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Risk management continued
Strategic risk
Our response
Compliance and regulatory risk
Compliance
Compliance
Viva Energy is subject to a wide range of
legislative and regulatory obligations and we
operate a number of facilities under various
permits, licences and approvals (Regulatory
Approvals) including facilities designated as
Major Hazard Facilities.
Failure to comply with legislative requirements
or the conditions of Regulatory Approvals may
cause damage to our brand and reputation.
It could also result in fines and penalties and/or
loss of applicable Regulatory Approvals, which
would adversely impact Total Shareholder
Return (TSR).
Action by governments and regulators
Changes in laws or the conditions of Regulatory
Approvals could also materially impact our
strategic objectives, operations and TSR.
• Our compliance program incorporates Business Principles and Code of
Conduct, policies and procedures, staff compliance training and audits.
• We have detailed operating procedures, standards, training, audit and
assurance programs.
• We have the specialised knowledge we need in our teams and from
external consultants and we involve subject matter experts to minimise
the risk of non-compliance with permits, legislation and regulation.
• We monitor existing regulatory requirements.
• We have a robust licence renewal submission process to ensure that
the business is not subject to onerous additional conditions.
Action by governments and regulators
• We monitor political activity and proposed changes to the law.
• We work with select industry bodies to influence on issues that may
affect our industry.
• We engage with regulatory bodies and lawmakers both directly
and through industry bodies on issues that may affect our industry.
Commodity price exposure
Viva Energy is exposed to the risk of
movements in global hydrocarbon pricing,
particularly in respect of the refining margin
earned by the Geelong Refinery. Fluctuation
in the refinery margin can impact TSR.
• We manage commodity price exposure through active monitoring of
commodity price exposure, hedging and the purchase or sale of swap
contracts up to 24 months forward.
24
Viva Energy Group Limited – Annual Report 2020 Strategic risk
Our response
Operational and supply chain risks
Our operations and supply chain can
be disrupted by events such as extreme
weather, accidents, breakdown or failure
of infrastructure, and interruption of power
supply. Disruption to any part of Viva Energy’s
supply chain could impact our operations
and TSR.
The Geelong Refinery may be disrupted by
mechanical failures, equipment shutdowns,
major accidents and other events that disrupt
operations. Any such event may have a
material adverse impact on refining capacity
and revenues.
The continuing threat of further outbreaks from
the COVID-19 pandemic may have a material
impact on operations or financial results should
government imposed restrictions cause a
decline in demand for our products, or affect
the credit position of our customers (amongst
other matters).
In early 2021, ExxonMobil announced the
closure of its Altona refinery to take effect
in 2021. LyondellBasell Australia operates
a polypropylene manufacturing plant (the
‘LBA Plant’) that is adjacent and connected
to the Geelong Refinery. The LBA Plant takes
product generated from refining activities at
the Geelong Refinery and the Altona refinery
and uses such product as feedstock to its own
plant. With the closure of the Altona refinery,
operations at the LBA Plant may be impacted,
which may in turn have an adverse impact on
the operations of the Geelong Refinery.
HSSE risks
Processing, transportation and storage of
crude oil and petroleum products, and the
operation of the Geelong Refinery and fuel
storage facilities, include inherently hazardous
and dangerous activities. A major incident
could result in injury or fatality and/or damage
to the environment. This could also negatively
impact our brand and reputation, and TSR.
There is also a risk of smaller spills and leaks
of petroleum and crude oil to the environment,
which would give rise to liabilities for clean-up
and remediation costs.
Supply chain
• We maintain minimum stock levels.
• We conduct due diligence assessments on shipping and road
transport providers.
• We also manage this risk through alternative supply options.
• We maintain insurance coverage for major events and supply interruptions.
Refinery
• The Geelong Refinery has a proactive monitoring, inspection and
preventative maintenance program to manage the risk of HSSE incidents
and unplanned plant outages.
• In line with better practice and industry standards, unit turnarounds are
undertaken every four to six years.
• The business has emergency and crisis management plans in place and
regularly undertakes simulated response exercises to test the effectiveness
of these plans. These exercises often include the relevant community and
emergency response authorities.
• We invest in utility infrastructure to minimise the impact of disruptions
to externally provided resources such as gas, electricity or water.
• We maintain sufficient finished product stock levels to ensure adequate
buffer to cover typical potential unplanned outages.
• To address the risk of COVID-19 directly impacting our ability to operate
the refinery, various measures were put in place to reduce/limit the
impact of COVID-19 infiltrating the workplace, for example minimising
the number of staff on site and the use of temperature checks.
• We continue to monitor and vet international shipping and procurement
activities, and provide regular updates to all employees, including current
advice from the Department of Heath.
• We continue to work with LBA on the implications of the closure of the
Altona Refinery and assessing mitigating options to address the risk for
the Geelong Refinery.
• We have in place a comprehensive HSSE control framework and
management system.
• Our HSSE Management System is supported by a number of policies,
procedures and standards designed to ensure that HSSE risks are either
eliminated or reduced so far as reasonably practicable.
• We provide appropriate information, instruction, training and supervision
to our people to drive safe operations at all levels.
• We have a risk-based audit and assurance program, which reviews
facilities and critical activities against the HSSE Management System,
legislative requirements and industry best practice in order to identify
continuous improvement opportunities.
• Significant and high potential events are investigated to identify root
causes, with corrective actions put in place and learnings shared across
our operations.
• HSSE performance is one of our key performance indicators that is actively
measured and reported to the Board.
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25
Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Risk management continued
Strategic risk
Our response
Key strategic relationships and third party branding
We have a number of key business and
operational relationships, including with
Coles Express, Shell and Vitol. A material
deterioration in the nature of Viva Energy’s
arrangements with these parties or a material
decline in the performance of these parties
or their reputation or brand has the potential
to negatively impact our brand and
reputations as well as TSR.
Climate change
Climate change risk has both transitional
and physical elements. Transitional risk is the
risk flowing from a transition to a lower-carbon
economy that may affect the Group’s business
model in the future. Physical risk is the risk
flowing from acute events or chronic longer-
term shifts in climate patterns resulting from
climate change that may require mitigation
and adaptation actions.
The risk to our business includes:
• decline in demand for our products due to
government policy, technology or market
changes in response to climate change;
• increased operating costs arising from
regulatory responses to reduce greenhouse
gas emissions (such as a price on carbon);
• We manage this risk through our contractual rights.
• We carry out assurance activities at Coles sites, which address key
operational performance.
• We have established a crisis management team and we undertake
an annual crisis management training exercise jointly with Shell.
• We have regular engagement with representatives of all third parties.
• We seek to understand our performance in a range of future demand
scenarios, including by assessing the potential impacts of transitional
risks on the performance of our business units.
• We have adopted the recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD) as a framework for our climate risk
assessment and disclosures.
• We actively monitor industry forecasts and technological developments
to understand where the industry and energy markets are heading.
• Our strategy focuses on our core business as well as identifying new
adjacent areas for growth and new opportunities in the energy sector that
we see developing from the transition to a lower-carbon economy, such as
our vision for the Geelong Energy Hub.
• We are incorporating climate-related issues into our financial planning
process – for example, in 2021 we plan to adopt shadow carbon prices
to be applied in our investment evaluation and capital allocation process.
• We consider physical climate risks when developing significant projects
• increased reputational impacts affecting
such as the Gas Terminal Project.
our ability to attract investment and
talent; and
• physical impacts on our assets and supply
chains from increased frequency and
severity of extreme weather and rising
sea level events.
• We are a member of energy forums, industry groups and peak advocacy
bodies and see value in joint industry action on climate change in order
to promote sustainable industry development.
• We also monitor potential regulatory change and participate in
consultation processes either directly or through industry associations
to shape policy in the area of climate change, and we maintain a policy
dialogue with all levels of government on climate change issues.
Liquidity and financing
Viva Energy has substantial working capital
requirements due to the need to purchase
large shipments of crude oil and refined
products. We rely on banks and supply and
trade financing arrangements to provide
working capital funding. Adverse changes
in our relationship with providers of funding
or in financial markets, which reduce our
access to, or increase the cost of, funding,
could adversely impact our financial position.
• Our treasury function operates within a fit for purpose Board-approved
Treasury Policy. The Policy requires maintenance of sufficient cash
reserves and ensures robust reporting of our cash position to
management and the Board.
• We have access to working capital funding sources through a syndicated
financing facility and a range of trade finance facilities.
• Our credit risk management function ensures credit is provided within
our desired risk parameters.
• We actively monitor cash flow through the proactive management
of accounts receivable and accounts payable, and we have insurance
cover in the event of a major incident to supplement loss of income
(cash receipts).
• We have insurance cover in place in the event of a major incident to
supplement loss of income (cash receipts).
26
Viva Energy Group Limited – Annual Report 2020 Strategic risk
Our response
Refining margin exposure
The Geelong Refining Margin (GRM) is based
on the difference between the value of the
refined products that the Geelong Refinery
produces and the cost of the crude oil and
feedstock it consumes to do so. Refining
margins are affected by a range of factors
including a decline in regional demand for
refined products, increased refining capacity,
international freight costs and exchange rate
fluctuations. A low GRM can materially impact
earnings of the Geelong Refinery.
Exchange rate
Viva Energy purchases crude oil, feedstock
and finished products in US dollars and sells
its products predominantly in Australian
dollars. Fluctuations in the AUD/USD exchange
rate may negatively impact our earnings and
cash flow.
Credit risk
• We undertake regular assessment of the economic viability of maintaining
refining activities. This includes rigorous economic justification for capital
projects and turnarounds as well as the ability to shut down unprofitable
individual processing units, logical groups of units or the complete refinery.
• We utilise dynamic inventory planning to optimise refining margin
performance.
• We have programs to improve operational availability and reliability.
• We have in place a fit for purpose refinery margin hedging policy.
• Refining margin movements as a result of regional market forces are
inherent in the refining business and the activities outlined above
are not designed to completely eliminate this exposure.
• We operate a hedging program that is designed to manage the impact
of exchange rate fluctuations.
Credit risk is the risk that a customer or
counterparty fails to meet its contractual
payment obligations. Such a default
could impact our revenue and cash flow.
• We undertake credit risk assessments on customers.
• We establish credit limits.
• We manage exposure to individual entities.
Material decline in demand for our products
A number of external factors, including a
decline in economic activity, the entry of new
competitors into the business segments in
which we operate, a change in government
policies/regulation and changes in technology,
have the potential to negatively impact
demand for our products.
The current COVID-19 pandemic highlights
the risk that further outbreaks could have an
impact on demand for our product, particularly
if there is a significant and prolonged period
of reduced travel and other related changes
in consumer mobility behaviour.
If there is a significant decline in demand for
our products, this could materially impact TSR.
• We operate in a range of business segments and with a range
of product offerings.
• We seek to understand our performance in a range of future
demand scenarios.
• We actively monitor industry forecasts and technological developments
to understand where the industry and energy markets are heading.
• Our strategy is to optimise performance of our core business as well
as to identify new adjacent areas for growth and new opportunities
in the energy sector.
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27
Viva Energy Group Limited – Annual Report 2020
Operating and financial review continued
Risk management continued
Strategic risk
Our response
Labour costs and industrial disputes
Viva Energy’s operations are affected by
availability and costs of labour and the health
of our working relationships with employees
and labour unions. A major dispute with
one or more unions representing our (or our
major contractors’) employees could disrupt
operations at one or more of our facilities and
materially impact TSR. Similarly, a material
increase in the cost of labour could impact
production costs and profit margin.
Cyber security
A cyber security breach could cause
operational, reputational or financial damage
or loss to Viva Energy.
The public profile and importance of cyber
security has visibly lifted and has prompted
a statement by the Prime Minister that
Australia was seeing an increase in the
intensity of attacks.
COVID-19 restrictions have resulted in an
increase in the number of people working
remotely and connecting to our environment.
We proactively manage the relationship with our employees.
We have in place employee agreements.
We conduct regular benchmarking to ensure that wages and other benefits
offered to employees remain competitive.
In the event that a risk of employee or third party industrial activity is
heightened, we develop contingency plans to mitigate potential impacts
on our operations.
Viva Energy has a range of user access controls that restricts and contains
the ability for a user to have wide-ranging access.
We have robust user education and training as the frontline defence
mechanism to phishing and malware attacks.
We operate a third party Security Operations Centre which monitors
and analyses Viva Energy’s security posture.
We utilise extensive technology based controls and undertake
independent technology controls testing and validation.
Viva Energy is engaged with agencies/bodies that monitor and provide
intelligence to corporates regarding cyber attack insights. These include
the Critical Infrastructure Centre, the Australian Security Intelligence
Organisation – Business & Government Liaison Unit and the Australian
Cyber Security Centre.
28
Viva Energy Group Limited – Annual Report 2020 Sustainability
2020 Highlights
TCFD climate
scenario analysis
and risk assessment
undertaken
Total Recordable Injury
Frequency Rate (TRIFR)*
3.61
FY2019: 4.55
Process Safety Events*
1
API Tier 1 Events
2
API Tier 2 Events
FY2019: 0
FY2019: 2
70%
Employee engagement score
COVID-19 Safe
planning and risk
management
Geelong Energy Hub
launch setting out
a strategic vision to
support the evolving
energy mix
$550K
Contributions to the national
bushfire relief
34%
Reduction in LOPCs>100kg*
41%
of senior leaders
are women
Developed and
launched Viva Ways
of Working
90%
RAP deliverables completed
Modern slavery risk
assessment completed
and first statement
issued in FY2021
* Excludes performance of Liberty Oil Holdings.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Our approach to sustainability
Viva Energy is one of Australia’s leading energy companies
and supplies approximately a quarter of the country’s
liquid fuel requirements. We are the exclusive supplier of
high-quality Shell fuels and lubricants in Australia through
an extensive network of more than 1,300 service stations
across the country. We own and operate the strategically
located Geelong Refinery in Victoria, and operate bulk
fuels, aviation, bitumen, marine, chemicals and lubricants
businesses supported by 24 fuel import terminals, 22 depots
and 55 airports and airfields.
Our Purpose is to help people reach their destination by
supplying the energy our customers and business partners
need to go about their daily lives or run their businesses, and
providing rewarding and fulfilling roles for our employees.
We aim to achieve this in a way that contributes to positive
sustainability outcomes, and is aligned with our values:
Integrity, Responsibility, Curiosity, Commitment and Respect.
The Health and Safety of our people, contractors, customers
and community members is our number one priority, more
so than ever as we navigate the unprecedented challenges
arising from the COVID-19 pandemic. To help support our
people through these difficult times, we implemented a
mental health and wellbeing framework, we listened to our
people and adapted the way we worked. We understand the
benefits of a truly inclusive and diverse workplace and this
remains a strong focus across our business.
We recognise that a transition to lower carbon energies
is necessary to mitigate climate change impacts. We are
committed to being part of the lower carbon energy future,
and are actively pursuing opportunities in the energy
transition such as the range of projects contemplated at our
Geelong Energy Hub. At the same time, we are determined
to maintain safe and reliable liquid fuel supply and local
manufacturing capability, both essential to a prosperous
Australian economy. We strive to do this with continued
focus on energy efficiency and decarbonisation of our assets,
where practical.
Our community programs and our environmental
management systems support and protect the communities
and environments we operate in, and our robust governance
ensures we manage our risks and conduct our business in
an ethical and transparent way.
Our Purpose is to help people
reach their destination, including
our employees, customers, business
partners and investors.
Sustainability Framework
Our Sustainability Framework is guided by our values which
determine how we approach safety, our environmental
and community responsibilities, and our quest for new
opportunities. They also guide our conduct, behaviours
and the way we treat people.
Our sustainability focus areas are reviewed annually by
completing a materiality assessment, ensuring we identify
and focus on the environmental, social and governance (ESG)
risks and opportunities facing our business now and in the
future. Across the business, risks identified as having significant
impact on the business performance are regularly reviewed
through our Enterprise Risk Management Framework, which is
further discussed on page 26. Our Group policies outline our
commitments and approach which are implemented through
our management systems. Where possible, we assign annual
targets and tangible commitments to ensure we focus on what
matters and strive for continuous improvement. This report
provides an overview of the progress we made during FY2020.
Our Values
Integrity
The right thing
always
Responsibility
Safety, environment,
our communities
Curiosity
Be open, learn,
shape our future
Commitment
Accountable and
results focused
Respect
Inclusiveness,
diversity, people
Our Code of Conduct and Group Policies
Our Focus Areas
• Health and safety
• Making the lower carbon
energy transition
• Our people
• Environment
• Our community
• Ethical conduct
and transparency
• Economic contribution
Enterprise Risk
Management
Framework
Materiality Process
Identifies our sustainability
focus areas that matter to
our business and stakeholders
Our Management
Systems
Reporting on Performance
Sustainability governance
To provide effective direction and oversight of our
sustainability program and the work of the Board’s
Sustainability Committee we have established three
Management Sustainability Committees in FY2021 covering
Climate Change and Emissions; Health and Safety; and
People and Culture with Executive team participation.
Further detail on our sustainability governance, with a
particular focus on climate change, is provided on page 41.
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Viva Energy Group Limited – Annual Report 2020 C
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Board
Provides strategic guidance and oversight of management
performance in implementing our business strategies, plans
and values
Audit and Risk
Committee
Assists the Board for oversight
in relation to the effectiveness
of the Company’s Risk
Management Framework
Sustainability
Committee
Assists the Board in fulfilling
its responsibilities for
oversight in relation to
all sustainability matters
Executive Leadership Team
Provides strategic direction through Sustainability
Management Committees.
Sustainability Management Committees
Climate Change
and Emissions
Health and
Safety
People and
Culture
External assurance
PwC has conducted limited assurance over our key
sustainability performance indicators including:
• Total Lost Time Injuries / Frequency Rate
• Total Recordable Injuries Frequency Rate
• Total Tier 1 / Tier 2 Process Safety Events
• Significant spills
• Total Employees
• Gender Split (Male / Female) (%)
• Senior Leadership Group (Male / Female) (%)
• Total greenhouse gas emissions (Scope 1 and 2)
• Total energy consumed
A copy of PwC’s limited assurance statement is available
on page 76.
About our reporting
This report sets out our sustainability focus areas and
performance, covering assets owned and operated
by the Viva Energy Group for the period 1 January to
31 December 2020 (unless otherwise stated). A summary
of our sustainability performance data is included on
pages 69 to 71 of this Annual Report.
This report has been prepared with reference to the
Global Reporting Initiative Standards (GRI Standards)
and supplementary Oil and Gas Sector disclosures.
The GRI Standards define material topics as those that
reflect significant economic, environmental and social
impacts and/or substantively influence stakeholders’
assessments of the organisation’s sustainability performance
in the reporting period. For a full list of the disclosures
included in this report against GRI Standards, refer to the
GRI content index on pages 72 to 75. In addition, we have
mapped the UN Sustainable Development Goals (SDGs)
that align with our focus areas throughout this report.
We have aligned our approach to climate change assessment
and reporting with the Recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD).
In FY2020, we completed assessments in accordance with
the Australian Modern Slavery Act 2018 (Cth) and issued
our inaugural annual Modern Slavery Statement in FY2021.
We also report to the Workplace Gender Equality Agency
(WGEA). Both reports can be found online at investor.
vivaenergy.com.au/investor-centre.
We participate in third party sustainability performance
benchmarking initiatives and assessments. These are selected
based on applicability to our industry sector and recognition
by our stakeholders. Throughout FY2020, we responded to
or participated in ISS (Governance, Environmental & Social
Disclosure Quality Score), MSCI, and Sustainalytics.
We also continued to respond to individual requests
for information on our sustainability approach and
performance from investors, proxy advisors, government
agencies, and customers. We welcome engagement and
feedback on our sustainability program and this report.
Please visit the Contact Us page on our website to provide
your feedback vivaenergy.com.au/contact-us.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Aligning with Sustainable Development Goals
To highlight how the Group is supporting the achievement of the UN Sustainable
Development Goals (SDGs) we have mapped relevant goals with our sustainability
focus areas throughout this report.
We believe that our business has the opportunity to contribute to these goals, either
by enhancing our positive contributions or by avoiding or mitigating negative impacts.
Overall, our business can contribute to sustainable development in a number of ways
including providing access to affordable energy; opportunities for decent employment;
business and skills development; investment in our communities; substantial tax
contributions; improved energy and transport infrastructure; managing the impacts
of our operations by emphasising environmental protection, health and safety, and
human rights. We also recognise that our industry has contributed to some of the
challenges that the SDGs seek to address such as climate change.
Our focus areas
Our key stakeholders are our shareholders and the wider
investment community, our business partners, customers,
employees and contractors, suppliers, regulators, non-
government organisations, and the communities in which
we operate.
In FY2020, we conducted a materiality assessment to identify
and understand our stakeholders’ perspectives on the most
important sustainability issues associated with our operations
and business strategy. We also reviewed the impacts and
our response to emerging trends and challenges, including
those related to the COVID-19 pandemic throughout FY2020
and the 2019/2020 Australian bushfires. Additionally, we have
provided our position on relevant standards and regulatory
requirements for the reporting year.
The material sustainability matters we identified through
our assessment were grouped into sustainability focus areas,
which we use in our approach and make up the sections of
this report. These have been summarised on pages 33 to 34
including for each area, our key stakeholders and the progress
we made in FY2020.
1.
Identify Issues of Significance
We identified our internal and external stakeholders
and the sustainability matters of concern.
2. Identify Sustainability Matters
We compiled a list of sustainability matters based on:
• economic, environmental and social positive and
negative impacts and the risks associated along our
value chain;
• current and emerging global trends in sustainability; and
• future challenges for our sector.
3. Prioritise the Sustainability Matters
We then prioritised the sustainability matters based
on how they:
• substantively influence the assessments and decisions
of stakeholders; and
• reflect the Group's significant economic, environmental,
and social impacts.
4. Define Focus Areas
We defined the key sustainability matters and mapped
these to the GRI Standards and UN SDGs. We then
clustered these priority topics into focus areas, which
we use in our sustainability approach and reporting.
32
Viva Energy Group Limited – Annual Report 2020 FY2020 focus areas and progress
Focus areas
Key matters
Description
Stakeholders Key highlights FY2020
Health and
safety
Personal safety
Process safety
Compliance
Emergency
response
Health and
wellness
Community
safety
Climate
risks and
opportunities
Greenhouse
gas emissions
Energy
efficiency
Future fuels
and new
energy
Sustainability
of our business
model
Spill
prevention
Emissions
Contaminated
land
management
Waste and
circular
economy
Water
consumption
Biodiversity
Flexible
working
Diversity and
inclusion
Engagement
Training and
development
Making the
lower carbon
energy
transition
Environment
Our people
The health, safety
and wellbeing of
our employees are
fundamental to our
business. Stakeholders
expect consistent
performance and the
disclosures of any
exceptions.
Employees
Total Recordable Injury Frequency Rate (TRIFR) 3.61*
Contractors
Lost Time Injury Frequency Rate (LTIFR) 1.14*
Customers
Communities
Business
partners
Governments
34% reduction in loss of containment incidents
greater than 100kg*
Major Hazard Facility (MHF) Safety case update
(NSW)
COVID-19 Safe planning and risk management
Keeping our people safe and well throughout the
COVID-19 pandemic
Addressing the
greenhouse gas and
energy intensity of
our own operations,
supporting our
customers achieving
their carbon reduction
aspirations, and
positioning for the lower
carbon energy transition.
Communities
Employees
Customers
Governments
Shareholders
Business
partners
Industry
associations
NGOs
Announcement of plans to develop an Energy Hub at
Geelong comprising a range of new energy projects
that support the company’s energy transition
Agreement to install our first 350kW ultra-fast electric
vehicle charging stations at selected retail service
station sites
Board strategy day to consider new energies
opportunities and the evolution of the fuel and
convenience sector, in the context of transition to
lower carbon energy
In early 2021, entered a strategic alliance with
HYZON Motors to pursue hydrogen fuel for transport
opportunities
Climate scenario analysis and risk assessment aligned
with the Taskforce on Climate-related Financial
Disclosures (TCFD) recommendations
Founding member of the Climate Leaders Coalition
Geelong Refinery Energy Masterplan development
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The protection of the
natural environment
and resources through
continual improvement
of our environmental
performance.
Communities
Zero environmental non-compliance sanctions
Shareholders
Customers
Employees
Governments
NGOs
Progressive transition of firefighting foams and
infrastructure in Queensland and South Australia
Remediation of the former Clyde Refinery land
in Sydney commenced
Australian Packaging Covenant plan refreshed
Awarded ecoBiz Star Partner for the Pinkenba
Terminal in Brisbane
Our ability to attract,
motivate and develop
high calibre people
enables us to deliver
outstanding business
results today and into
the future.
Employees
70% Employee engagement score
Communities
41% of senior leaders are women
Customers
Governments
Launched The Viva Way business values and
behaviours
Workplace Gender Equality Agency (WGEA)
Employer of Choice for Gender Equality
Enhanced the Family and Domestic Violence
Support policy
Developed and launched Viva Ways of Working
* Excludes performance of Liberty Oil Holdings.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Focus areas
Key matters
Description
Stakeholders Key highlights FY2020
Our community
programs are dedicated
to making positive social
impact, and community
engagement that
reduces and manages
any negative impacts
from our operations.
Communities
Employees
Governments
Customers
NGOs
Our
community
Local
community
engagement
Licence to
operate
Community
partnerships
Indigenous
participation
and
reconciliation
Employee
participation
Ethical
conduct and
transparency
Human rights
and modern
slavery
Responsible
procurement
Code of
conduct
Anti-corruption
and bribery
Governance
Cyber security
Maintaining strong
corporate governance
and transparency and
respecting human
rights in accordance
with our values and
Code of Conduct.
Being accountable
to our stakeholders
for our financial
and sustainability
performance.
Employees
Customers
Contractors
Shareholders
Governments
Communities
Business
partners
National bushfire relief effort and recovery including
$550K donations to charity and support services
90% of Reconciliation Action Plan deliverables
completed
Delivery of virtual National Reconciliation Week
and NAIDOC Week engagements
Launch of Cultural Awareness Training online
eLearning module
Team Fundraising contributing over $261,847
to charity
Re-awarded Low Aromatic Fuel (LAF) supply contract
through to mid-2023
Modern slavery risk assessment completed and
first statement issued in FY2021
Human rights policy adopted
Procurement policy revised to align with our
commitment to human rights, gender diversity
and RAP objectives
Economic
contribution
Revenue and
taxes paid
Local wages
and hiring
Local
manufacturing
Energy security
Business
resilience
The significant economic
contribution through
the products we supply,
the employment we
generate, the local
suppliers we support,
the returns we provide to
investors and the taxes
we pay. We are a key
contributor to Australia’s
energy security and
underpin every sector
of the economy.
Shareholders
Employees
Contractors
Governments
Communities
Maintained safe and reliable fuel supply during
COVID-19 and bushfire impacts
Working towards long-term fuel energy security
Major maintenance completed at the Geelong Refinery
$5.07B tax contribution
34
Viva Energy Group Limited – Annual Report 2020 Health and safety
We are committed to managing health, safety, security
and environmental risks to so far as reasonably practicable
(SFARP), and to seek continuous improvement in pursuit
of our aspiration for Goal Zero.
In FY2020, the COVID-19 pandemic presented a significant
health and safety challenge for our employees and operations.
We were well prepared as our strategic planning for FY2020
already identified potential psychosocial risks across our
organisation and targeted programs to foster improved
mental health and wellbeing outcomes were in already place.
We’re proud of the way our people rose to this challenge and
demonstrated an ability to lead, learn, adapt, deliver and care
throughout the shifting challenge of continuing to operate
our business safely during the pandemic.
2020 Highlights
• Total Recordable Injury Frequency Rate (TRIFR) 3.61*
• Lost Time Injury Frequency Rate (LTIFR) 1.14*
• Keeping our people safe and well throughout the
COVID-19 pandemic
• 34% reduction in loss of containment incidents greater
than 100kg*
• Major Hazard Facility Safety Case update (NSW)
• COVID-19 Safe planning and risk management
2021 Priorities
• Maintaining our mental health and wellbeing framework
and support structures across the organisation
• Implement the Advanced Error Reduction Organisation
(AERO) program at Geelong Refinery and the Goal Zero
and Beyond program in our Supply Chain operations
• Implement Enhanced Loss Prevention Strategy at the
Geelong Refinery to support asset integrity management
and reduce loss of primary containment events
Our commitment to HSSE
Our commitment to Health, Safety, Security and Environment (HSSE Policy) sets out how we conduct our operations
safely and responsibly. We also measure and assess our performance against established benchmarks, and study
outcomes for continual improvement. View a copy of our HSSE Policy here vivaenergy.com.au/HSSE.
Our HSSE Management System
To help guide our people in meeting the objectives and expectations set out in our
HSSE Policy, we have a comprehensive Health, Safety, Security, and Environment
Management System (HSSE MS). The HSSE MS defines our approach and key
controls for managing all HSSE risks across all our business operations, and applies
to all employees, contractors and visitors alike. We review this annually to ensure
continuous improvement.
To ensure the highest levels of integrity and transparency, a dedicated team that
is independent of our business operations reports and tracks our performance
across a range of industry specific leading and lagging indicators.
To strengthen our safety performance, we investigate incidents and near misses,
implement corrective actions and verify effectiveness of controls. We continually
aim to improve our performance by sharing lessons amongst our employees and
contractors. Our senior executives and managers empower our employees and
contractors to maintain safe, responsible and sustainable working environments
and to perform their work without harm to ourselves, the environment, or others
at all times.
Our HSSE strategy in FY2021 will focus on becoming more learning centred by
further developing a culture where we learn through improved performance
monitoring and investigation, and sharing these insights and improvements
effectively. Further building our people’s understanding of our risk management
processes and the critical controls and critical activities will be fundamental
to this strategy.
FY2020 employee
engagement results
93%
of participating employees
feel empowered to
intervene on unsafe acts
95%
of participating employees
agree their team is
committed to always
operating safely
98%
of participating employees
understand the health
and safety risks relevant
to their roles
* Excludes performance of Liberty Oil Holdings.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Health and wellness
A significant challenge in our COVID-19 response was keeping
up to date with the required new health protocols and
communicating them to our employees. In January 2020, we
updated our Pandemic Response Plan previously developed
in response to the 2009 swine flu epidemic. We were able
to adjust this to make it fit for purpose in anticipation that
COVID-19 had the potential to escalate to pandemic status.
Taking this prompt action allowed us to be thinking in crisis
response mode and generate strategies to respond to the
developing pandemic response.
In March 2020, significant work was undertaken to develop
the required health management protocols relevant to the
COVID-19 pandemic and in line with government directions,
including isolation requirements, return to work protocols,
workplace cleaning and disinfection protocols, visitor and
travel restrictions. This required significant effort in a short
period of time from in-house subject matter experts within
our Health, Security and Safety teams, with support from key
operational personnel.
Throughout FY2020, our Health team was critical in managing
health assessments of returned travellers, particularly prior
to the Australian Government closing borders and restricting
travel. During April 2020, the team also delivered our
annual flu vaccination program to 70% of our employees
in operational roles.
Our office-based workforce responded and adapted quickly
to the challenge of working from home. Our operations
workforce also showed great commitment to pulling
together and rapidly implementing the changes required
to manage COVID-19 health risks. These changes included
isolating designated workforce areas, changing workgroup
interfaces and reducing opportunities for contamination,
such as modifying work permit issuing and document sign off
practices, and cleaning down shared equipment.
A priority was the proactive management of the psychosocial
risks posed by having large tranches of our workforce
suddenly working remotely (from home), whilst facing a
range of work and personal life stressors presented by the
pandemic. This was particularly important through the
extended lockdown experienced by our Melbourne and
Geelong based teams. In response, we held regular People
Connect engagement sessions to support our employees
and introduced an online mental health and wellbeing
application called Uprise.
In FY2021 the mental health and wellbeing of our workforce
will remain a focus for us, particularly with the ongoing
impacts of the COVID-19 pandemic. Our overarching HSSE
strategy continues to include a proactive approach to
psychosocial risk identification and management through
our existing framework and support structures.
36
Case study: UPRISE and People Connect
We sought out new and innovative ways to
stay in touch with our workforce that had been
thrust into remote working situations, with all
the challenges this presented in terms of their
ability to perform, feel engaged, connected and
supported. We introduced a mental health and
wellbeing application called Uprise, through which
users can undertake wellness checks and complete
simple modules aimed at building mental fitness
and resilience. The release of this application was
timed to coincide with a substantial proportion of
our workforce being affected by the difficult Stage
4 restrictions imposed in Victoria. This was a time
when there was concern that our people were
feeling challenged by the demands of working
virtually, or may have been experiencing other
psychosocial stressors, such as concerns about
job security, financial stress or COVID-19 related
health impacts. The Uprise app provides content
specifically aimed at providing users with tools to
manage or cope with such stressors.
During this period the company also hosted virtual
weekly ‘People Connect’ sessions, often featuring
trained psychologists talking about coping with
the stresses of COVID-19, changing workplaces
and ways of working, home schooling and other
lockdown related pressures. These sessions were
very well attended across our workforce nationally
and provided a platform for our employees to raise
concerns, ask questions and receive trained and
insightful support on how to maintain their mental
health and wellbeing during this challenging time.
The People Connect sessions are set to continue
into FY2021 as we continue to navigate the
ongoing challenges of COVID-19 for our people
and our business.
Viva Energy Group Limited – Annual Report 2020 Personal safety
Personal safety focuses on the prevention of injuries to our
employees, contractors and anyone who could be impacted
by our operations. It involves maintaining safe workplaces,
robust operating procedures and a strong safety culture.
Our leaders encourage their teams to maintain a safe workplace,
assess jobs for potential risks before commencing and during
tasks, intervene to stop unsafe practices, and innovate to
improve safe working practices. This is supported by regular
mandatory training for all our people across the business.
Our personal safety performance again demonstrated a
marked improvement on the previous year, with a 20%*
reduction in the recordable injury frequency from 4.55 in
FY2019 to 3.61* in FY2020. We have also had a reduction in
the lost time injury frequency rate compared to the previous
year, with a rate of 1.14* in FY2020 compared to a rate of 1.41*
in FY2019. We tracked the performance of Liberty Oil Holdings
separately in FY2020, with the business experiencing six lost
time injuries and a total of ten recordable injuries.
In some areas of our business, we experienced significantly
less activity as a result of COVID-19 impacts, particularly
in our Aviation operations, with a correlating reduction in
safety incidents. However, the performance also materially
improved in road transport and our Supply Chain business
in general, with a 50% reduction in recordable injuries
across these operations.
In FY2021, our personal safety improvement initiatives will be
focused on learning from and improving our ways of working
through the Advanced Error Reduction Organisation (AERO)
program at Geelong Refinery and the Goal Zero and Beyond
program in our Supply Chain operations.
Personal safety performance1
Viva Energy (excluding Liberty
Oil Holdings)
FY2020
FY2019
Total Exposure Hours (million)
5.27
6.38
Total Lost Time Injuries
Employees
Contractor
Total Lost Time Injury Frequency
Rate (per million hours)
Total Recordable Injuries
Employee
Contractor
6
3
3
9
5
4
1.14
1.41
19
7
12
29
13
16
Total Recordable Injury Frequency
Rate (per million hours)
3.61
4.55
Liberty Oil Holdings
Total Lost Time Injuries
Total Recordable Injuries
6
10
NR
NR
1. Definitions for safety performance are included within the
Sustainability Performance Data on pages 69 and 71.
* Excludes performance of Liberty Oil Holdings.
Viva Energy Life Saving Rules
We have 12 clear and simple Life Saving Rules that
directly address dangerous and potentially fatal
behaviours. These rules are clearly communicated
and must be followed by our people and
contractors. All breaches are investigated and
tracked to identify trends and improvements. In
FY2020, we rolled out our Life Saving Rules to both
Liberty Oil Holdings and Westside Petroleum and
will begin to track their performance in FY2021.
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WORK WITH
A PERMIT
Work with a valid work
permit when required
2
CONDUCT
GAS TESTS
Conduct gas tests
when required
3
VERIFY
ISOLATION
Verify isolation before
work begins and use
the specified life
protecting equipment
1.8m
4
CONFINED SPACE
AUTHORISATION
Obtain authorisation before
entering a confined space
5
DISABLING
EQUIPMENT
Obtain authorisation
before overriding or
disabling safety
equipment
6
WORKING
AT HEIGHTS
Protect yourself
against a fall when
working at height
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SUSPENDED
LOADS
Do not walk under
a suspended load
8
DO NOT
SMOKE
Do not smoke
outside designated
smoking areas
9
NO ALCOHOL
OR DRUGS
No alcohol or drugs
while working or driving
10
NO PHONES
OR SPEEDING
While driving, do not
use your phone and do
not exceed speed limits
11
WEAR YOUR
SEATBELT
Wear your seatbelt
12
JOURNEY
MANAGEMENT
Follow prescribed Journey
Management Plan
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Process safety
Process safety focuses on the safe storage, processing and
transportation of hydrocarbon products to minimise the risk
of leaks, spills and flammable conditions. Critical to reducing
the potential for process safety incidents are our asset
integrity programs and operating procedures, which we have
in place for all of our facilities. To manage process safety,
we apply the Hazards and Effects Management Process
(HEMP) across all our operations. HEMP risk assessments
identify Safety Critical Equipment (SCE) that acts as a barrier
to prevent the uncontrolled release of a hazard, which may
lead to high consequence incident scenarios with the
potential to harm assets, people or the environment.
Monthly management review of leading and lagging SCE
performance indicators allows for the assessment of the
effectiveness of SCE performance and completion of
maintenance and inspection plans.
Process safety performance1
Viva Energy (excluding Liberty
Oil Holdings)
Tier 1 Process Safety Events
Tier 2 Process Safety Events
Liberty Oil Holdings
Tier 1 Process Safety Events
Tier 2 Process Safety Events
FY2020
FY2019
1
2
0
0
0
2
0
0
1. Definitions for safety performance are included within the
Sustainability Performance Data on pages 69 and 71.
Our larger facilities are classified by relevant safety regulators
as Major Hazard Facilities (MHF) and are subject to operating
licences which set out the parameters and conditions under
which we are required to operate these facilities. Renewal of
these licences typically follows a comprehensive review of
the facility’s Safety Case by the relevant regulator and also
considers past performance and overall safety commitment
of the Company. During FY2020, we updated the Safety Case
at our Clyde Terminal in Sydney and submitted it to SafeWork
NSW as part of our MHF licence renewal. This process will
continue in early FY2021 when the re-issue of the site’s MHF
licence is due to occur.
Overall, in FY2020 we recorded a significant reduction in
large spills and loss of containment events, with a 34%
reduction in loss of containment incidents greater than
100kg for Viva Energy (excluding Liberty Oil Holdings) and
a 40% reduction of these incidents for Liberty Oil Holdings,
compared to FY2019. Disappointingly we experienced our
first significant process safety incident in more than three
years, with an API Tier 1* process safety event involving the
loss of more than 1,000kg of alkylate from buried piping at
our Geelong Refinery. In this event, the product released
was contained in the surrounding soil and recovered to the
extent practicable, with no injury or lasting environmental
impact. We also experienced two API Tier 2* events at the
Geelong Refinery, with no offsite or environmental impacts
* Tier 1 and Tier 2 Process Safety Events are defined as per API RP 754.
38
Overall, in FY2020 we recorded a
significant reduction in large spills
and loss of containment events, with
a 34% reduction in loss of containment
incidents greater than 100kg for
Viva Energy and a 40% reduction of
these incidents for Liberty Oil Holdings,
compared to FY2019.
resulting from these incidents. For more information on loss
of containment events and spills, refer to the Environment
section on page 52.
In FY2021 our focus will be on analysing and developing
improved strategies to manage the integrity of our assets
as effectively as possible and drive reductions in loss of
containment events, given the process safety, environmental
and reputational implications of such events. Whist this is
relevant to all our operations, we will concentrate our efforts
at the Geelong Refinery through the implementation of an
Enhanced Loss Prevention Strategy.
Emergency and crisis management preparedness
A timely and effective response to an incident, based on
robust emergency planning, is the most important factor
in limiting injury, potential impact to the environment, our
assets, and our licence to operate. We regularly engage
and consult with emergency services organisations, the
local community and other stakeholders with respect to
our emergency response planning, including by running
practical exercises with their involvement. Our facilities have
emergency response plans and resources in place, and all
relevant personnel are trained in dealing with an emergency.
Our transport contractors also have emergency response
capability in place to cover any incidents that may occur
when transporting our products.
Crisis management planning has been crucial to our effective
response to the COVID-19 pandemic, and prior to that during
the 2019/2020 bushfires that impacted New South Wales and
Victoria. In FY2020 we successfully operated through the
COVID-19 pandemic while ensuring the health and safety
of our people, customers, suppliers and communities.
For more information on our response to COVID-19 during
FY2020, refer to www.vivaenergy.com.au/COVID19-response.
Throughout the 2019/2020 bushfires, we supported fuel
deliveries into impacted areas and quarantine fuel at our
service stations for emergency services. We also provided
direct support to customers that were experiencing difficulties
as a result of the disaster. For more information on our
bushfire response, refer to the Our Community section
on page 63.
Viva Energy Group Limited – Annual Report 2020
Case study: Communicating with our retail customers
To reach and engage with our retail customers, we maintain regular communications through a number of platforms
including our customer database. This enables us to connect with our customers on latest offers, competitions, site
updates, car maintenance and road trip related articles, and health and safety messages.
In FY2020, we used these platforms to communicate our COVID-19 safety messages across our Shell branded and Shell
Coles Express service station network. This included reassurance to the community that essential services were being
maintained by keeping our sites and our supply chain operational to ensure ongoing fuel supply. In line with the advice
from Government and health experts, changes to work and cleaning practices were implemented by our partners Coles
Express and Independent dealers to ensure the health and hygiene of our customers, their families and the thousands
of team members who operate the sites. These measures ensured our sites remained safe and comfortable environments
for everyone and in line with the COVID-19 guidelines provided by the Commonwealth Department of Health.
Case study: Viva Energy wins Best HSSE Program in Shell’s Global
Licensed Markets for fostering a mentally healthy workplace
Weipa Servicentre was the proud recipient of the award for Best HSSE Program in Shell’s
Global Licensed Markets in FY2020. Weipa is an isolated and remote mining town on the
coast of Cape York in northern Queensland. Aboriginal and Torres Strait Islander people
make up 19.5% of the population of approximately 3,900 people1. Research reveals remote
Australians die from suicide at twice the average rate of city-based people, yet are only
able to access mental health services at a fifth of the rate of city-based people2. It also
identifies farmers and Aboriginal and Torres Strait Islander people as among those most
at risk of suicide. The team at Weipa Servicentre tragically had personal experience with
this, having lost two team members to suicide in recent years.
The team adopted a targeted approach to foster a mentally healthy workplace, including offering Mental Health
First Aid training to staff, liaising with Weipa Community Health, and implementing check-ins with site staff and
safe zones promoting cultural awareness and exchange. Three staff members also participated in the Conquer the
Corrugations Cape York Mental Health Awareness Walk, a huge community event, supported by local businesses,
including Weipa Servicentre. Participants in the event walked 42km over the course of two days to raise awareness
of the issues surrounding life’s ‘corrugations’ in Cape York, to support and remember those affected, and to remove
the stigma that surrounds mental health.
“We wanted to share our story to inspire others to act and make mental illness a priority in their business.”
— Maddison Reinhardt, Weipa Servicentre Site Manager
Case study: Crisis prevention exercise
supporting the Australian Defence Force
In late 2019, Viva Energy was handed operational control of
the HMAS Cairns Defence Fuel Installation (DFI) facility as part
of a commercialisation project conducted under the Defence
Fuel Transformation Program. The DFI is situated adjacent to
the HMAS Cairns base, which the DFI services. Recognising
the close links between the base and the DFI teams, Defence
and Viva Energy undertook a major joint emergency response
exercise in October 2020 that tested each party’s capacity
to manage a spill to water emergency, as well as the coordination between the two parties and with the responding
agencies. The scenario tested on the day simulated a significant diesel spill from a failed ship’s hose during discharge
operations. Enacting the onsite response to this scenario included physically assembling spill response equipment and
working with Ports North, Maritime Safety Queensland and Defence personnel on how the active response would be
managed. This exercise served as an excellent opportunity to work together and identify improvement opportunities
for lines of communication and escalations during a potential crisis.
1. According to 2016 Census undertaken by the Australian Bureau of Statistics (ABS).
2. Bishop, L., Ransom, A., Laverty, M., & Gale, L. (2017). Mental health in remote and rural communities.
Canberra: Royal Flying Doctor Service of Australia.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Making the lower carbon energy transition
We recognise that human impacts are contributing to climate
change, and we support policies and action that will help
Australia meet its carbon reduction commitments in a sustainable
way, including support for Australia’s commitment to the Paris
Agreement. We are equally committed to improving energy
efficiency in our own company’s operations, and supporting
the development of lower carbon and renewable energies,
as part of the wider energy transition.
FY2020 Highlights
• Geelong Energy Hub launch setting out a strategic vision
to support the evolving energy mix
• Board strategy day to consider new energies opportunities
and the evolution of the fuel and convenience sector, in the
context of transition to lower carbon energy
• Agreement to install our first 350kW ultra-fast electric
vehicle charging stations at selected retail service station
sites
• In early 2021, entered into a strategic alliance with HYZON
Motors to pursue hydrogen fuel for transport opportunities
• Climate scenario analysis and risk assessment aligned with
the Taskforce on Climate-related Financial Disclosures
(TCFD) recommendations
• Founding member of the Climate Leaders Coalition
• Geelong Refinery Energy Masterplan development
FY2021 Priorities
• Progress Geelong Energy Hub energy transition initiatives,
such as the Gas Terminal Project and Solar Energy Farm
• Launch our ultra-fast electric vehicle charging stations pilot
to learn more about this technology and consumer uptake
• Progress our strategic alliance with HYZON Motors to
pursue hydrogen fuel for transport opportunities
• Implement shadow carbon pricing as a risk assessment
tool in our investment decision making
• Detailed feasibility assessment of energy projects at the
Geelong Refinery for future capital investment planning
• Progress our TCFD adoption program
• Enhanced climate change and emissions focus through
more dedicated roles, accountabilities and governance
committees
• Actively participate and collaborate with industry peers
on Climate Leaders Coalition initiatives
Lower carbon transition and business strategies
At Viva Energy, we proudly supply products and services that
are vital to our economy. At its heart we supply the energy
that keeps us moving, and our goal is to ‘Help People Reach
Their Destination’. As such, we have a unique position and
opportunity to support the transition to a lower carbon energy
future and expect to deliver this through a mix of traditional
and emerging energies that will evolve over time.
Our business strategy is to remain focussed on the efficiency
of our existing core business and outperform our competitors,
to grow in adjacent and new businesses lines aligned with our
traditional areas, while also capturing opportunities for new
growth in emerging products, services, and new markets.
We see opportunities that support the transition to a lower
carbon economy, as well as growth opportunities in existing
and adjacent businesses that we can pursue now and through
an energy transition
In FY2020 we announced our vision to develop the site of
the Geelong Refinery into an ‘Energy Hub’ to support the
energy needs of south-east Australia and the transition to
lower carbon energies. This leverages the benefits of this
strategic location, positioning Geelong as a core element of
energy supply for Victoria and the south-eastern states into
the future. There are a number of proposals aligned to this
concept, which are drawn out further in herein, and of which
the Gas Terminal Project is an early priority. Differentiating the
energy supply options at Geelong will help secure and grow
operations at Geelong into the future.
In our Retail and Commercial fuels businesses, we continue
to investigate and participate in new energies. We are
commencing electric vehicle (EV) charging services at key
retail fuel and convenience sites to build and understanding
of this emerging and important part of our broader retail
convenience offering. In addition, we are actively pursuing
opportunities for the development of hydrogen within the
heavy vehicle transport sector (busses and trucks) with the
recent announcement of our strategic relationship with
HYZON Motors. These opportunities, together with the
provision of biofuels, are expanded on further below as part
of the TCFD analysis of opportunities and provide potential
transition pathways into the future.
3. For further discussion of these impacts, refer to page 17 of the Operating and financial review.
40
Viva Energy Group Limited – Annual Report 2020 In both Retail and Commercial, we also see opportunities
to develop and grow our non-fuels businesses. In our Retail
channel, this includes the Convenience shopping retail
business, both in our core Shell Coles Express offering, and
through the Liberty Convenience joint venture. We expect to
continue to grow and learn in the convenience business, and
with developing shopping trends expect that the convenience
business presents a significant future growth opportunity.
Emissions and energy efficiency strategy
We differentiate the emissions and energy profile of our existing
core business into three categories: (i) Refining; (ii) Operations
(non-Refining); (iii) Customers. Each category has a distinctly
different profile that drives differing approaches.
Refining
We have been operating our refinery at Geelong since 1954,
and it remains an asset of national importance to Australia’s
energy security. The refining process is inherently carbon
and energy intensive, with Geelong representing 96% of our
Group’s overall greenhouse gas emissions, but is necessary
to the production of usable fuels to the market whether that
refinery is operated by us, elsewhere in Australia, or overseas.
Our approach is to operate Geelong Refinery as safely
and reliably as possible, ensuring the most efficient use of
energy, and mitigating greenhouse gas emissions within
the constraints of the current facility configuration. We have
identified opportunities to upgrade equipment and optimise
processes to reduce energy use and emissions, but have not
yet progressed these due to the uncertain outlook for refining
in Australia. We will continue to assess these alongside other
low carbon investment opportunities within our business.
Operations
Beyond the Geelong Refinery, we operate a nationwide
infrastructure, import and storage network, through which we
deliver our products to all parts of Australia. The energy and
emissions profile of these operations is significantly less than
that of our refining operations, and we see good opportunities
for us to progress mitigation, reduction and offset strategies
to reduce the energy and emissions footprint of this segment.
Customers
Our customers are also focussed on their energy efficiency
and emissions reduction, and our products contribute to their
footprint. Our goal is to provide commercial solutions and
expertise to help them achieve energy efficiency outcomes.
For many of our customers this is a journey, and we act as their
trusted fuel partner in continuing to support their business.
Taskforce on Climate-related Financial
Disclosures (TCFD) framework adoption
In FY2020, we progressed our work against the Taskforce on
Climate-related Financial Disclosures (TCFD) framework and
the results of this work are set out in the following section of
the report. This framework is an important tool for us to assess
and monitor the potential impacts of climate change on our
Company and to identify emerging trends that influence our
business strategy. The framework requires longer-term analysis
and assessment, which necessarily requires broad assumptions
into the future, however this is important analysis to ensure that
we continue to maintain a critical eye to longer-term trends
and that our current business model is capable of adaptation
to emerging trends.
The Recommendations
of the Taskforce on
Climate-related Financial
Disclosure (TCFD) is a
voluntary framework for
climate-related financial
disclosures. It recommends
that companies exposed
to climate risk make
assessments and disclose
against the following
core elements:
DRAFT – FOR DISCUSSION PURPOSES ONLY
Final Report
Recommendations of
the Task Force
on Climate-related
Financial Disclosures
Recommendations of the Task Force on Climate-related Financial Disclosures
i
June 2017
Governance: the
organisation’s governance
around climate-related risks and opportunities.
Strategy: the actual and potential impacts of climate-
related risks and opportunities on the organisation’s
business, strategy and financial planning.
Risk Management: the processes used by the
organisation to identify, assess and manage
climate-related risks.
Metrics and Targets: the metrics and targets used
to assess and manage relevant climate-related
risks and opportunities.
The TCFD differentiates climate impacts as:
• Transition risks and opportunities associated with
the expected shift to a lower carbon economy.
• Physical risks to assets, operations and supply
chains arising from changes in the physical climate.
These may include acute risks, such as intense
weather events, or chronic risks arising from
longer-term shifts such as changes in sea levels.
We know that it is critical for the sustainability of our business
to understand the opportunities and risks associated with
climate change and how to incorporate these into our
business strategy. To help guide our approach to this and
provide transparency to stakeholders we have adopted the
Recommendations of the TCFD framework.
We made significant progress on adopting the
recommendations of TCFD in FY2020, particularly in the
areas of scenario analysis and risk assessment. Detail on
our progress against each of the core TCFD elements is
provided below.
Governance
Board level
The Board of Viva Energy Group Limited (Board) holds ultimate
responsibility for reviewing and monitoring the systems of risk
management in the business, including climate-related risks.
On climate change related matters, the Board is primarily
supported in this role by the Sustainability Committee, which
assists in reviewing the Group’s carbon and energy efficiency
performance, priorities and governance.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Our Audit and Risk Committee (ARC) overseas the Group
Enterprise Risk Management Framework, which governs the
management of all risks within the business. Climate risks
are incorporated into this framework, and accordingly the
ARC serves an important role of ensuring a consistent and
centralised management approach to all risks.
In FY2020 the Board, through the Sustainability Committee
and the Audit and Risk Committee, was engaged on the
following climate-related matters:
• Reviewing and discussing the Group’s strategy, risks
and opportunities
• Reviewing the Enterprise Risk Management Framework
and whether the business is performing with due regard
to the risk appetite set by the Board.
• Reviewing management’s carbon and energy efficiency
priorities for 2020 and receiving subsequent progress
update reporting.
• Receiving briefings on management’s TCFD climate
scenario approach and risk assessment outcomes.
• Receiving updates on the Geelong Refinery’s greenhouse
gas (GHG) emissions and energy performance.
• Reviewing management’s proposal to implement a
shadow carbon price as part of the Group’s capital
allocation process.
Management level
In FY2020 the Chief Operating Officer oversaw the activities
of central Environment and Sustainability, and HSSE
Management and Assurance teams. These teams were
both led by national managers covering environmental
(including climate change) related compliance, operational
support, systems management and assurance.
The Group’s Executive General Manager (EGM) of Legal
and External Affairs oversaw the governance function of
the organisation, including the impacts of climate-related
regulatory and policy changes.
At an operational level, environmental and sustainability
matters are included in the accountabilities of asset managers
across the business, including the Executive General Manager
Refining, Supply Chain Operations Manager and other key
operational staff.
Throughout FY2020, a Management Sustainability Working
Group met on a monthly basis under the sponsorship of
the EGM of Legal and External Affairs. The working group
included key personnel from across all businesses and
functions of the Group, and was involved in the development
and support of the Group’s carbon and energy priorities,
and monitoring market, technology and government
policy developments.
In FY2021, we have continued to enhance the Group’s climate
change and energy focus, through:
• Centralising responsibility for all sustainability matters
to the Chief Business Development and Sustainability
Officer4, providing executive responsibility and oversight
of the Group’s climate and broader Sustainability strategy,
governance and engagement, and new energy strategy
and developments.
• Establishing a dedicated team led by a Group Carbon and
Sustainability Manager, reporting to the Chief Business
Development and Sustainability Officer, to lead and
coordinate our climate change and emissions strategy.
• Establishing a Climate Change and Emissions
Management Committee (which will replace the
Management Sustainability Working Group) comprising
senior staff, including all members of the Executive
Leadership Team, from across the organisation who are
responsible for the monitoring of climate-related risks
and opportunities, and implementation of the strategic
priorities in response.
Additionally in FY2021, a shadow carbon price will be
introduced into the Group’s investment evaluation and
capital allocation process, to provide Management and
the Board with an indication of how investments may be
impacted by future climate policy changes to guide
business decision making.
Strategy
Scenario analysis
In FY2020, we undertook an assessment specifically focused
on climate impacts, in order to deepen our understanding
of climate transition pathways through the development
of climate scenarios. In doing so, we evaluated the risks
and opportunities associated with these scenarios, and we
reviewed our business resilience and strategic response.
We developed three climate scenarios, designed to stress
test the resilience of our business strategy under a range
of plausible future states, using the following inputs and
approaches:
• Intergovernmental Panel on Climate Change (IPCC)
physical scenarios.5
• International Energy Agency (IEA) transitional scenarios.6
• Shared Socioeconomic Pathways (SSPs).7
• TCFD requirements for scenarios to be plausible, distinctive,
consistent, relevant, and challenging.
The three climate scenarios adopted represent three
distinct levels of global decarbonisation: Limited Mitigation;
Disorganised Mitigation; and Aggressive Mitigation. The
Aggressive Mitigation scenario represents a ‘lower than 2°C’
scenario specified by the TCFD and is oriented toward a 1.5°C
climate outcome.
4. The Chief Business Development and Sustainability Officer, Lachlan Pfeiffer, was formerly the group’s EGM Legal and External Affairs.
5. IPCC (2014): Fifth Assessment Report of the Intergovernmental Panel on Climate Change, https://www.ipcc.ch/report/assessment-report/ar5.
6. IEA (2020): World Energy Outlook 2020, IEA, Paris, https://www.iea.org/reports/world-energy-outlook-2020.
7. Riahi et al. (2017): The Shared Socioeconomic Pathways and their energy, land use, and greenhouse gas emissions implications: An overview,
Global Environmental Change, Volume 42, Pages 153-168, https://doi.org/10.1016/j.gloenvcha.2016.05.009.
42
Viva Energy Group Limited – Annual Report 2020 The climate scenarios we have selected represent plausible
development paths to future climate states, as described
by societal, technology and policy characteristics, and are
backed by internationally recognised climate scenarios.
It is important to note; however, that these scenarios are not
forecasts of our business, nor are they intended to represent
a comprehensive description of the future. Rather they are
designed to highlight the potential impacts of, specifically,
climate change at different timeframes in the future. It is
also noted that there are many other factors beyond climate
change that could, and will, impact Viva Energy’s business
over time. These include impacts, risks and challenges that
we face now, as well as those that may develop over time.
The key characteristics of each of the Viva Energy climate
scenarios are summarised in the table below.
Viva Energy
TCFD climate
scenario
Global
warming
state
IPCC physical
scenarios
IEA transition
scenarios
Description
Limited
Mitigation
> 4°C
RCP8.5
Not applicable
as transition
impacts not
considered
significant in
this scenario
• ‘Business as usual’ approach to climate change with continued
growth in GHG emissions.
• Limited government intervention and industry-led initiatives.
• UN Agreement Nationally Determined Contributions (NDCs)
not achieved.
• Significant physical risks, and much less prominent
transition impacts.
Disorganised
Mitigation
~ 3°C
RCP6
RCP4.5
Stated policies
• Gradual approach to reducing GHG emissions in the long
term driven by technology with some support by policy.
Aggressive
Mitigation
< 2°C
RCP2.6
• Limited government intervention, with technocratic-driven
leadership from business.
• NDCs achieved.
• Transition and physical impacts both prominent.
Sustainable
development
– Net Zero
by 2050
• Progressive government policy that sets a pathway for a rapid
and orderly transition.
• Quicker response sees GHG emissions begin to reduce in the
near term as governments and their communities embrace
the vision of a decarbonised future.
• NDCs exceeded.
• Significant transition impacts, and some but far less prominent
physical impacts.
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The time horizons we adopted for our climate scenarios
assessment and the bases for their selection include:
• Short Term – 2023: reflects near term policy and
technology certainty, aligned with our business operational
planning cycle.
• Medium Term – 2030: aligned with our strategic planning
timeframe, and consistent with market approach.
• Long Term – 2050: consistent with industry practice,
aligned with typical ‘net zero’ emissions target timeframes,
and to more fully consider physical climate impacts.
Following scenario development, we undertook a process to
identify climate-related risks and opportunities and assessed
these against the selected climate scenarios and time
horizons. The process we followed to identify climate-related
risks involved our external advisor EY completing internal
document and policy reviews, external desktop research and
a peer benchmarking exercise. It also involved conducting
interviews with key internal stakeholders to gain insights.
A series of workshops were then held with relevant internal
stakeholders to validate the identified risks and opportunities
and assess their rating across the various climate scenario
and time horizon combinations. Note, transition risks and
opportunities were assessed as unlikely to be significant
for the Limited Mitigation scenario. Similarly, Physical risks
are not expected to be significant in the Aggressive
Mitigation scenario.
The risk assessment process was aligned with our Group
Enterprise Risk Management Framework (ERM) in terms
of consequence and likelihood scales, and these were
combined to determine an overall risk rating using the
Group’s ERM risk matrix.
The risk analysis was conducted on a qualitative basis.
While all reasonable care has been taken in its preparation,
considering industry, market, societal and governmental
changes over any length of time, particularly in the longer
term, necessarily involves a high degree of uncertainty and
the application of broad assumptions. Many of these
assumptions are informed by the work and content of the
underpinning scenarios, but these scenarios are typically
compiled on global or regional bases, whereas our business
depends on many local Australian factors.
Further, as we have noted above, these risks and opportunities
relate only to matters directly related to the impacts of climate
change (whether those are physical or transitional impacts).
In order to understand the risks well, these risks are presented
on an ‘unmitigated’ or ‘inherent risk’ basis before any
strategies or risk treatment plans are applied which would
or could reduce the severity or likelihood of the risk to a
‘residual risk’ basis.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
The table below outlines the potentially significant climate-related risks and opportunities identified through this process,
as well as the key strategies we are implementing in response.
Risk/
opportunity
type
Transition
Risk – Policy
Description
Relevant scenarios
and time horizons
Our strategic response
Future climate policies that
establish a price on carbon
emissions or mandate
emissions performance
requirements – resulting
in additional costs for our
emission-intensive operations
such as the Geelong Refinery.
Potential to be
significant in the
medium term in
Aggressive Mitigation
and, to a lesser degree,
Disorderly Mitigation,
with impact increasing
in the longer term.
• We monitor Government climate policy
developments, actively engage in policy
consultation process, and evaluate how potential
changes will affect us.
• We advocate the importance of local refining
capability for national fuel security, and for
recognition of emissions-intensive trade exposed
businesses in climate policy.
Transition
Risk – Policy/
Market/
Technology
Climate policies aimed at
increasing electric vehicle (EV)
or other low carbon alternative
fuels uptake; technological
improvements in internal
combustion engine (ICE)
energy efficiency; shifts in
consumer mobility preferences
and patterns away from
privately owned ICE vehicles –
resulting in reduced consumer
fuel demand and lower revenue
in our Retail business.
Potential to be
significant in the
medium term in
Aggressive Mitigation
and, to a lesser degree,
Disorderly Mitigation,
with impact increasing
in the longer term.
Transition
Risk –
Technology
Technology advancements
leading to increased
alternative/advanced fuel
or renewable energy use in
Commercial business segments
(e.g. mining, aviation or others)
– resulting in reduced revenue
for our Commercial business.
Potential to be
significant in the
medium term in
Aggressive Mitigation
and Disorderly
Mitigation, with impact
increasing in the longer
term, particularly in
Aggressive Mitigation.
• We have developed an Energy Masterplan for
our Geelong Refinery to help reduce its GHG
emissions intensity.
• We will apply a shadow carbon price in our
investment evaluation and capital allocation to
assess potential future carbon price exposure.
• We have announced our vision for the Geelong
Energy Hub to diversify our refinery revenue streams
to lower carbon energy transition opportunities.
• We monitor Government policy developments,
technology advancements and consumer trends,
and factor these into our future business planning.
• We are partnering with new technology providers
and introducing new technologies on a test-and-
learn basis, such as the EV charger rollout at
selected retail service sites with a third party.
• We are involved in new technology forums and
industry groups in order to continue our focus
on these potential shifts.
• Our business units also capture earnings not directly
related to fuels, and we see opportunities to grow
these over time in both our Commercial and Retail
channels.
We supply a diverse portfolio of products to a
wide range of customer/industry segments which
are expected to have different transition rates and
pathways, reflecting a general resilience in our business.
We are collaborating with others and piloting
emerging alternative fuels and energies to position
for adoption where feasible. This includes work in
biofuels, hydrogen and other alternative fuels.
We are working with our Commercial customers to
understand their low carbon transition strategies,
and how we can support these.
Transition
Risk –
Market/
Reputation
Increased investor
scrutiny, increased lender
stigmatisation, shareholder
resolutions and negative
screening on emissions
intensive industries due
to increased uncertainty
around future earnings.
Potential to be
significant in the
medium term in
Aggressive Mitigation
and Disorderly
Mitigation, with impact
increasing in the longer
term, particularly in
Aggressive Mitigation.
We have adopted the TCFD recommendations for
disclosure to provide transparency and demonstrate
to stakeholders our understanding of climate risk
and linkages to our business strategy.
We conduct shareholder and proxy advisor
engagements to exchange perspectives in relation
to ESG matters, including climate change.
44
Viva Energy Group Limited – Annual Report 2020 Risk/
opportunity
type
Transition
Risk –
Reputation
Physical Risk
– Chronic
Physical Risk
– Acute
Description
Inability to attract or retain
talent due to increased
reputational damage and
volatility in emissions
intensive industries.
Relevant scenarios
and time horizons
Potential to be
significant in the
medium to long term in
Aggressive Mitigation,
and in the long term in
Disorderly Mitigation.
Our strategic response
• We are positioning the Group to be an active
participant in the transition to a lower carbon
economy over time. Initiatives such as the Geelong
Energy Hub will provide significant opportunities
for our present and future employees, including
the Gas Terminal Project, which is currently providing
opportunities for highly skilled roles.
Increased frequency of flooding
associated with rising sea
levels at the Geelong Refinery
and coastal fuel terminals
– resulting in asset damage
(increased costs) and disrupted
operations (decreased
revenue).
Potential to be
significant for the
refinery in the medium
to long term in Limited
Mitigation and
Disorderly Mitigation,
and in the longer term
in Limited Mitigation
for coastal terminals.
Increase in frequency and
severity of extreme weather
events (storms, cyclones, floods,
heatwaves) resulting in:
• supply chain delays, power
outages, asset damage;
• increased stormwater
management requirements
at the refinery and
terminals; and
• increased employee health
impacts and reduced
accessibility to the
workplace/customers.
Potential to be
significant for the
refinery, and to a
lesser extent our fuel
terminals, in the short,
medium and long term
in Limited Mitigation
and Disorderly
Mitigation, with
impact increasing
in the longer term.
• We have Emergency Response plans in place
for each of our facilities, and Business Continuity
Plans for our overall operations and supply chains.
• We continuously assess and renew our asset
integrity programs, including to adapt to
changed circumstance, to ensure reliable
and continuous supply.
• We consider physical climate risks when developing
significant projects such as the Gas Terminal
project at Geelong.
• We undertake, review and assess our asset integrity
programs to maintain their resilience to changing
environment and circumstances. Where appropriate,
we have redundancy and back-up systems to
maintain continued operations.
• We periodically review our stormwater management
procedures and the effectiveness of our stormwater
management infrastructure, and implement
upgrade projects where necessary.
Opportunity Increased demand for
infrastructure to distribute
low emissions fuels such as
EVs (via charging infrastructure)
and hydrogen, and for grid
stability systems in response
to the uptake of small-scale
renewables, creating new
revenue streams for our
Retail network.
Potential to be
significant in the
medium term in
Aggressive Mitigation
and Disorderly
Mitigation, with
opportunity increasing
in the longer term.
• We are involved in a pilot to install EV charging
stations at selected retail sites, to gain experience
in the logistical and commercial aspects of
deploying EV charging technology, and insights
into customer uptake trends and behaviours.
• We are involved in a number of hydrogen R&D
and advocacy forums, including the Australian
Hydrogen Council.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Risk/
opportunity
type
Description
Opportunity Increased demand for low
emission or advanced fuels
such as biodiesel, hydrogen
or sustainable aviation fuel
(SAF) in our Commercial
segments, creating new
revenue streams.
Relevant scenarios
and time horizons
Potential to be very
significant in the
medium to long term
in Aggressive
Mitigation and
Disorderly Mitigation.
Our strategic response
• We are closely monitoring developments across
key future fuel areas, and maintaining a presence
on energy forums, industry groups and peak
advocacy bodies.
• We have formed a strategic alliance with hydrogen
fuel cell OEM HYZON Motors to collaborate in
developing a complete hydrogen transport solution,
focused on the heavy transport sector.
• We have signed a Heads of Agreement with
Gevo to collaborate on the technical and
commercial feasibility of converting biomass into
renewable hydrocarbons, including sustainable
aviation fuel (SAF).
• We continue to supply ethanol E10 blended fuel
via our retail network where mandated and
investigate options for the delivery of biodiesel
or renewable diesel into the market.
Opportunity Increased affordability
of renewable electricity
(self-generated or via PPA),
and to a lesser extent
increased affordability
of energy efficient technology,
for use in our refinery,
resulting in reduced costs.
Potential to be
significant in the
medium to long
term in Aggressive
Mitigation and
Disorderly Mitigation,
with some opportunity
in the short term for
renewable electricity.
• In 2019, we commenced a Power Purchase Agreement
(PPA) with Acciona, the operator of the Mt Gellibrand
Wind Farm, 65km west of Geelong. The PPA is a
financial arrangement that guarantees pricing of
electricity representing approximately a third of the
Geelong Refinery’s annual electricity needs.
• We are investigating the feasibility of a solar energy
farm at the Geelong Refinery.
Opportunity Increased demand for lower
emissions energy sources
resulting in potential growth
opportunities for the Geelong
Energy Hub, including
specifically the planned gas
terminal to import liquefied
natural gas (LNG) as a
transitional fuel.
Potential to be
significant in the
medium to long term in
Aggressive Mitigation
and Disorderly
Mitigation, although
less opportunity for
LNG in Aggressive
Mitigation.
• We have set out our strategic vision for the Geelong
Energy Hub to support a lower carbon energy
transition, while underpinning the future of the
Geelong Refinery.
• We are progressing the cornerstone Gas Terminal
project through front-end design and approvals,
with a target commissioning date of 2024 when
south-east Australia is forecast to be short on gas.
Risk discussion
The primary transition risks identified in the assessment above
relate to demand substitution for our existing product suite,
whether that substitution is driven by government regulation,
technological advancement or consumer preference. In the
short term, none of these have been assessed to be significant.
As we look out over extended time horizons, we do see the
potential for increased impacts. The scale and speed of any
substitution is expected to vary significantly between both
product type and market sector. Accordingly, as we consider
strategies to address these risks, we develop them in a manner
that responds to the relevant product line, the rate of expected
change, and our customers’ needs.
Transition risks also give rise to the potential for increased
operating costs arising from regulatory responses to reduce
GHG emissions. These risks are likely to be relatively uniform
for market participants, and to be sector-wide.
The physical risks identified most likely arise in the Limited
Mitigation scenario, and to a lesser extent, over time in the
Disorderly Mitigation scenario – that is, where less is achieved
to address an increase in global temperatures, resulting in
more frequent and severe weather event impacts on assets
and facilities. In our retail network, this is less likely to be
significant, given the large number and wide distribution of
the service station network. In our supply chain and refining
operations, the risks predominantly relate to unreliable
supply driven by unplanned downtime, and increased costs
in mitigating or responding to weather events. We operate
substantial asset management and maintenance programs,
including site-level Emergency Response Management Plans
and Group-level Business Continuity Plans to mitigate these
generally localised impacts, and these will need to adapt over
time, should these risks eventuate.
46
Viva Energy Group Limited – Annual Report 2020 Opportunities and strategic response
Correspondingly, we see opportunities from an energy
transition to diversify our business revenue streams as
demand for lower carbon energy and fuels increases,
particularly in the Disorderly Mitigation and Aggressive
Mitigation scenarios in the medium to long term.
Similarly with the time horizon for the associated risks,
the opportunities for our business are more limited in the
short-term time horizon. Again, mirroring the risk profile,
the opportunities for alternative fuels will vary depending
on product type and market segment. Many of the new
technologies are in the nascent stage of technological
development (e.g. sustainable aviation fuel (SAF)), currently
have limited penetration in Australia (e.g. electric charging),
or require reductions in their associated cost base to become
commercially competitive (e.g. hydrogen mobility) – or a
combination of all of these.
We see a key existing opportunity in LNG imports into the
south-eastern Australian market through our Geelong facility.
LNG is a well-understood and mature market supported by
proven technology, and is a key transitional fuel in an energy
transition. Accordingly, we have materially progressed our
Gas Terminal Project and are currently working through
the Front-End Engineering Design (FEED) stage to bring
the project to a Final Investment Decision in 2022, with the
opportunity for gas supply in 2024.
As we look to the medium and longer-term time horizons,
alternative fuels provide materially positive opportunities.
Accordingly, our strategy is to develop our businesses and
capability in the early stages of these industries, in order
to participate in the opportunities as they mature. Some more
of these strategies are elaborated in the discussion below.
In FY2020, we announced our vision for the Geelong Energy
Hub, a business and energy diversification strategy centred
on our key asset in Geelong. Through this vision, we expect
to explore opportunities for transition fuels (such as LNG
imports), alternative fuels (e.g. biofuels and hydrogen) and
energy and emission reduction projects (e.g. a solar energy
farm). Further details on the Geelong Energy Hub can be
found on page 50.
As noted earlier, some of the more specific opportunities we
are currently pursing include:
• Battery Electric Vehicle (BEV): In FY2020 we signed
contracts to install our first 350kW ultra-fast electric vehicle
charging stations at selected retail service station sites
with a third party. We look forward to the construction
and launch of these sites in the first half of FY2021, with
this pilot enabling us to further monitor and support the
development of charging infrastructure and understand
customer uptake trends and behaviour.
• Biofuels: We continue to blend up to 10% ethanol with
ULP91 to make E10 and distribute this across our retail
service station network in NSW (86% of retail sites) and
Queensland (66% of retail sites) with additional sites
planned for FY2021. In FY2020 we entered into a Heads
of Agreement (HoA) with Gevo to work collaboratively
on activities in Australia to establish the technical and
commercial feasibility of converting biomass into SAF and
renewable gasoline from regionally sourced renewable
resources using Gevo’s patented technology. We continue
to investigate options for the delivery of biodiesel or
renewable diesel into the Australian market despite
availability and economic challenges.
• Hydrogen: We recently announced a strategic alliance
with HYZON Motors, a global supplier of hydrogen fuel
cell powered commercial vehicles. With an initial focus on
leveraging the Geelong Energy Hub to offer hydrogen for
transport, our alliance allows us to move past traditional
roadblocks to establishing a hydrogen refuelling network,
by working with an OEM to get hydrogen fuel cell vehicles
on the road to create the demand.
Critical to securing opportunities that will enable us to have
a key role in the future energy mix is in establishing and
maintaining strong collaboration and partnerships across
the entire value chain for a range of new energies. We are
closely monitoring progress in all future fuel areas with a
presence in Australian energy forums, industry groups and
membership of peak advocacy bodies. We are members of
Bioenergy Australia, Australian Industry Greenhouse Network
(AIGN), continue both our membership and Board position
on the Australian Hydrogen Council, and advise as an
industry representative on Deakin University’s Hycel’s
External Advisory Board. We participated in the Bioenergy
Roadmap Review Reference Group, initiated by the Federal
Government in 2020.
We see a key existing opportunity in
LNG imports into the south-eastern
Australian market through our Geelong
facility. LNG is a well-understood and
mature market supported by proven
technology, and is a key transitional
fuel in an energy transition.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Risk management
Our Enterprise Risk Management (ERM) Framework and
related risk management policies and procedures used
to identify, assess, monitor and manage risk within our
organisation are discussed in our Operating and Financial
Review (refer to page 26). Under this Framework we maintain
a Strategic Risk Register which captures risks that can affect
the achievement of the Group’s strategy and goals.
Climate risk was previously addressed in the ‘Emerging
Risks’ section of our Strategic Risk Register. As a result of
the significant climate scenario and risk assessment work
undertaken in FY2020, we now have a separate Climate
Risk Register supplementary to the Strategic Risk Register,
which captures all transitional and physical climate change
risks identified for monitoring over the longer term.
Climate risks are not duplicated in the Strategic Risk Register
unless a specific risk meets the definition of a strategic risk,
i.e., is assessed as having the capability of affecting the
achievement of the Group’s strategy and goals, in which
case it would be escalated to the Strategic Risk Register.
Currently one climate-related strategic risk, collapse in fuel
demand due to change in consumer mobility, is included in
the Strategic Risk Register. However, changes in consumer
mobility are also impacted by non-climate related matters,
with the changes driven by COVID-19 being an example
of this.
We identify and monitor our strategic risks through a
twice annual process of consultation across each business
unit and validation with the Group’s Executive team, with
reporting to the Board Audit and Risk Committee. As part
of this process, the Climate Risk Register will be reviewed
to determine if there are any material changes to climate risk
ratings, including whether elevation of any climate risks to
the Strategic Risk Register is warranted.
Metrics and targets
We report annually on our greenhouse gas (GHG) emissions,
and energy consumption and production under the Australian
Government’s National Greenhouse and Energy Reporting
(NGER) Scheme. The data we report is published each year
on the Clean Energy Regulator website cleanenergyregulator.
gov.au and includes:
• Scope 1 (direct) emissions arising from our operations
such as from fuel combustion, fugitive emissions and other
minor emission sources; and
• Scope 2 (indirect) emissions associated with the generation
of electricity we purchase for our operations.
Viva Energy Group operational greenhouse
gas emissions
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2015–16
2016–17
2017–18
2018–19
2019–20
Scope 1 Emissions (t CO2-e)
Scope 2 Emissions (t CO2-e)
Our emissions reported include the facilities and activities of
all Viva Energy Group subsidiaries and contractors within our
operational control and is reported for the 12 months ended
30 June.
For the 2019-20 NGER reporting period we reported Scope 1
emissions of 1,000,445 tonnes CO2-e and Scope 2 emissions
of 282,152 tonnes CO2-e. Scope 1 and 2 emissions from the
Geelong Refinery account for 96% of our total operational
greenhouse gas emissions. The Geelong Refinery’s Scope 1
emissions were well below the statutory Safeguard Mechanism
emission baseline for the facility of 1,160,938 tonnes CO2-e set
by the Clean Energy Regulator.
Our overall Group operational GHG emissions in 2019-20 were
10.4% lower than the previous reporting period. This reduction
is attributed to COVID-19 impacts on the Geelong Refinery in
the final quarter of the NGER reporting period. Fuel demand
reduction led to the shutdown of a major process unit for
extended maintenance, and the refinery operating in a lower
production ‘hydro skimming’ mode.
In FY2020, we developed our approach for implementing
shadow carbon pricing into our financial planning and
capital allocation process. This is intended to provide a risk
assessment tool to evaluate investments, understand carbon
price impact sensitivity, and guide investment decisions.
The shadow carbon prices adopted are a low-case ‘current
day’ price, and high-case price representative of a medium
term ‘Aggressive Mitigation’ scenario. These carbon prices
are derived from publicly available carbon price benchmarks
and will be updated annually.
48
Viva Energy Group Limited – Annual Report 2020 Geelong Refinery energy performance
Petroleum refining is inherently energy and GHG emission
intensive. Notwithstanding this, we remain focused on
improving and addressing the energy performance of
the Geelong Refinery.
With the Geelong Refinery more energy efficient (and less
energy intensive) when operating at high throughput and
high unit utilisation, the shut-down of units and operational
mode changes in FY2020 due to COVID-19 resulted in a
significant reduction in refinery utilisation, which resulted in
a significant increase in energy intensity to 123.98 compared
with 112.4 in FY2019.
Due to the financial impacts on refining in FY2020, capital
allocation at the Geelong Refinery was prioritised to safety
critical and asset integrity projects, with planned energy
projects deferred. Despite this, the refinery’s energy
performance remained a focus through daily operational
meetings and the implementation of new workflow processes
to capture operational energy improvements. In FY2020 we
progressed our Energy Masterplan including the detailed
feasibility of a number of energy efficiency opportunities.
In FY2021 our focus will be on progressing the Energy
Masterplan by further developing key energy projects to
ensure they are ready to be executed once more favourable
operational and capital conditions return.
Supply Chain energy efficiency program
Our two fuel terminals in Sydney, at Clyde and Gore Bay,
are the highest energy consumers in our Supply Chain fuel
storage and distribution network.
The energy consumption of the Clyde and Gore Bay facilities
has reduced significantly in recent years, as we transitioned
from refining operations into import terminal facilities.
Operational consolidation has improved the energy efficiency
of the Clyde facility, which has allowed for optimisation of
product movements.
In FY2020, electricity sub-metering was installed across
both the Clyde and Gore Bay facilities, and in FY2021 we
will be assessing the data arising from this to identify
operational optimisation opportunities and potential
energy efficiency projects.
At the bitumen plant located at our Pinkenba terminal in
Queensland, we transitioned operations to an import and
blending facility, with limited processing. By limiting the
processing of bitumen, we have significantly optimised
the plant heating requirements and have a projected 20%
saving on gas consumption. Additionally, the transition
away from processing has reduced the air and water
(from steam condensate) emissions. We will continue
to complete additional energy optimisation trials at the
bitumen plant throughout FY2021.
Case study: Climate Leaders Coalition
To support our strategy to pursue opportunities
and contribute to Australia’s transition to lower
carbon energies, in FY2020 we joined with other
leading businesses to become one of the founding
members of the Climate Leaders Coalition (CLC),
an initiative of the B Team Australasia. The B Team
is an initiative co-founded by Sir Richard Branson,
which brings together global leaders from business,
civil society and government to catalyse better
ways of doing business (a Plan B) that prioritises
the wellbeing of people and the planet.
The CLC is focused on collaboration and joint
problem solving in respect of decarbonisation
challenges, with an aim to support Australia’s
low carbon future while also ensuring long-term
economic sustainability. Other CLC Founding
Members include the CEOs of some of Australia’s
largest resources and industrial companies,
along with leading companies from the property,
consumer goods, finance, technology, research,
civil society and advisory sectors. CLC members
support the Paris Agreement and Australia’s
commitment to it. For further information visit
climateleaders.org.au.
“I am excited about the opportunity to work
together with the CEOs of these companies to
share learnings, collaborate on opportunities and
potentially work together on specific projects.
Many of these businesses are significant carbon
emitters or are responsible for significant
emissions through the products they sell, and
therefore share many of the same challenges as
we do. By working together, we believe that we
can be more effective in developing our respective
strategies to reduce emissions and demonstrate
how business is committed to the transition
towards a low carbon economy.”
— Scott Wyatt, CEO
8. Using the Solomon Associates global refinery benchmarking Energy Intensity Index (EII) methodology.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
New pipeline to take the gas to the Victorian
Transmission System (underground section)
Extension of the
existing Refinery Pier
A Floating Gas
Terminal moored
at the new pier
LNG ships
dock here
Localised dredging
required around
the new pier
Preliminary conceptual image and not to scale.
Fuel tanker (refinery operations)
Geelong Energy Hub
To support Australia’s energy future, in June 2020 we
shared our strategic vision for the Geelong Energy Hub.
The Geelong Energy Hub looks to support the evolving
energy mix while underpinning the future viability of
our refinery, with several potential projects to support
alternative energies such as renewables and hydrogen,
generating new jobs and economic development for
the region. Key to this vision is the plan to develop a
gas terminal.
The Geelong Refinery will continue to play a significant
role in liquid fuel manufacture and supply security –
providing the fuels that Victoria needs in the transport,
aviation, industrial and marine sectors. Even as
technology and Australia’s energy needs continue to
evolve, refined fuels will still be needed for many years
to come.
Our vision is to build a sustainable operation so that
we can continue local manufacturing, provide
employment and supply existing and future products
to meet the needs of our customers and the economy.
Why is the Energy Hub important?
A Gas Terminal can cost effectively bring gas from
where it is produced to where it is needed.
A Solar Energy Farm could help power the refinery
– reducing our carbon footprint.
Support the development of alternative lower
emission energy sources such as liquid fuels from
lower carbon feedstocks, and hydrogen.
Diversifies the Geelong refinery site, protecting
local jobs and generating new jobs and skills.
Gas Terminal Project
Viva Energy has plans to develop a Gas Terminal at
the Geelong Refinery. The Gas Terminal would bring
natural gas from various locations in Australia and
overseas, to help meet the projected gas shortage
in south-east Australia.
The Gas Terminal Project includes:
• Continuous mooring of a Floating Storage and
Regasification Unit (FSRU) which stores and converts
Liquefied Natural Gas (LNG) back into natural gas.
• A Refinery Pier extension. To accommodate the visiting
LNG ships and house the floating vessel, the existing
Refinery Pier will be extended by approximately 570m.
• Gas-blending facilities. Prior to supplying the market
and to meet Australian specification standards, all the
gas will be treated in a gas-blending facility within
the refinery boundary.
• A pipeline approximately 6.5km will be constructed
to get the gas to where it is needed. About 2.5km
of the pipeline will be above ground and about 4km
underground within existing pipeline corridors.
About half of this pipeline will be on Viva Energy’s land.
The Project is expected to provide 150+ jobs during the
two-year construction period and create around 50–100
ongoing local jobs.
Solar energy farm
As part of the Energy Hub we are investigating a
proposal to build a solar energy farm alongside the
Geelong Refinery. A solar energy farm could power
about 20% of the refinery’s electricity needs and reduce
our carbon footprint.
We own 41 hectares of vacant land immediately north
of the refinery, which would allow the installation of
enough photovoltaic (PV) panels with the capacity
to generate around 25MW of clean energy.
50
Viva Energy Group Limited – Annual Report 2020 C
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The solar energy farm would complement Viva Energy’s
support for the renewables transition, following entering
into a Power Purchase Agreement (PPA) with Acciona,
which owns and runs the Mt Gellibrand wind farm near
Colac. The PPA has secured pricing for Viva Energy on
approximately 100GWh per annum of electricity, which
represents around a third of our Geelong Refinery’s
annual electricity needs.
Strategic fuel supply and storage
Alongside the current refinery storage, the Energy Hub
includes the potential to develop additional diesel
storage to support the Federal Government’s Fuel
Security Package.
In September 2020, the Australian Federal Government
released its Fuel Security Package, which included a plan
to support the development of additional diesel storage.
A Request for Tender process commenced in early 2021
and Viva Energy participated. For more information on
the Fuel Security Package refer to page 67.
The Geelong site is well positioned to take advantage
of any future strategic storage opportunities as and
when these arise.
Hydrogen and alternative fuels
Our vision for the Energy Hub includes exploring
alternative energy sources, and a natural next step for
us is the hydrogen industry. The refinery is already a
significant producer and consumer of hydrogen as part
of existing processing activities. The opportunity exists
for us to extend existing hydrogen production facilities
into production of grey or green hydrogen for transport
and other needs.
The Council of Australian Governments (COAG) Energy
Council has established a working group to deliver on
elements of the National Hydrogen Strategy supporting
the development of a clean, innovative and competitive
hydrogen industry that will benefit all Australians.
As a member of the Australian Hydrogen Council,
we participated in the development of this strategy.
The flexibility of hydrogen to store energy in gas or
liquid form, its high energy density and ability to be
transported by trucks, ships or pipelines enables it to be
used as a fuel for a variety of applications. This makes it
a low emission energy source of great value, in particular
for the heavy vehicle sector. There remain challenges in
matching infrastructure requirements with vehicles, and
our strategic alliance with HYZON Motors will help us
to offer a refuelling, supply and vehicle solution for our
customers and the industry. The alliance aligns with our
collaborative approach, and fits with our intent to explore
different energy options as part of the Energy Hub.
We see this and the development of other possible
alternative energy sources as longer-term opportunities
that we are keen to explore.
Community consultation and
regulatory approvals
The Gas Terminal Project will require an Environmental
Effects Statement (EES) under the Environment Effects
Act 1978. The Project is also considered a ‘controlled
action’ and will require assessment and approval
under the Environment Protection and Biodiversity
Conservation Act 1999 (EPBC Act). The EES will be the
accredited assessment process for the purpose of the
EPBC Act under a Bilateral Assessment Agreement
between the Commonwealth and Victorian governments.
Community engagement and consultation is an
important part of our Project and we will be engaging
with the community and key stakeholders throughout
the Project seeking views, feedback and comments.
Opportunities for comment include draft scoping
requirements and the final EES. For the latest updates
visit vivaenergy.com.au/gas-terminal.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Environment
We are committed to protecting the environment and
minimising any potential environmental impacts arising
from our operations or our products. Our HSSE Policy
outlines our commitment to operating in an environmentally
responsible manner. The environmental aspects of our
operations are governed by environmental regulations,
which are managed in accordance with our HSSE
Management System (HSSE MS).
At the facility level, our operations have Environmental
Management Manuals which underpin the HSSE MS and
include important local controls to manage environmental
risks and compliance. All environmental incidents and
near misses are recorded and reported through our
incident reporting system. A range of industry specific key
performance indicators such as spills, environmental non-
compliance records, emissions and waste metrics is used
to measure the effectiveness of our management systems.
For our major facilities, including the Geelong Refinery
and the Clyde and Gore Bay Terminals, we publicly report
on our environmental licence compliance and performance
monitoring results. For up-to-date information visit
vivaenergy.com.au/environment.
In FY2020, we did not receive any environmental non-
compliance sanctions. For a further overview on our FY2020
environmental performance, refer to page 104 of the
Directors’ Report.
FY2020 Highlights
• Progressive transition of firefighting foams and
infrastructure throughout Queensland and
South Australia
• Remediation of the former Clyde refinery land in
Sydney commenced
• Australian Packaging Covenant (APC) plan refreshed
• Zero environmental non-compliance sanctions
• Awarded ecoBiz Star Partner at the Pinkenba Terminal
in Brisbane
FY2021 Priorities
• Implement our foam transition program, with a focus
on meeting Queensland and South Australian
compliance obligations by 2022
• Complete remediation at the former Newcastle
terminal and significantly progress remediation
of the former Clyde refinery and the former
North Fremantle terminal
• Implement our refreshed Australian Packaging
Covenant plan
Spill prevention
Our aim is to ensure that we do not have any uncontrolled
release of hydrocarbon products to the environment. We call
this ‘No Product to Ground’ and we refreshed this message in
FY2020. To meet this objective, we implement spill prevention
and control measures across all our operations, including
operational procedures, routine surveillance, risk-based
inspection programs, and utilising leak detection technology.
For marine spills, we work with the Australia Maritime Safety
Authority (AMSA) to maintain a national spill contingency
plan. We are also a significant participating member of
Australian Marine Oil Spill Centre (AMOSC), for which we have
responsibilities to contribute trained personnel and equipment
under mutual aid arrangements and in accordance with the
National Plan for Maritime Environmental Emergencies.
We measure our performance by tracking loss of primary
containment (LOPC) incidents that occur within the
operational boundary of our facilities and road transport
operations. A LOPC means that hydrocarbon products have
leaked or been spilled from the primary containment (tanks or
pipes) that are designed to safely hold our products. In many
cases we have secondary containment measures (such as tank
bunds) to provide additional protection against the products
entering the environment. Whilst the number of larger (100kg)
LOPCs have reduced, we did have three significant spills
(spills greater than 1000kg that reached the environment)
in FY2020. Two of the incidents related to process safety
incidents at the Geelong Refinery with the third relating to
the loss of fuel from an underground storage tank at one of
our retail service station sites in Victoria. All of these incidents
have been investigated and remedial measures implemented.
No product to ground peformance*
30
25
20
15
10
5
0
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Loss of Primary
Containment (LOPC)
>100kg
Spills to
Environment
>100kg
Number of
Significant Spills
2017
2018
2019
2020
* Excludes performance of Liberty Oil Holdings.
Viva Energy Group Limited – Annual Report 2020 Contaminated land remediation
Across our portfolio, we adopt a risk-based approach to
contaminated land remediation which is consistent with
national standards and undertaken in consultation with
environmental regulators where required. In FY2020 we
progressed the land remediation of several large, closed
facilities, including the former Newcastle (Hamilton)
terminal, the former Clyde refinery land, and the former
North Fremantle terminal. These works are being overseen
by a regulator-accredited Environmental Auditor who
will prepare a site suitability statement or reclassification
recommendation consistent with proposed future land use,
for regulatory approval.
In FY2021 we plan to complete remediation at the former
Newcastle terminal and significantly progress with
remediation of the former Clyde refinery and the former
North Fremantle terminal.
Air emissions
The manufacturing, storage, supply and use of our fuels
cause air emissions such as Volatile Organic Compounds,
greenhouse gases (GHG), sulphur oxides (SOx) and nitrogen
oxides (NOx). We monitor the air emissions from our facilities
according to each site’s licence conditions and report annually
to the National Pollutant Inventory (NPI). Refer to the NPI
website for our latest data npi.gov.au/npi-data.
The main sulphur processing units at the Geelong Refinery
continued to experience unreliable operation early in
FY2020. With the substantial drop in demand for fuel during
the COVID-19 restrictions in Victoria, many of the refinery’s
processing units, including the sulphur processing units,
were shut down for major maintenance. With production rates
significantly reduced through much of FY2020, air emissions
were well below levels of previous years with the exception
of SOx. Units were returned to service at the end of
November FY2020 without any breach of our environmental
licence conditions.
Fuel standards
We continue to support updates to fuels standards
in Australia, including the requirement to reduce
the sulphur limit in gasoline to 10ppm. Significant
capital investment would be required to achieve
these standards, which come into force from
mid-2027. We will continue the planning and
assessments on the capability and viability of
manufacturing these fuels at the Geelong Refinery.
PFAS and firefighting foam
Per- and poly-fluoroalkyl substances (PFAS) are manufactured chemicals that have been used for more than 50 years
in a range of products including firefighting foams, pesticides, waterproofing and stain repellents. Like all industries
responsible for flammable fuel storage, we have a history of storing and using PFAS-containing firefighting foams as
these have been the recommended best practice and most effective for combatting flammable fuel fires. While the
health and ecological effects of PFAS compounds are the subject of ongoing research, we acknowledge the
potential risk they pose and the precautionary approach to PFAS management adopted by environmental regulators
across Australia.
For managing our existing firefighting foams and associated infrastructure, we follow a risk-based approach in
determining foam system upgrade projects for transitioning our infrastructure to C6-purity compliant foams; and
transitioning to fluorine free foam for shallow pool fires and fuel spills. However, the effectiveness of fluorine free foams
is not yet demonstrated for the unlikely event of a large tank fire. In FY2020, we focused on progressing the transition
of firefighting foams and infrastructure throughout our Queensland and South Australian facilities. We agreed
transitional compliance plans with environmental regulators in these states and will continue to focus on meeting
these obligations by 2022.
We continue to engage with foam suppliers and industry research and development organisations such as LASTFIRE to
understand the capabilities and limitations of fluorine free foams. Whilst it is not currently widely accepted by industry,
it is anticipated that a suitable fluorine free foam for large tank application will be identified over the next few years.
For managing legacy impacts of PFAS to soil and groundwater, we have a due diligence program which is aligned with
the PFAS National Environmental Management Plan (NEMP) approach endorsed by all environmental regulators in
Australia. As a result, we have progressed with the investigations of PFAS impact at several Queensland sites, Newport
terminal and Geelong Refinery in Victoria, the former North Fremantle terminal in Western Australia and the Port Lincoln
terminal in South Australia. We continue to work with our environmental regulators on further assessments and suitable
mitigation or remediation where required.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Resource efficiency and engaging
in the circular economy
The demand from our customers, industry and government
for circular economy thinking to reduce waste continues to be
an important area for us. We demonstrate our commitment
to the circular economy in the following ways:
• Waste recovery practices at the Geelong Refinery ensure
most of our wastes are reused onsite, recycled or reused
in other industries.
• Continued signatory to the Australian Packaging Covenant.
• Exploring opportunities to develop, distribute and promote
products that include repurposed waste materials.
The performance of our waste recovery practices at the
Geelong Refinery remained strong in FY2020 with 90%
of hazardous waste (excluding wastewater) diverted from
landfill and 100% of wastewater sent to the Northern Water
Plant (operated by Barwon Water) for recycling. The recycled
water received back from the Northern Water Plant accounts
for approximately 80% of the refinery’s water consumption
(excluding seawater).
The Australian Packaging Covenant (‘the Covenant’)
is a national regulatory framework under the National
Environment Protection (Used Packaging Materials) Measure
2011 (NEPM) that sets out how governments and businesses
across Australia share the responsibility for managing the
environmental impacts of packaging. We continue to be a
signatory to the Covenant and in late FY2020 we refreshed
our action plan which focuses on our packaged and bulk
lubricant products. The two key goals of our plan include:
• optimising resource recovery in our supply chain; and
• minimise environmental impact of fugitive packaging
through innovative solutions.
At our bulk lubricant facilities, we continue to review
opportunities for optimising waste diversion and recycling
with our waste recovery providers. For more on this, refer to
our case study on Pinkenba – an ecoBiz star partner. For our
packaged products, our ambition to collaborate with our retail
and trade customers on promoting closed loop solutions for
oily containers in FY2020 was unfortunately delayed due to
COVID-19 restrictions. We remain committed to this initiative
and will progress further in FY2021.
Our main supplier of lubricant products, Shell, has developed
a global packaging strategy of ‘Reduce. Reuse. Recycle’.
Whilst a number of actions have already been implemented
into our supply chain (including use of reconditioned IBCs),
we continue to work with Shell on exploring innovative and
sustainable packaging opportunities. This includes using
post-consumer recycled plastic in packaging, and alternative
packaging options including Eco Boxes which reduce landfill
waste compared to equivalent rigid plastic packaging.
In FY2021, we will continue to work through the actions
set out in our refreshed action plan. For our latest annual
performance report, visit vivaenergy.com.au/environment.
Geelong Refinery waste recovery efforts in 2020*
WATER REC YCLING
100% of waste water is sent
to the Northern Water Plant
for recycling and returned for
re-use as recycled.
USED C AUS TIC
Reused at Clyde Terminal
and the Northern Water
Plant operated by
Barwon Water.
1 , 6 9 4 T
SLUDGE WA S TE
Converted to compost
and used on site.
8 3 5T
* This data relates to 1 July 2019 – 30 June 2020.
54
USED C ATA LYS T
Reused by the cement industry.
1 , 2 8 2 T
SCR A P ME TA L
Recovered and recycled.
2 6 1 T
TIMBER
Recycled through our onsite waste
transfer station and chipped for
mulch by the local council.
9 4 T
SULPHUR
Reused in industries including
fertilizer manufacture.
3 , 7 5 3 T
Viva Energy Group Limited – Annual Report 2020
Case study: Paving the way for recycled roads
As a major supplier of bitumen to the road transport industry, we continue to look
for opportunities to improve the sustainability of our road-surfacing products.
While the bitumen products we supply can be perpetually recycled, the industry
is moving towards the promotion and facilitation of a circular economy through
the use of other recycled materials in road construction. The use of crumbed
rubber in roads is now well established in Australia. Crumbed rubber comes from
recycling truck tyres, which have a naturally high rubber content. Opportunities
for this rubber into roads continues to increase, particularly through Australian
specifications and through our customers pursuing increased recycled content
to meet their own sustainability targets.
Currently, our bitumen operations supply modified crumbed rubber binders to customers for spray sealing roads
across the Australian east coast and South Australia. In addition to providing a solution to the mounting waste issue,
the crumbed rubber enhances the road surface by improving its engineering properties and durability, meaning better
performance and less maintenance.
We continue to work with the Australian Asphalt Pavement Association (AAPA) and industry partners on the expanded
use of crumbed rubber in asphalt applications, and other recycled waste applications in bitumen blended pavements.
Case study: Continuous improvement at Clyde
Clyde Refinery in Western Sydney ceased operation in 2012 and since then the
site has progressively been converted into a fuel import terminal. As part of the
conversion of the site, several initiatives have been implemented in recent years
to improve the environmental performance of the facility, including addressing
water discharge quality, air emissions, energy efficiency and the biodiversity
of the adjoining wetland.
The demolition of redundant refining infrastructure, the installation of quick
flush tanks for the controlled drainage of fuel storage tanks, a program of drain
and retention basin cleaning, and improvement in stormwater management
practices have resulted in reduced flow and improved quality of water discharges.
A number of air emissions reduction initiatives have also been implemented, including maintenance on floating tank
covers and associated vapour sealing systems for gasoline storage, resulting in reduced Volatile Organic Compound
(VOC) emissions by 35% since 2016.
The facility has also been made more energy efficient by consolidating operations to the central part of the site, allowing
for optimisation of product movement. In FY2020, electricity sub-metering was installed across the site and will be
utilised to identify further operational optimisation and energy efficiency projects in FY2021.
As part of our ongoing efforts to protect the Green and Golden Bell Frog (classified as vulnerable under the
Environment Protection and Biodiversity Act) we recently completed the construction of purpose designed breeding
ponds. We continue to monitor the frogs and restore their habitat at our Clyde facility and surrounding wetland areas,
with encouraging results from our ongoing surveillance.
Case study: Pinkenba – an ecoBiz star partner
We were recognised in FY2020 with an ecoBiz Star Partner award for our waste
and energy reductions in 2019/2020 across our supply chain, lubricants and
bitumen operations at our Pinkenba Terminal in Queensland. The ecoBiz Star
Partnership accreditation is reserved for businesses that can demonstrate at
least a 10% reduction in their resource intensity. Our terminal site and bitumen
plant both achieved an impressive 13.1% reduction in energy intensity; and
our lubricants warehouse achieved a reduction in waste to landfill and a 20.4%
reduction in waste intensity. This was achieved through measures including
specialised recycling of oil, oily filters, steel, cardboard, and hard and soft
plastics. In addition, while hazardous waste intensity has reduced with improved
oil extraction, the site continues to investigate alternative recovery opportunities
for this type of waste.
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55
Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Our people
Our ability to attract, motivate and develop
high calibre people enables us to deliver
outstanding business results today and
into the future.
FY2020 Highlights
• 70% employee engagement score
• 41% of senior leaders are women
• Launched The Viva Way business values and behaviours
• WGEA Employer of Choice for Gender Equality
• Enhanced the Family and Domestic Violence Support policy
• Developed and launched Viva Ways of Working
FY2021 Priorities
• Advance our Diversity and Inclusion Strategy including
a focus on reaching our gender diversity targets
• Embed the new Viva Ways of Working
• Organisation-wide family and domestic violence training
The Viva Way
In FY2020 we launched a new set of Company values –
The Viva Way. The Viva Way connects our purpose, values
and behaviours together to support our culture and create
the ‘way’ we work. Our Values set the standard, guiding our
actions and decision making. These Values reflect who we
are today as well as who we aspire to be.
The Viva Way was created from the inside out, whereby a
working group of senior leaders gathered input from team
members across all areas of our business to ensure The Viva
Way is uniquely and authentically ours. The Viva Way was
launched in FY2020, followed by small group discussions
about what it means for individuals and teams, and how they
will bring it to life. In FY2021 we will continue to embed and
promote The Viva Way across our business.
Diversity and inclusion
We are committed to ensuring we provide an inclusive and
diverse workplace where our people feel valued, included,
respected and able to develop and contribute to their full
potential. In our experience, diversity and inclusion promotes
different views and ways of doing things, enhanced decision
making, improved safety outcomes, increased productivity,
more effective teamwork and better wellbeing.
Our strategy is to continue to strengthen our diverse and
inclusive workplace. This includes a strong focus on gender
diversity, Indigenous employment and offering flexible work
practices. To view our Diversity Policy, visit vivaenergy.com.au/
diversity-inclusion.
Female representation in the Senior Leadership Group
Female new hires
Female representation on the Board
50%
50%
41%
39%
41%
30%
32%
40%
29%
29%
29%
40%
Overall female representation
Female promotions
24%
24%
22%
19%
26%
24%
2020
2019
2018
Target
2020
2019
2018
Target
2020
2019
2018
Target
2020
2019
2018
2020
2019
2018
2 Our values
Integrity
The right thing always
Responsibility
Safety, environment, our communities
Curiosity
Be open, learn, shape our future
Commitment
Accountable and results focused
Respect
Inclusiveness, diversity, people
3 Our behaviours
Customer Obsessed
Curious about customers
Excite our customers
Create mutual value
Better Together
Inclusive always
Innovate together
Challenge respectfully
Deliver Amazing Results
Embrace accountability
Push the boundaries
Prioritise what matters
1 Our purpose
y
a W a
e V i v
T h
Helping people
reach their
destination
56
Viva Energy Group Limited – Annual Report 2020 The Viva Way was created from the inside out, whereby a
working group of senior leaders gathered input from team
members across all areas of our business to ensure The Viva
Way is uniquely and authentically ours. The Viva Way was
launched in FY2020, followed by small group discussions
about what it means for individuals and teams, and how they
will bring it to life. In FY2021 we will continue to embed and
promote The Viva Way across our business.
Diversity and inclusion
We are committed to ensuring we provide an inclusive and
diverse workplace where our people feel valued, included,
respected and able to develop and contribute to their full
potential. In our experience, diversity and inclusion promotes
different views and ways of doing things, enhanced decision
making, improved safety outcomes, increased productivity,
more effective teamwork and better wellbeing.
Our strategy is to continue to strengthen our diverse and
inclusive workplace. This includes a strong focus on gender
diversity, Indigenous employment and offering flexible work
practices. To view our Diversity Policy, visit vivaenergy.com.au/
diversity-inclusion.
40%
To help us reach our gender targets in FY2021, we will be
focusing on the following initiatives:
Female representation in the Senior Leadership Group
2020
2019
2018
Target
Female new hires
2020
2019
2018
Target
41%
39%
41%
30%
32%
40%
50%
50%
Female representation on the Board
2020
2019
2018
Target
29%
29%
29%
Overall female representation
2020
2019
2018
24%
24%
22%
Female promotions
2020
2019
2018
19%
26%
24%
In FY2021 we plan to advance our Diversity and Inclusion
Strategy, with a focus on reaching our gender diversity
targets through a number of initiatives including improving
our employer brand, by externally promoting our leadership
in diversity and flexibility. Additionally, we plan to work with
our Senior Leadership Group to co-design and co-deliver
inclusive leadership interventions. Complementing our current
approach, these engagements will assist our senior leaders
in accelerating their leadership commitment to creating a
workplace environment where all employees feel comfortable,
included, accepted, and supported. As part of advancing
our Diversity and Inclusion strategy, we also plan to formalise
and support a Pride Committee with sponsorship from our
executive team.
Gender diversity
Our objective is to improve the representation of women in
all roles and levels in our business and to ensure that they are
paid equally with their male counterparts, as measured by
total remuneration. We measure, track and report progress
against gender diversity targets, and report to the Workplace
Gender Equality Agency (WGEA) on an annual basis.
For the 2019-20 reporting year the WGEA Competitor
Analysis Benchmark Report for Viva Energy demonstrates our
performance against a number of gender equality metrics, as
well as comparing our Company performance to that of our
peers and Australian industry overall. This includes the total
remuneration pay gap (expressed as a percentage) which
measures the difference between the average earnings of
women and men in the workforce. For the 2019-20 reporting
year, the pay gap for the Group (excluding Westside
Petroleum) was 7.6%. For all our latest and previously reported
results, refer to wgea.gov.au.
Due to the challenges of COVID-19 in FY2020, there were
fewer opportunities to progress our gender diversity initiatives.
Overall, there were fewer external recruitment opportunities,
including programs that have historically targeted women
such as our Graduate program and female operator intakes.
There was also less internal movement which has resulted in
fewer opportunities to promote women across the business.
We continued to support a Women in Leadership development
program throughout the year, and plan to build and support
our existing female leadership program alumni network.
• Improve external female employee attraction through
targeted review and promotion of our employer brand.
• Examine any bias that may exist in our internal recruitment
selection processes and remove any biases.
• Continue to produce gender balanced shortlists for all
management roles.
• A deep dive into non-traditional working environments
and understanding how they can be improved to be more
inclusive particularly for females in operational roles.
• Inclusive leadership training and development for all
Senior Leadership Group members.
• Set gender recruitment targets for Senior Leadership
Group members to help build collective accountability
across the business.
• Increase the representation of females in non-traditional
roles with a focus on attracting female operators within
our recruitment campaign at the Geelong Refinery.
• Recommence the Graduate program for FY2022 with
a target of 50% females.
• Continue to build, develop and embed our female
leadership development alumni network.
Our commitment to gender equality has again been
nationally recognised, with Viva Energy cited by the
Workplace Gender Equality Agency (WGEA) as a
2019-20 Employer of Choice for Gender Equality.
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57
Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Viva Ways of Working
While COVID-19 presented a unique set of challenges during
FY2020, we were able to work in new ways to meet the needs
of our customers, operations, teams and families. We were
determined to learn everything we could from our collective
experiences. We asked team members what they thought –
we listened and responded. Together, using focus groups
and pulse surveys we discovered how we could best succeed
in a rapidly changing world, building on our strengths,
addressing the areas where we can improve and ultimately
transforming everyone’s ways of working to enhance flexibility
and productivity.
To build on this success, and to hold on to and accelerate
the changes and improvements seen, we developed and
launched – Viva Ways of Working. The underlying principle
is that we trust our people and empower them to choose
the way they want to work. The new Viva Ways of Working is
all about harnessing the transformation we have seen in our
ways of working during COVID-19 and taking those learnings
into the future via three streams:
Viva Flex – providing even more flexibility in the
way we work
Viva Flex is about embedding the broad definition of flexibility
that Viva Energy supports. It is also about supporting more
remote working and providing clear expectations to help team
members strike the right balance between office and remote
working. As a team, we discuss individual, team, stakeholder
and customer needs and agree on what is needed to make
working remotely work for everyone. Our leaders support
and role model our flex practices.
Viva Connect – supporting inclusive and purposeful
communication
We hold virtual town halls monthly to keep our team members
updated on our business performance, key priorities, strategy
updates and as a forum to ask live questions of our leaders.
Our ongoing ‘People Connect’ sessions, held on a regular
basis, are curated to provide team members with support
on health, wellness and leadership. Team members use
these sessions to interact with leaders, external experts
and colleagues from across our business.
Viva Tech – enabling new ways of working
through technology
Viva Tech is all about enabling flexibility through technology.
Viva Tech is about ensuring every team member has the
technology and equipment needed to do their job. All team
members are supported to fully leverage our leading-edge
technology via webinar training sessions, and via our
curated resources hub which includes videos, webinars
and ‘how to’ guides.
In FY2021 we will focus on embedding our Viva Ways
of Working and reviewing them regularly for improvement
opportunities.
Case study: How flexibility works for us
“I’ve been in the truly fortunate position of being
able to build a career in People & Culture at
Viva Energy over a number of years while job
sharing and working three days a week. I have
been given many distinct roles and challenges,
I have managed teams, worked on business-
wide projects and I am a member of the Senior
Leadership Group. Never have I felt that I missed
out on opportunities because I work part time
and it has allowed me to balance my family
responsibilities. The most important part of
making this a success has been the flexibility
on both sides – I change my working days or
work additional hours when the business needs
it, and in return, I’m grateful that I’ve always had
committed and trusting managers who have
been open to diverse ways of working and have
supported me 100% in making it work.”
— Miranda Boddington, Organisational
Development Manager
“After having our son, my wife and I both wanted
to strike a balance between maintaining our
careers and spending quality time with him as
he grew up. We decided that each of us working
four days a week was the ideal balance, and I’m
grateful that Viva Energy supported my move
to four days to achieve this. I now love that my
Thursdays are dedicated to Father/Son time, but
I also love that transitioning to a four-day work
week didn’t diminish the level of influence and
responsibility I have in my work. I recognise that
the work/life balance I currently enjoy is made
possible through the right amount of give-and-
take from both myself and my manager and given
the dynamic environment in which we work this
balance is regularly revisited. I often hope that the
success I’ve had with going part time encourages
others, and particularly men, to try it for
themselves – I’m confident they won’t regret it!”
— Tom Curry, Geelong Refinery Crude Scheduler
Supporting those experiencing family
and domestic violence
In FY2020 we relaunched our Family and Domestic Violence
Support policy to provide significantly more support to any
of our team members experiencing family and domestic
violence. Under this policy we offer 10 days of paid leave,
direct financial assistance of up to $2,500 to help with costs,
as well as supporting changes of hours of work and work
location as needed.
In support of our refreshed policy, we plan to rollout
organisation-wide family and domestic violence training
to all employees in FY2021.
58
Viva Energy Group Limited – Annual Report 2020 Parental leave
At Viva Energy, we recognise the importance of supporting
our employees when raising a family. We offer an online,
on demand support program for our employees as they
transition through pregnancy, parental leave and return to
work. Our paid ‘Keeping in Touch’ program also ensures that
employees who are on extended parental leave can maintain
their connection with the business.
We also provide paid primary and secondary parental leave
in addition to any Government funded leave employees
may be eligible for. Additionally, we make full-time 12%
superannuation payment for employees (male and female)
on parental leave and during part-time work periods, for up to
five years from the child’s birth. This revolutionary initiative has
been widely supported by our employees and implemented
by other businesses since it was introduced in 2017.
Development and retention
We recognise that our success in the delivery of our strategic
goals depends on our employees having the necessary skills,
experiences, capabilities and opportunities to undertake
their roles. We support people and their development in
many ways to ensure we have the right people in the right
roles with the right skills. Our employees are required to
complete mandatory training to ensure their competency for
their roles, and we provide a range of personal development
opportunities. We measure our people development and
retention progress through individual development plans,
regular coaching and annual performance reviews.
For more information on the array of benefits offered to
our employees visit the careers section of our website
vivaenergy.com.au/careers.
Employee engagement
We regularly seek feedback from our employees as to what
we are doing well and what can be improved. This is done
through both structured surveys and informal engagement,
where employees are encouraged to contribute their thoughts
and insights at all levels of the organisation and provide
honest feedback on how we are performing across a range
of key areas. In FY2020 we ran an engagement survey, with
86% of our people from across our business participating.
The overall engagement score for this survey was 70%.
The survey again showed us that the highest scoring areas
are – Safety (91%), Diversity & Inclusion (83%), and our Values
(79%). We work hard to address the valuable feedback we
receive, to help drive a culture where people can be their best.
Case study: Leading a high-performance team to create
value for transport customers
Ash Backman joined Viva Energy in 2016 as Business Development Manager
for the transport sector. Today, as Viva Energy’s National Sales Manager
for Transport, Ash leads a large sales team dedicated to delivering tangible
benefits for Rail, Truck, Bus, Construction and Commercial Fleet customers.
“It’s really dynamic,” he says. “It’s a great challenge. Every day is different,
which brings new and exciting opportunities.”
In his current role, Ash works closely with some of Australia’s largest
businesses and understands the value and importance of building customer
partnerships that are mutually beneficial. “Helping our customers do great
things is central to our strategy,” he says. “For example, we’ve worked
closely with customers to trial and implement Shell Diesel Extra, which
offers improved engine efficiency compared to standard diesel. By trialling
the product in our customers’ equipment, we’ve been able to demonstrate
that Shell Diesel Extra drives tangible value for their business by lowering
fuel consumption. Improving fuel efficiency for our customers is an
achievement we’re really proud of.”
Ash loves the customer-obsessed culture that’s embedded across Viva
Energy’s business. “We’re empowered to create value for our customers
and partners, which is an aspect of my role I find really exciting,” he says.
“My team spends a huge amount of time working closely with our customers to create true partnerships. This includes
ensuring our supply arrangements are optimised for our customers, exploring innovation and continuous improvement
opportunities, and ensuring we’re as closely aligned with our customers’ objectives as we can possibly be. We seek
a thorough understanding of our customers’ operations, because that depth of knowledge provides crucial insights
that allow us to identify beneficial opportunities.”
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Our community
We are committed to building strong relationships and
making a positive difference in local communities across our
national operating footprint. We believe this is important for
employee attraction and engagement, and from a broader
community, stakeholder, customer and investor perspective.
In FY2020 most of our community engagements were
conducted virtually due to COVID-19 related challenges.
Despite this, we adapted our program to ensure the
health and safety of our partners, local communities
and our employees.
FY2020 Highlights
• National bushfire relief effort and recovery including
$550K donations to charity and support services
• Successful completion of the first year of our
inaugural Reconciliation Action Plan with 90%
deliverables completed
• Delivery of virtual National Reconciliation Week
and NAIDOC Week employee engagements
• Launch of Cultural Awareness Training online
eLearning module
• Team Fundraising events contributing over $261,847
to charity
• Re-awarded Low Aromatic Fuel (LAF) supply contract
through to mid-2023
• Virtual community meetings held for our major facilities
FY2021 Priorities
• Refresh our Community Program including review
of our community partnerships for implementation
in FY2022
• Continued implementation of our inaugural
Reconciliation Action Plan and refresh plan for
implementation from FY2022
• Community consultation for the Gas Terminal Project
Local community engagement
We strive to be a good neighbour and member of the local
communities where we operate. We recognise that our
operations have the potential to impact local communities,
and that regular dialogue and engagement with our
community stakeholders are essential to maintaining
our social licence to operate and for when we need to
deliver new projects. We maintain active and regular
community engagements for our larger facilities, with
specific community engagement activities and information
on our website for Geelong Refinery, and our terminals at
Newport, Clyde and Parramatta, Gore Bay and Pinkenba.
Visit here for latest information and updates:
vivaenergy.com.au/about-us/community-program.
We recognise that our operations
have the potential to impact local
communities, and that regular
dialogue and engagement with our
community stakeholders are essential
to maintaining our social licence to
operate and for when we need to
deliver new projects.
In FY2020 we announced our vision to establish the Geelong
Energy Hub at our refinery site and commenced community
engagement and consultation on the Gas Terminal Project.
This is an exciting project to diversify the use and earnings
of the refinery site, provide a new gas supply for south-east
Victoria and present opportunities for new energy projects
while still retaining the vital role the refinery plays in Australia’s
energy security. For the latest information on our local
community engagement for this project visit vivaenergy.com.
au/gas-terminal.
Our Geelong community
The Geelong Refinery is our largest operational site, employing
more than 700 people and supplying more than half of the fuel
needed for Victoria. Our refinery and associated operations
have been part of the local Geelong community since 1954
and inject more than $200M each year into the local economy
through wages and services. We have partnerships with a
range of local community organisations in Geelong including
Northern Futures as well as a partnership with the Geelong
Football Club – sponsoring their inaugural AFLW (women’s)
team, and their Next Generation Academy (NGA). We also
engage social enterprise Gen U to run the refinery cafeteria
and provide gardening services.
Sport plays a significant role in the Geelong region with AFL,
soccer, netball and cricket being the highest participation
sports. As a result, we support 10 local clubs to assist
people (particularly children) participate in sport and
connect them with their local community. Due to COVID-19
restrictions, we postponed our Club Legends Award in
FY2020. This program celebrates the unsung sporting
volunteers in the greater Geelong region.
60
Viva Energy Group Limited – Annual Report 2020 Community program
Our community goal is to be valued by our people, local communities and customers for our genuine efforts towards
positive social impact. We are committed to giving back to our local communities and in doing so, helping them reach
their destination. FY2020 has provided an opportunity to review our community program and work has commenced
to establish the direction for the program from 2022 onwards when our existing community partnerships conclude.
We continue to proudly partner with a range of organisations such as the Cathy Freeman Foundation (CFF), National
Aboriginal Sporting Chance Academy (NASCA), Koorie Heritage Trust (KHT) and Council for Aboriginal Alcohol
Program Services (CAAPS), which deliver a range of programs across the country primarily targeted at supporting young
Indigenous people and improving cultural awareness and identity. Support for these programs also helps us deliver
on the commitments as outlined in our RAP. While our opportunities for engagement and support were impacted
due to COVID-19 restrictions across our program, we still managed to adapt and make positive progress.
Highlights for 2020
576 Good Deeds
Good Deeds
completed by
our employees.
Our employees
raised $435,570
through Double My
Donation and Team
Fundraising (includes
Viva Energy matching).
Third year sponsoring
the Geelong Football
Club’s AFLW team.
437 young people
supported by Viva
Energy programs.
Strong delivery of our
Reconciliation Action Plan
which aims to foster
reconciliation with Indigenous
peoples through our activities,
services and programs.
$550K+ donated
donated to support
the efforts and
recovery from the
devastating bushfires
in early 2020.
Our business
We use our business capabilities to help
create long-term positive change
Indigenous community projects
As part of our contract to supply Low Aromatic Fuel
into northern Australia (renewed until at least 2023),
we are committed to helping to reduce petrol sniffing
and supporting Indigenous community projects.
Member of Supply Nation
Our membership provides options to support
Indigenous businesses with more than $2.5M spent
on Indigenous owned and led organisations.
Indigenous employment
Developed an Indigenous employment and retention
strategy which was endorsed by Reconciliation Australia.
Customers
Working collaboratively with our customers to support
local communities where we both operate.
Our people
We create simple and inspiring ways for
our employees to contribute to positive
social impact
Our communities
We support local projects that foster
positive role models to address significant
community challenges
Double My Donation to community partners
221 employees have donated $173,723 including
Viva Energy’s contribution.
Employee led
34 Community Ambassadors across the organisation
to deliver our community program and offer
participation opportunities for employees.
Team fundraising
$261,847 raised through team fundraising activities,
including Viva Energy’s contribution.
Improving Cultural Awareness
Employees were involved in a series of virtual activities
to celebrate NAIDOC and National Reconciliation week
and to deepen our cultural awareness and competency.
Disaster recovery
Viva Energy contributed $300K to RuralAid and $100K
to BlazeAid to help with bushfire recovery as well as
tripling employee donations of $43K to a range of
bushfire related charities.
Role model and Indigenous grants
Grants to the value of $90,000 were issued to 10 local
community organisations and two Indigenous programs
– Shooting Stars and Indigenous Literacy Foundation.
Good deeds
Despite our restrictions on volunteering this year, our
employees still found good deed opportunities to
participate in. These included including knitting blankets
for St Kilda Mums, donating blood, writing letters to
farmers, and packing food hampers.
Cathy Freeman Foundation (CFF)
Viva Energy has a four year partnership with CFF.
This year, the partnership has supported young
Indigenous people to attend ‘in community’ Horizons
camps designed to increase confidence and goal setting
skills. Our employees produced videos explaining their
work and study to show CFF students what is possible.
National Aboriginal Sporting Chance
Academy (NASCA)
NASCA delivered 210 hours of activities, supporting
58 students in western Sydney with the support of
Viva Energy’s partnership.
Council for Aboriginal Alcohol Program
Services (CAAPS)
The CAAPS numeracy and literacy program has
supported 29 school aged residents recovering from
substance misuse issues. This involved over 184 sessions
of numeracy and literacy support.
Koorie Heritage Trust (KHT)
Viva Energy’s funding supported the recording of oral
histories, delivery of virtual school holiday programs
and annual events including the Koorie Art Show and
Koorie Krismas.
Northern Futures
Annual funding of $40,000 has removed some of the
barriers to completing further study and getting into
employment. Of the 12 students supported, seven
students have completed their study, with five having
moved into employment.
Support for Geelong and grass roots sports
Premier partner of the Geelong Cats AFLW side and
Next Generation Academy as well as sponsorship for
10 local Geelong sports clubs.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
RAP update
Since launching our inaugural Reconciliation Action Plan (RAP) in late FY2019 we have made considerable progress,
with over 90% of our first-year commitments achieved. In FY2020, we enhanced our Cultural Awareness training
accessibility by launching an eLearning module, with many of our employees already completing the module.
Additionally, we had 1,342 employees involved in activities to deepen cultural awareness and competency throughout
the year. Our team developed an Indigenous Employment Strategy which includes initiatives to support out Indigenous
employees and target recruitment to these groups. In late FY2020, we also reviewed and updated our Procurement
Policy to consider Indigenous or Torres Straight Island owned or operated businesses and this will be managed through
our RAP Hub, a dedicated intranet page. Despite a challenging year due to COVID-19, our Indigenous community
partners were able to adapt and deliver programs in a different or virtual way. In FY2021 we will continue to implement
our RAP commitments and work to review and refresh our RAP from FY2022.
The RAP includes the use of artwork titled ‘Wa-ngal yalinguth, yalingbu, yirramboi’ (Woi-wurrung language), created by artist Dixon
Patten (of Bayila Creative), a proud Yorta Yorta and Gunnai man who was born and raised in Melbourne. This artwork has been
endorsed by Kulin elders.
Low Aromatic Fuel
In partnership with the Australian Government National Indigenous Australians
Agency, Viva Energy supplies around 35 million litres per annum of Low Aromatic
Fuel (LAF) to Northern Australia. In FY2020 we were re-awarded the supply
contract which will see us continue supply through to at least mid-2023.
The supply of Low Aromatic Fuel has helped to reduce petrol sniffing in regional
and remote areas, with independent research9 showing that since the introduction
of low aromatic fuel, there has been a 95.2% reduction in petrol sniffing in
communities that stock low aromatic fuel and that have been studied since 2007.
Low Aromatic Fuel is a specially designed 91 octane unleaded petrol that complies
with the Australian Fuel Quality Standards Act and can be used in all petrol
engines that use regular 91 octane fuel. We proudly manufacture LAF at our
Geelong Refinery.
91 Low Aromatic Supply zone
9. https://ministers.pmc.gov.au/wyatt/2020/low-aromatic-fuel-supplies-secured-2023.
62
Viva Energy Group Limited – Annual Report 2020 Case study: Responding to the bushfires
When several communities in which we operate were devastated by the
Australian bushfire crisis during the summer of 2019-20, we provided urgent
support to our customers and emergency services, and ongoing support to
the devastated communities.
Throughout the disaster, we worked hard to support fuel deliveries into impacted
areas and quarantine fuel at our service stations for emergency services. We also
supported the Defence response and provided direct support to customers that
were experiencing difficulties because of the disaster. This industry wide effort
was complicated by disruptions to roads and heavy traffic and was a challenging
task but working closely with our carriers, service station operators and response
agencies we maintained fuel supplies to where it was most needed.
The bushfire conditions also caused potential risks to health, particularly for those who may have pre-existing
respiratory conditions. We responded to this by implementing controls to mitigate any health risks to our employees
and contractors, which were not limited to the physical effects, but also the mental health effects.
We are proud of our people who came together during and after this period to organise successful events and
donations to support the bushfire appeal. Contributions were made to the national bushfire relief effort and recovery
including monetary donations to the value of $550K. These included donations of $100K and $300K made to BlazeAid
and Rural Aid respectively, and $130,114 was also donated to a range of charities by way of Viva Energy tripling
employee contributions. In addition, $20,500 of in-kind support was provided in the form of fuel for aerial firefighting.
As part of our broader volunteer programs, Viva Energy provides paid leave to all employees who volunteer to support
firefighting and relief efforts.
Case study: Supporting the Woorabinda Horizons Camp 2020
The Cathy Freeman Foundation aims to broaden the horizons and support
Indigenous students to experience their full potential in school. We are proud
sponsors of the Foundation, particularly the Horizons program, which gives
students a once in a lifetime opportunity to join their peers from partner
communities to experience life and work in one of our major cities. This helps to
broaden their ‘horizons’ and encourage them to continue education and engage
in employment on their return. Working together with the Foundation we help
build hope and aspiration.
The restrictions in place to manage COVID-19 made it difficult to run the
Horizons program in FY2020, so the program was adapted to being run directly
in the local community. Some of our employees created short videos where they talked about their roles at Viva Energy
and their work experiences to bring some of the experience into the community in a virtual way.
“At first, when I attended the Horizon Camp at my local high school I was like, ahh yeah, just another normal day
at school but with the activities and deadly music. To be honest though, it was so much fun! I have not laughed
and enjoyed myself in such a long time. The reason why I haven’t enjoyed myself in a while was because I recently
joined the school, and I didn’t feel comfortable with everyone around me because I didn’t know them, and they
didn’t know me.
After attending the Horizon Camp, however, I got to know everyone: their name and favourite hobbies, favourite
sports, colours… you name it. And till this day I am still friends with everyone. I successfully graduated with my
new two best friends Jeff10 and Barry10. With positivity in my mind, what this camp taught me, I can do anything
I put my mind to. It all starts with education. The best thing about the camp is that CFF provided us with a view
towards some career pathways. The Viva Energy videos showed me employment opportunities, local young
Indigenous role models like Ivy Yoren (CFF coordinator) led the way showing us that anything was possible and
that there was support within the community. I loved this. This program impacted me greatly because I was able
to recognise my worth and how precious and important I am.“
— Josie10, student at the Woorabinda Horizons Camp 2020.
In FY2021 we will look to further develop a program with CFF called the Viva Energy Experience, which will aim
to provide opportunities for students to spend more time in our business and provide opportunities for more
significant engagement.
10. Student name changed.
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63
Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Ethical conduct and transparency
We are committed to observing the highest standard
of corporate practice. Our Values: Integrity, Responsibility,
Curiosity, Commitment and Respect, reflect what
Viva Energy stands for and underpin our business
principles and behaviours.
FY2020 Highlights
• Modern slavery risk assessment completed and first
statement issued in FY2021
• Human Rights Policy adopted
• Procurement policy revised to align with our commitment
to human rights, gender diversity and RAP objectives
Viva Energy has long-standing Business Principles that
reflect our core values and guide the conduct and operations
of our Company. We also have a Code of Conduct, which
outlines how we expect our employees, officers and
Directors to behave and conduct themselves in the workplace.
Our Code of Conduct is supported by the following policies:
• Anti-Bribery and Corruption Policy
• Whistleblower Policy
• Securities Trading Policy
• Diversity Policy
• Disclosure Policy
• Shareholder Communications Policy
In FY2020, we adopted a Human Rights Policy based on
the UN Guiding Principles on Business and Human Rights.
Together with our Business Principles and Code of Conduct,
this policy guides Viva Energy’s commitment to conduct
business in a way that contributes to sustainable development
by respecting the human rights of all people, including
our employees, the communities in which we operate, and
customers and suppliers in our supply chains.
All employees are required to complete awareness
training on these policies, with more advanced training
provided depending on their role within the organisation.
For more information, including copies of our policies, visit
investor.vivaenergy.com.au/corporate-governance.
Modern slavery
Viva Energy supports fundamental human rights and the
prevention of modern slavery and human trafficking. During
FY2020, we assessed, and commenced the process of
mitigating, our risks in this area and we will continue to build
on this work in FY2021. We issued our inaugural statement
prepared in accordance with the Australian Modern Slavery
Act 2018. This report is available online at investor.vivaenergy.
com.au/company-reports.
64
Viva Energy Group Limited – Annual Report 2020 In FY2020, the public profile and
importance of cyber security
increased as a result of a number
of high-profile cyber-attacks that
affected government agencies and
private sector companies globally
and within Australia.
The use of information systems and operational technology
is important to Viva Energy’s ability to efficiently produce and
distribute products to our customers. We also need to protect
sensitive business and personal data related to our customers
and employees. We recognise our responsibility in the supply
chain and work closely with our partners, critical asset owners
and customers to maintain confidentiality, integrity and
availability of information. We are highly focused on ensuring
that effective cyber security measures are implemented and
followed to minimise any disruption to business activities and
to ensure we maintain our customers’ trust to help them reach
their destination.
We take our obligations around cyber security seriously,
operating an Information Security Management System
aligned with global best practices and ensuring a continual
cycle of review and improvement of our cyber security risks
and controls. Our Audit and Risk Committee has oversight
of the related progress, risks and governance with cyber
security being a standing agenda item.
Improvements in FY2020 occurred across people, process
and technology with a focus on increasing visibility of threat
activity, risk management, resilience and improving user’s
ability to identify and handle cyber related threats. Notable
enhancements included the deployment of application
whitelisting, improved user awareness training and phishing
testing significantly reducing the risk to our environment from
malicious applications and other cyber threats. No notifiable
data breaches occurred during FY2020.
We will continue to maintain and further enhance cyber
security measures across the business and our supply chain
in FY2021.
During FY2020, Viva Energy adopted a Human Rights Policy
and we built awareness across our business of the potential
risks of modern slavery. We did this through targeted briefings
to our procurement teams, along with the implementation of
our modern slavery training program mandated for both our
senior leaders, and staff who have responsibility for managing
external supplier procurement. This analysis did not identify
any actual instances of modern slavery within the direct supply
chains of Viva Energy, or any modern slavery allegations
against any supplier.
Procurement Policy
Our Procurement Policy sets out the policy for employees,
contractors, and agents engaging in any form of procurement
activity on behalf of Viva Energy. Decisions relating to the
purchase of goods and services are based on guiding
principles which must be followed when conducting any
purchasing activity. One of those guiding principles requires
that all Viva Energy dealings must be fair, transparent and
ethical, which therefore requires our suppliers to also adhere
to high ethical standards and fairness in their own business.
In FY2020 we revised this guiding principle in line with our
newly adopted Human Rights Policy. This means that we
actively seek to select suppliers that align with our human
rights commitments by seeking suppliers that:
• do not promote discrimination on any grounds, or
occurrences of modern slavery; and
• do promote fair living wages, freedom of association,
equitable working conditions, employee health and safety,
and working within the relevant laws of their country.
In support of our gender diversity policy and Reconciliation
Action Plan (RAP) objectives, we also amended our guiding
principles to:
• actively consider Indigenous or Torres Strait Island
owned or operated businesses wherever they are
available, and their offering meets our industry needs
and is cost competitive; and
• engage suppliers who demonstrate a commitment
to gender equity.
Cyber security
Cyber security is the protection of information assets by
addressing threats to information processed, stored, and
transported by internetworked information systems.
In FY2020, the public profile and importance of cyber
security increased as a result of a number of high-profile
cyber-attacks that affected government agencies and private
sector companies globally and within Australia. The Australian
Government also released its Cyber Security Strategy which
proposed changes that saw the Government taking on a
more prominent role in the oversight of critical infrastructure
assets and systems of national significance. The Australian
Government’s critical infrastructure reform means we expect
to see potential cyber security related changes that will add
to the current state regulatory framework. We continue to
engage with the relevant state and federal agencies that
oversee critical infrastructure in this regard.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Economic contribution
We support the Australian economy through the national
scope of our operations, the products we supply, the
employment we generate, the local suppliers we support,
the returns we provide to investors and the taxes we pay.
We aim to maximise the benefits and minimise any negative
impacts of our business operations.
FY2020 Highlights
• Maintained safe and reliable fuel supply during COVID-19
and bushfire impacts
• Worked on long-term fuel energy security
• Major maintenance completed at the Geelong Refinery
• $5.07B tax contribution
We own and operate the Geelong Refinery, which in 2021 will
become one of only two refineries remaining in Australia. It
supplies over 10% of Australia’s fuel, and more than 50% of all
the fuel used in Victoria. Employing almost 800 people and
injecting more than $200M into the local economy through
wages and services, the Geelong Refinery is a vital part of
Australia’s energy solution. The critical investments and
improvements we continue to make in major maintenance,
Supporting Australia’s economy
$1.3B
invested in local wages
and services.
$5.07B
Total tax contribution.
Over 1,419 strong
Australian workforce 41%
based in regional areas.
On average, we re-fuel
1.74M 1
trucks, buses, cars
and motorcycles
every week across
the Alliance network
Network of 46 fuel
import terminals and depots 3
and 55 airports and
airfields across Australia.
1.2B
litres of storage capacity.
Leading supplier
for lubricants and diesel
in the resources market.
Viva Energy supplies:
Approximately ¼
of Australia’s fuel needs.
National network
of 1,339
retail service stations
Approximately 40%
of the marine fuel oil market.
Approximately 35%
of jet fuel nationally.
Geelong Energy Hub
Proudly supporting local
manufacturing at the
Geelong Refinery –
1 of 2 2
refineries
in Australia.
Major manufacturer in Australia of
Avgas and bitumen, and major supplier
of solvents
avgas
solvents
bitumen
Manufactures Low
Aromatic Fuel for supply
into NT, QLD and WA.
789+
people (employees and
contractors) work at the
Refinery and 286 additional
contractors during major
maintenance.
Supplies 90%
of marine fuels for Victorian
commercial shipping and
Spirit of Tasmania.
50%+
of the Port of Geelong’s trade.
1. FY2019 figures used due to FY2020 figures impacted by COVID-19.
2. In October 2020, BP announced the shutdown of the Kwinana refinery in WA; and in February 2021,
ExxonMobil announced the planned shutdown of the Altona refinery in Victoria.
3. Includes 24 fuel import terminals and 22 active depots (including 17 Liberty Oil depots).
66
Viva Energy Group Limited – Annual Report 2020 We are working closely with the Department of Industry,
Science, Energy and Resources to provide input into the
development of the Fuel Security Package, and we remain
hopeful that this will secure the outlook for refining in
Australia and in turn the long-term sustainability of the
Geelong Refinery.
In addition to the Temporary Refinery Production Payment,
the Federal Government has now also sought proposals as
part of Boosting Australia’s Diesel Storage Program, which
provides up to $200M for the construction of additional
diesel storage. We have submitted opportunities at our
Geelong Refinery and other locations around the country
to participate in this program to improve our supply chains
and refining flexibility.
While the full details of the Fuel Security Package are yet to
be determined, these early programs are encouraging, with
other elements being progressed in early FY2021.
Tax transparency
We are committed to delivering transparency and providing
communities with a clear understanding of the tax
contributions we make and collect for the Australian economy.
In 2016, Viva Energy adopted the Voluntary Tax Transparency
Code, under which we make public disclosures of our tax
position, in addition to the requirements under our financial
statements. Due to the impact of the COVID-19 pandemic,
taxes calculated by reference to revenue and profits were
lower in FY2020. This included income tax for which no net
payment was made during the year. For further information,
refer to our FY2020 Taxes Paid Report available here investor.
vivaenergy.com.au/company-reports.
Total tax contribution
Income tax
Fuel excise
Customs duties
Payroll tax
Fringe benefits tax
Land tax
GST
PAYG withholding
Total tax contribution
A$M
-
4,102.2
19.8
10.4
0.8
22.9
852.0
60.3
5,068.4
Employing almost 800 people
and injecting more than $200M
into the local economy through
wages and services, the Geelong
Refinery is a vital part of Australia’s
energy solution.
reliability and safety improvements, the potential to increase
storage capacity along with the Federal Government’s Fuel
Security Package, and diversification of energy products
with the launch of the Geelong Energy Hub aim to ensure
our Refinery continues to provide energy security and be an
important part of local manufacturing for years to come.
With the significant footprint of our operations and
infrastructure, including the Refinery, our terminals and
pipelines, and our supply business, we are a key contributor
to the energy security position of Australia, and particularly
in liquid fuels and lubricants. This security underpins every
sector of the Australian economy, and we take our role in
delivering a safe and reliable supply seriously.
Fuel Security Package
In late FY2020, the Federal Government announced a
Temporary Refinery Production Payment of a minimum one
cent per litre on production to support Australia’s domestic
refineries to continue operations through to the end of
June 2021 while a longer-term Fuel Security Package is
designed and implemented.
The proposed Fuel Security Package consists of three
key elements, including a long-term Refinery Production
Payment, Minimum Stockholding Obligation on petrol, diesel
and jet fuel, and a $200M grants program to support the
establishment of up to 780 million litres of additional diesel
storage in Australia. This program is designed to bolster the
country’s energy security by preserving refining capacity and
increasing fuel stocks for times of disruption. In addition to
stocks held overseas, these measures will also help Australia
meet its obligations under the International Energy Agency
(IEA) Treaty.
By working to secure the long-term viability of Australian
refineries, we safeguard the capability to store and process
domestic crude, which provides a level of self-sufficiency,
contributes significantly to the level of oil stocks held in
Australia, enables us to make a range of products which are
important to our unique requirements such as Avgas and
Low Aromatic Fuels, and directly supports a range of other
industries that rely on the products we make.
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Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Case study: How the Geelong Refinery manufactures
solvents to help Australian industry
While people naturally associate refineries with the production of fuels and
bitumen, solvents that are required for the manufacture of a variety of everyday
products are also produced at the Geelong Refinery. Senior Associate
Technologist with Viva Energy’s Specialties team, Andrew Duthie, explains
the valuable role that solvents play in supporting Australian industries.
Responsible for quality control across all the hydrocarbon solvents that
Viva Energy supplies, Andrew Duthie plays a vital role given that the solvents
manufactured at the refinery are used in a diverse range of applications
and products.
Andrew sees these products all around us and knows the contribution they make to a multitude of Australian industries.
“If you go down to your local hardware store, almost every aisle you walk down will contain a product made with one
of our solvents,” he says. “That’s because we supply chemicals to such a wide range of industries, from adhesives
and coatings to the mining, agriculture chemistry, pharmaceutical, timber treatment and cleaning sectors.
Paints and varnishes do more than enhance appearance. They improve durability and extend the life of the
material’s use. Metal components of cars and structures would rust without their protective coatings. Timber would
rot without protective treatment. Our solvents are also used to produce the copper piping that carries our water
supply, and the nickel and cobalt used to make rechargeable batteries. They’re vital for the manufacture of many
different products that we rely on every day.”
Providing technical support
Andrew and his team have a strong focus on the needs of their customers. For a product manufactured with a solvent
to be effective, the solvent used must have specific properties. The team at the Geelong Refinery has the resources,
technical capability and skill to ensure the chemicals they manufacture and supply are fit for purpose and on-grade.
Andrew’s team helps develop formulations for new applications that customers might be pursuing, and performs tests
to help customers monitor their production processes. They also analyse customer product samples. This level of
technical support is only possible because of the laboratory at the Geelong Refinery. “We’re set up to really analyse
products in-depth, which is a huge benefit for our customers – and a major point of difference for us.”
Applying professional expertise
Andrew is driven to supply the best quality chemical products possible, and so he is meticulous when it comes to
quality control at the source of manufacture.
“At the end of the day it comes back to product quality. Producing and supplying high-quality products that meet
the requirements of our customers is ultimately how Viva Energy makes a positive difference to their businesses.”
Andrew believes that his team’s determination to find new products that meet changing customer demands will stand
Viva Energy in good stead for years to come. “In the last few years, we’ve seen a general transition to lower aromatic
solvents, especially in wood treatment products. We’ve taken up that challenge and now supply VivaSol D80 for use
in low odour timber treatment products.”
“I’m extremely proud of the Specialties team, but also of Viva Energy as a whole. It’s great to see everyone in the
company helping our customers to achieve their goals, with whatever products they’re manufacturing and supplying,
and succeeding in that.”
68
Viva Energy Group Limited – Annual Report 2020 Sustainability performance data*
Health and safety1
Personal safety2
Viva Energy (excluding Liberty Oil Holdings)
Total Exposure Hours (million)
Total Fatalities and Permanent Disability
FY2017
FY2018
FY2019
FY2020
FY2019/
2020 Δ#
5.55
0
6.24
1
6.38
0
5.27
0
-1.11
0
Total Lost Time Injuries / Frequency Rate (per million hours)
5 / 0.9
7 / 1.12
9 / 1.41
6 / 1.14 -3 / -0.27
Employees
Contractor
4
1
4
3
5
4
3
3
-2
-1
Total Recordable Injuries3 / Frequency Rate (per million hours)
25 / 4.51
36 / 5.77
29 / 4.55
1910 / 3.61 -10 / -0.94
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Employee
Contractor
Total High Potential Near Miss Incidents4
Reported Total Life Saving Rule Breaches
Liberty Oil Holdings
Total Exposure Hours (million)
Total Fatalities and Permanent Disability
Total Lost Time Injuries / Frequency Rate (per million hours)
Total Recordable Injuries3 / Frequency Rate (per million hours)
Total High Potential Near Miss Incidents4
Process safety5
Viva Energy (excluding Liberty Oil Holdings)
12
13
69
28
NR
NR
NR
NR
NR
14
22
87
32
NR
NR
NR
NR
NR
13
16
89
37
NR
NR
NR
NR
NR
7
12
87
17
0.33
0
6 / 18.24
10 / 30.40
0
-6
-4
-2
-20
-
-
-
-
-
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d
Total Tier 1 / Tier 2 Process Safety Events
0 / 3
0 / 4
0 / 2
1 / 2
+1 / 0
Liberty Oil Holdings
Total Tier 1 / Tier 2 Process Safety Events
NR
NR
NR
0 / 0
Environment
Environmental Non-compliance Sanctions6
2
0
0
0
Spills
Viva Energy (excluding Liberty Oil Holdings)
Loss of Primary Containment (LOPC) > 100kg7
Spills to Environment >100kg8
Significant Spills9
Liberty Oil Holdings
Loss of Primary Containment (LOPC) > 100kg7
Spills to Environment >100kg8
Significant Spills9
Significant air emissions – Geelong Refinery11
Volatile Organic Compounds (kg)
NOx (kg)
SOx (kg)
26
4
4
NR
NR
NR
29
3
3
NR
NR
NR
29
3
2
NR
NR
NR
1,910
6
3
3
2
0
679,438
546,251
632,076
542,949
565,700
472,172
195,900
-65.4%
304,434
-35.5%
1,685,843
1,702,719
3,164,355
3,680,140
+16.3%
-
0
-10
+3
+1
-
-
-
S
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69
Viva Energy Group Limited – Annual Report 2020
Sustainability continued
Water consumption – Geelong Refinery11
Potable water consumption (ML)
Sea water consumption (ML)
Recycled water consumption (ML)
Waste – Geelong Refinery11
FY2017
FY2018
FY2019
FY2020
FY2019/
2020 Δ#
592
366
241
261
+8.3%
100,076
118,192
107,299
85,296
-20.5%
1,191
1,179
1,197
1,053
-12.0%
Total Hazardous Waste generated (Tonnes)
Hazardous Waste diverted from landfill (Tonnes)
Total Non-hazardous Waste generated (Tonnes)
Non-hazardous Waste diverted from landfill (Tonnes)
463,817
463,331
1,693
1,504
589,439
588,576
2,495
2,232
550,969
550,066
566,885
566,436
680
500
612
378
+2.9%
+2.9%
-10.0%
-24.4%
Climate change and energy
Greenhouse Gas (GHG) Emissions12
Total GHG emissions (Scope 1 and 2) (tCO2e)
1,328,985
1,392,568
1,430,837
1,282,597
Total Scope 1 (tCO2e)
Refining (tCO2e)
Other (tCO2e)
Total Scope 2 (tCO2e)
Refining (tCO2e)
Other (tCO2e)
Energy12
Total Energy consumed (GJ)
Refining
Other
-10.4%
-10.2%
1,032,422
1,061,632
1,113,911
1,000,445
1,020,905
1,050,846
1,101,920
985,025
-10.6%
11,517
296,563
258,586
37,977
10,786
330,936
290,158
40,778
11,991
317,082
276,423
40,659
15,420
+28.6%
282,152
-11.0%
246,632
35,520
-10.8
-12.6
252,921,300 257,597,649 273,422,163 253,053,218
252,546,619 257,229,974 273,059,170 252,652,818
-7.5%
-7.5%
374,681
367,675
362,993
400,400
+10.3%
Energy Intensity Index13 – Geelong Refinery
Our people14
Total Employees
Gender Split (Male / Female) (%)
Total Employees in permanent full-time roles
Employees in permanent full-time roles (Male / Female) (%)
Total Employees in permanent part-time roles (Male / Female)
Employees in permanent part-time roles (Male / Female) (%)
Total Employees in full-time fixed term contracts
Employees in full-time fixed term contracts (Male / Female) (%)
Total Employees in part-time fixed term contracts
Employees in part-time fixed term contracts (Male / Female) (%)
Total Employees as casuals
Employees as casuals (Male / Female) (%)
Voluntary Employee turnover (%)
Voluntary Employee turnover (Male / Female) (%)
Board of Directors (Male / Female) (%)
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
112.4
123.9
+11.5
1,273
78 / 22
1,126
81 / 19
100
1,320
76 / 24
1,139
81 /19
111
1419
76 /24
1227
+99
0 / 0
+88
80 / 20
-1 / +1
116
+5
35 / 65
38 / 62
41 / 59
+3 / -3
22
35
27
-8
86 /14
69 / 31
48 / 52 -21 / +21
1
13
4
0 / 100
0 / 100
0 /100
24
22
45
-9
0 / 0
+23
100 / 0
100 / 0
91 / 9
-9 / +9
5
74 / 26
71 / 29
6
67 / 33
71 / 29
5
70 / 30
71 / 29
-1
+3 / -3
0 / 0
70
Viva Energy Group Limited – Annual Report 2020 Senior Leadership Group (Male / Female) (%)15
New Hires (Male / Female) (%)
Internal Promotions (Male / Female) (%)
Total Employees who took Primary Parental Leave
(Male / Female)
Total Employees who took Secondary Parental Leave
(Male / Female)
Total Employees who did not return to work after Primary
Parental Leave (Male /Female)16
WGEA Pay Gap (%)17
Total Employees (Westside Petroleum only)
Gender Split (Westside Petroleum only) (Male / Female) (%)
Our community
Good Deeds Completed
FY2017
FY2018
FY2019
FY2020
FY2019/
2020 Δ#
NR
NR
NR
NR
NR
NR
NR
NR
NR
59 / 41
68 /32
76 /24
61 / 39
60 /40
74 / 26
59 / 41
-2 / +2
70 / 30 +10 / -10
81 / 19
+7 / -7
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
24 / 28
32 / 0
0 / 1
7.6
12
58 / 42
-
-
-
-
-
-
NR
1054
1018
576
-43%
*
#
All data prior to FY2020 excludes Liberty Oil Holdings and Westside Petroleum.
For selected Environment and Greenhouse Gas and Energy metrics, variation in performance between FY2019 and FY2020 is expressed as a
percentage to facilitate the comparison of data.
1.
All data for Viva Energy FY2020 includes Westside Petroleum for the period post acquisition (September 2020 onwards). Totals used include
both employees and contractors. Liberty Oil Holdings is reported separately for FY2020.
2.
Personal Safety criteria definitions used are in line with US OSHA guidelines.
3.
Incidents that include Medical Treatment Case, Restricted Work Case, Lost Time Injuries and Fatalities.
4.
Incidents that can result in injury, illness, damage to assets, the environment or company reputation, or it can be a near miss. This can also
include Life Saving Rule breaches where the potential consequence of major injury or greater was highly likely, or First Aid Cases that could
have been a Total Recordable Injury in slightly different conditions.
5.
Tier 1 and Tier 2 Process Safety Events are defined as per API RP 754.
6.
7.
8.
9.
Number of environmental non-compliance sanctions, which occurred in the reporting year and resulted in the issue of a fine, prosecution,
enforceable undertaking or impact on licence to operate. This number does not include any pending proceedings.
Incidents resulting in the uncontrolled or unplanned release of material from a process or storage that serves as primary containment.
This number also includes Spills to the environment > 100kg, and Significant Spills.
Number of incidents resulting in the release of material to the environment without secondary containment. All spills are also counted as
LOPC incidents.
Number of incidents for the uncontrolled or unplanned release of material greater than 1,000kg to the natural environment without
secondary containment.
10. One of the 19 reported incidents occurred in late 2019; however, due to further assessment this incident was classified in FY2020 and is therefore
included in FY2020 data.
11. Geelong Refinery accounts for the majority of our significant environmental emissions for the Group. The data is aligned with the NPI reporting
period 1 July – 30 June for the reported year. All emission data for the Group is submitted to the National Pollutant Inventory and available at
npi.gov.au/npi-data.
12. Scope 1 and Scope 2 GHG emission and Total Energy Consumed estimates are prepared in accordance with the National Greenhouse and
Energy Report Act (NGER) for the reporting period 1 July – 30 June. ‘Other’ includes data for all non-refining operations including Commercial,
Retail Fuels and Marketing, Supply, Corporate Functions and Overheads. The reporting period excludes Westside Petroleum due to the full
acquisition of the business completed outside of the NGER reporting period.
13. Based on the Solomon Associates global refinery benchmarking Energy Intensity Index (EII) methodology. This data relates to the calendar year
ended 31st December 2020.
14. All data excludes Westside Petroleum unless otherwise stated.
15. The Senior Leader Group is selected senior, critical roles as defined by the executive team, and excludes members of the executive team.
16. Number of employees who did not return to work after primary parental leave (i.e. due to voluntary or involuntary termination).
17. The WGEA reported gender pay gap measures the difference between the average earnings of women and men in the workforce. The total
remuneration pay gap (expressed as a percentage) represents the total remuneration pay gap for the Group (excluding Westside Petroleum
due to the full acquisition of the business completed outside of the WGEA reporting period) for the 2019/2020 WGEA reporting period.
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71
Viva Energy Group Limited – Annual Report 2020
Sustainability continued
GRI content index
GRI Standard
Disclosure
Reference
General disclosures
Organisational profile
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
102-9
102-10
102-11
102-12
102-13
Strategy
102-14
Governance
102-16
Name of the organisation
Viva Energy Group Limited
Activities, brands, products,
and services
Operating and financial review – Annual Report (page 12)
Location of headquarters
Level 16, 720 Bourke Street, Docklands Vic 3008
Location of operations
About us – Annual Report (page 4)
Ownership and legal form
About us – Annual Report (page 3)
Markets served
About us – Annual Report (page 4)
Scale of the organisation
About us – Annual Report (page 4)
Information on employees
and other workers
Our people – Annual Report (page 56)
Sustainability performance data – Annual Report
(pages 69 to 71)
Supply chain
About us – Annual Report (page 4)
Significant changes to the
organisation and its supply chain
Precautionary Principle
or approach
External initiatives
Membership of associations
Operating and financial review – Annual Report (page 12)
2020 Corporate Governance Statement –
investor.vivaenergy.com.au/investor-centre
Viva Energy has used the Global Reporting Initiative
Reporting framework for sustainability reporting guidance
Viva Energy participates in and engages with a number
of local, national and global organisations including
Reconciliation Australia, Workplace Gender Equality
Agency, Australian Hydrogen Council, Bioenergy Australia,
Australian Industry Greenhouse Network, Australian
Institute of Petroleum, Cooperative Research Centre
Care, LastFire, Maritime Industry Australia Limited,
Climate Leaders Coalition, IChemE
Statement from senior
decision-maker
Chairman and CEO’s report – Annual Report (pages 6 to 7)
Values, principles, standards,
and norms of behaviour
Our approach to sustainability – Annual Report (page 30)
2020 Corporate Governance Statement –
investor.vivaenergy.com.au/investor-centre
102-18
Governance structure
Our approach to sustainability – Annual Report (page 30)
2020 Corporate Governance Statement –
investor.vivaenergy.com.au/investor-centre
Stakeholder engagement
102-40
102-42
102-43
102-44
102-45
102-46
102-47
72
List of stakeholder groups
Our approach to sustainability – Annual Report (page 30)
Identifying and selecting
stakeholders
Approach to stakeholder
engagement
Our approach to sustainability – Annual Report (page 30)
Our approach to sustainability – Annual Report (page 30)
Key topics and concerns raised
Our approach to sustainability – Annual Report (page 30)
Entities included in the
consolidated financial statements
Defining report content and
topic Boundaries
List of material topics
Our approach to sustainability – Annual Report (page 30)
Our approach to sustainability – Annual Report (page 30)
Our approach to sustainability – Annual Report
(pages 33 to 34)
Viva Energy Group Limited – Annual Report 2020 GRI Standard
Disclosure
Reference
102-48
Restatements of information
102-49
102-50
102-51
102-52
102-53
102-54
102-55
102-56
GRI Standard
Standard disclosures
Health and safety
GRI 103:
Management
Approach
GRI 403:
Occupational
Health and
Safety (2018)
103-1
103-2
103-3
403-1
403-2
403-3
403-4
403-5
403-7
403-8
Changes in reporting
Reporting period
The FY2019 non-hazardous waste volume for the
Geelong Refinery has been revised based on reassessment
of waste classifications. This change has been reflected
in the Sustainability performance data (on page 70)
About our reporting – Annual Report (page 31)
Unless otherwise indicated, all disclosures are for
1 January 2020 to 31 December 2020
Date of most recent report
18 March 2020
Reporting cycle
Annual
Contact point for questions
regarding the report
Claims of reporting in accordance
with the GRI Standards
Corporate directory – Annual Report (page 177)
About our reporting – Annual Report (page 31)
GRI content index
External assurance
Disclosures
GRI content index - Annual Report (page 72)
Limited assurance statement – Annual Report (page 76)
Reference
General management approach
Health and safety – Annual Report (page 35)
Occupational health and safety
management system
Hazard identification, risk
assessment, and incident
investigation
Health and safety – Annual Report (page 35)
Health and safety – Annual Report (page 35)
Occupational health services
Health and safety – Annual Report (page 35)
Worker participation, consultation,
and communication on occupational
health and safety
Worker training on occupational
health and safety
Prevention and mitigation of
occupational health and safety
impacts directly linked by business
relationships
Workers covered by an
occupational health and safety
management system
Health and safety – Annual Report (page 35)
Health and safety – Annual Report (page 35)
Health and safety – Annual Report (page 35)
Health and safety – Annual Report (page 35)
403-9
Work-related injuries
Health and safety – Annual Report (page 37);
Sustainability performance data – Annual Report
(pages 69 to 71)
Sector specific
disclosures
G4-OG13 Number of process safety events
Health and safety – Annual Report (page 38);
by business activity
Sustainability performance data – Annual Report
(pages 69 to 71)
G4-DMA Emergency Preparedness
Health and safety – Annual Report (page 38)
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73
Viva Energy Group Limited – Annual Report 2020
Sustainability continued
GRI Standard
Disclosures
Reference
Lower carbon energy transition
GRI 103:
Management
Approach
GRI 302:
Energy
103-1
103-2
103-3
302-1
General management approach
Making the lower carbon transition – Annual Report
(page 40)
Energy consumption within
the organisation
Making the lower carbon transition – Annual Report
(page 40);
GRI 305:
Emissions
(2016)
305-1
Direct (Scope 1) GHG emissions
Sustainability performance data – Annual Report
(pages 69 to 71)
Making the lower carbon transition – Annual Report
(page 40);
Sustainability performance data – Annual Report
(pages 69 to 71)
305-2
Energy indirect (Scope 2)
GHG emissions
Making the lower carbon transition – Annual Report
(page 40);
Sustainability performance data – Annual Report
(pages 69 to 71)
Environment
GRI 103:
Management
Approach
GRI 303:
Water and
effluents
(2018)
103-1
103-2
103-3
303-1
303-2
General management approach
Environment – Annual Report (page 52);
Water withdrawal by source
Environment – Annual Report (page 54);
Water sources significantly affected
by withdrawal of water
Sustainability performance data – Annual Report
(pages 69 to 71)
Environment – Annual Report (page 54);
Sustainability performance data – Annual Report
(pages 69 to 71)
303-3
Water recycled and reused
Environment – Annual Report (page 54);
GRI 304:
Biodiversity
(2016)
GRI 305:
Emissions
(2016)
304-4
305-7
IUCN Red List species and national
conservation list species with habitats
in areas affected by operations
Nitrogen oxides (NOx), sulfur
oxides (SOx), and other significant
air emissions
GRI 306:
Waste (2020)
306-2
Management of waste-related
impacts
Sustainability performance data – Annual Report
(pages 69 to 71)
Environment – Annual Report (page 55);
Environment – Annual Report (page 53);
Sustainability performance data – Annual Report
(pages 69 to 71)
Environment – Annual Report (page 54);
Sustainability performance data – Annual Report
(pages 69 to 71)
306-3
Waste generated
Environment – Annual Report (page 54);
Sustainability performance data – Annual Report
(pages 69 to 71)
306-4
Waste diverted from disposal
Environment – Annual Report (page 54);
Sustainability performance data – Annual Report
(pages 69 to 71)
306-5
Waste directed to disposal
Environment – Annual Report (page 54);
Sustainability performance data – Annual Report
(pages 69 to 71)
G4-EN24 Significant spills
Environment – Annual Report (page 52);
307-1
Non-compliance with environmental
laws and regulations
Sustainability performance data – Annual Report
(pages 69 to 71)
Environment – Annual Report (page 52);
Sustainability performance data – Annual Report
(pages 69 to 71)
Directors’ report – Annual Report (page 104)
Sector specific
disclosure
GRI 307:
Environmental
compliance
(2016)
74
Viva Energy Group Limited – Annual Report 2020 GRI Standard
Disclosures
Reference
Our people
GRI 103:
Management
Approach
GRI 401:
Employment
(2016)
103-1
103-2
103-3
401-1
General management approach
Our people – Annual Report (page 56)
New employee hires and
employee turnover
Our people – Annual Report (page 56);
Sustainability performance data – Annual Report
(pages 69 to 71)
401-3
Parental leave
Our people – Annual Report (page 59);
GRI 404:
Training and
education
(2016)
GRI 405:
Diversity
and equal
opportunity
(2016)
404-2
405-1
405-2
Programs for upgrading
employee skills and transition
assistance programs
Diversity of governance bodies
and employees
Ration of basic salary and
remuneration of women to men
Sustainability performance data – Annual Report
(pages 69 to 71)
Our people – Annual Report (page 59)
Our people – Annual Report (page 57);
Sustainability performance data – Annual Report
(pages 69 to 71)
Our people – Annual Report (page 57);
Sustainability performance data – Annual Report
(pages 69 to 71)
Our community
GRI 103:
Management
Approach
GRI 413: Local
Communities
(2016)
103-1
103-2
103-3
413-1
Economic contribution
General management approach
Our community – Annual Report (page 60)
Operations with local community
engagement, impact assessments,
and development programs
Our community – Annual Report (page 60)
GRI 103:
Management
approach
GRI 103-1
General management approach
Economic contribution – Annual Report (page 66)
GRI 103-2
GRI 103-3
GRI 201:
Economic
Performance
(2016)
201-1
201-2
Direct economic value generated
and distributed
Operating and financial review – Annual Report
(pages 12 to 28)
Financial implications and other
risks and opportunities due to
climate change
Making the lower carbon transition – Annual Report
(page 41)
GRI 204:
Procurement
practices
(2016)
GRI 207: Tax
(2019)
204-1
Proportion of spending
on local suppliers
Economic contribution – Annual Report (page 66)
207-1
Tax reporting
Economic contribution – Annual Report (page 67)
Taxes paid report – investor.vivaenergy.com.au/investor-centre
Ethical conduct and transparency
GRI 103:
Management
Approach
GRI 205: Anti-
corruption
(2016)
GRI 412:
Human rights
assessment
(2016)
GRI 103-1
General management approach
Ethical conduct and transparency – Annual Report (page 64)
GRI 103-2
GRI 103-3
205-2
Communication and training
about anti-corruption policies
and procedures
412-2
Policy and employee training
on human rights
Corporate Governance Statement –
investor.vivaenergy.com.au/investor-centre
Ethical conduct and transparency – Annual Report (page 64)
Corporate Governance Statement –
investor.vivaenergy.com.au/investor-centre
Ethical conduct and transparency – Annual Report (page 64)
Corporate Governance Statement –
investor.vivaenergy.com.au/investor-centre
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Viva Energy Group Limited – Annual Report 2020
Independent assurance statement
Independent Limited Assurance Report
to the Directors of Viva Energy Group Limited
What we found
Based on the work described below, nothing has come to our attention
that causes us to believe that the selected subject matter within the Viva
Energy Australia Annual Report 2020 has not been prepared, in all material
respects, in accordance with the Reporting Criteria. This conclusion is
to be read in the context of what we say in the remainder of our report.
What we did
Viva Energy Group Limited (the Company) and its controlled entities
(together the Group) engaged us to perform a limited assurance
engagement on the selected subject matter within the Viva Energy
Australia Annual Report 2020.
Subject matter
The scope of our work was limited to assurance over the selected subject
matter within the Viva Energy Australia Annual Report 2020. The selected
subject matter and the reporting criteria against which it was assessed
is summarised below. Our assurance does not extend to information in
respect of earlier periods or to any other information included in the
Viva Energy Australia Annual Report 2020.
Entity
(consolidated)
Viva Energy
Group Limited
Viva Energy
Group Limited
(excluding Liberty
Oil Holdings
Pty Limited)
Performance Indicator
(for the year ended 31 December 2020 unless
otherwise stated)
• Total Employees
• Gender Split (Male / Female) (%)
• Senior Leadership Group (Male / Female) (%)
• Total Greenhouse Gas (GHG) Emissions
(Scope 1 and 2) for the year ended 30 June 2020
• Total energy consumed for the year ended
30 June 2020
• Total Lost Time Injuries
• Total Lost Time Injuries Frequency Rate
(per million hours)
• Total Recordable Injuries Frequency Rate
(per million hours)
• Tier 1 Process Safety Events
• Tier 2 Process Safety Events
• Significant spills
Liberty Oil
Holdings Pty
Limited
• Total Lost Time Injuries
• Total Lost Time Injuries Frequency Rate
(per milllion hours)
• Total Recordable Injuries Frequency Rate
(per million hours)
• Tier 1 Process Safety Events
• Tier 2 Process Safety Events
• Significant spills
Reporting Criteria
The Selected subject matter needs to be read and understood together
with the Reporting Criteria, being the boundaries, definitions and
methodologies disclosed within the Viva Energy Australia Annual Report
2020, which the Group is solely responsible for selecting and applying.
The absence of a significant body of established practice on which to draw
to evaluate and measure non-financial information allows for different,
but acceptable, measurement techniques and can affect comparability
between entities and over time.
Our Independence and Quality Control
We have complied with relevant ethical requirements related to assurance
engagements, which are founded on fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and
professional behaviour.
Inherent limitations
Inherent limitations exist in all assurance
engagements due to the selective testing
of the information being examined.
Therefore fraud, error or non-compliance
may occur and not be detected.
Additionally, non-financial data may
be subject to more inherent limitations
than financial data, given both its nature
and the methods used for determining,
calculating and sampling or estimating
such data.
Restriction on use
This report, including our conclusions,
has been prepared solely for the Board
of Directors of the Group in accordance
with the agreement between us, to assist
the Directors in reporting the Group’s
sutainability performance and activities.
To the fullest extent permitted by law, we
do not accept or assume responsibility to
anyone other than the Board of Directors
and the Group for our work or this report
except where terms are expressly agreed
between us in writing.
76
The firm applies Auditing Standard ASQC 1 Quality Control for Firms
that Perform Audits and Reviews of Financial Reports and Other Financial
Information, Other Assurance Engagements and Related Services
Engagements and accordingly maintains a comprehensive system of
quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Responsibilities
PricewaterhouseCoopers
We are responsible for:
• planning and performing the engagement to obtain limited assurance
about whether the Selected subject matter is free from material
misstatement, whether due to fraud or error;
• forming an independent conclusion, based on the procedures we have
performed and the evidence we have obtained; and
• reporting our conclusion to the Directors of Viva Energy Group Limited.
Viva Energy Group Limited
The Group’s management are responsible for:
• preparing the Selected subject matter as well as the Viva Energy
Australia Annual Report 2020 in its entirety;
• the prevention and detection of fraud and error in relation to the
Selected subject matter;
• the design and operation of controls to ensure the completeness and
accuracy of information within the Viva Energy Australia Annual Report
2020, including but not limited to the Selected subject matter; and
• Determining suitable reporting criteria for reporting the Selected
subject matter within the Viva Energy Australia Annual Report 2020 and
publishing those criteria such that they are available to expected users
of the report.
What our work involved
We conducted our work in accordance with the Australian Standard on
Assurance Engagements (ASAE) 3000 Assurance Engagements Other
than Audits or Reviews of Historical Financial Information (Revised) and
ASAE 3410 Assurance Engagements on Greenhouse Gas Statements.
These Standards require that we comply with independence and ethical
requirements and plan the engagement so that it will be performed
effectively.
Main procedures performed
We are required to plan and perform our work in order to consider the risk
of material misstatement of the Selected subject matter. In doing so, we:
• Enquiring of relevant management of the Group regarding the processes
and controls for capturing, collating, calculating and reporting the
Selected subject matter, and evaluating the design and operational
effectiveness of selected controls;
• Testing the classification of incidents included within the calculation
of the Selected subject matter, on a sample basis, to relevant underlying
records including incident reports;
• Testing the exposure hours used within the calculation of the Selected
subject matter, on a sample basis, to relevant underlying contractor
and swipe card data;
• Testing the arithmetic accuracy of a sample of calculations of the
Selected subject matter;
• Assessing the appropriateness of the greenhouse gas emission factors
and methodologies applied in calculating the Selected subject matter;
• Agreeing the Selected subject matter to underlying data sources and
calculations; and
• Undertaking analytical procedures over the performance data utilised
within the calculations and preparation of the Selected subject matter.
We believe that the information we have obtained is sufficient and
appropriate to provide a basis for our conclusion.
John Tomac
Partner
15 March 2021
PricewaterhouseCoopers
Sydney
We permit this report to be disclosed in
the Viva Energy Australia Annual Report
2020 to assist the Directors in responding
to their governance responsibilities by
obtaining an independent assurance
report in connection with the Selected
subject matter.
Limited assurance
This engagement is aimed at obtaining
limited assurance for our conclusions.
As a limited assurance engagement is
restricted primarily to enquiries and
analytical procedures and the work is
substantially less detailed than that
undertaken for a reasonable assurance
engagement, the level of assurance
is lower than would be obtained in a
reasonable assurance engagement.
Professional standards require us to use
negative wording in the conclusion of a
limited assurance report
PricewaterhouseCoopers
ABN 52 780 433 757
One International Towers Sydney,
Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T +61 2 8266 0000, F +61 2 8266 9999
www.pwc.com.au
Liability limited by a scheme approved
under Professional Standards Legislation.
Viva Energy Group Limited – Annual Report 2020 Remuneration report
Letter from the Remuneration and Nomination Committee Chair – Robert Hill
Dear Shareholders,
On behalf of the Board, I am pleased to present Viva Energy’s 2020 Remuneration report.
Our performance
The response to the COVID-19 pandemic has naturally had a significant impact on our business and our customers. As always,
our priority has been the health and safety of our people and ensuring that we continue to operate safely and reliably to serve
our customers and the broader community. The Board is proud of the way our people responded to the crisis and the sound
results delivered under the circumstances, including:
• The Company’s Non-Refining Underlying EBITDA (RC) increased by approximately 16.5% over the prior year. Although fuel sales
were impacted by the ‘stay at home’ order and border restrictions that were in place around the country, robust diesel sales
through both retail and commercial channels, improved retail fuel margins and strong cost and capital management offset the
direct impact from declining sales demonstrating the resilience of our sales and marketing businesses. A contributing factor
to this strong result was the renegotiation of the Alliance agreement in 2019, which gave the Company control over retail fuel
pricing allowing the Company to better manage the sales/margin mix and more successfully navigate the challenges presented
by the pandemic, as well as to continue to drive sales growth in the year ahead. Retail sales volumes are progressively recovering
towards pre COVID-19 levels, and while Aviation sales volumes remain impacted by border closures, there are some early signs
of recovery following an increase in domestic air travel.
• Management delivered on some important strategic initiatives, including divesting the Company’s stake in Viva Energy REIT
(now Waypoint REIT), and returning $580 million of the proceeds of the divestment to our shareholders, with a commitment
to return the remaining $100 million. Strong progress was also made on the development of the Geelong Energy Hub, and
the Company has entered into an MOU with two high quality consortium partners for the development of a Gas Terminal
at Geelong. The Company also carried out a strategic review of the refining business and made progress to build stronger
foundation for continued refining operations.
• The Refining business was impacted by lower refining margins due to the decline in both domestic and global oil demand,
recording a Refining Underlying EBITDA (RC) loss of $95.1 million for the year. The Company made the decision to bring down
some processing units in April 2020 to reduce production and bring forward the planned major maintenance work, which has
now been completed. The refinery has since returned to full production, which has led to an improvement in refining margins.
While the refining outlook remains challenging, the Fuel Security Package announced by the Federal Government in
September 2020 and the commencement of the interim Refinery Production Payment from 1 January 2021 demonstrate
an ongoing commitment to strengthening Australia’s refining industry.
• The Company reported a Group Underlying EBITDA (RC) result of $519.4 million, finishing 2020 in a strong position with a
relatively low level of net debt at $104.2 million, emerging sales recovery in parts of our business that were most affected by
the pandemic, and with the prospects of a stronger foundation in our Refining segment.
The Board is very pleased with the way that management led the business through one of the most challenging periods in its
history and looks forward to the year ahead.
2020 Remuneration
Fixed remuneration
No adjustments were made to the remuneration of Executive KMP or the Non-Executive Director fees in 2020, with the exception
of the CFO who, as disclosed in the 2019 Remuneration Report, received an increase to his fixed remuneration from $600,000 to
$650,000 effective 1 March 2020.
2020 Short Term Incentive (STI)
The Executive KMP earned 26.25% of their maximum STI opportunity in 2020. This result was determined as follows:
• despite achieving the ‘at target’ level of Group Normalised Underlying EBITDA (RC) and a ‘stretch’ level of Underlying Supply
Chain EBITDA (RC), the Board exercised discretion to reduce the financial component of the STI scorecard (which comprises 60%
of the scorecard for the Executive KMP) to zero. A number of factors contributed to this decision, including the fall in regional
refining margins which led to the Company receiving JobKeeper payments and recording substantial losses in our Refining
business, which in turn impacted dividends paid to shareholders in 2020;
• the Executive KMP achieved stretch outcomes against the STI scorecard strategic measures and between threshold and target
outcomes in relation to the safety, environment and people performance measures. This reflects the momentum maintained
by management on the important strategic initiatives outlined above, as well as the fact that management improved safety
performance, maintained strong employee engagement through a challenging period, and successfully protected employees
and operations from the potential threat of COVID-19 infection in our workplace.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityDirectors’ reportAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
The Board considers the adjusted outcome to be a fair outcome, which reflects the experience of our shareholders and the broader
societal expectations during this global pandemic, while also appropriately rewarding the management team for delivering a strong
underlying result in the circumstances and making significant progress on major initiatives in 2020.
2018-2020 Long Term Incentive (LTI)
The 2018-2020 LTI, which comprises performance conditions relative Total Shareholder Return (rTSR) (50%), Return on Capital
Employed (ROCE) (25%) and cumulative Free Cash Flow (FCF) (25%), reached the end of its three-year performance period on
31 December 2020.
While the TSR and ROCE conditions were not met, the Company’s FCF performance over the three year period was above stretch,
reflecting the Company’s strong focus on cash and capital management programs.
The final 2018-2020 LTI outcome approved by the Board was 25% of maximum opportunity.
Looking ahead – 2021 remuneration
Executive KMP remuneration
The Board completed a review of the fixed and variable remuneration arrangements for our Executive KMP in early 2021.
As has been flagged previously, our CEO’s remuneration package was set materially below market median rates at the time of
our IPO. This was done recognising the strong retention focus and significant value tied to the legacy LTI structure put in place
under the previous ownership. The legacy LTI arrangements have now expired for the CEO. In the interests of ensuring we retain
and motivate our CEO appropriately, the Board has committed to address this issue and will make an adjustment to the CEO’s
remuneration in 2021, which will go some way to addressing the matter.
In addition, as our Chief Operating Officer is retiring from the Company this year, our Chief Financial Officer will take on
an expanded role and responsibilities. As a result, the Board will also increase his remuneration during 2021 to reflect this
greater responsibility.
The Board has also approved some modifications to our Long Term Incentive Plan going forward to better align performance
measures with our expectations of corporate performance going forward.
While these changes do not form part of the remuneration arrangements for 2020, in the interests of transparency, the Board
has provided information in section 10 for shareholders to consider.
I hope you find this Remuneration Report informative and, as always, we welcome your feedback.
Yours faithfully,
Robert Hill
78
Viva Energy Group Limited – Annual Report 2020 Remuneration report – contents
1. 2020 at a glance
1.1 Remuneration outcomes and COVID-19 related adjustments
2. Overview
2.1. Introduction
2.2. Details of KMP
3. Executive Remuneration – overview
3.1. Executive remuneration objectives
3.2. 2020 Executive remuneration framework – overview
3.3. Minimum Shareholding Policy
3.4. 2020 Executive remuneration mix
3.5. Executive remuneration delivery timeline – 2020 awards
4. 2020 Executive Remuneration framework – in more detail
4.1. Fixed Annual Remuneration (FAR)
4.2. 2020 Short Term Incentive (STI)
4.3. 2020–2022 Long Term Incentive (LTI)
4.4. Claw back and preventing inappropriate benefits
4.5. Legacy LTI
4.6. Executive service agreements
4.7. Loans and other transactions with KMP
5. Group Performance and 2020 remuneration outcomes
5.1. Company performance and remuneration outcomes – 2020 and historical
5.2. 2020 STI outcomes
5.3. 2018–2020 Long Term Incentive outcome
6. Remuneration governance
6.1. Role of the Board
6.2. Role of the Remuneration and Nomination Committee
6.3. Use of remuneration consultants
7. Executive statutory remuneration
8. Non-Executive Director remuneration
8.1. Non-Executive Director fees
8.2. 2020 Non-Executive Director fees
9. Equity interests
9.1. Performance Rights and Legacy LTI option holdings – KMP
9.2. Shareholdings – KMP
10. 2021 Remuneration
10.1. Executive KMP remuneration
10.2. 2021 LTI
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
1. 2020 at a glance
This section provides a high-level summary of the remuneration outcomes for 2020 for the Executive Key Management Personnel
(KMP). Further detail is provided in the remaining sections of this report.
Highlights
• Swift and effective health response to the COVID-19 crisis, with the business operating safely and reliably throughout the year
without disruption to customers.
• Non-Refining EBITDA (RC) of $614.5 million, up 16.5% on last year driven by very strong Retail performance, robust Diesel sales,
strong Specialities performance and disciplined cost and capital management.
• Underlying Group EBITDA (RC) of $519.4 million, down 19.4% on last year on a non-normalised basis, reflecting the substantial
impacts experienced in the Refining segment, which recorded losses of $95.1 million. On a normalised basis, Underlying Group
EBITDA (RC) was $734 million1 (excluding JobKeeper payments).
• Successful completion of the major maintenance event at the Refinery at a reduced capital spend.
• Reduced capital expenditure from the original forecast range of $250–$300 million to $158.5 million.
• Material progress on the Gas Terminal Project at Geelong, with the signing of an MOU with two high quality consortium partners
in relation to the development of the project and the related capacity of the terminal. The project has now progressed through
to the Front End Engineering Design stage.
• Successful divestment of the Viva Energy REIT (now Waypoint REIT) stake and return of $580 million of the proceeds to
shareholders, with a commitment to return the remaining $100 million.
• The Executive KMP earned 26.25% of their maximum STI opportunity in 2020. Despite achieving the ‘at target’ level of Group
Normalised Underlying EBITDA (RC) and a ‘stretch’ level of Underlying Supply Chain EBITDA (RC), the Board exercised
discretion to reduce the financial component of the STI scorecard (which comprises 60% of the scorecard for the Executive KMP)
to zero. A number of factors contributed to this decision, including the fall in regional refining margins, which led to the Company
receiving JobKeeper payments and recording substantial losses in our Refining business, which in turn impacted dividends paid
to shareholders in 2020.
• While the TSR and ROCE conditions were not met, the Company’s FCF performance over the three year performance period
was above stretch, reflecting the Company’s strong focus on cash and capital management programs. The final 2018-2020 LTI
outcome approved by the Board was 25% of maximum opportunity.
1. To calculate the Group Normalised Underlying EBITDA (RC), actual performance is restated applying available margin and exchange rate
assumptions used to set the targets at the beginning of the performance period.
1.1 Remuneration outcomes and COVID-19 related adjustments
Remuneration decisions were made this year in the context of the global COVID-19 pandemic. The Board, with the assistance
of the Remuneration and Nomination Committee, carried out a thorough review process examining the appropriateness of
remuneration outcomes in light of the impact of the pandemic on the business and stakeholders at large. This process included:
• agreeing the factors that should be taken into account in remuneration decisions and considering a number of scenarios based
around these factors;
• examining guidance on remuneration matters released by external stakeholders and the corporate regulator; and
• discussing and agreeing the principles that would guide remuneration decisions in the pandemic year. This included balancing
pay for performance, rewarding the significant effort of the executive team in successfully navigating the business through the
COVID-19 crisis, attracting and retaining key executives and appropriately reflecting the experience of our shareholders and
other stakeholders during the year.
The final outcomes approved by the Board are shown below.
80
Viva Energy Group Limited – Annual Report 2020 2020 STI outcome
Executive KMP
Scott Wyatt
Jevan Bouzo
Thys Heyns2
Adjusted STI
outcome (%
of maximum
opportunity)
26.25%
26.25%
26.25%
Total
STI award
$315,000
$170,625
$157,500
STI award
provided
in cash
$157,500
$85,312
$157,500
STI award
provided in
Share Rights1
$157,500
$85,312
-
1. Share Rights are planned to be granted in March 2021 and will vest into shares in two equal tranches, on 1 January 2022 and 1 January 2023,
subject to conditions as set out in section 5.2. The number of Share Rights granted to each Executive KMP is determined by dividing the dollar
value of the STI award to be provided in Share Rights by $1.6959, being the weighted average share price of the Company’s shares over the
performance period 1 January 2020 to 31 December 2020.
2. Due to Thys Heyns’ retirement from the Company, with anticipated effect at the end of March 2021, his STI will be paid 100% in cash
(no deferral component).
2018-2020 LTI outcome
Executive KMP
Scott Wyatt
Jevan Bouzo
Thys Heyns
Former Executive KMP
Daniel Ridgway**
Number of
2018 PR
granted
% of 2018
PR vested
Number of
2018 PR
vested
Value of
2018* PR
vested
Number of
2018 PR
lapsed
% of 2018
PR lapsed
480,000
192,000
240,000
240,000
25%
25%
25%
120,000
$198,000
48,000
60,000
$79,680
$99,600
360,000
144,000
180,000
75%
75%
75%
-
-
240,000
100%
* Calculated based on share price of $1.66, being the closing share price on the date of vesting on 23 February 2021.
** Unvested 2018 PR held by Daniel Ridgway lapsed upon his resignation on 29 May 2020.
2. Overview
2.1 Introduction
This report has been prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. The content
in this report has been audited by PricewaterhouseCoopers, the Company’s external auditor.
The Company is required to prepare a remuneration report in respect of KMP, being those people that have responsibility and
authority for planning, directing and controlling the activities of Viva Energy, either directly or indirectly. In 2020, the KMP were
the Non-Executive Directors and designated executives.
The Company was incorporated on 7 June 2018 and it listed on the ASX on 13 July 2018. This report describes the Company’s
remuneration arrangements for 2020. To provide shareholders with a complete overview of those remuneration arrangements,
information on the Legacy LTI arrangements that were put in place prior to the Company’s listing and that impacted Executive
KMP remuneration during 2020 are also disclosed.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
2. Overview continued
2.2 Details of KMP
The following individuals were KMP of the Company in 2020.
Name
Title
Non-Executive Directors
Term as KMP
Robert Hill
Chairman and Independent Non-Executive Director
18 June 2018 – current
Arnoud De Meyer
Independent Non-Executive Director
Dat Duong
Jane McAloon
Michael Muller
Sarah Ryan
Former Non-Executive Directors
Hui Meng Kho
Executive KMP
Scott Wyatt
Jevan Bouzo
Thys Heyns
Former Executive KMP
Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
18 June 2018 – current
7 June 2018 – current
18 June 2018 – current
1 October 2020 – current
Independent Non-Executive Director
18 June 2018 – current
Non-Executive Director
18 June 2018 – 30 September 2020
Chief Executive Officer and Managing Director
7 June 2018 – current
Chief Financial Officer
Chief Operating Officer
7 June 2018 – current
1 June 2020 – current
Daniel Ridgway
Chief Operating Officer
1 January 2019 – 29 May 2020
3. Executive remuneration – overview
3.1 Executive remuneration objectives
The overall objectives of executive remuneration at Viva Energy are to:
• drive sustainable value creation for our shareholders;
• drive appropriate behaviours and culture;
• attract and retain high-calibre talent; and
• ensure remuneration is well understood and transparent.
To achieve these objectives, the Board seeks to set executive remuneration at levels that are competitive in the market (for
ASX-listed companies comparable in terms of size, complexity and industry to the Company), and also to appropriately reward
the leadership team for achieving long-term sustainable growth. The Board reviews the executive remuneration objectives and
levels on an annual basis.
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Viva Energy Group Limited – Annual Report 2020 3.2 2020 Executive remuneration framework – overview
The 2020 executive remuneration framework is summarised below.
2020 Executive remuneration framework
Component
Delivery vehicle
Performance measures
Link to strategy
Fixed Annual
Remuneration
(FAR)
Base salary and
superannuation
FAR that is appropriate in order to enable Viva Energy to motivate,
engage and retain the calibre of executives that can execute the
Company’s strategy and continue to deliver value to shareholders.
As at the date of this report, the final tranche of the legacy LTI
awards has now vested for all Executive KMP with the exception
of the CFO. As foreshadowed in prior remuneration reports, as
the legacy arrangements expire, the Board intends to set FAR
at a market competitive level with regard to the size, complexity
and accountabilities associated with a particular role and the
level of skills and experience required to perform the role.
Reward is based on
performance against a
balanced scorecard of
performance measures
focused on financial (60%),
individual personal objectives
aligned with the Company’s
strategic goals (30%) and
safety, environment and
people outcomes (10%).
Vesting of the Performance
Rights is conditional on
achieving against a scorecard
of performance conditions
over a three-year performance
period, focused on relative
Total Shareholder Return
(50%), Free Cash Flow (25%)
and Return on Capital
Employed (25%).
Rewards execution on annual
performance objectives.
A balanced scorecard of
measures ensures targets
are achieved in a sustainable
manner with a strong emphasis
on the delivery of financial
outcomes. STI deferral
creates further alignment with
shareholders and acts as a
retention instrument.
Drives the delivery of Viva
Energy’s long-term objectives
in a sustainable manner,
provides alignment with the
interests of shareholders,
and encourages long-term
value creation.
Short Term
Incentive (STI)
– reward for
performance
against annual
objectives
50% paid
in cash
50%
deferred
into Share
Rights
Long Term
Incentive (LTI) –
rewards long-term
performance and
value creation for
shareholders
Performance Rights are
allocated at face value
at the beginning of the
three-year performance
period. Subject to
performance conditions
being met, some or all of
the Performance Rights
may vest into shares.
Prior to the Company’s listing on the ASX in 2018, the previous owners put in place an incentive plan referred to in this report as
the Legacy LTI. The program previously acted to motivate executives to transform and grow the value of the business through to
a potential exit event (such as listing on the ASX). The last of the Legacy LTI tranches of options vested for the CEO and COO in
January 2020 and they no longer hold any Legacy LTI options. As at the date of this report, the CFO is the only Executive KMP with
outstanding Legacy LTI options (see section 4.5 for more information). The program continues to provide retention value for the
CFO as any unvested options will be forfeited on resignation. No further grants will be made under the Legacy LTI.
3.3 Minimum Shareholding Policy
The Board has adopted a minimum shareholding policy which requires each member of the KMP (other than Non-Independent,
Non-Executive Directors) to accumulate a minimum shareholding equivalent to 100% of their Fixed Annual Remuneration within
five years of the date on which they became KMP, and to maintain such minimum shareholding for so long as they remain KMP.
Our KMP either already meet or are on track to meet this requirement.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
3. Executive remuneration – overview continued
3.4 2020 Executive remuneration mix
The weighting of each remuneration component of an executive’s total remuneration opportunity in 2020 was aligned to the
objectives of the executive remuneration framework outlined in section 3.1, in particular driving sustainable value for the Company.
The following diagrams set out the weighting of each remuneration component for the CEO, CFO and COO based on their
maximum potential STI and LTI opportunities and does not represent actual remuneration received for 2020.
28%
28%
18%
33%
33%
17%
32%
32%
17%
CEO
Scott Wyatt
18%
CFO
Jevan Bouzo
17%
COO
Thys Heyns1
17%
36%
72%
33%
67%
34%
68%
STI – Cash
STI – Share Rights
LTI
FAR
Fixed
At Risk
1. Daniel Ridgway held the position of COO until his resignation on 29 May 2020. Under the terms of his resignation, Mr Ridgway was not eligible
to participate in the 2020 STI and LTI.
3.5 Executive remuneration delivery timeline – 2020 awards
FAR
Base salary +
superannuation
STI
12-month
performance period
50% of
any award
granted
in cash
25% of any award granted
in Share Rights that are eligible
to vest after 12 months
25% of any award granted
in Share Rights that are eligible
to vest after 24 months
LTI
3-year performance period
Performance
conditions
tested
Year 0
Year 1
Year 2
Year 3
Year 4
84
Viva Energy Group Limited – Annual Report 2020 4. 2020 Executive remuneration framework – in more detail
The components of the 2020 executive remuneration framework are explained in detail below.
4.1 Fixed Annual Remuneration (FAR)
FAR is comprised of base salary and superannuation.
4.2 2020 Short Term Incentive (STI)
Viva Energy established an STI Plan to reward Executive KMP and other members of the executive team for strong performance
levels and contributions to the Company over a 12-month performance period.
STI performance is assessed against a balanced scorecard comprised of a robust set of performance measures, which drive the
Company’s short-term financial, strategic and operational objectives and set the platform for long-term success. The Board retains
overall discretion to adjust outcomes as appropriate.
Further information about the 2020 STI Plan is set out below. Please refer to section 5.2.1 for STI performance outcomes for 2020.
Opportunity
CEO (Scott Wyatt)
CFO (Jevan Bouzo)
COO (Thys Heyns)1
• Target: 67% of FAR
• Target: 50% of FAR
• Target: 54% of FAR
• Maximum: 134% of FAR
• Maximum: 100% of FAR
• Maximum: 107% of FAR
Performance period Performance was assessed over a 12-month performance period from 1 January 2020 to 31 December 2020
Performance
measures
Achievement of individual targets was used to determine the proportion of potential STI granted. For 2020,
the following performance measures and weightings applied.
Category
Measure
Financial
Strategic
priorities
• Underlying Group EBITDA (RC) – normalised
• Underlying EBITDA (RC) – Supply Chain
• A mix of individual and group objectives
• TRIF (Total Recordable Injuries/Frequency Rate)2
Safety,
environment
and people
• API Tier 1 and 2 incidents2
• LOPCs > 100kg3
• Employee engagement
• Women in management and leadership
Weighting
CFO
60%
-
30%
CEO
60%
-
30%
COO
30%
30%
30%
10%
10%
10%
Total
100%
100%
100%
2020 target
and maximum
opportunity
The maximum stretch opportunity for each performance measure was set at 200% of target. For each
performance measure, a threshold level of performance was also set. This level had to be met to
receive any STI.
Governance and
approval process
The CEO’s STI outcome was recommended by the RNC based on his performance, and any other relevant
considerations, and was approved by the Board.
The STI outcome for the other Executive KMP was recommended by the CEO to the RNC based on each
executive’s performance and any other relevant considerations, and was approved by the Board.
The Board had the ability to apply discretion in determining the STI outcomes to ensure they were
appropriate. For information on how discretion was applied to the 2020 STI outcomes, see section 5.2.2.
Delivery
STI award is provided as a mix of cash and deferred equity as follows:
• 50% in cash; and
• 50% in Share Rights, with 50% of those Share Rights eligible to vest on 1 January 2022 and the other 50%
eligible to vest on 1 January 2023. A Share Right entitles the participant to receive one ordinary share for
nil consideration if the Share Right vests.
Voting and
dividends
entitlements
Unvested Share Rights do not carry dividend or voting rights.
For each Share Right that vests, the participant will receive a cash payment equivalent to the dividends paid
by the Company on a share during the period between 1 January 2021 and the relevant vesting date.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
4. 2020 Executive Remuneration framework – in more detail continued
4.2 2020 Short Term Incentive (STI) continued
Restrictions
on dealing
Holders of Share Rights must not sell, transfer, encumber or otherwise deal with Share Rights unless the
Board allows it or the dealing is required by law. Additionally, in no circumstances will a holder of Share
Rights be able to hedge or otherwise affect their economic exposure to the Share Rights before they vest.
Holders of Share Rights will be free to deal with the ordinary shares allocated on exercise of Share Rights,
subject to the requirements of Viva Energy’s Securities Trading Policy.
Cessation of
employment
If a participant ceases to be employed and is considered to be a Good Leaver, any unvested Share Rights
that have been granted as part of the 2020 STI will remain on foot, unless the Board determines otherwise
in its absolute discretion.
If the participant ceases to be employed and is not a Good Leaver, any unvested Share Rights granted as
part of the 2020 STI will lapse.
Generally, a participant will be a Good Leaver unless their employment is terminated for cause or the
participant resigns.
Change of control
The Board may determine in its absolute discretion that all or a specified number of a participant’s Share
Rights will vest on a change of control.
1. Daniel Ridgway held the position of COO until his resignation on 29 May 2020. Under the terms of his resignation, Mr Ridgway was not eligible
to participate in the 2020 STI.
2. TRIF and API Tier 1 and 2 measures are industry standard safety performance metrics that reflect personal safety and process safety performance
(respectively).
3. Loss of Primary Containment. This measures the incidents resulting in the uncontrolled or unplanned release of material from a process or storage
that serves as primary containment.
4.3 2020-2022 Long Term Incentive (LTI)
Viva Energy has established an LTI Plan to assist in the attraction, motivation, retention and reward of the Executive KMP and other
members of the executive leadership team.
The LTI Plan is designed to reward long-term performance, provide alignment with the interests of shareholders, and encourage
long-term value creation.
We use a combination of performance conditions, which reflect our long-term financial, strategic and operational objectives and
focus on sustainable, long-term performance.
Further information on the 2020-2022 LTI Plan is set out below.
Opportunity
CEO (Scott Wyatt)
CFO (Jevan Bouzo)
COO (Thys Heyns)1
• Maximum: 134% of FAR
• Maximum: 100% of FAR
• Maximum: 107% of FAR
Instrument
Performance Rights. A Performance Right entitles the participant to acquire one ordinary share for nil
consideration at the end of the performance period, subject to satisfaction of the performance conditions.
The Board retains discretion to make a cash payment to participants on vesting of Performance Rights in lieu
of an allocation of shares.
Grant value
Performance Rights were granted using face value methodology.
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Viva Energy Group Limited – Annual Report 2020 Performance
conditions
Condition
Weighting Measure
Objective
50%
25%
Relative Total
Shareholder Return
(rTSR)
Cumulative Free
Cash Flow (RC)
(FCF) over the
performance period
25%
Average Return on
Capital Employed
(RC) (ROCE) for
each year of the
performance period
Total Shareholder Return over
the period, relative to the ASX100
(Comparator Group).
To create strong alignment
between LTI outcomes and the
experience of shareholders.
Cumulative FCF is calculated
based on Underlying EBITDA (RC),
normalised for market movements
in AUD refining margins
and adding/subtracting (as
appropriate) maintenance capital
expenditure, realised FX and
derivative movements, dividends
received from associated entities,
interest and taxes paid.
Underlying EBIT (RC) divided by
average capital employed (total
shareholder’s equity plus net debt)
for each year.
This measure rewards strong cost
and capital management with
positive conversion of underlying
earnings to cash flow to maximise
cash that the Company has available
to fund growth opportunities,
pay dividends and repay debts.
This measure rewards executives
for prudent management of
capital to maintain positive returns
on capital employed over the
performance period.
Replacement cost (RC) methodology is used in calculating both the FCF and ROCE outcomes, in order to
provide a truer reflection of underlying performance. This approach removes the impact of net inventory
gain/(loss) caused by fluctuations in crude oil prices and foreign currency exchange rates.
The Board considers that the use of RC methodology in setting FCF and ROCE targets within the LTI
is appropriate, and provides a suitable balance with the relative TSR measure.
Performance period
and exercise
Performance will be assessed over a 36-month period from 1 January 2020 to 31 December 2022. Vested
Performance Rights may be exercised during exercise periods aligned to the share trading windows outlined
in the Company’s share trading policy for up to three years after vesting.
There will be no re-testing of any of the performance conditions, and Performance Rights that do not vest
after the performance conditions are tested will lapse (and expire).
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
4. 2020 Executive Remuneration framework – in more detail continued
4.3 2020-2022 Long Term Incentive (LTI) continued
Components
rTSR component
The percentage of Performance Rights comprising the relative TSR component that vest, if any, will be
based on the Company’s TSR ranking relative to the Comparator Group over the performance period,
as set out in the following vesting schedule.
TSR ranking relative to the Comparator Group
% of Performance Rights that vest
Less than 50th percentile
At 50th percentile
Nil
50%
Between 50th and 75th percentile
Straight-line pro rata vesting between 50% and 100%
At 75th percentile or above
100%
FCF component
The percentage of Performance Rights comprising the FCF component that vest, if any, will be determined
over the performance period by reference to the following vesting schedule:
Cumulative FCF over the performance period
% of Performance Rights that vest
Less than target FCF performance
Equal to target FCF performance
Nil
50%
Between target and stretch FCF performance
Straight-line pro rata vesting between 50% and 100%
At or above stretch FCF performance
100%
ROCE component
The percentage of Performance Rights comprising the ROCE component that vest, if any, will be
determined over the performance period by reference to the following vesting schedule:
Average ROCE over each year
of the performance period
Less than target ROCE performance
Equal to target ROCE performance
% of Performance Rights that vest
Nil
50%
Between target and stretch ROCE performance
Straight-line pro rata vesting between 50% and 100%
At or above stretch FCF performance
100%
Disclosure of FCF
and ROCE targets
The Board considers that the FCF and ROCE targets are commercially sensitive as disclosure of those targets
can potentially indicate the Group’s margins and, as such, jeopardise Viva Energy’s competitive position.
Therefore, those targets will not be disclosed during the performance period.
However, the Board will provide full details of the vesting outcomes in connection with each component
of the LTI, including the levels at which the targets were set at the beginning of the performance period,
following completion of the performance period. The targets and the vesting outcomes will be detailed
in the Remuneration report for the year in which the LTI will be tested.
Information on the 2018-2020 LTI targets is set out in section 5.3.
Other features
Performance Rights have the same voting and dividend entitlements, restrictions on dealing, treatment
on cessation of employment, and change of control provisions as the Share Rights described in section
4.2 above. For completeness, it is noted that there is no dividend equivalent payment that applies to
Performance Rights.
1. Daniel Ridgway held the position of COO until his resignation on 29 May 2020. Under the terms of his resignation Mr Ridgway was not eligible
to participate in the 2020 LTI.
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Viva Energy Group Limited – Annual Report 2020 4.4 Claw back and preventing inappropriate benefits
Under the rules governing the STI and LTI Plans, the Board has power to ‘claw back’ incentives that it may exercise if, among
other things:
• a participant has acted fraudulently or dishonestly, is in material breach of their obligations to the Viva Energy Group, has
engaged in negligence or gross misconduct, brought a member of the Viva Energy Group into disrepute, been convicted
of an offence, or has a judgment entered against them in connection with the affairs of the Viva Energy Group;
• Viva Energy is required by or entitled under law or under the principal’s employment contract to reclaim remuneration from
the participant;
• a participant has made a material misstatement on behalf of a member of the Viva Energy Group or there is a material
misstatement or omission in the financial statements of the Viva Energy Group; or
• a participant’s entitlements vest or may vest as a result of the fraud, dishonesty, negligence or breach of obligations of any
other person and the Board is of the opinion that the entitlement would not have otherwise vested.
The claw back regime applies to cash STI, Share Rights granted under the STI Plan and Performance Rights granted under
the LTI Plan.
4.5 Legacy LTI
Section 10.4.3 of the Prospectus described the Legacy LTI arrangements introduced by Viva Energy Holding Pty Limited (VEH)
in 2015, which involved an issue of options. The Legacy LTI was introduced in order to assist in the motivation and retention of
key executives, and to provide alignment with the interests of the previous shareholders. This was a key component of VEH’s
remuneration framework. All offers under the Legacy LTI were made in the years prior to the Company’s listing on ASX and no
further offers will be made under this plan.
Jevan Bouzo, CFO, is the only member of the Executive KMP that has outstanding options issued under the Legacy LTI
arrangements as at the date of this report. The last tranche of the Legacy LTI options held by the CEO and COO vested and were
exercised on 2 January 2020. The remaining Legacy LTI options held by the CFO will expire at 5.00pm on 1 January 2022 unless
exercised earlier.
Number held as at
31 December 2020
1,538,095 options held by the CFO
Grant date
25 October 2017
Exercise price
A$1.21 per option
Vesting schedule
and expiry
Voting and dividend
entitlements
Restrictions on
dealing
• 1,153,571 options have vested and remain unexercised as at the date of this report.
• 384,524 options are scheduled to vest on 1 January 2022, subject to continued employment with
Viva Energy and the terms of the Legacy LTI.
Legacy LTI options do not carry dividend or voting right entitlements.
Legacy LTI option holders must not sell, transfer, encumber or otherwise deal with their options unless the
Board allows it or the dealing is required by law. Additionally, in no circumstances will Legacy LTI holders
be able to hedge or otherwise affect their economic exposure to the options before they vest. Legacy LTI
option holders will be free to deal with the ordinary shares allocated on exercise of their options, subject
to the requirements of Viva Energy’s Securities Trading Policy.
Cessation of
employment
If a Legacy LTI option holder ceases employment due to special circumstances (including death, terminal
illness or disablement), a pro-rata portion of their unvested Legacy LTI options (based on the proportion
of the performance period that has elapsed) will remain on foot and subject to the original performance
conditions, and the remainder will lapse unless the Board exercises a discretion to treat them otherwise.
In all other circumstances (including due to a participant’s resignation or termination), unless the Board
exercises its discretion to treat them otherwise and subject to applicable law, unvested Legacy LTI options
will automatically lapse.
Change of control
and claw back
Legacy LTI options have the same change of control provisions as the Share Rights described in section 4.2,
and the same claw back provisions as described in section 4.4.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
4. 2020 Executive Remuneration framework – in more detail continued
4.6 Executive service agreements
The CEO, CFO and COO have open-ended employment contracts. The key terms of the contracts are as follows:
• Employment may be terminated by either the Company or the executive upon providing 12 months’ written notice.
• Viva Energy may elect to pay the executive in lieu of all or part of such notice period with any such payment to be based on the
executive’s FAR over the relevant period. The executive may also be required to serve out the whole or part of the notice period
on an active or passive basis at the Board’s discretion.
• Any payments made to the executive upon termination of employment will be limited to the maximum amount permitted by
the Corporations Act.
• The executive’s employment may be terminated by Viva Energy without notice in certain circumstances such as un-remediated
material breach of their contract, serious misconduct (including dishonesty, fraud or wilful breach of duty), bankruptcy, failure to
comply with a reasonable direction from the Board, and if a personal profit is made at the expense of the Viva Energy Group
to which they are not entitled.
4.7 Loans and other transactions with KMP
4.7.1 Loans to Key Management Personnel
There were no loans made to the KMP of the Company, including their personally related entities, during the year.
4.7.2 Other transactions with Key Management Personnel
There were no other transactions (as contemplated by the Corporations Regulations 2001) with the KMP during the year.
5. Group performance and 2020 remuneration outcomes
5.1 Company performance and remuneration outcomes – 2020 and historical
COVID-19 presented significant challenge and disruptions to the business in 2020. First and foremost, it was a health emergency
and the crisis was unique in the speed at which it evolved and the broad impact it had on our business both domestically and
internationally. This year, more so than any other, we relied heavily on our company values and the capability of our people to
drive decisions and keep the business operating safely and reliably throughout the year without disruption to our customers.
The precautions we took both as a company and collectively as individuals kept our business operating and progressed several
major initiatives, including the successful completion of the major maintenance event at the Refinery, material progress on the
Gas Terminal Project at Geelong, and the successful divestment of our Viva Energy REIT (now Waypoint REIT) stake. We have
since returned the majority of the proceeds of the divestment to our shareholders – $580 million – despite the challenges of the
pandemic, and are committed to returning the remaining $100 million.
Our non-Refining EBITDA (RC) was $614.5 million, up 16.5% on last year. This was driven by strong Retail performance, robust
Diesel sales in both the Retail and Commercial segments and disciplined cost and capital management. The performance of our
commercial business was also resilient, notwithstanding the loss of domestic and international aviation this year, which reflects
the diverse segments in which we operate and the quality customers which make up our portfolio. The crisis placed significant
challenges on our supply chain as we adjusted plans to accommodate reductions in demand, especially Jet and Gasoline.
Further work across the supply chain and with our suppliers helped to reduce supply chain costs to accommodate a lower sales
environment without impacting reliable supply to our various markets. Overall the management of our supply chain and operating
costs provided some important insulation from the worst of the pandemic impacts.
Underlying Group EBITDA (RC) of $519.4 million was down 19.4% on last year on a non-normalised basis, reflecting the substantial
impacts we experienced in the refining part of our business. The Company minimised impacts through reduced operating and
capital spend and effective operational decisions in response to reduced demands. The Board made a decision last year to
normalise Underlying EBITDA (RC) results for movements in available refining margins and foreign exchange, both of which
are outside of management’s ability to influence. Normalising the result ensures that management are neither advantaged nor
disadvantaged by factors which are outside of their influence and provides a more accurate reflection of management performance
during the year. The table below outlines the Company’s performance for the years 2018 to 2020.
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Viva Energy Group Limited – Annual Report 2020 Underlying Group EBITDA (RC)
Underlying EBITDA (RC) – Retail, Fuels and Marketing: Retail
$528.9M
$608.8M
Underlying EBITDA (RC) – Retail, Fuels and Marketing: Commercial
$323.8M
Underlying EBITDA (RC) – Refining
$124.5M
$774.6M
$608.8M
$329.0M
$124.5M
2018
Actual1
Pro forma2
2019
Actual3
$644.5M
$564.3M
$296.5M
$117.0M
2020
Actual3
$519.4M
$670.8M
$238.3M
($95.1)M
Underlying EBITDA (RC) – Supply, Corporate and Overheads
($528.2)M
($287.7)M
($333.3)M
($294.6)M
TRIF (Total Recordable Injuries/Frequency Rate)4
Share price – high
Share price – low
Share price – close
Dividend per share (fully franked)
Special dividend (unfranked)
Capital return
36/5.77
$2.51
$1.66
$1.80
-
29/4.555
19/3.65
$2.51
$1.66
$1.80
$2.58
$1.72
$1.92
$2.12
$1.13
$1.91
4.8 cents
4.8 cents6
4.7 cents
0.8 cents
-
-
-
-
-
-
5.94 cents
21.46 cents
Statutory earnings per share basic/diluted
29.8/29.4 cents 26.6/26.2 cents
5.8/5.7 cents (1.9)/(1.9) cents
Underlying earnings per share
STI Outcomes – % of maximum
LTI Outcomes – % of maximum
15.1 cents
11.9 cents
7.0 cents
(1.9) cents
N/A
N/A
0%
N/A
0%
N/A
26.25%
25%
1. Actual results achieved – reported based on AASB 117, the old lease accounting standard.
2. This shows the historical period as if accounting standard AASB 16 (the current lease accounting standard) was in effect for the 2018 financial year.
3. Actual results achieved – reported based on AASB 16.
4. TRIF are industry standard safety performance metrics that reflect personal safety and process safety performance (respectively).
5. Excludes performance by Liberty Oil Holdings, which was acquired in December 2019 and did not form part of the safety and environment hurdles
set under the 2019 and 2020 STI scorecard.
6. This is the final dividend for the six months ended 31 December 2018. No interim dividend was paid in 2018.
5.2 2020 STI outcomes
This section discusses:
• performance against the 2020 STI scorecard – see section 5.2.1; and
• information about how the Board exercised discretion to adjust the scorecard outcome – see section 5.2.2.
5.2.1 Performance against the 2020 STI scorecard
The table below details performance against the 2020 STI scorecard by the Executive KMP. Overall, the scorecard result for each
Executive KMP on an unadjusted basis was slightly higher than target.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
5. Group performance and 2020 remuneration outcomes continued
5.2 2020 STI outcomes continued
5.2.1 Performance against the 2020 STI scorecard continued
Performance against 2020 STI scorecard1
Category
Objective
Weighting
Safety,
environment
and people2
Build a generative
safety culture and
a highly engaged
workforce focused
on delivering high
quality results
10%
Financial
Deliver sustainable
shareholder returns
and consistent
operating cash flows
60%
Strategic
objectives
Progress key
strategic initiatives
that deliver long
term growth
and position the
company for future
success
30%
Performance against
target range
w
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Performance against the performance measure
• TRIF 3.61 (4.55 in 2019)2,3
• Two Tier 2 incidents and one Tier 1 incident (two Tier 2
incidents in 2019)2,3
• 19 LOPC > 100kg (29 LOPC > 100kg in 2019)2,4
• Engagement score 70% (68% in 2019)2
• Protection of health and operations throughout
COVID-19
5
• Group Normalised Underlying EBITDA (RC) of $734M6,7
• Retail Underlying EBITDA (RC) of $671M
• Commercial Underlying EBITDA (RC) of $233M7
• Supply Chain Underlying EBITDA (RC) of ($155M)
• Refining Normalised Underlying EBITDA (RC) of $125M7
• Material progress on the Gas Terminal Project within
the Geelong Energy Hub
• Successful divestment of stake in Viva Energy REIT
(now Waypoint REIT)
• Return of $580M to shareholders by way of special
dividend, capital return and on-market buy-back
• Successful execution of major maintenance event
at Geelong
• Progress with the Federal Government to build a
stronger foundation for continued refining operations
• Carried out strategic review of the refining business
and made progress to build stronger foundation
for continued refining operations
1. For Safety, Environment and People, the same group metrics apply to all Executive KMP. For the Strategic objectives, in 2020 group
strategic goals were applied because of the integrated effort of the executive team to respond to the COVID-19 crisis and deliver on
the strategic milestones.
2. Excludes performance by Liberty Oil Holdings, which was acquired in December 2019 and did not form part of the safety, environment
and people hurdles set under the 2020 STI.
3. TRIF and API Tier 1 and 2 measures are industry standard safety performance metrics that reflect personal safety and process safety
performance (respectively).
4. Loss of Primary Containment. This measure measures the incidents resulting in the uncontrolled or unplanned release of material from a process
or storage that serves as primary containment.
5. This shows performance for the CEO and CFO, for whom Group Normalised EBITDA (RC) formed 60% of the scorecard. Performance for the
COO was slightly higher than for the CEO and CFO reflecting the different composition of the COO’s financial measures – 30% Group Normalised
EBITDA (RC) and 30% Supply Chain Underlying EBITDA (RC).
6. Actual performance is restated applying available margin and exchange rate assumptions used to set the targets at the beginning of the
performance period.
7. Results excluding JobKeeper payments.
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Viva Energy Group Limited – Annual Report 2020
5.2.2 COVID-19 adjustment to the 2020 STI raw score
The Board considered whether the calculated raw STI scorecard result was appropriate in the circumstances. In doing so, the
Board considered the COVID-19 impacts on the group financial performance, reduced dividends to shareholders and the broader
societal expectations during a global pandemic. After careful consideration, despite at-target achievement against the financial
metric for the CEO and CFO, and a slightly higher than target achievement for the COO, the Board resolved to exercise discretion
to reduce the financial component of the STI, which made up 60% of the scorecard, to zero. Accordingly, only the strategic, safety,
environment and people performance measures (together, 40% of the STI scorecard) were considered in determining the outcome.
As a result, the final 2020 STI outcome approved by the Board for the Executive KMP was 26.25% of maximum opportunity.
The Board considers that the remuneration outcomes are fair in the way they balance stakeholder interests while appropriately
rewarding executives for delivering a strong underlying result in the circumstances and making significant progress on major
initiatives in 2020.
Final 2020 STI outcome
Executive KMP
Scott Wyatt
Jevan Bouzo
Thys Heyns2
Adjusted STI
outcome (%
of maximum
opportunity)
Adjusted STI
outcome
(% of target)
Maximum
STI
foregone
Total STI
award
STI award
provided
in cash
STI award
provided
in Share
Rights1
26.25%
26.25%
26.25%
52.5%
52.5%
52.5%
$885,000
$315,000
$157,500
$157,500
$479,375
$170,625
$85,312
$85,312
$442,500
$157,500
$157,500
-
1. Share Rights are planned to be granted in March 2021 and will vest into shares in two equal tranches, on 1 January 2022 and 1 January 2023,
subject to conditions as set out in section 4.2. The number of Share Rights granted to each Executive KMP is determined by dividing the
dollar value of the STI award to be provided in Share Rights by $1.6959, being the weighted average share price of the Company’s shares
over the performance period 1 January 2020 to 31 December 2020.
2. Due to Thys Heyns’ retirement from the Company, with anticipated effect at the end of March 2021, his STI will be paid 100% in cash
(no deferral component).
5.3 2018-2020 Long Term Incentive outcome
The three year performance period of the 2018-2020 LTI grant ended on 31 December 2020. The 2018-2020 LTI performance
conditions along with the outcome against the maximum opportunity under the grant are shown in the table below.
In assessing the outcome, the FCF measure was normalised for movements in refining margins and foreign exchange (both on an
after-tax basis) as these factors are outside of management’s ability to influence. The Board excluded the impact of the Jobkeeper
payment and adjusted for the Viva Energy REIT (now Waypoint REIT) dividend foregone as part of the sale of the investment and
return of proceeds. As a result of these collective adjustments, FCF target was adjusted up from the normalised target of $410 million
(stretch of $460 million) to $520 million (stretch of $570 million).
2018-2020 LTI measures, hurdles and outcome
Measure
Weighting
Vesting
schedule
Minimum
(0% vesting)
Maximum
(100% vesting)
Actual
performance
Vesting
(% of maximum)
Cumulative
FCF over the
performance
period
Average ROCE
for each year of
the performance
period
TSR relative
to the ASX100
Comparator
Group
25%
25%
50%
Straight-line pro-rata
vesting between
50-100% for
performance between
target and stretch
hurdles
Straight-line pro-rata
vesting between
50% and 100% for
performance between
50th percentile and
75th percentile
Less than
adjusted target
performance of
$520M
Stretch adjusted
performance
of $570M
Less than target
performance of
15%
Stretch
performance
of 23%
$611M
100%
9.8%
0%
Less than 50th
percentile
At 75th percentile
or above
30th percentile
0%
Total
100%
25% vesting
The average ROCE over the 2018-2020 LTI performance period was 9.8%, which was below target performance. The ROCE
measure under the 2018-2020 LTI Plan is not normalised for movements in available refining margins. The deteriorated refining
margins since 2018, when the targets were set, have significantly impacted performance against this measure.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
5. Group performance and 2020 remuneration outcomes continued
5.3 2018-2020 Long Term Incentive Outcome continued
2018-2020 LTI measures, hurdles and outcome continued
The outcome for each Executive KMP under the 2018-2020 LTI is shown in the table below.
Executive KMP
Date 2018
PR1 granted
Number of
2018 PR
granted
Value at
grant date2
% of 2018
PR vested
Number of
2018 PR
vested
Value of
2018 PR
vested3
% of 2018
PR lapsed
Number of
2018 PR
lapsed
Scott Wyatt
23 July 2018
480,000
$878,400
Jevan Bouzo
23 July 2018
192,000
$351,360
Thys Heyns
23 July 2018
240,000
$439,200
Daniel Ridgway4 23 July 2018
240,000
$439,200
25%
25%
25%
-
1. 2018-2020 LTI Performance Rights.
120,000
$199,200
48,000
60,000
-
$79,680
$99,600
75%
75%
75%
360,000
144,000
180,000
240,000
-
100%
2. The values of the Performance Rights granted are based on the total grant date fair value. Refer to section 9.1 for further details on the fair value
of the Performance Rights.
3. Calculated based on share price of $1.66, being the closing share price on the date of vesting on 23 February 2021.
4. Unvested 2018 LTI Performance Rights held by Daniel Ridgway lapsed upon his resignation on 29 May 2020.
6. Remuneration governance
6.1 Role of the Board
The Board, with the guidance of the Remuneration and Nomination Committee (RNC), is responsible for:
• approving the remuneration of the Non-Executive Directors and Executive KMP;
• ensuring the Company’s remuneration framework is aligned with the Company’s purpose, values, strategic objectives and risk appetite;
• evaluating the performance of the CEO and other members of the Executive Leadership Team (ELT); and
• approving incentive plans and engaging external remuneration consultants as appropriate.
6.2 Role of the Remuneration and Nomination Committee
The Board has established the RNC to assist the Board in fulfilling its responsibilities for governance and oversight of remuneration
and board composition related matters.
The RNC is comprised of three Non-Executive Directors, a majority of whom are independent:
• Robert Hill (Chair)
• Arnoud De Meyer
• Hui Meng Kho (resigned as a member with effect from 1 October 2020)
• Dat Duong (commenced as a member with effect from 1 October 2020)
The RNC’s responsibilities include board composition and governance-related matters as well as making recommendations to the
Board in relation to:
• remuneration policies that will be designed to support the execution of the Company’s strategy and plans, and set remuneration
and rewards at levels to attract and retain the best people;
• the remuneration of the Non-Executive Directors;
• the remuneration packages (including Fixed Annual Remuneration, incentive plans and any other benefits or arrangements)
of the CEO and other members of the ELT; and
• the administration and operation of equity and incentive plans and assessing the effectiveness and implementation of such plans.
A copy of the RNC Charter is available on our website at www.vivaenergy.com.au.
6.3 Use of remuneration consultants
The RNC seeks external remuneration advice to ensure that it is fully informed when making decisions, including on recent market
trends and practices and other remuneration-related matters.
In 2020, no remuneration recommendations were received from remuneration consultants as defined under the Corporations Act 2001.
94
Viva Energy Group Limited – Annual Report 2020 7. Executive statutory remuneration
The table below has been prepared in accordance with the requirements on the Corporations Act 2001 and the relevant Australian
Accounting Standards. The amounts provided under the ‘STI share-based payment’ and ‘LTI share-based payment’ columns are
based on accounting values and do not reflect actual payments received in 2020.
Short-term benefits
Post-
employ-
ment
Long-term benefits
Salary
and fees
$
Non-
monetary
benefits
$
2020
STI
$
Annual
leave
$
Super-
annu-
ation
$
Long
service
leave
$
STI
share-
based
payment
$
LTI
share-
based
payment
$
Total
$
1
2
3
4
2020 875,6465
157,500
5,055
30,264
21,354
(2,243)
65,625
737,248 1,890,449
2019
875,228
-
2020 621,3135,6
85,312
2019
545,585
-
6,826
4,132
2,297
11,134
29,082
47,114
20,772
(83,012)
-
629,699
1,496,627
(4,833)
21,354
10,471
35,547
374,049 1,147,345
2020 521,3795
157,500
3,478
(11,442)
39,622
2019
N/A
N/A
N/A
N/A
N/A
9,649
8,971
N/A
-
-
311,739
909,486
397,417 1,116,925
N/A
N/A
N/A
Executive KMP
Scott Wyatt
Jevan Bouzo
Thys Heyns7
Former Executive KMP
Daniel
Ridgway8
Total
2020
224,578
2019
539,228
-
-
1,425
68,5999
8,755 152,11910
3,320
11,069
20,772
(22,113)
-
-
(363,142)
92,334
321,158
873,434
2020 2,242,916
400,312
14,090
82,588
91,085
169,318
101,172 1,145,572 4,247,053
2019 1,960,041
-
12,443
69,317
70,626
(95,476)
- 1,262,596 3,279,547
1. Non-monetary benefits represent the Viva Energy fuel discount benefit received, the payment of premiums for death and total and permanent
disability insurance cover, the payment of plan management fees for the Viva Energy Superannuation Plan, and payments made with respect
to mobile phone use.
2. Negative balances are as a result of the leave taken being greater than the leave accrued in the relevant financial year.
3. STI share-based payment represents the fair value of Deferred Share Rights granted under the 2020 STI, calculated in accordance with
accounting standards.
4. LTI share-based payment represents fair value of Performance Rights granted under the 2020, 2019 and 2018 LTI and the statutory expense
recorded in the income statement for the value of Legacy LTI options vesting across the period, calculated in accordance with accounting standards.
5. 2020 salary and fees include a $1,000 working from home payment received by all eligible employees.
6. Jevan Bouzo’s total fixed annual remuneration (inclusive of base salary and superannuation) was increased from $600,000 to $650,000 from
1 March 2020. Actual base salary received was adjusted as required to account for changes to the maximum superannuation contributions base.
7. 2020 remuneration for Thys Heyns is shown for the full year; however, he was only considered KMP from 1 June 2020.
8. 2020 remuneration for Daniel Ridgway is shown from 1 January 2020 until he ceased as KMP on 29 May 2020.
9. Includes annual leave payment of $90,829 upon termination.
10. Includes long service leave payment of $148,379 upon termination.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
8. Non-Executive Director remuneration
8.1 Non-Executive Director fees
Non-Executive Directors are paid annual fees. With the exception of the Chairman, each Non-Executive Director who is a chair or
a member of a Board Committee receives Committee fees in recognition of the additional responsibilities, time and commitment
required. Non-Executive Directors do not receive any performance-related remuneration.
The table below sets out Non-Executive Director remuneration, inclusive of statutory superannuation.
Board
Committee fees2
Description
Chair
Director
Chair
Member
Fees
$400,0001
$165,000
$35,000
$17,500
1. The Board Chair does not receive any additional fees for being the Chair or member of any Board Committees.
2. Standing Board Committees comprise: Audit and Risk; Remuneration and Nomination; Sustainability; and Investment.
Under the ASX Listing Rules and Viva Energy’s Constitution, the total amount paid to all Non-Executive Directors must not exceed
in aggregate in any year the amount fixed by Viva Energy in a general meeting for that purpose. As disclosed in the Prospectus, this
amount has been fixed by the Company at $1.9 million per annum. Non-Executive Director fees paid in 2020 were within this cap.
8.2 2020 Non-Executive Director fees
The fees paid to the Non-Executive Directors in 2020 are set out in the table below:
Short-term benefits
Salary
and fees
$
Non-
monetary
benefits
$
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
378,646
379,228
217,500
217,500
-
-
214,612
214,612
-
-
235,000
214,612
-
-
2020
1,045,758
2019
1,025,952
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post-
employment
benefits
Other
long-term
benefits
Super-
annuation
$
21,354
20,772
-
-
-
-
20,388
20,406
-
-
-
20,424
-
-
41,742
61,602
Other
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
400,000
217,500
217,500
-
-
235,000
235,018
-
-
235,000
235,036
-
-
1,087,500
1,087,554
Non-Executive Directors
Robert Hill (Chairman)
Arnoud De Meyer
Dat Duong1
Jane McAloon
Michael Muller1
Sarah Ryan2
Former Non-Executive Directors
Hui Meng Kho1,3
Total
1. Dat Duong, Michael Muller and Hui Meng Kho have agreed to not receive any remuneration for their positions as Non-Executive Directors.
2. Sarah Ryan did not receive superannuation in 2020 pursuant to an exemption granted by the ATO under section 19AA of the Superannuation
Guarantee (Administration) Act 1992. Accordingly, Dr Ryan’s 2020 fee includes the amount that would otherwise have been contributed
as superannuation.
3. Hui Meng Kho resigned as a Non-Executive Director with effect on 1 October 2020.
96
Viva Energy Group Limited – Annual Report 2020 9. Equity interests
9.1 Performance Rights and Legacy LTI option holdings – KMP
Abbreviations used in the following table:
2018 PR – 2018-2020 LTI Performance Rights | 2019 PR – 2019-2021 LTI Performance Rights | 2020 PR – 2020-2022 LTI Performance
Rights | Options – Legacy LTI options
Exercise
price
($)
Type
Held at
1 January 2020
Granted1
Exercised
Held at
312 December 2020
Un-
Vested
vested Number
Value
($)
Lapsed Number
Value
($)3
Vested
Un-
vested
Executive KMP4
Scott Wyatt
2020 PR
2019 PR
2018 PR
-
-
-
-
-
-
541,198
480,000
Options5
0.82 2,883,928
-
Jevan Bouzo
2020 PR
2019 PR
2018 PR
-
-
-
-
-
-
270,599
192,000
Options5
1.21
769,047
769,048
Thys Heyns
2020 PR
2019 PR
2018 PR
-
-
-
-
-
-
Options5
0.82 1,538,095
Former Executive KMP
Daniel
Ridgway
2020 PR6
2019 PR7
2018 PR7
-
-
-
-
-
-
270,599
240,000
-
-
270,599
240,000
Options5
0.82 1,345,834
-
- 556,121 692,371
- 301,232 295,207
- 278,060 272,499
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 2,883,928 3,172,321
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1,538,095 1,691,905
-
270,599
240,000
-
-
-
-
-
-
- 1,345,834 1,480,417
- 556,121
-
-
-
541,198
480,000
-
- 301,232
-
-
270,599
192,000
769,047
769,048
- 278,060
-
-
-
-
-
-
-
270,599
240,000
-
-
-
-
-
1. The 2020 LTI Performance Rights were awarded to Jevan Bouzo and Thys Heyns on 18 February 2020 and Scott Wyatt on 6 July 2020. The number
of Performance Rights were calculated by dividing the dollar value of their maximum LTI opportunity by $2.1578, being the volume weighted
average price of the Company’s shares on the ASX over the period from 1 January 2019 to 31 December 2019. The value of the Performance
Rights granted in 2020 is based on the total grant date fair value.
2. Of the 2018 PRs held by Scott Wyatt, Jevan Bouzo and Thys Heyns, 25% have vested and the remaining 75% have lapsed since 31 December 2020.
3. The value of Options exercised represents the number of Options exercised multiplied by the difference between Viva Energy’s closing share
price on the date of exercise ($1.92) and the exercise price of the Option ($0.82 for each of Scott Wyatt, Thys Heyns and Daniel Ridgway).
4. No other members of KMP held Performance Rights or Options during the year.
5. The Legacy LTI Plan was put in place prior to the Company’s listing in 2018 and no further grants have been made since the listing, nor will be
made under this plan going forward.
6. Daniel Ridgway retired as COO and ceased being a KMP on 29 May 2020. Mr Ridgway did not participate in the 2020-2022 LTI.
7. Unvested 2018 and 2019 LTI Performance Rights held by Daniel Ridgway lapsed upon his resignation on 29 May 2020.
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityAuditor’s independence declarationBoard of DirectorsExecutive Leadership Team
Remuneration report continued
9. Equity Interests continued
9.1 Performance Rights and Legacy LTI option holdings – KMP continued
Further details of each grant of Performance Rights and Legacy LTI options to Executive KMPs outstanding at the end of 2020
are set out below:
Type
2020 PR
2019 PR
Grant date
18 February 2020
6 July 2020
19 March 2019
23 May 2019
Fair value
at grant date
$0.47 – $1.73
$0.91 – $1.58
$1.73 – $2.23
$1.31 – $1.97
2018 PR
23 July 2018
$1.39 – $2.27
Options
Refer to section 4.5 Legacy LTI
Vesting date
As notified by the Company to the participant
after 31 December 2022
The date when all vesting conditions have been
satisfied or waived (performance period ends
31 December 2021)
The date when all vesting conditions have been
satisfied or waived (performance period ends
31 December 2020)
9.2 Shareholdings – KMP
The number of shares in the capital of the Company held directly and indirectly by each KMP are set out below:
Non-Executive Directors
Robert Hill
Dat Duong
Arnoud De Meyer
Jane McAloon
Mike Muller3
Sarah Ryan
Former Non-Executive Directors
Hui Meng Kho4
Executive KMP
Scott Wyatt
Jevan Bouzo
Thys Heyns
Former Executive KMP
Daniel Ridgway7
Balance
as at
1 January
2020
Acquired
through
exercise
of options
Acquired
in 2020
Disposed
in 2020
Other1
Balance
as at
31 December
20202
40,000
40,000
-
68,900
47,692
N/A
-
55,500
36,630
-
73,291
20,000
-
8,074,992
154,210
3,307,064
-
-
7866
7866
-
-
-
-
-
-
-
2,883,9285
-
-
-
-
-
-
-
-
-
-
(12,800)
67,200
-
-
(19,904)
104,496
(13,491)
70,831
-
-
(13,326)
79,965
-
N/A
(1,747,027)
9,171,893
(24,798)
130,198
1,538,0955
(413,992)
(709,111)
3,722,842
3,368,330
-
1,345,8345
(43,989)
N/A
N/A
1. Reduction in number of shares held as a result of the share consolidation implemented on 12 October 2020.
2. Post 31 December 2020, Scott Wyatt Jevan Bouzo and Thys Heyns are due to receive 120,000, 48,000, and 60,000 ordinary shares respectively
following the vesting of their 2018-2020 LTI performance rights.
3. Mike Muller became a Director on 1 October 2020. Accordingly, the disclosure covers the period after 1 October 2020.
4. Hui Meng Kho resigned as a Director with effect on 1 October 2020. Accordingly, the disclosure covers the period up to 1 October 2020.
5. Shares were acquired on 2 January 2020 following the exercise of the Legacy LTI options.
6. Acquired under the Employee Share Plan 2020 Exempt Share Award.
7. Daniel Ridgway resigned from the Company on 29 May 2020. Accordingly, the disclosure covers the period up to and including 29 May 2020.
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Viva Energy Group Limited – Annual Report 2020
10. 2021 Remuneration
10.1 Executive KMP remuneration
On the Company’s listing in 2018, the remuneration of the CEO was intentionally set at modest levels relative to ASX listed peers.
This was done recognising the strong retention focus and significant value tied to the legacy LTI structure put in place under the
previous ownership.
In each remuneration report since listing, the Board has communicated its intention to re-align the CEO’s pay as the Legacy LTI
arrangements expired. With the last of these having expired for the CEO in January 2020, the Board believes it important to
address the CEO’s pay levels going forward to ensure there is sufficient engagement and retention value to secure the CEO to lead
Viva Energy’s business recovery and transformation agenda. In considering the CEO’s remuneration, the Board considered a market
cap peer group of ASX 50-150 (in which Viva Energy was around the median), which was further augmented by consideration of
specific comparators of other CEO packages in the oil and gas industry. Both data sets confirmed that the CEO’s remuneration
was materially below market.
Accordingly, the Board has resolved to increase the CEO’s Total Fixed Remuneration (TFR) from $896,000 to $1,146,000 in 2021.
This is an increase of 27.9%. The Board acknowledges that this is a significant increase in fixed remuneration and will have a flow-on
effect to the CEO’s incentive opportunities.
In approving this increase the Board considered the CEO’s current fixed remuneration is well below the 25th percentile of
comparators. The CEO is a highly regarded, skilled and experienced leader and the Board believes that he has the necessary skills,
experience and track record to lead Viva Energy through its next strategic plan and should be remunerated for that job. Following
this increase, the CEO’s TFR will still be below the median of the ASX 50–150 peer group and his total remuneration (including his
incentive opportunities at maximum) will be around the median. This is an important step in re-aligning the CEO’s pay to market rates.
The Board will continue to review the CEO’s pay annually with a view to moving the CEO’s fixed remuneration to the Company’s goal
of above median of the peer group over time, as our business progresses through a period of recovery and transformation.
The increase in his fixed remuneration will be effected through a $100,000 (or 11%) increase in cash fixed remuneration and an
annual grant of $150,000 of restricted equity (equity fixed remuneration) (Restricted Stock Units (RSU)). The RSUs will be subject to
a service condition of one year and a further deferral period of one year. The Board decided to incorporate RSUs as a feature of the
CEO’s TFR as it wanted to address the market competitiveness of the package, but believed a combination of cash and RSUs was
more appropriate than simply increasing his cash pay as it increases equity exposure of the CEO’s package while also building in
a retention component.
We have announced that Thys Heyns, Chief Operating Officer, will retire from the Company in 2021. Jevan Bouzo will be appointed
to an expanded role of Chief Operating and Financial Officer, assuming responsibility for supply chain operations in addition
to his existing accountabilities. The Board has reviewed Mr Bouzo’s remuneration arrangements and decided to increase his
remuneration commensurate with the additional responsibilities of the expanded role as well as recognise the breadth of skill
and experience required to fulfil it. Mr Bouzo’s TFR will increase from $650,000 to $800,000 in 2021. The LTI and STI opportunities
remain at 100% of the TFR at maximum.
10.2 2021 LTI
The Company’s long-term incentive structure was developed at the time the Company listed on the ASX in 2018 and had its first
vesting opportunity this year. The Board reviewed the LTI program to ensure it remains fit for purpose, appropriately reflects the
current operating landscape, focuses executive effort on long-term priorities and continues to motivate and be valued by the
executives. The Board has decided to make some adjustments to two of the LTI performance measures. The adjustments and
the rationale are set out below.
2020 LTI
Change for the 2021 LTI Reason for the change
50% of the LTI is
weighted to rTSR.
TSR performance is
measured against the
ASX 100 comparator
group.
rTSR will continue
to form 50% of the
LTI in 2021.
In reviewing this measure, the Board considered a number of options,
including other indices and bespoke peer groups. The Board decided to retain
a broad peer group, but made the change from ASX100 to ASX 50–150.
The Board has made
a change to the
comparator group from
ASX100 to ASX 50–150.
Viva Energy is not a constituent of the ASX100 index. In terms of market
capitalisation, the Company has been positioned at the ‘lower end’ or
outside the current comparator group (ASX 100) during the 2018-2020
LTI performance period. The Board considers ASX 50–150 to be a more
appropriate comparator group as it more accurately reflects the companies
against which Viva competes for capital.
25% of the LTI is
weighted to cumulative
FCF over the
performance period.
FCF is retained at 25%
weighting, though
performance will be
measured on a ‘per
share’ basis.
The Board considers that FCF continues to be important and has adjusted
the way in which FCF is considered by introducing FCF on a per share basis.
This measure will be additive to the current FCF construct by focusing FCF
generation on a per share basis, to take into account the possibility that the
amount of shareholder’s capital may vary during the period.
ROCE will continue to be retained in the LTI design, with further detail on the 2021 LTI to be disclosed in the Notice of Annual
General Meeting.
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Directors’ report
The Directors present this report, together with the financial report of Viva Energy Group Limited (the Company) and the entities
it controlled (collectively, the Group), for the financial year ended 31 December 2020.
This Directors’ report has been prepared in accordance with the requirements of the Corporations Act 2001 (Cth). The following
information forms part of this report:
• Director biographies on pages 8 to 9
• Operating and financial review on pages 12 to 28
• Risk management disclosures which form part of the Operating and financial review on pages 23 to 28
• Remuneration report on pages 77 to 99
• External auditor’s independence declaration on page 105
• Note 35 Auditor’s remuneration on pages 163 to 164
Directors, Secretaries and meetings
The Directors of the Company at any time during the financial year ended 31 December 2020 and up until the date of this report are:
• Robert Hill – Appointed 18 June 2018
• Scott Wyatt – Appointed 7 June 2018
• Dat Duong – Appointed 7 June 2018
• Hui Meng Kho – Appointed 18 June 2018, resigned effective 1 October 2020
• Arnoud De Meyer – Appointed 18 June 2018
• Jane McAloon – Appointed 18 June 2018
• Michael Muller – Appointed 1 October 2020
• Sarah Ryan – Appointed 18 June 2018
Information on the qualifications, experience, special responsibilities and other directorships of our Directors is set out on
pages 8 to 9.
Company Secretaries
Lachlan Pfeiffer
BCom, LLB (Hons), MAICD
Lachlan Pfeiffer is the Executive General Manager, Legal and External Affairs. Lachlan was appointed Company Secretary on
7 June 2018.
Prior to joining Viva Energy in October 2014, Lachlan Pfeiffer worked as a corporate lawyer for Skadden, Arps, Slate, Meagher
and Flom (UK) LLP, based in London for seven years. Lachlan started his career in Melbourne working for Norton Rose Fulbright
(Australia).
Lachlan is a legal practitioner and holds a Bachelor of Commerce from Melbourne University and a Bachelor of Laws (with Hons)
from Monash University. He is also a member of the Australian Institute of Company Directors.
Julia Kagan
BBus (Banking and Finance), LLB (Hons), FGIA
Julia Kagan was appointed Company Secretary on 26 July 2019.
Julia joined Viva Energy in August 2018. Prior to this, Julia held governance roles at BHP and at ASX as part of the Listings
Compliance team. Julia is a legal practitioner and holds a Bachelor of Business and a Bachelor of Laws (Honours) from Monash
University. She is a Fellow of the Governance Institute of Australia.
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Viva Energy Group Limited – Annual Report 2020 Directors’ meetings
Details regarding Board and Board Committee meetings held during the year and each Director’s attendance at these meetings
are set out below. Directors have a standing invitation to attend all standing Board Committee meetings. Attendance by Directors
at meetings of committees of which they are not a member is not reflected in the table below.
All Directors receive copies of the agendas, minutes and papers of each standing Board Committee meeting, save to the extent
they are subject to a relevant conflict.
Board meetings
Independent
Board
Committee1
Audit and Risk
Committee
Sustainability
Committee
Remuneration
and Nomination
Committee
Investment
Committee
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
(A)
(B)
Non-Executive Directors
Robert Hill
Arnoud De Meyer
Dat Duong2
Hui Meng Kho3
Jane McAloon
Sarah Ryan
Michael Muller4
Executive Director
Scott Wyatt
15
15
15
12
15
15
3
15
15
15
15
12
15
15
3
15
1
1
1
1
1
1
1
1
1
1
7
7
7
7
7
7
4
4
2
2
4
4
2
2
6
6
6
2
6
6
6
2
3
3
3
2
3
3
1
3
3
3
3
2
3
3
1
3
(A) Number of meetings held during the period which the Director was eligible to attend.
(B) Number of meetings attended by the Director.
1. The Independent Board Committee is not a standing Board Committee. This Committee was established in 2020 to consider potential conflict
matters that may arise in connection with the Gas Terminal Project. Refer to the 2020 Corporate Governance Statement for further information.
2. Dat Duong became a member of the Remuneration and Nomination Committee on 1 October 2020.
3. Hui Meng Kho retired from the Board and its Committees effective on 1 October 2020.
4. Michael Muller was appointed to the Board and joined the Sustainability Committee and the Investment Committee on 1 October 2020.
Principal activities and review of operations
Principal activities
During the year, the principal activities of the Group included the following:
• sales of fuel and specialty products through Retail and Commercial channels across Australia;
• management of a national supply, distribution and terminal network; and
• manufacturing activities at the Group’s Geelong oil refinery.
State of affairs
There were no significant changes in the Group’s state of affairs during the year other than as set out in the Operating and financial
review, which is set out on pages 12 to 28 and in the Notes to the consolidated financial statements.
Review of operations
The Operating and financial review of the Group for the 2020 financial year is set out on pages 12 to 28 of this report.
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Dividends
We paid the following dividends during the financial year ended 31 December 2020:
Dividend
Total dividend
Payment date
Final dividend of 2.6 cents per share (fully franked)
for the six months ended 31 December 2019
Interim dividend of 0.8 cents per share (fully franked)
for the half year ended 30 June 2020
Special dividend of 5.94 cents per share (unfranked)
$50.6M
$15.5M
$114.9M
15 April 2020
16 September 2020
13 October 2020
Matters subsequent to the end of financial year
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected,
or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
Remuneration and share interests
Remuneration Report
The Remuneration Report is set out on pages 77 to 99.
Directors’ interests in share capital
The relevant interests of each Director in the share capital of the Company as at the date of this Directors’ report are set out below.
Director
Robert Hill
Scott Wyatt
Dat Duong
Arnoud De Meyer
Jane McAloon
Sarah Ryan
Michael Muller
Number of ordinary shares in which
the Director has a relevant interest
67,200
9,171,893*
-
104,496
70,831
79,965
-
* The CEO will receive 120,000 ordinary shares following the vesting of the 2018 LTI Performance Rights. As at the date of this report, these shares
have not yet been transferred to the CEO. See the Remuneration Report for further information.
Our Managing Director and CEO, Scott Wyatt, holds 1,097,319 Performance Rights issued under the Company’s Long Term
Incentive Plan.
Non-Executive Directors do not hold any rights or options over shares in the Company or any Group entity.
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Viva Energy Group Limited – Annual Report 2020 Rights and Options over shares in the Company
The table below details the number of Options, Performance Rights and Deferred Share Rights the Company had on issue as at the
date of this report. Further information is available in the Remuneration Report.
Number on issue
as at 31 December
2019
8,651,786
Options at various
exercise prices
and expiry dates
Changes during the
2020 financial year
Number on issue
as at 31 December
2020
Changes since the
end of the 2020
financial year
Number on issue as
at the date of this
report
7,113,691
Options exercised
1,538,095
Options exercisable
at $1.21 expiring
1 January 2022
-
1,538,095
Options* exercisable
at $1.21 expiring
1 January 2022
Options
Performance Rights
issued under the LTIP
3,524,041
Performance
Rights
2,087,421**
Performance
Rights issued
510,599 Performance
Rights forfeited
5,100,863
Performance
Rights
Deferred Share Rights
issue under the
LTIP and STIP
213,903 Deferred
Share Rights
1,987,680 Deferred
Share Rights issued
2,201,583 Deferred
Share Rights
308,000***
Performance
Rights vested
924,000
Performance
Rights lapsed
329,119***
Deferred Share
Rights vested
3,868,863
Performance
Rights
1,872,464
Deferred Share
Rights
*
As at the date of this report, there is only one holder of outstanding Options as set out in the Remuneration Report.
** Of these, 556,121 Performance Rights were granted to the CEO on 6 July 2020 as approved by shareholders at the 2020 AGM.
*** Each Performance Right or Deferred Share Right that vests entitles the holder to acquire one ordinary share. The shares allocated upon vesting
and exercise are acquired on market and transferred to the holder.
Corporate governance
As at the date of this report, our corporate governance arrangements and practices complied with the 4th Edition of the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations.
Our 2020 Corporate Governance Statement is available on the Investor Centre section of our website at www.vivaenergy.com.au.
Auditor
Our external auditor, PricewaterhouseCoopers (PwC), has provided an independence declaration in accordance with the
Corporations Act. This is set out at page 105.
Non-audit services
Details of non-audit services provided by, and amounts paid to, our external auditor are set out in Note 35 Auditor’s remuneration
to the financial statements.
The Directors have formed the view, based on advice from the Audit and Risk Committee, that the provision of non-audit services
during the 2020 financial year was compatible with, and did not compromise, the general standard of independence for auditors
imposed by the Corporations Act 2001. The non-audit services provided did not involve the external auditor reviewing or auditing
its own work or acting in a management or decision making capacity for the Company, or otherwise could reasonably be expected
to compromise its independence.
No officer of the Company was a partner or director of PricewaterhouseCoopers during the financial year.
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Environmental performance
The Group is subject to Federal, State and Local Government environmental regulation in respect of its land holdings,
manufacturing, terminal and distribution facilities and marketing operations. Licences are held for a number of these operations
issued by the relevant State environmental regulator.
The Group did not receive any fines, regulatory sanctions or prosecutions in relation to environmental issues or compliance with
its licences during 2020.
The Group received a remedial notice relating to perfluoroalkyl and polyfluoroalkyl substances (PFAS) in stormwater discharges
at its Newport Terminal and draft remedial notices, for discussion, from the Queensland Department of Environment & Science
relating to PFAS at the Pinkenba Terminal. These notices relate to legacy PFAS contamination associated with the historical
use of fluorinated fire-fighting foams at these facilities as part of the sites’ fire safety systems. There is a national approach
by environmental regulators across Australia to investigate and manage these legacy PFAS issues in a range of sectors that
traditionally used these fire-fighting foams. At both the Newport and Pinkemba sites, these matters were voluntarily notified by
Viva Energy to the relevant State regulator, and assessments and mitigation planning is underway to address these legacy issues
in consultation with regulators.
Indemnities and insurance
The Company maintains a deed of access, insurance and indemnity with each Director and each Company Secretary of the Group.
Under those deeds, the Company indemnifies, to the extent permitted by law, each Director and each Company Secretary against
any loss that may arise from, or in connection with, any act or omission by that Director/Company Secretary in the performance
of, or relating to or in connection with, their position as an officer of the Company or the execution or discharge of duties as such
an officer, to the full extent permitted by law. Each deed provides that the Company must meet the full amount of any such loss,
including legal costs (calculated on a full indemnity basis) that are reasonably incurred, charges and expenses.
Under the deeds, the Company must arrange and maintain a directors’ and officers’ insurance policy for the Directors and the
Company Secretaries to the extent permitted by law, and must use reasonable endeavours to maintain such insurance for the
period from the date of the deed until seven years after the Director/Company Secretary ceases to hold office. This seven-year
period can be extended where certain actions or proceedings commence before the period expires.
The Group has entered into insurance policies to insure the Directors and Company Secretaries. The Group has paid the premiums
for those policies. In accordance with common commercial practice, the insurance policies prohibits disclosure of the nature of the
liabilities insured against and the amount of the premiums.
Viva Energy Group Limited has agreed to reimburse its auditors, PricewaterhouseCoopers, for any liability (including reasonable
legal costs) incurred in connection with any claim by a third party arising from Viva Energy’s breach of its audit engagement
agreement.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, all amounts in this Directors’
Report have been rounded to the nearest one hundred thousand dollars ($100,000), or in certain cases, to the nearest one
thousand dollars ($1,000).
This Directors’ Report is made in accordance with a resolution of the Board.
Robert Hill
Chairman
Scott Wyatt
CEO and Director
Date: 24 February 2021
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Viva Energy Group Limited – Annual Report 2020
Auditor’s independence declaration
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Viva Energy Group Limited – Annual Report 2020About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainabilityRemuneration reportBoard of DirectorsExecutive Leadership TeamDirectors’ report PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration As lead auditor for the audit of Viva Energy Group Limited for the year ended 31 December 2020, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Viva Energy Group Limited and the entities it controlled during the period. Chris Dodd Melbourne Partner PricewaterhouseCoopers 24 February 2021
Long-term assets and liabilities
12. Property, plant and equipment
13. Leases
14. Long-term receivables
15. Long-term payables
16. Goodwill and other intangible assets
17. Provisions
18. Commitments and contingencies
Capital funding and financial risk management
19. Financial assets and liabilities
20. Derivative assets and liabilities
21. Long-term borrowings
22. Consolidated net debt
23. Contributed equity and reserves
24. Dividends declared and paid
25. Fair value of financial assets and liabilities
26. Financial risk management
Taxation
27. Income tax and deferred tax
Group structure
28. Group information
29. Business combinations
30. Interests in associates and joint operations
31. Parent company financial information
32. Deed of cross guarantee
Other disclosures
33. Post-employment benefits
34. Related party disclosures
35. Auditor’s remuneration
36. Events occurring after the reporting period
Directors’ declaration
Independent auditor’s report
123
123
126
128
128
128
130
132
133
133
135
135
136
136
138
139
140
144
144
148
148
149
151
154
154
157
157
160
163
164
165
166
Financial report
Consolidated statement of profit or loss
107
Consolidated statement of comprehensive income 108
109
110
111
112
112
114
114
115
116
118
119
119
119
120
121
122
123
123
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
General information
Results for the year
1. Revenue
2. Other profit or loss items
3. Segment information
4. Earnings per share
Inventories
Working capital and cash flow
5.
6. Cash and cash equivalents
7.
Reconciliation of profit to net cash flows from
operating activities
8. Trade and other receivables
9. Prepayments
10. Trade and other payables
11. Short-term borrowings
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Viva Energy Group Limited – Annual Report 2020
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Consolidated statement of profit or loss
For the year ended 31 December 2020
s
t
a
t
e
m
e
n
t
s
Revenue
Replacement cost of goods sold
Net inventory loss
Sales duties, taxes and commissions
Import freight expenses
Historical cost of goods sold
Gross profit
Net gain/(loss) on other disposal of property, plant and equipment
Net profit on sale of investments
Other income
Other income/(loss)
Transportation expenses
Salaries and wages
General and administration expenses
Maintenance expenses
Lease related expenses
Sales and marketing expenses
Interest income
Share of profit of associates
Realised/unrealised gain on derivatives
Net foreign exchanges (loss)/gain
Depreciation and amortisation expenses
Finance costs
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit after tax
Earnings per share
Basic earnings per share
Diluted earnings per share
Notes
2020
$M
2019
$M
1
12,409.9
16,541.6
(6,382.3)
(10,085.1)
2
(256.6)
(49.5)
(4,426.6)
(4,607.5)
(274.0)
(333.2)
(11,339.5)
(15,075.3)
1,070.4
1,466.3
5.5
106.4
24.9
136.8
(236.0)
(266.3)
(147.9)
(93.5)
(11.8)
(81.3)
370.4
4.4
10.6
35.3
(28.5)
(388.8)
(189.9)
(186.5)
150.3
(36.2)
(1.9)
1.3
-
(0.6)
(253.3)
(258.3)
(114.4)
(118.2)
(19.4)
(105.4)
596.7
2.8
60.2
7.9
37.3
(355.7)
(191.0)
158.2
(44.9)
113.3
Cents
Cents
(1.9)
(1.9)
5.8
5.7
30
2
13
30
2
2
2
2
27
4
4
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
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Viva Energy Group Limited – Annual Report 2020Notes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directory
Consolidated statement of comprehensive income
For the year ended 31 December 2020
(Loss)/profit for the year
Other comprehensive income/(loss)
Notes
2020
$M
(36.2)
2019
$M
113.3
Other comprehensive income that may be reclassified to profit or loss in subsequent
years (net of tax)
Effective portion of changes in fair value of cash flow hedges – Unrealised losses
on cash flow hedges recognised by Waypoint REIT
Recycling of unrealised gains on cash flow hedges on disposal of investment in
Viva Energy REIT (now called Waypoint REIT)
30
30
-
6.3
Other comprehensive income not to be reclassified to profit or loss in subsequent
years (net of tax)
Remeasurement of retirement benefit obligations
33
(2.4)
Net other comprehensive income/(loss)
3.9
(4.7)
-
(1.7)
(6.4)
Total comprehensive (loss)/income for the year (net of tax)
(32.3)
106.9
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
108
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Consolidated statement of financial position
As at 31 December 2020
s
t
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s
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Derivative assets
Prepayments
Current tax assets
Total current assets
Non-current assets
Long-term receivables
Property, plant and equipment
Right-of-use assets
Goodwill and other intangible assets
Post-employment benefits
Investments accounted for using the equity method
Net deferred tax assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Provisions
Short-term lease liabilities
Short-term borrowings
Derivative liabilities
Total current liabilities
Non-current liabilities
Provisions
Long-term borrowings
Long-term lease liabilities
Long-term payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Treasury shares
Reserves
Retained earnings
Total equity
Notes
2020
$M
2019
$M
6
8
5
12
20
9
14
12
13
16
33
30
27
49.1
794.1
698.8
2.9
-
27.6
21.0
127.2
1,247.8
1,195.6
6.7
0.2
20.9
31.2
1,593.5
2,629.6
33.6
1,475.2
2,321.5
646.7
0.2
15.4
325.8
2.1
4,820.5
6,414.0
38.4
1,468.1
2,328.1
657.0
6.9
641.8
166.0
2.1
5,308.4
7,938.0
10
17
13, 22
11
20
1,329.6
2,165.5
122.0
135.9
-
19.4
127.8
128.0
7.7
19.0
1,606.9
2,448.0
17
21
104.0
153.3
13, 22
2,398.4
15
23
23
23
94.3
2,750.0
4,356.9
2,057.1
4,373.9
(6.8)
(4,216.6)
1,906.6
2,057.1
95.7
256.9
2,320.3
93.2
2,766.1
5,214.1
2,723.9
4,861.3
(14.2)
(4,246.5)
2,123.3
2,723.9
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
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Viva Energy Group Limited – Annual Report 2020Notes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directory
Consolidated statement of changes in equity
For the year ended 31 December 2020
Balance at 1 January 2019
Statutory profit for the year
Unrealised losses on cash flow hedges
recognised by Waypoint REIT
Remeasurement of retirement
benefit obligations
Total comprehensive income for the year
Dividends paid
Reserve arising from IPO
Share-based payment expense
Treasury shares
Notes
Contributed
equity
$M
4,861.3
33
24
-
-
-
-
-
-
-
-
Balance at 31 December 2019
4,861.3
Treasury
shares
$M
Reserves
$M
Retained
earnings
$M
Total equity
$M
-
-
-
-
-
-
-
(14.2)
(14.2)
(4,226.4)
2,144.2
2,779.1
-
113.3
113.3
(4.7)
(1.7)
(6.4)
-
(3.5)
(10.2)
-
-
-
113.3
(4.7)
(1.7)
106.9
(134.2)
(134.2)
-
-
-
(3.5)
(10.2)
(14.2)
(4,246.5)
2,123.3
2,723.9
4,861.3
(14.2)
(4,246.5)
2,123.3
2,723.9
Balance at 1 January 2020
Statutory loss for the year
Other comprehensive income recycled
on sale of investment
Remeasurement of retirement
benefit obligations
Total comprehensive loss for the year
Dividends paid (net of dividends paid
on treasury shares)
Reserve arising from IPO
Share buy-back
Capital return to shareholders
Share-based payment reserve movement
Issue of shares to plan participants
Treasury shares
-
-
-
-
-
-
33
24
23a, 23c
23a
23c
23b
23b
(72.3)
(415.1)
-
-
-
Balance at 31 December 2020
4,373.9
-
-
-
-
-
-
-
1.0
-
15.7
(9.3)
(6.8)
-
6.3
(2.4)
3.9
-
1.0
22.0
(0.3)
3.3
-
-
(36.2)
(36.2)
-
-
(36.2)
6.3
(2.4)
(32.3)
(180.5)
(180.5)
-
-
-
-
-
-
1.0
(50.3)
(414.4)
3.3
15.7
(9.3)
(4,216.6)
1,906.6
2,057.1
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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Net cash flows from operating activities
7
Operating activities
Receipt from trade and other debtors
Payments to suppliers and employees
JobKeeper payments received
Interest received
Interest paid on loans
Interest paid on lease liabilities
Net income tax refund/(paid)
Investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of land for resale
Proceeds from sale of land
Purchase of intangible asset
Net cash consideration paid for step acquisition of associate
Coles Express Alliance payment
Proceeds from sale of investments
Share buy-back
Net purchase of employee share options
Dividends received from associates
Loan to associate
Loan repayment from associate
Notes
2020
$M
2019
$M
15,937.0
19,050.3
(15,585.7)
(18,448.3)
21.8
4.4
(8.0)
(171.0)
11.8
210.3
(157.4)
15.0
(6.8)
6.8
(1.1)
(1.0)
-
30
730.1
30
(50.3)
(8.8)
19.8
-
-
-
2.8
(13.4)
(162.5)
(26.2)
402.7
(161.7)
0.3
-
-
(0.1)
(24.8)
(137.0)
-
(20.0)
40.8
(15.9)
20.0
Net cash flows contributed/(used) in investing activities
546.3
(298.4)
Financing activities
Drawdown of borrowings
Repayments of borrowings
Dividends paid (net of dividend paid on treasury shares held)
Capital return (net of return paid on treasury shares held and
transaction costs)
Upfront financing cost paid and capitalised
Repayment of lease liability
Net cash flows used in financing activities
Net (decrease)/decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
1,120.0
(1,227.2)
24
(180.5)
4,320.0
(4,170.0)
(134.2)
(414.4)
(0.1)
(124.8)
(827.0)
(70.4)
119.5
49.1
6
-
(3.0)
(106.2)
(93.4)
10.9
108.6
119.5
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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Notes to the consolidated financial statements
General information
Reporting entity
The consolidated financial statements of Viva Energy Group Limited (‘Company’) and the entities it controlled (collectively, ‘Group’)
for the year ended 31 December 2020 were authorised for issue in accordance with a resolution of the Directors on 24 February
2021. The Company is a for-profit company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange (ASX: VEA).
The Group is principally engaged in refining, marketing, sale, supply and distribution of fuel and related specialty products.
The Group’s principal place of business is 720 Bourke Street, Docklands, Australia.
Significant changes in the current reporting period
The financial position and performance of the Group was particularly affected by the following events and transactions during the
reporting period:
• COVID-19 and its impact on the performance of the Group, with the Retail, Aviation and Marine businesses together with the
refinery particularly impacted;
• on 21 February, the Group sold its 35.5% security holding in Viva Energy REIT (now called Waypoint REIT) (see Note 30);
• a share buy-back program was announced during the period, which to 31 December 2020 had reduced shares on issue by
27,397,847 ordinary shares (see Note 23);
• a capital return of $415.1 million and special dividend of $114.9 million paid to shareholders were undertaken in October 2020,
which returned $530.0 million to shareholders, with associated share consolidation activities reducing shares on issue by
309,498,674 ordinary shares (see Note 23 and 24); and
• on 5 May 2020, the Group agreed to acquire the remaining 50% interest in Westside Petroleum Pty Ltd. Subsequent to the
acquisition receiving regulatory approval, the transaction was completed on 31 August 2020 (see Note 29).
Basis of preparation
Statement of compliance
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board.
The financial report has been prepared on a going concern basis. The Directors have made this assessment on the basis that the
Group has sufficient liquidity and undrawn borrowing facilities to meet its obligations and pay its debts as and when they fall due.
Notwithstanding, current liabilities exceed current assets by $13.4 million as at 31 December 2020, primarily due to a decrease
in working capital driven by a reduction in average benchmark crude and refined product prices between December 2019 and
December 2020.
The financial report has been prepared on a historical cost basis, except for financial assets and liabilities (including derivative
instruments), which have been measured at fair value.
The Group’s consolidated financial statements also comply with International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
The financial report is presented in Australian dollars. In accordance with ASIC Legislative Instrument 2016/191, all values are
rounded to the nearest one hundred thousand ($100,000), or in certain cases, to the nearest one thousand ($1,000).
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘functional currency’). The consolidated financial statements are presented in Australian
dollars, which is the Group’s functional and presentation currency.
Use of estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under
the circumstances.
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The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are highlighted below.
• Note 5 Inventories outlines the estimates and accounting policy used by the Group to value inventories.
• Information about the assumptions and the risk factors relating to impairment are described in Note 8 Trade and other
receivables and Note 16 Goodwill and other intangible assets.
• Note 12 Property, plant and equipment describes the policy and estimation of minimum operating stock and also the process
of assessing for impairment of property, plant and equipment.
• Note 13 Leases provides an explanation of the key assumptions used to determine the lease related right-of-use assets and
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lease liabilities.
• Note 16 Goodwill and other intangible assets outlines the key assumptions and methodology used to assess the carrying value
of the Group’s goodwill for impairment.
• Note 17 Provisions provides key sources of estimation, uncertainty and assumptions used in regards to estimation of provisions.
• Note 19 Financial assets and liabilities and Note 25 Fair value of financial assets and liabilities provide an explanation of the key
assumptions used to determine the fair value of financial assets and liabilities.
• Information about the assumptions and the risk factors relating to income tax expense and deferred tax balances are described
in Note 27 Income tax and deferred tax.
• Note 29 Business combinations outlines the judgements and calculations undertaken under the guidance of AASB 3 Business
combinations to recognise goodwill as a result of the Westside Petroleum acquisition.
New and revised accounting standards
In the current year, several amendments and interpretations were issued by the Australian Accounting Standards Board. The Group
has adopted all of the new amendments and interpretations issued that are relevant to its operations and effective for the current
annual reporting period. These are listed below:
• AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
• AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
• AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued
in Australia
• AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
• AASB 2020-4 Amendments to Australian Accounting Standards – COVID-19-related Rent Concessions
The adoption of these new amendments and interpretations do not have a significant impact on the consolidated financial
statements of the Group in the current or future periods. Other new amendments and interpretations introduced in the current
period are not applicable to the Group.
Standards issued but not yet effective as at 31 December 2020
A number of new accounting standards and interpretations have been published that are not yet effective for periods beginning
1 January 2020 and have not been early adopted by the Group. These standards and interpretations applicable from periods
beginning 1 January 2021 or beyond as noted by the effective date are not expected to have a material effect on the consolidated
financial statements.
Reclassification and changes in financial presentation
Where presentation and classification of items in the consolidated financial statements changes, the comparative amounts are
also reclassified unless it is impractical to do so. The nature, amounts and reason for the reclassification are also disclosed. If the
reclassification affects an item on the balance sheet, a third consolidated statement of financial position is also presented.
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Notes to the consolidated financial statements continued
Results for the year
1. Revenue
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Revenue from contracts from customers
Revenue from sale of goods
Non-fuels income
Other revenue
Total revenue
2020
$M
2019
$M
12,200.8
16,375.0
182.3
157.5
12,383.1
16,532.5
26.8
9.1
12,409.9
16,541.6
Revenue from sale of goods
The Group primarily generates revenue from the sale of refined products in Australia directly to motor vehicle users via the
Shell Coles Express Alliance network, directly or indirectly to service stations for sale to motor vehicle users, and to commercial
businesses such as road transport, shipping companies, government bodies and airlines. The products that the Group sells are
either refined at its own Geelong Refinery or imported into Australia as refined products.
Revenue from sale of goods is recognised at the point in time when control of the asset is transferred to the customer, generally on
delivery.
On 1 March 2019, the Group assumed responsibility of retail fuel pricing and marketing across the Alliance network and from this
date commenced recognising revenue upon sale of fuel to the motor vehicle user. Prior to this date, the Group recognised revenue
upon delivery of fuel to the Alliance retail site.
Commercial customers have full discretion over the channel and price to sell the products, and there is no unfulfilled obligation
that could affect the customer’s acceptance of the products. No element of financing is deemed present as the sales are made with
a credit term of typically 15 to 45 days, which is consistent with market practice.
Revenue is recognised based on the price specified in the contract, net of expected returns, trade allowances, rebates and GST
collected on behalf of third parties. Total revenue includes the recovery of excise paid.
Non-fuel income
Non-fuel income is principally from the site licence payments that the Group receives under a long-term alliance with Coles Express.
Other non-fuel income includes income from the use of Shell Card and the payment of royalties on convenience sales at alliance
retail sites.
(i) Site licence
The Group has granted to Coles Express a licence of the premises for the conduct of its business from that site. Calculation of the
site licence fee payable by Coles Express is detailed in each Site Agreement and on commercial terms that are bespoke to the
Alliance Arrangements. Revenue from licence fees is recognised over the licence period.
(ii) Brand licence fees
Licence fees relate to the right to access and to market fuel under the Shell brand. The Group (i.e. licensor) holds the licence to
the Shell brand and therefore retains the control over the brand. Revenue from licence fees is recognised over the licence period.
(iii) Shell Card fees
The Group offers Shell Cards that provide customers a secure and efficient way to buy quality fuels, access to an extensive national
service stations network and the option to use online tools to manage fuel spending. The Group charges a monthly card fee to its
customers for the use of the card. Revenue from Shell Card is recognised over a period of time. No element of financing is deemed
present as the sales are made with a credit term of typically 15 to 45 days, which is consistent with market practice.
(iv) Royalties
The Group receives royalties on convenience store sales in excess of agreed sales thresholds. The amount payable to the Group is
calculated on an annual basis as a percentage of any excess over a threshold amount of gross sales of certain kinds of goods and
services made on certain sites. Revenue from royalties is recognised over a period of time.
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Other revenue
Other income includes rental recoveries, income from sub-leases and management fees earned through the Aviation business.
Assets and liabilities related to contracts with customers
There were no assets or liabilities recognised in the balance sheet related to revenue from contracts with customers because the
period of amortisation is less than one year.
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Disaggregation of revenue from contracts with customers
No one customer accounts for more than 10% of revenue.
2. Other profit or loss items
Net inventory loss
2020
$M
(256.6)
2019
$M
(49.5)
During the year, a net inventory loss of $256.6 million (2019: $49.5 million loss) was recorded in net inventory gain/(loss), which
accounts for the net impact of movement in oil prices on inventory. Net inventory gains and losses within costs of goods sold
represent the difference between the cost of goods sold calculated using the replacement cost of inventory and the cost of goods
sold calculated on the FIFO method. Under the FIFO method, which is used to comply with accounting standard requirements, the
cost of inventory charged to the statement of profit and loss is based on its historical cost of purchase or manufacture, rather than
its replacement cost at the time of sale.
Fluctuations in foreign exchange and commodity prices (which are impacted by both the USD oil price and the foreign exchange
rate) can have a distorting effect on the Group’s underlying results, and the replacement cost of goods sold quantifies this impact.
Replacement cost of goods sold is a non-International Financial Reporting Standards measure, and is used by management to
present a clearer picture of the Group’s underlying business performance before impacts from movements in oil price and
foreign exchange.
Realised/unrealised gains on derivatives
Derivative contracts
2020
$M
35.3
2019
$M
7.9
The Group is exposed to the effect of changes in foreign exchange and commodity price movements. During the year the
Group entered into derivative contracts, being principally foreign exchange currency contracts (forwards and swaps) and
commodity derivative instruments for the purpose of managing the market risks arising from the Group’s operations and
to hedge market exposure.
Derivatives are recognised at fair value. The gain or loss on subsequent remeasurement is recognised immediately in the
consolidated statement of profit or loss. For the year ended 31 December 2020 and including any open positions at balance date,
gains of $35.3 million were made (2019: $7.9 million gain). The gains in the current period were the result of various commodity
price movements and a weakening AUD through the year.
Foreign exchange gain/(loss)
Foreign exchange gains
Foreign exchange losses
Net foreign exchange (loss)/gain
2020
$M
117.6
(146.1)
(28.5)
2019
$M
107.7
(70.4)
37.3
Foreign currency transactions are translated into Australian dollars using the exchange rate at the date of transactions. Gains and
losses resulting from the settlement of such transactions and from the translation of foreign exchange denominated monetary
assets and liabilities at year end exchange rates are recognised in the consolidated statement of profit or loss. The net foreign
exchange gain/(loss) primarily relates to the foreign currency movements arising from the Group’s trade and other payables.
Depreciation and amortisation expense
Depreciation of property, plant and equipment
Depreciation charge of right-of-use assets
Amortisation of intangible assets
Total depreciation and amortisation expense
2020
$M
(140.2)
(216.2)
(32.4)
(388.8)
2019
$M
(128.1)
(199.1)
(28.5)
(355.7)
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Notes to the consolidated financial statements continued
Results for the Year continued
2. Other profit or loss items continued
Finance costs
Interest on borrowings, trade finance and commitment fees
Interest on lease liabilities
Unwinding of discount on provisions
Unwinding of discount on long-term payables
Total finance costs
2020
$M
(12.5)
(171.0)
(4.0)
(2.4)
2019
$M
(22.1)
(162.5)
(4.3)
(2.1)
(189.9)
(191.0)
Other income
In 2020, the Group recorded payments of $24.9 million (2019: nil) from the Federal Government’s ‘JobKeeper’ wage subsidy
program, a measure implemented by the Federal Government in response to the impact of COVID-19. The payments provided
assistance to the Group in supporting employees in the most impacted parts of the business, particularly in the aviation and
refining business.
These JobKeeper payments were accounted for as government grants and recognised at their fair value upon reasonable
assurance that the grant would be received and the Group has complied with all attached conditions.
3. Segment information
The Group has identified its operating segments on the basis of how the Chief Operating Decision Maker reviews internal reports
about components of the Group to assess performance and determine the allocation of resources. The Group is organised into
business units based on operational activities and has three reportable segments:
Retail, Fuels and Marketing
The Retail, Fuels and Marketing segment consists of both retail and commercial sales and marketing of fuel and specialty products
in Australia under the Shell, Liberty, Westside Petroleum and Viva Energy brands as well as generation of substantial non-fuel
income. All sales and marketing focused activities are included in this segment.
Refining
The Group’s Geelong Refinery in Corio, Victoria, refines crude oil into petrol, diesel and jet fuel. The refinery also manufactures
and produces specialty products such as liquid petroleum gas, bitumen, oils, and chemical products.
Supply, Corporate and Overheads
The Group owns and manages an integrated supply chain of terminals, storage facilities, depots, pipelines and distribution assets
throughout Australia in order to facilitate product distribution and delivery through wholesale and retail sites. This segment
also includes property expenses and corporate functions that facilitate business activity. These activities have been grouped as
a segment as they largely represent the overhead base of the business and undertake all the non-sales and non-manufacturing
activities within the Group.
Management monitors the operating results of its business segments separately for the purpose of making decisions about resource
allocation and performance assessment. The performance of operating segments is evaluated based on segment profit and loss,
and is measured consistently with profit or loss in the consolidated financial statements in accordance with the Group’s accounting
policies. Transfer prices between operating segments are on an arm’s length basis similar to transactions with third parties.
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Information about reportable segments
31 December 2020
Segment revenue:
Total segment revenue
Inter-segment revenue
External segment revenue
Gross profit
Net inventory gain/(loss)
Gross profit
Profit/(loss) before interest, tax, depreciation and amortisation
Interest income
Depreciation and amortisation expenses
Finance costs
Segment profit/(loss) before tax expense
Other material items:
Share of profit of associates
Capital expenditure
31 December 2019
Segment revenue:
Total segment revenue
Inter-segment revenue
External segment revenue
Gross profit
Net inventory gain/(loss)
Gross profit
Profit before interest, tax, depreciation and amortisation
Interest income
Depreciation and amortisation expenses
Finance costs
Segment profit before tax expense
Other material items:
Share of profit of associates
Capital expenditure
Retail,
Fuels and
Marketing
$M
Supply,
Corporate and
Overheads
$M
Total
segments
$M
Refining
$M
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12,275.3
2,854.7
10,841.8
25,971.8
-
(2,854.7)
(10,707.2)
(13,561.9)
12,275.3
-
134.6
12,409.9
1,277.2
-
1,277.2
909.1
0.2
(69.9)
(15.1)
824.3
50.3
-
50.3
(95.1)
-
(67.5)
-
(162.6)
(0.5)
1,327.0
(256.6)
(257.1)
(426.2)
4.2
(251.4)
(174.8)
(848.2)
(256.6)
1,070.4
387.8
4.4
(388.8)
(189.9)
(186.5)
-
18.6
-
117.3
10.6
21.5
10.6
157.4
Retail,
Fuels and
Marketing
$M
Supply,
Corporate and
Overheads
$M
Total
segments
$M
Refining
$M
16,339.3
-
16,339.3
1,234.3
-
1,234.3
860.8
-
(65.9)
(11.3)
783.6
4,688.5
(4,688.5)
15,307.3
36,335.1
(15,105.0)
(19,793.5)
-
202.3
16,541.6
299.8
-
299.8
117.0
-
(59.4)
-
57.6
(18.3)
(49.5)
(67.8)
(275.7)
2.8
(230.4)
(179.7)
(683.0)
1,515.8
(49.5)
1,466.3
702.1
2.8
(355.7)
(191.0)
158.2
-
18.4
-
88.5
60.2
54.8
60.2
161.7
Geographical information
The Group’s country of domicile is Australia. The Group has operations in Australia, Singapore and Papua New Guinea; however,
all revenues are generated in Australia. All of the Group’s non-financial non-current assets are located in Australia.
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Notes to the consolidated financial statements continued
Results for the Year continued
4. Earnings per share
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the Group by the weighted
average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on conversion of all the dilutive options into ordinary shares.
In line with the requirements of AASB 133 Earnings per Share adjustments to the weighted average number of ordinary and
diluted shares are made for events, other than the conversion of potential ordinary shares, that have changed the number of
shares outstanding without a corresponding change in resources.
The following tables reflect the earnings and share data used in the basic and diluted EPS computations:
(a) Basic earnings per share
Total basic earnings per share attributable to the ordinary equity holders of the Group
(b) Diluted earnings per share
Total diluted earnings per share attributable to the ordinary equity holders of the Group
(c) Weighted average number of shares used as the denominator
Weighted number of ordinary shares used as the denominator in calculating
basic earnings per share
2020
Cents
(1.9)
2020
Cents
(1.9)
2019
Cents
5.8
2019
Cents
5.7
2020
Number
2019
Number
1,865,755,543 1,944,535,168
Adjustments for calculation of weighted diluted earnings per share:
Options
8,206,118
34,034,504
Weighted number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
1,873,961,661 1,978,569,672
(d) Information concerning the classification of securities
Ordinary shares
Ordinary shares at 31 December 2020 of 1,607,638,647 represent the 1,944,535,168 shares listed on the ASX as part of the IPO
on 13 July 2018, adjusted for the reduction of 309,498,674 ordinary shares as a result of the share consolidation undertaken by
the Group in 2020, and a further reduction of 27,397,847 ordinary shares through current year share buy-back activities.
Any profit is available for distribution to the holders of Viva Energy Group Limited ordinary shares in equal amounts per share,
subject to the Group’s approved dividend strategy.
Options and Rights
Options and rights granted to employees are considered to be potential ordinary shares. They have been included in the
determination of diluted earnings per share if the exercise price of the options is lower than the listed share price of Group shares as
at 31 December 2020 or if it is considered likely that performance conditions in relation to the rights will be achieved. The options
and rights have not been included in the determination of basic earnings per share. Details relating to the options and rights are
set out in Note 34 Related party disclosures.
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Working capital and cash flow
5. Inventories
Crude for processing
Hydrocarbon finished products
Stores and spare parts
Total inventories
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$M
141.2
526.6
667.8
31.0
698.8
2019
$M
311.3
858.1
1,169.4
26.2
1,195.6
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in, first-out (‘FIFO’) principle and
includes the direct cost of acquisition or manufacture. The inventory management system used by the Group is based on
replacement cost methodology. Certain management estimates are required to adjust replacement cost to the FIFO method
in order to comply with accounting standard requirements.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Impairment of inventories is recognised when net realisable value falls below carrying cost. This primarily occurs as a result of
movements in crude oil and refined product prices between the date of purchase and balance date, and is recorded in net inventory
gain/(loss) in the consolidated statement of profit or loss. No inventory impairment was recognised during the year (2019: nil).
6. Cash and cash equivalents
Cash at bank per consolidated statement of financial position
Bank overdraft (Note 11)
Balances per consolidated statement of cash flows
2020
$M
49.1
-
49.1
2019
$M
127.2
(7.7)
119.5
Cash and cash equivalents include cash deposits held at call with financial institutions. Cash at bank earns interest at floating rates
based on daily bank deposit rates during the year, and at the end of the reporting year there were no restrictions on cash (2019: nil).
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Notes to the consolidated financial statements continued
Working capital and cash flow continued
7. Reconciliation of profit to net cash flows from operating activities
Profit
Adjustments for:
Net (gain)/loss on disposal of property, plant and equipment
Net profit on sale of investment
Depreciation and amortisation
Depreciation of right-of-use assets
Non-cash interest and amortisation on long-term loans
Non-cash loss/(gain) on remeasurement of investment
Unrealised loss on derivatives
Unrealised foreign exchange movements
Share of associate’s profit not received as dividends or distributions
Non-cash employee share option taken up in reserves
Non-cash treasury shares granted to employees
Non-cash tax expense relating to IPO transaction cost offset against IPO reserve
2020
$M
(36.2)
(5.5)
(113.9)
172.6
216.2
7.9
7.4
0.6
10.2
(10.6)
10.9
1.1
1.0
2019
$M
113.3
1.9
-
156.6
199.1
1.4
(1.3)
33.4
(31.6)
(60.2)
2.2
-
(3.4)
Net cash flows from operating activities before movements in assets/liabilities
261.7
411.4
Movements in assets and liabilities:
Working capital balances
Decrease/(increase) in receivables
Decrease/(increase) in inventories
(Decrease)/increase in payables
Other
Decrease in other assets
Increase in deferred tax assets
Decrease in post-employment benefits
Decrease in tax asset
Increase in provisions
Net cash flows from operating activities
456.3
497.9
(859.6)
6.0
(158.3)
3.0
10.2
(6.9)
210.3
(8.1)
(172.9)
162.3
5.9
(25.3)
2.1
47.2
(19.9)
402.7
Movements in the assets and liabilities for the year ended 31 December 2020 have been adjusted for the assets and liabilities
transferred from Westside Petroleum Pty Ltd, which was acquired on 31 August 2020, as well as elimination of intercompany
balances due to the acquisition. In the comparative 2019 period, adjustments for assets and liabilities transferred and intercompany
eliminations also occurred to account for the Liberty Oil Holdings Pty Ltd acquisition on 1 December 2019. Refer to Note 29
Business combinations for further details.
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8. Trade and other receivables
Trade receivables
Trade receivables
Allowance for impairment of receivables
Total trade receivables
Other receivables
Receivables from related parties (Note 34)
Receivables from associates
Loan to associates
Finance lease receivables (Note 13)
Other debtors
Total other receivables
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t
s
2020
$M
658.5
(5.1)
653.4
12.3
39.5
13.7
1.1
74.1
140.7
2019
$M
1,008.5
(4.2)
1,004.3
90.4
35.9
6.9
-
110.3
243.5
Total trade and other receivables
794.1
1,247.8
Trade receivables
Trade receivables are non-interest-bearing and are generally on terms of 15 to 45 days. Trade receivables are amounts due from
customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised initially at fair
value and are held with the objective to collect the contractual cash flows, and therefore subsequently measured at amortised cost
using the effective interest method. Due to the short-term maturity, the carrying amount approximates the fair value. Periodically,
the Group enters into factoring arrangements on specific trade receivable balances as part of its overall collections strategy.
At 31 December 2020 there were no outstanding trade receivables subject to factoring (2019: nil).
The Group applies the AASB 9 Financial instruments simplified approach to measuring trade receivable expected credit losses,
which uses a lifetime expected loss allowance for expected credit losses for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss
rates are based on the payment profiles of sales over past periods using historical data and also using forward-looking projections
of customer payment expectations. Trade receivables are often insured for events of non-payment, through third party insurance,
which has also been factored into the expected loss rate calculations.
The loss allowance as at 31 December 2020 was determined as follows for trade receivables:
More than
30 days but
not more
than 60 days
past due
$M
More than
60 days but
not more
than 90 days
past due
$M
More than 90
days but not
more than
120 days
past due
$M
Not more
than 30 days
past due
$M
More than
120 days
past due
$M
1.0%
2.0%
5.0%
10.0%
70.0%
Total
$M
Current
$M
0.3%
658.5
(5.1)
632.8
(1.9)
18.8
(0.2)
1.7
(0.1)
0.8
(0.0)
0.2
(0.0)
4.2
(2.9)
31 December 2020
Expected loss rate
Gross carrying amount –
trade receivables
Loss allowance
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Notes to the consolidated financial statements continued
Working capital and cash flow continued
8. Trade and other receivables continued
Trade receivables continued
More than
30 days but
not more
than 60 days
past due
$M
More than
60 days but
not more
than 90 days
past due
$M
More than 90
days but not
more than
120 days
past due
$M
Not more
than 30 days
past due
$M
More than
120 days
past due
$M
1.0%
2.0%
5.0%
10.0%
15.0%
Total
$M
Current
$M
0.3%
1,008.5
(4.2)
962.5
(2.7)
36.9
(0.4)
1.4
(0.1)
0.6
-
1.0
(0.1)
31 December 2019
Expected loss rate
Gross carrying amount –
trade receivables
Loss allowance
Movements in the allowance for impairment of receivables were as follows:
Opening loss allowance as at 1 January
Increase in loss allowance recognised in profit or loss during the year
Receivables written off as uncollectible
Amount recognised as a result of acquisitions
Closing loss allowance at 31 December
2020
$M
(4.2)
(1.3)
0.9
(0.5)
(5.1)
6.1
(0.9)
2019
$M
(4.3)
(1.3)
2.1
(0.7)
(4.2)
The creation and release of loss allowances for trade receivables has been included within general and administration expense in
the consolidated statement of profit or loss. Amounts charged to the allowance account are generally written off when there is no
reasonable expectation of recovering additional cash.
Other receivables
Other receivables include receivables from related parties and other debtors of which the majority relates to GST receivable
balances and other specific receivable balances. Other receivables are measured at amortised cost as they are held with the
objective to collect contractual cash flows of principal and interest payments. Given the nature of the other receivable balances and
based on both previous history of collections and future expectations of receipts, the Group believes that other receivables
are fully collectable and have not applied a credit loss allowance to these balances.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included within trade and other receivables or trade and other payables in the
consolidated statement of financial position.
9. Prepayments
Prepayments
2020
$M
27.6
2019
$M
20.9
Prepayments primarily relate to prepaid council rates, insurance and shipping related costs. In addition, as at 31 December 2020
the Group has recognised a $7.5 million (2019: nil) prepayment to the State Revenue Office relating to the stamp duty contingency
outlined in Note 18 Commitments and contingencies.
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10. Trade and other payables
Trade payables
Amounts due to related parties
Amounts due to associates
Total trade and other payables
2020
$M
507.8
821.7
0.1
1,329.6
2019
$M
744.6
1,407.7
13.2
2,165.5
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Trade payables and amounts due to related parties and associates are non-interest-bearing and are normally settled in 30 to 60 days.
Amounts due to related parties are primarily for purchases of hydrocarbon. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the end of the reporting period. The carrying amounts of trade and
other payables are considered to be the same as their fair values, due to their short-term nature.
11. Short-term borrowings
Bank overdraft
Total short-term borrowings
2020
$M
-
-
2019
$M
7.7
7.7
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the end of the reporting period.
Long-term assets and liabilities
12. Property, plant and equipment
As at 1 January 2019
Opening net book value
AASB 16 opening adjustment
Acquisition of Liberty Oil Holdings
Additions
Disposals
Depreciation
Transfers*
As at 31 December 2019
Cost
Accumulated depreciation
Balance as above
Assets held for sale
Property, plant and equipment
Construction
in progress
$M
Freehold
land
$M
Freehold
buildings
$M
Leasehold
buildings
$M
Plant and
equipment
$M
Total
$M
272.1
112.9
155.3
-
-
160.8
(4.1)
-
(257.8)
171.0
171.0
-
171.0
-
171.0
-
5.1
-
(2.1)
-
-
-
0.4
-
(0.4)
(11.3)
5.7
115.9
149.7
115.9
-
115.9
(5.9)
110.0
211.8
(62.1)
149.7
(0.1)
149.6
52.0
(39.8)
-
-
-
-
(12.2)
-
-
-
-
-
-
879.0
1,471.3
-
16.3
1.3
(2.5)
(116.8)
260.9
(39.8)
21.8
162.1
(9.1)
(128.1)
(3.4)
1,038.2
1,474.8
1,478.6
(440.4)
1,977.3
(502.5)
1,038.2
1,474.8
(0.7)
(6.7)
1,037.5
1,468.1
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Notes to the consolidated financial statements continued
Long-term assets and liabilities continued
12. Property, plant and equipment continued
As at 1 January 2020
Opening net book value
Acquisition of Westside Petroleum
Additions
Disposals
Depreciation
Change of ARO discount rate
Transfers*
As at 31 December 2020
Cost
Accumulated depreciation
Balance as above
Assets held for sale
Property, plant and equipment
Construction
in progress
$M
Freehold
land
$M
Freehold
buildings
$M
Leasehold
buildings
$M
Plant and
equipment
$M
Total
$M
171.0
115.9
149.7
-
155.4
-
-
-
(209.9)
116.5
-
6.8
(7.4)
-
-
3.5
118.8
116.5
118.8
-
116.5
-
116.5
-
118.8
(2.7)
116.1
-
-
(1.5)
-
-
8.3
156.5
213.8
(57.3)
156.5
156.5
-
-
-
-
-
-
-
-
-
-
-
-
-
1,038.2
1,474.8
6.0
3.2
(8.2)
(140.2)
4.5
182.8
6.0
165.4
(17.1)
(140.2)
4.5
(15.3)
1,086.3
1,478.1
1,671.6
2,120.7
(585.3)
(642.6)
1,086.3
1,478.1
(0.2)
(2.9)
1,086.1
1,475.2
* Net transfers of $15.3 million in 2020 represents $4.5 million in software transferred out from construction in progress to intangibles and assets
under lease transferred to right-of-use assets.
Property, plant and equipment additions during the year includes $92.3 million in major maintenance spend undertaken at the
refinery (2019: $49.5 million).
All property, plant and equipment is stated at historical cost less depreciation, with the exception of construction in progress
and freehold land, which are not subject to depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Depreciation on assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual
values, over their estimated useful lives, as follows:
• Buildings
20 years
• Supply and refining infrastructure
20 to 30 years
• Plant and equipment
4 to 15 years
• Land
Not depreciated
Minimum operating stock – significant estimate
Minimum operating stock, which is the minimum level of inventories held in the entire supply chain and is necessary to operate
supply and refining as a going concern, is treated as part of property, plant and equipment. It is valued at cost.
Assets held for sale
The Group has a number of in use property, plant and equipment assets that are classified as held for sale from continuing
operations. These assets include retail, supply chain and aviation assets totalling $2.9 million (2019: $6.7 million) and meet
the AASB 5 Non-current Assets Held for Sale and Discontinued Operations classification requirements.
Refining assets
Globally suppressed oil prices and refinery margins, even prior to the outbreak of COVID-19, contributed to a challenging
environment for the refinery, and in light of these conditions the Group has undertaken a full impairment assessment of the
refinery’s $386 million fixed assets carrying value as at 31 December 2020.
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Key assumptions in the value-in-use calculation
Assumption
Cash flow
Approach used to determining values
Earnings before interest, tax, depreciation and amortisation, including Government support
and adjusted for working capital movement expectations and capital spend projections,
based on probability weighted forecast scenarios
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Long-term average growth rate
Post-tax discount rate
1%
8.2%
In testing for impairment, the recoverable amount of the refinery’s assets was determined based on a value in use calculation with
the key assumptions described below representing management’s expectations of future trends within the industry of which the
refinery operates, based on both external and internal data sources.
The cash flow projections used are based on probability weighted forecast scenarios covering a five-year period (2021 – 2025),
and a post-tax discount rate of 8.2%. The refinery’s cash flows beyond the five-year period are extrapolated using a 1% growth
rate. The critical estimates underpinning each of the scenarios used in the testing of the refinery’s carrying value are estimations
of intake, refining margins, foreign exchange rates, discount rates and the level of Government support expected on the back
of recent Government policy announcements.
Each of the scenario forecasts takes into account the impact of COVID-19, and reflect lower demand and a more subdued outlook
on margin than included in previous year’s forecasts. Intake forecasts take into account major maintenance schedules, with Crude
Distillation Unit 4 scheduled for 2022 and the Residue Catalytic Cracking Unit in the first half of 2025, and reflect efficiencies
expected to be achieved from prior period capital investment. Refining margin and foreign exchange forecasts have been sourced
from external parties for the early years of the forecast period1 and these align to forecasts included in the value in use calculation.
The scenarios include management’s best estimate of cash flows in the form of Government support in line with recent
announcements made in respect to Australia’s fuel security, with key assumptions relating to the tenure of the support, with
modelling including up to 10 years of support, and the payment mechanism, modelled to reflect a fixed one cent per litre of
production payment.
To ascertain the sensitivity of the recoverable amount to changes in key assumptions, management stress tested each assumption
individually. The results of these stress tests are shown in the table below:
Assumption
Intake (MBBLs)
Change in key assumption over the long term that would consume headroom
Reduce by 0.53 MBBL pa
Long-term refining margins (USD/bbl)
Reduce by 14.6 cents
The exchange rate (USD/AUD)
Increase by AUD 0.85 cents
Post-tax discount rate
Increase by 1.6%
Government support (cents per litre)
Reduce by 0.23 cents
Government support (tenure)
Reduction in tenure from 10 years to six years
Based on the forecasting and value in use methodology and the key assumptions described above, management considers
that the carrying value of the refinery’s property, plant and equipment is recoverable through the assets’ continued use; however,
recognises that a reasonably possible change in any individual key assumption over the longer term could result in the need to
record an impairment in a future period.
1. External forecasts cover a two year horizon
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Notes to the consolidated financial statements continued
Long-term assets and liabilities continued
13. Leases
This note provides information on the Group leases accounted for under AASB16 Leases.
(a) Amounts recognised on the consolidated statement of financial position
Right-of-use-assets
Retail sites
Supply and distribution sites
Corporate offices
Motor vehicles
Total right-of-use assets
2020
$M
2,111.9
173.6
35.6
0.4
2019
$M
2,086.6
202.2
38.5
0.8
2,321.5
2,328.1
Additions and transfers to the right-of-use assets during the year, including the acquired Westside Petroleum leases of $76.5 million
at acquisition date, were $209.6 million. These additions were offset by depreciation expense of $216.2 million.
Lease liabilities
Current
Non-current
Total lease liabilities
Finance lease receivable
Current
Non-current
Total finance lease receivable
2020
$M
135.9
2,398.4
2,534.3
2020
$M
1.1
7.3
8.4
2019
$M
128.0
2,320.3
2,448.3
2019
$M
-
-
-
The Group’s finance lease receivables were acquired as part of the Westside Petroleum acquisition. Note 29 Business combinations
provides further details of the acquisition. Finance lease receivables are disclosed within Trade and other receivables in the
consolidated statement of financial position.
(b) Amounts recognised on the consolidated statement of profit or loss
Depreciation charge of right-of-use assets
Retail sites
Supply and distribution sites
Corporate offices
Motor vehicles
Total depreciation charge for right-of-use assets
Interest expense (included within finance costs)
Expense relating to short-term leases, leases of low-value assets
and variable lease related payments not included in leases above
The total cash outflow for leases for the year amounted to $295.8 million (2019: $268.6 million).
2020
$M
2019
$M
181.1
31.8
2.8
0.5
216.2
163.3
32.5
2.9
0.4
199.1
171.0
162.5
11.8
19.4
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(c) The Group’s leasing activities and how they are accounted for
Group as a lessee
The Group leases various service station sites, office premises, vehicles, and storage and handling facilities. Rental contracts
are typically made for fixed periods of two to 15 years, but may have extension options as described below. Lease terms are
negotiated on an individual basis and contain a wide range of different terms and conditions.
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Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use
by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of amounts assessed to be included as lease payments under AASB16 Leases.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain
an asset of similar value in a similar economic environment with similar terms and conditions.
In line with accounting standard guidance, where leases have a fixed escalation rate, the fixed rate has been applied when
accounting for the lease payments. No rate has been applied to leases that increase at the rate of the Consumer Price Index (CPI)
or leases that have a variable escalation rate.
Right-of-use assets are measured at cost comprising the initial measurement of the lease liability and other components as
required under AASB16 Leases.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise computer equipment
and small office related items.
Various extension and termination options are included in a number of leases across the Group. The Group has determined that
the extension of the current Alliance with Coles Express to 2029 is an appropriate timeframe to base option renewals across the
lease portfolio. Beyond this timeframe there is significant flexibility in terms of managing lease contracts. For the purposes of the
requirements of AASB16 Leases, all lease extension periods that occur prior to February 2029 have been assumed to be exercised.
Group as a lessor
The Group has historically undertaken leasing activities as a lessor relating to Coles Express and Liberty service station sites and
pipeline assets under non-cancellable operating leases expiring within two to 16 years, with varying terms, escalation clauses and
renewal rights. On renewal, the terms of the leases are renegotiated.
In relation to the Group’s historical sublease and licensing arrangements, after consideration of the underlying contracts,
it has been determined that the inflows under these arrangements fall within the scope of AASB15 Revenue from contracts
with customers.
The acquisition of Westside Petroleum during the year has added to the Group a number of additional sublease arrangements.
The lease arrangements are a combination of both finance leases in accordance with AASB16 Leases and sublease arrangements
which fall within the scope AASB15 Revenue from contracts with customers. As at 31 December 2020, the acquired finance
leases have raised a current finance lease receivable of $1.1 million and a non-current finance lease receivable of $7.3 million,
which are included in the consolidated statement of financial position under trade an other receivables and long-term
receivables respectively.
Future minimum income expected to be received in relation to non-cancellable sublease and licence agreements not classified
as finance leases are as follows:
Within one year
After one year but not more than five years
More than five years
Total
2020
$M
174.4
597.5
600.1
2019
$M
147.8
527.0
659.2
1,372.0
1,334.0
The above amount of $1,372.0 million includes $37.7 million in future minimum sublease income expectations as a result of the
Westside Petroleum Pty Ltd acquisition.
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Notes to the consolidated financial statements continued
Long-term assets and liabilities continued
14. Long-term receivables
Receivables
Loans to equity-accounted investees
Lease receivables (Note 13)
Total non-current receivables
15. Long-term payables
Coles Express long-term payable
Other long-term payables
Total non-current payables
2020
$M
9.3
17.0
7.3
33.6
2020
$M
94.3
-
94.3
2019
$M
6.4
32.0
-
38.4
2019
$M
91.9
1.3
93.2
The Coles Express long-term payable represents the present value recognition of a payment due in the future to Coles Express
in relation to the transfer of inventory at the time of the Alliance agreement amendments that took effect 1 March 2019.
16. Goodwill and other intangible assets
Net book value
As at 1 January 2019
Acquisition of Liberty Wholesale
Additions
Transfers
Amortisation for the year
As at 31 December 2019
Cost
Accumulated amortisation
As at 31 December 2019
Goodwill
$M
Software
$M
Customer
contracts
$M
223.1
97.5
-
-
-
320.6
320.6
-
320.6
49.5
-
-
3.4
(4.8)
48.1
54.3
(6.2)
48.1
20.0
12.1
0.1
-
(4.7)
27.5
50.1
(22.6)
27.5
Joint
venture
rights
$M
139.9
-
-
-
(7.6)
132.3
152.1
(19.8)
132.3
Other
$M
-
2.9
137.0
-
(11.4)
128.5
139.9
(11.4)
128.5
Total
$M
432.5
112.5
137.1
3.4
(28.5)
657.0
717.0
(60.0)
657.0
As at 1 January 2020
320.6
48.1
27.5
132.3
128.5
657.0
Acquisition of Westside Petroleum
(Note 29)
Additions
Transfers
Adjustment on finalisation of Liberty
business combination
Amortisation for the year
As at 31 December 2020
Cost
Accumulated amortisation
As at 31 December 2020
19.2
-
-
(2.8)
-
337.0
337.0
-
337.0
0.1
1.1
4.5
-
(5.9)
47.9
60.0
(12.1)
47.9
-
-
-
-
(4.9)
22.6
50.0
(27.4)
22.6
-
-
-
-
(7.6)
124.7
152.1
(27.4)
124.7
-
-
-
-
(14.0)
114.5
139.9
(25.4)
114.5
19.3
1.1
4.5
(2.8)
(32.4)
646.7
739.0
(92.3)
646.7
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(a) Goodwill
Goodwill arises when the fair value of the consideration paid for a business acquisition exceeds the fair value of the identifiable
assets and liabilities acquired. Where consideration is less than the fair value of acquired net assets, the difference is recognised
immediately in the consolidated statement of profit and loss. Goodwill is not amortised and is measured at cost less any impairment
losses. In accordance with Australian accounting standard requirements, goodwill is allocated to a Cash-Generating Unit (CGU)
and is tested annually for impairment. In respect of equity accounted investees, the carrying amount of goodwill is included in
the carrying amount of the investment in the associate. A CGU level summary of the goodwill allocation is presented below.
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Marketing and Supply
Refining
Total goodwill recognised
2020
$M
337.0
-
337.0
2019
$M
320.6
-
320.6
Goodwill represents other intangible assets that did not meet the criteria for recognition as separately identifiable assets.
Goodwill allocated to the Marketing and Supply CGU relates to the acquisition of Shell Aviation in 2017 and Liberty Oil Holdings
Pty Ltd in 2019, and the current year addition of $19.2 million as a result of the acquisition of Westside Petroleum (refer to Note 29
Business combinations).
Goodwill is tested for impairment annually based on a value-in-use calculation. The calculation uses pre-tax cash flow projections
based on financial budgets approved by management with growth rates consistent with industry expectations.
Key assumptions in the value-in-use calculation
Assumption
Cash flow
Approach used to determining values
Earnings before interest, tax, depreciation and amortisation adjusted for working
capital movement expectations and capital spend projections
Estimated long-term average growth rate
Post-tax discount rate
2.5%
5.7%
The above key assumption values used in the goodwill assessment represent management’s expectations of future trends within
the industry of which the Marketing and Supply CGU operates, based on both external and internal data sources. The Group has
considered and assessed reasonably possible changes in the key assumptions used and has not identified any instances that could
cause the carrying amount of the Marketing and Supply CGU to exceed its recoverable amount.
There were no goodwill impairment losses recognised during the year ended 31 December 2020 (2019: nil).
(b) Other intangibles
The Group capitalises amounts paid for the acquisition of identifiable intangible assets, such as software, customer contracts and
joint venture rights, where it is considered that they will provide benefit in future periods through revenue generation or reductions
in costs. These assets, classified as finite life intangible assets, are carried in the consolidated statement of financial position at the
fair value of consideration paid less accumulated amortisation and impairment losses.
Intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives. Amortisation for the period is
included within the depreciation and amortisation expenses in the statement of profit and loss. The estimated useful lives in the
current and comparative periods are reflected by the following amortisation periods:
• Software
5 to 12 years
• Customer contracts
6 to 10 years
• Joint venture rights
20 years
(i) Software
Software primarily relates to the Group’s enterprise platform, Oracle JDE, which was implemented in 2018. The Group estimates
the useful life of the software to be at least 12 years based on the expected technical obsolescence of such asset. This useful life
profile aligns with the written commitment to provide premier support of the platform, underpinning the asset integrity of the
system until at least December 2030, not including extended support option periods generally available. The actual useful life may
be shorter or longer than 12 years, depending on technical innovations.
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Notes to the consolidated financial statements continued
Long-term assets and liabilities continued
16. Goodwill and other intangible assets continued
(b) Other intangibles continued
(ii) Customer contracts and joint venture rights
The customer contracts and joint venture rights were acquired as part of a business combination, namely, the Shell acquisition in
2014, the Shell Aviation acquisition in 2017 and the Liberty Oil Holdings Pty Limited acquisition in 2019. These intangible assets
were recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line basis based on the
timing of projected cash flows of the contracts over their estimated useful lives.
(iii) Other
On 27 February 2019, the Company announced the extension of the Alliance agreement with Coles Express through to 2029 under
revised terms to create greater alignment between both parties and position the agreement for future growth. Under the revised
terms, the Group paid Coles Express a one-off payment of $137.0 million to assume responsibility from 1 March 2019 for the
provision of the fuel offering, including retail fuel pricing and marketing across the Alliance network. The Group has assessed the
accounting treatment of this transaction under the reacquired rights guidance of the Australian Accounting Standards, and this
has been recognised as an intangible asset to be amortised over the remaining life of the Alliance agreement.
17. Provisions
At 1 January 2020
Additions/(write-back)
Provisions acquired
Utilised
Unwinding
Change of discount
At 31 December 2020
Current
Non-current
At 1 January 2019
Additions/(write-back)
Provisions acquired
Utilised
Unwinding
Change of discount
At 31 December 2019
Current
Non-current
Employee
benefits
$M
Restructuring
provision
$M
Asset
retirement
obligation
$M
Environmental
remediation
$M
73.8
28.6
0.3
(31.2)
1.2
-
72.7
70.5
2.2
0.9
2.0
0.2
(2.3)
-
-
0.8
0.8
-
94.4
0.6
0.2
(1.9)
1.9
4.5
99.7
7.3
92.4
40.1
6.1
-
(6.9)
0.5
0.3
40.1
33.3
6.8
Employee
benefits
$M
Restructuring
provision
$M
Asset
retirement
obligation
$M
Environmental
remediation
$M
73.4
30.7
3.8
(35.8)
1.7
-
73.8
71.9
1.9
2.5
3.5
-
(5.1)
-
-
0.9
0.9
-
90.7
(9.5)
8.7
(1.4)
5.9
-
94.4
9.1
85.3
41.0
7.5
-
(9.9)
1.5
-
40.1
34.1
6.0
Other
$M
14.3
-
0.1
(1.7)
-
-
Total
$M
223.5
37.3
0.8
(44.0)
3.6
4.8
12.7
226.0
10.1
2.6
122.0
104.0
Other
$M
89.7
(69.7)
-
(5.6)
(0.1)
-
14.3
11.8
2.5
Total
$M
297.3
(37.5)
12.5
(57.8)
9.0
-
223.5
127.8
95.7
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation. Provisions are discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as
a finance cost.
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(a) Employee benefits
Liabilities for wages and salaries, including annual leave and long service leave expected to be settled within 12 months of the
end of the year, are measured at the amounts expected to be paid. These obligations are presented as current liabilities in the
consolidated statement of financial position.
Liabilities for long service leave and annual leave that are not expected to be settled within 12 months of the end of the year are
measured at present value. In determining present value, consideration is given to the expected future wage and salary levels,
expectations of employee departures and periods of service. Expected future payments are adjusted for future wage and inflation
movement expectations, and discounted using market yields of corporate bonds. As required by accounting standards, these
obligations are presented as current liabilities in the consolidated statement of financial position if the Group does not have an
unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement
is expected to occur. However, based on past experience, the Group does not expect the full $71.9 million current employee
benefits liability to be taken or paid out within the next 12 months. The following amounts reflect current leave obligations that
are not expected to be taken or paid in the next 12 months.
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Current employee benefits liability expected to settle after 12 months
2020
$M
51.5
2019
$M
49.9
(b) Asset retirement obligation – significant estimate
The present value of costs for the future dismantling and removal of assets, and restoration of the site on which the assets are
located, is capitalised and depreciated over the useful life of the asset. Subsequent accretion to the amount of a provision due
to unwinding of discounting is recognised as a finance cost.
The costs for the future dismantling and removal of assets is based upon management’s best estimate using actual costs incurred
in similar past projects inflated to the estimated end of useful life date and discounted using an appropriate discount rate.
The Group has recognised a provision associated with plant and equipment including tanks at retail service station sites and fuel
storage terminals. In determining the provision, assumptions and estimates are made in relation to discount rates, the expected
cost to dismantle and remove the assets from the site and the expected timing of those costs. The carrying amount of the provision
as at 31 December 2020 was $99.7 million (2019: $94.4 million). The Group estimates that the costs would be incurred upon lease
expiry and subsequent exit of the relevant site.
As disclosed in Note 13 Leases, the Group’s rental contracts are typically for two to 15 years, but may have extension options.
(c) Environmental provision – significant estimate
Provisions for environmental remediation resulting from ongoing or past operations or events are recognised in the period in which
an obligation, legal or constructive, to a third party arises and the amount can be reasonably measured. Measurement of liabilities
is based on current legal requirements and existing technology.
Where environmental impact studies have been completed, the result of this is used to estimate cost. In other cases, estimates are
based on management experience of remediation at similar sites. The environmental remediation work provided for is expected
to be undertaken within the next three years.
(d) Other provisions
Other provisions include costs associated with the removal of contents and cleaning of tanks in preparation for demolition, and
provisions against legal claims. In 2019, the movement through other provisions included an adjustment of $66.4 million relating
to the adoption of AASB 16 Leases.
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Notes to the consolidated financial statements continued
Long-term assets and liabilities continued
18. Commitments and contingencies
(a) Capital commitments
At 31 December 2020, the Group had capital expenditure contracted at the reporting date but not recognised as liabilities
related to property, plant and equipment totalling $25.0 million (2019: $44.0 million). There are no capital commitments from
associate companies at the end of the period, therefore the included amount from associates in the Group’s overall amount
is nil (2019: $13.9 million).
(b) Guarantees
As at 31 December 2020, guarantees amounting to $48.2 million (2019: $55.7 million) have been given in respect of the Group’s
share of workers compensation, surety for major contracts and other matters including government works.
Under the terms of the Deed of Cross Guarantee entered in accordance with ASIC Instrument 2016/785, each Australian Group
entity guarantees to each creditor payment in full of any debt in accordance with the Deed. Parties to the deed are identified
in Note 32 Deed of cross guarantee. No liabilities have been recognised in the consolidated statement of financial position in
respect of financial guarantee contracts.
(c) Contingencies and other disclosures
Stamp duty – Viva Energy REIT
On 24 September 2018, Viva Energy REIT (now called Waypoint REIT) received an assessment from the Victorian State Revenue
Office (‘SRO’) for $31.2 million. The assessment relates to the transfer of properties prior to the completion of the Viva Energy REIT
IPO in August 2016. Pursuant to the arrangements between Viva Energy REIT and the Group at the time, which were disclosed in
the Prospectus, any such costs are payable by the Group.
The Group lodged an objection to the assessment on 2 November 2018 considering that there was a strong prospect of having the
assessment set aside. The SRO advised in a letter dated 22 November 2018 that it will not take recovery action while the objection
and any appeal process are continuing.
On 12 May 2020 the Group received a determination from the SRO disallowing the objection. It was concluded that there was no
new analysis raised in the determination that altered the position previously taken by the Group and, as a result, the Group advised
the SRO that it was appealing the matter. The SRO referred the matter to the Supreme Court on 30 July 2020 and a directions
hearing will be held by the Court on 19 March 2021, which will direct next steps in resolution of the matter.
Under an agreement with the SRO pending resolution of the matter, $7.5 million (representing approximately 25% of the duty
assessed) was paid to the SRO on 27 November 2020. In line with the view that there is a strong prospect of having the assessment
set aside, the $7.5 million is recognised as a prepayment.
Management continues to consider it not probable that the Group has a present obligation in relation to the assessment as at
31 December 2020, and as a result has not recorded a provision in the statement of financial position. As at 31 December 2020,
the Group has contingent liabilities of $50.6 million (2019: $40.5 million), which includes the above stamp duty amount of
$31.2 million.
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Capital funding and financial risk management
For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves. The primary
objective of the Group’s capital management is to maximise the shareholder value.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements
of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders,
return capital to shareholders or issue new shares.
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Under the
terms of the major borrowing facilities, the Group is required to comply with the following financial covenants:
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• the interest cover ratio must not be less than 3.0x;
• the liquidity ratio must not exceed 0.60; and
• the leverage ratio must not be more than 2.0x.
Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been
no breaches of the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2020
and 2019.
19. Financial assets and liabilities
This table provides a summary of the Group’s financial instruments, how they are classified and measured, and reference to relevant
disclosure notes within the financial statements.
The Group holds the following financial instruments at the end of the reporting period:
Notes
2020
$M
2019
$M
Financial assets
Financial assets held at amortised cost
Trade and other receivables
Long-term receivables
Cash and cash equivalents
Financial assets at fair value through profit and loss
Derivative assets
Financial liabilities
Financial liabilities held at amortised cost
Trade and other payables
Short-term borrowings
Long-term borrowings
Lease liabilities
Long-term payables
Financial liabilities at fair value through profit and loss
Derivative liabilities
794.1
33.6
49.1
1,247.8
38.4
127.2
-
0.2
876.8
1,413.6
1,329.6
2,165.5
-
153.3
94.3
7.7
256.9
2,448.3
93.2
8
14
6
20
10
11
21
15
20
13, 22
2,534.3
19.4
19.0
4,130.9
4,990.6
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Notes to the consolidated financial statements continued
Capital funding and financial risk management continued
19. Financial assets and liabilities continued
Financial assets
(a) Initial recognition and subsequent measurement
The Group classifies its financial assets in the following measurement categories:
• those to be measured at amortised cost; and
• those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss).
The classification of financial assets at initial recognition depends on the financial assets’ contractual cash flow characteristics
and business model the Group uses to manage them. At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in
the consolidated statement of profit or loss.
In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income
(OCI), it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Subsequent measurement of financial assets depends on the Group’s business model for managing the asset and its associated
cash flow characteristics. The Group’s three measurement categories are as follows:
(i) Amortised cost
This category is the most relevant to the Group. Financial assets are measured at amortised cost if the asset is held within a
business model to collect contractual cash flows where those cash flows represent solely payments of principal and interest.
Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets
at amortised cost include trade and other receivables, long-term receivables and cash and cash equivalents.
(ii) Fair value through other comprehensive income (FVOCI)
The Group measures financial assets at FVOCI if the financial asset is held within a business model to collect contractual cash
flows and for selling the financial assets, where those cash flows represent solely payments of principal and interest. Movements
in the carrying amount are taken through OCI, except for the recognition of impairment gains and losses, interest income and
foreign exchange gains and losses, which are recognised in the consolidated statement of profit or loss. Upon derecognition, the
cumulative fair value change recognised in OCI is recycled to profit or loss. The Group currently holds no financial assets measured
at FVOCI.
(iii) Fair value through profit and loss (FVPL)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL and include financial assets held for trading,
financial assets designated upon initial recognition at FVPL, or financial assets required to be measured at fair value. Financial
assets at FVPL are carried in the statement of financial position at fair value with net changes in fair value recognised in the
statement of profit or loss. During the year, derivative assets were the only assets measured at FVPL.
(b) Derecognition
A financial asset is derecognised from the Group’s consolidated statement of financial position when the rights to receive cash
flows from the asset have expired, or the Group has transferred its rights to receive cash flows from the asset and has transferred
substantially all the risks and rewards of the asset and/or control of the asset.
(c) Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised
cost and FVOCI. The impairment methodology applied depends on the determined risk profile of each financial asset and the
future expected credit risks relating to the identified asset. For trade receivables, the Group applies a simplified approach to
calculating expected credit losses as permitted by AASB 9 Financial instruments, recognising a loss allowance based on lifetime
expected credit losses at each reporting date. The Group has established a provision matrix that is based on historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic environment. See Note 8 Trade and
other receivables for further details.
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Financial liabilities
(a) Initial recognition and subsequent measurement
Financial liabilities are classified, at initial recognition, as financial liabilities measured at amortised cost (which for the Group
are Trade and other payables, long-term payables, lease liabilities and borrowings) or as financial liabilities at FVPL. All financial
liabilities are recognised initially at fair value and, in the case of payables and borrowings, net of directly attributable transaction
costs. The subsequent measurement of financial liabilities depends on their classification, as described below:
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(i) Amortised cost
This is the category most relevant to the Group and includes trade and other payables, lease liabilities, borrowings and long-
term payables. Trade payables and amounts due to related parties are non-interest-bearing and are normally settled in 30 to
60 days. Amounts due to related parties are primarily for purchases of hydrocarbon. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months after the end of the reporting period. They are recognised initially
at fair value and subsequently measured at amortised cost using the effective interest method. Due to their short-term nature,
the carrying amounts of trade and other payables are considered to be the same as their fair values. Trade and other payables,
lease liabilities, borrowings and long-term payables are initially recognised at fair value net of transaction costs incurred, and
subsequently measured at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption
amount is recognised in the statement of profit or loss over the period of the liabilities using the effective interest method.
(ii) Fair value through profit and loss (FVPL)
Derivatives are the Group’s only financial liabilities that are measured at FVPL. They are classified as held for trading and are
entered into by the Group to mitigate exposure to the effects of changes in foreign exchange and commodity price movements.
Changes in fair value of any derivative liabilities are recognised immediately in realised/unrealised (loss)/gain on derivatives in
the consolidated statement of profit or loss.
(b) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
20. Derivative assets and liabilities
Derivatives are classified as held for trading and accounted for at fair value through profit or loss. The Group has the following
derivative financial instruments at the end of the reporting period:
Derivative assets
Derivative liabilities
2020
$M
-
(19.4)
2019
$M
0.2
(19.0)
The Group has determined the fair value, which is classified as Level 2 in the fair value hierarchy, using the present value of
estimated future settlements based on market quoted information.
Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss category are presented
in the consolidated statement of profit or loss within other income or other expenses in the period in which they arise. Interest
income from these financial assets are recognised in the consolidated statement of profit or loss.
21. Long-term borrowings
Long-term bank loans
Net capitalised borrowing costs on long-term bank loans
Total non-current borrowings
2020
$M
155.0
(1.7)
153.3
2019
$M
260.0
(3.1)
256.9
The Group currently has a US$700 million syndicated revolving credit facility, expiring on 28 March 2022 with a one-year extension
option. The facility is unsecured with terms and conditions consistent with the previous period.
At the end of the reporting period, the Group had access to the unsecured facility limit amounting to $908.9 million (2019:
$999.1 million unsecured) that was in place primarily for working capital purposes. The amount drawn at 31 December 2020 is
$155.0 million (2019: $260.0 million). The weighted average interest rate on long-term bank loans in 2020 was 1.47% (2019: 2.29%).
This borrowing facility is subject to covenant arrangements disclosed under Capital funding and financial risk management on page 133.
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Notes to the consolidated financial statements continued
Capital funding and financial risk management continued
22. Consolidated net debt
Net debt
Cash and cash equivalents
Borrowings – repayable within one year
Borrowings – repayable after one year
Net debt excluding lease liabilities
Lease liabilities – repayable within one year
Lease liabilities – repayable after one year
Net debt including lease liabilities
2020
$M
49.1
-
(153.3)
(104.2)
(135.9)
2019
$M
127.2
(7.7)
(256.9)
(137.4)
(128.0)
(2,398.4)
(2,638.5)
(2,320.3)
(2,585.7)
Analysis of changes in
consolidated net debt
Net debt as at 1 January 2019
Recognised on adoption of
AASB16 Leases (see Note 13)
Cash flows
Other non-cash movements
Net debt as at 31 December 2019
Balances acquired on acquisition
(see Note 29)
Cash flows
Other non-cash movements
Net debt as at 31 December 2020
Other assets
Liabilities from financing activities
Cash/
overdrafts
$M
Leases
due within
1 year
$M
Leases
due after
1 year
$M
Borrowings
due within
1 year
$M
Borrowings
due after
1 year
$M
108.6
-
18.6
-
127.2
(1.0)
(77.1)
49.1
(7.2)
(43.6)
(105.8)
106.2
(121.2)
(128.0)
(2,278.9)
-
2.2
(2,320.3)
(3.7)
124.8
(129.0)
(135.9)
(81.6)
-
3.5
(2,398.4)
-
-
(7.7)
-
(7.7)
(2.2)
9.9
-
-
Total
$M
(50.6)
(108.4)
-
(2,384.7)
(147.1)
(1.4)
(30.0)
(120.4)
(256.9)
(2,585.7)
-
105.0
(1.4)
(88.5)
162.6
(126.9)
(153.3)
(2,638.5)
23. Contributed equity and reserves
(a) Contributed equity
Ordinary shares are classified as equity. These shares entitle the holder to participate in dividends, and to share in the proceeds
of winding up the Group in proportion to the number of, and amounts paid, on the shares held.
Issued and paid up capital
Cost per share
Movements in ordinary share capital
At 1 January 2019
At 31 December 2019
At 1 January 2020
Buy back of shares, net of tax
Capital return to shareholders
Share consolidation
At 31 December 2020
136
2020
$M
4,373.9
$2.720
Shares
1,944,535,168
1,944,535,168
1,944,535,168
(27,397,847)
-
(309,498,674)
2019
$M
4,861.3
$2.500
$M
4,861.3
4,861.3
4,861.3
(72.3)
(415.1)
-
1,607,638,647
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Share buy-back
During the period the Company purchased, and subsequently cancelled, 27,397,847 ordinary shares on market as part of the
Company’s buy-back program announced in February 2020. The cancellation of the shares has been treated as a reduction in share
capital ($72.3 million as per above table), with the difference between the par value of the purchased shares and the buy-back price
being recorded against the Company’s capital redemption reserve ($22.0 million). The total value of the share buy-back during the
period was $50.3 million.
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Share consolidation
Following the divestment of the investment in Waypoint REIT on 21 February 2020, the Group’s capital management initiatives
included a capital return to shareholders of $415.1 million and a special dividend of $114.9 million. A share consolidation was
then undertaken commensurate with the overall return to shareholders, reducing the number of ordinary shares by 309,498,674.
(b) Treasury shares
Treasury shares are shares in Viva Energy Group Limited that are held by the Viva Energy Employee Share Plan Trust for the
purpose of issuing shares under various share-based incentives plans. Shares issued to employees are recognised on the
first-in-first-out basis.
Movements in treasury shares
At 1 January 2019
Acquisition of treasury shares (average price: $2.23 per share)
Transfer of shares to employees – options exercised
Transfer of shares to employees – employee share plan
At 31 December 2019
At 1 January 2020
Acquisition of treasury shares (average price: $1.43 per share)
Transfer of shares to employees – options exercised
Transfer of shares to employees – employee share plan
Capital return to shareholders
Share consolidation
At 31 December 2020
Shares
35,694
15,142,432
(7,882,734)
(13,861)
7,281,531
7,281,531
6,545,012
(7,113,691)
(1,013,192)
-
(792,000)
4,907,660
$M
0.1
34.1
(20.0)
-
14.2
14.2
9.3
(14.2)
(1.5)
(1.0)
-
6.8
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Notes to the consolidated financial statements continued
Capital funding and financial risk management continued
23. Contributed equity and reserves continued
(c) Reserves
The following table shows a breakdown of the reserve balances and the movements in these reserves during the year.
Post-
employment
benefits
reserve
$M
Share-based
payment
reserve
$M
At 1 January 2019
Share-based payment expenses
Contributions from employees
Issue of shares to employees
Movement in IPO reserve
Remeasurement of retirement
benefit obligations
Unrealised (losses)/gains on cash flow
hedges recognised by Viva Energy REIT
At 31 December 2019
Share-based payment expenses,
net of tax
Contributions from employees
Issue of shares to employees
Movement in IPO reserve
Remeasurement of retirement
benefit obligations
Other comprehensive income
recycled on sale of investment
Share buy-back
Capital return
7.3
-
-
-
-
(1.7)
-
5.6
-
-
-
-
(2.4)
-
-
-
IPO
reserve
$M
(4,235.2)
-
-
-
(3.5)
-
-
3.1
2.3
7.5
(20.0)
-
-
-
(7.1)
(4,238.7)
11.0
6.5
(14.2)
-
-
-
-
-
-
-
-
1.0
-
-
-
-
Cash flow
hedge
reserve
$M
Capital
Redemption
Reserve
$M
(1.6)
-
-
-
-
-
(4.7)
(6.3)
-
-
-
-
-
6.3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22.0
(0.3)
21.7
Total
$M
(4,226.4)
2.3
7.5
(20.0)
(3.5)
(1.7)
(4.7)
(4,246.5)
-
11.0
6.5
(14.2)
1.0
(2.4)
6.3
22.0
(0.3)
(4,216.6)
At 31 December 2020
3.2
(3.8)
(4,237.7)
Capital Redemption Reserve
Shares purchased under the buy-back program result in a reduction in equity, with the impact to the Capital Redemption Reserve
being the difference between the total amounts paid to buy back each share and the initial cost per share of $2.50. In line with
accounting standard requirements, the costs associated with the share buy-back program, such as broker commission and legal
fees, are also captured in the Capital redemption reserve.
24. Dividends declared and paid
Dividends determined and paid during the year
Fully franked dividend relating to the prior period
Interim fully franked dividend
Special dividend
Dividends determined and paid during the year
2020
$M
50.6
15.5
114.9
181.0
2019
$M
93.3
40.9
-
134.2
The Company paid a dividend of $50.6 million – 2.6 cents per share to shareholders on 15 April 2020 (2019 $93.3 million – 4.8 cents
per share). This fully franked dividend was in relation to the six month period ended 31 December 2019.
In addition, the Company paid an interim dividend of $15.5 million – 0.8 cents per fully paid ordinary share (2019 –2.1 cents).
This fully franked dividend was in relation to the six month period ended 30 June 2020.
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On 13 October 2020, the Company returned $530.0 million to shareholders at $0.2740 per share. The return comprised a capital
return of $415.1 million, at $0.2146 per share, and an unfranked special dividend of $114.9 million, at $0.0594 per share, as
determined by the Board.
Included in the $181.0 million of dividends determined and paid during the year was $0.5 million in dividends relating to treasury
shares on hand during the year. The net impact of the total dividends on retained earnings amounted to $180.5 million.
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No final dividend will be paid in relation to the year ended 31 December 2020.
Dividend franking account
The balance of the franking account of the Australian consolidated tax group, headed by Viva Energy Group Limited, is $0.9 million
at 31 December 2020 (2019: $44.8 million) based on a tax rate of 30%.
25. Fair value of financial assets and liabilities
The Group’s accounting policies and disclosures may require the measurement of fair values for both financial and non-financial
assets and liabilities. The Group has an established framework for fair value measurement. When measuring the fair value of an
asset or a liability, the Group uses market observable data where available.
Fair values are categorised into different levels in a fair value hierarchy based on the following valuation techniques:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input
that is significant to the entire measurement.
(a) Fair value measurement hierarchy for the Group
31 December 2020
Derivative assets
Derivative liabilities
Total at 31 December 2020
31 December 2019
Derivative assets
Derivative liabilities
Total at 31 December 2019
Quoted in active
markets (Level 1)
$M
Significant
observable
inputs (Level 2)
$M
Significant
unobservable
inputs (Level 3)
$M
-
-
-
-
-
-
-
(19.4)
(19.4)
0.2
(19.0)
(18.8)
-
-
-
-
-
-
There were no transfers between levels during the 2020 and 2019 years.
(b) Estimation of fair values
Derivative assets and liabilities
The Group enters into derivative financial instruments with financial institutions with investment grade credit ratings. Foreign
exchange forward contracts and commodity forward contracts are valued using valuation techniques, which employ the use of
market observable inputs. As at 31 December 2020, the marked-to-market value of derivative asset positions is net of a credit
valuation adjustment attributable to derivative counterparty default risk.
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Notes to the consolidated financial statements continued
Capital funding and financial risk management continued
26. Financial risk management
The Group’s principal financial liabilities, other than derivatives, comprise current and non-current borrowings and trade and other
payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets
include loans, trade and other receivables, and cash and cash equivalents that were derived directly from its operations. The Group
also holds financial assets and enters into derivative transactions.
Exposure to foreign currency risk, interest rate risk, liquidity risk, commodity price risk and credit risk arises in the normal course of
the Group’s business. The Group’s overall financial risk management strategy is to seek to ensure that the Group is able to fund its
corporate objectives and meet its obligations to stakeholders. Derivative financial instruments may be used to hedge exposure to
fluctuations, especially movements in foreign exchange rates.
Financial risk management is carried out by Group Treasury, while risk management activities in respect to customer credit risk are
carried out by the Finance and Credit teams. The Group Treasury, Finance and Credit teams operate under policies approved by
the Board. The teams identify, evaluate and monitor the financial risks in close co-operation with the Group’s operating units.
(a) Foreign exchange risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Group is exposed to movements in foreign exchange rates in the normal course of its business primarily due
to the fact that it purchases product and crude in United States Dollars (‘USD’) and sells in Australian Dollars (‘AUD’). Any specific
foreign exchange exposure that relates to borrowings is managed separately and subject to separate Board approvals.
The objective of the Group’s foreign exchange program is to minimise the effect of a fluctuation in foreign exchange rates on
Group earnings and its cash flows. Transactions which could be regarded as speculative are not permitted. The program of foreign
exchange risk management identifies, measures, takes actions to mitigate this risk, and reports the performance of the program
in a controlled and non-speculative manner. The focus is on cash flow exposures rather than just profit and loss.
The Group manages foreign currency risk by using foreign currency forward contracts to offset foreign exchange exposures.
At 31 December 2020 and 2019, the Group hedged 100% of its net USD payables and this is actively managed on a daily basis
through a hedge program. As at 31 December 2020, the total fair value of all outstanding foreign currency exchange forwards
amounted to a $19.4 million net liability (2019: $18.8 million net liability).
The Group’s exposure to foreign exchange rates for classes of financial assets and liabilities, including sensitivities to pre-tax profit
of the Group, if the AUD strengthened/weakened by 10% against the USD with all other variables held constant, is set out below.
The foreign exchange program outlined is undertaken to mitigate this risk.
USD denominated trade receivables (in AUD)
USD denominated trade payables (in AUD)
Net exposure
Effect in pre-tax profit
AUD strengthens against USD by 10%
AUD weakens against USD by 10%
2020
$M
122.3
2019
$M
138.6
(1,070.5)
(1,661.6)
(948.2)
(1,523.0)
94.8
(94.8)
152.3
(152.3)
The Group has minimal exposure to other currencies (Euro, British Pound, Singapore Dollar and Papua New Guinea kina), with total
payable balances denominated in other currencies of $0.8 million at 31 December 2020 (2019: $0.7 million).
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(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s
syndicated bank loan with floating interest rates.
The Group’s exposure to interest rate risk for classes of financial assets and liabilities, including sensitivities to pre-tax profit of the
Group, if interest rates had changed by -/+1% from the year end rates, with all other variables held constant, is set out as follows:
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Financial assets
Cash and cash equivalents
Loan to related party
Total financial assets
Financial liabilities
Short-term bank loans
Long-term bank loans
Total financial liabilities
Net exposure
Interest rates increase by 1%
Interest rates decrease by 1%
2020
$M
49.1
30.7
79.8
-
153.3
153.3
(73.5)
(0.7)
0.7
2019
$M
127.2
38.9
166.1
7.7
256.9
264.6
(98.5)
(1.0)
1.0
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Due to the dynamic nature
of the underlying business, the liquidity risk policy requires maintaining sufficient cash and an adequate amount of committed
credit facilities to be held above the forecast requirements of the business.
The Group manages liquidity risk centrally by monitoring cash flow forecasts, maintaining adequate cash on hand and debt
facilities. The debt portfolio is periodically reviewed to ensure there is funding flexibility across an appropriate maturity profile.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
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Notes to the consolidated financial statements continued
Capital funding and financial risk management continued
26. Financial risk management continued
(c) Liquidity risk continued
31 December 2020
Trade and other payables
Short-term bank loans
Long-term payables
Long-term bank loans
Derivative liabilities
Lease liabilities
Total at 31 December 2020
31 December 2019
Trade and other payables
Short-term bank loans
Long-term payables
Long-term bank loans
Derivative liabilities
Lease liabilities
Total at 31 December 2019
More than
1 year but
no more
than 5 years
$M
More than
5 years
$M
-
-
-
155.0
-
1,230.0
1,385.0
-
-
1.4
260.0
-
1,136.5
1,397.9
-
-
114.2
-
-
2,327.7
2,441.9
-
-
114.2
-
-
2,403.2
2,517.4
No more
than 1 year
$M
1,329.6
-
-
-
19.4
302.9
1,651.9
2,165.5
7.7
-
-
19.0
284.2
2,476.4
Total
$M
1,329.6
-
114.2
155.0
19.4
3,860.6
5,478.8
2,165.5
7.7
115.6
260.0
19.0
3,823.9
6,391.7
The financial liabilities due within the next 12 month period amount to $1,651.9 million (2019: $2,476.4 million). The Group has
current assets of $1,593.5 million (2019: $2,629.6 million) and a net current liability position of $13.4 million (2019: $181.6 million net
current asset position). The Group has access to undrawn credit facilities of $753.9 million, in place primarily for working capital
purposes, and is in a position to meet its financial liability obligations as and when they fall due.
(d) Commodity price risk
The Group is exposed to the effect of changes in commodity price (i.e. oil and refined product prices) in its normal course
of business.
The objective of the Group’s commodity price strategy is to reduce earnings volatility as a result of movements in oil and refined
product prices. The Group achieves this by:
• monitoring hydrocarbon volumes priced in and out on a monthly basis and hedging up to 100% of the net exposure; and
• monitoring expected refining margins and hedging constituent components to protect refining income, hedging up to 100%
of net refinery exposure.
The Group manages commodity price exposure through the purchase or sale of swap contracts up to 36 months forward.
No commodity price hedges were outstanding at 31 December 2020 and 2019.
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Commodity price sensitivity analysis
The Group’s exposure to commodity prices risk including sensitivities to pre-tax profit if commodity prices had changed by -/+10%
from the year end prices, with all other variables held constant, is set out as follows:
Commodity prices decrease by 10%
Commodity prices increase by 10%
2020
$M
3.7
(3.4)
2019
$M
4.5
(4.1)
(e) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to
a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing
activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk
The Group manages credit risk and the losses which could arise from default by ensuring that parties to contractual arrangements
are of an appropriate credit rating, or do not show a history of defaults.
The Group applies the AASB 9 Financial instruments simplified approach to measuring trade receivable expected credit losses,
which uses a lifetime expected loss allowance for expected credit losses for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss
rates are based on the payment profiles of sales over past periods using historical data and also using forward-looking projections
of customer payment expectations. Trade receivables are often insured for events of non-payment, through third party insurance,
which has also been factored into the expected loss rate calculations. Generally, trade receivables are written off if past due for
more than one year and are not subject to enforcement activity.
The aging profile of the receivable balance and expected credit loss rates are detailed in Note 8 Trade and other receivables.
Financial institution credit risk
Financial assets such as cash at bank and forward contracts are held with high credit quality financial institutions.
Maximum exposure to credit risk
The Group’s maximum credit risk exposure at balance date in relation to each class of recognised financial assets, other than
equity and derivative financial instruments, is the carrying amount of those assets as indicated in the consolidated statement
of financial position.
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Notes to the consolidated financial statements continued
Taxation
27. Income tax and deferred tax
(a) Reconciliation of income tax expense at Australian standard tax rate to actual income tax expense
Accounting (loss)/profit before income tax expense
Tax at the Australian tax rate of 30%
Non-deductible transaction costs
Research and development expenditure
Sundry items
Adjustment relating to prior periods
Reversal of deferred tax liability on sale of REIT
Capital gains adjustment on sale of REIT
Non-refundable carry forward tax offsets
Step acquisition of Westside Petroleum
Income tax (expense)/benefit for the period
(b) Income tax benefit/(expense)
Current tax benefit/(expense)
Deferred tax (expense)/benefit
Capital gains adjustment on sale of REIT
Adjustment relating to prior periods
Income tax benefit/(expense) reported in the consolidated statement of profit or loss
Deferred income tax benefit included in income tax benefit/(expense) comprises:
Increase in deferred tax assets
Decrease/(increase) in deferred tax liabilities
Adjustment in deferred tax relating to prior periods
Tax relating to items recognised in other comprehensive income or directly
in equity rather than through the statement of profit or loss
Deferred tax related to items recognised in other comprehensive income during the period:
Remeasurement of defined benefit obligations
Unrealised losses on cash flow hedges recognised by Viva Energy REIT
Deferred tax related to items recognised directly to equity during the period:
Transaction costs recognised in equity
2020
$M
(186.5)
56.0
(4.4)
(0.2)
0.7
0.6
112.3
(12.7)
0.2
(2.2)
150.3
2020
$M
2.2
160.2
(12.7)
0.6
150.3
54.8
105.4
2.4
162.6
1.1
-
(3.9)
159.8
2019
$M
158.2
(47.5)
(4.9)
(0.3)
(1.1)
8.2
-
-
0.7
-
(44.9)
2019
$M
(68.6)
15.5
-
8.2
(44.9)
738.8
(723.3)
17.1
32.6
(0.7)
2.0
(4.5)
29.4
Total tax benefit associated with the sale for the Viva Energy REIT investment is $65.4 million being: tax expense of $34.2 million
(30% tax on accounting profit) plus $12.7 million capital gains tax adjustment, offset by the reversal of the associated deferred tax
liability of $112.3 million.
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(c) Deferred tax
Deferred tax assets
The balance comprises combined temporary differences attributable to:
2020
$M
2019
$M
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s
Property, plant and equipment
Lease liabilities
Inventories
Asset retirement obligation
Employee benefits
Derivative contracts
Tax losses carried forward
Other
Total deferred tax assets
Deferred tax liabilities
The balance comprises combined temporary differences attributable to:
Right-of-use assets
Intangible assets
Financial assets and investments
Total deferred tax liabilities
Net deferred tax assets
Net deferred tax balances expected to be realised within 12 months
Net deferred tax balances expected to be realised after more than 12 months
100.6
760.3
81.0
27.7
24.0
3.3
70.8
7.5
123.0
722.4
108.4
28.4
22.4
0.4
-
15.8
1,075.2
1,020.8
(699.0)
(52.3)
1.9
(749.4)
(690.5)
(53.5)
(110.8)
(854.8)
325.8
166.0
66.3
259.5
325.8
38.6
127.4
166.0
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Notes to the consolidated financial statements continued
Taxation continued
27. Income tax and deferred tax continued
(d) Movements in deferred tax assets
2019 movements
Balance at 1 January 2019
(Charged)/credited:
Property,
plant and
equipment
$M
128.9
Acquired in business combination
0.3
Initial recognition of
AASB 16 Leases
To profit or loss
Directly to equity
Other comprehensive income
-
(6.2)
-
-
-
-
749.7
(27.3)
-
-
Lease
liabilities
$M
Inventories
$M
Asset
retirement
obligations
$M
Employee
benefits
$M
Derivative
contracts
$M
66.6
27.0
20.3
(2.5)
-
-
41.8
-
-
2.6
-
(1.2)
-
-
1.2
-
1.6
-
(0.7)
22.4
-
-
2.9
-
-
Other
$M
43.9
Total
$M
284.2
1.5
5.6
(4.9)
(20.1)
(4.6)
-
744.8
(8.5)
(4.6)
(0.7)
Balance at 31 December 2019
123.0
722.4
108.4
28.4
0.4
15.8
1,020.8
Property,
plant and
equipment
$M
Lease
liabilities
$M
Inventories
$M
Asset
retirement
obligations
$M
Employee
benefits
$M
Derivative
contracts
$M
Tax losses
carried
forward
$M
123.0
722.4
108.4
28.4
22.4
0.4
-
(22.4)
25.5
12.4
-
(27.4)
0.1
(0.8)
-
-
-
-
-
-
-
-
-
-
-
-
0.1
0.4
-
1.1
-
-
2.9
-
-
-
-
-
-
-
-
70.8
Other
$M
Total
$M
15.8
1,020.8
0.2
(4.6)
(3.9)
-
-
25.9
(39.5)
(3.9)
1.1
70.8
100.6
760.3
81.0
27.7
24.0
3.3
70.8
7.5
1,075.2
2020 movements
Balance at
1 January 2020
(Charged)/credited:
Acquired in business
combination
To profit or loss
Directly to equity
Other comprehensive
income
Current year tax loss
and carried forward
tax credits/offsets
Balance at
31 December 2020
(e) Movements in deferred tax liabilities
2019 movements
Balance at 1 January 2019
(Charged)/credited:
Acquired in business combination
Initial recognition of AASB 16 Leases
To profit and loss
Other comprehensive income
Balance at 31 December 2019
146
Right-of-use
assets
$M
Intangible
assets
$M
Financial
assets and
investments
$M
-
-
(744.8)
54.3
-
(50.0)
(97.6)
(4.5)
-
1.0
-
-
-
(15.2)
2.0
Total
$M
(147.6)
(4.5)
(744.8)
40.1
2.0
(690.5)
(53.5)
(110.8)
(854.8)
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2020 movements
Balance at 1 January 2020
(Charged)/credited:
Acquired in business combination
To profit and loss
Disposal of REIT investment
Balance at 31 December 2020
Right-of-
use assets
$M
Intangible
assets
$M
Financial
assets and
investments
$M
Total
$M
(690.5)
(53.5)
(110.8)
(854.8)
fi
n
a
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c
i
a
l
s
t
a
t
e
m
e
n
t
s
(25.6)
17.1
-
-
1.2
-
(699.0)
(52.3)
-
0.4
112.3
1.9
(25.6)
18.7
112.3
(749.4)
The income tax expense for the year is the tax benefit on the current year’s taxable loss based on the income tax rate adjusted
by changes in deferred tax assets and liabilities attributable to temporary differences and unrecognised deferred tax assets, or
liabilities such as unused tax losses.
Current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period. Management evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject
to interpretation.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. Deferred income tax is not accounted for if it arises from initial
recognition of goodwill, or of an asset or liability in a transaction, other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit (or loss). Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Tax assets and liabilities are offset when there is a legally enforceable right to offset.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity, respectively.
Tax consolidation
The Company and its wholly-owned Australian controlled entities have elected to form an income tax consolidated group (TCG).
In addition to its own current and deferred tax amounts, the Company also recognises the current income tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the TCG.
The entities in the TCG have entered into a tax funding agreement under which the wholly-owned entities fully compensate
the Company for any current income tax payable assumed and are compensated by the Company for any current income tax
receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to the Company under
the income tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.
Assets or liabilities arising under tax funding agreements with the entities in the TCG are recognised as current amounts receivable
from or payable to other entities in the Group.
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Notes to the consolidated financial statements continued
Group structure
28. Group information
(a) Principles of consolidation
The consolidated financial statements comprise the financial statements of the Group and its material subsidiaries as at
31 December 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.
(b) Controlled entities
The consolidated financial statements of the Group includes the controlled entities listed below:
Country of incorporation/
establishment
Equity
holding
2020 %
Equity
holding
2019 %
Name of entity
Viva Energy Holding Pty Ltd
Viva Energy Australia Group Pty Ltd
Viva Energy Australia Pty Ltd
Viva Energy Aviation Pty Ltd
Viva Energy Gas Pty Ltd
Viva Energy Refining Pty Ltd
Viva Energy Gas Australia Pty Ltd
VER Manager Pty Limited
ZIP Airport Services Pty Ltd
Viva Energy S.G. Pte Ltd
Pacific Hydrocarbon Solutions Limited
Liberty Oil Holdings Pty Ltd*
Deakin Services Pty Ltd*
Liberty Oil Affinity Pty Ltd*
Liberty Oil City Leasing Pty Ltd**
Liberty Oil Land Pty Ltd*
Liberty Oil Property Pty Ltd*
Tradeway Services Pty Ltd*
Liberty Oil (SA) Pty Ltd*
Liberty Oil (WA) Pty Ltd*
Liberty Oil Corporation Pty Ltd*
Liberty Oil Finance Pty Ltd*
Liberty Oil Wholesale (S) Pty Ltd*
Liberty Oil Express Pty Ltd*
Liberty Oil Australia Pty Ltd*
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Papua New Guinea
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Westside Petroleum Consolidated Holdings Pty Limited**
Australia
Westside Petroleum Pty Ltd**
Westside Petroleum Wholesalers Pty Ltd**
Westside Petroleum Holdings Pty Ltd
Westside Petroleum BPM Pty Ltd**
Westside Petroleum Retail 1 Pty Limited**
Westside Petroleum Convenience Stores Pty Ltd**
Westside Petroleum CA Fuel Retail Pty Ltd**
Westside Petroleum Co Pty Ltd**
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
* Joined the Deed of Cross Guarantee on 13 December 2019. Refer to Note 32 Deed of cross guarantee for further detail.
** Joined the Deed of Cross Guarantee on 18 December 2020. Refer to Note 32 Deed of cross guarantee for further detail.
All Westside Petroleum companies were acquired on 31 August 2020. Refer to Note 29 Business combinations for further detail.
148
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
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(c) Interests in associates
The Group holds interest in the following investments accounted for using the equity method:
Name of entity
LOC Global Pty Ltd
Viva Energy REIT1
Westside Petroleum Pty Limited2
Fuel Barges Australia Pty Ltd
Country of incorporation/
establishment
Australia
Australia
Australia
Australia
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Equity
holding
2020 %
Equity
holding
2019 %
50
-
-
50
50
36
50
50
1. On 21 February 2020, the Group sold its 35.5% security holding (276,060,625 stapled securities) in Viva Energy REIT (now called Waypoint REIT)
for an average of $2.66 per security by way of a fully underwritten block trade, and a sale to each of Charter Hall Group and the Charter Hall
Long Wale REIT. The sale contributed $113.9 million to the Group’s pre-tax profit with net cash proceeds of $730.1million after transaction costs.
The Group no longer holds any securities in Waypoint REIT.
2. On 31 August 2020, the Group acquired the remaining 50% interest in Westside Petroleum Pty Ltd. Refer to Note 29 Business combinations
for further detail.
Further details regarding these investments can be found in Note 30 Interests in associates and joint operations.
(d) Interests in joint operations
The Group has a 52% interest in W.A.G Pipeline Pty Ltd (2019: 52%), a 50% interest in Crib Point Terminal Pty Ltd (2019: 50%)
and a 33% interest in Cairns Airport Refuelling Services Pty Ltd (2019: 33%). These are classified as joint operations under
AASB 11 Joint Arrangements. Further details regarding these investments can be found in Note 30 Interests in associates and
joint operations.
29. Business combinations
On 5 March 2020, the Group agreed to acquire the remaining 50% interest in Westside Petroleum Pty Ltd for a nominal purchase
price of $1. The acquisition received regulatory approval and was completed on 31 August 2020.
Westside Petroleum is a supplier of bulk fuels and lubricants to customers and distributors operating predominantly in regional
areas of New South Wales and Victoria. The business includes a network of 50 service stations carrying Westside Petroleum, Shell,
Caltex and Liberty brands.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration:
Settlement of loan facilities
Working capital funding
Write off shareholder loan to Westside Petroleum
Write off pre-acquisition trade receivables from Westside Petroleum
Total purchase consideration
$M
4.3
0.2
9.0
4.9
18.4
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Notes to the consolidated financial statements continued
Group structure continued
29. Business combinations continued
The acquisition had the following effect on the Group’s assets and liabilities:
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Finance lease receivables
Right-of-use assets
Intangible assets
Other assets
Trade and other payables
Provisions
Lease liabilities
Borrowings
Provision for deferred tax
Net identifiable assets acquired
Goodwill on acquisition
Total purchase consideration
Recognised
values
(1.0)
1.5
0.9
6.0
8.8
76.5
0.2
0.6
(4.0)
(3.2)
(85.3)
(2.2)
0.4
(0.8)
19.2
18.4
The recognised values represent the fair value of assets recorded on acquisition. The accounting for the acquisition is provisional
and will be finalised in the next accounting period. In completing the purchase price allocation, the Group has been required to
make judgements relating to the fair value of assets and liabilities, in particular the valuation of certain liabilities.
The $19.2 million of goodwill acquired represents other intangible assets that did not meet the criteria for recognition as separately
identifiable assets at the date of acquisition. It will not be deductible for tax purposes. The carrying value of goodwill is allocated to
the Marketing and Supply CGU. Refer to Note 16 Goodwill and other intangible assets.
Goodwill on acquisition has been provisionally accounted for. If new information regarding the fair values of acquired assets
and liabilities is obtained during the measurement period, the goodwill and respective asset and liability balances shall be
retrospectively adjusted.
Acquired receivables
The fair value of acquired trade receivables is $1.5 million. The gross contractual amount for trade receivables due is $2.0 million,
with a loss allowance of ($0.5) million.
Revenue and profit contribution
Westside Petroleum Pty Ltd contributed revenues of $38.6 million and loss after tax of $1.8 million to the Group from the
transaction date to 31 December 2020.
If the acquisition had occurred on 1 January 2020, pro-forma revenue and loss for the year ended 31 December 2020 would have
been revenues of approximately $109.7 million and loss after tax of approximately $7.6 million respectively. These amounts have
been calculated using Westside Petroleum’s results and adjusting them for differences in the accounting policies between the
Group and the acquired subsidiaries. During the course of 2020, the Group commenced converting company owned retail sites
into dealer owned sites to improve profitability.
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Purchase consideration – cash outflow
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration
Adjustment for debt/(cash) acquired
Net outflow of cash – investing activities
2020
$M
-
1.0
1.0
fi
n
a
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c
i
a
l
s
t
a
t
e
m
e
n
t
s
2019
$M
42.0
(17.2)
24.8
Acquisition-related costs
Acquisition-related costs of $0.2 million (2019: $2.0 million) are included within general and administration expenses or salaries and
wages in the consolidated statement of profit and loss and in operating cash flows in the statement of cash flows.
30. Interests in associates and joint operations
(a) Associates
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not control or joint control over those policies. The Group has
a non-controlling interest in the following entities which are classified as associates under the current ownership structure in
accordance with AASB 128 Investments in Associates and Joint Ventures. These investments have been recognised in the
consolidated financial statements using the equity method:
LOC Global Pty Ltd
Viva Energy REIT
Westside Petroleum Pty Limited
Fuel Barges Australia Pty Ltd
Total investments accounted for using the equity method
2020
$M
15.4
-
-
-
15.4
2019
$M
15.5
615.9
10.4
-
641.8
LOC Global Pty Ltd
LOC Global Pty Ltd (‘LOC Global’) is a private entity that is based in Melbourne, Australia. The Group holds 50% (2019: 50%) equity
holding in LOC Global.
LOC Global had no other contingent liabilities or capital commitments as at 31 December 2020, except as disclosed in Note 18
Commitments and contingencies.
Movement of LOC Global investment
Balance at the beginning of the year
Transfer of investment from Liberty Oil Holdings
Share of LOC Global loss
2020
$M
15.5
-
(0.1)
15.4
2019
$M
-
15.5
-
15.5
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Notes to the consolidated financial statements continued
Group structure continued
30. Interests in associates and joint operations continued
(a) Associates continued
Viva Energy REIT
On 21 February 2020, the Group sold its 35.5% security holding (276,060,625 stapled securities) in Viva Energy REIT (now called
Waypoint REIT) for an average of $2.66 per security by way of a fully underwritten block trade, and a sale to each of Charter
Hall Group and the Charter Hall Long Wale REIT. The sale contributed $113.9 million to the Group’s pre-tax profit with net cash
proceeds of $730.1 million after transaction costs. The Group no longer holds any securities in Waypoint REIT.
Movement of Viva Energy REIT investment
Balance at the beginning of the year
Dividends received
Share of Viva Energy REIT profit
Share of Viva Energy REIT OCI
Disposal of investment
Balance at end of year
2020
$M
615.9
(19.8)
13.7
-
(609.8)
-
2019
$M
591.6
(39.2)
70.3
(6.8)
-
615.9
Westside Petroleum Pty Limited
On 31 August 2020, the Group acquired the remaining 50% interest in Westside Petroleum Pty Ltd. It is no longer classified as an
associate and is now fully consolidated into the Group. Refer to Note 29 Business combinations for further detail.
Movement of Westside Petroleum investment
Balance at the beginning of the year
Share of Westside Petroleum loss
Business combination adjustment
Balance at end of year
2020
$M
10.4
(3.0)
(7.4)
-
2019
$M
14.9
(4.5)
-
10.4
Total share of profits in associates for the 2020 year amounted to $10.6 million (2019: $60.2 million). The $113.9 million profit from
the Waypoint REIT sale and the $7.4 million Westside business combination adjustment are disclosed within net profit on sale of
investments in the consolidated statement of profit or loss.
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Aggregate summary information of associates
This table below represents the aggregate summary information of associates. It represents the amounts shown in financial
statements of the associate companies in accordance with Australian accounting standards.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Net assets – Group’s share of investment
Adjustments resulting from the equity accounting method
Carrying amount of investments accounted for using the equity method
Revenue
Net profit from continuing operations
Net (loss) from associate acquired during the period
Net profit from associate disposed of during the period
Other comprehensive income
Total comprehensive income
Distributions received from equity accounted for investments
2020
$M
72.4
132.8
(78.5)
(115.0)
11.7
5.9
9.5
15.4
577.3
0.1
(5.8)
38.4
(1.6)
36.8
19.8
2019
$M
97.1
2,715.5
(122.2)
(911.9)
1,778.5
632.3
9.5
641.8
2,072.9
189.5
(8.5)
-
(19.1)
161.9
40.8
(b) Joint operations
Joint operations are those entities whose financial and operating policies the Group has joint control over, and where the Group
has rights to the assets and obligations for the liabilities of the entity.
The Group owns a 52% interest in W.A.G Pipeline Pty Ltd, a 50% interest in Crib Point Terminal Pty Ltd and a 33% interest in Cairns
Airport Refuelling Services Pty Ltd. The investments are incorporated in Australia with principal operations in Victoria and Cairns,
and are classified as joint operations under AASB 11 Joint Arrangements, where the Group recognises its direct right to the jointly
held assets, liabilities, revenues and expenses and has proportionately consolidated its interests under the appropriate headings
in the consolidated financial statements.
The joint operations had no other contingent liabilities or capital commitments as at 31 December 2020 and 2019, except as
disclosed in Note 18 Commitments and contingencies.
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Notes to the consolidated financial statements continued
Group structure continued
31. Parent company financial information
The financial information presented below presents that of the parent entity of the Group, Viva Energy Group Limited.
Statement of financial position
Non-current assets
Current liabilities
Net assets
Contributed equity
IPO reserve
Employee share-based payment reserve
Capital redemption reserve
Retained earnings
Total equity
Results
Profit of the Company
Total comprehensive income of the Company
2020
$M
2019
$M
4,852.7
112.6
4,740.1
4,791.8
4.0
4,787.8
4,373.9
4,861.3
(70.3)
(3.9)
21.8
418.6
4,740.1
(71.3)
(7.1)
-
4.9
4,787.8
594.7
594.7
136.9
136.9
32. Deed of cross guarantee
As at 31 December 2020, the Company (as the Holding Entity) and all the controlled entities listed in Note 28(b) Group information
(with the exception of Viva Energy S.G. Pte Ltd, Pacific Hydrocarbon Solutions Limited, Viva Energy Gas Australia Pty Ltd and
Westside Petroleum Holdings Pty Ltd) are parties to a Deed of Cross Guarantee dated 14 December 2018 (‘Deed’).
Liberty entities marked with an asterisk (*) in Note 28(b) Group information were joined as parties to the Deed by Assumption
Deeds dated 13 December 2019, and Westside Petroleum entities marked with a double asterisk (**) joined as parties to the Deed
on 18 December 2020.
Under the Deed, each company guarantees the debts of the others to each creditor payment in full of any debt in accordance
with the terms of the Deed.
By entering into the Deed, the controlled entities have been relieved from the requirement to prepare a financial report and
directors’ report under Instrument 2016/785 issued by the Australian Securities and Investments Commission (‘Instrument’).
The companies referred to above represent a ‘Closed Group’ for the purposes of the Instrument.
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The aggregate assets and liabilities of the companies which are party to the Deed and the aggregate of their results for the period
to 31 December 2020 and 2019 are set out below:
Revenue
Replacement cost of goods sold
Net inventory loss
Sales duties, taxes and commissions
Import freight expenses
Historical cost of goods sold
Gross profit
Net gain/(loss) on other disposal of property, plant and equipment
Net profit on sale of investments
Other income
Other income
Transportation expenses
Salaries and wages
General and administration expenses
Maintenance expenses
Lease related expenses
Sales and marketing expenses
Results from operations
Interest income
Share of profit in associates
Realised/unrealised gain on derivatives
Net foreign exchanges (loss)/gain
Depreciation and amortisation expenses
Finance costs
(Loss)/profit before income tax expense
Income tax benefit/(expense)
(Loss)/Profit after tax
2020
$M
2019
$M
12,408.3
16,541.6
(6,382.1)
(10,084.9)
(256.6)
(49.5)
(4,426.6)
(4,607.5)
(274.0)
(333.2)
(11,339.3)
(15,075.1)
1,069.0
1,466.5
5.5
106.4
24.9
136.8
(240.6)
(265.7)
(169.5)
(91.7)
(11.8)
(81.3)
-
345.2
4.2
10.6
35.3
(23.9)
(386.4)
(187.0)
(202.0)
156.3
(45.7)
(1.9)
1.3
-
(0.6)
(258.8)
(257.7)
(140.9)
(115.4)
(19.4)
(105.4)
(1.3)
567.0
2.8
60.2
7.9
37.2
(355.6)
(189.8)
129.7
(39.8)
89.9
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Notes to the consolidated financial statements continued
Group structure continued
32. Deed of cross guarantee continued
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Derivative assets
Prepayments
Current tax assets
Non-current assets
Long-term receivables
Property, plant and equipment
Right-of-use assets
Goodwill and other intangible assets
Post-employment benefits
Investments accounted for using the equity method
Net deferred tax assets
Other non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Provisions
Short-term lease liabilities
Short-term borrowings
Derivative liabilities
Non-current liabilities
Provisions
Long-term borrowings
Long-term lease liabilities
Long-term payables
Total liabilities
Net assets
Equity
Contributed equity
Treasury shares
Reserves
Retained earnings
Total equity
156
2020
$M
2019
$M
47.4
787.2
698.4
2.9
-
27.2
30.3
126.5
1,203.0
1,195.2
6.7
0.2
20.2
40.3
1,593.4
2,592.1
28.4
1,465.6
2,248.0
646.6
0.2
15.4
324.8
2.1
4,731.1
6,324.5
40.6
1,464.2
2,328.1
657.0
6.9
641.8
165.9
2.1
5,306.6
7,898.7
1,376.8
2,163.5
121.8
132.2
-
19.4
127.8
7.7
128.0
19.0
1,650.2
2,446.0
101.3
153.3
2,315.4
94.3
2,664.3
4,314.5
2,010.0
4,369.7
(6.8)
(4,216.6)
1,863.7
2,010.0
95.7
256.9
2,320.3
93.2
2,766.1
5,212.1
2,686.6
4,857.1
(14.2)
(4,246.5)
2,090.2
2,686.6
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Other disclosures
33. Post-employment benefits
(a) Superannuation plan
The main provider of superannuation benefits in the Group is the Viva Energy Superannuation Fund (‘VESF’). This fund was
established on 1 August 2014, and provides a mixture of defined benefits and accumulation style benefits. Currently, the principal
type of benefits provided under the VESF (to eligible members) is a lump sum, pension or lump sum and accumulation benefits.
Lump sum and pension benefits are based primarily on years of service and the highest average salary of the employee.
The Viva Energy Superannuation Plan (‘Plan’) is a sub-plan in the Plum Division of the MLC Super Fund, which is operated by
NULIS Nominee (Australia) Limited (the Trustee). The Plan is a ‘regulated fund’ under the provision of the Superannuation Industry
(Supervision) Act 1993. The Plan is treated as a complying defined benefit superannuation fund for taxation purposes.
The Group’s superannuation plan has a defined benefit section and also a defined contribution section. The defined contribution
section receives fixed contributions from Group companies and the Group’s legal or constructive obligation is limited to these
contributions. The defined benefit section was closed to new members in 1998.
(b) Defined benefit superannuation – significant estimate
The liability or asset recognised in the consolidated statement of financial position in respect of defined benefit superannuation
section is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include
the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions.
These complexities expose the Group to a number of risks, including asset value volatility, variations in interest rates, inflation and
fluctuations in life expectancy expectations. Recognising this, the Group has moved away from providing defined benefits pensions
and the scheme has been closed to new entrants for many years. All assumptions used in the valuation are reviewed at each
reporting date.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using
market yields of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms
approximating to the terms of the related obligation.
Gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in
which they occur, directly in other comprehensive income. They are included in retained earnings in the consolidated statement
of changes in equity and recognised as remeasurement of retirement benefit obligations in the consolidated statement of
financial position.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised
immediately in the consolidated statement of profit or loss within salaries and wages as past service costs.
Contributions to the defined contribution section of the Group’s superannuation fund and other independent defined contribution
superannuation funds are recognised as an expense as they become payable.
The following sets out details in respect of the defined benefit section only.
Amounts recognised in consolidated statement of financial position
Present value of defined benefit obligation
Fair value of defined benefit plan assets
Net defined benefit asset recognised in the consolidated statement of financial position
2020
$M
(93.4)
93.6
0.2
2019
$M
(98.5)
105.4
6.9
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Notes to the consolidated financial statements continued
Other disclosures continued
33. Post-employment benefits continued
(b) Defined benefit superannuation – significant estimate continued
Changes in the defined benefit obligation and fair value of plan assets
Present value of defined
benefit obligation
Fair value of defined
benefit plan assets
Balance at 1 January
Current service cost
Net interest on the defined benefit (liability)/asset
Return on assets less interest income
Actuarial (loss) – change in demographic assumptions
Actuarial (loss) – change in financial assumptions
Actuarial (loss)/gain – experience adjustments
Tax on remeasurement of defined benefit obligation
Benefits paid
Employer contributions
Employee contributions
Business acquisition
Balance at 31 December
2020
$M
(98.5)
(3.9)
(1.8)
-
(0.1)
(2.5)
(0.9)
14.8
-
(0.5)
-
(93.4)
2019
$M
(111.4)
(4.6)
(3.3)
-
(0.4)
(6.5)
0.4
-
27.9
-
(0.6)
-
(98.5)
Amounts recognised in consolidated statement of profit or loss
Amounts recognised in profit or loss
Service cost
Member contributions
Plan expenses
Current service cost
Net interest on the new defined benefit liability/(asset)
Components of defined benefit cost recorded in profit or loss
Amounts recognised in other comprehensive income
Remeasurement of the net defined benefit liability:
Return on assets less interest income
Actuarial loss – change in demographic assumptions
Actuarial loss – change in financial assumptions
Actuarial loss/(gain) – experience adjustments
Tax on remeasurement of defined benefit obligation
Components of defined benefit cost recorded in other comprehensive income
158
2020
$M
105.4
-
1.8
(0.1)
-
-
-
-
2019
$M
122.8
-
3.7
4.1
-
-
-
-
(14.8)
(27.9)
0.8
0.5
-
93.6
2.1
0.6
-
105.4
2020
$M
2019
$M
3.1
(0.4)
1.2
3.9
(0.1)
3.8
0.1
0.1
2.4
0.9
(1.1)
2.4
3.9
(0.5)
1.2
4.6
(0.4)
4.2
(4.1)
0.4
6.5
(0.4)
(0.7)
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The major categories of plan assets of the fair value of the total plan assets are, as follows:
Australian equities
International equities
Property
Fixed income bonds
Other
Cash
Total plan assets
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$M
8.4
12.2
7.5
37.4
9.4
18.7
93.6
2019
$M
8.4
12.6
10.4
41.1
12.6
20.3
105.4
The Group agreed to pay nil contributions to the Plan in 2020 (2019: nil) and has agreed to pay nil contributions in 2021, then
expects to recommence contributions after that time. The Group will, however, pay contributions to cover administration expenses
and premiums relating to the plan in 2021. The following payments are expected to be contributed to the defined benefit plan in
future years:
2020
$M
2019
$M
Within the next 12 months
Between 2 and 5 years
Between 5 and 10 years
Beyond 10 years
Total expected payments
0.8
3.8
1.9
0.3
6.8
The average duration of the defined benefit plan obligation at the end of the reporting period is 5.9 years (2019: 5.7 years).
Actuarial assumptions
The principal assumptions used in determining benefit obligations for the Group’s Plan are shown below:
Discount rate
Expected rate of salary increases
Pension increase rate
2020
%
1.1
2.0
1.8
-
2.4
1.6
0.3
4.3
2019
%
1.9
2.5
2.0
Pensioner mortality has been assumed following the mortality under the Australian Life Tables 2017-19. Significant assumptions
used to determine the present value of the defined benefit obligation are the discount rate and expected salary increases. The
sensitivity analysis shown below has been based on reasonable possible changes of the assumptions occurring at the end of the
reporting period:
Discount rate:
1.0% increase
1.0% decrease
Expected rate of salary increases:
1.0% increase
Impact on defined
benefit obligation
2020
$M
2019
$M
(5.4)
6.4
2.8
(5.7)
6.2
3.0
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the defined benefit
obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity
analyses are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses may
not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would
occur in isolation of one another.
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Notes to the consolidated financial statements continued
Other disclosures continued
34. Related party disclosures
Note 28 Group information provides information about the Group’s structure, including details of the subsidiaries and the
parent entities.
Entities in the Group engage in a variety of related party transactions as part of the normal course of business. They supply
products to related entities and overseas related corporations outside of the Group, and purchase crude and products from,
and pay service fees to, overseas related corporations.
• All related party transactions are conducted at arm’s length on a commercial basis.
• Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
• For the year ended 31 December 2020, the Group has not recorded any impairment of receivables relating to amounts owed by
related parties, nor has there been any expenses recognised during the period in respect of bad or doubtful debts written off
from related parties (2019: nil).
• The assessment of related party receivables is undertaken on an ongoing basis each financial year through examining the
financial position of the related party and the market in which the related party operates.
The following table provides the total amount of transactions that have been entered into with related parties for the relevant
financial year.
(a) Transactions with related parties
Sales and purchases of goods and services
Purchases
Sales of goods and services
Outstanding balances arising from sales/purchases of goods and services
Receivables
Payables
(b) Transactions with associates
Sales and purchases of goods and services
Purchases
Sales of goods and services
Other transactions
Interest income from associates
Sales of assets to associates
Lease expense paid to associates
Dividends from associates
Loan to associates
Outstanding balances arising from sales/purchases of goods and services
Receivables
Payables
160
2020
$’000
2019
$’000
6,910,598
10,687,684
600,860
964,193
12,337
90,477
821,692
1,407,737
2020
$’000
2019
$’000
10,941
43,843
490,570
1,608,118
1,678
5,188
113,200
19,849
-
601
31,480
146,370
40,838
30,335
39,538
139
35,905
13,199
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(c) Transactions with key management personnel or entities related to them
Executive Directors of controlled entities are entitled to receive discounts on their purchases of Company products under the same
conditions as are available to all other employees of the Group. The terms and conditions of the transactions with directors or their
director related entities were no more favourable than those available, or which might reasonably be expected to be available,
on similar transactions to non-director related entities or on an arm’s length basis. Dealings between the Group and various related
companies are identified in this note.
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Some directors hold directorships within the Vitol group of companies and any transactions entered into by the Group with the
Vitol group of companies are in the ordinary course of business and are at arm’s length.
(d) Key management personnel compensation
Short-term employee benefits
Post-employee benefits
Employee option plan
Total compensation paid to key management personnel
2020
$’000
3,955
133
1,247
5,335
2019
$’000
2,972
132
1,263
4,367
(e) Long Term Incentive Plan (LTI)
The Company has established a long term incentive (LTI) plan to assist in the motivation, retention and reward of eligible
employees. The LTI plan is designed to reward long-term performance, provide alignment with the interest of shareholders,
and encourage long-term value creation. The amount of rights that will vest depends on the Company’s relative total return
to shareholders (TSR), free cash flow (FCF) and return on capital employed (ROCE).
A Performance Right entitles the participant to acquire one ordinary share for nil consideration at the end of the performance
period, subject to the satisfaction of the performance conditions. The Board retains discretion to make a cash payment to
participants on vesting of Performance Rights in lieu of an allocation of shares.
Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
Set out below are summaries of rights granted under the plan:
Balance at the start of the financial year
Granted during the year
Forfeited during the year
Balance at the end of the financial year
The following performance rights arrangements were in existence at the end of the year:
2020
Number
of rights
2019
Number
of rights
3,524,041
1,600,000
2,087,421
2,052,041
(510,599)
(128,000)
5,100,863
3,524,041
Number of performance
rights outstanding
Tranche
FY18 Tranche
FY19 Tranche #1
FY19 Tranche – CEO
FY19 Tranche #2
FY20 Tranche – CFO
FY20 Tranche #1
FY20 Tranche – CEO
FY20 Tranche #2
Grant date
Fair value range at grant date
31-Dec-20
31-Dec-19
23-Jul-18
19-Mar-19
23-May-19
22-Oct-19
18-Feb-20
18-Feb-20
6-Jul-20
8-Oct-20
$1.39 – $2.27
$1.73 – $2.23
$1.31 – $1.97
$1.32 – $1.79
$1.06 – $1.73
$0.47 – $1.49
$0.91 – $1.58
$0.91 – $1.58
1,232,000
1,472,000
1,127,495
1,398,094
541,198
112,749
301,232
1,028,824
556,121
201,244
541,198
112,749
-
-
-
-
5,100,863
3,524,041
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Notes to the consolidated financial statements continued
Other disclosures continued
34. Related party disclosures continued
(e) Long Term Incentive Plan (LTI) continued
Fair value of performance rights
The FY20 LTI Plan performance rights with the relative TSR hurdle vesting condition have been valued by an independent expert
using a hybrid trinomial option model. This model uses a combination of Monte Carlo simulation and a trinomial lattice to model
the performance of the Company’s shares and the individual shares within the entities in the S&P/ASX 100 index. The FY20 LTI plan
performance rights with FCF and ROCE hurdles are valued using a hybrid employee stock option model with a single share price
target. Specifically, this model adjusts the spot prices as at the valuation date for expected dividends during the vesting period.
Model inputs for performance rights granted during the year included:
Grant date
18-Feb-20
18-Feb-20
6-Jul-20
8-Oct-20
Share price
at grant
date
$1.69
$1.69
$1.76
Expected
life
2.87 years
2.87 years
2.49 years
$1.76*
2.21 years
Volatility
25%
25%
25%
25%
Risk-free
rate of
return
0.73%
0.73%
0.19%
0.19%*
Dividend
yield Vesting date
4.30%
4.30%
4.30%
4.30%
31-Dec-22
31-Dec-22
31-Dec-22
31-Dec-22
* The performance rights granted on 8-Oct-20 (non-KMP) have not been independently valued, and are aligned to the 6-Jul-20 valuation inputs.
(f) Deferred share rights issued
During the period the Company issued share rights to certain employees. Subject to satisfaction of service conditions, a share right
entitles the participant to receive one ordinary share for nil consideration on vesting. Share rights carry no dividend or voting rights,
however, holders are entitled to a dividend equivalent payment.
The table below sets out the number share rights granted under the plan:
Balance at the start of the financial year
Granted during the year
Balance at the end of the financial year
The following deferred share rights arrangements were in existence at the end of the year:
2020
Number
of rights
213,903
1,987,680
2,201,583
2019
Number
of rights
-
213,903
213,903
Number of performance
rights outstanding
Tranche
FY19 Tranche
FY20 Tranche #1
FY20 Tranche #2
Grant date
22-Oct-19
18-Feb-20
6-Jul-20
Fair value range at grant date
31-Dec-20
31-Dec-19
$1.88
$1.61 – $1.69
$1.69
213,903
213,903
1,952,566
35,114
-
-
2,201,583
213,903
Fair value of deferred share rights
The deferred share rights were valued using the share spot price as at the valuation date.
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(g) Legacy LTI
Section 10.4.3 of the Prospectus described the Legacy LTI introduced by VEH in 2015. Under that plan options over preference
shares in VEH (VEH Options)2 were issued to certain participants, including the CEO and CFO. At, or around the time, of the
Company’s listing on the ASX in 2018, outstanding VEH Options were acquired by the Company and, as consideration, options
over shares in the Company were issued to Legacy LTI participants (Legacy LTI options). For further information, refer to the
Company’s Prospectus. All offers under the Legacy LTI were made in the years prior to listing, and no further offers will be made
under this plan.
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The table below sets out information in relation to the Legacy LTI options.
Balance at the start of the financial year
Exercised during the year
Balance at the end of the financial year
The following Legacy LTI options were in existence at the end of the year:
Grant date
26-Apr-16
26-Apr-16
25-Oct-17
Expiry date
1-Jan-20
1-Jan-20
1-Jan-22
2020
Number of
options
2019
Number of
options
8,651,786
16,534,520
(7,113,692)
(7,882,734)
1,538,094
8,651,786
Exercise
price
$0.82
$1.51
31-Dec-20
31-Dec-19
-
-
6,152,382
961,310
$1.21
1,538,094
1,538,094
1,538,094
8,651,786
Total expenses arising from employee plan transactions recognised during the 2020 year was $3,578,014 (2019: $2,248,341).
35. Auditor’s remuneration
The auditor of the Company and the Group is PricewaterhouseCoopers Australia (‘PwC’). The following fees were paid or payable
to PwC for services provided to the Company and the Group.
Audit or review services:
PricewaterhouseCoopers Australia
Audit or review of financial reports of the Group
900,000
1,015,000
2020
$
2019
$
Overseas PricewaterhouseCoopers firms
Audit or review of financial reports*
Non-audit services:
PricewaterhouseCoopers Australia
Other assurance services
Other services
Total
2020 Audit or review services include $130,000 additional work for 2019 audit.
2019 Audit or review services include $220,000 additional work for 2018 audit.
* Fees paid to PricewaterhouseCoopers Singapore for audit of Viva Energy S.G. Pte Ltd.
34,201
39,332
135,764
44,576
70,000
27,381
1,114,541
1,151,713
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Notes to the consolidated financial statements continued
Other disclosures continued
35. Auditor’s remuneration continued
The Directors have formed the view, based on advice from the Risk and Audit Committee, that the provision of non-audit services
during the 2020 financial year was compatible with, and did not compromise, the general standard of independence for auditors
imposed by the Corporations Act 2001. The non-audit services provided did not involve the external auditor reviewing or auditing
its own work or acting in a management or decision making capacity for the Company, or otherwise could reasonably be expected
to compromise its independence.
No officer of the Company was a partner or director of PricewaterhouseCoopers during the financial year. A copy of the auditor’s
independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 105.
36. Events occurring after the reporting period
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected,
or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
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Directors’ declaration
This Directors’ declaration is required by the Corporations Act 2001.
The Directors declare that in their opinion:
(a)
the consolidated financial statements and notes of the Viva Energy Group for the year ended 31 December 2020 set out on
pages 107 to 164 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards and the Corporations Regulations 2001;
(ii) giving a true and fair view of the Viva Energy Group’s financial position as at 31 December 2020 and of its performance
for the year ended on that date;
(b) there are reasonable grounds to believe that the Viva Energy Group will be able to pay its debts as and when they become
due and payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in
Note 32 Deed of cross guarantee to the financial statements will be able to meet any obligations or liabilities to which they
are, or may become, subject to by virtue of the Deed of Cross Guarantee described in Note 32 Deed of cross guarantee to
the financial statements.
The Basis of preparation on page 112 confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the year ended 31 December 2020.
The declaration is made in accordance with a resolution of the Directors.
Robert Hill
Chairman
Scott Wyatt
CEO and Director
24 February 2021
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Independent auditor’s report
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Viva Energy Group Limited – Annual Report 2020 PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Independent auditor’s report To the members of Viva Energy Group Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Viva Energy Group Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises: ● the consolidated statement of financial position as at 31 December 2020 ● the consolidated statement of comprehensive income for the year then ended ● the consolidated statement of profit or loss for the year then ended ● the consolidated statement of changes in equity for the year then ended ● the consolidated statement of cash flows for the year then ended ● the notes to the consolidated financial statements, which include a summary of significant accounting policies ● the directors’ declaration. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. a
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Viva Energy Group Limited – Annual Report 2020Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationHistorical financial informationCorporate directory Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality Audit scope Key audit matters ● For the purpose of our audit we used overall Group materiality of $10.1 million, which represents approximately 5% of the Group’s weighted current and previous 2 year average of profit before tax. ● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. ● We chose the Group's three year weighted average profit before tax as, in our view, the adoption of a multi-year weighted average benchmark will respond to longer-term trends in refining margins and will reduce volatility in the measure year-on-year. ● Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. ● Amongst other relevant topics, we communicated the following key audit matters to the Audit and Risk Committee: − Carrying value of refinery assets − Environmental and asset retirement provision − Inventory valuation ● These are further described in the Key audit matters section of our report.
Independent auditor’s report continued
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Viva Energy Group Limited – Annual Report 2020 ● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. Key audit matter How our audit addressed the key audit matter Carrying value of refining assets (Refer to note 12) [$386.0m] As at 31 December 2020, the Group’s property, plant and equipment balances include $386.0m of refining assets. As required under AASB 136 Impairment of assets, each period the Group assess all property, plant and equipment balances for any impairment indicators. The recoverable amount of the refining assets has been determined based on a value-in-use calculation. The carrying value of refining assets was considered to be a key audit matter for the following reasons: ● The impact of the COVID-19 pandemic on the demand for refined products has adversely impacted refining margins and consequently the refinery performance ● Pressure on the long-term outlook of the domestic refining industry as a result of global macroeconomic impacts ● Significant judgement was required by the Group to estimate the key assumptions in the calculation to determine the recoverable amount of the refining assets; including the discount rate, refinery intake, refinery margin, government support and foreign exchange rates. We performed the following procedures amongst others: ● Evaluated the forecast cash flows used in the Refinery Impairment Model for consistency with the Group’s most up-to-date budget and business plan formally approved by the Board of Directors. ● Assessed the Group’s historical ability to forecast cash flows by comparing budgets to reported actual results for the past 3 years. ● Considered whether the cash flows used in the calculation were appropriate and based on supportable assumptions by assessing cyclicality of refining margins. ● Compared the key assumptions around discount rate, refinery intake, refinery margin, foreign exchange rates and government support used in the calculation to historical results, external sources and economic and industry forecasts. ● Assessed the competence, experience and objectivity of the external experts used by the Group in preparing the relevant input to the impairment model. ● Evaluated the adequacy of disclosures in note 12 in light of the requirements of Australian Accounting Standards. a
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Viva Energy Group Limited – Annual Report 2020Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationHistorical financial informationCorporate directory Environmental and asset retirement provisions (Refer to note 17) [$139.8m] As at 31 December 2020, the Group recognised the following provisions: ● Environmental provisions: $40.1m ● Asset retirement provisions: $99.7m The provisions relate to the Group’s obligations to rehabilitate sites, either during or at the end of their operations. This includes the Group’s conversion of its former Clyde refinery to a storage terminal. This was a key audit matter as the calculation of the provisions required the Group to make judgements in estimating the cost and timing of future rehabilitation work, discounted to their present value and the provisions are material. We performed the following procedures amongst others: ● Tested the mathematical accuracy for a sample of the provision calculations. ● Obtained and read the litigation register and board minutes to identify any legal notices in relation to environmental obligations and checked that these were appropriately considered in the determination of the provisions. ● Assessed the competence, experience and objectivity of the internal and external experts used by the Group in preparing the relevant calculations for the determination of the provisions. ● Corroborated a sample of estimates used in the provision calculations to third party support or estimates made by external experts. ● Evaluated the completeness of the provisions through comparing new sites acquired/opened during the year with the sites for which a provision has been recognised. ● Performed sensitivity analysis over key estimates and assumptions, such as the discount and inflation rates used by making changes that we consider reasonably possible to assumptions, to assess the impact on the asset retirement provision determined. Inventory valuation (Refer to note 5) [$698.8m] The Group accounts for inventory at standard cost and allocates purchase price variances (PPV) to inventories to the extent that they are incurred in bringing inventories to their present location and condition. In addition, at month-end adjustments are made to the cost of inventories to ensure costs are assigned on a first-in-first-out (FIFO) basis in accordance with Australian Accounting Standards AASB 102 Inventories. This was a key audit matter due to the judgement involved in month-end adjustments made and the significance of the inventory balance. We performed the following procedures amongst others: ● Assessed the design and operating effectiveness of relevant internal controls over inventory valuation. ● Tested the mathematical accuracy for a sample of the underlying calculations within the valuation model. ● Tested the key inputs into the valuation model used to calculate the FIFO adjustments by comparing them to supporting evidence. ● Compared the carrying value of inventory to the estimated selling price obtained from an external source to check that inventory was measured at the lower of cost and net realisable value.
Independent auditor’s report continued
170
Viva Energy Group Limited – Annual Report 2020 Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 31 December 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. a
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Viva Energy Group Limited – Annual Report 2020Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationHistorical financial informationCorporate directory Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 77 to 99 of the Annual report for the year ended 31 December 2020. In our opinion, the remuneration report of Viva Energy Group Limited for the year ended 31 December 2020 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Chris Dodd Partner Niamh Hussey Melbourne Partner 24 February 2021
Disclosures
On 11 July 2018, the Company was granted certain waivers by ASX from ASX Listing Rule 10.1. The following information is required
to be disclosed in the Annual Report by the terms of the waivers.
Summary of material terms of certain supply agreements with affiliates of Vitol
Holding B.V.
Members of the Group and affiliates of Vitol Holding B.V. are parties to a number of contractual arrangements, including the
following material contracts:
• Vitol Asia Pte Ltd (Vitol Asia) and Viva Energy SG Pte Ltd are parties to a fuel supply agreement dated 18 June 2018 (Vitol Fuel
Supply Agreement);
• Vitol Aviation BV (Vitol Aviation) and Viva Energy Aviation Pty Ltd (Viva Aviation) are parties to an agreement relating to the
supply of aviation fuel dated 23 April 2018 (Vitol Aviation Fuel Supply Agreement); and
• Vitol Asia and Viva Energy Australia Pty Ltd are parties to a standard-form ISDA Master Agreement dated 13 August 2014
(Hedge Agreement).
Vitol Fuel Supply Agreement
Overview
Under the Vitol Fuel Supply Agreement, Vitol Asia agrees to supply to Viva Energy, and Viva Energy agrees to purchase (and to
ensure that each other member of the VEA Group purchases) from Vitol, the following products:
• all of Viva Energy’s requirements for feedstock for its refining operations, including crude oil and condensate (Feedstock),
subject to certain exceptions; and
• all of the hydrocarbon products (other than Feedstock) required by the VEA Group for its Australian operations, except for
products produced by the VEA Group’s refining operations, products purchased under ‘buy-sell’ agreements with local
refiners, and any lubricant products purchased from Shell Markets (Middle East) Limited under an Agreement for the Sale
and Distribution of Lubricants (Shell Lubricants Agreement), (collectively, Product).
Exclusivity arrangements
Pursuant to the Vitol Fuel Supply Agreement, Viva Energy agrees that it will not (and will ensure that each other member of the
VEA Group does not), except with the prior written consent of Vitol Asia but subject to certain exceptions, acquire product from
any third party or acquire any interest in a third-party supplier of product which is inconsistent with Viva Energy’s obligations
under the agreement. Further, Viva Energy agrees that if it or any member of the VEA Group wishes to sell any Products which
are ultimately exported out of Australia, Vitol Asia shall be the sole and exclusive market interface for all such sales on terms
to be mutually agreed.
In addition, if any member of the Group at any time seeks to purchase any lubricants of the kind purchased by Viva Energy under
the Shell Lubricants Agreement other than pursuant to the terms of that agreement, Vitol Asia shall, to the maximum extent
permitted by law, be the exclusive supplier of such lubricants to Viva Energy on terms to be mutually agreed by the parties but
based on the terms of the Vitol Fuel Supply Agreement.
For the purposes of the above paragraphs, VEA Group means the Company and each of its direct and indirect holding companies
and subsidiaries, and subsidiary undertakings and associated companies from time to time of such holding companies.
Term and termination
The initial term of the Vitol Fuel Supply Agreement is 10 years, which Vitol Asia may renew for a further period of five years and
which, following such renewal, the parties may renew again for a further period of five years by mutual agreement.1
The Vitol Fuel Supply Agreement may be terminated in the following circumstances:
• by the non-defaulting party, if the defaulting party becomes insolvent or fails to pay any amount due under the agreement;
• by the non-defaulting party, if Vitol Asia fails to deliver, or Viva Energy fails to take delivery of, for reasons other than ‘Force
Majeure’, at least 75% of the aggregate quantities of Product nominated or agreed for delivery and receipt in a month for six
or more consecutive months;
• by either party giving not less than 12 months’ notice, if Vitol Asia announces that it intends to discontinue its Product trading
business serving Australia; and
• by Vitol Asia, in the event of Viva Energy’s breach of certain of its obligations under the Vitol Fuel Supply Agreement (including
its obligations under the exclusivity arrangements), any event of default or review event under Viva Energy’s financing
arrangements, and certain other termination events.
1. Renewal of the Vitol Fuel Supply Agreement will be subject to shareholder approval, should ASX Listing Rule 10.1 apply at that time.
172
Viva Energy Group Limited – Annual Report 2020 Pricing terms
Under the Vitol Fuel Supply Agreement, the price for each delivery of Product is, or is determined by reference to, a price mutually
agreed by the parties based on prevailing market conditions, the actual price at which the relevant Vitol entity acquired the Product
or the average price in the relevant index for the Product plus reasonable financing and handling costs and the cost of freight and
logistics, as well as applicable market and quality premiums/discounts.
Procurement fee
The parties have agreed that no procurement fee will be payable to Vitol Asia during the first five years of the term of the Vitol Fuel
Supply Agreement. A procurement fee may be payable following this period, if mutually agreed by the parties and determined on
the basis of prevailing market conditions.
Title and risk
Title to the Product in each shipment passes from Vitol Asia to Viva Energy as the Product passes on to the ship at the load port.
All risk in the Product in each shipment passes to Viva Energy on and from that time.
Shortfall
If, except to the extent that such was caused by Viva Energy, Vitol Asia is unable to source or deliver sufficient Product to meet
any shipment that has been nominated by Viva Energy, then to the extent of such shortfall, Viva Energy may, with the prior written
consent of Vitol Asia (not to be unreasonably withheld or delayed), enter into a short-term agreement for the supply of such
Product shortfall.
Guarantee
Under a separate but related document, certain members of the Group (including Viva Energy Holdings Pty Ltd and Viva Energy
Australia Group Pty Ltd) have guaranteed to Vitol Asia the due and punctual performance and observation by Viva Energy of its
obligations under the Vitol Fuel Supply Agreement. The Company is a guarantor in respect of those obligations.
Vitol Aviation Fuel Supply Agreement
Overview
Under the Vitol Aviation Fuel Supply Agreement:
• Viva Aviation agrees to provide refuelling services on behalf of Vitol Aviation to Vitol Aviation’s international customers that
require such services (Refuelling Services) and, among other things, must establish and maintain or otherwise ensure access
and use of facilities at airports necessary to deliver aviation fuel to Vitol Aviation’s customers; and
• Vitol Aviation is responsible for managing its international customer accounts in connection with the Refuelling Services.
Term and termination
The Vitol Aviation Fuel Supply Agreement remains in force until terminated in accordance with its terms, including for convenience by
either party upon 12 months’ notice, such notice not to be given prior to the fourth anniversary of the commencement of the agreement.2
The Vitol Aviation Fuel Supply Agreement may also be terminated in the following circumstances:
• where the other party commits a material breach of the agreement, which is not remedied;
• where the other party repudiates the contract;
• where an ‘Insolvency Event’ occurs in respect of the other party; or
• where the other party suspends or ceases, or threatens to suspend or cease, carrying on all or a substantial part of its business.
Exclusivity
Vitol Aviation agrees to not utilise any party other than Viva Aviation in the provision of services similar to the Refuelling Services
within Australia, unless and except to the extent that Viva Energy is unable to perform the agreed services.
Pricing
Vitol Aviation and Viva Aviation must use reasonable endeavours to agree on a fuel rate and commission rate in connection with
each customer tender. Viva Aviation must invoice Vitol Aviation on a monthly basis in respect of sales to Vitol Aviation’s customers,
and Vitol Aviation is entitled to receive the agreed commission and fuel rate in respect of each such sale.
Hedge Agreement
Vitol Asia and Viva Energy Australia Pty Ltd are parties to a standard-form ISDA Master Agreement pursuant to which Viva Energy
hedges the price risks associated with the volatility of crude oil pricing. Each member of the Group has provided a guarantee to
Vitol Asia in respect of Viva Energy’s performance under this agreement. The agreement will remain on foot until terminated by
agreement of the parties or otherwise in accordance with its terms.
2. Continuation of the Vitol Aviation Fuel Supply Agreement for any period beyond the 10-year anniversary of the Company’s listing on the ASX
will be subject to shareholder approval, should ASX Listing Rule apply at that time.
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Viva Energy Group Limited – Annual Report 2020
Additional information
The information below is current as at 1 March 2021.
Voting rights
Shareholders in the Company have a right to attend and vote at all general meetings in accordance with the Company’s
Constitution, the Corporations Act 2001 (Cth) and the ASX Listing Rules.
Substantial holders
As at 1 March 2021, Viva Energy has three substantial holders who, together with their associates, hold 5% or more of the voting
rights in the Company, as notified to the Company under the Corporations Act.
Name
Sumitomo Mitsui Trust Holdings
Pendal Group
VIP Energy Australia B.V.
Date notice received
Number of shares1
Percentage of capital2
6 November 2019
20 March 2019
17 July 2018
99,332,762
97,535,578
871,845,097
5.11%
5.02%
44.84%
1. The number of shares quoted are based on the number of shares disclosed in the substantial shareholder notices lodged by each holder.
Since each notice was lodged, the Company has undertaken a share consolidation where each share in the Company held on 9 October 2020
was consolidated into 0.84 shares (with any resulting fraction of an ordinary share held by a shareholder rounded up to the next whole number
of shares).
2. The percentages quoted are based on the percentages disclosed in the substantial shareholder notices lodged by each holder. Since each notice
was lodged, the Company has bought on market and cancelled shares pursuant to its on-market buy-back program and as at 1 March 2021,
has 1,607,638,647 ordinary shares on issue.
Distribution of shareholders and number of shares
The following table shows the total number of shares on issue in the Company as at 1 March 2021 and the distribution of Viva Energy
shareholders by the size of their shareholding.
Size of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Total holders Number of shares held
Percentage
3,031
4,038
2,572
2,491
105
12,237
1,957,046
11,020,050
18,126,769
53,927,211
1,522,607,571
1,607,638,647
0.12%
0.69%
1.13%
3.35%
94.71%
100.00%
174
Viva Energy Group Limited – Annual Report 2020 Top 20 shareholders
The 20 largest registered shareholders as at 1 March 2021 are shown below.
1
2
3
4
VIP ENERGY AUSTRALIA B. V
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
5 NATIONAL NOMINEES LIMITED
6
7
8
9
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
ARGO INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
10 SCOTT WYATT
11 CITICORP NOMINEES PTY LIMITED
12 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
13 PACIFIC CUSTODIANS PTY LIMITED
14 NETWEALTH INVESTMENTS LIMITED
15 NAVIGATOR AUSTRALIA LTD
16 MR DENIS JEAN-MARC URTIZBEREA
17 UBS NOMINEES PTY LTD
18 MR DANIEL PAUL RIDGWAY
19 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
20 BOND STREET CUSTODIANS LIMITED
Number of
shares held
732,349,882
273,335,373
146,963,295
145,245,413
85,542,560
28,142,091
23,666,137
9,502,255
9,260,216
9,171,893
6,189,109
5,659,890
3,536,614
3,489,239
3,399,075
2,361,799
2,261,493
2,250,281
2,218,440
2,152,238
Total
1,496,697,293
Balance of register
110,941,354
Grand total
1,607,638,647
Percentage
45.55%
17.00%
9.14%
9.03%
5.32%
1.75%
1.47%
0.59%
0.58%
0.57%
0.38%
0.35%
0.22%
0.22%
0.21%
0.15%
0.14%
0.14%
0.14%
0.13%
93.08%
6.92%
100%
Holders with less than a marketable parcel
As at 1 March 2021, there were 418 shareholders holding less than a marketable parcel of shares (A$500) based on the closing
market price of $1.685.
Shares purchased on-market
We purchase shares on-market for the purposes of our Employee Share Plan and for the purposes of our incentive plans.
During the period (from 1 January 2020 to 1 March 2021) 6,608,119 shares were purchased on-market at an average price
of $1.43 per share.
On-market buy-back
On 18 March 2020, the Company announced its intention to conduct an on-market buy-back program. As at 1 March 2021,
the Company has bought back 27,397,847 shares under this program.
Unquoted equity securities
As at 1 March 2021, the Company has on issue:
• 1,538,095 Options exercisable at $1.21 expiring 1 January 2022 held by one employee;
• 1,469,844 Deferred Share Rights, held by 43 employees; and
• 3,868,863 Performance Rights, held by nine employees.
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175
Viva Energy Group Limited – Annual Report 2020
Historical financial information
For the years ended 31 December
FY2020
FY2019
FY2018
pro forma1
FY2017
pro forma1
FY2016
pro forma1
Consolidated results
Revenue
Group Underlying EBITDA (RC)
Underlying EBITDA (RC) – Retail, Fuels
and Marketing: Retail
Underlying EBITDA (RC) – Retail, Fuels
and Marketing: Commercial
Underlying EBITDA (RC) – Refining
Underlying EBITDA (RC) – Supply, Corporate
and Overheads
Underlying NPAT (RC)
Distributable NPAT (RC)
Financial statistics
Operating cash flow before capital expenditure2
Capital expenditure
Net debt
Earnings per share – basic
Earnings per share – diluted
Dividends per share
Other data
Sales volume
Number of service stations4
Refining intake
Geelong Refining Margin
Share price – high
Share price – low
Share price – close
Shares on issue – at year end
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
cents/share
cents/share
cents/share
ML
#
MBBLs
US$/BBL
$
$
$
#M
12,409.9
16,541.6
16,395.1
15,660.5
14,130.9
519.4
670.8
644.5
564.3
774.6
608.8
864.0
607.0
678.0
542.0
238.3
296.5
329.0
317.0
321.0
(95.1)
117.0
(294.6)
(333.3)
(35.9)
22.8
376.1
158.5
104.2
(1.9)
(1.9)
0.83
135.8
153.0
609.0
161.7
137.4
5.8
5.7
4.7
124.5
(287.7)
231.5
155.4
535.7
241.3
(0.2)
29.8
29.4
4.8
276.0
(336.0)
290.7
n/a
445.8
234.0
74.6
n/a
n/a
n/a
144.0
(329.0)
177.9
n/a
381.0
309.0
(428.8)
n/a
n/a
n/a
12,339
1,339
14,695
1,292
14,046
1,255
14,151
>1,100
14,557
>1,100
34.8
3.1
2.12
1.13
1.91
1,608
42.0
6.6
2.58
1.72
1.92
1,945
40.1
7.4
2.51
1.66
1.80
1,945
40.8
10.2
n/a
n/a
n/a
n/a
39.9
7.9
n/a
n/a
n/a
n/a
1. Pro forma adjustments have been made to ensure consistency and comparability with reported FY2019 and FY2020 performance. For FY2018,
pro forma adjustments include the impact of AASB 16 and to present the financial information in a manner that is consistent with the structure
and nature of the Group post IPO (13 July 2018). For FY2016 and FY2017, Pro-Forma adjustments include the impact of AASB 16 only and the
financial information included relates to Viva Energy Holding Pty Ltd.
2. The adoption of AASB16 Leases on 1 January 2019 resulted in the reclassicification of operating lease expenditure from operating cash to finance
costs and repayment of lease liability. The 2016, 2017 and 2018 results reflect the classification under the previous leasing standard.
3. Excludes special dividend of 5.94 cents per share.
4. Alliance, Dealer Owned, Westside Petroleum and Liberty Platforms.
176
Viva Energy Group Limited – Annual Report 2020 Corporate directory
Registered office
Level 16, 720 Bourke Street
Docklands, Victoria, Australia 3008
Telephone: 03 8823 4444
Share registry
Link Market Services Limited
Tower 4, 727 Collins Street
Melbourne, Victoria, Australia 3008
Telephone: 1300 554 474
Investor relations
investors@vivaenergy.com.au
Website
To view the 2020 Annual Report,
Corporate Governance Statement,
shareholder and Company information,
news announcements, financial reports,
historical information, and background
information on Viva Energy, please visit
our website at vivaenergy.com.au.
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Viva Energy Group Limited – Annual Report 2020