Annual Report
2021
Helping people reach their destination
Our purpose
Helping people
reach their
destination
Who we are
Viva Energy is a leading energy company with
120 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 2021, 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
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Viva Energy Group Limited – Annual Report 2021 02
Viva Energy Group Limited – Annual Report 2021 Contents
About us
Chairman and Chief Executive Officer’s report
Board of Directors
Executive Leadership Team
Operating and financial review
Sustainability report
Remuneration report
Directors’ report
Auditor’s independence declaration
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110
115
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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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.
Title: Wa-ngal yalinguth, yalingbu, yirramboi
Created by: Dixon Patten, Yorta Yorta and
Gunnai, Bayila Creative.
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 2021 and its financial position as
at 31 December 2021. 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, the Annual Report 2021 is available
on our website at www.vivaenergy.com.au
Corporate Governance Statement
You can find our Corporate Governance
Statement 2021 on our website at
www.vivaenergy.com.au
See the rest of our 2021 annual reporting suite at
www.vivaenergy.com.au
• Annual Report 2021
• Corporate Governance Statement 2021
• Modern Slavery Statement 2021
• Taxes Paid Report 2021
• Sustainability Data Supplement 2021
03
Helping people reach their destinationSustainability Data Supplement 2021Helping people reach their destinationModern Slavery Statement 2021Helping people reach their destinationTaxes Paid Report 2021Helping people reach their destinationCorporate Governance Statement 2021Viva Energy Group Limited – Annual Report 2021 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
Wholesale
distributors
Commercial
customers
Terminals are typically located
near major metropolitan,
industrial and mining centres
(closer to end customers).
Pipelines
Shipping
Terminal
storage
We transport product from terminal to
retail sites and commercial end customers.
Retail sites
Retail
customers
Shipping
Trucking
We sell bulk fuel
products directly
to commercial
customers.
Fuels are sold to
retail customers
through a network
of over 1,340 service
station sites.
1. Procurement/Supply
2. Domestic Refining
3. Primary Distribution
4. Storage
5. Secondary Distribution
6. Fuels Marketing
Net Zero by 2050*
Net Zero by 2030*
* Net zero commitment applies to Scope 1
and 2 emissions for activities under our
operational control which excludes primary
and secondary distribution by shipping.
We are pursuing operational optimisation, energy efficiency projects,
Ultra-Low Sulphur Gasoline upgrade, and developing circular
economy and bio-feedstocks to deliver a 10% reduction in emission
intensity for our refinery by 2030.
We are pursuing renewable purchasing and
generation, energy efficiency projects and carbon
offset projects to achieve net zero by 2030 for
our non-refining operations.
We aim to achieve net zero by 2050 for the overall Viva Energy Group
through bio fuels processing, waste to energy reprocessing, energy
import/export, renewable and low emissions energy inputs and
carbon offset projects.
Our year at a glance
People and community
Safety and environment1
1,447
Employees as at 31 December 2021
Net Zero
Commitment for Scope 1 and 2 GHG emissions
for our non-refining operations, by 2030
44%
of senior leaders are women (2020: 41%)
6.7
Total Recordable Injury Frequency Rate
(per million hours worked) (2020: 3.61)
Winner of AFR BOSS
Best Places to Work
in the Agriculture, Mining and Utilities industry
Process
Safety
Events
1
3
API Tier 1 Events
(2020: 1)
API Tier 2 Events
(2020: 2)
96%
of inaugural RAP deliverables completed
Over 94%
of our employees had two COVID-19 vaccinations
as at 31 December 2021
1. Excludes performance of Liberty Oil Holdings.
04
Viva Energy Group Limited – Annual Report 2021 Terminals are typically located
Terminals are typically located
near major metropolitan,
near major metropolitan,
industrial and mining centres
industrial and mining centres
(closer to end customers).
(closer to end customers).
Pipelines
Pipelines
Wholesale
Wholesale
distributors
distributors
Commercial
Commercial
customers
customers
Pipelines
Pipelines
Shipping
Shipping
Terminal
Terminal
storage
storage
We transport product from terminal to
We transport product from terminal to
retail sites and commercial end customers.
retail sites and commercial end customers.
Retail sites
Retail sites
Retail
Retail
customers
customers
Shipping
Shipping
Trucking
Trucking
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We sell bulk fuel
We sell bulk fuel
products directly
products directly
to commercial
to commercial
customers.
customers.
Fuels are sold to
Fuels are sold to
retail customers
retail customers
through a network
through a network
of over 1,340 service
of over 1,340 service
station sites.
station sites.
1. Procurement/Supply
1. Procurement/Supply
2. Domestic Refining
2. Domestic Refining
3. Primary Distribution
3. Primary Distribution
4. Storage
4. Storage
5. Secondary Distribution
5. Secondary Distribution
6. Fuels Marketing
6. Fuels Marketing
We source crude oil (domestic and international)
We source crude oil (domestic and international)
for domestic refining, and refined products from
for domestic refining, and refined products from
international refineries.
international refineries.
Sourcing
Sourcing
Domestic and
Domestic and
imported crude oil
imported crude oil
Imported
Imported
refined products
refined products
Domestic
Domestic
refineries
refineries
We refine crude oil into usable
We refine crude oil into usable
products – including petrol, diesel,
products – including petrol, diesel,
jet fuel and specialty products.
jet fuel and specialty products.
We transport refined product to bulk
We transport refined product to bulk
storage fuel terminals by pipe or ship.
storage fuel terminals by pipe or ship.
Net Zero by 2050*
Net Zero by 2050*
Net Zero by 2030*
Net Zero by 2030*
We are pursuing operational optimisation, energy efficiency projects,
We are pursuing operational optimisation, energy efficiency projects,
Ultra-Low Sulphur Gasoline upgrade, and developing circular
Ultra-Low Sulphur Gasoline upgrade, and developing circular
economy and bio-feedstocks to deliver a 10% reduction in emission
economy and bio-feedstocks to deliver a 10% reduction in emission
intensity for our refinery by 2030.
intensity for our refinery by 2030.
We are pursuing renewable purchasing and
We are pursuing renewable purchasing and
generation, energy efficiency projects and carbon
generation, energy efficiency projects and carbon
offset projects to achieve net zero by 2030 for
offset projects to achieve net zero by 2030 for
our non-refining operations.
our non-refining operations.
We aim to achieve net zero by 2050 for the overall Viva Energy Group
We aim to achieve net zero by 2050 for the overall Viva Energy Group
through bio fuels processing, waste to energy reprocessing, energy
through bio fuels processing, waste to energy reprocessing, energy
import/export, renewable and low emissions energy inputs and
import/export, renewable and low emissions energy inputs and
carbon offset projects.
carbon offset projects.
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Financial performance
Strategic priorities
$484.2M
Group Underlying EBITDA (RC)
Up 98% on 2020
$191.6M
Underlying NPAT (RC)
Up 474% on 2020
7.3¢
2021 dividend per share, fully franked
$118M
Returned via capital management program2
Worked with Federal Government to finalise the
Fuel Security Package
Completed FEED
and progressed to regulator approval phase for
Gas Terminal Project
Received Federal Government grant for
90ML Diesel Storage
to support minimum stockholding obligations
2. Capital management program of ~$118M includes capital return ~$100M and share buy-back ~$18M.
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Viva Energy Group Limited – Annual Report 2021
Chairman and Chief Executive Officer’s report
Viva Energy continued to play
a leading role in working with
government to develop a framework
which protects our local refining
industry from global downturns,
and in turn provides certainty to
commit and undertake long-term
investment in this critical sector.
Dear Shareholders
The COVID-19 global pandemic continued to impact our
operations and customers throughout 2021, and feature
heavily in the broader economic environment and outlook.
Management continued to care for employees, encouraging
vaccinations and enacting workplace processes to minimise
infection and protect our people through various waves of
infections and lockdowns.
Despite the continued challenge from the pandemic and
associated restrictions, we kept our business operating
reliably to serve our customers and the broader community
and delivered financial results which were a significant
improvement on the last two years.
On the strategic front, Viva Energy continued to play a leading
role in working with government to develop a framework which
protects our local refining industry from global circumstances
beyond our control, and in turn provides certainty to commit
and undertake long-term investment in this critical sector.
The Fuel Security Package, which was finalised during 2021,
and the range of measures that it incorporates, will see the
Company continue refining through to 2028, and undertake
a range of investments to improve fuel quality, increase
the country’s fuel reserves, and improve productivity and
performance. In times of global uncertainty, and disrupted
supply chains, this is good for both Viva Energy and the country.
The long-term arrangements with the Federal Government
have transformed the outlook for the refining business and
provided the foundation to progress our broader vision
for the Energy Hub at Geelong. In this regard, we made
significant progress on the Geelong Gas Terminal Project
– entered into an expanded partner group with substantial
international experience in LNG regasification terminals,
completed Front End Engineering Design, signed a Head
of Agreement to charter a Floating Storage and Regasification
Unit and, in early 2022, released for public exhibition the
Environment Effects Statement.
We also announced emission reduction commitments,
which we shared with investors in November 2021. These
commitments are an important part of our sustainability
agenda and demonstrate our commitment to playing a critical
role in Australia’s transition to a low-carbon future, as well as
ongoing energy security.
06
Robert Hill
Chairman
Scott Wyatt
Chief Executive Officer
2021 Performance
Viva Energy recorded a Group underlying EBITDA (RC) of
$484.2 million, which is up 98% on the prior year. Total Group
sales volumes increased by 7% in 2021, with strong earnings
underpinned by a 39% improvement in Commercial EBITDA
(RC), and strong Refining performance. Our Retail, Fuels and
Marketing business grew by about 3% to deliver an EBITDA
(RC) of $404.8 million, despite the impact on retail of the
temporary mobility restrictions in 2021. Refining EBITDA (RC)
was $103.4 million after a large loss in 2020, reflecting both the
introduction of fuel security payments and a strong recovery
in regional refining margins in the fourth quarter of 2021.
Our safety performance in 2021 was disappointing, with
Total Recordable Injury Frequency Rate and high potential
process safety incidents elevated compared to the prior year.
As a result there has been a renewed focus on our safety
management processes and learnings from these incidents
have formed the foundation for our broader safety programs
in 2022. Further information on this is contained in our
Sustainability Report.
Viva Energy maintained a strong balance sheet and finished
the year with a low net debt of $95.2 million. Our strong
financial position has enabled us to complete a further
$100 million capital return and an $18 million on-market
buy-back during 2021. The Company returned to positive
distributable NPAT in 2021, paid an interim dividend of
$65.9 million for the first half of 2021 and determined final
dividend of $49.6 million.
Viva Energy Group Limited – Annual Report 2021 C
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Board and leadership changes
In August 2021, Nicola Wakefield Evans was appointed to the
Board as an Independent Non-Executive Director. Nicola’s
considerable experience in governance, diversity leadership
and experience with companies involved in the transition to a
lower carbon future are a valuable contribution to the Board.
This appointment followed the retirement of Jane McAloon
as an Independent Non-Executive Director in August 2021.
We thank Jane for the significant contribution she has made
as a director and Chair of the Sustainability Committee
during her time with the Company.
There were several changes to the executive responsibilities
in 2021. Jevan Bouzo was appointed to an expanded role of
Chief Operating and Financial Officer, assuming responsibility
for supply chain operations in addition to his Chief Financial
Officer accountabilities. This follows the decision by Thys Heyns
to retire from the Company in March 2021, as we announced
in last year’s annual report. Lachlan Pfeiffer was appointed
to an expanded role of Chief Business Development and
Sustainability Officer. In this role, he continues to be
responsible for assurance functions which support good
governance, and now combines this with leading the broader
business development opportunities and the communication
of our sustainability strategy and associated initiatives.
Sustainability
Everything we do is driven by our purpose to help people
reach their destination. 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. We are committed to balancing
short-term needs and interests with those of future
generations, and integrating economic, environmental
and social considerations into business decision-making.
In 2021, we signed an MOU with Waga Energy for renewable
natural gas recovery from landfill, launched Carbon Neutral
Jet Fuel, and announced the launch of Australia’s most
ambitious hydrogen mobility project with the development
of a New Energies Service Station in Geelong (subject to
regulatory approval). We also announced our ambition to
reduce carbon emissions at our operations across the medium
and long term. We are proud of these commitments to
achieve net zero Scope 1 and 2 emissions for our non-refining
business by 2030, 10% reduction in emissions intensity at the
Refinery by 2030 and over the longer term an ambition to
reach net zero Scope 1 and 2 across all operations by 2050.
We are also targeting net zero Scope 1 and 2 emissions for
the life of the Gas Terminal Project.
We present an update on our sustainability program as part
of this Annual Report.
Looking forward
In 2022, we are expecting to benefit from continued
recovery in Retail and Aviation fuel sales as travel resumes.
Geo-political factors are likely to continue to drive some
uncertainty and volatility, with tight oil supply impacting fuel
prices in the short term. The Fuel Security Package provides
considerable protection from these forces within our refining
business. We expect to further develop the Geelong Energy
Hub projects and are committed to maintaining a strong
capital discipline, delivering attractive cash returns and
supporting our investors.
We are excited about the foundations we have laid in 2021
and look forward to the opportunities ahead.
Our approach to the energy transition is to continue to support
Australia’s energy security while concurrently developing,
integrating, and commercialising new lower-carbon energies
so that we actively support and accelerate the transition.
Robert Hill
Chairman
Scott Wyatt
Chief Executive Officer
and Managing Director
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07
Viva Energy Group Limited – Annual Report 2021
Board of Directors
Robert Hill
Independent
Non-Executive Director
and Chairman
LLB, BA, LLD(Hon), LLM,
DPolSc(Hon)
Scott Wyatt
Chief Executive Officer
and Managing Director
BCA
Arnoud De Meyer
Independent
Non-Executive Director
MSc.E, MSc.BA, PhD
Management, Hon Phd
Sarah Ryan
Independent
Non-Executive Director
PhD (Petroleum Geology
and Geophysics), BSc
(Geophysics) (Hons 1),
BSc (Geology), FTSE
Term of office
Term of office
Term of office
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 Strategy
and Investment Committee
08
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 is a director of the
Australian Institute of Petroleum
and is a former Board member
of Viva Energy REIT (now
Waypoint REIT) (2016 to 2019).
Board Committee memberships
• Member of the Strategy and
Investment Committee
Appointed to the Board
on 18 June 2018.
Appointed to the Board
on 18 June 2018.
Skills and experience
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 Professor
Emeritus at SMU.
Arnoud currently serves on
the boards of Banyan Tree
Holdings, upGrad Tech Pte
Ltd, 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 Strategy and
Investment Committee
• Member of the Remuneration
and Nomination Committee
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 the ASIC Corporate
Governance Consultative 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), OZ Minerals
Limited (since 2021) and MPC
Kinetic Pty Ltd (since 2016).
She is a former director of
Akastor ASA (2014 to 2021),
Central Petroleum Limited (2017
to 2018) and Aker Solutions ASA
(2010 to 2014).
Board Committee memberships
• Chair of the Audit and Risk
Committee
• Member of the Sustainability
Committee
• Member of the Strategy
and Investment Committee
Viva Energy Group Limited – Annual Report 2021 Former Director
Nicola Wakefield
Evans
Independent
Non-Executive Director
BJuris/LLB, FAICD
Dat Duong
Non-Executive Director
BBA, CFA
Michael Muller
Non-Executive Director
BA (Econ.Geography)
Jane McAloon
Former Independent
Non-Executive
Director
BEc(Hons), LLB, GDip
CorpGov, FAICD
Term of office
Term of office
Term of office
Term of office
Appointed to the Board on
18 June 2018, resigned with
effect on 25 August 2021.
Skills and experience
Jane McAloon served as a
Non-Executive Director on
the Board, as Chair of the
Sustainability Committee
and a member of the Audit
and Risk Committee and
the Strategy and Investment
Committee until her
resignation, effective
25 August 2021.
Jane was an executive
at BHP Billiton and AGL
and had held positions in
government in energy, rail
and natural resources as well
as being a Non-Executive
Director of several listed
and unlisted companies.
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. He is
currently a director of VG
Mobility (UK) Advisers Limited.
Board Committee memberships
• Member of the Audit and
Risk Committee
• Member of the Remuneration
and Nomination Committee
• Member of the Strategy
and Investment Committee
Appointed to the Board
on 1 October 2020.
Skills and experience
Mike Muller joined Vitol
in 2018 and is currently the
Head of Vitol Asia Pte Ltd and
a member of the Vitol Group
Board of Directors.
Prior to Vitol, Mike 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, Mike 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 Strategy
and Investment Committee
Appointed to the Board
on 3 August 2021.
Skills and experience
Nicola Wakefield Evans is a
highly experienced director
with broad ranging commercial,
strategy and corporate finance
legal experience gained over
a 30-year international career,
including 20 years as a partner
of King & Wood Mallesons.
During her time at King &
Wood Mallesons, Nicola held
a variety of senior management
positions with responsibility
for development and growth
of the international practice
and the Hong Kong, China
and London offices of King &
Wood Mallesons. Nicola’s key
areas of industry experience
include resource and energy,
infrastructure, financial services
and technology.
Nicola is currently a Non-
Executive Director of two ASX
listed companies, Macquarie
Group and Lendlease
Corporation, and also serves on
the board of MetLife Australia.
Nicola is also the Chair of 30%
Club Australia, member of the
Takeovers Panel, and member of
the boards of the Clean Energy
Finance Corporation, Australian
Institute of Company Directors,
the Goodes O’Loughlin
Foundation and the University
of New South Wales Foundation.
Nicola holds a Bachelor of
Jurisprudence and a Bachelor
of Laws from the University of
New South Wales.
Board Committee memberships
• Chair of the Sustainability
Committee
• Member of the Audit and
Risk Committee
• Member of the Strategy
and Investment Committee
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09
Viva Energy Group Limited – Annual Report 2021
Executive Leadership Team
Scott Wyatt
Chief Executive Officer
Jevan Bouzo
Chief Operating and
Financial Officer
Dale Cooper
Executive General
Manager, Refining
Amanda Fleming
Chief People and
Technology 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. In 2021,
Jevan assumed the expanded
role of Chief Operating and
Financial Officer.
Jevan is a Chartered
Accountant and holds a
Bachelor of Commerce
(majoring in Accounting
and Finance) from Monash
University.
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.
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.
Executive changes
There were changes in our Executive Leadership Team during the year.
Jevan Bouzo was appointed to an expanded role of Chief Operating
and Financial Officer, assuming responsibility for supply chain operations
in addition to his Chief Financial Officer accountabilities. This brought
together finance and operations to help drive stronger financial and
commercial focus across our business segments. Jevan succeeded
Thys Heyns in the Chief Operating Officer role. Thys left the Company
on 31 March 2021, having made the decision to retire after six years
of service to the Company.
Lachlan Pfeiffer was appointed to an expanded role of Chief Business
Development and Sustainability Officer. In this role he continues to be
responsible for assurance functions which support good governance,
and now combines this with leading the broader business development
opportunities, and the communication of our sustainability strategy
and associated initiatives.
10
Viva Energy Group Limited – Annual Report 2021 Megan Foster
Executive General
Manager, Retail
Lachlan Pfeiffer
Chief Business Development
and Sustainability Officer
Denis Urtizberea
Executive General
Manager, Commercial
Megan Foster has over
30 years’ experience in retail
across Petrol and Convenience,
FMCG, Grocery, Specialty,
Food, and general Retail.
Megan brings to her role
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 their 22 Australian
assets. Previously she has held
Senior Executive 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 Pfeiffer joined the
business in 2014, and has held
roles with the Group including
as General Counsel and
Executive General Manager,
Legal and External Affairs.
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
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 (with Hons) from Monash
University. He is also a member
of the Australian Institute of
Company Directors.
Denis Urtizberea joined Viva
Energy Australia late 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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Viva Energy Group Limited – Annual Report 2021
12
Viva Energy Group Limited – Annual Report 2021 Operating and financial review
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Company overview
Viva Energy is one of Australia’s leading energy companies.
In 2021, Viva Energy supplied over 13 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 1,340 Shell, Liberty
and Westside 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. As of this reporting period, wholesale sales
(previously in Retail), are now reported in Commercial.
Viva Energy supplies and markets
quality fuel products through a
national network of over 1,340 Shell,
Liberty and Westside branded retail
service stations with over 700 of the
sites being operated by Coles Express
under the Coles Alliance.
Refining
Viva Energy owns and operates the country’s largest and most
complex refinery in Australia, located at Geelong in Victoria.
Refineries play an important role in processing 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 (approximately 50%
of Victoria’s fuel demand) and is the only manufacturer of
bitumen, aviation gasoline (Avgas) for use in piston engine
aircraft, and aromatic and aliphatic based solvent products.
Supply and Distribution
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 its
own fuel delivery fleet of over 80 vehicles.
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13
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
Our strategy
We have been operating in Australia for 120 years and
throughout that time we have established significant
infrastructure positions, deep relationships with our
customers, strategic partnerships with leading companies
in their field, and a reputation for operating safely, reliably,
and with integrity.
Our purpose is to ‘help people reach their destination’ and
through our extensive retail network, commercial business,
national terminal and pipeline infrastructure position and
strategically located refinery in Geelong, Victoria, Viva Energy
supplies approximately a quarter of Australia’s liquid fuel
requirements.
In 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 remain an important part of every Australian’s
daily life. We are, however, at the beginning of a long-term
energy transition that is necessary to reduce emissions and
we have an important role to play in providing the energy
that people need today as well as the energies of the future,
and our strategies will focus on both. Beyond energies,
we are also focused on growing our exposure to non-fuel
earnings into other areas where we have proven success
and see new growth opportunities.
At our November 2021 investor day, we talked about our
strategy to evolve our businesses and this will be reflected
in the strategies we pursue and decisions that we take:
• Over time we aspire to transition to a fully integrated Fuel
and Convenience Retailer. We consider that full exposure to
the convenience market will become increasingly important
as mobility and convenience needs expand.
• Our commercial business already supplies a range of energy
and non-energy products and services to a diverse range
of commercial and industrial sectors. We intend to support
our customers to reduce emissions and progress their own
energy transition, as well as continuing to meet their current
energy needs.
• We believe that the refining industry plays a vital role in
Australia’s economy, and have worked closely with the
Australian Federal Government to implement a long-
term Fuel Security Package which provides important
support to the refining sector. With the future of the
refining business now more certain and less volatile, we
have a much stronger foundation to progress the further
development of our site at Geelong into an Energy Hub to
support the Company’s longer-term aspirations to expand
into other forms of energy such as natural gas, hydrogen
and renewable electricity. Beyond the refinery, we have
significant and strategic pipeline, terminal and logistics
infrastructure positions around the country where we will
explore opportunities to leverage and maximise the value
that underpins these infrastructure positions.
14
Viva Energy Group Limited – Annual Report 2021 Some of the early foundation steps we have taken in this evolution are shown below.
Today
Pathway
Future
Progress to date
Retail
Retail Network
and Branded
Fuels Supplier
Leverage
network
strength
and acquire
convenience
capability
Fuel and
convenience
retailer
Commercial
Commercial
Fuels,
Lubricants and
Specialties
Supplier
Leverage B2B
capability
and customer
relationships
Commercial
and industrial
services and
solutions
• Renegotiated Alliance agreement to fully control fuel offer
• Established and grown Liberty Convenience business to
provide additional retail and convenience growth pathway
• Secured future rights to take full control of Alliance and
Liberty Convenience businesses
• Coles Express store and forecourt refreshment program
• Improved network efficiency across all platforms
• Contracts to operate Rio Tinto, Woodside and HMAS
Cairns fuel facilities
• Established Carbon Solutions business. Launched Carbon
Neutral Jet Fuel and supplied first carbon neutral flight.
Further expansion to other sectors
• Working with customers to deploy Hydrogen fuelled
Electric Vehicles in heavy transport segment
• Partnered with Waga Energy for potential biomethane
offtake as part of lower-carbon product suite
• Secured contract with Government to operate Geelong
Refinery until at least mid 2028, and construct strategic
diesel fuel storage
Energy Hub
Oil Refinery
and Importer
Leverage
strategic
infrastructure
and internal
energy
capability
Energy and
infrastructure
• Refining margin volatility risk reduced through FSSP,
with opportunity for upside outperformance
• Progress on Gas Terminal Project at Geelong (FID by Q3
2022) with other projects in progress to create an
Energy Hub at Geelong
Looking to the future, we intend to maintain a strong focus
on outperformance in our traditional business while at the
same time leveraging our diversity to create value in new
growth areas:
• Outperform in our core businesses: we see continued
growth in our traditional markets, with opportunities to
outperform through: maintaining operating and capital
efficiency; optimising sales and margin opportunities;
building brand and customer preference; and profitably
growing market share.
• Leverage diversity to develop new energy and
non-energy growth pathways: convenience offer
development; Geelong Energy Hub Projects; integration
of new energies; commercial and carbon solutions.
• Acquire capability to accelerate proven opportunities:
invest and acquire capability where this can accelerate or
extend our growth opportunities. We have a strong balance
sheet with capacity for reinvestment, and will look to deploy
this in areas which support future growth.
2021 Business performance summary
The Group delivered an exceptional performance across
all parts of the business during 2021 and the management
team is particularly proud of the way we continued to care
for our people and successfully minimised the impacts from
the pandemic on our operations to maintain safe and reliable
supply to our customers through some challenging periods.
Emerging economic recovery and sustained market share
growth across key segments lifted group sales by 7%,
with strong earnings underpinned through our Commercial
and Industrial segments outperformance. Whilst Retail
earnings were impacted from rising oil prices and lower
retail fuel margins, the Refining business benefited from
strengthening refining margins during the final quarter on
the back of strong global demand for energy. Underlying
Group EBITDA (RC) and Underlying Free Cash Flow (RC)
is up $239.6M and $174.0M respectively during the year.
The Company maintained a disciplined approach to capital
management and retains a strong balance sheet that supports
future growth opportunities, which was set out in the Investor
Day that was held in November 2021.
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15
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance
summary continued
Our strategy is to develop and maximise the value of our
three discrete and unique businesses to establish new
energy and non-energy pathways. Increasing our exposure
to convenience as partnerships conclude will be key for our
Retail business, while our Commercial business will continue
to supply a range of energy and non-energy products and
services to a diverse range of industries. With the future of
our Geelong Refinery now secure, we have plans to further
develop the site into a broader Energy Hub. We expect to
deliver more than $50M of new earnings over the next three
to five years from our various businesses.
We are also proud of the commitments we have made in
2021 to progressively reduce emissions and achieve net zero
across the Group by 2050. These commitments together with
already announced new energy initiatives are our early steps
towards creating a decarbonised future.
The diversity of our earnings has helped to insulate the
Company from the impacts of higher levels of oil price
volatility and segment specific impacts from lockdowns and
border closures. Together with the Fuel Security Package,
which provides protection for the Refining business during
periods of low regional refining margins, the Company is well
positioned to deliver further consistent returns and benefit
from a further recovery in our markets during 2022.
Viva Energy consolidated results for
the full year ended 31 December 2021
The Group Net Profit After Tax on a historical cost basis (HC)
for 2021 was $232.9 million (M). After adjusting for revaluation
gains, net inventory gain and the AASB 16 Lease impact, Net
Profit After Tax on a replacement cost basis for the period was
$191.6M. A reconciliation from Statutory Profit After Tax (HC)
to Net Profit After Tax (RC) is summarised in the table below.
Reconciliation of Statutory Profit After
Tax to Net Profit After Tax (RC)
Statutory Profit After Tax
Less: Net inventory gain net of tax at 30%
Less: Revaluation gain on FX and oil
derivatives net of tax at 30%
Add: AASB 16 Lease impact net of tax at 30%
Net Profit After Tax (RC)
(A$M)
232.9
(88.6)
(11.3)
58.6
191.6
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
The diversity of our earnings has
helped to insulate the Company from
the impacts of higher levels of oil price
volatility and segment specific impacts
from lockdowns and border closures.
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.
To further assist with the assessment of the underlying
performance of the business, replacement cost measures
include lease expense and exclude lease interest and right-
of-use amortisation. These amounts are captured in the
‘AASB 16 Lease impact’ line item in the above reconciliation
table. Financial measures based on replacement costs and
inclusive of lease expense are identified by the use of the
suffix ‘RC’.
Reporting changes implemented in 2021
Since the last reporting period the Group has undertaken a
review of its underlying financial reporting across the different
business segments. The review considered the evolution of
our strategy, the way in which the business is run practically
and how to improve transparency of underlying performance.
The reporting changes implemented following this review
will also assist in the comparison of our result with our key
competitor. Whilst the number of segments remains the same,
the historical Supply, Corporate and Overheads (S,C&O)
segment is replaced with a Corporate segment. These changes
are reflected in the Summary Statement of Profit or Loss in
the Directors’ Report, with the key changes detailed below:
1. Adjustment to lease accounting – Lease expenses
previously excluded from EBITDA (RC) in accordance
with AASB 16 Leases have now been included in the
Underlying results of each relevant business. The impact
of adopting AASB 16 (including lease interest and lease
related amortisation) will be reported between NPAT (RC)
and NPAT (HC).
2. Segment reclassification – Wholesale volumes, which
includes Liberty Wholesale, have been moved from
Retail into Commercial as the margin and product mix
of wholesale fuel volumes is more aligned with the
Commercial segment. The Retail segment exclusively
represents sales from our branded retail network.
3. Supply, Corporate and Overhead costs – All applicable
S,C&O costs have been allocated into operating segments
with the residual ‘Corporate’ segment reflecting certain
head office functions and commonly used resources that
are not considered appropriate to be allocated to the
Group’s reportable segments.
4. FX and derivatives – Revaluation gain / (loss) on FX and
oil derivatives will be reported between NPAT (RC) and
NPAT (HC). Underlying NPAT (RC) now aligns with previous
Distributable NPAT (RC).
16
Viva Energy Group Limited – Annual Report 2021 Summary Statement of Profit and Loss
(A$M)
Revenue
31 December 2021
31 December 20202
Group
RFM1
Refining
Group
RFM1 Refining Variance
15,900.0
15,900.0
-
12,409.9
12,409.9
-
3,490.1
Cost of goods sold (RC)
(14,274.0)
(14,559.3)
285.3
(11,082.9)
(11,136.7)
Gross Profit (RC)
Retail, Fuels & Marketing
Retail
Commercial
Refining
Corporate
1. Total EBITDA (RC)
Retail, Fuels & Marketing
Retail
Commercial
Refining
Corporate
2. Share of profit from associates
Net loss on other disposal of assets
4. Net finance costs
Profit before tax (RC)
5.
Income tax (expense)/benefit (RC)
6. Net Profit/(Loss) After Tax (RC)
7. Significant one-off items3
8. Net inventory gain/(loss)3
9. Revaluation gain on FX and oil
derivatives3
10. AASB 16 Lease impact3
Net Profit/(loss) After Tax (HC)
1,626.0
1,340.7
285.3
1,327.0
1,273.2
747.6
593.1
285.3
-
747.6
593.1
-
-
484.2
392.8
-
-
285.3
-
91.4
760.8
512.4
53.8
-
760.8
512.4
-
-
53.8
53.8
(3,191.1)
299.0
-
-
53.8
-
(13.2)
80.7
231.5
-
244.6
382.2
(137.6)
239.6
187.5
217.3
103.4
187.5
217.3
-
-
235.4
156.4
235.4
156.4
-
-
(47.9)
60.9
-
103.4
(127.9)
-
(127.9)
231.3
(24.0)
(12.0)
(12.0)
0.6
(0.4)
0.6
(0.4)
-
-
(19.3)
10.6
(1.9)
(9.6)
10.6
(1.9)
(9.7)
-
-
(4.7)
(10.0)
1.5
(0.6)
(23.9)
284.4
(92.8)
191.6
-
88.6
11.3
(21.2)
259.0
(85.2)
173.8
-
79.6
5.7
28.1
(2.7)
25.4
(7.6)
17.8
-
9.0
5.6
77.8
(22.5)
55.3
(21.9)
33.4
179.3
290.1
(212.3)
230.5
(21.1)
(1.4)
(1.4)
269.0
(213.7)
229.1
(86.0)
64.1
183.0
179.3
(149.6)
-
(70.9)
158.2
(179.3)
(179.6)
(139.2)
(40.4)
268.2
1.7
0.9
0.8
9.6
(58.6)
232.9
(58.6)
200.5
-
(71.0)
(71.0)
-
12.4
32.4
(36.2)
153.0
(189.2)
269.1
3. Depreciation and amortisation
(176.1)
(112.8)
(63.3)
(175.5)
(100.8)
(74.7)
Profit before interest and tax (RC)
308.3
280.2
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Statutory earnings per share (HC)
Underlying earnings per share (RC)
14.6
12.0
(1.9)
1.8
16.5
10.2
1. Retail, Fuels and Marketing (RFM).
2. Prior year comparatives reflect the recently implemented reporting changes.
3. Results are reported net of tax.
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17
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance summary continued
The table below provides a reconciliation by segment profit/(loss) before tax (RC) per the above summary statement of profit
or loss, to profit/(loss) before tax (HC) in note 3 Segment information within the financial statements.
(A$M)
RFM Refining Corporate
Total
segments
RFM Refining Corporate
Total
segments
31 December 2021
31 December 2020
Profit/(loss) before tax
(RC) as above
Adjusted for:
Lease expense
Allocations
Interest income
Right-of-use amortisation
Lease interest expense
Revaluation gain on FX
and oil derivatives
Net inventory gain/(loss)
Significant items
Profit/(loss) before tax
(HC) as per segment note
259.0
25.4
-
284.4
268.9
(213.7)
-
55.2
296.2
12.0
(1.1)
(215.8)
(162.6)
0.1
12.0
(0.8)
-
-
8.1
8.0
113.7
-
309.5
12.9
-
57.6
(24.0)
1.9
(2.8)
(2.7)
-
-
-
3.9
300.2
270.9
-
-
(218.6)
(165.3)
16.1
9.6
(2.2)
(210.6)
(160.3)
1.3
0.1
9.6
(2.2)
-
-
1.2
126.6
(198.9)
(57.7)
-
-
-
(23.7)
343.4
(21.3)
(262.7)
3.8
(19.2)
4.4
(2.7)
(2.7)
-
-
113.9
97.5
274.8
-
-
(213.3)
(163.0)
2.5
(256.6)
113.9
(186.5)
Summary statement of profit and loss analysis
1. EBITDA (RC)
Retail
Retail achieved strong sales volumes and market share gains,
with growth achieved in the predominately regionally focused
Liberty Convenience and Dealer Owned channels. Continued
investment in the Alliance network with our partner, Coles,
has maintained strong brand share and customer preference
through this core convenience channel. In-store experience
has been improved through the refreshment of 137 Coles
Express stores over the last two years, and a further 130 stores
will see investment during 2022.
The Alliance channel was affected by lockdowns in Victoria
and New South Wales during Q3 2021, with weekly fuel sales
averaging 55.6 million litres per week through 2021, a slight
improvement on the 54.9 million litres per week achieved
during 2020. As restrictions were eased during Q4 2021 sales
volumes recovered to their highest levels in over 12 months,
reaching 65ML across consecutive weeks during December.
Diesel sales were particularly strong, reaching the highest
level of sales in five years.
Premium petrol penetration improved during the year,
increasing from 30% to 31%, while premium diesel penetration
increased from 0.8% to 2.2%. The Company continues to
invest in our premium brands and has taken steps to
increase availability of premium fuel across all our Shell
branded networks.
Retail profitability was lower due to rising oil price impacts
on retail fuel margins. Margins are expected to recover as oil
price stabilises and price increases flow through to the retail
price boards. Higher fuel prices may impact demand and
margin in the short term.
Commercial
The Commercial business achieved strong earnings uplift
across most segments during 2021, with total underlying
EBITDA (RC) of $217.3M improving by $60.9M over 2020.
Actions taken during 2020 to reduce costs and strategically
rebase businesses that were heavily impacted by the
pandemic (particularly Aviation and Marine) underpin much
of this earnings improvement, but the Company has also
benefited from strong sales growth within our specialty
businesses. Our exposure to a diverse range of segments
provides multiple pathways for growth and this is a unique
strength of our Commercial business.
The Commercial business is expected to benefit from
continued economic recovery and further sales growth
is expected following a recovery of Aviation and Marine
cruise sectors. This will likely result in higher supply chain
costs as servicing capacity are re-installed ahead of this
increase in demand.
Refining
Geelong Refinery achieved crude intake of 41.2MBBLs with
operational availability at 94.2% during 2021. Geelong Refining
Margin (GRM) increased from US$3.1/BBL in 2020 to
US$7.1/BBL as a result due to increased production, lower
crude premia, improved product yields, and strengthening
refining margins, particularly during the final quarter of the
year. Final Underlying EBITDA (RC) was $103.4M compared
with a loss of ($127.9M) in the prior year.
During the year the Refinery received income of $53.0M
under the Federal Government’s Temporary Refining
Production Payment (TRPP) ($40.6M) and Federal Security
Services Payment (FSSP) ($12.4M) programs, and $2.5M in
JobKeeper support. No payments were received for Q4 2021
due to improved refining margin conditions and a return
to profitability. Refining margins in 2022 are expected
18
Viva Energy Group Limited – Annual Report 2021 to be influenced by the recovery in global oil demand and
reduction in refinery capacity because of recently announced
or completed refinery closures and capacity reductions.
Crude premia in 2022 to date have continued to increase
following higher global oil demand.
The Company completed major maintenance work that
was previously deferred from 2020, and has commenced
planning for investment necessary to produce ultra-low
sulphur petrol by the end of 2024. The Company has received
a grant of $33.3M from the Federal Government to construct
an additional 90ML of diesel storage to meet minimum
stockholding obligations and support the government’s
fuel security program and expects to commence
construction in the 1H 2022.
The Company continues to advance a range of projects
at our Energy Hub at Geelong, including the Gas Terminal
Project in Victoria, and other new energy projects including
solar, and hydrogen re-fuelling offer aimed at heavy vehicles.
These projects are expected to progress to Final Investment
Decision (FID) during 2022.
Corporate
Corporate costs relate to certain head office functions
and commonly used resources that are not considered
appropriate to be allocated to the Group’s reportable
segments. The increase year on year is reflective of the
activity in relation to Group-led new energy strategic work,
increased incentives due to improved performance and
increased activity as the business recommenced work
deferred during 2020.
2. Share of profit from associates
Share of profit from associates represents the Group’s 50%
ownership of Liberty Oil Convenience’s result for the year.
The prior comparative period included eight months of the
Group’s share of Westside Petroleum’s result (with August
2020 being the timing of the acquisition of the remaining
share of Westside) and two months’ share of profit from
Waypoint REIT with the Group selling its security holding
in this investment at the end of February 2020.
3. Depreciation and amortisation
Depreciation and amortisation includes $140.4M of
depreciation on property, plant and equipment, $32.7M
of amortisation expense on intangible assets and $3.0M
on leases classified as finance leases prior to the introduction
of AASB 16 Leases. Total depreciation and amortisation of
$176.1M is broadly in line with the prior comparative period.
4. Net finance costs
Net finance costs of $23.9M were $1.4M higher than the
prior comparative period and consisted of interest income
of $1.9M, interest expense on borrowings, amortised
transaction costs and fees associated with trade finance
instruments of $12.2M, finance costs associated with leases
classified as finance leases prior to the adoption of AASB 16
Lease of $8.0M and the unwinding of discount on balance
sheet provisions of $5.6M.
The increase in net finance costs is due primarily to the Group
holding the proceeds from the sale of the Waypoint REIT
investment for most of 2020, prior to the Group’s capital
management plans being undertaken.
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19
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance
summary continued
Summary Statement of Profit and Loss
Analysis continued
5. Income tax expense
The Group is subject to income tax on the basis of historical
cost earnings (NPAT HC) rather than replacement cost
earnings (NPAT RC).
The income tax expense for the period is $92.8M (RC) and
$110.5M (HC), representing effective tax rates of 32.6% and
32.2% respectively. The key driver of the effective tax rate
exceeding the corporate tax rate is the non-deductibility of
the amortisation of the $137.0M payment to Coles Express
under the extended Alliance agreement in 2019.
6. Net Profit/(Loss) After Tax (RC)
The Net Profit After Tax (RC) of $191.6M represents a $158.2M
increase year on year, driven primarily by improved refining
conditions and assisted by the receipt of support under the
government’s TRPP and FSSP schemes. Retail, fuels and
marketing also contributed to the improvement with strong
Commercial results compensating for the impact of COVID-19
on retail volumes.
7. Significant one-off items (net of tax)
The prior year significant item relates to the sale of the
Group’s 35.5% security holding in Waypoint REIT for
an average of $2.66 per security.
8. Net inventory gain/(loss)
Net inventory gain/(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 gain of $88.6M (net of tax) reflects the
increase in oil prices experienced during the year.
9. 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 $11.3M (tax effected) was recognised
as a result of the impact of an increase in the oil price in the
first half of the year, offset by gains on FX hedges due to a
decrease in the AUD/USD exchange rate in the second half
of the year.
10. AASB 16 Lease impact
As detailed above (refer to ‘Reporting changes implemented
in 2021’ section), the EBITDA (RC) results include segment
applicable lease expense to provide a full view of segment
profitability. The line item AASB 16 Lease impact reflects the
elimination of lease expense and the recognition of lease
interest and right-of-use amortisation, to then report the
results under a historical cost and AASB 16 Lease basis.
20
Viva Energy Group Limited – Annual Report 2021 Summary statement of financial position
(A$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
Summary statement of financial
position analysis
1. Working capital
Working capital increased by $87.6M primarily as a result
of an increase in average benchmark crude and refined
product prices of A$45.2/BBL between December 2020
and December 2021.
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.
PP&E increased year-on-year due to a number of factors
including the resumption of non-essential work deferred
in the prior year due to the outbreak of COVID-19,
undertaking additional tank replacements and tank reline
work and the commencement of work on the Gas Terminal
Project. Capital works were also undertaken during the year
to enhance the Retail network, both in respect to site
forecourts and the convenience stores.
The increase of $40.7M represents additions of $190.1M
being capital expenditure of $185.1M, asset retirement
obligation additions of $3.8M, land purchased for resale of
$0.9M and business acquisitions of $0.3M. 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 $0.2M.
Offsetting these increases were depreciation of $140.4M,
disposals of $7.6M, and transfers including those of completed
software projects to intangibles $1.6M. A breakdown of
capital expenditure by segment is outlined below.
(A$M)
a. Retail, Fuels and
Marketing
b. Refining
2021
81.6
2020 Variance
37.7
43.9
Major Maintenance
Gas Terminal Project
New Energies
Other Refining
Capital expenditure
36.2
13.6
0.6
53.1
185.1
92.3
2.4
-
25.0
157.4
(56.1)
11.2
0.6
28.1
27.7
31 December 2021
31 December 2020
Variance
177.5
1,518.8
2,184.8
621.5
16.0
(95.2)
(2,480.5)
(136.9)
305.9
2,111.9
89.9
1,478.1
2,321.5
646.7
15.4
(104.2)
(2,534.3)
(181.8)
325.8
2,057.1
87.6
40.7
(136.7)
(25.2)
0.6
9.0
53.8
44.9
(19.9)
54.8
a. Retail, Fuels and Marketing
Retail, Fuels and Marketing capital expenditure of $81.6M
includes capital expenditure of $41.6M ($18.6M in 2020) for
new site branding, refreshing network convenience stores
and forecourts together with tank replacements, tank relines
and other asset integrity works. In addition, expenditure of
$37.4M ($21.5M in 2020) relates to expenditure to ensure the
integrity of the Group’s terminals and pipelines as well as
depot works and branding of dealer owned sites within the
Liberty Wholesale network ($2.6M). The year-on-year increase
is reflective of focus on non-essential spend in the prior year
combined with a renewed focus on improving the customer
retail experience.
b. Refining
Major maintenance
Major maintenance expenditure during the year of $36.2M
relates primarily to activity on the Refinery’s Hydrofluoric Acid
Alkylation ‘HFA’ plant, which was deferred from 2020, and on
the Bitumen Manufacturing Plant.
Gas Terminal Project
Expenditure of $13.6M was incurred during the period
advancing the Gas Terminal Project towards a final investment
decision. It is anticipated that the FID will be made by the
third quarter of 2022.
Other refining capital expenditure
Other refinery capital expenditure of $53.1M relates to
ongoing asset integrity and tank maintenance activity
together with a range of projects including the replacement
of equipment associated with the HFA major maintenance
event and continued work on the refinery’s control systems.
Work also commenced on the low sulphur gasoline project
and on the building of additional storage ahead of the
Minimum Stockholding Obligations coming into effect
from mid-2022.
3. Right-of-use assets
The right-of-use assets balance at year end was $2,184.8M,
a decrease of $136.7M from the prior comparative period.
Impacting this balance during the year were lease extensions,
new leases and the impact of lease payment escalations totalling
$84.9M (net of the impact of terminations). Depreciation charges
of $221.6M were recognised during the year.
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21
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance
summary continued
Summary statement of financial
position analysis continued
4. Intangible assets
Intangible assets decreased by $25.2M during the year
primarily due to amortisation charges of $32.7M offset in
part by the recognition of Goodwill ($5.3M) in relation to
small business acquisitions during the year. Also contributing
to the year-on-year movement is the capitalisation of
software projects ($2.2M).
5. Investment in associates
This balance relates to the Group’s 50% ownership of Liberty
Convenience.
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
decreased by $9.0M during the year.
7. Lease liability
The lease liability balance at year-end was $2,480.5M, a
decrease of $53.8M from the prior comparative period, with
lease extensions, new leases and lease escalations of $83.9M
more than offset by payments of lease principal totalling
$137.7M made during the year.
8. Long-term provisions, other assets and liabilities
The decrease in the net liability of $44.9M during the year
primarily represents a decrease in net derivative liabilities
($17.6M), an increase in net defined superannuation benefit
asset ($6.6M), the recognition of the Group’s purchase
of securities in Hyzon and Waga Energy ($9.2M) and the
unwinding of the discounting on the long-term payable
($2.5M). Other long-term receivables increased by $6.1M
due to a reclassification from short-term, while other long-term
provisions decreased by $7.9M during the year, primarily due
to a change in discount rate assumptions.
9. Net deferred tax asset
The net deferred tax asset relates to the tax effected
difference between the carrying value of assets and liabilities
recorded for accounting purposes, and those recorded for
tax purposes.
The movement in this balance during the year relates
predominantly to the use of tax losses generated during the
2020 year to offset 2021 tax payable, combined with other
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 increased by $54.8M primarily due to the
recognition of net profit after tax of $232.9M, partially offset
by capital management activities undertaken during the year
being a capital return of ($99.4M) and the share buy-back
program ($18.2M). Also impacting equity during the year
was the payment of dividends totalling ($65.7M) and other
transactions relating to the Group’s share-based incentive
plans and the purchase of treasury shares.
22
Viva Energy Group Limited – Annual Report 2021 Summary Statement of Cash Flows
(A$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
Increase/(decrease) in Trade and other payables
Increase/(decrease) in provisions
1. Changes in working capital
2. Non-cash items in profit before interest, tax, depreciation
and amortisation
Repayment of lease liability
Interest on capitalised leases
Operating free cash flow before capital expenditure
Payments for PP&E and intangibles
Proceeds from sale of PP&E
Net inflow/(outflow) for land developments
Acquisition of investments
Repayment of loan by associate
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
Finance costs
Net cash consideration paid for step acquisition of associate
7. Net income tax (payments)/refund
Net cash flow available for dividends and before borrowings
8. Dividends paid
9. Capital return
Net drawings/(repayment) 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
31 December
2021
31 December
2020
927.3
(502.3)
(480.8)
(9.5)
801.3
10.3
(181.0)
2.8
(137.7)
(173.3)
438.1
(185.1)
5.1
1.6
(15.8)
4.2
-
(9.4)
(18.0)
-
220.7
(8.9)
-
(36.1)
175.7
(65.7)
(99.6)
37.3
47.7
273.9
456.3
497.9
9.0
Variance
653.4
(958.6)
(978.7)
(18.5)
(859.6)
1,660.9
(6.9)
96.7
5.5
(124.8)
(171.0)
80.3
(158.5)
15.0
-
-
-
730.1
(8.8)
(50.3)
19.8
627.6
(6.6)
(1.0)
11.8
17.2
(277.7)
(2.7)
(12.9)
(2.3)
357.8
(26.6)
(9.9)
1.6
(15.8)
4.2
(730.1)
(0.6)
32.3
(19.8)
(406.9)
(2.3)
1.0
(47.9)
631.8
(456.1)
(180.5)
(414.4)
(107.2)
(70.3)
(104.2)
(137.4)
-
(1.4)
-
(95.2)
10.4
(2.2)
(1.4)
(0.1)
(104.2)
36.9
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23
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance
summary continued
Summary Statement of Cash Flows analysis
1. Changes in working capital
Inventory increased primarily as a result of an increase in
average benchmark crude and refined product prices of
A$45.2/BBL, with further increases a result of higher 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 $0.6M, unrealised
gains on foreign exchange and derivatives of $3.3M, offset
by transactions relating to employee share-based payments
of $6.9M and other minor amounts.
3. Proceeds from sale of investments
In the prior period, 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.
4. Payment for treasury shares (net of contributions
and capital returns)
During the year 4,269,221 shares were purchased at an average
price of $2.20 per share ($9.4M).
5. Share buy-back
During the year the Company continued with the buy-back
arrangements as announced on 24 August 2021 and purchased
7,924,716 shares on-market at an average price of $2.27.
6. Dividends received from associates
In the prior period, the Group received payment of the
Waypoint REIT 2019 final dividend prior to the sale of its
investment in the company.
7. Net income tax payments/refund
The net income tax payments of $36.1M for the year
represents a $23.7M tax refund received post-lodgement
of the Group’s 2020 financial year income tax return (whereby
instalments paid during the prior year exceeded the Group’s
final tax liability), tax instalments of $54.6M paid by the Group
in the current year to the ATO, and tax payments of $5.2M
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 23 September 2021, the Company paid a fully franked
interim dividend of 4.1 cents in relation to the six months
ended 30 June 2021 ($65.9M). Of this payment, $0.2M related
to the Group’s treasury shareholding at the time of payment.
9. Capital return
On 24 October 2021, the Company returned $99.7M to
shareholders by way of a capital return of 6.2 cents per share
as part of the Group’s capital management program.
Of this payment, $0.3M related to the Group’s treasury
share holding at the time of payment. Transaction costs
of $0.2M were incurred.
24
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 towards the key controls over
each of the risks.
Viva Energy Group Limited – Annual Report 2021 C
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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.
• Federal Government Fuel Security Services Payment (FSSP) will provide
financial support in low refining margin environment during the applicable
commitment period.
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25
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance summary continued
Risk management continued
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, interruption of power supply,
and off-shore supply impacts. 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).
ExxonMobil completed the closure of its Altona
refinery in August 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 (prior to its closure)
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.
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 an 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 reducing interactions between workgroups, the use
of temperature checks, and implementing vaccination incentive and rapid
antigen testing programs.
• 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 Health.
• 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.
26
Viva Energy Group Limited – Annual Report 2021 Strategic risk
HSSE risks
Our response
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.
• 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.
Key strategic relationships and third party branding
We have a number of key business and
operational relationships, including with
Coles Express, Shell, Vitol and Liberty Oil
Convenience. 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.
• 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 have representation on the Boards of Viva Energy equity interests
(e.g. Liberty Oil Convenience) to oversee that an appropriate internal
control framework is in place.
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27
Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance summary continued
Risk management continued
Strategic risk
Climate change
Our response
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
(including shifts in consumer preferences);
• increased operating costs arising from
regulatory responses to reduce greenhouse
gas emissions (such as a price on carbon);
• increased exposure to legal action as
stakeholder scrutiny of emissions intensive
industries grows;
• increased reputational impacts affecting 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.
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.
• 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 pursuing new
sustainability strategic opportunities that we see developing in the low-
carbon energy transition, such as our vision for the Geelong Energy Hub.
• We are incorporating climate-related issues into our financial planning
process by adopting shadow carbon prices to be applied in our
investment evaluation and capital allocation process.
• We consider physical climate risks when developing significant projects
such as the Gas Terminal Project.
• We monitor and report on our carbon footprint, and have announced
our commitment to operational emissions reduction targets, including
‘net zero by 2050’.
• 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.
• 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).
• Federal Government Fuel Security Services Payment (FSSP) will assist
to maintain sufficient liquidity during the applicable commitment period.
28
Viva Energy Group Limited – Annual Report 2021 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.
• Federal Government Fuel Security Services Payment (FSSP) will provide
financial support in low refining margin environment during the
applicable commitment period.
• 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.
• We have insurance cover in place in the event of major incidents
to supplement loss of income (cash receipts).
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, shifts in consumer
preferences and changes in technology,
have the potential to negatively impact
demand for our products.
The 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, such as Electric Vehicles, Hydrogen, Bio Fuels and
other alternative fuels.
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Viva Energy Group Limited – Annual Report 2021
Operating and financial review continued
2021 Business performance summary continued
Risk management continued
Strategic risk
Our response
Labour costs, labour availability 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.
The COVID-19 pandemic has limited the
labour market by restricting skilled labour from
entering the Australian market, compounded
by less movement domestically. With only
two remaining refineries in Australia, the pool
of experienced skilled labour for the refining
business is decreasing.
Cyber security
A cyber security breach by an external attacker
or trusted insider could cause operational,
reputational or financial damage or loss to
Viva Energy.
COVID-19 restrictions have continued the need
for an increased 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 engages with agencies/bodies that monitor and provide
intelligence to companies regarding cyber threats. These include
the Critical Infrastructure Centre, the Australian Security Intelligence
Organisation – Business & Government Liaison Unit and the Australian
Cyber Security Centre.
30
Viva Energy Group Limited – Annual Report 2021 Sustainability report
2021 Performance summary
44%
female representation in our
Senior Leadership Team
Target: 40%
Total Recordable Injury
Frequency Rate (TRIFR)1
6.70
2020: 3.61
Process Safety Events1
1
3
API Tier 1 Events
API Tier 2 Events
2020: 1
2020: 2
96%
RAP deliverables completed
Maintained a high level of
employee engagement
69%
Scope 1 and 2 GHG
emissions2
1,201,725
tCO2-e
2021 Highlights
Net Zero
emissions reduction
commitments3
Non-refining by 2030
Group by 2050
77%
of freshwater used for
Geelong Refinery is from
recycled sources
Launched
Carbon Neutral
Jet Fuel
Introduced a
Supplier Code
of Conduct
Winner of AFR BOSS
Best Places
to Work
in the Agriculture,
Mining and Utilities industry
Geelong
Energy Hub
projects under development
1. Excludes performance of Liberty Oil Holdings.
2. This data relates to 1 July 2020 - 30 June 2021.
3. Operational Scope 1 and Scope 2 greenhouse gas emissions.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Sustainability at Viva Energy
Helping people reach their destination
At Viva Energy, everything we do is driven by our purpose
to help people reach their destination. 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. As part of our Business
Principles, we commit to balancing short-term needs and
interests with those of future generations, and integrating
economic, environmental and social considerations into
business decision-making.
On the road we provide quality transport fuels and
convenience needs through a nationwide network of more
than 1,340 Shell, Liberty and Westside branded convenience
stores. In business, we provide a range of high-quality fuels
and industrial products and services to help our commercial
customers succeed and contribute to economic prosperity.
At the national level, we play a vital role in meeting
Australia’s energy security needs with our Geelong Refinery
producing 10% of the country’s fuel requirements, and
serving communities across Australia through our network
of more than 55 fuel terminals and depots and presence
at over 50 airports and airfields across the country.
At work, we provide rewarding careers for our employees
and contractors, and we acknowledge the trust that is placed
in us to operate safely and minimise our impact on the
environment in the communities where we operate. We aim
to help Australia reach net zero by reducing emissions in our
own operations and supporting our customers in reducing
theirs. We are committed to reaching net zero by 2050 and
are excited about the important role we must play and the
opportunities in the transition to lower-carbon energy.
Our approach to the energy transition is to continue to support
Australia’s energy security while concurrently developing,
integrating and commercialising new lower-carbon energies
so that we actively support and accelerate the transition.
We believe that the move to lower-carbon energies is
a transition, not a switch. We currently don’t have the
infrastructure in place to support a sudden change in the
energy mix. For example, our transport systems rely heavily
on liquid fuels, and for some applications such as aviation
there is currently no obvious commercial substitution.
Today’s electricity grid cannot yet support 100% renewables,
and our homes and businesses are reliant on gas supply for
their hot water, heating and cooking.
The transition of the entire energy system is a complex
process requiring a long-term commitment. New technology,
clever engineering, a stable and appropriate policy framework,
and new behaviours will all be essential, along with significant
investment in infrastructure by governments and the private
sector. Balancing energy security and the energy transition
will be important to reaching our nation’s climate goals
without compromising its development or unduly disrupting
people’s lives. We believe they are common goals, and we
are determined to play a critical role in both.
Our Geelong Refinery services the country’s largest
contiguous market, with Victoria, South Australia and
New South Wales all receiving fuels produced at Geelong.
The refinery takes crude from local gas and condensate
fields and has dedicated port capability to receive oil crude
oil and refined products for processing through our refining
infrastructure. Supplying around 10% of the country’s liquid
fuel requirements, and approximately 50% of Victoria’s, the
Geelong Refinery is well placed to service the nation’s fuel
demand well beyond the end of this decade, displacing
imports as demand declines with the uptake of alternative
energies in the long term. Fundamentally we provide an
important base level of energy security while the country
undertakes a broader energy transition.
32
Viva Energy Group Limited – Annual Report 2021 In the case of natural gas, Victoria and other south-eastern
states are facing a significant decline in natural gas supply
as traditional domestic gas fields reach their end of life.
Gas substitution policies are important and under
development, but the execution and success of these will
take many years to deliver and likely to reach well into the
next decade. In the meantime, people will continue to need
gas to heat homes, cook and underpin many industrial
businesses and jobs. Once operational, our proposed
Gas Terminal at Geelong can be rapidly connected to the
largest gas market in Australia, bringing gas from other parts
of the country and overseas to fill the projected shortfall.
As gas demand evolves, the terminal will provide the
flexibility of adaptable supply, eventually able to be removed
if the facility is no longer required. The project can provide
energy security without any additional local gas fields required
to be developed, or major pipelines built. We therefore
support both energy security and the energy transition
in a sensible, flexible and economical way.
We also have an important role to play in developing and
commercialising new and emerging energies. We are
particularly focused on helping our customers reduce their
own emissions, and introducing hydrogen for commercial
road transport applications, such as buses and trucks.
Pure Battery Electric Vehicles are not suitable for these
applications due to the weight of the battery and charging
times required. Hydrogen replaces the battery, which reduces
the payload impact and improves refuelling times with an
experience that is similar to traditional fuels. It is a product
that we are already familiar with and will integrate well with
traditional service stations and refuelling facilities. Together
with Australia’s planned investment in large-scale hydrogen
production, our role is to integrate this with traditional fuels
to provide a complete energy solution and provide home-
base and on-road infrastructure.
Although this remains an emerging energy, we are excited
about the opportunity that this presents and have announced
our plans to develop a hydrogen refuelling service station
at our Geelong Energy Hub alongside a behind-the-meter
solar farm on our available refinery land. This integration of
traditional and emerging technology is an example of how
Viva Energy can bring together industry and government
to address energy security and transition challenges, while
providing transitional job and development opportunities
for our employees, and continuing to support the socio-
economic wellbeing of the communities we operate in.
We are committed to being an active participant in the
energy transition by extending our role in energy security and
leveraging our capability to develop new energies to support
our customers, the environment and the broader economy.
Our approach to the energy transition
is to continue to support Australia’s
energy security while concurrently
developing, integrating, and
commercialising new lower-carbon
energies so that we actively support
and accelerate the transition.
Highlights for 2021
2021 was another challenging year for our people, our
customers and our communities, as the impacts of the global
COVID-19 pandemic continued to be felt in the immediate
term. It was also characterised by increased concern about
climate change across society, industry, government and
financial markets, and the need for accelerated action to
achieve the Paris Agreement objectives, which we support.
Despite these challenges, we have made significant progress
on the development of our strategic priorities and our
sustainability agenda. These are set out in this Sustainability
Report, with key highlights including:
• The health, safety and, more than ever, the wellbeing of
our employees and contractors remains our highest focus.
We have a Goal Zero ambition of no harm to people or
the environment, and in 2021 we strengthened our focus
on employee mental wellbeing support and flexible ways
of working.
• We had a very high level of voluntary vaccination across our
workgroups, and minimal infection within the workplace.
This helped us protect our people and maintain safe and
reliable supply of fuels to our customers throughout the
evolving pandemic. There were no material disruptions
to our operations, and our employees displayed great
resilience and engagement through this challenging period.
• Although we recorded an elevated number of personal
safety incidents in 2021 compared with prior years, our
employees’ commitment to safety remains very high with
over 95% believing that their team is committed to always
operating safely.
• Our environmental compliance performance continues
to improve, with zero environmental non-compliances
recorded across our non-refining operations nationally,
and a sustained reduction in loss of product containment
incidents compared with previous years.
• We recognise and value the diversity of our employees and
are proud of our best-practice policies to support flexible
working, inclusion and diversity, and gender pay gap closure.
Our efforts in this area were recognised by being awarded
winner of the AFR Boss Best Places to Work for our sector,
once again receiving citation under WGEA’s Employer of
Choice for Gender Equality, and we became a signatory
to 40:40 Vision for corporate leadership gender balance
in Australia by 2030.
• We continued to embed our new Viva Ways of Working via
three dedicated work streams, Viva Flex, Viva Connect and
Viva Tech. Our Ways of Working have become an important
and permanent part of our culture, and supported our
people through the COVID-19-related restrictions to our
traditional ways of working. We also maintained a high
level of employee engagement of 69% while managing
the challenges of COVID-19 on our people.
• We strengthened our commitments to the highest standards
of ethical business and conduct, including releasing our
second Modern Slavery Statement in 2022, introducing
a Supplier Code of Conduct, and refreshing our Business
Principles and Code of Conduct.
• Engagement and positive contribution to the communities
in which we operate continues to be a focus. We refreshed
our community partner program and completed the
implementation of our first Reconciliation Action Plan.
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Viva Energy Group Limited – Annual Report 2021
Identifying our focus areas
1 Identify important sustainability issues
We engaged with our stakeholders and identified
sustainability issues based on:
• economic, environmental and social positive and negative
impacts and the risks associated along our value chain;(cid:31)
• current and emerging global trends in sustainability; and
• future challenges and opportunities for our sector.
2 Prioritise the sustainability issues
We then prioritised the sustainability issues based on
how they:
• substantively influence the assessments and decisions
of stakeholders; and
• reflect the Group's significant economic, environmental,
and social impacts.
3 Define focus areas
We defined the key sustainability issues 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.
Sustainability report continued
• We continued to play a very important role in providing
energy security for Australia, and see this continuing
through the energy transition ahead. We worked closely
with the Federal Government to implement a long-term
Fuel Security Package, including our commitments to
continue refining until at least mid-2028 to produce
Ultra-Low Sulphur Gasoline, maintain minimum fuel
stock levels, and build more diesel storage.
• We made material progress in the development of our
proposed Gas Terminal at Geelong, which aims to maintain
gas supply security in south-eastern Australia in response
to a projected supply shortfall in the coming years, and
provide a potential power source to support the transition
to renewables in the electricity sector.
• We publicly released our long-term corporate strategy,
which sets out ambitions to transform Retail into a fully
integrated convenience business, extend our Commercial
and Industrial business to non-core fuel products and
services opportunities and support our customers to
reduce emissions, and transform our refinery to a diversified
Energy Hub.
• We announced our ambition to achieve net zero Scope 1
and 2 emissions for the Group by 2050. We committed to
achieving net zero emissions for our non-refining operations
and a 10% reduction in emissions intensity for our refinery
by 2030.
• We quantified our Scope 3 emissions, with the use of
our products representing the most significant Scope 3
emissions source. We see that the greatest contribution
we can make to reducing Australia’s emissions is
through reducing the carbon intensity of the energy we
produce and supply, and supporting the introduction
and commercialisation of lower-carbon energies and
technologies such as Hydrogen, Bio Energy and Electric
Vehicle charging.
Sustainability framework
In 2021, we undertook our annual materiality assessment to
confirm where our operations, products and industry have
the greatest impacts (positive or negative), and to understand
what is most important to our stakeholders. We use the
output of this to determine our strategic focus areas and to
guide our reporting. The assessment process we followed
to determine material issues and key focus areas is outlined
at the top of the page.
Our stakeholders are integral to our business and
sustainability success, and their sustainability interests
and concerns inform our materiality assessment and focus
areas. We actively undertake transparent and constructive
stakeholder engagement and consultation through formal
and informal channels.
Our key stakeholders, how we engage with them, and their
sustainability matters of interest are summarised in the
Stakeholder engagement section on pages 4-5 of our
Sustainability Data Supplement 2021, available at
vivaenergy.com.au/sustainability.
34
Viva Energy Group Limited – Annual Report 2021 We have identified seven strategic focus areas spanning all
material sustainability issues, risks and opportunities relevant
to our business, as shown in our Sustainability Framework
below. We consider these to be the areas that matter most
to Viva Energy and our stakeholders, and where we can make
the most positive impact.
Our strategic business focus on the opportunities in the
energy transition and increasing external stakeholder
expectations regarding climate change action have elevated
this focus area, as covered under Climate change and the
energy transition. We have recognised the increased focus
on wellbeing in our Health, safety and wellbeing focus area as
COVID-19 continued to present an immediate-term challenge
to our people, the community, and the economy. Issues such
as energy security, modern slavery, cyber security and sexual
harassment and bullying also gained increased prominence
in 2021, and are covered in our report.
Our seven focus areas form the basis of our disclosures in the
following sections.
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Curiosity
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OUR B
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Deliver amazing results
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Taking a
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people’s physical
and mental
wellbeing
Making the
transition to a
lower carbon
energy future
and Net Zero
emissions by
2050
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Respecting our
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minimising any
potential impacts
E
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OUR PURPOSE
Helping people
reach their
destination
Delivering
energy security,
providing local
jobs and skills
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Building strong
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Attracting,
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Our people
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Health, safety and wellbeing
Protecting and improving the health, safety and wellbeing of our people is an essential part of our culture – it defines
how we operate and represents how we live our values.
We are continuously enhancing our workplaces, policies and procedures in pursuit of Goal Zero – no harm to people
or the environment.
2021 Performance and progress
Total Recordable
Injury Frequency
Rate (TRIFR)1
6.70
2020: 3.61
19
Loss of Primary
Containment (LOPC)
> 100kg incidents1
2020: 19
2022 Priorities
• Rollout of our long-term Wellbeing Strategy – leaders and
people managers will complete mental health awareness
training supported by the Black Dog Institute
• Continue rollout of Move4Life movement training –
addressing musculoskeletal injury risk and supporting
physical wellbeing of our workforce across all operations
• Increase field safety observations and in field conversations
between senior leaders and workers in support of improved
visible safety leadership and oversight
• Continue asset-specific focus via the Geelong Refinery
integrity inspection program
Total Lost Time
Injury Frequency
Rate (LTIFR)1
1.97
2020: 1.14
Process Safety Events
• Growing personal safety risk identification capability
2020: 1
1 API Tier 1 Events
3 API Tier 2 Events
2020: 2
through Work Insights and Learning Huddles in Supply
Chain operations
• Integration of AERO principles into critical procedures
and management systems at Geelong Refinery.
1. Excludes performance of Liberty Oil Holdings.
• Developed a three-year Wellbeing Strategy to build on our
existing mental health and wellbeing support framework
• Further implemented the Advanced Error Reduction in
Organisations (AERO) and Goal Zero and Beyond programs
across our operations
• Implemented our enhanced loss prevention strategy
at Geelong Refinery, which focused on increased
inspections in pipetracks, on buried pipelines and in
culverts, using advanced technologies such as long-range
ultrasonic testing
• Sustained our robust health screening and return to work
practices, including rapid antigen testing to help prevent
COVID-19 impacting our people and operations
• Maintained connection with our people by our Health
team conducting:
– Almost 900 employee welfare calls
– 5,800 telehealth consultations with employees and
contractors
– Over 500 home office ergonomic assessments for
employees working from home.
36
Viva Energy Group Limited – Annual Report 2021 The foundation of our safety strategy
The foundation of our safety strategy is that our people are
the solution – they hold the knowledge and expertise to
address any safety issue and we trust and empower them
to do so.
In support of this principle, our safety strategy focuses on
leadership, learning and capability of our people. It aligns
with our business values and behaviours – the Viva Way.
Our safety strategy aligns with these values to drive
performance beyond Goal Zero by understanding what
motivates our people in their working and personal lives.
2021 Employee engagement results
on health and safety
92%
of participating employees feel empowered
to intervene and raise safety concerns.
95%
of participating employees agree their team
is committed to operating safely.
98%
of participating employees understand the
health and safety risks relevant to their roles.
Our HSSE Policy and
Management System
Our commitment to Health, Safety, Security and
Environment (our HSSE Policy) sets out how we
conduct our operations safely and responsibly.
We measure and assess our performance against
established benchmarks (and relevant licences)
to promote continuous improvement.
The HSSE Management System is reviewed annually
and defines our approach and key controls for
managing HSSE risks across all operations for all
employees, contractors and visitors. Learn more at
vivaenergy.com.au/sustainability/health-and-safety/
our-commitment-to-hsse.
Health and wellbeing
In 2021 we continued to deliver our health risk management
strategy and our ongoing response to the COVID-19
pandemic. During the pandemic the focus has been on
the potential psychosocial risks experienced by those who
switched to remote working, and COVID-related physical,
emotional and social impacts.
Over 94%
of our employees had
two COVID-19 vaccinations
in 2021.
Our Health, Safety and Operations teams worked to minimise
any material COVID-19 disruptions, minimise health risks
and maintain business continuity even through long-term
lockdowns in Victoria and New South Wales. As a result, no
facilities or operations were shut down due to the pandemic.
Our Health team managed a material increase in presentations
through the year, particularly in supporting employees
to return to work after illness or COVID-19 close-contact
assessments.
We kicked off our COVID-19 vaccination campaign in early
2021 with an incentives program – Viva Gets Vaccinated.
This ensured we were in a good position when vaccine
mandates were introduced at state levels, particularly for
our Victorian-based workforce.
The mental health and wellbeing of our people was a key
priority, supported by proactive strategies like People Connect
workforce forums, the Be You and Be Well campaign and
annual Safety Day activities.
A new Wellbeing Strategy
Our three-year Wellbeing Strategy provides a framework for
proactively managing physical, social and emotional wellbeing.
The Viva Energy Be Well scorecard was relaunched at Safety
Day 2021. The program encourages our workforce to monitor
aspects of their physical wellbeing like blood pressure,
blood sugar levels and cholesterol.
In 2022 and beyond we will continue to support the mental
health and wellbeing of our people. Training with the Black
Dog Institute will further equip leaders and managers
to recognise and respond to signs of mental health and
wellbeing challenges.
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Sustainability report continued
Case study: Better together with
#beyouandbewell
The #beyouandbewell campaign supported our people in New
South Wales and Victoria who experienced extended lockdowns
to stay well and stay connected. Based on caring for ourselves,
caring for each other, and caring for our community, the campaign
embraced the spirit of ‘better together’.
Our people around Australia were invited to find small ways to
stay well and support their mental health. Everyone was
encouraged to share their efforts to #beyouandbewell by posting
photos and videos on our internal social media platform –
Workplace by Facebook.
Our teams engaged in the campaign by sharing their activities
including exercising, family time, cooking and time with pets.
The opportunity to see a glimpse of work colleagues’ lives
outside work provided valuable connection.
Personal safety
Personal safety focuses on the prevention of injuries to our employees, contractors or anyone who could be impacted by our
operations. Maintaining safer workplaces, robust operating procedures and a strong safety culture are all part of our approach.
For more on our approach to personal safety visit vivaenergy.com.au/sustainability/health-and-safety/personal-safety
Personal safety performance1
Viva Energy (excluding Liberty Oil Holdings)
Total Exposure Hours (million)
Total Lost Time Injuries
Employees
Contractor
Total Lost Time Injury Frequency Rate (per million hours)
Serious injuries
Total Recordable Injuries
Employee
Contractor
Total Recordable Injury Frequency Rate (per million hours)
4.55
3.61
Liberty Oil Holdings
Total Lost Time Injuries
Serious injuries
Total Recordable Injuries
NR
NR
NR
6
4
10
1. Definitions for safety performance are included within the Sustainability Data Supplement 2021.
38
2019
2020
2021
6.38
5.27
5.07
9
5
4
1.41
7
29
13
16
6
3
3
10
2
8
1.14
1.97
6
19
7
12
5
34
19
15
6.7
4
4
5
Viva Energy Group Limited – Annual Report 2021
Our performance
During 2021 we registered 34 recordable injuries (up from
29 in 2019 and 19 in 2020) including five serious injuries
(a continued improvement over prior years).
Over the last three years, the company’s recordable injuries
have been predominantly musculoskeletal-related, with
the majority of injuries in 2021 incurred while workers were
undertaking routine activities such as turning valves, bending
over when lifting objects, and stepping down from vehicles.
These generally resulted in strains and sprains from slips,
trips and falls, and hand/finger injuries from ‘line of fire’ events.
Most injuries had short-term impacts and affected individuals
returned to work quickly as evidenced by the relatively low
number of recordable Lost Time Injuries.
Incident investigations into these low-level impact injuries
have identified a range of contributing factors including:
• External stressors and distractions affecting concentration,
including the broader impacts arising from the pandemic
• Recognition of lower-level hazards in our facilities or
operations that could result in sprains, strains, trips, falls
or line of fire injuries
• Higher incidence of sprain and strain injuries amongst
older age groups, particularly where they have experienced
previous injury or wear and tear over time
• Lower levels of leadership visibility and supervision due
to workplace restrictions in place to minimise COVID-19
infection, such as workplace bubbles.
In response to these learnings and conclusions, our safety
programs are targeting the following areas:
• Hazard identification and task analysis of routine activities
to assist in tailoring operational activities to match
individual employee physical capability where required
• Extending our Move4Life movement training program
in our operational environments, to further support the
physical resilience of our people
• A ‘hands off’ approach to certain routine activities to
mitigate potential hand strike injuries
• Valve management program to further prevent potential
body strain injuries.
Personal safety performance1
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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.
1
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
7
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
2019
2020
2021
Serious Injuries
Total Recordable
Injuries
Total Recordable Injury
Frequency Rate (TRIFR)
(per million hours)
1. Excludes performance of Liberty Oil Holdings.
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39
Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Our visibility and oversight of routine operational activities
will be foundational to supporting our safety improvement
strategies. With movement less restricted across our
workplaces, we are increasing our focus on visible and
meaningful leadership in the field and on becoming a more
learning-centred organisation. This culture of learning and
leadership will be developed through improved performance
monitoring and proactive leadership initiatives, including:
• Increasing field safety observations and conversations
by leaders
• Embedding our Smart with Heart leadership framework
• Focusing on human performance and frontline leadership
development via the AERO program at Geelong
• Growing competency in Work Insight sessions and
Learning Huddles in our Supply Chain business, to more
proactively identify personal safety risks in our operations.
Liberty Oil Holdings
During 2021 Liberty Oil Holdings (Liberty Oil) continued to
embed Life Saving Rules and introduce fatigue monitoring
systems across its vehicle fleet. Liberty Oil achieved a
significantly reduced injury rate in 2021, 50% lower than last
year. This reflects the general safety management system
improvements made since the business joined the Viva Energy
Group in December 2019.
Case study: Healthy Heads in Trucks
& Sheds partnership
Liberty Oil entered a new sponsorship in 2021 with
the Healthy Heads in Trucks & Sheds Foundation
(HHTS). Their mission is to improve the mental
health and wellbeing of every worker across the road
transport, logistics and supply chain sectors.
The three-year sponsorship will assist the HHTS in
delivering its National Mental Health and Wellbeing
Roadmap, to provide a best-practice approach to
building a psychologically safe industry.
The primary objective of the partnership with HHTS
is to provide national access to resources that support
mental health and wellbeing of the Liberty Oil driver
community and Viva Energy terminal employees –
and indirectly to suppliers.
Jennifer Gray, CEO of Liberty Oil, said she is
delighted the Company can support a program that
looks to bring together professional organisations
such as Lifeline, R U OK?, the Black Dog Institute and
Beyond Blue – in a tailored approach for the needs
of the transport and logistics sector.
The management of road transport risk, and driver personal
safety, including the ongoing embedding of the Life Saving
Rules, will continue to be a focus in 2022. Liberty Oil’s HSSE
Plan for 2022 also focuses on:
“We believe that industry tools will have greater
acceptance with the driver community and that
opens the door to better understanding and
communication,” Ms Gray said.
• Health and wellbeing
• Fixed assets integrity management
• Improving systems, data, and assurance.
A partnership with Healthy Heads in Trucks & Sheds is
the foundation for the Liberty Oil approach to proactively
managing mental health, with a focus on driver fitness to
work. Planned systems improvements include implementing
a more consistent driver training and assurance approach,
fuel efficiency baseline measurements, and vehicle
maintenance tracking developments.
HHTS focuses its work on three key pillars:
• An increase in the number of people trained in
mental health at transport and logistics facilities.
• Standardisation of policies and regulation at
transport and logistics facilities.
• Helping the individual be healthier from a diet
and mental health perspective.
Case study: Know your risks
Slips, trips and falls, strains and sprains and line of fire type injuries have
made up 84% of personal safety injuries in our Supply Chain business
over the past five years.
To raise awareness and engage with our teams, we launched the
#knowyourrisks campaign in conjunction with our annual Safety Day, held
in October as part of National Work Health & Safety month. Know Your
Risks focused on the three activities known to be major contributors to
our injuries: valve manipulation, using wharf hoses, and walking.
Know Your Risks posters were used by operations teams to:
• promote workplace conversation; and
• challenge our people to conduct a Work Insight to identify activity risk
factors and control and recovery measures.
Over 40 positive news stories of hazard reduction or elimination were
shared across our internal Workplace by Facebook platform in the
lead-up to Safety Day.
40
Viva Energy Group Limited – Annual Report 2021 Process safety
Process safety focuses on the safe storage, processing and
transportation of hydrocarbon products to minimise risk of
leaks, spills and flammable conditions. Our asset integrity
programs and operating procedures in place at all facilities are
critical to reducing the potential for process safety incidents.
For more on our approach to process safety visit
vivaenergy.com.au/sustainability/health-and-safety/
process-safety
Our operational facilities have proactive maintenance
and targeted integrity management programs. These are
designed to prevent the types of equipment failures that
could lead to loss of containment incidents or Process Safety
Events. Programs include:
• Risk-based inspection programs on significant assets such
as tanks
• Major turnaround maintenance events targeted at our
refinery process units
• Targeted maintenance schedules specifically for equipment
classified as safety critical.
Our performance
2021 saw a similar number of loss of containment events to
2020, noting that 2020 had a 34% reduction in those incidents
greater than 100kg for Viva Energy (excluding Liberty Oil
Holdings), compared to 2019. There was also a significant
downturn in loss of containment events related to asset
integrity failures.
In 2021 we experienced an API Tier 12 Process Safety Event,
involving the loss of refinery fuel gas through tank venting
during a shutdown event at the Geelong Refinery. The product
released was vented to atmosphere with no injury or lasting
environmental impact. Key learnings include modifying
equipment blanketing practices, improvements to operator
log keeping and expanded reporting and response
mechanisms related to abnormal vibration events.
We also experienced three API Tier 22 events with no offsite
or environmental impacts. Two of the API Tier 2 process
events occurred at Geelong. These were a crude leak from
piping during ship discharge activity, and a leak of fuel oil
when a bonnet gasket failed on the hydro-desulphuriser unit.
The Geelong Refinery will continue to expand its integrity
program in 2022 to address asset risks featured in their loss of
containment and Process Safety Events over the last two years.
The third incident was due to an overfill in our gantry at
Parramatta Terminal when a customer’s sensor equipment
failed whilst loading their tanker. Our prevention, control and
recovery measures worked as designed and all product was
contained onsite.
For more information on loss of containment events and spills,
refer to the Environment section on page 61.
Process safety performance1
4
3
2
1
0
2019
2020
2021
Tier 1 Process Safety Events
Tier 2 Process Safety Events
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Tier 1 Process Safety Events
Tier 2 Process Safety Events
Liberty Oil
Tier 1 Process Safety Events
Tier 2 Process Safety Events
2019
2020
2021
0
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1. Definitions for safety performance are included within
the Sustainability Data Supplement 2021.
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Inspections and testing
During 2021 the Geelong Refinery inspections team
doubled the number of pipetrack and piping inspections
and undertook extensive buried pipelines inspections to
determine their integrity status, using efficient long-range
ultrasonic testing technology.
The refinery also focused on upgrades to heat exchanger
internals and improvements to cleaning programs preventing
fouling of heat exchanger tubes, which can lead to premature
equipment failure and loss of containment. We have also
expanded the on-stream inspection program and corrosion
monitoring at the refinery by around 10% in the last two years.
These targeted integrity programs are fundamental to our
continuous improvement strategy and our commitment to
safe, reliable and responsible operations.
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2. Tier 1 and Tier 2 Process Safety Events are defined as per API RP 754. Excludes performance of Liberty Oil Holdings.
Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Pipeline management
Viva Energy operates high pressure licensed pipelines in Victoria and
New South Wales. These pipelines contain either crude oil (Victoria
only) or refined petroleum products such as diesel, petrol, LPG
or aviation fuel. Pipelines typically run alongside roads and within
easements on residential, rural, industrial and rail properties.
Viva Energy also operates and maintains the WAG Hastings Pump
Station, which delivers Bass Strait crude oil from Esso Long Island Point
through our WAG Pipeline to our Geelong Refinery.
Pipelines are constructed, operated, and maintained in accordance
with Australian Standard AS2885 Pipelines – Gas & Liquid Petroleum.
Licensed pipelines are regulated by Energy Safe Victoria (ESV) in
Victoria and Energy NSW in New South Wales.
Pipeline inspections
Our Pipelines Management System (PMS) ensures all Viva Energy
pipelines are managed in accordance with state-based regulations,
AS2885, and our HSSE MS and Hazard and Effects Management
Process (HEMP) Standard.
Through our PMS we perform inspections, make improvements
and institute other preventive safety measures. We routinely patrol
pipelines and complete pipeline condition survey validation digs
across our network to ensure continuous improvement and identify
issues and maintenance requirements early.
Engaging with stakeholders
Using the Mipela X-Info Connect Stakeholder Management Database, we assess property risk profiles along pipeline
transects for environmental, biodiversity, cultural heritage or other factors, and update property information. We also
track correspondence and communications with property owners/tenants and other external stakeholders that have an
interest in the safety and environmental aspects of our pipeline operations and maintenance activities.
Managing Major Hazard Facilities
Our larger facilities are classified under safety regulations as
Major Hazard Facilities (MHFs) and are subject to operating
licences and conditions. Licence renewal typically involves a
comprehensive update of the facility’s Safety Case, review by
the relevant regulator, and consideration of past performance
and safety commitment.
In 2021 we progressed the update of the Safety Case at our
Clyde Terminal in Sydney as part of our MHF licence renewal.
We also commenced pre-work for the re-submission of our
Safety Cases for the Newport Terminal, Geelong Refinery and
Lara LPG Terminal in Victoria. This process will continue in
2022 ahead of licence renewals.
Emergency and crisis management preparedness
An important factor in limiting injury and the potential impact
to the environment, our assets and our licence to operate is
a timely and effective response to incidents based on robust
emergency planning.
We regularly engage and consult with emergency services
organisations, and involve them in our drills and exercises.
We also engage with the local community and other
stakeholders with respect to our emergency response planning.
Crisis management planning continued to play a fundamental
role in our effective response to the COVID-19 pandemic.
For more on our approach to emergency and crisis
management preparedness, visit vivaenergy.com.au/
sustainability/health-and-safety/our-commitment-to-hsse
42
Viva Energy Group Limited – Annual Report 2021 C
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Climate change and the energy transition
Viva Energy recognises the complex global challenges posed by climate change. We support the objectives
of the Paris Agreement, Australia’s commitment to it, and the policies and actions critical to mitigating global
warming impacts.
Over the coming decades the Australian economy, and the
energy markets that power it, will need to reduce in carbon
intensity and ultimately reach net zero by 2050. Traditional
energies such as liquid petroleum fuels are expected to
continue to play a critical role and provide energy security
in the economy as the transition occurs, but we recognise
that these traditional fuels will be replaced by lower-carbon
energies as these develop and increasingly mature.
Viva Energy has two critical roles to play to support Australia
in transitioning to a lower-carbon economy: providing energy
security and actively participating in the energy transition.
Energy security is our core business – we provide approximately
25% of Australia’s fuel needs. The continuous, safe, reliable and
efficient supply of these fuels is critical to our everyday needs,
to our security, and to avoiding disruptions of supply and price
that could result from a poorly planned energy transition.
Energy transition is about our future in a decarbonising world.
This means reducing the carbon intensity of our existing fuels
and technologies, and introducing new lower or ‘zero’ carbon
energies. In 2021 we outlined our Energy Transition Strategy,
which comprises three complementary and overlapping areas
of strategic focus: developing opportunities in new energies;
collaborating with our customers on low-carbon solutions; and
achieving our own net zero emissions reduction commitments.
2021 Performance and progress
Emissions reduction
commitments:
• Group net zero by 2050
• Net zero by 2030 for
non-refining
• 10% emissions intensity
reduction for refining
by 2030
1,201,7251
Total Scope 1 and 2
GHG emissions (tCO2-e)
2019-20: 1,282,597
5.031
Geelong Emissions
Intensity (tCO2-e / TJ)
2019-20: 5.07
118.1
Geelong Energy
Intensity Index
2020: 123.9
1. This data relates to 1 July 2020 – 30 June 2021.
• Announced our ambition to achieve net zero Scope 1 and
2 emissions for the Group by 2050, with medium-term 2030
targets for our refinery (10% emissions intensity reduction)
and non-refining operations (net zero)
• Progressed feasibility assessment of Geelong Energy Hub
energy transition projects including our next generation
service station that includes EV charging, onsite green
hydrogen production and refuelling for heavy road
transport applications, and separately a solar farm
• Completed three ultra-fast 350 kW electric vehicle
charging installations at service stations with our partner,
Evie Networks
• Announced Waga Energy partnership for bringing
biomethane to market
• Launched our Carbon Solutions business, including our
first carbon neutral fuel product (Jet A-1)
• Implemented shadow carbon pricing into our capital
investment evaluation process
• Commenced energy efficiency project feasibility as part
of the Ultra-Low Sulphur Gasoline upgrade project
• Refreshed our climate scenario assessment to align to
a net zero by 2050 scenario
• Strengthened our governance committees, executive
accountabilities and functional responsibilities in relation
to climate change
• Completed a Scope 3 emissions baseline assessment.
2022 Priorities
• Develop the New Energies Service Station at Geelong
– expected to be Australia’s first publicly accessible,
commercially sized hydrogen refuelling station for heavy
road transport alongside EV charging
• Progress development (subject to approvals) of a
behind-the-meter Solar Farm on Geelong Refinery land
• Implement an ISO50001 Energy Management System
at Geelong Refinery
• Launch our expanded suite of carbon neutral fuel and
speciality products
• Implementation of our Energy Transition Strategy
• Track and transparently report progress against our
emissions reduction targets.
44
Viva Energy Group Limited – Annual Report 2021 Task Force on Climate-related Financial
Disclosures (TCFD)
We recognise it is critical for the sustainability of our business
to understand the opportunities and risks associated with
climate change, and how these are integrated into our
corporate strategy.
To help guide our approach and provide transparency
to stakeholders, we have adopted the Recommendations
of the Task Force on Climate-related Financial Disclosures
(TCFD) framework.
We made significant progress towards aligning with the TCFD
recommendations in 2020, particularly on scenario analysis
and risk assessment. In 2021, we focused on improving our
alignment with the metrics and targets element, as well as
enhancing our approach in the other elements.
Reference mapping of our disclosures against the core TCFD
recommendations is provided in the TCFD content index
on page 14 of our Sustainability Data Supplement 2021 at
vivaenergy.com.au/sustainability.
Task Force on Climate-
related Financial
Disclosures (TCFD)
The recommendations
of the Task Force on
Climate-related Financial
Disclosures (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:
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 shift to a lower-carbon economy.
These may be driven by market, technology,
policy and society changes.
• 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.
Risk management
Our Enterprise Risk Management (ERM) Framework and
related risk management policies and procedures used to
identify, assess, monitor and manage risk are discussed in our
Operating and Financial Review (OFR) (refer to pages 24-30).
Under this Framework we maintain a Strategic Risk Register
to capture risks that can affect the achievement of the
Group’s strategy and goals.
We maintain a Climate Risk Register supplementary to the
Strategic Risk Register, which captures the transitional and
physical climate change risks (and opportunities) identified
for monitoring over the short, medium and longer term.
Climate risks that meet the definition of a strategic risk,
that is, are assessed as having the capability of affecting
the achievement of the Group’s strategy and goals, are also
captured in the Strategic Risk Register. Risks in our Strategic
Risk Register in 2021 that have a climate-related driver
(although not necessarily exclusively) include:
• Decline in demand for our traditional products due changes
in government policies, shifts in consumer preferences,
and changes in technologies.
• Policy and regulatory change, including climate change
and sustainability policy, that significantly impacts our
current mode of operation.
We identify and monitor our strategic risks through a biannual
process of consultation across our business, validation with
the Group’s Executive Leadership Team, and reporting to the
Board Audit and Risk Committee. As part of this process, the
Climate Risk Register is reviewed for any material changes to
climate risk ratings, including whether elevation of any climate
risks to the Strategic Risk Register is warranted.
Scenario analysis
We undertook climate scenario analysis in 2020 to better
understand potential climate transition pathways and the
climate-related risks and opportunities our business could
be exposed to. We developed three climate scenarios
representing distinct levels of global climate mitigation,
designed to stress-test the resilience of our business strategy
under a range of plausible future states: Limited Mitigation;
Disorganised Mitigation; and Aggressive Mitigation.
In 2021, we updated our Aggressive Mitigation scenario from
a <2°C scenario to a 1.5°C scenario reflecting the International
Energy Agency (IEA) Net Zero Emisions by 2050 (NZE3)
transition scenario. This scenario is aligned with a Net Zero by
2050 goal, consistent with that recently adopted by the Federal
Government and our own emissions reduction commitments.
It is also oriented towards limiting global warming to 1.5°C,
which is an objective of the Paris Agreement.
3. https://www.iea.org/reports/net-zero-by-2050.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
The key characteristics of the climate scenarios adopted, including the updated Aggressive Mitigation scenario, are summarised
in the table below.
Viva Energy
TCFD climate
scenario
Global
warming
state
IPCC physical
scenarios1
IEA transition
scenarios2
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.
• Limited government intervention, with technocratic-driven
leadership from business.
• NDCs achieved.
• Transition and physical impacts both prominent.
Aggressive
Mitigation
1.5°C
RCP2.6
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.
1. IPCC (2014): Fifth Assessment Report of the Intergovernmental Panel on Climate Change, http://www.ipcc.ch/reports/assessment-report/ar5.
2. IEA (2021): World Energy Outlook 2021, IEA, Paris, http://www.iea.org/reports/world-energy-outlook-2021.
We retained the time horizons used in the prior year
assessment:
• Short-term (2023): reflecting near-term policy and
technology certainty, and aligned with our business
operational planning cycle
• Medium-term (2030): aligned with our strategic
planning timeframe
• Long-term (2050): consistent with market practice
and aligned with the Australian Government’s and
our own net zero emissions target timeframes.
The risks (and opportunities) in our Climate Risk Register
were reviewed and updated in 2021, including applying
the refreshed Aggressive Mitigation scenario. Risk and
opportunity prioritisation was based on the consequence
and likelihood criteria defined in our ERM Framework.
The potentially significant climate-related risks and
opportunities identified through this process, as well as
the key strategies and mitigations we are implementing in
response, are summarised in the Operating and Financial
Review (OFR) Strategic Risk section, page 28, described
on the following page, and expanded on in the Climate
risk and opportunity table in our Sustainability Data
Supplement 2021 at vivaenergy.com.au/sustainability.
Scenario analysis application
Scenario analysis can be useful to explore possible
futures for the economy and our sector. It is
important to note that the scenario outputs are not
forecasts of our business, nor are they intended to
represent a comprehensive description of the future.
Rather they are designed to help understand the
potential impacts of climate change across various
future horizons.
All reasonable care has been taken in our risk and
opportunity assessment. However, the consideration
of 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,
which are typically compiled on global or regional
bases, whereas our business depends on many local
Australian factors.
46
Viva Energy Group Limited – Annual Report 2021 Climate risks and opportunities
Transitional risks and opportunities
The key transitional climate risks we foresee relate to reduced
demand for our traditional hydrocarbon fuels driven by
preference shifts in our Retail business and market pressures
in our Commercial customer segments. Government
regulation and technological advancements will also play a
role in terms of how quickly the transition occurs. These risks
are not considered to be significant in the short term, but in
the longer term we anticipate potential for increased impacts
in the Aggressive Mitigation and Disorderly Mitigation
scenarios where climate mitigation pressures are more
pronounced. We expect the scale and pace of substitution
to vary significantly across our traditional product categories
and the market sectors we supply, which provides some
inherent resilience phasing.
Other transitional risks we envisage include the potential
for increased operating costs arising from regulatory
responses to reduce carbon emissions. There are also
potential reputational and legal risks arising from stakeholder
expectations and actions – including from investors, lenders,
community groups and the labour market.
We actively monitor consumer trends, government policy
developments and technology advancements. We maintain
fuel demand forecasting and factor these elements into our
strategic business planning.
Our corporate strategy recognises we are at the beginning
of a long-term energy transition, which will impact demand
for our traditional products. It positions us to be an active
participant in the low-carbon energy transition, particularly
energy for transport, with net zero ambitions. We see
opportunities in the energy transition to diversify our business
revenue streams to non-fuel and new energies in the medium
to long term. 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 an important part of the energy
mix and Australia’s energy security through the transition.
These opportunities are described in the following section.
We actively engage with external stakeholders and our
employees on our Energy Transition Strategy and progress,
including through the application of the TCFD disclosure
recommendations.
Shadow carbon pricing
In 2021 we implemented shadow carbon pricing
into the Group’s investment evaluation and capital
allocation process. This provides Management and
the Board with an indication of how investments
may be impacted by future climate policy changes,
and guides investment decision-making.
The shadow carbon prices adopted are a low-
case ‘current day’ price, and a high-case price
representative of a medium-term ‘Aggressive
Mitigation’ scenario.
Physical risks
Physical climate risks were identified as having potential to
arise in the Limited Mitigation scenario and, to a lesser extent,
in the longer term in the Disorderly Mitigation scenario.
The Limited Mitigation scenario reflects a lower level of
climate change mitigation, with resultant more frequent
and severe weather event impacts on assets and facilities.
In our Retail business, risks are considered unlikely to be
significant given the scale and geographic spread of our
service station network. In our supply chain and refining
operations, the risks predominantly relate to supply
disruptions, asset damage and increased costs in mitigating
or responding to weather events. We operate substantial
asset management and maintenance programs, and have
site-level Emergency Response Management Plans and
Group-level Business Continuity Plans to mitigate these
generally localised impacts. We anticipate these will adapt
over time if these risks eventuate.
We conduct detailed climate risk assessments on major
new projects to factor any required mitigations into project
design and operational procedures. An example of this
in 2021 was the detailed physical climate risk assessment
applying various climate scenarios undertaken during the
proposed Gas Terminal Project design process, to help
mitigate future physical climate risk impacts.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Our strategy for climate change and
the energy transition
Viva Energy has two important roles to play in supporting
Australia’s transition to a lower-carbon economy –
maintaining energy security and actively participating
in the energy transition.
Our corporate strategy outlined in the Operating and
Financial Review (OFR) on page 14 is focused on the
diversification and sustainability of each of our traditional
key businesses – Retail, Commercial and Refining – which
will provide ongoing energy security through the transition.
It also includes our Energy Transition Strategy with three
complementary and overlapping strategic focus areas:
• New Energies – pursuing development and investment
opportunities in new and transitional energy products
and services for the market that will help decarbonise
our economy in the longer term
• Carbon Solutions – collaborating with our Commercial
customers, and providing lower-carbon products and
solutions, to help them reduce their emissions profile
• Operational Emissions – reducing our own emissions
to achieve our net zero by 2050 Group commitment,
and by 2030 for our non-refining businesses.
Our progress in these three strategic focus areas is outlined
in the following sections.
New energies
We are focused on opportunities in several new and
transitional energies aligned with our core strategic
capabilities, as summarised below. These energies, and
the technologies that underpin them, are at varying stages
of adoption and commercialisation. We see these
technologies as having the best pathway to providing
the market and our customers with the viable low-carbon
solutions required in the medium to long term.
Our portfolio of new and transitional technologies and
solutions form a wide range of opportunities, will have
variable growth pathways, and require a range of operational
capabilities to support their development. Our focus is to
leverage our existing capabilities and infrastructure, remain
disciplined in our investments, and to continue to be a trusted
partner to our customers to deliver these products and
solutions during the energy transition.
Battery Electric Vehicles
Electric mobility is an evolving technology well suited to light
vehicles, and is a market which we expect to grow over the
current decade and continue to mature through the 2030s.
We see potential to leverage our Retail network scale and
coverage, and our brands, loyalty programs and commercial
relationships to provide the best electric vehicle charging
solution to customers, including our fleet and corporate
customers as they look to transition.
Emerging opportunities in line with our core strategic capabilities
Strategic
Capability
Battery Electric
Vehicles (BEV)
Retail
(on-road)
• Fast charging
• Superior customer
experience
• Convenience offer
Hydrogen Fuel Cell
Electric Vehicles
(HFCEV)
• Truckstop network
• Onsite H2 production
• Satellite H2 distribution
• Light Commercial
Bio and Waste Energies
Carbon Offsets
• E10
• Carbon offset fuels
Commercial
(fleet and
equipment)
• Charging-as-a-service
• Home base production
• Biodiesel
• People and goods –
mover segments
• Home base refuelling
• Fleet leasing
• Sustainable
aviation fuel
• Carbon offset fuels
• Carbon solutions
Energy
(production
and supply)
• Energy systems
model for least-cost
electricity input
• H2 production
• Refining feedstock
• Landfill biomethane
offtake
2021
progress
• 3 trial sites installed
and insights gathered
• H2 refuelling design
and feasibility – with
New Energies Service
Station announcement
in 2022
• Bio blending capability
• Carbon neutral
and Waga Energy
partnership
certified products –
Jet A-1
48
Viva Energy Group Limited – Annual Report 2021 hydrogen vehicle manufacturers, and expects to see
growing demand over time as FCEV become more prevalent
in the market.
This will be Australia’s first publicly accessible service station
that offers commercial scale, hydrogen refuelling for heavy
HFCEVs. It will have the capability to produce and dispense
green hydrogen in commercial quantities and provide a
zero-emission solution for the commercial road transport
sector, alongside electric recharging facilities. An onsite 2MW
electrolyser will generate green hydrogen by using renewable
electricity and recycled water received from Barwon Water’s
Northern Water Plant.
Subject to regulatory approvals, the New Energy Service
Station is expected to commence operations in late 2023.
We are also looking ahead at opportunities on major freight
routes such as Melbourne-Sydney-Brisbane.
Further information on our New Energies Service
Station is provided in the Geelong Energy Hub update
(see page 58) and at: vivaenergy.com.au/energy-hub/
new-energies-service-station-project
Bioenergy and waste recycling
Bio- and waste-derived energies offer the advantage
of providing substitute fuels into existing distribution
infrastructure and customer equipment, with minimal impact
to existing operations or fleet. The barriers to uptake for these
fuels continue to be commercial competitiveness challenges
and feedstock availability constraints.
Our strategy for biofuels and waste involves leveraging our
refining processing capability and supply chain expertise,
and to partner with others to reduce product carbon intensity
and participate in the circular economy. Opportunities we are
actively pursuing include:
Biomethane – a renewable and cost-competitive natural gas
substitute to reduce carbon emissions for heavy industrial gas
users. In 2021 we signed a partnership agreement with Waga
Energy to be the first to bring their landfill gas processing
technology to Australia and access biomethane produced
(see case study on page 50).
Plastics recycling – innovative plastic waste recycling
technologies have potential for circular economy solutions
and will require processing capability similar to that at our
refinery. In 2021 we worked with a consortium of companies,
including LyondellBasell and Licella, to convert synthetic oil
derived from recycled plastic feedstock to propylene, which
was then used in the production of plastic KitKat wrappers
(see case study on page 65).
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 (87% of sites) and Queensland (69%
of sites), with an additional seven sites converted to offering
E10 in 2021. In 2021 we recommissioned biodiesel supply
infrastructure in Victoria and Queensland and continue to
work with our customers and suppliers to enable the supply
of biodiesel or renewable diesel into the Australian market.
We are installing electric vehicle charging infrastructure on
selected service stations in partnership with Evie Networks.
In 2021 we completed three ultra-fast 350 kW charging
installations with our partner at Brighton (Tasmania), Coomera
(Queensland) and Taylors Lakes (Victoria). We will continue
to gather insights as we complete three installations in 2022,
and will evolve our electric mobility strategy as the market
continues to grow.
Hydrogen Fuel Cell Electric Vehicles
Hydrogen Fuel Cell Electric Vehicles (HFCEV) is a nascent yet
emerging market with strong long-term growth potential,
particularly in the heavy vehicle segment. Our approach is
to be an early mover, leveraging our supply chain capability
and infrastructure footprint, and bringing together our
customers, vehicle manufacturers and governments to
help establish this market.
Our starting point, to build experience in hydrogen mobility
across both ourselves and our vehicle operators, is to focus
on back-to-base refuelling through the New Energies Service
Station we are proposing to construct and operate as part
of our Geelong Energy Hub. With this project, Viva Energy
has brought together commercial fleet operators, government
and vehicle manufacturers to develop a commercially viable,
hydrogen-focused service station that will support the
transition to a zero-emissions energy solution in the large
and growing commercial transport sector.
At least 15 hydrogen-powered heavy vehicles are expected
to be deployed within the first two years of operations,
with significant scope to expand further as the commercial
opportunity is proven. The first seven vehicles will be
purchased and deployed by our partners with operations in
Geelong, including Toll Group, Cleanaway, ComfortdelGro
Corporate Australia (CDC) and Barwon Water. Some of the
vehicles will be delivered by Hyzon Motors out of Europe
and Australia and CDC’s two buses will be manufactured
and delivered by Australian-based manufacturer, Aluminium
Revolutionary Chassis Company (ARCC). Viva Energy is
in discussions with several other potential customers and
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Case study: Investing in renewable gas
In 2021, Viva Energy signed a partnership agreement with Waga Energy, the European leader in renewable natural
gas recovery from landfill waste. The four-year agreement provides us with first right of refusal to offtake biomethane
produced by Waga Energy in Australia. We see growing demand for renewable natural gas from customers looking to
reduce their carbon footprint.
Waga Energy has developed proprietary, patented technology for the recovery and purification of gas released from
landfill sites in units known as WAGABOX. The average WAGABOX unit offers a maximum installed capacity of
225 GWh/year, enough to power 35,000 homes and avoid 45,000 tonnes CO2-e per year.
“This is another step in developing lower-carbon products, as we begin the transition to more sustainable energy sources,”
says Lachlan Pfeiffer, Viva Energy’s Chief Business Development and Sustainability Officer. “We are keen to develop
products that will support our customers’ emissions reduction ambitions, and we think biomethane can play an
important role for customers with natural gas demand and usage.”
Waga Energy’s technology addresses the carbon challenge in two ways. The WAGABOX units capture the gas emitted
from landfill sites, which is a major source of greenhouse gas emissions. It also produces a renewable substitute for
fossil-based natural gas, so it reduces the carbon footprint of consumers.
Australia generates about 76 million tonnes of waste every year, with about 27% ending up in landfill which then generates
and releases methane. The Waga Energy solution to this challenge is proven, simple, efficient and economically viable.
50
Viva Energy Group Limited – Annual Report 2021 Carbon Solutions
For many of our customers, use of our products is a significant
part of their Scope 1 emissions. We aim to support them to
reduce their emissions as their trusted energy supplier.
We launched our Carbon Solutions customer offering in 2021,
providing carbon neutral and low-carbon products to enable
our customers to achieve their carbon emission reduction
objectives. We also continue to support our customers to
identify efficiencies and optimise fuel use and requirements
through our dedicated team of technical experts.
Our first accredited carbon neutral product, Carbon Neutral
Jet A-1 Fuel, was launched in early 2021. We are in the process
of gaining certification for our remaining product portfolio
(diesel, marine fuels, unleaded petrol, bitumen and chemicals)
and we expect to launch our expanded suite of carbon neutral
products in 2022.
A growing number of Shell lubricants products are already
carbon neutral certified and available to our customer base
across Australia4.
Throughout 2021 we engaged and collaborated with our
major customers to understand their carbon emission targets
and objectives to support development of our carbon neutral
and integrated biofuel (low-carbon) product solutions.
Carbon neutral certification
Viva Energy has chosen to certify its carbon neutral products
under the Australian Government’s Climate Active scheme.
The Climate Active carbon neutral certification is one of the
most rigorous in the world and ensures that the underlying
carbon inventory has been through a due diligence process
which includes a full Life Cycle Analysis (LCA), third party
audit, annual inventory reviews and the Climate Active
certification review.
Climate Active also stipulates the carbon offset markets that
participants can purchase their offsets from, ensuring that
only quality offsets are eligible for use under the scheme.
Our Carbon Solutions offer is an end-to-end offsetting
service with the purchase and retirement of offsets on behalf
of the customer.
Case study: Carbon Neutral Jet A-1 Fuel
Our Carbon Neutral Jet A-1 Fuel has been certified by
Climate Active as carbon neutral through the purchase
of carbon credits. These credits offset the emissions of
the product’s lifecycle carbon footprint, from resource
exploration through to extraction, transportation,
processing, storage, delivery, and the eventual
combustion of the jet fuel during flights. This assists
our customers to achieve their sustainability objectives
and provides passengers with a sustainable alternative
when flying.
In July 2021, in partnership with Alliance Airlines,
we delivered our first carbon neutral flight for fly-in
fly-out workers on a 90-minute trip from Cairns Airport.
Our Carbon Neutral Jet A-1 Fuel is available throughout
our aviation network. We offer the flexibility to procure
carbon offsets at different portfolio mix ratios from a
wide range of Australian and international projects.
For more information, including our Climate Active
certification see vivaenergy.com.au/business/aviation/
aviation-fuels
Fleet Savings and Carbon Footprint
Calculator
In 2021 we supported the rollout of the Fleet Savings
and Carbon Footprint Calculator.
Developed by Shell, this tool can be used by
transport and fleet customers to create annualised
potential savings for oil, fuel, maintenance costs
and emissions across their fleet. The tool includes
visualisations which highlight the benefits of
upgrading to a lubricant that could also help
improve fleet efficiency and sustainability.
For more see shell.com.au/savingscalculator.
4. shell.com/business-customers/lubricants-for-business/delivering-carbon-neutral-solutions-to-our-customers.html.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Operational emissions
Greenhouse gas emissions and energy
We annually report our greenhouse gas (GHG) emissions
and energy performance under the Australian Government’s
National Greenhouse and Energy Reporting (NGER)
Scheme, including:
• Scope 1 (direct) emissions arising from our operations
such as from fuel combustion, fugitive emissions and other
minor emission sources
• Scope 2 (indirect) emissions associated with the generation
of electricity we purchase for our operations
• Energy consumption and production.
Viva Energy Group operational greenhouse
gas emissions
Refining
For the Geelong Refinery, we reported a decrease in Scope
1 and 2 emissions from 1,231,657 tonnes CO2-e in 2019-20 to
1,147,915 tonnes CO2-e in 2020-21. This is largely attributed
to significantly lower coke combustion emissions associated
with the Residue Catalytic Cracking Unit (RCCU). This unit
was shut down for an extended duration during the reporting
period while the refinery operated in hydro-skimming mode
due to COVID-19 impacted market conditions and while unit
maintenance was undertaken5.
An emissions intensity (EI) metric, operational (Scope 1 and
2) emissions per energy content of high value products, has
been adopted for the refinery to smooth out production
variability effects due to market conditions and maintenance
cycles. The refinery EI was 5.03 tonnes CO2-e / TJ for 2020-21.
Geelong Refinery emission intensity (tCO2-e/TJ)
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2016-17
2017-18
2018-19
2019-20
2020-21
Scope 1 Emissions (t CO2-e)
Scope 2 Emissions (t CO2-e)
Our reported emissions include those from the facilities
and activities of all Viva Energy Group subsidiaries and
contractors within our operational control, for the 12 months
ending 30 June.
For the 2020-21 NGER reporting period we reported Scope 1
emissions of 932,077 tonnes CO2-e and Scope 2 emissions
of 269,648 tonnes CO2-e. Geelong Refinery accounts for 96%
of our total operational GHG emissions. Our overall Group
operational GHG emissions in 2020-21 were 6.3% lower than
2019-20.
Our Scope 1 and Scope 2 emissions data are published
each year on the Clean Energy Regulator (CER) website
at cleanenergyregulator.gov.au
2018-19
2019-20
2020-21
5.13
5.07
5.03
Geelong Refinery’s energy efficiency improved in 2021 as
process unit utilisation improved and the facility resumed
typical operations as market conditions recovered. The energy
intensity6 (EII) improved from 123.9 in 2020 to 118.1 in 2021.
A major steam leak identification and repair program resulted
in an estimated 0.5 EII improvement. The feasibility of energy
efficiency projects identified in the refinery Energy Masterplan
continued to be evaluated, with focus shifting to energy
projects and design efficiency opportunities with potential
for execution as part of the planned Ultra-Low Sulphur
Gasoline upgrade.
In 2021 the refinery commenced implementation of an
Energy Management System (EnMS), with the assistance of
a Victorian Government Business Recovery Energy Efficiency
Fund (BREEF) grant. The EnMS will establish an ongoing
process of identifying, planning and implementing energy
efficiency improvements to assist in delivering the facility’s
Energy Masterplan objectives. Following the completion of
a gap assessment in 2021, we plan to operationalise the EnMS
in 2022, including seeking independent certification against
the ISO 50001:2018 standard.
Non-refining
For our non-refining operations7, we reported an increase
in our Scope 1 and 2 emissions from 50,940 tonnes CO2-e
in 2019-20 to 53,810 tonnes CO2-e in 2020-21. Emissions
reductions were achieved following the successful
implementation of a bitumen furnace optimisation project
at our Pinkenba Terminal, and with reduced demand for
marine fuel oil (which requires heating) at the Gore Bay
Terminal. These reductions were offset by the inclusion
of emissions from the Liberty Oil fuel distribution business
which, for the first time was under the Group’s operational
control for the entire reporting period.
5. Refinery emissions and emissions intensity figures are aligned with the NGER reporting period 1 July – 30 June. The RCCU shut-down impact
on emissions performance is relevant for the first half of the NGER reporting period, i.e. occurred in the second half of 2020.
6. Using the Solomon Associates global refinery benchmarking Energy Intensity Index (EII) methodology for the 2021 calendar year reporting
period, noting this is different period to the NGER emissions reporting period.
7. Non-refining includes Retail, Fuels and Marketing, and Supply and Distribution, including Liberty Oil Holdings.
52
Viva Energy Group Limited – Annual Report 2021 Following the installation of sub-metering at our two fuel
terminals in Sydney (Clyde and Gore Bay), our onsite operators
identified and implemented changes to pump operations
transferring fuel through the Mascot Airport pipeline.
This initiative is estimated to deliver over 120 MWh of
electricity savings annually.
In 2021, grant co-funding was secured as part of the Victorian
Government’s BREEF program to implement energy efficiency
projects at our Newport Terminal, including upgrading road
gantry lighting, installing sub-metering, and upgrading
air-conditioning systems. All projects are planned to be
completed in 2022.
Emissions reduction commitments
In late 2021 we announced our ambition to achieve net zero
operational (Scope 1 and 2) emissions by 2050. We also
committed to medium-term (2030) emissions reduction targets
for our operational emissions from a 2019 base year, including:
• net zero for our non-refining operations8
• 10% reduction in emissions intensity at the Geelong Refinery.
For our non-refining operations, we see a clear pathway to
net zero through a combination of: energy efficiency projects
and optimisation; renewable electricity projects and/or
purchasing; offsets for residual emissions sourced from
certified and credible schemes.
Geelong Refinery is recognised as an emissions-intensive,
trade-exposed facility. As part of the Australian Government’s
Fuel Security Package, we have committed to continue
refining until at least mid-2028, with possible extension to mid-
2030. During this period, we will be co-investing in upgrades
to produce Ultra-Low Sulphur Gasoline (ULSG) to meet new
fuel specification requirements. This will have local air quality
and vehicle emissions benefits, but will require additional
energy for de-sulphurisation processing, with an anticipated
increase in the emissions intensity of the refinery.
To help off-set this projected increase in emissions intensity,
we are assessing the feasibility of various energy projects
which have potential to be implemented as part of the ULSG
project. We continue to assess the feasibility of refinery
Energy Masterplan projects and operational optimisation
initiatives more widely to achieve the overall 10% reduction
in emissions intensity targeted for 2030.
Beyond 2030, we expect the refinery’s role in the energy
market to evolve. There is potential to leverage its processing
capability to produce lower-carbon intensity fuels, and
participate in the circular economy, through the processing
of waste and bio-feedstocks. In the meantime, we are
diversifying this strategic asset through various Energy Hub
projects under development.
Non-refining
• Renewable purchasing
and generation
• Energy efficiency projects
• Carbon offset projects
Net Zero
Refining
• Operational optimisation
• Energy efficiency projects
• Ultra-Low Sulphur
Gasoline upgrade1
• Circular economy
and bio-feedstocks1
10% reduction
in emissions
intensity2
• Biofuels processing
• Waste reprocessing
• Energy import/export
facility
• Renewable and low
emissions energy inputs
• Carbon offset projects
Net Zero
2019
(base year)
Fuel Security
Commitment Period
2030
Refining Transition
and Repurposing
2050
1. These projects may increase refinery emissions intensity, but have broader emissions and environmental net benefits.
2. Scope 1 & 2 emissions per Energy Content of Products (tCO2-e/TJ).
8. Non-refining includes Retail, Fuels and Marketing, and Supply and Distribution, including Liberty Oil Holdings.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Target setting approach
Our GHG emissions reduction commitments have been established with reference to the GHG Protocol9 and Guidance
on Setting Science-based Targets10. The organisational boundaries, GHG types and emissions scopes are consistent
with those applied in Viva Energy’s reported inventory under the Australian Government’s NGER Scheme.
A 2019 base year (1 July 2018 – 30 June 2019 reporting period) has been selected as a reference point for tracking
progress towards our emissions commitments. It is the most recent period of standard operation – unaffected by the
COVID-19 pandemic and free of major refinery maintenance turnaround events.
We will review progress against our emissions reduction commitments annually and commit to transparent reporting
as part of our annual sustainability disclosures. We also commit to reviewing the basis and the level of ambition of our
targets every five years as a minimum, with the next review due following the 2024 reporting period.
As is industry practice, we retain the flexibility to recalculate our base year emissions where significant changes occur,
which materially alter the emissions profile of the Group or an activity or facility under its operational control. Adjustment
could be triggered by changes to corporate structure, estimation methodologies, and government regulation or
mandates, or the discovery of material miscalculation. We will apply a materiality threshold for base year emissions
adjustment of 5% of the relevant medium-term (2030) emissions target.
Scope 3 emissions
In 2021, we completed our first Scope 3 emissions inventory
assessment, which focused on our material emission sources
for the period 1 July 2020 – 30 June 2021.
Scope 3 emissions are indirect GHGs emitted as a
consequence of the Group operations, but where the sources
are owned or controlled by other organisations in our value
chain. The estimate was prepared referencing the GHG
Protocol11 and IPIECA12 methodology where appropriate, and
accounting for emissions related to the upstream extraction,
processing and transport of process inputs, and the
downstream distribution and combustion of sold products.
‘Use of Sold Products’ (GHG Protocol category 11) is the most
significant Scope 3 emissions source for Viva Energy, with
‘Purchased Goods and Services’ (category 1) and ‘Upstream
Transportation and Distribution’ (category 4) identified as the
next most significant emission sources.
The emissions estimates for our material Scope 3 emissions
categories are summarised on the following page.
9. The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, World Resources Institute and World Business Council
for Sustainable Development (2004).
10. Guidance on Setting Science-based Targets for Oil, Gas and Integrated Energy Companies, Science Based Targets Initiative (Consultation
Version August 2020). sciencebasedtargets.org/sectors/oil-and-gas.
11. GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, World Resources Institute and World Business Council
for Sustainable Development (2011).
12. IPIECA Estimating petroleum industry value chain (Scope 3) greenhouse gas emissions guidelines (2016).
54
Viva Energy Group Limited – Annual Report 2021 Scope 3 category
Upstream
1
Purchased goods & services – Emissions associated with the
extraction, production of International and local crude, condensates
and refined products
2 Capital goods & services
Fuel and energy-related activities: Extraction, production and transportation
Upstream transportation and distribution – Emissions for transport from
international and domestic imports
Assessed and quantified
670,554
5 Waste generated in operations
Not assessed for quantification
as not considered material
Business travel – Emissions of transportation carriers that occur during
the transportation of employees for business-related activities
Not assessed for quantification
as not considered material
3
4
6
7
Inclusion/exclusion
in assessment
tCO2-e
Assessed and quantified
1,606,578
Not assessed for quantification
as not considered material
Not assessed for quantification
as not considered material
Not assessed for quantification
as not considered material
Not relevant to Viva Energy
Assessed and partially quantified
(hired carrier road transport only)
44,362
Not assessed for quantification,
non-fuel products only
Employee commuting
8 Upstream leased assets
9 Downstream distribution
Downstream
10 Processing of sold products
11 Combustion of sold products – Emissions from reported sales volumes
Assessed and quantified
33,101,131
12 End of life treatment of sold products
13 Downstream leased assets
Not relevant to Viva Energy
Not relevant to Viva Energy
14
Franchises – Emissions from Retail service stations supplied but not
under operational control
Assessed and quantified
149,867
15 Investments
Not relevant to Viva Energy
Breakdown of Total Scope 1, 2 & 3 GHG emissions
Upstream Value Chain
Viva Energy
Downstream Value Chain
Activities and/or operations involving
the exploration, development,
and production of oil and gas.
Group
operational
emissions
Operations involving the marketing of oil and gas products
including combustion of sold products.
4.4%
1.8%
0.1%
3.3%
0.4%
90%
Purchased
crude &
refined
products
Shipping
& transport
Downstream
distribution
(hired carriers)
Operational
emissions
Retail
emissions
Combustion of sold products
3
3
3
1
2
3
3
2020-21
Total Scope 3
Total Scope 1 & 2
Total Scope 1, 2 & 3
tCO2-e
% of total tCO2-e
35,572,492
1,201,725
36,774,217
96.7%
3.3%
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Climate Leaders Coalition update
The Australian Climate Leaders Coalition (CLC) is a
group of cross-sectoral corporate CEOs supporting
the Paris Agreement commitments and setting public
decarbonisation targets. Established in August 2020 by
The B Team Australasia, its focus is on collaboration and
joint problem solving across decarbonisation challenges,
with the aim to support Australia’s low-carbon future
and ensure long-term economic sustainability.
As a founding member, Viva Energy supports the
commitments made and actively participated in
workshops and engagement throughout 2021. In October
2021, a Roadmap to 2030 was released by the CLC,
which included the vision and approaches adopted by
CLC members to decarbonise and transition as part of
a net zero and prosperous Australia. The roadmap was
published to share learnings and to encourage other
businesses across the economy to accelerate their
decarbonisation journey.
For further information visit climateleaders.org.au.
“Reducing emissions cannot be achieved by one
country or one company alone – it will require
collective action. As an energy company we have
an important role to play in reducing our own
emissions, but also in supporting and encouraging
our suppliers and customers to take their own action.
I am personally committed to play our part in
leading this critical energy transition.”
Scott Wyatt
Chief Executive Officer
56
Viva Energy Group Limited – Annual Report 2021 Just Transition statement
The concept of Just Transition is acknowledged in the Paris Agreement. It recognises that governments, industry and
workers need to collaborate on measures to minimise the socio-economic impacts of transitioning regional workforces
and their communities reliant on emissions-intensive industries as economies shift to lower-carbon intensity.
Geelong Refinery is our largest facility in terms of employment and regional contribution. While the Geelong region
is no longer heavily reliant on emissions-intensive industry, we remain cognisant of the key role our refinery plays in
the Geelong community – employing a sizeable workforce, engaging local businesses and supporting local
community partners.
We are engaging with a broad range of external stakeholders including governments, employees and employee
representative bodies, local communities, customers, suppliers and educational institutions to inform our energy
transition plans.
Key to our plans is our vision to transform the Geelong Refinery into a future Energy Hub, with several initiatives
already progressing on this front (see page 58). This initiative will help transition our business and the communities
that we support towards a low-carbon future, and provide our workforce with opportunities to develop new and
adjacent skills to support this.
We worked closely with the Federal Government in 2021 to implement the Fuel Security Package (FSP), which secures
the refining industry in Australia, including our Geelong Refinery, through the remainder of this decade. This gives us
confidence to invest in Energy Hub initiatives to transform our refinery and enable it to thrive into the low-carbon future.
We are also looking into opportunities to diversify and repurpose other strategic assets and infrastructure around
Australia. We will continue to engage with governments, our workforce and local communities on our plans.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Geelong Energy Hub update
Geelong Energy Hub
As one of the largest energy providers in Australia,
Viva Energy is excited about the evolving energy future.
Our Geelong site is crucial to our current energy needs
and also the energies we will need for the future. Our vision
is for the site to manufacture and deliver traditional fuels,
as well as offering transitional and alternative energies,
playing an important role in providing energy security
now and into the future.
The Geelong Energy Hub, located at the refinery site,
will comprise of a suite of projects to support the evolving
energy needs of Victoria and south-east Australia. As well as
existing refinery operations, the Geelong Energy Hub would
include a gas terminal, a solar farm, hydrogen generation
and refuelling, strategic tank storage, bio-processing and
waste recycling.
Our Geelong site is an ideal location to be an energy
gateway as it is an existing industrial facility with access
to the Port of Geelong and major population centres.
In addition, Viva Energy is a safe and experienced
operator, caring for its people, the environment and
local communities where we operate.
Geelong Refinery
Our refinery has been part of the local landscape
since 1954 and we are proud that it remains a key driver of
Victoria’s economy, supplying more than half of the state’s
fuel needs. One of only two refineries remaining in Australia,
it plays an important role in the nation’s fuel security and
provides hundreds of high-skilled manufacturing jobs.
The refinery can process up to 120,000 barrels of oil per day,
manufacturing petrol, diesel, LPG, jet fuel, avgas, bitumen,
specialty solvents for a wide range of industries, and Low
Aromatic Fuel to support the Federal Government’s
petrol-sniffing prevention program.
Learn more about the Geelong Energy Hub at
vivaenergy.com.au/energy-hub
58
Geelong Energy HubHelping address Victoria’s future energy needsNew Energies Service StationGreen hydrogen generation and refuelling plus electric vehicle recharging.Gas TerminalAddressing Victoria’s gas shortage forecast and ensuring supply for households and businesses. Refinery1 of 2 refineries in Australia, supplying around half Victoria’s fuel needs and contributing to Australia’s fuel security. GeelongGrammarSchoolCorio RailStationFloating Gas TerminalLNG shipsdock hereTreatmentFacilityUnderground pipeline connecting to Victoria’s gas distribution networkAbovegroundpipelinePier extensionRefinery PierSolarTurning the sun’s energy into clean power.Artists impression of Geelong Landscape with the Geelong Energy Hub and Gas TerminalH2Energy SecurityThe Energy Hub will deliver long-term energy security by supporting current and future energy projects.DiversifyingDiversifying the use of the refinery site supports Viva Energy’s ongoing economic contribution to the region. Currently the refinery has a 700 strong workforce and the Energy Hub will generate around 200–250 construction jobs and up to 100 ongoing jobs. The energy hub will also play a role in transitioning to a low-carbon future. Strategic Fuel StorageEnsuring Australia’s fuel security.Viva Energy Group Limited – Annual Report 2021 Gas Terminal
Gas is an integral part of the current and future energy mix. The proposed Gas Terminal would
provide an efficient and flexible option to meet the projected gas shortage in south-east
Australia. The facility would include a Floating Gas Terminal, an extension to Refinery Pier,
a Treatment Facility and a new 7km pipeline.
Having the Gas Terminal adjacent to the Geelong Refinery would leverage our capability
as an existing Major Hazard Facility (MHF) operator and offer potential synergies between
the two operations, including the reuse of seawater from the Gas Terminal into the refinery.
Hydrogen and New Energies Service Station
Green hydrogen is a zero emissions fuel and energy source, and in transport, a technology
solution where Battery Electric Vehicles are not suited. With our infrastructure background,
we have brought together vehicle operators and government to develop Australia’s most
ambitious hydrogen mobility project. It includes Australia’s first heavy vehicle focused, publicly
accessible hydrogen refuelling station that will refuel hydrogen vehicles, and be available to
any transport operator. We have branded this our New Energies Service Station (NESS).
Solar
A solar farm will be developed on the land at the northern end of the refinery site. The solar
farm will generate between 12-20 megawatts of green renewable energy and meet up to
10% of the refinery’s electricity needs. The solar farm will utilise latest technology trackers
to follow the path of the sun during the day and maximise the solar farm efficiency.
Whilst the electricity generated by the solar farm will primarily service the refinery’s power
needs, the electricity can be exported to the grid supplying the local area with renewable
energy and further decarbonising the Victorian power network.
Strategic Tank Storage
Viva Energy is proposing to build additional diesel storage within the grounds of Geelong
Refinery, which will play an important role in improving our nation’s fuel security. This project
is part of the Australian Federal Government’s ‘Boosting Australia’s Diesel Storage Program’.
Three diesel storage tanks of 30 million litres capacity each (enough to cover Victorian diesel
usage for around one week) are proposed to be located in the north-western corner of the
refinery site.
Bio-waste and recycling
The Geelong Energy Hub will explore new technologies to develop and supply biofuel
products and participate in waste oil and plastic recycling.
For more information, refer to the case study on page 65.
Economic benefits
Our Geelong Energy Hub could play a key role in delivering the energy that the state needs
now and in the future. This includes the fuel needed now for trucks, cars, planes and trains
that drive our economy, but also the fuels and energies of the future and the gas needed
to heat homes and power industry.
The Geelong Refinery currently has a permanent workforce of over 700 and contributes over
$230M into the local region through wages and services. The Energy Hub will play a key role
in diversifying the use and earnings from the site. It is anticipated that the Energy Hub will
generate around 200–250 construction jobs and up to 100 ongoing roles providing both
direct and indirect benefits.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Environment
Our Health, Safety, Security and Environmental (HSSE) Policy outlines our commitment to operating in an
environmentally responsible manner and minimising potential environmental impacts of our operations or
products. Aspects of our operations governed by environmental regulations are managed in accordance with
our HSSE Management System (HSSE MS).
2021 Performance and progress
Significant reduction
in environmental non-
compliance (ENC) incidents:
Zero ENCs – Non-refining
operations
50% reduction in ENCs
– Geelong Refinery
1
Significant spill
(>1,000kg)
2020: 3
81%
of hazardous waste
diverted from landfill
(excludes wastewater)
77%
of freshwater
withdrawn for the
Geelong Refinery
is recycled water
• Progressed our firefighting foam transition program
across all operations and remedial actions at facilities
with legacy PFAS impacts – on track to meet regulatory
obligations in 2022
• Progressed major land remediation projects at
decommissioned sites including Clyde refinery, Newcastle
(Hamilton) terminal, and North Fremantle terminal
• Implemented our Australian Packaging Covenant (APC)
plan – on track and due for review in 2023.
2022 Priorities
• Progress and complete major remediation projects
including Stage 2 of former Clyde refinery and remediation
of the former North Fremantle terminal
• Continue implementation of our foam transition program
to meet Queensland, South Australia, and emerging
New South Wales compliance obligations by 2022
• Progress assessments and planning for the Geelong
Refinery to meet Ultra-Low Sulphur Gasoline fuel standards
by the end of 2024
• Support development of the Product Stewardship for
Oil Containers Project
• Minimise offsite disposal of soil to improve soil reuse
and recycling at the Geelong Refinery
• Implement improvements to stormwater infrastructure
at the Geelong Refinery to improve stormwater discharge
quality to Corio Bay.
Compliance and licensing
All of our operational facilities have Environmental Management
Manuals (EMMs), which underpin the HSSE MS and include
local controls for managing environmental risks and compliance.
All environmental incidents and near misses are recorded
through our incident reporting system. A range of industry-
specific key performance indicators are used to measure the
effectiveness of our management systems – such as spills,
environmental non-compliance records, emissions and
waste metrics. In 2021, we undertook several site-specific
environmental audits and updated over 40 EMMs for our
aviation operations.
We publicly report on our environmental licence
compliance and performance monitoring results for
our major facilities. Learn more at vivaenergy.com.au/
environment
Environmental performance in 2021
In 2021 we recorded our best environmental performance in
over five years. Environmental non-compliance (ENC) incidents
were down from 27 in 2020 to 13 in 2021. All ENC incidents were
related to the Geelong Refinery, with all incidents assessed,
investigated and reported to the relevant environmental
regulator where required with no long-lasting impacts.
For our non-refining operations we recorded zero ENCs.
More significant incidents are classified as environmental
non-compliance (ENC) sanctions. ENC sanctions result in a
fine, prosecution, enforceable undertaking, or review of licence
to operate. In 2021, we recorded one ENC sanction incident.
The Geelong Refinery received an Infringement Notice for
an April 2021 EPA Licence breach relating to wastewater
discharge exceeding licence limits to Corio Bay. We have since
implemented changes to our maintenance program on the
environmentally critical equipment involved.
For more on our 2021 environmental performance,
see page 114 of the Director’s report. For our
environmental performance data refer to our
Sustainability performance data in our Sustainability
Data Supplement 2021
60
Viva Energy Group Limited – Annual Report 2021 Spill prevention and response
Our ‘No Product to Ground’ objective aims to prevent
uncontrolled release of hydrocarbon products to the
environment.
To meet this objective, we implement spill prevention and
control measures across all operations including: operational
processes and procedures, routine surveillance, risk-based
inspection programs, and leak detection technology.
For marine spills, we work with the Australian Maritime Safety
Authority (AMSA) to maintain a national spill contingency
plan. As an actively participating member of Australian
Marine Oil Spill Centre (AMOSC), we have responsibilities
to contribute trained personnel and equipment under mutual
aid arrangements and in accordance with the National Plan
for Maritime Environmental Emergencies.
In 2021 we continued to develop our spill response
capabilities, with 10 personnel from various groups within
our business undertaking Oil Spill Response Command
and Control training with AMOSC in April 2021.
Our performance is managed by tracking loss of primary
containment (LOPC) incidents that occur within our facilities
and road transport operations. An LOPC incident means
hydrocarbon product has leaked or spilled from the primary
containment (tanks or pipes) designed to safely hold our
products. Secondary containment measures (such as tank
bunds) also play a role in preventing products entering
the environment.
In 2021 we recorded a similar number of loss of containment
events to 2020 for larger (>100kg) LOPCs. One Significant Spill13
occurred across our operations in 2021, and was also recorded
as an API Tier 1 incident (see page 41) involving the release
of refinery fuel gas at Geelong Refinery.
To further improve the quality of our stormwater discharge
to Corio Bay, we will upgrade stormwater infrastructure at
the Geelong Refinery in 2022.
No product to ground performance1
30
25
20
15
10
5
0
Loss of Primary
Containment (LOPC)
>100kg
Spills to
Environment
>100kg
Significant Spills
2019
2020
2021
1. Excludes performance of Liberty Oil Holdings.
Contaminated land remediation
Our risk-based approach to contaminated land remediation
across our portfolio is consistent with national standards and
undertaken in consultation with environmental regulators.
In 2021 we progressed or completed land remediation at
several large decommissioned facilities14 including:
• Former Newcastle (Hamilton) terminal, NSW – remediation
works completed
• Former Clyde refinery land, NSW – Stage 1 Western
Area Remediation Project (WARP) completed; Stage 2
remediation works in progress
• Former North Fremantle terminal, WA – remediation
works in progress.
These works are being overseen by a regulator-accredited
Environmental Auditor, who will provide site suitability
statements consistent with proposed future land use
for regulatory approval.
Across our Retail network we completed two proactive
underground storage tank re-lining projects as part of a
preventative approach to managing environmental risk due
to ageing tanks and sensitive site settings. These measures
reduce the likelihood of any leaks of product to soil and
groundwater and more re-lines are planned for 2022.
13. Significant Spill is a spill of more than 1,000kg that reaches the environment.
14. These properties were sold (or in case of Part Clyde Terminal agreed to be sold upon the plan of subdivision being registered) to VE Property
Pty Ltd (VEP) in 2017 and 2018. Accordingly, with the exception of Clyde Terminal, these sites are now owned by VEP. Pursuant to the agreement
with VEP, Viva Energy retains responsibility for remediating these sites, so as to control the quality of remediation works and engagement with
the regulator on the remediation process.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Case study: Update on habitat
restoration
Green and Golden Bell Frogs, listed as vulnerable
under the Environment Protection and Biodiversity
Conservation Act 1999 (EPBC Act), have been
identified within the wetlands at the Clyde Terminal.
As part of our ongoing efforts to protect the Green
and Golden Bell Frogs and improve their habitat
within the wetlands, we continue to implement our
Plan of Management. This includes:
• Targeted pest control campaigns
• Regular frog surveys monitoring population
and habitat conditions
• A wetland improvement plan (including weed
removal and planting)
• Construction and management of purpose-
designed breeding ponds.
These measures have ensured the Clyde wetlands
provide a suitable environment and safe refuge to
support populations of these vulnerable frogs.
Surveys in 2021 have identified Green and Golden
Bell Frogs within the breeding ponds, including
reproductively mature males and a female. Surveys
will continue during the warmer months to build
understanding about how frogs use the wetland.
PFAS and firefighting foam
As with all industries responsible for flammable fuel storage,
we have historically stored and used PFAS-containing
firefighting foams in line with recommended best practice
to effectively combat flammable fuel fires. While the health
and ecological effects of PFAS compounds are subject to
ongoing research, we acknowledge their potential risk and
the precautionary approach to PFAS management adopted
by Australian environmental regulators.
Our risk-based approach to firefighting foams and associated
infrastructure includes transitioning to fluorine-free foam to
manage shallow pool fires and fuel spills, and to C6 purity
foams to manage larger fuel storage tank systems.
Testing results from LASTFIRE in late 2021 gave positive
indications of the efficacy of some fluorine-free foams for
potential fixed system firefighting on medium-sized fuel
storage tanks. In 2022 we anticipate having a fluorine-free
foam option for some modestly sized tanks <30m diameter,
containing standard petrol and kerosene hydrocarbon grades.
We progressed our transitional compliance plans for
firefighting foams and infrastructure throughout our facilities
in Queensland, Victoria and South Australia. We continue
to work with state regulators to achieve full compliance in
2022. In all other states, we have made progress on removing
fluorinated foams from service. We have commenced transition
planning at the Geelong Refinery and all NSW facilities.
Our due diligence program for managing legacy impacts
of PFAS to soil and groundwater is aligned with the PFAS
National Environmental Management Plan (NEMP)15 approach
endorsed by all environmental regulators in Australia. As
a result, we have continued to progress investigations and
remedial actions at:
• Pinkenba terminal and other Queensland sites
• Newport terminal and Geelong Refinery in Victoria
• former North Fremantle terminal in Western Australia
• Port Lincoln terminal in South Australia.
At our Pinkenba and Newport facilities, initial mitigation of
PFAS impacts found in former firefighting training areas was
successfully undertaken in 2021 by either capping or covering
the soil. This has reduced the concentration of PFAS in surface
water runoff.
15. PFAS National Environmental Management Plan Version 2.0, Heads of EPA Australia and New Zealand (2020).
62
Viva Energy Group Limited – Annual Report 2021 Air emissions
The manufacturing, storage, supply and use of our fuels
causes air emissions such as Volatile Organic Compounds
(VOCs), greenhouse gases (GHGs), sulphur oxides (SOx)
and nitrogen oxides (NOx).
The Geelong Refinery makes up almost 90% of Group
operations air emissions. The drop in fuel demand during
Victorian COVID-19 restrictions led to significantly reduced
production rates through much of 2020. Air emissions were
well below previous years with the exception of sulphur
dioxide (SO2). Through late 2020 to early 2021 many of the
refinery’s processing units, including sulphur processing units,
were shut down for major maintenance and performance
improvements. The sulphur recovery units were returned to
full capacity in Q1 2021 and maintained SO2 emissions well
below environmental licence limits.
A major maintenance project that improved our environmental
performance at the Geelong Refinery included the replacement
of a column in the Hydrofluoric Alkylation unit in late 2021.
This unit helps minimise fluoride emissions from the alkylation
process prior to releasing to atmosphere. These works will
ensure smooth and reliable operation of the unit for its next
production cycle.
Our non-refining operations continued to monitor and report
on air emissions where required, including maintenance of
existing controls.
We monitor air emissions from our facilities according
to site licence conditions and report annually to the
National Pollutant Inventory (NPI). See the latest NPI
data at npi.gov.au/npi-data
Case study: Air quality and odour
management
We have invested significantly in equipment and
processes to support our commitment to managing
and reducing air emissions and associated potential
for odour impacts, and to meeting our regulatory
requirements.
At our Gore Bay Terminal, we import marine fuel
oil (MFO) and other fuel products that are pumped
directly to our Clyde Terminal in Western Sydney
for storage and distribution. Given the proximity
and sensitivity of neighbouring properties and the
potentially odorous nature of MFO, the site has a
Vapour Emissions Control System (VECS) to reduce
any offensive odours and emissions.
The VECS collects vapour which is then treated
through beds of activated carbon to strip out
odour-generating compounds before the scrubbed
air is released back to the atmosphere. Classified
as environmental critical equipment, the VECS
underwent major maintenance in 2021 to increase
capacity and efficiency, and to re-route ducting
traversing the adjacent cliff-face, which had posed
significant challenges for inspection and maintenance.
Efficiency reviews of the activated carbon beds
are ongoing to remove an even broader range
of odour-generating compounds including those
potentially associated with alternative sources of
future MFO imports.
Fuel standards brought forward
We continue to support improvements to Australian
fuels standards including the introduction of Ultra-Low
Sulphur Gasoline (ULSG), which has a sulphur limit
of 10ppm.
As part of the long-term Fuel Security Package (FSP),
the Federal Government and industry have agreed
to bring forward the requirement for all gasoline
grades in Australia to be ultra-low sulphur by the
end of 2024.
Producing refined fuel to this specification requires
substantial upgrades to the Geelong Refinery.
The Federal Government has announced a
commitment to provide a 50% (to a maximum of
$125M) contribution towards the necessary capital
upgrades to produce ULSG.
Viva Energy and the Federal Government have also
agreed to bring forward important work to assess
Australian gasoline and diesel specifications – with
the potential to further align fuels to Euro 6 vehicle
emission standards.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Resource efficiency and the circular economy
Our customers, industry and government are increasingly
focusing on waste management and how the circular economy
can help to reduce waste. In 2021 we continued to focus
on opportunities at the Geelong Refinery and across our
lubricants supply chain, including:
• The Geelong Refinery participating in a world-first trial
to develop, distribute and promote recycled soft plastics
for food-grade packaging
• Developing waste-to-energy opportunities including
biomethane
• Waste recovery practices ensuring most refinery waste
is reused onsite, recycled or reused in other industries
• Continued signatory to the Australian Packaging
Covenant
• Exploring new technologies to develop and supply biofuel
products and participate in waste oil and plastic recycling.
The performance of our waste recovery practices at the
Geelong Refinery remained strong in 2021 with:
• Over 81% of hazardous waste (excluding wastewater)
diverted from landfill
• 100% of wastewater sent to the Northern Water Plant
(operated by Barwon Water) for recycling – the recycled
water returned accounted for 77% of the refinery’s water
consumption (excluding seawater).
In 2022 our waste management efforts at the Geelong
Refinery will focus on improving soil reuse onsite to minimise
offsite soil disposal.
Geelong Refinery waste recovery efforts in 20211
WATER REC YCLING
100% of wastewater is sent
to the Northern Water Plant
for recycling and returned for
reuse as recycled.
USED C AUS TIC
Reused at Clyde Terminal
and the Northern Water
Plant operated by
Barwon Water.
2 , 0 3 5 T
SLUDGE WA S TE
Converted to compost
and used on site.
2 5 7T
1. This data relates to 1 July 2020 – 30 June 2021.
64
Water conservation at the
Geelong Refinery
The Geelong Refinery requires large quantities of
water to produce steam to heat crude oil and cool
fuels during manufacturing. All freshwater used is
sent to the Northern Water Plant for recycling and
returned back to the refinery for reuse. In 2021, the
refinery used 1,090ML of recycled freshwater, 318ML
of potable freshwater and 110,319ML of seawater.
USED C ATA LYS T
Reused by the cement industry.
1 , 0 3 3 T
SCR A P ME TA L
Recovered and recycled.
2 4 5 T
TIMBER
Recycled through our onsite waste
transfer station and chipped for
mulch by the local council.
6 2 T
SULPHUR
Reused in industries including
fertiliser manufacture.
4 , 6 4 7 T
Viva Energy Group Limited – Annual Report 2021
The feedstock for
the wrappers came from
the Curby soft plastic
collection trial on the NSW
Central Coast, together
with soft plastic collected
via the REDcycle
supermarket program
Australian packaging
company Amcor used
the film to create the
prototype KitKat
wrapper for Nestlé
The soft plastics were
sorted, shredded and
converted by Licella into
liquid Plasticrude using
advanced recycling
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The propylene was used
by Taghleef Industries to
create a metallised film
The Plasticrude was
processed in our Geelong
Refinery’s Residue
Catalytic Cracking Unit,
turning it into feedstock
LyondellBasell used the
feedstock to produce
food-grade propylene
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Case study: Closing
the loop on food-grade
flexible plastics
Viva Energy joined forces with other
Australian manufacturers to produce
Australia’s first soft plastic food-
grade wrapper made with recycled
content. To date, soft plastics
collected in Australia have been
made into end-of-life products like
outdoor furniture, added to road
base or used in waste-to-energy.
This innovative pilot demonstrates
a circular future for soft plastics
– completed by a coalition of
companies including Nestlé,
CurbCycle, iQ Renew, Licella,
Viva Energy Australia, LyondellBasell,
REDcycle, Taghleef Industries
and Amcor.
Each organisation harnessed their
individual expertise to collect and
process waste soft plastic, turn
it back into oil, and create the
prototype wrapper used by Nestlé
for their KitKat packaging.
Environmental impact assessments – Gas Terminal Project
Viva Energy is currently seeking regulatory approvals to develop a Gas Terminal at Geelong. As part of this approvals
process we are undertaking an Environment Effects Statement (EES), the most rigorous environmental assessment
process in Victoria.
During the design phase of the Gas Terminal Project, we looked at all aspects of the terminal design, construction
and operation to find opportunities to improve the project’s sustainability performance, reduce environmental impacts
and minimise emissions.
As an example, we will reuse seawater from the proposed Gas Terminal floating storage and regasification process
in the refinery operations cooling water system. This delivers a unique environmental outcome where the water
temperature of the refinery discharge will be close to ambient and chlorine levels will be largely unchanged from
current refinery operations.
As part of our EES we have declared several environmental commitments for the project including the purchase of
certified carbon offsets for Scope 1 and Scope 2 emissions, which are directly related to the construction and operation
of the terminal.
The draft project Environmental Effects Statement (EES) is on public exhibition from March 2022.
For more information on the project, including sustainability initiatives being implemented, and the EES studies and
consultation process, visit vivaenergy.com.au/energy-hub/gas-terminal-project.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
The Australian Packaging Covenant
We continue to be a signatory to the Australian Packaging
Covenant (APC) – the national regulatory framework under the
National Environment Protection (Used Packaging Materials)
Measure 2011 (NEPM). The APC sets out how governments
and businesses across Australia share the responsibility for
managing the environmental impacts of packaging.
Our commitments are set out in our APC 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
• Minimising 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.
In 2021 we worked with the Big Bag Recovery initiative, which
now collects and diverts our outer grease bulk plastic bags
from landfill for recycling.
We continued to support the recycling activity of our retail
and lubricant customers. As a stakeholder, we provided initial
feedback to Australian Packaging Covenant Organisation
(APCO) regarding a proposed product stewardship scheme
for used oil containers. The scheme will promote recycling
of used oil containers up to 20L sold in Australia.
Our main supplier of packed lubricant products, Shell, has
implemented initiatives under their 2021 ‘Reduce. Reuse.
Recycle’ supply chain strategy, including:
• Lightweight cartons (without impact to carton strength),
leading to a reduction in GHG emissions and paper
consumption
• 1L lightweight bottles, leading to a reduction in plastic
consumption, waste going to landfill, and GHG emissions
Partnering to divert plastic
from landfill
We receive and move our grease products in large
bulk bags as part of our lubricant supply chain.
The grease is then loaded into reusable hoppers
for distribution to customers. While these bulk bags
provide a safe and efficient distribution solution,
some components have proven difficult to recycle.
By partnering with Big Bag Recovery to recycle the
outer bags, we expect to divert 5 tonnes of plastic
from landfill each year.
• 25% post-consumer resin (PCR) bottles, helping to create
a circular economy and reduce CO2 emissions.
In 2022 we will continue to implement our three-year APC
Action Plan and prepare for its review and update in 2023.
For more on our participation in the circular economy refer
to Bioenergy and waste recycling on page 49.
See our latest APC annual performance report
at vivaenergy.com.au/environment
66
Viva Energy Group Limited – Annual Report 2021 Our people
Our ability to attract, motivate and develop great people enables our outstanding business results today and
into the future. Our people give us a competitive edge that is core to our success.
2021 saw a renewed focus on positioning our Company as an employer of choice for females, and driving
greater employee engagement, inclusion and belonging – particularly during the ongoing pandemic.
2021 Performance and progress
1,447
employees
43% based in
regional areas
3.6%
gender pay gap
Recruited:
9 females in non-
traditional roles
66% females for the 2022
Graduate Program
44%
female representation
in our Senior
Leadership Group
Target: 40%
Maintained a high
level of employee
engagement of
69%
• Advanced our Inclusion and Diversity strategy including:
– Promotion of employment brand
– Recruitment audit for unconscious bias
– Introducing inclusive leadership training and shared
senior leadership accountability for achieving
gender targets.
• Embedded the new Viva Ways of Working via three
dedicated work streams; Viva Flex, Viva Connect and
Viva Tech
• Launched organisation-wide family and domestic violence
leave, and training for contact officers to respond to
potential cases reported
• Developed a Smart with Heart leadership framework
to unlock potential and build capabilities of our people
• Continued building a diverse and inclusive culture with
established Pride, Cultural Diversity and Reconciliation
Action Plan committees
• Proudly hold the citation for WGEA Employer of Choice
for Gender Equality
• Winner of AFR BOSS Best Places to Work in the Agriculture,
Mining and Utilities industry.
2022 Priorities
• Refreshing our Employee Value Proposition as part
of The Viva Way
• Implementing ‘Leading the Viva Way’ and ‘Smart with Heart’
frameworks through people practices, processes
and programs
• Embedding Viva Ways of Working with a focus on flexible
choices for frontline workers
• Lifting representation of females with a focus on
operational roles
• Broadening our diversity lens, building an inclusive
workplace and sustaining the momentum of the 2021
launch of our Pride and Cultural Diversity committees.
Case Study: AFR Best Place to Work
In 2021, our innovative practices to drive flexibility,
wellbeing and equality were recognised in the
AFR Boss Best Places to Work Awards, for which we
won the Agriculture, Mining and Utilities category.
We are proud to be recognised for:
• Our Viva Ways of Working, which provide choice
in how we work so we can maintain productivity,
connection, and wellbeing – and deliver the best
outcomes for Viva Energy
• Our focus on inclusion and inclusive leadership
to build a culture where everyone feels confident
to contribute their perspectives and be proud of
their individuality
• Our leading approach to reducing the gap in
retirement savings between males and females;
we were the first company in Australia to introduce
full-time equivalent superannuation payments for
employees on parental leave and parents working
part-time until their child turns five years old.
We continue to benchmark and enhance our people
policies to ensure leading practice.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Employee engagement
We regularly seek feedback to drive a culture where people
can be their best. Through structured surveys and informal
engagement, employees are encouraged to provide their
insights at all levels of the organisation and provide honest
feedback on performance.
Using Culture Amp, 81% of our people participated in an
engagement survey in late 2021. Our overall engagement
score of 69% was similar to the previous year’s score of 70%,
which itself was improvement on our results prior to 2020.
Like the previous year, the survey showed us that the highest
scoring areas are Safety (91%), Inclusion & Diversity (81%)
and Values (78%).
Constructive relations with our team members
and unions
Our people have the right to freedom of association and
collective bargaining. Our business maintains strong,
healthy employee relations through strategies that provide
operational flexibility, promote high productivity, and focus
on employee engagement. Enterprise Agreements cover
32% of our employees.
We maintain good working relationships with our team
members and union representatives. We are committed
to good faith bargaining and productive, respectful
workplace relations.
Terms and conditions of employment are regularly
benchmarked against relevant industry and competitors,
and national and state economic analysis informs the
Company’s negotiating strategy on wage increases,
and key productivity and enhanced flexibility improvements.
Viva Ways of Working
Our Viva Way describes how we work together in terms
of our values and behaviours and is reinforced through our
Viva Ways of Working (WoW).
The underlying principle of Viva WoW is that we trust our
people and empower them to choose the way they want
to work. Viva WoW accelerates changes and improvements
we have made to our ways of working during the pandemic
via three dedicated work streams: Viva Flex, Viva Connect
and Viva Tech.
Viva Flex – providing even more flexibility in the
way we work
We have enhanced flexibility provisions for all team members
by discussing individual, team, stakeholder and customer
needs and agreeing on a flexible model of working that is
modelled by our leaders. In 2022 we will work on how we
can progress flexibility for frontline workers.
Viva Connect – supporting inclusive and purposeful
communication
Virtual town halls held monthly keep our team updated
and provide a forum to ask live questions of leaders.
Our ongoing People Connect sessions provide team
members with support on health, wellness and leadership
– and opportunities to interact with colleagues, leaders
and external experts.
In 2021 we launched Workplace by Facebook to power our
internal communications and support employee connectivity.
Viva Tech – enabling new ways of working
through technology
Viva Tech is about enabling flexibility through technology
and ensuring everyone has the technology and equipment
to do their job. Team members are supported to leverage
our leading-edge technology via webinar training sessions
and a curated resources hub of videos and guides.
2021 employee engagement results
77%
of participating employees feel they have
the flexibility they need to manage work
and other commitments.
78%
of participating employees understand
they can arrange time out of work when
they need to.
73%
of participating employees genuinely
feel supported when making flexible
working arrangements.
68
Viva Energy Group Limited – Annual Report 2021 Case study: Part-time arrangements
providing work-life balance at Sydney
into-plane operations
Adam McLennan and Ross Parkin are refuellers at
Sydney Airport. They both enjoy the challenge of their
busy role, working shifts across seven days to keep
planes refuelled, and enjoy the option of balancing a
part-time role. Part-time hours mean Adam can spend
time caring for his four-year-old daughter. “I can enjoy
time with Daisy before she starts going to school and
I can also pick up extra shifts if needed,” he said.
For Ross it means more time to support his family as
his partner also works in shifts. “It allows me to help
out more at home and support my partner’s career
too,” he said. “I’m grateful for the flexibility.”
Anita Kiprovski works three days a week from 7am
until 3pm supporting the team with administration.
This allows flexibility to manage care for her three and
five-year-old children. “I went part-time after having
my first child to enable me to balance my family
commitments,” she said. “I feel very lucky to be
supported to do that”.
Smart with Heart Framework
The Smart with Heart Framework defines the competencies
that will enable success for people leaders and self-leaders.
This framework was built by our people, for our people.
Using focus groups, in-depth interviews and leading external
research, we listened to our people on what enables us to be
effective and succeed.
Together we identified the five Business Leadership and
five People Leadership competencies that make up Smart
with Heart.
The contemporary development methodology underpins
our approach to People and Culture, including development,
recruitment and talent.
Our people leaders dedicate time to having Smart with Heart
development conversations, which focus on:
• Building on strengths
• Remediating possible ‘de-railers’
• Progressing aspirations.
It also underpins coaching and development conversations,
leadership programs and interventions. Taking this holistic
approach enables us to unlock potential and build the
capabilities we need in our people to succeed.
2022 Graduate Program
In 2021 we launched our Viva Energy Graduate Program
campaign: Your Future is Our Energy. We received over
1,000 applications and appointed nine graduates – six female
and three males.
Developing our people
Our success in delivering on strategic goals depends on our
people having the necessary skills, experiences, capabilities
and opportunities. We support development to ensure we
have the right people in the right roles with the right skills.
In 2021 we invested more than 47,000 training hours across
our corporate and operational teams. Of this total, 32,699 hours
were attributed to operations, where 1,953 employees and
contractors completed an average of 16.7 training hours
during the year.
Overall, employees completed 15,239 hours of training
related to annual compliance activities and our changed
working arrangements – including an emphasis on cyber
security threats, and on the impact of working conditions
on psychological safety and wellbeing. As a minimum,
training is delivered across our Code of Conduct, Privacy,
Anti-Bullying & Harassment, Cyber Security, and operational
safe working training requirements.
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BUSINESS LEADERSHIPLEADERSHIP FRAMEWORKSmart with HeartYou know a Viva Leader when you meet them…PEOPLE LEADERSHIPChange AgilityPresentation & CommunicationPerformance & AccountabilityPeople DevelopmentCustomer CentricityDecision MakingCollaborationStrategic VisionInclusion &DiversitySafety FirstViva Energy Group Limited – Annual Report 2021
Gender diversity
Viva Energy is committed to improving the representation
and equal pay of women in all roles and levels in our business.
We track and report against diversity targets, and report
annually to the Workplace Gender Equality Agency (WGEA).
For 2020-21 we reported our workforce gender profile as of
31 March 2021, with our report lodged to WGEA on 11 August
2021. In addition to the compliance reporting, we are also
proud to be recognised again as a WGEA Employer of Choice.
One of the key metrics that we track to assess our progress
in gender diversity is our gender pay gap. The gender pay
gap includes the total remuneration pay gap (expressed as
a percentage) between women and men in the workforce.
We internally calculated the Group-level gender pay gap
of 3.6% for 2020-21 which was also reported to our Board.
In August 2021 we joined 40:40 Vision with other ASX 200
companies to commit to achieving gender balance in our
Executive Team by 2030. Gender balance is defined as having
at least 40% male and 40% female representation. We have
revised our target for female representation in the Senior
Leadership Group from 50% to at least 40%. As of the end
of 2021, we had 44% female representation in our Senior
Leadership Group.
Sustainability report continued
Inclusion and diversity
Our approach to diversity and inclusion builds pride and
engagement within our Company. By actively including
a diverse range of ideas and perspectives, we can better
connect with customers and with each other. An emphasis
on inclusion and inclusive leadership contributes to a culture
where everyone is confident to contribute and is proud of
their individuality.
Three executive-sponsored groups are dedicated to
supporting our team members to feel safe, supported,
empowered and proud to bring their authentic self to work:
• Pride Committee
• Cultural Diversity Collective
• Reconciliation Action Plan Committee.
Our Face of Viva Survey helps us better understand and
celebrate the diversity of the people who work for Viva Energy.
Female representation in the Senior Leadership Group
2021
2020
2019
Target
Female new hires
2021
2020
2019
Target
44%
41%
39%
40%
36%
30%
40%
50%
Female representation on the Board
2021
2020
2019
29%
29%
29%
Target (longer term succession planning)
40%
Our commitment to gender equality has again been
nationally recognised, with Viva Energy cited by the
Workplace Gender Equality Agency (WGEA) as a
2020-21 Employer of Choice for Gender Equality.
38%
Overall female representation
2021
2020
2019
26%
24%
24%
Female promotions
2021
2020
2019
19%
26%
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Viva Energy Group Limited – Annual Report 2021 Addressing everyday sexism
At Viva Energy, we are committed to creating a safe and inclusive culture where everyone is treated with respect. Sexual
harassment or other forms of harassment are not tolerated under our Business Principles and Code of Conduct.
As part of our approach to better understand the level of psychological safety among our team members, our CEO
Scott Wyatt championed a series of listening sessions. Driven by his Senior Leadership Team, the sessions covered
everyday sexism, the treatment of women and workplace culture. These leader-led sessions provided an opportunity
for feedback from team members, and a forum to reinforce supports available to manage inappropriate behaviour.
We have implemented a Say it Again campaign in various workgroups of our organisation to help team members call
out inappropriate comments in the moment – as a trigger for reflection and conversation on why a comment may be
considered inappropriate or offensive.
Case study: Women in Industry award finalists
The Women in Industry awards celebrate women
working across the mining, engineering, manufacturing
and commercial road transport industries, and
recognise career excellence and achievements.
Ashleigh Fulcher
Kirstie Looke
We were thrilled to announce that two women from our
Geelong Refinery were shortlisted as finalists in 2021.
Ashleigh Fulcher, Reliability Manager, was recognised
under the Excellence in Engineering category for her
outstanding personal contribution to manufacturing
and the wider manufacturing community.
Kirstie Looke, Crude Scheduler, was recognised under
the Rising Star category for showing significant promise
within her chosen industry and exceeding expectations
at the start of her career.
Parental Leave Policy
Our employees come from diverse backgrounds with different
family situations and caring responsibilities. We continue to
grow and improve the suite of resources and support offered
to people who are planning parenthood, starting parental
leave or returning to work.
In 2021 we partnered with Parents at Work to support parents
and carers. Their Work and Family Hub includes curated
courses and resources for support across all ages and
stages of life.
Our paid Keeping in Touch program ensures employees
on extended parental leave can maintain their connection
with the business. We also support our employees with
special compassionate leave in the event of early miscarriage
or unsuccessful IVF attempts. We provide paid primary
and secondary parental leave on top of any government-
funded leave.
Viva Energy makes 12% (full-time) superannuation payments
for employees on parental leave or working part-time for up
to five years from the child’s birth. This initiative has been
widely supported by our employees and sparked similar
commitments from other businesses since implementation
in 2017.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Our community
We are committed to building strong relationships and making a positive difference in local communities
that are associated with our national operating footprint. This is important for employee attraction and
engagement as well as maintaining our social licence to operate with the community and external stakeholders
more generally.
2021 Performance and progress
96%
of our inaugural RAP
deliverables have
been achieved
$3.5M
spend with First
Nations businesses
and organisations
$776,000
invested into community
partnerships
80%
of our people have
completed cultural
awareness training
• Refreshed our Community Program including adding
new partnerships in 2021 and for 2022
• Completed our inaugural Reconciliation Action Plan (RAP)
• National Reconciliation Week and National Aboriginal
and Islander Day Observance Committee (NAIDOC)
events conducted including virtual options
• Community consultations undertaken for the proposed
Gas Terminal Project to ensure community understanding
and support for the project and to comply with the
Environmental Effects Statement (EES) process.
2022 Priorities
• Finalise and launch our new community partnerships
• Launch and implement our second Reconciliation
Action Plan 2022-2024
• Increase engagement with the Geelong community by
expanding local sporting club grants and reintroducing
awards to recognise local heroes
• Promote employee Good Deed opportunities with
our partners, fundraising and volunteering
• Increase engagement with Traditional owners and
support for First Nations businesses.
Local community engagement
We recognise our operations provide benefits to the local
economy but have the potential to impact local communities.
Regular engagement with our community and stakeholders
is essential to maintaining our social licence to operate and
securing buy-in to deliver new projects.
We maintain active and regular community engagements
for our larger facilities and for any new major projects or
developments. Specific community engagement activities
are undertaken for the Geelong Refinery and our terminals
at Newport, Clyde and Parramatta, Gore Bay and Pinkenba.
For more information see vivaenergy.com.au/
sustainability/community
Our Geelong community
The Geelong Refinery is our largest operational site, employing
more than 700 people and supplying half of Victoria’s fuel
needs. Our operations have been part of the Geelong
community since 1954 and inject more than $230M annually
into the local economy.
Local community partnerships include:
• Northern Futures
• Sponsorship of the Geelong Football Club’s inaugural AFLW
(women’s) team and their Next Generation Academy
• Social enterprise Gen U, which provides cafeteria and
gardening services.
Sport plays a significant role in the Geelong region. Despite
COVID-19 impacting junior sport, we continued to support
10 local clubs. which rely on corporate contributions.
In 2021 we progressed our vision to develop the Geelong
Energy Hub at our refinery site with continued community
and stakeholder engagement and consultation.
For more information refer to vivaenergy.com.au/
energy-hub
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Viva Energy Group Limited – Annual Report 2021 C
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Community complaints
Viva Energy has a procedure for third party complaint
investigation, response and reporting. The Complaint
Management System includes:
• Reporting relevant complaints to regulators in keeping
with licence requirements
• Keeping a record of all complaints.
Our community stakeholders are kept informed about grievance
mechanisms through ongoing engagement including meetings,
newsletters and website updates. They can also access
grievance mechanisms through a 24-hour telephone line.
Viva Energy reviews all complaints or grievances to ensure
they are understood and remedied where possible. In 2021
the majority of community complaints received related to
noise, odour, nuisance or air quality concerns. We recorded
and investigated all complaints and made necessary
assessments and regulatory reports where required.
Community program
Our community program 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 to help them reach their
destination.
Our partnerships with organisations such as the Cathy Freeman
Foundation (CFF) and the National Aboriginal Sporting
Chance Academy (NASCA) officially concluded at the end
of 2021, which provided an opportunity to review the program
and partnerships we support.
Our partnership with the Koorie Heritage Trust (KHT) will
continue to support their important work to promote and
preserve traditional language and culture in Victoria, and
support us to build our cultural awareness and connection
in Victoria.
We have also developed a partnership with Racing Together
to promote First Nations youth participation in motorsports
and STEM careers.
Our programs have helped us deliver on our RAP
commitments. While opportunities for engagement with
our program partners were impacted due to COVID-19,
we adapted our engagement approach to deliver virtual
NAIDOC and Reconciliation Week activities.
Employee participation
Our employees have continued to do Good Deeds in 2021
– supported by two days of annual community engagement
leave. The impacts of COVID-19 reduced opportunities for
participation in volunteering and fundraising activities, with
220 Good Deeds completed in 2021, compared to 576 in
2020 and over 1,000 in 2019.
We have reimagined our Good Deeds program to encourage
more uptake of community engagement leave in 2022.
We support our employees with donations and team
fundraising through our Double My Donation and Team
Fundraising programs – where Viva Energy matches funds
raised for approved organisations.
To enable participation and engagement with key First
Nations celebrations, we adapted our approach to deliver
virtual activities for our people for NAIDOC and
Reconciliation Weeks.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Community highlights for 2021
220 Good Deeds
completed by our
employees.
Our employees
raised $291,055
through Double My
Donation and Team
Fundraising (includes
Viva Energy matching).
In our third year of being
a Premier Partner of the
Geelong Football Club’s
AFLW team, we continued
to be the major sponsor of
Welcome to Geelong Day.
The AFLW players and Viva
Energy introduced over 130
refugees and immigrants to
Aussie Rules at the footy fair.
95 young people
supported by Viva Energy
via our partners programs.
We have delivered
strongly on our inaugural
Reconciliation Action
Plan (RAP) with 96% of
actions achieved.
Our business
We use our business capabilities to help
create long-term positive change.
Low Aromatic Fuel (LAF)
With the renewal of our contract to manufacture and
supply LAF into northern Australia until at least 2023,
we continue our commitment to helping reduce petrol
sniffing in regional and remote communities.
Member of Supply Nation
Our membership provides options to support First
Nations businesses with more than $3.5M spent
on First Nations peoples owned and led organisations.
First Nations peoples employment
First Nations people’s employment has remained steady.
We encourage and influence our major contractors to
prepare and implement First Nations participation plans.
Customers
Working with our customers to support local communities
where we both operate.
Healthy Heads in Trucks & Shed (HHTS)
The three-year sponsorship will assist the Foundation
to deliver its National Mental Health and Wellbeing
Roadmap.
Support for Geelong and grass roots sports
We are a Premier Partner of the Geelong Cats AFLW side
and NextGen Academy, and sponsor 10 local Geelong
sports clubs.
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
204 employees have donated $160,412 including
Viva Energy matching.
Investing in the community
We contributed $776,620 to our partnerships
and sponsorships.
Employee led program
30 Community Ambassadors across the organisation
help to deliver our community program and offer
participation opportunities for employees.
Team fundraising
$130,643 raised for 11 charities through team fundraising
activities, including Viva Energy’s matching.
Improving cultural awareness
Of the 280 employees who participated in National
Reconciliation Week (NRW) events, 217 participated
in a series of virtual activities that included a NRW
People Connect session and KHT virtual cultural tours.
All activities were aimed not only at celebrating
NRW, but also to deepen our cultural awareness and
competency. Over 80% of employees and contractors
have completed On-Line Cultural Awareness Training
launched in 2020.
Cathy Freeman Foundation (CFF)
We supported 28 young First Nations people to attend
‘in community’ Horizons camps designed to increase
confidence and goal-setting skills. COVID-19 has seen
five camps rescheduled to 2022.
National Aboriginal Sporting Chance
Academy (NASCA)
NASCA delivered 276 hours of activities, supporting
43 students in western Sydney with the support of
Viva Energy’s partnership.
Racing Together
In July 2021 we entered a three-and-a-half-year
partnership with Racing Together, a forward-thinking
program to help First Nations youth become involved
in motorsport.
Over 130 participants will receive two days of intensive
training in advanced driving, motorsport, racing,
wellbeing, self-esteem and STEM subjects. Each year,
10 participants will be selected to form a racing team.
In the first six months of the partnership 10 students
have benefited from the program.
Koorie Heritage Trust (KHT)
Viva Energy’s funding supported the recording of a
further five new, 74 digitisations and 95 entries to KHT
collection management software of oral histories, the
delivery of virtual school holiday programs and annual
events including the Koorie Art Show and Koorie Krismas.
Northern Futures
We continue to engage with Northern Futures to
assist in removing barriers to disadvantaged students
completing study or gaining employment. This year
the program supported 14 students.
Community support and Indigenous grants
Grants to the total value of $69,420 with two Indigenous
programs – Shooting Stars and Indigenous Literacy
Foundation – each receiving a $20,000 grant and six local
community organisations received a share of $29,420.
74
Viva Energy Group Limited – Annual Report 2021
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Reconciliation Action Plan (RAP) update
Our inaugural RAP (2019-2021) saw us achieve 96% of our
commitments. The key deliverables achieved through
our RAP included:
• Supporting our major First Nations partners with
provision of $3M over three years to the Cathy Freeman
Foundation (CFF), National Aboriginal Sporting Chance
Academy (NASCA), Koorie Heritage Trust (KHT), and
Council for Aboriginal Alcohol Program Services (CAAPS).
Through these partnerships we supported over 360
individual young people and delivered classroom
sessions to over 9,450 students
• Re-securing the Low Aromatic Fuel (LAF) supply contract
for northern Australia until at least 2023 – continuing to
reduce petrol sniffing in remote and regional communities
While Viva Energy is pleased with the achievements in our
first RAP, we recognise there is more to do.
We have learnt from the challenges of our reconciliation
journey, including the impact of COVID-19, which restricted
our face-to-face engagements with First Nations people and
corporations. We will continue to build on our achievements
in our 2022-2024 RAP, which is due for release in April 2022.
Our second RAP will set additional targets that will stretch
us and aim to make positive impacts in the communities
where we operate, with focus on:
• Building longstanding relationships with Traditional
Owners to deliver sustainable benefits where our major
sites are located
• Widening the diversity of First Nations suppliers and
building stronger relationships
• Developing strategies for First Nations cultural awareness
training and First Nations employment and retention
• Maintaining our focus on increasing First Nations
employment and retention.
• Launching online First Nations Cultural Awareness Training
and increasing employee participation in the training
• Celebrating NAIDOC and National Reconciliation Week,
including pivoting to virtual activities in 2020 and 2021
• Updating our procurement guidance to actively consider
First Nations businesses for goods and services being
procured by the Company
• Partnering with CareerTrackers to host an annual intake
of First Nations interns – providing five internship
placements in 2019, four in 2020 and one in 2021
• Commencing a new partnership with Racing Together
to encourage First Nations youth participation in STEM
and motorsports.
Viva Energy is a member
of Supply Nation, an
Australian leader in supplier
diversity and connecting
organisations with First
Nation businesses. Supply
Nation supports us to
connect with and increase
our procurement spend with
First Nations businesses.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Case study: First Nations procurement – Nakula Marine Services
In 2018, Viva Energy awarded a fuel bunkering contract to Nakula Marine Services. Bunkering is where marine fuel
oil (MFO) is delivered through pipeline via a bunker truck onto a marine vessel and is a relatively complex activity.
The company also provides a range of vessel shipping agency services at the Port of Broome in the Kimberley region.
Since being awarded the contract Nakula Marine Services has transferred over 100 million litres of fuel.
Nakula Marine Services is a Broome-based, family-run business that incorporated in 2014. The business is 100%
First Nations people owned and operated with three of its five employees being First Nations people. The word Nakula
is derived from the Yawuru language and means water or ocean.
Scott Manning and Jade Robinson, owners of Nakula Marine Services, both worked at Viva Energy’s Broome terminal
where they met and decided to form the company. Jade is the Managing Director and is a proud Yawuru woman from
the Walman Jano clan on her mother’s side. Jade has worked in the Kimberley region for approximately 20 years.
She has worked in shipping and the oil and gas industry for the last seven years with a focus on vessel operations,
and has extensive knowledge of Broome Port.
Nakula Marine Services aims to employ local First Nations peoples wherever possible and enhance the prospects of
First Nations peoples through sustainable work opportunities and are looking to take on First Nations trainees once they
have the capability to do so.
Low Aromatic Fuel
In partnership with the Federal Government National Indigenous Australians
Agency, Viva Energy supplies around 35 million litres of Low Aromatic Fuel (LAF)
to northern Australia each year.
LAF 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.
LAF is manufactured at the Geelong Refinery and our supply footprint covers NT,
QLD and WA from our Darwin, Weipa, and Townsville terminals. The supply of
LAF has helped reduce petrol sniffing in regional and remote areas.
91 Low Aromatic
supply zone
76
Viva Energy Group Limited – Annual Report 2021 Case study: Racing Together
Viva Energy has entered into a new community partnership with Racing Together, a forward-thinking program to help
First Nations youth become involved in motorsport.
Over the three-year partnership, 130 participants will receive two days of intensive training in advanced driving, motorsport
and racing – as well as wellbeing, self-esteem and STEM subjects. Each year, 10 participants will be selected to form a
racing team.
Currently there are no high-profile First Nations figures in Australian motorsport, despite the $2.9 billion industry
generating an estimated 30,000 jobs. The goal of the Racing Together program is to have 30 First Nations Australians
participating and working in the sector within five years and 1,000 within 15 years.
Vince Neville, Viva Energy’s General Manager of Distribution, said he is delighted the Company is able to support
the program.
“The partnership between Racing Together and Viva Energy ties in closely with our vision for reconciliation as a nation
where First Nations people have equal and equitable opportunities to reach their destination,” Mr Neville said.
The program operates with the support of Queensland Government’s Department of Employment, Small Business
and Training.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Ethical conduct and transparency
Viva Energy observes the highest standard of corporate practice. Our Board and management team are
committed to protecting shareholder value by upholding a Code of Conduct that is ethical, responsible,
and respectful of customers, communities, our people and stakeholders.
2021 Performance and progress
Our Code of Conduct is supported by the following policies:
$5.87B
Total tax contribution
Zero
Notifiable cyber
security data breaches
Supplier Code
of Conduct
introduced
185
employees completed
modern slavery
training
• Targeted modern slavery due diligence – survey issued
to and responses received from 101 suppliers based on
their spend and inherent risk
• Embedded modern slavery clauses into our standard terms
and conditions for new procurement contracts
• Introduced a Supplier Code of Conduct
• Deep dive research into vetting shipping vessels to mitigate
modern slavery risks
• No notifiable cyber security data breaches.
2022 Priorities
• Embedding our Supplier Code of Conduct and furthering
our interaction with key suppliers through survey to
identify opportunities for sustainability collaboration
and performance improvement across our supply chain
• Exploring opportunities to collaborate with higher-risk
suppliers to reduce their modern slavery risk profile.
Our approach to strong corporate governance
Viva Energy has long-standing Business Principles reflecting
our core values and guiding our conduct and operations.
Our Code of Conduct outlines how we expect our people
(including Directors and senior executives) to behave and
conduct themselves in the workplace. All employees are
required to annually review and confirm their understanding
of the Business Principles and Code of Conduct.
• Anti-Bribery and Corruption Policy
• Whistleblower Policy
• Securities Trading Policy
• Inclusion and Diversity Policy
• Disclosure Policy
• Shareholder Communications Policy
• Human Rights Policy
• Supplier Code of Conduct.
Our employees receive awareness training on these policies
where it is appropriate for their role.
For more information on our corporate governance
and policies visit vivaenergy.com.au/our-company/
corporate-governance
Reporting misconduct
Viva Energy maintains a Whistleblower Service and Policy.
The policy details the rights of eligible persons to report –
on a confidential and anonymous basis – suspected illegal,
fraudulent, unethical or socially irresponsible conduct by
Viva Energy or any of our officers, employees or contractors.
This includes breaches of the Viva Energy Code of Conduct
or other Viva Energy policies.
We take allegations of improper conduct seriously. Concerns
or reports of improper conduct can be disclosed to our
independent whistleblower reporting service (Stopline)
or to a Viva Energy protected disclosure officer.
All disclosures are investigated in a timely, thorough and
confidential manner. We apply the principles of natural justice,
procedural fairness and best practice investigative techniques.
Eligible persons receive protection from detrimental action
and retain anonymity – unless the individual consents to being
identified or another exception applies. In 2021, we received
one disclosure via Stopline, and this was investigated and
closed in July 2021.
78
Viva Energy Group Limited – Annual Report 2021 Our Audit and Risk Committee (ARC) receives regular reports
of anonymised whistleblower disclosures and material
breaches of our Code of Conduct and other Viva Energy
policies. Reports include:
• A summary of the disclosure and the associated
investigation
• Identification of any patterns of conduct
• Recommendations.
Serious or material disclosures are considered for immediate
referral to the Chair of the ARC and Board. The Board is
informed of any material breaches of the Code of Conduct
by a Director or senior executive, and any other material
breaches of the Code of Conduct that call into question
the culture of the Company.
In 2021, approximately 70% of material breaches of our
Code of Conduct and other Viva Energy policies reported to
the ARC related to Life Saving Rule breaches (see page 39).
Approximately 30% related to Code of Conduct breaches
for inappropriate workplace behaviour. Appropriate action
was taken to address the breaches, including formal warnings
and termination of employment where warranted. There were
no reported cases of policy violations relating to bribery or
corruption during 2021.
Modern slavery
In 2021 we conducted further assessments aimed at
increasing the visibility, awareness and understanding of
modern slavery risks across our supply chains. This included
a targeted analysis of 101 key suppliers based on spend and
inherent risk. This was aimed at understanding the risks both
within the operations of the supplier itself and further up the
supply chain, i.e., beyond our Tier 1 suppliers.
We identified shipping as the area that presents the
greatest risk of modern slavery in our procurement activities.
This risk was further identified as potentially heightened
by the COVID-19 pandemic. As a result, we undertook an
assessment of the potential modern slavery risks associated
with the shipping vessels used to import crude oil and finished
products. This work enabled us to assess risk while also
presenting an opportunity for Viva Energy to drive positive
change given our involvement with the shipping industry and
established relationships with key shipping service providers.
During 2021 our assessments did not identify any actual
instances or allegations of modern slavery within the direct
operations of Viva Energy, and we did not become aware of
any modern slavery allegations against any of our suppliers.
Supporting our commitments, in 2021 we embedded
modern slavery clauses into the standard terms of conditions
for our new procurement contracts, supported by the
introduction of a Supplier Code of Conduct. For all employees
with responsibility for people, procurement and supply chain
account management we rolled out modern slavery training,
with 189 employees completing this training in 2021.
To view our Modern Slavery Statement 2021 visit
vivaenergy.com.au/investor-centre/company-reports
Procurement approach
Our Procurement Policy sets out how employees, contractors
and agents engage in any form of procurement activity on
behalf of Viva Energy. All decisions related to purchasing
activity are based on our guiding principles.
One of those guiding principles requires that all Viva Energy
dealings must be fair, transparent and ethical. Our suppliers
must also adhere to high ethical standards and fairness in
their own business. We actively seek suppliers that align with
our sustainability objectives, including that they:
• Do not promote discrimination on any grounds, or
occurrences of modern slavery
• Do promote fair living wages, freedom of association,
equitable working conditions, employee health and safety,
and working within the relevant laws of their country
• Support our gender diversity policy and Reconciliation
Action Plan (RAP) objectives.
We have also amended our guiding principles to:
• Actively consider Indigenous or Torres Strait Island owned
or operated businesses where their offering meets our
needs and is cost competitive
• Engage suppliers who demonstrate a commitment
to gender equity.
Supplier Code of Conduct
Viva Energy seeks to engage with contractors, suppliers
and service providers who share similar values. In 2021 we
introduced a Supplier Code of Conduct. The code supports
our sustainability focus areas and sets out our expectations
and responsibilities for our existing and future partnerships.
We communicated the new code to our key suppliers as
part of our modern slavery survey in 2021. More surveys are
planned for 2022 to identify opportunities for sustainability
collaboration and improvement across our supply chain.
Supporting small business
We support small business through our procurement guidelines
and standard 30-day payment terms. In 2021, a high percentage
(42%) of invoices were paid within 20 days, which is well within
our standard payment terms. Our payment terms and
performance are reported at register.paymenttimes.gov.au.
Standard payment terms and performance1
Value of invoices paid in
< 21 days
21 – 30 days
31 – 60 days
61 – 90 days
91 – 120 days
>120 days
%
42
28
30
0
0
0
1. This data is for half year ended 31 December 2021 and represents the
consolidated outcome for all Viva Energy Group reporting entities.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Tax transparency
We are committed to delivering transparency and providing
communities and stakeholders 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 each year of
our tax position, in addition to the requirements under our
financial statements. Our total Australian tax contribution
by way of taxes, duties and excise during the 2021 year was
over $5.8 billion. Over the last three years that contribution
has been approximately $16.5 billion.
To view our Taxes Paid Report 2021 visit
vivaenergy.com.au/investor-centre/company-reports
Total tax contribution $M
Income tax
Fuel excise
Customs duty
Payroll tax
Fringe benefits tax
Land tax
Government imposts
collected by the business
on behalf of others:
2019
26.2
2020
-
2021
30.9
4,296.9
4,102.2
4,631.0
14.2
9.0
0.8
14.2
19.8
10.4
0.8
22.9
10.3
9.4
0.7
25.7
GST
1,090.8
852.0
1,100.8
PAYG withholding
67.3
60.3
65.1
Total tax contribution
5,519.4
5,068.4
5,873.9
Cyber security
In 2021 the public profile and importance of cyber security
continued to increase. The Federal Government has taken
a more prominent role in the oversight of critical infrastructure
assets and systems considered to be of National Significance.
The critical infrastructure reform means cyber security
changes will add to the current state regulatory framework.
We continue to engage with the relevant state and federal
agencies to meet these requirements.
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 must also
protect sensitive business and personal data – we recognise
our responsibility in the supply chain and work closely with
our partners, critical asset owners and customers to maintain
confidentiality, integrity and awareness. Viva Energy is
focused on ensuring that effective cyber security measures
are implemented and followed to minimise disruption and
maintain customer trust.
Our Information Security Management System is aligned
with global best practices and ensures a continual cycle of
review and improvement of cyber security risks and controls.
Viva Energy’s Audit and Risk Committee has oversight with
cyber security a standing agenda item.
Improvements in 2021 focused on increasing visibility of threat
activity, risk management, resilience and improving users’
ability to identify and handle cyber threats. No notifiable
data breaches occurred during 2021.
80
Viva Energy Group Limited – Annual Report 2021 Economic contribution
We support the Australian economy through the national scope of our operations, the products we supply, the
employment we generate directly and indirectly, our support for local suppliers, investor returns and the taxes
we collect and pay.
Our vision is to become a diversified energy supplier that:
• Meets the country’s energy security needs through local manufacturing
• Supports existing jobs and generates new ones
• Supports economic development in the region
• Actively participates in the low-carbon energy transition.
2021 Performance and progress
• Long-term Fuel Security Package (FSP) in place with the
Federal Government to support Australia’s energy security
and enhance the long-term viability of the domestic
refining sector
2022 Priorities
• Continue to provide skilled manufacturing jobs at Geelong
Refinery and pursue opportunities to develop new roles
to support the Energy Hub initiatives, and development
of new energies
• Maintained safe and reliable fuel supply during COVID-19
• Readiness for commencement of Mandatory Stockholding
• Progressed the design, feasibility and environmental impact
assessments for our proposed Gas Terminal at Geelong
• Employed over 1,447 people with 43% of our workforce
located in regional areas.
Obligations (MSO) by mid-2022
• Commence construction of new diesel storage as part
of the ‘Boosting Australia’s Diesel Storage’ Program
• Progress the Gas Terminal Project through approvals
processes and investment decision, with potential to
meet forecast gas shortfall in south-eastern Australia
• Use of local materials in new major projects
• Consider the use of First Nations owned and
operated suppliers.
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Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Supporting Australia’s economy
$1.4B
invested in local wages
and services
$5.87B
Total tax contribution
Over 1,447 strong
Australian workforce 43%
based in regional areas
On average, we re-fuel
1.48M
trucks, buses, cars
and motorcycles
every week across
the Alliance network
Network of 55 fuel
import terminals and depots 2
and over 50 airports
and airfields across Australia
1.2B
litres of storage capacity
Leading supplier
for lubricants and diesel
in the resources market
Geelong Energy Hub
Proudly supporting local manufacturing
at the Geelong Refinery –
1 of 2 1 refineries
in Australia
Plans for development:
• Gas Terminal Project
• Solar farm project
• New Energies Service
Station for hydrogen refuelling
Only major Australian manufacturer of avgas,
solvents and bitumen
Viva Energy supplies:
avgas
solvents
bitumen
Approximately ¼
of Australia’s fuel needs
National network
of 1,340+
retail service stations
Approximately 40%
of the marine fuel oil market
Approximately 35%
of jet fuel nationally
Manufactures Low
Aromatic Fuel for supply into NT,
QLD and WA
712
people (employees and contractors)
work at the Refinery and 276 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. BP Kwinana ceased refining operations in February 2021 and ExxonMobil Altona ceased refining operations in September 2021.
2. Includes 24 fuel import terminals and network of 31 active depots (including 26 Liberty Oil Australia depots).
Supporting Australia’s economy and
fuel security
By the end of 2021 the Geelong Refinery was one of only
two refineries remaining in Australia. It supplies over 10%
of Australia’s fuel and approximately 50% of Victoria’s fuel.
Employing over 700 people and injecting almost $230M into
the local economy, the Geelong Refinery is a vital part of
Australia’s energy landscape. Our critical investments aim
to ensure our refinery continues to provide energy security
and be an important part of local manufacturing for years
to come, including:
• Major maintenance, reliability and safety improvements
• Increased diesel storage capacity along with the Federal
Government’s Fuel Security Package
• Diversification of energy products through Geelong Energy
Hub projects to support the low-carbon energy transition.
With the significant footprint of our operations and
infrastructure, we are a key contributor to Australia’s energy
security, particularly for liquid fuels. This security underpins
the Australian economy and Viva Energy remains committed
to safe and reliable supply.
We also have ambitions to play a role in natural gas supply
security for south-eastern Australia through our proposed
Gas Terminal at Geelong, in response to a projected gas
supply shortfall. In 2021 we progressed the design, feasibility
and environmental impact assessments associated with the
project. In 2022, the project is scheduled to progress through
the relevant regulatory approval processes and, pending the
outcome of these, Final Investment Decision.
82
Viva Energy Group Limited – Annual Report 2021 Our vision for the Geelong Energy Hub is to transition the
refining site to supplying multiple sources of energy as part
of the longer-term goal of energy transition to a lower-carbon
economy. This vision is supported by a commitment to
improved fuel standards through the advancement of
ULSG fuel specifications, and further harmonisation to Euro 6
vehicle emission standards. For more, refer to Fuel standards
on page 63.
We look forward to a period of substantial investment
in Geelong.
Minimum Stockholding Obligations
The Federal Government has announced plans to introduce
a Minimum Stockholding Obligations (MSO) for main
grade fuels (petrol, jet fuel and diesel) across the fuel
industry in Australia.
The first stage will start on 1 July 2022 and is designed to
maintain current average product levels in the country; stored
holdings of fuel equalling national consumption coverage of
24 days for petrol, 20 days for diesel and 24 days for jet fuel.
The second stage is slated for 1 July 2024 and requires an
increase of national diesel holdings, given the importance
of this fuel type to many economic sectors.
The MSO will apply to Viva Energy, however, refineries are
exempt from the increased diesel requirements at an asset
level. The crude held by refineries will be counted toward
the product holding requirements on a notional converted
product basis. MSO settings are currently under discussion
with government with overall impact to industry yet to
be determined. We expect these settings to support our
commitment to continue operating the Geelong Refinery.
Viva Energy expects to be compliant with the scheme from
commencement.
Viva Energy has secured a grant for up to 50% (maximum
$33.3M) of the cost of building an additional 90 million litres
of diesel storage at Geelong Refinery by mid-2024, with
the total project expenditure estimated to be between
$75M-$85M. Subject to regulatory approvals, construction
of the new diesel storage is expected to commence in 2022
with planned completion by mid-2024, prior to the introduction
of stage 2 of the MSO.
For more information on this see: vivaenergy.com.au/
energy-hub/strategic-supply-and-storage
The Gas Terminal is proposed to be operational in 2024,
and on commissioning would be connected to the largest
gas market in Australia, able to bring gas from other parts
of Australia and overseas to fill the projected shortfall. As gas
demand reduces through the low-carbon energy transition
in the coming decades, the floating regasification vessel
associated with the project can be easily removed.
For more information on the proposed Gas Terminal
Project, visit vivaenergy.com.au/energy-hub/gas-
terminal-project
Fuel Security Package
In 2021, Viva Energy worked closely with the Federal
Government to implement a long-term Fuel Security Package
(FSP) to support Australia’s refining industry and fuel security.
The FSP acknowledges the importance of refining to the
country’s broader energy security and enhances the long-term
viability of the domestic refining sector.
The FSP includes:
• A Fuel Security Services Payment (FSSP) when refining
margins are poor
• The introduction of industry Minimum Stockholding
Obligations (MSO)
• Capital contributions towards refinery upgrades to allow
production of Ultra-Low Sulphur Gasoline (ULSG), and
bringing forward the timeline for ULSG implementation
to by the end of 2024
• Capital contributions to building diesel storage as part
of the Boosting Australia’s Diesel Storage Program.
As part of the FSP, Viva Energy makes a commitment to
maintain refining operations through to 30 June 2028, with
an option to extend until 30 June 2030.
Viva Energy welcomed the support to the refining sector
in Australia, which has faced several structural headwinds
in recent years from challenging global trading conditions –
including increased competition from Asian refinery imports,
and significant impacts on demand from the pandemic.
Refineries provide a critical role in energy security,
through their crude conversion capability and substantial
inventory positions.
The structure of the FSP allows us to commit to the significant
capital program required through the refinery’s life cycle.
The structure of the FSP is not designed to underpin or
support profits of Geelong Refinery, but to partially mitigate
the downside risk of low refining margin cycles that Australian
refineries are exposed to. Reducing this risk gives us
confidence to proceed as we seek to invest in the future
of the Geelong site as part of our Energy Hub.
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83
Viva Energy Group Limited – Annual Report 2021
Aligning with UN Sustainable
Development Goals
This report maps our sustainability focus areas
against UN Sustainable Development Goals (SDGs).
We believe our business has an opportunity to
contribute to these broader goals by enhancing
our positive contributions and avoiding or mitigating
negative impacts.
Our business contributes 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 contribution
• Improved energy and transport infrastructure
• Managing the impacts of our operations by
emphasising environmental protection, health
and safety, and human rights.
We recognise that our industry has contributed
to some of the challenges – like climate change
– the SDGs seek to address.
For further information on UN SDG alignment,
performance and actions in 2021, refer to page 15
of the Sustainability Data Supplement 2021.
Sustainability report continued
Reporting and governance
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
2021 (unless otherwise stated).
This report has been prepared with reference to the Global
Reporting Initiative (GRI) Standards and supplementary
GRI Oil and Gas Sector disclosure guidance. We have also
identified the UN Sustainable Development Goals (SDGs)
that align with our focus areas throughout this report.
Our climate change and energy transition focus area
disclosures are aligned with the Recommendations of the
Task Force on Climate-Related Financial Disclosures (TCFD).
In addition to this report, please also refer to the Sustainability
Data Supplement 2021 for:
• Stakeholder Engagement
• Sustainability Performance Data
• Climate risk and opportunity table
• TCFD content index
• UN Sustainable Development Goals; alignment, activities,
and focus areas
• Global Reporting Initiative (GRI) content Index
• Glossary.
In 2021, we completed further assessments in accordance
with the Australian Modern Slavery Act 2018 (Cth). Our second
Modern Slavery Statement was issued in early 2022.
We also report our gender diversity performance to the
Workplace Gender Equality Agency (WGEA). Both reports
are available at investor.vivaenergy.com.au/investor-centre
Our 2021 sustainability reporting suite
is available on our website
This Sustainability Report is also provided as an extract
version titled Sustainability Report 2021 which is a
direct excerpt from this Annual Report 2021, including
aligning page numbers. These reports are available
at vivaenergy.com.au/sustainability.
2021 reporting suite:
• Annual Report 2021
• Sustainability Report 2021
• Sustainability Data Supplement 2021
• Modern Slavery Statement 2021
• Taxes Paid Report 2021
• Corporate Governance Statement 2021
84
Helping people reach their destinationAnnual Report 2021Helping people reach their destinationSustainability Report 2021This report forms part of the 2021 Viva Energy Group Limited Annual ReportHelping people reach their destinationSustainability Data Supplement 2021Helping people reach their destinationModern Slavery Statement 2021Helping people reach their destinationTaxes Paid Report 2021Helping people reach their destinationCorporate Governance Statement 2021Viva Energy Group Limited – Annual Report 2021 Assessing our performance
We benchmark our progress using leading sustainability
indices and surveys including:
• ISS (Governance, Environmental & Social Disclosure
Quality Score)
• MSCI ESG
• Sustainalytics
• S&P Global Corporate Sustainability Assessment (CSA).
Viva Energy was recognised as a top performing Australian
company for corporate sustainability in 2021, with its inclusion
on the Dow Jones Sustainability Index Australia. We were
also recognised by the Australian Council of Superfund
Investors (ACSI) as a “leading” reporter, which is the highest
level of recognition.
We continued to respond to individual requests for sustainability
information and performance data from investors, proxy
advisers, government agencies and customers.
Read more about supporting data for the report
in our Sustainability Data Supplement 2021 at
vivaenergy.com.au/sustainability
External assurance
We engaged an independent external assurance
organisation, PricewaterhouseCoopers (PwC), to provide
the Directors of Viva Energy Group with limited assurance
on the following material sustainability performance data
metrics covered in the Annual Report 2021 and Sustainability
Data Supplement 2021.
• 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.
PwC’s assurance statement can be found on pages 87-88.
Sustainability governance
The Board of Viva Energy Group Limited has oversight of
sustainability matters, including how these are integrated into
corporate strategy and risk management systems. The Board
is supported in this role on sustainability matters by various
committees, including:
• Strategy and Investment Committee, which assists in
the oversight of the Group’s strategic plans, including
Energy Transition and business sustainability strategy,
and capital allocation
• Sustainability Committee, which assists in reviewing
the Group’s sustainability performance, compliance and
disclosures, including in relation to health, safety, security
and environment (HSSE) matters, and greenhouse gas
emissions
• Audit and Risk Committee (ARC), which assists in the
oversight of the management of risks relevant to our
business, including HSSE risks and climate risks, and
the Group Enterprise Risk Management Framework.
In 2021, the Group’s sustainability and climate change
leadership structure and functional responsibilities were
enhanced. Executive accountability for new energies and
sustainability strategy, and external engagement was
centralised through the establishment of the Chief Business
Development and Sustainability Officer role. A dedicated
Sustainability function was established to lead and coordinate
our climate and broader sustainability program.
Accountability for sustainability and climate-related matters
and performance rests with our Executive Leadership Team
(ELT). To facilitate ELT direction and oversight of these
matters, Sustainability Management Committees were
expanded from the existing Health, Safety, Security and
Environment (HSSE) Committee, with the establishment of
a Climate Change Committee and a People and Community
Committee.
At an operational level, accountability for sustainability
performance rests with the asset managers across the
business. This includes the Executive General Manager
Refining, General Manager Distribution, and other key
operational staff.
We also have Executive-sponsored working groups in place
to promote and support our Inclusion and Diversity Strategy,
including: Pride Committee; Reconciliation Action Plan (RAP)
Committee; and Cultural Diversity Collective.
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85
Viva Energy Group Limited – Annual Report 2021
Sustainability report continued
Viva Energy’s governance structure and committee functions
relevant to sustainability performance and oversight are
summarised below.
Board
Provides strategic guidance and oversight of management
performance in implementing our business strategies,
plans and values
Strategy and
Investment
Committee
Assists the Board
in discharging its
responsibilities
in relation to the
Company’s strategy
for energy transition
and emissions
commitments
including capital
allocation
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
sustainability
performance
and disclosures
Executive Leadership Team
Provides strategic direction through Sustainability
Management Committees.
Sustainability Management Committees
Climate Change
Health, Safety,
Security and
Environment
People and
Community
Specifically, the Climate Change Management Committee
includes all ELT members and senior management
representatives from our operational and New Energies
teams. It meets on a quarterly basis to monitor our
operational emissions performance, steer the development
and implementation of our Energy Transition Strategy and
provides input to the Board.
In 2021, the Board and its Committees were 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 Energy Transition Strategy,
and associated initiatives and investments
• Receiving updates on Management’s TCFD alignment
status and disclosures
• Receiving updates on the Group’s greenhouse gas
emissions and energy performance
• Reviewing Management’s emissions reduction plans
and commitments
• Receiving briefings on external legal and reputational
developments relating to climate change action and
emissions reduction commitments.
The Group’s Remuneration Framework includes sustainability-
related scorecard metrics for safety, environmental (spill),
female representation in management/leadership, and
employee engagement performance. For 2022, the scorecard
framework has been updated to include progress towards
achieving the Group’s emissions reduction targets.
Industry associations
We engage with and participate in a range of industry
associations and forums on sustainability issues. This enables
us to contribute to policy and regulatory developments, and
stay informed and collaborate on emerging sustainability
trends and best practice.
In 2021, Viva Energy was a member of or participant in the
following associations and forums with sustainability-related
matters as their primary focus, or through subordinate
working groups:
• Australian Environment Business Network (AEBN)
• Australian Hydrogen Council
• Australian Industry Greenhouse Network (AIGN)
• Australian Institute of Petroleum (AIP)
• Bioenergy Australia
• Champions of Change Coalition
• Climate Leaders Coalition (CLC)
• Institute of Chemical Engineers Safety Centre (iChemE)
• LASTFIRE
• Maritime Industry Australia Limited (MIAL)
• Reconciliation Australia (RA)
• Workplace Gender Equality Agency (WGEA).
86
Viva Energy Group Limited – Annual Report 2021
Independent assurance statement
Independent Limited Assurance Report to the Board of
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 Group Annual Report 2021 and Viva Energy Group Sustainability Data Supplement 2021 (together,
the Viva Energy Group Sustainability Reporting 2021) has not been prepared, in all material respects, in accordance
with the Reporting Criteria. This conclusion is to be read in the context of the remainder of our report.
What we did
Viva Energy Group Limited (Viva Energy Group) engaged
us to perform a limited assurance engagement on the
selected subject matter within the Viva Energy Group
Sustainability Reporting 2021.
Subject matter
The scope of our work was limited to assurance over the
selected subject matter within the Viva Energy Group
Sustainability Reporting 2021. 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 Group
Sustainability Reporting 2021.
Entity
(consolidated)
Viva Energy
Group
Limited
Viva Energy
Group
Limited
(excluding
Liberty Oil
Holdings)
Liberty Oil
Holdings
Performance Indicator (for the
year ended 31 December 2021
unless otherwise stated)
• Total Employees
• Gender Split (Male / Female) (%)
• Senior Leadership Group (Male /
Female) (%)
• Total greenhouse gas emissions
(Scope 1 and 2) for the year ended
30 June 2021
• Total energy consumed for the year
ended 30 June 2021
• Total Lost Time Injuries
• Total Lost Time Frequency Rate
(per million hours)
• Total Recordable Injuries
• Total Recordable Injuries
Frequency Rate (per million hours)
• Total Tier 1 Process Safety Events
• Total Tier 2 Process Safety Events
• Significant spills
• Total Lost Time Injuries
• Total Lost Time Frequency Rate
(per million hours)
• Total Recordable Injuries
• Total Recordable Injuries
Frequency Rate (per million hours)
• Total Tier 1 Process Safety Events
• Total 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 Group Sustainability Data Supplement 2021, which
Viva Energy 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.
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.
•
•
Viva Energy Group
Viva Energy Group management are responsible for:
•
•
•
preparing the selected subject matter as well as the
Viva Energy Group Sustainability Reporting 2021 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 Group Sustainability Reporting 2021,
including but not limited to the Selected subject
matter; and
• Determining suitable reporting criteria for reporting
the selected subject matter within the Viva Energy
Group Sustainability Reporting 2021 and publishing
those criteria such that they are available to expected
users of the 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.
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Viva Energy Group Limited – Annual Report 2021
Independent assurance statement continued
What our work involved
We conducted our work in accordance with the Australian
Standard on Assurance Engagements 3000 Assurance
Engagements Other than Audits or Reviews of Historical
Financial Information (Revised) and the Australian
Standard on Assurance Engagements 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. The main procedures we performed were:
• Enquiring of relevant management of Viva Energy
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
18 March 2022
PricewaterhouseCoopers
Sydney
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 estimating such
data.
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.
Restriction on use
This report including our conclusions, has
been prepared solely for the Board of
Directors of Viva Energy Group Limited in
accordance with the agreement between us,
to assist the directors in reporting on the
selected subject matter. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other than
the Board of Directors and Viva Energy
Group for our work or this report except
where terms are expressly agreed between
us in writing.
We permit this report to be disclosed in the
Viva Energy Group Annual Report 2021 to
assist the Directors in responding to their
governance responsibilities by obtaining an
independent assurance report in connection
with the selected subject matter.
88
Viva Energy Group Limited – Annual Report 2021
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 2021 Remuneration Report.
Our performance
During 2021 the pandemic continued to dominate the macro environment. Sales in our largest Victoria and New South Wales
markets and Aviation sectors were particularly impacted by extended lockdowns and border closures, with uncertain demand
putting pressure on our operations and supply chains. We have maintained a strong focus on health and wellbeing and ensuring
that we operate safely and reliably to serve our customers and the broader community through this period.
Strong operational performance, underlying sales growth and cost management have supported a very strong financial performance
across all businesses. For 2021, we reported an Underlying Group EBITDA (RC) of $484.2M, which is an improvement of 98% on
the 2020 result and 23% on pre-pandemic performance reported for 2019.
During 2021, management also made strong progress on many key strategic priorities, including working with the Federal
Government to successfully finalise the fuel security package which has transformed the long-term outlook for the refining
business, progress the Geelong Gas Terminal Project through FEED, completing the return of a further $100M to shareholders
from the Waypoint REIT divestment and laying down commitments and plans to reduce the Company’s carbon emissions.
The Board is very pleased with the performance of the management team in 2021 and the tangible results delivered for
our shareholders.
2021 Remuneration outcomes
Taking account of the strong operational and financial performance, and success against key strategic priorities in the face
of challenging conditions, the Board has awarded 86.3% of the maximum STI to executive KMP for performance in 2021.
The 2019-2021 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 2021.
While the ROCE condition was not met, the Board determined the FCF condition was met at stretch ($967M normalised FCF
over the performance period) and rTSR performance condition at threshold (26.86% TSR delivered over the performance period)
resulting in a final LTI outcome approved by the Board of 50% of maximum opportunity.
Further detail on the STI and LTI plans, and the Board’s assessment of outcomes for 2021, is set out in sections 1.1 and 5 of the
Remuneration Report.
Looking ahead – 2022 remuneration
The Board completed a review of the fixed and variable remuneration arrangements for our Executive KMP in early 2022.
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Since listing on ASX in 2018, the Board has disclosed its intention to review the competitiveness of the CEO’s remuneration
package to ensure that he is properly remunerated for the value he delivers to the Company and continues to be engaged and
retained. In last year’s Remuneration Report, the Board disclosed that it would address the CEO’s remuneration re-alignment
in a staged approach with the first stage disclosed and implemented in 2021 with an increase to his TFR effected through a
combination of cash and Restricted Stock Units (RSUs) that are subject to a further combined two-year service and deferral period.
In accordance with that stated intention, the Board will make a second and final adjustment to the CEO’s remuneration in 2022.
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The Board has also approved some modifications to our 2022 LTI to better align performance measures with the Company’s
long-term strategic objectives.
While these changes do not form part of the remuneration arrangements for 2021, in the interests of transparency, the Board
has provided information on these and other changes 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
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Remuneration report continued
Remuneration report – contents
1.
2021 at a glance
2. Overview
2.1.
Introduction
2.2. Details of KMP
3.
Executive remuneration – overview
3.1. Executive remuneration objectives
3.2. 2021 Executive remuneration framework – overview
3.3. Minimum Shareholding Policy
3.4. 2021 Executive remuneration mix
3.5.
Executive Remuneration delivery timeline – 2021 awards
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4.
2021 Executive remuneration framework – in more detail
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4.1. Total Fixed Remuneration (TFR)
4.2. 2021 Short Term Incentive (STI)
4.3. 2021-2023 Long Term Incentive (LTI)
4.4. Claw back and preventing inappropriate benefits
4.5. Executive service agreements
4.6. Loans and other transactions with KMP
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5. Group performance and 2021 remuneration outcomes
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5.1.
Company performance and remuneration outcomes
– 2021 and historical
5.2. 2021 STI outcomes
5.3. 2019-2021 Long Term Incentive outcome
5.4. 2021 Realised Pay – Executive KMP (unaudited)
6.
Remuneration governance
7.
Executive statutory remuneration
8. Non-Executive Director remuneration
8.1. Non-Executive Director fees
8.2. 2021 Non-Executive Director fees
9.
Equity interests
9.1.
Performance Rights, Deferred Share Rights and Legacy
LTI option holdings – KMP
9.2. Shareholdings – KMP
10. 2022 Remuneration
10.1. KMP
10.2. 2022 variable remuneration
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Viva Energy Group Limited – Annual Report 2021 1. 2021 at a glance
This section provides a high-level summary of the remuneration outcomes for 2021 for the Executive Key Management Personnel
(KMP). Further detail is provided in the remaining sections of this report.
Highlights and outcomes
• Continued effective response to the pandemic and rising levels of infection in the community, with the business operating
safely and reliably throughout the year, without disruption to customers.
• Increased Retail market share by 2% across all retail channels, and continued refreshment of the Coles Express network
together with our partner Coles.
• Earnings growth in Commercial despite continued impact from border closures on Aviation and Marine segments.
• Refining segment returned to profitability during quarter four supported by improvements in regional refining margins
and strong production performance.
• Delivered Underlying Group EBITDA (RC) of $484.2M, an improvement of 98% on the 2020 result and an improvement
of 23% on pre-pandemic performance reported for 2019.
• Returned a further $100M to shareholders from the Waypoint REIT divestment via a capital return and a further $18M
via an on-market buy back.
• Worked with the Federal Government to successfully finalise the fuel security package, which has transformed the outlook
for the refining business. Secured Federal Government funding for construction of diesel storage at Geelong.
• Made strong progress on the Geelong Gas Terminal Project and entered into an expanded partner group with substantial
international experience in LNG regasification terminals. Further, the Company has completed FEED, signed a Head of
Agreement (HOA) to charter an FSRU and made substantial progress on the EES.
• Set out commitments to reduce the Company’s carbon emissions and announced net zero ambition. Signed MOU with
Waga Energy for renewable natural gas recovery from landfill, launched Carbon Neutral Jet Fuel, and is progressing feasibility
for construction of a Hydrogen production and refuelling facility at the Geelong Energy Hub, supported by possible
behind-the-meter solar farm.
• The Executive KMP earned 86.3% of the maximum STI, reflecting the very strong result delivered in 2021 and significant
progress on key strategic priorities.
• The Executive KMP earned 50% of the 2019-2021 LTI with the Board determining the FCF condition was met at stretch
($967M normalised FCF over the performance period) and rTSR performance condition at threshold (26.86% TSR delivered
over the performance period). The ROCE condition was not met and this portion of the award lapsed.
The final outcomes approved by the Board are shown below.
2021 STI outcome
Executive KMP
Scott Wyatt
Jevan Bouzo
STI outcome
(% of maximum
opportunity)
86.3%
86.3%
Total STI
award
$1,324,490
$690,000
STI award
provided
in cash
$662,245
$345,000
STI award
provided
in Share
Rights1
$662,245
$345,000
1. Share Rights (to be granted in March 2022) will vest into shares in two equal tranches, on 1 January 2023 and 1 January 2024, 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 $2.0311, being the weighted average share price of the Company’s shares over the performance period
1 January 2021 to 31 December 2021.
2019-2021 LTI outcome
Executive KMP
Scott Wyatt
Jevan Bouzo
Former Executive KMP
Thys Heyns2
Number
of 2019
PR granted
% of 2019
PR vested
Number
of 2019
PR vested
Value of
20191
PR vested
Number
of 2019
PR lapsed
% of 2019
PR lapsed
541,198
270,599
270,599
50%
50%
–
270,599
135,299
$673,792
$336,895
270,599
135,300
50%
50%
–
–
270,599
100%
1. Calculated based on share price of $2.49, being the closing share price on the date of vesting on 20 February 2022.
2. Unvested 2019 PR held by Thys Heyns lapsed upon his retirement from the Company on 31 March 2021.
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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 2021, the KMP were
the Non-Executive Directors and designated executives.
2.2. Details of KMP
The following individuals were KMP of the Company in 2021.
Name
Title
Term as KMP
Non-Executive Directors
Robert Hill
Chairman and Independent Non-Executive Director
18 June 2018 – current
Arnoud De Meyer
Independent Non-Executive Director
Dat Duong
Michael Muller
Sarah Ryan
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Nicola Wakefield Evans
Independent Non-Executive Director
18 June 2018 – current
7 June 2018 – current
1 October 2020 – current
18 June 2018 – current
3 August 2021 – current
Former Non-Executive Directors
Jane McAloon
Executive KMP
Scott Wyatt
Jevan Bouzo
Former Executive KMP
Thys Heyns
Independent Non-Executive Director
18 June 2018 – 24 August 2021
Chief Executive Officer and Managing Director
7 June 2018 – current
Chief Operating and Financial Officer (acted as Chief
Financial Officer until taking on the expanded role of
Chief Operating and Financial Officer on 1 March 2021)
7 June 2018 – current
Chief Operating Officer
1 June 2020 – 31 March 2021
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 2021 3.2. 2021 Executive remuneration framework – overview
The 2021 executive remuneration framework is summarised below.
FIXED ELEMENTS
VARIABLE ELEMENTS
Total Fixed Remuneration (TFR)
Short Term Incentive (STI)
Long Term Incentive (LTI)
How it is
delivered
Cash
Cash
(for the CEO, the 2021 TFR was
delivered through a combination
of cash and Restricted Stock
Units (RSUs) that are subject
to a combined two-year service
and deferral period)
How it
works
Base salary and superannuation
50% paid in cash
Equity
(Share Rights)
Equity
(Performance Rights)
50% deferred
into Share Rights,
which vest into
shares in two
equal tranches
12 and 24 months
after the grant
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
What it
does
Enables 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
Rewards execution on annual
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%)
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
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 per share
(25%) and Return on Capital
Employed (25%)
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 Chief Executive
Officer (CEO) and Chief Operating and Financial Officer (COFO) in January 2020 and January 2022 respectively and they no
longer hold any Legacy LTI options. 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 Total Fixed 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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3. Executive remuneration – overview continued
3.4. 2021 Executive remuneration mix
The weighting of each remuneration component of an executive’s total remuneration opportunity in 2021 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 diagrams1 set out the weighting of each remuneration component for the CEO and COFO based on their maximum
potential STI and LTI opportunities and do not represent actual remuneration received for 2021.
28%
28%
18%
33%
33%
17%
CEO
Scott Wyatt
18%
COFO
Jevan Bouzo
17%
36%
72%
33%
67%
STI – Cash
STI – Share Rights
LTI
TFR
Fixed
At Risk
1. For the CEO, the 2021 TFR was delivered through a combination of cash and Restricted Stock Units (RSUs) that are subject to a combined two-year
service and deferral period.
2. Thys Heyns held the position of COO until he retired from the Company on 31 March 2021. Under the terms of his resignation, Mr Heyns was not
eligible to participate in the 2021 STI and 2021 LTI.
3.5. Executive remuneration delivery timeline – 2021 awards
TFR
Base salary +
superannuation
TFR
(RSUs)*
Equity component of the TFR
granted in the form of RSUs that
are eligible to vest after 12 months
Further 12-month restriction
period applied to the shares
received upon vesting
STI
LTI
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
3-year performance period
Performance
conditions
tested
Year 0
Year 1
Year 2
Year 3
Year 4
* Applicable only for the CEO.
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Viva Energy Group Limited – Annual Report 2021 4. 2021 Executive remuneration framework – in more detail
The components of the 2021 executive remuneration framework are explained in detail below.
4.1. Total Fixed Remuneration (TFR)
TFR is comprised of base salary and superannuation. For the CEO, the 2021 TFR was delivered through a combination of cash
and Restricted Stock Units (RSUs) that are subject to a combined two-year service and deferral period.
4.2. 2021 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 2021 STI Plan is set out below. Please refer to section 5.2.1 for STI performance outcomes for 2021.
Opportunity
CEO (Scott Wyatt)
• Target: 67% of TFR
• Maximum: 134% of TFR
COFO (Jevan Bouzo)
• Target: 50% of TFR
• Maximum: 100% of TFR
Performance period
Performance was assessed over a 12-month performance period from 1 January 2021 to 31 December 2021
Performance
measures
For 2021, the following performance measures and weightings applied to the Executive KMP.
Category
Financial
Personal objectives
Measure
• Underlying Group EBITDA (RC)
• A mix of individual and Group objectives
• TRIFR (Total Recordable Injuries/Frequency Rate)1
• API Tier 1 and 2 incidents1
• LOPCs > 100kg2
• Medium/High PQ incidents3
• Employee engagement
• Representation of women
• Women in management and leadership
Safety, environment
& people
Total
Weighting
60%
30%
10%
100%
2021 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 COFO was recommended by the CEO to the RNC based on the 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.
Delivery
STI 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 2023 and the other
50% eligible to vest on 1 January 2024. 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 2022 and the relevant vesting date.
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4. 2021 Executive remuneration framework – in more detail continued
4.2. 2021 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 2021 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 2021 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. TRIFR and API Tier 1 and 2 measures are industry standard safety performance metrics that reflect personal safety and process safety
performance (respectively).
2. 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.
3. Product quality incidents that have a medium or high consequence risk rating measured against Viva Energy’s Risk Assessment Matrix.
4.3. 2021-2023 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 reflects our long-term financial, strategic and operational objectives
and focuses on sustainable, long-term performance.
Further information on the 2021-2023 LTI Plan is set out below.
Opportunity
CEO (Scott Wyatt)
• Maximum: 134% of TFR
COFO (Jevan Bouzo)
• Maximum: 100% of TFR
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 2021 Performance
conditions
Condition
Weighting Measure
Relative Total
Shareholder Return
(rTSR)
50%
Total Shareholder Return over the
period, relative to the ASX50-150
peer group (Comparator Group).
Cumulative Free
Cash Flow (RC)
per share (FCF
per share) over the
performance period
Average Return on
Capital Employed
(RC) (ROCE) for
each year of the
performance period
25%
25%
Cumulative FCF per share 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.
Objective
To create strong
alignment between
LTI outcomes and
the experience
of shareholders.
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 2021 to 31 December 2023.
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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4. 2021 Executive remuneration framework – in more detail continued
4.3. 2021-2023 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 per share component
The percentage of Performance Rights comprising the FCF per share component that vest, if any,
will be determined over the performance period by reference to the following vesting schedule:
Cumulative FCF per share
over the performance period
% of Performance Rights that vest
Less than target FCF per share performance
Equal to target FCF per share performance
Nil
50%
Between target and stretch FCF
per share performance
Straight-line pro rata vesting between 50% and 100%
At or above stretch FCF per share 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 2019-2021 LTI targets and performance against those 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.
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Viva Energy Group Limited – Annual Report 2021 4.4. Claw back and preventing inappropriate benefits
Under the rules governing the STI and LTI Plans, the Board has broad powers to ‘claw back’ incentives that it may exercise in
certain circumstances (for example the Executive KMP has acted fraudulently or dishonestly, has engaged in gross misconduct,
brought the Group into disrepute or materially breached their obligations to the Group). 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. Executive service agreements
Remuneration and other terms of employment for the CEO and COFO are formalised in an Employment Agreement
as summarised below:
Executive KMP
Contract duration
Scott Wyatt
Jevan Bouzo
Ongoing
Ongoing
Total fixed remuneration
at the end of 2021
financial year
Termination notice
period by Executive
Termination notice
period by Company1
$1,146,0002
$800,000
12 months
12 months
12 months
12 months
1. 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
TFR over the relevant period. Any payments made to the executive upon termination of employment will be limited to the maximum amount
permitted by the Corporations Act.
2. The CEO’s 2021 TFR was delivered through a combination of cash ($996,000) and Restricted Stock Units (RSUs) ($150,000) that are subject
to a combined two-year service and deferral period.
4.6. Loans and other transactions with KMP
4.6.1 Loans to Key Management Personnel
There were no loans made to the KMP of the Company, including their personally related entities, during the year.
4.6.2 Other transactions with Key Management Personnel
There were no other transactions (as contemplated by the Corporations Regulations 2001) with the KMP during the year.
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Remuneration report continued
5. Group performance and 2021 remuneration outcomes
5.1. Company performance and remuneration outcomes – 2021 and historical
The table below outlines the Company’s performance for the years 2018 to 2021.
Underlying Group EBITDA (RC)1
TRIFR (Total Recordable Injuries/Frequency Rate)
Share price – close
Dividend per share (fully franked)
Special dividend (unfranked)
Capital return
2018
$531.5M
36/5.77
$1.80
4.8 cents3
–
–
2019
$392.9M
29/4.552
$1.92
4.7 cents
–
–
2020
$244.6M
19/3.62
$1.91
0.8 cents
5.94 cents
21.46 cents
2021
$484.2M
34/6.72
$2.35
4.1 cents
–
6.2 cents
Statutory earnings per share basic/diluted
29.8/29.4 cents
5.8/5.7 cents
(1.9)/(1.9) cents 14.5/14.5 cents
Underlying earnings per share
STI Outcomes – % of maximum
LTI Outcomes – % of maximum
15.4 cents
8.1 cents
1.8 cents
12.0 cents
0%
N/A
0%
N/A
26.25%
25%4
86.3%
50%5
1. In 2021, the Company changed its approach to reporting underlying financial information to include lease expenses in the underlying results
for the Group. For the purposes of comparison, the historical results shown in this table also apply the new basis of reporting.
2. Excludes performance by Liberty Oil Holdings, which was acquired in December 2019 and does not form part of the safety and environment
hurdles set under the STI.
3. This is the final dividend for the six months ended 31 December 2018. No interim dividend was paid in 2018.
4. Vesting of the 2018-2020 LTI.
5. Vesting of the 2019-2021 LTI.
Share price – close
$2.50
$2.00
$1.80
$2.35
$1.50
2018
2019
2020
2021
STI outcomes
$m
600
500
400
300
200
100
0
% of maximum
opportunity
100
80
60
40
20
0
2018
2019
2020
2021
Underlying Group EBITDA (RC) $m
STI Outcome %
100
Viva Energy Group Limited – Annual Report 2021 5.2. 2021 STI outcomes
5.2.1 Performance against the 2021 STI scorecard
This section discusses performance against the 2021 STI scorecard by the Executive KMP.
Performance against
target range
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Category
Objective
Weighting
Financial
Deliver sustainable
shareholder returns
and consistent
operating cash flows
60%
Personal
objectives
Progress key
personal objectives
aligned with the
Company’s strategic
goals that deliver
long term growth
and position the
Company for future
success
30%
Safety,
environment
and people
Build a generative
safety culture and
a highly engaged
workforce focused
on delivering high-
quality results
10%
Performance against the performance measure
The Group’s financial performance in 2021 exceeded
the Stretch hurdle both on the basis of actual and
normalised performance, with actual EBITDA (RC)
of $484.2M2 a 98% improvement on the 2020 result.
The Executive KMP achieved Stretch performance
on their personal objectives, delivering on significant
strategic initiatives:
• Worked with the Federal Government to
successfully finalise the Fuel Security Package,
which has transformed the outlook for the refining
business. Secured Federal Government funding for
construction of diesel storage at Geelong.
• Strong progress on the Geelong Gas Terminal Project
– entered expanded partner group with substantial
international experience in LNG regasification
terminals, completed FEED, signed a HOA to charter
an FSRU and substantial progress on the EES.
• Returned $100M to shareholders from the
Waypoint REIT divestment via a capital return and
a further $18M via an on-market buy-back.
• Defined commitments to reduce the Company’s
carbon emissions and announced net zero ambition.
Signed MOU with Waga Energy for renewable natural
gas recovery from landfill, launched Carbon Neutral
Jet Fuel, and is progressing feasibility for construction
of a Hydrogen production and refuelling facility at
the Geelong Energy Hub, supported by possible
behind-the-meter solar farm.
Management maintained strong employee
engagement and focus on health and wellbeing,
ensuring that we operated safely and reliably
throughout the second year of pandemic disruption.
However, performance on personal and process safety
has been disappointing and the Board exercised
discretion to reduce the Safety, Environment and
People component of the scorecard to zero:
• TRIFR 6.7 (3.61 in 2020)1. Majority are relatively
minor incidents, associated with manual handling,
line of fire and slips, trips and falls.
• Three Tier 2 incidents and one Tier 1 incident
(two Tier 2 and one Tier 1 in 2020)1.
• 19 LOPC > 100kg (same as 2020)1.
• Engagement score 69% (70% in 2020).
1. Excludes performance by Liberty Oil Holdings, which was acquired in December 2019 and does not form part of the safety and environment
hurdles set under the STI.
2. At the beginning of the 2021 STI performance period, the Board agreed to assess performance based on normalised refining margins and
foreign exchange movements, whereby actual Group financial performance is restated applying available margins and exchange rate assumptions
used to set the targets at the beginning of the performance period. The Group’s performance in 2021 exceeded the Stretch hurdle both on the
basis of actual and normalised performance.
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5. Group performance and 2021 remuneration outcomes continued
5.2. 2021 STI outcomes continued
5.2.2 Final 2021 STI outcome
Executive KMP
Scott Wyatt
Jevan Bouzo
STI outcome
(% of maximum
opportunity)
STI outcome
(% of target
opportunity)
86.3%
86.3%
172.5%
172.5%
Maximum STI
foregone Total STI award
$211,150
$110,000
$1,324,490
$690,000
STI award
provided in
cash
STI award
provided in
Share Rights1
$662,245
$345,000
$662,245
$345,000
1. Share Rights (expected to be granted in March 2022) will vest into shares in two equal tranches, on 1 January 2023 and 1 January 2024, 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 $2.0311, being the weighted average share price of the Company’s shares over the
performance period 1 January 2021 to 31 December 2021.
5.3. 2019-2021 Long Term Incentive outcome
5.3.1 Performance against the 2019-2021 LTI performance conditions
The three-year performance period of the 2019-2021 LTI grant ended on 31 December 2021. The 2019-2021 LTI performance
conditions along with the outcome against the maximum opportunity under the grant are shown in the table below.
2019-2021 LTI measures, hurdles and outcome
Measure
Weighting
Vesting schedule
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
Minimum
(0% vesting)
Maximum
(100%
vesting)
Less than target
performance
of $825M
Stretch
performance
of $925M
Less than target
performance
of 15%
Stretch
performance
of 23%
Performance
Vesting
(% of
maximum)
$967M1
100%
9.0%
0%
Less than 50th
percentile
At 75th
percentile
or above
50th2
percentile
50%
Total
100%
50% vesting
1. In accordance with the terms of the 2019-2021 LTI, the FCF measure was normalised for movements in refining margins and foreign exchange
(both on an after-tax basis). The normalisation process involved: 1) restating the actual Group performance over the three-year performance
period by applying available margins and exchange rate assumptions used to set the target at the beginning of the performance period;
2) adjusting the Fuel Security Services Payment (FSSP) received by the Company in 2021 downward to nil; and 3) adjusting the JobKeeper
payment received during the performance period to nil. The targets set at the beginning of the performance period assumed the receipt
of the Waypoint REIT dividends – as the Waypoint REIT stake was divested during the performance period, an adjustment was made for
the dividends foregone. As a result of these collective adjustments, FCF performance was adjusted up from actual FCF of $620M to the
normalised performance of $967M over the performance period.
2. The Board engaged Aon Hewitt to independently assess Viva Energy’s rTSR performance against the ASX 100 peer group over the performance
period. The Company’s TSR over the three-year performance period was +26.86%. In assessing the Company’s TSR performance relative to
the ASX100 peer group, the Board resolved to include in the peer set Santos and Oil Search, notwithstanding that the entities merged in
December 2021 (had these companies been excluded, the Company’s performance would rank at the 49th percentile relative to the ASX100
Comparator Group). The Board considers both these companies to be relevant TSR comparators over the performance period for Viva Energy
on the basis of their industry and materiality within the index.
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Viva Energy Group Limited – Annual Report 2021 5.3.2 Final 2019-2021 LTI outcome
The outcome for each Executive KMP under the 2019-2021 LTI is shown in the table below.
Date 2019
PR1 granted
Number
of 2019
PR granted
Value at
grant date2
% of 2019
PR vested
Number
of 2019
PR vested
Value
of 2019
PR vested3
% of 2019
PR lapsed
Number
of 2019
PR lapsed
Executive KMP
Scott Wyatt
23 May 2019
Jevan Bouzo
19 March 2019
Former Executive KMP
Thys Heyns4
19 March 2019
1. 2019-2021 LTI Performance Rights.
541,198
270,599
$887,565
$535,786
270,599
$535,786
50%
50%
–
270,599
135,299
$673,792
$336,895
50%
50%
270,599
135,300
–
–
100%
270,599
2. The value of the Performance Rights granted is 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 $2.49, being the closing share price on the date of vesting on 20 February 2022.
4. Unvested 2019 LTI Performance Rights held by Thys Heyns lapsed upon his retirement from the Company on 31 March 2021.
5.4. 2021 Realised pay – Executive KMP (unaudited)
The following table sets out the pay actually earned by the executive during or in relation to the 2021 financial year, as a summary
of real or ‘take home’ pay. This includes fixed remuneration and any other benefits paid/payable in relation to the 2021 financial
year. It also includes the full value of incentive pay that has been earned in relation to the 2021 performance period.
This table is non-IFRS information and is unaudited. This disclosure is voluntary and is supplemental information to the statutory
remuneration disclosed in section 7 of this Remuneration Report.
TOTAL FIXED
REMUNERATION
STI
Cash
$
RSU
$
1
Deferred
Share Rights
$
Cash
$
LTI vested
$
2
3
4
Other
$
5
Total
$
Legacy LTI
vested
$
6
–
430,464
Executive KMP
Scott Wyatt
Jevan Bouzo
958,501
754,168
215,460
–
662,245
345,000
115,623
62,628
673,792
336,895
28,026
27,084
2,653,647
1,525,775
1. Represents the deferred equity component of Scott Wyatt’s 2021 Total Fixed Remuneration – 86,530 Restricted Stock Units will vest and be
automatically exercised into ordinary shares in accordance with its terms. The value is based on the share price of $2.49, being the closing share
price on 20 February 2022.
2. STI cash represents the cash component of the 2021 STI award (50%), which will be paid in March 2022.
3. Deferred STI represents the deferred equity component of the 2020 STI – 46,435 and 25,152 deferred share rights vested for Scott Wyatt and
Jevan Bouzo respectively and will be automatically exercised into ordinary shares in accordance with its terms. The value is based on the share
price of $2.49, being the closing share price on 20 February 2022.
4. LTI vested represents the value of the vested 2019-2021 LTI award. The value is based on the number of Performance Rights that vested
(270,599 and 135,299 Performance Rights for Scott Wyatt and Jevan Bouzo respectively) multiplied by $2.49, being the Viva Energy closing share
price at the time of vesting on 20 February 2022.
5. Comprises superannuation and other benefits including the Viva Energy discount benefit received, the payment of premiums for death and total
permanent disability insurance cover and the payment of plan management fees for the Viva Energy Superannuation Plan. Negative balances
are as a result of the leave taken being greater than the leave accrued in the relevant financial year. Accruals for annual leave and long service
leave have been excluded.
6. Represents the 183,176 shares transferred to Jevan Bouzo as a result of options that vested and were exercised via the cashless exercise facility
on 1 January 2022 multiplied by Viva Energy’s closing share price at the time of exercise ($2.30). 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. As at the
date of this report, there are no outstanding options under the Legacy LTI.
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6. Remuneration governance
Remuneration governance
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.
Remuneration and Nomination Committee (RNC)
The RNC is comprised of three Non-Executive Directors, a majority
of whom are independent.
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 Total Fixed 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.
Management
• Provides information relevant to remuneration decisions and
makes recommendations to the RNC.
Consultation with
shareholders and other
stakeholders
Remuneration consultants
and other external advisers
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.
Any advice provided by external advisers
is used to assist and inform the Board,
and it is not a substitute for the Board
and RNC processes.
In 2021, no remuneration
recommendations were received from
remuneration consultants as defined
under the Corporations Act 2001.
Remuneration consultants
and other external advisers
Management may seek its own advice
relevant to remuneration matters
(for example, market trends, legal advice,
tax advice).
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Viva Energy Group Limited – Annual Report 2021 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 2021.
Short-term benefits
Post-
employ-
ment
Long-term benefits
Salary
and fees
$
1
STI
$
2
Executive KMP
Scott Wyatt
Jevan Bouzo
2021
2020
2021
2020
958,5017 662,245
875,646
157,500
754,1688 345,000
85,312
621,313
Former Executive KMP
2021
Thys Heyns9
2020
285,02610
521,379
–
157,500
Total
2021 1,997,695 1,007,245
2020 2,018,338
400,312
3
5,394
5,055
4,452
4,132
Other
benefits
$
Annual
leave
$
Super-
annu-
ation
$
Long
service
leave
$
STI
share-
based
payment
$
LTI
share-
based
payment
$
4
5
6
Total
$
41,141
30,264
22,632
(54,856) 342,493
707,953 2,685,503
21,354
(2,243)
65,625
737,248 1,890,449
(2,986)
22,632
12,939
179,802
423,599 1,739,606
(4,833)
21,354
10,471
35,547
374,049
1,147,345
956
3,478
10,802
12,665
41,67211
(11,442)
79,827
13,989
5,424
39,622
2,242
8,971
–
–
(448,574)
(113,254)
397,417
1,116,925
50,688
(39,675) 522,295
682,978 4,311,855
82,330
17,199
101,172 1,508,714 4,154,719
1. 2021 salary and fees include a $150 per month working from home allowance received by all eligible employees.
2020 salary and fees include a once-off $1,000 working from home payment received by all eligible employees.
2. STI award provided in cash (50% of the total STI award). The 2021 STI cash award will be paid in March 2021.
3. Other benefits represent Viva Energy fuel discount, payment of premiums for death and total and permanent disability insurance cover,
payment of plan management fees for the Viva Energy Superannuation Plan, and payments made with respect to mobile phone use.
4. Negative balances are as a result of the leave taken being greater than the leave accrued in the relevant financial year.
5. STI share-based payment represents the fair value of Deferred Share Rights granted under the 2020 and 2021 STI, calculated in accordance
with accounting standards.
6. LTI share-based payment represents fair value of Performance Rights granted to date 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.
7. Scott Wyatt’s total fixed remuneration (inclusive of base salary and superannuation) was increased from $896,000 to $1,146,000, effective
on 1 March 2021. $150,000 of this increase was effected through a grant of 86,530 Restricted Stock Units (RSU) and as such has been expensed
under the LTI share-based payment amount. The RSUs are subject to a service condition of one year and a further deferral period of one year.
8. Jevan Bouzo’s total fixed remuneration (inclusive of base salary and superannuation) was increased from $650,000 to $800,000 effective
on 1 March 2021 when he took on an expanded role of Chief Operating and Financial Officer.
9. 2021 remuneration for Thys Heyns is shown from 1 January 2021 until he ceased as KMP on 31 March 2021.
10. Includes a termination payment of $150,000.
11. Includes annual leave payment of $31,320 upon termination.
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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 Strategy 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 $1.9M per annum. Non-Executive Director fees paid in 2021 were within this cap.
8.2. 2021 Non-Executive Director fees
The fees paid to the Non-Executive Directors in 2021 are set out in the table below:
Short-term benefits
Salary and
fees
$
Non-
monetary
benefits
$
Non-Executive Directors
Robert Hill (Chairman)
Arnoud De Meyer
Dat Duong1
Michael Muller1
Sarah Ryan2
Nicola Wakefield Evans3
Former Non-Executive Directors
Jane McAloon4
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
377,368
378,646
217,500
217,500
–
–
–
–
235,000
235,000
86,926
N/A
138,892
214,612
1,055,686
1,045,758
–
–
–
–
–
–
–
–
–
–
–
N/A
–
–
–
–
Post-
employment
benefits
Other long-
term benefits
Super-
annuation
$
22,632
21,354
–
–
–
–
–
–
–
–
8,693
N/A
13,353
20,388
44,678
41,742
Other
$
Total
$
–
–
–
–
–
–
–
–
–
–
–
N/A
–
–
–
–
400,000
400,000
217,500
217,500
–
–
–
–
235,000
235,000
95,619
N/A
152,245
235,000
1,100,364
1,087,500
1. Dat Duong and Michael Muller have agreed to not receive any remuneration for their positions as Non-Executive Directors.
2. Sarah Ryan did not receive superannuation in 2020 and 2021 pursuant to an exemption granted by the ATO under section 19AA of the Superannuation
Guarantee (Administration) Act 1992. Accordingly, Dr Ryan’s 2020 and 2021 fees include the amounts which would otherwise have been contributed
as superannuation.
3. Remuneration for Nicola Wakefield Evans is shown from 3 August 2021 when she was appointed a Non-Executive Director.
4. Jane McAloon resigned as a Non-Executive Director with effect on 25 August 2021.
106
Viva Energy Group Limited – Annual Report 2021 9. Equity interests
9.1. Performance Rights, Deferred Share 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 | 2021 PR – 2021-2023 LTI Performance Rights | Options – Legacy LTI options | RSU – Restricted Stock Units | DSR – Deferred
Share Rights
Held at
1 January 2021
Granted1
Exercised
Held at
31 December 20212
Exercise
price
($)
Type
Un-
Vested
vested Number
Value
($)
Lapsed Number
Value
($)3
Vested
Un-
vested
Executive KMP
Scott Wyatt
2021 RSU
2020 STI
DSR
2021 PR
2020 PR
2019 PR
2018 PR
Jevan Bouzo 2020 STI
DSR
2021 PR
2020 PR
2019 PR
2018 PR
Options4
–
–
–
86,530
143,640
92,871
159,738
905,501 1,365,106
556,121
541,198
480,000
–
–
–
–
–
–
–
–
50,305
86,525
471,725
555,613
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
301,232
270,599
–
192,000
1.21 1,153,5715 384,524
–
Former Executive KMP
2021 PR6
Thys Heyns
2020 PR7
2019 PR7
2018 PR
–
–
–
–
–
–
–
–
–
278,060
270,599
240,000
1. The following equity securities were granted in 2021:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
360,000
120,000
199,200
–
–
–
–
–
–
–
–
–
–
–
–
144,000
48,000
79,680
– 1,153,571 1,148,991
–
278,060
270,599
–
–
–
–
–
–
180,000
60,000
99,600
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
86,530
92,871
905,501
556,121
541,198
–
50,305
471,725
301,232
270,599
–
384,524
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
• Restricted Stock Units were awarded to Scott Wyatt on 16 March 2021 and represent $150,000 of Mr Wyatt’s 2021 total fixed remuneration.
The number of rights were calculated by dividing $150,000 by the volume weighted average price of the Company’s shares on the ASX
(VWAP) over the 30-day period immediately prior to the award.
• Deferred Share Rights were awarded to Jevan Bouzo and Scott Wyatt on 1 March 2021. The number of Deferred Share Rights were calculated
by dividing the dollar value of their equity component of the 2020 STI amount vested by the VWAP over the period from 1 January 2020 to
31 December 2020.
• 2021 LTI Performance Rights were awarded to Jevan Bouzo on 19 February 2021 and Scott Wyatt on 26 May 2021. The number of Performance
Rights were calculated by dividing the dollar value of their maximum LTI opportunity by $1.6959, being the VWAP over the period from
1 January 2020 to 31 December 2020. The value of the Performance Rights granted in 2021 is based on the total grant date fair value.
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2. Of the 2019 PRs held by Scott Wyatt and Jevan Bouzo, 50% have vested and the remaining 50% have lapsed since 31 December 2021. Of the
options held by Jevan Bouzo on 31 December 2021, all vested options were exercised on 1 January 2022 via cashless exercise facility resulting
in the transfer of 183,176 ordinary shares to Mr Bouzo.
3. The value of Performance Rights exercised is calculated based on the share price of $1.66, being the closing share price on the date of vesting
on 23 February 2021.
The value of Options exercised represents the number of shares received on the exercise of the options via cashless exercise facility multiplied
by Viva Energy’s closing share price on the date of exercise ($2.17).
4. 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.
5. On 1 January 2021, 384,524 options vested resulting in a difference with the number of options vested as at 31 December 2020.
6. Thys Heyns retired as COO and ceased being a KMP on 31 March 2021. Mr Heyns did not participate in the 2021-2023 LTI.
7. Unvested 2019 and 2020 LTI Performance Rights held by Thys Heyns lapsed upon his retirement from the Company on 31 March 2021.
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Remuneration report continued
9. Equity Interests continued
9.1. Performance Rights, Deferred Share Rights and Legacy LTI option holdings – KMP continued
Further details of each grant of Performance Rights and Legacy LTI options outstanding at the end of 2021 are set out below:
Type
Grant date
19 February 2021
26 May 2021
18 February 2020
6 July 2020
8 October 2020
19 March 2019
23 May 2019
Fair value
at grant date
$0.86 – $1.50
$1.18 – $1.50
$0.47 – $1.73
$0.91 – $1.58
$0.91 – $1.58
$1.73 - $2.23
$1.31 - $1.97
Vesting date
As notified by the Company to the participant after
31 December 2023
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)
25 October 2017
$1.21
1 January 2022
2021 PR
2020 PR
2019 PR
Options
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
Mike Muller
Sarah Ryan
Nicola Wakefield Evans3
Balance
as at
1 January
2021
Acquired
in 2021
67,200
30,000
–
–
104,496
57,300
–
79,965
N/A
–
30,000
30,000
Former Non-Executive Directors
Jane McAloon4
70,831
–
Acquired
through
vesting
of Per-
formance
Rights
Acquired
through
exercise
of options
Disposed
in 2021
Other1
Balance as at
31 December
20212
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,916)
94,284
–
–
(4,854)
156,942
–
(3,298)
(900)
–
106,667
29,100
N/A
N/A
Executive KMP
Scott Wyatt
Jevan Bouzo
Former Executive KMP
Thys Heyns7
9,171,893
130,198
–
4275
120,000
48,000
–
529,4896
(1,155,000)
(251,006)
7,885,887
(177,201)
(15,913)
515,000
3,722,842
–
60,000
–
–
N/A
N/A
1. Reduction in number of shares held as a result of the share consolidation implemented on 25 October 2021.
2. Post 31 December 2021:
• Jevan Bouzo acquired 183,176 ordinary shares following the exercise of the remaining Legacy LTI options; and
• Scott Wyatt and Jevan Bouzo are due to receive 270,599 and 135,299 ordinary shares respectively following the vesting of their 2019-2021
LTI Performance Rights.
3. Nicola Wakefield Evans became a Director on 3 August 2021. Accordingly, the disclosure covers the period from 3 August 2021.
4. Jane McAloon resigned as a Director with effect on 25 August 2021. Accordingly, the disclosure covers the period up to 25 August 2021.
5. Acquired under the Employee Share Plan 2021 Exempt Share Award.
6. Following the exercise of the Legacy LTI options via cashless exercise facility, 529,489 shares were transferred to Jevan Bouzo on 7 September 2021.
7. Thys Heyns retired from the Company on 31 March 2021. Accordingly, the disclosure covers the period up to and including 31 March 2021.
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Viva Energy Group Limited – Annual Report 2021 10. 2022 Remuneration
10.1. KMP
On the Company’s listing in 2018, the remuneration of the CEO was intentionally set at modest levels relative to ASX listed peers
and it has, since listing, continued to remain significantly below market. This was an intentional decision of the Board at the time,
recognising the strong retention focus and significant value tied to the legacy LTI structure put in place under the previous
ownership (which expired for the CEO in January 2020).
Since listing, the Board has communicated its intention to address the competitiveness of the CEO’s package. This is particularly
important as the Company continues to progress on its transformation journey in an evolving energy market in which the CEO
is considered by the Board to be a critical leader. The Board believes it important to address the CEO’s pay levels to ensure
there is sufficient engagement and retention value to secure the CEO.
In last year’s Remuneration Report, the Board disclosed that it would address the competitiveness of the CEO’s remuneration
package in a staged approach, with the first realignment step disclosed and implemented in 2021 via a combination of cash
and Restricted Stock Units (RSUs) that are subject to a further combined two-year service and deferral period. In considering
the CEO’s 2022 remuneration, the Board considered a market cap peer group of ASX 50-150, 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 TFR continues to be below median.
In line with the Board’s stated intention it would continue to review the CEO’s package with a view to moving Total Fixed
Remuneration (TFR) to just above the median of the ASX50-150 peer group, as the second and final step in this process, the Board
has made one further significant adjustment to the CEO’s TFR from $1,146,000 to $1,400,000 in 2022. The 2022 TFR will be delivered
via a combination of cash ($1,150,000) and RSUs ($250,000). The RSUs will be subject to a service condition of one year and a
further deferral period of one year to increase equity exposure of the CEO’s 2022 package while also building in a retention
component. Following this increase, the CEO’s TFR will be positioned just above median of the ASX 50-150 peer group and
his total remuneration (including his incentive opportunities at maximum) will be around the 75th percentile of the peer group.
The CEO will only realise the total reward under the incentive opportunities if STI and LTI targets are achieved at maximum
aligning the majority of his package with the experience of shareholders. This change is intended to be the final material step
and will conclude the process of market re-alignment.
No other changes will be made in 2022 to the remuneration arrangements of the Non-Executive Directors or the COFO.
10.2. 2022 variable remuneration
10.2.1 2022 STI
The Board previously determined to assess 2020 and 2021 STI financial performance based on normalised refining margins and
foreign exchange movements, whereby actual Group financial performance is restated applying available margins and exchange
rate assumptions used to set the targets at the beginning of the performance period.
For the 2022 STI, the Board has decided to assess STI financial performance based on actual performance (that is, not normalising
for refining margins). A contributing factor to this has been the Federal Government announcing the Fuel Security Services Payment
(FSSP) in 2021. The FSSP mechanism provides a level of ‘downside’ protection in a low refining margin environment, which makes
normalising no longer necessary going forward. While the FSSP mechanism is in place, the Board considers that assessing
remuneration outcomes based on actual (as compared to normalised) performance to be a simpler and more transparent process,
with outcomes aligned to the shareholder experience. The Board will continue to retain overarching discretion to assess the
appropriateness of STI outcomes at year end.
10.2.2 2022 LTI
Viva Energy is on a transformation journey as the energy industry evolves. While FCF, ROCE and rTSR all remain important,
the Board also wants to reward progress against tangible milestones on our transformation as they are critical to our long-term
success. For this reason, the Board has decided to incorporate in the 2022 LTI a strategic component linked to our strategic
objectives (aligned with the strategy outlined in the November 2022 investor day). This component will have a total weighting
of 15%. The existing measures (FCF, ROCE and rTSR) will be reduced in weighting by 5% each to accommodate the introduction
of the strategic component.
Measure
rTSR
2021 LTI (current)
Weighting: 50%
2022 LTI
Weighting: 45%
FCF per share
Peer group: ASX50-150
Weighting: 25%
Peer group: ASX50-150
Weighting: 20%
Normalised: Yes
ROCE
Strategic
Weighting: 25%
Normalised: No
N/A
Normalised: No (this measure will no longer be normalised for the same reasons
as apply to the STI (see above), being simplicity, transparency and shareholder
alignment)
Weighting: 20%
Normalised: No
Weighting: 15%
Further detail on the strategic measures will be included in the 2022 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 2021.
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 13 to 30;
• Risk management disclosures which form part of the Operating and financial review on pages 24 to 30;
• Remuneration Report on pages 89 to 109;
• External auditor’s independence declaration on page 115; and
• Note 34 Auditor’s remuneration on pages 169.
Directors, Secretaries and meetings
The Directors of the Company at any time during the financial year ended 31 December 2021 and up until the date of this report,
unless otherwise stated, are:
• Robert Hill
• Scott Wyatt
• Arnoud De Meyer
• Dat Duong
• Jane McAloon – Resigned with effect on 25 August 2021
• Michael Muller
• Sarah Ryan
• Nicola Wakefield Evans – Appointed 3 August 2021
Information on the qualifications, experience, special responsibilities and other directorships of our Directors is set out
on pages 8 to 9.
Company Secretaries
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.
Cheng Tang
BCom, LLB, AGIA
Cheng Tang was appointed Company Secretary on 19 August 2021.
Prior to joining Viva Energy in March 2020, Cheng was a senior adviser in the Listings Compliance team at ASX and started
her career in assurance at Ernst & Young. Cheng holds a Bachelor of Commerce and a Bachelor of Laws from Monash University
and is an Associate of the Governance Institute of Australia.
110
Viva Energy Group Limited – Annual Report 2021 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
Audit and Risk
Committee
Sustainability
Committee
(A)
(B)
(A)
(B)
7
17
17
10
17
17
9
17
17
17
17
9
17
17
9
17
7
5
7
3
7
5
7
3
(A)
4
(B)
4
2
4
4
2
2
4
4
2
Remuneration
and Nomination
Committee
Strategy and
Investment
Committee
(A)
(B)
(A)
(B)
6
6
6
6
6
6
3
3
3
1
3
3
2
3
3
3
3
1
3
3
2
3
Robert Hill
Arnoud De Meyer
Dat Duong
Jane McAloon1
Sarah Ryan
Michael Muller
Nicola Wakefield Evans2
Scott Wyatt
(A) number of meetings held during the period which the Director was eligible to attend.
(B) number of meetings attended by the Director.
1. Jane McAloon retired from the Board and its Committees with effect on 25 August 2021.
2. Nicola Wakefield Evans was appointed to the Board and joined the Sustainability Committee, the Audit and Risk Committee and the Strategy
and Investment Committee on 3 August 2021.
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 13 to 30 and in the Notes to the consolidated financial statements.
Review of operations
The Operating and financial review of the Group for the 2021 financial year is set out on pages 13 to 30 of this report.
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Directors’ report continued
Dividends
We paid the following dividends during the financial year ended 31 December 2021:
Dividend
Total dividend
Payment date
Interim dividend of 4.1 cents per share (fully franked)
for the half year ended 30 June 2021
$65.9M
23 September 2021
Matters subsequent to the end of financial year
Diesel Storage Program
On 31 January 2022, the Group announced the finalisation of a grant agreement in relation to the Federal Government’s Boosting
Australia’s Diesel Storage Program that will see the Group build 90 million litres of new strategic diesel storage at the Geelong
Refinery. The grant will cover up to 50% of total eligible expenditure up to a maximum of $33.3M. The total project expenditure
is estimated to be between $75.0M and $85.0M. Subject to regulatory approval, construction is expected to commence in 2022
with planned completion by 2024.
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 $31.2M. The assessment related 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, any such costs must
be payable by the Group.
An objection to the matter was lodged by VER Custodian Pty Ltd (a REIT entity) and a determination from the SRO was
subsequently received in May 2020 disallowing that objection. The matter was then referred to the Supreme Court of Victoria
(Court) with the court hearing on 8 November 2021. On 11 February 2022, the Court upheld the Group’s objection to the SRO’s
stamp duty assessment and determined that the assessment be reduced to nil.
As a result of the Court’s assessment, the $31.2M contingent liability that has been disclosed in the financial statements since
2018 is no longer recognised. In addition, a $7.5M payment made to the SRO in 2020, which is currently recognised in current
assets within the consolidated statement of financial position at 31 December 2021, will be returned to the Group in 2022.
No other matters or circumstances have arisen subsequent to the end of the financial year that have 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 89 to 109.
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 is set out below.
Director
Robert Hill
Scott Wyatt
Arnoud De Meyer
Dat Duong
Sarah Ryan
Michael Muller
Nicola Wakefield Evans
Number of ordinary shares in which
the Director has a relevant interest
94,284
7,885,887*
156,942
-
106,667
-
29,100
* The CEO will receive 270,599 ordinary shares following the vesting of the 2019 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 92,871 Deferred Share Rights issued under the Company’s Short Term Incentive
Plan, 86,530 Restricted Stock Units and 1,461,622 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 2021 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 2020
1,538,095 Options
at various exercise
prices and
expiry dates
Changes during the
2021 financial year
Number on
issue as at
31 December 2021
Changes since the
end of the 2021
financial year
Number on issue
as at the date of this
report
1,153,571 Options
exercised
384,524 Options
exercisable at
$1.21 expiring
1 January 2022
384,524 Options
exercised
–
Options
Performance
Rights
5,100,863
Performance Rights
2,733,434*
Performance
Rights issued
308,000**
Performance
Rights vested
1,585,408
Performance
Rights lapsed
2,540,824*** Deferred
Share Rights issued
5,940,889
Performance
Rights
699,045**
Performance
Rights vested
699,049
Performance
Rights lapsed
4,542,795
Performance
Rights
Deferred
Share Rights
2,201,583 Deferred
Share Rights
1,057,738** Deferred
Share Rights vested
3,637,914
Deferred Share
Rights
115,220**
Deferred Share
Rights vested
3,505,137
Deferred Share
Rights
46,755 Deferred Share
Rights lapsed
* Of these, 905,501 Performance Rights were granted to the CEO on 31 May 2021 as approved by shareholders at the 2021 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.
*** Of these, 179,401 deferred share rights were granted to the CEO under the Company’s STIP and LTIP.
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 Corporate Governance Statement 2021 is available on 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 115.
Non-audit services
Details of non-audit services provided by, and amounts paid to, our external auditor are set out in Note 34 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 2021 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.
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Directors’ report continued
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.
In 2021, the Group received an infringement notice from the Environment Protection Authority (EPA) Victoria for the discharge of
wastewater that exceeded levels above the Geelong refinery’s EPA licence limits. The EPA were promptly notified of the incident
and mitigating measures have since been put in place following investigation of the cause of the incident. The infringement
notice imposed a fine of approximately $8,000. There were no other fines, regulatory sanctions or prosecutions in relation to
environmental issues or compliance with its licences during 2021.
The Group commenced proceedings in the Queensland Land & Environment Court to appeal an Environmental Protection Order
issued by the Queensland Department of Environment & Science relating to perfluoroalkyl and polyfluoroalkyl substances (PFAS)
in stormwater discharges from the Pinkenba Terminal (received in 2021). The Group continues to work with the EPA in Victoria in
relation to similar impacts at our Newport Terminal (notice received in 2020). These notices relate to legacy PFAS contamination
associated with the historical use of fluorinated firefighting foams at the terminal as part of the site’s fire safety systems. At both
the Newport and Pinkenba sites and in consultation with the relevant regulators, mitigation actions have been implemented to
reduce the PFAS contamination in stormwater. These mitigations include covering or capping the former fire training grounds at
each of the sites, as these areas are responsible for the majority of the contamination in stormwater. Further work is underway to
finalise an appropriate level of water treatment. It is expected that a new version of the National Environment Management Plan
(NEMP) will be released in 2022, which will set out the acceptable PFAS limits. The Group will monitor and assess the impact of
the new NEMP when it becomes available.
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 prohibit 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
Date: 21 February 2022
Scott Wyatt
CEO and Managing Director
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Viva Energy Group Limited – Annual Report 2021 Auditor’s independence declaration
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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 2021, 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 21 February 2022 About usChairman and Chief Executive Officer’s reportOperating and financial reviewSustainability reportDirectors’ reportRemuneration reportAuditor’s independence declarationBoard of DirectorsExecutive Leadership TeamViva Energy Group Limited – Annual Report 2021
Financial report
Consolidated statement of profit or loss
117
Consolidated statement of comprehensive income 118
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
Long-term assets and liabilities
11. Property, plant and equipment
12. Leases
13. Long-term receivables
14. Financial assets held at fair value through other
comprehensive income
15. Long-term payables
16. Goodwill and other intangible assets
17. Provisions
18. Commitments and contingencies
119
120
121
122
122
124
124
125
127
129
130
130
130
131
132
133
133
134
134
136
137
138
138
138
140
142
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. Interests in associates and joint operations
30. Parent company financial information
31. Deed of Cross Guarantee
Other disclosures
32. Post-employment benefits
33. Related party disclosures
34. Auditor’s remuneration
35. Events occurring after the reporting period
Directors’ declaration
Independent auditor’s report
Disclosures
Additional information
Historical information
Corporate directory
143
143
145
146
146
147
148
149
150
153
153
157
157
158
160
160
163
163
166
169
170
171
172
178
180
182
183
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Consolidated statement of profit or loss
For the year ended 31 December 2021
s
t
a
t
e
m
e
n
t
s
Revenue
Replacement cost of goods sold
Net inventory gain/(loss)
Sales duties, taxes and commissions
Import freight expenses
Historical cost of goods sold
Gross profit
Net (loss)/gain 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
Interest income
Share of profit of associates
Realised/unrealised gain on derivatives
Net foreign exchanges loss
Depreciation and amortisation expenses
Finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) after tax
Earnings per share
Basic earnings per share
Diluted earnings per share
Notes
1
2
2
2
12
29
2
2
2
2
27
4
4
2021
$M
2020
$M
15,900.0
12,409.9
(9,088.5)
126.6
(4,965.5)
(220.0)
(14,147.4)
(6,382.3)
(256.6)
(4,426.6)
(274.0)
(11,339.5)
1,752.6
1,070.4
(0.4)
–
56.1
55.7
(255.0)
(281.7)
(160.9)
(105.5)
(6.2)
(88.8)
910.2
1.9
0.6
31.0
(14.5)
(394.7)
(191.1)
343.4
(110.5)
232.9
cents
14.6
14.5
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)
cents
(1.9)
(1.9)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
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Consolidated statement of comprehensive income
For the year ended 31 December 2021
Profit/(loss) for the year
Other comprehensive income/(loss)
Other comprehensive income that may be reclassified to profit or loss
in subsequent years (net of tax)
Recycling of unrealised gains on cash flow hedges on disposal
of investment in Waypoint REIT
Other comprehensive income not to be reclassified to profit or loss
in subsequent years (net of tax)
Changes in fair value of equity investments (net of tax)
Remeasurement of retirement benefit obligations
Net other comprehensive income
Notes
2021
$M
232.9
2020
$M
(36.2)
29
32
–
6.3
(0.6)
6.5
5.9
–
(2.4)
3.9
Total comprehensive income/(loss) for the year (net of tax)
238.8
(32.3)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
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Viva Energy Group Limited – Annual Report 2021 Consolidated statement of financial position
As at 31 December 2021
s
t
a
t
e
m
e
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t
s
C
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s
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i
d
a
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c
i
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Notes
2021
$M
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
Financial assets at fair value through other comprehensive income
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
Derivative liabilities
Current tax 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
6
8
5
11
20
9
13
11
12
16
32
29
14
27
10
17
12, 22
20
17
21
12, 22
15
23
23
23
2020
$M
49.1
794.1
698.8
2.9
–
27.6
21.0
96.7
1,293.1
1,179.5
1.4
6.8
28.0
–
2,605.5
1,593.5
40.6
1,517.4
2,184.8
621.5
6.8
16.0
9.2
305.9
1.2
4,703.4
7,308.9
33.6
1,475.2
2,321.5
646.7
0.2
15.4
–
325.8
2.1
4,820.5
6,414.0
2,145.7
1,329.6
143.1
149.4
8.6
34.2
122.0
135.9
19.4
–
2,481.0
1,606.9
96.2
191.9
2,331.1
96.8
2,716.0
5,197.0
2,111.9
4,252.5
(12.7)
(4,201.7)
2,073.8
2,111.9
104.0
153.3
2,398.4
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
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
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Consolidated statement of changes in equity
For the year ended 31 December 2021
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
Purchase of treasury shares
Balance at 31 December 2020
Balance at 1 January 2021
Statutory profit for the year
Remeasurement of retirement
benefit obligations
Changes in the fair value of
equity investments through
other comprehensive income
Total comprehensive income
for the year
32
24
32
Dividends paid (net of dividends paid
on treasury shares)
Share buy-back
Capital return to shareholders
Share-based payment reserve movement
Issue of shares to plan participants
Purchase of treasury shares
Balance at 31 December 2021
24
23a, 23c
23a
23c
23b
23b
Contributed
equity
$M
Treasury
shares
$M
Notes
Reserves
$M
4,861.3
(14.2)
(4,246.5)
Retained
earnings
$M
2,123.3
(36.2)
Total equity
$M
2,723.9
(36.2)
–
–
(36.2)
(180.5)
–
–
–
–
–
–
6.3
(2.4)
(32.3)
(180.5)
1.0
(50.3)
(414.4)
3.3
15.7
(9.3)
–
6.3
(2.4)
3.9
–
1.0
22.0
(0.3)
3.3
–
–
–
232.9
6.5
(0.6)
–
–
2,057.1
232.9
6.5
(0.6)
5.9
232.9
238.8
–
3.7
(0.2)
5.5
–
–
(65.7)
–
–
–
–
–
(65.7)
(18.0)
(99.6)
5.5
3.2
(9.4)
(4,216.6)
1,906.6
2,057.1
–
–
–
–
–
–
(72.3)
(415.1)
–
–
–
4,373.9
–
–
–
–
–
–
–
1.0
–
15.7
(9.3)
(6.8)
–
–
–
–
–
(21.7)
(99.7)
–
–
–
–
–
–
–
–
–
0.3
–
3.2
(9.4)
4,373.9
(6.8)
(4,216.6)
1,906.6
4,252.5
(12.7)
(4,201.7)
2,073.8
2,111.9
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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Consolidated statement of cash flows
For the year ended 31 December 2021
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n
t
s
Operating activities
Receipt from trade and other debtors
Payments to suppliers and employees
JobKeeper payments received
Refinery production payments received
Interest received
Interest paid on loans
Interest paid on lease liabilities
Net income tax (paid)/refund
Net cash flows from operating activities
Investing activities
Payments for purchases of property, plant and equipment and intangibles
Proceeds from sale of property, plant and equipment
Purchase of land for resale
Proceeds from sale of land
Net cash consideration paid for step acquisition of associate
Purchase of subleases from associate
Purchase of financial assets
Net cash consideration paid for acquisitions
Proceeds from sale of investments
Share buy-back
Net purchase of employee share options
Dividends received from associates
Loan repayment from associate
Net cash flows (used)/contributed in investing activities
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 increase/(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
Notes
2021
$M
2020
$M
19,225.4
(18,529.7)
15,937.0
(15,585.7)
6.2
44.7
1.9
(8.4)
(173.3)
(36.1)
530.7
21.8
–
4.4
(8.0)
(171.0)
11.8
210.3
(185.1)
(158.5)
5.1
(0.9)
2.5
–
(4.2)
(10.1)
(1.5)
–
(18.0)
(9.4)
–
4.2
(217.4)
3,985.0
(3,945.0)
(65.7)
(99.6)
(2.7)
(137.7)
(265.7)
47.6
49.1
96.7
15.0
(6.8)
6.8
(1.0)
–
–
–
730.1
(50.3)
(8.8)
19.8
–
546.3
1,120.0
(1,227.2)
(180.5)
(414.4)
(0.1)
(124.8)
(827.0)
(70.4)
119.5
49.1
7
29
29
24
6
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 2021 were authorised for issue in accordance with a resolution of the Directors on
21 February 2022. 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 Level 16, 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 has continued to impact the performance of the Group, with the Retail, Aviation, Marine and Refinery businesses,
in particular, unable to return to pre-COVID-19 volumes due to ongoing restrictions limiting travel and mobility across Australia;
• the Group recognised income from the Australian Federal Government of $56.1 million in relation to the Temporary Refinery
Production Payment (TRPP) and the Fuel Security Services Payment (FSSP) that were introduced in the period, as well as
COVID-19 JobKeeper support (see note 2);
• share buy-back program activities during the period reduced shares on issue by 7,924,716 ordinary shares (see note 23);
• a capital return was undertaken in October 2021, which returned $99.7 million to shareholders, with associated share
consolidation activities reducing shares on issue by 48,223,469 ordinary shares (see note 23).
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.
The financial report has been prepared on a historical cost basis, except for financial assets and liabilities (including derivative
instruments, equity securities and defined benefit plan assets and liabilities), 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.
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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.
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.
• 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 11 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 12 Leases provides an explanation of the key assumptions used to determine the lease related right-of-use assets and
lease liabilities.
• Note 16 Goodwill and other intangible assets outlines the key assumptions and methodology used to assess the carrying value
of the Groups 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.
New and revised accounting standards
In the current reporting period, with the exception of updated guidance relating to accounting for software as a service, there were
no new or amended accounting standards or interpretations issued by the Australian Accounting Standards Board that required
the Group to change its accounting policies.
In 2021, updated guidance was released by the International Financial Reporting Interpretations Committee on accounting for
configuration or customisation costs in a cloud computing or software as a service (SaaS) arrangement. The implementation of
the new guidance has resulted in a Group accounting policy change for SaaS arrangements. This accounting policy change did
not have a material impact on the prior year.
Standards issued but not yet effective as at 31 December 2021
A number of new accounting standards and interpretations have been published that are not yet effective for periods beginning
1 January 2021 and have not been early adopted by the Group. These standards and interpretations applicable from periods
beginning 1 January 2022 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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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
2021
$M
2020
$M
15,670.6
197.5
15,868.1
12,200.8
182.3
12,383.1
31.9
26.8
15,900.0
12,409.9
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.
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 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.
Other revenue
Other income includes rental recoveries, income from subleases and management fees earned through the Aviation business.
Other revenue is recognised as or when the Group satisfies its related performance obligations.
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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.
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 gain/(loss)
2021
$M
126.6
2020
$M
(256.6)
During the year, a net inventory gain of $126.6 million (2020: $256.6 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.
Net profit on sale of investments
2021
$M
–
2020
$M
106.4
During the previous period the Group sold its 35.5% security holding in Waypoint REIT which contributed $113.9 million to
the Group’s 2020 pre-tax profit with net cash proceeds of $730.1 million after transaction costs. This amount, along with an
offsetting $7.4 million business combination adjustment relating to the 2020 Westside Petroleum Pty Ltd acquisition comprised
the $106.4 million net profit on sale of investments within other income in the consolidated statement of profit and loss. In the
current period no investments were sold.
Other income
Temporary Refinery Production Payment
Fuel Security Services Payment
JobKeeper
Total other income
2021
$M
40.6
12.4
3.1
56.1
2020
$M
–
–
24.9
24.9
During the first half of 2021, as part of the Australian Government’s Fuel Security Package, a Temporary Refinery Production
Payment (TRPP) grant was available. Under the grant, the Group received a payment of $40.6 million. This program was superseded
by the Federal Security Services Package (FSSP), which commenced on 1 July 2021 and will conclude on 30 June 2028 (unless
extended at the option of the Group). The FSSP resulted in additional income of $12.4 million for the year.
In 2021 the Group also recorded income of $3.1 million from the Australian Government’s ‘JobKeeper’ scheme, which continued
to provide assistance to the Group in supporting employees in the most impacted parts of the business, particularly in the Aviation
and Refining businesses. Payments received this period of $6.2 million, as per the consolidated statement of cash flows, relate to
prior year accrued income in addition to current period income.
The JobKeeper, TRPP and FSSP income 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.
Realised/unrealised gains on derivatives
Derivative contracts
2021
$M
31.0
2020
$M
35.3
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Results for the year continued
2. Other profit or loss items continued
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 2021 and including any open positions at balance date,
gains of $31.0 million were made (2020: $35.3 million gain). The gains in the current period were the result of various commodity
price movements and a weakening Australian dollar through the year.
Foreign exchange gain/(loss)
Foreign exchange gains
Foreign exchange losses
Net foreign exchange loss
2021
$M
51.3
(65.8)
(14.5)
2020
$M
117.6
(146.1)
(28.5)
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
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
2021
$M
(140.4)
(221.6)
(32.7)
(394.7)
2021
$M
(12.2)
(173.3)
(3.2)
(2.4)
(191.1)
2020
$M
(140.2)
(216.2)
(32.4)
(388.8)
2020
$M
(12.5)
(171.0)
(4.0)
(2.4)
(189.9)
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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.
In the previous reporting period the segment classification consisted of:
• Retail, Fuels and Marketing
• Refining
• Supply, Corporate and Overheads
Since the last reporting period the Group has undertaken a review of the ways in which earnings are reported and tracked across
the different business segments. The review considered the evolution of our strategy, the way in which the business is run practically,
changes in executive team and accountabilities and external/investor feedback.
Whilst the number of segments remains the same, the historical Supply, Corporate and Overheads (S,C&O) segment is replaced
with a Corporate segment. These changes are reflected in the Summary Statement of Profit or Loss in the Directors’ Report, with
the key changes detailed below.
All applicable S,C&O costs are allocated out of the historical S,C&O segment and into Retail, Fuels and Marketing (RFM) and
Refining. Costs to be allocated include storage and handling, shipping and pipeline costs, functional costs such as Technology
& Digital, Finance, People & Culture, Procurement, Insurance, and divisional employee incentives. Costs such as storage and
handling will be allocated to businesses on a terminal by terminal basis in line with volumes of each business, while the majority
of corporate costs will be directly allocated based on individual people and in limited cases split evenly between RFM (Retail
and Commercial) and Refining. The historical S,C&O segment is replaced by the Corporate segment, which captures group
level costs which cannot be meaningfully allocated to the segments. These changes are reflected in the current year segment
information, and prior period information has been restated to align with the current period changes.
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, in addition to an allocation of supply
and corporate overheads.
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. All refinery operating
activities are included in this segment, including an allocation of supply and corporate overheads.
Corporate
The Corporate segment consists of group level costs which cannot meaningfully be allocated to the segments. All other corporate
and overhead costs are allocated based on an appropriate cost driver.
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. Revenues and
costs associated with Supply and Distribution are allocated to the operating segments based on appropriate cost drivers, most
commonly, sales volumes.
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.
Geographical information
The Group’s country of domicile is Australia. The Group has operations in Australia, Singapore and Papua New Guinea. All of the
Group’s non-financial non-current assets are located in Australia.
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Results for the year continued
3. Segment information continued
Information about reportable segments
31 December 2021
Segment revenue:
Total segment revenue
Inter-segment revenue
External segment revenue
Gross profit
Net inventory gain
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:
Capital expenditure
31 December 2020
Segment revenue:
Total segment revenue
Inter-segment revenue
External segment revenue
Gross profit
Net inventory 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
Retail,
Fuels and
Marketing
$M
15,900.0
–
15,900.0
1,340.7
113.7
1,454.4
822.9
–
(328.6)
(184.8)
309.5
Refining
$M
Corporate
$M
Total
segments
$M
4,842.0
(4,842.0)
–
285.3
12.9
298.2
124.5
–
(63.3)
(3.6)
57.6
–
–
–
–
–
–
(20.1)
1.9
(2.8)
(2.7)
(23.7)
20,742.0
(4,842.0)
15,900.0
1,626.0
126.6
1,752.6
927.3
1.9
(394.7)
(191.1)
343.4
81.6
103.5
–
185.1
Retail,
Fuels and
Marketing
$M
12,409.9
–
12,409.9
1,273.2
(198.9)
1,074.3
473.5
–
(311.2)
(183.6)
(21.3)
Refining
$M
Corporate
$M
Total
segments
$M
2,854.7
(2,854.7)
–
53.8
(57.7)
(3.9)
(184.3)
–
(74.8)
(3.6)
(262.7)
–
–
–
–
–
–
98.6
4.4
(2.8)
(2.7)
97.5
15,264.6
(2,854.7)
12,409.9
1,327.0
(256.6)
1,070.4
387.8
4.4
(388.8)
(189.9)
(186.5)
Other material items:
Capital expenditure
37.7
119.7
–
157.4
128
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4. Earnings per share
Basic earnings per share (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.
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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
2021
Cents
14.6
2021
Cents
14.5
2020
Cents
(1.9)
2020
Cents
(1.9)
2021
Number
2020
Number
1,593,579,427
1,865,755,543
Adjustments for calculation of weighted diluted earnings per share:
Options
10,378,108
8,206,118
Weighted number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
1,603,957,535
1,873,961,661
(d) Information concerning the classification of securities
Ordinary shares
Ordinary shares at 31 December 2021 of 1,551,490,462 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 357,722,143 ordinary shares as a result of share consolidations undertaken by the
Group in 2020 and 2021, and further reductions of 35,322,563 ordinary shares through 2020 and 2021 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 2021 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 33 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
2021
$M
235.6
910.8
1,146.4
33.1
1,179.5
2020
$M
141.2
526.6
667.8
31.0
698.8
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.
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
(2020: nil).
6. Cash and cash equivalents
Cash at bank per consolidated statement of financial position
2021
$M
96.7
2020
$M
49.1
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
(2020: nil).
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7. Reconciliation of profit to net cash flows from operating activities
Profit/(Loss)
Adjustments for:
Net loss/(gain) 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 on remeasurement of investment
Unrealised (gain)/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 gain on early termination of leases
Non-cash tax expense relating to IPO transaction cost offset against IPO reserve
2021
$M
232.9
0.4
–
173.1
221.6
7.0
–
(17.6)
14.3
(0.6)
8.1
0.8
(1.0)
–
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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
Net cash flows from operating activities before movements in assets/liabilities
639.0
261.7
Movements in assets and liabilities:
Working capital balances
(Increase)/decrease in receivables
(Increase)/decrease in inventories
Increase/(decrease) in payables
Other
(Increase)/decrease in other assets
Decrease/(increase) in deferred tax assets
Decrease in post-employment benefits
Decrease in tax asset
Increase/(decrease) in provisions
Net cash flows from operating activities
(502.3)
(480.8)
801.3
(12.3)
17.5
2.8
55.2
10.3
530.7
456.3
497.9
(859.6)
6.0
(158.3)
3.0
10.2
(6.9)
210.3
Movements in the assets and liabilities in the comparative 2020 period were 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.
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Working capital and cash flow continued
8. Trade and other receivables
Trade receivables
Trade receivables
Allowance for impairment of receivables
Total trade receivables
Other receivables
Receivables from related parties (Note 33)
Receivables from associates
Loan to associates
Finance lease receivables (Note 12)
Other debtors
Total other receivables
2021
$M
1,157.2
(5.5)
1,151.7
17.6
36.4
–
1.4
86.0
141.4
2020
$M
658.5
(5.1)
653.4
12.3
39.5
13.7
1.1
74.1
140.7
Total trade and other receivables
1,293.1
794.1
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 their overall
collections strategy. At 31 December 2021 there were no outstanding trade receivables subject to factoring (2020: 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 2021 was determined as follows for trade receivables:
More than
30 days but
not more
than 60 days
past due
$M
Not more
than 30 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
More than
120 days
past due
$M
1.0%
2.0%
5.0%
10.0%
30.0%
Total
$M
Current
$M
0.1%
1,157.2
1,136.5
(5.5)
(1.3)
5.2
(0.1)
1.8
(0.1)
0.7
(0.1)
0.0
(0.0)
13.0
(3.9)
More than
30 days but
not more
than 60 days
past due
$M
Not more
than 30 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
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 2021
Expected loss rate
Gross carrying amount –
trade receivables
Loss allowance
31 December 2020
Expected loss rate
Gross carrying amount –
trade receivables
Loss allowance
132
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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 as at 31 December
2021
$M
(5.1)
(1.5)
1.1
–
(5.5)
2020
$M
(4.2)
(1.3)
0.9
(0.5)
(5.1)
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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
2021
$M
28.0
2020
$M
27.6
Prepayments primarily relate to prepaid council rates, insurance and shipping related costs. In addition, as at 31 December 2021
the Group continues to recognise a $7.5 million (2020: $7.5 million) prepayment to the State Revenue Office relating to the stamp
duty contingency outlined in Note 18 Commitments and contingencies.
10. Trade and other payables
Trade payables
Amounts due to related parties
Amounts due to associates
Total trade and other payables
2021
$M
806.5
1,339.1
0.1
2,145.7
2020
$M
507.8
821.7
0.1
1,329.6
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.
133
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Long-term assets and liabilities
11. Property, plant and equipment
As at 1 January 2020
Opening net book value
Acquisition of Westside Petroleum
Additions
Disposals
Depreciation
Change of ARO discount/inflation rate
Transfers*
As at 31 December 2020
Cost
Accumulated depreciation
Balance as above
Assets held for sale
Property, plant and equipment
As at 1 January 2021
Opening net book value
Additions
Disposals
Depreciation
Change of ARO discount/inflation rate
Transfers**
As at 31 December 2021
Cost
Accumulated depreciation
Balance as above
Assets held for sale
Property, plant and equipment
Construction
in progress
$M
Freehold
land
$M
Freehold
buildings
$M
Plant and
equipment
$M
Total
$M
171.0
–
155.4
–
–
–
(209.9)
116.5
116.5
–
116.5
–
116.5
116.5
182.3
–
–
–
(109.2)
189.6
189.6
–
189.6
–
189.6
115.9
–
6.8
(7.4)
–
–
3.5
118.8
118.8
–
118.8
(2.7)
116.1
118.8
0.9
(3.1)
–
–
(1.6)
115.0
115.0
–
115.0
(1.4)
113.6
149.7
1,038.2
1,474.8
–
–
(1.5)
–
–
8.3
156.5
213.8
(57.3)
156.5
–
156.5
156.5
0.3
(0.9)
(11.0)
–
(8.3)
136.6
213.5
(76.9)
136.6
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
(585.3)
1,086.3
(0.2)
1,086.1
2,120.7
(642.6)
1,478.1
(2.9)
1,475.2
1,086.3
1,478.1
6.6
(3.6)
(129.4)
0.2
117.5
190.1
(7.6)
(140.4)
0.2
(1.6)
1,077.6
1,518.8
1,759.9
(682.3)
1,077.6
2,278.0
(759.2)
1,518.8
(1.4)
136.6
1,077.6
1,517.4
* Net transfers of $15.3 million in 2020 represent $4.5 million in software transferred out from construction in progress to intangibles and assets
under lease transferred to right-of-use assets.
** Net transfers of $1.6 million in 2021 represent $2.2 million in software transferred out from construction in progress to intangibles, offset by
$0.6 million in reclassifications.
134
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Property, plant and equipment additions during the year includes $36.2 million in major maintenance spend undertaken at the
refinery (2020: $92.3 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
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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. The process of identifying the
minimum operating stock volume estimate involves calculations in consultation with engineers responsible for the Group’s
refining, supply and distribution operations. Minimum operating stock 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. As at 31 December 2021, these assets totalling $1.4 million comprised mainly retail assets (2020: $2.9 million)
and meet the AASB 5 Non-current Assets Held for Sale and Discontinued Operations classification requirements.
Refining assets
During the current period the Australian Federal Government implemented a long-term Fuel Security Package to support and
enhance the long-term viability of Australia’s refining industry. The payment support provided to the Group will run until at least
30 June 2028, with the Group having the option to extend the support until at least 30 June 2030. The payment support structure
has been designed to protect earnings during periods of low refining margins, providing for more certain and reliable cash flow.
In a cap and collar approach, the payment will commence when the relevant margin marker falls below $10.20 per oil barrel (bbl).
The support will increase from 0 cents per litre (cpl) to 1.8 cpl (or $0.0/bbl to $2.90/bbl), on a linear basis until the support caps
at the margin marker level of $7.30/bbl. Below this margin level, full support at 1.8 cpl ($2.90/bbl) will be provided. To receive this
support, the Group has committed to continue its refining operations over the support period.
The Group’s property, plant and equipment includes refining assets with a net book value of $426.2 million as at 31 December 2021.
In line with AASB 136 Impairment of Assets the refining assets have been subject to an assessment as to whether any indication
of asset impairment exists. In 2020 impairment triggers were identified amidst globally suppressed oil prices contributing to a
challenging environment for the refinery. In assessing the refinery at year-end 2021, with the introduction of the Governments Fuel
Security Package designed to underpin the financial viability of the refinery and its asset base, and a more favourable present
and future economic outlook for the refining industry, the assessment concluded that no impairment triggers were identified
in relation to the refining assets.
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Long-term assets and liabilities continued
12. Leases
This note provides information on the Group leases accounted for under AASB 16 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
2021
$M
2,000.1
151.0
33.5
0.2
2020
$M
2,111.9
173.6
35.6
0.4
2,184.8
2,321.5
Net additions and transfers to right-of-use assets during the year were $84.9 million (2020: $209.6 million). These additions were
offset by depreciation expense of $221.6 (2020: $216.2 million).
Lease liabilities
Current
Non-current
Total lease liabilities
Finance lease receivable
Current
Non-current
Total finance lease receivable
2021
$M
149.4
2,331.1
2,480.5
2021
$M
1.4
6.9
8.3
2020
$M
135.9
2,398.4
2,534.3
2020
$M
1.1
7.3
8.4
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 $311.0 million (2020: $295.8 million).
2021
$M
189.7
28.8
2.8
0.3
221.6
173.3
6.2
2020
$M
181.1
31.8
2.8
0.5
216.2
171.0
11.8
136
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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.
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 AASB 16 Leases.
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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 AASB 16 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 AASB 16 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 licencing arrangements, after consideration of the underlying contracts, it has been
determined that the inflows under these arrangements fall within the scope of AASB 15 Revenue from Contracts with Customers.
The acquisition of Westside Petroleum in 2020 added to the Group a number of sublease arrangements considered finance
leases in accordance with AASB 16 Leases. As at 31 December 2021, finance leases have raised a current finance lease receivable
of $1.4 million (2020: $1.1 million) and a non-current finance lease receivable of $6.9 million (2020: $7.3 million), which are included
in the consolidated statement of financial position under trade and 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
13. Long-term receivables
Receivables
Loans to equity-accounted investees
Lease receivables (Note 12)
Total non-current receivables
2021
$M
172.0
553.2
493.3
2020
$M
174.4
597.5
600.1
1,218.5
1,372.0
2021
$M
6.9
26.8
6.9
40.6
2020
$M
9.3
17.0
7.3
33.6
137
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Long-term assets and liabilities continued
14. Financial assets held at fair value through other comprehensive income
Equity securities
Total financial assets held at fair value through other comprehensive income
2021
$M
9.2
9.2
2020
$M
–
–
In 2021, the Group purchased public securities in Waga Energy SA and Hyzon Motors Inc. In line with accounting standard
requirements, after initial recognition any subsequent valuation measurements are recorded through other comprehensive income.
15. Long-term payables
Coles Express long-term payable
Total non-current payables
2021
$M
96.8
96.8
2020
$M
94.3
94.3
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
Goodwill
$M
Software
$M
Customer
contracts
$M
Joint
venture
rights
$M
Other
$M
27.5
132.3
128.5
–
–
–
–
(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
Total
$M
657.0
19.3
1.1
4.5
(2.8)
(32.4)
646.7
739.0
(92.3)
646.7
22.6
124.7
114.5
646.7
–
–
(3.2)
19.4
50.0
(30.6)
19.4
–
–
(7.5)
117.2
152.1
(34.9)
117.2
–
–
(14.1)
100.4
139.9
(39.5)
100.4
5.3
2.2
(32.7)
621.5
746.5
(125.0)
621.5
Net book value
As at 1 January 2020
Acquisition of Westside Petroleum
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
As at 1 January 2021
Additions
Transfers
Amortisation for the year
As at 31 December 2021
Cost
Accumulated amortisation
As at 31 December 2021
320.6
19.2
–
–
(2.8)
–
337.0
337.0
–
337.0
337.0
5.3
–
–
342.3
342.3
–
342.3
48.1
0.1
1.1
4.5
–
(5.9)
47.9
60.0
(12.1)
47.9
47.9
–
2.2
(7.9)
42.2
62.2
(20.0)
42.2
138
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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 for impairment annually and whenever there is an indication that it may be impaired. 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
2021
$M
342.3
–
342.3
2020
$M
337.0
–
337.0
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, the acquisition of Liberty
Oil Holdings Pty Ltd in 2019, the Westside Petroleum Pty Ltd acquisition in 2020 and some small acquisitions in 2021.
Goodwill is tested for impairment annually based on a value-in-use calculation. The calculation uses post-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 have 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 2021 (2020: 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. Other intangibles are
assessed at the end of each reporting period for impairment indicators.
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
• Customer contracts
5 to 12 years
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.
139
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
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 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 2021
Additions/(write-back)
Utilised
Unwinding
Change of discount/inflation
Transfers*
At 31 December 2021
Current
Non-current
At 1 January 2020
Additions/(write-back)
Provisions acquired
Utilised
Unwinding
Change of discount/inflation
At 31 December 2020
Current
Non-current
Employee
benefits
$M
Restructuring
provision
$M
Asset
retirement
obligation
$M
Environmental
remediation
$M
72.7
41.6
(26.7)
1.1
–
–
88.7
85.0
3.7
0.8
3.5
(4.3)
–
–
–
–
–
–
99.7
(0.7)
(1.7)
1.7
3.2
(7.7)
94.5
17.0
77.5
40.1
4.2
(8.9)
–
0.4
7.7
43.5
31.2
12.3
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
Other
$M
12.7
1.2
(1.3)
–
–
–
Total
$M
226.0
49.8
(42.9)
2.8
3.6
–
12.6
239.3
9.9
2.7
143.1
96.2
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
*
In 2021 $7.7 million of asset retirement obligation provisions were reclassified to environmental remediation provisions as a result of a
classification reassessment.
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.
140
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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 $85.0 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
2021
$M
49.2
2020
$M
51.5
(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 2021 was $94.5 million (2020: $99.7 million). The Group estimates that the costs would be incurred upon lease
expiry and subsequent exit of the relevant site.
As disclosed in Note 12 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 the cost of site remediation.
In other cases, estimates are based on management experience of remediation at similar sites.
The Group has environmental provisions relating to various supply and distribution sites including the Clyde import terminal,
which once operated as a refinery, and various owned retail sites. The carrying amount of the provision as at 31 December 2021
was $43.5 million (2020: $40.1 million). 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.
141
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Long-term assets and liabilities continued
18. Commitments and contingencies
(a) Capital commitments
At 31 December 2021, the Group had capital expenditure contracted at the reporting date but not recognised as liabilities
related to property, plant and equipment totalling $30.5 million (2020: $25.0 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 (2020: nil).
(b) Guarantees
As at 31 December 2021, guarantees amounting to $55.9 million (2020: $48.2 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 31 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
As at 31 December 2021, the Group has contingent liabilities of $13.8 million primarily related to legal matters that management
considers it not probable that a present obligation exists (2020: $50.6 million).
Subsequent to 31 December 2021, a $31.2 million contingent liability that has been disclosed in the financial statements since 2018,
relating to a stamp duty claim from the Victorian State Revenue Office, was reduced to nil. Refer to Note 35 Events occurring after
the reporting period.
142
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 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 2021
and 2020.
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:
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Notes
2021
$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 assets at fair value through other comprehensive income
Equity securities
Financial liabilities
Financial liabilities held at amortised cost
Trade and other payables
Long-term borrowings
Lease liabilities
Long-term payables
Financial liabilities at fair value through profit and loss
Derivative liabilities
8
13
6
20
14
10
21
12, 22
15
20
2020
$M
794.1
33.6
49.1
–
–
1,293.1
40.6
96.7
6.8
9.2
1,446.4
876.8
2,145.7
191.9
2,480.5
96.8
8.6
4,923.5
1,329.6
153.3
2,534.3
94.3
19.4
4,130.9
143
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
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, however, can make an irrevocable
election at initial recognition for particular investments in equity instruments that would otherwise be measured through profit
or loss to present all subsequent changes, with the exception of dividends, in FVOCI, including upon derecognition. In 2021 the
Group purchased public securities in Waga Energy SA and Hyzon Motors Inc., and on initial recognition of these financial assets
elected to recognise any subsequent measurement 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.
144
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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:
(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
2021
$M
6.8
(8.6)
2020
$M
–
(19.4)
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 is recognised in the consolidated statement of profit or loss.
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Capital funding and financial risk management continued
21. Long-term borrowings
Long-term bank loans
Net capitalised borrowing costs on long-term bank loans
Total non-current borrowings
2021
$M
195.0
(3.1)
191.9
2020
$M
155.0
(1.7)
153.3
On 14 April 2021, the Group refinanced its US$700 million syndicated, revolving credit facility, expiring on 14 April 2024 with a
one-year extension option. The facility is unsecured with terms and conditions consistent with the previous facility held in the
comparative period.
At the end of the reporting period, the Group had access to the unsecured facility limit amounting to $964.7 million (2020:
$908.9million unsecured) that was in place primarily for working capital purposes. The amount drawn at 31 December 2021 is
$195.0 million (2020: $155.0 million). The weighted average interest rate on long-term bank loans in 2021 was 1.43% (2020: 1.47%).
This borrowing facility is subject to covenant arrangements disclosed under Capital funding and financial risk management
on page 143.
22. Consolidated net debt
Net debt
Cash and cash equivalents
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
2021
$M
2020
$M
96.7
(191.9)
(95.2)
(149.4)
(2,331.1)
(2,575.7)
49.1
(153.3)
(104.2)
(135.9)
(2,398.4)
(2,638.5)
Analysis of changes in consolidated
net debt
Net debt as at 1 January 2020
Balances acquired on acquisition
Cash flows
Other non-cash movements
Net debt as at 31 December 2020
Cash flows
Other non-cash movements
Net debt as at 31 December 2021
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
Total
$M
127.2
(1.0)
(77.1)
49.1
47.6
96.7
(128.0)
(3.7)
124.8
(129.0)
(135.9)
137.7
(151.2)
(149.4)
(2,320.3)
(81.6)
–
3.5
(2,398.4)
–
67.3
(2,331.1)
(7.7)
(2.2)
9.9
–
–
–
–
–
(256.9)
(2,585.7)
–
105.0
(1.4)
(88.5)
162.6
(126.9)
(153.3)
(2,638.5)
(40.0)
1.4
145.3
(82.5)
(191.9)
(2,575.7)
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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 2020
Buy-back of shares, net of tax
Capital return to shareholders
Share consolidation
At 31 December 2020
At 1 January 2021
Buy-back of shares, net of tax
Capital return to shareholders
Share consolidation
At 31 December 2021
2021
$M
4,252.5
$2.741
Shares
1,944,535,168
(27,397,847)
–
(309,498,674)
1,607,638,647
2020
$M
4,373.9
$2.720
$M
4,861.3
(72.3)
(415.1)
–
4,373.9
1,607,638,647
4,373.9
(7,924,716)
(48,223,469)
(21.7)
(99.7)
–
1,551,490,462
4,252.5
Share buy-back
During the period the Company purchased, and subsequently cancelled, 7,924,716 ordinary shares (2020: 27,397,847) on market
as part of the Company’s buy-back program. The cancellation of the shares has been treated as a reduction in share capital of
$21.7 million (2020: $72.3 million), with the $3.7 million (2020: $22.0 million) difference between the par value of the purchased
shares and the buy-back price being recorded against the Company’s capital redemption reserve. The total value of the share
buy-back during the period was $18.0 million (2020: $50.3 million).
Share consolidation
In 2021, the Group’s capital management initiatives included a capital return to shareholders of $99.7 million (2020: $415.1 million).
A share consolidation was then undertaken commensurate with the overall return to shareholders, reducing the number of ordinary
shares by 48,223,469 (2020: 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 2020
Acquisition of treasury shares (average price: $1.43 per share)
Transfer of shares to employees
Capital return to shareholders
Share consolidation
At 31 December 2020
At 1 January 2021
Acquisition of treasury shares (average price: $2.20 per share)
Transfer of shares to employees
Capital return to shareholders
Share consolidation
At 31 December 2021
Shares
7,281,531
6,545,012
(8,162,883)
–
(792,000)
4,907,660
4,907,660
4,269,221
(2,510,384)
–
(154,805)
6,511,692
$M
14.2
9.3
(15.7)
(1.0)
–
6.8
6.8
9.4
(3.2)
(0.3)
–
12.7
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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
IPO reserve
$M
Cash flow
hedge
reserve
$M
Capital
Redemption
Reserve
$M
Equity
Investment
Revaluation
Reserve
$M
5.6
(7.1)
(4,238.7)
(6.3)
At 1 January 2020
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
–
–
–
–
(2.4)
–
–
–
11.0
6.5
(14.2)
–
–
–
–
–
–
–
–
1.0
–
–
–
–
At 31 December 2020
3.2
(3.8)
(4,237.7)
Share-based payment
expenses, net of tax
Issue of shares to employees
Remeasurement of retirement
benefit obligations
Share buy-back
Capital return
Changes in the fair value
of equity investments at
fair value through other
comprehensive income
At 31 December 2021
–
6.5
–
–
–
9.7
8.2
(2.7)
–
–
–
–
1.7
–
–
–
–
–
–
(4,237.7)
–
–
–
–
–
–
–
22.0
(0.3)
21.7
–
–
–
3.7
(0.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$M
(4,246.5)
11.0
6.5
(14.2)
1.0
(2.4)
6.3
22.0
(0.3)
(4,216.6)
8.2
(2.7)
6.5
3.7
(0.2)
–
25.2
(0.6)
(0.6)
(0.6)
(4,201.7)
–
–
–
–
–
6.3
–
–
–
–
–
–
–
–
–
–
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
2021
$M
–
65.9
65.9
2020
$M
50.6
15.5
114.9
181.0
No final dividend was paid in the current period in relation to the previous year ended 31 December 2020 (2020: $50.6 million –
2.6 cents per share).
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The Company paid an interim 2021 dividend of $65.9 million – 4.1 cents per share to shareholders on 23 September 2021
(2020: $15.5 million – 0.8 cents per share). This fully franked dividend was in relation to the six month period ended 30 June 2021.
Included in the $65.9 million of dividends determined and paid during the year was $0.2 million in dividends relating to treasury
shares on hand during the year. The net impact of the total dividends on retained earnings amounted to $65.7 million.
There were no special dividends paid in the current period. In the previous period, a special dividend of $114.9 million,
at $0.0594 per share was declared and paid.
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In addition to the above dividend, since year end the Board has determined a final dividend of 3.2 cents per fully paid ordinary
share (2020: nil) in relation to year ended 31 December 2021. The aggregate amount of the proposed dividend expected to be
paid on 24 March 2022 out of retained earnings at 31 December 2021, but not recognised as a liability at year end, is $49.6 million.
Dividend franking account
The balance of the franking account of the Australian consolidated tax group, headed by Viva Energy Group Limited, is $2.9 million
at 31 December 2021 (2020: $0.9 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 2021
Derivative assets
Derivative liabilities
Equity securities
Total at 31 December 2021
31 December 2020
Derivative assets
Derivative liabilities
Total at 31 December 2020
Quoted in active
markets (Level 1)
$M
Significant
observable
inputs (Level 2)
$M
Significant
unobservable
inputs (Level 3)
$M
–
–
9.2
9.2
–
–
–
6.8
(8.6)
–
(1.8)
–
(19.4)
(19.4)
–
–
–
–
–
–
–
There were no transfers between levels during the 2021 and 2020 years.
(b) Recognised fair value measurements
Equity securities
In 2021, the Group purchased public securities in Waga Energy SA and Hyzon Motors Inc. The fair value of these publicly traded
securities is based on quoted market prices at the end of the reporting period.
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 2021, 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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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 cooperation 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 2021 and 2020, 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 2021, the total fair value of all outstanding foreign currency exchange forwards
amounted to a $1.8 million net liability (2020: $19.4 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, are 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%
2021
$M
173.3
(1,409.3)
(1,236.0)
2020
$M
122.3
(1,070.5)
(948.2)
123.6
(123.6)
94.8
(94.8)
The Group has minimal exposure to other currencies (Euro, British Pound, Singapore Dollar, Papua New Guinea kina and Malaysian
Ringgit) with total payable balances denominated in other currencies of $2.6 million at 31 December 2021 (2020: $0.8 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, are set out as follows:
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Financial assets
Cash and cash equivalents
Loan to related party
Total financial assets
Financial liabilities
Long-term bank loans
Total financial liabilities
Net exposure
Interest rates increase by 1%
Interest rates decrease by 1%
2021
$M
96.7
26.8
123.5
191.9
191.9
(68.4)
(0.7)
0.7
2020
$M
49.1
30.7
79.8
153.3
153.3
(73.5)
(0.7)
0.7
(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:
31 December 2021
Trade and other payables
Long-term payables
Long-term bank loans
Derivative liabilities
Lease liabilities
Total at 31 December 2021
31 December 2020
Trade and other payables
Long-term payables
Long-term bank loans
Derivative liabilities
Lease liabilities
Total at 31 December 2020
No more than
1 year
$M
More than
1 year but no
more than
5 years
$M
More than
5 years
$M
2,145.7
–
–
8.6
312.7
2,467.0
1,329.6
–
–
19.4
302.9
1,651.9
–
–
195.0
–
1,256.7
1,451.7
–
–
155.0
–
1,230.0
1,385.0
–
114.2
–
–
2,082.8
2,197.0
–
114.2
–
–
2,327.7
2,441.9
Total
$M
2,145.7
114.2
195.0
8.6
3,652.2
6,115.7
1,329.6
114.2
155.0
19.4
3,860.6
5,478.8
The financial liabilities due within the next 12-month period amount to $2,467.0 million (2020: $1,651.9 million). The Group has
current assets of $2,605.5 million (2020: $1,593.5 million) and a net current asset position of $124.5 million (2020: $13.4 million net
current liability position). The Group has access to undrawn credit facilities of $796.7 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.
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Capital funding and financial risk management continued
26. Financial risk management continued
(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 2021 and 2020.
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, are set out as follows:
Commodity prices decrease by 10%
Commodity prices increase by 10%
2021
$M
4.4
(4.0)
2020
$M
3.7
(3.4)
(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 ageing 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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Taxation
27. Income tax and deferred tax
(a) Reconciliation of income tax expense at Australian standard tax rate to actual income tax expense
Accounting profit/(loss) 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 (expense)/benefit
Deferred tax (expense)/benefit
Capital gains adjustment on sale of REIT
Adjustment relating to prior periods
Income tax (expense)/benefit reported in the consolidated statement of profit or loss
Deferred income tax benefit included in income tax benefit/(expense) comprises:
(Decrease)/increase in deferred tax assets
Decrease 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
Remeasurement of equity investments in overseas entities
Deferred tax related to items recognised directly to equity during the period:
Transaction costs recognised in equity
2021
$M
343.4
(103.0)
(4.3)
(0.4)
(0.1)
(4.3)
–
–
1.6
–
(110.5)
2021
$M
(92.9)
(13.3)
–
(4.3)
(110.5)
(52.8)
42.8
(3.3)
(13.3)
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
(2.8)
0.3
1.1
–
(4.2)
(20.0)
(3.9)
159.8
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Taxation continued
27. Income tax and deferred tax continued
(c) Deferred tax
Deferred tax assets
The balance comprises combined temporary differences attributable to:
Property, plant and equipment
Lease liabilities
Inventories
Asset retirement obligation
Employee benefits
Derivative contracts
Tax losses carried forward
Financial assets and investments
Other
Total deferred tax assets
Deferred tax liabilities
The balance comprises combined temporary differences attributable to:
Right-of-use assets
Intangible assets
Derivative contracts
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
2021
$M
88.8
744.1
120.0
27.4
26.3
–
3.4
1.7
4.6
2020
$M
100.6
760.3
81.0
27.7
24.0
3.3
70.8
1.9
7.5
1,016.3
1,077.1
(657.9)
(50.4)
(2.2)
(710.5)
(699.0)
(52.3)
–
(751.3)
305.8
325.8
31.1
274.7
305.8
66.3
259.5
325.8
154
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 (d) Movements in deferred tax assets
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
Financial
assets and
investments
$M
Other
$M
Total
$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
(110.8)
15.8
910.0
–
0.4
–
0.2
(4.6)
(3.9)
25.9
(39.1)
(3.9)
112.3
–
112.3
–
–
–
–
1.1
70.8
100.6
760.3
81.0
27.7
24.0
3.3
70.8
1.9
7.5
1,077.1
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
Financial
assets and
investments
$M
Other
$M
Total
$M
100.6
760.3
81.0
27.7
24.0
3.3
70.8
1.9
7.5 1,077.1
2020 movements
Balance at
1 January 2020
(Charged)/credited:
Acquired in business
combination
To profit or loss
Directly to equity
Disposal of REIT
investment
Other
comprehensive
income
Current year tax loss
and carried forward
tax credits/offsets
Balance at
31 December 2020
2021 movements
Balance at
1 January 2021
(Charged)/credited:
To profit or loss
(11.8)
(16.2)
39.0
(0.3)
–
–
–
–
–
–
–
–
–
–
–
–
5.1
–
(2.8)
(3.3)
–
–
–
–
–
–
–
(67.4)
(0.2)
–
–
–
1.0
(4.2)
13.3
(4.2)
0.3
(2.5)
–
(67.4)
Directly to equity
Other
comprehensive
income
Current year tax loss
and carried forward
tax credits/offsets
Balance at
31 December 2021
88.8
744.1
120.0
27.4
26.3
–
3.4
1.7
4.6 1,016.3
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Taxation continued
27. Income tax and deferred tax continued
(e) Movements in deferred tax liabilities
2020 movements
Balance at 1 January 2020
(Charged)/credited:
Acquired in business combination
To profit and loss
Balance at 31 December 2020
2021 movements
Balance at 1 January 2021
(Charged)/credited:
To profit and loss
Balance at 31 December 2021
Right-of-use
assets
$M
Intangible
assets
$M
(690.5)
(53.5)
(25.6)
17.1
(699.0)
–
1.2
(52.3)
Derivative
contracts
$M
Right-of-use
assets
$M
Intangible
assets
$M
–
(699.0)
(52.3)
(2.2)
(2.2)
41.1
(657.9)
1.9
(50.4)
Total
$M
(744.0)
(25.6)
18.3
(751.3)
Total
$M
(751.3)
40.8
(710.5)
The income tax expense for the year is the tax expense on the current year’s taxable income 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.
156
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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 2021. 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:
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*
Westside Petroleum Consolidated Holdings Pty Limited**
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**
Country of incorporation/
establishment
Equity
holding
2021 %
Equity
holding
2020 %
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
100
100
100
100
100
100
100
100
100
100
* Joined the Deed of Cross Guarantee on 13 December 2019. Refer to Note 31 Deed of Cross Guarantee for further detail.
** Joined the Deed of Cross Guarantee on 18 December 2020. Refer to Note 31 Deed of Cross Guarantee for further detail.
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Group structure continued
28. Group information continued
(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
Fuel Barges Australia Pty Ltd
Country of incorporation/
establishment
Australia
Australia
Equity
holding
2021 %
50
50
Equity
holding
2020 %
50
50
Further details regarding these investments can be found in Note 29 Interests in associates and joint operations.
(d) Interests in joint operations
The Group has a 52% interest in W.A.G Pipeline Pty Ltd (2020: 52%), a 50% interest in Crib Point Terminal Pty Ltd (2020: 50%)
and a 33% interest in Cairns Airport Refuelling Services Pty Ltd (2020: 33%). These are classified as joint operations under
AASB 11 Joint Arrangements. Further details regarding these investments can be found in Note 29 Interests in associates
and joint operations.
29. 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
Fuel Barges Australia Pty Ltd
Total investments accounted for using the equity method
2021
$M
16.0
–
16.0
2020
$M
15.4
–
15.4
LOC Global Pty Ltd
LOC Global Pty Ltd (‘LOC Global’) is a private entity that is based in Melbourne, Australia. The Group holds 50% equity holding
in LOC Global (2020: 50%).
LOC Global had no other contingent liabilities or capital commitments as at 31 December 2021.
Movement of LOC Global investment
Balance at the beginning of the year
Share of LOC Global profit/(loss)
2021
$M
15.4
0.6
16.0
2020
$M
15.5
(0.1)
15.4
158
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Waypoint REIT
In the previous period the Group sold its 35.5% security holding (276,060,625 stapled securities) in Waypoint 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 Waypoint 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
2021
$M
–
–
–
–
–
–
2020
$M
615.9
(19.8)
13.7
–
(609.8)
–
Total share of losses in associates for the 2021 year amounted to $1.0 million (2020: $10.6 million profit). The prior year $113.9 million
profit from the Waypoint REIT sale and offsetting $7.4 million business combination adjustment from the purchase of Westside
are disclosed within the prior year net profit on sale of investments in the consolidated statement of profit or loss.
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
2021
$M
35.4
180.8
(80.3)
(131.9)
4.0
2.0
14.0
16.0
760.9
2.5
–
–
–
2.5
–
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
(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 2021 and 2020, except as
disclosed in Note 18 Commitments and contingencies.
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Group structure continued
30. 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
Current assets
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
2021
$M
336.2
4,817.7
(420.4)
4,733.5
2020
$M
–
4,852.7
(112.6)
4,740.1
4,252.5
4,373.9
(70.3)
1.6
25.4
524.3
4,733.5
(70.3)
(3.9)
21.8
418.6
4,740.1
171.6
171.6
594.7
594.7
31. Deed of Cross Guarantee
As at 31 December 2021, 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.
160
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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 2021 and 2020 are set out below:
Revenue
Replacement cost of goods sold
Net inventory gain/( loss)
Sales duties, taxes and commissions
Import freight expenses
Historical cost of goods sold
Gross profit
Net gain 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
Depreciation and amortisation expenses
Finance costs
Profit/(loss) before income tax expense
Income tax(expense)/benefit
Profit/(loss) after tax
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$M
2020
$M
15,892.9
12,408.3
(9,088.3)
126.6
(4,965.5)
(220.0)
(14,147.2)
(6,382.1)
(256.6)
(4,426.6)
(274.0)
(11,339.3)
1,745.7
1,069.0
0.1
–
56.1
56.2
(260.5)
(281.0)
(184.1)
(103.1)
(6.3)
(88.8)
–
878.1
1.3
0.6
31.0
(17.7)
(387.9)
(184.2)
321.2
(98.1)
223.1
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)
161
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Group structure continued
31. 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
Financial assets at fair value through other comprehensive income
Net deferred tax assets
Other non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Provisions
Short-term lease liabilities
Derivative liabilities
Current tax 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
162
2021
$M
96.2
1,247.6
1,179.0
1.4
6.8
27.5
–
2020
$M
47.4
787.2
698.4
2.9
–
27.2
30.3
2,558.5
1,593.4
35.9
1,508.7
2,119.3
621.5
6.8
16.0
9.2
304.7
1.2
4,623.3
7,181.8
28.4
1,465.6
2,248.0
646.6
0.2
15.4
–
324.8
2.1
4,731.1
6,324.5
2,160.9
1,376.8
143.1
145.2
8.6
33.4
121.8
132.2
19.4
–
2,491.2
1,650.2
93.5
191.9
2,253.6
96.8
2,635.8
5,127.0
2,054.8
4,248.3
(12.7)
(4,201.7)
2,020.9
2,054.8
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
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021
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Other disclosures
32. 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 benefit
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
2021
$M
(81.6)
88.4
6.8
2020
$M
(93.4)
93.6
0.2
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Other disclosures continued
32. Post-employment benefits continued
(b) Defined benefit superannuation – significant estimate
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 gain/(loss) – change in financial assumptions
Actuarial gain/(loss) – experience adjustments
Benefits paid
Employer contributions
Employee contributions
Balance at 31 December
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 (gain)/loss – change in financial assumptions
Actuarial (gain)/loss – experience adjustments
Tax on remeasurement of defined benefit obligation
2021
$M
(93.4)
(3.5)
(1.0)
–
–
5.6
0.3
10.8
–
(0.4)
(81.6)
2020
$M
(98.5)
(3.9)
(1.8)
–
(0.1)
(2.5)
(0.9)
14.8
–
(0.5)
(93.4)
2021
$M
93.6
–
1.0
3.4
–
–
–
(10.8)
0.8
0.4
88.4
2020
$M
105.4
–
1.8
(0.1)
–
–
–
(14.8)
0.8
0.5
93.6
2021
$M
2020
$M
2.8
(0.3)
1.1
3.6
–
3.6
(3.4)
–
(5.6)
(0.3)
2.8
(6.5)
3.1
(0.4)
1.2
3.9
(0.1)
3.8
0.1
0.1
2.4
0.9
(1.1)
2.4
Components of defined benefit cost recorded in other comprehensive income
164
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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
2021
$M
7.4
10.6
8.4
52.7
9.3
–
88.4
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$M
8.4
12.2
7.5
37.4
9.4
18.7
93.6
The Group agreed to pay nil contributions to the plan in 2021 (2020: nil). The Group did 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:
Within the next 12 months
Between 2 and 5 years
Between 5 and 10 years
Beyond 10 years
Total expected payments
2021
$M
0.8
2.6
1.0
0.1
4.5
The average duration of the defined benefit plan obligation at the end of the reporting period is 5.2 years (2020: 5.9 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
2021
%
2.6
2.5
2.0
2020
$M
0.8
3.8
1.9
0.3
6.8
2020
%
1.1
2.0
1.8
Pensioner mortality has been assumed following the mortality under the Australian Life Tables 2015-17. 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
1.0% decrease
Impact on defined
benefit obligation
2021
$M
(4.1)
4.8
2.1
(2.0)
2020
$M
(5.4)
6.4
2.8
(2.6)
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.
165
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Other disclosures continued
33. 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 2021, 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 (2020: 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 repayment by associates
Purchase of assets from associate
2021
$’000
2020
$’000
8,753,045
327,369
6,910,598
600,860
17,617
1,339,106
12,337
821,692
2021
$’000
9,819
726,539
1,110
2,565
–
–
4,228
5,103
2020
$’000
10,941
490,570
1,678
5,188
113,200
19,849
–
–
Outstanding balances arising from sales/purchases of goods and services
Receivables
Payables
36,433
119
39,538
139
166
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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.
One director holds a directorship 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.
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(d) Key Management Personnel compensation
Short-term employee benefits
Post-employee benefits
Employee option plan
Total compensation paid to Key Management Personnel
2021
$’000
4,112
95
1,205
5,412
2020
$’000
3,955
133
1,247
5,335
(e) Long Term Incentive Plan (LTI)
The Company has 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
Vested 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:
2021
Number
of rights
5,100,863
2,733,434
(308,000)
2020
Number
of rights
3,524,041
2,087,421
–
(1,585,408)
(510,599)
5,940,889
5,100,863
Number of Performance
Rights outstanding
Tranche
2018 Tranche
2019 Tranche #1
2019 Tranche – CEO
2019 Tranche #2
2020 Tranche – CFO
2020 Tranche #1
2020 Tranche – CEO
2020 Tranche #2
2021 Tranche #1
2021 Tranche #2
Grant date
Fair value range at grant date
31-Dec-21
31-Dec-20
23-Jul-18
19-Mar-19
23-May-19
22-Oct-19
18-Feb-20
18-Feb-20
6-Jul-20
8-Oct-20
19-Feb-21
26-May-21
$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
$0.86 – $1.50
$1.18 – $1.50
–
856,896
541,198
–
301,232
750,763
556,121
201,245
1,827,933
905,501
5,940,889
1,232,000
1,127,495
541,198
112,749
301,232
1,028,824
556,121
201,244
–
–
5,100,863
167
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Other disclosures continued
33. Related party disclosures continued
(e) Long Term Incentive Plan (LTI) continued
Fair value of Performance Rights
The 2021 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 2021
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
19-Feb-21
26-May-21
Share price at
grant date
Expected life
(years)
$1.72
$2.06
2.86
2.60
Volatility
35%
35%
Risk-free
rate of
return
0.09%
0.10%
Dividend
yield Vesting date
4.30%
3.60%
1-Jan-24
1-Jan-24
(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
Vested during the year
Lapsed 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:
2021
Number
of rights
2,201,583
2,540,824
(1,057,738)
(46,756)
2020
Number
of rights
213,903
1,987,680
–
–
3,637,913
2,201,583
Number of deferred
share rights outstanding
Tranche
2019 Tranche
2020 Tranche #1
2020 Tranche #2
2021 Tranches #1
2021 Tranches #2
2021 Tranches #3
Grant date
Fair value range at grant date
31-Dec-21
31-Dec-20
22-Oct-19
18-Feb-20
6-Jul-20
19-Feb-21
23-Feb-21
8-Nov-21
$1.88
$1.61 – $1.69
$1.69
$1.72
$1.66
$1.72
–
1,108,731
17,557
2,382,307
86,530
42,788
213,903
1,952,566
35,114
–
–
–
3,637,913
2,201,583
Fair value of deferred share rights
The deferred share rights were valued using the share spot price as at the valuation date.
168
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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) 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.
The table below sets out information in relation to the Legacy LTI options.
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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
25-Oct-17
Expiry date
1-Jan-22
2021
Number of
options
1,538,094
(1,153,570)
2020
Number of
options
8,651,786
(7,113,692)
384,524
1,538,094
Exercise price
31-Dec-21
31-Dec-20
$1.21
384,524
384,524
1,538,094
1,538,094
Total expenses arising from employee plan transactions recognised during the 2021 year was $6,786,824 (2020: $3,578,014).
34. 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
860,000
900,000
2021
$
2020
$
Overseas PricewaterhouseCoopers firms
Audit or review of financial reports*
Non-audit services:
PricewaterhouseCoopers Australia
Other assurance services
Other services
Total
37,998
34,201
292,488
67,900
135,764
44,576
1,258,386
1,114,541
2021 Audit or review services include $120,000 additional work for 2020 audit (2020: $130,000 for 2019).
* Fees paid to PricewaterhouseCoopers overseas firms for the audit of Viva Energy S.G. Pte Ltd and Pacific Hydrocarbon Solutions Limited.
The Directors have formed the view, based on advice from the Risk and Audit Committee, that the provision of non-audit services
during the 2021 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 115.
169
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Other disclosures continued
35. Events occurring after the reporting period
Diesel Storage Program
On 31 January 2022 the Group announced the finalisation of a grant agreement in relation to the Federal Government’s Boosting
Australia’s Diesel Storage Program, that will see the Group build 90 million litres of new strategic diesel storage at the Geelong
Refinery. The grant will cover up to 50% of total eligible expenditure up to a maximum of $33.3 million. The total project
expenditure is estimated to be between $75.0 million and $85.0 million. Subject to regulatory approval, construction is expected
to commence in 2022 with planned completion by 2024.
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 related 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, any such costs
must be payable by the Group.
An objection to the matter was lodged by VER Custodian Pty Ltd (a REIT entity) and a determination from the SRO was subsequently
received in May 2020 disallowing that objection. The matter was then referred to the Supreme Court of Victoria (Court) with the court
hearing on 8 November 2021. On 11 February 2022 the Court upheld the Group’s objection to the SRO’s stamp duty assessment and
determined that the assessment be reduced to nil.
As a result of the Court’s assessment, the $31.2 million contingent liability that has been disclosed in the financial statements
since 2018 is no longer recognised. In addition, a $7.5 million payment made to the SRO in 2020, which is currently recognised in
current assets within the consolidated statement of financial position at 31 December 2021, will be returned to the Group in 2022.
No other matters or circumstances have arisen subsequent to the end of the financial year that have 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.
170
Notes to the consolidated financial statements continuedViva Energy Group Limited – Annual Report 2021 N
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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 2021 set out
on pages 117 to 170 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 2021 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 31 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 31 Deed of Cross Guarantee to
the financial statements.
The basis of preparation on page 122 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 2021.
The declaration is made in accordance with a resolution of the Directors.
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Robert Hill
Chairman
21 February 2022
Scott Wyatt
CEO and Managing Director
171
Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Independent auditor’s report
172
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 2021 and of itsfinancial 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 2021●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 significant accounting policiesand other explanatory information●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. Viva Energy Group Limited – Annual Report 2021 C
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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 geographic and 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 auditwe used overall Group materiality of $18.5 million,which representsapproximately 2% of the Group’s earnings beforeinterest, tax, depreciation andamortisation (EBITDA).●We applied this threshold,together with qualitativeconsiderations, to determinethe scope of our audit and the nature, timing and extent ofour audit procedures and toevaluate the effect ofmisstatements on thefinancial report as a whole.●We chose Group EBITDAbecause, in our view, it is themost appropriate benchmarkto assess the performance ofthe Group.●We utilised a 2% thresholdbased on our professionaljudgement, noting it is withinthe range of commonlyacceptable thresholds.●Our audit focused on where theGroup made subjectivejudgements; for example,significant accountingestimates involvingassumptions and inherentlyuncertain future events.●Amongst other relevanttopics, we communicated thefollowing key audit matters tothe Audit and RiskCommittee:−Refining assetsassessment ofimpairment indicators−Environmental and assetretirement provisions●These are further described inthe Key audit matters sectionof our report.Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Independent auditor’s report continued
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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 Refining assets assessment of impairment indicators (Refer to note 11) [$426.2m] As at 31 December 2021, the Group’s property, plant and equipment balances include $426.2m of refining assets. As required under AASB 136 Impairment of assets, each period the Group assesses all property, plant and equipment balances for any impairment indicators. In the current period, the Group has concluded that no impairment indicators exist. During the period, Viva entered into a long-term Fuel Security Package (FSP) with the Federal Government which has reduced the Group’s downside risk to the Geelong Refining Margin (GRM). While the introduction of the FSP has removed a degree of uncertainty associated with the carrying value of the refining assets, this remains a key audit matter because of the judgement involved in assessing impairment indicators and the financial significance of the refining assets. We performed the following procedures amongst others: ●Evaluated the Group’s assessment ofimpairment indicators, including theconclusions reached.●Considered the movement in oil price andasset performance over the period, and theongoing nature of refining assets.●Verified the mathematical accuracy of thecalculation for the FSP margin marker in line with the requirements under the FSP.●Considered the eligibility for payments madeunder the FSP. ●Evaluated the adequacy of disclosures innote 11 in light of the requirements ofAustralian Accounting Standards. Based on the procedures performed, we noted no material issues from our work. Viva Energy Group Limited – Annual Report 2021 a
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Key audit matter How our audit addressed the key audit matter Environmental and asset retirement provisions (Refer to note 17) [$138.0m] As at 31 December 2021, the Group recognised the following provisions: ●Environmental provisions: $43.5m●Asset retirement provisions: $94.5mThe 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 asample of the provision calculations. ●Evaluated the completeness of the provisionsby reviewing the litigation register and boardminutes to identify any legal notices inrelation to environmental obligations andchecked that these were appropriatelyconsidered in the determination of theprovisions. ●Assessed the competence, experience andobjectivity of the internal and externalexperts used by the Group in preparing therelevant calculations for the determinationof the provisions.●Corroborated a sample of estimates used inthe provision calculations to third partysupport or estimates made by externalexperts. ●Performed sensitivity analysis over keyestimates and assumptions, such as thediscount and inflation rates used by makingchanges that we consider reasonablypossible to assumptions, to assess the impacton the asset retirement provisiondetermined. Based on the procedures performed, we noted no material issues from our work. 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 2021, but does not include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we obtained included the Operating and financial review, Board of Directors, Executive Leadership Team and Directors’ report. We expect the remaining other information to be made available to us after the date of this auditor's report. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Independent auditor’s report continued
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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. When we read the other information not yet received, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action to take. 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. Viva Energy Group Limited – Annual Report 2021 a
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Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 89 to 109 of the directors’ report for the year ended 31 December 2021. In our opinion, the remuneration report of Viva Energy Group Limited for the year ended 31 December 2021 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 Melbourne Partner 21 February 2022 Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 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 agreement1.
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.
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Viva Energy Group Limited – Annual Report 2021 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.
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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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Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021 Additional information
The information below is current as at 3 March 2022.
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 3 March 2022, 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
Pendal Group Limited
Challenger Limited
VIP Energy Australia B.V.
Date notice received
Number of shares1
Percentage of capital2
9 February 2022
24 December 2021
17 July 2018
78,183,777
97,717,191
871,845,097
5.04%
6.28%
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.
In 2020 and 2021, the Company undertook two share consolidations where each share in the Company held on 9 October 2020 was consolidated
into 0.84 shares and each share in the Company held on 20 October 2021 was consolidated into 0.97 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. In 2020 and 2021,
the Company bought on market and cancelled shares pursuant to its on-market buy-back programs and as at 3 March 2022, has 1,551,490,462
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 3 March 2022 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
2,524
4,579
1,907
1,651
87
10,748
1,312,518
11,787,745
14,311,374
37,485,958
1,486,592,867
1,551,490,462
0.08%
0.76%
0.92%
2.42%
95.82%
100.00%
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Viva Energy Group Limited – Annual Report 2021 Top 20 shareholders
The 20 largest registered shareholders as at 3 March 2022 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 NOMINEES PTY LTD
ARGO INVESTMENTS LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
10 SCOTT WYATT
11 UBS NOMINEES PTY LTD
12 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
13 NETWEALTH INVESTMENTS LIMITED
14 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
15 PACIFIC CUSTODIANS PTY LIMITED
16 MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
17 NAVIGATOR AUSTRALIA LTD
18 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
19 MR DENIS JEAN-MARC URTIZBEREA
20 WARBONT NOMINEES PTY LTD
Number of
shares held
710,379,386
281,506,242
160,146,364
128,451,745
68,871,386
19,565,447
18,601,825
13,909,580
9,332,007
7,769,487
7,546,413
7,176,829
5,689,665
4,966,658
4,467,528
3,431,657
2,880,855
2,529,666
2,290,946
2,071,975
Percentage
45.79%
18.14%
10.32%
8.28%
4.44%
1.26%
1.20%
0.90%
0.60%
0.50%
0.49%
0.46%
0.37%
0.32%
0.29%
0.22%
0.19%
0.16%
0.15%
0.13%
Total
1,461,585,661
Balance of register
89,904,801
Grand total
1,551,490,462
94.21%
5.79%
100.00%
Holders with less than a marketable parcel
As at 3 March 2022, there were 177 shareholders holding less than a marketable parcel of shares (A$500) based on the closing
market price of $2.52.
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 2021 to 3 March 2022) 5,341,237 shares were purchased on-market at an average price
of $2.25 per share.
On-market buy-back
On 24 August 2021, the Company announced its intention to conduct an on-market buy-back program. As at 3 March 2022,
the Company has bought back 7,924,716 shares under this program.
Unquoted equity securities
As at 3 March 2022, the Company has on issue:
• 2,854,674 Deferred Share Rights granted under the Company’s STIP and LTIP, held by 64 employees; and
• 4,542,795 Performance Rights granted under the Company’s LTIP, held by 7 employees.
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Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021
Historical information
For the years ended 31 December
Consolidated results
Revenue
Group Underlying EBITDA (RC)
Underlying EBITDA (RC) – Retail
Underlying EBITDA (RC) – Commercial
Underlying EBITDA (RC) – Refining
Underlying EBITDA (RC) – Corporate
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 paid
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
2021
2020
pro forma1
2019
pro forma1
2018
pro forma1
2017
pro forma1
15,900.0
12,409.9
16,541.6
16,395.1
15,660.5
484.2
187.5
217.3
103.4
(24.0)
191.6
191.6
438.1
185.1
95.2
14.6
14.5
4.1
13,105
1,345
41.2
7.1
2.49
1.66
2.35
244.6
235.4
156.4
(127.9)
(19.3)
33.4
22.8
80.3
158.5
104.2
(1.9)
(1.9)
0.83
12,339
1,339
34.8
3.1
2.12
1.13
1.91
392.9
149.3
186.2
79.0
(21.6)
157.1
153.0
340.3
161.7
137.4
5.8
5.7
4.7
531.5
198.6
243.4
99.0
(9.5)
299.6
155.4
535.7
241.3
(0.2)
29.8
29.4
4.8
634.3
255.8
135.9
257.8
(15.1)
375.1
n/a
445.8
233.6
74.6
n/a
n/a
n/a
14,695
1,292
14,046
1,255
14,151
>1,100
42.0
6.6
2.58
1.72
1.92
40.1
7.4
2.51
1.66
1.80
40.8
10.2
n/a
n/a
n/a
n/a
1,551
1,608
1,945
1,945
1. Pro forma adjustments have been made to ensure consistency and comparability with reported 2021 performance. Each of the prior year
comparatives have been restated to reflect the reporting changes implemented in 2021, the key four changes being adjustments to lease
accounting, allocation of supply, corporate and overhead costs, segment reclassification for wholesale volumes and FX and derivatives reporting.
In addition, for 2018, pro forma adjustments include the impact of AASB 16 Leases 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 2017, pro forma adjustments include the impact of AASB 16 Leases
and the financial information included relates to Viva Energy Holding Pty Ltd.
2. The reporting changes referred to above also result in a reclassification of lease related finance costs and repayments of lease liability into
operating cash flow before capital expenditure. The 2020 comparison has been restated. There is no impact on the 2018 and 2017 years
as these years were not restated on the adoption of AASB 16 Leases.
3. Excludes the special dividend of 5.94 cents per share.
4. Alliance, Dealer Owned, Westside Petroleum and Liberty Platforms.
182
Viva Energy Group Limited – Annual Report 2021 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 Annual Report 2021,
Corporate Governance Statement 2021,
shareholder and Company information,
news announcements, financial reports,
historical information and background
information on Viva Energy, please visit
our website at www.vivaenergy.com.au.
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Consolidated financial statementsNotes to the consolidated financial statementsDisclosuresAdditional informationDirectors’ declarationIndependent auditor’s reportHistorical financial informationCorporate directoryViva Energy Group Limited – Annual Report 2021