TOGETHER WE
ARE STRONGER
VIVO ENERGY PLC
ANNUAL REPORT & ACCOUNTS 2020
TOGETHER THROUGH
ADVERSITY
These are exceptional times, and this has been an
extraordinary year.
As soon as the pandemic became apparent, our markets
in Africa took swift action to restrict mobility in order
to help prevent the spread of COVID-19. This effective
closure of parts of the economy led to a dramatic
reduction in travel which tested the resilience of
our business.
Its underlying strength has enabled Africa to deal
with threats in the past and to bounce back, energised
by a youthful population and a growing middle class.
As a young, energetic company with a growing
network, we have pulled together during this crisis.
We played our part, not just as a business, but with
our partners and as a pillar of our local communities.
The future of Vivo Energy is inseparable from the
bright future of our continent. Whatever the immediate
future brings, we look forward with confidence.
The Board and I are proud
of how our teams across the
Group quickly responded to
the impact of COVID-19 –
keeping the business running,
supporting each other and our
stakeholders, and demonstrating
true resilience.”
JOHN DALY
CHAIRMAN
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
2020 HIGHLIGHTS
– Played our part by prioritising the safety
of our people, our customers and our
communities throughout the pandemic.
– Took swift action at the start of the
pandemic, maintaining the resilience of our
business and the strength of our balance sheet.
– Raised $350 million in new long-term
debt through completion of our inaugural
bond transaction.
– Delivered an industry-leading safety record
during the year.
– Achieved a fast pace of recovery as mobility
restrictions were eased, with H2 performance
broadly in line with H2 2019.
– Further integrated sustainability
into our long-term thinking.
– Continued to deliver against our strategy,
despite the pandemic – expanding our
network, growing Non-fuel retail and
embracing digital.
REVENUES
US$ million
VOLUME
Million litres
GROSS CASH PROFIT
US$ million
6,918
-17%
9,637
-7%
697
-6%
ADJUSTED EBITDA
US$ million
NET INCOME
US$ million
RECOMMENDED DPS
Cents per share
360
-16%
90
-40%
3.8
0%
Final dividend in respect of full
12 months of 2020 and in line with
FY proposed dividend for 2019.
COMMUNITY
INVESTMENT SPEND
US$ million
SERVICE STATIONS
ADDED
Net total
HSSEQ –
TOTAL RECORDABLE
CASE FREQUENCY
4
104
Non-GAAP measures are explained and reconciled on pages 40 to 41.
Per million
exposure hours
0.10
CONTENTS
STRATEGIC REPORT
2020 highlights
Together we are stronger
Who we are
Where we operate
Chief Executive Officer’s statement
Investment case
Business model and value creation
Market overview
Strategic objectives
Key performance indicators
Segment review – Retail
Segment review – Commercial
Segment review – Lubricants
Financial review
Resources and relationships
Non-financial information statement
Risk management
Long-term viability and going concern
01
02
08
10
12
16
18
20
22
24
26
28
30
32
42
59
60
70
GOVERNANCE
Chairman’s statement
Board Leadership and Company Purpose
Board of Directors
Senior Executive Team
Division of Responsibilities
Composition, Succession and Evaluation
Nominations and Governance Committee Report
Audit and Risk Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ responsibilities
72
74
78
80
82
86
87
90
94
113
116
FINANCIAL STATEMENTS
Independent Auditors’ Report
118
Consolidated statement of comprehensive income 128
129
Consolidated statement of financial position
130
Consolidated statement of changes in equity
131
Consolidated statement of cash flows
132
Notes to the consolidated financial statements
172
Company statement of financial position
173
Company statement of changes in equity
174
Notes to the Company financial statements
OTHER INFORMATION
Shareholder information
Historical financial information
Glossary
Key contacts and advisers
Cautionary statement
184
186
188
190
191
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
TOGETHER WE ARE STRONGER
TOGETHER WE ARE STRONGER
WE ARE
TOGETHER
RESILIENT
WE ARE LIVING IN UNPRECEDENTED
TIMES. BUT TOGETHER WE ARE RESILIENT
AND I KNOW THAT BY CONTINUING TO
STAY CALM, RESOURCEFUL AND FOCUSED
ON SUPPORTING EACH OTHER WE WILL
OVERCOME THIS TOGETHER.”
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
02
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
STRATEGIC REPORT SUPPORTING OUR PARTNERS
From the earliest days of the pandemic, we rapidly
took action to protect our people and our partners.
Thanks to the fast response and dedication of our
innovative and quick‑thinking teams we were able
to keep our business running and to support our
customers throughout the lockdowns.
Protecting the health and safety of our people and
customers remained our number one priority –
adapting our service stations, depots and facilities
to make them safe and secure.
We implemented a range of projects to help our
local communities – including supporting many of
our host governments’ COVID‑19 funds, providing
free fuel for healthcare workers, blending hand
sanitisers at our lubricant blending plants, supporting
e‑learning applications for children whose schools had
closed, and providing supplies to those most in need
through local NGOs.
And we protected jobs – working closely with our dealer
network and our transport partners to protect the jobs
of the front line staff employed by them while volumes
were low.
Throughout the pandemic, we supported and
protected our stakeholders – playing our part,
and demonstrating that together we are resilient.
COMMUNITY INVESTMENT
$4m
donated to community
investment projects
and host governments’
COVID-19 funds
130+
Community
investment
projects
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
03
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT TOGETHER WE ARE STRONGER CONTINUED
TOGETHER
WE ARE MORE
SUSTAINABLE
New electric
vehicle charging
point in Reunion
60,000
tonnes of CO2 savings
over 10 years
3.9mwp
solar photovoltaic
power plant
04
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
0STRATEGIC REPORT ENSURING LONG-TERM
SUSTAINABILITY
Our vision is to become the most respected energy
business in Africa and, since our inception in 2011,
we have embedded sustainability practices into
our business. We aim to be good stewards of the
environment, while developing our people and
supporting our communities.
As part of the Group’s progress we have continued
to evolve and enhance our sustainability practices to
ensure we can achieve our vision.
We are now more formally embedding climate
change into our governance and strategy. This will
enable us to play our part in meeting environmental
policy commitments, while at the same time satisfying
the growing demand for fuel on the African continent
in the years ahead.
We are particularly proud of securing our first commercial
solar contract, which will provide a hybrid solar/fuel
energy solution to the Nampala gold mine, in Mali.
The plans and actions we initiate today are shaping our
future – ensuring that together we are more sustainable.
THE NAMPALA PROJECT UNDERLINES
OUR COMMITMENT TO DEVELOPING
INNOVATIVE PRODUCTS, SERVICES
AND PRACTICES THAT REDUCE IMPACT
ON THE ENVIRONMENT.”
ERIC GOSSE
EXECUTIVE VICE-PRESIDENT BUSINESS DEVELOPMENT,
SUPPORT AND INDIAN OCEAN ISLANDS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
05
0OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT TOGETHER WE ARE STRONGER CONTINUED
TOGETHER
AFRICA WILL
EMERGE
STRONGER
5.1%
expected average
annual GDP growth
in our markets
from 2021 to 2025
23African countries
with a Retail footprint
06
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
STRATEGIC REPORT A RESILIENT BUSINESS ON
A VIBRANT CONTINENT
Although 2020 was an unprecedented year, the macro
drivers behind continued growth in fuel demand in
our markets remained unchanged. We expect this
to continue as Africa emerges from the impacts of
the pandemic.
We’re a highly resilient business, integral to the lives
of our millions of customers who rely on our products
to move around the continent. And we operate in a
highly resilient continent, with an exceptionally young
and growing population, with more vehicles on the
road every year.
We are excited about future opportunities ahead of us
and will continue to adapt in order to capitalise on them.
The long-term growth opportunities across
the continent remain undimmed, and together
Africa will emerge stronger.
60%
of Africa’s population
are younger than
25 years old
THE MACRO DRIVERS FOR INCREASING
FUEL DEMAND – AND VIVO ENERGY’S
GROWTH – REMAIN STRONG.”
JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
07
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RETAIL
Retail is the engine that powers our growth. At the
end of 2020, our network comprised 2,330 service
stations across the continent – making us the second
largest retailer in Africa outside South Africa, in terms
of site numbers.
COMMERCIAL
Our Commercial business is founded on a proven
proposition to thousands of customers. We not only
ensure a reliable supply of high-quality fuels and energy
to a wide range of customers, but also support those
products with extensive, trusted services.
LUBRICANTS
We sell lubricants to Commercial customers and Retail
consumers in our countries of operation, and also export
to more than ten additional African markets.
WHO WE ARE
A COMPANY
ON THE MOVE
We’re a market-leading, pan-African retailer
and distributor of high-quality Shell and
Engen-branded fuels and lubricants to
Retail and Commercial customers across
the continent, with a growing Non-fuel
retail offering.
Operating in robust and growing markets,
we make our customers’ lives easier and
their experience with us more convenient,
enjoyable and rewarding.
How? By providing quality products and
services that meet their needs, supported
by high standards of safety, innovation and
service – in every area where we operate.
ADJUSTED EBITDA BY SEGMENT
US$ million
Retail
Commercial
Lubricants
216
92
52
Non-GAAP measures are explained and reconciled on pages 40 to 41.
08
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09
RETAIL FUELSale of petrol and diesel fuels at Shell and Engen-branded service stations, across 23 countries.CORE COMMERCIALSupplying mining, construction, transport, power and industrial companies. We also supply LPG, primarily to consumers, as well as fuels to the wholesale market.RETAIL LUBRICANTSProviding products to consumers at our service station forecourts and lubricant bays and also at oil shops, repair shops, service centres and resellers through a network of distributors.NON-FUEL RETAILMulti-branded convenience retail shops, quick service and fast casual restaurants, and other services including lubricant bays, car washes and ATMs.AVIATION & MARINESupplying aviation fuel, plus bunkering for marine traders and other shipping companies.COMMERCIAL LUBRICANTSSupplying specialist lubricants to mining companies and B2B customers, and also exporting to other African markets.STRATEGIC REPORT HIGHLIGHTS
– Mobility in our markets was impacted by COVID-19
restrictions, which in turn impacted volumes.
However, volumes recovered rapidly as restrictions
eased, demonstrating the resilience of our business.
– Improvement of our existing network with
320 service stations renovated during the year.
– Expansion of retail network with a net total
of 104 service stations added in 2020.
– 141 sites automated during the year, helping improve
service and efficiency.
– Development of Non-fuel retail offering with
a net total of 58 new shops and pharmacies and
20 food outlets added at our service stations, plus
new food joint ventures formed during the year.
– Continued growth of loyalty programmes across the
Group, with a total of more than 1.4 million members.
GROSS CASH PROFIT INCLUDING NON-FUEL RETAIL
US$ MILLION
2020
2019
2018
2017
2016
VOLUME
million litres
GROSS CASH UNIT MARGIN
$/’000 litres
5,456
-8%
761
+7%
1 Excludes Non-fuel retail.
HIGHLIGHTS
– Signed first solar/fuel hybrid project for
a Commercial customer – to provide solar
power to a mine in Mali.
– Achieved growth in our consumer LPG business,
with plans to expand our cylinder distribution
during 2021.
– Maintained and grew our Commercial fuels
business through existing and new customers
and seizing opportunities with fuel resellers.
– Enhanced and automated our Commercial sales
tools and processes for greater efficiency and
improved customer relationship management.
– Aviation and Marine volumes severely impacted
by travel restrictions imposed as a result of
COVID-19.
HIGHLIGHTS
– Consolidated and grew the consumer
Lubricants business.
– Achieved significant growth in motorcycle
oil sales.
– Expanded lubricants export footprint in
the Democratic Republic of the Congo
and to Ethiopia, however there were
lower sales in several export markets.
– Executed Retail lubricants recovery programme
to re-engage with customers in a COVID-safe
manner after mobility restrictions were eased.
– Introduced Shell-branded lubricants to a number
of our Engen-branded markets.
– Lockdown restrictions impacted Commercial
lubricants volumes in the construction and power
sectors, however significant improvements were
registered in the second half.
GROSS CASH PROFIT
US$ MILLION
2020
2019
2018
2017
2016
VOLUME
million litres
GROSS CASH UNIT MARGIN
$/’000 litres
4,045
-8%
45
-8%
GROSS CASH PROFIT
US$ MILLION
2020
2019
2018
2017
2016
VOLUME
million litres
GROSS CASH UNIT MARGIN
$/’000 litres
136
-1%
570
+4%
438
454
428
429
376
181
214
181
162
145
78
75
71
75
59
08
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
09
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT WHERE WE OPERATE
A STRONG AND
GROWING PRESENCE
At the end of 2020, our retail network comprised 2,330 service
stations, spanning 23 countries. Despite the impact of COVID-19,
we added a net total of 104 service stations during the year.
We also added a net total of 58 convenience retail shops and
pharmacies and 20 food outlets at our service stations.
We continue to operate significant Commercial and Lubricants
businesses across the continent.
01 TUNISIA
Total volume
Service stations
Market position
02 MOROCCO
Total volume
Service stations
Market position
03 CAPE VERDE
Total volume
Service stations
Market position
04 SENEGAL
Total volume
Service stations
Market position
05 MALI
Total volume
Service stations
Market position
06 GUINEA
Total volume
Service stations
Market position
07 CÔTE D’IVOIRE
Total volume
Service stations
Market position
08 BURKINA FASO
Total volume
Service stations
Market position
1,060
168
2
1,925
371
2
164
27
2
472
124
2
237
46
1
470
113
2
618
225
2
374
83
2
09 GHANA
Total volume
Service stations
Market position
10 UGANDA
Total volume
Service stations
Market position
11 KENYA
Total volume
Service stations
Market position
12 NAMIBIA
Total volume
Service stations
Market position
13 BOTSWANA
Total volume
Service stations
Market position
14 MADAGASCAR
Total volume
Service stations
Market position
15 MAURITIUS
Total volume
Service stations
Market position
491
232
2
427
160
2
1,235
245
1
350
68
1
271
80
2
159
75
4
355
50
1
Market position provided by CITAC,
and based on volumes.
Total volume is measured in million litres,
and excludes volume related to supply trading,
not allocated to countries.
16 GABON
Total volume
Service stations
Market position
17 RWANDA
Total volume
Service stations
Market position
18 ZAMBIA
Total volume
Service stations
Market position
19 MALAWI
Total volume
Service stations
Market position
20 TANZANIA
Total volume
Service stations
Market position
21 REUNION
Total volume
Service stations
Market position
22 MOZAMBIQUE
Total volume
Service stations
Market position
23 ZIMBABWE
Total volume
Service stations
Market position
93
24
4
60
31
3
101
41
4
40
25
4
85
20
9
189
35
3
98
24
3
132
63
4
10
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11
STRATEGIC REPORT Our markets with Shell-branded service stations
Our markets with Engen-branded service stations
10
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
11
01040508060709121314102017161802 03112223191521OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S STATEMENT
If 2019 was a year of firsts for
Vivo Energy, 2020 was a year like
no other. In 40 years of working,
across four continents and through
many macroeconomic cycles,
I have never experienced the
conditions we saw during the year.
My overriding memory of the year, however,
is one of pride and togetherness. It was
remarkable how each and every one of our
employees, contractors and partners stood
up and made a difference in the fight against
COVID-19.
Our position at the heart of our host
economies means that we played a critical
role in fuelling the continent’s response to
COVID-19, not only by keeping sites open and
customers fuelled, but also by supporting our
many stakeholders through a difficult time.
IMPACT OF COVID-19
ON OUR MARKETS
We started the year full of optimism, with
the integration of the Engen-branded markets
effectively completed, and strong performance
in our Shell-branded markets. It was only late
in Q1 that we started to feel the impact from
measures to prevent the spread of COVID-19
in our markets. However, recognising the
risk posed by the spread of the virus, we had
already taken the first of many actions to
protect our people, preventing international
travel from the end of January, and updating
existing business continuity plans to reflect
potential scenarios.
Few would have foreseen that at the
pandemic’s peak in April and May, nine of
our 23 markets would follow Europe into
complete lockdown of their economies, as a
preventive measure against the spread of the
virus. These markets represented 50% of our
Group volumes the previous year, with some
of these markets experiencing declines of up
to 70% in monthly volumes during H1. All of
our other host countries also implemented
movement restrictions such as curfews
as well as social distancing measures.
Vivo Energy’s first priority has, and always
will be, the health and safety of our people,
our customers, and the communities where
we operate. We acted quickly and decisively,
implementing a range of preventive and
protective health and safety measures
including remote working and split shift
patterns. We also took actions to protect
our customers when they visit our sites.
The resilience that the African continent has
shown during the COVID-19 pandemic has
been nothing short of remarkable. At the
outset of the pandemic, many experts rightly
feared a human and economic catastrophe
across the region, however, Africa is a young
and vibrant continent, with a median age in
our host countries of less than 25 years old.
In facing a disease that disproportionately
impacts the old, this demographic should
provide real protection against major illness.
It has been encouraging to see that healthcare
systems have not been overrun, and the
majority of our countries have tried to keep
their economies open and their people in
employment following the initial lockdowns.
TOGETHER
WE MADE
A DIFFERENCE
12
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13
STRATEGIC REPORT If 2019 was a year of firsts for
Vivo Energy, 2020 was a year
like no other.”
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
I do not wish to underplay the impact of
the pandemic on our markets, with lower
tourism, investment and economic activity,
and uncertainty remains as long as the virus
persists, but these are markets that have
not been knocked off course. The young
and growing population is driving economic
development and Vivo Energy is helping to
fuel that growth. The IMF expects GDP in
2020 to have fallen by 3.1% on average across
our operating countries (excluding Reunion),
but following a strong 4.5% rebound forecast
for 2021, expects average GDP growth of 5.2%
between 2022 and 2025. This would be one
of the highest growth rates in the world – and
we expect that it, together with our focus on
growing market share, will provide a strong
base for future growth.
DECISIVE ACTION TO
PROTECT OUR BUSINESS
AND ENABLE RECOVERY
While the scale of the changes to the
operating environment were unprecedented,
our reaction was testament to the
well-established culture and operating model
we have in Vivo Energy. Our decentralised
model meant that we had the right people
on the ground to react quickly to the
changing conditions, managing working capital,
credit and cash as well as working with our
stakeholders to make sure we supported
each other. The investment in our Enterprise
Resource Planning (ERP) system meant
that we had real-time data with which to
inform decision-making, and this helped the
Senior Executive Team to make the right
decisions and guide our local teams.
12
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13
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
As a result, we were able to limit the
many impacts of the pandemic on our business,
reducing supply and protecting our balance
sheet through April and May. Fuel is, and will
continue to be, the lifeblood of our economies,
enabling economic activity and development.
As the strictest mobility restrictions were
lifted, demand returned rapidly at our retail
sites in June and through the second half of the
year. Only the Aviation and Marine businesses,
which have represented less than 4% of the
Group gross cash profit on average over the
past three years, have remained subdued due
to international travel restrictions.
The swift demand recovery and our nimble
supply chain meant that we have been able to
deliver strong performance through the second
half of the year, which limited the reduction
in full year gross cash profit to 6% against 2019.
This fall is driven by volumes being down just
7% against 2019, despite a reduction of volumes
during April and May of approximately 30%,
the Aviation and Marine impact and restrictions
continuing through the year in many markets.
We also saw Group gross cash unit margin
remain largely stable over the previous year
at $72 per thousand litres, with H1 gross cash
unit margin impacted by inventory impacts,
and H2 seeing a reversal of this and benefiting
from the mix effect as well as the supply and
pricing environment.
This robust performance led to adjusted
EBITDA of $360 million, down 16% against the
previous year, and Basic earnings per share of
6 cents, 45% lower than 2019 as our normally
beneficial operating leverage worked against
us due to the lower volumes.
While the full year performance was lower
than 2019, H2 2020 performance was in line
with the previous year and demonstrates
the resilience of our business despite the
turbulence in the markets.
2020 was a challenging year on a number
of levels, and I was delighted at how we
responded. However, our share price has
not recovered in line with performance and
remains at disappointing levels. I believe that
as we deliver against our growth plans, and
show our commitment to shareholder returns,
this will be recognised in time by the market
and reflected in our valuation.
We delivered a strong
performance through the
second half of the year,
which limited the reduction
in full year gross cash profit
to 6% against 2019.”
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
SUPPORTING OUR STAKEHOLDERS
With a vision to become the most respected
energy business in Africa, we’ve always
aimed to provide a positive impact for all
of our stakeholders. I believe this is firmly
demonstrated by our actions through the
current pandemic and reflects the integration
of sustainable business practices into our
culture and operations.
We have supported and protected our
stakeholders through the pandemic and
worked closely with our dealer network
and our transporters to protect the jobs of
the front line staff employed by them while
volumes were low. We have also played our
part in supporting the communities in which
we operate by delivering over 130 community
investment projects, ranging from donations
of food, fuel and protective equipment to
the blending of hand sanitiser.
We have continued to carefully manage our
impact on the environment, keep our people
safe, healthy, well trained and supported, as well
as having stringent oversight to mitigate some
of the inherent risks in our markets around
fraud, bribery and corruption.
One area that has rightly come to prominence
during the past year is climate change, and we
outline further in the report our commitment
to playing our part in reducing the impact of
carbon emissions and the long-term transition
to low-carbon energies. This fits firmly with
our purpose to safely provide innovative
and responsible energy solutions to Africa,
which enable growth and development of
the continent and its people. In our markets
we expect there will be a significantly longer
transition than in Europe, due to a lack of
infrastructure, affordability and reliable access
to electricity, meaning that demand for fuels are
forecast to continue to grow rapidly over the
medium term. We have a central part to play in
making sure those fuels are as clean as possible,
that we provide our customers with the
offerings they need and that when commercial
alternatives become a reality, we will be
well-positioned to capitalise on them.
14
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15
STRATEGIC REPORT CAPITAL STRUCTURE
Maintaining a conservative balance sheet in
order to provide maximum future flexibility
is a core element of our strategy. Due to the
nature of our operating model, each market
self-funds its needs through both organic cash
generation, as well as access to local facilities.
These local facilities in aggregate amount
to $1.6 billion, with each country’s access to
finance scaled according to its needs. The level
of access to local facilities and our close
management of working capital meant that the
business was comfortably able to weather the
storm at the height of the mobility restrictions.
At the Group level, we’ve explored for
some time the opportunity to re-finance
an amortising facility that was due to mature
in 2022, in order to remove the need to
repay circa $80 million of capital per annum.
In September 2020, bond market conditions
improved and we successfully priced a
$350 million debt offering with a seven-year
tenor at 5.125%. The offering was multiple
times oversubscribed and increases the Group’s
flexibility for future capital allocation while
significantly extending the debt maturities at
attractive rates. The bond has an investment
grade rating of Baa3 from Moody’s and ratings
of BB+ from Fitch and S&P reflecting the
underlying strength of our business model
and financial position.
Earlier in the year, as a result of the uncertainty
created by the pandemic, the Group did not
pay the final dividend in respect of 2019 in
June 2020, as previously expected. This was
a prudent decision taken by the Board at the
height of the restrictions and impact on the
business. The Board also opted not to pay an
interim dividend in respect of H1 2020 at the
half-year results due to the short time period
of recovery that had been underway. However,
following the continued recovery in trading
through the third quarter, the Board declared
an interim dividend of $34 million, which is
the amount that would have been paid to
shareholders had the final dividend of the year
ended 31 December 2019 been paid, rather
than withdrawn.
Due to the positive performance continuing
in Q4, the Board has recommended a final
dividend of 3.8 cents per share ($48 million)
in respect of 2020. This is in line with our
stated progressive dividend policy and equal
to the proposed 2019 full year dividend of
3.8 cents, despite the impacts of COVID-19
on the business during the year. If approved
at our AGM, the final dividend will be paid to
shareholders on 25 June 2021.
LOOKING AHEAD
The Group experienced a swift recovery
in H2 2020, delivering strong financial
performance and has growing confidence for
the future, with the positive H2 2020 trends
expected to continue into 2021. We navigated
the first 12 months of the pandemic successfully,
strengthening our market position in our key
markets and continuing to invest in growing
our network and offerings. Assuming the level
of restrictions in our operating countries do
not materially change, we anticipate that the
progressive recovery in the Retail segment,
driven by increasing mobility, will support
business performance, with Aviation and
Marine remaining subdued. We continue to
invest in growing the business, with capital
expenditure expected to be in line with 2020
levels, at around $160 million as we invest in
growing and upgrading the retail network
and our offerings across all 23 countries,
with 90-110 net new sites targeted for the year.
We have leading market positions in structural
growth markets across Africa, which are
expected to see a rapid recovery in economic
growth in 2021 and beyond, driven by the
macro fundamentals on the continent.
The pandemic slowed, but has not stopped
this growth, and with a young and growing
population, an emerging middle class and
increasing car penetration, fuel demand in
our markets will continue to grow in the
coming years, underpinning our long-term
growth ambitions.
Throughout 2020 we maintained a strong
balance sheet, and in Q3 completed a bond
refinancing, which enhanced our capital
structure and provides improved flexibility
for capital allocation. Looking forward, we are
focused on continuing to capture the growth
opportunity that exists within our markets,
and believe that at the same time, the level
of cash flow generated within the Group and
the balance sheet flexibility means that we are
able to support a higher level of shareholder
returns. We demonstrated our commitment
to dividends by maintaining our progressive
policy through the pandemic and believe that
now is the right time to increase the minimum
payout ratio from 30% to 50% of attributable
net income, and intend for future dividends to
grow in line with earnings.
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
9,637
10,417
9,351
9,026
8,389
360
431
400
376
302
VOLUME
MILLION LITRES
2020
2019
2018
2017
2016
ADJUSTED EBITDA
US$ MILLION
2020
2019
2018
2017
2016
14
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
15
GROSS CASH PROFIT decreased 6% year-on-year$697mFINAL DIVIDEND$48mHSSEQ Strong HSSEQ performance with Total Recordable Case Frequency of 0.10 incidents per million exposure hours0.10OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INVESTMENT CASE
WHY
INVEST?
As a market-leading retailer and distributor of fuels and
related products to consumers and industries across
Africa, Vivo Energy is in prime position to capitalise on
the consistent growth in fuel demand in our emerging
markets, driven by increasing car penetration, a growing
middle class and major infrastructure investments.
LEADER IN
STRUCTURAL
GROWTH
MARKETS
We have leading market positions in markets
which continue to experience strong growth
in underlying fuel demand, driven by the macro
fundamentals on the continent. These positions
enable significant scale benefits for the Group
while providing the platform to capture
a growing share of the long-term growth
opportunity that exists.
RESILIENT
BUSINESS MODEL,
WITH DIVERSIFIED
LONG‑TERM PROFIT
DRIVERS
Our geographic diversification and
supply of a critical product for consumers,
industries and economies, gives us great
resilience. This, together with the cost-plus
nature of our operations, means our margins
aren’t correlated to the oil price, and provides
growing returns for our stakeholders over
the long term.
TOP THREE MARKET
POSITION IN
FIVE‑YEAR AVERAGE
ROACE OF
17of our 23 markets
20%
Non-GAAP measures are explained
and reconciled on pages 40 to 41.
We believe in operating in the right way and providing
tangible benefits for all of our stakeholders. We do this by
providing high-quality essential fuels, creating a well-trained
and supported workforce, collecting and paying taxes,
and operating to the highest standards of governance.”
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
16
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17
STRATEGIC REPORT STRONG CASH
GENERATION AND
SUPPORTIVE WORKING
CAPITAL DYNAMICS
We’re a highly cash generative business, driven
by disciplined capital allocation and supported
by negative working capital dynamics in our
Retail segment. This enables us to continue
to self-fund our high return investment into
our fuel and Non-fuel retail offerings, while
providing consistent returns to shareholders,
and maintaining a conservative capital structure.
CUSTOMER
FOCUSED, NIMBLE
AND LOCAL
We run a lean, flat and customer-centric
organisation, with locally empowered
management teams. Our ‘Focus, Simplify,
Perform’ operating model means we can
react quickly to changes in our countries.
Together with our investments in technology
and loyalty programmes, this enables us
to tailor our offerings to customer needs.
MAKING A
POSITIVE IMPACT
IS AT THE HEART
OF OUR PURPOSE
Our purpose is to safely provide innovative and
responsible energy solutions to Africa, which
enable the growth and development of the
continent and its people. This means providing
tangible benefits for all of our stakeholders,
fuelling economic activity, maintaining a
well-trained and supported workforce,
and operating to the highest standards of
governance. We’re also working to reduce our
environmental impact and making sure we
are the long-term partner of choice for our
customers and communities.
FIVE‑YEAR AVERAGE ANNUAL
ADJUSTED FREE CASH FLOW OF
CUSTOMERS SERVED
ON AN AVERAGE DAY
WE IMPLEMENTED
MORE THAN
$180m
750,000
130community investment
projects during 2020
16
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17
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT BUSINESS MODEL AND VALUE CREATION
HOW WE
CREATE VALUE
Our resilient and integrated business model
was tested and proven during the COVID-19
pandemic. This unchanged model, together
with our strong operating culture of focusing,
simplifying and performing, drives competitive
advantages in our markets and supports our vision
to become the most respected energy business
in Africa.
OUR RESOURCES
& RELATIONSHIPS
PARTNERSHIPS
AND STAKEHOLDERS
We maintain strong relationships
with our customers, retailers,
distributors, communities, investors
and host governments.
ASSETS
We have a well integrated network
of retail sites, customer facilities and
depots. We operate under the global
Shell brand, and a leading African
brand, Engen.
OUR PEOPLE
Our 2,747 diverse, talented and local
people form a de-centralised and
high performing team, with a common
culture and purpose.
NATURAL RESOURCES
We have a responsibility to the
environment, and are committed to
reducing our impact and continually
improving environmental performance.
FINANCIAL STRUCTURE
Our resilient unit margins, structurally
negative working capital and
high operating leverage deliver
sustainable cash generation.
OUR INTEGRATED MODEL...
... PROVIDES A SUSTAINED COMPETITIVE ADVANTAGE...
... WHILE EFFECTIVELY MANAGING OUR RISKS
– Oil price fluctuations
– Product availability and supply
– Currency exchange risk
– Information technology
– Product availability
and supply
– Partner reputation
and relationships
– Oil price fluctuations
– Health and safety
– Partner reputation
and relationships
– Climate change
More information in the Resources and
Relationships section on pages 42 to 58.
18
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
SUPPLYWe supply our operations through diverse providers, ranging from oil traders and government refineries to lubricant blending plants, ensuring cost effective security of supply.In 2020, Vitol – our largest shareholder – supplied around 33% of fuel products, under an arm’s length agreement, with standard market terms and conditions.STORAGEOn a continent where storage is scarce, we store up to one billion litres of fuels, equivalent to one month of supply, at either owned or shared facilities.DISTRIBUTIONWe distribute products using strong partnerships with trusted local transport companies, as well as by pipeline and rail where possible.The size of our footprint and relationships with suppliers enable us to source fuels at highly competitive prices.Infrastructure provides a major barrier to entry to others, and growing volumes drive efficiencies.Our model provides operational control over road transport, enabling us to implement our exacting HSSEQ standards and controls.STRATEGIC REPORT
COMMERCIAL
We supply thousands of
Commercial customers with fuels
and lubricants across the transport,
infrastructure, mining, aviation
and marine sectors. In addition,
we supply LPG to consumers
and commercial customers.
More information on
pages 26 to 27.
More information on
pages 28 to 29.
OUR OUTCOMES
CUSTOMERS
– Over 750,000 customers served
on an average day at our sites.
– Strong market share in Shell-branded
countries with an established position
in Engen-branded markets.
– Ever increasing food and
convenience retail offering.
EMPLOYEES
– Industry-leading safety record.
– Significant investment in
training and development.
– Increasing proportion
of female employees.
INVESTORS
– Shareholder returns.
– Conservative financial position.
COMMUNITIES
AND GOVERNMENTS
– Commitment to minimise
environmental impact.
– Investment into communities.
– Significant tax payer, and collector,
for host country governments.
... PROVIDES A SUSTAINED COMPETITIVE ADVANTAGE...
... WHILE EFFECTIVELY MANAGING OUR RISKS
See pages 62 to 69 for our complete list of principal risks, categorised into brand & reputational;
pricing; HSSEQ; operational; strategic; financial; and human resources & talent management risks,
managed through our internal control framework.
– Partner reputation and relationships
– Credit management
– Business concentration risk
– Health and safety
– Product availability and supply
– Credit management
– Currency exchange risk
– Health and safety
More information
on pages 42 to 58.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
19
RETAILWe supply high-quality fuels, lubricants, food and convenience retail offerings at a network of 2,330 Shell- and Engen-branded service stations. The majority of sites are owned by us, but operated by local dealers, reducing risk and utilising local knowledge.In 20 of 23 markets, pump prices are set by governments. Our leading brands and strong customer offering drive our industry-leading average throughput per site.Diversified mix of businesses across long‑term contracts, tender business and spot sales, with a proven proposition to add value to customers beyond supply.OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
MARKET OVERVIEW
COVID-19
IN AFRICA
Although COVID-19 is a global pandemic, Africa to
date has largely been spared the health emergencies
seen in Europe and the US.
The reasons for this remain unclear, but are likely
to include the swift actions by governments and the
youth of the population, with just 4% aged over 65,
compared to 19% in Europe. At the end of 2020,
there had been under one million reported cases and
under 17,500 reported deaths across our 23 operating
countries, less than 1% of total global deaths.
Number of reported COVID-19 deaths
in our markets at the end of 2020
0-100 deaths
101-1,000
1,001-5,000
5,001-10,000
Source: World Health Organization
20
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
Governments in Africa have experience
of responding to health crises and took
early action in March, when cases were low,
to protect their populations. These actions
included a range of mobility restrictions, with
nine markets moving to full lockdowns at a
similar time to Europe. The markets in question
included Morocco, Tunisia and Uganda, and
represented approximately 50% of Group
volumes in the previous year. The lockdowns
varied in length from a month to nearly
three months, and had a significant impact on
economic activity in the host countries, as well
as on fuel demand. A range of other measures
were taken in the other countries where we
have operations, including restrictions on travel
from urban to rural areas, curfews and the
closure of borders and schools. These were
designed to limit the spread of the virus,
while balancing economic activity.
During the second half of the year the
intensity of restrictions was reduced in
the majority of countries where we operate,
with periodic increases in restrictions following
a rise in case numbers. However, borders
remained closed in many markets, with the
tourism sectors particularly badly impacted
in countries such as Morocco and Mauritius.
The COVID-19 situation is dynamic and fluid,
and although case numbers have remained
below other regions, visibility on the future
trend of the virus, and related government
actions is low. The South and East regions
experienced increases in case numbers in
late December and January, attributed to
the ‘South African variant’, but governments
have tended to keep their economies largely
open, rather than returning to the lockdowns
imposed in Q2 2020. Whether this trend
continues will be a major determinant of
the future impact of the virus.
The ability of many African nations to
provide a substantial fiscal response is limited,
but governments and central banks took
action where they could to support their
economies, including accessing funding from
the IMF and other international organisations.
There has also been a concerted effort to
ensure that African nations receive access to
vaccines in a similar timeframe to developed
countries. Through COVAX, African Union
initiatives and bi-lateral arrangements,
hundreds of millions of doses are expected
to be delivered to the continent in 2021.
STRATEGIC REPORT MACRO TRENDS
The effects of COVID-19 had a number of macro
impacts across our markets, but have not fundamentally
altered the favourable back-drop provided by the
demographics. Mobility restrictions reduced fuel
demand in 2020, primarily in H1, but as seen in H2 2020,
demand returned rapidly and is forecast to return to
strong growth in 2021. This is expected to continue
for the medium term.
FUEL DEMAND IN OUR MARKETS IS PREDICTED
TO GROW IN THE MEDIUM TERM
t
c
u
d
o
r
p
t
s
a
c
e
r
o
f
d
n
a
c
i
r
o
t
s
i
h
d
e
x
e
d
n
I
s
t
e
k
r
a
m
3
2
r
u
o
n
i
d
n
a
m
e
d
+42%
150
140
130
120
110
100
90
80
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Source: CITAC
CARS ON THE ROAD
EXPECTED TO GROW
BETWEEN 2019 – 2024
4.8%
STRONG GDP
REBOUND
FORECAST IN 2021
4.5%
INCREASING CAR NUMBERS
There is rapid vehicle growth in Africa, with
BMI forecasting the number of cars on the road
expected to grow at a CAGR of 4.8% between
2019 – 2024. Vehicle numbers still significantly
lag that of Europe and the US, with just 53 cars
per 1,000 people, compared to 556 in Europe
and 805 in the US.
INFRASTRUCTURE DEVELOPMENT
The African Development bank believes
that the continent requires between
$130-170 billion per year of infrastructure
investment, which supports the future
of our Commercial business.
INCREASING POPULATION
AND EMERGING MIDDLE CLASS
There continues to be rapid population growth
across the majority of our markets, with the
UN expecting that there will be 1.1 billion more
people by 2050. This is driving growth in the
middle class, which, according to McKinsey,
is expected to expand to 582 million people
in 2030, from 376 million in 2013.
GDP GROWTH
While COVID-19 is expected to lead to
a 3.1% contraction in GDP in 2020, in our
markets (excluding Reunion), a strong
rebound of 4.5% is anticipated in 2021.
From 2022 to 2025 average annual GDP
is expected to grow at 5.2%, according
to the IMF.
INDUSTRY TRENDS
DIGITAL
– Growth in e-commerce for food and
convenience retail across a number of
markets, both related to home delivery
as well as click and collect.
– Accelerated growth in cashless and
touchless payments, with mobile money
continuing to grow.
SUSTAINABILITY
– Increased awareness of sustainability issues
among consumers, but limited changes
in behaviour.
– Increasing focus from Commercial
customers, investors and regulators
around climate change issues.
CONVENIENCE
– Significant growth in volume of proximity
shopping, with hygiene products in
high demand.
– Increased reliance on cars due to
social distancing.
– Cleanliness and protective equipment are
increasingly important considerations.
COMPETITION
– No major changes to competitive
landscape in the Retail business.
– Independent suppliers of products in
certain markets were impacted by the
dramatic changes in demand coupled with
the oil price, which has meant increased
opportunities for major players in the
resellers segment.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
21
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
STRATEGIC OBJECTIVES
OUR
STRATEGY
Over the years our strategy has
enabled us to grow. During 2020
it allowed us to quickly and
decisively react to the impact
of COVID-19, protecting our
people and our business.
5
1
2
REMAIN A
RESPONSIBLE
AND RESPECTED
BUSINESS IN THE
COMMUNITIES IN
WHICH WE OPERATE
Our vision is to become Africa’s
most respected energy business.
This means being a respected member
of the communities in which we operate,
doing business the right way, and aiming
to operate to the highest HSSEQ and
operational standards.
WHAT WE DID
DURING THE YEAR
– Implemented a range of preventive
health and safety measures to protect
against COVID-19.
– Supported our dealer and transporter
network to protect local jobs.
– Supported over 130 community/
COVID-19 projects across our operating
countries and helped stakeholders
mitigate the impact of the pandemic.
– Continued to achieve strong HSSEQ
performance, ahead of targets and
industry peers.
PRESERVE OUR LEAN
ORGANISATIONAL
STRUCTURE AND
PERFORMANCE-
DRIVEN CULTURE
Since our formation in 2011, our
business has been built on a flat,
customer-centric organisation with
a lean central management team.
Our ‘Focus, Simplify, Perform’ operating
culture enables fast decision-making,
encourages agility, and is fundamental
to our competitive position.
Our locally empowered country teams,
overseen by an experienced and responsive
Senior Executive Team, have also been
instrumental in our success.
WHAT WE DID
DURING THE YEAR
– Our decentralised model meant that we
had the right people on the ground to
react quickly to the changing conditions
caused by COVID-19.
– Implemented a range of measures to
help our people seamlessly adapt to the
new ways of working – including working
from home and safe reintegration to
our offices.
– Our new Enterprise Resource Planning
system meant that we had real-time data
to inform decision-making, which helped
the Senior Executive Team make the
right decisions and guide our local teams.
Helping our people seamlessly
adapt to the new ways of working
– including working from home
22
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
23
1 To remain a responsible and respected business in the communities in which we operate;2 To preserve our lean organisational structure and performance-driven culture;3 To maximise the value of our existing business;4 To pursue value-accretive growth; and5 To maintain attractive and sustainable returns through disciplined financial management.WE HAVE FIVE KEY STRATEGIC OBJECTIVES:STRATEGIC REPORT
3
4
5
MAXIMISE THE VALUE
OF OUR EXISTING
BUSINESS
PURSUE
VALUE-ACCRETIVE
GROWTH
We’ve continued to innovate, offering
our customers differentiated, recognised
and high-quality fuel and Non-fuel retail
products and services.
We expanded our retail network by
building new service stations, acquiring
new sites and upgrading existing retail
sites to fulfil unrealised potential.
Utilising our multiple trusted and valued
brands – including Shell and Engen – has
helped improve the customer experience,
generate new revenue streams and maximise
cross-selling opportunities.
One of our main focuses is to add more
non-fuel convenience retail and quick service
restaurant offerings through partnerships
with well-established global and regional
brand partners.
The optimisation and further development
of our existing retail network is a key
strategic focus.
In parallel, we plan to harness the opportunities
presented by mining, construction and
infrastructure projects in Africa, to
contribute to the continued growth of
our Commercial and Lubricants businesses.
MAINTAIN ATTRACTIVE
AND SUSTAINABLE
RETURNS THROUGH
DISCIPLINED FINANCIAL
MANAGEMENT
We have a strong financial and
operational track record, backed
by disciplined capital allocation.
This is underpinned by a robust financial
controls framework and comprehensive
internal audit process with strict credit
and currency exposure management.
WHAT WE DID
DURING THE YEAR
– During Q2 we saw fewer customers at our
service stations and volumes were impacted.
However, we rolled out a ‘Clean & Safe’ sites
initiative to protect and reassure customers,
after lockdown restrictions were eased.
– Continued to drive our digital roll-out for
our customers, with Shell websites now
available in all 15 markets and the Engen
market website roll-out commencing.
– Used the mobile app and loyalty programme
to help personalise relationships, driving
loyalty and spend.
– Automated 141 sites to improve service and
efficiency and support increased returns and
growth – we now have 301 automated sites
across the network.
– Added a net total of 78 new Non-fuel retail
shops, pharmacies and food outlets at our
service stations to provide convenience
and ‘quick service’ to our customers.
– Continued to leverage the power of
our premium brands – primarily Shell (as the
number one fuel brand in Africa) and Engen
(as a leading regional brand) – to capitalise
on increasing consumption, and demand
for better quality fuels, lubricants and
convenience products.
Used the mobile app and
loyalty programme to help
personalise relationships,
driving loyalty and spend
WHAT WE DID
DURING THE YEAR
– Added an additional net total of 104 new
service stations across our markets.
– In our Engen-branded markets, we acquired
new sites in Zambia and organically grew
our network in Tanzania.
– Improved our existing sites: 320 sites
were refurbished under the ‘Shining Site’
programme.
– Developed food joint ventures in Tunisia,
Kenya, Uganda, Rwanda and Namibia.
– Secured our first hybrid solar
energy solution contract with
a Commercial customer.
WHAT WE DID
DURING THE YEAR
– Effectively managed working capital, credit,
stocks and cash throughout the lockdown
period to protect and manage the business,
limiting the many impacts of the pandemic.
– However, our ROACE fell to 12% due to
lower profitability and increased capital
employed during the year.
– Completed our inaugural bond transaction,
raising a total of $350 million in new
long-term debt.
– Enhanced our capital structure to maximise
total shareholder returns and to continue
to drive sustainable growth.
Non-GAAP measures are explained and reconciled
on pages 40 to 41.
BEFORE
4
AFTER
We completed the
acquisition of the
Ngucha Retail network,
adding eight sites to our Zambia
network by year end and a ninth
in 2021, increasing volumes and
market share. The sites have been
rebranded to Engen and upgraded
to meet Vivo Energy’s rigorous
HSSEQ standards.
This accelerated growth is helping
to meet customer demand and
grow our brand visibility in Zambia.
22
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23
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
KEY PERFORMANCE INDICATORS
OUR KPIs
These KPIs show our performance for the past five years, together with
a brief explanation of the key drivers. We’ve chosen to use Financial,
Growth and HSSEQ KPIs in order to provide a rounded view
of our performance.
LINKED TO STRATEGIC OBJECTIVE:
1 2 3 4 5
Non-GAAP measures are explained
and reconciled on pages 40 to 41.
FINANCIAL KPIs
GROSS CASH PROFIT
US$ MILLION
2020
2019
2018
2017
2016
3 4 5
ADJUSTED EBITDA
US$ MILLION
32
4 5
697
743
680
666
579
2020
2019
2018
2017
2016
360
431
400
376
302
DEFINITION
Gross profit after direct operating expenses and before non-cash depreciation
and amortisation recognised in cost of sales. Reference to ‘cash’ in this measure
refers to non-cash depreciation and amortisation as opposed to the elimination
of working capital movements.
PERFORMANCE DRIVERS
– Volume and gross cash unit margin performance
DEFINITION
Earnings before interest, tax, depreciation and amortisation adjusted for impact
of special items.
PERFORMANCE DRIVERS
– Volume and gross cash unit margin performance
– Optimised cost structure and cost management
– Share of profit from investments in joint ventures and associates
NET INCOME
US$ MILLION
32
4 5
ADJUSTED FREE CASH FLOW
US$ MILLION
3 4 5
2020
2019
2018
2017
2016
90
150
146
130
99
2020
2019
2018
2017
2016
112
325
154
143
167
DEFINITION
Net income in accordance with IFRS/GAAP.
PERFORMANCE DRIVERS
– EBITDA performance
– Effective tax rate management
– Optimised capital and finance structure
DEFINITION
Cash flow from operating activities less net additions to property, plant and
equipment (PP&E) and intangible assets and excluding the impact of special items.
PERFORMANCE DRIVERS
– High conversion from EBITDA to free cash flow
– Structurally negative working capital
24
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
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25
STRATEGIC REPORT GROWTH KPIs
VOLUME
MILLION LITRES
2020
2019
2018
2017
2016
3 4 5
TOTAL RETAIL SERVICE STATIONS
3 4 5
9,637
10,417
9,351
9,026
8,389
2020
2019
2018
2017
2016
2,330
2,2261
1,900
1,829
1,726
DEFINITION
Total product volumes sold during the year.
PERFORMANCE DRIVERS
– Macroeconomic drivers impacting demand
– Sales and promotion activities
– Loyalty card system
– New and existing contracts with Commercial customers
and cross-selling
DEFINITION
Total number of revenue generating retail service stations.
PERFORMANCE DRIVERS
– Self-funding CAPEX through operating cash flow
– Significant white space opportunity
– Securing land leases and strategically located sites
1 2019 includes more than 200 retail service stations acquired
as part of the Engen acquisition.
GROSS CASH UNIT MARGIN
US$/’000 LITRES
3 4 5
ROACE
%
32
4 5
2020
2019
2018
2017
2016
72
71
73
74
69
2020
2019
2018
2017
2016
DEFINITION
Gross cash profit per 1,000 litres of sales volume.
PERFORMANCE DRIVERS
– Pricing structure in regulated markets ensures stable margins
– Competitive pricing strategies in deregulated markets
– Foreign currency exposure risk management to ensure US dollar margins
are protected
– Optimised supply chain and efficient operations
– Increase penetration of differentiated fuels
DEFINITION
Adjusted EBIT after tax, using the actual consolidated ETR, divided by average
capital employed. Average capital employed is the average of opening and closing
net assets plus borrowings and lease liabilities, less cash and cash equivalents and
interest bearing advances.
PERFORMANCE DRIVERS
– Disciplined capital allocation with rigorous return requirements
– Incentivise performance: employee compensation linked to ROACE
HSSEQ KPIs
TOTAL RECORDABLE CASE FREQUENCY (TRCF)
2020
2019
2018
2017
2016
1
0.10
0.04
0.19
0.10
0.31
SPILLS
2020
2019
2018
2017
2016
DEFINITION
Total Recordable Case Frequency (TRCF) per million exposure hours.
DEFINITION
Number of product spills greater than 100kg.
PERFORMANCE DRIVERS
– Using potential incident reporting to prevent incidents from happening
– Five HSSEQ focus areas: road transport safety; contractor safety; process safety;
PERFORMANCE DRIVERS
– Ensuring that safe working practices are followed: stringent contractor safety
requirements; driver training and monitoring
security; and COVID-19
12
21
23
25
20
1
2
3
2
4
3
24
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
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25
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT SEGMENT REVIEW
RETAIL
DRIVING THE
BUSINESS RECOVERY
With a growing footprint across the African continent, Retail is at the
heart of our business and has driven our business recovery during the
second half of the year. Our modern, safe and clean sites provide our
customers with access to high-quality products, services and increased
convenience wherever we operate.
– Increased our network by adding a net total
– Gross cash unit margin (excluding Non‑fuel
of 104 new service stations and adding a net total
of 78 Non‑fuel retail outlets
retail) increased by 7% to $76 per thousand litres,
mainly due to supply and pricing environment
– Volumes were down by 8% to 5,456 million litres
– Premium fuel gross cash profit was up 21%
compared to 5,900 million litres in 2019
– Gross profit (including Non‑fuel retail) was
down 6% to $387 million due to the impact
of COVID‑19
– Gross cash profit (including Non‑fuel retail)
was down 4% to $438 million
year‑on‑year
– Adjusted EBITDA was down 11% to $216 million
– Accelerated growth in Engen‑branded markets
by adding new sites
– Expanded our portfolio with food JV partners
to enable a faster roll‑out of new quick service
restaurants (QSRs)
PERFORMANCE
US$ million, unless otherwise indicated
Volumes (million litres)
Gross profit (including Non‑fuel retail)
Gross cash unit margin (excluding Non‑fuel retail) ($/’000 litres)
Retail fuel gross cash profit
Non‑fuel retail gross cash profit
Adjusted EBITDA
We continued to invest
in the quality and scope
of our Non-fuel retail
offerings in 2020
2020
2019
+/– %
5,456
5,900
-8%
-6%
+7%
-2%
411
71
421
387
76
412
26
216
33
-21%
242
-11%
NON-FUEL RETAIL
GROSS CASH PROFIT
$26m
26
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27
2020 HIGHLIGHTSSTRATEGIC REPORT 2020 REVIEW
Our Retail business segment delivered resilient
results despite the impact of COVID‑19 on
our operating environment. The segment made
a strong start to the year before COVID‑19
related containment measures led to a
significant decrease in demand. As mobility
restrictions were gradually eased across
our host countries, we registered strong
improvements in volumes, gross cash profit and
adjusted EBITDA in the second half of the year.
RETAIL FUEL
Retail fuel volumes were 8% lower in 2020.
Strong trading at the beginning of the year
was more than offset by COVID‑19 mobility
restrictions imposed across our portfolio in
late Q1, significantly impacting results in Q2,
particularly in April and May. As measures were
lifted, there was a strong rebound in demand,
due to fuel being a consumer staple, which
continued through H2. While we saw a rapid
recovery in volumes, with some countries
experiencing year‑on‑year growth in H2,
mobility restrictions remained in place across
many countries, suppressing demand.
To drive the recovery process, we
implemented a range of initiatives to
support our sites and attract customers
by positioning our retail stations as the
safest sites to refuel in the industry, offering
auxiliary services and improving convenience.
We completed the ‘Shining Engen’ programme
in January 2020 and undertook a ‘Shining Shell’
programme through the rest of the year,
providing enhancements to over 300 sites.
We continued to grow our network, opening
a net total of 104 sites, despite fluctuations in
product demand, which supported volume
growth in H2.
In line with our strategy to expand our position
in Engen‑branded markets, we acquired
new sites in Zambia and Rwanda, increasing
our networks by 21% and 35% respectively.
In Tanzania, a large Engen‑branded market,
we have organically grown our network
from seven sites in March 2019 to 20 sites
in December 2020.
Gross cash unit margin was higher than
the previous year at $76 per thousand
litres. In H1, unit margins were impacted by the
combined impact of the reduction in demand
that increased inventory levels and the sharp
fall in crude oil prices in March and April, which
led to negative inventory effects on the stock
on hand. Unit margins improved in H2 as a
result of the supply and pricing environment
in a number of our markets, together with
strong margin performance in premium fuels.
NON-FUEL RETAIL
We continued to develop our Non‑fuel retail
segment, with a net total of 58 convenience
retail shops and pharmacies and 20 food outlets
added at our service stations. Our financial
performance was impacted by COVID‑19
restrictions, but remained robust, with gross
cash profit of $26 million, down 21% in 2020.
The mobility restrictions led to lower traffic at
our sites, affected store opening hours and, in
some cases led to store closures for periods
during the year. We noted strong improvement
in most markets in H2, however in certain
markets, such as Morocco, ongoing restrictions
on travel between regions have impacted sales
at large motorway sites, which are traditionally
large contributors.
Due to the pandemic, we saw an evolution
in consumer behaviour. Our QSR takeaway and
drive‑through offerings became more vital and
we adapted our offerings accordingly, including
working with delivery partners in a number
of our markets. In convenience retail, we have
changed product lines to meet increased
demand for personal health products, as
well as trialling click and collect propositions.
We continued to expand our portfolio of
joint ventures with QSR partners to enable
the faster roll‑out of new restaurants.
We completed a joint venture in Namibia
for the KFC brand, now the sixth country in
which we have exclusive use of the KFC brand,
and launched our first joint venture in Tunisia
with Pomme de Pain.
LOOKING FORWARD
In 2021, we will continue to focus on expanding
and enhancing our network in both the Shell
and Engen‑branded markets, with particular
focus on improving our market position in
key Engen‑branded markets. We will look to
enhance the customer experience at our sites,
building on the successful launch of loyalty
programmes in key markets, undertaking
new fuel launches and providing the best and
safest experience for our customers. We will
also continue to maximise the value from our
existing sites by optimising the Non‑fuel retail
customer offerings, focusing on like‑for‑like
growth and expanding our growing QSR
business through new partnerships with
international brands.
PREMIUM FUELS GROSS CASH
PROFIT YEAR-ON-YEAR GROWTH
+21%
VOLUME
million litres
5,456
ADJUSTED
EBITDA
$216m
GROSS CASH PROFIT
CONTRIBUTION TO RETAIL
$438m
57%
60%
Retail
Commercial
Lubricants
57%
42%
1%
Retail
Commercial
Lubricants
60%
26%
14%
Regular fuels
Non-fuel retail
Premium fuels
88%
6%
6%
26
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
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27
RETAIL BUSINESS CONTRIBUTION TO GROUPOTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT SEGMENT REVIEW CONTINUED
COMMERCIAL
A PROVEN CUSTOMER
VALUE PROPOSITION
We ensure reliable supply of high-quality fuels and LPG products to
a wide range of customers in the mining, construction, power, road
transport, aviation and marine sectors. We provide those products
with extensive and trusted services, to ensure we add value beyond
the products we sell.
– Volumes were down 8% year‑on‑year mainly
– Gross profit was $156 million, 19% lower than
due to the impact of COVID‑19 travel
restrictions on Aviation and Marine sales
– Strong performance in Core Commercial,
with volumes up 5% year‑on‑year
– Gross cash unit margin was down 8%
to $45 per thousand litres
the previous year
– Adjusted EBITDA of $92 million was lower
by 32% year‑on‑year
PERFORMANCE
US$ million, unless otherwise indicated
Volumes (million litres)
Gross profit
Gross cash unit margin ($/’000 litres)
Gross cash profit
Adjusted EBITDA
Our tactical approach to
the resellers market and
robust performance in LPG
led to Core Commercial
volume growth
2020
2019
+/– %
4,045
4,380
-8%
156
45
181
92
192
-19%
49
214
135
-8%
-15%
-32%
AVIATION AND MARINE
GROSS CASH PROFIT
DOWN YEAR-ON-YEAR
-68%
28
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29
2020 HIGHLIGHTSSTRATEGIC REPORT 2020 REVIEW
Our Commercial segment volumes were lower
by 8% year‑on‑year, mainly due to the impact
of weaker Aviation and Marine volumes arising
from travel restrictions imposed as a result of
COVID‑19. However, volume‑performance
in Core Commercial was strong. Gross cash
unit margins of $45 per thousand litres was
down 8% year‑on‑year primarily due to the
negative inventory effects on the stock on hand
in H1 2020. Gross cash profit of $181 million
(2019: $214 million) was therefore 15% lower
than the previous year.
CORE COMMERCIAL
Our Core Commercial business offers a
range of services including the supply of
bulk fuel to customers in the transportation,
mining, construction and power sectors, as
well as LPG to both consumers and industry.
Core Commercial accounted for 85%
(2019: 75%) of total Commercial volumes
and 93% (2019: 82%) of overall Commercial
gross cash profit. Volumes were 5% higher
year‑on‑year mainly due to two months
of additional contribution from the
Engen‑branded markets, aided by our tactical
approach to the resellers market to take
advantage of disrupted supply chains, as
well as a robust performance in the LPG
business due to the use of gas for home
cooking. Furthermore, many of our key mining
customers continued to operate as they
were not significantly impacted by COVID‑19.
Volumes in H2 2020 compared to the prior
period, were negatively impacted by the
completion of a large circa 12‑month supply
contract in September, however underlying
trends remained positive.
Gross cash unit margin was down 9%
year‑on‑year due to negative inventory
effects and lower margin sales to resellers,
export customers and industrial users in
the LPG business. This was partially offset by
favourable supply margins in some markets.
As a result, unit margins were $49 per
thousand litres (2019: $54 per thousand litres)
in Core Commercial.
AVIATION AND MARINE
The contribution from Aviation and Marine
fell significantly due to the impact of travel
restrictions arising from COVID‑19, accounting
for just 15% of overall Commercial volumes
(2019: 25%) and 7% of total Commercial gross
cash profit (2019: 18%). These restrictions
resulted in volumes being 46% lower than the
previous year and unit margins falling to $21 per
thousand litres (2019: $35 per thousand litres).
The Aviation business registered the largest
drop in volumes, down 55% year‑on‑year as
most airlines were restricted to cargo and
repatriation flights across our markets at the
peak of the pandemic. We experienced a small
improvement in the second half of the year
following the partial lifting of travel restrictions
and the opening of borders in some countries,
although we expect that Aviation volumes will
remain subdued for some time. The Marine
business also recorded lower volumes
as a result of lower cargo and cruise line
movements in key markets. Partially offsetting
this, we secured profitable Marine spot sales
in some markets resulting in a 28% increase
in the unit margin.
LOOKING FORWARD
We will look to build on the resilient
Core Commercial performance in 2021 whilst
remaining flexible in Aviation and Marine to
meet changes in future demand. We aim to
achieve this by ensuring our customer focus
remains unparalleled, aligning our resources
to be able to deliver against our customer
needs and driving excellent sales effectiveness.
In terms of specific businesses, we plan to
build on our position as a leading provider
to the mining industry in our Shell‑branded
markets, and become a preferred supplier in
our Engen‑branded markets, through offering
solutions and services that create greater
value for customers. Following strong growth
in our LPG business, we will look to expand
our cylinder distribution in a returns focused
manner across relevant markets.
CORE COMMERCIAL VOLUMES
YEAR-ON-YEAR GROWTH
+5%
VOLUME
million litres
4,045
ADJUSTED
EBITDA
$92m
GROSS CASH PROFIT
CONTRIBUTION TO COMMERCIAL
$181m
42%
26%
Retail
Commercial
Lubricants
57%
42%
1%
Retail
Commercial
Lubricants
60%
26%
14%
Core Commercial
Aviation and Marine
93%
7%
28
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
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29
COMMERCIAL BUSINESS CONTRIBUTION TO GROUPOTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT SEGMENT REVIEW CONTINUED
LUBRICANTS
A PROACTIVE, ACCOMMODATING
BUSINESS PARTNER
We offer an extensive range of leading-edge lubricants to
different sectors, backed by approval from a wide range of equipment
manufacturers. We sell lubricants on the forecourt and through
distributors while also providing essential value to many Commercial
customers via a wide range of specialist products and services.
– Volumes were broadly flat year‑on‑year,
despite the drop in demand due to the impact
of COVID‑19
– Gross cash unit margin was $570 per thousand
litres, up 4% year‑on‑year, mainly due to
favourable base oil prices
– Gross profit was up 3% to $74 million
– Adjusted EBITDA was down 4% to $52 million,
year‑on‑year
– We have introduced the sale of Shell‑branded
lubricants in our Engen‑branded markets
PERFORMANCE
US$ million, unless otherwise indicated
Volumes (million litres)
Gross profit
Revenues
Gross cash unit margin ($/’000 litres)
Gross cash profit
Adjusted EBITDA
2020
136
74
366
570
78
52
2019
+/– %
137
72
375
547
75
54
-1%
+3%
-2%
+4%
+4%
-4%
Active engagement with
distributors delivered
robust performance
in Retail lubricants
LUBRICANTS YEAR-ON-YEAR
GROSS CASH UNIT MARGIN
GROWTH
+4%
30
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31
2020 HIGHLIGHTSSTRATEGIC REPORT 2020 REVIEW
The performance of our Lubricants segment
remained solid despite the drop in demand
arising from COVID‑19, which significantly
impacted the performance of our Retail
business in key markets. The gradual easing
of mobility restrictions generated significant
improvement in the second half of the
year, with volumes remaining broadly flat
year‑on‑year due to two months of additional
contribution from Engen‑branded entities
and marketing initiatives implemented to
aid the recovery process. Unit margins were
up 4% year‑on‑year at $570 per thousand
litres (2019: $547 per thousand litres) due
to favourable base oil prices.
Gross cash profit of $78 million was therefore
4% up year‑on‑year due to good unit margins
and volumes.
RETAIL LUBRICANTS
We sell Retail lubricants on the forecourt in
our service stations to Retail customers and
also through distributors to other consumers
(B2C). Retail lubricants accounted for 62%
of total segment volume (2019: 61%) and
63% of segment gross cash profit (2019: 60%).
Volumes sold were flat year‑on‑year despite
the significant impact of lower traffic at
our retail sites arising from COVID‑19
containment measures. Following the easing
of COVID‑19 measures, the strong H2 2020
performance was driven by a range of sales
promotions, active selling on our forecourts
and engagement with our distributors.
This demonstrates the strong underlying
demand for lubricants in our markets due
to the age of the car parc and the strength
of our Lubricants brand.
Unit margins were higher year‑on‑year at
$577 per thousand litres (2019: $542 per
thousand litres) due to improved sales of
our premium lubricants in the second half
of the year and favourable base oil prices.
COMMERCIAL LUBRICANTS
We sell Commercial lubricants to customers
across our operating units and also to
export customers in other countries.
Commercial volumes accounted for
38% of total Lubricants volume (2019: 39%)
and 37% of gross cash profit (2019: 40%).
Volumes were down 4% to 52 million litres
year‑on‑year mainly due to lower sales in
several export markets. There were also
lower sales volumes in the first half of the
year in the construction and power sectors,
which were impacted by lockdown restrictions.
Significant improvements were, however,
registered during the second half of the year
as COVID‑19 restrictions were gradually lifted.
Unit margins increased by 2% year‑on‑year
to $569 per thousand litres (2019: $556 per
thousand litres) due to the favourable product
mix and lower base oil prices, partially offset
by unfavourable exchange rate movements.
LOOKING FORWARD
We took a number of actions within our
Lubricants business in order to return to
growth in 2021. A key focus will be ensuring
we take the lead in the consumer segment by
providing innovative products and services
as well as developing closer consumer
relationships. On the B2B side, we will look to
differentiate our value‑led offering and provide
solutions to our customers as well as expanding
our footprint in our export countries.
In addition, we will aim to drive growth across
the Engen‑branded markets, by leveraging our
existing capabilities, marketing Shell‑branded
lubricants to Commercial customers
and ensuring we have strong end‑to‑end
supply across all of our operating units.
LUBRICANTS GROSS CASH
PROFIT YEAR-ON-YEAR GROWTH
+4%
VOLUME
million litres
136
ADJUSTED
EBITDA
$52m
GROSS CASH PROFIT
CONTRIBUTION TO LUBRICANTS
$78m
1%
14%
Retail
Commercial
Lubricants
57%
42%
1%
Retail
Commercial
Lubricants
60%
26%
14%
Retail lubricants
Commercial lubricants
63%
37%
30
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31
LUBRICANTS BUSINESS CONTRIBUTION TO GROUPOTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT STR ATEG IC REP ORT
FINANCIAL REVIEW
DRIVING RECOVERY
IN A PANDEMIC YEAR
CHIEF FINANCIAL
OFFICER’S STATEMENT
JOHAN DEPRAETERE
32
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
Despite the pandemic, we continued to invest in our markets, with capital expenditure of $168 million, predominantly into growth projects. We have also enhanced our new ERP system by adding further functionality and have made good progress on the implementation of the system in the Engen‑branded markets, which are scheduled to go live in H1 2021. We believe this increasing use of technology will help to drive business performance over time. As announced in July 2020, in Morocco the Conseil de la Concurrence’s review of the country’s fuel retailing industry is now subject to an independent review set up by the Royal Cabinet. There have been no updates on the review’s progress since July. We believe that Vivo Energy Morocco has at all times conducted its operations in accordance with applicable competition laws, rules and regulations.In September 2020, the Group successfully completed its debut notes offering, raising $350 million to mainly refinance its existing amortising loan facility. The notes, which have a seven‑year maturity and a coupon of 5.125%, significantly lengthens our debt maturities, provides additional balance sheet flexibility and further enhances our presence in the capital markets.We continue to allocate capital effectively. Our business model drives a lean cost base and we look to optimise our working capital in order to drive strong free cash flow. As a result, our balance sheet remains healthy with a low leverage that provides flexibility for us.FINANCIAL HIGHLIGHTS –Volumes were down 7% year‑on‑year, as COVID‑19 related restrictions led to reduced demand. –Gross cash profit was $697 million, 6% lower year‑on‑year due to the impact of COVID‑19 on volumes. –Total gross cash unit margin was higher year‑on‑year at $72 per thousand litres (2019: $71 per thousand litres), benefiting from the mix effect as well as the supply and pricing environment during the second half of the year. –Adjusted EBITDA down 16% to $360 million, mainly due to lower volumes and a negative operating leverage. –Net income was $90 million, down 40% year‑on‑year. –Adjusted diluted EPS of 6 cents per share for the 2020 year (2019: 12 cents per share). –Adjusted free cash flow down $213 million to $112 million from $325 million. –Paid an interim dividend of 2.7 cents per share, in place of the previously withdrawn final dividend of 2019, and proposed a final dividend of 3.8 cents per share, bringing the total dividends paid during the year to 6.5 cents per share.We started the year in a strong financial position, with a conservative balance sheet providing us with a good foundation to respond to the challenges presented by COVID-19. Our investment in upgrading our Enterprise Resource Planning (SAP S/4HANA) software delivered immediate payback, as we were able to provide the business with real-time information on sales, working capital and credit. This provided visibility for both local and central teams and enabled them to respond to a rapidly evolving operating environment. As a result, we were able to successfully manage through the crisis, limiting any long-term impact to our business. While we have seen a good recovery in performance in the second half of the year, we continue to monitor the key indicators in each of our markets closely and will react quickly to any change in our operations.We maintained a strong balance sheet through the period, increasing our utilisation of short-term local debt facilities during the peak of the restrictions. As working capital unwound due to the improving volumes, we returned to more normalised levels of facility utilisation, with our banks remaining very supportive. As a result, we maintained a conservative leverage ratio of 0.86x at year-end. STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
CONSOLIDATED RESULTS OF OPER ATIONS
SUMMARY INCOME STATEMENT
US$ million
Revenues
Cost of sales
Gross profit
Selling and marketing cost
General and administrative cost
Share of profit of joint ventures and associates
Other income/(expense)
EBIT
Finance expense – net
EBT
Income taxes
Net income
Earnings per share (US$)
Basic
Diluted
NON-GAAP MEASURES
US$ million, unless otherwise indicated
Volumes (million litres)
Gross cash profit
EBITDA
Adjusted EBITDA
ETR (%)
Adjusted net income
Adjusted diluted EPS (US$)
Non-GAAP measures are explained and reconciled on pages 40 and 41.
We overcame numerous challenges arising
from COVID-19 to deliver robust results.”
JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
2020
6,918
(6,301)
617
(226)
(176)
16
4
235
(60)
175
(85)
90
2020
0.06
0.06
2020
9,637
697
360
360
49%
90
0.06
2019
8,302
(7,627)
675
(224)
(165)
22
2
310
(64)
246
(96)
150
2019
0.11
0.11
2019
10,417
743
416
431
39%
162
0.12
Change
-17%
-17%
-9%
+1%
+7%
-27%
+100%
-24%
-6%
-29%
-11%
-40%
Change
-45%
-45%
Change
-7%
-6%
-13%
-16%
n/a
-44%
-50%
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
33
STR ATEG IC REP ORT
FINANCIAL REVIEW CONTINUED
ANALYSIS OF CONSOLIDATED RESULTS OF OPER ATIONS
34
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
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35
VOLUMESAfter a strong start to the year, with double digit volume growth in January and February, volumes sold were 7% lower year-on-year due to severe mobility restrictions imposed in the first half of the year to contain the spread of the COVID-19 pandemic. The Aviation, Marine and Retail businesses were significantly impacted by these restrictions, while Commercial fuel and LPG remained robust. The Group made significant recovery in the second half of the year as the containment measures were gradually eased. Aviation sales however remained subdued due to continuing restrictions on international travel. REVENUERevenue was 17% down year-on-year at $6,918 million (2019: $8,302 million), reflecting the significant decline in crude oil prices and contraction in demand due to the COVID-19 related mobility restrictions.COST OF SALESCost of sales were lower by $1,326 million, or 17%, to $6,301 million in 2020. The decrease is mainly due to lower purchases in line with sales volumes and lower cost of inventory due to the significant decrease in crude oil prices during the year.GROSS PROFITGross profit was $617 million, down 9% year-on-year mainly due to lower volumes, reflecting the effect of lower demand for oil products due to COVID-19. GROSS CASH PROFITGross cash profit was down 6% year-on-year to $697 million, mostly due to lower volumes, partially offset by higher gross cash unit margin. The Group started the year strongly, with over 20% growth in gross cash profit during the first two months of the year, before COVID-19 related restrictions caused an unprecedented drop in demand. The Group also took deliberate action at the peak of the pandemic to reduce inventory levels by making targeted sales of excess stock at lower margins. As restrictions were gradually eased across our markets, the Group saw a strong rebound in the second half of the year, with gross cash profit recovering well and unit margins benefiting from product mix and positive pricing. Accounting for hyperinflation however had a negative impact of circa $2 million (2019: +$3 million) on the gross cash profit. SELLING AND MARKETING COSTSelling and marketing cost remained broadly in line with 2019 and was mainly impacted by an additional two months’ cost contribution from Engen‑branded markets and a first full year of amortisation relating to our newly implemented ERP system. This was partially offset by lower spend on marketing campaigns, a decrease in non‑essential spend during the pandemic and favourable foreign currency exchange effects.GENERAL AND ADMINISTRATIVE COSTGeneral and administrative cost, including special items, increased by $11 million to $176 million in 2020 (2019: $165 million). This was mainly due to two months’ additional cost from Engen‑branded markets, COVID‑19 pandemic related donations provided to communities where Vivo Energy operates and higher depreciation and amortisation expense. The higher cost was partially offset by a positive foreign currency exchange effect.SHARE OF PROFIT FROM JOINT VENTURES AND ASSOCIATESShare of profit from joint ventures and associates decreased by $6 million to $16 million mainly due to the impact of COVID‑19 on SVL, our joint ventures in Morocco and our investments in QSR joint ventures that were negatively affected by temporary restaurant closures during lockdowns. In a number of markets, our QSRs were open and operating delivery and takeaway services in the second half of the year.OTHER INCOMEOther income of $4 million (2019: $2 million) mainly related to gains on disposal of PP&E.ADJUSTED EBITDAAdjusted EBITDA was $360 million, down 16% year‑on‑year. The decrease is mostly attributable to lower volumes linked to the impact of the COVID‑19 pandemic, higher general and administrative cost and a lower share of profit from our joint ventures and associates.NET FINANCE EXPENSENet finance expense decreased by $4 million to $60 million, mainly due to foreign exchange gains and a lower impact resulting from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. This was partially offset by higher interest expenses arising from increased use of short-term bank facilities at the peak of the COVID-19 pandemic and an additional two months of contribution from the Engen-branded markets. INCOME TAXESThe ETR increased to 49% from 39% compared to the comparative period of 2019. The increase in the ETR is primarily due to the lower earnings before tax of $175 million (2019: $246 million) giving a higher relative impact of the permanent items and withholding tax on upstreamed dividends and central fees which are not linked to the current year earnings before tax level. NET INCOMENet income, including the impact of special items, was $90 million, down 40% from $150 million in 2019. Minority interest was $10 million for the year (2019: $14 million).EARNINGS PER SHAREBasic earnings per share amounted to 6 cents per share (2019: 11 cents per share). Adjusted diluted earnings per share, excluding the impact of special items, were 6 cents per share (2019: 12 cents per share). STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
OVERVIEW OF OPER ATIONS BY SEGMENT
US$ million, unless otherwise indicated
Volumes (million litres)
Retail
Commercial
Lubricants
Total
Gross profit
Retail (including Non-fuel retail)
Commercial
Lubricants
Total
Gross cash unit margin ($/’000 litres)
Retail fuel (excluding Non-fuel retail)
Commercial
Lubricants
Total
Gross cash profit
Retail (including Non-fuel retail)
Commercial
Lubricants
Total
Adjusted EBITDA
Retail
Commercial
Lubricants
Total
2020
2019
Change
5,456
4,045
136
9,637
5,900
4,380
137
10,417
387
156
74
617
76
45
570
72
438
181
78
697
216
92
52
360
411
192
72
675
71
49
547
71
454
214
75
743
242
135
54
431
-8%
-8%
-1%
-7%
-6%
-19%
+3%
-9%
+7%
-8%
+4%
+1%
-4%
-15%
+4%
-6%
-11%
-32%
-4%
-16%
VOLUMES
2020
5,456
2019
5,900
million litres
GROSS CASH PROFIT
US$ million
9,637
2020
4,045
136
438
10,417
2019
4,380
137
454
697
78
743
75
181
214
RETAIL
COMMERCIAL
LUBRICANTS
RETAIL
COMMERCIAL
LUBRICANTS
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35
STR ATEG IC REP ORT
FINANCIAL REVIEW CONTINUED
CONSOLIDATED FINANCIAL POSITION
TOTAL ASSETS
31 DEC 2020
1,718
31 DEC 2019
1,605
US$ million
TOTAL EQUITY AND LIABILITIES
US$ million
3,268
31 DEC 2020
1,550
1,684
3,356
31 DEC 2019
1,751
1,530
3,268
1,584
3,356
1,826
NON-CURRENT ASSETS
CURRENT ASSETS
NON-CURRENT LIABILITIES & EQUITY
CURRENT LIABILITIES
1 Days sales outstanding (DSO) and days purchases outstanding (DPO) are based on monthly averages and on trade elements only.
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37
DIVIDENDSThe Board has adopted a progressive dividend policy while maintaining an appropriate level of dividend cover and sufficient financial flexibility in the Group. As part of the Group’s response to the impact of the pandemic, the Board prudently withdrew its recommendation to pay a final dividend for 2019 in order to protect its balance sheet. It also opted not to declare an interim dividend in respect of H1 2020 performance at the time. However, due to the rapid actions taken by the Group to protect our business, the resilience of our business model and the performance of the business in the second half of the year, our balance sheet remained strong. As a result, and in recognition of the importance of dividends to shareholders, the Board paid an interim dividend in December 2020, in place of the withdrawn 2019 final dividend. The recommended 2020 final dividend of 3.8 cents per share represents performance during the full 12 months of 2020 and should be seen as the base for future dividend rather than the 2020 total dividends paid of 6.5 cents per share.In March 2021, the Board decided to increase the minimum payout ratio from 30% to 50% of attributable net income to reflect the Group’s cash flows, strong balance sheet and continuing growth ambitions. The dividend remains progressive and the intent is for future dividends to grow in line with earnings. The Group declares its dividends in US dollars.ASSETSTrade receivables decreased by $107 million from $451 million in 2019 to $344 million in 2020. The decrease was largely due to the impact of lower sales volumes, as a result of lower demand and declining crude oil prices. Average monthly DSO1 for the period was 16 days (2019: 17 days).Other assets decreased by $50 million from $367 million in 2019 to $317 million, mainly due to a decrease in other government benefits receivable and prepayments, partially offset by loans to joint ventures.Inventories decreased by $37 million from $517 million in 2019 to $480 million in 2020, mainly attributable to the decline in crude oil prices resulting in a lower stock value compared to 2019. Average inventory days for the period was 29 days (2019: 24 days), higher than 2019 as a result of lower market demand during the period.Property, plant and equipment increased by $66 million from $823 million in 2019 to $889 million in 2020. Capital expenditure was the key driver for the increase, partially offset by depreciation for the period.The increase in right-of-use assets of $25 million from $176 million in 2019 to $201 million in 2020 related to new leases, of which the majority were retail service stations, partially offset by depreciation for the period.Investments in joint ventures and associates increased by $4 million, from $227 million in 2019 to $231 million in 2020, resulting from $16 million in share of profits and $14 million related to newly acquired joint ventures during the period. These new joint ventures are Kuku Foods with operations in Kenya, Uganda and Rwanda and Synergy Foods operating in Namibia. This increase was partially offset by a dividend received of $24 million.FINANCIAL POSITION PERFORMANCEThe consolidated statement of financial position can be found on page 129. The analysis of significant movements in assets, liabilities and equity during the year is detailed below.Deferred tax assets increased by $12 million from $34 million in 2019 to $46 million in 2020 mainly due to the increase in leases and tax losses for the period.EQUITYTotal equity increased by $8 million, from $804 million in 2019 to $812 million in 2020. The increase was primarily due to total comprehensive income for the year of $47 million, partially offset by dividends.LIABILITIESTrade payables decreased by $209 million from $1,257 million in 2019 to $1,048 million in 2020. The decrease was driven by lower purchases and costs, resulting from a global reduction in demand for fuel and declining crude oil prices. Average monthly DPO1 for the period was 54 days (2019: 55 days).Borrowings increased by $82 million from $600 million in 2019 to $682 million in 2020. The increase is mainly attributable to the proceeds from notes issued of $350 million, during September 2020, and increased short‑term borrowing facilities to fund working capital requirements due to the impact of COVID‑19 earlier in the year. The increase was partially offset by repayment of the Group’s long and short‑term loan obligations.The increase in lease liabilities of $18 million from $125 million in 2019 to $143 million in 2020 related to new leases, in line with the increase in right‑of‑use assets, partially offset by the repayment of lease instalments for the period. STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
LIQUIDITY AND CAPITAL RESOURCES
ADJUSTED FREE CASH FLOW
US$ million
Net income
Adjustment for non-cash items and other
Current income tax paid
Net change in operating assets and liabilities and other adjustments1
Cash flow from operating activities
Net additions of PP&E and intangible assets2
Free cash flow
Special items3
Adjusted free cash flow
1 Net change in operating assets and liabilities and other adjustments includes finance expense.
2 Excluding cash flow from acquisition of businesses and other investing activities.
3 Cash impact of special items. Special items are explained and reconciled on pages 40 and 41.
2020
90
214
(89)
48
263
(163)
100
12
112
2019
150
202
(83)
176
445
(147)
298
27
325
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37
Adjusted free cash flow decreased by $213 million, from $325 million in 2019 to $112 million in 2020. The decrease was mainly due to lower cash inflows from operating activities, which were negatively affected by a decrease in the net change in operating assets and liabilities and other adjustments of $128 million and a decrease in net income of $60 million. In the prior year net changes in operating assets and liabilities and other adjustments benefitted from the timing of prepayments in relation to the fuel importation contracts in Kenya and the timing of payments to suppliers. During 2020, the Group had fewer importation contracts further contributing to the year-on-year decrease. The fluctuations in working capital are resulting from the impact of declining crude oil prices and market demand experienced during the year, and are the main drivers for the decrease in net change in operating assets and liabilities and other adjustments. Income tax paid amounted to $89 million for the year ended 31 December 2020 (2019: $83 million). Cash inflow from operating activities fully funded net capital expenditure of $163 million in 2020 (2019: $147 million).In addition to the commentary on the Group’s consolidated statement of cash flows below, further disclosures in relation to the Group’s processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposures to credit risk, liquidity risk and market risk can be found in note 3 of the consolidated financial statements. STR ATEG IC REP ORT
FINANCIAL REVIEW CONTINUED
LIQUIDITY AND CAPITAL RESOURCES CONTINUED
CAPITAL EXPENDITURES
US$ million
Maintenance
Growth
Special projects
Total
US$ million
Retail
Commercial
Lubricants
Other (technology, supply and distribution and general corporate costs)
Total
Of which growth capital expenditure was:
Retail
Commercial
Lubricants
Other (technology, supply and distribution and general corporate costs)
2020
55
101
12
168
2020
100
29
3
36
168
101
74
23
2
2
2019
46
88
15
149
2019
78
27
2
42
149
88
61
21
2
4
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39
Due to the impact of COVID-19 on the business, we strategically slowed down non-essential capital expenditure during the first half of the year. As a result of the rapid actions taken by the Group to protect the business and the resilience of our business model, investment into Growth accelerated in the second half of the year to take advantage of the opportunities in some of our markets. The majority of Growth expenditure was attributable to Retail projects which included the expansion of our retail network and Non-fuel retail offerings as well as acquisition of dealer networks in some of our markets. The ‘Shining sites’ project was established in 2019 to enhance our Retail network and ensure compliance with our stringent standards. During 2020, 320 retail sites were ‘shined’.Special projects relate to investments in the Group’s new ERP system and projects to utilise its full potential for the business. In 2019, the Group implemented SAP S/4HANA in 15 countries and during 2020 we expanded this to a number of our joint venture and Group companies. The implementation process will continue in 2021 within the eight Engen‑branded countries and is expected to be fully completed by the end of the year. ROACE decreased from 21% in 2019 to 12% in 2020. The decrease is mainly due to lower earnings and an increase in capital employed compared to prior year. STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
NET DEBT AND AVAILABLE LIQUIDITY
US$ million
Long-term debt
Lease liabilities
Total debt excluding short-term bank borrowings
Short-term bank borrowings1
Less cash and cash equivalents
Net debt
1 Short-term bank borrowings exclude the current portion of the long-term debt.
US$ million
Net debt
Adjusted EBITDA1
Leverage ratio1
1
For the description and reconciliation of non-GAAP measures refer to pages 40 and 41.
US$ million
Cash and cash equivalents
Available undrawn credit facilities
Available short-term capital resources
31 December
2020
408
143
551
274
(515)
310
31 December
2019
371
125
496
229
(517)
208
31 December
2020
31 December
2019
310
360
0.86x
208
431
0.48x
31 December
2020
31 December
2019
515
1,563
2,078
517
1,410
1,927
The table below sets the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows:
US$ million
Borrowings1
Trade payables
Lease liabilities
Other liabilities2
Total
31 December 2020
Less than
3 months
Between
3 months
and 1 year
Between
1 and 2 years
Between
2 and 5 years
Over
5 years
266
1,040
7
13
1,326
2
8
28
22
60
6
–
29
17
52
60
–
59
2
121
350
–
94
161
605
Total
684
1,048
217
215
2,164
1 Borrowings exclude the undrawn multi-currency revolving credit facility of $240 million.
2 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
The Group has purchase obligations, for capital and operational expenditure, under various agreements, made in the normal course of business.
The purchase obligations are as follows, as at:
US$ million
Purchase obligations
Total
31 December
2020
22
22
31 December
2019
13
13
38
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39
Long-term debt includes a revolving credit facility and $350 million in notes with a coupon rate of 5.125% paid semi-annually that were issued in September 2020. The notes mature in seven years and are fully redeemable at maturity. Short-term bank borrowings include the individual operating entities’ uncommitted unsecured short-term bank facilities consisting of a large number of uncommitted facilities (ranging from $1 million to $391 million). These facilities, which carry interest rates between 1.5% and 18.0% per annum, are extended by multiple local banks to operating units and are typically for a period of 12 months, automatically renewable. The Group’s debt covenants are disclosed on page 162.Net debt increased by $102 million from $208 million at 31 December 2019 to $310 million at 31 December 2020. The increase in net debt was mainly due to an increase in the Group’s short-term bank borrowings and long-term debt. Short-term bank borrowings increased as a result of increased facility utilisation to fund working capital requirements due to the impact of COVID-19 earlier in the year. The increase in long-term debt was mainly attributable to the notes issuance and new leases for the period, partially offset by settlement of the term loan.Despite the difficult year, the Group maintained a healthy balance sheet with a leverage ratio of 0.86x in 2020. This increase is mainly attributable to a higher net debt and a lower adjusted EBITDA in the current year.The available undrawn credit facilities of $1,563 million comprise the remaining balance of $240 million of the undrawn committed multi-currency revolving credit facility and $1,323 million of undrawn, unsecured and uncommitted short-term bank facilities extended to our operating entities for working capital purposes. STR ATEG IC REP ORT
FINANCIAL REVIEW CONTINUED
NON-GAAP FINANCIAL MEASURES
Term
Description
Gross cash profit
This is a measure of gross profit after direct operating expenses and before non-cash depreciation and amortisation recognised
in cost of sales. Reference to ‘cash’ in this measure refers to non-cash depreciation and amortisation as opposed to the
elimination of working capital movements. Gross cash profit is a key management performance measure.
EBITDA
Earnings before finance expense, finance income, income tax, depreciation and amortisation. This measure provides the Group’s
operating profitability and results before non-cash charges and is a key management performance measure.
Adjusted net income
Net income adjusted for the impact of special items.
Special items
Net debt
Adjusted EBIT
Income or charges that are not considered to represent the underlying operational performance and, based on their significance
in size or nature, are presented separately to provide further understanding of the financial and operational performance.
Total borrowings and lease liabilities less cash and cash equivalents.
Earnings before finance expense, finance income and income taxes adjusted for special items. The Group views adjusted
EBIT as a useful measure because it shows the Group’s profitability and the ability to generate profits by excluding the impact
of tax and the capital structure, as well as excluding income or charges that are not considered to represent the underlying
operational performance.
Gross cash unit margin
Gross cash profit per unit. Unit is defined as 1,000 litres of sales volume. This is a useful measure as it indicates the incremental
profit for each additional unit sold.
Adjusted EBITDA
EBITDA adjusted for the impact of special items. This is a useful measure as it provides the Group’s operating profitability and
results, before non-cash charges and is an indicator of the core operations, exclusive of special items.
Adjusted diluted EPS
Diluted EPS adjusted for the impact of special items.
Adjusted free cash flow Cash flow from operating activities less net additions to PP&E and intangible assets and excluding the impact of special items.
This is a key operational liquidity measure, as it indicates the cash available to pay dividends, repay debt or make further
investments in the Group.
Leverage ratio
Net debt, including lease liability, divided by last 12 months adjusted EBITDA.
Return on average
capital employed
(ROACE)
Adjusted EBIT after income tax, using the actual consolidated ETR, divided by the average capital employed. Average capital
employed is the average of opening and closing net assets plus borrowings and lease liabilities, less cash and cash equivalents and
interest bearing advances. ROACE is a useful measure because it shows the profitability of the Group considering the average
amount of capital used.
40
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41
Non-GAAP measures are not defined by International Financial Reporting Standards (IFRS) and, therefore, may not be directly comparable with other companies’ non-GAAP measures, including those in our industry. Non-GAAP measures should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.The exclusion of certain items from non‑GAAP performance measures does not imply that these items are necessarily non‑recurring. From time to time, we may exclude additional items if we believe doing so would result in a more transparent and comparable disclosure.The Directors believe that reporting non‑GAAP financial measures in addition to IFRS measures provides users with an enhanced understanding of results and related trends and increases the transparency and clarity of the core results of our operations. Non‑GAAP measures are used by the Directors and management for performance analysis, planning, reporting and key management performance measures. STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
US$ million
Gross profit
Add back: depreciation and amortisation in cost of sales
Gross cash profit
Volume (million litres)
Gross cash unit margin ($/’000 litres)
US$ million
EBT
Finance expense – net
EBIT
Depreciation, amortisation and impairment
EBITDA
Adjustments to EBITDA related to special items:
Hyperinflation1
IPO2 and Engen acquisition related expenses3
Write-off of non-current asset4
Restructuring5
Management Equity Plan6
Adjusted EBITDA
US$ million
Net income
Adjustments to net income related to special items:
Hyperinflation1
IPO2 and Engen acquisition related expenses3
Write-off of non-current asset4
Restructuring5
Management Equity Plan6
Tax on special items
Adjusted net income
US$
Diluted earnings per share
Impact of special items
Adjusted diluted earnings per share
US$ million, unless otherwise indicated
EBIT
Adjustments to EBIT related to special items:
Hyperinflation1
IPO2 and Engen acquisition related expenses3
Write-off of non-current asset4
Restructuring5
Management Equity Plan6
Adjusted EBIT
ETR (%)7
Adjusted EBIT after tax
Average capital employed
ROACE
2020
617
80
697
9,637
72
2020
175
60
235
125
360
2
1
–
–
(3)
360
2020
90
2
1
–
–
(3)
–
90
2020
0.06
–
0.06
2020
235
2
1
–
–
(3)
235
49%
120
1,021
12%
2019
675
68
743
10,417
71
2019
246
64
310
106
416
–
11
3
3
(2)
431
2019
150
–
11
3
3
(2)
(3)
162
2019
0.11
0.01
0.12
2019
310
–
11
3
3
(2)
325
39%
198
956
21%
40
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41
Reconciliation of net debt and leverage ratio is included on page 39. The reconciliation of adjusted free cash flow is included on page 37.
1 The impacts of accounting for hyperinflation for Vivo Energy Zimbabwe, in accordance with IAS 29, are treated as special items since they are not considered to represent the underlying
operational performance of the Group and based on their significance in size and unusual nature are excluded as the local currency depreciation against the US dollar does not align to the
published inflation rates during the period.
IPO related items in 2020 and 2019 concern the IPO share awards which are accrued for over the vesting period.
2
3 On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Vivo Energy Overseas Holdings Limited (VEOHL) (formerly known as
Engen International Holdings (Mauritius) Limited). The cost of the acquisition and related integration project expenses are treated as special items.
4 The Group recognised a write-off in 2019 related to a government benefits receivable as a result of a retrospective price structure change by the government to finance their outstanding
debt. Such retrospective changes of existing price structures are considered non-recurring and are not representative of the core operational business activities and performance and
are, therefore, treated as special items.
5 Restructuring costs were incurred in 2019 mainly as a result of the integration of VEOHL into our business model. The impact from these activities do not form part of the core
operational business activities and performance and were, therefore, treated as a special item in 2019.
6 The Management Equity Plan vested at IPO in May 2018 and is exercisable on the first anniversary of admission for a period of 24 months. Changes in the fair value of the cash-settled
share-based plan do not form part of the core operational business activities and performance and should, therefore, be treated as a special item. The costs of share-based payment
schemes introduced after the IPO are not treated as special items.
7 Represents the actual consolidated ETR without the impact of special items on the ETR.
RESOURCES AND RELATIONSHIPS
ENGAGING WITH
OUR STAKEHOLDERS
We listen to and collaborate with a
wide range of stakeholders to grow
our business and deliver value.
Engagement with our shareholders and wider
stakeholder groups plays a vital role throughout the
business. It helps us gain a better understanding of the
impact of our decisions on stakeholder interests as well
as insight into their needs and concerns.
Details of how we’ve engaged with, and taken into
consideration, the interests of those stakeholders who
are material to the long-term success of the business
can be found on the following pages.
Not all information is reported directly to the Board.
However, the output of engagement with stakeholders
informs Group decisions, and relevant feedback is
reported to the Board and/or its Committees.
6
OUR PEOPLE
CUSTOMERS
GOVERNMENTS
PARTNERS
INVESTORS AND
SHAREHOLDERS
COMMUNITIES
OUR PEOPLE
We want our people to be fulfilled and
focused on doing business the right way.
CUSTOMERS
We want to understand and engage
with our customers and continue
to innovate and develop our range
of products and services to meet
their needs.
PARTNERS
We want to work closely with all
our partners, always focused on doing
business the right way, as we strive to
achieve our vision of becoming Africa’s
most respected energy business.
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43
More information on pages 42 to 58.WE HAVE SIX KEY STAKEHOLDER GROUPS:STRATEGIC REPORT HOW DID WE ENGAGE?
As COVID-19 impacted our markets, we acted
quickly and decisively, implementing a range
of preventive and protective health and safety
measures for employees.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– As employees switched to working from
home, we maintained regular employee
engagement as a key priority.
We provided guidelines and tools for remote
working, and created a series of virtual
training and e-learning programmes to
upskill employees.
We created a repository of key information
regarding COVID-19 on a dedicated page
on our intranet.
We established an Employee
Engagement Committee.
HOW DID WE ENGAGE?
We continued to engage with our
Retail customers through our Voice of Customer
online feedback programme and Treated like
a guest assessment programme.
We also expanded the number of countries
with consumer-facing websites, social media
platforms and loyalty programmes to better
engage and interact with our Retail customers.
In the Commercial segment, we conducted
a survey for key customers to assess our
response to COVID-19 and ways to improve
customer service.
– In addition to daily leadership team
meetings, we scheduled regular sessions
with employees to provide updates and
acknowledge their contributions.
– We supported employees through Group
and individual sessions with company
health advisers.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– A key concern was how to ensure
continued provision of products and
services while protecting the health and
safety of our customers.
– At our service stations, we launched a
‘Clean & Safe’ sites initiative, providing hand
washing stations, limiting the number of
customers at any one time, and running
stringent cleaning regimes.
– In some of our markets we have introduced
an LPG home delivery service and are
rolling out a lubricants oil change at
home programme.
– We worked closely with one of our mining
customers to develop a hybrid solar/fuel
energy solution to meet its requirements.
WHAT WERE THE RESULTS?
– An employee survey found that our people
were proud of how we had managed the
response to the pandemic, and that they
had been kept informed on the impact of
COVID-19 on the business. Employees also
told us that they felt safe and protected,
as well as supported by their line managers.
– Representatives for the Employee
Engagement Committee were identified
and appointed, and the first two committee
meetings have taken place.
– Employees remained engaged, focused
and continuously updated on relevant
developments.
WHAT WERE THE RESULTS?
– Our engagement activity showed that
customers were extremely satisfied
with our response to COVID-19.
– In the Retail segment, 84% of customers
were extremely satisfied with our
Treated like a guest assessment. 82% were
extremely satisfied with our response to
COVID-19.
– In the Commercial segment, customers said
that it remained ‘easy to connect’ with the
Company and gave us a high rating on the
support we provided during COVID-19.
– We continue to work directly with our
Commercial customers to address their
key requirements in a bespoke way.
HOW DID WE ENGAGE?
Our strong relationships with Shell and Engen
continue to help us to market and launch
new products, maximising the benefit of the
relationships for all stakeholders.
Local dealers operate approximately 94% of
our Retail network. During the lockdowns we
continued to engage closely with our dealers,
through ongoing dealer workshops and visits
by Vivo Energy’s Territory Managers, to ensure
that they were kept informed on our actions
and that their businesses were protected.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– We supported and protected our
stakeholders through the pandemic, and
worked closely with our dealer network
and our transporters to keep our service
stations open and protect the jobs of the
front line staff employed by them while
volumes were low.
– We ensured that front line staff at our
service stations had appropriate personal
protective equipment (PPE) supplies to
keep them safe.
WHAT WERE THE RESULTS?
– As a result of our actions and support for
our partners, including dealers and road
transport contractors, these businesses –
like our own business – remained protected
during the lockdown period.
– There is no alternative to road transport
in our markets and as mobility restrictions
were lifted, our customers started
moving again, which drove demand for
our products.
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43
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
HOW DID WE ENGAGE?
As the COVID-19 pandemic intensified across
the world, our focus during 2020 was on
helping our communities, host governments
and local partners to fight the virus and mitigate
its impact.
COMMUNITIES
We want to be a positive force and
make a real and lasting difference
in the communities where we
operate, not only by creating career
opportunities for local people, but
also by continuing to deliver a wide
range of community investment
programmes across our markets.
INVESTORS AND
SHAREHOLDERS
We want to understand and engage
with our investors to keep them
informed about key developments
in the Company.
GOVERNMENTS
We want to maintain good
relationships with governments in
the countries where we operate.
HOW DID WE ENGAGE?
In addition to the regular reporting cycle,
the Executive Directors and our Head of
Investor Relations regularly engage with our
shareholders and potential new investors.
As a result of COVID-19, there were very few
in person meetings or physical conferences
during the year, and a far greater reliance on
calls and video conferences to keep investors
and shareholders informed and engaged.
This had the benefit of greatly increasing the
reach of engagement into different territories
across the world that were previously not
on the engagement calendar.
During the year, the Group issued its first
corporate bond, which provided a broader
capital markets presence and enabled
significantly increased engagement with
debt investors and credit rating agencies.
HOW DID WE ENGAGE?
We primarily engage with our host
governments through industry bodies.
As a result of the pandemic, face-to-face
meetings with governments were restricted
during the year, however we were able to
maintain a dialogue with ministers and senior
members of our host governments through
video calls.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– The pandemic dramatically underlined the
importance of supporting our communities.
– Across our countries, we engaged
with our host governments to identify
how we could best support their efforts.
– We donated to local COVID-19
government funds.
– We were also involved in a number of
COVID-19 community investment activities,
including supporting e-learning applications
for children whose schools had closed,
and providing supplies to those most
in need through local NGOs.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– In 2020 the primary focus was on the
impact of COVID-19 on the Group’s
operations and financial performance
and we provided enhanced disclosure
on trends through the year.
– In addition, we continued to
engage with stakeholders on capital
allocation, governance, executive
remuneration and Company strategy.
– Furthermore, we have increased focus
on ESG matters, and sought to
enhance disclosure and engagement
with the ESG rating agencies.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– A key priority for our host governments
during the year was managing the
impact of COVID-19 in their markets.
– We engaged with our host governments to
see how we could best support their efforts,
and both donated to local COVID-19 funds
and provided fuel cards and medical supplies
to Ministries of Health, so that emergency
services in our markets could continue
to function.
– Throughout the year, we ensured that
our Retail and Commercial network
remained operational, so that critical
fuel products could continue to be provided,
keeping our governments and their
countries operational.
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STRATEGIC REPORT WHAT WERE THE RESULTS?
– Supporting our communities in their time
of need has helped us continue to build our
reputation. For example, Vivo Energy Kenya,
in partnership with the Government of
Kenya, produced 350,000 litres of sanitisers
at its lubricant blending plant in Mombasa.
This was distributed free of charge to
Kenyans via various arms of national
and county government, and various
community organisations.
– In addition, Vivo Energy Ghana, in
partnership with its retailers, launched
its ‘Retailer Sustainability Programme’
to implement COVID-19 prevention
projects in communities where it operates.
Many organisations across the country
benefited from this programme.
WHAT WERE THE RESULTS?
– The Group believes that the detailed
engagement throughout the year has
enhanced its relationships with its core
stakeholders and their understanding
of the key drivers of the business.
– The Group has successfully managed
investor churn through the year, welcoming
a range of new institutional shareholders
to its shareholder register.
WHAT WERE THE RESULTS?
– Due to our central position within the
economy, we’re major collectors of tax and
duties on behalf of governments through
the sale of petroleum products.
– We create significant direct and indirect
employment which generates major
economic benefit for countries, and are a
significant tax contributor in our own right.
In 2020, we paid $89 million in income
taxes to our host economies and collected
significant taxes and duties through the
sale of petroleum products.
SECTION 172(1) STATEMENT
Engaging with stakeholders is fundamental, and we believe that considering stakeholders
in key business decisions is not only our legal obligation but the right thing to do.
This has never been more relevant than during the COVID-19 pandemic, and the Group
continues to work hard to keep its employees safe and its business viable while also
striving to enable its customers and those critical businesses that rely on it to keep moving.
The individual Directors and the Board as a whole are aware and mindful of their duty
under section 172(1) of the Companies Act 2006 to act in the way which they consider,
in good faith, would be most likely to promote the success of the Company for the
benefit of its members as a whole. In doing this, section 172 requires a Director to
have regard, amongst other matters, to the:
– likely consequences of any decisions in the long-term;
– interests of the Company’s employees;
– need to foster the Company’s business relationships with suppliers, customers
and others;
– impact of the Company’s operations on the community and environment;
– desirability of the Company maintaining a reputation for high standards of business
conduct; and
– need to act fairly as between members of the Company.
In discharging our section 172 duties we have regard to the factors set out above.
We also have regard to other factors which we consider relevant to the decision being
made. We listen to and collaborate with a wide range of stakeholders in order to grow
our business and deliver value. The key stakeholder groups we have identified are our
people, customers, partners, communities, governments, investors and shareholders.
Further details about how we engage with these stakeholders can be found on
pages 42 to 45 and page 77. We acknowledge that not every decision we make will
necessarily result in a positive outcome for all of our stakeholders. By considering the
Company’s purpose, vision and values together with its strategic priorities and having a
process in place for decision-making, we do, however, aim to make sure that our decisions
are consistent and predictable.
DECISION MAKING
The Vivo Energy Board has a clear framework for determining the matters within its
remit and has approved Terms of Reference for the matters delegated to its Committees.
Throughout the year, the Board has considered the long-term consequences of the
decisions it has made, focusing on the interests of relevant stakeholders as appropriate.
Set out below are two examples of how the Directors discharged their duties under
section 172 during the year.
KEY BOARD DECISIONS
COVID-19
During 2020, COVID-19 affected businesses across the world. As the pandemic
unfolded, the Board held a series of additional meetings to review the action which
would be needed to ensure the business was in the best possible position to withstand
the effects of COVID-19, and to protect staff, customers and partners while preserving
shareholder value.
The Board considered carefully the needs of various stakeholder groups as the effects
of COVID-19 unfolded. It took balanced and prudent decisions designed to protect the
Company’s stakeholders in the long term.
As part of that process the Board took the following key decisions:
– Not to access government funding or borrowing;
– Not to furlough or make any employees redundant;
– Not to pay a final dividend for 2019, in order to preserve reserves;
– To declare and pay an interim dividend of $34 million, following the continued recovery
in trading through the third quarter. This is the amount that would have been paid to
shareholders had the final dividend for 2019 been paid rather than withdrawn; and
– To make donations, in cash and products, to a range of charities and funds in the
countries in which the Company operates.
These decisions were considered to be in the best interests of our people, shareholders,
customers, communities, governments and suppliers.
REFINANCING
The Group has a clear strategy which is outlined on pages 22 to 23, and the Board
regularly reviews this strategy in light of the changing external environment to ensure
that the focus remains correct. A key strategic objective is to maintain attractive
and sustainable returns through disciplined financial management. Prudent management
of the Company’s liquidity and capital resources is fundamental to this objective.
In September 2020, the Board took the decision to issue $350 million of senior notes,
with a seven-year tenor. The issue was timed to take advantage of favourable market
conditions. The proceeds of the issue were used to repay some of Vivo Energy’s bank
term facilities as well as for general corporate purposes. The Board considered and
assessed the transaction and a range of alternatives to ensure that the final decision
aligned with strategy and delivered appropriate returns. The Board took extensive
professional advice, engaged with prospective investors, considered the key risks and
the interests of shareholders, investors, our people and suppliers. It then concluded
that the issue of senior notes would be in the best interests of the Company and its
stakeholders as a whole.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
MANAGING
HIGH-QUALITY ASSETS
Our well-maintained assets range from the bright, efficient
service stations that provide high-quality products and customer
convenience, to an extensive fuel storage network and lubricant
blending plants. Owning or having operational control of these
assets is essential to control costs, guarantee supply and manage
HSSEQ and product quality.
HOW WE MANAGE
OUR RETAIL NETWORK
At the end of 2020, our retail network
comprised 2,330 service stations across
23 countries, trading under the Shell and
Engen brands. During the year we added
a net total of 104 new service stations.
A key priority during the year was to adapt
our service stations to make them safer for
our customers and our dedicated teams who
work there. Across the network, we made sure
that our sites were cleaner and safer through
increased cleaning protocols, provision of
protective equipment including hand sanitiser
and masks, COVID-19 preventative awareness
campaigns and car sanitisation services.
These activities and more helped reassure our
teams and made our customers feel safe when
visiting our sites.
We continued to make sure that our service
stations are convenient and welcoming places
to visit by refurbishing more sites and adding
new Non-fuel retail offerings, including shops,
pharmacies, coffee and food outlets.
Our customers are frequent and loyal visitors
because our service stations are clean, vibrant,
efficient and convenient. In 2020 we continued
to increase our payment systems and to
roll-out our new app for the Shell-branded
markets, which is bringing more convenience to
customers, and promoting even greater loyalty.
We support our dealers to
ensure they have a platform
to succeed and regularly check
that they’re maintaining the
standards that we require.”
HOW WE MANAGE
OUR DEALER NETWORK
In order to manage our retail network
efficiently, we utilise local dealers to operate
approximately 94% of our sites to our exacting
standards. We use a mix of three operating
models across our network depending on the
site location and circumstance. The majority
of our service stations are company-owned
and dealer-operated (CODO). However,
we also have sites that are dealer-owned and
operated (DODO) and a small number that
are company-owned and operated (COCO).
We support our dealers to ensure they have
a platform to succeed and regularly check
that they’re maintaining the standards that
we require. Across all our sites we manage
and control HSSEQ, marketing and branding,
as well as site and service standards, to ensure
operational excellence.
We have increased the number of Territory
Managers, allowing us to visit the sites more
frequently, and have introduced a more
structured call plan, driving compliance
and growth.
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STRATEGIC REPORT HIGHLIGHTS DURING THE YEAR
NETWORK
EXPANSION
104net total of new
service stations
EXTENSIVE
STORAGE
FACILITIES
57depots owned
EFFICIENT
MANAGEMENT
OF NETWORK
94%of sites operated
by local dealers
HOW WE MANAGE
OUR BRANDS
Our principal partnerships are with Shell and
Engen, with whom we’ve secured retail brand
licence agreements until December 2031
and March 2034 respectively. These give us
rights to use specified Shell and Engen brands
for our products and services, including our
service stations.
We own 50% of SVL, which is the exclusive
licensee for Shell’s lubricant brands in Africa
(with the exception of South Africa, Libya and
Egypt), giving us access to the industry’s most
widely respected lubricants.
In most of the Retail markets where we
operate we do not compete on price because
fuel prices are regulated (margins on regular
fuels were regulated in 20 of the 23 markets
where we operated at the end of 2020).
This means we compete on location, customer
experience and brand. We spend a material
amount on marketing across our operating
units to drive growth and protect and enhance
our brand which – when coupled with the high
levels of customer service, quality fuels, a safe
fuelling environment and a quality Non-fuel
retail offering – means that we’re able to
consistently outperform our competitors.
HOW WE MANAGE
OUR NETWORK OF STORAGE
FACILITIES AND PLANTS
We’ve developed an extensive network of
storage facilities to ensure that we can supply
our retail and commercial customers. In 2020,
we had access to over one billion litres of
storage across Africa, mitigating supply risks.
We own 57 depots in over 50 locations, giving
us reliable access to over 667,000 cubic metres
of directly-owned and managed storage
capacity. In addition, through joint venture
arrangements, we have further access to
approximately 390,000 cubic metres of storage.
This network is supplied by a combination
of ship, pipeline, truck and rail. In recent years,
average depot turns have increased from 8.2
in 2016, 9.2 in 2017, 9.4 in 2018 and 9.7 in 2019.
However, tank turns decreased to 8.6 in 2020,
mainly due to lower uplifts in Q2 as a result
of COVID-19 lockdowns. During the year our
fully automated petroleum storage depot in
Nanyuki, Kenya, with a capacity of 11.5 million
litres of fuel, was officially opened and linked to
Mombasa by rail.
We also benefit from a 50:50 joint venture
with Shell, known as Shell and Vivo Lubricants
(SVL). Through this joint venture, we have
access to and operate two lubricant blending
plants in Morocco and Kenya and have
interests in blending operations in Tunisia,
Côte d’Ivoire, Ghana and Guinea. This gives
us access to around 158,000 metric tonnes
of blending capacity. Our mining business offers
consignment stocks for fuels and/or lubricants
to 27 mining customers.
In the Marine sector, we have full bunkering
operations in five countries and have the
capability to supply fuel and lubricants to
marine customers in a number of other
markets. The LPG business owns bottling
plants and has interests in joint venture
facilities in seven countries.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
DRIVING OUR
CULTURE AND PURPOSE
More than ever before, COVID-19 has underlined the
importance of living by our operating culture of ‘Focus, Simplify
and Perform’. This culture helped us to play our part during the
pandemic and demonstrate that we do business the right way.
DOING BUSINESS THE RIGHT WAY
Our reputation is our most important asset
and we work hard to maintain it at every
opportunity. We demonstrate the highest
standards of corporate behaviour at all times
in every interaction with our employees, our
customers, those with whom we do business
and our shareholders. Throughout the year a
key priority has been to protect our employees,
customers and partners, while preserving
shareholder value.
Our Code of Conduct and General Business
Principles (both available on our website)
underpin everything we do and are the
foundation of our business. All new employees
complete an online induction programme,
which explains our policies and helps them
integrate into the organisation quickly
and comprehensively.
THE VIVO ENERGY WAY
Since the foundation of Vivo Energy in 2011,
our operating culture of ‘Focus, Simplify and
Perform’ has remained a central part of the
way we do business. We achieve success
by constantly reinforcing our fast and agile,
decentralised business model, and this was
more important than ever as COVID-19
started to impact our markets.
Our values of honesty, integrity and respect for
people guide our teams as they work towards
our vision of becoming Africa’s most respected
energy business.
During the year we communicated our Purpose
– to safely provide innovative and responsible
energy solutions to Africa, which enable growth
and development of the continent and its
people – to our employees. 84% of employees
believe that we are delivering our Purpose.
We keep our people regularly informed
about our business through interaction with
their managers, employee town hall meetings,
regular online newsletters and our Company
intranet. Despite having to work remotely
due to lockdowns, 92% of employees said that
they were kept informed about the impact of
COVID-19 on our business, on an ongoing basis.
We seek to maintain constructive
relationships with labour unions formally
representing our employees and have
localised union agreements and guidelines
in place, as applicable. Approximately 29%
of the Group’s employees are unionised.
We have a detailed counterparty screening
process in place which is formalised in the
Vivo Energy Know Your Customer (KYC)
Policy. The screening process enables us to
gain comfort that we know who we are doing
business with and that the ethics and values of
our counterparties align to our core values.
Employees, third parties and members of the
public also have access to our independent,
24/7 anonymous whistle-blowing helpline.
They can use this to report any concerns by
telephone, online via web reporting or via
a designated Vivo Energy whistle-blowing
app, which is available for both Android and
iOS devices.
During Q3 2020, we rolled out an all staff
online training course to raise awareness
regarding the ways in which concerns can be
reported. The training also affirmed the rights
of employees to report concerns anonymously
and that employees do not need to be
concerned about any form of victimisation
or harassment where concerns are reported
in good faith. All whistle-blowing reports are
sent to our Head of Ethics & Compliance and
Head of Forensics for review, in line with our
Investigation Guidelines and Misconduct and
Loss Reporting Policy.
We’re committed to providing equal
opportunities for all our employees.
Should any employees become disabled,
our policy is to engage, re-train and
make reasonable adjustments to enable
continued employment.
Our operating culture of
‘Focus, Simplify and Perform’
has remained a central part
of the way we do business
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STRATEGIC REPORT DELIVERING ON
OUR PURPOSE
STATEMENT
KNOWING
WHO WE DO
BUSINESS WITH
84%of employees believe
we are delivering
our Purpose
2,246
counterparties
checked
CONTRIBUTING
TO OUR
MARKETS
$89m
income tax paid to
our host economies
HUMAN RIGHTS
We strongly support the elimination of all
forms of modern slavery. Such exploitation
is entirely at odds with our core values of
honesty, integrity and respect for people.
These values are crucial to our success and
growth, and to achieving our vision of becoming
Africa’s most respected energy business.
Respect for human rights is embedded in
our Code of Conduct and General Business
Principles, which recognise a responsibility to
conduct business as responsible corporate
members of society and to support
fundamental human rights in line with the
legitimate role of business. Both the Code and
the Business Principles explicitly address our
commitment to combatting modern slavery
and human trafficking.
Our anonymous whistle-blowing helpline
contains a specific reporting category for
raising concerns in relation to any form of
unfair labour practices and potential human
right violations. Any report received in relation
to these categories is directly reported to
the Vivo Energy General Counsel and the
Vivo Energy Vice President Human Resources.
ANTI-CORRUPTION
AND ANTI-BRIBERY
We continue to maintain a multi-site ISO 37001
anti-bribery management systems certification,
covering all of our markets. We carried out five
onsite external reviews during the year as part
of the annual maintenance audits. We provide
mandatory employee training on topics such
as Anti-bribery and corruption; Anti-money
laundering; and our Code of Conduct. We also
hold financial crime courses on a bi-annual basis
for all employees, tailored to specifically address
applicable scenarios, with training completion
monitored by our Ethics & Compliance office.
Courses are made available in our three
operational languages to ensure that staff
members can fully grasp the course content
and learning objectives.
In addition, each employee is required to
submit a Conflict of Interest declaration every
year, confirming their understanding of our
compliance policies. These declarations are
reviewed and approved by line managers after
which a detailed risk assessment is conducted
by the Ethics and Compliance Office.
Corrective measures are recommended and
implemented by the Ethics and Compliance
Office where required.
We have also implemented a new stand-
alone Sponsorships and Donations (S&D)
Policy which requires high risk S&D to be
pre-approved by the Ethics and Compliance
Office and local Managing Directors. Very large
S&D require the approval of the Chairman,
the Chair of the Audit and Risk Committee,
and the CEO.
The speed of our response
to COVID-19 and our focus
on people and HSSEQ
helped us stand out from
the crowd and play our part.”
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HIGHLIGHTS DURING THE YEAROTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
DEVELOPING
OUR PEOPLE
We worked hard to keep our 2,747 people safe, focused and
engaged throughout the pandemic, making sure that we continue
to benefit from their skills and capabilities needed to support
our growth plans.
THE IMPACT OF COVID-19
ON OUR PEOPLE
At the start of 2020, nobody could have
predicted the scale and impact that COVID-19
would have on our people. But one thing that
didn’t change was our overarching principle of
keeping their health and safety a top priority.
Even before governments in our markets
started imposing lockdowns and restricting
movement, we acted quickly and decisively,
implementing a range of measures to ensure
that our people could work remotely from
home, together with actions to protect
those for whom this was not possible.
Regular updates from leadership, online
communications and interactions with line
managers kept our people engaged, able
to work remotely with ease, and focused
on sustaining and protecting our business.
Equally important, as mobility restrictions
were eased after the first lockdown, we made
sure we could reintegrate employees back
into offices in a carefully-planned, COVID-safe
manner, ensuring that strict guidelines were
developed and followed to keep our people
safe and well.
Across our markets, our company health
advisers played an integral part in keeping
our people safe, including mass testing of
employees, and directly supporting the limited
number of colleagues who have been infected
with COVID-19, or required to self-isolate.
We conducted a short, pulse survey in
November that was completed by 87% of
employees. We were proud to see that 95%
believed that we put their health and safety first
during COVID-19; that 92% felt they were kept
informed on the impact of the virus; and that
89% said they were proud of the way we have
managed COVID-19.
We’re also particularly pleased that no salaries
were cut and no employees were furloughed
or made redundant as a result of the pandemic.
TRAINING AND DEVELOPMENT
Learning and development remains an integral
part of our approach to talent management,
with structured development plans in place
to constantly build the skills and capabilities of
our people. We invested $1 million in training
throughout the year.
In part driven by the impact of COVID-19,
a significant proportion of our training activity
was shifted to virtual and online learning across
all areas of the business to upskill employees
during this period and maximise learning
opportunities – always ensuring that this
method of training had equally impactful results.
Emphasis was placed on training colleagues
on the preventative measures needed to
minimise the risk of spreading COVID-19,
including mask use and the need for sanitising
and handwashing.
In the second half of the year, we started
to roll out our SAP S/4HANA Enterprise
Resource Planning (ERP) system to our
Engen-branded markets, supported by
significant training. We’ve also identified
competencies, gaps and training needs in
order to maximise the value and utilisation
of the ERP across the Group.
RECRUITING, RETAINING
AND REWARDING OUR TEAMS
Throughout the year, and despite the
COVID-19 pandemic, we continued to
resource for future growth.
In addition to strengthening teams in our
Engen-branded markets a number of new
roles were identified, created and filled across
the Group to expand our capabilities and help
set us up for future growth in business areas
such as Food, Convenience Retail, Power,
Supply & Sourcing and Sales & Marketing.
During the year Doug Lafferty’s appointment
was announced and on 1 February 2021 he
joined our Board as Chief Financial Officer
Designate. He will take up his role as Chief
Financial Officer on 5 March 2021.
Our entrepreneurial culture means that
remuneration is closely tied to achievement.
Variable pay, in the form of annual discretionary
bonuses linked to individual and business
performance, is a key element of our culture.
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STRATEGIC REPORT STRUCTURED
DEVELOPMENT
FOR TRAINING &
DEVELOPMENT
ENTREPRENEURIAL
CULTURE AND
LOW RATE OF
RESIGNATIONS
DIVERSITY
AS A COMPETITIVE
ADVANTAGE
$1m
invested in learning and
development in 2020
3.5%resignations
during the year
27%of employees
are women
DIVERSITY
We promote the development and best use
of our employees to create an inclusive work
environment, where every employee has an
equal opportunity to develop his or her skills
and talents.
Part of our talent strategy, our Diversity
Principle states that Vivo Energy values
diversity as an organisational strength.
We believe that employing and developing
the top talent from all backgrounds and with
varied experiences within the countries where
we operate, gives us a competitive advantage.
Across the Group, 43 nationalities are
represented, with 35 nationalities across
our middle to senior management levels.
GENDER DIVERSITY
We strive to ensure balanced gender
diversification across all employees.
Although our gender balance is steadily
improving, we recognise that there is
further room for improvement.
Across the Group, women represent
27% of total employees, up from 26% in
2019 and 25% in 2018. Female representation
was higher (around 34%) among our
office-based and sales staff in 2020
(around 33% in 2019).
We’ve also developed bespoke incentive
schemes for front line sales staff in the
Retail, Commercial and Lubricants segments.
In addition, we provide a wide range of benefits
for many of our people including healthcare,
pensions and life insurance. Long-Term
Incentive Plan (LTIP) arrangements apply
selectively to senior managers and certain
other key members of staff.
See pages 102 to 104 for details of LTIP awards
to our Executive Directors.
Low rates of resignations in 2020 of 3.5% are
testament to the way we reward our teams,
and underline our success in retaining talent.
These figures are in line with those reported
in 2019, which saw a 4.6% resignation rate.
Our overall turnover percentage remains
well below the African benchmark.
During 2019 our Senior Independent Director,
Hixonia Nyasulu, was appointed Employee
Engagement Champion. In 2020 the Employee
Engagement Committee was established,
representatives were identified and appointed,
and the first two committee meetings took place.
For more information see page 89 in the
Governance Report.
We conducted a short pulse survey in
November, focused particularly on our
response to COVID-19 and levels of employee
engagement while working remotely. 92% of
employees said they are proud to work for
Vivo Energy and 95% said they choose to do
more than what is expected of them in their
roles. Local country results are being shared
with employees and areas of improvement
and action plans are being developed.
A more detailed employee survey is planned
for 2021 to ensure we continue to enhance
employee engagement.
During the year, we developed a flexi-place
working policy to help improve efficiency,
productivity and our Employee Value
Proposition. The aim is to roll out this
discretionary policy to eligible employees
during 2021.
OUR GENDER SPLIT AT
31 DECEMBER 2020 WAS
AS FOLLOWS:
Board of Directors
Senior Executive Team1
All other employees
Female
Male
Total
2
1
741
7
8
1,995
9
9
2,736
1
The CEO and CFO are counted in the Board of
Directors row. While they are also members of the
Senior Executive Team, they are not counted in this row,
to avoid double-counting.
Men
Women
73%
27%
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HIGHLIGHTS DURING THE YEAROTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
LOOKING AFTER
OUR PEOPLE
Safety is our absolute priority. Our robust HSSEQ system and
processes have helped us protect our employees, customers and
partners from the risk of COVID-19.
OUR HSSEQ FOCUS AREAS
Our HSSEQ performance is benchmarked
against the downstream activities of our
industry peers, and we consistently score
ahead of companies operating both within and
outside Africa. HSSEQ is an integral part of
our business plan and we work to incorporate
it throughout our culture and operations.
In 2020 we maintained four main HSSEQ focus
areas, adding a focus on COVID-19 when the
pandemic started impacting the world:
– Road safety including providing driver
training and rewarding safe driving, as well
as incorporating extra safety equipment
into vehicles.
– Contractor safety which extends from
requiring contractors to comply with our
HSSEQ policies through to driver and
vehicle initiatives.
– Process safety such as ensuring that safe
working practices are followed at all depots,
blending plants and other sites where we
operate potentially hazardous equipment.
– Security including traveller and country
security monitoring and incorporating
security initiatives into the design and
operation of our assets.
– COVID-19 Acting swiftly to protect our
people, customers and partners from
the risks associated with the pandemic.
HSSEQ is an integral part of
our business plan and we work
to incorporate it throughout
our culture and operations.”
KEEPING OUR PEOPLE
SAFE FROM COVID-19
In 2020, Vivo Energy, in line with the rest of the
world, experienced a year without precedent
where our challenging HSSEQ environment
was further impacted by the COVID-19
pandemic. Despite this, our robust HSSEQ
governance, policies and procedures ensured
that we not only mitigated the risk of the
pandemic to our employees and stakeholders,
but once again achieved world-class
HSSEQ results.
Our focus on the health and wellbeing of
our employees, customers, contractors and
stakeholders ensured that we were able to
recognise, mitigate and overcome our normal
HSSEQ risks while also being recognised by
many stakeholders for our work on COVID-19
risk mitigation within the markets where we
operate. This is firmly in line with our goal of
zero harm to people and the environment and
endorses Vivo Energy’s vision of becoming the
most respected energy business in Africa.
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STRATEGIC REPORT KEEPING HSSEQ
TRAINING RELEVANT
AND CURRENT
PREVENTING
INCIDENTS
DEDICATED
TO IMPROVED
SAFETY
9,000
hours of HSSEQ
training provided
92%of potential
incident reports
for 2020 closed out
370HSSEQ improvement
stories submitted
for Safety Day
TOTAL RECORDABLE CASE FREQUENCY
PER MILLION EXPOSURE HOURS
2020
2019
2018
2017
2016
EMPLOYEE AND CONTRACTOR
FATALITIES
2020
2019
2018
2017
2016
0.10
0.04
0.19
0.10
0.31
0
0
1
0
0
CONTINUOUS
HSSEQ IMPROVEMENT
During 2020 we reviewed the Group’s
HSSEQ governance system and its associated
policies, manuals, protocols and procedures.
This ensured that we have a simple, focused,
efficient and relevant HSSEQ Management
System that is able to be understood, adopted
and implemented across the countries where
we operate.
This review and update was supported by
the adoption of a bespoke HSSEQ information
management system which allows our staff,
from senior leadership through central and
country management to our employees, to
interact proactively within the HSSEQ sphere.
Our safety system is based on the premise that
all risks should be recognised across all aspects
of our business. These risks must have barriers
and controls to prevent incidents and accidents
occurring. On the occasions when an incident
does happen, this is rigorously investigated.
Lessons learnt from the incidents are shared
and operational procedures and processes are
updated to ensure that similar incidents do
not reoccur. High potential incident reviews
are led by senior management with extensive
and detailed remedial action plans produced.
Our ‘Potential Incident’ reporting system
aims to prevent incidents from happening,
as opposed to fixing them after they’ve
occurred – one of the true indicators of a
world-class safety culture. During 2020, the
Group recorded over 46,500 Potential Incident
reports, with around 92% of these having been
closed out by the end of December 2020. It is
only through the constant attention to these
potential incidents that major incidents and
accidents are avoided.
Across all of our operating units (OUs) we
were again very proud of our Total Recordable
Case Frequency (TRCF) and Lost Time Injury
Frequency (LTIF).
In our Engen-branded OUs, we further
strengthened the HSSEQ culture, with the
majority of Vivo Energy HSSEQ procedures
being adopted. This process will be completed
in 2021. These markets performed particularly
well in HSSEQ and the performance data for
2020 reflects the successful adoption of the
Vivo Energy HSSEQ Management System.
For us to remain a leader in HSSEQ, it is
imperative that we continue to ensure that
our staff are competent and that HSSEQ
training is relevant and current. In 2020,
we commenced a comprehensive HSSEQ
competency assessment review, with
each operationally critical position being
mapped and their competencies outlined.
This will be implemented using our new
information management system to ensure
that competencies are tracked and current,
and that employees are able to be evaluated
for new positions or promotions.
In 2020, we provided over 9,000 hours of
HSSEQ training, despite the severe travel
restrictions. Extensive use was made of
virtual learning platforms and a large number
of HSSEQ training courses were adapted and
distributed through the Group’s e-learning
channels, including podcasts and interviews
with HSSEQ Subject Matter Experts.
We maintain a Vivo Energy Group Crisis
Management Plan and run training sessions
and simulation exercises across our OUs.
During October, we ran our annual Safety
Day across the Group, which this year focused
on ‘Safety: Action Matters’, demonstrating
how employees have been improving HSSEQ
at Vivo Energy. 370 HSSEQ improvement
stories were submitted by employees and the
best were selected and showcased across the
Group to celebrate and share best practice.
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HIGHLIGHTS DURING THE YEAROTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RESOURCES AND RELATIONSHIPS CONTINUED
MANAGING OUR
ENVIRONMENTAL IMPACT
We continue to adapt our business to offer what our customers
need and to support the transition to a low-carbon economy
in the decades to come.
OUR ENVIRONMENTAL POLICY
AND MANAGEMENT SYSTEM
We recognise that we have a responsibility
towards the environment beyond legal and
regulatory requirements. We are committed to
reducing our impact and continually improving
our environmental performance as an integral
part of our business strategy and operating
methods. We will encourage our partners,
customers, suppliers and other stakeholders
to do the same.
As part of this commitment, we promote
cleaner and more efficient fuels and lubricants
through our business channels as well as
providing access to LPG where possible as
a transition fuel to replace carbon intensive
fuels. We will also look to utilise renewable
technologies in our operations and as
solutions for our customers.
We continued to deliver against our plan
to receive external certification for our
Environmental Management System (EMS)
which is part of our Group-wide HSSEQ
and Social Performance Management System,
designed to cause zero harm to people and
to protect the environment.
Across the Group, we secured the ISO 14001
(Environmental Management) standard in
five of our OUs, and both ISO 14001 and
ISO 45001 (Occupational Health and Safety)
certifications for Vivo Energy plc during
the year. We now hold 19 different ISO
certifications across the Group. We continue
our plan to obtain local ISO certifications
for the majority of our OUs within the next
five years.
GREENHOUSE GASES
In order to reduce our environmental
footprint and improve our environmental
performance we have concentrated on
operational efficiencies across our business.
Reporting and tracking of emissions in 2020
has ensured that we have continued to compile
a comprehensive overview of our Scope 1
and Scope 2 emissions. We will continue to
promote reduction of both emissions and
quantities of water and waste in all operations.
We adhere to the UK Government
Environmental Reporting Guidelines and the
UK Government Greenhouse Gas Conversion
Factors. These are the methodologies used
to calculate our GHG emissions.
Our combined GHG emissions from our
23 Shell- and Engen-branded operating
units were:
Kilotonnes
of CO2
equivalent
2020
Kilotonnes
of CO2
equivalent
2019
58.77
67.32
7.98
8.02
66.75
75.34
0.06926
0.07232
Emissions from
combustion of fuel
(Scope 1)
Emissions from
electricity, heat, steam
and cooling (Scope 2)
Total Scope 1 & 2
emissions
Emissions intensity
ratio (KT CO2e/
10,000m3)
This figure includes emissions of CO2 equivalent
(CO2e), including both combustion of fuel
and the operation of our facilities (including
the purchase of electricity, heat and cooling),
as far as it has been possible for us to ascertain.
We have not included emissions from our
central offices located outside our OUs as
these are small, shared office spaces, without
accurate information and responsible for
minimal emissions.
Our absolute emissions in 2020 are lower
than 2019 as a result of reduced activity across
our markets during the first half of the year.
The intensity ratio for 2020 is broadly in line
with the previous year due to continued
energy efficiency measures across the Group.
We have enhanced tracking of our Scope 3
emissions, to ensure we comply with all
legislative requirements and are working
towards comprehensively reporting these
in subsequent annual reports, to provide a
wider picture to investors and shareholders.
Finally, we also continue investigating
opportunities for carbon credits and carbon
offsets within our operations and with
our partners.
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STRATEGIC REPORT SETTING STANDARDS
IN OUR HSSEQ SYSTEM
TOTAL SCOPE
1 & 2 EMISSIONS
MINIMUM
FUEL SPILLS
19ISO certifications
obtained across
the Group
66.75
kilotonnes of
CO2 equivalent
0.00002%
of product volume
lost to the environment
RESPONDING TO CLIMATE CHANGE
Africa has a fundamental reliance on roads to
move goods and people around the continent
and we expect this will drive growing demand for
various fuels for many years ahead. The shift to
electric vehicles (EVs) will lag developed markets
due to the cost, lack of charging infrastructure,
access to electricity and regulation, which means
EVs are unlikely to become even a meaningful
part of the car market in the majority of
our countries for some time.
Cognisant of this, we still believe it is vital that
we respond to climate change impacts and we
actively strive to reduce our impact on the
environment. We’ve outlined through this report
the range of initiatives underway to manage our
Scope 1 and 2 impact, ranging from solar power
on sites, to trucking and distribution efficiencies
and we will continue to do more going forward.
It is clear that due to the nature of the products
we sell our indirect, Scope 3 impact is significantly
larger than our direct emissions, and while we
need to meet the growing demand for fuels
from our customers, we must do this in the most
climate-friendly way possible. Today we are one
of the few companies in Africa putting additives
into the majority of the Retail fuels we sell to
make them more efficient and are looking at
increasing our renewable energy offerings to our
B2B clients and our own operations.
We’re in the process of more formally
embedding climate change into our governance,
strategy and risk management, and have engaged
a sustainability consultancy to advise us as we
develop this further. We will continue to adapt
our business to offer what our customers need
and to support the transition to a low-carbon
economy in the decades to come. As part of this
we have also enhanced the Board oversight of
our climate change and broader ESG approach.
In this manner, we’re enhancing the monitoring
of the impacts of our business and plan to
disclose more of these in future reports.
We’re also committed to managing and
reducing our impacts, whether through the
use of new technologies or providing lower
carbon alternatives such as LPG, solar or other
commercially attractive options to customers
as part of the transition. We must not leave our
communities, who may be impacted the most by
climate change, behind. We will continue to invest
in those communities, supporting their efforts
against climate change where we can.
Vivo Energy’s purpose is to safely provide
innovative and responsible energy solutions to
Africa, which enable growth and development
of the continent and its people. Living our
purpose is strongly aligned with the need for
everyone to play their role in the battle against
climate change and we believe that by doing so,
and ensuring the longer-term sustainability of
the business, we will continue to deliver value
to all of our stakeholders.
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HIGHLIGHTS DURING THE YEAROTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
TRANSPORT EFFICIENCIES
Most product transportation in our countries
is by road, which is a challenging and complex
area for industry worldwide and particularly
in the majority of the countries within which
we operate. To improve safety performance,
we focus on safe practices, behaviours and
influence our contractors’ vehicle age and
design. A major focus over the past few
years has been on reducing the age of our
contractors’ fleets, while increasing the size
of the trucks from 35m3 to 42m3, to increase
drop efficiencies. In addition, we continue to
explore other options for improving supply
and distribution efficiencies. In Kenya, we have
shifted a large part of our inland distribution
to the north and centre of the country from
road to pipeline and rail. This not only reduces
our carbon footprint substantially but also
decreases our road transport risk.
SITE AND DEPOT EFFICIENCIES
We have continued to focus on improving
energy efficiency at our service stations,
depots and head offices to reduce the
demand and cost of conventional electricity,
while contributing to more environmentally
friendly operations. Actions include LED
lighting, more efficient heating and ventilation
systems, and better insulated double glazing.
Where possible newly built and rebuilt sites
will include solar power. During the year an
additional 33 service stations had solar panels
added, bringing the total number of sites across
the network with solar power to 118.
In Reunion, which is a French Territory,
we expect to see faster adoption of electric
vehicles due to French Government
subsidies, and as such we are investing in
new technologies that may be utilised in
future in alternative markets. During the
year we equipped a number of our sites
with photovoltaic panels that will supply
Electric Vehicle Recharge Facilities (EVRF),
meaning that the power used to charge EVs
will be renewable. We have also signed a
partnership agreement with Loisibike, which
specialises in electric bicycles in Reunion, as
part of the country’s Energy Saving Certificate
(C2E) framework.
In Tunisia solar panels were installed in the
Rades fuel depot and in the LPG filling plant,
and can produce up to 13% of the annual
electricity consumption of the depot.
In Reunion, which is a
French Territory, we expect
to see faster adoption
of electric vehicles due to
French Government subsidies,
and as such we are investing
in new technologies that
may be utilised in future
in alternative markets.”
PRODUCT IMPACT
CLEANER FUELS AND LUBRICANTS
The importation of products into most of
our markets is regulated by governments that
set specific standards for specifications of fuel
products which balance environmental impact
with affordability. Through our relationship
with Shell, we have access to their advanced
products, which enables us to include additives
in the retail fuels we sell in our Shell-branded
markets – driving better engine efficiency,
reducing fuel consumption and therefore
reducing emissions.
During 2019, we launched new fuel
formulations in a number of our markets,
and while some new product launches were
paused during 2020 we were able to launch
the new formulation of Shell FuelSave with
DYNAFLEX technology in Namibia and
Mali during the year. We intend to expand
the distribution of the latest additive fuel
technology in our markets during 2021.
We are also exploring opportunities to
provide additives in the fuels we sell in
our Engen-branded markets.
In Kenya, we launched new generations of
lubricants in the Shell Helix and Rimula ranges.
Derived from synthetic oil, these products
help reduce CO2 emissions and save fuel.
These lubricants are now sold in over ten of
our markets.
The year saw an increase in demand for LPG
across the markets in which we sell it, primarily
due to the nature of government responses
to the pandemic. LPG is seen as a transition
fuel as it is used both for home cooking as an
alternative to more traditional methods, and
can also be used to replace Heavy Fuel Oils in
industrial applications. We will look to develop
this business further in 2021.
MARINE FUELS
At the beginning of 2020, new marine fuel
regulations came into force, lowering the global
bunker fuel sulphur limit from 3.5% to 0.5%.
We supported the change and had prepared
our facilities. In accordance with MARPOL
2020, we now offer Low Sulphur Heavy Fuel
Oil to our marine customers.
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STRATEGIC REPORT WASTE MANAGEMENT AND
PRODUCT STEWARDSHIP
We’ve increased our focus on product
stewardship, ensuring that we manage
our products from acquisition until disposal.
In each country, we manage this in accordance
with national legislation and product
stewardship protocols.
All hazardous materials are accompanied by
Safety Data Sheets, and are transported, stored
and sold in accordance with strict requirements
which adhere to both national and industry
requirements. We dispose of all hazardous
waste in accordance with national legislation
and each country’s particular requirements for
obtaining disposal certificates. This information
is tracked, reported and verified by our
audit regime.
During the year we also began to track the
quantity of waste generated within the Group,
whether in our offices, at our depots or on our
sites. Once we have a suitable baseline for this
we will look to report further.
PRODUCT SPILLS
We recorded an exemplary hydrocarbon spills
performance during the year. There were
only two minor spills recorded in the Group,
with a total of only 1,700 litres being lost to
the environment. This compares to 7,500
litres that were spilt in 2019 and represents
less than 0.00002% of the product volumes
that we handled through the year. However,
we believe that even this is unacceptable and
continue to strive towards our goal of zero
harm to the environment with programmes
in place to reduce and minimise product spills.
These include training for road transport
contractors, quality marshals and detailed
checklists to ensure the correct standards
and procedures are followed in order to
reduce the chance of spills.
POWER SOLUTIONS
We were delighted to secure a contract to
provide solar power to the Nampala mine
in Mali, our first contract with one of our
commercial customers to provide a hybrid
solar and fuel energy solution. We look
forward to launching this project later this year
and to expanding this offering to our existing
and future Commercial customer base to help
reduce their costs. We believe the project will
reduce the mine’s CO2 emissions by around
60,000 tonnes over the next ten years.
SOCIETAL IMPACT
We want to make a real and lasting difference
to our communities, supporting them and
promoting a better quality of life and more
sustainable future.
Our team in Kenya has partnered with KOKO
Networks, a clean technology company, with
a network of around 600 smart fuel ATMs
that enable liquid bio-ethanol cooking fuel to
be scaled as a clean alternative to charcoal
and kerosene. Our partnership with KOKO
provides low-income households with a
product that is cheaper, more convenient,
safer, and has a much lower impact on the
environment. One of the key benefits of KOKO
Fuel for the consumer is that the initial cost is
significantly lower than that of LPG, thereby
reducing a key barrier to adoption. Uptake has
been very strong, with hundreds of thousands
of Nairobi residents benefiting and plans for
expansion to the rest of Kenya are underway.
In Mauritius our team immediately responded
following the grounding of the MV Wakashio,
on a coral reef off the coast of the island in July.
We provided our bunkering barge to help the
salvage efforts and reduce further product spill
to the sea. We provided oil spill kits, technical
assistance and donations to support the
government with the clean-up operation.
In Morocco we created an online version of
our Mama Tabiaa programme, an educational
initiative created with the Zakoura Foundation
and supported by the Ministry of Education
to educate students and their families on
environmental issues.
NUMBER OF PRODUCT SPILLS
GREATER THAN 100KG
2020
2019
2018
2017
2016
TOTAL VOLUME OF PRODUCT LOST
’000 LITRES
2020
2019
2018
2017
2016
2
3
2
4
3
1.7
7.5
45.4
50.4
1.1
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In Morocco we created an online version of
our Mama Tabiaa programme, an educational
initiative created with the Zakoura Foundation
and supported by the Ministry of Education
to educate students and their families
on environmental issues
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RESOURCES AND RELATIONSHIPS CONTINUED
MAINTAINING AN EFFECTIVE
FINANCIAL STRUCTURE
We maintain a disciplined and effective financial structure,
and manage to deliver maximum returns.
OPERATING LEVERAGE
Our mostly fixed cost structure mitigates the
need for adding significant overhead whenever
we grow the size of our Retail network, which
sets the business up for significant operating
leverage in the future.
CURRENT CREDIT RATINGS
We were awarded a rating of Baa3 by Moody’s
in 2020, which is investment grade, and reflects
well on our financial structure and business
strategy. We also have current BB+ ratings
from Standard and Poor’s and Fitch Ratings.
The recent notes, issued in September 2020,
were awarded the same rating. We actively
monitor capital market conditions for
opportunities to enhance the efficiency
of our capital structure.
HOW WE’RE FUNDED
Our business has achieved tremendous growth
since inception in 2011 and we’ve expanded our
footprint in Africa by investing over $1 billion
of funds generated internally from operating
cash flows. Most of the Group’s funding
requirements for new investments come from
cash generated by existing operations as well
as our structurally negative working capital
position. We have a well-managed financial
structure at Group level, with a leverage ratio
of 0.86x in 2020 and have access to $2.1 billion
in liquidity of which $1.3 billion is uncommitted.
The Group issued $350 million worth of notes
during the year, a good indicator of market
confidence in our future performance.
CAPITAL ALLOCATION
The Group follows a rigorous return
requirement in our capital allocation to ensure
that every growth project adds significant
value to our business. We carry out a
robust post-investment review process that
measures actual returns against projections,
with the majority of our projects exceeding
required returns.
WELL MANAGED
FINANCIAL STRUCTURE
MARKET
CONFIDENCE
STRONG
LIQUIDITY
0.86x
leverage ratio in 2020
(2019: 0.48x)
$350m
notes issued
$2.1bn
available short-term
resources in 2020
(2019: $1.9 billion)
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PRIORITIES AND HIGHLIGHTS DURING THE YEARSTRATEGIC REPORT NON-FINANCIAL INFORMATION STATEMENT
This Annual Report contains the information required to comply with the Companies, Partnerships and Groups (and Non-Financial Reporting)
Regulations 2016, as contained in sections 414CA and 414CB of the Companies Act 2006. The table below provides key references to information that,
taken together, comprises the Non-Financial Information Statement for 2020:
NO.
REPORTING
REQUIREMENT
POLICIES
ENVIRONMENTAL MATTERS
– Environmental policy
– Code of conduct
REFERENCE IN THE
2020 ANNUAL REPORT
– Climate change
– Climate change risk
PAGE
NO.
54 to 57
67
1
2
3
4
5
6
7
8
– HSSEQ and Social Performance policy
– Managing our environmental impact
54 to 57
EMPLOYEES
– Code of conduct
– Our culture and purpose
– General Business Principles
– Our people
– HSSEQ risk
– Looking after our people
– Whistle-blowing policy
– Data protection policy
– Privacy policy
– Performance, reward and
recognition framework
– Travel security policy
65
48 to 49
50 to 51
52 to 53
HUMAN
RIGHTS
SOCIAL
MATTERS
ANTI-CORRUPTION
AND ANTI-BRIBERY
– Combating Modern Slavery statement
– Our culture and purpose
48 to 49
– Privacy policy
– Data protection policy
– Code of conduct
– Engaging with our stakeholders
– General Business Principles
– Our people
– HSSEQ and Social Performance policy
42 to 45
50 to 51
– Anti-bribery and corruption manual
– Criminal activity, fraud,
64
bribery and compliance risk
– Our culture and purpose
48 to 49
– Anti-money laundering policy
– Anti-trust manual
– Whistle-blowing policy
– Know your counterparty policy
– Gifts and hospitality policy
– Sponsorship and Donations policy
– Code of conduct
BUSINESS
MODEL
PRINCIPAL RISKS
AND UNCERTAINTIES
NON-FINANCIAL KEY
PERFORMANCE INDICATORS
– Business model and value creation
18 to 19
– Principal risks and uncertainties
62 to 69
– Non-financial key performance indicators
25
– Our strategic objectives
22 to 23
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT STR ATEG IC REP ORT
RISK MANAGEMENT
OUR APPROACH
TO RISK
Active risk management is one of our key priorities and
an important component of our strategic framework.
Our success depends on our ability to identify and exploit
emerging business opportunities in the markets where
we operate, and this comes with an element of risk.
To achieve our risk management objectives,
we have embedded risk management
activities in the operational responsibilities
of management and made these activities
an integral part of our overall governance,
planning, decision-making, organisational and
accountability structure. Risk evaluation is
conducted by assessing the probability of a
risk occurring and its potential impact should
this happen.
The main purpose of risk evaluation is to
help prioritise risks and ensure effective risk
management. Through a structured approach
to risk management, we are able to mitigate
and manage risks and embrace opportunities
as they arrive.
OUR APPROACH TO
RISK MANAGEMENT
Our internal control system is based on
the Committee of Sponsoring Organizations
of the Treadway Commission’s (COSO)
framework and uses the five components
of the framework: control environment,
risk assessment, control activities, monitoring,
and information and communication.
Our approach is based on the underlying
principle that line management is accountable
for risk and control management. We follow
a risk-based approach to internal control and
management is responsible for implementing,
operating and monitoring the internal control
environment. The Board is responsible
for reviewing and monitoring the overall
risk profile, the adequacy of the Group’s
risk management and the effectiveness
of internal controls.
Our risk management framework is
underpinned by a ‘three lines of defence’
approach, which defines how risk management
activities are organised and where responsibility
and accountability lie within the Group.
– First line of defence – As the first line of
defence, local functional managers own and
manage their risks. They have ownership,
responsibility and accountability for directly
assessing, controlling and mitigating risks
in line with the guidance, policies and
requirements set by the Group. They are
responsible for implementing corrective
actions for control deficiencies identified
through the KPI reporting and goal zero
checklists (a monthly check completed
by management which evidences that
controls are operating as intended).
– Second line of defence – Financial (Internal
Control, Credit, Treasury) and non-financial
(Legal, Ethics & Compliance, Supply, HSSEQ,
Retail) risk management functions are in
place at Group level to oversee and monitor
risks and provide an objective challenge
to the first line of defence. They can
intervene directly by modifying internal
controls, policies and procedures as well
as developing risk systems.
– Third line of defence – The Group’s
(independent) Internal Audit function
and the Audit and Risk Committee are
in place to provide assurance to the
Board on the effectiveness of governance,
risk management and internal controls.
This includes the extent to which the
first and second lines of defence have
achieved their risk management and
control objectives.
In accordance with the UK Financial Reporting
Council guidance, we define a principal risk
as a risk or combination of risks that could
significantly affect the financial performance,
operations or reputation of the Group.
Our principal risks disclosed hereafter relate
to the current risks but also include the
identified emerging risks. Emerging risks are
considered particularly important in our
strategic planning process to identify potential
shifts in critical assumptions and develop
or modify strategies to either minimise
their negative effects or capitalise on the
opportunities that they may present.
OUR RISK APPETITE
The Board is committed to adopting a risk
profile and approving a risk management
framework that is in line with our vision
and culture.
We ensure the risk management framework
is adequately communicated, integrated in all
areas of the organisation and that accountability
is assigned at all appropriate levels.
When considering risk appetite, the Board
seeks to balance opportunities for growth and
business development in areas of potentially
higher risk and return, while being more risk
averse in other areas such as reputation,
legal, regulatory and health and safety.
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STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
RISK ASSESSMENT,
MONITORING AND REVIEW
For each risk or category of risks, our
risk management process includes
activities performed in a continuous cycle.
Risk assessment includes risk identification,
analysis and evaluation, and ensures each
risk is analysed to identify the consequence
and likelihood of the risk occurring and the
adequacy of existing controls. Each reportable
entity is responsible for implementing the
appropriate structures, processes and tools to
allow proper identification of risks. Once the
risks have been identified, analysed, managed
and evaluated, risk mitigation identifies the
actions to be implemented by management.
The risk register is one of the key components
of our risk management and governance
structure. The focus areas include HSSEQ,
financial, operational, compliance, reputation
and strategic risks. The Group risk register
consolidates the register from the Central
Functional Heads (top-down) and from
each operating unit, maintained by all local
management teams (bottom-up). The register
is reported on a quarterly basis and facilitates
evaluation of existing and emerging risks.
The Group register is reviewed by the
Internal Audit team to ensure completeness
of the reported risks and adequacy of their
assessments before presentation to the Senior
Executive Team for its review and analysis of
the risks as well as the related control activities
and mitigation measures.
The various risk reporting channels are
consolidated into one streamlined escalation
process which is used by the Board to assess
and analyse the risks of the Group and
implement an action plan when necessary.
Our Internal Audit team performs a continuous
assessment of our significant risks and
communicates them to senior management
who in turn develop action plans to address
the identified risks. Internal Audit reports
directly to the Audit and Risk Committee on
the principal risks. The Committee will review
and assess the status of each risk. Reviews and
recommendations are presented to senior
management to continuously strengthen
our internal controls framework.
INTERNAL CONTROL SYSTEM
Our approach to internal control includes
a number of general and specific risk
management processes and policies.
Within the essential framework provided by
our General Business Principles, the primary
control mechanisms are self-appraisal processes
in combination with strict accountability for
results. These mechanisms are underpinned
by established policies, standards and
guidance that relate to particular types of
risk. These include structural investment
decision processes, timely and effective
reporting systems and performance appraisal.
They cover all material controls, including
financial, operational and compliance.
In addition to these structured self-appraisals,
the assurance framework relies upon objective
appraisals by Internal Audit and the Central
Internal Control team. The results of these
teams’ risk-based reviews of operations
provide an independent view regarding the
effectiveness of risk and control management
systems. These established reviews, reporting
and assurance processes enable us to regularly
consider the overall effectiveness of the
system of internal control and to perform a
full annual review of the system’s effectiveness.
Taken together, these processes and practices
provide confirmation that relevant policies are
adopted and procedures implemented with
respect to risk and control management.
OUR DYNAMIC
RISK ENVIRONMENT
As part of the risk management framework,
we regularly consider changes in the nature,
likelihood and impact of existing and new
risks, including the Group’s ability to respond
to changes in its business and the external
environment. As detailed hereafter, our
business environment and risk exposure have
been particularly impacted in 2020 by the
COVID-19 crisis.
In response to the risks created by COVID-19,
we have initiated our Business Continuity Plans
and have put in place extensive measures to
protect the health and safety of our employees,
stakeholders, counterparties and communities.
The pandemic and new ways of working
have created increased opportunities for
fraudsters, with an increase in phishing attacks
and cyber-fraud activity reported. We have
strengthened our controls in this area, by
providing online training and guidance for all
staff on how to securely work from home.
We have adapted the management of critical
operational and finance activities, increasing
the frequency at which the Group monitors
our credit, supply commitments, demand,
stocks, payables and forex exposures in the
current high-volatility environment, enabling
the Group to manage risks as they arise.
These activities are expected to continue while
the pandemic has a significant impact on the
Group and will be adapted to the evolving
business environment as well as the measures
taken, imposed or released by authorities in
the countries where we operate. The Senior
Executive Team, together with relevant senior
operational and financial management, has met
on a regular basis, including weekly at the height
of the impact, to review the key performance
indicators, considered the Group’s response
to the developing situation and reviewed the
recovery plans for the businesses. Furthermore,
the Board has met regularly during this period
and has received updates from the Group.
As part of the Group’s risk management
framework, we continue to consider changes
in the nature, likelihood and impact of existing
risks, as well as new and emerging risks.
Considering the mobility constraints, our
Control functions have developed remote
review functionalities in order to maintain
continuous monitoring of our activities.
The Forensics function is in charge of fraud
detection and investigation activities as well as
fraud awareness and prevention. The function
works in close collaboration with the Group
Ethics and Compliance function and acts
independently of the business, reporting
directly to the Head of Internal Audit.
The Misconduct and Loss Reporting Policy,
together with the Investigation Guidelines,
directs our response to fraud and manages the
reporting, analysis and investigation of serious
allegations or concerns. The Forensics function
monitors the cases identified and initiates or
advises on the investigations when suspicions
or allegations are reported.
As detailed hereafter, as part of our ongoing
risk analysis, we reviewed the potential
impact of climate change on our business and
acknowledged the increased focus from our
key stakeholders around the issue. Our priority
will be to ensure our business is as efficient
as possible, while identifying areas where
we can support the long-term transition to
a low-carbon economy. We will continue to
comply with the evolving regulation while
adapting to deliver product offerings that meet
future changes in customer needs. We are
aware of our environmental impact and are
committed to reducing this and continually
improving our environmental performance.
We encourage our stakeholders to do the
same. In our view, this is consistent with our
vision to become the most respected energy
business in Africa.
As a listed company on the Main Market
of the London Stock Exchange, we have
considered the implications of the United
Kingdom’s exit from the European Union
(‘Brexit’) on the business of the Group.
The Brexit withdrawal agreement (officially:
The Agreement on the Withdrawal of the
United Kingdom from the European Union),
setting the terms of the withdrawal, was
ratified by the UK on 24 January 2020 and
by the European Parliament on 29 January
2020. After extensive negotiations, the UK
and the European Union agreed on the future
commercial and cooperation terms and
framework on December 24, 2020. In view of
their geographical location, we do not expect
our business operations to be impacted by
this agreement.
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5
These include:
– Financial regulators and governments –
as a UK listed company, Vivo Energy will
be required to meet the climate-related
disclosure standards set by the FCA,
including alignment to the Task Force
on Climate related Financial Disclosures
recommendations. As a leading energy
business in Africa, Vivo Energy’s licence to
operate will depend on strong government
relations. These governments and their
multinational backers are, in many cases,
increasingly focused on sustainability
and low-carbon transitions, including
the achievement of national targets or
Nationally Determined Contributions
(NDCs).
– Investors – asset owners and managers
are increasingly focused on the importance
of climate related risks in their portfolios,
often taking an active role in engaging
companies on their readiness for transition.
The emergence of initiatives like the
Net-Zero Asset Owners Alliance, Climate
Action 100+ and the Transition Pathway
Initiative demonstrates the ambitions
of the sector. The increased scrutiny is
complemented by the use of a number of
reporting platforms (e.g. Carbon Disclosure
Project) and climate related data services
that provide ESG ratings, climate risk metrics
and temperature alignment to assess
portfolio companies.
– Business partners – as a licensee of the
Shell and Engen brands, we recognise
our responsibility to play our part in our
branding partners’ strategy to reduce the
overall carbon impact of our products.
– Customers – shifts are expected in
customer needs and preferences over time
which may impact future fuel demand.
In common with many other companies,
we currently track the performance of our
business, with a focus on the operational savings
from the investments we have made to reduce
our impact on the environment.
PRINCIPAL RISKS
AND UNCERTAINTIES
Our activities are exposed to various risks
and uncertainties. These are risks that we
assess as relevant and significant to our business
at this time, however other risks could emerge
in the future.
Overall, our risk management programme
focuses on the unpredictability of the global
market and seeks to minimise potential adverse
effects on financial performance. In addition
to the risks and uncertainties presented below,
our ability to simultaneously manage the
multiple growth generating projects is closely
monitored by all relevant control functions.
The Board has assessed the impacts of
COVID-19 on the principal risk factors over
2020 and considered that the heightened risk
related to the impacts of the pandemic are
likely to remain applicable in 2021. Indeed,
at the time of issuance of this report, the
visible impact of the pandemic remained
lower in our markets than in most other
regions of the world, but given the nature of
the pandemic the Board did not exclude the
scenario whereby the number of infections
and mobility restrictions could increase again
in our markets. COVID-19 has affected most
of our principal risks, with Health and safety,
Credit management, Oil price fluctuations
and Currency exchange risk seeing particular
increases in their risk profiles.
In addition to the impact of COVID-19 on the
Group detailed hereafter in the description of
our principal risks, as per the Board assessment,
climate change factors are expected to have an
increasing impact on the Group. Consequently,
the climate change risk has now been added to
our list of principal risks.
We believe that the demand for fuel in our
markets will continue to grow and that the
transition to a low-carbon economy will take
significantly longer in our emerging economies
than in Europe. However, we do recognise
the impact that our operations have on the
environment, as well as the risks that climate
change may have on our activities, and are
committed to playing our part towards meeting
the Paris Agreement objectives. Vivo Energy
has previously developed an environmental
and social performance strategy and is evolving
this to provide for the increasing expectations
of our key stakeholders, business partners
and customers in relation to climate change.
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1 To remain a responsible and respected business in the communities in which we operate;2 To preserve our lean organisational structure and performance-driven culture;3 To maximise the value of our existing business;4 To pursue value-accretive growth; and5 To maintain attractive and sustainable returns through disciplined financial management.WE HAVE FIVE KEY STRATEGIC OBJECTIVES: STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
STRATEGIC
OBJECTIVES
1
BR AND & REPUTATIONAL
OUR RISK
RISK IMPACT
OUR MITIGATION
1. PARTNER REPUTATION AND RELATIONSHIPS
Our business depends on a small
number of key contractual brand
relationships with our brand partners,
Shell and Engen. We also rely on our
own business reputation and brand in
order to successfully grow our business
and develop new relationships with
other brand partners.
Our ability to grow and maintain our
business in our markets and beyond
depends on the reputation of our
business partners and relationships
(including our brand partners).
The termination of any key brand
licence could have a material impact
on our ability to grow or maintain our
business and could have a material cost
impact on current operations.
The deterioration of our brand name,
or of any of our business relationships,
including with our existing brand
partners, may prevent collaboration
opportunities with existing or new
partners, thus hindering growth plans
of the Group.
A negative trend or development in
the brand or reputation of one of our
key business partners could adversely
impact our current business and future
growth plans if it were to adversely
impact consumer sentiment towards
the brands under which we operate.
Our brand licence agreements contain
customary termination provisions which provide
that they can only be terminated in very specific
circumstances rather than for mere convenience.
Such termination provisions relate, inter alia, to
events of material breach, insolvency etc. We have
developed appropriate processes and procedures
to monitor and ensure our compliance with
the terms of our brand agreements thus
preserving both the relationships with our brand
partners and the sanctity of our key contractual
relationships. The Group’s corporate reputation
risk is one of the key risk categories subject to
an ongoing assessment and mitigation in our
risk management approach. It is continuously
monitored and reported as part of the risk
register and internal audit reporting.
We endeavour to only enter into brand
relationships with well-established and reputable
partners who are less likely to suffer significant
loss of reputation or brand value. In all our
key contracts and relationships, we ensure our
partners adhere to ethical, HSSEQ and other
operational standards that meet or exceed our
own standards. Stringent Know Your Customer
(KYC) procedures are performed prior to
entering any contract over the Group’s low level
threshold (and regardless of any value when
the counterparty is related to a defined list of
sanctioned countries) and repeated frequently.
We promote and develop the communities in
which we operate to help build the Vivo Energy
brand as the most respected energy business
in Africa.
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BR AND & REPUTATIONAL
OUR RISK
RISK IMPACT
OUR MITIGATION
STRATEGIC
OBJECTIVES
2. CRIMINAL ACTIVITY, FRAUD, BRIBERY AND COMPLIANCE RISK
Violations of anti-bribery,
anti-corruption laws, and other
regulatory requirements may
result in significant criminal or civil
sanctions, which could disrupt our
business, damage its reputation and
result in a material adverse effect
on the business, results of operations
and financial condition.
The countries where we operate are
exposed to high levels of risk relating
to criminal activity, fraud, bribery, theft
and corruption.
There are a number of regulatory
requirements applicable to the Group.
The related risk of non-compliance
with these regulations has increased
following the listing and the
Engen transaction.
The COVID-19 pandemic and
new ways of working have created
increased opportunities for fraudsters,
with an increase in cyber-fraud
activity reported.
We provide compliance training programmes
to employees at all levels.
Our Code of Conduct and KYC procedures,
along with various other policies and safeguards,
have been designed to prevent the occurrence
of fraud, bribery, theft and corruption within
the Group.
1
2
4
We have a confidential whistle-blowing helpline
for employees, contractors, customers and other
third parties to raise ethical concerns or questions.
We regularly maintain and update our information
technology and control systems within the Group.
The Head of Ethics and Compliance and the
Head of Forensics are involved in mitigating
fraudulent activities in the Group.
We strive to ensure our anti-bribery management
systems continue to be certified compliant under
the ISO 37001 standard.
We have further strengthened our controls in
2020 by providing online training and guidance
for all staff on how to work from home securely.
PRICING
OUR RISK
3. OIL PRICE FLUCTUATIONS
The price of oil and oil products may
fluctuate, preventing us from realising
our targeted margins, specifically in
the deregulated markets in which
we operate.
The COVID-19 pandemic led
to an unprecedented volatility
in oil prices throughout 2020.
4. CURRENCY EXCHANGE RISK
We are exposed to foreign exchange
risk, currency exchange controls,
currency shortage and other
currency-related risks.
Our risk includes potential
hyperinflation in several countries,
as we are currently experiencing
in Zimbabwe.
Emerging market currencies have been
hit hard by the global market sell-off on
the back of the COVID-19 pandemic.
RISK IMPACT
OUR MITIGATION
STRATEGIC
OBJECTIVES
Higher supply costs in deregulated
markets result in higher prices for our
products and could reduce our ability
to achieve targeted unit margins.
Price fluctuations could negatively
impact the value of stocks, resulting
in stock losses.
Exposure to commodity price risk is mitigated
through careful inventory and supply chain
management as well as dynamic pricing.
We have adapted the management of critical
operational and finance activities, increasing
the frequency at which the Group monitors
its supply commitments, demand and stocks
in the current high volatility environment.
Depreciation of foreign currency
exchange rates could result
in severe financial losses.
Our treasury policy requires each country to
manage its foreign exchange risks. The Central
Treasury team approves all hedging plans
before they are actioned to ensure they
are aligned with our strategic focus.
We mitigate currency exchange risks
through margin and pricing strategies.
Since the start of the pandemic, we have
increased the frequency at which the
Group monitors its forex exposures.
3
4
5
2
3
4
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FINANCIAL STATEMENTS
OTH ER IN FORMATION
STRATEGIC
OBJECTIVES
1
2
HEALTH, SAFETY, SECURITY & ENVIRONMENT
OUR RISK
RISK IMPACT
OUR MITIGATION
5. HEALTH AND SAFETY
We are exposed to accidents or
incidents relating to health, safety
and the environment and from such
accidents relating to employees.
We are further subject to HSSEQ laws
and regulations and industry standards
related to each of the countries in
which we operate.
This is our principal risk most impacted
by COVID-19. Main risk relates to
staff or business partners contracting
the virus, entailing threats to life and
business continuity.
We may incur potential liabilities
arising from HSSEQ accidents/incidents.
Brand reputation can be
severely impacted, along with
employee confidence.
Regulators and authorities may impose
fines, disrupt our operations and
disallow permits for future ventures.
The health and safety of our staff
and business partners are at risk
due to COVID-19. Unavailability of
staff, contractors or retailers could
also lead to closure of key sites.
We ensure all safety measures for our retail
service stations, storage sites and employees
are maintained at international standards.
We invest significantly in training and technology
to improve road transport safety.
The highest emphasis is placed on process safety,
and minimising security risks to our people,
our facilities and the communities in which
we operate.
We require all our contractors and partners
to manage their HSSEQ policies and practices
in line with ours.
On an ongoing basis, safety and security drills,
campaigns and programmes are conducted to
ensure widespread knowledge of the Group’s
HSSEQ principles and procedures.
In addition to our ongoing, daily attention to
HSSEQ, we hold an annual Safety Day, which
creates an opportunity for all employees to
refocus on the importance of HSSEQ of our
Group. The day is used to reinforce safety
measures as well as raise awareness of key issues.
Our BCCP has been reviewed (ensuring presence
of critical staff, in particular those involved in site
security) and COVID-19 protocols developed and
implemented to cope with the pandemic specific
risks. This includes international travel restrictions,
adherence to World Health Organization
guidelines and national legislation, special PPE
and donning/doffing procedures, revised
site access and visit controls, office and asset
recovery and reintegration plan and engagement
of key stakeholders including hauliers and
contractors. Finally, recommendation was made
for all non-essential physical work to be done
remotely and business meetings to be virtual.
6. ECONOMIC AND GOVERNMENTAL INSTABILITY
Several countries and regions in
which we operate have experienced
economic and political instability that
could adversely affect the economy
of our markets.
An economic slowdown which
adversely affects, for example,
disposable income, vehicle distance
driven, or infrastructure development,
in one or more of these regions could
negatively impact our sales and have
a material adverse effect on the
business, financial conditions and
operational results.
The pandemic and its social and
economic consequences could
negatively impact the stability of some
of the countries where we do operate,
intensifying social tensions.
We closely monitor evolving issues in markets.
We ensure appropriate responses
and business continuity plans are developed
to minimise disruptions.
All local regulatory environments and changes
are closely monitored.
1
4
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OPER ATIONAL
OUR RISK
RISK IMPACT
OUR MITIGATION
STRATEGIC
OBJECTIVES
7. PRODUCT AVAILABILITY AND SUPPLY
We are dependent upon the supply
of fuels, lubricants, and additives from
various suppliers. When raw materials
are needed urgently, asymmetric
negotiations occur. The bargaining
power shifts to the supplier who
in turn can charge a higher price.
Furthermore, we are restricted by
limited storage capacity within some
country facilities.
In the short term, the pandemic led
to an over-supply of crude oil leading to
crude oil prices declining to historically
low levels. The long-term impact on
oil producers remains unpredictable
and there may be future impacts on
production and supply capacity.
8. BUSINESS CONCENTRATION RISK
A large part of the Group’s operations
(and margins) are derived from
Morocco when compared to
other countries.
The increased procurement costs
could lower our margins.
Limited supply of products and storage
facilities may result in stock outs.
This could further result in breach
of contract and disruptions to our
operations, leaving us susceptible
to fines or penalties.
We ensure optimal inventory management
through close monitoring of inventory days,
sales and other factors which may require
additional inventory levels.
We monitor our suppliers’ political and social
environments, and realign our purchasing
strategies as necessary.
We have increased storage capacity at
strategic locations within Africa, following
the Engen acquisition.
Since the outbreak of the pandemic, we have
adapted the management and increased
the frequency of monitoring of our supply
commitments, demand and stocks.
Any unfavourable changes in market
dynamics, such as the re-imposition
of pricing regulations for fuel, or
downturns in the performance of
the operations overall, may lead to a
decline in the Group’s performance.
Overall diversification is the key strategy
and control measure.
The completion of the Engen transaction
has increased the geographic diversification
and reduced the relative weighting of the
Shell-branded operating units, including Morocco,
in the Group’s operations and volumes.
9. INFORMATION TECHNOLOGY RISK
Our organisation is currently migrating
to a new ERP, a critical project that
will redesign some of our operations,
functions and controls.
During the COVID-19 pandemic,
the Group experienced an increase
in phishing attacks and cyber-fraud
activity reported.
Inadequate processes and segregation
of duties may impact the quality of
the operations and controls, making
fraud detection difficult. Data quality
and management issues may have
financial, operational or compliance
consequences leading to increased
(financial and operating) costs and
missed opportunities.
Cyber-crime can lead to significant
and direct financial losses, costly and
time-consuming business disruption
and impact reputation.
Significant achievements have been completed
in the ‘enhancements and fixes’ programme
designed to ensure the Group can take full
advantage of its new ERP now operational in the
15 Shell-branded countries. Deployment in the
Engen-branded countries (most of them already
operating with a solution from the same vendor)
has started and is expected to be completed
during 2021 allowing a full integration of all
operating units into the Group’s platform.
The Group has developed its control activities
to strengthen its cyber-defence capacity
and efficiency to identify and block attacks.
The last penetration test conducted in 2020
by an external firm confirmed that our security
controls are above industry average.
1
3
1
5
2
3
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GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
STR ATEGIC
OUR RISK
RISK IMPACT
OUR MITIGATION
STRATEGIC
OBJECTIVES
10. ACQUISITION INTEGRATION
We may be unable to identify or
accurately evaluate suitable acquisition
candidates or to complete or integrate
past or prospective acquisitions
successfully and/or in a timely manner,
which could materially adversely
affect growth.
11. CLIMATE CHANGE
The increasing global actions to
mitigate climate change and its impacts
may lead to changes in our regulatory
environments, customer behaviours
and access to capital in the future
which could materially impact the
Group’s future prospects.
2
3
5
1
4
5
We may incur write-downs,
impairment charges or unforeseen
liabilities, placing strain on
financial resources.
All acquisition decisions are intensively reviewed
at several stages with ultimate approval by the
Board. This ensures risks at all levels are being
assessed and mitigated throughout the process.
Occurrences of indebtedness could
result in increased obligations and
include covenants or other restrictions
that limit operational flexibility.
We ensure there are detailed integration plans
with realistic timelines as well as designated teams
to execute the plans.
Tailored on-boarding and training is delivered
post-acquisition to ensure a smooth and
efficient transition.
The Engen-branded operating units acquired
in 2019 operate in line with the Group
procedures and policies. The integration
programme to align all key functions and
activities to the Group standards has proved to
be efficient. Operations are measured through
key performance indicators.
Shift in customer behaviours,
expectations and the development
and adoption of affordable clean
technology may impact future
fuel demand.
Non-adherence to evolving regulation,
brand partner expectations, technology
adoption and customer needs
exposes the Group to compliance
and financial risks. Brand reputation
can be severely impacted, along
with employee confidence.
Financial markets may focus capital
away from carbon intensive industries,
increasing the cost of capital for
the Group.
We have a range of initiatives underway
in order to limit our environmental impact
through efficiency measures, cleaner fuels
and alternative product offerings.
We are developing an assessment of the potential
impacts of climate change on future fuel demand,
access to finance, regulation and the impact of
extreme weather events into our business model,
strategy and financial planning process.
We have enhanced the Governance oversight
of ESG matters, including climate change, and the
Nominations and Governance Committee now
assists the Board with oversight of the Group’s
climate change and ESG plans and strategy
including its readiness to support the transition
to a lower carbon future in our markets.
The Group intends to enhance its future
reporting regarding climate change in order
to comply with the Task Force for Climate
Related Financial Disclosures in line with the
UK Government’s expectations.
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STR ATEGIC
OUR RISK
RISK IMPACT
OUR MITIGATION
STRATEGIC
OBJECTIVES
12. EPIDEMIC
We face the risk of prolonged impacts
from the COVID-19 pandemic,
or experience new and recurrent
epidemics, worldwide, that may
have dramatic effects on humans,
economies and security.
We have adapted the management of the
critical operational and finance activities,
increasing the frequency at which the Group
monitors its credit, supply commitments,
demand, stocks, payables and foreign exchange
exposures in a high-volatility environment.
1
5
Despite the sudden and unexpected outbreak
of the pandemic, the Group Business Continuity
Plans were immediately activated to keep
employees, retailers and contractors safe and
ensure the security of our critical sites and
operations. The Group has been able to maintain
supply to its retail sites and commercial customers.
In parallel, the Group provided support to
communities, made a series of donations
and brought logistic assistance to public
COVID-19 operational management facilities
in several countries.
The COVID-19 pandemic led to
a dramatic drop in demand for oil
and gas products due to the level
of mobility restrictions imposed by
governments. These restrictions
may be replicated in the event of
future pandemics.
The reduction in demand and
subsequent change in product pricing
could have a material impact on the
entire fuel supply chain, from suppliers
and distributors to dealers operating
sites, as well as on the stability of
the impacted countries.
Future pandemics may also lead to
different changes in government
actions and consumer behaviour that
require the Group to rapidly adapt
and manage its key operational and
financial variables.
Africa has experienced several epidemic
crises over the past decades, including
Ebola in 2013-2016, with authorities
taking strong measures such as
lockdowns and curfews to limit the
spread of contaminations which in turn
severely impacted the economies.
FINANCIAL
OUR RISK
RISK IMPACT
OUR MITIGATION
STRATEGIC
OBJECTIVES
13. CREDIT MANAGEMENT
We face risks arising from credit
exposure to commercial and retail
customers as well as governments,
including outstanding receivables
and committed transactions.
The COVID-19 pandemic impacted
the solvency and liquidity of most
of our customers, with a heightened
effect on the Aviation sector.
This may result in financial loss as a
result of bad debts and lost revenue.
Exceeding payment terms will result
in lower working capital, potentially
creating liquidity challenges for
the business.
We maintain country-specific Credit Policy
Manuals which ensure a harmonised, cost
effective and value-adding credit process
in all classes of business.
2
4
Continuous monitoring of outstanding credit
balances ensures our overall risk remains within
our tolerance.
We impose strict guidelines and procedures
should customers exceed the credit limits set.
Credit limits are set on an individual basis
following assessment of the customer through
KYC procedures.
We use debtor factorisation when considered
cost effective.
We increased the frequency of our credit
exposures monitoring and took rapid and
coordinated action to stabilise our business
and support our teams from the start of the
COVID-19 pandemic. We saw elevated levels
of overdue accounts early in the pandemic
but worked successfully with customers
to support them with their payments.
At year-end, Credit KPIs are within target.
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GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
HUMAN RESOURCES AND TALENT MANAGEMENT
OUR RISK
RISK IMPACT
OUR MITIGATION
14. HUMAN RESOURCES AND TALENT MANAGEMENT
STRATEGIC
OBJECTIVES
Our ability to attract, train and grow
people as well as retain talent is key
to the continuing success of the Group.
During the pandemic, our human
resources and talent management
risk has been impacted by
governmental limitations on
movements, delaying some
international assignments and
relocations. Some local measures may
also affect our ability to move talent
between countries in the future.
Increased costs caused by
staff inefficiency.
We benchmark compensation packages and
employee policies against market practice.
Interruptions to operations and
delay in new projects.
We invest in employee training and
career development.
1
2
Key people leaving the Group,
with some joining competitors.
Disputes, strikes and
sub-standard performance.
Loss of staff enjoyment, motivation,
connectedness and attachment
to the Group.
We use on-boarding workshops to ensure
that new employees are familiar with our
business, our culture and their roles when
joining the Group.
We maintain constructive dialogue with unions
and workforce representatives.
We maintain detailed succession plans and talent
management programmes.
The Group has deployed a new communication
approach and ways of working to keep connected
with all staff throughout the pandemic.
5
12
2
9
7
8
4 6
3
13
14
1
11
10
T
C
A
P
M
I
H
G
H
I
I
M
U
D
E
M
W
O
L
Partner reputation and relationships
Criminal activity, fraud, bribery and compliance risk
Oil price fluctuations
Currency exchange risk
Health and safety
Economic and governmental instability
Product availability and supply
Business concentration risk
Information technology risk
PRINCIPAL RISK FACTORS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. Acquisition integration
11. Climate change
12. Epidemic
13.
14.
Credit management
Human resources and talent management
LOW
MEDIUM
HIGH
LIKELIHOOD
RISK IMPACT
Decrease
Unchanged
Increase
68
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69
PRINCIPAL RISK FACTORS
STR ATEG IC REP ORT
RISK MANAGEMENT CONTINUED
LONG-TERM VIABILITY AND GOING CONCERN
LONG-TERM VIABILITY
In accordance with Provision 31 of the
UK Corporate Governance Code 2018,
the Directors have assessed the prospects
of the Group over a period significantly longer
than 12 months. The Directors believe that
a five-year period is the most appropriate
timeframe over which to assess the long-term
viability of the Group. This timeframe is
supported by the Group’s strategic business
planning cycle. Primary financing has a term
of seven years. The period of seven years
is slightly longer than the five-year business
planning cycle and therefore does not impact
the appropriateness of the timeframe.
The Directors have reasonable confidence
over this time horizon which allows for an
appropriate assessment of the Group’s
principal risks.
ASSESSMENT OF PROSPECTS
The Group’s prospects are assessed primarily
through its strategic and financial planning
process. On an annual basis the Directors
approve a detailed five-year strategic business
plan, which forecasts the Group’s cash flows
and ability to service financing requirements,
pay dividends and fund investing activities during
the period. The prospects assessment uses
key macro drivers as assumptions to forecast
how markets will evolve. Assumptions include
for example, wage and salary growth rates,
foreign exchange rates, inflation, GDP growth
and crude oil price assumptions.
ASSESSMENT OF VIABILITY
Although the output of the Group’s strategic
and financial planning process reflects the
Directors’ best estimate of the future prospects
of the business, the Group has carried out a
robust assessment of the potential financial
and operational impact of principal risks and
uncertainties facing the Group, including those
that would threaten its business model, future
performance, solvency or liquidity.
Four severe but plausible downside scenarios
have been modelled where the following
high impact principal risks have materialised:
– Economic and governmental instability
adversely affects a number of our local
entities resulting in devaluation of local
currencies (economic and governmental
instability and currency exchange risks).
– Higher supply costs in unregulated markets
resulting in higher prices for our products
and lower unit margins and potential fines as
a result of economic, social and governance
requirements (oil price fluctuations, climate
change and criminal activity, fraud, bribery
and compliance risk).
– Significant negative impacts on our working
capital due to oil price increases, security
stock increases and an increase in DSO and
a decrease in DPO coupled with key cost
increases (oil price fluctuations, product
availability and supply and economic and
governmental instability).
– The negative impacts of the implementation
of additional COVID-19 measures
throughout our business and ceasing of
operations in one of our operating units
(economic and governmental instability
and epidemic).
Each assessment starts with the available
liquidity headroom which is calculated as
an aggregation of cash and cash equivalents
plus committed available credit facilities as
at 31 December 2020. Then the five-year
forecast is used to calculate the cash position
and available headroom over the period taking
into account the impact of the downside
scenario adjustments. Each downside scenario
assumed an appropriate management response
to the specific events but not broader
mitigating actions which could be undertaken.
The assessments took account of the Group’s
current funding, forecast requirements and
existing committed borrowing facilities.
It assumed that the revolving credit facility
can be renewed.
STATEMENT OF
LONG-TERM VIABILITY
Based on the results of the analysis, the
Directors have a reasonable expectation that
the Group will be able to continue in operation
and meet its liabilities as they fall due over the
five-year period of their assessment.
GOING CONCERN
In accordance with provision 30 of the 2018
Code, the Directors consider it appropriate
to adopt the going concern basis of
accounting in preparing the financial statements.
Refer to page 132 in the notes to the
consolidated financial statements.
This Strategic Report has been approved
by the Board.
JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
2 MARCH 2021
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
GOVERNANCE
The following pages describe our governance
arrangements, the operation of the Board and
its Committees and how the Board discharged
its responsibilities during the year.
CONTENTS
Chairman’s Statement
Board Leadership and Company Purpose
Board of Directors
Senior Executive Team
Division of Responsibilities
Composition, Succession and Evaluation
Nominations and Governance Committee Report
Audit and Risk Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
72
74
78
80
82
86
87
90
94
113
116
Good governance is essential for creating
long-term viability of the business
and the economic development of
the communities where we operate.
The Vivo Energy Board has overall
responsibility for governance and we
are pleased to confirm that during 2020,
Vivo Energy was fully compliant with
the 2018 UK Corporate Governance
Code (‘2018 Code’) (available from
www.frc.com).
COMPLIANCE STATEMENT
Details of how we have applied the
main principles and complied with each
provision of the 2018 Code are set
out throughout the Governance and
Directors’ Reports. Further information
can be found here:
Board Leadership and Company Purpose
Division of Responsibilities
Composition, Succession and Evaluation
Audit, Risk and Control
Remuneration
74
82
86
90
94
The Directors’ Report also contains
information required to be disclosed
under the UK Listing Authority’s (UKLA)
Rules and the Disclosure Guidance and
Transparency Rules (DTRs). To the
extent necessary, certain information is
incorporated into this Report by reference.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
71
CHAIRMAN’S STATEMENT
TOGETHER WE
MAINTAIN HIGH
STANDARDS OF
GOVERNANCE
Our vision is to become
the most respected energy
business in Africa and our
actions through the pandemic
have supported that.”
JOHN DALY
CHAIRMAN
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
GOVERNANCE Dear Shareholder,
2020 brought so many changes
and challenges to our working
lives; changes that were all but
impossible to foresee at the start
of the year. It saw the Group
and its stakeholders facing the
global outbreak of the COVID-19
pandemic, which has been by
far the most unprecedented and
disruptive event of recent times
and probably of our lifetimes.
COVID-19
Throughout the pandemic, our first priority
was, and still is, to protect the health, safety
and wellbeing of our employees. As a supplier
of essential products in our markets, we
maintained supply at our retail sites and to our
Commercial customers. To best ensure safety
and to minimise the risk of virus transmission,
a series of preventative health measures were
implemented across our operations, retail
sites and offices for our employees, customers
and suppliers based on country-specific
situations and government guidance.
From the very beginning of the pandemic,
the strength of our culture has shone through.
Vivo Energy employees pulled together
and responded with agility and pace to show
their colleagues and our stakeholders that they
can trust us to be there when it matters the
most. I am humbled by the tenacity, resilience
and dedication of our people as it is due to
their significant efforts and sacrifices that our
businesses kept running and our customers
kept moving.
Since the introduction of the first lockdown,
physical Board meetings became impossible and
we moved to virtual meetings. I am grateful to
my fellow Board members for their invaluable
support and for making themselves available
whenever required, frequently at short notice.
While we’ve focused on doing the right thing
by our people, customers and suppliers,
we also took significant steps to protect
our financial stability, cash flow and liquidity.
In response to the impact of COVID-19, the
Board withdrew its recommendation to pay
the 2019 final dividend and in September,
the Group successfully completed its debut
bond offering, raising $350 million to mainly
refinance its existing amortising loan facility.
Due to these and other rapid actions the
Group took to protect the business and the
resilience of the business model, our balance
sheet has remained strong. As a result, we have
not furloughed any employees nor made any
COVID-19 related redundancies. In addition,
the Board was pleased to be able to restore
dividend payments and a dividend of 2.7 cents
per share was declared in October.
Our vision is to become the most respected
energy business in Africa and our actions
through the pandemic have supported
that. As well as our employees, we have
also prioritised the safety and wellbeing of
our suppliers, partners and communities,
consistently making sure that we have
proactively provided support where
it is needed.
We have made donations to relief funds,
provided free fuel, food and medical supplies,
and utilised our lubricant blending plants
to produce hand sanitiser. Further details
of how we have responded to the challenges
of COVID-19 can be found throughout the
Strategic Report.
ESG
The events of this year have meant that the
main considerations of the Group have often
related to mitigating the effects of COVID-19
but the Board has also maintained its corporate
governance and strategy focus throughout
the year.
As a Group, Vivo Energy recognises the critical
importance of meeting the growing needs of
our customers for affordable energy, while at
the same time reducing environmental impacts.
This is a dual challenge; while planning for the
future, we must also meet the energy demand
of today. We’re committed to remaining
relevant to our customers and delivering value
to all our stakeholders. We’re doing this by
evolving our customer offerings to meet future
changes and identifying low-carbon growth
opportunities to pursue as these become
commercially viable.
Besides evolving our customer offerings, we are
committed to managing and reducing our own
environmental impact. We continue focusing
on improving energy efficiency at our service
stations, depots and head offices. During the
year an additional 33 service stations had solar
panels added, bringing the total number of sites
across the network with solar power to 118.
During the second half of the year, the Board
spent time considering our ESG responsibilities
and the steps we are taking as well as those
we will be taking to do our part in providing
sustainable solutions. We were pleased to
secure a contract to commence our first
solar project at the Nampala mine which
will enable the mine to reduce its carbon
footprint by about 60,000 tonnes over
ten years. We will use this new project to
spur further uptake of such projects in Africa.
We have also sought our employees’ views
on the meaning of a zero carbon company
and engaged a third party consultant to
work with us to further develop our strategy.
BOARD CHANGES
After more than eight years at Vivo Energy,
Johan Depraetere, Chief Financial Officer,
has decided to retire from his role with the
Group and will be leaving us in the first half
of 2021. Johan has been instrumental in the
development and growth of the business,
and a pleasure to work with. Johan will be
missed by us all and we wish him all the
very best for the future.
While we are sad to see Johan go, we are
also pleased to welcome Doug Lafferty who
joined us as Chief Financial Officer Designate
on 1 February 2021. After an initial transition
period, he will become Chief Financial
Officer on 5 March 2021. Doug brings a wide
range of experience to the role and we are
looking forward to welcoming Doug to the
Vivo Energy family.
SUCCESSION AND DIVERSITY
Succession planning is a key focus for the Board.
In addition to ensuring orderly Chief Financial
Officer succession, over the last 12 months
the Board has discussed senior management
succession plans and the internal talent
pipeline, and received a detailed report on
diversity among senior managers and their
direct reports.
All our appointments are made on merit
taking diversity of skills, background, knowledge,
thought and gender into consideration.
Whereas we comfortably meet the Parker
Review recommendations, we’re very mindful
of not having met the 33% Hampton-Alexander
target, with women currently representing 20%
of our Board. We are committed to meeting
this target as well as improving gender diversity
among senior managers while also recognising
the difficulty of achieving this in the short term.
OUTLOOK
This year, we have demonstrated the resilience
of our business model and the strength of our
customer engagement. Looking ahead with
the expectation that 2021 will continue to be
impacted by challenging external factors, the
Board will continue to work with management
to deliver on our strategic goals while ensuring
that we continue to safeguard our business and
the well-being of our employees, customers,
suppliers and communities. While we cannot
predict the future, we can continue doing
what we do best, providing the energy that
our customers depend upon.
The full implications of COVID-19 remain to be
seen but one thing is certain. No one can defeat
the pandemic alone. This is a challenge that we
must face collectively as a global community.
Together we are stronger.
JOHN DALY
CHAIRMAN
2 MARCH 2021
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
73
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT BOARD LEADERSHIP AND COMPANY PURPOSE
REINFORCING OUR CULTURE:
The Group’s culture is a focus area and the
Board believes that the right culture and
values, supported by effective leadership and
a consistent tone from the top, are crucial to
the success of the Group. During the year,
the Directors looked at organisational culture
in different contexts, discussed the Group’s
culture and considered reports from the
nominated Employee Engagement Champion
and the Senior Management. The Board also
considered the first annual culture report
detailing how the Group has ‘lived’ its operating
culture and values.
The annual report included:
– the way in which Vivo Energy’s culture is
embedded throughout the organisation;
– the mechanisms in place to provide insight
and feedback on Vivo Energy’s culture; and
– focus areas and timelines for
2020 engagement.
In addition, an annual whistle-blowing report
was presented to the Board, providing an
update on the whistle-blowing programme.
OUR PURPOSE AND CULTURE
The Group’s vision is to become Africa’s most
respected energy business. We aim to do this
by realising the full potential of our people and
business partners and being recognised as the
benchmark for quality, excellence, safety and
responsibility in Africa’s marketplace. In line
with our vision, the Group’s purpose is to safely
provide innovative and responsible energy
solutions to Africa, which enable growth and
development of the continent and its people.
Our operating culture of ‘Focus, Simplify and
Perform’ and our values of ‘integrity, honesty
and respect for people’ have always been
core to our business. We believe that they
remain fundamental to the future success of
the business and, 2020 with its unprecedented
challenges, has both enabled and allowed us,
more than ever, to live by our culture and
our values.
As a business, we recognise that we are only
as good as our people and we understand
the value of recruiting and developing the
best people. By living our values, our people
differentiate us from our competitors and
enable us to deliver our strategy. It is therefore
important that all of our people understand the
importance of our vision, values and purpose
and their role in realising our vision of becoming
Africa’s most respected energy business.
Further information is available within the
Strategic Report on pages 50 to 51.
The Board ‘s primary role is to ensure
Vivo Energy’s long-term success by setting
the Group’s strategic direction, ensuring that
strategy is aligned with our purpose and culture
and to promote and protect the Group’s
interests for the benefit of all our stakeholders.
The Group’s governance framework supports
the Board in the delivery of the Group’s
strategy and long-term sustainable success
in various ways as detailed below.
HOW GOVERNANCE SUPPORTS
OUR STRATEGY
The Board recognises that it is responsible for
promoting the long-term sustainable success
of the Group and for delivering long-term
value for stakeholders. The Board does
this by providing effective leadership and by
ensuring that the Group’s business is conducted
with high standards of ethical behaviour in a
manner which contributes positively to wider
society and having regard to the interests of its
different stakeholders. To ensure the business
can meet its strategic priorities, the Board,
through its oversight of the development of the
Group’s strategy, provided strong leadership
and support to the Group. The Board
continues to benefit from a strong mix of
complementary skills and experiences, as
well as dynamics that allow for open debate,
challenge of existing assumptions and asking
difficult questions.
Throughout the year, the Board considered
the long-term consequences of the decisions
it made, focusing on the interests of relevant
stakeholders as appropriate. A key component
of the Board’s role in the development
of Vivo Energy’s strategy is the approval
of the annual operating plan. This process
allows the Board to ensure that the business
has the necessary resources to deliver its
strategy. Other key strategic items considered
by the Board during 2020 included:
– Bond issue;
– Growth strategies in non-core areas;
– Solar project in Mali; and
– Group’s ESG strategy and carbon emissions.
Further information on the strategic
priorities for the Group is available
in the Strategic Report.
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75
GOVERNANCE HOW THE BOARD
MONITORS CULTURE:
Listening to our employees – The Group
undertakes an employee engagement survey
every two years. Survey questions allow
employees to share their views on key topics,
which provide valuable insight into employee
engagement and the Group’s culture. The last
full survey was conducted in 2018 and a shorter
Pulse Survey during Q4 2020. The key findings
were presented to the Nominations and
Governance Committee and also discussed by
the Board. Action plans have been prepared
by the business to address the priority issues.
During 2019, the Company appointed the
Senior Independent Director as its Employee
Engagement Champion and in 2020, to assist
Hixonia Nyasulu in this role, an Employee
Engagement Champion Committee was
established. The Committee supports the
Nominations and Governance Committee
and, in addition to Hixonia, has six members
representing different operating regions.
The Committee met twice in 2020 to
discuss and consider the employees’ views
on the Group’s COVID-19 response, ways
of furthering employee engagement and
the Employee Pulse Survey results and
suggested follow up actions. In addition the
Committee agreed on its success metrics
and 2021 priorities.
Hixonia has reported to the Nominations and
Governance Committee and the Board on
the Committee’s work and provided feedback
on employee opinions and the alignment of
our culture and values across the various
aspects of our business, strategy and purpose.
Further details on page 89.
Whistle-blowing – Employees can report
incidents of wrongdoing through both internal
and external mechanisms. In addition to the
reports raised through line managers, the
Vivo Energy Global Helpline enables employees
or others to raise concerns in relation
to suspected violations of the law or the
Vivo Energy General Business Principles (such
reports may be raised anonymously, 24 hours
a day, seven days a week via this independent
helpline). Any reports are then referred to
the Head of Forensics and Head of Ethics &
Compliance or the General Counsel and are
investigated or escalated to the Chairman and
the Chair of the Audit and Risk Committee
as required.
To deal with any wrongdoing effectively,
honest communication is vital and we
encourage our employees to raise any such
concerns of misconduct. During 2020, to raise
further awareness of the importance and the
process and procedure of reporting concerns
of misconduct, we conducted mandatory
whistle-blowing training. The Board is provided
with periodic reports on whistle-blowing.
Further information is available on page 48.
Ethics, bribery and fraud – Vivo Energy
recognises that corruption undermines the rule
of law and democratic process, impoverishes
states and distorts free trade and competition.
The Audit and Risk Committee regularly
monitors and reviews the Company’s policies,
incidents and trends arising from any such
incidents and provides updates of key matters
to the Board.
Risk management and internal controls –
The Audit and Risk Committee annually
reviews the effectiveness of the Group’s system
of internal controls and risk management.
The results of the Committee’s review are
presented to the Board. During 2020, the
Board assessed the Committee’s review and
confirmed it concurred with the Committee’s
assessment that the risk management and
internal controls of the Group remain effective.
Promoting the success of the Company –
The Directors, in conducting Board business
and taking decisions at Board meetings, act
in a way that is most likely to promote the
success of the Company for the benefit of its
members as a whole, while having due regard
and taking into account the likely short- and
long-term consequences of any decision on
the Company and its business, the interests
of all the Company’s stakeholders, including
employees, and the impact on the community
and environment in which the Company
conducts its business.
The Board’s section 172(1) statement is
included within the Strategic Report on
page 45.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
KEY ACTIVITIES TO COMPLY WITH THE 2018 CODE
PURPOSE, CULTURE AND VALUES
Following the review of the Group’s purpose, the revised purpose was
communicated to the organisation and the Board kept updated of the
progress. During the year the Board also considered the Employee Pulse
Survey results, the first culture report and feedback from the Employee
Engagement Champion.
The Board is responsible for the Group’s whistle-blowing processes
and received periodic reviews during the year. Further details on the
Board’s involvement with purpose, culture and values can be found
on pages 74 to 75.
REMUNERATION
The Remuneration Committee reviews workforce compensation,
related policies and the alignment of incentives and rewards with
the Group’s culture and takes these reviews into account in the
setting of the policy for Executive Director remuneration.
During 2020, the Remuneration Committee received updates on
workforce remuneration, reviewed the 2018 Code and approved
the Committee’s revised Terms of Reference. Further details on
the Committee’s activities can be found on pages 94 to 112.
NOMINATIONS AND GOVERNANCE COMMITTEE
The Nominations and Governance Committee is responsible for
ensuring plans are in place for orderly succession to both the Board
and senior management positions, and for overseeing the development
of a diverse pipeline for succession.
During the year the Group’s senior management succession plans and
talent pipeline were discussed and reviewed by both the Nominations
and Governance Committee and the Board.
AUDIT AND RISK COMMITTEE
The role of the Audit and Risk Committee is to monitor and review
the Group’s financial reporting, the effectiveness of risk management
and internal controls, the Group’s whistle-blowing procedures and the
integrity of the internal and external audit processes.
WORKFORCE AND STAKEHOLDER ENGAGEMENT
The Board appointed Hixonia Nyasulu as Employee Engagement
Champion and in 2020 an Employee Engagement Champion Committee
was established to assist Hixonia. Further details are set out below.
The 2018 Code emphasises that the Board should understand the views
of key stakeholders and be in a position to explain how their interests
have been considered in decision-making.
EMPLOYEE ENGAGEMENT CHAMPION
Hixonia Nyasulu was appointed as the Company’s Employee Engagement
Champion in 2019. She is assisted in this role by the Employee
Engagement Champion Committee. During the year the roles of the
Employee Champion and the Committee were formalised to ensure
that the purpose was clear and that there were mechanisms in place
for reporting and feedback.
In her role, Hixonia has engaged with the VP HR and regional HR
representatives to obtain an understanding of the issues and concerns
of the workforce and received feedback and business improvement
suggestions from the employees.
At the 2019 AGM, shareholders approved the Remuneration Policy
and the intention is to next review the policy in 2022.
A successor to the Chief Financial Officer was identified and the
Committee recommended to the Board the appointment of Doug
Lafferty as Chief Financial Officer Designate from 1 February 2021
and as Chief Financial Officer from 5 March 2021. The appointment
was preceded by a confidential market search and the selection process
was carried out with the assistance of Spencer Stuart, an independent
external executive search and leadership consultancy, which has no other
connection with the Group. The Committee ensured that the procedure
for the appointment was rigorous, transparent, objective and merit-based.
Further details can be found on page 89.
The Committee reviewed and approved its revised Terms of Reference.
This year the Committee placed particular focus on monitoring
the impact of COVID-19 on risk management, corporate reporting,
the going concern and long-term viability assessment and regulatory and
accounting considerations of the bond issue. Further details can be found
on pages 90 to 93.
During Director discussions, factors set out in our section 172(1)
statement on page 45 are considered, where relevant to the Board’s
decision-making. The Board has formalised this within its decision-making
processes, by ensuring that the consideration of stakeholder interests
are set out in all Board and Committee papers in a proportionate
and appropriate way, relevant to the matter to be considered.
This will enable the Board and its Committees to effectively address
stakeholder concerns.
In conjunction with the Committee she has:
– Brought employee perspectives to the Board to increase Board
effectiveness and decision-making.
– Reviewed employee engagement and feedback mechanisms to ensure
they remain effective and appropriate.
– Reviewed the output of the Employee Pulse Survey.
– Devised success metrics and Committee activities for 2021.
Planned activities include engaging with and receiving feedback from
employees via various channels, exploring ways to increase employee
engagement through line managers and considering new ways of
working post-COVID-19. Details on the 2021 engagement activities
will be reported in the 2021 Annual Report.
OTHER ACTIVITIES
The Board approved revised Terms of Reference for each Board
Committee to reflect the 2018 Code. Copies of these documents
are available on the Group’s website.
The Board will continue to embed its approach to comply with the
2018 Code during the forthcoming year to ensure that the approach
to implementation provides support to the Group’s strategic objectives.
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77
GOVERNANCE STAKEHOLDERS
The Board is committed to building positive
relationships with all stakeholders and
recognises that this is not only vital to building
a sustainable business but also the right thing to
do. Multiple stakeholders are impacted by our
business, including shareholders, employees,
customers, partners and the communities and
governments of the countries in which the
Group operates. As we enter a new year in the
midst of a global pandemic, we continue to be
mindful of the needs and expectations of our
stakeholders. We recognise that working with
our stakeholders towards shared goals assists
us to deliver long-term sustainable success.
During the year, the Group undertook a
number of stakeholder engagement initiatives.
Further information on how the Group
engages with all its stakeholders is available
within the Strategic Report on pages 42 to 45.
In addition to the Group activities, the Board
undertook the following stakeholder activities:
SHAREHOLDERS
INVESTOR RELATIONS
The Board believes that having clear, open and
transparent communications with the capital
markets is an essential element of being a
listed company. In order to achieve this, the
Company has a designated investor relations
function, which acts as the primary point
of contact with the investment community
and is responsible for both maintaining and
enhancing Vivo Energy’s relations with current
and potential shareholders and the sell-side
analyst community. During the year, the Group
issued its first corporate bond, which provided
a broader capital markets presence and
meant that significantly increased engagement
took place with debt investors and credit
rating agencies.
Due to the impact of COVID-19 the
Company had to adapt its normal programme
of face-to-face institutional engagements
and move to virtual engagements, primarily
video-call based. While there are some natural
drawbacks to this necessary approach, it had
the benefit of greatly increasing the reach of
engagement into different territories across
the world that were previously not on the
engagement calendar.
During the year the Company maintained
an extensive programme of scheduled and
ad-hoc engagement with institutions and
analysts driven by the constantly changing
operating environments and an increase in
direct engagement from institutions as they
looked to manage through the combined
impact of working from home and the volatile
markets. During the year we conducted
virtual investor roadshows and attended
virtual investor conferences that were
primarily aimed at investors based in the
United Kingdom, United States, South Africa
and Europe.
These engagements were undertaken by a
combination of Executive Management and
the Investor Relations function. Due to the
restrictions on travel, the Group did not host
any investors in our operating units during
the year.
We do not anticipate that all of our Board of
Directors will be able to attend the meeting
in-person due to travel restrictions and health
and safety requirements. If any Director is
unable to attend in person, we will endeavour
to ensure that he/she can attend by phone.
The engagements with capital markets
stakeholders cover a broad range of topics,
but in 2020 the primary focus was on the
impact of COVID-19 on the Group’s operations
and financial performance. In addition to this
we continued to engage with stakeholders
on capital allocation, governance, executive
remuneration, governance and Group strategy.
Furthermore there has been increased focus
on ESG matters, including climate change, and
the Group has looked to enhance disclosure
and engage with the ESG rating agencies to
ensure a clearer understanding of the business
sustainability approach.
Investor Relations regularly presents to, and
discusses developments in the capital markets,
with the Board, as well as sharing sell-side
research and investor feedback. At the end
of the year, we commissioned a perception
study of a cross-section of our shareholders,
non-holders and sell-side analysts, which
we believe will be an important tool, both
from a strategic planning and a corporate
governance perspective.
Due to the importance that the Board
places on communication with shareholders,
arrangements can be made for major
shareholders to meet with the Chairman,
the Chief Executive Officer, the Chief Financial
Officer, the Senior Independent Director and
the Independent Non-Executive Directors,
as required.
ANNUAL GENERAL MEETING (AGM)
The Company’s third AGM will be held at 2:00
p.m. on 18 May 2021. The Notice of the AGM
will include further details, including the venue.
Details of the business to be proposed at the
meeting are contained in the Notice of AGM
which will be sent to shareholders at least 20
working days prior to the date of the meeting.
Voting at the AGM will be conducted by way
of a poll and the results will be announced
through the Regulatory News Service and
made available on our website following
the meeting.
To encourage shareholders to participate in
the AGM process, the Company will offer
electronic proxy voting through both our
registrar’s website and, for CREST members,
the CREST service.
Although it is our intention to hold the AGM
at the time set out above, we will continue to
closely monitor the impact of the COVID-19
outbreak in the United Kingdom and how it
may affect the arrangements for this year’s
AGM, particularly in relation to social distancing,
large gatherings and travel.
EMPLOYEES
Our people are central to us delivering
against our strategic objectives and our vision
to become Africa’s most respected energy
business. Our success is reliant on our culture
and the Board is committed to ensuring that
our workforce policies and practices are
aligned with the purpose, values and culture of
Vivo Energy. Further information on employee
engagement programmes is set out in the
Strategic Report on page 43.
OTHER STAKEHOLDERS
Alongside our shareholders and employees,
we have identified customers, partners,
communities, governments and investors as
our main stakeholders. Where the Board does
not engage directly with the stakeholders, it is
kept updated so that the Directors maintain
an effective understanding of what matters
to all our stakeholders and can draw on these
perspectives in Board decision-making and
strategy development. Updates are provided
in a variety of formats including face-to-face
presentations and reports by the Chief
Executive Officer or Chief Financial Officer
as well as by the senior management of the
Group’s businesses. Senior management is
requested, when presenting or providing
reports to the Board on strategy and principal
decisions, to ensure that the presentations
cover what impact the strategy/principal
decision has on the relevant stakeholders
and how the views of those stakeholders
have been taken into account.
For details of how the Board complied with
Section 172 of the Companies Act 2006
and how it further engaged with other
stakeholders, see page 45.
VISITS TO OUR LOCAL
OPERATING UNITS
Visiting our local operating units allows the
Directors to gain a better understanding
and insight into particular issues faced by the
operating unit and the business in general.
In addition, these visits give the Directors a
valuable opportunity to engage with our key
stakeholders including employees, customers
and local communities. A schedule of visits for
2020 had been agreed but, due to COVID-19
travel restrictions, the Board’s travel plans are
currently on hold. Board visits to the Group’s
operating units will continue as soon as it is safe
to travel again. In the meantime the Board’s
learning and understanding of our business is
continuing through virtual deep dives. The deep
dives have consisted of reports and virtual
presentations and over the year have covered
topics such as Zimbabwe, Mozambique, culture
and share price.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD OF DIRECTORS
Committee membership key
Audit and Risk Committee
Nominations and Governance Committee
Remuneration Committee
Chair
JOHN DALY CHAIRMAN
INDEPENDENT ON APPOINTMENT
APPOINTMENT DATE: 20 APRIL 2018
SKILLS AND EXPERIENCE
John brings strong international and consumer expertise to the Board having
held various executive leadership positions over the course of 20 years
at British American Tobacco plc (BAT). His most recent positions at BAT
were chief operating officer (2010-2014) and regional director for Asia Pacific,
based in Hong Kong (2004-2010). John is a former director of Reynolds
American Inc., a US public company owned 42% by BAT. Prior to his time
with BAT, John held various sales and marketing positions with Johnson &
Johnson, Bristol-Myers Squibb, Pennwalt Corporation and Schering-Plough.
Until November 2020 John was a non-executive director of Glanbia plc.
EXTERNAL PUBLIC APPOINTMENTS
Britvic plc – non-executive chairman
COMMITTEE MEMBERSHIP
NATIONALITY
CHRISTIAN CHAMMAS CHIEF EXECUTIVE OFFICER
APPOINTMENT DATE: 20 APRIL 20181
SKILLS AND EXPERIENCE
Christian has extensive experience in the energy sector and has a deep
knowledge of Africa and emerging markets. Prior to joining the Group,
Christian was at Total for 31 years where he held several executive positions
in Central America, the Caribbean, Pacific and India. Christian served
as chief executive officer for the Total group of companies in Nigeria,
Cameroon and Kenya, followed by successive positions as executive vice
president for the Total group of companies for Central Africa, executive
vice president for the Total group of companies for Caribbean and
Central America, and as Total group representative for India and executive
country chairman for downstream companies. His last position at Total was
as executive vice president for the MENA region in the downstream division.
EXTERNAL PUBLIC APPOINTMENTS
None
COMMITTEE MEMBERSHIP
None
NATIONALITY
JOHAN DEPRAETERE CHIEF FINANCIAL OFFICER
DOUG LAFFERTY CHIEF FINANCIAL OFFICER DESIGNATE
APPOINTMENT DATE: 20 APRIL 20182
APPOINTMENT DATE: 1 FEBRUARY 2021
SKILLS AND EXPERIENCE
Johan has wide-ranging experience in senior finance roles both
at Vivo Energy and other multinational companies including the
Samsung Group, McKinsey and Morgan Stanley. Johan’s responsibilities
include financial control, treasury & credit, IT and procurement.
EXTERNAL PUBLIC APPOINTMENTS
None
COMMITTEE MEMBERSHIP
None
NATIONALITY
SKILLS AND EXPERIENCE
Doug Lafferty was appointed as Chief Financial Officer Designate
in February 2021 to become Chief Financial Officer in March 2021.
His responsibilities include financial control, treasury & credit, IT and
procurement. Prior to joining the Group, Doug spent three years
as CFO and Executive Director for Williams Grand Prix Holdings
plc. Doug has also held a range of senior positions during a 16-year
international career with British American Tobacco, including Group Head
of Commercial Finance and Regional Head of Finance for the Americas.
EXTERNAL PUBLIC APPOINTMENTS
None
COMMITTEE MEMBERSHIP
None
NATIONALITY
1 Prior to this he was Chief Executive Officer of the Group with effect from 2 January 2012.
2 Prior to this he was Chief Financial Officer of the Group with effect from 6 April 2012.
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GOVERNANCE
THEMBALIHLE HIXONIA NYASULU
SENIOR INDEPENDENT
DIRECTOR
CAROL ARROWSMITH
INDEPENDENT
NON-EXECUTIVE DIRECTOR
CHRISTOPHER ROGERS
INDEPENDENT
NON-EXECUTIVE DIRECTOR
APPOINTMENT DATE: 20 APRIL 2018
APPOINTMENT DATE: 20 APRIL 2018
APPOINTMENT DATE: 22 APRIL 2018
SKILLS AND EXPERIENCE
Hixonia has global experience across multiple
sectors in South Africa and Europe for blue-chip
companies, as well as on the Banking Enquiry panel
for the South African Competition Commission.
Hixonia held numerous management roles at
Unilever in South Africa between 1978 and 1984,
and subsequently founded two highly successful
companies. She has substantial experience as a
non-executive director having held non-executive
director positions at Unilever plc, Sasol Ltd,
Anglo Platinum Ltd, the Development Bank
of Southern Africa, Nedbank and served as a
member of the JPMorgan Advisory Board for
South Africa until October 2013.
EXTERNAL PUBLIC APPOINTMENTS
Anglo American plc – non-executive director
COMMITTEE MEMBERSHIP
SKILLS AND EXPERIENCE
Carol has extensive experience of executive
remuneration. For over 20 years, she specialised
in advising boards of directors on executive
remuneration across a range of sectors.
Carol is a former vice chair and senior partner of
Deloitte LLP, a global partner in Arthur Andersen
and managing director of New Bridge Street
Consultants. Carol is a fellow of the Chartered
Institute of Personnel and Development.
EXTERNAL PUBLIC APPOINTMENTS
Compass Group plc – non-executive director
and chair of their remuneration committee
Centrica plc – non-executive director
and chair of their remuneration committee
COMMITTEE MEMBERSHIP
NATIONALITY
SKILLS AND EXPERIENCE
Chris is a Chartered Accountant and has extensive
financial and commercial experience. Chris was
a director of Whitbread plc from 2005 to 2016
where he served as group finance director from
2005 to 2012 and managing director of Costa
Coffee from 2012 to 2016. He was group finance
director of Woolworth Group plc and chairman
of the Woolworth Entertainment businesses
from 2001 to 2005. Previously Chris held senior
roles in both finance and commercial functions
in Comet Group plc and Kingfisher.
EXTERNAL PUBLIC APPOINTMENTS
Travis Perkins plc – non-executive director
Kerry Group plc – non-executive director
Sanderson Design Group plc –
non-executive director
COMMITTEE MEMBERSHIP
NATIONALITY
NATIONALITY
GAWAD ABAZA
INDEPENDENT
NON-EXECUTIVE DIRECTOR
JAVED AHMED
NON-EXECUTIVE DIRECTOR
(VITOL APPOINTED DIRECTOR)
TEMITOPE LAWANI
NON-EXECUTIVE DIRECTOR
(HELIOS APPOINTED DIRECTOR)
APPOINTMENT DATE: 1 DECEMBER 2018
APPOINTMENT DATE: 12 MARCH 20183
APPOINTMENT DATE: 16 MARCH 20183
SKILLS AND EXPERIENCE
Gawad has a wealth of African commercial
experience. He has significant operational
knowledge of running consumer-focused
businesses across the African continent having
held several senior management positions in
the Middle East and Africa at Kraft and Cadbury.
SKILLS AND EXPERIENCE
Javed joined Vitol in 2009 and leads its global
investing activity. Prior to this, Javed was with
Morgan Stanley from 1997 to 2009 where he
held positions including managing director and
the head of acquisitions and structured transactions
for Morgan Stanley’s commodities group.
EXTERNAL APPOINTMENTS
Gama Transformation Consultancy LLC –
managing director
COMMITTEE MEMBERSHIP
NATIONALITY
EXTERNAL APPOINTMENTS
Positions at a number of Vitol’s portfolio
companies, including Petrol Ofisi, VTTI,
VPI Holding and OVH Holding
COMMITTEE MEMBERSHIP
NATIONALITY
SKILLS AND EXPERIENCE
Temitope is a co-founder and managing partner of
Helios Investment Partners, the largest Africa-focused
private investment firm. He is also co-CEO and
a director of Helios Fairfax Partners. Prior to this,
Temitope was a principal at TPG Capital.
After beginning his career at the Walt Disney
Company as an M&A and corporate development
analyst, he went on to serve on the boards of
various corporate enterprises. Temitope is
currently a member of the MIT Corporation,
the MIT School of Engineering Dean’s Advisory
Council, the Harvard Law School’s Dean’s Advisory
Board, and on the board of the END Fund.
EXTERNAL PUBLIC APPOINTMENTS
Helios Towers plc – non-executive director
Positions at a number of Helio’s portfolio
companies, including Mall for Africa,
Zola Electric, OVH Energy and Axxela
NATIONALITY
3 Previously a supervisory board member of Vivo Energy Holding B.V. (the former Group holding company).
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
SENIOR
EXECUTIVE TEAM
A CHRISTIAN CHAMMAS
B JOHAN DEPRAETERE
C DOUG LAFFERTY
D HANS PAULSEN
E FRANCK KONAN-YAHAUT
F ERIC GOSSE
G OMAR BENSON
H HERMAN NIEUWOUDT
I MEHDI ABAGHAD
J NAOUFEL AISSA
K REINETTE WESSELS
L ADRIAN DE SOUZA
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GOVERNANCE A CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
See Christian’s biography on page 78.
B JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
See Johan’s biography on page 78.
C DOUG LAFFERTY
CHIEF FINANCIAL OFFICER DESIGNATE
See Doug’s biography on page 78.
D HANS PAULSEN
EVP EAST AND SOUTHERN AFRICA
Hans is the EVP East and Southern Africa, a role
he has held since 1 July 2019. Prior to his current
role, Hans served as the Group Programme
Manager leading the SAP implementation project
for the Group. Hans joined Vivo Energy in 2013
as Managing Director Uganda.
Before joining Vivo Energy, Hans held senior
management roles in the telecoms sector both
in Uganda and Zambia. He also previously worked
in the oil and gas industry with Royal Dutch Shell
in Uganda and Kenya from 1997 to 2002.
NATIONALITY
G OMAR BENSON
EVP SALES AND MARKETING
Omar is the EVP Sales and Marketing, a role he
has held since January 2021. During 2020 he was
Acting EVP Sales and Marketing, before being
permanently appointed to this role.
Prior to this Omar has held various other senior
positions at Vivo Energy, including Head of Fuel
Retail from 2013 and adding Convenience Retail
from 2015. In 2018 he was appointed VP Retail, CR,
QSR and ONFR. Prior to joining Vivo Energy Omar
held various roles at Shell where he spent 11 years
and before that Omar worked for Air Liquide,
Mobil Oil and Copharmed.
NATIONALITY
E FRANCK KONAN-YAHAUT
EVP WEST AFRICA
Franck is the EVP West Africa, a position he
has held since February 2019. Franck previously
held the positions of Managing Director,
Shell Côte d’Ivoire and Burkina Faso Cluster,
Managing Director, Côte d’Ivoire, before taking
up his previous role of Managing Director, Senegal
in September 2014. Franck transferred from
Royal Dutch Shell to Vivo Energy following the
sale of the Africa Downstream business in 2011.
Franck joined Royal Dutch Shell in 1996 from PwC,
and following a number of years as finance manager
in Guinea, Ghana and West Africa, he moved to
West Africa Gas Pipeline Company in the Shell
upstream business as general manager Finance
and Administration.
NATIONALITY
H HERMAN NIEUWOUDT
CHIEF OF STAFF
Herman is the Chief of Staff for the Group,
a role which he has held since September 2018.
Prior to this he was the Vice President Human
Resources, a position he held since the inception
of Vivo Energy. He is primarily responsible for
executive compensation and resourcing and
the Chairman’s and CEO’s office.
Herman transferred from Royal Dutch Shell
to Vivo Energy following the sale of the Africa
Downstream business in 2011. During his
17 years with Shell he held various roles including
downstream policy and compensation manager
for the Africa region and general manager HR for
Shell Oil Products Africa. Herman joined Shell in
1995 from Dulux South Africa where he was the
head of HR for the industrial coatings division.
NATIONALITY
F ERIC GOSSE
EVP BUSINESS DEVELOPMENT, SUPPORT
AND INDIAN OCEAN ISLANDS
Eric is the EVP, Business Development, Support
and Indian Ocean Islands, a position he has held
since January 2019. Eric is responsible for business
development and projects, supply and sourcing
(fuels), distribution, power and solar, technical audit,
technical and engineering and HSSEQ.
Eric joined the Group from Total where he held
various senior positions over the course of more
than 25 years. He brings a wealth of commercial
and industry experience to the Group.
NATIONALITY
I MEHDI ABAGHAD
VP RETAIL
Mehdi is the Vice President for Retail, a role he
has held since October 2020. Prior to this Mehdi
was the Retail Manager in Morocco where he
successfully grew and developed the service station
network and Retail offer in that market.
Mehdi has more than 20 years’ experience in
the industry. Before joining Vivo Energy, Mehdi
was the Commercial Manager for Shell Morocco
and before that he worked as the Commercial
and Export Director for Nexans and as a trader
for the investment bank Upline Securities.
NATIONALITY
NAOUFEL AISSA
J
VP LUBRICANTS & COMMERCIAL
Naoufel is the VP Lubricants & Commercial,
a role he has held since July 2017. Prior to this,
Naoufel held various senior roles at Vivo Energy,
including Head of Lubricants from July 2015 and
Managing Director, Tunisia until July 2015.
Naoufel transferred from Royal Dutch Shell
to Vivo Energy following the sale of the Africa
Downstream business in 2011. He has over
15 years’ experience including various sales
and marketing roles in Shell globally and throughout
Africa. Naoufel held the role of Managing Director
for Shell Tunisia from September 2009.
NATIONALITY
K REINETTE WESSELS
VP HUMAN RESOURCES
Reinette is the VP Human Resources, a position
she has held since September 2018, having joined
the Group in October 2013 as Head of Talent
and Development. Reinette is responsible for
providing strategic leadership and direction for
the HR Function across the Group.
L ADRIAN DE SOUZA
GENERAL COUNSEL
Adrian is the Group’s General Counsel, a role he
has held since July 2020. He is responsible for the
Group’s Legal, Ethics, Compliance and Company
Secretarial functions and has extensive experience
working for listed and multinational companies
across a number of sectors.
Prior to joining the Group, as an independent
consultant, Reinette provided specialised consulting
to a number of listed companies in the areas of
reward and talent management strategies and
deployment. Her knowledge and experience of the
human resources field spans a period of 29 years,
across a number of diverse sectors, including
holding various generalist, specialist and executive
HR positions at British American Tobacco, where
Reinette worked for 12 years and as remuneration
consultant at Old Mutual for seven years.
NATIONALITY
Adrian qualified as a solicitor in 1997, working
in private practice with Hogan Lovells and
Clifford Chance before joining SABMiller plc.
Adrian then became General Counsel and
Company Secretary at the FTSE 100 company
Land Securities Group plc, a position he held
for five years, before taking a similar role at
a Goldman Sachs private equity business.
Before joining the Group, Adrian was
Company Secretary at Barclays Bank UK plc.
NATIONALITY
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIVISION OF RESPONSIBILITIES
THE ROLE OF THE BOARD
An effective board comprises of a diverse
group of individuals, each contributing different
experiences, skills and backgrounds enabling
the board as a whole to provide challenge,
informed opinions and advice on strategy
and relevant topics.
Collectively, the Board is responsible for
promoting the long-term success of the
Group by setting strategic priorities, generating
value for stakeholders and ensuring that
the Group continues to contribute to wider
society. In particular, the Board is responsible
for reviewing opportunities and maintaining
effective risk management and internal
control systems.
As is normal for large companies, the
Vivo Energy Board relies on Executive
Management to run the business with the
Board monitoring management activities
and holding them to account against targets
and standards. The Board discharges some
of its responsibilities directly while others
are discharged through its principal Board
Committees and through management.
In order to retain control of key decisions and
ensure there is a clear division of responsibilities
between the Board and the running of the
business, the Board has a clear framework
for determining the matters within its remit
including an agreed schedule of Matters
Reserved for the Board and has approved
Terms of Reference for the matters delegated
to its Committees. The Terms of Reference
and the schedule of Matters Reserved for
the Board are available on our website.
All Committee Terms of Reference
were revised during the year. No changes
to the schedule of Matters Reserved for
the Board were deemed necessary in 2020.
The Board’s reserved matters include:
– Group strategy;
– Governance and regulatory compliance;
– Financial reporting;
– Major capital commitments;
– Major contracts and agreements;
– Internal controls;
– Significant remuneration changes;
– Stakeholder engagement;
– Material corporate transactions;
– Assessing and monitoring the culture
of the Group;
– Ensuring effective arrangements to engage
with employees; and
– Ensuring effective whistle-blowing
arrangements are in place.
OUR GOVERNANCE STRUCTURE
THE BOARD
AUDIT AND RISK
COMMITTEE
NOMINATIONS AND
GOVERNANCE COMMITTEE
REMUNERATION
COMMITTEE
The role of the Committee is
to assist the Board in fulfilling its
corporate governance obligations
in relation to the Group’s financial
reporting, internal control and
risk management systems.
In addition, it provides oversight
of the Internal Audit function
and the external auditors.
The Committee leads the process
for, and makes recommendations
to the Board, regarding the
appointment of new Directors
to the Board. In addition, the
Committee supports the Board
with the succession planning process,
implementation and delivery against
the Board Diversity Policy and
employee engagement process.
The role of the Committee is to set,
review and recommend the policy
on remuneration of the Chairman,
Executives, Company Secretary
and Senior Management team.
In addition, it monitors
the implementation of
the Remuneration Policy.
Following each Committee meeting the Chair of the Committee provides an update to the Board, detailing decisions made and key matters discussed.
Copies of the Committee minutes are circulated to all Board members to the extent appropriate.
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BOARD AND COMMITTEE ATTENDANCEThe Board has a comprehensive annual programme of meetings to monitor and review strategy across all the elements of the Group’s business model. In 2020 five Board meetings were scheduled. Additional meetings were held as and when required, for example to consider the bond issue and the appointment of Doug Lafferty. The Chairman ensures that regular meetings are also held with the Non-Executive Directors without the presence of the Executive Directors.In the spring, during the first height of the COVID-19 pandemic, the Board received weekly updates from management on developments, the Group’s response and actions taken. All Directors are expected to attend all Board and relevant Committee meetings unless prevented from doing so by illness or conflict of interest. Senior executives below Board level are invited, when appropriate, to attend Board meetings to make presentations on the results, opportunities, deep dives and strategies relating to their operating units. Board agendas are carefully planned to ensure that sufficient time and consideration are given to the Group’s strategic priorities and key monitoring activities as well as reviews of strategic issues. In advance of each meeting, papers and relevant materials are provided to Directors via a secure web portal which also provides access to a library of relevant information about the Company and Board procedures. Directors unable to attend specific Board or Committee meetings are asked to provide comments in advance and if necessary follow up with the relevant Chair of the meeting.GOVERNANCE 2020 BOARD ACTIVITY
During the year the Board has considered all relevant matters within its remit, including the following:
STRATEGY AND FINANCE
– Continued the review of the Group’s long-term strategy
– Considered the Group’s plan for 2021-2025
– Monitored the Group’s performance against the annual plan for
2020 and approved the annual plan for 2021 after taking into account
management’s revised assumptions and outlook for the year
– Reviewed and considered whether a final dividend for 2019 should
be made
– Reviewed and approved the 2020 interim dividend recommendation
– Reviewed and approved the preliminary and interim
results announcements
– Received and considered COVID-19 updates and the
Group’s response
– Considered and approved the issuance of $350 million of senior notes
– Considered and discussed the Group’s ESG strategy
– Reviewed the Group’s solar project and discussed alternative energies
– Mozambique and Zimbabwe deep dives
PEOPLE AND CULTURE
– Reviewed senior management succession plans and the Group’s
internal talent pipeline
– Received reports from the nominated Employee
Engagement Champion
– Received a report from the VP HR on the output of the Employee
Pulse Survey
GOVERNANCE, COMPLIANCE AND RISK
– Received and considered the first annual culture report
– Received Health & Safety updates
– Approved Doug Lafferty’s appointment
– Approved the Company’s Modern Slavery Statement
– Reviewed and approved the 2019 Annual Report and Accounts and
Notice of AGM
– Undertook an assessment of the effectiveness of the Group’s risk
management and internal controls framework, which concluded that
they remain effective
– Reviewed and approved the terms of reference of the Board’s
Committees to ensure these are aligned with the 2018 Code
– Received updates on the 2018 Code and its implementation
– Received regular Investor Relations reports
– Considered the output of the 2020 Board Effectiveness Review
STANDING AGENDA ITEMS
– Received reports from the Chief Executive Officer
– Received reports from the Chief Financial Officer
– Received Investor Relations updates
– Received updates from the Board’s Committees
– Reviewed and approved the previous meeting minutes
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Since the outbreak of the COVID-19 pandemic, Directors have been able to participate in meetings using secure virtual meeting technology. The following table shows the attendance of Directors at scheduled Board and Committee meetings during the year: BoardAudit and Risk CommitteeNominations and Governance CommitteeRemuneration CommitteeJohn Daly5/5n/a2/25/5Christian Chammas5/5n/an/an/aJohan Depraetere5/5n/an/an/aHixonia Nyasulu5/55/52/25/5Javed Ahmed15/5n/a1/2n/aTemitope Lawani5/5n/an/an/aCarol Arrowsmith5/55/52/25/5Christopher Rogers5/55/52/25/5Gawad Abaza5/55/52/25/5Notes:The maximum number of scheduled meetings held during the year that each Director could attend is shown next to the number attended. Additional meetings were held as required. Minutes of Board and Committee meetings are made available to all Directors.1 Javed Ahmed was unable to attend one Nominations and Governance Committee meeting due to a conflicting business engagement.OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIVISION OF RESPONSIBILITIES CONTINUED
THE BOARD’S COMMITTEES
AND THEIR ROLES
The Board has established three principal
Committees: the Audit and Risk Committee,
the Nominations and Governance Committee
and the Remuneration Committee.
Each Committee has its own terms of
reference approved by the Board which are
available on our website. Membership of each
Committee is determined by the Board on
the recommendation of the Nominations and
Governance Committee. The Board structure
is set out on page 82. In addition to the principal
Committees, the Board is also supported by
the Market Disclosure Committee and the
Employee Engagement Champion Committee.
The membership, roles and duties discharged
during 2020 for each Committee is detailed
in their respective Committee reports on
pages 87 to 112.
In 2020 an Employee Engagement Champion
Committee was set up. The Committee’s
primary function is to assist the nominated
Employee Engagement Champion on
furthering employee engagement and
understanding and listening to employees’ views
and suggestions. Further details are provided
on page 89.
The Market Disclosure Committee ensures
the legal and regulatory obligations and
requirements arising from the listing of the
Company’s securities on the London and
Johannesburg Stock Exchanges are met.
This includes the timely and accurate disclosure
to the market of all relevant information.
The Market Disclosure Committee meets
at such times as is necessary or appropriate.
The members of the Committee are
the Chairman, Chief Executive Officer,
Chief Financial Officer, Group Financial
Controller, General Counsel and
Head of Investor Relations.
In addition to the oversight provided by
the Board and its Committees, the Executive
Directors are supported by the Senior
Executive Team which helps them discharge
their duties. The Senior Executive Team
comprises the senior leadership team,
who have management responsibility for the
business operations and support functions.
The Senior Executive Team supports the
Executive Directors in the discharge of
their duties. The membership of the Senior
Executive Team can be found on pages 80 and
81. The Senior Executive Team holds regular
meetings and relevant matters are reported to
the Board by the Chief Executive Officer and,
as appropriate, the Chief Financial Officer.
DIRECTORS
Led by the Chairman, the Board of Directors
comprises four Independent Non-Executive
Directors, two Executive Directors and two
representatives from our major shareholders,
Vitol and Helios. Together, they ensure high
standards of governance and bring a broad
range of skills and experience to our business.
All Directors are encouraged to use their
independent judgement and to constructively
challenge all matters, whether strategic
or operational.
All Directors are required to devote sufficient
time and to demonstrate commitment to
their role. There is a process for the approval
of any additional external appointments for
the Executive Directors or Independent
Non-Executive Directors. All additional
appointments are to be approved by the
Board in advance of such appointments
being accepted.
During 2020 the Board approved Carol
Arrowsmith’s appointment to Centrica
plc and Gawad Abaza’s appointment to
Gama Transformation Consultancy LLC.
These appointments were not considered
to unduly affect Carol or Gawad’s time
commitment to the Company, nor impair their
ability to serve as Directors of the Company.
Following an internal review, it was confirmed
that no conflict of interest would arise through
either of these additional appointments.
In addition to the above appointments, the
Board also noted that during 2020 John Daly
stepped down from the Board of Glambian
plc and Gawad Abaza stepped down from the
Mondelez International and Cadbury Nigeria
plc Boards.
Further information on the skills and
experience, Committee membership and other
appointments of each Director can be found in
their individual biographies on pages 78 and 79.
INDEPENDENCE
With the exception of Javed Ahmed and
Temitope Lawani, the Non-Executive Directors
were considered to be independent on
appointment and are still considered to be
independent, in accordance with the criteria
outlined within the 2018 Code. They are
considered free from any business interest,
which could materially interfere with the
exercise of their judgement. In addition, the
Board is satisfied that each Non-Executive
Director dedicates the necessary amount of
time to the Company’s affairs and to their role.
The Board has agreed that each Director shall
stand for appointment or reappointment as
appropriate at each AGM. All Independent
Directors are appointed and reappointed by a
dual vote, where the approval of shareholders
excludes the major shareholders.
In accordance with the respective relationship
agreements, should either of the two
shareholder nominated Directors not be
reappointed by a vote at the AGM, the
respective shareholder would be entitled
to nominate them for reappointment to
the Board.
Copies of the Executive Directors’ service
contracts and letters of appointment for the
Non-Executive Directors are available for
inspection by shareholders at each AGM and
during normal business hours at the Company’s
registered office.
CONFLICTS OF INTEREST
Directors have a statutory duty to avoid
situations in which they may have interests
which conflict with those of the Company.
The Board has adopted procedures as provided
for in the Company’s Articles of Association
for authorising existing conflicts of interest and
for the consideration of, and if appropriate,
authorisation of new situations which may arise.
A register setting out each Director’s interests
is maintained and records both Javed Ahmed’s
and Temitope Lawani’s appointments on
behalf of the Company’s major shareholders.
In addition, where a Director holds
directorships or other similar appointments
in companies or organisations not connected
with the Company where no conflict of
interest has been identified, such appointments
are registered as potential conflicts and are
authorised and recorded.
As good practice, the Chairman requests
each of the Directors to declare any
conflict of interest at each Board meeting.
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
85
GOVERNANCE In line with best practice, the roles of our Chairman and Chief Executive Officer are separate, clearly defined and set out in writing. The role profiles
have been approved by the Board and are available on our website. The key roles of our Board are set out below:
CHAIRMAN
The Chairman’s primary role is to lead the Board and ensure that it operates effectively. In particular, he sets the Board’s agenda and promotes a
culture of open discussion and debate between Executive and Non-Executive Directors. He also has a pivotal role in ensuring effective communication
with shareholders and other stakeholders and ensures that the members of the Board are kept aware of the views of the major investors.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer develops the Group’s strategic direction for consideration and approval by the Board and represents the Group
to external stakeholders. He is responsible for running the business of the Group and ensuring the delivery of the strategy agreed by the Board.
The CEO does this in close collaboration with, and with the support of, the Senior Executive Team.
CHIEF FINANCIAL OFFICER
The Chief Financial Officer is responsible for providing strategic financial leadership, establishing financial planning and maintaining adequate internal
controls over financial reporting, representing the Group to external stakeholders as well as the day to day management of the finance function.
In addition to the finance function, IT and procurement functions also report to the Chief Financial Officer.
SENIOR INDEPENDENT DIRECTOR
The Senior Independent Director is an Independent Non-Executive Director of the Board. This role provides advice and additional support and
experience to the Chairman and where necessary, performs an intermediary role for other Directors. The Senior Independent Director leads the
annual appraisal and review of the Chairman’s performance and is available to respond to shareholder concerns when contact through the normal
channels is inappropriate.
The Senior Independent Director is also the Board’s nominated Employee Engagement Champion.
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors are responsible for contributing sound judgement and objectivity to the Board’s deliberations and overall decision-making
process, providing independent challenge, and monitoring the delivery of the strategy within the Board’s risk and governance framework.
COMPANY SECRETARY
It is the responsibility of the Company Secretary to ensure that there are good information flows to the Board and its Committees. The Company
Secretary advises the Board on corporate governance and best practice and assists the Chairman in ensuring that the Directors have a suitably tailored
and detailed induction and ongoing professional development programmes. The removal of the Company Secretary is a matter for the Board as
a whole.
All Directors have access to the advice and services of both the Group General Counsel and the Company Secretary. Directors may take independent
legal and/or financial advice at the Company’s expense when it is deemed necessary in order to discharge their responsibilities effectively. No such
independent advice was sought during the year to 31 December 2020.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT COMPOSITION, SUCCESSION AND EVALUATION
BOARD AND COMMITTEE EFFECTIVENESS REVIEW
An effective Board is vital to the success of Vivo Energy and, in order to ensure that the Board continues to operate as efficiently as possible,
in line with current best practice and the 2018 Code, the Board undertakes a formal review of its performance and that of its Chair and Committees
each year, with an external evaluation every three years. This year, the Chairman, with the support of the Company Secretary, facilitated an internal
evaluation of Board and Committee effectiveness. As an internally-facilitated review was also conducted in 2019, it is expected that the 2021 review
will be conducted externally.
THE BOARD EVALUATION PROCESS
The 2020 process was undertaken in three stages:
STAGE 1
STAGE 2
STAGE 3
The Board reviewed the report and considered
the recommendations. The Chairman in
conjunction with the Company Secretary
will develop a plan of action to improve
areas highlighted by the evaluation over
the forthcoming year.
The Chairman and Company Secretary
reviewed last year’s process and created
a comprehensive online questionnaire.
This sought the Directors’ views on a number
of topics such as Board composition and
performance, diversity, succession planning,
risk management, financial reporting and
controls and the performance of the Board’s
Committees. The questionnaire was designed
to also evaluate progress versus the prior
year’s improvement suggestions as well as
to assist in identifying focus areas for 2021.
Respondents completed the questionnaires
confidentially and the results were collated
and reported without attribution.
A complementary questionnaire drafted by the
Senior Independent Director was also issued
covering the Chairman’s performance.
Findings
Responses to all questions were sent to the
Chairman and responses on the effectiveness
of the Committees were also submitted to the
respective Committee Chairs. The results of
the evaluation process were reviewed by the
Board and the Committees at their respective
meetings in December 2020.
The Chairman also provided individual
feedback to each Director on their
individual performance.
The Senior Independent Director led the
review of the Chairman’s performance and
held a meeting with Directors without the
Chairman present to discuss the results of
the review before providing feedback to
the Chairman.
The conclusions of the 2020 effectiveness review were positive and confirmed that the Board continues to operate effectively benefiting from positive
dynamics, strong engagement and a collegiate boardroom culture that allows for open discussion and constructive challenge. The Chairman continues
to provide robust, effective and considerate leadership to the Board and each Director continues to contribute effectively. In addition, the Committees
were all confirmed to be operating in an effective manner.
The Directors felt that, with the exception of operating unit visits, all improvement suggestions from 2019 had received attention from the Board and
its Committees during the year. Nevertheless, the Board felt that it would benefit from further time spent on considering and discussing succession
plans and the internal talent pipeline during 2021. Visits to the Group’s operating units will also recommence as soon as it is safe to travel again.
The opportunities identified for the Board to further improve its effectiveness over the next year, included:
– Additional focus on understanding the interests of the Group’s stakeholders;
– Improving the Board’s understanding of key competitors and markets;
– Allocating more time to strategy with increased focus on future trends and alternative energy;
– Continued focus on key risks and risk appetite; and
– Continuing the programme of Board visits to the Group’s operating units.
These key areas would guide the development of the Board’s objectives for 2021.
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GOVERNANCE NOMINATIONS
AND GOVERNANCE
COMMITTEE REPORT
JOHN DALY
CHAIRMAN
INTRODUCTION
This has been a busy year for the Committee,
which continues to establish itself within
the business.
The key areas of activity have been the search
for our new Chief Financial Officer, succession
planning for our senior management, diversity
across the business and the formation of an
employee committee to assist the Group’s
Employee Engagement Champion to perform
her role more effectively.
ROLE OF THE COMMITTEE
The Committee reviews the executive and
identified senior leadership and succession
needs of the organisation and ensures that
appropriate procedures are in place for
nominating, training and evaluating Directors.
In particular, the Committee reviews the size,
structure and composition of the Board in
the context of the current and future needs
of the business and makes recommendations
to the whole Board.
It is also responsible for considering and
monitoring changes in the governance
environment promulgated by its various
stakeholders and adopting the relevant aspects
in a way that promotes efficient, effective and
entrepreneurial management for the long-term
success of the Company.
MEMBERSHIP
During the year under review, the following
were members of the Committee:
– John Daly – Chair
– Gawad Abaza
– Javed Ahmed
– Carol Arrowsmith
– Hixonia Nyasulu
– Christopher Rogers.
All of the members are independent
Non-Executive Directors, with the exception
of Javed Ahmed who is deemed not to be
independent by virtue of his appointment
by Vitol. Their biographies appear on
pages 78 and 79.
In addition to its Members, the Committee
Chair invites other Non-Executive Directors,
the Chief Executive and Executive Vice
President, Human Resources to attend
meetings, as appropriate. The Company
Secretary, Chief of Staff and General Counsel
have standing invitations to attend.
MEETINGS
The Committee met twice during the year, and
considered the following:
– The establishment of the Employee
Engagement Champion Committee and
feedback from its meetings
– The search for and appointment of the
Group’s new Chief Financial Officer
– Succession planning for Directors and
senior managers
– Diversity within the Group and initiatives
for the improvement of gender diversity
– Governance around the impact of
climate change
– A corporate governance update
– Employee survey results
– Updated terms of reference.
BOARD APPOINTMENTS
All appointments are subject to a formal,
rigorous and transparent process. The Board
supports the provisions of the Voluntary Code
of Conduct for Executive Search firms. It will
only engage executive search firms that are
signatories to this code, which includes the
adoption of measures designed to improve
ethnic and gender diversity on boards.
The Committee reviews the terms of
appointment for all Directors and makes
recommendations to the Board.
During the year, the Board made one
appointment, Doug Lafferty, who joined
the Company as its Chief Financial Officer
designate on 1 February 2021. Details of the
process around his appointment are set out
on page 89.
BOARD DIVERSITY
The Board adopted a new diversity policy
in 2019. This formally recognises the value
diversity brings to the Board and aims to
promote the recruitment of people who
are diverse in terms of ethnicity, age, skills,
background, gender and perspective.
The Committee is aware of and supports
the Parker and Hampton-Alexander initiatives.
The Company comfortably meets the Parker
recommendation of having at least one
Director from an ethnic minority background,
with four Directors meeting that criteria.
The Board is very conscious that the Company
has not met the Hampton-Alexander target
for gender diversity, with 22% of the Board
consisting of women at year end, against a
target of 33%.
The Committee is absolutely committed to
meeting this target, while also cognisant of the
difficulty of achieving this in the short term.
As the Company was listed relatively recently,
in 2018, the Non-Executives are relatively
early in tenure and there are no plans to
increase the size of the Board. In addition,
two Non-Executives are appointed by large
shareholders. The Committee will continue
to keep gender diversity under review and
look for opportunities to appoint more
women in the future, while always selecting
the best candidate for every role.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020 NOMINATIONS AND GOVERNANCE COMMITTEE REPORT CONTINUED
Shareholders should not assume that the
failure to meet this target means the Board
lacks diversity. The conversations, perspectives,
challenge and insights shared around the
Board table are those of a very diverse group
of people. The Board’s Directors are drawn
from eight different nationalities. They have
experience working across a number of
industries and territories that complement
our business. The Directors have had executive
careers in a broad range of industries including
FMCG, Energy, Engineering, Marketing,
Commodities, Professional Services, Corporate
Finance, and General Management and many
of them have experienced significant regulation
and change. The Board has given great
consideration to this mix, which is essential
to the advancement of its strategy and given
the nature of the business and the diverse
range of cultures and territories in which
the Group operates.
In particular and to support the Group’s
strategy, several members of the Board have
experience in advancing community initiatives
in a number of settings, have significant
financial and operational skills to help improve
financial discipline and offer advice on efficient
operating structures.
Others have experience in operating in high
growth, performance-driven cultures and help
management to address issues that arise in
the advancement of the Group’s strategy.
Details of diversity among our senior
management, their direct reports and the
Group more widely can be found on page 51.
SENIOR MANAGEMENT
SUCCESSION PLANNING
The Committee discussed succession planning
and received a detailed report on diversity
among senior managers and their direct
reports. Management recognised that this is
an area which requires improvement and took
the Committee through a series of initiatives
that would address the imbalance in the short,
medium and longer term. The Committee has
agreed with management that this is a critical
issue for the business in the coming year and
beyond and will carefully monitor progress.
CONFLICTS OF INTEREST
The Board operates a policy to identify and,
where appropriate, manage any potential
conflicts of interest that Directors may have.
The Nominations Committee monitors the
situation and determines the actions necessary
to address potential conflicts of interest.
In the year under review, no new conflicts
of interest were noted.
We’re building a diverse
organisation to ensure
the business has the
right talent to deliver against
the Group’s strategy.”
JOHN DALY
COMMITTEE CHAIR
INDEPENDENCE AND
RE‑ELECTION TO THE BOARD
The independence, effectiveness and time
commitment for each of the Non-Executives
have been reviewed. The Committee was
satisfied with the contributions of all Directors.
The Company received feedback from some
investors outlining concerns as to whether
the nature of some Non-Executives’ external
commitments meant they had insufficient time
available to properly perform their duties
for the Company. While the Committee has
always been confident that all Non-Executives
have been fully committed to the Company
and had sufficient time, the past year
has seen a reduction in the number
of outside appointments.
John Daly and Chris Rogers resigned from
one external non-executive position each and
Gawad Abaza retired from his executive role
at Mondelez International.
During the year, Carol Arrowsmith took on
an additional non-executive appointment at
Centrica plc and Gawad Abaza began his own
consultancy business. The Board considered the
likely time commitments for each role, whether
they would negatively impact on their roles
with the Company and whether any conflicts
of interest would arise. The Board was satisfied
on all of these matters and approved the new
positions prior to Carol and Gawad taking
them up.
In addition, the Committee re-considered
all external appointments of Directors
(including the Chairman) in terms of their time
requirements and potential conflict of interests.
The Committee is satisfied that each Director
will be in a position to effectively discharge
their duties in the coming year.
BOARD DIVERSITY
BOARD TENURE
BOARD INDEPENDENCE
2 females
7 males
22%
78%
All appointed in 2018 0‑3 years
Chairman
4 Independent Non-Executives
2 Shareholder appointed
Non-Executives
2 Executive Directors
11%
45%
22%
22%
All figures are as at year-end.
88
GOVERNANCEVIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020 The Committee also considered whether those
Non-Executives designated as independent
last year remain so and confirms that they
do. Accordingly, for the purposes of the 2018
UK Corporate Governance Code, the Board
as a whole is independent.
Shareholders will be asked to appoint
Doug Lafferty at the Annual General Meeting
in May and Johan Depraetere will retire from
the Board in early March 2021. The other
Directors will stand for re-election, with the
support of the Board.
GOVERNANCE
The Committee oversees the governance
agenda on behalf of the Board and considers
papers and proposals issued by governments,
regulatory bodies and investor groups and their
application to the Group. It ensures that the
decisions taken by the Board and its delegated
Committees are made in the best interests
of the Company and that they address any
wider implications that may affect stakeholders.
In the year under review, the Committee
received a presentation on governance
proposals from stakeholders. This presentation
covered the short and medium term as well
as trends likely to affect the Company in the
longer term, and its approach to adopting
the appropriate governance proposals.
A presentation on additional governance
requirements reflecting best practice in
climate change reporting was received by
the Committee and referred to the whole
Board for consideration. Details of the
impacts of climate change on the Group and
its approach to mitigating them can be found
on pages 54 to 57.
NEW EMPLOYEE
ENGAGEMENT COMMITTEE
In 2019, the Board appointed its Senior
Independent Director, Hixonia Nyasulu,
as its Employee Champion.
Hixonia worked with the Group’s Vice
President: Human Resources, Reinette Wessels,
to put together a structure that would enable
her to connect with as many colleagues as
possible in the context of significant restrictions
on travel. A committee of seven people was
established, comprising of Hixonia and Reinette,
together with representatives drawn from each
of five regions.
Terms of Reference were put in place, which
ensured the committee was not just a conduit
of views from the workforce to the Board,
but also a means of relaying the Board’s
messages to colleagues.
At its first meeting, the committee satisfied
itself that members were able to effectively
collect and present the views of all colleagues.
The Committee will monitor its progress in
this regard.
During the year, engagement was encouraged
via existing colleague suggestion boxes,
regular town hall meetings held with staff,
breakfast meetings held with local Managing
Directors, an employee survey, the results of
which feature on page 51 and other channels
tailored to individual businesses and countries.
The committee also reviewed detailed statistics
on health and safety.
Priorities for 2021 have been set, together
with metrics to measure progress.
These centred around the full 2021 Employee
Engagement Survey, Staff Turnover, Diversity
and Inclusion and Mental Health. The regional
representatives will also launch other initiatives
to solicit the views of colleagues, including
a new e-suggestion box.
COMMITTEE EFFECTIVENESS
As set out on page 86, the Committee
reviewed its own effectiveness based on
responses to a questionnaire. Members asked
for another meeting to be added to the plan
for the year and that the focus be on diversity,
particularly gender diversity, executive
succession and the Group’s talent pipeline.
Overall, the feedback was positive
and the Committee concluded that
it operated effectively.
JOHN DALY
CHAIRMAN
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER DESIGNATE
THE APPOINTMENT
OF OUR NEW CHIEF FINANCIAL
OFFICER DESIGNATE
During the course of the year the Group’s
Chief Financial Officer, Johan Depraetere,
informed us of his intention to stand down
from his position. Johan has been with the
business since April 2011 and has been an
excellent Chief Financial Officer. He indicated
that he was able to give the Board as
much time as it needed to find a first class
replacement and facilitate an orderly handover.
The Board and Committee had previously
considered executive succession planning,
both formally and informally. This preparation
meant that the search process could begin
quickly, and a meeting was held to confirm the
role specification and to decide which of the
pre-screened executive search firms to instruct.
The Committee appointed Spencer Stuart
to lead the search. The firm was chosen on
the basis of the strength of its Chief Financial
Officer practice, as well as its understanding
of the business and culture gained from
its recruitment of several Non-Executives
during the IPO process. Spencer Stuart has
no connection with the individual Directors
or the Company, other than to provide
recruitment services.
The key search criteria were to identify
candidates with considerable experience
in large international organisations with
exposure to emerging markets and who
had worked successfully across a wide range
of cultures. They would be required to
demonstrate experience of leading change,
driving results, strong commercial orientation,
leading people from a range of backgrounds
and a commitment to strong governance.
The Committee was very conscious
of the need to improve gender diversity
on the Board and required Spencer Stuart
to ensure their shortlist included a number
of female candidates.
Spencer Stuart conducted the search,
considering internal and external candidates
from a number of different countries and
sectors. Their initial work identified almost
300 finance professionals, with that number
then reduced to the 48 who best met the
criteria. The list was reduced further until
17 profiles were introduced to the Company,
of which nine formed the shortlist and were
interviewed. The shortlist was specifically
drafted with gender diversity as a key aim.
The candidates followed a rigorous process,
run by the Chairman and Chief Executive.
The candidates met the Chief of Staff and
Executive Vice President, Human Resources
and had individual meetings with the majority
of the Board. The calibre of candidates
was very high. Although the Committee
had targeted the appointment of a female,
Doug Lafferty was the outstanding candidate
and we are delighted that he agreed to
accept our offer to join the Board.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020 AUDIT, RISK AND CONTROL
AUDIT AND RISK
COMMITTEE
REPORT
CHRISTOPHER ROGERS
COMMITTEE CHAIR
COMMITTEE MEETINGS
During 2020, the Committee held five
scheduled meetings, of which two meetings
were held virtually due to the restrictions of
COVID-19. Further meetings were held on
3 February 2021 and 26 February 2021, the
latter to approve the 2020 Annual Report
and Accounts. Details of attendance by
members at Committee meetings can be
found on page 83. The Committee Chairman
extended Committee meeting invitations
to the Chief Financial Officer, Company
Secretary, General Counsel, Group Financial
Controller and Head of Internal Audit during
the year, which were accepted by all parties.
The external auditor was invited and attended
all meetings.
The Committee meets regularly with the
external auditors and the Head of Internal
Audit in private to discuss any issues which
may have arisen.
The Committee keeps the Board informed
of its activities and recommendations, with
the Committee Chair providing an update
after every Committee meeting detailing
activities of the Committee including the
recommendations and matters of particular
relevance. The Board reviews and discusses
key matters of the Committee meetings at
the Board meetings. All recommendations
set forth by the Committee, to the Board,
in 2020 were accepted.
The terms of reference, which outline the
Committee’s responsibilities, are reviewed
on an annual basis and approved by the Board.
The Committee’s amended terms of reference
in 2020 can be found on the Group’s website:
www.vivoenergy.com.
The Committee promptly reports concerns
to the Board in the event it is not satisfied with,
or believes that an action or improvement is
required concerning any aspect of financial
reporting, risk management and internal
control, compliance or audit-related activities.
This year the Committee placed particular
focus on the following key areas:
– Impact of COVID-19 on risk management,
corporate reporting, the going concern
and long-term viability assessment;
– Identification and assessment of a new
principal risk factor, Epidemic, as a result
of COVID-19;
– Regulatory and accounting considerations
of the bond issuance; and
– Operating effectiveness and reliance on
information technology general controls
specifically relating to SAP S/4HANA.
COMMITTEE STRUCTURE
The Committee continues to remain
in compliance with the 2018 Code.
During the year, there had been no changes
to the composition of the Committee.
All members remain Independent
Non-Executive Directors. The Committee
has a balanced mix of commercial, financial
and audit knowledge, with the Chairman of
the Committee, Christopher Rogers, meeting
the requirements of recent, relevant financial
experience. The biographies of all Committee
members can be found on page 79.
ROLES AND RESPONSIBILITIES
OF THE COMMITTEE
The primary role of the Audit and Risk
Committee (‘Committee’) is to assist the
Board in fulfilling its oversight responsibilities
by reviewing and monitoring the:
– Integrity of the financial and narrative
statements of the Company, including its
full year and half-year reports, preliminary
results announcements and any other
formal announcements relating to its
financial reporting information;
– Assumptions or qualifications in support
of the going concern and long-term
viability statements;
– The robust assessment of emerging
and principal risks facing the Group as
well as the adequacy and effectiveness
of the Group’s internal control and risk
management systems;
– The Group’s internal financial controls
system to identify, assess, manage and
monitor financial risks;
– Effectiveness of the Internal Audit function
at least annually;
– Ensure the Head of Internal Audit has
direct access to the Board Chair and the
Committee Chair, providing independence
from the executives and accountability to
the Committee;
– Relationship with external auditors, including
reviewing the independence, objectivity and
effectiveness of the audit process, taking
account of relevant professional, regulatory
and ethical guidance;
– The appointment, reappointment and
removal of the external auditor and making
a formal recommendation to the Board;
– Processes for compliance with laws,
regulations and ethical codes of conduct;
– The adequacy and security of the Company’s
arrangements for its employees, contractors
and external parties to raise concerns,
in confidence, about possible wrongdoing
in financial reporting or other matters; and
– The Directors’ duties in relation to
the Companies Act and various other
applicable governance codes.
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91
GOVERNANCE During these unprecedented times we worked
closely with management to assess shifts in strategic
priorities and business activities, to understand and
oversee the impact on the financial statements,
and maintain the integrity of our financial reporting.”
CHRISTOPHER ROGERS
COMMITTEE CHAIR
The Committee reviewed reports to
support the going concern assumption and
long-term viability of the Group and deemed
the Group’s statements on these topics to
be appropriate. Note 2 of the notes to the
consolidated financial statements, page 132,
provides further insight into the going concern
assessment. The Committee reviewed and
approved the principal risk factors and their
impacts. Further details on these areas can
be found on pages 62 to 69 in the Strategic
Report. The Committee is satisfied that the
Annual Report clearly depicts the Group’s
strategy, business model, financial performance
and positions.
The Committee considered the disclosure
guidance provided by the Financial Reporting
Council on COVID-19 and its impacts
on corporate reporting, cash flow and
liquidity, IFRS 15 ‘Revenue from contracts
with customers’, IFRS 16 ‘Leases’, and other
corporate governance topics.
Other disclosures and activities reviewed by
the Committee were:
– Assessment of the Group’s ongoing legal
cases and regulatory investigations; and
– Changes and amendments in the
International Financial Reporting Standards.
COVID-19
The Committee has considered the range
of implications that the COVID-19 pandemic
has had on risk management and corporate
reporting in the period. The key considerations
have been summarised below.
PRINCIPAL RISK FACTORS
The impact of COVID-19 on the Group’s
principal risk factors have been reviewed
in-depth together with related mitigations.
The Epidemic principal risk factor considers the
risk of prolonged impacts from the COVID-19
pandemic, new and recurrent epidemics that
may have dramatic effects on the population,
economies and security. The Committee
recognised and considered the impact of
climate change on the Group’s financial
reporting and considered the disclosure in
the 2020 Annual Report and Accounts to
be appropriate. Further information on the
Groups principal risk factors can be found
on pages 62 to 69 in the Strategic Report.
FINANCIAL REPORTING
Areas of financial reporting
The Committee and management have
factored the impact of COVID-19 on
accounting estimates and judgements, notably
impairment testing. Refer to pages 147 and 176
for further information on accounting estimates
and judgements.
In addition, the Group has reviewed the
amounts provided against receivables and loans
for expected credit losses, taking into account
the potential for increased losses due to the
economic impact of COVID-19.
Given the nature of our operations this did
not result in a significant impact on the overall
expected credit losses for the Group.
The financial close process and external audit
In response to governmental advice and
restrictions regarding social distancing and
travel, the Group’s employees involved in
the preparation of management information,
financial reporting and supporting the external
audit have been mostly working from home,
as have the external audit teams. This has
required teams to identify a different way
of working during the financial close process.
Financial system users who work remotely
have the required access including access
to software tools for the collation of audit
evidence. Despite the challenges faced through
remote working, the Group has met all
reporting deadlines without the need for an
extension in the publishing of the consolidated
financial information.
COMMITTEE ACTIVITIES
FINANCIAL DISCLOSURE
The Committee reviewed the half-year and
annual financial statements published for the
2020 financial year. Specific consideration was
given to the clarity of disclosures including the
impact of COVID-19, integrity of the financial
reporting process, compliance with legal and
financial reporting standards and the application
of existing and new accounting policies and
judgements. The Committee concluded the
accounting policies, judgements and estimates
are appropriate and balanced.
The Committee endorsed the Annual Report
and assessed it to be fair, balanced and
understandable to shareholders. In making
these assessments the Committee reviewed
disclosures, discussed the requirements
with senior management and inspected
representations made to the auditors.
Based on the Committee’s endorsement
a recommendation to the Board was made
and following the review of the report as a
whole, the Board confirmed the assessment
and approved the publication of the 2020
Annual Report.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT AUDIT, RISK AND CONTROL CONTINUED
Significant financial reporting judgements considered by the Committee were as follows:
Key judgements and estimates
Committee actions
Conclusions
GOODWILL IMPAIRMENT ASSESSMENT
Goodwill recognised from the acquisition business
is subject to impairment testing.
Key judgement areas surrounding the impairment
assessment include the determination of the
cash-generating units (CGU) and assumptions
used in the calculation of the recoverable amounts
of the CGU (including cash flow projections
based on financial plans, discount rates and
future growth rates).
The Committee assessed the following aspects
of the goodwill impairment test:
– The impact of COVID-19 and
environmental impacts;
The Committee is in agreement with the
appropriateness of the analysis performed
by management, the judgements applied and
the estimates used.
– The CGU level at which goodwill is monitored;
– Assumptions in relation to terminal growth in
the businesses at the end of the five-year plan
cycle period; and
The impact of COVID-19 has been considered to
be temporary, with a delay in achievement of the
Group’s growth rate. The Committee recognised
COVID-19 does not have a pervasive impact.
– Sensitivity analysis on the discount rate
and projected cash flows.
The Committee concluded that the significant
assumptions used for determining the recoverable
amounts were appropriate and sufficiently robust.
The Committee is satisfied that goodwill is not
impaired. Further information on the impairment
of goodwill can be found in notes 4 and 12 of the
consolidated financial statements.
Based on the assessment, the Committee
concluded that the receivables were
properly stated and the level of provisioning
was appropriate.
The Committee concluded that the related tax
positions are appropriate. Further information
on the tax positions can be found in note 4
of the consolidated financial statements.
OTHER GOVERNMENT BENEFITS RECEIVABLE
Other government benefits receivable are
subsidies received from national governments
for fuel sold as part of the Group’s ordinary
course of business.
TAX POSITIONS
Determining the Group’s income and other
tax positions requires interpretation of the tax
laws in numerous jurisdictions. Resolution of
uncertain tax positions can take several years
to complete and can be difficult to predict.
Therefore, judgement is required to determine
the Group’s income tax liability related to
uncertain tax positions.
The assessment of recoverability risk related
to other government benefits receivable was
considered by the Committee by taking into
consideration the:
– Stability of the macroeconomic and political
environment; and
– Credit risk and governmental policy changes.
Considered the appropriateness of the key
judgements and estimates in relation to the
uncertain tax positions.
Factors considered include the:
– Status of recent current tax audits
and enquiries;
– Results of previous claims;
– Transfer pricing policies of the Group; and
– Any changes to the relevant tax environments.
VIVO ENERGY PLC (COMPANY) IMPAIRMENT TEST
The Group determines the recoverable amount
of investment in subsidiaries where a trigger
for impairment is identified.
Market capitalisation of the Company is currently
below its carrying value. In accordance with
IAS 36 ‘Impairment of assets’ and in light of the
COVID-19 crisis, this was the triggering event
for the impairment assessment.
Key judgment areas surrounding the impairment
assessment include the assumptions used in the
calculation of the recoverable amounts such as
cash flow projections based on financial plans,
discount rates and long-term growth rates.
The Committee assessed the following aspects
of the impairment test:
– The impact of COVID-19;
– Assumptions used, specifically the discount rate
and terminal growth; and
– Sensitivity analysis on the discount rate and
terminal growth.
The Committee concluded that the assumptions
used for determining the recoverable amounts
were appropriate and sufficiently robust.
The Committee is satisfied that the investment
in Vivo Energy Holding B.V, held by the Company,
is not impaired. Further information on the
impairment assessment can be found in note 2
of the Company financial statements.
INTERNAL CONTROLS
AND RISK MANAGEMENT
The Committee is tasked with the responsibility
of reviewing and assessing risks, their impact
and ensuring that appropriate controls are
designed and implemented to mitigate these
risks. The Group’s risk assessment process and
the way in which significant business risks are
managed remains a key area of focus for the
Committee, the Internal Audit and Internal
Controls functions.
The risk register is one of the key components
of the risk management structure, which covers
the regular ongoing identification, assessment,
mitigation and management of risks and
is monitored regularly by the Committee.
The areas of focus remain largely unchanged
and address both the current and emerging
risks of the Group. In 2020, the Group further
elaborated its risk management framework
through the deployment of an additional
bottom-up risk assessment process at local
operating unit level.
Details relating to the principal risks and
uncertainties of the Group as well as the
mitigating controls can be found in the
Strategic Report on pages 62 to 69.
The Committee further reviewed the
internal controls of the business as a whole.
The internal control framework is intended to
manage rather than eliminate the risk of failure
to achieve the business objectives and can only
provide reasonable and not absolute assurance
against material misstatement.
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GOVERNANCE The Committee completed its review of the
effectiveness of the Group’s system of internal
controls and risk management. The review
covered the full year up to the date of this
Annual Report. There are no significant
weaknesses or instances of significant control
failure identified during the year. The Group’s
resilience and response to the impact of events
in 2020, in particular the COVID-19 crisis,
confirmed the robustness and responsiveness
of the risk management framework. Given the
strong and adaptable processes in place the
Committee is confident in its conclusion of the
effectiveness of the internal controls and risk
management system and has reported this
opinion to the Board.
INTERNAL AUDIT
The Committee has reviewed and approved
the internal audit plan and the progress of
audits performed for the year. The Committee
was regularly updated on the actions taken
and status of the audit recommendations.
Internal audit findings including remedial action
plans were presented and discussed in detail
with the Committee. There is continuous
communication between the Head of Internal
Audit and the Chair of the Committee to
ensure that all the information required by
the Committee to perform its duties are
made available.
The Internal Audit function has adapted its
approach to cope with the travel restrictions
and border closures in Africa throughout
2020. A SAP-based audit methodology has
been deployed which improved our remote
auditing capability.
Following the review done by the Committee,
the Internal Audit function’s resources have
been strengthened, in particular, through the
on-boarding of a SAP audit resource which
increased the audit capacity on SAP general
controls and change management.
The Committee considers the experience
and expertise of the function appropriate to
address all categories of risk within the business.
The Internal Audit function’s performance
was assessed against the approved internal
audit plan. The Committee concluded that
the Internal Audit function was effective for
the year and is satisfied that the scope, extent
and effectiveness of the internal audit activities
were appropriate.
ETHICS AND COMPLIANCE
WHISTLE-BLOWING AND FRAUD
We have a confidential whistle-blowing helpline
for employees, contractors, customers and
other third parties to raise ethical concerns
or questions. During 2020, a mandatory
whistle-blowing training was launched to
raise awareness around reporting concerns
of misconduct. The Ethics and Compliance
Committee closely monitored the numerous
COVID-19 donations made during the
year to ensure the relevant approvals were
obtained. Furthermore all KYC procedures
were performed for those donations which
exceeded the Group’s KYC threshold.
EXTERNAL AUDIT
INDEPENDENCE
The Committee reviewed the auditor
independence policy which is designed to
safeguard the continued independence of
the external audit firm. The policy sets out:
– The audit fee;
– Oversight of audit firms who perform
audit services; and
– Audit-related and non-audit services
provided to the Group.
Oversight by the Committee includes, but is
not limited, to making the recommendation
on the appointment, reappointment and
removal of the external auditor, assessing
their independence on an ongoing basis,
involvement in fee negotiations, approving the
statutory audit fee, the scope of the statutory
audit and appointment of the lead audit
engagement partner.
Nicholas Stevenson was appointed as lead
partner in 2018 and will be subject to the
mandatory partner rotation.
The Committee assesses the independence
of the external auditor on an ongoing basis.
PwC have confirmed to the Committee their
independence in accordance with the Ethical
Standard for Auditors issued by the Financial
Reporting Council (FRC).
During the year, the external auditor had
presented the 2020 financial audit plan.
The audit plan included the proposed audit
scope as well as the assessment of key audit
risks. The scope of the audit was assessed and
reviewed by the Committee to be appropriate.
External auditors are prohibited from providing
all but certain non-audit services as directed
by the FRC Revised Ethical Standard 2019.
Any approved non-audit services with fees
exceeding the threshold set to identify trivial
services or which are not stipulated within
the policy must be reviewed and approved
by the Committee.
The external auditor is only considered for
non-audit services in instances where they
have the most appropriate technical skills
and expertise.
AUDIT FEES
On an annual basis, the Committee reviews
the audit fees, resourcing and terms of
the engagement. On a quarterly basis, the
Committee reviews the non-audit services
provided by the auditor.
The Committee is responsible for overseeing
the process of approving all non-audit services
provided by the external auditor. In doing so,
it ensures the objectivity and independence
of the auditor is safeguarded. Prior to approval,
consideration is given to whether it is in the
interest of the Company that the services
are purchased from PwC instead of another
supplier. For the 2020 financial year, the total
amount paid to PwC for non-audit services
does not represent a significant portion of
their total revenues.
In 2020, the Group incurred total fees of
$3.0 million (2019: $3.9 million) to PwC.
Of this total, $2.4 million (2019: $3.0 million)
related to audit work and $0.6 million
(2019: $0.9 million) to audit-related services.
Audit fees are disclosed in note 7 of the
consolidated financial statements.
APPOINTMENT AND EFFECTIVENESS
The Committee is tasked with the primary
responsibility of overseeing the work
performed by, and the relationship with PwC,
the Group’s external auditors since 2018.
The Committee reviewed the quality, cost
and independence of the external audit and
are satisfied with each of these elements.
Senior finance personnel are required to
complete the Group’s auditor effectiveness
review template which provides insight into
various aspects of the audit and the quality
of work performed by PwC. The Committee
further considered its own assessment and
feedback from senior finance personnel
across the Group. Based on these reviews,
the Committee concluded that there had been
appropriate focus and challenge by PwC on
the primary areas of the audit and that PwC
had applied an appropriate level of scepticism
and conducted the audit with the required
level of skills and expertise. The Committee’s
recommendation to reappoint PwC as
the Group’s external auditor in 2020 was
accepted at the Annual General Meeting
held on 20 May 2020. The Committee further
recommended to the Board that PwC be
reappointed by shareholders at the Annual
General Meeting on 18 May 2021.
A re-tender of the external audit by the
Committee shall be in accordance with
the Financial Reporting Council guidance.
The tender process for audit-related
engagements is initiated and approved by
the Committee. The Committee confirms
compliance with the provisions of the
Competition and Markets Authority’s Order
for the financial year under review.
COMMITTEE EFFECTIVENESS
Each year the Board undertakes an evaluation
of the performance of the Audit and Risk
Committee. This provides an opportunity
to identify efficiencies, maximise strengths
and highlight areas for further development.
Overall feedback provided by the Board was
positive and the Committee is considered to be
functioning effectively in meeting its objectives.
CHRISTOPHER ROGERS
COMMITTEE CHAIR
2 MARCH 2021
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT
REMUNERATION
COMMITTEE
CAROL ARROWSMITH
COMMITTEE CHAIR
DEAR SHAREHOLDER
On behalf of the Board I am pleased to present
our Directors’ Remuneration Report for 2020.
This Remuneration Report details how the
current policy was implemented during 2020
and the decisions on remuneration for 2021.
COVID-19
As for most businesses, 2020 brought significant
challenges for Vivo Energy. A strong start
to the year was followed by a significant
dip in our financial performance during the
second quarter. Governments across Africa
reduced social interaction and movement,
which saw a reduction in demand for our
products and services. Management moved
swiftly to contain costs and focus operations
on those areas where we could continue to
trade, while also remaining mindful of how
the business could emerge from the pandemic
in as strong a position as possible.
HSSEQ is integral to how we operate and
we continued with our relentless focus on
it through the year, to ensure wherever
possible the safety and well-being of our staff,
our customers and the wider community.
Among a number of initiatives we swiftly
implemented hand washing and sanitising
stations and screening protocols for the safety
of our staff and customers. Blending capacity
in our lubricant sites was also partly switched
to the manufacture and distribution of hand
sanitiser for the wider community and we also
provided fuel to emergency service vehicles
to help in the battle against COVID-19.
Financial performance recovered well in the
second half as governments eased mobility
restrictions and demand rapidly returned at our
retail sites. During this second half management
quickly focused on restoring competitiveness
and creating a firm platform from which to
grow; this can be seen in the improvement
in market share compared to 2019 and the
significant net total of service stations added.
We have also been developing new and
innovative ways of meeting the energy needs
of our customers and we won our first solar
contract providing a hybrid solar/fuel energy
solution for a gold mine in Mali. We also
successfully completed our inaugural bond
transaction, securing stable long-term financing
at lower cost. Following the continued recovery
in trading through the third quarter, the Board
declared an interim dividend of $34 million,
which is the amount that would have been
paid to shareholders had the final dividend of
the year ended 31 December 2019 been paid,
rather than withdrawn.
Through all this we have not made any staff
redundant nor put anyone on furlough.
Nor have we taken advantage of any
government financial support schemes.
PERFORMANCE AND
REMUNERATION OUTCOMES
FOR 2020
We have always used our incentive framework
to align management’s interests with those of
our shareholders and provide an emphasis on
those aspects of performance which support
the resilience of our future success. This year
is no exception, with the Remuneration Policy
operating as intended.
We set ambitious financial performance
targets for 2020, before the global nature of
the pandemic was fully understood. Inevitably,
even though our leadership team performed
strongly throughout the year, curtailing costs,
focusing on growth opportunities, building new
revenue streams and ensuring the resilience
of the business, we did not meet those
ambitious targets. Therefore the 70% of the
annual bonus based on the achievement of
stretching financial targets did not pay out.
30% of our annual bonus is based on strategic
and operational targets which are tailored
to the contribution that can be made by the
CEO and the CFO. As the year unfolded it
was evident that some of these targets were
not aligned with the interests of shareholders;
accordingly, we replaced some more
subjective non-financial targets with specific
and measurable goals focused on restoring
competitiveness and creating a platform for
future growth. These objectives were based
on our ability to grow market share and open
new sites, focusing management on growth
opportunities that would deliver sustained
ongoing value for shareholders. We believe that
this was a proportionate and logical approach
to incentives, to ensure alignment between the
management and our shareholders.
Very strong performance was delivered
across all the strategic and operational targets,
including an increase in Retail market share
compared to 2019 in a number of our major
markets, which make up over two thirds of the
business, and the net total of service stations
added was well ahead of plan. Consequently,
we decided that this element of the bonus
would pay out in full, resulting in an overall
bonus payment of 30% of maximum.
Financial performance recovered well in the
second half as governments eased mobility
restrictions and demand rapidly returned.”
CAROL ARROWSMITH
COMMITTEE CHAIR
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GOVERNANCE Bonus awards have been made in the wider
organisation, with higher payouts in jurisdictions
where business has particularly outperformed.
PRIORITIES FOR 2021
Our remuneration policy has been in place
since the IPO in 2018. During 2021, we will be
reviewing how well it has operated and what,
if any, changes are appropriate, in particular
to ensure it reflects corporate governance
best practice and is aligned with shareholder
interests. We welcome any input from
shareholders as we develop our thinking and
intend to consult with shareholders during 2021
on any proposed changes, with the revised
policy being put to the vote at our AGM
in 2022.
As part of this review, we will also ensure
that the remuneration policies of our
wider workforce remain aligned with
our approach to executive and senior
management remuneration.
This Directors’ Remuneration Report will be
put to an advisory vote for shareholders at
the 2021 AGM on 18 May 2021. I am looking
forward to meeting with shareholders during
2021, as we work on the review to our
remuneration policy.
CAROL ARROWSMITH
COMMITTEE CHAIR
2 MARCH 2021
The first of our awards under the LTIP is due
to vest, based on performance to the end of
2020. Of the three performance measures:
EPS, ROACE and Relative TSR, (weighted
40%, 40%, 20% respectively), the ROACE
outcome was close to maximum at 19.67%,
whilst EPS and Relative TSR did not meet their
thresholds. The Committee chose not to make
any adjustment to these outcomes; therefore,
the award will vest at 37.4% of maximum.
Vested awards will be subject to a two-year
holding period.
In recognition of the performance leading
up to the IPO, and to retain these individuals
through the first years of the business post
Admission, it was agreed prior to the IPO
that one-off share awards would be granted
to the Executive Directors and certain senior
executives. The terms of these legacy awards
were agreed with our two major shareholders
prior to the IPO, were fully disclosed in the
prospectus and have continued to feature
in our Annual Reports. The third and final
tranche of these awards will vest in May 2021.
The Committee, in consultation with our two
major shareholders, and taking into account
the particularly strong performance in the
second half of the year, approved a vesting
level of 96.8%. Further details are set out on
pages 103 to 104. These are legacy awards and
will not be replicated in future years.
CHANGE IN CFO
We are delighted to welcome Doug Lafferty,
whose appointment as CFO to succeed
Johan Depraetere was announced in
November last year. We are sad to be saying
goodbye to Johan and owe him a great debt
for the way he has led the finance function
both before and since the IPO, and in
particular thanks is due to him for all the work
and insightful support he and his team have
brought to our remuneration work. Johan’s
remuneration in relation to his departure
is fully in line with our remuneration policy
and details can be found on page 104 of the
Directors’ Remuneration Report.
Doug’s remuneration package is also fully in line
with our policy. No buy-out awards were made
to Doug on appointment.
REMUNERATION FOR 2021
Our remuneration approach for 2021
remains aligned with our Policy and is
intended to attract and retain performance
orientated individuals of the right calibre to
take our business forward. In line with our
Policy, the Committee has made the following
decisions with respect to the remuneration
for Executive Directors in 2021:
– Base Salary – Christian’s salary remains
unchanged at £640,000 and Doug is
appointed on a base salary of £400,000.
Johan Depraetere’s salary was £450,000.
– Annual Bonus 2021 – The maximum
opportunity remains unchanged at 200% for
the CEO and 150% for the CFO. We have
retained the same bonus measures as
for previous years with adjusted EBITDA
weighted 40%, gross cash profit weighted
30% and non-financial metrics weighted
30%. We believe that this continues to
give us a good balance between top line
growth, bottom line delivery and focus
on strategic development areas for the
business. Details of targets will be disclosed
retrospectively in next year’s report as they
are commercially sensitive.
– LTIP 2021 – The maximum award levels
of 250% for the CEO and 200% for the
CFO and the performance measures of
EPS, ROACE and Relative TSR weighted
40%, 40% and 30% respectively remain
unchanged. The Committee is still in the
process of finalising targets for this award.
However, we intend to publish details
of the targets on the Company website
ahead of the 2021 AGM.
REMUNERATION POLICY
FOR THE WIDER WORKFORCE
The Committee continues to endorse and
support the strong pay for performance
ethos which runs across the entire organisation.
It is very mindful of the great commitment
that all our employees have shown throughout
this difficult year and has had regular updates
and briefings throughout the year on how
employees have been coping during the
pandemic. The Committee has oversight of
the budget and the distribution of annual pay
increases and it has been particularly mindful
this year on how incentive plan performance
has been measured and payouts determined to
ensure that the immense effort that employees
have put in is recognised and rewarded.
AGM VOTING OUTCOMES
At the 2020 AGM, shareholders voted on the 2019 Remuneration Report. Shareholders approved the Remuneration Policy at the AGM in 2019.
Remuneration Policy
(2019 AGM)
Remuneration Report
(2020 AGM)
Number
of votes
‘For’
%
of votes
cast
Number
of votes
‘Against’
%
of votes
cast
Total number
of votes
cast
Number
of votes
‘Withheld’
1,120,880,170
99.84%
1,785,050
0.16%
1,122,665,220
1,000
1,105,746,093
95.66%
50,124,535
4.34%
1,155,870,628
50
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
SUMMARY OF
OUR APPROACH
5
Our approach to remuneration is intended to reflect
our core values and remain consistent with our vision
to become the most respected energy business in Africa.
VOLUME
Million litres
9,637
-7%
ADJUSTED EBITDA
US$ million
360
-16%
SERVICE STATIONS
ADDED
Net total
TOTAL RECORDABLE
CASE FREQUENCY
Per million
exposure hours
104
0.10
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Maintain a highly performance-driven cultureReflect our values – notably on risk, HSSEQ and good business practiceReward for execution of strategy and align pay with shareholders’ interestsCommitment to openness and transparencyOUR REMUNERATION PRINCIPLES1 To remain a responsible and respected business in the communities in which we operate;2 To preserve our lean organisational structure and performance-driven culture;3 To maximise the value of our existing business;4 To pursue value-accretive growth; and5 To maintain attractive and sustainable returns through disciplined financial management.WE HAVE FIVE KEY STRATEGIC OBJECTIVES:GOVERNANCE PAY ELEMENT
APPROACH
REMUNERATION FOR 2021
BASE SALARY
Fixed pay levels
set at competitive levels
with role-appropriate
benefits.
Christian Chammas (CEO):
£640,000
Johan Depraetere (departing CFO):
£450,000
Doug Lafferty (incoming CFO):
£400,000
BENEFITS
Benefits package includes private medical care cover, life assurance and annual medical screening.
Pensions capped at 10% of salary, consistent with other UK employees.
ANNUAL BONUS
Incentive linked to
short-term targets.
Maximum opportunity unchanged at:
CEO: 200% of salary
CFO: 150% of salary
Performance targets remain weighted at 70% on financial performance
and 30% on non‑financial performance.
Adjusted EBITDA 40%
Gross cash profit 30%
Strategic goals 30%
50% of any bonus achieved will be deferred in shares until the Executive Director
has achieved their shareholding requirement.
The detailed targets for the 2021 bonus are deemed to be commercially sensitive as they
are closely linked to our internal business plans and are therefore excluded from this report.
However, the Committee intends to provide retrospective disclosure of targets in next year’s
Remuneration Report.
LTIP
Incentive linked to
long-term priorities.
Maximum opportunity unchanged at:
CEO: 250% of salary
CFO: 200% of salary
Performance measures remain:
EPS: 40%
ROACE: 40%
Relative TSR: 20% vs FTSE 350 (excluding financial services)
Awards are expected to be made prior to the AGM and targets published on the
Company’s website.
Performance will be measured over a three‑year period from 1 January 2021
to 31 December 2023. Awards will also be subject to a two‑year holding period.
ADDITIONAL SAFEGUARDS
SHAREHOLDING
DISCRETION AND JUDGEMENT
MALUS AND CLAWBACK
CEO has very significant shareholding
in the Company.
Incoming CFO will be expected to
build up a holding of 2x salary.
Shareholding guidelines apply for two years
after stepping down from the Board.
A key feature of the Directors’
Remuneration Policy, to ensure
pay reflects performance.
Provisions in place to prevent payments
for failure.
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REMUNERATION FOR EXECUTIVE DIRECTORS IN 2021OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION COMMITTEE GOVERNANCE
ROLES AND RESPONSIBILITIES
OF THE COMMITTEE
The Remuneration Committee operates
with a delegated authority from the Board
and is responsible for:
– Determining and agreeing with the
Board the Remuneration Policy for the
Executive Directors.
– Setting individual remuneration packages
and terms and conditions for the Executive
Directors and other senior executives.
– Reviewing and noting the remuneration
trends and practices across the Company
and taking these into account when
reaching any decisions.
– Evaluating the achievement of performance
conditions under the annual bonus and LTIP.
– Determining the Chairman’s remuneration,
though the Board itself determines the levels
of fees for the Non‑Executive Directors.
No individual is present when his or her
remuneration is being determined.
MEMBERSHIP
All members of the Committee are
Non‑Executive Directors as defined
by the Code.
Committee members
All members were appointed in May 2018,
unless otherwise stated in their biographies
on pages 78 to 79:
– Carol Arrowsmith – Chair
– John Daly
– Hixonia Nyasulu
– Christopher Rogers
– Gawad Abaza
MEETINGS
The Committee held five scheduled meetings
during 2020, plus additional meetings as
required. Details of attendance by members
at Committee meetings can be found on
page 83. The Committee normally invites
the Chief Executive Officer, the Chief
Financial Officer, the General Counsel, the
Company Secretary and the Chief of Staff
to attend appropriate elements of the
scheduled meetings.
ADVISERS TO THE
REMUNERATION COMMITTEE
Deloitte LLP were appointed as independent
advisers by the Committee in 2018 following
a competitive tender process. Deloitte are
members of the Remuneration Consultants
Group and, as such, voluntarily operate
under the code of conduct in relation to
executive remuneration consulting in the UK.
Total fees received by Deloitte in relation
to the remuneration advice provided to the
Committee during 2020 amounted to £40,350.
Fees are based on hours spent. Deloitte LLP in
the UK do not provide any further services to
the Company. Carol Arrowsmith was formerly
a partner at Deloitte LLP, retiring in May 2014.
No other Directors have any connection with
Deloitte LLP. The Committee is satisfied that
the advice provided by Deloitte is independent.
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In reaching decisions on both rewarding performance in 2020 and setting remuneration for 2021, the Committee was mindful of the UK Corporate Governance Code and considers that the remuneration framework appropriately addresses the following factors:ClarityThe Committee believes that the remuneration framework provides clear and transparent disclosure in relation to our executive remuneration arrangements.SimplicityRemuneration arrangements for Executive Directors are well understood by participants and we have sought to clearly explain our approach to shareholders.The ongoing structure of executive remuneration consists of fixed pay, annual bonus award and the LTIP award.RiskThe Committee believes that the structure of Executive Directors’ remuneration does not encourage inappropriate risk-taking.Malus and clawback provisions also apply to both the annual bonus and LTIP award. The Committee also retains scope to exercise discretion to ensure outcomes are appropriate.PredictabilityOur remuneration policy contains detail of maximum opportunity levels for each component of variable pay.ProportionalityThe Committee believes that poor performance should not be rewarded. For both incentive awards, achievement requires performance against challenging performance targets.Alignment to cultureThe Committee believes that the framework is well aligned to the culture of the business, with performance measures for variable awards being aligned to the Company’s wider strategy.PAY IN THE WIDER WORKFORCEWhen determining the approach to pay for the Executive Directors, the Committee is very mindful of pay and employment conditions for the wider employee base as this provides valuable context and ensures consistency in how pay principles are applied across the organisation.As a Committee, we value the opinions of our people and take into consideration the wider workforce. During the course of the year, we conducted an employee engagement survey and local town hall meetings, encouraging employees to provide feedback. Whilst we do not directly engage with the workforce on the Directors’ Remuneration Policy, we do have access to employee feedback on employment conditions across the organisation. Further detail on the Board’s approach to engagement with employees is set out on page 89.We are not currently required to disclose our CEO pay ratio, as there are less than 250 employees in the UK. However, the Committee does receive various briefings during the year on how pay and reward practices are operating, has oversight of the budget, its distribution for annual pay increases and how incentive plans are assessed and payouts determined.SHAREHOLDER ENGAGEMENTWe are committed to an ongoing dialogue with our shareholders and welcome feedback in relation to our approach to Board remuneration.As a Committee, we consult with our shareholders on a regular basis and appreciate their input and continued support. We consulted with our major investors prior to the adoption of the current Remuneration Policy. The Committee will undertake a review of the Remuneration Policy in the coming year in advance of seeking approval for a new policy at the 2022 AGM as part of the normal three-year renewal cycle. We intend to once again consult with our major shareholders in the coming months prior to the finalisation of the new policy in order to seek feedback on the key terms.GOVERNANCE 2020 DIRECTORS’ REMUNERATION REPORT
This Directors’ Remuneration Report (DRR) has been prepared on behalf of the Board by the Committee in accordance with the relevant
requirements of the Large and Medium‑sized Companies and Groups (Accounts and Reports) Regulations 2008.
ANNUAL REPORT ON REMUNERATION
This section of the DRR sets out how the Policy has been applied in the year and how it will be applied in the coming year. In accordance with the
legislative requirements, this DRR, along with the Remuneration Committee Chair’s Statement, will be subject to an advisory shareholder vote
at the 2021 AGM. Sections of this report that are subject to audit, in line with disclosure regulations, have been flagged below.
SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)
EXECUTIVE DIRECTORS
The following table sets out the total remuneration for the Executive Directors for the year ended 31 December 2020.
Johan Depraetere is included as he worked throughout 2020. Doug Lafferty joined the Company on 1 February 2021, his remuneration package
is in line with the Policy and is disclosed on page 105.
The first awards under the LTIP will vest in 2021 with the three‑year performance period ending on 31 December 2020. Estimated values
of these awards are included in the table. The table also includes details of the third and final tranche of the IPO Share Award which vests in
May 2021. These legacy awards were agreed prior to the IPO, but have been included, consistent with the disclosures in the previous two years.
No more awards have been or will be made under this legacy plan.
Full details of all legacy arrangements were set out in the Prospectus on Admission and in previous Directors’ Remuneration Reports.
Salary
Benefits1
Retirement benefits2
Total Fixed Pay
Annual bonus
Long‑Term Incentive Plan3
Legacy incentives: IPO Share Award4
Total Variable Pay including Legacy Incentives
Total Pay
Less Legacy Incentives
Total: Less Legacy Incentives
Christian Chammas
Johan Depraetere
(£’000)
(£’000)
FY2020
FY2019
FY2020
FY2019
640
5
64
709
384
332
317
1,033
1,742
(317)
1,425
640
5
64
709
936
–
302
1,238
1,947
(302)
1,645
450
5
45
500
203
187
223
613
1,113
(223)
890
450
5
45
500
494
–
212
706
1,206
(212)
994
1 The benefits consist of private medical cover. Directors also receive life assurance and have an annual medical screening.
2 The retirement benefits represent the Company’s contribution to the Executive Directors’ retirement planning at a rate of 10% of base salary. This benefit level is consistent with the
level provided to other UK employees.
3 The first awards under the LTIP will vest in 2021. An estimated value of the awards vesting has been shown based on the average share price over the fourth quarter of 2020 (82.1p).
No awards vested under the Long‑Term Incentive Plan in 2018 or 2019, as the first awards under this plan were granted in 2018. The 2018 LTIP awards were formally granted on
8 August 2018 when the share price was 148 pence.
4 The third tranche of this legacy award will vest in May 2021. An estimated value of the third tranche of this award has been shown based on the average share price over the fourth
quarter of 2020 (82.1p). The value of the second tranche, shown for 2019, has been restated based on the share price on the vesting date (78.6p). IPO share awards were formally
granted on 18 May 2018, when the share price was 174 pence.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL BONUS – 2020
The Executive Directors’ annual bonus targets for 2020 were set against a combination of financial and non‑financial performance measures.
The measures for financial performance were adjusted EBITDA and gross cash profit weighted at 40% and 30% of the bonus opportunity respectively.
The remaining 30% was based on a number of strategic and operational objectives.
Details of the performance targets and the outcomes are set out below.
FINANCIAL PERFORMANCE – 70% OF THE AWARD
The financial targets for the bonus were set in February 2020 before the global impact of COVID‑19 had become fully apparent and were therefore
set assuming more favourable trading conditions. Although it became quickly apparent that the performance thresholds were no longer realistic
in the light of unfolding circumstances, the Committee determined that the targets for this element of the bonus should remain unchanged.
Despite the external challenges, the business delivered a robust set of financial results as demonstrated by the Board’s decision to declare an interim
dividend of $34 million, which is the amount that would have been paid to shareholders had the final dividend of the year ended 31 December 2019
been paid, rather than withdrawn. Financial results for the second half of the year were also ahead of market expectations. There remained a strong
focus on protecting the health of our people, customers and communities across all operations. The Executive Directors, management teams and all
employees have delivered outstanding performance, reflecting the ongoing resilience of the business model and positioning the Company for growth
as the markets continue to recover.
Performance measure
% of element
Adjusted EBITDA (40%)
Gross cash profit (30%)
10%
$434m
$755m
20%
$440m
$760m
40%
$450m
$771m
60%
$461m
$782m
80%
$475m
$796m
100%
$488m
$809m
Actual performance
Result
$360m
$697m
% of element
0%
0%
STRATEGIC AND OPERATIONAL OBJECTIVES – 30% OF THE AWARD
In light of the quickly evolving priorities of the business, the objectives for the Executive Directors were adapted at the mid‑year stage to ensure
greater focus on positioning the business for growth after the pandemic. Objectives relating to a long‑term business strategy were replaced with more
specific targets linked to retail market share and net site additions. The Committee also determined that any payout under the non‑financial element
would be subject to the delivery of adjusted EBITDA of $200 million in H2.
CHRISTIAN CHAMMAS
Area
Focus
Market
Competitive
Position
Drive the recovery in H2 with focus on improving
market share
Growth Agenda
Deliver on plans for the expansion of the retail network
HSSEQ
Demonstrate focus on and personal leadership of the
HSSEQ agenda, in particular the impact and response
to COVID‑19 on staff, customers and business partners
Human Capital
Strengthen the senior leadership team with critical
new hires and develop clear succession plans at next
level down
FINAL ACHIEVEMENT: 30%
Outcome
Retail market share increased across a number of our major
markets compared with 2019. These major markets make
up over two thirds of the business.
Retail network significantly increased, with 104 net new sites
added by the end of the year, versus a stretch plan target
of 100.
An outstanding HSSEQ year. All performance measures
of TRCF, spills and consequential lost volume significantly
exceeded in both Shell and Engen‑branded OUs.
Initiatives, including hand washing/sanitising stations and
screening protocols, were swiftly put in place to protect
both customers and employees and their ongoing
safety was monitored constantly. Additional support was
provided with the lubricant blending plants producing
hand sanitiser and fuel was provided from our supplies
for emergency vehicles.
New CFO was successfully hired, and a number of other
key roles were also filled, in spite of the challenges in
recruiting. Detailed succession plans are in place for the
members of the Senior Executive Team and other critical
roles, with regular reporting to the Nominations and
Governance Committee.
Underpin
Adjusted EBITDA of $200 million in H2
Adjusted EBITDA of $220 million achieved in H2.
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GOVERNANCE STRATEGIC AND INDIVIDUAL OBJECTIVES – 30% OF THE AWARD
JOHAN DEPRAETERE
Area
Focus
Market
Competitive
Position
Infrastructure
Development
Drive the recovery in H2 with focus on improving
market share
Complete the implementation of the new ERP system,
ensuring integration of analytics and Engen upgrades
Financial Management Optimise cost, capex and cash management with particular
focus on H2
Ethics & Compliance
Strengthen internal controls framework
FINAL ACHIEVEMENT: 30%
Outcome
Retail market share increased across a number of our major
markets compared with 2019. These major markets make
up over two thirds of the business.
The new ERP system is now fully implemented and
operational across all Shell‑branded OUs, with Engen OUs
on track for full deployment by the end of 2021.
Analytics, dashboards and real‑time reporting are
embedded in the business and have been a critical
management tool during the pandemic.
Led the inaugural bond offering through to successful
completion, securing long‑term finance at lower cost. Capex
spend continued through the year in spite of the operational
challenges and refinancing took place to offset potential
impairments resulting from the oil price crisis.
All audit actions were addressed and resolved, with auditing
now moved fully to being done remotely. There were no
major control breaches during the year and the use of SAP
in this area has now become a core activity.
Underpin
Adjusted EBITDA of $200 million in H2
Adjusted EBITDA of $220 million achieved in H2.
OVERALL OUTCOME
Christian Chammas (maximum – 200% of salary)
Adjusted EBITDA
Gross cash profit
Non‑financial Objectives
Total
Johan Depraetere (maximum – 150% of salary)
Adjusted EBITDA
Gross cash profit
Non‑financial Objectives
Total
Maximum Opportunity
% of salary
% of salary
£’000
Outcome
80%
60%
60%
200%
60%
45%
45%
150%
0%
0%
60%
60%
0%
0%
45%
45%
0
0
384
384
0
0
203
203
As noted above, the performance targets for adjusted EBITDA and gross cash profit were set to reflect a more positive economic environment.
In spite of a strong performance through the year, ensuring the resilience of the business and building new income streams, the financial portion
of the annual bonus, making up 70%, did not pay out. Management’s focus on growing retail market share and the retail network has created a strong
platform for creating sustainable ongoing value for shareholders. There was also out‑performance of financial expectations for H2 and the Board was
pleased to declare an interim dividend of $34 million, which is the amount that would have been paid to shareholders had the final dividend of the year
ended 31 December 2019 been paid, rather than withdrawn. The HSSEQ performance was outstanding and work on succession planning has brought
in some key new hires and developed plans down the organisation. In addition the ERP system has become fully operational across the whole business,
the balance sheet has been strengthened through the successful bond issue and audit controls were judged to be fully functioning. The Committee
in particular noted that that there had been a strong level of performance across strategic priorities, both those focused on growing the business
during the year and those with a more long‑term orientation, and therefore determined that the payout of 30% of the maximum bonus for both
the CEO and the CFO represents a fair outcome.
As both Christian Chammas and Johan Depraetere have shareholdings which significantly exceed the shareholding guidelines, 2020 bonus awards
are payable in cash and not subject to deferral, in line with the shareholder approved Remuneration Policy.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
LONG-TERM INCENTIVE AWARDS
2018 LTIP AWARD
The performance period for the first award under the Long‑Term Incentive Plan (LTIP) ended on 31 December 2020. The 2018 LTIP award was
subject to EPS, ROACE and Relative TSR performance targets. The performance achieved in the three‑year performance period and the consequent
vesting levels are shown in the table below. The Committee reviewed the outcome of the awards in the context of the business performance over
the three‑year performance period and determined the vesting level of 37.4% was appropriate.
Any shares vesting are subject to a two‑year holding period, which will ensure continued alignment with our shareholders.
2018 Awards
EPS
Compound annual growth
ROACE
Weighted average over performance period
Relative TSR
v. FTSE 350 (exc. financial services)
Total vesting level in respect of 2018 Awards
Weighting
Threshold
(20% of
award vests)
Target
(50% of
award vests)
Maximum
(100% of
award vests)
40%
40%
20%
6%
16%
Median
8%
18%
–
12%
20%
Upper
quartile
Achieved
<6%
19.7%
Below
median
% of
award vesting
0%
37.4%
0%
37.4%
The vesting of the 2018 award was heavily impacted by market conditions in 2020. However, the business has delivered very strong returns on
capital over the last three years, while continuing to execute strategic goals. Financial trends for H2 were also more positive. In addition, the business
has continued to deliver against key HSSEQ targets. Therefore the Committee is satisfied that the vesting levels are warranted.
LTIP AWARDS GRANTED IN 2020
Awards were made under the LTIP during 2020, on the same basis as for prior years. These awards were granted in the form of nil‑cost options
over Vivo Energy plc shares, with the number of shares that may vest conditional upon performance to the end of the 2022 financial year. Any shares
vesting to Executive Directors will also be subject to an additional two‑year holding period.
The 2020 LTIP awards are subject to performance targets based on earnings per share (EPS), return on average capital employed (ROACE) and
relative total shareholder return (Relative TSR). The Committee determined that this mix of performance measures ensured focus on delivery of
strategic and operational goals and management of capital within the business, which is a key strategic focus and aligns with shareholder value creation.
Similar to comments noted above regarding the bonus, the targets for the 2020 LTIP were set before the global impact of the COVID‑19 pandemic
had become fully apparent.
Details of the performance measures with their weightings and targets are shown below:
2020 Awards
EPS
Compound annual growth
ROACE
Weighted average over performance period
Relative TSR
v. FTSE 350 (exc. financial services)
Weighting
NIL
40%
Less than 6%
per annum
20% of
element vests
6%
per annum
50% of
element vests
8%
per annum
100% of
element vests
12%
per annum
40%
Less than 16%
16%
18%
20%
20%
Below Median
Median
–
Upper‑quartile
Note: There is straight‑line vesting between the points shown in the table.
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GOVERNANCE The following table provides details of the awards made on 11 March 2020:
Name
Christian Chammas
Johan Depraetere
Number of
shares awarded
1,454,548
818,183
Face value at
grant (£’000)
End of performance period
1,367
769
31 December 2022
31 December 2022
The Committee decided that, due to share price volatility in the period prior to the award being made, a share price of 110 pence would be used
to determine the number of shares to be awarded. The closing share price on the grant date was 94 pence. For 2020 therefore, the awards to
Christian Chammas represent 214% of base salary (250% in 2019) and awards to Johan Depraetere represent 171% of base salary (200% in 2019),
based on the share price at the time of award.
LTIP AWARDS TO BE GRANTED IN 2021 (NOT AUDITED)
Awards will be made under the LTIP in 2021, in the 42‑day window following the announcement of the preliminary results for 2020. These awards
will be granted in the form of nil‑cost options over Vivo Energy plc shares, with the number of shares that may vest conditional upon performance
over a three‑year period from 1 January 2021 to 31 December 2023. Any shares vesting to Executive Directors will also be subject to an additional
two‑year holding period.
The maximum level of award for 2021 will remain unchanged at 250% of base salary for the CEO and 200% for the incoming CFO.
Johan Depraetere will not be granted an LTIP award in 2021.
The intention is for awards to remain conditional on achievement of stretching performance targets based on EPS, ROACE and TSR as for the awards
made in the three previous years.
The Remuneration Committee are still in the process of finalising targets for the 2021 awards. The current intention is that targets and full details
of the 2021 awards will be published on the Company’s website ahead of the 2021 AGM.
LEGACY INCENTIVES – IPO SHARE AWARDS (AUDITED)
As detailed in the Prospectus on Admission and in prior Directors’ Remuneration Reports, it was agreed prior to the IPO that one‑off share awards
would be granted to the Executive Directors and certain senior executives (the ‘IPO Share Awards’) in recognition of the performance leading up
to the IPO and to retain these individuals through the first years of the business post Admission. These awards were structured as nil‑cost options to
vest, subject to performance conditions, in three equal tranches on the first, second and third anniversaries of Admission. The terms of these awards,
including award levels and performance criteria, were determined prior to Admission. The third and final tranche of this award will be eligible for
vesting in May 2021. As previously disclosed these awards were one‑off in nature and will therefore not be replicated in future years.
Prior to IPO it was agreed that each tranche of the IPO Share Awards would be subject to targets relating to gross cash profit and adjusted net
income. These targets are equally weighted. The level of vesting is determined on a straight‑line basis, calculated as a percentage of the hurdle that
is delivered, with the minimum being zero and up to a maximum of 50% for each element. Although this approach is unconventional in the listed
environment, the nature of the targets reflect the legacy nature of the arrangement that was agreed prior to listing. Shareholders will note that
forward‑looking LTIP awards are subject to more conventional performance criteria consistent with mainstream FTSE practices.
The targets for this tranche were gross cash profit of $782 million and adjusted net income of $180 million. The financial results for the purposes of
the plan were gross cash profit of $795 million and adjusted net income of $168 million, and therefore this final tranche is expected to vest at 96.8%
of maximum.
In line with the scheme documentation, adjustments were made to reflect certain one‑off items and events occurring during the performance period
including the impact of the Engen acquisition, adjustments related to COVID‑19, and measures taken for the protection of the Company’s inventory
asset values (including legally required security stocks to mitigate the impact of movements in crude oil prices).
For the purposes of the single figure table, the amount shown is based on the number of shares expected to vest in May 2021 based on the average
share price over the fourth quarter of 2020 (82.1 pence).
Following the vesting of this final tranche, there will be no further payments to Executive Directors under this legacy plan.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
DETAILS OF LONG-TERM INCENTIVE AWARDS HELD BY EXECUTIVE DIRECTORS
LTIP
Christian
Chammas
Johan
Depraetere
Date of award
Share price
for award1
Option price
Number
of options
held as at
31 Dec 2019
Number
of options
awarded
during
the year
Number
of options
exercised
during
the year
Number
of options
lapsed
during
the year
End of
performance
period
Number
of options
held as at
31 Dec 2020
8 Aug 2018
12 Mar 2019
11 Mar 2020
8 Aug 2018
12 Mar 2019
11 Mar 2020
148p
131p
110p
148p
131p
110p
nil
nil
nil
nil
nil
nil
1,081,081
1,222,420
–
–
–
1,454,548
608,108
687,613
–
–
–
818,183
–
–
–
–
–
–
–
–
–
–
–
–
31 Dec 2020
31 Dec 2021
31 Dec 2022
31 Dec 2020
31 Dec 2021
31 Dec 2022
1,081,081
1,222,420
1,454,548
608,108
687,613
818,183
1 110p was the share price used to denominate the number of options awarded.
IPO SHARE AWARD
Christian
Chammas
Johan
Depraetere
Date of award
Share price at
date of award
Number
of shares
held as at
31 Dec 2019
Number of
shares vesting
during
the year
Number of
shares lapsed
during
the year
End of
performance
period
Number
of shares
held as at
31 Dec 2020
18 May 2018
18 May 2018
18 May 2018
18 May 2018
174p
174p
174p
174p
399,287
399,286
280,748
280,749
384,035
–
270,024
–
15,252
–
31 Dec 2019
31 Dec 2020
10,724 31 Dec 2019
31 Dec 2020
–
–
399,286
–
280,749
DEPARTURE TERMS FOR JOHAN DEPRAETERE
As announced on 25 November 2020, Johan Depraetere will leave the business at the end of his six‑month notice period on 25 May 2021.
He will remain a Director of the Company until 5 March 2021, after which he will step down from the Board. He will remain an employee
and will support his successor, Doug Lafferty, until the end of his notice period.
In line with the shareholder approved Remuneration Policy, the Remuneration Committee has approved good leaver status for Johan in relation to
his LTIP awards which will be outstanding when he leaves the Company. All awards will be treated in accordance with the plan rules and will remain
subject to performance conditions and pro‑rated for the period of employment. LTIP awards will be released on the normal date and remain subject
to malus and clawback. He will be required to hold 200% of his base salary in shares for the first 12 months after his departure and 100% of his base
salary for a further 12 months. Shareholding during this period will be monitored by the Company, and shares may only be sold with the prior consent
of the Board Chair or by compulsory purchase.
The Committee has determined that Johan will be eligible to participate in the 2021 Annual Bonus Plan given that he will have been employed for the
majority of the first half of the financial year. Any payout will be made after the end of the 2021 financial year and will be pro‑rated for the period
up until his departure from the organisation on 25 May 2021. As noted, Johan Depraetere will not receive an LTIP award in 2021.
Johan’s salary and benefits will continue until he leaves the Company on 25 May 2021.
There are no payments in lieu of notice.
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GOVERNANCE REMUNERATION PACKAGE FOR DOUG LAFFERTY
Doug Lafferty joined the Company and the Board on 1 February 2021 as Chief Financial Officer Designate and will be confirmed as
Chief Financial Officer on 5 March 2021.
He was appointed on a base salary of £400,000 per annum. His incentive awards are in line with the Remuneration Policy, and the same as for
Johan Depraetere, with maxima of 150% for the annual bonus plan and 200% for the LTIP award. He will be required to defer 50% of any bonus
earned into shares until he reaches his shareholding requirement of 200% of base salary.
His benefits package is in line with his predecessor and the rest of the UK workforce, with a cash allowance in lieu of pension of 10% of base salary,
four times base salary life assurance, family medical cover and an annual medical screening. His contract includes a six months’ notice period.
There was no buy‑out of existing long‑term awards or bonus.
NON-EXECUTIVE DIRECTORS
The fees for the Chairman and Non‑Executive Directors will be reviewed later in 2021, but currently remain unchanged since Admission in 2018.
The fee structure for 2020 is shown below, and any change will be reported in next year’s report.
Role
Chairman
Basic fee for Non‑Executive Directors
Additional fee for Senior Independent Director
Additional fee for Chair of a Board Committee
Fee
£275,000
£62,500
£15,000
£15,000
The following table sets out the total remuneration for the Chairman and the Non‑Executive Directors for the years ended 31 December 2020
and 2019.
Director
John Daly
Gawad Abaza
Carol Arrowsmith
Hixonia Nyasulu
Christopher Rogers
Javed Ahmed1
Temitope Lawani1
Total
1 The Non‑Executive Directors nominated by Vitol and Helios, subject to the Relationship Agreement, do not receive any fees.
DIRECTORS’ APPOINTMENT DATES
Director
John Daly
Christian Chammas
Johan Depraetere
Gawad Abaza
Carol Arrowsmith
Hixonia Nyasulu
Christopher Rogers
Javed Ahmed
Temitope Lawani
1 Original appointment dates.
FY2020
£’000
FY2019
£’000
275
62.5
77.5
77.5
77.5
–
–
575
275
62.5
77.5
77.5
77.5
–
–
575
Date of appointment
20 April 2018
2 January 20121
6 April 20121
1 December 2018
20 April 2018
20 April 2018
22 April 2018
12 March 2018
16 March 2018
Non‑Executive Directors are subject to annual re‑election at the AGM as their service contracts have no fixed term. Christian Chammas and
Johan Depraetere were appointed on rolling service contracts.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIRECTORS’ REMUNERATION REPORT CONTINUED
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)
The table below sets out the Directors’ and their connected persons’ share interests in the ordinary shares of the Company. Executive Directors
are expected to build up and maintain a shareholding of at least 200% of salary in Vivo Energy plc shares. This policy will apply to both the current
Executive Directors as well as any future appointments to the Board.
As at the year end, both Executive Directors have interests in shares which substantially exceed the minimum shareholding guideline. There have been
no changes in the interests of each Director between 31 December 2020 and the date of this report.
In line with the 2018 Code, the Committee has adopted a post‑employment shareholding guideline. Following departure, Executive Directors will be
expected to hold two times base salary for a period of 12 months, reducing to one times base salary for a further 12 months.
Director
John Daly
Christian Chammas
Johan Depraetere
Gawad Abaza
Carol Arrowsmith
Hixonia Nyasulu
Christopher Rogers
Javed Ahmed
Temitope Lawani
Shares owned
outright at
31 December
20201
Shares from IPO
Cash Award1
IPO Share Awards
(subject to
performance
conditions)2
LTIP
(subject to
performance
conditions)
271,666
6,858,100
5,319,104
20,000
37,878
22,000
65,803
n/a
13,152,630
n/a
298,144
223,195
n/a
n/a
n/a
n/a
n/a
n/a
n/a
399,286
280,749
n/a
n/a
n/a
n/a
n/a
n/a
n/a
3,758,049
2,113,904
n/a
n/a
n/a
n/a
n/a
n/a
1 As disclosed in the Prospectus, one‑off cash awards were made to Executive Directors on Admission. The cash amount was communicated before Admission and the net amount
was used to subscribe for shares at the IPO offer price shortly following Admission. Shares are released from the ‘no‑sale’ agreement in three equal tranches on the first, second and
third anniversaries of Admission. The shares shown are the final tranche and will be released in May 2021.
2 As disclosed in the Prospectus, it was agreed prior to Admission that one‑off share awards would be granted to Executive Directors shortly after the IPO. These awards, which were
granted as nil‑cost options, will vest, subject to performance conditions, in three equal tranches at the first, second and third anniversaries of Admission. The shares shown are the
final tranche and will vest, subject to performance conditions, in May 2021.
DILUTION
The Company ensures that the level of shares granted under the Company’s share plans and the means of satisfying such awards remain within
best practice guidelines so that dilution from employee share awards does not exceed 10% of the Company’s issued share capital for all employee
share plans and 5% in respect of executive share plans in any 10‑year rolling period. The Company will monitor dilution levels on a regular basis.
PERFORMANCE GRAPH AND TABLE
The graph below shows the TSR of the Company and the UK FTSE 250 index since the Admission of the Company to 31 December 2020.
The FTSE 250 index was selected on the basis that the Company has been a member of the FTSE 250 in the UK since 24 September 2018.
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Vivo Energy
FTSE 250 (exc. investment trusts)
Source: Thomson Reuters Datastream
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GOVERNANCE
COMPANY PERFORMANCE
The following table sets out the CEO’s pay since Admission on 10 May 2018. The data for 2018 is therefore on a part year only basis.
£’000
CEO remuneration
CEO single figure of remuneration
Annual bonus payout (% of Maximum)
Long‑term incentive vesting (% of Maximum)
Legacy IPO share award vesting (% of Maximum)
2020
1,742
30%
37.4%
96.8%
2019
1,947
73%
n/a
96%
2018
1,570
72%
n/a
99.96%
1 Figures for 2018 were stated on a part year basis covering the period from Admission (10 May 2018) to 31 December 2018.
PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION
The table below shows the percentage change in the salary, benefits and bonus of the Board Directors between 2019 and 2020, compared with the
percentage change for the same components of pay for employees of Vivo Energy plc who are based in the UK.
Executive Directors
Chief Executive Officer
Chief Financial Officer
Non-Executive Directors
John Daly
Gawad Abaza
Carol Arrowsmith
Hixonia Nyasulu
Christopher Rogers
Javed Ahmed
Temitope Lawani
Average employee
Salary/fee
% change
Benefits
% change
Annual bonus
% change
0%
0%
0%
0%
0%
0%
0%
n/a
n/a
2.9%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0%
‑59%
‑59%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
‑17%
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table shows the relationship between distributions to shareholders and the total remuneration paid to all employees for the years
ending 31 December 2019 and 2020.
US$ million
Shareholder distributions
Total employee expenditure
Approved by the Board and signed on its behalf
CAROL ARROWSMITH
CHAIR OF THE REMUNERATION COMMITTEE
2 MARCH 2021
2020
34
180
2019
30
168
Change
13%
7%
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
POLICY TABLE
The following sections are an extract from our Directors’ Remuneration Policy (‘Policy’) has been provided below for reference. The full Policy, as voted
on by shareholders at the AGM on 7 May 2019 can be found in the 2018 Annual Report and Accounts, which can be found on our website. The Policy
will be reviewed during 2021 and presented to shareholders to vote on at the AGM in 2022. For the avoidance of doubt this section of the Report
(pages 108 to 112) is not subject to a shareholder vote at the 2021 AGM.
FIXED PAY
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BASE SALARYPurpose and link to strategyProvides the fixed element of the remuneration package. Set at competitive levels against the market in order to attract and retain the calibre of executives required to execute the strategy.OperationBase salaries are normally reviewed annually. The Committee will consider various factors when determining salary levels, including individual contribution, business performance, role scope, practice in relevant talent markets and the range of salary increases applying across the Group. Maximum opportunityThere is no maximum salary. However, salary increases for Executive Directors will normally be within the range of increases for the general employee population over the period of this Policy. Increases in excess of those for the wider employee population may be awarded in certain circumstances including instances of sustained strong individual performance, if there is a material change in the responsibility, size or complexity of the role, or if an individual was intentionally appointed on a below-market salary. In such circumstances, the Committee will provide the rationale for the increase in the relevant year’s Annual Report on Remuneration.Performance metricsNot applicable. BENEFITSPurpose and link to strategyBenefits to be competitive in the market in which the individual is employed.OperationCan include Company benefits such as permanent health insurance, healthcare and life insurance.The Committee retains the ability to approve additional role appropriate benefits in certain circumstances (e.g. participation in all-employee share incentives, relocation allowances and expenses, expatriation allowances etc.).Maximum opportunityThere is no maximum limit. However, role appropriate benefits are capped at a suitable level reflecting the local market and jurisdiction.Performance metricsNot applicable. RETIREMENT BENEFITSPurpose and link to strategyProvides benefits which enable executives to plan for retirement. Retirement benefits are designed to be cost effective and competitive in the market in which the individual is employed.OperationDefined contribution scheme (and/or a cash allowance in lieu thereof).Maximum opportunityThe maximum defined contribution (or cash in lieu thereof) will be 10% of base salary. This is currently in line with retirement benefits provided to the rest of the UK employee population.Performance metricsNot applicable. GOVERNANCE VARIABLE PAY
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ANNUAL BONUSPurpose and link to strategyIncentivises the achievement of specific goals over the short term that are also aligned to the long-term business strategy.OperationPerformance measures are set by the Committee and are weighted to reflect a balance of financial, strategic and individual objectives.Following the end of the year the Committee reviews performance and determines the extent to which objectives have been achieved in order to determine the payout level.Executive Directors will normally be required to defer up to 50% of any resulting annual bonus into shares until the Executive Director meets the relevant shareholding requirement. The remaining balance of the annual bonus is paid in cash.Where bonuses are deferred into shares, dividend equivalents may accrue.Cash and share bonuses awarded for annual bonuses will be subject to malus and clawback. Maximum opportunityMaximum opportunity of 200% of salary. Currently a maximum opportunity of 200% of base salary applies to the CEO and 150% of base salary for the CFO.The payout for threshold performance may vary year-on-year depending on the nature and stretch of the target but will normally not exceed 25% of the maximum opportunity.Performance metricsBonuses for the Executive Directors may be based on a combination of financial and non-financial measures. The exact performance measures and targets for each financial year may be varied to reflect the priorities for the business. Financial measures will represent at least 50% of any award.LONG-TERM INCENTIVE PLAN (LTIP)Purpose and link to strategyAligns the interests of executives and shareholders by delivering shares to Executive Directors and other senior executives as a reward for delivery of long-term performance objectives aligned to the strategy.OperationThe Committee has the authority to grant awards under the LTIP to Executive Directors. Typically, they will do this every year. Awards are normally conditional on achievement of performance conditions assessed over three years. Awards to Executive Directors will normally also be subject to a holding period of two years post vesting. Details of the performance period and holding period will be disclosed in the Annual Report on Remuneration for the year in which the relevant award is made.Dividend equivalents may accrue on any shares that vest.Awards are subject to malus and/or clawback for a period of five years from the date of grant. Maximum opportunityThe LTIP provides for a conditional award of shares (or economic equivalent) up to an annual limit of 250% of base salary. Under the plan rules an award of up to 300% of base salary can be granted in exceptional circumstances. The operating grant policy for the CEO and CFO is 250% and 200% of base salary respectively.The vesting level for the threshold performance hurdle may vary year-on-year depending on the nature and stretch of the target but will normally not exceed 25% of the maximum opportunity.Performance metricsThe vesting of awards is usually subject to continued employment and the Group’s performance over the performance period. The Remuneration Committee will set the performance targets for each award in light of the appropriate business priorities at the relevant time.SHAREHOLDING GUIDELINESPurpose and link to strategyAlignment of Executive Directors with shareholders.OperationGuidelines are 200% of base salary for all Executive Directors. Shareholdings are expected to be built up and maintained over the course of tenure. Directors are also expected to hold two times base salary in shares for a period of 12 months on leaving the Company, reducing to one times base salary for a further 12 months.OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
PERFORMANCE CRITERIA FOR
INCENTIVES – SELECTING MEASURES,
TARGET SETTING AND ASSESSMENT
Performance criteria for annual bonus and
LTIP awards are designed to support the
execution of the short‑term and long‑term
business strategy and to provide alignment with
our shareholders’ interests. The combination
of financial, strategic and individual objectives
enables the Committee to achieve a balanced
assessment of performance.
Performance targets for each award are
intended to be suitably challenging, taking into
account internal and external forecasts, as
well as market conditions and the strategic
ambitions and risk appetite of the Group.
Outcomes at the maximum level are intended
to represent exceptional performance.
Consistent with best practice, the
Remuneration Committee will seek to
ensure that outcomes from incentive plans
suitably reflect performance. As well as
exercising suitable judgement when assessing
performance, the Committee may exercise
discretion and make adjustments to any
formulaic results, if the outcome is not
considered to be appropriate or is not
reflective of overall performance over
the relevant period. When making this
judgement, the Committee has scope to
consider any such factors as it deems relevant
in the circumstances. To ensure that awards
continue to operate in the manner intended,
the Committee may also adjust the targets
for awards or the calculation of performance
measures and vesting outcomes for certain
events (e.g. major acquisition).
MALUS AND CLAWBACK
The annual bonus, LTIP and IPO Share Awards
are subject to clawback in certain scenarios.
Such scenarios include, but are not limited to:
– material misstatement of the Company’s
financial accounts;
– a material failure of risk management by
the Company or any Group company;
– an error in calculation of any awards based
on false or misleading information;
– gross misconduct by the relevant participant;
– any action or omission on the part of a
participant resulting in serious reputational
damage to the Company, any member
of the Group; and
– a serious breach or non‑observance of
any code of conduct, policy or procedure
operated by the Group.
RECRUITMENT POLICY
When determining remuneration for a
new Executive Director, the Remuneration
Committee will consider the requirements of
the role, the needs of the business, the relevant
skills and experience of the individual and the
external talent market relevant to the role.
Normally the Committee would seek to align
the new Executive Director’s remuneration
package to the Remuneration Policy.
Base salary and benefits (including pension)
will be determined in accordance with the
policy table. If an individual is appointed
on a base salary below the desired market
positioning, the Committee retains the ability
to re‑align the base salary over time, reflecting
development in the role, which may result
in a higher rate of annual increase.
Where necessary, additional benefits may
also be provided (e.g. relocation support,
tax equalisation). In addition, for an overseas
appointment, the Committee may offer cost
effective benefits and pension provisions,
which reflect local market practice and
relevant legislation.
Notice periods in service contracts for
any new appointment would not exceed
12 months.
Incentive opportunities (excluding any
buy‑out) will be consistent with the policy.
As noted in the LTIP policy table, in exceptional
circumstances a maximum LTIP award of
up to 300% of base salary may be granted in
accordance with the LTIP rules. The Company
would provide clear disclosure regarding any
such awards. The Committee may tailor the
targets for initial incentive awards to reflect
the circumstances on recruitment.
The Committee may consider buying out
remuneration forfeited by an executive
on joining the Company. Any such buy‑out
will be of comparable commercial value to
the arrangements forfeited and capped as
appropriate. When determining the terms of
the buy‑out award, the Committee may tailor
the terms, taking into account the structure,
time horizons, value and performance targets
associated with arrangements forfeited.
The Committee may also require the
appointee to purchase shares in the Company
in accordance with its shareholding policy.
The Committee would subsequently provide
suitable disclosure regarding any such award
granted on recruitment to the Board.
Where an individual is appointed to the Board
as a result of internal promotion or following
a corporate transaction (e.g. following an
acquisition), the Committee retains the ability to
honour any legacy arrangements agreed prior
to the individual’s appointment to the Board.
On the appointment of a new Non‑Executive
Chairman or Non‑Executive Director,
the terms and fees will normally be consistent
with the fee policy.
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GOVERNANCE 110
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EXECUTIVE DIRECTORS: SERVICE CONTRACTS AND LOSS OF OFFICE PROVISIONSNotice PeriodSix months’ notice from the Company or the Executive Director.Termination PaymentsThe Company will also be entitled to terminate an Executive Director’s service agreement with immediate effect by making a payment in lieu of notice, equal to (i) the base salary that would have been payable, and (ii) the cost that would have been incurred in providing the Executive Director with the contractual benefits which the Executive Director would have been entitled to receive during the notice period.The Company can alternatively, in its sole discretion, continue to provide such contractual benefits instead of paying a sum representing their cost.The payment in lieu of notice may be subject to mitigation and therefore payable in equal monthly instalments over the notice period, conditional on the relevant Executive Director making reasonable efforts to secure alternative employment or engagements.Certain benefits in connection with departure (e.g. legal costs, outplacement costs) may be payable in certain circumstances. Incentive AwardsThe treatment of incentive awards will depend on the circumstances of departure.Normally no bonus is payable if, on the date on which any bonus is paid, the Executive Director has (i) left the Company, (ii) given or received notice of termination, or is (iii) under suspension for disciplinary matters which could result in dismissal. In certain circumstances, the Committee may determine that a departing executive will retain the ability to earn a bonus award subject to performance and time pro-rating to reflect the period employed. Any bonus deferred into shares will normally be released at the end of the deferral period, unless the Committee determines otherwise.Unvested long-term incentive awards will normally lapse on termination, unless the Committee determines that an Executive Director is deemed to be a ‘good leaver’. For good leavers, any unvested awards may run until the normal vesting date, with any vesting normally on a time apportioned basis and subject to the achievement of the performance conditions. If the Committee thinks there are circumstances that justify it, the Committee may release shares early, having regard to performance achieved to the date of leaving, if applicable.Restrictive CovenantsExecutive Directors will be subject to a confidentiality undertaking without limitation in time, and non-solicitation and non-compete restrictive covenants for a period of 12 months after the termination of their employment.Change of ControlNo special contractual provisions apply in the event of change of control.External AppointmentsExecutive Directors may accept up to one position as a Non-Executive Director of another publicly listed company, subject to prior approval from the Board. Any fees from such an appointment may be retained by the Executive Director. Executive Directors are not entitled to accept a position as an Executive Director in any company that is not a Group Company.The Executive Directors’ service contracts are available for inspection by shareholders at the Company’s registered office.OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
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LEGACY INCENTIVES AND IPO AWARDSDetails of legacy arrangements for the Executive Directors and other senior managers agreed prior to IPO were included in the Prospectus on Admission and also detailed in the 2018 Annual Remuneration Report. For the avoidance of doubt, they do not form part of the Remuneration Policy, as voted on by shareholders in 2019, and no further awards will be granted under these plans.IPO CASH AWARDSOperationIn recognition of the significant contribution made prior to Admission, cash bonuses were paid to Executive Directors shortly prior to Admission (the ‘IPO Bonuses’).The IPO Bonuses were conditional upon each of the Executive Directors using the after-tax amount to subscribe for shares at the Offer Price shortly following Admission. The Executive Directors subscribed for shares accordingly. The shares are subject to a ‘no-sale’ agreement of a maximum of three years from the date of Admission, with one third of the shares being released from the agreement on each of the first, second and third anniversaries of the date of Admission.No further awards will be granted to Executive Directors under this plan. IPO SHARE AWARDSOperationPrior to IPO it was agreed that one-off awards would be granted under the 2018 IPO Plan as soon as practicable after Admission (the ‘IPO Share Awards’).The IPO Share Awards were formally granted as nil-cost options over shares which will vest, subject to achievement of specified performance conditions. The performance targets relate to consolidated gross cash profit and adjusted net income. Awards are scheduled to vest in three equal tranches on the first, second and third anniversary of Admission. Dividend equivalents may accrue on any vested shares. Further details are set out in the Annual Report on Remuneration. No further awards will be granted to Executive Directors under this plan. NON-EXECUTIVE DIRECTOR REMUNERATIONPurpose and link to strategyTo attract and retain high calibre individuals by offering market competitive fee arrangements.OperationNon-Executive Directors receive a basic fee in respect of their Board duties. Additional fees are paid to Non-Executive Directors for additional Board responsibilities, including Chairmanship of Board Committees.The Chairman receives an all-inclusive fee for the role.The Remuneration Committee sets the remuneration of the Chairman, whilst the Board as a whole is responsible for determining Non-Executive Director fees. Fees are typically reviewed annually.Where appropriate, role-appropriate benefits may be provided. This may include travel and other expenses incurred in the performance of Non-Executive duties for the Company, which may be reimbursed or paid for directly by the Company, as appropriate, including any tax due on the benefits.Maximum OpportunityFee levels are capped in accordance with the Articles of Association.Current fee levels can be found on page 105. Fees are set at a level, which is considered appropriate to attract and retain the calibre of individual required by the Company.These fees are the sole element of Non-Executive remuneration and they are not eligible for participation in Group incentive awards, nor do they receive any retirement benefits.The Chairman’s appointment may be terminated at any time by either side by giving six months’ written notice or in accordance with the Articles. The Non-Executive Directors’ appointments may be terminated at any time by either side, giving one month’s written notice or in accordance with the articles.GOVERNANCE DIRECTORS’ REPORT
The Directors present their Report and
the audited consolidated and Company
financial statements for the year ended
31 December 2020:
COMPANY DETAILS
AND CONSTITUTION
Vivo Energy plc is a company incorporated
in England and Wales with company
number 11250655. The Company’s Articles
of Association (the ‘Articles’) may only be
amended by a special resolution at a general
meeting of the shareholders.
DIRECTORS’ REPORT CONTENT
The Strategic Report, the Corporate
Governance Report and Directors’
Remuneration Report are all incorporated
by reference into this Directors’ Report
and should be read as part of this Report.
STRATEGIC REPORT
The Strategic Report is a requirement of the
Companies Act 2006 (the ‘Act’) and can be
found on pages 2 to 70. The Company has
chosen, in accordance with section 414C(11)
of the Act, to include certain matters in
its Strategic Report that would otherwise
be disclosed in this Directors’ Report.
Such information is referenced below.
MANAGEMENT REPORT
For the purposes of Disclosure Guidance
and Transparency Rules (‘DTR’) 4, the
Strategic Report and this Directors’
Report on pages 113 to 115 comprise
the Management Report.
CORPORATE
GOVERNANCE STATEMENT
The corporate governance statement setting
out how the Company complies with the
2018 UK Corporate Governance Code
(the ‘2018 Code’) is set out on pages 71 to 112.
The information required by DTR 7.2.6R can be
found on pages 113 to 115. A description of the
composition and operation of the Board and
its Committees is set out on pages 71 to 112.
DISCLOSURES REQUIRED
UNDER LISTING RULE 9.8.4R
The information that fulfills the reporting
requirements relating to the following matters
can be found at the pages identified below.
Information
Directors’ compensation
Details of long-term incentive schemes
Location in Annual Report
Remuneration Report
Remuneration Report
Page(s)
94 to 112
102 to 104
STAKEHOLDER ENGAGEMENT
INCLUDING SECTION
172 STATEMENT
Details of the Company’s stakeholder
engagement practices and section 172
statement can be found on pages 42 to 45.
Further information is also available on pages
45 and 77 in respect of the Board’s stakeholder
engagement activities during the year.
GOING CONCERN AND VIABILITY
The going concern statement required by the
Listing Rules and the 2018 Code is set out on
page 70. The long-term viability statement
is located on page 70.
FINANCIAL RISK MANAGEMENT
OBJECTIVES AND POLICIES
Disclosures relating to financial risk
management objectives and policies, including
our policy for hedging are set out in note 3
to the consolidated financial statements.
IMPORTANT EVENTS SINCE THE
END OF THE FINANCIAL YEAR
Details of those important events affecting
the Group which have occurred since
the end of the financial year are set out
in the Strategic Report and note 32 to
the consolidated financial statements.
RISK MANAGEMENT AND
INTERNAL CONTROL
The Board has overall responsibility for
monitoring the Group’s system of internal
control and risk management and for carrying
out a review of its effectiveness. In discharging
that responsibility, the Board confirms that
it has established the procedures necessary
to apply the provisions of the 2018 Code,
including clear operating procedures,
lines of responsibility and delegated authority.
Business performance is managed closely and
the Board and the Senior Executive Team
have established processes to monitor:
– Strategic plan achievement, through
a regular review of progress towards
strategic objectives;
– Monitoring and maintenance of insurance
cover to adequately protect risk areas
of the Group;
– Financial performance, within a
comprehensive financial planning and
accounting framework, including budgeting
and forecasting, financial reporting, analysing
variances against plan and taking appropriate
management action;
– Capital investment and asset management
performance, with detailed appraisal,
authorisation and post-investment reviews;
and
– The emerging and principal risks
facing the Group, ensuring that they
are being identified, evaluated and
appropriately managed.
The Board is supported by the Audit and Risk
Committee in reviewing the effectiveness of
the Group’s risk processes and internal control
systems. The system of internal control is
designed to manage, rather than eliminate,
the risk of failure to achieve business objectives
and it must be recognised that it can only
provide reasonable and not absolute assurance
against material misstatement or loss. A robust
assessment of the principal and emerging risks
faced by the Company has been undertaken
by the Board (for further information please
see pages 60 to 69 in the Strategic Report).
The Board has established a framework of
controls, which enable risk to be assessed and
managed, which is annually reviewed to ensure
it remains prudent and effective.
The Chief Financial Officer, with the assistance
of the finance function, is responsible for
the appropriate maintenance of financial
records and processes. This ensures that
all financial information is relevant, reliable,
in accordance with the applicable laws and
regulations and distributed both internally and
externally in a timely manner. A review of the
consolidated financial position and financial
statements is completed by the Chief Financial
Officer to ensure that the financial position
and results of the Group are appropriately
recorded, circulated to members of the
Board and published where appropriate.
All financial information published by the
Group is subject to the approval of the Board,
on the recommendation of the Audit and
Risk Committee.
PB
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REPORT CONTINUED
FAIR, BALANCED
AND UNDERSTANDABLE
The Board considers the Annual Report
and financial statements, when taken as a
whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Company’s position
and performance, business model and strategy.
There are various activities, policies and
procedures in place for the Board to ensure
a fair balanced and understandable Annual
Report. These include, but are not limited to:
– The Annual Report and the financial
statements have been prepared in
accordance with the applicable reporting
and regulatory frameworks, including
International Financial Reporting Standards
(IFRS), FRS 102, 2006 Act, 2018 Code,
the DTR and UK GAAP.
– Accounting policies are used Company-wide
to ensure accurate and correct accounting
treatment. All financial information is
maintained according to those guidelines
which ensure compliance with IFRS.
– The Company has an extensive set of
internal controls covering various areas
of the business. The internal control KPIs
are monitored and measured on a monthly
basis. The finance function uses department
manuals which detail the reporting process
to be followed and the controls in place
to mitigate risk. These include the Finance
manual, Credit & Treasury manual and
Tax manual.
– Monthly reporting to the Board on
financial performance.
OVERSEAS BRANCHES
As at 31 December 2020, the Group had the
following branches:
– Engen Marketing Tanzania Limited (branch
registered in Tanzania, company registered
in Bahamas).
– Plateau Africa Holdings Limited (branch
registered in Mauritius, company registered
in Canada).
– Vivo Energy Namibia Ltd. (branch registered
in Namibia, company registered in the UK).
– Vivo Energy Overseas Holdings Limited
(branch registered in Kenya, company
registered in Mauritius).
DIRECTORS
The details of the Directors of the Company
who held office during the year and up to the
date of signing this report can be found on
pages 78 to 79.
POWERS OF THE DIRECTORS
The powers of the Directors are determined
by the Act and the Company’s Articles.
The Directors have been authorised to
issue and allot shares. These powers are
subject to annual shareholder approval at
the Annual General Meeting (AGM), and at
the 2021 AGM shareholders will be asked to
renew and extend the authority to allot shares
in the Company, or grant rights to subscribe
for, or to convert any security into, shares in
the Company for the purposes of section 551
of the Act (the ‘Allotment Resolution’).
The authority in the first part of the Allotment
Resolution will allow the Directors to allot
new shares in the Company, or to grant rights
to subscribe for, or convert any security into,
shares in the Company up to a nominal value
which is equivalent to approximately one third
of the total issued ordinary share capital of
the Company.
The authority in the second part of the
Allotment Resolution will allow the Directors
to allot new shares in the Company, or to
grant rights to subscribe for, or convert any
security into, shares in the Company, only in
connection with a rights issue, up to a nominal
value which is equivalent to approximately an
additional third of the total issued ordinary
share capital of the Company. This is in
line with corporate governance guidelines.
In addition, shareholders will be asked at the
2021 AGM to grant the Directors authority
to disapply pre-emption rights in line with
corporate governance guidelines.
There are no present plans to undertake a
rights issue or to allot any further new shares
other than in connection with the Company’s
share schemes and plans.
The Company did not repurchase any
shares during the financial year ended
31 December 2020. At the 2021 AGM
shareholders will be asked to grant authority
to the Directors under section 701 of the Act
to make market purchases of ordinary shares
up to a maximum of 126,694,189 shares.
In May 2019 the Company established an
employee benefit trust. At 2 March 2021 the
trust held 133,183 remaining shares which
are accounted for as treasury shares in the
consolidated financial statements of the Group.
The Company’s issued share capital at 2 March
is composed of a single class of 1,266,941,899
ordinary shares of 50 US cents, including
133,183 of treasury shares. The shares held by
the Trust are not considered as treasury shares
for the purposes of Listing Rules disclosure
DIRECTORS’ INDEMNITIES
In accordance with the Company’s Articles
and to the extent permitted by law, Directors
are granted a deed of indemnity from the
Company in respect of liability incurred as a
result of their office. Qualifying third party
indemnity provisions (as defined by section 234
of the Act) were in force during the year ended
31 December 2020 and remain in force.
In addition, the Company provides Board
members with Directors’ and Officers’ Liability
Insurance. Neither the indemnity nor the
insurance provides cover in the event that a
Director is proven to have acted dishonestly
or fraudulently.
DIRECTORS’ INTERESTS
The Directors’ interests in ordinary shares of
the Company are set out within the Directors’
Remuneration Report. No Director has any
other interest in any shares or loan stock of
any Group company. No Director was or is
materially interested in any contract, other
than under their service contract or letter
of appointment, which was subsisting during
or existing at the end of year and which was
significant to the Group’s business. Please refer
to the ‘Relationship Agreements’ section for
information relating to the Group’s relationship
with Vitol and Helios.
There are procedures in place to deal with any
conflicts of interest and these have operated
effectively during the year. Further details are
set out on pages 84 and 88.
RESPONSIBILITY STATEMENT
As required under the DTR, a statement
made by the Board regarding the preparation
of the financial statements is set out on page
116, which also provides details regarding the
disclosure of information to the Company’s
auditors and Management’s report on internal
controls over financial information.
SHARE CAPITAL
As at the date of this Report, the Company’s
issued share capital is composed of a single class
of 1,266,941,899 ordinary shares of $0.50 each.
SHAREHOLDERS’ RIGHTS
Each ordinary share of the Company carries
one vote at general meetings of the Company.
Except as set out in the Articles or in applicable
legislation, there are no restrictions on the
transfer of shares or on the voting rights in
the Company.
In accordance with applicable law and the
Company’s share dealing policy, Directors
and certain employees are required
to seek approval before dealing in any
Company securities.
The holders of ordinary shares are entitled to
receive the Company’s reports and accounts,
attend and speak at general meetings of the
Company, appoint proxies and exercise voting
rights. None of the shares carry any special
rights with regards to control of the Company.
There are no arrangements of which the
Company is aware under which financial rights
are held by a person other than the holder of
the shares, and no known agreements relating
to, or places restrictions on, share transfers or
voting rights.
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115
GOVERNANCE AGM
The Company’s third AGM will be held at 2:00
p.m. on 18 May 2021. The Notice of the AGM
will include further details, including the venue.
The Notice of the AGM contains a full
explanation of the business to be conducted at
the meeting and can be found on our website.
EMPLOYEE INVOLVEMENT
The Company considers it important that its
employees are involved and engaged at all levels
within the organisation. Through channels such
as Vivo Energy’s town hall meetings which
are undertaken on a quarterly basis within
each Operating Unit, management ensures
that employees are updated with matters
of interest, including updates on Company
performance. During the year the Board was
provided with an overview of the output
following the employee engagement Pulse
Survey which highlighted key issues affecting
Vivo Energy employees.
Further details on employee involvement
can be found in the Strategic Report on
pages 50 and 51. Additional information
regarding the Board’s Employee Engagement
Champion can be found on page 89.
EMPLOYMENT OF
DISABLED PEOPLE
Further details on the employment of disabled
people can be found in the Strategic Report
on page 48.
MODERN SLAVERY
In compliance with the Modern Slavery
Act 2016, the Company’s statement on
Modern Slavery can be found on our website.
The Directors’ Report was approved by the
Board on 2 March 2021.
JOHN DALY
CHAIRMAN OF THE BOARD
2 MARCH 2021
EMPLOYEE BENEFIT TRUST
On 10 May 2019 the Company established
the Vivo Energy Employee Benefit Trust (the
‘EBT’). This is a discretionary trust formed to
enable the Company to issue shares to certain
employees under the Company’s share plans,
namely the IPO share Award, Long-Term
Incentive Plan and any other share plan that
the Company may establish in the future.
To satisfy awards vesting under the IPO Share
Award, the EBT subscribed for 868,849 shares
on 1 May 2020. As at 31 December 2020 the
EBT held 133,183 shares. Dividends on shares
held by the EBT are waived.
DIVIDENDS
Full details of the Company’s dividend policy
and proposed final dividend payment for the
year ended 31 December 2020 are set out
on page 178 and note 22 to the consolidated
financial statements.
SUBSTANTIAL SHAREHOLDINGS
The major shareholders of the Company are
Vitol Africa B.V. and VIP Africa II B.V. (together
‘Vitol’) and HIP Oils Mauritius Limited and
Helios Holdings Limited (together ‘Helios’).
Details regarding the notifications received
by the Company in relation to material
shareholdings pursuant to the DTR can be
found on page 185.
RELATIONSHIP AGREEMENTS
As at 31 December 2020, Helios held 27% and
Vitol held 36% of the Company’s shares in issue.
Vitol was therefore classified as a controlling
shareholders under the Listing Rules.
Pursuant to Listing Rule 9.2.2AD(1) the
Company has entered into relationship
agreements with both Helios and Vitol
which shall only be terminated in the event that
the respective shareholder and its associates
ceases to hold at least 10% of the shares in
the Company, or if the Company ceases to be
admitted to listing on the premium segment
of the Official List and traded on London Stock
Exchange’s Main Market for listed securities.
Throughout the period under review, the
Company has complied with provisions and
obligations in the relationship agreements,
and as far as the Company is aware,
both Helios and Vitol have also complied.
CHANGE OF CONTROL
The Company’s subsidiary, Vivo Energy
Investments B.V. has in place a credit facility
agreement and senior notes under which a
change in control of the Company would in
certain circumstances trigger prepayment
and/or redemption or repurchase provisions
respectively. In addition, the Group’s
arrangements with brand partners and
the shareholders’ agreement in relation to
Shell and Vivo Lubricants B.V. could be subject
to change of control termination provisions
in limited circumstances.
The Company’s share plans (including the IPO
and Long-Term Incentive Plan Share Awards
granted to the Executive Directors and
Senior Management) contain clauses which
may cause options and awards to vest on a
change in control, in some cases subject to the
satisfaction of performance conditions at that
time. The Company is not party to any other
significant agreements that would take effect,
alter or terminate upon a change of control
following a takeover.
No Director or employee is contractually
entitled to compensation for loss of office or
employment as a result of a change in control.
RELATED PARTY TRANSACTIONS
The Group sources fuel products from
Vitol S.A. and certain of its affiliates
(together, ‘Vitol Fuel’) under a supply
agreement. The supply agreement is a
framework agreement under which Vitol Fuel
is the Group’s preferred supplier. Details of the
transactions under the supply agreement which
took place during the year, are disclosed in note
31 to the consolidated financial statements.
PRINCIPAL ACTIVITIES AND
FUTURE DEVELOPMENTS
WITHIN THE GROUP
The Strategic Report sets out the principal
activities of the Group and contains details
of possible future developments.
SUSTAINABILITY AND
GREENHOUSE GAS DISCLOSURES
Information about the Company’s approach to
sustainability including details of our greenhouse
gas emissions is set out in the Strategic Report
on page 54.
POLITICAL DONATIONS
No political donations were made during the
financial year. The Company’s policy is that
no political donations be made or political
expenditure incurred.
EXTERNAL AUDITORS
So far as each Director is aware, there is
no relevant audit information of which the
Company’s External Auditor is unaware.
Each Director has taken all steps he or she
should have taken as a Director in order
to make himself or herself aware of any
relevant audit information and to establish that
PricewaterhouseCoopers LLP (PwC) is aware
of that information.
As detailed on page 93, the Audit and
Risk Committee recommended, and the
Board approved, the proposal that PwC be
reappointed as Auditors of the Company at
the AGM. Resolutions to reappoint PwC as the
Company’s Auditors until the conclusion of the
AGM in 2022 and to authorise the Directors
to determine their remuneration, will be
proposed to shareholders at the AGM.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT GOVERN ANC E
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing
the Annual Report and Accounts in
accordance with applicable law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law, the Directors
have elected to prepare the Group financial
statements in accordance with International
Financial Reporting Standards (IFRS) as
adopted by the European Union (EU).
The Company financial statements have been
prepared in accordance with United Kingdom
Generally Accepted Accounting Practice
(United Kingdom Accounting Standards,
comprising FRS 102), the Financial Reporting
Standard applicable in the UK and Republic
of Ireland, and applicable law.
In preparing these financial statements, the
Directors are required to:
– adopt the going concern basis unless it is
inappropriate to do so;
– select suitable accounting policies and then
apply them consistently from year to year;
– make judgements and accounting estimates
that are reasonable and prudent; and
– state whether IFRS as adopted by the EU
and IFRS as issued by the IASB have been
followed for the Group financial statements
and United Kingdom Accounting Standards,
comprising FRS 102, have been followed for
the Company financial statements.
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s and
the Group’s transactions and disclose with
reasonable accuracy, at any time, the financial
position of the Group and the Company and
to enable them to ensure that the financial
statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
They are also responsible for safeguarding
the assets of the Group and the Company
and hence for taking reasonable steps for
the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
DECLARATION
Each of the Directors, whose names and
functions are listed on pages 78 to 79
of the Annual Report, confirm to the best
of their knowledge, that:
– the Group financial statements, which
have been prepared in accordance with
International Financial Reporting Standards
as adopted by the EU and applicable law,
and give a true and fair view of the assets,
liabilities, financial position and profit of
the Group;
– the Company financial statements, which
have been prepared in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102
‘The Financial Reporting Standard applicable
in the UK and Republic of Ireland’, and
applicable law), give a true and fair view of
the assets, liabilities, financial position and
profit of the Company;
– the Strategic Report and Directors’ Report
include a fair review of the development
and performance of the business and
the position of the Group, together with
a description of the principal risks and
uncertainties that it faces; and
– as at the date of this Report, there is
no relevant audit information of which
the Company’s auditor is unaware.
Each Director has taken all the steps he or
she should have taken as a Director in order
to make himself or herself aware of any
relevant audit information and to establish
that the Company’s auditors are aware
of that information.
The Board confirms that the Annual Report
and financial statements when taken as a
whole are fair, balanced and understandable
and provide the information necessary for
shareholders to assess the strategy, position and
performance and business model of the Group.
For and on behalf of the Board
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
2 MARCH 2021
JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
2 MARCH 2021
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STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
FINANCIAL STATEMENTS
Here we set out our statutory accounts and
supporting notes, which are independently
audited and provide in-depth disclosure
on the financial performance of our business.
CONTENTS
Independent Auditors’ Report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company financial statements
Notes to the Company financial statements
118
128
129
130
131
132
172
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117
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion:
– Vivo Energy plc’s Group financial statements and Company financial statements (the ‘financial statements’) give a true and fair view of
the state of the Group’s and of the Company’s affairs as at 31 December 2020 and of the Group’s profit and the Group’s cash flows for the year
then ended;
– the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
– the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’,
and applicable law); and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report & Accounts (the ‘Annual Report’), which comprise: the
Consolidated and Company statements of financial position as at 31 December 2020; the Consolidated statement of comprehensive income,
the Consolidated statement of cash flows, and the Consolidated and Company statements of changes in equity for the year then ended;
and the notes to the Consolidated and Company financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
SEPARATE OPINION IN RELATION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
ADOPTED PURSUANT TO REGULATION (EC) NO 1606/2002 AS IT APPLIES IN THE EUROPEAN UNION
As explained in note 2 to the Group financial statements, the Group, in addition to applying international accounting standards in conformity
with the requirements of the Companies Act 2006, has also applied international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
In our opinion, the Group financial statements have been properly prepared in accordance with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements 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 remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group.
Other than those disclosed in note 7 of the consolidated financial statements, we have provided no non-audit services to the Group in the period
under audit.
OUR AUDIT APPROACH
Context
PricewaterhouseCoopers Accountants NV, were the auditors of Vivo Energy Holdings B.V., the parent company of the Group prior to June 2018
and had been since the year ended 31 December 2012. Following the Group’s listing on the Main Market of the London Stock Exchange in May
2018, PricewaterhouseCoopers LLP were appointed as auditors of the Group and Vivo Energy plc. In preparation of the listing Vivo Energy plc was
incorporated and installed as the Group’s parent company. PricewaterhouseCoopers Accountants NV continue to support PricewaterhouseCoopers LLP
on the group audit for the year ended 31 December 2020.
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FINANCIAL STATEMENTS Overview
Audit scope
– Nine components engaged to perform audit of their complete financial information.
– Four components engaged to perform audits of specific balances.
– One component engaged to perform specified procedures.
– Overall coverage of 71% revenue, 68% profit before tax and 66% total assets was obtained.
Key audit matters
– Government Benefits Receivable (Group)
– Tax audits and Transfer Pricing (Group)
– Goodwill Impairment (Group)
– Plc Impairment (Company)
– COVID-19 (Group and Company)
Materiality
– Overall group materiality: US$11,500,000 (2019: US$13,000,000) based on 5% of average earnings before tax and special items for the last 3 years
(2019: 5% of earnings before tax and special items).
– Overall company materiality: US$19,000,000 (2019: US$18,500,000) based on 1% of net assets.
– Performance materiality: US$8,625,000 (group) and US$14,250,000 (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined in the Auditors’ responsibilities for the audit of the financial statements section, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related
to breaches of anti-bribery and corruption laws, health and safety regulations and competition laws and regulations, and we considered the extent
to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities
for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related
to posting inappropriate journal entries to increase revenue and management bias in accounting estimates. The group engagement team shared
this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work.
Audit procedures performed by the group engagement team and/or component auditors included:
– Discussions with the wider senior management including Internal Audit, Finance, Operations, Ethics and Compliance and Forensics.
These discussions included consideration of known or suspected instances of non-compliance with laws and regulation and fraud.
– Making inquiries of the Group General Counsel regarding the status and expected outcome of legal cases and regulatory matters and reviewing
the Group’s legal case tracker, maintained by the General Counsel, in respect to all significant legal matters.
– Evaluation of management’s controls designed to prevent and detect irregularities, in particular their anti-bribery controls. For example,
understanding the Group’s bid and contracting approval controls, the extent to which the Group’s anti-bribery and corruption programme is
embedded in operating units, assessment of procedures associated with making one-off payments to counterparties and searching third party
sources for allegations of corruption made against the Group and its employees.
– Assessment of matters reported on the Group’s whistleblowing helpline or through other mediums and the results of management’s investigation
of such matters.
– Reading key correspondence with regulatory authorities.
– Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to legal and
tax claims and government benefits receivables (see related key audit matters below).
– Identifying and testing journal entries both at a local operating unit level and group consolidation, in particular any journal entries posted with
unusual account combinations or posted by senior management.
– Review of correspondence with, or reports issued by, competition authorities and assessment of external legal advice received in respect
of any matters raised.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
Key audit matters
Key audit matters (KAM) are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
This is not a complete list of all risks identified by our audit.
Goodwill Impairment (Group), Plc Impairment (Company) and COVID-19 (Group and Company) are new key audit matters this year.
Accounting for the acquisition of Vivo Energy Overseas Holdings Limited (‘VEOHL’), which was a key audit matter last year, is no longer
included because of the transaction to which this KAM related did not reoccur in the current year and no equivalent transactions took place.
Otherwise, the key audit matters below are consistent with last year.
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Other Government Benefits Receivable (Group)
Refer to notes 2, 4 and 16 in the Group financial statements.
The Group has US$69 million of receivables (offset by provisions
of US$24m) from governments principally related to subsidies for
product prices or incidental costs where regulated price mechanisms
exist. The recoverability of these receivables is not always certain with
outstanding balances being aged and with governments with poor or
no credit ratings. Whilst during the year the level of gross receivables
has declined due to cash receipts and a reduction in subsidy levels,
the risk associated with recovery of aged items has been adversely
impacted by the deterioration in government finances as a result
of the COVID-19 pandemic.
Determination of the provisioning required against these receivables
requires consideration of the willingness and ability of the counterparties
to meet their obligations. This can often be complex and highly
judgemental. Due to the nature and aging of the receivables in
Guinea and Senegal we identified the receivables with the governments
of these countries to be where our main audit focus was required.
Tax audits and Transfer Pricing (Group)
Refer to notes 2, 4 and 10 in the Group financial statements.
The Group operates in a number of tax jurisdictions and recognises tax
assets and liabilities based on interpretation of local laws and regulations
which are sometimes uncertain and requires interpretation. In several
territories tax audits are performed and significant tax claims are made.
However these are often settled for much less once further information
is provided to tax authorities or matters result in litigation. The claims
often focus on the application of transfer pricing policies. Management
are required to make judgements on whether it is probable that the
tax authorities will accept the current treatment and, where it is not
considered probable, estimate the expected value or the most likely
value of the pay-out.
For Senegal and Guinea we performed procedures to determine the
accuracy of the receivables being recognised, including the legal right
to offset, by assessing supporting documentation and, where possible,
confirming the positions directly with the government authorities.
In addition we verified the claims arising in the year to the underlying
transactions and verified payments back to bank statements.
Where a provision has been recognised, we have assessed
management’s position against the communications with the local
authorities, historical precedent of similar matters being resolved,
and evidence of the Group’s efforts to secure payment. In addition, we
sought independent evidence of the government’s ability and willingness
to pay by considering third party published views on the economic
and fiscal positions of the countries, published credit ratings and,
where possible, meeting with government representatives.
Based on our work performed, we found the judgments and
assumptions used by management in the recoverability assessment
of government benefits receivables to be supportable based on the
available evidence.
With the assistance of our local and international tax specialists
including transfer pricing specialists, we evaluated management’s
judgements in respect of the likelihood of known tax exposures
resulting in liabilities and the accuracy and completeness of associated
uncertain tax position provisions recognised. For each material position
we looked at the nature of the underlying transactions, the technical
merits of the position and the local tax authorities’ track record of
challenging similar tax positions.
We also challenged management on the level of provisioning booked
for each uncertain tax position, considering both whether the level
of provisioning was too prudent or too optimistic. We considered
management’s assessment through the examination of their analysis
of these positions, including testing of their detailed workings and
consideration of advice received from their tax advisers.
We focused on the judgements and estimates made by management
in assessing the likelihood and quantification of material exposures
and recognition of uncertain tax position provisions.
We determined that the provisions recognised and the disclosures
in the financial statements were reasonable.
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FINANCIAL STATEMENTS KEY AUDIT MATTER
Goodwill Impairment (Group)
Refer to notes 2, 4 and 12 in the Group financial statements.
In March 2019, the Group completed the Engen acquisition that
generated US$65m of goodwill. This goodwill was allocated to the non
aggregated operating segments of ‘Retail fuel’ and ‘Commercial fuel’
which form part of the operating segments of ‘Retail’ and ‘Commercial’
respectively. Pre the Engen transaction goodwill was already allocated to
these non-aggregated operating segments giving a total goodwill value
of US$79m.
The goodwill balance is assessed annually for impairment and an
impairment test has been performed as at 30 September 2020 with
the recoverable amount calculated using a fair value less cost to dispose
(‘FVLCD’) methodology underpinned by a discounted cash flow
(‘DCF’) model. A number of judgements and estimates are involved
in the DCF model including determining appropriate discount rate and
long term growth rates and cash flow assumptions during the five-year
business plan period.
We have focused our audit work on ensuring these judgements and
estimates are appropriate.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
We assessed management’s allocation of goodwill and confirmed the
relative fair value method used was appropriate and the final allocation
reflected the nature of the acquired Engen business.
A distribution key was used by management to allocate corporate level
and other assets shared between segments, to the cash generating units
against which the goodwill impairment assessment was performed. We
performed sensitivities to confirm that different allocation keys would
not result in a materially different impairment outcome.
We obtained the models calculating the recoverable amounts for
the Retail fuel and Commercial fuel segments using the discounted cash
flow method based on cash flow projections from the board approved
five-year business plan. We considered the reasonableness of the
five-year business plan in light of the recent historical performance
of the Group including management’s forecast of the ongoing impact
of COVID-19 on the business and how this compares to actual
performance in 2020.
The discount rate and long term growth rate assumptions used by
management were consistent with those independently determined
by our internal valuation experts.
With the support of our valuation experts, we have audited
management’s methodology, inputs and the key assumptions.
We have agreed inputs to supporting documentation and have
performed sensitivities over the key assumptions in the FVLCD
models and in the underlying board approved business plan.
We have considered the accuracy and completeness of the financial
statement disclosures in light of the results of our audit procedures
and concluded that they are appropriate.
Based on the procedures performed we concluded that management
had correctly determined that no impairment to goodwill was required.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
KEY AUDIT MATTER
Plc Impairment (Company)
Refer to note 2 in the Company financial statements.
At 31 December 2020 the market capitalisation of the Group was lower
than the carrying value of the Company’s investment in the Group
of US$1,913m held, at cost, in the books of the Company. This was
identified as an impairment trigger and management have performed
an impairment test by calculating the recoverable amount using a value
in use (‘VIU’) methodology underpinned by a discounted cash flow
(‘DCF’) model.
A number of judgements and estimates are involved in building the DCF
model including determining an appropriate discount rate and long term
growth rate and cash flow assumptions during the five-year business
plan period. In addition the five-year business plan needs to be adjusted
to remove the impacts of expansionary capital expenditure.
We have focused our audit work on ensuring these judgements and
estimates are appropriate.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
We obtained the models calculating the recoverable amount using
the discounted cash flow method based on cash flow projections
from the board approved five-year business plan. We considered
the reasonableness of the five-year business plan in light of the recent
historical performance of the Group including management’s forecast
of the ongoing impact of COVID-19 on the business and how this
compares to actual performance in 2020.
With the support of our valuation experts, we have audited
management’s methodology, inputs and the key assumptions.
We have agreed inputs to supporting documentation and have
performed sensitivities over the key assumptions in the VIU model
and in the underlying board approved business plan.
We have compared management’s discount rate to an appropriate
Weighted Average Cost of Capital independently calculated by
our valuation experts and the long term growth rates to long term
US government bond rates. We have performed an assessment
of management’s model to confirm that it meets the VIU criteria
set out in IAS 36 and have assessed the adjustments made to the
five-year business plan to remove the benefits of expansionary
capital expenditure. Where differences were identified we performed
sensitivity analysis to confirm that there was no material impact on
the outcome of the impairment test.
In performing additional sensitivities we considered a number
of alternative scenarios that could be reasonably thought to occur.
These scenarios modelled, individually, the impact of further lockdowns
as a result of the COVID-19 pandemic; a recovery that excluded
a rebound in sales volumes towards pre COVID-19 plan levels; and
cash unit margins below historical levels. In addition we ran scenarios
reflective of the potential longer term impacts of climate change.
Using these scenarios we sensitised management’s model and
assumptions to identify whether these would generate an impairment.
No scenarios considered reasonably plausible generated an impairment.
We have considered the accuracy and completeness of the financial
statement disclosures in light of the results of our audit procedures
and concluded that they are appropriate.
Based on the procedures performed we concluded that management
had correctly determined that no impairment to the investment value
in the books of the Company was required.
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FINANCIAL STATEMENTS KEY AUDIT MATTER
COVID-19 (Group and Company)
The COVID-19 pandemic has had a significant impact on the Group’s
business during FY20 with the performance of the business being
significantly adversely affected in H1 2020 followed by a recovery
in trading in the second half of the year.
COVID-19 has had a pervasive impact across the Group and, inter
alia, required management to reconsider a number of key accounting
judgements and estimates. These included adjusting business plans and
models which underpin the annual assessments of impairment and going
concern; the assessment of the expected credit loss on trade and other
receivables; the recovery of other government benefits receivable, the
impact on accruals for long term incentive schemes; and the presentation
of the additional costs incurred by the Group in the financial statements.
We have considered the pervasive impact of COVID-19 through
the planning, risk assessment and execution phases of our audit
with particular focus on the effect the pandemic has had on areas
of key accounting judgement and estimation.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
During the course of 2020 management have prepared a number
of accounting position papers which consider the wider impact of
COVID-19 on the Group’s financial statements. We have reviewed
these papers, considered the appropriateness of management’s
proposed treatments in line with published guidance and, where
the impact is material, tested key assumptions to supporting
documentation.
Where forecast financial information is relevant to an accounting
judgement we have considered how management have modelled the
impact of COVID-19 in its forecasts for 2021 and 2022. In performing
this assessment we have taken into account the impact that the first
wave of the virus and the associated government restrictions had
on the Group’s results in H1 2020 and the subsequent recovery of
the business in H2 2020 and considered how further lockdowns and
restrictions may affect the business in subsequent periods.
In the case of going concern we have assessed both management’s
base case and pessimistic planning scenarios for 2021 and 2022. In
addition we have asked management to perform an additional severe
but plausible downside scenario which more closely reflects the 2020
experience during a further forecast lockdown in 2021. We have then
recalculated management’s headroom and covenant compliance tests
throughout 2021 and 2022 to confirm that in their severe scenario
sufficient liquidity remains.
Refer to our Key Audit matters above for details of how we have
considered the impact of COVID-19 in our audit procedures over
the impairment tests performed by management in respect to the
carrying value of goodwill recognised in the consolidated financial
statements and the investment in subsidiaries in the Company financial
statements.
We have reviewed the disclosures included within the financial
statements in respect to the impact of COVID-19 to ensure that the
disclosures are consistent with published guidance and the presentation
of additional costs incurred by the Group in responding to the
pandemic is appropriate.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
The Group operates in 23 countries across North, West, East and Southern Africa. It is structured such that each country operates
semi-autonomously with oversight, consolidation, and certain activities performed by group management. Each country can contain many legal entities,
associates and joint ventures for which separate financial information is prepared and monitored. In general, each country will have a single large
operating legal entity that holds most of the assets, liabilities and transactions.
Reporting packs are prepared by local management for each legal entity except in some specific cases where a sub-consolidation is performed
and a single reporting pack is prepared for a number of related legal entities. We have scoped our audit on the basis that a component is identified
by a reporting pack.
We identified Morocco and Kenya as financially significant components based on their size compared to the consolidated financial statements of
the Group. A further six large components were identified and engaged to perform audits of their complete financial information in order to provide
appropriate coverage over the operations of the Group. In addition, the components of Mauritius and Namibia were identified to perform an audit
of the revenue balances in order to provide sufficient coverage over the revenue financial statement line item.
Guinea and Senegal were identified as significant risk components relating to the recoverability of other government benefits receivable as described
in the key audit matters. Guinea was requested to perform an audit over the other assets balance only while Senegal was engaged to perform an audit
of their complete financial information as one of the six components identified above.
Rwanda was engaged to perform an audit of their complete financial information. This component provided limited contribution to the consolidated
results of the Group however represented an entity acquired as part of the Engen transaction that took place in 2019 and which had not previously
been included within audit scope. In addition, we have engaged Mozambique, another component acquired as part of the Engen transaction to
perform specified procedures. The procedures requested were selected to reflect the relatively small size of the component and our goal of
obtaining an understanding of activities occurring within the smaller components.
Procedures were also performed at a group level over balances including goodwill and tax as well as procedures over centralised controls and
IT functions. The aggregation of all the holding entities are treated as a single component with testing performed over balances including cash,
finance expenses and external borrowings.
Overall coverage of 71% revenue, 68% profit before tax, and 66% total assets was obtained. None of the operating units excluded from
our group audit scope individually contributed more than 6% to consolidated revenue.
Interactions with component teams varied depending on their size, complexity and risk. Interactions with each component included: detailed
instruction; a risk assessment and audit approach planning meeting; detailed deliverables identifying significant matters and procedures performed
over significant risks; status and clearance meetings at key stages of the audit; and file reviews tailored to the specifics of the component. This was
in addition to further ad hoc discussions on matters of interest. Due to the COVID-19 pandemic physical oversight visits were not possible. Instead,
additional virtual meetings were held between the group engagement team, local senior management and local component teams of Morocco,
Kenya, Côte D’Ivoire and Botswana. Combined with virtual file reviews these meetings were considered appropriate replacements for the
usual in person interaction.
The Company only audit was performed independently by the group engagement team. This did not contribute to the scope of work performed
on the consolidated financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on
the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
FINANCIAL STATEMENTS – GROUP
FINANCIAL STATEMENTS – COMPANY
Overall materiality
US$11,500,000 (2019: US$13,000,000).
US$19,000,000 (2019: US$18,500,000).
How we determined it
5% of average earnings before tax and special items
for the last 3 years (2019: 5% of earnings before tax
and special items).
1% of net assets.
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FINANCIAL STATEMENTS FINANCIAL STATEMENTS – GROUP
FINANCIAL STATEMENTS – COMPANY
The entity is a holding company of the rest of the Group
and is not a trading entity. Therefore an asset based
measure is considered appropriate. The strength of the
balance sheet is the key measure of financial health that
is important to shareholders since the primary concern
for the Company is the payment of dividends.
Rationale for benchmark applied The Group is profit-oriented; therefore it is
considered most appropriate to use a profit-based
benchmark. The Directors, management and the
users of the Group financial statements focus on
adjusted numbers, being adjusted EBITDA, adjusted
EBIT and adjusted net income. The Group defines
‘adjusted’ as excluding special items. In order to
incorporate the distorting effects of COVID-19 and
the steep decline in oil price on current year profits
within our materiality calculation we consider the use
of a 3-year average better reflects the overall impact
on the financial statements, given that the impact on
earnings before tax and special items was significantly
more pronounced than the decline in sales volumes
and balance sheet carrying values. Based on this,
we consider an adjusted metric of 3-year average
earnings before tax and special items to be the most
appropriate benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality
allocated across components was between US$1.0m and US$10.0m. Certain components were audited to a local statutory audit materiality that was
also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature
and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% of overall materiality, amounting to US$8,625,000 for the Group financial statements and US$14,250,000 for the Company
financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk
and the effectiveness of controls – and concluded that an amount in the middle of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above US$0.7m (group audit)
(2019: US$1.0m) and US$0.7m (company audit) (2019: US$1.0m) as well as misstatements below those amounts that, in our view, warranted reporting
for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
– considering the reasonableness of the period covered by management’s going concern assessment;
– agreeing management’s going concern assessment to the board approved five-year strategic plan and ensuring that the base case scenario
indicates that the business generates sufficient cash flows during the going concern period to meet its obligations while complying with
covenant arrangements;
– identifying that the gross cash unit margin and expected volume growth are the key assumptions inherent in the plan and validating these to
historical precedent and forecast changes in markets;
– analysing the cash flows in the forecast to identify unexpected trends and relationships and ensuring the mathematical accuracy of
management’s models;
– evaluating management’s severe but plausible scenario of a similar extent of COVID-19 related impact on 2021 as seen in 2020;
– reviewing key banking and debt agreements to confirm the availability of appropriate levels of committed facilities during the going concern period;
– assessing the forecast compliance with the covenants associated with the Group’s committed debt facilities and ensuring that under both the base
case and severe but plausible downside scenarios there are no forecast covenant breaches during the going concern period; and
– considering the appropriateness and accuracy of management’s financial statement disclosures relating to going concern.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the Company’s ability
to continue as a going concern.
In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 31 December 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and Directors’ Report.
DIRECTORS’ REMUNERATION
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities, with respect to the corporate governance statement as other information, are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement,
included within the Governance section of the Annual Report is materially consistent with the financial statements and our knowledge obtained during
the audit, and we have nothing material to add or draw attention to in relation to:
– the Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
– the disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation
of how these are being managed or mitigated;
– the Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in
preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do so over a period of at
least twelve months from the date of approval of the financial statements;
– the Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why the period
is appropriate; and
– the Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only
consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with
the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements
and our knowledge and understanding of the Group and Company and their environment obtained in the course of the audit.
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127
FINANCIAL STATEMENTS In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– the Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information
necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
– the section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with
the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements
in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for
such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability 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 the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ 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 ISAs (UK) 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 these financial statements.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target
particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not obtained all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not
visited by us; or
– certain disclosures of Directors’ remuneration specified by law are not made; or
– the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 20 April 2018 to audit the financial
statements for the year ended 31 December 2018 and subsequent financial periods. The period of total uninterrupted engagement is 3 years,
covering the years ended 31 December 2018 to 31 December 2020.
Nicholas Stevenson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
2 March 2021
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
US$ million
Revenues
Cost of sales
Gross profit
Selling and marketing cost
General and administrative cost
Share of profit of joint ventures and associates
Other income/(expense)
Earnings before interest and tax (EBIT)
Finance income
Finance expense
Finance expense – net
Earnings before tax (EBT)
Income taxes
Net income
Net income attributable to:
Equity holders of Vivo Energy plc
Non-controlling interest (NCI)
Other comprehensive income (OCI)
Items that may be reclassified to profit or loss
Currency translation differences
Net investment hedge (loss)/gain
Items that will not be reclassified to profit or loss
Re-measurement of retirement benefits
Income tax relating to retirement benefits
Change in fair value of financial instruments through OCI
Other comprehensive income, net of tax
Total comprehensive income
Total comprehensive income attributable to:
Equity holders of Vivo Energy plc
Non-controlling interest (NCI)
Earnings per share (US$)
Basic
Diluted
The notes are an integral part of these consolidated financial statements.
Non-GAAP Measures
US$ million, unless otherwise indicated
EBITDA
Adjusted EBITDA
Adjusted net income
Adjusted diluted EPS (US$)
Notes
5
5
7
13
8
6
9
10
6
14
21
2020
6,918
(6,301)
617
(226)
(176)
2019
8,302
(7,627)
675
(224)
(165)
16
4
235
12
(72)
(60)
175
(85)
90
80
10
90
(23)
(17)
(5)
1
1
(43)
47
41
6
47
0.06
0.06
2020
360
360
90
0.06
22
2
310
7
(71)
(64)
246
(96)
150
136
14
150
(42)
3
–
–
1
(38)
112
113
(1)
112
0.11
0.11
2019
416
431
162
0.12
Refer to the non-GAAP financial measures definitions and reconciliations to the most comparable IFRS measures on pages 40 and 41.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
US$ million
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments in joint ventures and associates
Deferred income taxes
Financial assets at fair value through other comprehensive income
Other assets
Current assets
Inventories
Trade receivables
Other assets
Income tax receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Retained earnings
Other reserves
Attributable to equity holders of Vivo Energy plc
Non-controlling interest
Total equity
Liabilities
Non-current liabilities
Lease liabilities
Borrowings
Provisions
Deferred income taxes
Other liabilities
Current liabilities
Lease liabilities
Trade payables
Borrowings
Provisions
Other financial liabilities
Other liabilities
Income tax payables
Total liabilities
Total equity and liabilities
Notes
31 December
2020
31 December
2019
11
27
12
13
10
14
16
17
18
16
19
20
27
23
24, 25
10
26
27
23
24, 25
15
26
889
201
222
231
46
12
117
1,718
480
344
200
11
515
1,550
3,268
633
4
252
(122)
767
45
812
119
412
104
72
165
872
24
1,048
270
16
9
171
46
1,584
2,456
3,268
823
176
226
227
34
9
110
1,605
517
451
257
9
517
1,751
3,356
633
4
199
(85)
751
53
804
104
294
102
66
160
726
21
1,257
306
14
3
178
47
1,826
2,552
3,356
The notes are an integral part of these consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 2 March 2021 and were signed on its behalf by:
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
129
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of Vivo Energy plc
Other reserves
Notes
Share
capital
Share
premium
Retained
earnings
Reserves1
Retirement
benefits
Currency
translation
difference
Fair value
reserves
Equity-
settled
incentive
schemes2
Total
NCI
Total
equity
US$ million
Balance at 1 January 2020
Net income
Other comprehensive income
Total comprehensive income
Share-based expense
Share issuance related to share awards
Transactions with NCI
Net impact of IAS 293
Dividends paid/declared4
Balance at 31 December 2020
633
–
–
–
–
–
–
–
–
633
4
–
–
–
–
–
–
–
–
4
199
80
–
80
–
1
–
6
(34)
252
(54)
–
–
–
–
–
–
–
–
(54)
30
30
22
2
–
(4)
(4)
–
–
–
–
–
(2)
(43)
–
(36)
(36)
–
–
–
–
–
(79)
2
–
1
1
–
–
–
–
–
3
8
–
–
–
3
(1)
–
–
–
10
Attributable to equity holders of Vivo Energy plc
Other reserves
US$ million
Balance at 1 January 2019
Net income
Other comprehensive income
Total comprehensive income
Share-based expense
Share issuance related to acquisition1
Share issuance related to share awards
Transactions with NCI
Net impact of IAS 293
Dividends paid4
Balance at 31 December 2019
Notes
Share
capital
Share
premium
Retained
earnings
Reserves1
Retirement
benefits
Currency
translation
difference
Fair value
reserves
Equity-
settled
incentive
schemes2
601
–
–
–
–
31
1
–
–
–
633
30
30
22
3
–
–
–
–
–
1
–
–
–
4
72
136
–
136
–
–
–
2
19
(30)
199
(136)
–
–
–
–
82
–
–
–
–
(54)
2
–
–
–
–
–
–
–
–
–
2
(19)
–
(24)
(24)
–
–
–
–
–
–
(43)
1
–
1
1
–
–
–
–
–
–
2
9
–
–
–
1
–
(2)
–
–
–
8
751
80
(39)
41
3
–
–
6
(34)
767
Total
533
136
(23)
113
1
113
–
2
19
(30)
751
53 804
10
90
(4)
(43)
47
6
–
3
–
–
(4)
(4)
–
6
(10)
(44)
812
45
Total
equity
NCI
48 581
14 150
(15)
(38)
(1) 112
–
1
12 125
–
–
4
6
–
19
(10)
(40)
53 804
The notes are an integral part of these consolidated financial statements.
1
Included in reserves is a merger reserve ($82m) relating to the premium on shares issued as part of the consideration of the acquisition of Vivo Energy Overseas Holdings Limited (VEOHL),
formerly known as Engen International Holdings (Mauritius) Limited in March 2019.
2 Equity-settled incentive schemes include the Long-Term Incentive Plan (LTIP) and the IPO Share Award Plan.
3 The net impact on retained earnings as a result of the index-based adjustments in Zimbabwe under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
4 The dividends paid to the equity holders of Vivo Energy plc were paid out of distributable reserves (refer to note 11 of the Company financial statements).
130
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
131
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS
US$ million
Operating activities
Net income
Adjustment for:
Income taxes
Amortisation, depreciation and impairment
Net gain on disposals of PP&E and intangible assets
Share of profit of joint ventures and associates
Dividends received from joint ventures and associates
Current income tax paid
Net change in operating assets and liabilities and other adjustments
Cash flows from operating activities
Investing activities
Acquisition of businesses, net of cash acquired
Purchases of PP&E and intangible assets
Proceeds from disposals of PP&E and intangible assets
Other investing activities
Cash flows from investing activities
Financing activities
Proceeds from long-term debt
Repayment of long-term debt
Net (repayments)/proceeds (of)/from bank and other borrowings
Repayment of lease liabilities
Dividends paid
Interest paid
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
The notes are an integral part of these consolidated financial statements.
Notes
10
11, 12, 27
8
13
13
28
11, 12
8, 11, 12
23
23
23
27
19
2020
90
85
125
(4)
(16)
24
(89)
48
263
(9)
(168)
5
–
(172)
517
(492)
26
(31)
(43)
(62)
(85)
(8)
(2)
517
515
2019
150
96
106
–
(22)
22
(83)
176
445
(16)
(149)
2
3
(160)
62
(82)
1
(27)
(40)
(51)
(137)
(24)
124
393
517
130
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
131
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Vivo Energy plc (the ‘Company’) a public limited company,
was incorporated on 12 March 2018 in the United Kingdom under the
Companies Act 2006 (Registration number 11250655). The Company
is listed on the London Stock Exchange Main Market for listed
securities and the Main Board of the securities exchange operated
by the Johannesburg Stock Exchange. References to ‘Vivo Energy’
or the ‘Group’ mean the Company and its subsidiaries and subsidiary
undertakings. These consolidated financial statements as at and for
the period ended 31 December 2020 comprise the Company, its
subsidiaries and subsidiary undertakings, joint ventures and associates.
On 1 March 2019, Vivo Energy Investments B.V. acquired a 100%
shareholding in Vivo Energy Overseas Holding Limited (VEOHL)
formerly known as Engen International Holdings (Mauritius) Limited.
Upon completion of the transaction, Vivo Energy extended operations
in eight new markets and added over 200 Engen-branded service
stations to the existing network.
Vivo Energy distributes and sells fuel and lubricants to retail and
commercial consumers in Africa and trades under brands owned by
the Shell and Engen group of companies and, for aviation fuels only,
under the Vitol Aviation brand. Furthermore, Vivo Energy generates
revenue from Non-fuel retail activities including convenience retail
and quick service restaurants by leveraging on its retail network.
Further details on the nature of the Group’s operations and principal
activities can be found in the Strategic report on page 1 to 70.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below, and have been
applied consistently over the years.
2.1 Basis of preparation and going concern
These consolidated financial statements have been prepared in
accordance with International Accountings Standards in conformity
with the requirements of the Companies Act 2006 and the
International Financial Reporting Standards (IFRS) pursuant to
Regulation EC No. 1606/2002 as it applies in the European Union (EU)
and interpretations issued by the IFRS Interpretations Committee
(IFRS IC). The consolidated financial statements have been prepared
under the historical cost convention unless otherwise indicated.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements, are disclosed
in note 4.
The Group has considered the impact of COVID-19 and the current
economic environment in relation to the going concern basis of
preparation for the consolidated financial statements. For the
purposes of the going concern assessment the Directors have
considered a period to 31 December 2022 using base case forecasts
for this period taken from the 2021 five-year strategic plan. The Group
has prepared the five-year strategic plan taking into consideration
the impact of the current year and its effect on future performance.
The Group has prepared a range of stress test scenarios including
a severe but plausible downside sensitivity analysis. The plausible
downside sensitivity assumes the impact and restrictions of
COVID-19 experienced in 2020 continue to impact the 2021 financial
performance with lower volume growth and gross cash unit margins
in comparison to the base case scenario for 2021. During 2022, the
Group does not expect to be severely impacted from COVID-19 and
has therefore forecast a recovery in the financial position.
The Group has considered the impact of restrictions on its operations
with Retail, Marine and Aviation most affected. For each of our
segments we have sensitised volumes, gross cash unit margins,
profits and cash flows, taking into account a similar but less extreme
impact of COVID-19 for the next two years, than experienced
in 2020. The impact over the next two years is not considered to
be as severe as initially experienced in 2020 reflecting the reduced
impact of second wave restrictions during the first few weeks
of 2021. In our sensitivities, available mitigating measures, such as
reducing uncommitted growth capex, dividend deferrals and other
discretionary spend, do not prevent the Group from operating.
The Group does not expect any significant structural changes to the
business will be necessary under any of the scenarios considered.
Based on management’s assessment for the next two years, sufficient
available liquidity exists and the Group has adequate resources to
meet its operational obligations.
As of 31 December 2020, the Company has available short-term
capital resources of $2,078m, which include $1,323m of uncommitted
facilities. The Group is not reliant on these uncommitted facilities.
Based on the cash flow projections for the next two years,
management has confirmed that there is sufficient cash and committed
facilities available. Notwithstanding this analysis, the Group has
continued to have access to and utilise the uncommitted short-term
funding lines throughout the year, and where necessary renew them
in the normal course of business. Therefore, the Directors expect
these uncommitted facilities to continue to be available to the Group
for the foreseeable future. Under both the base case and severe but
plausible downside scenarios, the financial covenants, relating to the
Group’s RCF, of minimum interest cover of 4x and maximum debt
cover of 3x are forecast to be met over the next two years. At the
time of approving the consolidated financial statements, the Directors
maintain a reasonable expectation that the Company and the Group
will have adequate resources to continue in operational existence
for the foreseeable future and have therefore prepared the financial
statements on a going concern basis. Further details are contained
within the going concern statement included in the Directors’ Report.
132
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
FINANCIAL STATEMENTS In preparing the consolidated financial statements the Group has
considered the impact that climate change may have on key accounting
judgements and estimates including asset useful economic lives and
asset valuations and impairments. At the year-end, whilst a number
of countries in which the Group operates are signatories to the Paris
Climate Agreement, none of the countries have introduced legislation
or detailed policy initiatives associated with transitioning away from
carbon based transportation fuels. As set out on page 54 to 57 of the
Strategic Report, whilst the Group continues to introduce initiatives
designed to reduce the carbon emissions from its direct operations
and develop alternative product offerings, the Group considers
that the transition towards a low-carbon economy in its primary
markets will be over a longer time period than will be seen in the
UK and the European Union. As a result, the Group considers that
the market for oil products across Africa will continue to grow within
its medium-term planning horizons and this assumption is embedded
within the Group’s five-year strategic business plan which in turn
supports a number of key forward-looking accounting judgements
and estimates.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Group and to the non-controlling
interests. Total comprehensive income of subsidiaries is attributed to
owners of the Group and to the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
All intra-group transactions and balances, income, expenses and cash
flows are eliminated on consolidation. Where necessary, accounting
policies of subsidiaries are adjusted to ensure consistency with the
policies adopted by the Group.
Changes in ownership interests in subsidiaries without change
of control
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions, that is, as transactions
with the owners in their capacity as owners. The difference between
fair value of any consideration paid and the relevant share acquired
of the carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals to non-controlling interests are
also recorded in equity.
2.2 Application of new and revised IFRS
The following pronouncements issued by the IASB and endorsed
by the European Union are effective for annual periods beginning
1 January 2020. The Group’s financial statements have been prepared
in accordance with these standards, which have no material impact
on the consolidated financial statements of the Group:
– Amendments to IFRS 3 Definition of a ‘business’
– Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39
and IFRS 7)
– Amendments to IAS 1 and IAS 8 Definition of ‘material’
– Effective date of updated references to the Conceptual Framework
Joint arrangements
Joint arrangements are contractual arrangements whereby the
Group and other parties undertake activities that are under joint
control, meaning that the relevant activities that significantly affect
the investee’s returns require the unanimous consent of the parties
sharing control. Joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations of each investor. The Group has assessed the nature
of its joint arrangements and determined them to be joint ventures.
Joint ventures are joint arrangements whereby the parties that have
joint control have the rights to the net assets of the arrangement
and are accounted for using the equity method.
2.3 New standards, amendments and interpretations
not yet adopted
The following amendment to the standards effective for annual periods
beginning on or after 1 January 2021, has not been applied in preparing
the consolidated financial statements of the Group:
– Effective date of IBOR reform Phase 2 amendments
The above amendment which is not yet effective, is not expected to
have a material impact on the Group.
Under the equity method, the investment is initially recognised at
cost adjusted for the post-acquisition changes in the Group’s share
of net assets of the joint venture, less any impairment in the value
of the investment. The Group’s share of post-tax profits or losses
are recognised in the consolidated income statement. Losses of
a joint venture in excess of the Group’s interest investment in that
joint venture are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on
behalf of the joint venture.
Unrealised gains on transactions between the Group and its joint
ventures are eliminated to the extent of the Group’s interest in the
joint ventures. Unrealised losses are eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Where necessary, accounting policies of the joint ventures are adjusted
to ensure consistency with the policies adopted by the Group.
2.4 Consolidation
The Group is made up of various entities, subsidiaries, joint ventures
and associates. Details regarding all entities are included in note 15
in the Company financial statements.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control is achieved
when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity.
The Group reassesses whether or not it controls an investee if the
facts and circumstances indicate that there may be changes to one or
more of the elements of control. Subsidiaries are consolidated from
the effective date of acquisition and de-consolidated from the date
that control ceases.
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133
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2.6 Foreign currency translation
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 (‘the functional currency’).
The functional currency of the Company is United States dollars
(‘US dollars’). These consolidated financial statements are presented
in US dollars, which is the functional and presentation currency
of the Company.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions, and from the translation
at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies, are recognised in the
consolidated statements of comprehensive income.
Foreign exchange gains and losses that relate to monetary items
such as borrowings, receivables and cash and cash equivalents are
presented in the consolidated statements of comprehensive income
within cost of sales for trading related gains and losses and within
finance income and expense for non-trading related gains and losses.
Translation differences on non-monetary financial assets,
such as equities classified as financial assets at fair value through
other comprehensive income (FVTOCI), are included in other
comprehensive income.
The financial statements of entities in hyperinflationary economies
are translated in accordance with IAS 29 ‘Financial Reporting in
Hyperinflationary Economies’.
Accounting for hyperinflation
The results of the Group’s operations within entities based in
Zimbabwe have been prepared in accordance with IAS 29 as if
the economy had been hyperinflationary from date of acquisition.
Hyperinflationary accounting requires transactions and balances
to be stated in terms of the measuring unit, current at the end
of the reporting period in order to account for the effect of loss
of purchasing power during the period. The Group has elected to
use the Zimbabwe Consumer Price Index (CPI), as published by
the Zimbabwe Reserve Bank, as the general price index to restate
amounts, since CPI provides an official observable indication of the
change in the price of goods and services.
The carrying amounts of non-monetary assets and liabilities carried
at historical cost have been adjusted to reflect the impact of the
CPI. Amortisation, depreciation and impairments shall be recalculated
based on the carrying amounts of property, plant and equipment,
right-of-use assets and intangible assets restated to reflect the change
in the general price index. All other items recognised in the statement
of comprehensive income are restated by applying the change in the
general price index from the dates when the items of income and
expenses were originally recorded. The restatement of income and
expenses are carried out on a monthly basis by applying the respective
conversion factor. The net impact of these gains or losses, have been
recognised in the statement of comprehensive income.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.4 Consolidation (continued)
Investments in associates
Associates are entities where the Group has significant influence
and is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but where the Group
does not have control or joint control over those policies.
At the date of acquisition, any excess of the cost of the acquisition
over the Group’s share of the net fair value of the identifiable net
assets, liabilities and contingent liabilities of the associate is recorded
as goodwill. The goodwill is included within the carrying amount
of the investment. Investments in associates are accounted for
using the equity method of accounting. Under the equity method,
the investment is initially recognised at cost and adjusted for the
post-acquisition changes in the Group’s share of net assets of
the associate, less any impairment in the value of the investment.
The Group’s share of post-tax profits or losses are recognised in
the consolidated income statement. Losses of an associate in excess
of the Group’s interest in that associate are recognised only to the
extent that the Group has incurred legal or constructive obligations
or made payments on behalf of the associate.
2.5 Business combination
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets and liabilities transferred
and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets
and liabilities acquired and contingent liabilities assumed in a business
combination are measured initially at their fair values at acquisition
date. The Group recognises any non-controlling interest in the
acquiree on an acquisition by acquisition basis, either at fair value or
at the non-controlling interest’s proportionate share of the recognised
amounts of acquiree’s identifiable net assets. Acquisition related costs
are expensed as incurred.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed
to be an asset or liability is recognised in accordance with IFRS 9
‘Financial Instruments’ either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the
consideration transferred and the fair value of non-controlling interest
over the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the
subsidiary acquired, the difference is recognised in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between group companies are eliminated. Profits and
losses resulting from inter-company transactions that are recognised
in assets are also eliminated. Accounting policies of the subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
FINANCIAL STATEMENTS All items in the statement of cash flows are expressed in terms
of the general price index at the end of the reporting period.
Following the application of IAS 29, the financial statements of
Zimbabwean subsidiaries are translated at the closing exchange
rate applicable for the period.
The impact of applying IAS 29 in the current period resulted in an
increase in property, plant and equipment of $20m (2019: $19m),
an increase in intangible asset of $7m (2019: $7m), an increase in net
finance expense of $3m (2019: $5m) and a decrease in net income of
$5m (2019: $3m). An impairment test on fixed assets was carried out
on 31 December 2020, which indicated there was no impairment to
be recognised.
Group companies
The results and financial position of all the Group entities with
a functional currency other than the presentation currency are
translated into the presentation currency as follows:
– Assets and liabilities are translated at the closing rate at the
reporting date;
– Income and expense items and cash flows are translated at the
average exchange rates for the period (unless this average is
not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income
and expenses are translated at the rate on the dates of the
transactions); and
– Exchange differences arising are recognised directly in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of
a foreign entity are treated as assets and liabilities of the foreign
entity and translated accordingly.
2.7 Revenue recognition
When the Group enters into an agreement with a customer, goods
and services deliverable under the contract are identified as separate
performance obligations (‘obligations’) to the extent that the customer
can benefit from the goods or services on their own and that the
separate goods and services are considered distinct from other goods
and services in the agreement. Where individual goods and services
do not meet the criteria to be identified as separate obligations they
are aggregated with other goods and/or services in the agreement
until a separate obligation is identified.
Revenue from the sale of goods, such as fuel and lubricants and
any other products are recognised when the Group has fulfilled
its performance obligation to a customer at a point in time.
The performance obligation to customers, including Vivo Energy
Kenya Ltd, is fulfilled when the Group's products are delivered to
the customer and transfer of title occurs. The Group does not offer
bundled products.
The transaction price is the amount of consideration to which the
Group expects to be entitled in exchange for transferring promised
goods or services to a customer. The transaction price is allocated
to the performance obligation in the contracts and excludes amounts
collected on behalf of third parties (i.e. sales taxes, excise duties
and similar levies). The majority of the markets in which the Group
operates are regulated and have fixed prices that are established either
by the government or the industry. The Group may offer discounts
and volume rebates to customers. Where applicable, discounts are
pre-agreed in the contracts that form part of the price determination
over the life of the contract. Volume rebates are determined
periodically, and recorded against revenue.
Vivo Energy Kenya Ltd, like other oil marketers in Kenya, participates
in the Open Tender System (OTS). Oil-marketing companies are
legally required to import petroleum products through the OTS, that
is centrally coordinated by the Ministry of Energy. This legal notice is
governed by the OTS agreements signed between all Kenyan licensed
oil marketers. Vivo Energy Kenya Ltd does not only participate in this
process but also purchases from the suppliers and sells the petroleum
products through the OTS to other oil marketing companies.
Related revenues are recognised at the fair value of the consideration
received or receivable once Vivo Energy Kenya Ltd has transferred
the goods to the customer and fulfilled its performance obligation.
For sales of services, the total consideration in the service contracts
is allocated to all services based on their stand-alone selling prices.
The stand-alone selling price is determined based on the list prices
at which the Group sells the services in separate transactions.
The transaction price is allocated to the performance obligations
identified in the contract. The revenue from services are recognised
over a period of time as the performance obligations are met.
Rental income is accounted for in revenue and recognised over the
duration of the rental contract.
The Group recognises an asset for the incremental costs of obtaining
a contract with a customer if the Group expects the benefit of those
costs to exceed one year. The Group has determined that certain sales
incentive programmes meet the requirements to be capitalised.
The Group applies a practical expedient to expense costs as incurred
for costs to obtain a contract when the amortisation period would
have been one year or less.
2.8 Finance income and expense
Finance income and expense are recognised in the income statement
using the effective interest rate method. All finance costs are
recognised in the periods in which they are incurred.
2.9 Consolidated statement of comprehensive income presentation
Cost of sales reflects all costs relating to the revenue recognised,
including depreciation costs. Selling and marketing costs reflect
the marketing, selling costs, depreciation and amortisation costs.
The general and administrative costs reflect all central and corporate
costs, including employee and depreciation costs.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
135
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.10 Property, plant and equipment
Property, plant and equipment is carried at historical cost less
accumulated depreciation and any accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction
cost and any costs directly attributable to bringing the asset into
operation. The purchase price or construction cost is the aggregate
amount paid and the fair value of any other consideration given to
acquire the asset. Property, plant and equipment is depreciated on a
straight-line basis over the estimated useful lives of the various classes
of assets and commences when the asset is ready for use. Land and
construction-in-progress are not depreciated.
The following depreciation rates are applied for the Group:
– Buildings:
– Machinery and other equipment:
20 – 50 years
4 – 25 years
Major improvements are capitalised when they are expected to
provide future economic benefit. When significant components of
property, plant and equipment are required to be replaced at regular
intervals, the Group derecognises the replaced part and recognises
the new part with its own associated useful life and depreciation.
Repairs and maintenance costs are charged to the consolidated
statement of comprehensive income as incurred.
The carrying amount of an item of property, plant and equipment is
derecognised on disposal, or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising from the
derecognition of property, plant and equipment is included in the
consolidated statements of comprehensive income when the item
is derecognised.
Each asset’s estimated useful life, residual value and method of
depreciation are reviewed and adjusted, if appropriate, at each
year-end.
2.11 Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the
excess of the consideration transferred over the acquirer's interest
in fair value of the net identifiable assets, liabilities and contingent
liabilities of the acquiree and the fair value of the non-controlling
interest in the acquiree.
Goodwill is allocated to cash-generating units (CGUs) for the purpose
of impairment testing. The allocation is made to those CGUs or groups
of CGUs that are expected to benefit from the business combination
in which the goodwill arose. The units or groups of units are identified
at the lowest level at which goodwill is monitored for internal
management purposes, being the operating segments.
For goodwill recognised in the consolidated statements of financial
position, impairment reviews are undertaken annually, once goodwill
has been allocated to CGUs, or more frequently if events or changes
in circumstances indicate a potential impairment. The carrying value of
the CGU to which goodwill is allocated is compared to the recoverable
amount. Any impairment is recognised immediately as an expense and
is not subsequently reversed.
Shell Licence Agreements (‘Licences’)
The licences acquired grant the Company the exclusive right to
distribute and market Shell-branded products in the relevant
countries. The licences are recognised at their fair value at the
acquisition date and are carried forward at cost less accumulated
amortisation calculated using the straight-line method over
the expected useful life of 15 years. The Licences expire in
December 2031.
Computer software
Computer software comprises software purchased from third
parties as well as the cost of internally developed software.
Computer software licences are capitalised on the basis of the costs
incurred to acquire and bring into use the specific software. Costs that
are directly associated with the production of identifiable and unique
software products that are controlled by the Group, and where it
is probable of producing future economic benefits, are recognised
as intangible assets. Direct costs of software development include
employee costs and directly attributable overheads. Costs associated
with maintaining software programs are recognised as an expense
when they are incurred. Amortisation is charged on a straight-line
basis over their estimated useful lives of three to ten years. As at
31 December 2020, internally developed software relating to the
ERP system has a remaining useful life of nine years.
Other intangible assets
Other intangible assets include Butagaz brand, LPG retail distributor
relationships and Commercial LPG customer relationships recognised
at their fair value allocated at acquisition date are subsequently
measured at carrying amount less accumulated amortisation calculated
using the straight-line method over the expected useful life of 10 years.
The VEOHL business acquisition in 2019 attributed additional intangible
assets recognised through application of IFRS 3 ‘Business combinations’.
These intangible assets relate to customer relationships and the use
of the Engen brand with useful lives of between ten to 15 years.
2.12 Impairment of non-financial assets
At least annually, the Group reviews the carrying amount of tangible
and intangible assets with finite lives to assess whether there is an
indication that those assets may be impaired. If any such indication
exists, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of an asset’s
fair value less costs to sell and its value in use. In assessing its value
in use or fair value less cost of disposal, the estimated future cash
flows attributable to the asset are discounted to their present value
using a pre-tax or post-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the
asset. If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is reduced
to its recoverable amount.
A corresponding impairment loss is recognised in the consolidated
statements of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount
of the asset is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount
does not exceed the original carrying amount that would have been
determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Any impairment reversal is
recognised in the consolidated statements of comprehensive income.
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FINANCIAL STATEMENTS 2.13 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost comprises direct purchase costs (including transportation),
cost of production, manufacturing and taxes, and is determined
using the weighted average cost method.
2.14 Other government benefits receivable
Other assets include other government benefits receivable that
reflect subsidies received from national governments for fuel sold
as part of the Group’s ordinary course of business.
The following types of compensation are applicable to the Company:
– Amounts due from/to the government for oil purchased at
higher/ lower prices than the price set by the local authority.
Where the oil purchasing price paid by the Group is higher than
the price set by the local authorities, a receivable due from the
government is recognised by the Group to compensate for the
higher price paid. Similarly if the purchasing price of oil is lower
than the set price, a liability towards the government is recognised.
If collections/payments are expected in one year or less, the
receivable/liability are classified as current assets/current liabilities.
If not, they are presented as non-current assets/non-current
liabilities. As at 31 December 2020, this relates to Vivo Energy
Botswana, Senegal, Morocco, Madagascar and Guinea.
– Amounts due from/to the government for transport costs incurred
to encourage marketers to distribute products to remote areas of
the country. The government has introduced a pricing mechanism
whereby if the Group only delivers to local areas, then a liability
requiring payment to the government will be recognised. If the
Group delivers to remote areas then a receivable owing from the
government will be due. If collections/payments are expected in
one year or less, the receivable/liability are classified as current
assets/current liabilities. If not, they are presented as non-current
assets/non-current liabilities. As at 31 December 2020, this relates
to Vivo Energy Botswana, Senegal, Morocco and Guinea.
The origination of these receivables arises from legal rights based
on government schemes of taxation and subsidies and not from any
contractual agreements. As such, they are not considered as financial
instruments within the scope of IFRS 9 ‘Financial Instruments’ and
are accounted for under IAS 20 ‘Accounting for Government Grants
and Disclosure of Government Assistance’. Other government
benefits receivable are recognised initially at fair value, which
represents the difference between the market value if sold at arm’s
length and the price set by the government. The subsidy is accrued
to match the associated cost to which the compensation has been
granted. Initial recognition and any subsequent adjustments are
recognised within cost of sales in the consolidated statement of
comprehensive income.
If a receivable is recognised as owing from the government and
there is risk over the recoverability of that asset, then a provision
for impairment will be recognised.
Where the Group enters into factoring arrangements it transfers
and derecognises other government receivables if either:
– The Group has transferred substantially all the risks and rewards
of ownership of the asset; or
– The Group has neither transferred nor retained substantially all the
risks and rewards of ownership of the asset and no longer retains
control of the asset.
Under the continuing involvement approach, the Group continues
to recognise part of the asset. The amount of the asset that continues
to be recognised is the maximum amount of the Group’s exposure
to that particular asset or its previous carrying amount, if lower.
2.15 Financial instruments
Financial instruments consist of:
– Financial assets, which include cash and cash equivalents, trade
receivables, lease receivables, employee and other advances, equity
investments and derivative financial instruments and eligible current
and non-current assets; and
– Financial liabilities, which include long-term and short-term loans
and borrowings, bank overdrafts, trade payables, lease liabilities,
derivative financial instruments and eligible current and non-
current liabilities.
Financial instruments are recognised initially at fair value plus or
minus, for an item not at fair value through profit and loss (FVTPL),
transaction costs that are directly attributable to its acquisition or
issue. Financial instruments are initially recognised when the Group
becomes a party to the contractual provisions of the instrument.
Trade receivables are initially recognised when they are originated.
Financial assets are derecognised when substantial risks and rewards
of ownership of the financial asset have been transferred. In cases
where substantial risks and rewards of ownership of the financial
assets are neither transferred nor retained, financial assets are
derecognised only when the Group has not retained control over
the financial asset. Financial liabilities are derecognised when its
contractual obligations are discharged, cancelled or expired, and when
its terms are modified and the cash flows are substantially different.
Subsequent to initial recognition, financial instruments are measured
as described below.
Financial instruments measured at amortised cost
Except for debt instruments that are designated at fair value through
profit or loss (FVTPL) on initial recognition, financial instruments that
meet the following criteria are measured at amortised cost using the
effective interest method:
– They are held within a business model whose objective is to hold
assets in order to collect contractual cash flows; and
– The contractual terms of the instrument give rise on specified dates
to cash flows that are solely payment of principal and interest on
the principal amount outstanding.
The amortised cost is reduced by impairment losses. Finance income
or expense, foreign exchange gains and losses and impairments are
recognised in profit and loss. The following financial assets and liabilities
are classified as measured at amortised cost:
Cash and cash equivalents
Cash and cash equivalents, on the statement of financial position and
for the purpose of the cash flow statement, includes cash on hand,
in banks, placements held at call with banks and other short-term
highly-liquid investments with maturities of three months or less.
Where the Group does not have the right to offset, bank overdrafts
are shown as borrowings in current liabilities on the consolidated
statement of financial position.
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2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.15 Financial instruments (continued)
Trade receivables
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. If collection
is expected in one year or less they are classified as current assets.
If not, they are presented as non-current assets. The Group may
obtain security for certain trade receivables in the form of cash
deposit, bank guarantees, credit insurance and assets securities,
which can be called upon if the counterparty is in default under
the terms of the agreement.
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of
the business if longer). If not, they are presented as non-current
liabilities. Where trade finance facilities are used to extend payment
terms, these facilities are presented as short-term borrowings in
the consolidated statement of financial position.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred and subsequently carried at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption
value is recognised in the consolidated statement of comprehensive
income, over the period of the borrowings, using the effective
interest method.
Other assets and other liabilities
Other assets such as employee loans, brand promotion fund
receivables, customer deposits and other liabilities are measured
at amortised cost using the effective interest rate method.
Equity investments at fair value through other comprehensive
income (FVTOCI)
For equity investments not held for trading, the Group elected to
present subsequent changes in the investment’s fair value in other
comprehensive income. The Group subsequently measures these
assets at fair value with fair value gains and losses recognised in
other comprehensive income and never reclassified to profit or loss.
Dividends are recognised in profit or loss as other income when the
Group’s right to receive payment is established.
Financial instruments measured at fair value through profit
or loss (FVTPL)
Instruments that are not measured at amortised cost or FVTOCI are
measured at FVTPL. These instruments are subsequently measured
at fair value, with any gains or losses arising on re-measurement
recognised in profit or loss. The gain or loss on disposal is recognised
in profit or loss. Financial instruments at FVTPL include derivative
financial instruments.
Derivative financial instruments
The Group is exposed to foreign currency fluctuations on foreign
currency assets, liabilities, net investment in foreign operations and
forecasted cash flows denominated in foreign currency.
The Group limits the effect of foreign exchange rate fluctuations by
following established risk management policies including the use of
derivatives. The Group enters into derivative contracts where the
counterparty is primarily a bank.
Derivative financial instruments are initially recognised and subsequently
measured at fair value. Attributable transaction costs are recognised
in profit or loss as a cost.
Changes in fair value of foreign currency derivative instruments
neither designated as cash flow hedges nor hedges of net
investment in foreign operations are recognised in profit or loss
and reported within foreign exchange gains, net within results from
operating activities.
Changes in fair value and gains or losses on the settlement of foreign
currency derivative financial instruments relating to borrowings, which
have not been designated as hedges, are recorded in finance expense.
Changes in fair value and gains or losses on the settlement of foreign
currency derivative financial instruments relating to operational
transactions, which have not been designated as hedges, are recorded
in other income.
Net investment hedges
When derivative financial liability is designated as the hedging
instrument in a hedge of a net investment in a foreign operation, the
effective portion of foreign exchange gains and losses is recognised
in OCI and presented in currency translation reserve within equity.
Any ineffective portion of foreign exchange gains and losses is
recognised immediately in profit or loss. The amount recognised
in OCI is reclassified to profit or loss as a reclassification adjustment
on disposal of the foreign operation.
2.16 Impairment of financial assets
The Group applies the expected credit loss (ECL) model for
recognising impairment losses on financial assets measured at
amortised cost. The ECL is the difference between the contractual
cash flows and the cash flows that the entity expects to receive
discounted using the effective interest rate.
Loss allowance for financial assets other than trade receivables
are measured at the amount equal to 12 months’ ECL, as they are
considered low risk, unless there has been a significant increase in
credit risk from initial recognition, in which case those are measured
at lifetime ECL. Since the contractual terms for most of the Group’s
financial assets are typically less than 12 months, there is no significant
difference between the measurement of 12 months’ and lifetime ECL.
For trade receivables, a simplified impairment approach is applied
and the ECL is measured at the amount equal to lifetime ECL.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial asset. Lifetime ECL for
trade receivables is computed by taking into account historical
credit loss experience adjusted for forward-looking information.
Experienced credit judgement is applied to ensure that the weighted
probabilities of default are reflective of the credit risk associated
with the Group’s exposure.
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FINANCIAL STATEMENTS The measurement of the ECL is a function of the probability of default,
loss given default (i.e. the magnitude of the loss after recovery if
there is a default) and the exposure at default (i.e. the asset’s carrying
amount). The ECL is based on the historical impairment data, of trade
receivables, grouped into various age categories and geographical
location. The impact of forward-looking macroeconomic factors on
the expected credit losses are taken into account in the impairment
data used for the ECL model. The Group considers there to be a high
magnitude of exposure on default of debt, when the counterparty fails
to engage in an acceptable repayment plan or fails to make contractual
payments, for a period greater than 180 days past due. The majority
of the Group’s ECL provision is made up of trade receivables
over 180 days. There is no impairment consideration for overdue
amounts that are secured with highly liquid collateral. Security held
on trade receivables does not have a significant impact on the risk
of trade receivables.
Financial assets are considered to be impaired when there is
reasonable and supportable evidence that one or more events
that have a detrimental impact on the estimated future cash flows
have occurred. This includes but is not limited to observable data
at the reporting date that confirms potential future impairment
such as severe financial difficulty of a counterparty; probability that a
counterparty will enter bankruptcy; a contract breach; disappearance
of an active market for a counterparty’s products; concession being
granted to a counterparty for economic or contractual reasons due to
a financial difficulty that would not otherwise be considered; and other
financial reorganisation of a counterparty’s business. At the reporting
date, any significant change in credit risk arising from these factors
results in an adjustment of default probabilities. Where the Group has
no reasonable expectation of recovering the debt, for example where
all legal avenues for collection of amounts due have been exhausted,
the debt (or relevant portion) is written off.
2.17 Share capital
Ordinary shares are classified as equity. Where any Group company
purchases the Company’s equity share capital (treasury shares),
the consideration paid is deducted from equity attributable to
the Company’s equity holders until the shares are cancelled or
reissued. Where such ordinary shares are subsequently reissued,
any consideration received is included in equity attributable to the
Company’s equity holders.
2.18 Non-controlling interest
Non-controlling interests in the Group’s equity are stated at the
non-controlling interest’s proportionate share of the net assets
and liabilities of the companies concerned.
2.19 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised
as a liability in the Group’s financial statements in the period in
which the dividends are approved by the Company’s shareholders.
2.20 Share-based payments
The Group issues equity-settled and cash-settled share-based payments
to employees via shares and share option plans.
Equity-settled share-based payments
Equity-settled share-based payments arising from the Long-Term
Incentive Plan (LTIP) and the IPO Share Award Plan are measured
at fair value (excluding the effect of non-market vesting conditions)
at grant date. The fair value determined at grant date is recognised
over the vesting period, based on the Group’s estimate of the shares
that will eventually vest and adjusted for the effect of non-market
vesting conditions. A corresponding increase in other reserves is also
recognised in equity.
Cash-settled share-based payments
Cash-settled share-based payments arising from the Vivo Energy
Management Equity Plan are recognised as an expense over the
vesting period, measured by reference to the fair value of the
corresponding liability which is recognised in the consolidated
statements of financial position. The liability is measured at fair value
at each reporting date until settlement, with changes in fair value
recognised in the consolidated statement of comprehensive income.
2.21 Leases
Leases are included in right-of-use (ROU) assets and lease liabilities
on the Group’s consolidated statement of financial position.
ROU assets and lease liabilities are recognised based on the present
value of the future minimum lease payments over the lease term at
commencement date. As most of the leases do not provide an implicit
rate, the Group uses the incremental borrowing rate based on the
information available at commencement date in determining the
present value of future payments. The ROU assets also include any
lease payments made at or before the commencement date, any initial
direct costs incurred and less any lease incentives. The ROU assets
acquired under IFRS 16 ‘Leases’ are depreciated on a straight-line basis
over the asset’s useful life, or over the shorter of the asset’s useful life
and the lease term if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease term.
The measurement of the lease liability may include options to extend
or terminate the lease when it is reasonably certain that the option
will be exercised. After the initial measurement at commencement,
the carrying amount of the lease liability is increased by interest on
the lease liability, reduced by lease payments made and remeasured to
reflect any reassessment or lease modifications. Interest on the lease
liability is computed based on the initial discount rate used to compute
the lease liability at commencement (or if applicable a revised discount
rate used in a modification or remeasurement) to produce a constant
period rate of interest on the remaining balance of the lease liability.
Lease agreements including a lease and non-lease component are
generally accounted for separately. For certain instances where it is
impractical to separate the lease from the non-lease component, the
Group will account for them as a single lease component. Additionally,
the Group applies a portfolio approach to effectively account for the
ROU assets and liabilities.
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Typically defined benefit plans define an amount of pension benefit that
an employee will receive on retirement, usually dependent on one or
more factors such as age, years of service and compensation.
The liability recognised in the consolidated statements of financial
position in respect of defined benefit pension plans 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. Full actuarial valuation was performed for all
the defined benefit plans. The present value of the defined benefit
obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid, and
that have terms to maturity approximating to the terms of the related
pension obligation. In countries where there is no deep market in such
bonds, the market rates on government bonds are used.
Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise.
Current and past service costs are recognised immediately in profit or
loss. Net finance expense/income will be calculated as the product of
the net defined liability/asset and the discount rate as determined at
the beginning of the year and is included in net finance expense in the
statement of comprehensive income.
Defined benefit scheme characteristics and funding
The Group operates multiple post-employment defined benefit
schemes for its employees in half of its operating countries.
The multiple pension schemes provide the employees with a pension
or lump sum retirement benefit where the exact pension payments
on retirement differ per scheme. For some operating companies
(mainly Ghana and Namibia) there is an additional post-employment
health scheme.
Approximately 84% of the total defined benefit obligations are
unfunded. The other 16% of the total defined benefit obligations are
funded. The funded plan relates to the pension schemes in Mauritius
and Gabon. The funded plans are legally separate from the Group and
administered by a separate fund and comply with local regulatory and
legal requirements.
The schemes are exposed to a number of risks, including:
– Investment risk: movement of discount rate used (high-quality
corporate bonds) against the return from plan assets. If plan assets
underperform against the yield then this will create a deficit;
– Interest rate risk: decreases/increases in the discount rate used
(high-quality corporate bonds) will increase/decrease the defined
benefit obligation;
– Longevity risk: changes in the estimation of mortality rates of
current and former employees; and
– Salary risk: increases in future salaries increase the gross defined
benefit obligation.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.22 Provisions
Provisions are liabilities of uncertain timing or amounts.
Provisions are recognised when the Group has a present, legal or
constructive obligation as a result of past events, that will result in a
probable outflow of economic resources, and a reliable estimate can
be made of the amount of the obligation.
Provisions are measured at the present value of management’s best
estimate of expenditure required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as finance expense.
Compulsory stock provision
The oil market regulator in Morocco introduced an industry
mechanism to enable oil market operators to maintain the necessary
compulsory stock volume requirement. The compulsory stock
provision relates to amounts due to the oil market regulator in
Morocco for cash received to fund the compulsory stock obligation
(CSO). The cash received in 1994 was based on the CSO levels and
the government regulated oil price at that time. The amount due to
the government is classified as a non-current liability in ‘Other liabilities’
in the consolidated statement of financial position.
Since 1 December 2015, the fuel market in Morocco has been
deregulated. The difference between the government regulated
oil price at the end of November 2015 and the purchase price of
the compulsory stock in 1994 is accounted for as a non-current
provision. As the price structure for LPG products remains regulated
the fluctuations in the oil prices are calculated on an ongoing basis.
As at 31 December 2020, the Moroccan government has not
indicated a repayment date for the compulsory stock obligation.
Legal and other provisions
Legal and other provisions include provisions for environmental
restoration, restructuring costs and legal claims. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole.
2.23 Post-employment obligations
The Group operates various post-employment schemes, including
both defined benefit and defined contribution pension plans and
post-employment medical plans.
Pension obligations
A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. The Group
has no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior
periods. A defined benefit plan is a pension plan that is not a defined
contribution plan.
For defined contribution plans, the Group pays contributions to
publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in the future payments
is available.
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FINANCIAL STATEMENTS Other post-employment obligations
Some Group companies provide post-retirement healthcare
benefits to their retirees. The entitlement to these benefits is usually
conditional on the employee remaining in service up to retirement
age and the completion of a minimum service period. The expected
costs of these benefits are accrued over the period of employment
using the same accounting methodology as used for defined benefit
pension plans. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or
credited to equity in other comprehensive income in the period in
which they arise. These obligations are valued annually by independent
qualified actuaries.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill. Deferred income tax
is not accounted for if it arises from initial recognition 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 substantively enacted by the reporting date and
are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Termination benefits
Termination benefits are payable when employment is terminated
by the Group before the normal retirement date, or whenever
an employee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits at the earlier
of the following dates (a) when the Group can no longer withdraw
the offer of those benefits; and (b) when the entity recognises costs
for a restructuring that is within the scope of IAS 37 ‘Provisions’ and
involves the payment of termination benefits.
In the case of an offer made to encourage voluntary redundancy,
the termination benefits are measured based on the number of
employees expected to accept the offer. Benefits falling due more
than 12 months after the end of the reporting period are discounted
to their present value.
2.24 Current and deferred income tax
The income tax expense for the period comprises current and
deferred tax. Income tax is recognised in the consolidated statements
of comprehensive income, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this
case, the income tax is also recognised in other comprehensive income
or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the reporting date in the countries
where the Company and its subsidiaries operate and generate taxable
income. The Group periodically evaluates positions taken or intended
to be taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It accounts for uncertain tax
positions where appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax assets are recognised only to the extent that it
is probable that future taxable profit will be available against which the
temporary differences, unused tax losses and unused tax credits can
be utilised. The criteria considered when recognising deferred income
tax assets includes:
– The existence of taxable temporary differences that relate to the
same taxation authority and same taxable entity; and
– The expected future taxable profits and tax planning opportunities.
In case of a history of recent losses, it has been considered whether
other convincing evidence is available to support the recognition
of the deferred income tax assets.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except for deferred
income tax liability where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities
relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
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3.
FINANCIAL RISK MANAGEMENT
3.1 Financial instruments by category
The table below sets out the Group’s classification of each class of financial assets and financial liabilities and their fair values for the current year
and the comparative year:
US$ million
Financial assets
Trade receivables1
Cash and cash equivalents
Financial assets at FVTOCI
Other assets2
Total
Measured at
amortised cost
Measured at
FVTOCI
Total
carrying value
Fair value
31 December 2020
344
515
–
127
986
–
–
12
–
12
344
515
12
127
998
344
515
12
127
998
1 Trade receivables include credit secured receivables of $180m.
2 Other assets (note 16) exclude the following elements that do not qualify as financial instruments: prepayments, VAT and duties receivable and other government benefits receivable.
US$ million
Financial liabilities
Trade payables
Borrowings
Other liabilities1
Lease liabilities
Other financial liabilities
Total
1 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
US$ million
Financial assets
Trade receivables1
Cash and cash equivalents
Financial assets at FVTOCI
Other assets2
Total
Measured at
amortised cost
Measured at
FVTPL
Total
carrying value
Fair value
31 December 2020
1,048
682
215
143
–
2,088
–
–
–
–
9
9
1,048
682
215
143
9
2,097
1,048
707
215
143
9
2,122
31 December 2019
Measured at
amortised cost
Measured at
FVTOCI
Total
carrying value
Fair value
451
517
–
115
1,083
–
–
9
–
9
451
517
9
115
1,092
451
517
9
115
1,092
1 Trade receivables include credit secured receivables of $206m.
2 Other assets (note 16) exclude the following elements that do not qualify as financial instruments: prepayments, VAT and duties receivable and other government benefits receivable.
US$ million
Financial liabilities
Trade payables
Borrowings
Other liabilities1
Lease liabilities
Other financial liabilities
Total
1 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
Measured at
amortised cost
Measured
at FVTPL
Total
carrying value
Fair value
31 December 2019
1,257
600
225
125
–
2,207
–
–
–
–
3
3
1,257
600
225
125
3
2,210
1,257
600
225
125
3
2,210
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FINANCIAL STATEMENTS 3.2 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, price risk, cash flow interest rate risk and
fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect
to the US dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
Management has set up a policy to require Group companies to manage their foreign exchange risk. Group treasury is required to approve all
hedging plans before execution. The Group has a number of natural hedges in place, where the timing of foreign currency payments is matched
with the receipts in a similar currency. Forward contracts are used to manage the foreign exchange risk arising from future obligations.
Foreign currency exposure on the consolidated net monetary position is $156m (2019: $378m). Other monetary balances in other currencies
are not material. If the non-US dollar held currency had weakened/strengthened by 10% against the US dollar with all other variables held
constant, pre-tax profit for the year would have been $16m (2019: $38m) higher/lower, mainly as a result of foreign exchange gains/losses on
translation of non-US dollar denominated receivables and payables.
Price risk
The Group generally seeks to manage its exposure to commodity price risk through careful inventory management and as at 31 December 2020
the Group was not significantly exposed to commodity price risk. In regulated markets, the Group has no price exposure as long as the sale of
the inventory is matching the timing of the price structures updates, however in unregulated markets, such as Marine and Aviation, the Group
may be exposed to price changes in the short-term if inventory is not carefully managed.
In Botswana, Guinea, Madagascar, Senegal and Morocco (for Butane only) the Group is financially compensated by the local government for the
effect of these price restrictions. For further information see note 16. For some countries (such as Senegal) the transport costs are subsidised.
The Group does not hold equity securities for trading and is, therefore, not exposed to price risk.
Cash flow interest rate risk and fair value interest rate risk
The Group’s interest rate risk arises from borrowings. It is Group policy to have short-term loan facilities at floating rate and medium to
long-term facilities at floating or fixed rate. The Group has short-term overdraft facilities which carry a fixed interest rate exposing the Group
to fair value interest rate risk. However, given that the rate is fixed for a short period of time, and that these facilities terms are subject to
renegotiation, should interest rate move, the exposure is minimal. Long-term borrowings consist of notes at fixed interest rate, which exposes
the Group to fair value interest rate risk (refer to note 23).
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3.
FINANCIAL RISK MANAGEMENT CONTINUED
3.2 Financial risk factors (continued)
Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances. Each local entity is responsible for
managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered.
Credit risk arises from cash and cash equivalents, as well as credit exposures to wholesale and retail customers, including outstanding receivables
and committed transactions. At reporting date, the Group noted no significant concentrations of credit risk to individual customers or
counterparties. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables.
All external customers must have their identity checked and credit worthiness assessed and approved prior to the signing of a binding agreement
or contract. Credit worthiness is assessed for all customers based on commercial data, but also considers financial data when a credit limit
exceeds $15,000 for Retail and $100,000 for Commercial. The utilisation of credit limits is regularly monitored and checks performed on
outstanding debt at regular intervals. Where the environment allows, security (bank guarantees) will be taken to secure the Group’s exposure.
For banks and financial institutions, management of the operating entity are responsible for making the short-term placements with the banks
after approval from Group Treasury.
The investment policy is based in order of importance on security, liquidity and yield. Management will assess the counterparty risks of the
third party based on financial strength, quality of management, ownership structure, regulatory environment and overall diversification.
Group Treasury is required to approve all investment decisions to ensure they are made in line with the Group’s credit policies. The Group
has provided secured loans to individual employees (note 16).
In Morocco customer receivables to the amount of $16m (2019: $19m) were assigned to a factoring subsidiary of a commercial bank; the
assigned amount was received in cash and the corresponding receivable was derecognised. For the late payment risk, the Group capped the
exposure to six months’ maximum of interest. This resulted in a continuous involvement accounting treatment where a substantial portion of
the risk has been transferred. A continuous involvement liability of $0.3m (2019: $0.4m) was recognised. In addition, other government benefits
receivable to the amount of $36m (2019: $9m) were assigned to a local commercial bank, the assigned amount was received in cash and the
corresponding receivable was derecognised. For the late payment risk, the Group capped the exposure to 5.5 months’ maximum of interest.
A continuous involvement liability of $0.6m was recognised. The Group considers that the held to collect business model remains appropriate
for these receivables and hence continues measuring them at amortised cost. The Group has arrived at this conclusion because the factoring of
the Group’s B2B receivables before maturing is done on an infrequent basis. Furthermore, the Group continues to guarantee the late payment
risk up to 180 days. The business model is, therefore, not impacted because the risks and rewards as existing prior to the factoring remain after
the factoring.
The Group’s cash and cash equivalent balances are primarily held at banks with strong credit ratings where the exposure to credit risk is
considered to be limited. The extent to which the Group’s cash and cash equivalent balances are held at banks where there is considered to be
an exposure to credit risk is set out below:
Banks
Bank 1
Bank 2
Bank 3
31 December 2020
31 December 2019
Credit rating
US$ million
Credit rating
US$ million
A+
Ba1
Ba2
74
67
45
AAAmmf
A+
Ba1-
56
49
42
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FINANCIAL STATEMENTS Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed
credit facilities. Due to the cyclical nature of the underlying businesses, the Directors aim to maintain flexibility in funding by keeping committed
credit lines available.
Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow. This is generally carried out at local
level in the operating companies of the Group in accordance with practice and limits set by Group policies. Where short-term liquidity is needed,
the operating entities organise short-term facilities to cover the deficit which have to be authorised by Group Treasury.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to
the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
US$ million
Borrowings1
Trade payables
Lease liabilities
Other liabilities2
Total
31 December 2020
Less than
3 months
266
1,040
7
13
1,326
Between
3 months
and 1 year
2
8
28
22
60
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
6
–
29
17
52
60
–
59
2
121
350
–
94
161
605
Total
684
1,048
217
215
2,164
1 Borrowings exclude, as of 31 December 2020, the undrawn multi-currency revolving credit facility of $240m (note 23).
2 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
US$ million
Borrowings1
Trade payables
Lease liabilities
Other liabilities2
Total
Less than
3 months
225
1,161
6
49
1,441
Between
3 months
and 1 year
81
89
17
24
211
31 December 2019
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
85
7
20
18
130
211
–
44
4
259
–
–
90
130
220
Total
602
1,257
177
225
2,261
1 Borrowings exclude, as of 31 December 2019, the undrawn multi-currency revolving credit facility of $236m (note 23).
2 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
Net investment hedge
Foreign currency exposure arises from the Group’s net investment in its several subsidiaries that have the Cape Verde Escudo (CVE) and the
CFA Franc BCEAO (XOF) as functional currencies that are 100% pegged to the Euro (EUR). Therefore, the risk arises from fluctuation in
spot exchange rates between these currencies (or the EUR) and the US dollar, which causes the amount of the net investment to vary.
The hedged risk in the net investment hedge is the risk of a variation in the CVE and the XOF currencies (or the EUR) against the US dollar
which will result in a variation in the carrying amount of the Group’s net investment in these foreign operations.
On 24 September 2020, the Group issued $350m notes (refer to note 23). In order to eliminate foreign exchange risk associated with the
translation of the EUR pegged part of its net investment into its functional currency, the Group entered into a fixed-fixed cross-currency swap
to exchange a portion of the US dollar denominated bonds to EUR. The cross-currency swap is applied for $150m of the bonds, maturing in
three years.
In 2019 part of the Group’s net investment in those subsidiaries was hedged by a EUR denominated secured bank loan with carrying amount
$150m, which mitigated the foreign currency risk arising from the revaluation of the subsidiaries’ net assets. The loan was designated as a
hedging instrument for the changes in the value of the net investment that is attributable to changes in the spot rate.
To assess hedge effectiveness, the Group determines the economic relationship between the hedging instrument and the hedged item by
comparing changes in the carrying amount of the swap that is attributable to a change in the spot rate with changes in the investment in the
foreign operation due to movements in the spot rate (the offset method).
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3.
FINANCIAL RISK MANAGEMENT CONTINUED
3.2 Financial risk factors (continued)
The amounts related to items designated as hedging instruments in the statement of financial position and the statement of comprehensive
income were as follows:
Carrying amount
US$ million
Cross currency swap
Nominal amount
150
Assets
–
Liabilities
150
Cross currency swap
(7)
(7)
–
Change in value
used for calculating
hedge for 2020
Change in value
of hedging instrument
recognised in OCI
Hedge ineffectiveness
recognised in
profit or loss
Carrying amount
US$ million
Foreign exchange denominated debt
Nominal amount
239
Assets
–
Liabilities
150
Foreign exchange denominated debt
(3)
(3)
–
Change in value
used for calculating
hedge for 2019
Change in value
of hedging instrument
recognised in OCI
Hedge ineffectiveness
recognised in
profit or loss
31 December 2020
Line item in the
statement of financial
position where the hedging
instrument is included
Borrowings
Line item in profit
or loss that includes
hedge ineffectiveness
Not applicable
31 December 2019
Line item in the
statement of financial
position where the hedging
instrument is included
Borrowings
Line item in profit
or loss that includes
hedge ineffectiveness
Not applicable
3.3 Capital management
The Group’s capital management objective is to maintain a commercially sound consolidated statements of financial position with the aim of
maximising the net cash return to the shareholders, while maintaining a level of capitalisation that is commercially defensible and which leads
to an effective and optimised working capital structure.
Liquidity and capital resources are monitored through a review of the Group’s net debt position, leverage ratio and available short-term capital
resources. Net debt is calculated as total borrowings and lease liabilities (including current and non-current borrowings and lease liabilities as
shown in the consolidated statements of financial position) less cash and cash equivalents. The leverage ratio is calculated as net debt divided
by adjusted EBITDA. For details related to key covenants refer to note 23.
US$ million
Long-term debt (note 23)
Lease liabilities (note 27)
Total debt excluding short-term bank borrowings
Short-term bank borrowings1
Less: cash and cash equivalents (note 19)
Net debt
1
Short-term bank borrowings exclude the current portion of long-term debt.
US$ million
Net debt
Adjusted EBITDA1
Leverage ratio
1
For the description and reconciliation of non-GAAP measures refer to pages 40 and 41.
US$ million
Cash and cash equivalents
Available undrawn credit facilities
Available short-term capital resources
31 December
2020
31 December
2019
408
143
551
274
(515)
310
371
125
496
229
(517)
208
31 December
2020
31 December
2019
310
360
0.86x
208
431
0.48x
31 December
2020
31 December
2019
515
1,563
2,078
517
1,410
1,927
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions in order to ensure sound
capital management.
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FINANCIAL STATEMENTS 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
4.1 Accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimates,
which have the most significant effect on the amounts recognised in the consolidated financial statements:
Accounting for leases under IFRS 16
In establishing the lease term for each lease contract that has an option to extend, judgement has been applied to determine the extension
period. When it is concluded that it is reasonably certain that the extension option will be utilised, the lease term is extended to include the
reasonably certain period of five years. The lease agreements have the option to extend the leases and the option to terminate the leases.
The extension options in different contracts vary between five years to unlimited period. The Group uses significant assumptions that all of the
existing leases that are expiring within the following five years, and have an extension option, will be extended for an additional five-year period,
when determining the lease term.
In addition, IFRS 16 requires lease payments to be discounted using the interest rate implicit in the lease. In case the interest rate implicit in
the lease cannot be readily determined, the incremental borrowing rate should be used. That is the rate of interest that a lessee would have to
pay to borrow over a similar value to the right-of-use asset in a similar economic environment. Accordingly, the Group elected to use the local
borrowing rates for each operating unit at the commencement date. That is the rate at which local operating units would need to borrow to
acquire the asset. For additional details relating to leases refer to note 27.
4.2 Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have
a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year, are
discussed below.
Goodwill impairment assessment
The Group annually tests whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.12.
The recoverable amount of each cash-generating unit (CGU) was determined based on a Fair Value Less Cost of Disposal calculation which
was based upon cash flow projections from the five-year business plan prepared for each CGU. The terminal value was estimated based upon
a perpetuity growth rate of 1.6%, reflecting an inflationary level of growth beyond the five-year plan. Post-tax discount rate of 12.2% was used
to discount the projected cash flows.
Based on the impairment test carried out, goodwill is not considered to be impaired. No impairment would occur, if the post-tax discount rate
applied to the cash flow projection of each CGU had been 1% higher than management estimates and all other assumptions remain unchanged.
The Retail fuel and Commercial fuel segments would only result in an indication of impairment if the post-tax discount rates increased to
19.4% and 18.2% respectively.
Government related assets and liabilities
The Group has various assets from and liabilities to governments and authorities with respect to government benefits receivable as well
as for taxes and duties. The Group constantly assesses underlying inherent risks and assumptions and as a consequence related accounting
estimates are determined and adjustments are made to the carrying amounts of those assets and liabilities, where necessary. A key element
in the assessment of uncertainty of recoverability of government benefit receivables is the credit risk associated with these governments;
this is considered in note 16.
Tax positions
The Group operates across many tax jurisdictions and the interpretation and application of tax law can be complex and requires judgement to
assess the risk and estimate the potential outcomes. These outcomes can vary significantly from what has been provided. The Group recognises
many individually immaterial provisions with a cumulative amount totalling $23m related to income tax and $37m related to indirect and other
tax matters recorded in other assets, other liabilities and provisions. These are recorded for the amount that is expected to be settled where
this can be reasonably estimated. This reflects management’s assessment of the expected value of such risks based on a multiple scenario
outcome and likelihood. Factors considered include the status of recent current tax audits and enquiries; the results of previous claims; the
transfer pricing policies of the Group and any changes to the relevant tax environments. The timing of the resolution of the risks is uncertain
and may take many years, however is expected to be within the next five years.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
5.
SEGMENT REPORTING
The Group operates under three reportable segments: Retail, Commercial and Lubricants.
Retail segment – Retail fuel is aggregated with Non-fuel retail. Both the operating segments derive revenue from Retail customers who
visit our Retail sites. Retail fuel and Non-fuel revenues are aggregated as the segments are managed as one unit and have similar customers.
The economic indicators that have been addressed in determining that the aggregated segments have similar economic characteristics are that
they have similar expected future financial performance and similar operating and competitive risks.
Commercial segment – Commercial fuel, LPG, Aviation and Marine are aggregated in the Commercial segment as the operating segments
derive revenues from Commercial customers. The segments have similar economic characteristics. The economic indicators that have been
addressed are the long-term growth and average long-term gross margin percentage.
Lubricants segment – Retail, B2C, B2B and Export Lubricants are the remaining operating segments. Since these operating segments meet
the majority of aggregation criteria, they are aggregated in the Lubricants segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers.
The Directors monitor the operating results of business units separately for the purpose of making decisions about resource allocation,
segment performance assessment and interacting with segment managers.
The following tables present revenues and profit information regarding the Group’s operating segments:
US$ million
Revenue from external customers
Gross profit
Add back: depreciation and amortisation
Gross cash profit
Adjusted EBITDA1
1 Refer to note 6 for the reconciliation to EBIT.
US$ million
Revenue from external customers
Gross profit
Add back: depreciation and amortisation
Gross cash profit
Adjusted EBITDA1
1 Refer to note 6 for the reconciliation to EBIT.
Retail
Commercial
Lubricants
Consolidated
2020
4,436
387
51
438
216
Retail
5,249
411
43
454
242
2,116
156
25
181
92
366
74
4
78
52
6,918
617
80
697
360
2019
Commercial
Lubricants
Consolidated
2,678
192
22
214
135
375
72
3
75
54
8,302
675
68
743
431
US$ million
Share of profit of joint ventures and associates included in segment EBITDA
Lubricants
Retail
Commercial
Total
2020
2019
8
4
4
16
12
5
5
22
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FINANCIAL STATEMENTS
The amount of revenues from external customers by location of the customers is shown in the table below.
US$ million
Revenue from external customers by principal country
Kenya
Morocco
Côte d’Ivoire
Other
Total
US$ million
Non-current assets by principal country (excluding deferred tax)
Morocco
The Netherlands
Kenya
Other
Total
6. RECONCILIATION OF NON-GAAP MEASURES
2020
2019
1,181
1,075
546
4,116
6,918
1,256
1,476
604
4,966
8,302
31 December
2020
31 December
2019
245
232
153
1,042
1,672
208
232
143
988
1,571
Non-GAAP measures are not defined by International Financial Reporting Standards (IFRS) and, therefore, may not be directly comparable
with other companies’ non-GAAP measures, including those in the Group’s industry. Non-GAAP measures should be considered in addition to,
and are not intended to be a substitute for, or superior to, IFRS measurements. The exclusion of certain items (special items) from non-GAAP
performance measures does not imply that these items are necessarily non-recurring. From time to time, we may exclude additional items
if we believe doing so would result in a more transparent and comparable disclosure.
The Directors believe that reporting non-GAAP financial measures in addition to IFRS measures, as well as the exclusion of special items,
provides users with enhanced understanding of results and related trends and increases the transparency and clarity of the core results
of operations. Non-GAAP measures are used by the Directors and management for performance analysis, planning, reporting and are
used in determining senior management remuneration.
US$ million
EBT
Finance expense – net
EBIT
Depreciation, amortisation and impairment
EBITDA
Adjustments to EBITDA related to special items:
Hyperinflation1
IPO2 and Engen acquisition related expenses3
Write-off of non-current asset4
Restructuring5
Management Equity Plan6
Adjusted EBITDA
2020
175
60
235
125
360
2
1
–
–
(3)
360
2019
246
64
310
106
416
–
11
3
3
(2)
431
1 The impacts of accounting for hyperinflation for Vivo Energy Zimbabwe, in accordance with IAS 29, are treated as special items since they are not considered to represent the underlying
operational performance of the Group and based on their significance in size and unusual nature are excluded as the local currency depreciation against the US dollar does not align to the
published inflation rates during the period.
IPO related items in 2020 and 2019 concern the IPO share awards which are accrued for over the vesting period.
2
3 On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Vivo Energy Overseas Holdings Limited (VEOHL) (formerly known as
Engen International Holdings (Mauritius) Limited). The cost of the acquisition and related integration project expenses are treated as special items.
4 The Group recognised a write-off in 2019 related to a government benefits receivable as a result of a retrospective price structure change by the government to finance their outstanding
debt. Such retrospective changes of existing price structures are considered non-recurring and are not representative of the core operational business activities and performance and are,
therefore, treated as special items.
5 Restructuring costs were incurred in 2019 mainly as a result of the integration of VEOHL into our business model. The impact from these activities does not form part of the core
operational business activities and performance and was, therefore, treated as a special item in 2019.
6 The Management Equity Plan vested at IPO in May 2018 and is exercisable on the first anniversary of admission for a period of 24 months. Changes in the fair value of the cash-settled
share-based plan do not form part of the core operational business activities and performance and should, therefore, be treated as a special item. The costs of share-based payment
schemes introduced after the IPO are not treated as special items.
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6. RECONCILIATION OF NON-GAAP MEASURES CONTINUED
US$ million
Net income
Adjustments to net income related to special items:
Hyperinflation1
IPO2 and Engen acquisition related expenses3
Write-off of non-current asset4
Restructuring5
Management Equity Plan6
Tax on special items
Adjusted net income
US$
Diluted EPS
Impact of special items
Adjusted diluted EPS
2020
90
2
1
–
–
(3)
–
90
2020
0.06
–
0.06
2019
150
–
11
3
3
(2)
(3)
162
2019
0.11
0.01
0.12
1 The impacts of accounting for hyperinflation for Vivo Energy Zimbabwe, in accordance with IAS 29, are treated as special items since they are not considered to represent the underlying
operational performance of the Group and based on their significance in size and unusual nature are excluded as the local currency depreciation against the US dollar does not align to
the published inflation rates during the period.
IPO related items in 2020 and 2019 concern the IPO share awards which are accrued for over the vesting period.
2
3 On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Vivo Energy Overseas Holdings Limited (VEOHL) (formerly known as
Engen International Holdings (Mauritius) Limited). The cost of the acquisition and related integration project expenses are treated as special items.
4 The Group recognised a write-off in 2019 related to a government benefits receivable as a result of a retrospective price structure change by the government to finance their outstanding
debt. Such retrospective changes of existing price structures are considered non-recurring and are not representative of the core operational business activities and performance and are,
therefore, treated as special items.
5 Restructuring costs were incurred in 2019 mainly as a result of the integration of VEOHL into our business model. The impact from these activities does not form part of the core
operational business activities and performance and was, therefore, treated as a special item in 2019.
6 The Management Equity Plan vested at IPO in May 2018 and is exercisable on the first anniversary of admission for a period of 24 months. Changes in the fair value of the cash-settled
share-based plan do not form part of the core operational business activities and performance and should, therefore, be treated as a special item. The costs of share-based payment
schemes introduced after the IPO are not treated as special items.
The Group defines Headline earnings as earnings based on net income attributable to owners of the Group, before items of a capital nature,
net of income tax as required for companies listed on the Johannesburg Stock Exchange.
US$ million, unless otherwise indicated
Headline earnings per share
Net income attributable to owners
Re-measurements:
Net gain on disposal of PP&E and intangible assets
Write-off of non-current asset1
Income tax on re-measurements
Headline earnings
Weighted average number of ordinary shares (million)
Headline EPS (US$)
Diluted number of shares (million)
Diluted headline EPS (US$)
Effective tax rate
2020
80
(4)
–
1
77
1,266
0.06
1,266
0.06
49%
2019
136
–
3
(1)
138
1,255
0.11
1,255
0.11
39%
1 The Group recognised a write-off in 2019 related to a government benefits receivable as a result of a retrospective price structure change by the government to finance their outstanding
debt. Such retrospective changes of existing price structures resulted in the re-measurement of an asset and is therefore excluded.
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FINANCIAL STATEMENTS 7. GENERAL AND ADMINISTRATIVE COST
Employee benefits
US$ million
Wages, salaries and other employee benefits
Restructuring, severance and other involuntary termination costs1
Retirement benefits
Share-based payment expense
2020
163
7
10
–
180
2019
159
3
7
(1)
168
1 Total restructuring costs amount to $7m (2019: $3m) of which some elements are reflected in other employee benefits categories.
Included in the employee benefit expense for the year ended 31 December 2020, was social security expense of $1m (2019: $1m) and other
pension costs relating to employees employed in the UK. Refer to note 3 in the Company financial statements.
Employee benefits have been charged in:
US$ million
General and administrative cost
Selling and marketing cost
Cost of sales
The monthly average number of full time equivalent employees was as follows:
Sales and distribution
Administration and support
2020
102
43
35
180
2020
1,904
794
2,698
2019
96
39
33
168
2019
1,845
755
2,600
Depreciation and amortisation
Depreciation of property, plant and equipment, right-of-use assets and amortisation of intangible assets are separately disclosed in notes 11,
12 and 27 respectively.
Audit fees
US $’000
Parent company and consolidated financial statements
Subsidiaries1
Audit fees2
Audit-related fees3
Tax advisory fees
Other assurance services4
Other non-audit services
Other fees total
Total fees
2020
1,248
1,175
2,423
377
–
227
–
604
3,027
2019
1,656
1,383
3,039
692
5
193
11
901
3,940
1 Audit fees for foreign entities are expressed at the average exchange rate for the year.
2 Audit fees in 2019 comprise fees for the business combination in relation to the VEOHL acquisition and the SAP S/4HANA implementation.
3 Audit-related fees relate to interim financial statements reviews.
4 Other assurance services relate mainly to comfort letter procedures in respect to note issuance and volume certificates to support brand royalty expenses.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
8. OTHER INCOME/(EXPENSE)
US$ million
Net gain on disposals of PP&E and intangible assets
Gain on financial instruments
Other income
9.
FINANCE INCOME AND EXPENSE
US$ million
Finance expense
Interest on bank and other borrowings and on lease liabilities1
Interest on long-term debt including amortisation of set-up fees
Net impact of hyperinflation2
Accretion expense net defined benefit liability
Foreign exchange loss
Other
Finance income
Interest from cash and cash equivalents
Foreign exchange gain
Finance expense – net
Includes an amount of $12m (2019: $11m) finance expense for leases in respect to IFRS 16 ‘Leases’.
1
2 Represents the net monetary loss impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.6.
10.
INCOME TAXES
Current income taxes
Analysis of income tax expense:
US$ million
Current tax
Current income tax
Current income tax prior years
Deferred tax
Deferred income tax
Deferred income tax prior years
Income tax expense
2020
2019
4
–
–
4
2020
(39)
(25)
(3)
(2)
–
(3)
(72)
8
4
12
(60)
–
1
1
2
2019
(35)
(24)
(5)
(2)
(1)
(4)
(71)
7
–
7
(64)
2020
2019
(96)
8
(88)
6
(3)
3
(85)
(95)
(2)
(97)
1
–
1
(96)
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FINANCIAL STATEMENTS The reconciliation of income taxes, computed at the statutory tax rate, to income tax expense was as follows:
US$ million
EBT
Statutory tax rate
Income tax expense at statutory tax rate
Increase/(decrease) resulting from:
Impact of tax rates in foreign jurisdictions
Income not subject to tax
Expenses not tax deductible
Non-recognition of tax benefits in relation to current period tax losses or temporary differences
Recognition and utilisation of previously unrecognised tax losses or temporary differences1
Withholding tax
Other2
Income tax expense
Effective tax rate
In 2019, $1m was recognised after the business acquisition and was supported by developments in the acquired markets.
1
2 Amongst others, includes movements related to uncertain tax positions.
Deferred income taxes
The significant components of the Company’s recognised deferred income tax assets and liabilities were as follows:
2020
175
19%
(33)
(18)
6
(11)
(10)
3
(19)
(3)
(85)
49%
2019
246
19%
(47)
(23)
7
(11)
(5)
6
(19)
(4)
(96)
39%
31 December 2020
31 December 2019
Asset
Liability
Asset
Liability
US$ million
Property, plant and equipment
Intangible assets
Retirement benefits
Provisions
Withholding taxes
Tax losses carried forward1
Other
Offsetting of balances
Total
1 $4m of the recognised deferred tax asset for tax losses carried forward, is supported by expected future taxable profits (2019: $8m).
The changes in the net deferred income tax assets and liabilities were as follows:
US$ million
Balance at the beginning of year, net
In profit
In other comprehensive income
Business acquisition
Other
Foreign exchange differences
1
–
10
17
–
13
33
74
(28)
46
(43)
(22)
(1)
–
(16)
–
(18)
(100)
28
(72)
1
–
9
17
–
12
17
56
(22)
34
2020
(32)
3
1
–
–
2
(26)
(31)
(23)
(1)
(2)
(15)
–
(16)
(88)
22
(66)
2019
(15)
1
(1)
(19)
1
1
(32)
Unrecognised deferred tax assets relate to carry forward losses of $98m (2019: $93m) and tax credit carry forwards of $12m (2019: $4m).
Of the unrecognised carry forward losses $1m will expire at the end of 2023, $7m at the end of 2024, $15m at the end of 2025 and $75m
at the end of 2026 or later.
The unrecognised taxable temporary differences associated with undistributed retained earnings of investments in subsidiaries, joint ventures
and associates amounts to $25m (2019: $20m).
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. PROPERTY, PLANT AND EQUIPMENT
US$ million
Cost at 1 January 2020
Additions
Disposals
Transfers
Foreign exchange differences1
Cost at 31 December 2020
Accumulated depreciation at 1 January 2020
Depreciation
Disposals
Foreign exchange differences1
Accumulated depreciation at 31 December 2020
Net carrying value at 31 December 2020
Land
Buildings
Machinery and
other equipment
Construction
in progress
55
2
(5)
–
–
52
–
–
–
–
–
52
319
16
(4)
7
1
339
(54)
(17)
3
–
(68)
271
552
25
(17)
69
13
642
(141)
(65)
17
(3)
(192)
449
92
109
(9)
(76)
–
116
–
–
–
–
–
117
1
Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.6.
US$ million
Cost at 1 January 2019
Additions
Business acquisition1
Disposals
Transfers
Foreign exchange differences2
Cost at 31 December 2019
Accumulated depreciation at 1 January 2019
Depreciation
Disposals
Foreign exchange differences2
Accumulated depreciation at 31 December 2019
Net carrying value at 31 December 2019
Land
Buildings
Machinery and
other equipment
Construction
in progress
33
–
22
–
1
(1)
55
–
–
–
–
–
55
229
6
71
(4)
24
(7)
319
(43)
(16)
3
2
(54)
265
453
25
61
(29)
53
(11)
552
(118)
(56)
28
5
(141)
411
68
93
9
–
(78)
–
92
–
–
–
–
–
92
1
2
Includes PP&E recognised on acquisition of VEOHL of $149m.
Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.6.
No assets have been pledged as security. Depreciation charge of $82m (2019: $72m) is included in cost of sales for $73m (2019: $64m),
in selling and marketing cost for $1m (2019: $1m) and in general and administrative cost for $8m (2019: $7m).
2020
Total
1,018
152
(35)
–
14
1,149
(195)
(82)
20
(3)
(260)
889
2019
Total
783
124
163
(33)
–
(19)
1,018
(161)
(72)
31
7
(195)
823
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FINANCIAL STATEMENTS 12.
INTANGIBLE ASSETS
US$ million
Cost at 1 January 2020
Additions
Foreign exchange differences1
Cost at 31 December 2020
Accumulated amortisation at 1 January 2020
Amortisation
Accumulated amortisation at 31 December 2020
Net carrying value at 31 December 2020
Shell licence
agreement
Goodwill
Computer
software
139
–
–
139
(82)
(5)
(87)
52
81
–
(2)
79
–
–
–
79
75
16
–
91
(19)
(9)
(28)
63
1
Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.6.
US$ million
Cost at 1 January 2019
Additions
Business acquisition
Foreign exchange differences1
Cost at 31 December 2019
Accumulated amortisation at 1 January 2019
Amortisation
Accumulated amortisation at 31 December 2019
Net carrying value at 31 December 2019
Shell licence
agreement
Goodwill
Computer
software
143
–
–
(4)
139
(77)
(5)
(82)
57
21
–
65
(5)
81
–
–
–
81
51
25
–
(1)
75
(16)
(3)
(19)
56
2020
Total
352
16
(2)
366
(126)
(18)
(144)
222
2019
Total
247
25
90
(10)
352
(113)
(13)
(126)
226
Other
57
–
–
57
(25)
(4)
(29)
28
Other
32
–
25
–
57
(20)
(5)
(25)
32
1
Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.6.
Amortisation charge of $18m (2019: $13m) is included in cost of sales for $3m (2019: $1m), selling and marketing cost for $12m (2019: $9m)
and general and administrative cost for $3m (2019: $3m).
Impairment test for goodwill
The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of the CGUs was determined based
on Fair Value Less Cost of Disposal calculation which requires the use of assumptions. The calculations use cash flow projections based on an
approved business plan covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated long-term
growth rate shown below. The terminal value was calculated using the Gordon Growth formula.
Goodwill is monitored at the operating segment level on a non-aggregated basis. The Group has several non-aggregated operating segments,
however, the goodwill is allocated to Retail fuel and Commercial fuel given that substantially all activities of the acquired businesses relate to
these two operating segments. Both the goodwill acquired in the 2019 Engen acquisition and the goodwill acquired from previous acquisitions
are allocated and considered for impairment testing together at the non-aggregated operating segments Retail fuel and Commercial fuel.
For this purpose, a discounted cash flow analysis was used to compute the recoverable amount using the approved plan. This results in
81% of the carrying amount of goodwill being allocated to Retail fuel and 19% of the carrying amount being allocated to Commercial fuel.
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12.
INTANGIBLE ASSETS CONTINUED
The following tables set out the key assumptions for those CGUs that have a significant goodwill allocated to them:
Volume compounded annual growth rate
Gross cash profit compounded annual growth rate
Post-tax discount rate
Long-term growth rate
The methodology applied to each of the key assumptions used is as follows:
2020
Commercial
fuel
4.8%
5.3%
12.2%
1.6%
Retail
fuel
6.2%
5.8%
12.2%
1.6%
Assumptions
Volume growth
Gross cash profit growth
Post-tax discount rate
Long-term growth rate
Approach used to determine values
Volume growth over the five-year forecast period; based on past performance and management
expectations of market developments.
Based on past performance and management expectations of the future.
Based on specific risks relating to the industry and country. Factors considered for the industry
include regulatory environment, market competition and barriers to entry.
Based on the IMF GDP projections for the markets where Vivo Energy operates. Sensitivity analysis
was performed for changes in long-term growth rate by -1.5% and +2.0%.
The Group considers the post-tax discount rate to be the most sensitive assumption. No impairment would occur, if the post-tax discount rate
applied to the cash flow projection of each CGU had been 1% higher than management estimates and all other assumptions in the table above
are unchanged. Goodwill in relation to the Retail fuel and Commercial fuel CGUs would only result in an indication of impairment if the post-tax
discount rates increased to 19.4% and 18.2%, respectively. There are no reasonable possible changes that could occur to key assumptions that
would reduce the recoverable amount below the carrying amount.
13.
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
The Group also has interests in a number of associates and joint ventures that are accounted for using the equity method. A comprehensive
listing of the Group’s joint ventures and associates can be found in note 15 of the Company financial statements.
US$ million
At 1 January
Acquisition of businesses
Share of profit
Dividend received
Foreign exchange differences
At 31 December
2020
227
14
16
(24)
(2)
231
2019
223
5
22
(22)
(1)
227
In December 2017, the Group acquired a 50% interest in Shell and Vivo Lubricants B.V. (SVL) that is considered a material investment to the
Group. SVL is the principal supplier of manufacturing, sales and distribution for lubricants products in Africa. The investment is a joint venture
investment and measured using the equity method. SVL is jointly owned by Vivo Energy Investments B.V. (50%) and Shell Overseas Investments
B.V. (50%).
The table below provides summarised financial information for the carrying amount of the investment in SVL.
US$ million
At 1 January
Share of profit
Dividend received
Foreign exchange differences
At 31 December
2020
164
8
(15)
(1)
156
2019
163
12
(11)
–
164
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FINANCIAL STATEMENTS The total assets of SVL as per 31 December 2020 are $220m (2019: $241m), of which $139m (2019: $156m) relate to current (including cash and
cash equivalents of $30m (2019: $28m)) and $81m (2019: $85m) to non-current assets. The current liabilities are $73m (2019: $89m) (including
borrowings of $15m (2019: $21m)) and non-current liabilities of $11m (2019: $6m). The revenue for the year ending 31 December 2020 was
$255m (2019: $281m), and profit after income tax was $18m (2019: $21m). Other comprehensive income, net of tax, for the year amounted to
$1m (2019: loss of $1m). The 2020 profit includes amortisation and depreciation of $9m (2019: $8m), net finance expense of $1m (2019: $1m)
and income tax expense of $13m (2019: $9m).
The carrying value of SVL includes a notional goodwill of $96m calculated as the difference between the cost of the investment and the investor’s
share of the fair values of the investee’s identifiable assets and liabilities acquired. Since the notional goodwill is not shown as a separate asset,
it is not required to be separately tested for impairment, nor does it trigger an annual impairment test.
There are no contingent liabilities relating to the Group’s investments in joint ventures and associates.
14. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
The Group has classified equity investments as financial instruments at FVTOCI (without recycling). These investments are measured using inputs
for the asset or liability that are in absence of observable market data, based on net asset value of the related investments (level 3 in the IFRS 13
‘Fair Value Measurement’ hierarchy).
The value is based on the net asset value of the related investments and therefore no sensitivity analysis is presented.
US$ million
At 1 January
Fair value adjustment
Foreign exchange differences
At 31 December
2020
9
2
1
12
2019
8
1
–
9
Financial assets at fair value through other comprehensive income relate to the Group’s investment in Société de Gestion des Stocks Pétroliers
de Côte d’Ivoire S.A. (GESTOCI) in which it holds an interest of circa 17%. The Group does not have significant influence or joint control in
the investee. The investment is not held for trading and not a contingent consideration recognised by an acquirer in a business combination,
therefore, at initial recognition the Group has elected to account for the investment at fair value through other comprehensive income.
No dividends were received from GESTOCI in 2020 and 2019. Financial assets at fair value through other comprehensive income are categorised
as level 3 of the fair value hierarchy and are the only level 3 financial assets within the Group. There were no changes made during the year
to valuation methods or the processes to determine classification and no transfers were made between the levels in the fair value hierarchy.
15. OTHER FINANCIAL ASSETS AND LIABILITIES
Other financial assets and liabilities are derivative instruments comprising forward foreign exchange contracts and cross-currency swaps with
a fair value of $(9)m (2019: $(3)m). In 2020 the Group settled an interest rate swap on long-term borrowings and entered into a fixed-fixed
cross-currency swap. Other financial assets and liabilities are categorised as level 2 of the fair value hierarchy. There have been no transfers
between any levels during the year.
The specific valuation techniques used to value financial instruments that are carried at fair value using level 2 techniques are:
– The fair value of cross-currency swaps is calculated as the present value of the estimated future cash flows based on current market data
provided by third party banks; and
– The fair value of forward foreign exchange contracts is calculated by comparison with current forward prices of contracts for comparable
remaining terms.
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16. OTHER ASSETS
US$ million
Prepayments
Amounts due from dealers and joint ventures
VAT and duties receivable
Other government benefits receivable
Deposits
Indemnification asset on legal and tax claims
Employee loans
Other1
Current
Non-current
1 The amount mainly comprises of other non-current receivables.
Other government benefits receivable
US$ million
Senegal
Morocco
Guinea
Botswana
Madagascar
Other
31 December
2020
31 December
2019
86
60
59
45
13
12
7
35
317
200
117
317
99
33
61
92
13
13
7
49
367
257
110
367
Credit rating
Ba3
BB+
None available
BBB+
None available
31 December
2020
31 December
2019
24
10
3
1
–
7
45
38
22
7
3
10
12
92
The Group is exposed to credit risk in relation to other government benefits receivables. Based on management’s review on the recoverability
of these receivables it believes the credit risk in relation to these balances is relatively low. Other government benefits receivable are partially
provided for and presented net of provisions for impairment of $24m (2019: $18m). For the year $103m (2019: $133m) of other government
benefits were recognised in cost of sales for compensation of costs incurred.
17.
INVENTORIES
US$ million
Fuel
Lubricants
Other
31 December
2020
31 December
2019
401
77
2
480
436
79
2
517
Cost of sales as disclosed on the face of the consolidated statements of comprehensive income include the total expense for inventory
during the year for $5,976m (2019: $7,379m). The carrying value of inventory represents the net realisable value. Provisions for write-downs
of inventories to the net realisable value amounted to $8m as per 31 December 2020 (2019: $7m).
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FINANCIAL STATEMENTS 18. TRADE RECEIVABLES
Trade receivables were as follows, as at:
US$ million
Trade receivables
Less: loss allowance of trade receivables
Trade receivables – net
31 December
2020
31 December
2019
410
(66)
344
506
(55)
451
The fair values of trade receivables approximate their carrying value as they are deemed short-term in their nature and recoverable within
12 months.
Movements in the loss allowance of trade receivables are as follows:
US$ million
At 1 January
Additions1
Reversals
Utilisation
Foreign exchange differences
At 31 December
1 Additions in 2019 include an amount of $10m related to acquired assets of VEOHL.
19. CASH AND CASH EQUIVALENTS
US$ million
Cash
Cash equivalents:
Short-term placements
Money market funds and other cash equivalents
2020
2019
55
14
(6)
(1)
4
66
41
22
(4)
(2)
(2)
55
31 December
2020
31 December
2019
479
36
–
515
348
65
104
517
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
20. SHARE CAPITAL AND RESERVES
Share capital consists of 1,266,941,899 ordinary shares at the nominal value of $0.50 each. At 31 December 2020, 1,266,808,716 shares have
been issued and fully paid and entitle the holder to participate in dividends and 133,183 treasury shares. The shares held by the trust are not
considered as treasury shares for the purposes of Listing Rules disclosure. On a show of hands, every holder of ordinary shares present at a
meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Shareholders will, under general law,
be entitled to participate in any surplus assets in a winding up of the Company in proportion to their shareholding.
Other reserves are disclosed in the consolidated statements of changes in equity.
Ordinary shares
At 1 January
Capital contribution/shares issued
Share issuance related to share awards/Directors’ subscriptions
At 31 December
2020
2019
Number of shares
US$ million
Number of shares
US$ million
1,266,073,050
–
868,849
1,266,941,899
633
–
–
633
1,201,798,866
63,203,653
1,070,531
1,266,073,050
601
31
1
633
21. EARNINGS PER SHARE
Basic and diluted EPS were computed as follows:
US$ million, unless otherwise indicated
Basic earnings per share
Net income
Attributable to owners
Weighted average number of ordinary shares (million)
Basic earnings per share (US$)
US$ million, unless otherwise indicated
Diluted earnings per share
Earnings attributable to owners
Diluted number of shares (million)
Diluted earnings per share (US$)
US$
Adjusted diluted earnings per share
Diluted earnings per share
Impact of special items
Adjusted diluted earnings per share
2020
2019
90
80
1,266
0.06
150
136
1,255
0.11
2020
2019
80
1,266
0.06
136
1,255
0.11
2020
2019
0.06
–
0.06
0.11
0.01
0.12
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FINANCIAL STATEMENTS 22. DIVIDENDS
Given the impact of COVID-19 on the business in the first half of 2020, the Board withdrew its recommendation to pay a final dividend for
2019 and did not declare an interim dividend for the first half of 2020 in July. On 18 December 2020 the Company paid an interim dividend of
2.65 cents per share, which is the amount that would have been paid to shareholders had the final dividend of the year ended 31 December 2019
been paid rather than withdrawn. This interim dividend was paid out of distributable reserves and is reflected in the statement of changes
in equity.
The Board has recommended a final dividend of circa 3.8 cents per share, amounting to $48m, which is in respect of the full 12 months of 2020.
Payment of this dividend is expected on 25 June 2021 to shareholders of record at close of business on 28 May 2021. The dividend will be paid
out of distributable reserves as at 31 December 2020 and is not recognised in the statement of changes in equity.
US$ million
Interim dividend
Final dividend
Total
23. BORROWINGS
US$ million
Notes1
VEI BV Term Loan2
VEI BV Revolving Credit Facility3
Bank borrowings
Current
Non-current
Drawn on
24/09/2020
09/06/2017
27/02/2019
Interest rate
5.125%
Libor + 2.50%/3.00%
Euribor + 1.50%/1.85%
Maturity
24/09/2027
09/06/2022
2020
34
48
82
2019
14
–
14
31 December
2020
31 December
2019
349
–
59
274
682
270
412
682
–
308
63
229
600
306
294
600
1 The amounts are net of financing costs. Notes amount is $350m; financing costs are $1m.
2 The amounts are net of financing costs. Loan amount was $310m in 2019; financing costs were $2m in 2019.
3 The amount includes financing costs of circa $1m (2019: $1m).
Current borrowings consist of bank borrowings which carry interest rates between 1.5% and 18% per annum. Included in bank borrowings
is an amount of $50m (2019: $17m) relating to trade financing.
The fair value of the notes is approximately $374m based on quoted market prices at the end of the reporting period. The carrying amounts
of other Group’s non-current and current borrowings approximate the fair value.
The VEI BV Term Loan facility was entered into on 9 June 2017. Interest was paid quarterly at a rate of Libor +2.5% per annum. The incremental
facility was drawn down on 18 December 2017 and carried an interest of Libor +2.5% for the amortised portion and Libor +3.0% for the bullet
portion. The facility was refinanced in September 2020 when the Group issued $350m notes with a coupon rate of 5.125% paid semi-annually
and maturing in seven years. The notes are fully redeemed at maturity.
In May 2018, the Company established a multi-currency revolving credit facility of $300m. The multi-currency revolving credit facility was initially
utilised, in February 2019, with a drawdown of $64m, to fund the acquisition of VEOHL. Majority of the RCF facility matures in May 2023.
Besides the RCF, the Group has various unsecured short-term bank facilities extended to operating entities for working capital purposes.
The undrawn, unsecured short-term bank facilities of $1,323m include a large number of uncommitted facilities held with a number of different
banks. Most of these facilities are subject to an annual renewal process.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
23. BORROWINGS CONTINUED
The tables below provide an analysis of cash and non-cash movements in borrowings for the period:
US$ million
1 January
Proceeds from long-term debt1
Repayment of long-term debt2
Proceeds/repayment of bank borrowings
Foreign exchange movements
Other3
31 December
Long-term debt
Bank borrowings
371
517
(492)
–
7
5
408
229
–
–
26
8
11
274
1 Mainly represents the issuance of fully redeemable notes to the amount of $350m on 24 September 2020 and RCF drawdowns.
2
Includes repayments of the Term Loan and RCF.
3 Other includes financing costs and non-cash items.
US$ million
1 January
Proceeds from long-term debt
Repayment of long-term debt
Proceeds/repayment of bank borrowings
Borrowings acquired in acquisition of business1
Foreign exchange movements
Other2
31 December
1 Represents the borrowings acquired through the acquisition of VEOHL as at 1 March 2019.
2 Other changes include financing costs.
Key covenants:
The key covenants below relate to the VEI BV Revolving Credit Facility:
Long-term debt
Bank borrowings
392
62
(82)
–
–
(3)
2
371
208
–
–
1
27
(7)
–
229
2020
Total
600
517
(492)
26
15
16
682
2019
Total
600
62
(82)
1
27
(10)
2
600
– Within 150 calendar days after the Group’s year-end its audited annual consolidated financial statements, unaudited annual non-consolidated
financial statements and the unaudited annual Group accounts of each operating unit must be provided to the lender. Within 90 days
after each half of each financial year, the unaudited non-consolidated financial statements, unaudited consolidated financial statements and
unaudited Group accounts for each operating unit for the financial half-year must be provided to the lender.
– The financial covenants are minimum interest cover of 4x and maximum debt cover of 3x. With each set of financial statements, a financial
covenants compliance certificate has to be provided indicating the debt and interest cover. The loan carries some customary negative
pledges such as on asset sale, securities over assets, mergers and guarantees subject in each case to some exemptions and permitted baskets.
It also has a change of control clause triggering repayment if an entity, other than permitted ones, takes control of the Company.
The below key covenants relate to the VEI BV Notes:
– The financial covenants are a minimum fixed charged cover of 2x. The Notes carry customary restrictive covenants such as on asset sale,
securities over assets, mergers and guarantees subject in each case to some exemptions and permitted baskets, and a maintenance of listing
covenant. It also has a change of control clause giving each noteholder a put right if an entity, other than permitted ones, takes control of
the Company.
No key covenants were breached in the last applicable period.
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FINANCIAL STATEMENTS 24. PROVISIONS
Provisions include the following:
US$ million
Provisions
Retirement benefit obligations (note 25)
Current
Non-current
US$ million
At 1 January
Additions
Utilisation
Releases
Foreign exchange differences
At 31 December
Current
Non-current
31 December
2020
31 December
2019
85
35
120
16
104
120
Compulsory stock
obligation
Legal
provision
Other
21
–
–
(3)
2
20
–
20
20
12
2
(1)
(2)
(1)
10
10
–
10
52
11
(5)
(2)
(1)
55
6
49
55
85
31
116
14
102
116
2020
Total
85
13
(6)
(7)
–
85
16
69
85
Compulsory stock obligation provision
The oil market regulator in Morocco introduced an industry mechanism to enable oil market operators to maintain the necessary compulsory
stock volume requirement. This resulted in an oil fund liability, which is an amount payable to the Moroccan oil fund regulator in relation to the
compulsory stock reserve requirement introduced in 1994. Refer to note 2.22 for further details.
Legal provision
This amount represents a provision of certain legal claims brought against the Group. The timing of any payout is uncertain as these claims are
being disputed by the Group. The Group believes that the outcome of these claims will not give rise to a significant loss beyond the amounts
provided against as at 31 December 2020.
Other
Other provisions include a number of costs to be paid out by the Group that have uncertainty in timing of cash values and total monetary
value. Other provisions relate mainly to employee related provisions of $10m (2019: $8m) and provisions for uncertain tax positions for
non-income taxes, interest and penalties of $31m (2019: $29m). Refer to note 4.2 for further details regarding uncertain tax positions.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. RETIREMENT BENEFITS
The Group operates defined benefit plans in multiple African countries, which include Cape Verde, Gabon, Ghana, Guinea, Côte d’Ivoire,
Mauritius, Morocco, Namibia, Reunion, Rwanda, Senegal and Tunisia. The plans operated in Cape Verde, Mauritius, Morocco, Tunisia and
Ghana combined present approximately 80% of the total liability for the Company. The valuations are carried out in line with the regulatory
requirements in each country considering the requirements under IAS 19 ‘Employee Benefits’. The plans offered in these countries differ
in nature and consist of medical plans, pension plans, retirement indemnities, jubilees and long service award plans. These plan benefits are
linked to final salary and benefit payments are met as they fall due. The two exceptions to this are Gabon and Mauritius, which both operate
a funded plan. The plan in Gabon has a funding level of approximately 90% and Mauritius approximately 68%. In Gabon plan assets are held in
the form of insurance contracts. For Mauritius, plan assets are held in vehicles with standard investment risk, following a balanced investment
strategy, split between equities, government bonds and asset-backed securities. The plan in Mauritius has been closed to future accrual;
from 31 December 2014 onwards. However, the link to final salaries is being maintained for in-service employees.
US$ million
Current service cost
Accretion expense
US$ million
Defined benefit plans
Defined contribution plans
Total retirement benefit costs
US$ million
Consolidated statements of financial position obligations for:
Pension benefits
Other post-employment benefits
Total liability
The amounts recognised in the consolidated statements of financial position are determined as follows:
US$ million
Present value of funded obligations
Fair value of plan assets
Funded status of funded benefit obligations (net liability)
Present value of unfunded obligation
Unfunded status end of year (net liability)
Net defined benefit obligation
2020
2019
1
2
3
2020
3
9
12
1
2
3
2019
3
6
9
31 December
2020
31 December
2019
31
4
35
26
5
31
31 December
2020
31 December
2019
(17)
12
(5)
(26)
(31)
(31)
(13)
11
(2)
(24)
(26)
(26)
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FINANCIAL STATEMENTS The movements in the defined benefit obligation for funded and unfunded post-employment defined benefits over the year are as follows:
Pension benefits
Other
Total
Pension benefits
2020
US$ million
At 1 January
Current service costs
Benefits paid
Interest costs
(Gains)/losses from change in financial assumptions
(Gains)/losses from change in demographic assumptions
Actuarial (gains)/losses
Retirement benefit obligations recognised on acquisition
Foreign exchange differences
At 31 December
37
1
(4)
2
4
1
1
–
1
43
5
–
–
–
–
–
(1)
–
–
4
The movements in the fair value of plan assets over the year are as follows:
US$ million
At 1 January
Interest income
Employer contributions
Benefits paid
Foreign exchange differences
At 31 December
Pension benefits
11
–
3
(2)
–
12
42
1
(4)
2
4
1
–
–
1
47
2020
Total
11
–
3
(2)
–
12
37
1
(3)
2
1
–
–
–
(1)
37
Pension benefits
12
1
2
(3)
(1)
11
Other
4
–
–
–
–
–
–
2
(1)
5
2019
Total
41
1
(3)
2
1
–
–
2
(2)
42
2019
Total
12
1
2
(3)
(1)
11
The plan assets shown above are invested in equities $6m (2019: $5m), government bonds $4m (2019: $3m), corporate bonds $2m (2019: $3m),
insurance contracts $0.4m (2019: Nil) and cash and cash equivalents $0.03m (2019: $0.1m).
The sensitivity of the defined benefit obligation to changes in weighted principal assumptions is:
Rate of increase in pensionable remuneration
Rate of increase in pensions in payment
Rate of increase in healthcare costs
Discount rate for pension plans
Discount rate for healthcare plans
Expected age at death for persons aged 60:
Men
Women
31 December 2020
31 December 2019
Range of assumptions
Increase/(decrease)
Assumptions used
Effect of using alternative assumptions
3.71%
2.41%
16.20%
4.38%
21.13%
79.86
83.61
4.34%
2.26%
9.72%
5.84%
13.81%
79.74
83.65
0.50% – (0.50%)
0.50% – (0.50%)
0.50% – (0.50%)
0.50% – (0.50%)
0.50% – (0.50%)
2.72% – (2.55%)
1.20% – (1.11%)
4.07% – (3.77%)
(5.56)% – 5.99%
(5.01)% – 5.50%
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. RETIREMENT BENEFITS CONTINUED
The principal actuarial assumptions were as follows:
Discount rate
Inflation rate
Future salary increases
Future pension increases
Tunisia
Senegal
9.75%
4.50%
6.00%
n/a
8.00%
1.75%
3.00%
n/a
Cape
Verde Mauritius Morocco
Côte
d’Ivoire
Guinea
Namibia
Ghana
Gabon
Reunion
Rwanda
2020
4.00%
2.00%
2.00%
1.00%
2.75%
0.50%
0.50%
3.00%
2.50%
2.00%
6.00%
n/a
6.00% 13.50% 15.60% 23.00%
10.10% 12.00%
n/a
n/a
n/a
8.00%
n/a
n/a
3.00%
n/a
n/a
n/a
5.50%
2.75%
3.00%
n/a
1.00% 11.25%
4.75%
1.80%
7.50%
2.58%
n/a
n/a
Discount rate
Inflation rate
Future salary increases
Future pension increases
Tunisia
9.25%
4.50%
6.00%
n/a
Senegal
Cape Verde
Mauritius
Morocco
Côte d’Ivoire
10.00%
1.50%
3.00%
n/a
4.00%
2.00%
2.00%
1.00%
5.25%
2.80%
2.80%
3.00%
3.25%
n/a
6.00%
n/a
6.00%
n/a
3.00%
n/a
Guinea
13.50%
n/a
10.00%
n/a
Namibia
11.30%
7.40%
n/a
n/a
2019
Ghana
15.00%
10.00%
n/a
n/a
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience
in each territory.
The weighted average duration of the defined benefit obligation is 11.98 years.
Expected contributions to post-employment benefit plans for the year ending 31 December 2021 are $2m.
26. OTHER LIABILITIES
US$ million
Oil fund liabilities (note 2.22)
Other tax payable1
Deposits owed to customers
Employee liabilities²
Deferred income
Other
Current
Non-current
1 Other tax payable mainly relates to VAT, withholding taxes and employee taxes.
2 Employee liabilities mainly relate to employee bonuses.
31 December
2020
31 December
2019
110
75
72
44
14
21
336
171
165
336
96
91
63
51
11
26
338
178
160
338
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FINANCIAL STATEMENTS 27. LEASES
The Group has leases for motor vehicles, corporate offices, land, buildings and equipment. Leases have remaining lease terms of one year to
99 years, some of which may include options to extend the leases for at least five years and some of which may include options to terminate
the leases within one year.
The consolidated statement of financial position shows the following amounts relating to leases:
US$ million
Right-of-use assets, 1 January 2019
Depreciation of right-of-use assets
Leases effective in 2019
Right-of-use assets, 31 December 2019
Depreciation of right-of-use assets
Leases effective in 2020
Right-of-use assets, 31 December 2020
US$ million
Current lease liabilities
Non-current lease liabilities
The consolidated statement of comprehensive income shows the following amounts relating to leases:
US$ million
Interest expense (included in finance cost)
Depreciation of right-of-use assets
Expenses relating to short-term leases, low-value leases and variable leases not included in the lease liabilities
Land and buildings
Motor vehicles
130
(17)
47
160
(22)
43
181
18
(4)
2
16
(3)
7
20
Total
148
(21)
49
176
(25)
50
201
31 December
2020
31 December
2019
24
119
143
2020
(12)
(25)
(7)
21
104
125
2019
(11)
(21)
(6)
Depreciation charge of $25m (2019: $21m) is included in: cost of sales for $4m (2019: $3m), in selling and marketing costs for $18m (2019: $16m)
and in general and administrative costs $3m (2019: $2m).
The consolidated statement of cash flows shows the following amounts relating to leases:
US$ million
Cash flows from financing activities
Principal elements of lease payments
Interest paid
Other information related to leases was as follows:
Weighted average remaining lease term (years)
Weighted average discount rate
2020
2019
(31)
(10)
(41)
2020
10
11%
(27)
(9)
(36)
2019
11
12%
The Group recognised rental income of $34m (2019: $43m) as revenue in the statement of comprehensive income.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
28. NET CHANGE IN OPERATING ASSETS AND LIABILITIES AND OTHER ADJUSTMENTS
US$ million
Trade payables
Trade receivables
Inventories
Other liabilities
Other assets
Provisions
Other
2020
(203)
114
40
(17)
39
1
74
48
2019
105
50
(25)
6
6
(5)
39
176
29. COMMITMENTS AND CONTINGENCIES
Commitments
The Group has purchase obligations for capital and operational expenditure, under various agreements, made in the normal course of business.
The purchase obligations are as follows, as at:
US$ million
Purchase obligations
31 December
2020
31 December
2019
22
13
Contingent liabilities and legal proceedings
The Group may from time to time be involved in a number of legal proceedings. The Directors prepare a best estimate of its contingent liabilities
that should be recognised or disclosed in respect of legal claims in the course of ordinary business. Furthermore, in many markets there is a
high degree of complexity involved in the local tax and other regulatory regimes. The Group is required to exercise judgement in the assessment
of any potential exposures in these areas.
As previously announced, the Group’s subsidiary in Morocco received a report in January 2020 from the investigators in charge of the Conseil
de la Concurrence’s (CdC) ongoing review of the competitive dynamics of the Moroccan fuel retailing industry. Vivo Energy Morocco has
provided submissions to the CdC at their request. The report and these submissions were discussed at a private hearing of the CdC held on
21 and 22 July 2020 in Morocco. After the hearing, the Royal Cabinet intervened and formed an independent commission to review the CdC
investigation. This followed the receipt of allegations regarding the CdC process and conduct. It is understood that the CdC was recommending
a fine of 8% of annual Moroccan turnover against the industry before the formation of the independent commission. We await the outcome
of that investigation. Management believes that Vivo Energy Morocco has at all times conducted its operations in accordance with applicable
competition laws, rules and regulations.
In the ordinary course of business, the Group is subject to a number of contingencies arising from litigation and claims brought by governmental,
including tax authorities, and private parties. The operations and earnings of the Group continues, from time to time, to be affected to varying
degrees by political, legislative, fiscal and regulatory developments, including those relating to the protection of the environment and indigenous
groups in the countries in which they operate. The industries in which the Group is engaged are also subject to physical risks of various types.
There remains a high degree of uncertainty around these contingencies, as well as their potential effect on future operations, earnings, cash flows
and the Group’s financial condition.
The Group does not believe and is not currently aware of any other litigations, claims, legal proceedings or other contingent liabilities that should
be disclosed.
30. SHARE-BASED PAYMENTS
The Group operates share-based payment plans for certain Executive Directors, Senior Managers and other senior employees.
Information on these plans is included in the Remuneration Report on page 94.
Management Equity Plan
In 2013, Vivo Energy Holding B.V. awarded to eligible employees either (1) Management equity plan (MEP) phantom options which entitled
option holders to a cash payment based on the value of Vivo Energy Holding shares upon exercise of their MEP phantom options or
(2) the opportunity to acquire restricted shares in combination with a linked option right to acquire ordinary shares in Vivo Energy.
Under the terms of the phantom options, all outstanding phantom options would become fully exercisable upon the share admission in
May 2018. The option holders subsequently agreed to amend the terms of their outstanding phantom options such that 30% of the outstanding
phantom options were deemed to be exercised at share admission and 70% became exercisable on the first anniversary of the share admission
being 4 May 2019, for a period of 24 months. Under the amended terms, the option holders’ entitlement to the cash payment is based on the
market value of the shares at the time of exercise net of a nominal exercise price per share.
The MEP related liability as at 31 December 2020 amounted to $4m (2019: $15m).
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FINANCIAL STATEMENTS IPO Share Award Plan
In May 2018, Vivo Energy plc granted certain Executive Directors and Senior Managers one-off share awards (‘IPO Share Awards’) under the
2018 IPO Share Award Plan. The IPO Share Awards vest, subject to continued service and performance conditions relating to consolidated gross
cash profit growth and adjusted net income growth being met, in three equal tranches on the first, second and third anniversary of admission.
Long-Term Incentive Plan
Vivo Energy plc adopted the Vivo Energy 2018 Long-Term Incentive Plan (the ‘LTIP 2018’) in May 2018, the Vivo Energy 2019 Long-Term Incentive
Plan (the ‘LTIP 2019’) in March 2019 and the Vivo Energy 2020 Long-Term Incentive Plan (the ‘LTIP 2020’) in March 2020. The LTIP 2018,
LTIP 2019 and LTIP 2020 provide for grants of awards over the shares of the Company in the form of share awards subject to continued
employment and the performance conditions relating to earnings per share, return on average capital employed and total shareholder returns
over a three-year period. Executive Directors and Senior Management of the Group are eligible for grants under the LTIP 2018, LTIP 2019
and LTIP 2020.
The table below shows the share-based payment expense/(income) recognised in the statements of comprehensive income:
US$ million
Cash-settled share-based payments
Management Equity Plan
Equity-settled share-based payments
IPO Share Award Plan
Long-Term Incentive Plans 2018, 2019 & 2020
2020
2019
(3)
1
2
–
(2)
–
1
(1)
MEP
Movements in the number of shares and share options outstanding, and their related weighted average exercise prices, are as follows:
LTIP
IPO
In million
LTIP 2018
LTIP 2019
LTIP 2020
Outstanding at 1 January 2020
Granted/Lapsed
Vested/Exercised
Outstanding at 31 December 2020
Exercisable at 31 December 2020
Outstanding at 1 January 2019
Granted/Lapsed
Vested/Exercised
Outstanding at 31 December 2019
Exercisable at 31 December 2019
3
–
–
3
–
4
(1)
–
3
–
5
(1)
–
4
–
–
5
–
5
–
–
5
–
5
–
–
–
–
–
–
The inputs of the valuation model for options granted during the year are as follows:
IPO
Share Awards
Average exercise
price per phantom
option
US$
Phantom
Options
2
–
(1)
1
–
4
(1)
(1)
2
–
0.05
–
–
0.05
n/a
0.05
–
–
0.05
n/a
7
–
(4)
3
3
11
–
(4)
7
7
US$
LTIP 2018
LTIP 2019
LTIP 2020
Share price at grant date
Share price at valuation date
Option exercise price
Expected dividends as a dividend yield (%)
2.24
–
–
0%
1.65
–
–
0%
1.22
–
–
0%
2020
MEP
phantom
options
–
1.16
0.05
0%
IPO Share
Awards
2.33
–
–
0%
LTIP 2018
LTIP 2019
IPO Share
Awards
2.24
–
–
0%
1.65
–
–
0%
2.33
–
–
0%
2019
MEP
phantom
options
–
1.67
0.05
0%
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
31. RELATED PARTIES
Sales and purchases
US$ million
2020
Sales of products and services and other income
Purchase of products and services and other expenses
2019
Sales of products and services and other income
Purchase of products and services and other expenses
The following table presents the Company’s outstanding balances with related parties:
US$ million
31 December 2020
Receivables from related parties
Payables to related parties
31 December 2019
Receivables from related parties
Payables to related parties
Joint ventures
and associates
Shareholders
Total
29
269
15
284
37
837
66
1,106
130
1,312
145
1,596
Joint ventures
and associates
Shareholders
Total
53
(51)
2
11
(58)
(47)
2
(160)
(158)
8
(339)
(331)
55
(211)
(156)
19
(397)
(378)
The receivables from related parties arise from sale transactions and loans to joint ventures. Receivables are due two months after the date
of sales, are unsecured in nature and bear no interest. Loans to joint ventures are interest bearing and secured by the entire issued share capital
of the joint venture. No provisions are held against receivables from related parties.
The payables to related parties arise mainly from purchase transactions at arm’s length, including a supplier agreement with Vitol Supply,
and are typically due two months after the date of purchase. These payables bear no interest.
Key management compensation
Key management is considered to be the Directors (Executive and Non-Executive) and Senior Management.
US$’000
Salaries and other short-term employee benefits1
Share-based benefits2
Service fees
Post-employment benefits
1
2
Includes termination benefits in 2020 of $68,141.
Share-based benefits include LTIP and IPO Share Awards.
2020
7,339
3,087
731
622
11,779
2019
8,933
2,572
734
505
12,744
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FINANCIAL STATEMENTS Directors’ compensation
Directors’ compensations are disclosed from the date of appointment.
US$’000
Salaries and other short-term employee benefits
Share-based benefits1
Service fees
Post-employment benefits
1
Share-based benefits include LTIP and IPO Share Awards.
2020
2,164
2,202
731
165
5,262
2019
3,277
3,090
734
164
7,265
In the year ended 31 December 2020, Directors exercised the IPO Share Awards. The aggregate gross pre-tax gain made on the exercise
of the options was $1m (2019: $1m).
32. EVENTS AFTER BALANCE SHEET PERIOD
There have been no material subsequent events after the reporting period, up to and including the date that the financial statements
were authorised for issue, that would have required disclosure or adjustment of the Consolidated financial statements or the Company
financial statements.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT COMPANY STATEMENT OF FINANCIAL POSITION
US$ million
Fixed assets
Investments
Current assets
Debtors
Cash and cash equivalents
Creditors falling due within one year
Current assets less current liabilities
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium
Other reserves
Equity-settled incentive schemes
Retained earnings1
Total equity
Notes
31 December
2020
31 December
2019
5
6
7
8
9
10
1,913
1,913
5
6
11
(5)
6
1,919
1,919
633
4
1,210
7
65
1,919
1,913
1,913
11
1
12
(48)
(36)
1,877
1,877
633
4
1,244
6
(10)
1,877
1 Profit for the financial year ended 31 December 2020 was $74m (2019: Loss of $18m).
The notes are an integral part of these consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 2 March 2021 and were signed
on its behalf by:
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
JOHAN DEPRAETERE
CHIEF FINANCIAL OFFICER
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FINANCIAL STATEMENTS COMPANY STATEMENT OF CHANGES IN EQUITY
US$ million
At 1 January 2020
Share issuance related to share awards
Equity-settled incentive scheme
Profit for the period
Dividends
As at 31 December 2020
US$ million
At 1 January 2019
Share issuance related to acquisition
Share issuance related to share awards
Equity-settled incentive scheme
Loss for the period
Dividends
As at 31 December 2019
Called up
share capital
Share
premium
633
–
–
–
–
633
4
–
–
–
–
4
Called up
share capital
Share
premium
601
31
1
–
–
–
633
3
–
1
–
–
–
4
Other
reserve1
1,244
–
–
–
(34)
1,210
Other
reserve1
1,192
82
–
–
–
(30)
1,244
Equity-settled
incentive
schemes
Retained
earnings
6
(1)
2
–
–
7
(10)
1
–
74
–
65
Equity-settled
incentive
schemes
Retained
earnings
4
–
(2)
4
–
–
6
8
–
–
–
(18)
–
(10)
Total
1,877
–
2
74
(34)
1,919
Total
1,808
113
–
4
(18)
(30)
1,877
1
Included in reserves is a merger reserve ($82m) relating to the premium on shares issued as part of the consideration of the acquisition of Vivo Energy Overseas Holdings Limited (VEOHL),
formerly known as Engen International Holdings (Mauritius) Limited in March 2019.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS
1. GENERAL INFORMATION
2.2 Foreign currency translation
Vivo Energy plc (‘Vivo Energy’ or the ‘Company’) was incorporated as
a private limited company in the United Kingdom on 12 March 2018 and
re-registered as a public limited company on 9 April 2018. Vivo Energy
plc was incorporated in conjunction with the pre-IPO reorganisation
of the Group. On 10 May 2018 the Company listed on the London
Stock Exchange Main Market for listed securities and the Main Board
of the securities exchange operated by the Johannesburg Stock
Exchange by way of secondary inward listing. The Company operates
as the holding company of a group which distributes and sells fuel,
liquefied petroleum gas (LPG) and lubricants to Retail and Commercial
consumers under the Shell and Engen brands. The Group sells Aviation
fuels, using the Vitol Aviation brand, as well as unbranded marine fuels.
In addition, the Group generates revenue under convenience retail
and quick service restaurants by leveraging on its retail network.
The Company is registered in England and Wales and is limited by
shares (Registration number 11250655) under the Companies Act
2006. The address of the registered office is 5th floor, The Peak,
5 Wilton Road, London, SWIV IAN, United Kingdom.
The Company’s ownership structure is 24.16% owned by HIP
Oils Mauritius Limited; 27.37% owned by Vitol Africa B.V.; 8.73%
owned by VIP Africa II B.V.; 3.07% owned by Helios Holdings
Limited. The remaining percentage is owned by a number of private
shareholders and companies, none of whom own more than 20% of
the issued share capital of the Company.
2.
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies
have been applied consistently over the years.
2.1 Basis of preparation
The Company financial statements, for the years ended 31 December,
have been prepared on a going concern basis, under the historical cost
accounting rules, in accordance with Financial Reporting Standard 102
(‘FRS 102’) and those parts of the UK Companies Act 2006 applicable
to companies reporting under FRS 102.
The following disclosure exemptions available under FRS 102 have
been applied:
Section 7 Statement of cash flow and section 3 Financial statement
presentation paragraph 3.17(d)
Section 26 Share-based payment paragraph 26.18(b), 26.19, 26.21, 26.23
As permitted by section 408(3) of the Companies Act 2006, the
income statement of the Company is not presented in this Annual
Report. The Company has not published its individual cash flow
statement as its liquidity, solvency and financial adaptability are
dependent on the Group rather than its own cash flows. The Group
consolidated financial statements as presented on page 117 include
the financial statements of the Company and all of its subsidiary
undertakings together with the Group’s share of the results of
associates made up to 31 December 2020.
Functional and presentation currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment
in which the entity operates (the ‘functional currency’). The financial
statements are presented in United States dollars (‘US dollars’),
which is also considered to be the Company’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Monetary assets and liabilities expressed in foreign currencies
at the end of the reporting period are translated into US dollars
at the market rate ruling at the end of the reporting period.
2.3 Income tax
The income tax expense for the period comprises current and
deferred tax. Income tax is recognised in the statements of
comprehensive income, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this
case, the income tax is also recognised in other comprehensive income
or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the reporting date in the
country where the Company operates and generates a taxable
income. The Company periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on timing
differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition
of goodwill. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the reporting
date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax is recognised on all timing differences at the reporting
date. Unrelieved tax losses and other deferred tax assets are only
recognised when it is probable that they will be recovered against
the reversal of deferred tax liabilities or other future taxable profits.
Deferred income tax is provided on timing differences arising on
investments in subsidiaries and associates, except for deferred income
tax liability where the timing of the reversal of the timing difference is
controlled by the Company and it is probable that the timing difference
will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income taxes assets and liabilities
relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
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FINANCIAL STATEMENTS 2.4 Financial instruments
The Company has adopted to apply the requirements of IFRS 9
in preparations of the financial statements. Financial instruments
are initially recognised when the Company becomes a party to the
contractual provisions of the instrument. Trade receivables are initially
recognised when they are originated. Financial assets are derecognised
when substantial risks and rewards of ownership of the financial asset
have been transferred. In cases where substantial risks and rewards
of ownership of the financial assets are neither transferred nor
retained, financial assets are derecognised only when the Company
has not retained control over the financial asset. Financial liabilities are
derecognised when its contractual obligations are discharged, cancelled
or expired, and when its terms are modified and the cash flows
are substantially different. Subsequent to initial recognition financial
instruments are measured as described below.
Financial instruments measured at amortised cost
Except for debt instruments that are designated at fair value through
profit or loss (FVTPL) on initial recognition, financial instruments that
meet the following criteria are measured at amortised cost using the
effective interest method.
– They are held within a business model whose objective is to hold
assets in order to collect contractual cash flows; and
– The contractual terms of the instrument give rise on specified dates
to cash flows that are solely payment of principal and interest on
the principal amount outstanding.
The amortised cost is reduced by impairment losses. Finance income
or expense, foreign exchange gains and losses and impairments
are recognised in profit and loss. The following financial assets
and liabilities are classified as measured at amortised cost:
Cash and cash equivalents
Cash and cash equivalents include cash at bank. Cash equivalents
are short-term, highly liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant
risk of change in value.
Other financial liabilities
Financial liabilities are initially measured at fair value, net of transaction
cost and are subsequently measured at amortised cost using
the effective interest method, with interest expense recognised
on an effective yield basis except for short-term payables when
the recognition of interest would be immaterial.
2.5 Investments
Investments in subsidiary undertakings are stated at cost, less any
provision for impairment.
2.6 Share-based payments
The Group operates a number of share-based payment plans using
the Company’s equity instruments. The fair value of the compensation
given in respect of these share-based payment plans is recognised
as a capital contribution to the Company’s subsidiaries over the
vesting period. The capital contribution is reduced by any payments
received from subsidiaries in respect of these share-based payments.
Details of the share-based payments, share option schemes and
share plans are disclosed in note 30 ’Share-based payments’ to
the consolidated financial statements.
2.7 Dividend policy
Dividends paid and received are included in the Company financial
statements in the period in which the related dividends are actually
paid or received or, in respect of the Company’s final dividend for
the year, approved by shareholders.
2.8 Share capital
Ordinary shares are classified as equity.
Where any Group company purchases the Company’s equity
share capital (treasury shares), the consideration paid is deducted
from equity attributable to the Company’s equity holders until the
shares are cancelled or reissued. Where such ordinary shares are
subsequently reissued, any consideration received is included in
equity attributable to the Company’s equity holders.
2.9 Going concern basis
The Company operates as an investment holding company for the
Vivo Energy Group, holding investments in Vivo Energy Holding B.V.
As the Company is an intrinsic part of the Group’s structure, the
Directors have a reasonable expectation that Group companies
will continue to support the Company through trading and cash
generated from trading for the foreseeable future. Thus, they
continue to adopt the going concern basis in preparing the financial
statements. For further details, refer to note 2.1 in the consolidated
financial statements.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
2.10 Critical accounting estimates and judgements
Certain accounting judgements and estimates are used when applying the Company’s accounting policies. These estimates and judgements
are not considered significant and do not have a significant impact on the financial statements.
Accounting estimate
In the process of applying the Company’s accounting policies, management has made the following estimate, which has a significant effect
on the amounts recognised in the consolidated financial statements:
Investment impairment assessment
The Group determines the recoverable amount of investment in subsidiaries where a trigger for impairment is identified. The impairment test
compares the carrying value of the Company to its recoverable amount. The recoverable amount was determined based on a value in use
calculation, which was based on free cash flows from the five-year strategic plan prepared for the Group. The terminal value was estimated
based on the latest IMF GDP projections for the markets where Vivo Energy operates. The cost of capital (based upon a weighted average
cost of capital for the Group) was used to discount the free cash flows from the approved five-year strategic plan. Based on the impairment
test performed, the recoverable amount for the Company exceeds the carrying value and therefore there is no impairment. The value in use
is sensitive to assumptions used in the model. As required by the value in use methodology, the assumptions for volumes and gross cash profit
do not take into account the growth capital expenditure on new sites planned by the Group in future years and expected volumes and profits
from those sites. Profits and associated cash flows generated by the growth assumptions for new sites was therefore excluded when calculating
the recoverable value of Vivo Energy plc.
The following tables set out the key assumptions used in the impairment test:
Volume compounded annual growth rate on the five-year forecast numbers
Gross cash profit compounded annual growth rate on the five-year forecast numbers
Pre-tax discount rate for the sensitivities
Long-term growth rate
The methodology applied for each key assumptions used are as follows:
2020
4.4%
5.3%
10.6%
1.6%
Assumptions
Volume growth
Gross cash profit growth
Pre-tax discount rate
Long-term growth rate
Approach used to determine values
Volume over the five-year forecast period; based on past performance and management expectations of market
developments, adjusted to exclude volumes generated by future growth capital expenditure on new sites planned
by the Group.
Based on past performance and management expectations of the future, adjusted to exclude margins generated
by future new sites planned by the Group.
The Group’s pre-tax weighted average cost of capital. Sensitivity analysis was performed for changes in discount
rate by +2.6% and -1.7%.
Based on the IMF GDP projections for the markets where Vivo Energy operates. Sensitivity analysis was
performed for changes in long-term growth rate by -1% and +1.5%.
A sensitivity analysis was performed on the recoverable amount incorporating changes in the discount rate and long-term growth rates.
The Group considers the pre-tax discount rate to be the most sensitive assumption. Results of the sensitivity analysis show that the investment
in subsidiary undertakings is not impaired, with the headroom ranging between $500m and $1,000m. A 1% change in volumes or a 1% change in
gross cash profit would not reduce the recoverable amount to below the carrying value. An indication of impairment on the investment in Vivo
Energy plc would result if the pre-tax discount rate increased by 3.4% (from 10.6% to 14%). There are no reasonable possible changes that could
occur to key assumptions that would reduce the recoverable amount below the carrying amount.
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FINANCIAL STATEMENTS 3.
EMPLOYEE COSTS
US$ million
Salaries and wages
Social security costs
Share-based payments
The monthly average number of full time equivalent employees as at 31 December:
No.
Directors
Administration and support
4.
INCOME TAX
2020
7
1
2
10
2020
6
18
The Company is subject to income tax in the United Kingdom on its net income as adjusted for tax purposes, at the rate of 19%.
At 31 December 2020, the Company had accumulated tax losses of $2m (2019: Nil).
Deferred tax
No deferred tax asset has been recognised under the Company’s accounting policy for recognising deferred tax assets.
A reconciliation between the actual income tax expense and the theoretical amount that would arise using the applicable income tax rate
for the Company is as follows:
Reconciliation of effective tax
US$ million
Profit/(loss) before income tax
Tax calculated at 19%
Impact of:
Expenses not allowable for tax purpose
Dividends received not subject to tax
Prior period adjustment
Total income tax expense
5.
INVESTMENTS
US$ million
At 1 January
Acquisition of investment
At 31 December
2020
74
(14)
–
14
–
–
2020
1,913
–
1,913
2019
14
1
4
19
2019
6
16
2019
(18)
3
(1)
–
(2)
–
2019
1,800
113
1,913
On 1 March 2019, Vivo Energy plc made a capital contribution to Vivo Energy Holding B.V. to finance the acquisition of VEOHL, a retailer and
marketer of Engen-branded fuels and lubricants in Africa. Refer to note 2.10 for investment impairment assessment.
6. DEBTORS
US$ million
Related party receivable
Other receivables
Total
31 December
2020
31 December
2019
3
2
5
9
2
11
Receivable from related party arises from recharges of employee benefit costs. The amounts are unsecured, interest free and have no fixed date
of repayment and are repayable on demand. Debtors are measured at amortised cost and the carrying amount is equal to the fair value for the
period end.
7. CASH AND CASH EQUIVALENTS
US$ million
Bank
31 December
2020
31 December
2019
6
1
177
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
8. CREDITORS
US$ million
Due within one year
Trade and other payables
Related party payables
Total creditors
31 December
2020
31 December
2019
4
1
5
4
44
48
Payable to related parties relates to salary related expenses and other costs as well as to IPO costs in 2019. The amounts are unsecured, interest
free, have no fixed date of repayment and are payable on demand. Creditors are measured at amortised cost and the carrying amount is equal
to the fair value for the period end.
9. CALLED UP SHARE CAPITAL
Share capital consists of 1,266,941,899 ordinary shares at the nominal value of $0.50 each. For further details, refer to note 20 in the
consolidated financial statements.
10. OTHER RESERVES
The other reserves include the share capital reduction completed subsequent to the listing on the London and Johannesburg Stock Exchange
Market in 2018. Also included in other reserves is a merger reserve ($82m) relating to the premium on shares issued as part of the consideration
of the acquisition of VEOHL in March 2019.
11. DIVIDENDS
Given the impact of COVID-19 on the business in the first half of 2020, the Board withdrew its recommendation to pay a final dividend
for 2019 and did not declare an interim dividend for the first half of 2020 in July. On 18 December 2020 the Company paid an interim
dividend of 2.65 cents per share, which is the amount that would have been paid to shareholders had the final dividend of the year ended
31 December 2019 been paid rather than withdrawn. This interim dividend was paid out of distributable reserves and is reflected in the
statement of changes in equity.
The Board has recommended a final dividend of circa 3.8 cents per share, amounting to $48m, which is in respect of the full 12 months of 2020.
Payment of this dividend is expected on 25 June 2021 to shareholders of record at close of business on 28 May 2021. The dividend will be paid
out of distributable reserves as at 31 December 2020 and is not recognised in the statement of changes in equity.
US$ million
Interim dividend
Final dividend
Total dividend
12. RELATED PARTIES
2020
34
48
82
2019
14
–
14
The Company discloses transactions with related parties which are not wholly owned with the same Group. It does not disclose transactions
with members of the same Group that are wholly owned. All transactions during the period under review have been with members of the
same Group that are wholly owned.
13. EVENTS AFTER BALANCE SHEET PERIOD
For the events after balance sheet period refer to note 32 in the consolidated financial statements.
14. OTHER MATTERS
The auditors’ remuneration for the current year in respect of audit and audit-related services was $0.3m. Auditors’ remuneration relating
to other non-audit services has been disclosed in the consolidated financial statements, refer to note 7. The consolidated accounts have been
completed in accordance with requirements SI 2008/489.
The Directors are remunerated by the Company for their services to the Group as a whole. No remuneration was paid to them specifically in
respect of their services to Vivo Energy plc for either year. Full details of the Directors’ remuneration are disclosed in ‘Directors’ compensation’
in note 31.
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179
FINANCIAL STATEMENTS 15. COMPANY UNDERTAKINGS
A list of all subsidiaries, indirectly held by Vivo Energy plc, except for Vivo Energy Holding B.V. which is 100% owned directly by Vivo Energy plc,
in the Group as at 31 December 2020 is as follows:
Subsidiary
Incorporation
Class of share
Registered address
Shareholding
Vivo Energy Marketing Tanzania Limited
Bahamas
Ordinary shares
Vivo Energy Botswana Pty Ltd.
Botswana
Ordinary shares
Vivo Energy Burkina S.A.
Burkina Faso
Ordinary shares
Plateau Africa Holdings Ltd.
Vivo Energy Cabo Verde S.A.
Canada
Cape Verde
Ordinary shares
Ordinary shares
Sociedade Comercial de Navegacão
Concha Verde S.A.
Cape Verde
Ordinary shares
Vivo Energy Côte d’Ivoire S.A.
Côte d’Ivoire
Ordinary shares
Vivo Energy Gabon S.A.
Gabon
Ordinary shares
Vivo Energy Ghana Ltd.
Ghana
Ordinary shares
Vivo Energy de Guinée S.A.
Guinea
Ordinary shares
Vivo Energy Guinée Mining SARL
Guinea
Ordinary shares
Vivo Energy Kenya Ltd.
Vivo Energy Malindi Ltd.
Vivo Energy East Africa Ltd.
Vivo Energy Provident Trust Ltd.
Vivo Marketing Kenya Ltd.
Vivo Oil Tanking Kenya Ltd.
Kenya
Kenya
Kenya
Kenya
Kenya
Kenya
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Vivo Energy Liberia Ltd.
Liberia
Ordinary shares
Société Malgache des Pétroles
Vivo Energy S.A.
Vivo Energy Limited
Madagascar
Ordinary shares
Malawi
Ordinary shares
Vivo Energy Mali S.A.
Vivo Solar Mali
Mali
Mali
Ordinary shares
Ordinary shares
Vivo Energy Senegal Holdings Ltd.
Mauritius
Ordinary shares
Vivo Energy Tunisia Holdings Ltd.
Mauritius
Ordinary shares
Vivo Energy Madagascar Holdings Ltd.
Mauritius
Ordinary shares
Vivo Energy Africa Holdings Ltd.
Mauritius
Ordinary shares
Vivo Energy Mauritius Ltd.
Vivo Energy Overseas Holdings Ltd.
Mauritius
Mauritius
Ordinary shares
Ordinary shares
H&J Corporate services, Ocean Centre, Montague Foreshore,
East Bay Street, P.O. Box SS-19084, Nassau, Bahamas
Plot 54349 Field Precinct, Office Block B, Central Business
District, Gaborone, Botswana
Rond Point des Nations Unies, Ouagadougou Secteur 4
Section II Lot EX-TF 432 Parcelle III, Burkina Faso
199 Bay Street, Suite No.4000, Toronto ON M5L 1A9, Canada
Avenida Amilcar Cabral, C.P 4, Mindelo, São Vicente,
Cabo Verde
Avenida Amilcar Cabral, C.P 4, Mindelo, São Vicente,
Cabo Verde
Rue des pétroliers, Zone Industrielle de Vridi,
15 BP 378 Abidjan, Côte d’Ivoire
234, BD Bessieux, Face au Lycee Immaculee Conception,
BP 224, Libreville, Gabon
Rangoon Lane, Contonments City, Digital Address:
GL-045-46-56, P.O. Box 1097, Accra, Ghana
Aeroport Gbessia, Commune de Matoto, BP 312,
Conakry, Guinea
Aeroport Gbessia, Commune de Matoto, BP 312,
Conakry, Guinea
Vienna Court, East Wing, State House Road, P.O. Box 43561-
00100, Nairobi, Kenya
Vienna Court, East Wing, State House Road, P.O. Box 43561-
00100, Nairobi, Kenya
Vienna Court, East Wing, State House Road, P.O. Box 43561-
00100, Nairobi, Kenya
Vienna Court, East Wing, State House Road, P.O. Box 43561-
00100, Nairobi, Kenya
Vienna Court, East Wing, State House Road, P.O. Box 43561-
00100, Nairobi, Kenya
Vienna Court, East Wing, State House Road, P.O. Box 43561-
00100, Nairobi, Kenya
c/o Law Offices of Yonah, Obey & Associates,
152 Cary Street, P.O. Box 3147, Monrovia Liberia
Bâtiment B4 Golden Business Center – Lot II i A bis Morarano
Alarobia-101, Antananarivo-Madagascar
Mission Road, Bulk Oil Sites, Makata Industrial Area,
Blantayre, Malawi
Hippodrome, Route de Koulikoro BP 199,
Immeuble N°3293 – Bamako, Mali
Dépot Vivo Energy Mali, Niaréla Sans fil, Zone Industrielle, BP
199 Bamako, Mali
Level 3, Alexander House, 35 Cybercity,
Ebene 72201, Mauritius
Level 3, Alexander House, 35 Cybercity,
Ebene 72201, Mauritius
Level 3, Alexander House, 35 Cybercity,
Ebene 72201, Mauritius
Level 3, Alexander House, 35 Cybercity,
Ebene 72201, Mauritius
Cemetery Road, Roche Bois, Port Louis, Mauritius
C/O IQ EQ Corporate Services (Mauritius) Ltd,
33, Edith Cavell Street, Port Louis, 11324, Mauritius
100%
100%
58.79%
100%
100%
100%
66.67%
60%
74.34%
100%
100%
100%
100%
100%
100%
100%
100%
100%
72%
100%
77.05%
100%
100%
100%
100%
100%
75%
100%
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
15. COMPANY UNDERTAKINGS CONTINUED
Subsidiary
Incorporation
Class of share
Registered address
Shareholding
Vivo Energy Maroc S.A.
Morocco
Ordinary shares
Vivo Energy Africa Services Sarl.
Morocco
Ordinary shares
Terminal Energetique Jorf
Morocco
Ordinary shares
Terminal D’hydrocarbures Jorf
Morocco
Ordinary shares
Terminal Energetique Agadir
Tidsi Gaz
VE Mozambique Trading Lda
Vivo Energy Mocambique Lda
Morocco
Morocco
Mozambique
Mozambique
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Vivo Energy Holding B.V.
Netherlands
Ordinary shares
Netherlands
Vivo Energy Investments B.V.
Netherlands
Vivo Energy Cape Verde Holdings B.V.
Netherlands
Vivo Energy Morocco Holdings B.V.
Netherlands
Vivo Energy Mauritius Holdings B.V.
Netherlands
Vivo Energy Mali Holdings B.V.
Netherlands
Vivo Energy Newco Holdings B.V.
Netherlands
Vivo Energy Ghana Holdings B.V.
Netherlands
Vivo Energy Kenya Holdings B.V.
Netherlands
Vivo Energy Uganda Holdings B.V.
Netherlands
Vivo Energy Guinea Holdings B.V.
Vivo Energy Côte d’Ivoire Holdings B.V. Netherlands
Netherlands
Vivo Energy Burkina Faso Holdings B.V.
Netherlands
Vivo Energy Supply B.V.
Nigeria
Vivo Energy Sales and Marketing Ltd.
Vivo Energy Reunion S.A.
Vivo Energy Rwanda Ltd.
Kabuye Depot Holding Company
Rwanda Ltd.
Reunion
Rwanda
Rwanda
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Immeuble Le Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf Casablanca, 20190 Maroc
Casablanca Nearshore Park Shore 14 – 2ème étage Plateau 201,
1100 Bd Al Qods – Quartier Sidi Maârouf, 20270,
Casablanca, Morocco
Immeuble Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf, Casablanca
Immeuble Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf, Casablanca
Zone Industrielle d’Anza (côté mer), Agadir
Zone Industrielle d’Anza (côté mer), Agadir
EN4, Tchumene II, Talhao 19, Parcela 3380, Matola, Mozambique
Rua dos Desportistas, no.480, Edifício Maputo Business Tower,
110 Andar, Fraccao A, Maputo, Mozambique
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands
1, Murtala Mohammed Drive, Ikoyi, Lagos, Nigeria
1 Rue Sully Prud’Homme, ZI N°2, Le Port, 97823, Reunion
Kacyiru, Gasabo, Umujyi wa Kigali, Rwanda
Kacyiru, Gasabo, Umujyi wa Kigali, Rwanda
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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FINANCIAL STATEMENTS Subsidiary
Incorporation
Class of share
Registered address
Vivo Energy Senegal S.A.
Senegal
Ordinary shares
Vivo Energy Sierra Leone Ltd.
Sierra Leone
Ordinary shares
Vivo Energy South Africa (Pty) Ltd.
South Africa
Ordinary shares
Vivo Energy Tanzania Limited
Tanzania
Ordinary shares
Société Vivo Energy Tunisie S.A.
Société Butagaz Tunisie S.A.
Société Sudgaz S.A.
Société D’Exploitation et de Gestion
des Points de Vente S.A.1
Vivo Energy Uganda Ltd.
Vivo Energy Malindi Uganda Ltd.
Vivo Energy Uganda Provident Trust.
Vivo Energy Namibia Ltd.
Tunisia
Tunisia
Tunisia
Tunisia
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Uganda
Ordinary shares
Uganda
Uganda
Ordinary shares
United Kingdom Ordinary shares
Vivo Energy UK Services Ltd.
United Kingdom Ordinary shares
Engen Petroleum Zambia Ltd.
VE Zambia Legacy Ltd.
Zambia
Zambia
Ordinary shares
Ordinary shares
Engen Marketing Ltd.
Vivo Energy Zimbabwe (Private) Ltd.
Zambia
Zimbabwe
Ordinary shares
Ordinary shares
Vivo Energy Zimbabwe Operations
(Private) Limited
Vivo Energy Zimbabwe Holdings
(Private) Ltd.2
Zimbabwe
Ordinary shares
Zimbabwe
Ordinary shares
Quartier Bel-Air Route des Hudrocarbores,
BP 144 Dakar, Senegal
37 Siaka Stevens Street, Freetown, Sierra Leone
15th Floor Towers South, The Towers, 2 Heerengracht,
cnr Hertzog Boulevard, Foreshore 8001, Cape Town,
South Africa
Plot No. 263 Mandela Road, Kurasini, Temeke District,
Dar es Salaam, Tanzania
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
Plot 9/11 7th Street Industrial Area, Kampala, Uganda
Plot 9/11 7th Street Industrial Area, Kampala, Uganda
Plot 9/11 7th Street Industrial Area, Kampala, Uganda
5th Floor – The Peak, 5 Wilton Road, London, SW1V 1AN,
United Kingdom
5th Floor – The Peak, 5 Wilton Road, London, SW1V 1AN,
United Kingdom
Plot 3132, Buyantanshi Road, Lusaka, Zambia
1394 Mushemi Road, Rhodes Park, P.O. Box 32256,
Lusaka, Zambia
Plot 3132, Buyantanshi Road, Lusaka, Zambia
Engen House 71 Kaguvi Street P.O. Box 372,
Harare, Zimbabwe
Engen House 71 Kaguvi Street P.O. Box 372,
Harare, Zimbabwe
Engen House 71 Kaguvi Street P.O. Box 372,
Harare, Zimbabwe
Shareholding
93.60%
100%
100%
100%
100%
100%
65.01%
48.40%
100%
100%
100%
100%
100%
100%
99.98%
100%
100%
100%
49%
1 Société D’Exploitation et de Gestion des Points de Vente S.A. is an entity incorporated in order to directly operate retail sites in Tunisia. There are three senior staff members appointed
as shareholders with a total of 52% shareholding. All of them have no voting rights and cannot influence any decisions. Therefore the Group controls the entity and has the ability to affect
returns through its power over the entity.
2 Vivo Energy Zimbabwe Holdings (Private) Ltd was acquired as part of the business acquisition of VEOHL in 2019. The Group has existing rights that give it the current ability to direct
the relevant activities of the investee that significantly affect the variable returns of the entity, which the Group is exposed to.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
15. COMPANY UNDERTAKINGS CONTINUED
A list of all joint ventures and associates, indirectly held by Vivo Energy plc, in the Group as at 31 December 2020 is as follows:
Investment
Incorporation
Class of share
Registered address
Shareholding
Baobab Energy Botswana
Propriety Limited
Botswana
Ordinary shares
Plot 50369 Fairgrounds Office Park, Gaborone, Botswana
Manutenção Caboverdeana Matec S.A.
Cape Verde
Ordinary shares
Baobab Energy Côte d’Ivoire Sarl.
Côte d’Ivoire
Ordinary shares
Stockage Petrolier de Cote d’Ivoire Sarl. Côte d’Ivoire
Ordinary shares
Société Gabonaise D’Entroposage des
Produits Pétrolière S.A.
Société PIZO de Formulation de
Lubrifiants S.A.
Gabon
Ordinary shares
Rua dos Bombeiros – Zona Industrial CP 227 Mindelo,
São Vicente Republica de Cabo Verde
Rue des pétroliers, Zone Industrielle de Vridi,
15 BP 378 Abidjan, Côte d’Ivoire
Abidjan Port-bouet vridi canal de Petroliers 12 B.O 2141
Abidjan 12, Côte d’Ivoire
P.O. BOX 2218, Libreville, Gabon
Gabon
Ordinary shares
Port Gentil, P.O. Box 699, Port Gentil, Gabon
Chase Logistics Ltd.
Ghana
Ordinary shares
Road Safety Ltd.
Société Guinéene des Pétroles S.A.
Kuku Foods Kenya Ltd.
Ghana
Guinea
Kenya
Ordinary shares
Ordinary shares
Ordinary shares
Logistique Pétrolière S.A.
Madagascar
Ordinary shares
Petroleum Importers Limited
Energy Storage Company Ltd.
Mer Rouge Oil Storage Company Ltd.
Compagnie D’Entreposage
Communautaire S.A.
Malawi
Mauritius
Mauritius
Morocco
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
1 Alema Avenue, Airport Residential Area, Accra,
P.O. Box AN 8743 Accra North, Ghana
Tema Shell Installation, Fishing Harbour Road, Tema, Ghana
Boulevard Maritim, Kaloum, BP 656, Conakry, Guinea
LR NO. 20/8342/3 1st Ngong Avenue, P.O. Box 14885, 00100,
Nairobi, Kenya
Immeuble FITARATRA- 5 ème étage,
Rue Ravoninahitriniarivo, Ankorondrano 101,
Antananarivo, Madagascar
6th Floor Unit House, Off Victoria Avenue, Blantyre, Malawi
Cemetery Road, Roche Bois, Port Louis, Mauritius
Edith Cavell Street, Les Cascades, Port Louis, Mauritius
Route cotière 111, Km 6,5, Ghezouane,
Mohammedia, Morocco
Stogaz S.A.
Morocco
Ordinary shares
Rue Ferhat Hachad, Mohammedia, Morocco
50%
15%
50%
30%
37.50%
28.10%
8%
50%
17%
50%
33%
25%
50%
25%
32.31%
50%
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FINANCIAL STATEMENTS Investment
Maghreb Gaz S.A.
Incorporation
Class of share
Registered address
Morocco
Ordinary shares
Morocco
Société de Cabotage Pétrolier S.A.
Ismailia Gaz S.A.
Morocco
Société Dakhla des Hydrocarbures S.A. Morocco
Morocco
Tadla Gaz S.A.
Morocco
Société Marocaine de Stockage S.A.
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Sopetrole S.A.
Havi Properties (Proprietary) Ltd.
Morocco
Namibia
Ordinary shares
Ordinary shares
Synergy Foods (Proprietary) Limited
Shell and Vivo Lubricants B.V.
Namibia
Netherlands
Ordinary shares
Ordinary shares
Société Réunionnaise d’Entreposage S.A. Reunion
Rwanda
Kuku Foods Rwanda Ltd.
Ordinary shares
Ordinary shares
Immeuble Tafraouti, Km 7,5 Route de Rabat, Ain Sebaa,
Casablanca, Morocco
27 Bd Zerktouni, Casablanca, Morocco
Km 9 Route d’El Hajeb, Meknes, Morocco
11 Avenue de la Marine Royale, Dakhla, Morocco
Km 7,5 Route de Rabat, Ain Sebaa, Casablanca, Morocco
Lotissement des Pétroliers, Oued El, Maleh,
Mohammedia, Morocco
Zone Industrielle, lot n°2, Laayoune, Morocco
18 Liliencron Street, The Village, Unit 20-22 Eros,
Windhoek, Namibia
202 Tacoma Street, Suiderhof, Windhoek, Namibia
Carel van Bylandtlaan 30, 2596 HR The Hague,
The Netherlands
3 Rue Jacques Prevert, Riviere des Galets, 97420 Le Port
Kimihurura, Gasabo and Umujyi wa Kigalirr, Rwanda
Société de Manutention de Carburants
Aviation Dakar S.A.
Société Dakaroise D’Entreposage S.A.
Cimsahel Energy S.A.
Société D’Entrepots Pétroliers
de Tunisie S.A.
Société Bitumes de Tunis S.A.
Viniz Food S.A
Société d’Exploitation et de Gestion
des Pipelines de Rades S.A.
Kuku Foods Uganda Ltd.
Senegal
Ordinary shares
Dakar-Yoff, B.P. 8022 Yoff, Senegal
Senegal
Senegal
Tunisia
Tunisia
Tunisia
Tunisia
Ordinary shares
Ordinary shares
Ordinary shares
Cap des Biches, Rufisque, B.P. 59 Rufisque, Senegal
Sous préfecture de SINDIA, Senegal
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
Ordinary shares
Ordinary shares
Ordinary shares
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
Rue de Syrie bloc C7-1 Tunis, Tunis, 1002, Tunisia
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
Uganda
Ordinary shares
Plot 49, Mackenzie Vale, Kololo, Kampala, Uganda
Shareholding
37.49%
38.71%
40%
33.33%
50%
12%
48.97%
50%
50%
50%
19.96%
50%
25%
50%
50.10%
30%
49.9%
50%
25%
50%
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OTH ER IN FORMATION
SHAREHOLDER INFORMATION
FINANCE CALENDAR 2020/21
Financial year-end
Annual results announcement
Q1 Trading update
Annual General Meeting
Final dividend payment
Interim results announcement
Interim payment date
Q3 Trading update
PLEASE NOTE THESE DATES ARE PROVISIONAL AND SUBJECT TO CHANGE.
31 December 2020
3 March 2021
27 April 2021
18 May 2021
25 June 2021
27 July 2021
17 September 2021
21 October 2021
ANNUAL GENERAL MEETING (AGM)
The Company’s third AGM will be held at 2:00 p.m. on 18 May 2021. The Notice of the AGM will include further details, including the venue.
DIVIDENDS
The Directors have adopted a progressive dividend policy while maintaining an appropriate level of dividend cover and sufficient financial
flexibility in the Group. The Group paid an interim dividend of 2.7 cents in December 2020, representing the amount that would have been paid
to shareholders had the final dividend of 2019 been paid rather than withdrawn. A final dividend of 3.8 cents for the full 12 months of 2020 will be
proposed to shareholders. This will result in a full year dividend of 6.5 cents per share for the year. The final dividend of 3.8 cents should be seen as
the base for future dividend payments.
In March 2021, the Board decided to increase the minimum payout ratio from 30% to 50% of attributable net income to reflect the Group’s cash
flows, strong balance sheet and continuing growth ambitions. The dividend remains progressive and the intent is for future dividends to grow in
line with earnings.
Interim dividend
Final dividend
Dividend per share
Record date
Payment date
2.7 dollar cents
3.8 dollar cents
20 November 2020
28 May 2021
18 December 2020
25 June 2021
All dividends will be declared in US dollars. Shareholders who hold shares through the London Stock Exchange and are resident in the UK,
may elect to receive their dividends in pound sterling and shareholders who hold shares through the Johannesburg Stock Exchange will
automatically receive their dividends in South African Rand.
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185
STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
MAJOR SHAREHOLDERS
As at 31 December 2020, the following interests in the ordinary share capital of the Company have been notified to the Directors under
the Disclosure Guidance and Transparency Rules (DTR 5). In accordance with DTR 5, as of 2 March 2021 the Directors have not received
any notification of a change in the shareholders’ positions from 31 December 2020.
Shareholder name
Vitol Africa B.V.1
HIP Oils Mauritius Limited2
VIP Africa II B.V.1
Petronas Marketing International SDN BHD
Helios Holdings Limited2
1 Members of the Vitol Group.
2 Members of Helios Investment Partners.
31 December 2020
Percentage
27.37%
24.16%
8.73%
3.93%
3.07%
The rights attached to the ordinary shares of the Company held by these shareholders are identical in all respects. The threshold for notifications
is in accordance with DTR 5.1.2. If the Company has not been informed that interests have fallen below this threshold the last notification is
included in this table.
MANAGING YOUR SHAREHOLDING
Link Asset Services, the Company Registrar, provides our shareholders with online access to information regarding their investments
as well as the services to assist in managing your shareholding on an online platform or telephonically.
Link Asset Services can be contacted via telephone on 0371 664 0300 (+44 371 664 0300 outside the UK). Lines are open between
09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. Furthermore you may contact the Registrar by emailing
shareholderenquiries@linkgroup.co.uk.
The registrar is located at 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
SHAREHOLDER SECURITY
In recent years, share fraud has been increasing at an alarming rate. This entails shareholders receiving unsolicited phone calls or investment
opportunities, known as boiler room scams. These opportunities are usually high risk and turn out to be worthless investments. The callers
may sometimes imply a connection to Vivo Energy and provide misleading and incorrect information.
Investors are advised to be very wary of unsolicited advice, offers to sell shares at a discount or buy at a premium, or offers of free company
reports. If you have been contacted by an unauthorised company or approached by investors with unsolicited advice you should contact the
Financial Conduct Authority (FCA) using the share fraud reporting form at www.fca.org.uk/scams. You can find out more about investment
security by visiting the FCA’s website or by calling the helpline on 0800 111 6768 (overseas callers dial +44 207 066 1000).
KEEPING IN CONTACT
Our Annual and Interim Reports, trading results, announcements and presentations can be found on our website, www.vivoenergy.com.
Here you can find details of our business and operations and extensive information about the Vivo Energy Group.
To support efficient communication as well as being environmentally friendly, we encourage shareholders to register to the mailing list
on the investor relations website.
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185
OTH ER IN FORMATION
HISTORICAL FINANCIAL INFORMATION
SUMMARY INCOME STATEMENT
US$ million
Revenues
Cost of sales
Gross profit
Selling and marketing cost
General and administrative cost
Share of profit of joint ventures and associates
Other income/(expense)
Earnings before interest and tax (EBIT)
Finance expense – net
Earnings before tax (EBT)
Income taxes
Net income
NON-GAAP MEASURES
US$ million, unless otherwise indicated
Volumes (million litres)
Gross cash profit
EBITDA
Adjusted EBITDA
Adjusted net income
Adjusted diluted EPS (US$)1
2020
6,918
(6,301)
617
(226)
(176)
16
4
235
(60)
175
(85)
90
2020
9,637
697
360
360
90
0.06
2019
8,302
(7,627)
675
(224)
(165)
22
2
310
(64)
246
(96)
150
2019
10,417
743
416
431
162
0.12
2018
7,549
(6,924)
625
(197)
(183)
28
3
276
(47)
229
(83)
146
2018
9,351
680
366
400
178
0.14
2017
6,694
(6,080)
614
(194)
(197)
16
3
242
(31)
211
(81)
130
2017
9,026
666
326
376
171
0.13
2016
5,729
(5,196)
533
(218)
(135)
16
1
197
(23)
174
(75)
99
2016
8,389
579
286
302
109
0.08
1 EPS for 2017 and 2016 are the updated earnings per share based on the capital structure of the Group at 31 December 2018 (including the IPO reorganisation impacts on the weighted
average number of ordinary shares).
SEGMENT INFORMATION
US$ million, unless otherwise indicated
FY 2020
H2 2020
H1 2020
FY 2019
H2 2019
H1 2019
Volumes (million litres)
Retail
Commercial
Lubricants
Total
Gross cash unit margin ($’000 litres)
Retail fuel (excluding Non-fuel retail)
Commercial
Lubricants
Total
Gross cash profit
Retail (including Non-fuel retail)
Commercial
Lubricants
Total
5,456
4,045
136
9,637
76
45
570
72
438
181
78
697
2,975
1,974
70
5,019
83
47
612
79
262
92
43
397
2,481
2,071
66
4,618
66
43
537
65
176
89
35
300
5,900
4,380
137
10,417
71
49
547
71
454
214
75
743
3,060
2,301
71
5,432
72
50
557
72
238
115
39
392
2,840
2,079
66
4,985
71
47
537
70
216
99
36
351
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
US$ million
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments in joint ventures and associates
Deferred income taxes
Financial assets at fair value through other comprehensive income
Other assets
Current assets
Inventories
Trade receivables
Other assets
Income tax receivables
Other financial assets
Cash and cash equivalents
Total assets
Equity and liabilities
Total equity
Attributable to equity holders of Vivo Energy
Non-controlling interest
Liabilities
Non-current liabilities
Lease liabilities
Borrowings
Provisions
Deferred income taxes
Other liabilities
Current liabilities
Lease liabilities
Trade payables
Borrowings
Provisions
Other financial liabilities
Other liabilities
Income tax payables
Total liabilities
Total equity and liabilities
31 December
2020
31 December
2019
31 December
2018
31 December
2017
31 December
2016
889
201
222
231
46
12
117
1,718
480
344
200
11
–
515
1,550
3,268
767
45
812
119
412
104
72
165
872
24
1,048
270
16
9
171
46
1,584
2,456
3,268
823
176
226
227
34
9
110
1,605
517
451
257
9
–
517
1,751
3,356
751
53
804
104
294
102
66
160
726
21
1,257
306
14
3
178
47
1,826
2,552
3,356
622
148
134
223
36
8
101
1,272
441
444
255
19
3
393
1,555
2,827
533
48
581
98
314
75
51
143
681
13
1,062
286
15
–
165
24
1,565
2,246
2,827
585
148
120
219
43
6
83
1,204
353
412
229
8
–
423
1,425
2,629
402
46
448
121
396
92
51
169
829
12
869
259
21
1
152
38
1,352
2,181
2,629
507
136
116
51
37
6
80
933
333
305
170
9
3
369
1,189
2,122
548
40
588
113
40
82
52
140
427
11
719
197
25
–
93
62
1,107
1,534
2,122
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
187
OTH ER IN FORMATION
GLOSSARY
Term
B2B
B2C
BCCP
CAGR
CAPEX
CGU
DPO
DPS
DSO
DTR
EBIT
EBITDA
EBT
EPS
ERP
ESG
ETR
FCA
FVTOCI
FVTPL
FY
GAAP
GDP
GHG
H1
H2
HSSEQ
IASB
IFRS
Description
Business to business
Business to consumer
Business Continuity and Contingency Plan
Compound annual growth rate
Capital expenditure
Cash-generating unit
Days payable outstanding
Dividend per share
Days sales outstanding
Disclosure Guidance and Transparency Rules
Earnings before finance expense, finance income and income taxes
Earnings before finance expense, finance income and income taxes, depreciation and amortisation
Earnings before income taxes
Earnings per share
Enterprise resource planning
Environmental, Social and Governance
Effective tax rate
Financial Conduct Authority
Fair value through other comprehensive income
Fair value through profit and loss
Full year
Generally Accepted Accounting Principles
Gross domestic product
Greenhouse gas
Six-month period 1 January to 30 June
Six-month period 1 July to 31 December
Health, safety, security, environment and quality
International Accounting Standards Board
International Financial Reporting Standards
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
STR ATEG IC REP ORT
GOVERN ANC E
FINANCIAL STATEMENTS
OTH ER IN FORMATION
Term
IFRS IC
IMF
IPO
JV
KFC
KPI
KYC
LIBOR
LPG
LTIF
LTIP
M&A
NCI
NGO
OCI
OU
PP&E
PPE
Q
QSR
RCF
ROACE
ROU
SVL
TRCF
TSR
UK
US
VEI BV
VEOHL
Description
IFRS Interpretation Committee
International Monetary Fund
Initial public offering
Joint venture
Kentucky Fried Chicken
Key performance indicator
Know Your Customer
London Interbank Offered Rate
Liquefied petroleum gas
Lost time injury frequency
Long-Term Incentive Plan
Mergers and acquisitions
Non-controlling interest
Non-governmental organisation
Other comprehensive income
Operating unit
Property, plant and equipment
Personal protective equipment
Quarter
Quick service restaurant
Revolving credit facility
Return on average capital employed
Right-of-use
Shell and Vivo Lubricants B.V.
Total recordable case frequency
Total shareholder return
United Kingdom
United States
Vivo Energy Investments B.V.
Vivo Energy Overseas Holdings Limited
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OTH ER IN FORMATION
KEY CONTACTS AND ADVISERS
REGISTERED OFFICE
Vivo Energy plc
The Peak, 5th Floor
5 Wilton Road, London
SWIV IAN
United Kingdom
DOMICILE
Registered in England and Wales
No. 11250655
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
COMPANY SECRETARY
Minna Gonzalez-Gomez
PRINCIPAL LEGAL ADVISERS
Freshfields Bruckhaus Deringer LLP
PRINCIPAL BANKERS/SPONSOR
JP Morgan Securities plc
REGISTRY
In the UK: 0371 664 0300
Outside the UK: +44 371 664 0300
INVESTOR RELATIONS
Email: investors@vivoenergy.com
Tel: +44 20 3034 3735
MEDIA ENQUIRIES
Email: vivoenergy@tulchangroup.com
Tel: +44 20 7353 4200
WEBSITE
vivoenergy.com
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Such forward-looking statements contained
in this report are current only as of the
date on which such statements are made.
The Company and the Directors do not intend,
and do not undertake any obligation, to update
any forward-looking statements set forth in
this report. You should interpret all subsequent
written or oral forward-looking statements
attributable to the Group or to persons
acting on the Group’s behalf as being qualified
by the cautionary statements in this report.
As a result, you should not place undue reliance
on such forward-looking statements.
In particular, the statements in the Risk
section on page 60 of this report regarding
the Group’s strategy, targets and other future
events or prospects are forward-looking
statements. No assurance can be given that
such future results will be achieved; actual
events or results may differ materially as a
result of risks and uncertainties facing the
Group. Such risks and uncertainties could
cause actual results to vary materially from
the future results indicated, expressed or
implied in such forward-looking statements.
In addition, management’s assumptions about
future events may prove to be inaccurate.
You should be aware that a number of
important factors could cause actual results
to differ materially from the plans, objectives,
expectations, estimates and intentions
expressed in such forward-looking statements.
Given these risks and uncertainties, you should
not rely on forward-looking statements as a
prediction of actual results.
This report includes forward-looking
statements. These forward-looking
statements involve known and unknown
risks and uncertainties, many of which are
beyond the Company’s control and all of
which are based on the Directors’ current
beliefs and expectations about future events.
Forward-looking statements are sometimes
identified by the use of forward-looking
terminology such as: ‘believe’, ‘expects’, ‘may’,
‘will’, ‘could’, ‘should’, ‘shall’, ‘risk’, ‘intends’,
‘estimates’, ‘aims’, ‘plans’, ‘predicts’, ‘continues’,
‘assumes’, ‘positioned’, ‘anticipates’ or ‘targets’
or the negative thereof, other variations
thereon or comparable terminology, but
are not the exclusive means of identifying
such statements. These forward-looking
statements include all matters that are not
historical facts. They appear in a number of
places throughout this report and include
statements regarding the intentions, beliefs or
current expectations of the Directors or the
Group concerning, among other things, the
future results of operations, financial condition,
prospects, growth, strategies of the Group
and the industry in which it operates, which
reflect estimates and assumptions made by
the Group’s management. These estimates
and assumptions reflect the Company’s
best judgement based on currently known
market conditions and other factors.
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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2020
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VIVO ENERGY PLC
The Peak, 5th Floor
5 Wilton Road, London
SWIV IAN
United Kingdom