Vivo Energy Limited
Annual Report & Accounts 2022
THE FUTURE
IS NOW
THE FUTURE IS NOW
Throughout 2022, Africa has continued to
be reshaped.
While the macro drivers for Vivo Energy’s growth
remain strong, a number of key external headwinds
have challenged the business, including inflation,
volatile exchange rates, commodity prices and
interest rates. Changing competition, political
environments and security issues have added
pressure to our business.
But by combining flexibility, our underlying strengths
and by working closely together, we’ve navigated
these headwinds and continued to demonstrate
the resilience shown over recent years.
Throughout the year we’ve been Building for the
Future, developing our strategy and five-year plan.
We’ve also been changing our business –
welcoming a new CEO, creating new executive and
management committees, and most significantly
delisting our business in the middle of the year,
returning us from a public to a private company.
We are ready to grasp new opportunities and to
grow – even faster than before.
For Vivo Energy, the future is now.
STRATEGIC REPORT
2022 highlights
Who we are
Where we operate
Chief Executive Officer’s statement
Our strategy
Our stakeholders
Key performance indicators
Financial review
Our culture, values and purpose
Our sustainability framework
Non-financial information statement
Section 172(1) statement
Task Force on Climate-Related Financial Disclosures
Risk management
GOVERNANCE
Board leadership and Company purpose
Board of Directors
Role of the Board and division of responsibilities
Directors’ Report
Statement of Directors’ responsibilities
FINANCIAL STATEMENTS
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 statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
1
2
3
4
6
7
8
10
18
20
26
27
28
32
37
39
40
41
43
45
52
53
54
55
56
90
91
92
OTHER INFORMATION
Task Force on Climate-Related Financial
Disclosures (‘TCFD’) index
Glossary
Key contacts and advisers
100
101
103
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2022 HIGHLIGHTS
REVENUES
US$ million
VOLUMES
Million litres
ADJUSTED EBITDA
US$ million
10,969
+30%
10,777
+5%
470+5%
SERVICE STATIONS ADDED
Net total
126
NET INCOME
US$ million
105-31%
TOTAL RECORDABLE
CASE FREQUENCY
Per million
exposure hours
0.18
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT WHO WE ARE
WE ARE A GROWTH
COMPANY ON AN
EXCITING CONTINENT
We are a market-leading, pan-African retailer and distributor of
high-quality fuels and lubricants using the Shell and Engen brands.
We source, distribute, market and supply these products to Retail
and Commercial customers across Africa and keep the continent
on the move.
We have a growing Non-fuel retail offering and are continuing to
develop innovative energy solutions to enhance sustainability.
RETAIL
Retail is the engine that powers our
growth. At the end of 2022, our
network comprised 2,589 service
stations across the continent.
RETAIL FUEL
Sale of petrol and diesel fuels at Shell and
Engen-branded service stations, across
23 countries.
NON-FUEL RETAIL
Multi-branded convenience retail shops,
quick service and fast casual restaurants,
and other services including lubricant bays,
car washes and ATMs.
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.
CORE COMMERCIAL
Supplying mining, construction, transport,
power and industrial companies. We also
supply LPG, primarily to consumers, as
well as fuels to the wholesale market.
AVIATION AND MARINE
Supplying aviation fuel, plus bunkering
for marine traders and other
shipping companies.
LUBRICANTS
We sell lubricants to Retail and
Commercial customers in our
countries of operation, and also
export to more than ten additional
African markets.
RETAIL LUBRICANTS
Providing 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.
COMMERCIAL LUBRICANTS
Supplying specialist lubricants to mining
companies and B2B customers, and also
exporting to other African markets.
HIGHLIGHTS
Volumes (million litres)
6,370 +5%
HIGHLIGHTS
Volumes (million litres)
4,258 +5%
HIGHLIGHTS
Volumes (million litres)
149 0%
Gross cash profit1 (US$ million)
Gross cash profit (US$ million)
Gross cash profit (US$ million)
489 0%
237 +22%
91 -2%
Gross cash unit margin2 ($/’000 litres)
Gross cash unit margin ($/’000 litres)
Gross cash unit margin ($/’000 litres)
71 -5%
1
Includes Non-fuel retail.
2 Excludes Non-fuel retail.
Non-GAAP measures are explained
and reconciled on pages 16 and 17.
56 +17%
608 -3%
2
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STRATEGIC REPORT WHERE WE OPERATE
TWO LEADING BRANDS
ACROSS 23 COUNTRIES
At the end of 2022, our Retail network comprised 2,589
service stations across 23 countries, more than twice the
size of the network we acquired at our inception in 2011.
We added a net total of 126 service stations and
165 convenience retail shops and food outlets.
2,589
SERVICE
STATIONS
1,149
CONVENIENCE
RETAIL SHOPS
AND PHARMACIES
323FOOD OUTLETS
20 TANZANIA
Total volume
Service stations
21 REUNION
Total volume
Service stations
125
41
218
35
22 MOZAMBIQUE
Total volume
Service stations
143
43
23 ZIMBABWE
Total volume
Service stations
34
65
70
24
119
44
128
56
56
40
Our markets with
Shell-branded service stations
Our markets with
Engen-branded service stations
01 TUNISIA
Total volume
Service stations
06 GUINEA
Total volume
Service stations
1,139
171
11 KENYA
Total volume
Service stations
549
132
16 GABON
Total volume
Service stations
1,490
286
02 MOROCCO
Total volume
Service stations
2,094
404
07 CÔTE D’IVOIRE
Total volume
Service stations
769
233
12 NAMIBIA
Total volume
Service stations
03 CAPE VERDE
Total volume
Service stations
04 SENEGAL
Total volume
Service stations
05 MALI
Total volume
Service stations
202
27
562
136
314
53
08 BURKINA FASO
Total volume
Service stations
362
107
13 BOTSWANA
Total volume
Service stations
09 GHANA
Total volume
Service stations
10 UGANDA
Total volume
Service stations
496
237
542
172
14 MADAGASCAR
Total volume
Service stations
255
77
19 MALAWI
Total volume
Service stations
15 MAURITIUS
Total volume
Service stations
420
50
17 RWANDA
Total volume
Service stations
18 ZAMBIA
Total volume
Service stations
436
74
259
82
2
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Total volume is measured in million litres and excludes volume related to supply trading, not allocated to countries.
010405080607091213141020171618 0311231921152202OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S STATEMENT
CHIEF EXECUTIVE
OFFICER’S STATEMENT
STAN MITTELMAN
THE FUTURE
IS NOW
Throughout the year,
we’ve been Building for
the Future, developing our
strategy and five‑year plan.”
STAN MITTELMAN
CHIEF EXECUTIVE OFFICER
4
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5
As I reflect on my first year as CEO, I am pleased that all my initial expectations of Vivo Energy being an exciting, fast-paced and entrepreneurial business have been confirmed.I would like to pay tribute to my predecessor, Christian Chammas, for his support and guidance as we worked together at the start of the year. Christian was instrumental in transforming, developing and growing the business during his decade as CEO, and I hope he is enjoying a well-deserved retirement.Throughout the year, I was fortunate enough to visit 19 of our operating units and our offices in Amsterdam, Cape Town and Johannesburg, meeting many of our talented and dedicated colleagues in the process. As I look ahead to 2023 and beyond, what heartens me the most is the passion, dedication and drive that I see in Vivo Energy colleagues across the continent. Our people are the ‘magic ingredient’ that will allow us to achieve our aspirations and successfully deliver our plan.A CHALLENGING YEARFollowing on from two years dominated by COVID-19, we started 2022 with optimism for brighter times ahead. But the year has not been without challenges. The conflict in Ukraine significantly affected product supply and pricing. Issues with inflation, exchange rates, government receivables, dollar availability, and margin challenges have challenged a number of our operating units (OUs). And we’ve seen a changing political environment, and ongoing security issues, particularly in some of our West African OUs.It has undoubtedly been a tough year. However, we have worked together to navigate these challenges, and have continued to demonstrate the resilience shown over recent years.STRATEGIC REPORT Net income
$105m
HSSEQ
0.18
Strong HSSEQ
performance with
Total Recordable Case
Frequency of 0.18
incidents per million
exposure hours.
Adjusted EBITDA
US$ million
2022
2021
2020
2019
2018
Volumes
million litres
2022
2021
2020
2019
2018
470
447
360
431
400
10,777
10,302
9,637
10,417
9,351
4
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BUSINESS PERFORMANCEAlthough we continue to have an industry‑leading Health, Safety, Security, Environment and Quality (HSSEQ) performance, it saddens me that we recorded a contractor fatality in Uganda, following a fire in our depot in February. Violations against our Life Saving Rules reduced by 40% compared to the previous year, but we must ensure a zero‑tolerance approach to any violations against our Life Saving Rules, and it is vital that our people remain constantly vigilant and keep HSSEQ a fundamental priority for Vivo Energy.Our volumes increased 5% to 10,777 million litres, reflecting the resilience of our markets, despite the challenging macroeconomic environment. Volumes in the Retail and Commercial segments were both 5% ahead of the prior year, with Lubricants volumes remaining flat.Group gross cash unit margin increased by 1% to $76 per thousand litres. Although unit margins in Retail and Lubricants decreased as a result of increases in crude oil prices, these were offset by the unit margin increase in Commercial, mainly due to the positive impact from effective product sourcing.Together, these factors led to gross cash profit of $817 million, up 5% against 2021.This performance results in adjusted EBITDA of $470 million, an increase of 5% against the previous year. Net income reduced 31% to $105 million.I am pleased that despite external challenges, we continued to meaningfully invest for growth, opening a net total of 126 service stations and 165 convenience retail shops and food outlets.BUILDING FOR THE FUTUREThroughout the year we’ve been Building for the Future, developing our strategy and five‑year plan. Our aspiration is to achieve market share leadership in fuel and lubricants, and to differentiate our non‑fuel business. Specifically, we will work to: –Maximise value from Retail fuel – growing our network by around 150 service stations per year, –Accelerate growth from the rest of the core business – Non‑fuel retail, Commercial fuel, Lubricants and LPG, and –Evolve our business to serve changing customer needs – focusing in particular on Solar and e‑mobility.CHANGEA common theme for the year has been change, the most significant of which has been the new ownership and delisting of our business.At the end of 2021, the Vivo Energy plc Board agreed to recommend a transaction with BidCo, a wholly owned, indirect subsidiary of Vitol Investment Partnership II Limited, itself being an investment vehicle advised by employees of the Vitol Group (‘the Vitol Offer’).In January 2022, shareholders voted overwhelmingly to approve the Vitol Offer. In July, following completion of all of the regulatory and anti-trust approvals, the scheme was formally approved at a Court hearing and the Company became 100% privately owned. As part of the transition, the Vivo Energy plc Board of Directors, chaired by John Daly, resigned at the end of July. I would like to take this opportunity to thank John and his fellow Directors for their work while we were a public company, and the new Vivo Energy Board for its governance and guidance of Vivo Energy since.Our new ownership brings more opportunities to grow faster, leveraging Vitol, and unlocking opportunities with its other portfolio companies. We are already investigating these through feasibility and pilot studies in a number of our OUs.During the year we also launched a new organisation structure, creating Executive and Management Committees, reorganising our OUs into three zones (West, East & South, and Maghreb & Indian Ocean), and updating some of our Central Function reporting.Keeping our business simple and agile is part of Vivo Energy’s DNA and is a major part of our success. Across our Group, we need to ensure that we stay lean, agile, and entrepreneurial. Our operating model will continue to remain OU-focused and decentralised, and we must continue to simplify – adapting where required – to make sure we structure ourselves for future success in the years ahead.It has been a privilege to work alongside my new colleagues this year. There is a vast opportunity that exists in Africa and I look forward to continue working with my team to develop and realise Vivo Energy’s growth story in the coming years.If 2022 was about Building for the Future, 2023 is about putting that plan into action.The Future is Now!STAN MITTELMANCHIEF EXECUTIVE OFFICEROTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INITIATIVES
1 MAXIMISE VALUE
2 ACCELERATE GROWTH
OUR STRATEGY
OUR STRATEGY
Over the years, our strategy has
enabled us to grow, meeting the
increasing energy needs of a vibrant
African continent. To continue to
grow and succeed, we will focus on
three strategic pillars.
3 WE HAVE THREE
STRATEGIC PILLARS:
3 EVOLVE THE BUSINESS MODEL
6
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1 MAXIMISE VALUE from Retail fuel2 ACCELERATE GROWTH from the rest of the core business3 EVOLVE THE BUSINESS MODEL to serve customer needs RETAIL –Optimising and upgrading our network –Adding new sites each year –Shining our existing sitesNON-FUEL RETAIL OFFERING –Building a substantial food business, on and off our service stations –Increasing our convenience retail presence –Diversifying other Non-fuel retail offeringsCOMMERCIAL FUEL & LUBRICANTS –Driving B2B core profitable market share growth –Growing re-seller volume market share –Growing our lubricants business (incl. exports) –Increasing focus on aviation and marineSOLAR –Developing solar hybrid power product offering –Piloting more electric vehicle (EV) charging sitesLIQUEFIED PETROLEUM GAS (LPG) –Reducing product mix carbon intensity through LPG growthNEW MOBILITY –Investigating and developing new mobility solutionsSTRATEGIC REPORT OUR STAKEHOLDERS
OUR STAKEHOLDERS
We listen to and collaborate
with a wide range of stakeholders
to grow our business and
deliver value.
5 WE HAVE FIVE KEY
STAKEHOLDER GROUPS:
Engagement with our stakeholders 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.
The output of engagement with stakeholders informs Group decisions,
and relevant feedback is reported to the Board and/or its Committees.
1 OUR PEOPLE
We want our people to be safe,
engaged, and focused on doing
business the right way.
2 CUSTOMERS
We want to offer our
customers the best platform
in the market, providing
an exceptional customer
experience, a wide range of
customer value propositions,
and exciting Non-fuel
retail offerings.
3 PARTNERS
We want to support our
partners, always focused on
doing business the right way as
we strive to achieve our vision
of becoming the most respected
energy business in Africa.
4 COMMUNITIES
We want to make a real
and lasting difference to our
communities, engaging with
them to earn their respect and
trust, supporting them and
promoting a better quality of life
and more sustainable future.
5 GOVERNMENTS
We want to maintain good
relationships with host
governments in the countries
where we operate.
6
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1 OUR PEOPLE2 CUSTOMERS3 PARTNERS4 COMMUNITIES5 GOVERNMENTS OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT KEY PERFORMANCE INDICATORS
OUR KPIs
FINANCIAL KPIS
GROSS CASH PROFIT
US$ MILLION
2022
2021
2020
2019
2018
These KPIs show our performance for 2022 in
comparison to the past four 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.
ADJUSTED EBITDA
US$ MILLION
817
777
697
743
680
2022
2021
2020
2019
2018
470
447
360
431
400
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
– Volumes and gross cash unit margins performance
DEFINITION
Earnings before interest, tax, depreciation and amortisation adjusted for impact
of special items.
Performance drivers
– Volumes and gross cash unit margins performance
– Optimised cost structure and cost management
– Share of profit from investments in joint ventures and associates
GROWTH KPIS
VOLUMES
MILLION LITRES
2022
2021
2020
2019
2018
TOTAL RETAIL SERVICE STATIONS
10,777
10,302
9,637
10,417
9,351
2022
2021
2020
20191
2018
2,589
2,463
2,330
2,226
1,900
DEFINITION
Total product volumes sold during the year.
Performance drivers
– Macroeconomic drivers influencing demand
– Sales and promotion activities
– Loyalty card system
– New and existing contracts with commercial customers and cross-selling
HSSEQ KPIS
DEFINITION
Total number of revenue generating retail service stations.
Performance drivers
– Self-funding capital expenditure 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.
TOTAL RECORDABLE CASE FREQUENCY (TRCF)
PER MILLION EXPOSURE HOURS
TOTAL PRODUCT LOST
METRIC TONNES
2022
2021
2020
2019
2018
0.04
0.04
0.10
0.18
0.19
2022
0
2021
2020
1.7
2019
2018
7.5
18.4
45.4
DEFINITION
TRCF per million exposure hours.
DEFINITION
Product lost to the environment.
Performance drivers
– Using potential incident reporting to prevent incidents from happening
– Training and competency development for continuous HSSEQ improvement
– Focus on personal safety, road transport safety and security
Performance drivers
– Ensuring that safe working practices are followed: stringent
contractor safety requirements; driver training and monitoring
8
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STRATEGIC REPORT
FINANCIAL KPIS
GROWTH KPIS
HSSEQ KPIS
NON-GAAP MEASURES ARE EXPLAINED
AND RECONCILED ON PAGES 16 AND 17
NET INCOME
US$ MILLION
2022
2021
2020
2019
2018
DEFINITION
Net income in accordance with IFRS/GAAP.
Performance drivers
– EBITDA performance
– Effective tax rate management
– Optimised capital and finance structure
GROSS CASH UNIT MARGIN
US$/’000 LITRES
2022
2021
2020
2019
2018
DEFINITION
Gross cash profit per 1,000 litres of sales volume.
Performance drivers
– Pricing structure in regulated markets ensures stable margins
– Competitive pricing strategies in deregulated markets
– Foreign currency exposure risk management to ensure
US dollar margins are protected
– Optimised supply chain and efficient operations
– Increased penetration of differentiated fuels
105
2022
-126
ADJUSTED FREE CASH FLOW
US$ MILLION
90
152
150
146
2021
2020
2019
2018
112
154
311
325
DEFINITION
Cash flow from operating activities less net additions to property, plant and equipment
and intangible assets and excluding the impact of special items.
Performance drivers
– High conversion from EBITDA to free cash flow
– Structurally negative working capital
ROACE
%
2022
2021
2020
2019
2018
76
75
72
71
73
17
19
12
21
23
DEFINITION
Adjusted EBIT after income tax 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.
Performance drivers
– Disciplined capital allocation with rigorous return requirements
– Incentivise performance: employee compensation linked to ROACE
TOTAL SCOPE 1 & 2 EMISSIONS1&2
KT OF CO2 EQUIVALENT
EMPLOYEE & CONTRACTOR FATALITIES
NUMBER
2022
2021
2020
2019
21.91
21.75
21.73
23.35
2022
2021
0
2020
0
2019
0
2018
1
1
DEFINITION
Emissions from combustion of fuel, electricity, heat, steam and cooling.
DEFINITION
Fatal occupational injuries and illnesses, except those related to COVID-19.
Performance drivers
– Increasing efficiencies across our operations
– Adding solar initiatives
1 Scope 1 & 2 emissions data available from 2019.
2 Previous years have been rebased as per the Vivo Energy Greenhouse Gas
Inventory Management Plan with 2019 as the base year.
Performance drivers
– Risk assessment and mitigation
– Potential incident reporting to prevent incidents from happening
– HSSEQ competency review and training programme
8
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL REVIEW
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
NON-GAAP MEASURES
US$ million, unless otherwise indicated
Volumes (million litres)
Gross cash profit
EBITDA
Adjusted EBITDA
ETR (%)
Adjusted net income
Non-GAAP measures are explained and reconciled on pages 16 and 17.
2022
10,969
(10,237)
732
(247)
(212)
27
(5)
295
(87)
208
(103)
105
2022
10,777
817
427
470
49%
154
2021
8,458
(7,765)
693
(222)
(185)
27
(1)
312
(59)
253
(101)
152
2021
10,302
777
442
447
40%
157
Change
+30%
+32%
+6%
+11%
+15%
–
+400%
-5%
+47%
-18%
+2%
-31%
Change
+5%
+5%
-3%
+5%
n/a
-2%
10
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STRATEGIC REPORT 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
Non-GAAP measures are explained and reconciled on pages 16 and 17.
2022
2021
Change
6,370
4,258
149
10,777
6,090
4,063
149
10,302
435
210
87
732
71
56
608
76
489
237
91
817
249
151
70
470
436
168
89
693
75
48
628
75
490
194
93
777
259
116
72
447
+5%
+5%
–
+5%
0%
+25%
-2%
+6%
-5%
+17%
-3%
+1%
0%
+22%
-2%
+5%
-4%
+30%
-3%
+5%
10
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FINANCIAL REVIEW CONTINUED
ANALYSIS OF CONSOLIDATED RESULTS OF OPER ATIONS
1
Special items are explained and reconciled on pages 16 and 17.
12
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VOLUMESOverall volumes of 10,777 million litres were 5% ahead of 2021, reflecting resilience of our markets despite the current challenging economic environment. The Retail and Commercial segments were the main contributors to the volume growth, with volumes 5% ahead of the prior year in both segments. The increase in the Retail segment was driven by the revamp and rollout of Retail sites coupled with strategic marketing activities. The volume increase in the Commercial segment was primarily driven by new customers in the aviation business. Lubricants volume growth remained flat year-on-year. This was attributable to higher volumes sold in the Commercial lubricants business, offset by the volume decrease in the Retail lubricants business.REVENUERevenue increased by $2,511 million, from $8,458 million in 2021 to $10,969 million in 2022. The increase is primarily attributable to higher average refined product prices and volume growth during the year, partially offset by the impact of depreciating currencies. COST OF SALESCost of sales amounted to $10,237 million, $2,472 million higher than the prior year (2021: $7,765 million), due to an increase in the cost of inventory driven by higher refined product prices during the year. Higher sales volumes further contributed to the increase, partially offset by the impact of depreciating local currencies.GROSS PROFITGross profit increased by 6% to $732 million (2021: $693 million) primarily due to higher refined product prices and volume growth, offset by the impact of depreciating local currencies. Excluding the effect of special items1, gross profit was up 7% at $741 million.GROSS CASH PROFITGross cash profit was up 5% year-on-year, increasing from $777 million to $817 million, primarily driven by higher volumes and a strong gross cash unit margin in the Commercial segment. The stabilisation of the aviation business and improved performance in the Core commercial business further contributed to the increase in gross cash profit. GROSS CASH UNIT MARGINThe gross cash unit margin of $76 per thousand litres was broadly in line with the prior year. Unit margins in the Retail segment were 5% lower than the prior year mainly due to the steep increases in the crude oil prices. The Commercial segment unit margin increased to $56 per thousand litres, 17% ahead of the prior year, mainly due to the positive impact from effective product sourcing. The 3% unit margin decrease in the Lubricants segment was attributable to the significant increase in the base oil prices. Excluding the impact of special items1, the gross cash unit margin was $77 per thousand litres, 3% higher than the prior year. SELLING AND MARKETING COSTSelling and marketing cost was up 11% year-on-year, increasing from $222 million in 2021 to $247 million, mainly due to higher brand fees and costs for other external services, offset by a positive foreign currency exchange effect.GENERAL AND ADMINISTRATIVE COSTGeneral and administrative cost, including special items1, was $212 million, 15% higher than the prior year (2021: $185 million), primarily due to expenses related to the Vitol Offer and higher indirect taxes, partially offset by a positive foreign currency exchange effect.SHARE OF PROFIT OF JOINT VENTURES AND ASSOCIATESShare of profit of joint ventures and associates was in line with the prior year at $27 million (2021: $27 million) mainly due to a strong performance from joint ventures in Morocco and the food sector. This strong performance was offset by a lower share of profit from our joint venture investment in Shell and Vivo Lubricants B.V.ADJUSTED EBITDAAdjusted EBITDA increased by 5% year‑on‑year to $470 million (2021: $447 million), primarily due to a solid gross profit performance, which was offset by higher general and administrative and selling and marketing costs during the year.NET FINANCE EXPENSENet finance expense increased by $28 million to $87 million, from $59 million in 2021, primarily due to an increase in short‑term borrowings, explained by a higher utilisation of local credit facilities to meet working capital requirements. In the last quarter of the year, finance expense further increased due to the Bridge loan obtained in October 2022.INCOME TAXESThe ETR increased to 49% in the current year (2021: 40%). This was predominantly due to a lower earnings before tax of $208 million (2021: $253 million) resulting in a higher relative impact of expenses which are not tax deductible, including non‑deductible expenses related to the delisting, and withholding tax on upstreamed dividends and central fees.NET INCOMENet income, including the impact of special items1, decreased by $47 million to $105 million (2021: $152 million). Non‑controlling interest was $14 million (2021: $12 million).STRATEGIC REPORT CONSOLIDATED FINANCIAL POSITION
12
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
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13
1
Days sales outstanding (DSO) and days purchases outstanding (DPO) are based on monthly averages and on trade elements only.
ASSETSOTHER ASSETSOther assets increased by $328 million, from $398 million to $726 million, primarily due to an increase in government benefits receivable compared to 2021. This increase is explained by the increase in crude oil prices during the year that resulted in higher pricing subsidies. Further information related to other assets can be found in note 15 of the consolidated financial statements.TRADE RECEIVABLESTrade receivables increased by $137 million, from $461 million to $598 million, predominantly due to higher average crude oil prices and increased sales volumes during the period. The increase is partially offset by the depreciation of local currencies in many of the countries in which we operate. Average monthly DSO1 for the period was 15 days (2021: 15 days). INVENTORIESThe increase in inventories of $123 million, from $564 million to $687 million, is mainly due to the increasing cost of inventory resulting from the higher crude oil prices. The increase is partially offset by the depreciation of local currencies in many of the countries in which we operate. Average inventory days for the period was 26 days (2021: 26 days). RIGHT‑OF‑USE ASSETSThe increase in right-of-use assets of $16 million, from $219 million in 2021 to $235 million in 2022, related to new leases of which the majority were Retail service stations. The increase is partially offset by depreciation and a negative foreign currency impact.CASH AND CASH EQUIVALENTSCash and cash equivalents decreased by $87 million, from $587 million in 2021 to $500 million in 2022. This decrease is primarily attributable to an increased utilisation of cash due to higher working capital requirements and rising other government benefits receivable. INTANGIBLE ASSETSThe decrease in intangible assets of $24 million, from $212 million in 2021 to $188 million in 2022, is largely due to amortisation and the depreciation of local currencies, partially offset by additions in the current year.PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment decreased by $18 million, from $938 million in 2021 to $920 million in 2022, due to depreciation and negative foreign currency impacts, partially offset by current year additions. EQUITYTotal equity decreased by $684 million, from $883 million in 2021 to $199 million in 2022, primarily due to $707 million dividends paid, partially offset by the total comprehensive income for the year of $35 million. Further information related to dividends can be found in note 20 of the consolidated financial statements.LIABILITIESBORROWINGSBorrowings increased by $900 million, from $629 million to $1,529 million, mainly due to the Bridge loan received in October 2022 and a $63 million drawdown on the revolving credit facility as well as a higher utilisation of short‑term bank facilities to fund working capital requirements driven by higher crude oil prices. Further information related to borrowings can be found in note 21 of the consolidated financial statements.TRADE PAYABLESTrade payables increased by $253 million from $1,434 million to $1,687 million. The increase is predominantly attributable to higher crude oil prices increasing the cost of inventory, partially offset by the depreciation of local currencies in many of the countries in which we operate. Average monthly DPO1 for the period was 61 days (2021: 57 days). LEASE LIABILITIES The increase in lease liabilities of $22 million, from $161 million in 2021 to $183 million in 2022, is largely attributable to new lease agreements, partially offset by the repayment of lease instalments during the period. OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FINANCIAL REVIEW CONTINUED
LIQUIDITY AND CAPITAL RESOURCES
ADJUSTED FREE CASH FLOW
US$ 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 assets
Free cash flow
Special items2
Adjusted free cash flow
1 Net change in operating assets and liabilities and other adjustments includes finance expense.
2 Cash impact of special items. Special items are explained and reconciled on pages 16 and 17.
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
1 Non-GAAP measures are explained and reconciled on pages 16 and 17.
2022
105
225
(93)
(229)
8
(160)
(152)
26
(126)
2022
64
100
–
164
2022
96
34
2
32
164
100
72
26
2
2021
152
226
(102)
195
471
(167)
304
7
311
2021
61
102
5
168
2021
99
32
3
34
168
102
75
25
2
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VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
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15
Most of the Group’s capital expenditure related to Growth projects which included the Retail network expansion and new Non-fuel retail offerings. Capital expenditure related to Maintenance is mainly attributable to our continued focus on maintaining our stringent standards at our Retail sites.The ‘Shining sites’ project was established in 2019 to enhance our Retail network and has resulted in 317 Retail sites being ‘shined’ by the end of the year.ROACE1 was 17% for 2022, compared to 19% in 2021, primarily due to higher average capital employed.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.Adjusted free cash flow decreased by $437 million, from $311 million in 2021 to an outflow of $126 million in 2022. The decrease in the adjusted free cash flow was mainly due to the negative movements in net change in operating assets and liabilities and other adjustments and a lower net income of $47 million. Majority of the $229 million cash outflow from net change in operating assets and liabilities and other adjustments was primarily attributable to a cash outflow from other government benefits receivable of $307 million. The increase in other government benefits receivable was mainly due to the higher crude oil prices which increased the pricing subsidies. Refer to notes 26 and 15 of the Consolidated financial statements for further information. Income tax paid amounted to $93 million for the year ended 31 December 2022 (2021: $102 million).STRATEGIC REPORT NET DEBT AND AVAILABLE LIQUIDITY
US$ million
Long-term debt and RCF
Lease liabilities
Total debt excluding short-term bank borrowings
Short-term bank borrowings
Less: cash and cash equivalents
Net debt
US$ million
Net debt
Adjusted EBITDA1
Leverage ratio1
1
For the description and reconciliation of non-GAAP measures refer to pages 16 and 17.
US$ million
Cash and cash equivalents
Available undrawn credit facilities
Available short-term capital resources
31 December
2022
31 December
2021
1,016
183
1,199
513
(500)
1,212
349
161
510
280
(587)
203
31 December
2022
31 December
2021
1,212
470
2.58x
203
447
0.45x
31 December
2022
31 December
2021
500
1,614
2,114
587
1,471
2,058
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
31 December 2022
Borrowings
Trade payables
Lease liabilities
Other financial liabilities
Other liabilities1
Total
Less than
3 months
Between
3 months
and 1 year
Between
1 and 2 years
Between
2 and 5 years
Over
5 years
527
1,603
7
10
31
2,178
111
84
33
1
27
256
635
–
37
–
18
690
407
–
76
–
2
485
–
–
122
–
146
268
Total
1,680
1,687
275
11
224
3,877
1 Other liabilities (note 24) 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
31 December
2022
31 December
2021
13
21
14
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
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15
Long-term debt mainly consists of $350 million in notes and $603 million related to a Bridge loan received in the last quarter of the year. Refer to note 21 of the consolidated financial statements for further information.Current borrowings include individual operating entities’ uncommitted, unsecured short-term bank facilities, which are automatically renewable typically for a period of 12 months, ranging from $3 million to $410 million, and carry interest rates between 2.9% and 34.2% per annum. The Group’s debt covenants are disclosed in note 21 of the notes to the consolidated financial statements. Net debt increased by $1,009 million to $1,212 million, primarily due to higher borrowings, and a decrease in cash and cash equivalents. The increase in borrowings is attributable to the proceeds from the Bridge loan and the utilisation of short-term financing to fund working capital requirements. The Group’s leverage ratio increased to 2.58x in 2022, compared to 0.45x in 2021 due to a higher net debt.The available undrawn credit facilities of $1,614 million comprise the undrawn portion of the committed multi-currency revolving credit facility of $207 million and $1,407 million of undrawn, unsecured and uncommitted short-term bank facilities extended to our operating entities for working capital purposes. OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
NON-GAAP FINANCIAL MEASURES
Term
Gross cash profit
EBITDA
Description
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.
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
Gross cash unit margin
Adjusted EBITDA
Adjusted free cash flow
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 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.
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.
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 the last 12 months’ adjusted EBITDA.
Return on average
capital employed (ROACE)
Adjusted EBIT after income tax 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.
16
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
17
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.STRATEGIC REPORT RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
US$ million
Gross profit
Add back: depreciation and amortisation in cost of sales
Gross cash profit
Volumes (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:
IPO1 and Vitol Offer related expenses2
Impairment of other government benefits receivable3
Hyperinflation4
Management Equity Plan5
Adjusted EBITDA
US$ million
Net income
Adjustments to net income related to special items:
IPO1 and Vitol Offer related expenses2
Impairment of other government benefits receivable3
Hyperinflation4
Management Equity Plan5
Tax on special items
Adjusted net income
US$ million, unless otherwise indicated
EBIT
Adjustments to EBIT related to special items:
IPO1 and Vitol Offer related expenses2
Impairment of other government benefits receivable3
Hyperinflation4
Management Equity Plan5
Adjusted EBIT
Adjusted EBIT after tax
Average capital employed
ROACE
2022
732
85
817
10,777
76
2021
693
84
777
10,302
75
2022
208
87
295
132
427
35
7
1
–
470
2022
105
43
7
1
–
(2)
154
2022
295
35
7
1
–
338
201
1,188
17%
2021
253
59
312
130
442
4
–
–
1
447
2021
152
4
–
–
1
–
157
2021
312
4
–
–
1
317
193
1,042
19%
Reconciliation of net debt and leverage ratio is included on page 15. The reconciliation of adjusted free cash flow is included on page 14.
16
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
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17
1 IPO related items in 2021 concern the IPO share awards which are accrued for over the vesting period.2 These expenses are related to the Vitol Offer transaction, Bridge loan financing and other acquisitions, and are treated as special items as they do not form part of the core operational business activities and performance.3 The Group has recognised an impairment of other government benefits receivable as a result of an expected retrospective price structure change by certain governments to finance their outstanding debt. Such retrospective changes of existing price structures are not representative of the core operational business activities and performance for the period and are, therefore, treated as special items. 4 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.5 The Management Equity Plan vested at IPO in May 2018 and was 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.OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR CULTURE, VALUES AND PURPOSE
OUR CULTURE,
VALUES AND PURPOSE
When Vivo Energy was created in 2011,
we quickly developed, introduced and
embedded our ‘Focus, Simplify and Perform’
operating culture, and this has been our
guiding principle ever since. It has enabled
us to stay one step ahead, and will continue
to be a key part of our business for many
years to come.
18
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,
agile, decentralised business model, and have
continued to focus on simplification – adapting
our model where required – to make sure
we structure ourselves for future success in
the years ahead.
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.
Our people are regularly kept informed about
our business through their managers, employee
townhall meetings, and the Company intranet,
which was redeveloped in 2022 to drive
engagement through more regular, relevant and
trusted content.
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 30% of the Group’s employees
are unionised.
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
and in every interaction with our employees,
our customers, and broader stakeholders.
Our Code of Conduct, Counterparty Code
of Conduct and General Business Principles (all
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 induction programme includes training
in relation to our Code of Conduct and
key Anti‑bribery and corruption (ABC) and
Anti‑money laundering (AML) initiatives.
We have a detailed counterparty screening
process in place, which is formalised in the
Vivo Energy Know Your Counterparty
(KYC) policy. The screening process gives us
confidence that we know who we are doing
business with and that the ethics and values
of our counterparties align to our core values.
As part of the screening process, we request
new counterparties to agree to a compliance
statement, which sets out our approach
towards ABC, AML and conflict of interest.
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT During the year we automated our KYC
screening, resulting in a more efficient and
paperless process. We also enhanced our
process to ensure increased scrutiny in
relation to sanctions.
Employees, third parties and members of the
public 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 Q4 2022, we rolled out an all staff
data privacy online training course to raise
awareness regarding the importance of
protecting third party information and
how to identify data privacy risks. We also
conducted ten phishing simulation tests
during 2022, to increase employee awareness
and understanding of cyber‑security risks.
Despite the increasing complexity of these
tests, the number of employees being deceived
has continued to fall.
We’re committed to providing equal
opportunities for all our employees.
Should any employee become disabled,
our policy is to engage, re‑train and
make reasonable adjustments to enable
continued employment.
ANTI-CORRUPTION
AND ANTI-BRIBERY
We continue to maintain a multi‑site ISO 37001
anti‑bribery management systems certification,
covering all of our markets. During the year, we
carried out five external reviews of operating
units as part of the annual maintenance audits.
No non‑conformities were noted during
the reviews.
During Q3 2022, we rolled out a new online
Code of Conduct training course to all
employees. The course focused on important
topics such as our zero‑tolerance to bribery
and corruption, guidance regarding gifts and
hospitality and the importance of declaring
conflicts of interest. This course is also assigned
to all new joiners when they start their
employment. The course is available in our
three operational languages to ensure that
all our people can fully grasp the 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 & Compliance Office.
Corrective measures are recommended and
implemented by the Ethics & Compliance
Office where required.
Knowing who we
do business with
4,928
counterparty screening
checks conducted.
Our purpose is to safely
provide innovative and
responsible energy solutions
to Africa, which enable
growth and development
of the continent and its
people.”
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, which
are crucial to our success and growth, and to
achieving our vision of becoming Africa’s most
respected energy business.
We are committed to respecting, upholding
and applying the highest human rights and
ethical standards across the economies and
societies in which we operate. Our approach is
guided by the ten Principles of the UN Global
Compact, with which Vivo Energy complies.
Our Human Rights Policy Statement sets
out the core human rights principles which
we strive to uphold. The policy statement is
available on our external website.
Respect for human rights is also embedded in
our Code of Conduct and General Business
Principles, which recognise our responsibility
to conduct business as a responsible corporate
citizen 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
includes a specific reporting category for raising
concerns in relation to any form of unfair
labour practices and potential human rights
violations. Any report received in relation to
these categories is directly reported to the Vivo
Energy Head of Ethics & Compliance and the
Vivo Energy Chief Human Resources Officer.
Finally, we have also rolled out training on,
and have included the Voluntary Principles
on Security and Human Rights in contracts
for suppliers who provide security services at
our assets.
19
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 1 PEOPLE
We believe that by keeping our people
safe, supported and enabling their
development, we are able to deliver
consistent success as an organisation.
We have four key priorities
in our People pillar:
ENSURING THE
SAFETY OF PEOPLE
TRAINING AND
DEVELOPMENT
ENHANCING
GENDER DIVERSITY
EMPLOYEE ENGAGEMENT
OUR SUSTAINABILITY FRAMEWORK
INTRODUCING OUR
NEW SUSTAINABILITY
FRAMEWORK
Since our foundation in 2011, we have worked hard to do
business the right way, knowing that this is the only way
to successfully grow, develop and achieve our vision of
becoming Africa’s most respected energy business.
In 2022, we established the Vivo Energy Sustainability
Framework. While we recognise that good progress has
been made in sustainability activities, including positive
action, our activities could benefit from having a more
structured approach across the Group.
As a result, we have set up a clear and simple framework,
to provide an umbrella for all our Environmental, Social
and Governance (ESG) and sustainability activities,
guide our approach, and provide more focus on the
sustainability topics that matter the most to us, and
our stakeholders.
The Vivo Energy Sustainability Framework comprises
three key pillars:
1
2
3
PEOPLE
SAFE AND EMPOWERED TEAMS
PLANET
MINIMISING THE GROUP’S IMPACT
PARTNERSHIPS
LEADING BY EXAMPLE
These three pillars are all underpinned by our high
standards of corporate behaviour, and focus on doing
business the right way. This in turn is aligned to our
Purpose to safely provide innovative and responsible
energy solutions to Africa, which enable growth and
development of the continent and its people.
20
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT
ENSURING THE SAFETY OF PEOPLE
More than ever, safety remains a key
focus for us.
As a result of our personal safety initiatives,
in 2022, we recorded a commendable
Total Recordable Case Frequency (TRCF)
of 0.18 per million exposure hours.
Although we continue to have an
industry‑leading HSSEQ performance, we are
saddened to have recorded a contractor fatality
in Uganda following a fire in our Kampala
depot during the year.
In order to continually improve our HSSEQ
performance, 22 security risk assessments,
process safety and HSSEQ management system
audits were conducted in our operating units to
further reduce risk, with action plans developed
to address any issues.
During the year, we completed electrical
compliance inspections across our operations
and depots, and have started to register all
safety critical equipment on our SAP enterprise
resource planning system, in order to formalise
and ensure planned maintenance.
We worked with our security providers to
ensure that appropriate training was provided
so that Vivo Energy is fully compliant with the
Voluntary Principles on Security and Human
Rights across the Group.
We had zero recordable robberies during the
year and continued to see a decrease in other
security incidents across our network due to
our constant vigilance and preparedness.
We continued our project to ensure that each
person fulfilling an HSSEQ critical position has
the necessary knowledge and competency to
ensure our policies, processes and procedures
are fully and correctly implemented. By the
end of the year over 1,000 colleagues had
completed a comprehensive competency
assessment. Any identified gaps have been
linked to training plans in order that these
can be closed.
We have also continued to focus on employees’
general health and wellbeing, providing
the opportunity for employees across our
operating units to complete an annual medical
health assessment, led by our company
health advisers.
TRAINING AND DEVELOPMENT
We employ around 2,800 people, and
work hard to support and develop them at
every opportunity.
Learning and development is an integral part
of our approach to talent management, and
we have structured development plans in place
to constantly build the skills and capabilities of
our people. We invested around $1.7 million
in training in 2022.
In Zambia, we launched a road
transport safety culture campaign
called ‘Staying Alive’ – in partnership
with our main transporters Juba
and Mohab and the country’s Road
Transport and Safety Agency – to
drive awareness and ensure safe
transport of our products.
GENDER DIVERSITY
29%
of employees
are women
OUR GENDER SPLIT
31 DECEMBER 2022
Female Male Total
Board of Directors
Senior Executive Team1
Senior Executive
Team’s direct reports2
0
2
21
5
12
65
5
14
86
All other employees
778 1,917 2,695
1 The CEO is counted in the Board of
Directors row. While he is also a member of
the Senior Executive Team, he is not counted
in this row, to avoid double‑counting.
2 Not including personal assistants.
Note: 88 employees are Directors across the
Group’s subsidiaries, of which 66 are male and
22 female.
Total Recordable Case Frequency
Per million exposure hours
2022
2021
2020
2019
2018
0.04
0.04
0.10
0.18
0.19
Employee & contractor fatalities
Number
2022
2021
0
2020
0
2019
0
2018
1
1
During the year, a key training highlight was
an online and residential senior leadership
development programme in partnership with
the Gordon Institute for Business Science
for 22 colleagues. This programme helps to
develop well‑rounded senior leaders, who
are willing and able to make strategic business
decisions and lead teams, with a focus on smart
and profitable growth.
We also conducted an accelerated leadership
programme for 28 of our junior to mid‑level
managers, to help improve their strategic
leadership skills, enabling them to grow and
develop within the business.
ENHANCING GENDER DIVERSITY
We promote the development and efficient
deployment of our employees to create an
inclusive work environment, where everybody
has an equal opportunity to develop his or her
skills and talents.
We strive to ensure balanced gender
diversification across our employee workforce.
Although our gender balance is steadily
improving, we recognise that there is further
room for improvement.
Across the Group, at the end of 2022, women
represented 29% of total employees, up from
27% in 2021. Female representation among our
office‑based and sales staff in 2022 was 35%.
EMPLOYEE ENGAGEMENT
We work hard to nurture an open culture
where the opinions of our people are heard
and valued. In 2022, we continued the rollout
of our online platform – Your Voice – to
encourage employees to submit ideas on a
wide range of topics. These are reviewed
by country HR managers and discussed at
country leadership level. Where the ideas
make business sense and have the potential
to improve ways of working, they are
implemented to help grow, develop and
improve the business.
We continued the pilot of our Employee
Assistance Programme in six of our operating
units, providing practical information and
confidential counselling to employees and
their close family members on a wide range
of work and personal issues. During 2022,
it was agreed to roll out the programme to
18 of our countries.
In our last employee engagement survey, nine
out of ten employees said that they are proud
to work for us, believing we are well‑respected
in the countries where we operate, deliver
world‑class HSSEQ performance and that
we will be successful in the future.
21
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR SUSTAINABILITY FRAMEWORK
2 PLANET
With fuel demand expected to grow
across our markets, we aim to meet it
in the most climate‑friendly way possible
and minimise the impact on our planet.
Our four key priorities in our
Planet pillar include:
GREENHOUSE GAS
MANAGEMENT
PRODUCT SPILLS
SUPPORTING THE
ENERGY TRANSITION
SOCIETAL IMPACT
22
We are already supplying lower carbon energy alternatives, and believe that as they become a more widespread reality across Africa, we will be well positioned to deliver the benefits to our customers. It is crucial to understand the climate-related risks and opportunities we are presented with and ensure they are fully considered in our strategy. We have therefore aligned with the TCFD framework, and are now integrating the outcomes across our businesses, strategy and financial planning. For more information see pages 28 to 31. GREENHOUSE GASES (GHG)In 2022, we made progress with the collection, tracking and reporting of our greenhouse gas inventory across our 23 operating units, in accordance with the standards set out by the GHG Protocol. During the year we continued to implement our GHG Inventory Management Plan (IMP) which describes the process of collecting, calculating and quantifying our GHG emissions. In addition to our Scope 1 and 2 emissions, we report on ten relevant categories of Scope 3 emissions in accordance with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Our reporting now includes emissions relating to the use of sold products, where much of our value chain emissions fall. Our Group-wide Scope 1 and 2 emissions, and all calculated categories of Scope 3 emissions, are disclosed on the next page.We have not included emissions from our central offices located outside our OUs as these are small, shared offices, responsible for minimal emissions. This includes our small shared office in the UK, which uses renewable electricity and as such has no GHG emissions. We have implemented efficiency measures in the office to limit energy consumption.We are pleased to report that our Operational Intensity ratio (Scope 1 & 2) has improved compared to previous years. Our overall emissions (Scope 1, 2 and material Scope 3 categories) have increased, due to the inclusion of category 1A (purchased goods) figures, however, the Intensity ratio has decreased compared to the prior year.Historic data sets have been rebased in accordance with the Vivo Energy Greenhouse Gas Inventory Management Plan, with 2019 as the base year.We have successfully identified short-, medium- and long-term initiatives to manage Scope 1 and 2 impacts including reducing our own emissions while increasing efficiencies and solar initiatives across the Group.It is clear that due to the nature of the products we sell, our indirect Scope 3 impact is significantly greater than our direct emissions. While we need to meet the continuing demand for hydrocarbon fuels from our customers, we must do so in the most climate-friendly way possible. Today, we are one of the few companies in Africa putting additives into most of the Retail fuels we sell to improve efficiency. During the year we developed and launched EcoDrive – our first differentiated fuel in our Engen-branded markets – in Rwanda. Designed to improve fuel economy and be more efficient than standard fuels, the new range of EcoDrive fuel products will also help grow brand preference and market share.PRODUCT SPILLSWe consider any release of product to the environment as unacceptable, and continue to implement stringent process safety standards and procedures, as well as ensuring our contractors have advanced technical mitigations in place to prevent spills.During 2022 we continued to maintain our excellent record of preventing spills, despite extremely challenging operating conditions, and were delighted to record zero spills during the year.SUPPORTING THE ENERGY TRANSITIONWe recognise that the sustainability of our business depends on our understanding of the climate-related risks and opportunities we face, together with our commitment to ensuring that these are fully considered in our strategy.Today, our core businesses are focused on distributing and marketing fuels and lubricants to our Retail and Commercial customers in Africa.We therefore perceive that the most material transition risks to the Group are related to factors that could reduce demand for the fuels we sell due to any combination of climate-related technology, market and policy and legal developments across our markets.We have identified a number of activities and plans across key climate-related areas, which both harness transition opportunities, and mitigate transition risks.Using renewable power at our facilitiesWe are including on-site solar power at newly built and rebuilt retail sites where possible. In 2022 we added solar to 75 sites. We are also installing solar panels at depots and offices.Supporting electric vehicles (EV) in our retail segmentWe are piloting EV charging infrastructure in a number of our markets, such as Mauritius, Reunion and Morocco, to understand its potential and ensure we are positioned to address customer demand as it evolves.Supplying low- or zero-carbon fuels in Retail and Commercial segmentsWe are continually monitoring and responding to Retail and Commercial customers’ demands for new technologies and lower-carbon alternatives such as LPG, solar or other commercially attractive options, as part of the transition.VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT
Achieving lower emissions logistics
We are engaging with our fuel delivery fleet
suppliers to minimise the climate impact
of trucks used for transporting our fuel to
end‑users. To minimise fuel usage, we are
prioritising pipeline and rail transport ahead of
road, where possible.
SOCIETAL IMPACT
During 2022 we launched an initiative
called Green Champions as part of World
Environment Day. Its aim was to find
climate‑related activities that could be
developed and implemented by employees to
help minimise our impact to the planet.
Over 230 employees expressed an interest to
become Green Champions. Following review
by each of the operating unit managing
directors, 99 colleagues across the Group
were appointed.
Nearly 130 initiatives have been developed – all
of which are linked to the four Planet priorities.
These are in the process of being implemented
across the Group.
OPERATIONAL EMISSIONS – SCOPE 1 AND 2
KT CO2e, unless otherwise indicated
Total Scope 11
Total Scope 22,3,7
Total Scope 1 & 2 Emissions7
Total energy consumed4
(million kilowatt-hours)
Scope 1 & 2 Intensity
(KT CO2e/10,000m3)
2019
11.22
12.13
23.35
64.76
2020
10.41
11.32
21.73
59.04
2021
2022
10.44
11.31
21.75
60.91
10.39
11.52
21.91
60.81
0.022
0.023
0.021
0.020
VALUE CHAIN EMISSIONS – SCOPE 3
KT CO2e, unless otherwise indicated
2019
2020
2021
2022
1A. Purchased goods5,7
1B. Purchased services
2. Capital goods
3. Fuel‑ and energy‑related activities3,7
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel6,7
8. Upstream leased assets
9. Downstream transportation and
distribution
5,668.91
5,194.45
5,826.97
6,030.33
25.96
38.15
5.75
85.64
0.41
0.81
4.36
25.62
37.14
4.93
74.80
1.33
0.48
3.72
24.60
35.88
6.09
84.86
1.31
0.17
3.58
24.48
34.11
7.78
78.43
2.05
0.79
4.42
26.14
19.52
21.84
29.94
In Mauritius we are continuing the
deployment of aquaponic vegetable
gardens. In September, the team
inaugurated a fourth unit at the NGO Ti
Rayons Soleil, in Vacoas. This mini food
farm will directly benefit the residents,
and young people from vulnerable
backgrounds in the region.
GREEN CHAMPIONS
99
employees appointed
as Green Champions
in 2022
11. Use of sold products
26,280.16
24,208.93
26,138.65
27,313.19
13. Downstream leased assets
1.77
1.62
1.85
2.02
Total Scope 37 (reported categories) 32,138.06 29,572.54 32,145.80 33,527.54
Total Scope 1, 2 & 3 Emissions
32,161.41 29,594.27 32,167.55 33,549.45
Scope 1,2 & 3 Intensity7
(KT CO2e/10,000m3)
30.874
30.710
31.225
31.131
Number of product spills
Greater than 100KG
2022
0
2021
2020
2019
2018
2
2
2
3
1 Direct emissions from activities owned and controlled by the organisation.
2
Indirect emissions purchases of energy in the form of electricity due to activities owned and controlled by
the organisation.
IEA emission factors for electricity is published in October each year. Indirect emissions are calculated using the latest
emission factors which are backdated by two years and cause historic electricity related data to be different to those
previously published.
3
4 Total energy consumed calculated using fuels’ lower heating values and metered electricity.
5
Indirect emissions have been added to Scope 3 CAT 1A Purchased goods. As per the Vivo Energy Greenhouse Gas
Inventory Management Plan, historic figures for material changes require rebasing to the base year of 2019. Year 2019,
2020, and 2021 figures have been rebased.
6 Business travel emissions included for 2019, 2020 and 2021 based on historic travel and entertainment spend.
7 Previous years have been rebased as per the Vivo Energy Greenhouse Gas Inventory Management Plan with 2019
as the base year.
Total product lost
Metric tonnes
18.4
2022
0
2021
2020
1.7
7.5
2019
2018
45.4
23
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR SUSTAINABILITY FRAMEWORK
3
PARTNERSHIPS
Engaging with and supporting the
development of our partners and local
communities helps us gain a better
understanding of their needs and
concerns. This matters to us because
we employ local people and serve local
businesses and individuals. Leading by
example across our value chain is key
to us achieving our vision of becoming
the most respected energy business
in Africa.
We have three key priorities
in our Partnerships pillar:
PARTNERING WITH
COMMUNITIES
ENABLING LOCAL
ENTERPRISE
RESPONSIBLE
PURCHASING
PARTNERING WITH COMMUNITIES
Our community investment programmes
matter to us because we employ local people
and serve local businesses and individuals.
We want to create lasting social and economic
benefits for these communities and engage with
them to earn their respect and trust.
During 2022, our community investment
programme was primarily focused on road
safety, education, and the environment.
Throughout the year we launched around
100 community projects.
Road safety
Road safety is a major challenge across Africa
and particularly for businesses like Vivo Energy,
which rely on trucks and road tankers for
supply and distribution. There are too many
accidents, fatalities and injuries associated
with road transport in Africa and we are
determined to make a difference where we
can. Our programmes are designed to deliver
a cultural shift in attitudes to road safety across
the general population, in particular amongst
school children.
Already widely recognised as an industry leader
in the promotion of road safety initiatives and
higher standards, we work closely with local
communities to provide training, guidance,
technology and, where appropriate, funding to
initiate changes to road layout and signage.
As an example, in Botswana we launched a
programme to improve road safety around
schools. Partnering with the NGO, Society
for Road Safety Ambassadors, we helped
add road signs and speed humps near schools
around the capital Gaborone in addition
to providing road safety education to both
students at the schools and the general public
through a radio campaign. The programme
was recognised by the Botswana government
for its positive impact.
Education
We are active in the development and delivery
of a wide range of educational initiatives across
the continent. Many are aimed at children and
young people, with the objective of fostering
academic achievement, entrepreneurship
and learning. Others are focused on skills and
knowledge for life, often with an emphasis on
safety, environmental issues and health.
In Ghana we funded a community digital
literacy project in partnership with
Worldreader and the Ghana Library Authority.
The programme provided households in
Ghana’s Northern Region with e‑readers
loaded with books. Since the start of the
project, over 12,000 books have been read,
helping improve literacy and education among
the region’s youth.
24
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT
Environment
We express our commitment to protecting
the environment through two complementary
channels. Clearly, we have a direct responsibility
for the impact that Vivo Energy makes as
a business and we work hard to develop
energy resources, products, services, practices
and policies that reduce our impact on
the environment.
We also have a responsibility to educate
local communities and help them adopt
behaviours that will safeguard the environment
and improve energy efficiency and, as a
consequence, promote both a better quality
of life and a sustainable future for individuals
and businesses alike.
Although Senegal’s electrification rate is one of
the highest on the continent, there are deep
disparities between urban and rural areas.
During the year, our team in Senegal sponsored
the For Hope Association to develop a rural
electrification project using solar panels for 24
villages in the rural community of N’Guellou,
located in the centre of Senegal.
The first phase of the three‑year programme
is planned to power eight villages, including
345 houses, three health posts, ten schools,
and 27 places of worship.
ENABLING LOCAL ENTERPRISE
We are focused on supporting the growth of
our dealer and transporter network and other
local businesses – creating tens of thousands of
indirect jobs across our network.
In order to manage our retail network
efficiently, we utilise local dealers to operate
approximately 95% of our sites to our exacting
standards. We support our dealers to ensure
they have a platform to succeed and regularly
check that they’re maintaining the standards
that we require.
RESPONSIBLE PURCHASING
We place great emphasis on operating our
business with high ethical standards and in a
socially responsible way, and want to work
with business partners that share our values.
We have developed a supplier code of conduct
for our partners to adhere to, which covers
minimum standards on areas including: human
rights and modern slavery, respect, child labour,
and discrimination.
In Senegal we partnered with the For
Hope Association to develop rural
electrification using solar panels.
In Ghana we funded a community
digital literacy project, in partnership
with Worldreader and the Ghana
Library Authority.
24
Senegalese villages to be
powered by solar.
AROUND 100
community investment projects
launched during the year.
25
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NON-FINANCIAL INFORMATION STATEMENT
No.
Reporting requirement
Policies
Reference in the 2022 Annual Report
1
Environmental
matters
– Environmental policy
– Code of Conduct
– Sustainability Framework: Planet
– Climate change risk
– HSSEQ and Social Performance policy
– HSSEQ risk
Page no.
22 to 23
34
33
– Task Force on Climate-Related
28 to 31
Financial Disclosures
2
Employees
– Code of Conduct
– Our culture, values and purpose
– General Business Principles
– Sustainability Framework: People
18 to 19
20 to 21
– Whistle-blowing policy
– Data protection policy
– Privacy policy
– Performance, reward and
recognition framework
– Travel security policy
3
Human rights
– Combating Modern Slavery statement
– Our culture, values and purpose
18 to 19
– Privacy policy
– Data protection policy
– Human Rights statement
– Supplier code of conduct
Social matters
– Code of Conduct
– Our culture, values and purpose
18 to 19
20 to 21
24 to 25
33
– General Business Principles
– Sustainability Framework: People
– HSSEQ and Social Performance policy
– Sustainability Framework: Partnerships
– Anti-bribery and corruption manual
– Criminal activity, fraud,
– 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
bribery and compliance risk
– Our culture, values and purpose
18 to 19
– Principal risks and uncertainties
33 to 35
– Non-financial key performance indicators
8 to 9
Anti-corruption
and anti-bribery
Principal risks
and uncertainties
Non-financial key
performance
indicators
4
5
6
7
26
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 2022: VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT SECTION 172(1)
STATEMENT
Engaging with stakeholders is
fundamental, and we believe that
considering them in key business
decisions is not only our legal
obligation but the right thing to do.
27
We recognise that the business can only grow and prosper over the long term if it understands and respects the views and needs of the Company’s people, customers, partners, communities, and governments, as well as the environment we operate within. The Board plays a critical role in ensuring that Vivo Energy conducts its business in a manner which is consistent with the highest standards of corporate governance and ethical behaviour so that the Group contributes positively to wider society.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 section 172 duties the Directors have regard to the factors set out above. The Directors also have regard to other factors which they consider relevant to the decision being made. The Board recognises that Vivo Energy is run for the benefit of our shareholders, but that the long-term success of the Group is reliant on the fostering and nurturing of relationships with a variety of stakeholders and on regular consideration of the impact of the Group’s activities on them. Accordingly, 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 and governments. Further details about how we engage with these stakeholders can be found on page 7 and page 38. The Board considers all relevant factors and stakeholders in deciding on a course of action that is most likely to result in sustainable success for all stakeholders. Stakeholder interests are not always aligned and on some occasions, it is necessary for the Board to prioritise the needs of one stakeholder group over another and every decision we make will not therefore 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-MAKINGThe Board’s main responsibility is to promote the long-term success of the Group, leading in an entrepreneurial manner ensuring we generate value for stakeholders. We have a clear framework for determining the matters within our remit and have approved Terms of Reference for the matters delegated to our Committees.Throughout the year, the Board has considered the long-term consequences of the decisions it has taken, focusing on the interests of relevant stakeholders as appropriate. Set out below are examples of how the Directors discharged their duties under section 172 during the year.KEY BOARD DECISIONSWates PrinciplesGood corporate governance is a key factor in achieving effective leadership and sustainable corporate behaviour. This means ensuring that there is an effective framework of internal practices, policies, systems and controls which clearly define levels of accountability and authority for decision-making within a culture of openness, ethics and values. We recognise that our ambition of becoming Africa’s most respected energy business can only be achieved through demonstrable good governance in its broadest sense and strong governance has always been at the heart of Vivo Energy. Until the delisting from the London and Johannesburg stock exchanges, Vivo Energy complied with the 2018 Governance Code. Following the delisting, the Company’s Non-Executive Directors resigned and the new Board considered different governance frameworks before deciding to adopt the Wates Principles as the basis with effect from 1 January 2023. Effective corporate governance provides competitive advantage, helps deliver strategy and is vital to Board’s decision-making. It supports long-term sustainable growth and also gives our stakeholders confidence that Vivo Energy is being run effectively. Continuing to have a robust and transparent governance framework was therefore considered to benefit all our stakeholders. ESG and sustainability Regardless of where you are located, affordable energy is essential to facilitate improvements in the quality of life and critical to economic growth. Our planet’s resources are not, however, indefinite and collective action is required to protect the health of the natural environment, upon which we all rely. Environmental damage has broad consequences for the health and wellbeing of societies and climate change remains the greatest environmental threat we face. As a Group, Vivo Energy has an important role in meeting the growing needs of our customers for energy, while, at the same time, working towards a more sustainable future by reducing environmental impacts. We recognise that the sustainability and longevity of our business depends on our understanding of the climate-related risks and opportunities we face. The Board considers environment and climate change during its discussions and when making decisions regarding the Group’s strategy, risk management, investments and stakeholders. While the Board recognises that good progress has been made in sustainability activity, it could benefit from having a more structured approach across the Group. As a result, a three pillar Sustainability Framework (People, Planet and Partnerships), was established during the year to provide an umbrella for all ESG and sustainability activities, to guide the Group’s approach, and provide more focus on the sustainability topics that matter the most to us, and our stakeholders. For further details, please see pages 20 to 25.We tasked the ESG and Climate Committee with overseeing the implementation of the Framework and the Group’s climate-related progress with the Board retaining ultimate responsibility for sustainability and environment. The Committee was renamed ESG Committee and is chaired by the CEO who regularly reports to the Board on the Committee’s discussions and progress made. To harness the energy and passion of our people across the business, we also launched an initiative called Green Champions with the aim of finding climate-related activities that could be developed and implemented by employees to help minimise our impact on the planet. Nearly 100 colleagues across the Group were appointed as Green Champions and 99 initiatives have been developed so far – all of which are linked to our Planet priorities. These initiatives are now in the process of being implemented across the Group.The expectations of governments, regulators, investors, customers and our people, who are all becoming increasingly concerned with ESG issues and the need to minimise our impact on the environment, were all important considerations when making the above decisions.VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
TASK FORCE ON
CLIMATE-RELATED
FINANCIAL
DISCLOSURES
The Group has voluntarily
opted to prepare the TCFD
ahead of the 2023 disclosure
requirement for private
companies. We recognise
that the sustainability of our
business depends on our
understanding of the climate-
related risks and opportunities
we face, together with our
commitment to ensuring that
these are fully considered in
our strategy. This disclosure,
aligned to the TCFD framework,
is an important component
of our ESG journey,
providing transparency for
our stakeholders regarding
our climate-related
preparedness.
28
THE BOARD
Oversees Group-wide climate-related risks and opportunities.
BOARD COMMITTEES
Audit and Risk Committee is responsible for reviewing and
monitoring the overall Group risk profile, including climate-related risks
and internal controls.
ESG COMMITTEE
Objective is to guide Vivo Energy’s
organisation around climate-related
risks and opportunities, manage sustainability
risk areas, assess ESG strategy and risk
management framework, and monitor ongoing
ESG and climate-related metrics and targets.
HSSEQ
Our HSSEQ function is responsible
for maintenance and quality
assurance of the Group’s Greenhouse Gas
Inventory Management Plan. It also has
responsibilities for risk assessment control
measures for physical climate risks.
CFO
Oversees financial aspects of Group ESG
strategy, including considerations relating to
spend on alternative energy within
the core business, non-fuels, and M&A.
INTERNAL AUDIT
Annually assesses Group significant risks,
reporting directly to the Audit and Risk
Committee on principal risks, including
climate risks. Provides assurance to the
Board on effectiveness of governance, risk
management and internal controls.
OPERATING UNITS (OUs)
Our OUs report on physical and transition climate-related risks and
opportunities on country level risk registers, including assessments
of exposure to risks and opportunities.
GOVERNANCEClimate-related issues have been considered as a principal risk since 2020 and are formally embedded into our systematic risk identification, evaluation, and Board and management processes. In 2021, to support the Board’s oversight of climate-related matters and ongoing integration of climate-related governance and initiatives across the Group, we enhanced our governance structures by establishing the ESG and Climate Committee (now ESG Committee). Chaired by the CEO, the Committee plays an integral role in overseeing our climate-related progress and reports to the Board. Our ESG strategy includes climate-related risks and opportunities and matters relating to greenhouse gas emissions, which are strategic items considered by the Board. The Board and the Audit and Risk Committee are jointly responsible for reviewing and monitoring the Group’s overall climate-related risk profile, risk management and the effectiveness of internal controls. Across Vivo Energy, line management is accountable for risk and control management, including measures for managing climate‑related risks. Our HSSEQ function is responsible for maintenance and quality assurance of the Group’s greenhouse gas inventory and management plan. It also has responsibilities for risk assessment control measures for physical climate risks.Our Internal Audit team annually assesses Group significant risks, reporting directly to the Audit and Risk Committee on principal risks, including climate risks. This provides assurance to the Board on effectiveness of governance, risk management and internal controls. Overall risk assessment includes risk identification, analysis and evaluation, ensuring each risk is analysed to identify the consequence and likelihood of the risk occurring, and the adequacy of existing controls. For further details of our approach to risk management, including our three lines of defence approach, refer to pages 32 to 35.VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT TRANSITION RISKS
RISK DESCRIPTION
POTENTIAL OUTCOMES
RELEVANT
TIME HORIZON
RISK TYPE
New climate-related reporting and
disclosure requirements or obligations
– Legal or reputational issues; increased
compliance costs
Failure to meet internal or external
stakeholders’ climate-related expectations
resulting in degraded relations with current
or potential employees
– Increased operating costs from employee
turnover; reduced revenues due to challenges
attracting new talent
Increased costs of products due to policy
changes to fuel subsidies; or higher trading prices
of oil and liquid fuels due to transitional policies
– Reduced revenues due to lower demand
for higher cost products
Commercial customers transitioning to
alternative fuels or renewable technologies
– Reduced revenues in our
Commercial segment
Policy & Legal/
Reputational
Reputational
Market/
Policy & Legal
Technology/
Market
Degradation of commercial partnerships
due to divergent climate strategy or ambition
– Reduced revenues due to loss of brand value
Market
Policies or technology shifts that result in
an increased share of electric vehicles and
hybrids in the passenger transport mix;
alternative fuel uptake; improvements
in internal combustion engine efficiency;
or reduced consumer demand for fuels
– Reduced revenues in our Retail segment
Technology/Market/
Policy & Legal
Mandatory carbon pricing impacting
the power or aviation sectors
– Increased operating costs; reduced revenues
in our Commercial segment
Policy & Legal
29
STRATEGYVivo Energy operates across 23 countries in Africa, each with different physical geographies and varying levels of climate-related maturity across market, technological, and policy and legal aspects. We believe that our operating units are well-equipped to respond to local, short-term climate-related issues, such as physical or environmental risks, and monitoring and responding to any transition-driven changes in customer demand. In 2021, we completed a climate scenario analysis to broaden our understanding of the possible impacts of physical and transitions risks and transition opportunities. We adopted short-, medium-, and long-term time horizons for our climate scenarios to be able to capture climate-related risks and opportunities which may manifest beyond traditional horizons.We defined a list of the most relevant climate-related risks and opportunities via an in-depth analysis of our business and a series of engagement workshops across key business segments and functions. The list was validated and consolidated by the ESG and Climate Committee. The risks and opportunities described below, are consistent with the prior year and, are potential drivers and outcomes that could be presented at various points in the future, depending on regional and global climate pathways. They are not necessarily new to us, and in many cases, we already have business responses corresponding to these risks and opportunities. Based on the analysis done in 2021, climate change is not expected to have a significant or material impact over the Group’s business operations in the short- and medium-term. The 2021 assessment therefore, remains relevant and reflective of the Group in 2022. Furthermore, there have been no developments in the organisation or climate change factors, that would result in a significant change of the 2021 assessment and its conclusions.These time horizons included:Short-term2021-20240-3 yearsMedium-term2025-2029 4-8 yearsLong-term2030-2060 9-39 yearsVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES CONTINUED
STRATEGY CONTINUED
TRANSITION OPPORTUNITIES
OPPORTUNITY DESCRIPTION
POTENTIAL OUTCOMES
RELEVANT
TIME HORIZON
OPPORTUNITY
TYPE
Increased operational efficiency of
Vivo Energy retail sites and depots;
increased renewable energy supply
to Vivo Energy retail sites and depots
Improving logistics fleet fuel efficiency and
optimising routing schedules; where possible,
prioritising pipeline and rail over road as means
of distribution of products
Meeting increased retail demands for lower
carbon fuel alternatives (e.g. LPG, biofuels),
electric vehicle charging infrastructure, or lower
carbon products; meeting increased commercial
demand for renewable energy or sustainable
aviation fuels
– Reduced operating costs from
asset efficiency gains
– Reduced operating costs from
fleet efficiency gains
Technology/
Market
Technology
– Increased revenues from emerging
or new retail and commercial
market demands
Technology/Market/
Policy & Legal
SCENARIO ANALYSIS – PHYSICAL
Our physical assets are exposed to occasional
local environmental stressors, and all local
incidents are recorded via our HSSEQ tool.
Mitigative actions are followed when required,
while KPIs are systematically tracked to reflect
asset performance – to date, no physical
climate-related issues have materialised at a
Group level. The conclusions of the prior year
scenario analysis are still considered relevant
for 2022.
In our first iteration of climate scenario
analysis, we assessed a representative sample
of assets from markets representing over
40% of Group volumes, including Kenya,
Mozambique, Mali, Morocco and Mauritius.
These markets were selected in order to
represent a range of physical geographies
across Africa, assumed to be exposed to
different types of physical climate hazards, as
well as their overall significance to the Group’s
retail and commercial businesses. The total
sample included 31 assets (six depots and 25
retail sites). Our focus was on understanding
the possible exposure under medium- and
long-term horizons. The physical hazards
assessed included chronic risks from sea level
rise and average temperatures, and acute
risks from drought, heatwaves, inland floods
and wildfires.
OUR KEY FINDINGS
FROM THE EXERCISE ARE
SUMMARISED BELOW:
– In the medium term, under both
climate scenarios (IPCC SSP5-8.5, IPCC
SSP2-4.5), the majority of assets
assessed were at low exposure to
most sources of physical hazard.
Instances of elevated exposure to
droughts and heatwaves were identified
at some assets in the medium term.
– In the long term, under both
climate scenarios (IPCC SSP5-8.5, IPCC
SSP2-4.5), elevated exposure to
droughts and heatwaves was
identified as the most prevalent
change across the sample of assets
assessed. No coastal assets were
significantly exposed to sea-level
rise in the long term under either
climate scenario.
– We must further investigate the
modelling results and related metrics
before we are able to fully interpret and
disclose on the exposure of the sample
to wildfires.
Note:
Qualitative physical hazard exposure classifications
(i.e. low; moderate; high) are assigned by Sust Global,
and are based upon thresholds applied to quantitative
hazard-specific exposure metrics, as per the site-by-site
results of the analysis.
SCENARIO ANALYSIS – TRANSITION
Today, our core businesses are focused on
distributing and marketing fuels and lubricants
to our retail and commercial customers in
Africa. We therefore perceive that the most
material transition risks to the Group are
related to factors that could reduce demand
for the fuels we sell due to any combination of
climate-related technology, market, and policy
and legal developments across our markets.
The conclusions of the prior year scenario
analysis are still considered relevant for 2022.
OUR KEY FINDINGS
FROM THE EXERCISE ARE
SUMMARISED BELOW:
– There is minimal impact to fuel
demand growth in the short- and
medium-term horizons, compared
to current market projections.
– In the long term, our fuel sales
volumes could continue to grow under
the IEA SDS but at a slower rate than
our forecasts based upon current
market projections, as oil demand in
the African transport sector increases
into the long-term horizon under
this scenario.
30
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT We continue to closely monitor demand
indicators in each of our markets and believe
we are well positioned to react quickly to
transition-driven changes to demand that
may occur.
OUR STRATEGY FOR RESILIENCE
To date, the actual impact of climate-related
risks on our financial performance and financial
position has been non-material. However,
we are actively considering our strategy, role
and responses to energy transitions across
our markets. We have already invested in
transition initiatives such as on-site solar across
our network, and EV charging infrastructure
in a range of countries including Morocco and
Reunion. We are continuously monitoring
demand trends for lower-carbon energy
and fuel alternatives, along with our capital
allocation to ensure we can respond to
changing market needs. We internally track
the performance of our business practice,
focusing on the operational savings from the
investments made to reduce our impact, and
operate our offices, depots and service stations
more efficiently.
Below we summarise our activities and
plans across key climate-related areas, which
we perceive as both harnessing transition
opportunities, and mitigating transition risks.
USING RENEWABLE POWER
AT OUR FACILITIES
We are including on-site solar power at newly
built and rebuilt retail sites where possible.
In 2022 we added solar to 75 sites.
We are also installing solar panels
at depots and offices.
SUPPORTING ELECTRIC
VEHICLES (EV) IN OUR
RETAIL SEGMENT
We are piloting EV charging infrastructure in
a number of our markets, such as Mauritius,
Reunion and Morocco, to understand its
potential and ensure we are positioned to
address customer demand as it evolves.
SUPPLYING LOW-
OR ZERO-CARBON
FUELS IN RETAIL AND
COMMERCIAL SEGMENTS
We are continually monitoring and
responding to Retail and Commercial
customers’ demands for new technologies
and lower-carbon alternatives such as LPG,
solar or other commercially attractive
options, as part of the transition.
ACHIEVING LOWER
EMISSIONS LOGISTICS
We are engaging with our fuel delivery
fleet suppliers to minimise the climate
impact of trucks used for transporting
our fuel to end-users.
To minimise fuel usage, we are prioritising
pipeline, marine and rail transport ahead of
road, where possible.
RISK MANAGEMENT
As climate-related risks are on the Group’s
list of principal risks, they are subject to
Vivo Energy’s risk management framework
underpinned by the ‘three lines of defence’
approach. The scenario analysis process has
helped determine possible climate-related
risks at asset, business unit and Group level,
and also highlight the actions we are already
taking to manage these types of risks. We are
in the process of ensuring that physical and
transition risks are systematically included in
all risk registers at OU level. Internal Audit has
instructed our OUs to consider both physical,
and transition risks in their risk assessments
and reporting, and guidance has been provided
on how to integrate these risks on the country
level risk registers. Our goal is to achieve a
level of granularity and consistency that will
adequately reflect all material climate-related
risks centrally, enabling comprehensive
identification, analysis and evaluation, along
with the adequacy of existing controls over the
relevant time horizons. Further details on our
risk management around climate risks can be
found on page 34.
METRICS AND TARGETS
As described on pages 22 to 23, we have
continued to enhance our GHG reporting
and disclosure since the prior year. To facilitate
the Group’s ability to assess performance
against transitional climate-related risks and
opportunities, we are tracking our operational
emissions and value chain emissions intensity.
Our operational emissions intensity represents
the emissions from the operation of our
facilities (e.g. from the purchase of electricity,
heat and cooling), relative to the volume of fuel
products supplied to and consumed by our
customers. This metric reflects our operational
greenhouse gas reduction efforts, including the
overall impact of initiatives such as increasing
the number of retail sites and depots with
on-site solar power. Further details on
Scope 1, 2 and 3 emissions can be found on
page 23.
31
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RISK
MANAGEMENT
The main purpose of risk
evaluation is to help prioritise
risks and ensure effective risk
management. Through an
embedded approach to risk
management, we are able to
mitigate and manage risks and
embrace opportunities as
they arise.
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33
OUR APPROACH TO RISK MANAGEMENTOur 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.The Audit & Risk Committee and the Board are responsible for reviewing and monitoring the overall risk profile, the adequacy of the Group’s risk management and the effectiveness of internal controls.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.RISK ASSESSMENT, MONITORING AND REVIEWFor 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. The risk register is one of the key components of our risk management and governance structure. 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 control framework. INTERNAL CONTROL SYSTEMOur 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. OUR DYNAMIC RISK ENVIRONMENTAs 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. 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 Group’s Ethics & Compliance function monitors the cases identified and initiates or advises on the investigations when suspicions or allegations are reported.The ability to obtain financing through access to capital markets may impact the future operations of the business, obstructing the Group from realising its growth and acquisition strategy. This may also change the debt to equity ratio of the Group in the short-term. To this effect, management is aware of the related risks for which an implementation strategy is underway, to ensure the Group has sufficient capital resources. Furthermore, the Group has a robust forecasting function in place to anticipate and manage possible cash commitments shortfalls and maintains long standing and strong relationships with lenders.STRATEGIC REPORT 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.
BRAND AND REPUTATIONAL
PRICING
HEALTH, SAFETY, SECURITY
& ENVIRONMENT
3. OIL PRICE FLUCTUATIONS
5. HEALTH AND SAFETY
The price of oil and oil products may fluctuate
preventing the Group from realising its targeted
margins, specifically in the unregulated markets
where we operate.
Price fluctuations could negatively impact the
value of stocks, resulting in stock losses.
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 to cope with a high volatility and high
sensitivity environment.
4. CURRENCY EXCHANGE RISK
The Group is also exposed to foreign exchange
risk, currency exchange controls, currency
shortage and other currency-related risks.
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 are exposed to accidents or incidents
relating to HSSEQ and are further subject to
laws and regulations and industry standards
related to its operations in each of the
operating countries.
We may incur potential liabilities and the brand
reputation can be severely impacted, along with
employee confidence.
Regulators and authorities may impose fines,
disruptions to operations and disallow permits
for future ventures.
The COVID-19 pandemic significantly increased
the HSSEQ risks across the Group. The main
risk relates to staff or business partners
contracting the virus, entailing threats for
life and business continuity. There is also an
elevated risk of robbery and theft associated
with the deteriorating economic conditions in
most countries.
6. ECONOMIC AND
GOVERNMENTAL INSTABILITY
Several countries and regions in which we
operate have experienced sustainability
and growth.
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.
This includes the enactment of local content
and local ownership laws that could impact our
markets and operations.
A new pandemic and the related social and
economic consequences could negatively
impact the stability of some of the countries
where we operate, intensifying social tensions.
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.
2. CRIMINAL ACTIVITY,
FRAUD, BRIBERY AND
COMPLIANCE RISK
The delisting of the Group has directly
impacted (lowered) the number of regulations
applicable to the Group. However, a significant
number of regulations and rules remain
applicable such as the anti-bribery and
corruption laws, sanctions (restrictions) and
Know Your Counterparty best practices.
In addition, the number of regulations
applicable to the Group and the (related)
risk of non-compliance can increase with
any extension of the Group activities to
new territories.
The COVID-19 pandemic and new ways of
working have created increased opportunities
for fraudsters.
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33
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RISK MANAGEMENT CONTINUED
OPERATIONAL
STRATEGIC
FINANCIAL
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 of the countries in
which we operate. The increased procurement
costs could lower our margins. Limited supply
of products and storage facilities may result in
stockouts. This could further result in breach
of contract and disruptions to our operations,
leaving us susceptible to fines or penalties.
8. BUSINESS CONCENTRATION RISK
The Group’s operations (and margins) in
Morocco are disproportionately large in
relation to the operations in the other countries
and a downturn in business in Morocco could
affect the Group’s overall performance.
The integration of the Engen transaction
has increased the geographic diversification
and reduced the relative weighting of the
Shell-branded OUs, including Morocco, in the
Group’s operations and volumes.
9. INFORMATION TECHNOLOGY RISK
The Group has experienced an increase in
phishing attacks and cyber-fraud activity
reported. The Group conducts regular phishing
simulation exercises to test, assess and validate
staff awareness and appropriate conduct when
receiving emails.
10. LOCAL CONTENT
13. CREDIT MANAGEMENT
We face risks arising from its credit exposure
on commercial and retail customers, including
outstanding receivables and committed
transactions. This may result in financial loss as a
result of bad debts and lost revenue.
Exceeded payment terms impact the OUs’
working capital and can create 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. Continuous monitoring of
outstanding credit balances ensures our overall
risk remains within our tolerance.
HUMAN RESOURCES AND
TALENT MANAGEMENT
14. HUMAN RESOURCES
AND TALENT MANAGEMENT
Over-solicitation of staff (in relation with
projects to manage in parallel to day-to-day
activities) can become a demotivating factor.
Increased costs caused by staff inefficiency and
remedial contracting.
Key people leaving the Group, with
some joining competitors. We maintain
detailed succession plans and talent
management programmes.
Employee discontent can result in industrial
disputes, strikes and sub-standard performance.
We maintain constructive dialogue with unions
and workforce representatives.
During the pandemic, our human resources
and talent management risk has been impacted
by the governmental limitations on movements,
delaying some international assignments and
relocations. Some local measures may also
affect our ability to move talents between
countries in the future.
There is an increasing trend across the
continent on local content regulations.
New regulations are in the pipeline that
could significantly impact our operations
(shareholding of energy supply companies).
In some countries, local content regulations
already oblige local companies to be given first
priority in the provision of goods and services in
some specific sectors (e.g. mining).
11. CLIMATE CHANGE
Although many uncertainties exist about
the potential consequences of future climate
change, it will result in adverse effects on
human health, ecosystems, economic systems
and infrastructures that are sensitive to changes
in climate.
Non-adherence to the evolving regulation,
technology and customer needs exposes
the Group to compliance and financial risks.
Brand reputation can be severely impacted,
along with employee confidence. Regulators and
authorities may impose fines, disrupt our
operations and suspend licences to operate.
Financial markets (investors) could re-orientate
investment criteria to environmental, social and
governmental issues.
Shifts in customer behaviours, expectations
and consumption trends may impact our
volumes, in particular in countries which start
to experience the emergence of a hybrid and
electric vehicles market.
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.
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.
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.
The Group Business Continuity Plans can
be activated quickly and effectively to keep
employees, retailers and contractors safe and
ensure the security of our critical sites and
operations. This plan ensures the Group is
able to maintain supply to its retail sites and
commercial customers.
Africa already experienced several epidemic
crises over the past decades, some of which in
turn severely impacted the economies.
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35
STRATEGIC REPORT PRINCIPAL RISK FACTORS
5
2
9
7
11
8
1
12
6
3
4
10
13
14
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. Local content
11. Climate change
12. Epidemic
13.
14.
Credit management
Human resources and talent management
LOW
MEDIUM
HIGH
LIKELIHOOD
RISK IMPACT
Decrease
Unchanged
Increase
34
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35
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
GOVERNANCE
The following pages describe our governance
arrangements, the operation of the Board
and its Committees and how the Board has
discharged its responsibilities during the year.
CONTENTS
Compliance statement
Board leadership and Company purpose
Board of Directors
Role of the Board and division of responsibilities
Directors’ Report
Statement of Directors’ Responsibilities
36
37
39
40
41
43
COMPLIANCE STATEMENT
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.
Until the delisting in July 2022, we were subject
to the UK Code of Corporate Governance
(the ‘Code’) which was issued by the Financial
Reporting Council in 2018. Until 26 July 2022,
the Board considers that the Company has fully
complied with the Code.
The 2018 Code is available from www.frc.com.
Following the delisting, the Board considered
different options before it decided to adopt the
Wates Principles as the basis of the Company’s
governance code with effect from 1 January 2023.
Details of our corporate governance
arrangements are set out throughout this
Governance Report and, where indicated in this
report, in the Strategic Report.
36
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022GOVERNANCE BOARD
LEADERSHIP
AND COMPANY
PURPOSE
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.
37
HOW GOVERNANCE SUPPORTS OUR STRATEGYWe recognise that our ambition of becoming Africa’s most respected energy business can only be achieved through demonstrable good governance in its broadest sense. The Board 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, provides 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, challenging 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 the 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 items considered during 2022 include: - Local content requirements;- Sanctions;- Sustainability; and - Growth strategies in non-core areas. Further information on the strategic priorities for the Group is available in the Strategic Report on page 6. OUR PURPOSE AND CULTUREOur purpose sets out why we exist and directs us to focus on what is important to our stakeholders. The Board has overall responsibility for establishing Vivo Energy’s purpose, values and strategy to deliver long-term sustainable success and generate value for stakeholders while being aligned with the Group’s culture.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. We aim to do this by realising the full potential of our people and business partners, supporting our communities and being recognised as the benchmark for quality, excellence, safety and responsibility in Africa’s marketplace.Our culture drives our behaviours and underpins everything we do. We recognise that how we do things is just as important as what we do. The right culture plays a fundamental part in delivering our strategy; it sets the tone and leads to a motivated and productive workforce. 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. How the Board monitors culture:We believe 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. The Board is responsible for ensuring that the culture in which we operate drives the right behaviours and the Group’s culture is a focus area for the Board.Listening to our employees – People are the lifeblood of every business. They are crucial to the day-to-day functioning of our operations; and we recognise that the strength of our business is built on the hard work and dedication of our people. We are committed to building an engaging and inclusive culture that empowers and allows our people to grow and thrive. By living our values, our people differentiate us from our competitors and enable us to deliver our strategy. Our people are at the heart of everything we do and we use many different channels to understand how our people experience working for Vivo Energy. These engagements aid us in shaping our culture, policies and practices to ensure Vivo Energy is an attractive and inclusive place to work.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. In our last employee engagement survey, nine out of ten employees said that they are proud to work for us, believing we are well-respected in the countries where we operate, deliver world-class HSSEQ performance and that we will be successful in the future. The next survey is scheduled to take place in 2023.In 2022, we continued with the roll-out of the electronic suggestion tool, Your Voice, to encourage employees to submit ideas on a wide range of topics. Where the ideas make business sense and have the potential to improve ways of working, they are implemented to help grow, develop and improve the business. Since the implementation of the tool, we have received over 200 suggestions of which 92 have been or are being implemented. During the year the Board considered the annual culture update, and received reports from the Employee Engagement Champion. A culture dashboard and the annual whistle-blowing report were also presented to the Board.Ethics, bribery and fraud – The Group values its good reputation for ethical behaviour, integrity and reliability and expects high standards of conduct from all stakeholders involved with our operations. VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
38
We measure the effectiveness of our compliance programme through audits and through monitoring breach allegations and root causes. The Audit and Risk Committee monitors and regularly reviews the Company’s policies, incidents and trends arising from any such incidents and provides updates of key matters to the Board. 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 Speak Up helpline enables employees and third parties 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 Ethics & Compliance and are investigated or escalated to the General Counsel 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 concerns of misconduct. The Board is provided with periodic reports on whistle-blowing.Social engagement – We want to be a force for good and support those who support us. We recognise the importance of going beyond maintaining our social licence to operate; supporting the issues that matter to our communities and working with them for the long term are essential for building trust and earning their respect. We aim to 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. We do this through partnerships, employee engagement and non-political donations.During 2022, our community investment programme was primarily focused on road safety, education, and the environment. Throughout the year we launched around 100 community projects. Risk management and internal controls – The Board is responsible for the Company’s systems of internal control and risk management. 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 2022, 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.Respect for human rights is a fundamental part of operating as a responsible business. Any exploitation of human beings is entirely at odds with our core values of honesty, integrity and respect for people and we are committed to building awareness and working with our partners to ensure that all those working within Vivo Energy or our supply chain are treated with respect and dignity. We have a well-developed policy framework that covers our responsibilities to protect the human rights of those working in our direct operations, as well as in our value chain and communities. We have also issued separate written guidance to our retail network on what modern slavery is, how to recognise it and how to report issues to us. In addition, our Speak Up helpline includes a specific reporting category for raising concerns relating to potential unfair labour practices or human rights violations. During the year the Board approved the Company’s Modern Slavery Statement which is published on our website www.vivoenergy.com/About/Our-Principles-Policies/Modern-Slavery-Statement and was submitted to the UK online registry. Our Supplier Code of Conduct and Human Rights Policy Statements also are available on our website www.vivoenergy.com/About/Our-Principles-Policies. Vivo Energy recognises that corruption undermines the rule of law and democratic process, impoverishes states and distorts free trade and competition. We have established policies and governance procedures that set and monitor our approach to preventing fraud, bribery and corruption, including our Code of Conduct and Anti-Bribery and Corruption manual. We conduct mandatory e-learning courses for all employees to ensure that they understand the Group’s zero-tolerance approach to fraud, bribery, and corruption of any kind. A gift and hospitality register is in place and our employees must report and seek permission to accept gifts and hospitality over a prescribed financial value. We maintain a multi-site ISO 37001 anti-bribery management certification. During the year we carried out five external reviews in our Operating Units as part of our annual compliance audit. No non-conformities were found. We have a detailed counterparty screening programme in place which is formalised in the Vivo Energy Know Your Counterparty (KYC) policy. This screening process gives us confidence that we know who we are doing business with and that the ethics and values of our counterparties are aligned with ours. As part of the process we require new counterparties to sign a compliance statement, which sets out our approach towards AML, ABC, modern slavery and conflicts of interest. 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 27.STAKEHOLDERSWe do not operate in isolation. Multiple stakeholders are impacted by our business, including shareholders, employees, customers, partners and the communities and governments of the countries in which we operate.Engaging with stakeholders and understanding their views is vital to the Board and underpins effective decision-making. We create value for our shareholders by taking decisions that are sustainable in the long term not only for us but also for those our business affects. The Board is committed to building positive relationships with all stakeholders and recognises that this is not only essential to building a sustainable business but also the right thing to do. During the year, the Group undertook a number of stakeholder engagement initiatives, both before and after delisting. Further information is available within the Strategic Report on pages 24 to 25. 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 Interim 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 stakeholders, see page 27.VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022GOVERNANCE BOARD OF
DIRECTORS
CHRISTOPHER BAKE
CHAIRMAN
STAN MITTELMAN
CHIEF EXECUTIVE OFFICER
JAY GLEACHER
INTERIM CHIEF FINANCIAL OFFICER
Appointment Date: 26 July 2022
Skills and Experience
Chris Bake joined the Board in July 2022 and
became the Chairman in February 2023. Chris is
a highly experienced leader and brings significant
investment, strategy development and M&A
experience to the Board, together with a deep
knowledge of the energy sector.
Since joining Vitol in 1995, Chris has held various
leadership positions in Dubai, Bahrain, London,
Buenos Aires and Houston. He is currently
chairman of VTTI, an independent provider of
global energy storage, on the board of Petrol Ofisi
and a member of the Vitol Executive Committee.
Before joining Vitol, Chris worked for BP
and Phibro.
Appointment Date: 5 March 2022
Skills and Experience
Stan brings over 30 years of downstream energy
experience to Vivo Energy and has spent a
substantial part of his career operating in Africa.
Before joining Vivo Energy, Stan was SVP Africa at
TotalEnergies Marketing & Services, where he led
the fuel retailing and marketing business across 40
countries in Africa. Prior to this, Stan held a range of
senior positions at TotalEnergies, including CEO of
Total Marketing France, and a number of roles on
the continent, including EVP West Africa for Total
Marketing Services and MD Total Zimbabwe.
Appointment Date: 26 July 2022
Skills and Experience
Jay Gleacher became Interim Chief Financial Officer
in January 2023, having initially joined the Board in
July 2022. As CFO, Jay is responsible for financial
control, treasury & credit, IT and procurement.
Jay has extensive finance and M&A experience in
the energy sector. Besides the Vivo Energy Board,
Jay is also a supervisory board member of Varo
Energy B.V.
Prior to joining Vivo Energy, Jay was an Investment
Director focused on investment opportunities
in Europe, Africa and Latin America at Vitol.
Before joining Vitol in 2009, Jay worked in Morgan
Stanley’s Investment Banking Global Energy Group.
SELIM ŞIPER
INDEPENDENT
NON‑EXECUTIVE DIRECTOR
Appointment Date: 26 July 2022
Skills and Experience
Selim Şiper has an excellent understanding
of brands and consumers, a track record
of strong operations management and an
international perspective of driving value in
complex environments.
From 2017 to 2022 Selim was the CEO of Petrol
Ofisi, Turkey’s leading distributor of fuels and
lubricants, and he now serves on Petrol Ofisi’s
board. Before joining Petrol Ofisi, Selim was the
CEO of Ipragaz.
MATTHEW STACEY
NON‑EXECUTIVE DIRECTOR
Appointment Date: 26 July 2022
Skills and Experience
Matt Stacey is Head of Middle Distillates at Vitol.
Matt is a highly experienced leader who brings
wealth of knowledge and understanding of the oil
markets to Vivo Energy.
Before joining Vitol in 2015, Matt worked for Royal
Dutch Shell, where he held various trading and
management positions across its distillate business,
in both London and Singapore.
39
VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT ROLE OF THE BOARD AND DIVISION OF RESPONSIBILITIES
40
THE ROLE OF THE BOARDCollectively, 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. An effective board comprises a diverse group of individuals, each contributing different experiences, skills and backgrounds enabling it as a whole to provide challenge, informed opinions and advice on strategy and relevant topics. A comprehensive annual programme of meetings enables the Board to monitor and review strategy across all the elements of the Group’s business model. In 2022, five Board meetings were scheduled. Additional meetings were held as required. 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 OUs. 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.In line with other 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. Responsibility for the running of the Group is delegated to the CEO, who in turn delegates certain responsibilities to Executive Committee and Management Committee members relevant to their respective areas of responsibility. 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 roles of our Chairman and CEO are separate, clearly defined and set out in writing.DIRECTORSA well-governed company exposes itself to the widest possible sources of information and experience, both in the people it employs and the voices to which it listens. Our Board has a broad range of experience and perspectives across a number of industries and territories that complement our business. Further details are available on page 39. As is best practice, the Board is continually assessed to ensure an appropriate balance of skills and experience is maintained. Training and development is key to ensuring the ongoing effectiveness of any board. All new directors are offered an induction to assist them in familiarising themselves with the Group’s operations, the regulatory environment we operate in, directors’ duties, and the Group’s culture and values. An outline induction programme is discussed with each new director and tailored to meet any specific requirements. During the year our Directors have been briefed, amongst others, on local content requirements, directors’ duties, sanctions and environmental matters. All Directors have access to the advice and services of both the 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 up to 31 December 2022.CONFLICTS OF INTERESTDirectors 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, as good practice, the Chair requests each of the Directors to declare any conflict of interest at each Board/Committee meeting.COMMITTEESThe Board discharges some of its responsibilities directly while others are discharged through its principal Board Committees and through management. The Board has two principal Committees: The Audit and Risk Committee, and the Remuneration Committee. In addition to the principal Committees, the Board is also supported by two management Committees, Employee Engagement Champion Committee and the newly re-instated and re-named ESG Committee. Each Committee has an annual work programme. Their work feeds into the Board’s consideration of the Group’s strategy, allowing the Board to assess whether the strategy remains appropriate, promotes stakeholder value in a sustainable manner and whether it is ultimately the right approach to achieving our purpose. 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.AUDIT AND RISK COMMITTEEThe Committee oversees the Group’s financial reporting, risk management, internal control processes including reviews of principal risks and external audit. The Committee also monitors the activities and effectiveness of the Internal Audit function and has a primary responsibility for overseeing the relationship with the external auditors. REMUNERATION COMMITTEEThe role of the Committee is to set, review and recommend the remuneration of the Executives and Senior Management team. The Committee also reviews remuneration arrangements across the Group.ESG COMMITTEEThe Committee is focused on overseeing the delivery of the Group’s Sustainability Framework and driving further integration of sustainability and climate matters across the Group. The Committee is chaired by the CEO who provides regular updates to the Board. EMPLOYEE ENGAGEMENT CHAMPION COMMITTEEThe role of the Committee is to provide an open two-way line of communication between the Board and our people and to enhance employee engagement across the Group. VIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022GOVERNANCE DIRECTORS’
REPORT
The Directors present their
Report and the audited
Consolidated and Company
financial statements for the year
ended 31 December 2022.
DIRECTORS’ REPORT CONTENT
The Company has chosen, in accordance
with section 414C(11) of the Companies Act
2006, to include certain matters in its Strategic
Report that would otherwise be disclosed
in this Directors’ Report. Such information is
referenced below.
COMPANY DETAILS
AND CONSTITUTION
Vivo Energy Limited 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.
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 US$0.50
each. The shareholders of the Company are
Vitol Africa B.V. and VIP Blue II B.V.
DIRECTORS
The Directors who served the Company
during the year up to the date of the signing of
these financial statements together with their
dates of appointment and resignation, where
appropriate, were as follows:
John Daly (resigned 26 July 2022)
Christian Chammas (resigned 3 March 2022)
Douglas Lafferty (resigned 30 April 2022)
Stanislas Mittelman (appointed 3 March 2022)
Carol Arrowsmith (resigned 26 July 2022)
Christopher Rogers (resigned 26 July 2022)
Thembalihle Hixonia Nyasulu
(resigned 26 July 2022)
Gawad Abaza (resigned 26 July 2022)
Temitope Lawani (resigned 26 July 2022
Javed Ahmed (resigned 16 December 2022)
Christopher Bake (appointed 26 July 2022)
Jay Gleacher (appointed 26 July 2022)
Selim Șiper (appointed 26 July 2022)
Matthew Stacey (appointed 26 July 2022)
IMPORTANT EVENTS SINCE THE
END OF THE FINANCIAL YEAR
Details of important events affecting the
Group which have occurred since the end of
the financial year are set out in note 30 to the
Consolidated financial statements.
RESULTS
The results for the year are set out on pages 44
to 99.
During the year, the Company declared two
interim dividends and one special dividend
amounting to a total amount of approximately
US$ 698m. Further details on page 80.
The Board has not recommended a
final dividend for the period ended
31 December 2022.
CORPORATE GOVERNANCE
Until the delisting of the Company on 26 July
2022, the Company was in full compliance
with the 2018 Corporate Governance Code.
The majority of the Board resigned following
delisting and the new Board has decided to
adopt the Wates Principles as the governance
code basis with effect from 1 January 2023.
Further details on pages 27 and 36.
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 and is
supported by the Audit and Risk Committee.
In discharging that responsibility, the Board
confirms that it has established necessary
procedures, including clear operating
procedures, lines of responsibility and
delegated authority.
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 32 to 35 in the
Strategic Report). The Group’s assessment
of risks related to financial instruments can
be found in the Notes to the Consolidated
financial statements. 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.
RISKS RELATED TO
FINANCIAL INSTRUMENTS
The Group’s assessment of risks related
to financial instruments can be found on
pages 66 to 68 in the Notes to the consolidated
financial statements.
OVERSEAS BRANCHES
As at 31 December 2022, the Group had
the following other entities including branches:
– Vivo Energy Tanzania Marketing Limited
(foreign company registered in Tanzania,
company registered in Bahamas).
The foreign company name remains Engen
Marketing Tanzania Limited.
41
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 DIRECTORS’ REPORT CONTINUED
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.
ENGAGEMENT
WITH STAKEHOLDERS
We know that engaging closely with all our
stakeholders and understanding their view is
fundamental to building a strong, sustainable
business. Further information on how we
engage with our diverse range of partners and
stakeholders is available within the Strategic
Report on page 7.
STREAMLINED
ENERGY AND CARBON
REPORTING STATEMENT
As a Group we recognise that our global
operations have an environmental impact and
we are committed to monitoring and reducing
our emissions year‑on‑year.
Further details are available in the Strategic
Report on pages 22 to 23.
– Plateau Africa Holdings Limited
(branch registered in Mauritius,
company registered in Canada).
– Vivo Energy Namibia Limited (branch
registered in Namibia, company registered
in the UK).
– Vivo Energy Overseas Holdings Limited
(branch registered in Kenya, an external
company registered in South Africa, the
company registered in Mauritius).
– Vivo Energy Foundation (a charitable
foundation registered in Mauritius).
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 2022 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.
EMPLOYEE BENEFIT TRUST
On 10 May 2019 the Company established
the Vivo Energy Employee Benefit Trust (the
‘EBT’). This was 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 and Long‑Term
Incentive Plan. Following the delisting of the
Company and the termination of the share
plans, the EBT was formally terminated on
2 December 2022.
RESEARCH AND DEVELOPMENTS
No material research took place during the
period and is not intended for the current year.
Development activities undertaken comprised
the continued development of the Group’s
internal systems.
FUTURE DEVELOPMENTS
Since Vivo Energy’s inception in 2011, the
Company has had a clear growth strategy and
has looked to deliver sustainable value for all
its stakeholders. Our leading position in Africa
means that we are well positioned to continue
to capitalise on the opportunities that will arise
from the growth on the continent.
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.
The Audit and Risk Committee recommended,
and the Board approved, the proposal that
PwC be reappointed as Auditors of the
Company at the Annual General Meeting
(AGM). Resolutions to reappoint PwC as the
Company’s Auditors until the conclusion of the
AGM in 2024 and to authorise the Directors
to determine their remuneration, will be
proposed to shareholders at the AGM.
The Directors’ Report was approved by the
Board on 1 March 2023.
STAN MITTELMAN
CHIEF EXECUTIVE OFFICER
1 MARCH 2023
42
GOVERNANCEVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 STATEMENT
OF DIRECTORS’
RESPONSIBILITIES
The Directors are responsible
for preparing the Annual Report
& Accounts and the financial
statements in accordance with
applicable law and regulation.
Company law requires the Directors to
prepare financial statements for each financial
year. Under that law the Directors have
prepared the Consolidated financial statements
in accordance with UK‑adopted International
Accounting Standards and the Company
financial statements 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).
Under company law, directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of
the state of affairs of the Group and Company
and of the profit or loss of the Group for that
period. In preparing the financial statements,
the Directors are required to:
– select suitable accounting policies and then
apply them consistently;
– state whether applicable UK‑adopted
International Accounting Standards have
been followed for the Consolidated
financial statements and United Kingdom
Accounting Standards, comprising FRS 102
have been followed for the Company
financial statements, subject to any material
departures disclosed and explained in the
financial statements;
– make judgements and accounting estimates
that are reasonable and prudent; and
– prepare the financial statements on the
going concern basis unless it is inappropriate
to presume that the Group and Company
will continue in business.
The Directors are responsible for safeguarding
the assets of the Group and Company
and hence for taking reasonable steps for
the prevention and detection of fraud and
other irregularities.
The Directors are also responsible for
keeping adequate accounting records that are
sufficient to show and explain the Group’s
and Company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Group and Company and enable
them to ensure that the financial statements
comply with the Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the corporate and
financial information included on the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.
DIRECTORS’ CONFIRMATIONS
Each of the Directors confirm that, to the
best of their knowledge, 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 should
have taken as a Director in order to make
himself 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 give a true and fair view 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
STAN MITTELMAN
CHIEF EXECUTIVE OFFICER
1 MARCH 2023
JAY GLEACHER
INTERIM CHIEF FINANCIAL OFFICER
1 MARCH 2023
43
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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.
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
45
52
53
54
55
56
90
92
44
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion:
– Vivo Energy Limited’s Consolidated 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 2022 and of the Group’s profit and the Group’s cash flows for the year
then ended;
– the Consolidated financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied
in accordance with the provisions 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, including 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 2022 (the ‘Annual Report’), which comprise: the
Consolidated and Company statements of financial position as at 31 December 2022; 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 financial statements, which include a description of the significant accounting policies.
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, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 2.1 to the
Consolidated financial statements and note 2.9 to the Company financial statements concerning the Group’s and the Company’s ability to continue
as a going concern. The Directors have assessed the going concern status of the Company and the Group based on the business plans approved by
the Board in December 2022 and the existing debt facilities and concluded that sufficient liquidity headroom exists in both ‘base case’ and ‘severe but
plausible downside’ scenarios to enable the Company and the Group to meet their obligations as they fall due during the going concern assessment
period subject to the refinancing of the long-term bank borrowings and RCF facility due to expire within the going concern period. The refinancing
of these facilities is not committed at the date of authorisation of these financial statements. These conditions, along with the other matters explained
in those notes to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Group’s and
the Company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group and the
Company were unable to continue as a going concern.
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.
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 five-year strategic plan approved by the Board of Directors and ensuring that the base
case scenario indicates that sufficient cash flow is generated during the going concern period to meet its obligations while complying with its
covenant arrangements.
– Evaluating management’s forecasts by analysing the cash flows to identify unexpected trends and relationships; ensuring the mathematical accuracy
of management’s models and by assessing the appropriateness of key assumptions of gross cash unit margin and expected volume growth against
historical experience.
– Identifying the covenant terms from the facility agreements and ensuring that there are no forecast covenant breaches during the going
concern period.
– Reperforming management’s sensitivity to identify the scenario that would result in a breach of covenants and concurred that such a scenario was
not plausible.
– Evaluating the reasonableness of the severe but plausible scenarios identified by management and ensuring that under such scenarios the Group is
expected to meet its obligations as these fall due.
– Evaluating the Directors’ assessment and identification of a material uncertainty resulting from the need to renew existing financing arrangements
within the going concern period.
– Confirming that the financial statement disclosures relating to going concern were accurate and appropriate.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
45
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY LIMITED CONTINUED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
OUR AUDIT APPROACH
Context
On the 25th July 2022, Vivo Energy was taken private by VIP II Blue B.V., being a wholly-owned indirect subsidiary of Vitol Investment Partnership
II Limited, itself being an investment vehicle advised by employees of the Vitol Group. The shares were delisted from the London Stock Exchange,
the Company renamed Vivo Energy Limited and a new Board of Directors appointed. We have been engaged by the newly appointed Audit and
Risk Committee to conduct the year-end audit of the Consolidated and Company financial statement of Vivo Energy Limited for the year ended
31 December 2022. As part of our audit planning we have considered the impact of the transaction on our audit risk assessment including evaluating
management’s analysis of its impact on the Consolidated financial statements. As part of our audit of this transaction we have considered change of
control clauses within the Group’s debt facilities and the changes to the debt structure of the Group implemented after the take private transaction
was completed. We note that a material uncertainty in respect to going concern has been identified by the Directors relating to the need to refinance
the revolving credit facility and a long-term borrowing during the going concern period. Further details relating to both the material uncertainty and
the procedures we have performed over going concern are included in the material uncertainty related to going concern section of this report.
Overview
Audit scope
– Ten operating units subject to full scope audit of financial information.
– Three operating units subject to audit of specific financial statement line items.
– Overall coverage of 78% revenue, 75% profit before tax, and 69% total assets was obtained.
Key audit matters
– Material uncertainty related to going concern (Group and Company)
– Government Benefits Receivable (Group)
– Tax audits and Transfer Pricing (Group)
– Fixed Asset Investments (Company)
Materiality
– Overall group materiality: US$12,500,000 (2021: US$12,900,000) based on 5% of earnings before tax and special
items (2021: 5% of earnings before tax and special items).
– Overall company materiality: US$19,300,000 (2021: US$19,000,000) based on 1% of total assets.
– Performance materiality: US$9,375,000 (2021: US$9,675,000) (Group) and US$14,475,000 (2021: 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.
Key audit matters
Key audit matters 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.
In addition to going concern, described in the Material uncertainty related to going concern section above, we determined the matters described
below to be the key audit matters to be communicated in our report. This is not a complete list of all risks identified by our audit.
Fixed Asset Investments is a new key audit matter this year. Otherwise, the key audit matters below are consistent with last year.
46
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Government Benefits Receivable (Group)
Refer to notes 2 ,4 and 15 in the Consolidated financial statements.
The Group has $413 million of gross receivables (offset by provisions of
$11m) from governments principally related to subsidies for product prices,
transport costs or incidental costs where regulated price mechanisms exist.
The recoverability of these receivables is not always certain with some
outstanding balances being aged and with governments with poor or no
credit ratings.
Spiking oil prices and weakening local currencies during the year along with
the need to support local populations as the cost of living has increased,
has resulted in additional subsidies being generated and the level of gross
receivables has risen significantly as the subsidies outstrip the ability
of governments to make payments on a timely basis. Although these
new subsidies are not significantly aged, the ability of governments to
make repayments has been adversely impacted by the deterioration in
government finances as a result of the COVID-19 pandemic, high inflation
and increased costs to service existing debt.
We assessed the risk of recoverability of each of the balances by
considering the:
– existence of an agreed position with the government and history of
write-offs;
– ageing of existing balances;
– country level credit ratings and other economic data points;
– history of payments and / or delays of such payments;
– the proposed settlement mechanism and timing of realisation of
said mechanism.
Where we identified the potential for greater risk of material
irrecoverability we have assessed management’s position against
the communications with the local authorities, external legal advice,
historical precedent of similar matters being resolved, the existence
of offsetting balances and evidence of the Group’s efforts to secure
payment. In the case of Senegal we participated in a meeting with a
government representative to understand the governments’ plans for
settlement of the balance.
Determination of the provisioning required against these receivables
requires consideration of the willingness and ability of the counterparties to
meet their obligations, including how and when the obligations will be met.
This can often be complex and highly judgemental.
Where a provision has been recorded we have assessed the basis for
the recognition of the provision and re-performed management’s
calculations. We have also assessed the completeness and accuracy of
management’s disclosures in notes 4 and 15.
Due to particular uncertainties in either the timing and/or method of
recoverability, the track record of the governments to settle the balances
in full or on a timely basis or whether the costs incurred fall within the
regulatory structure, we identified the receivables in Senegal, Madagascar
and Kenya to be where particular audit focus was required.
Based on our work performed, we found the judgements and
assumptions used by management in the recoverability assessment
of government benefits receivables to be supportable based on the
available evidence.
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Tax audits and Transfer Pricing (Group)
Refer to notes 2, 4 and 9 in the Consolidated financial statements.
The Group operates in a number of tax jurisdictions and recognises tax
based on interpretation of local laws and regulations which are sometimes
uncertain and require interpretation. In several territories tax audits are
performed and tax claims are made; however, these are often settled for
much less once further information is supplied. 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.
We focused on the judgements and estimates made by management
in assessing the likelihood and quantification of material exposures and
treatment of uncertain tax position provisions.
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 tax positions being challenged. 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 determined that the provisions recognised and the disclosures in the
financial statements were reasonable.
47
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY LIMITED CONTINUED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Fixed Asset Investments (Company)
Refer to notes 2 and 5 in the Company financial statements.
We have evaluated management’s impairment trigger assessment.
During the year, following the take private transaction, the Company paid
out a dividend of $628m to the new shareholders. This was in excess of
the profits for the year and was funded out of cash that was loaned to the
Company by its subsidiary Vivo Energy Investments B.V. which had in turn
taken out a bridging loan with external parties.
Although a payment of a dividend in excess of profits in the year would
usually be considered an impairment trigger, where the parent company
dividend was funded by a loan from a subsidiary entity (as opposed to a
dividend) the transaction does not result in a diminution in the value of
the underlying Group below parent company. The significant dividend
payments during the year therefore do not create an impairment trigger
in respect of the parent company’s investment in the underlying Group.
The payment of dividends in excess of profits generated in the year
was considered as a potential trigger for impairment in the fixed asset
investment held in the Company at cost. Management also considered
other potential triggers, including both internal and external information.
In performing this trigger assessment management have also considered
the discounted cash flow models that they prepare as part of assessing the
recoverable amount of the Group and certain of its assets.
In addition, we have obtained management’s latest calculation of the
recoverable amount of the Group; validated the model used and
the mathematical accuracy of the value in use calculation; agreed the
cash flows to the board approved five-year plan; and assessed the
discount rate and long-term growth rates used against third party data
sources. This model indicates a value in excess of the carrying value of
the investment.
No triggers for impairment were identified by management in the year.
We concurred with management that there were no internal or
external indicators of impairment in the year.
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 an operating unit is identified by a
reporting pack.
We identified Morocco and Kenya as financially significant operating units based on their size compared to the Consolidated financial statements of the
Group. A further eight, large operating units 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, Mauritius was further identified to perform procedures over retirement benefit
obligations, revenue and receivables given its relative contribution to these financial statement line items.
Senegal and Kenya were identified as significant risk operating units relating to the recoverability of other government benefits receivable as
described in the key audit matters. Senegal was engaged to perform an audit of their complete financial information as one of the eight components
identified above.
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 operating unit with testing performed over balances including cash, finance
expenses, and external borrowings. Procedures were performed centrally to assess and mitigate the significant risk of recoverability of Government
Benefits Receivable in Madagascar which was an operating unit not included in the scope.
Overall coverage of 78% revenue, 75% profit before tax, and 69% total assets was obtained. None of the operating units excluded from our Group
audit scope individually contributed more than 3% to consolidated revenue.
Interactions with operating unit teams varied depending on their size, complexity and risk. Interactions included: detailed instruction; a risk assessment
and audit approach planning meeting; detailed deliverables identifying significant matters and procedures performed over significant risks; and status
and clearance meetings at key stages of the audit. For larger and more significant components, file reviews tailored to the specifics of the component
took place. In person site visits took place in Senegal, Guinea, Morocco, Kenya, and Cote d’Ivoire. This was in addition to further ad hoc discussions on
matters of interest.
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.
The impact of climate risk on our audit
In planning our audit, we have considered the potential impact of climate change on the Consolidated financial statements. Given the principal
activities of the Group it is highly likely that climate risk will have a significant impact on the Group’s business. As part of our audit, we have evaluated
management’s climate change risk assessment including the identified physical and transition risks and the assessment of the impact of those risks
on the Consolidated financial statements. We note management’s conclusion that material physical risks are likely to arise in the longer term and
therefore have no current financial statement impacts. Transitional risks are considered to have a more significant impact on the business. However,
these are only expected to arise in the medium to long-term given that the energy transition in Africa is likely to operate on an extended timeline.
We have performed procedures to evaluate the appropriateness of management’s risk assessment including comparing current year results against
48
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 the transition risk impacted models prepared in 2021 and researching the legislative landscape within the principal locations in which the Group
operates. We assessed that the key financial statement line items and estimates which are more likely to be impacted by climate risks are those
associated with future cash flows, given the more notable impacts of climate change on the business are expected to arise in the medium to long-term.
These include the impairment assessment of goodwill and the useful economic life of non-current assets. However, our procedures did not identify
any material impact on either the Consolidated financial statements or our key audit matters for the year ended 31 December 2022. We have
reviewed management’s financial statement disclosures relating to climate change to confirm that they are consistent with the results of management’s
risk assessment and our audit procedures. Management have voluntarily presented disclosures aligned to the recommendations of the TCFD. We have
reviewed these disclosures to ensure consistency with the financial statements and our knowledge obtained during the course of the audit.
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 – CONSOLIDATED FINANCIAL STATEMENTS – COMPANY
Overall materiality
US$12,500,000 (2021: US$12,900,000).
US$19,300,000 (2021: US$19,000,000).
How we determined it
5% of earnings before tax and special items
(2021: 5% of earnings before tax and special items).
1% of total assets.
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 Consolidated financial statements focus on
adjusted numbers, being adjusted EBITDA, adjusted
EBIT and adjusted net income. The Group defines
‘adjusted’ as excluding special items. Based on this, we
consider an adjusted metric of average earnings before
tax and special items to be the most appropriate
benchmark.
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 Statement of financial position is the key measure
of financial health that is important to shareholders since
the primary concern for the Company is the payment of
dividends.
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$1.4m and US$12.0m. 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% (2021: 75%) of overall materiality, amounting to US$9,375,000 (2021: US$9,675,000) for the Consolidated financial statements and
US$14,475,000 (2021: 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 at the upper end of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above US$1.0m
(Group audit) (2021: US$1.0m) and US$1.0m (Company audit) (2021: US$1.0m) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
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, which includes reporting based on the Task Force on Climate-Related Financial Disclosures
(TCFD) recommendations. 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.
49
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY LIMITED CONTINUED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
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 2022 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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, 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 laws and regulations associated with importing, transporting, storing and selling oil products in the countries in which the Group
operates, 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 financial statements such as the Companies Act 2006 and local tax laws and regulations in each territory. 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 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:
– Inquiries of the wider senior management team including members of the Senior Executive Team, Country Leadership Teams, Internal Audit, Legal,
Finance, Operations, Ethics and Compliance teams. These inquiries included consideration of known or suspected instances of non-compliance
with laws and regulations 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 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.
– Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to government
benefits receivables and uncertain tax positions.
– Identifying and testing journal entries both at a local operating unit level and as part of the 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, government authorities and assessment of external legal advice received in respect of any
matters raised.
– Incorporating an element of unpredictability into our audit procedures through the variation of the nature, timing and extent of the procedures
performed and the inclusion of new components within the Group audit scope.
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.
50
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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. In our engagement letter, we also agreed to describe our audit approach, including communicating
key audit matters.
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 are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Nicholas Stevenson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
1 March 2023
51
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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 Limited
Non-controlling interest (NCI)
Other comprehensive income (OCI)
Items that may be reclassified to profit or loss
Currency translation differences
Net investment hedge gain, net of tax
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 Limited
Non-controlling interest (NCI)
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
Notes
5
5
7
12
6
8
9
6
13
2022
10,969
(10,237)
732
(247)
(212)
2021
8,458
(7,765)
693
(222)
(185)
27
(5)
295
11
(98)
(87)
208
(103)
105
91
14
105
(77)
6
–
–
1
(70)
35
29
6
35
2022
427
470
154
27
(1)
312
9
(68)
(59)
253
(101)
152
140
12
152
(27)
12
5
(1)
1
(10)
142
134
8
142
2021
442
447
157
Refer to the non-GAAP financial measures definitions and reconciliations to the most comparable IFRS measures on pages 16 and 17.
52
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
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
Share capital
Share premium
Retained earnings
Other reserves
Attributable to equity holders of Vivo Energy Limited
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
2022
31 December
2021
10
25
11
12
9
13
15
16
17
15
14
18
19
25
21
22, 23
9
24
25
21
22
14
24
920
235
188
237
61
13
172
1,826
687
598
554
10
14
500
2,363
4,189
633
4
(281)
(200)
156
43
199
156
945
89
86
150
1,426
27
1,687
584
15
11
187
53
2,564
3,990
4,189
938
219
212
233
58
12
116
1,788
564
461
282
13
6
587
1,913
3,701
633
4
335
(135)
837
46
883
135
352
105
87
153
832
26
1,434
277
19
–
187
43
1,986
2,818
3,701
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 1 March 2023 and were signed on its
behalf by:
STAN MITTELMAN
Chief Executive Officer
Interim Chief Financial Officer
JAY GLEACHER
53
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of Vivo Energy Limited
Other reserves
Notes
Share
capital
Share
premium
Retained
earnings Reserves1,2
Retirement
benefits
Currency
translation
difference
Fair
value
reserves
Equity-
settled
incentive
schemes3 Total
633
–
–
–
–
–
–
–
–
633
28
28
20
4
–
–
–
–
–
–
–
–
4
335
91
–
91
–
–
–
(9)
(698)
(281)
(59)
–
(1)
(1)
–
–
5
–
–
(55)
2
–
–
–
–
–
–
–
–
2
(90)
–
(62)
(62)
–
–
–
–
–
(152)
4
–
1
1
–
–
–
–
–
5
8
–
–
–
3
(11)
–
–
–
–
837
91
(62)
29
3
(11)
5
(9)
(698)
156
Total
equity
NCI
46
14
(8)
6
–
–
–
–
(9)
43
883
105
(70)
35
3
(11)
5
(9)
(707)
199
US$ million
Balance at 1 January 2022
Net income
Other comprehensive income
Total comprehensive income
Share-based payment expense
Share-based payment modification3
Treasury shares sold
Net impact of IAS 294
Dividends paid5
Balance at 31 December 2022
Attributable to equity holders of Vivo Energy Limited
Other reserves
US$ million
Balance at 1 January 2021
Net income
Other comprehensive income
Total comprehensive income
Share-based payment expense
Share awards transactions3
Net impact of IAS 294
Dividends paid5
Balance at 31 December 2021
Notes
Share
capital
Share
premium
Retained
earnings Reserves1,2
Retirement
benefits
Currency
translation
difference
Fair
value
reserves
Equity-
settled
incentive
schemes3 Total
Total
equity
NCI
633
–
–
–
–
–
–
–
633
28
28
20
4
–
–
–
–
–
–
–
4
252
140
–
140
–
6
6
(69)
335
(54)
–
–
–
–
(5)
–
–
(59)
(2)
–
4
4
–
–
–
–
2
(79)
–
(11)
(11)
–
–
–
–
(90)
3
–
1
1
–
–
–
–
4
10
–
–
–
4
(6)
–
–
8
767
140
(6)
134
4
(5)
6
(69)
837
45
12
(4)
8
–
–
–
(7)
46
812
152
(10)
142
4
(5)
6
(76)
883
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.
Included in reserves is a cost of hedging reserve $1m (2021: Nil).
2
3 Equity-settled incentive schemes included the Long-Term Incentive Plan (LTIP) and the Restricted Share Award Plan which was modified in 2022 to cash-settled on delisting. In 2021,
reserves included $5m related to a market purchase of ordinary shares of the Company to satisfy option exercises under the Company’s IPO Share Award Plan and LTIP.
4 The net impact on retained earnings as a result of the index-based adjustments in Zimbabwe under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
5 The dividends paid to the equity holders of Vivo Energy Limited were paid out of distributable reserves (refer to note 10 of the Company financial statements).
54
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 CONSOLIDATED STATEMENT OF CASH FLOWS
US$ million
Notes
2022
2021
Operating activities
Net income
Adjustment for:
Income taxes
Amortisation, depreciation and impairment
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
Purchases of PP&E and intangible assets
Proceeds from disposals of PP&E and intangible assets
Other investment activities
Cash flows from investing activities
Financing activities
Proceeds from long-term debt1
Repayment of long-term debt
Net (repayments)/proceeds (of)/from bank and other borrowings2
Repayment of lease liabilities
Dividends paid
Interest paid
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease)/increase 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.
1 Represents proceeds from the Bridge loan.
2 Other borrowings includes the RCF.
105
103
132
(27)
17
(93)
(229)
8
(164)
4
(1)
(161)
595
–
317
(33)
(707)
(75)
97
(31)
(87)
587
500
9
10, 11, 25
12
12
26
10, 11
10, 11
12
21
21
21
25
18
152
101
130
(27)
22
(102)
195
471
(168)
1
–
(167)
–
(60)
11
(33)
(76)
(61)
(219)
(13)
72
515
587
55
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Vivo Energy Limited (‘Vivo Energy’ or the ‘Company’), formerly
Vivo Energy plc, was incorporated on 12 March 2018 in the United
Kingdom. The Company is registered in England and Wales and is a
private company limited by shares (Registration number 11250655)
under the Companies Act 2006. References to ‘Vivo Energy’ or
the ‘Group’ mean the Company, its subsidiaries, joint ventures and
associates. These consolidated financial statements as at and for
the period ended 31 December 2022 comprise the Company, its
subsidiaries and subsidiary undertakings, joint ventures and associates.
On 25 November 2021, the Boards of VIP II Blue B.V. (a wholly owned,
indirect subsidiary of Vitol Investment Partnership II Limited itself
being an investment vehicle advised by employees of the Vitol Group
referred to as ‘Vitol’) and Vivo Energy announced that they had
reached an agreement on the terms of a recommended cash offer
for the entire issued and to be issued share capital of the Company,
excluding shares held by the existing Vitol shareholders (‘Vitol Offer’).
The Vitol Offer was completed on 25 July 2022, following which the
Company delisted from the London Stock Exchange and Johannesburg
Stock Exchange and re-registered as a private limited company under
the name of Vivo Energy Limited. The Group’s shareholders are VIP
II Blue B.V. and Vitol Africa B.V. The Group’s ultimate parent is Vitol
Holding II S.A.
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.
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 for all the years presented.
2.1 Basis of preparation
These consolidated financial statements have been prepared in
accordance with UK adopted International Accounting Standards
in conformity with the requirements of the Companies Act 2006.
The consolidated financial statements have been prepared under the
historical cost convention unless otherwise indicated.
The preparation of financial statements in conformity with
International Financial Reporting Standards (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.
Going concern
On 25 November 2021 the Group and VIP II Blue B.V. (wholly
owned, indirect subsidiary of Vitol Investment Partnership II Limited,
itself being an investment vehicle advised by employees of the
Vitol Group, referred to as ‘Vitol’) announced a recommended total
cash offer of $1.85 per share to be made by Vitol for Vivo Energy plc
(the Vitol Offer). The Vitol Offer took effect from 25 July 2022.
Vitol continues to support the Group with its strategy and growth
ambitions, and there have been no, and is not expected to be any,
56
structural changes to the Group’s business operations over the next
two years.
As part of the Group’s risk management framework, changes in the
nature, likelihood and impact of existing and new risks are regularly
considered, including the Group’s ability to respond to changes in its
business and the external environment. There have been no changes
in the Group’s principal risks that would impact the going concern over
the next two years.
IFRS requires the going concern assumption to be assessed over a
period of at least 12 months from the date of approval of the financial
statements. For the purposes of the going concern assessment,
the Directors have considered a period up to 31 December 2024.
The Directors have performed a going concern assessment based
on the forecasts for this period taken from the five-year strategic
plan which includes a detailed analysis of the Group’s future financial
and operating performance. The five-year strategic plan takes into
consideration the impact of the current year performance, future
growth expectations and the effect of other macroeconomic factors
on the performance of sales volumes, gross cash profit and cash flows.
Based on management’s assessment up to 31 December 2024,
the Group is expected to maintain sufficient available liquidity and
generate positive cash flows to meet its obligations as they fall due.
As at 31 December 2022, the Group has a committed headroom of
$194m which includes the undrawn portion of the committed RCF of
$207m. In the ordinary course of business the majority of the revolving
credit facilities (RCF) expires in May 2023, with the arrangement of
a new facility, on similar terms, expected to be completed prior to
its expiration.
The Group maintains its debt structure as described in note 3.2.
The notes and the RCF have covenants for which further information
can be found in note 21. Breach of these covenants may result in
full and immediate repayment of the long-term borrowings and an
inability to access the RCF. The Group has met these covenants in
the past and expects to continue to do so over the next two years.
Management has performed a sensitivity to identify the decrease
in the Group’s financial performance that would result in a breach
of these covenants. Group EBITDA would have to decrease against
plan by more than 13%, finance expense to increase by more than
15%, or net debt to increase by more than 51% to result in a breach.
The likelihood of such impacts is not considered plausible.
As part of the going concern assessments the Directors have also
considered a number of severe but plausible downside scenarios.
The scenarios simulate the impact to headroom of a further
depreciation of local currencies and increase to key costs equivalent
to the most severe impact over the past five years as well as plausible
negative changes in the working capital (due to developments in
crude oil prices, timing of receipt of government subsidies, DSO, and
DPO) and soaring inflation rates. Under all scenarios the sensitised
forecasts show that the Group has sufficient committed liquidity
headroom through to 31 December 2024, assuming renewal of the
RCF and long-term borrowing on similar terms. Considering the
severe but plausible downside scenario above, the impact on working
capital may result in a higher utilisation of credit. However, under
such circumstances, the increase in the finance expense and net debt
would not exceed levels that could breach the debt covenants in the
existing facilities.
As of 31 December 2022, the Company has available short-term
capital resources of $2,114m, which include $1,407m of uncommitted
facilities. Despite these facilities being uncommitted the Group has
continued to have access to and utilise the uncommitted short-term
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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.
The long-term borrowing received by the Group during
October 2022 matures in 12 months, however, the Group can
unilaterally exercise two extension options of three months each,
extending the maturity date to April 2024. The Group expects to
refinance this loan and the RCF prior to maturity. The refinancing
of these facilities is not committed at the date of authorisation of
these financial statements. These conditions, indicate the existence
of a material uncertainty which may cast significant doubt about the
Group’s and the Company's ability to continue as a going concern.
Therefore, notwithstanding the material uncertainty caused by the
liquidity events of refinancing the long-term borrowings and RCF
within the going concern period, the Directors maintain a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence during the going
concern period and consider it appropriate to adopt the going concern
basis of accounting in preparing the financial statements. The financial
statements do not include the adjustments that would result if the
Group was unable to continue as a going concern.
Climate change
In preparing the consolidated financial statements management
has considered the impact that climate change may have.
Management has assessed the impact of climate change
on the business. Additional information can be found on
pages 28 to 31. Management has further considered the extent to
which climate change impacts key areas of accounting judgement
and disclosure. Based on this assessment, climate change does not
currently have a significant or material impact on the outcome of
key accounting judgements and estimates, including going concern,
asset useful economic lives, asset valuations and impairments as
the impact of transitional risks is only forecast to have a significant
impact on the Group’s business and cash flow beyond the point at
which asset carrying values are realised. Management will continue to
monitor, assess and account for the impact of climate change in future
years. At 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 pages 22 to 23 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. Furthermore, the Group
continues to experience unrestricted access to capital markets and
has demonstrated its ability to raise additional debt and equity funding
at competitive market rates in the recent past. Therefore, there is
currently no indication that climate change will negatively impact the
Group’s cost of capital to the extent that changes in the discount
rates, used in accounting estimates and judgements, would result in a
material adjustment to the financial statement balances.
2.2 Application of new and revised IFRS
The following amendments and new interpretations to the IFRS
standards effective for annual periods beginning on or after
1 January 2022 are applicable and have been applied in preparing the
consolidated financial statements and does not have a material impact
for the Group:
– Annual improvements 2018-2020
– Narrow-scoped amendments to IAS 1, IAS 8, IAS 16, IAS 37 and
IFRS 3
There are no other standards, amendments and interpretations which
are effective for the financial year beginning on 1 January 2022 that
have an impact on the consolidated financial statements of the Group.
2.3 New standards, amendments and interpretations
not yet adopted
The following amendments to the standards effective for annual
periods beginning on or after 1 January 2023 have not been applied in
preparing the consolidated financial statements of the Group:
– Narrow-scoped amendments to IAS 1, IAS 8 and IAS 12
The above amendments which are not yet effective, are not expected
to have a material impact on 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 14 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.
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.
57
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.4 Consolidation (continued)
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.
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.
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 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 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.
58
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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 $15m (2021: $25m), an
increase in intangible assets of $5m (2021: $9m) and a decrease in net
income of $3m (2021: $1m).
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.
2.6 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 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.
Vivo Energy Supply B.V. was established to consolidate functional
activities across the operating units and leverage economics of scale by
streamlining sourcing and procurement across markets. Vivo Energy
Supply B.V. purchases product from Vitol and third party suppliers
and provides products to the Group’s operating units and external
customers. The contractual responsibility of Vivo Energy Supply B.V.
is to provide goods to the customer. The contractual performance
obligation is satisfied upon delivery of goods to the customer based on
the incoterms. Revenue is recognised once the performance obligation
has been fulfilled and presented on a gross basis as Vivo Energy Supply
B.V. acts as a principal in the supply of its products.
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.
2.7 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.
2.8 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.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.9 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.
2.10 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 2022, internally developed software relating to the
ERP system has a remaining useful life of seven 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 to 15 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 10 to 15 years.
2.11 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 STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 2.12 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.
2.13 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 Group:
– 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 2022, this relates to Vivo Energy Botswana, Guinea,
Gabon, Kenya, Madagascar, Morocco, Mozambique and Senegal.
– 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 2022, this relates
to Vivo Energy Botswana, Guinea, Morocco and Senegal.
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.
2.14 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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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.14 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. Trade payables are
measured at amortised cost and the fair value approximates the
carrying amount.
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 availability and rate
fluctuations by following the 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 a derivative is designated as the hedging instrument in a hedge
of a net investment in a foreign operation, any gain or loss on the
hedging instrument relating to the effective portion of the hedge
is recognised in OCI and presented in currency translation reserve
within equity. The gain or loss relating to the ineffective portion 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.
2.15 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.
62
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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, including loans to joint ventures, 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.
2.16 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.
2.17 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.
2.18 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.
The Company recognises the interim dividend in the period in which
it is paid.
2.19 Share-based payments
Prior to delisting, the Group issued 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), the IPO Share Award Plan and the Restricted
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.
2.20 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 re-measured 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 re-measurement) 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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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.21 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 up to 1997 was based on the CSO levels
and the government regulated oil price at that time. The amount
received has been agreed with the Government and is classified as a
non-current liability in ‘Other liabilities’ in the consolidated statement
of financial position.
The fuel market in Morocco has been deregulated since
1 December 2015 and the LPG market continues to be regulated.
Due to the uncertainty on the value at which the CSO will be settled,
a provision for the fluctuations in the purchase price of products has
been recognised. The provision relates to the difference between the
cash received up to 1997, to purchase stocks for the CSO, and the oil
price at the end of November 2015 and the LPG price to date. As at
31 December 2022, 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.
2.22 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.
64
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.
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.
The Group’s funded plans relate 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.
The Group acknowledges that the recognition of a pension scheme
surplus depends on the interpretation of the wording of the pension
scheme rules and the relevant accounting standard.
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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.
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.
The Group has adopted the provisions of IFRIC 14 when assessing
a pension scheme in surplus. A restriction has been applied to the
balance sheet, and the net surplus recognised on the balance sheet has
been restricted to nil.
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.
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.
2.23 Current and deferred income tax
The income tax expense for the period comprises current and
deferred tax. Income tax is recognised in the consolidated statement
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.
65
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange 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 $345m (2021: $254m). 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 $35m (2021: $25m) higher/lower, mainly as a result of foreign exchange gains/losses on
translation of non-US dollar denominated receivables and payables. Due to the liquidity constraints in Kenya during the year, Vivo Energy Kenya
Ltd had to enter into material foreign exchange (USD) borrowings and swaps that remain outstanding at year-end.
Price risk
The Group generally seeks to manage its exposure to commodity price risk through careful inventory management and as at 31 December 2022
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, Gabon, Guinea, Kenya, Madagascar, Morocco (for butane only), Mozambique and Senegal, the Group is financially compensated by the
local government for the effect of these price restrictions. For some countries the transport costs are subsidised. For further information see note 15.
The Group does not hold equity securities for trading and is, therefore, not exposed to equity 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. Additionally, 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 the interest rate move, the exposure is minimal. Long-term borrowings mainly consist of notes at a fixed interest
rate which exposes the Group to fair value interest rate risk, and a Bridge loan at a floating interest rate which exposes the Group to cash flow
interest rate risk (refer to note 21).
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 15).
In Morocco customer receivables to the amount of $18m (2021: $17m) 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 (2021: $0.3m) was recognised. In addition, other government benefits receivable to
the amount of $144m (2021: $99m) 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 6.5 months’ maximum of interest. A continuous
involvement liability of $1.2m (2021: $1.6m) was recognised. The Group considers that the held-to-collect business model remains appropriate
for these receivables and hence continues measuring them at amortised cost. The Group has arrived at this conclusion because the factoring of
the Group’s B2B receivables before maturing is done on an infrequent basis.
66
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 The Group’s cash and cash equivalent balances are primarily held at banks with strong credit ratings where the exposure to credit risk is
considered to be limited. The extent to which the Group’s cash and cash equivalent balances are held at banks where there is considered to be
an exposure to credit risk is set out below:
31 December 2022
31 December 2021
Credit rating
US$ million
Credit rating
US$ million
Banks
Bank 1
Bank 2
Bank 3
Ba1
A+
B
33
28
28
Ba1
A+
B2
97
38
31
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
Borrowings
Trade payables
Lease liabilities
Other financial liabilities
Other liabilities1
Total
31 December 2022
Less than
3 months
Between
3 months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
527
1,603
7
10
31
2,178
111
84
33
1
27
256
635
–
37
–
18
690
407
–
76
–
2
485
–
–
122
–
146
268
Total
1,680
1,687
275
11
224
3,877
1 Other liabilities (note 24) exclude the elements that do not qualify as financial instruments.
US$ million
Borrowings
Trade payables
Lease liabilities
Other liabilities1
Total
31 December 2021
Less than
3 months
Between
3 months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
278
1,375
7
28
1,688
13
59
32
23
127
22
–
32
18
72
60
–
66
2
128
368
–
106
144
618
Total
741
1,434
243
215
2,633
1 Other liabilities (note 24) exclude the elements that do not qualify as financial instruments.
Net investment hedge
On 24 September 2020, the Group issued $350m notes (refer to note 21). The Group entered into a fixed-fixed cross-currency swap
to exchange $150m US dollar denominated bonds to Euro (EUR). The cross-currency swap has a maturity of three years and was designated as
the hedging instrument of the net investment hedge described below.
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 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. The Group has hedged its
net investment in subsidiaries with EUR pegged functional currencies.
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 hedging instrument 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 dollar offset method).
An economic relationship between the hedged item and hedging instrument exists given that their fair values move in the opposite direction of
the same risk, which is the hedged risk. The impact of currency basis spreads and forward elements are excluded from the assessment of hedge
effectiveness and are recognised in OCI as cost of hedging reserve. Hedge ineffectiveness would arise to the extent that the net assets of the
foreign operations fell below the designated amount of the hedging instrument and due to any inefficiency in the currency markets.
67
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT CONTINUED
3.1 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:
US$ million
Cross-currency swap
Nominal amount
150
Assets
14
Carrying amount
31 December 2022
Line item in the
statement of financial
position where the hedging
instrument is included
Liabilities
–
Other financial assets
Cross-currency swap
9
8
–
Not applicable
Change in value
used for calculating
hedge
Change in value
of hedging instrument
recognised in OCI
Hedge ineffectiveness
recognised in
profit or loss
Line item in profit
or loss that includes
hedge ineffectiveness
US$ million
Cross-currency swap
Nominal amount
150
Assets
5
Carrying amount
31 December 2021
Line item in the
statement of financial
position where the hedging
instrument is included
Liabilities
–
Other financial assets
Cross-currency swap
12
12
–
Not applicable
Change in value
used for calculating
hedge
Change in value
of hedging instrument
recognised in OCI
Hedge ineffectiveness
recognised in
profit or loss
Line item in profit
or loss that includes
hedge ineffectiveness
3.2 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 21.
US$ million
Long-term debt and RCF (note 21)
Lease liabilities (note 25)
Total debt excluding short-term bank borrowings
Short-term bank borrowings (note 21)
Less: cash and cash equivalents (note 18)
Net debt
US$ million
Net debt
Adjusted EBITDA1 (note 6)
Leverage ratio1
1 For the description and reconciliation of non-GAAP measures refer to pages 16 and 17.
US$ million
Cash and cash equivalents
Available undrawn credit facilities1
Available short-term capital resources
1 Of which $1,407m (2021: $1,171m) are uncommitted facilities.
31 December
2022
31 December
2021
1,016
183
1,199
513
(500)
1,212
349
161
510
280
(587)
203
31 December
2022
31 December
2021
1,212
470
2.58x
203
447
0.45x
31 December
2022
31 December
2021
500
1,614
2,114
587
1,471
2,058
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.
68
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
4.1 Accounting judgements
In the process of applying the Group’s accounting policies, no judgements have been made that would have a significant effect on the amounts
recognised in the consolidated financial statements, other than those involving estimates.
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 as follows:
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. Management has
applied judgement in determining the timing of recovery of the government benefits receivable which extend past 12 months. A key element is
the recoverability of government benefits receivable; this is considered in note 15. The recoverability assessment takes into account the stability
of the macroeconomic and political environment, credit risks including relevant policy changes and governments’ track records in settling debts as
well as the ageing of the outstanding amounts and government confirmations on outstanding balances.
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 $17m related to income tax and $32m 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, it is expected to be within the next five years.
69
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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 revenue. Both operating streams 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:
Retail
Commercial
Lubricants
Consolidated
2022
7,057
435
54
489
249
3,434
210
27
237
151
478
87
4
91
70
10,969
732
85
817
470
2021
Retail
Commercial
Lubricants
Consolidated
5,516
436
54
490
259
2,487
168
26
194
116
455
89
4
93
72
8,458
693
84
777
447
2022
2021
11
11
5
27
15
6
6
27
2022
2021
1,837
1,790
881
6,461
10,969
1,441
1,411
727
4,879
8,458
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.
US$ million
Share of profit of joint ventures and associates included in segment EBITDA
Lubricants
Retail
Commercial
Total
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
Morocco
Kenya
Senegal
Other
Total
70
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022
US$ million
Non-current assets by principal country (excluding deferred tax)
Morocco
The Netherlands
Kenya
Other
Total
31 December
2022
31 December
2021
250
230
137
1,148
1,765
257
246
157
1,070
1,730
6. RECONCILIATION OF NON-GAAP MEASURES
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:
IPO1 and Vitol Offer related expenses2
Impairment of other government benefits receivable3
Hyperinflation4
Management Equity Plan5
Adjusted EBITDA
US$ million
Net income
Adjustments to net income related to special items:
IPO1 and Vitol Offer related expenses2
Impairment of other government benefits receivable3
Hyperinflation4
Management Equity Plan5
Tax on special items
Adjusted net income
2022
208
87
295
132
427
35
7
1
–
470
2022
105
43
7
1
–
(2)
154
2021
253
59
312
130
442
4
–
–
1
447
2021
152
4
–
–
1
–
157
IPO related items in 2021 concern the IPO share awards which are accrued for over the vesting period.
1
2 These expenses are related to the Vitol Offer transaction, Bridge loan financing and other acquisitions, and are treated as special items as they do not form part of the core operational
business activities and performance.
3 The Group has recognised an impairment of other government benefits receivable as a result of an expected retrospective price structure change by certain governments to finance
their outstanding debt. Such retrospective changes of existing price structures are not representative of the core operational business activities and performance for the period and are,
therefore, treated as special items.
4 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.
5 The Management Equity Plan vested at IPO in May 2018 and was 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.
71
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
7. GENERAL AND ADMINISTRATIVE COST
Employee benefits
US$ million
Wages, salaries and other employee benefits
Restructuring, severance and other involuntary termination costs
Retirement benefits
Share-based payment expense
2022
179
4
10
3
196
2021
179
5
10
5
199
Included in the employee benefit expense for the year ended 31 December 2022 was social security expense of $1m (2021: $1m) and other
pension costs relating to employees employed in the UK. Refer to note 3 in the Company financial statements.
Employee benefits have been charged in:
US$ 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
2022
110
49
37
196
2022
1,951
827
2,778
Depreciation and amortisation
Depreciation of property, plant and equipment, right-of-use assets and amortisation of intangible assets have been charged in:
US$ million
Cost of sales
Selling and marketing cost
General and administrative cost
Audit fees
US$’000
Parent company and consolidated financial statements
Subsidiaries
Audit fees
Audit-related fees1
Other assurance services2
Other fees total
Total fees
2022
85
33
14
132
2022
1,101
1,537
2,638
424
332
756
3,394
1 Audit-related fees relate to interim financial statements reviews.
2 Other assurance services relate mainly to comfort letter procedures in respect to note issuance and volume certificates to support brand royalty expenses.
2021
111
49
39
199
2021
1,945
822
2,767
2021
84
32
14
130
2021
1,463
1,218
2,681
377
19
396
3,077
72
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 8. FINANCE INCOME AND EXPENSE
US$ million
Finance expense
Interest on bank and other borrowings and on lease liabilities1
Interest on long-term debt including amortisation of set-up fees
Accretion expense net defined benefit liability
Foreign exchange loss
Other
Finance income
Interest from cash and cash equivalents
Finance expense – net
1
Includes an amount of $17m (2021: $16m) finance expense for leases in respect to IFRS 16 ‘Leases’.
9. INCOME TAXES
Current income taxes
Analysis of income tax expense:
US$ million
Current tax
Current income tax
Current income tax prior years
Deferred tax
Deferred income tax
Deferred income tax prior years
Income tax expense
2022
2021
(56)
(28)
(2)
(8)
(4)
(98)
11
11
(87)
(41)
(20)
(2)
(1)
(4)
(68)
9
9
(59)
2022
2021
(104)
(2)
(106)
1
2
3
(103)
(102)
–
(102)
2
(1)
1
(101)
73
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
9. INCOME TAXES CONTINUED
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
Withholding tax
Other1
Income tax expense
Effective tax rate
1 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:
2022
208
19%
(40)
(21)
11
(13)
(7)
(28)
(5)
(103)
49%
2021
253
19%
(48)
(24)
10
(10)
(8)
(18)
(3)
(101)
40%
31 December 2022
31 December 2021
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
–
9
14
–
7
85
116
(55)
61
(38)
(15)
(1)
–
(21)
–
(66)
(141)
55
(86)
1
–
10
13
–
5
73
102
(44)
58
2022
(29)
3
–
(4)
5
(25)
(36)
(18)
(1)
–
(14)
–
(62)
(131)
44
(87)
2021
(26)
1
(1)
(1)
(2)
(29)
1 The recognised deferred tax asset relates to $2m (2021: $2m) tax losses which is supported by expected future taxable profits.
The changes in the net deferred income tax assets and liabilities were as follows:
US$ million
Balance at the beginning of year, net
In profit
In other comprehensive income
Other
Foreign exchange differences
Unrecognised deferred tax assets relate to carry forward losses of $120m (2021: $107m) and tax credit carry forwards of $19m (2021: $15m).
Of the unrecognised carry forward losses $6m will expire at the end of 2024, $13m at the end of 2025, $16m at the end of 2026 and $85m at
the end of 2027 or later.
The unrecognised taxable temporary differences associated with undistributed retained earnings of investments in subsidiaries, joint ventures
and associates amounts to $27m (2021: $29m).
In December 2021, the Organisation for Economic Co-operation and Development (OECD) issued model rules for a new global minimum tax
framework and the UK has announced the intention to bring these into effect from 2024. While the overarching framework has been published,
the Group is awaiting the final legislation and detailed guidance to assess its full implications. No current or deferred tax was recognised, as the
respective laws are not yet substantively enacted.
74
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 10. PROPERTY, PLANT AND EQUIPMENT
US$ million
Cost at 1 January 2022
Additions
Disposals
Transfers
Foreign exchange differences1
Cost at 31 December 2022
Accumulated depreciation at 1 January 2022
Depreciation
Disposals
Foreign exchange differences1
Accumulated depreciation at 31 December 2022
Net carrying value at 31 December 2022
Land
Buildings
Machinery
and other
equipment
Construction
in progress
63
3
(3)
1
(5)
59
–
–
–
–
–
59
383
29
(4)
34
(37)
405
(86)
(24)
4
8
(98)
307
719
30
(25)
78
(67)
735
(245)
(60)
24
23
(258)
477
104
95
–
(113)
(9)
77
–
–
–
–
–
77
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
US$ million
Cost at 1 January 2021
Additions
Disposals
Transfers
Foreign exchange differences1
Cost at 31 December 2021
Accumulated depreciation at 1 January 2021
Depreciation
Disposals
Foreign exchange differences1
Accumulated depreciation at 31 December 2021
Net carrying value at 31 December 2021
Land
Buildings
Machinery
and other
equipment
Construction
in progress
52
11
–
2
(2)
63
–
–
–
–
–
63
339
14
(1)
41
(10)
383
(68)
(21)
1
2
(86)
297
642
30
(4)
70
(19)
719
(192)
(62)
3
6
(245)
474
116
105
–
(113)
(4)
104
–
–
–
–
–
104
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
No assets have been pledged as security.
2022
Total
1,269
157
(32)
–
(118)
1,276
(331)
(84)
28
31
(356)
920
2021
Total
1,149
160
(5)
–
(35)
1,269
(260)
(83)
4
8
(331)
938
75
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. INTANGIBLE ASSETS
US$ million
Cost at 1 January 2022
Additions
Foreign exchange differences1
Cost at 31 December 2022
Accumulated amortisation at 1 January 2022
Amortisation
Accumulated amortisation at 31 December 2022
Net carrying value at 31 December 2022
Shell licence
agreement
Goodwill
Computer
software
Other
137
–
(3)
134
(92)
(4)
(96)
38
81
–
(7)
74
–
–
–
74
99
7
–
106
(37)
(11)
(48)
58
56
–
(3)
53
(32)
(3)
(35)
18
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
US$ million
Cost at 1 January 2021
Additions
Foreign exchange differences1
Cost at 31 December 2021
Accumulated amortisation at 1 January 2021
Amortisation
Accumulated amortisation at 31 December 2021
Net carrying value at 31 December 2021
Shell licence
agreement
Goodwill
Computer
software
Other
139
–
(2)
137
(87)
(5)
(92)
45
79
–
2
81
–
–
–
81
91
8
–
99
(28)
(9)
(37)
62
57
–
(1)
56
(29)
(3)
(32)
24
2022
Total
373
7
(13)
367
(161)
(18)
(179)
188
2021
Total
366
8
(1)
373
(144)
(17)
(161)
212
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
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 a 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 as 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 VEOHL 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.
The following table sets 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
76
2022
Commercial
fuel
7.3%
9.1%
12.4%
2.2%
Retail
fuel
6.3%
7.2%
12.4%
2.2%
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 The methodology applied to each of the key assumptions used is as follows:
Assumptions
Approach used to determine values
Volume compounded annual growth rate
Volume growth over the five-year forecast period, based on past performance and
management expectations of market developments.
Gross cash profit compounded annual growth rate Based on past performance and management expectations of the future over the five-year
Post-tax discount rate
Long-term growth rate
forecast period.
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.
The Group considers the post-tax discount rate to be the most sensitive assumption. With all other assumptions in the table above remaining
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 21.2% and 22.8%, respectively. There are no reasonable changes that could occur to the key assumptions that would
reduce the recoverable amount below the carrying amount.
12. 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 14 of the Company financial statements.
US$ million
At 1 January
Acquisition of businesses
Share of profit
Dividend received
Foreign exchange differences
At 31 December
2022
233
1
27
(17)
(7)
237
2021
231
–
27
(22)
(3)
233
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
2022
156
11
(8)
(4)
155
2021
156
15
(15)
–
156
The total assets of SVL as per 31 December 2022 are $278m (2021: $260m), of which $217m (2021: $190m) relate to current (including cash and
cash equivalents of $20m (2021: $18m)) and $61m (2021: $70m) to non-current assets. The current liabilities are $143m (2021: $121m) (including
borrowings of $65m (2021: $48m)) and non-current liabilities of $8m (2021: $9m). The revenue for the year ending 31 December 2022 was
$367m (2021: $363m), and profit after income tax was $21m (2021: $28m). Other comprehensive loss, net of tax, for the year amounted to $9m
(2021: $3m). The 2022 profit includes amortisation and depreciation of $9m (2021: $9m), net finance expense of $2m (2021: $2m) and income
tax expense of $10m (2021: $10m).
The carrying value of SVL includes a notional goodwill of $96m calculated as the difference between the cost of the investment and the investor’s
share of the fair values of the investee’s identifiable assets and liabilities acquired. Since the notional goodwill is not shown as a separate asset,
and there is no objective evidence of impairment, it is not required to be separately tested for impairment, nor does it trigger an annual
impairment test.
There are no contingent liabilities relating to the Group’s investments in joint ventures and associates.
77
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
13. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
The Group has classified equity investments as financial instruments at FVTOCI (without recycling). These investments are measured using
inputs for the asset or liability that are in absence of observable market data, based on net asset value of the related investments (level 3 in the
IFRS 13 ‘Fair Value Measurement’ hierarchy) which management considers to best represent the fair value of the associated investment given its
nature. The fair value of the financial asset approximates the carrying amount.
The value is based on the net asset value of the related investments and therefore no sensitivity analysis is presented.
US$ million
At 1 January
Fair value adjustment
Foreign exchange differences
At 31 December
2022
2021
12
1
–
13
12
1
(1)
12
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.
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.
14. OTHER FINANCIAL ASSETS AND LIABILITIES
Other financial assets and liabilities are derivative instruments comprising forward foreign exchange contracts and cross-currency swaps. The fair
values as at 31 December 2022 amounted to $14m (other financial assets) (2021: $6m) and $11m (other financial liabilities) (2021: Nil) respectively.
Other financial liabilities include foreign exchange swaps in Vivo Energy Kenya Ltd (refer to note 3.1). The instruments are categorised as level 2 of
the fair value hierarchy. There have been no transfers between any levels during the year.
The specific valuation techniques used to value financial instruments that are carried at fair value using level 2 techniques are:
– The fair value of cross-currency swaps is calculated as the present value of the estimated future cash flows based on current market data
provided by third party banks; and
– The fair value of forward foreign exchange contracts is calculated by comparison with current forward prices of contracts for comparable
remaining terms.
15. OTHER ASSETS
US$ million
Other government benefits receivable
Prepayments
VAT and duties receivable
Amounts due from dealers and joint ventures1
Deposits1
Employee loans1
Indemnification asset on legal and tax claims1
Other1,2
Current
Non-current
1 Financial assets are measured at amortised cost and the fair value approximates the carrying amount.
2 The amount mainly comprises other non-current receivables.
78
31 December
2022
31 December
2021
402
122
90
56
17
7
5
27
726
554
172
726
114
85
72
64
16
7
10
30
398
282
116
398
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 Other government benefits receivable
US$ million
Kenya
Senegal
Madagascar
Morocco
Gabon
Mozambique
Botswana
Guinea
Other
Credit rating
B
Ba3
B-
BB+
B-
CCC+
BBB+
None available
31 December
2022
31 December
2021
167
101
52
21
20
14
10
10
7
402
31
20
12
23
2
–
10
9
7
114
The Group is exposed to credit risk in relation to other government benefits receivables. Management continuously assesses the recoverability
of the receivables and engages with governments on the related recoverability methods. In the event a significant risk of default is identified,
management shall proceed to quantify this risk through a discounting model. An extended period of recovery is not in itself representative
of default and if all other factors, including the historical track record of recoveries, indicate that full recovery is probable then no provision is
recorded. Based on management’s review on the recoverability of these receivables it believes the credit risk in relation to these balances is
relatively low, except for those balances for which a provision has been recognised. Other government benefits receivable are partially provided
for and presented net of provisions for impairment of $11m (2021: $10m). For the year $892m (2021: $336m) of other government benefits
were recognised in cost of sales for compensation of costs incurred.
16. INVENTORIES
US$ million
Fuel
Lubricants
Other
31 December
2022
31 December
2021
555
121
11
687
433
105
26
564
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 $9,855m (2021: $7,400m). The carrying value of inventory represents the lower of cost or net realisable value. Provisions for
write-downs of inventories to the net realisable value amounted to $7m as per 31 December 2022 (2021: $7m). Other inventory consists mainly
of energy saving certificates, fittings for LPG and lubricants and spare parts.
17. TRADE RECEIVABLES
Trade receivables are measured at amortised cost and were as follows, as at:
US$ million
Trade receivables
Less: loss allowance of trade receivables
Trade receivables – net
31 December
2022
31 December
2021
654
(56)
598
521
(60)
461
The fair values of trade receivables approximate their carrying value as they are deemed short term in their nature and recoverable within
12 months. Trade receivables include credit secured receivables of $240m (2021: $223m).
Movements in the loss allowance of trade receivables are as follows:
US$ million
At 1 January
Additions
Reversals
Utilisation
Foreign exchange differences
At 31 December
2022
2021
60
7
(4)
(1)
(6)
56
66
7
(6)
(4)
(3)
60
79
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
18. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are measured at amortised cost and the fair value approximates the carrying amount.
US$ million
Cash
Cash equivalents:
Short-term placements
31 December
2022
31 December
2021
422
78
500
392
195
587
19. SHARE CAPITAL AND RESERVES
The Company has 1,266,941,899 authorised ordinary shares with a nominal value of $0.50 each. At 31 December 2022, 1,266,941,899 shares
have been issued and fully paid and entitle the holder to participate in dividends. On a show of hands, every holder of ordinary shares present at
a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Shareholders will, under general law,
be entitled to participate in any surplus assets in a winding up of the Company in proportion to their shareholding.
Ordinary shares at 31 December
2022
2021
Number of shares
US$ million Number of shares
US$ million
1,266,941,899
633
1,266,941,899
633
Other reserves are disclosed in the consolidated statement of changes in equity.
20. DIVIDENDS
In March 2022, the Board declared an interim dividend for the 2021 financial year of 4.0 cents per share, amounting to $51m which was paid on
24 June 2022 from distributable reserves as at 31 December 2021.
In July 2022, in line with the terms of the Vitol Offer, the Company declared a 2022 special dividend of 2.0 cents per share amounting to approximately
$18.5m which was paid on 8 August 2022 to all Vivo Energy shareholders on the register of members of the Company on 22 July 2022 except the Helios
entities, which have each agreed to waive the right to receive the special dividend. This dividend was paid from distributable reserves as at 30 June 2022.
In October 2022, the Company declared a further interim dividend amounting to $628.5m which was paid on 13 October 2022 from
distributable reserves as at 30 September 2022.
21. BORROWINGS
US$ million
Bridge loan1
Notes1
VEI BV Revolving Credit Facility
Bank borrowings
Current
Non-current
Drawn on
13/10/2022
24/09/2020
03/08/2022
31 December
2022
31 December
2021
603
350
63
513
1,529
584
945
1,529
–
349
–
280
629
277
352
629
1 The amounts are net of financing costs.
Current borrowings include bank borrowings which carry interest rates between 2.9% and 34.2% per annum, are short term in nature and the
carrying amount approximates the fair value.
In October 2022, the Group received proceeds from an unsecured Bridge loan with an initial term of 12 months and two three-months
extension options exercisable by the Company. The Bridge loan has a floating interest rate linked to the Secured Overnight Financing Rate and
the carrying amount approximates the fair value.
In September 2020, the Group issued $350m notes with a coupon rate of 5.125% paid semi-annually and seven-year maturity. The notes are
fully redeemed at maturity, with a repayment date of 24 September 2027. The fair value of the notes is approximately $312m based on quoted
market prices at the end of the reporting period.
The Group maintains a multi-currency revolving credit facility (RCF) of $270m. The RCF was utilised in the current year with a drawdown of
$63m. The RCF matures in May 2023. The RCF is a floating rate facility and the carrying amount approximates the fair value.
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 $1,407m (2021: $1,171m) include a large number of uncommitted facilities held with a
number of different banks. Most of these facilities are subject to an annual renewal process.
80
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 21. BORROWINGS CONTINUED
The tables below provide an analysis of cash and non-cash movements in borrowings for the period:
US$ million
1 January
Proceeds of long-term debt1
Proceeds/(repayment) of bank borrowings and other borrowings2
Foreign exchange movements
Other3
31 December
1 Mainly represents the proceeds from the Bridge loan.
2 Other borrowings relate to the RCF to be settled within the next 12 months.
3 Other includes financing costs and non-cash items.
US$ million
1 January
Repayment of long-term debt
Proceeds/(repayment) of bank borrowings
Foreign exchange movements
Other1
31 December
1 Other includes financing costs and non-cash items.
Long-term debt
and RCF
Bank
borrowings
349
595
59
4
9
1,016
280
–
258
(25)
–
513
Long-term debt
Bank
borrowings
408
(60)
–
–
1
349
274
–
11
(5)
–
280
2022
Total
629
595
317
(21)
9
1,529
2021
Total
682
(60)
11
(5)
1
629
Key covenants:
The key covenants below relate to the VEI BV Revolving Credit Facility:
– 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 financial statements 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 financial statements 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 debt cover follows the Group’s leverage ratio
calculation and interest cover indicates the Group’s ability to service its debt related interest with profits. These calculations take into account
bank permitted exemptions stipulated within the contractual agreement. 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, and a maintenance
of listing covenant. It also has a change of control clause triggering repayment if an entity, other than permitted ones, takes control of
the Company.
The key covenants for the Bridge loan are substantially the same as the covenants for the revolving credit facility.
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. 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.
81
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
22. PROVISIONS
Provisions include the following:
US$ million
Provisions
Retirement benefit obligations (note 23)
Current
Non-current
US$ million
At 1 January
Additions
Utilisation
Releases
Foreign exchange differences
At 31 December
Current
Non-current
31 December
2022
31 December
2021
76
28
104
15
89
104
94
30
124
19
105
124
2022
Uncertain
tax positions
Compulsory
stock
obligation
Legal
provisions
Other
Total
33
4
(1)
(10)
(2)
24
–
24
24
28
–
–
(3)
(3)
22
–
22
22
12
1
–
–
(1)
12
12
–
12
21
4
(4)
(1)
(2)
18
3
15
18
94
9
(5)
(14)
(8)
76
15
61
76
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 the recognition of a provision, 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 2.21 for further details.
Uncertain tax positions
This amount represents provisions for uncertain tax positions for non-income taxes, interest and penalties of $24m (2021: $33m). Refer to note
4.2 for further details regarding uncertain tax positions and note 15 for further details of the indemnification asset on tax claims.
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 2022. Refer to note 15 for further details of the indemnification asset on legal claims.
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 $9m (2021: $10m).
82
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 23. RETIREMENT BENEFITS
The Group operates defined benefit plans in multiple African countries, which include Cape Verde, Côte d’Ivoire, Gabon, Ghana, Guinea,
Mauritius, Morocco, Namibia, Reunion, Rwanda, Senegal, South Africa and Tunisia. The plans operated in Cape Verde, Ghana, Mauritius,
Morocco and Tunisia combined represent approximately 85% of the total liability for the Company. The valuations are carried out in line with the
regulatory requirements in each country considering the requirements under IAS 19 ‘Employee Benefits’. The plans offered in these countries
differ in nature and consist of medical plans, pension plans, retirement indemnities, jubilees and long service award plans. These plan benefits
are linked to final salary and benefit payments are met as they fall due. These plans are unfunded with two exceptions to this are Gabon and
Mauritius, which both operate a funded plan. The plan in Gabon has a funding level of approximately 60% and Mauritius approximately 112%.
In Gabon plan assets are held in the form of insurance contracts. For Mauritius, plan assets are held in vehicles with standard investment risk,
following a balanced investment strategy, split between equities, government bonds and asset-backed securities. The plan in Mauritius has been
closed to future accrual from 31 December 2014 onwards. However, the link to final salaries is being maintained for in-service employees.
US$ 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 assets1
Funded status of funded benefit obligations
Present value of unfunded obligation
Unfunded status end of year (net liability)
Net defined benefit obligation
2022
2021
1
2
3
2
2
4
2022
2021
3
9
12
4
8
12
31 December
2022
31 December
2021
24
4
28
25
5
30
31 December
2022
31 December
2021
(11)
11
–
(24)
(24)
(24)
(13)
13
–
(25)
(25)
(25)
1 The plans in Mauritius had a net surplus of $1m (2021: $1m), however, this surplus is irrecoverable and therefore the fair value of the assets are restricted to the present value of the
funded obligations.
83
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
23. RETIREMENT BENEFITS CONTINUED
The movements in the defined benefit obligation for funded and unfunded post-employment defined benefits over the year are as follows:
US$ million
At 1 January
Current service costs
Benefits paid
Interest costs
(Gains)/losses from change in financial assumptions
Actuarial (gains)/losses
Foreign exchange differences
At 31 December
Pension
benefits
Other
38
1
(2)
2
(1)
–
(3)
35
5
–
–
–
–
–
(1)
4
The movements in the fair value of plan assets over the year are as follows:
US$ million
At 1 January
Return on plan assets
Employer contributions
Benefits paid
Foreign exchange differences
At 31 December
Pension benefits
13
(2)
2
(2)
–
11
2022
Total
43
1
(2)
2
(1)
–
(4)
39
2022
Total
13
(2)
2
(2)
–
11
Pension
benefits
Other
43
2
(3)
1
(3)
1
(3)
38
4
–
–
1
–
–
–
5
Pension benefits
12
3
2
(3)
(1)
13
2021
Total
47
2
(3)
2
(3)
1
(3)
43
2021
Total
12
3
2
(3)
(1)
13
The plan assets shown above are invested in equities $6m (2021: $7m), government bonds $3m (2021: $3m), corporate bonds $2m (2021: $2m),
insurance contracts $0.3m (2021: $0.3m) and cash and cash equivalents $0.05m (2021: $0.01m).
The plans in Mauritius had a net surplus of $1m (2021: $1m), however, this surplus is irrecoverable and therefore the fair value of the assets are
restricted to the present value of the funded obligations.
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 2022
31 December 2021 Range of assumptions
Increase/(decrease)
Assumptions used
Effect of using alternative assumptions
5.07%
2.17%
20.43%
4.76%
17.65%
79.59
83.62
4.39%
2.28%
13.72%
5.13%
18.28%
79.65
83.69
0.50% – (0.50%)
0.50% – (0.50%)
0.50% – (0.50%)
0.50% – (0.50%)
0.50% – (0.50%)
2.49% – (2.34%)
1.95% – (1.80%)
3.66% – (3.41%)
(4.77%) – 5.13%
(4.82%) – 5.28%
84
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 The principal actuarial assumptions were as follows:
Tunisia
Senegal
Cape
Verde Mauritius Morocco
9.75%
7.00%
9.75%
2.00%
3.25%
2.00%
6.50%
2.90%
2.75%
2.00%
Côte
d’Ivoire Guinea Namibia
Ghana
Gabon Reunion Rwanda
2022
South
Africa
6.00% 15.50% 13.20% 34.50%
8.10% 10.00%
n/a
n/a
6.25%
2.20%
3.75% 13.25% 12.70%
6.10%
6.25%
2.00%
7.00%
3.00%
3.50%
2.90%
6.00%
3.00% 11.20%
n/a
n/a
1.00%
3.00%
n/a
n/a
n/a
n/a
n/a
n/a
3.00%
2.85%
7.50%
n/a
n/a
n/a
n/a
Tunisia
Senegal
Cape
Verde Mauritius Morocco
9.50%
5.50%
8.25%
1.75%
4.00%
2.00%
4.75%
2.50%
2.50%
2.00%
Côte
d’Ivoire Guinea Namibia
Ghana
Gabon Reunion Rwanda
6.00% 15.00% 12.90% 21.60%
8.10% 10.00%
n/a
n/a
5.25%
2.75%
1.00% 12.00% 11.30%
6.10%
4.75%
1.80%
6.00%
3.00%
2.00%
2.50%
6.00%
3.00%
8.50%
n/a
n/a
1.00%
2.98%
n/a
n/a
n/a
n/a
n/a
n/a
3.00%
2.58%
7.50%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2021
South
Africa
Discount rate
Inflation rate
Future salary
increases
Future pension
increases
Discount rate
Inflation rate
Future salary
increases
Future pension
increases
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 10.5 years.
Expected contributions to post-employment benefit plans for the year ending 31 December 2023 are $3m.
24. OTHER LIABILITIES
US$ million
Other tax payable1
Oil fund liabilities2 (note 2.21)
Deposits owed to customers2
Employee liabilities2,3
Deferred income
Other2
Current
Non-current
1 Other tax payable mainly relates to VAT, withholding taxes and employee taxes.
2 Financial liabilities amounting to $224m (2021: $215m) are measured at amortised cost and its fair value approximates the carrying amount.
3 Employee liabilities mainly relate to employee bonuses.
31 December
2022
31 December
2021
93
93
78
50
10
13
337
187
150
337
84
90
75
46
17
28
340
187
153
340
85
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. LEASES
The Group has leases for motor vehicles, corporate offices, land, buildings and equipment. Leases have remaining lease terms of one year to
99 years, some of which may include options to extend the leases for at least five years and some of which may include options to terminate
the leases within one year.
The consolidated statement of financial position shows the following amounts relating to leases:
US$ million
Right-of-use assets, 1 January 2021
Depreciation of right-of-use assets
Leases effective in 2021
Right-of-use assets, 31 December 2021
Depreciation of right-of-use assets
Leases effective in 2022
Right-of-use assets, 31 December 2022
Land and
buildings
Motor
vehicles
181
(26)
44
199
(26)
44
217
20
(4)
4
20
(4)
2
18
Total
201
(30)
48
219
(30)
46
235
Lease liabilities are measured at amortised cost and the fair value approximates the carrying amount.
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
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
The Group recognised rental income of $26m (2021: $24m) as revenue in the statement of comprehensive income.
26. NET CHANGE IN OPERATING ASSETS AND LIABILITIES AND OTHER ADJUSTMENTS
US$ million
Trade payables
Trade receivables
Inventories
Other assets
Other liabilities
Provisions
Other1
1 Of which $87m relates to net finance expense (2021: $59m).
86
31 December
2022
31 December
2021
27
156
183
2022
(17)
(30)
(7)
26
135
161
2021
(16)
(30)
(7)
2022
2021
(33)
(13)
(46)
2022
15
10%
2022
397
(195)
(184)
(379)
44
(10)
98
(229)
(33)
(14)
(47)
2021
11
10%
2021
432
(140)
(104)
(95)
29
9
64
195
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 27. COMMITMENTS AND CONTINGENCIES
Commitments
The Group has purchase obligations for capital and operational expenditure, under various agreements, made in the normal course of business.
The purchase obligations are as follows, as at:
US$ million
Purchase obligations
31 December
2022
31 December
2021
13
21
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.
In 2019, it was reported that the Moroccan competition council, Conseil de la Concurrence's (‘CDC’), had launched an investigation into the
petroleum retail industry. As announced in March 2021, the Royal Cabinet’s review concluded that the CDC investigation “was marked by
numerous procedural irregularities” and experienced “an obvious deterioration in the climate of deliberations”. At that time, a new President
was appointed to lead the CDC. The investigation is still ongoing, and we continue to believe that we have conducted our 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 continue, 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.
28. SHARE-BASED PAYMENTS
The Group operates share-based payment plans for certain Executive Directors, Senior Managers and other senior employees.
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 B.V. 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 phantom options are fully vested and were fully settled in the prior year with no further outstanding options.
IPO Share Award Plan
In May 2018, Vivo Energy Limited 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. The IPO Share Awards Plan was fully settled during the prior year with no further outstanding options.
Long-Term Incentive Plan
Vivo Energy Limited adopted the Vivo Energy 2019 Long-Term Incentive Plan (the ‘LTIP 2019’) in March 2019, the Vivo Energy 2020 Long-Term
Incentive Plan (the ‘LTIP 2020’) in March 2020 and the Vivo Energy 2021 Long-Term Incentive Plan (the ‘LTIP 2021’) in March 2021. The LTIP
2019, LTIP 2020 and LTIP 2021 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 Incentive Plans.
As a result of the completion of Vitol Offer, Executive Directors and Senior Management of the Group were afforded an opportunity to choose
between receiving an immediate pay-out for the LTIPs or convert the existing plans from equity-settled to cash-settled. Under the first option,
all share-options which would not otherwise have vested were accelerated and deemed to have vested and exercised. All remaining LTIPs were
converted from equity-settled to cash-settled as a long-term incentive plan for Senior Management. No new LTIPs were issued during the
current financial period. The fair value of the options at the date of modification was $6m.
87
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
28. SHARE-BASED PAYMENTS CONTINUED
Restricted Share Award Plan
The Restricted Share Award Plan provided for grants of awards over the shares of the Company in the form of share awards subject to
continued employment over a 16-month period. Certain Senior Managers of the Group are eligible for grants under the Restricted Share Award
Plan. Following the Vitol Offer, the vesting of the Restricted Share Awards Plan was accelerated and settled. The fair value of the options at the
date of modification was $2m.
US$ million
Cash-settled share-based payments
Management Equity Plan
Equity-settled share-based payments
IPO Share Award Plan
Long-Term Incentive Plans
Restricted Share Award Plan
2022
2021
–
–
2
1
3
1
1
2
1
5
Movements in the number of shares and share options outstanding, and their related weighted average exercise prices, are as follows:
In million
LTIP 2018
LTIP 2019
LTIP 2020
LTIP 2021
IPO
Share
Awards
Restricted
Share
Awards
LTIP
IPO
Restricted
Share
Awards
Average
exercise
price per
phantom
option
US$
MEP
Phantom
Options
Outstanding at 1 January 2022
Lapsed/Vested/Exercised/Modified
Outstanding at 31 December 2022
Exercisable at 31 December 2022
Outstanding at 1 January 2021
Granted/Lapsed
Vested/Exercised
Outstanding at 31 December 2021
Exercisable at 31 December 2021
–
–
–
–
3
(1)
(2)
–
1
4
(4)
–
–
4
–
–
4
–
4
(4)
–
–
5
(1)
–
4
–
6
(6)
–
–
–
6
–
6
–
–
–
–
–
1
–
(1)
–
–
1
(1)
–
–
–
1
–
1
–
–
–
–
n/a
0.05
–
–
–
n/a
–
–
–
–
3
–
(3)
–
–
29. RELATED PARTIES
Sales and purchases
US$ million
2022
Sales of products and services and other income
Purchase of products and services, and other expenses
2021
Sales of products and services and other income
Purchase of products and services, and other expenses
88
Joint ventures
and associates
Shareholders
Total
29
390
23
369
154
1,522
56
887
183
1,912
79
1,256
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 The following table presents the Company’s outstanding balances with related parties:
US$ million
31 December 2022
Receivables from related parties
Payables to related parties
31 December 2021
Receivables from related parties
Payables to related parties
Joint ventures
and associates
Shareholders
Total
47
(80)
(33)
54
(81)
(27)
15
(327)
(312)
5
(232)
(227)
62
(407)
(345)
59
(313)
(254)
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. An expected credit loss of $3m (2021: $1m) was recognised in relation to related party receivables. The payables to related
parties arise mainly from purchase transactions at arm’s length, including a supplier agreement with Vitol Supply, and are typically due two
months after the date of purchase. These payables bear no interest.
Key management compensation is considered to be the Directors (Executive and Non-Executive) and Senior Management.
US$’000
2022
Salaries and other short-term employee benefits
Termination benefits
Long-term incentives1,2
Service fees
Post-employment benefits3
9,848
593
4,570
178
1,451
16,640
2021
9,451
–
2,496
784
744
13,475
1
2
3
Includes share-based incentives (LTIP, IPO Share Awards and Restricted Share Awards) until delisting.
Includes long-term incentives related to 1 Director (2021: 2 Directors).
Includes post-employment benefits related to 1 Director (2021: 2 Directors).
Directors’ compensation
Directors’ compensations are disclosed from the date of appointment. Further details of current year Directors can be found on page 39.
US$ million
Salaries and other short-term employee benefits
Long-term incentives2
Service fees
Post-employment benefits
2022
Highest paid
Director
1,286
1,070
–
156
2,512
2021
Highest paid
Director
2,651
812
–
91
3,554
Directors1
3,349
812
784
170
5,115
Directors1
2,380
1,070
178
251
3,879
1
2
Includes remuneration of the Directors for their relevant terms of service.
Includes share-based incentives while the Company was listed (LTIP, IPO Share Awards and Restricted Share Awards). During the year no Directors exercised share options (2021: the
highest paid Director exercised their share options).
30. EVENTS AFTER BALANCE SHEET PERIOD
On 7 February 2023, a newly incorporated entity Vitol Emerald Bidco (Pty) Ltd (Bidco) entered into customary sale documentation with Petronas
and The Phembani Group to affect the transfer of Petronas’ stake in Engen Ltd (Engen). At the time of signing the agreement Bidco is a wholly owned
subsidiary of Vitol Africa B.V., one of the direct shareholders of Vivo Energy. On 9 February 2023, Vivo Energy together with Engen announced
an intention to combine their respective businesses. At completion of the transaction, Petronas will sell its entire 74% shareholding in Engen to a
wholly-owned indirect subsidiary of Vivo Energy. In the period between signing and completion Vitol Africa B.V. will transfer its shareholding in Bidco
to Vivo Energy and the shareholders of Vivo Energy will contribute any necessary capital to fund completion in addition to third party acquisition debt.
Completion is expected in H2 2023. Engen is a market leader in South Africa and has around 1,300 service stations across seven African countries.
When added to the Vivo Energy portfolio, the combined Group will have over 3,900 service stations and more than two billion litres of storage
capacity across 27 African countries. The Phembani Group, PETRONAS’ long-standing partner in Africa and Engen’s B-BBEE shareholder, is continuing
its strong association with Engen and will remain invested as a 21% shareholder in the South African business. The transaction will further benefit
employees of Engen through a newly implemented 5% employee share ownership programme, resulting in Engen South Africa being 26% owned by
previously disadvantaged parties. The transaction is currently pending regulatory approvals and fulfilment of conditions precedent. Other than the
above, 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.
89
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 COMPANY STATEMENT OF FINANCIAL POSITION
US$ million
Fixed assets
Investments
Current assets
Debtors
Cash and cash equivalents
Creditors amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium
Other reserves
Equity-settled incentive schemes
Retained earnings1
Total equity
Notes
31 December
2022
31 December
2021
5
6
7
8
8
9
10
1,913
1,913
20
1
21
(16)
5
1,918
(637)
1,281
633
4
443
–
201
1,281
1,913
1,913
7
2
9
(7)
2
1,915
–
1,915
633
4
1,136
4
138
1,915
1 Profit for the financial year ended 31 December 2022 was $63m (2021: $68m).
The notes are an integral part of these Company financial statements.
The Company financial statements were approved by the Board of Directors and authorised for issue on 1 March 2023 and were signed on its
behalf by:
STAN MITTELMAN
Chief Executive Officer
JAY GLEACHER
Interim Chief Financial Officer
90
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 COMPANY STATEMENT OF CHANGES IN EQUITY
US$ million
At 1 January 2022
Share-based payment expense
Share-based payment modification2
Profit for the period
Dividends
As at 31 December 2022
US$ million
At 1 January 2021
Share issuance related to share awards3
Equity-settled incentive scheme
Profit for the period
Dividends
As at 31 December 2021
Called up
share capital
Share
premium
Other
reserve1
Equity-settled
incentive
schemes2
Retained
earnings
633
–
–
–
–
633
4
–
–
–
–
4
1,136
5
–
–
(698)
443
4
1
(5)
–
–
–
138
–
–
63
–
201
Called up
share capital
Share
premium
Other
reserve1,3
Equity-settled
incentive
schemes
Retained
earnings
633
–
–
–
–
633
4
–
–
–
–
4
1,210
(5)
–
–
(69)
1,136
7
(5)
2
–
–
4
65
5
–
68
–
138
Total
1,915
6
(5)
63
(698)
1,281
Total
1,919
(5)
2
68
(69)
1,915
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 included the LTIP and the Restricted Share Award Plan which was modified in 2022 to cash-settled on delisting.
3 Reserves included $5m related to market purchase of ordinary shares of the Company to satisfy option exercises under the Company’s IPO Share Award Plan and Long-Term Incentive
Plan (LTIP).
91
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Vivo Energy Limited (‘Vivo Energy’ or the ‘Company’), formerly Vivo
Energy plc, is a private limited company incorporated in the United
Kingdom on 12 March 2018. 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.
On 25 November 2021, the Boards of VIP II Blue B.V. (a wholly owned,
indirect subsidiary of Vitol Investment Partnership II Limited itself
being an investment vehicle advised by employees of the Vitol Group
referred to as ‘Vitol’) and Vivo Energy announced that they had
reached an agreement on the terms of a recommended cash offer
for the entire issued and to be issued share capital of the Company,
excluding shares held by the existing Vitol shareholders (‘Vitol Offer’).
The Vitol Offer was completed on 25 July 2022, following which the
Company delisted from the London Stock Exchange and Johannesburg
Stock Exchange and re-registered as a private limited company under
the name of Vivo Energy Limited. The Group’s shareholders are VIP
II Blue B.V. (67.726%) and Vitol Africa B.V. (32.274%). The Group’s
ultimate parent is Vitol Holding II S.A.
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.
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 pages 52 to 89
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 2022.
In the process of applying the Company’s accounting policies, there are
no significant estimates or judgements which have a significant effect
on the amounts recognised in the financial statements. In preparing
the financial statements, management has considered the impact that
climate change may have. There is currently no indication that climate
change will negatively impact the Company’s accounting estimates
92
and judgements, which would result in a material adjustment to the
financial statement balances. For further details, refer to note 2.1 in
the Consolidated financial statements.
2.2 Foreign currency translation
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 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 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.
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 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 28 ’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. Therefore, notwithstanding
the material uncertainty caused by the liquidity events of refinancing
the long-term borrowing and RCF within the going concern period,
the Directors maintain a reasonable expectation that the Company
will have adequate resources to continue in operational existence
during the going concern period and consider it appropriate to
adopt the going concern basis of accounting in preparing the financial
statements. The financial statements do not include the adjustments
that would result if the Company was unable to continue as a going
concern. For further details, refer to note 2.1 in the consolidated
financial statements.
2.4 Financial instruments
The Company has elected 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. The Group determines the recoverable
amount of an investment in subsidiaries where a trigger for
impairment is identified by assessing the external and internal
factors to determine indicators for impairment. External factors
include market capitalisation, market interest rates, changes in the
crude oil prices, changes in the competitive landscape, changes to
government regulations and the impact of COVID-19 on the business.
Internal factors include year-to-date performance, the five-year
strategic plan, outcomes of previous impairment assessments
performed and the impact of structural changes in the business.
93
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
3. EMPLOYEE COSTS
US$ million
Salaries and wages
Social security costs
Share-based payments
Total
The monthly average number of full-time equivalent employees as at 31 December:
No.
Directors
Administration and support
2022
2021
10
1
1
12
2022
4
22
9
1
2
12
2021
6
19
2021
68
(13)
–
13
–
–
4. INCOME TAX
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 2022, the Company had accumulated tax losses of $2m (2021: $2m) and carried forward tax credits of $2m (2021: Nil).
Deferred tax
No deferred tax asset has been recognised under the Company’s accounting policy for recognising deferred tax assets.
A reconciliation between the actual income tax expense and the theoretical amount that would arise using the applicable income tax rate
for the Company is as follows:
Reconciliation of effective tax
US$ million
Profit before income tax
Tax calculated at 19%
Impact of:
Expenses not allowable for tax purposes
Dividends received not subject to tax
Non-recognition of tax benefits in relation to current period tax losses or temporary differences
Total income tax expense
2022
63
(12)
(4)
18
(2)
–
5. INVESTMENTS
The investments relate solely to the 100% shareholding of Vivo Energy Holding B.V. with a carrying amount of $1,913m as at 31 December 2022.
Management has performed an impairment trigger assessment for the investment. At the end of the reporting period, the recoverable amount
of the investment exceeded its carrying amount. Refer to note 2.5 for the Company's accounting policy.
6. DEBTORS
US$ million
Related party receivable
Other receivables
Total
31 December
2022
31 December
2021
14
6
20
5
2
7
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
94
31 December
2022
31 December
2021
1
2
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 8. CREDITORS
US$ million
Intercompany loan
Creditors due within one year
Related party payables due within one year
Total
31 December
2022
31 December
2021
637
9
7
653
–
6
1
7
Payables to related parties consist of an intercompany loan, salary related expenses and other costs. The intercompany loan is unsecured,
interest-bearing and is repayable by 13 October 2024. Other 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 (2021: 1,266,941,899) ordinary shares at the nominal value of $0.50 each. For further details, refer to
note 19 in the consolidated financial statements.
10. DIVIDENDS
In March 2022, the Board declared an interim dividend for the 2021 financial year of 4.0 cents per share, amounting to $51m which was paid on
24 June 2022 from distributable reserves as at 31 December 2021.
In July 2022, in line with the terms of the Vitol Offer, the Company declared a 2022 special dividend of 2.0 cents per share amounting to $18.5m
which was paid on 8 August 2022 to all Vivo Energy shareholders on the register of members of the Company on 22 July 2022 except the Helios
entities, which had each agreed to waive the right to receive the 2022 special dividend. These dividends were paid from distributable reserves as
at 30 June 2022.
In October 2022, the Company declared a further interim dividend amounting to $628.5m which was paid on 13 October 2022 from
distributable reserves as at 30 September 2022.
11. RELATED PARTIES
The Company discloses transactions with related parties that 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.
12. EVENTS AFTER BALANCE SHEET PERIOD
For the events after balance sheet period, refer to note 30 in the Consolidated financial statements.
13. OTHER MATTERS
The auditors’ remuneration for the current year in respect of audit and audit-related services was $0.3m (2021: $0.3m). Auditors’ remuneration
relating to other non-audit services has been disclosed in the consolidated financial statements, refer to note 7. The consolidated financial
statements 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 Limited for either year. Full details of the Directors’ remuneration are disclosed in ‘Directors'
compensation’ in note 29 in the Consolidated financial statements.
95
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
14. COMPANY UNDERTAKINGS
A list of all subsidiaries, indirectly held by Vivo Energy Limited, except for Vivo Energy Holding B.V. which is 100% owned directly by Vivo Energy
Limited, in the Group as at 31 December 2022 are disclosed below. Unless otherwise stated, the share capital disclosed comprises ordinary
shares and stated ownership percentages represent the effective equity owned by the Group to the nearest whole number.
Subsidiary
Incorporation
Registered address
Shareholding
Vivo Energy Tanzania Marketing Ltd.
Bahamas
Vivo Energy Botswana Pty Ltd.
Botswana
Vivo Energy Burkina S.A.
Burkina Faso
Plateau Africa Holdings Ltd.
Vivo Energy Cabo Verde S.A.
Sociedade Comercial de Navegacão
Concha Verde S.A.
Vivo Energy Côte d’Ivoire S.A.
Vivo Energy Gabon S.A.
Vivo Energy Ghana Ltd.
Canada
Cape Verde
Cape Verde
Côte d’Ivoire
Gabon
Ghana
Vivo Energy de Guinée S.A.
Vivo Energy Guinée Mining SARL
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.
Crowpeak Energy Kenya Ltd.
Guinea
Guinea
Kenya
Kenya
Kenya
Kenya
Kenya
Kenya
Kenya
Vivo Energy Liberia Ltd.
Liberia
Société Malgache des Pétroles
Vivo Energy S.A.
Vivo Energy Ltd.
Vivo Energy Mali S.A.
Vivo Solar Mali S.A.
Vivo Energy Senegal Holdings Ltd.
Vivo Energy Tunisia Holdings Ltd.
Vivo Energy Madagascar Holdings Ltd.
Vivo Energy Africa Holdings Ltd.
Vivo Energy Mauritius Ltd.
Vivo Energy Overseas Holdings Ltd.
Vivo Energy Foundation1
Franchise Foods Africa Ltd.
Vivo Energy Maroc S.A.
Madagascar
Malawi
Mali
Mali
Mauritius
Mauritius
Mauritius
Mauritius
Mauritius
Mauritius
Mauritius
Mauritius
Morocco
Vivo Energy Africa Services SARL
Morocco
Terminal Energetique Jorf S.A.
Morocco
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 Lycée Immaculée 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
Icea Lion Centre, Chiromo Road, Riverside Park, Westlands District,
Nairobi, Kenya P.O. Box 10643, G.P.O 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, Blantyre, 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
Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius
Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius
Immeuble Le Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf Casablanca, 20190 Morocco
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, Morocco
1 The Vivo Energy Foundation does not have ordinary share capital and is a charitable foundation formed and constituted in accordance with the provisions of the
Foundations Act 2012 of the Republic of Mauritius.
96
100%
100%
59%
100%
100%
100%
67%
60%
74%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
72%
100%
77%
77%
100%
100%
100%
100%
75%
100%
100%
50%
100%
100%
100%
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 Registered address
Shareholding
Subsidiary
Terminal D’hydrocarbures Jorf S.A.
Terminal Energetique Agadir S.A.
VE Mozambique Trading Lda
Vivo Energy Mocambique Lda
Incorporation
Morocco
Morocco
Mozambique
Mozambique
Vivo Energy Holding B.V.
Netherlands
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.
Vivo Energy Guinea Holdings B.V.
Netherlands
Vivo Energy Côte d’Ivoire Holdings B.V. Netherlands
Netherlands
Vivo Energy Burkina Faso Holdings B.V.
Netherlands
Vivo Energy Power Holding B.V.
Netherlands
Vivo Energy Supply B.V.
Nigeria
Vivo Sales and Marketing Ltd.
Vivo Energy Reunion S.A.
Vivo Energy Rwanda Ltd.
Kabuye Depot Holding Company
Rwanda Ltd.
Vivo Energy Senegal S.A.
Vivo Energy Sierra Leone Ltd.
Vivo Energy South Africa (Pty) Ltd.
Senegal
Sierra Leone
South Africa
Vivo Energy Power Services SA (Pty) Ltd. South Africa
Vivo Energy Tanzania Ltd.
Tanzania
V&R Energy Tanzania Ltd.
Tanzania
Tunisia
Tunisia
Tunisia
Tunisia
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.
Uganda
Vivo Energy Uganda Ltd.
Vivo Energy Malindi Uganda Ltd.
Uganda
Vivo Energy Uganda Provident Trust Ltd. Uganda
Vivo Energy Namibia Ltd.
Vivo Energy UK Services Ltd.
Vivo Energy Zambia Ltd.
VE Zambia Legacy Ltd.
Engen Marketing Ltd.
Vivo Energy Zimbabwe Holdings
(Private) Ltd.
Vivo Energy Zimbabwe
(Private) Ltd.
Vivo Energy Zimbabwe Operations
(Private) Ltd.
Immeuble Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf, Casablanca, Morocco
Zone Industrielle d’Anza (côté mer), Agadir, Morocco
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
Wilhelminakade 99, 3072 AP Rotterdam, The Netherlands
1, Murtala Mohammed Drive, Ikoyi, Lagos, Nigeria
Quartier Bel-Air Route des Hydrocarbores, 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
Commerce Square, 39 Rivonia Road, Sandhurst, Sandton, South Africa
Plot No. 263 Mandela Road, Kurasini, Temeke District,
Dar es Salaam, Tanzania
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
Reunion
Rwanda
Rwanda
1 Rue Sully Prud’Homme, ZI N°2, Le Port, 97420, Reunion
Kacyiru, Gasabo, Umujyi wa Kigali, Rwanda
Kacyiru, Gasabo, Umujyi wa Kigali, Rwanda
United Kingdom 5th Floor – The Peak, 5 Wilton Road, London, SW1V 1AN, United Kingdom
United Kingdom 5th Floor – The Peak, 5 Wilton Road, London, SW1V 1AN, United Kingdom
Zambia
Zambia
Zambia
Zimbabwe
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
Zimbabwe
Zimbabwe
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
94%
100%
100%
100%
100%
60%
100%
100%
100%
48%
100%
100%
100%
100%
100%
100%
100%
100%
49%
49%
49%
97
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
14. COMPANY UNDERTAKINGS CONTINUED
A list of all joint ventures and associates, indirectly held by Vivo Energy Limited, in the Group as at 31 December 2022 are disclosed
below. Unless otherwise stated, the share capital disclosed comprises ordinary shares and stated ownership percentages represent the
effective equity owned by the Group to the nearest whole number.
Investment
Incorporation
Registered address
Shareholding
Plot 50369 Fairgrounds Office Park, Gaborone, Botswana
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
Tema Shell Installation, Fishing Harbour Road, Tema, Ghana
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
Route cotière 111, Km 6,5, Ghezouane,
Mohammedia, Morocco
Km 9 Route d’El Hajeb, Meknes, Morocco
Immeuble Tafraouti, Km 7,5 Route de Rabat, Ain Sebaa,
Casablanca, Morocco
59 Bd Zerktouni, 6eme Etage N°18, Casablanca, Morocco
669 Bd El Qods, Ain Chock, Casablanca, Morocco
27 Bd Zerktouni, Casablanca, Morocco
11 Avenue de la Marine Royale, Dakhla, Morocco
Zone Industrielle, lot N°2, Laayoune, Morocco
Rue Ferhat Hachad, Mohammedia, Morocco
Angle Rue Ibnou Al Atir, et 15 Bd Abdelkrim Khettabi, Casablanca, Morocco
Km 7,5 Route de Rabat, Ain Sebaa, Casablanca, Morocco
38 Av Driss Lahrizi N°32, Casablanca, Morocco
Zone Industrielle d’Anza (côté mer), Agadir, Morocco
7 Menara Mall, Av Mohamed VI, Marrakech. Morocco
12th Floor Sanlam Centre, 157 Independence Avenue, Windhoek, Khomas,
9000, Namibia
Units 7 & 15 Hidas Shopping Centre, Windhoek, Khomas, 9000, Namibia
Carel van Bylandtlaan 30, 2596 HR The Hague, The Netherlands
3 Rue Jacques Prevert, Riviere des Galets, 97420 Le Port, Reunion
Kimihurura, Gasabo and Umujyi wa Kigalirr, Rwanda
Dakar-Yoff, B.P. 8022 Yoff, Senegal
Cap des Biches, Rufisque, B.P. 59 Rufisque, Senegal
Sous préfecture de SINDIA, Senegal
25, Yoff hanger, Pèlerin, Dakar, Senegal
24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia
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
50%
33%
20%
23%
37%
50%
33%
25%
38%
32%
40%
37%
50%
50%
39%
33%
49%
50%
50%
50%
50%
47%
50%
50%
50%
50%
20%
50%
23%
48%
47%
47%
30%
50%
50%
25%
50%
Uganda
Plot 49, Mackenzie Vale, Kololo, Kampala, Uganda
Baobab Energy Botswana Pty Ltd.
Baobab Energy Côte d’Ivoire SARL
Botswana
Côte d’Ivoire
Stockage Petrolier de Côte d’Ivoire SARL
Côte d’Ivoire
Société Gabonaise D’Entroposage des
Produits Pétrolière S.A.
Road Safety Limited Company
Kuku Foods Kenya Ltd.
Logistique Pétrolière S.A.
Gabon
Ghana
Kenya
Madagascar
Malawi
Mauritius
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Morocco
Namibia
Namibia
Netherlands
Reunion
Rwanda
Senegal
Senegal
Senegal
Senegal
Tunisia
Tunisia
Tunisia
Tunisia
Petroleum Importers Ltd.
Energy Storage Company Ltd.
Compagnie D’Entreposage
Communautaire S.A.
Ismailia Gaz S.A.
Maghreb Gaz S.A.
MFG Vivo Holding S.A.
Planet Pizza SARL
Société de Cabotage Pétrolier S.A.
Société Dakhla des Hydrocarbures S.A.
Sopetrole S.A.
Stogaz S.A.
Sublime Food SARL
Tadla Gaz S.A.
TH Energy SARL
Tidsi Gaz S.A.
Top Gourmandise SARL
Havi Properties (Proprietary) Ltd.
Synergy Foods (Proprietary) Ltd.
Shell and Vivo Lubricants B.V.
Société Réunionnaise d’Entreposage S.A.
Kuku Foods Rwanda Ltd.
Société de Manutention du Carburants
Aviation de Dakar Yoff S.A.
Société Dakaroise d’Entreposage S.A.
Cimsahel Energy S.A.
Petrovi 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.
98
FINANCIAL STATEMENTSVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 A list of all joint ventures and associates, indirectly held by Vivo Energy Limited, which are part of the Shell and Vivo Lubricants Group as at
31 December 2022 are disclosed below. Unless otherwise stated, the share capital disclosed comprises ordinary shares and stated ownership
percentages represent the effective equity owned by the Group to the nearest whole number.
Investment
Incorporation
Registered address
Shareholding
Ghana
Guinea
Guinea
Shell et Vivo Lubrifiants Côte d’Ivoire SARL Côte d’Ivoire
Shell and Vivo Lubricants Ghana Ltd.
Shell et Vivo Lubrifiants de Guinée SARL
Société Guineenne des lubrifiants et
emballages S.A.
Shell and Vivo Lubricants Kenya Ltd.
Société Shell et Vivo Lubrifiants Africa
Services SARL
Société Shell et Vivo Lubrifiants du Maroc S.A. Morocco
Shell and Vivo Lubricants Nigeria Ltd.
Société Shell & Vivo Lubrifiants de
Tunisie SARL
Société Tunisienne des Lubricants de Radès
S.A.
Shell Vivo Lubricants Supply DMCC
Kenya
Morocco
Nigeria
Tunisia
Tunisia
Zone industrielle de Vridi, Rue des pétroliers à Abidjan, Côte d’Ivoire
Rangoon Lane, Cantonments City, Accra, Ghana
L'Aéroport Gbessia, Commune de Matoto, BP 312 Conakry, Guinea
Boulevard Maritime, Commune de Kaloum, B.P. 709, Conakry, Guinea
Vienna Court, State House Road, P.O. Box 43561, 00100, Nairobi, Kenya
1 Rue Abou Abbas EL Araj Roches Noires, Casablanca, Morocco
1 Rue Abou Abbas EL Araj Roches Noires, Casablanca, Morocco
1 Murtala Muhammed Drive, Ikoyi, Lagos state, Nigeria
24/26 place, 14 janvier 2011-1001, Tunisia
24/26 place, 14 janvier 2011-1001, Tunisia
United Arab Emirates Almas Tower, 45 A Jumeirah Lakes Tower, P.O. Box 124848, Dubai,
United Arab Emirates
50%
50%
50%
35%
50%
50%
50%
50%
50%
30%
50%
99
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (‘TCFD’) INDEX
Our detailed TCFD disclosures can be found in this Annual Report on the following pages:
TCFD Recommendation
Reference in the 2022 Annual Report
Page no.
Governance
a) Describe the board’s oversight of
– TCFD – Governance
Disclose the organisation’s
governance around
climate‑related risks
and opportunities.
climate‑related risks and opportunities.
– Section 172(1) Statement
– Risk Management
b) Describe management’s role in assessing
–
Planet and Partnerships
and managing climate‑related risks
and opportunities.
– TCFD – Governance
Strategy
a) Describe the climate‑related risks and
– TCFD – Strategy
Disclose the actual and potential
impacts of climate‑related
risks and opportunities on
the organisation’s businesses,
strategy, and financial planning
where such information
is material.
opportunities the organisation has identified
over the short‑, medium‑, and long‑term.
– Risk Management
b) Describe the impact of climate‑related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning.
– TCFD – Strategy
– Risk Management
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate‑related scenarios, including a 2°C
or lower scenario.
– TCFD – Strategy
Risk Management
a) Describe the organisation’s processes for
– TCFD – Risk Management
Disclose how the organisation
identifies, assesses, and manages
climate‑related risks.
identifying and assessing climate‑related risks.
– Risk Management
b) Describe the organisation’s processes
for managing climate‑related risks.
– TCFD – Risk Management
– Risk Management
c) Describe how processes for identifying,
– TCFD – Risk Management
assessing, and managing climate‑related risks
are integrated into the organisation’s overall
risk management.
– Risk Management
28
27
32 to 35
22 to 25
28
29 to 31
32 to 35
29 to 31
32 to 35
29 to 31
31
32 to 35
31
32 to 35
31
32 to 35
Metrics and Targets
a) Disclose the metrics used by the
– TCFD – Metrics and Targets
31
Disclose the metrics and targets
used to assess and manage
relevant climate‑related risks
and opportunities where such
information is material.
organisation to assess climate‑related risks
and opportunities in line with its strategy
and risk management process.
– Risk Management
32 to 35
b) Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions
and the related risks.
– TCFD – Metrics and Targets
31
– Planet and Partnerships
22 to 25
c) Describe the targets used by the organisation
– TCFD – Metrics and Targets
31
to manage climate‑related risks and
opportunities and performance against targets.
– Planet and Partnerships
22 to 25
100
OTHER INFORMATIONVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 GLOSSARY
Term
ABC
AGM
AML
ATM
B2B
B2C
CGU
CO2
CSO
DPO
DSO
EBIT
EBITDA
EBT
ECL
ERP
ESG
ETR
EV
FRC
FVTOCI
FVTPL
FY
GAAP
GDP
GHG
HR
Description
Anti‑bribery and corruption
Annual General Meeting
Anti‑money laundering
Automated teller machine
Business to business
Business to consumer
Cash‑generating unit
Carbon dioxide
Compulsory stock obligation
Days purchases outstanding
Days sales outstanding
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
Expected credit loss
Enterprise Resource Planning
Environmental, Social and Governance
Effective tax rate
Electric vehicles
Financial Reporting Council
Fair value through other comprehensive income
Fair value through profit and loss
Full year
Generally Accepted Accounting Principles
Gross domestic product
Greenhouse gas
Human resources
101
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 Description
Health, safety, security, environment and quality
International Energy Agency
International Financial Reporting Standards
International Monetary Fund
Inventory Management Plan
Initial public offering
Key performance indicator
Kilotonne
Know Your Counterparty
Net debt, including lease liability, divided by the last 12 months’ adjusted EBITDA
Liquefied petroleum gas
Long‑Term Incentive Plan
Mergers and acquisitions
Non‑controlling interest
Non‑governmental organisation
Other comprehensive income
Open Tender System
Operating unit
Property, plant and equipment
Quarter
Revolving credit facility
Return on average capital employed
Right‑of‑use
Shell and Vivo Lubricants B.V.
Task Force on Climate‑Related Financial Disclosures
Total Recordable Case Frequency
United Kingdom
United States
Vivo Energy Investments B.V.
Vivo Energy Overseas Holdings Limited
GLOSSARY CONTINUED
Term
HSSEQ
IEA
IFRS
IMF
IMP
IPO
KPI
KT
KYC
Leverage Ratio
LPG
LTIP
M&A
NCI
NGO
OCI
OTS
OU
PP&E
Q
RCF
ROACE
ROU
SVL
TCFD
TRCF
UK
US
VEI BV
VEOHL
102
OTHER INFORMATIONVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 KEY CONTACTS AND ADVISERS
REGISTERED OFFICE
Vivo Energy limited (formerly 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
WEBSITE
vivoenergy.com
103
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTVIVO ENERGY LIMITED | ANNUAL REPORT & ACCOUNTS 2022 Design and production by Radley Yeldar www.ry.com
Page 4 photograph was taken by Business Publications Ltd.
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VIVO ENERGY LIMITED
The Peak, 5th Floor
5 Wilton Road, London
SWIV IAN
United Kingdom