Annual Report 2020 Helping people reach their destination Our purpose Helping people reach their destination Who we are Our values Viva Energy is a leading energy company with Integrity more than 110 years of operations in Australia. The right thing always We make, import, blend and deliver fuels, lubricants, solvents and bitumen through our Responsibility extensive national and international supply Safety, environment, our communities chains. We are the exclusive supplier of Shell fuels and lubricants in Australia and in 2020, we supplied approximately a quarter Curiosity of Australia’s liquid fuel requirements to a Be open, learn, shape our future national network of retail sites and directly to our commercial customers. We also operate Commitment a nationwide fuel supply chain, including the Accountable and results focused strategically located Geelong Refinery, an extensive import, storage and distribution Respect infrastructure network, including a presence Inclusiveness, diversity, people at over 50 airports and airfields. Viva Energy Group Limited – ABN 74 626 661 032 Viva Energy Group Limited – Annual Report 2020 01 Contents About us 04 Chairman and Chief Executive Officer’s report 06 Board of Directors 08 Executive Leadership Team 10 Operating and financial review 12 Sustainability 29 Remuneration report 77 Title: Wa-ngal yalinguth, yalingbu, yirramboi Created by: Dixon Patten, Yorta Yorta and Gunnai, Bayila Creative Directors’ report 100 Auditor’s independence declaration 105 Acknowledgement Financial report 106 Viva Energy acknowledges and pays respect to the Consolidated financial statements 107 past, present and future Traditional Custodians and Elders of this nation and the continuation of cultural, Notes to the consolidated financial statements 112 spiritual and educational practices of Aboriginal and Directors’ declaration 165 Torres Strait Islander peoples. We particularly pay respects to the Traditional Custodians of the land, Independent auditor’s report 166 across the nation where we conduct business. Disclosures 172 We also acknowledge our gratitude that we share Additional information 174 this land today, our sorrow for the costs of that sharing Historical financial information 176 and our hope and belief that we can move to a place of equity, justice and partnership together. Corporate directory 177 02 Viva Energy Group Limited – Annual Report 2020 About this Annual Report This Annual Report contains information on the operations, activities and performance of the ‘Viva Energy Group’ for the year ended 31 December 2020 (unless otherwise stated) and its financial position as at 31 December 2020. The Viva Energy Group comprises Viva Energy Group Limited (ACN 626 661 032) (the ‘Company’) and its controlled entities. In this Annual Report, references to ‘we’, ‘us’, ‘our’, and ‘Group‘ are references to the Viva Energy Group. Printed copies of this Annual Report will be posted to those shareholders who have requested to receive a printed copy. Otherwise, shareholders are notified when the Annual Report becomes available and provided details of where the report can be accessed electronically. See the rest of our 2020 annual reporting suite at www.vivaenergy.com.au Corporate Governance Statement You can find our 2020 Corporate Governance Statement on the Investor • Annual Report 2020 Centre section of our website at www.vivaenergy.com.au. • Taxes Paid Report 2020 • Modern Slavery Statement 2020 • Corporate Governance Statement 2020 Viva Energy Group Limited – Annual Report 2020 03 About us Our operations We source crude oil (domestic and international) for domestic refining, and refined products from international refineries. We transport refined product to bulk storage fuel terminals by pipe or ship. Domestic refineries Sourcing We refine crude oil into usable produt – inluding petrol, diesel, Domestic and Imported jet fuel and specialty products. imported crude oil refined products Pipelines Shipping 1. Procurement/Supply 2. Domestic Refining 3. Primary Distribution OurTerminals year are attypically a glancelocated near major metropolitan, industrial and mining centres We sell bulk fuel (closer to end customers). products directly Pipelines Wholesale Commercial to commercial distributors customers customers. People and community Safety and environment* Fuels are sold to Shipping Trucking retail customers through a network Terminal We transport product from terminal to 3.61Retail of over 1,300 service storage retail sites and commercial end customers. Retail sites customers station sites. 1,419 Total recordable injury frequency Employees rate (per million hours worked) 4. Storage 5. Secondary Distribution 6. Fuels Marketing FY2019: 4.55 1.14 41% Lost time injury frequency rate of senior leaders are women (per million hours worked) FY2019: 1.41 70% 34% Reduction in LOPCs>100kg Employee engagement score from 2019 Process Safety Events $550K 1 2 API Tier 1 Events API Tier 2 Events Contributions to the national bushfire relief FY2019: 0 FY2019: 2 * Excludes performance of Liberty Oil Holdings. 04 Viva Energy Group Limited – Annual Report 2020 We source crude oil (domestic and international) for domestic refining, and refined products from international refineries. We transport refined product to bulk storage fuel terminals by pipe or ship. Domestic refineries Sourcing We refine crude oil into usable produt – inluding petrol, diesel, Domestic and Imported jet fuel and specialty products. imported crude oil refined products Pipelines Shipping About us 1. Procurement/Supply 2. Domestic Refining 3. Primary Distribution Executive Officer’s report Executive Officer’s Chairman and Chief Terminals are typically located near major metropolitan, industrial and mining centres We sell bulk fuel (closer to end customers). products directly Pipelines Wholesale Commercial to commercial distributors customers customers. Fuels are sold to of Directors Board Shipping Trucking retail customers through a network Terminal We transport product from terminal to Retail of over 1,300 service storage retail sites and commercial end customers. Retail sites customers station sites. 4. Storage 5. Secondary Distribution 6. Fuels Marketing Leadership Team Executive financial review financial Financial performance Operating and Balance sheet and Financial performance Capital management working capital $614.5M $104.2M 0.8¢ Sustainability Non-Refining Underlying Net Debt Dividend per share1 EBITDA (RC) Down from Net Cash of $480.9M No final FY2020 dividend declared Up 16.5% on FY2019 as at 30 June 2020 Remuneration report ( $95.1) M $ 87.1M ~$580.0M Refining Underlying EBITDA (RC) Underlying FCF (RC) Returned via Capital Management program2 with $100M of Down $212.1M on FY2019 Waypoint REIT sale proceeds remaining to be returned Directors’ report Directors’ ($35.9)M $ 89.9M $158.5M Underlying NPAT (RC) Working Capital FY2020 capex3 Auditor’s independence Auditor’s Down $171.7M on FY2019 Down from $162.5M Reduced from original guidance as at 30 June 2020 range of $250M–$300M declaration 1. Excluding the special dividend of 5.94¢ per share. 2. Capital Management program of ~$580M includes Capital return ~$415M, Share buy-back ~$50M and Special Dividend ~$115M. 3. Includes major maintenance capital expenditure. Viva Energy Group Limited – Annual Report 2020 05 Chairman and Chief Executive Officer’s report Robert Hill Scott Wyatt Chairman Chief Executive Officer Despite the reduction in fuel demand, the Company delivered strong underlying performance in our Retail, Fuels and Marketing (the non-refining) business, reporting non-refining Underlying EBITDA (RC) of $614.5M in 2020, up 16.5% on 2019. Performance up 16.5% on 2019. This performance was driven by strong diesel sales, improved retail fuel margins and a robust The COVID-19 pandemic has been a defining event for the performance in our broader commercial specialty businesses. Australian and global economy and society during 2020. Our priority has been the health and safety of our people Our group results were, however, heavily impacted by and ensuring that we continued to operate safely and reliably performance in our refining business. Weak regional refining to serve our customers and the broader community through margins due to the substantial decline in global oil demand one of the most challenging years in Viva Energy’s history. coupled with substantial short term reductions in domestic demand due to extended lockdown restrictions in Victoria Our teams moved swiftly in early 2020 to implement led to an Underlying Refining EBITDA (RC) loss of $95.1M for effective health and operating measures to protect our the year. At a group level, we recorded a Group Underlying people and operations from exposure to COVID-19, and EBITDA (RC) of $519.4M (down 19.4% on 2019) and a Net Profit achieved a 20% reduction* in the number of recordable After Tax (RC) loss of $35.9M (down from a profit of $135.8M injuries compared to 2019. We achieved a 34% reduction in in 2019). incidents involving loss of primary containment greater than 100kg*, and safely completed significant maintenance work While this is a disappointing outcome given the strong on the Residual Catalytic Cracker Unit despite the challenges performance of the broader non-refining business, the associated with management of COVID-19. Company took appropriate steps to mitigate the COVID-19 related impacts that were largely out of our control and While total demand for transport fuel fell 16% from 2019, refining performance has improved since