Helping people reach their destination Annual Report 2018 Viva Energy is one of Australia’s leading energy companies. We are proud of our 110-year history in Australia helping people reach their destination. Contents About us 03 About this Annual Report Chairman and Chief Executive Officer’s report 04 This Annual Report contains information on the operations, activities and performance of the ‘Viva Operating and financial review 07 Energy Group’ (or ‘Group’) for the period ended 31 December 2018 and its financial position as at Sustainability 20 31 December 2018. The Group comprises Viva Energy Board members 32 Group Limited (ACN 626 661 032) (the ‘Company’) and its controlled entities. Executive Leadership Team 34 In this Annual Report, references to ‘we’, ‘us’, and ‘our’, Financial report 36 are references to the Viva Energy Group. Directors’ report 37 The Company was admitted to the Official List of ASX on 13 July 2018. In connection with its ASX listing, the Auditor’s independence declaration 58 Company completed a corporate restructure, which included the acquisition of Viva Energy Holding Pty Consolidated financial statements 59 Limited (former holding entity of the Viva Energy Notes to the consolidated financial statements 64 Group) and its controlled entities. The Company was incorporated on 7 June 2018 and, except for the Directors’ declaration 110 corporate restructure to acquire Viva Energy Holding Independent auditor’s report 111 Pty Limited and its controlled entities, the Company did not trade separately prior to the ASX listing. Disclosures 117 Accordingly, the full year results of Viva Energy Group Limited presented here, and the previous period results Additional information 119 presented for comparison, adopt and incorporate Corporate directory 121 the results of Viva Energy Holding Pty Limited and its controlled entities at such time. Printed copies of this Annual Report will be posted to those shareholders who have requested to receive a printed copy. Otherwise shareholders are notified when the Annual Report becomes available and provided details of where the report can be accessed electronically. Corporate Governance Statement The Company’s Corporate Governance Statement can be viewed in the Investor Centre section on our website www.vivaenergy.com.au VIVA ENERGY GROUP LIMITED / ABN 74 626 661 032 01 VIVA ENERGY GROUP LIMITED / ANNUAL REPORT 2018 Viva Energy is one of Australia’s leading energy companies, supplying approximately a quarter of the country’s liquid fuel requirements through its commercial business and a network of more than 1,250 service stations across the country. VIVA ENERGY GROUP LIMITED / ANNUAL REPORT 2018 02 About Us About us About us Viva Energy is one of Australia’s by an extensive infrastructure footprint • be one of Australia’s most respected Executive Officer’s report leading energy companies, supplying including more than 20 terminals. Viva energy companies; Chairman and Chief approximately a quarter of the country’s Energy supplies fuel into more than 50 • expand its markets through innovation liquid fuel requirements through its airports and airfields across the country. and a dedicated customer-centric focus; integrated network of more than 1,250 It is the sole supplier of Shell branded service stations across the country, along automotive fuel, lubricants and greases • care for the environment and the with its diverse commercial business. in Australia. communities in which it operates by dealing responsibly with all its Viva Energy owns and operates the Viva Energy’s vision is to: stakeholders; and strategically located Geelong Refinery • focus on continued operational • deliver attractive and sustainable financial review in Victoria, and operates bulk fuels, Operating and excellence and safe and reliable shareholder returns and consistent aviation, bitumen, marine, chemicals operations; operating cash flows. and lubricants businesses supported Sustainability Supplying approximately ¼ Board Members of the country’s liquid 1,255 fuel requirements 14,045ML Retail fuel and Total volume convenience stores Leadership Team Executive $528.9m $293m 4.8c Group Underlying EBITDA (RC)* Underlying NPAT (RC) Dividend per share** 15.1c More than Underlying Basic Earnings Per Share (RC) 120kb/d 1,200 Capacity Refinery Employees * Viva Energy reports segment information on a ‘replacement cost’ (RC) basis. See section 4.3.1 of the prospectus issued in connection with the Company’s initial public offering (Prospectus) for a description of the difference between ‘historical cost’ (HC) and ‘replacement cost’ accounting. See further the description of the accounting policy for ‘Inventories’ in Appendix C of the Prospectus. ** The final dividend for the six months ended 31 December 2018. No interim dividend was paid in 2018. 03 VIVA ENERGY GROUP LIMITED / ANNUAL REPORT 2018 Chairman and Chief Executive Officer’s report “Viva Energy has demonstrated encouraging performance and delivered on a number of key initiatives, which will support growth in the year ahead.” Robert Hill Scott Wyatt Chairman Chief Executive Officer Dear Shareholder, The Company successfully completed Inaugural dividend the planned maintenance turnaround Viva Energy is proud of its 110 years of of the secondary distillation unit at The Board has declared a fully franked history operating in Australia, and 2018 the Geelong Refinery and associated dividend of 4.8 cents per share for signalled an exciting new chapter for our furnace upgrade, which, along with Viva Energy’s inaugural dividend for business, with the listing of the Company other improvements, support an annual the six months ended 31 December on the Australian Securities Exchange crude intake of up to 44M barrels, 2018, representing a payout ratio (ASX) on 13 July 2018. On behalf of the leaving us well positioned for any future of 60% of Distributable NPAT (RC). Board, we welcome you as a shareholder improvements in refining margins. and present Viva Energy’s first Annual Our people Report as a listed Company. The business also successfully transitioned from the legacy SAP enterprise platform Our people are core to our success to Oracle JDE, and completed the and once again in FY2018 we continued An historic year with good conversion of our old refinery in Clyde, to focus on the development of our progress on many fronts Sydney, into our largest import terminal people and culture. in Australia, in turn improving our supply Despite an extremely challenging competitiveness into one our most We were pleased to welcome Megan regional refining margin environment important markets. Further improvements Foster as our new General Manager, in the latter part of the second half of in supply chain capability were achieved Retail, with Daniel Ridgway taking 2018, Viva Energy has demonstrated through the construction of jet storage in the newly created position of Chief sound performance in our other Cairns, and a new bitumen import facility Operating Officer, where he will continue segments and delivered on a number in Northern Queensland. to help drive business opportunities and of key initiatives, which will support ensure our ongoing safe and growth in the year ahead. reliable operations across all parts of Financial performance the Company. Megan has over 25 years’ Our number one commitment remains in line with updated experience in retail and will be a to the safety of our people and the tremendous addition to our Company. communities in which we operate. market guidance We pride ourselves on running a 2018 was a challenging year with the Diversity in all its forms remains a key business built on safety and protection Group’s expected financial performance focus for Viva Energy, and we pride of the environment and we continue negatively impacted by weakness in ourselves on the culture we foster in to pursue ‘Goal Zero’, Viva Energy’s regional refining margins. In aggregate, our workforce. Women comprise 22% objective to cause no harm to people the remaining business segments of the total workforce and or the environment. (excluding Refining) performed strongly. approximately 41% of the senior leadership group. We were delighted During the year, Viva Energy has grown The results included: to be awarded the WGEA Employer its Retail network to 1,255 sites, including of Choice for Gender Equality citation • Group Underlying EBITDA (RC) through acquiring a 50% interest in for the second consecutive year of $528.9 million; and Westside Petroleum. The Aviation (2018–2019). business was fully transitioned from • Underlying NPAT (RC) of Shell, and we have continued to see $293.0 million. solid sales performance in this and other commercial segments on the back of The Retail division performed well generally healthy economic activity despite lower sales volumes from the throughout the year. Coles Alliance network. The Commercial division has continued to deliver through retention of contracts as well as securing a number of new contracts. VIVA ENERGY GROUP LIMITED / ANNUAL REPORT 2018 04 Viva Energy’s new Board of About us Directors brings significant Executive Officer’s report expertise and a diverse Executive Officer’s report Chairman and Chief range of skills that are well Chairman and Chief suited to the governance of the Company. financial review Operating and Sustainability Board Members It has been a landmark year for Viva Board and governance Looking forward Leadership Team Energy, and we look forward to the Executive Viva Energy’s new Board of Directors In February 2019, we announced an road ahead. Our management team brings significant expertise and a diverse extension of the Alliance with our retail and Board remain focused on our goal range of skills that are well suited to partner Coles until 2029. Under this to be one of Australia’s most respected the governance of the Company. revised agreement, Viva Energy has energy companies, through the safe assumed full responsibility for retail fuel and reliable operation of our businesses The Board has overseen the important pricing and marketing across the Alliance with respect for the environment and task of transitioning Viva Energy to the network.