Viva Energy Group Limited

Thank you for standing by and welcome to the Viva Energy Australia full-year 2024 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phone, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Scott Wyatt, Chief Executive Officer. Please go ahead.

Good morning all and thank you for joining us today to discuss Beaver Energy's past year 2024 results. My name is Scott White, Chief Executive Officer of Beaver Energy and on the call with me today is Carolyn Pettit, Chief Financial Officer and Jovan Buzo, our CEO of Convenience and Mobility. 2024 was an important year for the company with some significant investments underway to pursue the strategic agenda that we set out at our strategy day in 2023. We've made some good progress with more to be delivered in the area ahead as we complete the integration of our retail businesses, including the full acquisition of Liberty Convenience and the investment program underway at Geelong. I look forward to discussing this with you all this morning. As always, let me start with our safety and environmental performance on slide four. Over the last couple of years, we've significantly expanded our operational activities with the acquisition of Express and OQI Group and the growth of our Liberty Rural Business Group. All these businesses are now consolidated into our reporting and management systems and fully reflected in the performance head out on this slide. Given the substantial changes to our operations and the associated safety and environmental risks, I'm pleased that we've been able to maintain a strong performance through this transition with both high severity injuries and significant process safety events stable and improving over time. We have improved process safety performance over the last couple of years in particular with two API Tier 1 and 2 incidents recorded at Geelong Refinery last year, one relating to a relief valve failure and the other to a leaking heat exchanger. Both incidents were well managed with no impact to people, demonstrating the strength of our safety protocols and response measures. As mentioned earlier, we have made good progress in our strategic agenda with the highlights set out on slide 5. We successfully completed the OCR acquisition in March last year and since then have made substantial progress on integrating our retail operating platforms, which will largely come together during the second quarter of this year. These platforms will allow us to end transitional service arrangements and support the delivery of more than $90 million of synergies and cost reductions over the next two years. Together with growth in store conversions, I expect this to be a key driver of earnings improvement through the second half of 2025 and into 2026. Our commercial industrial business continues to grow through a mix of organic and small bolt-on acquisitions, with the OCR wholesale business giving us a strong position in the north of the country in particular, where we are supporting the Australian Defence Force as well as other critical mining accounts. At the end of last year we entered the marine market in Brisbane, extending our operations through all three major Australian ports. At Geelong, we commissioned 19 million litres of strategic storage and are well advanced on the construction of our low-sulfur gasoline processing plant, which is due to commence production in the second half of this year. We are nearing the end of the environmental approval process for our proposed LNG storage terminal and have constructed initial capabilities to receive and process waste and biogenic feedstocks for the production of recycled plastics and low-carbon fuels. Turning to slide 6, let me address our key financial and operational outcomes. Group sales increased by 4% to almost 17 billion litres, comprising strong growth from commercial, which was up more than 5%, and resilient fuel sales in the convenience business, given the cost of living pressures. Convenience sales declined by 4%, primarily driven by lower tobacco sales, while growth margin increased to almost 40% as the sales mix shifted to higher margin products. The Geelong refinery operated in their full capacity during the year with intake at 40 million barrels, supporting exceptional operating performance. After starting strong, regional margins declined through the year on the back of a bearish global economy, triggering federal government support of $25 million in the third quarter. Overall, the company delivered 5% EBITDA growth and declared a final dividend of 3.87 cents per share, representing 66% of group impact for 2024. Moving to slide seven which sets out the earnings performance by segment and over the last four years. Looking through refining which provides upside volatility as we saw in 2022, the business has been steadily increasing earnings with solid year-on-year growth from both CNN and CNI businesses. While the transition and integration of our retail business is progressing well, it has indeed been a challenging year for this part of the business with pressure on sales and operating costs weighing heavily. on the underlying business performance. As you can see on slide 8, both OTR and Express have been similarly impacted by softer consumer demand and illicit tobacco, coupled with rising costs of doing business in an inflationary environment. The OTR network has seen 47 stores added through the course of the year, which has lifted operating costs ahead of sales uplift from pre-publishment, and the Express network has declined by 25 stores, largely as a result of divestments to Chevron in South Australia. Overheads have reduced but remain elevated during this period of transition, with considerable opportunities for substantial reduction once the integration of businesses is completed in the second quarter of this year. We remain confident in our plan to extract $90 million of synergies over the next two years. Overall CNM EBITDA was $231 million for the period, in line with the prior year, but behind our expectations for this part of the business. Jebam will discuss this in more detail a little later. Turning to the next slide, our commercial and industrial businesses continued to perform well in 2024. Both sales and earnings lifted by 5%, with sales reaching $11.7 billion and EBITDA of $470 million. This continued growth was driven by the acquisition of the OTR wholesale fuels business and strong demand across all sectors, particularly aviation, agriculture and defence. There is a solid pipeline of opportunities in the commercial business which underpins this growth and will support sustained performance in the year ahead. As mentioned earlier, the refining business delivered a strong operating performance during 2024, with crude intake at 40 million barrels and plant availability increasing to 95%. Earnings were $112 million in the first half, but declined in the second half as refining margins softened, resulting in a full-year GRM of $8.70 per barrel. In the third quarter, the refinery received $25 million in government support as the margin marker approached full support levels. So this was partly offset by carbon costs under the safeguard mechanism. I'm going to hand over to Carol and Pettit to talk about our financial performance in a little bit more detail.

Thanks, Scott. So let's now turn to slide 12, which shows the net cash flow bridge. So you can see the business delivered positive underlying free cash flow despite a period of significant investment across the business. So net cash flow of negative $23 million reflects the impact of almost $100 million in integration costs split between OPEX and CAPEX, as well as investment in the ultra-low sulfur gasoline and strategic storage projects. So while these investments have weighed on short-term cash flow, they are critical to positioning the business for long-term growth and value creation. The next slide, slide 13, sets out capital expenditure in greater detail in 2024, as well as our expectations for 2025 and beyond. Net investment was almost $500 million in FY2024, and that reflects the higher base of CapEx across retail and refining businesses and additional one-off investments. Capital spending in 2005 is expected to be a similar level, including transaction costs and net of government grant contributions. This is before normalising to long-term guidance as we conclude compliant investment and finish integrating the convenience and mobility business. We continue to target approximately $50 million per annum of our own funding to transform stores to OPR, with capacity to increase as other capital commitments wind down and be off the proofs up. So turning to slide 14, looking at the balance sheet, closing net debt stands at $1.8 billion as of 31 December 2024, reflecting the impact of recent acquisitions and ongoing investments. However, gearing remains within our target range of 1 to 1.5 times term debt to trailing 12-month EBITDA. The OCR Group acquisition was financed through a new Australian $1 billion term loan facility while our net debt position also includes the revolving credit facility, which continues to be used for working capital purposes. Now, looking ahead, the Liberty Convenience Acquisition is set to complete on 31 March 2025. The net cash considerations for this acquisition is estimated to be approximately $115 million, inclusive of working capital adjustments, plus taking on existing lost debt facilities. The acquisition will be funded through existing debt facilities. With gearing within target levels, we are focused on reducing overall net debt over time, supported by disciplined capital management and a continued focus on cash generation. Attending to slide 15, you can see the breakdown of the dividend announced today. At 3.87 cents per share, the final fully franked dividend represents a 50% payout of net profit from the convenience and mobility and commercial and industrial segments in the second half. As you know, we assess the energy and infrastructure segment on a full year basis. So with energy and infrastructure reporting a net loss of $22 million in FY2024, dividends for the full year represent 66% of group net profit, which is towards the higher end of our policy range payout, between 50% and 70%. Now, to support our growth strategy, preserve capital and attract retail investors, we have activated a dividend reinvestment plan for the final dividend. Eligible shareholders can reinvest their dividends directly into shares at a 1.5% discount, and this is not an underwritten facility. I'll now hand over to Javan to give an update on our convenience mobility strategy.