Viva Energy Group Limited

Good morning, and thank you for joining us to discuss our 2026 first half results. With me on the call is Carolyn Pettich, our Chief Financial Officer, Denny Buvasperia, our EGM of Commercial, Jennifer Gray, our Chief Strategy Officer, and Teresa Rendo, our new Retail CEO. On the call, Carolyn and I will share the group results, while Jen and Teresa will provide more commentary on our retail convenience businesses, and then you'll be available to answer any questions around commercial. As foreshadowed in our quarterly trading update, we've delivered a record earnings this half, supported with strong performances in all of our business units. These results reflect a substantially improved refining margin environment driven by events in the Middle East, but also improving retail sales growth and continuing strength of our commercial businesses. The improvements in our underlying business are very encouraging and we expect to be able to continue building on this as we cycle through this extraordinary period. Despite significant volatility, I'm very pleased with the way we've managed the significant inventory and supply exposures and maintained capital discipline throughout the period. The resulting strong cash conversion has strengthened our balance sheet with net debt reducing from $2.1 billion at the end of 2025 to $1.7 billion at the end of June. In recognition of these results, the board has determined an interim fully franked dividend of 7.73 cents per share, representing a 70% payout of CNM and CNI NPAT on a replacement cost basis, which is, of course, at the top end of the company's dividend policy. In line with our policy, the contribution of the ENI business will be assessed at the conclusion of the financial year. That said, we expect the ENI business to continue performing well through the second half. Notwithstanding these excellent financial results and an improvement in our personal safety performance, it is important to acknowledge that we had a significant process safety incident in April, which resulted in a fire within the gasoline complex. We are fortunate that no one was seriously hurt and that the fire was safely contained by the professional actions of our response teams, but this is indeed a serious incident which we are determined to learn from. As we've previously confirmed, the refinery is expected to maintain operations at more than 90% of its normal operating capacity until the unit is repaired or replaced. We are assisting technology solutions and will work with our insurers to determine the best pathway forward over the coming months. Given this is a long-term investment decision, our approach will also be influenced by the government refining retention policy, which is currently under development and which I'll cover in a little bit more detail later in the presentation. The first half of this year was obviously shaped by the geopolitical events which have caused significant disruption across the global energy markets. While these events have severely tested traditional supply chains, we have worked closely with governments, customers and our suppliers to maintain production and supply throughout the period, leveraging Viva Energy's integrated supply chain capability. Our trading relationship with VITO coupled with our domestic refining capability provides important diversification of supply which reduces risk of supply disruption and provides critical earnings protection during periods of high volatility. A refining business benefited from higher regional refining margins and the term supply arrangements with retail insulated the company from the extremes of price escalations over the period. Underscoring the importance of domestic refining to the country's energy security framework the government updated the fuel security services payment scheme to provide more protection during periods of low regional refining margin and is engaging with us on a new program to retain refining through the next decade. As part of this program, we successfully completed commissioning of the ultra-low sulfur gasoline project at the beginning of the year. Yet again, our commercial business delivered an exceptional performance through a period of significant disruption and volatility. This reflects the diversity of our various businesses within commercial, the quality of our customer base, and the strength of our infrastructure and supply chains. Sales volumes lifted to 5.9 billion litres, driven by strong demand across the portfolio, lifting underlying EBITDA to around $250 million for the half. Both CNI and CNM benefited from advantage-term supply arrangements that were in place prior to the conflict in the Middle East, and which have insulated the business from elevated and volatile prices across the period, After allocating these benefits and other initiatives to manage costs and margin, CNI earnings lifted to $305 million for the half. Notwithstanding the effects of the fire at Geelong Refinery, our E&I business delivered an EBITDA of $354 million for the period, underpinned by exceptionally strong regional refining margins. GRM for the half averaged over $21 per barrel, which is in line with the GRM recorded for July and is expected to remain strong for the remainder of the year. Operating costs were elevated during the half due to measures taken to stabilize operations and recover from the loss of the oculation unit. However, we expect these costs to moderate as we adapt to a new operating setup. Before I hand over to Jen and Teresa, let me just touch on the fuel security measures recently announced by the federal government. Collectively, these represent a significant investment in critical energy infrastructure to improve fuel security and support domestic refining and together offer opportunities for Beaver Energy to further strengthen its infrastructure positions. Right now, we are heavily engaged with government on policy development to provide long-term investment certainty for the refining sector, which we expect to provide more certain returns than provided under the current FSSP framework. Together with the development of government-funded storage, we anticipate these programs can strengthen our refining operations and accelerate the development of our energy hub at Geelong. We expect consultation and engagement to materially progress through the remainder of this year. Let me now hand over to Jen to talk about our convenience business.

Thanks, Scott. I'll start with our trading performance on slide 11. The first half result shows a material improvement in the convenience and mobility with an increase of $139 million from $74 million compared to the prior corresponding period. The first part of the bridge normalises the benefits from fire period acquisitions, including Liberty Oil convenience and the transition to owned fuel supply in South Australia, as well as an adjustment that recognises core industry trading conditions in 2025. The second part sets out the underlying trading performance with improvements supported by higher fuel sales, stronger retail fuel margins and an allocation of supply benefits achieved during this period. Total retail fuel volumes increased by around 2% with diesel the primary driver of this growth. Margins were partially offset by a one-off excise reduction that was passed through to the market in full immediately. Inconvenience, local sales were lower, reflecting the continued year-on-year decline in tobacco, but importantly tobacco sales remained stable over a 12-month period. and sales excluding tobacco increased by 1.3% supported by increased customer visits and a more coordinated promotional activity. These benefits were partially offset by inflationary pressures including wages and rent together with other costs such as the year-on-year impact of legacy electricity contracts that expired mid-2025. Overall, the results show that the earning space is improving. The next phase is to build on the momentum through better retail execution, great control of the supply chain and disciplined investment in the network. During the half, we make progress against the five priorities through which we are building a stronger and more scalable retail operating platform. Together, these priorities are designed to improve the customer proposition, strengthen execution and establish a platform for sustainable earnings growth. First, under team and customer obsessed, we passed through the full excise reduction promptly, providing customers with relief during a period of elevated fuel prices. We also rolled out flybys across OTR, aligning loyalty and customer data across the OTR and Ready Express networks, and addressing a specific pain point for customers at our converted locations. Under retail excellence, we appointed a new retail CEO and have continued to strengthen the broader leadership capability of the business. We also maintain strong retail fuel supply through a period of significant market disruption and demand uncertainty. Our efficient supply chain is progressing to plan. Distribution capability has now been established across the eastern seaboard and we are on track to exit from the Coles product supply agreement by the end of November. We've also focused on the curation of our offer, starting with a review of the product range, simplification of our offer and improving its relevance to customers. We've sourced the first private label products ahead of launch in the second half, initially focused on everyday categories such as milk and water, addressing a key gap in our offer. Finally, under the right network and format, we've adapted the full year 26 development program to focus capital on highest return opportunities, which I'll cover in more detail on the following slide. Our network strategy is focused on having the right format in the right location, supported by disciplined returns led capital allocation. We have adapted the full year 26 development program in response to evolving market conditions. The program continues to be led by opening new OTR stores paired with conversions where the economics are compelling. For full year 26, we expect to deliver 20 to 25 new OTR stores supported by a smaller number of conversions to both OTR and Liberty formats. We're also progressing the conversion of 25 to 30 stores to an unattended self-service format. These are predominantly locations where the shop sales do not support continued investment in a fully attended store, but where the fuel site itself remains attractive. We're trialling an unattended format that retains a customer proposition through features such as a small kiosk, vending and collection capability, while materially lowering the operating costs of the site. Customer acceptance across the three trial locations has been encouraging with improved fuel sales and site performance with payback periods aligned with industry norms. We will apply the learnings from these trials as we progress the 2026 conversion program. Establishing an independent supply chain is a critical enabler for our next phase of convenience growth. Distribution capability is now operational across South Australia, the Northern Territory, Victoria, Tasmania, Queensland and New South Wales. Western Australia remains on track for November which will allow us to complete the national rollout and exit of the Coles product supply agreement by the end of November 2026. Our integrated supply chain gives us great control over ranging, promotions, forecasting and inventory Thanks, Janice.

Our efforts over recent periods have really remained focused on both organising and stabilising our end-to-end convenience and mobility business, including bringing it to self-sufficiency from transitional arrangements. As we look forward, we have a structured roadmap to unlock earnings growth across retail. In half two, our sequencing of near-term execution is broadly focused on progressing initiatives that have already commenced and are in trial, ahead of medium-term scale benefits that include supply, range, buying and network through FY27. If we look at our work streams and starting with our team and customer obsessed, we are well progressed in how we organise our team as one Viva Energy retail team, removing duplication and working consistently with further unlock to be realised in half two. Further to this, we have a clear plan to deepen customer engagement through data-led personalisation and unlocking those customers that are active within our database, starting with flybys. Retail excellence is our second pillar, and we are centred on strengthening leadership, systems and processes to lift execution, efficiency and consistency. My initial observations after four weeks is that the uplift that exists in this space and the efficiency gains are both real and measurable. The efficiency of our supply chain is key. As Jen has already shared, our immediate focus is to have a supply chain that we can fully scale from December 2026 and into 2027, where we will unlock synergy from being just in case on our stock to just in time. Through embedding a new operating model, we will progress increased control of our end-to-end supply and focus that to match demand so that we carry less safety stock in our stores. Curation of our offer is another key unlock. We are buoyed by our recent quick win trials that advance our product range review disciplines, better segment our ranges, expand our private label penetration and grow where we under index in category. This will improve productivity per square metre, basket penetration and overall health of inventory. Lastly is the right network and format. It includes continuing our pipeline of network expansion and format optimisation that Jen has shared, but more so ensuring that we better embed the learnings in this space to drive down capex and improve performance. So if I was to summarise on where we've been and where we're going, the clear message is that F26 is about completing the retail foundation platform, while F27 will convert that platform into better execution, improved customer outcomes and sustained growth. We recognise that much of this work is still in delivery. Our focus is on disciplined execution and clear measurement of all benefits underpinned with a robust retail scorecard. I will now hand over to Carolyn to discuss our financial performance. All right, thanks, Teresa.