Ampol Limited (ALD) Earnings Call Transcript & Summary

Good morning, and welcome to the 2020 Annual General Meeting of Caltex Australia Limited. We would like to begin by acknowledging the traditional owners of the land on which we meet today, the Gadigal people of the Eora Nation and pay our respects to elders past and present. My name is Steven Gregg and I have the honor of being your Chairman. As a result of the proxies I hold as Chairman, we have a quorum present, so I declare this meeting open. I'm disappointed that we are unable to meet with our shareholders personally today as a result of the public health restrictions in place in response to the COVID-19 pandemic. However, I look forward to having the chance to engage with shareholders face-to-face when we meet next year. Today, we are webcasting the entire meeting live. And through this live webcast, we will be able to receive and answer your questions online. [Operator Instructions] The portal is now open to receive your questions, and they can be submitted at any time throughout the meeting. [Operator Instructions] Jeff Etherington, our interim CFO, is here with me today and will read out the name of the shareholder and their question. As our time is limited, it may not be possible for us to answer all questions. Let me start the meeting today with some introductions. With me on stage is our interim Chief Executive Officer, Matt Halliday. Also at our Sydney office, the non-executive Directors, Barbara Ward, Penny Winn and Melinda Conrad. Today, Melinda is seeking reelection. We also have our company Secretary, Georgina Koch; and representatives of our external auditor, KPMG, in attendance. Members of the Caltex Board are also joining us by teleconference today are non-exec directors, Mark Chellew and Bruce Morgan. Today, we say farewell to Bruce, who will retire as a Director of Caltex after 7 productive years on the Board. Bruce has made a valued contribution to the development of the organization and the Board over many years, including as Chair of the Audit Committee, as a member of the Safety and Sustainability Committee. We thank Bruce for his service and wish him all the best in the future. With Bruce departing and conclusion of the takeover discussions with Couche-Tard, we have made good progress on our search for new directors who can make a positive contribution to the future of Caltex, and he will bring complementary skills to the board. I look forward to updating shareholders on these developments in the near future. The remaining members of the Caltex leadership team are joined by teleconference as well. Before we progress with today's agenda, I would like to provide a brief summary on the recent conclusion of discussions with Couche-Tard. I'll then provide my review of the 2019 performance and update on our progress with our strategy for growth before handing over to Matt for update on trading conditions and our operational response to the COVID-19 pandemic. Matt will also talk in some detail about the revitalization of the Ampol brand, which we are ready to launch back in the Australian retail fuels market later this year. Shareholders would be aware that we recently concluded discussions with Couche-Tard regarding their conditional, nonbinding and indicative acquisition proposal for Caltex. The conclusion of the discussions followed the end of the agreed due diligence period, with Couche-Tard deciding not to proceed due to the high level of economic uncertainty caused by the COVID-19 pandemic. The Caltex team has done an exceptional job navigating through the due diligence process, and Couche-Tard have been highly complementary of their work. Couche-Tard's own communications to the market confirmed the view of the strategic fit of Caltex as a component of its Asia Pacific expansion strategy. They have also communicated the possible interest in reengaging with the Board once there is sufficient clarity around the global economic outlook, although I would stress that there is no certainty that they will do so. I'd also like to reiterate that the Caltex Board's priority at all times has been and will be to maximize the value for Caltex shareholders. While discussions at this point have concluded, we remain confident in our ability to unlock value for shareholders as an independent business. Should we receive an approach in the future from Couche-Tard or any other party, then we will be willing to consider that approach on its merits. At the same time, as mentioned, we can have confidence in our future as an independent business. We have a well-articulated strategy that we believe will create significant long-term value for shareholders, and we remain committed to this strategy and to continue to execute despite the current uncertainties created by the COVID-19 pandemic. A big part of our future will be our transition back to the iconic and company-owned Ampol brand. Today, we seek shareholder approval to change our formal listed company name to Ampol. We have a comprehensive brand and network transition strategy in place that will ensure the Ampol brand will support our success into the future. Ampol is an iconic brand that reflects the deep Australian heritage and expertise. Ampol continues to be regarded as a high-quality and trusted brand by Australian consumers and resonates across our key customer segments. The transition to Ampol also supports our evolution into a growing regional fuels and convenience business. As a proud and independent Australian company, we are ready to revitalize and make the transition to Ampol, and I look forward to hearing more from Matt on this a bit later in the meeting. I'll now provide my review of the 2019 performance. 2019 was an important year for Caltex. While financial outcomes were disappointing, the business performed well in a challenging operating environment, and we delivered a solid underlying result. Importantly, we made good progress executing our Fuels & Infrastructure and Convenience Retail growth strategies, which positions us to capture further value to shareholders. There were many highlights from the last 12 months, including the expansion of our capabilities in our Ampol trading and shipping business, earnings growth in Gull and SEAOIL, the successful launch of Caltex' Woolworths Metro and the high -- and the divestment of 25 higher and better use sites for approximately $136 million. We've also successfully completed a $260 million off-market buyback and announced a transition to the Ampol brand, which we'll hear more about later. On historic cost profit basis in 2019, Caltex' net profit after tax was $383 million. Under our preferred method of reporting, replacement cost of sales operating profit, we recorded net after tax of $344 million, which was down 38% on 2018. Fuels & Infrastructure delivered a solid result, underlying result despite the impact of a tough domestic market, the reduced earnings from a repriced Euro Garages Group contract and reduced refining earnings from outages and lower original margins. Its earnings before interest and tax was $450 million, which is a decline of 21% on 2018. Total fuel sales volumes increased by 3% to 21.1 billion liters, and the highlight of the Fuels & Infrastructure's performance was from our international business, with improved performance across Gull and SEAOIL. In total, international sales volumes increased by 36% to 4.8 billion liters. Australian sales volumes, including our Convenience Retail and wholesale customers, fell by 3% to 16.3 billion liters. At Lytton, earnings before interest and tax was $70 million, down from $161 million in 2018. Total production at Lytton was 5.8 billion liters, a 6% decline on 2018. Our Convenience Retail business delivered earnings before interest and tax of $201 million, approximately 35% lower than the outcomes achieved in 2018. Total Convenience Retail fuel sales volumes were 4.8 billion liters, which is a 2% less than the 4.9 billion liters of fuel sales in '18. Despite the decline, retail fuel margins strengthened in the second half of 2019 as we renewed focus on our retail fuel offer. Caltex also made premium fuel share gains and delivered improved shop earnings. We continued the transition of franchise sites to company operations in 2019, which is a key enabler of our Convenience Retail growth strategy. A total of 112 franchise sites were transitioned to company operations in 2019, bringing the total number of company-operated sites to 631. More than 99% of the network will be company-operated by the end of this year. In 2019, we launched new initiatives to deliver improved returns for shareholders. In August, we announced a cost-out program to deliver $100 million of sustainable savings to our business, delivering $60 million from this program in 2019. Importantly, we also announced the divestment of around 50 retail sites, which are deemed to have a higher value through alternative use. The first tranche of the 25 sites was sold for approximately $136 million. These initiatives reflected the strong focus we had in 2019 on capital discipline and delivering sustainable uplift in returns for shareholders. We also delivered a significant number of strategic initiatives in 2019. Our Ampol Singapore trading and shipping business was established in 2013. And since this time, we have evolved our international operations from a single market supply function to a long-term growth engine. In 2019, we continued this important work by announcing our intention to open an Ampol trading and shipping office in Houston in the U.S. We also announced our intention to create our first international storage position in Southeast Asia. The Houston office opened in January this year, and it works in combination with our existing team in Singapore to enable Caltex to benefit from sourcing improvements and investigate new markets. The international storage pilot in Southeast Asia is now also operational and will also provide new opportunities for us to capture value across the supply chain. The extension of our operations creates a blueprint for expansion into new locations, products and services. This pipeline of international growth opportunities in Fuels & Infrastructure has the potential to deliver meaningful earnings growth over the next 5 years. Turning to our Convenience Retail business. In 2019, we continued to execute our strategy and leverage our extensive retail network to capture opportunities. In 2019, we began a review of approximately 800 company-controlled retail sites, aimed at ensuring a tailored site offering can deliver significant earnings growth. In August, we announced that we identified approximately 500 sites that could create further growth through an enhanced convenience offer. From this review, we also finalized our 3-tiered approach to retail store formats. The opening of our first 2 Caltex Woolworths Metro stores, our Tier 1 format, was an important milestone as we executed this new format approach. This format sets a new standard of service, product quality and range that will disrupt the convenience sector. Following this new approach to formats, we also launched a lower-cost version of The Foodary at Five Dock to provide a strong example of how we can deliver efficiency with capital and operating costs. Finally, we launched Caltex self-serve as a Tier 3 format. Caltex self-service is a safe and reliable and competitive offer that can be rolled out at the right locations with lower capital and operating costs. These milestones illustrate the strong progress we have made with our retail strategy. Coupled with the transition of sites to company operation and our refocus on market-leading fuel offer, these initiatives will help us deliver a potential nonfuel earnings uplift of $85 million by 2024. Caltex' commitment to safety underpins our reputation for safe and reliable supply and is a major driver of the engagement and productivity of our workforce. Our safety performance has been a major contributor to our success in recent years, and we remain fully committed to maintaining a safe working environment for our employees and partners. Given this, we are disappointed that our 2019 safety performance did not meet the high standards we set ourselves. In Fuels & Infrastructure, while we reduced the severity of personal safety incidents, recordable injuries and days away from work both increased. Similarly, while the number of Tier 1 process safety incidence was reduced to 0, we had an increase in the overall number of spills against our high standards. In 2020, in Fuels & Infrastructure, we are implementing an action plan to reduce the major causes of workplace injuries, which are repetitive and high muscle load manual tasks, along with slips, trips and falls. In addition to the rollout of new training initiatives, where we know injuries occur, we will improve communications to raise public and personal awareness of the safety hazards and where possible, increase the presence of leaders in the field to reinforce the right safety behaviors and receive feedback from our frontline teams. We have also reviewed the causes of spills in 2019 and have developed action plans for our specific areas of operations. In Convenience Retail last year, we had an increase in safety incidents at sites transitioning to company-owned operations. While these incidents are predominantly low consequence, we are committed to improvement and are focused on establishing the right safety culture through new programs, including more regular store communications and safety cards that reinforce awareness of common safety risks in our retail operations. As a Board, we recognize that environmental, social and governance issues are significant to our investors, customers and employees and the general community. In 2019, we made significant progress with key sustainable initiatives and continue to embed sustainability into our corporate culture and into our strategic and business planning processes. In March, we released our second sustainability report, which captures our performance for the year. Importantly, we also launched our sustainability strategy for 2019 through to 2021. This was preceded by a comprehensive materiality assessment of our sustainability risks that we conducted in early 2019. Our sustainability strategy is framed by 4 main pillars: the first pillar is safe and responsible business. This is aimed at ensuring we conduct our business activity safely and responsibly and we look after our people. The second pillar is continuous improvement and optimization of our assets. This ensures we deliver operational excellence and utilize our resources efficiently. The third pillar is the contribution of the Australian economy and communities. This ensures we generate economic benefits for Australia and help develop communities. And finally, the fourth pillar is transitioning to a low-carbon economy. This pillar ensures that we future-proof Caltex and support our customers as we transition to a low-carbon future. As part of this strategy, we conducted a review of the UN's Sustainable Development Goals and mapped these against our sustainability strategy to determine the areas where we can make the most impact. You can read about them in our sustainability report. In 2019, we also tested our operations and corporate strategy against 3 plausible climate futures and prepared our 3-year climate risk strategy. This strategy seeks to operationalize our Climate Change Position Statement and to address the risks and opportunities identified in our analysis. As I said last year, we have adopted the task force of Climate-Related Financial Disclosures framework, and we're committed to full disclosure and alignment by 2021. As a leading provider of transport fuels in Australia, we acknowledge that we have a role to play in the transition to a low-carbon future and are conscious of our important role in the economy and in communities. As such, we are committed to the work being undertaken as part of our sustainability strategy and continuing to meet our customers' changing energy and mobility needs. I encourage you to read our 2019 sustainability report to find more information about our approach to environmental, social and governance issues. You will find it on the Caltex website. Before I hand over to Matt, I want to touch on an important subject of CEO succession. The Board recognizes the critical importance of the CEO succession. And late last year, we made significant progress in our search for a new Chief Executive Officer to replace Julian Segal. However, we believe it was not prudent nor practical to complete the search at the time given the receipt of Couche-Tard's conditional offer to acquire Caltex. For this reason, in late February, we announced that Julian would retire and step down as the company's Managing Director and Chief Executive Officer, and that we make interim appointments of strong internal leaders to ensure we are well placed to progress discussions on the potential transaction, while continuing to focus on managing the business well. On this basis, Matt Halliday was appointed as the interim Chief Executive Officer; Louise Warner was appointed as the interim Chief Operating Officer; and Jeff Etherington was appointed as the interim Chief Financial Officer. These interim appointments have ensured the business has continued to be managed efficiently and with focus through a difficult period. Over the last 2 months since these appointments, discussions with Couche-Tard have concluded, and we've taken quick and decisive action to respond to the COVID-19 pandemic. The Board will review these interim appointments in due course and provide further updates on the CEO succession later in the year. Continuation of these interim positions ensures the business is best positioned to respond to COVID-19 disruptions and progress execution of our articulated strategy. I will now hand over to our interim CEO, Matt Halliday, to talk more about our transition to Ampol and the important issue of fuel security. Matt will also provide an update on our trading conditions and our operational response to COVID-19. Across our economy and communities, COVID-19 is having unprecedented impacts. Caltex continues to take strong action to protect shareholder value, while ensuring we remain engaged with governments and to continue to play an important role in our economy and communities as an essential service. A big part of our work over the last month has been aligning our cost base with significant demand drops we are seeing across the market. The Caltex Board and the executive leadership team will make an important contribution to support Caltex at this time, with all directors and executive team members taking a 20% pay cut for an initial period of 3 months. Matt will talk more about this now.

Thank you, Chairman. I'm going to provide a brief update on trading conditions and how we are responding to protect shareholder value in the current environment. I will then touch on our operational response to COVID-19, before touching on our exciting move to revitalize the much-loved and iconic Ampol brand. Our first quarter trading update was released to the market in late April, with RCOP EBIT of $142 million, broadly flat with the first quarter 2019 result, demonstrating the resilience of our integrated business with strong performance in Convenience Retail, mitigating the impacts of record low refiner margins and weakness across the economy. Our first quarter performance includes significant volume impacts from bushfires early in the year and the government response to COVID-19 from late March. Unfortunately, the demand and broader impacts of COVID-19 on our business have become more acute as we have pushed into the second quarter. In the current environment, we're seeing a weakened crude oil market, with increasing storage on water lifting crude and product freight rates. Global hydrocarbon demand weakness due to economic hibernation and reduced domestic and international travel is impacting several parts of our business. Australian industry jet demand is expected to be down between 80% and 90% during the period that travel restrictions remain in place. Convenience Retail fuel volumes are down 16% year-to-date through April in comparison to the same period in 2019. And volume declines for Gull in New Zealand and SEAOIL in the Philippines have been larger than Australian retail fuel volume declines. However, New Zealand market has improved just over the last week with a relaxation of controls. Pleasingly, demand resilience continues to be observed in key B2B segments, including mining, agriculture and transportation. In response to this environment, Caltex remains committed to taking necessary action to protect our assets and market-leading position to optimize cash flows and shareholder value. We have taken several hard decisions since the onset of this crisis. First, we have brought forward and are extending our Lytton refinery's Turnaround & Inspection for 2020. Global fuel demand erosion caused by COVID-19 is expected to impact refining conditions for at least several months, and we have now safely suspended operations at the refinery and committed this important maintenance program. Our decision will deliver a more capital-efficient T&I and enable a reduction in the cost of the shutdown as well as further optimization of the supply chain, including a reduction in working capital. We estimate the program of work will be delivered safely, and with a 10% reduction in planned CapEx and has been timed to coincide with a period of low margin. Second, we have reviewed our aviation business and taken early action in relation to stranded costs, including changes to our on-airport operations, deferral of capital investments and a reduction in workforce hours and contractor activity. Third, target 2020 group CapEx is being reduced to below $250 million from the previously stated target of approximately $300 million by focusing only on critical business items. Finally, we continue to review fixed costs right across our business, including reductions in corporate costs. Actions from these reviews will be in addition to the previously announced $40 million cost-out program for 2020. Decisions already taken on this front to reduce costs include: a temporary 15% to 20% reduction in Convenience Retail weekly hours to align with current reduced customer activity; as the Chairman has already outlined, a 20% reduction in Board and executive team remuneration and a 10% reduction for senior leaders for an initial 3-month period; and reduced corporate costs, with measures including utilization of annual leave and reduced hours. The combined benefit from these early initiatives on cost are expected to save approximately $10 million per month of operating costs. We will continue to take decisive action to protect our business as the current situation on COVID-19 evolves. Importantly, Caltex enters the current period of COVID-19 uncertainty with a strong balance sheet, and we will continue to protect our cash flows and to position ourselves to take advantage of opportunities that will arise when markets recover. Turning now to our broader operational response to COVID-19. I would first like to offer my thoughts to all shareholders, employees, customers and partners at this difficult time. COVID-19 is having an impact on all parts of our economy and society, and the last few months have proved challenging for government, business and the broader community. For Caltex, we are proud of the important role we play in keeping our customers moving and serving the community as an essential service. Our focus has been on operating safely and protecting the health of employees and customers while ensuring reliable supply for customers and delivering for the community as an essential service. I want to quickly cover off on each of these in turn. Our first priority is the safety of our employees, customers and partners. Over the last few months, we have quickly implemented changes to the way that we operate. For those we are serving through our retail network, we have reduced customer touch points in-store and increased sanitation practices. This has included things like cleaning procedures for shift changeovers, protective screens at high-volume sites, stopping the use of reusable coffee cups, increasing signage and making hand sanitizer and wipes available for customer use where possible. At our truck stops, we have made changes to ensure we can continue to serve the transport sector and the essential workers that support it. This includes establishing designated eating areas with social distancing in mind; increasing cleaning of bathroom, shower and laundry facilities; and using takeaway packaging where possible. For those who we serve through our terminals, depots and other distribution facilities, we have adopted social distancing and additional cleaning procedures. Second, we remain focused on reliable supply. We understand so many people across Australia depend on our essential products and services, whether this is fuel, lubricants or convenience products. We are committed to ensuring customers can continue to access these products and services where and when they are needed. There has been some media and broader discussion about whether border controls in Australia or the global response to COVID-19 will impact fuel supply to or within Australia. We can assure all shareholders, customers and communities that our fuel supply chains remain resilient. We have invested significantly in infrastructure and our supply chain capability over a long period. And this means we are able to maintain the high standards of supply and availability you have come to expect. Key to this strength is our Ampol Singapore team. Through this international sourcing and shipping capability and the strong relationships we have with suppliers globally, we have full confidence in adjusting our supply chains to continue to meet customer and community needs. Inside Australia, our teams are working closely with government authorities to ensure border controls and other restrictions do not impede on the supply of our products. Despite the recent uncertainty in our economy and in global markets, we continue to progress our exciting work to deliver on the revitalization of an Australian icon, the relaunch of the much-loved and company-owned Ampol brand. We announced this transition to the market late last year, and I want to take this chance to update you on the progress we have made. Over the last week, we have launched our new Ampol logo to our employees, customers and other stakeholders, and we are well progressed with our transition plans. The leadership team remains confident in the plans we have in place for this transition. The new Ampol logo, which you can see on your screen, draws on elements of the heritage, red and blue Ampol brand, a nod to our company's proud history as an independent Australian company, while being modernized to reflect the scale and breadth of our operations today. That is, it links our history with our aspirations for the future: Born Australian, world-class. The new, modern and distinctive leaning A is the centerpiece of the new logo design, symbolizing the company's forward momentum and mindset to keep evolving to deliver on the world stage. The new Ampol logo will be a beacon for our customers across Australia's largest retail and fuel distribution network. It will connect Ampol with a new generation of customers and underpins our commitment to, again, make it Australia's most-loved and admired fuel brand. While much has changed since Ampol was formed over 80 years ago, we have never been more focused on delivering for customers and shareholders and being a positive contributor in local economies and communities. Trusted and high-quality products, a commitment to convenience and customer service and the confidence that comes with Australia's largest transport fuels network. That's what our customers can continue to expect from Ampol across our 2,000-strong branded site network in our depots and terminals across Australia and across our operations overseas. It is for these reasons that I believe Ampol is much better suited to carry us forward as an independent and fully integrated transport fuels and convenience business with operations in Australia and beyond. The revitalization of Ampol is the start of an exciting journey and a change that will support our success well into the future. Finally, I want to comment on the recent focus on global supply chains, fuel security and the federal government's announcements about establishing a national oil reserve. Caltex takes its role as the market leader in transport fuels very seriously. As a proud Australian company, over many years we have invested in assets and capabilities across the supply chain to help Australia maintain fuel security and ensure safe and reliable supply for all our customers. We have a strong track record of reliable fuel supply. There has been no widespread or sustained fuel shortages for several decades, including during major global disruptions. With our diverse supply chains, we are confident to supply our customers across the broad range of circumstances that we can face, and there are no supply issues in the current market environment. Over the last month, we have engaged proactively with both state and federal governments across Australia and New Zealand on liquid fuel supply. As the market leader in Australia, with operations across all parts of the fuels value chain, we remain ready to assist in any way we can should the government wish to do more to bolster liquid fuel security for the future. I'll now hand back to the Chairman.

Thanks, Matt. And I would now like to open up the meeting to general questions. There will be an opportunity to ask questions about each resolution later in the meeting before going to the voting outcomes of each question -- each resolution, I should say. [Operator Instructions] We'll -- Jeff?

Yes, we do have the first question, Chairman, comes from the Australian Shareholders' Association. It's in 2 parts. The first, has all the takeover activity gone away, or either Couche-Tard or EG likely to come back for a second bite? The second part, do you notice more focus on the core business now that management is no longer distracted by potential takeovers?

Thanks, Jeff, and thank you to the ASA. We don't know whether either EG or Couche-Tard will come back and approach us again with a takeover proposal. We have conducted ourselves, and I believe they have as well very professionally. But we have just left it that they will get on with their life and their business as we will with ours. So we really don't know. But meanwhile, and I think to the second part of your question, it's vital that we do focus on the business going forward as an independent company. And while the management ultimately focused on running the business well during the takeover, there's no question with clear air, we will have more focus on delivering under the Ampol name in the future.

The next question comes from Dr. [ Stanley Bolden ]. The question is, even before the COVID pandemic, the aging Lytton refinery's contribution to Caltex' earnings before interest and taxes, how does Caltex justify spending shareholder dollars given the low long-term demand outlook facing the industry?

Thanks, Dr. Bolden. Lytton, which is our only refinery in the country, has had a long history with Caltex. And as we all know, the oil industry and refining is a cyclical industry. And Lytton has provided Caltex over a number of years with very high returns. And importantly, there's a lot of flexibility as to how we treat crude and ultimately refined product in the country. So Lytton has done well for us. At the moment, clearly, the refiner margins are very challenged. But we do believe it's worth keeping and investing in. But as ever with all our assets, we review the long-term efficiency and contribution every year.

The next question is another one from the Australian Shareholders' Association. The question is, your growth strategy for Australia appears to be based on nonfuel convenience operations. While there has been some growth in nonfuel convenience, it is off a low base and seems unlikely to make up for a continuing downward trend in fuel sales of all types. Please comment on the future drivers of growth in Australia, including alternative fuels.

Again, thanks to the ASA. We see significant growth opportunities in the country, not just in Convenience Retail, but in our core Fuels & Infrastructure business. We see growth in fuel demand, albeit at a slower rate. And we also see our very privileged position of assets and infrastructure is providing us with an advantage in the market. So our strategy is very much a 2-pronged strategy. It is on Fuels & Infrastructure and on the Convenience Retail side of it. We believe we have significant upside in how we run these businesses and how we position ourselves in the market on both sides.

The next question comes from Dr. [ Eileen Lustig ]. The question is, recent analysis of the International Energy Agency's grim demand projections suggest 2019 was the global peak for fossil fuel demand. Does the company have an exit strategy for our refining business? How will this be managed to ensure shareholder capital is not left stranded by the transition to a low-carbon economy and that workers are supported through this transition?

Thanks, Dr. Lustig. Thank you for your question, which I'm going to let Matt respond to in detail. However, before I pass over to Matt, a few general comments, if I may. Firstly, Caltex takes climate change very seriously, and we support the Paris Agreement goals. The Board and the management team are working hard to understand all the issues surrounding climate change and how it relates to our business. We believe we have a role, as we said in the speeches a few minutes ago, to play in a transition to a low-carbon future while balancing the current and future energy needs of all our customers and the Australian industry in general. Matt, can I just ask you to comment on that, particularly with regard to Lytton and how we're going to look at that in the context of climate change.

Yes. Thank you, Chairman, and thank you for the question. As the Chairman recently noted, Lytton is an important part of our integrated supply chain. It's an important asset when we look at the integrated value chain, and that's how we do look at the business. We are committed to transitioning to a low-carbon future, and we'll play an important role in that. And we are committed to meeting the Paris Agreement goals as we continue to evolve our strategy and our business planning. Lytton, as an important part of our integrated value chain, will be part of that. And one of the things that we have done is introduced a shadow carbon price into our strategic and planning framework, and that will ensure that the impacts of carbon pricing do play a role in our future decision-making.

The next question again for Matt from Mr. [ Ross Knowles ]. The sustainability report says one of the priorities for 2020 is to investigate metrics and targets to support an energy transition strategy. Recent shareholder resolutions at Woodside, Santos and Rio Tinto have demonstrated widespread investor support for companies setting the Paris-aligned emission reduction targets, including scope 3 emissions. Will Caltex be setting targets to reduce scope 1, 2 and 3 emissions in line with the Paris climate goals?

So Caltex is yet to support -- yet to set its own targets, including a longer-term target. But as the Chairman noted, we support and recognize the need to limit warming to less than 2 degrees above pre-industrial levels, and we are committed to meeting Paris Agreement commitments. So we will be giving further consideration to how our business strategy and planning does align with the Paris Agreement in coming years and how that impacts decarbonization targets. As I mentioned, we have implemented a shadow carbon price, which ensures that our decision-making framework does take account of carbon pricing.

And Chairman, no more questions for this item.

Great. Thank you. Thank you, Jeff. We'll now move to the formal items of business. As notified to the ASX, all resolutions will be decided today by using proxy instructions received in advance of the AGM from shareholders. I would like to thank all shareholders for their efforts to submit proxies in advance of today's meeting. A number of shareholders have appointed the Chairman as proxy for today's meeting. Where these proxies are open, I intend to cast votes in favor of each resolution. The first item of business relates to the 2019 financial reports. Caltex' 2019 annual report has been released to the ASX and is available on our website. For the purpose of today's meeting, the financial report, the director's report and the independent auditor's report for the year ended 31 December 2019 are put before the meeting. I would now like to open the meeting to questions on the financial reports. There will be an opportunity to ask questions on other items of business a little later.

Chairman, there are no questions on this item.

Thank you, Jeff. As there are no further questions or any questions on this item, we'll move to the next item of business of the meeting. The notice of meeting contains the following matters to be voted on by shareholders. The reelection of Melinda Conrad as a Director; the adoption of the 2019 remuneration report; and approve the company name change from Caltex Australia Limited to Ampol Limited. The voting directions for the proxies for each resolution will be displayed on your screen. The final number of votes will be advised to the ASX and will also be available on our website after the meeting. The next item of business is the reelection of Melinda Conrad. Melinda brings to the Board over 25 years of experience and expertise in consumer-related industries, including as a retail entrepreneur and as CEO and continues to make a valuable contribution to the Caltex Board. The Board unanimously supports Melinda's reelection as an independent non-exec director. I'll now ask Melinda to speak to her reelection. Thank you.

Thank you, Chairman, and good morning, everyone. Today, I'm seeking your support for reelection to the Caltex Board as an independent nonexecutive director. It's been an honor to serve as Caltex' Director since being appointed on the 1st of March 2017, and I am proud of the contribution I've had the opportunity to make, including through my work as a member of the Audit and Human Resources Committees. I bring to the Board considerable experience as a company director in a range of industries, including retail, financial services and health care. I continue to serve on a range of public, private and not-for-profit boards including the ASX Limited and the Stockland Group. My skills in the retail sector, both at a Board and executive level, are highly relevant to the Caltex' business and strategy at this time. I've held senior strategy and marketing roles in global retail organizations and have experience in several retail businesses as a founder and CEO. I have previously served as a Director of The Reject Shop Limited and David Jones Limited. I have thoroughly enjoyed my time on the Caltex Board. While Caltex is not without its challenges in the current difficult environment, the underlying drivers for success remain. It would be an honor and a privilege to have the opportunity to continue to contribute to the ongoing execution of the Caltex strategy. Thank you for giving me the opportunity to seek your support for my reelection.

I will now answer questions on this item of business. A reminder, you can submit questions at any time. [Operator Instructions]

Chairman, there are no questions on this item.

Thank you, Jeff. As there are no questions here, the results for the voting are 98.82% for the resolution; 0.9% against. The resolution has been overwhelmingly passed. I now have the pleasure of declaring Melinda reelected as Director of the company. Meli, congratulations.

Thank you, Chairman.

Okay. The next item of business is the remuneration report. The vote on this resolution is advisory only and does not bind the directors or the company. I'll now answer questions on this item of business.

The first question is from the Australian Shareholders' Association. And the question is, our major concerns are that the STI is payable totally in cash upon vesting and offers a maximum opportunity of 140% of base salary. A financial gateway for this STI is the achievement of 80% of RCOP net profit after tax, which appears to equate to 80% of budgeted RCOP NPAT. The question is whether these hurdles are sufficiently challenging to justify a payout of this magnitude?

Again, thank you to the ASA for your question. I'd just like to reassure them and the shareholders that our rem structure for our staff is totally aligned with performance and long-term value creation for shareholders. And I would also just like to note that proof of this is that in 2019, no STI was made at all, which I think just confirms that. I think to the extent that there's the possibility of 140% payable, yes, there is, but outperformance has to occur. Thank you.

Chairman, there are no other questions on this item.

Thank you, Jeff. As there are no questions, results for the rem report voting are 97.61% in favor of the rem report and the resolution; and 2% against. The resolution has been passed. Thank you, shareholders. The next item of business is the change of company name from Caltex Australia Limited to Ampol Limited. The resolution is also to change all references from Caltex Australia Limited to the -- in the constitution of the company to Ampol Limited. In 2019, we assumed and announced that we would transition to the company-owned Ampol brand. The announcement came after the completion of a comprehensive brand strategy review and the termination of our existing license agreement with Chevron Corporation. I look forward to the transition, as I believe Ampol more accurately reflects our values in both our history and future as a company. Many of our shareholders may also have fond memories of Ampol in Australia. I will now answer questions on this item of business.

Chairman, the first question is from Dr. [ Eileen Lustig ]. The question is, with the reestablishment of the Ampol brand, what consideration has been given to the installation of electric vehicle fast-charging points, preferably with coffee shops, decent loos and Internet access.

Thank you, Dr. Lustig, for the question. We are giving absolute consideration to the provision of electric charging stations at all our stations, and we've been looking at this for the last 12 months. And we're going through the economics of how that works and how best to position it. We already, in many of our stores, have great coffee and great service. So hopefully, under the Ampol name, and with the refreshment and direction under Matt's stewardship, this will come. So thank you for the question.

Chairman, there are no more questions on this item.

Thank you, Jeff. As there are no further questions, the results for the voting are 99.6% for the resolution; and 0.16% against the resolution. The resolution has been passed, and I'd like to thank all shareholders for their absolute support in the creation -- or the recreation of the Ampol brand. Thank you. That now concludes the formal business of the meeting. However, before we close, I want to recognize the outstanding contribution of our former Chief Executive and Managing Director, Julian Segal. Julian retired from Caltex earlier this year after 11 years of service. Julian joined Caltex in 2009, initially steering the company through the GFC and then overseeing the transition of Caltex from a fuel refiner and marketer to an integrated transport fuels business. Under Julian's leadership over the past 11 years, we've delivered a total shareholder return of over 15% and returned $9.64 in capital per share. There were many significant and defining decisions taken under Julian's leadership. This included the transition of the Kurnell refinery to an import terminal. The establishment of Ampol Singapore and international expansion through the acquisitions of Gull and SEAOIL. These decisions remain a focal point of our current Fuels & Infrastructure growth strategy. Julian also set the path for our Convenience Retail growth strategy, which is critically important to our future. It has been a pleasure and privilege to work with Julian over my time and the Board's time at Caltex. I congratulate him on a wonderful career, and we look forward to continuing his work to the benefit of all Caltex shareholders in the years ahead. On behalf of Ampol Limited's Board and the management, I sincerely thank our employees, customers and partners and you, the shareholders, for your continued support of our company. We look forward to updating you as we continue to execute our strategy. I have every confidence that Ampol Limited will come through the current environment in a strong position and to continue to deliver for shareholders. To close the meeting, we would like to share with you a short video, marking the launch of our revitalized Ampol logo. We are proud and independent Australian company with an exciting future as Ampol, and I know all our shareholders will look forward to seeing this new brand emerge on service station forecourts around the country in the years ahead. Thank you. I now declare the meeting closed.