Viva Energy Group Limited (VEA) Earnings Call Transcript & Summary

Yes. Good afternoon, and thank you all for joining us today as we discuss Viva Energy's Financial Year 2020 Full Year Results. My name is Scott Wyatt, the Chief Executive Officer of Viva Energy. And on the call with me today is Jevan Bouzo, our Chief Financial Officer. We're heading into 2021 having successfully navigated one of the most challenging years in Viva Energy's history. The results I'll be presenting today reflect how well our organization has worked together in 2020 to respond to the challenges presented by COVID-19 and an extremely difficult refining environment. In the early stages of 2020, we were quick to implement COVID -- effective COVID-safe operating procedures and adapt our supply chain to respond to rapidly changing demand. Throughout the year, we have demonstrated a strong financial discipline, entering the crisis in a strong net cash position following the divestment of our stake in Viva Energy REIT and maintaining good control of both costs and capital expenditure. As we end 2021, I believe we are extremely well positioned for recovery and growth with high-performing Retail businesses, a robust Commercial-based line business and good progress with the federal government on the long-term fuel security package. The initiatives we are progressing at the Geelong Energy Hub also provide more long-term opportunities, and we are very excited about the future for that particular part of our business. I'm very proud to say that during 2020, the company maintained a strong focus on safety despite the challenges of the COVID environment and a significant work involved in completing major maintenance work on the Residual Catalytic Cracking Unit. During 2020, we achieved a 20% reduction in the number of recordable injuries compared to 2019. At the same time, we undertook proactive and effective safety measures to protect employees and their families from exposure to COVID-19. In terms of sales and production performance, I'm also pleased to report that we were able to successfully adapt to the changing and challenging market conditions. While total demand for transport fell 16% over 2019, we achieved growth in diesel sales, improved our premium fuels penetration and maintained total market share. Our refinery production rates were naturally reduced as a result of a decision to bring forward and extend our major maintenance program. And our team at the refinery successfully adjusted the production mix to adapt to significant changes in market demand and the refining margin environment. The highlight result for me in 2020 is the strong underlying performance in the Non-Refining business, our Retail and Commercial businesses, which increased by more than 16% to $614.5 million EBITDA. This was driven by strong diesel sales, improved retail fuel margins compared with 2019 and a robust performance in our broader commercial specialty businesses. The group results were, of course, heavily impacted by COVID-19 and global weakness in the refining sector, which saw our Refining business report a $95 million loss and taking the company to a net profit after tax loss of nearly $36 million for the year. I am, however, particularly pleased given that environment that we are -- we're able to return nearly $650 million to shareholders through a mix of dividends, capital management and still finished the year with a low debt of just over $100 million. I think we are extremely well positioned to recover and pursue growth as life returns to this market. In terms of our progress on our strategic priorities, Viva Energy is a company firmly focused on the future. And despite the challenges last year, we have made significant progress on a number of strategic priorities that I believe will set us up for growth in 2021 and beyond. Active management of retail pricing and customer campaigns delivered an exceptional result in our Retail business while continuing our strategy to recover share in our core retail channels. We also continue to close gaps in our retail network, which now exceeds over 1,300 service stations right across the country. While it was an extremely challenging year for refining, we have taken significant steps to improving the long-term sustainability of this part of our business by working closely with the federal government to develop a framework, which I believe supports the long-term viability of the refining sector. The interim production payment in place provides welcome support during 2021, and we remain optimistic about finding a long-term solution for -- in respect of the fuel security package. We obtained a strong capital management discipline throughout 2020, divesting our noncore shareholding in Waypoint REIT and returning the bulk of these proceeds to shareholders via capital return and special dividend. We aim to return the remaining $100 million once the long-term outlook for the refinery is clearer. Of course, we also announced our vision to establish an energy hub at Geelong, and we've made serious progress with our consortium partners of the development of the proposed gas terminal project. This project, and others, aims to leverage our position at Geelong and our capability and will generally support our development of new energy opportunities. Let me now hand over to Jevan, who will discuss our key financials in some more detail.

Thanks, Scott. I'll kick off on Slide 11. There are really 2 parts to our results for 2020. Despite a really challenging year for Australia, our Retail, Fuels and Marketing Non-Refining business performed extremely well, and as Scott said, up 16.5% on 2019 to an underlying EBITDA (RC) of $614.5 million. The standouts here were really Retail and Supply, Corporate and Overheads, with Commercial impacted by aviation demand through the majority of the year. I'll cover each of these in a bit more detail as I go through the pack. As you know, refining was a part of our business that was really challenged by the pandemic and the impact on regional refining margins. EBITDA moved into a loss position for the year of $95.1 million. Overall, underlying NPAT recorded a loss of $35.5 million for the year, down from a profit of $135.8 million in 2019. While distributable NPAT for the second half recorded a $1.5 million loss, the first half recorded an NPAT profit of $24.3 million. Turning to Slide 12. The bridge on this slide sets out the material impacts for the year at a group level. The integration of Liberty and Westside delivered $22 million of benefit. An overall margin improvement of $129 million was driven by Retail, more than offsetting the volume loss in this part of the business. You can see that the single biggest impact by far has been regional refining margins, impacting the result by $178 million. COVID-related disruption on a net basis impacted the business by nearly $100 million with overall volume and production losses collectively resulting in another $178 million impact. This was partially offset by an early focus on cost control and lower supply chain costs to manage the impact of the disruption, combined with the receipt of some JobKeeper support. On Slide 13, retail underlying EBITDA of $670 million showed just how resilient this part of the business can be despite the demand disruption that we saw. Retail margins recovered by $124 million from a low base in 2019, more than offsetting the volume impacts during the year. And it's been pleasing to see Alliance volumes recovering after the worst of the COVID-19 impacts in the first half of 2020. Our decision to acquire the remaining 50% of the Liberty regional and Westside businesses delivered a benefit of $22 million for the year. We also added 38 new stores to the Shell- and Liberty-branded network during 2020, taking our total network to more than 1,300 stores. Slide 14 in Commercial. Underlying EBITDA of $238 million was down primarily as a result of the aviation impacts. Border closures and lockdowns pushed down Aviation sales volumes by $67 million, which is marginally offset by the receipt of some JobKeeper support in this part of our business. A focus on cost and the diversified nature of our broader Commercial business meant that outside Aviation, results held up fairly well. Early and active management of customer credit meant we were able to successfully manage bad debts such that we did not experience any material impacts. Slide 15 sets out the magnitude of the impact to our Refining business. Refining was heavily impacted by the decline in both domestic and global oil demand. Underlying EBITDA was a $95 million loss, driven directly by regional refining margins at $178 million and lower refining production of $69 million to manage the impact of COVID-19 restrictions. Again, a strong focus on costs and the receipt of some JobKeeper support marginally offset these impacts. The actions taken to maintain production and bring forward major maintenance helped to mitigate losses, and we've seen some small improvements in Geelong refining margins since returning to full production in November 2020. On Slide 16. Supply, Corporate and Overheads consists of our integrated supply chain of terminals, facilities, depots, pipelines and distribution assets located right across Australia as well as site maintenance costs and all our head office and corporate costs. As I mentioned earlier, we acted quickly on costs early in the year, and combined with lower supply chain costs, delivered a significant reduction in operating expenses, reducing the cost of this segment from $333 million in 2019 to $295 million for 2020. Slide 17 sets out our cash flow bridge. Working capital reduced by $97 million, partially offsetting the net inventory loss of $257 million for the year. And when adding back the impacts of the sale of the Waypoint REIT stake and associated capital management, the underlying free cash flow of the business was $87 million. The positive underlying free cash flow was driven by a focus on cost, both operating and more importantly capital expenditure, despite the lower underlying NPAT result. Slide 18 sets out the movement in the balance sheet net debt. The impact of net inventory loss during the year was partially offset by a release of working capital that I mentioned earlier. And after accounting for the $100 million of remaining proceeds from the WayPoint REIT sell-down, our balance sheet remains strong with relatively low net debt and plenty of headroom in our USD 700 million debt facility. Slide 19 sets out our capital expenditure for 2020 and the guidance for 2021. Strong focus on managing capital expenditure during 2020 helped to manage cash flow and maintain a strong balance sheet position with capital expenditure of $159 million for the year relative to our original guidance of $250 million to $300 million. Group capital expenditure for 2021 is forecast to be in the range of $185 million to $210 million, returning to a level that's more consistent with historical levels in the business. The refining major maintenance scheduled for 2021 is the HFA unit, which was originally part of the planned 2020 turnaround works and deferred to 2021. Finally, on Slide 20. Significant one-off impacts included the $179 million gain relating to the sale of the Waypoint REIT stake. The underlying NPAT (RC) loss of $35.9 million is in line with the guidance update provided to the market in December and translates to a distributable NPAT of $22.8 million for the year. In line with past practice, we've referred to distributable NPAT when considering the payment of a dividend for the period. And with the distributable NPAT loss of $1.5 million in the second half of 2020, there will be no final dividend for the 6 months ended 31 December 2020. I am pleased to report that despite the challenging 2020, the company returned $595 million to shareholders throughout the year, consisting of a $15.5 million first half dividend, a $115 million special dividend, a $415 million capital return and $50 million of on-market buyback. It's a key priority for the company to return to a positive distributable NPAT for the first half of 2021. And now I'll hand back to Scott to take you through our focus on the recovery and outlook.

Thanks, Jevan. I'd just like to turn to Slide 22, just touch for a minute on our historical business performance. This slide sets out the cash contribution, which is EBITDA less capital expenditure of our Refining and Non-Refining businesses over time. As you can see from there, despite the impact of COVID-19, the Non-Refining businesses, which, of course, is our Retail and Commercial segments, have delivered strong cash contributions growth over a relatively long period of time. With gradual recovery in Commercial segments and continued improvement in our core Retail businesses, we see opportunities for continued growth into the future. Whilst Refining has had periods of strong contributions in 2015 and 2017, as you can see from the chart, it has, of course, been impacted by weak refining margin since 2018, and of course, more dramatically by COVID-19 in 2020. With the support of an appropriate fuel security package and some self-help initiatives such as the development of the energy hub projects, it is possible to see Refining returns delivering reliable and acceptable returns into the future and begin to make important positive contributions to our business. Turning to Slide 23. Over the last 3 years, Viva Energy has been working to build a solid foundation for growth. And this is what has put us in such a strong position to deal with the impacts of COVID-19 last year. The renegotiation of the Alliance agreement in 2019, the acquisition and growth of the Liberty businesses and the diversity of our Commercial businesses have all been key to our strong performance in the Non-Refining businesses last year. Maintaining disciplined capital and cost management, together with our sensible response to COVID-19, has preserved cash and helped us enter 2021 with a very strong balance sheet and plenty of capacity for recovery and growth. Turning to Slide 24, which sets out the priorities that we -- a plan that we have in place to deliver sustained recovery. We do have a robust recovery date in place, and we do expect to return to growth over the next 3 years and are already well advanced on the implementation and delivery of these initiatives. These will be a key focus for us over the next 3 years. Turning to Slide 25. Our priorities for this year, particularly, are very clear: resolve the future of our Refining business; restore this to positive returns; pick up the pre-COVID growth momentum in our Retail businesses; and be ready to capture growth in the commercial sector still heavily impacted by COVID-19. We expect to further develop the Geelong Energy Hub projects and maintain a strong capital discipline that has served us well over the last year. Finally, on Slide 26. Our outlook for 2021 is expected to remain challenging and uncertain for Refining, but we retained a largely positive outlook across most parts of our business, and we're really excited about the year ahead. Before I hand over to questions, I would like to take this opportunity to acknowledge the contributions that our Chief Operating Officer, Thys Heyns, has made to our business over the last 6 years. Thys has successfully led the Refining business for most of his time and will retire from Viva Energy at the end of March. I want to thank him personally for his support and leadership and wish him all the best for the very -- all the very best for the future and congratulate Jevan Bouzo in his expanded role as Chief Operating and Financial Officer of the company going forward. On that note, Jevan and I are now happy to take your questions.

[Operator Instructions] Your first question comes from Mark Samter with MST Marquee.

A couple of questions, if I can. First, are you able to give us a bit more, and I guess it's hard with everything moving around so much on the volume side in Retail, but for how you feel the Alliance sites in particular are tracking in terms of market share and where you hope they might drop out when we fully recovered retail volumes back?

Yes. I think really -- thanks, Mark. Thanks for the question. No, really positive about the - I mean, naturally about the Retail business given the results that we achieved last year. We came -- as you see on the pack, we delivered average sort of 59 -- or nearly 60 million liters a week in quarter 4, which, of course, includes a fair amount of time with Victoria still under restrictions. So I think given -- in that context, given that environment, I'm pretty happy with the performance of the -- where we saw exit last year. And with the -- entering 2021 with most states now out of restrictions, there's clearly upside from the result that we turned in quarter 4 last year. So based on -- from a share perspective, I think we've held share through some particularly volatile times last year. We did maintain a reasonable level of investment in our customer campaigns last year, and that supported a pretty strong performance cost feel given -- in the context of the challenging environment, but also with shop, and I think you can see that in the results that were announced by Coles recently with convenience sales up 10%. I think that really demonstrated the role that convenience stores play with people shopping closer to home and obviously, our brands being a brand of choice through that time. So yes, I think whilst it was a disruptive year, we obviously lost the momentum that we had coming out of last year in terms of restoring growth through the Alliance network. I think we're well placed to pick up on that and move forward this year and notwithstanding that, of course, the other retail channels have done well. I'm really pleased with how Liberty Convenience has progressed last year with a number of store openings and our own dealer network, which are more regionally located, and we probably have performed pretty well given that regional areas were largely less affected than the metro areas.

Got it. Could you just give us a bit of a refresher within that Retail business on the share that is diesel? I mean obviously, diesel just about seems to -- price is almost a fixed price product at the pump at the moment. And so the diesel margins have been under pretty material pressure. But I don't know, I guess maybe explain some of the difference in your outlook statement to some of you or one of your listed peers perhaps that you're less exposed to that diesel. Can you give us just a bit more insight, I guess, particularly diesel held up a lot better in terms of volume and retail last year, how we're tracking at the moment in the retail business from diesel's share of the mix?

Yes. I think diesel, of course, is a Retail and Commercial story, of course. So -- and so you kind of got to look at it in that context, Mark. I think -- yes, I'm really pleased to see that diesel actually grew last year for our business despite reductions we saw in many segments. And that's a reflection, I think, of the fact that Commercial outside of aviation sectors continued fairly uninterrupted throughout the year. And so we enjoyed good performance outside of Aviation right across Commercial. Very strong agricultural season, which benefited both Retail and Commercial in terms of delivery into those segments. And of course, that's an area that we've invested heavily in the last few years through the acquisition of Liberty Wholesale. And we now have quite a strong presence in rural Australia, and we benefited from that. And we have -- I think one of the things we aim to improve after taking over responsibility for the whole complete fuel offer with the renegotiation of the arrangements with the Alliance was to restore growth in our diesel business in Retail, particularly through further development of our business offer through Shell card to customers. And I think you can see some early signs of success in that area in our diesel performance last year in Retail. So I think those are sort of key trends, Mark.

Okay. Okay. And then I guess I might as well be the idiot that asks the question that you can't answer on the government support package. Is there anything you can say about where -- the point we're sitting at in terms of negotiation? Is there a reasonably clear feel for how it looks and we're finishing the details? Or are we a bit further away from conclusion than that?

No. I think it's progressing well. It's developing a long-term framework, which is what we are working on, and what is ultimately important for our sector is going to take some time. So I think we need to appreciate that. It's not as simple as just what is the refining production payment level that needs to be set. It's also important to understand the government's plans for minimum stockholding obligations and now how that affects importers and also how the funding is going to be managed for the production payment as well. It's the workings of those 3 components that ultimately determine how refineries will be positively impacted through the fuel security package. And so working through the workings of those and how that will get implemented is obviously going to take some time, but it's important to understand because that will obviously drive the long-term outlook. So it's going well. I mean the -- Mr. Taylor is obviously very supportive of the sector, working hard to find a solution that sees the remaining refineries continue to operate. The department is working through this at quite some pace. And we're heavily engaged. And I remain hopeful that we will understand more definitively what that framework looks like before the end of the half.

Your next question comes from Adam Martin with Morgan Stanley.

Just on the sort of Exxon and BP refinery closures. Can you just talk through any arrangements you have with those companies, and I don't know, I suppose just the implications of those 2 closures on your business, please?

Yes, sure. So yes, the Kwinana closure for us is more of the implications there, how do -- what's the right way and optimal way for us to continue to supply our market in Perth. Do we -- and there's obviously options to continue to purchase from BP in the way that we have done for quite some time as the operators of the refinery or move more to a self-supply model and import directly. So those are the options -- broadly the options that we have there in Perth. I think the more material implications for Geelong is obviously the closure of Altona because that operates in the same state as Geelong does and the same -- essentially the same market. I think putting aside the disappointment to see a refinery close because obviously, there are impacts on people and other businesses, I think, broadly, it's a positive development for the long-term outlook for Geelong because the market for local production, if you like, has now increased because prior to -- whilst Altona and Geelong operate, it's largely enough refinery production to service the whole of the Victoria market. With Altona closed, obviously, the market for Geelong production is greater, and we should have more opportunity to sell our surface production locally rather than having to send it out to other states. So that's -- I think that's a potential opportunity. But also a more structural change that will occur, of course, is that Victoria will move to a net import market. And so the demand for imports will grow. That also presents an opportunity for Geelong because Geelong has capability not only to act as a refinery but also to act as an import location. And we already do import on the margins where demand in Victoria exceeds our production. And so we have opportunities to really participate in supporting that import demand going forward. And that's entirely consistent, as I see it, with our vision for just building Geelong into an energy hub. Having our import capability alongside refining capacity is very -- has a lot of synergies with it, and utilizes, obviously, the infrastructure that we already have there and can be developed further. So I'm sort of looking at that as a long-term real opportunity for our business and very supportive of our sort of broader strategy around developing a first-class energy hub that will support Victoria in a more material way in the future.

Okay. And just the second question there. Just the other volumes that you report there, they've almost fallen to 0 in the second half of '20. There's a small figure there, but it's pretty low. Is that primarily the marine business? Can you just provide some context on those other volumes that you report, please?

Which slide are you looking at?

I haven't got the slide in front of me, but it's the other volumes where you put out diesel, petrol. And you can only work it out by looking at first half versus second half.

Okay. I'm looking at Slide 7...

I'll come back if you like.

Yes. Maybe. I'm looking at other volumes here of 788.

Million liters.

And I think you reported like 750 or something in the first half.

725. Yes. I think it's largely the falloff in fuel oil because we obviously had a cruise season at the beginning of the year and not so towards the end of the year. But there was a number of mitigations that we took around barges and costs to manage the impacts of that down to a fairly small impact to the overall Commercial business in the end. And most of the specialties products that we sell are pretty low volumes, as you can imagine, things like lubricants and bitumen and those sorts of products.

[Operator Instructions] Your next question comes from Baden Moore with Goldman Sachs.

Just a follow-on from the Altona query. Are you already in negotiations with Exxon for an increased domestic crude supply potentially? And are there any other synergies you think you might be able to yield out of the change in the market structure? And just one on the buyback. I know you mentioned that you came to see a clearer look at the long-term outlook. But does that, for you, come when you have certainty on the market structure for the subsidy? Or do you think you'd actually need to see it implemented before you have a more certain outlook for your Refining business?

Yes. No, sure. So I can't talk to you about specific commercial negotiations that we have with the counterparties. But I think broadly, we are a major consumer of domestic crude. Typically, Geelong will process about 1/3 of its diet from local sources. And that includes Bass Strait, Cooper Basin and other more local fields. So obviously, if there's less popular refineries in Australia, then there's potentially the opportunity for us to process more crude and adjust our diet going forward based on what crudes are available in the market. So that will obviously develop more fully once refineries are actually closed and those crude supplies are available. So we certainly see that as an interesting area, and we'll obviously continue to monitor that. And then I might get Jevan to talk to the capital return question.

Thanks, Scott. Baden, yes, I think there's probably a couple of points on the capital management. We're certainly committed to returning the $100 million in due course, in line with the commitment we made last year. I think you're right, some clarity on the Refining outlook in the context of the sustainability of that part of the business is really what we're looking for. And I won't go into detail on the discussions with government and the potential to get a solution that will give us confidence to run that business into the future. But certainly, that's the sort of thing that we'll be looking to understand before we make any decisions on returning further funds.

I mean we've taken the government on their public commitments to date. And obviously, there was an announcement last year by Mr. Taylor and Prime Minister Morrison about the long-term security package, and that delivered on that in the context of the first half interim production payment that they've put in place. So I think getting -- as we conclude the discussions we're having at the moment about long-term fuel security package, I think we can get confidence on the outcome of that potentially to move forward with the capital return even before it's implemented. But obviously, we need to see the details.

Your next question comes from David Errington with Bank of America.

In your presentation, if you go to Slide 13, I mean the same question has been asked to -- of Ampol and everyone basically in the industry. But clearly, there's a couple of really positives there with that waterfall. The $22 million Liberty Oil benefit, I mean that was really pleasing. And then you've got the recovered retail margins of $124 million that more than offset significantly the Alliance volumes of $42 million. Now my question on this is, how much is that a structural recovery? Because when you look at that benefit, the $124 million over $42 million, it's a $80 million net benefit. How much is that a benefit relative to previous market inefficiencies? In other words, the market was too low in terms of margin compared to how much do you think you're borrowing and might need to get back in '21. Now I know you don't want to give forward-looking statements, but the #1 question we're all asking in Retail in '21 is when volumes pick up, will you be able to keep that retail margin? Or will you have to give some back?

Yes. So probably -- there's 2 parts of the question. I think -- obviously, we're coming off as a low base in 2019. And you can see that quite markedly when you look at Slide 22, which shows -- which set out the performance of the Non-Refining business since 2015. You've got a big step-up in 2016 as we started to adapt our strategy with the Alliance. And then from there, you've seen steady year-on-year growth with a decline in 2019 where we recently -- we obviously took control of fuel pricing and had a very difficult time in the market as pricing strategies were adapted. And 2020 has seen a return to the trajectory that we saw from the years prior. So there's a bit of a reset there from the year before, which I feel is bankable. But if you think about 2020, there was also a period where we had rapidly falling oil prices and quite a benefit to the sector from that as well, which may not be repeatable in 2021. But offsetting at the same time, we've also, I think, got some reason to be optimistic about retail volumes continuing to increase through the course of the year, too. So I think you've got to think about that factor playing into it as well. But the best thing -- I mean the great news for us as a company, David, now is that we have all the levers, right? So -- and we have the ability to set pricing and manage sales outcomes and drive our business much more directly than we were able to before we renegotiated the arrangements with Coles, and that has served us incredibly well through 2020. And I have no doubt it will serve us very well in this year coming and the years ahead as well.

I'm glad you mentioned Slide 22, Scott, because that's where the next question where I was going. When I look at that slide -- you probably guessed that. And you probably know where I'm going with the question. I probably don't even need to ask it, just by highlighting it. Your underlying performance in terms of what is your controllables is pretty strong, this result. I mean really, you've done extremely well. You've got to be pretty pleased with your management team's performance. And that slide, given that we've been in a very COVID-impacted year in '20, I'm talking the light blue line, is incredibly encouraging. When you look at -- you potentially got the recovery in Commercial over due course, et cetera. You got Retail that you're in control of. Yes, you might -- there might be some retail margins there that you've got volumes coming through. You've got Liberty Oil that came through. There's a lot of good things going on in that light blue line. I got to tell you, Scott, that dark blue line doesn't encourage me. And it just -- I know that you're talking actively with the good minister and all the rest of it. But as a shareholder, he's going to have to come up with something pretty sweet, a lot of sugar, to get me across the line, that Refining there. As I look at your light blue line, it's a good line. But the dark blue line, well, black oil is probably -- it's black and it should be black, not dark blue. Because it does look to be a black oil to me.

Well, I could have done it in red. That might have been helpful. But -- so you see it as a problem. I see it as an opportunity, David.

Oh, yes. Please explain.

No. I think the point of this slide is to go -- is to show, look, the Non-Refining business, as you say, has, I think, performed really well over a long period of time. And yes, some challenges in 2019 but recovered well from that last year despite last year being a pretty unique year. And still some -- I think some recovery in Commercial are down the track as well. So I think there's a lot to be positive about in terms of the underlying Non-Refining part of our business. And if you turn that Refining number from the negative 212 cash to a positive number again, which can come through returning to full production, the -- getting the right package in place with the federal government to get long-term sustainability and maybe some improvement in refining margins over time as the global economy recovers, then suddenly you've got a really good -- you're selling a very different business than what we saw in 2020 going forward. And it doesn't take much to turn that around.

Yes. I mean I must admit, it is cash thirsty...

And obviously, if it doesn't turn around, then you change your business model and that Refining segment disappears.

So it is cash thirsty, though, isn't it, Scott? I mean that's the problem. I mean you got more CapEx this year. You've probably got $50 million to $60 million every year of cash flow going out in CapEx.

No, no. Dead right. And that's why the fuel security package is really a critical piece of the jigsaw for Refining. If we didn't have the announcement last year from Minister Taylor and Prime Minister Morrison and the interim support package in place for the first part -- half of this year, we probably wouldn't have a Refining business. So I think we have -- we obviously take a lot of confidence from that. We've still got to deliver on it. I get that. And it's -- but I've said before, I think the discussions are progressing in the way that I was hopeful they would. And we're not -- we should have, I think, a clearer direction within the next few months. So I think it's worth -- it's been worth -- it's been worth continuing. I think it has the potential to return to a positive contributor, which is -- I think will really turn around the performance that we saw in our group business last year.

It's a swing factor. Well, well done on the light blue factor, Scott and Jevan. Let's hope that, that black number -- I know it's not black, but let's hope that that's a big swing factor and can at least get back to neutral.

Yes, agree.

Your next question comes from Shaun Cousins with JPMorgan.

Just a couple of questions on the Geelong Energy Hub. You've quantified sort of CapEx of $250 million to $300 million and FID in, say, mid-2022. Can you just sort of talk about, will Viva incur all or part or none of that sort of CapEx and over what time horizon? And maybe how do you see the Geelong Energy Hub positioned relative to what AGL are proposing but then also relative to what's going on in Port Kembla and if they cross over in the same market, et cetera, please?

Yes, sure. I can maybe kick off, Shaun, on the capital components, and Scott will no doubt make some comments around the competitive position of the facility as well. And I think from our perspective, we've put the $250 million to $300 million out there in the context that that's the approximate range that we expect will be required to construct a facility of that nature. I think you're right on the fact that we've got a couple of pretty credible partners signed up. We're progressing on the opportunity both on our own and together with those partners. And there's the opportunity for us to work with them in a way that gets an appropriate return for a project of that nature. And that might mean sharing the capital investments, I mean, looking at different models. And so as we get closer to a final investment decision, we'll start to flesh those things out in a little bit more detail. I think for now, as you say, you shouldn't necessarily assume that we're going to need to spend all that money ourselves. And in the event that we do, there's obviously return hurdles that we'll be looking to, to get us comfortable with taking an FID position when the time comes. Again, it takes time to construct a facility like that. So it's not something that we'd outlay all in one go. And it would happen over a couple of years, obviously.

Right. And how it's positioned, please, Scott, this piece?

Sorry?

And sorry, how do you think Geelong stacks up relative to sort of Port Kembla, which seems a little bit more progressed than AGL, which is not as progressed?