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

Good morning. My name is Scott Wyatt, the Chief Executive of Viva Energy Australia. On behalf of the executive team, I want to thank you for joining us for the Investor Strategy Day today. In Australia and around the world, we are seeing pandemic restrictions relaxed, borders reopening and economies kicking back to life. The year ahead holds a lot of promise, and we are excited about the opportunities for recovery and further development of our strategies for long-term growth. Our business is well positioned to benefit from a resurging economy, and we look forward to sharing our plans with you and to answer any questions that you might have. Although some interstate and even international travel is now possible, we are conducting this as a virtual event so that we can bring as many people together as possible from Australia and around the world. This is event will be recorded and will be available online at the conclusion, including the presentations and other material that we will use during the day. Cameron Sinclair, our Head of Investor Relations, will be facilitating the event. So if you have any issues with accessing the technology, then please reach out to him. Before we begin, I would like to take a few moments to acknowledge country. We are joining you from traditional Wurundjeri land, which forms part of the Kulin nation and what we generally refer to as the Greater Melbourne region. I acknowledge that Wurundjeri people's enduring connection with this land and pay respect to their elders, past, present and emerging. I extend that respect to any aboriginal and Torres Strait Islander peoples that are with us today. Joining me today are my executive team. Together, we will introduce the company, the core businesses, which we lead, and we will share our strategies to grow and transform the business over the years ahead. While the pandemic presented many challenges for our business and our people, I am particularly proud of the way we successfully navigated this period. We have delivered strong financial and operating results despite the circumstances and have prepared the company well for the future. Now we all look forward to sharing our strategy with you today. Today's agenda will begin with a brief overview of the company and our strategic objectives, followed by a deeper review of each of the 3 key businesses. We will share our approach to new energies, our commitment to reduce emissions in our operations, and conclude with an overview of our approach to deployment of capital. Now we have, of course, scheduled time to answer your questions. So I really do encourage you to submit these in the Q&A function just as soon as you are ready. Cameron Sinclair will receive these and submit them at an appropriate juncture. We really do look forward to hearing what's on your mind. Looking at our objective for the day, it's to share our confidence in the outlook for the company. We do recognize that we are at the beginning of a long-term energy transition that is necessary to reduce emissions and will ultimately impact demand for some of the products that we sell. We intend to actively participate in this transition, but also leverage our diverse positions to grow in other areas where we have proven success and see new growth opportunities. During the course of the day, we'll provide more insight into the unique strategic positions that we have in a wide range of consumer, commercial, industrial, energy and nonenergy markets. This diversity has proven to insulate earnings from different sector cycles, but it also provides many different lower carbon growth pathways where we have credible capability and the experience to succeed. Looking to the future, we intend to maintain a strong focus on outperformance in our traditional business, while at the same time leveraging this diversity to create value in new growth areas. We are confident in both the near- and long-term outlook, and look forward to sharing this with you over the course of the day. Now before we explore this further, let me touch on our operational and safety performance, which, as always, is our top priority. Throughout the pandemic, we have maintained a steady safety focus and support of our people. We have enjoyed high commitment from our workforce who have worked hard to keep COVID out of our workplaces and of course, maintain supply to our customers. We have excellent voluntary support for vaccinations, and we expect to be well above 90% double-vaxxed by the end of this year. While our overall safety performance remains strong, we have seen an increase in low-level personal injuries this year as we have resumed maintenance programs and caught-up on major maintenance and construction activities. It has been a really busy year across all our operational sites. And as a consequence, we have seen a higher level of trips, falls and manual handling injuries, which, of course, has been disappointing. Nevertheless, I am pleased with the way our operational leaders and our workforce have responded, and we maintain a strong commitment to safety across the workforce with 95% of our people believing that their team is committed to always operating safely. Our track record and our commitment to safety is highly valued by our customers, and this will continue to be a key differentiator as we pursue new opportunities into the future. Now for those of you that are not familiar with our company, let me just spend a few minutes providing an overview of our business and our performance. Viva Energy consists of 3 relatively unique and diverse business units. We have been operating in this country for 120 years, previously as Shell and now as Viva Energy. And today, we supply approximately 25% of the country's liquid fuel requirements. Throughout that long history, we have established significant infrastructure positions, deep relationships with our customers, strategic partnerships with leading companies in their fields and a reputation for operating safely, reliability and with integrity. Our purpose is to help people reach their destination, and our employees, contractors and partners do that with pride, 7 days a week, 24 hours a day. Now taking each business in turn, let's look firstly at our Retail business. Our fuel and convenience business is underpinned by a nationwide network of more than 1,300 Shell and Liberty branded fuel and convenience stores. We carry the Shell brand under a long-term license agreement, and we have the largest single-branded retail fuel and convenience network in the country. We also have a long-term relationship with Coles, one of the largest grocery companies in Australia, who operate our stores and provide the convenience offer. Our commercial business has significant exposure to many of the key commercial and industrial sectors, which drive the Australian economy and deep customer relationships with many of the most successful large and small companies across the country. Now beyond traditional bulk fuel, such as diesel and jet, we manufacture and supply chemicals, bitumen, low-sulfur fuel oil and specialty petrol and aviation fuels to meet the unique needs of Australian businesses. We believe we have more reach into more segments than any of our competitors, and this is a key differentiator. Our Energy Hub has Geelong Refinery at its heart, but also includes other energy projects that leverage this strategic asset within one of the largest and fastest-growing states in Australia. Supported by a long-term contract with the federal government, we expect to continue refining towards the end of the decade, and we'll upgrade the refinery to meet new fuel standards, which will support the introduction of lower emission Euro 6 vehicles from 2024. We are also exploring opportunities to integrate biofuels and synthetic crudes from waste, which we believe can contribute to the broader energy transition in a meaningful way. Now beyond our refinery in Victoria, all our businesses are supported by a network of import terminals, inland depots and a nationwide logistics capability. Geelong Refinery is connected to Melbourne markets by 2 owned and operated product pipelines, which continue through to Melbourne's International Airport. Crude oil is sourced from domestic oil fields and internationally through the Vitol trading network who also supply our imported refined product requirements. Vitol is one of the largest independent energy traders in the world, representing around 7% of global oil flow. They have a significant presence in the Asian region, which gives us deep access to markets, scale and expertise that would be difficult to replicate independently. Viva Energy owns and operates the majority of our infrastructure with access to over -- sorry, more than 1.1 billion liters of storage capacity. We are an active trader with other participants in the Australian market, and we expect to benefit from the introduction of minimum stockholding obligations, which come into place for mid-2022 and then further in mid-2024 with sufficient storage to meet new commitments and participate in a market-based trading mechanism should this be developed. Now turning to our performance. Viva Energy has a strong track record of reliable cash generation. Although our refining business was naturally impacted by the severe reduction in domestic oil demand, weak global refining margins and planned major maintenance work at our site, the cash losses in this part of the business last year were offset by strong retail performance and our resilient commercial performance, especially given the impacts of border closures on domestic and international aviation demand. Under the circumstances we faced, the performance of our business through these challenging times, I believe, was remarkable. This underscores the resilience of our business and the value that comes from diversity, with a downturn in one part of our business, buffered by outperformance in others. Our exposure to international markets through refining, consumer markets through retail and a range of commercial industrial sectors really does serve us well, both now and into the future. We finished 2021 with a stronger refining business, now underpinned by the federal government fuel security services payment, a strong recovery in retail fuel volumes as state home restrictions end and the prospect of a recovery in aviation as borders are reopened. The federal government fuel security services payment provides direct financial support when refining margins are low, reducing the downside risk while retaining the opportunity for outperformance when refining margins are strong. This really does transform the outlook for the refining business, which we believe will support more reliable and attractive returns to our investors over time. Through these challenging times, we have maintained a strong balance sheet and a disciplined and investor-friendly approach to capital management. The divestment of our nonstrategic stake in Waypoint REIT immediately prior to the pandemic provided a valuable buffer against the unknown impacts from COVID at that time. Of course, once the impacts were more certain, proceeds were promptly returned to shareholders in the form of a capital return, special dividend and on-market share buybacks. Over the last 4 years, we have proudly returned over $950 million to our shareholders. With the introduction of the fuel security services payment and the changed outlook for our refining business, we have adapted our dividend policy to better reflect the performance of our refining and nonrefining businesses. We anticipate that this will provide more reliable dividend returns to our investors based on the performance of the nonrefining business with, of course, opportunities for outperformance when the refining business delivers superior earnings in the future. We've retained a strong balance sheet with a position to invest in future growth opportunities, and Jevan, of course, will talk more about this a bit later in the day. Let me now turn to our strategic objectives. There has been much said about the energy transition and the impact of new energies on demand for traditional fuels. We do understand the need to reduce consumption of fossil fuels, and we, of course, will support efforts to improve efficiency and the commercialization of renewable energies in our transport markets. We have an incredibly important role to play in providing the energy that people need today as well as the energies of the future, and our strategies will very clearly focus on both. Our outlook for Australian fuel demand considers various assumptions, such as electric vehicle uptake, population growth, mobility and economic demand in key fuel demand sectors. We have established a range of potential scenarios, including high and low fuel demand drivers to determine possible outlooks through to 2030. This, of course, is our house view, with the base case reflecting an electric vehicle adoption consistent with the recently announced federal government Future Fuels and Vehicles Strategy. Consistent with these projections, we are already seeing a strong recovery in fuel demand as stay-at-home restrictions end and borders are reopened. We expect a recovery to pre-COVID levels by 2024. And under the various decarbonization scenarios, we anticipate fuel demand to remain strong throughout this decade and well into the next. Petrol demand is likely to be most impacted from the introduction and further adoption of electric vehicles in time. And this will, of course, mostly play out in the retail businesses. Retail operators with the best networks and the strongest convenience offers naturally have the best prospects in this environment. And we believe we are well positioned in both areas through our quality retail network and our partnerships with both Coles Express and Liberty convenience. As mentioned earlier, we have an advantage position in each of our core businesses. We aim to leverage these positions to extend into new growth areas and broaden our focus to take advantage of emerging opportunities. In the future, we expect these businesses to look very different than they do today, and this is very much reflected in the strategies we pursue and the decisions that we will take. Over time, we aspire to transition to a fully integrated fuel and convenience retailer. The arrangements with our current retail partners continue to serve us very well. But as we approach the end of the decade, we believe that full exposure to the convenience market will become increasingly important as mobility and convenience needs evolve. This will significantly inform our decisions when the current convenience partner arrangements conclude. Our commercial business already supplies a range of energy and nonenergy products and services to a diverse range of commercial and industrial sectors. As I mentioned earlier, this diversity has served us well through the pandemic. And looking forward, it provides many new growth pathways with our customers, which we will continue to explore. We intend to support our customers to reduce emissions and progress their own energy transition as well as continuing to meet their current energy needs. We see this bundling of traditional and new energies as a critical component of any energy transition, and we are well placed to leverage this opportunity with the strong position that we have in the key sectors we operate within commercial. With the future of the refining business now more certain and certainly less volatile, we have a much stronger foundation to progress the further development of our site at Geelong into an Energy Hub. The LNG terminal project is progressing well and is now the leading project in the state. We see an opportunity to develop hydrogen production and refilling facilities to service back-to-base operations and then leverage our retail network to establish refueling locations across key transport routes such as Melbourne to Sydney and on to Brisbane. Beyond the refinery, we have significant and strategic pipeline terminal and logistics infrastructure positions around the country. Just like the development of the Energy Hub at Geelong, we will explore opportunities to leverage and maximize the value that underpins these strong infrastructure positions while continuing to support our evolving retail and commercial businesses. Now each of our businesses will, of course, follow their own strategic pathway. But across the group, we aim to take a consistent approach. We see continued growth in our traditional markets, with opportunities to outperform by being the most efficient operator with exposure to the broadest range of earnings opportunities. As I've already mentioned, Viva Energy has privileged positions with quality infrastructure, deep customer relationships across a diverse range of commercial segments and a retail network that frankly is practically impossible to replicate today. We are well positioned to outperform our competitors, and this will remain a ruthless focus of the company. At the same time, we see opportunities to leverage our diversity to establish new energy and nonenergy growth pathways. It might surprise you, but 40% of our commercial earnings already come from products and services other than diesel and jet, and we believe this is just the beginning. Our strategic positions across all our businesses provide scope to grow, and we believe we can deliver more than $50 million of earnings from these sorts of new opportunities over the next 3 to 5 years. In pursuing this goal, we anticipate that we will invest and acquire capability where this can accelerate or extend our growth opportunities. We do have a strong balance sheet, and we have capacity for reinvestment, and we will look to deploy this in areas which support future growth without compromising our discipline on delivering strong commercial outcomes. Now look, in concluding, let me say a few words about our people. Viva Energy has significant scale in all our markets, but we're small enough to be nimble, responsible -- responsive and stay in touch with our customers. We know each other, we work well together, and everyone is committed to our future success. I like to think that we operate as if we are all owners in the business, and our purpose, values and behaviors underpin this culture. I'm incredibly proud of our company and for what we have achieved together, especially through some of the most challenging times over the last year. We are collectively excited about the future and the strategies we are pursuing, and I'm confident that we will continue to achieve great things together. Now as we move on, let me hand over to Megan Foster, who leads our fuel and convenience business. [Presentation]

Good morning, all. My name is Megan Foster, Executive General Manager of our Fuel and Convenience Retail business for Viva Energy. I joined the company nearly 3 years ago, and I'm really energized by what we have been able to achieve over this time, of keynote, the transitioning of the Alliance Retail Fuel offer from Coles to Viva Energy and the development of our Liberty Convenience joint venture. I'm really excited by the direction of the Retail Fuels and Convenience business with our network well positioned for the future. Viva Energy has more than 1,300 Shell and Liberty branded sites across Australia and the largest single-branded company-controlled network operating under the Coles Express Alliance. Our network has been established for more than 90 years, and it's a familiar and welcome feature on highways, suburban streets and in our regional centers. We are a significant participant in the fuel and convenience business with strong brands, best-in-class partners and an exciting future ahead. The fuel and convenience market has a strong record of year-on-year growth, which accelerated during the pandemic as people shopped closer to home. Our stores are close to our customers and well positioned to meet the needs of the people on the move. The range of offers has expanded to meet these evolving needs with considerable room to extend further, given both local and overseas experience. Our retail strategy aims to build both fuel and convenience sales, and I'm really pleased with the progress we are making. As Scott noted earlier, our strategic goal is to transform our retailer network and branded fuels business into that of a leading fuel and convenience retailer. There are near-term opportunities for us to improve our retail network, efficiency and developing and acquiring new format stores, managing our stores with limited long-term potential and improving our overall fuel and convenience offers to lift sales across our core network. The renegotiation of the Alliance in 2019 has helped us improve fuel price competitiveness. And we will continue to invest in our premium brands, which drive differentiation value across all our networks. We've had good results from the refurbishment of 137 Coles Express stores over the last year, and we'll continue to support our partner, Coles, in improving the convenience offer and growing store sales. We see considerable opportunities to continue to grow our retail outcomes in the years ahead. Over the longer term, we will meaningfully participate in the development of alternative fuels, such as hydrogen refueling and electric vehicle recharging, and prepare for transitioning to a fully integrated convenience retailer when our current partnership arrangements conclude. We've seen considerable growth in convenience sales through the pandemic, and are really excited about the opportunities that will have moved from changing customer ability and convenience needs. Viva Energy has the largest single-branded company-controlled network in Australia, with 716 stores operating under Coles Express brand. Our partnership with Coles began nearly 20 years ago and has been very successful in delivering a competitive and compelling convenience offer. Under this partnership, Coles Express operate the stores and Viva Energy manages the fuel offer and sets the retail pump prices. In addition to the Alliance network, we also have a 50% share in Liberty Convenience. This network has 92 sites, operating mostly larger format convenience stores, with a skew towards regional and highway locations. Our joint venture partner has aspiration to grow 150 sites by the end of 2024, and we are really excited about the performance of the convenience offer and the potential growth that can come through this growing retail channel. Our owner dealer platform is typically a family-owned business that supports local communities, operating either under the Shell or the Liberty brand. These sites support our national network coverage. We've had great success in expanding Shell V-Power availability through this network in the past few years. This has been aided in -- aiding in our share growth in our premium fuels. Fuel retail demand is remarkably inelastic to prices and economic conditions, growing 2% annually prior to COVID, and largely as a result of increased car ownership and population growth. Sales have obviously fallen as a result of extended periods of lockdown across the nation. However, traffic is now quickly recovering as stay-at-home restrictions and internal borders are reopened. Like fuel demand, Retail fuel margins have also grown consistently at an average of 3.8% per annum since 2011. Recent variations in margin reflected considerable movements in oil prices through the pandemic, both up and down, which supported margins in 2020 and compressed margins in 2021. Overall, the Retail business delivers relatively consistent and reliable earning outcomes, and an important contributor to the broader Viva Energy Group. Since taking control of Retail fuel pricing from Coles in 2019, Viva Energy has focused on improving our price competitiveness across the Alliance network, and growing our network with both Coles and Liberty Convenience partner. This has helped deliver strong growth in our retail business, with market share increasing to 19%. The Australian convenience market has demonstrated strong, consistent growth, averaging 3.2% per annum over the last 7 years and 5.1% in 2020 as people shop closer to home during the pandemic. The key growth markets were food-to-go and take-home food segments. But overall, all parts of the convenience business performed really well. The trend of shopping locally has continued well into 2021, and the pandemic has been helpful to introduce many new customers to our offer. It is important to know that convenience drives a high frequency of customer visits, and has grown a proportion of visitations on a shop-only mission. This will continue to grow as we further develop the convenience offer, providing a considerable growth opportunity for our retail businesses. Coffee is a key driver of repeat visits, and Coles Express have invested heavily over the last few years to improve their offer, winning a number of customer awards. Coles Express has continued to outperform the market, securing a circa 13% share of total convenience market. This outperformance was driven by strong food-to-go, growth in hot beverages, competitively priced grocery items and tobacco. The fuel and convenience market landscape is evolving from traditional fuel, tobacco and confectionery offer of old. Energy differentiation with premium fuels where we outperformed the market and in future will include electric vehicles and hydrogen for heavy vehicles. There are many opportunities to differentiate our energy offers from our competitors. And our partnership with Shell provides valuable learnings from other markets, which are evolving much more quickly than Australia. As I mentioned earlier, hot beverages and food-to-go have some of the fastest-growing categories in the on-road segment. The investment in coffee by Coles Express is a good example of how to drive sales and preference in this segment. The much broader restaurant style food in the Liberty Convenience business is tapping into a diverse sizable market, having good success in many locations. The Destination segment is relatively new and evolving, but has potential to leverage the convenience location and easy access of our stores, assessing a whole range of products and services. Creating Destination offers will attract new customers and increase store time of the customers seeking to charge electric vehicles. Building a direct connection to the customer and driving loyalty through personalization by digital offers and communication will be the key to driving growth in convenience and fuel. Through our 20-year partnership with Coles, we drive loyalty through the largest loyalty program in Australia, Flybuys. With over 8.6 million members, we benefit from not just being part of the program, but also by the leverage we obtain with the 20 other partners that form part of the Flybuys alliance. In addition to Flybuys, we drive customer approach [indiscernible] with the docket redemption program we have with Coles supermarkets. Customer research indicates that discount dockets is a key determiner in choice of fuel retailer. This is a key advantage over a majority of our competitors in the market. In addition to Flybuys and shopper dockets, we've also been building a substantial partnerships program. Building long-term strategic alliances with complementary organizations and their membership bases has increased loyalty and patronage. Carsales, Transurban, G'day Parks and the AFL are just a few partners to know. Another loyalty driver, of course, is our Shell Card business, which drives significant B2B volumes into our retail network, and we continue to grow and transform the Shell Card business to capture greater share of transport and small and medium enterprise segment. Shell is a globally recognized brand that just ticked over 120 years in Australia. Over this period, we have delivered a consistent fuel offer trusted by our customers. In a market full of disruption, the Shell brand is a welcomed and trusted icon consumers can rely on. We continue to invest heavily in the brand across advertising and sponsorships with a key focus on our premium fuels offer, Shell V-Power. This investment translates into increased share of voice, improved brand metrics, but most importantly, increased volumes in both our standard and premium fuels. The Liberty Convenience brand continues to grow in market with an increased footprint and localized brand marketing. The Liberty brand is building strong loyalty in the trucks and trade business with superior diesel facilities, amenities and food and beverage offers to suit this segment. With both brands across different platforms, this enables us the flexibility to truly target and capture different customer segments across [indiscernible] and convenience market. It's important that we continue to future-proof our sites to ensure we can service the customer needs of today, but also into the future. This requires us to continually reinvest in the customer proposition. A major network refurbishment is underway, which will continue to support Coles Express in improving their convenience offer and growing store sales. In conjunction with Coles Express, we have now refurbished close to 140 shops in the last 12 months. The focus of the refresh has been on improving the customer experience in-store with new fixtures, lighting, improved coffee offer and refresh point of sale being the focus. As Scott noted earlier, the coffee is a key reason for repeat customer visits. And Coles Express have invested heavily over the last few years to improve the offer, and have recently been voted best coffee in the convenience market. You can even buy the same coffee beans at your local Coles supermarket. The results to date of the refurbished sites have been tremendous without seeing much improved shop and fuel performance. Given the strong success of this program, both Coles Express and Viva Energy have agreed to the next phase of sites to be refreshed in 2022. In addition to the shop refresh, we've been investing in the forecourt to drive increased fuel throughput, new pumps, increased products, focus on premium fuels and diesel. As an example, we are now offering V-Power in Tasmania. As we look to the future of our Retail sites, part of the forecourt optimization planning will require us to address alternative fuel add-ons. As highlighted earlier, the new Liberty Convenience sites have larger stores with high proportion of freshly prepared food and Barista Coffee. With larger forecourts, we've improved these facilities to attract more trucks and trades. We'll continue to add adjacent offers to create Destinations on the sites, like large quick-service retail offerings. The overall customer response to all of site refresh program has been really positive and will help lift our retail performance into the years ahead. As a large retail business with over 1,300 sites all across Australia, we are continually evaluating our network performance to ensure that we are delivering the best offer to Australian motorists. Our immediate focus is to optimize the Alliance network with an emphasis to increase fuel throughput and to grow the Liberty and dealer-owned network, ensuring we maintain excellent network coverage. We aim to focus on expanding the value proposition of our network and catering to a broader customer segment, which will be achieved predominantly through the Liberty Convenience network. Rationalizing some of our older and limited long-term potential sites will support our site growth ambitions and allow us to develop new market-leading convenience stores and forecourts with improved fuel product offerings. As these sites come up for lease renewal, we retain the opportunity to move them across to our dealer network, ensuring that we retain a strong network coverage. Our Retail business has consistently demonstrated good cash generation over the last few years despite the immediate challenges resulting from the pandemic. We had the largest single operator retail network in Australia built over many years, which would be impossible to replicate today. Not only do we have a superior retail network position in terms of location and offer, but we also have one of the most recognized fuel brands in the world, Shell. In the near term, our Retail business is well positioned for recovery as fuel demand improves, following the impacts of COVID and statewide travel restrictions. Pleasingly, we've seen recovery off the back of reduced restrictions in Victoria and New South Wales, and we really look forward to seeing more motorists out there on the road. During the pandemic, we have seen significant growth in convenience sales as customers focused on shopping locally. Pleasingly, this trend has continued well into 2021, reflecting changed consumer behavior. I'm really encouraged by the resilient performance of our Retail business, especially during the pandemic, and look forward to our continued strong performance as we enter a more certain period. I hope you share my excitement about our fuel and convenience business. Our vision is to create the highest performing and most efficient fuel and convenience retail network in Australia. Over the next decade, we expect to obtain full exposure to convenience market, being important to retail business as mobility requirements change and convenience needs further developed. Before I talk about the future state of the business, I think it's worth noting the near-term opportunities that exist within our business. We are now entering a period with more certainty, which will see us deliver quick recovery in our Retail fuel volumes, particularly within the Alliance network, which has been more impacted than our Liberty Convenience and dealer-owned channels. Outside this recovery, we'll continue to build a broader network through our dual premium and value-led offers. The steps we are taking to rationalize and refurbish our network will prove in improved customer experience, leading to higher sales, both across the shop and the pump. Improving our customers' convenience experience will prove to be valuable well into the future as the convenience markets continue to expand. The Liberty Convenience channel has delivered over 90 new sites since the joint venture was established in 2018, and we have strong ambitions to grow this network to 150 sites by the end of 2024. The Liberty network is a unique value-led proposition and tailors its convenience over to its local customers. We are pleased with the performance of Liberty Convenience offer to date and see excellent potential growth within this channel. Embedded in our network platforms is optionality for significant growth in the convenience market with the Liberty Convenience joint venture concluding in 2024 and the Alliance agreement in 2029. The possible integration of Liberty Convenience business presents an excellent opportunity for us to develop our internal capabilities associated with running a fully integrated fuel and convenience business, and allows us to gain increased exposure to the growing convenience market. By the end of the decade, our Alliance agreement with Coles Express will come to an end, and we'll have the option to take back the network. We will assess both these opportunities to take full control of the platforms and associated exposure to convenience as and when the agreements conclude. With our national retail footprint, we have a distinct advantage with the introduction of public charging of electric vehicles as this market grows over time in our existing truck stops network to support the introduction of hydrogen refueling for heavy vehicles in the longer term. In the near term, we're also progressing the potential development of a rooftop solar solution to support renewable energy consumption, and also exploring a retail consumer carbon credits plan. In conjunction with our passionate and engaged Retail team, I am truly excited to lead and transform our Retail fuel business into a market-leading, fully integrated convenience retailer over the decade. I'll now hand over to Denis to showcase our commercial and industrial business. [Presentation]

Good morning, everyone. My name is Denis Urtizberea, and I have the immense privilege to lead the Commercial businesses at Viva Energy. Welcome to B2B, the place to be, as we usually joke in our organization. What a fantastic testimony from our partner, Alliance Airlines. I really love this video because it represents so well what we are, a customer-driven organization. It also highlights what we believe in, partnerships, what we have gone through in the last 2 years, resilience and discipline to deliver success, and the transformational agenda we have ahead of us moving from traditional fuel supply to energy solutions development that are more sustainable and environmental. For those who are not so familiar with our business, our commercial activity consists of a diversified line of products, including ground fuels, marine fuels, jet fuel, lubricants, bitumen and chemicals. These support a large portfolio of businesses, delivering solutions to marine, aviation, mining, oil and gas, construction, transport and agriculture and a number of smaller industrial sectors. There are many reasons to believe in our commercial business. Firstly, and most importantly, we are a passionate people business that delivers customer-driven agenda. We believe in true long-standing customer relationships that deliver mutual value in good and bad times. That sounds pretty common. But would we have 17 out of our 20 top customers having business with us for more than 10 years if it was not a key characteristic of partnering with us? That is a very solid platform that I believe is critical to successful B2B activity. Another reason to believe is our great diversity of activities that has proven to be a successful strategy over the last 2 years. This diversity delivers two major advantages in the years to come: one, it provides resilience to sector cycles; and two, it provides a wider platform for growth opportunities. This valuable diversity is supported by a superior nationwide supply chain backed by international capability of Vitol. This has enabled us to proudly develop leading market positions in more segments than our traditional competitors. If you are not totally convinced yet, we are delivering a unique value proposition to our customers through the integrated support with refining at Geelong across a broad range of specialty products. Again, these demonstrate additional resilience, generates incremental value and a greater local content that becomes increasingly important in some part of our activities. So what is our strategic approach? The video introducing this session summarizes it pretty well: the challenge we face; and the transformational agenda that is paving our way. Firstly, we will continue to outperform in our core businesses. In particular, we will leverage the recovery of aviation and cruise businesses with a focus on a value-led agenda. We'll expand our regional coverage in transport and agriculture sectors, and we'll always leverage our infrastructure position and keep a strong discipline to optimize our supply chain costs. In parallel, we'll continue the transformation of our commercial businesses by leveraging our capabilities and customer relationships to create new growth pathways. We are becoming a solutions provider for our customers evolving energy needs. We see this agenda developing around two main things, firstly, hydrocarbon solutions, because our customers will continue to use our traditional products for quite some time, given the continued economic growth in some sectors and fewer fuel substitution options available. As a trusted adviser, we no longer just supply fuels, but we create solutions that includes some engineering design, supply and implementation of equipment, provision of hydrocarbon products, technical advice and in used condition monitoring. Those services are already developed primarily in resource and transport sectors, which we will expand across the rest of our portfolio. Our second theme is carbon solutions, and reflect increasing need and/or desire from our customers to reduce their carbon emissions. And we believe we have a major role to play on that front, but we'll come to -- back to that a bit later. We will deliver this steady growth strategy by reinforcing the capabilities of our teams and by developing new partnerships. But we also plan to acquire capability to accelerate this agenda by maximizing our participation in some value chains, offering new sets of services in complement of those that I've already mentioned, or even targeting new adjacent commercial opportunities. I said earlier, we have developed market-leading position in a number of sectors. Let's review some of them. Resources is a key industrial segment. Pre-COVID, the resources sector was growing at an average slightly above 2.5% per annum. Our resilience in this sector is based on key strength, a national supply chain servicing all key mining regions across Australia. This gives us the opportunity to benefit from a balanced portfolio of customers, just as iron ore in the Pilbara, coal in this -- on the Eastern Coast, gold in Kalgoorlie region and many other minerals across the country. Our performance in this sector does not rely on only one particular commodity and it's relevant cycle or any one customer. Our strategic partnerships with Vitol and Shell, combined with the expertise of our teams on the ground, enable us to deliver world-class technical and supply chain capabilities. And we do all of this while respecting and adhering to the highest safety and environmental standards. The development of further services, in particular, in the carbon solutions domain, will be of paramount importance in the future, and we are already active on that front. Another great example of our resilience during COVID was from our Marine business. And again, here, our strength is based on the diversity of the segments we serve, from oil and gas up north to containers and shipping and crews in Melbourne and Sydney, ferries, towage and coastal shipping. Viva Energy is also the primary supplier of marine fuels to the Australian Defense Force, broadly operating HMAS Cairns defense fuel installation under long-term agreement with the commonware. The container in oil and gas segments have continued to perform well despite the challenges from pandemic, with our cruise business being the most challenged. Viva Energy traditionally enjoys strong positions across the marine fuels industry, and the eventual resumption of the cruise sector represents a good opportunity for growth and recovery in the near future. The transition to new fuels has also started with the introduction of our locally manufactured very low sulfur fuel oil 2 years ago, and there is a potential to support further transition with LNG refueling through our Geelong Energy Hub. The aviation industry has undoubtedly been the most impacted segment in our portfolio during the pandemic. But the last 2 years, I've especially highlighted the key strengths that support our market position here. We serve our customers in more than 50 airports and airfields across the country with into-plane capability at all major airports. General Refinery is the only manufacturer of Avgas in Australia. Our premium Jet Valet and Fuel2Sky offers provide our customers with faster and convenient refueling. Our close relationships with customers, in particular, in the general aviation space has enabled us to better support them in those difficult times. There is good recovery to happen in this segment over the next 2 years as boarder reopen with the opportunity for all of us to travel again for business and for leisure. Emission reduction is a key challenge for this industry, given the difficulty of suitable fuel substitutions. Industry discussions to date are focused on sustainable aviation fuels, hydrogen or other energy sources. It will take time for a solution. And this is the reason why we launched a new offer in the interim to give our customers the capability to offset some of their carbon emissions. Viva Energy was the first company to launch certified Carbon Neutral Jet A1, and as you saw in the introductory video, has recently supported an inaugural flight with Alliance Airlines. The continuation of our refining activity at Geelong is a fantastic outcome for our integrated specialties business. Being the only manufacturer of bitumen and hydrocarbon solvents in Australia with a strategically located supply chain across major population centers on the East Coast, we have developed long-term partnerships with key construction companies and chemicals resellers. By maximizing our manufacturing capability, we will further grow both refining and marketing earnings in the next 2 to 3 years. I talked about a number of segments for which we have developed a market-leading position. Agriculture and regional Australian market were not part of our traditional strength, but we believe there is plenty of room for improvement, and our market position is changing very fast. Liberty Wholesale reinforces our supply chain capability with their significant depot network, combined with a local sales force, supported by company-owned transport fleet. The development of this new sales channel has created new route to market potential and open opportunities to develop strategic partnerships with local distributors to support regional markets across Australia. The transport segment is also growing through active prospecting and acquisition of new customers. Supported by access to the Shell and Liberty branded retail network, we shall account for customer on-road refueling requirements. All the sectors we have mentioned will face a similar challenge, reducing their carbon intensity and emissions. We believe we have a key role to play here. We will actively collaborate with our customers, and we are already doing so to support their decarbonization agenda. We will build new earnings from emerging energies and low carbon options. To that end, we are accelerating the creation of new capabilities. We are investing in dedicated people resources. We recently created carbon solutions and new energy teams to develop expertise and design our initial offers. We are investing in technology through strategic partnerships and alliances with third-party business experts such as HYZON or WAGA Energy. Lachlan will discuss this later. We will further develop our biofuels offer and explore LNG and EV technology opportunities. And we will accelerate the development of carbon offset solutions, including the certification of some carbon neutral fuels. This is already in place for Jet A-1, as previously mentioned. We believe in being the trusted adviser for our customers. We will continue to build scale and demonstrated competence to command relevant position in emerging markets. I started this session by giving you the reasons to believe in the commercial business. I realize I forgot to mention the most two important ones: our track record; and the potential growth of this business. Our track record, first. This diversified business has a proven track record of strong and consistent cash generation. Thanks to a strict discipline on supply chain costs, a strict discipline on our capital management and close relationships with our customers, and despite the lack of face-to-face interactions, we delivered, in 2020, a similar cash performance as pre-COVID. Our strong performance in H1 this year is very encouraging, and is reinforcing our delivery track record. Our future potential for growth, there is just business recovery ahead of us in some sectors in the near future. We will selectively leverage this to run a value-led agenda to maximize returns. Most of the segments we are servicing are growing, moderately, but growing. 90% of our commercial earnings are under contractual arrangements, and approximately 40% of our earnings are already coming from products and services other than jet and diesel. Time to me -- for me to wrap-up this presentation and to do so, I would like to summarize our key strategic priorities: number one, recovery, target profitable growth in Aviation and Marine, maintain good discipline on cost at all times; number two, growth, leverage the diversity of our portfolio, maximize the integrated value of our specialties products through increased production at Geelong refinery, expand our regional network in aviation, increase our share of regional markets through Liberty Wholesale business and accelerate the development of our services offers; number three, sustainability. This is all about supporting our customers to reduce their carbon emissions through efficiencies to lower their energy consumption, so the development of physical solution, hydrogen, LNG, biofuels or others, and through the implementation of offset programs when transition is particularly difficult from a technical perspective or long to implement. In conclusion, we have a very solid and resilient foundation. Our strategic transformation has been initiated, and we have an extraordinary pool of talented and passionate people to deliver value to our customers and to our stakeholders. That's my B2B, the place to be and to believe. Thank you for your time, and I now hand back to Scott to have the first question-and-answer session. Thank you.

Thanks, Denis, and thank you, Megan as well. I want to take a minute just to acknowledge the work that Denis and Megan and their teams have done over the last few years to lead our business through the pandemic and deliver some outstanding results and also set up the business for the future. It's been great to give them the opportunity to talk about their respective businesses, their plans for the business. So hopefully, that's inspired a few questions this morning. We'll come back after this Q&A session and a break to talk to about refining, new energies and capital deployment. But in the meantime, we'll obviously switch to an official question and answer now. So if I can hand over to Cameron to have some questions.

Your first question comes from David Errington of Bank of America. In deploying new capital to catch the $50 million uplift in EBITDA from new earnings streams, can you use the existing network? Or does it require new capital?

Yes. Thanks, David, and great to have you online. It's going to be a mix, David, and Jevan will talk and come to this a little bit later on, but we certainly see opportunities for growth, not just in our -- obviously, in our core businesses, as I explained earlier on, but also in developing new opportunities and leveraging the diversity that we have across our businesses to pursue growth, and we have already many examples of how we're pursuing that. But we obviously, obviously see some areas where we need to deploy capital as well. I think the LNG projects or terminal project is a really good example of the sorts of new business activities that we're exploring. And that's obviously still needs to go to FID, but it's a great example of where we may choose to deploy our capability to pursue new growth and will surely the others as well.

Your next question comes from Scott Ryall at Rimor Equity Research. Regarding Slide 17 and the greater than $50 million of EBITDA from new earnings streams over the next 3 to 5 years, can you give more clarity as to whether you would consider this to replace other earnings streams or whether you would consider this as a net gain to Viva?

I think -- yes, that's a great question. Thank you very much. I think -- and I think about our strategic approach and having a three-pronged approach to it. Fundamentally, there's a discipline and an opportunity to continue to outperform in our existing businesses. We've got a good track record of returning strong cash and a good track record of great resilience through the pandemic. We continue to see opportunities to grow our core business with a real focus on our performance. So that means being the most efficient operator in markets, having a nice brand preference, deep relationships with our customers and releveraging the diversity that we have across our Retail, Commercial and Energy Hub businesses. So I think we can expect the opportunity to continue to grow our core businesses. Second part of that, though, is obviously extending and leveraging our diversity and finding new growth areas, which will obviously leverage the businesses that we're in, extend us into some new areas and -- but like the LNG project and really take our business in new directions and transform those businesses into our fuel and convenience business, our commercial and industrial solutions and services provider and energy and infrastructure business over time. And the development of those opportunities is what we see as delivering additional earnings, which we've set out a near-term opportunity to deliver more than $50 million over the next 3 to 5 years.

Your next question comes from Adam Martin at Morgan Stanley. Can you talk through your fuel demand scenarios in Slide 15? How are you thinking about fuel demand decline as growth across petrol and diesel as EVs accelerate? What growth or decline rates are you assuming of the assumptions behind this?

Thanks, Adam, and great to have your question as well. I'd like to take the opportunity of handing over to Lachlan Pfeiffer to take this question. Lachlan, we'll come back and talk more about our new energies and sustainability strategy but a good opportunity for him to just touch on our scenarios and how we thought about the future. Lachlan?

[indiscernible] our base case scenario, that's important to understand, the three main variables. We're talking about GDP growth, the [indiscernible] growth and uptake of EVs. And largely, what we've seen in that base case scenario is consistent with a lot of the forecast you see out there and including the federal government's forecast, such as EV uptake. So by 2030, we are looking at a number of about 1.7 million EV vehicles on the road and had only started to see a small lot of [indiscernible] by the end of the [indiscernible]. And that's largely offset by the EV growth and population growth. And [indiscernible] forecasting they'll be about 30% uptake of new vehicle sales being a [indiscernible] as at 2030. And then the effective scenario is obviously up and down, in either direction, goes higher and lower base cases.

The next question comes from Daniel Butcher at CLSA. Thanks for the fuel demand outlook for 2030. How would that decline look just for the Retail business, ignoring Commercial, which is more resilient? And how might retail fuel volume decline in 2040 and 2050 in your view?

Look, I think we obviously haven't gone out beyond 2030. I think the next 10 years is a significant transition ahead of us. And I think even our projections to 2030 will have some variability associated with it. The -- when I think about the Retail business, clearly, that's where electric vehicles will have a role to play, and we'll have -- and we'll see the effect of that within our Retail business. But as we've seen over the last decade, there is still -- even in a world where we've got increasing vehicle efficiency or improved efficiency in the current vehicle fleet just through improved technology and greater efficiency of petrol and diesel vehicles, we still maintain [indiscernible] strong demand for fuels within the Retail business, driven essentially by population growth and increased car ownership and, obviously, post-COVID as the economy recovers, and we can see net immigration again. Now population growth will still be a key driver in Australia of demand generally, and we'll see that reflected in the Retail business. And so while you've got the impact of electric vehicles, which is relatively modest, as you can see in the projections, we've got some strong good drivers that will continue to support growth as well. But look, beyond that, as we've set out in our strategy today, our key focus in the very long term is really to transform this business into a genuine convenience and mobility business. That is the strength. It's a big market. As Megan pointed out, it's a $9 billion market. It's growing at 3% -- over 3% per annum. Our models, through the relationship we have with Coles, is seeing our convenience business -- our joint convenience business growing at more than 5%, so outperforming. I mean there's not a lot of businesses around that demonstrate that sort of size and potential, and that's what we are focused on, building our capability and [indiscernible] continue to be a major player in that segment, and that will provide growth beyond fuel and certainly beyond 2030.

Your next question comes from Michael Simotas at Jefferies. What proportion of transactions currently don't involve the fuel purchase? How does this compare to global best practice when working with [indiscernible]?

Michael, really great question. And well, I'll get Megan to touch on, and maybe, Megan, you can particularly talk here about what we've seen through the pandemic and the uplift that we're seeing through people shopping locally.

So in our business here, it's about -- can I say, it's about just under 30% of shop-only [indiscernible] globally, depending where you go. It should be up with over 50% in terms of our shop-only emission. And as you obviously see, as different companies throughout the world expanding their convenience offer add on different services, that continues to grow. So we are definitely at the lower range compared to international. Obviously, through our relationship with Shell, we get [ packed ] with a large exposure to international trends. At the moment, in our business, different businesses just sit around just under 30% of the [indiscernible].

The next question comes from Mark Wiseman at Macquarie. Could you please give a sense of the scale of sizes that would be transferred to the dealer network and any breakdown of locations/type of sites?

It feels like another great question for Megan. So over to you.

Obviously, we've got a fairly big network under company control, so over 700 sites. And in any retail network, you will have a different [indiscernible] look at in the goal and definitely at their performance. And as the leases come up, we look at how they're performing, the future potential, what's currently happening in that market and determine what is the best platform to look at. And that's the beauty of our model that we have the optionality of moving between different platforms, including through obviously the Coles Express, our Liberty joint venture partner but also the dealer network. And the beauty of actually moving the model of this dealer network, it is quite a different operating model, but it allows us to keep that volume and also our network coverage. So at the moment, it's a continual evolving analysis that we do. And it's really triggered by the lease renewal that comes up, and then obviously, we have a distribution of our lease renewals coming up over the next 2 years.

The next question comes from [ Sam Johnson ] at [ Zingle ]. Can you please have some color of growth in convenience shop revenues, not heavily impacted by COVID?

Yes. Look, I think in the deck that I touched on before, I think we're showing in the -- over a long period of time, there's been consistent growth in the convenience -- within the fuel and convenience channel. So that's the 3.2% growth that I referred to before. Now clearly, we've seen some more significant growth during the period of pandemic as people have shopped more locally. It's been a fabulous opportunity to introduce more people, more customers through the nonfuel offer, and it helps to position us to maintain a customer, if you like, going forward. And so it's -- and it's -- we're a significant player in that market. And through the Alliance, we hold about this 15% share of that convenience business. And as I said before, that model that we have at the moment outperforms that market. So that is the opportunity we see. It's a growing percentage of customers that are visiting our sites, not directly for the fuel offer but for the convenience offer. And our convenience offer is a transaction that will take place more regularly than the fuel offer because, obviously, you don't need to fill your car after the day that you're going to need to visit the stores for a coffee or your lunch on the road, et cetera. And so increasingly, we can see an opportunity to leverage the network, the accessibility we have through our network and committees of the locations, of course, to continue to grow that nonfuels transaction. That will be sustaining business, obviously, in the long term. In the short term, it continues to provide real growth upside beyond the general performance of the fuel offer as well. So I think it's important as we go forward to really start to think about our retail fuel and convenience network as being a genuine convenience offer in what is a large and attractive and growing market.

The next question comes from Mark Samter fro MST. You have shown the scale and quantum of your storage and terminal infrastructure. Given the high multiples being talked about in the press, they go back into long ports. How do you think about ownership of these assets? And is there latent value not being realized by the equity market?

It's a great question. Jevan will actually -- will obviously talk a little bit more about our balance sheet later on, but it might just give him the opportunity now just to touch a bit on this question.

And there's certainly value in our infrastructure and assets, and I think that we've talked about a lot over the years. And I hope that, that value over time will be reflected in the business that you see and known today and have the opportunity to invest in. I think as we look forward, there will be plenty of opportunities for us to deploy our excess balance sheet capacity, and I'll talk a little bit about later today. So I think if we find a number of opportunities when doing that, that are really compelling. We've always got opportunity to look at our infrastructure and the sorts of assets that sit within our business to fund further and greater opportunities to invest but certainly something that we recognize as a great deal of value in the company that we have today.

Your next question comes from Joseph Wong at UBS. Can you talk about the capabilities you need to develop to take control of convenience retail in VEA or choose to take control of the Coles Alliance site by 2029?

Yes. Joseph, I think -- look, the way to think about this is the capability exists on our platform. So Liberty Convenience is obviously building a network to keep some great outcomes and has made [indiscernible] with some really top-performing site with a very different offer from our Coles Express platform. It obviously has the capability to do that internally, and we will acquire -- have opportunity to acquire that, the remaining 50% of that from 2024. So with that will come, obviously, that capability. And within the Coles Express business, obviously, that's their bread and butter. I mean Coles [indiscernible] of what they do, and we see that throughout the way they operate the Coles Express business. And when that business transitions across, of course, where we choose to go at the appropriate time, then, obviously, that capability will come with it. Now that's -- so the aim will be to seamlessly transition that and to have it continue operate that business in the way that it has to that point in time and continue to develop and evolve the offer over into the future. Within that day, we've got -- Megan runs a retail team with a significant level of retail and experience, obviously, strong field experience as well. They support both our partners in developing and exceeding the business -- in both our Retail businesses, and obviously, that will be important capability for us moving forward, too.

Your next question comes from Michael Simotas at Jefferies. Denis mentioned the potential to acquire capability in commercial markets. Are these opportunities substantial? Is the competition regulator likely to have any concerns?

I'll give Denis the opportunity to talk to that.

I will probably start by thank you, first, for your question, Michael, and for your interest in the Commercial business. Yes, many, many opportunities in the market, and they can go to different directions. So let me start with the end of your question. Is the competition regulator likely to have any concerns? I don't think so because this is adjacent to our business, and that would certainly not reduce the competition on the finished products that we are selling. As I mentioned, primarily driven by our desire to offer more services to our customers and to ease their lives to [ fulfill ] their core activities. So as I mentioned, this could be about new engineering design solution program supplying them with equipment, implementing those solutions. It could be about technical advice. This could be consistency on a number of updates, and carbon solution will certainly be another area where we will grow our services to customers. Are these opportunities substantial? That very much [indiscernible]. Usually, the Commercial businesses consist of a combination of smaller business, but we have a great number of them, and the diversity of our business makes the strength of this business at all. I think this will be pretty much the same in the offer. We will selectively target where we believe it has value to our offer. It had sustainability to our earnings. And then we obviously be with more values for customers.

Your next question comes from Grant Saligari at Crédit Suisse. Would you expand on the capacity in Australia to produce sustainable aviation fuel?

And look, we'll come to biofuels and other new energies in more detail with our conversation we'll get later on. But Lachlan, can I ask you the opportunity to probably buy a bit of a window into this particular question?

Yes, absolutely. I think the [ payable ] aviation fuel is probably -- highlights a good example of a challenge [indiscernible]. So reducing it isn't so much the question. It's more about the cost that we continue to deliver to the market. So we do see opportunities to just produce products that come on over time. Basically, aviation is a good example of a [indiscernible]. And so the products we launched this year and having an offset jet fuel is designed for that exact purpose to be the interim solution as you develop these new technologies up and the cost competitiveness of the income come down. So that's absolutely something we're looking at, and I think we will see that develop in the market with our alliance [indiscernible]. The airline industry is very focused on improving their performance [indiscernible]. As a matter of [indiscernible] cost parity to existing jet.

Your next question comes from Michael Simotas of Jefferies. Can you talk to the benefit of the 137 Coles Express renewal and refurbishment program?

Yes, Michael. This has been a great program that we've been able to progress through the pandemic together with Coles, and it's been pretty exciting to see us continue to keep our model relevant and progressing, and obviously, that's supporting some of the results that we've seen that -- Megan, perhaps, I can get you to talk a bit more to the point that Michael was asked.

Yes. So it's sort of a minor [ reason ], more focus on [indiscernible] of the shop. So I wouldn't -- reality is we wouldn't disclose the capital, but the return is being quite upward in quite a short period paper. We've seen the shop sales increased sort of [indiscernible]. And then the fuel sales have come up with that as people keep coming into the store, seeing the new offer in conjunction with the refresh [indiscernible] very heavily in the [indiscernible] office. So we've had a real push on new machines, which kind of sell, but also putting the coffee on the board, the [indiscernible] side. So in terms of shop margin, obviously, as you're more moving to food or coffee, there's a lot more margin in those products, with additional groceries, so not what I would comment on Coles' margin. But definitely, as you move more into that food supply and coffee, you will traditionally increase your shop margin.

Our next question comes from a private shareholder. What digital trends are emerging? And is your network well positioned to capture this?

Yes. It's a really good question and, certainly, an evolving landscape. I might have the opportunity of getting Amanda Fleming, who's our Chief People and Technology Officer, to talk to this one.

It's a great question. I guess for digital, it's such an important enabler of growth because what a digital offering enables you to do is actually get really as personal as a customer. So you're able to collect customer information and data and news and analytics to actually personalize an offer when they're coming into the store. And also what we're seeing in trends emerging around the world is being able to pay the full court in a seamless way, which is really important during COVID. And when you lean into that data and analytics, it actually enables us to curate office, so bringing people into the convenience store as well as being able to pay on the four quarters I just mentioned. And the other trend that is in merchandising. So Megan and Scott have both talked about the fact that people are shopping locally at the convenience store and what that data from that digital offering enables us to do is to actually curate merchandising in that store that reflects the [indiscernible] and try to get through to [indiscernible] information to like through the digital pay. And I think our network is really well placed. We've got a loyalty partner in Flybuys, which is the largest loyalty partner in Australia, and we're able to lean into that ecosystem of 20-plus partners. And again, that customer data, which is so valuable in retail, it will be a really important growth driver for us, and our network is really positioned to multiply that.

Our next question comes from David Errington at Bank of America. You have a very strong fast network of infrastructure. What do you believe the utilization of capacity is in a normal year, i.e., pre-COVID? And what is the opportunity to leverage your capacity, particularly within minimum storage requirements kick in?

Yes, David. Yes, as we indicated in the presentation, we hold around 1.1 million billion liters of storage across our network. Obviously, the refinery forms a considerable part of that, but our terminal network is also incredibly important and provides this storage right around the country and underpins a key part of the government's energy security agenda, of course. And looking at introduction of minimum stockholding obligations, which come into force -- coming into force the middle of next year, to hold stocks at current levels and then increase the level of diesel commitments by 2024. We feel very well placed to get the support there to support, obviously, our current business and the growth plans that we have for our current business,. and I think pre-COVID, we've got plenty of track record and being able to do that with our customers but also sufficient storage to meet the changing obligations that we're expecting to see from government through the introduction of the minimum stockholding obligations and with surplus to participate in whatever market mechanism is developed to support high assistance in the market that aren't able to meet their minimum stockholding obligations. You may remember we've also received support from government to construct 90 million liters of diesel storage at Geelong that adds to that, that 1.1 billion liters that I've just spoken about and obviously provides further upside for our ability to play into that evolving market. So I think we feel very well placed, David. So look, that brings us to, I think, the end of this Q&A session. We'll take a short break now. I think we lost track of the time, but I think we are coming back to 10:45, so I look forward to joining you again then with the rest of the team. And as I said before, we'll come back to the energy infrastructure business, new energies and sustainability and then wrap up with capital management. So enjoy the break. We'll see you soon. [Break]

Welcome, everyone. I appreciate that we didn't get to all your questions in the previous Q&A session. So we will hold those over to the Q&A session will come in the next set of presentations. I'll shortly invite Dale Cooper take us through his presentation on energy and infrastructure. But just before I do that, let us share our video on our Energy Hub. [Presentation]

Good morning, everyone. My name is Dale Cooper, and I'm the Executive General Manager of Refining. I joined the Viva Energy team from Canada 15 months ago, and I'm responsible for our Geelong Refinery. A challenging refinery environment, the impact of COVID-19 has been unprecedented. I am incredibly proud of how our team and everyone across our Viva Energy supply chain have demonstrated their adaptability, resilience and can-do Aussie attitude to deliver on all of our commitments with safety and reliability always at the forefront. With the announcement of the federal government's fuel security package, the outlook for our refinery is assured to the end of the decade, and we have a pipeline of exciting projects that positions us extremely well for the future. Our Geelong site commenced operations in 1954 and has a proud history of future within the Australian economy. Today, our refinery supplies approximately 50% of Victoria's [indiscernible] fuel demand and helps maintain Australia's fuel security. Our refinery and associated supply chain infrastructure is regarded as an asset of national strategic significance underpinned by the federal government's fuel security package. We are continuously working to maintain safe, reliable and competitive operations while exploring opportunities for diversification to suit the changing energy mix and facilitate the transition to a lower-carbon future. We call this vision for our site, the Geelong Energy Hub. The Energy Hub incorporates our plans for nationally significant strategic diesel storage, the gas import terminal project to meet the expected gas shortfall in Southeastern Australia and the commercialization of hydrogen production and refueling for heavy vehicles for potential East Coast hydrogen distribution network. Lachlan will explain the details of some of these new energy projects in the next section. But let me say that as a person who has worked in the energy sector for almost 4 decades, I have never seen as a comprehensive and exciting pipeline of visionary and game-changing projects. Of course, it's one thing to have a powerful vision, and it is another to be able to deliver it. Viva Energy has a proven ability to execute each element of this strategy. We will continue to outperform in our core business, optimizing the infrastructure support we are receiving from the federal government and delivering fuel security through improved productivity and reliability. This fits well within our current organizational capabilities. We will leverage our capability, develop new growth pathways to deliver the diversification that is core to the strategy. We will drive development of the gas import terminal, and the 90 million liters of strategic vehicle storage, as a key new direction of our business, are set profitably within our wheelhouse. Both are proven technologies and well within our capability execution. For our transition story, we will acquire the capability to accelerate proven opportunities through partnerships with key technology and customer participants. We will develop hydrogen refueling operations as improving technology through a combination of our own existing expertise and additional required capability where required. Our Geelong Refinery has been a key part of the Australian economy for nearly 70 years and has a number of unique advantages that help us compete with other regional refiners. As one of just two remaining refineries in Australia, our location provides an advantage as we have greater access to domestic oil fields. This advantage will increase when the third refinery in the region closes in 2022, making us one of the last two refiners in the region. The complexity of our facility means we are the only domestic supplier of avgas, bitumen and other solvent products, which are resilient to normal cyclical refining margins. This provides us with the advantage of being able to have these high-margin specialty products to contribute to our profitability and also support our commercial customers. The flexibility of our facility also provides us a competitive advantage to adjust our product slate in response to changing fuel demand. We use this separate advantage when COVID lockdown significantly impacted demand for jet fuel and petrol, thus responding by increasing the production of more valuable products that did not extend the same decline in demand. Our location allows us to capitalize on great advantages, many of which stem from Australia's relatively remote location, far from key trading hubs like Singapore. The first differential between shipping crude oil versus finished products and smaller ships provides our advantage -- a key advantage for our facility with one of only two refineries in Australia, Geelong Refinery is critical to fuel security for the nation. The federal government's bill security package recognizes our facility as an asset of national importance. This package supports the refinery and periods of low refining margins and has provided us with confidence to continue operations and undertake significant profitable investments to further improve the site. [indiscernible] security package has the four (sic) [ three ] core components: the fuel security services payments, the minimum stock holding obligation, ultra-low sulfur gasoline production. These three components are funded or cofunded by the federal government and the commitment from Viva Energy to continue refining in Australia towards the end of the decade. This is the cost of [indiscernible]. What Australia gets in return is supporting our refining business. The fuel security services payment is defined with a capping dollar mechanism. When the margin marker is above the collar, there is no payment received. When the margin marker is between the cap and collar, we receive some portion of the payment. When our margins are below the cap, we receive the full payment of or $0.018 per liter of refined fuel. This means we have the security of government support in low-margin environments. But in high-margin environments, the government supports costs, and we retain all the upside benefit. Historically, we would have received no payment about 50% of the time, and we would have received partial payment 30% of the time and full payment 20% of the time. This program is a game changer for our industry. I'd like to change gears here a little bit and now talk about gas. Gas supplies, 22% of Victoria's energy needs. There are 2 million households and 60,000 businesses in this state that rely on it for feeding, cooking and hot water and industrial users like our refinery. For the last 50 years, the state has relied on gas from the Bast Strait. But that resource is declining, and we are going to replace -- have to replace our gas supply. The Australian energy market operator believes that we will start seeing the impact of that gas shortage in the next couple of years. A shortage in gas supplies could have an impact on prices and result in gas not being available for homes or businesses when they need it. The development of liquefied natural gas import terminals has been identified as a key strategy to meet the gas supply shortfall. Viva Energy's Gas Terminal Project is perfectly positioned to be the largest and most flexible source of additional gas for Victoria. Utilizing an existing industrial port and close proximity to the gas distribution grid, Viva Energy's Geelong Refinery site is the ideal location to meet Southeast Australia's future gas needs. Positioned close to 2 biggest markets for gas, Melbourne and Geelong, our project promises to deliver the most cost-effective and reliable supply of gas into the region. Viva Energy is an experienced major hazard facility operator with an excellent safety record, and our project partners have substantial international experience developing and running LNG regasification terminals like this one. Locating this facility next to our [indiscernible] Refinery also provides a unique opportunity for integration with refinery operations, allowing us to run the terminal with minimal environmental impact. This is the leading gas terminal project in Victoria, and we are continuing to work through the approval process, targeting final investment decision in Q3 of 2022 with construction and start-up planned to delivery first gas from the mid-2020s. Viva Energy plans to primarily run its Gas Terminal Project as an infrastructure owner and operator to facilitate the importation of a crucial supply of gas into Victoria. Once operational, we could consider additional value-adding projects to support the facility. This could include the option of Viva Energy participating more directly in gas markets as a wholesaler or retailer. We could also look at a role for Viva Energy in gas-powered electricity generation or in gas storage to boost peak demand capacity. We believe gas is going to have a key role in helping Australia reach net zero emissions targets by supporting electricity grid reliability until renewable energy generation and storage technologies improve. Our terminal can help deliver the gas needed to drive this. Over time, we also expect to see new markets for LNG emerge for Viva Energy, including as a lower-emission fuel for marine bunkering or as a fuel in the transport sector. Our refining business is well positioned to benefit from the recovery in refining margins and the additional income streams from new projects in our Geelong Energy Hub. We enter this new era knowing Viva Energy will enjoy the financial benefits of improved refining margin environment but with the confidence that comes from knowing we have the fuel security service payment to provide support when those margins cycle down. We also stand prepared to maximize productivity in our refinery with the benefit of greater efficiency and improved reliability, thanks to the plant upgrades currently funded by the federal government. Our steps towards greater sustainability will help deliver fuel security for Australia and greater earnings growth for Viva Energy. Our vision for the Geelong Energy Hub is to create a suite of projects to manage the energy transition journey. This diversified site will support the local economy and community in Geelong and continue to play a role as a strategic asset of national importance for energy security. Thank you for your time, and I look forward to your questions. I would now like to turn it over to Lachlan, who will take you through new energies and our approach to sustainability.

Thank you, Dale, and thank you, everyone, to -- for joining today. My name is Lachlan Pfeiffer, and I am the Chief Business Development and Sustainability Officer here at Viva Energy. Delivering fuels to the Australian energy market is our core business. And in the medium to long term, the energy markets in Australia will adapt as we transition our economy away from carbon-intensive outcomes. We are fully supportive of these transition goals and to achieving the intent of The Paris Agreement. Our ambition is to play a critical role in developing, commercializing and delivering alternative lower-carbon energy fuels and solutions to the Australian market and to remain the provider of choice to our customers and to the public. We are also pleased today to announce our own emission reduction commitments as we take action to address our own emissions footprint. Our ambitions in the new energies markets are threefold with each area supporting the other as we address these transition goals. You've already heard from Denis today with respect to our carbon solutions business as we aim to provide our customers with the best fit-for-purpose solutions to their operations and to assist them in transitioning to lower-carbon outcomes. For many of our customers, using our products is a substantial part of their Scope 1 emissions, and we believe we are the best placed to assist them with the products and solutions to address their longer-term carbon reduction goals. I'm going to focus now a bit more on our new energies team and the initiatives we have underway to bring replacements and alternatives fuels to the market. Many of these fuels and newer technologies are yet to achieve the scale or price necessary to be wholesale solutions to displacing existing products. That is where we see the role of our new energies team, to prove out new projects, products and to bring to bear the group's capabilities for safe, reliable and efficient delivery to these new markets. And of course, we also have our own role with our own carbon footprint to address. We are setting our emission reduction targets today which goes on a journey to net zero by 2050. Our team is active across a number of emerging and transitional fuels. These technologies are at varying stages of adoption and commercialization. And our focus is on the solutions that we believe have the best pathway to providing the market and our customers with the fuels they will need in the medium or longer term. I will talk in some more detail to EVs and hydrogen shortly. Natural gas that we have listed here is not a new technology. But as Dale has touched on already this morning, we consider that it is an important transition fuel that, and it has the advantage of having proven delivery systems and uses in energy and transport markets that can help to transition to a lower-carbon outcome. We are also working on new solutions in the bio and waste markets, covering a wide range of feedstocks and fuels. And finally, we expect there to be an important role for carbon offsets. We operate in an industry where the engines and infrastructure cannot easily be changed overnight. And we service some sectors that do not have clear alternatives to lower-carbon outcomes. In these markets, carbon offsets will be an important interim tool as newer technologies are developed. The aviation sector is a good example of this. And as you've already heard this morning, we recently launched the country's first jet fuel certified as carbon neutral by Climate Active. While offsetting carbon credits against traditional fuels is not directed abatement, that cost and the carbon markets provide important funding to projects that do have a direct carbon benefit, and we expect the need in these market to grow for some time. In addition, we believe there is scope to invest in carbon-generating projects here in Australia that will supply the carbon credits to offset fuels in projects that we'll deliver in the future. So turning to EVs. These are the most well-known and developed new technology in the passenger vehicles market. Manufacturers continue to develop new models for Australia, and we expect to see growing uptake in the coming years with the total cost of ownership forecast to achieve parity to an internal combustion engine by the middle of the decade. We have a number of test sites in the market now, working with third-party operators from which we are able to access data and optimize the offer. Public charging infrastructure, not just its availability to customers but the cost to install to owners and operators, remain the hurdle in this market. And the optimization of charging speed and location must suit the user experience and demand to avoid the risk of early-stage infrastructure becoming redundant. What Viva Energy brings is a superior network footprint with access to over 1,300 retail sites across the country. That advantage, together with our scale and wider ecosystem, our brands, loyalty programs, commercial relationships and Shell card business, gives us the network effect advantages to provide the best solution to customers. We see an opportunity to extend the EV offer from public charging and into the Commercial segment, servicing fleets and corporate customers as they look to transition their businesses. So we expect to be increasingly active in this market in the near term as EVs become more widely adopted in Australia. In the hydrogen for transport sector, we've been an early mover. At the start of this year, we entered into a strategic arrangement with the hydrogen vehicle manufacturer HYZON Motors. While hydrogen is a much earlier-stage technology than battery electric, we see a strong opportunity in the heavy vehicle market, which batteries have difficulty servicing. Australia is highly reliant on road trucking for its freight and commercial operations, and being able to provide a low-emission product to this market is critical to the country's long-term net zero goals. There's significant energy in the wider hydrogen market at the moment. But in terms of users that come closest to cost parity with the alternatives, hydrogen for the heavy vehicle transport sector is one of the leading market opportunities. And so while we do look at the whole hydrogen supply chain, our focus is on creating demand in the transport sector. And critical to that is access to vehicles and the confidence of our transport and freight customers that they will have a reliable, efficient and safe solution. This plays to our existing strengths as a refueler as there is complexity in delivering hydrogen from the electrolyzer and into the vehicles. But that is complexity that we experienced and solving for. The market is, as of today, starting from scratch. Hydrogen-powered vehicles are, compared to EVs, further back on their journey to cost parity. But we are aiming to bring together the elements to build this demand. That means being the conduit between our customers, the vehicle manufacturers and government, as well as bringing our own capabilities, assets and infrastructure. We expect that the initial phase will focus on back-to-base hydrogen refueling operations, but we're also looking ahead to the major freight routes particularly on the eastern seaboard across Melbourne, Sydney and Brisbane. So whereas EVs and hydrogen fuel cells involve new engine technologies, the bio and waste sector has the advantage of providing substitute fuels into existing equipment with minimal impact on customers' current operations. The challenge for these fuels is around pricing in the market and bringing sufficient scale. Given their use in existing drivetrain technology, we can see a good market for these products through a medium-term transition phase. Our advantage at Viva Energy is both our refining presence, which brings with it processing capability and potential future adaptation to process a wider range of bio and waste feedstocks and further our scale, supply chain and network and our ability to bring feedstocks and fuels through our system. We currently supply ethanol blended fuels to the retail sector, and we see the opportunity for growth in developing and supplying biofuels offers into the commercial sector. And then we're also seeing opportunities in adjacent markets. We recently entered into an alliance with Waga Energy to bring new biomethane technology to Australia, providing a substantially lower carbon-intensive gas solution to the market. This technology would be a first to the Australian market, purifying landfill gas into a form that can be directly injected into the gas grid or used in transport solutions. And on the waste recycling front, earlier this year, the Geelong refinery participated in an advanced recycle project, processing a recycled plastic feedstock to produce KitKat wrappers. Linking into a circular economy, Viva Energy and a number of other companies, including LyondellBasell and Licella, were able to prove up this new technology for an in-market product use. This trial project highlights the importance of the processing capability of the Geelong facility in advanced plastics recycling and points to potential opportunities in the future. So as we look at these new products and technologies, we see a portfolio of new or developing energy market solutions. These form a wide range of opportunities with most likely quite different growth pathways. In addition, these products need to be adapted and suited to the different market segments to the needs of different customers, and we believe we are best placed to solve for these problems and provide their solutions to our customers. Our focus is to remain disciplined in our investments and to be the highest-quality and most trusted partner to deliver these products and services to our customers and assist the fuels industry through the energy transition. Today, we are also pleased to announce that we are formalizing and setting Viva Energy Group's Scope 1 and 2 emission reduction targets. While our new energies business strategy is focused on what fuels the market will need and want, we also recognize the importance of addressing our own carbon footprint. The Paris Agreement and the Glasgow Climate Pact an important milestones for the international community. As a developed nation, we believe Australia has, even more so, a role to play in these goals and particularly in developing and delivering technological solutions that will assist the world to achieve these ambitions. At Viva Energy, we split our business for this purpose into the refining and nonrefining segments, and we have set ambitions for both 2030 and for 2050. So in the medium term, by 2030, we aim to have our entire retail fuels and marketing businesses, that is all of our businesses other than the Geelong Refinery, at net zero emissions. For the refinery, we aim to improve our emissions intensity by 20% by 2030 and then, as part of the whole group, to be net zero by at least 2050. The important aspect, of course, is how we'll get there. In our nonrefining businesses, we see a clear pathway to net zero, utilizing a combination of energy efficiency projects in our supply chain, some renewable energy generation of our own and purchasing electricity sourced from renewable projects, also acquiring certificates generated from those projects. There'll also be some green benefit in the electrical market itself. And while it is not our focus, we can access carbon offsets for any emissions we cannot directly address. We're willing to do this with minimal cost to our -- minimal impact to our cost base. For refining, refining is an energy-intensive process, and our refinery is one of the largest electricity and gas users in the state in what is a complex manufacturing process. In addition, we recently agreed to the federal government's Fuel Security Package and are committed to keep the refinery open towards the end of the decade. And this commitment includes bringing forward the ultra low-sulphur basically gasoline upgrades. These upgrades are important and have important environmental benefits by improving Australian fuel quality standards and reducing the impact of fuels on air quality. However, the additional desulfurization equipment needed for these projects will increase our own energy use and emissions profile. Our goal for the refinery is to reduce its emissions intensity by 10% by the end of this decade. Emissions intensity is a metric developed to track Scope 1 and 2 emissions as a factor of the energy content of our main products. We plan to achieve this through a combination of our own efficiency projects and our own capital projects and through improved decarbonization of the grid. And then additionally, we have set a 2050 net zero goal for the entire group. For the Geelong Refinery, post 2030, it's role in the energy system will need to be determined. Whether it remains in its current format and operations in the longer term would depend on its value to that system. It is possible that its processing capability is adapted more substantially to bio or waste processing, or the site is augmented to a new scope of operations, or a conversion scenario is pursued. Irrespective, these strategies will be implemented with an understanding of the cost impact and scope of its carbon footprint with an aim to achieve net zero by 2050. And further today, we are also pleased to announce that our plans for the Gas Terminal Project in Geelong include a commitment to fully offset the Scope 1 and 2 emissions of the proposed terminal from construction and through the life of the facility. This highlights our approach to new projects and initiatives within the business, where we aim to either design out emissions in the project or look to factor in the carbon offsets -- carbon costs and offsets from day 1. Particularly, we have brought a sustainability lens to all aspects of the development of the gas terminal, and committing to a net zero leading to a net zero from day 1 is a logical extension of this. We believe our customers in the market are fully supportive of this approach to new terminal operations. And so finally, I would like to emphasize that we believe these commitments are our first step to our decarbonization goals. The largest impact we can make to a lower-carbon outcome for Australia is in the development of lower-outcome fuels solutions for the market. But we also aim to continue to improve our own emissions footprint and ideally to outperform or bring forward these commitments as our company continues to play a critical role in energy security, infrastructure and markets. And with that, I look forward to any questions you may have later. But for now, I will pass over to Jevan.

Thanks, Lachlan. Hello, everyone. Thank you for making it this far. My name is Jevan Bouzo, and I'm the Chief Operating and Financial Officer for Viva Energy. It's been a pretty full day of presentations, and now you're on the homestretch. In this section, I'm going to set out our capital management framework and wrap up the formal part of the presentations with the investment case for Viva Energy. I'll start with our capital management framework. We have and will maintain a disciplined approach to capital management. I like to think about this in 3 categories. Our underlying earnings, which support maintenance CapEx through the depreciation we record. This is about keeping things running in a safe and reliable way. Second, our free cash flow, which funds both dividends and growth opportunities on an ongoing basis. This is about getting the balance right between dividends to shareholders and retaining cash to invest in attractive core business growth opportunities, both short term and long term, and those that can also help us participate in the energy condition. The third category is our excess balance sheet capacity, which, at the moment, is substantial. We recognize we have one opportunity to deploy this, so it's important that we're disciplined here. Our approach with larger, more material investments is to consider opportunities which deliver returns in excess of the company WACC. Looking forward, this can generate more than $50 million of earnings over the next 3 to 5 years. Given these types of opportunities can be lumpy, we'll consider additional returns to shareholders along the way to ensure that our capital structure remains as efficient as possible. Together, these elements will allow us to continue growing a sustainable cash generating business with strong shareholder returns. Our Retail, Fuels and Marketing business is a strong cash-generating business with a growing profile of underlying free cash flow despite recent COVID disruptions. While CapEx will return to more normal levels, post pandemic, the decisions we've made over the last couple of years to reset the Coles Alliance, maintain our diversification to a range of commercial sectors and focus on strong customer relationships will continue to pay off going forward. As a guide, when looking at the last few years, this business has generated in excess of $200 million of free cash flow and, when applying the midpoint of our dividend payout ratio, allows for significant dividends and surplus cash to fund growth opportunities. The pro forma dividend and free cash flow retained lines in the table show the attractive dividend profile that the business supports under our current dividend policy for Retail, Fuels and Marketing. This slide sets out the profile of our refining business over the commitment period. Geelong refining margin is supported by the FSSP, which significantly reduces volatility and provides for significant potential upside when refining margins are strong. The FSSP covers operating and capital expenditure over the commitment period, noting the early years include a heavy capital burden in line with major maintenance commitments. Overall, the refinery has the potential to deliver significant upside in periods where the FSSP is not required. Our dividend policy for refining considers upside on an annual basis and has the ability to provide substantial excess cash during periods of strong refining margins. On this slide, we set out our target gearing, which should help you think about the quantum of our balance sheet capacity as well as some context on how we'll think about deploying excess capital. Starting with gearing. It's important to remember our working capital facility is used to manage short-term fluctuations in working capital. And as a result, we consider this part of our net working capital. From a term debt capacity perspective, we'll target a level in the range of 1x to 1.5x net debt-to-underlying EBITDA. This will be separate from our net working capital and is a long-term target that we'll achieve in line with deployment of capital for sensible opportunities. On average, underlying EBITDA over the past few years, this equates to $500 million to $750 million of balance sheet capacity. When considering options to deploy the capital, we'll consider the 3 categories set out on this slide. Firstly, for our free cash flow retains beyond dividends, we'll aim to deliver overall returns at or above WACC, noting that this will be a mix of existing business opportunities with short paybacks and higher returns as well as longer-term investments in energy transition and innovation opportunities that will take time to pay back. We'll use our balance sheet capacity to fund large acquisition opportunities, targeting returns that are accretive relative to our WACC. Things like the LNG import terminal or the Liberty Convenience buyout that ends 2024 are good examples, and we expect to add over $50 million in annual earnings from these types of opportunities over the next 3 to 5 years. We'll also consider opportunities for further returns to shareholders along the way to ensure that we retain an efficient capital structure. So why invest in us? Today, you've heard about our strategy to outperform in our core businesses, leverage diversity to develop new growth pathways and acquire capability to accelerate proven opportunities. Over time, we will transition our 3 core businesses. Retail will move from a retail network and branded fuel supplier to a fully integrated fuel and convenience retailer. Commercial fuels and lubricants specialty supply will become a business focused on commercial and industrial services and solutions for customers. Our refinery will become an integrated energy and infrastructure business. On this slide, we summarize the investment case for Viva Energy. Retail, Fuels and Marketing is a strong cash-generating business underpinned by national infrastructure and the largest single-operator retail network, both of which are practically impossible to replicate. This supports the ability to grow earnings in the core business as fuel remains relevant well into the next decade, as well as investing in opportunities in nonenergy segments such as convenience and commercial services. We'll see opportunities to profit from the energy transition, and the energy hub at Geelong is a good example of one of these that can grow the business over the medium to long term. The commitment to refining is with a significantly lower level of volatility and provides potential upside from strong refining margins over the commitment period. Going forward, the strong cash generation of the business will support an attractive dividend profile with more consistent dividends driven by our Retail, Fuels and Marketing business and potential upside from refining on an annual basis. We've worked hard to establish a track record of disciplined capital management and have substantial balance sheet capacity to deploy over the medium term. Like I said earlier, tapping into this balance sheet capacity will allow us to pursue acquisitions that will add over $50 million of earnings. Along with this, we'll have the ability to undertake further capital management. With all of these factors working together, I'm confident that we'll deliver strong shareholder returns going forward. This now brings us to the conclusion of the formal part of the presentations, and I'll hand back to Scott for the Q&A on the second half of the morning.

Thanks, Jevan. And look, I'm please go out to hand over to your questions and I'd say we have time to pick up some of the questions from the earlier Q&A section. I'm also handing over to you, Cameron.

Thanks, Scott. The first question comes from Michael Simotas, and this is from an earlier session. "Earlier comments seem to suggest that Viva intends to take control of the Coles' business when the agreement expires in 2029. What does this mean for buying growth until then. And is there any opportunity to execute on this earlier?"

Thanks, Michael, for the question. When we renegotiated the arrangements with Coles in 2019. We extended the agreement through until 2029. That was a very deliberate decision on our part because we see continued value in working with the polls of our partner in the retail business, as we've set out this morning to add superior value to our overall offer, both fuel and convenience and this leads to strong performance in that part of our business. Between '29, this is -- we've also set out is probably the point in time in the future where the fuel environment has evolved sufficiently that we -- that convenience becomes even more important to that point in time. And we thought that was a logical point to review. The arrangement potentially move forward more heavily into the convenience in our own right. So that's the background to the 2029 position, and we're very committed to continuing to work with Coles. And we do continue to work with Coles, our partner in the development of the network, I think we set out the strategies that we have to continue to refresh the offer, adding new sites, reviewing the future potential sites as they come up for renewal and ensuring that we continue to refresh that network and keep it relevant for the customers, not only today, but also into the future. Alongside that, we have, of course, our Liberty [indiscernible] platform. That has been a platform that has helped us grow into different markets, with a different offer than what the Coles Express or the Alliance software provides more, regionally focused, more hot [ full ] sitdown offers and highway locations. It's been very successful. It's also provided the opportunity to build our network and to add some of those future sites that we just spoke about. And has really complemented the work that we have -- we're doing with our partner in Coles. So I think the combination of both platforms with both partners as a real differentiation in our retail business, I think what's important in today's presentation is that we're obviously being more aware about our ambitions to become a fully integrated fuel and convenience [indiscernible]. I think it's important to set that out because as we think about the future and evolution of fuel and convenience, I think having stating our aspirations and willingness to anticipate in that market and grow that part of the business is an important part of our strategy.

Your next question comes from Mark Samter at MST. "Regional margins have been very strong as of late, [indiscernible] ethylene cracks. Can you provide a bit more recent update on refinery performance? And what would you think we can see over the coming months if jet [indiscernible] continues to grow and we get a cold Northern Hemisphere winter?"

Thanks, Mark. We'll obviously put out our fourth quarter results a bit later in the year and as the climate closes. I think as I'll just take a bit of a longer-term view in respect to that question, and perhaps a bit of background around our decision to continue refining and taking up -- working to contract with government to do that. I think what we do see is -- as a result of COVID is a substantial reduction in refining capacity across the world. We've obviously seen that here in Australia. And I think today, there's been an announcement around the closure of a refinery in New Zealand as well and there's plenty of other refinery closures around our region that [indiscernible] out of the system. Capacity's being added, not as much as that's been taken out, and we expect that future projects will slow or not proceed as a result of the pandemic and also just the longer-term outlook for oil demand. At the same time, we see an improvement in oil demand as the well starts to reopen. It's obviously a bit of a bumpy process to reopening, but certainly, as economies reopen and borders reopen, we see very quick and substantial improvements in all demand. And so as that plays out, combined with a slowdown in capacity, there is a potential environment where in the future, where refining can actually enjoy a period of strong and healthy refining margins and provide outperformance that we speak about when we talk about the outlook for the business. So that's the opportunity that's continuing to refinery provides for us. Now we're excited about that opportunity and certainly it can generate substantial returns for the business and ultimately to shareholders as well. Yes, we've seen in recent times some much stronger refining margin, as you point out, and that's just a good example of how quickly things can change in the refining margin environment. Good thing going forward of course is the fuel security services packages, the downside volatility that we've also experienced in the past is now substantially reduced through the package, and that really transforms the outlook for the refining business.

Your next question comes from Gordon Randy at RBC Capital Markets. "Can you please provide some input with respect to French margins for the [ Geelong ] refinery. What is its current reliability? And how does it compare with other Australian region refineries in terms of comparative performance in key operational and efficiency areas, i.e, energy consumption, energy sustainability?

Thanks very much for the question, Gordon. I'll hand that one over to Dale.

Gordon, thank you very much for your question. Certainly, as I arrived here and joined Viva, some of the same questions you asked, I asked them myself. And I would say that, first of all, [indiscernible]n to molecules, the barrels, the dollars and always the people. And I would absolutely say that it is interestingly the most so far, has been the people. It's been a really challenging environment through COVID, further refining both globally and regionally. But I would say that when faced up times, you brings the best to the worst of the teams and absolutely they have been impressed with how the team has come together to take on this very challenging environment. In terms of its reliability. And so we've had a very good run coming out of some major turnaround investments that we did last year, while demands were not that well. So we took that opportunity to invest in our turnaround. We've completed a couple of other turnarounds this year as well on a somewhat smaller scale, both executed safely, reliably, on budget, on schedule. So that has really impressed me over the capability to operate and maintain that safe reliable facility. Certainly, energy is incredibly important to a refiner, next to crude oil, it's our second biggest cost. And I would say that the configuration of our refinery in contract complexity is relatively high. To give this advantage, we do purchase some incremental natural gas. The way that we manage that is through both terming up class and some spots. So we try to mitigate exposures for those costs. And as well, I would say that our location does give us an advantage in terms of access to domestic crude. And as regional refiners leave the refining business, that can use additional access to those, and we're very much looking forward to seeing how that project plays out. As you look further to the future, certainly in managing our own energy intensity will be incredibly important. The Energy Hub does give us that opportunity as we reconfigure the refinery, the introduction of outflows, [indiscernible] ethylene production capability gives us an opportunity to do that in the most energy-efficient way. So certainly, incrementally, our energy performance can and will improve over time.

Thanks, Dale. The next question comes from Adam Martin at Morgan Stanley. "Assuming you achieved the Q3 2020 FID date for Geelong, can you walk through the main steps to hit supply into market by mid 2020s? When we look to confirm the commercial model, i.e., midstream infrastructure sale investor versus sourcing and selling the gas?"

Yes, look, thanks, Adam. I might say I'll [indiscernible] address your question.

Thank you. It's probably a good chance to give a brief update on the project. So we are going to the phase now of the regulatory approval. So we're sort of getting out in transition and kick off the approvals process in the first half of next year, looking forward to this year's approval and that time frame, and then we'll move to that commercial FID approval as soon as possible after [indiscernible]. As we set out in the slides, it -- you'll understand that our main focus is on that bit gas tunnel, [indiscernible] gas tunnel operator, and that's supposed to getting the project but we've got on partners who bring both the tool set and development channel importantly. The mindset between on demand for capacity through the gas tunnel and we'll continue to work with some commercial partners and the [indiscernible] in the market so you may want come into that project. So it will be really a case of getting to that Q3 FID stage to total define that final commercial model. You will see updates on that. In terms of bringing gas to the market, that's about that supply-demand balance that's what's up in the slides today. We've said that it's looking like mid-2020s, and this a few moving parts to that. But we'll work with our partners and other commercial distance in the market, and maybe go from the [indiscernible] as soon as possible because our view is, is that, that cash flow is coming on and our guest knows [indiscernible] projects to supply that [indiscernible].

Thanks, Lachlan. The next question comes from Mark Wiseman at Macquarie. "It's a long effective campaign with Port Kembla Terminal to win these customers over, and should we be optimistic with our contracts to be fine soon?"

Thanks, Michael. It's probably another good one for Lachlan so I'll hand back to you. Lachlan?

Yes, so good question and look, the -- I mean a lot of people's projects but the reason we've always thought this is a great project is it brings the best source of gas applied to where the gas demand is. So the main short in Australia is going to develop in Victoria and really in Melbourne, in Western Melbourne, in industry and business. So the game that we've got is we drill the terminal right next to that demand short, with minimal use of a small piece of extra part into that system. And it avoids the costs and necessity of reversing [indiscernible] and handles bringing gas down from New South Wales from other projects, each, of course, add cost and complexity to that. So we think -- we've always said we think it's the best case for an import terminal in the country. Over the long term, I think if you look at the forecast, there's clearly room for more than 1 terminal, and there's like we need to the [indiscernible]. So we can see room for both. But we're looking forward to getting out [ canal ] up and improving where the demand is much required.

Thanks, Lachlan. The next question comes from Daniel Butcher at CLSA. "Can you just talk about the environmental challenges associated with the project?"

Back to you, Lachlan.

I think the -- directly environmental challenges with the project?

Yes.

Okay. So it's a good question because as I'm sure you know, some previous projects fell over at the environmental approval and hurdle. And the 2 key things that we had an advantage of long will probably more than 2. One, it's an existing industrial facility. And so the change to the amenity of the site is fairly minimal. We already bring in ships to location with crude regularly, and we'll now be bringing in LNG players. We're not located in a [indiscernible] wetland. [indiscernible] modeling there'll be no impact on that. And ultimately, there's a lot of water used in these regasification processes, and we have quite a neat solution where the water that's used in the regasification process has been re -- put through the refinery and into our cooling system in the refinery, which either been operating to this [indiscernible]. And it's run through the system there and through that process, it's effectively reheated. And if anything, there's a bit of an environmental benefit in that the water comes back into carrier [indiscernible] at a more temperate level. So we actually think it's a really neat solution, an environmental standpoint as well and has a lot of [indiscernible] in that aspect.

Thanks, Lachlan. The next question comes from David Errington at Bank of America. "Over the next 3 to 4 years, you've called out in a letter period of about $500 million for the refinery in business. Can you explain in more detail what is the fiscal and what support you overstate from the government?"

Yes. Thanks for the question, David. And also just thanks for the questions on the LNG project as well. It's a significant project and confident about our Energy Hub and something that I'm very proud of in the sense that we really kicked this off beginning of -- or during the early parts of October, the pandemic, and have really progressed quite materially to the point we're at the moment. And we're really excited about the opportunity for that project as part of that overall energy hub context. The $500 million, David, that you're referring to in terms of refining incorporates -- it's the full-up capital, really. It includes the run and maintain capital that we normally spend to kick the refinery operating, incorporates the turnaround that we have over the next few years as part of our normal planned major maintenance again and, of course, the upgrade to low sulfur gasoline. Now the fuel security services payment, which obviously kicks in when refining margins are low, also includes rates, a recovery of that ongoing capital requirements, including just components of the low sulfur fuels upgrade that we will be funding. In addition to that, there is $125 million available from government to also contribute to the development of the low-sulfur fuels upgrade as well. So it's a substantial amount of capital acknowledged to actually well-funded within the normal cash flow of the business and obviously, with the support of the field Security Services payment, if that's required through that period based on the refining margin environment that we trade through.

Thanks. Next question comes from Joseph Wong at UBS. "Can you provide more detail on the return hurdles. Is 3% above WACC has fee rate of returns for new projects?

Joseph, I'll pass that one, cost to Jevan.

Thanks, Scott, and thanks for your question, Joseph. I won't comment on specific return hurdles. As you know, we don't disclose our WACC for commercial reasons. However, when we do think about new projects and the opportunity to deploy capital, we'll certainly be looking at opportunities to maximize returns. And what we've tried to set out today is a bit of a guide to give some context as to how we'll, at least, be thinking about minimum returns on new projects and new opportunities, particularly with respect to the balance sheet capacity that we've got and the sort of earnings uplift that, that can deliver. While I think we'll be lucky if we can find opportunities for total to exactly our maximum how short capacity and certainly be out looking for opportunities to add earnings in accretive ways to the business. with a focus on cash flow per share and return on capital employed.

Thanks, Jevan. The next question comes from Mark Wiseman at Macquarie. Regarding acquisitions, are you willing to book capital into traditional fuel [indiscernible] which is New Zealand [indiscernible] from here to deploy into new energies and capabilities to accelerate the transition.

Thanks, Mark. Now look, I think we're always open to both sort of outlined at the beginning. Our strategic approach is to outperform in our existing businesses as well as grow and extend into new areas, leveraging the diversity of our businesses. So there are genuinely 2 components there, and certainly, investment in our traditional business may well be part of how we think about outperforming in those segments, whether it's within commercial, within retail or within our refining business or our LNG hub business as well or potentially overseas. So we're very open to those at belt part of that strategy around our performance. But obviously, at the same time, also looking to invest in future earnings streams as well and going up to some of the opportunities that we see there.

Thanks. Next question comes from Michael Simotas at Jefferies. "What are your expectations for refining margins on the medium to long term? Product demand is recovering at significant capacity [indiscernible] for this supported period of very strong refining margins."

I think, Michael, thanks for your question. I think I sort of answered that before maybe this question is coming in a different sequence recap, I think, with the changes in refining capacity across the region in the globe. And perhaps a recovery in oil demand, which we've seen some early signs of back here in Australia, but also obviously globally as well that we do see a potential period. There is a relative balance or even imbalance in favor of refining some period of time, which will obviously then drive an improvement in refining margins in a potential period of out performance where we're not relying with only fuel security services payments and very much enjoying a more profitable period of refining. So that really was the opportunity that we saw going forward as part of the thinking around why we submitted to continue refining and entering into that contract with the federal government.

Thanks, Scott. The next question comes from Adam Martin at Morgan Stanley. "How are you considering growing in the EV space? A significant portion of [indiscernible] may happen at home, office, supermarkets, et cetera, as opposed to the conventional [indiscernible] given times. How will the government assist in rolling out this infrastructure? Can you provide some example, please?

Okay. [indiscernible] address that?

Yes. Thanks, Adam. It's [indiscernible]. And the question makes a good point in the sense that it's important to understand that [indiscernible] is not going to the same business model as our traditional business models in our retail fuels model. So I think as we said today, the advantage we bring in this space is a retail book. So yes, people will charge at home and the office but there's only a few public charging infrastructure. And having the best of our offering and the ability to access the best parts [indiscernible] into the EV market and build sort of a minimum vital network will be the -- will support the best offer to customers. And as always, it's going to be about what is the best offer to the customers. I think the way the federal government's recently released future fuels security, future fuels strategy, and they're very much focused on ensuring that the infrastructure is built and can see the charging demand coming. And makes good sense that neat infrastructure to support the uptake of those vehicles. So we'll look into the -- both in the near term to really kind of build what will be the best customer offer. And then also, we see it sort of a great advantage in supporting our convenient offer, that easy charging.n It's going to have complementary benefits to the retail and convenience network. We're going to have real time and will be spending more time at public changing locations, and really being part of the wider convenience story and the wider revenue streams through the convenience network as we go through that set for customer offer.

The next question comes from the analogy at Credit Suisse, Viva using or planning to use an internal carbon price to form the project net zero. If not, how do you balance the commercial and sustainability outcomes?

Thanks, Cam. So I'll hand that one over to Jevan.

Thanks, Scott, and thanks for your question, Grant. It is something that we consider, and we do think about the shadow carbon price internally when we look at new projects and new opportunities. I think the topic of balancing commercial returns and our sustainability objectives is a typical challenge and it's one for all companies these days. You've heard some commitments that we've made around the LNG input terminal, and it's certainly going to be a factor in the commercials when we think about new projects and new opportunities going forward as inevitable. Despite that, I still think there are real opportunities for us to pursue, whether it's acquisitions, business development or other growth pathways that can deliver sensible and attractive commercial returns while still achieving the net zero outcomes that we've set for ourselves.

Thanks Jevan. The next question comes from Michael Simotas at Jefferies. "The economics of EV charging do not seem obvious given the convenience of charging at home or nonservice station locations. How are you thinking about this?"

Yes. I mean I think a lot in said, it's going to be an important part of our retail offer. I think about it as really part of the overall convenience offering that we have on site, which will obviously be a mix of traditional fuels, electric-charging hydrogen in some locations and obviously, the broader convenience and mobility offers that we have. I think it's beyond the sort of earning potential of that part of the business in a retail setting, it's going to be an important feature for customers to choose our locations choose to spend time there and sort of in the case for recharging, but obviously, also just seeing us today as an appropriate and custom offering from a convenience perspective. So that's fundamentally how we approach it. I might start to hand a lot about the commercial thinking as well.

Yes. I think if the -- it's out to the [indiscernible] you're going in terms of pure public charging infrastructure, might not be the way to go. We really do need to bring a value add to customers and I think that's the way we'll see the business in the space in over time with a stack of the offer of customers. See opportunity as well to go into this commercial space and indeed, to take a lot of the comfort in governments' fleet maybe will be the first move is to one transition, some of those fleet across the [indiscernible]. And for that, you need a port into the commercial segment that you also to cover the network to be able to support them when they're not at posted. We feel like we have a good opportunity there as well. And then one will be focusing on developing in the shorter term.

Thanks, Lachlan. The final question comes from Scott Ryall at Rimor Equity Research. "Can you please talk to the conceptual limits around the Shell relationship in the context of its purchase of the [indiscernible] retailers, and potential ability to Shell to our EV charging solutions?"

Yes. Thanks, Scott. Look, we're not at liberty to talk about the details of the commercial arrangements that we have with Shell. But we have 2 primary relationships with them. One is obviously carrying the Shell brand here in Australia, which is a long-term arrangement that we have with Shell. Obviously, we've been operating under the brand, as Megan said, for all of our history and still a really important part of our business. We also are the exclusive supplier of Shell lubricants and grease here in Australia as well. And obviously, a lot of our people have a legacy Shell relationship as well. So we've got a very deep and close partnership with them. That continues today. We also have a continued presence here in Australia and continue to evolve their business, which obviously more recently includes entry into retail electricity. So as in any partnership, these sorts of relationships can flow up opportunities and where we can work together and obviously carrying a common brand makes that a very sensible opportunity, but we'll continue to work closely with them and see how that business opportunity for them involves some what opportunities that present for us in the future. Okay. Look, I think we've come to the end of the session, and thanks very much for your questions. On behalf of the executive team, I would like to thank you for joining us today. As you've heard, we are very proud of our company and our performance, and we're excited about the opportunities ahead. We have a unique set of businesses with advantaged positions in the market as combined many pathways to growth. We have a bold vision for each of our businesses, and we have probably taken steps to execute on these through the establishment of the energy hub along the development of our strategically positioned retail fuel and convenience platforms, and the extension of our position in various commercial and industrial segments that we operate in. As a leading energy company, we also recognize that we have an important role to play in the energy transition. And we are committed to introducing new entities as they evolve supporting our customers to reduce their emissions and taking concrete steps to reduce our own. As customer partners to our customers, we are excited about the opportunities that this will present and really look forward to playing our part to support the country's commitment to [ emission ] production while continuing to support energy, reliability and security. As we move forward, we are committed to maintaining a strong capital discipline, delivering attractive cash returns and very much supporting our investors. I want to thank all our investors today for your continued support. And we really look forward to meeting with more face-to-face in the near future as the world begins to reopen. Thanks very much again for taking the time to join us today.