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

So good afternoon and welcome to Viva Energy 2022 Annual General Meeting. I'm Robert Hill, and I'm honored to serve as the Chairman of Viva Energy. It's now just after 3:00 p.m. Australian Eastern Standard Time. We have a quorum present, and I declare this Annual General Meeting of Viva Energy Group Limited open. We're holding our Annual General Meeting today as a hybrid meeting, which means that we have people joining us here at Marvel Stadium in Melbourne as well as online. Welcome to all of you today. We're especially delighted to have some of our shareholders here in person after holding this meeting as an entirely virtual meeting over the last 2 years. I'd like to acknowledge the traditional custodians of country throughout Australia; and their connections to land, sea and community. Here in the Docklands, we are on the traditional lands of the Kulin Nation. We pay our respect to their elders past and present and extend that respect to all aboriginal and Torres Strait Islander peoples here today. Before we begin, I will hand over to our company Secretary, Julia Kagan, to run through some of the procedural matters.

Thank you, Chairman. And welcome to everyone joining us today. Before we commence today's meeting, there are just a few housekeeping matters to go through. A couple of words on safety: There are no safety drills planned today, so if you do hear an emergency alarm, please observe the staff and fire wardens, who will provide further instructions. A couple of words on voting. Voting on all items of business today is carried out by way of a poll. Now shareholders had the option of casting their vote before the meeting or appointing a proxy to do so on their behalf. If you haven't done so, you can vote at today's meeting both in person and online. And you can do so at any time, starting from now as the polls are now open for voting. For those of you that are attending here in person, you will have received an attendance card when you registered on arrival, so those of you that hold a yellow card, you can cast your vote by filling out that card. Those holding a red or a blue card are not entitled to vote at today's meeting, but if you do have any questions, please see a member of the Link Market Services team at the registration desk. For those shareholders that are joining us online, you'll see some instructions before you now, and if you could just follow those instructions to cast your vote. Voting will close shortly after the end of the meeting today. So a few words on how to ask questions at this meeting. So those that are attending this meeting in person and holding a yellow or a blue card, you can ask questions. Non-shareholder visitors will be holding a red card, and those holding a red card are not entitled to ask questions at today's meeting. So anyone with a yellow or blue card, if you wish to speak, can you please make your way over to the microphone when the Chairman calls for questions? And identify yourself, please, before asking your question. [Operator Instructions] In terms of sequencing, when we do get to questions, the Chairman will consider questions first from the floor and then questions submitted online, and then we'll go to phone questions. Thank you, Chairman.

Thank you, Julia. Today, I am joined on the stage by my fellow directors. To my left: Sarah Ryan, an independent nonexecutive director and Chair of our Audit and Risk Committee; Dat Duong, nonexecutive director; and Nicola Wakefield Evans, an independent nonexecutive director and Chair of our Sustainability Committee. On my right: Scott Wyatt, Chief Executive Officer and Managing Director; Mike Muller, a nonexecutive director; and Arnoud De Meyer, independent nonexecutive director and Chair of the Strategy and Investment Committee of the company. Jevan Bouzo, our Chief Operating and Financial Officer, is at the front table. And Lachlan Pfeiffer, Chief Business Development and Sustainability Officer. And of course, you've already heard from Julia Kagan, our company Secretary. The rest of the executive team join us in the audience today. We also have joining us in person here in Melbourne Trevor Johnston and Brendan Davis, representing our auditor, PricewaterhouseCoopers. Brendan and Trevor will be available to answer questions on the auditor's report later in the meeting. Before we go through the formal business of the meeting, Scott and I will address you on the performance of the company and some of the highlights over the last year. So I will go first. Despite the continuing -- continued impact of the pandemic, 2021 was a year of significant achievement for the company. We kept the business operating safely and reliably throughout, caring for our employees, serving our customers and the broader community and delivering financial results which showed significant improvement on prior years. For the year, we recorded group underlying EBITDA on a replacement basis of 482 -- $484.2 million. This is an increase of 98% on the prior year and an increase of 23% on pre-pandemic performance in 2019. Throughout through this period, Viva Energy maintained a strong balance sheet and finished the year with a low net debt of $95.2 million. Our strong financial position enabled us to complete a further $100 million capital return and an $18 million on-market buyback. The company also returned to positive distribution net profit after tax and paid $115.5 million in dividends in respect of the 2021 financial year. We're very pleased with this strong recovery, which was underpinned by a particularly strong improvement in our commercial and refining businesses and continued strength in our Retail business despite lower demands from periods of lockdowns and border closures. The steps we took to respond to a rapidly changing environment and support our customers through the pandemic were important to set the business on a firm footing to benefit from longer-term recovery, and this is very evident in the results that we delivered. Scott will talk more about these results and update on our 2022 performance when he addresses the meeting shortly, but the future of our business is in good shape. We've entered into a contract with the federal government to continue operating our Geelong Refinery through to at least mid-2028. And we're undertaking a significant investment program to transform the site into an energy hub, which aims to consolidate our role in supporting energy security and the energy transition. Our contract with government provides an effective floor in refining earnings and critical financial support for the development of strategic storage and upgrades to refining processing capability to meet new fuel standards. Our refinery, 1 of 2 remaining in the country, is a facility of national significance. Australia is, of course, at the beginning of a long-term energy transition. It is important that we make this transition together with our customers and that we collectively deliver the outcomes which are critical for the long-term health of the planet. We believe that Viva Energy has an important role to play to support Australia's energy security, providing the energy that people need today as well as accelerating energy transition by developing energies of the future. It is critical that we get this balance right. Last year, Scott and the executive team held an Investor Strategy Day to share our approach to this transition and what it means for each of our businesses and our key priorities. Importantly, we announced commitments to achieve net zero scope 1 and 2 emissions in our nonrefining operations by 2030; 10% reduction in emissions intensity at the refinery by 2030; and over the longer term, an ambition to reach net zero scope 1 and 2 emissions across the operations by 2050. We're also committed to helping our customers reduce their emissions and have already announced a number of initiatives that will support these objectives such as carbon-neutral jet fuel and investment in hydrogen refueling facilities for heavy vehicle transport operators at our energy hub in Geelong. We have installed with our project partner, Evie Networks, electric vehicle charging facilities at 5 trial stations; and also trialed the recycling of plastics through our refinery operations in partnership with the LyondellBasell polypropylene facility which we have subsequently acquired. This merging of traditional and renewable energies are great examples of how we believe that we can be part of the solution and make a successful transition. We also shared our aspirations for each of our 3 key business unit. We aim to become a fully integrated fuel and convenience retailer as arrangements with our retail partners conclude, to extend our commercial businesses with adjacencies and new service offerings to build on our commercial and industrial capability and to transform our site at Geelong to consolidate its roles in the long-term part of our energy and infrastructure businesses. We're excited about the future and are making good progress in progressing strategies to achieve these aspirations. Scott will talk about these when he addresses the meeting. During 2021, we had some changes to our Board. In August 2021, Nicola Wakefield Evans was appointed to the Board as an independent nonexecutive director. Nicola's considerable experience in governance, diversity leadership and experience with companies involved in the transition to a lower-carbon future have been a valuable contribution to the Board. The appointment followed the retirement of Jane McAloon as an independent nonexecutive director in August of '21. She stepped down from the Board of visa -- Viva following a change in her listed board commitments and has subsequently been appointed as Chair of EnergyAustralia. I take this opportunity to thank Jane for her significant contribution as a director and as Chair of the Sustainability Committee during her time with the company. We are a company driven by people. And we're both thankful and proud of our team's efforts over the last year to deliver extraordinary results in the face of continuing challenge in the external environment. On behalf of the Board, I would like to thank Scott and his leadership team, our employees for their significant contribution to our results; my colleagues on the Board for their ongoing work and commitment; and our shareholders, for your continued support of the company. And I will now ask Scott to take you through his delivery.

Thanks, Robert. Look, I would also like to take this opportunity to thank our people for their significant contributions through some very challenging times. The pandemic and the impacts on our business and daily lives have challenged us all, and I'm very proud of the way we have collectively responded and the results that we have achieved under difficult circumstances. The start of 2022 has presented further challenges and uncertainty resulting from the conflict in Ukraine, with global oil markets highly volatile, but again we are responding well. And many of the decisions that we took through the height of the pandemic are indeed serving us well. Amidst an excellent period of operating and financial performance, our safety performance in 2021 was somewhat disappointing. With an increase in maintenance and construction activity, we unfortunately experienced a higher number of personal injuries across our operating areas associated with manual handling, slips, trips and falls. Although impacts on people were relatively minor, we are nevertheless concerned about the increased frequency of injuries and have taken steps to lift our leadership focus and presence on sites to support our teams to improve personal safety. As always, this is a key priority for our business this coming year. As Robert has already mentioned, our operating and financial performance was particularly strong last year. Total sales volumes were up 7% on 2020, supported by an emerging economic recovery in many areas and sustained market share growth across key segments despite continued impacts of lockdowns and border closures. Our Commercial business grew earnings by 39% over 2020 despite continued impacts of the pandemic-related restrictions on aviation and marine cruise sectors. Decisions we took to reset commercial businesses to adapt to a lower sales environment and continued support of our customers across all sectors have served us well, and we are well positioned to continue benefiting from further recovery growth as we emerge from the pandemic. Our Retail business, of course, was naturally impacted by prolonged lockdowns in Victoria and New South Wales, with rising oil prices also leading to compressed Retail margins at times. While earnings were down 20% on 2020, we did maintain strong relative sales performance and increased our market share by 2% across all retail channels, with particularly good growth from our Liberty Convenience business. Our refining business returned to profitability in 2021, recording an EBITDA on a replacement cost basis of $103.4 million compared with a loss of $127.9 million in 2020. This reflects a return to stronger refining margins in the last quarter of the year, together with support from the federal government's fuel security packages. The company has not received any fuel security services payments during the last quarter of 2021 or the first quarter of 2022 as refining margins have recovered. Since April this year, we have seen a significant increase in refining margins driven by a combination of strong global demand for refined products, coupled with a tightening supply as a result of refinery closures around the world, reduced exports from China and the broader impacts of sanctions on the purchase of Russian oil. In light of this unique environment, we recently provided an intra-period financial update on our performance disclosing that, for the 4-month period ending 30th of April 2022, our unaudited EBITDA on a replacement cost basis was approximately $308 million. which is an increase of 65% on the corresponding 4-month period in 2021. This result is in large part a reflection of the refining margin environment as well as a strong performance in our retail and commercial businesses in the first 4 months of this year. As Robert mentioned earlier, we have made good progress on our strategic agenda. And we are very excited about the future opportunities which we shared with investors during November last year. There are 2 million households and 65,000 businesses that rely on gas in Victoria. Our proposed gas terminal in Geelong will play an important role in supporting these individuals and businesses by addressing the forecast gas shortage and improving energy security as we make a longer-term transition to renewables. The gas terminal will bring gas from other parts of the country and overseas to meet the needs of Victorian households and businesses. We've made significant progress on this project over the last year, expanding our partner group, completing front-end engineering design and completing the environmental effects statement for public exhibition. This is a key step in achieving regulatory approval for the project; and it's an important opportunity to engage with the community, stakeholders and government. The panel hearing is expected to be completed in the third quarter of this year. During 2021, we also signed an MOU with Waga Energy for renewable natural gas recovery from landfill and launched carbon-neutral jet fuel. More recently, we announced the launch of our hydrogen production and refueling project, with support from ARENA and the Victorian government; as well as our agreement to acquire LyondellBasell Australia. These are important steps in the development of our energy hub at Geelong and for the growth and extension of our Commercial business. Our hydrogen fueling project will see us develop a new energy service station as Australia's first publicly accessible commercial hydrogen refueling station built specifically for heavy vehicles like buses and trucks. The station will also offer electric vehicle recharging and therefore bring together 2 zero-emission technologies that will support the energy transition in one of the harder-to-abate sectors. LyondellBasell is Australia's only polypropylene manufacturer, located within our refinery footprint, and supplying the Australian market with raw material for the production of diverse plastic products ranging from food packaging to polymer bank notes. This acquisition, we believe, will open the door for innovation and the development of new business opportunities in the future. In 2021, we delivered exceptional results and took significant steps on our strategic priorities. We are very excited about the foundations that we have laid and look forward to the opportunities ahead in 2022 and beyond. We thank all our shareholders, for your continued support. Let me now hand back to Robert to take us through the formal business of the meeting.

Thank you, Scott. As we go through the resolutions today, I will open for questions. Those shareholders with us in Melbourne today holding a yellow or a blue card, you may make your way to the microphone at the appropriate time. And please identify yourself before asking your question. For our shareholders attending online, I would encourage that you start submitting your questions now, and we will address them as we go. I will now proceed with the formal business of the meeting. The notice of meeting sets out the following matters for consideration by shareholders today: one, to consider the financial statements and reports; two, to adopt the remuneration report; three, to elect Nicola Wakefield Evans, reelect myself and Dat Duong as directors of the company; and four, to grant performance rights to Scott Wyatt under the company's long-term incentive plan. During the meeting, we will display the proxy votes and the direct votes received in advance of the meeting. Where I as Chairman of the meeting have been nominated as a shareholder's proxy, I intend to vote all undirected and available proxies in favor of each resolution. There are also voting restrictions for some resolutions outlined in the notice of meeting. I remind you that the polls are now open for voting. The outcome of today's meeting, including the final vote numbers, will be released on the ASX after the conclusion of today's meeting. So I turn to the first item of business, consideration of the financial statements and reports, including the directors' report and the auditor's report. The Corporations Act requires the directors to lay before the Annual General Meeting the financial report, directors' report and auditor's report for the last financial year. There is no formal resolution put to shareholders for this item, but there will be an opportunity to ask questions on the matters contained in the reports, so I ask, are there any questions from the floor? And if so, please make your way to the microphone, identify yourself and ask your question.

Chairman, my name is Ian Curry. I represent the Australian shareholders and myself as a shareholder. Chairman, there's certainly been some good news of late and I just wondered if I could seek a little bit more information. Firstly, given the improvement to end of April, are retail fuel volumes now trending towards target through the Coles outlet? Secondly, what's the [ management of risk ] with the Vitol relationship at this stage? And thirdly, the gas terminal project, there is certainly some opposition to that. And I know that will be part of the community discussions, but I'd like to know just how that will be managed. And fourthly, a question about the future of service stations. You made the comment that there are 5 stations now which are being prepared for [ electronic ] recharging and also for the hydro, but is this a threat to the current service station structure and approach? Perhaps I could leave those 4 points with you...

Okay. So the first is the recovery of retail volumes. Do you want to deal with that, Scott? And then I'll deal with Vitol.

Okay. Can -- is this microphone working? Yes. Thanks for the question. Look. When we released our first quarter results and the Alliance sales, which I think you specifically referred to and which is obviously a core channel in our Retail business, we're averaging just over 55 million liters a week, which is in line with sort of average for 2020 despite the fact that we were -- have been emerging from obviously COVID generally. Quarter 1 was still heavily impacted by the emergence of Omicron around the country. And obviously we had flooding events as well, which had a material impact in some parts of Australia, impacting retail fuel volumes, so we haven't seen the -- a full recovery in Retail at this point in time. And nor has the industry, which remains down as well. Looking forward, I think how the retail market recovers will very much depend on mobility behaviors. And we still see in the capital cities particularly, so Melbourne, Sydney and Brisbane, the larger cities, mobility levels have not recovered to pre-pandemic levels, I think, largely driven by the sort of working-from-home and flexible working environment that has emerged through the last couple of years. So we [ sort of see ], watch with interest of how that evolves through the course of the year, where it finally settles. And that will obviously drive ultimately the sort of recovery in Retail going forward, I think.

Is there an impact of price on those volumes? Or is it an inflexible necessity that people pay the price [indiscernible] the petrol price?

No. I think, I mean, obviously the cost of petrol is a significant cost of living for people, so it's certainly probably also a factor in driving some of those mobility changes that we're seeing as well because people have to make choices about where they spend. Now to some extent, there's a level of travel that people, consumers generally need to do. And I think what we've seen throughout the pandemic and certainly in this year as well is that the business community and industry and all forms of industry in the country has performed steadily right through the pandemic and drives a certain level of demand in our Commercial business but also in our Retail business as well, but I think -- for general consumers, I think price is certainly and particularly obviously at current pricing levels driven by international environment is probably driving demand down a little bit, so...

So question on Vitol. I'll answer for Viva, not answer for Vitol, but the Vitol relationship is obviously very important to us. Not only are they our largest shareholder, but they -- we buy our product through them. And that -- we have a competitive advantage, in our view, in doing that, as they're the world's largest trader in hydrocarbons, so in terms of both the purchase of refined product and the purchase of crude oil for the refinery, they're a very valuable partner. We responded to the invasion of Ukraine by Russia. I think we said it publicly at the time by making the decision that we wouldn't purchase further product from Russia. I don't think we got a lot, but we do get shipments from time to time because we source our products according to the specifications, what we need for the refinery and price, obviously, and availability. And so we'll make no further purchases from Russia, and we didn't really wait for the Australian policies to be announced to make that decision ourselves. We had 2 shipments that had already been purchased, and we've made arrangements to deal with those. We made arrangements with the Australian government to deal with those in a way that doesn't breach any sanctions. So that's the end of that. Vitol have been helpful to us in those decisions because they then have to source product elsewhere. And as I understand it -- as I said, I don't want to answer Vitol, but in Vitol's own business, they are reducing their involvement with Russia and therefore respecting the -- expecting the standards in that regard that have been set by the Western world. The third question was...

The gas terminal project. And there is some community opinions, [ I guess, best ], or objections, if you like.

Correct. So there always is with a new development like that. It's new for Geelong. It's new for Australia. We are doing it, as Scott said, because we see a business opportunity, but that business opportunity is related to the fact that we see a declining availability of gas in Southeastern Australia as the Bass Strait resources decline. And the public -- the government's public pronouncements to that effect evidence what we believe is occurring. And that shortfall is potentially a very serious shortfall. And Scott mentioned that in Victoria alone you've got over 2 million households that utilize gas stoves and the like and some 600 businesses that are reliant on natural gas as well. And what we are looking to do is to meet that shortfall, therefore meet the public need, as well as at the same time provide a business opportunity in doing so. So a new development. There's always some concern by some people. And I guess they really break down into 2 different groups. There's 1 group that just doesn't like the idea of us importing gas in the Southeastern Australia even if it might be imported from the other side of Australia. Or it depends because they say it's going to add to the climate change challenge, but as I've said, it's largely replacing the product that's currently supplied through another way, the existing fields, so I really don't think that is a big issue in itself. We know that the energy sector as a whole has got to respond to the climate change crisis. And the sector has got to play its part in reductions in the same way as all other sectors have to, but we don't think this particular development will make any difference in that regard. The second group of people concerned are really those who -- it's sort of the, I respectfully say, not in my backyard. It's something new. It's unfamiliar to me. I'm not sure about it. And we are seeking to demonstrate to them that -- given our history and long history in Geelong, that we can manage it safely. And it's not in any way -- it's going to be for -- a benefit for the community, not a risk to the community. So we're dealing with that one, we have also -- there are very few people that have actually raised environmental issues beyond the broader lower carbon issue. And so we've done a lot of baseline work and so forth. We do understand that environment very carefully, and we're confident that we can do the development in an environmentally responsible way.

So you would see this as being quite different to the AGL proposal at Crib Point.

Well, there was a huge protest vote, huge protest on that development based on local environmental issues. We don't see the same local environmental issues at Geelong. In many ways, Geelong, given its history, its industrial history and so forth, is ideally located for this development. And we just happen to have the competitive advantage of already having [ wharfs ] and familiarity with bringing product into the existing refinery. So we're well placed in that regard. So yes, it's we're going through, as Scott said, the environmental effects process at the moment. There'll be a public panel process that follows over the next few months, and ultimately there will be regulatory decisions made. And we're obviously hopeful and reasonably confident that we'll be successful in that regard, and we're progressing in that expectation.

And lastly, the future of service stations.

Well, service stations have been historically located at convenient spots. And whilst they may have been driven by the fuel offering in many cases, the convenience offering over the years has continued to grow and still continues to grow. So as the traditional fuel gradually reduces, which we would expect will happen, although it's not happening very quickly in Australia, apart from another crisis of pandemics and the like, the value benefit of the sites will become more weighted towards the convenience offering. So that's why Scott said that we are now putting more emphasis on that side of the business and developing that side of the business. We're lucky to have -- well, we talk about our family of sites as about 1,300, 1,350 in Australia of various types and sizes, which gives us the largest national footprint in that regard. So in the years ahead, we want to maximize the convenience opportunity in those. And the provision of alternative fuels that we will offer through those facilities as well may in the end be a lesser proportion of the total value. I think that remains to be seen. Any other questions in the room? If not, Julia, we go to online.

Yes, Chairman, we have a couple of questions. The first question is from [ Stephen Mayne ]. And [ Stephen ] asks, "Retail shareholder voting participation has been falling in recent years because we all feel powerless in the face of big institutional votes. When disclosing the outcome of voting on all resolutions today, could you please advise the ASX, how many shareholders voted for and against each item, similar to what happens with schemes of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions; and was disclosure initiative adopted by the likes of [ Metcash, LTM and Dexus ] after their 2021 AGMs."

So we obviously respect retail shareholders to the same extent as any other shareholder. In fact, we'd like to see more of them here today, but our constitution, we're obliged to take votes by poll. And that's the way we have traditionally reported and that's the decision we've made in relation to this meeting. And I think we should stick with this meeting, but we obviously will take this on Board as a representation and give consideration as to whether we should amend our practice. It is interesting that some other companies are doing it even though I'm not sure that it actually tells you quite as -- provides you with much more useful information than the question there would suggest, but we'll think about that for the future. Any others, Julia?

Yes, Chairman, another one from [ Stephen Mayne ]. And he asks, "We received $28 million in JobKeeper, which puts us in the top 25 for listed companies. Could the Chair and CEO please comment on whether the Board had any discussions about repaying any of this figure given that the scheme is now regarded as having been widely [indiscernible], with $38 billion of the $89 billion going to applicants which didn't qualify under the rules? Given that more than 10 public companies such as [ Cochlear, Iluka, Harvey Norman, Nine and Premier Investments ] paid back some or all of their JobKeeper, why don't we do the same?" Thank you, Chairman.

So as I recall it, I answered this question last year. And the JobKeeper payments we received in the previous year -- almost all, if not all, of the $28 million was in the previous year. This year in question was none or a very small amount of JobKeeper payments, but I did say at the time that we appreciated those payments. Because as Scott has said in his report today, basically we market products, and we woke up one morning and there was no market. And it was very important to us to keep the refinery in particular operating, important to the nation to be able to do so. And JobKeeper was very helpful in supporting us to enable us to keep the workforce in jobs during that period. And as the questioner will [ note ], we weren't one of those companies that made big profits that year, quite the contrary. So we spent the money as it was intended. It served the purpose. It enabled us to keep the refinery operating. It was still a very tough year for us financially, so I don't really see the relevance of the [indiscernible] part of the question. Any others?

Yes, Chairman, another one from [ Stephen Mayne ].

Yes.

"What is Viva Energy policy position on making political donations? And have we or will we be making any donations related to the current federal election? What regulatory risks do we face from Canberra, particularly given the change of government and the policy positions of the greens and the teal independents on climate change? For instance, many other countries have imposed an end date for the sale of petrol vehicles. Would a sunset date of, say, 2035 be bad for our business?" Thank you.

So the first part of the question, political donations. We haven't made any political donations. And our policy, which we stated publicly at the time of our public listing, was that we didn't intend to do so, so obviously if we change that policy, we would make a public pronouncement at an appropriate time. We haven't changed the policy. That -- so that deals with the first one. Yes, the change of government will raise new questions in relation to the part we play in climate responses. I have to say that the new government in opposition has been very supportive of particularly the fuel security support that we've received from the previous government. Both major parties supported that. So what I'm talking about is the underpinning of the refinery, that specific fuel security payment when -- which enabled us to have the confidence to make major investments in the future upgrading of the refinery; and in the new tankage requirements of the government for energy security, new diesel storage, which we bid to support the government in that regard and we're successful in relation to Geelong. And as I said, we're about to start building 3 new tanks down there in that regard. So that was supported by the labor party. And I think the labor party -- I think, from memory, the labor party has said before that they still think we're undersecured in relation to Australia's needs in of -- in terms of fuel storage. And I guess the third area was in relation to the financial support we're getting for the new low-sulfur facility. And the then opposition was supportive of that also. They obviously think that, that would lead to a good outcome. It helps sustain refining industry in Australia, which is important in terms of national fuel security and to do so with a higher-quality product, so I don't think there'll be any issues in that regard. The other policies. They have -- the policies they took to the election in relation to low carbon -- their trajectory in early years was more demanding than that of the coalition. The end picture was the same, where they seek to go, but they want more to occur in early years. We note that. And some -- to some extent, I'm pleased to say that we feel that we were a little ahead of that with the announcements we made last year. We're actually achieving significant reductions ourselves in carbon emissions. And even in relation to the very difficult challenge of the refinery, we've announced carbon reductions as well. Yes, they want to accelerate the takeup of EV vehicles, and that's fine. We're pleased to see that they want to focus on fleet. We think that's sensible, and we're going to seek to service those vehicles as well through our existing facilities. We -- they also want -- are going to reduce the -- take away the tariff, the excise on non-luxury vehicles. We think that's fine. That's a sensible public policy and no reason why they shouldn't do that. And also take off the fringe benefits tax in relation to [ lower ] non-luxury vehicles, and we have no quarrel with that policy as well. In relation to the other important part of the climate change suite, and that is for major emitters that are subject to a cap, which is us and others, but anyway, it's us, they want to screw down the cap. And that's what the scheme -- that was always the concept of the scheme. And their policy says that the -- any ratcheting down will be negotiated between the company, relevant company, and the clean energy regulator, with the support of the relevant department. And we're happy with that. On the one hand, we see the labor parties wanting the refinery to continue and they want to support the refinery. On the other hand, they want to -- the refinery to play its part in a lower-carbon future, and we have no quarrel with that. And as I said, we're already on the path of achieving that. So I think that probably answers the question. Any others?

Yes, Chairman, there is one more. "Australia has had a remarkably low and slow takeup of electric vehicles by world standards, presumably in part because of policy confusion and backflipping out of Canberra related to the carbon wars over the past decade. What policies do we support to speed up this uptake? And to what extent will or could our retail network be deployed for electric vehicle charging? Does the new labor government in Canberra have any relevant policies in this area?"

So I think I pretty much answered that question already. I've said what the policies are as I understand it and then no problem with that. And I've said that we also want to play our part in refueling those electric-powered vehicles. And the only thing I would add to it is we also part -- that's largely referring to the light transport fleet. We're of a view that the heavy transport fleet in the future may move more towards a hydrogen fueling option, and we are positioning ourselves to be the national leader in supplying that capability in Australia. So as Scott said earlier today, we've announced that -- the first significant refueling facility at Geelong. That will be green hydrogen. We will make the green hydrogen ourselves on site, fueled from our solar plant, but we're also in discussions with governments on the eastern states -- in the eastern states about a refueling network from North to South of Australia on the major heavy transport highways. That's going to take time, but on the other hand, the vehicles aren't there yet either, so it's we've got to work hand in glove in the development of these vehicles and work with the transport sector towards that outcome. But we think that's probably what's going to happen over time and we want to be part of that story. Any more, Julia?

There's no more questions online at this point.

Have we got any questions on the phone?

There are no telephone [ questions at this time ].

None? Sorry. I couldn't...

No, no, Robert, there's no questions on the phone.

Okay, if there are no questions on the phone, I declare that the financial statements and reports have been received and considered by the meeting. Item 2. The next item is the remuneration report. The vote on this item is advisory only. However, the Board will consider and take into account the outcome of the vote and feedback from shareholders on the remuneration report, so are there any questions from the floor on this item of business?

Yes, Chairman, once again. ASA has had quite lengthy discussions and correspondence on the remuneration report and the components of that report. And it would appear in some respects that our main position is for greater transparency where that can be achieved. I suspect that means perhaps trying to be less complicated, although not many companies have managed to do that yet. It's also arguable that you're still, what, 3 or 4 years through as a listed company; and that there are some issues that have carried through from previous years. In that context, I've been directed to vote according to the number of directed for or against proxies. Most of the proxies I have are open and some 215,000 of them, but I've been directed to vote in favor of the report, as the majority of the directed votes are in favor of the report.

I'm pleased to hear that. And I've also always appreciated our dialogue with ASA. And you might also, if you look at the intricate, fine detail, find that we actually have responded to certain of your representations in a positive way. Any questions from the floor? Any other questions?

We have a question online, Chairman.

Questions online.

So this is a question from [ Stephen Mayne ].

Yes.

"In addition to the $25 million in JobKeeper, former Prime Minister Scott Morrison visited our Geelong refinery on April 13 and announced a $125 million grant for a refinery update. Has this money been received as yet? Is the new government committed to it? And does it have any impact on the remuneration arrangements at the company? Will any executives get a bonus for successfully securing such a large government grant?" Thank you.

So the $125 million was a contribution towards the costs of the low-sulfur plant, wasn't it, Scott...

Low-sulfur upgrade, yes.

There's no -- low-sulfur upgrade, which was calculated at roughly half the cost, so -- and that -- as I said in an answer to a previous question, that was not just supported by the government. That was supported by the then opposition as well. The -- and the contract with the government, as I understand it, has been signed, although I don't think we've received any payment yet, but we're just starting that process -- that project now. There's no benefit that is directly related to executives as a one-off that relates to that project. Executives have the potential to earn benefits from achieving the outcomes that the company is seeking. And the development of the broader Geelong energy hub and all its component parts, some of which we've talked about today and there are some others as well, obviously gets taken into account in determining whether they earn reward under the short-term benefit or the long-term benefits. So they don't get a portion of the grant, if that's what the question is, but it -- but delivering on these outcomes for the company, which just builds the future of the company, obviously gets taken into account when we assess their performance. Any other questions?

Yes, Chairman. We've got one more question from [ Stephen Mayne ]. "There was an 11% protest vote against the remuneration report but no meaningful protest vote against the CEO's LTI grant. Do we know which of the proxy advisers recommended a vote against the rem report? And what was the concern there identified? Are we likely to make any changes in light of this protest vote?"

So the proxy advisers, of course, advise their clients. And we would say good proxy advisers who also talk to us and ask us for explanations, and we seek to be as transparent as possible and tend to have a good exchange with them in that regard. Sometimes, they accept our arguments, and sometimes they don't. So I know that there were some proxy advisers that were unhappy about a couple of things. I don't think it's [ so relevant ] to the rem report, but I think there was one that was -- that believes we've been too slow to lift the representation of women on the Board. And that's largely because we've had such little turnover on the Board, but we actually have a policy to increase women on the Board when we do get a turnover. And the -- and there were some others, which I think is probably more what the question is talking about, who disagreed with us in our determination of the -- of an aspect of the long-term incentive which was really a shareholder -- our comparative position in relation to other companies within the ASX 200. And we -- it's the long and the short of it is that 2 companies that were in the index, Shell and [ Oil Search ], dropped out the month before the end of the 36-month period. And as a result of that change, whether the -- they merged. That's why they dropped out, even though they were good comparators for us in many ways. And that would have changed the decision as to whether the executive got a benefit or not. And we thought as a Board, after serious consideration and debate, that, that outcome would have been an unfair outcome. And it was our view that it's in the interest of shareholders to make decisions that are fair to the executive. They had a different view, at least one of the proxy advisers. So that's a difference of view and that's the explanation for it.

There are no more questions online, Chairman.

Any questions on the phone?

There are no phone questions at this time.

Okay. So thank you. So I'll formally put the motion on item 2, that the remuneration report for the year ended 31st of December 2021 be adopted. Please record your vote now if you haven't already done so. For shareholders attending this meeting in person, please now select for, against or abstain next to resolution 2 on your yellow paper voting card. For shareholders attending this meeting online, please select for, against or abstain next to resolution 2 on your online voting card. [Voting]

Okay, we will announce the results of the poll later, as I indicated at the outset of the meeting. Item -- I'll move on to item 3, which is the reelection of directors. The first is relates to the election of Nicola Wakefield Evans as a director. Nicola retires at this meeting in accordance with the company's constitution and, being eligible, offers herself for election. The Board has considered Nicola's performance and contribution and supports Nicola's election. Details of Nicola's qualifications, career and experience are set out in the notice of motion (sic) [ notice of meeting ] and in the annual report. And Nicola is here with us in Melbourne today, and I will ask Nicola to speak to you in support of her election.

Thank you, Robert. Good afternoon, ladies and gentlemen. As Robert mentioned, I'm [ Nikki ] Wakefield Evans. It's a great privilege to be considered for election to the Viva Energy Board at this Annual General Meeting, and I'm delighted to speak in support of my election. I would like to make the following points about how I contribute to Viva Energy. In addition to my role on the Board, I am the Chair of the Sustainability Committee, a member of the Audit and Risk Committee and the Strategy and Investment Committee. I'm also a nonexecutive director of the Macquarie Group, LendLease, MetLife insurance Australia, the Clean Energy Finance Corporation, the Australian Institute of Company Directors, the University of New South Wales foundation and the Goodes-O'Loughlin foundation. I'm also a member of the Takeovers Panel and I chair the 30% Club Australia. As an experienced senior executive, corporate lawyer and nonexecutive director, I have deep technical knowledge across a number of sectors that are relevant to Viva Energy, including renewable energy; energy trading; resources, energy and infrastructure; transport and logistics; property and construction in Australia and globally. I also have over 30 years experience as a corporate finance lawyer where I'm qualified to practice in Australia, Hong Kong and the United Kingdom. I've also lived and worked in Asia and North America and have worked with a number of businesses globally in many sectors. This experience allows me to have an appreciation of the complexity and diversity of the global energy markets that are relevant to Viva Energy and enables me to contribute effectively to the Board's oversight of Viva Energy's operations. My exposure to many high-performing organizations during my legal career and as a nonexecutive director on other boards has enabled me to understand the importance of having a great culture, values and organizational resilience. I believe that I can bring this experience from other successful organizations to my work on the Viva Energy Board. My experience as a nonexecutive director and as an adviser to boards brings a useful and relevant understanding of corporate governance and of how good boards should operate. I also have extensive experience in ESG and safety through chairing similar committees on other boards. This experience assists me in my current role as Chair of the Sustainability Committee at Viva Energy; and allows me to contribute to the business, strategic, regulatory and governance aspects as a director of Viva Energy given its diverse operations. Viva Energy has a great Board with a broad mix of skills and experience, and I'm thrilled to be part of it and this very dynamic company. Thank you for considering my election. I can assure you that I will continue to dedicate both the time and commitment to fulfill my duties to Viva Energy and its shareholders. I therefore offer myself for election to the Board of Viva Energy and very much appreciate your support. Thank you.

Thank you, Nicola. Turning now to questions. We've received a written question prior to the AGM. The question relates to Nicola's position on other Boards and asks whether Nicola is able to devote sufficient time to her role with Viva Energy. I could read the question out in full, but that's basically what the question is; and I would like to respond to that. And basically, in our recruitment process after Jane decided to become a company chairman and move on, we did actually have a very strong list of candidates before us; and Nicola was the outstanding candidate. The question of her heavy workload was one thing that we did discuss with her, and we became satisfied. And I think we all know there are some people who can handle a heavy workload and some people can't, and Nicola was one of those who can. And I can assure our shareholders what we've seen from Nicola since she joined the Board not so very long ago is that she's making a major contribution to the company, doing everything that we would expect and want from her. So in relation to Nicola, her other board experience, particularly the finance sector and the clean energy sector, is a net asset to the company. And we're very pleased to have had her as a director. And I'm pleased that she is standing for -- now formally for election in accordance with our constitution. Are there any other questions? So I go to the floor first in accordance with this process. Is there anyone on the floor that wanted to ask Nicola a question? Are there any -- if there are not, are there any online who want to ask Nicola a question?

Yes, Chairman. There is a question online from [ Stephen Mayne ]. And [ Stephen ] asks, "What was the recruitment process that led to Nicola's appointment? Was an external recruitment firm involved? And how many candidates were interviewed with the full Board or the Chair? Could Nicola also please outline to what extent she has worked with or knew any of the other directors before joining the Board?"

Okay. So the first part of the question was, yes, we did involve a recruitment firm that assisted us with the long list and the development of a short list. And we also obviously contributed our own knowledge of potential candidates and the long list was then reduced to a short list through meetings with the candidates. And unfortunately, they were all online, but that was part of the times. And they were done by a subcommittee in the first instance and then, as we got the list down to a short, short list, by the Board as a whole, so it was a thorough process. And as I think I said a moment ago, that in the end, we had a number of very strong candidates, but we decided that Nicola was top of that list. I can say she was our first choice and we were very pleased that she accepted our invitation to join the Board. Do you want to answer the bit, Nicola, about who you know and whether they [indiscernible]?

Sure. Thank you, Robert. So the second part of the question is to what extent I've worked with or knew any of the other directors before joining this Board. I hadn't worked with any of the other directors or anyone in senior management before I joined the Board. I knew Sarah because Sarah and I are both members of Chief Executive Women, but we've never worked in the same company together.

Thank you. Are there any other questions online, Julia?

[ No, Chairman ].

Are there any questions on the phone?

There are no telephone questions at this time.

Thank you. A summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on the screen now. I formally put the motion that Nicola Wakefield Evans be elected as a director of the company. Please record your vote now if you haven't already done so. [Voting]

Thank you. Again, we'll announce the result in due course. The next item relates to the reelection of myself as a director, and I therefore hand the chair of this meeting to Sarah Ryan for this item of business.

Thank you, Robert. Good afternoon, everyone. So Robert retires at this meeting in accordance with the company's constitution, and being eligible, he offers himself for reelection. The Board has considered Robert's performance and contribution and supports his reelection. Details of Robert's qualifications, career and experience are set out in the notice of meeting and in the annual report. I will ask Robert to say a few words about his election. Robert, over to you.

Thank you. It has been a privilege to chair the Board of Viva since its public listing. I've appreciated the cooperation and support of my fellow Board members. We've maintained a cohesive and collaborative Board, which I think has served the company well. We have also, I believe, provided sound strategic guidance during a challenging period and reinforced the strong values which have always underpinned the company. 3 years ago, I offered myself based on a lifetime of leadership in the public and private sectors. I offered a wealth of experience from the law, politics, government, higher education, business and the not-for-profit sectors. I particularly stressed my strengths in public policy. I offer again the same qualifications but also, I believe, 3 years of successful governance of Viva. The next few years will be very important for the company as the energy transition accelerates. We must come through that process an even stronger company. Helping guide the company to that outcome would be a continuing privilege, and as such, I submit myself for your consideration.

Thank you, Robert. So we'll turn now to questions. Are there any questions from the floor on this item of business? [ Sorry ]...

[ Yes, there is ]. I will be voting open proxies in favor of the reelection of the Chairman but would just like to make the point that there is a policy of achieving, I think, 1 year -- shares equal to 1 year's fees. There's 4 years in, and I think it's a 5-year term. It does mean that Mr. Hill and the Board will need to get the share price up quite dramatically or he'll be buying quite a lot of shares next year. Because at the moment, I think he's got quite a challenge in front of him.

Thank you. Maybe I'll just say a few words first. So the policy is that all independent nonexecutive directors hold a year's worth of director's fees within 5 years of appointment. So all of our directors are in compliance with that, and as you've pointed out, we're 4 years into it. And we don't have year-on-year targets, so Robert is in compliance. Perhaps, Robert, would you like to add anything?

Only that, in accordance with the constitution, within the 5 years, I will meet the requirement, just that [ it'd have been ] more expensive than it might have been.

Thank you. Do we have any questions online, Julia?

Yes, we do. It's a question from [ Stephen Mayne ]. "Many thanks to Robert for agreeing to disclose proxies early to the ASX ahead of the 3:00 p.m. AGM start. And congratulations on your 99% vote in favor. In light of your background as John Howard's environment minister and the change of government, does this still make sense to have you as Chairman of the company for the next 3 years? Please outline your labor connections." Thank you.

Well, I don't have any labor connections, but I actually think the fact that I was Australia's longest-serving environment minister will help the company and the challenges that it faces in the next few years in the energy transition. And in relation to working with the labor government, I have no problem in that regard. I congratulate them on having been elected. And I know their policies. We found that it -- easy to work with them when they're in opposition. And I'm not expecting it to be -- to change by the fact that they're now on the other side of the chamber.

Thanks. Do we have any questions on the phone, Julia, operator?

Operator?

There are no phone questions at this time.

Thank you. So a summary of the direct and proxy votes received in advance of the meeting in relation to this item now appears on the screen, so I formally put the motion to the meeting that Robert Hill be reelected as a director of the company. Please record your vote now if you already haven't done so. [Voting]

Okay, thank you. So I'll now hand the chair back to Robert. Thank you.

The next item -- thank you, Sarah. The next item relates to the reelection of Dat Duong as a director. Dat retires at this meeting in accordance with the company's constitution and, being eligible, offers himself for reelection. The Board has considered Dat's performance and contribution and supports Dat's reelection. Details of Dat's qualifications, career and experience are set out in the notice of meeting and in the annual report. Dat is with us here today, and I will ask Dat to speak to you about his reelection.

Thank you, Chairman. Good afternoon, everyone. It's an honor to be here today to offer myself for reelection to the Viva Energy Board, luckily at a time when the share price has performed well. As a result, I would like to take a few minutes to provide a brief background on my experience. I actually started my career in the industry that Viva is in as a business analyst at Esso Imperial Oil in Canada in 1988. Since then -- 1998, sorry. Since then, I've accumulated over 20 years of experience across the fields of finance, accounting, mergers and acquisitions and strategy. I have extensive experience in international investment banking both in Hong Kong and Canada, where I led multiple downstream oil transactions during my time with Merrill Lynch, in the global energy and power investment banking group. I currently lead investments for Vitol in Asia Pacific and brings [ in a few ] experience in financial analysis to the Board of Viva Energy, as well as providing an international perspective of best practices by similar companies that Vitol owns globally. In addition, I have deep understanding of the business and industry, having been involved with Viva Energy since the initial investment by the Vitol Investment Partnership in 2014. We made some strategic decisions as a Board with the management team over the past few years that have been reflected in the company's business performance. I'm extremely excited to continue as a Board member of Viva as the company enters the next phase of its journey stronger as a publicly listed company, so I humbly seek reelection today and appreciate your support. Thank you.

Thank you, Dat. Again we turn to questions. Are there any questions from the floor on this item? If not, Julia, are there any questions online?

No Chairman.

Are there any questions on the phone?

There are no telephone questions.

Thank you. A summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on screen now. I formally put the motion that Dat Duong be reelected as a director of the company. Please record your vote now and if you haven't already done so -- if you haven't already done so. The voting lines will close shortly after the next item of business. [Voting]

Thank you. I'll turn to item 4, which is the next item of business, the grant of performance rights to Scott Wyatt. It is proposed to issue 923,637 performance rights under the 2022 long-term incentive plan to Scott Wyatt, our Chief Executive and Managing Director. Each performance right will entitle Scott to acquire 1 ordinary share in the company, for 0 consideration at the end of the performance period, subject to satisfaction of the performance conditions. The performance period is 3 years and will run from the 1st of January '22 to the 31st of December '24. The notice of meeting sets out all the relevant details in relation to the performance rights, including the performance conditions. I'll take questions. Are there any questions from the floor on this item of business? If there are no questions from the floor, do we have any questions online, Julia?

No, Chairman.

Do we have any questions on the phone?

There are no telephone questions.

Thank you. So a summary of the direct and proxy votes received in advance of the meeting in relation to this item now appear on the screen. I will formally put the motion for item 4, that 923,637 performance rights be granted to Scott Wyatt under the company's long-term incentive plan. Please record your vote now if you haven't already done so. [Voting]

Thank you. So that covers all of the business before the AGM today, but before we finish, I want to check that attending shareholders and through Julia with the online and phone operator procedures to see whether we have any further questions. There's no questions in the room. Julia, do you have any further questions?

No more questions, Chairman.

No questions from the operator?

There are no telephone questions.

Thank you. So voting will close shortly after the conclusion of the AGM. For those shareholders online, a 5-minute countdown timer will appear on top of your screen advising the remaining voting time. If you've not already cast your vote, can you please do so now? The shareholders at the meeting in Melbourne, please complete your paper voting forms. And place them in the ballot voting boxes with Link staff, who are both roaming in the room and also located at the exit doors. Voting results will be released to the ASX and will be displayed on the company's website after the conclusion of the meeting. Thank you again for participating today in this hybrid formal -- format meeting. It's been a pleasure to meet those of our shareholders who could attend in person in Melbourne, and we appreciate the attendance of those shareholders who are participating remotely. For those attending here today in Melbourne, I invite you to meet your directors and management team over tea and coffee. I now declare the Annual General Meeting closed. Thank you.