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

Good afternoon and welcome to Viva Energy's 2023 Annual General Meeting. I am 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 we have people joining us in person here at King & Wood Mallesons in Melbourne as well as online. And we welcome all of you here today. I'd like to acknowledge the traditional custodians of country throughout Australia; and their connections to land, sea and community. Here in Melbourne, we're on the traditional lands of the Kulin people. We pay our respect to their elders past and present and extend that respect to all aboriginal and Torres Strait Islander peoples present today. Before we begin, I will hand over to our company Secretary, Julia Kagan, to run through some procedural matters.

Thank you, Chairman. And welcome to everyone joining today. There are no safety drills planned for today, so if you do hear an emergency alarm, please observe. The staff and fire wardens will provide further instructions. Voting on all items of business today will be carried out by way of a poll. 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 during the meeting, starting from now, as the polls are now open for voting. If you're attending the meeting in person here today, you will have received an attendance card when you registered. Those who hold a yellow voting card can cast your vote by filling out your card. Those holding a red or a blue card are not entitled to vote at this meeting. If you do have any questions, just please ask a member of the Link Market Services team. For those shareholders joining us online, you can cast your vote by following the instructions on the screen in front of you. And voting will close shortly after the end of the meeting today. A few words now on how to ask questions at this meeting. To those attending here in person today and holding a yellow or a blue card: You are entitled to speak and ask questions at this meeting. And visitors who hold a red card are not entitled to speak at the meeting. So if you do hold a yellow or a blue card and you wish to ask a question, please make your way to the microphone when the Chairman calls for questions and identify yourself before asking the question. [Operator Instructions] And you don't need to wait until the formal items of business to submit your questions. There may be a slight delay in transmission, so we do encourage you to start submitting your questions now. [Operator Instructions] When we get to questions, the Chairman will consider questions, first, from the floor; then questions submitted online; and then questions asked by phone. Thank you. I'll just hand back to the Chairman.

Thank you, Julia. Today, I am joined on stage by my fellow directors. To my left: Arnoud De Meyer, independent nonexecutive director and Chair of our Strategy and Investment Committee; Sarah Ryan, an independent nonexecutive director and Chair of our Audit and Risk Committee. To my right: Scott Wyatt, Chief Executive Officer and Managing Director; Nicola Wakefield Evans, an independent nonexecutive director and Chair of our Sustainability Committee; and Dat Duong, nonexecutive director. Mike Muller, nonexecutive director, could not be with us today and is joining us remotely by telephone. Carolyn Pedic, our Chief Financial Officer; Lachlan Pfeiffer, our Chief Business Development and Sustainability Officer; Julia Kagan, our company Secretary, are also with us on stage today. And the rest of the executive team join us in the audience. We're also joined -- 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, Scott and I will address the meeting on our performance and some of the highlights over the last year. 2022 was a remarkable year for Viva Energy. We delivered exceptional results across all parts of the business. And since I last addressed this meeting, we have taken further significant strides forward in our strategic agenda. The acquisition of Coles Express and the recent announcement of our intention to acquire On the Run group are particularly exciting developments, which Scott and I will speak about shortly. Of course, 2022 was heavily shaped by the impacts from the war in Ukraine and the subsequent disruption to energy markets and broader supply chains due to sanctions on Russia. Throughout this period, Viva Energy has continued to maintain reliable supply of energy to our customers with locally produced fuel from our refinery at Geelong; and international suppliers from Vitol, who are our global trading partner. It's been a challenging period, but we've adapted well. And I'm proud of the role we play in maintaining energy security. We are particularly conscious of this responsibility we have as a major contributor to the national energy security whilst at the same time accepting the important contribution we must also make to the transition to reducing carbon emissions. As always, we maintained a strong focus on safety and health and wellness of our people during 2022. The pandemic, war in Ukraine and increasing costs-of-living pressures have impacted people in many ways. And we take seriously our leadership responsibility to provide care and support through these uncertain times. I also take this opportunity to thank our entire Viva Energy team for their contribution and commitment to our business and welcome the 6,000 Coles Express team members who recently joined us on the 1st of May. We have now more than 7,500 people working in our business and serving our customers. As I mentioned earlier, 2022 was an exceptional year for Viva Energy. Group sales grew by 9%, to within 5% of pre-pandemic levels. And underlying EBITDA more than doubled on the prior year to $1.1 billion on a replacement cost basis. The resulting cash flows and continued capital discipline have maintained a healthy balance sheet, with net cash of $291 million at the end of 2022. Recognizing these exceptional results, the Board was pleased to pay out a dividend of $0.27 per share for the year, representing a 70% payout ratio, at the top end of our range. I'd like to thank our investors for their continued support. Looking to the future, we've made significant progress in our strategic agenda to transform and grow our businesses. The acquisition of Coles Express and On the Run group will transform our retail fuels business into the largest convenience retailer in Australia with a pathway to more than 1,000 stores across the company operating under the Shell and OTR brands. We aim to become a convenience retailer who happens to sell energy rather than a fuel retailer who happens to sell convenience items. Apart from significant growth opportunities in convenience, a more compelling convenience offer will support longer dwell times as customers wait to recharge their electric vehicles. We are building-in resilience and ultimately future proofing our retail business as the energy transition accelerates. We also continue to evolve our energy hub at Geelong, building on the refining business which has served Australia well for so long. We recognize that national and community expectations are changing, however, and we must respond to ensure the contribution and value of the business into the future. The acquisition of LyondellBasell Australia last year has given us access to new products and markets in our commercial business as well as manufacturing capability at Geelong. We're now the only producer of polypropylene in Australia. Furthermore, we will have the platform and capability to receive feedstocks derived from waste plastics and food grade -- and create food-grade recycled polypropylene. We will be adapting a traditional hydrocarbon fed plant to support recycling and contribute to enhance sustainability outcomes through the circular economy. Similarly, we have the capacity to utilize waste and bio feedstocks in our traditional refinery and have taken the decision to invest in the infrastructure which will support us commencing coprocessing these feedstocks alongside crude oil at Geelong from next year. Again it's a contribution to sustainability through reducing waste but also reducing the carbon intensity of our fuels and other products produced. We're also making good progress on the construction of an additional 90 million liters of diesel storage to support the federal government's strategic fuel storage agenda. And this year, we'll commence construction of a new processing capability to produce ultra-low-sulfur petrol to support the introduction of lower-emission vehicles to Australia. Our proposal to construct an LNG terminal at Geelong to bring natural gas to Victoria from other parts of Australia continues, albeit slowly to progress through the regulatory approval process. Our project is designed to cover an expected shortfall of gas to -- supply to satisfy the demand required by industry and the community in Southeastern Australia as the Bass Strait fields are exhausted. When we add Australia's first hydrogen service station for heavy vehicles, which we have scheduled to open next year, it will be evident that we've made good progress in the development of what will be one of the most important energy hubs in Australia now and well into the future. I'll leave it to Scott to talk about the successes in the third sector of our business, commercial, which is also undergoing its own process of transformation, but before I hand over to Scott, I'd like to say a few words about the changes we've made in the company's leadership team to support our significant strategic agenda. Jevan Bouzo, previously Chief Operating and Financial Officer, was appointed Chief Executive, Convenience and Mobility. Jevan's new role will have responsibility for the combined Coles Express, Viva Energy Retail and OTR businesses, together with the broader development and execution of new energies and other mobility-related offers as they are implemented across our retail network. Carolyn Pedic was appointed as Chief Financial Officer and joined the company on the 1st of January 2023. Carolyn brings extensive industry experience to the position with over 20 years experience in finance and risk management roles across energy and mining. And I am delighted to formally welcome Carolyn to her first AGM of our company today. We also appointed Jennifer Gray to the role of Executive General Manager, Supply Chain. Jennifer has an extensive had an -- has had an extensive career in retail, wholesale and supply across Shell and Viva Energy; and previously led the company's Liberty Wholesale business. On behalf of the Board, I'd like to thank Scott and his leadership team, the extended leadership team and all our team members for their significant contribution to our results; and again thank our shareholders for their continued support of the company. And I'll now ask Scott to take us through his presentation.

Thank you, Robert. And a big welcome to all our shareholders and guests with us today. As always, I'd like to start with safety. Our personal safety performance as measured by total recordable injury rate showed a small improvement in 2022 but remains elevated relative to historical levels and indeed our own aspirations. Higher levels of construction, maintenance and operational activity as we emerged from the pandemic certainly presented some challenges, with the majority of personal incidents consisting of slips, trips and musculoskeletal injuries. We continue to invest in our asset integrity programs and are seeing continued improvement in early identification of potential hazards and leaks, which we believe will drive down the number of spills and loss-of-containment incidents in the years ahead. In 2023, we have seen a positive trend in safety performance through our renewed focus on early intervention and learning programs. I remain pleased with the focus on safety right across the company and with our strong safety culture which is supported by feedback from employee surveys. All parts of our business performed extremely well last year, contributing to an exceptional operating and financial performance for the group. We certainly benefited from a very strong regional refining margin environment, which in many ways validated our decision to maintain refining capability despite the challenges of the last few years. Near-capacity production and nimble responses to ever-changing international supply chains ensured we made the most of this opportunity while maintaining reliable supply to all of our customers, with this part of our business contributing an EBITDA of $518 million. As Robert mentioned, there is considerable work underway to upgrade our refining capability to further strengthen the long-term outlook for this part of our business. Beyond refining, our retail and commercial businesses are really going from strength to strength. A steady recovery of sales in parts of our business that were most affected by the pandemic, growth from new customers and improved returns across all sectors has driven a strong retail performance and an exceptional commercial result in 2022. The diversity of our individual commercial businesses and the investments we have made in production and distribution of specialty products differentiate us from our competitors and are a key driver of growth in this part of our business. Our retail, fuels and marketing businesses delivered EBITDA of $584.9 million, up 44% on the prior year. I am very proud of the results we delivered last year, although external factors were a material driver of these results. The decisions we have made in recent times have positioned us well, and the underlying performance of all parts of our business is fundamentally strong. Together with the progress we are making on our strategic agenda, which I'll turn to next, I believe we are extremely well placed to continue growing our business and delivering strong returns in the years to come. At our Investor Day in 2021, we laid out our transition and growth agenda for Viva Energy. Since then, we have delivered on a number of fronts. Just this month, we took our first step in becoming a leader in convenience retail. We completed the acquisition of Coles Express convenience business for a total consideration of $300 million. We now directly capture convenience sales in a highly successful express-format offering. As announced last year, we expect this acquisition to be EPS accretive as fuel sales through this channel continue to improve. More importantly, the acquisition of Coles Express gave us full operational control of our network. This was essential for the next step in our retail strategy, the acquisition of the OTR group, which we announced last month, for a total consideration of $1.15 billion. Once synergies are realized, the OTR group would add approximately $165 million to our EBITDA. We genuinely believe we are buying the best full-service convenience operating model in the country and possibly one of the best in the world. OTR generates more than 70% of its earnings from convenience sales compared to Coles Express at less than 40%. Once the OTR acquisition completes, we intend to extend the OTR offer across suitable stores in the Coles Express network, add new stores in great locations and begin the transformation of our fuel and convenience business. Within commercial and industrial, we expect our specialty businesses to continue to grow as a proportion of the overall earnings base. We will continue to look for opportunities to scale our specialty product offering through acquisitions of adjacent businesses such as what we achieved with the polymers business which we acquired last year. Lastly, we will seek to optimize our energy and infrastructure assets. Planning and development is well underway for several projects at the Geelong Energy Hub. The strategic diesel storage and ultra-low-sulfur gasoline will comprise the bulk of the investment this year, but we also expect to begin construction on the green hydrogen refueling station and prepare for coprocessing opportunities to produce lower-carbon fuels and recycled plastics, which we believe can play an important long-term role in both the energy transition and a circular economy. We continue to believe that our proposed Gas Terminal Project can play an important role in meeting the projected gas supply shortfall in Victoria and the broader Southeast markets. As always, we balance our transformation and growth agenda with returning cash to shareholders. We believe our dividend policy achieves an appropriate balance, as highlighted by our attractive dividend profile last year. Looking forward to the rest of this year, let me begin by making a few comments about our first quarter trading results which we released to the market last month. Group sales were up 15% on the same period last year, and EBITDA rose 70% to $293 million. This reflected a relatively strong refining margin environment and a particularly strong performance in both our retail and commercial businesses, which continue to benefit from sales growth and a favorable margin environment. We expect fuel demand to remain robust as mobility continues to recover and we leverage the acquisition of the Coles Express business which will also contribute earnings uplift from convenience sales. Commercial sales are expected to moderate as we cycle seasonality impacts in the first quarter and wholesale markets soften. In the current quarter, we are also experiencing some softening in refining margins as energy markets normalize from the extremes of 2022 and global oil demand recovery slows due to inflationary and economic pressures. Oil does continue to flow from Russia. And the threat of exports from China also are contributing to stronger supply fundamentals. Locally, we are currently undertaking planned major maintenance works at Geelong, which we expect to be completed by the end of June. Despite the short-term outlook for refining, we remain positive about the broader outlook for the business over the full year. A largely resilient domestic economy and our diverse segments will continue to present opportunities for the business, while over the longer term, global refining capacity does look to be tight with new large-scale refineries increasingly hard to justify. As I mentioned earlier, I believe our business is in great shape. And we are increasingly well positioned to manage the energy transition and to deliver consistent long-term growth. I am excited about the projects and opportunities we are pursuing and look forward to providing more updates as these progress in the year ahead. They really are creating solid foundations for each of our 3 increasingly distinct businesses to grow through sustainable pathways well into the future. Let me now hand over 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 blue card, you may way -- make your way to the microphones at the appropriate time. And please identify yourself before asking a question. For our shareholders attending online, I would encourage you to start submitting your questions now; and we'll address them as we go. I'll now proceed to 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 reelect Arnoud De Meyer and Michael Muller as directors of the company; and four, to grants -- 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 proxy, I intend to vote all undirected and available proxies in favor of each resolution. There are also voting restrictions on some resolutions, as outlined in the notice of the 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. The Corporations Act requires the directors to lay before the Annual General Meeting the financial report, the directors' report and the auditor's report for the last financial year. There are no -- there is no formal resolution put to shareholders on this item, but there will be an opportunity to ask questions on the matters contained in the reports. Are there any questions from the floor?

Chairman, my name is Ian Curry, a shareholder. 2 questions. The first is we're continuing to have [ petrol-driven ] vehicles. We're moving towards electric vehicles. Can you explain what happens with the next step if hydrogen comes into play? Does hydrogen in some way knock out electricity, or does it complement it? The other question is to do with the gas import terminal. I was quite surprised when I read that the company had been asked for further information. And I would have thought they'd been pretty well supplied. And then I realized, of course, that there was the [indiscernible] coming up. And it seemed to me that there was a possibility that, that was deliberately delayed in terms of any approval, so I'm wondering now whether this is moving along.

So in relation to the -- thank you for the questions. In relation to hydrogen, yes, it is work in progress, but it would seem across the globe that electricity has taken the lead in relation to the light vehicle transport fleet of the future. Whether that will be [ so ] forever or whether it will be taken over by another alternative in time, we will see, but in some ways, to convert to battery-powered vehicles is an easier step than other alternatives. And that's the way in which the manufacturers seemed to have read the opportunity and are responding. We think it's a different story in relation to the heavy transport sectors where batteries are not as useful given the load that needs to be transported and the range over which those vehicles need to be -- need to cover. And we think hydrogen is likely to have a competitive advantage in that area. I have to say that, that opportunity is still progressing slowly not only in Australia but across the world, but these vehicles are being produced now. And Viva is assisting in that process through our project in Geelong for the first hydrogen service station because we're not only installing the infrastructure for that service station, but we're working hand in glove with a number of transport companies as they develop the vehicles that could utilize that facility. So the demand is not there yet in Australia and the facilities to fuel the vehicles is not there yet in Australia, but we're trying to move at the same pace so that we are ready to take full advantage of that. Now if we are correct and -- it's not just us. There are others who share this view. There will then be gradually a demand for these -- this capacity to service the major highway network of Australia. We think particularly up the east coast. And we would like to replicate our facility, our servicing facility, at Geelong; and other strategic sites, in first instance, up the east coast of Australia but otherwise elsewhere in Australia. Now we are developing this site hand in glove with the government that wants us to do it as well. We're leading in Australia in the development of this refueling facility, so it's important for the government in terms of its alternative fuel agenda. And we think it's important in the long term for us because, in many ways, our service station infrastructure is better suited to refueling a hydrogen opportunity than it is an EV opportunity. It's the same headspace, I guess, when you bring your vehicle in to fill up with hydrogen, where it's a different headspace when you bring it in to fill up with EVs. We think we can meet that market through our convenience offering when people stop to take our high-quality coffee, and that's the strategy we're developing in that regard. So that's where we think it's going to go, and we will see. We're not getting ahead of ourselves, but we don't want to get behind the market opportunity as well. In relation to the import gas terminal, yes. To be honest: We were a little bit frustrated and disappointed that we went through the whole environmental impact study process. And basically, at the outset, you determine with the regulators what are the questions that need to be answered. You develop your case and you answer those questions. It goes to the regulators. It -- the regulator's advice goes to government. Government makes a decision. In our instance, after quite a long period of consideration, the government came back to us and said, "It's now been decided that we want you to do further work on 4 specific questions." And [ it's all very well ] to be a bit frustrated and disappointed, but government runs the regulatory process and we have to respond to that in a positive and constructive way, so we've been now working with the regulators to define the scope of the extra 4 questions that they want answered. And we're still in the process of seeking to settle the detail of that, so our plan is to continue with the approval process, which as I said in my presentation, it's progressing, albeit slower than what we would like, but we're still working towards achieving approvals and ultimately providing that facility which we think will be needed in Southeastern Australia. In the meantime, we've had this sort of major disruption within the gas market. And as it's turned out, it's probably not the right time to begin that operation given the prices and the caps and so forth, so I really think the gas market needs to settle down over the next few years, in any event, for it to be a worthwhile investment opportunity. So we progress. We, hopefully, obtain the regulatory approval. We wait -- we've done a lot of the -- pretty much all the engineering, planning and design that we needed to do. We wait for the opportunity. And if the opportunity presents as we hope, we take advantage of that, which we think will be of the benefit to not only Viva but for all of those in Southeast Australia that still depend upon an adequate and regular gas supply.

[ Well, I'll definitely ] ask that question again next year, Chairman...

And so you'll notice I totally avoided the political aspect.

[indiscernible].

[indiscernible].

Any other questions from the floor? If not, Julia, I think we go to the online questions.

Yes, Chairman. So we've got a few. The first question is from [ Stephen Mayne ]. And [ Stephen ] is asking: The Chairman said the following at last year's AGM. We've announced the first significant refueling facility at Geelong that will be green hydrogen. We'll make the green hydrogen ourselves on site, fueled from our solar plant, but we're also in discussions with government on the Eastern states about a refueling network from North to South of Australia, on the major heavy transport highways. 12 months on, how is that progressing? And who do we believe should pay for that, especially with our shares at a record high?

Well, as I said a moment ago, the investment in Australia's first hydrogen service station has really been a shared investment between Viva and government. And it's not really surprising if you have government policy in favor of development of this currently nonexisting industry. And you know that the market will be slow to develop, so it's really an investment in national infrastructure. It's the service station is progressing. Our electrolyzer arrives in the third quarter of this year, and the service station will be developed over the course of next year. As I said, it's developing about the same pace as the vehicles that will utilize that capability. It's been interesting that, since we started it, the interest in it has actually grown. And we now have a heavier transport sector that have approached us and said they want to be part of it as well, so that's required some redesign to provide a capacity to service heavy vehicles. So in terms of being the national leader and, in some ways, experimenting as to how this is going to work in a national perspective, we are where we want to be. The pace of implementation seems to be about right, so nothing has changed in relation to our plans for that. We're getting on with that. I've mentioned before the issue of the infrastructure across Australia, particularly up the east coast; and yes, again, we're working hand in glove with government on that. And as you may know, some of the other state governments are also investing in that sector as well. Those decisions haven't yet been made but are work in progress, so it is continuing to progress. It does take time, but it might be -- that might be such a bad thing, seeing it's been quite challenging getting the transport sector up to speed as well. Does that answer it, Julia, or -- do you think, adequately?

I believe so, Chairman, yes.

What's the next one?

So we've got another one, also from [ Stephen Mayne ]. In addition to the $25 million in JobKeeper, former Prime Minister Scott Morrison visited our Geelong refinery on April 13 last year and announced a $125 million grant for our new low-sulfur plant. How much of this money has been received, so far? How much have we spent on the project? And do we still believe it will cost $250 million in total?

Well, the JobKeeper support is really from 2 years ago and we've dealt with it previously. And it was support to the whole of Australian economy basically to support -- to keep people in jobs whilst there wasn't demand for their services. We received some support and we were able to keep all of our staff at work and continued providing essential fuel across the nation, so I think that worked in our interest. And it worked in the interests of Australia as a whole. The other part of the question really is something entirely different, and that's the investment by the commonwealth government in energy security. They see us as a critically important part of that. There are only 2 refineries left in Australia. And the package that's been offered applies to us as well as the Ampol refinery in Brisbane. And it consisted of a number of parts, basically an underpinning of the refinery operating costs themselves plus some support in upgrading the capabilities to produce low-sulfur petrol so that, that will complement the introduction of the more efficient vehicles to be imported into Australia; an investment in greater diesel storage because, of course, it was seen as a strategic risk for Australia, to have inadequate diesel storage. And so each of these projects has been a joint investment between us and government as -- and the Australian people as such. In relation to the low-sulfur gasoline plant, our estimate -- they -- government said it was prepared to contribute $125 million towards the costs to us. At that time, our estimate was somewhere in the $250 million range. They made the same offer, of course, to Ampol in Brisbane. Our project is progressing well, but the cost has gone up, and the last figure that we've said publicly was around the $300 million mark. And that really is consistent with all major industrial development or redevelopments in Australia at this time, with the costs of production and the inflationary costs and the like. Unfortunately, all these major infrastructure projects have significantly risen in costs. So that's where we are on that project at the moment. It's complex. It's large. It's complex. It's new for Australia but otherwise progressing well.

Thank you, Chairman. Another one from [ Stephen Mayne ]: Thank you for offering shareholders a hybrid AGM this year. And will Michael and the Chair commit to doing this in future years to maximize shareholder participation? Well done for showing companies like Santos and Scentre Group which withdrew the online component this year. What was the experience of a hybrid AGM like from your end?

Well, I think our view is that it's working quite well. It's giving shareholders an opportunity that they didn't otherwise have. Not all of the shareholders are locally based here in Melbourne, so it expands shareholder participation, and I think we've been pleased about that. So we make a decision on an annual basis, but I don't immediately see why we would change the format for next year.

Thank you, Chairman. We now have a question from John Whittington from ASA. "Mr. Chairman, my name is John Whittington and I am a volunteer company monitor for the Australian Shareholders' Association. We would first like to congratulate you, the Board, the management and all Viva employees for such a great financial outcome in 2022. Mr. Chairman, we, like the Board, were concerned by the increase in process safety events and significant spills. Is enough focus directed at this area? Would it be appropriate to make it a gateway condition for executive incentive payments?"

Well, we as a Board don't think that, that would be as fair as the Board maintaining its discretion to take into account the performance and make a judgment on total performance. So we also say, as you've heard today from Scott, myself, we would -- whilst result and safety is quite good comparatively, we want it to be even better. And we work hard to achieve a better result, and Scott has, as I said, repeated that here today. And as far as the Board is concerned, I don't think we could expect any more of management than what they are doing in all reasonable endeavors to continue to improve safety outcomes and management of environmental risks.

Thank you. And another one from Mr. Whittington: "Mr. Chairman, you've provided a lot of useful information for shareholders in your excellent business performance summary on Pages 38 to 45. However, you didn't really cover your current cash levels which are high compared with previous years. Your receivables also seem to be considerably higher than historic figures. Is this high level of cash and receivables a one-off, or do you see it ongoing? In either case, will the cash be predominantly returned to shareholders or reinvested in the business?"

Well, I think it's important to give Carolyn her first opportunity as CFO to address shareholders. Would you like to have a go at that one?

No problem. Thanks, Robert. And thank you for the question as well. And so [ I'm sure ] this is in reference to our nearly $300 million of cash as at the 31st of December '22, which certainly was a healthy level of cash. You probably would have noted that Scott and Robert referred to the completion of Coles Express for $300 million in May. So we certainly had that in mind when we were considering the cash at the year-end. And we also guided to additional CapEx this year, in comparison to, say, last year, of $405 million to $455 million. So with -- and obviously we've got the OTR acquisition on the horizon as well, so we feel that, that is certainly on our mind when we were thinking about the cash levels and felt that, that was appropriate at year-end.

Thank you.

And another one from [ Stephen Mayne ]. Given the interesting discussions across a range of topics today, including these director elections, could the Chair and candidates for election undertake to make an archived copy of the webcast, plus a full transcript of proceedings, available on the company's website? The likes of Nine, AGL, [ ASX ], ANZ, [ Domino's ] and Lendlease all produce AGM transcripts. Will you follow suit today?

Well, our practice is to record and retain the online record. We don't take a transcript and retain that. And I guess different companies may have different views, but I think in today's world the online record is the record that at least the younger generation would prefer to go to. I was brought up in a world where we didn't have that alternative, so we had transcripts, but I think the world is moving on. And I think we're pretty much in accord with current expectations.

Thank you, Chairman. There's no more online questions for this resolution.

Thank you. So can I, just in parting, thank John and [ Stephen ], for their questions? Both maintain an interest in our Annual General Meetings, which I appreciate. Now questions on the phone? Have we got any phone...

There are no telephone questions at this time.

There are no telephone questions. And then if there are no further questions, I declare that the financial statements and reports have been received and considered at the meeting. And I'll move to item 2, which 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. Are there any questions from the floor on this item of business? If not, I ask, are there any questions online on this item of business?

Yes, Chairman, there's a question from John Whittington. "Mr. Chairman, we believe that NED fees are too high for a company of Viva's size. Godfrey Remuneration Group's research published in 2022 shows that the median NED remuneration for companies with market caps in the $3.5 billion to $7.5 billion range was forecast at $201,000 for the industrial and services group. Median for board Chairs was $370,000, which is considerably lower than the [ 2017 to 235,000 ] being paid currently by Viva. We believe that the market is yet to catch up, so your proposed increase is not yet warranted."

Well, John has asked -- has so much asked a question as made that point in previous meetings. And we continue to go back and check against the comparator, which -- ASX 50 to 150; and also to take specialist advice. And the advice we received is that the remuneration levels are not out of step with current market, the current market, so -- and this -- of course, this small increase in directors' benefits is the first in 5 years, so we think we've been prudent in that regard and really quite conservative.

Thank you, Chairman. There's no other questions online.

Yes, no other questions -- all right.

No other questions online, yes.

I thought John would have had a few more. It's -- any on the phone?

There are no telephone questions at this time.

Okay, so if there are no further questions: A summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on the screen now. And as there are no further questions on this item of business, I formally put the motion on item 2, that the remuneration report for the year ended 31st of December 2022, 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 the meeting online, please select for, against or abstain next to resolution 2 on your online voting card. [Voting]

Okay, so sufficient time to vote. We'll move to item 3A. This item relates to the reelection of Arnoud De Meyer as a director. Arnoud retires at this meeting in accordance with the company's constitution and, being eligible, offers himself for reelection. The Board has considered Arnoud's performance and contribution and supports Arnoud's reelection. Details of Arnoud's qualifications, career and experience are set out in the notice of meeting and in the annual report. Arnoud is with us, as I said before, in Melbourne today; and I'll ask Arnoud to speak to you in support of his reelection. Arnoud?

Thank you, Chairman. Good afternoon, ladies and gentlemen. It is a real honor for me to be here at the 2023 Annual General Meeting and to offer myself for reelection as a director of Viva Energy. As you may have learned from my CV, I've been running business schools and a university for the last 30 years in both Europe and Asia and have in that capacity been in very close contact with international business. I have been an independent director of our trustee in close to 20 organizations, some smaller, some bigger than Viva Energy. Originally, I'm an electrotechnical engineer, and I started my career as an instrumentation engineer in petrochemicals. I also have always had a very strong interest in energy production and distribution. I bring to the Board of Viva Energy a broad international perspective on the current challenges for business. I bring also the experience of other business sectors, a deep understanding of strategy formulation and implementation as well as the opportunities and risks of technology and business. And I bring also a commitment to the implementation of sustainability and diversity and, of course, a long career as an academic and a practitioner in the management of R&D and innovation. The 3 years since my last election in 2020 have been very interesting and rewarding for Viva Energy. When I look back at my intervention in May 2020: I emphasized the uncertainty that was ahead of us. Looking back at Viva Energy over the last 3 years, we have managed very well through the very turbulent period. Under the leadership of our Chairman, Robert Hill; and in perfect collaboration with our very capable management team, we put the pandemic behind us and recovered very well. We made a significant start with the transition into new sources and carriers of energy. We continued the development of the energy hub in Geelong. And through our major recent acquisitions, we are transforming significantly the business portfolio of the company. We also returned quite some capital to the shareholders. At the same time, we remain fully committed to our commitment to energy security for Australia. All this has resulted in very positive short-term returns for the shareholders; and I'm also convinced that our mid- to long-term outlook is bright for you, our shareholders. I look forward to continue contributing to the transformation and the growth of our company as a director, as a member of the Remuneration and Nomination Committee and the Chair of the Strategy and Investment Committee. As an independent director, I also want to reassure you that I always have the shareholders' interests in mind in our decision-making. I thank you beforehand for the trust you put into me if you reelect me as a director. Thank you very much.

Thank you, Arnoud. We'll move to questions. Are there any questions from the floor on this item? If not, Julia, are there any questions online?

There is Chairman. This one is from [ Stephen Mayne ]. In 2019, Treasury Wine Estates voluntarily moved to annual elections for directors, in line with best practice that occurs in both the U.S. and the U.K. Dual-listed companies like News Corp and Rio Tinto all do this due to the laws in the U.S. and U.K. And BHP has continued doing it even after its U.K. DLC ended. Can the Chair comment on whether our company will follow this TWE lead and move to annual election of directors at the 2023 AGM? Would Arnoud support shifting to this model?

So I'll tell you the position. I'll answer it in terms of the position of the Board as a whole. And Arnoud may have something to add. We look to Arnoud for advice on best global business practice. We -- our constitution provides that 1/3 of the shareholders come up for reelection each year. We think that adds an element of stability. That's probably particularly important in the current business environment. As I said, we're going -- our sector in particular is going through quite a dramatic transition at the moment. And that stability in governance of the company, I think, is important, so you've got, we need to balance that against for all opportunities, for proper accountability to shareholders, but the view of the Board at present, anyway, would be that our formula achieves the dual goals. Arnoud, did you want to add anything to that? You were specifically asked to comment.