Wrap Text
2018 Full Year Results
Vivo Energy plc
(Incorporated in England and Wales)
(Registration number: 11250655)
(Share code: VVO)
LEI: 213800TR7V9QN896AU56
ISIN: GB00BDGT2M75
Vivo Energy plc
(LSE: VVO & JSE: VVO)
2018 Full Year Results
London, United Kingdom, 6 March 2019: Vivo Energy plc, the retailer and marketer of Shell and
Engen branded fuels and lubricants in Africa, today announces its consolidated financial results for the year
ended 31 December 2018.
Christian Chammas, CEO of Vivo Energy plc, commented: "This has been a remarkable year for
Vivo Energy and we are pleased to have met our objectives for the period and delivered a strong first set
of results as a public company. In 2018, we achieved volume growth of 4% at a gross cash unit margin of
$73 per thousand litres, which drove adjusted EBITDA of $400 million. The completion of the transaction
with Engen is transformational for our business, adding operations in eight new countries under a strong,
well-respected brand. During 2018 we have proved the resilience of the Group's footprint in the face of
challenges in some markets. Looking forward we continue to see significant growth opportunities across
our portfolio as we continue to enhance our position in our fast-growing markets across Africa."
KEY PERFORMANCE INDICATORS
Six-month period ended(1) Twelve-month period ended
31 December 31 December
($ in millions), if not otherwise indicated 2018 2017 Change 2018 2017 Change
Volumes (million litres) 4,723 4,564 +3% 9,351 9,026 +4%
Gross Cash Unit Margin ($/'000 litres) 71 75 -5% 73 74 -1%
Gross Profit 312 319 -2% 624 614 +2%
Gross Cash Profit 336 343 -2% 680 666 +2%
Adjusted EBITDA 196 187 +5% 400 376 +6%
Net Income 75 58 +29% 146 130 +13%
Adjusted Net Income 83 85 -2% 178 171 +4%
(1)Figures presented for the six-month period ended 31 December are unaudited.
Financial Highlights
- Full year volumes up 4%, in line with guidance and driven by a strong performance in our
Commercial business
- Total gross cash unit margin of $73 per thousand litres (2017: $74), with H2 2018 gross cash unit
margin of $71 per thousand litres, primarily impacted by market conditions in Morocco
- Gross profit up 2% to $624 million, with higher volumes more than offsetting lower margins
- Growth in adjusted EBITDA of 6% to $400 million
- Net income of $146 million, up 13% year-on-year
- Adjusted diluted EPS of $0.14 and diluted headline EPS of $0.11 for the year
- Generated strong adjusted free cash flow of $149 million, 8% higher than 2017
- Leverage ratio decreased to 0.79x (2017: 0.97x)
- Proposed final dividend of 1.3 cents per share, bringing the full year dividend to 1.9 cents per
share, 30% of attributable net income (pro-rated for the period post IPO)
Strategic and Operational Highlights
- Further expanded our Shell-branded network by opening a net total of 88 new retail service
stations and 119 new Non-fuel retail offerings
- Successful transaction with Engen, which completed on 1 March 2019, significantly increasing our
footprint across Africa
- Total Recordable Case Frequency of 0.192, below industry peers
- The first company in Africa, and one of the first 10 companies globally, to be certified under ISO
37001 standard for anti-bribery management systems
- Completed the first phase of the deployment of our new ERP system, the first step on our data
journey
Engen(1)
As previously announced, on 1 March 2019, Vivo Energy completed the transaction to acquire Engen
International Holdings (Mauritius) Limited, adding 230 Engen-branded service stations and eight new
countries to our network, which now includes 2,130 service stations, across 23 African markets. The eight
new markets are Gabon, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia and Zimbabwe.
Engen's operations in Kenya (where we already operate) is the ninth country included in the transaction.
For the year ended 31 December 2018, the nine entities that have transferred to Vivo Energy sold
approximately 1.0 billion litres of fuel (2017: 0.9 billion). Unaudited management adjusted EBITDA for the
entities was approximately $33 million (2017: $33 million), of which $24 million is attributable(2) (2017: $26
million) to the business, with attributable net cash on hand of approximately $51 million(3) (2017: $48
million).
Vivo Energy believes that there is significant potential to grow the Engen business by leveraging our
platform and operating model and thereby increasing the Group's market share. Our current plans are to
maintain the Engen brand in the eight new operating countries, as we believe that the Engen brand is
strong and well-established. However, we will rebrand Engen service stations in Kenya to the Shell brand
in accordance with the Shell Brand Licence Agreement.
2019 Outlook
In 2019, we expect to build further on the good momentum from 2018, delivering low to mid double-
digit percentage volume growth from a combination of organic growth across our existing markets and
the integration of the newly acquired Engen operations. Based on current market conditions in Morocco
and a more conservative outlook in the Commercial segment we expect to achieve a US dollar gross cash
unit margin in the high sixties per thousand litres for the year. This is on the assumption that there are
no further material changes to the operating environment in Morocco during the year. Overall the
prospects for the Group remain positive, we are excited by the opportunities that our expanded portfolio
will bring, and expect to continue to build our retail footprint across our markets by opening between 80
to 100 new retail service stations across the 23 high growth countries in which we now operate.
Ends
(1) Engen data points are based on Engen management information reporting.
(2) Based on Engen management information figure. 100% of unaudited management adjusted EBITDA includes minority shares. Minority interests include 40% in
Gabon and 51% in Zimbabwe.
(3) Includes approximately $25 million of attributable cash on hand in Zimbabwe at the official exchange rate at 31 December 2018.
Results Presentation
Vivo Energy plc will host a presentation for analysts and investors today, 6 March 2019 at 09.00 GMT,
which can be accessed at https://www.investis-live.com/vivo-energy/5c597101186fe7100054ae95/tolt
Conference call details:
Please dial into the call at least 15 minutes prior to the conference start time.
Participant dial-in numbers
Dial in: +44 20 3936 2999
Participant Access Code: 498299
The replay of the webcast will be available after the event at https://investors.vivoenergy.com
Media contacts: Investor contact:
Rob Foyle, Head of Communications Giles Blackham, Head of Investor Relations
+44 7715 036 407 +44 1234 904 306
rob.foyle@vivoenergy.com giles.blackham@vivoenergy.com
Tulchan Communications LLP
Martin Robinson, Suniti Chauhan
+44 20 7353 4200
vivoenergy@tulchangroup.com
Notes to editors:
Vivo Energy operates and markets its products in countries across North, West, East and Southern Africa. The
Group has a network of 2,130 service stations in 23 countries operating under the Shell and Engen brands and
exports lubricants to a number of other African countries. Its retail offering includes fuels, lubricants, card services,
shops restaurants and other non-fuel services. It provides fuels, lubricants and liquefied petroleum gas (LPG) to
business customers across a range of sectors including marine, mining, construction, power, transport, and
manufacturing. Jet fuel is sold to customers under the Vitol Aviation brand.
The Company employs around 2,700 people and has access to 1,081,000 cubic metres of fuel storage capacity. The
Group's joint venture, Shell and Vivo Lubricants B.V., sources, blends, packages and supplies Shell-branded lubricants
and has blending capacity per annum of around 158,000 metric tonnes at plants in six countries (Ghana, Guinea,
Côte d'Ivoire, Kenya, Morocco, and Tunisia).
This announcement is available on the Company's website: http://investors.vivoenergy.com
Forward looking-statements
This announcement includes forward-looking statements. These forward-looking statements involve known and unknown risks
and uncertainties, many of which are beyond the Company's control and all of which are based on the Directors' current
beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward-
looking terminology such as "believe", "expects", "may", "will", "could", "should", "shall", "risk", "intends", "estimates",
"aims", "plans", "predicts", "continues", "assumes", "positioned", "anticipates" or "targets" or the negative thereof, other
variations thereon or comparable terminology. These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this report and include statements regarding the intentions, beliefs or
current expectations of the Directors or the Group concerning, among other things, the future results of operations, financial
condition, prospects, growth, strategies of the Group and the industry in which it operates.
No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result
of risks and uncertainties facing the Group. Such risks and uncertainties could cause actual results to vary materially from the
future results indicated, expressed, or implied in such forward-looking statements.
Such forward-looking statements contained in this report speak only as of the date of this report. The Company and the
Directors expressly disclaim any obligation or undertaking to update these forward-looking statements contained in the
document to reflect any change in their expectations or any change in events, conditions, or circumstances on which such
statements are based unless required to do so by applicable law.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Just a year ago, we were a privately owned business. Today, following our IPO in May 2018, we are a publicly
listed company accountable to many shareholders, with strong governance processes in place. I would like to
pay tribute to my team right at the start of this statement - their commitment, skills and sheer hard work made
the IPO not only possible but hugely successful. And I also want to thank Vitol and Helios, our founding owners,
for their strong backing for the IPO. Most importantly, the IPO did not distract from our business and we have
delivered good results for 2018.
As well as delivering the IPO, we've finalised the transaction to acquire key parts of the Engen business. This
deal, which completed on 1 March 2019, extends our footprint into eight new countries, increasing our presence
to 23 African markets, further diversifying our business and opening up new opportunities to accelerate growth
across Africa. And as if that wasn't enough behind-the-scenes activity for one year, we also prepared the ground
for future efficiencies by implementing the first stages in a new Enterprise Resource Planning (ERP) system that
will transform our analytical capabilities and efficiency.
Performance highlights
We grow by developing our business - both organically and inorganically - across a continent that's surging
forward. Throughout Africa, the demographic and economic trends are almost universally positive and
supportive of our business model. More people are becoming more affluent and, with higher purchasing power,
are driving demand for our business - not just for fuels and lubricants but also for fast food, retail and the many
other products and services we offer on our retail service stations. As consumer spending power increases, so
too does activity in the Commercial sector. This in turn means increased fuel and lubricant demand from
companies involved in construction, mining, aviation, transport and many other sectors.
We're enormously proud to have delivered growth, in every single year since our formation in 2011. 2018 has
been no different.
It was important to start our life as a public company by delivering against our guidance and I am delighted to
say that we have done so, in spite of several external headwinds, as our diversified business model proved
resilient. Our volumes grew by 4% year-on-year, to 9,351 million litres, and we delivered a gross cash unit margin
of $73 per thousand litres.
Volume growth was driven by a strong performance in our Commercial business. Our Retail business grew by
3% in the year, despite the impact of industry supply shortages in the third quarter. On the gross cash unit
margin side, we saw strong performance in the Commercial business which partially offset pressure on our Retail
segment through the second half of the year. This was primarily as a result of market conditions in Morocco,
which we expect will continue into 2019.
The strong operational performance is reflected in our financial performance where we delivered continued
year-on-year adjusted EBITDA growth. Group adjusted EBITDA of $400 million was 6% higher than 2017 (EBIT
of $276 million, 14% higher than 2017), with adjusted net income of $178 million being 4% higher than the
previous year. We also generated strong adjusted free cash flow of $149 million and continued to deliver our
business, with a leverage ratio now standing at 0.79x. This has meant that the Board recommends a final dividend
of 1.3 dollar cents per share, bringing the full year dividend to 1.9 dollar cents per share, representing 30% of
attributable net income, pro-rated for the period since IPO and in line with our dividend policy. If approved at
our Annual General Meeting, the final dividend will be paid to shareholders on 10 June 2019.
Much of the focus this year has been on our Moroccan Retail segment as a result of the fuel sector being caught
up in wider consumer activism in the country in the second quarter. During 2018, we continued to operate
efficiently and have invested to grow our network and our product offerings in the country, albeit at lower
margins in the second half of the year. We continue to engage with the relevant government stakeholders,
primarily through the industry body. As a result of the Moroccan market conditions and the growth of Vivo
Energy in our other markets and segments, the EBITDA contribution of the Moroccan retail segment in 2018
was 18%, compared to 29% in 2017 (and 14% in the second half of 2018). We expect this 18% contribution to
fall further in 2019, primarily as a result of the contribution of the new Engen markets in 2019.
Safety - no room for compromise or complacency
We continued to have a very strong Health, Safety, Security and Environment (HSSE) record which shows
us exceeding our targets and remaining ahead of our peers on safety performance.
However, it saddens me greatly to report that in October we lost a colleague in a Liquefied Petroleum Gas
(LPG) fire at a customer's factory in Morocco. Although the investigation into the incident is ongoing, the
learnings have been shared widely and acted on, to ensure such a tragedy can never happen again.
We understand that maintaining our strong track record as we grow will become ever more challenging, and
our promise to our teams remains the same - we'll give them great careers, we'll empower them to make
decisions and we'll do everything we can to make sure that they always go home safely at the end of their
working day.
Becoming the most respected energy company in Africa
The way we treat our teams is at the heart of our vision: to become the most respected energy company in
Africa. We could have aimed to be the fastest growing, the biggest or the most profitable - but to us, respect is
the mark of a business that truly understands its potential to be a long-term positive force in the world.
We want to be respected by all our stakeholders - by employees for our uncompromising focus on HSSE and
the way they are recognised and rewarded… by customers for the unbeatable quality of our products and the
excellent service our teams provide… by communities for the way we work hard to be good and supportive
neighbours… and of course by shareholders for our high standards of integrity, transparency and governance,
and our track record of delivering growth.
Looking ahead
The coming year will be exciting as the Engen transaction will enable us to take our tried and tested way of
working into new markets. We will continue to expand our retail network, our Non-fuel retail offerings and will
drive premium fuel penetration in our markets.
Whilst we don't know what macroeconomic factors outside our control might occur and impact the African
economy, our business model is proven, our financial model is resilient and our entrepreneurial teams are
energised and empowered.
2019 outlook
In 2019, we expect to build further on the good momentum from 2018, delivering low to mid double-digit
percentage volume growth from a combination of organic growth across our existing markets and the integration
of the newly acquired Engen operations.
Based on current market conditions in Morocco and a more conservative outlook in the Commercial segment
we expect to achieve a US dollar gross cash unit margin in the high sixties per thousand litres for the year. This
is on the assumption that there are no further material changes to the operating environment in Morocco during
the year.
Overall the prospects for the Group remain positive, we are excited by the opportunities that our expanded
portfolio will bring, and expect to continue to build our retail footprint across our markets by opening between
80 and 100 new retail service stations across the 23 high growth countries in which we now operate.
It's been a privilege to work alongside my colleagues over this last year and I would like to thank every single
one of them for the outstanding contributions that they have each made in 2018.
I look forward to sharing more successes in the months ahead.
Christian Chammas
Chief Executive Officer
OPERATIONS REVIEW
OVERVIEW OF OPERATIONS BY SEGMENT
US$'000, unless otherwise indicated 2018 2017 Change
Volumes (million litres)
Retail 5,354 5,196 +3%
Commercial 3,863 3,701 +4%
Lubricants 134 129 +4%
Total 9,351 9,026 +4%
Gross profit
Retail (including Non-fuel retail) 392,934 396,397 -1%
Commercial 163,256 144,630 +13%
Lubricants 68,197 72,894 -6%
Total 624,387 613,921 +2%
Gross cash unit margin ($/'000 litres)
Retail fuel (excluding Non-fuel retail 75 78 -4%
Commercial 47 44 +7%
Lubricants 525 581 -10%
Total 73 74 -1%
Gross cash profit
Retail (including Non-fuel retail) 427,959 429,434 0%
Commercial 181,249 161,601 +12%
Lubricants 70,420 74,991 -6%
Total 679,628 666,026 +2%
Adjusted EBITDA
Retail 226,977 227,026 0%
Commercial 122,205 106,978 +14%
Lubricants 51,026 42,124 +21%
Total 400,208 376,128 +6%
RETAIL
US$'000, unless otherwise indicated 2018 2017 Change
Volumes (million litres) 5,354 5,196 +3%
Gross profit (including Non-fuel retail) 392,934 396,397 -1%
Gross cash unit margin (excluding Non-fuel retail) ($/'000 litres) 75 78 -4%
Retail fuel gross cash profit 402,939 407,666 -1%
Non-fuel retail gross cash profit 25,020 21,768 +15%
Adjusted EBITDA 226,977 227,026 0%
OVERVIEW
Retail is the engine that powers the Group's track record for delivering both organic and inorganic growth. In
fact we're the second largest retailer in Africa outside South Africa, in terms of site numbers. Every day of 2018,
some 800,000 retail customers relied on Vivo Energy to help them run their vehicles and live their lives. We
focus on opening new service stations, maximising the value generated by our existing sites, giving more people
more reasons to visit our service stations.
2018 REVIEW
The Retail segment reported adjusted EBITDA of $227 million in 2018, representing 57% of the Group's adjusted
EBITDA. Volumes grew by 3% and gross profit and adjusted EBITDA were in line with 2017.
RETAIL FUEL
In 2018 we sold a record of 5,354 million litres of fuel to our retail customers. Year-on-year volume growth of
3% was fuelled by our ability to develop our network and by focusing on our strategic and operational excellence
initiatives. In 2018, we maintained the leading or number two market share position in 14 of our 15 markets.
During the last year, we added a net total of 88 new sites to our network of Shell-branded service stations,
exceeding our target of opening 80 sites per year. Volume from new sites represented 2% (2017: 2%), of year-
on-year volume growth.
Existing portfolio growth was lower than in 2017 at 1% (2017: 5%) primarily as a result of external short-term
supply constraints in the third quarter and sites that were either closed or transferred to the Commercial
segment due to changes in supply agreements. 2017 also benefitted from a higher number of 'prior year' service
station openings than 2018. Average throughput per site was in line with the previous year thanks to our targeted
consumer-focused approach to marketing and increased penetration of differentiated fuel product offerings in
our markets.
Gross cash unit margin for Retail fuel was lower at $75 per thousand litres ($78 per thousand litres in 2017).
The market conditions in Morocco in the second half of the year were the primary reason for lower unit margins
in 2018. The EBITDA contribution of the Moroccan retail segment was lower in 2018 than 2017, and we expect
this to fall further in 2019, primarily as a result of the contribution of the new Engen markets.
NON-FUEL RETAIL
Gross cash profit from our Non-fuel retail business rose by 15% year-on-year to $25 million. This increase is
attributable to our continued efforts to increase outlet penetration in our network. This has allowed us to
further leverage our service stations to take advantage of the Non-fuel retail opportunity in our markets which
in turn drives fuel volumes through the 'halo effect'.
During 2018, we continued to roll out our strategy of bringing more major food brands to our service stations,
opening 80 convenience retail shops and 39 new quick service and fast casual restaurants.
Quick service restaurants are magnets for customers - increasing footfall and improving sales across all the
services we offer, while also generating significant revenue in their own right. In 2018 we opened the first KFC
in the Côte d'Ivoire and in Botswana we now have 12 KFC stores through a joint venture with a local partner.
COMMERCIAL
US$'000, unless otherwise indicated 2018 2017 Change
Volumes (million litres) 3,863 3,701 +4%
Gross profit 163,256 144,630 +13%
Gross cash unit margin ($/'000 litres) 47 44 +7%
Gross cash profit 181,249 161,601 +12%
Adjusted EBITDA 122,205 106,978 +14%
OVERVIEW
Our Commercial business is founded on a proven customer value proposition. We not only ensure a reliable
supply of high quality fuels to a wide range of customers operating in high-growth sectors - we also support
those products with extensive services.
In terms of geographies, we worked with miners in ten different countries, with marine customers in seven
countries and supplied aviation fuel at 24 airports in eight countries. We also enabled consumers in eight
countries to heat their homes, run their businesses and cook with LPG. Our LPG business relies on an effective
multi-channel distribution network to supply butane and propane direct to consumers, predominantly for
cooking and heating. We continue to build market share - for example, in Côte d'Ivoire we achieved double
digit growth in 2018, and from a standing start in 2015, we now hold almost a 10% share of the market.
2018 REVIEW
Strong performance in Aviation, Marine and LPG secured a 4% year-on-year volume growth for the Commercial
segment. Gross profit rose by 13% to $163 million, and gross cash unit margin was higher at $47 per thousand
litres, an increase of 7% over the previous year. Commercial adjusted EBITDA of $122 million, accounted for
30% of Group adjusted EBITDA for the year.
CORE COMMERCIAL
We sell LPG and bulk fuel to customers in industries such as mining, construction and power, and also provide
LPG to consumers. Core commercial accounted for 73% of total Commercial volumes (2017: 76%) and 83%
of total Commercial gross cash profit (2017: 85%).
Gross cash unit margin rose by 9% to $53 per thousand litres, on the back of our ability to develop customer
value propositions and target profitable growth in high margin sectors. In LPG, margins were higher due to
profitable bulk sales to customers in the manufacturing industry. Continued cost savings through transportation
optimisation initiatives and operational excellence also benefited gross cash unit margins.
Gross cash profit climbed by 9% to $150 million, thanks to the increased margin and a 1% increase in volumes
year-on-year. Commercial fuel volumes were impacted by lower fuel demand in the power sector and delays in
government contracts in some countries. The negative impacts were offset by an increase in demand for mining
fuel driven by increased exploration activities. LPG volumes benefited from the continued development of our
distribution networks and improved point of sale coverage.
AVIATION AND MARINE
We delivered a strong contribution from this segment in 2018. Aviation and Marine accounted for 27% of total
Commercial volumes (2017: 24%) and 17% of total Commercial gross cash profit (2017: 15%). Volumes grew by
16% year-on-year while gross cash profit jumped 28% to $31 million for the year ended 31 December 2018.
Gross cash unit margin increased to $30 per thousand litres from $27 per thousand litres in 2017.
High margin spot sales, increasing crude oil prices and favourable sourcing of aviation fuel helped drive higher
gross cash unit margins.
In Marine, volumes rose amid higher demand on shipping routes where our marine bunkering operations are
located. Our continuing efforts to secure opportunistic spot sales at favourable pricing had a positive impact
on both margins and volumes.
LUBRICANTS
US$'000, unless otherwise indicated 2018 2017 Change
Volumes (million litres) 134 129 +4%
Gross profit 68,197 72,894 -6%
Revenue 363,732 339,555 +7%
Gross cash unit margin ($/'000 litres) 525 581 -10%
Gross cash profit 70,420 74,991 -6%
Adjusted EBITDA 51,026 42,124 +21%
OVERVIEW
In the majority of countries where we operate, our Lubricants business is the market leader or number two
player, based on 2017 data.
Our Lubricants segment is made up of retail and commercial lubricants sales of distributed products from SVL,
our 50% owned blending business. SVL owns and operates two blending plants and has interests in a further four
joint venture facilities. Profit from SVL is included in the segment EBITDA, but other metrics such as volumes
and gross cash profit are from our distribution and marketing activities.
Over the last 12 months our effective marketing campaigns encouraged customers to access our Shell-branded
products in new ways. Active promotion and entrepreneurial spirit are absolutely crucial to forecourt sales -
for example, during 2018 we continued to roll out and expand a programme that puts trained oil specialists
beside the pumps at the forecourts and in dedicated lube bays at key service stations. Directly incentivised to
encourage motorists to choose Shell-branded lubricants, these professionals offer oil checks and top-ups.
2018 REVIEW
Volumes in this segment rose 4% year-on-year, however gross cash profit was down by 6%, primarily due to
higher base oil prices in 2018.
As the base oil price increases, there is a lag before we are able to pass on increases to customers as a result of
pricing commercial contractual terms and holding inventories required for the manufacture of lubricants through
our SVL joint venture.
Adjusted EBITDA grew 21% to $51 million, mainly attributable to our SVL joint venture that ensures a
partnership across the value chain. Lubricants accounted for 13% of the Group's adjusted EBITDA.
RETAIL LUBRICANTS
This part of our business sells lubricants to retail customers and consumers. During the year, Retail lubricants
accounted for 61% of total Lubricants volumes (2017: 61%) and 60% of total Lubricants gross cash profit (2017:
62%). Volumes increased 5% in 2018, although lower than anticipated efficiencies at some of our distributors
meant that we marginally missed achieving our full growth potential. Unit margins decreased to $513 from $592
per thousand litres in the previous year, mainly as a result of an increase in base oil prices. Our response to the
increased cost of base oil was to introduce active price management in line with our pricing strategy and
marketing initiatives focused on selling an optimised sales mix of premium products that ensure higher margins.
COMMERCIAL LUBRICANTS
The Commercial lubricants segment comprises sales to commercial customers as well as export sales to more
than ten countries outside our portfolio. Commercial lubricants accounted for 39% of total Lubricants volumes
(2017: 39%) and 40% of total Lubricants gross cash profit (2017: 38%).
Despite major construction, power and mining projects that were either postponed, delayed or cancelled,
activity increased towards the end of the year and this led to volumes rising by 3%. Unit margins were $544 per
thousand litres in 2018, down by 4% over the previous year. As was the case for Retail lubricants, this was
primarily due to the increase in base oil prices from 2017 to 2018.
FINANCIAL REVIEW
CONSOLIDATED RESULTS OF OPERATIONS
SUMMARY INCOME STATEMENT
US$'000 2018 2017 Change
Revenues 7,549,318 6,693,515 +13%
Cost of sales (6,924,931) (6,079,594) +14%
Gross profit 624,387 613,921 +2%
Selling and marketing cost (196,573) (193,599) +2%
General and administrative cost (183,343) (197,436) -7%
Share of profit of joint ventures and associates 28,270 16,342 +73%
Other income/(expense) 2,769 2,686 +3%
EBIT 275,510 241,914 +14%
Finance expense - net (46,108) (31,137) +48%
EBT 229,402 210,777 +9%
Income taxes (83,343) (81,124) +3%
Net income 146,059 129,653 +13%
NON-GAAP MEASURES
US$'000, unless otherwise indicated 2018 2017 Change
Volume (million litres) 9,351 9,026 +4%
Gross cash profit 679,628 666,026 +2%
EBITDA 365,955 326,092 +12%
Adjusted EBITDA 400,208 376,128 +6%
ETR (%) 36% 38% n/a
Adjusted net income 177,712 170,592 +4%
Adjusted diluted EPS (US$)(1) 0.14 70.24 n/a
(1) Refer to general information (note 1) in the consolidated financial statements. Weighted average number of
ordinary shares and diluted number of shares for the year ended 31 December 2018 relate to Vivo Energy plc and
for the year ended 31 December 2017 relate to Vivo Energy Holding B.V.
ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS
Volumes
In 2018 total volumes sold were 9,351 million litres, up 4% year-on-year. Retail fuel, our largest segment,
accounted for 57% of total volumes and increased by 3% year-on-year despite short-term external supply
constraints that impacted sales in the third quarter. Our Commercial segment had a strong year, with volumes
higher by 4% year-on-year, driven by new Aviation contracts and successful Marine tenders and spot sales.
Commercial volumes represented 41% of total volumes. Lubricants volumes accounted for 2% of total volumes
and grew by 4% year-on-year.
Revenue
Revenue increased by $855 million, or 13% to $7,549 million in the year ended 31 December 2018 from $6,694
million in 2017. Higher revenue was primarily driven by volume growth as well as rising crude oil prices from
2017 to 2018.
Cost of sales
Cost of sales increased by $845 million, or 14% to $6,925 million in the year ended 31 December 2018 from
$6,080 million in 2017. This increase is due to the volume growth and higher crude oil prices between 2017 and
2018.
Gross profit
As a result of the volume growth and favourable foreign currency exchange movements, gross profit amounted
to $624 million for the year compared to $614 million in 2017 (2% growth year-on-year). These positive drivers
were partly offset by a decrease in unit margins largely attributable to market conditions in Morocco in 2018.
Gross cash profit
Gross cash profit was higher by $14 million, amounting to $680 million in the year. Total gross cash unit margin
was $73 per thousand litres (2017: $74 per thousand litres). The decrease is primarily driven by market
conditions in Morocco that impacted our Retail unit margin. Rising base oil prices during 2017 and 2018 resulted
in lower unit margins in our Lubricants segment. Lower margins in Retail and Lubricants were offset by a strong
unit margin increase of 7% in our Commercial segment.
Selling and marketing cost
Selling and marketing cost amounted to $197 million, marginally higher than 2017 ($194 million) mainly as a
result of inflation and increased point of sale cost in relation to higher Aviation sales.
General and administrative cost
General and administrative costs, including special items, decreased by 7% to $183 million. The decrease was
primarily driven by fair value adjustments of the Management Equity Plan in 2017 and 2018, partially offset by
non-recurring IPO and Engen acquisition related costs, as well as reorganisation costs related to our cost
optimisation programme.
Share of profit from joint ventures and associates
Share of profit from joint ventures and associates amounted to $28 million, of which $13 million was attributable
to our SVL lubricants joint venture of which we acquired a 50% shareholding in December 2017.
Other income
Other income of $3 million (2017: $3 million) mainly relates to gains on disposal of PP&E and unrealised losses
on financial instruments.
Adjusted EBITDA
Adjusted EBITDA increased by $24 million or 6% year-on-year to $400 million, driven by higher volumes, lower
operating expenses as well as an increase in share of profit from joint ventures and associates.
Net finance expense
Net finance expense increased by $15 million or 48% to $46 million from $31 million in 2017. This net finance
expense variation mainly resulted from higher long-term debt relative to the same period in 2017. The increase
in borrowings is attributable to the term loan facility entered into in June 2017, and drawings on an incremental
facility in December 2017, to fund the acquisition of the participation in SVL.
Income taxes
For the year ended 31 December 2018, the ETR decreased to 36% from 38% compared to the comparative
period of 2017. The decrease is mainly attributable to lower expenses not tax deductible, and higher non-taxable
income.
Net income
Net income, including the impact of special items was $146 million, up 13% from $130 million for the year ended
31 December 2017.
Earnings per share
Basic earnings per share amounted to 11 dollar cents per share. Adjusted diluted earnings per share, excluding
the impact of special items were 14 dollar cents.
CONSOLIDATED FINANCIAL POSITION
SUMMARY BALANCE SHEET
US$'000 31 December 2018 31 December 2017 Change
PP&E and right-of-use assets 770,019 733,584 +5%
Intangible assets 133,962 119,993 +12%
Investments in joint ventures and associates 223,452 218,801 +2%
Other non-current assets 144,908 131,112 +11%
Total non-current assets 1,272,341 1,203,490 +6%
Inventories 440,767 353,129 +25%
Trade receivables 443,645 412,181 +8%
Other current assets 277,731 237,520 +17%
Cash and cash equivalents 392,853 422,494 -7%
Total current assets 1,554,996 1,425,324 +9%
Total assets 2,827,337 2,628,814 +8%
Borrowings and lease liability 411,401 517,505 -21%
Other non-current liabilities 269,987 311,615 -13%
Total non-current liabilities 681,388 829,120 -18%
Borrowings and lease liability 299,616 271,443 +10%
Trade payables 1,060,528 868,521 +22%
Other current liabilities 204,474 212,109 -4%
Total current liabilities 1,564,618 1,352,073 +16%
Total equity 581,331 447,621 +30%
Total equity and liabilities 2,827,337 2,628,814 +8%
ASSETS
PP&E and right-of-use assets increased by $36 million to $770 million, principally due to the continued investment
in our retail network, partially offset by depreciation expense.
Intangible assets increased by $14 million to $134 million, largely due to additions relating to our new ERP
software, offset by amortisation and unfavourable foreign currency movements.
Investments in joint ventures and associates increased by $5 million. The main movements were from an increase
in our share of profit from joint ventures and associates amounting to $28 million partially offset by dividends
received of $23 million.
Inventories increased by $88 million principally driven by increased activities, higher crude oil prices as well as
the timing of purchases and shipments. Average monthly inventory days for the period were 24 days (2017: 22
days).
Trade receivables increased by $31 million driven by increased sales volumes and higher crude oil prices. Average
monthly Days sales outstanding for the period was 16 days (2017: 17 days).
Other assets (non-current and current) largely relate to other government benefits receivable from our
regulated markets, prepayments, VAT and duties receivable as well as income tax receivables. The increase of
$54 million is mainly driven by other government benefits receivable, principally as a result of the timing
of payments and higher operational activities.
EQUITY AND LIABILITIES
The non-current portion of borrowings and lease liability decreased by $106 million mostly due to the scheduled
repayments of the Group's loan facility and repayments of the lease liability.
Other liabilities (non-current and current) principally relate to employee liabilities, oil fund liabilities, deposits
owed to customers, other tax payable and provisions. The decrease of $49 million is largely due to the
revaluation and repayment of the Management Equity Plan related liability and other employee-related liabilities.
Current portion of borrowings and lease liability increased by $28 million to $300 million, primarily due to an
increase in individual operating entities' short-term bank facilities used for working capital management.
Trade payables increased by $192 million primarily due to an increase in crude oil prices, increased activities and
the timing of purchases and shipments. Average monthly Days payable outstanding for the period was 56 days
(2017: 53 days).
DIVIDENDS
The Board is recommending a final dividend per share of 1.3 dollar cents amounting to $16 million and bringing
the full year dividend to 1.9 dollar cents per share, amounting to $24 million. This represents a pay-out ratio of
30% of attributable net income, pro-rated for the period since IPO.
LIQUIDITY AND CAPITAL RESOURCES
ADJUSTED FREE CASH FLOW
US$'000 2018 2017(1)
Net income 146,059 129,653
Adjustment for non-cash items and other 167,051 156,884
Change in working capital (67,611) (38,274)
Cash flow from operations activities 245,499 248,263
Net additions of PP&E and intangible assets(2) (143,702) (119,453)
Free cash flow 101,797 128,810
Special items(3) 47,284 9,064
Adjusted free cash flow 149,081 137,874
(1) Prior year comparatives were reclassified where necessary.
(2) Excluding cash flow from acquisition of businesses.
(3) Cash impact of special items. Special items are explained and reconciled in the Non-GAAP financial measures.
The Group maintained a strong cash generation with an adjusted free cash flow of $149 million (2017: $138
million), that was driven by a high cash inflow from operating activities mainly as a result of strong business
performance.
Cash flow from operating activities fully funded capital expenditures that were higher than 2017 mainly due to
the investment in our new ERP system and significant investments in our retail station network.
We paid income tax to the amount of $103 million for the year ended 31 December 2018 (2017: $114 million).
CAPITAL EXPENDITURES
US$'000 2018 2017
Maintenance 50,877 46,094
Growth 71,630 62,684
Special projects 24,277 13,080
Total 146,784 121,858
Retail 65,989 62,612
Commercial 20,339 19,059
Lubricants 1,968 1,175
Other (Technology, supply and distribution and general corporate costs) 58,488 39,012
Total 146,784 121,858
Of which growth capital and expenditure was: 71,630 62,684
Retail 50,412 46,937
Commercial 14,782 10,993
Lubricants 1,647 772
Other (Technology, supply and distribution and general corporate costs) 4,789 3,982
The expansion and development of our retail network represented the majority of our capital expenditure
during the year. This included the construction of retail sites, Non-fuel retail offerings as well as related
infrastructure (including storage facilities) to support this network.
Special projects relate to technology and other strategic investments. This included a significant investment in
the implementation of a new ERP system and also further automation of our operations.
NET DEBT AND AVAILABLE LIQUIDITY
US$'000 31 December 2018 31 December 2017
Long-term debt 391,753 479,889
Lease liabilities 110,850 133,757
Total debt excluding short-term bank borrowings 502,603 613,646
Short-term bank borrowings(1) 208,414 175,302
Less cash and cash equivalents (392,853) (422,494)
Net debt 318,164 366,454
(1) Short-term bank borrowings exclude the current portion of the long-term debt.
US$'000 31 December 2018 31 December 2017
Net debt 318,164 366,454
Adjusted EBITDA 400,208 376,128
Leverage ratio(1) 0.79x 0.97x
(1) For the description and reconciliation of non-GAAP measures refer to Non-GAAP measures below.
US$'000 31 December 2018 31 December 2017
Cash and cash equivalents 392,853 422,494
Available undrawn credit facilities 1,280,734 761,490
Available short-term capital resources 1,673,587 1,183,984
Net debt at 31 December 2018 decreased to $318 million from $366 million at 31 December 2017. The
decrease was primarily due to lower long-term debt and lease liabilities as a result of scheduled repayments,
partially offset by an increase in short-term bank borrowings and a decrease in cash and cash equivalents.
The leverage ratio was 0.79x at 31 December 2018 from 0.97x at 31 December 2017 due to the decrease in
net debt and an increase in adjusted EBITDA.
In May 2018, the Company established a new multi-currency revolving credit facility of $300 million. The multi-
currency revolving credit facility consists of a primary $300 million and an additional $100 million contingent
upon events after the listing. This credit facility remained fully undrawn at year-end. At the end of February 2019
an amount of $62 million was drawn in relation to the Engen acquisition. Available short-term capital resources
amounted to $1,674 million compared to $1,184 million at 31 December 2017.
The table below sets the Group's financial liabilities into relevant maturity groupings based on the remaining
period at the reporting date to the contractual maturity date. The amounts disclosed are the contractual
undiscounted cash flows.
US$'000 31 December 2018
Between
Less than 3 months Between Between Over
3 months and 1 year 1 and 2 years 2 and 5 years 5 years Total
Borrowings 202,553 83,835 84,265 232,512 - 603,165
Trade payables 1,002,778 49,808 5,794 2,148 - 1,060,528
Lease liabilities 5,212 15,269 19,597 50,647 42,632 133,357
Other liabilities 43,350 19,960 22,240 4,601 129,431 219,582
Total 1,253,893 168,872 131,896 289,908 172,063 2,016,632
The Group has purchase obligations, under various agreements, made in the normal course of business. The
purchase obligations are as follows, as at:
US$'000 31 December 2018 31 December 2017
Purchase obligations 13,271 11,706
Total 13,271 11,706
NON-GAAP FINANCIAL MEASURES
Non-GAAP measures are not defined by International Financial Reporting Standards (IFRS) and, therefore, may
not be directly comparable with other companies' non-GAAP measures, including those in the Group's industry.
Non-GAAP measures should be considered in addition to, and are not intended to be a substitute for, or
superior to, IFRS measurements.
The exclusion of certain items from non-GAAP performance measures does not imply that these items are
necessarily non-recurring. From time to time, we may exclude additional items if we believe doing so would
result in a more transparent and comparable disclosure.
The Directors believe that reporting non-GAAP financial measures in addition to IFRS measures provides users
with an enhanced understanding of results and related trends and increases the transparency and clarity of the
core results of our operations. Non-GAAP measures are used by the Directors and management for
performance analysis, planning, reporting and key management performance measures.
Term Description Term Description
Gross cash profit This is a measure of gross profit after Gross cash unit Gross cash profit per unit. Unit is defined
direct operating expenses and before non- margin as 1,000 litres of sales volume. This is a
cash depreciation and amortisation useful measure as it indicates the
recognised in cost of sales. This is a incremental profit for each additional unit
key management performance measure. sold.
EBITDA Earnings before finance expense, finance Adjusted EBITDA EBITDA adjusted for the impact of special
income, income tax, depreciation and items. This is a useful measure as it
amortisation. This measure provides the provides the Group's operating
Group's operating profitability and results profitability and results, before non-cash
before non-cash charges and is a key charges and is an indicator of the
management performance measure. core operations, exclusive of special items.
Adjusted net Net income adjusted for the impact of Adjusted diluted Diluted EPS adjusted for the impact of
income special items. EPS special items.
Special items Income or charges that are not Adjusted free cash Cash flow from operating activities less net
considered to represent the underlying flow additions to PP&E and intangible assets and
operational performance and, based on excluding the impact of special items. This
their significance in size or nature, are is a key operational liquidity measure, as it
presented separately to provide further indicates the cash available to pay
understanding of the financial and dividends, repay debt or make further
operational performance. investments in the Group.
Net debt Total borrowings and lease liabilities less Leverage ratio Net debt, including lease liability, divided
cash and cash equivalents. by adjusted EBITDA.
Return on average Adjusted EBIT after income tax divided by Existing portfolio A measure of growth in retail volumes
capital employed the average capital employed. Average growth from retail service stations that have been
(ROACE) capital employed is the average of opening open for at least a year but excluding prior
and closing net assets plus borrowings year sales of retail service stations closed
and lease liabilities, less cash and cash during the year. It is an indicator of current
equivalents. ROACE is a useful measure trading performance and is important for
because it shows the profitability of the understanding growth in the existing
Group considering the average amount of portfolio of sites, excluding the effect of
capital used. new sites and closures.
RECONCILIATION OF NON-GAAP MEASURES
US$'000 2018 2017
Gross profit 624,387 613,921
Add back: depreciation and amortisation in cost of sales 55,241 52,105
Gross cash profit 679,628 666,026
Volume (million litres) 9,351 9,026
Gross cash unit margin ($/'000 litres) 73 74
US$'000 2018 2017
EBIT 275,510 241,914
Depreciation, amortisation and impairment 90,445 84,178
EBITDA 365,955 326,092
Adjustments to EBITDA related to special items:
IPO and Engen acquisition related expenses(1) 29,340 -
Restructuring(2) 16,923 8,539
Management Equity Plan (12,010) 41,497
Adjusted EBITDA 400,208 376,128
US$'000 2018 2017
Net income 146,059 129,653
Adjustments to net income related to special items:
IPO and Engen acquisition related expenses(1) 29,340 -
Restructuring(2) 16,923 8,539
Management Equity Plan (12,010) 41,497
Tax on special items (2,600) (9,097)
Adjusted net income 177,712 170,592
US$ 2018 2017
Diluted EPS 0.11 52.34
Impact of special items 0.03 17.90
Adjusted diluted EPS(3) 0.14 70.24
(1) In May 2018, the Company became listed on the London Stock Exchange Main Market for listed securities and the Main Board of the JSE Limited by way of
secondary inward listing. All IPO-related expenses are considered to be special items. Furthermore, on 4 December 2017, the Company agreed to enter into a
sale and purchase agreement with Engen Holdings (Pty) Limited ('Engen Holdings'), a 100% subsidiary of Engen Limited, in relation to the purchase of shares in
Engen International Holdings (Mauritius) Limited ('Engen International Holdings Limited') for the exchange of a shareholding in Vivo Energy, and a cash element.
Related integration project expenses are treated as special items.
(2) Restructuring expenses relate to further optimising the organisation and are substantial in scope and impact and do not form part of the underlying core
operational activities.
(3) Refer to general information (note 1) in the consolidated financial statements.
US$'000 2018 2017
EBIT 275,510 241,914
Adjustments to EBIT related to special items:
IPO and Engen acquisition related expenses(1) 29,340 -
Restructuring(2) 16,923 8,539
Management Equity Plan (12,010) 41,497
Adjusted EBIT 309,763 291,950
Effective tax rate 36% 38%
Adjusted EBIT after tax 197,224 179,584
Average capital employed 856,785 722,569
ROACE(3) 23% 25%
(1) In May 2018, the Company became listed on the London Stock Exchange Main Market for listed securities and the Main Board of the JSE Limited by way of
secondary inward listing. All IPO-related expenses are considered to be special items. Furthermore, on 4 December 2017, the Company agreed to enter into a
sale and purchase agreement with Engen Holdings (Pty) Limited ('Engen Holdings'), a 100% subsidiary of Engen Limited, in relation to the purchase of shares in
Engen International Holdings (Mauritius) Limited ('Engen International Holdings Limited') for the exchange of a shareholding in Vivo Energy, and a cash element.
Related integration project expenses are treated as special items.
(2) Restructuring expenses relate to further optimising the organisation and are substantial in scope and impact and do not form part of the underlying core
operational activities.
(3) ROACE includes the impact of the 50% acquisition of SVL which completed in December 2017. ROACE excluding the impact of the 50% acquisition of SVL was
28% in 2017.
PRINCIPAL RISK AND UNCERTAINTIES
Our activities are exposed to various risks and uncertainties. These are risks that we assess as relevant and
significant to our business at this time, however there might be other risks that could emerge in the future.
Overall, our risk management programme focuses on the unpredictability of the global market and seeks to
minimise potential adverse effects on financial performance.
Brand & reputational
No. Our risk Risk impact Our mitigation
1. Partner reputation A deterioration to our brand name may We require all our contractors and
and relationships prevent collaboration opportunities business partners to manage their HSSE
Our business identity depends on with other companies, thus hindering policies and practices in-line with ours.
its relationship with our brand partners growth plans of the Group.
and the reputation of those brands, in
particular our relationship with Shell. Stringent Know Your Counterparty
A decline in consumer confidence may ('KYC') procedures are performed
drive down volumes and result in lower prior to entering any contract over
margins. a value of $50,000 per year.
We promote and develop the
communities in which we operate to
help build the Vivo Energy brand as the
most respected in Africa.
2. Criminal activity, fraud, bribery Violations of anti-bribery, We provide compliance training
and compliance risk anti-corruption laws, and other programmes to employees at all levels.
As a result of business in Africa regulatory requirements may result in
our countries are exposed to high levels significant criminal or civil sanctions, The Code of Conduct and KYC
of risk relating to criminal activity, fraud, which could disrupt our business, procedures, along with various other
bribery, theft and corruption. damage its reputation and result in a policies and safeguards have been
material adverse effect on the business, designed to prevent the occurrence of
results of operations and financial fraud, bribery, theft and corruption
There are a number of regulatory condition. within the Group.
requirements applicable to the Group
and the related risk of non-compliance
with these regulations have increased
following the listing.
We have a confidential whistle-blowing
helpline for employees, contractors,
customers and other third parties to
raise ethical concerns or questions.
We regularly maintain and update the
information technology and control
systems within the Group.
The Head of Ethics and Compliance and
the Head of Forensics are involved
in mitigating fraudulent activities in the
Group.
We strive to ensure our anti-bribery
management systems will continue
to be certified compliant under the ISO
37001 standard.
Pricing
No. Our risk Risk impact Our mitigation
3. Oil price fluctuations Higher supply costs in deregulated Exposure to commodity price risk is
The price of oil and oil products may markets result in higher prices for our mitigated through careful inventory
fluctuate preventing us from realising products and could reduce our ability management and dynamic pricing.
our targeted margins, specifically in the to achieve targeted unit margins.
deregulated markets in which we
operate.
4. Currency exchange risk Depreciation of foreign currency Our treasury policy requires each
We are exposed to foreign exchange exchange rates could result country to manage their foreign
risk, currency exchange controls, in severe financial losses. exchange risks. The Central Treasury
currency shortage and other currency- team approves all hedging plans before
related risks. they are actioned to ensure they are
aligned with our strategic focus.
Currency exchange risks are mitigated
by margin and pricing strategies.
Health, safety, security & environment
No. Our risk Risk impact Our mitigation
5. Health and safety We may incur potential liabilities arising We ensure all safety measures for our
We are exposed to accidents or from HSSE accidents/incidents. retail service stations, storage sites, and
incidents relating to health, safety and employees are maintained
the environment and from remediation at international standards.
of such accidents relating to employees. Brand reputation can be severely
impacted, along with employee
confidence.
We invest significantly in training and
We are further subject to HSSE laws technology to improve road transport
and regulations and industry standards Regulators and authorities may impose safety.
related to our operations in each of fines, disruptions to operations and
the countries in which we operate. disallow permits for future ventures.
The highest emphasis is placed on
process safety, and minimising security
risks to our people, our facilities and the
communities in which we operate.
We require all our contractors
and partners to manage their
HSSE policies and practices in-line with
ours.
On an ongoing basis, safety and security
drills, campaigns and programmes are
conducted to ensure wide-spread
knowledge of the Group's HSSE
principles and procedures.
In addition to our ongoing, daily
attention to HSSE, we hold an annual
Safety Day, which creates an
opportunity for all employees to refocus
on the importance of HSSE of our
Group. The day is used to reinforce
safety measures as well as raise
awareness of key issues.
Legal, regulatory and political instability
No. Our risk Risk impact Our mitigation
6. Economic and governmental An economic slowdown which We closely monitor evolving issues
instability adversely affects, for example, in markets.
Several countries and regions in which disposable income, vehicle distance
we operate have experienced economic driven, or infrastructure We ensure appropriate responses
and political instability that could development, in one or more of and business continuity plans are
adversely affect the economy of our these regions could negatively impact developed to minimise disruptions.
markets. our sales and have a material adverse
effect on the business, financial All local regulatory environments
conditions and operational results. and changes are closely monitored.
Operational
No. Our risk Risk impact Our mitigation
7. Product availability and supply The increased procurement We ensure optimal inventory
We are dependent upon the supply of costs could lower our margins. management through close
fuels, lubricants, and additives from monitoring of inventory days, sales
various suppliers. When raw materials and other factors which may require
are needed urgently, asymmetric Limited supply of products and additional inventory levels.
negotiations occur. The bargaining power storage facilities may result in stock
shifts to the supplier who in turn can outs. This could further result in
charge a higher price. breach of contract and disruptions
to our operations, leaving us
susceptible to fines or penalties. Attention to our suppliers' political
and social environments are
performed and our purchasing
Furthermore we are restricted by limited strategies realigned as necessary.
storage capacity within some country
facilities.
The Group now has increased
storage capacity at strategic locations
within Africa, following the Engen
acquisition.
8. Business concentration risk Any unfavourable changes in market Overall diversification is the key
A large part of the Group's operations dynamics, such as the re-imposition of strategy and control measure.
(and margins) are derived from Morocco pricing regulations for fuel, or
when compared to other countries. downturns in the performance of the
operations overall, may lead to a
decline in the Group's performance.
The completion of the Engen
transaction has increased the
geographic diversification, as the
Group has expanded its footprint
in Africa.
9. New ERP implementation Inadequate processes and The project is managed by one of the
Our organisation is currently migrating segregation of duties may impact the Group's Leadership Team members.
to a new ERP, a critical project that quality of the operations, controls Processes have been thoroughly
will redesign some of our operations, and make fraud detection difficult. defined and pre-validated. The new
functions and controls. Data quality and management issues platform has been already rolled out
may have financial, operational or and is operational in the two
compliance consequences leading selected pilot countries. Segregation
to increased (financial and operating) of duties and data quality have been
costs and missed opportunities. assessed through both internal and
external audits. The remaining
deployment will be executed in
successive waves across the Group
throughout 2019.
Strategic
No. Our risk Risk impact Our mitigation
10. Acquisition integration We may incur write-downs, All acquisition decisions are intensively
We may be unable to identify or accurately impairment charges or reviewed at several stages with
evaluate suitable acquisition candidates unforeseen liabilities, placing ultimate approval by the Board. This
or to complete or integrate past or strain on financial resources. ensures risks at all levels are being
prospective acquisitions successfully and/or assessed and mitigated throughout the
in a timely manner, which could materially process.
adversely affect growth. Occurrences of indebtedness
could result in increased
obligations and include covenants or We ensure there are detailed
other restrictions that limit integration plans with realistic time
operational flexibility. lines as well as designated teams to
execute the plan.
Tailored on-boarding and training is
delivered post-acquisition to ensure
a smooth and efficient transition.
Financial
No. Our risk Risk impact Our mitigation
11. Credit management This may result in financial loss as a We maintain Credit Policy Manuals
The Group faces risks arising from result of bad debts and lost revenue. which are country specific. These
credit exposure to commercial and retail Manuals ensure a harmonised,
customers as well as governments, Exceeding payment terms will result (cost) effective and value-adding credit
including outstanding receivables and in lower working capital, potentially process in all classes of business.
committed transactions. creating liquidity challenges for
the business.
Continuous monitoring of outstanding
credit balances are performed to
ensure our overall risk remains within
our tolerance.
We impose strict guidelines and
procedures should customers exceed
the credit limits set.
Credit limits are set on an individual
basis after having assessed the
customer through KYC procedures.
We use debtor factorisation
when considered necessary.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
US $'000 Notes 2018 2017
Revenues 5 7,549,318 6,693,515
Cost of sales (6,924,931) (6,079,594)
Gross profit 5 624,387 613,921
Selling and marketing cost (196,573) (193,599)
General and administrative cost 7 (183,343) (197,436)
Share of profit of joint ventures and associates 13 28,270 16,342
Other income/(expense) 8 2,769 2,686
Earnings before interest and tax (EBIT) 6 275,510 241,914
Finance income 6,145 5,423
Finance expense (52,253) (36,560)
Finance expense - net 9 (46,108) (31,137)
Earnings before tax (EBT) 229,402 210,777
Income taxes 10 (83,343) (81,124)
Net income 6 146,059 129,653
Net income attributable to:
Equity holders of Vivo Energy plc(1) 135,155 119,717
Non-controlling interest (NCI) 10,904 9,936
146,059 129,653
Other comprehensive income (OCI)
Items that may be reclassified to profit or loss
Currency translation differences (19,678) 27,918
Net investment hedge gain/(loss) 6,638 (10,205)
Items that will not be reclassified to profit or loss
Re-measurement of retirement benefits 2,888 2,652
Income tax relating to retirement benefits (750) (713)
Change in fair value of financial instruments through OCI 14 1,204 165
Other comprehensive income, net of tax (9,698) 19,817
Total comprehensive income 136,361 149,470
Total comprehensive income attributable to:
Equity holders of Vivo Energy plc(1) 125,862 136,991
Non-controlling interest (NCI) 10,499 12,479
136,361 149,470
Earnings per share (US $) 21
Basic 0.11 53.21
Diluted 0.11 52.34
US $'000, unless otherwise indicated 2018 2017
EBITDA 365,955 326,092
Adjusted EBITDA 400,208 376,128
Adjusted net income 177,712 170,592
Adjusted diluted EPS (US $)(1) 0.14 70.24
The notes are an integral part of these consolidated financial statements.
(1)Formerly Vivo Energy Holding B.V. refer to general information (note 1).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2018
US $'000 Notes 31 December 2018 31 December 2017
Assets
Non-current assets
Property, plant and equipment 11 621,756 585,171
Right-of-use assets 27 148,263 148,413
Intangible assets 12 133,962 119,993
Investments in joint ventures and associates 13 223,452 218,801
Deferred income taxes 10 36,374 42,627
Financial assets at fair value through other comprehensive income 14 7,626 6,314
Other assets 16 100,908 82,171
1,272,341 1,203,490
Current assets
Inventories 17 440,767 353,129
Trade receivables 18 443,645 412,181
Other assets 16 254,999 229,068
Income tax receivables 19,478 8,452
Other financial assets 15 3,254 -
Cash and cash equivalents 19 392,853 422,494
1,554,996 1,425,324
Total assets 2,827,337 2,628,814
Equity and liabilities
Total equity
Attributable to equity holders of Vivo Energy plc(1) 532,959 401,546
Attributable to non-controlling interest 48,372 46,075
20 581,331 447,621
Liabilities
Non-current liabilities
Lease liability 27 97,622 121,261
Borrowings 23 313,779 396,244
Provisions 24, 25 75,150 91,982
Deferred income taxes 10 51,206 51,388
Other liabilities 26 143,631 168,245
681,388 829,120
Current liabilities
Lease liability 27 13,228 12,496
Trade payables 1,060,528 868,521
Borrowings 23 286,388 258,947
Provisions 24, 25 15,177 20,866
Other financial liabilities 15 - 664
Other liabilities 26 165,196 152,409
Income tax payables 24,101 38,170
1,564,618 1,352,073
Total liabilities 2,246,006 2,181,193
Total equity and liabilities 2,827,337 2,628,814
The notes are an integral part of these consolidated financial statements.
(1)Formerly Vivo Energy Holding B.V. refer to general information (note 1).
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 5 March 2019
and were signed on its behalf by:
Christian Chammas Johan Depraetere
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Attributable to equity holders of Vivo Energy plc(1)
Other reserves
Equity-
Currency Fair settled
Share Share Retained Retirement translation value incentive NCI Total
US $'000 Notes capital premium earnings Reserves benefits difference reserves schemes(2) reserves Total NCI equity
Balance at 1 January 2018 30 244,753 309,218 - (2,294) (160,226) 2,446 1,904 5,715 401,546 46,075 447,621
Net income - - 135,155 - - - - - - 135,155 10,904 146,059
Other comprehensive income - - - - 2,138 (12,635) 1,204 - - (9,293) (405) (9,698)
Total comprehensive income - - 135,155 - 2,138 (12,635) 1,204 - - 125,862 10,499 136,361
IPO-related reorganisation impact(3) (30) (244,753) (364,511) - 2,248 152,382 (2,446) (1,904) (5,715) (464,729) - (464,729)
Capital contribution 20 1,800,000 - - (1,335,272) - - - - - 464,728 - 464,728
Director subscription 20 2,698 1,336 - - - - - - - 4,034 - 4,034
Capital reduction 20 (1,201,799) 1,799 - 1,200,000 - - - - - - - -
Share-based expense 30 - - - - - - - 9,485 - 9,485 - 9,485
Dividends paid 22 - - (7,967) - - - - - - (7,967) (8,202) (16,169)
Balance at 31 December 2018 600,899 3,135 71,895 (135,272) 2,092 (20,479) 1,204 9,485 - 532,959 48,372 581,331
Attributable to equity holders of Vivo Energy Holding B.V.
Other reserves
Equity-
Currency Fair settled
Share Share Retained Retirement translation value incentive NCI Total
US $'000 Notes capital premium earnings Reserves benefits difference reserves schemes(2) reserves Total NCI equity
Balance at 1 January 2017 30 244,753 473,501 - (4,233) (175,396) 2,281 1,814 5,715 548,465 39,993 588,458
Net income - - 119,717 - - - - - - 119,717 9,936 129,653
Other comprehensive income - - - - 1,939 15,170 165 - - 17,274 2,543 19,817
Total comprehensive income - - 119,717 - 1,939 15,170 165 - - 136,991 12,479 149,470
Share-based expense 30 - - - - - - - 90 - 90 - 90
Dividends paid - - (284,000) - - - - - - (284,000) (6,397) (290,397)
Balance at 31 December 2017 30 244,753 309,218 - (2,294) (160,226) 2,446 1,904 5,715 401,546 46,075 447,621
The notes are an integral part of these consolidated financial statements.
(1) Formerly Vivo Energy Holding B.V. refer to general information (note 1).
(2) Equity-settled incentive schemes include the Long-Term Incentive Plan ('LTIP') and the IPO Share Award Plan.
(3) Refer to the general information (note 1).
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
US $'000 Notes 2018 2017(1)
Operating activities
Net income 146,059 129,653
Adjustment for:
Income taxes 10 83,343 81,124
Depreciation, amortisation and impairment 11,12,27 90,445 84,178
Net gain on disposals of PP&E and intangible assets 8 (1,810) (1,573)
Share of profit of joint ventures and associates 13 (28,270) (16,342)
Dividends received from joint ventures and associates 13 23,343 9,497
Current income tax paid (103,422) (114,150)
Net change in operating assets and liabilities and other adjustments 28 35,811 75,876
Cash flows from operating activities 245,499 248,263
Investing activities
Acquisition of businesses 13 (547) (160,173)
Purchases of PP&E and intangible assets 11, 12 (146,784) (121,858)
Proceeds from disposals of PP&E and intangible assets 8, 11, 12 3,082 2,405
Cash flows from investing activities (144,249) (279,626)
Financing activities
Proceeds from issuance of shares 525 -
Repayment of long-term debt 23 (83,809) (116,800)
Net (repayments)/proceeds (of)/from bank and other borrowings 23 40,306 525,802
Repayment of lease liability 27 (24,736) (18,910)
Dividends paid (16,169) (290,397)
Interest paid (43,834) (35,228)
Interest received 6,145 4,646
Cash flows from financing activities (121,572) 69,113
Effect of exchange rate changes on cash and cash equivalents (9,319) 16,091
Net increase/(decrease) in cash and cash equivalents (29,641) 53,841
Cash and cash equivalents at beginning of the year 422,494 368,653
Cash and cash equivalents at end of the year 19 392,853 422,494
The notes are an integral part of these consolidated financial statements.
(1)Prior year comparatives were reclassified where necessary.
NOTES
1. GENERAL INFORMATION
Vivo Energy plc, a public limited company, was incorporated in conjunction with a pre-IPO reorganisation on 12 March
2018 in the United Kingdom under the Companies Act 2006 (Registration number 11250655). The Company is registered
in England and Wales and is limited by shares. The address of the registered office is 5th Floor, The Peak, 5 Wilton Road,
London, SW1V IAN, United Kingdom. The Company listed on the London Stock Exchange Main Market for listed
securities and the Main Board of the securities exchange operated by the Johannesburg Stock Exchange by way of
secondary inward listing on 10 May 2018. References to 'Vivo Energy' or the 'Group' mean the Company and Vivo Energy
Holding B.V. ('VEH', the holding company of the Group until Admission), together with its consolidated subsidiaries and
subsidiary undertakings. Therefore, the consolidated financial statements for the year ended 31 December 2018 are
presented for the Group with continuity, including the impact of the IPO reorganisation.
2. BASIS OF PREPARATION
The Group's principal accounting policies are unchanged from those set out in the Prospectus published in connection
with the Group's initial public offering in May 2018, which is available on the Company's website.
The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2018
or 31 December 2017, but is derived from those accounts. Statutory accounts for 2018 will be delivered to the Registrar
of Companies in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their
reports and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The audit of the
statutory accounts for the year ended 31 December 2018 is now complete. Whilst the financial information included in
this announcement has been computed in accordance with International Financial Reporting Standards ("IFRS") this
announcement does not itself contain sufficient information to comply with IFRS.
This announcement was approved by the Board of Directors on 5 March 2019.
3. FINANCIAL RISK MANAGEMENT
3.1 Financial instruments by category
The table below sets out the Group's classification of each class of financial assets and financial liabilities and their fair values
for the current year and the comparative year:
31 December 2018
Financial
assets at Financial Financial Total
amortised assets at assets at carrying
US $'000 cost FVTPL FVTOCI value Fair value
Financial assets
Trade receivables(1) 443,645 - - 443,645 443,645
Cash and cash equivalents 392,853 - - 392,853 392,853
Financial assets at FVTOCI - - 7,626 7,626 7,626
Other assets(2) 92,922 - - 92,922 92,922
Other financial assets - 3,254 - 3,254 3,254
Total 929,420 3,254 7,626 940,300 940,300
(1) Trade receivables include credit secured receivables of $197m.
(2) Other assets (note 16) exclude the following elements that do not qualify as financial instruments: prepayments, VAT and duties receivable and other government benefits
receivable.
31 December 2018
Financial
liabilities Total
measured at carrying
US $'000 amortised cost value Fair value
Financial liabilities
Trade payables 1,060,528 1,060,528 1,060,528
Borrowings 600,167 600,167 600,167
Other liabilities(1) 219,582 219,582 219,582
Lease liabilities 110,850 110,850 110,850
Total 1,991,127 1,991,127 1,991,127
(1) Other liabilities (note 26) exclude the following elements that do not qualify as financial instruments: other tax payable and deferred income.
31 December 2017
Financial
assets at Financial Financial Total
amortised assets at assets at carrying
US $'000 cost FVTPL FVTOCI value Fair value
Financial assets
Trade receivables(1) 412,181 - - 412,181 412,181
Cash and cash equivalents 422,494 - - 422,494 422,494
Financial assets at FVTOCI - - 6,314 6,314 6,314
Other assets(2) 87,473 - - 87,473 87,473
Total 922,148 - 6,314 928,462 928,462
(1) Trade receivables include credit secured receivables of $135m.
(2) Other assets (note 16) exclude the following elements that do not qualify as financial instruments: prepayments, VAT and duties receivable and other government benefits
receivable.
31 December 2017
Financial
liabilities Total
measured at carrying
US $'000 amortised cost value Fair value
Financial liabilities
Trade payables 868,521 868,521 868,521
Borrowings 655,191 655,191 655,191
Other liabilities(1) 248,495 248,495 248,495
Lease liabilities 133,757 133,757 133,757
Other financial liabilities 664 664 664
Total 1,906,628 1,906,628 1,906,628
(1) Other liabilities (note 26) exclude the following elements that do not qualify as financial instruments: other tax payable and deferred income.
The Group has classified equity investments as financial instruments at FVTOCI (without recycling). These investments
are measured using inputs for the asset or liability that are in absence of observable market data, based on net asset value
of the related investments (level 3 in the IFRS 13 fair value measurement hierarchy). Because the value is based on the
net asset value of the related investments, no sensitivity analysis is presented.
3.2 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate
risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group's financial performance.
Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions and recognised
assets and liabilities.
Management has set up a policy to require Group companies to manage their foreign exchange risk. Group treasury is
required to approve all hedging plans before execution. The Group has a number of natural hedges in place, where the
timing of foreign currency payments is matched with the receipts in a similar currency. Forward contracts are used to
manage the foreign exchange risk arising from future obligations.
Foreign currency exposure on the consolidated net monetary position is $274m (2017: $166m). Other monetary balances
in other currencies are not material. If the non-US dollar held currency had weakened/strengthened by 10% against the
US dollar with all other variables held constant, pre-tax profit for the year would have been $27m (2017: $17m)
lower/higher, mainly as a result of foreign exchange gains/losses on translation of non-US dollar denominated receivables
and payables.
Price risk
The Group generally seeks to manage its exposure to commodity price risk through careful inventory management and
as at 31 December 2018 the Group was not significantly exposed to commodity price risk. In regulated markets, the
Group has no price exposure as long as the sale of the inventory is matching the timing of the price structures updates,
however in unregulated markets, such as Marine and Aviation, the Group may be exposed to price changes in the short-
term if inventory is not carefully managed. The Group does not hold equity securities for trading and is, therefore, not
exposed to price risk.
In Botswana, Guinea, Madagascar, Senegal and Morocco the Group is financially compensated by the local government
for the effect of these price restrictions. For further information see note 3.2 Credit risk. For some countries (such as
Senegal) the transport costs are subsidised.
Cash flow interest rate risk and fair value interest rate risk
The Group's interest rate risk arises from borrowings. It is Group policy to have short-term loan facilities at floating rate
and medium to long-term facilities at floating or fixed rate. Swap from floating to fixed is possible when there is a clear
economic benefit, subject to Group Treasury's approval. The Group has long-term borrowing facilities which carry
variable interest rates and therefore the Group is exposed to a cash flow interest rate risk as at 31 December 2018. The
Group also has some short-term overdraft facilities which carry a fixed interest rate exposing the Group to fair value
interest rate risk. But given that the rate is fixed for a short period of time, and that these facilities terms are subject to
renegotiation should interest rate move, the exposure is minimal. At 31 December 2018, if interest rates on US dollar-
denominated and Euro-denominated borrowings had been one hundred basis point higher/lower with all other variables
held constant, the calculated post-tax profit for the year would have been $5m (2017: $2m) higher/lower, mainly as a
result of higher/lower finance expense on floating rate borrowings.
Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances. Each local entity
is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery
terms and conditions are offered. Credit risk arises from cash and cash equivalents, as well as credit exposures to
wholesale and retail customers, including outstanding receivables and committed transactions. The maximum exposure
to credit risk at the reporting date is the carrying value of each class of receivables.
All external customers must have their identity checked and credit worthiness assessed and approved prior to the signing
of a binding agreement or contract. Credit worthiness is assessed for all customer based on commercial data, but also
considers financial data when a credit limit exceeds $15,000. The utilisation of credit limits is regularly monitored and
checks performed on outstanding debt at regular intervals. Where the environment allows, security (bank guarantees)
will be taken to secure the Group's exposure. For banks and financial institutions, management of the operating entity
are responsible for making the short-term placements with the banks after approval from Group Treasury.
The investment policy is based in order of importance on security, liquidity and yield. Management will assess the
counterparty risks of the third party based on financial strength, quality of management, ownership structure, regulatory
environment and overall diversification. Group Treasury is required to approve all investment decisions to ensure they
are made in line with the Group's credit policies. The Group has provided secured loans to individual employees (note
16).
As at 31 December 2018, the Group is exposed to credit risk in relation to other government benefits receivables mainly
in Botswana, Morocco, Madagascar, Senegal and Guinea. The Morocco funds of $27m (2017: $31m) relate to
compensation provided by the government for setting the price of butane on sales to retail customers. These other
government benefits receivable are partially provided for, the total provision amounted to $15m at 31 December 2018
(2017: $18m). Management believes that the credit risk in relation to these balances (note 16) is relatively low.
In Morocco customer receivables to the amount of $24m (2017: $27m) were assigned to Attijariwafa Factoring
(subsidiary of Attijariwafa Bank), the assigned amount was received in cash and the corresponding receivable was
derecognised and with regard to the late payment risk, the Group capped the exposure to six months maximum of
interest at a rate of 4.70% per annum. This resulted in a continuous involvement accounting treatment where a substantial
portion of the risk has been transferred. A continuous involvement liability of $0.5m (2017: $0.5m) was recognised. In
addition, other government benefits receivable to the amount of $44.7m were assigned to Banque Centrale Populaire,
the assigned amount was received in cash and the corresponding receivable was derecognised. With regard to the late
payment risk, the Group capped the exposure to 5.5 months maximum of interest at a rate of 3.79% per annum. A
continuous involvement liability of $0.7m was recognised.
The tables below show the balances of the major counterparties at the reporting dates:
31 December 2018 31 December 2017
Credit rating US $'000 Credit rating US $'000
Banks
Bank 1 A+ 57,812 AAA 198,132
Bank 2 Af 46,012 A-1 12,873
Bank 3 BB+ 44,696 None available 7,641
Other government benefits receivable
Botswana government A- 33,353 A- 20,002
Senegal government B+ 30,236 B+ 4,333
Morocco government BBB- 27,370 BBB- 31,499
Guinea government None available 10,660 None available 10,897
Madagascar government None available 9,974 None available 1,076
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate
amount of committed credit facilities. Due to the cyclical nature of the underlying businesses, the directors aim to maintain
flexibility in funding by keeping committed credit lines available.
Management monitors rolling forecasts of the Group's liquidity reserve on the basis of expected cash flow. This is
generally carried out at local level in the operating companies of the Group in accordance with practice and limits set by
Group policies. Where short-term liquidity is needed, the operating entities organise short-term facilities to cover the
deficit which have to be authorised by Group Treasury.
The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period
at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
31 December 2018(1)
Between
Less than 3 months Between 1 Between 2 Over
US $'000 3 months and 1 year and 2 years and 5 years 5 years Total
Borrowings 202,553 83,835 84,265 232,512 - 603,165
Trade payables 1,002,778 49,808 5,794 2,148 - 1,060,528
Lease liabilities 5,212 15,269 19,597 50,647 42,632 133,357
Other liabilities(2) 43,350 19,960 22,240 4,601 129,431 219,582
Total 1,253,893 168,872 131,896 289,908 172,063 2,016,632
(1) Borrowings exclude, as of 31 December 2018 the undrawn multi-currency revolving credit facility of $300 million (note 23).
(2) Other liabilities (note 26) exclude the following elements that do not qualify as financial instruments: other tax payable and deferred income.
31 December 2017
Between
Less than 3 months Between 1 Between 2 Over
US $'000 3 months and 1 year and 2 years and 5 years 5 years Total
Borrowings 175,302 83,948 83,948 316,529 - 659,727
Trade payables 832,104 36,417 - - - 868,521
Lease liabilities 4,846 14,540 17,217 49,906 55,712 142,221
Other liabilities(1) 20,761 23,457 16,833 73,488 113,956 248,495
Total 1,033,013 158,362 117,998 439,923 169,668 1,918,964
(1) Other liabilities (note 26) exclude the following elements that do not qualify as financial instruments: other tax payable and deferred income.
Net investment hedge
Foreign currency exposure arises from the Group's net investment in its several subsidiaries that have the Cape Verde
Escudo ('CVE') and the CFA Franc ('XOF') functional currency, both currencies being 100% pegged to the Euro ('EUR').
Therefore the risk arises from fluctuation in spot exchange rates between these currencies (or the EUR) and the US
dollar, which causes the amount of the net investment to vary.
The hedged risk in the net investment hedge is the risk of a weakening the CVE and the XOF currencies (or the EUR)
against the US dollar which will result in a reduction in the carrying amount of the Group's net investment in these foreign
operations.
Part of the Group's net investment in those subsidiaries is hedged by a EUR denominated secured bank loan (carrying
amount: $124m) (2017: $157m), which mitigates the foreign currency risk arising from the revaluation of the subsidiary's
net assets. The loan is designated as a hedging instrument for the changes in the value of the net investment that is
attributable to changes in the spot rate.
To assess hedge effectiveness, the Group determines the economic relationship between the hedging instrument and the
hedged item by comparing changes in the carrying amount of the debt that is attributable to a change in the spot rate
with changes in the investment in the foreign operation due to movements in the spot rate (the offset method). The
Group's policy is to hedge the net investment only to the extent of the debt principal.
The amounts related to items designated as hedging instruments were as follows:
31 December 2018
Carrying amount Line item in the
statement of financial
position where the
hedging
US $'000 Nominal amount Assets Liabilities instrument is included
Foreign exchange denominated debt 175,000 - 124,346 Borrowings
Change in value Hedge
Change in value of hedging ineffectiveness Line item in profit
used for calculating instrument recognised in or loss that includes
hedge for 2018 recognised in OCI profit or loss hedge ineffectiveness
Foreign exchange denominated debt (6,638) (6,638) - Not applicable
31 December 2017
Carrying amount
Line item in the
statement of financial
position where the
hedging
US $'000 Nominal amount Assets Liabilities instrument is included
Foreign exchange denominated debt 175,000 - 156,725 Borrowings
Change in value Hedge
Change in value of hedging ineffectiveness Line item in profit
used for calculating instrument recognised in or loss that includes
hedge for 2017 recognised in OCI profit or loss hedge ineffectiveness
Foreign exchange denominated debt 10,205 10,205 - Not applicable
3.3 Capital management
The Group capital management objective is to maintain a commercially sound consolidated statements of financial position
with the aim of maximising the net cash return to the shareholders, whilst maintaining a level of capitalisation that is
commercially defensible and which leads to an effective and optimised working capital structure.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital.
Net debt is calculated as total borrowings and lease liabilities (including 'current and noncurrent borrowings and lease
liabilities' as shown in the consolidated statements of financial position) less cash and cash equivalents. Total capital is
calculated as 'equity' as shown in the consolidated statements of financial position plus net debt.
US $'000 31 December 2018 31 December 2017
Total borrowings and lease liabilities (notes 23 & 27) 711,017 788,948
Less: cash and cash equivalents (note 19) (392,853) (422,494)
Net debt 318,164 366,454
Total equity 581,331 447,621
Total capital 899,495 814,075
Gearing ratio 0.35 0.45
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
4.1 Accounting judgements
In the process of applying the Group's accounting policies, management has made the following judgements, apart from
those involving estimates, which have the most significant effect on the amounts recognised in the consolidated financial
statements:
Accounting for leases under IFRS 16
In establishing the lease term for each lease contract that has an option to extend, judgement has been applied to
determine the extension period. When it is concluded that it is reasonably certain that the extension option will be
utilised, the lease term is extended to include the reasonably certain period of five years. The lease agreements have the
option to extend the leases and the option to terminate the leases. The extension options in different contracts vary
between five years to unlimited period. The Group uses significant assumptions that all of the existing leases, that are
expiring within the following five years, that have an extension option, will be extended for an additional five years period,
when determining the lease term.
In addition, IFRS 16 requires lease payments to be discounted using the interest rate implicit in the lease. In case the
interest rate implicit in the lease cannot be readily determined, the incremental borrowing rate should be used. That is
the rate of interest that a lessee would have to pay to borrow over a similar value to the right-of-use asset in a similar
economic environment. Accordingly, the Group elected to use the local borrowing rates for each operating unit at the
commencement date. That is the rate at which local operating units would need to borrow to acquire the asset. For
additional details relating to leases refer to note 27.
Deferred tax position
Recognition of deferred tax assets requires assessment of when those assets are likely to reverse and judgement on the
availability of sufficient taxable profits upon reversal. Deferred tax assets are recognised only to the extent it is considered
probable that those assets will be recoverable. The deferred tax assets as at 31 December 2018 are $36m (2017: $43m)
as presented in note 10. Deferred tax assets recorded are re-assessed at each period.
4.2 Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities
within the next financial year are discussed below.
Retirement benefit obligations
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the
discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used
to determine the present value of the estimated future cash outflows expected to be required to settle the pension
obligations. In determining the appropriate discount rate, the Group considers the interest rates of government bonds
that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating
the terms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions. Additional information is
disclosed in note 25. The assumptions are reviewed annually.
Goodwill impairment assessment
In 2012 goodwill was recognised in relation to the wave 2 completion, comprising Guinea, Burkina Faso and Côte d'Ivoire.
In 2013 goodwill was recognised in relation to the wave 6 completion, comprising Ghana. For the purpose of impairment
testing, goodwill was allocated to each country which represents the lowest level within the entity at which the goodwill
is monitored for internal management purposes.
The recoverable amount of each cash generating unit was determined based on a value in use calculation which was based
upon free cash flows (in their local currencies) from the five-year strategic plan prepared for each cash generating unit.
The terminal value was estimated based upon a perpetuity growth rate of 2%, reflecting an inflationary level of growth
beyond the five-year plan. A cost of capital (based upon a weighted average cost of capital ('WACC')) in a range of 16%-
17.5% was used to discount the free cash flows denominated in their respective currencies.
Based upon the goodwill impairment test, goodwill is not impaired. For goodwill to be impaired, the WACC would have
to increase to approximately 40%.
Government related assets and liabilities
The Company has various assets from and liabilities to governments and authorities with respect to government benefits
receivable as well as for taxes and duties. The Group constantly assesses underlying inherent risks and assumptions and
as a consequence related accounting estimates are determined and adjustments are made to the carrying amounts of
those assets and liabilities, where necessary. Refer to note 3.2 relating to credit risk.
Tax positions
Determining the Group's income tax positions requires interpretation of the tax laws in numerous jurisdictions.
Resolution of tax positions taken can take several years to complete and can be difficult to predict. Therefore, judgement
is required to determine the Group's income tax liability. Judgemental areas are in particular transfer pricing and expenses
deductible for tax purposes. When it is considered probable that there will be a future income tax liability to a tax
authority, a provision is recorded for the amount that is expected to be settled if this can be reasonably estimated. Income
tax provisions are re-assessed each period.
5. SEGMENT REPORTING
The Group operates under three reportable segments: Retail, Commercial and Lubricants.
Retail segment - Retail fuel is aggregated with Non-fuel retail. Both the operating segments derive revenue from retail
customers who visit our retail sites. Retail fuel and Non-fuel revenues are aggregated as the segments are managed as
one unit and have similar customers. The economic indicators that have been addressed in determining that the
aggregated segments have similar economic characteristics are that they have similar expected future financial
performance and similar operating and competitive risks.
Commercial segment - Commercial fuel, LPG, Aviation and Marine are aggregated in the Commercial segment as the
operating segments derive revenues from commercial customers. The segments have similar economic characteristics.
The economic indicators that have been addressed are the long-term growth and average long-term gross margin
percentage.
Lubricants segment - Retail, B2C, B2B and Export Lubricants are the remaining operating segments. Since these operating
segments meet the majority of aggregation criteria, they are aggregated in the Lubricants segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision makers. The Directors monitor the operating results of its business units separately for the purpose of making
decisions about resource allocation, segment performance assessment and interacting with segment managers.
The following tables present revenues and profit information regarding the Group's operating segments:
2018
US $'000 Retail Commercial Lubricants Consolidated
Revenue from external customers 4,860,533 2,325,053 363,732 7,549,318
Gross profit 392,934 163,256 68,197 624,387
Add back: depreciation and amortisation 35,025 17,993 2,223 55,241
Gross cash profit 427,959 181,249 70,420 679,628
Adjusted EBITDA 226,977 122,205 51,026 400,208
2017
US $'000 Retail Commercial Lubricants Consolidated
Revenue from external customers 4,363,068 1,990,892 339,555 6,693,515
Gross profit 396,397 144,630 72,894 613,921
Add back: depreciation and amortisation 33,037 16,971 2,097 52,105
Gross cash profit 429,434 161,601 74,991 666,026
Adjusted EBITDA 227,026 106,978 42,124 376,128
US $'000 2018 2017
Share of profit of joint ventures and associates included in segment EBITDA
Retail 8,215 9,602
Commercial 6,663 6,740
Lubricants 13,392 -
Total 28,270 16,342
The amount of revenues from external customers by location of the customers is shown in the table below.
US $'000 2018 2017
Revenue from external customers by country
Morocco 1,561,320 1,322,238
Kenya 1,269,975 1,336,627
Ghana 602,963 533,204
Other 4,115,060 3,501,446
Total 7,549,318 6,693,515
US $'000 31 December 2018 31 December 2017
Non-current assets by country (excluding deferred tax)
The Netherlands 206,015 182,459
Morocco 187,461 189,058
Kenya 124,531 125,184
Other 717,960 664,162
Total 1,235,967 1,160,863
6. RECONCILIATION OF NON-GAAP MEASURES
Non-GAAP measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be
directly comparable with other companies' non-GAAP measures, including those in the Group's industry. Non-GAAP
measures should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS
measurements. The exclusion of certain items (special items) from non-GAAP performance measures does not imply
that these items are necessarily non-recurring. From time to time, we may exclude additional items if we believe doing
so would result in a more transparent and comparable disclosure.
The Directors believe that reporting non-GAAP financial measures in addition to IFRS measures, as well as the exclusion
of special items, provides users with enhanced understanding of results and related trends and increases the transparency
and clarity of the core results of operations. Non-GAAP measures are used by the Directors and management for
performance analysis, planning, reporting and are key management performance measures.
The Group defines Headline earnings as earnings based on net income attributable to owners of the Group, before items
of a capital nature, net of income tax as required for companies listed on the Johannesburg Stock Exchange.
US $'000 2018 2017
EBIT 275,510 241,914
Depreciation, amortisation and impairment 90,445 84,178
EBITDA 365,955 326,092
Adjustments to EBITDA related to special items:
IPO and Engen acquisition related expenses(1) 29,340 -
Restructuring(2) 16,923 8,539
Management Equity Plan (12,010) 41,497
Adjusted EBITDA 400,208 376,128
US $'000 2018 2017
Net income 146,059 129,653
Adjustments to net income related to special items:
IPO and Engen acquisition related expenses(1) 29,340 -
Restructuring(2) 16,923 8,539
Management Equity Plan (12,010) 41,497
Tax on special items (2,600) (9,097)
Adjusted net income 177,712 170,592
(1) In May 2018, the Company became listed on the London Stock Exchange Main Market for listed securities and the Main Board of the JSE Limited by way of secondary inward
listing. All IPO-related expenses are considered to be special items. Furthermore, on 4 December 2017, the Company agreed to enter into a sale and purchase agreement
with Engen Holdings (Pty) Limited ('Engen Holdings'), a 100% subsidiary of Engen Limited, in relation to the purchase of shares in Engen International Holdings (Mauritius)
Limited ('Engen International Holdings Limited') for the exchange of a shareholding in Vivo Energy, with a cash element. Related integration project expenses are treated as
special items.
(2) Restructuring expenses relate to further optimising the organisation and are substantial in scope and impact and do not form part of the underlying core operational
activities.
US $ 2018 2017
Diluted EPS 0.11 52.34
Impact of special items 0.03 17.90
Adjusted diluted EPS(1) 0.14 70.24
(1) Refer to the general information (note 1).
US $'000, unless otherwise indicated 2018 2017
Headline Earnings Per Share
Net income attributable to owners 135,155 119,717
Re-measurements:
Net gain on disposal of PP&E and intangible assets (1,810) (1,573)
Income tax on re-measurements 476 475
Headline Earnings 133,821 118,619
Weighted average number of ordinary shares(1) 1,201,798,866 2,250,000
Headline EPS (US $)(2) 0.11 52.72
Diluted number of shares(1) 1,201,798,866 2,287,433
Diluted headline EPS (US $)(2) 0.11 51.86
Effective Tax Rate 36% 38%
(1) Weighted average number of ordinary shares and diluted number of shares for year ended 31 December 2018 relate to Vivo Energy plc and for the year ended 31
December 2017 to Vivo Energy Holding B.V.
(2) Refer to general information (note 1).
7. GENERAL AND ADMINISTRATIVE COST
Employee benefits
US $'000 2018 2017
Wages, salaries and other employee benefits 157,455 145,917
Restructuring, severance and other involuntary termination costs(1) 13,829 8,539
Retirement benefits 7,036 6,254
Share-based expense(2) (2,525) 41,497
175,795 202,207
(1) Total restructuring costs amount to $16.9m of which some elements are reflected in other employee benefits categories.
(2) Share-based expense includes a fair value adjustment for the former management equity plan and the SVL management equity plan.
Included in the employee benefit expense for the year ended 31 December 2018, was social security expense of $2.3m
(2017: $0.9m) and other pension costs of $0.2m (2017: $0.2m) relating to employees employed in the UK.
Employee benefits have been charged in:
US $'000 2018 2017
General and administrative cost 102,093 123,051
Selling and marketing cost 42,113 45,088
Cost of sales 31,589 34,068
175,795 202,207
The number of average full-time equivalent employees was as follows:
2018 2017
Sales and distribution 1,702 1,711
Administration and support 657 638
2,359 2,349
Depreciation and amortisation
Depreciation of property, plant and equipment, right-of-use assets and amortisation of intangible assets are separately
disclosed in note 11, 27 and 12 respectively.
Audit fees
US $'000 2018 2017
Parent company and consolidated financial statements 1,036 714
Subsidiaries(1) 765 756
Audit fees 1,801 1,470
Audit-related fees(2) 1,149 335
Tax advisory fees(3) 34 -
Tax compliance fees 28 -
Other assurance services(4) 1,895 1,912
Other fees total 3,106 2,247
Total fees 4,907 3,717
(1) Audit fees for foreign entities are expressed at the average exchange rate for the year.
(2) Audit-related fees in relation to interim financial statements reviews and brand fees reporting.
(3) Tax advisory fees relate to advisory engagements.
(4) Other assurance services relate mainly to the IPO.
8. OTHER INCOME/(EXPENSE)
US $'000 2018 2017
Net gain on disposals of property, plant and equipment and intangible assets 1,810 1,573
Loss on financial instruments (813) (1,784)
Other income 1,772 2,897
2,769 2,686
9. FINANCE INCOME AND EXPENSE
US $'000 2018 2017
Finance expense
Interest on bank and other borrowings and on lease liability(1) (26,695) (20,368)
Interest on long-term debt including amortisation of set-up fees (18,776) (10,816)
Foreign exchange loss (2,426) -
Accretion expense net defined benefit liability (2,177) (2,176)
Other (2,179) (3,200)
(52,253) (36,560)
Finance income
Interest from cash and cash equivalents 6,145 4,644
Foreign exchange gain - 779
6,145 5,423
Finance expense - net (46,108) (31,137)
(1) Includes an amount of $10m (2017: $10m) finance expense for leases in respect to IFRS 16 'Leases'.
10. INCOME TAXES
Current income taxes
Analysis of income tax expense:
US $'000 2018 2017
Current tax
Current income tax (76,779) (90,704)
Current income tax prior years (2,311) 2,278
(79,090) (88,426)
Deferred tax
Deferred income tax (3,282) 10,036
Deferred income tax prior years (971) (2,734)
(4,253) 7,302
Income tax expense (83,343) (81,124)
The reconciliation of income taxes, computed at the statutory rate, to income tax expense was as follows:
US $'000 2018 2017
EBT 229,402 210,777
Statutory tax rate(1) 19% 25%
Income tax expense at statutory rate (43,586) (52,694)
Increase/(decrease) resulting from:
Impact of tax rates in foreign jurisdictions (20,632) (5,478)
Income not subject to tax 10,340 7,153
Expenses not tax deductible (264) (11,100)
Non-recognition of tax benefits in relation to current period tax losses or temporary differences (3,588) (3,222)
Recognition and utilisation of previously unrecognised tax losses or temporary differences 141 927
Tax rate changes (182) -
Withholding tax (21,583) (20,293)
Other (3,989) 3,583
Income tax expense (83,343) (81,124)
Effective tax rate 36% 38%
(1) The statutory tax rate changed from 25% in 2017 to 19% in 2018 due to the ultimate parent entity being a tax resident in the United Kingdom in 2018 (formerly
The Netherlands).
Deferred income taxes
The significant components of the Company's deferred income tax assets and liabilities were as follows:
31 December 2018 31 December 2017
US $'000 Asset Liability Asset Liability
Tax losses carried forward(1) 19,530 - 19,941 -
Intangible assets - (20,492) - (23,216)
Retirement benefits 9,088 (1,015) 10,637 (1,026)
Property, plant and equipment 551 (17,143) 491 (14,906)
Provisions 27,180 - 30,077 -
Withholding taxes - (15,985) - (16,500)
Other 13,741 (11,150) 11,049 (5,796)
70,090 (65,785) 72,195 (61,444)
Offsetting of balances (14,579) 14,579 (10,056) 10,056
Unrecognised deferred tax asset(2) (19,137) - (19,512) -
36,374 (51,206) 42,627 (51,388)
(1) The recognised deferred tax asset relates to $6.6m tax losses which is supported by expected positive results in coming years.
(2) The unrecognised deferred tax assets mainly relate to tax losses $19m (2017: $19m).
The changes in the net deferred income tax assets and liabilities were as follows:
US $'000 2018 2017
Balance at the beginning of year, net (8,761) (15,513)
In profit (4,253) 7,302
In other comprehensive income (750) (713)
Other (1,742) 769
Foreign exchange differences 674 (606)
(14,832) (8,761)
The unrecognised carry forward losses at 31 December 2018 amount to $86m (2017: $77m). $17m will expire at the
end of 2021, $17m at the end of 2022, $15m at the end of 2023 and $37m at the end of 2024 or later.
11. PROPERTY, PLANT AND EQUIPMENT
2018
Machinery
and other Construction
US $'000 Land Buildings equipment in progress Total
Cost at 1 January 2018 31,537 201,172 428,416 76,520 737,645
Additions - 8,326 14,544 96,544 119,414
Disposals (38) (5,166) (38,473) - (43,677)
Transfers to Right-of-use asset - - (11,737) - (11,737)
Transfers 2,207 29,761 71,464 (103,432) -
Foreign exchange differences (1,004) (4,526) (11,480) (1,621) (18,631)
Cost at 31 December 2018 32,702 229,567 452,734 68,011 783,014
Accumulated depreciation at 1 January 2018 - (36,434) (116,040) - (152,474)
Depreciation - (13,482) (46,550) - (60,032)
Disposals - 4,908 38,023 - 42,931
Transfers to Right-of-use asset - - 3,495 - 3,495
Foreign exchange differences - 1,126 3,696 - 4,822
Accumulated depreciation at 31 December 2018 - (43,882) (117,376) - (161,258)
Net carrying value at 31 December 2018 32,702 185,685 335,358 68,011 621,756
2017
Machinery and Construction
US $'000 Land Buildings other equipment in progress Total
Cost at 1 January 2017 29,344 164,462 349,029 73,370 616,205
Additions 531 11,374 29,827 70,030 111,762
Disposals (7) (6,524) (12,029) - (18,560)
Transfers 118 24,350 44,879 (69,347) -
Foreign exchange differences 1,551 7,510 16,710 2,467 28,238
Cost at 31 December 2017 31,537 201,172 428,416 76,520 737,645
Accumulated depreciation at 1 January 2017 - (27,504) (81,971) - (109,475)
Depreciation - (13,977) (42,200) - (56,177)
Impairments - (280) (545) - (825)
Disposals - 6,451 11,791 - 18,242
Foreign exchange differences - (1,124) (3,115) - (4,239)
Accumulated depreciation at 31 December 2017 - (36,434) (116,040) - (152,474)
Net carrying value at 31 December 2017 31,537 164,738 312,376 76,520 585,171
No assets have been pledged as security. Depreciation charge of $60m (2017: $56m) is included in cost of sales for $52m
(2017: $49m), in selling and marketing costs for $1m (2017: $1m) and in general and administrative cost for $7m (2017:
$6m).
12. INTANGIBLE ASSETS
2018
Shell Licence
US $'000 Agreement Goodwill Other Total
Cost at 1 January 2018 144,640 21,232 58,462 224,334
Additions - - 26,986 26,986
Disposals - - (759) (759)
Foreign exchange differences (1,656) (263) (1,208) (3,127)
Cost at 31 December 2018 142,984 20,969 83,481 247,434
Accumulated amortisation at 1 January 2018 (72,331) - (32,010) (104,341)
Amortisation (5,123) - (5,894) (11,017)
Disposals - - 233 233
Foreign exchange differences 499 - 1,154 1,653
Accumulated amortisation at 31 December 2018 (76,955) - (36,517) (113,472)
Net carrying value at 31 December 2018 66,029 20,969 46,964 133,962
2017
Shell Licence
US $'000 Agreement Goodwill Other Total
Cost at 1 January 2017 137,855 20,587 47,207 205,649
Additions - - 9,904 9,904
Disposals - - (946) (946)
Foreign exchange differences 6,785 645 2,297 9,727
Cost at 31 December 2017 144,640 21,232 58,462 224,334
Accumulated amortisation at 1 January 2017 (63,660) - (25,426) (89,086)
Amortisation (5,123) - (5,447) (10,570)
Impairment - - (129) (129)
Disposals - - 432 432
Foreign exchange differences (3,548) - (1,440) (4,988)
Accumulated amortisation at 31 December 2017 (72,331) - (32,010) (104,341)
Net carrying value at 31 December 2017 72,309 21,232 26,452 119,993
Amortisation charge of $11m (2017: $11m) is included in selling and marketing costs for $9m (2017: $9m) and general
and administrative cost for $2m (2017: $2m). Other also includes acquired and internally generated software costs.
A goodwill impairment test was performed and did not result in an impairment.
The Group monitors goodwill impairment at country level, being the cash generating unit ('CGU') and tests whether
goodwill has suffered any impairment on an annual basis. The recoverable amount of the CGU is determined based on
value-in-use calculations which require the use of assumptions. These calculations use cash flow projections based on
approved financial budgets covering a five-year period.
The methodology applied to each of the key assumptions used are as follows:
Assumptions Approach used to determine values
Volumes Average volumes over the five-year forecast period; based on past performance and management
expectations of market developments.
Budgeted average gross margin Based on past performance and management expectations of the future.
Pre-tax discount rate Based on specific risks relating to the industry and country. Factors considered for the industry include
regulatory environment, market competition, and barriers to entry.
The Group considers the discount rate to be the most sensitive assumption. No impairment would occur, if the pre-tax
discount rate applied to the cash flow projection of each CGU had been 0.5% higher than management estimates and all
other assumptions in the table above are unchanged.
13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
US $'000 2018 2017
At 1 January 218,801 50,709
Acquisition of businesses 547 160,173
Share of profit 28,270 16,342
Dividend received (23,343) (9,497)
Foreign exchange differences (823) 1,074
At 31 December 223,452 218,801
The acquisition of investment in December 2017 related to the acquisition of Shell and Vivo Lubricants B.V. (SVL) that is
considered a material investment to the Group. SVL is the principal supplier of manufacturing, sales and distribution for
lubricants products in Africa.
SVL was acquired by purchasing from HV Investments B.V. all its shares held in SVL. The investment is a joint venture
investment and measured using the equity method. SVL is jointly owned by Vivo Energy Investments B.V. (50%) and Shell
Overseas Investments B.V. (50%).
The total assets of SVL as per 31 December 2018 are $234m (2017: $256m), of which $153m (2017: $169m) relates to
current (including cash and cash equivalents of $23m (2017: $27m)) and $81m (2017: $87m) to non-current assets. The
current liabilities are $79m (2017: $96m) (including borrowings of $21m (2017: $10m)) and non-current liabilities are
$6m (2017: $13m). The revenue for the year ending 31 December 2018 was $287m (2017: $286m), and profit after
income tax was $22m (2017: $29m). The 2018 profit includes amortisation and depreciation of $8m (2017: $8m) and net
finance expense of $2m (2017: $0.3m).
The carrying value of SVL includes a notional goodwill of $96m calculated as the difference between the cost of the
investment and the investor's share of the fair values of the investee's identifiable assets and liabilities acquired. Since the
notional goodwill is not shown as a separate asset, it is not required to be separately tested for impairment, nor does it
trigger an annual impairment test.
There are no contingent liabilities relating to the Group's investments in joint ventures and associates.
14. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
US $'000 2018 2017
At 1 January 6,314 6,053
Fair value adjustment 1,204 165
Foreign exchange differences 108 96
At 31 December 7,626 6,314
Financial assets at fair value through other comprehensive income are categorised as level 3 of the fair value hierarchy
and are the only level 3 financial assets within the Group. There have been no transfers between any levels during the
year.
15. OTHER FINANCIAL ASSETS AND LIABILITIES
Other financial assets and liabilities are derivative instruments comprising forward foreign exchange contracts and interest
hedge contracts with a fair value of $3m (2017: $(1)m). A loss of $1m on changes in fair value has been recognised in
other income/(expense) (2017: loss of $2m). Other financial assets and liabilities at fair value through other income are
categorised as level 2 of the fair value hierarchy. There have been no transfers between any levels during the year.
16. OTHER ASSETS
31 December 31 December
US $'000 2018 2017
Other government benefits receivable(1) 123,091 71,748
Prepayments 109,306 118,507
VAT and duties receivable 30,588 33,511
Indemnification asset on legal and tax claims 9,629 9,868
Employee loans 7,912 8,137
Other(2) 75,381 69,468
355,907 311,239
Of which current 254,999 229,068
Of which non-current 100,908 82,171
355,907 311,239
(1) Refer to note 3.2.
(2) The amount mainly comprises of items such as customer related deposits, other non-current receivables and loans to dealers.
Other government benefits receivable
31 December 31 December
US $'000 2018 2017
Botswana 33,353 20,002
Senegal 30,236 4,333
Morocco 27,370 31,499
Guinea 10,660 10,897
Madagascar 9,974 1,076
Other 11,498 3,941
123,091 71,748
For the year $234m (2017: $163m) of other government benefits was recognised in cost of sales for compensation of costs incurred.
17. INVENTORIES
31 December 31 December
US $'000 2018 2017
Fuel 364,120 276,680
Lubricants 70,070 69,773
Other 6,577 6,676
440,767 353,129
Cost of sales as disclosed on the face of the consolidated statements of comprehensive income include the total expense
for inventory during the year for $6,719m (2017: $5,869m). The carrying value of inventory represents the net realisable
value.
Provisions for write-downs of inventories to the net realisable value amounted to $5m as per 31 December 2018 (2017: $5m).
18. TRADE RECEIVABLES
Trade receivables were as follows, as at:
31 December 31 December
US $'000 2018 2017
Trade receivables 484,235 451,937
Less: provision for impairment of trade receivables (40,590) (39,756)
Trade receivables - net 443,645 412,181
The fair values of trade receivables approximate their carrying value as they are deemed short-term in their nature and
recoverable within 12 months.
Movements on provision for impairment of trade receivables are as follows:
US $'000 2018 2017
At 1 January 39,756 36,733
Additions 6,425 7,019
Reversals (3,800) (5,418)
Utilisation (363) (816)
Foreign exchange differences (1,428) 2,238
At 31 December 40,590 39,756
As at 31 December 2018 trade receivables of $29m (2017: $29m) were past due but not impaired. The aging of these
trade receivables is as follows:
31 December 31 December
US $'000 2018 2017
Up to 3 months past due 20,750 12,993
3 to 6 months past due 2,528 6,337
More than 6 months past due 5,857 9,762
29,135 29,092
19. CASH AND CASH EQUIVALENTS
31 December 31 December
US $'000 2018 2017
Cash 172,932 216,840
Cash equivalents:
Short-term placements 214,049 203,237
Money market funds and other cash equivalents 5,872 2,417
392,853 422,494
20. SHARE CAPITAL AND RESERVES
Share capital consists of 1,201,798,866 ordinary shares at the nominal value of $0.50 each. All shares have been issued
and fully paid and entitle the holder to participate in dividends. On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
The Company does not have a limited share of authorised capital. Shareholders will, under general law, be entitled to
participate in any surplus assets in a winding up of the Company in proportion to their shareholding.
Effective 13 June 2018, the Company completed a court-approved reduction of capital. The purpose of the reduction of
capital was to provide distributable reserves which will allow the Company to make future dividend payments. Following
the reduction of capital, the number of issued shares and the rights attached to those shares remained unchanged. The
nominal value of the ordinary shares in the capital of the Company was reduced by $1.00 from $1.50 to $0.50.
Other reserves are disclosed in the consolidated statements of changes in equity.
2018 2017
Number of Number of
Ordinary shares Shares $'000 Shares $'000
At 1 January 2,250,000 30 2,250,000 30
Reorganisation (2,250,000) (30) - -
Capital contribution 1,200,000,000 1,800,000 - -
Directors' subscriptions 1,798,866 2,698 - -
Capital reduction - (1,201,799) - -
At 31 December 1,201,798,866 600,899 2,250,000 30
21. EARNINGS PER SHARE
Basic and diluted EPS were computed as follows:
US $'000, unless otherwise indicated 2018 2017
Basic earnings per share
Net income 146,059 129,653
Attributable to owners 135,155 119,717
Weighted average number of ordinary shares(1) 1,201,798,866 2,250,000
Basic earnings per share (US $) 0.11 53.21
US $'000, unless otherwise indicated 2018 2017
Diluted earnings per share
Earnings attributable to owners 135,155 119,717
Diluted number of shares(1) 1,201,798,866 2,287,433
Diluted earnings per share (US $)(2) 0.11 52.34
(1) Weighted average number of ordinary shares and diluted number of shares for the year ended 31 December 2018 relate to Vivo Energy plc and for the year ended 31
December 2017 to Vivo Energy Holding B.V.
(2) Refer to general information (note 1).
US $ 2018 2017
Adjusted diluted earnings per share
Diluted earnings per share 0.11 52.34
Impact of special items 0.03 17.90
Adjusted diluted earnings per share(1) 0.14 70.24
(1) Refer to general information (note 1).
22. DIVIDENDS
The Board approved an interim dividend of circa 0.7 dollar cents per share. This dividend was paid on 17 September
2018 to shareholders of record at close of business on 17 August 2018. The dividend was paid out of distributable
reserves as at 30 June 2018.
The Board has recommended a final dividend of circa 1.3 dollar cents per share, amounting to $16m. Payment of this
dividend is expected on 10 June 2019 to shareholders of record at close of business on 17 May 2019. The dividend will
be paid out of distributable reserves as at 31 December 2018.
US $'000 2018
Interim dividend 7,967
Final dividend 15,838
Total 23,805
23. BORROWINGS
31 December 31 December
US $'000 Drawn on Interest rate Maturity 2018 2017
VEI BV Term Loan(1) 09/06/2017 Libor + 2.50%/3% 09/06/2022 391,753 479,889
Bank borrowings 208,414 175,302
600,167 655,191
Of which current 286,388 258,947
Of which non-current 313,779 396,244
600,167 655,191
(1) The amounts are net of financing costs. Loan amount is $395m (2017: $484m); financing costs are $3m (2017: $4m).
Current borrowings consist of bank borrowings which carry interest rates between 1% and 18% per annum. Included in
bank borrowings is an amount of $32m (2017: $73m) relating to trade financing.
The carrying amounts of the Group's non-current and current borrowings approximate the fair value.
The VEI BV Term Loan facility was entered into on 9 June 2017. The facility matures on 9 June 2022 and has semi-annual
repayments. Interest is paid quarterly at a rate of Libor plus a margin of 2.50% per annum. Incremental facility was drawn
down on 18 December 2017 and carries an interest of Libor +2.5% for the amortised portion and Libor +3% for the
bullet portion.
In May 2018, the Company established a new multi-currency revolving credit facility of $300 million. The multi-currency
revolving credit facility consists of a primary $300 million and an additional $100 million contingent upon events after the
listing. This credit facility remained fully undrawn at year-end. At the end of February 2019, an amount of $62 million was
drawn in relation to the Engen acquisition.
Key covenants:
- The Company needs to supply to the lender within 150 calendar days after year-end its audited annual consolidated financial
statements, unaudited annual non-consolidated financial statements and the unaudited annual Group accounts of each
operating unit. Within 90 days after each half of each financial year, the Company should provide its unaudited non-
consolidated financial statements, unaudited consolidated financial statements and unaudited Group accounts for each
operating unit for the financial half-year.
- With each set of financial statements, a financial covenants compliance certificate has to be provided showing the debt
cover and interest cover. The loan carries some customary negative pledges such as on asset sale, securities over assets,
mergers and guarantees subject in each case to some exemptions and permitted baskets. It also has a Change of Control
clause triggering repayment if a shareholder, other than permitted ones, takes control of the Company.
No covenants were breached in the last applicable period.
24. PROVISIONS
Provisions include the following:
31 December 31 December
US $'000 2018 2017
Provisions 61,091 78,803
Retirement benefit obligations (note 25) 29,236 34,045
90,327 112,848
Of which current 15,177 20,866
Of which non-current 75,150 91,982
90,327 112,848
2018
Compulsory
stock Legal
US $'000 obligation provision Other Total
At 1 January 26,092 6,195 46,516 78,803
Additions 6 3,377 9,355 12,738
Utilisation (3,909) (232) (15,513) (19,654)
Releases - (4,712) (3,723) (8,435)
Foreign exchange differences (461) (154) (1,746) (2,361)
At 31 December 21,728 4,474 34,889 61,091
Of which current - 4,474 10,703 15,177
Of which non-current 21,728 - 24,186 45,914
21,728 4,474 34,889 61,091
2017
Compulsory Legal
US $'000 stock obligation provision Other Total
At 1 January 21,187 7,086 43,084 71,357
Additions 3,121 333 21,390 24,844
Utilisation - (145) (15,852) (15,997)
Releases - (1,357) (5,520) (6,877)
Foreign exchange differences 1,784 278 3,414 5,476
At 31 December 26,092 6,195 46,516 78,803
Of which current - 6,195 14,671 20,866
Of which non-current 26,092 - 31,845 57,937
26,092 6,195 46,516 78,803
Compulsory stock obligation provision
The compulsory stock obligation provision relates to the Oil fund liability in Morocco as disclosed under 'Other liabilities'.
The provision represents the difference between the purchase price of the compulsory oil stocks in 1994 and current
market values up to November 2015, as well as the difference between the purchase price and current market values of
LPG. From 1 December 2015 the fuel market in Morocco is deregulated. As at 31 December 2018, the Moroccan
government has not indicated a repayment date for the compulsory stock obligation.
Legal provision
This amount represents a provision of certain legal claims brought against the Group. The timing of any pay-out is
uncertain as these claims are being disputed by the Group. The Group believes that the outcome of these claims will not
give rise to a significant loss beyond the amounts provided against as at 31 December 2018.
Other
Other provisions include a number of costs to be paid out by the Group that have uncertainty in timing of cash values
and total monetary value and mainly relate to employee benefits provisions of $15m (2017: $20m) and provisions for
uncertain tax positions of $9m (2017: $10m).
25. RETIREMENT BENEFITS
The Group operates defined benefit pension plans in various countries under local regulatory frameworks. All of the
plans are final salary pension plans, which provide benefits to members in the form of a guaranteed level of pension
payable for life. The level of benefits provided depends on members' length of service and their salary in the final years
leading up to retirement.
US $'000 2018 2017
Current service cost 873 579
Accretion expense 2,177 2,176
Other 46 44
3,096 2,799
US $'000 2018 2017
Defined benefit plans 3,096 2,799
Defined contribution plans 6,117 5,631
Total retirement benefit costs 9,213 8,430
31 December 31 December
US $'000 2018 2017
Consolidated statements of financial position obligations for:
Pension benefits 25,186 29,927
Other post-employment benefits 4,050 4,118
Total liability 29,236 34,045
The amounts recognised in the consolidated statements of financial position are determined as follows:
31 December 31 December
US $'000 2018 2017
Present value of funded obligations (12,903) (13,212)
Fair value of plan assets 11,670 11,179
Funded status of funded benefit obligations (net asset) (1,233) (2,033)
Present value of unfunded obligation (23,953) (27,894)
Unfunded status end of year (net liability) (25,186) (29,927)
Net defined benefit obligation (25,186) (29,927)
The movements in the defined benefit obligation for funded and unfunded post-employment defined benefits over the
year are as follows:
2018 2017
Pension Pension
US $'000 benefits Other Total benefits Other Total
At 1 January 41,106 4,118 45,224 40,661 3,791 44,452
Current service costs 711 145 856 1,374 154 1,528
Past service costs/settlements - 17 17 (949) - (949)
Benefits paid (2,891) (248) (3,139) (2,118) (253) (2,371)
Interest costs 2,177 596 2,773 2,164 554 2,718
(Gains)/losses from change in financial assumptions (254) (155) (409) (1,696) (155) (1,851)
(Gains)/losses from change in demographic
assumptions (494) - (494) - - -
Actuarial (gains)/losses (1,945) (95) (2,040) (377) 54 (323)
Other - - - (229) - (229)
Foreign exchange differences (1,554) (328) (1,882) 2,276 (27) 2,249
At 31 December 36,856 4,050 40,906 41,106 4,118 45,224
The movements in the fair value of plan assets over the year are as follows:
2018 2017
Pension Pension
US $'000 benefits Other Total benefits Other Total
At 1 January 11,179 - 11,179 9,448 - 9,448
Interest income 597 - 597 542 - 542
Return on plan assets, excluding interest income (55) - (55) 478 - 478
Employer contributions 3,104 248 3,352 2,293 253 2,546
Benefits paid (2,923) (248) (3,171) (2,155) (253) (2,408)
Administration expenses (15) - (15) (7) - (7)
Foreign exchange differences (217) - (217) 580 - 580
At 31 December 11,670 - 11,670 11,179 - 11,179
The sensitivity of the defined benefit obligation to changes in weighted principal assumptions is:
Assumptions used Effect of using alternative assumptions
31 December 31 December
US $'000 2018 2017 Range of assumptions Increase/(decrease)
Rate of increase in pensionable remuneration 4.43% 4.35% 0.50% - (0.50%) 2.59% - (2.46%)
Rate of increase in pensions in payment 2.27% 1.00% 0.50% - (0.50%) 4.00% - (3.73%)
Rate of increase in healthcare costs 9.88% 12.00% 0.50% - (0.50%) 4.12% - (3.83%)
Discount rate for pension plans 5.98% 5.59% 0.50% - (0.50%) (4.85%) - 5.14%
Discount rate for healthcare plans 13.71% 15.50% 0.50% - (0.50%) (5.43%) - 6.07%
Expected age at death for persons aged 60:
Men 79.73 80.22
Women 83.56 83.33
The principal actuarial assumptions were as follows:
2018
Cape Côte
Tunisia Senegal Verde Mauritius Morocco d'Ivoire Guinea Namibia Ghana
Discount rate 8.50% 8.25% 4.25% 6.00% 3.50% 6.00% 13.50% 11.40% 15.00%
Inflation rate 4.70% N/A 2.00% 3.50% N/A N/A N/A 8.00% 10.00%
Future salary increases 6.00% 3.00% 2.00% 3.50% 6.00% 3.00% 10.00% N/A N/A
Future pension increases N/A N/A 1.00% 3.00% N/A N/A N/A N/A N/A
2017
Cape Côte
Tunisia Senegal Verde Mauritius Morocco d'Ivoire Guinea Namibia Ghana
Discount rate 7.50% 9.00% 4.50% 5.50% 3.25% 6.00% 13.75% 11.90% 17.50%
Inflation rate 3.90% 1.00% 2.00% 3.80% 2.00% 1.80% 8.00% 9.10% 12.50%
Future salary increases 6.00% 3.00% 2.00% 3.00% 6.00% 3.00% 10.00% N/A N/A
Future pension increases N/A N/A 1.00% N/A N/A N/A N/A N/A N/A
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published
statistics and experience in each territory.
The weighted average duration of the defined benefit obligation is 10.8 years.
Expected contributions to post-employment benefit plans for the year ending 31 December 2019 are $4m.
26. OTHER LIABILITIES
31 December 31 December
US $'000 2018 2017(1)
Oil fund liabilities (see note 24) 86,502 88,070
Other tax payable 80,098 63,271
Employee liabilities 61,517 93,801
Deposits owed to customers 60,171 54,062
Deferred income 9,147 8,888
Other 11,392 12,562
308,827 320,654
Of which current 165,196 152,409
Of which non-current 143,631 168,245
308,827 320,654
(1) Prior year comparatives were reclassified where necessary.
27. LEASES
The Group has leases for motor vehicles, corporate offices, land, buildings and equipment. Leases have remaining lease
terms of one year to 99 years, some of which may include options to extend the leases for at least five years, and some
of which may include options to terminate the leases within one year.
The consolidated statement of financial position shows the following amounts relating to leases:
Land and Motor
US $'000 buildings vehicle Others Total
Right-of-use assets, 1 January 2017 115,687 19,587 655 135,929
Depreciation of ROU assets (12,105) (4,267) (105) (16,477)
Leases effective in 2017 25,795 2,975 191 28,961
Right-of-use assets, 31 December 2017 129,377 18,295 741 148,413
Depreciation of ROU assets (16,377) (2,282) (737) (19,396)
Leases effective in 2018(1) 16,543 2,615 88 19,246
Right-of-use assets, 31 December 2018 129,543 18,628 92 148,263
(1) Included in leases effective 2018, is an amount of $8m for the transfer of leases from PPE to right-of-use assets.
31 December 3 31 December
US $'000 2018 2017
Current lease liability 13,228 12,496
Non-current lease liability 97,622 121,261
110,850 133,757
The consolidated statement of comprehensive income shows the following amounts relating to leases:
US $'000 2018 2017
Interest expense (included in finance cost) (10,054) (10,016)
Depreciation of ROU assets (19,396) (16,477)
Depreciation charge of $19m (2017: $16m) is included in cost of sales for $3m (2017: $2m), in selling and marketing costs
for $14m (2017: $12m) and in general and administrative costs $2m (2017: $2m).
The consolidated statement of cash flows shows the following amounts relating to leases:
US $'000 2018 2017
Cash flows from financing activities
Principal elements of lease payments (24,736) (18,910)
Interest paid (10,054) (10,016)
(34,790) (28,926)
Other information related to leases was as follows:
2018 2017
Weighted average remaining lease term (years) 15.12 13.15
Weighted average discount rate 10% 10%
The Group recognised rental income of $35m (2017: $30m).
28. NET CHANGE IN OPERATING ASSETS AND LIABILITIES AND OTHER ADJUSTMENTS
US $'000 2018 2017
Inventories (98,973) (10,182)
Trade receivables (47,425) (94,064)
Trade payables 222,290 132,357
Other assets (68,652) (42,471)
Other liabilities (15,620) 47,414
Provisions (17,473) (582)
Other 61,664 43,404
35,811 75,876
29. COMMITMENTS AND CONTINGENCIES
Commitments
The Group also has purchase obligations, under various agreements, made in the normal course of business. The purchase
obligations are as follows, as at:
31 December 31 December
US $'000 2018 2017
Purchase obligations 13,271 11,706
13,271 11,706
Contingent liabilities and legal proceedings
The Group may from time to time be involved in a number of legal proceedings. The Directors prepare a best estimate
of its contingent liabilities that should be recognised or disclosed in respect of legal claims in the course of ordinary
business. Furthermore, in many markets there is a high degree of complexity involved in the local tax regimes. The Group
is required to exercise judgement in the assessment of any potential exposures in these areas.
The Group does not believe and is not currently aware of any litigations, claims, legal proceedings or other contingent
liabilities that should be disclosed.
30. SHARE-BASED PAYMENTS
The Group operates share-based payment plans for certain Executive Directors, senior managers and other senior
employees.
Management Equity Plan
In 2013, Vivo Energy Holding B.V. awarded to eligible employees either (1) phantom options which entitled option holders
to a cash payment based on the value of Vivo Energy Holding shares upon exercise of their phantom options or (2) the
opportunity to acquire restricted shares in combination with a linked option right to acquire ordinary shares in Vivo
Energy.
Under the terms of the phantom options, all outstanding phantom options would become fully exercisable upon admission
in May 2018. The option holders have since agreed to amend the terms of their outstanding phantom options such that
30% of the outstanding phantom options were deemed to be exercised at admission and 70% will become exercisable on
the first anniversary of admission for a period of 12 months. Under the amended terms, the option holders' entitlement
to the cash payment is based on the market value of the shares at the time of exercise net of the exercise price per share.
The Management Equity Plan ('MEP') related liability as at 31 December 2018 amounted to $20m (2017: $49m). The
intrinsic value of the phantom options per 31 December 2018 is $20m (2017: $49m).
The awards of restricted shares with linked options were classified as equity-settled share-based payment transactions,
however since participants would not be entitled to the full value of both instruments, the award fell away and the share-
based payment reserve was released.
SVL Phantom Option Awards
Executive Directors and other senior executives were granted phantom option awards by Shell and Vivo Lubricants B.V.
('SVL') in 2012. These awards became fully exercisable on admission, but the option holders agreed to amend the terms
such that they would receive a cash payment.
All payments under this plan have now been made, and there are no further outstanding interests.
IPO Share Award Plan
In May 2018, Vivo Energy plc granted certain Executive Directors and senior managers one-off share awards ('IPO Share
Awards') under the 2018 IPO Share Award Plan. The IPO Share Awards will vest, subject to continued service and
performance conditions relating to consolidated gross cash profit and adjusted net income being met, in three equal
tranches on the first, second and third anniversary of admission.
Long-Term Incentive Plan
In May 2018, Vivo Energy plc adopted the Vivo Energy 2018 Long-Term Incentive Plan (the 'LTIP'). The LTIP provides for
grants of awards over the shares of the Company in the form of share awards subject to continued employment and the
performance conditions relating to earnings per share, return on average capital employed and total shareholder returns,
over a three-year period. Executive Directors and other employees of the Group are eligible for grants under the LTIP.
The table below shows the share-based payment expense recognised in the statements of comprehensive income:
US $'000 2018 2017
Cash-settled share-based payments
Management Equity Plan (17,526) 41,497
SVL Management Equity Plan 5,516 -
Equity-settled share-based payments
IPO Share Award Plan 5,697 -
Long-Term Incentive Plan 3,788 -
(2,525) 41,497
Movements in the number of share and share options outstanding, and their related weighted average exercise prices,
are as follows:
LTIP IPO MEP
Average Average
exercise price exercise price
IPO Share per linked Linked per phantom Phantom
LTIP Awards option $ options(1) option $ options(2)
At 1 January 2018 - - - - - -
Granted/Converted 3,916,949 3,658,641 - - 0.05 15,529,661
Vested/Exercised - - - - 0.05 (4,658,898)
At 31 December 2018 3,916,949 3,658,641 - - 0.05 10,870,763
At 1 January 2017 - - 142.12 40,620 142.12 30,992
Movements - - - - 142.12 (1,873)
Outstanding at 31 December 2017 - - 142.12 40,620 142.12 29,119
(1) Linked options were forfeited as part of the IPO admission.
(2) In relation to the IPO Admission, the option holders have agreed to amend the terms of their outstanding phantom options (MEP) which resulted into a conversion of their
granted phantom options.
The Black-Scholes option-pricing is used to calculate the fair value of the options and the amount to be expensed. The
inputs into the model for options granted in the year expressed as weighted averages are as follows:
2018 2017
MEP MEP
IPO Share phantom MEP linked phantom
LTIP Awards options options options
Share price at grant date ($) $2.24 $2.33 $1.84 $1,811 $1,811
Option exercise price ($) - - $0.05 $142.12 $142.12
Volatility (%) - - 22% 30% 22%
Option life (years) 3 years 3 years 1 year 1 year 1 year
Risk-free interest rate - - 2.30% 0.95% 2.30%
Expected dividends as a dividend yield (%) 0% 0% 0% 0% 0%
The weighted average fair value of linked options and phantom options as of 31 December 2018 using the Black-Scholes
valuation model was nil (2017: $43.70) and $1.79 (2017: $1,672) per option, respectively.
31. RELATED PARTIES
Sales and purchases
Joint
ventures and
US $'000 associates Shareholder Other Total
2018
Sales of products and services, and other income 14,665 133,909 88 148,662
Purchase of products and services, and other expenses 320,783 1,279,007 - 1,599,790
2017(1)
Sales of products and services, and other income 11,997 124,073 3,104 139,174
Purchase of products and services, and other expenses 78,351 1,510,638 244,443 1,833,432
(1) Other sales and purchases relate to Shell and Vivo Lubricants B.V. full year 2017.
The following table presents the Company's outstanding balances with related parties:
Joint
ventures and
US $'000 associates Shareholder Other Total
31 December 2018
Receivables from related parties 3,911 13,005 534 17,450
Payables to related parties (55,651) (236,263) - (291,914)
(51,740) (223,258) 534 (274,464)
31 December 2017
Receivables from related parties 12,187 14,689 564 27,440
Payables to related parties (46,060) (138,504) (60) (184,624)
(33,873) (123,815) 504 (157,184)
The receivables from related parties arise from sale transactions which are due two months after the date of sales. The
receivables are unsecured in nature and bear no interest. No provisions are held against receivables from related parties.
The payables to related parties arise mainly from purchase transactions and are typically due two months after the date
of purchase. These payables bear no interest. In 2017, other income from shareholder includes a loss on financial
instruments of $2m that concern forward foreign exchange contracts with Vitol SA.
32. EVENTS AFTER BALANCE SHEET PERIOD
On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Engen
International Holdings (Mauritius) Limited (EIHL), a retailer and marketer of Engen-branded fuels and lubricants in Africa.
EIHL markets its products to retail customers through a large network of Engen-branded service stations, including
convenience retail offerings, as well as directly to commercial customers.
The transaction will add operations in eight new countries and 230 Engen-branded services stations expanding the
Group's presence across 23 countries in Africa. The new markets for the Group are Gabon, Malawi, Mozambique,
Reunion, Rwanda, Tanzania, Zambia and Zimbabwe. EIHL's Kenya operations, a market in which the Group currently
operates, is the ninth country included in the transaction.
Consideration for the transaction comprised of an issue by the Company of 63,203,653 new shares and $62.1m in cash.
This has resulted in Engen Holdings (Pty) Limited holding a circa 5.0% shareholding in the Company. The cash element
has been funded by a draw down on the Company's multi-currency facility.
A total of $5.3m, relating to acquisition costs, has been expensed in the profit and loss for the reporting period ending
31 December 2018.
Given the proximity of the acquisition to the date that the financial statements are authorised for issue, and as permitted
by IFRS 3 Business Combinations, the fair values of acquired identifiable assets and liabilities could not be reliably estimated
at this time. Fair values are being determined by an independent professional expert. The effects of the transaction have
not been recognised at 31 December 2018. The assets and liabilities including EIHL's operating results are consolidated
from 1 March 2019.
JSE sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
Date: 06/03/2019 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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