Good afternoon, and welcome to Viva Energy's 2024 Annual General Meeting. I'm Robert Hill, and I'm honored to serve as the Chairman of Viva Energy. It's now just after 2:00 P.M., Australian Central Standard Time. We have a quorum present, and I declare this Annual General Meeting of Viva Energy Group Limited open. We're holding our annual general meeting today as a hybrid meeting, which means we have people joining us here in person at the InterContinental Adelaide, as well as online. I welcome all of you. I'd like to acknowledge the traditional custodians of the country throughout Australia and their connection to land, sea, and community. Here in Adelaide, we're on the traditional lands of the Kaurna Nation. We pay our respect to their elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander peoples present today.
Before we begin the formal business, I will hand over to our Company Secretary, Julia Kagan, to run through some procedural matters.
Thank you, Chairman, and welcome to everyone joining us today. There are no safety drills planned for today, so if you do hear emergency alarm, please observe the staff and fire wardens who will provide further instructions. Voting on all items of business today will be carried out by way of a poll. Shareholders had the option of casting their vote before the meeting or appointing a proxy to do so on their behalf. If you haven't done so, you can vote at today's meeting, both in person and online. You can do so at any time during the meeting, starting from now, as the polls are now open for voting. If you're attending the meeting in person, you will have received an attendance card when you registered. Those who hold a yellow voting card can cast your vote by filling out your card.
Those holding a red or a blue card are not entitled to vote at this meeting. If you do have any questions, please see a Link Market Services team member at the registration desk. For those shareholders joining us online, you can cast your vote by following the instructions set out on the screen in front of you. Voting will close shortly after the end of the meeting today. Just a few words on how to ask questions at this meeting. Those attending the meeting in person and who hold a yellow or a blue card, you are entitled to speak and ask questions at this meeting. Visitors who hold a red card are not entitled to ask questions at this meeting.
If anyone with a yellow or blue card wishes to speak, please make your way to the microphone when the chairman calls for questions, and identify yourself before asking the question. For those who are participating via our online platform, you will be able to submit questions by registering as a shareholder or proxy holder and selecting the Ask a Question button. You do not need to wait until we get to the formal items of business to submit your questions. I'll just remind you that there may be a slight delay in transmission, so we do encourage you to start submitting your questions now, and we will address these a little later today. For shareholders participating by phone, the phone line operator will introduce you to the meeting at the appropriate time, and you can speak at that point.
When we get to questions, the Chairman will consider questions from the floor first, then questions submitted online, and then questions by phone. I will now hand back to the Chairman.
Thank you, Julia. Today, I'm joined on stage by my fellow Directors. To my left, Sarah Ryan, an Independent Non-Executive Director and Chair of our Audit and Risk Committee. Arnoud De Meyer, Independent Non-Executive Director and Chair of the Strategy and Investment Committee, and Mike Muller, Non-Executive Director. To my right, Scott Wyatt, Chief Executive Officer and Managing Director. Nicola Wakefield Evans, an Independent Non-Executive Director and Chair of our Sustainability Committee. Dat Duong, a non-executive director, couldn't be with us in person today, and he joins us by telephone. Carolyn Pedic, our Chief Financial Officer, Lachlan Pfeiffer, our Chief Strategy Officer, Jevan Bouzo, our CEO, Convenience and Mobility, and Julia Kagan, who you heard from, our Company Secretary, with us on stage today. We will also have joining us.
We also have joining us here in person today, Trevor Johnston, representing our auditor, PricewaterhouseCoopers, sitting in the front row. Trevor will be available to answer questions on the auditor's report later in the meeting. Before we go through the formal business, Scott and I will address the meeting on our performance and some of the highlights over the last year. It is significant that we're holding our annual general meeting here in Adelaide today. It's a first, but earlier this year, we completed the acquisition of the On the Run group. The Shaheen family built On the Run to become a highly successful business and the largest non-government employer in South Australia. We are excited to have the opportunity to take this industry-leading convenience offer to our national network.
It will help us grow and future-proof the convenience and mobility sector of our business. I wanted to specifically refer to our energy and infrastructure business, which remains critically important to the overall success of Viva Energy. The Geelong Refinery supplies more than half of Victoria's fuel requirements, regularly supplies Tasmania, and with the acquisition of On the Run, will also supply South Australia. It's an illustration of the contribution we make in supporting energy security in Australia, an aspect of our business, which in turbulent times, is especially important. Conflict in Europe and the Middle East continues to disrupt energy markets and underscores the importance of maintaining local manufacturing capability and a sensible balance of self-sufficiency.
On the subject of energy security, it's been heartening to see the Commonwealth Government recognize the important role of natural gas in sustaining manufacturing businesses like ours and supporting baseload electricity supply as we transition to renewables. We remain concerned about the outlook for gas supply in Victoria and the impact that this will have on prices and outright supply to consumers and businesses. We believe that our LNG import terminal project within our Geelong Energy Hub can contribute a flexible and pragmatic option towards solving this structural gas shortfall. We plan to be in a position to make a final investment decision in 2025, with an anticipated delivery date before winter 2028, should the Victorian Government approve the project this year and we secure sufficient commercial offtake arrangements.
Beyond traditional hydrocarbon refining, we continue to explore opportunities to reduce the carbon content of fuels we produce and offer our customers. Construction of our hydrogen production and refueling facility in Geelong is underway and will see green hydrogen as a longer-term, viable option for the heavy transport industry. We also believe that low-carbon liquid fuels, such as sustainable aviation fuel and renewable diesel, will be important for the hard-to-abate sectors such as aviation, mining, and road transport. We welcome the initiatives announced by the government at last week's federal budget to unlock local production of low-carbon liquid fuels, exploring incentives to support production and demand, the development of a much-needed certification scheme, and funding as part of the Future Made in Australia Innovation Fund recognizes the important role that low-carbon fuels play in our energy transition.
With policy settings from the government, which bring Australia into line with standards overseas, these fuels can be made at Geelong and distributed through our existing infrastructure. They will greatly enhance the long-term value of our assets, while at the same time helping our customers reduce their carbon emissions. In our Commercial and Industrial business, we're seeing year-on-year growth. Commercial and Industrial fuel sales grew by 12.6% in 2023, and we have secured a number of important strategic accounts which will deliver further growth in the years ahead. I'm particularly proud that the Australian Defence Forces entrusted us to supply all of its fuel needs. It says a lot about the quality of our people, our capability, and our reputation. Viva Energy is well-positioned as the federal government invests more in defense capacity and fuel resilience in the years ahead.
On the company performance as a whole, the group delivered another strong EBITDA of AUD 713 million during the year 2023, with strong year-on-year growth across our non-refining business. This represents our second-best earnings result as a listed company, following this, the record year in 2022, and illustrates the importance of the strategic agenda we are pursuing. Underlying cash generation was strong, and the board determined to pay dividends of AUD 0.156 per share. We aim to continue growing our business, diversifying our income, making an important contribution to energy security, and supporting the broader energy transition in the years ahead. On behalf of the board, I'd like to thank Scott and his leadership team, the extended Executive team, and all our team members who've worked incredibly hard during a transformative year for the company.
Again, thank our shareholders for their continued support. I'll now ask Scott to take us through his presentation.
Thank you, Robert. And, look, welcome all to all our shareholders and guests with us today. Last year was indeed a busy year for the company. The extended major maintenance activity at Geelong Refinery and the transition of Coles Express business, including taking full control of operations across our Retail Network, required considerable effort across the company. And with that backdrop, I'm really pleased with our safety performance, which remains steady, and indeed, some good improvements in our process safety performance. Looking forward, I'm conscious of the new risks that we have taken on with the growth in our convenience and mobility business, and particularly, the impacts on our team members from robberies and crime that unfortunately do occur from time to time.
We have inherited some good processes from Coles and OTR, and we'll continue to look for ways to improve our safety across our retail network as we upgrade stores and enhance our offer. Across the rest of the traditional business, we continue to invest in improving asset integrity and inspections to reduce the risk of leaks and spills, and generally driving a strong safety culture, which remains a source of pride among the broader Viva Energy team. As Robert highlighted, 2023 was very much a transformational year for Viva Energy. We delivered a strong financial performance and made significant progress on the strategic agenda, which we shared at the Investor Day in November. Group sales increased 9% to more than 15 billion liters and are now 5% above pre-pandemic levels.
Commercial and industrial sales grew by 12.6%, as aviation demand continued to recover, and other commercial segments saw strong demand in what has been a broadly robust domestic environment. In contrast, convenience and mobility sales were relatively weaker, with total fuel demand growing by less than 1% due to cost of living pressures and convenience sales impacted by the growth in illicit tobacco. Group earnings were AUD 713 million, which outside of the refining business, represented a 16% increase on 2022. In particular, Commercial and Industrial supported the group as it delivered its third consecutive year of earnings growth, up 33% on 2022. The business continued to benefit from its high-touch customer focus, extensive infrastructure positions, and diversification across different industries and specialty products.
Our refining operations were impacted by extended major maintenance, but outside of these operational challenges, the general refining environment was constructive, with refining margins above long-term averages. Our balance sheet was strong ahead of financing the OTR Group acquisition, ending the period with net debt of AUD 380 million. As we set out in November last year, we are embarking on a multi-year strategy to transform from a fuel retailer that happens to sell convenience, to a convenience retailer that happens to sell energy. We expect this to deliver strong earnings growth over the next five years, expectantly doubling the contribution from our traditional retail business. It's an important driver of growth, but also an important response to the energy transition. During the year, we completed the acquisition of Coles Express, and more recently, completed on the acquisition of OTR.
Together, these retail platforms provide a pathway to substantially improving our convenience offering and directly accessing strong growth in this attractive and fast-growing segment, which is estimated at over AUD 200 billion. The transition has gone smoothly, and we are now focused on early upgrades to Coles Express stores, capturing supply chain benefits, and reducing overhead costs by bringing them together the business under one single operating platform. We expect to be able to provide more detail on our plans at our half year results, and once again, at the full- year, once we have direct experience operating stores under the new platform. In conjunction with upgrading the convenience offer, we'll also begin installing electric vehicle recharging facilities at our stores in New South Wales.
We received funding for 30 fast charging recharging facilities from the New South Wales Government, and expect to deploy the first round of charges during the second half of the year. We see electric vehicle recharging as an important convenience category over the long- term, which will help drive visits to our stores and in-store sales uplift as customers spend more time with us. As Robert mentioned, supporting our Commercial and Industrial business, work has commenced on the construction of our hydrogen production and refueling facility at Geelong. This initiative is aimed at heavy vehicle users, and together with renewable fuels, which Robert touched on, will play an important role in reducing emissions in commercial and industrial segments. A number of our customers have already purchased hydrogen vehicles and in anticipation of this development, and we look forward to reporting on early progress again at our AGM next year.
This project is part of our broader Geelong Energy Hub ambitions, which include LNG import and storage facility, strategic storage, lower carbon and renewable fuels production. Work is also underway to upgrade processing capability to reduce sulfur and aromatic content of petrol, which we expect to be commissioned in the third quarter of 2025. It is worth noting that Geelong Refinery is the only manufacturer of bitumen for Australian roads, Avgas for smaller piston engine aircraft, Low Aromatic Petrol to combat petrol sniffing in regional communities, polypropylene plastics, and military-grade fuels to support Australian Defence and its allies. This is a unique competitive advantage with strong integration with our commercial and industrial businesses. Overall, I'm pleased with the progress we have made on our strategic agenda over the last year.
We have exciting plans for each of our three unique businesses and look forward to delivering on these in the year ahead. Looking forward to the rest of this year, let me begin by making a few comments about our first quarter 2024 operating results, which we released to the market last month. The group delivered a strong performance, with Geelong Refinery operating at near capacity and sales up almost 8% compared to the same time last year. The commercial business maintained momentum, delivering another strong sales result on the back of healthy demand across most sectors and new business wins. Our retail operations performed well, despite adverse weather in some markets, general cost of living pressures affecting fuel demand, and lower tobacco, tobacco sales, with continued growth across the other convenience categories.
We do see cost of living pressures impacting mobility and general consumer demand, and we recognize that the relatively high cost of fuel contributes to those pressures. Oil prices have recently begun to soften, providing some relief, but we will continue to focus on delivering value to customers through our range of retail offers, which now includes Coles Express, OTR, Liberty Convenience, and our network of Independent Retail Partners. Over the long- term, we expect our Convenience and Commercial businesses to provide relatively stable and strong earnings, supported by the contribution from the OTR Group acquisition, which was completed in the first quarter. We also expect continued demand strength from our commercial and industrial businesses, which remains a very diverse business with demonstrated resilience to sectoral cycles.
While regional refining margins have softened recently, they do remain above historical averages, and we are well positioned to maximize production opportunities with no planned major turnarounds this year. In conclusion, we are very excited about the remainder of 2024 and beyond. We have a strong and diverse portfolio, which is well positioned to capture growth opportunities. We are highly focused on executing our strategic objectives, which we believe provide considerable growth opportunities over the long- term. As I hand back to Robert, I would especially like to thank our people, our customers and partners, and of course, our shareholders, for your continued support. Thank you.
Thank you, Scott. As we go through the resolutions today, I will open for questions. Those shareholders with us in Adelaide, holding a yellow or blue card, you may make your way to the microphone at the appropriate time, and please identify yourself before asking your question. For our shareholders attending online, I'd encourage you to start submitting your questions now, and we'll address them as we go. I'll now proceed with the formal business of the meeting. The notice of meeting sets out the following matters for consideration by shareholders today: One, to consider the financial statements and report. Two, to adopt the remuneration report. Three, to elect Sarah Ryan and myself as Directors of the company. Four, to grant performance rights to Scott Wyatt under the company's long-term incentive plan.
And five, to approve the grant of financial assistance by each OTR entity in connection with the acquisition by Viva Energy Retail. During the meeting, we'll display the proxy votes and direct votes received in advance of the meeting. Where I, as Chairman of the meeting, have been nominated as a shareholder's proxy, I intend to vote all undirected and available proxies in favor of each resolution. There are also voting restrictions for some resolutions, as outlined in the notice of meeting. I remind you that the polls are now open for voting. The outcome of today's meeting, including the final vote numbers, will be released on the ASX at the conclusion of today's meeting. I turn to the first item of business, consideration of the financial statements and reports.
The Corporations Act requires the Directors to lay before the Annual General Meeting, the Financial Report, the Director's Report, and the Auditor's Report, for the last financial year. There's no formal resolution put to shareholders for this item, but there'll be an opportunity to ask questions on the matters contained in the reports. So I now ask, are there any questions from the floor on the financial statements and reports? If there are, please make your way to the microphone. If not, I'll ask our company secretary, Julia Kagan, to read out any online questions we've received on this item of business.
There are no online questions, Chairman.
I ask the phone operator, do we have any shareholders who want to ask a question by phone?
There are no phone questions at this time.
Thank you. As there are no further questions, must be a good set of accounts, Scott. I declare that the financial statements and reports have been received and considered at the meeting. Item two is the Remuneration Report, which is included within our Annual Report. The vote on this item is advisory only. However, the board will consider and take into account the outcome of the vote and feedback from shareholders on the Remuneration Report. Are there any questions on the Remuneration Report?
Good afternoon, Chairman. My name is Bob Ritchie. I have been appointed by the Shareholders Association to represent the proxy donors, 21 of them, about the same number as shareholders seated on the floor of the room, by the look of today. We're voting 250,000, or a bit over that, yes. We will be voting in favor of adoption of the remuneration report and in favor of all other resolutions today. But I'd like to make two comments. One is that if all performance goes well, then the remuneration for the Chief Executive associated with the plan from this meeting and what I believe will be adopted provides at the maximum an income that's about 50x the Australian average and about 70x the median Australian income.
I'm not complaining about that, but I want to draw attention to the fact that I can see a shift globally against this wide gap in incomes, and it may be something the board should take into account as the years progress. I'm not even talking about this year or next year or the year in which the LTI comes in, but I think it is on the cards, and there's a social responsibility for the care of the company to make sure you're not out of tune. That leads me to the other point that the Shareholders Association holds dear, and that is the four or five-year LTI hurdle, or for the time for it. You're working on three years. You have a plan.
You have intentions to double the retail side of the business across the next five years. It would be appropriate as that works its way into a plan for you to think about extending that three years to four. In that regard, I will seek an opportunity to speak with the chair of REM after this meeting is over, just to speak briefly. Thank you.
Well, thank you for coming, and thank you for your question and your support and that of your association. So, you know, I share your concern about income disparity and wealth disparity in our society. And as you know, over the years, the gap has actually been widening. So it is, as you describe, a social issue, and the something that, you know, society as a whole should be conscious of and thinking about, how best to respond to it. Governments obviously think about it in terms of, public policy that will lift the income of the lower sections of our community, and also how the higher sections should be effectively taxed. You know, the theory of that is to try and minimize income disparity.
From the point of view of a corporation such as ours, what should we do? Obviously, we now have, what, some 14,000 staff, and we look to see that they are properly remunerated. But in relation to the top level of our company, and you mentioned our Chief Executive Officer, we live in a competitive world, and we have to pay our Senior Executives at a level that appropriately reflects and respects their contribution and is competitive with their peers. So I sometimes get asked these questions, and of Scott, I say, "You know, Scott has been very loyal to this company," but it goes back a long way. And therefore, in some ways, I'm a Chairman that doesn't have the worries of some others, but that would not be a justification to not treat him fairly.
You know, I have to respect his position and where he is in that, in that level of Australian corporate leadership, and we seek to remunerate him accordingly. We certainly don't seek to overpay him, I say quietly. We don't seek to underpay him either. On the other issue, which was. What was the other issue?
Linked to the LTI.
LTI. Well, we actually, and with your, some of your colleagues in the state, have had these discussions over the years. We do do share your sentiment that for a long-term incentive, three years doesn't seem very long. When we started, you know, we're a young company, we started with a three-year structure. This year, for the first time, we've actually provided a five-year mechanism for one of our Senior Executives, Jevan Bouzo, in relation to our Retail and Convenience business. Why have we done that? Because we've actually Jevan's come in to run that business. It's going to be a huge business, you know, bringing in the Coles Express business, the On the Run business, and soon to be the Liberty Convenience business.
We've set a five-year target for him in terms of financial return to the company. So why not have a long-term incentive that's linked into that five years, which is exactly what we have, we have done. So what I say to you is that I hear what you say, and we've actually started on the road that you have outlined for us. So I hope that you think that that's a step in the right direction. Have we got any other questions from within the room? Yep.
Mr. Chairman, Kevin Longmire, a shareholder. Can I digress and just ask a question about the accounts? I sort of glossed over it a little bit too quickly, and I.
You can certainly ask a question about the accounts. The issue is whether... Would you mind if a bit later in the meeting, when I call for overall questions-
Yes.
We do it then?
Yes.
So we just stick to the rem at the moment?
Yeah.
Okay.
Thank you.
No problems. We always make time for all questions. I'm very pleased so many shareholders have turned out in Adelaide. Let you into a secret, there are more turned out in Adelaide than turned out in Melbourne. No other questions from the floor on the remuneration report? Julia, online?
Nothing, Chairman.
Operator on the, on the phone?
There are no phone questions at this time.
So the, the question is, the remuneration report for the year ended 31st of December, 2023 be adopted. Please record your vote if you've not already done so. For shareholders attending this meeting in person, please now vote for, against, or abstain next to resolution two on the yellow paper voting card. For shareholders attending the meeting online, please select for, against, or abstain next to resolution two on the online voting, voting card. The next two. Thank you. I'm told to pause. I've paused. The next two items relate to the re-election of Directors. As I'm standing for re-election at this meeting, I will hand the chair of the meeting to Arnoud De Meyer for this item of business. Thank you, Arnoud.
Thank you. Good afternoon to all of you, and we look now first at Item 3A. This item relates to the re-election of Sarah Ryan as a Director. Sarah retires at this meeting in accordance with the company's constitution, and being eligible, offers herself up for re-election. The board has considered Sarah's performance and contribution and supports Sarah's re-election. Details of Sarah's qualification, career, and experience are set out in the notice of this meeting and in the Annual Report. Sarah is with us here in Adelaide today, and I will ask Sarah to speak to you in support of her re-election. Sarah?
Thank you. So I was delighted when I was invited to join the board of Viva Energy back in 2018 as we prepared to go public, and I'm very happy to be here with you today. So I'm a member of the Sustainability Committee, and I Chair our Audit and Risk Committee. My background is mostly from the energy industry, with over 30 years experience worldwide, mostly around oil field operations, engineering, and developing and commercializing research and innovation in energy-related technology. I also have substantial experience as a COO and in Executive Management, particularly key aspects such as strategy, people management, risk management, and delivery of business priorities. I've also spent 10 years in Investment Management and Private Equity, mostly based in the United States, starting as an Analyst, then an Investment Director and Portfolio Manager, where I mostly focused on global energy and natural resources.
Many of the issues I've had to deal with over that time are very relevant to Viva's business today. For example, high-risk operations, the emphasis on safety, and ensuring that the company can not only survive but thrive in our changing world as the world decarbonizes its energy and transport systems. I'm currently a non-executive director on the board of three other ASX-listed companies, being Transurban, Aurizon, and Calix. I'm a former director of Woodside Energy and OZ Minerals in Australia, and Akastor, based out of Norway. For most of these companies, I am or was a member of their Audit, Risk, and Sustainability Board committees.
On the energy technology side, I'm currently on the Board of the Future Battery Industries Cooperative Research Centre, where I Chair their Audit and Risk Committee, and I'm on the Advisory Board of the Australian Research Council Centre of Excellence for Green Electrochemical Transformation of CO2. It's a mouthful. I'm also a fellow of the Australian Academy of Technology and Engineering, where I chair the Energy Forum. I believe my background and experience leave me well-placed to contribute to the company's future, and I'll be delighted to be re-elected as a director by shareholders today. Thank you.
Thank you, Sarah. Let's now turn to the questions. Are there any questions on the floor on this item of the business? Yeah.
Acting Chairman, this is my second and last time on the microphone. And I rise to speak in support of the resolution. I do not have a question, but as we're meeting in Adelaide, and Sarah Ryan was a member of the board of OZ Minerals as it closed. My colleagues and I, who were dealing with that company, held that board in a very high regard, and from our perspective, anyone who was invited to join that board gets an extra boost in terms of their credentials. Thank you.
Thank you very much.
Thank you. I'm honored.
Congratulations, Sarah. Any other questions from the floor? I don't see any. Julia, have we received any online questions on this item of business today?
No, we haven't.
Thank you, Julia. I will now go to the phone questions. Operator, do we have any shareholders who wish to ask a question by phone?
There are no phone questions at this time.
Thank you. A summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on the screen now. I formally put the motion that Sarah Ryan be re-elected as a Director of the company. Please record your vote now, if you haven't already done so. Thank you. We can now go to item three B. Robert retires at this meeting in accordance with the company's constitution, and being eligible, offers himself for re-election. The board has considered Robert's performance and contribution and supports Robert's re-election. Details of Robert's qualifications, career, and experience are set out in the notice of the meeting and in the annual report. I will ask Robert to say a few words about his re-election. Robert, over to you.
Thank you, Arnoud. Viva is a young company. This year, we mark the 10th A nniversary since Vitol purchased downstream assets of Shell and set up a new business. I joined the Viva board as the only Australian Independent Director, recognizing the importance of Shell's infrastructure and capabilities to Australia's security, economy, and broader public life. But I also recognized that with an energy transition starting to gather pace, the challenges in the future would be many. Four years later, we became an Australian publicly listed company, and I was proud to be its first Chair. Public listing brought new investors, and I thank our investors for the confidence they've shown to the Board and Executive. Luckily for me, I've led a committed and cohesive board and executive, and our Executive group has been first class.
We've sought to build a culture of pride and respect within the company, which has been reciprocated by a great team of employees. As a result, the company is strong, with growing resilience. We're meeting our responsibilities in relation to the nation's energy security. We're building new low carbon products and services to support an energy transition, which we believe in and our customers expect, and we've been able to deliver good financial returns to our investors. It's hard to recognize the Viva of today from that of 10 years ago. At that time, we were a wholesaler of fuel to our service stations. Now we're well on the way to owning and operating Australia's largest, and we would argue, best Retail, Convenience, and Fuel business.
In the Commercial and Cndustrial sector, we didn't have an aviation business or a cruise ship business of any consequence, and we certainly didn't offer carbon solutions to our customers. Now, our Commercial and Industrial business is strong and diverse and showing, as I said earlier, year-on-year growth. The Geelong oil refinery is now underpinned by government support and is the centerpiece of a growing energy hub. The three 30-million-liter diesel tanks, as part of Australia's National Security, Fuel Security program, will become operational within months. The new ultra-low sulfur gasoline unit and other plant upgrades for low aromatics gasoline are being constructed, which will bring the refinery up to world's best practice in terms of fuel quality. The first publicly accessible hydrogen service station to supply heavy transport is planned to be filling vehicles this year and open to the public next year.
We will be offering the capacity to process hard-to-recycle waste plastics through our residue catalytic cracking unit and polypropylene plant. Most importantly, we now manufacture F-44 fast jet fuel for the Royal Australian Air Force. So to this background, I again offer myself for election as a director. In doing so, and while recognizing that stability and continuity of our small board has been important, I know that change must come with time. I see it as part of my responsibility to ensure that refreshment of leadership of the board occurs over the next few years and in a way which adds value to the company. Thank you.
Thank you, Robert. Turning now to the questions. Are there any questions from the floor on this item of the business? I don't see any questions from the floor. Julia, have we received any online questions on this item of the business today?
There are no questions.
Thank you, Julia. I will now go to the phone questions. Operator, do we have any shareholders who wish to ask a question by phone?
There are no phone questions at this time.
Thank you very much. A summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on the screen now. Therefore, I formally put to motion that Robert Hill be re-elected as a director of the company. Please record your vote now, if you haven't already done so. The voting lines will close shortly after the next item of business. I will now hand the chair back to Robert.
Thank you, Professor. The next item of business is item four, grant of performance rights to Scott Wyatt, proposed to issue 798,270 performance rights under the 2024 long-term incentive plan to Scott Wyatt, our Chief Executive Officer and Managing Director. Each performance right will entitle Scott to acquire one ordinary share in the company for no consideration at the end of the performance period, subject to satisfaction of the performance conditions. The performance period is three years and will run from the first of January 2024 to the 31st December 2026. The notice of meeting sets out all the relevant details in relation to the performance rights, including the performance conditions. Do I have any questions from the floor on this item of business?
If not, Julia, do we have any questions online?
No, we don't, Chairman.
Phone operator, do we have any questions by phone?
There are no phone questions at this time.
Thank you. Summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on the screen now. As there are no further questions, I formally put the motion for item four, that 798,270 performance rights be granted to Scott Wyatt under the company's long-term incentive plan. Please record your vote if you haven't already done so. Item five, the next item of business, item five, financial assistance. The Corporations Act requires, in certain circumstances, shareholders' approval of a company providing financial assistance to acquire shares in itself. Under the Corporations Act, if immediately after the acquisition, the company providing the financial assistance has an Australian-listed holding company, the financial assistance must be approved by a special resolution of the shareholders of that holding company.
In order to help fund the OTR Group acquisition, Viva Energy Retail made drawdowns under certain of its existing and new syndicated debt facilities. The company and the Viva entities are guarantors under those facilities, and it is a condition required by the company's financiers that certain OTR entities acquired must also accede as guarantors to these facilities. The accession by the OTR entities as guarantors to these facilities will have the effect of each OTR entity financially assisting the acquisition of its own shares for the purposes of the Corporations Act, which gives rise to the requirement to put forward this resolution as a special resolution. The notice of motion, again, sets out all the relevant details in relation to the financial assistance. I turn to questions. I say in advance that Carolyn's volunteered to answer any questions. No questions from the floor.
Are there any questions online, Julia?
No questions.
Any questions from the by telephone?
There are no phone questions at this time.
Okay, thank you. A summary of the direct and proxy votes received in advance of the meeting in relation to this item appears on the screen now. As there are no further questions, I formally put the motion for item five, that the grant of financial assistance by each OTR target entity be approved. Please record your vote now, if you haven't already done so. That covers all of the business before the Annual General Meeting. I said that before we finish up, I would check with attending shareholders and with Julia online and our telephone operator to see if there are any further questions. So, I'm confidently expecting one question, at least one question from the floor. It's on the account, so you still might get a chance.
Can I make that two questions, Mr. Chairman? Can't get out of this so lightly.
No, I think,
First question is, John Duff Transport. Could you give me some background why you purchased this, given that you had AUD 2 million in assets and AUD 15 million in goodwill. Was it a terrific buy for you to sort of to pay that much for goodwill?
Yeah, I'll go first, and maybe, Carolyn, you can talk about the goodwill part. But we have a business within Viva Energy Group, which we built up over the last 5 or 6 years, called Liberty Rural. It's a business that services customers in regional communities, mostly focused on agricultural clients, but also small businesses in rural Australia as well. It's a business that we sort of built up from ground up with a joint venture partner originally. Had 50% stake in that company, and we took 100% of it a few years ago. So it's now a fully independent business within the Viva Energy Group. It's taken us right across the country now.
We have a presence in most regional communities around the country, mostly trading under Liberty Rural. But over time, we've added to that, that business with the acquisition of companies like John Duff Group, which you, you referred to, to continue to build our presence in those regional markets. We see as a very exciting part of our business. Obviously, regional Australia is, it's big country. There's a lot of customers and communities that, that rely on, rely on us to supply fuels and lubricants and service their business. And obviously, agriculture, particularly, is a big segment in Australia. So it's not any good business, but it's a business that we're very proud to be involved in, and it's quite a material part of the commercial and industrial business today. So that's the background to the acquisition of that particular business.
So there's been others that we've acquired as well, and we continue to look for opportunities to add to that and continue to expand our business in those regional areas. In terms of the goodwill question?
Yeah, absolutely. I mean, it's fairly, I guess, common and normal to acquire a business, as Scott described, in terms of the paying a multiple of earnings for that business. So you've got the potential to bring those earnings into your business going forward. So it's quite customary to have a certain payment, and then the actual value of the net assets that you've acquired is lower than that payment, so this is quite usual to have goodwill.
Usually, that amount is about 10% of the profit that it makes. So are you saying to me that it's more than 10x, or is it less than 10x?
Oh, I mean, certainly in terms of the multiple we paid, nothing, nothing like that. But, I mean, the percentage of goodwill will depend on the actual underlying assets of the business that you've acquired.
Okay. My second question is, I get a lot of conflicting noise about hydrogen.
Yep.
I see it's too expensive to produce. I see that Fortescue is being subsidized by the government. Apart from electrolysis, that I know that's a process that occurs with hydrogen production, what method are you gonna go down to to produce hydrogen? And are you being subsidized by the government?
Yeah. So, we're starting cautiously. I said that our hydrogen service station, our New Energy Service Station, will be the first open to public use in Australia, which we're building at Geelong. We've purchased our own electrolyser, which we now have in country, in storage. So we'll be producing the hydrogen. We'll use green energy, and we'll produce green hydrogen as a result through our own process.
Can you tell me what green energy is?
Well, in this instance, the energy source will be a renewable energy source.
Can you give me an example?
Yeah. It could be, it could be from wind. It could be from solar.
So that's green energy? Okay.
Yeah, renewable energy. So, we'll make it on site. And it's not a large electrolyser, but interestingly, I think right at the moment, it's the largest in the country. So really, this is just the start of a new world in Australia. When you... You know, a lot of grand stories out there
But we're just, Australia is in outcome is just starting to scratch the surface, and we're scratching it in that area in which we think we might be able to help. There is a logic in our minds that says that heavy transport is well suited to a hydrogen fuel, as opposed to other options. As we go through the transition, what's the best way to fuel a heavy transport fleet? You might say, "Well, big batteries. Very, very big batteries." There are those who argue that it won't work efficiently with large, heavy, heavy transport. You might say to me, "With a renewable diesel," well, then we can have a debate about the renewable diesel. At the moment, it's not produced in Australia, and the cost of it, if we're to import.
We are importing some for clients who actually want to go down that path, but the cost is roughly 2x-3x the size, the price of hydrocarbon-based diesel, so it's a big price increase. Or the transport fleet might move to hydrogen, which is quite logical in some ways because they fuel it pretty close to a traditional service station. They get sufficient range. And so we are working in conjunction with a number of transport entities, waste company, bus company, one that's not transport, and Barwon Water in Geelong, that some of their vehicles are being converted to hydrogen, because there's not much point in having a service station and no vehicle. So again, this is hand in glove, and the Australian government is contributing to our cost.
We know that it's making a profit on this is a way off. We are doing this as a part of our contribution towards the long-term, low-carbon future of Australia within our areas of responsibility. So it's not unreasonable to say to the public, "If you want to believe in that, then share with us in the cost of this first facility." We've been approached by other states to look at developing similar facilities. But right at the moment, at this early stage, we're finding hard to make the figures justify our contribution to those additional service stations. But ultimately, hopefully, they will come. So is that a that's our piece of the pie.
Now, you know, there are other pieces that people talk about with massive electrolysers and massive solar farms to fuel them, and so forth, but that's not our bit.
Okay, all right. Thanks for that.
All right. Thanks for asking the questions. So, no further questions on the floor? No further questions online? No further questions on the phone. It's for me to tell you that voting will close shortly after the conclusion of this meeting. For those shareholders online, a five-minute countdown timer will appear at the top of your screen, advising the remaining voting time. If you've not already cast your vote, can you please do so now? For shareholders at the meeting in Adelaide, please complete your paper voting forms and place them in the ballot voting boxes with Link staff, who are both roaming the room and also located at the exit door, so you can't get through the door.
Our voting results will be released to the ASX, as I said earlier, and will be displayed on the company's website after the conclusion of this meeting. Thank you again for participating today in this hybrid format meeting. It's been great to hold it here in Adelaide, South Australia, the headquarters of our retail convenience, our national retail convenience business. I said to someone the other day, our global business, which at the moment is national. Thank you, as I said, for those who've come along in person here today. I will close the meeting and invite those who are in person to stay for a cup of tea or coffee and have a chat with our board members and members of the senior executive. And with that, I now declare the Annual General Meeting closed. Thank you.