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VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021PB CVIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GROWTH
WITH PURPOSE
Vivo Energy plc
Annual Report &
Accounts 2021
STRATEGIC REPORT
2021 highlights IFC
Growth with purpose 1
Who we are 8
Where we operate 10
Chief Executive Officer’s statement 12
Business model and value creation 14
Market overview 16
Our strategy 18
Key performance indicators 20
Segment review – Retail 22
Segment review – Commercial 24
Segment review – Lubricants 26
Financial review 28
Materiality assessment 38
Resources and relationships 40
Non-financial information statement 57
Task Force on Climate-Related Financial Disclosures 58
Section 172(1) statement 63
Risk management 64
Long-term viability and going concern 74
GOVERNANCE
Chairman’s statement 76
Board leadership and Company Purpose 78
Board of Directors 82
Senior Executive Team 84
Division of responsibilities 86
Composition, succession and evaluation 91
Nominations and Governance
Committee Report 93
Audit and Risk Committee Report 96
Directors’ Remuneration Report 100
Directors’ Report 118
Statement of Directors’ responsibilities 122
FINANCIAL STATEMENTS
Independent Auditors’ Report 124
Consolidated statement of comprehensive income 132
Consolidated statement of financial position 133
Consolidated statement of changes in equity 134
Consolidated statement of cash flows 135
Notes to the consolidated financial statements 136
Company statement of financial position 174
Company statement of changes in equity 175
Notes to the Company financial statements 176
OTHER INFORMATION
Shareholder information 184
Historical financial information 186
Task Force on Climate-Related Financial 188
Disclosures(‘TCFD’) Index
Glossary 189
Key contacts and advisers 191
Cautionary statement 192
VOLUMES
Million litres
10,302
+7%
SERVICE STATIONS
ADDED
Net total
133
TOTAL RECORDABLE
CASEFREQUENCY
Per million
exposure hours
0.04
REVENUES
US$ million
8,458
+22%
ADJUSTED
EBITDA
US$ million
447
+24%
NET INCOME
US$ million
152
+69%
Non-GAAP measures are explained
and reconciled on pages 36 to 37.
2021 HIGHLIGHTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
AN EXCITING,
DYNAMICJOURNEY
Over the following pages we
look at some of the key events
and milestones that have
marked our journey.
GROWTH WITH PURPOSE
TEN YEARS OF
RESPONSIBLEGROWTH
A decade ago, we set out a clear vision,
changedthe culture of the business,
andencouraged our peopleto
be entrepreneurial.
The Vivo Energy story has always been
aboutgrowth and an operating model that
couldmeet the increasing energy needs
of a vibrant African continent.
But with growth comes responsibility.
Guided by our Purpose, we’ve supported
localcommunities, enhanced safety,
maintainedhigh standards of governance,
andexplored innovative energy solutions.
As we look to the next ten years,
we’llcontinue to grow with purpose and
enable the development of Africaand
its people.
A STRONG YEAR
The Board and I are pleased
with the continued recovery,
which enabled us to address
the approaches from Vitol
from a position of strength,
leading to an agreed
transaction at a substantial
premium to the prevailing
price at the time of the
initial approach.
John Daly
Chairman
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
1VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OUR CLEAR VISION
HAS FUELLED
OURAMBITION
SINCE2011
That vision remains to
become the most respected
energy business in Africa.
THE BEGINNINGS
OF VIVO ENERGY
We were established
on 1 December 2011,
followingthe carve out of
most of Shell’s downstream
business in Africa –
1,269Shell‑branded service
stations across 15 African
countries. We initially
launched with seven
countries. A further six
joined in 2012, and two
more in 2013, completing
our Shell‑branded network.
GROWTH WITH PURPOSE
We rapidly established
a new operating culture
and ‘Focus,Simplify
and Perform’ became
the basis of how we
runthe business.
2011
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20212 3VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
+15
YEARS
NEW 15-YEAR
BRAND LICENCE
AGREED WITH
SHELL
We focused on investing
to grow our business,
expanding and improving
our network and offer.
1,628
SITES IN 2015
2015 2018
1,900
SITES IN 2018
LAUNCHED OUR FOOD
JOINT VENTURE
STRATEGY
We secured our first KFC
joint venture partnership
in Botswana, with other
countries following.
OUR INITIAL
PUBLICOFFERING
We became a public company,
admitted to trading on the
London and Johannesburg
stock exchanges.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20212 3VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
2021
IN OUR TENTH YEAR
WE’RE NOW STRONGER
THAN EVER, DELIVERING
ON OUR STRATEGY,
SUPPORTED BY OUR
PEOPLE AND GUIDED
BYOUR PURPOSE
AGREEMENT TO
SUPPLY SOLAR POWER
We secured our first
commercial solar contract
in 2020, which will provide
a hybrid solar/fuel energy
solution to the Nampala
gold mine, in Mali.
ENGEN ACQUISITION
COMPLETED
We added operations in
eight new countries, with
230 Engen-branded service
stations instantly joining
the network.
+8
NEW
MARKETS
Our Purpose is to safely provide
innovative and responsible energy
solutions to Africa, which enable
growth and development of the
continent and its people.
GROWTH WITH PURPOSE CONTINUED
2019
2,226
SITES IN 2019
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20214 5VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
ENHANCING OUR
SUSTAINABILITY
– Formation of ESG and Climate Committee.
– Expansion of solar on sites initiative.
– Enhanced GHG reporting.
– 68% of African-based employees fully
vaccinated (well ahead of Africa’s average).
– Completion of materiality assessment to
identify and prioritise sustainability topics.
– Reporting of first TCFD disclosures.
BUSINESS RECOVERY
ON TRACK
Retail volumes and Retail
gross cash profit ahead
of2019 levels.
INVESTING
FOR THE FUTURE
Retail site roll-out going
exceptionally well, with 133
net new service stations
added this year, up from
104 in 2020.
PROVIDING RETURNS
FOR SHAREHOLDERS
$103 million of dividends
paid to investors and
$51 million recommended
since the start of pandemic.
Dividend policy enhanced
to increase minimum
payout ratio from 30%
to 50% of attributable
net income.
$154m
DIVIDENDS
20
21
2020
2
019
1
2
018
2
017
133
96
71
Net new service
stations added
103
104
1 Excludes 230 service stations acquired as part
of the Engen acquisition.
20
21
2020
2
019
2
018
2
017
6,090
5,900
5,354
Retail volumes
million litres
5,196
5,456
ESG AND CLIMATE
COMMITTEE
Cross-functional ESG
and Climate Committee
formed to guide our climate
change response and
broader ESG strategy.
VACCINATION
PROGRAMME
Encouraged
colleagues to receive
COVID-19 vaccinations.
68%
OF AFRICAN-
BASED EMPLOYEES
FULLY VACCINATED
2,463
SITES IN 2021
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20214 5VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
GROWTH WITH PURPOSE
GROWTH IS INTEGRAL
TOOURDNA
Africa has lots more to
offerand we’ll be there to
create opportunities and
continue to support this
vibrant, exciting continent.
CONTINUING
TO EXPAND
THE NETWORK
We plan to continue
accelerating the growth
ofour network.
Confident in this
opportunity and our
teams’ability to execute,
we can allocate
more capital to grow
fasterthan before.
INCREASING
TECHNOLOGY USE
We will continue to use
technology to maximise
the efficiency of our
business – automating
our sites, improving our
loyalty programmes and
extracting more value from
our Enterprise Resource
Planning (ERP) system.
GROWTH WITH PURPOSE CONTINUED
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20216 7VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
GROWTH WITH PURPOSE
GROWING
NON-FUEL
RETAIL
We will increase the
scale and range of brands
under our Non‑fuel
retail business through
organic growth and new
joint ventures, delivering
afullscale offer.
PREPARING FOR
THE ENERGY
TRANSITION
Driving growth in theLPG
business (cleanerfuels),
delivering a solar/hybrid
offering for commercial
customers, and
exploring alternative
energy solutions.
FURTHER
DEVELOPING
OUR PEOPLE AND
COMMUNITIES
Our core values of honesty,
integrity and respect for
people underpin everything
we do and are crucial to
our success. We continue
to develop our people
and communities, creating
lasting social and economic
benefits, and strive to
achieve our vision.
FUEL DEMAND GROWTH
The macro fundamentals remain unchanged with fuel demand in our markets
predicted to continue to grow in the medium term.
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
150
140
130
120
110
100
90
80
Indexed historic and forecast product
demand in our 23 markets
+38%
Source: CITAC
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20216 7VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
WHO WE ARE
Retail is the engine that powers our growth.
At the end of 2021, our network comprised
2,463 service stations across the continent –
making us the second largest retailer in Africa
outside South Africa, in terms ofsite numbers.
RETAIL FUEL
Sale of petrol and diesel fuels at Shell and Engen-branded
service stations, across 23 countries.
NON-FUEL RETAIL
Multi-branded convenience retail shops, quick service and
fast casual restaurants, and other services including lubricant
bays, car washes and ATMs.
HIGHLIGHTS
FOR MORE
INFORMATION
SEE PAGES
22-23
WE ARE A GROWTH
COMPANY ON AN
EXCITING CONTINENT
RETAIL
We’re a market-leading, pan-African
retailer anddistnd distributor of high-quality
Shelland Engell and Engen-branded fuels and
lubricants to RetailandCommel and Commercial
customers across thecontinents across the continent, with
agrowing Non-fuel reta growing Non-fuel retail offering.
Operating in robust and growing markets,
wemake our customers’ lives easier and
theirexperience with us more convenient,
enjoyable and rewarding.
How? By providing quality products and
servicesthat meet their needs, supported
byhighstandards of safety, innovation and
service– inevery area where we operate.
Gross cash profit (US$ million)
Adjusted EBITDA (US$ million)
Retail 490
Commercial 194
Lubricants 93
Retail 259
Commercial 116
Lubricants 72
Non-GAAP measures
are explained and reconciled
on pages 36 to 37.
Volumes (million litres)
6,090 +12%
Gross cash profit
1
(US$ million)
490 +12%
Gross cash unit margin
2
($/’000 litres)
75 -1%
1 Includes Non-fuel retail.
2 Excludes Non-fuel retail.
128 new shops and
foodoutlets added at
our service stations.
Significantly expanded
the network,
adding a net total of
133servicestations
across the Group.
STRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 20218
Our Commercial business is founded on a proven
proposition to thousands of customers. We not only
ensure a reliable supply of high-quality fuels and energy
to a wide range of customers, but also support those
products with extensive, trusted services.
CORE COMMERCIAL
Supplying mining, construction, transport, power and
industrialcompanies. We also supply LPG, primarily to
consumers,as well as fuels to the wholesale market.
AVIATION & MARINE
Supplying aviation fuel, plus bunkering for marine traders
andothershipping companies.
HIGHLIGHTS
We sell lubricants to Retail and Commercial
customers in our countries of operation,
and also export to more than ten additional
African markets.
RETAIL LUBRICANTS
Providing products to consumers at our service station
forecourts and lubricant bays and also at oil shops, repair
shops, service centres and resellers through anetwork
of distributors.
COMMERCIAL LUBRICANTS
Supplying specialist lubricants to miningcompanies and B2B
customers, and also exporting to other African markets.
HIGHLIGHTS
FOR MORE
INFORMATION
SEE PAGES
24-25
FOR MORE
INFORMATION
SEE PAGES
26-27
COMMERCIAL LUBRICANTS
Volumes (million litres)
4,063 0%
Gross cash profit (US$ million)
194 +7%
Gross cash unit margin ($/’000 litres)
48 +7%
Volumes (million litres)
149 +10%
Gross cash profit (US$ million)
93 +19%
Gross cash unit margin ($/’000 litres)
628 +10%
Excluding a low-margin
supply contract,
year-on-year growth in
our Core Commercial
business was driven
by new customers,
particularly in the
transport, power
and mining sectors.
LPG volumes remained
flat with continued
portfolio review
and consideration
ofnew market
entry opportunities.
Strong year for lubricants
with continued year-on-
year growth.
Completed roll-out
of our Shell-branded
lubricants portfolio in the
Engen-branded markets.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
9VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
WHERE WE OPERATE
TWO LEADING BRANDS
ACROSS 23 COUNTRIES
2021 was a year of significant growth across
our network, as we added a net total of 133
service stations and 128 convenience retail
shops andfood outlets. We areontrack to
have more than doubledthe network since
inception bythe end of 2022.
09
GHANA
Total volume 517
Service stations 232
Market position 2
10
UGANDA
Total volume 471
Service stations 167
Market position 1
11
KENYA
Total volume 1,372
Service stations 263
Market position 1
12
NAMIBIA
Total volume 403
Service stations 71
Market position 1
13
BOTSWANA
Total volume 280
Service stations 81
Market position 2
14
MADAGASCAR
Total volume 210
Service stations 76
Market position 4
15
MAURITIUS
Total volume 395
Service stations 51
Market position 1
01
TUNISIA
Total volume 1,120
Service stations 169
Market position 2
02
MOROCCO
Total volume 2,108
Service stations 385
Market position 2
03
CAPE VERDE
Total volume 193
Service stations 27
Market position 2
04
SENEGAL
Total volume 556
Service stations 129
Market position 2
05
MALI
Total volume 276
Service stations 48
Market position 1
06
GUINEA
Total volume 533
Service stations 123
Market position 2
07
CÔTE D’IVOIRE
Total volume 678
Service stations 229
Market position 2
08
BURKINA FASO
Total volume 419
Service stations 94
Market position 2
2,463
SERVICE
STATIONS
1,041
CONVENIENCE
RETAIL SHOPS
AND PHARMACIES
ACROSS
23
COUNTRIES
266
FOOD OUTLETS
01
04
05
08
06
07
09
12
13
14
10
20
17
16
18
03
11
23
19
21
15
22
02
Market position is provided by
CITAC and based on volumes.
Total volume ismeasured in million
litres and excludesvolume related
to supply trading, not allocated
to countries.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202110 11VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
16
GABON
Total volume 83
Service stations 23
Market position 4
17
RWANDA
Total volume 83
Service stations 44
Market position 2
18
ZAMBIA
Total volume 101
Service stations 44
Market position 4
19
MALAWI
Total volume 46
Service stations 33
Market position 4
20
TANZANIA
Total volume 98
Service stations 37
Market position 10
21
REUNION
Total volume 213
Service stations 35
Market position 2
22
MOZAMBIQUE
Total volume 100
Service stations 39
Market position 4
23
ZIMBABWE
Total volume 50
Service stations 63
Market position 4
Our markets with Shell‑branded service stations
Our markets with Engen‑branded service stations
01
04
05
08
06
07
09
12
13
14
10
20
17
16
18
03
11
23
19
21
15
22
02
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202110 11VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
CHIEF EXECUTIVE OFFICER’S STATEMENT
A DECADE
OF GROWTH
From the very beginning,
we set out with a clear
vision to become the
mostrespected energy
business in Africa.”
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
CHIEF EXECUTIVE
OFFICER’S STATEMENT
CHRISTIAN CHAMMAS
In this, my final CEO statement at Vivo Energy
before retirement, Ilookback not just on 2021,
but also on our first decade, andreflect on how
we’re continuing togrow with purpose.
From the very beginning, we set out aclear
vision to become the most respected energy
business in Africa. And today, byremaining true
to this vision, Ibelieve that weare stronger than
ever – delivering onourstrategy, supported by
our people, and guided by our Purpose.
CONTINUED RESILIENCE
Our 2020 Annual Report was dominated
by theimpact of COVID-19 on our markets,
and how we had responded to the pandemic,
supporting and protecting our stakeholders
– playing our part, and demonstrating that
together we are resilient. A year on, I didn’t
expect our lives to continueto be dominated
by COVID-19. However, we have continued
to support the continent’s recovery, enabling
people and businesses to stay on the move by
providing essential fuels and services. The ever
changing nature of the pandemic did not make
2021 an easy year, but we have continued
to grow, delivering against our strategy and
producingstrong results.
Africa was impacted by waves of the pandemic
at varying times through the year, which led
to periodic stricter curfews and mobility
restrictions. However, we operate on a highly
resilient continent and our markets have
generally weathered the waves of new variants,
which have had limited impact on public health.
Vaccination rates against COVID-19 have
progressed at different paces. While the majority
of target populations in Morocco and Mauritius
are fully vaccinated, sub-Saharan Africa countries
are generally still in the early stages of roll-out.
During the year we continued to focus on the
health and safety of our people, and undertook
a range of initiatives to inform our employees
about the vaccine. I am pleased to report that
68% of our African-based employees were fully
vaccinated by the end ofthe year.
STRONG BUSINESS PERFORMANCE
Our business recovery from the lows of Q2
2020 remains firmly on track, with volumes up
7% to 10,302 million litres, and within touching
distance of 2019 levels. Group gross cash unit
margin remained strong during the year at
$75per thousand litres, as the pricing and supply
environment continued to support us, along with
further benefits from the product mix effect.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202112 13VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
Net income
$152m
Full year dividend
$72m
HSSEQ
0.04
Strong Health, Safety,
Security, Environment
and Quality (HSSEQ)
performance with
Total Recordable Case
Frequency of 0.04
incidentsper million
exposure hours.
21
019
018
017
447
431
400
376
360
21
019
018
017
10,302
10,417
9,351
9,026
9,637
Together, these factors led to gross cash
profitof$777 million, up 11% against 2020
andahead of 2019.
This strong performance resulted in adjusted
EBITDA of $447 million, our highest ever
performance, which is up 24% against the
previous year, with net income up 69% to
$152 million. Adjusted diluted earnings per
share of 11 cents, 83% higher than 2020 and
broadly in line with 2019.
None of this would have been possible without
the support of our talented and dedicated
leadership team and employees across the
Group, of whom I am immensely proud.
Thepeople at Vivo Energy are our most
important asset and central to us delivering
ourobjectives and achieving our vision.
When we established this business in 2011 we
started with 1,269 service stations and set out
with the objective to invest to grow, expanding
and improving our network and offer.
Growth has been at the heart of our business
over the past decade. 2021 was no different, as
we have continued to invest for the future, seizing
opportunities, and opening a record number of
new service stations, with a net total of 133 new
sites opened during the year, ahead of our original
guidance. Having focused on building the right
teams for our Engen-branded markets in the first
few years following the acquisition, it has been
very pleasing to see that 55 of these net new
sites were in these countries. At the end of 2021
we had grown the Group’s network to 2,463
service stations.
Another key area of development for the
business during the year was the continuing
enhancement of our sustainability approach
and reporting. We formed a cross-functional
ESG and Climate Committee, which I chair.
In our first year we focused on confirming our
key sustainability issues through a materiality
assessment as well as the further integration
of climate considerations into the business as
part of our first Task Force on Climate-Related
Financial Disclosures (TCFD) reporting, which
are included in this report. As part of this
process, wehave accelerated the pace of the
installation of solar on our sites and looked to
broaden our low and zero carbon offerings.
We have also enhanced our Greenhouse
Gas tracking and reporting, and this, together
with another excellent safety performance
and continuing investments into communities,
provides afirmbasis for moving forward
in 2022.
OFFER FOR VIVO ENERGY
In November, our Board agreed to
recommenda transaction with BidCo, a
wholly owned, indirect subsidiary of Vitol
Investment Partnership II Limited, itself being
aninvestment vehicle advised by employees
ofthe Vitol Group (‘the Vitol Offer’).
The Vitol Offer is toacquire all of the shares in
the Company that Vitol Group don’t currently
own. This was the second unsolicited approach
made by BidCo during the year, with the Board
firmly rejectingthe first approach.
The second approach came after Vitol had
secured agreement to acquire a further 27.1%
ofthe company from Helios Investment
Partners. After detailed negotiations, the Board
was able todeliver an improved total cash
offer of $1.85 for each Vivo Energy plc share,
which represented almost a 20% increase on
the original approach in February, and over
70% higher than the prevailing price at that
time. As a result, the Board believes it has
delivered a positive outcome for all stakeholders.
Although below the IPO price in 2018, the Vitol
Offer represents an attractive valuein cash for
shareholders, and Vitol’s proven track record
of supporting our long-term growth plans will
enable us to continue to deliver benefits to
wider stakeholders.
In January 2022, shareholders voted
overwhelmingly to approve the Vitol Offer.
Regulatory approvals across a number
of themarkets where we operate are
currently being sought and we expect that
the transaction will complete in Q3 2022,
atwhichpoint VivoEnergy will be delisted.
BUILDING FOR THE FUTURE
After a decade of leading Vivo Energy,
Iamveryproud of what our teams have
achieved – sustained growth, always with
afocus on doing business the right way.
It has been a privilege to work alongside
mycolleagues. Their constant dedication has
been instrumental in our success, andI would
like to thank all of them for their outstanding
contributions over the years.
We announced the appointment of
StanMittelman as the CEO designate
in November 2021 and I am confident
he will be an excellent successor to take
VivoEnergyforward through its next
stageofgrowth, building for the future.
Stan has 30 years of experience in the
downstreamenergy sector, with much
of thattime spent in Africa, and knows at
first-hand the vast opportunity that exists on
the continent. He has a strong track record in
developing businesses and driving growth and
this – along with his genuine passion for and
understanding of Africa – make him ideally
suited to the role.
In addition to my colleagues, I would like to
thank our customers, partners, shareholders
and host governments for the support they
have shown me and Vivo Energy over the
last decade.
Vivo Energy has a very bright future ahead.
I wish the Company well and lookforward to
seeing its continued development and success.
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
BUSINESS MODEL AND VALUE CREATION
HOW WE
CREATE VALUE
Our resilient and integrated business model has
helped us rebound from the COVID-19 pandemic.
This model, together with our strong operatingculture
offocusing, simplifying and performing, creates value,
drives competitive advantage and supports our vision to
becomethe most respected energybusiness in Africa.
MANAGING OUR RESOURCES
AND RELATIONSHIPS
OUR STAKEHOLDERS
We listen to, and collaborate with, awide
range of stakeholders to grow our business
and deliver value. These include our
own people, customers, partners, local
communities, investors and shareholders,
andhost governments.
OUR ASSETS
We own or have operational control of our
well-maintained assets, including our Shell and
Engen-branded retail network, fuel storage
facilities and commercial customer facilities.
OUR PEOPLE
We benefit from a strong, decentralised and
high-performing team of 2,764 people, with
ashared goal to make a difference. Speed and
agility, doing business the right way, and a focus
on continuous HSSEQ improvement ensures
our people succeed.
OUR ENVIRONMENTAL IMPACT
We actively strive to reduce our impact on
the environment, embedding climate change
into our governance and adapting our business
to support the transition to a low-carbon
economy in the decades to come.
OUR FINANCIAL STRUCTURE
We continue to manage our financial structures
in an effective and prudent manner to drive the
success of our investment strategy and ensure
our sound financial performance.
FOR MORE
INFORMATION
SEE PAGES
40-56
SUPPLY
We supply our operations
through diverse providers,
ranging from oil traders and
government refineries to
lubricant blending plants,
ensuring cost effective
security of supply.
DISTRIBUTION
We distribute products
using strong partnerships
with trusted local transport
companies, aswell as
by pipeline and rail
wherepossible.
STORAGE
On a continent where
storage is scarce, we
store up to one billion
litres of fuels, equivalent
to one month of supply,
at either owned or
shared facilities.
The size of our footprint
and strong supplier
relationships enable
us to source fuels
athighlycompetitive prices.
Infrastructure provides
a major barrier toentry
to others, and growing
volumes drive efficiencies.
Our model provides
operational control over
road transport, enabling
us toimplement our
exacting HSSEQ standards
and controls.
– Oil price fluctuations
– Product availability
and supply
– Currency exchange risk
– Information technology
– Product availability
and supply
– Partner reputation
and relationships
– Oil price fluctuations
– Health and safety
– Partner reputation
and relationships
– Climate change
OUR INTEGRATED MODEL...
... PROVIDES A SUSTAINED COMPETITIVE ADVANTAGE...
... WHILE EFFECTIVELY MANAGING OUR RISKS
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STRATEGIC REPORT
DELIVERING POSITIVE
OUTCOMES FOR
OUR PEOPLE
– Industry-leading safety record
– Engaged employees, with nine out
oftenproud to work for Vivo Energy
– People rewarded on achievement,
resultingin low rates of resignations
CUSTOMERS
– Around a million customers served
duringanaverage day at our sites
– Extremely satisfied customers, based
onsurvey feedback
– Strong market share in our Shell-branded
markets, with growing market share
intheEngen-branded markets
– Expanding our full-site offering across
the network
– Customer-centric organisation, with
locallyempowered management teams
PARTNERS
– Supporting our retailers and working
together to become Africa’s most
respectedenergy business
– Working with Shell and Engen to
launchnew products, maximising
benefitsfor all stakeholders
COMMUNITIES
– Making a real and lasting difference
toour communities
– Promoting a better quality of life anda
moresustainable future
– Improving road safety, education
andtheenvironment in the markets
wherewe operate
INVESTORS AND SHAREHOLDERS
– Strong return on average capital employed
– Strong cash generation and supportive
working capital dynamics
– Shareholder returns
GOVERNMENTS
– Significant tax payer and collector for
host governments
– Supporting the development of transport
and infrastructure projects in our markets
RETAIL
We supply high-quality fuels, lubricants,
food and convenience retail offerings
through a network of 2,463 Shell
and Engen-branded service stations.
The majority of sites are owned by us,
but operated by local dealers, reducing
operational complexity and utilising
local knowledge.
COMMERCIAL
We supply thousands of Commercial
customers with fuels and lubricants
across the transport, infrastructure,
mining, aviation and marine sectors.
In addition, we supply LPG to consumers
andcommercial customers.
In 20 of our 23 markets, pump prices
are set by governments. Our leading
brands and strong customer offering
drive our industry-leading average
throughput per site.
We serve a diversified mix of businesses
across long‑term contracts, tender
business and spot sales, with a proven
proposition that adds value to customers
beyond supply.
– Credit management
– Currency exchange risk
– Health and safety
– Partner reputation and relationships
– Credit management
– Business concentration risk
– Health and safety
– Product availability and supply
FOR MORE
INFORMATION
SEE PAGES
22-23
FOR MORE
INFORMATION
SEE PAGES
24-25
... PROVIDES A SUSTAINED COMPETITIVE ADVANTAGE...
... WHILE EFFECTIVELY MANAGING OUR RISKS
See pages 66 to 73 for our complete list of principal risks, categorised into brand & reputational;
pricing; HSSEQ; operational; strategic; financial; and humanresources&talent management risks.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
MARKET OVERVIEW
COVID-19
IN AFRICA
The pandemic has continued to have a more limited
impact in Africa than other regions.
Despite a number of different waves of COVID-19 in
Africa during the year, by the end of 2021, fewer than
fourmillion cases had been reported in total across
our23operating countries. Although these countries
include around 6%ofthe global population, they
accountfor less than 1.5%of total global deaths.
Number of reported
COVID-19 deaths in our
markets at the end of 2021
0 -1,00 0 deat h s
1,001-5,000
5,001-10,000
10,001-20,000
20,001-30,000
Unlike the situation in 2020, when
governments in countries accounting for
approximately 50% of our volumes initiated
a range of full lockdowns in response to the
COVID-19 pandemic, in2021 governments
took a more nuancedapproach to managing
the pandemic. This varied by country and
region, but generally involved curfews,
regional restrictions and border closures
which evolved regularly, depending on the
situation. This meant that while mobility
remained constrained throughout the year,
it was to a far lesser degree than in 2020.
A number of different waves ofCOVID-19
arrived in different countries at different
times during the year, with a large wave
starting in June and continuing through
much of the third quarter. During this
period, several countries moved back into
short-term lockdowns, similar in nature to
2020, but the impact onmobility in those
markets was less than in the previous year.
While volumes in affected countries were
impacted during those periods, they did
not drop to the same extent as in 2020
and recovered swiftly when measures
were eased.
In the latter months of the year, the
intensity of restrictions were reduced in the
majority of countries where we operate,
and we saw the opening of borders in a
number of countries, such as Morocco,
that had been closed since the start of the
pandemic. This provided a much-needed
boost to countries with significant tourism
sectors. However, the COVID-19 situation
is dynamic and fluid, and the Omicron
variant that appeared late in the year led to
the imposition of certain travel restrictions
that primarily impacted southern African
countries. Following the year-end, the
majority of these travel restrictions have
once again been removed.
The provision and take-up of vaccines
has been slower than anticipated in the
majority of our sub-Saharan markets,
as delays in vaccine delivery affected
the roll-out in the first half of the year.
Even when vaccines are delivered, there
remain considerable challenges to the
roll-out including infrastructure and
vaccine hesitancy. However, a number of
countries have madeexcellent progress,
including Morocco,Tunisia and Mauritius,
which have all vaccinated the majority
of their populations and are delivering
booster vaccines.
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STRATEGIC REPORT
MARKET
DRIVERS
KEY MEGA TREND:
SUSTAINABILITY &
CLIMATE CHANGE
Across our markets, we expect fuel
demandto continue to grow and we
aim to meet this demand in the most
climate-friendly way possible. We are
already supplying lower carbon energy
alternatives, and believe that asthese
becomea more widespread reality across
Africa, we will be well positioned to
deliverthe benefits to our customers.
Last year we announced the Group’s
intention to formally embed climate-related
issues into our governance and strategy,
better enabling us to play our part as
environmental stewards while at the
same time satisfying the growing demand
for energy on the continent. In 2021
wemadegood progress on this goal.
We appreciate that for the sustainability
of our business, it is crucial to understand
the climate-related risks and opportunities
we are presented with and ensure they
are fully considered in our strategy.
We have therefore prepared our
first disclosure aligned with the TCFD
framework. We undertook climate-scenario
analysisto increase our understanding of
climate-related risks and opportunities
and the process and results are helping
us enhance the development of our
businesses and strategies. We view this
framework as an important component
of our ESGjourney and our detailed
disclosures on pages 58 to 62 provide
transparency forour stakeholderson our
climate-related preparedness. In addition to
this work, weundertook our first Group-
wide materiality assessment to identify and
confirm the keysustainability topics facing
our business. The results of this can be
found on pages38 to 39.
MACRO AND INDUSTRY TRENDS:
The effects of COVID-19 had a number
ofmacro impacts across our markets,
but have not fundamentally altered the
favourable back-drop provided by the
demographics of young and growing
populations and an emerging middle class.
There has however been an economic
impact from COVID-19, with sub-Saharan
GDP growth forecast by the IMF to be
4.0% in 2021, having fallen by 1.7% in 2020.
Prior to the pandemic, GDP growth for
the region was expected to be 3.5%in
both 2020 and 2021. In response to this
economic impact, the IMF undertook the
largest allocation of special drawing rights
in its history, which meant the region
received around $23 billion in funding.
The allocations are particularly material
for a number of countries – for example,
they represent over 5% of Zambia’s
economy – and are designed to enable
governments to rebuild reserves and
maintain accommodative monetary policy
tosupporteconomic recovery.
Mobility restrictions reduced fuel demand
in 2020, primarily due to lockdowns, but
demand returned rapidly in 2021, growing
by 9.8%. Due to the macro fundamentals,
and very limited take-up of electric vehicles
due to a lackof infrastructure and cost, fuel
demand growth is forecast to remain highly
resilient fora number of years. This will
underpin opportunities for growth in our
traditional business, with the development
ofthe continent providing opportunities
innon-fuelretail and digitisation.
FUEL DEMAND
GROWTH IN 2021
9.8%
FUEL DEMAND IN OUR MARKETS IS PREDICTED
TO GROW IN THE MEDIUM TERM
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
150
140
130
120
110
100
90
80
Indexed historic and forecast product
demand in our 23 markets
+38%
Source: CITAC
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR STRATEGY
Our strategy supports
our commitment to grow
with purpose, meeting the
increasing energy needs of
avibrant African continent.
OUR STRATEGY
5
WE HAVE FIVE
KEY STRATEGIC
OBJECTIVES:
1 2
REMAIN A RESPONSIBLE
AND RESPECTED BUSINESS
IN THE COMMUNITIES IN
WHICHWE OPERATE
Our vision is to become Africa’s
mostrespected energy business.
This means being a respected member
of the communities in which we operate,
doing business the right way, and aiming
to operate to the highest HSSEQ and
operational standards.
HIGHLIGHTS FROM THE YEAR
– Progressed our ESG journey by
reporting our first TCFD,although
Greenhouse Gas targetsstill tobe set.
– Completed a materiality assessment
toconfirm keysustainability topics.
– Supported over 120 community
investment projects across the Group.
– Achieved another strong health and
safety performance, ahead of targets
andindustry benchmarks.
PRESERVE OUR LEAN
ORGANISATIONAL STRUCTURE
AND PERFORMANCE-
DRIVEN CULTURE
Since our formation in 2011, our
business has been built on a flat,
customer-centric organisation with
alean central management team.
Our ‘Focus, Simplify, Perform’ operating
culture enables fast decision-making,
encourages agility, and is fundamental
toourcompetitive position.
Our locally empowered country teams,
overseen by an experienced and responsive
Senior Executive Team, have also been
instrumental in our success.
HIGHLIGHTS FROM THE YEAR
– Continued to support our employees to
work flexibly and often remotely as they
navigated the ongoing restrictions caused
by COVID-19.
– Introduced new ways to improve
employee engagement, driving up
performance and business results.
– Conducted an employee engagement
survey where 71% of respondents
believe the organisation works in a
simplified and focused way to deliver
results and performance.
1
To remain a responsible
and respected business in
the communities in which
weoperate
2
To preserve our lean
organisational structure and
performance-driven culture
3
To ma ximise the value
ofourexisting business
4
To pursue value-accretive
growth
5
To maintain attractive
and sustainable returns
through disciplined
financialmanagement
TAASA OBUTONDE
Our team in Uganda developed
an ongoing plastic waste pollution
campaign, bringing together various
stakeholders including the government,
environmentalists, the national
broadcaster and other companies.
This behavioural change campaign –
including plastic waste collection points
at a number of our service stations
– hasreceived very positive feedback
andhelpedposition Vivo Energy Uganda
asasocially responsible company.
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STRATEGIC REPORT
3 4 5
MAXIMISE THE VALUE OF
OUR EXISTING BUSINESS
We’ve continued to innovate, offering
our customers differentiated, recognised
and high-quality fuel and Non-fuel retail
products and services.
Utilising our multiple trusted and valued
brands – including Shell and Engen – has
helped improve the customer experience,
generate new revenue streams and
maximise cross-selling opportunities.
The optimisation and further development
of our existing retail network is a key
strategic focus.
HIGHLIGHTS FROM THE YEAR
– Continued our site automation
programme, automating an additional
278 sites to improve efficiency.
– Used the mobile app and loyalty
programme to help personalise
relationships, increasing loyalty
programme membership to
around1.8 million.
– Added a net total of 128 new
Non-fuelretail shops, pharmacies
andfood outlets at our service
stationsto provide convenience
andquick service toour customers.
– However, our overall volumes
wereslightly behind 2019, on
alike-for-like basis.
PURSUE
VALUE-ACCRETIVE
GROWTH
We expanded our retail network
by building new service stations,
acquiring new sites and upgrading
existing retail sites to fulfil
unrealised potential.
One of our main focuses is to add
morenon-fuel convenience retail and
quick service restaurant offerings through
partnerships with well-established
globaland regional brand partners.
In parallel, we plan to harness the
opportunities presented by mining,
construction and infrastructure projects
in Africa, to contribute to the continued
growth of our Commercial and
Lubricants businesses.
HIGHLIGHTS FROM THE YEAR
– Added an additional net total of 133
newservice stations across our markets.
– Improved our existing sites, with
326 being refurbished under
the‘Shiningsites’programme.
– Developed our Power offering,
engagingwith prospects across
anumberof markets.
MAINTAIN ATTRACTIVE
AND SUSTAINABLE RETURNS
THROUGH DISCIPLINED
FINANCIAL MANAGEMENT
We have a strong financial and
operational track record, backed
bydisciplined capital allocation.
This is underpinned by a robust financial
controls framework and comprehensive
internal audit process with strict credit
andcurrency exposure management.
HIGHLIGHTS FROM THE YEAR
– Due to our strong balance sheet, the
dividend payout ratio was increased
from 30% to 50% of attributable
net income.
– Volume growth and strict capital
allocation enabled recovery in ROACE
to 19% compared to 12% in 2020.
– Strong cash generation led to the
leverage ratio falling from 0.86x
to0.45xat the end of the year.
TERMINAL AUTOMATION SYSTEM
Our continued upgrade of the terminal
automation system has enabled
increased efficiencies in the loading
processes across the depots as well as
improved stock control. Theprogramme
automates the gantry atthe depot
loading bays, to automatically load
product to our contractors’ trucks
andimprove systems and controls.
RWANDA GROWTH
We have developed a master plan
toidentify opportunities in preferred
market areas. During the course
of the last two years the team in
Rwanda grewthe network organically
and acquired local competitors,
focused onKigali, to drive its
accelerated growth programme,
significantly increasingthe number
ofservicestationsfrom 23 to 44.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR KPIs
KEY PERFORMANCE INDICATORS
FINANCIAL KPIs
GROWTH KPIs
GROSS CASH PROFIT
U
S$ MILLION
20
21
2020
2
019
2
018
2
017
777
3 4 5
697
743
680
666
VOLUMES
MILLION LITRES
20
21
2020
2
019
2
018
2
017
10,302
3 4 5
9,637
10,417
9,351
9,026
ADJUSTED EBITDA
U
S$ MILLION
20
21
2020
2
019
2
018
2
017
447
32 4 5
360
431
400
376
TOTAL RETAIL SERVICE STATIONS
20
21
2020
2
019
1
2
018
2
017
2,463
3 4 5
2,330
2,226
1,900
1,829
DEFINITION
Gross profit after direct operating expenses and before non-cash depreciation
andamortisation recognised in cost of sales. Referenceto‘cash’ in this measure
referstonon-cash depreciation and amortisation as opposed to the elimination
ofworking capital movements.
Performance drivers
– Volumes and gross cash unit margins performance
DEFINITION
Total product volumes sold during the year.
Performance drivers
– Macroeconomic drivers influencing demand
– Sales and promotion activities
– Loyalty card system
– New and existing contracts with commercial customers and cross-selling
DEFINITION
Earnings before interest, tax, depreciation and amortisation adjusted for impact
ofspecialitems.
Performance drivers
– Volumes and gross cash unit margins performance
– Optimised cost structure and cost management
– Share of profit from investments in joint ventures andassociates
HSSEQ KPIs
TOTAL RECORDABLE CASE FREQUENCY (TRCF)
PER MILLION EXPOSURE HOURS
20
21
2020
2
019
2
018
2
017
0.04
1
0.10
0.04
0.19
0.10
TOTAL PRODUCT LOST
METRIC TONNES
20
21
2020
2
019
2
018
2
017
18.4
1
1.7
7.5
45.4
50.4
DEFINITION
TRCF per million exposure hours.
Performance drivers
– Using potential incident reporting to prevent incidents from happening
– Training and competency development for continuous HSSEQ improvement
– Focus on personal safety, road transport safety and security
DEFINITION
Product lost to the environment.
Performance drivers
– Ensuring that safe working practices are followed: stringent
contractorsafetyrequirements; driver training and monitoring
DEFINITION
Total number of revenue generating retail service stations.
Performance drivers
– Self-funding capital expenditure through operating cash flow
– Significant white space opportunity
– Securing land leases and strategically located sites
1 2019 includes more than 200 retail service stations acquired
aspartoftheEngen acquisition.
These KPIs show our performance for 2021 in
comparison to the past four years, togetherwith a
brief explanation of thekeydrivers. We’ve chosen
to use Financial, Growthand HSSEQKPIs inorder
toprovide aroundedview ofour performance.
STRATEGIC REPORT
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FINANCIAL KPIs
GROWTH KPIs
NET INCOME
U
S$ MILLION
20
21
2020
2
019
2
018
2
017
152
32 4 5
90
150
146
130
ADJUSTED FREE CASH FLOW
US$ MILLION
2021
2020
2019
2018
2017
311
3 4 5
112
325
154
143
DEFINITION
Net income in accordance with IFRS/GAAP.
Performance drivers
– EBITDA performance
– Effective tax rate management
– Optimised capital and finance structure
GROSS CASH UNIT MARGIN
U
S$/’000 LITRES
20
21
2020
2
019
2
018
2
017
75
3 4 5
72
71
73
74
ROACE
%
2021
2020
2019
2018
2017
19
32 4 5
12
21
23
25
DEFINITION
Gross cash profit per 1,000 litres of sales volume.
Performance drivers
– Pricing structure in regulated markets ensures stable margins
– Competitive pricing strategies in deregulated markets
– Foreign currency exposure risk management to ensure
USdollarmarginsareprotected
– Optimised supply chain and efficient operations
– Increased penetration of differentiated fuels
DEFINITION
Adjusted EBIT after income tax divided by the average capital employed. Average capital
employed isthe average of opening and closing net assets plus borrowings and lease
liabilities, lesscash and cashequivalents and interest bearing advances.
Performance drivers
– Disciplined capital allocation with rigorous return requirements
– Incentivise performance: employee compensation linked to ROACE
HSSEQ KPIs
TOTAL SCOPE 1 & 2 EMISSIONS
1
KT OF CO
2
EQUIVALENT
20
21
2020
2
019
21.94
1
21.75
22.87
EMPLOYEE & CONTRACTOR FATALITIES
NUMBER
2021
2020
2019
2018
2017
0
1
0
0
1
0
DEFINITION
Emissions from combustion of fuel, electricity, heat, steam and cooling.
Performance drivers
– Increasing efficiencies across our operations
– Adding solar initiatives
1 Scope 1 & 2 emissions data available from 2019.
DEFINITION
Fatal occupational injuries and illnesses, except those related to COVID-19.
Performance drivers
– Risk assessment and mitigation
– Potential incident reporting to prevent incidents from happening
– HSSEQ competency review and training programme
DEFINITION
Cash flow from operating activities less net additions to property, plantand equipment
(PP&E) and intangible assets and excluding theimpact of special items.
Performance drivers
– High conversion from EBITDA to free cash flow
– Structurally negative working capital
1 2 3 4 5
NON-GAAP MEASURES ARE EXPLAINED
ANDRECONCILED ON PAGES 36-37
LINKED TO STRATEGIC OBJECTIVE:
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202120 21VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
SEGMENT REVIEW
Volumes
59%
Adjusted EBITDA
58%
Gross cash profit
63%
– Accelerated growth in our network
by adding a net total of 133 new
service stations and adding a net
totalof 128 Non‑fuel retail outlets
– Volumes were up by 12% from
5,456 million litres in 2020 to
6,090million litres in 2021
– Gross profit (including Non‑fuel
retail) was up 13% from $387 million
to $436 million in 2021
– Gross cash profit (including Non‑fuel
retail) was up 12% to $490 million
– Gross cash unit margin
(excludingNon‑fuel retail)
was broadly in line with 2020,
at$75perthousand litres
– Premium fuel gross cash profit
wasup 8% year‑on‑year
– Adjusted EBITDA was
up20%to$259 million
2021 HIGHLIGHTS
RETAIL BUSINESS CONTRIBUTION TO GROUP
Retail 59%
Commercial 39%
Lubricants 2%
Retail 58%
Commercial 26%
Lubricants 16%
Retail 63%
Commercial 25%
Lubricants 12%
DRIVING GROWTH
We continued to invest
inour Retail network by
growing our retail sites
toatotal of 2,463 in 2021.
PERFORMANCE
US$ million, unless otherwise indicated 2021 2020 +/– %
Volumes (million litres) 6,090 5,456 +12%
Gross profit (including Non‑fuel retail) 436 387 +13%
Gross cash unit margin (excluding Non‑fuel retail) ($/’000 litres) 75 76 -1%
Retail fuel gross cash profit 458 412 +11%
Non‑fuel retail gross cash profit 32 26 +23%
Adjusted EBITDA 259 216 +20%
RETAIL
ACCELERATING GROWTH
AND PERFORMANCE
With a strong focus on growth, Retail remains at the heart
ofour business. As one of Africa’s largest retailers we continue
to enhance our Retail site offerings to attract customers across
the continent. Our modern, safe and clean sites provide our
customers with access to high-quality products, services and
increased convenience.
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STRATEGIC REPORT
2021 REVIEW
Our Retail business segment remains the
key driver of the Group’s recovery from the
impact of COVID‑19. The easing of mobility
restrictions and our accelerated site roll‑out
programme supported the volume recovery
throughout the year. The segment’s KPIs,
volumes, gross cash profit and adjusted
EBITDAwere ahead of 2020, as well as
the2019 pre‑pandemic period.
RETAIL FUEL
Retail fuel volumes were 12% and 3% higher
compared to 2020 and 2019, respectively.
This performance was supported by many of
our markets experiencing lighter COVID‑19
restrictions in 2021 compared to those
imposed in 2020. During the year, countries
looked to regional restrictions and curfews to
manage COVID‑19 rather than full lockdowns.
Our continued focus on expanding the Retail
network, in both Shell and Engen‑branded
markets, further contributed to volume
recovery. During the year we opened a
net total of 133 new retail sites, which was
21%ahead of our initial guidance for the year.
This was driven by excellent progress in the
Engen‑branded markets, where we opened
55net new sites, expanding the network
inthose markets by21%.
The Group continued to progress its
‘Shiningsites’programme to enhance the
customer experience at our sites as well
as running a range of promotions, such as
‘clean and safe sites’, new fuel launches and
targeted marketing campaigns. These initiatives
generated increased traffic to our sites which
contributed tovolume growth during the year.
Premium fuel volumes increased by 28% and
gross cash profit was up 8% compared to the
prior year. The market penetration of premium
fuels continued to increase, mainly driven
by marketing campaigns, active pricing and
network expansion.
Gross cash unit margin remained strong at
$75per thousand litres, broadly in line with the
prior year at $76 per thousand litres. The gross
cash unit margin in 2021 and 2020 benefitted
from a positive supply and pricing environment,
and despite volatility due to COVID‑19, unit
margins in both years were ahead of 2019.
NON-FUEL RETAIL
Gross cash profit increased from $26 million
in 2020 to $32 million in 2021, mainly due to a
higher footfall resulting from reduced mobility
restrictions and an increased number of
Non‑fuel retail outlets.
Our continued focus on expanding our
Non‑fuel retail customer offerings resulted in
the opening of a net total of 96 convenience
retail shops and pharmacies and 32 food
outletsacross our service stations.
Gross cash profit was 3% behind 2019 levels,
primarily due to the continuedimpact of
curfews across the portfolio, whichaffected
theevening trade at our quick service
restaurants (QSR), as well as regional
restrictions reducing the number of customers
at highway sites. This was offset by the
consumer trend towards increasing use of
takeaway and delivery services in many of our
markets. The Group has focused on ensuring
itsofferings are available on local aggregator
food delivery platforms.
In convenience retail, we continued to adapt
and enhance our product lines to meet our
customers’ changing demands. We continued
to prioritise our customers’ health and safety by
ensuring clean and safe sites in all our markets.
LOOKING FORWARD
In 2022, we will continue to focus on expanding
and enhancing our network in both the Shell
and Engen‑branded markets. We believe
there is still significant opportunity to grow
our network through expansion of new sites
in 2022. We will also continue to maximise
the value of our existing sites by looking at
opportunities to drive like‑for‑like growth.
We will continue to build our Non‑fuel retail
offering. In addition, we will maintain focus
on expanding our joint venture portfolio
with new QSR partners, bringing a range
ofnew international fast‑food brands
toourAfrican markets.
INTERNATIONAL
BRANDS
We continue to bring
international brands to our
markets and enhance our
convenience retail offerings.
$32m
NON-FUEL RETAIL
GROSS CASH PROFIT
+8%
PREMIUM FUEL
GROSS CASH PROFIT
YEAR-ON-YEAR
GROWTH
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202122 23VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
SEGMENT REVIEW CONTINUED
Volumes
39%
Adjusted EBITDA
26%
Gross cash profit
25%
– Volumes were flat year‑on‑year
mainly due to the completion
ofalarge low‑margin supply
contractin 2020
– Excluding the supply contract,
volumes were 6% ahead of 2020
– Improved performance in
Aviationand Marine, with
volumesup20%year‑on‑year
– Gross cash unit margin was up
7%to$48 per thousand litres
– Gross profit was $168 million,
8%higher than the previous year
– Adjusted EBITDA was up 26%
year‑on‑year to $116 million
2021 HIGHLIGHTS
COMMERCIAL BUSINESS CONTRIBUTION TO GROUP
STRONG PERFORMANCE
Core Commercial
volumes were driven
bystrong performance
inthereseller market.
PERFORMANCE
US$ million, unless otherwise indicated 2021 2020 +/– %
Volumes (million litres) 4,063 4,045 0%
Gross profit 168 156 +8%
Gross cash unit margin ($/’000 litres) 48 45 +7%
Gross cash profit 194 181 +7%
Adjusted EBITDA 116 92 +26%
COMMERCIAL
VALUE-LED
CUSTOMER OFFERINGS
Our adaptable business model ensures our ability to meet the
changing demands of our customers across a range of sectors
including mining, construction, power, road transport, aviation
and marine. We meet the needs of our business partners
through a comprehensive range of products supported
byextensive and trusted services.
Retail 59%
Commercial 39%
Lubricants 2%
Retail 58%
Commercial 26%
Lubricants 16%
Retail 63%
Commercial 25%
Lubricants 12%
STRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202124
2021 REVIEW
Volumes in our Commercial segment
remained flat year‑on‑year, mainly due to
the completion of a large low‑margin supply
contract in September 2020. Excluding the
supply contract, volumes were 6% higher
year‑on‑year but 3%behind 2019. Gross cash
unit margin of $48per thousand litres was up
7% compared to 2020 and slightly behind 2019.
Gross cash profit was 7% higher year‑on‑year
at $194 million (2020:$181 million) and 9%
behind 2019.
CORE COMMERCIAL
Our Core Commercial business offers a
range of services including the supply of
bulk fuel to customers in the transportation,
mining, construction and power sectors,
as well as LPG to both consumers and
industry. Core Commercial accounted
for 83%(2020: 85%) of total Commercial
volumesand 87% (2020: 93%) of overall
Commercial gross cash profit.
Core Commercial volumes were 3% lower
year‑on‑year, however, excluding the large
low‑margin supply contract, volumes were
4%higher year‑on‑year and 8% ahead of 2019.
Volumes were driven by a strong performance
in the reseller market and increased demand
from the mining sector.
Gross cash unit margin increased by
2%, from$49 per thousand litres in
2020 to $50per thousand litres in 2021.
This year‑on‑year increase was supported
by a change in the product mix, resulting
inincreased sales of higher margin
products,as well as negative inventory
effectsimpactingperformance in 2020.
AVIATION AND MARINE
The Aviation and Marine business
accounted for 17%of overall Commercial
volumes(2020: 15%) and 13% of total
Commercial gross cash profit (2020: 7%),
and continues to be significantly impacted
byCOVID‑19 mobility restrictions.
Aviation and Marine volumes increased by
20%against the previous year, but remained
36% below 2019. Gross cash unit margin
increased from $21 perthousand litres in
2020to $37 per thousand litres in 2021
and6%ahead of 2019.
The Aviation business experienced the
beginnings of a recovery with volumes
26%ahead of the prior period, mainly due
tothe re‑opening of international travel, local
flights as well as an increase in cargo flights in
many of our markets. Volumes were still 43%
behind 2019 as the recovery in international
travel remains in its early stages and subject
to regular changes due to COVID‑19 related
policies. The gross cash unit margin was
significantly higher than 2020, which was
impacted by negative inventory effects.
The Marine business also experienced a
recovery, with volumes 12% higher than the
prior year. This was mainly attributable to
ourcontinued efforts to secure opportunistic
spot sales during the year.
LOOKING FORWARD
In 2022, we will remain focused on driving
growth within our Core Commercial business.
We plan to continue implementing our
adaptable business model and opportunistic
approach to ensure our offering meets market
demand. While the impacts of COVID‑19
continue to restrict performance in the
Aviation and Marine markets, we will remain
flexible to meetthe needs of our customers.
PRODUCT MIX
Improved gross cash
profitsupported by a
change in product mix.
+20%
AVIATION AND
MARINE VOLUMES
YEAR-ON-YEAR
GROWTH
+7%
TOTAL COMMERCIAL
GROSS CASH PROFIT
UP YEAR-ON-YEAR
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
25VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
SEGMENT REVIEW CONTINUED
Volumes
2%
Adjusted EBITDA
16%
Gross cash profit
12%
– Volumes were up 10% year‑on‑year
and 9% ahead of 2019
– Gross cash unit margin was $628per
thousand litres, up 10% year‑on‑year,
and 15% ahead of 2019
– Gross profit was up
20%to$89million
– Adjusted EBITDA was up 38%
to$72 million year‑on‑year
and33%above 2019
2021 HIGHLIGHTS
PERFORMANCE
LUBRICANTS BUSINESS CONTRIBUTION TO GROUP
PRODUCT MIX
Successful introduction
ofShell‑branded
lubricantsin our
Engen‑branded markets.
US$ million, unless otherwise indicated 2021 2020 +/– %
Volumes (million litres) 149 136 +10%
Gross profit 89 74 +20%
Revenues 455 366 +24%
Gross cash unit margin ($/’000 litres) 628 570 +10%
Gross cash profit 93 78 +19%
Adjusted EBITDA 72 52 +38%
LUBRICANTS
AWARD-WINNING
PRODUCT PORTFOLIO
We blend, distribute and sell high-quality lubricants across
Africa – on our forecourts to Retail customers, to other
Retailcustomers through distributors, and to our Commercial
customers. Our extensive range of leading-edge products
provide value to all these customers.
Retail 59%
Commercial 39%
Lubricants 2%
Retail 58%
Commercial 26%
Lubricants 16%
Retail 63%
Commercial 25%
Lubricants 12%
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202126 27VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
2021 REVIEW
Our Lubricants segment delivered
strong performance during the year.
Volumes were 10% higher year‑on‑year and
9% higher than2019. Unit margins were up
10%year‑on‑year at $628 per thousand litres
(2020:$570per thousand litres) mainly due
to favourable base oil prices. Gross cash profit
of $93million was 19%higher year‑on‑year,
primarily attributable to improved unit margins
and volumes. Adjusted EBITDA and gross cash
profit were 33% and 24%,respectively, ahead
of 2019.
RETAIL LUBRICANTS
Our Retail lubricants business involves the sale
of products from our service station forecourts
to Retail customers, and to other consumers
(B2C) through distributors. Retail lubricants
accounted for 64% of total segment volume
(2020: 62%) and 62% of segment gross cash
profit (2020: 63%).
Volumes were 13% higher than the prior
year and 14% ahead of 2019. The strong
performance in 2021 is attributable to higher
traffic at our retail sites resulting from lighter
COVID‑19 mobility restrictions in the current
period and our ability to continue to source
products in certain constrained markets.
Our marketing campaigns and promotions
havealso contributed to the improved volumes.
Unit margins increased by 7%, from $577per
thousand litres in 2020 to $616perthousand
litres. This increase is primarily attributable
to the temporary benefit of lubricant price
increases in H1 2021 offsetting increasing
product costs and a change in product mix
dueto an increase in premium products sold.
COMMERCIAL LUBRICANTS
We sell Commercial lubricants to customers
across our operating units and also to
export customers in other countries across
Africa. Commercial volumes accounted for
36%oftotal Lubricants volume (2020: 38%)
and 38%of gross cash profit (2020: 37%).
Volumes were 4% ahead of the prior year,
primarily due to increased demand from
the mining sector in both our domestic
andexport markets.
Unit margins increased by 14% year‑on‑year,
from $569 per thousand litres to $648per
thousand litres. The increase is mainly
attributable to the favourable pricing
environment as well as the sale of products
with higher margins. The business also
completed the transition to Shell‑branded
lubricants for non‑Retail customers in our
Engen‑branded markets, which has further
contributed to the positive performance
ofthegross cash unit margins.
LOOKING FORWARD
The Group has delivered a strong performance
in 2021 and we will look to build on this in
2022. We believe our innovative products and
services enable us to deliver a differentiated
product to our customers, enhancing the
brand’s reputation and driving growth.
We will continue to explore opportunities
to grow the Lubricants business both locally
within our markets as well via exports across
the African continent. The introduction of
Shell‑branded lubricants in our Engen‑branded
markets has been successful and we look to
expand our market position in these countries.
COMMERCIAL
LUBRICANTS
Commercial lubricants
volumes supported
bythemining sector.
+10%
LUBRICANTS
VOLUME UP
YEAR-ON-YEAR
+19%
GROSS CASH PROFIT
YEAR-ON-YEAR
INCREASE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202126 27VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL REVIEW
While we are still very
much a growth business,
we continue to deliver
strong returns for
ourshareholders.”
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER
CHIEF FINANCIAL
OFFICER’S STATEMENT
DOUG LAFFERTY
I’m delighted to be able to report such a strong
set of results for Vivo Energy. Our high-quality
team has contributed significantly to the
continued recovery of the business amidst
theongoing impacts of COVID-19.
While I would have liked to have travelled
tomore of our operating units, Iwas able to
visit a number of them in the second half of the
year as some restrictions eased. These visits
provided me with an opportunity to spend
time with our local teams and to better
understand the specific operating units, and the
wider business in general.
As a result of the strong performance in
H22020, our inaugural bond offering in
September 2020, and our strong balance sheet,
one of the decisions we were able to make
early in the year was to increase our dividend
payout ratio from 30% to 50% of attributable
net income. This demonstrated that while
we are still very much a growth business,
weare also able to deliver strong returns
forour shareholders. The policy change came
on top of the Board’s decision to catch-up
deferred dividends in 2020 and to maintain
theprogressive policy, which meant that todate
we have paid over $100 million individends
since the start of the pandemic.
A STRONG
RECOVERY
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STRATEGIC REPORT
Even with these cash returns, the business
continues to have low gearing, and a
conservative leverage ratio of 0.45x at
year‑end. This is a result of the strong cash
flow we continued to generate through our
business model and our position as a provider
of essential products to the African continent.
Our cash flow enabled us to allocate capital to
accelerate the growth of the Retail network
during the year, and it was very pleasing to be
able to deliver 133 net new sites this year, 21%
ahead of the top of our initial guidance range,
which in itself was ahead of the previous year’s
range. This acceleration has been achieved
while maintaining our strict return criterion
of only approving projects where we expect
to achieve at least a 20%IRR. We continue
toassess our investments against expectations
and over the past few years we have delivered
returns substantially ahead of this.
We have also spent considerable time assessing
the risks and opportunities that may result from
climate change in the coming years, as part of
our inaugural TCFD reporting. We will continue
to integrate climate change into our business
planning and strategy as we move forward.
A significant amount of time during the year
was spent responding to the Vitol Offer, first
in Q1 2021 and then in Q3 2021. Ultimately,
the Board recommended a transaction, having
secured a price that was over 70% higher
than the prevailing share price at the time of
the initial offer. I believe we have delivered a
positive outcome for all stakeholders, with
shareholders now having voted overwhelmingly
to support the transaction. It has been an
exciting year and I have no doubt the team will
continue to help drive the business forward
and ensure that our capital continues to be
allocated effectively across the portfolio.
As recently announced, I will be leaving the
Group in 2022 to take up a role elsewhere.
I have greatly enjoyed my time at Vivo Energy
and am proud of the contribution I was able
tomake across the business and that the strong
performance of the Group continued during
my tenure. I firmly believe that the strategy is
right, and the opportunity exists, to provide
long‑term benefits to our customers and
broader stakeholders.
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER
1 MARCH 2022
Volumes were up 7% year-on-year, as countries experienced
lighter COVID-19 mobility restrictions.
Total gross cash unit margin was higher year-on-year at
$75perthousand litres (2020: $72 per thousand litres),
asaresult of the higher-margin product mix and positive
pricingenvironment.
Gross cash profit was $777 million, 11% higher year-on-year
asaresult of the improved volumes and unit margins.
Adjusted EBITDA was up 24% to $447 million, mainly due
tohigher gross cash profit.
Adjusted diluted EPS of 11 cents per share for the 2021 year
(2020: 6 cents per share).
Adjusted free cash flow improved by $199 million to $311million
from $112 million in 2020.
Paid an interim dividend of 1.7 cents per share, and declared a
further interim dividend of 4.0 cents per share in respect of the
2021 year, bringing the full year dividend to 5.7 cents per share.
Non-GAAP measures are explained and reconciled on pages 36 and 37.
2021 HIGHLIGHTS
VOLUMES
Million litres
10,302
+7%
ADJUSTED EBITDA
US$ million
447
+24%
GROSS CASH PROFIT
US$ million
777
+11%
NET INCOME
US$ million
152
+69%
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202128 29VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
CONSOLIDATED RESULTS OF OPERATIONS
FINANCIAL REVIEW CONTINUED
US$ million
2021
2020
Change
Revenues 8,458 6,918 +22%
Cost of sales (7,765) (6,301) +23%
Gross profit 693 617 +12%
Selling and marketing cost (222) (226) -2%
General and administrative cost (185) (176) +5%
Share of profit of joint ventures and associates 27 16 +69%
Other income/(expense) (1) 4 -125%
EBIT 312 235 +33%
Finance expense – net (59) (60) -2%
EBT 253 175 +45%
Income taxes (101) (85) +19 %
Net income 152 90 +69%
Earnings per share (US$)
2021
2020
Change
Basic 0 .11 0.06 +83%
Diluted 0 .11 0.06 +83%
US$ million, unless otherwise indicated
2021
2020
Change
Volumes (million litres) 10,302 9,637 +7%
Gross cash profit 777 697 +11%
EBITDA 442 360 +23%
Adjusted EBITDA 447 360 +24%
ETR (%) 40% 49% n/a
Adjusted net income 157 90 +74%
Adjusted diluted EPS (US$) 0 .11 0.06 +83%
Non-GAAP measures are explained and reconciled on pages 36 and 37.
SUMMARY INCOME STATEMENT
NON-GAAP MEASURES
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202130 31VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS
VOLUMES
Overall volumes of 10,302 million litres were
7% ahead of 2020 and slightly behind 2019,
reflecting the lighter mobility restrictions
in our markets during the year, with most
operating units returning to volume growth.
This strong performance was mostly driven by
the expansion of the Retail network across our
portfolio and the continuing business recovery
from the impact of COVID-19, partially offset
by the end of a large low-margin supply
contract in the Commercial segment in 2020.
REVENUE
Revenue increased by $1,540 million, from
$6,918 million in 2020 to$8,458 million in 2021.
The increase is primarily attributable to higher
average crude oil prices and volume growth
during the year.
COST OF SALES
Cost of sales were $7,765 million, $1,464 million
above the prior year (2020:$6,301 million),
mainly due to the increase in the cost of
inventory as a result of higher crude oil prices.
Higher purchases, in line with the increase in
demand, further contributed to the increase
during the period.
GROSS PROFIT
Gross profit increased by $76 million to
$693million (2020: $617 million) due to
increased volumes as a result of lighter
COVID-19 mobility restrictions and higher
unit margins.
GROSS CASH PROFIT
Gross cash profit was up 11% year-on-year,
increasing from $697 million to $777 million,
primarily driven by higher volumes and strong
unit margins. Gross cash unit margin was
$75perthousand litres, 4% higher than 2020,
which was negatively affected by COVID-19
related inventory effects and a $2 million
negative impact from hyperinflation accounting.
In 2021, gross cash profit also benefitted from
ahigher margin product mix.
SELLING AND MARKETING COST
Selling and marketing cost amounted
to $222 million, marginally lower than
2020($226 million), mainly due to a lower
expected credit loss, partially offset by the
appreciation of local currencies and increased
spending on marketing campaigns in 2021.
GENERAL AND
ADMINISTRATIVECOST
General and administrative cost, including
special items, was $185 million, 5% higher than
the prior year (2020: $176 million), mainly due
to an increase in manpower costs.
SHARE OF PROFIT FROM JOINT
VENTURES AND ASSOCIATES
Share of profit from joint ventures and
associates increased by 69% to $27 million
(2020:$16 million), mainly due to the higher
share of profit from Shell and VivoLubricants
and our joint ventures in Morocco.
OTHER INCOME/EXPENSE
Other income/expense was -$1 million
compared to +$4 million in 2020, which
included gains from disposals of property,
plantand equipment.
ADJUSTED EBITDA
Adjusted EBITDA was 24%upyear-on-year
to $447 million (2020: $360 million).This was
primarily due to increased sales volumes and
improved unit margins.
NET FINANCE EXPENSE
Net finance expense decreased by $1 million
to $59 million, from $60 million in 2020
which was impacted by a mark-to-market
loss on the settlement of interest rate swaps
as part of the notes offering. The decrease
is further explained by a lower impact from
hyperinflationary accounting. The decrease was
partially offset by a foreign exchange loss (gain
in 2020), and higher interest on lease liabilities
due to new leases in the current year.
INCOME TAXES
The ETR decreased to 40% from 49%
compared to 2020. This was predominantly
due to the higher earnings before tax of
$253 million (2020: $175 million) resulting
inalower relative impact of expenses which
are not tax deductible and withholding tax
onupstreamed dividends and central fees.
NET INCOME
Net income, including the impact of special
items, was up by $62 million to $152 million
(2020: $90 million). Minority interest was
$12million (2020: $10 million).
EARNINGS PER SHARE
Basic earnings per share amounted to
11cents per share (2020: 6 cents per share).
Adjusted diluted earnings per share, excluding
the impact of special items, were 11 cents
pershare (2020: 6 cents per share).
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202130 31VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
US$ million, unless otherwise indicated
2021
2020
Change
Volumes (million litres)
Retail 6,090 5,456 +12%
Commercial 4,063 4,045 0%
Lubricants 149 136 +10 %
Total 10,302 9,637 +7%
Gross profit
Retail (including Non-fuel retail) 436 387 +13%
Commercial 168 156 +8%
Lubricants 89 74 +20%
Total 693 617 +12%
Gross cash unit margin ($/’000 litres)
Retail fuel (excluding Non-fuel retail) 75 76 -1%
Commercial 48 45 +7 %
Lubricants 628 570 +10%
Total 75 72 +4%
Gross cash profit
Retail (including Non-fuel retail) 490 438 +12%
Commercial 194 181 +7 %
Lubricants 93 78 +19%
Total 777 697 +11%
Adjusted EBITDA
Retail 259 216 +20%
Commercial 116 92 +26%
Lubricants 72 52 +38%
Total 447 360 +24%
OVERVIEW OF OPERATIONS BY SEGMENT
RETAIL
2
020
20
21
438
490
Gross cash profit
US$ millio
n
LUBRICANTS
2020
2021
78
93
Gross cash profit
US$ millio
n
COMMERCIAL
2020
20
21
181
194
Gross cash profit
US$ millio
n
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202132 33VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
CONSOLIDATED FINANCIAL POSITION
ASSETS
Trade receivables increased by $117million,
from $344 million in 2020 to $461 million in
2021, mainly due to higher crudeoil prices and
increased sales volumes during the period.
Average monthly DSO
1
for theperiod was
15days (2020: 16 days).
The increase in inventories of $84 million, from
$480 million in 2020 to $564 million in 2021,
related to higher crude oil prices and increased
market demand. Average inventory days for
the period was 26days (2020: 29 days).
Other assets increased by $81 million, from
$317 million in 2020 to $398 million in 2021,
mostly due to increases in other government
benefits receivable arising from new subsidy
balances in some of our markets.
Cash and cash equivalents increased by
$72million from $515 million in 2020 to
$587 millionin 2021. The increase was largely
attributable to the higher cash inflow from
operations, partially offset by dividends
paid, and the repayment of the revolving
credit facility.
Property, plant and equipment increased
by $49 million from $889 million in 2020
to $938 million in 2021. Right-of-use assets
increased by $18 million, from $201 million in
2020 to $219 million in 2021. These increases
are mainly due to the continued expansion
of our Retail network, partially offset by
depreciation for the year.
Investments in joint ventures and associates
increased by $2 million, from $231 million in
2020 to $233 million in 2021. The increase is
primarily due to the share of profit received
from joint ventures and associates amounting
to $27 million, partially offset by dividends
received of $22 million.
EQ UITY
Total equity increased by $71 million from
$812 million in 2020 to $883 million in 2021,
mainly due to total comprehensive income
for the year of $142million. This increase was
partially offset by dividends paid, amounting
to$76million during the period.
LIAB ILITIES
Trade payables increased by $386 million from
$1,048 million in 2020 to $1,434 million in 2021.
The increase is primarily due to higher crude
oil prices and increased product demand in
thecurrent year. Favourable payment terms
agreed with suppliers further contributed to
the increase. Average monthly DPO
1
for the
period was 57 days (2020: 54 days).
The increase in lease liabilities of $18 million
from $143 million in 2020 to $161 million
in 2021, is predominantly due to new lease
agreements, partially offset by the repayment
of lease instalments in the period.
The decrease in borrowings of $53 million
from$682 million in 2020 to $629 million
in2021 is mainly due to the repayment of
therevolving credit facility.
DIVIDENDS
The Board has adopted a progressive
dividendpolicy while maintaining an appropriate
level of dividend cover and sufficient financial
flexibility in the Group.
In March 2021, the Board increased the
minimum payout ratio from 30% to 50%
of attributable net income to reflect the
Group’s cash flows, strong balance sheet and
continuing growth ambitions. The dividend
policy remains progressive and the intent is for
future dividends to grow in line with earnings.
The Group declares its dividends in US dollars.
The interim dividend of 1.7 cents pershare,
amounting to $21 million was paid during the
year, the first dividend paid under the enhanced
dividend policy of the 50%payout ratio.
The Board has declared a further interim
dividend for the 2021 financial year of 4.0cents
per share. Further information related to
dividends canbefound on page 163.
FULL YEAR DIVIDEND
US cents per share
1 Days sales outstanding (DSO) and days purchases outstanding (DPO) are based on monthly averages and on
trade elements only.
2018 2019
1
2020 2021
1 2019 full year proposed dividend of
2.7 cents paid as an interim dividend
in 2020 in settlement of withdrawn
2019 final dividend.
1.9
3.8 3.8
5.7
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202132 33VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
LIQUIDITY AND CAPITAL RESOURCES
The strong cash flow generated from operating
activities funded our capital expenditure
initiatives to pursue various opportunities in
our markets. The majority of Growth capital
expenditure is attributable to Retail projects
which included the expansion of our Retail
network. The increase in Maintenance capital
expenditure was mainly due to projects
in our Retail segment and our continued
focus on the maintenance ofoursupply
anddistribution infrastructure.
The ‘Shiningsites’project, established in 2019,
to ensure we maintain compliance with our
stringent standards, has resulted in 326 retail
sites being ‘shined’ in 2021.
SAP S/4HANA, the Group’s new ERP system,
was fully implemented in all our Engen‑branded
entities by April 2021. The decreasedcapital
expenditure of special projects in the current
year is primarily due to the completion of the
SAPS/4HANA implementation.
ROACE increased from 12% in 2020
to 19%in 2021, primarily due to higher
earningscompared to prior year.
US$ million
2021
2020
Net income 152 90
Adjustment for non-cash items and other 226 214
Current income tax paid (102) (89)
Net change in operating assets and liabilities and other adjustments
1
195 48
Cash flow from operating activities 471 263
Net additions of PP&E and intangible assets (167) (163)
Free cash flow 304 100
Special items
2
7 12
Adjusted free cash flow 311 112
1 Net change in operating assets and liabilities and other adjustments includes finance expense.
2 Cash impact of special items. Special items are explained and reconciled on pages 36 and 37.
ADJUSTED FREE CASH FLOW
CAPITAL EXPENDITURES
US$ million 2021 2020
Maintenance 61 55
Growth 102 101
Special projects 5 12
Total 168 168
US$ million 2021 2020
Retail 99 100
Commercial 32 29
Lubricants 3 3
Other (technology, supply and distribution and general corporate costs) 34 36
Total 168 168
Of which growth capital expenditure was: 102 101
Retail 75 74
Commercial 25 23
Lubricants 2 2
Other (technology, supply and distribution and general corporate costs) – 2
In addition to the commentary on the Group’s consolidated statement of cash flows below, further disclosures in relation to the Group’s processes for
managing its capital, its financial risk management objectives, details of its financial instruments and its exposures to credit risk, liquidity risk and market
risk can be found in note 3 of the consolidated financial statements.
Adjusted free cash flow increased by
$199million, from $112 million in 2020 to
$311million in 2021. The increased cash flow
was mainly driven by higher cash inflows
from operating activities due to the positive
movement in net change in operating assets
and liabilities of $147 million and an increase
innet income of $62 million.
The positive net change in operating assets
and liabilities is primarily attributable to trade
payables which increased due to higher crude
oil prices, increased product demand and
favourable payment terms with suppliers.
This was partially offset by increases in trade
receivables and inventories predominantly
due to higher crude oil prices and increased
market demand.
Income tax paid amounted to $102 million
for the year ended 31 December 2021
(2020:$89 million). Cash flow from operating
activities fully funded net capital expenditure
of$167 million in 2021 (2020: $163 million).
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202134 35VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
Long-term debt consists of $350 million in
notes issued in September2020.The notes
have a coupon rate of 5.125% paid
semi-annually and are fully redeemable in
2027, at maturity. Short-term bank borrowings
include uncommitted unsecured short-term
bank facilities which are extended by various
local banks to individual operating entities,
ranging from $1 million to $354 million and
carry interest rates between 1.5% and 16.1%
per annum. These facilities are automatically
renewable and typically for a period of
12 months. The Group’s debt covenants
are disclosed in note 23 of the notes to the
consolidated financial statements. Net debt
decreased by $107 million to $203million,
mainly due to an increase in cash and cash
equivalents and a decrease in long-term debt.
The increase in cash and cash equivalents was
driven by higher cash flows from operating
activities. The repayment of the RCF explains
the decrease of long-term debt.
The Group’s leverage ratio strengthened
from 0.86x in 2020, to 0.45x in 2021, mainly
attributable to the decrease in net debt and
higher adjusted EBITDA.
This low leverage ratio is reflective of our
strong balance sheet. The available undrawn
credit facilities of $1,471million comprise the
undrawn, committed multi-currency revolving
credit facility of $300 million and $1,171 million
of undrawn, unsecured and uncommitted
short-term bank facilities extended to our
operating entities for working capital purposes.
Future decisions on the structure of the
Group’s debt facilities may be dependent
uponthe Vitol Offer.
US$ million
31 December
2021
31 December
2020
Long-term debt 349 408
Lease liabilities 161 143
Total debt excluding short-term bank borrowings 510 551
Short-term bank borrowings 280 274
Less: cash and cash equivalents (587) (515)
Net debt 203 310
US$ million
31 December
2021
31 December
2020
Net debt 203 310
Adjusted EBITDA
1
447 360
Leverage ratio
1
0.45x 0.86x
1 For the description and reconciliation of non-GAAP measures refer to pages 36 and 37.
US$ million
31 December
2021
31 December
2020
Cash and cash equivalents 587 515
Available undrawn credit facilities 1,471 1,563
Available short-term capital resources 2,058 2,078
NET DEBT AND AVAILABLE LIQUIDITY
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$ million 31 December 2021
Less than
3months
Between
3months
and1year
Between
1and2 years
Between
2and5years
Over
5 years Total
Borrowings 278 13 22 60 368 741
Trade payables 1,375 59 – – – 1,434
Lease liabilities 7 32 32 66 106 243
Other liabilities
1
28 23 18 2 144 215
Total 1,688 127 72 128 618 2,633
1 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
The Group has purchase obligations, for capital and operational expenditure, under various agreements, made in the normal course of business.
The purchase obligations are as follows, as at:
US$ million
31December
2021
31December
2020
Purchase obligations 21 22
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202134 35VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
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 our 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
Gross cash profit This is a measure of gross profit after direct operatingexpenses and before non-cash depreciation
andamortisation recognised incostofsales. Reference to ‘cash’ in this measure refers to non-cash
depreciation and amortisation as opposed to the elimination ofworking capitalmovements.
Grosscashprofit isakeymanagement performance measure.
EBITDA Earnings before finance expense, finance income, income tax, depreciation and amortisation.
Thismeasure provides the Group’s operating profitability and results before non-cash charges
andisakey management performance measure.
Adjusted net income Net income adjusted for the impact of specialitems.
Special items Income or charges that are not considered to represent the underlying operational performanceand,
based on their significance insizeor nature, are presented separately to provide further understanding
ofthe financial andoperational performance.
Net debt Total borrowings and lease liabilities less cash andcashequivalents.
Adjusted EBIT Earnings before finance expense, finance income and income taxes adjusted for special items.
TheGroupviews adjusted EBIT as a useful measurebecause it shows the Group’s profitability and the
ability to generate profits by excluding the impact of tax and the capital structure, as well as excluding
income or charges that are not considered to represent the underlying operationalperformance.
Gross cash unit margin Gross cash profit per unit. Unit is defined as 1,000litres of sales volume. This is a useful measure
asitindicates the incremental profit foreach additional unit sold.
Adjusted EBITDA EBITDA adjusted for the impact of special items. This is a useful measure as it provides the Group’s
operating profitability and results, before non-cash charges and is an indicator of the coreoperations,
exclusive of special items.
Adjusted diluted EPS Diluted EPS adjusted for the impact of special items.
Adjusted free cash flow Cash flow from operating activities less net additions to PP&E and intangible assets and excluding
theimpact of special items. Thisisakey operational liquidity measure, as it indicates the cash
availabletopay dividends, repay debt ormakefurther investments inthe Group.
Leverage ratio Net debt, including lease liability, divided by the last 12months’ adjustedEBITDA.
Return on average
capitalemployed (ROACE)
Adjusted EBIT after income tax divided by the average capital employed. Average capital employed
is the average of opening and closingnet assets plus borrowings and lease liabilities, less cash and
cashequivalents and interest bearing advances. ROACE is a usefulmeasure because it shows
theprofitability of the Group considering the average amount ofcapital used.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202136 37VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
US$ million 2021 2020
Gross profit 693 617
Add back: depreciation and amortisation in cost of sales 84 80
Gross cash profit 777 697
Volumes (million litres) 10,302 9,637
Gross cash unit margin ($/’000 litres) 75 72
US$ million 2021 2020
EBT 253 175
Finance expense – net 59 60
EBIT 312 235
Depreciation, amortisation and impairment 130 125
EBITDA 442 360
Adjustments to EBITDA related to special items:
IPO
1
, Engen acquisition
2
and Vitol Offer related expenses
3
4 1
Management Equity Plan
4
1 (3)
Hyperinflation
5
– 2
Adjusted EBITDA 447 360
US$ million 2021 2020
Net income 152 90
IPO
1
, Engen acquisition
2
and Vitol Offer related expenses
3
4 1
Management Equity Plan
4
1 (3)
Hyperinflation
5
– 2
Adjusted net income 157 90
US$ 2021 2020
Diluted earnings per share 0 .11 0.06
Impact of special items – –
Adjusted diluted earnings per share 0.11 0.06
US$ million, unless otherwise indicated 2021 2020
EBIT 312 235
Adjustments to EBIT related to special items:
IPO
1
, Engen acquisition
2
and Vitol Offer related expenses
3
4 1
Management Equity Plan
4
1 (3)
Hyperinflation
5
– 2
Adjusted EBIT 317 235
Adjusted EBIT after tax 193 120
Average capital employed 1,042 1,021
ROACE 19% 12%
Reconciliation of net debt and leverage ratio is included on page 35. The reconciliation of adjusted free cash flow is included on page 34.
1 IPO related items in 2021 and 2020 concern the IPO share awards which are accrued for over the vesting period.
2 On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Vivo Energy Overseas Holdings Limited (VEOHL) (formerly known
asEngen International Holdings (Mauritius) Limited). The cost of the acquisition and related integration project expenses incurred in 2020 are treated as special items.
3 These expenses related to the potential change in control transaction, are treated as special items as they do not form part of the core operational business activities and performance.
4 The Management Equity Plan vested at IPO in May 2018 and was exercisable on the first anniversary of admission for a period of 24 months. Changes in the fair value of the cash-settled
share-based plan do not form part of the core operational business activities and performance and should, therefore, be treated as a special item. The costs of share-based payment
schemes introduced after the IPO are not treated as special items.
5 The impacts of accounting for hyperinflation for Vivo Energy Zimbabwe, in accordance with IAS 29, are treated as special items since they are not considered to represent the underlying
operational performance of the Group and based on their significance in size and unusual nature are excluded as the local currency depreciation against the US dollar does not align to
thepublished inflation rates during the period.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202136 37VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
MATERIALITY ASSESSMENT
FOCUSING ON THE
SUSTAINABILITY
TOPICS THAT
MATTER TO
STAKEHOLDERS
As part of our ongoing drive to more
formallyembed sustainability into our
business,we conducted a materiality
assessment during theyear in order
toprioritise and identify ourmost
importantsustainability areas.
Our Materiality Assessment approach
wasmodelled on the five-part Materiality
Test,and aligned with AA1000 APS 2018,
GRI, SASB, CDSB, IR, WEF and various
stockexchange rules around the world.
OUR MATERIALITY PROCESS
Identifying relevant topics
Working with sustainability consultants,
we conducted in-depth desk research
and interviews with internal and
externalstakeholders as the first key
stepinthe process.
This research focused on relevant industry,
media and regional materials on trade,
policy and socio-economic topics. The team
reviewed all available corporate documentation
relating to sustainability, suchas company
policies and commitments, as well as peer/
competitor companies.
They also conducted a horizon scan to identify
relevant legislation, sustainability standards such
as SASB, GRI, DJSI, and relevant mega trends
and SDGs. This research helped to define a list
of sustainability topics that was used as the basis
for the prioritisation exercise with internal and
external stakeholders.
Interviews were then scheduled with a range of
29 internal and external stakeholders to assess
their views on materiality topics.
Questions focused on stakeholders’ views on
the set of potential material topics and included
a mixture of unprompted, open questions,
andspecific questions testing the findings of
thedesk research and other early discussions.
Prioritising topics
An assessment tool using tried and tested
criteria was deployed to assess Group level
operations and achieve relative priority scores
from the perspectives of Stakeholder Concern,
Business Impact, and Impact on Society and
Environment (known as ‘Outward Looking’,
or‘Double’ Materiality, currently best practice).
Our materiality analysis tool scored each issue,
resulting in a clear matrix diagram which maps
impact on the environment and society (and
byextension, Vivo Energy) against importance
to stakeholders, to provide an assessment
of materiality for strategy, reportingand
target setting.
Validating topics
A three-step process was used to
validateandapprove the assessment.
Analysis was first validated through an internal
workshop, comprising senior leaders from
across different business functions, including
operations, strategy, HSSEQ, sustainability,
risk,legal, HR and communications.
The workshop allowed attendees to
question the materiality analysis, feed in
wider perspectives, adjust scores using
new information, and discuss priorities
andmanagement focus.
The team used the prioritisation criteria
to guide the discussion, and to ensure the
overall outcome was balanced and fair,
and did not overly favour any particular
individual’s preferences.
Following detailed discussion and review
thefindings were presented to our
ESGandClimate Committee for its
review,andultimately to the Board.
NEXT STEPS
The materiality process, including
developmentof the materiality matrix,
hasbeena valuable process. It has
enhancedour stakeholder engagement
andboth confirmed key sustainability
areasthatwe already address through
ourcurrent practices, as well as
identifyingemerging areas for
future focus.
DEFINING OUR MATERIAL TOPICS
TIER 1
CORPORATE INTEGRITY HSSE ENERGY TRANSITION
Maintenance of corporate reputation by having
appropriate Governance structures overseeing
adherence tointernational and local regulations
and standards, code of conduct and management
ofcompliance risks. Ensuringalignment with
human rights standards and prevention
of violations.
Continued world-class safety and security
practices for all Vivo Energy employees and
contractors, managing mental and physical
wellbeing of employees, as well as managing
environmental and safety risks of product spills.
Reducing climate change impacts and supporting
the energy transition by reducing the carbon
intensity ofourproduct portfolio and integrating
risks and opportunities from climate change into
the business.
GHG EMISSIONS ECONOMIC AND
COMMUNITY DEVELOPMENT
Policy and strategy for reporting and managing
energy use and carbon emissions across the full
value chain.
Promoting social and economic development by
supporting access to infrastructure, education
and enterprise opportunities in host countries
and communities.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202138 39VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
Sustainability is an integral
part of our business.”
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
MATERIALIT Y MATRIX
KEY
Environmental
Social & Governance
TIER 2
GOVERNMENT AND
STAKEHOLDER RELATIONS
TALENT MANAGEMENT
AND DEVELOPMENT
Managing relationships with institutional and
government stakeholder groups, relating to
industry and fuel standards, development
of energy infrastructure and stability of the
regulatory framework.
Providing career growth opportunities through
training and skills development while attracting
and retaining skilled people and supporting the
growth of local employable labour pools.
LABOUR RIGHTS
AND INCLUSION
LOCAL PARTNER
RELATIONSHIPS
Enabling diversity and inclusivity, with fair
andequal employment opportunities and
working conditions, and in compliance with
locallabour regulation.
Managing retail site dealers, third party
transporters and other local counterparties
to maintain productive/effective/equitable
relationships, operational standards and
ourlocal reputation.
ADDITIONAL TOPICS
WASTE MANAGEMENT
Managing operational waste across
the business.
CYBER SECURITY
Managing exposure to cyber security threats
to avoid reputational and economic impacts
from disruption to commercial activities and
to ensure effective data protection.
WATER RESOURCES
Managing water consumption levels across
assets and implementing water stewardship
strategies.
LEVEL OF IMPORTANCE TO STAKEHOLDERS
POTENTIAL IMPACT ON VIVO ENERGY
Corporate
integrity
Energy
transition
GHG
emissions
HSSE
Economic and
community
development
Government
and stakeholder
relations
Talent management
and development
Labour rights
and inclusion
Local partner
relationships
Waste
management
Cyber security
Water
resources
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202138 39VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR PEOPLE
RESOURCES AND RELATIONSHIPS
OUR STAKEHOLDERS
We listen to and collaborate with a
wide range of stakeholders to grow
ourbusiness and deliver value.
Engagement with our shareholders and
wider stakeholder groups plays a vital role
throughout the business. It helps us gain a
better understanding of the impact of our
decisions on stakeholder interests as well
asinsight into their needs and concerns.
Details of how we’ve engaged with, and
taken into consideration, the interests
of those stakeholders who are material
to the long-term success of the business
canbe found on the following pages.
Not all information is reported directly
to the Board. However, the output of
engagement with stakeholders informs
Group decisions, and relevant feedback
is reported to the Board and/or
its Committees.
FOR MORE
INFORMATION
SEE PAGES
46-51
We want our people to be safe, engaged,
andfocused on doing business the right way.
HOW DID WE ENGAGE?
– We carried out a full employee engagement survey
todiscover how our people view various aspects
oftheCompany,after almost a decade in operation.
– We launched a new online platform – Your Voice –
toencourage employeestosubmit ideas on a wide
rangeof topics.
– The Employee Engagement Champion Committee
completed its first full year with representatives providing
input and feedback to our Senior Independent Director
Hixonia Nyasulu, ensuring that employees’ issues and
concerns areshared with the Board.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– The employee survey focused on measuring six key
areas,including leadership and culture; reward; role
content; career; workplace; and purpose and values.
– Following review of the survey results, we
developed action plans in each market to further
improve performance.
– Recommendations from ‘Your Voice’ are reviewed
by country HR Managers and discussed at country
leadership level. Where the ideas make business sense
and have the potential to improve ways of working,
theyare implemented to help grow, develop and
improvethe business.
WHAT WERE THE RESULTS?
Nine out of ten employees
reported they were
proud to work for
VivoEnergy in the employee
engagement survey.
The average favourability
score from the full employee
survey was 75%, up from
73% when last conducted
in 2018, and higher than the
69% global benchmark.
1 Based on Mercer’s Oil & Gas
and FMCG combined employee
engagement benchmark.
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STRATEGIC REPORT
PARTNERSCUSTOMERS
FOR MORE
INFORMATION
SEE PAGES
44-45
FOR MORE
INFORMATION
SEE PAGES
22-27
We want to offer our customers the best
platform in the market, providing an exceptional
customer experience, a wide range of customer
value propositions, and exciting Non-fuel
retail offerings.
HOW DID WE ENGAGE?
– We continued to listen and respond to our
Retailcustomers through our Voice of Customer
andVoice that Countsfeedback programmes.
– We launched a Retail trade customer prospecting
drivewith our retailers and Territory Managers to
canvasand convert new local customers.
– We continued the growth of our loyalty programmes
across the Group, allowing us to engage directly with
around1.8 million loyalty members.
– In the Commercial segment, we focused on enhancing our
sales approach and training to help improve our customer
relationship management process and engagement.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– Customers remained focused on health and personal
safety during the continuing pandemic. We continued
todeliver clean and safe sites by focusing on 28 customer
touchpoints at each site across our Retail network.
– We continued to advance our ways of working remotely
with our Commercial customers, providing expert
technical guidance even when not physically at our
customers’ sites.
– We developed and expanded our hybrid solar/
fuel energyoffer, growing our pipeline of prospects
considering alternative energy solutions.
We want to support our partners, always
focused on doing business the right way as
westrive to achieve our vision of becoming
themostrespected energy business in Africa.
HOW DID WE ENGAGE?
– Our strong relationships with Shell and Engen continued
to help us market and launch new products, maximising
the benefit of the relationships for all stakeholders.
– We regularly meet with the HSSE, quality and branding
teams at Shell and Engen to ensure our standards are
market-leading.
– We enhanced our Customer Champion app, improving
communication and engagement with Retail site staff.
– We published a supplier Code of Conduct, which
specifically addresses the minimum standards and
conductwe expect from our suppliers and partners.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– Our updated Retail policy and procedures manual,
together with a new online retailer academy was
developed during the year and will be launched to ensure
our retailers are supported and have immediate access
toall operating procedures and best practice.
– We provided regular news updates, training and
accreditation for site staff across the Shell-branded
network, with plans to launch a similar platform
intheEngen-branded network in 2022.
Better engagement
with ourretail site staff
has helped improve the
standard and quality
of our Retail offering
for customers.
88% of our Retail customers
highly satisfied with our
ongoing response to the
COVID-19 pandemic.
In the Retail segment,
over90% of customers
were extremely satisfied
with the overall quality
of service.
The latest formulation
ofShell fuel products
waslaunched in five more
countries during the year.
WHAT WERE THE RESULTS? WHAT WERE THE RESULTS?
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RESOURCES AND RELATIONSHIPS CONTINUED
OUR
STAKEHOLDERS
COMMUNITIES
We want to make a real and lasting difference
to our communities, engaging with them to
earn their respect and trust, supporting them
and promoting a better quality of life and more
sustainable future.
HOW DID WE ENGAGE?
– For 2021, while COVID-19 related support for our
stakeholders continued to be a priority which we
supported, we also shifted our Community Investment
programme back to include our three core focus areas
ofroad safety, education and the environment.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– We launched over 120 community investment projects
across the Group during the year.
– As road safety is a major challenge across Africa,
community leaders want our programmes to deliver
acultural shift in attitudes to road safety across the
general population, in particular among schoolchildren.
– We also support development and delivery of a wide
range of educational initiatives, helping children and young
people foster academic achievement, entrepreneurship
and learning.
– Finally we have a responsibility to empower local
communities and help them adopt behaviours that will
safeguard the environment, improve energy efficiency,
and promote a better quality of life and a more
sustainable future.
FOR MORE
INFORMATION
SEE PAGES
54-55
Community
investmentprojects
+120
launched during the year.
GO GREEN ZAMBIA
We launched a programme
to support the Ministry
of Green Economy
and Environment, in
conjunction with a number
of our partners, by planting
50,000 trees in Zambia.
WHAT WERE THE RESULTS?
Supporting our communities
has helped us continue
to build our reputation.
For example, Vivo Energy
Tunisia partnered with the
Ministry of Education to
develop entrepreneurship
skills across hundreds
ofyoung children.
Vivo Energy Ghana,
launched its ‘Stop,
Think&Drive’ campaign
to deliver an awareness
campaign for commercial
drivers and motorcyclists.
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STRATEGIC REPORT
INVESTORS AND
SHAREHOLDERS
GOVERNMENTS
We want to maintain good relationships
withhost governments in the countries
wherewe operate.
HOW DID WE ENGAGE?
– We primarily engage with our host governments
throughindustry bodies.
– Face-to-face engagement with ministers and senior
officials remained a challenge due to the pandemic,
however, we continued to engage virtually, and in
face-to-face settings where permitted.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– A key priority for our host governments during the
year was managing the ongoing impactofCOVID-19
intheir markets.
– We continued to engage with and support our
hostgovernments, ensuring that ourRetail and
Commercial network remained operational, so that
critical fuelproducts could continue to be provided
tokeep businesses and countries operational.
We want to understand and engage with
ourinvestors and keep them informed
aboutkeydevelopments at Vivo Energy.
HOW DID WE ENGAGE?
– In addition to the regular reporting cycle, the
ExecutiveDirectors and our Head of Investor Relations
regularly engage with our shareholders and potential
new investors.
– As a result of COVID-19, there were very few in person
meetings or physical conferences during the year, and
a far greater reliance on calls and video conferences to
keep investors and shareholders informed and engaged.
This had the benefit of greatly increasing the reach of
engagement into different territories across the world
that were previously not on the engagement calendar.
WHAT TOPICS WERE RAISED
AND HOW DID WE RESPOND?
– In 2021 the primary focus was on the Group’s
recoveryfrom the impact of COVID-19 related
mobilityrestrictions and the recovery of our host
countries’ economies.
– In addition, we continued to engage with stakeholders
on capital allocation following the enhancement of
thedividend policy in March 2021. We also engaged
on issues such as management succession, executive
remuneration, governance and Group strategy.
– We increased focus on ESG matters, and sought
toenhance disclosure and engagement with the
ESGrating agencies.
– Following the announcement of the Vitol Offer
inNovember 2021, our engagement activities
adoptedamore prescriptive approach to
ensure thatinvestors’ views were heard while
maintainingcompliance with Takeover Panel rules.
WHAT WERE THE RESULTS? WHAT WERE THE RESULTS?
We believe that the detailed
engagement throughout
the year has enhanced
relationships withour core
stakeholders and supported
greater understanding
ofthekey drivers of
the business.
Due to our central position
within economies, we
maintained our position
as a major collector
of tax and duties on
behalf of governments
through thesale of
petroleum products.
We successfully
attracted a range of new
institutional shareholders.
This led to strong share
price performance during
theyear, before the
announcement of the
Vitol Offer.
We create significant direct
and indirect employment
which generates major
economic benefit for
countries, and are a
significant tax contributor in
our own right. In 2021, we
paid $102 million in income
taxes to our hosteconomies
and collected significant
taxes and dutiesthrough the
saleofpetroleum products.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RESOURCES AND RELATIONSHIPS CONTINUED
OUR ASSETS
Our well-maintained assets
range from the bright, efficient
service stations that provide
high-qualityproducts and customer
convenience, to an extensive fuel
storage network and lubricant
blending plants. Owning or having
operational control ofthese assets
is essential for our ability tocontrol
costs, guarantee supply and
manage HSSEQ.
HOW WE MANAGE
OUR RETAILNETWORK
At the end of 2021, our retail network
comprised 2,463service stations across
23countries, trading under the Shell and
Engenbrands. During the year we added
anettotal of 133 new service stations.
We remained fully focused on helping
tocombat the pandemic by continuing to
implement protective measures across our
network. We ensured our sites were cleaner
and safer for customers and staff through strict
protocols, awareness campaigns, and provision
of protective equipment across the network.
We continued the ‘Shining sites’ programme
to make sure that our service stations are
convenient and welcoming places to visit,
adapted to all types of motorists including those
driving light vehicles, trucks, commercial vehicles
and motorbikes. We refurbished 326 sites,
alsoadding Non-fuel retail offerings, including
shops, pharmacies, coffee and food outlets
andcar service repair centres.
Our customers are frequent and loyal visitors
because our service stations are clean, vibrant,
efficient and convenient. In 2021 we continued
to increase our payment systems and to
roll-out our new app for the Shell-branded
markets, which is bringing more convenience to
customers, and promoting even greater loyalty.
HOW WE MANAGE
OUR DEALERNETWORK
In order to manage our retail network
efficiently, we utilise local dealers to operate
approximately 96% ofour sites to our exacting
standards. We use a mix ofthree operating
models across our network depending on the
site location and circumstance. The majority
of our service stations are company-owned
and dealer-operated (CODO). However,
wealso have sites that are dealer-owned and
operated (DODO) and a small number that
are company-owned and operated (COCO).
We support our dealers to ensure they have
a platform to succeed and regularly check
that they’re maintaining the standards that
we require. Across all our sites we manage
and control HSSEQ, marketing and branding,
aswell as site and service standards, toensure
operational excellence.
Our Territory Managers frequently visit the
sites, following a structured call plan, which
drives compliance and growth.
HOW WE MANAGE
OUR NETWORK OFSTORAGE
FACILITIES AND PLANTS
We’ve developed an extensive network of
storage facilities to ensure that we can supply
our Retail and Commercial customers. In 2021,
we had access to over one billion litres of
storage across Africa, mitigating supply risks.
We own 57 depots in over 50 locations, giving
us reliable access to over 663,000 cubic metres
of directly-owned and managed storage
capacity. In addition, through joint venture
arrangements, we have further access to
approximately 375,000 cubic metres of storage.
SHINING SITES
We refurbished 326 sites
to improve customer
experience and
support growth.
The average depot
turns increased to 9.5
during 2021, mainly as
a result of increased
year-on-year volumes.
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STRATEGIC REPORT
This network is supplied by a combination
ofship, pipeline, truck and rail. In recent years,
average depot turns have increased from
8.2in2016, 9.2 in 2017, 9.4 in 2018 and 9.7
in2019. Tank turns decreased to 8.6 in 2020,
mainly due to lower uplifts in Q2 as a result
ofCOVID-19 lockdowns, but we are pleased
toreport a rebound to 9.5 in 2021.
We also benefit from a 50:50 joint venture
with Shell, known as Shell and Vivo Lubricants
(SVL). Through this joint venture, we have
access to and operate two lubricant blending
plants in Morocco and Kenya and have
interests in blending operations in Tunisia,
Côte d’Ivoire, Ghana and Guinea. This gives
us access to around 158,000 metric tonnes
ofblending capacity.
In the Marine sector, we have full bunkering
operations in five countries and have the
capability to supply fuel and lubricants to
marine customers in a number of other
markets. The LPG business owns bottling
plants and hasinterests in joint venture
facilitiesinsevencountries.
HOW WE MANAGE
OUR BRANDS
Our principal partnerships are with Shell and
Engen, with whom we’ve secured retail brand
licence agreements until December 2031
and March 2034 respectively. These give us
rights to use specified Shell and Engen brands
for our products andservices, including our
service stations.
We own 50% of SVL, which is the licensee for
Shell’s lubricant brands and intellectual property
across all African markets, except South Africa,
Libya and Egypt. This gives us access to the
industry’s most widely respected lubricants.
In most of the Retail markets where we
operate wedo not compete on price because
fuel prices are regulated (margins on regular
fuels were regulated in 20 of the 23 markets
where we operated at the end of 2021).
This means we compete on location, customer
experience and brand. We spend a material
amount on marketing across our operating
units to drive growth and protect and enhance
our brand which – when coupled with the high
levels of customer service, quality fuels, asafe
fuelling environment and a quality Non‑fuel
retail offering – means that we’re able to
consistently outperform our competitors.
Network expansion
133
net total of new Retail
service stations added.
Storage capacity
663,000
cubic metres of directly-
owned and managed
storage capacity.
HIGHLIGHTS
DURING THE YEAR
Retail service stations
2,463
across the Group in
totalatthe end of 2021.
Sites refurbished
326
through our ‘Shining
sites’programme.
Site automation
278
retail sites automated
toimprove service
andefficiency.
2021
2020
2019
2018
2017
2,463
2,226
1,900
Retail service stations
1,829
2,330
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202144 45VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RESOURCES AND RELATIONSHIPS CONTINUED
OUR PEOPLE
OUR CULTURE, VALUES
AND PURPOSE
When Vivo Energy was
createdadecade ago, we quickly
developed, introduced and
embedded our ‘Focus, Simplify and
Perform’ operatingculture, and
this has been our guiding principle
eversince. It has enabled us to stay
one step ahead, and will continue
tobe a key part of our business
formany years to come.
THE VIVO ENERGY WAY
Since the foundation of Vivo Energy in 2011,
our operating culture of ‘Focus, Simplify
and Perform’ has remained a central part
of the way we do business. We achieve
success by constantly reinforcing our fast,
agile, decentralised business model, and
this remained important as we continued
to manage the impact of COVID-19 in our
markets during 2021.
Our values of honesty, integrity and respect
forpeople guide our teams as they work
towards our vision of becoming Africa’s
mostrespected energy business.
The employee engagement survey conducted
during the year showed that 79% of employees
believe that we are delivering on our Purpose
– to safely provide innovative and responsible
energy solutions to Africa, which enable
growth and development of the continent
andits people.
We keep our people regularly informed
about our business through interaction with
their managers, employee town hall meetings,
regular online newsletters and via our intranet.
71% of employees felt that the organisation
works in a simplified and focused way to deliver
results and performance, and 79% said that
they were kept informed about organisational
decisions that affect them.
We seek to maintain constructive relationships
with labour unions formally representing
our employees and have localised union
agreements and guidelines in place, as
applicable. Approximately 30% of the
Group’semployeesare unionised.
DOING BUSINESS THE RIGHT WAY
Our reputation is our most important
asset and we work hard to maintain it at
every opportunity. We demonstrate the
highest standards of corporate behaviour
at all times and in every interaction with
our employees, our customers, those with
whom we do business and our shareholders.
80%of employees felt that colleagues live the
corporate values of honesty, integrity and
respect for people.
Our Code of Conduct and General Business
Principles (both available on our website)
underpin everything we do and are the
foundation of our business. We published
aseparate Supplier Code of Conduct
in Q42021, which specifically addresses
the minimum standards and conduct
weexpectfrom our suppliers.
All new employees complete an online
induction programme, which explains our
policies and helps them integrate into the
organisation quickly and comprehensively.
The induction programme includes training
inrelation to our Code of Conduct and
keyAnti-bribery and corruption (ABC)
andAnti-money laundering (AML) initiatives.
We have a detailed counterparty screening
process in place which is formalised in the
VivoEnergy Know Your Customer (KYC)
Policy. The screening process gives us
confidence that we know who we are doing
business with and that the ethics and values
of our counterparties align to our core values.
As part of the screening process we request
new counterparties to sign a compliance
statement which sets out our approach
towards ABC, AML and conflict of interest.
Employees, third parties and members of the
public also have access to our independent,
24/7 anonymous whistle-blowing helpline.
They can use this to report any concerns by
telephone, online via web reporting or via
a designated Vivo Energy whistle-blowing
app, which is available for both Android
andiOS devices.
During Q2 2021, we rolled out an all staff
online training course to raise awareness
regarding cyber security and the risks of data
being maliciously obtained by third parties.
The course focused on teaching employees
how to successfully identify phishing attempts
and how to escalate their response. We also
conducted seven phishing simulation tests
during 2021 to increase employee awareness
and understanding of cyber security risks.
Despite the increasing complexity of these
tests, the number of employees being
deceivedhas continued to fall.
Delivering on
ourPurpose
79%
of employees believe that
Vivo Energy is delivering
its Purpose.
Delivering results
71%
of employees felt that the
organisation works in a
simplified and focused
way to deliver results
and performance.
Our Purpose is to safely
provide innovative and
responsible energy solutions
to Africa, which enable
growth and development of
the continent and its people.
STRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202146
HIGHLIGHTS
DURING THE YEAR
Delivering on
our Purpose
79%
of employees believe we
are delivering our Purpose.
Knowing who we
do business with
2,618
counterparty screening
checks conducted.
Contributing
to our markets
$102m
income tax paid to
our host economies.
We’re committed to providing equal
opportunities for all our employees.
Should anyemployee become disabled,
our policy is to engage, re-train and
make reasonable adjustments to enable
continued employment.
ANTI-CORRUPTION AND
ANTI-BRIBERY
We continue to maintain a multi-site ISO 37001
anti-bribery management systems certification,
covering all of our markets. During the year, we
carried out five external reviews of operating
units as well as a review of head office operations
in London as part of the annual maintenance
audits. No non-conformities werenoted
duringthe reviews.
We provide mandatory employee training
ontopics such as Anti-bribery and corruption,
Anti-money laundering, and our Code of
Conduct. We also hold financial crime courses
on a bi-annual basis for all employees, tailored
to specifically address applicable scenarios,
withtraining completion monitored by our
Ethics & Compliance office. Courses are
available in our three operational languages
toensure that all our people can fully grasp
thecontent and learning objectives.
In addition, each employee is required
to submita Conflict of Interest
declaration everyyear, confirming their
understandingofour compliance policies.
These declarations are reviewed and approved
by line managers after which a detailed risk
assessment is conducted by the Ethics and
Compliance Office. Corrective measures
arerecommendedand implemented
by theEthics and Compliance Office
where required.
HUMAN RIGHTS
We strongly support the elimination of all
forms of modern slavery. Such exploitation
is entirely at odds with our core values of
honesty, integrity and respect for people,
whichare crucial to our success and growth,
and to achieving our vision of becoming
Africa’smost respected energy business.
We are committed to respecting, upholding and
applying the highest Human Rights and ethical
standards across the economies and societies in
which we operate. Our approach is guided by
the 10 Principles of the United Nations’ Global
Compact (UNGC), with whichVivoEnergy
complies. We published a Human Rights Policy
Statement in Q4 2021 which sets out the
core human rights principles which we strive
touphold. The policy statement is available
onour external website.
Respect for human rights is also embedded
inour Code of Conduct and General Business
Principles, which recognise our responsibility
to conduct business as a responsible corporate
citizen and to support fundamental human
rights in line with the legitimate role of business.
Both the Code and the Business Principles
explicitly address our commitment to combatting
modern slavery and human trafficking.
In order to provide practical guidance to our
employees and counterparties, we published
Modern Slavery Guidance Principles in Q2 2021.
We also launched a project to roll out the new
principles to all operating units and retailers.
Our anonymous whistle-blowing helpline
includes a specific reporting category for
raisingconcerns in relation to any form
ofunfairlabour practices and potential
human rights violations. Any report received
in relation to these categories is directly
reported to the Vivo Energy Head of Ethics
and Compliance and the Vivo Energy Vice
PresidentHuman Resources.
Respect for human rights is embedded
in our Code of Conduct and General
Business Principles.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
47VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
RESOURCES AND RELATIONSHIPS CONTINUED
Throughout the year we
continued to engage our
2,764people, working hard
tosupport and develop them
atevery opportunity.
CONTINUING TO SUPPORT OUR
PEOPLE THROUGH COVID-19
COVID-19 continued to have a major
impacton the lives of our people during 2021,
and our overarching priority to protect their
health and safety again remained paramount.
We have continued to track COVID-19 data
across our markets, following best practice
and local guidance and regularly reminding
our people of the preventative measures to
minimise the risk of catching or transmitting
the virus. Despite these efforts, we sadly
lost three employees to COVID-19 during
the course of the year and have worked
tosupporttheir families.
During the year we strongly encouraged
employees to be vaccinated against COVID-19.
For example, using our Company doctors
to inform employees about the vaccines,
allowing them to be given on our sites where
possible, and offering to cover the cost of
vaccinations where not freely provided by our
host countries. At the same time, our policy
is to ensure that no employee will suffer any
unfavourable treatment, should they decline
theoffer of a vaccination.
Although the provision and take-up of
vaccines has been slower than expected in
the majority of our sub-Saharan markets, by
the end of the year we were pleased to see
that 68% ofAfrican-based employees were
fully vaccinated.
Employees’ mental and physical wellbeing
remained a key focus and we organised
wellness days, workshops and talks as well
as medical expertreferrals across the
Groupduring the year.
Towards the end of the year, we launched
a pilot Employee Assistance Programme in
six of our operating units providing practical
information and confidential counselling to
employees and their close family members
on a wide range of work and personal issues.
This pilot programme is being monitored,
withthe intention of rolling itout across
theGroup during 2022.
EMPLOYEE ENGAGEMENT
During 2020 we acted quickly and decisively
toensure that our people could work remotely
from home where possible, taking additional
actions to support those colleagues for whom
this was not possible. While we have done
everything possible to safely reintegrate
colleagues back into the workplace where
allowed, 2021 saw continued restrictions
andfurther need towork from home for
manyof our colleagues.
As a result, it was vital that we continued to
enhance our employee engagement channels,
and we rolled out a number of initiatives
duringthe year.
In June we conducted a full employee
engagement survey, which tracked six key areas:
leadership and culture; reward;role content;
career; workplace; andpurpose and values.
Employees were very keen to participate in
the survey, as evidenced by thecompletion
rateof 88%.
Across the 39 questions, the average score
was75%, up from 73% when the full survey
was last conducted in 2018, demonstrating that
employees are more positive about working for
Vivo Energy, even during these disruptive times.
Nine out of ten employees are proud to work
for us, believing we are well-respected in the
countries where we operate, deliver world-
class HSSEQ performance and that we will be
successful in the future. Following review of the
survey results, we developed action plans in
each market tofurther improve performance.
We work hard to nurture an open culture
where the opinions of our people are heard
and valued. In addition to existing programmes,
welaunched a new online platform –
Your Voice – to encourage employees to
submit ideas on a wide range of topics.
These are reviewed by country HR Managers
and discussed at country leadership level.
Where the ideas make business sense andhave
the potential to improve ways of working, they
are implemented to help grow, develop and
improve the business.
The Employee Engagement Champion
Committee, established in 2020, completed
its first full year with representatives providing
input andfeedback to our Senior Independent
Director Hixonia Nyasulu so that employees’
issues andconcerns could be shared with
the Board.
ENGAGING AND
DEVELOPING OUR PEOPLE
ENGAGEMENT SURVEY
Nine out of ten employees
are proud to work for
Vivo Energy.
We work hard to nurture
an open culture where the
opinions of our people are
heard and valued.
Structured training
anddevelopment
$1.5m
invested in learning and
development in 2021.
Entrepreneurial
culture andlow rate
ofresignations
5.1%
resignations during the year.
STRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202148
TRAINING AND DEVELOPMENT
2021 continued to be a year of integration for
the Engen-branded markets. We again worked
hard to ensure that the systems and structures
in those markets were fit for purpose, that
we had the right people in place, and that
theywere upskilled as needed.
Learning and development remains an integral
part of our approach to talent management,
and we have structured development plans
in place to constantly build the skills and
capabilities of our people. We invested around
$1.5 million intraining throughout the year.
During the year we enhanced virtual and
online learning across all areas of the business,
upskilling employees and maximising learning
opportunities, while always ensuring that this
method of training was as impactful as more
traditional methods. We successfully rolled
out a more user-friendly e-learning system
during the year, creating the foundation to
build a more effective platform that allows us
to integrate competency assessments, learning
interventions to help manage our people’s
performance and career development.
IMPROVING OUR HR SYSTEMS
Following the roll-out of our SAP
SuccessFactors people management system,
wefurther digitised our way of working,
enhancing our use of technology and
improvingour HR systems.
This included fully automating our annual
salary review process and standardising
payrollsystems in 22 of the 26countries
whereemployees are based.
RECRUITING, RETAINING
AND REWARDING OUR TEAMS
Throughout the year, and despite the
COVID-19 pandemic, we continued
tobuildresource for the future.
In addition to strengthening teams in our
Engen-branded markets, a number of new
roleswere identified, created and filled across
the Group to expand our capabilities and help
set us up for future growth in business areas
such as Food, Convenience Retail, Power,
Supply & Sourcing and Sales & Marketing.
Our entrepreneurial culture means that
remuneration is closely tied to achievement.
Variable pay, in the form of annual discretionary
bonuses linked to individual and business
performance, is a key element of our culture.
We’ve also developed bespoke incentive
schemes for front line sales staff in the Retail,
Commercial and Lubricants segments.
In addition, we provide a wide range of benefits
for many of our people including healthcare,
pensions and life insurance. Long-Term
Incentive Plan (LTIP) arrangements apply
selectively to senior managers and certain
otherkey members of staff.
See pages 112 to 115 for details of LTIP
awardstoour Executive Directors.
At 5.1%, our low rate of resignations in 2021
was testament to the way we reward our
teams, and underlines our success in retaining
talent. This figure is similar to that reported
in 2020, which saw a 3.5% resignation rate.
Our overall turnover percentage remains
wellbelow the African benchmark.
We had 130 interns in Vivo Energy as part
of our internship programme during 2021,
26 of whom were appointed permanently.
We remain committed to attracting future
young local talent which contribute to
buildingsustainable talent pipelines.
DIVERSITY
We promote the development and efficient
deployment of our employees to create an
inclusive work environment, where everybody
has an equal opportunity to develop his or her
skills and talents.
Part of our talent strategy, our Diversity
Principle states that Vivo Energy values diversity
as an organisational strength. We believe that
employing and developing top talent from
all backgrounds and with varied experiences
givesusa competitive advantage.
Across the Group, 43 nationalities are
represented, with 36 nationalities across
ourmiddle to senior management levels.
GENDER DIVERSITY
We strive to ensure balanced gender
diversification across our employee workforce.
Although our gender balance is steadily
improving, we recognise that there is further
room for improvement.
Across the Group, women represent
27% oftotal employees, in line with 2020.
Female representation was higher (36%)
among our office-based and sales staff in
2021(34% in 2020).
Men 73%
Women 27%
Gender diversity
27%
of employees are women
GENDER SPLIT 2021
OUR GENDER SPLIT AT 31 DECEMBER 2021
WAS AS FOLLOWS:
Female Male Total
Board of Directors 2 7 9
Senior Executive Team
1
1 8 9
Senior Executive Team’s direct reports
2
16 61 77
All other employees 732 1,944 2,676
1 The CEO and CFO are counted in the Board of Directors row.
While they are also membersof the SeniorExecutive Team,
theyarenotcounted in this row, to avoid double-counting.
2 Not including personal assistants.
Note:
88 employees are Directors across the Group’s subsidiaries,
of which 66 are male and 22 female.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
49VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
RESOURCES AND RELATIONSHIPS CONTINUED
Safety remains a key focus
and we are immensely proud
of our industry-leading
HSSEQ performance.
CONTINUOUS
HSSEQ IMPROVEMENT
HSSEQ remains an integral part of our
business, and during the year, we continued
to perform very well, delivering first class
HSSEQ results. Despite the travel restrictions
associated with COVID-19, a number of
independent and internal HSSEQ audits, plus
management visits, were conducted to assure
our shareholders of our performance in this
important area.
We continue to focus on competency and
preparation, in line with our 2021 Safety Day
theme, and made excellent progress on further
integrating the Engen-branded operating
units, embedding the Vivo Energy HSSEQ
Management System into these markets.
We have increased focus on visible safety
leadership, with our executive management
team and senior leaders actively promoting
safety across the Group over the course of
the year, augmented by leadership visits where
possible. Country leadership teams also actively
engaged with their people and this was tracked
and monitored through our bespoke HSSEQ
online management system.
As we look ahead to 2022 we will introduce
an internationally recognised set of Life Saving
Rules, relevant to all operations. We will also
continue to develop proactive performance
indicators to ensure we can prevent incidents
from happening and not merely react to
thosethat have occurred – a sign of a truly
world-class HSSEQ culture.
TRAINING AND COMPETENCY
During the year we launched a project
to ensure that each person fulfilling an
HSSEQ critical position has the necessary
knowledge and competency to ensure our
policies, processes and procedures are fully
and correctly implemented. This included
a fullreview of the HSSEQ competencies,
supported by a revamped training system
andknowledge transfer initiatives.
We are confident that this will further
improveour safety KPIs, to help us achieve
ourtarget of Goal Zero – no harm to
peopleand minimising our impact on
the environment.
We launched an ‘Understanding Your Safety
Climate’ project, allowing each operating unit
(OU) todetermine its perceived safety culture,
bothfrom management and staff perspectives.
The online survey provides detailed results
for the OUs’ management and employees,
enabling meaningful engagement to improve
trust, communication, safety, engagement, and
riskmitigation. Together, these improvements
are helping us progress towards agenerative
safety culture.
PERSONAL SAFETY
We focus on risk assessment and mitigation
to ensure that all our risks are recognised
and plans put in place to ensure that we
manage and reduce these to ‘As Low As
Reasonably Practicable’.
Our management system actively encourages
all employees or contractors, to report all
incidents, near misses and potential incidents
– however small – and these are tracked to
closure through the system, reinforcing our
proactive safety culture. Responsibility for risk
management is in the hands of those that have
accountability for the operations, with results
and mitigation processes visible to senior
leadership in real time.
Incidents are classified according to risk type
and are reported through our online HSSEQ
management system. Emphasis is placed on
closing these reports quickly and efficiently,
reducing risk, and helping to prevent incidents
from taking place. In 2021 around 500 near
misses were reported, with 88% being closed,
following investigation, by the end of the year.
In addition, over 56,000 Potential Incidents
were reported, with an 88% closure rate
byyear-end.
We reviewed our Hazard and Effect
Management Process for all classes of business
in the Engen-branded and majority of
Shell-branded OUs, updating these results in
our management system. This process allows
us to prioritisehigh risks and review mitigations
regularly and in real time.
OUR TARGET
OF GOAL ZERO
No harm to people and
minimising our impact
onthe environment.
88%
Over 56,000 Potential
Incidents were reported,
with an 88% closure rate
byyear-end.
LOOKING AFTER
OUR PEOPLE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202150 51VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
ROAD TRANSPORT SAFETY
Despite extremely challenging road transport
conditions in Africa, we have delivered a strong
result in road transport safety, exceeding our
Serious Motor Vehicle Incident Rate targets.
However, we will never become complacent
and road transport continues tobeone
ofourmain HSSEQ focus areas.
We constantly strive to improve the
safety featuresincorporated in our own
and contracted fleets, ensuring that these
are continually monitored and reviewed.
Our hauliers are evaluated on a regular basis,
and plans are agreed with our partners to
improve both the physical safety of the fleet
as well as the competency and performance
of the drivers. Direct interaction with drivers
toinfluence behaviour is an important
component of our safety plans and has
provenhighly beneficial over recent years.
While it is vitally important to ensure that
safe road operations are maintained, we also
striveto reduce carbon emissions associated
with our transport activities, making sure
that our operations are conducted as
efficiently as possible. This has the triple
benefit of improvingthe environment,
realising economiesof scale, and reducing
thecostof operations.
In addition, we have alsoinitiated numerous
road safety projectswithin the communities
inwhich we operate.
Every incident which has a consequence
on theGroup is reported, investigated and
reviewed within the management system.
Lessons learnt from each incident are then
available to all OUs, to help them review
and update their own Hazard and Effect
Management Process.
Additionally, our supply and distribution
functions continue to concentrate on
proactivesafety measures to reduce risk and
prevent incidents. Each piece of safety critical
equipment is in the process of being mapped,
recorded and a maintenance programme
developed for each item. This will form an
integral part of our proactive safety campaign
and be directly linkedto our competency
programme for those responsible for
this equipment.
We expect all of our contractors to maintain
the same safety standard when performing
work on our behalf. Rigorous controls and
reporting have allowed us to ensure that our
contractors’ work is conducted safely and
withminimum disruption. We constantly strive
to improve our contractors’ competency and
safety culture through regular interactions,
monitoring, tracking and interventions.
As a result of these initiatives, we have,
forthe third year in a row, recorded a
verycommendable Total Recordable
CaseFrequency (TRCF) of 0.04 per million
exposure hours. This is wellbelowthose of
our peers andsupportsourvision of being the
mostrespected energybusiness in Africa.
SECURITY
We have seen a decline in security in the
majority of the countries where we operate,
exacerbated by socio-economic challenges
brought on by the pandemic. In general, this
decline has been associated withan increase
in robberies and theft, whilesome countries
have experiencedaserious increase in incidents
associatedwith terrorism and social unrest.
We monitor these trends closely and have
proactively increased our security measures,
training and preparedness to maintain our
good security record. These measures include
constant security review of all our head
offices, depots and retail sites. We ensure
thatcountries are externally audited, on
a risk-based approach, by world-leading
securityconsultants to ensure that our
internalcontrols are effective and sufficient.
These interventions have resulted in a 20%
decrease in security incidents in our retail
network during the year, ensuring our staff
and customers areable to enjoy a safer
environment. We will be increasing our
focuson site securityin the coming years.
We have rolled out a personal mobile app
which monitors employees when they are
travelling for business or who are in high risk
situations. Additional measures are in place
to ensure their health and safety in case of
incidents. This app has the added benefit of
supporting our Scope 3 emission reporting
byproviding accurate business travel data.
In Morocco we continued our
successful #CODEWAHED
campaign to promote road safety.
Since 2019 the programme has
reached 30 million Moroccans.
2021
2020
2019
2018
2017
0.04
0.04
0.19
Total Recordable Case Frequency (TRCF)
Per million exposure hours
0.10
0.10
2021
2020
2019
2018
2017
0
0
0
0
0.04
1
Employee & contractor fatalities
Number
0.10
0.10
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202150 51VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RESOURCES AND RELATIONSHIPS CONTINUED
OUR
ENVIRONMENTAL
IMPACT
With fuel demand expected
to grow across our markets,
we aim to meet it in the most
climate-friendly way possible.
We are already supplying lower carbon
energyalternatives, and believe that as they
become a more widespread reality across
Africa, we will be well positioned to deliver
thebenefits to our customers.
We formed the ESG and Climate Committee
to guide our climate change response and
broader ESG strategy. This committee was
established as a cross-functional team, chaired
by our CEO, andsupported by external
experts in climate change and ESG. Its initial
objectives were toensure we are able to meet
our regulatory reporting obligations; guide
the process of embedding climate into Vivo
Energy’s decision-making; and develop the
Group’s long-term ESG strategy.
We have made good progress on each
ofthese, better enabling us to play our part
asenvironmental stewards while at the
sametime satisfying the growing demand
forenergy on the African continent.
TASK FORCE ON
CLIMATE‑RELATED FINANCIAL
DISCLOSURES (TCFD)
It is crucial to understand the climate-related
risks and opportunities we are presented with
and ensure they are fully considered in our
strategy. We have therefore prepared our first
disclosure aligned with the TCFD framework,
and are now integrating the outcomes across
our businesses, strategy and financial planning.
For more information see pages 58 to 62.
ISO ACCREDITATION
In order to continually improve our
environmental record and reduce our
environmental footprint, we have continued
our journey to attain ISO accreditation against
a number of standards. In 2021, we attained
an additional seven certifications. In February
2022, we received certification for a further
audit that had been conducted during 2021.
These include ISO 9001 (Quality Management
Systems) in two OUs, ISO 17025 (Testing and
calibrating laboratories) in two OUs, and the
IMS (Integrated Management System), which
combines all aspects of our systems, processes
and standards in a further three OUs.
Renewal of the ISO 14001 and 45001
forVivoEnergy plc was also confirmed
duringthe year.
At the end of the year we held 28 separate
ISOcertifications across the Group.
GREENHOUSE GASES
In 2021 we made significant progress enhancing
and expanding the coverage of our greenhouse
gas inventory across our 23 operating units,
in accordance with the standards set out
by the GHG Protocol. During the year we
finalised our GHG Inventory Management
Plan (IMP) which describes the process of
collecting, calculating and quantifying our GHG
emissions. Through the IMP we defined our
boundary conditions, emission quantification
methodologies, GHG data management system,
base year rebasing due to the Engen acquisition
and related management tools – incorporating
auditing andverification processes.
During the rebasing exercise:
– Scope 1 Heavy Goods Vehicle GHG
emissions moved to Scope 3 – Category 4
for transport purchased in 2019 and 2020.
– The emissions reported for all our classes of
businesses are defined by our boundaries.
– Full year data for Engen operating units have
been applied for Scope 1, 2 and reported
Scope 3 categories for 2019 in accordance
with the GHG Protocol.
In addition to updating and re-basing our Scope
1 and 2 emissions in accordance with the GHG
Protocol Corporate Accounting and Reporting
Standard, we are now also able to report on
ten relevant categories of Scope 3 emissions
in accordance with the GHG Protocol
Corporate Value Chain (Scope 3) Accounting
and Reporting Standard. Our reporting now
includes emissions relating to the use of sold
products, where much of our value chain
emissions fall. Our Group-wide Scope 1 and 2
emissions, and all calculated categories of Scope
3 emissions, are disclosed below. We are in
the process of expanding our Scope 3 GHG
inventory tobeable to include all relevant
categories ofScope 3 emissions in the future.
Enhancing and expanding
the coverage of our
greenhouse gas inventory
across our
23
operating units.
HSSEQ ISO
certifications held.
28
Additional countries
where new fuel
formulation launched.
5
We made good progress with
our sustainability approach and
reporting during the year.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202152 53VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
We have not included emissions from our
central offices located outside our OUs as
these are small, shared offices, responsible
for minimal emissions. This includes our small
shared office in the UK, which uses renewable
electricity and as such has no GHG emissions.
We have implemented efficiency measures in
the office to limit energy consumption.
We are pleased to report that our Operational
Intensity ratio (Scope 1 & 2) has remained
flat compared to 2019, and improved from
2020, despite the impact of the pandemic.
Our overall Intensity metric (Scope 1, 2 and
material Scope 3 categories) has marginally
increased, due to the mix of products sold
being impacted by the nature of the mobility
restrictions in our markets.
We have successfully identified short, medium,
and long-term initiatives to manage Scope
1 and2 impacts including reducing our own
emissions while increasing efficiencies and
solarinitiatives across the Group.
It is clear that due to the nature of the
products we sell, our indirect Scope 3
impact is significantly greater than our direct
emissions. While we need to meet the
continuing demand for hydrocarbon fuels
from our customers, we must do so in the
most climate-friendly way possible. Today,
we are one of the few companies in Africa
putting additives into mostof the Retail fuels
we sell to improve efficiency and are looking to
increase ourrenewable energy offerings to our
customers and at our own operations.
OPERATIONAL EMISSIONS – SCOPE 1 AND 2
KT CO
2
e, unless otherwise indicated 2019 2020 2021
Scope 1 Total
1
11. 2 2 10.41 10.44
Scope 2 Total
2
11. 6 5 11. 3 4 11. 5 0
Total Scope 1 & 2 Emissions 22.87 21.75 21.94
Total energy consumed (million kilowatt-hours) 64.76 59.04 60.91
Scope 1 & 2 Intensity (KT CO
2
e/10,000m
3
) 0.022 0.023 0.021
VALUE CHAIN EMISSIONS – SCOPE 3
KT CO
2
e, unless otherwise indicated 2019 2020 2021
1B. Purchased services 25.96 25.62 24.60
2. Capital goods 38.15 37.14 35.88
3. Fuel- and energy- related activities 6.27 5.72 6.87
4. Upstream transportation and distribution 85.64 74.80 84.86
5. Waste generated in operations 0.41 1.33 1. 31
6. Business travel
4
– – 0.22
8. Upstream leased assets 4.36 3.72 3.58
9. Downstream transportation and distribution 26.14 19.52 21.84
11. Use of sold products 26,280.16 24,208.93 26,138. 65
13. Downstream leased assets 1.77 1.62 1.85
Scope 3 Total (reported categories) 26,468.86 24,378.40 26,319.66
Total Scope 1, 2 & 3 Emissions 26,491.73 24,400.15 26,341.60
Scope 1,2 & 3 Intensity (KT CO
2
e/10,000m
3
) 25.431 25.320 25.569
1 Direct emissions from activities owned and controlled by the organisation.
2 Indirect emissions from purchases of energy in the form of electricity, heat, steam, or cooling due to activities owned
andcontrolled by the organisation.
3 Total energy consumed calculated using fuels’ lower heating values and metered electricity.
4 Business travel emissions were not captured in 2019 and 2020.
Depots with terminal
automation system live.
14
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202152 53VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR
ENVIRONMENTAL
IMPACT
SITE AND DEPOT EFFICIENCIES
We have continued to focus on improving
energy efficiency at our service stations,
depots and head offices to reduce the
demand and cost of conventional electricity,
while contributing to more environmentally
friendly operations. Actions include LED
lighting, moreefficient heating and ventilation
systems, and double glazing that features
improved insulation.
During the year we upgraded our terminal
automation system which is now live in
14ofour depots. This allows full stock
monitoring and ensures that we keep
any lossesto a minimum. This also allows
us to increase the process safety aspects
of our depot and terminal operations
andtruckloading efficiency.
Where possible, newly built and rebuilt
sites include solar power. During the year
anadditional 64 service stations were
equippedwith solar panels.
PRODUCT QUALITY
The importation of products into most of our
markets is regulated by governments that set
specifications for fuel products which balance
environmental impact with affordability.
Through our relationship with Shell and Engen,
we have access to advanced products, which
enables us to include additives in the retail fuels
we sell in our markets – driving better engine
efficiency, reducing fuel consumption, and
therefore reducing emissions.
TRANSPORT EFFICIENCIES
Most of our product transportationisby
road, which is a challenging and complex
issue for industry worldwide and particularly
in the majority of the countries where we
operate. To improve safety performance,
we focus on safe practices and behaviours,
and on influencing the age and design of
ourcontractors’ vehicles.
A major focus of the past few years
hasbeenon reducing the age of our
contractors’ fleets, while increasing the size
ofthe trucks from 35m
3
to 42m
3
, to increase
drop efficiencies. In addition, we continue
to exploreother options for improving
supply anddistribution efficiencies, including
pipelineand rail where these options exist.
This not only reduces our carbon footprint
substantially butalso decreases our road
transport risk.
During 2019, we commenced launching new
fuel formulations in a number of our markets.
In 2021 we launched Shell FuelSave with
DYNAFLEX technology in Ghana, Guinea,
Botswana, Burkina Faso and Côte d’Ivoire,
meaning we have the latest fuel formulation
in13 of our 15Shell-branded OUs.
In addition to improving product quality we
focus on product stewardship, reducing and
eliminating the risk of crossovers (mixing up
product lines) at our retail sites. We introduced
and trialled a number of interventions during
the year, whichare being reviewed before
beingshared with other OUs during 2022.
SOCIETAL IMPACT
Community investment matters, because we
employ local people and serve local businesses
and individuals. We want to make a real and
lasting difference to our communities, engaging
with them to earn their respect and trust,
supporting them and promoting a better
quality of life and a more sustainable future.
Our community programme also aims to help
us move closer to our vision of becoming the
most respected energy business in Africa.
During 2020, we rightly focused our efforts on
implementing a range of projects to support
our partners and local communities in the fight
against COVID-19. These included supporting
many of our host governments’ COVID-19
funds, providing free fuel for healthcare
workers, blending hand sanitisers at our
lubricant blending plants, supporting e-learning
applications for children whose schools had
closed, and providing supplies to those most
inneed through local NGOs.
20
21
2020
2
019
2
018
2
017
2
3
2
Number of product spills
Greater than
100KG
4
2
20
21
2020
2
019
2
018
2
017
18.4
7.5
45.4
Total product lost
Metric tonnes
50.4
1.7
Community Investment programme
back to our threecore focus areas,
namely Road Safety, Education and
theEnvironment.
RESOURCES AND RELATIONSHIPS CONTINUED
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202154 55VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
For 2021, while COVID-19 related support for
our stakeholders continued to be a priority,
we shifted our Community Investment
programme back towards our three core
focus areas, namely Road Safety, Education
andthe Environment.
In Uganda, we launched a project to educate
communities about the damage caused by
plastic waste, named ‘Taasa Obutonde’,
which means ‘Let us save the environment’.
The programme aims to show how plastic
waste harms both the environment and our
own health through a public behavioural
change campaign.
This project has made use of physical
workshops, media engagement and social
media to deliver its message. Additionally,
waste collection points have been installed
at Shell service stations in order to engage
allforecourt customers with appropriate
wastedisposal methods.
The effectiveness of the campaign, and
the work by our teams, has been widely
recognised by the public, the media and
government officials.
In Guinea we developed the Vivo Green
Action project, in the mining town of Boké.
This programme is working to restore and
reinvigorate used mine sites, educating and
paying locals to plant cashew trees at these
locations. During the year over 3,000 trees
were planted. Additionally local women from
the area were supported and trained to form
acooperative, helping them learn new skills
andmanage the crops.
PRODUCT SPILLS
We consider any release of product to the
environment as unacceptable, and continue
toimplement stringent process safety
standardsand procedures, as well as ensuring
our contractors have advanced technical
mitigations in place to prevent spills.
During 2021 we continued to maintain our
very good record of preventing spills, despite
extremely challenging operating conditions,
particularly in our West African markets.
We only recorded two spills during the year
and the lessons learnt from these incidents
have been shared with all our operations
aswe work towards our goal of zero harm
tothe environment.
SOIL AND GROUNDWATER
MANAGEMENT
We have developed a Soil and Groundwater
Management manual, providing requirements
and guidance for identifying, assessing and
managing risks associated with potentially
contaminated land. Using a risk-based
management approach, we are able to assess,
manage and mitigate a range of risks posed
byacontaminated site.
As part of this new approach, we continue
to review and track potentially contaminated
sites using a combination of initial desktop
assessments and more detailed ‘phase 2’
assessments to quantify the risk, characterise
the site and assess the need for remedial action.
We also implement remedial action and track
progress as part of our clean-up obligation
report on a quarterly basis.
WASTE MANAGEMENT AND
PRODUCT STEWARDSHIP
We continue to refine and review our
recording and monitoring of the quantity of
waste generated within our operations through
our HSSEQ online management system, acting
on the most relevant findings. The quantity of
waste generated is classified into hazardous
and non-hazardous waste and we now have
anaccurate baseline for all reported waste
generated in our facilities.
2021 2020 2019
Non-hazardous
waste
(Metric tonnes)
2,723 2,833 3,348
Hazardous
waste
(Metric tonnes)
1,752 1,620 3,618
We’ve increased our focus on product
stewardship, ensuring that we manage
ourproducts from acquisition to
disposal. In each country, we manage this
in accordancewith national legislation
andproductstewardship protocols.
We have reviewed and updated our product
data sheet format in accordance with the
Globally Harmonised System (GHS) standard
to ensure our hazardous classification is
consistent and standardised in accordance
with international practice. These data sheets
are now available to all our OUs through
our HSSEQ online management system and
arereviewed and updated as changes occur.
In Côte d’Ivoire we signed
anagreement with Ivorian
start-up Coliba to manage our
plastic waste, equipping 40 of
our Shell service stations with
bins to collect plastic bottles.
Coliba will collect and recycle
the bottles into reusable
granules which will be sold to
the automotive, construction
and textile industries.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RESOURCES AND RELATIONSHIPS CONTINUED
HOW WE’RE FUNDED
The Group has achieved significant growth
since inception in 2011. We have further
expanded our presence in Africa by investing
over $1 billion of capital generated internally
from operating cash flows. The Group’s funding
for new investments is financed through cash
generated by existing operations, as well as
from our structurally negative working capital
position. At a Group level, we have a financial
structure that is well-managed, with a leverage
ratio of 0.45x (2020: 0.86x) and have access
to $2.1 billion (2020: $2.1 billion) in liquidity
of which $1.2 billion (2020:$1.3 billion) is
uncommitted. The liquidity available to the
Group includes a $300 million undrawn,
committed multi-currency revolving credit
facility and $1,171 million of undrawn, unsecured
and uncommitted short-term bankfacilities
extended to our operating entities for
workingcapital purposes.
CAPITAL ALLOCATION
To ensure every growth project undertaken
adds significant value to our business, we
apply a rigorous return requirement in our
capital allocation. Post-investment, each
project undergoes a robust review process
that measures the returns realised against
projections, with the majority of our projects
exceeding required returns.
ENHANCING OUR
CAPITAL STRUCTURE
Our operating model, mostly fixed cost in
nature, negates the addition of significant
overhead whenever we increase the size of
our Retail network as we pursue growth in the
geographic areas we operate in. This model
results in a healthy operating leverage for the
Group. Since 2015, we’ve grown volumes by a
CAGR of 4%, gross cash profit by 9%, adjusted
EBITDA by 11% and adjusted net income
by 13%. We actively monitor capital market
conditions for opportunities to enhance the
efficiency of our capital structure.
CURRENT CREDIT RATINGS
In 2021, the Group was affirmed a rating
of Baa3 by Moody’s, which is investment
grade. We also have current BB+ ratings
from Standard and Poor’s and Fitch
Ratings. The $350 million of notes, issued
in September 2020, were awarded the
same ratings. The ratings reflect our good
geographical diversification, conservative
financial structure,robust post-pandemic
performanceand strong market positions.
We continue to manage our
financial structures in an effective
and prudent manner, driving
the success of our investment
strategy and ensuring a sound
financial performance.
Leverage ratio
0.45x
in 2021 (2020: 0.86x).
Strong liquidity
$2.1bn
available short-term
resources in 2021
(2020: $2.1 billion).
OUR FINANCIAL
STRUCTURE
Strong cash flow from
operations funded our
capital expenditure
initiatives, enabling us to
pursue various opportunities
inour markets.
STRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202156
NON-FINANCIAL INFORMATION STATEMENT
This Annual Report contains the information required to comply with the Companies, Partnerships and Groups (and Non-Financial Reporting)
Regulations 2016, as contained in sections 414CA and 414CB of the Companies Act 2006. The table below provides key references to
information that, taken together, comprises the Non-Financial Information Statement for 2021:
No. Reporting requirement Policies Reference in the 2021 Annual Report Page no.
1
Environmental
matters
– Environmental policy
– Code of conduct
– HSSEQ and Social Performance policy
– Climate change
– Climate change risk
– Managing our environmental impact
– HSSEQ risk
– Task Force on Climate-Related
Financial Disclosures
52 to 55
71
52 to 55
69
58 to 62
2
Employees – Code of conduct
– General Business Principles
– Whistle-blowing policy
– Data protection policy
– Privacy policy
– Performance, reward and
recognition framework
– Travel security policy
– Our culture, values and purpose
– Engaging and developing our people
– Looking after our people
46 to 47
48 to 49
50 to 51
3
Human rights – Combating Modern Slavery statement
– Privacy policy
– Data protection policy
– Human Rights statement
– Supplier code of conduct
– Our culture, values and purpose 46 to 47
4
Social matters – Code of conduct
– General Business Principles
– HSSEQ and Social Performance policy
– Engaging with our stakeholders
– Engaging and developing our people
40 to 43
48 to 49
5
Anti-corruption
and anti-bribery
– Anti-bribery and corruption manual
– Anti-money laundering policy
– Anti-trust manual
– Whistle-blowing policy
– Know your counterparty policy
– Gifts and hospitality policy
– Sponsorship and Donations policy
– Code of conduct
– Criminal activity, fraud,
bribery and compliance risk
– Our culture, values and purpose
68
46 to 47
6
Business model – Business model and value creation 14 to 15
7
Principal risks
and uncertainties
– Principal risks and uncertainties 66 to 73
8
Non-financial key
performance
indicators
– Non-financial key performance indicators
– Our strategic objectives
20 to 21
18 to 19
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
57VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
TASK FORCE
ON CLIMATE-
RELATED
FINANCIAL
DISCLOSURES
GOVERNANCE
Climate-related issues have been considered
as a principal risk since 2020 and areformally
embedded into our systematic risk
identification, evaluation, and Board and
management processes. In 2021, to support
theBoard’s oversight of climate-related matters
and ongoing integration of climate-related
governance and initiatives across the Group,
we enhanced our governance structures by
establishing the ESG and Climate Committee.
Chaired by the CEO, the Committee
plays an integral role in overseeing our
climate‑related progress and reports to the
Board.TheNominations and Governance
Committee also assists the Board with
oversight of our climate‑related strategy.
Our ESG strategy includes climate‑related
risks and opportunities and matters relating to
greenhouse gas emissions, which are strategic
items considered by the Board. The Board
and the Audit and Risk Committee are jointly
responsible for reviewing and monitoring the
Group’s overall climate‑related risk profile,
risk management and the effectiveness of
internal controls.
Across Vivo Energy, line management
is accountable for risk and control
management, including measures for
managingclimate‑related risks.
Overall risk assessment includes risk
identification, analysis and evaluation, ensuring
each risk is analysed to identify the consequence
and likelihood of the risk occurring, and the
adequacy of existing controls. For further
details of our approach to risk management,
including our three lines of defence approach,
refer to pages 64 to 73.
Our key climate‑related organisational
governance structures and their roles are
summarised below.
We recognise that the sustainability of our business depends on
our understanding of the climate-related risks and opportunities we
face, together with our commitment to ensuring that these are fully
considered in our strategy. We have therefore prepared our first
disclosure aligned withthe TCFD framework. We view this framework
as an important component of our ESG journey, withourresponses
to the TCFD recommendations providing transparency for our
stakeholders regarding our climate-related preparedness.
ESG AND CLIMATE COMMITTEE
Objective is to guide Vivo Energy’s organisation around climate-related
risksandopportunities, manage sustainability risk areas, assess
ESGstrategy andrisk management framework, and monitor ongoing
ESGandclimate-relatedmetrics and targets.
CFO
Oversees financial aspects of Group ESG strategy, including
considerationsrelatingto spend on alternative energy within
thecorebusiness,non-fuels, and M&A.
OPERATING UNITS (OUs)
Our OUs report on physical and transition climate-related risks and opportunities on
countrylevelriskregisters,includingassessments ofexposureto risks and opportunities.
HSSEQ
Our HSSEQ function is responsible for maintenance and quality
assuranceoftheGroup’s greenhouse gas inventory and management
plan.It alsohas responsibilities for risk assessment control
measuresforphysicalclimate risks.
INTERNAL AUDIT
Annually assesses Group significant risks, reporting directly to the Audit and Risk
Committee onprincipal risks, including climate risks. Provides assurance to the
Board oneffectiveness of governance, risk management and internal controls.
THE BOARD
Oversees Group-wide climate-related risks and opportunities.
BOARD COMMITTEES
Nominations and Governance Committee assists the Board with oversight of the Group’s climate change
and ESGplansand strategy. Audit and Risk Committee is responsible for reviewing and monitoring the overall
Groupriskprofile, including climate-related risks and internal controls.
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STRATEGIC REPORT
STRATEGY
Vivo Energy operates across 23 countries in
Africa, each with different physical geographies
and varying levels of climate-related maturity
across market, technological, and policy and
legal aspects. We believe that our operating
units are well-equipped to respond to local,
short-term climate-related issues, such as
physical or environmental risks, and monitoring
and responding to any transition-driven
changes in customer demand. Our focus this
year as part of TCFD reporting was to assess
and understand in greater detail the range
of potentially material climate-related risks
and opportunities on a Group-wide basis
that could be experienced under different
scenarios across longer time horizons. In 2021,
we implemented climate scenario analysis to
broaden our understanding of the possible
impacts of physical and transitions risks and
transition opportunities.
We adopted short-, medium-, and long-term
time horizons for our climate scenarios to
be able to capture climate-related risks and
opportunities which may manifest beyond
traditional horizons.
These time horizons included:
Short-term
2021-2024
0-3 years
Medium-term
2025-2029
4-8 years
Long-term
2030-2060
9-39 years
We applied the following climate scenarios and their underlying assumptions to explore the implications on our business strategy:
RISK CATEGORY CLIMATE SCENARIO APPLIED RATIONALE FOR SELECTION
PHYSICAL RISKS
Very High GHG Emissions:
IPCC SSP5-8.5 (4.4°C best estimate
by end of century)
– Aligns with the most credible and recent global
consensus on climate science
– Allows transparency and comparability
– Focusing on results from SSP5-8.5 (the very high
GHG emissions scenario) delineates worst-case
exposure to physical climate hazards
Intermediate GHG Emissions:
IPCC SSP2-4.5 (2.7°C best estimate
by end of century)
TRANSITION RISKS
IEA Sustainable Development Scenario
(consistentwith the ‘well below 2°C’ goal of the
Paris Agreement, consistent with limiting the global
temperature rise to 1.65°C with a 50% probability)
– Offers quantitative, forward-looking
Africa-specific assumptions, such as oil and liquid
fuel demand, to be utilised as part of climate
scenario analysis
– Focuses on SDGs to which Vivo
Energy is wellpositioned to contribute
(e.g.SDG 7-ensuring universal access to
affordable, reliable, sustainable and modern
energy services by 2030)
We defined a list of the most relevant
climate-related risks and opportunities via an
in-depth analysis of our business and a series
of engagement workshops across key business
segments and functions. The list was validated
and consolidated by the ESG and Climate
Committee. These risks and opportunities
arepresented in the tables below.
The exercise provided us with specific subject
areas to explore in greater detail, quantitatively
and qualitatively, as part of climate-related
scenario analysis. The defined items have
also fed into our ongoing risk management
processes, as discussed underthe Risk
Management section in the Strategic Report.
PHYSICAL RISKS
RISK DESCRIPTION POTENTIAL OUTCOMES RELEVANT
TIME HORIZON
RISK TYPE
Event-based: Increased frequency and
severityofextreme weather events
includingInland flooding; Heatwaves;
Droughtsand Storms/Cyclones
– Asset damage to depots and retail sites;
Increased capex and insurance costs
– Disrupted operations of depots and retail
sites; Decreased revenues and increased
operating costs at depots and retail sites
Acute
Long-term shifts: Changes in average climate
conditions including rising sea levels, coastal
flooding and increased average temperatures
– Increased operating costs of depots
andretail sites
– Increased maintenance capex and
insurance costs
– Accelerated depreciation of asset values
andasset relocation requirement
Chronic
The risks and opportunities described below
are potential drivers and outcomes that could
be presented at various points in the future,
depending on regional and global climate
pathways. They are not necessarily new to us,
and in many cases, wealready have business
responses corresponding to these risks
and opportunities.
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES CONTINUED
STRATEGY CONTINUED
TRANSITION RISKS
RISK DESCRIPTION POTENTIAL OUTCOMES RELEVANT
TIME HORIZON
RISK TYPE
New climate-related reporting and
disclosurerequirements or obligations
– Legal or reputational issues; increased
compliance costs
Policy & Legal/
Reputational
Failure to meet internal or external
stakeholders’ climate-related expectations
resulting in degraded relations with current
orpotential employees
– Increased operating costs from employee
turnover; reduced revenues due to challenges
attracting new talent
Reputational
Increased costs of products due to policy
changesto fuel subsidies; or higher trading prices
of oil and liquid fuels due to transitional policies
– Reduced revenues due to lower demand
forhigher cost products
Market/
Policy & Legal
Commercial customers transitioning to
alternative fuels or renewable technologies
– Reduced revenues in our
Commercial segment
Technology/
Market
Degradation of commercial partnerships
duetodivergent climate strategy or ambition
– Reduced revenues due to loss of brand value
Market
Policies or technology shifts that result in
anincreased share of electric vehicles and
hybridsin the passenger transport mix;
alternative fuel uptake; improvements in
internalcombustion engine (ICE) efficiency;
orreduced consumer demand for fuels
– Reduced revenues in our Retail segment
Technology/Market/
Policy & Legal
Mandatory carbon pricing impacting
thepoweror aviation sectors
– Increased operating costs; reduced revenues
inour Commercial segment
Policy & Legal
TRANSITION OPPORTUNITIES
OPPORTUNITY DESCRIPTION POTENTIAL OUTCOMES RELEVANT
TIME HORIZON
OPPORTUNITY
TYPE
Increased operational efficiency of
VivoEnergyretail sites and depots;
Increasedrenewable energy supply
toVivoEnergy retail sites and depots
– Reduced operating costs from
assetefficiency gains
Technology/
Market
Improving logistics fleet fuel efficiency and
optimising routing schedules; Where possible,
prioritising pipeline and rail over road as means
ofdistribution of products
– Reduced operating costs from
fleetefficiency gains
Technology
Meeting increased retail demands for lower
carbon fuel alternatives (e.g. LPG, biofuels),
electric vehicle charging infrastructure, or lower
carbon products; Meeting increased commercial
demand for renewable energy or sustainable
aviation fuels
– Increased revenues from emerging
ornewretail and commercial
market demands
Technology/Market/
Policy & Legal
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202160 61VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC REPORT
SCENARIO ANALYSIS – PHYSICAL
At the end of 2021, Vivo Energy’s network
comprised of 57 depots and 2,463 retail
sites spread across our 23 markets in Africa.
Our assets are exposed to occasional
local environmental stressors, and all local
incidents are recorded via our HSSEQ tool.
Mitigative actions are followed when required,
while KPIs are systematically tracked to reflect
asset performance – to date, no physical
climate-related issues have materialised at a
Group level.
In our first iteration of climate scenario analysis,
we assessed a representative sample of assets
from markets representing over 40% of
Group volumes, including Kenya, Mozambique,
Mali, Morocco and Mauritius. These markets
were selected in order to represent a
range of physical geographies across Africa,
assumed to be exposed to different types
of physical climate hazards, as well as their
overall significance to the Group’s retail and
commercial businesses. The total sample
included 31 assets (six depots and 25 retail
sites). Our focus was on understanding the
possible exposure under medium- and long-
term horizons. The physical hazards assessed
included chronic risks from sea level rise and
average temperatures, and acute risks from
drought, heatwaves, inland floods and wildfires.
OUR KEY FINDINGS
FROM THE EXERCISE ARE
SUMMARISED BELOW:
– In the medium term, under both
climatescenarios (IPCC SSP5-8.5, IPCC
SSP2-4.5), the majority of assets
assessed were at low exposure to
most sources of physical hazard.
Instances of elevated exposure to
droughts and heatwaves were identified
at some assets in the medium term.
– In the long term, under both
climate scenarios (IPCC SSP5-8.5, IPCC
SSP2-4.5), elevated exposure to
droughts and heatwaves was
identified as the most prevalent
change across the sample of assets
assessed. No coastal assets were
significantly exposed to sea-level
rise in the long term under either
climate scenario.
– We must further investigate the
modelling results and related metrics
before we are able to fully interpret and
disclose on the exposure of the sample
to wildfires.
Note:
Qualitative physical hazard exposure classifications
(i.e. low; moderate; high) are assigned by Sust Global,
andarebased upon thresholds applied to quantitative
hazard-specific exposure metrics, as per the site-by-site
results of the analysis.
Vivo Energy manages physical risks through
a series of resilience measures as described
below, which we believe provide adequate
control for short-term risks. As we move
forward, we will investigate possible impacts,
and whether any additional responses are
required to address the elevated exposure
from certain hazards in the medium and
longterm under the higher emissions scenarios.
Further details of how this process feeds into
risk identification, assessment and management
are discussed in the Risk Management section.
Vivo Energy’s existing resilience
measures for physical climate hazards:
Our hazard identification process (HAZID)
ensures environmental risks are considered
in the initial design and construction stage of
retail sites and depots, and that appropriate
mitigation measures are implemented.
Expected environmental conditions for
each location are assessed using statistics
and databases to inform design tolerance
thresholds; if an OU identifies any emerging
risks, these are accounted for via risk mitigation
measures at existing assets and for future
projects. Vivo Energy’s technical roles provide
the minimum engineering standards to cover
the HSSEQ control framework, with risks
assessed and managed to as low as reasonably
practical. A HSSEQ management system is
in place in each OU, under which physical
risks are covered and qualified. Our Hazard
Effect Management Process (HEMP) ensures
that environmental risks are considered and
reviewed throughout the lifespan of retail
sites and depots. Audits ensure any mitigation
measures or calibrations required are identified
and implemented in response to any changes
to risks (covering physical measures such as
equipment, processes and skills of roles).
SCENARIO ANALYSIS – TRANSITION
Today, our core businesses are focused on
distributing and marketing fuels and lubricants
to our retail and commercial customers in
Africa. We therefore perceive that the most
material transition risks to the Group are
related to factors that could reduce demand
for the fuels we sell due to any combination of
climate-related technology, market, and policy
and legal developments across our markets.
In our first iteration of climate-scenario analysis,
we focused our quantitative assessment
on the possible impacts of fuel and overall
energy demand changes in Africa, as per the
IEA’s Sustainable Development Scenario.
We modelled an ‘IEA SDS Aligned’ scenario,
which represents hypothetical Group-wide
fuel sales volumes, should oil and liquid demand
in Africa develop in the long term as per the
IEA SDS.
OUR KEY FINDINGS
FROM THE EXERCISE ARE
SUMMARISED BELOW:
– There is minimal impact to fuel
demandgrowth in the short- and
medium-term horizons, compared
tocurrent market projections.
– In the long term, our fuel sales
volumes could continue to grow under
the IEA SDS but at a slower rate than
our forecasts based upon current
market projections, as oil demand in
the African transport sector increases
into the long-term horizon under
this scenario.
We continue to closely monitor demand
indicators in each of our markets and believe
we are well positioned to react quickly to
transition-driven changes to demand that
may occur.
OUR STRATEGY FOR RESILIENCE
To date, the actual impact of climate-related
risks on our financial performance and financial
position has been non-material. However,
we are actively considering our strategy, role
and responses to energy transitions across
our markets. We have already invested in
transition initiatives such as on-site solar across
our network, and EV charging infrastructure
in a range of countries including Morocco and
Reunion. We are continuously monitoring
demand trends for lower-carbon energy
and fuel alternatives, along with our capital
allocation to ensure we can respond to
changing market needs. We internally track
the performance of our business practice,
focusing on the operational savings from the
investments made to reduce our impact, and
operate our offices, depots and service stations
more efficiently.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES CONTINUED
Below we summarise our activities and
plans across key climate-related areas, which
we perceive as both harnessing transition
opportunities, and mitigating transition risks.
RISK MANAGEMENT
As climate-related risks are on the Group’s
list of principal risks, they are subject to
Vivo Energy’s risk management framework
underpinned by the ‘three lines of defence’
approach. The scenario analysis process has
helped determine possible climate-related
risks at asset, business unit and Group level,
and also highlight the actions we are already
taking to manage these types of risks. We are
in the process of ensuring that physical and
transition risks are systematically included in
all risk registers at OU level. Internal Audit has
instructed our OUs to consider both physical,
and transition risks in their risk assessments
and reporting, and guidance has been provided
on how to integrate these risks on the country
level risk registers. Our goal is to achieve a
level of granularity and consistency that will
adequately reflect all material climate-related
risks centrally, enabling comprehensive
identification, analysis and evaluation, along
with the adequacy of existing controls over
therelevant time horizons.
Further details on our risk management
aroundclimate risks can be found on page 71.
METRICS AND TARGETS
As described on pages 52 to 55, we have
substantially enhanced our GHG reporting and
disclosure this year. We have improved and
restated our Scope 1 and 2 emissions and for
the first time have calculated and disclosed 10
Scope 3 Categories, including Category11-Use
of sold products, the most meaningful category
of emissions.
As we move forward, we will continue to
work on enhancing the measurement of
our emissions to ensure we have a reliable
basis to measure the effectiveness of future
reduction initiatives.
To facilitate the Group’s ability to assess
performance against transitional climate-related
risks and opportunities, we are tracking
our operational emissions and value chain
emissions intensity.
Our operational emissions intensity represents
the emissions from the operation of our
facilities (e.g. from the purchase of electricity,
heat and cooling), relative to the volume of
fuelproducts supplied to and consumed by our
customers. This metric reflects our operational
greenhouse gas reduction efforts, including the
overall impact of initiatives such as increasing
the number of retail sites and depots with
on-site solar power.
Our value chain emissions intensity represents
the total emissions across our value chain
(covering Scope 1 and 2 sources as well as all
calculated upstream and downstream Scope 3
sources), relative to the volume of fuel products
supplied to and consumed by our customers.
This metric reflects the overall greenhouse
gas emissions produced for each unit of fuel
that we sell which is used by our customers,
including emissions outside our operational
control such as those from production,
processing, and end-use of the products. Non-
energy products such as lubricants are not
included inthe intensity metrics because their
end-use isnot combustion.
In 2021, our core focus was to identify a robust
baseline for our Scope 1 and 2 emissions, and
to expand our Scope 3 GHG emissions data
collection and reporting.
During 2022, we intend to work towards
setting Scope 1 and 2 emissions reduction
targets, and are currently exploring our options.
To support emissions reductions outside
our value chain, we are exploring the role
of carbon offsets in achieving Scope 1 and 2
carbon neutrality. We also continue to look at
opportunities to reduce our Scope 3 intensity
through the development of our low-carbon
product mix, and value chain engagement.
MOVING FORWARD
Across our businesses, strategy and financial
planning, we are now integrating the
outcomes of the first iteration of our TCFD
disclosure process. We are fully committed to
strengthening our climate-related disclosures
as we progress our climate strategy, and look
forward to enhancing the information available
to our stakeholders regarding our climate
strategy risks and opportunities.
SUPPORTING ELECTRIC
VEHICLES (EV) IN OUR
RETAIL SEGMENT
We are piloting EV charging infrastructure
inanumber of our markets, such as Reunion
and Morocco, to understand its potential
and ensure we arepositioned toaddress
customer demandas it evolves.
ACHIEVING LOWER
EMISSIONS LOGISTICS
We are engaging with our fuel delivery
fleetsuppliers to minimise the climate
impactof trucks used for transporting
ourfuel to end-users.
To minimise fuel usage, we are prioritising
pipeline and rail transport ahead of road,
where possible.
USING RENEWABLE POWER
AT OUR FACILITIES
We are including on-site solar power
at newlybuilt and rebuilt retail sites
where possible.
In the last 12 months we have added
solarto64 sites.
We are also installing solar panels
atdepotsandoffices.
SUPPLYING LOW-
OR ZERO-CARBON
FUELS IN RETAIL AND
COMMERCIAL SEGMENTS
We are continually monitoring and
responding to Retail and Commercial
customers’ demands for new technologies
and lower-carbon alternatives such as LPG,
solar or other commercially attractive
options, as part of the transition.
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STRATEGIC REPORT
SECTION 172(1)
STATEMENT
We recognise that the business can only
grow and prosper over the long term if it
understands and respects the views and needs
of the Company’s people, customers, partners,
communities, investors and shareholders, and
governments, as well as the environment we
operate within. The Board plays a critical role in
ensuring that Vivo Energy conducts its business
in a manner which is consistent with the highest
standards of corporate governance and ethical
behaviour so that the Group contributes
positively to wider society.
The individual Directors and the Board as a
whole are aware and mindful of their duty
under section 172(1) of the Companies Act
2006 to act in the way which they consider, in
good faith, would be most likely to promote the
success of the Company for the benefit of its
members as a whole. In doing this, section 172
requires a Director to have regard, amongst
other matters, to the:
– likely consequences of any decisions
inthelong term;
– interests of the Company’s employees;
– need to foster the Company’s business
relationships with suppliers, customers
and others;
– impact of the Company’s operations on
thecommunity and environment;
– desirability of the Company maintaining a
reputation for high standards of business
conduct; and
– need to act fairly as between members
ofthe Company.
In discharging our section 172 duties we have
regard to the factors set out above. We also
have regard to other factors which we consider
relevant to the decision being made. We listen
to and collaborate with a wide range of
stakeholders in order to grow our business
and deliver value. The key stakeholder groups
we have identified are our people, customers,
partners, communities, governments, investors
and shareholders. Further details about how
we engage with these stakeholders can be
found on pages 40 to 43 and page 81.
We acknowledge that not every decision
we make will necessarily result in a positive
outcome for all of our stakeholders.
By considering the Company’s purpose,
vision and values together with its strategic
priorities and having a process in place for
decision‑making, we do, however, aim to
make sure that our decisions are consistent
and predictable.
DECISION-MAKING
The Board’s main responsibility is to promote
the long-term success of the Group, leading
in an entrepreneurial manner ensuring we
generate value for stakeholders. We have a
clear framework for determining the matters
within our remit and have approved Terms
of Reference for the matters delegated
toour Committees.
Throughout the year, the Board has considered
the long-term consequences of the decisions it
has made, focusing on the interests of relevant
stakeholders as appropriate. Set out below
are examples of how the Directors discharged
their duties under section 172 during the year.
KEY BOARD DECISIONS
Vitol’s Offer
On 25 November 2021, the Boards of BidCo
and Vivo Energy announced that they have
reached an agreement on the terms of a
recommended cash acquisition of the entire
issued and to be issued share capital of the
Company, excluding shares held by the existing
Vitol shareholders (‘Vitol Offer’). The Vitol
Offer is to be implemented by means of a
Court-sanctioned scheme of arrangement
under Part26 of the Companies Act.
Under the terms of the acquisition, shareholders
who are on the register of members of Vivo
Energy at 6:00 p.m. on the day of the Court
Hearing to sanction the Scheme will be entitled
to receive, a total cash offer for each scheme
share, of $1.85. The Scheme Document is
available at www.vivoenergy.com/offer-for-vivo.
To consider the Vitol Offer, Vivo Energy’s Board
constituted an independent committee, which
excluded the nominated Directors from both
Helios and Vitol. In considering the terms of the
Vitol Offer, the Independent Directors took into
account a number of factors, including:
– the opportunity for Vivo Energy’s
shareholders to crystallise the value of their
holdings in cash today, and realise the potential
future value creation through a substantial
premium to the undisturbed share price;
– the irrevocable commitment from
VivoEnergy’s second largest shareholder,
Helios, to accept the offer in respect of its
total shareholding of 27.1% and that combined
withVitol’s current holding of 36.0% in
VivoEnergy, BidCo together with the
existingVitol entities could have acquired a
controlling 63.1% shareholding in Vivo Energy;
– BidCo’s intentions for the business,
management, employees and other
stakeholders of Vivo Energy; and
– Vitol’s proven track record of supporting
Vivo Energy’s long-term growth plans.
Following a period of discussion and negotiations,
the Independent Vivo Energy Directors
concluded that the terms of the Vitol Offer are
fair and reasonable and recognise the strength
of Vivo Energy’s business and its prospects.
Accordingly, the Independent Directors
unanimously resolved to recommend the Vitol
Offer to Vivo Energy’s shareholders.
The decision to recommend the offer was
considered to be in the best interests of our
people, shareholders, customers, communities,
governments and suppliers. In making the
decision the Independent Committee was
advised by J.P. Morgan, Rothschild & Co and
Freshfields Bruckhaus Deringer.
ESG and Climate
Management Committee
Companies and the environment are
interdependent. Businesses depend on the
environment for their operations, their supply
chain, for healthy workforces, and beyond.
Investors, employees, communities and the wider
public expect companies to act responsibly and
to minimise any adverse impact they might have
on local communities and the environment in
order to ensure the long-term success of the
business and to secure a sustainable planet
forfuture generations.
The Board considers climate change during
its discussions and when making decisions
regarding the Group’s strategy, risk management,
investments and stakeholders. A key
development in 2021 was the establishment
ofthe ESG & Climate Management Committee
to help guide Vivo Energy’s approach to climate
and environmental matters. The Committee
is chaired by the CEO, with meetings attended
by the CFO, General Counsel, Head of
HSSEQ, Head of Investor Relations and
Corporate Development and Strategy Manager.
The Committee met five times in the course
ofthe year.
The expectations of governments, regulators,
investors, customers and our people, who are
allbecoming increasingly concerned with ESG
issues and the need to minimise our impact
on the environment, were all important
considerations when making the decision.
Dividend Policy
The Group has a clear strategy, which the
Board regularly reviews in light of the changing
external environment to ensure that the focus
remains correct. A key strategic objective is
to maintain attractive and sustainable returns
through disciplined financial management.
Prudent management of the Company’s
liquidity and capital resources is fundamental
tothis objective.
In light of the additional liquidity created by the
bond re-financing in 2020, in the first half of
the year the Board considered the Company’s
Dividend Policy and resolved to adopt a
progressive policy which increased the minimum
payout ratio from 30% to 50% of attributable net
income, and intends for future dividends to grow
in line with earnings.
In making this decision the Directors were
mindful of the expectations and needs of the
Company’s shareholders, the interests of our
people, and those of the wider stakeholder
group. The Board considered investor perception
study, employee feedback received on the
measures taken to protect jobs during the
pandemic and the Company’s immediate and
longer-term strategic priorities, together with
the risks facing the business. A detailed financial
report was received from the CFO and the
market expectations as well as the impact the
change would have on the Group’s growth plans,
liquidity and long-term viability were considered,
none of which were thought to be negatively
impacted by the decision.
Engaging with stakeholders is
fundamental, and we believe that
considering them in key business
decisions is not only our legal
obligation but the right thing to do.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR APPROACH
TO RISK
Active risk management is one
of our key priorities and an
important component of our
strategic framework. Our success
depends on our ability to identify
and exploit emerging business
opportunities in the markets
where we operate, and this
comes with an element of risk.
To achieve our risk management objectives,
wehave embedded risk management
activities into the operational responsibilities
of management and made these activities
an integral part of our overall governance,
planning, decision-making and organisational
structure. Risk evaluation is conducted by
assessing the probability of a risk occurring
andits potential impact.
The main purpose of risk evaluation is to
help prioritise risks and ensure effective risk
management. Through an embedded approach
to risk management, we are able to mitigate
and manage risks and embrace opportunities
asthey arise.
OUR APPROACH TO
RISKMANAGEMENT
Our internal control system is based on
theCommittee of Sponsoring Organizations
of the Treadway Commission’s (COSO)
framework and uses the five components
of the framework: control environment,
riskassessment, control activities, monitoring,
and information and communication.
Our approach is based on the underlying
principle that line management is accountable
for risk and control management. We follow
a risk-based approach to internal control and
management is responsible for implementing,
operating and monitoring the internal control
environment. The Audit & Risk Committee and
the Board are responsible for reviewing and
monitoring the overall risk profile, the adequacy
of the Group’s risk management and the
effectiveness of internal controls.
Our risk management framework is
underpinned by a ‘three lines of defence’
approach, which defines how risk management
activities are organised and where responsibility
and accountability lie within the Group.
– First line of defence – As the first line of
defence, local functional managers own and
manage their risks. They have ownership,
responsibility and accountability for directly
assessing, controlling and mitigating risks
in line with the guidance, policies and
requirements set by the Group. They are
responsible for implementing corrective
actions for control deficiencies identified
through KPI reporting and goal zero
checklists (amonthly check completed
bymanagement which evidences that
controls are operating as intended).
– Second line of defence – Financial (Internal
Control, Credit, Treasury) and non-financial
(Legal, Ethics & Compliance, Forensics,
Supply, Distribution, HSSEQ, Retail, ESG)
risk management functions are in place
at Group level to oversee and monitor
risks and provide an objective challenge
to the first line of defence. They can
intervene directly by modifying internal
controls, policies and procedures as well
asdeveloping risk systems.
– Third line of defence – The Group’s
(independent) Internal Audit function
and the Audit and Risk Committee are in
place to provide assurance to the Board
on the effectiveness of governance,
risk management and internal controls.
This includes the extent to which the
first and second lines of defence have
achieved their risk management and
control objectives.
In accordance with the UK Financial Reporting
Council guidance, we define a principal risk
as a risk or combination of risks that could
significantly affect the financial performance,
operations or reputation of the Group.
Our principal risks, disclosed hereafter, relate to
the current risks and also include components
which are the main identified emerging risks.
Emerging risks are considered particularly
important in our strategic planning process to
identify potential shifts in critical assumptions
and develop or modify strategies to either
minimise their negative effects or capitalise
onthe opportunities that they may present.
OUR RISK APPETITE
The Board is committed to adopting a risk
profile and approving a risk management
framework that is in line with our vision
and culture.
We ensure the risk management framework
is adequately communicated, integrated in all
areas of the organisation and that accountability
is assigned at all appropriate levels.
When considering risk appetite, the Board
seeks to balance opportunities for growth and
business development in areas of potentially
higher risk and return, while being more risk
averse in other areas such as reputation, legal,
regulatory and health and safety.
In 2021, the Group enhanced its risk appetite
framework. For each of the Group’s principal
risks, we have defined a risk appetite scale and
carried out an in-depth review of the appetite
with all risk owners, the Senior Executive
Team and the CEO. We have also developed
a set of key risk indicators to measure the
residual level of our principal risks against
theapprovedrisk appetite.
RISK MANAGEMENT
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STRATEGIC REPORT
RISK ASSESSMENT,
MONITORING AND REVIEW
For each risk or category of risks, our
risk management process includes
activities performed in a continuous cycle.
Risk assessment includes risk identification,
analysis and evaluation, and ensures each
risk is analysed to identify the consequence
and likelihood of the risk occurring and the
adequacy of existing controls. Each reportable
entity is responsible for implementing the
appropriate structures, processes and tools to
allow proper identification of risks. Once the
risks have been identified, analysed, managed
and evaluated, risk mitigation identifies the
actions to be implemented by management.
The risk register is one of the key components
of our risk management and governance
structure. The focus areas include HSSEQ,
financial, operational, compliance, reputation
and strategic risks. The Group risk register
consolidates the register from the Central
Functional Heads (top-down) and from each
OU, maintained by all local management
teams (bottom-up). The register is reported
on aquarterly basis and facilitates evaluation
ofexisting and emerging risks.
The Group register is reviewed by the team
in charge of the Risk Management reporting
to ensure completeness of the reported
risks and adequacy of their assessments
before presentation to the Senior Executive
Team for its review and analysis of the risks
as well as the related control activities and
mitigation measures.
The various risk reporting channels are
consolidated into one streamlined escalation
process which is used by the Board to assess
and analyse the risks of the Group and
implement an action plan when necessary.
Our Internal Audit team performs a continuous
assessment of our significant risks and
communicates them to senior management
who in turn develop action plans to address
the identified risks. Internal Audit reports
directly to the Audit and Risk Committee on
the principal risks. The Committee will review
and assess the status of each risk. Reviews and
recommendations are presented to senior
management to continuously strengthen
ourinternal control framework.
INTERNAL CONTROL SYSTEM
Our approach to internal control includes
a number of general and specific risk
management processes and policies. Within the
essential framework provided by our General
Business Principles, the primary control
mechanisms are self-appraisal processes in
combination with strict accountability for
results. These mechanisms are underpinned by
established policies, standards and guidance that
relate to particular types of risk. These include
structural investment decision processes,
timely and effective reporting systems and
performance appraisal. They cover all material
controls, including financial, operational and
compliance. In addition to these structured
self-appraisals, the assurance framework
reliesupon objective appraisals by Internal
Audit and the Central Internal Control team.
The results of these teams’ risk-based reviews
of operations provide an independent view
regarding the effectiveness of risk and control
management systems. These established
reviews, reporting and assurance processes
enable us to regularly consider the overall
effectiveness of the system of internal control
and to perform a full annual review of the
system’s effectiveness. Taken together, these
processes and practices provide confirmation
that relevant policies are adopted and
procedures implemented with respect to risk
and control management. The internal control
systems align with the guidance in the Guidance
on Risk Management, Internal Control and
Related Financial and Business Reporting
document issued by the FRC.
OUR DYNAMIC
RISK ENVIRONMENT
As part of the risk management framework,
we regularly consider changes in the nature,
likelihood and impact of existing and new
risks, including the Group’s ability to respond
to changes in its business and the external
environment. The COVID-19 pandemic
continued to impact our operations in 2021,
however, at a much reduced scale compared
to 2020.
Our response to the risks created by
COVID-19, have once again proved to
be effective. Our responses include
comprehensive Business Continuity Plans and
extensive measures deployed to protect the
health and safety of our customers, employees,
suppliers and other stakeholders, as well as
communities. The pandemic and new ways of
working have created increased opportunities
for fraudsters, with an increase in phishing
attacks and cyber-fraud activity reported.
Our controls have been reinforced in these
areas, by strengthening our cyber-attacks
defence (identification and blockage) capacity,
providing online training and guidance for all
staff on how to securely work from home
and regularly testing staff awareness through
phishing simulation exercises.
The management of critical operational and
finance activities is continuously adapted
to address the evolving pandemic risk: this
concerns the frequency at which the Group
monitors its credit, supply commitments,
demand, inventories, payables and forex
exposures. While currency and crude oil price
volatility continues, the overall uncertainty
requires continuous monitoring, enabling the
Group to manage risks as they evolve or arise.
Our operating environment will be particularly
impacted by the measures taken by authorities
in the countries where we operate. The Senior
Executive Team, together with relevant senior
operational and financial management, has
continued to review the KPIs, considered our
response to the most recent developments
and reviewed the effectiveness of the recovery
plans for the businesses. The Board has
regularly received updates from the Group
onthese developments.
Considering the persistent mobility constraints,
our Control functions have continued to
operate remotely to ensure continuous
monitoring of our activities. However, during
the last quarter of the year, the Internal
Audit team was able to resume its in-country
reviews. This is expected to continue in 2022,
although it is dependent on how the COVID-19
pandemic develops.
The Misconduct and Loss Reporting Policy,
together with the Investigation Guidelines,
directs our response to fraud and manages
the reporting, analysis and investigation of
serious allegations or concerns. The Group
Ethics and Compliance function monitors the
cases identified and initiates or advises on the
investigations when suspicions or allegations
are reported.
In 2020, we acknowledged the increased focus
from our key stakeholders on the impact of
climate change on our business. As detailed
within the Strategic Report on pages 52 to 55,
the Group has initiated an extensive analysis
of its risk exposures related to climate change.
Our priority is to ensure our business is as
efficient as possible, while identifying areas
where we can support the long-term transition
to a low-carbon economy. We will continue
to comply with the evolving regulation and
adapt our product offerings to meet changes
in customer needs. We are aware of our
environmental impact and are committed to
reducing this and continually improving our
environmental performance. We encourage
our business partners to do the same. In our
view, this is consistent with our vision to
become the most respected energy business
in Africa.
Finally, Vitol, the Group’s largest shareholder,
has reached an agreement with the Vivo
Energy plc Board to acquire the Group and
take it private. Pending the completion of
this acquisition, the Group remains a listed
company on the Main Market of the London
Stock Exchange and the Johannesburg Stock
Exchange. Our risk management activities
continue to operate as described and we do
not expect our internal control framework
to be impacted prior to completion of the
acquisition. Management has considered a
number of additional risks which arise during
the period between the offer being made and
it finally being taken private. Completion is
subject to receipt of a number of anti-trust
approvals from authorities across the continent.
If these are not forthcoming, Vitol has a right
to withdraw its offer, which could negatively
impact the Company’s share price. We believe
the risk of this is low. This is because there is
limited overlap between the existing businesses
of the Company and Vitol and because both
Vitol and the Company are using leading
specialists to advise on and help prepare the
anti-trust submissions. The long offer period
creates uncertainty for a number of staff in
head office functions, creating a heightened
risk on talent retention. Our HR teams are
working hard to mitigate this risk, which affects
a relatively small number of people across
the Group.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
RISK MANAGEMENT CONTINUED
PRINCIPAL RISKS
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, other risks 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. In addition
tothe risks and uncertainties presented below,
our ability to simultaneously manage the
multiple growth generating projects is closely
monitored by all relevant control functions.
The Board has assessed the impacts of
COVID-19 on the principal risk factors over
2021 and considered that the heightened
risk related to the impact of the pandemic is
likely to remain applicable at least for the first
months of 2022. At the time of issuance of this
report, uncertainty about the direction ofthe
crisis remains high, with recurrent waves of new
variants on which the effectiveness of current
vaccines remains uncertain. We continued to
note that the visible impact ofthe pandemic
remained lower in our markets than in most
other regions of the world. However, given
the nature of the pandemic, the Board did
notexclude the scenario whereby the number
of infections and mobility restrictions could
once again increase in our markets.
In 2021, the ERP stabilisation risk was removed
as a principal risk as there is marginal residual
risk associated with the project. All countries
are now operating on the SAPS/4HANA
platform, following the successful migration of
the Engen-branded operating units during the
first half of 2021.
We believe that the demand for fuel in our
markets will continue to grow and the transition
to a low-carbon economy will take significantly
longer in our emerging economies than in
Europe. However, we do recognise the impact
our operations have on the environment, as
well as the risks that climate change may have
on our activities, and are committed to playing
our part towards meeting the Paris Agreement
objectives. We have therefore invested
significant time and resources on complying
with the TCFD recommendations, including
scenario analysis assessing the potential physical
and transition risks on future demand. This has
enhanced the integration of climate-related
considerations within the business and will
support the Group going forward as we
develop our strategy and planning in the
long-term context of the energy transition in
Africa. The detailed climate-related disclosures
can be found on pages 58 to 62.
5
WE HAVE FIVE
KEY STRATEGIC
OBJECTIVES:
1
To remain a responsible
and respected business in
the communities in which
weoperate
2
To preserve our lean
organisational structure and
performance-driven culture
3
To ma ximise the value
ofourexisting business
4
To pursue value-accretive
growth
5
To maintain attractive
and sustainable returns
through disciplined
financialmanagement
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STRATEGIC REPORT
BRAND & REPUTATIONAL
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
1. PARTNER REPUTATION ANDRELATIONSHIPS
Our business benefits from a small
numberof key contractual brand
relationships with our brand partners,
Shell and Engen. We also rely on our
own business reputation and brand in
order to successfully grow our business
and develop new relationships with
otherbrand partners.
Our ability to grow and maintain our
business in our markets and beyond
depends on the reputation of our
business partners and relationships
(including our brand partners).
The termination of any key brand
licence could have a material impact
on our ability to grow or maintain our
business and could have a material cost
impact on current operations.
The deterioration of our brand, or
of any of our business relationships,
including with our existing brand
partners, may prevent collaboration
opportunities with existing or new
partners, thus hindering the growth
plans ofthe Group.
A negative trend or development in
the brand or reputation of one of our
key business partners could adversely
impact our current business and future
growth plans if it were to adversely
impact consumer sentiment towards
the brands under which we operate.
Our brand licence agreements contain
customarytermination provisions which
provide that they can only be terminated in
very specific circumstances rather than for
convenience. Such termination provisions
relate, inter alia, to events ofmaterial breach,
insolvency etc. Wehave developed appropriate
processes and procedures to monitor
andensure our compliance with the terms of
our brand agreements thus preserving both
the relationships with our brand partners and
the sanctity of our key contractual relationships.
The Group’s corporate reputation risk is
one of the key risk categories subject to an
ongoing assessment and mitigation in our
risk management approach. It is continuously
monitored and reported as part of the risk
register and internal audit reporting.
We endeavour to only enter into brand
relationships with well-established and
reputable partners. In all our key contracts and
relationships, we ensure our partners adhere to
ethical, HSSEQ and other operational standards
that meet or exceedour own standards.
Stringent KYC procedures are performed prior
to entering any contract over the Group’s low
level threshold (and regardless of anyvalue
when the counterparty is related to a defined
list of sanctioned countries) and repeated
frequently. We promote and develop the
communities in which we operate to help build
the Vivo Energy brand as the most respected
energy business in Africa.
1
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202166 67VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
BRAND & REPUTATIONAL
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
2. CRIMINAL ACTIVITY, FRAUD,BRIBERY AND COMPLIANCERISK
The countries where we operate are
exposed to high levels of risk relating
to criminal activity, fraud, bribery,
theftand corruption.
There are a number of regulatory
requirements applicable to the Group
and its listing on the London and
Johannesburg Stock Exchanges.
The COVID-19 pandemic and new
ways of working have created increased
opportunities for fraudsters, with a
continuous increase in cyber-fraud
activity reported. Refer to risk 9 for
further details.
The potential delisting project entails
risks relating to non-compliance with
allregulatory requirements.
Violations of anti-bribery,
anti-corruption laws, and other
regulatory requirements may
result in significant criminal or civil
sanctions, which could disrupt our
business, damage its reputation
and result in a material adverse
effect onthe business, results of
operationsandfinancial condition.
We provide compliance training programmes
toemployees at all levels.
Our Code of Conduct and KYC
procedures,along with various other policies
and safeguards, have been designed to prevent
the occurrence of fraud, bribery, theft and
corruption within the Group.
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 our
information technology and control systems
within the Group.
The Head of Ethics and Compliance is involved
in mitigating fraudulent activities in the Group.
We strive to ensure our anti-bribery
management systems continue to be certified
compliant under the ISO 37001 standard.
Regular online training and guidance are
provided to all staff on how to work from
home securely.
In 2021, the Group increased the frequency
of phishing simulation exercises to ensure
staffawareness of cyber security.
1
2
4
PRICING
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
3. OIL PRICE FLUCTUATIONS
The price of oil and oil products may
fluctuate, preventing us from realising
our targeted margins, specifically in
the deregulated markets in which
we operate.
The COVID-19 pandemic led
toincreased volatility in oil prices.
Higher supply costs in deregulated
markets result in higher prices for our
products and could reduce our ability
toachieve targeted unit margins.
Price fluctuations could negatively
impactthe value of stocks, resulting
instock losses.
Exposure to commodity price risk is mitigated
through careful inventory andsupply chain
management as well asdynamic pricing.
We have adapted the management of
critical operational and finance activities,
increasing the frequency at which the Group
monitors its supply commitments, demand
and stocks to cope with a high volatility and
highsensitivity environment.
3
4
5
4. CURRENCY EXCHANGE RISK
We are exposed to foreign exchange
risk, currency exchange controls,
currency shortage and other
currency-related risks.
Depreciation of foreign currency
exchange rates could result
inseverefinancial losses.
Our treasury policy requires each
countrytomanage its foreign exchange
risks. The Central Treasury team approves
all hedgingplans beforethey are actioned
toensurethey arealigned with our
strategic focus.
We mitigate currency exchange risks
throughmargin and pricing strategies.
Since the start of the pandemic, we have
increased the frequency at which the
Groupmonitors its forex exposures.
2
3
4
RISK MANAGEMENT CONTINUED
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STRATEGIC REPORT
HEALTH, SAFETY, SECURITY & ENVIRONMENT
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
5. HEALTH AND SAFETY
We are exposed to accidents or
incidents relating to health, safety
and the environment and from such
accidents relating to employees.
We are further subject to HSSEQ
lawsand regulations and industry
standards related to each of the
countries in which we operate.
This is our principal risk most impacted
by COVID-19. Main risk relates to
staff or business partners contracting
the virus, entailing threats to life and
business continuity. There is also an
elevated risk of robbery and theft
associated with the deteriorating
economic conditions in most
countrieswhere we operate.
We may incur potential liabilities arising
from HSSEQ accidents/incidents.
Brand reputation can be
severely impacted, along with
employee confidence.
Regulators and authorities may impose
fines, disrupt our operations and
disallow permits for future ventures.
The health and safety of our staff
and business partners are at risk due
to COVID-19. Unavailability of staff,
contractors or retailers could also
leadto closure of key sites.
We ensure all safety measures for our retail
service stations, storage sites and employees
aremaintained at international standards.
We invest significantly in training and
technologyto improve road transport safety.
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 HSSEQ policies and practices
inline with ours.
On an ongoing basis, safety and security drills,
campaigns and programmes are conducted to
ensure widespread knowledge of the Group’s
HSSEQ principles and procedures.
In addition to our ongoing, daily attention to
HSSEQ, we hold an annual Safety Day, which
creates an opportunity for all employees
to refocus on the importance of HSSEQ
of our Group. The day is used to reinforce
safety measures as well as raise awareness
ofkey issues.
Our BCCP has been reviewed (ensuring
presence of critical staff, in particular those
involved in site security) and COVID-19
protocols developed and implemented to cope
with the pandemic specific risks. This includes
international travel restrictions, adherence
to World Health Organization guidelines and
national legislation, special PPE and donning/
doffing procedures, revised site access and
visit controls, office and asset recovery and
reintegration plan and engagement of key
stakeholders including hauliers and contractors.
Finally, recommendation was made for all
non-essential physical work to be done remotely
and business meetings to be held virtually.
1
2
6. ECONOMIC AND GOVERNMENTAL INSTABILITY
Several countries and regions in
which we operate have experienced
economic and political instability that
could adversely affect the economy
ofour markets.
An economic slowdown which
adversely affects, for example,
disposable income, vehicle distance
driven, or infrastructure development,
in one or more of these regions could
negatively impact our sales andhave
a material adverse effect onthe
business, financial conditions and
operational results.
The pandemic and its social and
economic consequences could
negatively impact the stability of some
of the countries where we operate,
intensifying social tensions.
The risk also includes the potential
enactment of local content and local
ownership laws that could impact
ourmarkets and operations.
We closely monitor evolving issues inmarkets.
We ensure appropriate responses
andbusiness continuity plans are developed
tominimise disruptions.
All local regulatory environments
andchangesareclosely monitored.
1
4
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OPERATIONAL
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
7. PRODUCT AVAILABILITY AND SUPPLY
We are dependent upon the supply
of fuels, lubricants, and additives from
various suppliers. When raw materials
are needed urgently, asymmetric
negotiations occur. The bargaining
power shifts to the supplier who
inturncan charge a higher price.
Furthermore, we are restricted by
limited storage capacity within some
country facilities.
The pandemic’s long-term impact on
oil producers remains unpredictable
and there may be future impacts on
production and supply capacity.
The increased procurement costs
couldlower our margins.
Limited supply of products and storage
facilities may result in stock outs.
This could further result in breach
of contract and disruptions to our
operations, leaving us susceptible
tofines or penalties.
We ensure optimal inventory management
through close monitoring of inventory days,
salesand other factors which may require
additional inventory levels.
We monitor our suppliers’ political and social
environments, and realign our purchasing
strategies as necessary.
Following the Engen acquisition, we have
increased storage capacity at strategic
locationswithin Africa.
Since the outbreak of the pandemic, we have
adapted the management and increased
the frequency of monitoring of our supply
commitments, demand and stocks.
Vivo Energy Supply B.V. has increased its
involvement and support to local supply teams,
developing a new framework and setup to
strengthen trading and shipping activities.
A newdedicated team is in place for this role.
1
3
8. BUSINESS CONCENTRATION RISK
A large part of the Group’s operations
(and margins) are derived from
Morocco when compared to
other countries.
Any unfavourable changes in market
dynamics, such as the re-imposition
of pricing regulations for fuel, or
downturns in the performance of
theoperations overall, may lead to a
decline in the Group’s performance.
Overall diversification is the key strategy
andcontrol measure.
The integration of the Engen transaction
has increased the geographic diversification
and reduced the relative weighting of the
Shell-branded OUs, including Morocco,
intheGroup’s operations and volumes.
1
5
9. INFORMATION TECHNOLOGY RISK
The Group has experienced an
increasein phishing attacks and
cyber-fraud activity reported
overthepast two years.
Cyber-crime can lead to significant
and direct financial losses, costly and
time-consuming business disruption
andimpact reputation.
The Group has developed its control activities
to strengthen its cyber-defence capacity
and efficiency to identify and block attacks.
The lastpenetration test conducted in 2021
byan external firm confirmed that our security
controls are above industry average.
The Group conducts regular phishing simulation
exercises to test, assess and validate staff
awareness and appropriate conduct when
receiving emails.
2
3
RISK MANAGEMENT CONTINUED
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STRATEGIC REPORT
STRATEGIC
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
10. ACQUISITION INTEGRATION
We may be unable to identify or
accurately evaluate suitable acquisition
candidates or to complete or integrate
past or prospective acquisitions
successfully and/or in a timely manner,
which could materially adversely
affect growth.
We may incur write-downs,
impairmentcharges or unforeseen
liabilities, placing strain on
financial resources.
Occurrences of indebtedness
could result in increased
obligations and include covenants
or other restrictionsthat limit
operational flexibility.
All acquisition decisions are intensively
reviewedat several stages with ultimate
approval by the Board. This ensures risks
atall levels are being assessed and mitigated
throughout the process.
We ensure there are detailed integration plans
with realistic timelines as well as designated
teams to execute the plans.
Tailored on-boarding and training is delivered
post-acquisition to ensure a smooth and
efficient transition.
The Engen-branded operating units acquired in
2019 operate in line with the Group procedures
and policies. The Group performed a complete
assessment and review of all key management
positions in these OUs.
Operations are measured through KPIs.
2
3
5
11. CLIMATE CHANGE
The increasing global actions to
mitigateclimate change and its impacts
may lead to changes in our regulatory
environments, customer behaviours
and access to capital in the future
whichcould materially impact the
Group’s future prospects.
Shift in customer behaviours,
expectations and the development
andadoption of affordable, clean
technology may impact future
fuel demand.
Non-adherence to evolving
regulation, brand partner
expectations, technologyadoption
and customer needs exposes
the Group to complianceand
financial risks. Brand reputation
can be severely impacted, along
withemployee confidence.
Financial markets may focus capital
away from carbon intensive industries,
increasing the cost of capital for
the Group.
We have a range of initiatives underway
inorderto limit our environmental impact
throughefficiency measures, cleaner fuels
andalternative product offerings.
We are developing an assessment of the
potential impacts of climate change on future
fuel demand, access to finance, regulation and
the impact of extreme weather events into
our business model, strategy and financial
planning process.
We have enhanced the Governance oversight
ofESG matters, including climate change, and
the Nominations and Governance Committee
now assists the Board with oversight of the
Group’s climate change and ESG plans and
strategy, including its readiness to support
the transition to a lower-carbon future in
our markets.
The Group has completed its first year of
disclosures under the TCFD requirements
and intends to continue to expand the analysis
to incorporate the setting of greenhouse gas
(GHG) targets. We have enhanced our GHG
data collection and expanded our disclosure to
include material Scope 3 emissions. The Central
HSSEQ department has created a specific KPI
on GHG emissions.
The first meeting of the ESG and Climate
Committee was held in 2021. The objective
of this Committee is to guide the Group’s
organisation around climate-related risks
and opportunities, manage the sustainability
risk areas, assess the ESG strategy and risk
management framework and monitor the
ESGand climate-related metrics and targets.
1
4
5
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
STRATEGIC
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
12. EPIDEMIC
We face the risk of prolonged
impactsfrom the COVID-19 pandemic,
or experience new and recurrent
epidemics, worldwide, that may
have dramatic effects on humans,
economiesand security.
In 2020, the COVID-19 pandemic
led toa dramatic drop in demand
for oil and gas products due to the
level of mobility restrictions imposed
by governments. These restrictions
may be replicated inthe event of
future pandemics.
The reduction in demand and
subsequent change in product pricing
could have a material impact on the
entire fuel supply chain, from suppliers
and distributors to dealers’ operating
sites, as well as on the stability of the
impacted countries.
Future pandemics may also lead
todifferent changes in government
actions and consumer behaviour that
require the Group to rapidly adapt
and manage its key operational and
financial variables.
Africa has experienced several
epidemiccrises over the past decades,
including Ebola in 2013-2016, with
authorities taking strong measures
suchas lockdowns and curfews to limit
the spread of contaminations which in
turn severely impacted the economies.
We have adapted the management of the
criticaloperational and finance activities,
increasing the frequency at which the Group
monitors its credit, supply commitments,
demand, stocks, payables and foreign exchange
exposures in a high-volatility environment.
The Group Business Continuity Plans can
be activated quickly and effectively to keep
employees, retailers and contractors safe and
ensure the security of our critical sites and
operations. This plan ensures the Group is
able to maintain supply to its retail sites and
commercial customers.
We have enhanced our internal control activities
through the intensification of risk monitoring,
inparticular on credit exposure and liquidity,
which proved effective in mitigating our risk
despite the fragility of creditors.
In parallel, the Group has continued to provide
support to communities, made a series of
donations and provided logistic assistance
inseveral countries.
1
5
FINANCIAL
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
13. CREDIT MANAGEMENT
We face risks arising from credit
exposure to commercial and retail
customers as well as governments,
including outstanding receivables and
committed transactions.
The COVID-19 pandemic impacted
thesolvency and liquidity of most of
ourcustomers, with a heightened
effect on the Aviation sector.
While significantly improved in 2021,
the credit quality of our counterparties
remains exposed to possible
deterioration due to subsequent
wavesof the pandemic.
This may result in financial loss as a
resultof bad debts and lost revenue.
Exceeding payment terms will result
inlower working capital, potentially
creating liquidity challenges for
thebusiness.
We maintain country-specific Credit Policy
Manuals which ensure a harmonised, cost
effective and value-adding credit process in
allclasses of business.
Continuous monitoring of outstanding credit
balances ensures 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
following assessment of the customer through
KYC procedures.
We use debtor factorisation when considered
cost effective.
We increased the frequency of our credit
exposures monitoring and took rapid and
coordinated action to stabilise our business
and support our teams from the start of the
COVID-19 pandemic. We saw elevated levels
of overdue accounts early in the pandemic but
worked successfully with customers tosupport
them with their payments. At year-end,
CreditKPIs are well within target.
2
4
RISK MANAGEMENT CONTINUED
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STRATEGIC REPORT
HUMAN RESOURCES AND TALENT MANAGEMENT
OUR RISK RISK IMPACT OUR MITIGATION STRATEGIC
OBJECTIVES
14. HUMAN RESOURCES AND TALENT MANAGEMENT
Our ability to attract, train and grow
people as well as retain talent is key
tothe continuing success of the Group.
Some local regulations may affect
our ability to appoint or move
talentbetween countries.
Increased costs caused
bystaff inefficiency.
Interruptions to operations
anddelayinnew projects.
Key people leaving the Group,
withsomejoining competitors.
Disputes, strikes and
sub-standard performance.
Loss of staff enjoyment, motivation,
connectedness and attachment
tothe Group.
We benchmark compensation packages and
employee policies against market practice.
We invest in employee training and
career development.
We use on-boarding workshops toensure
that new employees are familiar with our
business, ourculture andtheir roles when
joiningthe Group.
We maintain constructive dialogue with
unionsand workforce representatives.
We maintain detailed succession plans and
talentmanagement programmes.
The Group has deployed a new
communicationapproach and ways
ofworkingto keep connected with
allstaffthroughout the pandemic.
1
2
PRINCIPAL RISK FACTORS
PRINCIPAL RISK FACTORS
1. Partner reputation and relationships
2. Criminal activity, fraud, bribery and compliance risk
3. Oil price fluctuations
4. Currency exchange risk
5. Health and safety
6. Economic and governmental instability
7. Product availability and supply
8. Business concentration risk
9. Information technology risk
10. Acquisition integration
11. Climate change
12. Epidemic
13. Credit management
14. Human resources and talent management
RISK IMPACT
Decrease
Unchanged
Increase
6
11
LIKELIHOOD
LOW MEDIUM HIGH
LOW MEDIUM HIGH
IMPACT
10
5
4
3
9
14
7
8
1
2
13
12
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202172 73VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
LONG-TERM VIABILITY AND GOING CONCERN
LONG-TERM VIABILITY AND GOING CONCERN
LONG-TERM VIABILITY
In accordance with Provision 31 of the
UKCorporate Governance Code 2018,
theDirectors have assessed the prospects of
the Group over a period significantly longer
than 12 months. The Directors believe that
a five‑year period is the most appropriate
timeframe over which to assess the long‑term
viability of the Group. This timeframe is
supported by the Group’s strategic business
cycle and planning period, which are both
five years. The Group’s primary financing has
a term of seven years. The period of seven
years is slightly longer than the five‑year
strategic business cycle and planning period and
therefore does not impact the appropriateness
of the timeframe. The Directors have
reasonable confidence over this time horizon
as it allows for reduced uncertainty and
an appropriate assessment of the Group’s
principal risks.
Assessment of prospects
The Group’s prospects are assessed primarily
through its strategic and financial planning
process. On an annual basis the Directors
approve a detailed five‑year strategic business
plan, which forecasts the Group’s cash flows
and ability to service financing requirements,
pay dividends and fund investing activities during
the period. The prospects assessment uses
key macro drivers as assumptions to forecast
how markets will evolve. Assumptions include,
forexample, wage and salary growth rates,
volume growth rates, foreign exchange rates,
inflation, gross domestic product growth and
crude oil prices.
Assessment of viability
Although the output of the Group’s strategic
and financial planning process reflects the
Directors’ best estimate of the future
prospects of the business, the Board has
carried out a robust assessment of the potential
financial and operational impact of principal
risks and uncertainties it faces, including those
that would threaten its business model, future
performance, solvency or liquidity.
Four severe but plausible downside scenarios
have been modelled where the following
medium to high impact principal risks
have materialised:
– Economic and governmental instability
adversely affects a number of our local
entities resulting in devaluation of local
currencies (economic and governmental
instability and currency exchange risks).
– Higher supply costs in deregulated markets
resulting in lower unit margins, and potential
fines as a result of economic, social, tax
and governance requirements (oil price
fluctuations, climate change and criminal
activity, fraud, bribery and compliance risks).
– Significant negative impacts on our working
capital due to oil price increases, security
stock increases and an increase in DSO and
a decrease in DPO coupled with key cost
increases (oil price fluctuations, product
availability and supply and economic and
governmental instability risks).
– The negative impacts of the implementation
of COVID-19 mobility restrictions
throughout our business, growth in the
recently acquired Engen-branded markets
being slower than expected, together
with reduced demand as a result of
climate change (climate change, epidemic,
acquisition integration).
Each assessment starts with the available
liquidity headroom which is calculated as an
aggregation of cash and cash equivalents plus
committed revolving credit facilities (RCF) as
at 31 December 2021. The five-year forecast
is then used to calculate the cash position and
available headroom over the period taking
into account the impact of the downside
scenario adjustments. Each downside scenario
assumed an appropriate management response
to the specific events but not broader
mitigating actions which could be undertaken.
The assessments took account of the Group’s
current funding, forecast requirements and
existing committed borrowing facilities.
The RCF will expire in May 2023, with the
arrangement of a new facility expected to
becompleted prior to its expiration.
Outcome
The outcome of each of the severe but
plausible downside scenarios resulted in the
Group maintaining its positive headroom over
the entire assessment period. In each of the
outcomes the Group is able to meet its debt
obligations and debt covenants.
The headroom outcome excludes the Group’s
undrawn uncommitted available credit
facilities, which can be drawn upon if mitigation
is required. Refer to page 35 for further
details regarding the Group’s net debt and
available liquidity.
As part of the going concern assessment,
management has performed a sensitivity
analysis to identify the decline in performance
that would result in a breach of the Group’s
debt covenants. The likelihood of such
reductions in performance are not considered
plausible. Refer to page 136 for further details
on the sensitivity analysis.
Statement of long-term viability
Based on the results of the analysis, the
Directors have a reasonable expectation that
the Group will be able to continue in operation
and meet its liabilities as they fall due over the
five-year period of their assessment, subject to
the impact of any post-acquisition changes to
the business model, strategy or debt profile of
the Group introduced by Vitol. The intentions
statement included within the announcement
on 25 November 2021, states that Vitol will
continue to support the Group with its strategy
and growth ambitions. The Directors do not
have access to Vitol’s detailed plans for the
business including the future financing structure
and therefore are unable to incorporate these
plans into their long-term viability assessment.
GOING CONCERN
In accordance with provision 30 of the 2018
Code, the Directors consider it appropriate
to adopt the going concern basis of accounting
in preparing the financial statements,
notwithstanding the material uncertainty
caused by the expected change in ownership of
the Company and the Group during the period.
Refer to note 2 in the notes to the consolidated
financial statements.
This Strategic Report has been approved
bythe Board.
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER
1 MARCH 2022
STRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202174
GOVERNANCE
CONTENTS
Chairman’s Statement 76
Board Leadership and Company Purpose 78
Board of Directors 82
Senior Executive Team 84
Division of Responsibilities 86
Composition, Succession and Evaluation 91
Nominations and Governance Committee Report 93
Audit and Risk Committee Report 96
Directors’ Remuneration Report 100
Directors’ Report 118
Statement of Directors’ Responsibilities 122
COMPLIANCE STATEMENT
Good governance is essential for creating
long-term viability of the business and the
economic development of the communities
where we operate. The Vivo Energy Board has
overall responsibility for governance.
During 2021, Vivo Energy has complied with all
of the 2018 UK Corporate Governance Code’s
(‘2018 Code’) Provisions, with the exception of
Provision 11. From 1 February to 5 March 2021,
when both the CFO and the CFO Designate were
members of the Board, the Board consisted of
three Executive Directors, two Non-Executive
Directors, four independent Non-Executive
Directors and the Chairman. Following Johan
Depraetere’s retirement from the Board on
5 March 2021, the Company has been fully
compliant with the Code.
The 2018 Code is available from www.frc.com.
Details of how we have applied the main principles
and complied with each provision of the 2018
Code are set out throughout the Governance
andDirectors’ Reports. Further information
canbe found here:
Board Leadership and Company Purpose 78
Division of Responsibilities 86
Composition, Succession and Evaluation 91
Audit, Risk and Control 96
Remuneration 100
The Directors’ Report also contains information
required to be disclosed under the UK Listing
Authority’s (UKLA) Rules and the Disclosure
Guidance and Transparency Rules (DTRs).
To the extent necessary, certain information
isincorporated into this Report by reference.
The following pages describe ourgovernance
arrangements, the operation oftheBoardand
itsCommittees andhow theBoarddischarged
its responsibilities during the year.
Our strong
governance facilitates
effective and prudent
management and
helps deliver the
long-term success
ofthe Group.”
JOHN DALY
CHAIRMAN
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
75VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
JOHN DALY
A PIVOTAL
YEAR
Dear Shareholder,
What a year this has been!
Early in the year we said goodbye to Johan
Depraetere and welcomed Doug Lafferty as
our new CFO. During the following months,
the Board spent a significant time selecting
a suitable candidate to take over from
Christian Chammas as our next CEO as well
as considering the merits of our majority
shareholder, Vitol’s,offers.In November,
after much deliberation and consideration,
the Directors resolved to recommend
VIPIIBlueB.V.’s (‘BidCo’) cash offer to
our shareholders. Shortly after,wealso
celebratedour tenth anniversary and
deliveredperformance objectives for 2022.
COVID-19 has continued to have a far-reaching
impact on people’s health and livelihoods
and our OUs, in common with the rest of
the world, have been subject to continued
external influences and changing restrictions.
Through it all, we have nevertheless delivered
good operational performance and I am
proud of how the Group and our people
have adapted to these unforeseen changes
and challenges.
Even though the full Board has been unable to
meet face to face in person, we have been able
to continue having constructive discussions, to
challenge management and, at times, engage
in robust debates virtually. I am grateful to my
Board Colleagues for their valuable support
and for making themselves available whenever
required, frequently at short notice.
I am proud of how the
Group and our people
have adapted to these
unforeseen changes
andchallenges.”
JOHN DALY
CHAIRMAN
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202176 77VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
STRATEGY
During our in-depth annual strategyreview,
the Board considered where Vivo Energy is
today, its strategic focus and options for future
growth. External and internal presentations
were received from different emerging and
target areas of the business including solar,
real estate, fuel and non-fuel retail. We also
considered alternative energy solutions and
joint venture partnerships as well as current
trends and opportunities. These presentations
provided context to our deliberations and
enabled the Board to confirm its support
forthe strategy.
In addition to management’s strategic plans,
the Board recognises that culture plays an
important part in delivering strategy and
fulfilling our vision of becoming the most
respected energy business in Africa. The Board
is committed to promoting a strong and
positive culture supported by our core values,
and receives regular reports which allows it
toassess culture within the Group, to ensure
alignment with our strategy, vision and purpose.
On 25 November 2021 we announced that
we had reached agreement with VIP II Blue B.V.
on the terms of a recommended cash offer
for all of the issued and to be issued ordinary
shares of the Company not already owned
bythe existing Vitol shareholders. This was the
second unsolicited approach made by BidCo
during the year, the first having been rejected
in February.
The Independent Directors considered a
number of matters including BidCo’s intentions
for the business, the irrevocable commitment
from our second largest shareholder, Helios,
to accept the offer in respect of its total
shareholding of 27.1% and the opportunity
forour shareholders to crystallise the value
oftheir shareholdings.
This wasn’t an easy decision to make but following
careful consideration and a period of discussions
and negotiations, the Independent Directors
concluded that the terms of the offer were
fair and reasonable and unanimously resolved
to recommend the offer to theshareholders.
The offer is to be effected by means of a
Court-sanctioned Scheme of Arrangement
under Part26 of the Companies Act. You can
read more about the offer on pages13 and 63.
ESG
Regardless of where you are located,
affordableenergy is essential to facilitate
improvements in quality of life and critical
toeconomic growth. Our planet’s resources
are not, however, infinite. We recognise
that environmental damage has broad
consequences for the health and wellbeing
of societies. As a Group, Vivo Energy has an
important role in meeting the growing needs
of our customers for energy, while, at the same
time, working towards a more sustainable
future by reducing environmental impacts.
Vivo Energy’s purpose is to safely provide
innovative and responsible energy solutions to
Africa, which enable growth and development
of the continent and its people. Living our
purpose is strongly aligned with the need
to play our part in the battle against climate
change. By doing so and thereby ensuring
the longer-term sustainability of the business,
we will continue to deliver value to all
our stakeholders.
We have made good progress this year but
realise that there is still more to do. To better
understand how the potential impacts of
climate change might affect our communities,
business and performance, we undertook
in-depth materiality and TCFD assessments
with the support of external experts.
The Board also received training on climate
andTCFD reporting requirements.
During the year we established an ESG and
Climate Management Committee which is
responsible for developing our roadmap and
overseeing ESG targets and emerging ESG
risks. The Committee is chaired by the CEO
who regularly reports to the Board on the
Committee’s discussions andreceives feedback
on the same. You can read more about ESG
onpages52 to 55.
BOARD CHANGES
After more than ten years at Vivo Energy,
Christian Chammas, Chief Executive Officer,
has decided to retire from his role with the
Group and will be leaving us in 2022. Christian’s
leadership, drive, focus on performance, and
absolute dedication to the health and safety
of ouremployees, customers and partners
has been integral to the remarkable growth
and success of Vivo Energy since its formation
a decade ago. The Board and I will be very
sad to see Christian go, and wish him all the
best for the future, and a long, healthy and
well-earned retirement.
While we are sad to see Christian go, we are
also looking forward to welcoming Stanislas
(Stan) Mittelman to lead Vivo Energy through
its next stage of growth. Stan has a strong
track record in developing businesses and
driving growth, which together with his
genuinepassion and understanding of Africa
makes him an ideal successor to Christian.
In January 2022, we also announced that
DougLafferty, our Chief Financial Officer,
willbe leaving the Group. We thank Doug for
his valuable contribution and wish him all the
very best in his new role. Details of Doug’s
successor will be announced in due course.
SUCCESSION AND DIVERSITY
Succession planning has remained a key focus
for the Board. Over the last 12 months, in
addition to ensuring orderly Chief Executive
Officer succession, the Board has considered
senior management succession plans and the
internal talent pipeline, and received a detailed
report on diversity among senior managers
andtheir direct reports.
Appointments to the Board, as well as other
positions within the Group, are made on merit
taking diversity of skills, background, knowledge,
thought and gender into consideration.
Whereas we comfortably meet the Parker
Review recommendations, we recognise that
we have work to do on gender diversity with
women currently representing only 22% of our
Board. We are committed to meeting the FTSE
Women Leaders’ targets as well as improving
gender diversity among senior managers while
also recognising the difficulty of achieving this
inthe short term.
OUTLOOK
Since Vivo Energy’s inception in 2011, the
Company has had a clear growth strategy and
has looked to deliver sustainable value for all
its stakeholders. During the last ten years, we
have significantly grown our retail footprint and
have also broadened our consumer offering
into non-fuel services, including shops and
restaurants. The Group has demonstrated
the strength of its business model through
the impacts of the pandemic and our leading
position in Africa means that we are well
positioned to continue to capitalise on the
opportunities that will arise from the growth
on the continent.
The Court and General meetings held on
20 January 2022 approved the Scheme of
Arrangement. Pending required anti-trust
approvals, the Scheme is expected to become
effective in the third quarter of 2022, at which
point Vivo Energy will be delisted. Until such
time, the Board will continue working with
management on our strategic goals todeliver
further growth with purpose.
On behalf of the Board and I, I thank
youforthe trust you have placed in us.
JOHN DALY
CHAIRMAN
1 MARCH 2022
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BOARD LEADERSHIP AND COMPANY PURPOSE
The Board’s primary role is to ensure
VivoEnergy’s long-term success by setting
the Group’s strategic direction, ensuring that
strategy is aligned with our purpose and culture
and to promote and protect the Group’s
interests for the benefit of all our stakeholders.
The Group’s governance framework supports
the Board in the delivery of the Group’s
strategy and long-term sustainable success
invarious ways as detailed below.
HOW GOVERNANCE SUPPORTS
OURSTRATEGY
We recognise that our ambition of becoming
Africa’s most respected energy business can
only be achieved through demonstrable good
governance in its broadest sense. The Board
is responsible for promoting the long-term
sustainable success of the Group and for
delivering long-term value for stakeholders.
The Board does this by providing effective
leadership and by ensuring that the Group’s
business is conducted with high standards of
ethical behaviour in a manner which contributes
positively to wider society and having regard to
the interests of its different stakeholders.
To ensure the business can meet its strategic
priorities, the Board, through its oversight
of the development of the Group’s strategy,
provides strong leadership and support to
the Group. The Board continues to benefit
from a strong mix of complementary skills and
experiences, as well as dynamics that allow for
open debate, challenging existing assumptions
and asking difficult questions.
Throughout the year, the Board considered
the long-term consequences of the decisions
it made, focusing on the interests of relevant
stakeholders as appropriate. A key component
of the Board’s role in the development of Vivo
Energy’s strategy is the approval of the annual
operating plan. This process allows the Board
to ensure that the business has the necessary
resources to deliver its strategy. Other key
strategic items considered by the Board
during2021 included:
– the offers made by our majority
shareholder, Vitol;
– dividend policy;
– presentations on African consumer
andAfrican economies;
– growth strategies in non-core areas;
– QSR and CR business models;
– updates on the Mali solar project; and
– Group’s ESG strategy and carbon emissions.
Further information on the strategic
priorities for the Group is available
intheStrategic Report.
Reinforcing our culture:
The Group’s culture is a focus area for the
Board. We believe that the right culture and
values, supported by effective leadership and
a consistent tone from the top, are crucial to
the success of the Group. During the year,
the Directors evaluated organisational culture
in different contexts, discussed the Group’s
culture and considered reports from the
nominated Employee Engagement Champion
and senior management. The Board also
considered the annual culture report which
details how the Group has ‘lived’ its operating
culture and values.
This report covered:
– the way in which Vivo Energy’s culture is
embedded throughout the organisation;
– the mechanisms in place to provide insight
and feedback on Vivo Energy’s culture; and
– focus areas and timelines for
2022 engagement.
To allow the Directors to maintain a continuous
overview of the Group’s cultural temperature,
a culture dashboard was introduced as an
additional reporting tool. The dashboard covers
headcount, vacancies, appointments, employee
survey results and diversity.
The annual whistle-blowing report was also
presented to the Board, providing an update
onthe whistle-blowing programme.
OUR PURPOSE ANDCULTURE
The Group’s purpose is to safely provide
innovative and responsible energy solutions to
Africa, which enable growth and development
of the continent and its people. We aim to
do this by realising the full potential of our
people and business partners, supporting
our communities and being recognised as the
benchmark for quality, excellence, safety and
responsibility in Africa’s marketplace.
We recognise that how we do things is just as
important as what we do, and culture plays a
fundamental part in delivering our strategy.
The right culture sets the tone and leads
to a motivated and productive workforce.
Our operating culture of ‘Focus, Simplify and
Perform’ and our values of ‘integrity, honesty
and respect for people’ have always been core
to our business. We believe that they remain
fundamental to the future success of the
business. The challenges of 2021 have allowed
us to demonstrably live by our culture and
our values.
People are crucial to the day-to-day functioning
of a business. In order to create a positive
working environment, we aim to build and
maintain an inclusive and diverse business.
We recognise that the strength of our business
is built on the hard work and dedication of our
people. We are only as good as our people and
seek to recruit, retain and develop the best
people and to engage them over the long term.
By living our values, our people differentiate us
from our competitors and enable us to deliver
our strategy. It is therefore important that all
of our people understand the importance of
our vision, values and purpose and their role in
realising our vision of becoming Africa’s most
respected energy business. Further information
is available within the Strategic Report on
pages46 to 47.
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GOVERNANCE
How the Board monitorsculture:
Listening to our employees – We use many
different channels to understand how our
people experience working for Vivo Energy.
These engagements aid us in shaping our
culture, policies and practices to ensure
VivoEnergy is an attractive place to work.
The Group undertakes an employee
engagement survey every two years.
Survey questions allow employees to share
their views on key topics, which provide
valuable insight into employee engagement and
the Group’s culture. This year’s survey consisted
of 41 questions and, with an overall response
rate of 88.4%, continues to reflect high levels of
employee engagement. The key findings were
presented to the Nominations and Governance
Committee and also discussed by the full Board.
Local focus groups were held in every OU
following which action plans were prepared
toaddress the priority issues.
Hixonia Nyasulu, the Senior Independent
Director, is the Group’s Employee Engagement
Champion and the Chair of Vivo Energy’s
Employee Engagement Champion Committee.
Hixonia was appointed to this role after
discussions by the Board and the Nominations
and Governance Committee where the role
requirements, existing time commitments,
suitability and the Directors’ interests were
considered. Hixonia’s passion for talent
development gained through running her
own businesses and her understanding of the
African continent and related employment
matters were important considerations
whenmaking the selection.
Hixonia’s main objective is to provide an open
line of communication between the Board and
our people. To assist Hixonia in her role, the
Employee Engagement Champion Committee
was formed in 2020. In addition to Hixonia,
the Committee comprises six members
representing the Group’s different operating
regions. The Committee met twice in 2021 to
discuss and consider the employee engagement
activities across the Group, employee wellbeing,
post COVID-19 ways of working, employee
engagement survey results and Vitol’s offer.
The Committee also received health and safety
updates and reviewed its own effectiveness.
Hixonia has reported to the Nominations and
Governance Committee and the Board on
the Committee’s work and provided feedback
on employee opinions and the alignment
ofour culture and values across the various
aspects of our business, strategy and purpose.
The Board was pleased to receive employees’
endorsement on the Group’s efforts during the
pandemic to keep our people, customers and
communities safe and to protect jobs.
Further details on the Committee’s work
canbe found on page 95.
The Board has been mindful of employees’
views and concerns and towards the end of
the year, the Group launched a pilot Employee
Assistance Programme in six of our operating
units providing practical information and
confidential counselling to employees and their
close family members on a wide range of work
and personal issues. This pilot programme is
being monitored, with the intention of rolling
itout across the Group during 2022.
Furthermore, in addition to the suggestion
boxes already in the OUs, in the latter part
of the year we also launched an electronic
employee suggestion tool, ‘Your Voice’.
Your Voice is an easy to use platform that
allows employees to submit ideas on a wide
range of topics including our business principles,
careers, business growth, innovation, leadership,
workplace and culture. Between November
and January, we received 86 suggestions,
ofwhich 21 have been or are in the process
ofbeing implemented.
Whistle-blowing – Employees can report
incidents of wrongdoing through both internal
and external mechanisms. In addition to the
reports raised through line managers, the
VivoEnergy Global ‘Speak Up’ helpline enables
employees and third parties to raise concerns
in relation to suspected violations of the law
or the Vivo Energy General Business Principles
(such reports may be raised anonymously,
24 hours a day, seven days a week via this
independent helpline). Any reports are then
referred to the Head of Ethics & Compliance
and are investigated orescalated to the General
Counsel, the Chairman and the Chair ofthe
Audit and Risk Committee as required.
To deal with any wrongdoing effectively,
honestcommunication is vital and we
encourage our employees to raise any such
concerns of misconduct. The Board is provided
with periodic reports on whistle-blowing.
Ethics, bribery and fraud – Respect for human
rights is a fundamental part of operating as
a responsible business. Any exploitation of
human beings is entirely at odds with our
core values of honesty, integrity and respect
for people and we are committed to building
awareness and working with our partners
to ensure that all those working within Vivo
Energy or our supplier chain are treated with
respect and dignity.
During the year the Board approved the
Company’s Modern Slavery Statement
which is published on our website
www.vivoenergy.com/About/Our-Principles-
Policies/Modern-Slavery-Statement and was
also submitted to the UK online registry.
We also formalised our Supplier Code of
Conduct and Human Rights Policy Statement
and both are available on our website
www.vivoenergy.com/About/Our-Principles-
Policies. In addition, we issued written guidance
to our retail network on what modern slavery
is, how to recognise it and how to report
issuesto us.
Vivo Energy recognises that corruption
undermines the rule of law and democratic
process, impoverishes states and distorts free
trade and competition. We have established
policies and governance procedures that set
and monitor our approach to preventing fraud,
bribery and corruption, including our Code
of Conduct and Anti-Bribery and Corruption
Manual. We conduct mandatory e-learning
courses for all employees to ensure that
they understand the Group’s zero-tolerance
approach to fraud, bribery, and corruption of
any kind.
The Audit and Risk Committee regularly
monitors and reviews the Company’s policies,
incidents and trends arising from any such
incidents and provides updates of key matters
to the Board.
Social engagement – We employ local people
and serve local businesses and individuals;
engaging with our communities is vital as it
helps us earn their trust and respect and allows
us to support them and promote a better
quality of life and a more sustainable future.
We do this through partnerships, employee
engagement and non-political donations.
In 2021 we supported over 120 community
investment projects across the Group.
These were primarily focused on our core
areas of education, environment and road
safety, and also included health and female
empowerment projects.
Risk management and internal controls
– TheBoard is responsible for the
Company’s systems of internal control
and risk management. TheAudit and Risk
Committee annually reviews the effectiveness
of the Group’s system of internal controls
and risk management. The results of the
Committee’s review are presented to the
Board. During 2021, the Board assessed
the Committee’s review and confirmed it
concurred with the Committee’s assessment
that the risk management and internal
controlsof the Group remain effective.
Promoting the success of the Company –
The Directors, in conducting Board business
and taking decisions at Board meetings, act
in a way that is most likely to promote the
success of the Company for the benefit of its
members as a whole, while having due regard
and taking into account the likely short- and
long-term consequences of any decision on
the Company and its business, the interests
of all the Company’s stakeholders, including
employees, and the impact on the community
and environment in which the Company
conducts its business.
The Board’s section 172(1) statement is
included within the Strategic Report on
page63.
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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
KEY ACTIVITIES TO COMPLY WITH THE 2018 CODE
Term Description
Purpose,
Culture
and Values
During the year the Board considered the Employee Engagement Survey results, the culture report and feedback from
thenominated Employee Engagement Champion.
The Board is responsible for the Group’s whistle-blowing processes and received periodic reviews during the year.
Further details on the Board’s involvement with purpose, culture and values can be found on pages 78 to 79.
Remuneration The Remuneration Committee reviews workforce compensation, related policies and the alignment of incentives and
rewards with the Group’s culture and takes these reviews into account in the setting of the policy for Executive Director
remuneration. During 2021, the Remuneration Committee considered Stan Mittelman’s remuneration package and
Christian Chammas’ retirement terms, received updates on workforce remuneration and considered share plans and
retention arrangements relating to Vitol’s offer. The Committee also reviewed the Company’s Remuneration Policy and
consulted with shareholders on the proposed changes. The revised policy will be put to shareholder vote at the AGM.
Further details on the Committee’s activities can be found on pages 100 to 117.
Nominations
and Governance
Committee
The Nominations and Governance Committee is responsible for ensuring plans are in place for orderly succession to both
the Board and senior management positions, and for overseeing the development of a diverse pipeline for succession.
During the year the Group’s senior management succession plans and talent pipeline were discussed and reviewed by both
the Nominations and Governance Committee and the Board. A successor to the Chief Executive Officer was identified
and the Committee recommended to the Board the appointment of Stan Mittelman as Chief Executive Officer Designate
from 14 February 2022. After an initial transition period Stan will be appointed a Director of the Company and become
CEO. The appointment was preceded by a confidential market search and the selection process was carried out with the
assistance of Russell Reynolds Associates, an independent external executive search and leadership consultancy, which
has no other connection with the Group. The Committee ensured that the procedure for the appointment was rigorous,
transparent, objective and merit-based. Further details can be found on page 95.
The Committee also received ESG and corporate governance updates, reviewed the results of the Board effectiveness
evaluation and considered the Group’s social initiatives.
Further details on the Committee’s activities can be found on pages 93 to 95.
Audit and Risk
Committee
The role of the Audit and Risk Committee is to monitor and review the Group’s financial reporting, the effectiveness of
risk management and internal controls, the Group’s whistle-blowing procedures, the integrity of the internal and external
audit processes, and the appointment and performance of the external auditor. This year the Committee placed particular
focus on strengthening the control framework and ensuring compliance across the Group; climate change and its impact
on corporate reporting, as well as long-term viability assessment and regulatory and accounting considerations relating
toVitol’s offer.
Further details can be found on pages 96 to 99.
Workforce and
Stakeholder
Engagement
The 2018 Code emphasises that the Board should understand the views of key stakeholders and be in a position to explain
how their interests have been considered in decision-making. During Director discussions, factors set out in our section
172(1) statement on page 63 are considered, where relevant to the Board’s decision-making. The Board has formalised this
within its decision-making processes, by ensuring that the consideration of stakeholder interests is set out in all Board and
Committee papers in a proportionate and appropriate way, relevant to the matter to be considered. This will enable the
Board and its Committees to effectively address stakeholder concerns.
Employee
Engagement
Champion
The Senior Independent Director, Hixonia Nyasulu, is the Company’s nominated Employee Engagement Champion.
Hixonia is assisted in this role by the Employee Engagement Champion Committee.
In her role, Hixonia has engaged with the VP HR and regional HR representatives to obtain an understanding of the
issues and concerns of the workforce and received feedback and business improvement suggestions from the employees.
In conjunction with the Committee Hixonia has:
– brought employee perspectives to the Board to increase Board effectiveness and decision-making;
– reviewed employee engagement and feedback mechanisms to ensure they remain effective and appropriate;
– reviewed the output of the Employee Engagement Survey;
– received and discussed regional employee engagement reports;
– received and considered health and safety updates;
– considered the Group’s culture; and
– discussed and provided employee feedback on Vitol’s offer.
In the coming year the Committee plans to continue engaging with and receiving feedback from employees via various
channels, exploring ways to increase employee engagement including embedding the new ‘Your Voice’ tool and following
up on Employee Engagement Survey action points. Details on the 2022 engagement activities will be reported in the 2022
Annual Report.
Other
activities
The Board reviewed matters reserved for its consideration and resolved to include environment and climate in the
schedule of Matters Reserved for the Board. A copy of the revised document is available on the Group’s website.
The Board also reviewed the Group’s Manual of Authorities to ensure the approval levels in place remain appropriate.
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GOVERNANCE
STAKEHOLDERS
Engaging with stakeholders and understanding
their views is vital to the Board and underpins
effective decision-making. The Board is
committed to building positive relationships
with all stakeholders and recognises that this
is not only essential to building a sustainable
business but also the right thing to do.
Multiple stakeholders are impacted by our
business, including shareholders, employees,
customers, partners and the communities
and governments of the countries in which
we operate. As we enter another year in the
midst of a global pandemic, we continue to
be mindful of the needs and expectations
ofour stakeholders.
During the year, the Group undertook a
number of stakeholder engagement initiatives.
Further information on how the Group
engages with all its stakeholders is available
within the Strategic Report on pages 40 to 43.
In addition to the Group activities, the Board
undertook the following stakeholder activities:
SHAREHOLDERS
Investor Relations
The Board and Management believe that having
transparent and regular communication with
the capital markets is an essential element
ofbeing a listed company. In order to achieve
this, the Company has a designated investor
relations function, which is the primary point
ofcontact with equity and debtinvestors,
sell-side analysts and other financial
market participants.
During the year, the continuing impact of
COVID-19 meant that the vast majority of
engagements took place virtually, although the
Company was able to resume some limited
face-to-face interactions in the second half of
2021. While we welcomed the opportunity to
re-engage in person, with all of the benefits that
it entails, the continuing programme of virtual
engagements enabled a significantly broader
outreach into a range of territories that both
expanded our activities and made them
more efficient.
The Company conducted an extensive
programme of scheduled and ad hoc
engagements with institutions and analysts
during the year. These were undertaken by
acombination of Executive Management and
the Investor Relations function. As part of this,
we conducted virtual investor roadshows and
attended virtual investor conferences that were
primarily aimed at investors based in the United
Kingdom, United States, South Africa and
Europe. Due to the restrictions on travel, the
Group did not host any investors in our OUs
in the first nine months of the year, but in Q4
hosted investors in both Morocco and Uganda.
Our engagements with capital markets
stakeholders cover a broad range of topics,
butin 2021 the primary focus was on the
Group’s recovery from impacts of COVID-19
related mobility restrictions and the recovery
of our host countries’ economies. In addition
to this, we continued to engage with
stakeholders on capital allocation following
the enhancement of the dividend policy in
March 2021, management succession, executive
remuneration, governance and Group strategy.
There has also been considerable focus on
ESG matters, and in particular, climate-related
strategy and disclosure. Following the
announcement of the agreed transaction
with BidCo in November 2021, engagement
with investors moved to a more prescriptive
approach to ensure that investors’ views were
heard whilst maintaining compliance with
Takeover Panel rules.
Investor Relations regularly presents to,
and discusses developments in the capital
markets, with the Board, as well as sharing
sell-side research and investor feedback.
Due to the importance that the Board
places on communication with shareholders,
arrangements can be made for major
shareholders to meet with the Chairman,
theChief Executive Officer, the Chief Financial
Officer, the Senior Independent Director and
the Independent Non-Executive Directors,
as required.
Annual General Meeting (AGM)
The Company’s AGM will be held at 2:00 p.m.
on 17 May 2022. The Notice of the AGM will
include further details, including the venue.
Details of the business to be proposed at
the meeting are contained in the Notice of
AGM which will be sent to shareholders
at least 20working days prior to the date
of the meeting. Voting at the AGM will be
conducted by way of a poll and the results will
be announced through the Regulatory News
Service and made available on our website
following the meeting.
To encourage shareholders to participate in
the AGM process, the Company will offer
electronic proxy voting through both our
registrar’s website and, for CREST members,
the CREST service.
Although it is our intention to hold the AGM
at the time set out above, we will continue to
closely monitor the impact of the COVID-19
outbreak in the United Kingdom and how
it may affect the arrangements for this
year’s AGM, particularly in relation to social
distancing,large gatherings and travel.
We do not anticipate that all of our Board of
Directors will be able to attend the meeting in-
person due to travel restrictions and health and
safety requirements. If any Director is unable to
attend in person, we will endeavour to ensure
that he/she can attend virtually or by phone.
EMPLOYEES
Our people are our most important asset
and central to us delivering our strategic
objectives and our vision of becoming Africa’s
most respected energy business. Our success
is reliant on our culture and the Board is
committed to ensuring that our workforce
policies and practices are aligned with the
purpose, values and culture of VivoEnergy.
Further information on employee engagement
programmes is set out in the Strategic Report
on pages 48 to 49.
OTHER STAKEHOLDERS
Alongside our shareholders and employees,
we have identified customers, partners,
communities, governments and investors as
our main stakeholders. Where the Board does
not engage directly with the stakeholders, it is
kept updated so that the Directors maintain
an effective understanding of what matters
to our stakeholders and can draw on these
perspectives in Board decision-making and
strategy development. Updates are provided
in a variety of formats including face-to-face
presentations, reports by the Chief Executive
Officer or Chief Financial Officer as well as
by the senior management of the Group’s
businesses. Senior management is requested,
when presenting or providing reports to the
Board on strategy and principal decisions,
to ensure that the presentations cover
what impact the strategy/principal decision
has on the relevant stakeholders andhow
the views of those stakeholders havebeen
takeninto account.
For details of how the Board complied with
section 172 of the Companies Act 2006
and how it further engaged with other
stakeholders, see page 63.
VISITS TO OUR LOCAL
OPERATING UNITS
Visiting our local OUs is an important way
for Directors to meet with local senior
management, engage with employees and
other stakeholders and to gain a better
understanding and insight into particular issues
faced by the OUs and the business in general.
The Board had hoped to resume these visits
in 2021. However, due to the continuing
COVID-19 travel restrictions, the Board’s
travel plans remain on hold. Board visits to
theGroup’s OUs will continue as soon as it is
safeto travel again.
In the meantime, the Board’s learning and
understanding of our business has continued
through virtual deep dives. These have
consisted ofreports and virtual presentations
by senior management and external experts
and have covered topics such as solar, non-fuel
retail, African economies, TCFD requirements,
African consumers, use of real estate, culture
and share price.
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
BOARD OF DIRECTORS
BOARD OF
DIRECTORS
JOHN DALY CHAIRMAN
Independent on appointment
Appointment Date: 20 April 2018
Skills and Experience
John brings strong international and consumer expertise to the Board
having held various executive leadership positions over the course
of 20years at British American Tobacco plc (BAT). His most recent
positions at BAT were chief operating officer (2010-2014) and regional
director for Asia Pacific, based in Hong Kong (2004-2010). John is
a former director of Reynolds American Inc., a US public company
owned 42% by BAT. Prior to his time with BAT, John held various sales
and marketing positions with Johnson & Johnson, Bristol-Myers Squibb,
Pennwalt Corporation and Schering-Plough.
External Public Appointments
Britvic plc – non-executive chairman
Committee Membership
Nationality
DOUG LAFFERTY CHIEF FINANCIAL OFFICER
Appointment Date: 1 February 2021
3
Skills and Experience
Doug Lafferty was appointed as Chief Financial Officer Designate in
February2021 before becoming Chief Financial Officer in March 2021.
His responsibilities include financial control, treasury & credit, IT and
procurement. Prior to joining the Group, Doug spent three years
as CFOandExecutive Director for Williams Grand Prix Holdings
plc. Doug hasalso held a range of senior positions during a 16-year
internationalcareer with British American Tobacco, including Group
Head ofCommercial Finance andRegional Head of Finance for
the Americas.
External Public Appointments
None
Committee Membership
None
Nationality
STAN MITTELMAN CHIEF EXECUTIVE
OFFICER DESIGNATE
Appointment Date: March 2022
2
Skills and Experience
Stan brings over 30 years of downstream energy experience to Vivo
Energy and has spent a substantial part of his career operating in Africa.
Before joining Vivo Energy, Stan was SVP Africa at TotalEnergies Marketing
& Services, where he led the fuel retailing and marketing business across
40 countries in Africa. Prior to this, Stan held a range of senior positions
at TotalEnergies, including CEO of Total Marketing France, and a number
of roles on the continent, including EVP West Africa for Total Marketing
Services and MD Total Zimbabwe. Stan became Chief Executive Officer
Designate on 14 February 2022. After an initial transition period Stan will
be appointed a Director of the Company and become CEO.
External Public Appointments
None
Committee Membership
None
Nationality
CHRISTIAN CHAMMAS CHIEF EXECUTIVE OFFICER
Appointment Date: 20 April 2018
1
Skills and Experience
Christian has extensive experience in the energy sector and has a
deep knowledge of Africa and emerging markets. Prior to joining
the Group, Christian was at Total for 31 years where he held several
executive positions in Central America, the Caribbean, Pacific and
India. Christian served as chief executive officer for the Total group
ofcompanies in Nigeria, Cameroon and Kenya, followed by successive
positions as executive vice president for the Total group of companies for
Central Africa, executive vice president for the Total group of companies
for Caribbean and Central America, and as Total group representative
for India and executive countrychairman for downstream companies.
His last position at Totalwas as executive vice president for the
MENAregion in the downstream division.
External Public Appointments
None
Committee Membership
None
Nationality
3 Doug was appointed as the Chief Financial Officer Designate on 1 February
2021 and Chief Financial Officer on 5 March 2021. Johan Depraetere was the
ChiefFinancial Officer from April 2018 to 5 March 2021.
1 Prior to this Christian was Chief Executive Officer of the Group witheffect from
2 January 2012.
2 Date to be confirmed.
Committee membership key
Audit and Risk Committee
Nominations and Governance Committee
Remuneration Committee
Chair
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202182 83VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
THEMBALIHLE HIXONIA NYASULU
SENIOR INDEPENDENT
DIRECTOR
Appointment Date: 20 April 2018
Skills and Experience
Hixonia has global experience across multiple
sectors in South Africa and Europe for blue-chip
companies, as well as on the Banking Enquiry panel
for the South African Competition Commission.
Hixonia held numerous management roles at
Unilever in South Africa between 1978 and 1984,
and subsequently founded two highly successful
companies. She has substantial experience as a
non-executive director having held non-executive
director positions at Unilever plc, Sasol Ltd,
AngloPlatinum Ltd, the Development Bank
of Southern Africa, Nedbank and served as a
member of the JPMorgan Advisory Board for
South Africa untilOctober 2013.
External Public Appointments
Anglo American plc – non-executive director
Committee Membership
Nationality
GAWAD ABAZA
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Appointment Date: 1 December 2018
Skills and Experience
Gawad has a wealth of African commercial
experience. He has significant operational
knowledge of running consumer-focused
businesses across the African continent having
heldseveral senior management positions in
theMiddle East and Africa at Kraft and Cadbury.
External Appointments
Gama Transformation Consultancy LLC –
managing director
Committee Membership
Nationality
CAROL ARROWSMITH
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Appointment Date: 20 April 2018
Skills and Experience
Carol has extensive experience of executive
remuneration. For over 20 years, she specialised
in advising boards of directors on executive
remuneration across a range of sectors.
Carol isaformer vice chair and senior partner of
Deloitte LLP, a global partner in Arthur Andersen
and managing director of New Bridge Street
Consultants. Carol is a fellow of the Chartered
Institute of Personnel and Development.
External Public Appointments
Compass Group plc – non-executive director
andchair of their remuneration committee
Centrica plc – non-executive director
andchairoftheir remuneration committee
Committee Membership
Nationality
JAVED AHMED
NON-EXECUTIVE DIRECTOR
(VITOL APPOINTED DIRECTOR)
Appointment Date: 12 March 2018
4
Skills and Experience
Javed joined Vitol in 2009 and leads its global
investing activity. Prior to this, Javed was with
MorganStanley from 1997 to 2009 where he
heldpositions including managing director and
thehead of acquisitions and structured transactions
for Morgan Stanley’s commodities group.
External Appointments
Positions at a number of Vitol’s portfolio
companies, including Petrol Ofisi, VTTI,
VPIHoldingand OVH Holding
Committee Membership
Nationality
CHRISTOPHER ROGERS
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Appointment Date: 22 April 2018
Skills and Experience
Chris is a Chartered Accountant and has extensive
financial and commercial experience. Chris was
a director of Whitbread plc from 2005 to 2016
where he served as group finance director from
2005 to 2012 and managing director of Costa
Coffee from 2012 to 2016. He was group finance
director of Woolworth Group plc and chairman
of the Woolworth Entertainment businesses
from 2001 to 2005. Previously Chris held senior
rolesinboth finance and commercial functions
inComet Group plc and Kingfisher.
External Public Appointments
Wickes Group plc – chairman
Kerry Group plc – non-executive director
Sanderson Design Group plc –
non-executive director
Committee Membership
Nationality
TEMITOPE LAWANI
NON-EXECUTIVE DIRECTOR
(HELIOS APPOINTED DIRECTOR)
Appointment Date: 16 March 2018
4
Skills and Experience
Temitope is a co-founder and managing partner
of Helios Investment Partners, the largest
Africa-focused private investment firm. He is also
co-CEO and adirector of Helios Fairfax Partners.
Prior to this, Temitope was a principal at TPG
Capital. After beginning his career at the Walt
Disney Company as an M&A and corporate
development analyst, he went on to serve on
the boards of various corporate enterprises.
Temitope is currently a member of the MIT
Corporation, theMIT School of Engineering Dean’s
Advisory Council, the Harvard Law School’s Dean’s
Advisory Board, andon the board of the END Fund.
External Public Appointments
Helios Towers plc – non-executive Director
Pershing Square Holdings Ltd – non-executive director
Positions at a number of Helios’ portfolio companies
including OVH Energy and Axxela
Nationality
4 Previously a supervisory board member of Vivo Energy Holding B.V. (the former
Group holding company).
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202182 83VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
SENIOR EXECUTIVE TEAM
SENIOR
EXECUTIVE TEAM
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
See Christian’s biography on page 82.
STAN MITTELMAN
CHIEF EXECUTIVE OFFICER DESIGNATE
See Stan’s biography on page 82.
FRANCK KONAN-YAHAUT
EVP WEST AFRICA
Franck is the EVP West Africa, a position he has held
since February 2019. He previously held the positions of
Managing Director, Shell Côte d’Ivoire and Burkina Faso
Cluster and Managing Director of Côte d’Ivoire, before
taking up his previous role ofManaging Director, Senegal
in September 2014.
Following the sale of the Africa Downstream business
in 2011, Franck transferred from Royal Dutch Shell to
Vivo Energy. Franck joined Royal Dutch Shell in 1996
from PwC, and following a number of years as finance
manager in Guinea, Ghana and West Africa, he moved to
WestAfrica Gas Pipeline Company in the Shellupstream
business as general manager Finance and Administration.
Nationality
HANS PAULSEN
EVP EAST AND SOUTHERN AFRICA
Hans is the EVP East and Southern Africa, a role he
hasheld since 1 July 2019. Prior to his current role, Hans
served as the Group Programme Manager leading the
SAP implementation project for the Group. Hans joined
Vivo Energy in 2013 asManaging Director Uganda.
Before joining Vivo Energy, Hans held senior management
roles in the telecoms sector both inUganda and Zambia.
Healso previously worked in the oil and gas industry
with Royal Dutch Shell inUganda and Kenya from 1997
to 2002.
Nationality
DOUG LAFFERTY
1
CHIEF FINANCIAL OFFICER
See Doug’s biography on page 82.
OMAR BENSON
EVP SALES AND MARKETING
Omar is the EVP Sales and Marketing, a role he hasheld
since January 2021. During 2020, Omar was the Acting
EVPSales and Marketing before being permanently
appointed to his current role.
Prior to this Omar has held various other senior positions
at Vivo Energy, including Head of Fuel Retail from 2013,
adding Convenience Retail to thatfrom 2015. In 2018
he was appointed VPRetail, CR, QSR and ONFR.
Before joining Vivo Energy, Omarheld various roles at
Shellwhere he spent 11 years and before that Omar
worked for AirLiquide, Mobil Oil and Copharmed.
Nationality
ERIC GOSSE
EVP BUSINESS DEVELOPMENT,
SUPPORT AND INDIAN OCEANISLANDS
Eric is the EVP, Business Development, Support and Indian
Ocean Islands, a position he has held since January 2019.
Ericis responsible for business development (including
powerand solar), supply, distribution, engineering and
HSSEQ. Eric is alsothe Chairman of VivoEnergy’s
lubricantjoint venture with Shell.
Eric joined the Group from Total where he held various
senior positions over the course of more than 25 years.
Hebrings a wealth of commercial and industry experience
tothe Group.
Nationality
1 Doug was appointed as the Chief Financial Officer
Designate on 1 February 2021 and Chief Financial
Officer on 5 March 2021. Johan Depraetere was the
Chief Financial Officer from April 2018 to 5 March 2021.
Our Senior Management
Team embodies Vivo Energy’s
effective operating culture to
focus, simplify and perform.
Through its agility and speed
of decision-making, this
team leads Vivo Energy’s
performance-driven approach.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202184 85VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
HERMAN NIEUWOUDT
CHIEF OF STAFF
Herman is the Chief of Staff for the Group, a role which
he has held since September 2018. Prior to this he was
the Vice President Human Resources, aposition he
held since the inception of VivoEnergy. He is primarily
responsible for executive compensation and resourcing
and theChairman’s and CEO’s office.
Herman transferred from Royal Dutch Shell to Vivo
Energy following the sale of the Africa Downstream
business in 2011. During his 17years with Shell he
held various roles including downstream policy and
compensation manager forthe Africa region and general
manager HR for Shell Oil Products Africa. Herman joined
Shell in 1995 from Dulux South Africa where he was the
head of HR for the industrial coatings division.
Nationality
MEHDI ABAGHAD
VP RETAIL
Mehdi is the Vice President for Retail, a role he has held
since October 2020. Prior to this Mehdi was the Retail
Manager in Morocco where he successfully grew and
developed the service station network and Retail offer in
that market.
Before joining Vivo Energy, Mehdi was the Commercial
Manager for Shell Morocco and before that he worked as
the Commercial and Export Director for Nexans and as a
trader for theinvestment bank Upline Securities.
Nationality
ASIF LAKHANY
HEAD OF BUSINESS STRATEGY
& TRANSFORMATION
Asif is the Head of Business Strategy and Transformation.
Asif has over 25 years of leadership experience in
Strategic Marketing roles, focused on developing and
implementing digital transformation plans as well as more
traditional business transformations.
Throughout his career, Asif has worked across a number
of industries, including downstream oil marketing, minerals
& mining, and financial services. Before joining Vivo
Energy Asif held the position of Director of Organisation
Effectiveness at Dixons Carphone plc.
Nationality
NAOUFEL AISSA
VP LUBRICANTS & COMMERCIAL
Naoufel is the VP Lubricants & Commercial, a rolehe has
held since July 2017. Prior to this, Naoufel held various
senior roles at Vivo Energy, including Head of Lubricants
from July 2015 and Managing Director, Tunisia until
July 2015.
Naoufel transferred from Royal Dutch Shell to Vivo
Energy following the sale of the Africa Downstream
business in 2011. He has over 25 years’ experience in
theindustry and throughout Africa.
Nationality
ADRIAN DE SOUZA
GENERAL COUNSEL
Adrian is the Group’s General Counsel, a role he has held
since July 2020. He is responsible for the Group’s Legal,
Ethics, Compliance, Forensic Investigations and Company
Secretarial functions and has extensive experience
working for listed and multinational companies across a
number of sectors.
Adrian qualified as a solicitor in 1997, working inprivate
practice with Hogan Lovells and CliffordChance before
joining SABMiller plc.
Adrian then became General Counsel and Company
Secretary at the FTSE 100 company Land Securities
Group plc, a position he held for five years, before taking
a similar role at a GoldmanSachs private equity business.
Before joining the Group, Adrian was CompanySecretary
at BarclaysBank UK plc.
Nationality
REINETTE WESSELS
VP HUMAN RESOURCES
Reinette is the VP Human Resources, a position she has
held since September 2018, having joined the Group
in October 2013 as Head of Talent and Development.
Reinette is responsible for providingstrategic leadership
and direction for theHR Function across the Group.
Prior to joining the Group, as an independent consultant,
Reinette provided specialised consulting to a number
of listed companies in the areas of reward and talent
management strategies and deployment. Her knowledge
and experience of thehuman resources field spans a
period of over 30 years, across a number of diverse
sectors, including holding various generalist, specialist
and executive HR positions at British American Tobacco,
where Reinette worked for 12 years and as remuneration
consultant at Old Mutual forseven years.
Nationality
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIVISION OF RESPONSIBILITIES
THE ROLE OF THE BOARD
OUR GOVERNANCE STRUCTURE
An effective board comprises a diverse group
of individuals, each contributing different
experiences, skills and backgrounds enabling
the Board as a whole to provide challenge,
informed opinions and advice on strategy
andrelevant topics.
Collectively, the Board is responsible for
promoting the long-term success of the
Groupby setting strategic priorities, generating
value for stakeholders and ensuring that
the Group continues to contribute to wider
society. In particular, the Board is responsible
for reviewing opportunities and maintaining
effective risk management and internal
control systems.
In line with other large companies, the Vivo
Energy Board relies on Executive Management
to run the business with the Board monitoring
management activities and holding them to
account against targets and standards.
The Board discharges some of its
responsibilities directly while others are
discharged through its principal Board
Committees and through management.
In order to retain control of key decisions and
ensure there is a clear division of responsibilities
between the Board and the running of the
business, the Board has a clear framework
for determining the matters within its remit,
including an agreed schedule of Matters
Reserved for the Board and has approved
Terms of Reference for the matters delegated
to its Committees. The Terms of Reference
and the schedule of Matters Reserved for
theBoard are available on our website.
Matters Reserved for the Board and all
Committee Terms of Reference were
reviewed during the year. Following the review,
environmental and climate-related matters
were added to the schedule of Matters
Reserved for the Board. Nominations and
Governance Committee Terms of Reference
were amended accordingly. No changes to the
Terms of Reference of the other Committees
were deemed necessary.
The Board’s reserved matters include:
– Group strategy;
– governance and regulatory compliance;
– financial reporting;
– major capital commitments;
– major contracts and agreements;
– internal controls;
– significant remuneration changes;
– stakeholder engagement;
– material corporate transactions;
– assessing and monitoring the culture
ofthe Group;
– environmental and climate-related matters;
– ensuring effective arrangements to engage
with employees; and
– ensuring effective whistle-blowing
arrangements are in place.
Following each Committee meeting, the Chair of the Committee provides an update to the Board, detailing decisions made and key matters discussed.
Copies of the Committee minutes are circulated to all Board members to the extent appropriate.
The role of the Committee is
to assist the Board in fulfilling
its corporate governance
obligations in relation to the
Group’s financial reporting,
internal control and risk
management systems.
In addition, itprovides
oversight of the Internal
Auditfunction and the
external auditors.
AUDIT AND RISK
COMMITTEE
The Committee leads the process
for, and makes recommendations
to the Board regarding the
appointment of new Directors
to the Board. In addition, the
Committee supports the Board
with the succession planning
process, implementation and
delivery against the Board
Diversity Policy and employee
engagement process.
The Committee also monitors
corporate governance and
regulatory developments.
NOMINATIONS AND
GOVERNANCE COMMITTEE
The role of the Committee is
to set, review and recommend
the policy on remuneration
of the Chairman, Executives,
Company Secretary and
SeniorManagement team.
In addition, it monitors
the implementation of the
Remuneration Policy.
REMUNERATION
COMMITTEE
THE BOARD
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202186 87VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
BOARD AND COMMITTEE ATTENDANCE
Since the outbreak of the COVID-19 pandemic, Directors have been able to participate in meetings using secure virtual meeting technology.
The following table shows the attendance of Directors at scheduled Board and Committee meetings during the year:
Board
Audit and
Risk Committee
Nominations and
Governance Committee
Remuneration
Committee
John Daly 5/5 n/a 3/3 5/5
Christian Chammas 5/5 n/a n/a n/a
Johan Depraetere 1/1 n/a n/a n/a
Doug Lafferty 5/5 n/a n/a n/a
Hixonia Nyasulu 5/5 5/5 3/3 5/5
Javed Ahmed
1
5/5 n/a 2/3 n/a
Temitope Lawani 5/5 n/a n/a n/a
Carol Arrowsmith 5/5 5/5 3/3 5/5
Christopher Rogers 5/5 5/5 3/3 5/5
Gawad Abaza
2
5/5 5/5 3/3 4/5
Notes:
The maximum number of scheduled meetings held during the year that each Director could attend is shown next to the number attended. Additional meetings were held as required.
Minutes of Board and Committee meetings are made available to all Directors.
1 Javed Ahmed was unable to attend one Nominations and Governance Committee meeting due to a conflicting business engagement.
2 Gawad Abaza was unable to attend one Remuneration Committee meeting due to a conflicting business engagement.
A comprehensive annual programme of
meetings enables the Board to monitor and
review strategy across all the elements of
the Group’s business model. In 2021, five
Board meetings were scheduled. A number
of additional meetings were held to consider
Vitol’s proposals and the appointment of Stan
Mittelman. The Chairman ensures that regular
meetings are also held with the Non-Executive
Directors without the presence of the
Executive Directors.
All Directors are expected to attend all Board
and relevant Committee meetings unless
prevented from doing so by illness or conflict
ofinterest. Senior executives below Board level
are invited, when appropriate, to attend Board
meetings to make presentations on the results,
opportunities, deep dives and strategies relating
to their OUs.
Board agendas are carefully planned to ensure
that sufficient time and consideration are
given to the Group’s strategic priorities and
key monitoring activities as well as reviews
ofstrategic issues.
In advance of each meeting, papers and
relevant materials are provided to Directors
via a secure web portal which also provides
access to a library of relevant information
about the Company and Board procedures.
Directors unable to attend specific Board or
Committee meetings are asked to provide
comments in advance and ifnecessary follow
up with the relevant Chairofthe meeting.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202186 87VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIVISION OF RESPONSIBILITIES CONTINUED
BOARD ACTIVITY
During the year the Board has considered all relevant matters within its remit, including the following:
PEOPLE
AND CULTURE
– Reviewed senior management
succession plans and the Group’s
internal talent pipeline
– Received reports from the nominated
Employee Engagement Champion
– Received Health & Safety updates
– Received and considered updates
on culture
– Considered diversity initiatives
– Considered the Group’s Supplier
Code of Conduct
– Considered the Group’s Human
Rights Policy Statement
– Approved Stan Mittelman’s
appointment
– Approved Christian Chammas’
retirement terms
– Approved the Company’s
ModernSlavery Statement
STANDING
AGENDA ITEMS
– Received reports from the
Chief Executive Officer
– Received reports from the
Chief Financial Officer
– Received Investor Relations updates
– Received updates from the
Board’s Committees
– Reviewed and approved the
previousmeeting minutes
ESG
– Received and considered the results
ofexternally conducted materiality
andTCFD assessments
– Received CEO’s ESG & Climate
Management Committee updates
– Attended training on TCFD
reporting obligations
– Received an update on the Group’s
social engagement initiatives
GOVERNANCE,
COMPLIANCE AND RISK
– Reviewed and approved the
2020Annual Report and Accounts
andNotice of AGM
– Undertook an assessment of the
effectiveness of the Group’s risk
management and internal controls
framework, concluding that
theyremain effective
– Reviewed risk appetite and top 10 risks
– Reviewed Matters Reserved for
the Board
– Reviewed Manual of Authorities
– Received updates on the
2018Codeand its implementation
– Received regular Investor
Relations reports
– Considered revised Directors’
Remuneration Policy
– Considered the output of the
2021Board Effectiveness Review
STRATEGY
AND FINANCE
– Continued the review of the
Group’slong-term strategy
– Considered the Group’s plan
for2022-2026
– Monitored the Group’s performance
against the annual plan for 2021 and
approved the annual plan for 2022
– Reviewed and approved the 2020
finaldividend recommendation
– Reviewed and approved the 2021
interim dividend recommendation
– Considered and approved revised
Dividend Policy
– Reviewed and approved
the preliminary and interim
results announcements
– Received and considered COVID-19
updates and the Group’s response
– Received and discussed Investor
Perception Survey
– Considered and resolved to
recommend Vitol’s cash offer to
the shareholders
– Considered and discussed the Group’s
ESG approach and TCFD disclosures
– Considered Materiality Assessment
– Received updates on the Group’s
solar project and discussed
alternative energies
– Considered presentations onAfrican
Economies and on African Consumer
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GOVERNANCE
THE BOARD’S COMMITTEES ANDTHEIR ROLES
The Board has established three principal
Committees: the Audit and Risk Committee, the
Nominations and Governance Committee and
the Remuneration Committee. Each Committee
has its own terms of reference approved by
the Board which are available on our website.
Membership of each Committee is determined
by the Board on the recommendation of the
Nominations and Governance Committee.
The Board structure is set out on page 86.
In addition to the principal Committees, the
Board is also supported by the Market Disclosure
Committee, Employee Engagement Champion
Committee and the newly formed ESG &
Climate Management Committee.
The membership, roles and duties discharged
during 2021 for each Committee is detailed in
their respective Committee reports on pages
93 to 117.
The Employee Engagement Champion
Committee’s primary function is to assist the
nominated Employee Engagement Champion
in furthering employee engagement and
understanding and listening to employees’
viewsand suggestions. Further details are
provided on pages 79 and 95.
The Market Disclosure Committee ensures
the legal and regulatory obligations and
requirements arising from the listing of the
Company’s securities on the London and
Johannesburg Stock Exchanges are met.
This includes the timely and accurate disclosure
to the market of all relevant information.
The Market Disclosure Committee meets
at such times as is necessary or appropriate.
The members of the Committee are
the Chairman, Chief Executive Officer,
Chief Financial Officer, Group Financial
Controller, General Counsel and Head
ofInvestor Relations.
In addition to the oversight provided by the
Board and its Committees, the Executive
Directors are supported by the Senior
Executive Team which helps them discharge
their duties. The Senior Executive Team
comprises the senior leadership team, who
have management responsibility for the business
operations and support functions. The Senior
Executive Team supports the Executive
Directors in the discharge of their duties.
The membership of the Senior Executive
Teamcan be found on pages 84 and 85.
The Senior Executive Team holds regular
meetings and relevant matters are reported to
the Board by the Chief Executive Officer and,
as appropriate, the Chief Financial Officer.
DIRECTORS
Led by the Chairman, the Board of Directors
comprises four Independent Non-Executive
Directors, two Executive Directors and two
representatives from our major shareholders,
Vitol and Helios. Together, they ensure high
standards of governance and bring a broad
range of skills and experience to our business.
All Directors are encouraged to use their
independent judgement and to constructively
challenge all matters, whether strategic
or operational.
All Directors are required to devote sufficient
time and to demonstrate commitment to their
role. There is a process for the approval of
any additional external appointments for the
Executive Directors or Independent Non-
Executive Directors. All additional appointments
are to be approved by the Board in advance
ofsuch appointments being accepted.
During 2021 the Board approved Chris
Rogers’ appointment to Wickes Group plc
as the chairman of the board and Temitope
Lawani’s non-executive director appointment
to Pershing Square Holdings limited.
These appointments were not considered
to unduly affect Chris’ or Temitope’s time
commitment to the Company, nor impair their
ability to serve as Directors of the Company.
Following an internal review, it was confirmed
that no conflict of interest would arise through
either of these additional appointments.
In addition to the above appointments, the
Board also noted that Chris Rogers stepped
down from the Board of Travis Perkins plc.
Further information on the skills and
experience, committee membership and
otherappointments of each Director can
befound in their individual biographies on
pages 82 and 83.
INDEPENDENCE
With the exception of Javed Ahmed and
Temitope Lawani, the Non-Executive Directors
were considered to be independent on
appointment and are still considered to be
independent, in accordance with the criteria
outlined within the 2018 Code.
They are considered free from any business
interest, which could materially interfere with
the exercise of their judgement. In addition,
the Board is satisfied that each Non-Executive
Director dedicates the necessary amount of
time to the Company’s affairs and to their role.
The Board has agreed that each Director shall
stand for appointment or reappointment as
appropriate at each AGM. All Independent
Directors are appointed and reappointed by a
dual vote, where the approval of shareholders
excludes the major shareholders.
In accordance with the respective relationship
agreements, should either of the two
shareholder nominated Directors not be
reappointed by a vote at the AGM, the
respective shareholder would be entitled
to nominate them for reappointment to
the Board.
Copies of the Executive Directors’ service
contracts and letters of appointment for
the Non-Executive Directors are available
for inspection by shareholders at each AGM
andduring normal business hours at the
Company’s registered office.
CONFLICTS OF INTEREST
Directors have a statutory duty to avoid
situations in which they may have interests
which conflict with those of the Company.
The Board has adopted procedures as provided
for in the Company’s Articles of Association
for authorising existing conflicts of interest and
for the consideration of, and if appropriate,
authorisation of new situations which may arise.
A register setting out each Director’s interests
is maintained and records both Javed Ahmed’s
and Temitope Lawani’s appointments on
behalf of the Company’s major shareholders.
In addition, where a Director holds
directorships or other similar appointments
in companies or organisations not connected
with the Company where no conflict of
interest has been identified, such appointments
are registered as potential conflicts and are
authorised and recorded.
As good practice, the Chairman requests
eachof the Directors to declare any conflict
ofinterest at each Board meeting.
ESG & CLIMATE MANAGEMENT COMMITTEE
During the year the Group formed an ESG & Climate Management Committee to help guide the Group’s approach to these topics.
The Committee is chaired by the CEO and the members are the Head of HSSEQ, General Counsel, Head of Investor Relations
andCorporateDevelopment and Strategy Manager with the CFO regularly in attendance. The Committee met five times during 2021.
The Committee focused on three main areas in its inaugural year; the Company’s first TCFD disclosures, undertaking a materiality assessment,
and reviewing GHG emissions, measurements and reporting, including the role of carbon offsets going forward. As part of its work, the
Committee met regularly, receiving presentations on each of theworkstreams from both internal and external counterparts enabling the
Committee to lead and support delivery against each Workstreamand to drive further integration of sustainability and climate matters
acrossthe Group. The CEO regularly reported to theBoardon the Committee’s discussions and received feedback on the same.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202188 89VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIVISION OF RESPONSIBILITIES CONTINUED
In line with best practice, the roles of our Chairman and Chief Executive Officer are separate, clearly defined and set out in writing. The role profiles
have been approved by the Board and are available on our website. The key roles of Board members are set out below:
Chairman
The Chairman’s primary role is to lead the Board and ensure that it operates effectively. In particular, he sets the Board’s agenda and promotes a
culture of open discussion and debate between Executive and Non-Executive Directors. He also has a pivotal role in ensuring effective communication
with shareholders and other stakeholders and ensures that the members of the Board are kept aware of the views of the major investors.
Chief Executive Officer
The Chief Executive Officer develops the Group’s strategic direction for consideration and approval by the Board and represents the Group
toexternal stakeholders. He is responsible for running the business of the Group and ensuring the delivery of the strategy agreed by the Board.
The CEO does this in close collaboration with, and with the support of, the Senior Executive Team.
Chief Financial Officer
The Chief Financial Officer is responsible for providing strategic financial leadership, establishing financial planning and maintaining adequate internal
controls over financial reporting, representing the Group to external stakeholders as well as the day-to-day management of the finance function.
In addition to the finance function, IT and procurement functions also report to the Chief Financial Officer.
Senior Independent Director
The Senior Independent Director is an Independent Non-Executive Director of the Board. This role provides advice and additional support and
experience to the Chairman and where necessary, performs an intermediary role for other Directors. The Senior Independent Director leads the
annual appraisal and review of the Chairman’s performance and is available to respond to shareholder concerns when contact through the normal
channels is inappropriate.
The Senior Independent Director is also the Board’s nominated Employee Engagement Champion and Chair of the Employee Engagement
Champion Committee.
Non-Executive Directors
The Non-Executive Directors are responsible for contributing sound judgement and objectivity to the Board’s deliberations and overall
decision-making process, providing independent challenge, and monitoring the delivery of the strategy within the Board’s risk and
governance framework.
Company Secretary
It is the responsibility of the Company Secretary to ensure that there are good information flows to the Board and its Committees. The Company
Secretary advises the Board on corporate governance and best practice and assists the Chairman in ensuring that the Directors have a suitably
tailoredand detailed induction and ongoing professional development programmes. The removal of the Company Secretary is a matter for the
Boardas a whole.
All Directors have access to the advice and services of both the Group General Counsel and the Company Secretary. Directors may take independent
legal and/or financial advice at the Company’s expense when it is deemed necessary in order to discharge their responsibilities effectively. No such
independent advice was sought during the year to 31 December 2021.
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GOVERNANCE
COMPOSITION, SUCCESSION AND EVALUATION
In accordance with Provision 21 of the
2018 Code, a formal rigorous assessment
and evaluation of the performance and
effectiveness of the Board, itsCommittees and
individual Directors including the Chairman
took place over the second and third quarters
of 2021. The purpose of the evaluation
wasto review and evaluate how the Board
and its Committees operate and measure
against corporate governance principles,
current best practice, the requirements
ofthe 2018 Code and to identify any areas
for potential improvements in Board
processes. The evaluation also measured the
Boardagainstsector and market cap peers.
This was the first triennial external Board
evaluation undertaken by Vivo Energy. It was
facilitated by Lisa Thomas of Independent
Board Evaluation (IBE). Neither Lisa Thomas
nor IBE have any other connections with
Vivo Energy and were appointed following
a competitive tender overseen by the
Nominations and Governance Committee.
Selection process
As both previous evaluations were carried out
internally, in accordance with the 2018 Code,
this year’s evaluation was to be facilitated
externally. At itsDecember 2020 meeting,
theNominations and Governance Committee
approved the initiation of a tender process
which was carried out during the first quarter
of 2021 with potential evaluators providing
written proposals for review by the Company
Secretary. Three selected reviewers gave
presentations to a panel of Non-Executive
Directors, the Chairman and the Company
Secretary. At the completion of the process,
IBE was selected as the reviewer and the
evaluation method was agreed with Lisa
Thomas as part of the selection process.
Evaluation process
A comprehensive brief was given to Lisa
Thomas by the Chairman in June 2021.
Given the travel restrictions in place at the time,
careful thought was given as to how to carry
out an effective review and the Chairman and
the Company Secretary worked closely with
IBE to agree the sequencing and timetable
forthe review.
EXTERNAL EVALUATION PROCESS
Lisa Thomas observed Board and Committee meetings in July 2021.
Access to supporting materials was provided for briefing purposes.
Following the July meetings, Lisa Thomas conducted one-to-one
interviewswith the Directors, the Company Secretary and selected
regularBoard contributors and external advisers. Due to the travel
restrictions necessitated by the COVID-19 pandemic, many of these
interviewswere conducted virtually.
The reports prepared by Lisa Thomas were discussed with the
Chairmanand the Committee Chairs followed by the Nominations
and Governance Committee and the Board as a whole in the
October2021 meetings. The Senior Independent Director
discussed theChairman’s performance with the Board, without
theChairmanpresent, at the same time.
Feedback on the individual Directors was presented to the Chairman
forhim to use as part of his annual appraisal of Board members,
toensurethat each continues to perform to his or her best ability.
Audit and Risk and Remuneration Committee reports were
discussedinthe Committee meetings in December 2021.
BOARD AND COMMITTEE EFFECTIVENESS REVIEW
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202190 91VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
Findings
The feedback received was positive and confirmed that the Board and its Committees are well run and continue to operate effectively.
The feedback confirmed that the Board’s diversity of thought, experience and culture, along with the collective professional experience of Board
members were positives; all of these have helped in setting the right tone for sound plc governance post IPO. Board composition was a strength with
some suggested adjustments around better gender balance, and some additional skills. Relationships with the majority shareholders were working
well, ensuring an appropriate balance in and outside the room and supporting decision-making in the interests of all shareholders. The Chairman
was credited with keeping the dynamics positive and ensuring good dialogue, and his style and experience were seen as key in ensuring the smooth
continuation of Board discussions.
The feedback also considered the need to drive to action on strategy, to formulate an overall ESG narrative, and to ensure a smooth CEO succession
as areas of focus for the Board in the coming year.
Board Committees were also reviewed and were considered to be fulfilling their remit. The Committees have strong, capable and inclusive
Chairswho maintain a supportive environment and promote quality conversation and challenge.
2022 priorities Progress on 2021 priorities
The review identified opportunities for the Board as a maturing
plc, and recommended areas of focus and action. In the context
ofoverseeing a smooth CEO transition and preparing for the
expected delisting of the Company, both announced after
completionof the review, the Board has decided to focus
onthefollowing actions for 2022:
– review attendees at Committee meetings to ensure
aligned discussions;
– arrange for the Directors to be exposed to more external
insightsto help challenge convention and provoke new
discussionsand perspectives to support strategy discussions;
– continue to enhance the Board’s understanding of the Group’s
customers and performance relative to competitors;
– increase the level of engagement between the Board and the
senior executives; and
– continue to focus on improving Board reporting and to build
ontheprogress already made.
The development areas identified will influence the Board and
Committee meeting agendas for the coming year to ensure that each
area receives the Board’s focus and there is a good balance between
operational, strategic and governance topics. We will report on our
progress in next year’s Annual Report.
The Board has made good progress in meeting its priorities and all
improvement suggestions from the 2020 review have received attention
from the Board and its Committees during the year, with the exception
that, due to travel restrictions as a result of the COVID-19 pandemic,
it has not been possible to visit OUs. These visits offer important
engagement and learning opportunities for the Board andthisarea
willbe prioritised in the coming year.
In accordance with best practice, Independent Board Evaluation has reviewed and approved the narrative in this section of the Governance Report.
It should be noted that the review was carried out before the announcement of 25 November 2021 and should be read in that context.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202192 PBVIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
NOMINATIONS
AND GOVERNANCE
COMMITTEE
REPORT
JOHN DALY
COMMITTEE CHAIR
We’re ensuring we have
the right talent to build Vivo
Energy for the future.”
JOHN DALY
CHAIRMAN
INTRODUCTION
This has been another busy year for
the Committee.
The key areas of activity have been the search
for our new Chief Executive Officer, succession
planning for our senior management, diversity
across the business and ESG related matters.
ROLE OF THE COMMITTEE
The Committee reviews the executive and
identified senior leadership and succession
needs of the organisation and ensures that
appropriate procedures are in place for
nominating, training and evaluating Directors.
In particular, the Committee reviews the size,
structure and composition of the Board in the
context of the current and future needs of the
business and makes recommendations to the
whole Board.
It is also responsible for considering and
monitoring changes in the governance
environment promulgated by its various
stakeholders and adopting the relevant aspects
in a way that promotes efficient, effective and
entrepreneurial management for the long-term
success of the Company.
MEMBERSHIP
During the year under review, the following
Directors were members of the Committee:
– John Daly – Chair
– Gawad Abaza
– Javed Ahmed
– Carol Arrowsmith
– Hixonia Nyasulu
– Christopher Rogers.
All of the members are independent
Non-Executive Directors, with the exception
of Javed Ahmed who is deemed not to be
independent by virtue of his appointment
byVitol. Their biographies appear on pages
82and 83.
In addition to its Members, the Committee
Chair invites other Non-Executive Directors,
the Chief Executive Officer and senior
managers to attend meetings, as appropriate.
The Company Secretary, Chief of Staff, Vice
President, Human Resources and General
Counsel have standing invitations to attend.
MEETINGS
In addition to the three scheduled meetings
theCommittee met as needed during the year,
and considered the following:
– the search for and appointment of the
Group’s new Chief Executive Officer;
– succession planning for Directors and
senior managers;
– diversity within the Group and initiatives
forthe improvement of gender diversity;
– governance especially around the impact
ofclimate change;
– feedback from the Employee Engagement
Champion Committee meetings;
– update on the Group’s culture and social
engagement activities;
– a corporate governance update;
– Employee Engagement Survey results; and
– Board evaluation.
BOARD APPOINTMENTS
All appointments are subject to a formal,
rigorous and transparent process. The Board
supports the provisions of the Voluntary Code
of Conduct for Executive Search firms. It will
only engage executive search firms that are
signatories to this code, which includes the
adoption of measures designed to improve
ethnic and gender diversity on boards.
The Committee reviews the terms of
appointment for all Directors and makes
recommendations to the Board.
During the year, the Committee conducted the
process for the recruitment of a new Group
CEO, leading to the appointment of Stan
Mittelman who joined the Company as its Chief
Executive Officer Designate on 14 February
2022. Details of the process around his
appointment are set out on page 95.
BOARD DIVERSITY
A well-governed company exposes itself to
the widest possible sources of information and
experience, both in the people it employs and
the voices to which it listens. The Committee
recognises that diversity, in the broadest sense,
enables wider perspectives which encourage
more effective discussions and better
decision-making, and is crucial for an effective
Board. In considering any appointment to the
Board, the Committee identifies the set of skills
and experience required and appointments
are made on merit according tothe balance
of skills and experience offered by the
prospective candidates.
The Board adopted a diversity policy in 2019.
This formally recognises the value that diversity
brings to the Board and aims to promote the
recruitment of people who are diverse in terms
of ethnicity, age, skills, background, gender
and perspective.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
93VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOMINATIONS AND GOVERNANCE COMMITTEE REPORT CONTINUED
The Committee is aware of and supports the
Parker and FTSE Women Leaders (previously
Hampton-Alexander Review) initiatives.
The Company comfortably meets the Parker
recommendation of having at least one Director
from an ethnic minority background, with four
Directors meeting that criteria. The Committee
is very aware that there is more to be done on
gender diversity, with women making up 22%
ofthe Board at year-end.
Shareholders should not assume that thismeans
the Board lacks diversity. The Board’s Directors
are drawn from seven different nationalities
and the conversations, perspectives, challenge
and insights shared around the Board table are
thoseof a very diverse group of people.
Our Directors have experience working
across a number of industries and territories
that complement our business. They have
had executive careers in a broad range of
industries including FMCG, Energy, Engineering,
Marketing, Commodities, Professional Services,
Corporate Finance, and General Management
and many of them have experienced significant
regulation and change.
The Board has given great consideration to this
mix, which is essential to the advancement of
its strategy and given the nature of the business
and the diverse range of cultures and territories
in which the Group operates.
Details regarding diversity of our senior
management, their direct reports and the
Group more widely can be found on page 49.
SENIOR MANAGEMENT
SUCCESSION PLANNING
The Committee recognises that diversity
extends beyond the Boardroom and we
support the management in its efforts to build
adiverse organisation to ensure we have the
right talent in place to deliver further growth.
Achieving a diverse pipeline at the most senior
levels will be possible only if efforts have been
made to develop and retain diverse candidates
in the layers below. In 2021, on average, 31% of
all new key roles in the business were filled with
female talent but we recognise that this is an
area which requires further improvement.
During the year the Committee discussed
succession planning, reviewed the Group’s
talent pipeline and received a detailed report
on diversity among senior managers and their
direct reports. Management also took the
Committee through a series of initiatives that
would address the gender imbalance in the
short, medium and longer term.
CONFLICTS OF INTEREST
The Board operates a policy to identify and,
where appropriate, manage any potential
conflicts of interest that Directors may have.
The Nominations and Governance Committee
monitors the situation and determines
the actions necessary to address potential
conflictsof interest.
During the year conflicts of interest were
reviewed and, bar those relating to the
announcement of25 November 2021,
nonewconflicts of interest were noted.
INDEPENDENCE AND
RE‑ELECTIONTO THE BOARD
The Committee reviewed the independence,
effectiveness and time commitment for each
ofthe Non-Executives and was satisfied with
theDirectors’ contributions.
During the year, Chris Rogers stepped down
as anon-executive director of Travis Perkins
plc andwas appointed as the chairman of
Wickes Group plc. Temitope Lawani took
onanadditional non-executive appointment
atPershing Square Holdings limited.
The Committee and the Board considered the
likely time commitments for each role, whether
they would negatively impact on their roles
with the Company and whether any conflicts
of interest would arise. The Board was satisfied
on all of these matters and approved the new
positions prior to Chris and Temitope taking
them up.
In addition, the Committee re-considered
all external appointments of Directors
(including the Chairman) in terms of their time
requirements and potential conflict of interests.
The Committee is satisfied that each Director
will be in a position to effectively discharge
theirduties in the coming year.
The Committee also considered whether
Non-Executive Directors designated as
independent last year remain so, and confirms
that they do. Accordingly, for the purposes of
the 2018 UK Corporate Governance Code,
theBoard as a whole is independent.
With the exception of Christian Chammas who
will retire from the Board in early March2022
and Doug Lafferty who will leave the Group
during the first half of the year, all other Directors
will stand for re-election, with the support of
the Board. The shareholders will also be asked
to confirm Stan Mittelman’s appointment at the
Annual General Meeting in May.
GOVERNANCE
The Committee oversees the governance agenda
on behalf of the Board and considers papers and
proposals issued by governments, regulatory
bodies and investor groups and their application
to the Group. It ensures that the decisions taken
by the Board and its delegated Committees are
made in the best interests of the Company and
that they address any wider implications that
mayaffect stakeholders.
In the year under review, the Committee
received a governance update covering the
short and medium term as well as trends likely
to affect the Company in the longer term, and
theirimplications for governance proposals.
The Committee considered the Group’s anti-
modern slavery and anti-bribery obligations
and received presentations on governance
requirements reflecting best practice in climate
change reporting. These were referred to the
whole Board for consideration. Details of the
impacts of climate change on the Group and
itsapproach to mitigating them can be found
onpages 52 to 55 and TCFD disclosures on
pages 58 to 62.
0-3 years 11%
3-5 years 89%
BOARD TENURE
Chairman 11%
4 Independent Non-Executives 45%
2 Shareholder appointed Non-Executives 22%
2 Executive Directors 22%
BOARD INDEPENDENCE
2 females 22%
7 males 78%
BOARD DIVERSITY
All figures are as at year-end.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202194 95VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
EMPLOYEE ENGAGEMENT
CHAMPION COMMITTEE
During the year the Committee received
updates on employee engagement from the
Company’s Employee Engagement Champion
and the Chair of the Employee Engagement
Champion Committee, Hixonia Nyasulu.
Employee engagement in 2021 took place via
existing colleague suggestion boxes, regular
town hall meetings held with employees,
breakfast meetings held with local Managing
Directors, an Employee Engagement Survey,
the results of which feature on pages 40 and 46,
and other formal and informal channels tailored
toindividual businesses and countries.
The Committee met twice during the year
andconsidered regional updates, employee
wellbeing, post COVID-19 ways of working
and Employee Engagement Survey results.
The Committee also received detailed updates
on health and safety and provided employee
feedback on thecashoffer made by Vitol.
Priorities set for 2021 were reviewed as part
of the Committee’s effectiveness evaluation
as well as additional priorities for 2022
discussed. These centre around the Employee
Engagement Survey follow up actions, diversity
and inclusion and employee wellbeing and will
inform the setting of agendas for the year.
In 2022 the regional representatives will also
spend time on employee suggestions received
via the Your Voice e-suggestion box launched
inNovember 2021.
BOARD AND COMMITTEE
EFFECTIVENESS
This year’s effectiveness reviews were carried
out by Lisa Thomas of Independent Board
Evaluation. The Committee considered
the results and was satisfied that the Board
continues to be of adequate size and
composition to suit the current scale of the
Group’s operations and has an appropriate
balance of skills, knowledge, experience and
diversity to enable it to effectively discharge
its duties.
The Committee also reviewed the results
ofits own effectiveness. Overall, the feedback
received was positive and confirmed that the
Committee is functioning well and fulfilling its
remit. More on the effectiveness evaluation
isprovided onpages 91 to 92.
JOHN DALY
CHAIRMAN
THE APPOINTMENT
OF OUR NEW CHIEF EXECUTIVE
OFFICER DESIGNATE
During the course of the year, the Group’s Chief
Executive Officer, Christian Chammas, informed
us ofhis intention to stand down from his
position, indicating that he would givethe Board
as much time as it needed to find a suitable
replacement and facilitate an orderly handover.
Christian joined Vivo Energy in January
2012, shortly after its formation, following
the acquisition of Shell’s downstream
business in Africa. Christian has been
instrumental intransforming, developing
and growing the business and has led the
Group’s sustained growth, its listing on the
London and Johannesburg stock exchanges
in 2018, andacquisition of part of Engen.
Christian hasbeen an excellent CEO and
willbemissed by us all.
The Board and the Committee have regularly
considered executive succession planning, both
formally and informally. This preparation meant
that the search process could begin quickly and,
following confirmation of the role specification,
Russell Reynolds Associates was appointed
to lead the search. The firm was chosen on
the basis of the strength and credibility of its
CEO practice and its global reach, as well as
its understanding of the business and culture.
Russell Reynolds has no connection with the
individual Directors or the Company, other
thanto provide recruitment services.
Russell Reynolds is a signatory to the Enhanced
Code of Conduct for Executive Search Firms.
The key search criteria were to identify
candidates with considerable experience in
large international organisations with exposure
to emerging markets and who had worked
successfully across a wide range of cultures.
Candidates would be required to demonstrate
experience of leading change, driving results,
strong commercial orientation, leading people
from a range of backgrounds and a commitment
to strong governance.
The Committee was very conscious of
theneed to improve gender diversity on
the Board and required Russell Reynolds
toensure their shortlist included a number
offemale candidates.
Russell Reynolds conducted the search,
considering a number of different candidates
from a number of different countries and
sectors. Their initial search identified more than
60 potential candidates for this role, from across
the world. This list was reduced to 12, and
following two rounds of screening interviews
six candidates were shortlisted. The shortlist
reflected the requirement forgender diversity.
The selection process was run by the Chairman
and the Chief of Staff. The candidates were
interviewed by the Board members and the
Chief of Staff. Following the extensive and
rigorous selection process, Stan Mittelman
wasselected and we are delighted that
he agreed to accept our offer to join
theGroupand the Board.
I am delighted that the Board
has put its trust in me to take
the Group forward. Having
spent much of my career in
Africa, I know first-hand the
vast opportunity that exists
on the continent and I look
forward to working with my
new colleagues to continue
Vivo Energy’s growth story.”
STAN MITTELMAN
CHIEF EXECUTIVE OFFICER DESIGNATE
CEO DESIGNATE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202194 95VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
ROLES AND RESPONSIBILITIES
OFTHECOMMITTEE
The primary role of the Audit and Risk
Committee (‘Committee’) is to assist the
Board in fulfilling its oversight responsibilities
byreviewing and monitoring the:
– Integrity of the financial and narrative
statements of the Company, including its
full year and half year reports, preliminary
results announcements and any other
formal announcements relating to its
financial reporting information;
– Assumptions or qualifications in support
of the going concern and long-term
viability statements;
– The robust assessment of emerging
and principal risks facing the Group as
well as the adequacy and effectiveness
of the Group’s internal control and risk
management systems;
– The Group’s internal financial controls
system to identify, assess, manage and
monitor financial risks;
– Effectiveness of the Internal Audit
functionat least annually;
– Ensure the Head of Internal Audit has
direct access to the Board Chair and the
Committee Chair, providing independence
from the executives and accountability
tothe Committee;
– Relationship with external auditors,
includingreviewing the independence,
objectivity and effectiveness of the
audit process, taking account of relevant
professional, regulatory and ethical guidance;
– The appointment, reappointment and
removal of the external auditor and making
a formal recommendation to the Board;
– Processes for compliance with laws,
regulations and ethical codes of conduct;
– The adequacy and security of the
Company’s arrangements for its employees,
contractors and external parties to raise
concerns, in confidence, about possible
wrongdoing in financial reporting or
othermatters; and
– The Directors’ duties in relation to
the Companies Act and various other
applicablegovernance codes.
The terms of reference, which outline the
Committee’s responsibilities can be found
onthe Group’s website: www.vivoenergy.com.
The Board reviews and approves the terms
ofreference on an annual basis.
If the Committee is not satisfied with, or
believes that an action or improvement
is required concerning any aspect of
financial reporting, risk management
andinternal control, compliance or audit-
related activities, the Committee reports
and proposes corrective action on these
matterstothe Board.
This year the Committee placed particular
focus on the following key areas:
– Strengthening the control framework and
ensuring compliance across the Group;
– The Vitol takeover offer; and
– Climate change and its impact on corporate
reporting, the going concern and long-term
viability assessment.
COMMITTEE STRUCTURE
There have been no changes to the
composition of the Committee in the current
year. The Committee has maintained its
compliance with the 2018 Code. All Committee
members remain Independent Non-Executive
Directors. The Board is satisfied that
Christopher Rogers, the Chairman of the
Committee, meets the relevant recent
financial experience as outlined in the UK
Corporate Governance Rules in the Disclosure
Guidance and Transparency Rules 7. It further
considers the Committee as a whole to have
the appropriate experience and blend of
commercial, financial and audit knowledge.
The biographies of all Committee members
can be found on page 83.
COMMITTEE MEETINGS
During the year, the Committee held
fivescheduled meetings, of which
threemeetings were held virtually due to the
restrictions of COVID-19. The attendance
details of members at Committee meetings
can be found on page87. The Board Chairman,
Chief Financial Officer, Company Secretary,
General Counsel, Group Financial Controller,
Head of Internal Audit and external auditor
also attended Committee meetings by
invitation of the Committee Chair.
The Committee, together
with management, has
remained agile and adapted
its focus to strengthen
ourrisk management.
Through this agility, we have
ensured the integrity of our
financial statements.”
CHRISTOPHER ROGERS
COMMITTEE CHAIR
AUDIT AND RISK COMMITTEE REPORT
AUDIT AND RISK
COMMITTEE
REPORT
CHRISTOPHER ROGERS
COMMITTEE CHAIR
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GOVERNANCE
The Committee regularly meets, individually,
with the external auditor and the Head of
Internal Audit to discuss any issues which
mayhave arisen.
The Committee keeps the Board informed
of its activities and recommendations, with
the Committee Chair providing an update
tothe Board after every Committee
meeting. The Committee promptly reports
concerns to the Board if it’s not satisfied with
or believes that actions or improvements
are required concerning any aspect of
financial reporting, risk management,
internal controls, compliance or audit-related
activities.In 2021, all recommendations
set forth by the Committee,to the Board,
were accepted.
COMMITTEE ACTIVITIES
Financial disclosure
The Committee reviewed the half year and
annual financial statements published for
the 2021 financial year with management.
Particular focus was placed on the clarity of
disclosures, integrity of the financial reporting
process, compliance with legal and financial
reporting standards and the application of
accounting policies and judgements. As part
of its review the Committee received regular
updates from management and the external
auditors in relation to various accounting
judgements and estimates and concluded
theseto be appropriate and balanced.
The Committee endorsed the 2021 Annual
Report and Accounts (‘Annual Report’),
and assessed it to be fair, balanced and
understandable to shareholders. In making
these assessments the Committee reviewed
disclosures, discussed the requirements
with senior management and inspected
representations made to the auditors.
The Committee further concluded the
AnnualReport provides adequate information
for shareholders to assess the performance,
business model and strategy of the Group.
Based on the Committee’s endorsement a
recommendation to the Boardwas made
and following the review ofthe report as a
whole, the Board confirmed the assessment
and approved the publication ofthe 2021
Annual Report.
The Committee reviewed the reports to
support the going concern assumption
and long-term viability of the Group.
The Committee has given due consideration
to the announcement of the recommended
total cash offer of $1.85 per share to be made
by Vitol for Vivo Energy plc. The Committee
agreed with management’s conclusion that in
the normal course of business, management’s
business plans and the existing debt facilities
provide an adequate basis for the going
concern and long-term viability assessment.
However, the Committee does not have
access to Vitol’s detailed plans for the business
or the post-acquisition debt structure and
therefore there is no certainty that the going
concern assessment incorporates these
plans. The Committee also reviewed the
long-term viability assessment performed
bymanagement and agreed with the
conclusion. The Committee therefore
deemed the Group’s statements on these
topics to be appropriate. Note 2 of the notes
to theconsolidated financial statements, on
pages136 and 137, provides further insight into
the goingconcernassessment. Further details
regarding the long-term viability assessment
canbe foundon page 74.
In preparing the consolidated financial
statements management has considered
the impact that climate change may have.
The Task Force on Climate-Related Financial
Disclosures (TCFD) is a reporting framework
that consists of a list of recommendations for
companies to consider, with the aim to improve
and increase the reporting of climate-related
financial information. In accordance with the
TCFD reporting framework, management has
assessed the impact of the scenario assessments
on the Group’s physical and transitional risks.
Additional information can be found on pages
58 to 62. Based on this assessment, climate
change is not expected to have a significant or
material impact on key accounting judgements
and estimates, underpinning the current
year’s financial statements, including asset
useful economic lives and asset valuations and
impairments. Management will continue to
assess and account for the impact of climate
change in future years. The Committee has
agreed on management’s conclusion following
the review of the assessment outcomes.
The 2020 Annual Report was included in the
Financial Reporting Council’s (FRC) sample for
its limited scope thematic review of companies’
disclosure relating to provisions, contingent
liabilities and contingent assets under IAS 37
Provisions, contingent liabilities and contingent
assets. The Committee is pleased to report
there were no questions or queries as a
result of the FRC’s review. However, the FRC
did suggest some possible enhancements
to the financial statement disclosure and
they have been included in the 2021 Annual
Report. The Committee has reviewed the
enhancements made to the financial statements
disclosure based on the letter received
from the FRC. The FRC review provides
noassurance that the 2020 Annual Report
was correct in all material aspects. The FRC’s
role is not to verify the information provided
but to consider compliance with reporting
requirements. The letter is drafted on the basis
that the FRC (which includes the FRC’s officers,
employees and agents) accepts no liability for
reliance on them by the Group or any third
party, including but not limited to investors
and shareholders.
Other activities and disclosures reviewed
bytheCommittee over the course of the year:
– Assessment of the Group’s ongoing legal
cases and regulatory investigations;
– Impairments assessment of receivables,
including amounts due from joint ventures;
– Existing and new special items;
– Useful life review of property,
plantand equipment;
– Implementation of SAP Analytics Cloud;
– Impairment trigger assessment of the
carrying valueofthe parent companies’
investment in the Group; and
– Changes and amendments in the
International Financial Reporting
Standards(IFRS).
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OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
AUDIT AND RISK COMMITTEE REPORT CONTINUED
INTERNAL CONTROLS
AND RISK MANAGEMENT
The Committee is tasked with the
responsibilityof reviewing and assessing
risks and their impact as well as ensuring
that appropriate controls are designed
and implemented to mitigate these risks.
The Group’s risk assessment process and
the way in which significant business risks are
managed remains a key area of focus for the
Committee, the Internal Audit and Internal
Controls functions.
The risk register is one of the key
componentsof the risk management
structure, which covers the regular ongoing
identification, assessment, mitigation and
management of risksand is monitored regularly
by the Committee. The areas of focus remain
largelyunchanged and address both the
currentand emerging risks of the Group.
The Committee reviewed and approved
the principal risk factors and their impacts.
Further details on these areas can be found
onpages 66 to 73 in the Strategic Report.
The internal control framework was
reviewedby the Committee. The internal
control framework is intended to manage
rather than eliminate the risk of failure to
achieve the business objectives and can
onlyprovide reasonable and not absolute
assurance against material misstatement.
In 2021, the Group has enhanced its risk
appetite framework. This included a definition
of the Group’s risk appetite scale and an
in-depth review of the Group’s appetite for
each of its principal risks. Furthermore, key
risk indicators were developed and designed
to measure the residual level of the Group’s
principal risks against the agreed risk appetite.
No material weaknesses or instances of
significant control failure were identified
duringthe year. The Committee completed
its review of the effectiveness of the
Group’s system of internal controls and risk
management. The review covered the full
year up to the date of this Annual Report.
The Committee is confident in its conclusion
of the effectiveness of the internal controls
andrisk management system. The Committee
has set forth this conclusion tothe Board.
INTERNAL AUDIT
The Committee reviewed and approved the
internal audit plan and the progress of audits
performed for the year. The Committee
is regularly updated on the actions taken
and status of the audit recommendations.
Internal audit findings including remedial action
plans were presented and discussed in detail
with the Committee. There is continuous
communication between the Head of Internal
Audit and the Chair of the Committee to
ensure that all the information required by
the Committee to perform its duties are
made available.
In 2021, the Internal Audit function has
continued to apply its SAP-based audit
methodology, ensuring remote auditing
capability, to adapt to the persistent travel
restrictions and border closures across the
African continent. During the last quarter
ofthe year, the Internal Audit team has
been able to resume its audits on-site. This is
expected to continue in 2022, while closely
monitoring the COVID-19 restrictions and
adapting their approach accordingly.
The Committee considers the experience
and expertise of the function appropriate to
address all categories of risk within the business.
The Internal Audit function’s performance
was assessed against the approved internal
audit plan. The Committee concluded that
theInternal Audit function was effective
for theyear and is satisfied that the scope,
extentand effectiveness of the internal
auditactivities were appropriate.
ETHICS AND COMPLIANCE
The Committee discussed with the Head
ofEthics and Compliance and Investigations
on the ethics and compliance environment
of the Group. The Committee reviewed
thefollowing activities:
– Conflict of interest risk assessment;
– ISO 37001 Anti-bribery management
system audit;
– Board approved Modern Slavery
statement;and
– Mandatory Cyber security and
CodeofConduct trainings.
Significant financial reporting judgements considered by the Committee were as follows:
Key judgements and estimates Committee actions Conclusions
Other Government Benefits Receivable
Other government benefits receivable are
subsidies received from national governments
for fuel sold as part of the Group’s ordinary
course of business.
The assessment of recoverability risk related
to other government benefits receivable was
considered by the Committee by taking into
consideration the:
– Stability of the macroeconomic and
politicalenvironment; and
– Credit risk and governmental policy changes.
Based on the assessment, the Committee
concluded that the receivables were properly
stated and the level of provisioning was
appropriate. Further information on other
government benefits receivable can be found in
note 4 of theconsolidated financial statements.
Tax Positions
Determining the Group’s income and other
tax positions requires interpretation of the
taxlaws in numerous jurisdictions. Resolution
ofuncertain tax positions can take several
yearsto complete and can be difficult to
predict. Therefore, judgement is required
todetermine the Group’s income tax
liabilityrelated to uncertain tax positions.
Considered the appropriateness of the key
judgements and estimates in relation to the
uncertain tax positions. Factors considered
include the:
– Status of recent current tax audits
and enquiries;
– Results of previous claims;
– Transfer pricing policies of the Group; and
– Any changes to the relevant
tax environments.
The Committee concluded that the related tax
positions are appropriate. Further information
on the tax positions can be found in note 4
ofthe consolidated financial statements.
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GOVERNANCE
The Committee reviewed the ongoing
developments in the Group’s cyber security
landscape, the oil and gas industry and events
within the Group itself. The review focused
on the strengthened approach in order to
manage the increased threat of cyber security.
The Committee is satisfied with the progress
made in this area and continues to focus on
thedigital transformation across the Group.
The Head of Ethics and Compliance and
Investigations and the Head of Forensics are
involved in mitigating fraudulent activities
withinthe Group. The Committee is kept
informed of all ongoing investigations and
has agreed with management’s approach
and resolutions.
EXTERNAL AUDIT
Independence
The auditor independence policy, which
is designed to safeguard the continued
independence of the external audit firm,
hasbeen reviewed by the Committee.
The policy sets out:
– The audit fee;
– Oversight of audit firms who perform
auditservices;
– Audit-related and non-audit services
provided to the Group; and
– Tender of the external auditor and
keyaudit partners.
PwC, the Group’s external auditor, has
confirmed to the Committee its independence
in accordance with the Ethical Standard for
Auditors issued by the FRC. The Committee
continues to assess the independence of
theexternal auditor on anongoing basis.
External auditors are only permitted to
perform certain non-audit services as directed
by the FRC Revised Ethical Standard 2019.
Any approved non-audit services with fees
exceeding the threshold set to identify trivial
services or which are not stipulated within
the policy must be reviewed and approved by
the Committee. The external auditor is only
considered for non-audit services in instances
where they have the most appropriate
technical skills and expertise.
The Committee reviews the external audit
fee structure, resourcing and terms of the
engagement on an annual basis. On aregular
basis, the Committee reviews the non-audit
services provided by the Group’sauditors.
The Committee is responsible for overseeing
the process of approving all non-audit services
provided by the external auditor. In doing so,
it ensures the objectivity and independence
ofthe auditor is safeguarded. Prior to approval,
consideration is given to whether it is in the
interest of the Company that the services
are purchased from PwC instead of another
supplier. For the 2021 financial year, the total
amount paid to PwC for non-audit services
does not represent a significant portion of
theirtotal revenues.
Audit fees
In 2021, the Group incurred total fees of
$3.1million (2020: $3.0 million) to PwC.
Of thistotal, $2.7 million (2020:$2.4 million)
related to audit work and $0.4 million
(2020:$0.6 million) to audit-related services.
Audit fees are disclosed in note 7 of
the consolidated financial statements.
The Committee is satisfied that this level of
feesis appropriate in respect of the audit
services provided and enables the conduct
ofan effective audit process.
Appointment and effectiveness
PricewaterhouseCoopers LLP has been
the Group’s external auditors since 2018,
with Nicholas Stevenson appointed
as lead auditengagement partner.
Prior to the incorporation of Vivo Energy
plc, PricewaterhouseCoopers Accountants
N.V. were the Group’s external auditors.
The Committee is tasked with the primary
responsibility of overseeing the relationship
andwork performed by the Group’s auditors.
Oversight activities by the Committee
include,but is not limited to, the
recommendation of the appointment,
reappointment and removal of the external
auditor, assessing their independence on an
ongoing basis, involvement in fee negotiations,
approving the statutory audit fee, the scope
ofthe statutory audit and appointment
of the lead audit engagement partner.
Mandatory partner rotation is applicable
tothelead audit engagement partner.
The external auditor had presented the
2021 financial audit plan, which included the
proposed audit scope as well as the assessment
of key audit risks. The Committee reviewed the
audit plan and assessed it to be appropriate.
The Committee reviewed the quality, cost
and independence of the external audit
and is satisfied with each of these elements.
Senior finance personnel are required to
complete the Group’s auditor effectiveness
review template which provides insight into
various aspects of the audit and the quality
ofwork performed by PwC. The Committee
further considered its own assessment and
feedback from senior finance personnel
across the Group. Based on these reviews,
theCommittee concluded that there had been
appropriate focus and challenge by PwC on
the primary areas of the audit and that PwC
had applied an appropriate level of scepticism
and conducted the audit with the required
level of skills and expertise. The Committee
recommended to reappoint PwC as the
Group’s external auditor for 2021 and this
was accepted at the Annual General Meeting
held on 18 May 2021. The Committee will
recommend to reappoint of PwC as the
Group’s external auditors for the 2022 financial
year at the 2022 Annual General Meeting.
The Committee has discussed the re-tender of
the Company’s audit. If the Company remains
listed, it will tender its audit during the course
of 2023, with the successful firm conducting
the audit of the Company’s 2023 financial
statements. Any re-tender will be carried out in
accordance with the guidance provided by the
FRC and Competition and Markets Authority.
COMMITTEE EFFECTIVENESS
Each year the Board undertakes an
evaluationof the performance of the
AuditandRisk Committee in which
efficienciescan be identified, strengths
maximised and areas for further development
highlighted. Overall feedback provided by
the Board was positive and the Committee
is considered to be functioning effectively
inmeeting its objectives.
CHRISTOPHER ROGERS
COMMITTEE CHAIR
1 MARCH 2022
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 202198 99VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIRECTORS’ REMUNERATION REPORT
REMUNERATION
COMMITTEE
CAROL ARROWSMITH
COMMITTEE CHAIR
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to
presentour Directors’ Remuneration Report
for the financial year ending 31 December 2021.
As announced on 25 November 2021, the
Board agreed to recommend a transaction
with BidCo, a wholly owned, indirect subsidiary
of Vitol Investment Partnership II Limited,
itself being an investment vehicle advised
by employees of the Vitol Group (‘the Vitol
Offer’), to acquire all of the shares in the
Company that Vitol Group don’t currently own.
Shareholder support for the transaction was
obtained at the Court and General Meetings
on 20 January 2022, and it is currently expected
that the scheme of arrangement will take effect
during the third quarter of 2022. This provides
a relatively unusual backdrop to the preparation
of this year’s Remuneration Report.
Notwithstanding the above, the Remuneration
Committee continues to operate under the
existing Remuneration Policy approved by our
shareholders and in this report we have set out
details of key decisions in line with normal good
practice. The previous Remuneration Policy
was last approved in 2018. We will be seeking
approval for a new Remuneration Policy at the
2022 AGM, albeit it is not anticipated that it will
run its course. Further details are set out below
and in the main body of the report.
PERFORMANCE DURING 2021
In a year where the business has once again had
to manage around the uncertainties presented
by COVID-19, the Group has performed
strongly, with business recovery from the
lows of Q2 2020 remaining firmly on track.
Volumes have continued to improve, and
together with strong gross cash unit margin,
this led to grosscash profit of $777 million.
Adjusted EBITDAfor the year was $447 million,
which represents a 24% improvement on 2020.
In the Retail segment we opened a record
number of new service stations, with a net total
of 133 new sites opened during the year, ahead
of the original guidance. This represents an
outstanding achievement.
We achieved another strong health and safety
performance, ahead of targets and industry
benchmarks. Progress in ESG was also made,
reporting our first TCFD and completing a
materiality assessment to identify and confirm
the Group’s key sustainability topics.
Throughout the year we continued to engage,
support and develop employees. A full
employee engagement survey was conducted
in June, with improved performance across all
categories from when last completed in 2018.
Nine out of ten employees reported they are
proud to work for Vivo Energy.
We remain focused on capturing the
long-term structural growth opportunities
inourmarkets and creating sustainable
valueforallofour stakeholders.
The bonus outcomes for the year reflect this
performance context. Based on performance
against the targets set, the bonus outcome
for the CEO was 80% of maximum.
Having reflected on the results for the year
and the strategic progress made, which will
position the Company for future growth, the
Committee determined that this represented
afair reflection of performance in the year.
The 2019 LTIP was based on a combination
of relative TSR, EPS and ROACE targets.
The performance targets for this award were
set prior to the onset of the pandemic and
therefore envisioned a more positive trading
environment. The vesting outcome for this
award is expected to be 16.4% of maximum.
Vested awards held by Christian Chammas will
be subject to a holding period. Doug Lafferty
did not participate in this scheme.
REMUNERATION POLICY
FORTHEWIDER WORKFORCE
The Committee continues to endorse and
support the strong pay for performance ethos
which runs across the entire organisation. It is
very mindful of the great commitment that
all our employees have shown throughout
this difficult year and has had regular updates
and briefings throughout the year on how
employees have been coping during the
pandemic, and the steps taken to provide
support. The Committee has oversight of
the budget and the distribution of annual pay
increases and it has been particularly mindful
this year on how incentive plan performance
has been measured and payouts determined to
ensure that the immense effort that employees
have put in is recognised and rewarded.
Bonus awards have been made in the
wider organisation, with higher payouts in
jurisdictions where the local business has
particularly outperformed.
EXECUTIVE CHANGES
We are delighted to welcome Stan Mittelman,
whose appointment as CEO to succeed
Christian Chammas was announced in
November last year. Christian has led the
business for ten years, during which he has
demonstrated leadership, drive, focus on
performance and an absolute fixation on the
health and safety of our employees, customers
and partners. Christian has been integral to the
remarkable growth and success of Vivo Energy
since its formation a decade ago. Of special
mention is the way in which he has managed
the business through the pandemic with his
total focus on our people’s safety and wellbeing.
The Committee continues
to endorse and support the
strong pay for performance
ethos which runs across the
entire organisation.”
CAROL ARROWSMITH
COMMITTEE CHAIR
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021100 101VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
GOVERNANCE
As potential successors were considered,
the Committee was mindful of the need to
enable an orderly transition, especially given
that there would be a degree of uncertainty
as to when candidates would be available to
join the business. Therefore, the Committee
agreed that Christian would remain employed
and continue to support the business until
November 2022. This was to provide the
business with a degree of stability during a
period of potential uncertainty. There will be
no payment in lieu of notice.
Christian’s departure terms are consistent with
the Remuneration Policy previously approved
by shareholders. In light of Christian’s tenure
and performance, he will be treated as a good
leaver for bonus and share plan purposes, with
all awards remaining subject to performance in
line with other participants and time pro-rating
in line with the plan rules. Christian will also
adhere with the post-employment shareholding
guidelines that were introduced in 2019.
Stan has been appointed on a salary of
£585,000, which is lower than his predecessor,
and with retirement benefits in line with other
UK employees. The remaining elements of
his package are in line with the Remuneration
Policy and previous practice. Stan was
also granted a buyout for arrangements
forfeited onjoining the business. The buyout
arrangement is in shares, replacing the
value forfeited from his previous employer
onabroadly like-for-like basis.
In January 2022, Doug Lafferty announced his
resignation from the Board in order to take
up a new external position. He will remain a
Director until he leaves the business. During his
tenure, Doug has made a big impact on our
business, contributing significantly to the
development of our strategy and helping drive
the continued recovery following the impacts of
COVID-19. The Board wishes him all the best
for the future. In line with our standard policy,
Doug will not receive a bonus in respect of
2021 and 2022, and all unvested share awards
will lapse on departure. Further detail on the
above is set out in the main body of the report.
REMUNERATION POLICY RENEWAL
As noted above, the Remuneration Policy is due
for renewal at the 2022 AGM. During 2021,
and prior to the cash offer being received, we
reviewed our Remuneration Policy which had
been in place since the IPO in 2018. The current
approach is aligned with mainstream FTSE
practices comprising fixed pay, bonus (partly
deferred into shares) and performance-based
long-term incentives. Following a review of
how the policy had operated since adoption,
the Committee concluded that this structure
remains largely fitfor purpose.
The proposed updates to the policy are
relatively minor in nature. They include changes
intended to align with best practice, such as
making future bonuses subject to deferral
irrespective of shareholding. We consulted with
our major shareholders and the proxy agencies
on the proposed changes in the autumn of
2021, they were generally received positively,
and shareholders indicated their support.
Although the new policy is not expected to be
in force for a prolonged period, the proposed
new policy is included in full in this report for all
shareholders to review.
REMUNERATION FOR 2022
In light of the potential transaction, we are not
proposing any major changes to our approach
to pay for 2022.
As noted above, Stan Mittelman has
been appointed at a lower salary than his
predecessor, and Christian Chammas and
DougLafferty will not receive any increase
to base salary for 2022. Incentives will also
continue to be operated consistently with
prior years.
We have retained the same bonus measures
as for previous years with a focus on adjusted
EBITDA, gross cash profit and non-financial
metrics. We believe that this continues to give
us a good balance between top line growth,
bottom line delivery and focus on strategic
development areas for the business.
In light of the potential transaction, no LTIP
awards are currently proposed for 2022. In the
event that the transaction does not proceed,
the Committee shall consider whether LTIP
awards should be granted in respect of the year.
In the event that the transaction proceeds, the
Committee will need to consider the impact of
any change of control on outstanding incentive
awards. All such awards will be treated in line
with the relevant plan rules and the terms
of the Remuneration Policy. In the event of
any accelerated release of share awards, it is
expected that vesting would take into account
both performance and the proportion of the
performance period that has elapsed at the
relevant time.
I would like to thank all shareholders for the
level of their engagement and feedback during
2021 and more generally since the Company’s
listing in 2018. We have sought to operate our
remuneration arrangements in a responsible
manner, and we look forward to maintaining
support at the 2022 AGM.
CAROL ARROWSMITH
COMMITTEE CHAIR
1 MARCH 2022
AGM VOTING OUTCOMES
At the 2021 AGM, shareholders voted on the 2020 Remuneration Report. Shareholders approved the Remuneration Policy at the AGM in 2019.
Number
of votes
‘For’
%
of votes
cast
Number
of votes
‘Against’
%
of votes
cast
Total number
of votes
cast
Number
of votes
‘Withheld’
Remuneration Policy (2019 AGM) 1,120,880,170 99.84% 1,785,050 0.16% 1,122,665,220 1,000
Remuneration Report (2021 AGM) 1,181,967,490 100.00% 27,685 0.00% 1,181,995,175 2,500,449
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021100 101VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
DIRECTORS’ REMUNERATION REPORT CONTINUED
SUMMARY OF
OUR APPROACH
OUR REMUNERATION
PRINCIPLES
Our approach to remuneration
is intended to reflect our core
values and remain consistent
with our vision to become the
most respected energy business
in Africa.
Maintain a highly driven
performance culture
Reflect our values – notably on risk
HSSEQ and good business practice
Reward for execution of strategy
and align pay with shareholders’
interests
Commitment to openness
and transparency
Our current approach is aligned with mainstream
FTSEpractices and remains unchanged, comprising:
– Base salary
– Benefits aligned to the local market
– Retirement benefits in line with the UK workforce
– Bonus
– Performance based long-term incentives
Proposed changes:
– Automatic deferral of 50% of any bonus into shares
for two years, irrespective of an Executive Directors’
current shareholding
– Finalising Policy decisions taken in prior years, such as capping
retirement benefits and extending shareholding guidelines
toapply after departure from the Board
– Increase in notice periods to maximum of 12 months
OUR REMUNERATION POLICY
BUSINESS PERFORMANCE IN 2021
VOLUME
Million litres
10,302
+7%
SERVICE STATIONS
ADDED
Net total
133
REVENUES
US$ million
8,458
+22%
ADJUSTED EBITDA
US$ million
447
+24%
GROSS CASH PROFIT
US$ million
777
+11%
TOTAL RECORDABLE
CASEFREQUENCY
Per million
exposure hours
0.04
GOVERNANCE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021102 103VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
REMUNERATION FOR EXECUTIVE DIRECTORS IN 2022
Pay element Approach Remuneration for 2022
Christian Chammas (departing CEO): £640,000 (no change)
Doug Lafferty (departing CFO): £400,000 (no change)
Stan Mittelman (incoming CEO): £585,000
Base Salary
Fixed pay levels
setatcompetitive levels
with role-appropriate
benefits.
Maximum opportunity unchanged at:
CEO: 200% of salary
Performance targets for Executive Directors remain weighted at 70% on financial
performance and 30% on non‑financial performance.
Adjusted EBITDA 40%
Gross cash profit 30%
Strategic goals 30%
50% of any bonus achieved will ordinarily be deferred in shares over a two-year period.
The detailed targets for the 2022 bonus are deemed to be commercially sensitive as they
are closely linked to our internal business plans and are therefore excluded from this report.
Retrospective disclosure of targets for the 2021 bonus are shown on pages 110 to 112.
Incentive linked to
short-term targets.
Annual Bonus
Benefits Benefits package includes private medical care cover, life assurance and annual medical screening.
Retirement benefits capped at 10% of salary, consistent with other UK employees.
In light of the potential transaction, no LTIP awards are currently proposed for 2022. In the event
that the transaction does not proceed, the Committee shall consider whether LTIP awards
should be granted in respect of the year.
Any future awards will be made in line with the Remuneration Policy. No changes to maximum
opportunities are currently proposed.
Incentive linked to
long-term priorities.
LTIP
Additional Safeguards
SHAREHOLDING
Executive Directors are expected to build up
a holding of 2x salary.
Shareholding guidelines apply for two years
after stepping down from the Board.
DISCRETION AND JUDGEMENT
A key feature of the Directors’
Remuneration Policy, to ensure pay
reflectsperformance.
MALUS AND CLAWBACK
Provisions in place to prevent payments
forfailure.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION COMMITTEE GOVERNANCE
ROLES AND RESPONSIBILITIES
OFTHECOMMITTEE
The Remuneration Committee operates
withadelegated authority from the Board
andis responsible for:
– Determining and agreeing with the
Board the Remuneration Policy for
theExecutive Directors;
– Setting individual remuneration
packagesand terms and conditions
for the Executive Directors and
othersenior executives;
– Reviewing and noting the remuneration
trends and practices across the Company
and taking these into account when
reachingany decisions;
– Evaluating the achievement of
performanceconditions under the
annualbonus and LTIP; and
– Determining the Chair’s remuneration,
though the Board itself determines the levels
of fees for the Non-Executive Directors.
No individual is present when his or her
remuneration is being determined.
MEMBERSHIP
All members of the Committee are Non-
Executive Directors.
Committee members
All members were appointed in May 2018, unless
otherwise stated in their biographies on pages
82 to 83:
– Carol Arrowsmith – Chair
– John Daly
– Hixonia Nyasulu
– Christopher Rogers
– Gawad Abaza
MEETINGS
The Committee held five scheduled meetings
during 2021, plus additional meetings as
required. Details of attendance by members
at Committee meetings can be found on page
87. The Committee normally invites the Chief
Executive Officer, the Chief Financial Officer,
the General Counsel, the Company Secretary
and the Chief of Staff to attend appropriate
elements of the scheduled meetings.
ADVISERS TO THE
REMUNERATIONCOMMITTEE
Deloitte LLP were appointed as independent
advisers by the Committee in 2018 following
a competitive tender process and attend
meetings to provide external context.
Deloitte are members of the Remuneration
Consultants Group and, as such, voluntarily
operate under the code of conduct in relation
to executive remuneration consulting in the
UK. Total fees received by Deloitte in relation
to the remuneration advice provided to
the Committee during 2021 amounted to
£102,950 (2020: £40,350). Fees are based on
hours spent. Deloitte LLP in the UK do not
provide any further services to the Company.
Carol Arrowsmith was formerly a partner at
Deloitte LLP, retiring in May 2014. No other
Directors have any connection with Deloitte
LLP. The Committee is satisfied that the advice
provided by Deloitte is independent.
In reaching decisions on both rewarding performance in 2021, revising the Remuneration Policy and setting remuneration for 2022, the Committee
was mindful of the UK Corporate Governance Code and considers that the remuneration framework appropriately addresses the following factors:
Clarity The Committee believes that the remuneration framework provides clear and transparent disclosure in relation
toour executive remuneration arrangements.
Incentives are linked to clear performance criteria that are communicated to participants at the start of the
performance period. This provides a clear link between reward and the successful execution of our strategy.
TheCommittee also places emphasis on ensuring that the Remuneration Report provides a transparent disclosure.
Since the IPO, we have also had regular engagement with our shareholders on pay matters.
Simplicity Remuneration arrangements for Executive Directors are well understood by participants and we have sought to
clearly explain our approach to shareholders.
The ongoing structure of executive remuneration consists of fixed pay, annual bonus award and the LTIP award.
Risk The Committee believes that the structure of Executive Directors’ remuneration does not encourage inappropriate
risk-taking.
Malus and clawback provisions also apply to both the annual bonus and LTIP award. The Committee also retains scope
to exercise discretion to ensure outcomes are appropriate.
Predictability Our remuneration policy contains detail of maximum opportunity levels for each component of variable pay.
Proportionality The Committee believes that poor performance should not be rewarded. For both incentive awards, achievement
requires performance against challenging performance targets.
Alignment to culture The Committee believes that the framework is well aligned to the culture of the business, with performance measures
for variable awards being aligned to the Company’s wider strategy.
GOVERNANCE
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This Directors’ Remuneration Report (DRR)
has been prepared on behalf of the Board
bythe Committee in accordance with the
relevant requirements of the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008
as amended.
DIRECTORS’
REMUNERATIONPOLICY
The following sections set out our Directors’
Remuneration Policy (‘Policy’), which, with the
AGM voting outcomes on page 101, will be put
forward for a binding shareholder vote at the
2022AGM. Subject to shareholder approval,
the Policy will take effect from the date of
the AGM.
SUMMARY OF
DECISION-MAKING PROCESS
During 2021, a review was conducted to assess
how well the previous policy had operated
since IPO in 2018 and whether any changes
were necessary, taking into account the strategic
priorities of the business. The Committee
sought the views of all Board Directors, including
executive management, while ensuring that
conflicts of interest were suitably mitigated.
An external perspective was provided by our
independent remuneration adviser. The review
took into account evolving corporate governance
developments, latest investor views and relevant
market practice. The Committee also remained
mindful of remuneration policies and practices
across the wider workforce.
As part of the decision-making process,
shareholders were consulted on key changes
tothe Policy and its operation, with their
feedback directly shaping proposals.
CHANGES TO THE
REMUNERATION POLICY
The previous Remuneration Policy was
approved at the 2019 AGM, with 99.84% of
votes cast in favour. The Committee believes
that the Policy has operated as intended and,
as such, no fundamental changes are proposed.
However, the Policy has been reviewed
against evolving market and best practice
developments and various minor changes
havebeen made to the proposed Policy.
The most material change is that future bonuses
will be subject to compulsory deferral into
shares, irrespective of the Executive Directors’
current shareholding. Further changes have
also been made to finalise Policy decisions
taken in prior years (e.g. capping retirement
benefits and extendingshareholding guidelines
to apply afterdeparture from the Board).
The maximum potential notice period in
service contracts has been increased from
sixto 12 months.
2021 DIRECTORS’ REMUNERATION REPORT
POLICY TABLE
FIXED PAY
Base salary
Purpose and link
to strategy
Provides the fixed element of the remuneration package. Set at competitive levels against the market in order to
attract and retain the calibre of executives required to execute the strategy.
Operation Base salaries are normally reviewed annually. The Committee will consider various factors when determining salary
levels, including individual contribution, business performance, role scope, practice in relevant talent markets and the
range of salary increases applying across the Group.
Maximum
opportunity
There is no maximum salary. However, salary increases for Executive Directors will normally be within the range
ofincreases for the general employee population over the period of this Policy.
Increases in excess of those for the wider employee population may be awarded in certain circumstances including
instances of sustained strong individual performance, if there is a material change in the responsibility, size or
complexity of the role, or if an individual was intentionally appointed on a below-market salary. In such circumstances,
the Committee will provide the rationale for the increase in the relevant year’s Annual Report on Remuneration.
Details of current salary levels for Executive Directors are set out in the Annual Report on Remuneration.
Performance metrics Not applicable.
Benefits
Purpose and link
to strategy
Benefits to be competitive in the market in which the individual is employed.
Operation Can include Company benefits such as permanent health insurance, healthcare and life insurance.
The Committee retains the ability to approve additional role appropriate benefits in certain circumstances
(e.g.participation in all-employee share incentives, relocation allowances and expenses, expatriation allowances etc.).
Benefits in respect of the year under review are disclosed in the Annual Report on Remuneration.
Maximum
opportunity
There is no maximum limit. However, role appropriate benefits are capped at a suitable level reflecting the local
market and jurisdiction.
Performance metrics Not applicable.
Retirement benefits
Purpose and link
to strategy
Provides benefits which enable executives to plan for retirement. Retirement benefits are designed to be cost
effective and competitive in the market in which the individual is employed.
Operation Defined contribution scheme (and/or a cash allowance in lieu thereof).
Maximum
opportunity
The maximum defined contribution (or cash in lieu thereof) will be in line with retirement benefits provided to the
majority of the UK employee population (or other relevant jurisdictions, where relevant). This limit is currently 10% of
base salary in the UK.
Performance metrics Not applicable.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
VARIABLE PAY
Annual bonus
Purpose and link
to strategy
Incentivises the achievement of specific goals over the short term that are also aligned to the long-term business
strategy.
Operation Performance measures are set by the Committee and are weighted to reflect a balance of financial, strategic and
individual objectives.
Following the end of the year the Committee reviews performance and determines the extent to which objectives
have been achieved in order to determine the payout level.
Executive Directors will normally be required to defer up to 50% of any resulting annual bonus into shares for two
years. The remaining balance of the annual bonus is paid in cash.
Where bonuses are deferred into shares, dividend equivalents may accrue. Deferred awards are not subject to any
further performance criteria.
Cash and share bonuses awarded for annual bonuses will be subject to malus and/or clawback. Further details of our
Malus and Clawback Policy are set out on page 107.
Maximum
opportunity
Maximum opportunity of 200% of base salary. Currently a maximum opportunity of 200% of base salary applies to
the CEO. In prior years, the maximum bonus opportunity was 150% of base salary for the CFO.
The payout for threshold performance may vary year-on-year depending on the nature and stretch of the hurdle set
but will normally not exceed 25% of the maximum opportunity.
Performance
metrics
Bonuses for the Executive Directors may be based on a combination of financial and non-financial measures.
Theexact performance measures and targets for each financial year may be varied to reflect the priorities for the
business. Financial measures will represent at least 50% of any award.
Long-Term Incentive Plan (LTIP)
Purpose and link
to strategy
Aligns the interests of executives and shareholders by delivering shares to Executive Directors and other senior
executives as a reward for delivery of long-term performance objectives aligned to the strategy.
Operation The Committee has the authority to grant awards under the LTIP to Executive Directors. Typically awards will be
granted annually. Awards are normally conditional on achievement of performance conditions assessed over three
years. Awards to Executive Directors will normally also be subject to a holding period of two years post vesting.
Details of the performance period and holding period will be disclosed in the Annual Report on Remuneration for the
year in which the relevant award is made.
Dividend equivalents may accrue on any shares that vest.
Awards are subject to malus and/or clawback for a period of five years from the date of grant. Further details of the
Malus and Clawback Policy are set out on page 107.
Maximum
opportunity
The LTIP provides for a conditional award of shares (or economic equivalent) up to an annual limit of 250% of base
salary. Under the plan rules an award of up to 300% of base salary can be granted in exceptional circumstances.
The normal operational maximum for the incoming CEO is 250% of base salary. In prior years, grants of up to 200%
of base salary have been granted for the CFO.
The vesting level for the threshold performance hurdle may vary year-on-year depending on the nature and stretch
ofthe hurdle set but will normally not exceed 25% of the maximum opportunity.
Performance
metrics
The vesting of awards is usually subject to continued employment and the Group’s performance over the
performance period. The Remuneration Committee will set the performance targets for each award in light of the
appropriate business priorities at the relevant time. The Committee may vary the performance measures, targets and
weightings as well as the period of assessment forfuture awards to ensure that they continue to align with the Group’s
strategy.
In light of the potential transaction, no LTIP awards are currently proposed for 2022. In the event that the transaction
does not proceed, the Committee shall review and consider the performance metrics that would apply to any LTIP
awards granted in respect of the year.
Shareholding guidelines
Purpose and link
to strategy
Alignment of Executive Directors with shareholders.
Operation Guidelines are 200% of base salary for all Executive Directors. Shareholdings are expected to be built up and
maintained over the course of tenure.
Directors are also required to retain shares post the cessation of employment with the Company. They are required
to hold 200% of base salary (or full actual holding if lower) for the first 12 months and 100% of base salary for the
second 12 months.
POLICY TABLE CONTINUED
GOVERNANCE
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PERFORMANCE CRITERIA FOR
INCENTIVES – SELECTING
MEASURES, TARGET SETTING
ANDASSESSMENT
Performance criteria for annual bonus and
LTIPawards are designed to support the
execution of the short-term and long-term
business strategy and to provide alignment with
our shareholders’ interests. The combination
of financial, strategic and individual objectives
enables the Committee to achieve a balanced
assessment of performance.
Performance targets for each award are
intended to be suitably challenging, taking
intoaccount internal and external forecasts,
as well as market conditions and the strategic
ambitions and risk appetite of the Group.
Outcomes at the maximum level are intended
to represent exceptional performance.
Further details of the current performance
measures and targets for bonus and LTIP
awards are set out in the Annual Report
on Remuneration.
Consistent with best practice, the
Remuneration Committee will seek to
ensure that outcomes from incentive plans
suitably reflect performance. As well as
exercising suitable judgement when assessing
performance, the Committee may exercise
discretion and make adjustments to any
formulaic results, if the outcome is not
considered to be appropriate or is not
reflective of overall performance over
the relevant period. When making this
judgement, the Committee has scope to
consider any such factors as it deems relevant
in the circumstances. To ensure that awards
continue to operate in the manner intended,
the Committee may also adjust the targets
for awards or the calculation of performance
measures and vesting outcomes for certain
events (e.g. major acquisition).
MALUS AND CLAWBACK
The annual bonus and LTIP are subject to
malus and clawback in certain scenarios.
Such scenarios. include, but are not limited to:
– material misstatement of the Company’s
financial accounts;
– a material failure of risk management by
theCompany or any Group company;
– an error in calculation of any awards based
on false or misleading information;
– gross misconduct by the relevant participant;
– any action or omission on the part of a
participant resulting in serious reputational
damage to the Company or any member of
the Group; and
– a serious breach or non-observance of
any code of conduct, policy or procedure
operated by the Group.
ILLUSTRATION OF THE
REMUNERATION POLICY
The Executive Directors’ remuneration
arrangements have been designed to ensure
that a significant proportion of pay is dependent
on the delivery of stretching short-term and
long-term performance targets, aligned with
the creation of sustainable shareholder value
and the delivery of the Group’s objectives.
The Committee considers the level of
remuneration that may be received under
different performance outcomes and ensures
that this is appropriate in the context of the
performance delivered and the value added
for shareholders.
The chart that follows provides illustrative
values of the ongoing annual remuneration
package for the CEO in 2022 under three
assumed performance scenarios. As noted
elsewhere in this report, the current intention is
that no LTIP awards would be granted in 2022.
However, in the interest of full transparency,
the charts below show values assuming an
LTIP grant in line with our normal operational
grant policy.
This chart is for illustrative purposes only and
actual outcomes may differ from those shown.
Impact of share price increase
As LTIP awards are granted in shares, the value
of the award can vary significantly depending
on the extent to which the performance
criteria are achieved and the movement of
the share price over the relevant vesting and
holding period. For example, if the share price
increased by 50% over the relevant vesting and
holding period, the maximum values shown in
the charts below would increase to £4.0 million
for Stan Mittelman. Similarly, if the share
price was to fall by 50%, the maximum values
shown in the charts below would reduce to
£2.5 million for StanMittelman.
STAN MITTELMAN
£’000
Fixed pay Annual bonus LTIP
Maximum
Mid
Minimum
20%
36%
45%
3,281
33% 30%
37%
1,965
100%
649
Notes
The charts have been prepared using the following assumptions
1,2
.
Component Minimum Mid Maximum
Fixed
pay
Base salary Base salary on appointment
Retirement
benefits
10% of base salary
Benefits Estimation of benefit figures based on previous incumbent
Variable
pay
Annual
bonus
Nil
50% of maximum
(CEO: 100% of salary)
100% of maximum
(CEO: 200% of salary)
LTIP Nil
50% of maximum
(CEO: 125% of salary)
100% of maximum
(CEO: 250% of salary)
1 As announced on 9 November 2021, Christian Chammas has informed the Board of his intention to retire. As he will
step down from the Board in March 2022, his remuneration arrangements have not been shown in the table above.
2 As announced on 14 January 2022, Doug Lafferty has informed the Board of his resignation and he will be stepping down
from the Board no later than 13 July 2022. He will therefore not receive any incentive awards for 2022 (see page 114
for further details). As his remuneration for 2022 will be limited to fixed pay only, he has not been included in the charts
above. His annualised fixed pay for 2022 is estimated to be £440,000.
3 Stan Mittelman joined the Company as CEO Designate on 14 February 2022. His benefits figure is based on the value
received by the previous incumbent for 2021.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
RECRUITMENT POLICY
When determining remuneration for a
new Executive Director, the Remuneration
Committee will consider the requirements of
the role, the needs of the business, the relevant
skills and experience of the individual and the
external talent market relevant to the role.
Normally the Committee would seek to align
the new Executive Director’s remuneration
package to the remuneration policy.
Base salary and benefits (including pension)
willbe determined in accordance with the
policy table. If an individual is appointed
on a base salary below the desired market
positioning, the Committee retains the ability
to re-align the base salary over time, reflecting
development in the role, which may result
inahigher rate of annual increase.
Where necessary, additional benefits may
also be provided (e.g. relocation support,
tax equalisation). In addition for an overseas
appointment, the Committee may offer cost
effective benefits and pension provisions,
which reflect local market practice and
relevant legislation.
Where retirement benefits are set by
reference to practices outside of the UK,
they will be capped based on benefits
locally available to wider employees in
therelevant jurisdiction.
Notice periods in service contracts for
any newappointment would not exceed
12 months.
Incentive opportunities (excluding any
buy-out) will be consistent with the policy.
As noted in the LTIP policy table, in exceptional
circumstances a maximum LTIP award of
upto 300% of base salary may be granted in
accordance with the LTIP rules. The Company
would provide clear disclosure regarding any
such awards. The Committee may tailor the
targets for initial incentive awards to reflect
thecircumstances on recruitment.
The Committee may consider buying out
remuneration forfeited by an executive
on joining the Company. Any such buy-out
will be of comparable commercial value
to the arrangements forfeited and capped
as appropriate.
When determining the terms of the buy-out
award, the Committee may tailor the terms,
taking into account the structure, time horizons,
value and performance targets associated
with arrangements forfeited. The Committee
may also require the appointee to purchase
shares in the Company in accordance with its
shareholding policy. The Committee would
subsequently provide suitable disclosure
regarding any such award granted on
recruitment to the Board.
Where an individual is appointed to the Board
as a result of internal promotion or following
a corporate transaction (e.g. following an
acquisition), the Committee retains the ability to
honour any legacy arrangements agreed prior
to the individual’s appointment to the Board.
On the appointment of a new Non-Executive
Chairman or Non-Executive Director, the
terms and fees will normally be consistent
withthe fee policy.
Executive Directors: service contracts and loss of office provisions
Notice Period
Up to 12 months’ notice from the Company or the Executive Director.
Termination
Payments
The Company will also be entitled to terminate an Executive Director’s service agreement with immediate effect
bymaking a payment in lieu of notice, equal to (i) the base salary that would have been payable, and (ii) the cost that
would have been incurred in providing the Executive Director with the contractual benefits which the Executive
Director would have been entitled to receive during the notice period.
The Company can alternatively, in its sole discretion, continue to provide such contractual benefits instead of paying
asum representing their cost.
The payment in lieu of notice may be subject to mitigation and therefore payable in equal monthly instalments over
the notice period, conditional on the relevant Executive Director making reasonable efforts to secure alternative
employment or engagements.
Certain benefits in connection with departure (e.g. legal costs, outplacement costs) may be payable in certain
circumstances.
Incentive Awards The treatment of incentive awards will depend on the circumstances of departure.
Normally no bonus is payable if, on the date on which any bonus is paid, the Executive Director has (i) left the
Company, (ii) given or received notice of termination, or is (iii) under suspension for disciplinary matters which could
result in dismissal. In certain circumstances, the Committee may determine that a departing executive will retain the
ability to earn a bonus award subject to performance and time pro-rating to reflect the period employed. Any bonus
deferred into shares will normally be released at the end of the deferral period, unless the Committee determines
otherwise.
Unvested long-term incentive awards will normally lapse on termination, unless the Committee determines that
an Executive Director is deemed to be a ‘good leaver’. For good leavers, any unvested awards may run until the
normal vesting date, with any vesting normally on a time apportioned basis and subject to the achievement of the
performance conditions. If the Committee thinks there are circumstances that justify it, the Committee may release
shares early, having regard to performance achieved to the date of leaving, if applicable.
Holding periods will generally continue to apply, unless the Committee determines otherwise.
Restrictive
Covenants
Executive Directors will be subject to a confidentiality undertaking without limitation in time, and non-solicitation
andnon-compete restrictive covenants for a period of 12 months after the termination of their employment.
Change of Control No special contractual provisions apply in the event of change of control.
External
Appointments
Executive Directors may normally accept up to one position as a non-executive director of another publicly listed
company, subject to prior approval from the Board. Executive Directors are not entitled to accept a position as
an executive director in any company that is not a Group Company. Any fees from such an appointment may be
retained by the Executive Director.
The Executive Directors’ service contracts are available for inspection by shareholders at the Company’s registered office.
GOVERNANCE
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Non-Executive Director Remuneration
Purpose and link
to strategy
To attract and retain high calibre individuals by offering market competitive fee arrangements.
Operation Non-Executive Directors receive a basic fee in respect of their Board duties. Additional fees are paid to
Non-Executive Directors for additional Board responsibilities, including Chairing of Board Committees.
The Non-Executive Chair receives an all-inclusive fee for the role.
The Remuneration Committee sets the remuneration of the Chair, whilst the Board as a whole is
responsiblefordetermining Non-Executive Director fees. Fees are typically reviewed annually.
Where appropriate, role-appropriate benefits may be provided. This may include travel and other expenses
incurredin the performance of Non-Executive duties for the Company, which may be reimbursed or paid
fordirectly by the Company, as appropriate, including any tax due on the benefits.
Maximum
Opportunity
Fee levels are capped in accordance with the Articles of Association.
Current fee levels can be found on page 115. Fees are set at a level, which is considered appropriate to attract
andretain the calibre of individual required by the Company.
These fees are the sole element of Non-Executive remuneration and they are not eligible for participation
inGroupincentive awards, nor do they receive any retirement benefits.
The Chair’s appointment may be terminated at any time by either side by giving six months’ written notice or in accordance with the articles.
The Non-Executive Directors’ appointments may be terminated at any time by either side, giving one month’s written notice or in accordance
withthe articles.
The Chair’s appointment and Non-Executive Directors’ letters of appointment are available for inspection at the Company’s registered office.
DETAILED PROVISIONS
The Committee may adjust or amend incentive
awards only in accordance with the provisions
of the relevant plan rules. This includes making
adjustments to awards to reflect one-off
corporate events, such as a change in the
Company’s capital structure. In accordance
with the plan rules, awards may be settled in
cash rather than shares, where the Committee
considers this appropriate (e.g. to comply
with local securities law). For the avoidance
of doubt, the Company intends to settle LTIP
awards in shares in the normal course of events
and would clearly explain the reasons for any
cash settlement.
The Committee may make any remuneration
payments and payments for loss of office
(including exercising any discretions available
to it in connection with such payments)
notwithstanding that they are not in line with
the Policy set out above, where the terms of
the payment were agreed either: (i) during the
term of, and were consistent with any previous
policy; or (ii) at a time when the relevant
individual was not a Director of the Company
and the payment was not in consideration
for the individual becoming a Director of
the Company.
The Committee may make minor amendments
to the Remuneration Policy to aid its operation
or implementation without seeking shareholder
approvals (e.g. for regulatory, exchange control,
tax or administrative purposes or to take
account of a change in legislation) provided that
any such change is not to the material advantage
of the Director.
PAY IN THE WIDER WORKFORCE
When determining the approach to pay for the
Executive Directors, the Committee is very
mindful of pay and employment conditions
for the wider employee base as this provides
valuable context and ensures consistency
in how pay principles are applied across
the organisation.
Historically a key feature of the Company’s
operating model has been a strong pay for
performance ethos, which runs through the
entire organisation, from the CEO to every
employee in the Group. The Committee
endorses this approach to remuneration and
will support the Executive Directors and
senior executives in ensuring this remains in
place. Bonus plans are operated across the
Company with objectives and award levels
tailored based on the nature of the role and
seniority. Senior executives participate in the
LTIP based on the same targets as Executive
Directors. Long-term incentives for the wider
management team are generally based on
financial performance criteria.
As a Company, we value the opinions of our
people and take into consideration the wider
workforce. During the course of the year, we
conducted an employee engagement survey
and local town hall meetings, encouraging
employees to provide feedback. Our ‘Your
Voice’ programme also provided employees
with the opportunity to ask questions and
suggest topics for discussions. While we do
not directly engage with the workforce on
executive pay, we do have access to employee
feedback on employment conditions across the
organisation and encourage participation in our
employee engagement channels. Further detail
on the Board’s approach to engagement with
employees is set out on page 79.
We are not currently required to provide
disclosure of our CEO pay ratio or gender pay
gaps, as there are less than 250 employees in
the UK. Such metrics are problematic due to
the limits on sample size and the challenges of
comparing pay in the UK to pay practices in the
various jurisdictions in which we operate.
CONSIDERATION OF
SHAREHOLDERS’ VIEWS
The Company places significant value on
engagement with our major shareholders
and we seek to ensure that shareholders
clearly understand key decisions relating to
executive pay.
During the second half of 2021, we consulted
with our major shareholders to seek their
feedback on the proposed changes to our
Remuneration Policy. The shareholders
we consulted with were supportive of the
proposals. The detail of the proposals is laid
out in this Remuneration Report and all
shareholders will have the opportunity to
vote on them at our upcoming AGM. We will
continue to consult with shareholders over the
next months as required and are committed to
an open dialogue with them.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
This section of the DRR sets out how the Policy has been applied in the year and how it will be applied in the coming year. In accordance with the
legislative requirements, this DRR, along with the Remuneration Committee Chair’s Statement, will be subject to an advisory shareholder vote
atthe2022 AGM. Sections of this report that are subject to audit, in line with disclosure regulations, have been flagged below.
SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)
Executive Directors
The following table sets out the total remuneration for the Executive Directors for the year ended 31 December 2021.
Christian Chammas
(£’000)
Doug Lafferty
6
(£’000)
Johan Depraetere
7
(£’000)
FY 2021 FY2020 FY 2021 FY 2021 FY2020
Salary 640 640 367 84 450
Benefits
1
5 5 5 1 5
Retirement benefits
2
64 64 37 8 45
Total Fixed Pay 709 709 409 93 500
Annual bonus
3
1,029 384 n/a 88 203
Long-Term Incentive Plan
4
232 432 n/a 104 243
Legacy incentives: IPO Share Award
5
n/a 412 n/a n/a 290
Total Variable Pay including Legacy Incentives 1,261 1,228 – 192 736
Total Pay 1,970 1,937 409 285 1,236
Less Legacy Incentives n/a (412) n/a n/a (290)
Total: Less Legacy Incentives 1,970 1,525 409 285 946
1 The benefits consist of private medical cover. Directors also receive life assurance and have an annual medical screening.
2 The retirement benefits represent the Company’s contribution to the Executive Directors’ retirement planning at a rate of 10% of base salary. This benefit level is consistent with the level
provided to other UK employees.
3 Doug Lafferty is not eligible to receive a bonus for 2021 as he has resigned.
4 The 2018 LTIP awards vested in 2021. The value of the awards vesting has been restated from last year to use the actual share price on vesting of 106.8p. The 2019 LTIP awards will vest in
2022. An estimated value of the awards vesting has been shown based on the average share price over the fourth quarter of 2021 (115.79p). The 2019 LTIP awards were formally granted
on 12 March 2019 when the share price was 131p.
5 The third and final tranche of this legacy award vested in May 2021. The value of this third tranche has been restated based on the share price at the vesting date (106.8p). No more
awards have been made or will be made under this plan. Full details of the targets and the performance against them can be found in the 2020 Report and Accounts.
6 Doug Lafferty was appointed to the Board as Chief Financial Officer Designate on 1 February 2021 and as Chief Financial Officer on 5 March 2021.
7 The figures for Johan Depraetere are in relation to the period to 5 March 2021, when he stepped down from the Board as Chief Financial Officer. He remained an employee of the
Company until 25 May 2021. His annual bonus and LTIP awards for the year were pro-rated to 25 May 2021. His salary, benefits and retirement benefits from 1 January to 25 May 2021
were £177,692, £2,000 and £17,768 respectively. The full bonus paid for the financial year was £198,305.
ANNUAL BONUS – 2021 (AUDITED)
The Executive Directors’ annual bonus targets for 2021 were set against a combination of financial and non-financial performance measures.
The measures for financial performance were adjusted EBITDA and gross cash profit weighted at 40% and 30% of the bonus opportunity respectively.
The remaining 30% was based on a number of strategic and operational objectives.
Details of the performance targets and the outcomes are set out below.
As noted above, Doug Lafferty was not eligible to receive a bonus for 2021.
FINANCIAL PERFORMANCE – 70% OF THE AWARD
Performance measure % of element Actual performance
10% 20% 40% 60% 80% 100% Result
% of
element
Adjusted EBITDA (40%) $422m $426m $434m $442m $455m $467m $447m 27.15%
Gross cash profit (30%) $746m $750m $758m $766m $779m $791m $777m 23.25%
ANNUAL REPORT ON REMUNERATION
GOVERNANCE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021110 111VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC AND OPERATIONAL OBJECTIVES – 30% OF THE AWARD
CHRISTIAN CHAMMAS FINAL ACHIEVEMENT: 30%
Area Focus Outcome
Business Strategy Deliver the strategic business review and plan
forthenextphase of the business.
Delivered a five-year strategic plan, which included detailing
the foundations for the key elements of the strategy around
growth in the LPG business, delivering a solar/hybrid offering
to commercial customers and exploring alternative energy
solutions. A number of key initiatives aligned to the new
strategic plan were already underway by the end of the year.
Growth Agenda Identify growth opportunities aligned with
strategicbusinessaspirations.
Identified growth opportunities are already contributing to
the bottom line. These include acceleration of new retail site
openings, four new Food joint ventures delivered and five
retail alliance projects completed.
HSSEQ Demonstrate focus on and personal leadership
oftheHSSEQ agenda, in particular the continuing
impactandresponse to COVID-19 on staff,
customersandbusinesspartners.
Another outstanding HSSEQ year. All performance
measures of TRCF, spills and consequential lost volume
significantly exceeded in both Shell and Engen-branded
OUs.
A relentless focus on COVID-19 protocols across all
countries and sites was maintained to ensure the safety and
well-being of customers, employees and business partners.
82% of employees feel proud about how the Group has
managed its approach to the pandemic.
Human Capital Contribute to the recruitment of a new CEO
Develop clear succession plans at next level
ofleadership,with focus on diversity.
Female representation across the senior management
population increased from 9.1% to 11.5% during the year.
Succession plans in place for all senior management roles,
with a clear focus on diversity.
New CEO has been recruited and a full induction and
transition plan developed.
ESG Develop the ESG strategy and implementation plan. Key elements of the ESG strategy and implementation plan
were developed and implemented during 2021, including:
– Completion of a materiality assessment to identify and
prioritise sustainability topics;
– First year of reporting against TCFD;
– Expansion of the measurement of the Group’s GHG
emissions to include 10 Scope 3 categories;
– Evaluation of the use of carbon offsets for both corporate
and client use;
– Extension of the solar programme for retail sites.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
OVERALL OUTCOME
Outcome
Maximum opportunity
% of salary % of salary £’000
Christian Chammas (maximum – 200% of salary)
Adjusted EBITDA 80% 54.3% 347, 520
Gross cash profit 60% 46.5% 297,60 0
Non-financial objectives 60% 60.0% 384,000
Total 200% 160.8% 1,029,120
Business performance through the year has been strong, particularly with the uncertain operating environment created by COVID-19.
Business recovery from the lows of Q2 2020 has remained firmly on track, demonstrating the underlying resilience of the business. Volumes have
continued to improve and are 7% up on 2020. Gross cash profit at $777 million is up 11% on 2020 and adjusted EBITDA at $447 million is a 24%
improvement. Retail growth has been outstanding with 133 net new service stations, ahead of guidance. It was another year of strong HSSEQ
performance and significant progress was made on ESG, with reporting on TCFD for the first time and the completion of a materiality assessment to
identify and prioritise the Group’s sustainability topics. Work on succession planning has continued, with plans in place for all key management roles.
There has been good progress in female representation and a clear focus on diversity. The Committee noted the strong financial performance for the
year combined with the excellent progress made against the strategic objectives and therefore determined that the payout of 80.4% of the maximum
bonus for the CEO was a fair reflection of performance in the year.
In line with the existing shareholder approved Remuneration Policy, approved at the 2018 AGM, Christian Chammas has a shareholding which
significantly exceeds the shareholding guidelines. His 2021 bonus awards is therefore payable in cash and not subject to deferral.
LONG-TERM INCENTIVE AWARDS
2019 LTIP AWARD (AUDITED)
The performance period for this award under the Long-Term Incentive Plan (LTIP) ended on 31 December 2021. The 2019 LTIP award was subject
to EPS, ROACE and Relative TSR performance targets. The performance achieved in the three-year performance period and the consequent vesting
levels are shown in the table below. The Committee reviewed the outcome of the awards in the context of the business performance over the three-
year performance period and determined the vesting level of 16.4% was appropriate.
Any shares vesting are subject to a two-year holding period, which will ensure continued alignment with our shareholders.
2019 Awards Weighting
Threshold
(20% of
award vests)
Target
(50% of
award vests)
Maximum
(100% of
award vests) Achieved
% of
award vesting
EPS
Compound annual growth
40% 6% 8% 12% -6% 0%
ROACE
Weighted average over performance period
40% 16% 18% 20% 17.4% 16.4%
Relative TSR
v. FTSE 350 (exc. financial services)
20% Median –
Upper
quartile
Below
median
0%
Total vesting level in
respect of 2019 Awards
16.4%
The 2019 LTIP was based on a combination of relative TSR, EPS and ROACE targets. The performance targets for this award were set prior to
the onset of the pandemic and therefore envisioned a more positive trading environment. The final vesting outcome for this award was 16.4%
ofmaximum. Vested awards held by Christian Chammas will be subject to a holding period. Doug Lafferty did not participate in this scheme.
Taking into account the strength of performance over the last three years, including the strong response to the pandemic, the Committee is satisfied
that the vesting levels are warranted.
ANNUAL REPORT ON REMUNERATION CONTINUED
GOVERNANCE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021112 113VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
LTIP AWARDS GRANTED IN 2021 (AUDITED)
Awards were made under the LTIP during 2021. These awards were granted in the form of nil-cost options over Vivo Energy plc shares, with the
number of shares that may vest conditional upon performance to the end of the 2023 financial year. In line with the Remuneration Policy, the awards
made represented 250% of base salary for Christian Chammas and 200% for Doug Lafferty. Any shares vesting to Executive Directors will ordinarily
also be subject to an additional two-year holding period.
As with previous awards, the 2021 LTIP awards are subject to performance targets based on earnings per share (EPS), return on average capital
employed (ROACE) and relative total shareholder return (Relative TSR). The Committee determined that this mix of performance measures
continued to ensure focus on delivery of strategic and operational goals and management of capital within the business, which is a key strategic
focusand aligns with shareholder value creation.
Details of the performance measures with their weightings and targets are shown below:
2021 Awards Weighting Nil
Threshold
20% of
element vests
Maximum
100% of
elementvests
EPS
Cumulative over the performance period
40% Less than 36.7p 36.7p 43.7p
ROACE
Weighted average over the performance period
40% Less than 16% 16% 20%
Relative TSR
v. FTSE 350 (exc. financial services)
20% Below Median Median Upper-quartile
Note: There is straight-line vesting between the points shown in the table.
The following table provides details of the awards made on 7 April 2021:
Name
Number of
shares awarded
Face value at
grant (£’000)
End of performance
period
Christian Chammas 1,651,528 1,600 31 December 2023
Doug Lafferty 825,764 800 31 December 2023
The share price for the award was 96.88p being the average closing share price over the five trading days immediately prior to 7 April 2021. As noted
below the award to Doug Lafferty will lapse in full following his resignation.
LTIP AWARDS TO BE GRANTED IN 2022 (NOT AUDITED)
In light of the potential transaction, no LTIP awards are currently proposed for 2022. In the event that the transaction does not proceed, the
Committee shall consider whether LTIP awards should be granted in respect of the year.
Such future awards would be made in line with the Remuneration Policy. No changes to maximum opportunities are currently proposed.
In the event that the transaction proceeds, the Committee will consider the impact of any change of control on all outstanding LTIP awards.
The treatment of the award will be in line with the relevant plan rules and the terms of the Remuneration Policy. In line with best practice, it is
expected that any accelerated release of share awards will take into account performance and time pro-rating.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
DETAILS OF LONG-TERM INCENTIVE AWARDS HELD BY EXECUTIVE DIRECTORS
LTIP
Current
Directors
Date of
award
Share price
for award
1
Option price
Number
ofoptions
held as at
31Dec 2020
Number
of options
awarded
during
the year
Number
of options
exercised
during
the year
Number
of options
lapsed
during
the year
End of
performance
period
Number
of options
held as at
31Dec 2021
Christian Chammas 8 Aug 2018 148p nil 1,081,081 – – 676,757 31 Dec 2020 404,324
12 Mar 2019 131p nil 1,222,420 – – – 31 Dec 2021 1,222,420
11 Mar 2020 110 p nil 1,454,548 – – – 31 Dec 2022 1,454,548
7 April 2021 97p nil – 1,651,528 – – 31 Dec 2023 1,651,528
Doug Lafferty 7 April 2021 97p nil – 825,764 – – 31 Dec 2023 825,764
Previous
Directors
Johan Depraetere 8 Aug 2018 148p nil 608,108 – – 380,676 31 Dec 2020 2 27,432
12 Mar 2019 131p nil 687,613 – – – 31 Dec 2021 687,613
11 Mar 2020 110 p nil 818,183 – – – 31 Dec 2022 818,183
1 Johan Depraetere stepped down from the Board on 5 March 2021 and left the business on 25 May 2021.
DEPARTURE TERMS FOR CHRISTIAN CHAMMAS (AUDITED)
As announced in November 2021, Christian Chammas will be retiring from Board in 2022. As we began to discuss potential successors, the
Committee were mindful of the need to enable an orderly transition, especially given that there was a degree of uncertainty as to when candidates
would be able to join the business. Therefore, the Committee agreed that Christian would remain employed and continue to support the business
until at least through his notice period. He will step down from the Board in March 2022. He will not receive any payment in lieu of notice.
In line with the shareholder approved Remuneration Policy, the Remuneration Committee has approved good leaver status for Christian in relation
to his LTIP awards which will be outstanding when he leaves the Company. In line with the plan rules, awards will vest taking into account performance
and the portion of the performance period elapsed on departure. Ordinarily performance would be assessed at the end of the performance
period, however in light of the change of control the intention would be to treat Christian consistently with other employees. He will ordinarily be
required to hold 200% of his base salary in shares for the first 12 months after his departure and 100% of his base salary for a further 12 months.
Shareholding during this period will be monitored by the Company, and shares may only be sold with the prior consent of the Board Chair or by
compulsory purchase.
The Committee has determined that Christian will be eligible to participate in the 2022 Annual Bonus Plan given that he will continue to be employed
for the majority of the financial year. Any payout will be made after the end of the 2022 financial year and will be pro-rated for the period up until
hisdeparture from the organisation. He will not receive an LTIP award in 2022.
Christian’s salary and benefits will continue until he leaves the Company.
DEPARTURE TERMS FOR DOUG LAFFERTY (AUDITED)
As announced on 14 January 2022, Doug Lafferty has resigned from the business to take up a new role. He will remain a Director of the Company
until he leaves and will be focused on the delivery of the Company’s full year results and on ensuring the effective transition of his responsibilities.
In line with the Remuneration Policy, Doug will not be eligible to receive a bonus for 2021 nor 2022. He will forfeit his 2021 LTIP award and is not
eligible to participate in the 2022 LTIP award. His salary and benefits will continue until he leaves the Company.
REMUNERATION PACKAGE FOR STAN MITTELMAN
Stan Mittelman joined the Company on 14 February 2022 as CEO Designate. After an initial transition period he will be appointed a Director of the
Company and become CEO.
He was appointed on a base salary of £585,000 per annum. His incentive opportunities are in line with the Remuneration Policy, and are expected
to be consistent with the previous maxima that applied to Christian Chammas. He will be required to defer 50% of any bonus earned and have a
shareholding requirement of 200% of base salary.
His benefits package is in line with his predecessor and the rest of the UK workforce, with a cash allowance in lieu of pension of 10% of base salary,
four times base salary life assurance, family medical cover and an annual medical screening. His contract includes a 12-month notice period.
On joining the Company, Stan forfeited various time vested stock awards. He will therefore receive an initial award of 800,000 shares which will vest
over two years and will be subject to a further 12-month holding period. This award is being made to compensate him for the loss of awards from his
previous employer. The timeframe for release of shares mirrors the arrangements which they replace. He will also receive relocation assistance for
him and his family.
ANNUAL REPORT ON REMUNERATION CONTINUED
GOVERNANCE
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DEPARTURE TERMS FOR JOHAN DEPRAETERE (AUDITED)
Johan Depraetere stepped down from the Board on 5 March 2021 and remained an employee until he left the business on 25 May 2021 at the end of
his six-month notice period. As reported last year, the Remuneration Committee approved good leaver status in relation to his LTIP awards. Details of
the vesting level of his 2019award is shown in the table above. His 2020 LTIP award will be subject to time pro-rating and performance.
The Committee had also determined that he would be eligible to participate in the 2021 Annual Bonus Plan. He will be eligible to receive a payout of
£198,305, which reflects the performance against the financial targets, his performance versus his personal strategic objectives and is pro-rated forhis
leaving date of 25 May 2021. Financial targets were the same as other Executive Directors as described above. His personal objectives were based
on ensuring the completion of the SAP implementation across all the businesses; the delivery of the year-end results for 2020 and the successfulon-
boarding of his successor. The Committee concluded that he had delivered strongly in all these areas and agreed a payout of24% against hisindividual
performance objectives. This will result in Johan receiving an annual bonus of 111.7% of pro-rated base salary.
NON-EXECUTIVE DIRECTORS (AUDITED)
The fees for the Chair and Non-Executive Directors were reviewed in 2021, but it was determined not to increase them. The fees remain unchanged
since Admission in 2018. The fee structure for 2021 is shown below.
Role Fee
Chair £275,000
Basic fee for Non-Executive Directors £62,500
Additional fee for Senior Independent Director £15,000
Additional fee for Chair of a Board Committee £15,000
The following table sets out the total remuneration for the Chair and the Non-Executive Directors for the years ended 31 December 2021 and 2020.
Director
FY2021
£’000
FY2020
£’000
John Daly 275 275
Gawad Abaza 62.5 62.5
Carol Arrowsmith 77. 5 77. 5
Hixonia Nyasulu 77. 5 77. 5
Christopher Rogers 77. 5 77. 5
Javed Ahmed
1
– –
Temitope Lawani
1
– –
Total 575 575
1 The Non-Executive Directors nominated by Vitol and Helios, subject to the Relationship Agreement, do not receive any fees.
DIRECTORS’ APPOINTMENT DATES
Director Date of appointment
John Daly 20 April 2018
Christian Chammas 2 January 2012
1
Doug Lafferty 1 February 2021
Gawad Abaza 1 December 2018
Carol Arrowsmith 20 April 2018
Hixonia Nyasulu 20 April 2018
Christopher Rogers 22 April 2018
Javed Ahmed 12 March 2018
Temitope Lawani 16 March 2018
1 Original appointment date.
Non-Executive Directors are subject to annual re-election at the AGM as their service contracts have no fixed term. Christian Chammas and Doug
Lafferty were appointed on rolling service contracts, but will not be standing for re-election this year.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REMUNERATION REPORT CONTINUED
SHAREHOLDING REQUIREMENT
A minimum shareholding requirement is in place for Executive Directors to build and maintain a value of shares over the course of their tenure equal
to 200% of base salary. A post-employment shareholding policy is also in place, which requires Executive Directors to retain their shares post the
cessation of employment with the Company. They are required to hold 200% of base salary (or full actual holding if lower) for the first 12 months and
100% of base salary for the second 12 months.
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)
The table below sets out the Directors’ and their connected persons’ share interests in the ordinary shares of the Company. Executive Directors
are expected to build up and maintain a shareholding of at least 200% of salary in Vivo Energy plc shares. This policy will apply to both the current
Executive Directors as well as any future appointments to the Board.
As at the year-end, Christian Chammas had interests in shares which substantially exceed the minimum shareholding guideline. There have been no
changes in the interests of each Director between 31 December 2021 and the date of this report. As Doug Lafferty was only appointed in 2021 and
had not received any vested share awards, he had not yet begun building an interest in shares.
Director
Shares owned
outright at
31 December
2021
LTIP
(subject to
performance
conditions)
LTIP
(subject to
holding period
only)
John Daly 271,666 n/a n/a
Christian Chammas 7,367,949 4,328,496 404,324
Doug Lafferty n/a 825,764 n/a
Gawad Abaza 20,000 n/a n/a
Carol Arrowsmith 37,878 n/a n/a
Hixonia Nyasulu 22,000 n/a n/a
Christopher Rogers 65,803 n/a n/a
Javed Ahmed n/a n/a n/a
Temitope Lawani 19,560,150 n/a n/a
Previous Directors
Johan Depraetere
1
5,542,299 1,505,796 227,432
1 Johan Depraetere’s share interests are shown as at 25 May 2021, being his departure date.
DILUTION
The Company ensures that the level of shares granted under the Company’s share plans and the means of satisfying such awards remain within best
practice guidelines so that dilution from employee share awards does not exceed 10% of the Company’s issued share capital for all employee share
plans and 5% in respect of executive share plans in any ten-year rolling period. The Company will monitor dilution levels on a regular basis.
PERFORMANCE GRAPH AND TABLE
The graph below shows the TSR of the Company and the UK FTSE 250 index since the Admission of the Company to 31 December 2021.
The FTSE250 index was selected on the basis that the Company has been a member of the FTSE 250 in the UK since 24 September 2018.
£140
£120
£100
£80
£60
£40
£20
£0
10 May 18
31 May 18
30 Jun 18
31 Jul 18
31 Aug 18
30 Sep 18
31 Oct 18
30 Nov 18
31 Dec 18
31 Jan 19
28 Feb 19
31 Mar 19
30 Apr 19
31 May 19
FTSE 250 (exc. investment trusts) Source: Thomson Reuters DatastreamVivo Energy
Value of hypothetical £100 holding
30 Jun 19
31 Jul 19
31 Aug 19
30 Sep 19
31 Oct 19
30 Nov 19
31 Dec 21
31 Dec 19
31 Jan 20
29 Feb 20
31 Mar 20
30 Apr 20
31 May 20
30 Jun 20
31 Jul 20
31 Aug 20
30 Sep 20
31 Oct 20
30 Nov 20
31 Dec 20
31 Jan 21
28 Feb 21
31 Mar 21
30 Apr 21
31 May 21
30 Jun 21
31 Jul 21
31 Aug 21
30 Sep 21
31 Oct 21
30 Nov 21
ANNUAL REPORT ON REMUNERATION CONTINUED
GOVERNANCE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021116 117VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
COMPANY PERFORMANCE
The following table sets out the CEO’s pay since Admission on 10 May 2018. The data for 2018 is therefore on a part year only basis.
£’000
CEO remuneration 2021 2020 2019 2018
CEO single figure of remuneration 1,970 1,937 1,947 1,570
Annual bonus payout (% of Maximum) 80% 30% 73% 72%
Long-term incentive vesting (% of Maximum) 41.0% 37.4% n/a n/a
Legacy IPO share award vesting (% of Maximum)
2
n/a 96.8% 96% 99.96%
1 Figures for 2018 were stated on a part year basis covering the period from Admission (10 May 2018) to 31 December 2018.
2 The final tranche of the Legacy IPO share awards vested in 2020. There are no further awards to vest under this plan.
PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION
The table below shows the percentage change in the salary, benefits and bonus of the Board Directors between 2020 and 2021, compared with the
percentage change for the same components of pay for employees of Vivo Energy plc.
Average % change 2020 to 2021 Average % change 2019 to 2020
Salary/fee
% change
Benefits
% change
Annual bonus
% change
Salary/fee
% change
Benefits
% change
Annual bonus
% change
Executive Directors
Christian Chammas 0% 0% 168% 0% 0% -59%
Doug Lafferty n/a n/a n/a n/a n/a n/a
Previous Executive Directors
Johan Depraetere 0% 0% -2% 0% 0% -59%
Non-Executive Directors
John Daly 0% n/a n/a 0% n/a n/a
Gawad Abaza 0% n/a n/a 0% n/a n/a
Carol Arrowsmith 0% n/a n/a 0% n/a n/a
Hixonia Nyasulu 0% n/a n/a 0% n/a n/a
Christopher Rogers 0% n/a n/a 0% n/a n/a
Javed Ahmed n/a n/a n/a n/a n/a n/a
Temitope Lawani n/a n/a n/a n/a n/a n/a
Vivo Energy plc employees 2.22% 0% 85.52% 2.9% 0% -17%
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table shows the relationship between distributions to shareholders and the total remuneration paid to all employees for the years
ending 31 December 2020 and 2021.
US$ million 2021 2020 Change
Shareholder distributions 69 34 103%
Total employee expenditure 199 180 11%
Approved by the Board and signed on its behalf
CAROL ARROWSMITH
CHAIR OF THE REMUNERATION COMMITTEE
1 MARCH 2022
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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DIRECTORS’ REPORT
The Directors present
theirReportand the audited
consolidated and Company
financial statements for the year
ended 31 December 2021:
COMPANY DETAILS
AND CONSTITUTION
Vivo Energy plc is a company incorporated
in England and Wales with company
number 11250655. The Company’s Articles
of Association (the ‘Articles’) may only be
amended by a special resolution at a general
meeting of the shareholders.
DIRECTORS’ REPORT CONTENT
The Strategic Report, the Corporate
Governance Report and Directors’
Remuneration Report are all incorporated
by reference into this Directors’ Report
andshould be read as part of this Report.
STRATEGIC REPORT
The Company has chosen, in accordance
with section 414C(11) of the Act, to include
certain matters in its Strategic Report that
would otherwise be disclosed in this Directors’
Report. Such information is referenced below.
MANAGEMENT REPORT
For the purposes of Disclosure Guidance
andTransparency Rules (‘DTR’) 4, the
StrategicReport and this Directors’
Report on pages 118 to 121 comprise
theManagement Report.
IMPORTANT EVENTS SINCE THE
END OF THE FINANCIAL YEAR
On 25 November 2021, the Boards of the
Company and BidCo announced that they
have reached agreement on the terms of a
recommended cash offer for all of the issued
and to be issued ordinary share capital of
the Company not already owned by the
existing Vitol shareholders. The Offer is to
be effectedby means of a Court-sanctioned
scheme ofarrangement under Part 26 of
the Act.
On 20 January 2022 Court and General
meetings were held to consider and, if
thoughtfit, approve the Scheme and
to consider, and if thought fit, pass the
SpecialResolution relating to the Offer:
– at the Court meeting the requisite
majorityof eligible scheme shareholders
voted in favour of the Scheme; and
– at the General Meeting the requisite
majority of eligible Vivo Energy shareholders
votedto pass the Special Resolution to
implement the Scheme, including the
amendment of Vivo Energy’s Articles
of Association (‘Articles’) and the re-
registration of Vivo Energy as a private
limited company under theCompanies
Act 2006.
The Scheme remains subject to the sanction
by the Court at the Court Hearing, which is
expected to take place in the third quarter
of 2022, and the satisfaction (or, if capable
of waiver, the waiver by BidCo) of the
other conditions to the Scheme that remain
outstanding. Subject to the Scheme receiving
the sanction of the Court, the Scheme is
expected to become effective in the third
quarter of 2022.
RISK MANAGEMENT AND
INTERNAL CONTROL
The Board has overall responsibility for
monitoring the Group’s system of internal
control and risk management and for carrying
out a review of its effectiveness. In discharging
that responsibility, the Board confirms that
it has established the procedures necessary
to apply the provisions of the 2018 Code,
including clear operating procedures, lines
ofresponsibility and delegated authority.
Business performance is managed closely
andthe Board and the Senior Executive
Teamhaveestablished processes to monitor:
– strategic plan achievement, through
a regular review of progress towards
strategic objectives;
– monitoring and maintenance of insurance
cover to adequately protect risk areas
ofthe Group;
– financial performance, within a
comprehensive financial planning and
accounting framework, including budgeting
and forecasting, financial reporting,
analysingvariances against plan and taking
appropriate management action;
– capital investment and asset management
performance, with detailed appraisal,
authorisation and post-investment
reviews;and
– the emerging and principal risks
facing the Group, ensuring that they
are being identified, evaluated and
appropriately managed.
The Board is supported by the Audit and
RiskCommittee in reviewing the effectiveness
of the Group’s risk processes and internal
control systems. The system of internal control
is designed to manage, rather than eliminate,
therisk of failure to achieve business objectives
and it must be recognised that it can only
provide reasonable and not absolute assurance
against material misstatement or loss. A robust
assessment of the principal and emerging risks
faced by the Company has been undertaken
by the Board (for further information please
see pages 64 to 73 in the Strategic Report).
The Board has established a framework of
controls, which enable risk to be assessed
andmanaged, which is annually reviewed
toensure it remains prudent and effective.
The Chief Financial Officer, with the assistance
of the finance function, is responsible for the
appropriate maintenance of financial records
and processes. This ensures that all financial
information is relevant, reliable, in accordance
with the applicable laws and regulations and
distributed both internally and externally in
atimely manner. A review of the consolidated
financial position and financial statements is
completed by the Chief Financial Officer to
ensure that the financial position and results
of the Group are appropriately recorded,
circulated to members of the Board and
published where appropriate. All financial
information published by the Group is
subject to the approval of the Board,on
the recommendation of the Auditand
Risk Committee.
FAIR, BALANCED
AND UNDERSTANDABLE
The Board considers the Annual Report
and financial statements, when taken as a
whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Company’s position
and performance, business model and strategy.
There are various activities, policies and
procedures in place for the Board to ensure
a fair, balanced and understandable Annual
Report. These include, but are not limited to:
– The Annual Report and the financial
statements have been prepared in
accordance with the applicable reporting
and regulatory frameworks, including
International Financial Reporting
Standards(IFRS), FRS 102, 2006 Act,
2018Code, the DTR and UK GAAP.
– Accounting policies are used company-wide
to ensure accurate and correct accounting
treatment. All financial information is
maintained according to those guidelines
which ensure compliance with IFRS.
– The Company has an extensive set of
internal controls covering various areas
ofthe business. The internal control KPIs
are monitored and measured on a monthly
basis. The finance function uses department
manuals which detail the reporting process
to be followed and the controls in place
to mitigate risk. These include the Finance
manual, Credit & Treasury manual and
Tax manual.
– Monthly reporting to the Board
onfinancial performance.
GOVERNANCE
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021118
OVERSEAS BRANCHES
As at 31 December 2021, the Group had
thefollowing branches:
– Vivo Energy Tanzania Marketing Limited
(branch registered in Tanzania, company
registered in Bahamas). The branch name
remains Engen Marketing Tanzania Limited.
– Plateau Africa Holdings Limited
(branchregistered in Mauritius,
companyregistered in Canada).
– Vivo Energy Namibia Ltd. (branch registered
in Namibia, company registered in the UK).
– Vivo Energy Overseas Holdings Limited
(branch registered in Kenya, the company
registered in Mauritius).
POWERS OF THE DIRECTORS
The powers of the Directors are determined
by the Act and the Company’s Articles.
The Directors have been authorised to issue
and allot shares. These powers are subject
toannual shareholder approval at the AGM,
and at the 2022 AGM shareholders will be
asked to renew and extend the authority
to allot shares in the Company, or grant
rights to subscribe for, or to convert any
security into, shares in the Company for
the purposes of section 551 ofthe Act (the
‘Allotment Resolution’).
The authority in the first part of the Allotment
Resolution will allow the Directors to allot
new shares in the Company, or to grant rights
to subscribe for, or convert any security into,
shares in the Company up to a nominal value
which isequivalent to approximately one third
of the total issued ordinary share capital of
the Company.
The authority in the second part of the
Allotment Resolution will allow the Directors
to allot new shares in the Company, or to grant
rights to subscribe for, or convert any security
into, shares in the Company, only in connection
with a rights issue, up to a nominal value which
is equivalent to approximately an additional
third of the total issued ordinary share capital
of the Company. This is in line with corporate
governance guidelines.
In addition, shareholders will be asked at the
2022 AGM to grant the Directors authority
to disapply pre-emption rights in line with
corporate governance guidelines.
There are no present plans to undertake a
rights issue or to allot any further new shares
other than in connection with the Company’s
share schemes and plans.
The Company did not repurchase any shares
during the financial year ended 31 December
2021. At the 2022 AGM shareholders will
be asked to grant authority to the Directors
under section 701 of the Act to make market
purchases of ordinary shares up to a maximum
of 126,694,189 shares.
In May 2019 the Company established an
employee benefit trust. At 28 February 2022
the trust held 3,039,550 remaining shares
which are accounted for as treasury shares
inthe consolidated financial statements of
the Group. The Company’s issued share
capital at 28 February 2022 is composed of a
single class of 1,266,941,899 ordinary shares
of US$0.50, including 3,039,550 oftreasury
shares. The shares held by the Trustare
notconsidered as treasury shares for the
purposes of Listing Rules disclosure.
DIRECTORS’ INDEMNITIES
In accordance with the Company’s Articles
and to the extent permitted by law, Directors
are granted a deed of indemnity from the
Company in respect of liability incurred as a
result of their office. Qualifying third party
indemnity provisions (as defined by section
234of the Act) were in force during the
yearended 31 December 2021 and remain
in force.
In addition, the Company provides Board
members with Directors’ and Officers’
LiabilityInsurance. Neither the indemnity
northe insurance provides cover in the
event that a Director is proven to have
acteddishonestly or fraudulently.
DIRECTORS’ INTERESTS
No Director has any other interest in any
shares or loan stock of any Group company.
No Director was or is materially interested
inany contract, other than under their service
contract or letter of appointment, which
was subsisting during or existing at theend
of year and which was significant to the
Group’s business.
SHARE CAPITAL
As at the date of this Report, the Company’s
issued share capital is composed of a single
class of 1,266,941,899 ordinary shares of
US$0.50 each.
SHAREHOLDERS’ RIGHTS
Each ordinary share of the Company carries
one vote at general meetings of the Company.
Except as set out in the Articles or in applicable
legislation, there are no restrictions on the
transfer of shares or on the voting rights
inthe Company.
In accordance with applicable law and the
Company’s share dealing policy, Directors
and certain employees are required
to seek approval before dealing in any
Company securities.
The holders of ordinary shares are entitled to
receive the Company’s reports and accounts,
attend and speak at general meetings of the
Company, appoint proxies and exercise voting
rights. None of the shares carry any special
rights with regards to control of the Company.
There are no arrangements of which the
Company is aware under which financial rights
are held by a person other than the holder of
the shares, and no known agreements relating
to, or places restrictions on, share transfers
orvoting rights.
EMPLOYEE BENEFIT TRUST
On 10 May 2019 the Company established
the Vivo Energy Employee Benefit Trust (the
‘EBT’). This is a discretionary trust formed to
enable the Company to issue shares to certain
employees under the Company’s share plans,
namely the IPO Share Award, Long-Term
Incentive Plan and any other share plan that
theCompany may establish in the future.
The EBT purchased in the market a total of
4,000,000 shares to satisfy option exercises
made under the Company’s IPO Share Plan
(the ‘IPO Award Shares’) and the Long Term
Incentive Plan (the ‘LTIP’) on 9 and 10 March
2021. As at 31 December 2021 the EBT held
3,039,550 shares. Dividends on shares held
bythe EBT are waived.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
119VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
DIRECTORS’ REPORT CONTINUED
Information Requirement Location Page(s)
Information in Strategic Report 2008 Accounts Regulations Sch 7 para 1A Strategic Report 1-74
Directors’ compensation Listing Rule 9.8.4R Remuneration Report 10 0 -117
Details of long-term incentive schemes Listing Rule 9.8.4R Remuneration Report 112-114
Stakeholder engagement activities including
section 172 statement
Companies Act 2006 s414CZA 2018 Code Resources and relationships – Engaging with
ourStakeholders
40-43, 63
Corporate Governance statement DTR 7.2.1 R – 7.2.8A R
LR 9.8.6 (5) R, 9.8 6(6) R and 9.8.10 R
Compliance statement 75
Description of the composition and
operationofthe board and its Committee
DTR 7. 2.7R Governance 82-83,
86-90
Going concern statement LR 9.8.6(3) R, 9.8.10 R Long-term viability and going concern 74
Long-term viability statement LR 9.8.6(3) R, 9.8.10 R Long-term viability and going concern 74
Financial risk management objectives and
policies,including policy for hedging
2008 Accounts Regulations Sch 7 para 6 (as amended
by Accounts and Reports (Amendment) (EU Exit)
Regulations 2019)
Consolidated financial statements, Note 3 146-148
Important events since the end of the
financialyear
2008 Accounts Regulations Sch 7 para 7(1)(a) Consolidated financial statements, Note 32 173
Directors who held office during the year
andupto the date of signing this report
Companies Act 2006 s416 (1) (a) Board of Directors 82-83
Controlling interest – Group’s relationship
withVitol and Helios
LR 9.8.4 R Directors’ Report – Relationship agreement 121
Procedures to deal with any conflicts
of interests
GC100 2008 Guidance on directors’ conflicts of
interest ABI’s 2009 Companies Act and articles
of association guidance
Division of responsibilities 89
Directors’ interests LR 9.8.6 R (1) Remuneration Report 116
Responsibility statement DTR 4.1.12 R Responsibility Statement 122
Statement about auditing functions
requiredbyDTR 7.1.3 R
DTR 7.1.5 R Directors’ Report
Responsibility Statement
118
122
Statement on internal control and
riskmanagement systems
DTR 7.1.5 R Directors’ Report
Responsibility Statement
118
122
Major shareholder’s interests LR 9.8.6 (2) R
DTR 5
Shareholder information – Major shareholders 185
Dividend – policy Pensions and Lifetime Savings Association
(PLSA) 2020 guidance
Shareholder information 184
Dividend – declared further interim dividend
foryearended 31 December 2021
Companies Act 2006 s416 (3) Company financial statements, Note 11
Consolidated financial statements, Note 22
179
163
Related party transactions (transactions
underthe supply agreement which took
placeduring the year)
LR 9.8.4 (10) – (13) R Company financial statements, Note 12
Consolidated financial statements, Note 31
179
172-173
Principal activities 2018 Code – provision 2 Strategic Report 8 -11
Possible future developments 2008 Accounts Regulations
Sch 7 para 7 (1) (b)
DTR 4.1.11 R (2)
Strategic Report
Consolidated financial statements
2 2 -27, 118 ,
136 -137
Sustainability and greenhouse gas emissions 2008 Accounts Regulations Sch 7 para 15 (2) Strategic Report – Resources and relationships 40-56
Statement setting out Task Force on Climate-
Related Financial Disclosures (TCFD)
LR 9.8.6(8) R, 9.8.6B G, 9.8.6C G, 9.8.6D G, 9.8.6E G Strategic Report – TCFD
Directors’ Report
58-62
121
Employee engagement and involvement 2008 Accounts Regulations Sch paras 11 and
(amended by the Companies (Miscellaneous
Reporting) Regulations 2018)
Strategic Report – Resources and relationships
and Governance Report –Board leadership
and Company Purpose and Nominations and
Governance Committee Report
46 -51
79-80, 88,
95
Engagement with suppliers, customers
and others in a business relationship
withthecompany
2008 Accounts Regulations Sch 7 paras
11B and11C(amended by the Companies
(MiscellaneousReporting) Regulations 2018)
Strategic Report – Business model and
valuecreation
14-15
Employment of disabled people 2008 Accounts Regulations Sch 7 para 7 (1) (b) Strategic Report – Resources and relationships 40-56
Modern Slavery statement Modern Slavery Act 2016 Vivo Energy website 79, 185
DISCLOSURES REQUIRED UNDER LISTING RULE 9.8.4R
The information that fulfils the reporting requirements relating to the following matters can be found at the pages identified below.
GOVERNANCE
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SUBSTANTIAL SHAREHOLDINGS
The major shareholders of the Company are
Vitol Africa B.V. and VIP Africa II B.V. (together
‘Vitol’) and HIP Oils Mauritius Limited, Helios
Investors II, Africa Ltd and Peak Co-Investment
Partners (together ‘Helios’).
RELATIONSHIP AGREEMENTS
As at 31 December 2021, Helios held 27% and
Vitol held 36% of the Company’s shares in issue.
Vitol was therefore classified as a controlling
shareholder under the Listing Rules.
Pursuant to Listing Rule 9.2.2AD(1) the
Company has entered into relationship
agreements with both Helios and Vitol which
shall only be terminated in the event that
the respective shareholder and its associates
ceases to hold at least 10% of the shares in
the Company, or if the Company ceases to be
admitted to listing on the premium segment of
the Official List and traded on London Stock
Exchange’s Main Market for listed securities.
Throughout the period under review, the
Company has complied with provisions and
obligations in the relationship agreements, and
as far as the Company is aware, both Helios
and Vitol have also complied.
CHANGE OF CONTROL
The Company’s subsidiary, Vivo Energy
Investments B.V. has in place a credit facility
agreement and senior notes under which a
change in control of the Company would in
certain circumstances trigger prepayment
and/or redemption or repurchase provisions
respectively. The provision for the credit facility
may trigger if the Vitol Offer is completed.
The provision for the senior notes will not be
triggered by the Vitol Offer.
In addition, the Group’s arrangements
with brand partners and the shareholders’
agreement in relation to Shell and Vivo
Lubricants B.V. could be subject to change
of control termination provisions in limited
circumstances. These provisions will not be
triggered by the Vitol Offer.
The Company’s share plans (including the IPO
and Long-Term Incentive Plan Share Awards
granted to the Executive Directors and
Senior Management) contain clauses which
may cause options and awards to vest on a
change in control, in some cases subject to the
satisfaction of performance conditions at that
time. The Company is not party to any other
significant agreements that would take effect,
alter or terminate upon a change of control
following a takeover.
No Director or employee is contractually
entitled to compensation for loss of office or
employment as a result of a change in control.
RELATED PARTY TRANSACTIONS
The Group sources fuel products from
VitolS.A. and certain of its affiliates together,
(‘Vitol Fuel’) under a supply agreement.
The supply agreement is a framework
agreement under which Vitol Fuel is the
Group’s preferred supplier.
POLITICAL DONATIONS
No political donations were made during the
financial year. The Company’s policy is that
no political donations be made or political
expenditure incurred.
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES
The Group has made good progress on its
initial disclosures under the Task Force on
Climate-Related Financial Disclosures (‘TCFD’)
framework and addressing the associated
recommendations and substantially complies
with the requirements.
Full implementation of the Metrics and Targets
recommendations was not attained for this
reporting period since the Group’s focus
was on achieving an accurate GHG emissions
baseline, as such the Group is not yet in a
position to set targets relating to climate
and link them to executive compensation.
The setting of formal GHG emissions
reduction targets is outlined for the next
implementation phase.
Further details on TCFD disclosures can be
found on pages 58 to 62.
EXTERNAL AUDITORS
So far as each Director is aware, there is
no relevant audit information of which the
Company’s External Auditor is unaware.
Each Director has taken all steps he or she
should have taken as a Director in order
to make himself or herself aware of any
relevant audit information and to establish that
PricewaterhouseCoopers LLP (PwC) is aware
of that information.
As detailed on page 99, the Audit and
Risk Committee recommended, and the
Board approved, the proposal that PwC be
reappointed as Auditors of the Company at
the AGM. Resolutions to reappoint PwC as the
Company’s Auditors until the conclusion of the
AGM in 2023 and to authorise the Directors
to determine their remuneration, will be
proposed to shareholders at the AGM.
AGM
The Company’s fourth AGM will be held at
2:00 p.m. on 17 May 2022. The Notice of the
AGM will include further details, including
the venue.
The Notice of the AGM contains a full
explanation of the business to be conducted at
the meeting and can be found on our website.
EMPLOYEE INVOLVEMENT
The Company considers it important that its
employees are involved and engaged at all levels
within the organisation. Through channels such
as Vivo Energy’s town hall meetings which are
undertaken on a monthly basis within each
OU, management ensures that employees are
updated with matters of interest, including
updates on Company performance. In the latter
part of the year an online employee suggestion
toolbox, You Voice, that complements existing
two-way communications already in place,
was introduced.
The Directors’ Report was approved by the
Board on 1 March 2022.
JOHN DALY
CHAIRMAN OF THE BOARD
1 MARCH 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible
for preparing the Annual Report
and Accounts in accordance with
applicable law and regulations.
Company law requires the
Directors to prepare financial
statements for each financial year.
Under that law, the Directors have
electedto prepare the Group
financial statements in accordance
with UK adopted International
Accountings Standards in
conformity with the requirements
of the Companies Act 2006.
The Company financial statements have been
prepared in accordance with United Kingdom
GenerallyAccepted Accounting Practice
(United Kingdom Accounting Standards,
comprising FRS 102), theFinancial Reporting
Standard applicable in the UK and Republic
ofIreland, and applicable law.
In preparing these financial statements,
theDirectors are required to:
– adopt the going concern basis unless
itisinappropriate to do so;
– select suitable accounting policies and then
apply them consistently from year to year;
– make judgements and accounting estimates
that are reasonable and prudent; and
– state whether the UK adopted International
Accountings Standards in conformity
with the requirements of the Companies
Act2006 have been followed for the Group
financial statements and United Kingdom
Accounting Standards, comprising FRS
102, have been followed for the Company
financial statements.
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s and
the Group’s transactions and disclose with
reasonable accuracy, at any time, the financial
position of the Group and the Company and
to enable them to ensure that the financial
statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
They are also responsible for safeguarding
the assets of the Group and the Company
and hence for taking reasonable steps for
the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
DECLARATION
Each of the Directors, whose names and
functions are listed on pages 82 to 83
oftheAnnual Report, confirm to the best
oftheirknowledge, that:
– the Group financial statements, which
have been prepared in accordance with
International Financial Reporting Standards
as adopted by the UK and applicable law,
and give a true and fair view of the assets,
liabilities, financial position and profit of
the Group;
– the Company financial statements, which
have been prepared in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102
‘The Financial Reporting Standard applicable
in the UK and Republic of Ireland’, and
applicable law), give a true and fair view
ofthe assets, liabilities, financial position
andprofit of the Company;
– the Strategic Report and Directors’ Report
include a fair review of the development
and performance of the business and
the position of the Group, together with
a description of the principal risks and
uncertainties that it faces; and
– as at the date of this Report, there
isnorelevant audit information of
whichthe Company’s auditor is unaware.
Each Director has taken all the steps he or
she should have taken as a Director in order
to make himself or herself aware of any
relevant audit information and to establish
that the Company’s auditors are aware
ofthat information.
The Board confirms that the Annual Report
and financial statements when taken as a
whole are fair, balanced and understandable
and provide the information necessary for
shareholders to assess the strategy, position
andperformance and business model of
the Group.
For and on behalf of the Board
CHRISTIAN CHAMMAS
CHIEF EXECUTIVE OFFICER
1 MARCH 2022
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER
1 MARCH 2022
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GOVERNANCE
FINANCIAL STATEMENTS
CONTENTS
Independent Auditors’ Report 124
Consolidated statement ofcomprehensiveincome 132
Consolidated statement offinancialposition 133
Consolidated statement ofchangesinequity 134
Consolidated statement of cash flows 135
Notes to the consolidated financialstatements 136
Company financial statements 174
Notes to the Company financial statements 176
Here we set out our statutory accounts and
supporting notes, whichareindependently
audited and provide in-depth disclosure
onthefinancialperformance of ourbusiness.
The financial
statements are
assessed to be
fair, balanced and
understandable,
withafocus on the
clarity of disclosures.”
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion:
– Vivo Energy plc’s Group financial statements and Company financialstatements (the ‘financial statements’) give a true and fairview of the state
ofthe Group’s and of the Company’s affairs as at31 December 2021 and of the Group’s profit and theGroup’s cash flows for the yearthen ended;
– the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
– the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS102 ‘The Financial Reporting Standard applicable in the UK andRepublicof Ireland’,
andapplicable law); and
– the financial statements have been prepared in accordance with therequirements of the Companies Act 2006.
We have audited the financial statements, included within the AnnualReport & Accounts 2021 (the ‘Annual Report’), which comprise: the
Consolidatedand Company statements of financial position as at 31 December 2021; the Consolidated statement of comprehensive income,
theConsolidated statement of cash flows, and the Consolidated and Company statements of changes in equity for the year then ended;
andthenotesto the financial statements, which include a description ofthe significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities under
ISAs(UK) are further described in the Auditors’ responsibilities forthe audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
theUK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 7 to the financial statements, wehave provided no non-audit services to the Company or its controlled
undertakings in the period under audit.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in note 2.1
totheConsolidated financial statements and note 2.9 to the Company financial statements concerning the Group’s and the Company’s ability to
continue as a going concern. The Directors have assessed the going concern status of the Company and the Group based on the business plans
approved by the current Board in December 2021 and the existing debt facilities and concluded that sufficient liquidity headroom exists in both
‘base case’ and ‘severe but plausible downside’ scenarios to enable the Company and the Group to meet their obligations as they fall due during the
going concern period. However, on 25 November 2021, the Boards of Vivo Energy plc and a newly formed company, being a wholly-owned indirect
subsidiary of Vitol Investment Partnership II Limited, itself being an investment vehicle advised by employees of the Vitol Group, announced that they
had reached agreement on the terms of a recommended total cash offer for all of the issued and to be issued ordinary share capital of the Company
not already owned by the existing Vitol shareholders. The arrangement was approved by shareholder special resolution on 20 January 2022 but
remains subject to competition and regulatory approvals in certain territories. Following completion of the transaction, currently anticipated in Q3
2022, the current Board is not expected to continue in position and will therefore not be exercising oversight of the Group’s strategy and business
plan. In performing the going concern assessment the Directors are required to consider the potential impact of the proposed transaction. While the
Directors are not aware of any matters arising from the proposed transaction which would materially impact the Group’s or Company’s future cash
generation or funding and liquidity positions, they do not have access to the acquirer’s detailed plans for the business including the post transaction
debt structures and the potential renewal or replacement of the revolving credit facility (‘RCF’). Consequently, there is no certainty that the basis
upon which the going concern assessment has been performed by the current Board of Directors includes these plans. This condition, along with the
other matters explained in the notes to the financial statements, indicates the existence of a material uncertainty which may cast significant doubt
about the Group’s and the Company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result
if the Group and the Company were unable to continue as a going concern.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021124
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
– Considering the reasonableness of the period covered by management’s going concern assessment.
– Agreeing management’s going concern assessment to the five-year strategic plan approved by the current Board and ensuring that the ‘base case’
scenario indicates that sufficient cash flow is generated by the Group during the going concern period to meet its obligations while complying with
its covenant arrangements.
– Evaluating management’s forecasts by analysing the cash flows to identify unexpected trends and relationships; ensuring the mathematical accuracy
of management’s models and by assessing the appropriateness of key assumptions of gross cash unit margin and expected volume growth to
historical experience.
– Identifying the covenant terms from the facility agreements and ensuring that there are no forecast covenant breaches during the going
concern period.
– Reperforming management’s sensitivity to identify the scenario thatwould result in a breach of covenants and concurred that such ascenario
wasnot plausible being more severe than the impact of the COVID-19 pandemic on the Group in 2020.
– Evaluating the reasonableness of the severe but plausible scenarios identified by management and ensuring that under such scenarios theGroup
isexpected to meet its obligations as these fall due.
– Evaluating the Directors’ assessment of the impact of the announced transaction with Vitol on going concern, including change of control clauses in
existing finance arrangements and the availability of information relating to the future plans of the acquirer.
– Confirming that the financial statement disclosures relating to going concern were accurate and appropriate.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, other than the material uncertainty identified
in note 2.1 to the Consolidated financial statements and note 2.9 to the Company financial statements, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the
going concern basis of accounting, or in respectof the Directors’ identification in the financial statements of any other material uncertainties to the
Group’s and the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
OUR AUDIT APPROACH
Context
Climate change
In planning our audit, we have considered the potential impact of climate change on the Group financial statements. Given the principal activities of the
Group it is highly likely that climate risk will have a significant impact on the Group’s business. As part of our audit, we have evaluated management’s
climate change risk assessment including the identified physical and transition risks and the assessment of the impact of those risks on the Group
and Company financial statements. We note management’s conclusion that material physical risks are likely to arise in the longer term and therefore
have no current financial statement impacts. Transitional risks are considered to have a more significant impact on the business. However, these are
only expected to arise in the medium to long-term given that the energy transition in Africa is likely to operate on an extended timeline. We have
performed procedures to evaluate the appropriateness of management’s risk assessment including the use of our climate change experts and
researching the legislative landscape within the principal locations in which the Group operates. We assessed that the key financial statement line
items and estimates which are more likely to be impacted by climate risks are those associated with forecasting of future cash flows, given the more
notable impacts of climate change on the business are expected to arise in the medium to long-term. These include the impairment assessment of
goodwill and the viability assessment as well as the useful economic life of non-current assets. However, our procedures did not identify any material
impact on either the Group financial statements or our key audit matters for the year ended 31 December 2021. We have reviewed management’s
financial statement disclosures relating to climate change to confirm that they are consistent with the results of management’s risk assessment and our
audit procedures.
Proposed Transaction with Vitol
On 25 November 2021, the Boards of Vivo Energy plc and a newly formed company, being a wholly-owned indirect subsidiary of Vitol Investment
Partnership II Limited, itself being an investment vehicle advised by employees of the Vitol Group, announced that they had reached agreement
on the terms of a recommended total cash offer for all of the issued and to be issued ordinary share capital of the Company not already owned
by the existing Vitol shareholders. As part of our audit planning we have considered the impact of the proposed transaction on our audit risk
assessment including evaluating management’s analysis of its impact on the Group and Company financial statements. As part of this risk assessment
we have considered change of control clauses within the Group’s debt facilities and the statement of intentions issued by the acquirer at the time the
transaction was announced. We note that the only material impact is in respect to the going concern assessment where as a result of the Directors
not having access to the acquirer’s detailed plans for the business, including the future debt structure, a material uncertainty is considered to exist.
Further details relating to both the material uncertainty and the procedures we have performed over going concern are included in the ‘Material
uncertainty related to going concern’ section of this report.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
125VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC CONTINUED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
Overview
Audit scope
– Ten components engaged to perform audit of their complete financial information.
– Three components engaged to perform audits of specific balances.
– Two components engaged to perform specified procedures.
– Overall coverage of 72% revenue, 87% profit before tax, and66%total assets was obtained.
Key audit matters
– Material uncertainty related to going concern (Group and Company).
– Government Benefits Receivable (Group).
– Tax audits and Transfer Pricing (Group).
Materiality
– Overall group materiality: US$12,900,000 (2020: US$11,500,000) based on 5% of earnings before tax and special items (2020: 5% of average
earnings before tax and special items for the last three years).
– Overall company materiality: US$19,000,000 (2020: US$19,000,000) based on 1% of net assets.
– Performance materiality: US$9,675,000 (2020: US$8,625,000) (Group) and US$14,250,000 (2020: US$14,250,000) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our
auditof the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to going concern, described in the Material uncertainty related to going concern section above, we determined the matters described
below to be the key audit matters to be communicated in our report. This is not a complete list of all risks identified by our audit.
Goodwill Impairment and COVID-19, which were key audit matters last year, are no longer included because they are not considered to represent a
higher than normal risk of material misstatement to the financial statements. Otherwise, the key audit matters below are consistent with last year.
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Government Benefits Receivable (Group)
Refer to notes 2, 4 and 16 in the Group financial statements. We performed procedures over the accuracy of the material
receivables recognised in the year for government benefit receivables
in each country by obtaining and testing the movement schedules.
We further performed confirmations directly with the governments
and, where these were ineffective, alternative procedures. In addition,
we assessed each government’s ability to pay through review of
credit ratings, reports from international bodies (e.g. the International
Monetary Fund) and media searches.
The Group has $124 million of receivables (offset by provisions of $10m)
from governments principally related to subsidies for product prices,
transport costs or incidental costs where regulated price mechanisms exist.
The recoverability of these receivables is not always certain with some
outstanding balances being aged and with governments with poor or no
credit ratings.
Where considering the extent to which a provision should be
recognised, we have assessed management’s position against the
communications with the local authorities, historical precedent of
similar matters being resolved, and evidence of the Group’s efforts to
secure payment. In addition, we sought independent evidence of the
government’s ability and willingness to pay by considering third party
published views on the economic and fiscal positions of each country
including credit ratings, and meeting with government representatives.
Rising oil prices during the year has resulted in additional subsidies being
generated and the level of gross receivables has risen. Although these
new subsidies are not significantly aged, the ability of governments to
make repayments has been adversely impacted by the deterioration in
government finances as a result of the COVID-19 pandemic.
For Senegal we verified the claims arising in the year to the underlying
transactions and verified payments back to bank statements.
We obtained confirmations of the amounts due from government
representatives and verified that repayment of the receivables was
incorporated into the most recent government budgets.
Determination of the provisioning required against these receivables
requires consideration of the willingness and ability of the counterparties to
meet their obligations. This can often be complex and highly judgemental.
Due to the nature and aging of the receivables in Senegal we identified
these to be where particular audit focus was required.
Based on our work performed, we found the judgments and
assumptions used by management in the recoverability assessment
of government benefits receivables to be supportable based on the
available evidence.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021126
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Tax audits and Transfer Pricing (Group)
Refer to notes 2, 4 and 10 in the Group financial statements. With the assistance of our local and international tax specialists including
transfer pricing specialists, we evaluated management’s judgements in
respect of the likelihood of tax positions being challenged. For each
material position we looked at the nature of the underlying transactions,
the technical merits of the position and the local tax authorities’ track
record of challenging similar tax positions.
The Group operates in a number of tax jurisdictions and recognises tax
based on interpretation of local laws and regulations which are sometimes
uncertain and requires interpretation. In several territories tax audits are
performed and significant tax assessments are raised. However these
are often settled for much lower amounts once further information is
supplied. The claims often focus on the application of transfer pricing
policies. Management are required to make judgements on whether it is
probable that the tax authorities will accept the current treatment and,
where it is not considered probable, estimate the expected value or the
most likely value of the pay-out.
We also challenged management on the level of provisioning booked
for each uncertain tax position, considering both whether the level
of provisioning was too prudent or too optimistic. We considered
management’s assessment through the examination of their analysis
of these positions, including testing of their detailed workings and
consideration of advice received from their tax advisers.
We focused on the judgements and estimates made by management
in assessing the likelihood and quantification of material exposures and
treatment of uncertain tax position provisions.
We determined that the provisions recognised and the disclosures inthe
financial statements were reasonable.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enoughwork to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
The Group operates in 23 countries across North, West, East and Southern Africa. It is structured such that each country operates
semi-autonomously with oversight, consolidation, and certain activities performed by Group management. Each country can contain many
legalentities, associates and joint ventures for which separate financial information is prepared and monitored. In general, each country will
haveasingle large operating legal entity that holds most of the assets, liabilities and transactions.
Reporting packs are prepared by local management for each legal entity except in some specific cases where a sub-consolidation is performed and
a single reporting pack is prepared for a number of related legal entities. We have scoped our audit on the basis that a component is identified by
areporting pack.
We identified Morocco and Kenya as financially significant components based on their size compared to the consolidated financial statements of the
Group. A further six, large components were identified and engaged to perform audits of their complete financial information in order to provide
appropriate coverage over the operations of the Group. In addition, the components of Mauritius and Namibia were identified to perform an audit
of the revenue balances in order to provide sufficient coverage over the revenue financial statement line item. Mauritius was further identified to
perform procedures over retirement benefit obligations given its relative contribution to this financial statement line item.
Senegal was identified as a significant risk component relating to the recoverability of other government benefits receivable as described in the key
audit matters. Senegal was engaged to perform an audit of their complete financial information as one of the six components identified above.
Gabon and Cape Verde were engaged to perform an audit of their complete financial information. These components provided limited contribution
to the consolidated results of the Group however represent entities which have not previously been included within the audit scope.
In addition, we have engaged Mali and Burkina Faso to perform specified procedures. The procedures requested were selected to reflect the relevant
significant risks to the Group and to obtain a deeper understanding of the activities of the component. The procedures performed do not form part
ofthe audit coverage described below.
Procedures were also performed at a Group level over balances including goodwill and tax as well as procedures over centralised controls and
ITfunctions. The aggregation of all the holding entities are treated as a single component with testing performed over balances including cash,
financeexpenses, external borrowings and cost of sales.
Overall coverage of 72% revenue, 87% profit before tax, and 66% total assets was obtained. None of the operating units excluded from our
Groupaudit scope individually contributed more than 5% to consolidated revenue.
Interactions with component teams varied depending on their size, complexity and risk. Interactions with each component included: detailed
instruction; a risk assessment and audit approach planning meeting; detailed deliverables identifying significant matters and procedures performed over
significant risks; status and clearance meetings at key stages of the audit; and file reviews tailored to the specifics of the component. This was in addition
to further ad hoc discussions on matters of interest. Due to COVID-19 physical oversight visits were not possible. Instead, additional virtual meetings
were held between the group engagement team, local senior management and local component teams of Morocco, Kenya, Uganda and Senegal.
Combined with virtual file reviews these meetings were considered appropriate replacements forthe usual in person interaction.
The Company only audit was performed independently by the groupengagement team. This did not contribute to the scope ofworkperformed
onthe consolidated financial statements.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
127VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC CONTINUED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the
financialstatements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
FINANCIAL STATEMENTS – GROUP FINANCIAL STATEMENTS – COMPANY
Overall materiality US$12,900,000 (2020: US$11,500,000). US$19,000,000 (2020: US$19,000,000).
How we determined it 5% of earnings before tax and special items
(2020:5%of average earnings before tax
andspecialitems for the last three years).
1% of net assets.
Rationale for
benchmark applied
The Group is profit-oriented; therefore it is
consideredmost appropriate to use a profit-based
benchmark. The Directors, management and the users
of the Group financial statements focus on adjusted
numbers, being adjusted EBITDA, adjusted EBIT and
adjusted net income. The Group defines ‘adjusted’ as
excluding special items. Based on this, we consider an
adjusted metric of average earnings before tax and
special items to be the most appropriate benchmark.
The entity is a holding company of the rest of the
Groupand is not a trading entity. Therefore, an asset
based measure is considered appropriate. The strength
of the Statement of financial position is the key measure
of financial health that is important to shareholders since
the primary concern for the Company is the payment of
dividends.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality
allocated across components was between US$1.3m and US$12.0m. Certain components were audited to a local statutory audit materiality that
wasalso less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature
andextent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% (2020: 75%) of overall materiality, amounting to US$9,675,000 (2020: US$8,625,000) for the Group financial statements and
US$14,250,000 (2020: US$14,250,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk
and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above US$1.0m
(Groupaudit) (2020: US$0.7m) and US$1.0m (Company audit) (2020: US$0.7m) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The Directors are responsible for the other information, which includes reporting based on the Task Force on Climate-Related Financial Disclosures
(‘TCFD’) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an
audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
FINANCIAL STATEMENTS
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Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and Directors’ Report.
DIRECTORS’ REMUNERATION
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement,
included within the Governance section of the Annual Report is materially consistent with the financial statements and our knowledge obtained during
the audit, and, except for the matters reported in the section headed ‘Material uncertainty related to going concern’, we have nothing material to add
or draw attention to in relation to:
– The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation
of how these are being managed or mitigated;
– The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting
in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do so over a period of
atleast twelve months from the date of approval of the financial statements;
– The Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why the period
isappropriate; and
– The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only
consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the
relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and
our knowledge and understanding of the Group and Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
– The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
– The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the
Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements
in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or the Company or to cease operations, orhave no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whetherdue to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable
ofdetecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related
tobreaches of anti-bribery and corruption laws, health and safety regulations and competition laws and regulations, and we considered the extent
to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct
impact on the financial statements such as the Companies Act 2006 and local tax laws and regulations in each territory. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that
the principal risks were related to posting inappropriate journal entries to increase revenue and management bias in accounting estimates. The group
engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to
such risks in their work. Audit procedures performed by the group engagement team and/or component auditors included:
– Inquiries of the wider senior management team including members of the Senior Executive Team, Country Leadership Teams, Internal
Audit, Finance, Operations, Ethics and Compliance and Forensics. These inquiries included consideration of known or suspected instances of
non-compliance with laws and regulations and fraud.
– Making inquiries of the Group General Counsel regarding the status and expected outcome of legal cases and regulatory matters and
reviewingthe Group legal case tracker, maintained by the GeneralCounsel, in respect to all significant legal matters.
– Evaluation of management’s controls designed to prevent and detect irregularities, in particular their anti-bribery controls. For example,
understanding the Group’s bid and contracting approval controls, theextent to which the Group’s anti-bribery and corruption programme is
embedded in operating units, assessment of procedures associated with making one-off payments to counterparties and searching third party
sources for allegations ofcorruption made against the Group and its employees.
– Assessment of matters reported on the Group’s whistleblowing helpline or through other mediums and the results of management’s investigation
of such matters.
– Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to government
benefits receivables, the future growth forecasts and the impact of climate change.
– Identifying and testing journal entries both at a local operating unit level and as part of the Group consolidation, in particular any journal entries
posted with unusual account combinations or posted by senior management.
– Review of correspondence with, or reports issued by, competition authorities and assessment of external legal advice received in respect of any
matters raised.
– Incorporating an element of unpredictability into our audit procedures through the variation of the nature, timing and extent of the procedures
performed and the inclusion of new components within the Group audit scope.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
forexample, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However,ittypically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target
particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion
aboutthe population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part16
ofthe Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose
orto any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF VIVO ENERGY PLC CONTINUED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
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OTHER REQUIRED REPORTING
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if, inour opinion:
– we have not obtained all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not
visited by us; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
Following the recommendation of the Audit and Risk Committee, we were appointed by the Directors on 20 April 2018 to audit the financial
statements for the year ended 31 December 2018 and subsequent financial periods. The period of total uninterrupted engagement is four years,
coveringthe years ended 31 December 2018 to31 December 2021.
OTHER MATTERS
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will form
part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with
the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report will be
prepared using the single electronic format specified in the ESEF RTS.
Nicholas Stevenson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
1 March 2022
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
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US$ million Notes 2021 2020
Revenues 5 8 ,458 6 , 91 8
Cost of sales (7, 7 6 5) (6 , 3 01)
Gross profit 5 6 93 6 17
Selling and marketing cost (222) (2 26)
General and administrative cost 7 (1 8 5) (17 6)
Share of profit of joint ventures and associates 13 27 16
Other income/(expense) 8 (1) 4
Earnings before interest and tax (EBIT) 6 312 235
Finance income 9 12
Finance expense (6 8) (7 2)
Finance expense – net 9 (5 9) (6 0)
Earnings before tax (EBT) 253 17 5
Income taxes 10 (10 1) (8 5)
Net income 6 15 2 90
Net income attributable to:
Equity holders of Vivo Energy plc 14 0 80
Non-controlling interest (NCI) 12 10
152 90
Other comprehensive income (OCI)
Items that may be reclassified to profit or loss
Currency translation differences (27) (2 3)
Net investment hedge gain/(loss) 12 (17)
Items that will not be reclassified to profit or loss
Re-measurement of retirement benefits 5 (5)
Income tax relating to retirement benefits (1) 1
Change in fair value of financial instruments through OCI 14 1 1
Other comprehensive income, net of tax (10) (4 3)
Total comprehensive income 14 2 47
Total comprehensive income attributable to:
Equity holders of Vivo Energy plc 13 4 41
Non-controlling interest (NCI) 8 6
14 2 47
Earnings per share (US$) 21
Basic 0 . 11 0 .06
Diluted 0 . 11 0 .06
The notes are an integral part of these consolidated financial statements.
- 
US$ million, unless otherwise indicated 2021 2020
EBITDA 4 42 360
Adjusted EBITDA 4 47 36 0
Adjusted net income 15 7 90
Adjusted diluted EPS (US$) 0 .11 0.06
Refer to the non-GAAP financial measures definitions and reconciliations to the most comparable IFRS measures on pages 36 and 37.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021132
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
US$ million Notes
31 December
2021
31 December
2020
Assets
Non-current assets
Property, plant and equipment 11 938 889
Right-of-use assets 27 219 201
Intangible assets 12 212 222
Investments in joint ventures and associates 13 2 33 2 31
Deferred income taxes 10 58 46
Financial assets at fair value through other comprehensive income 14 12 12
Other assets 16 11 6 11 7
1,7 8 8 1 , 71 8
Current assets
Inventories 17 56 4 480
Trade receivables 18 4 61 34 4
Other assets 16 28 2 20 0
Income tax receivables 13 11
Other financial assets 15 6 –
Cash and cash equivalents 19 5 87 51 5
1, 913 1, 5 5 0
Total assets 3 ,7 01 3, 268
Equity
Share capital 20 6 33 6 33
Share premium 4 4
Retained earnings 335 2 52
Other reserves (13 5) (12 2)
Attributable to equity holders of Vivo Energy plc 837 767
Non-controlling interest 46 45
Total equity 883 812
Liabilities
Non-current liabilities
Lease liabilities 27 13 5 11 9
Borrowings 23 352 412
Provisions 24, 25 10 5 10 4
Deferred income taxes 10 87 72
Other liabilities 26 15 3 16 5
832 872
Current liabilities
Lease liabilities 27 26 24
Trade payables 1,4 3 4 1, 0 4 8
Borrowings 23 27 7 270
Provisions 24, 25 19 16
Other financial liabilities 15 – 9
Other liabilities 26 18 7 171
Income tax payables 43 46
1,9 8 6 1, 5 8 4
Total liabilities 2 , 818 2 ,4 56
Total equity and liabilities
3 ,7 01
3, 268
The notes are an integral part of these consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 1 March 2022 and were signed onits
behalf by:
CHRISTIAN CHAMMAS DOUG LAFFERTY
Chief Executive Officer Chief Financial Officer
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
133VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
Attributable to equity holders of Vivo Energy plc
Other reserves
US$ million Notes
Share
capital
Share
premium
Retained
earnings Reserves
1,2
Retirement
benefits
Currency
translation
difference
Fair
value
reserves
Equity-
settled
incentive
schemes
3
Total NCI
Total
equity
Balance at 1 January 2021 633 4 252 (54) (2) (7 9) 3 10 7 67 45 8 12
Net income – – 14 0 – – – – – 14 0 12 15 2
Other comprehensive income – – – – 4 (1 1) 1 – (6) (4) (10)
Total comprehensive income – – 14 0 – 4 (1 1) 1 – 13 4 8 14 2
Share-based payment expense 30 – – – – – – – 4 4 – 4
Share awards transactions 30 – – 6 (5) – – – (6) (5) – (5)
Net impact of IAS 29
4
– – 6 – – – – – 6 – 6
Dividends paid
5
22 – – (69) – – – – – (69) (7) (76)
Balance at 31 December 2021 633 4 335 (5 9) 2 (90) 4 8 837 46 8 83
Attributable to equity holders of Vivo Energy plc
Other reserves
US$ million Notes
Share
capital
Share
premium
Retained
earnings Reserves
1
Retirement
benefits
Currency
translation
difference
Fair
value
reserves
Equity-
settled
incentive
schemes
3
Total NCI
Total
equity
Balance at 1 January 2020 633 4 19 9 (54) 2 (4 3) 2 8 7 51 53 8 04
Net income – – 80 – – – – – 80 10 90
Other comprehensive income – – – – (4) (36) 1 – (39) (4) (4 3)
Total comprehensive income – – 80 – (4) (36) 1 – 41 6 47
Share-based payment expense 30 – – – – – – – 3 3 – 3
Share issuance related to share awards 30 – – 1 – – – – (1) – – –
Transactions with NCI – – – – – – – – – (4) (4)
Net impact of IAS 29
4
– – 6 – – – – – 6 – 6
Dividends paid/declared
5
22 – – (34) – – – – – (34) (10) (4 4)
Balance at 31 December 2020 633 4 2 52 (54) (2) (7 9) 3 10 767 45 812
The notes are an integral part of these consolidated financial statements.
1 Included in reserves is a merger reserve ($82m) relating to the premium on shares issued as part of the consideration of the acquisition of Vivo Energy Overseas Holdings Limited (VEOHL),
formerly known as Engen International Holdings (Mauritius) Limited in March 2019.
2 Reserves include $5m related to market purchase of ordinary shares of the Company to satisfy option exercises under the Company’s IPO Share Award Plan and Long-Term Incentive
Plan (LTIP).
3 Equity-settled incentive schemes include the LTIP, the IPO Share Award Plan (fully vested in 2021) and the Restricted Share Award Plan.
4 The net impact on retained earnings as a result of the index-based adjustments in Zimbabwe under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
5 The dividends paid to the equity holders of Vivo Energy plc were paid out of distributable reserves (refer to note 11 of the Company financial statements).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021134 135VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
FINANCIAL STATEMENTS
US$ million Notes 2021 2020
Operating activities
Net income 15 2 90
Adjustment for:
Income taxes 10 101 85
Amortisation, depreciation and impairment 11, 12, 27 13 0 12 5
Net gain on disposals of PP&E and intangible assets 8 – (4)
Share of profit of joint ventures and associates 13 (27) (16)
Dividends received from joint ventures and associates 13 22 24
Current income tax paid (1 0 2) (8 9)
Net change in operating assets and liabilities and other adjustments 28 19 5 48
Cash flows from operating activities 4 71 2 63
Investing activities
Acquisition of businesses, net of cash acquired – (9)
Purchases of PP&E and intangible assets 11, 12 (16 8) (16 8)
Proceeds from disposals of PP&E and intangible assets 8, 11, 12 1 5
Cash flows from investing activities (167) (17 2)
Financing activities
Proceeds from long-term debt 23 – 517
Repayment of long-term debt 23 (6 0) (4 9 2)
Net (repayments)/proceeds (of)/from bank and other borrowings 23 11 26
Repayment of lease liabilities 27 (33) (31)
Dividends paid (76) (43)
Interest paid (61) (62)
Cash flows from financing activities (219) (8 5)
Effect of exchange rate changes on cash and cash equivalents (13) (8)
Net increase/(decrease) in cash and cash equivalents 72 (2)
Cash and cash equivalents at beginning of the year 515 517
Cash and cash equivalents at end of the year 19 5 87 515
The notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021134 135VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Vivo Energy plc (‘Vivo Energy’ or the ‘Company’) a public
limited company, wasincorporated on 12 March 2018 in the
UnitedKited Kingdom. The Company is registered in England and Wales
and is limited by shares (Registration number 11250655) under the
CompaniesAct2006. The Company is 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. References to ‘Vivo Energy’
orthe ‘Group’ mean the Company and its subsidiaries and subsidiary
undertakings. These consolidated financial statements as at and for
the period ended31 December 2021 comprise the Company, its
subsidiaries and subsidiary undertakings, joint ventures and associates.
Vivo Energy distributes and sells fuel and lubricants to retail and
commercial consumers in Africa and trades under brands owned by
the Shell and Engen group of companies and, for aviation fuels only,
under the Vitol Aviation brand. Furthermore, Vivo Energy generates
revenue from Non-fuel retail activities including convenience retail
andquick service restaurants by leveraging on its retail network.
Further details on the nature of the Group’s operations and principal
activities can be found in the Strategic Report on pages 1 to 74.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below, and have been
applied consistently over the years.
2.1 Basis of preparation
These consolidated financial statements have been prepared in
accordance with UK adopted International Accountings Standards
in conformity with the requirements of the Companies Act 2006.
The consolidated financial statements have been prepared under the
historical cost convention unless otherwise indicated.
The preparation of financial statements in conformity with
International Financial Reporting Standards (IFRS) requires the use
of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements, are disclosed
innote 4.
Going concern
IFRS requires the going concern assumption to be assessed over a
period of at least 12 months from the date of approval of the financial
statements. For the purposes of the going concern assessment,
the Directors have considered a period up to 31 December 2023.
The Directors have performed a going concern assessment based
on the forecasts for this period taken from the five-year strategic
plan which includes a detailed analysis of the Group’s future financial
and operating performance. The five-year strategic plan takes into
consideration the impact of the current year performance, future
growth expectations and the effect of other macroeconomic factors
on the performance of sales volumes, gross cash profit and cash flows.
Based on management’s assessment for the next two years, the Group
is expected to maintain sufficient available liquidity and generate positive
cash flows to meet its obligations as they fall due. As at 31 December
2021, the Group has a committed headroom of $607m which includes
the undrawn committed RCF of $300m. In the ordinary course of
business majority of the revolving credit facilities (RCF) expires in
May2023, with the arrangement of a new facility, on similar terms,
expected to be completed prior to its expiration. The five-year strategic
plan indicates that the RCF will remain undrawn throughout the going
concern period. The Group maintains its debt structure as described
in note 3.2. The notes and the RCF have covenants for which further
information can be found in note 23. Breach of these covenants may
result in full and immediate repayment of the long-term borrowings
and an inability to access the RCF. The Group has met these covenants
in the past and expects to continue to do so over the next two years.
Management have performed a sensitivity to identify the decrease
in the Group’s financial performance that would result in a breach
ofthese covenants. Group EBITDA would have to decrease by more
than 50% or finance expense increase by more than 140% to result in a
breach. During the peak of the COVID-19 pandemic, in April and May
2020, the Group did not experience such severe impacts on liquidity
and performance. The likelihood of such impacts is therefore, not
considered plausible. As part of the going concern and long-term viability
assessments the Directors have also considered a number of severe
but plausible downside scenarios and in all cases the sensitised forecasts
confirm that the Group has committed liquidity headroom through
31 December 2023. Refer to page 74 for information on the analysis and
outcome of the Group’s long-term viability assessment where additional
severe but plausible scenarios have been modelled.
As of 31 December 2021, the Company has available short-term
capital resources of $2,058m, which include $1,171m of uncommitted
facilities. Based on the cash flow projections for the next two years,
management has confirmed that there is sufficient cash and committed
facilities available and the Group is not reliant on these uncommitted
facilities. Notwithstanding this analysis, the Group has continued
to have access to and utilise the uncommitted short-term funding
lines throughout the year, and where necessary renew them in the
normal course of business. Therefore, the Directors expect these
uncommitted facilities to continue to be available to the Group for
theforeseeable future.
As part of the Group’s risk management framework, changes in the
nature, likelihood and impact of existing and new risks are regularly
considered, including the Group’s ability to respond to changes in its
business and the external environment. There have been no changes
in the Group’s principal risks that would impact the going concern over
the next two years. Further details on the Group’s principal risks can
be found on pages 66 to 73.
On 25 November 2021 the Group and VIP II Blue B.V. (wholly
owned, indirect subsidiary of Vitol Investment Partnership II Limited,
itself being an investment vehicle advised by employees of the Vitol
Group, referred to as ‘Vitol’) announced a recommended total cash
offer of $1.85per share to be made by Vitol for Vivo Energy plc.
The transaction is expected to complete during the third quarter
of2022 and has a limited impact on the Group’s financial statements
at 31 December 2021. The Group’s principal committed and drawn
debt facility contains a change of control clause, which permits Vitol
to take over control. However, the change in control clause within
the RCF, could result in the facility being withdrawn on completion
of the transaction. Future decisions on the structure of the Group’s
debt facilities, including the renewal or replacement of the RCF, may
be dependent upon Vitol. The current Board is not expected to
continue in position and will therefore not be exercising oversight
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021136
of the Group’s strategy and business plan. While the intentions
statement included within the announcement on 25 November 2021,
states that Vitol will continue to support the Group with its strategy
and growth ambitions, the Directors do not have access to Vitol’s
detailed plans for the business including the future financing structure
and the potential renewal or replacement of the RCF. Therefore,
there is no certainty that the intentions of the acquirer have been
incorporated into the Directors’ going concern assessment which
represents a material uncertainty that may cast significant doubt
upon the Group’s ability to continue as a going concern. At the time
of approving the consolidated financial statements, the Directors
maintain a reasonable expectation that the Company and the Group
will have adequate resources to continue in operational existence for
the foreseeable future. The financial statements do not include the
adjustments that would result if the Group was unable to continue as
a going concern. Therefore, the Directors consider it appropriate to
adopt the going concern basis of accounting in preparing the financial
statements, notwithstanding the material uncertainty caused by the
expected change in ownership of the Company and the Group during
the period. Furtherdetails are contained within the going concern
statement included in the Directors’ Report.
Climate change
In preparing the consolidated financial statements management
has considered the impact that climate change may have. The Task
Force on Climate-Related Financial Disclosures (TCFD) is a reporting
framework that consists of a list of recommendations for companies
to consider, with the aim to improve and increase the reporting of
climate-related financial information. In accordance with the TCFD
reporting framework, management has assessed the impact of
the scenario assessments on the Group’s physical and transitional
risks. Additional information can be found on pages 58 to 62.
Management have further considered the extent to which these
climate-related scenarios impact key areas of accounting judgement
and disclosure, including a sensitivity analysis using the assumptions
consistent with the TCFD assessment. Based on this assessment,
climate change does not currently have a significant or material
impact on the outcome of key accounting judgements and estimates,
including going concern, asset useful economic lives, asset valuations
and impairments as the impact of transitional risks is only forecast to
have a significant impact on the Group’s business and cash flow beyond
the point at which asset carrying values are realised. Management will
continue to monitor, assess and account for the impact of climate
change in future years. At year-end, whilst a number of countries
in which the Group operates are signatories to the Paris Climate
Agreement, none of the countries have introduced legislation or
detailed policy initiatives associated with transitioning away from
carbon based transportation fuels. As set out on pages 52 to 55 of the
Strategic Report, whilst the Group continues to introduce initiatives
designed to reduce the carbon emissions from its direct operations
and develop alternative product offerings, the Group considers
that the transition towards a low-carbon economy in its primary
markets will be over a longer time period than will be seen in the UK
and the European Union. As a result, the Group considers that the
market for oil products across Africa will continue to grow within its
medium-term planning horizons and this assumption is embedded
within the Group’s five-year strategic business plan which in turn
supports a number of key forward-looking accounting judgements
and estimates. Furthermore, the Group continues to experience
unrestricted access to capital markets and has demonstrated its ability
to raise additional debt and equity funding at competitive market rates
in the recent past. Therefore, there is currently no indication that
climate change will negatively impact the Group’s cost of capital to the
extent that changes in the discount rates, used in accounting estimates
and judgements, would result in a material adjustment to the financial
statement balances.
2.2 Application of new and revised IFRS
The following pronouncements issued by the IASB and endorsed by
the United Kingdom are effective for annual periods beginning on
1 January 2021. The Group’s financial statements have been prepared
in accordance with these standards, which have no material impact
onthe consolidated financial statements of the Group:
– Amendments to IFRS 16 COVID-19 related rent
concessions(May 2020)
– Interest Rate Benchmark Reform Phase 2
(Amendments to IFRS 9, IAS 39 and IFRS 7)
The decision made by the IFRS IC in April 2021 on the treatment of
cloud computing has no material impact on the Group.
2.3 New standards, amendments and interpretations
notyetadopted
The following amendments to the standards effective for annual
periods beginning on or after 1 January 2022, have not been applied in
preparing the consolidated financial statements of the Group:
– Narrow-scoped amendments to IAS 1, IAS 8, IAS 12, IAS 16,
IAS 37 and IFRS 3
– Annual improvements 2018-2020
The above amendments which are not yet effective, are not expected
to have a material impact on the Group.
2.4 Consolidation
The Group is made up of various entities, subsidiaries, joint ventures
and associates. Details regarding all entities are included in note 15
inthe Company financial statements.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control is achieved
when the Group is exposed to, or has rights to, variable returns
fromits involvement with the entity and has the ability to affect those
returns through its power over the entity.
The Group reassesses whether or not it controls an investee if the
facts and circumstances indicate that there may be changes to one or
more of the elements of control. Subsidiaries are consolidated from
the effective date of acquisition and de-consolidated from the date
thatcontrol ceases.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Group and to the non-controlling
interests. Total comprehensive income of subsidiaries is attributed to
owners of the Group and to the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
All intra-group transactions and balances, income, expenses and cash
flows are eliminated on consolidation. Where necessary, accounting
policies of subsidiaries are adjusted to ensure consistency with the
policies adopted by the Group.
Changes in ownership interests in subsidiaries without change
ofcontrol
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions, that is, as transactions
with the owners in their capacity as owners. The difference between
fair value of any consideration paid and the relevant share acquired
of the carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals to non-controlling interests are
alsorecorded in equity.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
137VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.4 Consolidation (continued)
Joint arrangements
Joint arrangements are contractual arrangements whereby the
Group and other parties undertake activities that are under joint
control, meaning that the relevant activities that significantly affect
the investee’s returns require the unanimous consent of the parties
sharing control. Joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights and
obligations of each investor. The Group has assessed the nature of
its joint arrangements and determined them to be joint ventures.
Joint ventures are joint arrangements whereby the parties that have
joint control have the rights to the net assets of the arrangement
andare accounted for using the equity method.
Under the equity method, the investment is initially recognised at
cost adjusted for the post-acquisition changes in the Group’s share
of net assets of the joint venture, less any impairment in the value
of the investment. The Group’s share of post-tax profits or losses
are recognised in the consolidated income statement. Losses of
ajoint venture in excess of the Group’s interest investment in that
jointventure are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on
behalfof the joint venture.
Unrealised gains on transactions between the Group and its joint
ventures are eliminated to the extent of the Group’s interest in the
joint ventures. Unrealised losses are eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Where necessary, accounting policies of the joint ventures are adjusted
to ensure consistency with the policies adopted by the Group.
Investments in associates
Associates are entities where the Group has significant influence and
isneither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but where the Group
doesnot have control or joint control over those policies.
At the date of acquisition, any excess of the cost of the acquisition
overthe Group’s share of the net fair value of the identifiable net
assets, liabilities and contingent liabilities of the associate is recorded
as goodwill. The goodwill is included within the carrying amount
of the investment. Investments in associates are accounted for
using the equity method of accounting. Under the equity method,
the investment is initially recognised at cost and adjusted for the
post-acquisition changes in the Group’s share of net assets of
theassociate, less any impairment in the value of the investment.
The Group’s share of post-tax profits or losses are recognised in
theconsolidated income statement. Losses of an associate in excess
ofthe Group’s interest in that associate are recognised only to the
extent that the Group has incurred legal or constructive obligations
ormade payments on behalf of the associate.
2.5 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’).
The functional currency of the Company is United States dollars
(‘US dollars’). These consolidated financial statements are presented
in US dollars, which is the functional and presentation currency
ofthe Company.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
thesettlement of such transactions, and from the translation
at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies, are recognised in the
consolidatedstatements ofcomprehensive income.
Foreign exchange gains and losses that relate to monetary items
such as borrowings, receivables and cash and cash equivalents are
presented in the consolidated statements of comprehensive income
within cost of sales for trading related gains and losses and within
finance income and expense for non-trading related gains and losses.
Translation differences on non-monetary financial assets,
suchasequities classified as financial assets at fair value through
other comprehensive income (FVTOCI), are included in other
comprehensive income.
The financial statements of entities in hyperinflationary economies
are translated in accordance with IAS 29 ‘Financial Reporting in
Hyperinflationary Economies’.
Accounting for hyperinflation
The results of the Group’s operations within entities based in
Zimbabwe have been prepared in accordance with IAS 29 as if
theeconomy had been hyperinflationary from date of acquisition.
Hyperinflationary accounting requires transactions and balances
to be stated in terms of the measuring unit, current at the end of
the reporting period in order to account for the effect of loss of
purchasing power during the period. The Group has elected to
use the Zimbabwe Consumer Price Index (CPI), as published by
the Zimbabwe Reserve Bank, as the general price index to restate
amounts, since CPI provides an official observable indication of the
change in the price of goods and services.
The carrying amounts of non-monetary assets and liabilities carried
at historical cost have been adjusted to reflect the impact of the
CPI.Amortisation, depreciation and impairments shall be recalculated
based on the carrying amounts of property, plant and equipment,
right-of-use assets and intangible assets restated to reflect the change
in the general price index. All other items recognised in the statement
of comprehensive income are restated by applying the change in the
general price index from the dates when the items of income and
expenses were originally recorded. The restatement of income and
expenses are carried out on a monthly basis by applying the respective
conversion factor. The net impact of these gains or losses, have been
recognised in the statement of comprehensive income.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021138
All items in the statement of cash flows are expressed in terms
of thegeneral price index at the end of the reporting period.
Following the application of IAS 29, the financial statements of
Zimbabwean subsidiaries are translated at the closing exchange
rateapplicable forthe period.
The impact of applying IAS 29 in the current period resulted in an
increase in property, plant and equipment of $25m (2020: $20m),
anincrease in intangible asset of $9m (2020: $7m), a decrease in
net income of $1m (2020: $5m) and a nil impact on net finance
expense(2020: $3m).
Group companies
The results and financial position of all the Group entities with
a functional currency other than the presentation currency are
translated into the presentation currency as follows:
– Assets and liabilities are translated at the closing rate at the
reporting date;
– Income and expense items and cash flows are translated at the
average exchange rates for the period (unless this average is
not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income
and expenses are translated at the rate on the dates of the
transactions); and
– Exchange differences arising are recognised directly in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of
a foreign entity are treated as assets and liabilities of the foreign
entityand translated accordingly.
2.6 Revenue recognition
When the Group enters into an agreement with a customer, goods
and services deliverable under the contract are identified as separate
performance obligations (‘obligations’) to the extent that the customer
can benefit from the goods or services on their own and that the
separate goods and services are considered distinct from other goods
and services in the agreement. Where individual goods and services do
not meet the criteria to be identified as separate obligations they are
aggregated with other goods and/or services in the agreement until a
separate obligation is identified.
Revenue from the sale of goods, such as fuel and lubricants and
any other products are recognised when the Group has fulfilled
its performance obligation to a customer at a point in time.
The performance obligation to customers, including Vivo Energy
Kenya Ltd, is fulfilled when the Group’s products are delivered to
the customer and transfer of title occurs. The Group does not offer
bundled products.
The transaction price is the amount of consideration to which the
Group expects to be entitled in exchange for transferring promised
goods or services to a customer. The transaction price is allocated
tothe performance obligation in the contracts and excludes amounts
collected on behalf of third parties (i.e. sales taxes, excise duties
and similar levies). The majority of the markets in which the Group
operates are regulated and have fixed prices that are established
either by the government or the industry. The Group may offer
discounts and volume rebates to customers. Where applicable,
discounts are pre-agreed in the contracts that form part of the price
determination over the life of the contract. Volume rebates are
determined periodically, and recorded against revenue.
Vivo Energy Kenya Ltd, like other oil marketers in Kenya, participates
in the Open Tender System (OTS). Oil-marketing companies are
legally required to import petroleum products through the OTS, that
is centrally coordinated by the Ministry of Energy. This legal notice is
governed by the OTS agreements signed between all Kenyan licensed
oil marketers. Vivo Energy Kenya Ltd does not only participate in this
process but also purchases from the suppliers and sells the petroleum
products through the OTS to other oil marketing companies.
Related revenues are recognised at the fair value of the consideration
received or receivable once Vivo Energy Kenya Ltd has transferred
thegoods to the customer and fulfilled its performance obligation.
Vivo Energy Supply B.V. was established to consolidate functional
activities across the operating units and leverage economics of scale by
streamlining sourcing and procurement across markets. Vivo Energy
Supply B.V. purchases product from Vitol and third party suppliers
and provides products to the Group’s operating units and external
customers. The contractual responsibility of Vivo Energy Supply B.V.
is to provide goods to the customer. The contractual performance
obligation is satisfied upon delivery of goods to the customer based on
the incoterms. Revenue is recognised once the performance obligation
has been fulfilled and presented on a gross basis as Vivo Energy Supply
B.V. acts as a principal in the supply of its products.
For sales of services, the total consideration in the service contracts
is allocated to all services based on their stand-alone selling prices.
The stand-alone selling price is determined based on the list prices
at which the Group sells the services in separate transactions.
The transaction price is allocated to the performance obligations
identified in the contract. The revenue from services are recognised
over a period of time as the performance obligations are met.
Rental income is accounted for in revenue and recognised over the
duration of the rental contract.
The Group recognises an asset for the incremental costs of obtaining
a contract with a customer if the Group expects the benefit of those
costs to exceed one year. The Group has determined that certain sales
incentive programmes meet the requirements to be capitalised.
The Group applies a practical expedient to expense costs as incurred
for costs to obtain a contract when the amortisation period would
have been one year or less.
2.7 Finance income and expense
Finance income and expense are recognised in the income statement
using the effective interest rate method. All finance costs are
recognised in the periods in which they are incurred.
2.8 Consolidated statement of comprehensive income
presentation
Cost of sales reflects all costs relating to the revenue recognised,
including depreciation costs. Selling and marketing costs reflect
the marketing, selling costs, depreciation and amortisation costs.
The general and administrative costs reflect all central and corporate
costs, including employee and depreciation costs.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
139VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.9 Property, plant and equipment
Property, plant and equipment is carried at historical cost less
accumulated depreciation and any accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction
cost and any costs directly attributable to bringing the asset into
operation. The purchase price or construction cost is the aggregate
amount paid and the fair value of any other consideration given to
acquire the asset. Property, plant and equipment is depreciated on a
straight-line basis over the estimated useful lives of the various classes
of assets and commences when the asset is ready for use. Land and
construction-in-progress are not depreciated.
The following depreciation rates are applied for the Group:
– Buildings: 20 – 50 years
– Machinery and other equipment: 4 – 25 years
Major improvements are capitalised when they are expected to
provide future economic benefit. When significant components of
property, plant and equipment are required to be replaced at regular
intervals, the Group derecognises the replaced part and recognises
the new part with its own associated useful life and depreciation.
Repairs and maintenance costs are charged to the consolidated
statement of comprehensive income as incurred.
The carrying amount of an item of property, plant and equipment is
derecognised on disposal, or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising from the
derecognition of property, plant and equipment is included in the
consolidated statements of comprehensive income when the item
is derecognised.
Each asset’s estimated useful life, residual value and method of
depreciation are reviewed and adjusted, if appropriate, at each
year-end.
2.10 Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the
excess of the consideration transferred over the acquirer’s interest
in fair value of the net identifiable assets, liabilities and contingent
liabilities of the acquiree and the fair value of the non-controlling
interest in the acquiree.
Goodwill is allocated to cash-generating units (CGUs) for the purpose
of impairment testing. The allocation is made to those CGUs or groups
of CGUs that are expected to benefit from the business combination
in which the goodwill arose. The units or groups of units are identified
at the lowest level at which goodwill is monitored for internal
management purposes, being the operating segments.
For goodwill recognised in the consolidated statements of financial
position, impairment reviews are undertaken annually, once goodwill
has been allocated to CGUs, ormore frequently if events or changes
in circumstances indicate apotential impairment. The carrying value of
the CGU to which goodwill is allocated is compared to the recoverable
amount. Any impairment is recognised immediately as an expense and
isnotsubsequently reversed.
Shell Licence Agreements (‘Licences’)
The Licences acquired grant the Company the exclusive right to
distribute and market Shell-branded products in the relevant
countries. The Licences are recognised at their fair value at the
acquisition date and are carried forward at cost less accumulated
amortisation calculated using the straight-line method over
the expected useful life of 15 years. The Licences expire in
December 2031.
Computer software
Computer software comprises software purchased from
thirdparties as well as the cost of internally developed software.
Computer software licences are capitalised on the basis of the costs
incurred to acquire and bring into use the specific software. Costs that
are directly associated with the production of identifiable and unique
software products that are controlled by the Group, and where it
is probable of producing future economic benefits, are recognised
as intangible assets. Direct costs of software development include
employee costs and directly attributable overheads. Costs associated
with maintaining software programs are recognised as an expense
when they are incurred. Amortisation is charged on a straight-line
basisover their estimated useful lives of three to ten years. As at
31 December 2021, internally developed software relating to the
ERPsystem has a remaining useful life of eight years.
Other intangible assets
Other intangible assets include Butagaz brand, LPG retail distributor
relationships and Commercial LPG customer relationships recognised
at their fair value allocated at acquisition date are subsequently
measured at carrying amount less accumulated amortisation
calculated using the straight-line method over the expected useful
life of 10 to15years. The VEOHL business acquisition in 2019
attributed additional intangible assets recognised through application
of IFRS3‘Business combinations’. These intangible assets relate to
customer relationships and the use ofthe Engen brand with useful lives
of between 10 to 15 years.
2.11 Impairment of non-financial assets
At least annually, the Group reviews the carrying amount of tangible
and intangible assets with finite lives to assess whether there is an
indication that those assets may be impaired. If any such indication
exists, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of an asset’s
fair value less costs to sell and its value in use. In assessing its value
in use or fair value less cost of disposal, the estimated future cash
flows attributable to the asset are discounted to their present value
using a pre-tax or post-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the
asset. If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is reduced
to its recoverable amount.
A corresponding impairment loss is recognised in the consolidated
statements of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount
of the asset is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount
does not exceed the original carrying amount that would have been
determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Any impairment reversal is
recognised in the consolidated statements of comprehensive income.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021140
2.12 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost comprises direct purchase costs (including transportation),
costof production, manufacturing and taxes, and is determined
usingthe weighted average cost method.
2.13 Other government benefits receivable
Other assets include other government benefits receivable that
reflectsubsidies received from national governments for fuel sold
aspart of the Group’s ordinary course of business.
The following types of compensation are applicable to the Group:
– Amounts due from/to the government for oil purchased at
higher/lower prices than the price set by the local authority.
Where the oil purchasing price paid by the Group is higher than
the price set by the local authorities, a receivable due from the
government is recognised by the Group to compensate for the
higher price paid. Similarly if the purchasing price of oil is lower
than the set price, a liability towards the government is recognised.
If collections/payments are expected in one year or less, the
receivable/liability are classified as current assets/current liabilities.
If not, they are presented as non-current assets/non-current
liabilities. As at 31 December 2021, this relates to Vivo Energy
Botswana, Guinea, Kenya, Madagascar, Morocco and Senegal.
– Amounts due from/to the government for transport costs incurred
to encourage marketers to distribute products to remote areas of
the country. The government has introduced a pricing mechanism
whereby if the Group only delivers to local areas, then a liability
requiring payment to the government will be recognised. If the
Group delivers to remote areas then a receivable owing from the
government will be due. If collections/payments are expected in
one year or less, the receivable/liability are classified as current
assets/current liabilities. If not, they are presented as non-current
assets/non-current liabilities. As at 31 December 2021, this relates
to Vivo Energy Botswana, Guinea, Morocco and Senegal.
The origination of these receivables arises from legal rights based
on government schemes of taxation and subsidies and not from any
contractual agreements. As such, they are not considered as financial
instruments within the scope of IFRS 9 ‘Financial Instruments’ and
are accounted for under IAS 20 ‘Accounting for Government Grants
and Disclosure of Government Assistance’. Other government
benefits receivable are recognised initially at fair value, which
represents the difference between the market value if sold at arm’s
length and the price set by the government. The subsidy is accrued
to match the associated cost to which the compensation has been
granted. Initial recognition and any subsequent adjustments are
recognised within cost of sales in the consolidated statement of
comprehensive income.
If a receivable is recognised as owing from the government and
there is risk over the recoverability of that asset, then a provision
forimpairment will be recognised.
Where the Group enters into factoring arrangements it transfers
andderecognises other government receivables if either:
– The Group has transferred substantially all the risks and rewards
ofownership of the asset; or
– The Group has neither transferred nor retained substantially all the
risks and rewards of ownership of the asset and no longer retains
control of the asset.
Under the continuing involvement approach, the Group continues
torecognise part of the asset. The amount of the asset that continues
to be recognised is the maximum amount of the Group’s exposure
tothat particular asset or its previous carrying amount, if lower.
2.14 Financial instruments
Financial instruments consist of:
– Financial assets, which include cash and cash equivalents, trade
receivables, lease receivables, employee and other advances, equity
investments and derivative financial instruments and eligible current
and non-current assets; and
– Financial liabilities, which include long-term and short-term
loans and borrowings, bank overdrafts, trade payables, lease
liabilities, derivative financial instruments and eligible current and
non-current liabilities.
Financial instruments are recognised initially at fair value plus or
minus, for an item not at fair value through profit and loss (FVTPL),
transaction costs that are directly attributable to its acquisition or
issue. Financial instruments are initially recognised when the Group
becomes a party to the contractual provisions of the instrument.
Trade receivables are initially recognised when they are originated.
Financial assets are derecognised when substantial risks and rewards
ofownership of the financial asset have been transferred. In cases
where substantial risks and rewards of ownership of the financial
assets are neither transferred nor retained, financial assets are
derecognised only when the Group has not retained control over
the financial asset. Financial liabilities are derecognised when its
contractual obligations are discharged, cancelled or expired, and when
its terms are modified and the cash flows are substantially different.
Subsequent to initial recognition, financial instruments are measured
asdescribed below.
Financial instruments measured at amortised cost
Except for debt instruments that are designated at fair value through
profit or loss (FVTPL) on initial recognition, financial instruments that
meet the following criteria are measured at amortised cost using the
effective interest method:
– They are held within a business model whose objective is to hold
assets in order to collect contractual cash flows; and
– The contractual terms of the instrument give rise on specified dates
to cash flows that are solely payment of principal and interest on
the principal amount outstanding.
The amortised cost is reduced by impairment losses. Finance income
or expense, foreign exchange gains and losses and impairments are
recognised in profit and loss. The following financial assets and liabilities
are classified as measured at amortised cost:
Cash and cash equivalents
Cash and cash equivalents, on the statement of financial position and
for the purpose of the cash flow statement, includes cash on hand,
inbanks, placements held at call with banks and other short-term
highly-liquid investments with maturities of three months or less.
Where the Group does not have the right to offset, bank overdrafts
are shown as borrowings in current liabilities on the consolidated
statement of financial position.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
141VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.14 Financial instruments (continued)
Trade receivables
Trade receivables are amounts due from customers for goods sold
orservices performed in the ordinary course of business. If collection
is expected in one year or less they are classified as current assets.
If not, they are presented as non-current assets. The Group may
obtain security for certain trade receivables in the form of cash
deposit, bank guarantees, credit insurance and assets securities,
whichcan be called upon if the counterparty is in default under
theterms ofthe agreement.
Trade payables
Trade payables are obligations to pay for goods or services that
havebeen acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of
the business if longer). If not, they are presented as non-current
liabilities. Where trade finance facilities are used to extend payment
terms, these facilities are presented as short-term borrowings in
theconsolidated statement of financial position. Trade payables are
measured at amortised cost and the fair value approximates the
carrying amount.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred and subsequently carried at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption
value is recognised in the consolidated statement of comprehensive
income, over the period of the borrowings, using the effective
interest method.
Other assets and other liabilities
Other assets such as employee loans, brand promotion fund
receivables, customer deposits and other liabilities are measured
atamortised cost using the effective interest rate method.
Equity investments at fair value through other comprehensive income
(FVTOCI)
For equity investments not held for trading, the Group elected to
present subsequent changes in the investment’s fair value in other
comprehensive income. The Group subsequently measures these
assets at fair value with fair value gains and losses recognised in
other comprehensive income and never reclassified to profit or loss.
Dividends are recognised in profit or loss as other income when the
Group’s right to receive payment is established.
Financial instruments measured at fair value through profit
orloss(FVTPL)
Instruments that are not measured at amortised cost or FVTOCI are
measured at FVTPL. These instruments are subsequently measured
at fair value, with any gains or losses arising on re-measurement
recognised in profit or loss. The gain or loss on disposal is recognised
in profit or loss. Financial instruments at FVTPL include derivative
financial instruments.
Derivative financial instruments
The Group is exposed to foreign currency fluctuations on foreign
currency assets, liabilities, net investment in foreign operations and
forecasted cash flows denominated in foreign currency.
The Group limits the effect of foreign exchange rate fluctuations by
following established risk management policies including the use of
derivatives. The Group enters into derivative contracts where the
counterparty is primarily a bank.
Derivative financial instruments are initially recognised and subsequently
measured at fair value. Attributable transaction costs arerecognised
inprofit or loss as a cost.
Changes in fair value of foreign currency derivative instruments
neitherdesignated as cash flow hedges nor hedges of net
investment in foreign operations are recognised in profit or loss
and reported within foreign exchange gains, net within results from
operating activities.
Changes in fair value and gains or losses on the settlement of foreign
currency derivative financial instruments relating to borrowings, which
have not been designated as hedges, are recorded in finance expense.
Changes in fair value and gains or losses on the settlement of foreign
currency derivative financial instruments relating to operational
transactions, which have not been designated as hedges, are recorded
in other income.
Net investment hedges
When a derivative is designated as the hedging instrument in a hedge
of a net investment in a foreign operation, any gain or loss on the
hedging instrument relating to the effective portion of the hedge
is recognised in OCI and presented in currency translation reserve
within equity. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss. The amount recognised
inOCI is reclassified to profit or loss as a reclassification adjustment
ondisposal of the foreign operation.
2.15 Impairment of financial assets
The Group applies the expected credit loss (ECL) model for
recognising impairment losses on financial assets measured at
amortised cost. The ECL is the difference between the contractual
cash flows and the cash flows that the entity expects to receive
discounted using the effective interest rate.
Loss allowance for financial assets other than trade receivables
are measured at the amount equal to 12 months’ ECL, as they are
considered low risk, unless there has been a significant increase in
credit risk from initial recognition, in which case those are measured
at lifetime ECL. Since the contractual terms for most of the Group’s
financial assets are typically less than 12 months, there is no significant
difference between the measurement of 12 months’ and lifetime ECL.
For trade receivables, a simplified impairment approach is applied
and the ECL is measured at the amount equal to lifetime ECL.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial asset. Lifetime ECL for
trade receivables is computed by taking into account historical
credit loss experience adjusted for forward-looking information.
Experienced credit judgement is applied to ensure that the weighted
probabilities of default are reflective of the credit risk associated
withthe Group’s exposure.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021142
The measurement of the ECL is a function of the probability of
default, loss given default (i.e. the magnitude of the loss after recovery
if there is a default) and the exposure at default (i.e. the asset’s
carrying amount). The ECL is based on the historical impairment
data, of trade receivables, grouped into various age categories and
geographical location. The impact of forward-looking macroeconomic
factors on the expected credit losses are taken into account in the
impairment data used for the ECL model. The Group considers there
to be a high magnitude of exposure on default of debt, when the
counterparty fails to engage in an acceptable repayment plan or fails
to make contractual payments, for a period greater than 180 days
past due. The majority of the Group’s ECL provision is made up of
trade receivables over 180 days. There is no impairment consideration
for overdue amounts that are secured with highly liquid collateral.
Security held on trade receivables does not have a significant impact
on the risk oftrade receivables.
Financial assets, including loans to joint ventures, are considered to
be impaired when there is reasonable and supportable evidence that
one or more events that have a detrimental impact on the estimated
future cash flows have occurred. This includes but is not limited to
observable data atthe reporting date that confirms potential future
impairment suchas severe financial difficulty of a counterparty;
probability that a counterparty will enter bankruptcy; a contract
breach; disappearance of an active market for a counterparty’s
products; concession being granted to a counterparty for economic
or contractual reasons due to a financial difficulty that would not
otherwise be considered; and other financial reorganisation of a
counterparty’s business. At the reporting date, any significant change in
credit risk arising from these factors results in an adjustment of default
probabilities. Where the Group has no reasonable expectation of
recovering the debt, for example where all legal avenues for collection
of amounts due have been exhausted, the debt (or relevant portion)
is written off.
2.16 Share capital
Ordinary shares are classified as equity. Where any Group company
purchases the Company’s equity share capital (treasury shares),
the consideration paid is deducted from equity attributable to
the Company’s equity holders until the shares are cancelled or
reissued. Where such ordinary shares are subsequently reissued,
any consideration received is included in equity attributable to the
Company’s equity holders.
2.17 Non-controlling interest
Non-controlling interests in the Group’s equity are stated at the
non-controlling interest’s proportionate share of the net assets
andliabilities of the companies concerned.
2.18 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised
asaliability in the Group’s financial statements in the period in
whichthe dividends are approved by the Company’s shareholders.
The Company recognises the interim dividend in the period in which
it is paid.
2.19 Share-based payments
The Group issues equity-settled and cash-settled share-based payments
to employees via shares and share option plans.
Equity-settled share-based payments
Equity-settled share-based payments arising from the Long-Term
Incentive Plan (LTIP), the IPO Share Award Plan and the Restricted
Share Award Plan are measured at fair value (excluding the effect
of non-market vesting conditions) at grant date. The fair value
determined at grant date is recognised over the vesting period,
based on the Group’s estimate of the shares that will eventually
vest and adjusted for the effect of non-market vesting conditions.
A corresponding increase in other reserves is also recognised in equity.
Cash-settled share-based payments
Cash-settled share-based payments arising from the Vivo Energy
Management Equity Plan are recognised as an expense over the
vesting period, measured by reference to the fair value of the
corresponding liability which is recognised in the consolidated
statements of financial position. The liability is measured at fair value
at each reporting date until settlement, with changes in fair value
recognised in the consolidated statement of comprehensive income.
2.20 Leases
Leases are included in right-of-use (ROU) assets and lease liabilities
onthe Group’s consolidated statement of financial position.
ROU assets and lease liabilities are recognised based on the present
value of the future minimum lease payments over the lease term at
commencement date. As most of the leases do not provide an implicit
rate, the Group uses the incremental borrowing rate based on the
information available at commencement date in determining the
present value of future payments. The ROU assets also include any
lease payments made at or before the commencement date, any initial
direct costs incurred and less any lease incentives. The ROU assets
acquired under IFRS 16 ‘Leases’ are depreciated on a straight-line basis
over the asset’s useful life, or over the shorter of the asset’s useful life
and the lease term if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease term.
The measurement of the lease liability may include options to extend
or terminate the lease when it is reasonably certain that the option
will be exercised. After the initial measurement at commencement,
the carrying amount of the lease liability is increased by interest on the
lease liability, reduced by lease payments made and re-measured to
reflect any reassessment or lease modifications. Interest on the lease
liability is computed based on the initial discount rate used to compute
the lease liability at commencement (or if applicable a revised discount
rate used in a modification or re-measurement) to produce a constant
period rate of interest on the remaining balance of the lease liability.
Lease agreements including a lease and non-lease component are
generally accounted for separately. For certain instances where it is
impractical to separate the lease from the non-lease component, the
Group will account for them as a single lease component. Additionally,
the Group applies a portfolio approach to effectively account for the
ROU assets and liabilities.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
143VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES CONTINUED
2.21 Provisions
Provisions are liabilities of uncertain timing or amounts.
Provisions arerecognised when the Group has a present, legal or
constructive obligation as a result of past events, that will result in a
probable outflow of economic resources, and a reliable estimate can
be made of the amount of the obligation.
Provisions are measured at the present value of management’s best
estimate of expenditure required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as finance expense.
Compulsory stock provision
The oil market regulator in Morocco introduced an industry
mechanism to enable oil market operators to maintain the necessary
compulsory stock volume requirement. The compulsory stock
provision relates to amounts due to the oil market regulator in
Morocco for cash received to fund the compulsory stock obligation
(CSO). The cash received in 1994 was based on the CSO levels and
the government regulated oil price at that time. The cash received
in 1994 has been agreed with the Government and is classified as a
non-current liability in ‘Otherliabilities’ in the consolidated statement
of financial position.
The fuel market in Morocco has been deregulated since
1 December2015 and the LPG market continues to be regulated.
Due to the uncertainty on the value at which the CSO will be settled,
a provision for the fluctuations in the purchase price of products has
been recognised. The provision relates to the difference between
the cash received in 1994, to purchase stocks for the CSO, and
the oil price at the end of November 2015 and the LPG price to
date. As at31 December 2021, the Moroccan government has not
indicateda repayment date for the compulsory stock obligation.
Legal and other provisions
Legal and other provisions include provisions for environmental
restoration, restructuring costs and legal claims. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations, the likelihood
that anoutflow will be required in settlement is determined by
consideringthe class of obligations as a whole.
2.22 Post-employment obligations
The Group operates various post-employment schemes, including
bothdefined benefit and defined contribution pension plans and
post-employment medical plans.
Pension obligations
A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. The Group
has no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior
periods. A defined benefit plan is a pension plan that is not a defined
contribution plan.
For defined contribution plans, the Group pays contributions to
publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in the future payments
is available.
Typically defined benefit plans define an amount of pension benefit
that an employee will receive on retirement, usually dependent on one
or more factors such as age, years of service and compensation.
The liability recognised in the consolidated statements of financial
position in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The defined benefit obligation
is calculated annually by independent actuaries using the projected
unit credit method. Full actuarial valuation was performed for all
the defined benefit plans. The present value of the defined benefit
obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid, and
that have terms to maturity approximating to the terms of the related
pension obligation. In countries where there is no deep market in such
bonds, the market rates on government bonds are used.
Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise.
Current and past service costs are recognised immediately in profit or
loss. Net finance expense/income will be calculated as the product of
the net defined liability/asset and the discount rate as determined at
the beginning of the year and is included in net finance expense in the
statement of comprehensive income.
Defined benefit scheme characteristics and funding
The Group operates multiple post-employment defined benefit
schemes for its employees in half of its operating countries.
The multiple pension schemes provide the employees with a pension
orlump sum retirement benefit where the exact pension payments
on retirement differ per scheme. For some operating companies
(mainly Ghana and Namibia) there is an additional post-employment
health scheme.
The Group’s funded plans relate to the pension schemes in Mauritius
and Gabon. The funded plans are legally separate from the Group and
administered by a separate fund and comply with local regulatory and
legal requirements.
The schemes are exposed to a number of risks, including:
– Investment risk: movement of discount rate used (high-quality
corporate bonds) against the return from plan assets. If plan assets
underperform against the yield then this will create a deficit;
– Interest rate risk: decreases/increases in the discount rate used
(high-quality corporate bonds) will increase/decrease the defined
benefit obligation;
– Longevity risk: changes in the estimation of mortality rates of
current and former employees; and
– Salary risk: increases in future salaries increase the gross defined
benefit obligation.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021144
Other post-employment obligations
Some Group companies provide post-retirement healthcare
benefits to their retirees. The entitlement to these benefits is usually
conditional on the employee remaining in service up to retirement
age and the completion of a minimum service period. The expected
costs of these benefits are accrued over the period of employment
using the same accounting methodology as used for defined benefit
pension plans. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or
credited to equity in other comprehensive income in the period in
which they arise. These obligations are valued annually by independent
qualified actuaries.
Termination benefits
Termination benefits are payable when employment is terminated
by the Group before the normal retirement date, or whenever
anemployee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits at the earlier of
the following dates (a) when the Group can no longer withdraw the
offer of those benefits; and (b) when the entity recognises costs for a
restructuring that is within the scope of IAS 37 ‘Provisions’ and involves
the payment of termination benefits.
In the case of an offer made to encourage voluntary redundancy,
the termination benefits are measured based on the number of
employees expected to accept the offer. Benefits falling due more
than12 months after the end of the reporting period are discounted
to their present value.
2.23 Current and deferred income tax
The income tax expense for the period comprises current and
deferred tax. Income tax is recognised in the consolidated statement
of comprehensive income, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this
case, the income tax is also recognised in other comprehensive income
or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the reporting date in
the countries where the Company and its subsidiaries operate and
generate taxable income. The Group periodically evaluates positions
taken or intended to be taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation.
It accounts for uncertain tax positions where appropriate on the basis
of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if
theyarise from the initial recognition of goodwill. Deferred income tax
is not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantively enacted by the reporting date and
are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it
isprobable that future taxable profit will be available against which the
temporary differences, unused tax losses and unused tax credits can
be utilised. The criteria considered when recognising deferred income
tax assets includes:
– The existence of taxable temporary differences that relate to the
same taxation authority and same taxable entity; and
– The expected future taxable profits and tax planning opportunities.
In case of a history of recent losses, it has been considered whether
other convincing evidence is available to support the recognition
ofthe deferred income tax assets.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except for deferred
income tax liability where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities
relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
145VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, cash flow interest rate risk
and fairvalue interest rate 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 $254m (2020: $156m). 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 $25m (2020: $16m) higher/lower, 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 2021
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.
In Botswana, Guinea, Kenya, Madagascar, Morocco (for Butane only) and Senegal the Group is financially compensated by the local government
for the effect of these price restrictions. For some countries the transport costs are subsidised. For further information see note 16.
The Group does not hold equity securities for trading and is, therefore, not exposed to equity price risk.
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. The Group has short-term overdraft facilities which carry a fixed interest rate exposing the
Group to fair value interest rate risk. However, given that the rate is fixed for a short period of time, and that these facilities terms are subject
to renegotiation, should the interest rate move, the exposure is minimal. Long-term borrowings consist of notes at fixed interest rate, which
exposes the Group to fair value interest rate risk (refer to note 23).
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. At reporting date, the Group noted no significant concentrations of credit risk to individual customers or
counterparties. 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 customers based on commercial data, but also considers financial data when a credit limit
exceeds $15,000 for Retail and $100,000 for Commercial. 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).
In Morocco customer receivables to the amount of $17m (2020: $16m) were assigned to a factoring subsidiary of a commercial bank; the
assigned amount was received in cash and the corresponding receivable was derecognised. For the late payment risk, the Group capped the
exposure to six months’ maximum of interest. This resulted in a continuous involvement accounting treatment where a substantial portion of
the risk has been transferred. A continuous involvement liability of $0.3m (2020: $0.3m) was recognised. In addition, other government benefits
receivable to the amount of $99m (2020: $36m) were assigned to a local commercial bank, the assigned amount was received in cash and the
corresponding receivable was derecognised. For the late payment risk, the Group capped the exposure to 5.5 months’ maximum of interest.
A continuous involvement liability of $1.6m (2020: $0.6m) was recognised. The Group considers that the held to collect business model remains
appropriate for these receivables and hence continues measuring them at amortised cost. The Group has arrived at this conclusion because the
factoring of the Group’s B2B receivables before maturing is done on an infrequent basis.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021146
The Group’s cash and cash equivalent balances are primarily held at banks with strong credit ratings where the exposure to credit risk is
considered to be limited. The extent to which the Group’s cash and cash equivalent balances are held at banks where there is considered to be
an exposure to credit risk is set out below:
31 December 2021 31 December 2020
Credit rating US$ million Credit rating US$ million
Banks
Bank 1 Ba1 97 A+ 74
Bank 2 A+ 38 Ba1 67
Bank 3 B2 31 Ba2 45
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 2021
US$ million
Less than
3 months
Between
3 months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years Total
Borrowings 278 13 22 60 368 741
Trade payables 1,375 59 – – – 1,434
Lease liabilities 7 32 32 66 106 243
Other liabilities
1
28 23 18 2 144 215
Total 1,688 127 72 128 618 2,633
1 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
31 December 2020
US$ million
Less than
3 months
Between
3 months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years Total
Borrowings 275 12 25 114 386 812
Trade payables 1,040 8 – – – 1,048
Lease liabilities 7 28 29 59 94 217
Other liabilities
1
13 22 17 2 161 215
Total 1,335 70 71 175 641 2,292
1 Other liabilities (note 26) exclude the elements that do not qualify as financial instruments.
Net investment hedge
On 24 September 2020, the Group issued $350m notes (refer to note 23). The Group entered into a fixed-fixed cross-currency swap
toexchange $150m US dollar denominated bonds to EUR. The cross-currency swap has a maturity of three years and was designated as
thehedging instrument of the net investment hedge described below.
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 BCEAO (XOF) as functional currencies that are 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 variation in the CVE and the XOF currencies (or the EUR) against the US dollar
which will result in a variation in the carrying amount of the Group’s net investment in these foreign operations. The Group has hedged its
netinvestment in subsidiaries with EUR pegged functional currencies.
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 hedging instrument 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).
An economic relationship between the hedged item and hedging instrument exist given that their fair values move in the opposite direction of
the same risk, which is the hedged risk. The impact of currency basis spreads and forward elements are excluded from the assessment of hedge
effectiveness and are recognised in OCI as cost of hedging reserve. Hedge ineffectiveness would arise to the extent that the net assets of the
foreign operations fell below the designated amount of the hedging instrument and due to any inefficiency in the currency markets.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
147VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT CONTINUED
3.1 Financial risk factors (continued)
The amounts related to items designated as hedging instruments in the statement of financial position and the statement of comprehensive
income were as follows:
31 December 2021
US$ million Nominal amount
Carrying amount
Line item in the
statement of financial
position where the hedging
instrument is includedAssets Liabilities
Cross currency swap 150 5 – Other financial assets
Change in value
used for calculating
hedge for 2021
Change in value
of hedging instrument
recognised in OCI
Hedge ineffectiveness
recognised in
profit or loss
Line item in profit
or loss that includes
hedge ineffectiveness
Cross currency swap 12 12 – Not applicable
31 December 2020
US$ million Nominal amount
Carrying amount
Line item in the
statement of financial
position where the hedging
instrument is includedAssets Liabilities
Cross currency swap 150 – 7 Other financial liabilities
Change in value
used for calculating
hedge for 2020
Change in value
of hedging instrument
recognised in OCI
Hedge ineffectiveness
recognised in
profit or loss
Line item in profit
or loss that includes
hedge ineffectiveness
Cross currency swap (7) (7) – Not applicable
3.2 Capital management
The Group’s 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, while maintaining a level of capitalisation that is commercially defensible and which leads
toan effective and optimised working capital structure.
Liquidity and capital resources are monitored through a review of the Group’s net debt position, leverage ratio and available short-term capital
resources. Net debt is calculated as total borrowings and lease liabilities (including current and non-current borrowings and lease liabilities as
shown in the consolidated statements of financial position) less cash and cash equivalents. The leverage ratio is calculated as net debt divided
byadjusted EBITDA. For details related to key covenants refer to note 23.
US$ million
31 December
2021
31 December
2020
Long-term debt (note 23) 349 408
Lease liabilities (note 27) 161 143
Total debt excluding short-term bank borrowings 510 551
Short-term bank borrowings (note 23) 280 274
Less: cash and cash equivalents (note 19) (587) (515)
Net debt 203 310
US$ million
31 December
2021
31 December
2020
Net debt 203 310
Adjusted EBITDA
1
(note 6) 447 360
Leverage ratio 0.45x 0.86x
1 For the description and reconciliation of non-GAAP measures refer to pages 36 and 37.
US$ million
31 December
2021
31 December
2020
Cash and cash equivalents 587 515
Available undrawn credit facilities
1
1,471 1,563
Available short-term capital resources 2,058 2,078
1 Of which $1,171m (2020: $1,323m) are uncommitted facilities.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions in order to ensure sound
capital management.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021148
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 an unlimited period. The Group exercises significant judgement that all
of the existing leases that are expiring within the following five years, and have an extension option, will be extended for an additional five-year
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.
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 as follows:
Government related assets and liabilities
The Group 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. A key element is
the recoverability of government benefits receivable; thisisconsidered in note 16. The recoverability assessment takes into account the stability
of the macroeconomic and political environment, credit risks including relevant policy changes and governments’ track records in settling debts as
well as the aging of the outstanding amounts and government confirmations on outstanding balances.
Tax positions
The Group operates across many tax jurisdictions and the interpretation and application of tax law can be complex and requires judgement to
assess the risk and estimate the potential outcomes. These outcomes can vary significantly from what has been provided. The Group recognises
many individually immaterial provisions with a cumulative amount totalling $18m related to income tax and $42m related to indirect and other
tax matters recorded in other assets, other liabilities and provisions. These are recorded for the amount that is expected to be settled where
this can be reasonably estimated. This reflects management’s assessment of the expected value of such risks based on a multiple scenario
outcome and likelihood. Factors considered include the status of recent current tax audits and enquiries; the results of previous claims; the
transfer pricing policies of the Group and any changes to the relevant tax environments. The timing of the resolution of the risks is uncertain
andmay take many years, however it is expected to be within the next five years.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
149VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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 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:
2021
US$ million
Retail Commercial Lubricants Consolidated
Revenue from external customers 5, 516 2,487 455 8,458
Gross profit 436 168 89 693
Add back: depreciation and amortisation 54 26 4 84
Gross cash profit 490 194 93 777
Adjusted EBITDA
1
259 116 72 447
1 Refer to note 6 for the reconciliation to EBIT.
2020
US$ million
Retail Commercial Lubricants Consolidated
Revenue from external customers 4,436 2 ,116 366 6,918
Gross profit 387 156 74 617
Add back: depreciation and amortisation 51 25 4 80
Gross cash profit 438 181 78 697
Adjusted EBITDA
1
216 92 52 360
1 Refer to note 6 for the reconciliation to EBIT.
US$ million 2021 2020
Share of profit of joint ventures and associates included in segment EBITDA
Lubricants 15 8
Retail 6 4
Commercial 6 4
Total 27 16
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021150
The amount of revenues from external customers by location of the customers is shown in the table below.
US$ million 2021 2020
Revenue from external customers by principal country
Morocco 1,441 1,075
Kenya 1,411 1,181
Senegal 727 495
Other 4,879 4,167
Total 8,458 6,918
US$ million
31 December
2021
31 December
2020
Non-current assets by principal country (excluding deferred tax)
Morocco 257 245
The Netherlands 246 232
Kenya 157 153
Other 1,070 1,042
Total 1,730 1,672
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
usedindetermining senior management remuneration.
US$ million 2021 2020
EBT 253 175
Finance expense – net 59 60
EBIT 312 235
Depreciation, amortisation and impairment 130 125
EBITDA 442 360
Adjustments to EBITDA related to special items:
IPO, Engen acquisition and Vitol Offer related expenses
4 1
Management Equity Plan
1 (3)
Hyperinflation – 2
Adjusted EBITDA 447 360
1 IPO related items in 2021 and 2020 concern the IPO share awards which are accrued for over the vesting period.
2 On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Vivo Energy Overseas Holdings Limited (VEOHL) (formerly known as
Engen International Holdings (Mauritius) Limited). The cost of the acquisition and related integration project expenses incurred in 2020 are treated as special items.
3 These expenses related to the potential change in control transaction, are treated as special items as they do not form part of the core operational business activities and performance.
4 The Management Equity Plan vested at IPO in May 2018 and was exercisable on the first anniversary of admission for a period of 24 months. Changes in the fair value of the cash-settled
share-based payments plan do not form part of the core operational business activities and performance and should, therefore, be treated as a special item. The costs of share-based
payment schemes introduced after the IPO are not treated as special items.
5 The impacts of accounting for hyperinflation for Vivo Energy Zimbabwe, in accordance with IAS 29, are treated as special items since they are not considered to represent the underlying
operational performance of the Group and based on their significance in size and unusual nature are excluded as the local currency depreciation against the US dollar does not align to the
published inflation rates during the period.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
151VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
6. RECONCILIATION OF NON-GAAP MEASURES CONTINUED
US$ million 2021 2020
Net income 152 90
Adjustments to net income related to special items:
IPO, Engen acquisition and Vitol Offer related expenses
4 1
Management Equity Plan
1 (3)
Hyperinflation – 2
Adjusted net income 157 90
US$ 2021 2020
Diluted earnings per share 0 .11 0.06
Impact of special items – –
Adjusted diluted earnings per share 0.11 0.06
1 IPO related items in 2021 and 2020 concern the IPO share awards which are accrued for over the vesting period.
2 On 1 March 2019 Vivo Energy Investments B.V., a subsidiary of the Group, acquired 100% of the issued shares in Vivo Energy Overseas Holdings Limited (VEOHL) (formerly known as
Engen International Holdings (Mauritius) Limited). The cost of the acquisition and related integration project expenses incurred in 2020 are treated as special items.
3 These expenses related to the potential change in control transaction, are treated as special items as they do not form part of the core operational business activities and performance.
4 The Management Equity Plan vested at IPO in May 2018 and was exercisable on the first anniversary of admission for a period of 24 months. Changes in the fair value of the cash-settled
share-based payments plan do not form part of the core operational business activities and performance and should, therefore, be treated as a special item. The costs of share-based
payment schemes introduced after the IPO are not treated as special items.
5 The impacts of accounting for hyperinflation for Vivo Energy Zimbabwe, in accordance with IAS 29, are treated as special items since they are not considered to represent the underlying
operational performance of the Group and based on their significance in size and unusual nature are excluded as the local currency depreciation against the US dollar does not align to the
published inflation rates during the period.
The Group defines headline earnings per share 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$ million, unless otherwise indicated 2021 2020
Headline earnings per share
Net income attributable to owners 140 80
Re-measurements:
Net gain on disposal of PP&E and intangible assets – (4)
Income tax on re-measurements – 1
Headline earnings 140 77
Weighted average number of ordinary shares (million) 1,264 1,266
Headline earnings per share (US$) 0 .11 0.06
Diluted number of shares (million) 1,272 1,266
Diluted headline earnings per share (US$) 0 .11 0.06
Effective tax rate 40% 49%
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021152
7. GENERAL AND ADMINISTRATIVE COST
Employee benefits
US$ million 2021 2020
Wages, salaries and other employee benefits 179 163
Restructuring, severance and other involuntary termination costs 5 7
Retirement benefits 10 10
Share-based payment expense 5 –
199 180
Included in the employee benefit expense for the year ended 31 December 2021, was social security expense of $1m (2020: $1m) and other
pension costs relating to employees employed in the UK. Refer to note 3 in the Company financial statements.
Employee benefits have been charged in:
US$ million 2021 2020
General and administrative cost 111 102
Selling and marketing cost 49 43
Cost of sales 39 35
199 180
The monthly average number of full time equivalent employees was as follows:
2021 2020
Sales and distribution 1,945 1,904
Administration and support 822 794
2,767 2,698
Depreciation and amortisation
Depreciation of property, plant and equipment and right-of-use assets as well as amortisation of intangible assets have been charged in:
US$ million 2021 2020
Cost of sales 84 80
Selling and marketing cost 32 31
General and administrative cost 14 14
130 125
Audit fees
US$’000 2021 2020
Parent company and consolidated financial statements 1,463 1,248
Subsidiaries
1
1, 218 1,175
Audit fees 2,681 2,423
Audit-related fees
2
377 377
Other assurance services
3
19 227
Other fees total 396 604
Total fees 3,077 3,027
1 Audit fees for foreign entities are expressed at the average exchange rate for the year.
2 Audit-related fees relate to interim financial statements reviews.
3 Other assurance services relate mainly to comfort letter procedures in respect to note issuance and volume certificates to support brand royalty expenses.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
153VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
8. OTHER INCOME/(EXPENSE)
US$ million 2021 2020
Net gain on disposals of PP&E and intangible assets – 4
Other expense (1) –
(1) 4
9. FINANCE INCOME AND EXPENSE
US$ million 2021 2020
Finance expense
Interest on bank and other borrowings and on lease liabilities
1
(41) (39)
Interest on long-term debt including amortisation of set-up fees (20) (25)
Net impact of hyperinflation
2
– (3)
Accretion expense net defined benefit liability (2) (2)
Foreign exchange loss (1) –
Other (4) (3)
(68) (72)
Finance income
Interest from cash and cash equivalents 9 8
Foreign exchange gain – 4
9 12
Finance expense – net (59) (60)
1 Includes an amount of $16m (2020: $12m) finance expense for leases in respect to IFRS 16 ‘Leases’.
2 Represents the net monetary loss impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
10. INCOME TAXES
Current income taxes
Analysis of income tax expense:
US$ million 2021 2020
Current tax
Current income tax (102) (96)
Current income tax prior years – 8
(102) (88)
Deferred tax
Deferred income tax 2 6
Deferred income tax prior years (1) (3)
1 3
Income tax expense (101) (85)
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021154
The reconciliation of income taxes, computed at the statutory tax rate, to income tax expense was as follows:
US$ million 2021 2020
EBT 253 175
Statutory tax rate 19% 19%
Income tax expense at statutory tax rate (48) (33)
Increase/(decrease) resulting from:
Impact of tax rates in foreign jurisdictions (24) (18)
Income not subject to tax 10 6
Expenses not tax deductible (10) (11)
Non-recognition of tax benefits in relation to current period tax losses or temporary differences (8) (10)
Recognition and utilisation of previously unrecognised tax losses or temporary differences – 3
Withholding tax (18) (19)
Other
1
(3) (3)
Income tax expense (101) (85)
Effective tax rate 40% 49%
1 Amongst others, includes movements related to uncertain tax positions.
Deferred income taxes
The significant components of the Company’s recognised deferred income tax assets and liabilities were as follows:
31 December 2021 31 December 2020
US$ million
Asset Liability Asset Liability
Property, plant and equipment 1 (36) 1 (43)
Intangible assets – (18) – (22)
Retirement benefits 10 (1) 10 (1)
Provisions 13 – 17 –
Withholding taxes – (14) – (16)
Tax losses carried forward
1
5 – 13 –
Other 73 (62) 33 (18)
102 (131) 74 (100)
Offsetting of balances (44) 44 (28) 28
Total 58 (87) 46 (72)
1 The recognised deferred tax asset relates to $2m (2020: $4m) tax losses which is supported by expected future taxable profits.
The changes in the net deferred income tax assets and liabilities were as follows:
US$ million 2021 2020
Balance at the beginning of year, net (26) (32)
In profit 1 3
In other comprehensive income (1) 1
Other (1) –
Foreign exchange differences (2) 2
(29) (26)
Unrecognised deferred tax assets relate to carry forward losses of $107m (2020: $98m) and tax credit carry forwards of $15m (2020: $12m).
Of the unrecognised carry forward losses $1m will expire at the end of 2023, $1m at the end of 2024, $16m at the end of 2025 and $89m
attheend of 2026 or later.
The unrecognised taxable temporary differences associated with undistributed retained earnings of investments in subsidiaries, joint ventures
andassociates amounts to $29m (2020: $25m).
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
155VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. PROPERTY, PLANT AND EQUIPMENT
2021
US$ million
Land Buildings
Machinery
and other
equipment
Construction
inprogress Total
Cost at 1 January 2021 52 339 642 116 1,149
Additions 11 14 30 105 160
Disposals – (1) (4) – (5)
Transfers 2 41 70 (113) –
Foreign exchange differences
1
(2) (10) (19) (4) (35)
Cost at 31 December 2021 63 383 719 104 1,269
Accumulated depreciation at 1 January 2021 – (68) (192) – (260)
Depreciation – (21) (62) – (83)
Disposals – 1 3 – 4
Foreign exchange differences
1
– 2 6 – 8
Accumulated depreciation at 31 December 2021 – (86) (245) – (331)
Net carrying value at 31 December 2021 63 297 474 104 938
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
2020
US$ million
Land Buildings
Machinery
and other
equipment
Construction
inprogress Total
Cost at 1 January 2020 55 319 552 92 1,018
Additions 2 16 25 109 152
Disposals (5) (4) (17) (9) (35)
Transfers – 7 69 (76) –
Foreign exchange differences
1
– 1 13 – 14
Cost at 31 December 2020 52 339 642 116 1,149
Accumulated depreciation at 1 January 2020 – (54) (141) – (195)
Depreciation – (17 ) (65) – (82)
Disposals – 3 17 – 20
Foreign exchange differences
1
– – (3) – (3)
Accumulated depreciation at 31 December 2020 – (68) (192) – (260)
Net carrying value at 31 December 2020 52 271 450 116 889
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
No assets have been pledged as security.
12. INTANGIBLE ASSETS
2021
US$ million
Shell licence
agreement Goodwill
Computer
software Other Total
Cost at 1 January 2021 139 79 91 57 366
Additions – – 8 – 8
Foreign exchange differences
1
(2) 2 – (1) (1)
Cost at 31 December 2021 137 81 99 56 373
Accumulated amortisation at 1 January 2021 (87) – (28) (29) (144)
Amortisation (5) – (9) (3) (17)
Accumulated amortisation at 31 December 2021 (92) – (37) (32) (161)
Net carrying value at 31 December 2021 45 81 62 24 212
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021156
2020
US$ million
Shell licence
agreement Goodwill
Computer
software Other Total
Cost at 1 January 2020 139 81 75 57 352
Additions – – 16 – 16
Foreign exchange differences
1
– (2) – – (2)
Cost at 31 December 2020 139 79 91 57 366
Accumulated amortisation at 1 January 2020 (82) – (19) (25) (126)
Amortisation (5) – (9) (4) (18)
Accumulated amortisation at 31 December 2020 (87) – (28) (29) (144)
Net carrying value at 31 December 2020 52 79 63 28 222
1 Foreign exchange differences include the impact from the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Refer to note 2.5.
Impairment test for goodwill
The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of the CGUs was determined
based on a fair value less cost of disposal calculation which requires the use of assumptions. The calculations use cash flow projections based on
an approved business plan covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated long-term
growth rate as shown below. The terminal value was calculated using the Gordon Growth formula.
Goodwill is monitored at the operating segment level on a non-aggregated basis. The Group has several non-aggregated operating segments,
however, the goodwill is allocated to Retail fuel and Commercial fuel given that substantially all activities of the acquired businesses relate to
thesetwo operating segments. Both the goodwill acquired in the 2019 VEOHL acquisition and the goodwill acquired from previous acquisitions
are allocated and considered for impairment testing together at the non-aggregated operating segments Retail fuel and Commercial fuel.
For thispurpose, a discounted cash flow analysis was used to compute the recoverable amount using the approved plan. This results in
81%ofthe carrying amount of goodwill being allocated to Retail fuel and 19% of the carrying amount being allocated to Commercial fuel.
The following table sets out the key assumptions for those CGUs that have a significant goodwill allocated to them:
2021
Retail
fuel
Commercial
fuel
Volume compounded annual growth rate 5.3% 2.8%
Gross cash profit compounded annual growth rate 5.0% 2.4%
Post-tax discount rate 10.6% 10.6%
Long-term growth rate 2.4% 2.4%
The methodology applied to each of the key assumptions used is as follows:
Assumptions Approach used to determine values
Volume compounded annual growth rate Volume growth over the five-year forecast period; based on past performance and
management expectations of market developments.
Gross cash profit compounded annual growth rate Based on past performance and management expectations of the future over the five-year
forecast period.
Post-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.
Long-term growth rate Based on the IMF GDP projections for the markets where Vivo Energy operates.
The Group considers the post-tax discount rate to be the most sensitive assumption. No impairment would occur, if the post-tax discount rate
applied to the cash flow projection of each CGU had been 1% higher than management estimates and all other assumptions in the table above
are unchanged. Goodwill in relation to the Retail fuel and Commercial fuel CGUs would only result in an indication of impairment if the post-tax
discount rates increased to 20.2% and 22.8%, respectively. There are no reasonable possible changes that could occur to key assumptions that
would reduce the recoverable amount below the carrying amount. A sensitivity analysis was performed in line with the Group’s TCFD scenario
outcomes to simulate the potential impact of climate change on the impairment assessment. Under this scenario, the Group still has sufficient
headroom for both the Retail and Commercial fuel segments.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
157VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
The Group also has interests in a number of associates and joint ventures that are accounted for using the equity method. A comprehensive
listing of the Group’s joint ventures and associates can be found in note 15 of the Company financial statements.
US$ million 2021 2020
At 1 January 231 227
Acquisition of businesses – 14
Share of profit 27 16
Dividend received (22) (24)
Foreign exchange differences (3) (2)
At 31 December 233 231
In December 2017, the Group acquired a 50% interest in 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. 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 table below provides summarised financial information for the carrying amount of the investment in SVL.
US$ million 2021 2020
At 1 January 156 164
Share of profit 15 8
Dividend received (15) (15)
Foreign exchange differences – (1)
At 31 December 156 156
The total assets of SVL as per 31 December 2021 are $262m (2020: $214m), of which $191m (2020: $134m) relate to current (including cash and
cash equivalents of $18m (2020: $30m)) and $71m (2020: $80m) to non-current assets. The current liabilities are $121m(2020:$70m) (including
borrowings of $48m (2020: $15m)) and non-current liabilities of $9m (2020: $9m). The revenue for the year ending 31 December2021 was
$364m (2020: $253m), and profit after income tax was $29m (2020: $18m). Other comprehensive loss, net of tax, for the year amounted to
$3m (2020: $1m). The 2021 profit includes amortisation and depreciation of $9m (2020: $9m), net finance expense of $2m (2020: $1m) and
income tax expense of $10m (2020: $12m).
The carrying value of SVL includes a notional goodwill of $96m calculated as the difference between the cost of the investment and the investor’s
share of the fair values of the investee’s identifiable assets and liabilities acquired. Since the notional goodwill is not shown as a separate asset,
and there is no objective evidence of impairment, itisnot required to be separately tested for impairment, nor does it trigger an annual
impairment test.
There are no contingent liabilities relating to the Group’s investments in joint ventures and associates.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021158
14. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
The Group has classified equity investments as financial instruments at FVTOCI (without recycling). These investments are measured using
inputs for the asset or liability that are in absence of observable market data, based on net asset value of the related investments (level 3 in the
IFRS 13 ‘Fair Value Measurement’ hierarchy) which management considers to best represent the fair value of the associated investment given
its nature. The fair value of the financial asset approximates the carrying amount. Since the value is based on the net asset value of the related
investment, no sensitivity analysis is presented.
The value is based on the net asset value of the related investments and therefore no sensitivity analysis is presented.
US$ million 2021 2020
At 1 January 12 9
Fair value adjustment 1 2
Foreign exchange differences (1) 1
At 31 December 12 12
Financial assets at fair value through other comprehensive income relate to the Group’s investment in Société de Gestion des Stocks Pétroliers
de Côte d’Ivoire S.A. (GESTOCI) in which it holds an interest of circa 17%. The Group does not have significant influence or joint control in
the investee. The investment is not held for trading and not a contingent consideration recognised by an acquirer in a business combination,
therefore, at initial recognition the Group has elected to account for the investment at fair value through other comprehensive income.
No dividends were received from GESTOCI in 2021 and 2020. 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 were no changes made during the year
tovaluation methods or the processes to determine classification and no transfers were made between the levels in the fairvalue hierarchy.
15. OTHER FINANCIAL ASSETS AND LIABILITIES
Other financial assets and liabilities are derivative instruments comprising forward foreign exchange contracts and cross-currency swaps with
afair value of $6m (2020: $(9)m). In 2020 the Group settled an interest rate swap on long-term borrowings and entered into a fixed-fixed cross-
currency swap. Other financial assets and liabilities are categorised as level 2 of the fair value hierarchy. There have been no transfers between
any levels during the year.
The specific valuation techniques used to value financial instruments that are carried at fair value using level 2 techniques are:
– The fair value of cross-currency swaps is calculated as the present value of the estimated future cash flows based on current market data
provided by third party banks; and
– The fair value of forward foreign exchange contracts is calculated by comparison with current forward prices of contracts for comparable
remaining terms.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
159VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
16. OTHER ASSETS
US$ million
31 December
2021
31 December
2020
Other government benefits receivable 114 45
Prepayments 85 86
VAT and duties receivable 72 59
Amounts due from dealers and joint ventures
1
64 60
Deposits
1
16 13
Indemnification asset on legal and tax claims
1
10 12
Employee loans
1
7 7
Other
1,2
30 35
398 317
Current 282 200
Non-current 116 117
398 317
1 Financial assets are measured at amortised cost and the fair value approximates the carrying amount.
2 The amount mainly comprises other non-current receivables.
Other government benefits receivable
US$ million Credit rating
31 December
2021
31 December
2020
Kenya B 31 –
Morocco BB+ 23 10
Senegal Ba3 20 24
Madagascar None available 12 –
Botswana BBB+ 10 1
Guinea None available 9 3
Other 9 7
114 45
The Group is exposed to credit risk in relation to other government benefits receivables. Based on management’s review on the recoverability
of these receivables it believes the credit risk in relation to these balances is relatively low. Other government benefits receivable are partially
provided for and presented net of provisions for impairment of $10m (2020: $24m). For the year $336m (2020: $103m) of other government
benefits were recognised in cost of sales for compensation of costs incurred.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021160
17. INVENTORIES
US$ million
31 December
2021
31 December
2020
Fuel 433 401
Lubricants 105 77
Other 26 2
564 480
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 $7,400m (2020: $5,976m). The carrying value of inventory represents the net realisable value. Provisions for write-downs
ofinventories to the net realisable value amounted to $7m as per 31 December 2021 (2020: $8m). Other inventory consists of energy saving
certificates, fittings for LPG and lubricants and spare parts.
18. TRADE RECEIVABLES
Trade receivables are measured at amortised cost and were as follows, as at:
US$ million
31 December
2021
31 December
2020
Trade receivables 521 410
Less: loss allowance of trade receivables (60) (66)
Trade receivables – net 461 344
The fair values of trade receivables approximate their carrying value as they are deemed short-term in their nature and recoverable within
12 months. Trade receivables include credit secured receivables of $223m (2020: $180m).
Movements in the loss allowance of trade receivables are as follows:
US$ million 2021 2020
At 1 January 66 55
Additions 7 14
Reversals (6) (6)
Utilisation (4) (1)
Foreign exchange differences (3) 4
At 31 December 60 66
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are measured at amortised cost and the fair value approximates the carrying amount.
US$ million
31 December
2021
31 December
2020
Cash 392 479
Cash equivalents:
Short-term placements 195 36
587 515
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
161VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
20. SHARE CAPITAL AND RESERVES
Share capital consists of 1,266,941,899 ordinary shares at the nominal value of $0.50 each. At 31 December 2021, 1,263,902,349 shares have
been issued and fully paid and entitle the holder to participate in dividends and 3,039,550 treasury shares. In 2019, the Company established an
employee benefit trust. This is a discretionary trust formed to enable the Company to issue shares to certain employees under the Company’s
share plans. The shares held by the trust are not considered as treasury shares for the purposes of Listing Rules disclosure. On a show of hands,
every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to
one vote. Shareholders will, under general law, beentitled to participate in any surplus assets in a winding up of the Company in proportion to
their shareholding.
Other reserves are disclosed in the consolidated statements of changes in equity.
2021 2020
Ordinary shares
Number of shares US$ million Number of shares US$ million
At 1 January 1,266,941,899 633 1,266,073,050 633
Share issuance related to share awards – – 868,849 –
At 31 December 1,266,941,899 633 1,266,941,899 633
21. EARNINGS PER SHARE
Basic and diluted EPS were computed as follows:
US$ million, unless otherwise indicated 2021 2020
Basic earnings per share
Net income 152 90
Attributable to owners 140 80
Weighted average number of ordinary shares (million) 1,264 1,266
Basic earnings per share (US$) 0.11 0.06
US$ million, unless otherwise indicated 2021 2020
Diluted earnings per share
Earnings attributable to owners 140 80
Diluted number of shares (million) 1,272 1,266
Diluted earnings per share (US$) 0.11 0.06
US$ 2021 2020
Adjusted diluted earnings per share
Diluted earnings per share 0 .11 0.06
Impact of special items – –
Adjusted diluted earnings per share 0.11 0.06
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021162
22. DIVIDENDS
Given the impact of COVID-19 on the business in the first half of 2020, the Board withdrew its recommendation to pay a final dividend for
2019and did not declare an interim dividend for the first half of 2020. On 18 December 2020 the Company paid an interim dividend of 2.65
cents per share, which is the amount that would have been paid to shareholders had the final dividend of the year ended 31 December2019
been paid rather than withdrawn. This interim dividend was paid out of distributable reserves and is reflected in the statement of changes in
equity. Payment of the final approved dividend for 2020 of 3.8 cents per share, amounting to $48m, was made on 25 June 2021.
In 2021, the Board approved an interim dividend of 1.7 cents per share, amounting to $21.5m. This dividend was paid on 10 September 2021 to
shareholders of record at close of business on 13 August 2021. The dividend was paid out of distributable reserves as at 30 June 2021.
The Board has declared a further interim dividend for the 2021 financial year of 4.0 cents per share, amounting to $51m. Payment of this
dividend is expected on 24 June 2022 to shareholders of record at close of business on 27 May 2022. The dividend willbe paid out of
distributable reserves as at 31 December 2021 and is not recognised in the statement of changes in equity.
US$ million 2021 2020
Interim dividend 21 34
Dividend 51 48
Total 72 82
23. BORROWINGS
US$ million Drawn on Interest rate Maturity
31 December
2021
31 December
2020
Notes 24/09/2020 5.125% 24/09/2027 349 349
VEI BV Revolving Credit Facility 27/02/2019 Euribor + 1.25%/1.75% – 59
Bank borrowings 280 274
629 682
Current 277 270
Non-current 352 412
629 682
1 The amounts are net of financing costs. Notes amount is $350m; financing costs are $1m (2020: $1m).
2 The amount included financing costs of circa $1m.
Current borrowings, consist of bank borrowings which carry interest rates between 1.5% and 16.1% per annum, are short-term in nature and
the carrying amount approximates the fair value.
In September 2020, the Group issued $350m notes with a coupon rate of 5.125% paid semi-annually and seven-year maturity. The notes are fully
redeemed at maturity. The fair value of the notes is approximately $364m based on quoted market prices at the end of the reporting period.
In May 2018, the Company established a multi-currency revolving credit facility of $300m. The multi-currency revolving credit facility was initially
utilised, in February 2019, with a drawdown of $64m, to fund the acquisition of VEOHL. The majority of the RCF facility matures in May 2023.
The RCF is a floating rate facility and the carrying amount approximates the fair value.
Besides the RCF, the Group has various unsecured short-term bank facilities extended to operating entities for working capital purposes.
The undrawn, unsecured short-term bank facilities of $1,171m (2020: $1,323m) include a large number of uncommitted facilities held with a
number of different banks. Most of these facilities are subject to an annual renewal process.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
163VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
23. BORROWINGS CONTINUED
The tables below provide an analysis of cash and non-cash movements in borrowings for the period:
US$ million 2021
Long-term debt Bank borrowings Total
1 January 408 274 682
Repayment of long-term debt (60) – (60)
Proceeds/(repayment) of bank borrowings – 11 11
Foreign exchange movements – (5) (5)
Other
1
1 – 1
31 December 349 280 629
1 Other includes financing costs and non-cash items.
US$ million 2020
Long-term debt Bank borrowings Total
1 January 371 229 600
Proceeds from long-term debt 517 – 517
Repayment of long-term debt (492) – (492)
Proceeds/(repayment) of bank borrowings – 26 26
Foreign exchange movements 7 8 15
Other 5 11 16
31 December 408 274 682
1 Mainly represents the issuance of fully redeemable notes to the amount of $350m on 24 September 2020 and RCF drawdowns.
2 Includes repayments of the Term Loan and RCF.
3 Other includes financing costs and non-cash items.
Key covenants:
The key covenants below relate to the VEI BV Revolving Credit Facility:
– Within 150 calendar days after the Group’s year-end its audited annual consolidated financial statements, unaudited annual non-consolidated
financial statements and the unaudited annual Group financial statements of each operating unit must be provided to the lender.
Within 90days after each half of each financial year, the unaudited non-consolidated financial statements, unaudited consolidated financial
statements and unaudited Group financial statements for each operating unit for the financial half-year must be provided to the lender.
– The financial covenants are minimum interest cover of 4x and maximum debt cover of 3x. With each set of financial statements, a financial
covenants compliance certificate has to be provided indicating the debt and interest cover. The debt cover follows the Group’s leverage ratio
calculation and interest cover indicates the Group’s ability to service its debt related interest with profits. These calculations take into account
bank permitted exemptions stipulated within the contractual agreement. 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. However, a change in
control clause within the RCF, could result in the facility being withdrawn on completion of the transaction.
The below key covenants relate to the VEI BV Notes:
– The financial covenants are a minimum fixed charged cover of 2x. The Notes carry customary restrictive covenants such as on asset sale,
securities over assets, mergers and guarantees subject in each case to some exemptions and permitted baskets, and a maintenance of listing
covenant. It also has a change of control clause giving each noteholder a put right if an entity, other than permitted ones, takes control of the
Company (Vitol is included as permitted entity).
No key covenants were breached in the last applicable period.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021164
24. PROVISIONS
Provisions include the following:
US$ million
31 December
2021
31 December
2020
Provisions 94 85
Retirement benefit obligations (note 25) 30 35
124 120
Current 19 16
Non-current 105 104
124 120
2021
US$ million
Uncertain
tax positions
Compulsory
stock
obligation
Legal
provisions Other Total
At 1 January 31 20 10 24 85
Additions 8 9 4 5 26
Utilisation (2) – (1) (4) (7)
Releases (4) – (1) (2) (7)
Foreign exchange differences – (1) – (2) (3)
At 31 December 33 28 12 21 94
Current – – 12 7 19
Non-current 33 28 – 14 75
33 28 12 21 94
Compulsory stock obligation provision
The oil market regulator in Morocco introduced an industry mechanism to enable oil market operators to maintain the necessary compulsory
stock volume requirement. This resulted in the recognition of a provision, which is an amount payable to the Moroccan oil fund regulator in
relation to the compulsory stock reserve requirement introduced in 1994. Refer to note 2.21 for further details.
Uncertain tax positions
This amount represents a provision for uncertain tax positions for non-income taxes, interest and penalties of $33m (2020: $31m). Refer to note
4.2 for further details regarding uncertain tax positions and note 16 for further details of the indemnification asset on tax claims.
Legal provision
This amount represents a provision of certain legal claims brought against the Group. The timing of any payout 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 2021. Refer to note 16 for further details of the indemnification asset on legal claims.
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.Other provisions relate mainly to employee related provisions of $10m (2020: $10m).
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
165VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. RETIREMENT BENEFITS
The Group operates defined benefit plans in multiple African countries, which include Cape Verde, Gabon, Ghana, Guinea, Côte d’Ivoire,
Mauritius, Morocco, Namibia, Reunion, Rwanda, Senegal, South Africa and Tunisia. The plans operated in Cape Verde, Ghana, Mauritius,
Morocco, Senegal and Tunisia combined present approximately 79% of the total liability for the Company. The valuations are carried out in line
with the regulatory requirements in each country considering the requirements under IAS 19 ‘Employee Benefits’. The plans offered in these
countries differ innature and consist of medical plans, pension plans, retirement indemnities, jubilees and long service award plans. These plan
benefits are linked to final salary and benefit payments are met as they fall due. The two exceptions to this are Gabon and Mauritius, which both
operate a funded plan. The plan in Gabon has a funding level of approximately 65% and Mauritius approximately 110%. In Gabon plan assets
are held in the form ofinsurance contracts. For Mauritius, plan assets are held in vehicles with standard investment risk, following a balanced
investment strategy, splitbetween equities, government bonds and asset-backed securities. The plan in Mauritius has been closed to future
accrual; from31 December 2014 onwards. However, the link to final salaries is being maintained for in-service employees.
US$ million 2021 2020
Current service cost 2 1
Accretion expense 2 2
4 3
US$ million 2021 2020
Defined benefit plans 4 3
Defined contribution plans 8 9
Total retirement benefit costs 12 12
US$ million
31 December
2021
31 December
2020
Consolidated statements of financial position obligations for:
Pension benefits 25 31
Other post-employment benefits 5 4
Total liability 30 35
The amounts recognised in the consolidated statements of financial position are determined as follows:
US$ million
31 December
2021
31 December
2020
Present value of funded obligations (13) (17)
Fair value of plan assets 13 12
Funded status of funded benefit obligations (net liability) – (5)
Present value of unfunded obligation (25) (26)
Unfunded status end of year (net liability) (25) (31)
Net defined benefit obligation (25) (31)
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021166
The movements in the defined benefit obligation for funded and unfunded post-employment defined benefits over the year are as follows:
2021 2020
US$ million
Pension
benefits Other Total
Pension
benefits Other Total
At 1 January 43 4 47 37 5 42
Current service costs 2 – 2 1 – 1
Benefits paid (3) – (3) (4) – (4)
Interest costs 1 1 2 2 – 2
(Gains)/losses from change in financial assumptions (3) – (3) 4 – 4
(Gains)/losses from change in demographic assumptions – – – 1 – 1
Actuarial (gains)/losses 1 – 1 1 (1) –
Foreign exchange differences (3) – (3) 1 – 1
At 31 December 38 5 43 43 4 47
The movements in the fair value of plan assets over the year are as follows:
2021 2020
US$ million
Pension benefits Total Pension benefits Total
At 1 January 12 12 11 11
Return on Plan Assets 3 3 – –
Employer contributions 2 2 3 3
Benefits paid (3) (3) (2) (2)
Foreign exchange differences (1) (1) – –
At 31 December 13 13 12 12
The plan assets shown above are invested in equities $7m (2020: $6m), government bonds $3m (2020: $4m), corporate bonds $2m (2020:$2m),
insurance contracts $0.3m (2020: $0.4m) and cash and cash equivalents $0.01m (2020: $0.03m).
The sensitivity of the defined benefit obligation to changes in weighted principal assumptions is:
Assumptions used Effect of using alternative assumptions
31 December 2021 31 December 2020 Range of assumptions Increase/(decrease)
Rate of increase in pensionable remuneration 4.39% 3.71% 0.50% – (0.50%) 2.67% – (2.54%)
Rate of increase in pensions in payment 2.28% 2.41% 0.50% – (0.50%) 1.53% – (1.42%)
Rate of increase in healthcare costs 13.72% 16 .20% 0.50% – (0.50%) 4.21% – (3.90%)
Discount rate for pension plans 5.13% 4.38% 0.50% – (0.50%) (4.93%) – 5.39%
Discount rate for healthcare plans 18.28% 21.13% 0.50% – (0.50%) (5.18%) – 5.70%
Expected age at death for persons aged 60:
Men 79.65 79.86
Women 83.69 83.61
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
167VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. RETIREMENT BENEFITS CONTINUED
The principal actuarial assumptions were as follows:
2021
Tunisia Senegal
Cape
Verde Mauritius Morocco
Côte
d’Ivoire Guinea Namibia Ghana Gabon Reunion Rwanda
South
Africa
Discount rate 9.50% 8.25% 4.00% 4.75% 2.50% 6.00% 15.00% 12.90 % 21.60% 5.25% 1.00% 12.0 0% 11. 3 0 %
Inflation rate 5.50% 1.75% 2.00% 2.50% 2.00% n/a n/a 8.10% 10.00% 2.75% 1.80% 4.75% 6.10%
Future salary
increases 6.00% 3.00% 2.00% 2.50% 6.00% 3.00% 8.50% n/a n/a 3.00% 2.58% 7.50% n/a
Future pension
increases n/a n/a 1.00% 2.98% n/a n/a n/a n/a n/a n/a n/a n/a n/a
2020
Tunisia Senegal
Cape
Verde Mauritius Morocco
Côte
d’Ivoire Guinea Namibia Ghana Gabon Reunion Rwanda
Discount rate 9.75% 8.00% 4.00% 2.75% 2.50% 6.00% 13. 50% 15.60% 23.00% 5.50% 1.00% 11. 2 5 %
Inflation rate 4.50% 1.75% 2.00% 0.50% 2.00% n/a n/a 10.10% 12.00% 2.75% 1.80% 4.75%
Future salary increases 6.00% 3.00% 2.00% 0.50% 6.00% 3.00% 8.00% n/a n/a 3.00% 2.58% 7.50 %
Future pension increases n/a n/a 1.00% 3.00% n/a n/a 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 2022 are $3m.
26. OTHER LIABILITIES
US$ million
31 December
2021
31 December
2020
Oil fund liabilities (note 2.21) 90 110
Other tax payable
2
84 75
Deposits owed to customers 75 72
Employee liabilities
1,3
46 44
Deferred income 17 14
Other 28 21
340 336
Current 187 171
Non-current 153 165
340 336
1 Financial liabilities amounting to $215m (2020: $215m) are measured at amortised cost and its fair value approximates the carrying amount.
2 Other tax payable mainly relates to VAT, withholding taxes and employee taxes.
3 Employee liabilities mainly relate to employee bonuses.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021168
27. LEASES
The Group has leases for motor vehicles, corporate offices, land, buildings and equipment. Leases have remaining lease terms of one year to
99years, some of which may include options to extend the leases for at least five years and some of which may include options to terminate
theleases within one year.
The consolidated statement of financial position shows the following amounts relating to leases:
US$ million
Land and
buildings
Motor
vehicles Total
Right-of-use assets, 1 January 2020 160 16 176
Depreciation of right-of-use assets (22) (3) (25)
Leases effective in 2020 43 7 50
Right-of-use assets, 31 December 2020 181 20 201
Depreciation of right-of-use assets (26) (4) (30)
Leases effective in 2021 44 4 48
Right-of-use assets, 31 December 2021 199 20 219
Lease liabilities are measured at amortised cost and the fair value approximates the carrying amount.
US$ million
31 December
2021
31 December
2020
Current lease liabilities 26 24
Non-current lease liabilities 135 119
161 143
The consolidated statement of comprehensive income shows the following amounts relating to leases:
US$ million 2021 2020
Interest expense (included in finance cost) (16) (12)
Depreciation of right-of-use assets (30) (25)
Expenses relating to short-term leases, low-value leases and variable leases not included in the lease liabilities (7) (7)
The consolidated statement of cash flows shows the following amounts relating to leases:
US$ million 2021 2020
Cash flows from financing activities
Principal elements of lease payments (33) (31)
Interest paid (14) (10)
(47) (41)
Other information related to leases was as follows:
2021 2020
Weighted average remaining lease term (years) 11 10
Weighted average discount rate 10% 11%
The Group recognised rental income of $24m (2020: $19m) as revenue in the statement of comprehensive income.
28. NET CHANGE IN OPERATING ASSETS AND LIABILITIES AND OTHER ADJUSTMENTS
US$ million 2021 2020
Trade payables 432 (203)
Trade receivables (140) 114
Inventories (10 4) 40
Other assets (95) 39
Other liabilities 29 (17)
Provisions 9 1
Other 64 74
195 48
1 Of which $59m relates to net finance expense (2020: $60m).
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
169VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
29. COMMITMENTS AND CONTINGENCIES
Commitments
The Group has purchase obligations for capital and operational expenditure, under various agreements, made in the normal course of business.
The purchase obligations are as follows, as at:
US$ million
31 December
2021
31 December
2020
Purchase obligations 21 22
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 and other regulatory regimes. The Group is required to exercise judgement in the assessment
of any potential exposures in these areas.
The Group’s subsidiary in Morocco received a report in January 2020 from the investigators in charge of the Conseil de la Concurrence’s (‘CDC’)
ongoing review of the competitive dynamics of the Moroccan fuel retailing industry. Vivo Energy Morocco provided submissions to the CDC
at their request. The report and these submissions were discussed at a private hearing of the CDC held on 21 and 22 July 2020 in Morocco.
After the hearing, the Royal Cabinet intervened and formed an independent commission to review the CDC investigation. This followed the
receipt of allegations regarding the CDC process and conduct. As announced in March 2021, the Royal Cabinet’s review concluded that the CDC
investigation “was marked by numerous procedural irregularities” and experienced “an obvious deterioration in the climate of deliberations”.
A new President has now been appointed to lead the CDC. We continue to believe that we have conducted our operations in accordance with
applicable competition laws, rules and regulations.
In the ordinary course of business, the Group is subject to a number of contingencies arising from litigation and claims brought by governmental,
including tax authorities, and private parties. The operations and earnings of the Group continue, from time to time, to be affected to varying
degrees by political, legislative, fiscal and regulatory developments, including those relating to the protection of the environment and indigenous
groups in the countries in which they operate. The industries in which the Group is engaged are also subject to physical risks of various types.
There remains a high degree of uncertainty around these contingencies, as well as their potential effect on future operations, earnings, cash flows
and the Group’s financial condition.
The Group is not currently aware of any other 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.
Information onthese plans is included in the Remuneration Report on page 100.
Management Equity Plan
In 2013, Vivo Energy Holding B.V. awarded to eligible employees either (1) Management equity plan (MEP) phantom options which entitled
option holders to a cash payment based on the value of Vivo Energy Holding B.V. shares upon exercise of their MEP 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 the share admission in
May2018. The option holders subsequently agreed to amend the terms of their outstanding phantom options such that 30% of the outstanding
phantom options were deemed to be exercised at share admission and 70% became exercisable on the first anniversary of the share admission
being 4 May 2019, for a period of 24 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 a nominal exercise price per share.
The MEP phantom options are fully vested and were fully settled during the year. The MEP related liability as at 31 December 2020 amounted to
$4m.
IPO Share Award Plan
In May 2018, Vivo Energy plc granted certain Executive Directors and Senior Managers one-off share awards (‘IPO Share Awards’) under the
2018 IPO Share Award Plan. The IPO Share Awards vest, subject to continued service and performance conditions relating to consolidated gross
cash profit growth and adjusted net income growth being met, in three equal tranches on the first, second and third anniversary of admission.
The IPO Share Awards Plan was fully settled during the year with no further outstanding options.
Long-Term Incentive Plan
Vivo Energy plc adopted the Vivo Energy 2018 Long-Term Incentive Plan (the ‘LTIP 2018’) in May 2018, the Vivo Energy 2019 Long-Term
Incentive Plan (the ‘LTIP 2019’) in March 2019, the Vivo Energy 2020 Long-Term Incentive Plan (the ‘LTIP 2020’) in March 2020 and the Vivo
Energy 2021 Long-Term Incentive Plan (the ‘LTIP 2021’) in March 2021. The LTIP 2018, LTIP 2019, LTIP 2020 and LTIP 2021 provide for grants
of awards over the shares of the Company in the form of share awards subject to continued employment and the performance conditions
relating to earnings per share, return on average capital employed and total shareholder returns over a three-year period. Executive Directors
and Senior Management of the Group are eligible for grants under the LTIP Incentive Plans. The LTIP 2018 was fully vested and settled during
the year.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021170
Restricted Share Award Plan
Vivo Energy plc adopted the Restricted Share Award Plan during the year. The Restricted Share Award Plan provides for grants of awards over
the shares of the Company in the form of share awards subject to continued employment over a 16-month period. Certain Senior Managers of
the Group are eligible for grants under the Restricted Share Award Plan.
The table below shows the share-based payment expense/(income) recognised in the statements of comprehensive income:
US$ million 2021 2020
Cash-settled share-based payments
Management Equity Plan 1 (3)
Equity-settled share-based payments
IPO Share Award Plan 1 1
Long-Term Incentive Plans 2018-2021 2 2
Restricted Share Award Plan 1 –
5 –
Movements in the number of shares and share options outstanding, and their related weighted average exercise prices, are as follows:
LTIP IPO
Restricted
Share
Awards MEP
In million LTIP 2018 LTIP 2019 LTIP 2020 LTIP 2021
IPO
Share
Awards
Restricted
Share
Awards
Average
exercise
price per
phantom
option
US$
Phantom
Options
Outstanding at 1 January 2021 3 4 5 – 1 – 0.05 3
Granted/Lapsed (1) – (1) 6 – 1 – –
Vested/Exercised (2) – – – (1) – – (3)
Outstanding at 31 December 2021 – 4 4 6 – 1 – –
Exercisable at 31 December 2021 1 – – – – – n/a –
Outstanding at 1 January 2020 3 5 – – 2 – 0.05 7
Granted/Lapsed – (1) 5 – – – – –
Vested/Exercised – – – – (1) – – (4)
Outstanding at 31 December 2020 3 4 5 – 1 – 0.05 3
Exercisable at 31 December 2020 – – – – – – n/a 3
The inputs of the valuation model for options granted during the year are as follows:
US$ LTIP 2020 LTIP 2021
Restricted Share
Awards
Fair value at grant date 1.22 1.36 1.49
Expected dividends as a dividend yield (%) 0% 0% 0%
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
171VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
31. RELATED PARTIES
Sales and purchases
US$ million
Joint ventures
andassociates Shareholders Total
2021
Sales of products and services and other income 23 56 79
Purchase of products and services, and other expenses 369 887 1,256
2020
Sales of products and services and other income 29 37 66
Purchase of products and services, and other expenses 269 837 1,106
The following table presents the Company’s outstanding balances with related parties:
US$ million
Joint ventures
andassociates Shareholders Total
31 December 2021
Receivables from related parties 54 5 59
Payables to related parties (81) (232) (313)
(27) (227) (254)
31 December 2020
Receivables from related parties 53 2 55
Payables to related parties (51) (160) (211)
2 (158) (156)
The receivables from related parties arise from sale transactions and loans to joint ventures. Receivables are due two months after the date
ofsales, are unsecured in nature and bear no interest. Loans to joint ventures are interest bearing and secured by the entire issued share capital
of the joint venture. An expected credit loss of $1m (2020: Nil) was recognised in relation to a joint venture receivable.
The payables to related parties arise mainly from purchase transactions at arm’s length, including a supplier agreement with Vitol Supply,
andaretypically due two months after the date of purchase. These payables bear no interest.
Key management compensation
Key management is considered to be the Directors (Executive and Non-Executive) and Senior Management.
US$’000 2021 2020
Salaries and other short-term employee benefits 9,451 7, 339
Share-based payments 2,496 3,087
Service fees 784 731
Post-employment benefits 744 622
13,475 11,779
1 Includes termination benefits in 2020 of $68,141.
2 Share-based payments include LTIP, IPO Share Awards and Restricted Share Awards.
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021172
Directors’ compensation
Directors’ compensations are disclosed from the date of appointment.
US$’000 2021 2020
Salaries and other short-term employee benefits 3,349 2,164
Share-based payments 812 2,202
Service fees 784 731
Post-employment benefits 170 165
5,115 5,262
1 Share-based payments include LTIP and IPO Share Awards.
2 Includes remuneration of the former Chief Financial Officer up to his leaving date of 25 May 2021.
In the year ended 31 December 2021, the aggregate gross pre-tax gain made on the exercise of the options was $1m (2020: $1m).
32. EVENTS AFTER BALANCE SHEET PERIOD
There have been no material subsequent events after the reporting period, up to and including the date that the financial statements
were authorised for issue, that would have required disclosure or adjustment of the Consolidated financial statements or the Company
financial statements.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
173VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
US$ million Notes
31 December
2021
31 December
2020
Fixed assets
Investments 5 1,913 1,913
1,913 1,913
Current assets
Debtors 6 7 5
Cash and cash equivalents 7 2 6
9 11
Creditors falling due within one year 8 (7) (5)
Current assets less current liabilities 2 6
Total assets less current liabilities 1,915 1,919
Net assets 1,915 1,919
Capital and reserves
Called up share capital 9 633 633
Share premium 4 4
Other reserves 10 1,136 1,210
Equity-settled incentive schemes 4 7
Retained earnings 138 65
Total equity 1,915 1,919
1 Profit for the financial year ended 31 December 2021 was $68m (2020: $74m).
The notes are an integral part of these consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 1 March 2022 and were signed
onits behalf by:
CHRISTIAN CHAMMAS DOUG LAFFERTY
Chief Executive Officer Chief Financial Officer
COMPANY STATEMENT OF FINANCIAL POSITION
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021174 175VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
US$ million
Called up
share capital
Share
premium
Other
reserve
1,2
Equity-settled
incentive
schemes
Retained
earnings Total
At 1 January 2021 633 4 1,210 7 65 1,919
Share awards transactions – – (5) (5) 5 (5)
Equity-settled incentive scheme – – – 2 – 2
Profit for the period – – – – 68 68
Dividends – – (69) – – (69)
As at 31 December 2021 633 4 1,136 4 138 1,915
US$ million
Called up
share capital
Share
premium
Other
reserve
1
Equity-settled
incentive
schemes
Retained
earnings Total
At 1 January 2020 633 4 1,244 6 (10) 1,877
Share issuance related to share awards – – – (1) 1 –
Equity-settled incentive scheme – – – 2 – 2
Profit for the period – – – – 74 74
Dividends – – (34) – – (34)
As at 31 December 2020 633 4 1,210 7 65 1,919
1 Included in reserves is a merger reserve ($82m) relating to the premium on shares issued as part of the consideration of the acquisition of Vivo Energy Overseas Holdings Limited (VEOHL),
formerly known as Engen International Holdings (Mauritius) Limited in March 2019.
2 Reserves include $5m related to market purchase of ordinary shares of the Company to satisfy option exercises under the Company’s IPO Share Award Plan and Long-Term Incentive
Plan (LTIP).
COMPANY STATEMENT OF CHANGES IN EQUITY
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021174 175VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
1. GENERAL INFORMATION
Vivo Energy plc (‘Vivo Energy’ or the ‘Company’) was incorporated as
a private limited company in the United Kingdom on 12 March 2018 and
re-registered as a public limited company on 9 April 2018. Vivo Energy
plc was incorporated in conjunction with the pre-IPO reorganisation
of the Group. On 10 May 2018 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. The Company operates
as the holding company of a group which distributes and sells fuel,
liquefied petroleum gas (LPG) and lubricants to Retail and Commercial
consumers under the Shell and Engen brands. The Group sells Aviation
fuels, using the Vitol Aviation brand, as well as unbranded marine fuels.
In addition, the Group generates revenue under convenience retail
and quick service restaurants byleveraging on its retail network.
The Company is registered in England and Wales and is
limited by shares (Registration number 11250655) under the
CompaniesAct2006. The address of the registered office is 5th floor,
The Peak, 5Wilton Road, London, SWIV IAN, United Kingdom.
The Company’s ownership structure is 36.0% owned by entities
that are members of the Vitol Group (comprising Vitol AfricaB.V.
and VIPAfrica II B.V.) and 27.1% owned by entities that are members
of Helios Investment Partners (including but not limited to HIPOils
MauritiusLimited and Helios Holdings Limited). The remaining
percentage is owned by a number of privateshareholders and
companies, none of whom own more than20% of the issued share
capital of the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies
have been applied consistently over the years.
2.1 Basis of preparation
The Company financial statements, for the years ended 31 December,
have been prepared on a going concern basis, under the historical cost
accounting rules, in accordance with Financial Reporting Standard 102
(‘FRS 102’) and those parts of the UK Companies Act 2006 applicable
to companies reporting under FRS 102.
The following disclosure exemptions available under FRS 102 have
been applied:
Section 7 Statement of cash flow and section 3 Financial statement
presentation paragraph 3.17(d)
Section 26 Share-based payment paragraph 26.18(b), 26.19, 26.21, 26.23
As permitted by section 408(3) of the Companies Act 2006,
the income statement of the Company is not presented in this
AnnualReport. The Company has not published its individual cash
flow statement as its liquidity, solvency and financial adaptability are
dependent on the Group rather than its own cash flows. The Group
consolidated financial statements as presented on page 123 include
the financial statements of the Company and all of its subsidiary
undertakings together with the Group’s share of the results of
associates made up to 31 December 2021.
In the process of applying the Company’s accounting policies, there are
no significant estimates or judgements which have a significant effect
on the amounts recognised in the financial statements. In preparing
the financial statements management has considered the impact that
climate change may have. There is currently no indication that climate
change will negatively impact the Company’s accounting estimates
and judgements, which would result in a material adjustment to the
financial statement balances. For further details, refer to note 2.1 in
the consolidated financial statements.
2.2 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment
in which the entity operates (the ‘functional currency’). The financial
statements are presented in United States dollars (‘US dollars’),
which is also considered to be the Company’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
thesettlement of such transactions and from the translation
at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Monetary assets and liabilities expressed in foreign currencies
attheend of the reporting period are translated into US dollars
atthemarket rate ruling at the end of the reporting period.
2.3 Income tax
The income tax expense for the period comprises current and
deferred tax. Income tax is recognised in the statements of
comprehensive income, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this
case, the income tax is also recognised in other comprehensive income
or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the reporting date in the
country where the Company operates and generates a taxable
income. The Company periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on timing
differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition
of goodwill. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the reporting
date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax is recognised on all timing differences at the reporting
date. Unrelieved tax losses and other deferred tax assets are only
recognised when it is probable that they will be recovered against
thereversal of deferred tax liabilities or other future taxable profits.
Deferred income tax is provided on timing differences arising on
investments in subsidiaries and associates, except for deferred income
tax liability where the timing of the reversal of the timing difference is
controlled by the Company and it is probable that the timing difference
will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income taxes assets and liabilities
relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021176 177VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
2.4 Financial instruments
The Company has adopted to apply the requirements of IFRS 9
in preparations of the financial statements. Financial instruments
are initially recognised when the Company becomes a party to the
contractual provisions of the instrument. Trade receivables are initially
recognised when they are originated. Financial assets are derecognised
when substantial risks and rewards ofownership of the financial asset
have been transferred. In cases where substantial risks and rewards
of ownership of the financial assets are neither transferred nor
retained, financial assets are derecognised only when the Company
has not retained control over the financial asset. Financial liabilities are
derecognised when itscontractual obligations are discharged, cancelled
or expired, andwhen its terms are modified and the cash flows
are substantially different. Subsequent to initial recognition financial
instruments aremeasured as described below.
Financial instruments measured at amortised cost
Except for debt instruments that are designated at fair value through
profit or loss (FVTPL) on initial recognition, financial instruments that
meet the following criteria are measured at amortised cost using the
effective interest method.
– They are held within a business model whose objective is to hold
assets in order to collect contractual cash flows; and
– The contractual terms of the instrument give rise on specified dates
to cash flows that are solely payment of principal and interest on
the principal amount outstanding.
The amortised cost is reduced by impairment losses. Finance income
or expense, foreign exchange gains and losses and impairments
are recognised in profit and loss. The following financial assets
andliabilitiesare classified as measured at amortised cost:
Cash and cash equivalents
Cash and cash equivalents include cash at bank. Cash equivalents
areshort-term, highly liquid investments that are readily convertible
toknown amounts of cash and which are subject to an insignificant
riskofchange in value.
Other financial liabilities
Financial liabilities are initially measured at fair value, net of transaction
cost and are subsequently measured at amortised cost using
the effective interest method, with interest expense recognised
on an effective yield basis except for short-term payables when
therecognition of interest would be immaterial.
2.5 Investments
Investments in subsidiary undertakings are stated at cost, less any
provision for impairment. The Group determines the recoverable
amount of an investment in subsidiaries where a trigger for
impairment is identified by assessing the external and internal
factors to determine indicators for impairment. External factors
include market capitalisation, market interest rates, changes in the
crude oil prices, changes in the competitive landscape, changes to
government regulations and the impact of COVID-19 on the business.
Internal factors include year-to-date performance, the five-year
strategic plan, outcomes of previous impairment assessments
performed and the impact of structural changes in the business.
2.6 Share-based payments
The Group operates a number of share-based payment plans using
the Company’s equity instruments. The fair value of the compensation
given in respect of these share-based payment plans is recognised
as a capital contribution to the Company’s subsidiaries over the
vesting period. The capital contribution is reduced by any payments
received from subsidiaries in respect of these share-based payments.
Details ofthe share-based payments, share option schemes and
share plans are disclosed in note 30 ’Share-based payments’ to
theconsolidated financial statements.
2.7 Dividend policy
Dividends paid and received are included in the Company financial
statements in the period in which the related dividends are actually
paid or received or, in respect of the Company’s final dividend for
theyear, approved by shareholders.
2.8 Share capital
Ordinary shares are classified as equity.
Where any Group company purchases the Company’s equity
share capital (treasury shares), the consideration paid is deducted
from equity attributable to the Company’s equity holders until the
shares are cancelled or reissued. Where such ordinary shares are
subsequently reissued, any consideration received is included in
equityattributable to the Company’s equity holders.
2.9 Going concern basis
The Company operates as an investment holding company for the
Vivo Energy Group, holding investments in Vivo Energy Holding B.V.
As the Company is an intrinsic part of the Group’s structure, the
Directors have a reasonable expectation that Group companies will
continue to support the Company through trading and cash generated
from trading for the foreseeable future. On 25 November 2021 the
Company and VIP II Blue B.V. (wholly owned, indirect subsidiary of
Vitol Investment Partnership II Limited, itself being an investment
vehicle advised by employees of the Vitol Company, referred to as
‘Vitol’) announced a recommended total cash offer of $1.85 per share
to be made by Vitol for Vivo Energy plc. The transaction is expected to
complete during the third quarter of 2022 and has a limited impact on
the Company’s financial statements at 31 December 2021. The current
Board is not expected to continue in position and will therefore not
be exercising oversight of the Group’s strategy and business plan.
While the intentions statement included within the announcement
on 25 November 2021, states that Vitol will continue to support the
Company with its strategy and growth ambitions, the Directors do
not have access to Vitol’s detailed plans for the business including the
future financing structure and therefore, there is no certainty that the
intentions of the acquirer have been incorporated into the Directors’
going concern assessment which represents a material uncertainty
that may cast significant doubt upon the Company’s ability to continue
as a going concern. At the time of approving the Company’s financial
statements, the Directors maintain a reasonable expectation that the
Company will have adequate resources to continue in operational
existence for the foreseeable future. The financial statements do
not include the adjustments that would result if the Company was
unable to continue as a going concern. Therefore, the Directors
consider it appropriate to adopt the going concern basis of accounting
in preparing the financial statements, notwithstanding the material
uncertainty caused by the expected change in ownership of the
Company and the Group during the period. For further details, refer
to note 2.1 in the consolidated financial statements.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021176 177VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
3. EMPLOYEE COSTS
US$ million 2021 2020
Salaries and wages 9 7
Social security costs 1 1
Share-based payments 2 2
Total 12 10
The monthly average number of full time equivalent employees as at 31 December:
No. 2021 2020
Directors 6 6
Administration and support 19 18
4. INCOME TAX
The Company is subject to income tax in the United Kingdom on its net income as adjusted for tax purposes, at the rate of 19%.
At 31 December 2021, the Company had accumulated tax losses of $2m (2020: $2m).
Deferred tax
No deferred tax asset has been recognised under the Company’s accounting policy for recognising deferred tax assets.
A reconciliation between the actual income tax expense and the theoretical amount that would arise using the applicable income tax rate
fortheCompany is as follows:
Reconciliation of effective tax
US$ million 2021 2020
Profit/(loss) before income tax 68 74
Tax calculated at 19% (13) (14)
Impact of:
Dividends received not subject to tax 13 14
Total income tax expense – –
5. INVESTMENTS
The investments relate solely to the 100% shareholding of Vivo Energy Holding B.V. Management have performed an impairment trigger
assessment for the investment. On 25 November 2021 the Group and VIP II Blue B.V. (wholly owned, indirect subsidiary of Vitol Investment
Partnership II Limited, itself being an investment vehicle advised by employees of the Vitol Group, referred to as ‘Vitol’) announced a
recommended total cash offer of $1.85 per share to be made by Vitol for Vivo Energy plc. At 31 December2021, the market capitalisation of
the investment, following the Vitol Offer announcement, exceeded its carrying amount. Including the assessment of various internal and external
factors management have not identified any triggers for impairments. Refer to note 2.5 for further details on the impairment of investments.
6. DEBTORS
US$ million
31 December
2021
31 December
2020
Related party receivable 5 3
Other receivables 2 2
Total 7 5
Receivable from related party arises from recharges of employee benefit costs. The amounts are unsecured, interest free and have no fixed date
of repayment and are repayable on demand. Debtors are measured at amortised cost and the carrying amount is equal to the fair value for the
period end.
7. CASH AND CASH EQUIVALENTS
US$ million
31 December
2021
31 December
2020
Bank 2 6
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021178 179VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
8. CREDITORS
US$ million
31 December
2021
31 December
2020
Due within one year
Trade and other payables 6 4
Related party payables 1 1
Total 7 5
Payables to related parties relates to salary related expenses and other costs. The amounts are unsecured, interest free, have no fixed date of
repayment and are payable on demand. Creditors are measured at amortised cost and the carrying amount is equal to the fair value for the
period end.
9. CALLED UP SHARE CAPITAL
Share capital consists of 1,266,941,899 (2020: 1,266,941,899) ordinary shares at the nominal value of $0.50 each. For further details, refer to
note20 in the consolidated financial statements.
10. OTHER RESERVES
The other reserves include the share capital reduction completed subsequent to the listing on the London and Johannesburg Stock Exchange
Market in 2018. Also included in other reserves is a merger reserve ($82m) relating to the premium on shares issued as part of the consideration
of the acquisition of VEOHL in March 2019.
11. DIVIDENDS
Given the impact of COVID-19 on the business in the first half of 2020, the Board withdrew its recommendation to pay a final dividend for 2019
and did not declare an interim dividend for the first half of 2020. On 18 December 2020 the Company paid an interim dividend of 2.65cents
per share, which is the amount that would have been paid to shareholders had the final dividend of the year ended 31 December2019 been
paid rather than withdrawn. This interim dividend was paid out of distributable reserves and is reflected in the statement of changes in
equity. The 2020 final dividend of circa 3.8 cents per share, amounting to $48m, was paid out on 25 June 2021. The dividend was paid out of
distributable reserves and recognised in the statement of changes in equity in 2021.
In 2021, the Board approved an interim dividend of 1.7 cents per share, amounting to $21.5m. This dividend was paid on 10 September 2021
toshareholders of record at close of business on 13 August 2021. The dividend was paid out of distributable reserves as at 30 June 2021.
The Board has declared a further interim dividend for the 2021 financial year of 4.0 cents per share, amounting to $51m. Payment of this
dividend is expected on 24 June 2022 to shareholders of record at close of business on 27 May 2022. The dividend will be paid out of
distributable reserves as at 31 December 2021 and is not recognised in the statement of changes in equity.
US$ million 2021 2020
Interim dividend 21 34
Dividend 51 48
Total 72 82
12. RELATED PARTIES
The Company discloses transactions with related parties which are not wholly owned with the same Group. It does not disclose transactions
with members of the same Group that are wholly owned. All transactions during the period under review have been with members of the
sameGroup that are wholly owned.
13. EVENTS AFTER BALANCE SHEET PERIOD
For the events after balance sheet period refer to note 32 in the consolidated financial statements.
14. OTHER MATTERS
The auditors’ remuneration for the current year in respect of audit and audit-related services was $0.3m (2020: $0.3m). Auditors’ remuneration
relating toother non-audit services has been disclosed in the consolidated financial statements, refer to note 7. The consolidated financial
statements have been completed in accordance with requirements SI 2008/489.
The Directors are remunerated by the Company for their services to the Group as a whole. No remuneration was paid to them specifically in
respect of their services to Vivo Energy plc for either year. Full details of the Directors’ remuneration are disclosed in ‘Directors’ compensation’
in note 31.
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021178 179VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
15. COMPANY UNDERTAKINGS
A list of all subsidiaries, indirectly held by Vivo Energy plc, except for Vivo Energy Holding B.V. which is 100% owned directly by Vivo Energy plc,
intheGroup as at 31 December 2021 are disclosed below. Unless otherwise stated, the share capital disclosed comprises ordinary shares and
stated ownership percentages represent the effective equity owned by the Group to the nearest whole number.
Subsidiary Incorporation Registered address Shareholding
Vivo Energy Marketing Tanzania Ltd. Bahamas H&J Corporate services, Ocean Centre, Montague Foreshore, East Bay Street,
P.O. Box SS-19084, Nassau, Bahamas
100%
Vivo Energy Botswana Pty Ltd. Botswana Plot 54349 Field Precinct, Office Block B, Central Business District,
Gaborone, Botswana
100%
Vivo Energy Burkina S.A. Burkina Faso Rond Point des Nations Unies, Ouagadougou Secteur 4 Section II Lot EX-TF
432 Parcelle III, Burkina Faso
59%
Plateau Africa Holdings Ltd. Canada 199 Bay Street, Suite No.4000, Toronto ON M5L 1A9, Canada 100%
Vivo Energy Cabo Verde S.A. Cape Verde Avenida Amilcar Cabral, C.P 4, Mindelo, São Vicente, Cabo Verde 100%
Sociedade Comercial de Navegacão
Concha Verde S.A.
Cape Verde Avenida Amilcar Cabral, C.P 4, Mindelo, São Vicente,
Cabo Verde
100%
Vivo Energy Côte d’Ivoire S.A. Côte d’Ivoire Rue des pétroliers, Zone Industrielle de Vridi, 15 BP 378 Abidjan, Côte d’Ivoire 67%
Vivo Energy Gabon S.A. Gabon 234, BD Bessieux, Face au Lycee Immaculee Conception, BP 224, Libreville, Gabon 60%
Vivo Energy Ghana Ltd. Ghana Rangoon Lane, Contonments City, Digital Address:
GL-045-46-56, P.O. Box 1097, Accra, Ghana
74%
Vivo Energy de Guinée S.A. Guinea Aeroport Gbessia, Commune de Matoto, BP 312, Conakry, Guinea 100%
Vivo Energy Guinée Mining SARL Guinea Aeroport Gbessia, Commune de Matoto, BP 312, Conakry, Guinea 100%
Vivo Energy Kenya Ltd. Kenya Vienna Court, East Wing, State House Road, P.O. Box 43561-00100,
Nairobi, Kenya
100%
Vivo Energy Malindi Ltd. Kenya Vienna Court, East Wing, State House Road, P.O. Box 43561-00100,
Nairobi, Kenya
100%
Vivo Energy East Africa Ltd. Kenya Vienna Court, East Wing, State House Road, P.O. Box 43561-00100,
Nairobi, Kenya
100%
Vivo Energy Provident Trust Ltd. Kenya Vienna Court, East Wing, State House Road, P.O. Box 43561-00100,
Nairobi, Kenya
100%
Vivo Marketing Kenya Ltd. Kenya Vienna Court, East Wing, State House Road, P.O. Box 43561-00100,
Nairobi, Kenya
100%
Vivo Oil Tanking Kenya Ltd. Kenya Vienna Court, East Wing, State House Road, P.O. Box 43561-00100,
Nairobi, Kenya
100%
Vivo Energy Liberia Ltd. Liberia c/o Law Offices of Yonah, Obey & Associates,
152 Cary Street, P.O. Box 3147, Monrovia Liberia
100%
Société Malgache des Pétroles
Vivo Energy S.A.
Madagascar Bâtiment B4 Golden Business Center – Lot II i A bis Morarano Alarobia-101,
Antananarivo-Madagascar
72%
Vivo Energy Ltd. Malawi Mission Road, Bulk Oil Sites, Makata Industrial Area, Blantayre, Malawi 100%
Vivo Energy Mali S.A. Mali Hippodrome, Route de Koulikoro BP 199, Immeuble N°3293 – Bamako, Mali 77%
Vivo Solar Mali S.A. Mali Dépot Vivo Energy Mali, Niaréla Sans fil, Zone Industrielle, BP 199 Bamako, Mali 77%
Vivo Energy Senegal Holdings Ltd. Mauritius Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius 100%
Vivo Energy Tunisia Holdings Ltd. Mauritius Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius 100%
Vivo Energy Madagascar Holdings Ltd. Mauritius Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius 100%
Vivo Energy Africa Holdings Ltd. Mauritius Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius 100%
Vivo Energy Mauritius Ltd. Mauritius Cemetery Road, Roche Bois, Port Louis, Mauritius 75%
Vivo Energy Overseas Holdings Ltd. Mauritius C/O IQ EQ Corporate Services (Mauritius) Ltd,
33, Edith Cavell Street, Port Louis, 11324, Mauritius
100%
Vivo Energy Maroc S.A. Morocco Immeuble Le Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf Casablanca, 20190 Maroc
100%
Vivo Energy Africa Services SARL. Morocco Casablanca Nearshore Park Shore 14 – 2ème étage Plateau 201, 1100 Bd Al
Qods – Quartier Sidi Maârouf, 20270, Casablanca, Morocco
100%
Terminal Energetique Jorf S.A.
Morocco
Immeuble Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf, Casablanca
100%
Terminal D’hydrocarbures Jorf S.A.
Morocco
Immeuble Zenith II, Lotissement Attaoufik,
Route de Nouaceur, Sidi Maarouf, Casablanca
100%
Terminal Energetique Agadir S.A.
Morocco
Zone Industrielle d’Anza (côté mer), Agadir 100%
Tidsi Gaz S.A.
Morocco
Zone Industrielle d’Anza (côté mer), Agadir 100%
VE Mozambique Trading Lda Mozambique EN4, Tchumene II, Talhao 19, Parcela 3380, Matola, Mozambique 100%
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021180 181VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
Subsidiary Incorporation Registered address Shareholding
Vivo Energy Mocambique Lda Mozambique Rua dos Desportistas, no.480, Edifício Maputo Business Tower, 110 Andar,
Fraccao A, Maputo, Mozambique
100%
Vivo Energy Holding B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Investments B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Cape Verde Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Morocco Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Mauritius Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Mali Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Newco Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Ghana Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Kenya Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Uganda Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Guinea Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Côte d’Ivoire Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Burkina Faso Holdings B.V. Netherlands Teleportboulevard 110, 1043 EJ Amsterdam, The Netherlands 100%
Vivo Energy Supply B.V. Netherlands Wilhelminakade 99, 3072 AP Rotterdam, The Netherlands 100%
Vivo Energy Sales and Marketing Ltd. Nigeria 1, Murtala Mohammed Drive, Ikoyi, Lagos, Nigeria 100%
Vivo Energy Reunion S.A. Reunion 1 Rue Sully Prud’Homme, ZI N°2, Le Port, 97823, Reunion 100%
Vivo Energy Rwanda Ltd. Rwanda Kacyiru, Gasabo, Umujyi wa Kigali, Rwanda 100%
Kabuye Depot Holding Company
Rwanda Ltd.
Rwanda Kacyiru, Gasabo, Umujyi wa Kigali, Rwanda 100%
Vivo Energy Senegal S.A. Senegal Quartier Bel-Air Route des Hudrocarbores, BP 144 Dakar, Senegal 94%
Vivo Energy Sierra Leone Ltd. Sierra Leone 37 Siaka Stevens Street, Freetown, Sierra Leone 100%
Vivo Energy South Africa (Pty) Ltd. South Africa 15th Floor Towers South, The Towers, 2 Heerengracht,
cnr Hertzog Boulevard, Foreshore 8001, Cape Town, South Africa
100%
Vivo Energy Tanzania Ltd. Tanzania Plot No. 263 Mandela Road, Kurasini, Temeke District,
Dar es Salaam, Tanzania
100%
Société Vivo Energy Tunisie S.A. Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 100%
Société Butagaz Tunisie S.A. Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 100%
Société Sudgaz S.A. Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 100%
Société D’Exploitation et de Gestion
des Points de Vente S.A.
Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 48%
Vivo Energy Uganda Ltd. Uganda Plot 9/11 7th Street Industrial Area, Kampala, Uganda 100%
Vivo Energy Malindi Uganda Ltd. Uganda Plot 9/11 7th Street Industrial Area, Kampala, Uganda 100%
Vivo Energy Uganda Provident Trust. Uganda Plot 9/11 7th Street Industrial Area, Kampala, Uganda 100%
Vivo Energy Namibia Ltd. United Kingdom 5th Floor – The Peak, 5 Wilton Road, London, SW1V 1AN, United Kingdom 100%
Vivo Energy UK Services Ltd. United Kingdom 5th Floor – The Peak, 5 Wilton Road, London, SW1V 1AN, United Kingdom 100%
Vivo Energy Zambia Ltd. Zambia Plot 3132, Buyantanshi Road, Lusaka, Zambia 100%
VE Zambia Legacy Ltd. Zambia 1394 Mushemi Road, Rhodes Park, P.O. Box 32256, Lusaka, Zambia 100%
Engen Marketing Ltd. Zambia Plot 3132, Buyantanshi Road, Lusaka, Zambia 100%
Vivo Energy Zimbabwe Holdings
(Private) Ltd.
Zimbabwe Engen House 71 Kaguvi Street P.O. Box 372,
Harare, Zimbabwe
49%
Vivo Energy Zimbabwe
(Private) Ltd.
Zimbabwe Engen House 71 Kaguvi Street P.O. Box 372,
Harare, Zimbabwe
49%
Vivo Energy Zimbabwe Operations
(Private) Ltd.
Zimbabwe Engen House 71 Kaguvi Street P.O. Box 372,
Harare, Zimbabwe
49%
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021180 181VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
A list of all joint ventures and associates, indirectly held by Vivo Energy plc, in the Group as at 31 December 2021 are disclosed below.
Unless otherwise stated, the share capital disclosed comprises ordinary shares and stated ownership percentages represent the effective
equityowned by the Group to the nearest whole number.
Investment Incorporation Registered address Shareholding
Baobab Energy Botswana Propriety Ltd. Botswana Plot 50369 Fairgrounds Office Park, Gaborone, Botswana 50%
Manutenção Caboverdeana Matec S.A. Cape Verde Rua dos Bombeiros – Zona Industrial CP 227 Mindelo,
São Vicente Republica de Cabo Verde
15%
Baobab Energy Côte d’Ivoire SARL Côte d’Ivoire Rue des pétroliers, Zone Industrielle de Vridi, 15 BP 378 Abidjan,
Côte d’Ivoire
33%
Stockage Petrolier de Côte d’Ivoire SARL Côte d’Ivoire Abidjan Port-bouet vridi canal de Petroliers 12 B.O 2141 Abidjan 12,
Côte d’Ivoire
20%
Société Gabonaise D’Entroposage des
Produits Pétrolière S.A.
Gabon P.O. Box 2218, Libreville, Gabon 23%
Société PIZO de Formulation de Lubrifiants S.A. Gabon Port Gentil, P.O. Box 699, Port Gentil, Gabon 17%
Chase Logistics Ltd. Ghana 1 Alema Avenue, Airport Residential Area, Accra,
P.O. Box AN 8743 Accra North, Ghana
8%
Road Safety Limited Company Ghana Tema Shell Installation, Fishing Harbour Road, Tema, Ghana 37%
Société Guinéene des Pétroles S.A. Guinea Boulevard Maritim, Kaloum, BP 656, Conakry, Guinea 17%
Kuku Foods Kenya Ltd. Kenya LR No. 20/8342/3 1st Ngong Avenue, P.O. Box 14885, 00100, Nairobi, Kenya 50%
Logistique Pétrolière S.A. Madagascar Immeuble FITARATRA- 5 ème étage, Rue Ravoninahitriniarivo, Ankorondrano 101,
Antananarivo, Madagascar
33%
Petroleum Importers Ltd. Malawi 6th Floor Unit House, Off Victoria Avenue, Blantyre, Malawi 25%
Energy Storage Company Ltd. Mauritius Cemetery Road, Roche Bois, Port Louis, Mauritius 38%
Mer Rouge Oil Storage Company Ltd. Mauritius Edith Cavell Street, Les Cascades, Port Louis, Mauritius 15%
Compagnie D’Entreposage
Communautaire S.A.
Morocco Route cotière 111, Km 6,5, Ghezouane,
Mohammedia, Morocco
32%
Ismailia Gaz S.A. Morocco Km 9 Route d’El Hajeb, Meknes, Morocco 40%
Maghreb Gaz S.A. Morocco Immeuble Tafraouti, Km 7,5 Route de Rabat, Ain Sebaa,
Casablanca, Morocco
37%
MFG Vivo Holding S.A. Morocco 59 Bd Zerktouni, 6eme Etage N°18, Casablanca 50%
Planet Pizza SARL Morocco 669 Bd El Qods, Ain Chock, Casablanca 50%
Société de Cabotage Pétrolier S.A. Morocco 27 Bd Zerktouni, Casablance, Morocco 39%
Société Dakhla des Hydrocarbures S.A. Morocco 11 Avenue de la Marine Royale, Dakhla, Morocco 33%
Société Marocaine de Stockage S.A. Morocco Lotissement des Pétroliers, Oued El, Maleh, Mohammedia, Morocco 12%
Sopetrole S.A. Morocco Zone Industrielle, lot N°2, Laayoune, Morocco 49%
Stogaz S.A. Morocco Rue Ferhat Hachad, Mohammedia, Morocco 50%
Sublime Food SARL Morocco Angle Rue Ibnou Al Atir, et 15 Bd Abdelkrim Khettabi, Casablanca 50%
Tadla Gaz S.A. Morocco Km 7,5 Route de Rabat, Ain Sebaa, Casablanca, Morocco 50%
TH Energy SARL Morocco 38 Av Driss Lahrizi N°32, Casablanca, Morocco 50%
Top Gourmandise SARL Morocco 7 Menara Mall, Av Mohamed VI, Marrakech 50%
Havi Properties (Proprietary) Ltd. Namibia 12th Floor Sanlam Centre, 157 Independence Avenue, Windhoek, Khomas,
9000, Namibia
50%
Synergy Foods (Proprietary) Ltd. Namibia Units 7 & 15 Hidas Shopping Centre, Windhoek, Khomas, 9000, Namibia 50%
Shell and Vivo Lubricants B.V. Netherlands Carel van Bylandtlaan 30, 2596 HR The Hague, The Netherlands 50%
Société Réunionnaise d’Entreposage S.A. Reunion 3 Rue Jacques Prevert, Riviere des Galets, 97420 Le Port 20%
Kuku Foods Rwanda Ltd. Rwanda Kimihurura, Gasabo and Umujyi wa Kigalirr, Rwanda 50%
Société de Manutention du Carburants
Aviation de Dakar Yoff S.A.
Senegal Dakar-Yoff, B.P. 8022 Yoff, Senegal 23%
Société Dakaroise D’Entreposage S.A. Senegal Cap des Biches, Rufisque, B.P. 59 Rufisque, Senegal 48%
Cimsahel Energy S.A. Senegal Sous préfecture de SINDIA, Senegal 47%
Société D’Entrepots Pétroliers
de Tunisie S.A.
Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 30%
Société Bitumes de Tunis S.A. Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 50%
Viniz Food S.A. Tunisia Rue de Syrie bloc C7-1 Tunis, Tunis, 1002, Tunisia 50%
Société d’Exploitation et de Gestion
des Pipelines de Rades S.A.
Tunisia 24-26 place du 14 janvier 2011 – 1001 Tunis, Tunisia 25%
Kuku Foods Uganda Ltd. Uganda Plot 49, Mackenzie Vale, Kololo, Kampala, Uganda 50%
15. COMPANY UNDERTAKINGS CONTINUED
FINANCIAL STATEMENTS
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021182 183VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
A list of all joint ventures and associates, indirectly held by Vivo Energy plc, which are part of the Shell and Vivo Lubricants Group as at
31 December 2021 are disclosed below. Unless otherwise stated, the share capital disclosed comprises ordinary shares and stated ownership
percentages represent the effective equity owned by the Group to the nearest whole number.
Investment Incorporation Registered address Shareholding
Shell et Vivo Lubrifiants Côte d’Ivoire SARL Côte d’Ivoire Zone industrielle de Vridi, Rue des pétroliers à Abidjan, Côte d’Ivoire 50%
Shell and Vivo Lubricants Ghana Ltd. Ghana Rangoon Lane, Cantonments City, Accra, Ghana 50%
Shell et Vivo Lubrifiants de Guinee SARL Guinea l’Aéroport Gbessia, Commune de Matoto, BP 312 Conakry, Guinea 50%
Société Guineenne des lubrifiants et
emballages S.A.
Guinea Boulevard Maritime, Commune de Kaloum, B.P. 709, Conakry, Guinea 35%
Shell and Vivo Lubricants Kenya Ltd. Kenya Vienna Court, State House Road, P.O. Box 43561, 00100, Nairobi, Kenya 50%
Société Shell et Vivo Lubrifiants Africa
Services SARL
Morocco 1 Rue Abou Abbas EL Araj Roches Noires, Casablanca, Morocco 50%
Société Shell et Vivo Lubrifiants du Maroc S.A. Morocco 1 Rue Abou Abbas EL Araj Roches Noires, Casablanca, Morocco 50%
Shell and Vivo Lubricants Nigeria Ltd. Nigeria 1 Murtala Muhammed Drive, Ikoyi, Lagos state, Nigeria 50%
Société Shell & Vivo Lubrifiants de
Tunisie SARL
Tunisia 24/26 place, 14 janvier 2011-1001, Tunisia 50%
Société Tunisienne des Lubricants de Radès
S.A.
Tunisia 24/26 place, 14 janvier 2011-1001, Tunisia 30%
Shell Vivo Lubricants Supply DMCC United Arab Emirates Almas Tower, 45 A Jumeirah Lakes Tower, P.O. Box 124848, Dubai,
United Arab Emirates
50%
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021182 183VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
FINANCE CALENDAR 2021/22
Financial year-end 31 December 2021
Annual results announcement 2 March 2022
Annual General Meeting 17 May 2022
Dividend payment 24 June 2022
Interim results announcement 26 July 2022
Interim payment date 9 September 2022
PLEASE NOTE THESE DATES ARE PROVISIONAL AND SUBJECT TO CHANGE.
ANNUAL GENERAL MEETING (AGM)
The Company’s AGM will be held at 2:00 p.m. on 17 May 2022. The Notice of the AGM will include further details, including the venue.
DIVIDENDS
In March 2021, the Board decided to increase the minimum payout ratio from 30% to 50% of attributable net income to reflect the Group’s
cashflows, strong balance sheet and continuing growth ambitions. The dividend remains progressive and the intent is for future dividends to
grow in line with earnings.
The Group paid an interim dividend of 1.7 cents per share in September 2021, amounting to $21 million. The Board has declared a further interim
dividend for the 2021 financial year of 4.0cents per share, amounting to $51 million. This will result in a full year dividend of 5.7 cents pershare,
amounting to $72 million for the year.
Dividend per share Record date Payment date
Interim dividend 1.7 US cents 13 August 2021 10 September 2021
Dividend 4.0 US cents 27 May 2022 24 June 2022
All dividends will be declared in US dollars. Shareholders who hold shares through the London Stock Exchange and are resident in the UK,
mayelect to receive their dividends in pound sterling and shareholders who hold shares through the Johannesburg Stock Exchange will
automatically receive their dividends inSouth African Rand.
SHAREHOLDER INFORMATION
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021184 185VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATION
MAJOR SHAREHOLDERS
As at 31 December 2021, the following interests in the ordinary share capital of the Company have been notified to the Directors under
theDisclosure Guidance and Transparency Rules (DTR 5).
Shareholder name
31 December 2021
Percentage
Vitol Group 36.05%
Helios Investment Partners 27.09%
Petronas Marketing International SDN BHD 3.93%
1 The Vitol Group includes Vitol Africa B.V. and VIP Africa II B.V.
2 Helios Investment Partners includes but is not limited to HIP Oils Mauritius Limited and Helios Holdings Limited.
As of 1 March 2022, the Directors have not received any notifications of changes in the shareholders’ positions from 31 December 2021.
The rights attached to the ordinary shares of the Company held by these shareholders are identical in all respects. The threshold for notifications
is in accordance with DTR 5.1.2. If the Company has not been informed that interests have fallen below this threshold the last notification is
included in this table.
MANAGING YOUR SHAREHOLDING
Equiniti Limited, the Company Registrar, provides our shareholderswith online access to information regarding their investments
aswellastheservices to assist in managing your shareholding on an online platform or telephonically.
Equiniti Limited can be contacted via telephone on 0371384 2030 (+44 371 384 2030 outside the UK). Lines are open between
08:30–17:30(UK Time), Monday to Friday excluding public holidays inEnglandand Wales. Furthermore you may contact
theRegistrarbyemailing enquiries@equinitishareviewdealing.com.
The Registrar is located at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom.
SHAREHOLDER SECURITY
In recent years, share fraud has been increasing at an alarming rate. This entails shareholders receiving unsolicited phone calls or investment
opportunities, known as boiler room scams. These opportunities are usually high risk and turn out to be worthless investments. The callers
maysometimes imply a connection to VivoEnergy and provide misleading and incorrect information.
Investors are advised to be very wary of unsolicited advice, offers to sell shares at a discount or buy at a premium, or offers of free company
reports. If you have been contacted by an unauthorised company or approached by investors with unsolicited advice you should contact the
Financial Conduct Authority (FCA) using the share fraud reporting form at www.fca.org.uk/consumers/report-scam-us. You can find out more
about investment security by visiting the FCA’s website orby calling the helpline on 0800 111 6768 (overseas callers dial +44207 066 1000).
KEEPING IN CONTACT
Our Annual and Interim Reports, trading results, announcements andpresentations can be found on our website, www.vivoenergy.com.
Here you can find details of ourbusiness and operations and extensive information about the VivoEnergy Group.
To support efficient communication as well as being environmentally friendly, we encourage shareholders to register to the mailing list
ontheinvestor relations website.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021184 185VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
SUMMARY INCOME STATEMENT
US$ million 2021 2020 2019 2018 2017
Revenues 8,458 6 ,918 8,302 7,549 6,694
Cost of sales (7,765) (6,301) (7,627 ) (6,924) (6,080)
Gross profit 693 617 675 625 614
Selling and marketing cost (222) (226) (224) (197) (194)
General and administrative cost (185) (176) (165) (183) (197)
Share of profit of joint ventures and associates 27 16 22 28 16
Other income/(expense) (1) 4 2 3 3
Earnings before interest and tax (EBIT) 312 235 310 276 242
Finance expense – net (59) (60) (64) (47) (31)
Earnings before tax (EBT) 253 175 246 229 211
Income taxes (101) (85) (96) (83) (81)
Net income 152 90 150 146 130
NON-GAAP MEASURES
US$ million, unless otherwise indicated 2021 2020 2019 2018 2017
Volumes (million litres) 10,302 9,637 10,417 9, 351 9,026
Gross cash profit 777 697 743 680 666
EBITDA 442 360 416 366 326
Adjusted EBITDA 447 360 431 400 376
Adjusted net income 157 90 162 178 171
Adjusted diluted EPS (US$)
1
0 .11 0.06 0.12 0.14 0.13
1 EPS for 2017 is the updated earnings per share based on the capital structure of the Group at 31 December 2018 (including the IPO reorganisation impacts on the weighted average
number of ordinary shares).
SEGMENT INFORMATION
US$ million, unless otherwise indicated FY 2021 H2 2021 H1 2021 FY 2020 H2 2020 H1 2020
Volumes (million litres)
Retail 6,090 3,151 2,939 5,456 2,975 2,481
Commercial 4,063 2,068 1,995 4,045 1,974 2,071
Lubricants 149 74 75 136 70 66
Total 10,302 5,293 5,009 9,637 5,019 4,618
Gross cash unit margin
($/’000litres)
Retail fuel (excluding Non-fuel retail) 75 72 78 76 83 66
Commercial 48 49 47 45 47 43
Lubricants 628 633 616 570 612 537
Total 75 74 77 72 79 65
Gross cash profit
Retail (including Non-fuel retail) 490 246 244 438 262 176
Commercial 194 100 94 181 92 89
Lubricants 93 46 47 78 43 35
Total 777 392 385 697 397 300
HISTORICAL FINANCIAL INFORMATION
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021186
OTHER INFORMATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
US$ million
31 December
2021
31 December
2020
31 December
2019
31 December
2018
31 December
2017
Assets
Non-current assets
Property, plant and equipment 938 889 823 622 585
Right-of-use assets 219 201 176 148 148
Intangible assets 212 222 226 134 120
Investments in joint ventures and associates 233 231 227 223 219
Deferred income taxes 58 46 34 36 43
Financial assets at fair value through other comprehensive income 12 12 9 8 6
Other assets 116 117 110 101 83
1,788 1,718 1,605 1,272 1,204
Current assets
Inventories 564 480 517 441 353
Trade receivables 461 344 451 444 412
Other assets 282 200 257 255 229
Income tax receivables 13 11 9 19 8
Other financial assets 6 – – 3 –
Cash and cash equivalents 587 515 517 393 423
1,913 1,550 1,751 1,555 1,425
Total assets 3,701 3,268 3,356 2,827 2,629
Equity and liabilities
Total equity
Attributable to equity holders of Vivo Energy 837 767 751 533 402
Non-controlling interest 46 45 53 48 46
883 812 804 581 448
Liabilities
Non-current liabilities
Lease liabilities 135 119 104 98 121
Borrowings 352 412 294 314 396
Provisions 105 104 102 75 92
Deferred income taxes 87 72 66 51 51
Other liabilities 153 165 160 143 169
832 872 726 681 829
Current liabilities
Lease liabilities 26 24 21 13 12
Trade payables 1,434 1,048 1,257 1,062 869
Borrowings 277 270 306 286 259
Provisions 19 16 14 15 21
Other financial liabilities – 9 3 – 1
Other liabilities 187 171 178 165 152
Income tax payables 43 46 47 24 38
1,986 1,584 1,826 1,565 1,352
Total liabilities 2,818 2,456 2,552 2,246 2,181
Total equity and liabilities 3,701 3,268 3,356 2,827 2,629
187VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (‘TCFD’) INDEX
Our detailed TCFD disclosures can be found in this Annual Report on the following pages:
TCFD Recommendation Reference in the 2021 Annual Report Page no.
Governance
Disclose the organisation’s
governance around climate-
related risks and opportunities.
a) Describe the board’s oversight of
climate-related risks and opportunities.
– TCFD – Governance
– Section 172(1) Statement
– Risk Management
58
63
64 to 73
b) Describe management’s role in assessing
and managing climate-related risks
and opportunities.
– Our Environmental Impact
– TCFD – Governance
52 to 55
58
Strategy
Disclose the actual and potential
impacts of climate-related
risks and opportunities on
the organisation’s businesses,
strategy, and financial planning
where such information
is material.
a) Describe the climate-related risks and
opportunities the organisation has identified
over the short-, medium-, and long-term.
– TCFD – Strategy
– Risk Management
59 to 61
64 to 73
b) Describe the impact of climate-related risks
andopportunities on the organisation’s
businesses, strategy, and financial planning.
– TCFD – Strategy
– Risk Management
59 to 61
64 to 73
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C
orlower scenario.
– TCFD – Strategy 59 to 61
Risk Management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.
a) Describe the organisation’s processes for
identifying and assessing climate-related risks.
– TCFD – Risk Management
– Risk Management
62
64 to 73
b) Describe the organisation’s processes
formanaging climate-related risks.
– TCFD – Risk Management
– Risk Management
62
64 to 73
c) Describe how processes for identifying,
assessing, and managing climate-related risks
are integrated into the organisation’s overall
risk management.
– TCFD – Risk Management
– Risk Management
62
64 to 73
Metrics and Targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where such
information is material.
a) Disclose the metrics used by the
organisationtoassess climate-related risks
andopportunities in line with its strategy
andrisk management process.
– TCFD – Metrics and Targets
– Risk Management
62
64 to 73
b) Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions
andthe related risks.
– TCFD – Metrics and Targets
– Our Environmental Impact
62
52 to 55
c) Describe the targets used by the organisation
to manage climate-related risks and
opportunities and performance against targets.
– TCFD – Metrics and Targets
– Our Environmental Impact
62
52 to 55
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021188
OTHER INFORMATION
GLOSSARY
Term Description
ABC Anti-bribery and corruption
AML Anti-money laundering
ATM Automated teller machine
B2B Business to business
B2C Business to consumer
BCCP Business Continuity and Contingency Plan
CAGR Compound annual growth rate
CAPEX Capital expenditure
CGU Cash-generating unit
CO
2
Carbon dioxide
COCO Company-owned and company-operated
CODO Company-owned and dealer-operated
CSO Compulsory stock obligation
DODO Dealer-owned and dealer-operated
DPO Days purchases outstanding
DSO Days sales outstanding
DTR Disclosure Guidance and Transparency Rules
EBIT Earnings before finance expense, finance income and income taxes
EBITDA Earnings before finance expense, finance income and income taxes, depreciation and amortisation
EBT Earnings before income taxes
ECL Expected credit loss
EPS Earnings per share
ERP Enterprise Resource Planning
ESG Environmental, Social and Governance
ETR Effective tax rate
EURIBOR Euro Interbank Offered Rate
FCA Financial Conduct Authority
FMCG Fast-moving consumer goods
FRC Financial Reporting Council
FTSE Financial Times Stock Exchange
FVTOCI Fair value through other comprehensive income
FVTPL Fair value through profit and loss
FY Full year
GAAP Generally Accepted Accounting Principles
GDP Gross domestic product
GHG Greenhouse gas
H1 Six-month period 1 January to 30 June
H2 Six-month period 1 July to 31 December
HR Human resources
189VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Term Description
HSSEQ Health, safety, security, environment and quality
IASB International Accounting Standards Board
IEA International Energy Agency
IFRS International Financial Reporting Standards
IFRS IC IFRS Interpretations Committee
IMF International Monetary Fund
IMP Inventory Management Plan
IPO Initial public offering
IRR Internal rate of return
JV Joint venture
KFC Kentucky Fried Chicken
KPI Key performance indicator
KT Kiloton
KYC Know Your Customer
Leverage Ratio Net debt, including lease liability, divided by the last 12 months’ adjusted EBITDA
LPG Liquefied petroleum gas
LTIP Long-Term Incentive Plan
M&A Mergers and acquisitions
NCI Non-controlling interest
NGO Non-governmental organisation
OCI Other comprehensive income
OTS Open Tender System
OU Operating unit
PP&E Property, plant and equipment
PPE Personal protective equipment
Q Quarter
QSR Quick service restaurant
RCF Revolving credit facility
ROACE Return on average capital employed
ROU Right-of-use
SDG Sustainable development goal
SVL Shell and Vivo Lubricants B.V.
TCFD Task Force on Climate-Related Financial Disclosures
TRCF Total recordable case frequency
TSR Total shareholder return
UK United Kingdom
US United States
VEI BV Vivo Energy Investments B.V.
VEOHL Vivo Energy Overseas Holdings Limited
GLOSSARY CONTINUED
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021190
OTHER INFORMATION
KEY CONTACTS AND ADVISERS
REGISTERED OFFICE
Vivo Energy plc
The Peak, 5th Floor
5 Wilton Road, London
SWIV IAN
United Kingdom
DOMICILE
Registered in England and Wales
N o . 112 5 0 6 5 5
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
COMPANY SECRETARY
Minna Gonzalez-Gomez
PRINCIPAL LEGAL ADVISERS
Freshfields Bruckhaus Deringer LLP
PRINCIPAL BANKERS/SPONSOR
JP Morgan Securities plc
REGISTRY
In the UK: 0371 384 2030
Outside the UK: +44 371 384 2030
INVESTOR RELATIONS
Email: investors@vivoenergy.com
Tel: +44 20 3034 3735
MEDIA ENQUIRIES
Email: vivoenergy@tulchangroup.com
Tel: +44 20 7353 4200
WEBSITE
vivoenergy.com
191VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021
OTHER INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report 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, but
are not the exclusive means of identifying
such statements. 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, which
reflect estimates and assumptions made by
the Group’s management. These estimates
and assumptions reflect the Company’s
bestjudgement based on currently known
market conditions and other factors.
In particular, the statements in the Risk
section on page 64 of this report regarding
the Group’s strategy, targets and other future
events or prospects are forward-looking
statements. 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.
In addition, management’s assumptionsabout
future events may prove to be inaccurate.
You should be aware that a number of
important factors could cause actual results
to differ materially from the plans, objectives,
expectations, estimates andintentions
expressed in such forward-looking statements.
Given these risks and uncertainties, you should
not relyonforward-looking statements as a
prediction of actual results.
Such forward-looking statements contained
in this report are current only as of this
report. The Company and the Directors
do not intend, and will not update any
forward-looking statements set forth in this
report. You should interpret all subsequent
written or oral forward-looking statements
attributable to the Group or to persons
acting on the Group’s behalf as being qualified
by the cautionary statements inthis report.
As aresult, you should not place undue
reliance onsuchforward-looking statements.
This report may contain references to
VivoEnergy’s website. These references are
for convenience only and Vivo Energy is not
incorporating into this report any material
posted on www.vivoenergy.com.
VIVO ENERGY PLC | ANNUAL REPORT & ACCOUNTS 2021192
OTHER INFORMATION
Design and production by Radley Yeldar www.ry.com
This report has been printed on Claro Silk and Munken, papers which are
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VIVO ENERGY PLC
The Peak, 5th Floor
5 Wilton Road, London
SWIV IAN
United Kingdom