I have no particular expectation for their refining business,...

I have no particular expectation for their refining business, which will probably continue to remain very volatile.

Probably more interesting to focus on their 2 other divisions : retail and commercial.
Based on their FY 22 results, these 2 divisions together generated $445 m of underlying free cash flow* (vs 273 m the year before).
This is significant as this free cash flow represents 10 % of the enterprise value.
However, it is a bit biased because this free cash flow is calculated before the effect of working capital**, financial charges and taxes.
This is not a problem for working capital (positive contribution to cash flow in FY 22) and financial charges (the group was net cash at 31/12/22).
But we probably need to adjust the above free cash flow for a normal tax rate of 30 %.
If we do this, the underlying free cash flow for retail and commercial (after tax) was around 288 m in FY 22 and still represents a significant free cash flow yield of 6.4 %.

This level of free cash flow (excluding the refining business) does not reflect today's potential of free cash flow for 2 main reasons :
- it does not fully include the 2 recent acquisitions (Coles Express*** and OTR),
- it does not take into account the large improvement of EBITDA (RC) during H1 23 : + 41 % yoy (excluding refining business).

If we include these 2 elements to get a potential free cash flow after tax (excluding the refining business), Viva Energy has probably a free cash flow yield of around 8 %.



* Also good to see that this free cash flow was fully explained by large EBITDA (585 m in FY 22 vs 405 m in FY 21)
** my understanding. I may be wrong on that point.
*** Coles Express consolidated only since 1/5/23 and OTR acquisition not yet finalised.