Refining NZ 2016 Annual Report

Directors’ statement
The Directors are responsible for the preparation of the financial
statements and other information included in this Annual
Report. The financial statements authorised for issue by the
Board of Directors and dated on 27 February 2017, have been
prepared in conformity with generally accepted accounting
practice to give a true and fair view of the financial position of
the Group and the results of their operations and cash flows.
The Company appoints an independent licensed auditor to audit
the financial statements prepared by the Directors and to
express an opinion on these financial statements. The
independent licensed auditors’ report, which sets out their
opinion and the basis of that opinion, is set out on page 83 of
the Annual Report.
The Annual Report of The New Zealand Refining Company
Limited is signed on behalf of the Board by:
S C ALLEN
M TUME
15 March 2017

2 Chairman and CEO’s Report

4 Strategy

10 Governance

22 Shareholder Information

24 Directors’ Profiles

28 Leadership Team Profiles

33 Economic Performance

83 Independent Auditor’s Report

86 Trend Statement

87 Glossary

88 Corporate Directory


Contents

Chairman
and CEO’s Report
w
KEY STRATEGIC METRICS
SIMON ALLEN
CHAIRMAN
SJOERD POST
CHIEF EXECUTIVE OFFICER
REFINING NZ
ANNUAL REPORT 2016
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32
CHAIRMAN AND CEO’S REPORT
CH
AIRMAN
AND
CEO’
S REPORT
Upstream at Origin Energy. During the year Tim Wall and
Stuart Brown resigned. This month Andrew Warrell resigned as
a Director. A replacement for Andrew has yet to be confirmed.
We wish to acknowledge Peter for his long-standing and
professional contribution as an Independent Director. At the
same time we thank Tim, Stuart and Andrew for their
respective contributions and welcome Paul to the Refining
NZ Board.
FUTURE OUTLOOK
The Directors are confident that we are building a
sustainable refining business, able to compete with Asia
Pacific refiners, and to manage future market challenges.
It is clear that the way forward is based around team
performance, solid reliability, outstanding product quality,
and investment in growth.
BUSINESS ENVIRONMENT
Our 2016 business performance was marked by continued
strong demand for gasoline on the back of new vehicle growth
– both in New Zealand and Asia - and New Zealand jet fuel
demand on the back of continued growth in tourism. Diesel
demand was more muted across the region as a result of
slower growth in the Chinese economy. The Gross Refining
Margin (GRM) for 2016 averaged USD 6.47 per barrel.
Operational availability was 96.9% reflecting the planned
hydrocracker shutdown in April 2016 and a world-class unplanned
downtime for the year of 0.85% - an excellent achievement, this
being the first full year of operations of our new petrol making
unit, Te Mahi Hou (TMH). The refinery processed a record 42.7
million barrels of crude oil. Our uplift over the Singapore
Complex Margin averaged USD 3.22 per barrel underpinned by
the contribution from TMH. Free cash flow* at $47 million was
strong and meant we were able to finish the year close to the
Company’s target gearing ratio (10-20 %). This, despite the fact
that the exchange rate remained high with the New Zealand
dollar averaging USD 0.70 for the year (2015: USD 0.70).
STRATEGY
The Company’s aspiration to be the manufacturing and
supply partner of choice for New Zealand and the supporting
strategies behind that aspiration remain unchanged (see
strategy section on page 5 for further detail).
Having successfully commissioned TMH in the fuels supply
chain, our growth focus shifted to attractive smaller projects
with short payback periods. In 2016 we continued to optimise
the performance of TMH, made operational changes to
improve the flexibility of our bitumen production, and started
to balance our steam make across the refinery. Together these
initiatives lifted our GRM by around USD 0.10 per barrel.
Going forward we will continue to invest in a ‘funnel’ of
sustainable, smaller growth projects. Some are already well
advanced, notably the First Gas project which will double our
access to natural gas in 2017. We are also increasing the pumping
capacity on the Refinery Auckland Pipeline (RAP) to ensure we
can continue to meet New Zealand’s future fuel demand. And
finally, we are getting closer to applying for environmental
consent for dredging to allow larger crude cargoes to the refinery.
STAFF SHARE SCHEME
In March 2016, our first offer under our staff share purchase
scheme was well received. Rewarding our committed and
talented team for meeting a set of business performance
hurdles, the scheme will add to the culture of high
performance we are embedding at Refining NZ.
SHAREHOLDER RETURNS
The Directors resolved to pay a fully imputed final dividend of
6 cents per share to be paid on 30 March 2017, with a record
date of 16 March 2017. With an interim dividend of 3 cents
paid in September, the total dividend payment for the year
is 9 cents.
BOARD CHANGES
At the Annual Meeting in May 2016, shareholder’s approved
a change to the Constitution of the Company. The Board now
consists of a majority of Independent Directors and three
Directors from shareholder oil companies.
Independent Director, Peter Springford resigned after nine
years on the Board, eight of which were served as Chair of the
Board’s Audit, Risk and Finance Committee. His role as an
Independent Director was replaced by Paul Zealand who has
34 years’ experience in the oil and gas sector including roles as
Chairman and CEO with Shell New Zealand and CEO of
Refining NZ had a good year in 2016. Margins were historically
strong and an excellent operational performance allowed the
refinery to capture the margins fully and deliver $47 million
net profit after tax. Overall, the business had a pleasing safety
performance both from a personal and process safety
perspective and we made solid progress towards meeting the
2017 regulatory deadlines for high hazard units set down by
the new Health and Safety Act.
Before giving more colour to the result, we would like to thank
our staff and contractors for the many outstanding
contributions that have supported this year’s result.
Their commitment to the business is truly second to none.
HEALTH, SAFETY AND ENVIRONMENT
Our Health and Safety performance in 2016 was pleasing.
As you can see from our Key Strategic Metrics set out on
page 3, we finished the year with four recordable injuries
to staff and contractors (including one lost time incident)
- or a TRCF* of 0.5 and a LTIF* of 0.25 – a major
improvement on recent prior years and certainly what we
consider ‘best-in-class’ in New Zealand. We had one high
potential product release as a result of equipment
malfunction. Fortunately, no one was hurt and there was
no significant damage to the plant. In response, we took
decisive action to replace 400 items on site which were of
a similar design.
Importantly, our April shutdown was completed without
injury to staff or inadvertent release of product during the
restart of the processing units. We continued to action the
key findings of the 2015 DuPont audit, including
implementation of a new permit to work system and a new
isolation procedure as an additional safeguard to make
process plant safe for maintenance.
Environmentally, we continue to invest in improving our
performance, as highlighted on page 8 of this report. We
reported five environmental incidents in 2016, principally as a
result of heavy rainfall events during the time that our
storm-water management systems were being upgraded.
*SEE GLOSSARY PAGE 87
Quality and
reliability
BUILD ON
ELEMENTS OF
OUR CUSTOMER
PROMISE
Environmental
DELIVER A
WORLD CLASS
PERFORMANCE
Health
and safety
DELIVERING
WORLD CLASS
PERFORMANCE
Competitiveness
IMPROVE OUR
UNIT OF
MEASURE
F Y 16
F Y 15
TRCF, rolling 12-mth*#/200,000 hrs
0.51
1.32
LTIF, rolling 12-mth*#/200,000 hrs
0.25
0 .10
Tier 1 and 2 process safety incidents*#
1
5
Releases outside consent
#
5
2
Throughput (million barrels)#
42.7
42.6
Operational availability%
96.9
97.7
Gross Refinery MarginUS$/barrel
6.47
9.20
Free cash flow NZ$M
47
139
Net profit/(loss) after tax - GroupNZ$M
47
151
Crude priceUS$/barrel
44
52
Exchange rateUS$
0.70
0.70

Operating in an
ultra-competitive market
We compete in one of the toughest regional markets in the
world, against refiners many times larger and newer than ours
at Marsden Point. Our customers have many supply choices,
especially with product exports from refineries in Korea,
Singapore, India and the Middle East. Ours continues to be a
Northland success story with our people being our single most
important differentiator for staying competitive and successful.
Our aspiration
remains the same
Our continued aspiration is to be the fuels manufacturing and
supply partner of choice for New Zealand.
To achieve that aspiration we need to deliver three things:
- a world-class safety and environmental performance;
a fuels offer that is competitive with Asia Pacific’s fuel
manufacturers; and strong returns for our shareholders.
As a ‘toll refiner’ we can influence our customers’ decision
(whether to make product at Marsden Point or to import from
other refineries) by providing a compelling customer
proposition based on three elements:
• Quality - a core strength of ours, continuing to produce on
specification product for our customers;
• Reliability - another core strength, the ongoing safe and
reliable running of our processing units proven by a world
class rate of unplanned downtime; and
• Price – where product quality and refinery reliability are
‘absolutes’ for being a supplier of choice, price is at the
core of a competitive offer. This is an area we need to keep
in focus as a result of the changing competitive dynamic in
the Asia-Pacific region described earlier.
Strategy
Our strategy
Deliver a world-class health and
safety performance
We are one of a few high hazard units in the country and have
robust management processes in place to keep our refinery
running safely. We have a continuous improvement programme
in place and a culture focused on personal and process safety
to ‘raise the bar’ in order to become world-class.
Continuing to implement the recommendations of the
independent DuPont safety review of 2015 will see us lift our
game even further.
Deliver a world-class
environmental performance
We support our staff and wider community aspiration of
continuing to live in a clean and pristine environment. We are
especially conscious of Patuharakeke’s mana whenua status
(customary authority) and regularly engage the hapu on our
environmental performance. We also draw on their cultural
expertise for environmental monitoring of key projects.
We have the facilities and management processes to minimise
the impact of our refining activities on the surrounding
environment. Tightening our controls, improving housekeeping
and exploring ways to further reduce the impact of our
operations will help us stay in ‘sync’ with the rising
expectations of our neighbours and wider community.
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Raising the bar on
Health and Safety
Three-time gold medalist and world record para-swimmer,
Cameron Leslie is living proof that Northlanders can
achieve their goals through hard work, the support of
family and buddies, and being prepared to prove
doubters wrong.
An inspiring speaker, Cameron’s guest spot was a highlight
for our Safety Hub - a new addition to our HSE safety
action plan aimed at strengthening safety leadership, and
raising the bar on our HSE performance to world class.
Safety Hub pairs our maintenance supervisors with senior
managers, creating a network of leaders regularly
engaging with maintenance teams across site, deepening
their understanding of how work is carried out safely, and
encouraging new thinking about how we can lift our
safety performance. Developing our safety leadership is
broadening and improving the quality of conversations we
have about our safety performance.
Cameron inspired our safety leaders to achieve more.
His lasting insight on world-class performance is neatly
summed up by his personal motto - na te mahi, he
rangatira (what you put in is what you get out). The
same can be said about delivering a world-class
HSE performance.
Celebrating
outstanding
performers
In December our exchanger team was awarded Refining NZ
team of the year, a first for a tight-knit crew whose work
– changing out our heat exchangers for maintenance - is
tough and often grimy. In 2016 this hard-working team
repeatedly went beyond the call of duty to keep the plant
running safely.
Identifying outstanding team or individual contribution
in a workplace where pride in the quality of the work,
and a belief that what we do is important for New Zealand,
is not difficult. In 2016 we received a large number of
nominations for outstanding contributions across six
categories: - safety star; team of the year; team player;
rookie of the year; going the extra mile; and
resilient performance.
Given that most if not all of our employees and
contractors turned out at Recognition Day, it is clear that
our people appreciate the business taking time to
recognise performance. While for some of our winners,
public celebration of their outstanding contribution may
take time to get used to, at the same time we know that it
is critical to engaging our people and making high
performance something we can all aspire to.
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Embed a high-performance culture
A world-class performing business requires a high-
performance culture built around engagement, a team of
talented, committed individuals, such as we have at Refining
NZ, supported by the right structure for our business.
• We have shifted non-core areas of the business to our
alliance partners. Going forward, we will strengthen those
relationships so that they deliver best practice and further
value for the business through innovation, and better ways
of working.
• We continue to strive for simplicity with our core
processes and procedures and removing duplication and
waste from the business. Embedding Lean principles is
fundamental to a culture where continuous improvement
is ‘just the way we do business’.
• Engaging and getting the best out of our talented
individuals comes from fostering diversity of thinking and
providing support via a range of development
opportunities. Equipping our talented individuals enables
them to deliver on our promises to our customers, our
shareholders, and our community.
Build on the quality and reliability
elements of our customer promise
Competing successfully with the best in Asia Pacific starts
with playing to our many strengths and continuing to do what
we are good at.
• We have a history of investing in plant reliability and the
production of quality cleaner fuels. Our operational
availability compares well with refineries in the region of a
similar size and complexity.
• We have a team of talented and committed people.
Improve our competitiveness
If we are to deliver value for our customers we need to
maintain the relentless focus on our cost base and understand
how we can produce more of the high-value products from
the same barrel of crude oil. These two areas are crucial to
delivering our value proposition to our customers, namely our
competitiveness, and driving the activities set out in our
action plan. Harnessing innovative ideas from both inside and
outside the business continues to provide new opportunities
to improve our business delivery.
Our 2017 action plan
In line with our strategy, the major areas of focus in 2017
are our health, safety and environmental (HSE) performance;
continuing to scope and implement revenue growth
opportunities that will lift our ability to compete with
imported fuel products; and improving
organisational performance.
1. L ift our HSE performance
MAINTAIN A SAFE WORKPLACE
We continue with our work on strengthening our HSE
performance to get to world class.
• We continue to manage the process safety risk of our most
critical assets and lift our reliability performance. Our asset
management programme focuses on maintaining the
current capability of the plant and is supported by well
managed shutdowns (completed safely, to the right
quality, on time and on budget).
• We are progressing on multiple fronts to complete the
recommendations from the independent DuPont safety
review of 2015.
• We intend to do a substantial piece of work with our
people to validate safety as a core value, adding individual
wellbeing to that value. The support of our Health and
Safety Steering Committee - a group of experienced,
committed individuals – is critical to this piece of work.
• Finally, included in our 2017 actions is a substantial piece
of work to finalise our ‘Safety Case’ under the new health
and safety regulations.

Innovation at our
fingertips
High-end, innovative technology that allows our
operations team to optimise the production from key
processing units, is critical to the safe and reliable running
of our refinery.
Over the past five years we’ve been upgrading control and
safeguarding systems and componentry – automated
systems that control operations and provide a real-time
view of processing unit production. Key units have been
upgraded, with upgrades across the rest of the refinery
yet to come. For our operations team, the instalment of
new panels in the control room running easy-to-read
graphics is the most visible (and welcome) part of this
complex upgrade.
At the same time, the introduction of APC (automated
process control) is proving a step change for the running
of our petrol making unit. Since its introduction in
December this high-level, automated control has helped
optimise functioning (maximising feed, reducing steam
and fuel consumption), all of which is improving the
revenue we earn from this new unit.
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MANAGE OUR ENVIRONMENTAL FOOTPRINT
We are conscious of our responsibility for minimising the
impact of our 50-year-old refinery on the surrounding
environment, and are continually looking to lift our
environmental performance. This is underlined by a no spill
policy across the refinery, and ongoing major project
investment in cleaning and preventing hydrocarbons leaving
the site, and bolstering the resilience of our water
treatment systems.
2. Grow our revenue
OPTIMISING OUR NEW GASOLINE
MANUFACTURING UNIT (TMH)
With TMH successfully starting up late in 2015, we have
identified a number of optimisation opportunities over the
past year. These opportunities are being scoped as projects
and will be executed over time to deliver further
margin growth.
IMPROVING PROFITABILITY VIA SMALL TO
MEDIUM MARGIN INITIATIVES
Tapping the knowledge of our team generated a ‘funnel’ of
business improvement ideas capable of lifting our
performance across many aspects of our refining business,
the fuels supply chain, and our offering to customers.
In 2017, we continue to progress a number of smaller growth
ideas in our development funnel from ideation
to implementation.
OBTAINING A GREATER SUPPLY OF NATURAL GAS
Our agreement with First Gas (formerly Vector) to boost
compression on the northern pipeline will double our access
to natural gas from around 2.5 to around 5 petajoules in 2017.
As an often price competitive source of energy in the refining
process, this presents a significant margin opportunity.
BRINGING LARGER CRUDE CARGOES INTO
MARSDEN POINT TO IMPROVE FREIGHT
ECONOMICS
We continue with our proposal to bring up to half of our crude
intake in cargoes of around one million barrels. Further
consultation with tangata whenua, community stakeholders
and the general public will take place before we apply for
resource consent.
INCREASING CAPACITY ON THE REFINERY
AUCKLAND PIPELINE
The first phase of a three-phase project to increase RAP
capacity by around 15% is underway. Retaining sufficient
capacity is crucial to matching demand, as Auckland grows
and the number of international arrivals continues to climb.
Investing in our
environment
Working at the edge of Whangarei harbour we are
conscious of the impact of our refinery on our
environment, and take responsibility for minimising that
by continuing to invest in our environmental performance.
Keeping hydrocarbons on site is crucial to our
environmental performance. Over the last three years we
have invested $14 million on cleaning our site and
strengthening our water treatment systems so that they
remain robust and capable of managing heavy rain events.
In 2016 we continued with the upgrade of our oil traps
and boosted the performance of our storm water
management capability - cleaning oil traps and holding
basins, installing new oil skimmers, clearing canals and
installing new bio-treating capability.
Managing coastal erosion is also critical to keeping
hydrocarbons on site. In 2016 we invested around $2
million on restoring a dune severely eroded by a series of
storm events over the past 10 years. The dune project
restored our south eastern boundary and returned part of
the coastal environment to tangata whenua and the
Ruakaka community.
3. Improve our organisational
performance
In 2017 our journey to high performance continues across
four key areas:
STRENGTHENING OUR VALUES CULTURE
Our people have asked for ‘safety and wellbeing’ to be added
to our Company’s values of honesty and integrity, respect,
leadership and winning together. As we introduce safety and
wellbeing, we will take the opportunity to re-energise and
celebrate our values culture.
EMBRACING TECHNOLOGY
We remain focused on removing complexity in the technology
space, through standardisation and by working with our
strategic alliance partners to exploit opportunities from
innovation and access to new technology.
CONTINUE TO EXPLOIT ‘LEAN’
MANAGEMENT PRACTICES
We will continue to employ Lean principles to lift individual
and team performance through eliminating waste, identifying
better ways of working and visual management of key
team objectives.
LEADERSHIP DEVELOPMENT
We will continue to support our managers to develop as
leaders, through mentoring, succession planning and targeted
development, under the umbrella of our overall leadership
development model.
In conclusion
We have the ability to be a competitive refining business in
the face of a challenging business environment, marked by
volatile refiners’ margins and strong regional competition.
• Our team has worked hard to embed our new gasoline
manufacturing unit, TMH into our ‘business as usual’
operations. Exploiting further value will come as we continue
to optimise the running of this key unit.
• Sustained growth will come from continuing to improve
our HSE performance, maintaining reliability and integrity and
successful implementation of some of the promising ideas in
our innovation funnel.
We are well placed to develop our competitive edge with an
action plan to grow our business sustainably and a team of
talented, innovative and committed Northlanders with a track
record of getting the details right.

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Governance
Regulatory framework
The New Zealand Refining Company Limited (‘the Company’,
‘Refining NZ’) operates in New Zealand and is listed on the
Main Board of the New Zealand Stock Exchange (NZX). It is
subject to regulatory control and monitoring by both the NZX
and the Financial Markets Authority (‘FMA’). Corporate
Governance Best Practice included in Appendix 16 of the NZX
Main Board / Debt Market Listing Rules (‘NZX Listing Rules’),
as amended on 7 March 2016, sets out some ‘Minimum
Requirements’ for governance and the FMA has also re-issued
in December 2014 ‘Principles and Guidelines – a handbook for
directors, executives and advisors’. In this section we provide
an overview of our governance rules (for further guidance on
our governance rules, including Board charters, constitution
and dividend policy, please refer to our website at
www.refiningnz.com).
Refining NZ meets the requirements of Appendix 16 apart
from paragraph 2.7, which encourages Directors to take a
portion of their remuneration under a ‘Performance Based
Equity Security Compensation plan’. Directors of the Company
do not receive any form of performance-based remuneration.
Role of the Board
The Board is responsible for setting the Company’s strategic
direction and for providing oversight of the management of
the Company, with the aim of increasing shareholder value
and ensuring the obligations of the Company are properly
met. The Board is accountable to shareholders for the
performance of the Company, with day-to-day management
of the Company delegated to the Chief Executive.
The respective roles of the Board and Management (the
Leadership Team) are set out in the Board’s Charter.
Board structure
The Board currently consists of six Directors. The Board
maintains a skills matrix to ensure that all requisite skills and
competencies are covered by the appointed Directors,
including refinery or oil industry experience.
The number of Directors is determined by the Board, in
accordance with the Company’s constitution, to ensure that it
is able to provide a range of knowledge, views and experience
relevant to the Company’s business.
Under the NZX Listing Rules, the Company is obliged to have
at least three Independent Directors or, if greater, one third of
the Board.
As at 31 December 2016, the Company had four Independent
Directors: Simon Allen (Chairman), Vanessa Stoddart, Mark
Tume and Paul Zealand, representing a Board majority.
The Company does not have any Executive Directors.
Major shareholders (BP, ExxonMobil and Z Energy) do not
have a constitutional right to appoint Directors, although
it is accepted that they are entitled to representation. The
Nomination and Remuneration Committee, using the same
criteria as for all other Directors, considers nominations for
these representatives as if they were non-
representative Directors.
Representative Directors are able to appoint, subject to
approval by a majority of the other Directors, an Alternate
Director to act on their behalf and occupy their position for a
period of time, if for any reason they are unavailable to attend
Board meetings or otherwise act. An Alternate Director has
the powers, rights, duties and responsibilities of a Director
when acting in the place of an ordinarily appointed Director.
However, they are not entitled to receive remuneration from
the Company or to be Chairman of the Company. Andrew
Warrell (Mobil Oil New Zealand) was the only Director with an
Alternate Director during the course of the year. Mr Warrell
resigned on 13 March 2017, and at that same time John
Crawford ceased to be an Alternate Director.
Each year the Board will appoint a Chairman from among the
Independent Directors who is responsible for representing the
Board to shareholders.
Directors will generally hold office for an initial three-year
term following their appointment, subject to any obligation
to retire by rotation in accordance with the Company’s
constitution and the NZX Listing Rules. If a Director is
appointed by the Board, that Director will hold office until
the next Annual Meeting, but will be eligible for re-election
at that meeting.
On their first appointment, Directors attend an induction
programme aimed at deepening their understanding of the
business and the environment and markets in which the
Company operates.
A Director can accept other Board appointments during their
tenure on the Board, as long as the appointment is not in
conflict with the Company’s business and does not adversely
affect the Director’s performance. Directors must discuss
any other appointments with the Chairman before accepting.
A profile for each Director is set out on pages 24 to 27,
outlining their individual experience, tenure and entries in
the interest register.

Sub-committees of the Board
There are three Board sub-committees: the Audit, Risk and Finance
Committee; the Nomination and Remuneration Committee; and
the Independent Directors’ Committee. Each committee operates in
accordance with a written Charter approved by the Board and
reviewed periodically by the respective committees. The Committee
Charters are available in the Governance section of the company
website: www.refiningnz.com
AUDIT, RISK AND FINANCE COMMITTEE
The Audit, Risk and Finance Committee comprises between
three to five Directors who have the appropriate financial
expertise and understanding of the Company’s industry and
with at least one member who is considered to be an ‘audit
committee financial expert’.
The function of the Audit, Risk and Finance Committee is to
oversee financial reporting, the treasury function, and the
Company’s risk management and assurance programmes.
The Committee keeps under review the scope and results of
audit work, the cost effectiveness, performance, independence
and objectivity of the auditors. Members of the Committee
review the financial statements and the NZX announcement
of the financial results.
As at 31 December 2016 the Audit, Risk and Finance Committee
comprised: Mark Tume (Chair), Simon Allen and Paul Zealand.
NOMINATION AND REMUNERATION COMMITTEE
In respect of nominations, the responsibilities of the Committee
include to identify and nominate, for the approval of the Board,
candidates to fill Board vacancies and the position of Chief
Executive as and when they arise; to regularly review the structure,
size and composition (including the skill, knowledge and
experience) of the Board and to make recommendations to the
Board regarding any changes. In respect of remuneration, the
Committee reviews and makes recommendations to the Board
regarding the Company’s remuneration policy, including changes in
Directors’ fees. The Committee provides oversight of the Company’s
Business Performance Factor which sets the base for any individual
incentive payments under the Individual Performance Incentive
Scheme and the award of shares to participating employees under
the ‘DC12’ Employee Share Scheme.
The Nominations and Remuneration Committee also makes
recommendations to the Board regarding the remuneration
package of the Chief Executive, including the payment of any
Short-Term Incentive Payment and the remuneration packages
of the Leadership Team who are profiled on pages 28 to 32.
The Committee reviews the People Strategy on an annual
basis including changes to organisation structure, the
capability development strategy and succession planning
processes including succession planning for executive roles,
diversity and inclusiveness initiatives and other strategic
people priorities that arise from time to time.
As at 31 December 2016 the Nomination and Remuneration
Committee comprised: Vanessa Stoddart (Chair) and Simon Allen.
INDEPENDENT DIRECTORS’ COMMITTEE
The three largest shareholders of the Company are also
major customers, either directly or through wholly owned
subsidiaries, and have representation on the Board which
could lead to a conflict of interest. Clause 8.18.1 of the
constitution allows for the Independent Directors to act as the
Board in respect of matters that pose a conflict of interest if
raised at the full Board.
The role of the Independent Directors is:
• to act as the Board in relation to those matters to be
decided by the Board in which all of the other Directors
have an interest which disqualifies them from forming part
of the quorum and voting, and
• to act as a Committee of the Board to deal with matters
delegated or referred to it by the Board or the Leadership
Team, including ensuring that issues concerning the major
customers, and in particular any conflicts of interest, are
dealt with in a transparent manner for the benefit of the
Company as a whole.
The Independent Directors are listed on pages 25 to 27.
Board performance
The Board periodically evaluates its own performance, and its
own processes and procedures to ensure that they are
appropriate to assist the Board in effectively fulfilling its role
and meeting its duties. Individual Directors undertake a peer
and self-assessment based on a methodology agreed by the
Board. The last Board review was undertaken in 2016.
Internal financial control
The Board has overall accountability to shareholders and other
stakeholders for the Company’s system of internal financial
control. Responsibility for maintaining the requisite systems
and processes is delegated to the Chief Executive. The
Company has a comprehensive management system which
covers all aspects of the business. The management system
incorporates internal financial and operational controls to:
• facilitate effective and efficient operations
• safeguard the Company’s assets
• ensure proper accounting records are maintained, and
• ensure that the financial information used within the
business and for publication is reliable.
The Company is committed to maintaining management
systems that meet the requirements of Occupational Health
and Safety (NZS 4801), Environment (ISO 14001) and Quality
(ISO 9001), all of these systems embedding continuous
improvement processes.
Annual budgets, forecasts and reports on the strategic
direction of the Company are regularly prepared by the
Leadership Team for review by the Board. HSE, financial and
business performance reports are prepared monthly and
reviewed by the Board throughout the year to monitor
performance against HSE, financial and non-financial targets
and strategic objectives.
The number of Directors’ Meetings held (including Meetings of Committees of Directors) during 2016 is as follows:
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DATE OF
APPOI NTMENT
OR RETIREMENT
BOARD MEETINGSAUDIT, RISK AND
FINANCE COMMITTEE
NOMINATION AND
REMUNERATION
COMMITTEE
INDEPENDENT
DIRECTORS’
COMMITTEE
SITE
WALKS
ATTENDED POSSIBLEATTENDED POSSIBLEATTENDED POSSIBLEATTENDED POSSIBLEATTENDED
INDEPENDENT
S C Allen (Chair)4 Dec 201477443310101
P M SpringfordResigned
7 Dec 2016
77443310101
V C M Stoddart20 May 201377--3310101
M Tume1 Aug 2007 6744- -10101
P A Zealand29 Aug 2016 3311- -552
NON-INDEPENDENT
BP
M H Elliott3 May 2012 77--33--2
T J WallResigned
11 Feb 2016
---------
EXXONMOBIL
S J BrownResigned
6 May 2016
22-------
A T WarrellResigned
13 Mar 2017
67-------
Alternate
J R CrawfordCeased
13 Mar 2017
---------
Z ENERGY
M J Bennetts10 May 201077------1

Role of the Leadership Team
All Board authority conferred on the Leadership Team is
delegated through the Chief Executive. The Board and Chief
Executive agree specific goals and objectives directed towards
the Company’s strategic aims. The Chief Executive presents
HSE, financial, operational and other reports and proposals to
the Board at each meeting. In between meetings, the
Chairman maintains an informal link between the Board and
the Chief Executive. The Chief Executive keeps the Chairman
informed on all important issues and the Chairman is available
to provide counsel and advice to the Chief Executive where
appropriate. Only decisions of the Board acting as a body are
binding on the Chief Executive.
A profile of the Leadership Team is provided on pages 28 to 32.
Diversity
The Board recognises the value of diversity within the
workforce, reflected in the Company’s people strategy and
recruitment processes. The Company is also committed to
providing equal employment opportunities with all
appointments being merit-based.
GENDER
The following table provides the gender composition of
Refining NZ’s permanent workforce. By way of comparison,
figures for the past year are also included.
31 DECEMBER 2016 31 DECEMBER 2015
Directors
Females 1 14 % 1 13 %
Males 6 86% 7 87%
Leadership Team
Females 1 10 % 2 22%
Males 9 90% 7 78%
IPL Directors
Females 1 50% 2 67%
Males 1 50% 1 33%
Workforce
(excluding IPL)
Females 44 13 % 34 10 %
Males 289 87% 295 90%

AGE PROFILE
The age profile of Refining NZ’s permanent employees and
Board as at 31 December 2016 is as follows:
DIRECTORS LEADERSHIP WORKFORCE TOTAL
TEAM (EXCLUDING IPL)
% % % %
Under 30 years - - 12% 11%
30-50 years - 10% 50% 48%
50 years and over 100% 90% 38% 41%
Directors’ and Officers’ insurance
The Company has arranged Directors’ and Officers’ Liability
Insurance, which ensures that generally Directors will incur no
monetary loss as a result of actions undertaken by them as
Directors. Certain actions are specifically excluded, such as the
incurring of penalties and fines which may be imposed in
respect of breaches of the law.
Independent professional advice
With the approval of the Chairman, Directors are entitled to
seek independent professional advice on any aspect of their
Director’s duties, at the Company’s expense.
Use of Company information
The Board did not receive any notices from any Director of the
Company or its subsidiaries during the year, requesting to use
Company information received in their capacity as a Director,
which would not otherwise have been available to them.
Code of business conduct
The Company has a Code of Business Conduct which applies
to all Directors and employees. The Code of Business Conduct
sets standards and expectations and also provides a decision
framework to guide consistency of application, ensuring that
decisions are consistent with the Company’s values, strategies,
legal and policy obligations.
The Company has a ‘whistle blowing’ procedure and
employees are responsible for reporting any breaches in the
Code of Business Conduct of which they become aware to
either their manager, manager’s manager or the Company’s
Disclosure Officer. Any concerns can be raised anonymously
with the Disclosure Officer.
Risk management and assurance
Business risk assessments are conducted by the Leadership
Team and reported to the Board of Directors.
The Leadership Team and the Board obtain assurance over the
adequacy of the Company’s management system from a
variety of sources. The Company has an enterprise-wide audit
programme, which verifies that operational controls are
operating as documented and also assesses the efficiency and
effectiveness of internal controls.
During 2016 the Company was subject to 31 audits by external
parties, including four audits conducted by the Company’s
internal auditor, BDO Northland, and 14 audits by in-house
operational auditors. The summary results from audits were
reported to the Leadership Team and the Audit, Risk and
Finance Committee of the Board.
Share dealings
To ensure compliance with the law around insider trading, the
Company has issued a share trading policy applicable to
Directors, Officers and all employees. A Director or member of
the Leadership Team can only enter into share transactions if
prior approval has been given as outlined below:
A listing of Directors’ shareholdings is included with their
profiles on pages 25 to 27 of this Annual Report.
Disclosure of information
to shareholders
Refining NZ is committed to keeping its shareholders informed
and places a high degree of importance on open
communication and transparent reporting and to providing
comprehensive continuous disclosure to shareholders and
other stakeholders, in compliance with the NZX Listing Rules.
A Half Year and Annual Report are published each year and
posted on the Company’s website. Presentations to analysts
are given following the Half Year and Full Year announcements
to provide insight into the Company’s overall performance and
market conditions. These presentations are also posted on the
Company’s website and to the NZX. The Company provides
bi-monthly data on throughput, margins and processing fees,
which enables stakeholders to assess the financial
performance of the Company.
The Company Secretary takes primary responsibility for
communications with the NZX in relation to NZX Listing Rules
and disclosure obligations. Shareholders may raise matters for
discussion at Annual Meetings.
The Company has made a number of disclosures to the NZX
under the continuous disclosure rules. Details are available on
the Company website at www.refiningnz.com and on the
NZX’s website: www.nzx.com.
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SHARE TRANSACTION BY: APPROVER OF TRANSACTION:
Chief Executive Chairman
Company Secretary Chairman
Other Leadership Team member Company Secretary
Chairman Chair of Audit, Risk and
Finance Committee
Director Chairman

HEADCOUNT
DIRECTORS LEADERSHIP WORKFORCE TOTAL
TEAM (EXCLUDING IPL)
# % # % # % # %
NZ European-Pakeha 4 57.1 3 30.0 211 63.4 218 62.3
Pacific Islander - - 1 10.0 1 0.3 2 0.6
Maori 1 14.3 - - 16 4.8 17 4.8
Maori and NZ European - - - - 24 7.2 24 6.8
Maori and Non NZ European - - - - 1 0.3 1 0.3
Maori and Pacific Islander - - - - 1 0.3 1 0.3
Non NZ European 2 28.6 6 60.0 63 18.9 71 20.3
Asian - - - - 9 2.7 9 2.6
African - - - - 1 0.3 1 0.3
Indian - - - - 2 0.6 2 0.6
Information not provided - - - - 4 1.2 4 1.1
TOTAL 7 100.0 10 100.0 333 100.0 350 100.0
Remuneration report
DIRECTORS’ REMUNERATION
The Board determines the level of remuneration paid to
Directors within the amounts approved by shareholders (that
is, from the approved collective pool). The current approved
fee pool limit is $850,000 and was approved by shareholders
at the Annual Meeting in April 2012. Directors’ remuneration
in 2016 as advised to shareholders at the Annual Meeting, is
set at a level to remain comparable with other companies in
New Zealand, taking into account the expertise, skills and
responsibilities of Directors. Current Directors’ fees are set out
in the table on the right:
Board members are also entitled to reimbursement for any
direct costs incurred in carrying out their role as Directors,
including travel costs. Total value of reimbursements paid to
the Directors during the year amounted to $1,200.
POSITION 2016 FEES
(PER ANNUM)
BOARD OF DIRECTORS
Chairman $170,000
Independent Director $88,000
Non-Independent Director $72,000
AUDIT, RISK AND FINANCE COMMITTEE
Chairman $25,000
Member $12,50 0
NOMINATION AND REMUNERATION COMMITTEE
Chairman $10,000
Member $5,000

2016
DIRECTOR BOARD FEES AUDIT, RISK NOMINATION AND TOTAL
AND FINANCE REMUNERATION FEES
COMMITTEE FEES COMMITTEE FEES
INDEPENDENT
S C Allen, Chairman 170,000 - - 170,000
P M Springford (resigned 7 Dec 2016) 88,000 25,000 5,000 118,000
V C M Stoddart 88,000 - 10,000 98,000
M Tume 88,000 12,500 - 100,500
P A Zealand (appointed 29 Aug 2016) 30,040 4,270 - 34,310
NON-INDEPENDENT
BP
M H Elliott
72,000 - 5,000 77,000
T J Wall (resigned 11 Feb 2016)

EXXONMOBIL
S J Brown (resigned 6 May 2016)
72,000 - - 72,000
A T Warrell (resigned 13 March 2017)

Z ENERGY
M J Bennetts 72,000 - - 72,000
TOTAL 680,040 41,770 20,000 741,810
ETHNICITY
At Refining NZ we collect information from all permanent employees on which ethnicity they choose to identify with.
We allow employees to select more than one ethnicity, ‘other’ or choose not to respond. The ethnicity of Refining NZ’s
permanent employees and Board as at 31 December 2016 is as follows:
ETHNICITY
NZ European/Pakeha,
62.3%
Maori/Non NZ European, 0.3%
Maori/Pacific Islander, 0.3%
African, 0.3%
Non NZ European,
20.3%
Pacific Islander,
0.6%
Unspecified,
1.1 %
Indian,
0.6%
Maori/NZ European,
6.8%
Maori,
4.8%
Asian,
2.6%
NATIONALITY
NZ, 83%
Australia, 4%
South Africa, 2%
UK, 4%
Other, 7%
The remuneration and other benefits, excluding reimbursements, received by the individual Directors of the Company during the
year were as follows:
The Directors do not participate in any profit-based incentive
system. No Director of the Company has received, or become
entitled to receive, a benefit (other than a benefit included in
the total emoluments received or due and receivable by
Directors shown in this report), including shares, remuneration
paid by subsidiary company or other payments from services
provided. No loans have been made to Directors. The Company
has arranged Liability Insurance for Directors.
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REMUNERATION OF THE CHIEF EXECUTIVE
The Chief Executive’s employment commenced on 14 January
2013 with an employment agreement that can be terminated
by either party on six months’ notice. Refining NZ can also
terminate the Chief Executive’s employment for redundancy
or for ill health (on 12 and six months’ notice respectively).
The Chief Executive’s remuneration is approved by the Board
and is reviewed annually. Total remuneration is made up of
two components: fixed remuneration and short-term
performance incentives.
Fixed remuneration includes base salary of $963,500
per annum, effective 1 April 2016 (2015: $940,000).
The short-term performance incentive (STI), is an incentive up
to 60 % of base salary per plan year subject to the
achievement of agreed Key Performance Indicators (KPIs).
In addition, the Board can award a discretionary bonus in the
case of over performance of KPIs. The Chief Executive
participates in the Employee Share Purchase Scheme as
outlined on page 82.
Short-term performance incentives are deemed ‘at risk’
payments designed to motivate and reward performance in
the financial year. The KPIs relate to areas of health and safety,
plant reliability, leadership, financial and in-full on-time
on-spec product delivery. The weightings applied
are as follows:
KPI CATEGORY WEIGHTING %
Health and safety (personal and process) 40%
Financial 25%
Leadership 25%
Plant reliability 5%
In-full on-time on-spec product delivery 5%
Each category of KPI is ‘scored’ against the agreed targets for
those KPIs. There are various performance levels within each
KPI category; below target, on target, and above target. The
individual category scores are weighted and combined to
determine the Chief Executive Performance factor (CPF).
Maximum CPF equals 60 % of base salary, on target
performance is an STI equivalent to 40 % of Base Salary.
The total remuneration paid to the Chief Executive during his
four-year tenure is as follows:
Leadership Team and other employees’
remuneration profile
The Company’s Leadership Team and employees with
Individual Employment Agreements (IEAs) are remunerated
with a mix of base salary and benefits, and short-term
performance incentives. The remuneration of all Leadership
Team members was externally benchmarked in early 2016. The
determination of fixed remuneration is based on
responsibilities, individual performance and experience, and
market data. At-risk/variable remuneration comprises
individual performance rewards, based on:
• achievement of Company business performance targets
(BPFs) which include: the frequency of personal safety
incidents (total recordable case frequency), the number of
process safety incidents (Tier 1 and Tier 2), level of
operating costs, unplanned downtime and delivery in full
on time to our customers,
• achievement of individual performance factors (IPFs), and
• values and behaviours demonstrated by the individual.
In addition to the above, the Company established the
Employee Share Purchase Scheme (‘the scheme’) in the 2015
financial year which has been approved by the Commissioner
of Inland Revenue as a section DC12 share scheme under the
Income Tax Act 2007. The purpose of the scheme was to
recognise the important contribution of the employees to the
Company’s future and to assist the Company in retaining and
motivating employees.
Participating employees were able to acquire $1,026 worth of
shares in the Company in respect of the 2015 financial year.
This offer was based on the Company contribution of $1,000,
multiplied by the 2015 Business Performance Factor (BPF), and
increased by an employee contribution of $1. The 2015 BPF of
1.025 was approved by the Board in February 2016.
A trust has been created under the scheme for the purpose of
purchasing the Company’s shares on the New Zealand Stock
Exchange (‘the NZX’) and holding those shares until they vest
with each participating employee over a three year period. The
shares were acquired on 21 April 2016 (total of 98,025 shares
at the price of $3.14 per share) and will vest over a three year
period ending on 21 April 2019.
The Company estimates the annual operating costs of the
scheme of approximately $30,000 and the cost of the
contribution of approximately $319,800 (based on a BPF of
1.025) per year.
The following table shows the number of employees and
former employees (including members of the Leadership
Team), not being Directors, who, in their capacity as
employees, received remuneration and other benefits during
2016 of at least $100,000. The remuneration figures include
all monetary payments actually made during the year and
contributions made by the Company as a part of the share
scheme; the remuneration excludes amounts paid post 31
December 2016 that relate to performance during the 2016
financial year. No employees appointed as a Director of IPL,
a subsidiary company of Refining NZ, receive or retain any
remuneration or other benefits for holding this office.
NUMBER OF NUMBER OF
EMPLOYEES EMPLOYEES
$000 2016 2015
100-109 22 22
110 -119 19 21
120 -129 19 28
13 0 -139 38 28
140 -14 9 33 38
150 -159 19 24
160-169 32 30
170 -179 29 22
180-189 21 24
190-199 12 22
200-209 9 8
210-219 7 4
220-229 6 2
230-239 5 4
24 0-249 3 4
250-259 1 3
260-269 1 1
270-279 - 2
280-289 2 2
290-299 1 -
310 -319 1 -
320-329 - 1
330-339 - 1
340-349 1 -
350-359 1 1
1,380-1,389 - 1
1,430-1,439 1 -
The total remuneration paid over the last two years comprises:
Explanation of the above items:
1 The above information has been prepared on an accrual
basis, not cash basis. Note that the short-term incentive
and a portion of a superannuation contribution are paid
out in the year following the year in which they are earned.
2 Other relates to entitlements due to participation in the
Company’s Private Car Travel Allowance Scheme and in the
New Zealand Refining Company Staff Superannuation Plan
in accordance with the plan rules and the relevant
investment statement.
SCENARIO CHARTS - CHIEF EXECUTIVE
PERFORMANCE PAY FOR 2017
Fixed remuneration comprises base salary and other benefits.
The base salary was set as $963,000 until 31 March 2017 and
$987,590 from 1 April 2017 (representing a 2.5% increase). The
annual variable pays out 40 % of base salary for on target
performance (which would equate to 29% of total
remuneration), and 60 % for above target performance
(equating to 38% of total remuneration).
$000 FY2016 FY2015
Base salary 958 940
Other 41 41
Subtotal 999 981
Short term incentive 540 438
Discretionary based KPIs - -
TOTAL REMUNERATION 1,539 1,419
FINANCIAL YEAR FY2016 FY2015 FY2014 FY2013
Total remuneration
paid ($000) 1,539 1,419 1,381 1,403
Percentage STI
against maximum 93% 78% 71% 74%
$1800
$1600
$1400
$1200
$1000
$800
$600
$400
$200
$-
($000)
FIXED REMUNERATION ANNUAL VARIABLE
FIXED
100 %
ON TARGET
71%
29%
ABOVE TARGET
MAXIMUM
62%
38%
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The analysis is compiled on a cash basis; variable performance
rewards (linked to individual and business performance for a
financial reporting period) are paid subsequent to balance
date and reported as part of the remuneration banding for the
following year. The remuneration above includes individual
incentive payments under the Individual Performance
Incentive Scheme and the award of shares to participating
employees under the DC12 Employee Share Scheme.
The ratio between employee remuneration (median) and Chief
Executive’s total remuneration for the 2016 financial year (on
a cash basis) was 1:11 (2015:1:10).
Other New Zealand Stock Exchange and
statutory information
DONATIONS
The Company made donations of $41,000 during the year
ended 31 December 2016 (2015: $48,000). No political
donations were made in 2016.
AUDITORS
PricewaterhouseCoopers, whose remuneration for audit and
other services is detailed in note 2 to the financial statements,
have indicated their willingness to continue in office. Each
service referred to in note 2 requires prior approval by the
Audit, Risk and Finance Committee so that such service does
not compromise auditor objectivity and independence. The
Committee also reports to the Board on the quality and
expertise of the auditor. The Committee also ensures that the
auditor rotation provisions of the NZX listing rules are
complied with.
NEW ZEALAND EXCHANGE WAIVERS
No NZX waivers were sought or granted in 2016. In 2016 the
Company utilised an NZX waiver that was granted and
disclosed in 1999 which allows the Company to price certain
products in tiers for different quantities to incentivise
customers to increase their use of the refinery.
CREDIT RATING
The Company does not have a credit rating.
Going concern
The Directors have considered whether it is appropriate to
prepare the 2016 financial statements on the basis that the
Company and the Group are a going concern. As part of its
normal business practices, the Group prepares annual budgets
and longer-term financial and business plans. In reviewing this
information, the Directors are satisfied that the Company and
the Group have adequate resources to continue in business for
the foreseeable future. For this reason, the Directors continue
to adopt the going concern basis in preparing the Group’s
financial statements.
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Shareholder spread
AS AT 31 JANUARY 2017
NO. OF SHARES SHAREHOLDERS % HOLDER SHARES % OF SHARES
1-499 232 4.50 63,589 0.02
500-999 259 5.02 179,581 0.06
1,000-1,999 699 13.56 942,004 0.30
2,000-4,999 1,430 27.74 4,550,839 1.46
5,000-9,999 986 19.12 6,591,496 2.11
10,000-49,999 1,336 25.91 24 ,757, 0 3 8 7.92
50,000-99,999 127 2.46 8,282,291 2.65
100,000-499,999 60 1.16 10,703,928 3.42
500,000-999,999 9 0.18 6 ,194,129 1.98
1,000,000 upwards 18 0.35 25 0 , 311, 5 5 8 80.08
TOTAL 5,156 100.00 312,576,453 100.00
Geographical spread
AS AT 31 JANUARY 2017
LOCATION SHAREHOLDERS % HOLDER SHARES % OF SHARES
Auckland (Greater) 1,529 29.65 203,976,289 65.26
Wellington (Greater) 652 12.65 57, 8 6 0 ,16 9 18.51
Whangarei/Northland 597 11.58 11,347,948 3.63
Other North Island 1,115 21.63 18,716,345 5.99
South Island 1,133 21.97 19,599,756 6.27
Australia 67 1.30 6 37,75 9 0.20
Other Overseas 63 1.22 438 ,187 0.14
TOTAL 5,156 100.00 312,576,453 100.00
Substantial product holders
AS AT 31 JANUARY 2017
The following shareholders hold 5% or more of the issued capital of the Company and have filed notices with the Company
under the Financial Markets Conduct Act 2013 that they are substantial product holders in the Company.
NO. OF ORDINARY SHARES
BP New Zealand Holdings Limited 66,24 0,021
Mobil Oil NZ Limited 53,760,000
Z Energy Limited 47,999,980
The total number of quoted voting products of the Company on issue at 31 December 2016 and 31 January 2017
was 312,576,453 fully paid ordinary shares.
Twenty largest shareholders
AS AT 31 JANUARY 2017
SHAREHOLDERS TOTAL SHARES HELD % OF TOTAL
1 BP New Zealand Holdings Limited 66,24 0,021 21.19
2 Mobil Oil NZ Limited 53,760,000 17. 2 0
3 Z Energy Limited 47,999,980 15.36
4 Citibank Nominees (New Zealand) Limited – NZCSD 11,499,376 3.68
5 HSBC Nominees (New Zealand) Limited – NZCSD 10,453,596 3.34
6 National Nominees New Zealand Limited – NZCSD 9,381,469 3.00
7 Forsyth Barr Custodians Limited 6,428,378 2.06
8 HSBC Nominees (New Zealand) Limited – NZCSD 6,362,281 2.04
9 BNP Paribas Nominees (NZ) Limited – NZCSD 5,178 ,6 4 6 1.66
10 Accident Compensation Corporation – NZCSD 4, 334,101 1.39
11 JP Morgan Chase Bank – NZCSD 3,758,695 1.20
12 Custodial Services Limited 3,543,466 1.13
13 Masfen Securities Limited 3,274,539 1.05
14 Investment Custodial Services Limited 1, 9 57,10 2 0.63
15 Generate KiwiSaver Public Trust Nominees Limited - NZCSD 1,883,771 0.60
16 FNZ Custodians Limited 1, 8 4 0,196 0.59
17 JBWere (NZ) Nominees Limited 1,679,969 0.54
18 Investment Custodial Services Limited 1, 5 6 7, 6 4 4 0.50
19 Chester Perry Nominees Limited 1,525,724 0.49
20 Rees Hollier John Jones + Moira Marguerite Jones + Walter Mick George Yovich 1,4 87, 6 72 0.48
TOTAL 24 4,156,626 78.13
In the above table, the shareholding of New Zealand Central Securities Depositary Limited (NZCSD) has been re-allocated to the
applicable members of the NZCSD. The shareholder spread table on page 23 groups shares held by NZCSD as single legal holding.
Forsyth Barr Custodians Limited holdings are shown in the geographical spread table as being located in the South Island,
however the beneficial owners may be more widely spread.
Shareholder Information
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ON

Michael
Bennetts
BBS, Diploma in
Corporate Management
Simon Allen
BSc, BCom
CHAIRMAN

Directors’ Profiles
Mr Allen has over 30 years commercial
experience in the New Zealand and
Australian Capital Markets. He was Chief
Executive of investment bank BZW and
ABN AMRO in New Zealand for 21 years
and has been actively involved in advising
companies, Government and investors on
matters relating to their strategies and
capital markets participation.
Mr Allen is Chair of Crown Fibre Holdings
Limited, and St Cuthbert’s College. He is a
Director of IAG New Zealand and a trustee
of the Antarctic Heritage Trust.
Past governance roles include Auckland
Healthcare Services Limited (Director),
Financial Markets Authority (Chair), NZSE
(Director) and NZX Limited (Chair),
Auckland Council Investments Limited
(Chair) along with a number of other
unlisted companies.
ENTITY INTEREST
Crown Fibre Holdings Limited Chairman
St Cuthbert’s College Chairman
Simon Allen Consulting Limited Director
IAG New Zealand Director
Antarctic Heritage Trust Trustee
EQUITY INTEREST IN REFINING NZ
2016: 35,000 (2015: 35,000)
Relevant interest: registered holder (as Trustee) and
beneficiary of trust.
Chief Executive for Z Energy Limited.
Previously held senior roles with a global
oil major in New Zealand, China, Singapore,
South Africa, and the UK. Director
experience in both private and public
energy related companies in South Africa
and Asia Pacific since 1998.
ENTITY INTEREST
Harbour City Property Investments Limited Director
Auckland Iron Works Limited Director
Punakaiki Fund Limited Director and Shareholder
EQUITY INTEREST IN REFINING NZ
2016: nil (2015: nil)
REFINING NZ
ANNUAL REPORT 2016
2524
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ECTORS
' PROFILES
REFINING NZ
ANN
UA
L REPO
RT 2016
DIR
ECTORS
' PROFILES

Also a director of Genesis Energy in New
Zealand, and Lochard Energy in Australia.
Previously CEO of Upstream for Origin
Energy, Country Chairman for Shell New
Zealand, and has held executive positions
in Shell companies in UK, Netherlands,
New Zealand and Australia.
ENTITY INTEREST
Genesis Energy (NZ) Director
Lochard Energy (AU) Director
Zoenergy Ltd (NZ) Director
Zoenergy Pty Ltd (AU) Director
Zealand Family Trust (NZ) Director
Zoenergy Family Trust (AU) Director
EQUITY INTEREST IN REFINING NZ
2016: nil (2015: nil)
Paul
Zealand
BSc (Hons), MBA
INDEPENDENT DIRECTOR
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ANNUAL REPORT 2016
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2726
DIR
ECTO
RS' PROFILES
DIR
ECTORS
' PROFILES
Vanessa
Stoddart
BCom/LLB (Hons),
PGDip Professional Ethics
INDEPENDENT DIRECTOR
Mark Tume
BBS
INDEPENDENT DIRECTOR
Vice President Fuels NZ and Managing
Director BP New Zealand Limited. Joined
BP in 1994 and has held positions in Retail,
Sales and Marketing, General Management
with BP in Australia, Fiji, USA and the UK.
Previous governance experience in
Australia and Fiji.
ENTITY INTEREST
BP New Zealand Holdings Limited Director
BP New Zealand Share Scheme Limited Director
BP Oil New Zealand Limited Director
BP Pacific Investments Limited Director
Coro Trading NZ Limited Director
Europa Oil NZ Limited Director
RD Petroleum Limited Director
EQUITY INTEREST IN REFINING NZ
2016: nil (2015: nil)
Professional director with experience in
the infrastructure, energy and financial
sectors. Directorships include NZ Oil and
Gas, Infratil, and Te Atiawa Iwi Holdings
Management Ltd.
ENTITY INTEREST
Long Board Limited Director
Infratil Limited and Subsidiaries Chairman/ Director
Koau Capital Partners Ltd Director
Maori Trustee Advisory Board Member
Yeo Family Trustee Limited Director
New Zealand Oil and Gas Limited
and Subsidiaries Director
Welltest Limited Director
Rearden Capital Pty Limited Director
RA 2014 Pty Limited Chairman
RA (Holdings) 2014 Pty Limited Director
Te Atiawa Iwi Holdings Management Limited Chairman
Netlogix Australia PTY Ltd Director
EQUITY INTEREST IN REFINING NZ
2016: nil (2015: nil)
A director of The Warehouse Group Ltd,
Heartland Bank Ltd, Financial Markets
Authority and Alliance Group Ltd,
Commissioner for The Tertiary Education
Commission and member of MBIE and DOC
Audit and Risk Committees amongst other
positions. Previously Group General Manager
Engineering and People Air New Zealand Ltd.
and Chief Executive of the Australian
Packaging Division of Carter Holt Harvey Ltd.
ENTITY INTEREST
Board of Tertiary Education
Commission Commissioner
The Warehouse Group Limited Director
Alliance Group Limited Director
Department of Conservation (Member)
Audit, Risk and
Finance Committee
Ministry of Business,
Innovation and Enterprise (Chair)
Audit, Risk and
Finance Committee
Board of the Financial
Markets Authority Director
Heartland Bank Limited Director
EQUITY INTEREST IN REFINING NZ
2016: nil (2015: nil)
Matthew
Elliott
BCom, Diploma of
Commerce (post grad)
IPL Directors
Denise Jensen
CHAIRPERSON
Kevin Still
DIRECTOR
(A PPOI NT ED 17 FEBRUARY 2017)
Peter Gubb
ALTERNATE DIRECTOR
Kathryn Dunn
DIRECTOR
(RESIGNED 27 OCTO BER 2016 )
William Parker
DIRECTOR
(RESIGNED 31 DE CEMBER 2016 )

Joe joined the Company in January 2016, having
accumulated over 20 years’ experience in human
resources. Joe has held senior management roles in
a range of industries including FMCG, Forestry, Pulp
and Paper, Health and Education. Joe had previous
careers as a Forest Ranger and also trained as a
primary school teacher.
Joe is happily married with two adult children. Outside
of work he has an undying passion for watching sports
and can be regularly seen, tragically some would say,
at Warriors and Blues home games.
RESPONSIBILITIES
• Employee relations
• Staff development
• Recruitment and reward
2016: nil
Kevin joined Refining NZ in July 2016 with over 30
years’ international experience in the refining and oil
and gas sectors.
He has held senior process engineering and production
management roles in oil refining and gas processing
facilities at Sasol and PetroSA in South Africa and has
managed the national and international marketing and
outbound logistics functions for PetroSA and for
Woodside Energy in Australia. At Woodside Energy he
was also responsible for the strategy and commercial
functions and business management of several of the
company’s oil and gas joint ventures, including the
North West Shelf project.
Kevin is married with three adult children and in his
spare time he enjoys the Northland outdoors, scuba
diving and sailing.
RESPONSIBILITIES
• Crude oil and refined products supply chain
• Customer relationships and agreements
• Refinery optimisation and scheduling
• Oil accounting
• Business development
• Strategy and analysis
2016: nil
Kevin
Still

BSc (Chem Eng)
SUPPLY CHAIN AND BUSINESS
OPTIMISATION MANAGER

Joe Akari
BEd, Post Grad Diploma
(Business Administration)
CHIEF PEOPLE AND CAPABILITY OFFICER
Sjoerd Post
MSC (Mathematics)
CHIEF EXECUTIVE OFFICER
Leadership Team
Profiles
Leadership Team
Profiles
Leadership Team
Peter has held the position of Refining Manager
since 2011. Prior to this, Peter progressed through
Refining NZ holding various management roles
within Operations, IT and Process Services. Peter
also held the Leadership Team position of Quality,
Health, Safety and Environment Manager. Prior to
joining Refining NZ, Peter had previous process
experience in the dairy industry.
Peter and his partner have two adult children and
he has recently become a grandfather. Outside of
work he enjoys golf, watching rugby and getting
out on the water for a spot of fishing.
RESPONSIBILITIES
• Refinery and marine/jetty operations
• Refinery to Auckland Pipeline operation
and management
• Process engineering
• Process control
• Operational excellence
• Emergency services
EQUITY INTEREST IN REFINING NZ
2016: 326 (2015: nil)
Peter Gubb
REFINING MANAGER
Sjoerd joined the Company in January 2013. He has
over 30 years’ international commercial business
experience. Prior to joining Refining NZ, Sjoerd was
a member of the Executive Team of Royal Dutch
Shell’s Downstream (Refining, Trading, Distribution
and Sales and Marketing) business responsible for
the overall global Downstream Strategy and
Portfolio activities. Sjoerd was also on the Boards
of the European Refinery Association Europia and
Technical Association CONCAWE. Prior to that he
was the Head of Shell’s Global Aviation and Marine
businesses and has held a variety of roles in
Trading, Commercial Sales, Customer Service
Management, Marketing and Sales, including
assignments in New Zealand, Denmark and London.
Born and raised in Holland, Sjoerd has considered
New Zealand home since the mid 80s. During the
weekends Sjoerd enjoys spending time with his wife
and two daughters. He also enjoys music, the visual
arts and sailing.
EQUITY INTEREST IN REFINING NZ
2016: 29,255 (2015: 28,929)
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
2928
LEADER
SHIP
TEAM
PROFI
LES
LEADER
SHIP
TEAM
PROFI
LES

Greg has over 20 years’ experience in corporate
communications, gained predominantly in the UK where
he worked in the FMCG and B2B sectors for national
and global businesses - including Royal Mail, Dairy
Crest, Unilever, BOC Industrial Gases. Greg returned to
New Zealand with his family in 2008, to work as a
media relations advisor for Bank of New Zealand. He
joined Refining NZ in 2009 where his role encompasses
all areas external and internal communications.
Greg joined the Leadership Team in 2013. Outside of
work Greg enjoys writing and time with his partner and
two teenage sons.
RESPONSIBILITIES
• External communications; corporate publications,
Company announcements
• Public affairs: government; media; iwi
and community
• Internal communications
EQUITY INTEREST IN REFINING NZ
2016: 326 (2015: nil)
Julian joined Refining NZ in 2002 as a process
engineer for the Semi Regeneration Platformer.
Prior to that he worked, in South Africa, both as a
process and a control engineer in Caltex and Sasol.
From 2009-2012 he concentrated on operations
being the Asset Manager for the Hydrocracking
complex at Refining NZ. In 2013, he was appointed
the HSSE Manager and so became a member of
the Refining NZ Leadership Team.
Julian is married with two sons. Outside of
work he is a keen gardener and a collector of
antique clocks.
RESPONSIBILITIES
• Health and safety
• Process safety
• Environment
• Security
EQUITY INTEREST IN REFINING NZ
2016: 326 (2015: nil)
Julian
Young
PhD, BSc
HSSE MANAGER
Greg McNeill
BA (History), Post Grad Diploma (Media),
Advanced Certificate of Marketing
COMMUNICATIONS AND
EXTERNAL AFFAIRS MANAGER
Greg McNeill
BA
Prior to joining Refining NZ, Rob had worked as a
project engineer and maintenance manager in both the
Paper and Steel Production industries in Australia and
the UK.
Rob joined Refining NZ in 1995 and over the past 20
years has fulfilled several engineering, maintenance and
project management positions.
In early 2006 Rob and his family travelled to Far Eastern
Russia, where Rob was seconded on a four-year
assignment to work for Shell on the Sakhalin Island LNG
project where he led the development, training and
implementation of the new LNG maintenance
organisation.
Rob was appointed to the Engineering Manager’s
position in 2013 and enjoys applying his knowledge,
skills and experience to improving the delivery of
engineering and maintenance services to the benefit
of Refining NZ.
RESPONSIBILITIES
• Asset integrity, reliability and performance
• Inspection, integrity assurance, compliance
• Maintenance engineering, planning and scheduling,
workshops and mobile equipment
• Discipline engineers and specialists - mechanical,
electrical, instrumentation, control systems, civil
and facilities
EQUITY INTEREST IN REFINING NZ
2016: 326 (2015: nil)
Robin Baxter
BEng
ENGINEERING MANAGER
Denise joined Refining NZ in 2005 and was appointed to
the position of Chief Financial Officer in 2009 and
Company Secretary in 2010. A Chartered Accountant
with over 25 years’ experience, Denise brings to
Refining NZ her passion for leading and managing
change and using disciplined financial processes to
drive performance and growth. Denise is a member of
the Chartered Accountants Australia New Zealand and
the Institute of Directors. Denise is also a Director of
the Northland District Health Board.
Outside of work Denise enjoys spending time with her
husband and three adult children, whilst enjoying
Northland’s outdoor lifestyle.
RESPONSIBILITIES
• Finance
• Business information systems
• Corporate administration
• Procurement
• Company secretarial
• Investor relations
• Risk and assurance
EQUITY INTEREST IN REFINING NZ
2016: 14,255 (2015: 13,929)
Denise
Jensen
CA
CHIEF FINANCIAL OFFICER
AND COMPANY S ECRETARY
3130
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
LEADER
SHIP
TEAM
PROFI
LES
LEADER
SHIP
TEAM
PROFI
LES

Dave
Cunningham
PROJECT MANAGER
Cunningham
Napo’s association with the refinery spans 40 years,
principally as the owner of on-site civil contracting
company, Henare Contracting, and following his
retirement in 2012, as Refining NZ’s official
kaumatua (Maori elder).
As kaumatua his principle responsibilities are to
advise the CEO and the Leadership Team; provide
pastoral support for Maori employees and
contractors – including where required, lifting tapu
from work sites; working with local kaumatua to
co-ordinate site blessings, (including the dawn
blessing of the Te Mahi Hou commemorative
sculpture); advising on protocol (tikanga) and te
reo pronunciation.
In the past three years Napo has had a pivotal role
in the Company’s consultation with tangata
whenua, helping introduce hapu and iwi to the
Company’s crude shipping proposal at a series of
hui across the Whangarei region.
Napo is respected for his deep understanding of
Te Ao Maori (Maori world view) by our people and
contractors as well as in the Marsden Point
community where he retains close ties with
local hapu, Patuharakeke.
Napo Henare
REFINING NZ KAUMATUA
(NGATI HINE)
Dave joined Refining NZ as an operator in 1984 and has held
various management rolls within the Company, mainly in
Operations and Maintenance.
In 2001, he completed a short-term secondment as a refinery
specialist based in Chicago, executing hydrocracker shutdowns
and start-ups around the world. Thereafter he was a key member
of the Point Forward Project Management team, before taking on
the role of refinery Maintenance Manager. In 2011 as part of the
Te Mahi Hou project Dave was based in Los Angeles working
closely with Worley Parsons Engineering, moving back to the
refinery to oversee the completion of the project as Construction
Manager and in 2015, as Project Director.
Outside of work, Dave is a dedicated husband, father of three and
a grandfather. He is very keen on water sports especially surfing,
diving and fishing, loves building and light engineering, and is
passionate about motorsport.
RESPONSIBILITIES
• Deliver a range of selected projects and shutdowns safely, to
the agreed quality, on time and budget.
EQUITY INTEREST IN REFINING NZ
2016: 326 (2015: nil)
32
REFINING NZ
ANNUAL REPORT 2016
LEADER
SHIP
TEAM
PROFI
LES
Retired Leadership Team
David Gray
SPECIAL PROJECTS MANAGER
(RETIRED 31 JANUARY 2017)

Economic
Performance
34 Consolidated Income Statement
The income earned and operating
expenditure incurred by the Refining NZ
Group during the financial year
35 Consolidated Statement of
Comprehensive Income
Items of income and operating expense
not recognised in the income statement
and hence taken to reserves in equity
36 Consolidated Balance Sheet
A summary of the Refining NZ Group
assets and liabilities
at the end of the financial year
38 Consolidated Statement of
Changes in Equity
Components that make up the capital and
reserves of the Refining NZ Group and
the changes of each component during
the financial year
40 Consolidated Statement
of Cash Flows
Cash generated and used by the
Refining NZ Group
41 Basis of Preparation

43 Notes to the Financial Statements
43 Performance
43 1 Segment reporting
45 2 Income and expenses
48 3 Related parties
51 4 Taxation
52 5 Earnings per share
53 Debt and Equity
53 6 Equity
54 7 Dividends
55 8 Bank borrowings
56 Operating Assets and Liabilities
56 9 Property, plant and equipment and intangibles
60 10 Capital expenditure commitments
60 11 Restoration provision
61 12 Operating lease commitments
62 13 Transactions between shareholders
62 14 Trade and other receivables
63 15 Cash and cash equivalents
64 16 Inventories
65 17 Trade and other payables
66 18 Employee benefits
75 Financial Risk Management
75 19 Financial risk management
80 20 Derivative financial instruments
82 Other
82 21 Employee share-based payments
82 22 Contingent liabilities
83 Independent Auditor’s Report

86 Trend Statement

87 Glossary

88 Corporate Directory
REFINING NZ
ANNUAL REPORT 2016
33
ECONOMIC P
ER FORMANC
E

Consolidated Statement
of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2016


NOTE
GROUP
2016
$000
GROUP
2015
$000
NET PROFIT AFTER INCOME TAX47,474
150,931
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to the Income Statement
Defined benefit plan actuarial (loss)/gain
18 (k)
(4,566)
8,213
Deferred tax on defined benefit actuarial loss/(gain)
41,278(2,300)
Total items that will not be reclassified to the Income Statement(3,288)5,913
Items that may be subsequently reclassified to the Income Statement
Movement in cash flow hedge reserve
(476)
( 5 ,167)
Deferred tax on movement in cash flow hedge reserve
41331,447
Total items that may be subsequently reclassified to the Income Statement(343)(3,720)
TOTAL OTHER COMPREHENSIVE (LOSS)/INCOME, AFTER INCOME TAX
(3,631)2,193
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, AFTER INCOME TAX
43,84315 3,124
ATTRIBUTABLE TO:
Owners of the Parent
43,546
152,964
Non-controlling interest
297
160
43,843
15 3,124
THE ABOVE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 41 TO 82.


NOTE
GROUP
2016
$000
GROUP
2015
$000
INCOME
Operating revenue
2
353,629
4 45 ,186
Other income
2
527
1,585
TOTAL INCOME354,156
446,771
EXPENSES
Purchase of process materials and utilities
2
69,294
59,200
Materials and contractor payments
2
26,780
24,279
Wages, salaries and benefits
2
57, 523
52,798
Depreciation and disposal costs
2, 9
87, 233
72,10 9
Administration and other costs
2
33,306
25,968
TOTAL EXPENSES274,136
234,354
NET PROFIT BEFORE FINANCE COSTS80,020
212,417
FINANCE COSTS
Finance income
2
(151)
(14 8 )
Finance cost
2
15,677
2,903
NET FINANCE COSTS
2
15,526
2,755
Net profit before income tax
64,494
209,662
Less income tax
4
17,020
58,731
NET PROFIT AFTER INCOME TAX47,474
150,931
ATTRIBUTABLE TO:
Owners of the Parent
47,177
150,771
Non-controlling interest
297
160
47,474
150,931
EARNINGS PER SHARE FOR PROFIT
ATTRIBUTABLE TO THE SHAREHOLDERS OF
THE NEW ZEALAND REFINING COMPANY LIMITED:
CENTSCENTS
Basic and diluted earnings per share
5
15.1
48.2
THE ABOVE CONSOLIDATED INCOME STATEMENT IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 41 TO 82.
Consolidated Income Statement
FOR THE YEAR ENDED 31 DECEMBER 2016
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
3534
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

Consolidated Balance Sheet
AS AT 31 DECEMBER 2016


NOTE
GROUP
2016
$000
GROUP
2015
$000
EQUITY
Contributed equity
6
265,771
265,771
Treasur y stock
6,21
(308)
-
Employee share entitlement reserve
6,21
228
75
Cash flow hedge reserve
6
(7, 84 6 )
( 7, 5 0 3 )
Retained earnings
6
494,358
523,125
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT752,203
781,468
Non-controlling interest
6 ,13
-
727
TOTAL EQUITY752,203
782,195
THE BOARD OF DIRECTORS OF THE NEW ZEALAND REFINING COMPANY LIMITED AUTHORISED THESE CONSOLIDATED FINANCIAL STATEMENTS FOR ISSUE ON
27 FEBRUARY 2017.
For and on behalf of the Board:
S C ALLEN DIRECTOR M TUME DIRECTOR
THE ABOVE CONSOLIDATED BALANCE SHEET IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 41 TO 82.
Consolidated Balance Sheet
AS AT 31 DECEMBER 2016


NOTE
GROUP
2016
$000
GROUP
2015
$000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
15
1,675
7, 5 6 5
Trade and other receivables
14
142,558
163,579
Inventories
16
2,329
2,16 6
Assets of disposal group classified as held for sale
13
-
5,229
TOTAL CURRENT ASSETS146,562
178,539
NON-CURRENT ASSETS
Inventories
16
17, 515
15,307
Property, plant and equipment
9
1,121,097
1,137, 8 35
Intangibles
9
4,425
-
TOTAL NON-CURRENT ASSETS1,143,037
1,15 3,142
TOTAL ASSETS1,289,599
1,331,681
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
17
140,932
169,643
Income tax payable
3,268
20,704
Bank borrowings
8
69,500
25,000
Employee benefits
18
10,337
9,725
Derivative financial instruments
20
334
6
Liabilities of disposal group classified as held for sale
13
-
1,528
TOTAL CURRENT LIABILITIES224,371
226,606
NON-CURRENT LIABILITIES
Deferred tax liabilities
4
119 , 570
111, 5 27
Employee benefits
18
24,268
17, 8 9 2
Restoration provision
11
8,624
8,046
Bank borrowings
8
150,000
175,000
Derivative financial instruments
20
10,563
10 ,415
TOTAL NON-CURRENT LIABILITIES313,025
322,880
TOTAL LIABILITIES5 37, 396
549,486
NET ASSETS752,203
782,195
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
3736
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

GROUP
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2016



NOTE
CONTRIBUTED
EQUITY

$000
TREASURY
STOCK

$000
EMPLOYEE SHARE
ENTITLEMENT RESERVE

$000
CASH FLOW
HEDGE RESERVE

$000
RETAINED
EARNINGS

$000
TOTAL EQUITY
ATTRIBUTABLE TO
OWNERS OF THE PARENT
$000
NON-CONTROLLING
INTEREST

$000
TOTAL
EQUITY

$000
AT 1 JANUARY 2015 265,771--(3,783)382,068644,056623644,679
COMPREHENSIVE INCOME
Net profit after income tax----150,771150,771160150,931
Other comprehensive income
Movement in cash flow hedge reserve
20
---( 5 ,167)-( 5 ,167)-( 5 ,167)
Defined benefit actuarial gain
18 (k)
----8,2138,213-8,213
Deferred tax on other comprehensive income---1,447(2,300)(853)-(853)
TOTAL OTHER COMPREHENSIVE INCOME, AFTER INCOME TAX
---(3,720)5,9132,193-2,193
TRANSACTIONS WITH OWNERS OF THE PARENT
Equity-settled share-based payments
21
--75--75-75
Unclaimed dividends written back----22-2
Dividends paid
7
----(15,629 )(15,629 )(56)(15,685)
TOTAL TRANSACTIONS WITH OWNERS OF THE PARENT
--75-(15,627)(15,552)(56)(15,6 08 )
AT 31 DECEMBER 2015265,771-75( 7, 5 0 3 )523,125781,468727782,195
COMPREHENSIVE INCOME
Net profit after income tax----47,17747,17729747,474
Other comprehensive income
Movement in cash flow hedge reserve
20
---(476) -(476)-(476)
Defined benefit actuarial loss
18 (k)
----(4,566)(4,566)-(4,566)
Deferred tax on other comprehensive income---1331,2781, 411-1, 411
TOTAL OTHER COMPREHENSIVE INCOME, AFTER INCOME TAX---(343)(3,288)(3,631)-(3,631)
TRANSACTIONS WITH OWNERS OF THE PARENT
Equity-settled share-based payments
21
--153--153-153
Treasury shares purchased
21
-(308)---(308)-(308)
Unclaimed dividends written back----1212-12
Acquisition of non-controlling interest
13
----(775)(775)(869)(1,644)
Dividends paid
7
----(71,893)(71,893)(155)(72,048)
TOTAL TRANSACTIONS WITH OWNERS OF THE PARENT-(308)153-(72,656)(72 , 811)(1,024)(73,835)
AT 31 DECEMBER 2016265,771(308)228(7, 84 6 )494,358752,203-752,203
THE ABOVE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 41 TO 82.
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
3938
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2016


NOTE
GROUP
2016
$000
GROUP
2015
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
356,773
445,983
Payments for supplies and other expenses
(133,629 )
(107,493)
Payments to employees
(54,950)
(48,499)
CASH GENERATED FROM OPERATIONS168,194
289,991
Interest received
151
14 8
Interest paid
(14,871)
(2,622)
GST (paid)/received
(618)
4,036
Income tax paid
(25,076)
(26,998)
(4 0,414)
(25,436)
NET CASH INFLOW FROM OPERATING ACTIVITIES
15
127,780
264,555
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
(81,162)
(128,635)
Proceeds from sale of property, plant and equipment
-
2,656
NET CASH OUTFLOW FROM INVESTING ACTIVITIES(81,162)
(125,979 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from/(repayments of) bank borrowings
19,500
(116,000)
Unclaimed dividends
-
7
Dividends paid to shareholders
7
(71,893)
(15,629 )
Dividends paid to non-controlling interest
(155)
(56)
Purchase of treasury stock
(308)
-
NET CASH OUTFLOW FROM FINANCING ACTIVITIES(52,856)
(131,678 )
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS(6,238)
6,898
Cash and cash equivalents at the beginning of the year
7, 913
1,015
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR1,675
7, 913
CLASSIFIED AS:
Cash and cash equivalents
1,675
7, 5 6 5
Cash and cash equivalents classified as held for sale
13
-
348
1,675
7, 913
THE ABOVE CONSOLIDATED STATEMENT OF CASH FLOWS IS TO BE READ IN CONJUNCTION WITH THE NOTES PAGES 41 TO 82.
THE CASH FLOWS ARE EXCLUSIVE OF GST.
(a) R EPORTING ENTITY
The reporting entity is the consolidated group comprising The
New Zealand Refining Company Limited (‘Parent’ or ‘Company’)
and its subsidiary, Independent Petroleum Laboratory Limited.
The New Zealand Refining Company is a limited liability
company incorporated and domiciled in New Zealand with its
registered office at Marsden Point, Whangarei, New Zealand.
The Parent operates New Zealand’s only oil refinery at Marsden
Point near Whangarei as a toll refiner, and owns and operates a
pipeline, running from the refinery at Marsden Point to Wiri,
located in South Auckland, transporting refined fuels for
consumption within the Auckland market. The subsidiary
provides specialised fuels, biofuels, and industrial and
environmental laboratory testing services.
The New Zealand Refining Company Limited is registered under
the Companies Act 1993, is listed on the New Zealand Stock
Exchange (NZX) and is an FMC Reporting Entity under the
Financial Markets Conduct Act 2013 (‘FMC Act 2013’).
These consolidated financial statements were approved by the
Directors on 27 February 2017.
(b) BASIS OF PREPARATION
These financial statements have been prepared in accordance with:
• The Financial Markets Conduct Act 2013.
• The NZX Main Board Listing Rules.
• New Zealand Generally Accepted Accounting Practice
(NZGAAP).
• New Zealand equivalents to the International Financial
Reporting Standards (‘NZ IFRS’), International Financial
Reporting Standards (IFRS) and other applicable New
Zealand Financial Reporting Standards, as appropriate for
profit-oriented entities.
The consolidated financial statements are prepared on the basis
of historical cost, except for:
• Derivative financial instruments and plan assets (included
in the net defined benefit liability) which are measured at
fair value, and
• Held-for-sale assets measured at fair value less cost to sell.
The consolidated financial statements are prepared on a GST
exclusive basis, except for receivables and payables which are
GST inclusive.
Basis of Preparation
FOR THE YEAR ENDED 31 DECEMBER 2016
Functional and presentation currency
These financial statements are presented in New Zealand
dollars ($) which is the Group’s functional currency, and the
financial information has been rounded to the nearest
thousand dollars ($000), unless otherwise stated.
Consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity 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. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated
on consolidation. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the
asset transferred.
Use of judgements and estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
the Directors to exercise their judgement in the process
of applying the Group’s accounting policies. Estimates
and judgements are continually evaluated and are based
on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances.
In the process of applying the Group’s accounting policies,
the following areas involve judgement and assumptions
that can significantly affect the amounts recognised in the
financial statements:
• Inventory obsolescence provision – refer to note 16;
• Recoverability of the capital work in progress, and useful lives
property, plant and equipment – refer to note 9;
• Defined benefit pension plan obligation – refer to note 18;
• Restoration provision – refer to note 11.
Significant estimates are designated by this symbol
in the notes to the financial statements.
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PERFORMANCE
This section focuses on Refining NZ’s financial performance and the returns provided to equity holders. The following notes are included:
Note 1: Segment reporting
Note 2: Income and expenses
Note 3: Related parties
Note 4: Taxation
Note 5: Earnings per share
1 Segment reporting
(a) Identification and description of reportable segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Leadership Team,
identified as the chief operating decision-maker. The Leadership Team reviews the Group’s internal reporting of oil refining and
distribution separately in order to assess their performance and allocate resources. The operating segments, based on these
reports are as follows:
Oil Refining
The Parent owns and operates an oil refinery located at Marsden Point, 160 kilometres north of Auckland. The oil refinery
is able to process a wide range of crude oil types imported from around the world.
Distribution
The Parent owns infrastructure to support the distribution of manufactured products to its customers. The Refinery
to Auckland pipeline transfers product to the Wiri Oil terminal located in South Auckland (refer note 3).
Other
Other includes the subsidiary Company operations and properties. These have not been included in a reportable segment as
they are not separately reported to the Leadership Team.
Sales between segments are carried out at arm’s length and represent charges by the subsidiary Company (included in ‘Other’)
to Oil Refining. The revenue from external parties reported to the Leadership Team is measured in a manner consistent with
that in the Income Statement. All revenue is generated in New Zealand.
Revenue derived from major customers, and the relevant operating segments is disclosed in note 3.
(b) R eporting measures
The performance of the operating segments is based on net profit after income tax. This information is measured
in a manner consistent with that in the consolidated financial statements.
The Group manages assets and liabilities on a central basis and therefore does not provide any segment information
of this nature.











Basis of Preparation
FOR THE YEAR ENDED 31 DECEMBER 2016
(c) S IGNIFICANT ACCOUNTING POLICIES
Accounting policies, disclosed within each of the
applicable notes to the financial statements, are
designated by this symbol.
Changes in accounting policies and disclosures
The principal accounting policies applied in the preparation of
these financial statements have been consistently applied to all
periods presented.
New standards and amendments that became effective from
1 January 2016 did not have a significant impact on the Group.
The International Accounting Standards Board has issued a
number of standards, amendments and interpretations which
are not yet effective and which may have an impact on the
Group’s financial statements, including:
• NZ IFRS 9 ‘Financial Instruments – Classification
and Measurement’, mandatory for the year ending
31 December 2018;
• NZ IFRS 15 ‘Revenue from Contracts with Customers’,
mandatory for the year ending 31 December 2018;
• NZ IFRS 16 ‘Leases’, mandatory for the year ending
31 December 2019.
The Group has not yet applied these in preparing these financial
statements as the potential impact of these standards to the
Group’s financial statements has not been assessed yet; these
standards are expected to be applied in the periods in which
they become mandatory.
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
(c) S egment results
Revenue from external customers ($000)
2016
$000
2015
$000
3 07,197
404,963
42,80436,819
3,6283,404
Net profit after income tax ($000)
Oil RefiningDistributionOtherOil RefiningDistributionOther
2016
$000
2015
$000
22,538
129,495
22,96318,782
1,9732,654
Oil RefiningDistributionOtherOil RefiningDistributionOther
1 Segment reporting cont.1 Segment reporting cont.
31 DECEMBER 2016OIL REFINING
$000
DISTRIBUTION
$000
OTHER
$000
TOTAL
$000
Total operating revenue
307,19742,8048,720358,721
Inter-segment revenue
-- (5,092)(5,092)
REVENUE FROM EXTERNAL CUSTOMERS
307,19742,8043,628353,629
Other income
--527527
Finance income
147-4151
Finance cost
(15,652)-(25)(15,677)
Depreciation and disposal costs
(79,922)(6,868)(443)( 87, 233 )
Income tax
(7,65 4 )(8,930)(436)(17,020 )
Net profit after income tax
22,53822,9631,97347,474

31 DECEMBER 2015OIL REFINING
$000
DISTRIBUTION
$000
OTHER
$000
TOTAL
$000
Total operating revenue404,96336,8197,777449,559
Inter-segment revenue--(4,373)(4,373)
REVENUE FROM EXTERNAL CUSTOMERS404,96336,8193,4044 45 ,186
Other income59-1,5261,585
Finance income138-1014 8
Finance cost(2,869)-(34)(2,903)
Depreciation and disposal costs(64,856)(6,868)(385)(72,10 9 )
Income tax( 51,177)( 7, 3 0 4 )(250)(58,731)
Net profit after income tax129,49518,7822,654150,931
2 Income and expenses
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Specific
accounting policies are as follows:
Processing fee (oil refining) revenue
Processing fees are recognised when the Group has processed crude oil into refined products for the customer.
Pipeline fee (distribution) revenue
Pipeline fees are recognised when the products have been transferred to the Wiri Oil terminal in South Auckland.
Operating lease income
Rental income from operating leases (including Wiri Oil terminal rental) is recognised on a straight-line basis in accordance
with the substance of the relevant agreements.
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016


NOTE
GROUP
2016
$000
GROUP
2015
$000
Net profit before income tax includes
the following income and expenses:
OPERATING REVENUE
Processing fees
276,590
379,155
Natural Gas recovery
21,403
15,0 03
Other refining related income
8,695
10,805
Refining revenue306,688
404,963
Distribution revenue
36,788
30,294
Operating lease income:
Wiri Oil land and plant
3
6,525
6,525
Other
84
84
Other operating income
3,544
3,320
TOTAL OPERATING REVENUE353,629
4 45 ,186
OTHER INCOME
Other income
527
1,563
Gain on disposal of property, plant and equipment
-
22
TOTAL OTHER INCOME527
1,585
TOTAL INCOME354,156
446,771
And charging:
Process materials and utilities
47, 891
4 4,197
Natural gas
21,403
15,0 03
PURCHASE OF PROCESS MATERIALS AND UTILITIES69,294
59,200
Contractor payments
19,819
20,19 9
Materials
6,684
6,822
Obsolescence provision recognised/(released)
277
(2,742)
TOTAL MATERIALS AND CONTRACTOR PAYMENTS26,780
24,279
Wages and salaries
52,692
47,7 3 4
Defined contribution pension plan contributions
1,276
1,091
Defined benefit pension plan expense
18 ( j)
3,172
3,696
Medical plan contributions
18 ( j)
230
202
Equity-settled share-based payments
21
153
75
TOTAL WAGES, SALARIES AND BENEFITS57, 523
52,798
Depreciation expense
9
87,177
72,10 9
Loss on disposal of property, plant and equipment
9
56
-
TOTAL DEPRECIATION AND DISPOSAL COSTS87, 233
72,10 9
Administration and other expenses
3,724
3,786
Contract services
14,242
10,337
Consultants
5,264
2,922
Insurance
3,334
2,945
Rates
1,185
1,097
Employee related costs
3,456
3,147
2 Income and expenses cont.


NOTE
GROUP
2016
$000
GROUP
2015
$000
Auditor’s fees
Audit of financial statements
138
190
Treasury market updates
-
8
AGM scrutineering
6
6
Compliance report on processing fees
32
-
Advisory fees for directors’ fee benchmarking
5
-
Directors’ fees
742
588
Operating lease expenses:
Wiri Oil land rental
500
500
Other
637
394
Donations
41
48
TOTAL ADMINISTRATION AND OTHER COSTS33,306
25,968
Interest expense:
Bank borrowings
15,255
16,900
Restoration provision finance charge
422
337
Finance costs
15,677
17, 2 37
Less: amounts capitalised to qualifying assets
-
(14,334 )
TOTAL FINANCE COSTS15,677
2,903
Finance income:
Interest income on short-term bank deposits
(151)
(14 8 )
TOTAL FINANCE INCOME(151)
(14 8 )
NET FINANCE COSTS15,526
2,755
TOTAL COSTS289,662
2 37,10 9
NET PROFIT BEFORE INCOME TAX64,494
209,662

Auditor’s fees
’Audit of financial statements’ includes the fees for the annual audit of the financial statements. The 2015 audit fee includes the
audit of Independent Petroleum Laboratory Limited (IPL) for the 2015 and preceding two years, to enable audited financial
statements to be provided as part of the sale process (refer note 13). Previously, the audit of IPL had been limited to the work
required to enable the auditors to provide an opinion on the Group’s financial statements.
2 Income and expenses cont.
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3 Re lated parties3 Related parties cont.
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
(a) Shareholders and other related parties
The Group enters into transactions on an arm’s length basis with the oil companies, who are also shareholders of the Parent, and Wiri
Oil Services Limited (Wiri Oil), a company that is owned by shareholders of the Parent.
Details of shareholdings at 31 December are:

2016
%
2015
%
BP New Zealand Holdings Limited (BP)
21.19
21.19
Mobil Oil NZ Limited (Mobil)
17. 20
17. 2 0
Z Energy Limited (Z Energy)
15.36
15.36
The nature, transactions and balances with the shareholders and other related parties are as follows:

(i) Revenue from related parties
Revenue from the oil refining and distribution segments is derived from the Oil Companies as follows:
2016
$000
2015
$000
2016
$000
2015
$000
BP
88,596
113 , 6 9 5
45,913
36,802
Chevron
-
33,020
-
-
Mobil
78,688
97,70 0
24,744
30,231
Z Energy
143,065
130,393
69,442
59,443
Wiri Oil
6,963
6,934
39
185
317,312
381,742
140,138
126 ,661
Processing fees
The Group has separate processing agreements with each of the three Oil Companies which have been in place since 1995. They are
long-term ‘evergreen’ contracts which continue unless renegotiated or terminated by mutual consent or by a customer on one year’s
notice. 78% (2015: 85%) of the Group’s total operating revenue is earned from processing fees charged under those agreements.
Refer note 19(a) for further details.
Leases
The Parent leases land from Wiri Oil Services Limited (Wiri Oil) and owns the Wiri Oil terminal (plant) located on this land. The land
and plant is leased back to Wiri Oil. The leases are non-cancellable operating leases, which expire in 2024 with no right of renewal.
At the end of the lease term, ownership of the Wiri Oil terminal reverts to Wiri Oil Services Limited. Operating lease income and
expenses are disclosed in note 2.
Excise Duty
Excise duty is collected from the Oil Companies and paid to the New Zealand Customs Service on the same day each month (refer
note 17) and is included in the above balances outstanding.
(ii) Purchases of goods and services
The Group purchases sulphur, a by-product of the refining process which is on sold to third parties, and other fuels,
from related parties as follows:
2016
$000
2015
$000
2016
$000
2015
$000
BP
483
1,332
19
112
Chevron
-
568
-
-
Mobil
487
1,450
27
118
Z Energy
1,105
1,74 0
114
172
2,075
5,090
160
402
(iii) Other charges
Insurance
A portion of the Group’s material damage and business interruption and contract works and liability insurance is held by companies
related to shareholders.
Administration fees
The Parent charges an administration fee to the New Zealand Refining Company Pension Fund. For a description of this plan see note 18.
2016
$000
2015
$000
2016
$000
2015
$000

Insurance premiums
BP - Jupiter Insurance Ltd
437
392
-
-
Administration fees
The New Zealand Refining Company Pension Fund
25
26
6
6
462
418
6
6
TRANSACTION VALUES FOR
THE YEAR ENDED 31 DECEMBER
BALANCES OUTSTANDING
AS AT 31 DECEMBER
TRANSACTION VALUES FOR
THE YEAR ENDED 31 DECEMBER
BALANCES OUTSTANDING
AS AT 31 DECEMBER
BALANCES OUTSTANDING
AS AT 31 DECEMBER
TRANSACTION VALUES FOR THE
YEAR ENDED 31 DECEMBER
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
3 Related parties cont.
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
(a) Income tax expense
The income tax expense for the year is the tax payable on the current year’s taxable income based on the New Zealand
income tax rate on the basis of the tax laws enacted or substantially enacted at the end of the reporting period, adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements and to unused tax losses.
GROUP
2016
$000
GROUP
2015
$000
Net profit before income tax expense
64,494
209,662
Tax at the New Zealand corporate income tax rate of 28% (2015: 28%)
18,058
58,705
Tax effect of amounts which are either non-deductible or taxable in calculating taxable income:
Expenses not deductible for tax
152
26
Adjustments in respect of current income tax in respect of previous years
(1,190 )
-
INCOME TAX EXPENSE, REPRESENTED BY:17,020
58,731
Current tax expense
7, 566
4 8 ,124
Deferred tax recognised in the income statement
4(b)
9,454
10,607
(b) Deferred tax
Deferred tax assets and liabilities arise from temporary differences between the tax base of assets and liabilities and their
carrying amounts in the consolidated financial statements, and are recognised for temporary differences at the tax rates
expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or
substantively enacted. An exception is made for certain temporary differences arising from the initial recognition of an
asset or liability.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.

Current and deferred tax balances attributable to amounts recognised in other comprehensive income or directly in equity are
also recognised in other comprehensive income or directly in equity, respectively.
4 Taxation
GROUP
2016
$000
GROUP
2015
$000
Salaries and other short-term employee benefits
3,697
3,484
Post-employment benefits
155
196
TOTAL KEY MANAGEMENT PERSONNEL COMPENSATION3,852
3,680
Number of personnel at 31 December
10
9

The above analysis is compiled on a cash basis; variable performance rewards (linked to individual and business performance for a
financial reporting period) are paid subsequent to balance date and reported as part of payments to key management personnel for
the following year.
NOTE
(b) Directors’ fees and key management personnel compensation
Directors’ fees are disclosed in note 2.
Key management personnel include all members of the Leadership Team.
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTE
PROPERT Y,
PLANT AND
EQUIPMENT
$000
PROVISIONS


$000
EMPLOYEE
BENEFITS

$000
FINANCIAL
INSTRUMENTS

$000
TAX
LOSSES

$000
TOTAL


$000
AT 1 JANUARY 2015120,230(4,295)( 7,70 4 )(1,526 )(6,638)100,067
Deferred tax in respect of previous years 1,792(45)(37) - (1,752)(42)
Deferred tax in respect of current year2,139824(757)538,39010,649
Deferred tax recognised
in the income statement
4(a)3,931779(794)536,63810,607
Deferred tax on items included
in other comprehensive income--2,300(1,447)-853
AT 31 DECEMBER 2015
124,161( 3,516 )( 6 ,198 )(2,920)- 111, 5 27
Deferred tax in respect of previous years
(136 )(96)(203)4-(431)
Deferred tax in respect of current year
10,486(170 )(429)(2)-9,885
Deferred tax recognised
in the income statement
4(a)10,350(266)(632)2-9,454
Deferred tax on items included
in other comprehensive income--(1,278)(133)-(1, 411)
AT 31 DECEMBER 201613 4 , 511(3,782)(8,108)(3,051)-119 , 570


Earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average
number of ordinary shares on issue during the year. The Company has no dilutive potential ordinary shares at 31 December
2016 (2015: nil) and therefore basic and dilutive earnings per share are the same.
4 Taxation cont.
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
6 Equity
DEBT AND EQUITY
The Group’s objective when managing capital (net assets of the Group) is to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefit for other stakeholders and to maintain an appropriate capital
structure. The Group borrows under a negative pledge arrangement (refer note 8). The Group monitors rolling forecasts which
take into consideration the Group’s debt financing plans and covenant compliance, to ensure that it is able to continue meeting
funding requirements.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, or issue new shares.
This section outlines Refining NZ’s capital structure and includes the following Notes:
Note 6: Equity
Note 7: Dividends
Note 8: Bank borrowings
5 Earnings per share
TOTAL
2016
TOTAL
2015
NOTE
Profit after tax attributable to shareholders of the Company
$000
47,177
150,771
Weighted average number of shares on issue
000’s6
312,508
312,576
BASIC AND DILUTED EARNINGS PER SHARE15.1
48.2
Contributed Equity
The issued capital of the Company is represented by 312,576,453 no par value ordinary shares (2015: 312,576,453) issued and fully
paid, less 98,025 treasury shares held by CRS Nominees Limited (refer to note 21). All ordinary shares rank equally with one vote
attached to each ordinary share.

Treasury stock
Treasury stock represents the value of shares acquired by the Parent on-market in respect of the Employee Share Purchase Scheme
(refer to note 21).

Employee share entitlement reserve
The employee share entitlement reserve is used to recognise the fair value of shares granted but not vested. Amounts are transferred
to share capital when the shares vest to the employee (refer to note 21).

Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments
used in cash flow hedges pending subsequent recognition in the income statement.

Non-controlling interest
Non-controlling interest represent equity in a subsidiary non attributable, directly or indirectly, to the Parent. Changes in the Parent’s
ownership interest in a subsidiary that do not result in the Parent losing control of the subsidiary are equity transactions. Any profits
or losses realised on transactions between shareholders is recognised directly in retained earnings. For details on transactions
between shareholders refer to note 13.
DEFERRED TAX LIABILITY/(ASSET)
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
7 Dividends
CENTS PER
SHARE
TOTAL
2016
$000
TOTAL
2015
$000
Interim dividend for 20155.0-15,629
Final dividend for 201520.0
62,515
-
Interim dividend for 20163.0
9,378
-
TOTAL71,893
15,629
The dividends were fully imputed. Supplementary dividends of $1.307 million (2015: $0.266 million) were paid to shareholders who
were not tax residents in New Zealand for which the Group received a foreign investor tax credit entitlement.
Imputation credits available to shareholders for subsequent reporting periods amount to $31.693 million (2015: $52.329 million).
Dividend declared post balance date
The Group has declared a final dividend of 6 cents per share, fully imputed, payable 30 March 2017 (2015: 20 cents per share).
8 Bank borrowings
Bank borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Borrowings are classified as current liabilities unless the Group has an unconditional right to
defer settlement for at least 12 months after the balance sheet date.
GROUP
2016
$000
GROUP
2015
$000
BANK BORROWINGS
Current bank borrowings:
Revolving cash advances (expiry June 2016)
-
25,000
Revolving cash advances (expiry June 2017)
69,500
-
Total current bank borrowings69,500
25,000
Non-current bank borrowings:
Revolving cash advances (expiry June 2017)
-
25,000
Revolving cash advances (expiry December 2019)
50,000
50,000
Term Loan (expiry December 2020)
100,000
100,000
Total non-current bank borrowings150,000
175,000
TOTAL BANK BORROWINGS219,500
200,000
EFFECTIVE INTEREST RATE
Bank loans
6.0%
6.4%
UNDRAWN FACILITIES
The Group has the following undrawn borrowing facilities:
Revolving cash advances (expiry June 2016)
-
75,000
Revolving cash advances (expiry June 2017)
130,500
175,000
TOTAL UNDRAWN BORROWING FACILITIES130,500
250,000
The carrying amounts of bank borrowings approximate their fair value. The borrowings are unsecured. The Parent borrows under a
negative pledge arrangement which requires certain certificates and covenants, including debt to total debt and equity, security to
tangible assets and EBITDA to interest ratios. All these requirements have been met and no breaches of these covenants are forecast.
The Parent has the ability to determine which revolving cash advance facility will be drawn upon to meet funding requirements.
The revolving cash advances expiring in June 2017 are in the process of being renewed.
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Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
OPERATING ASSETS AND LIABILITIES
This section shows the assets used to generate the Group’s trading performance and the liabilities incurred as a result. Liabilities
relating to the Group’s financing activities are detailed in the Debt and Equity section of the Notes. Taxation assets and liabilities are
detailed in the Performance section of these Notes.
This section includes the following Notes:
Note 9: Property, plant and equipment and intangibles
Note 10: Capital expenditure commitments
N o t e 11: Restoration provision
Note 12: Operating lease commitments
Note 13: Transactions between shareholders
Note 14: Trade and other receivables
Note 15 : Cash and cash equivalents
Note 16: Inventories
Note 17: Trade and other payables
Note 18: Employee benefits
9 Property, plant and equipment and intangibles

Property, plant and equipment and intangibles are initially recognised at cost which includes expenditures directly attributable
to the acquisition. Cost also includes transfers from equity of any gains/losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment, and borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset.

Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced asset is derecognised.

Major inspections associated with planned plant shutdowns and tank maintenance are capitalised at cost and recognised in
the carrying amount of the refining plant, provided the recognition criteria are met.

When an asset is disposed of, any gain or loss on disposal is calculated as the difference between the disposal proceeds and
the carrying value of the asset, and is recognised as a gain or loss on disposal of property, plant and equipment and presented
in ‘Other gains’ or ‘Total depreciation and disposal costs’ in the Income Statement.

Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised in the Income Statement for the amount by which
the asset’s carrying amount exceeds its recoverable amount, being the higher of an asset’s fair value less costs to sell and its
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
Depreciation is provided on a straight-line basis on all property, plant and equipment other than freehold land, capital work in
progress and precious metals (rhenium, platinum) contained in certain catalysts.

Included within the intangible assets are carbon credits received in the form of New Zealand Units (NZU’s).

The Group applies judgements in relation to the appropriateness and recoverability of the capital work in progress,
and useful lives applied to the property, plant and equipment. Capital work in progress as at 31 December 2016 has been
assessed by Management as recoverable.

During the financial year there have been no significant changes in estimates relating to useful lives of assets. The useful lives
applied are as follows:
Useful lives (years)

Freehold improvements 20
Buildings and jetties 20
Refining plant
- tankage 40-50
- rotating equipment 20-30
- piping 20-50
- vessels and columns 25-40
- instruments 10 -15
- electrical and electrical cabling 15-25
- plant shutdown and tank maintenance 2-20
- other refining plant 10-65
Catalysts 3-10
Refinery to Auckland Pipeline 6-70
Wiri Oil terminal (leased) 20
Equipment and vehicles 3-7
Capital work in progress n/a
Property, plant and equipment are included in the negative pledge arrangement as detailed in note 8.
During the year, the Group has not capitalised any borrowing costs on qualifying assets (2015: capitalised $14.334 million, at the
weighted average rate of its general borrowings of 6.0 %).
P
E
9 Property, plant and equipment and intangibles cont.
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
5756
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
9 Property, plant and equipment and intangibles cont.

GROUP
FREEHOLD
LAND AND
IMPROVEMENTS
$000
BUILDINGS
AND JETTIES

$000
REFINING
PLANT

$000
CATALYSTS


$000
REFINERY TO
AUCKLAND
PIPELINE
$000
WIRI OIL TERMINAL
(LEASED)
(NOTE 3)
$000
EQUIPMENT
AND VEHICLES

$000
CAPITAL WORK
IN PROGRESS

$000
TOTAL PROPERTY,
PLANT AND
EQUIPMENT
$000
INTANGIBLES


$000
AT 1 JANUARY 2015
Cost
69,556108,2812,438,47898,574222,0004 4,16 986 ,912385,2293,453,199-
Accumulated depreciation
(4 8 ,19 9 ) ( 86 ,19 9 ) (1,972,092) (58,219 ) (98,772) (39,729) (74,344) -( 2 , 37 7, 5 5 4 ) -
NET BOOK AMOUNT
21,35722,082466,38640,355123,2284,44012,56 8385,2291,075,645-
YEAR ENDED 31 DECEMBER 2015
Opening net book amount
21,35722,082466,38640,355123,2284,44012,56 8385,2291,075,645-
Additions/transfers
-670436 ,1339,339--1,260( 3 07, 016 )14 0,386-
Disposals
-(218)(42) (2,014) --(433) -(2,707) -
Depreciation charge
(1,361)(1,898)( 51,438 )(8,526)(5,260)(429)( 3,197)-(72,10 9 )-
Transferred to disposal group
Classified as held for sale
-(1,389) ----(1,991) -(3,380)-
CLOSING NET BOOK AMOUNT
19,99619,247851,03939,15 4117, 9 6 84 , 0118,20778,2131,137, 8 35-
AT 31 DECEMBER 2015
Cost
69,556106,7132,873,547105,74 4222,0004 4,16 979,25178,2133, 579,193-
Accumulated depreciation
(49,560)( 87,4 6 6 )(2,022,508)(66,590)(104,032)(4 0,15 8 )(71,044)-( 2,4 41, 35 8 )-
NET BOOK AMOUNT
19,99619,247851,03939,15 4117, 9 6 84 , 0118,20778,2131,137, 8 35-
YEAR ENDED 31 DECEMBER 2016
Opening net book amount
19,99619,247851,03939,154117, 9 6 84 , 0118,20778,2131,137, 835-
Additions/transfers
-41327,70 64,327--10,53724,13267,1154,425
Reclassification of additions
3,61982,636(104,140 )---17, 885---
Disposals
(40)(119 )103-----(56)-
Depreciation/amortisation charge
(1,435)(4,490)(60,318)( 8,915)(5,229)(429)(6,361)-( 87,177)-
Transferred from disposal group
reclassified from held for sale
-1,389----1,991-3,380-
CLOSING NET BOOK AMOUNT
22,14099,076714,39034,566112 ,73 93,58232,259102,3451,121,0974,425
AT 31 DECEMBER 2016
Cost
73,122191,8332,679,44790,718222,00044,169114 ,10 8102,3453, 517,7424,425
Accumulated depreciation
(50,982)(92,757)(1,965,057)(56,152)(109,261)(40,587)(81,849)-(2,396,645)-
NET BOOK AMOUNT
22,14099,076714,39034,566112 ,73 93,58232,259102,3451,121,0974,425
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
5958
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
12 Operating lease commitments

Leases in which a significant portion of risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Income
Statement on a straight-line basis over the period of the lease.


GROUP
2016
$000
GROUP
2015
$000
Commitments for operating leases where the Group is a lessee
- No later than one year
937
1,009
- One to five years
2,482
2,787
- Beyond five years
1,125
1,625
TOTAL4,544
5,421
The Group leases a small number of equipment and vehicles under non-cancellable operating leases. The Group leases process
industrial platinum under non-cancellable operating leases to be returned to the owners at the end of the lease periods, subject to
renegotiation options.

The Group also leases land under a non-cancellable operating lease that expires in 2024 with no right of renewal.

The operating lease expenditure charged to the Income Statement during the year is disclosed in note 2.


GROUP
2016
$000
GROUP
2015
$000
Commitments for operating leases where the Group is a lessor
- No later than one year
6,609
6,609
- One to five years
26,392
26,434
- Beyond five years
14,681
21,248
TOTAL47,682
54,291
The Group leases land and refining plant to Wiri Oil Services Limited (refer to note 3) under a non-cancellable operating lease,
which expires in 2024 with no right of renewal. The Group also leases land under an agreement that has two rights of renewal
for 21 years each.
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Commitments are presented for the assets purchases contracted as at the reporting date but not provided for in the
financial statements.
GROUP
2016
$000
GROUP
2015
$000
Capital commitments in relation to property, plant and equipment
14,382
15,912

The restoration provision relates to restoration obligations in relation to a lease agreement for the seabed upon which the jetty is
situated at Marsden Point.
The restoration provision is measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax interest rate that reflects the current market assessments of the time value of money and the risks specific to
the obligation.

Changes in the estimates during the year are recorded as a change in the restoration provision and the respective asset.
Increase in the provision due to passage of time (unwinding of discount) is recognised as finance costs.

GROUP
2016
$000
GROUP
2015
$000
AT 1 JANUARY8,046
7, 9 28
Unwinding of discount
422
337
Change in assumptions – discount rate
156
(219 )
AT 31 DECEMBER8,624
8,046
The present value of the restoration provision depends on a number of assumptions including estimated timing, restoration
costs and the discount rate used. Management assesses the appropriateness of the assumptions at each balance date. Any
changes in these assumptions will impact the carrying amount of the restoration provision.

The lease agreement expires in 2025 and this provision will be utilised, at that time, if the lease is not renegotiated for a
further term. An interest rate of 4.24% (2015: 4.53%) has been applied and set with reference to New Zealand Government
Bonds as a risk free rate.
10 Ca pital expenditure commitments
11 Re storation provision
P
P
E
P
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
6160
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

The Company’s only subsidiary, Independent Petroleum Laboratory Limited and certain property, plant and equipment leased to this
subsidiary by the Parent, were presented as a disposal group held for sale as at 31 December 2015 following the initiation of a
process to sell these assets.

In October 2016 the Parent decided to withdraw from the sale process and the assets previously reported as held for sale were
reclassified as held for use. The assets held for use are recognised at the lower of the estimated recoverable amount and the carrying
value that would have been recognised had the assets never been classified as held for sale.

On 31 December 2016, the Company acquired BP Oil New Zealand Limited’s 25.8% minority shareholding in Independent Petroleum
Laboratories Limited for $1.644 million to become a wholly owned subsidiary from that date. The excess of the purchase price over
the historic value of the non-controlling interest acquired of $0.869 million was recognised in retained earnings.

The purchase of the remaining 25.8% minority interest in Independent Petroleum Laboratory Limited on 31 December 2016, means
that there are no non-controlling interests at balance date.



Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest rate method, less impairment.
NOTE
GROUP
2016
$000
GROUP
2015
$000
Processing fees
29,858
31,975
Product distribution
3,822
2,992
Excise duty
17
105,651
123,857
Other
3,227
4,755
TOTAL TRADE AND OTHER RECEIVABLES142,558
163,579
Trade receivables are non-interest bearing and are normally settled on 7 to 21 day terms. No allowance for impairment loss has been
recognised as at 31 December 2016 (2015: nil). Trade and other receivables related party balances are disclosed in note 3.
13 Transactions between shareholders
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
14 Trade and other receivables
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value, and bank overdrafts.

In the statement of cash flows, the deposits’ placements and withdrawals and bank borrowings receipt and repayment are
presented on a net basis as their turnover is quick, amounts are large and the maturities are relatively short.
The below presents a reconciliation of net cash flow from operating activities to reported profit:


GROUP
2016
$000
GROUP
2015
$000
NET PROFIT AFTER INCOME TAX47,474
150,931
Adjusted for:
Depreciation and disposal costs
87, 233
72,10 9
Gain on sale property, plant and equipment
-
(22)
Movement in deferred tax
8,042
11, 4 6 0
Add/(less) deferred tax on items included in other comprehensive income
1,412
(853)
Movement in provisions
578
118
Movement between defined benefit pension plan employer contributions and expense
2,190
1,954
Other non-cash movements
8
755
Impact of changes in working capital items
Increase in trade and other receivables
17, 808
(2,940)
Increase in trade and other payables
(30,164)
22,814
Less increase in trade and other payables relating to property, plant and equipment
14,203
(12,283)
Less accrual relating to acquisition of non-controlling interest
(1,644)
-
Increase in employee entitlements
306
2,754
Less to other comprehensive income
(75)
(484)
Increase in income tax
(17, 5 0 9 )
21,126
Increase in inventories
(2,082)
(2,884)
NET CASH INFLOW FROM OPERATING ACTIVITIES127,780
264,555

15 Cash and cash equivalents
P
P
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
6362
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

16 Inventories
Inventories comprise spare parts and consumables, and are stated at the lower of cost, determined using the weighted
average cost method, or net realisable value.

Inventories are classified as current assets where usage is expected to be within 12 months and as non-current assets where
usage is expected after 12 months.


GROUP
2016
$000
GROUP
2015
$000
INVENTORIES
Current inventories:
Inventories at weighted average cost
2,884
2,733
Obsolescence provision
(555)
(567)
Total current inventories2,329
2,16 6
Non-current inventories:
Inventories at weighted average cost
21,607
19,10 9
Obsolescence provision
(4,092)
(3,802)
Total non-current inventories17, 515
15,307
TOTAL INVENTORIES19,844
17,47 3
Inventories are reviewed annually for impairment. The inventory obsolescence depends on a number of assumptions, including
age and condition of each individual inventory item. As at 31 December 2016 Management has written down the carrying
value of some inventories to estimated net realisable value, taking into account the above assumptions.
The consumption of inventories and any associated write downs are recognised as part of materials expense disclosed in note 2.
Inventories are included in the negative pledge arrangement (refer note 8).
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
17 Trade and other payables
Trade payables, including collected excise duty, are initially recognised at amounts payable. Provisions are recognised when
the Group has a legal or constructive obligation as a result of past events, it is more likely than not that an outflow of
resources will be required to settle the obligation, and the amount has been reliably estimated.
NOTE
GROUP
2016
$000
GROUP
2015
$000
Trade payables
35,281
35,786
Deconstruction provision
-
10,000
Excise duty
14
105,651
123,857
TOTAL TRADE AND OTHER PAYABLES140,932
169,643
Trade payables are unsecured, non-interest bearing and are usually paid within 30 days of recognition.

The deconstruction provision related to the decommissioned Semi–Regeneration Platformer which the Group was obligated to
complete, following the commissioning of the Continuous Catalyst Regeneration Platformer in 2015. The deconstruction of the
Semi–Regeneration Platformer was completed in 2016.

Changes to excise duties have no direct impact on the results of the Group as they are collected from the oil companies (note 14)
and paid to the New Zealand Customs Service on the same day each month.

Trade and other payables related party balances are disclosed in note 3.
P
E
P
REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
6564
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE

Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
18 Employee benefits
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2016
Liabilities for employee benefits comprise the following:


GROUP


NOTE
2016
CURRENT

$000
2016
NON -
CURRENT
$000
2016
TOTAL

$000
2015
CURRENT

$000
2015
NON -
CURRENT
$000
2015
TOTAL

$000
Defined benefit pension plan
18 (b)
-13,27813,278
-6,5976,597
Medical plan
18 (b)
1705,5345,704
1545,4065,560
Wages, salaries, annual leave and sick leave
5,455-5,455
5,408-5,408
Employee incentive scheme
3,664-3,664
3,031-3,031
Long-service leave and retirement bonus
1,0485,4566,504
1,1325,8897, 0 21
TOTAL10,33724,26834,605
9,72517, 8 9 227, 617

Defined benefit pension plan (scheme closed since 31 December 2002)
The Parent contributes to a defined benefit pension plan (the ‘Plan’) for eligible employees. The liability recognised in the
Balance Sheet in respect of the defined benefit pension plan is the present value of the defined benefit pension plan obligation
at the balance sheet date less the fair value of plan assets.

The defined benefit pension plan obligation is calculated annually by independent actuaries using the projected unit credit
method. The present value of the defined benefit pension plan obligation is determined by discounting the estimated future
cash outflows using interest rates of government bonds that have terms to maturity approximating the terms of the related
pension liability.

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.

Past-service costs are recognised immediately in the Income Statement.
Medical plan
The Parent pays health insurance premiums in respect of a limited number of former employees and a limited number of
current employees when they retire, until their death. This arrangement is no longer offered to new employees. The medical
plan is accounted for in a similar manner to the defined benefit plan outlined above, with an accounting valuation performed
by an independent actuary at each balance date.

Wages, salaries, annual leave and sick leave
These liabilities are measured at the amounts expected to be paid when settled.

Employee incentive schemes
The Company offers a short-term incentive scheme to eligible employees which recognises both individual and Company
performance. The Group recognises a provision where contractually obliged or where there is past practice that has created
a constructive obligation.

Long-service leave and retirement bonus
Long-service leave and retirement bonuses are measured based on an actuarial assessment and represent the present value of
the estimated future cash outflows, which are expected as a result of employee services provided up to the balance sheet date.
(a) Defined benefit pension plan

Nature of benefits
At retirement, the 92 (2015: 107) active members have pension entitlements based on final salary and membership. Members may
elect to exchange part, or all, of their pension for a cash lump sum. At 31 December 2016 the Plan had 110 (2015: 106) pensioners
receiving regular pension payments. There were also 6 (2015: 6) members receiving disability pensions, which can be paid from the
Plan until normal retirement age.

Description of regulatory framework
The Financial Markets Authority licenses and supervises regulated superannuation schemes. The Fund transitioned from the
Superannuation Schemes Act 1989 to the Financial Markets Conduct Act 2013 (the Act) on 11 November 2016 as an employer related
restricted workplace savings scheme.

The Act requires an actuarial valuation to be performed for each defined benefit superannuation scheme at least every three years to
assess whether the Company’s current level of contributions to the Plan is sufficient to meet future obligations (funding valuation).
For detail regarding the latest funding valuation see note 18(h).

At each balance date an accounting update is performed by an independent actuary in accordance with NZ IAS 19 ‘Employee
Benefits’ for recording in the Balance Sheet. The last full actuarial valuation performed under the Superannuation Schemes Act 1989
was as at 31 March 2016.


18 Employee benefits cont.
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REFINING NZ
ANNUAL REPORT 2016
REFINING NZ
ANNUAL REPORT 2016
6766
EC ONOMIC
PERFORMANCE
EC ONOMIC
PERFORMANCE