Refining NZ 2018 Interim Report

INTERIM REPORT 2018
RESOLVE
RESILIENCE
PRIDE

CONTENTS
S C Allen
Director
21 September 2018
M Tume
Director
01 Performance Highlights 2018
02 Chairman’s Report
04 Profit Matrix
05 Condensed Consolidated Interim
Financial Statements
25 Corporate Directory
This Interim Report of The New Zealand Refining Company
Limited and its subsidiary, Independent Petroleum
Laboratory Limited, is for the six-month period ended
30 June 2018 and was approved for issue by the Board of
Directors on 22 August 2018.
The Company trades as Refining NZ and so references to
this name relate to the Company as a legal entity.
For and on behalf of the Board:
ABOUT THIS
REPORT

GROUPGROUP
30 JUNE30 JUNE
20182017
$000$000
OPERATING RESULTS
Operating revenue ($000)
147,029
190,567
Net (loss)/profit before income tax ($000)
(3,320)
49,086
Net (loss)/profit after income tax ($000)
(2,822)
35,193
SHARE INDICATORS
Net tangible assets per security*
$2.41
$2.47
Earnings per share (annualised)
(2) cents
22 cents
NUMBERS
Shareholders
4,894
5,195
Employees
385
377
* Net tangible assets per security is a non-GAAP performance measure. It is calculated as ‘net assets’ disclosed in the balance sheet, minus intangible
assets, and plus or minus the value of derivative instruments, divided by the number of shares on issue at the end of the reporting period.
Processing Fee Revenue
• Revenue earned from processing fees is the main component of Operating Revenue as disclosed in note 1
of the Condensed Consolidated Interim Financial Statements.
• Processing Fees earned for the six months ended 30 June 2018 were 36% lower than the previous
corresponding financial period largely due to the impact of the planned refinery shutdown executed in 1H18.
• The Company’s processing fee revenue is impacted by the refiners’ margin (difference between product
and feedstock prices in the international markets), volume of feedstock processed and the exchange rate.
The key variables for the six months ended 30 June can be summarised as follows:
30 JUNE30 JUNE
20182017
$000$000
KEY VARIABLES
Intake (‘000 Barrels)
17,879
20,055
Gross Refining Margin (USD/Barrel)
5.65
7.70
Average USD Exchange rate
0.73
0.71
PERFORMANCE
HIGHLIGHTS 2018
REFINING NZ
INTERIM REPORT 2018
01

The shutdown was a significant
achievement for the Company.
Everyone in our team deserves
full credit for completing over 1,700
individual jobs to a high quality in
unseasonably cold weather. This
included two complex retrofits – the
mid-section replacement of the high
vacuum unit and the re-lifing of the
hydrogen manufacturing unit.
PERFORMANCE
Refining margins were healthy in the
first six months of the year. The Gross
Refinery Margin at USD 5.65 per
barrel (1H 2017: USD 7.70 per barrel),
remained within the Company’s
historical average margin range of
USD 4-6 per barrel. Our average uplift
over the Singapore Complex Margin
at USD 2.42 per barrel (1H 2017: USD
4.59 per barrel) reflected the impact
of the shutdown. We achieved a
throughput of 17.9 million barrels (1H
2017: 20.1 million barrels). With the
return to the full and reliable operation
of the refinery’s processing units we
expect to capitalise on continuing
healthy refining margins in the
second half of 2018.
In the lead-up to, and during the
shutdown, we worked closely
with our customers on planning
and scheduling of fuel imports to
ensure country fuel stocks were not
impacted. We are especially grateful
to our customers’ respective supply
teams for their support and
understanding during
the shutdown.
Our 2018 Health and Safety Action
Plan placed extensive focus on the
shutdown where we had 1,800
people work 600,000 hours across
multiple and complex work fronts.
While it was disappointing that four
individuals and their families were
impacted by injury we remain
committed to ensuring that our
people go home safely every day.
Our process safety performance was
impacted by a weld failure on a newly
installed valve during the hydrocracker
restart (a Tier 1 process safety event*).
The subsequent emergency shutdown
of the unit was managed safely by our
operations and emergency services
teams with no injury to our team on
site or damage to the unit.
In March the Refinery’s Safety Case
was submitted to WorkSafe. This
substantial piece of work outlines the
management processes we have in
place to run the refinery safely and
provides our local community with
guidance on personal safety should
there be a major event at the refinery.
We are in the process of socialising
the Safety Case in our local community.
REFINERY TO AUCKLAND
PIPELINE (RAP)
In February the Northland Regional
Council determined that the refinery
had no causative role in the September
2017 rupture on the RAP. Remediation
of the RAP rupture site was completed
at the end of May. The costs associated
with the environmental remediation
were largely met by the Company’s
insurance cover.
Refining NZ has reported an interim Net Loss after Tax
of $2.8 million for the six months ending 30 June 2018
(Net Profit after Tax for 1H 2017: $35.2 million), on the
back of the first total refinery maintenance shutdown
in 15 years.
* Tier 1 Process Safety Event is an unplanned or uncontrolled release of any material from a process
resulting in a lost time incident or fatality, fire, or explosion causing $25,000 (or greater) cost to
Company; a release of material greater than the threshold quantities given in Table 1 of API 754 in
any one hour period; an officially declared community evacuation or community shelter-in-place.
CHAIRMAN’S
REPORT
REFINING NZ
INTERIM REPORT 2018
02

Post-incident, the RAP was approved
to run at a maximum operating
pressure of 75 bar. Further pipeline
integrity data and analysis is being
collated for submission to the pipeline
certifier, Lloyds Register to allow the
Company to return to pre-incident
operating pressure (87 bar). Due to
very wet conditions delaying final
inspection activities, this is likely to
be in early 2019.
STRATEGY
The government’s focus on
transitioning the country to net zero
emissions by 2050 is an opportunity
to apply our capabilities, equipment
and refining knowledge to produce
biofuels and hydrogen at Marsden
Point. Long-term, we are actively
looking to the feasibility of a domestic
biofuels and hydrogen industry to
meet the future needs of aviation
and long-haul heavy trucking and
are in dialogue with the government
and other parties.
In the near-term, we continue to
pursue initiatives that will improve
energy performance and hence
our carbon profile, already greatly
improved by Te Mahi Hou and
increased access to natural gas.
Negotiations with the government
to recognise the refinery’s status
after our Negotiated Greenhouse
Agreement with the Crown expires
at the end of 2022 are ongoing.
Strategic initiatives that will grow
revenue and contribute to the
competitiveness of the refining
business are progressing to plan.
Our dredging project has been
granted resource consent with
conditions. While we are pleased with
the decision, we have appealed a
small number of conditions that we
believe are too restrictive.
BOARD AND MANAGEMENT
CHANGES
In February, Chief Executive Sjoerd
Post announced he was stepping
down from the role and would see
the Company through the process of
appointing his successor. In June the
Company appointed Mike Fuge as
his successor. Mike brings significant
international and local experience
in oil and gas, electricity and hydro
generation. He was the Chief
Executive of Pacific Hydro based
in Melbourne – a global renewable
energy owner, operator and developer
with over 1 gigawatt of renewable
projects in operation or construction.
Prior to Pacific Hydro, he was the
Chief Operating Officer at Genesis
Energy. Mike has also worked for
Royal Dutch Shell Group in
New Zealand and overseas.
The Board believes that Mike has the
leadership skills and experience to lead
the refinery in the coming years and to
contribute to the initiatives arising from
the government’s commitment to zero
carbon emissions. The transition to a
new CEO has been supported by
Sjoerd remaining in the role to the
end of August, for which the Board is
very appreciative.
In March, Mike Bennetts resigned as
a director of the Company. He was
replaced by Lindis Jones.
DIVIDEND
The Company’s Directors have
resolved to pay a fully imputed interim
dividend of 3 cents per share to be
paid on 20 September 2018 with a
record date of 13 September 2018.
The 2018 profit matrix has been
re-issued to reflect the Company’s
end-of-year profit and borrowing
expectations for a number of margin
and exchange rate scenarios (refer to
page 4 of this report).
FUTURE OUTLOOK
Completing the 2018 shutdown has
set us up for the continued reliable
and safe operation of our refinery,
the production of high quality
products for our customers, and
the continued pursuit of attractive,
margin improvement opportunities
with short pay-back periods.
Looking ahead, our refinery will
continue to have an essential role
in New Zealand’s energy future.
The re-lifing of the hydrogen
manufacturing unit during the
shutdown has strengthened our
position as a major hydrogen producer
and will be pivotal as we look to the
feasibility of a domestic biofuels and
hydrogen industry.
Simon Allen – Chairman
THE SHUTDOWN WAS A
FOR THE COMPANY.
”
”
SIGNIFICANT ACHIEVEMENT
REFINING NZ
INTERIM REPORT 2018
03

The profitability of a refining business is largely dependent on refiners’ margins and the USD
exchange rate. These variables are outside of Refining NZ’s control and can have significant
volatility. As a result, it is difficult for the Company to provide absolute forecasts of profitability;
instead we provide a profit matrix. This indicates our expected net profit after income tax and
borrowings at 31 December 2018 for given margin and foreign exchange rates. Throughput and
costs (excluding interest and tax) are constant at all levels of the profit matrix.
The 2018 profit matrix was originally issued in February 2018. In August a revised profit matrix was
issued by the Company to show 2018 expected net profit/(loss) after tax for a range of margin and
exchange rate variables based on the actual loss after tax ‘banked’ at 30 June, plus our latest
estimate of costs and throughput for the year. The 31 December 2018 projected borrowings also
takes into account the 3 cents per share interim dividend payable on 20 September 2018.
USD/NZD 0.60 0.65 0.70 0.75
GRM (USD/barrel)
H2
10 2 (4) (10)
30 21 13 6
49 39 30 22
69 57 47 38
89 75 63 53
270 281 290 298
250 259 266 276
230 240 250 257
210 222 233 242
190 204 216 226
5.00
41 Production, million barrels
99 Non processing fee revenue, $m
97 Depreciation, $m
Net profit after taxBorrowings
6.00
7. 0 0
8.00
9.00
FY
5.28
5.85
6.41
6.97
7.54
PROFIT
MATRIX
REFINING NZ
INTERIM REPORT 2018
04

CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS CONTENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
PAGE
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
The income earned and operating expenditure incurred by the Refining NZ Group
during the six month period
06
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
Items of income and operating expense not recognised in the income statement and
hence taken to reserves in equity
07
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
A summary of the Refining NZ Group assets and liabilities at the end of the six month period
08
CONDENSED CONSOLIDATED INTERIM 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 six month period
10
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
Cash generated and used by the Refining NZ Group
11
BASIS OF PREPARATION
12
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
14
PERFORMANCE
14
1 Operating revenue14
2 Segment information15
3 Related parties17
DEBT AND EQUITY
18
4 Dividends
18
5 Loans and borrowings
18
OPERATING ASSETS AND LIABILITIES
19
6 Property, plant and equipment and intangibles19
7 Capital commitments20
8 Restoration provision20
9 Cash and cash equivalents21
10 Trade and other payables22
11 Employee benefits22
FINANCIAL RISK MANAGEMENT
23
12 Financial instruments23
OTHER
24
13 Contingent assets and liabilities24
14 Events after balance date24
CORPORATE DIRECTORY
25
REFINING NZ
INTERIM REPORT 2018
05
REFINING NZ
INTERIM REPORT 2018
05

CONDENSED CONSOLIDATED
INTERIM INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
GROUPGROUP
30 JUNE30 JUNE
20182017
NOTE$000$000
INCOME
Operating revenue
1,2
147,029
190,567
Other income
2
1,152
67
TOTAL INCOME

148,181
190,634
EXPENSES
Purchase of process materials and utilities
37,735
31,592
Materials and contractor payments
13,792
12,001
Wages, salaries and benefits
28,899
27,092
Depreciation and disposal costs
46,216
48,228
Administration and other costs
18,323
15,464
TOTAL EXPENSES
144,965
134,377
NET PROFIT BEFORE FINANCE COSTS

3,216
56,257
FINANCE COSTS
Finance income
(63)
(63)
Finance costs
6,599
7,234
NET FINANCE COSTS

6,536
7,171
Net (loss)/profit before income tax
(3,320)
49,086
(Add)/less income tax

(498)
13,893
NET (LOSS)/PROFIT AFTER INCOME TAX

(2,822)
35,193
ATTRIBUTABLE TO:
Owners of the Parent

(2,822)
35,193
EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO
THE SHAREHOLDERS OF THE NEW ZEALAND REFINING COMPANY LIMITED
CENTSCENTS
Basic and diluted earnings per share
(0.90)
11.25
The above Condensed Consolidated Interim Income Statement is to be read in conjunction with the accompanying notes.
REFINING NZ
INTERIM REPORT 2018
06

CONDENSED CONSOLIDATED
INTERIM STATEMENT OF
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
GROUPGROUP
30 JUNE30 JUNE
20182017
NOTE$000$000
NET (LOSS)/PROFIT AFTER INCOME TAX
(2,822)
35,193
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to the Income Statement
Defined benefit plan actuarial loss
11
(453)
(4,457)
Deferred tax on defined benefit actuarial loss

127
1,248
Total items that will not be reclassified to the Income Statement(326)
(3,209)
Items that may be subsequently reclassified to the Income Statement
Movement in cash flow hedge reserve
(596)
430
Deferred tax on movement in cash flow hedge reserve
167
(121)
Total items that may be subsequently reclassified to the Income Statement
(429)
309
TOTAL OTHER COMPREHENSIVE LOSS, AFTER INCOME TAX

(755)
(2,900)
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD, AFTER INCOME TAX

(3,577)
32,293
ATTRIBUTABLE TO:
Owners of the Parent

(3,577)
32,293
The above Condensed Consolidated Interim Statement of Comprehensive Income is to be read in conjunction with the accompanying notes.
REFINING NZ
INTERIM REPORT 2018
07

CONDENSED CONSOLIDATED
INTERIM BALANCE SHEET
AS AT 30 JUNE 2018 (UNAUDITED)
GROUPGROUP
30 JUNE31 DECEMBER
20182017
NOTE$000$000
ASSETS



Cash and cash equivalents
6,802
17,557
Trade and other receivables
109,498
156,694
Derivative financial instruments
12
57
1,193
Income tax receivable
606
–
Inventories
3,181
2,228
TOTAL CURRENT ASSETS

120,144
177,672
NON-CURRENT ASSETS
Inventories
18,358
17,972
Property, plant and equipment
6
1,204,862
1,128,933
Intangibles
6
6,368
8,148
TOTAL NON-CURRENT ASSETS
1,229,588
1,155,053
TOTAL ASSETS

1,349,732
1,332,725




LIABILITIES



CURRENT LIABILITIES
Trade and other payables
10
143,577
176,199
Income tax payable
–
8,453
Loans and borrowings
5
50,000
–
Employee benefits
11
8,268
10,281
Derivative financial instruments
12
693
137
Finance lease liability
240
222
TOTAL CURRENT LIABILITIES

202,778
195,292
NON-CURRENT LIABILITIES
Deferred tax liabilities
121,790
123,124
Employee benefits
11
30,700
29,623
Restoration provision
8
10,060
9,888
Bank borrowings
5
222,000
170,000
Derivative financial instruments
12
8,518
9,550
Finance lease liability
2,347
2,473
TOTAL NON-CURRENT LIABILITIES

395,415
344,658
TOTAL LIABILITIES

598,193
539,950
NET ASSETS

751,539
792,775
REFINING NZ
INTERIM REPORT 2018
08

CONDENSED CONSOLIDATED
INTERIM BALANCE SHEET
AS AT 30 JUNE 2018 (UNAUDITED)
GROUPGROUP
30 JUNE31 DECEMBER
20182017
NOTE$000$000
EQUITY
Contributed equity
265,771
265,771
Treasury stock
(969)
(678)
Employee share entitlement reserve
580
429
Cash flow hedge reserve
(6,545)
(6,116)
Retained earnings

492,702
533,369
TOTAL EQUITY

751,539
792,775
The Board of Directors of The New Zealand Refining Company Limited authorised these financial statements
for issue on 22 August 2018.

For and on behalf of the Board:

S C Allen M Tume
Director Director
The above Condensed Consolidated Interim Balance Sheet is to be read in conjunction with the accompanying notes.
REFINING NZ
INTERIM REPORT 2018
09

CONDENSED CONSOLIDATED INTERIM
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
CONTRIBUTED
EQUITY
TREASURY
STOCK
EMPLOYEE
SHARE
SCHEME
ENTITLEMENT
RESERVE
CASH
FLOW
HEDGE
RESERVE
RETAINED
EARNINGS
TOTAL
EQUITY
GROUP
NOTE$000$000$000$000$000$000
AT 1 JANUARY 2017
265,771 (308)
228 (7,846)494,358 752,203
COMPREHENSIVE INCOME
Net profit after income tax–
–
– – 35,193 35,193
Other comprehensive income
Movement in cash flow hedge
reserve
– – – 430 – 430
Defined benefit actuarial loss
11
– – – – (4,457)(4,457)
Deferred tax on other comprehensive
income
– – – (121)1,248 1,127
TOTAL OTHER COMPREHENSIVE LOSS,
AFTER INCOME TAX

– – – 309 (3,209)(2,900)
TRANSACTIONS WITH OWNERS OF
THE PARENT
Equity-settled share-based payments– – 117 – – 117
Treasury shares purchased– (370)– – – (370)
Dividends paid

– – – – (18,755)(18,755)
TOTAL TRANSACTIONS WITH OWNERS
OF THE PARENT
– (370)117 – (18,755)(19,008)
AT 30 JUNE 2017

265,771 (678)345 (7,537)507,587 765,488
AT 1 JANUARY 2018
265,771 (678)429 (6,116)533,369 792,775
COMPREHENSIVE INCOME
Net loss after income tax
– – – – (2,822)(2,822)
Other comprehensive income
Movement in cash flow hedge
reserve
– – – (596)– (596)
Defined benefit actuarial loss
11
– – – – (453)(453)
Deferred tax on other comprehensive
income
– – – 167 127 294
TOTAL OTHER COMPREHENSIVE LOSS,
AFTER INCOME TAX

– – – (429)(326)(755)
TRANSACTIONS WITH OWNERS OF
THE PARENT
Equity-settled share-based payments
– – 151 – – 151
Treasury shares purchased
– (291)– – – (291)
Unclaimed dividends written back
– – – – (10)(10)
Dividends paid

– – – – (37,509)(37,509)
TOTAL TRANSACTIONS WITH OWNERS
OF THE PARENT
– (291)151 – (37,519)(37,659)
AT 30 JUNE 2018

265,771 (969)580 (6,545)492,702 751,539
The above Condensed Consolidated Interim Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
REFINING NZ
INTERIM REPORT 2018
10

CONDENSED CONSOLIDATED INTERIM
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
GROUPGROUP
30 JUNE30 JUNE
20182017
NOTE$000$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
166,955
191,492
Payment for supplies and expenses
(76,387)
(60,676)
Payments to employees
(30,137)
(29,504)
CASH GENERATED FROM OPERATIONS
60,431
101,312
Interest received
63
63
Interest paid
(5,514)
(7,095)
GST paid
(10,352)
(3,083)
Income tax paid
(9,601)
(11,900)
NET CASH INFLOW FROM OPERATING ACTIVITIES
9
35,027
79,297
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
(109,728)
(39,858)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES

(109,728)
(39,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from/(Repayments of) bank borrowings
102,000
(14,500)
Unclaimed dividends
(10)
–
Dividends paid to shareholders
(37,509)
(18,755)
Finance lease
(244)
–
Purchase of treasury stock
(291)
(370)
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES
63,946
(33,625)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
(10,755)
5,814
Cash and cash equivalents at the beginning of the period
17,557
1,675
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
6,802
7,489
The above Condensed Consolidated Interim Statement of Cash Flows is to be read in conjunction with the accompanying notes.
REFINING NZ
INTERIM REPORT 2018
11

BASIS OF PREPARATION
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
Basis of preparation
These condensed consolidated interim financial statements as at and for the six months ended 30 June 2018
comply with New Zealand Generally Accepted Accounting Practice (‘NZ GAAP’) and have been prepared in
accordance with New Zealand Equivalents to International Accounting Standard (‘NZ IAS‘) 34 Interim Financial
Reporting and International Accounting Standard (‘IAS‘) 34 Interim Financial Reporting and, consequently, do not
include all the information required for full financial statements. The condensed consolidated interim financial
statements should be read in conjunction with the annual consolidated financial statements for the year ended
31 December 2017.
Entities reporting
The condensed consolidated interim financial statements for the ‘Group‘ are for the economic entity
comprising The New Zealand Refining Company Limited (‘Parent’, ‘Company’ or ‘Refining NZ’) and its subsidiary,
Independent Petroleum Laboratory Limited. No separate Parent results are disclosed in these condensed interim
financial statements.
The Parent and the Group are designated as for profit entities for financial reporting purposes.
Statutory base
The condensed consolidated interim financial statements of the Group have been prepared in accordance with the
requirements of the NZX Main Board Listing Rules. Refining NZ is registered under the Companies Act 1993 and
is a FMC Reporting Entity under Part 7 of the Financial Markets Conduct Act 2013.
Accounting policies
The accounting policies used in the preparation of these condensed consolidated interim financial statements are
consistent with those used in the previously published consolidated interim financial statements as at and for the
six months ended 30 June 2017 and the audited consolidated financial statements as at and for the year ended
31 December 2017.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period and the Group had
to amend its accounting policies as a result of adopting the following standards:
• NZ IFRS 9 Financial Instruments – early adopted by the Group for the year ending 31 December 2017, and
• NZ IFRS 15 Revenue from Contracts with Customers – adopted in the current reporting period.
Adoption of NZ IFRS 15 Revenue from Contracts with Customers from 1 January 2018 has not resulted in
material adjustments to the amounts recognised in the financial statements. Refining revenue is recognised over
time as processing services are delivered. Distribution revenue, identified as a separate performance obligation,
is recognised over time as refined products are delivered. Revenue from other contracts (primarily relating to
provision of services) is recognised over time as goods or services are delivered to customers.
The Group has made an assessment to determine if any additional disclosures are required to comply with
the NZ IFRS 15 requirements. Current disaggregation of the revenue from contracts with customers using
existing segments and categories, as per notes to these condensed and the recent annual consolidated financial
statements, is considered appropriate to depict how the nature, amount, timing and uncertainty of revenue and
cash flows are affected by economic factors.
REFINING NZ
INTERIM REPORT 2018
12

BASIS OF PREPARATION
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
Use of judgements and estimates
The preparation of the condensed consolidated interim 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 judgements and
assumptions that can significantly affect the amounts recognised in the condensed consolidated interim
financial statements:
• Recoverability of the capital work in progress, and useful lives of property, plant and equipment – refer to
note 6;
• Restoration provision – refer to note 8;
• Employee benefits (including defined benefit pension plan obligation) – refer to note 11;
• Inventory obsolescence provision – no significant changes to these estimates have been made in relation
to inventory obsolescence provision in these condensed consolidated interim financial statements.
REFINING NZ
INTERIM REPORT 2018
13

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
PERFORMANCE
This section focuses on Refining NZ’s financial performance and the returns provided to equity holders.
The following notes are included:
Note 1: Operating revenue
Note 2: Segment information
Note 3: Related parties
1 OPERATING REVENUE
GROUPGROUP
30 JUNE30 JUNE
20182017
FOR THE SIX MONTHS ENDED 30 JUNE$000$000
Comprises:
Processing fees
97,356
151,038
Natural Gas recovery
14,078
8,891
Other refining related income
7,152
4,595
REFINING REVENUE
118,586
164,524
Pipeline fee revenue
23,248
20,993
Wiri land and terminal lease income
3,263
3,263
DISTRIBUTION REVENUE
26,511
24,256
Other operating income
1,932
1,787
TOTAL OPERATING REVENUE
147,029
190,567
In the current financial reporting period, the Parent Company undertook a total refinery shutdown to carry
out planned inspection and maintenance activities; major refits were also successfully completed during this
one-in-fifteen year event. All critical shutdown works have been completed by 30 June 2018, with some
demobilisation activities to be completed post balance date. The refinery has been back in full operation from
6 July 2018. The impact of the shutdown on the 2018 net profit after tax is expected to be in the range of
$45-$47 million. The capital cost associated with the shutdown is outlined in note 6.
REFINING NZ
INTERIM REPORT 2018
14

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
2 SEGMENT INFORMATION
(a) Description of segments
The Leadership Team is the chief operating decision-maker. This Team reviews the Group’s internal
reporting in order to assess performance and allocate resources including the definition of the operating
segments – oil refining and distribution. Management has determined the operating segments based
on these reports.
The Leadership Team considers the business from an operations perspective and assesses the
performance of the two main business segments ‘Oil refining’ and ‘Distribution’.
Oil refining
The Company 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 from around the world.
Distribution
The Company 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.
Other
Other segments include 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
(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.
(b) Reporting 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 condensed consolidated interim financial statements.
The Group manages assets and liabilities on a central basis and therefore does not provide any segment
information of this nature.
REFINING NZ
INTERIM REPORT 2018
15

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
2 SEGMENT INFORMATION (continued)
(c) Segment results
REFINING NZ
INTERIM REPORT 2018
16

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
2 SEGMENT INFORMATION (continued)
OIL REFININGDISTRIBUTIONOTHERTOTAL
30 JUNE 2018$000$000$000$000
Total operating revenue
118,586 26,511 4,294 149,391
Inter-segment revenue
– – (2,362)(2,362)
REVENUE FROM EXTERNAL CUSTOMERS
118,586 26,511 1,932 147,029
Other income
– 1,082 70 1,152
Finance income
62 – 1 63
Finance cost
(6,589)– (10)(6,599)
Depreciation and disposal costs
(42,527)(3,434)(255)(46,216)
Income tax
5,864 (5,218)(148)498
Net (loss)/profit after income tax
(16,695)13,418 455 (2,822)
OIL REFININGDISTRIBUTIONOTHERTOTAL
30 JUNE 2017$000$000$000$000
Total operating revenue164,524 24,256 4,294 193,074
Inter-segment revenue– – (2,507)(2,507)
REVENUE FROM EXTERNAL CUSTOMERS
164,524 24,256 1,787 190,567
Other income– – 67 67
Finance income62 – 1 63
Finance cost(7,226)– (8)(7,234)
Depreciation and disposal costs(44,581)(3,434)(213)(48,228)
Income tax(8,338)(5,269)(286)(13,893)
Net profit after income tax21,041 13,548 604 35,193
Comparatives for total operating revenue and income tax for the Oil Refining and Distribution segments have been
updated to ensure consistency between financial reporting periods.
3 RELATED PARTIES
The Group enters into transactions with related parties. Details of related parties and the types of transactions
entered into during the period ended 30 June 2018 are consistent with those disclosed in the audited financial
statements for the year ended 31 December 2017.
REFINING NZ
INTERIM REPORT 2018
17

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
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.
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 4: Dividends
Note 5: Loans and borrowings
4 DIVIDENDS
TOTALTOTAL
CENTS 30 JUNE 201830 JUNE 2017
PER SHARE$000$000
Final dividend paid for 20166.0
–
18,755
Final dividend paid for 201712.0
37,509
–
TOTAL
37,509
18,755
The dividends were fully imputed. Supplementary dividends were paid to shareholders who were not tax
residents in New Zealand for which the Group received a foreign investor tax credit entitlement.
Dividend declared post balance date
The Group has declared a dividend of 3 cents per share, fully imputed, payable on 20 September 2018
(2017: 6 cents per share).
5 LOANS AND BORROWINGS
The chart below outlines the maturity profile of the facilities.
0
20,000
40,000
60,000
80,000
100,000
120,000
3-4 YEARS2-3 YEARS1-2 YEARS0-1 YEARS
$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.
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.
0
20,000
40,000
60,000
80,000
100,000
120,000
3-4 YEARS2-3 YEARS1-2 YEARS0-1 YEARS
$000
REFINING NZ
INTERIM REPORT 2018
18

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
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.
This section includes the following notes:
Note 6: Property, plant and equipment and intangibles
Note 7: Capital commitments
Note 8: Restoration provision
Note 9: Cash and cash equivalents
Note 10: Trade and other payables
Note 11: Employee benefits
6 PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLES
GROUPGROUP
30 JUNE30 JUNE
20182017
$000$000
OPENING NET BOOK AMOUNT
1,137,081
1,125,522
Additions
122,387
43,536
Depreciation and disposals cost
(46,216)
(48,228)
Transfers
(2,022)
(500)
CLOSING NET BOOK AMOUNT
1,211,230
1,120,330

Comprises:
Property, plant and equipment
1,204,862
1,116,406
Intangibles
6,368
3,924
CLOSING NET BOOK AMOUNT
1,211,230
1,120,330
Property, plant and equipment additions for the six months ended 30 June 2018 includes $98 million invested
during the planned maintenance shutdown (refer to note 1). Total cost of the shutdown is estimated to be
approximately $110 million.
Intangibles includes the New Zealand Units (NZUs) issued by the Crown to the parent company, pursuant to
the company’s Negotiated Greenhouse Agreement (NGA), which is valid until 2022. The Company is currently
exempted from the Emissions Trading Scheme (ETS) due to the NGA and the company’s demonstrated
commitment to progress in reduction of energy intensity along a world’s best practice pathway.
No impairment losses have been recognised in relation to property, plant and equipment, work in progress,
and intangibles (30 June 2017: nil).
REFINING NZ
INTERIM REPORT 2018
19

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
7 CAPITAL COMMITMENTS
GROUPGROUP
30 JUNE30 JUNE
20182017
$000$000
Capital expenditure contracted for in relation to property, plant and equipment at the
end of the period but not yet incurred
24,308
19,256
8 RESTORATION PROVISION
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.
At 30 June 2018 the Company has reassessed the value of the future expenditures and amended the discount
rate assumptions (from 3.48% as at 31 December 2017 to 3.37% as at 30 June 2018). An increase in the
provision, as a result of the passage of time (unwinding of discount), of $172 thousand was recognised as a
finance cost.
REFINING NZ
INTERIM REPORT 2018
20

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
9 CASH AND CASH EQUIVALENTS
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:
GROUPGROUP
30 JUNE30 JUNE
20182017
FOR THE SIX MONTHS ENDED 30 JUNENOTE$000$000
NET PROFIT AFTER INCOME TAX
(2,822)
35,193
Adjusted for:
Depreciation and disposal costs
46,216
48,228
Movement in deferred tax
(1,334)
760
Add: deferred tax on items included in other comprehensive income
294
1,127
Movement in provisions
172
1,097
Less: increase in provisions included in property, plant and equipment
8
–
(914)
Non-cash items
(38)
498
Defined benefit pension plan expense
1,231
1,110
Impact of changes in working capital items:
Decrease/(Increase) in trade and other receivables
47,196
(9,337)
(Decrease)/Increase in trade and other payables
(32,622)
4,555
Add: decrease/(increase) in trade payables included in property,
plant and equipment
(10,399)
104
Decrease in employee entitlements (excl. defined benefit pension plan)
(2,469)
(3,639)
(Decrease)/Increase in income tax payable
(9,059)
107
(Increase)/decrease in inventories
(1,339)
408
NET CASH FLOWS FROM OPERATING ACTIVITIES

35,027
79,297
REFINING NZ
INTERIM REPORT 2018
21

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
10 TRADE AND OTHER PAYABLES
GROUPGROUP
30 JUNE31 DECEMBER
20182017
$000$000
Trade payables
47,360
46,255
Excise duty
96,217
129,944
TOTAL TRADE AND OTHER PAYABLES
143,577
176,199
Trade and other receivables, and trade and other payables both include excise duties of $96.2 million
(31 December 2017: $129.9 million). Changes to excise duties have no direct impact on the results of the Group
as they are collected from the oil companies and are paid to the New Zealand Customs Service on the same day
of each month.
11 EMPLOYEE BENEFITS
Employee benefits comprise defined benefit pension and medical plan, wages, salaries, annual leave, and long-
service leave and retirement bonus.
The non-current portion of the employee benefits includes the defined benefit pension plan obligation at 30 June
2018 representing the accounting valuation performed, as at that date, by an independent actuary in accordance
with NZ IAS 19 Employee Benefits. The actuarial assumptions used in the 30 June 2018 valuation are consistent
with those adopted as at 31 December 2017. The discount rate adopted at 30 June 2018 was 3.0% (December
2017: 3.0%) and is set with reference to New Zealand Government Bonds.
The total amount recognised in other comprehensive income is as follows:
GROUPGROUP
30 JUNE30 JUNE
20182017
$000$000
Actuarial losses
(390)
(6,211)
Actual return on plan assets less interest income
87
3,225
Contributions tax
(150)
(1,471)
TOTAL RECOGNISED IN OTHER COMPREHENSIVE INCOME INCLUDING CONTRIBUTIONS TAX
(453)
(4,457)
REFINING NZ
INTERIM REPORT 2018
22

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
FINANCIAL RISK MANAGEMENT
This section outlines the key risk management activities undertaken to manage the Group’s exposure to
financial risk.
This section includes the following notes:
Note 12: Financial instruments
12 FINANCIAL INSTRUMENTS
All financial assets other than derivatives are classified as loans and receivables. All financial liabilities other
than derivatives are classified as measured at amortised cost. The fair value of financial assets and liabilities
approximates their carrying value.
GROUPGROUP
30 JUNE31 DECEMBER
20182017
$000$000
Trade and other receivables
109,498
156,694
Cash and cash equivalents
6,802
17,557
TOTAL LOANS AND RECEIVABLES
116,300
174,251
Trade and other payables
(47,360)
(46,255)
Bank borrowings
(272,000)
(170,000)
FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
(319,360)
(216,255)
Derivative liabilities designated in hedging relationships
Forward foreign exchange contracts
57
458
Electricity futures
(989)
668
Interest rate swaps
(8,222)
(9,620)
TOTAL DERIVATIVE LIABILITIES DESIGNATED IN HEDGING RELATIONSHIPS
(9,154)
(8,494)
Classified as:
Current assets
57
1,193
Current liabilities
(693)
(137)
Non-current liabilities
(8,518)
(9,550)
TOTAL DERIVATIVE LIABILITIES DESIGNATED IN HEDGING RELATIONSHIPS
(9,154)
(8,494)
Financial instruments are measured at fair value using the following fair value measurement hierarchy:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
• inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2), and
• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(level 3).
The Group’s financial instruments have been measured at the fair value measurement hierarchy of level 2
(2017: level 2).
REFINING NZ
INTERIM REPORT 2018
23

NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018 (UNAUDITED)
Interest rate swaps and forward foreign exchange contracts are not traded in an active market and their fair value
is determined by using valuation techniques. Specific valuation techniques used by the Group refer to observable
market data and include:
• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows
based on observable yield curves, and
• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the
balance date, with the resulting value discounted back to present value.
OTHER
This section contains additional notes and disclosures that aid in understanding Refining NZ’s performance and
financial position.
This section includes the following notes:
Note 13: Contingent assets and liabilities
Note 14: Events after balance date
13 CONTINGENT ASSETS AND LIABILITIES
Contingent asset
Following the Refinery to Auckland pipeline rupture on 14 September 2017, the Parent Company incurred costs
associated with repairs to the pipeline and the recovery and remediation of the leak site (completed May 2018).
The Company’s financial results have been impacted with reduced processing fee revenue in 2017 and distribution
revenue in both 2017 and 2018 (as a result of the pipeline operating below its maximum allowable operating
pressure post incident).
The Company had insurance policies to cover both environmental remediation and loss of revenue following the
incident. In the six months ended 30 June 2018:
• Insurance recoveries of $1.1 million were recognised as “Other income” in respect of environmental
remediation costs incurred during the period.
• The Parent Company was advised that its claim under the material damage and business interruption policy for
loss of revenue, had been accepted by insurers.
The claim, yet to be finalised, is expected to be in the range of $2-3 million based on the Parent Company’s
assessment. This potential insurance recovery has not been recognised in the financial statements, pending
confirmation and acceptance of the claimed amounts by insurers.
Contingent liabilities
The Group has no contingent liabilities at 30 June 2018 (30 June 2017: nil).
14 EVENTS AFTER BALANCE DATE
No events after balance date occurred, except for the declared interim dividend as per note 4.
REFINING NZ
INTERIM REPORT 2018
24

CORPORATE
DIRECTORY
Registered Office
Marsden Point
Ruakaka
Mailing Address
Private Bag 9024
Whangarei 0148
Telephone: +64 9 432 5100
Website
www.refiningnz.com
Share Register
Computershare Investor Services Limited
Private Bag 92119
Auckland 1142
Telephone: +64 9 488 8777
enquiry@computershare.co.nz
Bankers
ANZ Bank New Zealand Limited
Bank of New Zealand
MUFG Bank, Limited
Bank of China (New Zealand) Limited
Legal Advisers
Minter Ellison Rudd Watts
Chancery Green
Auditor
PricewaterhouseCoopers
Chairman
S C Allen (independent director)
Independent Directors
V C M Stoddart
M Tume
P A Zealand
Non-Independent Directors
M J Bennetts (resigned 16 March 2018)
D C Boffa
R Cavallo
L Jones (appointed 19 March 2018)
Chief Executive Officer
S Post (resignation effective 31 August 2018)
M Fuge (appointment effective 27 August 2018)
Company Secretary
D M Jensen
Managing your shareholding online
To change your address, update your payment
instructions and to view your registered details
including transactions, please visit:
www.computershare.co.nz/investorcentre
Please assist our registrar by quoting your
CSN or shareholder number.
REFINING NZ
INTERIM REPORT 2018
25

www.refiningnz.com