Refining NZ 2018 Annual Report

CLEAR.
REFINING NZ

ANNUAL REPORT 2018

From the very first day our
refinery began operating,
our position as a critical
piece of energy infrastructure
was clear.
That hasn’t changed and neither has our
aspiration to be the fuels manufacturer and
supplier of choice for New Zealand. We know
it is a big responsibility and look to fulfil that
by running our refinery safely and reliably
while being clear about what we need to do
to delight our customers, provide value to our
shareholders, and to sustain our community
and our environment for the years ahead.

INVESTED.
REFINING NZ ANNUAL REPORT 201802

For nearly 60 years we’ve kept New Zealand
moving. Our continuous investment in the
Refinery’s capacity and capability has been
pivotal to the success of our company, our
region and our country. It’s an investment
shared by every Northlander who works here.
Focusing our skills and expertise on achieving
a cleaner, safer and more efficient fuel supply,
we are investing in a sustainable energy future
– New Zealand’s future.
03

CONFIDENT.
REFINING NZ ANNUAL REPORT 201804

We believe in doing the right things, at the
right time and in the right way. As a trusted
and capable partner, our ideas, vision and
substantial technical knowledge amount
to considerable experience and intellectual
capital, allowing us to adapt in the ever-
changing energy industry. Our confident,
practical thinking and collaborative
approach provides a solid foundation to
create an exciting economic future.
05

Directors’ Statement
The Directors are responsible for the preparation of the
consolidated financial statements and other information
included in this Annual Report. The consolidated financial
statements authorised for issue by the Board of Directors and
dated on 21 February 2019 have been prepared in conformity
with generally accepted accounting practices to give a true and
fair view of the financial position of the Group and the results
of its operations and cash flows.
The New Zealand Refining Company Limited (“the Company”,
“Refining NZ”, “RNZ”) appoints an independent auditor to
audit the consolidated financial statements prepared by the
Directors and to express an opinion on these consolidated
financial statements.
The independent auditor’s report, which sets out their opinion and
the basis of that opinion, is set out in the “Independent Auditor’s
Report” on page 121 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
Chair
14 March 2019
J B Miller
Chair, ARFC
REFINING NZ ANNUAL REPORT 201806

Contents
08 Highlights
10 Chairman and Chief Executive Officer’s report
14 Q&A with Mike Fuge
16 Innovation and New Technology
18 The Way We Do Business
20 Our Strategy
22 In Dialogue with our Stakeholders
24 Our Performance in 2018
35 Our Action Plan
38 Governance
56 Shareholder and Bondholder Information
58 Board of Directors
62 Leadership Team
67 Consolidated Financial Statements
121 Independent Auditor’s Report
126 Trend Statement
127 Glossary
128 GRI Index
130 Corporate Directory
130 Financial Calendar
07

Gross Refining Margin
$6.31
$ 8.02 PER BARREL IN FY17
USD
PER
BARREL
Net Profit After Income Tax
$30M
$79M IN FY17
NZD
$
EBITDA
[1]
$15 3M
$220M IN FY17
NZD
TRCF
[1]
0.76
0.89 IN FY17
HIGHLIGHTS.
[1] For a full definition refer to Glossary on page 127.
REFINING NZ ANNUAL REPORT 201808

COMMUNITY
CALLOUTS
EMERGENCY
EXERCISES
Contribution to
Northland Economy of
85
26
~
7% p.a.
IN 2018
Successful issue of
subordinated notes
$75M
ON 14 DECEMBER 2018
NZD
Total fully imputed dividend
7. 5CPS
FOR FY2018 (2017: 18.0CPS)
&
09

CREATING
BETTER
ENERGY
CHOICES FOR
NEW ZEALAND.
Chairman and Chief Executive Officer’s Report
REFINING NZ ANNUAL REPORT 201810

The Net Profit after Tax (NPAT) of $29.6 million
(2017: $78.5 million) reported for the year ended 31
December 2018 reflects two very different halves to
the year: a first half impacted by the first planned
full refinery shutdown in 14 years and a second half
marked by healthy refining margins, weakening
exchange rate and a strong operational
performance.
The underlying business fundamentals
remain strong.
This was borne out by the reliable running of the
Refinery’s processing units post shutdown and for the
remainder of the year, which saw refinery throughput for
the second half of 2018 at its highest ever. This operational
performance allowed the Company to capitalise on healthy
refining margins.
REFINING MARGINS AT TOP OF HISTORIC RANGE
The Gross Refining Margin averaged USD 6.31 for the year
(2017: USD 8.02 per barrel) or USD 7.33 when normalised
for the 2018 shutdown. This is at the top of its historical
USD 4.00 to USD 6.00 per barrel range, supported by
global demand growth and our continued progress in
optimising the Refinery’s operational efficiency.
RNZ’s uplift over the Singapore Complex Margin averaged
USD 3.61 per barrel (2017: USD 4.27), reflecting the
impact of the 2018 shutdown. The Company benefited
from a weaker exchange rate which averaged USD 0.69
for the year (2017: USD 0.71).
While the planned maintenance shutdown took longer
than expected, there are rich learnings which our
shutdown team is already applying to planning for
the next shutdown in 2020: on time, on budget.
A notable success was the major refurbishing of
the Refinery’s Hydrogen Manufacturing Unit. This
refurbishment underpins the Refinery’s role in the fuels
supply chain and presents the exciting possibility of
developing further hydrogen infrastructure, potentially
critical to our low carbon economy, and to New Zealand
continuing to meet its climate change obligations.
Health, Safety and Environment
We continue to implement the recommendations from the
two DuPont reviews of our health and safety management
systems. The 2018 Shutdown was an opportunity to
rollout two key recommendations of the 2017 review,
namely a new, streamlined permit to work system and
system of isolations (Log out, Tag out) to safeguard plant
for maintenance.
Regrettably, five of the eight recordable cases during the
year occurred during the shutdown. In terms of process
safety, the most significant event was a manufacturing
weld failure on a newly installed isolation valve on the
Hydrocracking Unit. Fortunately, no one was hurt and
there was no plant damage as a result of this incident.
Our personal and process safety performance in the
second half of the year was much improved. We aspire to
improve on our performance so that all of our people go
home safely every day.
11

In 2018, we achieved a major milestone with the
submission of our Safety Case to WorkSafe, and the
rollout of that case to our local community (see the “What
if? The Safety Case provides robust answers” on page
25). Our action plan for 2019 will look to improve on our
safety performance particularly through our ongoing work
in cultural safety. The launch of E T
~
u Tangata - Stand in the
Gap - will go a long way to improving our performance
through a series of cultural safety initiatives with our
people and contracting workforce (see the”taking a stand
for safety” on page 34).
Customer Promise: Quality, Reliability,
Competitiveness
The support we provide to key industries helps drive
New Zealand’s economic growth. This is highlighted
by the continued demand for diesel, but especially for
jet fuel which has continued to be driven by increasing
international visitor numbers. With an eye to maintaining
an attractive value proposition for our customers, we
remain focused on improving the quality, reliability and
competitiveness of our refining operations.
Pursuing attractive, short pay back, margin enhancing
projects has continued to reap benefits with current
initiatives delivering excellent results. This reflects the
value of ongoing investment in leveraging efficiencies.
PIPELINE CAPACITY UPGRADE DELIVERS
RECORD THROUGHPUT
The Refinery to Auckland Pipeline (RAP) capacity upgrade
project, to help meet growing Auckland demand saw the
Refinery achieve a new annual throughput record on the
pipeline. The first two phases of this three-phase upgrade
have been completed and following a review of phase
three, we are now exploring the use of a drag reducing
agent as an alternative de-bottlenecking option. This has
the potential to increase pipeline throughput by
a further 15% at a lower capital investment.
In May, the Company completed the last piece of
remediation on the RAP rupture site near Ruakaka.
In December, the Government announced an Inquiry into
the pipeline outage. Its purpose is to draw lessons from
the outage to inform how the fuel industry and the
Government could improve the resilience of fuel supply
into the Auckland region. The Refinery is actively working
with the Inquiry team. Separately, we are providing
information to the Commerce Commission study into
retail fuel markets.
DREDGING FOR COMPETITIVE ADVANTAGE
AND IMPROVED RETURNS
In December, the Environment Court confirmed the
resource consents issued for the Refinery’s crude shipping
dredging project.
This strategically important project has been de-risked
considerably by a set of revised conditions that all parties
consider to be effective and workable. Improving the
economics of up to half of all crude delivered to the
Refinery will help to keep us competitive with imported
fuel from Asia Pacific refiners. A date for dredging to
commence has yet to be confirmed and is dependent on
the successful completion of monitoring activity on the
harbour and a final investment decision by the Board.
There is more that we can do to improve our operational
performance and competitiveness, while improving
returns to our shareholders. This will continue to be a core
part of our strategy moving forward.
Sustainability and Community
The Company’s core focus on improving operations
extends to a continued commitment to deliver a world
class environmental performance.
We continue to deliver advances in environmental
performance including reductions in sulphur per unit of
fuel production as well as the carbon intensity of our
refining operation. Maintaining and improving the
environmental integrity of our refining site has seen the
Company invest over $24 million over the past four years.
We will continue to improve our emissions profile through
our partnership with the Energy Efficiency and
Conservation Authority (EECA). Together we are
progressing projects that will save energy while also
improving our carbon profile (see the “When small gains
power a village” on page 27).
The Company is also reviewing a number of options and
working with its customers and the Ministry of Transport
to meet the requirements of the IMO
1
MARPOL
regulations. MARPOL aims to reduce the sulphur content
of fuel oil used in shipping from 3.5% to 0.5%. Our
expertise and technology in this space means we are well
placed to meet the challenges and opportunities of this
market-disrupting regulatory change (see the “Spec
change prompts solutions” on page 37).
1 IMO International Maritime Organisation – International Convention for the
Prevention of Pollution from Ships (MARPOL)
REFINING NZ ANNUAL REPORT 201812

Subordinated notes issue
The Board has been working on the capital structure of
the business and on 14 December 2018 the Company
issued $75 million of unsecured, subordinated notes for a
term of approximately 15 years. The notes provide greater
financial flexibility by diversifying RNZ’s funding sources.
The net proceeds of the Offer were used to repay a
portion of the Company’s existing bank debt.
Dividend
The Company’s Directors resolved to pay a fully
imputed final dividend of 4.5 cents per share to be paid
on 21 March 2019, with a record date of 7 March 2019.
With an interim dividend of 3 cents paid in September,
the total dividend payment for the year is 7.5 cents
(2017: 18 cents).
Board changes
In March, Mike Bennetts resigned as a Director and was
replaced by Lindis Jones. In November James Miller was
appointed as an Independent Director who brings a wealth
of experience and insight to the Refining NZ Board from
the financial markets. In February 2019, Mark Tume
resigned as a Director after eleven years on the Board.
Mark has made a significant contribution to the Refining
NZ Board including two years as the chairman of the Audit,
Risk and Finance Committee. He is held in high esteem by
fellow Directors for his professionalism, depth of
experience and the commercial acumen he brought to the
Refining NZ Board table. Thank you to Mike and Mark for
their respective contributions and we welcome Lindis and
James to the Refining NZ Board.
Outlook
The strong operational performance in the second half
of the year highlights the strengths of our refinery and the
talented team who continue to run it safely and reliably.
The review of the Company’s business strategy looks
to build on that strength and opens up the possibility
to transform our business in realistic, credible steps,
into a sustainable, low carbon energy producer.
14 March 2019
As a major employer we are proud of the Refinery’s
contribution to our Northland community. Through
partnerships with key organisations we continue to
support the environmental and educational aspirations of
our community. In 2018, our support for a series of new
education initiatives included establishing the RNZ
scholars programme for Bream Bay College students
studying STEM (Science, Technology, Engineering, Maths)
related subjects at university.
Vision for a brighter energy future
RNZ’s Management and Board have been defining a
business strategy that will shape the future direction
of the Company. It recognises the major contribution of
the Refinery to the national fuels supply chain and to
Northland as well as the national economy. It also
acknowledges the challenges presented by the need to
decarbonise the country’s energy infrastructure.
At the heart of our new strategy is a profitable core
refining business: commercially attractive, safe and
reliable. We are a major employer committed to helping
New Zealand meet its climate change obligations and
since 2008 have reduced the CO
2
intensity of our
products by around 20%.
Our strategy will look to generate further value out of
the business, leveraging existing assets and capabilities
to lift the Refinery’s operational performance. With
New Zealand’s energy future in mind, we will build on the
core through the judicious choice and implementation of
highly economic projects.
More detail about our new strategy will be provided in Q2/
Q3 at a Company strategy day. A date for the strategy day
will be announced shortly.
A REALISTIC STEP BY STEP STRATEGY BACKED
BY A COMMITTED WORKFORCE, SUBSTANTIAL
EXPERTISE AND NEARLY 60 YEARS OF ENERGY
PROBLEM-SOLVING CREDIBILITY
13

Chief Executive Officer, Mike Fuge
joined the Refinery in August 2018.
Prior to that he was the CEO of the
Australian based renewables energy
company, Pacific Hydro and has a
background in oil working with Shell
internationally, and in electricity with
Genesis Energy.
We took a moment to ask Mike a few
candid questions about the view from
the helm.
You are a relative newcomer to
Marsden Point. What attracted you to
faraway Northland and have you had
any connection with the Refinery
before now?
I’ve worked across New Zealand and
around the world, including in Europe,
South America, Australia, the Middle
East and South East Asia, but I am
proud to say that my roots are here in
Northland. I am a fourth generation
Northlander, so this is where my
family whakapapa to and, as a
student engineer back in the ‘80s,
I worked at the Refinery during the
university break.
It has definitely been a long time
between drinks, but yes, I have
been here before.
The success of our refining business can never be credited to one
person, but instead belongs to the many people we have ties to; our work
colleagues, our whanau, our community. Together we are connected,
and by working as one team we’re able to run our refinery safely and
reliably while getting value adding projects off the ground and done in
an expert, no-fuss, Northland kind of way.
In a changing landscape, we’re tapped into the conversations about
New Zealand’s energy future and by taking part, by sharing our deep
expertise and ideas, we’re at the table helping to make that future
sustainable for generations to come.
CONNECTED.
What do you make of the rise of
green alternatives to conventional
transport fuels such as petrol,
diesel and jet fuel?
We are challenged by climate change,
which is a human problem not just a
national problem, that demands a
solution or set of solutions, capable
of stopping or reducing our carbon
footprint.
If you ask me whether the answer is
electric, hydrogen, gas, or biofuels the
answer is all of these. The bottom line
is that more diversification is headed
our way and we need to understand
that it won’t be a one-size-fits-all,
silver bullet to improve our collective
carbon footprint.
While the electric vehicle is an
established technology, and rapidly
becoming very economic, electric
heavy trucks and aeroplanes aren’t a
technical economic reality yet. And
while that is the case, you can expect
to see other forms of technology
come to play in that space, whether
that’s biofuels or hydrogen.
Q&A WITH MIKE FUGE
REFINING NZ ANNUAL REPORT 201814

So what does that mean for
Marsden Point?
With our bias towards diesel and
kerosene or jet fuel, I think that we
are well positioned in the medium
term. I’m talking 15-20 years. Diesel,
for heavy transport, and jet fuel will
stay for a pretty sustained period
which means we will have a strong
part to play in the production of
those fuels.
Longer term, our deep skills in
hydrogen and manufacturing, in
processing at high pressure, high
temperature, flammable gases and
liquids, will form the basis of the
long-term future for the Refinery.
Whether that’s supporting the
production of locally produced and
export hydrogen or whether it’s
producing biofuels.
Hydrogen is an exciting opportunity for
the energy sector but has been
criticised by some as niche, and not
economic. Do you see a viable role for
hydrogen in a low carbon economy?
Hydrogen very much has a part to
play in our energy future, particularly
in heavy transport which will be
absolutely critical, particularly in
biofuels. At the moment these look to
be the safest technical bet for aviation
and heavy transport going forward.
Hydrogen looks to be more
transportable than a lot of the
alternatives and there is some exciting
technology for export, where you
effectively attach the hydrogen to a
petrol type substance which is easily
transportable.
If you can get the transport option
up and running, there is a very good
possibility that in the next 10 to 15
years, we will effectively be generating
renewable energy in New Zealand,
converting it to hydrogen, exporting
it to Asia where they don’t have the
same access to renewable energy,
and getting a great return.
From a refinery point of view, we
have the ability to flex our hydrogen
production. We can turn the plant up
or down and make choices about how
we firm up an otherwise intermittent
supply of renewable energy.
From your first year in charge, what do
you make of the Refinery?
What’s striking is the incredible
enthusiasm from everyone coming
through the gate every morning.
There’s a lot of pride in this refinery
and it’s a modest place that keeps
its talent hidden.
The deep capability we have here
is quite unique. The work that some
of our process engineers do, our
operators, the fuels testing laboratory
(IPL), the technology that our
mechanical engineers bring, is all
quite phenomenal. To give an
example, we had identified cracks in
steel work on a processing unit and
instead of shutting down the unit for a
couple of days, the guys safely froze
the pipe and took it off to do a live
change out.
That sort of innovation, that quiet
“let’s-get-on-and-do-it” attitude is
typical of Northland. At the same
time, that understanding of the need
to be consistently reliable for our
customers day in and day out, is
typical of this Refinery and everyone
who works here.
Q&A
15

1/ WELDING MADE EASIER – ROBOTIC WELDING
Shutdown 2018 gave Refining NZ the opportunity to
think outside the box and enlist the help of technology
that would ultimately be safer for our people and improve
productivity. On two major projects, the Hydrogen
Manufacturing Unit (HMU) and the High Vacuum Column,
robotic welding helped achieve just this.
The HMU project required the welding of 320 new tube
replacements, a staggering amount of work to be done
within a tight time frame.
Local contractor, Culham Engineering, provided four robotic
welders to complete the task, which otherwise would have
required 12 welders working within a confined space.
By using the robotic welder the job was completed
to an extremely high standard and more safely.
Our high vacuum unit column required another cutting
edge robotic tool, the Adaptarc, specially designed for
orbital and linear pipe welding to weld layers of stainless
steel cladding inside the column.
The team took an innovative approach with the Adaptarc to
achieve the outcome they required. This included building
a track system for the weld robot to move around on.
The Adaptarc achieved in a few days what would
otherwise have taken four workers a week to achieve by
hand. We will now use the robotic welding equipment
more widely on site given the excellent results achieved.
2/ REMOTE PIPE INSPECTOR – ROVER
In the lead-up to the Shutdown 2018, the Refinery
engaged Australian company ATMECO to survey the
sulphur duct which runs between the Sulphur Recovery
Unit and the Multi Flue stack. The duct was last opened
14 years ago and we needed assurance that it was safe
for our people to access and inspect.
To avoid putting our people into an unsafe situation,
ATMECO purpose-built ‘rover’, similar to a remote control
car, to survey the lining and inspect the flange and
expansion joint assemblies. The rover captured 360
degree images with a unique camera sensor. Controlled
via a long fibre optic cable providing ethernet
communications between the vehicle, on-board sensors
and surveyor, the rover could travel beyond the visual line
of sight.
The footage gave engineers a good understanding of the
integrity of the duct, but importantly confirmed that the
duct was in a good shape.
With the help of a company passionate about finding a
technology solution, we could eliminate the risk of sending
someone into a confined space for a manual inspection.
INNOVATION & NEW TECHNOLOGY
CREATIVE.
We are relentlessly focused on creating the highest performing, most
internationally competitive refinery possible. We’ve come a long way,
but to compete against the best in the world requires the constant,
diligent pursuit of efficiency. Every little bit counts: every innovation,
every new process, initiative and new technology comes from the
collective intelligence and expertise of our people. And they combine
to make us safer, more productive and well-positioned for a strong
sustainable energy future.
REFINING NZ ANNUAL REPORT 201816

3/ HIGH FLYING SURVEY – DRONE
The sound of survey drones carrying out inspections
overhead caused a real buzz during the Shutdown 2018,
but this wasn’t entirely new to the Refinery.
Australian company ATMECO last inspected the Refinery’s
flare structure in 2017 using a 20kg drone. That survey
captured high resolution images of the thousands of bolts
on the flare structure. Armed with this imagery, the project
team built a 3-D model of the upper flare section with a
specific focus on the roof. The data verified the structure’s
dimensions against the original drawings of the flare.
This was then used to manufacture a replacement roof.
The visual inspection meant that we knew exactly what
was needed and were able to have the replacement roof
pre-fabricated and ready to install during the shutdown.
This helped to reduce time spent on inspection during an
already busy shutdown schedule.
With the advance of such technology we see many
opportunities for its use on site – to be safer, better and
more productive.
4/ QUALITY PAINT JOB – TANK 13
Keeping workers out of the “line-of-fire” has been a
driving factor for the project team at Tank 13.
The large crude tank which towers above its counterparts
at 22 metres high and 76m across, is the largest tank at
the Refinery and largest of its kind in New Zealand.
Before the tank can be placed back in service a total of
4,500 square metres of roof and floor needs to be prepped
and re-coated.
The innovative plan to use an automated system to
blast and coat the tank roof was supported by Fitzroy
Engineering.
The biggest day for the project team, saw a maximum
of 330m
2
of the tank roof blasted and coated, around
three times more than what would have been achieved
manually.
The tank team is thrilled that the automated system
has met specification and is of a consistent quality with
minimal waste. Taking the team out of the line of fire
improves workplace safety and results in a quicker
turnaround.
Work on the tank floor and shell is well advanced. The
power of collaboration aided by technology is consistently
helping this important project stay one step ahead.
1
3
2
4
17

THE WAY WE DO BUSINESS
We are a critical part of our nation’s energy
infrastructure and responsible for
manufacturing and supplying the bulk of the
country’s transport fuels. Through our
operation we have a significant footprint at a
regional and national level and strive to create
value for our stakeholders.
Refining NZ operates New Zealand’s only oil refinery
at Marsden Point near Whangarei. Our core business is
processing a wide range of imported crude oil types,
producing high quality transport fuels for the New Zealand
market in addition to bitumen for roading, sulphur for farm
fertiliser and CO
2
for carbonated drinks. We supply around
70% of the total domestic market for petroleum products.
We also play a critical role in the distribution of fuel
products by means of the Refinery to Auckland Pipeline
(RAP). Auckland represents just over a third of total
domestic demand and the pipeline is by far the most
efficient means of moving fuel to New Zealand’s largest
market. Our customers are responsible for distribution to 10
port terminals across the country and into the Northland
region from a truck loading terminal opposite the Refinery.
The impact of our business goes far beyond our refinery
with the support we provide to key industries such as
tourism, agriculture, large manufacturing and heavy
transport essential to economic growth in the region and
across New Zealand. In this context we are aware of the
Treasury’s Living Standards Framework, designed to
shape public policy to improve intergenerational wellbeing.
As a longstanding employer and contributor to Northland,
we believe we can help advance these goals.
Our value creation is aligned with the four capitals -
Human, Natural, Financial/Physical, Social -
as set out in the Living Standards Framework.
SUPPLY
CUSTOMERS
ANNUAL OUTPUT
CRUDE OIL IMPORTED TO REFINING NZ
OVERSEAS REFINERIES
REFINED TO MULTIPLE PRODUCTS
AT MARSDEN POINT
ANNUAL INPUT
REFINING NZ
OUR PRODUCTIONDISTRIBUTIONOUR SHARE OF NZ FUEL DEMAND
TRUCK
LOADING
5%
REFINERY TO
AUCKLAND
PIPELINE
52%
40%
42M BARRELS
6.5B LITRES
COASTAL
DISTRIBUTION
3%
EXPORT AND
BUNKER FUEL
REFINING NZ
CUSTOMERS
58%
85%
67%
PETROL
JET FUEL
DIESEL
BY-PRODUCTS
2.2B LITRES
2.1B LITRES
1.4B LITRES
ANNUAL SUPPLY TO NZ
FUEL DEMAND
70%
30%
DIRECT IMPORT OF REFINED
PRODUCTS TO NZ
Our role in Fuelling NZ
Graphic presents a typical year and is prepared based on 2017 production and distribution data.
REFINING NZ ANNUAL REPORT 201818

SUPPLY
CUSTOMERS
ANNUAL OUTPUT
CRUDE OIL IMPORTED TO REFINING NZ
OVERSEAS REFINERIES
REFINED TO MULTIPLE PRODUCTS
AT MARSDEN POINT
ANNUAL INPUT
REFINING NZ
OUR PRODUCTIONDISTRIBUTIONOUR SHARE OF NZ FUEL DEMAND
TRUCK
LOADING
5%
REFINERY TO
AUCKLAND
PIPELINE
52%
40%
42M BARRELS
6.5B LITRES
COASTAL
DISTRIBUTION
3%
EXPORT AND
BUNKER FUEL
REFINING NZ
CUSTOMERS
58%
85%
67%
PETROL
JET FUEL
DIESEL
BY-PRODUCTS
2.2B LITRES
2.1B LITRES
1.4B LITRES
ANNUAL SUPPLY TO NZ
FUEL DEMAND
70%
30%
DIRECT IMPORT OF REFINED
PRODUCTS TO NZ
HUMAN CAPITAL
Committed to keeping our people safe
As a high-hazard site, safety is paramount. We aim to
deliver a world-class health and safety performance and
continually strive to improve using a risk-based approach.
This mind-set is not limited to our own staff but includes
the significant number of contractors on site.
We are committed to being a fair and caring employer.
We work hard to build a supportive and inclusive work
culture, where staff are able to share values, feel
recognised and rewarded, and are given opportunities
to develop to their full potential.
NATURAL CAPITAL
Committed to our environment
We aim to deliver a world class environmental
performance. As a large emitter of carbon dioxide we are
conscious of our responsibility to minimise the
environmental impact of our refining operations.
For the medium term New Zealand will need conventional
fuels as part of the mix to meet its energy needs.
We also acknowledge the role we can play in helping
New Zealand achieve its ambitions for a low carbon future.
FINANCIAL AND PHYSICAL CAPITAL
Committed to our nation’s economy
Refining NZ competes against overseas refiners many
times larger that offer direct imports of refined products
to our major oil company customers. Through our Marsden
Point operations we keep a higher share of the fuel value
chain in New Zealand and maintain and develop related
skillsets in the national workforce.
Our products support a thriving economy and have a very
direct impact on economic development. Our continued
aspiration is to be the supplier of choice for New Zealand.
SOCIAL CAPITAL
Committed to supporting our local community
We are a responsible corporate citizen and work hard to be
a good neighbour and supporter of our region. We are a
sizeable part of the Northland economy, contributing
almost 7% of the region’s GDP
1
. We are proud to be a
voice for our region on the national stage. We maintain
good working relationships with our community, helping
them to achieve their environmental and educational
aspirations. At the same time we regularly update our
neighbours on our performance, projects and plans for
the future.
1 www.infometrics.co.nz
Our interpretation of these goals is set out under four headings:
19

OUR STRATEGY
While our sector is operating in a changing
landscape as New Zealand transitions to a low
carbon energy supply, profitable refining
remains at the core of our strategy.
New Zealand’s declared commitment to a carbon neutral
energy future is an exciting statement of leadership on the
world stage. It is a commitment to which Refining NZ has
much to contribute. We have a safe, reliable and efficient
infrastructure and continue to improve our environmental
footprint. With our substantial technical knowledge, we
bring considerable intellectual property to the nation’s
green energy and growth agendas.
Our strategic review will shape the future direction
of our refining business. With New Zealand’s energy
future in mind, we will build on our core competency
of transforming raw feedstock into high quality fuels.
Looking ahead, New Zealand’s mix of energy sources
will include a greater percentage of renewables.
Our business strategy is built around five strategic pillars,
each of which is aligned with a set of 14 priority areas.
These are the most important issues for the business
and help determine how we create value towards the
different capitals (refer to page 129 for further information
on material issues).
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.
DELIVER A WORLD-CLASS ENVIRONMENTAL PERFORMANCE
We are conscious of our responsibility for minimising the impact of our operations on the surrounding
environment, and are continually looking to lift our environmental performance. To achieve this, we have facilities
and management processes to minimise the impact of our activities.
BUILD ON THE QUALITY AND RELIABILITY OF OUR CUSTOMER PROMISE
As a toll refiner we can influence our customers’ decision whether to make a product at Marsden Point or to import from
refineries overseas. We provide a compelling customer proposition based on three elements: Quality, Reliability and Price.
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. Harnessing innovative ideas from
both inside and outside the business continues to provide new opportunities to improve our business delivery.
EMBED A HIGH PERFORMANCE CULTURE
Culture, shared values, staff feeling recognised and rewarded and given the opportunities to develop to their
potential, are core to the people and capability strategy. The workforce is becoming demonstrably more diverse across
a number of fronts, hence inclusivity is another main theme in the people agenda.
REFINING NZ ANNUAL REPORT 201820

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21

IN DIALOGUE WITH OUR STAKEHOLDERS
Strong relationships underpin the ability of our
business to create value in the short, medium
and long-term. We are committed to nurturing
these relationships and by being transparent
about our activities and our strategic plan,
look to maintain trust and goodwill.
Built on mutual trust
Listening to our stakeholders, engaging in an open
dialogue and responding to their views and concerns is
very important for us. Rather than one-off consultations
around specific topics, we prefer an integrated approach
and ongoing dialogue about our role, our products and
services, our business performance and other issues.
This enables us to fully understand our impact on the
value of the four capitals in our strategic framework.
For this purpose, we have tailored platforms for different
stakeholder groups. For instance, social media plays a
major role in our engagement with our direct neighbours.
Being a large industrial in a pristine natural setting, we
greatly appreciate the valuable support and regular
dialogue we have with our community.
Transparent reporting following
international standards
Refining NZ has a tradition of communicating in a
transparent way and drawing on our values of honesty,
integrity and respect with those people and organisations
with whom we have important relationships. In that
same spirit, and recognising the growing importance
to shareholders of our social and environmental
performance, we have structured this report to provide
in-depth commentary on those issues identified as the
most important and material. To ensure we are following
accepted international best practice, this report has been
prepared in accordance with Global Reporting Initiative
(GRI) Standards: Core option. The materiality assessment
providing the basis for this disclosure is shown in the GRI
Index at the back of this report.
REFINING NZ ANNUAL REPORT 201822

•
Shareholder day at Marsden Point (January 2018)
•
Annual shareholder meeting
•
Webcast for half year and full year results presentation
•
Revitalised investor pages on the company website: www.refiningnz.com
Reports to NZX including bi-monthly throughputs and margin
•
Regular reporting and meetings
•
Ongoing coordination of fuel supply
Access to pipeline for imported fuels during the 2018 shutdown
•
Ongoing sponsorship programme
•
Memoranda of Understanding with Patuharakeke Te Iwi Trust Board and
the Ngatiwai Trust Board
•
Periodic business updates
•
Programme of education initiatives
•
Consultation regarding the dredging project
Support for shellfish rahui on Mair Bank
•
Business planning days
•
New social media platform for employees
•
Mentoring programme
•
Refreshed values and culture programme
Acknowledging outstanding staff performance with the
introduction of the Hive Awards (see page 34)
•
Progressed the Refinery’s post NGA
(Negotiated Greenhouse Agreement) status
Business update to key ministers, local
MP’s and local government
•
Regular reporting and
meetings
•
Integrated working with
major suppliers
Participation in business
planning days
ShareholdersCustomers
Iwi and
Community
EmployeesGovernmentSuppliers
Stakeholders
23

Deliver a world-class
health and safety performance
OUR PERFORMANCE IN 2018
– Eight recordable cases
which resulted in five lost
time injuries.
– Improved personal safety
performance in the second
half of the year (post Total
Refinery Shutdown).
– Tier 2 process safety
events included a pump
seal leak, corrosion under
insulation hydrocarbon
leak, and a wet slops pipe
leak. All events resulted in
a relatively small loss of
containment.
Safety and wellbeing is a core value,
underpinning the way we do business.
The critical importance we place on safety, including
personal, occupational health and process safety,
is reflected in the way we manage safety issues at
our high hazard site. At the core is our Central Safety
Committee (CSC). This Committee is chaired by our
CEO and includes the Leadership Team alongside
subject matter experts, employees and on site contractor
representatives. This Committee sets overarching safety
principles and reviews ongoing performance. Below
the CSC are six sub-committees tasked with the
implementation and continuous development of our
safety management systems.
We constantly strive to improve our safety performance
and the Safety Case discussed on the next page is an
element of our management systems. Despite our focused
efforts we are not satisfied with our 2018 performance,
in particular our Lost Time Injury Frequency (LTIF
[1]
),
which was impacted by five incidents during the year,
four of which occurred during the Shutdown 2018.
We acknowledge that each incident is one too many.
Each incident has been investigated and lessons drawn
for our future performance.
Tier 1 incidents represent the most significant process
safety event as defined by the American Petroleum
Institute, an international standard setting body (refer
to the “Glossary” on page 127 for a definition of a Tier 1
incident). In 2018, we recorded two Tier 1 process
safety events: a seal leak on a mogas booster pump
and a latent manufacturing defect causing a newly installed
OEM
1
isolation valve on the Hydrocracking unit to fail.
Our performance by the numbers
20182017201620152014
Total recordable case frequency (TRCF
[1]
)#/200,000 hrs
0.76
0.890.511.320.86
Lost time injury frequency (LTIF
[1]
)#/200,000 hrs
0.48
0.260.250.100.19
Tier 1 process safety incidents
2
0111
Tier 2 process safety incidents
3
4042
Number of major emergency exercises
(internal and external)
26
1713147
[1]
See Glossary on page 127.
1 OEM - Original Equipment Manufacturer
REFINING NZ ANNUAL REPORT 201824

WHAT IF? THE SAFETY CASE PROVIDES ROBUST ANSWERS
CASE STUDY
Given the inherently hazardous nature of refining, it’s no
surprise that our refinery has been designated a major
hazard facility under the Major Hazard Facilities Regulation.
The Regulation came into being as part of the 2015 Health
and Safety at Work Act and was enacted to provide
assurance to workers, emergency services, the community,
and others that the potential for major incidents has been
assessed and that effective controls are in place.
Our refinery is one of 123 such facilities around the country
including major industrials such as Methanex in Taranaki
and Oji Fibre Solutions in Kawerau. As a Major Hazard
facility we are legally obliged and accountable for working
in certain ways to ensure that the processes we follow and
the things we do are safe. That includes having an
accepted Safety Case, a written demonstration that our
refinery has the ability and means to control major incident
hazards effectively.
While technically a legal requirement, preparing the Safety
Case provided us with an opportunity to look at our
procedures with a refreshed perspective. In March 2018
we submitted our documentation to WorkSafe which is
responsible for overseeing the Major Hazard Facility
Regulation. This 535 page document details how the
Refinery identifies all the hazards which could result in
a major incident (safety assessments), the systems the
Refinery uses to manage the risk posed by major incidents
(safety management system) and what our team does if
the worst were to happen (Emergency Response
Management Plan).
At the time of writing, WorkSafe has still to confirm that
our Safety Case has been accepted. In the meantime we
have taken the case a step further, rolling out a 15 page
easy-to-access summary through a series of community
briefings. At every session people have most wanted to
know what they should do in the unlikely event of an
emergency, the types of incidents that we may encounter
and the emergency plans and the training we undertake
to ensure we’re ready for any eventuality.
Our Safety Case highlights the importance we place
on the safety of our people and the safe running of the
Refinery above all else. Whether we’ve been in community
halls, staff rooms, board rooms or fire stations, our case
has had the thumbs up from everyone we’ve spoken to.
The Safety Case summary is available on the company
website: https://www.refiningnz.com/community/
A SUMMARY OF OUR SAFETY CASE HAS BEEN PRODUCED
TO EXPLAIN HOW WE MANAGE OUR REFINERY SAFETY,
FOR OUR COMMUNITY.
25

Deliver a world-class
environmental performance
Our performance by the numbers
We are conscious of the impact of our operation
on the surrounding environment and are
continually looking to lift our environmental
performance. As we operate a mature
industrial complex, most of our improvements
are incremental and yet significant in size.
Energy is the biggest cost for the Refinery so there is
plenty of motivation to be a more efficient consumer of
energy. This has driven our robust track record of energy
efficiency improvements. Saving energy reduces our air
emissions and is another factor that keeps us competitive
with bigger, overseas refiners.
We made good progress with our energy initiatives in
2018. The one-in-fourteen year total refinery maintenance
shutdown impacted energy demand through reduced
electricity consumption. However, most of our energy
reduction was the result of systematic initiatives and will
therefore have a positive impact on our environmental
performance going forward.
Our emissions to air, water and ground have the potential
to impact our local environment beyond our fenceline.
Unlike carbon dioxide (CO
2
) emissions which have an
impact at global level, sulphur dioxide (SO
2
) affects air
quality more at local or regional level. We have achieved
further reductions in our SO
2
emissions per unit of fuel
production in 2018. We are working with our customers,
industry and the Ministry of Transport to reduce the
sulphur content in fuel oil used in shipping as RNZ supplies
100% of the domestic demand for shipping fuel. Once
these solutions are implemented, SO
2
emissions at ports
and along the coastlines will be significantly lowered.
To maintain the environmental integrity of our refining
site, we have invested over $24 million in the past four
years including improving the resilience of our waste
water systems. This has boosted our ability to prevent
hydrocarbons leaving the site especially during major
rain events.
– Higher consumption of
natural gas in 2018 has
reduced SO
2
and CO
2

emissions.
20182017201620152014
Releases outside consent#
5
4523
Direct CO
2
emissionskg CO
2
/t of product
204
200201227228
Hydrocarbon Fuel UsagePJ
13.2
14.214.115.314.5
Ex-Crude (refinery produced fuel)PJ
9.8
11.411.513.512.6
Natural gasPJ
3.4
2.82.61.81.9
Electricity UsagePJ
1.14
1.221.211.030.96
Water UsageMillion Tonnes
1.65
1.701.681.651.60
Sulphur Dioxide (SO
2
) Emissions
Tonnes
3,404
3,6954,3324,0553,885
Flare
Amount of Flare as
Mass % of Feedstock
0.08
0.020.090.020.08
REFINING NZ ANNUAL REPORT 201826

WHEN SMALL GAINS POWER A VILL AGE
CASE STUDY
Refining crude oil is an energy intensive process. In fact,
our refining operation consumes enough energy every
year to power around 375,000 homes.
Refining NZ has been on an energy improvement pathway
for many years. It makes simple business sense as energy
is our biggest cost. Equally, it is part of our obligations
under the Negotiated Greenhouse Agreement (NGA) we
have had with the Crown since 2003.
Our steady, year-on-year focus on energy improvement
means we have been able to reduce our CO
2
intensity
by around 20% since 2008. Te Mahi Hou
[1]
has been a
key contributor, improving energy efficiency across the
Refinery and reducing our CO
2
emissions by 10%. On
the back of this seminal project we’ve pursued a host
of quick-win projects, working with the Energy Efficiency
and Conservation Authority (EECA). These include, for
example, re-using a decommissioned compressor to
recover hydrogen from our Benzene Recovery Unit which
has reduced CO
2
by around 9,000 tonnes a year. Looking
ahead, we are working with EECA to optimise our heat
exchanger cleaning schedules.
We’ve also made our own savings, tapping a well of
energy improvement ideas to increase hydrogen recovery
from Te Mahi Hou and reduce CO
2
by 7,000 tonnes per
year. Working with First Gas we’ve doubled our access to
natural gas and switched out crude for a cleaner, efficient
fuel. This has reduced CO
2
by 10,000 tonnes a year. The
first two phases of the RAP capacity upgrade netted a
saving of 4,000 tonnes of CO
2
per year.
On their own each energy saving project is dwarfed by
Te Mahi Hou, but the combination of projects completed
or on the drawing board nonetheless represents a valuable
contribution to our energy conscious refining business.
[1] $365m investment in the Continuous Catalytic Regeneration (CCR) commissioned in 2015.
ENERGY MANAGER, JUAN VIDELA KEEPS A CLOSE EYE ON
THE ENERGY INTENSITY OF PROCESSING UNITS AND RELATED
UTILITIES ACROSS THE REFINERY.
27

Build on the quality and reliability
elements of our customer promise
Our performance by the numbers
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 cleaner quality fuels which
meet the specific requirements of the
New Zealand market. We maintain a quality
management system to the requirements
of ISO 9001 (Quality Management) which
is externally audited on a regular basis.
Our goal is to deliver to our customers in full, on time
and to specification. To deliver on this promise we
invest in our refining operation and product storage.
Keeping unplanned downtime to a minimum is critical
and is supported by our strong focus on maintaining
equipment. As a result, our operational availability
compares well with refineries of a similar size and
complexity in the region.
– 2018 Refinery throughput
and operational availabil-
ity was reduced primarily
due to the Planned Total
Refinery Maintenance
Shutdown.
– The 2018 RAP throughput
was an all-time record for
the Company.
20182017201620152014
Throughput refinerymillion barrels
40.4
41.742.742.639.7
Throughput pipeline RAPmillion barrels
21.0
19.820.118.417.9
Operational availability%
90.7
98.096.997.793.5
Unplanned refinery downtime%
0.8
0.60.90.30.2
Unplanned RAP downtime%
1.3
4.60.90.60.9
REFINING NZ ANNUAL REPORT 201828

SHUTDOWN 2018 - AN ENORMOUS LOGISTICAL UNDERTAKING
CASE STUDY
Our customers depend on the safe and reliable running
at Marsden Point 24 hours a day, every day of the year
to produce high quality fuel products for New Zealand.
Underpinning that need to remain safe and reliable is the
day-to-day maintenance of refining plant and equipment
and at periodic intervals, planned maintenance shutdowns
for major work, and the hard-to-get-to jobs that can’t be
done on the run in a live plant. With a typical planned
maintenance shutdown, processing units can be brought
back into production once maintenance is completed.
This means that the Refinery can keep on producing fuels.
In April 2018, we embarked on the first total refinery
shutdown at Marsden Point in 14 years. With all processing
units, related units and utilities shut down, all production
ceased for a period of ten days. The Shutdown 2018 was
an enormous logistical undertaking that required two years
of planning and marshalling resources from across the
country, and around the world. At its peak there were
1,800 workers on site, across multiple work fronts. Over
1,700 jobs were carried out safely and to a high quality,
including 2,000 welds with less than a 1% failure rate.
What made 2018 even more remarkable, was the
shutdown crew having to work in unseasonably cold
weather while managing emergent work and other factors,
including the failure of a newly installed OEM isolation
valve which impacted the restart of the hydrocracker.
The two major “brownfield” retrofits, the mid-section
replacement of the high vacuum unit and re-lifing the
Hydrogen Manufacturing Unit (HMU), proved more
challenging than anticipated.
By far the most valuable outcome from the Shutdown
2018 has been a refurbished HMU which, for a major
hydrogen producer, opens up the exciting possibility of
developing hydrogen infrastructure for our low carbon
economy (see page 14, Q&A with Mike Fuge).
AN EXCHANGER BANK BEING LIFTED INTO POSITION DURING
THE 2018 SHUTDOWN.
29

Improve our
competitiveness
Refining NZ’s location is our competitive edge,
enabling us to respond to the specific product
and quality requirements of our New Zealand
based customers. The structural advantage
of being close to market allows us to supply
New Zealand with fuel more efficiently.
We regularly tap the knowledge of our team to generate
business improvement ideas capable of lifting our
performance across our refining business, the fuels supply
chain and our offering to customers. The installation of
automated process control optimised the operation of
our petrol making unit and led to efficiency gains. In 2018,
our refining operation saw the full benefit of First Gas’s
investment in capacity on the Northern gas pipeline
which significantly increased our access to natural gas
from Takanaki. As a typically price-competitive source of
energy in the refining process, this represents a significant
opportunity for us to increase our refining margin.
[1] See “Glossary” on page 127
Our performance by the numbers
20182017201620152014
Gross Refining MarginUS$/barrel
6.31
8.026.479.204.96
Free Cash Flow
[1]
NZ$m
(58)
10347139(141)
Capital investmentNZ$m
162
9581129220
Net profit after taxNZ$m
30
794715110
Crude priceUSD/barrel
71
54445299
Exchange rateUSD/NZD
0.69
0.710.700.700.82
– $107m invested in
planned total refinery
shutdown.
– GRM normalised for the
shutdown was
USD 7.33 per barrel.
REFINING NZ ANNUAL REPORT 201830

In 2018 the strategically important dredging project came
a step closer to getting underway.
In December the Environment Court confirmed the
resource consents issued to Refining NZ for its dredging
project, subject to minor revisions agreed between the
parties to our appeal.
Resource consents with 138 conditions attached had been
granted by the Northland Regional Council in July. While
the bulk of those conditions were workable, the Company
chose to appeal a small number relating to water clarity,
turbidity and a seasonal prohibition on dredging.
The Refinery was especially conscious that the revised
conditions ensure that the sensitive ecosystems
in Whangarei Harbour are not impacted by the dredging.
Mair Bank, adjacent to the Refinery, is one such area that
is especially important as it forms a natural barrier for us.
It also holds significant cultural value for Tangata Whenua.
Key to safeguarding sensitive areas is a sustained
programme of turbidity monitoring, using real-time meters.
These are to be stationed at key points on the harbour,
including adjacent to Mair and Marsden Banks, Motukaroro
Marine Reserve and Home Point and will measure
the existing level of suspended particles in the water.
The programme will gather baseline data for 12 months
before dredging can commence and will continue to
monitor turbidity throughout the dredging programme.
The importance of this project cannot be underestimated.
Improving the economics of up to half of all crude
delivered to the Refinery via larger cargoes will help to
keep our refinery competitive with imported fuel from
Asia Pacific refiners and will ensure employment of over
600 Northlanders who come through the Refinery gates
every day.
That the revised conditions were agreed in a relatively
short timeframe underlines the fact that having monitoring
measures in place before, during and after the dredging is
the right thing to do for our community.
A date for dredging to commence has yet to be confirmed
and is dependent on the successful completion of
monitoring activity on the harbour and a final investment
decision by the Board.
MONITORING PREPARES WAY FOR DREDGING
CASE STUDY
ONE OF SIX REAL-TIME TURBIDITY METERS THAT WILL GATHER
DATA BEFORE, DURING AND AFTER DREDGING.
31

Embed a high
performance culture
We provide a dynamic, progressive and
technically advanced environment for around
390 highly skilled employees and 265 contractors.
In our recruiting as well as in the development
of our staff, we put a strong emphasis on
alignment with our values.
Our core values underpin our culture and we use them
to hold ourselves to account, staying “above the line”
and celebrating those who model these behaviours best
through our Hive awards.
We continue to roll out our “One Team” culture programme.
A strength of our culture has been delivering reliably and safely
to our customers and we intend to leverage this further.
Diversity and inclusion is also an important aspect of
our culture. We understand that diversity of backgrounds
and experience is a strength, particularly in robust
decision making.
Maori are well represented across the Refinery and in
our latest operator intake in October 2018. Our continued
participation in the Global Women – Activate Programme
and Darden Executive Programme provide an opportunity
to develop our female leaders. In addition, six young
women from across our community have been identified
for scholarship and work experience.
We aspire to having a strong safety culture with initiatives
such as E T
~
u Tangata – Stand in the Gap – looking to
engage our staff and wider community in ensuring we
all go home safely every day.
1 Source: www.infometrics.co.nz. Historical information may be occasionally revised by Infometrics as more accurate source data information is available.
Our performance by the numbers

2018
2017201620152014
Number of staffHeadcount
390
396386394397
Number of contractorsHeadcount
265
29317896117
Contribution to regional economy
1
% of Northland GDP
6.8
6.8
7.37.57.5
Macron
E T
~
u Tangata
REFINING NZ ANNUAL REPORT 201832

Gender
The following table provides the gender composition of
the Group’s permanent workforce as at 31 December
2018. By way of comparison, figures for the past year
are also included.
Ethnicity
The Group collects information from all permanent
employees on which ethnicity they chose to identify with.
We allow employees to select ‘other’ or chose not to
respond. The ethnicity of the Group’s permanent employees
and Board as at 31 December 2018 is as follows:
Age profile
The age profile of the Group’s permanent
employees and Board is as follows:
New Zealand
Australia
United Kingdom
South Africa
Other
Information
not provided
•
•
•
•
•
•
NATIONALITY
2018
Directors
[1]
Leadership
Team
WorkforceTotal
%%%%
NZ European-Pakeha5715622346224461
Other European22922558156216
Maori and NZ
European
----236236
Maori----195195
Maori and other
European
----4141
Asian----133133
Pacific Islander--1136272
Indian----4141
African----4141
Information not
provided
----174174
Total71008100382100397100
NZ European/Pakeha
Other European
Maori & NZ European
Maori
Maori and other European
Asian
Pacific Islander
Indian
African
Information not provided
•
•
•
•
•
•
•
•
•
•
ETHNICITY
2018
29% 2 71% 5
Directors
[1]
29% 2 71% 5
2018
2017
12% 1 88% 7
Leadership Team
12% 1 88% 7
2018
2017
16% 62 84% 320
Workforce
18% 68 82% 320
2018
2017
71% 5 29% 2
12% 1
Directors
[1]
71% 5
29% 2
2018
2017
100% 8
Leadership Team
88% 7
2018
2017
33% 125
60% 232 7% 25
Workforce
34% 132
11% 44 55% 212
2018
2017
35% 138 59% 234 6% 25
Total
36% 144
11% 44 53% 215
2018
2017
[1] Excludes Mark Tume who resigned on 21 February 2019.
Males
Males
Males
Females
Females
Females
30-50 Over 50
Over 50
30-50
Under 30
Under 30
30-50
30-50
Over 50
Over 50
33

Wiremu and Marsella Edmonds have a powerful story to
tell about the impact of health and safety on their family
after losing their son Robert in a forestry accident in 2013.
Following his death, they chose to engage with industry
and developed the ‘Stand in the Gap’ programme.
In 2018 Wiremu and Marsella brought Stand in the Gap
to the Refinery. The Edmonds family has a long history
of working in forestry. What Wiremu had experienced
in forestry was a workplace culture that allowed unsafe
practices to go unchecked. These practices got passed
through the generations and no one stood in the gap to
break the cycle of behaviour that led to injury or, worst of
all, fatalities in forestry.
Wiremu and Marsella challenged our people to make a
stand for safety and wellbeing recognising that everyone
at the Refinery has the right to be safe at work and to go
home to family without harm or injury. The programme
they developed empowers people to stand up for what’s
right in safety and deliver what they say they are going to
do, in other words to “stand in the gap”.
During the Hive business planning day in January,
programme leaders, Cory Abraham (pictured) and Jared
Hemara introduced staff and contractors to E T
~
u Tangata
– our take on Stand in the Gap, and asked them to make
a written commitment to safety and wellbeing for 2019.
E T
~
u Tangata will be rolled out across the Refinery, starting
with a safety assessment and followed by a series of
safety and wellbeing initiatives. Supporting E T
~
u Tangata
is the new Kaihautu Award which recognises those who
live by our safety, wellbeing and environmental values,
and go beyond what’s expected of them whether that’s
looking out for their own safety and wellbeing or that of
their workmates. In choosing our Kaitiaki we will be guided
by our ongoing programme of Hauora Hikoi (safety walks)
and Hauora Korero (safety talks).
With learnings from Wiremu and Marsella, and the backing
of the Stand in the Gap team, we believe E T
~
u Tangata will
make a positive contribution to the safety of everyone
working at Marsden Point.
TAKING A STAND FOR SAFETY
CASE STUDY
HEALTH AND SAFETY ADVISOR CORY ABRAHAM IS
SPEARHEADING THE ROLLOUT OF OUR SAFETY AND WELLBEING
PROGRAMME, E T
~
U TANGATA - STAND IN THE GAP
REFINING NZ ANNUAL REPORT 201834

OUR ACTION PLAN
In 2019, we will focus on the successful
delivery of our core operations – recognising
the need to deliver on our promises, earn our
reputation and build the confidence of
investors. It is a year when we “earn the right”
to plan towards a brighter energy future.
Lift our Health, Safety and Environmental performance
We are continuing our work to embed safety and
wellbeing as a core value.
• We are progressing our Du Pont safety journey with
a further audit planned in Q4/2019.
• In 2018, we submitted our Safety Case under the
new health and safety regulations. Should the
Safety Case be approved in 2019, we will develop
a compliance plan.
• We continue our investment in multiple projects to
improve our environmental performance.
• We are working with the regional authority to renew
our environmental consents that expire after 2022.
These consents include discharges to air, land and
water, coastal structures and groundwater. Given the
changes in the policy landscape, RNZ considers that
early reconsenting will provide greater certainty to the
Company and its shareholders.
Improve quality and reliability, and grow our revenue
We will progress key growth ideas from our development
funnel.
• Preparation for maintenance projects in 2020
We are preparing for the planned maintenance
shutdown of our Crude Distillation Unit (CDU1) and
Continuous Catalyst Regeneration (CCR) in 2020.
• Lifestyle asset management
Taking a structured approach to our long-term strategic
asset management plan will allow us to reprioritise
capital projects and shutdown and tank maintenance
schedules with the aim of reducing overall maintenance
capital costs.
• Dredging Whangarei Harbour
As part of the revised consent conditions we will
gather 12 months of baseline water quality data.
• Further increasing our storage capacity for jet fuel
We will start with the second tank conversion to
provide increased storage capacity at Marsden Point.
• Trialling increased pipeline capacity
We will trial drag reducing agent (DRA) as an
alternative third phase of the RAP capacity upgrade.
Indications are that DRA could increase pipeline capacity
by around 15%.
Improve our organisational performance
Our journey to high performance continues across five
key areas:
• Rollout of company values
Our culture is underpinned by our company values.
We now recognise and celebrate those who “walk the
talk” through the Hive Awards.
• Supporting our talented people
We continue to support our managers to develop as
leaders through mentoring, succession planning and
targeted development. Developing a bespoke
leadership training programme will provide further
momentum in this area.
• Promoting diversity
We continue to work with an external provider to
raise awareness of unconscious bias and will build
on this through an inclusivity training programme
for senior managers.
• Structuring better ways of working
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.
We continue to employ LEAN principles to lift
individual and team performance through eliminating
waste, identifying better ways of working safely and
visual management of team objectives.
• Engagement feedback
We engage with our employees in annual surveys,
facilitated by Aon Hewitt. They provide valuable
feedback on management and staff engagement
aspects, including leadership and communication.
35

The profitability of a refining business is largely dependent on refiners’ margins and the USD exchange rate. These variables
are largely outside our 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 2019 net profit after income tax and
year end borrowings for given margin and foreign exchange rates.
2019 Highlights
• No planned maintenance shutdowns
• Higher volumes (~44 million barrels
planned throughput)
• Operating costs include one-off
costs:
– resource consent renewal
– seed funding for new initiatives
– support for government inquiry
and fuel market study.
Profit Matrix 2019
0.60
US$ EXCHANGE RATE
0.700.650.75
GRM US$
4 (10) (23) (34)
(34) (46) (56) (65)
43 25 10 (3)
81 61 43 27
120 96 76 58
158 131 109 89
273 293 311 326
326 342 356 369
220 244 265 283
169 195 220 241
131 154 174 198
92 119 142 161
5.00
4.00
6.00
7.00
8.00
9.00
44 Production, Mbbl
101 Non processing fee revenue, $m
103 Depreciation, $m
Net profit after tax
Borrowings
REFINING NZ ANNUAL REPORT 201836

The market for shipping fuel is entering a period of change
with the introduction of international regulations requiring
sulphur content to be heavily reduced.
The changes are brought about by the International
Maritime Organisation (IMO) treaty, MARPOL Annex VI,
which requires a decrease in sulphur emissions through
reducing the sulphur content of shipping fuels from 3.5%
to 0.5%.
Practically speaking, it means that from January 2020
international ships arriving at New Zealand ports will either
be carrying low sulphur (0.5%) fuel oil, or be using high
sulphur fuel oil (3.5%) but have a scrubber installed to
remove excess sulphur. New Zealand has still to sign up
to the MARPOL treaty but when we do, our fishing fleet,
interisland ferries and other large New Zealand registered
vessels will also have to reduce their sulphur emissions.
The Refinery is taking a broad and proactive approach to
MARPOL, working with the Government and industry (oil
companies, shippers, bitumen suppliers and consumers)
on solutions that will allow New Zealand’s shipping
industry to comply with MARPOL.
That approach starts with producing a MARPOL compliant
low sulphur fuel oil. While it is straightforward to remove
sulphur from diesel and petrol, the process for doing the
same with fuel oil is less so. But by making use of spare
desulphurisation capacity the Refinery will be able to
produce the components to blend low sulphur fuel oil
in 2020.
Roading bitumen has the potential to act as a sulphur sink.
To be a workable solution we need to produce more
bitumen by freeing up capacity (de-bottlenecking) on the
Refinery’s Bitumen Blowing Unit and or, install new
bitumen technologies. The scoping of technologies that
could modernise and lift bitumen production is well
underway, but a high tech option, should it prove viable,
is likely to be three to four years away from being installed.
De-bottlenecking offers a quicker fix.
At the same time we are looking to expand the Refinery’s
crude diet which is configured towards crudes with a high
sulphur content, to include for the first time, competitively
priced onshore crudes from the United States. We’re also
looking to the logistics of exporting high sulphur fuel oil
and increasing export parcel sizes to improve freight
economics.
MARPOL will bring short-term volatility to the market,
however expert commentators believe that this important
spec change will benefit middle distillate (diesel) cracks,
while forward-thinking shippers who install scrubbers on
their vessels can expect to benefit from lower prices for
high sulphur fuel oil.
At a local level, the New Zealand shipping industry will be
ably supported through this change by the high tech and
other solutions being explored at Marsden Point.
SPEC CHANGE PROMPTS SOLUTIONS
CASE STUDY
REDUCING SULPHUR EMISSIONS FROM SHIPPING WILL IMPROVE
AIR QUALITY AT PORTS AND ON THE NEW ZEALAND COASTLINE.
37

REFINING NZ ANNUAL REPORT 201838
GOVERNANCE.

39
Regulatory framework
The New Zealand Refining Company Limited
(“the Company’, “Refining NZ”, “RNZ”) operates in
New Zealand and is listed on the NZX’s Main Board.
It is subject to regulatory control and monitoring by both
the NZX and the Financial Markets Authority (“FMA”).
Governance at Refining NZ
Our Corporate Governance framework sets out our
Board’s practices and processes to provide accountability
to shareholders for Refining NZ’s actions and performance.
Through this framework the Board creates the strategic
direction and objectives for the business, identifies and
manages our risks, strengthens our business culture and
strives to continuously improve our performance.
The Board is committed to maintaining the highest
standards of corporate governance, business behaviour
and accountability. It regularly reviews and assesses
the Company’s governance structures and processes
to ensure that they are consistent with best practice.
It also supports best practice reporting and has structured
this statement to report against the NZX Corporate
Governance Code (“NZX Code”) revised in October 2018.
The Board considers that it has followed the
recommendations in the NZX Code during the financial
year ending 31 December 2018. In this regard, non-
compliance during the year prior to the implementation
of governance practices reflecting the new NZX Code was
the result of Refining NZ following the old NZX Corporate
Governance Best Practice Code as detailed in the last
year’s annual report.
In this section we provide an overview of our governance
framework. For further guidance on our governance
framework, including Board charters, the Company’s
Constitution and our corporate governance policies, please
refer to the “Investor Centre” section of our website at
www.refiningnz.com. References in this section to our
website are to the Investor Centre pages.
This governance statement was approved by the Board
on 21 February 2019 and is current as at that date.

REFINING NZ ANNUAL REPORT 201840REFINING NZ ANNUAL REPORT 201840
Refining NZ’s Board sets clear and consistent
expectations of all Directors, and Refining NZ people
(employees, contractors and other agents) through
the Code of Conduct.
Refining NZ’s framework for ethical behaviour includes
a day-to-day business focus and recognises our
responsibilities to shareholders, customers, employees,
those with whom we do business, our neighbours and
society at large.
Code of Conduct
Refining NZ’s Code of Conduct sets out clear and
consistent expectations for Directors, employees and
representatives of the Company and is available on our
website and the intranet.
The Code of Conduct reflects recommendation 1.1 of
the NZX Code (although a different conflict of interest
policy applies), requiring all Refining NZ Directors,
employees and representatives to:
– act with high standards of honesty, integrity and
fairness in all aspects of their involvement with
the Company;
– undertake their duties with care and diligence;
– uphold the integrity and good name of the Company;
and
– not knowingly participate in illegal or unethical activity.
The Code of Conduct goes further than recommendation
1.1 of the NZX Code and requires conflict of interest to be
avoided. A detailed conflicts policy applies to the Directors
and it is set out in the Board Charter and the Independent
Directors Committee Charter.
The Code details the escalation process including the right
to contact the Disclosure Officer. Employees who expose
serious wrongdoing are protected against retaliatory action
in accordance with the Protected Disclosures Act 2000
and the Company’s Whistle-Blowing Policy.
Compliance is monitored through an annual confirmation
by the Leadership Team and the Chief Executive to the
Board confirming adequacy of disclosure and transparency
with the Board, integrity of reporting, legislative
compliance and financial reporting controls (“general
assertion statement”). In the case of serious breaches,
disciplinary action, including dismissal, is considered
by Management.
A biannual training programme, including an “on-line”
Code of Conduct training module, was rolled out in 2018.
The Code of Conduct is reviewed bi-annually.
Securities trading
The Company’s Securities Trading Policy applies to
Directors, Officers and all employees. A Director or
member of the Leadership Team can only enter into
securities transactions if prior approval has been given.
A listing of Directors’ and Leadership Team member
shareholdings is included with their profiles on pages 58 to
65 of this Annual Report. A copy of the policy is available
on our website.
“Directors should set high standards of ethical behaviour, model this
behaviour and hold management accountable for these standards
being followed throughout the organisation.”
Ethical
standards
PRINCIPLE
1

41
Board role and responsibilities
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 (see Board role and responsibilities
chart below).
The respective roles of the Board and Management
(the Leadership Team) are set out in the Board’s Charter
available on our website.
The main functions of the board include:
– reviewing and approving the strategic, business and
financial plans prepared by Management;
– monitoring performance against the strategic, business
and financial plans;
– assessing the effectiveness of Management’s risk
management plans, including Health, Safety and
Environmental risks;
– appointing, providing counsel to and reviewing the
performance of the Chief Executive;
– approving major investments and divestments;
– ensuring ethical behaviour by the Company, Board,
Management and employees; and
– assessing its own effectiveness in carrying out its
functions.
The Board monitors these matters by receiving
reports and plans from Management, maintaining an
active programme of site visits and through its annual
work programme.
The Board uses committees to address certain issues
that require detailed consideration by members of the
Board who have specialist knowledge and experience.
The Board retains ultimate responsibility for the functions
of its committees and determines their responsibilities.
The Board has a statutory obligation to reserve
responsibility for certain matters. It also deals directly
with issues relating to appointments to the Board,
strategy, business and financial plans.
All Board authority conferred on the Leadership Team
is delegated through the Chief Executive.
“To ensure an effective Board there should be a balance of
independence, skills, knowledge, experience and perspectives.”


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and performance
PRINCIPLE
2

REFINING NZ ANNUAL REPORT 201842
Board composition and appointment
The Board currently consists of seven Directors:
Simon Allen (the Chair), Vanessa Stoddart, Paul Zealand
and James Miller are Independent Directors. Deborah
Boffa, Riccardo Cavallo and Lindis Jones are not
Independent. Independence is assessed according to
the NZX Main Board Listing Rules criteria.
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
Company’s Constitution, the Company is obliged to have
at least three Independent 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 (“Representative
Directors”) as if they were non-representative Directors.
Each year the Board will appoint a Chairman from
among the Independent Directors who is responsible
for representing the Board to shareholders. The roles of
Chairman of the Board, Chair of the Audit, Risk and
Finance Committee and Chief Executive must all be
held by different people.
The Board is responsible for appointing Directors subject
to shareholders’ approval at the Annual Shareholders’
Meeting. The Nominations and Remuneration Committee
manages the appointment process for new Directors and
the re-election of existing Directors in order to make a
recommendation to the Board. When considering an
appointment, the Committee will undertake a thorough
check of the candidate and his or her background. Where
the Board determines a person is an appropriate candidate,
shareholders are notified of that and are provided with all
material information that is relevant to the decision on
whether to elect or re-elect a Director.

4
2
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3
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Business Transformation





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N
Large Project Execution
Asset Management
Human Resource Management
Oil Refining Operations
Process Safety Management
Financial Management & Reporting
Energy Industry
Oil Products Supply Chain
Market Economics
Public Company Board Experience
Customer Perspective
MALE FEMALE
3 - 9 years
0 - 3 years
100%
75%
50%
25%
INDEPENDENT NON-INDEPENDENT
Board characteristics
#
Number of experts in the field
Key

43
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 to fill a casual vacancy, that
Director will hold office until the next Annual Shareholders’
Meeting, but will be eligible for election at that meeting.
On their appointment, Directors:
– attend an induction programme aimed at deepening
their understanding of the business and the
environment and markets in which the Company
operates; and
– enter into a written agreement with Refining NZ,
establishing the terms of their appointment.
Directors’ skills and training
The Board maintains a skills matrix setting out the mix of
skills and diversity of the Board. The skills matrix is used to
evaluate whether the collective skills and experience of
the Directors meet Refining NZ’s requirements both
currently and into the future. The skills matrix defines the
following skills and competencies against which each of
the appointed Directors is periodically evaluated:
– business transformation;
– customer perspective;
– market economics;
– public company Board experience;
– financial management and reporting;
– human resources management;
– oil refining operations;
– energy industry;
– oil products supply chain;
– asset management;
– process safety management; and
– large projects execution.
The Board has determined that it needs a minimum of one
Director who would be considered expert in respect of
each skill/competency.
The Directors undertake appropriate training to remain
current on how to best perform their duties as Directors.
Board tenure
The Refining NZ Board does not have a tenure policy
although it supports the philosophy that regular rotation of
Directors introduces new thinking, perspectives, skills and
experience to the Board table.
Director, Board and Committees’ performance
The Directors, the Board and all Committees annually
evaluate their own performance, processes and
procedures to ensure that they are appropriate to assist
the Board in effectively fulfilling its role and meeting its
duties.
Board meetings open with scheduled “board only” time.
Reflecting on the meeting and consideration of any
matters requiring disclosure are formal agenda items
at the end of each board meeting.
The Board conducts formal performance evaluations;
periodically engaging an outside facilitator as well as
undertaking peer and self-assessments based on a
methodology agreed by the Board. The Chairman had
one-on-one discussions with every Director in 2018,
with feedback discussed at the Board.
The current mix of skills and experience is considered
appropriate for the responsibilities and requirements of
governing Refining NZ. The Board actively manages its
succession to ensure the successful transition of Directors
to the Board, ensuring that there are adequate handover
periods. In line with this approach, James Miller was
appointed to the Board in 2018 to shadow Mark Tume
in his role as Chairman of the Audit, Risk and Finance
Committee. Mark retired from the Board in February 2019.
Diversity
Refining NZ recognises the value in diversity of thinking
and skills, and seeks to ensure that the Board and
workforce both comprise members reflecting diversity.
The Company’s Diversity and Inclusion Policy is available
on the website.
Further information on diversity can be found on pages
32-33 of this report including the Company’s diversity
initiatives.

REFINING NZ ANNUAL REPORT 201844
Committees of the Board
Board Committees at Refining NZ are established to
perform particular work on an ongoing basis. There are
four Board Committees: the Audit, Risk and Finance
Committee; the Nominations and Remuneration
Committee; the Independent Directors Committee; and
the Health, Safety, Environment and Operations
Committee.
Each Committee operates in accordance with a written
charter approved by the Board and reviewed periodically
by the respective Committee. The Committee Charters
are available in the corporate governance section of the
Company website: www.refiningnz.com.
The Board will also establish non-standing committees, as
required, to deal with specific matters. In 2018, the Board
established a Due Diligence Committee to oversee the
process of the subordinated notes issue.
Audit, Risk and Finance Committee
James Miller (Chair) , Simon Allen and Paul Zealand
The Committee members are all Independent Directors.
All members of the Committee have the appropriate
financial expertise and understanding of the Company’s
industry and are considered to be “audit committee
financial experts”.
The role of the Audit, Risk and Finance Committee is
defined by the Charter and is to oversee financial reporting,
treasury risk management, external and internal audit and
assurance, and regulatory conformance.
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. For more
information about auditing and reporting Refining NZ’s
financial performance, see Principles 4 and 7.
The Committee meets with the internal and external
auditors (either together or separately) as the Committee
Chair considers appropriate.
Nominations and Remuneration Committee
Vanessa Stoddart (Chair) , Simon Allen and Paul Zealand
The Nominations and Remuneration Committee comprises
three Independent Directors.
The role of the Nominations and Remuneration Committee
is defined by the Charter.
In respect of nominations, the responsibilities of the
Committee are to identify and nominate, for the approval
of the Board, candidates to fill Board vacancies (including
development of succession planning) 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 section
CW26C of the Income Tax Act 2007 (as amended)
(Exempt ESS).
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 62 to 65.
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, culture and
engagement as well as other strategic people priorities
that arise from time to time.
“The board should use committees where this will enhance its
effectiveness in key areas, while still retaining board responsibility.”
Board
committees
PRINCIPLE
3

45
Independent Directors Committee
Simon Allen (Chair) , James Miller, Vanessa Stoddart
and Paul Zealand
The four Independent Directors form the Committee,
the role of which is defined in the Charter.
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 8.16.1 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
Management, 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.
Health, Safety, Environment
and Operations Committee
Paul Zealand (Chair) , Simon Allen, Debi Boffa, Riccardo Cavallo,
Lindis Jones, James Miller and Vanessa Stoddart
The Board maintains appropriate oversight over matters
relating to health and safety, including both personal safety
(occupational health) and process safety (major accident
hazard risk exposure) and environment.
All Directors are members of the Committee, the role of
which is defined by the Charter.
– The Committee is responsible for, among others,
reviewing, monitoring and making recommendations
to the Board on Refining NZ’s health, safety,
environment and operational risk management
framework, policies and targets;
– seeking assurance that the Company is effectively
structured and resourced to manage these risks;
– reviewing selected incidents and considering the
appropriateness of actions to minimise the risk of
recurrence; and
– reviewing Management’s emergency response and
crisis management preparedness.

REFINING NZ ANNUAL REPORT 201846
Takeover Protocols
The Takeover Protocols policy sets out the rules and
procedures followed in case of a takeover offer for
the Company:
– on receipt of a communication that a takeover offer
is likely, the Directors will consider the continuous
disclosure obligation of the Company under the NZX
Listing Rules 10.1;
– upon receipt of a notice of intention to make a takeover
offer (“Takeover notice”) Refining NZ will notify the
NZX and appoint an independent advisor. The
independent advisor’s role will be to prepare a report
on the merits of the offer, providing an expert opinion
to Refining NZ shareholders; and
– an independent takeover panel will be established to
oversee the process.
Shareholder communication would include the formal
takeover offer, target company statement and the
independent advisers report.
Board
meeting*
Health, safety,
environmental
and operations
committee
Audit, risk
and finance
Committee
Nominations and
Remuneration
committee
Independent
Directors
Meeting
Due diligence
committee
Site walks
S C Allen7/76/63/35/54/49/95
M J Bennetts
(resigned 16 March 2018)
1/11/11
L Jones
(appointed 19 March 2018)
6/65/55
D C Boffa7/76/6
3
R Cavallo7/76/64
J Miller (appointed 1 Nov 2018)1/11/11
V C M Stoddart7/76/65/54/42
M Tume (resigned 21 February 2019)6/75/63/34/43
P A Zealand7/76/63/35/54/49/95
* includes April 2018 Annual Shareholders’ Meeting.
In addition, 13 meetings were held throughout the year in relation to the appointment of the Chief Executive and the Board’s succession, including the appointment of two new Directors.
Meeting attendance
Director attendances at Board and sub-committee meetings during 2018 were as follows:

47
Continuous Disclosure
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. Refining NZ’s Continuous Disclosure Policy sets out
principles to be followed to provide timely advice to the
market of material events and developments affecting the
Company as they occur and to ensure a robust investor
and media relations programme operates to ensure all
market participants have equal opportunities to receive
information issued by the Company.
The policy applies to:
– all Refining NZ Directors;
– all employees of the Company and its subsidiaries; and
– contractors, consultants, advisers and other service
providers to the Company, where they are under a
relevant contractual obligation.
This Policy aims to ensure Refining NZ meets all statutory
and NZX Listing Rule obligations, as well as adopting "best
practice" for identification, and timely disclosure of material
information.
Major Decisions
Directors’ commitment to timely and balanced disclosure
is set out in its Continuous Disclosure Policy and includes
advising shareholders on any major decisions. Where
voting on a matter is required the Board encourages
investors to attend the meeting or to send in a proxy vote.
Shareholders may raise matters for discussion at the
Annual Shareholders’ Meeting either in person or by
emailing the Company with a question to be asked.
Financial Reporting
The Audit, Risk and Finance Committee plays a central role
in Refining NZ’s commitment to transparent reporting of
its financial performance as outlined in the Committee
Charter.
The Leadership Team is responsible for implementing and
maintaining appropriate accounting and financial reporting
principles, policies, and internal controls designed to
ensure compliance with accounting standards and
applicable laws and regulations.
Refining NZ’s external auditor, PricewaterhouseCoopers,
is responsible for planning and carrying out each external
audit in line with applicable auditing standards. They are
accountable to shareholders through the Audit, Risk and
Finance Committee and the Board respectively. The Board
retains overall responsibility for financial reporting.
The Committee makes sure that it and the full Board are
sufficiently informed about good-practice financial
reporting and Refining NZ’s operations to know whether
financial reporting is fit for purpose. This means it
represents a balanced viewpoint, is factual and complete
and is effectively implemented.
The CEO provides an annual assertion statement to
the Board, confirming that Refining NZ’s financial records
have been properly maintained, and that the financial
statements comply with Generally Accepted Accounting
Practice and give a true and fair view of Refining NZ’s
financial position and performance.
The Half Year (interim report) and the Annual Report are
available on the Company’s website www.refiningnz.com.
Non-financial Reporting
The Company’s non-financial reporting is provided annually
and reports on material environmental, economic and
social sustainability risks against the Global Reporting
Initiative, a standard recognised by the Sustainable Stock
Exchange Initiative. For the non-financial reporting refer to
pages 18 to 65.
“The Board should demand integrity in financial and
non-financial reporting, and in the timeliness and balance
of corporate disclosure.”
Reporting
and disclosures
PRINCIPLE
4

REFINING NZ ANNUAL REPORT 201848
The Company has adopted a Director and Executive
Remuneration Policy for remuneration of the Board and
Leadership Team. Refining NZ’s remuneration framework
and policies are overseen by the Nominations and
Remuneration Committee in line with the Charter.
The policy is available on the website.
Remuneration
Refining NZ aims to attract and retain appropriately
qualified and experienced individuals. Refining NZ applies
a fair and equitable approach to remuneration and reward
practices, taking into account internal and external
relativities balanced against the commercial environment.
The Board will take independent advice and establish
market rates and medians against New Zealand
businesses of comparable size and complexity, having
regard to industry specific and generic roles. Individual
performance, company performance and market relativity
are key considerations in setting remuneration levels.
In 2018, the Board took independent advice in relation
to the remuneration offered to the Chief Executive
and a number of Leadership Team members.
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 $ 900,000 and was approved
by shareholders at the Annual Shareholders’ Meeting in
April 2018. Directors’ remuneration is set at a level to
remain comparable with other companies in New Zealand,
taking into account the expertise, skills and responsibilities
of Directors. The Directors of the subsidiary company,
Independent Petroleum Laboratory Limited, do not
receive remuneration.
The remuneration and other benefits, excluding
reimbursements, received by the individual Directors
of the Company during the year were as follows:
“The remuneration of Directors and executives should be
transparent, fair and reasonable.”
2018
Annual Fees
$
2017
Annual Fees
$
Board of Directors
Chairman
180,000
170,000
Independent Director
75,000
88,000
Non-independent Director
75,000
72,000
Audit, Risk and Finance Committee
Chairman
30,000
25,000
Member
12,500
12,500
Nominations and Remuneration Committee
Chairman
20,000
10,000
Member
5,000
5,000
Independent Directors Committee
Member
20,000
n/a
Health, Safety, Environment and Operations Committee
Chairman
10,000
n/a
AppointedBoard
fees
$
ARFC
Committee
fees
$
R&N
Committee
fees
$
Independent
Directors
Committee fees
$
HSEO
Commitee
fees
$
Total
fees
$
S C AllenChairman4 Dec 2014180,000180,000
M J Bennetts*Z Energy10 May 201016,02716,027
L JonesZ Energy19 Mar 201858,97358,973
D C BoffaBP23 Aug 201775,00075,000
R CavalloMobil12 Apr 201775,00075,000
J MillerIndependent1 Nov 201812,50012,500
V C M StoddartIndependent20 May 201375,00020,00020,000115,000
M Tume**Independent1 Aug 200775,00030,00020,000125,000
P A ZealandIndependent29 Aug 201675,00012,5005,00020,00010,000122,500
*M Bennetts resigned as Director effective 16 March 2018. ** M Tume resigned as Independent Director effective 21 February 2019.
Remuneration
PRINCIPLE
5

49
Financial
year
CEOBase
salary
$000
Other
$000
Subtotal
$000
Pay for performance (STI)
$000
STI against
maximum
%
Total
Remuneration
$000
KPI basedDiscretionary
FY2018Mike Fuge
(from 27 August 2018)
31661377165-81542
FY2018Sjoerd Post
(to 31 August 2018)
70537742300300981,342
FY2017Sjoerd Post982451,027405150941,582
FY2016Sjoerd Post95841999540-931,539
FY2015Sjoerd Post94041981438-781,419
Five year summary – Chief Executive Remuneration
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 (including
Directors and Officers insurance cover). The Chairman
does not receive additional fees for being on a Committee.
No loans have been made to Directors.
Chief Executive Remuneration
Mike Fuge commenced as the Company’s Chief
Executive on 27 August 2018, taking over from
Sjoerd Post who completed his tenure with the
Company on 31 August 2018.
As a result of the change, the Chief Executive
remuneration detail provided below primarily relates to
payments made to Mike Fuge. Details of payments made
to Sjoerd Post are detailed on page 50.
The Chief Executive’s remuneration is approved by the
Board and is reviewed annually.
The Chief Executive’s Total Remuneration paid in the
period from 27 August to 31 December 2018 was
$377,293. Total remuneration is made up of two
components:
– fixed remuneration – base salary of $316,304 (portion
of the annual salary amounting to $ 900,000); and
– a one-off reimbursement of transition costs and other
benefits of $ 60,989.
The Chief Executive’s remuneration package includes a
short-term performance incentive (STI) with an “on-
target” incentive of 45% of base salary per plan year, up to
65%. The STI payment is subject to the achievement of
agreed Key Performance Indicators (KPI’s). Short-term
performance incentives are deemed “at risk” payments
designed to motivate and reward performance in the
financial year. The STI is paid in the year following the
performance period.
The KPIs agreed for the four months ended 31 December
2018 related to health and safety and operational
performance, leadership as well as specific deliverables
in terms of the CEO’s 90 day plan and the initiation of a
broader strategic review as discussed on page 13.
The KPIs agreed for the 2019 financial year relate to areas
of health and safety, plant reliability, leadership, financial
and in-full on-time in-spec product delivery. The
weightings applied are as follows:
Each category of KPI is “scored” against the agreed
targets for those KPI’s. 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 (CEPF). On-target performance is an
STI equivalent to 45% of Base Salary, with a maximum of
65% of Base Salary for exceptional performance.
The Chief Executive participates in the Employee Share
Purchase Scheme as outlined on page 50.
KPI categoryWeighting
%
Health and safety (personal and process) 40
Financial 15
Strategic Projects and critical milestones15
Leadership25
Plant reliability 2.5
In-full, on-time, in-spec product delivery 2.5

REFINING NZ ANNUAL REPORT 201850
Former Chief Executive Remuneration
Former Chief Executive, Sjoerd Post, received
remuneration during FY2018 which totalled $1,341,715.
This payment included a pro rata STI pay for performance
in the 8 month period ended 31 August 2018 of $300,000
and an additional discretionary payment of $300,000
pursuant to the terms of his employment agreement in
recognition of an agreed contract extension. The remaining
remuneration was a combination of fixed remuneration,
accrued annual leave, KiwiSaver and other benefits.
Scenario charts – Chief Executive Performance
pay for 2019
The Chief Executive is entitled to a short-term
performance incentive payment based on performance
against KPI’s. The scenario chart below depicts the
remuneration proportions for Mike Fuge for the year ended
31 December 2019, as a proportion of total remuneration.
Fixed remuneration reflects the base salary plus KiwiSaver
contributions. As a percentage of fixed remuneration,
for performance that “meets expectations”, the STI
component would pay out at 45% of fixed remuneration.
At “maximum”, for performance that exceeds expectations,
the STI component would pay out at 65% of fixed
remuneration.
Leadership team and other
employees’ remuneration profile
The 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 the Chief
Executive and selected Leadership Team members was
externally benchmarked in 2018. 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 which include: the frequency of personal
safety incidents (Total Recordable Case Frequency),
the number of process safety incidents (Tier I and
Tier II), safety walks (Hauora Hikoi) and talks (Hauora
Korero), level of operating costs, unplanned downtime
and delivery in full, on time, in-spec to our customers
and critical project milestones;
– Individual Performance Factors (IPFs) based on
achievement of individual performance objectives; and
– values and behaviours demonstrated by the individual.
Employee Share Purchase Scheme
The Company established the Employee Share Scheme
which is exempt in accordance with the section CW26C
of the Income Tax Act 2007 (as amended). 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.
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. For further details on the scheme refer
to note 21 of the consolidated financial statements.
The Company estimates the annual operating costs of
the scheme of approximately $15 thousand and the cost of
the contribution of approximately $300 thousand per year,
depending on the business performance.
ON TARGET
FIXED
100%69%
31%
ABOVE TARGET
(MAXIMUM)
61%
39%
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$
Fixed remuneration
Annual variable