Refining NZ 2019 Annual Report

Refining New Zealand

Annual Report 2019

RIGHT FOR
NEW ZEALAND.
Our job is to be right for New Zealand,
now and in the future.
Our refining infrastructure and related
assets – jetties, storage tanks and the
Refinery to Auckland Pipeline (RAP)
– are critical to the supply of transport
fuels throughout the country.
Seventy per cent of the transport fuels
consumed in New Zealand are produced
at the Refinery. Thirty eight per cent
of the country’s fuel storage is at our
Marsden Point site. The RAP is the most
cost-effective and environmentally
responsible means of distributing fuels
to Auckland.
The technical capability and
commitment of our people underpin
our operations and provide value-add
opportunities to the benefit of our many
stakeholders.
We will continue to do what we do 24
hours a day, seven days a week – and
we see an opportunity to evolve our
infrastructure and refining assets to
meet the need for lower carbon fuels
of the future.
01

Directors’ Statement
The Directors are pleased to present
The New Zealand Refining Company
Limited’s Annual Report and Financial
Statements for the year ended
31 December 2019. The Annual Report
of The Zealand Refining Company Limited
is signed on behalf of the Board by:
S C Allen
Chair
20 March 2020
J B Miller
Chair, A RF C
Contents
01 Right for New Zealand
05 Right for Travel
06 Right for Transport
08 Right for Industry
11 Right for Northland
13 Right for New Zealanders
14 Who we are / Highlights
16 Chairman and Managing Director’s Report
22 Right Infrastructure
23 History of Investment
24 Right Focus
26 How we create value
28 Stakeholder Engagement and Material Issues
30 Our Performance Against Key Material Issues
30 - Personal & Process Safety
33 - Emissions & Climate Change
36 - Quality & Reliability
39 - Culture & Diversity
42 Board of Directors
43 Leadership Team
44 Governance at Refining NZ
46 Remuneration & People Report
50 Our People
52 Financial Commentary
53 Statutory Disclosures
54 Shareholder & Bondholder Information
56 The Numbers
114 Independent Auditor’s Report
118 Trend Statement
119 Glo s s ar y
120 GRI Index
122 Corporate Directory
122 Financial Calendar
REFINING NZ ANNUAL REPORT 20190203

RIGHT FOR
TRAVEL.
ENOUGH JET FUEL
TO FILL
70,000
A320S EACH YEAR
New Zealand is a nation of travellers. We visit
each other, we visit places far away, and we
are visited. Tourism is one of the driving forces
in our economy.
Jet fuel from the Refinery powers the aviation
sector that makes tourism possible. Four
million litres of jet fuel per day flow through the
RAP and onto Auckland International Airport.
That’s enough to power 470 A320 journeys
from Auckland to Sydney.
We have continued to invest in increasing the
capacity of the RAP in time to meet growing
demand. Since 2017 our upgrade projects
have lifted capacity by more than 10 per cent
and we have identified further opportunities
to increase capacity in the future.
Over the longer term, it is expected that
demand for jet fuel will continue to grow
strongly as tourism and the economy grow.
Auckland International Airport has forecast
a near-doubling of passenger numbers to
40 million (260,000 flights) by 2040.
REFINING NZ ANNUAL REPORT 20190405

RIGHT FOR
TRANSPORT.
New Zealanders rely on safe, efficient and
economic transport for the goods and services
that sustain us.
Much of the country’s demand for transport
fuels is met by products made at our Refinery
with longhaul trucking particularly dependent
on our high quality diesel. Diesel is used at
a rate equivalent to one truck filling every
seven seconds.
The current mix of transport fuels will meet
the majority of New Zealand’s transport
needs in the foreseeable future. As transport
and fuel technologies evolve it will likely
be complemented by lower-carbon alternatives
including electric power, hydrogen and biofuels.
With our deep capability and existing
infrastructure we can play a crucial role
as New Zealand transitions to a lower-
carbon economy.
ENOUGH DIESEL TO
FILL MORE THAN
4.5M
TRUCKS EACH YEAR
REFINING NZ ANNUAL REPORT 20190607

RIGHT FOR
INDUSTRY.
Businesses of every kind depend on fuel
from our Refinery to enable them to serve their
customers. They can do their jobs only if we
do ours – providing a continuous, reliable and
safe supply of high-quality fuel products for
distribution throughout the country.
Sustaining our performance at this level
means operating to exacting standards every
minute of every day. We keep an eye to the
future and are always looking to improve, by
tapping into the knowledge of our teams and
working in collaboration with our customers.
In infrastructure, our bitumen supports the
maintenance of 60,000 km of roads each
year – in and around major centres, on country
roads across New Zealand, and on roads of
national significance.
In agriculture, sulphur extracted from crude oil
during the refining process is a vital feedstock
in the production of crop fertilisers that
maximise pasture growth.
In a world of growth and change, our reliability
and safety, based on a deeply embedded
culture of operational excellence, will become
more important than ever.
OUR BITUMEN
SUPPORTS THE
MAINTENANCE OF
60,000KMS
OF NZ ROADS
EACH YEAR
REFINING NZ ANNUAL REPORT 20190809

RIGHT FOR
NORTHLAND.
Refining NZ is a Northland success story.
Our refining and distribution business is
a significant employer, with around 1,100
Northland jobs and 2,400 specialist jobs across
the country relying on work from Marsden
Point. In total, we have $1.4 billion invested in
our physical and other assets and contribute
6.5 per cent to Northland’s GDP.
It’s not just about the numbers. Our people
understand that the Refinery’s future depends
on world-class performance. They apply a
broad range of technical, professional and
life skills every day. Their achievements, and the
standards they keep, create value both at work
and in the community.
Most of our people are Northlanders. We are
part of the community – at work, at home
and through the Company’s responsible
engagement with Iwi and hapu, local
authorities, businesses, schools, sporting
groups and other interest groups. Playing
our part in Northland’s future is a powerful
motivating force.
6.5%
OF NORTHLAND’S
GDP
^
^ www.infometrics.co.nz
REFINING NZ ANNUAL REPORT 20191011

RIGHT FOR
NEW ZEALANDERS.
61,000
TRUCK MOVEMENTS
REDUCED WITH THE
USE OF THE PIPELINE
TO AUCKL AND
The need for New Zealand to refine its own
transport fuels, ensuring access to a reliable
and high-quality supply of affordable fuels, was
realised in the 1950s. More than 60 years later,
and with a wealth of experience and technical
know-how under our belts, the need is as
strong as ever.
We work closely with our customers to ensure
the petrol, diesel and jet fuel we make helps
keep you moving – as you go to work, head out
for the weekend or jet away.
We’ve also made substantial investments in
our refining and distribution assets to make
our fuels cleaner, lighten our environmental
footprint and meet demand as the population
of Auckland and the rest of the country
continues to grow.
As proud Kiwis we are conscious of the need
to transition to lower-carbon fuels that are
better for our environment. With our capability
in refining and our track record of reducing
emissions, we are well placed to contribute to
the supply of sustainable fuels for a low-carbon
economy. That transition is coming. Managing
it is the right thing to do for all New Zealanders.
REFINING NZ ANNUAL REPORT 20191213

WHO WE ARE
REFINED TO MULTIPLE PRODUCTS
AT MARSDEN POINT
CRUDE OIL
IMPORTED TO
REFINING NZ
42M
BARRELS
ANNUAL OUTPUT
6.5B LITRES
70%
OF NEW ZEALAND’S
FUEL NEEDS
SUPPLYING
PERSONAL
TRANSPORT
CO
2
AGRICULTURE FERTILISER
ROADS
FREIGHT
AIR TRAVEL
HEAVY INDUSTRY
~
Our infrastructure assets based
around our Refinery at Marsden
Point, form the backbone of the
New Zealand transport fuels
supply chain. The quality fuels
we produce keep New Zealand
and New Zealanders moving.
DISTRIBUTED THROUGH OUR
170KM PIPELINE TO AUCKLAND
INTO STORAGE TANKS AT WIRI
OF NZ FUEL STORAGE
LOCATED AT
MARSDEN POINT
DISTRIBUTED BY LAND
AND SEA
HIGHLIGHTS
Diesel produced
Jet fuel produced
2.3BLitres
1.7 BLitres
1. 9 BLitres
Gross Refining Margin (GRM)
(2018: 6.31USD)
(2018: 1.4B)
(2018: 2.0B)
(2018: 1.8B)
5.34
USD per Barrel
EBITDA
^

(2018 : $15 3m )
$
118 m
NPAT
(2018 : $ 29.6m)
$
4.2m
Free Cash Flows
^
(2018 : ( $ 58m) )
$
39.4m
Petrol produced
( 2018 : 21.0m )
(2018: 40.4m)
Refinery throughput
RAP throughput
42.7m
20.8m
Barrels
Barrels
* per 20 0,0 0 0 hours, rolling 12 month
^ For a full definition, refer to glossary on page 119
0.27
TRCFR
*^
(2018: 0.76)
0.13
LTIFR
^
(2018 : 0.4 8 )
48%
52%
38%
REFINING NZ ANNUAL REPORT 20191415

RIGHT
NOW
We’re refining our business
to meet the future need for
transport fuels.
The year in review was one in which the Company’s excellent
operational performance was not matched by its financial
results, with a Net Profit after Tax (NPAT) of $4.2 million,
(2018: $29.6 million) reflecting the extreme volatility in the
global refining sector and cost pressures on the Company.
While disappointing in the short term, we expect that
strong gains in our operational performance, track record
of investment in key infrastructure assets and actions to
reduce costs and improve revenue, should allow us to
take advantage of market conditions when they improve.
Market factors combined to drive refining margins down
in the final months of the year. The impact of low margins
on the Company was exacerbated by the $3.8 million impact
of the Transpower outage in November, electricity and gas
price increases and one-off expenditure, including the costs
related to the Government pipeline Inquiry.
In 2019 our operational performance was excellent, with very
high availability of our processing units and new records being
set on crude intake and production. To a significant extent,
this excellent performance reflected a full year’s benefit from
the maintenance Turnaround
^
completed in 2018.
Right for New Zealand
With our critical role in the transport fuels supply chain,
the Refinery and distribution infrastructure into the heart
of Auckland is vital to the well-being of people and
communities throughout New Zealand. The ability of our
refining and distribution business to meet around 70 per cent
of New Zealand’s overall demand for transport fuels (63%
petrol; 62% diesel; 88% jet fuel) supports the continued
productivity of the travel, transport, industrial and other
sectors of the national economy.
Our deep capability in refining, built up over nearly 60 years
and investment in processing facilities to produce high
quality (low sulphur) fuels, positions us to play a significant
role in shaping the future of New Zealand’s transport
fuels, and enabling the country to meet its climate change
obligations into the future.
We have advanced several projects to deliver operational
efficiencies and enhance margins, with the long-term aim
being to lift our competitiveness and returns to shareholders.
The Company is also continuing with preparations for a
$37 million solar farm adjacent to the Refinery, noting that
the project has to be submitted to the Refining NZ Board
for final approval.
Health, safety and wellbeing
Our personal and process safety performance in 2019 was
outstanding. Health, safety and wellbeing are core values
for the Company. Continuing to improve our performance
ensures that our people and our Refinery remain safe
at all times, while the impact of our operations on our
environment and our community is minimised.
In 2019 the lost time injury frequency rate (LTIFR) was
0.13 (2018: 0.48) per 200,000 hours worked, a marked
improvement on the prior year with only one lost time injury.
This performance reflects the success of our safety culture
programme E Tu Tangata (Stand in the Gap) rolled out across
the Refinery via a series of Hauora Korero (safety talks) and
Hauora Hikoi (safety walks).
We operate New Zealand’s highest hazard facility and
are constantly working to improve our health and safety
performance in line with our Safety Case which was
approved in 2020 by the regulator, WorkSafe. In 2019
our process safety performance was outstanding, with
no Tier 1 or Tier 2 incidents (2018: two Tier 1; three Tier 2).
That performance is top quartile when benchmarked against
our European oil industry peers
*
.
CHAIRMAN AND
MANAGING DIRECTOR’S
REPORT
* CONCAWE (European Oil Company Organisation for Environment, Health and Safet y)
^ Refer to glossary on page 119
REFINING NZ ANNUAL REPORT 20191617REFINING NZ ANNUAL REPORT 20191617

Refining margins weaker than expected
Our Refinery operates in a cyclic industry and volatility
is to be expected. In 2019 factors outside the Company’s
control – global supply and demand – had a direct impact
on the Company’s returns to shareholders.
Our Gross Refining Margin averaged USD 5.34 per barrel,
compared with USD 6.31 in 2018. This was weaker than
expected as global refining margins felt the impact of
higher exports of products from China, demand growth
being lower than expected, and new refining capacity
coming online early in China and other parts of Asia.
While the Singapore Complex Margin dropped
significantly as a result of the above, our uplift over the
Singapore Complex Margin significantly increased to
USD 4.32 per barrel underpinned by excellent operational
availability and performance.
Higher crude freight rate costs resulted from US
sanctions on Chinese crude tanker companies.
The expected lift in diesel margins in the lead up to
MARPOL (regulations for lower sulphur content in
shipping fuels) did not arrive as had been forecast,
by market commentators, while High Sulphur Fuel Oil
margins fell strongly.
Given the headwinds in the market, including the
uncertain impact of the COVID -19 outbreak on demand
and supply, the low margin environment we have
experienced will likely remain for the first half of 2020.
Responding to low refining margins
Our management team has worked with the Board
on a comprehensive plan to respond to the lower
margin environment and secure long-term value
for shareholders.
The primary focus of the Company’s plan has been
to immediately reduce our cash spend, cutting our
2020 capital programme by 20 per cent, rationalising
operating costs as well as increasing revenue. At the
same time, we are looking at different options available
to enable the Company to stay at the core of the fuel
supply chain in New Zealand. Executing the plan should
enable the Company to continue to add resilience to the
fuel supply chain by optimising our essential
infrastructure assets.
Excellent operational performance
The operational availability of our processing units
was at 99.7 per cent, with the utilisation rate on the
Hydrocracker unit at its highest level for the past decade.
This positive performance was achieved despite the
Transpower outage in the region in November which
saw a total loss of power to the Refinery.
Operational availability on the RAP was greater than
99 per cent, with annual throughput at 20.8 million
barrels, the second highest level on record. In 2019 the
Refinery achieved a throughput of 42.7 million barrels
(2018: 40.4 million).
Operating and capital costs remained tightly controlled
as refinery operations came under sustained pressure
from significantly higher electricity and gas prices.
Ongoing supply issues with the Pohokura offshore
natural gas field meant that access to natural gas supplies
had to be carefully managed during the year. We have
subsequently contracted our natural gas requirements
for a number of years ahead with a credible market
participant with diverse supply options.
Customer promise: quality, reliability,
competitiveness
New Zealand’s economic growth drives increasing
demand for all fuels, particularly for diesel, while tourism
demands an increasing supply of jet fuel. Maintaining an
attractive value proposition for our customers requires a
constant focus on improving the quality, reliability and
competitiveness of our refining operations.
Our short duration, planned maintenance on the
Hydrocracker unit is expected to be completed in
early April. Preparations for a second longer duration
Turnaround is advancing with those preparations
benchmarked as ‘top quartile’ by an external Turnaround
specialist.
The forward profile of our tank maintenance programme
2020 to 2023 has been revised without compromising
personal or process safety on site.
In June, the Company commenced the 12-month
turbidity monitoring programme, a key condition of the
dredging resource consent, and we continue to explore
options to optimise the capital cost and benefits of the
dredging programme with our customers.
Environmental sustainability
Our focus on improving our operations extends to a
commitment to world class environmental performance.
We are continuing to improve our emissions profile
through energy-saving projects, including those carried
out through our partnership with the Energy Efficiency
and Conservation Authority (EECA).
The process of renewing the Refinery’s resource
consents which expire 31 December 2022, is progressing
with all expert reports on the Refinery’s discharges to
land, air and water now complete. We expect to lodge
a resource consent application in the second quarter of
this year.
Work continues on our waste water management
systems to ensure they remain robust in extreme
weather events.
MARPOL
We are broadening our crude diet to minimise the impact
of the MARPOL regulations which came into force on
1 January 2020. Four new, lower cost crudes have been
tested successfully and forward crude procurement decisions
by our customers are already being made as a result.
Government Inquiry findings
The final report of the Government Inquiry into the 2017
pipeline outage and the resilience of fuel supply into the
Auckland region was released in September 2019.
The Inquiry concluded that the Company had maintained
and operated the RAP properly and in keeping with all legal
requirements and standard industry practice. We were also
encouraged by the Inquiry noting that Refining NZ is working
to make timely investment decisions, and that it has a clear
goal of having new infrastructure in place shortly before it
is needed to meet demand (i.e. rather than just in time or
too late).
The Company is continuing to push for further legislative
protections for the pipeline, and we are working with the
Government and industry on ways to further improve the
resilience of Auckland’s fuel supply chain.
Emissions trading scheme
In 2019 the Government confirmed that Refining NZ
will be brought in to the New Zealand Emissions Trading
Scheme (NZETS) with an allocation of carbon units after
the Negotiated Greenhouse Agreement (NGA) expires
at the end of 2022.
Entry into the NZETS on the basis of our 2006-2009
emissions is an imperative for the Company as we transition
to a future based on lower carbon fuels. We believe that our
strong track record of emissions reduction, which has seen
the Company invest around $750 million in technology
to make cleaner fuels, and lower our emissions,
provides a solid platform for our entry in the NZETS.
Ongoing investment in our infrastructure assets requires
farsighted and predictable policy given that our investment
planning is based on 25-30 year asset life.
We are mindful of the potential disruption from further
reforms to the NZETS currently before Parliament, especially
a review of carbon unit allocation to EITE (Emissions
Intensive Trade Exposed) businesses and are continuing
to monitor this issue closely.
Dividend
Given the challenging, low margin environment the Company
is operating in the Directors have resolved that it is prudent
to not pay a final dividend. With an interim dividend of two
cents paid in September, the total dividend payment for the
year is two cents per share.
Governance
Board and Management changes
Mark Tume resigned after 11 years as a Director in February
2019. Mark made a significant contribution to the Board,
including as Chairman of the Audit, Risk and Finance
Committee for two years.
Chief Executive Officer Mike Fuge resigned in September
and left the Company on 21 February 2020. Following an
international search, the Board appointed Naomi James
as his successor. Naomi joins the Company from Santos
Limited, one of Australia’s largest independent oil and gas
producers, where she was responsible for midstream
infrastructure assets including oil and gas processing
facilities. Naomi will join the Company in April 2020.
Director Paul Zealand has stepped into the role of Managing
Director during the CEO transition. Paul will not be
considered an Independent Director during his tenure of
Managing Director. The Board is grateful to Paul for his
significant contribution during this period.
REFINING NZ ANNUAL REPORT 20191819REFINING NZ ANNUAL REPORT 201918

Andrew Brewer was appointed to the new role of Chief
Operating Officer, effective 16 March 2020. He brings a
wealth of experience from the refining sector, having spent
the previous 18 years with Caltex in Australia and Chevron
in Canada, in both refinery and supply leadership roles.
Audit changes
In December, the Refining NZ Board aligned its audit policy
and its external audit services with recent market guidance
from the Financial Markets Authority.
The Refining NZ Board reissued the Company’s Auditor
Independence policy statement (a copy is available on the
Company’s website) and carried out a market assessment
of external audit services, which it is required to do every
ten years under that policy.
After a thorough assessment process – which included
consideration of the level of non-assurance services
provided and the length of tenure of the then current
auditor – the Board appointed Ernst & Young (EY) to provide
external audit services to the Company. EY will stand for
reappointment by shareholders at the Company’s 2020
Annual Shareholder Meeting.
Outlook
The second half of 2019 proved extremely challenging for
the refining segment of the Company and is continuing to
prove so; the headwinds in the market have carried over
to the first quarter of the year and are compounded by the
ongoing negative impact of COVID-19 on demand and
supply in the Asia Pacific region.
The full impact of COVID-19 is yet to play out, but it is
likely to produce further volatility as demand returns and
refining capacity comes back on line, especially in China.
New Zealand is being impacted significantly and our
customers are responding daily to the changing product
demand profile. The demand for transport fuels is evolving
rapidly and we are working closely with our customers on
how we may assist with their Supply Chain Management.
Market commentator FGE is forecasting a rebound in global
oil demand in the first half of 2021.
Given the current trading environment and the significant
uncertainties ahead we are looking at all tactical and strategic
responses to the financial challenges we face and are
keeping the Government informed as the situation unfolds.
Our team at Marsden Point remains focused on the safe
and reliable performance of our refining operations and the
multi-fuel pipeline to Auckland, backed by a rationalised
programme of operational and capital spending. This should
ensure that we can continue to provide a reliable supply
of high-quality products to our customers and, looking
ahead, that we are well placed to benefit from our
excellent operational performance when global refining
margins improve.
REFINING NZ ANNUAL REPORT 20192021REFINING NZ ANNUAL REPORT 20192021

The Marsden Point Refinery and associated
infrastructure were originally built in the 1960s
as the Government recognised the need for
New Zealand to have the capability to refine
crude oil to produce transport fuels within
the country, reducing its reliance on imported
fuel. We have continued to build on that key
infrastructure over the past 60 years to keep
New Zealanders on the move.
The high-value infrastructure assets now under our
management – our jetties, storage tanks and the Refinery
to Auckland Pipeline – are critical to the ongoing security of
New Zealand’s fuel supplies and to New Zealanders’
well-being and prosperity.
The Marsden Point site has three jetties over which 40-42
million barrels of crude oil are delivered and 6.5 billion litres
of product are shipped each year, and 126 tanks in which
crude or refined product is stored. It is the starting point for
the 170 kilometre RAP, which moves petrol, diesel and jet
fuel to the Wiri oil terminal in South Auckland. About half
of our production is distributed via the RAP to Auckland
and half is sent across our jetties into coastal tankers
or to road tankers for delivery around New Zealand.
We invest to ensure that these critical assets remain at
the core of the transport fuel supply chain in New Zealand
and can continue to play their vital role in maintaining the
nation’s security of supply. We also invest to ensure that
the Refinery’s processing capability remains world-class
in performance and reliability, with the capability to safely
meet demand for the existing fuel portfolio and the nation’s
transport needs in the future.
Our original two jetties were constructed in 1964 and
we are in the middle of a significant refurbishment plan
to ensure they continue to service the Refinery and our
distribution business.
We are four years into a multi-year tank refurbishment
programme, conducted under regulatory and technical
oversight. This major programme of work has been
optimised, resulting in a smoother and more efficient capital
spend. Key enablers for this include the use of acoustic
emissions testing to assess tank conditions, robotic blasting
and painting and automated tank cleaning, which improves
not only capital efficiency but also quality and safety.
Since 2017 capacity upgrade projects have lifted throughput
capacity on the RAP by more than ten per cent to ensure we
can continue to meet the need for transport fuels as
Auckland continues to grow.
Meanwhile the Company continues to invest in assets
and processes that deliver efficiencies, provide options
for an expanded range of products and improve the safety
of those who work on the site.
RIGHT
INFRASTRUCTURE
Refining Company formed.
Lists on the New Zealand
stock exchange in 1962.
Major expansion of the Refinery as
part of the National government’s
Think Big programme of energy
expansion projects. Extra tankage,
Hydrocracker and Refinery to
Auckland pipeline added.
NGA signed with the Crown. Commits
the Refinery to an emissions reduction
pathway through to 2023.
Third jetty added at
Marsden Point.
$190M Point Forward project
commissioned increasing
processing capacity to
̃135,000 barrels/day.
RAP capacity project has
increased supply into
Auckland by more than 10% .
HISTORY OF
INVESTMENT
Operations at the Marsden
Point Refinery get underway.
New Zealand fuel
market is deregulated.
Wiri oil terminal
approved
$180M Future Fuels project
commissioned delivering cleaner
fuels by reducing benzene in
petrol and sulphur in diesel.
$ 365M* Te Mahi Hou project
completed : Lifts petrol making
capacity by 2M barrels, improves
energy efficiency and reduced CO
2

emissions by around 120,000 Tonnes
per annum.
“We are satisfied that Refining NZ
is making appropriate investment decisions
to maintain the capacity of the refinery
and the RAP to meet future demand.”
Government Inquiry into the Auckland Fuel Supply Distribution (2019)
Government Inquiry into the Auckland Fuel
Supply Distribution (2019)
1961
1964
Sulphur plant completed.
Solidifies molten sulphur
into pellets for the
agri-nutrients sector.
“ We found that Refining NZ’s work
to respond to the leak, repair the
pipe, and remediate the damage
was of a high standard. Their
work was swift, well-coordinated,
careful, thorough, and effective.”
1982
1985
1989
+
2015
2017
2019
Since 1964 we’ve invested in significant capacity and capability
projects to meet the country’s demand for more, and cleaner
fuel products, as well as to improve the environmental footprint
of our refining operations. With our strong track record
of investment and deep technical capability we are well
positioned to contribute to New Zealand’s low carbon future.
2003
2005
2009
*
Excludes front end engineering and design, and financing costs
REFINING NZ ANNUAL REPORT 20192223REFINING NZ ANNUAL REPORT 20192223

260
250
240
230
220
210
200
190
20062007200820092010201120122013201420152016201720182019
est
~$750m
~20%
reduction in
carbon intensity
since 2008
>35,000
C0
2
Intensity [tC0
2
/t production]
C0
2
intensity
improvement
Te Mahi Hou ($425m)
~10% CO
2
intensity reduction and
120,000 tCO
2
emission reduction
HCU and HMU upgrades (
$2.2m)
~3% CO
2
intensity reduction
Point Forward ($190m)
~8% CO
2
intensity reduction
Avg 2016 – 2019Total C0
2
/tonne production
invested
2005-2015
tonnes p.a. sulphur
removed from fuels
since 2005
260
250
240
230
220
210
200
190
20062007200820092010201120122013201420152016201720182019
est
~$750m
~20%
reduction in
carbon intensity
since 2008
>35,000
C0
2
Intensity [tC0
2
/t production]
C0
2
intensity
improvement
Te Mahi Hou ($425m)
~10% CO
2
intensity reduction and
120,000 tCO
2
emission reduction
HCU and HMU upgrades (
$2.2m)
~3% CO
2
intensity reduction
Point Forward ($190m)
~8% CO
2
intensity reduction
Avg 2016 – 2019Total C0
2
/tonne production
invested
2005-2015
tonnes p.a. sulphur
removed from fuels
since 2005
Pursuing further
energy saving
initiatives
Energy conservation
partnership
with EECA
Solar project has
potential to remove
18,000 tones of CO
2
As an energy intensive industry we are highly
conscious of the impact of our operations on
the environment and have been improving
our profile through CO
2
and SO
2
emission
reduction programmes.
In 2003 the Company signed the landmark Negotiated
Greenhouse Gas Agreement with the Crown while
announcing a $180 million investment in the Future Fuels
project to produce higher quality petrol and diesel (with
reduced benzene and sulphur). This enabled New Zealanders
to use vehicles with more advanced, cleaner engine
technology.
The NGA committed the Refinery to a pathway towards
world’s best practice in energy efficiency, requiring a
substantive investment to adopt new lower emissions
technology. Between 2005 and 2015 the Company has
invested around $750 million, which has driven carbon
intensity down by around 20 per cent, reduced benzene
from our refining processes, and removed over half
a million tonnes of sulphur from our petrol and diesel
products.
In 2015 our single, most substantive emissions reduction
initiative, the $365 million
*
Te Mahi Hou project which
replaced an aging platformer (petrol processing plant),
lifted petrol production while reducing CO
2
emissions
by around 120,000 tonnes a year, the gain equivalent
to taking 60,000 Toyota Corolla–sized cars off our roads
or New Zealanders investing $4.6 billion on Tesla 3
electric vehicles.
Our commitment to helping New Zealand meet its
climate change obligations means that we are always
looking to improve our emissions profile by lifting the
energy efficiency of our Refinery. Regular benchmarking
against our competitors in the Asia Pacific region shows
that Refining NZ continues to “punch above its weight”
in terms of emissions profile; we outperform our refining
peers in Australia and globally, rank better than the
worldwide emissions average.
We recognise the challenge of climate change and believe
that our strong track record of investment in emissions
reduction provides a platform for our entry in the NZETS
as an Emissions Intensive Trade Exposed business,
as well as securing our major ongoing contribution
to the Northland and wider New Zealand economy.
Longer term, we see an opportunity to leverage our existing
infrastructure to produce green hydrogen and potentially,
reduce our emissions by a further 50 per cent.
RIGHT
FOCUS
Te Mahi Hou is the single
largest carbon reduction
project in New Zealand and
proves that doing the right
thing for the environment
can also make good
business sense.
1,000,000
500,000
0
1,500,000
200
205
210
215
220
225
230
20152016201720182019
(Provisional)
Scope 1 [t C0
2
] Direct emissions
– from fuel chemical reactions
Scope 2 [t C0
2
] Indirect emissions
– from purchased electricity
Carbon intensity [kg C0
2
/t of product]
CARBON PROFILE
CO
2
INTENSITY
IMPROVEMENT
t CO
2
kg CO
2
/t of product
*
Excludes front end engineering and design, and financing costs.
REFINING NZ ANNUAL REPORT 20192425REFINING NZ ANNUAL REPORT 20192425

HOW WE CREATE VALUE
INPUTS
Engaged people
Safe, diverse, high
performing and
empowered teams
People & culture
Grow our talented
people supported
by world class health
and safety performance
Capability
Our technical
expertise, knowledge
systems supported by
operational excellence
Centre of
technical excellence
A competitive and
high-quality supplier,
leading New Zealand’s
transition to a
low-carbon future
Competitive &
profitable business
Providing returns for our
shareholders over the
business cycle with options
for future growth, leveraging
our infrastructure and
capability
Financial capital
& resources
The equity, debt, and
cash flow which keep
us competitive and
profitable across the
business cycle
Essential &
efficient infrastructure
A safe, clean, reliable
refining and distribution
business which embraces
new technology and
provides dependable
supply
Trusted
& valued partner
Delivering on
our promises
Refining
assets
Able to produce
the quality of fuels
NZ needs with
high process
integrity
Distribution
assets
Able to provide
low emission
fuel transportation
into Auckland
OUTPUTS
Environment
Our responsibility
to air, water and
land discharge is
supported by a world
class environmental
performance
Responsible
operator
Committed to improving
our environmental footprint
and including low-carbon
alternatives
Relationships
Quality relationships
with shareholders,
customers, Iwi and other
stakeholders which keep
us connected to our
communities
REFINING NZ ANNUAL REPORT 20192627

Significance of Refining NZ’s economic, environmental and social impacts
STAKEHOLDER ENGAGEMENT
AND MATERIAL ISSUES
Influence on stakeholder’s assessments and decisions
High
Medium
High
Process safety
At the heart of the relationship we have with each
of our stakeholders, is an understanding of the
material issues for each stakeholder or those that
matter the most, as well as for the Company.
To deepen our understanding of what’s important, the views
of every stakeholder (Iwi, customers, suppliers, investors,
employees) have been independently validated through
one-on-one discussions. Each material issue has then
been prioritised according to their influence on stakeholder
decisions about the Company.
The 14 material issues identified with our stakeholders are
shown in the matrix on page 29. These issues are integrated
into our thinking as we develop our strategies and plans to
deliver value for our stakeholders and improve the overall
performance of our business.
In terms of how we report on performance, the material
issues are grouped into broad categories: health, safety and
wellbeing; environmental; quality and reliability; people
and competitiveness and profitability.
Health, safety and wellbeing
This is a core value for our business. As a high hazard facility,
we have robust management systems and processes in
place to ensure everyone working at the Refinery goes
safely home, every day.
Environmental
Running our Refinery in accordance with our resource
consents while minimising the environmental impact of
our refining operations is critical to our ‘licence to operate’.
Quality and reliability
Maintaining the reliability of the Refinery through ongoing
investment in planned maintenance is critical to delivering
high quality transport fuels to our customers, on time
and in specification.
People
People are core to our business and our single most
important asset. Our ability to attract and develop talented
people underpins the success of our business and adds
value to our community.
Competitiveness and profitability
By maintaining the relentless focus on our cost base
and optimising the value from our infrastructure, we will
efficiently deliver high quality products to our customers
and secure improved returns for our shareholders.
On the following pages we provide an update on those
categories in the top right quadrant of the matrix (high
influence on stakeholder decision making/significance of
Refining NZ impacts) together with culture and diversity
of our people, which underpins our performance across
all categories. As highlighted throughout this report,
the competitiveness and profitability of the Company
remains a core focus for management and the Board.
To ensure we are following accepted international best practice, this report has been prepared in accordance with
Global Reporting Initiative (GRI) standards: Core option.
LEGEND:
Health, safety and wellbeing
Environmental
Competitiveness and profitability
People
Quality and Reliability
Environmental, Social and Governance
Issues Materiality Matrix
REFINING NZ ANNUAL REPORT 20192829
Governance & board independence
Training & development
Contribution to
regional economy
Quality & reliability
of products
Personal safety
& wellbeing
Business continuity
& emergency response
Community &
Iwi engagement
Risk
management
Energy efficiency
Culture & diversity
Financial
performance
Emissions to air,
water & ground
Greenhouse gas/
climate change

DELIVER A WORLD CLASS HEALTH & SAFETY
PERFORMANCE
Safety and wellbeing is one of our core values.
We have an active programme to embed a
culture that supports the safety and wellbeing
of our employees, contractors and visitors
to our site.
Our safety performance improved considerably in 2019,
with no Tier 1 or Tier 2 incidents occurring and a reduction in
lost time injury frequency rate (LTIFR) from 0.48 to 0.13 per
200,000 hours worked. Our performance was boosted by
the introduction of the E Tu Tangata programme, which aims
to embed a culture that values and delivers both personal
and process safety.
Our programme is governed by the Central Safety
Committee (CSC), chaired by our Managing Director
and including the Leadership Team, along with subject
matter experts, employees and contractor representatives.
Six sub-committees are charged with the specifics
of implementing and further developing our systems.
Performance data is collected and reported back to the
CSC for review. Personal safety is recorded in terms of
the total recordable case frequency rate (TRCFR) and
LTIFR, while process safety reporting takes place under a
framework endorsed by the American Petroleum Institute –
refer to page 119 for definitions of Tier 1 and Tier 2 Process
Safety Events.
Our Safety Case, submitted to Worksafe in 2018 and
approved in early 2020, has been promoted widely within
and outside the Company. The Safety Case details how
the Refinery identifies hazards that could result in major
incidents (safety assessments), the systems used to
manage the risk posed by major incidents (safety
management system) and the systems for responding to
any incidents (Emergency Response Management Plan).
The Safety Case was mandated under the 2015 Health
and Safety at Work Act, given the Company is the largest
and the most technically complex high hazard facility in
New Zealand. While it is a matter of compliance,
we have embraced the Safety Case as an opportunity
to interrogate our systems and processes and provide
assurance to workers, responding agencies and our
community that the potential for major incidents has
been assessed and effective controls are in place. As
part of our 2020 programme we will address opportunities
identified by Worksafe to enhance elements of our
existing programme.
Our Emergency Services team undertook a busy programme
of training for safety, preparedness and response, both
internally and in conjunction with external peers. A key focus
was training with Auckland fire brigades, which are first
responders to any emergency involving the RAP within the
Auckland city limits. More frequent and smaller scenario-
based training was also carried out in conjunction with
external response agencies.
OUR PERFORMANCE AGAINST MATERIAL ISSUES
TRCFR
^
Tier 1
^
Tier 2
^
Number of emergency exercises
LTIFR
^
( 2018 : 0.76 )
( 2018 : 2)( 2018 : 3 )
(2018: 26)
( 2018 : 0.48 )
0.27
00
86
0 .13
PERSONAL & PROCESS SAFETY
Our performance in 2019
• Widespread site acceptance of the
E Tu Tangata safety engagement programme
(refer to page 32).
• Significant reduction in the total recordable
case frequency with two recordable injuries
during the year.
• No Tier 1 or Tier 2 incidents.
• Worksafe acceptance of our Safety Case.
2020 action plan
• Continue to deliver E Tu Tangata
and behavioural safety programmes.
• Improve the quality of Hauora Hikoi (safety
walks) to provide recording greater insights.
• Complete the Du Pont audit of our
Health & Safety management system.
• Develop and implement the Safety
Case compliance plan.
Our performance by the numbers

2019
2018201720162015
TRCFR200,000 hrs
0.27
0.760.890.511.32
LTIFR200,000 hrs
0.13
0.480.260.250.10
Tier 1 process safety incidents #
0
2011
Tier 2 process safety incidents #
0
3404
Number of emergency exercises
(internal and external)
#
86
26171314
Step-change
improvement in
personal safety
performance
World-class
process safety
performance
Over 8,000 on site
safety engagements
during the year
$34,000 contributed
to community
organisations (linked
to our personal safety
performance)
^
Refer to Glossary on page 119
31REFINING NZ ANNUAL REPORT 201930

“We really wanted our colleagues to know that when we are
safe here, inside the gates, it’s not just us who benefit,” says
Cory. “Our communities benefit when we practice safety.
We wanted to recognise our collective efforts by making a
quarterly donation to local charities.”
“The charities are voted on by our people. In 2019 we were
able to donate to two fantastic local charities – Food for Life,
which provides hot, healthy meals to children in low-decile
Northland schools; and Te Tai Tokerau Emergency Housing
Charitable Trust, which provides safe and affordable housing
for our homeless population.”
One of the greatest strengths of E Tu Tangata is that it is
designed, managed and supported by employees – the
result being a significant improvement to our health and
safety performance during 2019.
CASE STUDY
A grass roots initiative that took hold and grew
E Tu Tangata – our site-wide programme to embed a
deep and effective safety culture – has grown and earned
acceptance across the Refinery since its launch in early
2019.
E Tu Tangata was a grass roots response to a story of
heart-breaking loss told by Wiremu and Marsella Edmonds
to the site in 2018. “Hearing that story was a wero to me – a
challenge – to really shake up the safety culture of
our workplace and to make it relevant and meaningful
– particularly for those who work hard to keep themselves
and their buddies safe on site, as well as for our community,”
says Cory Abraham, health and safety advisor.
“We designed E Tu Tangata to do just that.”
“We partnered with the local school, which helped design
a logo for the programme. The integrated patterns at the
bottom represent all the different companies we work with
onsite. The weave of the patterns represents unity. The
fishbone pattern represents the programme, while Mount
Manaia and the A Block stack represent our physical
presence here at Marsden Point.”
The Kaihautu Award was designed alongside the programme
as a quarterly recognition of individuals who have stood out
for their attitudes towards health and safety. That concept
extended to include a quarterly donation to a local
community group, with the amount set by reference to our
site-wide health and safety performance.
Image and brand to be supplied
EMISSIONS & CLIMATE CHANGE
OUR PERFORMANCE AGAINST MATERIAL ISSUES
DELIVER A WORLD CLASS
ENVIRONMENTAL PERFORMANCE
We are committed to playing our part in
protecting the environment – we recognise that
our emissions to the air, water and ground have
potential for environmental impacts locally and
nationally. In recent years we have progressed
major initiatives to reduce emissions of carbon
dioxide (CO
2
) and sulphur dioxide (SO
2
), and
to improve the resilience of our waste
water systems.
A particular focus, given our status as an Emissions Intensive
Trade Exposed (EITE) business, is on helping New Zealand
to meet its commitments to international goals in regard to
climate change. EITE businesses can make significant
contributions to reduction targets as New Zealand transitions
to a low emissions economy, by continuing to reduce the
emissions intensity of their operations.
Refining NZ is one of the larger emitters of CO
2
in
New Zealand, but has a track record of using new
technologies and adapting traditional ones to reduce our
carbon footprint. The signing of our NGA with the Crown in
2003 inspired a creative view of possibilities in this aspect
of the business, which continues to the present day. The
Government confirmed in 2019 that Refining NZ will be
brought into the New Zealand Emissions Trading Scheme as
an EITE with an allocation of carbon units when our NGA
expires at the end of 2022.
Careful management of our energy consumption is an
important element in reducing carbon emissions and an
obligation under our NGA. As energy is the largest cost
for the Refinery, we also have strong economic incentives
to use it efficiently.
Direct CO
2
emissions
(2018:204kg)(CO
2
/t of product)
206kg
Natural gas usage
( 2018 : 3.5PJ )
3.4 PJ
Sulphur dioxide (SO
2
) emissions
( 2018 : 3,404T )
4,329T
Releases outside consent
(2018:5)
1
Electricity usage
( 2 018 : 1.14 PJ )
1. 2 3 PJ
REFINING NZ ANNUAL REPORT 20193233

CASE STUDY
Investing in emissions reduction
The Refinery is proud of its environmental performance and
the strong track record of investment in emissions reduction
since the inception of the NGA.
Jointly developed with successive governments and
government agencies, the Agreement places obligations on
Refining NZ to achieve emissions reduction targets. Through
a sustained programme of regular and substantial investment
in emissions reduction, reported to the Ministry for the
Environment (MfE) and audited by MfE appointed auditors,
the Refinery has achieved an improvement in CO
2
intensity
of around 20 per cent.
Between 2006 and 2018 the Refinery invested around $570
million in major projects and energy efficiency programmes.
Following the Refinery’s $180 million Future Fuels project
(2005) which enabled cleaner vehicles to operate in
New Zealand, two subsequent upgrade projects were
undertaken: In 2009 Point Forward was completed at cost
of $190 million; in 2015 Te Mahi Hou was completed at a
cost of $365 million*. Te Mahi Hou, lifted energy performance
across the Refinery and reduced carbons emissions by
120,000 tonnes per year – arguably the single biggest
contribution from any EITE reduction project in the country.
Refining NZ was the first company in New Zealand to sign an
NGA, a significant undertaking that was recognised by the
Government as preserving economic activity in New Zealand
while supporting international efforts to halt global warming.
While reducing emissions those major investments have
also been good for our refining and distribution business
and the ongoing resilience of fuel supply to Auckland and the
rest of the country. The recent Government Inquiry into the
pipeline rupture noted that Refining NZ has invested ahead
of when demand for our product is needed (i.e. rather than
just in time, or too late).
Outside of major projects the Company has also invested
around $12 million in programmes to improve the energy
efficiency of processing units and utilities. In the near term,
we will continue to invest in ongoing programmes, including
recovering hydrogen from fuel gas streams and hydrogen
optimisation, optimising steam use, heat exchanger cleaning,
and the phased introduction of LED lighting.
Looking ahead, our objective is to continue to meet
New Zealand’s transport fuel needs as the country
moves towards a low -carbon economy. Entry in the
NZETS in 2023 with an allocation of carbon units once
the NGA expires, is vital to our future ability to invest in
CO
2
emissions reduction from the Refinery and the
high-quality transport fuels we make for New Zealand.
Our performance in 2019
• Implemented environmental
improvement projects.
• Numerous studies completed and
consultation initiated in preparation
for renewal of the site resource consents.
• Confirmed entry into the New Zealand Emissions
Trading Scheme (NZETS) when the NGA expires
at the end of December 2022.
2020 action plan
• Prepare for the transition to the
NZETS and other regulatory changes.
• Lodge our application with the Northland
Regional Council to renew our site
resource consents.
• Implement the 2020 compliance plan for the
Hazardous Substances at Work Act.
Our performance by the numbers

2019
2018201720162015
Release outside consent#
1
5452
Direct CO
2
emissions
kg CO
2
/t
of product
206
204200201227
Total fuel usagePJ
14.3
13.214.214.115.3
Ex-Crude
(Refinery produced fuel)
PJ
10.7
9.811. 411. 513.5
Natural gasPJ
3.5
3.42.82.61. 8
Electricity usagePJ
1.23
1. 1 41.221.211.03
Water usageMillion tonnes
1.68
1.651.701.681.65
SO
2
emissionsTonnes
4,329
3,4043,6954,3324,055
Flare
Amount of flares
as mass % of
feedstock
0.02
0.080.020.090.02
Improvement
projects lift
environmental
performance
Increased
electricity and fuel
usage reflects record
throughputs and
product make
Emissions
impacted by higher
Hydrocracker utilisation
and reduced access
to natural gas
Reduced
flaring in a
non-Turnaround
year
“ The agreement (NGA) was
a significant example of
Government and business
working together to achieve
a balanced outcome for
New Zealand”.
(Ministerial Group on Climate Change)
*
Excludes front end engineering and design, and financing costs
2020 action plan
• Continue to deliver E Tu Tangata
and behavioural safety programmes.
• Improve the quality of Hauora Hikoi (safety
walks) to provide recording greater insights.
• Complete the Du Pont audit of our
Health & Safety management system.
• Develop and implement the Safety
Case compliance plan.
REFINING NZ ANNUAL REPORT 20193435

QUALITY & RELIABILITY
OUR PERFORMANCE AGAINST MATERIAL ISSUES
Refinery throughput
Operational availability
RAP throughput
( 2018 :21.0m )
( 2018 :40.4m)
( 2018 : 90.7%)
20.8
m
42.7
m
99.7
%
BUILD ON THE QUALITY & RELIABILITY
ELEMENTS OF OUR CUSTOMER PROMISE
The reliability of our processing units and the
high quality of our fuel products are essential
to the resilient supply of fuel products (petrol,
diesel, jet fuel) to our customers in Auckland
and across New Zealand.
Maintaining the reliability and quality elements of our
customer promise means constant monitoring of our
performance and the people, plant, systems and
processes behind that, and adopting a continuous
improvement mindset. The Refinery runs a quality
management system to the requirements of ISO 9001
(Quality Management), which is externally audited on
a regular basis.
Our performance goal is to deliver to our customers in full,
on time and in specification. Keeping unplanned downtime
to a minimum is critical and our operational availability
compares well with refineries of a similar size and
complexity in the region.
In 2019 we progressed a range of projects to improve
our current performance and position our operations for
the future. These projects have either provided or are
expected to lift our operational performance and increase
product volumes in order to deliver a reliable and quality
supply option to our customers and improved returns
to shareholders.
Unplanned RAP downtime
( 2018 :1.3 )
0.9
%
Unplanned Refinery downtime
( 2018 : 0.8 )
1.6
%
Our performance in 2019
• Accelerated and optimised our tank maintenance
programme, avoiding the need to convert a tank
for jet service and reducing the investment that
would otherwise be required.
• Advanced our Crude Shipping Project via
optimisation discussions with our customers
and started baseline water quality monitoring.
• Sulphur Plant successfully commissioned.
• Continued with preparations for 2020 planned
maintenance Turnarounds. Preparedness
benchmarked as ‘top quartile’.
• Trialled new crudes to give our customers
more buying choice.

2020 action plan
• Maintain systems and programmes of
work to deliver product to our customers
– in full, on time, and in specification.
• Deliver a successful Turnaround 2020
and continue preparations for 2021 Turnaround.
• Continue to improve the yield on the
Continuous Catalytic Reformer Platformer
and complete the first statutory inspection
since commissioning in 2015.
• Achieve ISO 55001 Asset Management
accreditation.
Our performance by the numbers

2019
2018201720162015
Refinery throughputmillion barrels
42.7
40.441.742.742.6
RAP throughputmillion barrels
20.8
21.019.820.118.4
Operational availability%
99.7
90.798.096.997.7
Unplanned Refinery downtime%
1. 6
0.80.60.90.3
Unplanned RAP downtime%
0.9
1. 34.60.90.6
Strong Refinery
throughput resulting
in several production
records
RAP throughput
was the second
highest on record
High operational
availability on the
Refiner y’s
processing units
Low unplanned
downtime on both
the Refinery and
the RAP
37REFINING NZ ANNUAL REPORT 201936

CASE STUDY
Tank maintenance review brings improvement
in efficiency, quality and cost
Tank maintenance is a critical work programme over the long
term given our need to store crude oil and other feedstocks,
and then finished products prior to piping or shipping for end
use. We have 126 tanks of varying size and type on the
refinery site that we maintain (clean and inspect) as part of
the tank maintenance programme.
The programme is continuous and must take account of
tank specifications, previous repair scopes and legislative
requirements. Inspection and maintenance intervals for
individual tanks are typically up to 15 years, with the tanks
being out of service while the work is carried out.
“Tank maintenance is a big budget item as well as a
major technical requirement,” says Hayden Cartwright, tank
programme manager, who has been running the programme
for the past year. “With a peak in scale, we decided last year
to do a thorough review to see if we could improve the
scheduling and delivery of the programme, while maintaining
quality and safety.”
“It was an important time to do that because we had a bow
wave of work – the peak arrived in 2017-18 and lasts for
another five to six years. Then we had an extra consideration
– the potential changes to come in our storage profile
associated with the larger tankers that could deliver crude to
the refinery after dredging for the Crude Shipping Project. We
needed to make sure tank capacity would be available for that
– preferably without creating a need for new tanks, which
obviously come at a significant cost.”
“Once you pull any programme apart and look at it with
a new perspective, all sorts of possibilities open up.
That’s certainly what happened in this case. We’ve been
able to plan the peak of the programme, comprising about
40 tanks, up to three years in advance. This is a positive
change from the traditional approach, which was based
on inspection followed closely by maintenance determined
by whatever was found.”
“There has been a range of other gains – notably a step
forward in technology via the use of acoustic emissions
testing, which essentially listens for corrosion on the floor of
the tank in advance of physical inspection. That allows you to
prioritise the inspection and subsequent work, which of
course makes the programme more efficient and reduces
the likelihood of surprises.”
“In that part of the programme we have engaged with a
leading supplier from the United Kingdom. It’s one of the
areas in which we’ve brought in external expertise, with
others including the cleaning of crude tanks, where we
brought in expertise from Denmark.”
“It’s fair to say the alternative approach has been a success,
with improvements in planning, efficiency, technology,
safety and cost”.
CULTURE & DIVERSITY
OUR PERFORMANCE AGAINST MATERIAL ISSUES
EMBED A HIGH PERFORMANCE CULTURE
In a changing world, we are focused on
lifting our performance by ensuring that
our talented team is motivated and engaged.
That means ensuring our work culture
reflects the Company’s values, taps diverse
experience and thinking and continues to
foster opportunities for talented individuals.
The Company provides a dynamic, progressive and
technically advanced environment for 412 employees and
251 contractors (as at 31 December 2019). In recruiting
and in the development of our teams we place a strong
emphasis on alignment with our values – Winning together,
Honesty, Integrity, Respect, Leadership and Safety &
Wellbeing. These underpin our culture and hence our
performance.
Diversity and inclusion are important aspects of our culture.
We understand that diverse backgrounds and experience are
a source of strength, particularly in robust decision making.
Maori are well represented across the business.
The proportion of women employed across the business
increased to around 20 per cent during the 2019 year.
Our participation in the Global Women – Activate
Programme and the Darden Executive Programme provides
opportunities to develop our female leaders. We also provide
scholarship and work experience opportunities for students
drawn from our community.
The rollout of the One Team culture programme continued
in 2019, with business units continuing to develop their own
specific culture plans. These have included recognition
schemes, unconscious bias training, improved
communication and wellness initiatives.
A safety culture audit was completed during the year,
highlighting positive aspects of staff and contractor
perceptions of safety on site, along with areas for continued
development.
Those who model our values best are celebrated each year
through the Hive Awards. Contenders are nominated by their
colleagues and winners are chosen by the Leadership Team
across four categories – Rising Star, Valued Expert, True
Professional and Most Valuable Player. The 10 recipients of
the Hive Awards in 2019 – chosen for their commitment to
the business and the value they bring to the workplace –
were each awarded a professional development opportunity.
We continue our improvement journey through employing
LEAN Principles to lift individual and team performance.
In 2019, 17 LEAN projects brought $2 million of savings
to the business through identifying better ways of working.
Number of staffNumber of contractors
Contribution to
regional economy
(2018:390)
(2018:265)( 2018 : 6.8 )
412
2516.5%
REFINING NZ ANNUAL REPORT 20193839

Our performance in 2019
• Continued rollout of the “One Team”
culture programme.
• Inaugural Kaihautu Awards to reinforce
the Company’s values.
• Safety culture audit completed.
• Mentoring provided to high-potential employees
through leadership development programmes.
• Increased female representation across
the Company to around 20 per cent.
• Professional development awarded to
ten recipients of Hive Awards.
2020 action plan
• Continued participation in the Darden
Executive Programme and the Global Women
– Activate Programme.
• Cultural safety development workshops
as part of the E Tu Tangata programme.
• Continued focus on values, with the safety
observation programme acknowledging good
values-based behaviours observed in the field.
• A regional Girls in Trades forum to be facilitated
in conjunction with the Ministry of Education,
supporting career pathways for young women
studying STEM courses.
Our performance by the numbers

2019
2018201720162015
Number of staff
(excluding Directors)
Headcount412390396386394
Number of contractorsHeadcount251265293178178
Contribution to regional economy
*
% of
Northland GDP
6.56.87. 37. 57. 5
CASE STUDY
A reluctant winner enjoys the benefits
Arran Beasley was one of seven recipients of Hive Awards in
the inaugural year, 2018. The award itself, and the reward
that came with it, both humbled and uplifted him.
Arran, a pressure equipment inspector, leading the risk
based inspection programme and engineering quality,
has worked in the Refinery since 1994. The award came as a
surprise. “I felt very undeserving. I was in a bit of a slump, I
guess – not just with work, but also outside factors... but it
all impacted on my work. So when I won the award I was
originally going to turn it down. I decided instead, out of
respect for those who nominated me, to make the most of
the opportunity.”
Arran is one of three recipients so far to have taken the
option of an Outward Bound course as his reward. The
various courses are designed to challenge and teach the
participants against the backdrop of the New Zealand
landscape, building transferable skills and attitudes that
can apply to leadership, management, work and other
aspects of their lives.
“I was always keen to do Outward Bound, so I gave it a go
and loved it,” Arran says. He had put his name forward for
the 21-day trip – the longest course available, with a strong
focus on reflection and sharing among the participants.
Arran says it was all memorable. Solo nights away in the
bush, struggling up steep ridges loaded with 30kg packs,
waiting patiently for a puff of wind in the sails of ‘cutter’
sailboats, menial tasks like doing the dishes – there was
an opportunity to make something positive out of
every situation.
“There were lots of people in my group who had worked
really hard to pay for their courses – they fund-raised, they
got sponsorship, they saved, where mine was fully paid for.
I felt very, very grateful and privileged to be supported by my
workplace to be there.
“I came away from that experience recognising that
everyone has a major contribution they can make,” he says.
Refining NZ is thrilled to have the opportunity to reinvest
in the business by offering professional development for
employees. We have truly talented and capable staff. They
are our greatest asset and we pride ourselves on our ability
to attract and retain the very best.
“ I’m a better person for being
on the course, for my family and
the business. I certainly try to
make sure they’re getting a
return on their time and financial
investment in me, by using the
skills I learned in Outward Bound
and bringing them into my
personal and work environments.”
* Source: www.infometrics.co.nz
Historical information may be occasionally revised by infometrics as more accurate source data information is available.
Over $2 million
savings contributed
through LEAN
improvement
projects
Increasing diversity
across the workplace.
Female employees
around 20% for the
first time
REFINING NZ ANNUAL REPORT 20194041

BOARD OF DIRECTORSLEADERSHIP TEAM
Simon Allen
Independent Chairman
Equity interest: 35,000 shares
(2018: 35,000)
Deborah Boffa
Director
Equity interest: Nil
Andrew Brewer
Chief Operating Officer
Riccardo Cavallo
Director
Equity interest: Nil
James Miller
Independent Director
Equity interest: 23,000 shares
(2018: 23,000)
Vanessa Stoddart
Independent Director
Equity interest: Nil
Paul Zealand
Managing Director
Equity interest: Nil
For full biographies see our website
REFININGNZ.COM
REFINING NZ ANNUAL REPORT 20194243
Joe Akari
Chief People and
Capability Officer
Robin Baxter
Engineering Manager
Denise Jensen
Chief Financial Officer and
Company Secretary
Greg McNeill
Communications and External
Affairs Manager
Jack Stewart
Acting Refining Manager
Kevin Still
Supply Chain and
Business Optimisation Manager
Napo Henare
Refining NZ Kaumatua
(Cultural advisor to
Managing Director)
Equity interest: Nil
Lindis Jones
Director
Equity interest: Nil
Julian Young
Chief Development Officer

Meeting attendance
Director attendance at Board and sub-committee meetings during 2019 were as follows:
BOARD
MEETING
^
HEALTH, SAFETY,
ENVIRONMENTAL
AND OPERATIONS
COMMITTEE
AUDIT, RISK
& FINANCE
COMMITTEE
PEOPLE,
NOMINATIONS
AND
REMUNERATION
COMMITTEE
INDEPENDENT
DIRECTORS
MEETING
SITE
WALKS
S Allen14/144/45/54/49/94
D Boffa13/143/43/43
R Cavallo14/144/43
L Jones11/144/44/42
J Miller13/144/45/52/29/93
V Stoddart14/144/44/49/92
M Tume (resigned 21 February 2019)1/11/21/11
P Zealand
*
13/144/45/54/48/93
GOVERNANCE
AT REFINING NZ
The New Zealand Refining Company Limited (“the Company”,
“Refining NZ”) 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”).
Our Corporate Governance framework sets out our Board’s practices
and processes to provide accountability to shareholders for
Refining NZ’s actions and performance.
While this section of the Annual Report provides
information on our corporate governance, Refining NZ’s
full governance statement, including detailed reporting
against the NZX Corporate Governance Code, together
with our governance policies can we viewed on
the ”Investor Centre” section of our website:
www.refiningnz.com/. The website makes available
the following governance documents:
−Constitution
−Board and Committee Governance
•
Board Charter
•
Audit, Risk and Finance Committee Charter
•
Health, Safety, Environment and Operations
Committee Charter
•
Independent Directors Committee Charter
•
People, Nominations and Remuneration
Committee Charter
−Policies
•
Auditor Independence Policy Statement
•
Code of Conduct
•
Continuous Disclosure Policy
•
Director and Executive Remuneration Policy
•
Diversity and Inclusion Policy
•
Environmental Policy
•
Health & Safety Policy
•
Securities Trading Policy
•
Takeovers Policy
•
Whistleblowing Policy
The Board considers that it has followed the
recommendations in the NZX Code during the financial
year ended 31 December 2019. The governance
statement was last approved by the Board on
5 December 2019 and is current as at that date.
Independence of Directors
The Board currently consists of seven Directors:
− Simon Allen (the Chair), Vanessa Stoddart,
and James Miller are Independent Directors
*
.
−Paul Zealand assuming the role of Managing
Director effective 1 February 2020, ceasing to be an
Independent Director under the NZX Listing Rules.
− Deborah Boffa, Riccardo Cavallo and Lindis Jones
are not Independent.
The Chairman is an Independent Director, responsible
for representing the Board to shareholders.
Independence is assessed according to the NZX Main
Board Listing Rules criteria.
Responsibilities of the Board and its Committees
The Board is responsible for setting the Company’s
strategic direction and for providing oversight of the
management of the Company, with the aim of increasing
shareholder value and ensuring the obligations of the
Company are properly met. The Board is accountable to
shareholders for the performance of the Company, with
day-to-day management of the Company delegated to
the Chief Executive.
The 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.
There are four Board Committees:
− the Audit, Risk and Finance Committee
comprising four members, of which three were
Independent Directors
*
in 2019;
− the People, Nominations and Remuneration
Committee comprising five members in 2019,
of which four were Independent Directors
*
;
− the Independent Directors Committee comprising
in 2019 all four Independent Directors
*
; and
− the Health, Safety, Environment and Operations
Committee comprising all Directors.
The respective roles of the Board, its Committees
and Management (the Leadership Team) are set out
in the Board’s and relevant Committees’ Charters.
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.
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.
^
includes April 2019 Annual Shareholders’ Meeting and meetings held throughout the year in relation to the Chief Executive resignation and appointment and
Government Inquiry into the Pipeline outage.
* Paul Zealand assumed the role of Managing Director on 1/2/20 following the resignation of the Chief Executive. At this point, he ceased to be an Independent
Director under the NZX Listing Rules. He will resume his position as a Non-Executive Director when Naomi James takes up the position of Chief Executive in
April 2020.
REFINING NZ ANNUAL REPORT 20194445

REMUNER ATION
& PEOPLE REPORT
Director and executive team remuneration
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 People, Nominations
and Remuneration Committee in line with the Charter.
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 2019, the Company engaged remuneration consultants
Korn Ferry to undertake a comprehensive pay equity
review to help ensure that remuneration processes
equitably reward performance.
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. The Company undertook a market benchmarking
of Directors’ fees in 2019. However, recognising the
Company’s financial performance, the Board has elected
not to increase Directors’ fees at this time.
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
Chief Executive’s employment commenced on 27 August
2018. On 17 September 2019 Mike Fuge advised of his
decision to resign from his role which became effective
on 21 February 2020. As a result of the change,
the remuneration detail provided below relates to
payments made to the resigning Chief Executive.
The Chief Executive’s remuneration is approved by
the Board and is reviewed annually.
Total Remuneration paid to Mike Fuge in the period
1 January to December 2019 was $ 932,000 and
comprised of two components:
−fixed remuneration – base salary of $ 900,000, and
−other benefits of $32,000.
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 companies,
Independent Petroleum Laboratory Limited Maranga Ra
Limited and Maranga Ra Holdings Limited, are not
remunerated in that position.
The remuneration and other benefits, excluding
reimbursements, received by the individual Directors
of the Company during the year were as follows:
2019
ANNUAL
FEES
$
2018
ANNUAL
FEES
$
Board of Directors
Chairman180,000180,000
Independent Director75,00075,000
Non-independent Director75,00075,000
Audit, Risk and Finance (ARF)
Committee
Chairman30,00030,000
Member12,50012,500
People, Nominations and
Remuneration (PNR) Committee
Chairman20,00020,000
Member5,0005,000
Independent Directors Committee
Member20,00020,000
Health, Safety, Environment and
Operations (HSEO) Committee
Chairman10,00010,000
There was no short term incentive paid in
respect of the 2019 performance year.
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 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:
KPI CATEGORYWEIGHTING
%
Health and safety (personal and process)40
Financial15
Projects and critical milestones15
Leadership25
Plant reliability2.5
In-full, on-time, in-spec product delivery2.5
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.
APPOINTEDBOARD
FEES


$
ARF
COMMITTEE
FEES

$
PNR
COMMITTEE
FEES

$
INDEPENDENT
DIRECTORS
COMMITTEE
FEES
$
HSEO
COMMITTEE
FEES

$
TOTAL
FEES


$
S C AllenIndependent Chairman4 Dec 2014180,000180,000
D C BoffaBP23 Aug 201775,0003,61678,616
R CavalloMobil12 Apr 201775,00075,000
L JonesZ Energy19 Mar 201875,0009,04184,041
J MillerIndependent1 Nov 201875,00027,08320,000122,083
V C M StoddartIndependent20 May 201375,00020,00020,000115,000
M Tume*Independent1 Aug 200710,6854,2742,84917,808
P A ZealandIndependent29 Aug 201675,00012,5005,00020,00010,000122,500
*M Tume resigned as Independent Director effective 21 February 2019.
Five year summary – Chief Executive Remuneration
FINANCIAL
YEAR
CEOBASE
SALARY
OTHER SUBTOTALPAY FOR PERFORMANCE
(STI)
STI AGAINST
MAXIMUM
TOTAL
REMUNERATION
$000$000$000$000$000%$000
FY2019Mike Fuge90032932---932
FY2018Mike Fuge
(from 27 August 2018)
31661377165-81542
FY2018Sjoerd Post
(to 31 August 2018)
7053774 2300300981,342
FY2017Sjoerd Post982451,027405150941,582
FY2016Sjoerd Post95841999540-931,539
FY2015Sjoerd Post94041981438-781,419
KPI BASEDDISCRETIONARY
REFINING NZ ANNUAL REPORT 20194647

Scenario charts – Chief Executive Performance
pay for 2020
In April 2020 Naomi James will commence as the
Company’s new Chief Executive. To cover the transition
from incumbent Mike Fuge to the new CEO, Independent
Director Paul Zealand was appointed Managing Director
effective 1 February 2020 ceasing to be an Independent
Director for the purposes of the NZX Listing Rules.
Chief Executive, Naomi James’s remuneration
package includes:
− a base salary of $ 995,000 per annum;
− a short-term performance incentive (STI) payment
based on performance against 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;
− a long-term incentive plan (LTI) in a form of:
- a grant of initial performance rights equivalent to one
year’s base salary ($ 995,000) that will vest on the
4
th
anniversary of commencement subject to the
achievement of a minimum “on target” performance
against annual controllable KPI’s during the
resting period;
- performance rights equivalent to 25% of base salary
on the first anniversary of the commencement date,
25% on the 2
nd
anniversary and 50% on each
successive anniversary, with each tranche having
a 3 year vesting period with a further year to vest.
The Chief Executive’s entitlement is capped
at $6 million.
Employee Share Purchase Scheme
The Company established the Employee Share Scheme
which is tax 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 the consolidated financial
statements included in the latest Annual Report.
The Company estimates the annual operating costs of
the scheme of approximately $11,000 and the cost of
the contribution of approximately $314,000 per year,
depending on the business performance.
Employee Remuneration
The following table shows the number of employees
and former employees (including members of the
Leadership Team), not being Directors, who, in their
capacity as employees, received remuneration and
other benefits during 2019 of at least $100,000.
The remuneration figures include all monetary
payments actually made during the year and contributions
made by the Company as a part of the share scheme.
Remuneration excludes amounts paid post 31 December
2019 that relate to performance during the 2019 financial
year. No employees appointed as a Director of IPL, a
subsidiary company of Refining NZ, receive or retain any
remuneration or other benefits for holding this office.
The analysis (see chart) is compiled on a cash basis;
variable performance rewards (linked to individual and
business performance for a financial reporting period)
are paid subsequent to balance date and reported as
part of the remuneration banding for the following year.
The table alongside includes the incentive payment paid
to the CEO in respect of 2018.
The ratio between employee remuneration (median)
and Chief Executive’s total annualised, on-target
remuneration for the 2019 financial year (on a cash basis)
was 1:7 (2018: 1:11).
The 2019 remuneration includes amounts paid past
31 December 2018 that relate to performance during the
2018 financial year. There was no short term incentive
payment made to staff post 31 December 2019 in relation
to the 2019 performance.
The scenario chart below depicts the remuneration for
the part year ended 31 December 2020 including the fixed
remuneration and the STI; the LTI is not disclosed as the
underlying measures and targets for the LTI have not been
finalised as of the date of this report.
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.
In addition to the remuneration of the new Chief
Executive, Naomi James:
− $131 thousand was paid to the incumbent CEO,
Mike Fuge for the period from 1 January to
21 February 2020;
− Approximately $150 thousand will be paid to
Paul Zealand, Managing Director in his executive
capacity for the period from February to April 2020.
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 achievement of critical project milestones;
− Individual Performance Factors (IPFs) based on
achievement of individual performance objectives; and
− values and behaviours demonstrated by the individual.
AMOUNT OF
REMUNERATION
$000
NUMBER OF EMPLOYEES
20192018
100-109
17 16
110 - 119
18 15
120-129
18 12
130-139
31 27
140-149
27 26
150-159
33 26
160-169
28 31
170-179
33 32
180-189
24 22
190-199
29 24
200-209
16 16
210-219
6 10
220-229
4 5
230-239
4 11
240-249
4 7
250-259
2 3
260-269
3 3
270-279
1 -
280-289
2 1
290-299
- 2
310-319
- 1
320-329
- 2
350-359
2 1
360-369
- 1
370-379
- 2
390-399
- 1
450-459
- 1
470-479
1 1
490-499
1 -
760-769
1 -
1,090-1,099
1 -
1,910-1,919
- 1
ON TARGET
FIXED
100%69%
31%
ABOVE TARGET
(MAXIMUM)
61%
39%
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$
Fixed remuneration
Annual variable
REFINING NZ ANNUAL REPORT 20194849REFINING NZ ANNUAL REPORT 20194849

Workforce
TOTAL
ETHNICIT Y
Ethnicity of the Group’s permanent employees and Board as at 31 December 2019.
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.
NATIONALITY
Nationality of the Group’s permanent employees
and Board as at 31 December 2019.
GENDER
Gender composition of the Group’s permanent
workforce as at 31 December 2019.
Directors
Directors
Leadership Team
Leadership TeamWorkforce
Workforce
AGE PROFILE
Age profile composition of the Group’s permanent
workforce as at 31 December 2019.
TOTAL
2019
Females229%
Males571%
2018
Females229%
Males571%
2019
Under 3000%
30-50343%
Over 50457%
2018
Under 3000%
30-50343%
Over 50457%
2019
Under 3000%
30-50112%
Over 50788%
2018
Under 3000%
30-5000%
Over 508100%
2019
Under 30307%
30-5023258%
Over 5014235%
2018
Under 30256%
30-5023260%
Over 5012534%
2019
Under 30307%
30-5023657%
Over 5015336%
2018
Under 30256%
30-5023558%
Over 5013736%
2019
Females113%
Males787%
2018
Females113%
Males787%
2019
Females7819%
Males32681%
2018
Females6216%
Males32084%
2019
NZ European/Pakeha
23157%
Maori
256%
Maori & NZ European
277%
Maori & Other Ethnicity
31%
Pacific Islander/
Pacific Islander &
Other Ethnicity
51%
Other European
6215%
Asian
123%
African
51%
Indian
72%
Other
51%
Information not provided
226%
2019
New Zealand
31876%
United Kingdom
154%
Australia
154%
South Africa
133%
Other
368%
Information not provided
225%
2019
NZ European/Pakeha
24057%
Maori
256%
Maori & NZ European
277%
Maori & Other Ethnicity
31%
Pacific Islander/
Pacific Islander &
Other Ethnicity
61%
Other European
6716%
Asian
123%
African
51%
Indian
72%
Other
51%
Information not provided
225%
OUR PEOPLE
Directors
2019
NZ European/Pakeha
571%
Other European
229%
Leadership Team
2019
NZ European/Pakeha
450%
Pacific Islander/
Pacific Islander &
Other Ethnicity
113%
Other European
337%
REFINING NZ ANNUAL REPORT 20195051

STATUTORY DISCLOSURESFINANCIAL COMMENTARY
Directors’ and Officers’ Insurance
The Company has granted indemnities to its Directors,
Senior Leadership Team members, and persons whom it
has appointed as Directors of its subsidiaries in relation to
potential liabilities and costs they may incur in those roles.
The indemnities are subject to certain limitations that are
prescribed by law and they do not cover settlements or
admissions prejudicing a successful defence of a claim
without the Company’s consent as well as the indemnified
person’s advisor costs after the defence of a claim
has been assumed by the Company, unless they are
reasonably necessary.
The Company has arranged Directors’ and Officers’
Liability Insurance for its Directors, Leadership Team
and persons whom it has appointed as Directors of
its subsidiaries, which provide them with insurance in
respect of certain liabilities and costs they may incur
in those roles. This insurance is limited to cover that
is not prohibited by law.
Independent professional advice
With the approval of the Chairman, Directors are entitled
to seek independent professional advice on any aspect
of their Director’s duties, at the Company’s expense.
Use of Company information
The Board did not receive any notices from any Director
of the Company or its subsidiaries during the year,
requesting to use Company information received in their
capacity as a Director, which would not otherwise have
been available to them.
Donations
The Company made donations of $175,644 during
the year ended 31 December 2019 (2018: $171,329).
No political donations were made.
Credit rating
The Company does not have a credit rating.
The Company had an excellent operational performance
in 2019, with operational availability on the Refinery’s
processing units at 99.7%. A record crude throughput of
42.7 million barrels (up 6% on the previous year), resulted
in several production records – the highest Hydrocracker
unit utilisation rate in ten years and the highest refined
product make and customer product offtakes. Refined
product delivered via the RAP at 20.8 million barrels was
the second highest on record.
A confluence of negative influences led to a low margin
environment in the second half of the year meaning that
the Company was not able to fully capitalise on the strong
operational performance. Weaker than expected global
refining margins, driven by a slowdown in the global
economy, Chinese refinery exports, additional refining
capacity coming online earlier than expected, sanctions
imposed on Chinese crude tanker companies by the United
States and the expected lift in diesel margins in the lead up
US$ EXCHANGE RATE
GRM

US$/BBL
4.00
3.10
“Fee Floor”
5.00
6.00
7. 0 0
0.500.600.550.650.700.75
41.7 Production (million barrels)
65 Non processing fee revenue excluding pass through income ($m)
107 Depreciation ($m)
Net profit after tax
Borrowings
(38) (51) (61) (69) (69) (69)
290 307 322 333 333 333
1 (15) (28) (39) (49) (57)
236 258 276 292 305 317
45 25 9 (6) (18) (28)
191 211 228 245 262 276
89 65 45 28 14 1
148 171 191 208 223 236
133 105 82 62 45 30
104 132 155 175 191 206
to MARPOL not materialising – resulted in the Company
reporting a Gross Refining Margin of USD 5.34 for the year
(2018:USD 6.31).
Operating costs were tightly controlled during the year as
Refinery operations came under sustained pressure from
higher electricity and gas prices.
Refining NZ reported a NPAT of $4.2 million in line with
the Company’s profit matrix issued in February 2019,
taking into account the $3.8 million NPAT impact of the
Transpower outage in November 2019. The financial year
2019 result was assisted by a favourable USD/ NZD
exchange rate which averaged USD 0.66 for the year.
Capital expenditure amounted to $78 million, down from
$162 million in 2018 when the Company completed the
one-in-fifteen year total refinery Turnaround.
2020 PROFIT MATRIX
EBITDAFree Cash Flow Net Profit After Tax
$
118
M$
39.4
M$
4.2
M
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 2020 NPAT and
year end borrowings for
given margin and foreign
exchange rates.
REFINING NZ ANNUAL REPORT 20195253

Twenty largest shareholders
As at 31 January 2020
]\-[=’]’-’
SHAREHOLDERSTOTAL SHARES HELD% OF TOTAL
1Mobil Oil New Zealand Limited 53,760,000 17.20%
2Z Energy Limited 47,999,980 15.36%
3BP New Zealand Holdings Limited 31,572,640 10.10%
4HSBC Nominees (New Zealand) Limited * 25,985,326 8.31%
5Citibank Nominees (New Zealand) Limited * 20,867,072 6.68%
6Accident Compensation Corporation * 16,097,524 5.15%
7HSBC Nominees (New Zealand) Limited A/C Sate Street * 15,711,219 5.03%
8JP Morgan Chase Bank NZ NZ Branch - Segregated Clients Acct * 11,284,588 3.61%
9BNP Paribas Nominees (NZ) Limited * (NZCSD<COGN40>) 6,815,452 2.18%
10BNP Paribas Nominees (NZ) Limited *(NZCSD<BPSS407>) 6,241,921 2.00%
11FNZ Custodians Limited 4,084,462 1.31%
12National Nominees Limited * 2,800,581 0.90%
13Masfen Securities Limited 2,274,539 0.73%
14Tea Custodians Limited Client Property Trust Account * 2,252,770 0.72%
15New Zealand Depository Nominee Limited 2,199,637 0.70%
16Forsyth Barr Custodians Limited 1,318,447 0.42%
17New Zealand Permanent Trustees Limited * 1,200,000 0.38%
18JBWere (NZ) Nominees Limited 1,115,761 0.36%
19Century Securities Limited 1,018,638 0.33%
20Gary John van Leeuwen & Caroline Frances van Leeuwen 1,009,248 0.32%
255,609,805 81.79%
The shareholder spread table on page 55 groups shares held by NZCSD (denoted by * in the table above) as a single legal holding.
Substantial product holders
As at 31 January 2020
The following shareholders each hold 5% or more of the issued capital of the Company and have filed notices
with the Company under the Financial Markets Conduct Act 2013 that they are substantial product holders in the Company.
NO. OF ORDINARY SHARES
Mobil Oil NZ Limited 53,760,000
Z Energy Limited 47,999,980
BP New Zealand Holdings Limited 31,572,640
Wellington Management Group LLP 29,220,118
Accident Compensation Corporation 15,777,524
The total number of quoted voting products of the Company on issue at 31 December 2019 and 31 January 2020 was
312,576,453 fully paid shares.
Shareholder and bondholder spread
As at 31 January 2020
SHAREHOLDERSBONDHOLDERS
NO. OF SHARES /
BONDS
NO. OF
SHAREHOLDERS
%
HOLDER
NUMBER OF
SHARES
% OF
SHARES
NO. OF
BONDHOLDERS
%
HOLDER
NO. OF
BONDS
% OF
BONDS
1 - 499 236 5.46% 62,418 0.02%
500 - 999 257 5.95% 178,810 0.06%
1,000 - 1,999 552 12.77% 741,672 0.24%
2,000 - 4,999 1,177 27.24% 3,748,179 1.20%
5,000 - 9,999 778 18.00% 5,263,877 1.68% 41 8.07% 229,000 0.31%
10,000 - 49,999 1,128 26.11% 20,897,792 6.68% 327 64.37% 6,618,000 8.82%
50,000 - 99,999 110 2.55% 6,956,182 2.23% 84 16.54% 4,601,000 6.13%
100,000 - 499,999 64 1.48% 11,252,870 3.60% 43 8.46% 6,619,000 8.83%
500,000 - 999,999 8 0.19% 5,960,241 1.91% 2 0.39% 1,000,000 1.33%
1,000,000 upwards 11 0.25% 257,514,412 82.38% 11 2.17% 55,933,000 74.58%
4,321 100.00% 312,576,453 100.00% 508 100.00% 75,000,000 100.00%
Geographical spread
As at 31 January 2020
SHAREHOLDERSBONDHOLDERS
LOCATION
NO OF
SHAREHOLDERS
%
HOLDER
NUMBER OF
SHARES
% OF
SHARES
NO OF
BONDHOLDERS
%
HOLDER
NO. OF
BONDS
%
OF
BONDS
Auckland (Greater) 1,319 30.53% 219,168,910 70.12% 149 29.33% 28,687,000 38.25%
Wellington (Greater) 545 12.61% 62,322,259 19.94% 116 22.83% 19,895,000 26.52%
Whangarei/Northland 479 11.09% 5,227,833 1.67% 13 2.56% 645,000 0.86%
Other North Island 911 21.08% 12,747,417 4.08% 121 23.82% 3,297,000 4.40%
South Island 943 21.82% 12,172,098 3.89% 102 20.08% 22,297,000 29.73%
Australia 66 1.53% 464,345 0.15% 1 0.20% 50,000 0.07%
Other Overseas 58 1.34% 473,591 0.15% 6 1.18% 129,000 0.17%
4,321 100.00% 312,576,453 100.00% 508 100.00% 75,000,000 100.00%
SHAREHOLDER AND
BONDHOLDER INFORMATION
REFINING NZ ANNUAL REPORT 20195455

PAGE
Group Financial Statements
Consolidated Income Statement 58
The income earned and operating expenditure incurred by the Refining NZ Group
during the financial year
Consolidated Statement of Comprehensive Income 59

Items of income and operating expense not recognised in the income statement
and hence taken to reserves in equity
Consolidated Balance Sheet 60

A summary of the Refining NZ Group assets and liabilities at the end of the financial year
Consolidated Statement of Changes in Equity 62

Components that make up the capital and reserves of the Refining NZ Group
and the changes of each component during the financial year
Consolidated Statement of Cash Flows 64

Cash generated and used by the Refining NZ Group during the financial year
Notes to the Consolidated Financial Statements 65
PERFORMANCE 69
DEBT AND EQUITY 80
OPERATING ASSETS AND LIABILITIES 86
FINANCIAL RISK MANAGEMENT
103
OTHER 111
Independent Auditor’s Report 114
Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
THE
NUMBERS
REFINING NZ ANNUAL REPORT 20195657

Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Income Statement
FOR THE YEAR ENDED 31 DECEMBER 2019
GROUPGROUP
20192018
NOTE$000$000
INCOME
Revenue
1, 2
344,861
359,316
Other income
1, 2
3,514
3,150
TOTAL INCOME348,375
362,466
EXPENSES
Purchase of process materials and utilities
2
98,082
81,140
Materials and contractor payments
2
31,340
29,003
Wages, salaries and benefits
2
61,247
61,268
Administration and other costs
2
39,471
38,408
TOTAL EXPENSES230,140
209,819
EARNINGS BEFORE DEPRECIATION, FINANCE COSTS AND INCOME TAX118,235
152,647
Depreciation and disposal costs
2, 10
99,931
97,075
NET PROFIT BEFORE FINANCE COSTS AND INCOME TAX18,304
55,572
FINANCE COSTS
Finance income
2
(44)
(104)
Finance cost
2
13,489
13,904
NET FINANCE COSTS13,445
13,800
Net profit before income tax
4,859
41,772
Income tax
4
694
12,156
NET PROFIT AFTER INCOME TAX4,165
29,616
ATTRIBUTABLE TO:
Owners of the Parent
4,165
29,616
EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO
THE SHAREHOLDERS OF THE NEW ZEALAND REFINING COMPANY LIMITED
CENTSCENTS
Basic and diluted earnings per share
5
1.3
9.5
The above Consolidated Income Statement is to be read in conjunction with the notes on pages 65 to 113.
GROUPGROUP
20192018
NOTE$000$000
NET PROFIT AFTER INCOME TAX4,165
29,616
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to the Income Statement
Defined benefit plan actuarial gain/(loss)
18(k)
7,681
(16,024)
Deferred tax on defined benefit plan actuarial (gain)/loss
4
(2,151)
4,487
Total items that will not be reclassified to the Income Statement
5,530
(11,537)
Items that may be subsequently reclassified to the Income Statement
Movement in cash flow hedge reserve
20
(3,094)
7,856
Deferred tax on movement in cash flow hedge reserve
4
866
(2,200)
Total items that may be subsequently reclassified to the Income Statement(2,228)
5,656
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), AFTER INCOME TAX

3,302
(5,881)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, AFTER INCOME TAX7,467
23,735
ATTRIBUTABLE TO:
Owners of the Parent
7,467
23,735
The above Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes on pages 65 to 113.
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20195859

Consolidated Balance Sheet
AS AT 31 DECEMBER 2019
GROUPGROUP
20192018
NOTE$000$000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
15
5,255
779
Trade and other receivables
14
145,063
152,712
Income tax receivable
5,895
1,394
Derivative financial instruments
20
4,421
6,249
Inventories
16
3,340
2,974
TOTAL CURRENT ASSETS163,974
164,108
NON-CURRENT ASSETS
Inventories
16
19,410
19,955
Derivative financial instruments
20
205
6
Property, plant and equipment
10
1,171,301
1,191,948
Right-of-use assets
9
4,028
-
Intangibles
10
22,137
14,309
TOTAL NON-CURRENT ASSETS1,217,081
1,226,218
TOTAL ASSETS1,381,055
1,390,326
LIABILITIES
CURRENT LIABILITIES

Trade and other payables
17
171,018
152,561
Derivative financial instruments
20
3,997
1,300
Borrowings
8
-
50,000
Lease liabilities
9
248
171
Employee benefits
18
7,861
9,948
TOTAL CURRENT LIABILITIES183,124
213,980
NON-CURRENT LIABILITIES
Derivative financial instruments
20
5,017
5,564
Borrowings
8
246,616
208,601
Lease liabilities
9
3,206
2,303
Employee benefits
18
40,894
48,087
Provisions
13
12,643
10,866
Deferred tax liabilities
4
132,811
131,289
TOTAL NON-CURRENT LIABILITIES441,187
406,710
TOTAL LIABILITIES624,311
620,690
NET ASSETS
756,744
769,636
The above Consolidated Balance Sheet is to be read in conjunction with the notes on pages 65 to 113.
GROUPGROUP
20192018
NOTE$000$000
EQUITY
Contributed equity
6
265,771
265,771
Treasury stock
6, 21
(960)
(969)
Employee share entitlement reserve
6, 21
681
732
Cash flow hedge reserve
6, 20
(2,688)
(460)
Retained earnings
493,940
504,562
TOTAL EQUITY
756,744
769,636
The Board of Directors of The New Zealand Refining Company Limited authorised these Consolidated Financial Statements for issue on
26 February 2020.
For and on behalf of the Board:





S C Allen J B Miller
Director Director
Consolidated Balance Sheet
AS AT 31 DECEMBER 2019
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20196061

Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2019
CONTRIBUTED
EQUITY
TREASURY
STOCK
EMPLOYEE SHARE
SCHEME ENTITLEMENT
RESERVE
CASH FLOW
HEDGE
RESERVE
RETAINED
EARNINGS
TOTAL
EQUITY
GROUP
NOTE$000$000$000$000$000$000
AT 1 JANUARY 2018
265,771 (678)429(6,116)533,369 792,775
COMPREHENSIVE INCOME
Net profit after income tax- - - - 29,616 29,616
Other comprehensive income
Movement in cash flow hedge reserve
20
- - - 7,856 - 7,856
Defined benefit actuarial loss
18(k)
- - - - (16,024)(16,024)
Deferred tax on other comprehensive income
20
- - - (2,200)4,487 2,287
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), AFTER INCOME TAX
- - - 5,656 (11,537)(5,881)
TRANSACTIONS WITH OWNERS OF THE PARENT
Equity-settled share-based payments
21
- - 303 - - 303
Treasury shares purchased
21
- (291)- - -(291)
Unclaimed dividends written back- - - - (1)(1)
Dividends paid
7
- - - - (46,885)(46,885)
TOTAL TRANSACTIONS WITH OWNERS OF THE PARENT
- (291)303 - (46,886)(46,874)
AT 31 DECEMBER 2018
265,771 (969)732 (460)504,562 769,636
AT 1 JANUARY 2019
265,771 (969)732 (460)504,562 769,636
COMPREHENSIVE INCOME
Net profit after income tax
- - - - 4,165 4,165
Other comprehensive income
Movement in cash flow hedge reserve
20
- - - (3,094)- (3,094)
Defined benefit actuarial gain
18(k)
- - - - 7,681 7,681
Deferred tax on other comprehensive income
20
- - - 866 (2,151)(1,285)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), AFTER INCOME TAX- - - (2,228)5,530 3,302
TRANSACTIONS WITH OWNERS OF THE PARENT
Equity-settled share-based payments
21
- - 241 - - 241
Shares vested to employees
21
-292 (292)---
Treasury shares purchased
21
- (283)- - -(283)
Dividends paid
7
- - - - (20,317)(20,317)
TOTAL TRANSACTIONS WITH OWNERS OF THE PARENT- 9 (51)- (20,317)(20,359)
AT 31 DECEMBER 2019
265,771 (960)681 (2,688)493,940 756,744
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the notes on pages 65 to 113.
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20196263

Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2019
GROUPGROUP
20192018
NOTE$000$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
351,625
352,384
Payment for supplies and other expenses
(151,172)
(161,369)
Payments to employees
(62,780)
(58,858)
Interest received
44
104
Interest paid
(14,418)
(13,727)
Net GST paid
(1,936)
(2,347)
Income tax paid
(4,238)
(11,551)
NET CASH INFLOW FROM OPERATING ACTIVITIES
1515
117,125
104,636
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
(77,695)
(162,316)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES

(77,695)
(162,316)
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments of)/proceeds from bank borrowings
(13,200)
15,300
Proceeds from subordinated notes
8
-
73,301
Unclaimed dividends
-
(1)
Dividends paid to shareholders
7
(20,317)
(46,885)
Lease payments
9
(1,154)
(522)
Purchase of treasury stock
21
(283)
(291)
NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES

(34,954)
40,902
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
4,476
(16,778)
Cash and cash equivalents at the beginning of the year

779
17,557
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR5,255
779
(a) REPORTING ENTITY
The reporting entity is the consolidated group comprising The New Zealand Refining Company Limited (‘Parent’ or ‘Company’)
and its subsidiaries, Independent Petroleum Laboratory Limited, Maranga Ra Holdings Limited and Maranga Ra Limited (the Group).
The New Zealand Refining Company is a limited liability company incorporated and domiciled in New Zealand with its registered
office at Marsden Point, Whangarei, New Zealand. All subsidiaries have a balance date aligned with the reporting date of the
Parent company.
The Parent operates New Zealand’s only oil refinery at Marsden Point near Whangarei as a toll refiner, and owns and operates a
pipeline, running from the refinery at Marsden Point to Wiri, located in South Auckland, transporting refined fuels for consumption
within the Auckland and Waikato markets. Independent Petroleum Laboratory provides specialised fuels, biofuels, and industrial and
environmental laboratory testing services. Maranga Ra Holdings Limited and Maranga Ra Limited were incorporated in December 2019,
ahead of the Company’s investment in the proposed solar farm development adjacent to the Refinery. These entities had no assets or
liabilities as at balance date.
The New Zealand Refining Company Limited is registered under the Companies Act 1993, is listed on the New Zealand Stock Exchange
(NZX) and is an FMC Reporting Entity under the Financial Markets Conduct Act 2013 (‘FMC Act 2013’).
These consolidated financial statements were approved by the Directors on 26 February 2020.
(b) BASIS OF PREPARATION
These consolidated financial statements comply with:
• The Financial Markets Conduct Act 2013;
• Generally Accepted Accounting Practice (GAAP);
• New Zealand equivalents to International Financial Reporting Standards (‘NZ IFRS’), International Financial Reporting Standards
(IFRS) and other authoritative pronouncements of the External Reporting Board, as appropriate for for-profit entities.
The consolidated financial statements are prepared on the basis of historical cost, except for derivative financial instruments and plan
assets (included in the net defined benefit pension plan liability) which are measured at fair value.
The consolidated financial statements are prepared on a GST exclusive basis.
Functional and presentation currency
These consolidated financial statements are presented in New Zealand dollars ($) which is the Group’s functional currency, and the
financial information has been rounded to the nearest thousand dollars ($000), unless otherwise stated.
Consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date
that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation.
Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
The above Consolidated Statement of Cash Flows is to be read in conjunction with the notes on pages 65 to 113.
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20196465

Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Use of judgements and estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires the Directors to
exercise their judgement in the process of applying the Group’s accounting policies. Estimates and judgements are continually evaluated
and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
The following areas involve estimates and assumptions that can significantly affect the amounts recognised in the consolidated
financial statements:
• Useful lives of the property, plant and equipment
The Group reassessed the remaining useful lives of the assets associated with the distribution segment (including the Refinery
to Auckland Pipeline). As a result of the remaining life assessment carried out by independent pipeline experts, Rosen Group,
and valuation specialist BECA Limited, the weighted average remaining useful life has been extended from 19 to 31 years
(resulting in a decrease in annual depreciation by approximately $2 million). The remaining useful lives of the assets
associated with the refining assets are considered appropriate.
• Impairment assessment of assets
The carrying value of the Group’s assets were tested for impairment as at 31 December 2019. Key judgements underpinning
this assessment include:
- The Parent Company’s site consents and jetty lease will be renewed prior to expiry in May 2022 and September 2024,
respectively, and
- The Parent Company will enter the New Zealand Emissions Trading Scheme as an Energy Intensive Trade Exposed entity when
the Negotiated Greenhouse Agreement with the Crown expires in January 2023.
It is the opinion of Management that the risks of the not gaining environmental consents on a commercially acceptable basis or not
entering into the New Zealand Emissions Trading Scheme as an Energy Intensive Trade Exposed entity are relatively low.

On this basis, the Group has estimated the recoverable amount of its assets on a value in use basis and determined that there is
no impairment under a range of reasonably possible scenarios. Not renewing the site consents or jetty lease, or renewing for a
significantly shorter period of time than expected, would result in an impairment.

Management and the Board have used their refining industry experience and external sources of information, where appropriate,
to determine their expectations of the future. The key assumptions used in the impairment testing are outlined below. While
the sensitivities outlined in the following table highlight the absolute movement in each key assumption that would result in the
elimination of the excess of recoverable amount over carrying amount, a lesser movement in a combination of each of those key
assumptions could also lead to a similar result.
KEY ASSUMPTION
UNIT
VALUE
ATTRIBUTED
SENSITIVITY
(ABSOLUTE MOVEMENT)
Gross refiners margin
US$/bbl4.9 – 8.1 (median 7.4)Decrease by 0.9 (median)
Exchange rateUS$0.63Increase by 0.07
Refinery throughput mbbl42Decrease by 5
Discount rate
%7.7Increase by 2.5
Estimates are designated by an
E
symbol in the notes to the consolidated financial statements.
(c) SIGNIFICANT ACCOUNTING POLICIES
Accounting policies are disclosed within each of the applicable notes to the consolidated financial statements and are designated
by a
P
symbol.
The principal accounting policies applied in the preparation of these consolidated financial statements have been consistently applied
to all periods presented except in relation to the new lease standard.
New and amended standards adopted by the Group
The Group has adopted NZ IFRS 16 ‘Leases’ for the first time in the annual reporting period commencing 1 January 2019. The Group
applied the simplified retrospective transition approach. Further details on the adoption of NZ IFRS 16 ‘Leases’ and the impact on the
Group’s financial performance and position are disclosed in Note 9, Lease liabilities.
There were no other new and amended standards issued by the International Accounting Standards Board (IASB) or the New Zealand
Accounting Standards Board (NZASB) mandatory for the year ended 31 December 2019, that were considered to have a material impact
to the Group.
New and amended standards not yet effective and not early adopted by the Group
The IASB has issued a number of standards, amendments and interpretations which are not yet effective and which may have an impact
on the Group’s consolidated financial statements.
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20196667
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019

PAGE
PERFORMANCE 69
1 Segment reporting 69
2 Income and expenses 72
3 Related parties 75
4 Taxation 78
5 Earnings per share 79
DEBT AND EQUITY 80
6 Equity 80
7 Dividends 81
8 Borrowings 81
9 Lease liabilities 83
OPERATING ASSETS AND LIABILITIES 86
10 Property, plant and equipment, and intangibles 86
11 Operating leases 90
12 Capital commitments 90
13 Provisions 91
14 Trade and other receivables 92
15 Cash and cash equivalents 93
16 Inventories 94
17 Trade and other payables 95
18 Employee benefits 96
FINANCIAL RISK MANAGEMENT 103
19 Financial risk management 103
20 Derivative financial instruments 108
OTHER 111
21 Employee share-based payments 111
22 Contingent liabilities 112
23 Auditor’s fees 112
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
PERFORMANCE
This section focuses on Refining NZ’s financial performance and the returns provided to equity holders. The following notes are included:
Note 1: Segment reporting
Note 2: Income and expenses
Note 3: Related parties
Note 4: Taxation
Note 5: Earnings per share
1. SEGMENT REPORTING
(a) Identification and description of reportable segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Leadership Team, identified as the
chief operating decision-maker. The Leadership Team reviews the Group’s internal reporting of oil refining and distribution separately
in order to assess their performance and allocate resources. The operating segments, based on these reports are as follows:
Oil Refining
The Parent owns and operates an oil refinery located at Marsden Point, 160 kilometres north of Auckland. The oil refinery is able to
process a wide range of crude oil types imported from around the world.
Distribution
The Parent owns infrastructure to support the distribution of manufactured products to its customers. The Refinery to Auckland Pipeline
(RAP) transfers product to the Wiri Oil terminal located in South Auckland (refer note 3).
Other
Other includes the subsidiary companies’ operations and properties. These have not been included in a reportable segment as they are
not separately reported to the Leadership Team.
Sales between segments are carried out at arm’s length and represent charges by the subsidiary companies (included in “Other”) to
Oil Refining. The revenue from external parties reported to the Leadership Team is measured in a manner consistent with that in the
Income Statement. All revenue is generated in New Zealand.
Revenue derived from major customers, and the relevant operating segments, is disclosed in note 3.
(b) Reporting measures
The performance of the operating segments is based on earnings before depreciation, finance costs and income tax and net profit after
income tax. This information is measured in a manner consistent with that in the consolidated financial statements.
The Group manages assets and liabilities on a central basis and therefore does not provide any segment information of this nature.
69REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 201968
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019

1. SEGMENT REPORTING (continued)
(c) Segment results
1. SEGMENT REPORTING (continued)
NOTEOIL REFININGDISTRIBUTIONOTHERTOTAL
$000$000$000$000
31 DECEMBER 2019
Total revenue
297,836 42,998 9,760 350,594
Inter-segment revenue
- - (5,733)(5,733)
REVENUE FROM EXTERNAL CUSTOMERS297,836 42,998 4,027 344,861
Other income
222
2- 2,035 1,479 3,514
Earnings before depreciation, finance costs and income tax
76,724 37,347 4,164 118,235
Finance income
38 - 6 44
Finance cost
(13,488)- (1)(13,489)
Depreciation and disposal costs
(95,527)(3,779)(625)(99,931)
Income tax
9,575 (9,399)(870)(694)
Net (loss)/profit after income tax
(22,678)24,169 2,674 4,165
NOTEOIL REFININGDISTRIBUTIONOTHERTOTAL
$000$000$000$000
31 DECEMBER 2018
Total revenue304,509 50,613 9,336 364,458
Inter-segment revenue
- - (5,142)(5,142)
REVENUE FROM EXTERNAL CUSTOMERS
304,509 50,613 4,194 359,316
Other income-2,8902603,150
Earnings before depreciation, finance costs and income tax
2
105,398 44,845 2,404 152,647
Finance income102 - 2 104
Finance cost(13,892)- (12)(13,904)
Depreciation and disposal costs(89,648)(6,868)(559)(97,075)
Income tax
(1,078)(10,634)(444)(12,156)
Net profit after income tax
882 27,343 1,391 29,616
The earnings before depreciation, finance costs and income tax and depreciation and net profit after income tax of the distribution and
other segments are before exclusion of inter-segment revenue and costs.
42,998
297,836
4,027
Oil Refining
Distribution
Other
REVENUE FROM EXTERNAL CUSTOMERS ($000)
50,613
304,509
4,194
2019
$000
2018
$000
37,347
44,845
76,724
105,398
4,1642,404
Oil Refining
Distribution
Other
EARNINGS BEFORE DEPRECIATION, FINANCE COSTS AND INCOME TAX ($000)
2019
$000
2018
$000
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20197071
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019

2. INCOME AND EXPENSES
P
Revenue is recognised when control of a good or service transfers to a customer. Processing fees, pipeline fees and other
services provided by the Group are identified as distinct performance obligations which are satisfied over time and for which
a transaction price is separately determined and allocated. No significant judgement is involved in the price determination and
allocation. An output method is applied to measure progress of the services provided. The Group does not have contracts with
customers where significant financing components, non-cash considerations or consideration payable to customers, obligations
for refunds or specific warranties would be existent. Specific accounting policies are as follows:
Refining revenue

Processing fees and other processing related fees, such as blending and reprocessing (presented as “Other refining related
income”) are recognised over time as processing services are delivered. The revenue from processing and other processing related
fees is recognised in the amounts invoiced, applying paragraph B16 of NZ IFRS 15 ‘Revenue from Contracts with Customers’,
reflecting actual volumes processed (including intermediate products), adjusted for fee floor and cap, when applicable.
The cost of natural gas, used by the Parent in the refining process, is recovered from customers and presented as a component
of refining revenue; the Parent acts as principal with respect to procuring and selling natural gas.
Distribution revenue
Pipeline and terminalling fee revenue is recognised over time as refined products are delivered to the Wiri Oil terminal in South
Auckland, and in the amount to which the Group has a right to invoice customers, applying the practical expedient in NZ IFRS 15,
within an operating period.
Rental income from operating leases (including Wiri Oil terminal rental) is recognised on a straight-line basis in accordance with
the substance of the relevant agreements.
Other revenue
Revenue from other contracts (primarily relating to provision of services) is recognised over time as goods or services are
delivered to customers.
2. INCOME AND EXPENSES (continued)
Net profit before income tax includes the following income and expenses:
GROUPGROUP
20192018
NOTE$000$000
REVENUE
Processing fees
241,970
258,873
Natural gas recovery
39,579
31,987
Other refining related income
16,287
13,649
Refining revenue
297,836
304,509
Pipeline and terminalling fee revenue
36,473
44,088
Wiri land and terminal lease income
11
6,525
6,525
Distribution revenue
42,998
50,613
Other operating income
4,027
4,194
TOTAL REVENUE344,861
359,316
OTHER INCOME
Other income
3,514
3,150
TOTAL OTHER INCOME3,514
3,150
TOTAL INCOME348,375
362,466
And charging:
Process materials and utilities
58,502
49,153
Natural gas
39,580
31,987
PURCHASE OF PROCESS MATERIALS AND UTILITIES98,082
81,140
Contractor payments
23,433
20,856
Materials
7,752
8,124
Obsolescence provision recognised
155
23
TOTAL MATERIALS AND CONTRACTOR PAYMENTS31,340
29,003
Wages and salaries
55,324
55,854
Defined contribution pension plan contributions
1,771
1,597
Defined benefit pension plan expense
18(j)
3,685
3,272
Medical plan contributions
18(j)
226
242
Equity-settled share-based payments
21
241
303
TOTAL WAGES, SALARIES AND BENEFITS61,247
61,268
Administration and other expenses
23
4,099
5,962
Contract services
17,158
16,202
Consultants
6,721
4,873
Insurance
4,830
3,964
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20197273
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019

2. INCOME AND EXPENSES (continued)
GROUPGROUP
20192018
NOTE$000$000
Rates
1,187
1,282
Employee related costs
4,005
4,151
Directors' fees
795
780
Operating lease expenses:
Wiri Oil land rental
500
500
Other
-
523
Donations
176
171
TOTAL ADMINISTRATION AND OTHER COSTS39,471
38,408
Depreciation of property, plant and equipment
10
99,058
96,424
Depreciation of right-of-use assets
9
440
-
Loss on disposal of property, plant and equipment
10
433
651
TOTAL DEPRECIATION AND DISPOSAL COSTS99,931
97,075
Interest expense:
Bank borrowings
11,107
13,975
Subordinated notes
3,894
243
Restoration provision finance charge
254
345
Finance leases
9
342
-
Interest capitalised to qualifying asset
(2,108)
(659)
TOTAL FINANCE COSTS
13,489
13,904
Finance income:
Interest income on short-term bank deposits
(44)
(104)
TOTAL FINANCE INCOME(44)
(104)
NET FINANCE COSTS13,445
13,800
TOTAL COSTS343,516
320,694
NET PROFIT BEFORE INCOME TAX
4,859
41,772
Insurance recoveries
Following the Refinery to Auckland pipeline rupture on 14 September 2017, the Parent Company incurred costs associated with repairs
to the pipeline and the recovery and remediation of the leak site which was completed in May 2018.
The Company had insurance policies to cover both environmental remediation and loss of revenue following the incident. In this
financial year the Company recognised $2.1 million of insurance recoveries as “Other income” (2018: $1.8 million) under the material
damage and business interruption policy for loss of revenue.
3. RELATED PARTIES
(a) Shareholders and other related parties
The Group enters into transactions with the oil companies who are also shareholders of the Parent, and Wiri Oil Services Limited
(Wiri Oil), a company that is owned by shareholders of the Parent.
Details of shareholdings at 31 December are:
20192018
%%
BP New Zealand Holdings Limited (BP)
10.10
10.10
Mobil Oil NZ Limited (Mobil)
17.20
17.20
Z Energy Limited (Z Energy)
15.36
15.36
The nature, transactions and balances with the shareholders and other related parties are as follows:
(i) REVENUE FROM RELATED PARTIES
Revenue from the oil refining and distribution segments is derived from the oil companies as follows:
TRANSACTION VALUES FOR THE
YEAR ENDED 31 DECEMBER
BALANCES OUTSTANDING
AS AT 31 DECEMBER
2019201820192018
$000$000$000$000
BP
89,066
90,661
38,060
32,766
Mobil
80,894
83,567
32,955
26,420
Z Energy
151,836
164,164
68,080
74,365
Wiri Oil
7,073
7,047
29
24
TOTAL
328,869
345,439
139,124
133,575
Processing fees
The Group has separate processing agreements with each of the three oil companies which have been in place since 1995. They are
long-term “evergreen” contracts which continue unless renegotiated or terminated by mutual consent or by a customer on one year’s
notice. 93% (2018: 94%) of the Group’s total operating revenue is earned under the processing agreements. Refer to note 19(a) for
further details.
Leases
The Parent leases land from Wiri Oil Services Limited (Wiri Oil) and owns the Wiri Oil terminal (plant) located on this land. The land
and plant is leased back to Wiri Oil. The leases are non-cancellable operating leases, which expire in February 2025 with no right of
renewal. At the end of the lease term, ownership of the Wiri Oil terminal reverts to Wiri Oil Services Limited.
Excise duty
Excise duty is collected from the Oil Companies and paid to the New Zealand Customs Service on the same day each month (refer notes
14 and 17) and is included in the above balances outstanding as at 31 December.
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20197475
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019

3. RELATED PARTIES (continued)
(ii) PURCHASES OF GOODS AND SERVICES
The Group purchases sulphur, a by-product of the refining process, which is on sold to third parties, and other fuels, from related parties
as follows:
TRANSACTION VALUES FOR THE
YEAR ENDED 31 DECEMBER
BALANCES OUTSTANDING
AS AT 31 DECEMBER
2019201820192018
$000$000$000$000
BP
735
1,087
-
170
Mobil
311
996
-
145
Z Energy
1,133
2,689
185
328
TOTAL
2,179
4,772
185
643
(iii) OTHER CHARGES
A portion of the Group’s material damage and business interruption and contract works and liability insurance is held by companies
related to shareholders.
TRANSACTION VALUES FOR THE
YEAR ENDED 31 DECEMBER
BALANCES OUTSTANDING
AS AT 31 DECEMBER
2019201820192018
$000$000$000$000
BP – Jupiter Insurance Ltd
702
619
-
-
ExxonMobil (Ancon)
331
-
-
-
TOTAL
1,033
619
-
-
3. RELATED PARTIES (continued)
(b) Directors’ fees and key management personnel compensation
Directors’ fees are disclosed in note 2.
Key management personnel include all members of the Leadership Team.
GROUPGROUP
20192018
$000$000
Salaries and other short-term employee benefits
3,929
4,489
Post-employment benefits
139
160
TOTAL KEY MANAGEMENT PERSONNEL COMPENSATION4,068
4,649
Number of personnel at 31 December
8
8
The above analysis is compiled on a cash basis; variable performance rewards (linked to individual and business performance for a
financial reporting period) are paid subsequent to balance date and reported as part of payments to key management personnel for
the following year.
Key management personnel compensation in 2018 includes the short term incentives paid to the former CEO (Sjoerd Post) and members
of the leadership team in respect of the 2017 performance year. The 2018 total key management personnel compensation include:
• the short term incentives paid to the former CEO and members of the leadership team in respect of the 2017 performance year, and,
• $600 thousand paid to the former CEO in respect of the 2018 performance year, comprising: a pro-rata short term incentive payment
pursuant to the achievement of 2018 key performance indicators and an additional discretionary payment, pursuant to the terms of
his employment agreement, in recognition of an agreed contract extension.
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20197677
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019

4. TAXATION
(a) Income tax expense
P
The income tax expense for the year is the tax payable on the current year’s taxable income based on the New Zealand income
tax rate on the basis of the tax laws enacted or substantively enacted at the end of the reporting period, adjusted by changes in
deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements and to unused tax losses.
GROUPGROUP
20192018
NOTE$000$000
NET PROFIT BEFORE INCOME TAX EXPENSE4,859
41,772
Tax at the New Zealand corporate income tax rate of 28% (2018: 28%)
1,361
11,696
Tax effect of amounts which are either non-deductible or taxable in
calculating taxable income:
Income not assessable for tax
(203)-
Expenses not deductible for tax
61
285
Adjustments in respect of current income tax in respect of previous years
(525)
175
INCOME TAX EXPENSE, REPRESENTED BY:694
12,156
Current tax expense
457
1,704
Deferred tax recognised in the income statement
4(b)
237
10,452
(b) Deferred tax
P
Deferred tax assets and liabilities arise from temporary differences between the tax base of assets and liabilities and their
carrying amounts in the consolidated financial statements, and are recognised for temporary differences at the tax rates expected
to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted. An exception is made for certain temporary differences arising from the initial recognition of an asset or liability.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised in other comprehensive income or directly in equity are
also recognised in other comprehensive income or directly in equity, respectively.
4. TAXATION (continued)
DEFERRED TAX LIABILITY/(ASSET)
PROPERTY,
PLANT AND
EQUIPMENT
PROVISIONSEMPLOYEE
BENEFITS
FINANCIAL
INSTRUMENTS
TAX
LOSSES
TOTAL
NOTE$000$000$000$000$000$000
1 JANUARY 2018
139,218 (4,129)(9,587)(2,378)- 123,124
Deferred tax in respect of
previous years
(899)(197)12 - - (1,084)
Deferred tax in respect of
current year
17,018 (82)(790)- (4,610)11,536
Deferred tax recognised in
the income statement
4(a)16,119 (279)(778)- (4,610)10,452
Included in other
comprehensive income
- - (4,487)2,200 - (2,287)
31 DECEMBER 2018
155,337 (4,408)(14,852)(178)(4,610)131,289
Deferred tax in respect of
previous years
(159)(118)36 - (284)(525)
Deferred tax in respect of
current year
1,238 (175)(347)- 46 762
Deferred tax recognised in
the income statement
4(a)1,079 (293)(311)- (238)237
Included in other
comprehensive income
- - 2,151 (866)- 1,285
31 DECEMBER 2019
156,416 (4,701)(13,012)(1,044)(4,848)132,811
The Group has unused tax losses of $17.3 million (2018: $16.5 million) available to carry forward.
5. EARNINGS PER SHARE
P
Earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average
number of ordinary shares on issue during the year. The Company’s share-based payments described in note 21 have no material
dilutive effect on the earnings per share.
TOTALTOTAL
NOTE20192018
Profit after tax attributable to shareholders of the Company ($000)
4,165
29,616
Weighted average number of shares on issue (000’s)
6
312,177
312,243
BASIC AND DILUTED EARNINGS PER SHARE
1.3
9.5
REFINING NZ CONSOLIDATED FINANCIAL STATEMENTS 20197879
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2019