2020 Annual Report

REFINING NZ
ANNUAL REPORT 2020

Refining NZ Annual Report 2020

32

Refining NZ Annual Report 2020
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 2020.
The Annual Report of The Zealand Refining Company
Limited is signed on behalf of the Board by:
CONTENTS
02 Directors’ Statement
04 Highlights and key metrics
06 Chairman’s Statement
10 Chief Executive Officer’s Statement
14 Environmental, Social and
Corporate Governance:
16 Health, Safety and Well-being
18 Environmental
20 Quality and Reliability
22 People
25 Governance at Refining NZ
28 Remuneration Report
34 Board of Directors
35 Corporate Lead Team
36 Bondholder and Shareholder Information
40 Statutory Disclosures
42 Consolidated Financial Statements
96 Independent Auditor’s Report
100 Trend statement
103 Glossary
104 Corporate Directory
S C Allen
Chair
19 March 2021
J B Miller
Chair, ARFC

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14.7
RAP THROUGHPUT
(2019 20.8)
1.63
GRM
(2019 5.34)
0
RECORDABLE SAFETY INCIDENTS
(2019 TRCFR* 0.27)
29.9
REFINERY THROUGHPUT
(2019 42.7)
5
RELEASES OUTSIDE OF CONSENT
(2019 1)
HIGHLIGHTS AND
KEY METRICS
SAFE
OPERATIONS
BEST SAFETY PERFORMANCE
ON RECORD
An outstanding operational and
financial response to one of the most
challenging business environments in
the Company’s 60 years of operation.
CIRCA $80M REDUCTION
IN CASH COSTS
STRENGTHENED BALANCE SHEET
AND LOWERED NET DEBT
UNPRECEDENTED COVID-19
DEMAND IMPACTS
EFFECTIVE OPERATIONAL
RESPONSE TO REDUCE VOLUMES
SECOND LOWEST MARGIN IN 25 YEARS
CIRCA $90M FEE FLOOR PAYMENTS
DELIVER TO
CUSTOMER
PLAN
RESET COST
BASE TO CASH
BREAKEVEN AT
FEE FLOOR
$231M
NET DEBT
(2019 $241M)
$34M
CAPITAL EXPENDITURE
(2019 $78M)
0
TIER 1* OR TIER 2* INCIDENTS
(2019 ZERO TIER 1 AND
TIER 2 INCIDENTS)
$161M
OPERATING COST
(2019 $184M)
MBBL
MBBLUSD/BBL
*REFER TO GLOSSARY ON PAGE 103

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Refining NZ Annual Report 2020
CHAIRMAN’S
STATEMENT
Simon Allen
Chairman
The 2020 year was unique in the Company’s history, with the
COVID-19 pandemic requiring an immediate response to maintain
the Company’s near-term resilience at the same time that structural
refining market changes called for a rethink in long-term strategy.
Your Board has worked closely with
Management and received valuable and
essential support from employees at all levels,
to navigate the challenges presented by these
circumstances. Our combined efforts have
brought the Company to a position in which
short-term viability has been maintained despite
a major shock to both volumes and margins,
and therefore revenues, and in which the
options for strategic change have been clearly
identified and advanced.
In the immediate onset of the COVID-19 pandemic we
acted quickly and decisively, working with our customers to
manage stocks and supply across the country. We agreed
to change the way in which the refinery operated, with the
processing facilities shifting to a rotating basis to enable
the refinery to produce at substantially lower rates to help
balance fuel supply across the country.
The complex changes made necessary during this period
were completed while maintaining an exemplary safety
performance on site – there were no Tier 1 or 2 process
safety events or recordable personal injury incidents during
the year. In an environment that requires constant vigilance
in regard to hazards even during normal times, this is a very
significant achievement by both our employees and our
contractors working on site.
We still have much work to do to ensure that robust
operational and safety performance are maintained,
financial performance is restored, and the long-term shape
and strategy of the Company is agreed and implemented.
Strategic Review
The Board decided in April 2020 to carry out a Strategic
Review to determine the optimal business model
and capital structure for the Company. At the time of
announcement, we were responding to the situation
created by the pandemic, but we were still fundamentally
challenged by structural conditions resulting in low
refining margins globally and oversupply in the Asia-Pacific
region. We were also necessarily conscious of the global
movement towards, and New Zealand’s focus on, reducing
carbon emissions, with the emergence of new challenges
and opportunities expected in the transition to low-carbon
transport fuels over time.
With our very substantial investment in critical
infrastructure and in New Zealand’s only oil refinery,
and with the need to realise full value and deliver more
sustainable returns for shareholders, we considered the
Strategic Review necessary to determine the best future
use of those assets.
The review has enabled the Company to move to a
Simplified Refinery model from January 2021 and to assess
the potential to move to an import terminal model in the
future. The Company’s fuels infrastructure has significant
latent value which could be realised on transition to an
import terminal, with the added benefit of significantly
lowering its carbon emissions profile.

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9
strategic experience that will be of great value as we work
through the Strategic Review outcomes and future
growth opportunities for the Company. Lucy will be subject
to re-election at the next Annual Meeting of Refining NZ
shareholders.
Carbon budgets
On 31 January 2021, the Climate Change Commission
released the draft carbon budgets for the next 15 years.
These budgets include significant reductions from the
transport sector and industrial heat processes. The option
of conversion to an import terminal would result in a
significant reduction in the Company’s direct emissions
and, as a result, in New Zealand’s emissions. An import
terminal would be the lowest carbon option for delivering
fuel to the Auckland market.



The Marsden Point site, with Refining NZ’s infrastructure,
presents a range of opportunities for growth as the
New Zealand fuel supply changes in the future. The existing
infrastructure is capable of supporting transition to biofuels
and sustainable aviation fuels (SAF) and has the potential to
expand existing operations to support green fuel imports,
exports, storage, blending and other energy sources.
The Company will continue to engage with Government
and other stakeholders to assess and explore these
opportunities as carbon budgets are finalised and
Government policy required to support achievement of
these budgets is developed.
On behalf of the Board, I would like to thank our people,
our contractors, suppliers, tangata whenua, the local
community, customers, Government, shareholders and
our other stakeholders for their continued support during
these unprecedented times. Your support remains vital to
our success, as we move through this period of change and
build towards a better future.
The Stategic Review process was highly consultative,
given the range of stakeholders involved and the long-
term horizon for decision-making and implementation
that future changes would involve. Our customers have
all expressed a desire for the Company to convert to an
import terminal model. This involves the renegotiation of
complex commercial and contractual matters between the
Company and customers. The potential for disagreement
arising from the Strategic Review is reflected in dispute
notices issued by customers. The Company continues to
work with customers to negotiate long-term arrangements.
Importantly, we have reached in principle agreement with
bp on key commercial terms, including price. Negotiations
with Z Energy and Mobil are on-going. An overview of the
potential import terminal option is included in the FY20
Investor Presentation, available through the Company
website at www.refiningnz.com.
The Board recognises that financial returns to shareholders
have not been satisfactory for some years. We are
committed to delivering on the outcomes of the review, to
realise full value for the Company’s assets and deliver more
sustainable returns ‘through the cycle’ while continuing
to support secure, competitive fuel supply for the country
and a fair and well managed transition for employees and
other Stakeholders. The Board will keep shareholders
informed as the process continues. Ultimately, any decision
to proceed with conversion to an import terminal will
be subject to a vote by the non-customer shareholders
following the circulation to Shareholders of an Independent
Appraisal Report.
Should a proposal to move to an import terminal model be
approved by shareholders we will continue to work with
Government and other stakeholders on a planned transition
to manage the impact of changes on the refinery’s
workforce and the Northland economy.
Financial performance
The Company’s financial results reflected the historically
low level of refining margins in the early months of the year,
compounded by the impact of the COVID-19 pandemic.
Margins remained low throughout the year.
The net loss after tax was $198.3 million, compared with
a $4.2 million profit for the 2019 year. Total revenue was
$245.7 million, compared with $348.4 million in 2019.
This included Fee Floor payments from customers totalling
circa $90 million.
Throughputs at the Refinery and the Refinery to Auckland
Pipeline (RAP) were about 30 per cent lower than for
the prior year - a direct consequence of the COVID-19
pandemic. Land fuel volumes recovered to near normal
levels by the end of the year, while jet fuel volumes
remained weak.
Aside from the impact of lower volumes and refinery
margins, net loss after tax reflected a non-cash impairment
charge of circa $158 million after tax against the value of
the Company’s refining assets, reflecting a decline in the
outlook for refining margins.
We acted quickly to reset the cost base, with a reduction
of circa $80 million in 2020 planned expenditure, to keep
costs within the Fee Floor and thus enable the Company
to operate on a cash neutral basis. We took a range of
measures to strengthen the balance sheet, including the
renegotiation of bank lines and increasing and extending
our bank facilities.
Given the challenging, low-margin environment in which
the Company is operating, the Directors have resolved that
it is prudent to not pay a dividend to shareholders for the
2020 year.
Governance
The COVID-19 pandemic and the Strategic Review
intensified the Company’s governance requirements to a
level well beyond the already busy programme associated
with any ‘normal’ year. This required 57 Board and Sub-
committee meetings through the year. I would like to
acknowledge the efforts of all Board members in this
context. I note, in particular, the commitment of my fellow
Independent Directors in their oversight of the Strategic
Review and the renegotiation of commercial relationships
with our customers during this period.
The Board’s primary focus remains on completing the work
arising from the Strategic Review to enable the Company’s
assets to be valued appropriately and to provide sustainable
returns to shareholders.
The Strategic Review process has been led by the Chief
Executive Officer (CEO), Naomi James, who joined the
Company in April 2020. Naomi was previously Executive
Vice President at Santos Ltd, where she was responsible
for midstream infrastructure assets including oil, gas and
LNG processing facilities.
Paul Zealand served as Managing Director from February
to April 2020, providing a transition between the previous
CEO, Mike Fuge, and Naomi starting in the CEO role.
Mr Zealand’s designation as an Independent Director
was suspended during this period and restored when he
resumed his role on the Board.
As announced in December 2020, Debi Boffa resigned
as a Director pending her transfer to a new role offshore
with her employer, bp. The Board records its thanks for her
outstanding contribution to the Company during her three
years as a Director. Consistent with previous practice, the
Board invited bp to nominate a replacement director and,
following a review of her candidacy, we welcomed Lucy
Nation to the Board. Lucy brings extensive industry and

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Refining NZ Annual Report 2020
CHIEF EXECUTIVE
OFFICER’S STATEMENT
The Refining NZ team delivered an outstanding
response to one of the most challenging business
environments in the Company’s 60 years of operation.
Naomi James
Chief Executive Officer
While responding to the immediate impacts of
the COVID-19 pandemic and a structural shift
downward in refining margins, far-reaching
actions were taken to improve the Company’s
financial performance and resilience over both
short and long-term horizons.
Refining margins structurally weak pre-COVID-19
Refining margins were weak at the start of the year
due to a combination of market factors – a substantial
increase in the supply of refined product from larger, low-
cost refineries in the Asia Pacific region and lower than
expected demand growth for transport fuels. High energy,
shipping and labour costs in New Zealand also affected the
Company’s competitiveness relative to other refineries in
the region.
The global drop in demand triggered by COVID-19 and the
expectation of a slow recovery in oil and refined product
demand, particularly for jet fuel, weighed heavily on the
already oversupplied market and placed yet more pressure
on margins.
The average Singapore Complex Margin (SCM) across the
year was negative USD1.65 per barrel (2019: +USD1.02
per barrel). The uplift earned over the SCM was USD3.28
per barrel (2019: USD4.32 per barrel). The reduced uplift
reflects higher crude versus product freight costs and the
impact of the COVID-19 induced rotating operations on the
refinery’s efficiency.
The Gross Refining Margin earned was USD1.63 per
barrel – the second lowest since the 1995 Processing
Agreements came into effect.
Operations adapted for the changed environment
Refinery and pipeline throughputs for the whole year were
circa 30% lower than in 2019. Throughput at the refinery
was 29.8 million barrels (2019: 42.7 million barrels) and on
the RAP 14.7 million barrels (2019: 20.8 million barrels).
Land fuel volumes recovered to just above pre-COVID-19
levels by the end of the year, while jet volumes remained
weak at circa 30-40% of pre-COVID-19 volumes.
The Company worked in partnership with customers to
make significant operational changes, reducing refinery
production and non-essential activity on site. This included
operating the refinery’s processing facilities on a rotating
basis and a full six-week shutdown of the plant in the
middle of the year to help balance fuel supply across
New Zealand.
Health and safety maintained despite
operational changes
The safety of our workplace and the health and wellbeing
of our people are core company values, at the heart of the
on-site culture. To operate the refinery on a rotating basis
and to do so safely, was an outstanding achievement and
a testament to the capability and commitment of
our people.
As we operate one of the country’s highest hazard facilities,
we work within a system of stringent safety policies and
controls. Our Safety Case was approved in 2020 by the
regulator, WorkSafe. Our process safety performance in
the 2020 year was again outstanding, with no Tier 1 or
Tier 2 events recorded for the second successive year.
In addition, there were no recordable personal safety
incidents, with recordable and lost time injury frequency
rates being zero per 200,000 hours worked (2019: 0.13
LTIFR*, 0.27 TRCFR*).
The E Tu Tangata safety culture programme, an employee-
led initiative, was a significant contributor to improved
performance during the year and won the New Zealand
Workplace Health and Safety Engagement Award in
November 2020. E Tu Tangata continues to have a
significant impact on our safety culture. A good example
of this was the establishment of the Manaaki group in
2020, whereby people organised themselves to provide
wellbeing support to colleagues – a critical role during the
disruption caused by COVID-19 and the changes required
for simplification of the refinery.

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The Fee Floor provided protection against
the impacts of both low margins and reduced
refinery throughputs
The Fee Floor established under Processing Agreements
with the Company’s customers provided protection against
the impact of both low margins and the lower refinery
throughputs. The Fee Floor is a guaranteed minimum
level of income in New Zealand dollars, irrespective of
the number of barrels processed and refining margins,
designed to ensure the Company can continue to operate
through periods of low margins.
2020 was only the second time the Fee Floor has come into
effect for a full year in the 25 years since the Processing
Agreements commenced. Processing fee revenue prior to
Fee Floor payments was $52 million (2019: $242 million).
Refining NZ customers made Fee Floor payments totalling
$90 million, increasing the Gross Refining Margin from
USD1.63 to USD4.40 per barrel.
Refinery to Auckland Pipeline revenue was down
20% because of the lower volumes, partially offset
by higher pipeline fees. Total income for the year was
$245.7 million, down $102.6 million (circa 29%) on the
previous financial year.
Cost base reset to breakeven at the Fee Floor
The Company acted quickly to reset its 2020 cost base to
operate within the Fee Floor, reducing total expenditure
by around $80 million. This required a ‘whole of business’
response and strong financial discipline. Operating costs
were down by circa $35 million, with savings achieved in
electricity, process material, labour and other costs through
changes in operations and by stopping all non-essential
activity on site. Capital expenditure was reduced by circa
$45 million following changes to asset management
strategies and the deferral of the platformer and crude
distillation turnaround into 2021.
The Company took early action to strengthen the balance
sheet by increasing and extending bank lines, providing
significant debt headroom and eliminating material near-
term maturities.
Free cashflow was $11 million for the year (2019: $39
million), which allowed the Company to reduce net debt
to $231 million as at 31 December 2020 (2019: $242
million). This reflected cash neutral operations and
optimisation of the balance sheet through $13 million of
asset sales to fund $5.6 million of restructuring costs from
November 2020 through to early 2021, in preparation for
refinery simplification.
The Company has significant liquidity headroom with cash
and undrawn debt facilities in excess of $100 million,
excluding facilities maturing in the next 12 months. It
remained in compliance with its debt covenants, with
headroom on interest cover ratios expected to increase in
2021 due to the maturing of historical interest rate swaps in
December 2020 and the benefit of lower floating rates.
A Simplified Refinery model provides time to
negotiate with customers
Plans to simplify the refinery operations, making the
business robust to an extended period of low margins,
were finalised in October 2020 as an early outcome of the
Strategic Review. In parallel, the Company engaged with
customers to evaluate a possible future transition to an
import terminal.
The Simplified Refinery model, implemented from January
2021, reduces primary crude intake 18% to circa 34
million barrels per annum in a non-turnaround year, with
refined fuels production similar to the levels at the time
the Processing Agreement came into effect in 1995. The
Company has also ceased bitumen production under
the simplified model. An organisational restructure was
completed at a cost of $5.6 million to reduce the workforce
by around 25%, with circa 90 employees leaving the
Company either through redundancies, retirements or
resignations from November 2020 through to April 2021.
Refining NZ initiated the formation of the Northland
Refinery Transition Working Group, made up of regional
and local Government bodies and local groups, and national
agencies and departments. With this support we undertook
a comprehensive transition support programme including
the provision of workshops on resilience, CV writing and
interview skills training, as well as a Careers Expo at which
our people were introduced to about 20 employers with
job vacancies to fill. Our aim is to have all those who want
to be, in training or new jobs within six months of leaving
Refining NZ and we were about half-way to that point by
the end of the year.
The Simplified Refinery enables us to extend cash neutral
operations into 2021 under a Fee Floor scenario and to fund
the circa $20 million maintenance turnaround of the main
crude distiller and the platformer, deferred from 2020.
This provides time and optionality to progress work on
the potential future conversion to an import terminal
with customers, who have all expressed a desire to
move to that business model.
Significant progress made assessing the import
terminal option
Refining NZ is now well progressed in its assessment
of the import terminal option, with an understanding of
the costs and time involved in a conversion to an import
terminal and Front End Engineering and Design (FEED)
and detailed planning work now underway. The proposed
import terminal system would have annual capacity of circa
three billion litres, supplying the Auckland and Northland
markets which make up circa 40% of the total
New Zealand market.
Refining NZ has been negotiating with each of its
customers, seeking to agree commercial terms which
include a lengthy initial term (10+ years), a combination
of fixed annual access fees and variable throughput fees
linked to actual volumes – targeting total estimated fees
(across all customers) of circa $100 million per annum
during the initial term – and provision for third party access
to unutilised RAP capacity.
Refining NZ has reached in principle agreement with bp on
key commercial terms including price
1
. Reaching in-principle
agreement on key terms with bp is a significant milestone
which now allows Refining NZ to progress preparations
for the required approvals while continuing to negotiate to
reach agreement with our other customers.
Negotiations with Z Energy and Mobil are ongoing,
with Refining NZ focused on agreeing terms which
are acceptable to customers and fair to non-customer
shareholders.
There is a strong commitment from Management and
the Board to realise fair value for shareholders from the
Company’s strategic infrastructure assets while continuing
to support secure, competitive fuel supply to New Zealand.
Ultimately, any decision to proceed with a conversion to
an import terminal will be a decision voted upon by the
non-customer shareholders following an Independent
Appraisal Report.
As with recent simplification changes, Refining NZ is
committed to continuing to work closely with local, regional
and national authorities and agencies to ensure any future
transition is smooth and well managed and the impact to
our employees and the region is minimised.
Outlook
The outlook for refining margins remains challenging in the
near term, with COVID-19 travel restrictions likely to affect
jet fuel demand for some time, and with significant refining
capacity closures required to return refinery utilisation to
more normal levels.
The Simplified Refinery model will ensure that the
Company is robust to an extended period of low margins
and our plan for 2021 focuses on continuing to operate the
refinery safely, completing the maintenance turnaround
(deferred from 2020) and meeting our commitments
to customers under the Processing Agreements, while
operating within the Fee Floor.
The four-week turnaround, starting in late February
2021, includes the first statutory inspection for the CCR
Platformer (Te Mahi Hou Project commissioned in 2015)
and routine inspection and maintenance for the crude
distillation unit and associated plant. During the turnaround,
all other processing units not undergoing maintenance
will be temporarily shut down, with customers importing
refined products. The estimated cost of the turnaround is
circa $20 million, within a total capital budget of circa $50
million for 2021.
I take this opportunity to express my appreciation for the
outstanding commitment and support of the Board, the
management team, customers, contractors and in particular
our employees during a year of unprecedented challenges
for the Company. Our achievements in the 2020 year give
me confidence in the Company’s ability to continue to adapt
and grow towards a sustainable future.
*REFER TO GLOSSARY ON PAGE 103
1
The in principle agreement is non-binding and subject to a number of conditions including Refining NZ reaching agreement with its other customers (Z Energy and Mobil), Refining NZ shareholder
and lender approvals, completion of detailed planning and commercial due diligence, negotiation of a binding Terminal Services Agreement and final approval by the independent directors of
Refining NZ and by bp.

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Refining NZ Annual Report 2020
Environmental, Social and
Governance Issues Materiality Matrix
Legend

Significance of Refining NZ’s economic, environmental and social impacts
Influence on stakeholder’s assessments and decisions
Medium
High
High
Governance & Board independence
Training & development
Energy efficiency
Community &
Iwi engagement
Business continuity &
emergency response
Risk
management
Greenhouse gas/
climate change
Contribution to
regional economy
Financial
performance
Personal safety
& wellbeing
Process safety
Quality & reliability
of products
Emissions to air,
water & ground
Culture & diversity
ENVIRONMENTAL,
SOCIAL AND CORPORATE
GOVERNANCE REPORT
Stakeholder engagement
Despite a challenging year, our approach and
commitment to the environment, to society
and to governance remains unchanged. In
our business processes and decision making,
we consider the impact we have on the
community and the environment in which
we operate.
We understand and value the importance of strong
relationships which underpin the ability of our business
to create value – even more so in uncertain and
challenging times. Our wide network of stakeholders
includes investors, customers, employees, suppliers,
neighbours, tangata whenua as well as local and
national Government.
The 2020 year was a uniquely challenging year, with
COVID-19 having a major impact on our business.
The significant fuel demand reduction resulting from
travel and transport restrictions and the consequential
reduction in revenue through weak global refining
margins and lower refinery throughputs, required us
to collaborate with many stakeholders who responded
with considerable support for our business.
We had to act quickly and decisively in response
to COVID-19. A key factor which enabled us to
successfully reset the business at pace, was to provide
absolute clarity to our people (and other stakeholders)
about what mattered most as we navigated these
unprecedented times. We simplified our company
scorecard to three important deliverables for the
year (refer to page 4 of this Annual Report), cascaded
these objectives to stakeholders and provided regular
progress updates throughout the year.
We also agreed with our customers to change the
way we operated the refinery whereby the processing
facilities were operated in different modes to enable the
refinery to produce substantially lower volumes to help
balance fuel supply across New Zealand.
A Strategic Review was initiated in April 2020 with
the views of our customers and the New Zealand
Government important inputs’ in defining what role our
Company could play in delivering secure, competitive
fuel supply to New Zealand over the longer-term.
Material issues
We developed our Environmental, Social and Corporate
Governance (ESG) strategy over the last few years,
with an assessment undertaken in early 2018, in
collaboration with our stakeholders, to identify material
issues. The materiality assessment is represented by
the matrix set out on page 15; noting that this does not
fully reflect more recent changes to our regulatory and
market environment, particularly in relation to climate
change and carbon emissions.
The material topics have been grouped together for
reporting purposes as:
• Health, safety and wellbeing,
• Quality and reliability,
• Environmental, and
• People.
Our ESG report has been prepared in accordance with
Global Reporting Initiative (GRI) standards: Core option.
The GRI reporting index is available on our Company
website at: www.refiningnz.com.
Looking forward – TCFD reporting
In September 2020, the New Zealand Government
confirmed that climate-related financial disclosures will
be mandatory for all publicly listed companies. The
disclosure reporting requirements will be based against
standards to be issued by the External Reporting
Board in line with the Task Force on Climate Change-
related Financial Disclosures (TCFD) recommendations.
Refining NZ is committed to meeting these new
reporting requirements, effective from 2023 at the
earliest, which will require the Company to assess the
risks and opportunities of climate change across four
thematic areas: governance, strategy, risk management,
metrics and targets.
Competitiveness and profitability
Environmental
Health, safety and wellbeing
Quality and Reliability
People

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Refining NZ Annual Report 2020
87
0.272019
0.762018
0.892017
0.512016
00
E TU TANGATA
E Tu Tangata, which calls on our people to
‘stand up’ for safety and wellbeing, won the
Engagement category of the NZ Workplace
Health & Safety Awards for 2020.
E Tu Tangata is a grass-roots initiative in response to the
story of a young family who lost a loved one because of a
workplace accident.
“That tragedy really hit home for everyone here,” said
Health and Safety Advisor, Cory Abraham. “Any parent
knows that you don’t ever want to be burying your child,
and that case made real for us just how important it was
to get our safety culture right.”
The Company engaged Leading Culture to conduct a
comprehensive safety culture survey. The results showed
that there were areas where we could improve including:
diversity, tools, and leadership. We sought improvement in
each of these areas to enhance engagement.
The Company has a diverse workforce, with employees
from more than 12 countries and a variety of ethnicities
working at the Marsden Point site. We recognised that
our practices didn’t reflect that diversity, and this reduced
the effectiveness of our safety messages. In recognition
of this diversity we have incorporated te ao M
-
aori (the
M
-
aori world view) into our safety culture strategy. The
ethos of kotahitanga (unity) has been incorporated into
our communications to bridge cultural barriers and bring
everyone together. We see evidence that this is providing
a much stronger connection for staff than traditional safety
engagement programmes.
In 2019 we developed a new safety inspection system
and introduced Hauora Korero (safety talks) and Hauora
Hikoi (safety walks). The goal was to encourage everyone
on site to be confident and comfortable to have a
safety related conversation, and to record it. We also
encouraged consistent reporting of near misses, hazards,
and interventions, and we strengthened our processes
to learn from near miss events to support continued
good performance.
The responsibility for safety observations shifted. From
this point on it was not the responsibility of a few, but of all
workers. We set ourselves a lofty goal of recording 6,500
Hauora Korero and Hikoi for the 2020 year. At the end of
2020 we had recorded more than 6,800.
The Kaihautu Award recognises those safety leaders who
demonstrate the E Tu Tangata values while at work. People
are nominated and a Kaihautu (leader) is chosen by their
colleagues. The Kaihautu is presented with a carved hoe (a
paddle) to hand down to the next Kaihautu. This award is a
great way to celebrate the achievement of individuals, and
to recognise and build leadership capability.
CASE STUDY
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&
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ENGAGEMENT
The ethos of kotahitanga (unity)
has been incorporated into
our communications to bridge
cultural barriers and bring
everyone together.
0.132019
0.482018
0.132017
0.482016
862019
262018
172017
132016
02019
32018
42017
02016
02019
22018
02017
12016
HEALTH, SAFETY,
AND WELL-BEING
0
TOTAL RECORDABLE CASE FREQUENCY
RATE (TRCFR) (/200,000 HRS)
TIER 1 PROCESS SAFETY INCIDENTS
LONG TERM INJURY FREQUENCY RATE
(LTIFR) (/200,000 HRS)
Safety is a core value for Refining NZ.
Our commitment is: “Everyone Safely
Home Every Day”.
Despite the extensive operational changes we needed
to make in response to the COVID-19 pandemic our
safety performance has continued to improve. In
2020, the Refining NZ team delivered the best safety
performance on record, with no Tier 1 or Tier 2 process
safety incidents and no recordable injuries.
The impact of the pandemic on demand for transport
fuels required the Company to make significant
operational changes, working in partnership with
customers to reduce refinery production. The refinery
continued to operate through the national and regional
lockdowns, with essential staff remaining on site
with additional protections in place and other staff
working from home. Processing units were operated
in rotating mode, starting and stopping in turn, with
the entire plant temporarily shut down for six weeks in
order to help balance fuel supply across New Zealand.
This mode of operating the refinery was unique, and
to do so safely – with no process safety incidents or
recordable cases, was an outstanding achievement.


The approval by WorkSafe of our Safety Case in early
2020 marked a significant milestone for our business
and our safety journey. The Safety Case details the
hazards that, left unchecked, could result in major
incidents; along with the measures used to prevent
such incidents occurring and the emergency response
systems to reduce consequences should an incident
occur. We are proud of our team and the work that has
gone into developing the safety case, which further
strengthens the effectiveness of personal and process
safety management at Refining NZ.
WorkSafe’s first inspection of the operating Safety Case
was completed during the year and we are updating
the Safety Case as we transition to the Simplified
Refinery operating model whilst continuing to progress
identified risk reduction projects.
Underpinning the safety initiatives and structures
are our Hauora Hikoi (Safety Walks) and Hauora
Korero (Safety Talks), which are undertaken by people
across the business. We intend to further develop this
programme in 2021 to encourage deeper site-wide
engagement. Safety champions under the auspices
of our E Tu Tangata programme (see case study)
participated in workshops to help ensure the safe
completion of the four-week maintenance turnaround
that commenced in February 2021.
0
TIER 2 PROCESS SAFETY INCIDENTS
NUMBER OF EMERGENCY EXERCISES
(INTERNAL AND EXTERNAL)

Refining NZ Annual Report 2020

1918

Refining NZ Annual Report 2020
ENVIRONMENTAL
2020 was a milestone
year for Refining NZ’s
environmental management.
In April the Government approved a process
to bring the Company into the New Zealand
Emissions Trading Scheme (NZ ETS), as an
Emissions Intensive Trade Exposed (EITE)
business with an industrial allocation of
carbon units, after its Negotiated Greenhouse
Agreement (NGA) expires in January 2023.
We were the first company to enter into an NGA with the
Crown in 2003 and investments made by the Company
in major capital projects and careful management, has
enabled Refining NZ to reduce energy consumption and
emissions over the past 20 years.
In 2020, as a result of COVID-19, Refining NZ had to reduce
production through operating the refinery in rotating mode,
to help balance fuel supply across the country. As a result,
our total carbon emissions (scope 1 and 2) were down
circa 28% on 2019. However, this mode of operating the
plant was less efficient, increasing both the intensity of
our emissions (per tonne of refined product produced)
and our fuel losses through flaring. Refining NZ had good
environmental performance during cyclic operations
and hot-standby, with action taken to address minor
environmental non-conformances.
The Company transitioned to a simplified refinery from
January 2021. It is expected that, due to higher production
levels, total CO
2
emissions will be higher than 2020, but
remain below the 2019 level.
In 2020 we made significant progress with our renewal
application for the Marsden Point site resource consent,
working towards approval from the Northland Regional
Council in 2021, ahead of the existing consents expiring
in mid-2022.
Expert assessments obtained as part of the consenting
process noted that, based on the last five years of data, the
effects of Refining NZ activities on the environment have in
general been less than minor.
The effects of Refining NZ’s discharges to the harbour
were less than minor to negligible. This is due to continual
improvement of our environmental protection systems on
site as part of our ISO 14001 Environmental Management
Systems Certification. The marine life growing on the
Refinery jetty, which is exposed directly to our wastewater
discharge, was found to be of high ecological value and is
similar to that found in the Reotahi marine reserve located
directly opposite the refinery.
The nearby Mair Bank sand-based marine population is
healthy, although some shellfish numbers have diminished
in recent years. Experts do not consider that this is related
to refinery operations, however, the Company is committed
to working with the Regional Council, Tangata Whenua
and other agencies to investigate and improve shellfish
populations on the sand banks near the entrance to the
Whangarei harbour.
The business continues to actively protect and maintain the
resident population of threatened New Zealand Dotterel.
These endangered birds’ nest at the refinery site and it
is thanks to the high level of predator control and other
environmental measures that these birds choose to breed
at the Marsden Point site.
848,621
DIRECT CO
2
EMISSION (SCOPE 1) (T CO
2
)
1,080,0412019
972,0182018
1,045,5952017
1,054,3512016
5
RELEASES OUTSIDE CONSENT
12019
52018
42017
52016
56,100
INDIRECT CO
2
EMISSION (SCOPE 2) (T CO
2
)
177,1322019
162,7532018
175,7882017
174,2522016
218.4
DIRECT CO
2
EMISSION INTENSITY (KG CO
2
/T OF PRODUCT)
206.12019
195.92018
199.42017
205.12016
0 .17
FLARE (AMOUNT OF FLARE AS MASS % OF FEEDSTOCK)
0.022019
0.052018
0.022017
0.092016
INDICATORUNIT20162017201820192020
Total Fuel UsagePetajoule14.114.213.214.311.2
Ex-Crude (refinery produced fuel)Petajoule11.511.49.810.78.8
Natural gasPetajoule2.62.83.43.52.4
Electricity UsagePetajoule1.211.221.141.230.92
Water UsageMillion Tonnes1.681.71.651.681.49
Sulphur Dioxide EmissionsTonnes4,3323,6953,4044,3293,345

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Refining NZ Annual Report 2020
QUALITY AND
RELIABILITY
INDICATORUNIT20162017201820192020
Throughput Refinerymillion barrels42.741.740.442.729.8
Throughput RAPmillion barrels20.019.821.020.814.7
Operational availability%96.998.090.799.798.2
Unplanned Refinery downtime%0.80.60.81.623.2
Unplanned RAP downtime%0.94.61.30.94.8
0.8B LITRES
1.9B LITRES
1.4B LITRES
JET FUEL PRODUCED (BILLION LITRES)
DIESEL PRODUCED (BILLION LITRES)
PETROL PRODUCED (BILLION LITRES)
(2019 1.7B LITRES)
(2019 2.3B LITRES)
(2019 1.9B LITRES)
Crude oil bought by our customers is shipped to our
deep-water port at Marsden Point, near Whangarei,
for refining into high-quality transport fuels. As a toll
refiner, we process a range of crude oils imported
from offshore markets to produce premium and
regular petrol, diesel, jet fuel and fuel oils for our three
customers, bp Oil New Zealand Limited, Mobil Oil
New Zealand Limited and Z Energy Limited. Around
58 per cent of the Company’s fuel production travels
via a purpose-built 170-kilometre pipeline (the Refinery
to Auckland Pipeline, or RAP) to Wiri in South Auckland
for storage and distribution by road. The balance is
distributed by our customers via truck around Northland
and by coastal tanker to destinations throughout
New Zealand.
The reliability of our refinery and the high quality of our
fuel products are essential to the resilient supply of
fuel products. The significant fuel demand reduction
resulting from travel and transport restrictions in
response to COVID-19, required the Company to
collaborate with customers to reduce refinery production
and help balance fuel stocks across the country. This
change is reflected in much higher downtime for the
refinery and pipeline in 2020, and lower throughputs.
Through the first nation-wide lockdown in March/April
2020 we had to find ways to reduce our production to
half of normal rates almost overnight and to minimise
jet fuel production. Jet fuel would, in normal times, be
around 30 per cent of what we make. We were able
to reduce that to much lower levels by increasing the
percentage of diesel make which, importantly, avoided
the need for our customers to export jet fuel at much
lower prices.
The reliability of our refinery
and the high quality of our fuel
products are essential to the
resilient supply of fuel products.

Refining NZ Annual Report 2020

2322

Refining NZ Annual Report 2020
PEOPLE
They set the plant up to safely run in the
unprecedented alternating operating mode,
shouldered their responsibilities as essential
workers during lockdown and helped the
refinery remain viable through a significant
cost reduction program and by taking leave
during the six-week plant shutdown in
July-August 2020. The team showed
dedication and resilience throughout
these challenging times.
The wage subsidy received from the New Zealand
Government ensured the Company was able to
maintain the employment of all of our people through
this period before transitioning to a simplified refinery
at the end of 2020. Contractor numbers reduced
year-on-year reflecting the stopping of all non-essential
work during 2020.
We celebrated the achievements of our workforce at
the close of 2020 with awards based on our Company
values: Safety and Wellbeing, Leadership, Integrity,
Respect, Honesty and Winning Together. Our Most
Valuable Player award celebrated the person who most
embodied all our values. This year Cory Abraham, who
has been instrumental in leading E Tu Tangata and
supporting the improvement of the site’s safety record
was the deserving recipient.
To obtain direct feedback during the transition to a
simplified refinery, we launched a pulse survey in
late 2020 called “Our Voice”. The survey focusses on
safety and wellbeing, simplification, communication,
leadership, accountability, development, energy and
values and will continue regularly through 2021 so that
we can continue to support our staff as our business
goes through change.
344
NUMBER OF STAFF
(2019 412)
105
(2019 251)
NUMBER OF CONTRACTORS
TRANSITION SUPPORT
One of the most challenging aspects of 2020
was the decision to disestablish circa 90
1
roles
and farewell colleagues from the Company in
order to simplify refinery operations enabling
the Company to run cash breakeven at the Fee
Floor in 2021 and fund the $20 million planned
maintenance turnaround in quarter one.
Our Corporate Lead Team made commitments about the
way the restructure would be undertaken:
• Treating everyone with respect and with dignity,
• Support would be made available to prepare those
directly affected by the change for life away from the
refinery, and
• To help everyone leaving the Company who wanted,
to find new jobs or be in training within six months of
leaving the Company.
The Corporate Lead Team chose to do this because it
aligned with our company values and was the right thing to
do, in recognition of the years of service and energy that
each person had given to the Company.
The Company partnered with local support providers
including the Ministry of Social Development, which helped
employees write CV’s and master interviewing skills;
Whangarei Budgeting Services, which ran workshops
on how best to manage redundancy payouts and other
financial considerations and Vitae, boosted its presence
onsite as part of our continued Employee Assistance
Programme.
The Manaaki group was also established as part of E Tu
Tangata to support mental health and wellbeing. Manaaki
was provided with training in psychological first aid,
learning some of the key elements in this process – Look,
Listen and Link - supporting our people and leaders through
the change.
Alongside their face-to-face awhi (support) being available
for a korero (chat) or deeper support as needed, Refining
NZ provided online resources and information on Wellbeing
Boards placed around the site.
The Company later reached out to local and national
business partners and invited them to join us in a Careers
Expo, so that they could look to recruit from the pool of
talented Refining NZ employees who were soon to leave.
We had 20 businesses and other organisations join us for
the Expo. By the year’s end, around half of those looking
for employment had found new opportunities beyond
Refining NZ.
CASE STUDY
Our people rose to the challenges of 2020
against the background of the COVID-19 crisis.
1
Actual headcount released through redundancy, retirement or resignation.

Refining NZ Annual Report 2020

2524

Refining NZ Annual Report 2020
GOVERNANCE
AT REFINING NZ
Our Corporate Governance
framework sets out our Board’s
practices and processes to
provide accountability to
shareholders for Refining NZ’s
actions and performance.
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”).
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 be 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
• Health & Safety, Environment and Quality 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 ending 31 December 2020. The Company’s
Governance Statement was last approved by the Board
on 16 February 2021 and is current as at that date.
People and Diversity
20202019
BOARD
CORPORATE
LEAD TEAMWORKFORCEBOARD
CORPORATE
LEAD TEAMWORKFORCE
NO.%NO.%NO.%NO.%NO.%NO.%
GENDER
Male571%457%28083%571%787%32681%
Female229%343%5717%229%113%7819%
ETHNICITY
NZ European/Pakeha571%571%19357%571%450%23157%
Other European229%229%5817%229%337%6215%
Maori & NZ European - - - - 227% - - - - 277%
Maori - - - - 227% - - - - 256%
Asian - - - - 103% - - - - 123%
Other* - - - - 329% - - 1 13%4712%
NATIONALITY
New Zealand - - - - 27177% - - - - 31876%
United Kingdom - - - - 144% - - - - 154%
Australia - - - - 134% - - - - 154%
South Africa - - - - 123% - - - - 133%
Other - - - - 257% - - - - 368%
Information not provided - - - - 165% - - - - 225%
AGE
Under 30 - - - - 237% - - - - 307%
30 to 50343%457%19357%343%113%23258%
over 50457%343%12136%457%787%14235%
* Other includes Maori & Other Ethnicity, Pacific Islander, Pacific Islander & Other Ethnicity, African, Indian, Middle Easterner, Pakistani, Sri Lankan, South American, North American, Information
not provided.
Diversity and Inclusion
Diversity and inclusion are important aspects of our culture.
We value diverse backgrounds and experience as a source
of strength, particularly in robust decision making. Equally,
we recognise that we must be adaptable and continue to
develop ways to successfully connect with, and capture the
benefits of, our diverse workforce in an impactful way. Our
award winning E Tu Tangata programme (refer to page 17)
is an example of a new initiative founded on the strength of
this diversity.
In 2020 we saw a significant shift in the the gender balance
of the Corporate Leadership team. We continue to focus
on the development of our women leaders, with on-the-
job experience a key element in supporting them into
larger more complex roles. Several of our women leaders
participated in the 2020 Strategic Review, which provided
them with an opportunity to develop their commercial and
strategic skills. As a result of that experience, they have
now been appointed into more senior leadership positions
within our organisation

26

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27
Meeting attendance
The challenges of a weak global oil market exacerbated
by COVID-19, as well as the undertaking of a significant
Strategic Review, required additional Board and sub-
committee meetings to be held in 2020. In addition to the
normal meeting schedule, 35 additional Board and sub-
committee meetings were convened, to average at least
one meeting every week. Director attendances at Board
and sub-committee meetings during 2020 were as follows:
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 Officer.
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 are Independent Directors;
• the People, Nominations and Remuneration Committee
comprising five members, of which four are Independent
Directors;
• the Independent Directors Committee comprising 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 Corporate Lead 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.
Independence of Directors
The Board currently consists of seven Directors:
• Simon Allen (the Chair), James Miller, Vanessa Stoddart
and Paul Zealand are Independent Directors.
• Riccardo Cavallo, Lindis Jones and Lucy Nation 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. Major shareholders (bp,
ExxonMobil and Z Energy) do not have a constitutional right
to appoint Directors, however there has been a practice of
inviting those three major shareholders to each nominate a
director for consideration for appointment by the Board.
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.
BOARD
MEETING*
AUDIT, RISK
AND FINANCE
COMMITTEE
PEOPLE,
NOMINATIONS
AND
REMUNERATION
COMMITTEE
INDEPENDENT
DIRECTORS
COMMITTEE
HEALTH, SAFETY,
ENVIRONMENT
AND OPERATIONS
COMMITTEESITE WALKS
S C AllenIndependent Chair24/246/67/715/155/54
D C Boffa
1
Non-independent24/241/16/7-5/53
R CavalloNon-independent24/241/1--5/52
N L JonesNon-independent24/246/6--5/53
J B MillerIndependent24/246/67/715/155/53
V C M StoddartIndependent23/241/17/715/155/53
P A ZealandIndependent24/24 (**6)5/5 (**2)7/7 (**1)15/15 (**3)5/5 (**1)4
* includes April 2020 Annual Shareholders’ Meeting
** denotes number of meetings attended as Managing Director
1
Ms. Boffa resigned as a Director of Refining NZ effective from 1 February 2021. The Board appointed Ms. Lucy Nation, bp’s Vice President of Regions, Cities and Solutions for Asia Pacific, to fill
the casual vacancy and she will be considered for election at the next Annual Meeting of Refining NZ shareholders.

Refining NZ Annual Report 2020

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Refining NZ Annual Report 2020
REMUNERATION
REPORT
Director and Corporate Lead Team Remuneration
The Company has adopted a Director and Executive
Remuneration Policy for remuneration of the Board
and Corporate Lead Team. Refining NZ’s remuneration
framework and policies are overseen by the People,
Nominations and Remuneration Committee in accordance
with the People, Nominations and Remuneration
Committee 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.





Directors’ Remuneration
The Board determines the level of remuneration paid to
Directors within the amounts approved by shareholders
(that is, from the approved collective pool). The current
approved fee pool limit is $900,000 and was approved by
shareholders at the Annual Shareholders’ Meeting in April
2018. Directors’ remuneration is set at a level to remain
comparable with other companies in New Zealand, taking
into account the expertise, skills and responsibilities of
Directors. The Directors of subsidiary companies (refer to
page 40) are not remunerated in that position.
In February 2020 the Board reviewed Directors’ Fees,
based on a market benchmarking report prepared by Ernst
and Young Limited (EY). Based on the market positioning,
EY recommended that Board Members receive an increase
in their fees for director and committee roles to bring
remuneration into line with companies of a similar size,
scope and complexity. The Board considered EY’s analysis
and determined that even with the significant workload
of the Board, an increase in directors’ fees was not
appropriate for the 2020 financial year given the Company’s
financial performance. Directors fees were last increased
in 2018.
The remuneration and other benefits, excluding
reimbursements, received by the individual Directors of the
Company during the 2020 financial year were as follows:
Refining NZ aims to attract and
retain appropriately qualified
and experienced individuals
APPOINTEDBOARD FEES
AUDIT, RISK
AND FINANCE
COMMITTEE
FEES
PEOPLE,
NOMINATIONS
AND
REMUNERATION
COMMITTEE
INDEPENDENT
DIRECTORS
COMMITTEE
FEES
HEALTH, SAFETY,
ENVIRONMENT
AND
OPERATIONS
COMMITTEE FEETOTAL FEES
S C AllenIndependent Chair4 Dec 2014180,000----180,000
D C Boffa Non-independent23 Aug 201775,000-5,000--80,000
R CavalloNon-independent12 Apr 201775,000----75,000
N L JonesNon-independent19 Mar 201875,00012,500---87,500
J B MillerIndependent1 Nov 201875,00030,0005,00020,000-130,000
V C M StoddartIndependent20 May 201375,000-20,00020,000-115,000
P A ZealandIndependent29 Aug 201675,0009,3755,00015,0007,500111,875
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.

30

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31
Chief Executive Remuneration
Mike Fuge’s resignation as Chief Executive Officer was
effective from 21 February 2020. To cover the transition
until Naomi James’ commencement as Chief Executive
Officer, Independent Director Paul Zealand was appointed
Managing Director effective 1 February 2020 (for the time
of the appointment Paul ceased to be an Independent
Director for the purposes of the NZX Listing Rules).
Remuneration payments made to Mike Fuge and Paul
Zealand in their capacity as Chief Executive Officer and
Managing Director (respectively) are set out in the
five-year summary – Chief Executive Remuneration table
on page 31.
Naomi James commenced her employment as Chief
Executive Officer on 6 April 2020. Naomi James’s total
remuneration package includes:
• a base salary of $995,000 per annum; and
• a short-term performance incentive (STI) payment
based on achievement of agreed key performance
indicators (KPI’s). The STI is an incentive with an “on
target” incentive of 45% of base salary per plan year,
with the potential for this to increase to 65% depending
on performance. Short term incentive payments 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; and
• a long-term incentive plan (LTI) in the form of:
-a grant of initial performance rights (in the form of
shares in the Company) equivalent to one year’s
base salary ($995,000) that will vest on 6 April 2024
(being the fourth

anniversary of Naomi James’
commencement as CEO) subject to the achievement
of a minimum “on target” performance against annual
controllable KPI’s during the vesting period; and
-performance rights equivalent to 25% of base salary
on the first anniversary of the commencement
date, 25% on the 2nd anniversary and 50% on each
successive anniversary, with each tranche having a
three year vesting period with a further year to vest.
The Chief Executive Officer’s entitlement is capped at
$6 million; and
• other benefits including Kiwisaver and a relocation
allowance.
The total remuneration paid to Naomi James from 6 April
2020 to 31 December 2020 was $1,026,000 and comprised
the following components:
• fixed remuneration – base salary of $772,633
(annualised $995,000 per annum);
• initial retention performance rights on commencement
equivalent to 100% of base salary (noted above);
(2020 cost recognised, $206,000) and
• other benefits of $46,500.
Given the Company’s financial performance, Naomi
James’ short-term incentive in respect of the 2020
performance year was not paid in cash. However the
Board has approved the issue of performance rights in
2021 with a two year retention in recognition of the Chief
Executive Officer’s outstanding contribution in the 2020
year as the Company navigates its strategic future and to
further incentivise the CEO through the implementation
of the Strategic Review outcomes in coming years. These
performance rights (equivalent to $540,000) are due to be
granted in March 2021 and accounted for the in the 2021
financial year.
The Chief Executive Officer’s KPIs, with respect to the
short-term incentive, agreed for the 2020 financial year
relate to:
KPI CATEGORY
Delivery against the Company scorecard (HSE, deliver
to customer plan and cash neutral at the Fee Floor)50
Completion of the Strategic Review and creation of a
pathway to future shareholder value50
Five-year summary – Chief Executive Remuneration
FINANCIAL
YEARCEO
BASE
SALARY
$000
OTHER
$000
SUBTOTAL
$000
PAY FOR
PERFORMANCE
$000
(KPI BASED)
INITIAL
PERFORMANCE
RIGHTS
(STI)
$000
(DISCRETIONARY)
STI
AGAINST
MAXIMUM %
TOTAL
REMUNERATION
$000
FY2020Naomi James77347820-206--1,026
FY2020Paul Zealand187-187----187
FY2020Mike Fuge1304134----134
FY2019Mike Fuge90032932----932
FY2018Mike Fuge31661377165--81542
FY2018Sjoerd Post 70537742300-300981,342
FY2017Sjoerd Post982451,027405-15094 1,582
FY2016Sjoerd Post95841999540--931,539
For the purposes of historical comparison, set out below is a five-year summary of remuneration (including the components
of the total remuneration) paid to the Chief Executive Officer during each of the past five years.

32

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33
Impact of COVID-19
COVID-19 provided a unique set of circumstances that
required the Company to quickly respond to. The significant
fuel demand reduction resulting from travel and transport
restrictions and the consequential reduction in revenue
through weak global refining margins required the Company
to make significant operational changes by reducing refinery
production and non-essential activity on site. This included
operating the refinery’s processing facilities on a rotating
basis to enable the refinery to produce at substantially
lower rates, as well as a full six-week shutdown of the plant
in the middle of the year to help balance fuel supply across
New Zealand.
A significant number of our staff supported the business
by taking annual leave during the six-week shutdown
- a testament to the commitment of our people as the
Company navigated the challenges of COVID-19. The
$5.1 million received from the Government as a COVID-19
wage subsidy ensured that the Group could maintain the
employment of all of our people through to the end of the
third quarter, when we started to see a recovery in land
transport fuel demand reflecting the lifting of COVID-19
travel restrictions following the imposition of Auckland’s
COVID-19 Level 3 lockdown.
No market increases awarded
The Corporate Lead Team and employees with Individual
Employment Agreements (IEAs) are remunerated
with a mix of base salary and benefits, and short-term
performance incentives. The determination of fixed
remuneration is based on responsibilities, individual
performance and experience, and market data. As a result
of the financial performance of the business, no market
increases were awarded to staff during 2020.
Short term incentives cancelled
Given the Company’s financial performance, the short-term
incentive plan for employees and Corporate Lead Team
members on IEAs was cancelled in 2020 and replaced
with a nominal, target payment of $500 per employee,
based on achievement of scorecard outcomes (rather than
the “normal” percentage of salary award). While making
this change in recognition of the Company’s financial
performance, the Board considered that it was important to
maintain a focus on the achievement of the 2020 business
imperatives, which included:
• Maintaining safe operations;
• Delivering on our customer commitments; and
• Operating cash neutral at the Fee Floor.
The 2020 business imperatives were fully met, and the
$500 award was paid in February 2021, with employees
able to choose whether to receive the reward personally or
to donate the money to an identified charity.
Staff retention through Strategic Review
Following the Strategic Review undertaken in 2020, the
Company announced that it would implement a Simplified
Refinery, effective from January 2021, while continuing to
evaluate a possible future staged transition to an import
terminal. As a result of the implementation of the Simplified
Refinery, a number of employees left the business in late
2020, with employee numbers reducing from 412 at
1 January 2020 to 344 at 31 December 2020. An additional
45 people will leave the business in early 2021.
Management Performance Rights
To recognise and reward performance in 2020 and retain
and incentivise key members of Management through the
implementation of Strategic Review outcomes in coming
years, the Board has approved a one-off management
performance rights award (in the form of shares in the
Company), under which selected individuals in key
management roles will be offered performance rights.
The level of award has had regard to Management not
receiving any short-term incentive for 2020 and individual
performance in 2020 against individual KPIs. Performance
rights are subject to a two-year vesting condition and will
vest on 1 January 2023 subject to continued employment
(or redundancy).
In awarding the management performance rights, the
Board considered it important to continue to incentivise
and reward Senior Management for protecting shareholder
value through the challenges of 2020 – safely resetting
the cost base to operate cash neutral at the Fee Floor
and strengthening the balance sheet, while establishing
a pathway to long-term shareholder value through the
delivery of Strategic Review outcomes. The two-year
vesting condition is intended to retain and incentivise key
members of management, while ensuring that there is
alignment with the objective of long-term value creation
for shareholders.
Employee Share Purchase Scheme
The Company previously established the Employee Share
Purchase Scheme which is tax exempt in accordance with
section CW26C of the Income Tax Act 2007 (as amended).
The purpose of the Employee Share Purchase Scheme is to
recognise the important contribution of all employees to the
Company’s future and to assist the Company in retaining
and motivating employees.
A trust has been created under the Employee Share
Purchase Scheme for the purpose of holding Company
shares on behalf of each participating employee over a
three-year period.
The Company estimates that the annual operating costs
of the Employee Share Purchase Scheme is approximately
$15,000. The value of the award under the Employee Share
Purchase Scheme amounts to approximately $300,000 per
annum depending on the business performance.
Employee Remuneration
The following table shows the number of employees and
former employees (including members of the Corporate
Lead Team), not being Directors, who, in their capacity
as employees, received remuneration and other benefits
during 2020 of at least $100,000.
The remuneration figures include all monetary payments
actually made during the year and contributions made by
the Company as part of the share scheme. No employees
appointed as a director of 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; the
variable performance rewards (linked to individual and
business performance for a financial reporting period) in
respect of the 2018 financial year, were paid subsequent
to balance date and reported as part of the remuneration
banding for the 2019 year.
The 2020 remuneration does not include amounts paid
past 31 December 2019 that relate to performance during
the 2019 financial year as there was no short-term
incentive payment made to staff in relation to 2019
performance. Other than the nominal $500 payment to
each employee, there was also no short-term incentive
payment made to staff post 31 December 2020 in relation
to 2020 performance.
The ratio between employee remuneration (median)
and Chief Executive’s total annualised, on-target
remuneration for the 2020 financial year (on a cash basis)
was 1:7 (2019: 1:7).
NUMBER OF EMPLOYEES
AMOUNT OF REMUNERATION
$00020202019
100-109 27 17
110-119 11 18
120-129 27 18
130-139 20 31
140-149 35 27
150-159 39 33
160-169 37 28
170-179 34 33
180-189 36 24
190-199 14 29
200-209 8 16
210-219 3 6
220-229 4 4
230-239 3 4
240-249 1 4
250-259 1 2
260-269 - 3
270-279 1 1
280-289 - 2
310-319 1 -
330-339 1 -
350-359 1 2
360-369 1 -
380-389 1 -
390-399 1 -
430-439 1 -
470-479 - 1
490-499 - 1
500-509 1 -
760-769 - 1
810-820 1 -
1,090-1,099 - 1

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35
LUCY NATION
DIRECTOR
Equity interest: Nil
CHRIS BOUGEN
GENERAL COUNSEL / COMPANY
SECRETARY
JAMES MILLER
INDEPENDENT DIRECTOR
Equity interest: 23,000 shares (2019: 23,000)
LINDIS JONES
DIRECTOR
Equity interest: Nil
MARK PEARCE
PROJECT DIRECTOR STRATEGIC
REVIEW
RICCARDO CAVALLO
DIRECTOR
Equity interest: Nil
PAUL ZEALAND
INDEPENDENT DIRECTOR
Equity interest: Nil
CAZ JACKSON
CHIEF PEOPLE OFFICER
SIMON ALLEN
INDEPENDENT CHAIRMAN
Equity interest: 35,000 shares (2019: 35,000)
VANESSA STODDART
INDEPENDENT DIRECTOR
Equity interest: Nil
DENISE JENSEN
CHIEF FINANCIAL OFFICER
JACK STEWART
CHIEF OPERATING OFFICER
KEVIN STILL
GENERAL MANAGER CUSTOMER
& COMMERCIAL
NAOMI JAMES
CHIEF EXECUTIVE OFFICER
BOARD OF DIRECTORSCORPORATE LEAD TEAM

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3736

Refining NZ Annual Report 2020
BONDHOLDER
AND SHAREHOLDER
INFORMATION
Twenty largest shareholders
As at 31 January 2021
TOTAL SHARES
HELD% OF TOTAL
SHAREHOLDERS
1Mobil Oil New Zealand Limited 53,760,000 17.18%
2Z Energy Limited 47,999,980 15.34%
3BP New Zealand Holdings Limited 31,572,640 10.09%
4Accident Compensation Corporation * 29,955,682 9.57%
5Citibank Nominees (New Zealand) Limited * 13,274,879 4.24%
6HSBC Nominees (New Zealand) Limited * 10,402,171 3.32%
7Leveraged Equities Finance Limited 6,028,186 1.93%
8New Zealand Depository Nominee Limited 5,223,922 1.67%
9BNP Paribas Nominees (NZ) Limited (NZCSD<COGN40>) * 4,980,759 1.59%
10UBS New Zealand Limited 4,601,641 1.47%
11BNP Paribas Nominees (NZ) Limited (NZCSD<BPSS40>) * 3,993,683 1.28%
12JP Morgan Chase Bank NZ NZ Branch - Segregated Clients Acct * 3,497,624 1.12%
13FNZ Custodians Limited 3,349,799 1.07%
14Public Trust Class 10 Nominees Limited * 3,118,624 1.00%
15HSBC Nominees (New Zealand) Limited A/C State Street * 2,464,801 0.79%
16Custodial Services Limited (<A/C 4>) 2,302,649 0.74%
17ASB Nominees Limited 1,812,360 0.58%
18Custodial Services Limited (<A/C 3>) 1,498,321 0.48%
19Century Securities Limited 1,360,000 0.43%
20Public Trust * 1,360,000 0.43%
232,557,721 74.32%
*The Shareholder spread table on page 39 groups shares held by NZCSD (denoted by * in the table above) as a single legal holding.

Substantial product holders
As at 31 December 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 thay they are substantial product holders in the Company.
NO. OF ORDINARY
SHARES
PRODUCT HOLDERS
Mobil Oil NZ Limited 53,760,000
Z Energy Limited 47,999,980
BP New Zealand Holdings Limited 31,572,640
Accident Compensation Corporation29,919,682

The total number of quoted voting products of the Company on issue at 31 December 2020 and 31 January 2021
was 312,893,643 fully paid shares.

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39
Twenty largest bondholders
As at 31 January 2021
TOTAL
BONDS HELD% OF TOTAL
BONDHOLDERS
1Tea Custodians Limited Client Property Trust Account (NZCSD<TEAC40>)* 16,694,000 22.26%
2FNZ Custodians Limited 14,147,000 18.86%
3Forsyth Barr Custodians Limited (<1-CUSTODY>) 9,699,000 12.93%
4JBWere (NZ) Nominees Limited 2,398,000 3.20%
5JPMorgan Chase Bank NA NZ Branch - Segregated Clients Acct (NZCSD<CHAM24>)* 2,000,000 2.67%
6Citibank Nominees (New Zealand) Limited (NZCSD<CNOM90>)* 1,750,000 2.33%
7Hobson Wealth Custodians Limited 1,641,000 2.19%
8Nicholas Peter Gordon & Richard Anthony Johnston 1,400,000 1.87%
9Forsyth Barr Custodians Limited (<ACCOUNT 1E>) 1,065,000 1.42%
10Jill Gordon 1,000,000 1.33%
11Nicholas Peter Gordon & Andrea Lee Bull 1,000,000 1.33%
12RGTKMT Investments Limited 1,000,000 1.33%
13FNZ Custodians Limited (<DTA Non Resident A/C>) 883,000 1.18%
14Forsyth Barr Custodians Limited (<A/C 1 NRLAIL>) 876,000 1.17%
15Sierra Investments Limited 690,000 0.92%
16Craig John Thompson 500,000 0.67%
17Woolf Fisher Trust Incorporated 500,000 0.67%
18Falstaff Investments Limited 400,000 0.53%
19Investment Custodial Services Limited 367,000 0.49%
20Custodial services Limited 275,000 0.37%
58,285,000 77.72%
*The bondholder spread table on page 39 groups bonds held by NZCSD (denoted by * in the table above) as a single legal holding.
Shareholder and bondholder spread
As at 31 January 2021
SHAREHOLDERSBONDHOLDERS
NO. OF
SHARES/BONDS
NO. OF
SHAREHOLDERS% HOLDER
NO. OF
SHARES
% OF
SHARES
NO. OF
BONDHOLDERS% HOLDER
NO. OF
BONDS
% OF
BONDS
1 - 4992705.6567,6010.02----
500 - 9993056.38210,0760.07----
1,000 - 1,99963813.35849,7220.27----
2,000 - 4,9991,20125.123,804,9121.22----
5,000 - 9,99979316.595,336,6961.70417.99230,0000.31
10,000 - 49,9991,26426.4423,816,6777.6134266.687,028,0009.37
50,000 - 99,9991723.6011,105,0053.557414.424,022,0005.36
100,000 - 499,9991092.2820,260,9326.47417.996,355,0008.47
500,000 - 999,999110.236,682,8712.1450.973,449,0004.60
1,000,000 - upwards170.36240,759,15176.95101.9553,916,00071.89
Total4,780100.00312,893,643100.00513100.0075,000,000100.00
Geographical spread
As at 31 January 2021
SHAREHOLDERSBONDHOLDERS
LOCATION
NO. OF
SHAREHOLDERS% HOLDER
NO. OF
SHARES
% OF
SHARES
NO. OF
BONDHOLDERS% HOLDER
NO. OF
BONDS
% OF
BONDS
Auckland (Greater)1,68035.15203,550,05165.0515830.8033,889,00045.18
Wellington (Greater)56011.7271,434,29222.8310921.2521,182,00028.24
Whangarei/
Northland51010.675,971,2191.91122.34615,0000.82
Other North Island95119.8917,354,3335.5512223.783,334,0004.45
South Island95019.8713,223,8834.2310720.8615,861,00021.15
Australia691.44559,4130.18----
Other Overseas601.26800,4520.2550.97119,0000.16
Total4,780100.00312,893,643100.0051310075,000,000100.00

40

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41
Directors’ and Officers’ Insurance
The Company has granted indemnities to its Directors,
Corporate Lead Team members, and persons who 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, Corporate Lead
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 Group made donations of $50,000 during the year
ended 31 December 2020 (2019: $175,644). No political
donations were made.
Credit rating
The Company does not have a credit rating.
STATUTORY
DISCLOSURES
Refining NZ Subsidiary Directors
REFINING NZ SUBSIDIARYNAME OF DIRECTOR
Independent Petroleum Laboratory Limited Denise Jensen, Kevin Still
Maranga Ra Limited Naomi James, Denise Jensen
Maranga Ra Holdings Limited Naomi James, Denise Jensen

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4342

Refining NZ Consolidated Financial Statements 2020
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS PAGE
Consolidated Income Statement 44
Consolidated Statement of Comprehensive Income 45
Consolidated Balance Sheet 46
Consolidated Statement of Changes in Equity 48
Consolidated Statement of Cash Flows 50
Notes to the Consolidated Financial Statements 51
INDEPENDENT AUDITOR’S REPORT 96

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45
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
THE ABOVE CONSOLIDATED INCOME STATEMENT IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 51 TO 95.THE ABOVE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 51 TO 95.
NOTE
GROUP
2020
$000
GROUP
2019
$000
INCOME
Revenue
4233,937 344,861
Other income
411,810 3,514
TOTAL INCOME
3, 4245,747 348,375
EXPENSES
Purchase of process materials and utilities82,119 98,082
Materials and contractor payments19,992 31,340
Wages, salaries and benefits
2061,532 61,247
Administration and other costs31,681 39,471
TOTAL EXPENSES195,324 230,140
EARNINGS BEFORE DEPRECIATION, IMPAIRMENT, FINANCE COSTS AND INCOME TAX50,423 118,235
Depreciation and disposal costs
1187,218 99,931
Impairment of assets223,697 -
TOTAL DEPRECIATION, DISPOSALS AND IMPAIRMENT310,915 99,931
NET (LOSS)/PROFIT BEFORE FINANCE COSTS AND INCOME TAX(260,492)18,304
FINANCE COSTS
Finance income(176)(44)
Finance cost11,096 13,489
NET FINANCE COSTS10,920 13,445
NET (LOSS)/PROFIT BEFORE INCOME TAX(271,412)4,859
Income tax
6(73,133)694
NET (LOSS)/PROFIT AFTER INCOME TAX(198,279)4,165
ATTRIBUTABLE TO:
Owners of the Parent(198,279)4,165
EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO THE SHAREHOLDERS OF THE
NEW ZEALAND REFINING COMPANY LIMITEDCENTS
Basic earnings per share
7(63.5)1.3
Diluted earnings per share
7(63.3)1.3
NOTE
GROUP
2020
$000
GROUP
2019
$000
NET (LOSS)/PROFIT AFTER INCOME TAX(198,279)4,165
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to the Income Statement
Defined benefit plan actuarial (loss)/gain
20(4,130)7,681
Deferred tax on defined benefit actuarial loss/(gain)
6(b)1,156 (2,151)
Total items that will not be reclassified to the Income Statement(2,974)5,530
Items that may be subsequently reclassified to the Income Statement
Movement in cash flow hedge reserve
2211,092 (3,094)
Deferred tax on movement in cash flow hedge reserve
6(b)(3,106)866
Total items that may be subsequently reclassified to the Income Statement
227,986 (2,228)
TOTAL OTHER COMPREHENSIVE INCOME, AFTER INCOME TAX5,012 3,302
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, AFTER INCOME TAX(193,267)7,467
ATTRIBUTABLE TO:
Owners of the Parent(193,267)7,467
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020

46

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47
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2020
THE ABOVE CONSOLIDATED BALANCE SHEET IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 51 TO 95.
NOTE
GROUP
2020
$000
GROUP
2019
$000
EQUITY
Contributed equity
8266,057 265,771
Treasury Stock
8, 23(896)(960)
Employee share entitlement reserve
8, 23779 681
Cash flow hedge reserve
8, 225,298 (2,688)
Retained earnings292,692 493,940
TOTAL EQUITY563,930 756,744
The Board of Directors of the New Zealand Refining Company Limited authorised these Consolidated Financial Statements for issue on
16 February 2021.
For and on behalf of the Board:




S C Allen J B Miller
Director Director
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2020
NOTE
GROUP
2020
$000
GROUP
2019
$000
ASSETS
Cash and cash equivalents
1743,289 5,255
Trade and other receivables
16160,894 145,063
Income tax receivable677 5,895
Derivative financial instruments
228,766 4,421
Inventories
184,431 3,340
TOTAL CURRENT ASSETS218,057 163,974
NON-CURRENT ASSETS
Inventories
1814,176 19,410
Derivative financial instruments
22371 205
Property, plant and equipment
11, 12887,134 1,171,301
Right-of-use assets
10, 123,335 4,028
Intangibles
119,968 22,137
Deferred tax assets
634,857 24,611
TOTAL NON-CURRENT ASSETS949,841 1,241,692
TOTAL ASSETS1,167,898 1,405,666
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
19162,752 171,018
Derivative financial instruments
22725 3,997
Lease liabilities
10, 17202 248
Employee benefits
2011,269 7,861
TOTAL CURRENT LIABILITIES174,948 183,124
NON-CURRENT LIABILITIES
Derivative financial instruments
22974 5,017
Borrowings
9, 17274,611 246,616
Lease liabilities
10, 173,940 3,206
Employee benefits
2044,819 40,894
Provisions
157,802 12,643
Deferred tax liabilities
696,874 157,422
TOTAL NON-CURRENT LIABILITIES429,020 465,798
TOTAL LIABILITIES603,968 648,922
NET ASSETS563,930756,744

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49
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
CONTRIBUTED
EQUITY
TREASURY
STOCK
GROUPNOTE$000$000
AT 1 JANUARY 2019265,771 (969)
COMPREHENSIVE INCOME
Net profit after income tax- -
Other comprehensive income
Movement in cash flow hedge reserve
22- -
Defined benefit actuarial gain
20- -
Deferred tax on other comprehensive income
22- -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), AFTER INCOME TAX- -
TRANSACTIONS WITH OWNERS OF THE PARENT
Equity-settled share-based payments
23- -
Shares vested to employees
23- 292
Treasury shares purchased- (283)
Dividends paid- -
TOTAL TRANSACTIONS WITH OWNERS OF THE PARENT- 9
AT 31 DECEMBER 2019265,771 (960)
AT 1 JANUARY 2020265,771 (960)
COMPREHENSIVE INCOME
Net loss after income tax- -
Other comprehensive income
Movement in cash flow hedge reserve
22- -
Defined benefit actuarial loss
20- -
Deferred tax on other comprehensive income
22- -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), AFTER INCOME TAX- -
TRANSACTIONS WITH OWNERS OF THE PARENT
Equity-settled share-based payments
23- -
Shares vested to employees
23-350
Treasury shares issued
23286 (286)
Unclaimed dividends written back- -
TOTAL TRANSACTIONS WITH OWNERS OF THE PARENT286 64
AT 31 DECEMBER 2020266,057 (896)
EMPLOYEE SHARE
SCHEME ENTITLEMENT
RESERVE
CASH FLOW
HEDGE
RESERVE
RETAINED
EARNINGS
TOTAL
EQUITY
$000$000$000$000
732(460)504,562 769,636
- - 4,165 4,165
- (3,094)- (3,094)
- - 7,681 7,681
- 866 (2,151)(1,285)
- (2,228)5,530 3,302
241 - - 241
(292)- -
- - - (283)
- - (20,317)(20,317)
(51)- (20,317)(20,359)
681 (2,688)493,940 756,744
681 (2,688)493,940 756,744
- - (198,279)(198,279)
- 11,092 - 11,092
- - (4,130)(4,130)
- (3,106)1,156 (1,950)
- 7,986 (2,974)5,012
448 - - 448
(350)---
- - --
- - 5 5
98 - 5 453
7795,298 292,692 563,930
THE ABOVE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IS TO BE READ IN CONJUNCTION WITH THE NOTES ON PAGES 51 TO 95.

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51
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTE
GROUP
2020
$000
GROUP
2019
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers224,044 351,625
Payment for supplies and other expenses(128,379)(151,172)
Payments to employees(57,518)(62,780)
Interest received176 44
Interest paid(11,267)(14,418)
Net GST paid(1,041)(1,936)
Income tax paid5,609 (4,238)
NET CASH INFLOW FROM OPERATING ACTIVITIES
1731,624 117,125
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment(33,939)(77,695)
Proceeds from sale of intangibles13,320 -
NET CASH OUTFLOW FROM INVESTING ACTIVITIES(20,619)(77,695)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from/(repayments of) bank borrowings27,900 (13,200)
Dividends paid to shareholders
8- (20,317)
Lease payments
10(871)(1,154)
Purchase of treasury stock
23- (283)
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES27,029 (34,954)
NET INCREASE IN CASH AND CASH EQUIVALENTS38,034 4,476
Cash and cash equivalents at the beginning of the year5,255 779
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR43,289 5,255
THE ABOVE CONSOLIDATED STATEMENT OF CASH FLOWS IS TO BE READ IN CONJUNCTION WITH THE NOTES PAGES 51 TO 95.
REPORTING ENTITY
The New Zealand Refining Company Limited (‘Parent’, ‘Company’ or ‘Refining NZ’) is a profit-oriented company registered under the Companies
Act 1993 and an FMC Reporting Entity for the purposes of the Financial Markets Conduct Act 2013. Refining NZ is listed, and its ordinary shares
are quoted on the NZX Main Board Equity Market (‘NZX Main Board’) and its subordinated notes quoted on the NZX Debt Market.
The consolidated financial statements (hereinafter ‘financial statements’) for the year ended 31 December 2020 presented are those of
Refining NZ together with its subsidiaries (‘the Group’). Subsidiaries are all entities over which the Group has control and includes Independent
Petroleum Laboratory Limited, Maranga Ra Holdings Limited and Maranga Ra Limited.
BASIS OF PREPARATION
These consolidated financial statements for the year ended 31 December 2020 comply with:
• The Financial Markets Conduct Act 2013;
• Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’);
• New Zealand equivalents to the 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 and 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.
Use of judgements and estimate
The preparation of financial statements requires directors to make certain judgements, estimates and assumptions that affect the application
of accounting policies and reported amounts of assets, liabilities, income and expenses. The areas involve estimates and assumptions that can
significantly affect the amounts recognised in the consolidated financial statements:
• Impairment assessment of assets – refer to Note 12 for further details.
• Useful lives of the property, plant and equipment – refer to Note 11 for further details.
• Going concern – these financial statements have been prepared on a going concern basis. Management and the Board consider that this
is appropriate based on the Group’s current cash position and available credit facilities, and that the Board expects that Refining NZ will be
able to continue in operation and meet covenants under its facility agreements over the next twelve months.
Refining NZ’s forecast for the next twelve months indicates the Group has the ability to continue to operate as a going concern despite
the challenges arising from the current low margin environment and COVID-19, based on the implementation of a simplified refinery which
enables the Company to run cash neutral from 2021 under a Fee Floor scenario. (Refer to note 1 for detail of potential impacts of Strategic
Review outcomes and note 24, Contingencies, in relation to customer notices of dispute).
• Recoverability of tax losses – in the twelve months ended 31 December 2020, Refining NZ generated a tax loss of $37.6 million,
increasing the Group’s cumulative tax losses to $54.9 million. A deferred tax asset in respect of these unutilised tax losses has
been recognised.
On the basis that at least a 49% continuity of shareholding is maintained, Management and the Board believe that future taxable profits
will be available against which the tax losses can be recovered and therefore the deferred tax asset can be realised. Any adverse change in
future profits, or significant change in the shareholding of Refining NZ, could limit the Company’s ability to realise the deferred tax asset.
Estimates are designated by an
E
symbol in the notes to these consolidated interim financial statements.

52

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53
2. COVID-19 Pandemic
On 11 March 2020 the World Health Organisation declared a global pandemic as a result of the outbreak and spread of COVID-19. The New
Zealand Government subsequently raised its Alert Level to 4 (full lockdown of non-essential services) for an initial four-week period. As an
essential service, the Group continued to operate during the lockdown, and subsequently throughout COVID-19 Alert Levels 3, 2 and 1 (as well
as Auckland’s Level 3 lockdown in August).
During 2020, in response to the significant fuel demand reduction resulting from travel and transport restrictions and the consequential
reduction in revenue through weak global refining margin and lower refinery throughputs, Refining NZ implemented the following measures:
• Reduced refinery production
Refining NZ agreed with its customers to change the way it operated the refinery whereby its processing facilities were operated in different
modes to enable the refinery to produce substantially lower volumes to help balance fuel supply across New Zealand.
• Reduced non-essential activity on-site
All safety critical work continued during COVID-19; however, all non-essential activity on-site was suspended including the deferral of the
planned maintenance turnaround of the main crude distiller and the gasoline manufacturing unit from May 2020 to March 2021.
• Increased and extended debt facilities (refer to note 9)
Refining NZ extended and expanded its existing bank facilities, increasing the weighted average term to over three years at the time and
adding $50 million of additional capacity, which brought the total available debt funding facilities to $400 million (including the Company’s
$75 million subordinated notes on issue) as at 31 December 2020.
The key direct and indirect impacts on the Group can be summarised as follows:
• Total refinery throughput for the year ended 31 December 2020 was 29.8 million barrels, 30% lower than in 2019 and circa 35% lower from
the time the pandemic was declared.
• Our customers were invoiced at the Fee Floor amounting to $140 million during the year ended 31 December 2020. The actual processing
fee earned from operations was below the Fee Floor, resulting in circa $90 million being paid by customers as fee floor payments as outlined
in note 4.
• Pipeline revenues were 19% lower than 2019 at $29 million, reflecting the impact of reduced demand for transport fuels, particularly jet fuel
into Auckland International Airport, offset by higher pipeline fees. Pipeline volumes were circa 35% lower from the time that the pandemic
was declared compared to the prior year.
• The Group accessed the Government wage subsidy totalling $5.1 million as outlined in note 4.
• The capital budget for 2020 was reduced from $70 million to a spend of circa $32 million.
• Operating costs excluding natural gas were circa $25 million or 13% lower than 2019 due to lower electricity and other costs largely as a
result of reducing non-essential activity on site and lower production.
• The Company operated on a cash neutral basis following lockdown (Alert Level 4), through to October 2020, when it’s net cash position
improved by circa $17 million, due to savings realised from the six-week temporary shutdown of the refinery in July/August and the proceeds
of asset sales. The net debt position as at 31 December 2020 was $231 million. Refer to notes 9 and 17 for further detail.
• The Company declared Force Majeure under the Negotiated Greenhouse Agreement to relieve the Company of its obligation to meet world’s
best practice energy intensity pathway in 2020 while the refinery was impacted by COVID-19 travel restrictions. This continued through to
the end of the year with land fuels demand recovering and jet remaining at 30-40% of pre-COVID-19 levels (refer to note 11).
• The Company declared Force Majeure under its natural gas supply contract, to relieve the Company of its “take or pay” obligations, given the
lower refinery throughputs. The supplier subsequently exercised their right of termination in response to a constrained gas supply market in
New Zealand. The Company has since secured a supply of natural gas through 2021 to meet the refinery’s minimum requirements.
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements have been consistently applied to all
periods presented, except for the change in presentation of deferred taxes in the statement of financial position to present deferred tax assets
and deferred tax liabilities on a gross basis, to increase the transparency of the deferred tax asset in relation to tax losses accumulated by the
Company, being a significant estimate under Basis of Preparation. Comparatives in the statement of financial position have been updated to
ensure consistency between financial reporting periods.
There were no new and amended accounting standards mandatory for the year ended 31 December 2020 that were considered to have a
material impact to 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.
1. Strategic review
On 15 April 2020, the Refining NZ Board announced a Strategic Review to determine the optimal business model and capital structure for its
assets to maximise “through the cycle” returns to shareholders and deliver secure, competitive fuel supply to New Zealand.
The first phase of the Strategic Review was to assess all the options, including opportunities to improve the competitiveness of refining
operations and options to separate the refining and infrastructure assets or convert to a fuel import business model.
On 25 June 2020, the Company announced that it would take two business model options forward; a Simplified Refinery (to improve the near-
term viability of its current business model), while continuing to evaluate a possible future staged transition to an import terminal (including
exploration of a commercial framework with customers, overseen by the Independent Directors).
Simplified Refinery model
Under the Simplified Refinery model, implemented from January 2021, refining capacity was reduced by circa 18% (being an equivalent of
circa 34 million barrels per annum) with total refined fuels production levels similar to levels at the time of commencement of the Processing
Agreement in 1995 and bitumen production ceased. An organisational restructure was finalised prior to 31 December 2020, at a cost of circa
$5.6 million to reduce the workforce by around 25%, with circa 90 employees leaving the Company either through redundancies, retirements
or resignations during November 2020 through to April 2021. (Refer to note 20.) Under the Simplified Refinery model, lower labour costs and a
reduction in other costs are intended to enable the Company to extend cash neutral operations in 2021 under a scenario where processing fee
income is at the Fee Floor (of circa $141 million) and refinery operations are uninterrupted.
Refining NZ’s customers, bp Oil New Zealand Limited, Mobil Oil New Zealand Limited, and Z Energy Limited have all issued notices of dispute
under the Processing Agreement, in relation to the simplification of Marsden Point oil refinery operations as detailed in note 24.
Import Terminal model
Discussions with Refining NZ’s customers in relation to the potential future staged transition to an import terminal continue. The Independent
Directors, who have been overseeing discussions with customers, continue to see significant unrealised value in the Company’s fuels
distribution infrastructure with the added benefit of significantly lowering the Company’s carbon emissions profile on transition to an import
terminal. Any decision to proceed with a conversion to an import terminal will need to meet a number of requirements, including new
agreements with the Company’s customers that will be voted on by non-customer shareholders.
Impact on Financial Reporting
These financial statements have been prepared based on Group operations under the current Processing Agreements, with a simplified refinery
operating through to 2035 followed by a conversion to an import terminal as outlined under note 12. There is a wide range of potential outcomes
from the Strategic Review, commercial negotiations with customers and customer disputes, which are not solely within the Company’s control.
The potential outcomes may therefore impact, positively or negatively, including in a material way, the financial performance and financial
position of the Group in the future.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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55
3. Segment reporting
(a) Identification and description of reportable segments and reporting measures
Management (the Corporate Lead Team) reviews the Group’s internal reporting in order to assess performance and allocate resources including
the definition of operating segments – oil refining and infrastructure:
• Oil Refining – the Company operates the Marsden Point oil refinery as a toll processor.
• Infrastructure - the Company owns infrastructure to support the distribution of manufactured products to its customers, including the
Refinery to Auckland Pipeline (RAP) which transfers product to the Wiri Oil terminal located in South Auckland. In addition, the segment
includes laboratory testing services undertaken by Independent Petroleum Laboratory Limited.
• Inter-segment – represents transactions between segments carried out on normal commercial terms.
The Corporate Lead Team primarily uses revenue and adjusted earnings before finance costs, tax, depreciation and amortisation (or ‘Adjusted
EBITDA’) of the Parent Company as measures to assess the performance of the operating segments. For Non-GAAP information refer to note 26.
Assets and liabilities information, depreciation, finance income and costs and taxes are managed on a Group basis and are therefore not
presented as part of the segment information.
The presentation of segments in this financial report has changed from the 2019 full year consolidated financial statements to align with the
way that the Corporate Lead Team now monitors the segmental financial performance, as outlined above.
Revenue derived from major customers, and the relevant operating segments, is disclosed in note 5.
(b) Segment results
31 DECEMBER 2020NOTE
OIL REFINING
$000
INFRASTRUCTURE
$000
TOTAL
$000
External customer4200,423 45,324 245,747
Inter-segment- 4,219 4,219
TOTAL INCOME (*)200,423 49,543 249,966
Adjusted EBITDA
2625,112 32,666 57,778
31 DECEMBER 2019
OIL REFINING
$000
INFRASTRUCTURE
$000
TOTAL
$000
External customer4297,836 50,539 348,375
Inter-segment- 5,733 5,733
TOTAL INCOME (*)297,836 56,272 354,108
Adjusted EBITDA
2680,175 41,511 121,686
(*) prior to consolidation eliminations
2. COVID-19 Pandemic (continued)
In addition to the above, other direct and indirect impacts of COVID-19 on the Refining NZ’s balance sheet include:
ITEMCOVID-19 IMPACT ASSESSMENT
Cash and cash equivalents
The Group maintained cash and cash equivalent balances of between $15-45 million throughout
the year.
Trade and other receivables
Trade receivables reflect an increased receivable in respect of the processing fee floor payments due in
2020. Refiners margins were weak in the last two months of 2019 resulting in very low processing fee
income, but no Fee Floor payments were receivable as at 31 December 2019 given that the year-to-
date revenue had exceeded the Fee Floor amount. Refer to note 16 for further details.
Income tax
The Company generated tax losses of $37.6 million in the twelve months ended 31 December 2020.
Refer to note 6. Total tax losses available to the Group to offset against future taxable income amount
to $54.9 million (refer to key judgements and estimates under Basis of Preparation).
Derivative financial instruments
COVID-19 has impacted commodity markets. Derivatives are recognised at fair value, hence the impact
on the financial and commodity markets is included in the derivative instruments’ valuation.
Inventories
Obsolescence assessment has been conducted with regards to inventories. Refer to note 18 for
further details.
Property, plant and equipment
Impairment assessment has been conducted with regards to property, plant and equipment.
Refer to notes 1, 11 and 12 for further details.
Right-of-use assets
Impairment assessment has been conducted with regards to right-of-use assets. Refer to notes 10 and
12 for further details.
Intangibles
Included are New Zealand Units (NZUs) held by the Parent company, recognised at historical cost and
tested for impairment with reference to market value of carbon units. No impairment was recognised
on intangible assets.
Trade and other payables
Trade and other payables are lower due to non-essential activity being reduced, with a corresponding
reduction in capital and operating costs. Refer to note 19.
Borrowings
In response to the global uncertainty, Refining NZ extended and expanded its existing bank facilities.
Refer to note 9 for further details.
Lease liabilities
No impact – refer to right-of-use assets.
Employee benefits
A significant proportion of the Company’s staff agreed to take annual leave during the six weeks that
the refinery was in “hot standby” in July-August 2020, reducing the annual leave liability by $1.2
million during the period.
In addition, lower investment returns earned by the Pension Fund following COVID-19 and amended
assumptions underpinning the valuation, particularly a lower yield curve impacting the discount rate,
contributed to the actuarial loss reported in the year ended 31 December 2020.
An organisational restructure was undertaken in 2020 to reduce the workforce by circa 25% in
preparation for a refinery simplification (refer to note 1). A redundancy provision of $4.4 million
was recorded as at 31 December 2020. Refer to note 20 for further details.
Provisions
Present value of provisions updated for the impact of financial and commodity markets on
interest rates.
Deferred tax asset
The Group incurred tax losses in the period which increased the deferred tax asset. Refer to note 6 for
further details.
Deferred tax liability
The Group has recognised an impairment of assets which decreased the deferred tax liability. Refer to
notes 6 and 12 for further details.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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57
5. 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:
FOR THE YEAR ENDED 31 DECEMBER 2020
2020
%
2019
%
bp New Zealand Holdings Limited (BP)10.0910.10
Mobil Oil NZ Limited (Mobil)17.1817.20
Z Energy Limited (Z Energy)15.3415.36
The nature, transactions and balances with the shareholders and other related parties are as follows:
• Processing fees – separate processing agreements with each of the three oil companies have been in place since 1995. Subject to any
rights of termination that may arise at law, the processing agreements are intended to operate as long-term “evergreen” contracts which
continue unless renegotiated or terminated by mutual consent or by a customer on one year’s notice. 91% (2019: 93%) of the Group’s
total revenue is earned under the processing agreements. No customer has given notice of termination as at the date of these financial
statements. For credit terms refer to note 21.
• Distribution Revenue – includes Refinery to Auckland Pipeline fees, terminalling and handling fees associated with products imported by
the oil companies, as well as other income associated with the Wiri Oil infrastructure that is owned by the Parent Company and located on
the land owned by Wiri Oil. The land and plant are 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 – collected from the Oil Companies and paid to the New Zealand Customs Service on the same day each month (refer notes
16 and 19) and is included in the below balances outstanding as at 31 December.
• 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. In addition, a portion of insurance premium in relation to material damage and business interruption is paid to companies
related to shareholders.
(i) Revenue, purchases and other charges from related parties
Revenue*PurchasesOther charges
TRANSACTION VALUES
FOR THE YEAR ENDED
31 DECEMBER
BALANCES
OUTSTANDING AS AT
31 DECEMBER
TRANSACTION VALUES
FOR THE YEAR ENDED
31 DECEMBER
BALANCES
OUTSTANDING AS AT
31 DECEMBER
TRANSACTION VALUES
FOR THE YEAR ENDED
31 DECEMBER
BALANCES
OUTSTANDING AS AT
31 DECEMBER
2020
$000
2019
$000
2020
$000
2019
$000
2020
$000
2019
$000
2020
$000
2019
$000
2020
$000
2019
$000
2020
$000
2019
$000
BP59,160 89,066 40,402 38,06096 735 58 - 372 335 - -
Mobil57,781 80,894 4,825 32,955 148 311 139 - 571 331 - -
Z Energy96,581 151,836 92,795 68,080 141 1,133 95 185 - - - -
Wiri Oil7,004 7,073 42 29 - - - - - - - -
TOTAL220,526 328,869 138,064 139,124385 2,179 292 185 943 666 - -
* Revenue excludes excise duty.
4. Revenue
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.
Revenue from other contracts (primarily relating to provision of services) is recognised over time as goods or services are delivered to customers.
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.
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.
FOR THE YEAR ENDED 31 DECEMBER 2020
GROUP
2020
$000
GROUP
2019
$000
Comprises:
Processing fees141,601 241,970
Natural Gas recovery30,156 39,579
Other refining related income18,139 16,287
REFINING REVENUE189,896 297,836
Pipeline fees29,283 36,400
Other distribution income11,7506,598
DISTRIBUTION REVENUE41,033 42,998
Other operating revenue3,008 4,027
TOTAL REVENUE233,937 344,861
Other income11,810 3,514
TOTAL INCOME245,747 348,375
The processing fee revenue is subject to a fee floor, which comes into effect if the total processing fee for a calendar year is below a minimum
value. Processing fee revenue prior to any fee floor was circa $50 million in 2020, with an additional circa $90 million in income earned from
Refining NZ customers under the Fee Floor and an additional $1.6 million of processing fee revenue recognised in 2020 relates to prior periods.
In 2019 no fee floor payments were made as processing fee revenue exceeded the fee floor.
Included in other income is $5.1 million of COVID-19 wages subsidy paid by the New Zealand Government (2019: nil), refer to note 2, and a gain
on sale of assets of $5.9 million (2019: nil).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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59
(b) Deferred tax
The Group has unused tax losses of $54.9 million (2019: $17.3 million) available to carry forward. A deferred tax asset in respect of these
unutilised tax losses has been recognised. (Refer to Basis of Preparation: Use of judgements and estimates).
The Group has changed its presentation of deferred taxes in the statement of financial position to present deferred tax assets and deferred tax
liabilities on a gross basis to increase the transparency of the deferred tax asset in relation to tax losses accumulated by the Company, being
a significant estimate under Basis of Preparation of these Financial Statements. Comparatives in the statement of financial position have been
updated to ensure consistency between financial reporting periods.
NET DEFERRED
TAX ASSET /
(LIABILITY)
RECOGNISED IN
PROFIT OR LOSS
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
NET DEFERRED
TAX ASSET /
(LIABILITY)
"DEFERRED
TAX ASSET"
"DEFERRED
TAX LIABILITY"
1 JAN 201931 DEC 2019
$000$000$000$000$000$000
Property, plant and equipment(155,727)(1,182)-(156,909)-(156,909)
Provisions3,107 198 -3,305 3,305 -
Employee benefits14,852 311 (2,151)13,012 13,012 -
Financial instruments178 - 866 1,044 1,044 -
Intangibles390 103 -493 493 -
Right of use assets- (513)-(513)-(513)
Leases- 565 -565 565 -
Inventory1,301 43 -1,344 1,344 -
Tax losses4,610 238 -4,848 4,848 -
Total(131,289)(237)(1,285)(132,811)24,611 (157,422)
NET DEFERRED
TAX ASSET /
(LIABILITY)
RECOGNISED IN
PROFIT OR LOSS
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
NET DEFERRED
TAX ASSET /
(LIABILITY)
"DEFERRED
TAX ASSET"
"DEFERRED
TAX LIABILITY"
1 JAN 202031 DEC 2020
$000$000$000$000$000$000
Property, plant and equipment(156,909)62,275 -(94,634)-(94,634)
Provisions3,305 (1,297)-2,008 2,008 -
Employee benefits13,012 781 1,156 14,949 14,949 -
Financial instruments1,044 - (3,106)(2,062)-(2,062)
Intangibles493 (719)-(226)-(226)
Right of use assets(513)(195)-(708)-(708)
Leases565 227 -792 792 -
Inventory1,344 947 -2,291 2,291 -
Tax losses4,848 10,725 -15,573 15,573-
Total(132,811)72,744 (1,950)(62,017)35,613(97,630)
5. Related parties (continued)
(b) Directors’ fees and key management personnel compensation
Directors’ fees and key management (Corporate Lead Team) personnel remuneration (paid during the financial year) were as follows:
GROUP
2020
$000
GROUP
2019
$000
Salaries and other short-term employee benefits3,915 3,929
Post-employment benefits115 139
TOTAL KEY MANAGEMENT PERSONNEL COMPENSATION4,030 4,068
Directors' fees779 795
TOTAL KEY MANAGEMENT PERSONNEL COMPENSATION & DIRECTORS' FEES4,809 4,863
Salaries and other short-term employee benefits include fees paid to Mr P Zealand totalling $187,000 (2019: nil), who acted as Managing
Director during the period February to April 2020 to assist in the CEO transition. For key management personnel share scheme, refer to note 23.
6. Taxation
(a) Income tax expense
NOTE
GROUP
2020
$000
GROUP
2019
$000
Net (loss)/profit before income tax expense(271,412)4,859
Tax at the New Zealand corporate income tax rate of 28% (2019: 28%)(75,995)1,361
Tax effect of amounts which are either non-deductible or taxable in calculating taxable income:
Income not assessable for tax(1,286)(203)
Expenses not deductible for tax3,783 61
Adjustments in respect of current income tax in respect of previous years365 (525)
INCOME TAX EXPENSE(73,133)694
Represented by:
Current tax expense(389) 457
Deferred tax recognised in the income statement
6(b)(72,744)237
INCOME TAX EXPENSE(73,133)694
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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9. Borrowings
The carrying amounts of borrowings approximate their fair value. The borrowings are unsecured. The Parent can determine which revolving cash
advance facility will be drawn upon to meet funding requirements. The Parent borrows under a negative pledge arrangement which requires
certain certificates and covenants, including debt to total debt and equity, guarantor coverage ratio and EBITDA to interest ratios. All these
requirements have been met.
In 2020, the Company increased and extended its existing committed bank facility limits from $275 million to $325 million and increased the
weighted average senior debt tenor from 2.9 years at 31 December 2019 to 3.1 years at the time of the extension. The weighted average senior
debt tenor as at 31 December 2020 was 2.6 years.
The maturity profile of the Company’s borrowing facilities as at 31 December 2020, including the utilisation of those facilities and undrawn
amounts is as follows:
The carrying value of the subordinated notes as at 31 December 2020 amounts to $74.6 million. The difference between the carrying value and
the $75 million face value is due to unamortised issue costs and accrued interest. While the expiry of the subordinated notes is on 1 March
2034, the maturity profile reflects the notes as maturing in 2024 to align with the first election date, when the Company may elect to either
redeem the notes or to offer new conditions to the noteholders.
7. Earnings per share
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 24 have no material dilutive effect on the earnings per share.
TOTALTOTAL
NOTE20202019
Profit after tax attributable to shareholders of the Company($000)(198,279)4,165
Weighted average number of shares on issue000's
8312,293 312,177
Weighted average number of shares on issue (incl. dilutive shares)000's
8313,335 312,420
BASIC EARNINGS PER SHARECents(63.5)1.3
DILUTED EARNINGS PER SHARECents(63.3)1.3
8. Equity and dividends
Contributed Equity. The issued capital of the Company is represented by 312,893,643 ordinary shares (2019: 312,576,453) issued and fully
paid, less 519,859 (2019: 417,644) treasury shares held by CRS Nominees Limited (refer to note 23). All ordinary shares rank equally with one
vote attached to each ordinary share.
Treasury stock. Treasury stock represents the value of shares acquired by CRS Nominees Limited on-market or shares issued by the Company,
in respect of the Employee Share Purchase Scheme (refer to note 23).
Employee share entitlement reserve. The employee share entitlement reserve is used to recognise the fair value of shares granted but not
vested to employees (as part of the Employee Share Purchase Scheme) or to the Chief Executive within the Share Rights Scheme. Amounts are
transferred to share capital when the shares vest to the employee (refer to note 23).
Cash flow hedge reserve. The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of
hedging instruments used in cash flow hedges pending subsequent recognition in the income statement (refer to note 22).
Dividends. No dividends were paid or declared in 2020. Imputation credits available to shareholders for subsequent reporting periods amount
to $20.944 million as at 31 December 2020 (2019: $23.589 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
$M
Utilised facilities (cash advance)
Undrawn facilities (cash advance)Subordinated Notes
4-5 YEARS3-4 YEARS2-3 YEARS1-2 YEARS0-1 YEAR
45
35
70
35
15
25
75
70
25
5
0
20
40
60
80
100
120
140
160
180

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GROUP
2020
$000
GROUP
2019
$000
Lease liabilities
Opening lease liability3,454 3,778
Additions284 -
Lease extensions and modifications659 -
Revaluations(55)-
Lease payments (capital portion)(200)(324)
CLOSING LEASE LIABILITY, INCLUDING:4,1423,454
Current202 248
Non-current3,940 3,206
The income statement includes the following amounts in relation to leases:
GROUP
2020
$000
GROUP
2019
$000
Depreciation charge455 440
Impairment1,170 -
Interest expense (included in Finance costs)352 342
Expense relating to short-term leases (included in Administration and other costs )190 220
Expense relating to leases of low-value assets that are not short term leases (included in Administration and
other costs )427 609
The total cash outflow for leases in 2020 was $871,000 (2019: $1,154,000).
10. Lease liabilities
Lease liabilities are associated with the following right-of-use assets:
• land, foreshore license, barge ramp where the oil tanker jetty is located and offices. The right-of-use asset is depreciated over the period
until the expiry of the lease;
• platinum held in catalysts used in the oil refining process. The leased platinum must be returned to the lessor at the end of the lease term.
The estimated cost of reclamation, discounted to present value, is included as a provision in the Group’s balance sheet, refer to note 15.
The lease payments are variable and represent interest paid to the lessor based on an agreed fixed rate and with reference to the market
value of the leased platinum.
There are no restrictions or covenants imposed by leases, or exposure arising from residual value guarantees. Extension and termination options
included in some leases are used to maximise operational flexibility in terms of managing contracts and are exercisable by the Group.
The balance sheet shows the following amounts relating to right-of-use assets and lease liabilities:
GROUP
2020
$000
GROUP
2019
$000
Right-of-use assets
Opening net book value4,028 4,468
Additions273 -
Lease extensions and modifications659 -
Depreciation charge(455)(440)
Impairment(1,170)-
CLOSING NET BOOK AMOUNT3,335 4,028
Cost5,581 4,664
Accumulated depreciation and impairments(2,246)(636)
NET BOOK AMOUNT, INCLUDING:3,335 4,028
Freehold land and improvements545 209
Buildings and jetties178 -
Refining Plant1,395 2,197
Catalysts1,217 1,622
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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65
11. Property, plant and equipment, and intangibles
Property, plant and equipment and intangibles are initially recognised at cost which includes expenditures directly attributable to the acquisition.
Major inspections associated with planned plant shutdowns (or turnarounds) and tank maintenance are capitalised at cost and recognised in the
carrying amount of the refining plant, provided the recognition criteria are met.
During the year the Group has capitalised borrowing costs amounting to $0.7 million (2019: $2.1 million) on qualifying assets. Borrowings costs
were capitalised at the weighted average rate of its general borrowings of 5.4% (2019: 5.9%). Property, plant and equipment are included in the
negative pledge arrangement as detailed in note 9.
Depreciation is provided on a straight-line basis on all property, plant and equipment other than freehold land, capital work in progress and
precious metals (rhenium, platinum) contained in certain catalysts.
E
Following an impairment of assets recognised as at 30 June 2020, the Group reassessed the remaining useful lives of assets from 1 July
2020 to align with the base assumption that the refinery would operate until 2035 and then convert to an import terminal.
As a result of the remaining life assessment carried out by in-house subject matter experts, the weighted average remaining useful life
of the refining assets has been reduced, resulting in an increase in the depreciation in the second half of the year by approximately
$3.6 million. The impact of the revised useful lives on the future years is estimated at circa $7 million.
The standard useful lives used by the Group are as follows:
USEFUL LIVES
(YEARS)
Freehold improvements5-50
Buildings and jetties5-50
Refining plant
–tankage15-50
–rotating equipment15-30
–piping15-50
–vessels and columns15-40
–instruments10-15
–electrical and electrical cabling15-25
–plant shutdown and tank maintenance2-20
–other refining plant10-65
Catalysts3-10
Refinery to Auckland Pipeline
–pipeline78
–plant and equipment10-34
Wiri Oil terminal (leased)20
Equipment and vehicles3-25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Intangibles relate to the New Zealand Units (NZUs) and are recognised at historical cost with an indefinite useful life. Carbon units are issued
by the Crown to the Parent company, pursuant to the Company’s Negotiated Greenhouse Agreement (NGA), which expires 2022. The Company
is currently exempted from the Emissions Trading Scheme (ETS) due to the NGA and the Company’s demonstrated commitment to progress in
reduction of energy intensity along a world’s best practice pathway, noting that in 2020 the Company declared Force Majeure under the NGA in
response to COVID-19 (refer to note 2).
In April 2020, the New Zealand Government approved the making of regulations to bring the Company in to the New Zealand Emissions Trading
Scheme (NZ ETS) as an Emissions Intensive Trade Exposed (EITE) business with an industrial allocation of carbon units after the NGA expires at
the end of 2022.
Under the regulations the industrial allocation will be based on 90% of the Company’s 2006-2009 emissions data, in accordance with the
Climate Change Response Act 2002. The Climate Change Response (Emissions Trading Reform) Amendment Bill provides for a 1% per year
phase out of rates of assistance over 2021 to 2030, meaning that the applicable rate of assistance at the time Refining NZ enters the NZ ETS in
2023 would be 87%.
The Government has signalled that further regulatory reforms, as a result of a review of industrial allocation policy and electricity allocation
factors, may result in very different allocative baselines in the future, including the amount that the Company is ultimately allocated when it
enters the NZ ETS in 2023. Refining NZ continues to engage with Government during this review process, but no outcome is guaranteed at
this stage.

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67
FREEHOLD
LAND AND
IMPROVEMENTS
BUILDINGS AND
JETTIES
REFINING PLANT
GROUPNOTE$000$000$000
AT 1 JANUARY 2019
Cost78,265 200,291 2,887,124
Accumulated depreciation(53,979)(101,858)(2,102,586)
NET BOOK AMOUNT24,286 98,433 784,538
YEAR ENDED 31 DECEMBER 2019
Opening net book value24,286 98,433 784,538
Additions/transfers4,078 652 78,478
Disposals- - -
Depreciation/amortisation charge
11(b)(1,567)(4,744)(72,701)
CLOSING NET BOOK AMOUNT26,79794,341790,315
AT 31 DECEMBER 2019
Cost82,343 200,943 2,903,133
Accumulated depreciation(55,546)(106,602)(2,112,818)
NET BOOK AMOUNT26,797 94,341 790,315
YEAR ENDED 31 DECEMBER 2020
Opening net book value26,797 94,341 790,315
Additions/transfers916 8,867 30,429
Disposals- - 5
Depreciation charge
11(b)(1,743)(5,279)(64,714)
Impairment of assets
12- (75)(201,825)
CLOSING NET BOOK AMOUNT25,970 97,854 554,210
AT 31 DECEMBER 2020
Cost83,259 208,615 2,928,039
Accumulated depreciation and impairment losses(57,289)(110,761)(2,373,829)
NET BOOK AMOUNT25,970 97,854 554,210
CATALYSTSREFINERY TO
AUCKLAND
PIPELINE
WIRI OIL
TERMINAL
(LEASED)
EQUIPMENT AND
VEHICLES
CAPITAL WORK IN
PROGRESS
TOTALINTANGIBLES
$000$000$000$000$000$000$000
80,885 224,497 44,167 129,739 90,984 3,735,952 14,309
(39,600)(116,081)(41,442)(88,458)- (2,544,004)-
41,285 108,416 2,725 41,281 90,984 1,191,948 14,309
41,285 108,416 2,725 41,281 90,984 1,191,948 14,309
4,206 125 - 4,480 (13,175)78,844 7,828
(1)- - (2)(430)(433)-
(10,057)(3,389)(390)(6,210)- (99,058)-
35,433105,1522,33539,54977,3791,171,30122,137
84,856 224,621 44,042 134,204 77,379 3,751,521 22,137
(49,423)(119,469)(41,707)(94,655)- (2,580,220)-
35,433 105,152 2,335 39,549 77,379 1,171,301 22,137
35,433 105,152 2,335 39,549 77,379 1,171,301 22,137
1,963 (18)- 911 (17,957)25,111 4,785
(230)- - - - (225)(7,384)
(6,164)(3,927)(380)(4,343)- (86,550)-
(9,275)---(11,328)(222,503)-
21,727 101,207 1,955 36,117 48,094 887,134 9,968
81,627 224,603 44,042 135,346 59,422 3,764,953 9,968
(59,900)(123,396)(42,087)(99,229)(11,328)(2,877,819)-
21,727 101,207 1,955 36,117 48,094 887,134 9,968
11. Property, plant and equipment, and intangibles (continued)
(a) Summary of fixed assets movements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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69
11. Property, plant and equipment, and intangibles (continued)
(b) Depreciation
NOTE
GROUP
2020
$000
GROUP
2019
$000
Depreciation on Property, Plant and Equipment11(a)86,550 99,058
Depreciation on Right-to-Use Assets
10455440
Loss on disposal of Property, Plant and Equipment213 433
DEPRECIATION CHARGE87,21899,931
12. Impairment assessment
Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. The carrying value of the Group’s assets were tested for impairment as at 30 June 2020, resulting in an impairment of assets
of circa $219 million (or circa $158 million net of deferred tax). In addition, the stock obsolescence provision was increased by $3.4 million
for the year ended 31 December 2020. The Company updated the impairment analysis as at 31 December 2020 and as a result of this latest
assessment, no change to the impairment loss recognised as at 30 June 2020 was identified.
Key judgements underpinning the 31 December 2020 assessment include:
• Strategic Review
As a result of the Strategic Review undertaken in 2020, the Company has transitioned to a simplified refinery from the start of the 2021 year,
aiming to achieve cash breakeven of the Group at the Fee Floor, while the commercial discussions with customers on the possible future
transition to an import terminal continue (refer to note 1).
As set out in note 1, there is inherent uncertainty associated with the potential conversion to an import terminal and its timing and the
potential outcomes from the commercial negotiations with the Company’s customers, which are not solely within the Company’s control, are
currently unknown.
The Processing Agreements are long-term “evergreen” contracts which, subject to any termination right arising at law, continue unless
renegotiated or terminated by mutual consent or by a customer on one year’s notice. As at the date of these financial statements, no
customer has given notice of termination and any decision to proceed with a conversion to an import terminal will require new agreements
with the Company’s customers to be voted on by non-customer shareholders. As such, the Board and Management have conducted the
value in use impairment assessment as at 31 December 2020 based on the Group’s existing business model and the existing Processing
Agreements, with updates to reflect the Company’s response to COVID-19 (see note 2) and taking into account the effects of the refinery’s
simplification from 2021.
Once commercial discussions with customers are finalised and if a decision to proceed with the conversion to an import terminal is approved
by non-customer shareholders, there may or may not be, a material favourable or unfavourable impact on future value in use assessments of
the carrying value of the Group’s assets.
• Resource consents
The Company’s resource consents for activities at its Marsden Point site are considered to be on track to be renewed prior to expiry in
May 2022. It is the opinion of Management and the Board that the risks of not renewing resource consents on a commercially acceptable
basis is low.
• New Zealand Emissions Trading Scheme (NZ ETS) and Climate Change Response (Zero Carbon) Amendment Act 2019
In April 2020 the Government approved the making of regulations to bring the Company in to the NZ ETS as an Emissions Intensive Trade
Exposed (EITE) business with an industrial allocation of carbon units, with effect upon the expiry of the Negotiated Greenhouse Agreement
with the Crown on 31 December 2022.
Under the regulations the Company’s industrial allocation entitlement will be based on 90% of the Company’s 2006-2009 emissions
data submitted in accordance with the Climate Change Response Act 2002. The Climate Change Response (Emissions Trading Reform)
Amendment Act 2020 provides for a 1% per year phase out of rates of assistance over 2021 to 2030, meaning that the applicable rate
of assistance at the time the Company enters the NZ ETS in 2023 would be 87%. This is the basis on which we have completed the 31
December 2020 impairment testing.
However, the Government has signalled that further regulatory reforms (resulting from a review of industrial allocation policy and electricity
factors), may result in very different allocative baselines in the future, including a change in the number of carbon units that the Company is
ultimately allocated when it enters the NZ ETS in 2023.
On 31 January 2021, the Climate Change Commission (hereinafter as “Commission”) released its draft advice for consultation on
New Zealand’s carbon budgets for the next 15 years. The draft budgets propose carbon budget targets of a 2% reduction on 2018
greenhouse gas emissions by 2025, a 17% reduction by 2030 and a 36% reduction by 2035 and a doubling of the containment reserve trigger
in the ETS to $70/tCO
2
. The Commission’s modelling indicates that meeting the 2050 target will involve marginal abatement costs at around
$140/tCO
2
in 2030.
A significant increase in carbon unit prices, or a change in the allocation of units to the Company under the NZ ETS may have a material
financial impact on the future financial performance of the Company.
• COVID-19 global pandemic
COVID-19 has had a significant impact on current demand for transport fuels and therefore demand for refined products, resulting in
significant market uncertainty. How long a recovery will take is uncertain and some independent experts are forecasting that the recovery
from COVID-19 will be slow, impacting the longer-term demand forecasts for transport fuels, particularly jet fuel which currently remains at
30-40% of pre-COVID-19 levels.
• Market outlook – refining margins
An increased supply of refined product and lower than expected demand for transport fuels in the Asia Pacific region has resulted in a
reduced outlook for refining margins generally. (Refer to note 1).
The global drop in oil demand triggered by COVID-19 and the expectation of a slow recovery in oil and refined products demand, particularly
jet fuel, has further exacerbated the oversupply in the global refining market. This has resulted in very weak refining margins during the
financial year, and significant uncertainty regarding refining margins in the future.
• Future New Zealand transport fuel demand
The Climate Change Response (Zero Carbon) Amendment Act 2019 has set a target for New Zealand to reduce its net emissions of all
greenhouse gases (except biogenic methane) to zero by 2050.
This target was reiterated in the draft advice issued by the Climate Change Commission on 31 January 2021, for consultation on
New Zealand’s carbon budgets. To meet targets set for the transport sector, the Commission assumes:
-The phase out of the import of light internal combustion engine vehicles between 2030 and 2035, leading to a 40% electric vehicle
penetration in the light vehicle market by 2035, with a consequential impact on domestic petrol demand.
-That medium and heavy trucks will electrify more slowly, with around 15% of the medium trucks and 8% of heavy trucks imported
into New Zealand being electric by 2030, increasing to 84% and 69%, respectively by 2035, with a consequential impact on
domestic diesel demand.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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71
12. Impairment assessment (continued)
-A scale up of manufacturing low emissions fuels (i.e. biofuels or hydrogen-derived synthetic fuels), is assumed, with 140 million
litres per year of low emissions fuels by 2035 (an equivalent of circa 3% of total domestic liquid fuel demand, or 1.5% of total fuel
demand including international transport, in 2035).
According to the Commission, there will continue to be a need for liquid fuels for some transport uses, such as off-road vehicles and equipment,
aviation, and shipping. The Commission notes that given there is no commercially viable sustainable aviation fuel supply in New Zealand, the
aviation sector will be challenging to decarbonise.
The pace of transition to alternative fuels and the manner by which that transition may occur, remains uncertain. Any significant change in
demand for refined products in New Zealand could therefore impact, favourably or unfavourably, on future assessments of the carrying value of
the Group’s assets.
There is significant volatility and uncertainty in the market as a result of COVID-19 oversupply in the global refining market and proposead
Government policy to address climate change risks and the impacts on future demand for transport fuels, and the outlook for refiner’s margins
cannot be reliably predicted. Management and the Board have used their refining industry experience and independent expert forecasts, where
appropriate, to determine the base assumptions adopted in the impairment testing as at 31 December 2020. These and other assumptions
detailed in this note have the potential to impact the timing and other aspects of a potential conversion to an import terminal.
The approach to the impairment testing, including the key assumptions and sensitivities, reflecting the market uncertainty,
are outlined below:
Cash Generating Unit
The Group identifies two cash generating units being: Refining NZ’s assets and the assets of its subsidiary, Independent Petroleum Laboratory
Limited (‘IPL’).
Recoverable amount
The recoverable amount of the assets was determined on a value in use basis using a discounted cash flow methodology. In determining the
recoverable amount, the Company considered fair value less cost of disposal, noting the inherent limitations in this approach as noted above
under Strategic Review (refer to note 1 for further detail).
Based on the impairment assessment carried out, the recoverable amount of the Company’s assets was determined at circa $770 million which
resulted in an impairment loss of circa $219 million being recognised for the year ended 31 December 2020 (circa $158 million net of deferred
tax) and allocated to the refining segment.
Key assumptions
The key assumptions used in the impairment testing include:
–NZ transport fuel demand
Refining NZ uses demand forecasts formulated by an independent expert, which reflects a faster transition away from fossil fuels, driven
by New Zealand’s commitment to zero net greenhouse gas emissions by 2050, than previously anticipated. According to the latest demand
outlook, petrol and diesel demand will start declining from circa 2025 and 2030, respectively, reaching the Company’s refinery production
levels by circa 2035 and 2040, respectively. This outlook is considered to be largely in line with the Climate Change Commission ‘Draft
Advice for Consultation’ issued on 31 January 2021.
Jet fuel demand forecasts have a wide range due to the uncertainty around COVID-19 recovery and viable alternative sources of energy for
air travel, however independent expert forecasts used by the Company have demand forecast to recover to pre-COVID-19 levels by 2025
and grow until circa 2040. Given the long-term uncertainty with respect to alternative fuels, including biofuel demand which could replace
some of the decline in crude oil derived fuel production, potential contribution of biofuel demand to revenue has not been considered for
impairment assessment purposes at this time.
–Refining and pipeline volume
The base assumption is that the refinery will operate until 2035, followed by a conversion to an import terminal, noting that the outlook for
transport fuels demand remains highly uncertain. The Processing Agreements are long-term “evergreen” contracts which, subject to any
termination right arising at law, continue unless renegotiated or terminated by mutual consent or by a customer on one year’s notice. As at
the date of these financial statements, no customer has given notice of termination and therefore the assumed date for conversion to an
import terminal in 2035, is aligned to the timeframe by which the refinery’s production is forecast to exceed domestic petrol demand.
The refinery and pipeline throughputs were assumed at an average of circa 34 million barrels and circa 18.5 million barrels per annum,
respectively, in the 15-year period to 2035. Near-term volumes have been adjusted for the impacts of COVID-19 driven demand reduction;
longer-term, Refining NZ used demand forecasts developed by independent industry experts.
–Refining margins and pipeline fees
Consistent with previous impairment assessments, the Company has used refining margin forecasts developed based on the latest crude
and product pricing issued by independent expert market commentators used by Refining NZ. Given the current uncertainty in outlook, a
downside to these forecasts has been incorporated into the gross refining margins used for this impairment assessment. Whilst margins are
not expected to recover to above the Fee Floor equivalent until 2023, independent forecasts assume margins averaging to circa USD6.00 per
barrel through the refinery forecast period to 2035.
Pipeline revenue in the 15-year period to 2035 is determined with reference to the current Processing Agreement to 2035, and then
subsequently as a combination of estimated pipeline, terminal and wharfage fees.
–Exchange rate
Forward rates as at the end of the reporting period have been applied, with a range of 0.70 to 0.73 over the forecast period.
–Operating costs and capital spend
Operating costs (excluding pass through costs such as natural gas) and capital spend associated with an operation of the simplified refinery
are assumed at an average of approximately $135 million and $55 million per annum, respectively, in the 15 years to 2035.
–Discount rate
A nominal post-tax weighted average cost of capital has been used as assessed by external advisors at 7.7% in the 15 years to 2035 (period
of the refinery operation) and 6% beyond 2035 (import terminal operation), noting that in the 31 December 2019 impairment assessment a
weighted cost of capital of 7.7% was used.
–Carbon cost
The Company will enter the NZ ETS as an Energy Intense Trade Exposed (EITE) business at the expiry of the Negotiated Greenhouse
Agreement on 31 December 2022. The base assumption is that the Company will receive an industrial allocation of 87% in 2023 with
a 1% per year phase out until 2030 and 2% beyond 2030. Carbon unit prices used average $42/t from 2021-2035 based on independent
expert forecasts.
–Import terminal conversion
An import terminal is assumed to commence its operation from 2036, with an estimated average revenue of circa $90 million per annum in
real terms, reflecting detailed analysis of the value of the infrastructure and forecast fuel demand assumptions. Operating and capital costs
are estimated at an average of circa $35 million per annum in real terms, reflecting managements best estimate of costs given forecast fuel
demand assumptions.
–Forecast period and terminal value
Due to the long-term, cyclical nature of the business, a 30-year forecast period has been adopted with a terminal value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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12. Impairment assessment (continued)
Sensitivities
The following chart outlines a range of possible sensitivities associated with each of the key assumptions, across the full period modelled and
based on a range of potential outcomes for each of these assumptions. It should be noted that changes in a combination of the key assumptions
could also have a significant impact upon the recoverable amount assessed.
*The sensitivity shown for EITE industrial allocations under the ETS and carbon unit prices is intended to show both the impact of a change in
the industrial allocation made to the Company (from 87% on entry to the NZ ETS 2023) as well as the impact of a change in carbon costs. For
illustrative purposes, a sensitivity has been shown based on a 60% allocation in 2023 and a 1% per year phase out of rates of assistance over
2021 to 2030, and a carbon cost of $70/t (being a doubling of the containment reserve trigger in the ETS as proposed by the draft advice from
the Climate Change Commission).
13. Operating leases
Lease income from operating leases, where the Group is a lessor, are recognised as income on a straight-line basis over the period of the lease.
The Group leases land and refining plant to Wiri Oil Services Limited (refer to note 5) under a non-cancellable operating lease which expires in
February 2025 with no right of renewal. The annual Wiri land and terminal lease income and cost are recognised on a straight-line basis over
the period of lease and amounted to $0.5 million and $6.0 million, respectively, in 2020 (2019: $0.5 million and $6.0 million).
GROUP
2020
$000
GROUP
2019
$000
Lease payments receivable from operating leases where the Group is a lessor
–No later than one year6,589 6,609
–One to five years14,692 21,248
–Beyond five years- -
TOTAL21,281 27,857
14. Capital commitments
Commitments are related to asset purchases contracted as at the reporting date but not provided for in the consolidated financial statements.
As at 31 December 2020 the capital commitments amounted to $20.2 million (31 December 2019: $28.1 million).
15. Provisions
Provisions of $7.8 million include the jetty restoration provision of $6.9 million (31 December 2019: $11.8 million) and the platinum reclamation
provision relating to leased platinum (refer to note 10 for further details).
The restoration of the seabed which the jetty is situated on at Marsden Point is dependent on, the term of the lease, inflation rate (2020: 1.5%,
2019: 2%) and discount rate assumptions (2020: 3.58%, 2019: 1.83%).
These changes resulted in a net decrease in the provision of $5.5 million. An increase in the provision as a result of the passage of time
(unwinding of discount) of $0.2 million was recognised as a finance cost.
16. Trade and other receivables
NOTE
GROUP
2020
$000
GROUP
2019
$000
Processing fees11,967 4,096
Product distribution3,0273,773
Other trade receivables3,6964,023
Excise duty
19135,793127,581
Derivatives pending settlement9291,645
Other receivables and prepayments5,482 3,945
TOTAL TRADE AND OTHER RECEIVABLES160,894145,063
Trade receivables in respect of processing fees and distribution are due from customers, non-interest bearing and are normally settled on 7 to
21-day terms.
Excise duty receivable is due from customers and collected by the Parent on behalf of the New Zealand Customs Service and paid on the same
day each month (corresponding offset is presented as a payable in note 19).
Other receivables and prepayments generally arise from transactions outside the usual operating activities of the Group, for example prepaid
insurance premiums.
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and
payment by the customer exceeds one year. Therefore, the Group does not adjust any of the transaction prices for the time value of money.
No allowance for impairment loss has been recognised as at 31 December 2020 (2019: Nil). Credit risk disclosures required pursuant to NZ IFRS
9 are outlined in note 21(b).
The carrying value of trade receivables approximates their fair values.
Trade and other receivables related party balances are disclosed in note 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
WACC +/-1pp
OPEX (excl. nat gas) +/-10%
CAPEX +/-15%
Intake +5%/-10%
FX +/-10 cents
Refining margin +/-20%
Terminal volume +/-10%
Terminal revenue +/-10%
Carbon allocation -27pp reduction (*)
US$4.9
0.81
30.5mbbl
$58m
$158m
8.7%/7%
60%
$81m
2.1bl
5005506006507007508008509009501000 $M
US$7.3US$6.1
0.71
33.9mbbl
$50m
$143m
77%/6%
$90m
2.4bl
0.61
35.6mbbl
$43m
$129m
6.7%/5%
$99m
2.6bl
Allocation 87% and price $70/t
Allocation 60% and price $70/t

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75
17. Cash and cash equivalents
Reconciliation of net cash flow from operating activities to reported (loss)/profit:
NOTE
GROUP
2020
$000
GROUP
2019
$000
NET (LOSS)/PROFIT AFTER INCOME TAX(198,279)4,165
Adjusted for:
Depreciation, disposal and amortisation costs
11(b)87,218 99,931
Impairment223,697 -
Movement in deferred tax
6(b)(70,794)1,522
Add movement in deferred tax on items included in other comprehensive income
6(b)(1,950)(1,285)
Movement in provisions
15(4,841)1,777
“Less decrease/(increase) in jetty restoration provision
relating to property, plant and equipment “5,096 (1,491)
Employee share scheme entitlement reserve
23448241
Decrease/(Increase) in intangibles
1112,169 (7,828)
Less proceeds from sale of intangibles(13,320)-
Interest and other non-cash movements(679)620
Impact of changes in working capital items
(Increase)/decrease in trade and other receivables
16(15,831)7,649
(Decrease)/increase in trade and other payables
19(8,266)18,457
Less increase/(decrease) in trade and other payables relating to property, plant and equipment
and intangibles4,392 (712)
Increase/(decrease) in employee benefits
207,333 (9,280)
Less employee entitlements included in other comprehensive income
20(c)(4,130)7,681
Decrease/(increase) in income tax receivable5,218 (4,501)
Decrease in inventories
184,143 179
Net cash inflow from operating activities31,624 117,125
In the Consolidated Statement of Cash Flows, the deposits placements and withdrawals and bank borrowings receipts and repayments are
presented on a net basis as their turnover is quick, amounts are large, and the maturities are relatively short.
The below sets out an analysis of the Group’s liabilities for which cash flows have been, or will be, classified as financing activities in the
statement of cash flows:
CASH
AND CASH
EQUIVALENTS
BORROWINGS
DUE WITHIN
ONE YEAR
BORROWINGS
DUE AFTER
ONE YEAR
NET CASH
POSITION
FINANCE
LEASE DUE
WITHIN
ONE YEAR
FINANCE
LEASE DUE
AFTER
ONE YEAR
TOTAL
$000$000$000$000$000$000$000
NET (CASH)/ DEBT AS AT
1 JANUARY 2019(779)50,000 208,601 257,822 171 2,302 260,295
Cash flows (Cash)(4,476)(50,000)36,800 (17,676)- - (17,676)
Finance lease payments- - - - (171)(152)(323)
Adoption of IFRS 16 'Leases'- - - - 153 1,151 1,304
Other non-cash movements- - 1,215 1,215 95 (95)1,215
NET DEBT AS AT 1 JANUARY 2020(5,255)- 246,616 241,361 248 3,206 244,815
Cash flows(38,034)- 27,995 (10,039)- - (10,039)
Finance lease payments- - - - (200)- (200)
Other non-cash movements- - - - 154 734 888
NET (CASH)/DEBT AS AT
31 DECEMBER 2020(43,289)- 274,611 231,322 202 3,940 235,464
Cash and cash equivalents include $4.6 million (2019: $4.8 million) held by Refining NZ’s electricity futures broker as collateral.
18. Inventories
Inventories are reviewed annually for impairment. The inventory obsolescence depends on a number of assumptions, including age and
condition of each of the individual inventory items. As at 31 December 2020 the inventory obsolescence provision amounted to $8.2 million
(2019: $4.8 million).
The consumption of inventories and any associated write downs are recognised as part of the purchase of process materials and utilities and
materials and contractor payments expense lines in the Consolidated Income Statement.
Inventories are included in the negative pledge arrangement (refer note 9).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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19. Trade and other payables
NOTE
GROUP
2020
$000
GROUP
2019
$000
Trade payables22,563 31,967
Goods services tax payable909 1,847
Deferred income
113,487 9,623
Excise duty
16135,793 127,581
TOTAL TRADE AND OTHER PAYABLES162,752171,018
Trade payables are unsecured, non-interest bearing and are usually paid within 30 days of recognition.
Changes to excise duties have no direct impact on the results of the Group as they are collected from the oil companies (note 16) and paid to the
New Zealand Customs Service on the same day each month.
Deferred income relates to the New Zealand Units (NZUs) received in advance – refer to note 11.
Trade and other payables related party balances are disclosed in note 5.
20. Employee benefits
Liabilities for employee benefits comprise the following:
20202019
CURRENTNON-CURRENTTOTALCURRENTNON-CURRENTTOTAL
NOTE$000$000$000$000$000$000
Defined benefit pension plan20(a)- 32,733 32,733 - 24,907 24,907
Medical plan
20(a)17 7,185 7,202 104 9,958 10,062
Wages, salaries, annual leave
and sick leave6,466 - 6,466 6,610 - 6,610
Redundancy provision4,372 - 4,372 - - -
Long-service leave and
retirement bonus414 4,901 5,315 1,147 6,029 7,176
TOTAL11,269 44,819 56,088 7,861 40,894 48,755
Defined benefit pension plan (scheme closed since 31 December 2002)
Nature of benefits
The Parent contributes to a defined benefit pension plan (the “Plan”) for eligible employees. The defined benefit pension plan obligation is
calculated annually by independent actuaries using the projected unit credit method, at present value of the estimated future cash outflows
using interest rates of government bonds that have terms to maturity approximating the terms of the related pension liability. There were no
Fund amendments, curtailments or settlements during 2020 (2019: Nil).
Total membership of the scheme as at 31 December 2020 was 192 (2019: 196) and includes:
• current staff members contributing to the scheme, who have pension entitlements based on final salary and membership;
• retirees/pensioners receiving regular pension payments;
• members receiving disability pensions, which can be paid from the Plan until normal retirement age.
Regulatory framework
The Financial Markets Authority licenses and supervises regulated superannuation schemes. The Fund is an employer related restricted
workplace savings scheme under the Financial Markets Conduct Act 2013 (the Act).
The Act requires an actuarial valuation to be performed for each defined benefit superannuation scheme at least every three years to assess
whether the Company’s current level of contributions to the Plan is sufficient to meet future obligations (funding valuation).
Responsibilities for the governance of the fund
The Trustees of the Fund are responsible for the governance of the Fund. The Trustees are appointed by the Company and have a legal obligation
to act solely in the best interests of the Fund beneficiaries. The Trustees have the following roles:
• Administration of the Fund and payment to the beneficiaries from Plan assets when required in accordance with the Plan rules.
• Management and investment of the Plan assets.
• Compliance with superannuation law and other applicable regulations.
Description of risks
Under the defined benefit pension plan the Group has a legal obligation to pay further contributions if the Fund does not hold sufficient assets
to pay all employees the benefits they are entitled to. There are a number of risks that could expose the Company to such a shortfall; the more
significant risks being:
• Investment returns – the funding valuation assumes a certain return on assets, which will be available to fund liabilities. Lower than
assumed returns could require the Company to increase contributions to offset the shortfall.
• Life expectancy – the majority of the Plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy
will result in an increase in the Plan’s liabilities.
The Plan liabilities are calculated, for financial reporting purposes, using a discount rate set with reference to New Zealand Government Bonds.
A decrease in the government bond yield will increase Plan liabilities for financial reporting purposes, but not necessarily impact upon the
funding requirements of the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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79
20. Employee benefits (continued)
Medical plan (scheme closed since 1996)
The Parent pays health insurance premiums in respect of 15 former employees (2019: 21 former and current employees) when they retire,
until their death. This arrangement is no longer offered to new employees. The medical plan is accounted for in a similar manner to the
defined benefit plan outlined above, with an accounting valuation performed by an independent actuary at each balance date. In 2020 the
Company offered medical retirees a lump sum payment in exchange for ceasing on-going Company contributions. Three medical retirees
accepted this offer. (In February 2021, a further six medical retirees accepted a revised cash-out offer.)
Redundancy provision
An organisational restructure was undertaken in 2020 to reduce the workforce by around 25% with circa 90 employees leaving the Company
either through redundancies, retirements or resignations from November 2020 through to April 2021 (refer to note 1). The total cost of the
restructure was $5.6 million, recognised in wages, salaries and other benefits in the year ended 31 December 2020. Redundancy payments
totalling $1.2 million were paid out prior to 31 December 2020, with the balance of $4.4 million to be paid in the first quarter of 2021.
Long-service leave and retirement bonus
Long service leave and retirement bonuses are measured based on an actuarial assessment and represent the present value of the estimated
future cash outflows, which are expected as a result of employee services provided up to the balance date.
(a) Reconciliation of medical and defined benefit pension plan
MEDICAL PLANPENSION PLAN
PRESENT
VALUE OF
OBLIGATION
FAIR VALUE
OF PLAN
ASSETS
TOTALPRESENT
VALUE OF
OBLIGATION
FAIR VALUE
OF PLAN
ASSETS
TOTAL
NOTE$000$000$000$000$000$000
AT 1 JANUARY 2019 EXCLUDING TAXES(8,197)- (8,197)(106,120)83,054 (23,066)
Amounts recognised in consolidated
Income Statement:
Current service cost- - - (1,901)- (1,901)
Interest (expense)/income(226)- (226)(2,552)1,985 (567)
20(b)(226)- (226)(4,453)1,985 (2,468)
Amounts recognised in Other
Comprehensive Income
(excluding contributions tax):
Actual return on plan assets less interest
income- - - - 9,893 9,893
Actuarial losses arising from changes
in assumptions(550)- (550)(2,710)- (2,710)
Actuarial (losses)/gains arising from liability
experience(1,375)- (1,375)(748)- (748)
20(c)(1,925)- (1,925)(3,458)9,893 6,435
Contributions:
–Employers- - - - 2,411 2,411
–Plan participants- - - (453)453 -
Benefits paid286 - 286 5,735 (5,735)-
Premiums and expenses paid- - - 427 (427)-
Net Liability Excluding Taxes(10,062)- (10,062)(108,322)91,634 (16,688)
Contributions Tax(8,219)
NET LIABILITY IN BALANCE SHEET
31 DECEMBER 2019(10,062)(24,907)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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20. Employee benefits (continued)
MEDICAL PLANPENSION PLAN
PRESENT
VALUE OF
OBLIGATION
FAIR VALUE
OF PLAN
ASSETS
TOTALPRESENT
VALUE OF
OBLIGATION
FAIR VALUE
OF PLAN
ASSETS
TOTAL
NOTE$000$000$000$000$000$000
AT 1 JANUARY 2020 EXCLUDING TAXES(10,062)- (10,062)(108,322)91,634 (16,688)
Amounts recognised in consolidated
Income Statement:
Current service cost- - - (2,117)- (2,117)
Interest (expense)/income(103)- (103)(1,126)939 (187)
Settlement gain933 - 933 - - -
20(b)830 - 830 (3,243)939 (2,304)
Amounts recognised in Other
Comprehensive Income (excluding
contributions tax):
Actual return on plan assets less interest
income- - - - 676 676
Actuarial losses arising from changes in
assumptions(745)- (745)(5,310)- (5,310)
Actuarial (losses)/gains arising from liability
experience2,397 - 2,397 759 - 759
20(c)1,652 - 1,652 (4,551)676 (3,875)
Contributions:
–Employers- - - - 936 936
–Plan participants- - - (394)394 -
Benefits paid379 - 379 5,458 (5,458)-
Premiums and expenses paid- - - 341 (341)-
Net Liability Excluding Taxes
20(d)(7,201)- (7,201)(110,711)88,780 (21,931)
Contributions Tax(10,802)
NET LIABILITY IN BALANCE SHEET
31 DECEMBER 2020(7,201)(32,733)
(b) Amounts recognised in the Consolidated Income Statement
MEDICAL PLANPENSION PLAN
2020
$000
2019
$000
2020
$000
2019
$000
Service cost--2,1171,901
Net interest cost103226187567
Settlement gain(933) - --
PLAN EXPENSE(830)2262,3042,468
Contributions tax- - 1,1371,217
PLAN EXPENSE PLUS TAXES(830)2263,4413,685
(c) Amounts recognised in the Consolidated Statement of Comprehensive Income
2020
$000
2019
$000
Defined benefit actuarial loss(4,551)(3,457)
Actual return on plan assets less interest income676 9,893
Actuarial gain/(loss) medical scheme2,585 (1,925)
Gains arising from settlement(933)-
Total recognised in other comprehensive income(2,223)4,511
Contributions tax(1,907)3,170
Total recognised in other comprehensive income with contributions tax(4,130)7,681
(d) Fair value of defined benefit pension plan assets
SIGNIFICANT
OBSERVABLE INPUTS
LEVEL 2
$000
Net current assets1,004
Debt instruments8,540
Investment Funds – Composite Funds 79,236
TOTAL ASSETS88,780
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

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20. Employee benefits (continued)
The percentage invested in each asset class at the balance date are:
PENSION PLAN
20202019
Australasian Equity11.1%10.3%
International Equity33.5%33.3%
Fixed Income33.1%33.3%
Cash10.8%11.3%
Property and Other11.5%11.8%
(e) Actuarial assumptions and funding arrangements
Assumptions are determined either by the Group in consultation with the independent actuary (such as expected rate of salary increases) or by
the independent actuary (mortality in retirement, discount rate).
As at 31 December 2020 the following actuarial assumptions were applied:
20202019
MEDICAL PLANPENSION PLANMEDICAL PLANPENSION PLAN
Discount rate1.8%1.7%2.1%2.0%
Expected rate of future salary increases- 1.5%- 2.5%
Pension increases- No provision- No provision
Mortality in retirementNew Zealand Life Tables 2012-2014 mortality table, set back by 1 year,
together with an age related future mortality improvement scale.
Health insurance premium8.0%- 8.0%-
Rate of Fringe Benefit Tax42.86%- 42.86%-49.25%-
The average term at which the expected future discounted cash flows are due is 12 years (2019: 13 years). The average undiscounted expected
term of all liabilities is 14 years (2019: 15 years).
Expected employer contributions to the defined benefit pension plan and medical scheme in 2021 is $995,000 (after the deduction of ESCT) and
$251,000 respectively.
The last full actuarial valuation performed under the Financial Markets Conduct Act 2013 was as at 31 March 2019 at which time the
Defined Benefit Plan was fully funded based on the assumptions used by the Actuary. These assumptions were consistent with the actuarial
assumptions outlined above, except for the discount rate determined based on the expected long-term future returns of the plan rather than the
risk-free rate of return. The funding objective adopted at the 31 March 2019 funding valuation is to ensure that the Fund’s assets are not less
than the value of accrued benefits. The Company contributes a fixed amount of $1.5 million (including contributions tax at 33%) and a lump sum
contribution to fund new disability pensions. The next statutory actuarial valuation is due no later than 31 March 2022.
(f) Sensitivity analysis – pension plan
The sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur,
and changes in some of the assumptions may be correlated. The methods and types of assumptions used in preparing the sensitivity analysis
are consistent with those applied during the comparative reporting period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2019 1% movement discount rate
2020 1% movement discount rate
2019 1 year movement in life expectancy
2020 1 year movement in life expectancy
2019 1% Salary Movement
2020 1% Salary Movement
Decrease in defined obligationIncrease in defined obligation
-15000-10000-500005000100001500020000
2,915
3,311
2,893
2,145
-2,631
-2,994
-3,031
-11,770
-2,163
-12,004
14,279
14,876

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85
21. Financial risk management
The Group’s activities expose it to a variety of financial risks (market, credit and liquidity) in the normal course of the Group’s business.
Risk management is performed by Group Management who evaluate and hedge certain financial risks including currency risk and interest rate
risk under a Treasury Policy that is approved by the Board of Directors.
a) MARKET RISK
Market risk includes refining margin, electricity pricing, currency and interest rate risk.
Refining margin risk
The refining margin (margin) generated by the Group is a key input to the calculation of the processing fee revenue which is set as 70% of
the gross refining margin generated, subject to a fee floor of circa $140 million (2019: $136 million), and margin cap of USD9.00 per barrel
for each customer. This 70/30 split of the refining margin reflects the fact that Refining NZ’s customers bear the risks and associated costs of
crude purchasing, the finance and currency costs and risks associated with maintaining crude, feedstock and product inventories, shipping and
demurrage risks and guaranteeing a minimum processing fee.
The margin is calculated as the typical market value of all the products produced, minus the typical market value of all feedstock processed. The
typical market value of products is determined by using quoted prices for the products in Singapore plus the typical freight cost to New Zealand
plus product quality premia. The typical value of feedstock is determined by using the market value for crude oil and other feedstock at the point
of purchase, plus the typical cost of freight to New Zealand.
Refining margin risk is the risk of volatility in the typical product and feedstock prices to which the Group is exposed. The Group’s revenue is
likely to be impacted, favourably or unfavourably, during periods of market price volatility (refer to notes 1 and 12). The Group does not hedge
this risk. The downside in the volatility of margin and foreign exchange risk is limited by the processing fee floor, which comes into effect if the
total processing fee for a calendar year does not exceed a minimum value.
Processing fee revenue in 2020 was charged at the fee floor which accounted for 61% of the Group’s total revenue (2019: 70%, with no fee floor
payments made by customers).
Electricity
The Group is also exposed to commodity price risk in relation to the purchase of electricity. This exposure exists as a result of the Group
purchasing electricity via the New Zealand Electricity Wholesale Market, which is subject to price volatility caused by both demand/supply
and transmission constraints. The Group uses electricity futures and Contracts for Differences to hedge the electricity price risk, with targeted
coverage of forecast consumption up to three years.
Currency risk
The Group is exposed to foreign exchange risk as a result of transactions denominated in currencies other than the Group’s functional currency.
The primary currencies giving rise to the currency risk are US dollar, Singaporean dollar, Euro and Australian dollar. Currency risk arises from the
processing fee (being calculated in US dollars and billed in New Zealand dollars) and future commercial transactions (purchase of property, plant
and equipment, goods or services).
The Group may enter into hedging agreements with Board approval and in accordance with the Group’s Treasury Policy which requires all
purchases of all capital items of value exceeding certain thresholds to be hedged with either forward exchange contracts or currency options.
Interest rate risk
The Group’s interest rate risk arises from fixed term borrowings at floating interest rates. The Group may use interest rate hedging instruments
to manage interest rate risk.
Sensitivity analysis
The graphs below summarise the potential impact of each type of market risk exposures on the Group’s profit before tax and equity (assuming all
other factors remain unchanged), except for electricity risk which was effectively hedged in 2019 and 2020.
• Price risk - an increase and decrease of refining margin by USD1.00 per barrel.
In 2020 there is no sensitivity due to a decrease in refining margins as the fee floor under the Processing Agreements was in effect for the
full year, with margins having to be at least USD2.78 per barrel higher in 2020, for Processing Fee revenue to be above the fee floor, (based
on the 2020 throughputs).
• Currency risk – the sensitivity analysis is presented based on the impact of the New Zealand dollar weakening or strengthening against
foreign currencies, such as US dollar, Singaporean dollar, Euro and Australian dollar. A 10% movement in foreign currencies is considered as
reasonably possible given the volatility in foreign exchange rates in the prior years.
There is no currency risk when the Company is at the Fee Floor as it is a fixed New Zealand dollar amount.
• Interest rate risk – a change in interest rates by 25 basis points (bps) is considered by the Group reasonably possible over the short-term.
In 2020 the remainder of the interest rate swaps matured leaving the Company exposed to $200 million floating debt (2019: $72.1 million).
b) CREDIT RISK
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as
credit exposures to customers from outstanding receivables and committed transactions.
For banks only parties with a minimum long-term credit rating of A+ or A1 are accepted. Gross limits are set for financial institutions and the
usage of these limits is determined by assigning product weightings to the principal amount of the transaction.
Transactions are spread across several counterparties to avoid concentrations of credit exposure. No credit limits were exceeded during the
reporting period and Management does not expect any losses from non-performance by counterparties.
The Group is exposed to credit risk if counterparties fail to make payments as they fall due in respect of payment of trade receivables as
invoices fall due 7-14 days for the Parent and 30 days for its subsidiary after being raised. The receivables from the oil companies (as disclosed
in the related party note 5) present a concentration of credit risk, however, Management has assessed the credit quality of these customers
as being high. Based on the analysis of the historical payments of the Group’s customers and with reference to their credit rating and short
payment terms, the Group assessed the expected credit losses in respect to 31 December 2020 receivables to be immaterial. No collateral is
held over trade receivables (refer to note 24).
The maximum exposure to credit risk at balance date is the carrying amount of the financial assets.
Overdue trade receivable balances at 31 December 2020, which were subsequently paid in January 2021, totalled $1.126 million
(2019: $0.343 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2019 Equity (pre-tax)
2020 Equity (pre-tax)
2019 Profit or loss before tax
2020 Profit or loss before tax403
179
403
94
-403
-179
-403
-93
25 bps decrease ($000)
25 bps increase ($000)
-500-2500250500

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87
21. Financial risk management (continued)
c) LIQUIDITY RISK
The Group monitors rolling forecasts of liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on the Group’s undrawn borrowing facilities (note 9).
Surplus cash held by the Group over and above the balance required for working capital management is invested in interest bearing current
accounts, term deposits, and money market deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient
headroom as determined by the above-mentioned forecasts.
Non-derivative financial liabilities
The following table sets out the maturity analysis for non-derivative financial liabilities based on the contractual terms as at balance date.
The amounts presented are the contractual undiscounted cash flows and are based on the expiry of the bank facility or maturity of the
subordinated notes.
The liquidity analysis set out below discloses cash outflows resulting from the financial liabilities only and does not consider expected net cash
inflows from financial assets (including trade receivables) or undrawn debt facilities which provide liquidity support to the Group. Contractual
cash flows associated with bank borrowings include interest for the period until the debt rollover date (typically within six months from the
balance date) and subordinated notes include interest in the period until 1 March 2034.
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
LESS THAN
6 MONTHS
BETWEEN
6 MONTHS -
1 YEAR
BETWEEN
1-2 YEARS
BETWEEN
2-5 YEARS
OVER
5 YEARS
TOTAL CASH
FLOWS
GROUP 2020NOTE$000$000$000$000$000$000$000
NON-DERIVATIVE
FINANCIAL LIABILITIES
Trade payables
19(22,563)(22,563)- - - - (22,563)
Lease liabilities
10(4,142)(405)(277)(675)(1,817)(3,885)(7,059)
Bank borrowings
9(200,000)(1,290)345 (35,000)(165,000)- (200,945)
Subordinated notes
9(74,611)(1,913)(1,913)(3,825)(11,475)(107,513)(126,639)
TOTAL NON-DERIVATIVE
FINANCIAL LIABILITIES(301,316)(26,171)(1,845)(39,500)(178,292)(111,398)(357,206)
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
LESS THAN
6 MONTHS
BETWEEN
6 MONTHS -
1 YEAR
BETWEEN
1-2 YEARS
BETWEEN
2-5 YEARS
OVER
5 YEARS
TOTAL CASH
FLOWS
GROUP 2019NOTE$000$000$000$000$000$000$000
NON-DERIVATIVE
FINANCIAL LIABILITIES
Trade payables
19(31,967)(31,967)- - - - (31,967)
Lease liabilities
10(3,454)(252)(290)(532)(1,551)(3,499)(6,124)
Bank borrowings
9(172,100)(1,681)- (98,100)(74,000)- (173,781)
Subordinated notes
9(74,516)(1,913)(1,913)(3,825)(11,475)(111,337)(130,463)
TOTAL NON-DERIVATIVE
FINANCIAL LIABILITIES(282,037)(35,813)(2,203)(102,457)(87,026)(114,836)(342,335)
Derivative financial liabilities
The table below details the liquidity risk arising from derivative liabilities held by the Group at balance date. Derivative financial liabilities are
split into the Gross settled derivatives which include foreign exchange forward contracts with the inflow being based on the foreign currency
converted at the closing spot rate, and the net settled derivatives which include interest rate swaps (with the floating rate being based on the
most recent rate set), electricity futures and contracts for differences.
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
LESS THAN
6 MONTHS
BETWEEN
6 MONTHS -
1 YEAR
BETWEEN
1-2 YEARS
BETWEEN
2-5 YEARS
OVER
5 YEARS
TOTAL CASH
FLOWS
GROUP 2020NOTE$000$000$000$000$000$000$000
DERIVATIVE FINANCIAL
INSTRUMENTS
Net settled derivatives
227,438 4,809 3,232 (603)- - 7,438
Gross settled derivatives
Outflows- - - - - - -
Inflows- - - - - - -
Total gross settled
derivatives- - - - - - -
TOTAL DERIVATIVE
FINANCIAL LIABILITIES
227,438 4,809 3,232 (603)- - 7,438
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
LESS THAN
6 MONTHS
BETWEEN
6 MONTHS -
1 YEAR
BETWEEN
1-2 YEARS
BETWEEN
2-5 YEARS
OVER
5 YEARS
TOTAL CASH
FLOWS
GROUP 2019NOTE$000$000$000$000$000$000$000
DERIVATIVE FINANCIAL
INSTRUMENTS
Net settled derivatives
22(4,302)524 (74)(2,001)(2,739)- (4,290)
Gross settled derivatives
Outflows- (87)(1,193)(4,757)- - (6,037)
Inflows- 89 1,179 4,706 - - 5,974
Total gross settled
derivatives
22(86)2 (14)(51)- - (63)
TOTAL DERIVATIVE
FINANCIAL LIABILITIES
22(4,388)526 (88)(2,052)(2,739)- (4,353)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020