CHANGE. Greg: QA (incl. Naomi LTI, carry value, director - - PowerPoint PPT Presentation

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Sep 01, 2022 555 likes •941 views

Designer just do an agenda Jareks changes REFINING NZ Also, the script changes (Greg to ANNUAL GENERAL MEETING | 29 APRIL 2020 make those changes) Me to hold pen on script Greg: in sync JS to hold pen on pres +

SLIDE 1 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

CHANGE.

Jarek’s changes
Also, the script changes (Greg to

make those changes)

Me to hold pen on script
Greg: in sync
JS to hold pen on pres + script
Greg: QA (incl. Naomi LTI, carry

value, director renumeration)

Designer just do an agenda

SLIDE 2 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

ATTENDEES – QUESTION PROCESS

When the Question function is available,

the Q&A icon will appear at the top of the app.

To send in a question, simply click in the

‘Ask a question’ box, type your question and the press the send arrow

Your question will be sent

immediately for review

SLIDE 3 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 33

BOARD ARD OF DIR IRECT CTORS RS

SLIDE 4 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

SIMON ALLEN

CHAIRMAN’S ADDRESS

SLIDE 5 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 5

AGEND NDA

SLIDE 6 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 6

DISCLAIMER

This presentation does not constitute an offer or invitation by The New Zealand Refining Company Limited (hereafter referred to as “Refining NZ”) or any of its subsidiaries

(together “the Group”) or any other person to acquire any securities in any member of the Group or any part of the Group’s business or assets.

This presentation contains forward looking statements concerning the strategy, plans, projections, assumptions, expectations, forecasts, prospects, potential exposure to the

market and business risks, financial condition, results and operations of the Group.

Forward looking statements are subject to the risks and uncertainties associated with the refining environment, including price/refining margin and foreign currency

fluctuations, regulatory changes, environmental factors, production results, site and infrastructure operations, demand for the Group’s products or services and other

conditions. Forward looking statements are based on management’s current expectations and assumptions, which may or may not prove to be correct, reasonable or reliable,

and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements.

Forward-looking statements are all statements other than statements of historical fact, including (without limitation) any statement regarding strategy, financial condition, plans,

projections, assumptions, expectations, prospects, estimates, forecasts, management targets, potential exposure to market and business risks, and any other statement or estimate regarding the future prospects or performance of the Group, its business or its assets.

Readers should not place undue reliance on forward looking statements. Forward looking statements should be read in conjunction with Refining NZ’s financial statements

available on its website: https://www.refiningnz.com/. This presentation is for information purposes only and does not constitute legal, financial, tax, financial product advice or investment advice or a recommendation to acquire securities of any member of the Group, and has been prepared without taking into account the objectives, financial situation

r needs of individuals. Before making an investment decision, you should consider the appropriateness of the information having regard to your own objectives, financial

situation and needs and consult an NZX Firm or solicitor, accountant or other professional adviser if necessary. Any reliance by any person on any information in this presentation is a matter for that person’s own judgement and no liability is accepted by any member of the Group or any of their officers, directors, agents, employees or advisors for any such reliance.

In light of these risks, results could differ materially from those stated, implied or inferred from the forward looking statements contained in this presentation. No member of the

Group guarantees future performance and past performance information is for illustrative purposes only. To the maximum extent permitted by law, the directors of each member of the Group, the members of the Group and their affiliates, and their respective offices, partners, employees, agents, associates and advisers do not make any representation or warranty, express or implied, as to accuracy, reliability, reasonableness, or completeness of the information in this presentation, or likelihood of fulfilment of any forward looking statement or any event or results expressed or implied in any forward looking statement, and disclaim all responsibility and liability for these forward looking statements and the information (or omission therefrom) in this presentation (including, without limitation, liability for negligence).

Except as required by law or regulation (including the NZX Main Board Listing Rules), no member of the Group undertakes any obligation to provide any additional or updated

information whether as a result of new information, future events or results or otherwise.

Forward looking figures in this presentation are unaudited and may include non-GAAP financial measures and information. Not all of the financial information (including any

non-GAAP information) will have been prepared in accordance with, nor is it intended to comply with: (i) the financial or other reporting requirements of any regulatory body or any applicable legislation; or (ii) the accounting principles generally accepted in New Zealand or any other jurisdiction with IFRS. Some figures may be rounded and so actual calculation of the figures may differ from the figures in this presentation. Non-GAAP financial information does not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities. Non-GAAP financial information in this presentation is not audited or reviewed.

Each forward looking statement speaks only as of the date of this presentation.

SLIDE 7 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 7 See our Full Financial Statements for further detail, available at http://www.refiningnz.com/investor-centre.aspx 1 Per 200,000 hours, rolling 12-month 2 For a full definition please refer to Glossary 3 For a full definition please refer to Glossary 4 Net Profit Before Finance Costs and added back Depreciation and disposal costs FY 18 FY 19 Personal TRCF [1,2] 0.76 0.27 Process Tier 1 (>US$25k) [2] 2 Tier 2 (>US$2.5k) [2] 3 Releases outside consent 5 1 Throughput Mbbl 40.4 42.7 RAP Throughput Mbbl 21.0 20.8 Singapore complex margin [3] US$/bbl 2.70 1.02 EBITDA [4] NZ$M 153 118 NPAT NZ$M 30 4.2 Exchange rate US$/NZ$ 0.69 0.66

Excellent operational and safety performance, despite challenging environment for refiners

FY19 9 RE RESU SULT T SU SUMMARY MARY

SLIDE 8 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 8

A CHA A CHALLENGING LENGING STAR ART T TO 20 2020 20

RNZ has responded quickly ROBUST COVID-19 RESPONSE

Rapid response to COVID-19 Plan to operate cash-neutral COVID has compounded structural pressure on global refining margins

DIVIDENDS

Fully imputed dividend 2.0 cents per share No final dividend paid reflects challenging low margin environment

REFINANCING

Increase in total available debt funding facilities to $400 million No significant maturities until March 2022 Increases the average term of the bank facilities to over three years

SLIDE 9 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 9

RE RECE CENT NT BUS BUSIN INESS SS CHA CHANGE NGES

BOARD & MANAGEMENT

Naomi James appointed CEO Paul Zealand in Managing Director role to assist with CEO transition Andrew Brewer appointed to new role

f COO

EMISSIONS TRADING SCHEME

RNZ to enter the Emissions Trading Scheme when NGA expires Allocation based on 2006-2009 emissions data Further reforms may alter allocative baselines

EXTERNAL AUDIT CHANGE

Audit independence policy aligned to Financial Markets Authority guidance Ernst & Young (EY) appointed after thorough market assessment EY standing for reappointment today

SLIDE 10 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 10

WHY WHY? ? S STRA RATEGIC TEGIC RE REVIE IEW W RA RATION IONALE ALE

Change is needed

▪ Return on capital is not acceptable ▪ Structural changes resulting in low refining margins globally due to oversupply ▪ Current business model and processing agreements largely unchanged since 1995 ▪ Examine options to extract more value from infrastructure assets

SLIDE 11 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 11

HOW? HOW? S STRA RATEGIC TEGIC RE REVIE IEW W PR PROCESS CESS

CEO TO LEAD

Naomi James, CEO will lead the process The new CEO started in April, with the need for strategic change identified. International search for:

Change management
Strategy development
Oil and gas experience
Transformation of commodity

businesses

INDEPENDENT GOVERNANCE

There will be competitive matters not

appropriate to share with full Board

Independent directors committee will
versee these issues
Committee will separately oversee

and take decisions on these matters

WORKSTREAMS + PHASES

2 workstreams: Business Model and

Capital Structure

Initial phase to assess options
Support and expert advice from

external advisors

SLIDE 12 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

NAOMI JAMES

CEO ADDRESS

SLIDE 13 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 13

Aims:
Determine the optimal business model and capital structure
Maximise “through cycle” returns to shareholders
Deliver secure, competitive fuel for NZ, now and into a lower carbon future
Unlock value of infrastructure

STRA RATEGIC TEGIC RE REVIE IEW: : I INTRODUCTION ODUCTION

SLIDE 14 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 14

RE RETURNS URNS BE BELOW LOW THE HE CO COST T OF CAP APIT ITAL AL

Refining NZ Return on Invested Capital, 2006-20191 Refining NZ Gross Refining Margin, 2006-2019 8.37 8.14 11.30 4.16 6.17 6.11 5.77 4.58 4.96 9.20 6.47 8.02 6.31 5.34 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 USD/bbl 21.5 13.2 15.7 3.3 7.1 5.1 4.8 (0.2) 1.0 13.7 5.2 7.8 3.3 1.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ROIC (%) 1) 2006 was the first year for full adoption of NZ IFRS, comparing returns on capital in earlier years would be misleading Refinery has not earnt its cost of capital through the cycle due to: ▪ Regional supply/demand imbalance ▪ Structure of the processing agreements (est.1995) ▪ Increased cost of operations (especially electricity and natural gas) and investments made

SLIDE 15 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 15

STRA RATEGI TEGIC C AS ASSET SETS

▪ Infrastructure critical to NZ fuel supply ▪ Deeply integrated with rest of supply chain ▪ Unique competitive advantage ▪ Technical capability of skilled employees ▪ Land – strategic location

SLIDE 16 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 16

RE REFIN INERY ERY OPPOR PPORTUNITI TUNITIES

SLIDE 17 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 17

OPPOR PPORTUNI TUNITY Y TO UN UNLOCK LOCK IN INFRAS RASTUCTURE TUCTURE VAL ALUE UE

Storage Refinery Land Refinery - More volatile earnings stream Infrastructure – less volatile earnings stream Pipeline Jetties Refinery and Infrastructure assets are owned and operated by a single vehicle Customer terms are primarily governed by the processing agreements RNZ believes that the value of the Infrastructure assets is not appropriately reflected in its share price The Strategic Review will seek to address this Laboratory

SLIDE 18 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 18

OPT PTION IONS

▪ Options to optimise business model and capital structure to maximise value for shareholders ▪ Maximise “through cycle” returns to shareholders ▪ Deliver secure, competitive fuel supply to New Zealand

Improve current refining model Strategic Review

ptions

Alter refinery business model (including processing/distribution agreements) Separate refining and infrastructure assets (change structure and funding) Convert to an import terminal (new commercial arrangements) Future Growth options ▪ Evaluate growth potential under different

perating models

▪ Potential for Refining NZ to improve the resilience and performance of NZ supply chain, as the independent operator of shared infrastructure ▪ Options to progress Maranga Ra solar farm project and other low carbon energy options

SLIDE 19 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 19

NEXT T STEPS PS

Create value for shareholders and support secure, competitive fuel supply to New Zealand, now and into a lower carbon future We are actively engaging with employees, customers, Government and

ther stakeholders

All options are on the table Expect to update the market on the Strategic Review in June 2020

SLIDE 20 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

CHAIRMAN

SIMON ALLEN

SLIDE 21 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

ATTENDEES – QUESTION PROCESS

When the Question function is available,

the Q&A icon will appear at the top of the app.

To send in a question, simply click in the

‘Ask a question’ box, type your question and the press the send arrow

Your question will be sent

immediately for review

SLIDE 22 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

RESOLUTIONS

ANNUAL MEETING

SLIDE 23 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

ATTENDEES – VOTING PROCESS

When the poll is open, the vote will

be accessible by selecting the voting icon at the top of the screen

To vote simply select the direction in

which you would like to cast your vote, the selected option will change colour.

There is no submit or send button,

your selection is automatically recorded.

SLIDE 24 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

APPOINTMENT OF AUDITOR

RESOLUTION 1

REAPPOINTMENT OF AUDITOR

SLIDE 25 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

“That Ernst & Young (EY) be reappointed as auditor to the Company for the financial year ending 31 December 2020.”

RE RESO SOLUTION LUTION 1

SLIDE 26 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

RESOLUTION 1

FOR AGAINST DISCRETIONARY TOTAL ABSTAIN

Proxies and Postal votes

190,971,125 113,828 32,803,203 223,888,156 424,911

RE RESO SOLUTION LUTION 1

SLIDE 27 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

APPOINTMENT OF AUDITOR

RESOLUTION 2

AUDITOR FEES AND EXPENSES

SLIDE 28 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

“That Directors be authorised to fix the fees and expenses of Ernst & Young as auditor to the Company for the financial year ending 31 December 2020.”

RE RESO SOLUTION LUTION 2

SLIDE 29 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

RESOLUTION 2

FOR AGAINST DISCRETIONARY TOTAL ABSTAIN

Proxies and Postal votes

190,791,883 290,208 32,800,173 223,882,264 430,803

RE RESO SOLUTION LUTION 2

SLIDE 30 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

RE-ELECTION/ ELECTION OF DIRECTORS

RESOLUTION

RE RE-ELECTION OF DIRECTOR

RESOLUTION 3

SLIDE 31 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

INDEPENDENT DIRECTOR

JAMES MILLER

SLIDE 32 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

“That Mr S.C. Allen, who retires by rotation in accordance with clause 8.9 of the Constitution, be re-elected as a Director of the Company.”

RESOLUTION 3

SLIDE 33 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

RESOLUTION 3

FOR AGAINST DISCRETIONARY TOTAL ABSTAIN

Proxies and Postal votes

190,501,324 516,021 32,836,456 223,853,801 459,266

RESOLUTION 3

SLIDE 34 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

GENERAL BUSINESS

SLIDE 35 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

OUR UR SH SHAR AREHOLDE EHOLDERS RS AR ARE KE KEY STAKE AKEHOLDER HOLDERS

We welcome your further feedback on our Strategic Review Please email us at corporate@refiningnz.com

SLIDE 36 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020 36

APPENDIX 1

Glossary

LTIF - Lost time injury frequency (rolling 12 month per 200,000 hours) TRCF - Total recordable case frequency (rolling 12 month per 200,000 hours) Tier 1 Process Safety Event (API 754) - A tier 1 Process Safety Event (PSE) is an unplanned or uncontrolled release of any material, including non-toxic and non-flammable, from a process which results in one or more of the following: A LTI and/or fatality; A fire or explosion resulting in greater than or equal to $25,000 of direct cost to the company; A release of material greater than the threshold quantities given in Table 1 of API 754 in any one-hour period; A

fficially declared community evacuation or community shelter-in-place.

Tier 2 Process Safety Event (API 754) - A tier 2 Process Safety Event (PSE) is an unplanned or uncontrolled release of any material, including non-toxic and non-flammable, from a process which results in one or more of the following: A recordable injury; A fire or explosion resulting in greater than or equal to $2,500

f direct cost to the company; A release of material greater than the threshold

quantities given in Table 2 of API 754 in any one-hour period. EBITDA – Net Profit Before Finance Costs and added back Depreciation and disposal costs ROIC - Net operating profit less adjusted taxes (NOPLAT) divided by average invested capital, where NOPLAT is net profit after tax excluding any non-operating income/expenses, and Invested Capital includes property, plant and equipment (adjusted for operating leases), intangibles, right-of-use assets and operating net working capital. Gross Refining Margin (excluding Fee Floor/Margin Cap) / Singapore Complex Margin - The Gross Refining Margin is calculated in USD as the difference between the value of products and the cost of feedstock for each refining customer. The value of products use Singapore quoted prices adjusted for New Zealand quality and the cost of importing those products to New Zealand. Feedstocks are valued using the notional market values adjusted for the cost of getting the feedstock to the refinery. The Gross Refining Margin incorporates the cost of hydrocarbon used as fuel and incurred as process losses. Typically, Refining NZ has an uplift over the Singapore complex margins of around USD 3.00 to 4.00 per barrel. The value of the uplift varies due to fluctuations in freight rates, product quality premium, crude market premium and operational performance. Product quality premium are the cost differentials between products made to New Zealand quality and products made to the quality that applies to quoted prices in Singapore. Crude market premium are the cost differences between the crude types actually processed at Refining NZ and Dubai (used as basis for the Singapore complex margins). Refining NZ’s crude diet comprises of crudes that price off Dubai as well as crudes that price off different markers such as Brent. The fluctuations of these price markers relative to each other impact the uplift.

SLIDE 37 REFINING NZ ANNUAL GENERAL MEETING | 29 APRIL 2020

CHANGE.

Jarek’s changes
Also, the script changes (Greg to

make those changes)

Me to hold pen on script
Greg: in sync
JS to hold pen on pres + script
Greg: QA (incl. Naomi LTI, carry

value, director renumeration)

Designer just do an agenda