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Annual Report 2020
Powering better
journeys, today
and tomorrow
Powering better
journeys, today
and tomorrow
Our company has always been about more than fuel.
Fuel may be the foundation of our business, but our
motivation and purpose comes from the passion of our
people and our dedication to the customers, industries
and communities we serve. From our origins until
today, we’ve always been inspired by the role we can
play in people’s lives – to keep them moving, to make
journeys happen.
Today, Ampol is back to being the momentum
behind every journey. From delivering the very
best in fuels, lubricants, convenience and quality
service, to solving our customers’ energy needs now
and into the future, we enable them to go further.
We’ve been powering journeys for over 100 years,
leveraging our market-leading infrastructure and
the knowledge and passion of our people, and we’ll
be here powering journeys for 100 more.
Our Values
The Ampol Values underpin everything
we do. In particular, the Ampol Value
of ‘Never stop caring’ encourages us
to always do the right thing and have
a positive impact on the communities
and economies in which we operate.
Connect to win
We collaborate as an integrated business
to drive growth.
Find new ways
We innovate to deliver positive outcomes.
Own it
We make bold decisions and are
accountable for the outcomes.
Make a difference for customers
We are connected to our customers
and support their changing needs.
Never stop caring
We keep safety front of mind and make
a positive contribution to those around us.
Contents
2020 highlights
Chairman’s report
02
04
Managing Director and CEO’s report 06
Bringing back Ampol
Our operations
Fuels and Infrastructure
Convenience Retail
Sustainability
Financial report
08
10
12
16
20
24
About this report
This 2020 Annual Report for Ampol Limited
(ACN 004 201 307) has been prepared as at
30 March 2021. Throughout this document,
terms such as Ampol and Ampol Australia have
the same meaning as Ampol Group, unless the
context states otherwise.
Shareholders can request a printed copy of
the Annual Report, free of charge, by emailing
ampol@Boardroomlimited.com.au or writing to
Boardroom Pty Limited
Level 12, 225 George Street,
Sydney NSW 2000
2020 highlights
Despite the significant challenges and
disruptions in 2020, we continued the
execution of our strategy and delivered
on our promises to shareholders
Strong progress made
delivering our International
growth strategy
Execution of retail
strategy supporting
improved shop performance
Fuels and Infrastructure
International EBIT
Convenience Retail
RCOP EBIT
18%
on 2019
43%
on 2019
76
new Seaoil
sites added
10
new Gull
sites added
$25m
increase in shop contribution
margin on 2019
7%
increase in
like-for-like sales
Group RCOP EBIT
$401m
Operating cash flow
$268m
Dividend
48cps
full year dividend
(fully franked)
26
sites
rebranded
to Ampol
4 pilot Ampol Woolworths
Metro stores added
International
volumes up
36%
on 2019
02
Ampol Limited We delivered on our strategic
commitments to shareholders
Keeping our people, communities
and environment safe
$500m
subordinated notes
issuance completed
$300m
Off-market Buy-back
announced. Completed
in January 2021
Charter Hall and GIC
consortium acquired a
49% interest in 203 core
$682m
freehold sites for
Safety — TRIFR
Fuels and Infrastructure
FY18
FY19
FY20
4.6
Convenience Retail
FY18
FY19
FY20
7.7
10.7
10.4
10.1
14.0
$2.47m
community investment
via Ampol Foundation
0.8
Scope 1 & 2 GHG emissions
(Mt CO2-e)
37.7%
female representation
at leadership level
$15.7b
direct economic value
generated in 2020
03
Annual Report 2020 Chairman’s report
Ampol delivered a resilient
financial result in 2020 in a
challenging operating environment
Executing our growth
strategies
In 2020, we made strong progress in
the delivery of our growth strategies.
In Fuels and Infrastructure International,
we achieved 18% earnings growth, and
volumes increased by 36% in volatile
market conditions. Milestones in the
evolution of our international operations
were also achieved, with the extension
of our international storage program
and the opening of our Houston Trading
and Shipping office.
Ongoing government restrictions
implemented in response to COVID-19
and the depth and breadth of the
challenges to the Australian economy
impacted demand for our products
throughout the year, while sustained
weakness in refining margins negatively
impacted the performance of our
Lytton refinery.
On a historic cost profit basis, Ampol’s
net profit after tax (NPAT) was a loss of
$485 million, impacted by a $360 million
inventory loss and $337 million loss in
Significant Items. Our replacement cost
of sales operating profit EBIT result was
$401 million, down 34% on 2019.
Despite this, there were several
highlights as we continued to
execute our strategy and deliver on
commitments made to shareholders.
Significant capital was released
through our Convenience Retail property
transaction, we issued a $500 million
hybrid bond as part of our capital
management strategy and announced
a $300 million Off-market Buy-back
which has benefited all shareholders.
We also completed our CEO transition
process, made two new appointments
to the Ampol Board and began the
execution of our exciting transition
to Ampol.
Responding to COVID-19
Faced with challenging conditions
created by COVID-19, the business
responded quickly throughout the
year to protect our balance sheet and
cash flow and enable us to emerge in
a strong position as markets recover.
In just a few weeks from March 2020,
we brought forward and extended
our Lytton refinery Turnaround and
Inspection (T&I), reduced our capital
expenditure for 2020 and took strong
action on costs, including reducing fees
and salaries for our Board and executive
team members.
Unfortunately, many of our employees
were also impacted, with stand-downs,
reduced working hours and other
changes to employment required. I am
proud of the efforts of all our employees
in responding to the challenges of
COVID-19.
Despite the significant disruption to
global hydrocarbon markets, throughout
the year our supply chains remained
resilient and we continued to deliver
safely and reliably for our customers
and the broader Australian community.
04
Ampol Limited CEO transition and Board
appointments
In June 2020, I was pleased to announce
the completion of our CEO transition
process, with Matthew Halliday
appointed as Managing Director and
Chief Executive Officer. Matt did
an outstanding job as Interim Chief
Executive Officer, leading Ampol through
a period of unprecedented disruption
following the onset of COVID-19. His
skills and knowledge of the business
and track record in 2020 give the Board
every confidence in Matt’s ability to
successfully deliver our strategy.
In June, I was also pleased to announce
the appointment of Michael Ihlein and
Gary Smith to the Ampol Board as
Independent Non-executive Directors.
Michael and Gary bring substantial
experience as executives and directors
and will be significant assets to the
Board over the coming years.
Looking ahead
Market conditions in 2021 will continue
to be challenging and there remains
considerable uncertainty over the
outlook and timing for economic
recovery. We will continue to execute
our strategy for the benefit of
shareholders, with a focus on cost
and capital efficiency.
On behalf of the Board, I would
like to extend our thanks to Matt,
his leadership team and to all
employees for their efforts to deliver
for customers and shareholders in a
tough environment.
I would also like to thank the
shareholders for their continued
support of Ampol as we move forward
to execute our strategy for the medium
and long term.
Steven Gregg
Chairman
These milestones support opportunities
for further expansion into new
geographies, products and services
over the medium to long term.
In Convenience Retail, we delivered
a 7% increase in like-for-like sales
and a $25 million increase in shop
contribution margin, reflecting
improvements in our operational
performance and customer offer.
We also reached practical completion
of our transition from franchise
operations. As the Australian
convenience market continues to
grow, we will continue to execute
our retail growth strategy to achieve
our non-fuel earnings uplift target of
$85 million by 2024.
“ There were several
highlights as
we continued to
execute our strategy
and deliver on
commitments made
to shareholders.
Significant capital was released
through our Convenience Retail
property transaction, we issued a
$500 million hybrid bond as part of
our capital management strategy and
announced a $300 million Off-market
Buy-back which has benefited all
shareholders. We also completed
our CEO transition process, made
two new appointments to the
Ampol Board and began the execution
of our exciting transition to Ampol.”
Annual Report 2020
05
Managing Director and CEO’s report
Our strategic priorities are
well established and we remain
focused on advancing them
I am honoured to have been appointed
to lead this great Australian company.
Ampol has a rich history here in
Australia and our track record of
delivering for shareholders, customers
and communities remains at the heart
of everything that we do.
While it has been a difficult 12 months
with myriad challenges impacting our
financial performance, I am optimistic
about our future. I believe we can
sustainably deliver value and growth
for shareholders, people and customers,
while being a positive contributor in
local communities as we execute our
established strategy in the years ahead.
Delivering on our promises
Despite a year of significant volatility
and uncertainty, with severe economic
impact from bushfires, adverse weather
and the COVID-19 pandemic, we have
made excellent progress on delivering
the strategic initiatives outlined to
shareholders in 2019. I am proud of how
Ampol has responded to the challenges
faced throughout the year.
We successfully completed our
Convenience Retail property
transaction, with the Charter Hall
and GIC consortium acquiring a 49%
interest in 203 of our core freehold
retail property sites, and executed
a $500 million hybrid bond issuance.
Fuels and Infrastructure International
EBIT grew by 18%, with strong
momentum in Convenience Retail shop
and our successful tender to redevelop
four high-volume New South Wales
highway sites giving us confidence in
our Convenience Retail growth strategy.
We were also able to deliver on our
commitment to release franking
credits to shareholders, with a
$300 million Off-market Buy-back
announced in November and completed
in January 2021, which was further
supplemented by a 48 cents per share
fully franked full-year dividend.
Improving safety
performance
The safety of our people and our
customers is always a priority and
I am extremely pleased with the strong
improvement in our safety performance
in 2020. The extended T&I at our Lytton
refinery was completed incident-free
and we also recorded our best process
safety result in the past five years.
Fuels and Infrastructure benefited from
targeted personal safety improvement
plans to reduce the frequency of injuries
Case study
Being a positive contributor
Ampol has a history of giving back
to communities across the country
and, under my leadership as CEO,
we will reignite our commitment to
leveraging our employees, skills and
infrastructure to make a positive
impact wherever we operate.
In 2020, we relaunched our Ampol
Foundation which is aimed at
supporting better access to education
and employment opportunities for
young Australians. We launched
a new partnership with The Smith
Family and extended our relationships
with the Clontarf Foundation and
Stars Foundation.
06 Ampol Limited
and accidents such as strains, slips,
trips and falls. Convenience Retail
safety also improved significantly due
to our focus on behavioural safety and
the execution of our safety roadmap,
driving a reduction in the frequency of
low-consequence injuries, especially
around manual handling tasks.
Our customer commitment
Delivering for customers is one of
the key reasons we exist and as CEO
I will ensure we continue to have
customers at the heart of our decision
making. I am pleased to say that
there have been many examples that
have brought this commitment to life
over the past 12 months as we have
navigated COVID-19 and responded
to a range of other challenges.
From providing a new customer with
reassurance about our ability to deliver
on a key project as COVID-19 hit global
supply chains, to our work delivering
for essential services and the local
community during the bushfires of
early 2020, customers can always
rely on Ampol. This constant focus is
also evidenced by the strength of our
depot operations and partnerships
with distributors that has allowed us to
support primary producers recovering
from drought.
In 2021 we will relaunch the Ampol
Best All Rounder Award. For over
35 years this program has celebrated
Australia’s leaders of tomorrow,
recognising qualities such as
leadership, service and community,
sport, arts and culture, attitude
and personal conduct among tens
of thousands of final year students
across Australia.
I am also proud of our ongoing
engagement with state and federal
governments to ensure the safe and
reliable supply of transport fuels
throughout the COVID-19 pandemic.
Leveraging the Ampol rebrand
I have no doubt that now is the
right time to be rebranding to Ampol.
We have a proud history as an Australian
company, and this sets us apart from our
competitors as the only major Australian
fuel brand in the market.
Becoming Ampol is more than just a
name change. It’s about repositioning
what our business stands for, clearly
articulating why we exist and leveraging
our brand to win customers and improve
financial performance.
Our new purpose is: Powering better
journeys, today and tomorrow. Ampol
has always been passionate about
keeping people and businesses moving
and fuelling them at every point of their
journey. This new purpose captures
our commitment to our customers
and the central role we play in keeping
people, businesses and the broader
economy moving.
In 2020, we delivered the rebrand
of our first 26 Ampol retail sites and
the transition of our network will
accelerate in 2021. We also launched our
Amplify premium fuels and AmpolCard
brands, engaged key customers to
share our strategy and strengthened
relationships. In addition, we finalised
new partnerships with Red Bull Ampol
Racing, the National Rugby League
as the naming rights sponsor of the
Ampol State of Origin, Surf Life Saving
Australia and The Smith Family.
Delivering value and growth
Our strategic priorities are well
established and we remain focused on
advancing them in 2021. We will leverage
our market-leading infrastructure
and skills in Australia to deliver for
customers and shareholders.
We will focus on international
growth and continue to expand our
international operations toward
regional market leadership, while
continuing to execute our Convenience
Retail growth strategy. We will also
invest in our brand and bring our story
to life as a proud and independent
Australian company, being local in
the way we deliver for customers and
communities and leveraging this as
a competitive advantage.
Finally, we will continue our work to
support the energy transition and the
ongoing focus on decarbonisation
across our economy. Ampol has a key
role to play in this transition and, while
I don’t expect our energy mix to change
significantly in the near term, we need
to spend the time now to understand
the technologies that will shape our
future as we look to leverage our core
business to deliver new energy solutions
for our customers. We have identified
a broad set of future energy themes
and are mapping these to our proven
strengths to develop multiple areas
where we have a right to play. This will
allow us to protect and grow value for
shareholders as the energy transition
progresses.
Heading into 2021, we remain focused
on cost and capital efficiency and will
continue to make decisions to improve
returns and deliver growth for our
shareholders. Ampol has a proud history
and record of delivering through a
range of market conditions and I have
no doubt we are well positioned as the
economy recovers.
I would like to thank all of our employees
for their contribution to our strategic
success and persistent efforts to deliver
for customers and shareholders in a very
challenging market.
Matthew Halliday
Managing Director and CEO
07
Annual Report 2020 Bringing back Ampol
We have reawakened
an Australian icon
Key milestones
December 2019
May 2020
May 2020
Ampol to return
Ampol announced that it would be
revitalising the iconic Australian brand.
New logo revealed
Ampol revealed its new logo, which draws
on key elements from the heritage Ampol
brand, including the original red and blue
bands, with a new, modern and distinctive
leaning ‘A’, symbolising the company’s
forward momentum.
Shareholders back Ampol
At the Ampol Annual General Meeting,
shareholders gave approval for the change
of company name to Ampol Limited.
Uniquely Australian
The revitalisation of the iconic Ampol
brand is a key part of our business
strategy. It provides a unique
opportunity to re-engage our people,
reinforce our customer connections and
redefine who we are as a company.
Ampol captures the best of our history
and our aspirations for the future.
Born Australian, we have grown to
become the largest Australian-owned
and fully independent fuel brand in
the market, with a focus on evolving
with the needs of our customers
and delivering sustainable value and
growth for shareholders. Fundamental
to our success is the continuation of
the qualities that we have long been
known for, such as safe and reliable
supply and leadership in premium
fuels and convenience.
08
As we look towards our future and
executing our strategy, the reinvigoration
of Ampol allows us to enhance our
market-leading position in transport
fuels, execute on the convenience
market opportunity and reaffirm our
commitment to communities.
As we deliver the rebrand works across
our retail network, we are refreshing the
shopfronts of our company-controlled
sites to align with our format strategy.
This includes transitioning our shops
to our Foodary brand and the continued
rollout of our Ampol Woolworths
Metro format.
Powering ahead after
a strong start in 2020
We have made strong progress since
we announced the return of Ampol in
December 2019. We opened our first two
Ampol retail sites in Sydney in August,
with a total of 26 sites rebranded across
the country in 2020. We are on track to
rebrand our entire network of more than
1,900 sites by the end of 2022.
In 2020, we revealed our new Amplify
premium fuels brand, and the new face
of our market-leading fuel card with
AmpolCard. We also formally introduced
the brand to our employees and
business customers, sharing our views
on the future of fuels, the evolution of
our products and what a modern Ampol
looks like and stands for.
Reaffirming our commitment
to communities
As a proud and independent Australian
company, we are committed to
being a positive contributor to the
communities in which we work and live.
Ampol is a brand that strongly
resonates with Australians and our
revitalisation has renewed our focus
on leveraging our network and our
employees to help improve the lives
of all Australians.
Ampol Limited August 2020
August 2020
October 2020
Ampol back on
Australian forecourts
Ampol opened its first two sites in
Concord and Granville, Sydney, seeing
the brand back on Australian forecourts
for the first time in 25 years.
Unveiling of Amplify
premium fuels
Ampol’s new premium fuels brand
was unveiled with the Red Bull
Holden Racing team, featuring the
new brand on the racing car’s livery
at the Darwin Triple Crown
for the first time.
Ampol reveals new
partnerships with the
National Rugby League
and The Smith Family
Ampol announced it would be naming
rights sponsor of the Ampol State of
Origin through to 2023. It also revealed
a new partnership with The Smith
Family, with Ampol’s investment helping
to support 480 students through the
Learning for Life program.
Our community focus is on
powering better journeys for
young Australians by supporting
organisations that champion
education, employment and
community engagement for youth,
and in 2020 we announced new
partnerships with The Smith Family
and Surf Life Saving Australia.
We are also focused on delivering
sponsorships and partnerships that
bring the new Ampol brand to life for
both old and new customers. Recent
announcements include a partnership
with Red Bull Ampol Racing and the
National Rugby League as naming
rights sponsor of the Men’s and
Women’s State of Origin series.
November 2020
November 2020
Australia’s leading fuel
card brand relaunched
as AmpolCard
Ampol revealed the new face of its
market-leading fuel card brand, with
the introduction of AmpolCard.
Red Bull Ampol
Racing and Surf Life
Saving Australia
partnerships announced
Ampol revealed an expanded partnership
with Triple Eight Race Engineering that
would see Ampol become a co-naming
rights sponsor of the Red Bull Ampol
Racing team. The company also revealed
a new national partnership with Surf Life
Saving Australia, with the aim of coming
together to improve water safety on
Australian beaches.
Annual Report 2020
09
Our operations
Ampol is Australia’s market-leading
fuels and retail business, underpinned
by strategic infrastructure and
customer positions
We operate a portfolio of highly
strategic assets, including privileged
infrastructure located across key
demand centres, and have the leading
branded retail network with more than
1,900 sites nationwide.
Our strong infrastructure position
is augmented by our supply chain
expertise, including a rapidly growing
international presence through our
trading and shipping operations in
Singapore and the United States.
This position and expertise allows us
to safely and reliably serve our deep
customer base, which is diversified
across both wholesale and retail
channels. This includes our network
of approximately 80,000 B2B
customers, a retail network that serves
over three million customers each week
and our market-leading card offer that
maintains 38% market share*.
Philippines
Strategic partnership
designed to augment
international growth
20%
Owned since 2018
Singapore
Trading and
Shipping office
Ampol’s Trading
and Shipping
business was
established in
2013 to source
petroleum
products from
global markets
and leverage
our privileged
infrastructure
10
Houston
Houston Trading and
Shipping office, which came
online in October 2020
New Zealand
Owner of Gull, New
Zealand’s leading
independent fuel brand
100%
Owned since 2017
Retail network
Fuels and
Infrastructure
(Australia)
Gull network
(New Zealand)
Seaoil network
(Philippines)
Ampol Limited
Principal activities
Fuels and Infrastructure
Convenience Retail
Our Fuels and Infrastructure business
sources, imports, refines and distributes
fuels and lubricants for a diverse
customer base.
Our Convenience Retail business manages
a network of 708 sites to deliver fuel,
lubricants and a range of convenience
and essential products to more than
three million customers every week.
~80,000
B2B customers
74
fuel storage and
distribution hubs
20.1BL
total fuel sales
in 2020
36%
increase in international
volumes in 2020
3m
weekly customers
708
controlled sites
38%*
market share maintained
by our market-leading fuel
card, AmpolCard
7%
increase in like-for-like
shop sales in 2020
Trading and Shipping
Refining
Infrastructure and
Distribution
Retail
With capability and scale across the transport fuels
supply chain, we are the market leader in Australia
and an emerging player in the Asian region.
Our capability in product sourcing, peerless
infrastructure and network assets, coupled with our deep
customer relationships, allows us to run an integrated
business and to drive value from international sourcing
through to wholesale supply of fuels and lubricants.
In a competitive and evolving market, Fuels and
Infrastructure has transitioned successfully over the
past five years from a single market supply function to
a long-term growth engine that has delivered increased
volumes, capabilities and geographies.
Through new formats, products, technology and services,
we are redefining what convenience means for Australians.
Our national network of 708 controlled sites delivers
customers a premium fuel and card offer through Amplify
and AmpolCard, with a growing convenience offer that is
unparalleled in the Australian market.
Over recent years, we have evolved our convenience
offer to meet the changing needs of customers and to
capture the growing market opportunity. This includes
the introduction of our Foodary and Ampol Woolworths
Metro formats, and partnerships with Uber Eats as well
as quick service restaurant (QSR) partners such as Boost
and Guzman Y Gomez.
See page 12
See page 16
* Includes volumes from Ampol’s branded retail network
11
Annual Report 2020
Fuels and Infrastructure
The success of our Fuels and Infrastructure
business is underpinned by the capabilities
of our people in managing complex supply
chains, as well as our privileged assets, deep
customer base and strong international
partnerships
Houston
office
achieves operational readiness
10
sites added to
Gull New Zealand
retail network
International
volumes increased by
36%
International
EBIT uplift of
18%
on 2019
76
sites added to Seaoil network
in the Philippines
12
Ampol Limited
In 2020, Fuels and Infrastructure was
impacted by significant demand
destruction due to COVID-19,
including impacts on earnings at the
Lytton refinery. Despite these tough
conditions, we continued to deliver
our strategy, maintained our focus on
safely and reliably serving our customers,
and delivered projects critical for
future growth.
Milestones included the
commencement of operations at our
Houston Trading and Shipping office,
expansion of our international storage
program and significantly improved
safety performance.
Financial performance
Fuels and Infrastructure delivered an
RCOP EBIT of $154 million in 2020,
which was below the $450 million
RCOP EBIT in 2019, largely due to
lower earnings from Lytton and loss
of scale in Fuels and Infrastructure
Australia from COVID-19 related
demand destruction.
Excluding Lytton, the result was
impacted by the significant decline in
Australian fuel volumes and associated
efficiencies, and effects from managing
rapidly changing supply chains.
Earnings were supported by increased
imports during the extended Lytton T&I,
continued growth in the International
business, strong cost discipline and
$30 million in foreign exchange gains.
The reduction in Lytton RCOP EBIT
by $215 million compared to 2019
was reflective of the extremely weak
external refiner margin environment,
impacted first by IMO2020 and then
by COVID-19. Action was taken to
mitigate impacts by bringing forward
and extending the T&I, with a renewed
focus on costs and efficiency.
Total Australian fuels sales volumes
were 13.6 billion litres in 2020, a
17% decline on 2019, reflecting adverse
weather impacts at the start of the
year and demand destruction, including
the significant impact of government
restrictions implemented in response
to COVID-19. Pleasingly, international
volumes were 36% higher than 2019 at
6.5 billion litres, driven by an increase
in third-party sales in volatile market
conditions, supported by our expanded
international storage initiatives.
Strong progress
executing our International
growth strategy
In 2020, we remained focused on
executing our International growth
strategy, with strong organic earnings
growth delivered in volatile market
conditions. Fuel and Infrastructure
International’s EBIT of $85 million
was up 18% on 2019.
Trading and Shipping plays a key role
in our success, sourcing petroleum
products from global markets that allow
us to meet the needs of our customers
in Australia and overseas. Our sourcing
capabilities and geographic reach
have significantly expanded in recent
years, with strong growth observed in
third-party fuel volumes in 2020 and
storage in the South East Asian region
providing scope for our Trading and
Shipping business to deliver strong
returns on working capital in volatile
market conditions.
In addition to managing price volatility
and volume shock over a disruptive
period, the Trading and Shipping business
focused on growth through customer,
geographic and product expansion.
In 2020, this included the extension of
our international storage program from
the introduction of diesel and jet fuel in
2019, to crude oil in 2020. Our Houston
office, which we announced in 2019 as a
new strategic initiative to capitalise on
the USA’s unique and growing position
in international oil markets, achieved
operational readiness in October 2020.
The recently established Houston office
has been supporting our Singapore team
with investigating new international
markets and identifying sourcing
improvement opportunities, and they
will continue to work together to identify
further growth potential in 2021.
Our Gull business in New Zealand
performed well during the year,
with volumes growing by 4%.
The business opened 10 new sites in
2020, with 9 more planned for 2021.
For Seaoil in the Philippines, of which
we own a 20% equity interest, volumes
showed resilience, despite impacts
from government travel restrictions.
The business opened an additional
76 sites, with significant potential for
long-term network expansion. In 2020,
we provided expertise to assist Seaoil’s
development of an emerging B2B
capability, demonstrating further
growth potential.
We are tracking well against our 2019
commitment to deliver $70 million in
earnings uplift through international
growth by 2024.
Case study
International builds momentum with
new office and storage
This new office works in combination
with our existing team in Singapore
to improve sourcing optionality, hours
of operation and market insights.
We also expanded our international
storage program, from jet and diesel
in 2019 to crude oil in 2020.
Our international storage position
brings new flexibility to generate
value from blending, storing and
re-parcelling products and creates
optimisation opportunities.
In combination with our Trading
and Shipping teams, our storage
program has played an important
role in 2020 as we managed
significant price volatility and
volume shock in global markets
following the onset of COVID-19.
In 2021, we will continue to explore
opportunities to expand our
storage activities by product and
geography in an efficient capital
manner that optimises returns
for shareholders.
In 2020, Ampol reached several
milestones in its International
growth strategy, with the opening
of a new Trading and Shipping
office in Houston and the expansion
of our international storage
program supported by favourable
market conditions.
First established in 2013, our
Trading and Shipping operations
play a key role in our success,
sourcing petroleum products from
global markets that connect to
customer needs in both Australia
and other international markets.
Over the past seven years, we have
leveraged this skill base to expand
capabilities and increase opportunities
to capture value and sustainably grow
long-term earnings. This has included
expanding the number of countries
we source from and continuing to
build our international customer
base, along with the acquisition
of Gull New Zealand and a 20%
interest in Seaoil in the Philippines.
In 2020, we achieved operational
readiness at our Houston Trading
and Shipping office, which aims to
capitalise on the USA’s unique position
in international crude markets.
13
Annual Report 2020 Fuels and Infrastructure continued
Maximising the value
of our assets
Returns from our assets were
impacted by lower demand in
2020 due to COVID-19 restrictions,
which reinvigorated our focus on
maximising value, cost efficiency
and capital effectiveness within
our infrastructure network.
We have the leading position in two
of the largest demand centres in
the country, being New South Wales
and Queensland, with our position
entrenched by the scale of our supply
position and the quality of our
privileged infrastructure. This includes
our significant holdings at Kurnell and
Lytton, which remain valuable assets
that are key to our ongoing operations
and have significant future optionality.
To capture further value, we are
investigating opportunities to augment
our infrastructure positions in other
markets, as well as considering
repurposing assets for the short-term,
releasing small non-strategic assets,
and finally, conducting a review of our
operations at the Lytton refinery.
In 2020, regional refining margins
came under sustained pressure from
weak product demand and global
economic conditions following the onset
of COVID-19, and this resulted in a
Lytton RCOP EBIT loss for the year of
$145 million. Ampol took strong action
throughout the year to protect cash
flows, and in April we brought forward
and successfully delivered our planned
T&I. Lytton returned to operation from
September 2020, with a production
volume of 3.5 billion litres for the full year.
As well as the global economic impact
of COVID-19, there are a range of other
headwinds that have and will continue
to impact refining. These include the
stronger Australian dollar, the continued
growth in new supply capacity in
the region and, in the longer term,
significant capital investment required
to meet new fuel quality standards.
Due to these factors, and the impact
of COVID-19 demand destruction
on refiner margins, Ampol made the
decision to commence a comprehensive
review of the Lytton refinery to
determine the best operating model
over the medium-term.
14
We took steps to
improve our safety
performance in 2020
Total Recordable Injury Frequency
Rate (TRIFR) of 4.6
60%
on 2019
Days Away From Work Injury
Frequency Rate (DAFWIFR) of 1.1
70%
on 2019
The review, which commenced in
October 2020 and will conclude in
the first half of 2021, will consider all
options for the facility’s operations and
for the connected supply chains and
markets it serves. These options include
closure and permanent transition to
an import model, the continuation of
existing refining operations and other
alternate models of operation, including
the necessary investment required to
execute each of the options. All relevant
strategic, economic and operational
factors are being considered, including
measures announced by the Australian
Government to support refining and
bolster fuel security.
We have maintained our
position as the number one
transport fuels provider
Despite a challenging year, Ampol
remains the number one provider
of transport fuels in Australia.
While Australian fuel volumes were
impacted by COVID-19 related demand
destruction, and the associated loss
of scale across the supply chain, our
performance was resilient and we
have continued to build on our strong
customer and industry knowledge.
Ampol Limited In 2020, key sectors such as aviation
and retail were significantly impacted
by government restrictions. This
was partly balanced against strong
demand in mining and agriculture,
with our diversified customer
portfolio also supporting resilience
in our sales volumes.
Australian sales volumes, including
to Convenience Retail and to our
broader base of Australian wholesale
customers, fell by 17% to 13.6 billion
litres in 2020, with jet fuel volumes
declining by 56%. The demand outlook
for 2021 will remain uncertain as
Australia continues to manage the
spread of COVID-19. Jet fuel demand
is expected to remain extremely
challenged as the travel restrictions
continue, with international flights
representing more than 75% of
Ampol’s 2019 jet fuel volumes.
Finally, while traditional transport fuels
are expected to remain resilient and
growing in the Australian market in
the medium-term, we are maintaining
a focus on understanding the energy
transition and the ongoing focus on
decarbonisation. We have identified
a broad set of future energy themes
and are mapping these to our proven
strengths to develop multiple areas
where we have a right to play. This will
allow us optionality in the near-term
and, over the long-term, help us build
a portfolio of positions to protect and
grow value for shareholders as the
energy transition pathway becomes
clearer. We will continue to do this
through test and learn opportunities
and potential larger-scale opportunities
as commercial viability improves.
Improving our
safety performance
In 2020, Fuels and Infrastructure saw
a 60% reduction in its Total Recordable
Injury Frequency Rate (TRIFR),
achieving a 4.6 for the year. It also saw
a 70% reduction in the Days Away From
Work Injury Frequency Rate (DAFWIFR),
achieving a 1.1. This was an outstanding
result that reflects a concerted effort
by management, supervision and
frontline team members on maintaining
a strong safety culture. This was
supported by targeted strategies
and fit-for-purpose initiatives and
campaigns, including a slips, trips and
falls campaign, back to basics campaign
and our Move4Life program.
15
Annual Report 2020 Convenience Retail
Convenience Retail delivered
a strong result in 2020, with
improved performance in both
fuel and shop earnings
RCOP EBIT up
43%
on 2019
7%
increase in like-for-like sales
10.1
TRIFR, down 28% on 2019
108
sites returned to core network
given improved performance
Essential pharmaceuticals
delivery range launched
through Uber Eats
4
new pilot Ampol Woolworths Metro
stores added to network
26
sites transitioned to Ampol brand
Major milestones included the
practical completion of the transition of
franchise stores to company operations,
the launch of our first rebranded
Ampol retail stores, the opening of
another four Ampol Woolworths Metro
sites and further improvement in our
operational performance.
These milestones have built on our
ongoing transformation toward
being a market leader in the fuel
and convenience sector.
Financial performance
Convenience Retail delivered strong
performance in 2020, with improvement
in both fuel and shop earnings.
Overall, the business delivered
an RCOP EBIT of $287 million,
an increase of 43% on 2019.
Retail fuel earnings were driven by
significant improvement in retail fuel
margins. This offset volume weakness
caused by bushfires and floods in the
early part of the year, followed by
government restrictions implemented
in response to COVID-19 from late
March. Total fuel sales volumes were
4.1 billion litres in 2020, 14% lower
than the 4.8 billion litres in 2019.
Strong momentum in execution of our
retail growth strategy is evidenced
through a 7% increase in like-for-like
sales in 2020, with strong growth
in basket size reflecting ongoing
improvement in our customer offer.
This shop growth also reflects a
behaviour that accelerated during
COVID-19, with Australians spending
more time in their local area and seeking
out the convenience of our network and
range to meet their daily shopping needs.
The $25 million increase in shop
contribution margin in 2020 was
achieved despite a reduced network
size as we progressed the refinement
of our network footprint.
Improving the quality of
our network
In 2020, we made significant progress
in refining our network footprint
to position the business to deliver
stronger returns.
This work has leveraged our network
review announced in 2019, which
identified 500 sites within our controlled
network that had a clear opportunity
to deliver growth through disciplined
execution and an enhanced convenience
offer, as well as 240 sites that were
identified as non-core. Pleasingly,
through improved execution of fuel and
shop performance, we have lifted ROCE
at 108 non-core sites and pulled them
back into the core network.
The return of 108 sites to the core
network, as well as the closure of
marginal sites, has seen our non-core
network reduce to approximately
100 sites. Approximately 20 further
non-core sites are planned for closure
in 2021 and we will continue to explore
alternative avenues to maximise returns
from the approximately 80 remaining
non-core sites as part of business as
usual activity, with a large number
likely to be closed or transferred to
alternative operators.
Further to these initiatives, we
completed our Convenience Retail
property transaction, with the Charter
Hall and GIC consortium acquiring
a 49% interest in 203 of our core
freehold retail property sites. We also
successfully completed the divestment
of 25 higher and better use sites,
which was announced late in 2019,
for $136 million.
Moving forward, we will continue to look
for opportunities to release capital and
optimise site utilisation. We will also
continue to review property markets
and ongoing site performance in 2021.
16
Ampol Limited
Case study
Ampol and Uber Eats supporting Australians through COVID uncertainty
In 2020, Ampol and Uber Eats
partnered to deliver an Australian first
in the convenience industry, providing
consumers the ability to order essential
pharmaceutical items right to their
front door.
Accessible through the Ampol
Foodary shop on the Uber Eats app,
over-the-counter pharmaceutical
products, such as Panadol, Nurofen,
Zyrtec, Codral and Advil, are available
for delivery from Ampol stores across
Australia, with delivery times averaging
less than 30 minutes. The offer
supports Australians to isolate when
they are sick and keep themselves
and their families safe.
This pharmaceutical category
complements the broad range of items
already available through the Foodary
Uber Eats shop that was launched in
2019, including healthy ready-to-eat
meals, sandwiches, protein snacks,
hot food, coffee, health and beauty
and general grocery products.
Joanne Taylor, Ampol’s Executive
General Manager, Convenience Retail,
said that Ampol’s Uber Eats offering
is adapting to changing consumer
needs in the new ‘COVID-normal’,
and supporting all shopper
missions from a late-night snack
to a top-up grocery shop.
“Our Uber Eats delivery offer forms
part of our strategy to achieve growth
through targeted consumer-focused
programs that deliver more
convenience to Australians.
“Our Foodary Uber Eats shop was a
huge success in 2020, with strong
performance confirming that
Australians are increasingly looking
to safely access essential products
from the comfort of their home.
“As cities and states around the
country have continued to enter short
lockdowns, our Uber Eats offer has
supported Australians to isolate by
giving them all the essentials items
they need, right at their fingertips,
with basket sizes continuing to
increase as customers become more
familiar with the breadth of our range.”
Uber Eats is available at more
than 400 Ampol locations across
the country.
17
Annual Report 2020 Convenience Retail continued
In 2020, we made strong progress
on delivering network upgrades
and completed the first 26 Ampol
transitions. We were also selected by
the New South Wales Government as
the preferred proponent to redevelop
four existing highway service centres
located on the M4 Motorway at Eastern
Creek and on the M31 Hume Highway
at Pheasants Nest. These four tier-one
sites are exposed to high traffic flow
– given their privileged locations on
major motorways – with expected total
fuel volumes post redevelopment of
approximately 150ML. They offer strong
potential for growth by leveraging
Ampol’s innovative convenience
formats and QSR offerings.
The award of these new contracts
in 2020 reflects our market-leading
position in fuel and the strength of our
formats. The redevelopment of these
sites will strengthen our network.
Transition of franchise
network reaches
practical completion
Optimisation and range
driving growth in shop
performance
In 2020, we added another 112 sites to
company operations. Over four years,
we have progressed from having less
than 1,000 employees in retail, to over
6,800. The successful completion of the
franchise transition provides us with
the platform to focus on the execution
of our retail strategy that will deliver
improved returns for shareholders.
In 2020, we delivered strong
performance in shop, with total network
shop sales growing by 4% and like-for-like
sales by 7%. This improvement was
underpinned by the breadth of our range
and strong growth in chilled perishables,
groceries, beverages, tobacco and
general merchandise.
This improved performance is also
a result of the execution of key
customer-focused initiatives, including
our integration with Uber Eats, as well
as range and format improvements. In
2020, we added another approximately
75 sites to Uber Eats, and launched a new
essential pharmaceuticals category in our
delivery range, which was an Australian
first for the convenience industry.
We also benefited from scale and range
advantages enabled by our wholesale
supply agreement with Woolworths,
with strong performance in categories
including chilled items, confectionery
and groceries.
18
Ampol Limited Executing our format
strategy and leveraging
the rebrand
In 2020, we were encouraged by the
strong results from our first two
flagship Ampol Woolworths Metro
pilot stores that were opened in late
2019. Over the course of the year, we
observed strong sales uplift and margin
expansion, while driving a significant
reduction in operational costs.
We maintained a disciplined approach
to format upgrades in 2020, pausing
during the middle of the year due to
COVID-19 and resuming these works
in the fourth quarter, delivering an
additional four Ampol Woolworths
Metro stores across Sydney. We applied
learnings from the first two pilot stores
and achieved a reduction in capital
spend ranging from 20–30%, with an
enhanced layout designed to enable
further labour and waste optimisation.
In 2021, we will extend the pilot with
plans to open a further 20 Ampol
Woolworths Metro sites, applying
the insights from our pilot stores.
The revitalisation of Ampol across our
network will present an opportunity
to refresh the appearance of our
company-controlled sites in 2021,
enabling us to transition our shops
to a base-level Foodary format.
Upon the conclusion of the rebrand,
our convenience shops will carry
either the Foodary or Ampol
Woolworths Metro brand.
Improvement in
operational performance
In 2020, we delivered improvements
in operational performance, with new
initiatives to enhance the customer
experience, become more efficient and
reinforce the right safety behaviours.
Our retail teams responded quickly
to the onset of COVID-19 to ensure
the safety of customers, employees,
and partners, including reducing
customer touch points in-store
and increasing sanitation practices.
We also implemented initiatives such
as additional cleaning procedures for
shift changeovers, protective screens
at high-volume sites, temporarily
stopping use of reusable coffee cups,
increasing signage and making hand
sanitiser and wipes available for
customers wherever possible.
We also continued to work towards
improving our safety culture with an
objective of reducing the number of safety
incidents through a focus on behavioural
safety and improving safety leadership.
We saw an overall improvement in our key
safety metric, TRIFR, achieving 10.1 for
the period.
Recordable injuries remained stable
throughout the year and most incidents
related to the performance of everyday
tasks, highlighting the criticality of
safety culture and behaviours.
In 2021, we will remain focused on
improving our safety performance,
with key priorities for the year including
the delivery of a behavioural safety
program, continued safety inspections
and leadership visits.
19
Annual Report 2020 Sustainability
We take a responsible and
long-term view to delivering
sustainable value for our stakeholders
Safety
People
Environment
Community
Total Recordable Injury
Frequency Rate 1
Female representation
at leadership level
Carbon emissions 3
4.6
10.1
Fuels and
Infrastructure
Convenience
Retail
37.7%
798,708
Total emissions
Total community
investment 5
$2.47m
Days Away from Work
Injury Frequency Rate 2
Overall female
representation
0 major spills
(Vol (l) >=8,000L)
Community complaints
1.1
4.8
42.8%
Fuels and
Infrastructure
Convenience
Retail
4 minor spills
(160 < Vol (l) <8,000L)
34
Overall
44%
from FY19
Process safety
Employee
engagement score
0 marine spills
(Any quantity)
Supporting the
education of more than
0
1
Tier One
Safety event
Tier Two
Safety event
76%
1 Category 3
environmental incident 4
12,080
children6 across Australia
Corresponding United Nations Sustainable Development Goals
Aligning our approach with global standards
To help play our role in addressing the significant sustainability
challenges our world faces, we have mapped out the United
Nations Sustainable Development Goals (SDGs) against our
Sustainability Strategy.
4
Quality education
7
Affordable and clean energy
8
9
Decent work and economic growth
Industry, innovation and infrastructure
In 2020, we also became a signatory to the
United Nations Global Compact.
10
Reduced inequalities
13
Climate action
20
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Contribution t o t h e
tralian economy a n d c o m m u
Strategy and approach
In executing our corporate strategy
and delivering on our company
purpose – Powering better journeys,
today and tomorrow – we recognise
the need to take a responsible and
long-term view to delivering sustainable
value for our customers, shareholders,
local communities and employees.
Our approach involves making
sustainability core to decision making
and balancing environmental, social and
governance aspects with our broader
strategic objectives.
In 2019, we prepared a three-year
Sustainability Strategy, which is
an integral part of our overarching
corporate strategy.
We have defined sustainability
across four pillars
Safe and responsible business
Being safe and ethically responsible in how we
do business. Developing and looking after our
people to support the delivery of our strategy
Continuous improvement and
optimisation of assets
Delivering operational excellence, utilising
resources efficiently
Contribution to the Australian
economy and communities
Generating economic benefits for Australia
and helping to develop communities in the
areas we operate
Transition to a low carbon future
Future-proofing Ampol and supporting our
customers in the transition to a low carbon
future. Engaging with our key stakeholders,
including shareholders
1. Total number of occupational injuries per one million hours worked. Occupational injuries include
an injury requiring days away from work, restrictions in the work performed or medical treatment
2. Total number of days away from work per one million hours worked. Days away from work is
defined as the number of days a worker is certified by a physician to be unfit to perform normal
duties, starting from the day after the incident occurred
3. Emission estimates are prepared in accordance with the Australian National Greenhouse and
Energy Reporting Determination 2008. This includes emissions and energy consumption at
corporate offices, pipelines, depots and diesel stops and marine fuels
4.
Incident resulting in medium to long-term environmental harm and remediation effort (>3 months)
5. Total community investment value includes management costs and additional contributions to
the community including employee volunteering
6. Clontarf Foundation: 9,000; Stars Foundation: 1,000; The Smith Family: 480; Ampol Best All
Rounder: 1,600
Safe and responsible business
Safety performance improved
significantly in 2020
2020 saw a significant reduction in
recordable injuries and days away from
work across the business. This was a
result of the focus put on improving
safety leadership, as well as the execution
of targeted initiatives and campaigns
aimed at educating employees on safety
practices and procedures.
Our Fuels and Infrastructure
business saw a 60% reduction
in recordable injuries and a
70% reduction in days away from
work injuries, with no Category 2 injuries
during the year. These results were
achieved during a period of disruption
due to COVID-19, and an extended
T&I at the Lytton refinery, which are
recognised as times of enhanced risk.
Recordable injuries within our
Convenience Retail business remained
stable compared to 2019, with most
incidents relating to the performance
of everyday tasks, and regrettably,
the business recorded one Category 2
injury in 2020. We recognise the need
to continue our focus on improving
safety culture and safety leadership
to reduce these incidents, with key
priorities for 2021 including the delivery
of our Safety Blackspot Program and
continued safety inspections by the
senior leadership team.
Managing health and safety
risks associated with the
COVID-19 pandemic
The health and safety of our people
and customers has been a primary
focus for Ampol in 2020 as we dealt
with the onset of COVID-19. In early
March, a crisis team was activated
with the key objectives of keeping our
people, customers and community
safe, and ensuring that our business
could continue to operate as an
essential service.
21
Annual Report 2020
We adopted stringent protocols to
mitigate infection risk across our
network. This included complying with
changing regulatory requirements
and investing in the necessary
controls to support health and safety.
In Convenience Retail, we developed
COVID-Safe training, implemented
alternate rosters to limit employee
cross-over, reinforced hygiene standards,
increased sanitation and installed
Perspex screens at our checkout
points. In Fuels and Infrastructure, we
implemented thermal screening at the
Lytton refinery, excluded non-essential
personnel from small indoor areas,
such as control rooms, and we also
implemented restrictions at our wharfs
for both Ampol and ship personnel.
To support our people, front-line
employees were supported with
additional COVID-19 leave, and
office-based employees were enabled
with remote working capability,
including the use of Microsoft
Teams to conduct virtual meetings.
Managing environmental risk
During the year, we continued
the delivery of our group-wide
environmental management governance
framework, with the objective of
aligning our business operations with
the principles set out in ISO14001:2015
Environmental Management Systems.
Key focus areas in 2020 included
regular reporting on environmental
performance, delivering legal obligation
training to the Ampol Leadership Team
and preparing guidance materials for
senior leaders for site visits.
Unfortunately, during 2020, Ampol
recorded one Category 3 environmental
event as a result of a leak from an
underground tank at a retail site. A
detailed investigation and environmental
site assessment was executed, with a
remediation plan put in place, and we
continue to engage with local residents
and businesses. To prevent future
incidents of this nature occurring,
Ampol has reviewed and updated its
underground petroleum storage risk
model and implemented initiatives to
improve control effectiveness, such as
more frequent Statistical Inventory
Reconciliation Analysis (SIRA) reporting,
proactive Equipment Integrity Testing
(EIT) and the roll out of Automatic Tank
Gauging (ATGs) across our network.
22
Supporting our people
In 2020, we conducted our annual
employee engagement survey to
improve our understanding of the
experience of our people, and the
areas where we need to improve.
Despite the significant disruption to
our workforce because of COVID-19,
our engagement levels remained
strong at 76%. We will look to improve
on this result in 2021 by enhancing
the clarity of our company strategy,
better celebrating the achievements of
individuals and teams and supporting
more courageous thinking in the way
we work and make decisions.
To promote general employee wellbeing,
in 2020 we launched our inaugural
Ampol Wellbeing Month – an education
program designed to encourage
employees to take care of their health,
while educating on the support provided
by our Employee Assistance Program.
During the year, we continued to
encourage an inclusive work environment
with the celebration of a number of
cultural days, such as NAIDOC Week,
Wear it Purple Day, Close the Gap and
National Reconciliation Week. These
celebrations were managed by our
employee-led working groups – Women
in the Fuels Industry (WIFI), Indigenous
Trailblazers and the Rainbow Alliance –
which are supported by our Diversity
and Inclusion Council.
In acknowledgement of our focus
on gender equality, we were ranked
26th on Equileap’s Global Top 100
gender-equal companies.
Respecting human rights
We support fundamental human rights
and the prevention of modern slavery
and human trafficking.
We have developed a Human Rights
Policy and framework and responded
to our obligations under the Modern
Slavery Act 2018 (Cth). This included
mapping our supply chain, conducting
a high-level modern slavery risk
assessment and conducting a
prioritisation exercise for high-risk areas
in our supply chain. We have delved
into the risk areas which we identified
as top priorities and introduced
steps to assess and address modern
slavery risk within our operations
and supply chain. Key activities in
2020 included risk assessments,
supplier engagement, training and
strengthening grievance mechanisms.
Our first Modern Slavery Statement
will be published in 2021.
Continuous improvement
and optimisation of assets
Being efficient with our energy
and water use
We recognise that we expend large
amounts of energy and water, and we
are focused on delivering initiatives to
reduce the use of these resources.
Our Lytton refinery constitutes the
largest component of our energy
footprint, comprising 99.6% in 2020.
To reduce Lytton’s energy use, we have
continued the delivery of efficiency
projects and operational optimisation
opportunities, including the upgrade
of the analysers on its furnaces and
the reinstatement of steam raiser
economisers. We are also continuing
our focus on minimising Lytton’s impact
on water resources, which comprises
80% of our total water use. In 2020,
approximately 67% of Lytton’s water
use came from recycled sources.
To reduce energy use across our retail
operations, in 2021 we will deliver an
energy management program, which
will be focused on improving energy
efficiency across our retail sites and
increasing the use of renewable energy.
$2.47m
invested in communities
via the Ampol Foundation
In 2020, more than
1,600 students received
the Ampol Best
All Rounder Award
for demonstrating
exceptional leadership
and community spirit
in unprecedented
circumstances
The Ampol Foundation
supports the education
of more than
12,080
children across Australia
Ampol Limited Partnership with The Smith Family
announced in October 2020
Contribution to the
Australian economy
As a proud and independent Australian
company, we are committed to being a
positive contributor to communities and
using our network and employee base
to improve the lives of all Australians.
Our revitalisation as Ampol has
renewed our focus on communities in
2020 and provided an opportunity to
ensure our activities have proven social
impact, make a meaningful difference
and align with our new company
purpose of Powering better journeys,
today and tomorrow.
Powering better journeys for
young Australians through the
Ampol Foundation
At Ampol, we are passionate about
championing education and employment
opportunities for Australia’s youth, and
have made this a major focus of the
Ampol Foundation in 2020. We believe
that investment in youth development
and education has a long-lasting impact
on broader society.
In 2020, we announced a new
partnership with The Smith Family,
complementing our existing long-term
partnerships with Stars Foundation
and Clontarf Foundation, along with
our Ampol Best All Rounder program
which reaches thousands of schools
each year. Through these programs,
Ampol supports the education of more
than 12,080 children1 across Australia.
The Ampol Best All Rounder Award,
Australia’s most iconic secondary
education recognition program,
entered its 35th year in 2020 and
recognised more than 1,600 students
who demonstrated exceptional
leadership and community spirit
during unprecedented circumstances.
Ampol also announced a new
partnership with Surf Life Saving
Australia in December 2020.
1.
Clontarf Foundation: 9,000; Stars
Foundation: 1,000; The Smith Family: 480;
Ampol Best All Rounder: 1,600
The Smith Family
In October 2020, Ampol announced a
new partnership with The Smith Family.
Through our partnership, we are investing
directly in the Learning for Life program,
which provides young Australians
experiencing disadvantage with the extra
tools and support they need to stay
at school and go onto further study or
work. We are also supporting The Smith
Family through fundraising activities and
engaging our employees in volunteering
and other programs, such as iTrack
mentoring and work inspiration.
Surf Life Saving Australia
Our partnership with Surf Life Saving
Australia will see the Ampol brand on
the sleeve of the iconic surf lifesaving
patrol shirt on beaches across the
country, with Ampol to also have
a presence at major surf lifesaving
events, including the Coolangatta
Gold and the Australian Surf Life
Saving Championships
Being a positive contributor
In 2020, as we revitalised the
Ampol brand and reaffirmed our
commitment to communities, we
enabled our employees to engage
with social issues and organisations
that are important to them.
This was launched through our
inaugural Positive Contributor Day
held in October 2020 as part of the
internal launch of Ampol.
On Positive Contributor Day, employees
were encouraged to take a day off from
work and donate their time to a charity
or community group of their choice,
while our retail network conducted
a fundraising effort that raised more
than $40,000 for The Smith Family.
Transition to a low
carbon future
Climate change considerations
for our business
We are committed to publishing
climate disclosures in line with the
recommendations of the Task Force on
Climate-related Financial Disclosures
Case study
Ampol named in
Top 20 Best Workplaces
to Give Back
In 2020, Ampol was honoured to be
ranked 20th in Australia’s Top 40
Best Workplaces to Give Back.
The list, an initiative of Good
Company, recognises businesses
that, despite being in the first
recession in three decades, continue
to demonstrate responsible
leadership and support employees
to give back to local communities.
Ampol was recognised for its
support of non-profit organisations,
volunteer leave, payroll giving, the
Ampol Best All Rounder program
and our actions to support affected
communities during the 2019-2020
Australian bushfire crisis.
(TCFD). In 2019, we conducted a
qualitative assessment to determine
the physical and transitional climate
risks most relevant to our business. In
2020, we built on this important work
by further integrating management
of climate change into our financial
and strategic planning processes and
tracking our performance against the
recommendations of TCFD.
In 2020, we made progress on our
climate change risk strategy that we
launched in 2019. Key activities over
the course of the year included the
introduction of an internal carbon price
for investment and strategic decision
making, undertaking climate scenario
analysis and engagement with our
stakeholders, including holding an
ESG investor roadshow.
Climate scenario analysis
Undertaking climate scenario analysis
allows our business to estimate how
we are positioned for different climate
futures over the medium to long-term.
In 2020, we tested our operations
and corporate strategy against two
plausible climate futures including a
business-as-usual scenario (3-4 degrees
C). We will be providing a report of
this analysis in our Decarbonisation
and Energy Transition Strategy, to be
released in Q2 2021.
23
Annual Report 2020 Financial report
The 2020 Financial Report for Ampol Limited includes:
− Directors’ Report
− Lead Auditor’s Independence Declaration
− Directors’ Declaration
− Independent Auditor’s Report to the Shareholders
of Ampol Limited
− Consolidated Income Statement
− Consolidated Statement of Comprehensive Income
− Consolidated Balance Sheet
− Consolidated Statement of Changes in Equity
− Consolidated Cash Flow Statement
− Notes to the Financial Statements for the year
ended 31 December 2020
Ampol Group
For the purposes of this report, the Ampol Group
(collectively, the “Group”) refers to:
− Ampol Limited (Ampol), the parent company
of the Group listed on the Australian Securities
Exchange (ASX)
− Major operating companies, including Ampol
Australia Petroleum Pty Ltd (formerly Caltex
Australia Petroleum Pty Ltd)
− Wholly owned entities and other entities that
are not controlled by the Group
Contents
Directors’ report
Financial statements
Ampol Limited
ACN 004 201 307
Shareholder Information
25
78
132
Directors’ Report
Directors’ Report
5
The Board
Introduction
Ampol Limited (formerly Caltex Australia Limited) presents the
2020 Directors’ Report (including the Remuneration Report) and
the 2020 Financial Report for Ampol Limited (Ampol) and its
controlled entities (Ampol Group) for the year ended
31 December 2020. An Independent Audit Report from KPMG,
as external auditor, is also provided.
Board of Directors
The Board of Ampol comprises Steven Gregg (Chairman),
Matthew Halliday (Managing Director and CEO), Mark Chellew,
Melinda Conrad, Michael Ihlein, Gary Smith, Barbara Ward AM
and Penny Winn.
Bruce Morgan retired from the Ampol Board as an Independent
Non-executive Director, effective 14 May 2020.
1
3
5
7
2
4
6
8
1 Steven Gregg
Chairman and Independent Non-executive Director
Date of appointment: 9 October 2015
Board Committees: Nomination Committee (Chairman)
Steven has over 30 years’ experience in investment banking
and management consulting in Europe and Australia. He brings
to the Board extensive executive, corporate finance and
strategic experience.
Steven is Chairman of Tabcorp Holdings Limited and a director
of Challenger Limited and Challenger Life Company Limited,
and William Inglis & Son Limited. He is also the Chairman of
Unisson Disability Limited and a trustee of the Australian
Museum. He has previously served as Chairman of Goodman
Fielder Limited and Austock Group Limited.
Steven has extensive Australian and international experience,
with ABN AMRO (as Senior Executive Vice President and Global
Head of Investment Banking), Chase Manhattan, Lehman
Brothers and AMP Morgan Grenfell. His most recent executive
role was as a Partner at McKinsey & Company.
Steven holds a Bachelor of Commerce from the University of
New South Wales.
2 Matthew Halliday
Managing Director and CEO
Date of appointment: 29 June 2020
Matthew Halliday was appointed Managing Director and Chief
Executive Officer in June 2020. He joined Ampol in April 2019 as
Chief Financial Officer.
Prior to joining Ampol, Matthew enjoyed a successful career with
Rio Tinto spanning 20 years, where he held senior finance and
commercial roles across several divisions and geographies.
Matthew is a Chartered Accountant and holds a Bachelor of
Commerce from the University of Western Australia and an MBA
from London Business School.
3 Mark Chellew
Independent Non-executive Director
Date of appointment: 2 April 2018
Board Committees:
Safety and Sustainability Committee, Human Resources
Committee and Nomination Committee
Mark brings to the Board international expertise in industry,
strategy, governance and large capital projects with a
background in manufacturing, mining and process industries.
He is currently Chairman of Cleanaway Waste Management
Limited. Mark was formerly Chairman of the industry body
Manufacturing Australia and a director of Virgin Australia
Holdings Limited and Infigen Energy Limited.
Mark was the Chief Executive Officer and Managing Director of
Adelaide Brighton and prior to that, held executive positions at
Blue Circle Industries and CSR Limited.
Mark holds a Bachelor of Science (Ceramic Engineering) from
the University of New South Wales, a Master of Engineering
(Mechanical) from the University of Wollongong and a
Graduate Diploma of Management from the University
of New South Wales.
25
Annual Report 2020
6
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Directors’ Report continued
6
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Directors’ Report continued
The Board continued
4 Melinda Conrad
Advisor with Poten & Partners, working with the LNG
Commercial team
Gary holds a Bachelor of Engineering (Mechanical Engineering)
and Master of Science (Chemical Engineering and Chemical
Commercial team
Technology) from the University of New South Wales.
Advisor with Poten & Partners, working with the LNG
Independent Non-executive Director
Date of appointment: 1 March 2017
Audit Committee, Human Resources Committee
and Nomination Committee
The Board continued
4 Melinda Conrad
Independent Non-executive Director
Date of appointment: 1 March 2017
Melinda brings to the Board over 25 years’ experience in
Board Committees:
Audit Committee, Human Resources Committee
business strategy, marketing and technology led transformation,
and Nomination Committee
and brings skills and insights as an executive and director from
a range of industries, including retail, financial services and
Board Committees:
healthcare.
5 Michael Ihlein
Board Committees:
6 Gary Smith
Board Committees:
Gary holds a Bachelor of Engineering (Mechanical Engineering)
and Master of Science (Chemical Engineering and Chemical
Technology) from the University of New South Wales.
7 Barbara Ward AM
Independent Non-executive Director
Date of appointment: 1 April 2015
Board Committees:
7 Barbara Ward AM
Human Resources Committee (Chairman), Audit Committee
Independent Non-executive Director
and Nomination Committee
Date of appointment: 1 April 2015
Board Committees:
Human Resources Committee (Chairman), Audit Committee
and Nomination Committee
Barbara brings to the Board strategic and financial expertise
in senior management roles. Barbara is a director of Qantas
Airways Limited, a number of Brookfield Multiplex Group
companies and Crestone Holdings Limited.
Melinda brings to the Board over 25 years’ experience in
business strategy, marketing and technology led transformation,
and brings skills and insights as an executive and director from
a range of industries, including retail, financial services and
healthcare.
Melinda is currently a director of ASX Limited, a director of
Stockland Group and a director of the George Institute for
Global Health and the Centre for Independent Studies. She
is a member of the Australian Institute of Company Directors
Corporate Governance Committee and an Advisory Board
member of Five V Capital.
Melinda is currently a director of ASX Limited, a director of
Stockland Group and a director of the George Institute for
Global Health and the Centre for Independent Studies. She
is a member of the Australian Institute of Company Directors
Melinda has previously served as a director of OFX Group
Corporate Governance Committee and an Advisory Board
Limited, The Reject Shop Limited, David Jones Limited, APN
member of Five V Capital.
News & Media Limited, the Garvan Medical Research Institute
Foundation and as a member of the ASIC Director Advisory
Panel. Melinda held executive roles at Harvard Business School,
Colgate-Palmolive, several retail businesses as founder and
CEO, and in strategy and marketing advisory.
Barbara was formerly a director of the Commonwealth Bank
of Australia, Lion Nathan Limited, Multiplex Limited, Data
Advantage Limited, O'Connell Street Associates Pty Ltd, Allco
Finance Group Limited, Rail Infrastructure Corporation, Delta
Electricity, Ausgrid, Endeavour Energy and Essential Energy.
She was also Chairman of Country Energy, NorthPower and
HWW Limited, a Board member of Allens Arthur Robinson,
The Sydney Opera House Trust and Sydney Children's
Hospital Foundation and served on the Advisory Board of
LEK Consulting.
Melinda has previously served as a director of OFX Group
Limited, The Reject Shop Limited, David Jones Limited, APN
News & Media Limited, the Garvan Medical Research Institute
Foundation and as a member of the ASIC Director Advisory
Panel. Melinda held executive roles at Harvard Business School,
Colgate-Palmolive, several retail businesses as founder and
CEO, and in strategy and marketing advisory.
Melinda holds a BA (Hons) from Wellesley College in Boston,
an MBA from Harvard Business School, and is a Fellow of the
Australian Institute of Company Directors.
Barbara was formerly a director of the Commonwealth Bank
of Australia, Lion Nathan Limited, Multiplex Limited, Data
Advantage Limited, O'Connell Street Associates Pty Ltd, Allco
Finance Group Limited, Rail Infrastructure Corporation, Delta
Electricity, Ausgrid, Endeavour Energy and Essential Energy.
She was also Chairman of Country Energy, NorthPower and
HWW Limited, a Board member of Allens Arthur Robinson,
The Sydney Opera House Trust and Sydney Children's
Hospital Foundation and served on the Advisory Board of
LEK Consulting.
Barbara brings to the Board strategic and financial expertise
in senior management roles. Barbara is a director of Qantas
Airways Limited, a number of Brookfield Multiplex Group
companies and Crestone Holdings Limited.
Barbara was Chief Executive Officer of Ansett Worldwide
Aviation Services from 1993 to 1998. Prior to that, she held
various positions at TNT Limited, including General Manager
Finance, and also served as a Senior Ministerial Advisor to
The Hon PJ Keating.
Melinda holds a BA (Hons) from Wellesley College in Boston,
an MBA from Harvard Business School, and is a Fellow of the
Australian Institute of Company Directors.
Barbara holds a Bachelor of Economics and a Master of Political
Economy from the University of Queensland and is a member of
the Australian Institute of Company Directors.
Barbara was Chief Executive Officer of Ansett Worldwide
Aviation Services from 1993 to 1998. Prior to that, she held
various positions at TNT Limited, including General Manager
Finance, and also served as a Senior Ministerial Advisor to
The Hon PJ Keating.
Independent Non-executive Director
Date of appointment: 1 June 2020
5 Michael Ihlein
Audit Committee (Chairman), Safety and Sustainability
Independent Non-executive Director
Committee and Nomination Committee
Date of appointment: 1 June 2020
Board Committees:
Audit Committee (Chairman), Safety and Sustainability
Committee and Nomination Committee
Mike brings to the Board financial expertise and experience as
an international executive from a range of industries, including
previous roles as CEO and CFO of Brambles Limited and CFO
of Coca-Cola Amatil Limited.
Mike is currently a director of Scentre Group, CSR Limited,
Inghams Group Limited and the not-for-profit mentoring
organisation Kilfinan Australia Ltd.
Mike brings to the Board financial expertise and experience as
an international executive from a range of industries, including
previous roles as CEO and CFO of Brambles Limited and CFO
of Coca-Cola Amatil Limited.
8 Penny Winn
Independent Non-executive Director
Date of appointment: 1 November 2015
Board Committees:
Safety and Sustainability Committee (Chairman),
Audit Committee and Nomination Committee
Mike holds a Bachelor of Business Studies (Accounting) from
the University of Technology, Sydney. He is a fellow of the
Australian Institute of Company Directors, CPA Australia and
the Financial Services Institute of Australasia.
Mike is currently a director of Scentre Group, CSR Limited,
Inghams Group Limited and the not-for-profit mentoring
organisation Kilfinan Australia Ltd.
Mike holds a Bachelor of Business Studies (Accounting) from
the University of Technology, Sydney. He is a fellow of the
Australian Institute of Company Directors, CPA Australia and
the Financial Services Institute of Australasia.
Independent Non-executive Director
Date of appointment: 1 June 2020
Human Resources Committee, Safety and Sustainability
Committee and Nomination Committee
Gary brings to the Board substantial Australian and international
oil industry experience with a career in oil and gas which spans
40 years, including 20 years with Shell and various executive
roles within the industry, including General Manager Refining,
Supply and Distribution of Ampol Limited (formerly Caltex
Australia Limited). Gary is currently employed as a Senior
6 Gary Smith
Independent Non-executive Director
Date of appointment: 1 June 2020
Board Committees:
Human Resources Committee, Safety and Sustainability
Committee and Nomination Committee
Gary brings to the Board substantial Australian and international
oil industry experience with a career in oil and gas which spans
40 years, including 20 years with Shell and various executive
roles within the industry, including General Manager Refining,
Supply and Distribution of Ampol Limited (formerly Caltex
Australia Limited). Gary is currently employed as a Senior
8 Penny Winn
Independent Non-executive Director
Date of appointment: 1 November 2015
Board Committees:
Safety and Sustainability Committee (Chairman),
Audit Committee and Nomination Committee
Penny brings to the Board Australian and international strategic,
major transformation and business integration, technology and
retail marketing experience. Penny is currently a director of
CSR Limited, a director of Goodman Limited, Goodman Funds
Management Limited and a director of Coca-Cola Amatil Limited.
She has previously served as Chair and a director of Port
Waratah Coal Services Limited, a director of a Woolworths
business, Greengrocer.com, a Myer business, sass & bide,
and Quantium Group.
Prior to her appointment to Ampol, Penny was Director Group
Retail Services with Woolworths Limited. She has over 30 years
of experience in retail with senior management roles in Australia
and internationally.
Penny brings to the Board Australian and international strategic,
major transformation and business integration, technology and
retail marketing experience. Penny is currently a director of
CSR Limited, a director of Goodman Limited, Goodman Funds
Management Limited and a director of Coca-Cola Amatil Limited.
She has previously served as Chair and a director of Port
Waratah Coal Services Limited, a director of a Woolworths
business, Greengrocer.com, a Myer business, sass & bide,
and Quantium Group.
Penny holds a Bachelor of Commerce from the Australian
National University and a Master of Business Administration
from the University of Technology, Sydney and is a graduate
of the Australian Institute of Company Directors.
Prior to her appointment to Ampol, Penny was Director Group
Retail Services with Woolworths Limited. She has over 30 years
of experience in retail with senior management roles in Australia
and internationally.
Penny holds a Bachelor of Commerce from the Australian
National University and a Master of Business Administration
from the University of Technology, Sydney and is a graduate
of the Australian Institute of Company Directors.
Barbara holds a Bachelor of Economics and a Master of Political
Economy from the University of Queensland and is a member of
the Australian Institute of Company Directors.
26
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Leadership Team
1
3
5
2
4
6
7
1 Michael Abbott
Chief Governance and Risk Officer
Michael Abbott was appointed as Chief Governance and Risk
Officer in January 2021. He is responsible for risk, audit, legal,
secretariat, corporate affairs and sustainability.
Prior to joining Ampol, Michael spent 15 years at Woodside
Energy, holding a variety of senior roles, including Senior Vice
President, Corporate and Legal, where he was responsible for
multiple corporate disciplines, including government affairs,
emergency management, audit, governance, as well as business
climate and economic outlook. Before Woodside, Michael spent
13 years working as a private practice lawyer in Australia and
Hong Kong.
Michael holds a Bachelor of Law and Arts and a Master of
Business Administration from the University of Western Australia.
2 Andrew Brewer
Executive General Manager, Infrastructure
Andrew Brewer was appointed Executive General Manager,
Infrastructure in November 2020 and manages Ampol’s Australian
manufacturing and distribution assets as well as the Information
Technology business.
He is an experienced senior executive in the energy and
resources sector, having held leadership roles for large-scale
facilities and integrated supply chains in the minerals processing,
resources and energy industries across Australia, New Zealand
and Canada. This includes former roles at Ampol, where he was
General Manager of the Kurnell refinery, and later Executive
General Manager of Supply Chain Operations and Executive
General Manager Transformation. Andrew has returned to Ampol
from Refining New Zealand where he held the position of Chief
Operating Officer.
Andrew has a Bachelor of Engineering (Honours) and a Bachelor
of Science from the University of Adelaide and a Diploma in
Management from Deakin University.
3 Jeff Etherington
Interim Chief Financial Officer
Jeff Etherington was appointed Interim Chief Financial Officer in
March 2020. He is responsible for finance, accounting, treasury,
taxation and procurement. Jeff joined Ampol in November 2014 as
Group Treasurer, before being appointed Deputy Chief Financial
Officer and Group Treasurer in March 2019.
Prior to joining Ampol, Jeff spent over 15 years at Qantas Airways
Limited, holding various senior roles including Group Treasurer
and Head of Investor Relations. Before Qantas, Jeff spent four
years working in treasury at Southcorp Limited, and six years in
foreign exchange and trade finance at National Australia Bank
Limited. Jeff was a Non-executive Director of Qantas Credit
Union (now Qudos Bank) from 2008 to 2015.
Jeff is a CPA and holds a Bachelor of Business Studies and a
Master of Applied Finance from Monash University. Jeff is also
a member of the Australian Institute of Company Directors.
27
Annual Report 2020
6 Joanne Taylor
Executive General Manager, Retail, Brand and Culture
Joanne Taylor was appointed Executive General Manager of
Retail, Brand and Culture in August 2020. She is responsible for
Ampol’s retail business, human resources, brand and marketing,
and internal communications.
Joanne, who joined Ampol in 2016, has over 20 years’ experience
in the retail, QSR, hospitality and manufacturing sectors, and
brings significant experience in operations, supply chain,
communications and human resources to Ampol.
In her role she is focused on transforming Ampol’s national
network of stores with the revitalisation of the Ampol brand and
evolving its retail offer to make life easier every day for millions
of Australian consumers and business customers.
Prior to joining Ampol, Joanne spent 11 years at McDonald's
Australia in operations, franchise, people and supply chain roles.
Joanne holds a Bachelor of Commerce from the University of
New South Wales.
8
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Leadership Team continued
4 Brent Merrick
Executive General Manager, Commercial
Brent Merrick was appointed Executive General Manager,
Commercial in September 2020. Brent is responsible for the
commercial functions of the Fuels and Infrastructure business,
including trading and shipping, B2B sales, supply and
commercial optimisation across the value chain, as well as
building future energy solutions for our customers.
Brent joined Ampol in 2000, with his career at the company
spanning a range of roles, including his first job as a Process
Engineer at the Lytton refinery in Queensland. Brent gained
commercial and trading experience through roles in the
Australian supply and trading teams, before being seconded
to Chevron Singapore. Brent held the roles of National Sales
Manager and Transformation Officer in the marketing business
before returning to Singapore as a trader. More recently,
he was responsible for expanding Ampol’s international
operations by establishing offices in Singapore and the
United States, which drive the company’s global trading and
shipping business.
Brent holds a Bachelor of Engineering (Chemical) from the
University of Queensland.
5 Alan Stuart-Grant
Executive General Manager, Strategy and Corporate
Development
Alan Stuart-Grant was appointed as Executive General
Manager, Strategy and Corporate Development in November
2017 and manages Ampol’s strategy, corporate development,
mergers and acquisitions and transformation activities.
Prior to joining Ampol, Alan held a senior position in the Oil and
Gas department of Glencore plc, and prior to that spent more
than a decade in private equity and investment banking,
working in Sydney, London and Singapore.
Alan holds a Bachelor of Science (Business Administration)
degree from the University of Bath and is also a member of the
Australian Institute of Company Directors.
28
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
9
Operating and financial review
The purpose of the operating and financial review (OFR) is to enhance the periodic financial reporting and provide shareholders
with additional information regarding the Group’s operations, financial position, business strategies and prospects. The review
complements the Financial Report on pages 58 to 111.
78-131.
The OFR may contain forward-looking statements. These statements are based solely on the information available at the time
of this report, and there can be no certainty of outcome in relation to the matters to which the statements relate.
Company overview
Ampol Limited is an independent Australian company and the nation’s leader in transport fuels.
We supply the country’s largest branded petrol and convenience network as well as refining, importing and marketing fuels and
lubricants. We have a deep history spanning over 120 years, having grown to become the largest transport fuels company listed
on the Australian Securities Exchange (ASX).
Ampol supplies fuel to around 80,000 customers in diverse markets across the Australian economy, including defence, mining,
transport, marine, agriculture, aviation and other commercial sectors. Across our retail network, we serve more than three million
customers every week with fuel and convenience products.
Our ability to service our broad customer base is supported by our robust supply chain and strategic infrastructure positions across
the country, which includes 17 terminals, five major pipelines, 57 depots, 1,926 branded sites (including approximately 708
company-controlled retail sites) and one refinery located in Lytton, Queensland. This network is supported by over 8,200 people
across Australia and overseas.
In recent years, we have leveraged our Australian business to extend our supply chain and operations into international markets.
This includes our Trading and Shipping business that operates out of Singapore and Houston in the USA, and our international
storage positions across the Asia Pacific region. We also have a growing presence in New Zealand as owner of Gull New Zealand,
which operates the largest independent import terminal in the country and a retail network. Ampol also owns a 20% equity interest
in Seaoil, a leading independent fuel company in the Philippines.
Ampol Limited returned to its iconic Australian name following shareholder approval on 14 May 2020. The national roll-out of the
Ampol brand across our retail network has begun and will be completed by the end of 2022.
29
Annual Report 2020
10
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Operating and financial review continued
Group strategy
Ampol’s strategy is focused around three elements underpinned by our market-leading position in transport fuels, strategic assets,
customer positions and supply chain expertise.
30
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
11
Operating and financial review continued
We are delivering on our promises
Despite the many challenges and disruptions faced in 2020, Ampol made significant progress over the last 12 months delivering
on our strategic commitments to shareholders.
Completion of the sale of 49% interest in 203 core freehold sites to Charter Hall and GIC consortium has demonstrated the value
of our high-quality freehold sites and released significant capital. We have also delivered performance improvements in a significant
number of our non-core retail sites and divested 25 higher and better use sites for $136 million in 2019.
Good progress has been made on our targeted $195 million earnings before interest and tax (EBIT) uplift by 2024, with the
completion of our $40 million cost out program, the strong performance in our Fuels and Infrastructure International business and
positive momentum in retail shop performance.
We also delivered on our promise to return capital to shareholders with the announcement of a $300 million Off-market Buy-back
which completed in early 2021 and released franking credits to Australian investors and is expected to deliver earnings per share
accretion. Late in 2020 we also successfully completed a $500 million subordinated notes issuance to wholesale investors in the
domestic fixed income market. These subordinated notes are an effective long-term source of capital and proceeds of the issue
will be used for general corporate purposes.
31
Annual Report 2020
12
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
AMPOL LIMITED
AMPOL LIMITED
2020 Annual Report
Operating and financial review continued
12
Ampol Group results 31 December 2020
12
Directors’ Report continued
On an historical cost profit basis, Ampol recorded an after-tax loss of $485 million for the 2020 full year, including significant items
of $337 million loss. This compares with the 2019 full year profit of $383 million, which included significant items of $53 million gain.
Directors’ Report continued
The 2020 result includes a product and crude oil inventory loss of $360 million after tax, which compares with an inventory loss of
$14 million after tax in 2019.
2020 Annual Report
A reconciliation of the underlying result to the statutory result is set out in the following table:
Operating and financial review continued
Operating and financial review continued
Ampol Group results 31 December 2020
2019
$m
On an historical cost profit basis, Ampol recorded an after-tax loss of $485 million for the 2020 full year, including significant items
Ampol Group results 31 December 2020
Reconciliation of the underlying result to the statutory result
(after tax)
of $337 million loss. This compares with the 2019 full year profit of $383 million, which included significant items of $53 million gain.
On an historical cost profit basis, Ampol recorded an after-tax loss of $485 million for the 2020 full year, including significant items
The 2020 result includes a product and crude oil inventory loss of $360 million after tax, which compares with an inventory loss of
of $337 million loss. This compares with the 2019 full year profit of $383 million, which included significant items of $53 million gain.
Net (loss)/profit attributable to equity holders of the parent entity
383
$14 million after tax in 2019.
The 2020 result includes a product and crude oil inventory loss of $360 million after tax, which compares with an inventory loss of
Deduct/add: Significant items loss/(gain)
$14 million after tax in 2019.
A reconciliation of the underlying result to the statutory result is set out in the following table:
2020
$m
(after tax)
(485)
(53)
337
A reconciliation of the underlying result to the statutory result is set out in the following table:
Deduct/add: Inventory loss
RCOP(i) NPAT (excluding significant items)
Reconciliation of the underlying result to the statutory result
Reconciliation of the underlying result to the statutory result
On an RCOP basis, Ampol recorded an after-tax profit for the 2020 full year of $212 million, excluding significant items. This
Net (loss)/profit attributable to equity holders of the parent entity
compares with an RCOP after-tax profit of $344 million for the 2019 full year, excluding significant items.
Net (loss)/profit attributable to equity holders of the parent entity
Deduct/add: Significant items loss/(gain)
(485)
337
Deduct/add: Significant items loss/(gain)
Deduct/add: Inventory loss
337
360
Deduct/add: Inventory loss
RCOP(i) NPAT (excluding significant items)
RCOP(i) NPAT (excluding significant items)
On an RCOP basis, Ampol recorded an after-tax profit for the 2020 full year of $212 million, excluding significant items. This
compares with an RCOP after-tax profit of $344 million for the 2019 full year, excluding significant items.
On an RCOP basis, Ampol recorded an after-tax profit for the 2020 full year of $212 million, excluding significant items. This
compares with an RCOP after-tax profit of $344 million for the 2019 full year, excluding significant items.
360
212
212
383
(53)
(53)
14
14
344
344
360
2020
$m
212
2020
(after tax)
$m
(after tax)
(485)
14
2019
$m
344
2019
(after tax)
$m
(after tax)
383
RCOP NPAT ($m)
180 175
165 256
135 209
120 92
265 341
262 287
296 263
294 344
2013
2014
2015
2016
2017
2018
2019
2020
1H RCOP NPAT
2H RCOP NPAT
Dividend
The Board has declared a final fully franked dividend of 23 cents per share for the second half of 2020, in line with the Dividend
Policy pay-out ratio of 50% to 70% of RCOP NPAT excluding Significant Items. Combined with the interim dividend of 25 cents per
share for the first half, this equates to a total dividend of 48 cents per share for 2020 (fully franked). This compares with a total
dividend payout of 83 cents per share for 2019 (fully franked). The record and payment dates for the final dividend are referenced
93.
on page 73.
Dividend
The Board has declared a final fully franked dividend of 23 cents per share for the second half of 2020, in line with the Dividend
Dividend
Policy pay-out ratio of 50% to 70% of RCOP NPAT excluding Significant Items. Combined with the interim dividend of 25 cents per
The Board has declared a final fully franked dividend of 23 cents per share for the second half of 2020, in line with the Dividend
share for the first half, this equates to a total dividend of 48 cents per share for 2020 (fully franked). This compares with a total
Policy pay-out ratio of 50% to 70% of RCOP NPAT excluding Significant Items. Combined with the interim dividend of 25 cents per
(i) Replacement cost of sales operating profit (RCOP) excluding significant items (on a pre- and post-tax basis) is a non-International Financial Reporting
dividend payout of 83 cents per share for 2019 (fully franked). The record and payment dates for the final dividend are referenced
share for the first half, this equates to a total dividend of 48 cents per share for 2020 (fully franked). This compares with a total
Standards (IFRS) measure. It is derived from the statutory profit adjusted for inventory (gains)/losses, as management believes this presents a clearer
on page 73.
dividend payout of 83 cents per share for 2019 (fully franked). The record and payment dates for the final dividend are referenced
picture of the Company’s underlying business performance as it is consistent with the basis of reporting commonly used within the global oil industry. This
on page 73.
is unaudited. RCOP excludes the unintended impact of the fall or rise in oil and product prices (key external factors). It is calculated by restating the cost of
sales using the replacement cost of goods sold rather than the historical cost, including the effect of contract-based revenue lags.
(i) Replacement cost of sales operating profit (RCOP) excluding significant items (on a pre- and post-tax basis) is a non-International Financial Reporting
Standards (IFRS) measure. It is derived from the statutory profit adjusted for inventory (gains)/losses, as management believes this presents a clearer
(i) Replacement cost of sales operating profit (RCOP) excluding significant items (on a pre- and post-tax basis) is a non-International Financial Reporting
picture of the Company’s underlying business performance as it is consistent with the basis of reporting commonly used within the global oil industry. This
Standards (IFRS) measure. It is derived from the statutory profit adjusted for inventory (gains)/losses, as management believes this presents a clearer
is unaudited. RCOP excludes the unintended impact of the fall or rise in oil and product prices (key external factors). It is calculated by restating the cost of
picture of the Company’s underlying business performance as it is consistent with the basis of reporting commonly used within the global oil industry. This
sales using the replacement cost of goods sold rather than the historical cost, including the effect of contract-based revenue lags.
is unaudited. RCOP excludes the unintended impact of the fall or rise in oil and product prices (key external factors). It is calculated by restating the cost of
sales using the replacement cost of goods sold rather than the historical cost, including the effect of contract-based revenue lags.
32
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Directors’ Report
Directors’ Report
CONTINUED
CONTINUED
13
Operating and financial review continued
COVID-19
The full year ending 31 December 2020 has been marked by the impact of the Coronavirus (COVID-19) pandemic. Ampol’s priority
during this time has been to take necessary action to safeguard the health of our people and customers, ensure business continuity,
optimise cashflow and ensure we are well placed to capture opportunities when market conditions improve.
In response to the unfolding COVID-19 crisis and the broader dynamics in the global fuel oil markets, Ampol has taken a number of
initiatives that together will protect the business and assist in navigating this challenging period, while ensuring both the wellbeing of
our people and the safe and reliable supply of high-quality transport fuels to our customers.
The Group has taken early and decisive action to mitigate the impacts of COVID-19 including: (i) bringing forward and extending the
Lytton refinery Turnaround and Inspection (T&I) in order to execute it safely; (ii) optimising retail and aviation fuel cost base; (iii)
reducing corporate overheads; and (iv) deferring non-critical capital spend.
These steps have enabled Ampol to continue to execute the strategy in a disciplined manner and continue to focus on improving
cost and capital efficiency to deliver value for shareholders.
COVID-19 has had an adverse impact on the operating environment and financial performance for the Group for the year ending
31 December 2020 including:
Unprecedented challenges for the global hydrocarbon industry, as various government restrictions significantly impacted
product demand, and in turn external refiner margins.
Total Australian fuels sales volumes were 13.6 BL in 2020, 17% lower than the 16.3 BL in 2019, reflecting adverse weather
impacts at the start of the year and the significant impact of government restrictions implemented in response to the COVID-19
pandemic. Jet fuel, which made up 19% of Australian wholesale volumes in 2019, continues to be the most impacted product.
The significant inventory loss of $360 million after tax which contributed materially to the Historic Cost Operating Profit (HCOP)
loss of $485 million. During the COVID-19 pandemic there was high volatility of oil prices and exchange rates with Dated Brent
hitting a low of US$18.55/bbl whole month average in April 2020 that contributed to the material inventory loss recorded
in 2020.
Global hydrocarbon demand weakness due to government travel restrictions arising from the COVID-19 pandemic, including
the impact on regional refiner margins and global trade balances, has impacted the profitability of Lytton Refinery. With refiner
margins at historic low levels and hydrocarbon demand weakness globally and in Australia, the Group has assessed the
recoverable amount of its Lytton Refinery cash-generating unit which determined the carrying value of the refinery as at
30 June 2020 was $80 million in excess of its recoverable amount. This was reassessed at 31 December 2020 with no
further impairment.
The impact of demand reduction due to the uncertainty introduced by COVID-19 indicated that the assets at the Convenience
Retail site cash-generating unit level may be impaired and caused the Group to assess the recoverability of the carrying value
of the Convenience Retail site assets which were determined to be in excess of their recoverable amount as at 30 June 2020
by $233 million and a further $59 million at 31 December 2020.
Other significant items caused by COVID-19 include:
(i) The divestment of marginal depots and retail sites resulting in asset impairment of $23 million and site remediation
provision of $32 million;
(ii) Other specific asset impairment due to review of company priorities across projects and future investment was undertaken
to ensure a clearer focus on the organisational priorities post the COVID-19 impact resulted in ceasing IT projects;
(iii) Increase in provision for doubtful debts as a result of the expected impact on Ampol customers from COVID-19 of
$3.7 million;
(iv) The above expenses have been partially offset by other revenue received from government assistance for wage support
of $6.8 million.
Whilst COVID-19 has adversely impacted 2020, Ampol’s liquidity position and balance sheet remain strong. The Group has
maintained substantial committed undrawn debt capacity with a diverse group of high-quality financial institutions, on appropriate
terms with a prudent weighted average maturity of 3.6 years. Significant headroom remains to key financial covenants under all the
Group’s borrowing arrangements.
The Group has taken a conservative approach to further bolster its funding arrangements. During the first half of 2020, the Group
extended the tenor on $500 million (AUD equivalent) of its existing bank facilities and upsized its bank facilities by $385 million.
On 20 November 2020, Ampol completed an agreement with a Charter Hall and GIC consortium that acquired a 49% interest in
203 freehold convenience retail sites, which delivered net proceeds of $655 million.
On 9 December 2020, Ampol successfully issued $500 million of subordinated notes (or hybrid). These notes will diversify
Ampol’s funding sources and support its credit profile in line with its Capital Allocation Framework.
The total available funds at 31 December 2020 was $2,940 million (31 December 2019: $2,649 million), with $2,140 million
in undrawn committed bank debt facilities.
33
Annual Report 2020
14
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Operating and financial review continued
Income statement
For the year ended 31 December
1. Total revenue(i)
Share of net profit of entities accounted for using the equity method
2. Total expenses(ii)
Replacement cost earnings before interest and tax
Finance income
Finance expenses
3. Net finance costs
Income tax expense(iii)
Non-controlling interest
Replacement cost of sales operating profit (RCOP)
4. Significant items gain/(loss) after tax
5. Inventory loss after tax
Historical cost net (loss)/profit after tax
Interim dividend per share
Final dividend per share
Earnings per share (cents)
Historical cost basis including significant items – Basic
Historical cost basis including significant items – Diluted
Replacement cost basis excluding significant items – Basic
Discussion and analysis – Income statement
2020
$m
2019
$m
15,434
22,352
11
4
(15,044)
(21,749)
401
1
(110)
(109)
(75)
(5)
212
(337)
(360)
(485)
25c
23c
(194.2)
(194.2)
84.8
607
1
(121)
(120)
(142)
(1)
344
53
(14)
383
32c
51c
151.3
151.1
135.9
1.
Total revenue
▼ 31%
2.
Total expenses –
replacement
cost basis
▼ 31%
Total revenue decreased due to a 17% decline in Australian sales volumes resulting from reduced
demand as a result of the COVID-19 pandemic. Australian Dollar product prices are also on
average 34% lower than 2019. Lower product prices in 2020 were driven by lower weighted
average Dated Brent crude oil price (2020: US$42/bbl vs 2019: US$64/bbl).
Revenue includes assistance from governments for wage support of $6.8 million received from
Australia, New Zealand and Singapore government programs.
Total expenses also decreased primarily as a result of lower replacement cost of goods sold,
driven by the same components noted above for fuel revenue.
(i)
Includes other income of $28 million (2019: $45 million).
(ii) Excludes significant item loss of $337 million (2019: $53 million gain).
(iii) Excludes tax receivable/benefit on inventory loss of $154 million and tax receivable/benefit on significant items of $167 million.
(2019: tax receivable/benefit on inventory loss of $6 million).
34
Directors’ Report (continued)Ampol Limited
15
Directors’ Report continued
Operating and financial review continued
Income statement continued
Discussion and analysis – Income statement RCOP EBIT breakdown(i)
Fuels and Infrastructure EBIT
Fuels and Infrastructure EBIT consists of the segment’s earnings on fuel products through the Lytton
refinery, other Australian earnings (including earnings on sales to the Convenience Retail segment)
and International earnings.
F&I delivered EBIT of $154 million in 2020, which was below the $450 million EBIT in 2019, largely
due to lower earnings from Lytton and loss of scale in F&I Australia from COVID-19 related demand
destruction.
F&I EBIT (excluding Lytton) was $299 million, which is a decrease of $81 million compared to 2019.
The result was impacted by the significant decline in Australian fuel volumes and associated
efficiencies, and effects from managing rapidly changing supply chains. Earnings in the period were
supported by increased imports during the extended Lytton Turnaround & Inspection (T&I), continued
growth in International RCOP EBIT, strong cost discipline and $30 million of foreign exchange gains.
Lytton delivered an EBIT loss of $145 million, which was down $215 million compared to 2019. The
reduction in Lytton EBIT was reflective of the extremely weak external refiner margin environment,
impacted by sustained weakness in global hydrocarbon demand from COVID-19. Action was taken
to mitigate impacts by bringing forward and extending the refinery T&I, and a renewed focus on costs
and efficiency.
Convenience Retail EBIT
Convenience Retail EBIT consists of earnings on fuel products and shop products at Ampol
convenience stores.
Convenience Retail delivered an EBIT result of $287 million, which is up 43% compared to 2019.
Retail fuel earnings were supported by margin benefits from oil price timing lags and rational industry
behaviour, offsetting volume weakness. The result also reflects continued improvement in shop
performance.
Corporate EBIT
Corporate operating expenses decreased by $3 million compared to 2019.
RCOP EBIT excluding significant items
$154m
$287m
($41m)
$401m
(i)
The breakdown of RCOP shown here represents a management reporting view of the breakdown and, therefore, individual components may not reconcile
to statutory accounts.
35
Annual Report 2020
16
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Operating and financial review continued
Income statement continued
Discussion and analysis – Income statement
3. Net finance costs
▼ 9%
Net finance costs decreased by $11 million compared with 2019. The decreased interest cost is due
to lower average daily borrowings combined with lower interest rates in 2020.
4. Significant items
The significant item loss of $337 million after tax or $504 million before tax relates to:
Impairment of Non-Current Assets
The Group has recognised a total impairment loss of $413 million on non-current assets. These
impairments relate to Lytton Refinery cash-generating unit of $80 million at 30 June 2020,
Convenience Retail site cash-generating units of $233 million at 30 June 2020 and $59 million at
31 December 2020 and other specific assets of $42 million.
Ampol Rebranding Expense
Ampol has recognised an expense of $66 million in respect to rebranding due to its contractual
obligation to remove Caltex signage and install Ampol branding of sites owned by a third party
($46 million), accelerated depreciation ($11 million) and other operating expenses ($9 million).
Higher Better Use Sites
In 2019, the Group recognised a net gain of $53 million on sale from the divestment of the 25
Higher and Better Use (HBU) sites after environmental remediation. The environmental remediation
activity commenced in 2020 and a reassessment of the remediation provision was undertaken as at
31 December 2020. This resulted in recognition of an additional provision of $17 million.
Gain on sale of investment in joint operation
On 1 October 2020, the Group sold its investment in the Sydney Joint User Hydrant Installations
(JUHI) of a gain on sale of $21 million.
Other Expenses
Site Remediation Provisions
The divestment of Convenience Retail and Depot sites resulted in an environmental remediation
provision of $32 million recognised in respect of the cost of remediating these sites for
alternative use.
Provision for Doubtful Debts
The provision for doubtful debt has increased by $4 million as a result of the expected impact on
Ampol customers from COVID-19.
Other income
Other income includes assistance from governments for wage support of $6.8 million received from
Australia, New Zealand and Singapore government programs.
Significant items tax benefit
Significant items tax benefit of $151 million represents tax at the Australian corporate tax rate of
30% on Significant items before tax and utilisation of previously unrecognised capital losses (tax
benefit of $16 million) which has been applied to a capital gain on the sale of the 49% interest in
203 freehold convenience retail sites with Charter Hall and GIC consortium.
There was an inventory loss of $360 million after tax or $514 million before tax in 2020. Over time
revenues will increase/decrease as the price of products changes, this includes impacts from the
AUD/USD exchange rate movements. As Ampol holds crude and product inventory, the price at
which the inventory was purchased will often vary from the price at the time of the revenue, thereby
creating an inventory gain or loss. During the COVID-19 pandemic there was particularly high
volatility of prices and exchange rates, which have resulted in the loss.
after tax
$337m
5.
Inventory loss
after tax
$360m
36
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Directors’ Report continued
17
Operating and financial review continued
Income statement continued
Business unit performance - Fuels and Infrastructure
Fuels and Infrastructure delivered an EBIT result of $154 million, including $299 million from F&I excluding Lytton and $145 million
loss from Lytton.
Total Australian fuels sales volumes were 13.6 BL in 2020, 17% lower than the 16.3 BL in 2019, reflecting adverse weather impacts
at the start of the year and demand destruction, including the significant impact of government restrictions implemented in response
to the COVID-19 pandemic. International volumes of 6.5 BL in 2020, were 36% higher than 4.8 BL in 2019, underpinned by
continued growth of international businesses.
Business unit performance - Convenience Retail
Convenience Retail delivered RCOP EBIT of $287 million in 2020, compared to $201 million RCOP EBIT in 2019.
Total Convenience Retail fuels sales volumes were 4.1 BL in 2020, 14% lower than the 4.8 BL fuels sales volumes in 2019, due
to the impacts on industry demand from bushfires and floods in 1Q 2020, followed by COVID-19 restrictions since late March 2020.
Balance sheet
As at 31 December
1. Working capital
2. Property, plant and equipment
3.
Intangibles
4.
Interest-bearing liabilities net of cash
5. Other non-current assets and liabilities
Total equity
Discussion and analysis – Balance sheet
2020
$m
421
3,468
558
2019
$m
632
3,702
579
(1,348)
(1,746)
127
3,225
110
3,271
Change
$m
▼211
▼234
▼21
▼398
▲17
▼46
1. Working capital
▼ $211m
2. Property, plant
and equipment
▼ $234m
3.
4.
Intangibles
▼ $21m
Interest-bearing
liabilities
▼$398m
5. Other non-current
assets and liabilities
▲$17m
The decrease in working capital was primarily driven by lower product and crude price impacting
receivables, inventory and payables.
The decrease in property, plant and equipment (PP&E) is driven by Convenience Retail ($292
million), Lytton ($80 million) and other asset impairments ($42 million) and depreciation of $394
million. This is partially offset by 2020 capital expenditure and accruals (including major cyclical
maintenance) of $205 million, site dismantling and remediation asset of $241 million and additions of
lease right of use assets of $147 million.
Intangibles decreased primarily due to amortisation of $28 million and software impairment loss of
$20 million. This is partially offset by additions of $39 million.
Interest-bearing liabilities relates to net borrowings of $434 million and lease liabilities $914 million as
at 31 December 2020. The decrease in interest-bearing liabilities was primarily due to the completion
of the core freehold retail property transaction with net proceeds of $655m.
Ampol’s gearing at 31 December 2020 was 12%, decreasing from 21% at 31 December 2019.
On a lease-adjusted basis, gearing at 31
31 December 2019.
December 2020 was 29%, compared with 35% at
Other non-current assets and liabilities increased primarily due to the increase in deferred tax assets
offset by the increase in non-current site remediation and dismantling provision.
37
Annual Report 2020
18
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Operating and financial review continued
Cash flows
For year ended 31 December
1. Net operating cash inflow
2. Net investing cash inflows/(outflows)
3. Net financing cash outflows
Net increase/(decrease) in cash held(i)
(i)
Including effect of exchange rates on cash and cash equivalents.
Discussion and analysis – Cash flows
2020
$m
268
463
(392)
333
2019
$m
844
(139)
(679)
(29)
Change
$m
▼576
▲602
▲287
▲362
1. Net operating
cash inflows
▼$576m
2. Net investing
cash inflows
▲ $602m
3. Net financing
cash outflows
▲ $287m
Net operating cash inflows were lower in 2020 driven by COVID-19 induced hydrocarbon demand
impacts, as well as the cash component of inventory loss resulting from a decline in crude and
product prices coinciding with a decline in customer demand.
Investing cash flows represent the cash components (i.e. excluding any accruals) for capex, Lytton
T&I, and purchases of intangibles.
2020 includes the once-off benefit from the net proceeds from the sale of 49% interest in 203 freehold
convenience retail sites and the gain on sale of the investment in joint operations.
2019 includes the once-off benefit from the gain on sale for HBU Tranche 1 sites.
Financing cashflows in 2020 include repayment from borrowing of $93m, the Dividend payment of
$190m and repayment of lease principal $108m. The 2019 result included impact of the $260m share
buy-back.
Capital Expenditure
Capital expenditure totalled $227 million including major T&I spending at Lytton refinery of $64 million and $22 million in intangible
software.
Business outlook and prospects for future financial years
This section includes information on Ampol’s future financial prospects. Given the significant influence of external factors – such
as market competitiveness, economic conditions, including ongoing impacts from COVID-19, exchange rates and regional refiner
margins – the discussion of our financial prospects is general in nature.
To the extent that there are statements which contain forward-looking elements, they are based on Ampol’s current expectations,
estimates and projections. Such statements are not statements of fact, and there can be no certainty about outcomes in the areas
that these statements relate to. Ampol does not make any representation, assurance or guarantee as to the accuracy or likelihood
of fulfilment of any forward-looking statements.
Overview
We will continue to execute our business strategy in 2021 with a core focus on creating value for shareholders. We have a clear
list of priorities which focus on delivering improved returns across the integrated business, with a focus on improved cost and
capital efficiency.
With the completion of our original $100 million cost out program, in 2021 we will begin work on a further $40 million of structural
savings to be delivered by 2022. We will also continue to focus on delivering our targeted $195 million EBIT uplift by 2024,
progressing key initiatives in our Fuels and Infrastructure International strategy and in Convenience Retail.
Our rebrand to Ampol will be a key focus, with our national rollout to reach scale by the end of the year. Investment in our iconic
Australian brand will allow us to enhance our market-leading position in retail fuel and provides a strong platform to execute on the
attractive and growing convenience market opportunity.
Ampol also remains committed to releasing our substantial franking credit balance to shareholders, in accordance with our capital
allocation framework and subject to business performance. Our announced $300 million Off-market Buy-back has been completed
in January 2021 which derived a $119 million release of franking credits.
38
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Directors’ Report continued
19
Operating and financial review continued
Business outlook and prospects for future financial years continued
Fuels and Infrastructure
In 2021, we will protect returns in Fuels and Infrastructure Australia by completing the review of our Lytton refinery in the first half of
the year, to determine the best path forward to maximise value for shareholders. More broadly across the non-refining Australian
business, we will take a disciplined approach to capital effectiveness and cost efficiency, while also selectively pursuing investments
that can deliver strong returns.
Influencing our performance in 2021 will be global economic conditions, including recovery in demand for hydrocarbons in the
markets in which we operate following the social and economic impacts of COVID-19.
The performance of our Lytton refining business will continue to be influenced by external factors, including foreign exchange rates
and regional refiner margins, along with domestic market conditions such as demand for Ampol refined products and input costs.
Earnings growth in Fuels and Infrastructure will be targeted through the continued delivery of our International strategy, with our
plan to deliver $70 million EBIT growth in this part of our business by 2024. In 2021, we will focus on executing the organic growth
initiatives that underpin this target, leveraging the scale and capabilities we possess across the broader business and the strong
progress we have made over the last few years. Our ambitions in our International business are built off our key strengths of
strategic assets, supply chain expertise and deep customer relationships.
Finally, in 2021 we will also continue to build foundations for energy transition by working with our customers, focusing on a
targeted set of energy and decarbonisation themes, each of which has clear linkages to our capabilities and assets. As part of this
work we will announce our decarbonisation strategy along with our TCFD report during the first half of 2021.
Convenience Retail
Ampol’s company-operated retail network provides an important foundation to deliver value to shareholders through extracting
share from both the $31 billion retail fuel market and the growing $8.8 billion convenience market in Australia.
In 2021, as we transition to Ampol, we are confident our fuels position will be strengthened by the network refurbishment and the
introduction of our Amplify premium fuels, which are formulated leveraging our strong premium fuels pedigree. Amplify premium
fuels are specifically designed for Australian driving conditions and engineered to clean and protect engines.
Our retail fuel strategy will focus on leveraging our high-quality network, premium fuels and leading card offer, to continue to
generate strong earnings, through the targeted combination of value and volume.
Our strong earnings base from retail fuel provides the platform to generate further earnings growth through our retail shop offer.
We remain well positioned to deliver on our potential $85 million non-fuel EBIT uplift in Convenience Retail by 2024. COVID-19 has
driven changes in customer behaviour with people spending more time in their local community, preferencing smaller format stores
like ours and taking advantage of the convenience that our well-located network of stores offer.
This experience has served to strengthen our conviction in our strategy. In 2021, we will further build on the strategy in place
by enhancing our merchandise offer and increasing the efficiency of store operations, while continuing to execute our network
rebrand. We will also continue to focus on deploying the right formats in the right location to meet customer needs and generate
strong returns.
39
Annual Report 2020
20
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Risk management
There are a number of material risks that have the potential to impact on Ampol achieving its financial goals
and business strategy.
The Ampol Risk Management Framework (ARMF) has been developed to proactively and systematically identify, assess and
address events that could impact business objectives. The ARMF integrates the consideration of risk into the Company’s
activities so that:
risks in relation to the effective delivery of the Company’s business strategy are identified;
control measures are evaluated; and
where potential improvements in controls are identified, improvement plans are scheduled and implemented.
The Board reviews the ARMF with management on an annual basis to ensure that it remains sound.
Risks identified through the ARMF are also assessed on a regular basis by management, and material risks are regularly reported
to the Board and its committees. These reports include performance against the Board-approved risk appetite and the status and
effectiveness of control measures for each material risk. The Board, the Audit Committee, the Safety and Sustainability Committee
and the Human Resources Committee each receive reports on material risks relevant to their responsibilities.
Following is a table outlining our material risks, along with a description of each risk and an outline of the mitigation strategies that
are in place. In this table, we have not included information that could result in unreasonable prejudice to Ampol, including
information that is confidential, commercially sensitive or that could give a third party a commercial advantage.
Ampol’s approach to risk management is also outlined in our Corporate Governance Statement, which is available on our website.
Material risk
Description
Monitor and manage
Strategic and commercial risks
1. Customer and
competitors
2. Business
transformation
The transport fuels and Convenience Retail
landscapes are continually evolving. Ampol needs
to be able to transform along with this landscape to
seize opportunities and ensure the ongoing viability
and success of the business.
Changes in customer demand, technology and
products have the potential to materially impact
Ampol’s earnings. Ampol must respond and adapt
to these changes by optimising current earnings
streams and creating new earnings streams in both
domestic and international markets in order to
support the growth of Ampol and deliver value to
customers, the community and shareholders.
3. Climate change Risks associated with the transition to a low carbon
economy have the potential to impact Ampol’s
socio-political and regulatory environment, earnings
and growth opportunities, and brand and
reputation. Ampol must balance the needs of the
current economy, our customers and shareholders,
while demonstrating active integration of climate
associated risk into strategic and financial planning
processes to inform its investment decisions.
In parallel, Ampol actively assesses and models
the physical impact of climate change on the
business and manages the energy intensity of our
operations to limit carbon emissions.
For Ampol’s TCFD disclosures, please refer
to Ampol’s 2020 Sustainability Report.
Ampol’s strategic decision-making framework
ensures that strategies are in place to manage
competitive risks that sustain and improve value
accretion.
These strategies include:
enhancing the core business through
relentless focus on cost efficiency, capital
effectiveness and customer delivery;
delivering earnings growth in International
and Convenience Retail; and
building foundations for the energy transition,
leveraging the strength of our assets,
customer positions and capabilities.
The Board oversees Ampol’s sustainability
approach, with the Board’s Safety and
Sustainability Committee assisting with
governance and monitoring as reflected in the
Committee’s Charter.
Ampol focuses on building resilience to the
transitional and physical risks posed by climate
change, including undertaking scenario analysis,
helping our customers respond to climate
change, reducing the carbon intensity of our
operations, undertaking external engagement
and advocacy, and improving transparency
and reporting.
Ampol supports the recommendations of the Task
Force on Climate-related Financial Disclosures
and has developed an implementation plan to
ensure full alignment by 2021.
40
Directors’ Report (continued)Ampol Limited
21
Directors’ Report continued
Risk management continued
4. Cyber and
information
security
As a leading transport fuels provider and
convenience retailer, Ampol faces an ever-evolving
cyber security threat. Ampol must be able to detect,
prevent and respond to these threats by
maintaining a high standard of information
and cyber security controls.
Ampol’s information technology (IT) and systems
are subject to regular review and maintenance,
and business continuity plans are in place. Ampol
actively monitors and responds to potential local
and global IT security threats.
5. Organisational
capability
Successful execution of Ampol’s strategy and
business objectives is driven by the capability
and talent of our people. A lack of organisational
capability can negatively impact Ampol’s ability
to maximise returns.
Ampol aims to be an employer of choice. It has in
place and actively manages retention and
attraction of critical capabilities, its employee
agreements, and it monitors employee
engagement and the external labour markets.
Operational risks
6. Process safety
7. Personal
safety, health
and wellbeing
8. Environmental
The manufacturing and transportation of transport
fuels and the operation of Ampol’s retail network
gives rise to an inherent risk to the health and
safety of our employees, contractors, the public
and the environment in which we operate. Ampol
invests the necessary capital and resources to
reduce these risks so far as is reasonably
practicable.
9. Product quality
– fuels and
lubricants
10. Product quality
– food
11. Business
interruption
An inability to produce and supply high quality, fit
for purpose fuel and lubricant products that meet
our customers’ needs, conform to specifications
and satisfy our contractual and regulatory
requirements, has the potential to put our
customers at risk. In turn, this may damage
Ampol’s brand, reputation and impact earnings.
Similarly, in the convenience retail environment,
Ampol aims to produce and supply quality, fit for
purpose food products that meet customer needs,
conform to specifications, and satisfy our
contractual and regulatory requirements.
Business interruption may arise from several
circumstances, including:
operational difficulties throughout the supply
chain, such as extended industrial disputes or
manufacturing interruptions;
loss of externally-supplied utilities;
pandemics;
security breaches affecting operational
systems; and
natural disasters, such as bushfires and floods.
Any of these events could result in a significant
interruption to operations leading to commercial
loss.
To manage these risks, Ampol has in place:
an integrated management system for
managing safety, health and environment;
and
a comprehensive risk management
framework which actively manages and
mitigates these risks from the corporate level
through to the local site operating level and
involves active engagement from senior
management.
Ampol also mitigates certain major risk exposures
through its comprehensive corporate insurance
program, which provides cover for damage to
facilities and associated business interruption
as well as product liability.
Ampol has designed and implemented robust
quality control measures throughout the supply
chain to ensure both fuel and food products are
safe and to protect our brand and reputation.
A governance structure is in place to monitor
and report on the status of these risks and the
effectiveness of their control measures to the
Board’s Safety and Sustainability Committee.
Almost all operational risks are potential sources
of business interruption.
Ampol manages these risks through the
framework and governance structures described
in this report, including those focused on security
and resilience. It also mitigates certain major risk
exposures through its comprehensive corporate
insurance program, which provides cover for
damage to facilities and associated business
interruption as well as product liability.
41
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AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Directors’ Report continued
Risk management continued
Financial risks
12. Capital
management
and allocation
An inability to successfully manage and allocate
capital erodes Ampol’s profitability, cash flows,
growth aspirations, investor confidence, licence to
operate and relationships with key stakeholders.
13. Liquidity
Inadequate access to liquidity may limit Ampol’s
ability to raise funds to meet the forecast
requirements of the business, for planned
expenditure or to seize emerging opportunities.
A weak balance sheet also limits Ampol’s ability to
withstand material levels of liquidity-related stress
from other material risk events and/or a major
economic downturn.
14. Financial
markets
Commodity prices, refiner margin (RM) and other
associated markets driven by supply and demand
for Ampol’s products may vary outside of
expectations from time to time. Foreign exchange
rate variations can offset or exacerbate this risk.
Compliance and conduct risks
15. Regulatory and
compliance
16. Fraud or ethical
misconduct
Ampol is exposed to a wide range of economic and
regulatory environments since its operations are
located across several jurisdictions.
Ampol’s brand, reputation and licence to operate
can be negatively impacted through actual or
perceived breaches of law, and/or behaviours and
actions that are inconsistent with the Company’s
values or breach its Code of Conduct.
42
Ampol governs capital allocation in accordance
with a well-defined capital allocation framework
that is underpinned by operational and capital
efficiency and ensures a strong return on capital
employed (ROCE) across all parts of the portfolio.
An Investment Committee supports this
framework, which is comprises senior leaders
with the necessary governance and processes
to successfully prioritise and execute its capital
investments and manage capital allocation.
Ampol seeks to prudently manage liquidity risk by
maintaining a capital structure that is consistent
with its capital allocation framework, supports
its activities and centrally monitors cash flow
forecasts, including the degree of access to debt
and equity markets.
A key element of its funding strategy is the use
of committed undrawn debt facilities, with an
extended facility maturity profile.
Ampol balances its exposure to financial market
risk in accordance with the Board approved
Group Treasury Policy. The policy sets a range
of quantitative and volumetric limits to reduce the
inherent risk to levels within the desired risk
appetite threshold.
Ampol regularly monitors financial market
exposures and reports this as part of its updates
to senior management and the Board.
Ampol applies strict operating standards, policies,
procedures and training to ensure that it remains
in compliance with its various permits, licences,
approvals and authorities.
In addition, Ampol proactively manages
regulatory risks through a combination of
vigilance regarding current regulations, contact
with relevant bodies/ agencies and working in
partnership with various stakeholders to reduce
the likelihood of significant incidents that could
impact Ampol and/ or the communities in which
it operates.
Ampol engages with regulatory bodies and
industry associations to keep abreast of changes
to laws. It has a stakeholder engagement plan
that is actively managed to mitigate the impact
of major policy changes.
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Events subsequent to the end of the year
On 22 January 2021 the Group completed an off market buy
back of 11,404,848 shares at a price of $26.34 per share
which included a capital component of $2.01 per share. The
total amount of the buy back was $300.4 million and the
impact of this transaction on the issued share capital of the
Company was to reduce it by $22.9 million with the
remainder from retained earnings. The number of issued
shares post the buy back is 238.3 million.
On 22 February 2021, the Directors declared a fully franked
final dividend of 23 cents per share.
At the date of issue of this report, the future impact of
COVID-19 on global and domestic economies and the
impact on the Group remains uncertain. The Group
continues to actively monitor this situation.
There were no other items, transactions or events of a
material or unusual nature that are likely to significantly
affect the operations of Ampol, the results of those
operations or the state of affairs of the Group subsequent
to 31 December 2020.
Environmental regulations
Ampol is committed to complying with the relevant laws,
regulations and standards of the jurisdictions in which
we operate, as well as to minimising the impact of our
operations on the environment. The Board’s Safety and
Sustainability Committee addresses the appropriateness
of Ampol’s OHS and environmental practices to manage
material health, safety and environmental risks, so that
these risks are managed in the best interest of Ampol
and its stakeholders.
Ampol sets key performance indicators to measure
environmental, health and safety performance and drive
improvements against targets. In addition to review by the
Board, progress against these performance measures is
monitored regularly by the Managing Director and CEO and
executive general managers.
Risks are examined and communicated through the Ampol
Risk Management Framework, which includes environmental
risks. Under the framework, risks and controls are assessed
and improvements are identified, with regular reports being
made to management and the Board.
The Ampol Operational Excellence Management System is
designed to ensure as reasonably practicable that operations
are carried out in an environmentally sound, safe, secure,
reliable and efficient manner. Its operating standards and
procedures support the Ampol Environment Policy and the
Ampol Health and Safety Policy.
Ampol meets reporting requirements under the National
Greenhouse and Energy Reporting Scheme, reporting
energy consumption and production as well as greenhouse
gas emissions from Group operations. Ampol also continues
to disclose information on emissions under the National
Pollutant Inventory. Ampol continues to remain a signatory
to the Australian Packaging Covenant.
23
Compliance with environmental regulations
For the year ended 31 December 2020, regulators
were notified of a total of six environmental reportable
non-compliances. Of these, one incident resulted in
environmental impacts of greater than 12 months duration.
For the period, the group received nine formal notices from
the regulator. Remediation action has been taken in relation
to the incidents and notices. The business received no fines
during the period. All incidents were investigated and lessons
captured and shared across the Group.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on
page 50 and forms part of the Directors’ Report for the
financial year ended 31 December 2020.
70
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24
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report
Message from the Human Resources Committee
Dear Shareholder,
I am pleased to present Ampol’s Remuneration Report for the year ended 31 December 2020. The Remuneration Report provides
information about the executive remuneration framework and remuneration outcomes for Key Management Personnel (KMP). KMP
comprises:
Non-Executive Directors (NED); and
the Managing Director and Chief Executive Officer (MD & CEO) and select direct reports to the MD & CEO (collectively, Senior
Executives).
2020 was a year that presented many challenges for Ampol. Despite the impacts of bushfires on the east coast of Australia,
followed by the onset of COVID-19, our people’s agility and discipline ensured that we delivered for our customers while enhancing
our position as a positive contributor in the local communities in which we operate.
I am proud of how our people responded, living our values and demonstrating the Ampol ‘can do’ spirit that underpins our market-
leading reputation. This was evident in our safety performance which saw some of the best results in Ampol’s history. Targeted
improvement plans led to material reductions in the frequency of recordable injuries across both Convenience Retail and Fuels and
Infrastructure (F&I). Our process safety result was also the best that Ampol has ever recorded.
Company performance in 2020
Ampol delivered resilient performance in 2020. Strong action was taken throughout the year to control costs and optimise
operations across our integrated supply chain to protect our balance sheet and maximise value for shareholders, during a time of
sustained weakness in refining margins and the destruction in fuel demand, particularly in aviation.
As a result of these impacts, our refinery and aviation business experienced large declines in turnover. During this time, Ampol
welcomed the support of the Government’s JobKeeper scheme which provided necessary assistance to both the refining and
aviation businesses. JobKeeper payments were not claimed across the remainder (being the majority) of Ampol’s business.
Despite the significant impacts to both aviation and refining, performance across our broader F&I business was resilient when
considering the challenges of declining volumes, reduced scale efficiencies and changing global supply chains. In particular, our
International business performed strongly.
Convenience Retail results were also strong, reflecting effective management of operating costs, improved shop performance and
favourable industry retail fuel margins, which offset volume weakness.
Throughout 2020, we also delivered key capital initiatives for shareholders, including executing the Convenience Retail property
transaction, delivering a hybrid bond issuance and announcing an Off-market Buy-back that will benefit all shareholders. Ampol also
commenced its rebrand, which presents a unique opportunity to deepen customer relationships and increase our market share.
2020 remuneration outcomes
The following are the key remuneration decisions and outcomes from FY2020. They demonstrate the strong alignment between
company performance and our executive remuneration framework:
The transition of the MD & CEO early in the year resulted in several changes to Senior Executive portfolios and, as a result,
three Senior Executives received temporary increases to their fixed remuneration through this transitionary period;
There were no changes to NED fees;
All KMP had their fixed remuneration and fees reduced by 20% for three months, as part of cost reduction activities adopted in
response to COVID-19;
For the second consecutive period, no short-term incentives (STIs) were paid to Senior Executives, as RCOP NPAT did not
meet threshold performance requirements; and
Approximately 7% of the 2018 long-term incentive plan (LTIP) grant vested, following performance testing over the three-year
period to 31 December 2020.
As reported in the 2019 Remuneration Report, retention awards were granted to Senior Executives in March 2020, which vest in
March 2021. These awards were one-off, made in the context of heightened retention risk through a protracted take-over bid and to
support the MD & CEO transition. The retention awards are conditional on continued service, successful performance and
appropriate conduct.
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25
Remuneration Report continued
Message from the Human Resources Committee continued
Changes to Key Management Personnel
2020 saw the successful transition of Ampol’s MD & CEO and several Senior Executives, with the Company’s internal succession
plans activated and key external appointments made. The key changes made to KMP in FY2020 were:
Matthew Halliday was permanently appointed as MD & CEO, having acted as Interim CEO;
Brent Merrick was promoted to Executive General Manager, Commercial, having most recently served as General Manager,
Trading and Shipping for five years;
Joanne Taylor was promoted into an expanded role covering people and brand, in addition to her existing retail portfolio;
Andrew Brewer was appointed Executive General Manager, Infrastructure, returning to Ampol from Refining NZ; and
Michael Ihlein and Gary Smith were appointed to the Ampol Board as Independent Non-Executive Directors.
Changes to the executive remuneration structure for 2021
In 2020, the Board conducted a comprehensive review of the executive remuneration framework, to identify opportunities to further
drive our strategic priorities, strengthen our ability to attract and retain executive talent, and improve alignment with the interests of
shareholders.
Key changes for 2021 include:
Updated STI gate-opener and reduced maximum STI opportunity, to appropriately incentivise MD & CEO and Senior Executive
behaviours;
Introduction of STI deferral delivered in equity and a new minimum shareholding requirement, to enhance Senior Executive and
shareholder alignment;
Revised long-term incentive (LTI) program to support long-term share ownership, through a simplified one-year holding
requirement for 100% of vested shares at the end of the three-year performance period, and an adjusted vesting schedule for
the relative total shareholder return (TSR) performance measure to align with market practice; and
Enhanced malus and clawback requirements across the framework to strengthen risk and remuneration consequences.
Overall, the redesigned executive remuneration framework reduces the maximum incentive opportunity, and increases the
weighting on equity in the mix of total remuneration.
The Board is confident that the changes to the executive remuneration framework will deliver improved value to shareholders at a
lower cost, while continuing to ensure focus on delivery of our strategic priorities. Additional information on the changes are
provided in Table 1d. of this report.
On behalf of the Board, I thank you for your continued interest in Ampol. We trust that this overview, and the accompanying detail in
the Remuneration Report are helpful when forming your views on Ampol’s Senior Executive and NED remuneration arrangements.
Kind regards,
Barbara Ward AM
Chairman, Human Resources Committee
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Annual Report 2020
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AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report continued
The Directors of Ampol Limited present the Remuneration Report prepared in accordance with section 300A of the Corporations Act
2001 (Cth) (Corporations Act) for the Ampol Group for the year ended 31 December 2020.
The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act,
apart from where it is indicated that the information is unaudited.
1. Remuneration snapshot
1a. Key Management Personnel
This Remuneration Report is focused on the KMP of Ampol, being those persons with authority and responsibility for planning,
directing and controlling the activities of Ampol.
Unless otherwise indicated, the KMP were classified as KMP for the entire financial year.
Current Non-executive Directors
Steven Gregg
Mark Chellew
Melinda Conrad
Michael Ihlein(i)
Gary Smith(ii)
Chairman and Independent, Non-executive Director
Independent, Non-executive Director
Independent, Non-executive Director
Independent, Non-executive Director
Independent, Non-executive Director
Barbara Ward AM
Independent, Non-executive Director
Penny Winn
Independent, Non-executive Director
Former Non-executive Directors
Bruce Morgan(iii)
Independent, Non-executive Director
Current Senior Executives
Matthew Halliday(iv)
Andrew Brewer(v)
Jeff Etherington(vi)
Brent Merrick(vii)
Joanne Taylor
Former Senior Executives
Julian Segal(viii)
Louise Warner(ix)
Managing Director and Chief Executive Officer
Executive General Manager, Infrastructure
Interim Chief Financial Officer
Executive General Manager, Commercial
Executive General Manager, Retail, Brand and Culture
Managing Director and Chief Executive Officer
Chief Commercial Officer
(i) Mr Ihlein was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(ii) Mr Smith was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(iii) Mr Morgan retired from the Board as an Independent, Non-executive Director effective 14 May 2020.
(iv) Mr Halliday was appointed Interim CEO effective 2 March 2020 and then permanently as MD & CEO effective 29 June 2020.
(v) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(vi) Mr Etherington was appointed Interim Chief Financial Officer effective 2 March 2020.
(vii) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020.
(viii) Mr Segal ceased as MD & CEO effective 2 March 2020.
(ix) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
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Directors’ Report (continued)Ampol Limited
27
Directors’ Report continued
Remuneration Report continued
1. Remuneration snapshot continued
1b. Senior Executive remuneration outcomes in 2020 (unaudited)
Remuneration
element
Outcome
Fixed
remuneration
Senior Executives had their base salary reduced by 20% for a period of three months in 2020 to assist in the
organisational response to COVID-19.
STI
LTI
There were no changes made to the remuneration of the MD & CEO following his permanent appointment
effective June 2020.
As reported in the 2019 Remuneration Report, there were no permanent increases to fixed remuneration for
Senior Executives, except for the Executive General Manager, Retail, Brand and Culture, who received a 2.5%
salary increase in April 2020 to better align salary with market.
Portfolios were temporarily expanded for Matthew Halliday from Chief Financial Officer to Interim Chief Executive
Officer; Louise Warner from Executive General Manager, Fuels and Infrastructure to Chief Commercial Officer;
and for Joanne Taylor who temporarily had accountability for the Government and Corporate Affairs portfolio in
addition to Retail, Brand and Culture. Higher duties salaries were temporarily provided to Senior Executives
through these temporary expansions to role. These amounts are included in the salary amounts reported in table
4a below.
RCOP NPAT performance in 2020 was 43% of target, which is below the threshold level of performance and
results in no 2020 STI awards being payable.
The 2017 LTI grant vested in April 2020, following Board assessment of performance measures over the 1
January 2017 to 31 December 2019 performance period. Overall, 6.66% of the 2017 LTI award vested in April
2020. This grant was subject to the achievement of relative TSR against S&P/ASX 100 companies (60%), a profit
growth measure (20%) and a strategic measure (20%).
Ampol’s relative TSR performance compared to S&P/ASX 100 companies over this period was below
threshold performance (50th percentile). No portion of the performance rights subject to this measure vested
on 1 April 2020.
A profit growth target attributable to merger and acquisition ventures was defined at the beginning of the
performance period. While a number of ventures were successful in generating substantial NPAT over the
period, performance was below threshold requirements and no portion of the performance rights subject to
this measure vested on 1 April 2020.
The strategic measure was based on the implementation of our Convenience Retail strategy measured
through both quantitative and qualitative metrics. Net Promoter Score increased 10% over the period and
total shop sales achieved a 19% uplift; both measures were above the threshold performance requirements.
The Board determined that threshold performance was achieved and 33.3% of the performance rights
subject to this measure vested on 1 April 2020.
Retention
award
To mitigate the heightened retention risk during a protracted take-over bid and to ensure Senior Executive team
stability through the transition of the MD & CEO, one-off cash retention awards to the value of 100% of fixed
annual remuneration were established in March 2020. The payments will be made in March 2021 to the MD &
CEO, Interim Chief Financial Officer, and Executive General Manager, Retail, Brand and Culture.
1c. Summary of 2020 Non-executive Director fees
NED fees are fixed and do not have any variable components. The Chairman receives a fee for chairing the Ampol Limited Board
and is not paid any other fees. Other NEDs receive a base fee and additional fees for committee chairmanship and membership,
except for the Nomination Committee where no additional fee is paid.
NEDs base fees did not change in 2020. NED fees were reduced by 20% for a period of three months in 2020 to assist in the
organisational response to COVID-19.
Superannuation contributions were made at a rate of 9.5%. No additional retirement benefits were paid.
Fees paid to NEDs are subject to a maximum annual NED fee pool of $2.5 million (including superannuation). The fee pool was
approved by shareholders at the 2016 Annual General Meeting and is unchanged since that time.
See sections 4a and 4b for further detail.
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AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report continued
1. Remuneration snapshot continued
1d. Outlook for 2021 (unaudited)
Key changes to remuneration arrangements in FY21 are outlined below:
Change
Commentary
Senior Executive fixed
remuneration
The Board determined there would be no increase to the fixed remuneration of the MD & CEO for 2021,
and there are no anticipated increases for Senior Executives in 2021.
STI
The operation of the STI will be revised to incorporate:
Updated STI gate-opener: The RCOP NPAT financial gate-opener (requiring 80% of target
performance) will continue to apply to the Ampol (Company) Scorecard, representing the majority of
STI opportunity (65% weighting of overall STI, including 40% weighted to RCOP NPAT).
Introduction of STI deferral: A portion of awards will be deferred in restricted shares for two years
(where the deferred component is over $25,000), 40% for the MD & CEO, and 25% for other
Senior Executives.
In conjunction with these changes, the maximum STI opportunity for Senior Executives has been reduced
from 200% to 150% of STI target opportunity.
LTI
LTI awards will continue to be split into two equally weighted components, with the following
performance hurdles:
Relative TSR: Measured against the S&P ASX100, with 50% vesting at median and pro-rata vesting
up to 100% vesting for 75th percentile performance. The relative TSR vesting schedule has been set
in line with prevalent market practice.
Return on Capital Employed (ROCE): Consistent with the 2020 LTI awards, the ROCE hurdle will
provide for 33% vesting at threshold performance, 66% at target performance and 100% vesting at
stretch performance. The ROCE threshold has been set above our Weighted Average Cost of Capital
and with target ROCE aligned to the three-year business plan target.
Subject to meeting performance conditions, 100% of LTI awards will convert to restricted shares following
the end of the three-year performance period and placed into a holding lock until the end of year four.
(This varies from LTI awards of previous years where 25% is held for four years, noting that this
requirement can be waived if shareholding is greater than one times base salary).
Minimum
shareholding
requirement
A new minimum shareholding requirement will be introduced as 100% of fixed annual remuneration for
the MD & CEO and 50% for other Senior Executives. The minimum shareholding is to be obtained within
five years.
Malus and clawback
Enhanced malus and clawback requirements for variable remuneration will also be implemented. Board
discretion will be retained.
Non-executive
Director fees
Non-executive
Director fee pool
Non-executive Director fees will not change in 2021.
There will be no change to the Non-executive Director fee pool in 2021.
As a result of the above changes to the executive framework in 2021, Senior Executive maximum total remuneration will be reduced
by approximately 10%.
2. Oversight and external advice
2a. Board and Human Resources Committee
The Board takes an active role in the governance and oversight of Ampol’s remuneration policies and practices. Approval of certain
key human resources and remuneration matters are reserved for the Board, including setting remuneration for KMP and any
discretion applied in relation to the targets or funding pool for Ampol’s incentive plans.
The Human Resources Committee assists the Board to fulfil its corporate governance responsibilities in relation to Ampol’s
remuneration framework, incentive plans, succession planning, as well as diversity and inclusion.
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Directors’ Report (continued)Ampol Limited
Directors’ Report continued
29
Remuneration Report continued
2. Oversight and external advice continued
2a. Board and Human Resources Committee continued
The Human Resources Committee seeks to put in place appropriate remuneration arrangements and practices that are clear and
understandable, attract and retain talent and capability, and support superior performance and long-term growth in shareholder
value.
Further information about the role of the Board and the Human Resources Committee is set out in their charters, which are available
on the Company’s website (www.ampol.com.au).
2b. External advice
The Human Resources Committee is independent of management and is authorised to obtain external professional advice as
necessary. The use of external specialists to provide advice and recommendations specifically in relation to the remuneration of
KMP is either initiated directly, or approved by, the Human Resources Committee, and these specialists are directly engaged by the
Human Resources Committee Chair.
During 2020, Ampol received no ‘remuneration recommendations’ (as defined in the Corporations Act).
3. Senior Executive remuneration
3a. Remuneration philosophy and structure
The guiding philosophy underpinning the way Ampol rewards Senior Executives and all other employees is outlined below:
Guiding philosophy Commentary
Alignment with
shareholders’
interests
The payment of STI is dependent upon achieving threshold financial and non-financial performance
aligned with Ampol’s strategy.
The vesting of LTI is aligned with achieving strong returns for shareholders with the key measures of
success being both relative TSR and ROCE.
Share restriction arrangements within the LTI scheme require all Senior Executives to build up and
maintain shareholdings to encourage further alignment with Ampol shareholders.
Further detail on these measures is outlined in section 3d.
Performance focused
and differentiated
The Company’s performance and reward processes enable individual connection to Ampol’s strategy and
values – Connect to win, Find new ways, Own it, Make a difference, and Never stop caring – and
appropriately weight company and individual objectives based on role level of accountability and
contribution. Assessment of performance drives differentiated reward outcomes.
Market competitive
Ensure gender equity
in remuneration
outcomes
Total reward offerings are set at competitive levels for comparable, similarly sized roles in each of the
geographies we operate and allow Ampol to attract and retain quality talent. The Company’s remuneration
philosophy is to position fixed remuneration at the median of a customised peer group of companies, and
total remuneration generally aligned to the upper quartile for stretch performance.
Market benchmarking compares against two peer groups; a primary customised peer group consisting of
20 companies of comparable size and complexity, and which the Board considers to be leading
competitors for capital and people; and a secondary peer group based on pure market capitalisation,
consisting of 20 companies. Externally managed trusts and overseas domiciled companies are excluded.
Remuneration is reviewed to understand and address any gender-based pay differences on a like-for-like
job level basis.
Remuneration structure
Our Senior Executive annual remuneration structure consists of:
fixed remuneration: base salary, non-monetary benefits, and superannuation; and
variable remuneration: short-term and long-term incentives delivered in cash and equity that vests over future years.
Variable remuneration is “at risk” and subject to individual and Group performance objectives. This comprises a mix of cash STIs
(only payable if a threshold level of 80% RCOP NPAT target is met) and equity-based incentives awarded upon the achievement of
relative TSR and a return-based performance measure. Superannuation is payable at a rate of 9.5% of base salary and on any STI
payments delivered in cash. The remuneration structure (including the remuneration mix) is approved annually by the Board.
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AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3b. Remuneration mix
The maximum total remuneration mix for Senior Executives representing stretch performance is outlined below for 2020.
The remuneration mix is weighted more heavily towards variable remuneration to better align remuneration outcomes to executive
performance. See section 3d for further information on the LTI performance hurdles and vesting schedules.
MD & CEO
MD & CEO
Other Senior
Executives
Other Senior Executives
%
0
27%
33%
20
37%
40
40%
60
0%
10%
20%
30%
40%
50%
60%
36%
27 37 36
33 40 27
27%
80
70%
80%
100
90%
100%
■ Fixed remuneration
Fixed remuneration
■ Variable remuneration – STI
Variable remuneration - STI
■ Variable remuneration – LTI
Variable remuneration - LTI
(i) The remuneration mix for other Senior Executives uses the average fixed remuneration of the cohort. STI reflects 120% of fixed remuneration and LTI
reflects 90% of base salary.
(ii) Variable remuneration includes the superannuation payable on the cash portion and assumes all annual objectives and performance rights granted under
the Ampol Equity Incentive Plan (AEIP) achieve target performance.
3c. Variable remuneration – 2020 STI Plan
Plan
STI awards are made under the Rewarding Results Plan.
Plan rationale
The plan rewards a combination of financial and non-financial performance measures that are aligned to
the creation of shareholder value. Primary emphasis is placed on Company RCOP NPAT. Non-financial
measures focus on safety and executing critical business plan objectives.
Performance period The performance period is for the 12 months ending 31 December 2020.
2020 target and
maximum stretch
opportunity levels
Financial gateway
For the MD & CEO the target STI opportunity is 70% of base salary and the maximum stretch STI
opportunity is 140% of base salary.
For other Senior Executives the target STI opportunity is 60% of base salary and the maximum stretch
STI opportunity is 120% of base salary.
RCOP NPAT performance, including the cost of incentives, needs to be at least 80% of target before any
short-term incentives are payable. In 2020, RCOP NPAT achieved 43% of target, resulting in no STI
being payable to Senior Executives.
Use of discretion
In 2020, the Human Resources Committee decided against exercising discretion in relation to any
exceptional unforeseen and uncontrollable impacts on the agreed performance measures.
Payment vehicle
STI awards are delivered in cash.
Payment frequency STI awards are paid annually. Payments are made in the April following the end of the performance
period.
Senior Executive performance objectives
Senior Executive performance objectives were defined in support of the 2020 business plan and Ampol’s longer-term strategic
objectives. The Board has regularly monitored progress against business plan milestones and targets within each Senior Executive
portfolio where specific performance measures were defined for teams and individuals. The Board approves the performance
objectives of the MD & CEO and following recommendation from the MD & CEO, the Human Resources Committee reviews the
performance objectives of the other Senior Executives.
Senior Executive performance assessment
The following table outlines the common performance objectives that applied to two or more Senior Executives in 2020. These
measures accounted for between 50% and 55% of the Senior Executives’ performance scorecards. The remaining performance
objectives were specific to each Senior Executive portfolio, including delivery of specific strategic growth projects/milestones,
achievement of divisional EBIT targets, and achievement of key development targets.
If all performance objectives are assessed at threshold, 60% of the target STI opportunity would be payable. If target performance is
achieved, 100% of the STI target opportunity would be payable. If all objectives are assessed at stretch, 200% of the STI target
opportunity would be payable. Payments are pro-rated between threshold and target, and between target and maximum on this
basis noting this pay-out schedule deliberately incentivises above target performance.
50
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Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3c. Variable remuneration – 2020 STI Plan continued
Senior Executive performance assessment continued
Measure
Description
RCOP NPAT
RCOP NPAT is the primary
performance measure in
determining Senior Executive
STI outcomes.(i)
Weighting
40%
31
Performance
assessment Commentary
Below
threshold
Personal safety
– F&I
Performance is measured
based on the Total
Recordable Injury Frequency
Rate (TRIFR)
5-7.5%
Target to
stretch
Personal safety
– Convenience
Retail
Performance is measured
based on the TRIFR
5-7.5%
Target to
stretch
The FY2020 financial result was impacted by
challenging market conditions, with sustained
weakness in refining margins, and severe demand
destruction arising from COVID-19. At a business
unit level, F&I International and Convenience
Retail achieved above target performance,
however the impact of refining led to an overall
result below threshold.
F&I personal safety performance was between
target and stretch with a TRIFR of 4.6, which is the
best result since Ampol began measuring TRIFR.
This represents an improvement of ~57% over the
previous year and was achieved as a result of
targeted improvement plans. The Days Away from
Work Injury Frequency Rate (DAFWIFR) was 1.1
and there was no high severity (Cat 2) injuries.
Convenience Retail personal safety performance
was between target and stretch with a TRIFR of
10.1. This represents an improvement of ~28%
over the previous year and was a result of the
implementation of targeted safety plans. The
DAFWIFR was 4.8 and there was one high severity
(Cat 2) injury.
Performance is measured
based on the number of spills
Process safety
(assessed at
company or
business unit
level)
5-7.5%
Target Process safety performance met target with four
minor spills and there were no Tier 1 Process
Safety incidents for the second year in a row. This
result is the strongest ever from Ampol, resulting
from targeted improvement plans.
Free cash flow
(FCF)
FCF excluding growth capital
expenditure and dividends
5%
Below
threshold
Free cash flow performance was below threshold
for 2020.
(i)
The RCOP NPAT methodology calculates the cost of goods sold on the basis of theoretical new purchases instead of actual costs from inventory. The
cost of these theoretical new purchases is calculated as the average monthly cost of cargoes received during the month of those sales. Similarly, where
there are sales revenues on a different basis to current month pricing, the revenue is recalculated on current pricing with the resulting pricing lag a
component of reported inventory gains and losses. Each year, the Board reviews any significant items, positive and negative, and considers their
relevance to the RCOP NPAT result. The Board may exclude any exceptional events from RCOP NPAT that management and the Board consider to be
outside the scope of usual business. Exclusions may be made to give a clearer reflection of underlying financial performance from one period to the next.
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Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3d. Variable remuneration – 2020 LTI Plan
Plan
LTI awards are granted under the Ampol Equity Incentive Plan (AEIP).
Plan rationale
LTI instrument
The AEIP aligns Senior Executive rewards with the shareholder experience. This is done using relative
TSR and ROCE performance measures to ensure capital is maximised to deliver strong shareholder
returns.
Performance rights are granted by the Company for nil consideration. Each performance right is a right to
receive a fully paid ordinary share at no cost provided performance and service-based vesting conditions
are achieved. Performance rights do not carry voting or dividend rights.
The Board may determine to pay Senior Executives the cash value of a share in satisfaction of a vested
performance right, instead of providing a share or restricted share. It is expected such discretion will only
be exercised in limited cases, typically where the Senior Executive is a ‘good leaver’ from Ampol, that is
where the employee ceases employment due to redundancy or retirement. Overseas based Senior
Executives may also receive rights which can only be cash-settled (but these awards have the same
service conditions and performance hurdles).
Allocation
methodology
The number of performance rights granted is determined by dividing the maximum opportunity level by the
20-day volume weighted average share price up to the first day of the performance period, discounted by
the value of the annual dividend to which the performance rights are not entitled. No discount is applied
for the probability of achieving the performance measures.
Performance period The performance period is three years commencing on 1 January in the year the awards are made.
For the 2020 awards, this is the three-year period from 1 January 2020 to 31 December 2022.
Target and stretch
opportunity
The MD & CEO received a grant of performance rights based on a maximum stretch LTI value of 150% of
base salary. The target LTI value is 100% of base salary.
Other Senior Executive grants were based on a maximum stretch LTI value of 90% of base salary with
target LTI value of 60% of base salary.
Performance
measure weightings
The performance measures of relative TSR assessed against a comparator group of S&P/ASX 100
companies and ROCE assessed against business plans were equally weighted in the 2020 awards.
Vesting
Vesting will occur in the April following the performance period once the performance measures have been
assessed per the vesting schedule.
For the 2020 awards, this will be April 2023.
Vesting schedule
Threshold (50th percentile): 33.3%
Relative TSR performance and percentage of the rights that will vest:
Below threshold: 0%
Stretch (90th percentile): 100%
Target (75th percentile): 66.6%
Target to stretch: Pro-rata vesting occurs between these relative performance levels
Threshold to target: Pro-rata vesting occurs between these relative performance levels
ROCE is determined as RCOP EBIT over Capital Employed using the monthly average values for the
performance period.
ROCE performance and percentage of the rights that will vest are the same as the relative TSR measure(i);
at threshold performance 33.3% of rights vest, at target 66.6% of rights vest, and at stretch 100% with pro-
rata vesting occurring between these relative vesting levels.
Shares acquired
upon vesting of the
performance rights
Shares to satisfy vested performance rights are usually purchased on market.
Shares allocated upon vesting of performance rights will carry the same rights as other ordinary shares
(including dividends and voting rights).
(i)
Threshold ROCE performance has been set above our Weighted Average Cost of Capital and target aligned to the three-year business plan target
approved in 2020. The Board has full discretion in relation to its assessment of ROCE performance and may include or exclude items to appropriately
reflect the impact of corporate actions such as mergers and acquisitions or major projects which, while in shareholders’ long-term interests, may adversely
impact near-term ROCE. Specific details of the ROCE targets have not been disclosed due to commercial sensitivity, although, the Remuneration Report
for the year ending December 2022 will present Ampol’s performance against the ROCE targets.
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Remuneration Report continued
3. Senior Executive remuneration continued
3d. Variable remuneration – 2020 LTI Plan continued
Share restriction
arrangements
Share restriction arrangements are designed to encourage Senior Executive shareholding in Ampol over a
longer period and further align with shareholder interests.
25% of the vested portion of performance rights will be converted into restricted shares. These shares are
unable to be sold for a further period of four years (until 1 April 2027 for the 2020 LTI awards). This
effectively extends the life of the AEIP from three years to seven years. For LTI awards from 2016,
restriction arrangements may be waived if the Senior Executive can demonstrate he or she holds the
equivalent of 100% of their base salary in shares prior to vesting.
On ceasing employment, all dealing restrictions on the restricted shares cease to apply, subject to the
application of the Clawback Policy.
Clawback Policy
See section 3e for information on the Ampol Clawback Policy.
Termination
provisions
Should an AEIP participant cease to be an employee due to resignation, all unvested equity awards held
by the participant will lapse, except in exceptional circumstances as approved by the Board.
The Board has the discretion to determine the extent to which equity awards granted to a participant
under the AEIP vest on a pro-rated basis, where the participant ceases to be an employee for reasons
including retirement, death, total and permanent disablement, and redundancy. In these cases, the
Board’s usual practice is to pro-rate the award to reflect the portion of the period from the date of grant to
the date the participant ceased to be employed. In addition, the portion of the award that ultimately vests
is determined by testing against the relevant performance measures at the usual time.
Change of control
provisions
Any unvested performance rights may vest at the Board’s discretion.
2018 and 2019 LTI awards
The 2018 and 2019 LTI awards will vest in April 2021 and April 2022 respectively, with a 60% weighting on relative TSR
performance and 40% on other measures.
For the 2018 LTI award, 40% of the award is based upon three strategic measures. The performance assessment for the 2018
award that will vest in April 2021 is as follows:
The vesting performance of the relative TSR measure (60%) was below threshold. Ampol’s three-year TSR performance
compared to S&P/ASX 100 companies over the period from 1 January 2018 to 31 December 2020 was -4.5%, placing it at the
38th percentile of the comparator group. No portion of the performance rights subject to the relative TSR performance measure
will vest on 1 April 2021, given performance below the 50th percentile.
The vesting performance of the F&I profit growth measure (20%) was below threshold. In 2018, Ampol set strategic objectives
to deliver increased earnings through merger and acquisition ventures related to entry into or development of new markets,
products and/or services. This excludes business-as-usual improvement efforts, including cost-out or continuous improvement
efforts and growth in current business activities.
The vesting performance of the Convenience Retail EBIT growth measure (10%) was below threshold. Since the establishment
of the Convenience Retail EBIT growth measure in 2018, several factors have contributed to a decline in earnings. The most
significant contribution during 2019 was the softening of the retail fuel margin. While margins have improved during 2020, this
has been somewhat offset by demand destruction due to COVID-19. Regardless of the effect of COVID-19 on the 2020 result,
the incremental EBIT is below threshold.
The vesting performance of the franchisee transition measure (10%) was at target. In 2018, Ampol commenced a long-term
project to transition more than 400 franchised retail stores to Ampol ownership. The Board has assessed the project as meeting
target objectives across the balance of qualitative and quantitative performance criteria, including project budget and timeline
delivered between target and stretch, and success of the change management program. Just 12 sites continue to trade as
franchised sites through to their agreement expiry dates. The at target performance assessment of the franchise transition
measure results in 66.6% of this measure vesting (6.66% of the total 2018 LTI award).
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2020 Annual Report
Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3d. Variable remuneration – 2020 LTI Plan continued
2018 and 2019 LTI awards (continued)
For the 2019 LTI award, 60% of the award is based on relative TSR and 40% ROCE. The performance assessment of both relative
TSR and ROCE are consistent with what has been outlined above under the 2020 awards.
The ROCE measure reflects the importance placed on capital discipline and the need to grow earnings in our Convenience Retail
and F&I business areas, but only where this can be done at an appropriate return on the invested capital to maximise value for
shareholders.
3e. Clawback Policy
Ampol has a Clawback Policy which allows the Company to recoup incentives which may have been awarded and/or vested to
Senior Executives in certain circumstances. The specific triggers which allow Ampol to recoup the incentives include Senior
Executives acting fraudulently or dishonestly; acting in a manner which has brought a Group company into disrepute; where there
has been a material misstatement or omission in the financial statements in relation to a Group company in any of the previous
three financial years; or any other circumstances the Board determines in good faith to have resulted in an ‘unfair benefit’ to the
Senior Executive.
Upon the occurrence of any of the triggers, the Board may then take such actions it deems necessary or appropriate to address the
events that gave rise to an ‘unfair benefit’. Such actions may include:
1.
2.
requiring the Senior Executive to repay some or all cash or equity incentive remuneration paid in any of the previous three
financial years;
requiring the Senior Executive to repay any gains realised in any of the previous three financial years through the AEIP or on
the open-market sale of vested shares;
3. cancelling or requiring the forfeiture of some or all the Senior Executive’s unvested performance rights, restricted shares, or
4.
shares;
reissuing any number of performance rights or restricted shares to the participant subject to new vesting conditions in place of
the forfeited performance rights, restricted shares or shares;
5. adjusting the Senior Executive’s future incentive remuneration; and/or
6.
initiating legal action against the Senior Executive.
3f. Hedging and margin lending policies
The Ampol Securities Trading Policy prohibits KMP from entering into any arrangements that would have the effect of limiting their
exposure relating to Ampol securities, including vested Ampol securities or unvested entitlements to Ampol securities under Ampol
employee incentive schemes.
KMP are prohibited from entering into any margin lending arrangements and other secured financing arrangements in respect of
Ampol securities.
KMP are required to undertake training to ensure that they are aware of and understand their obligations and responsibilities under
the Securities Trading Policy, which is available on our website. A contravention is a serious matter and may lead to disciplinary
action, including termination of employment.
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Remuneration Report continued
3. Senior Executive remuneration continued
3g. Senior Executive remuneration and service agreements
MD & CEO
The MD & CEO’s remuneration is determined by the Board following receipt of a recommendation from the Human Resources
Committee. In making its remuneration recommendation, the Human Resources Committee considered the performance of the MD
& CEO and external market remuneration levels for companies of a similar size and complexity.
The split between the MD & CEO’s 2020 annual total target and maximum remuneration is outlined below.
Fixed
remuneration
Variable remuneration
STI (ii)
LTI (iii)
Target
$1,264,725 (70% of base salary)
$1,650,000 (100% of base salary)
Where target performance is achieved; all
Company and individual financial and non-
financial (incl. strategic) measures are
assessed as meeting target objectives.
Where target performance is achieved; relative
TSR 75th percentile of ASX 100 companies and
ROCE measure meets target objective.
$1,806,750(i)
Maximum
$2,529,450 (140% of base salary)
$2,475,000 (150% of base salary)
Where stretch performance is achieved; all
Company and individual financial and non-
financial (incl. strategic) measures are
assessed as meeting stretch objectives.
Where stretch performance is achieved; relative
TSR 90th percentile of ASX 100 companies and
ROCE measure meets stretch objective.
(i) The MD & CEO’s fixed remuneration remains unchanged since his appointment effective 29 June 2020. It consists of a base salary of $1,650,000 and
superannuation of $156,750.
(ii) Values include the superannuation contributions of 9.5% in addition to STI target and maximum amounts.
(iii) LTI performance measures are tested at the end of a three year performance period. Share restriction arrangements encourage share retention and
promote alignment with shareholders over the longer term.
Table 1. Summary of MD & CEO’s service agreement
Term
Duration
Conditions
Ongoing until notice is given by either party
Termination by MD & CEO Six months’ notice
Termination by Company
for cause
Termination by Company
(other)
Company may elect to make payment in lieu of notice
No notice requirement or termination benefits (other than accrued entitlements)
Six months’ notice
Termination payment of six months’ base salary (reduced by any payment in lieu of notice)
Treatment of unvested STI and LTI in accordance with plan terms
Post-employment restraints Restraint applies for six months if employed in the same industry within Australia
Mr Matthew Halliday was appointed as Chief Financial Officer in April 2019. Mr Halliday received an award of restricted shares to
compensate him for forgone LTI at his prior employer. The restricted share grant will vest in four tranches over three years and
reflects the vesting schedule of the LTI forgone. Each unvested tranche will lapse if his employment ceases due to resignation,
negligent behaviour, unsatisfactory performance or circumstances requiring immediate termination prior to each respective vesting
date. This arrangement was established prior to his appointment to the MD & CEO role.
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Remuneration Report continued
3. Senior Executive remuneration continued
3g. Senior Executive remuneration and service agreements continued
Other Senior Executives
The remuneration and terms of employment for the other Senior Executives are formalised in service agreements (contracts of
employment). Other Senior Executives are appointed as permanent Ampol employees and the terms and conditions reflect market
conditions at the time of the contract negotiation and appointment. The durations of the service agreements are open-ended (i.e.
ongoing until notice is given by either party). The material terms of the service agreements are set out below. For all permanently
appointed Senior Executives the termination on notice (by the Company) is six (6) months and the notice period for resignation (by
the Senior Executive) is six (6) months.
Table 2. Service agreements for Senior Executives
Termination on notice
(by the Company)
Resignation
(by the Senior Executive)
Permanently appointed Senior Executives
6 months
6 months
Should a Senior Executive resign, their entitlement to unvested shares payable through the AEIP would generally be forfeited and, if
resignation was on or before 1 April of the year, any entitlement under the Rewarding Results Plan would also be forfeited subject
to the discretion of the Board. Should a Senior Executive be made redundant, their redundancy payment is determined by the
Ampol Redundancy Policy with the payment calculated based on years of service and the applicable notice period.
Other than prescribed notice periods, there is no special termination benefit payable under the service agreements. Statutory
benefits (such as long service leave) are paid in accordance with the legislative requirements at the time the Senior Executive
ceases employment.
Former Managing Director and Chief Executive Officer – Julian Segal
Mr Julian Segal retired effective 2 March 2020. On retirement his unvested 2018 and 2019 LTI awards were pro-rated based on the
portion of the vesting period he was employed. The portion of LTI awards he retains will remain subject to the applicable
performance hurdles and will vest, if applicable, in accordance with original terms of offer and at the end of the performance periods
in April 2021 and April 2022. He did not receive a 2020 LTI award and no STI was payable for 2020.
Former Chief Commercial Officer – Louise Warner
Ms Louise Warner resigned effective 28 September 2020. Upon resignation her unvested LTI awards and retention award lapsed in
accordance with original terms of offer.
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Directors’ Report continued
37
Remuneration Report continued
3. Senior Executive remuneration continued
3h. Link between Company performance and Senior Executive remuneration
The link between Senior Executive remuneration and Company performance is outlined in section 1 where the 2020 remuneration
outcomes are provided, and section 3 where the STI and LTI performance measures are explained.
Table 3 outlines Ampol’s TSR, dividend, share price, earnings per share, RCOP NPAT results and safety performance each year
from 2016 to 2020 together with the linkage to actual STI and LTI outcomes.
Table 3. Link between Company performance and Senior Executive remuneration (unaudited)
Summary of performance over 2016-20
12-month TSR %(i)
Dividends (cents per share)
Share price(ii)
RCOP excluding significant items earnings per share
RCOP NPAT excluding significant items (million)(iii)
Ampol Safety – TRIFR (iv)
Ampol Safety – DAFWIFR(v)
Link to remuneration
STI – percentage of business plan RCOP NPAT target
achieved
STI – average Senior Executive outcome (relative to
target)
LTI – percentage vesting three years after grant date
2020
-14.1
76c
2019
36.9
93c
2018
-21.7
118c
2017
11.8
121c
2016
-16.4
102c
$28.42
$33.95
$25.48
$34.05
$30.46
$0.84
$212
7.4
3.1
$1.36
$344
11.5
5.7
$2.06
$538
8.3
2.0
$2.38
$2.01
$621
$524
5.2
1.4
5.6
1.7
43%
65%
89%
119%
87%
0%
0%
88%
121%
95%
Year of grant
Percentage of grant vesting
2018
6.66%
2017
2016
2015
2014
6.66%
21.22%
22.38%
84.78%
(i) TSR is a measure of the return to shareholders in respect of each financial year. It is calculated as the change in share price for the year, plus dividends
announced for the year, divided by the opening share price.
(ii) The price quoted is the trading price for the last day of trading (31 December) in each calendar year.
(iii) Measured using the RCOP method which excludes the impact of inventory gains and losses and significant items as determined by the Board providing a
truer reflection of underlying financial performance.
(iv) Total Recordable Injury Frequency Rate (TRIFR).
(v) Days Away from Work Injury Frequency Rate (DAFWIFR). The total number of occupational injuries resulting in 'Days Away from Work' as certified by a
physician during a nominated reporting period per 1,000,000 hours worked for a nominated reporting period.
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Remuneration Report continued
3. Senior Executive remuneration continued
3i. Remuneration tables
Table 4a. Total remuneration earned by Senior Executives in 2020 (unaudited, non-statutory disclosures)
The following table sets out the actual remuneration earned by Senior Executives in 2020. The value of remuneration includes the
equity grants where the Senior Executive received control of the shares in 2020.
The purpose of this table is to provide a summary of the “past” and “present” remuneration outcomes received in either cash or
equity. Due to this, the values in this table will not reconcile with those provided in the statutory disclosures in table 4b. For example,
table 4b discloses the value of LTI grants which may or may not vest in future years amortised over the vesting period and may be
negative when adjustments for actual vesting outcomes are applied. Table 4a discloses the value of LTI grants from previous years
which vested in 2020.
Salary
and fees(i)
Other
remuneration
(ii)
Bonus
(short-term
incentive)
Termination
Benefit(iii)
Retention
Award(iv)
LTI vested
during the
year(v)
Remuneration
‘earned’ for
2020(vi)
Current Senior Executives
Matthew Halliday (Managing Director and Chief Executive Officer) (vii)(viii)
2020
1,470,278
205,110
Andrew Brewer (Executive General Manager, Infrastructure) (ix)
2020
67,659
14,584
Jeff Etherington (Interim Chief Financial Officer) (vii)(x)
2020
594,730
67,891
Brent Merrick (Executive General Manager, Commercial) (xi)
2020
181,777
64,610
-
-
-
-
Joanne Taylor (Executive General Manager, Retail, Brand and Culture) (vii)
2020
854,695
90,244
-
Former Senior Executives
Julian Segal (Former Managing Director and Chief Executive Officer) (vii)(xii)
2020
408,083
150,094
Louise Warner (Former Chief Commercial Officer) (vii)(xiii)
2020
749,964
108,133
Total remuneration:
2020
4,327,186
700,666
-
-
-
-
-
-
-
-
1,533,000
408,489
3,616,877
-
-
82,243
766,500
17,358
1,446,479
-
-
246,387
886,676
28,915
1,860,530
1,074,250
237,567
-
-
-
1,632,427
36,441
1,132,105
1,311,817
3,186,176
491,203
10,017,048
(i) Salary and fees comprise base salary and cash payments in lieu of employer superannuation (on 2020 base salary and/or on STI payments).
(ii) Other remuneration includes superannuation, annual leave and long service leave entitlements, and any fringe benefits tax payable on non-monetary
benefits. For Mr Merrick this includes relocation assistance provided in support of his return to Australia from Singapore.
(iii) Termination benefits includes salary paid during the Senior Executives’ notice period.
(iv) To manage heightened retention risk through a protracted take-over bid and to support the MD & CEO transition, a one-off cash retention award to the
value of 100% of fixed annual remuneration was established in March 2020. The retention awards are conditional on continued service, successful
performance and appropriate conduct.
(v) This refers to cash and equity based LTI plans from prior years that have vested in the current 2020 year. The value is calculated using the closing share
price of Company shares on the vesting date. The 2020 LTI figures reflect 6.66% of the 2017 LTI Award vested. For Mr Halliday, this amount refers to the
value of the restricted shares which vested to him during 2020 (refer to tables 5 and 6 below for more detail).
(vi) This refers to the total value of remuneration earned during 2020, being the sum of the prior columns.
(vii) These Senior Executives elect to receive an equivalent cash payment in lieu of employer superannuation that is in excess of the quarterly Superannuation
Guarantee Maximum.
(viii) Mr Halliday was appointed Interim CEO effective 2 March 2020 and then permanently MD & CEO on 29 June 2020.
(ix) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(x) Mr Etherington was appointed Interim Chief Financial Officer effective 2 March 2020.
(xi) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020.
(xii) Mr Segal ceased as MD & CEO effective 2 March 2020.
(xiii) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
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Directors’ Report continued
39
Remuneration Report continued
3. Senior Executive remuneration continued
3i. Remuneration tables continued
Table 4b. Total remuneration for Senior Executives in 2020 (statutory disclosures)
The following table sets out the audited total remuneration for Senior Executives in 2019 and 2020, calculated in accordance with
statutory accounting requirements:
Primary
Bonus
(short-
term
incentive)
Non-
monetary
benefits(ii)
Salary
and fees(i)
Post-
employment
Other
long-term
Equity
Total
Super-
annuation
Other(iii)
Termination
Benefit (iv)
Retention
Award(v)
Share
benefits
(long-term
incentive) (vi)
Rights
benefits
(long-term
incentive) (vii)
Current Senior Executives
Matthew Halliday (Managing Director and Chief Executive Officer) (vi)(viii)(ix)
59,972
21,348
41,305
- 1,277,500
809,972
63,016
3,825,875
2020
1,552,762
2019
761,279
-
-
25,378
15,634
16,914
Andrew Brewer (Executive General Manager, Infrastructure) (x)
2020
2019
72,874
-
-
-
1,242
6,428
1,699
-
-
-
Jeff Etherington (Interim Chief Financial Officer) (viii)(xi)
2020
620,225
2019
-
-
-
13,550
16,098
12,748
-
-
-
Brent Merrick (Executive General Manager, Commercial) (xii)
2020
195,306
2019
-
-
-
29,360
17,124
4,597
-
-
-
Joanne Taylor (Executive General Manager, Retail, Brand and Culture) (viii)
2020
882,719
2019
845,526
-
-
Former Senior Executives
20,632
21,348
20,240
18,469
20,767
19,746
-
-
-
-
-
-
-
-
-
Julian Segal (Former Managing Director and Chief Executive Officer) (viii)(xiii)
2020
501,690
2019
2,264,809
-
-
3,965
16,667
35,856 1,074,250
16,044
25,000
53,619
-
Louise Warner (Former Chief Commercial Officer) (viii)(xiv)
2020
800,435
2019
995,956
-
-
Total remuneration:
14,410
21,348
21,904
237,567
16,280
20,767
21,837
-
1,028,564
115,871
1,963,640
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82,243
-
(8,516)
1,292,855
-
-
53,164
299,551
-
-
(1,499)
1,682,337
176,909
1,081,417
(261,957)
1,370,471
907,296
3,266,768
(354,231)
741,433
214,295
1,269,135
-
638,750
-
738,897
-
-
2020
4,626,011
- 143,131
120,361
138,349 1,311,817 2,655,147
809,972
(510,023)
9,294,765
2019
4,867,570
-
76,171
82,168
112,116
-
-
1,028,564
1,414,371
7,580,960
59
Annual Report 2020
40
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3i. Remuneration tables continued
Table 4b. Total remuneration for Senior Executives in 2020 (statutory disclosures) continued
(i) Salary and fees include base salary and cash payments in lieu of employer superannuation. For 2020 the cash payments in lieu of employer
superannuation is on 2020 base salary. These figures also include any annual leave accruals for Senior Executives.
(ii) The non-monetary benefits received by Senior Executives include car parking benefits, employee AmpolCard benefits, the payment of the default
premiums for death and total and permanent disability insurance cover and related fringe benefits tax payments made by Ampol.
(iii) Other long-term remuneration represents the long service leave accruals for all Senior Executives. For Mr Merrick this includes relocation assistance
provided in support of his return to Australia from Singapore.
(iv) Termination benefits includes salary paid during notice periods.
(v) This value represents the amount of the retention award accrued for in 2020 being 10 out of 12 months of the total retention award.
(vi) Share benefits represent the value of the restricted shares awarded to Mr Halliday on commencing employment. These values have been calculated in
accordance with accounting standards with further details regarding these awards set out in Table 5.
(vii) These values have been calculated in accordance with accounting standards. The values may not represent the future value that the Senior Executive will
receive, as the vesting of the performance rights is subject to Ampol achieving pre-defined performance measures. The value of restricted shares and
performance rights is amortised over the applicable vesting period. The amount shown is the amortisation relating to the 2020 reporting year (and 2019 as
a comparison). The accounting value of share-based payments may be negative where an executive’s share-based payment expense includes
adjustments for previously incurred expenses relating to an award that has not met its vesting conditions. For Mr Merrick this value includes a one-off
retention award of share rights granted in 2019 vesting in equal tranches in April 2021 and April 2022.
(viii) These Senior Executives elect to receive an equivalent cash payment in lieu of employer superannuation that is in excess of the quarterly Superannuation
Guarantee Maximum.
(ix) Mr Halliday was appointed Interim CEO effective 2 March 2020 and then permanently MD & CEO on 29 June 2020.
(x) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(xi) Mr Etherington was appointed Interim Chief Financial Officer effective 2 March 2020.
(xii) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020.
(xiii) Mr Segal ceased as MD & CEO effective 2 March 2020.
(xiv) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
60
Directors’ Report (continued)Ampol Limited
41
Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3i. Remuneration Tables continued
Table 5. Unvested shareholdings of Senior Executives during 2020
Unvested
shares at 31
Dec 2019
Restricted
shares
granted
Shares vested
in current
performance
year
Unvested
shares at
Forfeited
31 Dec 2020
Matthew Halliday(i)
76,898
-
16,268
-
60,630
(i) The restricted shares awarded to Mr Halliday represent the grant received on commencement with Ampol in lieu of the LTI forgone with his previous
employer (refer to section 3g for further detail). 17.5% vested in October 2019 and 17.5% vested in October 2020. 30.2% will vest in October 2021 and the
final tranche of 34.8% will vest in October 2022.
Table 6. Restricted share grant to a Senior Executive – other awards
The following table provides an estimate of the future cost to Ampol of unvested restricted shares based on the progressive vesting
of the restricted shares. One award was made to Matthew Halliday in 2019 in respect of unvested LTI which lapsed upon his
resignation with his prior employer. The estimated future cost of the unvested shares has been supplied below.
Type of award
Year of award
Vested
(% of shares
vested)
Future years
when shares
will vest
Future cost
to Ampol of
unvested
shares ($)
Matthew Halliday
Sign-on
2019
35.0%
2021 (30.2%)
704,486
2022 (34.8%)
Table 7. 2020 Senior Executive performance rights
LTIs for Senior Executives are awarded as performance rights under the AEIP as explained in section 3d. The following table sets
out details of movements in performance rights held by Senior Executives during the year, including details of the performance
rights that vested as presented in table 4a.
Performance
rights at
1 Jan 2020(i)
Current Senior Executives
Matthew Halliday
Andrew Brewer(vi)
Jeff Etherington(vii)
Brent Merrick(viii)
Joanne Taylor
37,505
8,717
42,308
45,653
66,045
Former Senior Executives
Julian Segal(ix)
Louise Warner(x)
366,450
81,935
Granted
in 2020(ii)
Vested
in 2020(iii)
Lapsed
in 2020(iv)
Balance at
31 December 2020(v)
67,604
-
10,836
-
23,462
-
28,974
-
-
(745)
-
(1,241)
-
(1,564)
-
-
(17,013)
-
(17,374)
(99,038)
(109,345)
105,109
8,717
35,386
45,653
70,892
267,412
-
(i)
This relates to the 2017, 2018 and 2019 performance rights. If the service-based and performance-based vesting conditions are achieved, the 2018 and 2019 performance rights
will vest in 2021 and 2022 respectively. For Senior Executives appointed during the year this includes performance rights held at the time of appointment. For Mr Merrick this value
includes a one-off retention award of share rights granted in 2019 vesting in equal tranches in April 2021 and April 2022.
This relates to the 2020 performance rights. If the service-based and performance-based vesting conditions are achieved, these performance rights will vest in 2023.
(ii)
(iii) This relates to the 2017 performance rights of which 6.66% vested. Senior Executives received one Ampol share for each right that vested.
(iv) This relates to the 2017 performance rights of which 93.33% lapsed and for the former Senior Executives the full or pro-rated portion of unvested performance rights which lapsed
on cessation of employment. Refer to section 3g.
The performance rights for any former Senior Executives are as at the date they ceased employment or retired from their office.
(v)
(vi) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(vii) Mr Etherington was appointed Interim Chief Financial Officer effective 2 March 2020.
(viii) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020.
(ix) Mr Segal ceased as MD & CEO effective 2 March 2020.
(x) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
61
Annual Report 2020
42
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3i. Remuneration tables continued
Table 8. Valuation assumptions of performance rights granted
The fair value of performance rights granted under the AEIP is determined independently by Deloitte using an appropriate numerical
pricing model. The model considers a range of assumptions and the fair values for each year of grant have been calculated
incorporating the assumptions below.
2020 grant(i)(ii)
2019 grant(i)
2018 grant(i)
Relative
TSR against
S&P/ASX 100
ROCE
measure
Relative
TSR against
S&P/ASX 100 ROCE measure
Relative
TSR against
S&P/ASX 100
Strategic
measure
Grant date
03 April 2020 03 April 2020
4 April 2019/
4 April 2019/
4 April 2018/
4 April 2018/
20 May 2019
20 May 2019
18 May 2018
18 May 2018
Vesting date
1 April 2023
1 April 2023
1 April 2022
1 April 2022
1 April 2021
1 April 2021
Exercise price
Volatility
Risk-free interest rate
Dividend yield
Nil
29%
0.2%
3.6%
Nil
29%
0.2%
3.6%
Nil
Nil
Nil
Nil
20%/20%
20%/20%
23%/22%
23%/22%
1.4%/1.2%
1.4%/1.2%
2.2%/2.3%
2.2%/2.3%
4.5%/4.4%
4.5%/4.4%
3.6%/3.9%
3.6%/3.9%
Expected life (years)
3.0 years
3.0 years
3.0/2.9 years
3.0/2.9 years
3.0/2.9 years
3.0/2.9 years
Share price at
grant date
$23.00
$23.00
$26.50/$27.01
$26.50/$27.01
$31.42/$30.81
$31.42/$30.81
Valuation per right
$9.07
$20.65
$8.23/$8.08
$23.19/$23.83
$11.88/$9.74
$28.24/$27.53
(i) Market performance measures, such as relative TSR, must be incorporated into the option-pricing model valuation used for the AEIP performance rights,
which is reflected in the valuation per performance right. Non-market vesting conditions such as ROCE and strategic measures are not taken into account
when determining the value of the performance right. This explains the higher valuation for these performance rights. However, the value of the ROCE and
strategic measures may be discounted during the performance period to reflect the Board’s assessment of the probability of the number of equity
instruments that will vest based on progress against the performance measures. These values are reflected in table 4b.
(ii)
In 2020 AEIP performance grants were made on 3 April 2020. In previous years the MD & CEO’s awards were made after shareholder approval was
obtained at the Annual General Meeting held in May. Approval for Mr Halliday’s 2020 award was not sought as he was Interim CEO and not a Managing
Director at this time.
Table 9. Mix of fixed and variable remuneration based on 2020 statutory remuneration table
The fixed and variable proportion of each Senior Executive’s remuneration for 2020 is outlined below. The percentages are based
on the 2020 statutory remuneration disclosures in table 4b (including the LTI values which are determined in accordance with
accounting standards), and do not correspond to the target remuneration percentages outlined in section 3b.
Fixed
44%
100%
51%
82%
56%
100%
100%
Variable (including short-term and
long-term incentive payments)
56%
-
49%
18%
44%
-
-
Current Senior Executives
Matthew Halliday
Andrew Brewer
Jeff Etherington
Brent Merrick
Joanne Taylor
Former Senior Executives
Julian Segal(i)
Louise Warner(ii)
(i) Mr Segal ceased as MD & CEO effective 2 March 2020.
(ii) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
62
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Remuneration Report continued
3. Senior Executive remuneration continued
3i. Remuneration tables continued
Table 10. FY2020 STI outcomes
The following table sets out the actual STI outcome for each Senior Executive as a percentage of their maximum STI opportunity.
43
Current Senior Executives
Matthew Halliday(i)
Andrew Brewer(ii)
Jeff Etherington(iii)
Brent Merrick(iv)
Joanne Taylor
Former Senior Executives
Julian Segal(v)
Louise Warner(vi)
Average(vii)
2020
0%
0%
0%
0%
0%
0%
0%
0%
2019
0%
-
-
-
0%
0%
0%
0%
(i) Mr Halliday was appointed Interim CEO effective 2 March 2020 and then permanently MD & CEO on 29 June 2020.
(ii) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(iii) Mr Etherington was appointed Interim Chief Financial Officer effective 2 March 2020.
(iv) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020.
(v) Mr Segal ceased as MD & CEO effective 2 March 2020.
(vi) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
(vii) This is the average of those KMP eligible to receive an STI payment in each year.
4. Non-executive Director fees
4a. Our approach to Non-executive Director fees
Ampol’s business and corporate operations are managed under the direction of the Board. The Board oversees the performance of
Ampol’s management in seeking to deliver superior business performance and long-term growth in shareholder value. The Board
recognises that providing strong leadership and strategic guidance to management is important to achieve our goals and objectives.
Under the Ampol Constitution and the ASX Listing Rules, the total annual fee pool for NEDs is determined by shareholders. Within
this aggregate amount, NED fees are reviewed by the Human Resources Committee, considering recommendations from an
independent remuneration consultant, and set by the Board.
Fees for NEDs are set at a level to attract and retain directors with the necessary skills and experience to allow the Board to have a
proper understanding of, and competence to deal with, current and emerging issues for Ampol’s business. The Board seeks to
attract directors with different skills, experience, expertise and diversity. Additionally, when setting NED fees, the Board considers
factors such as external market data on fees and the size and complexity of Ampol’s operations.
The NEDs’ fees are fixed, and NEDs do not participate in any Ampol incentive plan.
4b. Board and committee fees for 2020
The current maximum annual fee pool for NEDs is $2.5 million, including statutory entitlements. This amount was approved by
shareholders at the 2016 Annual General Meeting.
Table 11. 2020 Non-executive Director fees
The following table outlines the 2020 NED fees.
Board
Committees(i)
2020 fee(ii)
Chairman
$502,207
Member
Committee Chairman
Member
$167,402
$46,000
$20,000
(i) Comprising the Audit Committee, Human Resources Committee, and Safety and Sustainability Committee. No fees are paid to the Chair or members of
the Nomination Committee.
(ii) Ampol paid superannuation of 9.5% for Non-executive Directors in addition to the above fees in 2020.
63
Annual Report 2020
44
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report continued
4. Non-executive Director fees continued
4c. Remuneration table
Table 12. Non-executive Director fees in 2020 (statutory disclosures)
The following table sets out the audited NED fees in 2019 and 2020, calculated in accordance with statutory accounting
requirements and which reflect the actual remuneration received during the financial year. NED fees were reduced by 20% for a
period of three months in 2020 to assist in the organisational response to COVID-19. NEDs are not eligible to receive any cash or
equity-based incentives.
Primary
Post-employment
Total
Salary
and fees
Non-monetary
benefits
Superannuation(i)
Current Non-executive Directors
Steven Gregg (Chairman)
2020
2019
Mark Chellew
2020
2019
Melinda Conrad
2020
2019
Michael Ihlein(ii)(iii)
2020
2019
Gary Smith(iv)
2020
2019
Barbara Ward AM
2020
2019
Penny Winn
2020
2019
Former Non-executive Directors
Bruce Morgan(ii)(v)
2020
2019
477,097
502,207
197,033
207,403
197,033
207,403
133,915
-
114,072
-
221,733
233,403
221,733
233,403
87,762
233,403
-
921
-
-
220
160
-
-
-
-
406
221
-
-
1,006
1,036
45,324
47,710
18,718
19,703
18,718
19,703
6,652
-
10,837
-
21,065
22,173
21,065
22,173
5,543
22,173
522,421
550,838
215,751
227,106
215,971
227,266
140,567
-
124,909
-
243,204
255,797
242,798
255,576
94,311
256,612
(i) Superannuation contributions are made on behalf of Non-executive Directors to satisfy Ampol’s obligations under the Superannuation Guarantee
legislation. Fees paid to Non-executive Directors may be subject to fee sacrifice arrangements for superannuation.
(ii) These Non-executive Directors were provided superannuation guarantee employer shortfall exemption from the Australian Tax Office and were provided
employer superannuation contributions as a cash allowance for part of the year.
(iii) Mr Ihlein was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(iv) Mr Smith was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(v) Mr Morgan retired from the Board as an Independent, Non-executive Director effective 14 May 2020.
64
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
45
Remuneration Report continued
5. Shareholdings of Key Management Personnel
Table 13: Shareholdings of Key Management Personnel
The movement during the reporting period in the number of shares of Ampol Limited held directly or indirectly by each KMP,
including their personally related entities, is in the following table.
Held at
31 Dec 2019
Purchased
Vested
Sold
Held at
31 Dec 2020(I)
Current Directors
Steven Gregg
Mark Chellew
Melinda Conrad
Michael Ihlein(ii)
Gary Smith(iii)
Barbara Ward AM
Penny Winn
Former Directors
Bruce Morgan(iv)
Current Senior Executives
Matthew Halliday
Andrew Brewer(v)
Jeff Etherington(vi)
Brent Merrick(vii)
Joanne Taylor
Former Senior Executives
Julian Segal(viii)
Louise Warner(ix)
6,000
1,400
8,000
-
-
6,500
5,911
10,500
16,268
17,063
3,967
874
3,008
351,274
469
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,268
-
745
-
1,241
-
1,564
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000
1,400
8,000
-
-
6,500
5,911
10,500
32,536
17,063
4,712
874
4,249
351,274
2,033
65
Annual Report 2020
46
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Remuneration Report continued
5. Shareholdings of Key Management Personnel continued
Table 13: Shareholdings of Key Management Personnel continued
Current Directors
Steven Gregg
Mark Chellew
Melinda Conrad
Michael Ihlein(ii)
Gary Smith(iii)
Barbara Ward AM
Penny Winn
Former Directors
Bruce Morgan(iv)
Current Senior Executives
Matthew Halliday
Andrew Brewer(v)
Jeff Etherington(vi)
Brent Merrick(vii)
Joanne Taylor
Former Senior Executives
Julian Segal(viii)
Louise Warner(ix)
Held at
31 Dec 2018
Purchased
Vested
Sold
Held at
31 Dec 2019(i)
6,000
1,400
8,000
-
-
6,500
5,911
10,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
325,585
469
4,150
-
-
-
-
-
-
-
-
-
16,268
-
-
-
3,008
21,539
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000
1,400
8,000
-
-
6,500
5,911
10,500
16,268
-
-
-
3,008
351,274
469
(i) The shareholdings for any former Directors or former Senior Executives are as at the date they ceased employment or retired from their office.
(ii) Mr Ihlein was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(iii) Mr Smith was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(iv) Mr Morgan retired from the Board as an Independent, Non-executive Director effective 14 May 2020.
(v) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(vi) Mr Etherington was appointed Interim Chief Financial Officer effective 2 March 2020.
(vii) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020.
(viii) Mr Segal ceased as MD & CEO effective 2 March 2020.
(ix) Ms Warner resigned as Chief Commercial Officer effective 28 September 2020.
6. Other Key Management Personnel transactions
Apart from as disclosed in the indemnity section of the Directors' Report, no KMP have entered into a material contract, loan or
other transaction with any entity in the Ampol Group during the year ended 31 December 2020 (2019: nil).
66
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
47
Directors’ interests
The Directors’ relevant interests in the shares of Ampol Limited at 31 December 2020 are set out in the following table.
Director
Shareholding
Nature of interest
Steven Gregg
6,000 shares
Indirect interest
Matthew Halliday
32,536 shares
Direct interest (32,536 shares)
105,109 performance rights
Direct interest in 105,109 performance rights
Mark Chellew
1,400 shares
Melinda Conrad
8,000 shares
Michael Ihlein
Gary Smith
0 shares
0 shares
Barbara Ward AM
6,500 shares
Penny Winn
5,911 shares
Former Directors(i)
Indirect interest
Indirect interest
Not applicable
Not applicable
Direct interest
Indirect interest
Bruce Morgan
10,500 shares
Indirect interest
Julian Segal
351,274 shares
Direct Interest (296,367 shares)
267,412 performance rights
Indirect Interest (81,907 shares)
Direct Interest in (267,412 performance rights)
(i) The shareholdings for any Former Directors are as at the date they ceased employment or retired from their office.
No other Director has acquired or disposed of any relevant interests in the Company’s shares in the period from 1 January 2020 to
the date of this Annual Report.
67
Annual Report 2020
48
AMPOL LIMITED
2020 Annual Report
Directors’ Report continued
Board and committee meetings
The Ampol Board met 38 times during the year ended 31 December 2020. In addition, Directors attended Board strategy sessions
and workshops, site visits and special purpose committee meetings during the year.
The number of Board and committee meetings attended by each Director during 2020 are set out in the following table.
Director(i)
Board(ii)
Audit Committee
Human Resources
Committee
Nomination
Committee
Safety and
Sustainability
Committee
Current Directors
Held Attended Held Attended Held Attended Held Attended Held Attended
Steven Gregg
Matthew Halliday(iii)
Mark Chellew
Melinda Conrad
Michael Ihlein (iv)
Gary Smith(v)
Barbara Ward AM
Penny Winn
Former Directors
Bruce Morgan(vi)
Julian Segal(vii)
38
15
38
38
17
17
38
38
19
6
38
15
38
36
17
17
38
38
17
6
-
-
-
5
4
-
5
5
1
-
-
-
-
5
4
-
5
5
1
-
-
-
3
3
-
2
3
-
-
-
-
-
3
3
-
2
3
-
-
-
1
-
1
1
-
-
1
1
1
-
1
-
1
1
-
-
1
1
1
-
-
-
4
-
2
2
-
4
2
-
-
-
4
-
2
2
-
4
2
-
(i) All Directors are invited to (and regularly attend) committee meetings; this table lists attendance only where a Director is a member of the relevant
committee. A number of Directors also participated in Board Committees convened for special purposes.
Includes out of session meetings but excludes strategy workshops and briefings.
(ii)
(iii) Mr Halliday attended all Board meetings from the time of appointment as MD & CEO from 29 June 2020.
(iv) Mr Ihlein was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(v) Mr Smith was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(vi) Mr Morgan retired from the Board as an Independent, Non-executive Director effective 14 May 2020.
(vii) Mr Segal ceased as MD & CEO effective 2 March 2020.
68
Directors’ Report (continued)Ampol Limited
Directors’ Report continued
Shares and interests
The total number of ordinary shares on issue at
31 December 2020 was 249,706,947 shares, prior to
the completion of a 11,404,848 share buy back in 2021
(2019: 249,706,947 shares on issue). The total number
of rights on issue at the date of this report is 1,385,590
(2019: 1,700,742). 426,101 rights were issued during 2020
(2019: 908,182). 757,022 rights vested or lapsed during the
year (2019: 516,578), with an additional 2,026 rights lapsing
in 2021 prior to the date of this report. On vesting, Ampol is
required to allocate one ordinary share for each right. For
each right that vests, Ampol intends to purchase a share
on market.
Non-audit services
KPMG is the external auditor.
In 2020, KPMG performed non-audit services for Ampol in
addition to its statutory audit and review engagements for
the full year and half year.
KPMG received, or was due to receive, the following
amounts for services performed for Ampol during the year
ended 31 December 2020:
for audit and review services – total fees of $1,666,800
(2019: $1,748,700);
for assurance services – total fees of $41,600 (2019:
$132,100); and
for other services – total fees $574,000 (2019: $80,940).
Other services includes transaction services in respect of
Ampol’s disposal of a 49% interest in certain freehold
convenience retail sites and remuneration benchmarking
services.
The Board has received written advice from the Audit
Committee in relation to the independence of KPMG, as
external auditor, for 2020. The advice was made in
accordance with a resolution of the Audit Committee.
The Directors are satisfied that:
the provision of non-audit services to the Ampol Group
during the year ended 31 December 2020 by KPMG is
compatible with the general standard of independence
for auditors imposed by the Corporations Act; and
the provision of non-audit services during the year
ended 31 December 2020 by KPMG did not
compromise the auditor independence requirements
of the Corporations Act for the following reasons:
–
–
–
The provision of non-audit services in 2020 was
consistent with the Board’s policy on the provision
of services by the external auditor;
The non-audit services provided in 2020 are not
considered to be in conflict with the role of
external auditor and
The Directors are not aware of any matter relating
to the provision of the non-audit services in 2020
that would impair the impartial and objective
judgement of KPMG as external auditor.
49
Company Secretaries
The following person is the current Company Secretary of
Ampol as at the date of this report:
Georgina Koch
Georgina Koch was appointed to this position in March 2020.
Georgina manages Ampol’s legal, secretariat and
compliance teams. As General Counsel, she is responsible
for managing legal risk for Ampol and providing legal advice
to Ampol’s Board, CEO and broader leadership team.
Georgina, who joined Ampol in 2017, has over 20 years’
experience in advising on commercial, competition and
corporate legal issues. Prior to Ampol, she held senior roles
at Commonwealth Bank and Clayton Utz.
Georgina holds a Bachelor of Economics, a Bachelor of
Laws and a Masters in Labour Law and Relations from the
University of Sydney.
Indemnity and insurance
Ampol has paid insurance premiums for Directors’ and
officers’ liability for current and former Directors and officers
of the Company, its subsidiaries and related entities.
The insurance policies prohibit disclosure of the nature of the
liabilities insured against and the amount of the premiums.
The Constitution provides that each officer of the Company
and, if the Board considers it appropriate, any officer of a
subsidiary of the Company be identified out of the assets
of the Company to the relevant extent against any liability
incurred by the officer in or arising out of the conduct of the
business of the Company or the subsidiary (as the case may
be) or in or arising out of the discharge of the duties of the
officer, unless incurred in circumstances that the Board
resolves do not justify indemnification. Where the Board
considers it appropriate, the Company may execute a
documentary indemnity in any form in favour of any officer of
the Company or a subsidiary of the Company, provided that
such terms are not inconsistent with the Constitution. For
more information, refer to the Constitution on the
Ampol website.
Rounding of amounts
Ampol Limited is an entity to which Australian Securities and
Investments Commission Corporations Instrument 2016/191
applies. Amounts in the 2020 Directors’ Report and the 2020
Financial Report have been rounded off to the nearest
hundred thousand dollars (unless otherwise stated) in
accordance with that instrument.
The Directors’ Report is made in accordance with a
resolution of the Board of Ampol Limited.
Steven Gregg
Chairman
Matthew Halliday
Managing Director & Chief Executive Officer
Sydney, 22 February 2021
69
Annual Report 2020
Auditor’s Independence Declaration
2020 Annual Report
AMPOL LIMITED
50
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Ampol Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Ampol Limited for
the financial year ended 31 December 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPMG
Julian McPherson
Partner
Sydney
22 February 2021
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The
KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global
organisation. Liability limited by a scheme approved under Professional Standards Legislation.
70
Ampol Limited Directors’ Declaration
Directors’ Declaration
51
In the opinion of the Directors of Ampol Limited (the Company):
a)
the financial statements and notes that are contained in pages 58 to 111 and the Remuneration Report set out on pages 24 to
66
46 are in accordance with the Corporations Act 2001 (Cth), including
78 to 131
44
(i) giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the financial
year ended on that date; and
(ii) complying with Australian Accounting Standards, and the Corporations Regulations 2001;
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable;
c) at the date of this declaration, there are reasonable grounds to believe that the companies in the Ampol Group that are parties
to the Deed of Cross Guarantee as identified in note F1 will be able to meet any obligations or liabilities to which they are, or
may become, subject by virtue of the Deed of Cross Guarantee described in note F1, and
d) a statement of compliance with International Financial Reporting Standards has been included in note A to the financial
statements for the year ended 31 December 2020.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) from the Managing
Director and CEO and the Chief Financial Officer for the financial year ended 31 December 2020.
Signed in accordance with a resolution of the Directors:
Steven Gregg
Chairman
Matthew Halliday
Managing Director & Chief Executive Officer
Sydney, 22 February 2021
71
Annual Report 2020
Independent Auditor’s Report
TO THE SHAREHOLDERS OF AMPOL LIMITED
AMPOL LIMITED
2020 Annual Report
52
Independent Auditor’s Report
To the shareholders of Ampol Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Ampol Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
• giving a true and fair view of the
Group’s financial position as at 31
December 2020 and of its financial
performance for the year ended on that
date; and
The Financial Report comprises the:
• Consolidated balance sheet as at 31 December 2020
• Consolidated income statement, Consolidated
statement of comprehensive income, Consolidated
statement of changes in equity, and Consolidated
cash flow statement for the year then ended
• Notes including a summary of significant accounting
policies
• Directors’ Declaration.
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with
the Code.
Key Audit Matters
The Key Audit Matters we identified are:
• Site remediation and dismantling
provisions
• Taxation of Singaporean entities
•
Impairment of non-current assets
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit
of the Financial Report as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
72
Ampol Limited Site remediation and dismantling provisions (A$586.7m)
Refer to Note C6 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s determination of the site
remediation and dismantling provisions is
considered a key audit matter. This is due to
the inherent complexity in estimating the
amounts and timing of future remediation and
dismantling costs, particularly those forecast
to be incurred several years in the future.
This is influenced by:
Current environmental, regulatory and
contractual requirements, and the impact
of the completeness of environmental
remediation activities incorporated into
the provision estimate;
The expected environmental
management strategy, and the nature of
costs incorporated into the provision
estimate;
Third party expert advice obtained by
management regarding their obligations
and estimates of future costs;
Historical experience, and whether this is
a reasonable predictor when evaluating
forecast costs; and
The expected timing of the expenditure.
Our procedures included:
• Assessing the consistency of the basis for
recognition and measurement of the provisions
with environmental and regulatory requirements,
contractual lease terms and the requirements of
the accounting standards.
• Reading the Group’s board minutes, litigation
register and correspondence with regulatory
authorities to identify legal environmental
obligations and checking these were appropriately
considered in the determination of the provisions.
• Recalculating the mathematical accuracy for a
sample of the provision calculations.
• Comparing the expected timing of remediation
work against the Group’s remediation plans or
expected period of site operation which was
determined with reference to the useful life of
underlying site assets or site lease term.
•
Evaluating the completeness of the provisions by
comparing the site listing for which a provision has
been recognised to other internal and external
records of Group sites.
• Working with our environmental specialists, we:
o
evaluated the scope, competence, experience
and objectivity of the Group’s internal and
external experts; and
o corroborated a sample of estimates used in the
provision calculations to underlying evidence
such as third party support and actual
expenditure incurred by the Group.
•
Performing sensitivity analysis over key estimates
and assumptions, including discount rate and
inflation rate by making changes that we consider
reasonably possible to assess the impact on the
provision determined by management.
53
73
Annual Report 2020 Independent Auditor’s Report (continued)
TO THE SHAREHOLDERS OF AMPOL LIMITED
AMPOL LIMITED
2020 Annual Report
54
Taxation of Singaporean entities (A$178.9m)
Refer to Note E1 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s determination as to whether the
earnings from its Singaporean entities are subject
to income tax in Australia is a key audit matter.
This is due to the judgement required in assessing
the Group’s current estimate of taxation amounts,
which required senior audit team member and tax
specialist involvement. The critical elements of this
were:
•
•
The significant uncertainty surrounding the
timing of resolution of the matter with the
Australian Taxation Office (ATO) and the final
tax rate that will be levied in respect of the
Group’s Singaporean entities’ earnings; and
The judgement in the Group’s current
estimate of taxation by applying the Australian
income tax rate of 30% to the Singaporean
entities’ earnings, which may differ to the final
tax that applies if the income is deemed to be
non-assessable or only partially assessable in
Australia.
Our procedures included:
• Working with our tax specialists to evaluate
the estimate by:
o
o
reading documentation received from the
ATO as well as documentation prepared
by the Group’s internal and external
advisors; and
updating our understanding of the issue,
including the current status of discussions
with the ATO, expected timing for
resolution and the extent of any potential
changes to the estimate.
•
Evaluating the disclosures of the Group, in
particular disclosure of potential adjustments
to future period income tax expense, by
comparing them to our understanding of the
matter.
74
Ampol Limited Impairment of non-current assets (A$371.6m)
Refer to Note C4 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Assessment of the recoverability of non-current
assets associated with the Lytton refinery and
Convenience Retail site CGUs was a key audit
matter due to:
•
•
the estimates and assumptions used in the
cashflow projections, including the impact of
COVID-19 on key assumptions, which form
the basis of the recoverable amounts
attributable to the CGUs require significant
judgement; and
the recognition of an impairment of $80m and
$291.6m relating to the Lytton Refinery CGU
and Convenience Retail site CGUs
respectively.
We involved valuation specialists to supplement
our senior audit team members in assessing this
key audit matter.
Our procedures included:
• Considering the appropriateness of and
assessing the integrity of the impairment
modelling used, including the accuracy of the
underlying calculations.
• Assessing the consistency of assumptions to
the Group’s plan and strategy, past
performance of the CGUs and information on
key industry metrics, including the impact of
COVID-19 on these metrics.
• Considering the sensitivity of the models by
varying key assumptions noted above. We did
this to identify those assumptions at higher
risk of bias or inconsistency in application to
focus additional procedures, particularly in the
context of the COVID-19 pandemic.
• Working with our valuation specialists, we
independently developed a discount rate range
using market data for comparable entities,
adjusted by risk factors specific to the CGUs.
• Assessing the disclosures in the financial
report using our understanding of the issues
obtained from our testing and against the
requirements of the accounting standards,
including those made with respect to
judgements and estimates.
55
75
Annual Report 2020 Independent Auditor’s Report (continued)
TO THE SHAREHOLDERS OF AMPOL LIMITED
AMPOL LIMITED
2020 Annual Report
56
Other Information
Other Information is financial and non-financial information in Ampol Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the
Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company’s ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend
to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our Auditor’s Report.
76
Ampol Limited Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Ampol Limited for the year ended 31
December 2020, complies with Section 300A
of the Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report
in accordance with Section 300A of the Corporations Act
2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 24 to 46 of the Directors’ report for the year ended
31 December 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Julian McPherson
Partner
Sydney
22 February 2021
57
77
Annual Report 2020 Financial Statements
Contents
Primary statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes In Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
A Overview
A1 Reporting entity
A2 Basis of preparation
A3 Use of judgement and estimates
A4 Changes in significant accounting policies
B Results for the year
B1 Revenue and other income
B2 Costs and expenses
B3 Segment reporting
B4 Earnings per share
B5 Dividends
C Operating assets and liabilities
C1 Receivables
C2 Inventories
C3 Intangibles
C4 Property, plant and equipment
C5 Payables
C6 Provisions
D Capital, funding and risk management
D1 Going concern, liquidity and interest-bearing liabilities
D2 Risk management
D3 Capital management
D4 Fair value of financial assets and liabilities
D5 Master netting or similar agreements
D6 Issued capital
E Taxation
E1 Income tax benefit/(expense)
E2 Deferred tax
E3 Tax consolidation
F Group structure
F1 Controlled entities
F2 Business combinations
F3 Equity-accounted investees
F4 Joint operations
F5 Parent entity disclosures
F6 Non-controlling interest disclosures
G Other information
G1 Commitments
G2 Contingent liabilities
G3 Related party disclosures
G4 Key management personnel
G5 Notes to the cash flow statement
G6 Auditor remuneration
G7 Net tangible assets per share
G8 New standards and interpretations not yet adopted
G9 Events subsequent to the end of the year
78 Ampol Limited
79
80
81
82
83
84
84
84
84
84
85
86
86
87
88
92
93
94
94
95
95
98
104
105
107
107
108
113
114
115
116
117
117
118
119
120
120
124
124
125
126
127
128
128
128
128
129
130
131
131
131
131
Consolidated Income Statement
Consolidated Income Statement
FOR THE YEAR ENDED 31 DECEMBER 2020
For the year ended 31 December 2020
Millions of dollars
Revenue
Cost of goods sold – historical cost
Gross profit
Other income
Other expense
Net foreign exchange gain
Selling and distribution expenses
General and administration expenses
(Loss)/profit from operating activities
Finance costs
Finance income
Net finance costs
Share of net profit of entities accounted for using the equity method
(Loss)/profit before income tax expense
Income tax benefit/(expense)
Net (loss)/profit
(Loss)/profit attributable to:
Equity holders of the parent entity
Non-controlling interest
Net (loss)/profit
Basic and diluted (loss)/earnings per share
Historical cost – cents per share - basic
Historical cost – cents per share - diluted
59
2020
2019
15,406.3
22,307.1
(14,200.5)
(20,388.7)
1,205.8
28.0
(434.8)
39.1
1,918.4
44.7
-
3.7
(1,125.7)
(1,122.2)
(339.6)
(627.2)
(109.7)
0.6
(109.1)
10.7
(725.6)
245.8
(479.8)
(484.9)
5.1
(479.8)
(194.2)
(194.2)
(207.3)
637.3
(121.0)
1.2
(119.8)
4.2
521.7
(137.9)
383.8
382.8
1.0
383.8
151.3
151.1
Note
B1
B1
B2
B2
F3.2
E1
F6
B4
B4
The Consolidated Income Statement is to be read in conjunction with the notes to the Financial Statements.
79
Annual Report 2020
60
AMPOL Limited
Annual Report 2020
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2020
For the year ended 31 December 2020
Millions of dollars
(Loss)/profit for the period
Other comprehensive income
Note
2020
(479.8)
Items that will not be reclassified to income statement:
Actuarial (loss)/gain on defined benefit plans
Tax on items that will not be reclassified to income statement
E2.2
Total items that will not be reclassified to income statement
Items that may be reclassified subsequently to income statement:
Foreign operations – foreign currency translation differences
Net change in fair value of net investment hedges
Effective portion of changes in fair value of cash flow hedges
Net change in fair value of cash flow hedges reclassified to income statement
Tax on items that may be reclassified subsequently to income statement
Total items that may be reclassified subsequently to income statement
Other comprehensive (loss)/income for the period, net of income tax
(0.4)
0.1
(0.3)
(13.7)
1.6
24.0
(22.1)
(2.0)
(12.2)
(12.5)
2019
383.8
3.6
(1.1)
2.5
11.0
(1.2)
4.5
(10.5)
2.1
5.9
8.4
Total comprehensive (loss)/income for the period
(492.3)
392.2
Attributable to:
Equity holders of the parent entity
Non-controlling interest
Total comprehensive (loss)/income for the period
F6
(497.4)
5.1
(492.3)
391.2
1.0
392.2
The Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes to the Financial Statements.
80
Ampol Limited
Consolidated Balance Sheet
Consolidated Balance Sheet
AS AT YEAR ENDED 31 DECEMBER 2020
For the year ended 31 December 2020
Millions of dollars
Current assets
Cash and cash equivalents
Receivables
Inventories
Other
Total current assets
Non-current assets
Receivables
Investments accounted for using the equity method
Intangibles
Property, plant and equipment
Deferred tax assets
Employee benefits
Other
Total non-current assets
Total assets
Current liabilities
Payables
Interest-bearing liabilities
Current tax liabilities
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Payables
Interest-bearing liabilities
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury stock
Reserves
Retained earnings
Total parent entity interest
Non-controlling interest
Total equity
(i) Refer to note A4 for further information.
61
Note
2020
2019(i)
C1
C2
C1
F3
C3
C4
E2
C5
D1
C6
C5
D1
E2
C6
D6
F6
367.6
859.8
1,333.6
50.9
2,611.9
2.5
173.0
558.4
3,467.7
453.8
2.9
47.7
4,706.0
7,317.9
35.0
1,479.2
2,109.5
34.2
3,657.9
8.7
154.9
578.8
3,702.5
172.2
4.0
68.1
4,689.2
8,347.1
1,489.1
2,732.6
160.2
90.7
65.1
178.7
221.5
118.8
50.5
88.7
1,983.8
3,212.1
16.0
1,555.5
9.7
39.9
488.3
2,109.4
4,093.2
3,224.7
502.6
(1.6)
5.6
2,444.5
2,951.1
273.6
3,224.7
21.3
1,559.3
-
40.5
243.4
1,864.5
5,076.6
3,270.5
502.6
(2.0)
19.4
2,737.0
3,257.0
13.5
3,270.5
81
The Consolidated Balance Sheet is to be read in conjunction with the notes to the Financial Statements.
Annual Report 2020
62
AMPOL Limited
Annual Report 2020
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2020
For the year ended 31 December 2020
Millions of dollars
Balance at
1 January 2020
Total comprehensive
income for the year
(Loss)/profit for the year
Total other
comprehensive
(loss)/income
Total comprehensive
(loss)/income for the
year
Ampol Property Trust –
Divestment of Minority
Interest, net of tax
Ampol Property Trust –
Distribution
Own shares
acquired net of tax
Shares vested to
employees
Expense on equity
settled transactions
Dividends to
shareholders
Balance at
31 December 2020
Balance at
1 January 2019
Total comprehensive
income for the year
Profit for the year
Total other
comprehensive
income/(loss)
Total comprehensive
income/(loss) for the
year
Own shares
acquired net of tax
Shares vested to
employees
Expense on equity
settled transactions
Dividends to
shareholders
Balance at
31 December 2019
Issued
capital
Treasury
stock
Foreign
currency
translation
reserve
Equity
compen-
sation
reserve
Hedging
reserve
Retained
earnings
Total
Non-
controlling
interest
Total
equity
502.6
(2.0)
42.9
(5.0)
(18.5)
2,737.0 3,257.0
13.5 3,270.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.4)
0.8
–
–
–
–
–
(484.9)
(484.9)
5.1
(479.8)
(12.1)
(0.1)
–
(0.3)
(12.5)
–
(12.5)
(12.1)
(0.1)
–
(485.2)
(497.4)
5.1
(492.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
(0.3)
(1.4)
382.5
382.5
256.2
638.7
–
–
–
–
–
(1.2)
(1.2)
(0.3)
0.5
(1.4)
–
–
–
(0.3)
0.5
(1.4)
–
(189.8)
(189.8)
–
(189.8)
502.6
(1.6)
30.8
(5.1)
(20.1)
2,444.5 2,951.1
273.6 3,224.7
524.9
(2.5)
33.1
(1.1)
(20.8)
2,828.6 3,362.2
13.1 3,375.3
–
–
–
–
–
–
–
–
–
–
(4.3)
4.8
–
–
–
–
–
–
382.8
382.8
1.0
383.8
9.8
(3.9)
–
2.5
8.4
–
8.4
9.8
(3.9)
–
385.3
391.2
1.0
392.2
–
–
–
–
–
–
–
–
–
–
1.3
(4.8)
5.8
–
–
–
–
–
(3.0)
–
5.8
(237.9)
(260.2)
–
–
–
–
(3.0)
–
5.8
(260.2)
(239.0)
(239.0)
(0.6)
(239.6)
502.6
(2.0)
42.9
(5.0)
(18.5)
2,737.0 3,257.0
13.5 3,270.5
Shares bought back(i)
(22.3)
(i)
11,103,572 shares were bought back during the year ended 31 December 2019.
The Consolidated Statement of Changes in Equity is to be read in conjunction with the notes to the Financial Statements.
82
Ampol Limited
Consolidated Cash Flow Statement
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 DECEMBER 2020
For the year ended 31 December 2020
63
Millions of dollars
Cash flows from operating activities
Receipts from customers
Payments to suppliers, employees and governments
Shares acquired for vesting employee benefits
Dividends and distributions received
Interest received
Interest and other finance costs paid
Income taxes paid
Net operating cash inflows
Cash flows from investing activities
Net proceeds from sale of investment in joint operations
Proceeds from sale of non-controlling interest in Ampol Property Trust
Transaction costs from sale of non-controlling interest in Ampol Property
Trust
Note
2020
2019
23,267.0
30,419.3
(22,845.0)
(29,385.6)
(0.4)
1.8
0.3
(100.9)
(55.2)
267.6
24.8
682.0
(26.8)
(4.3)
0.5
1.3
(113.1)
(73.8)
844.3
-
-
-
G5.2
F4
Purchases of property, plant and equipment
(140.3)
(184.3)
Major cyclical maintenance
Purchases of intangibles
Proceeds from sale of property, plant and equipment, net of selling costs
Net investing cash inflows/(outflows)
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Repayment of lease principal
Payments for shares bought back
Distributions/dividends received/(paid) to non-controlling interest
Dividends paid
Net financing cash outflows
Net increase in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
F6
B5
Cash and cash equivalents at the end of the period
G5.1
(64.4)
(21.9)
9.2
462.6
(48.0)
(48.4)
141.7
(139.0)
9,675.9
10,486.4
(9,769.0)
(10,556.1)
(107.7)
-
(1.2)
(189.8)
(391.8)
338.4
(5.8)
332.6
35.0
367.6
(109.5)
(260.2)
(0.6)
(239.0)
(679.0)
26.3
2.6
28.9
6.1
35.0
The Consolidated Cash Flow Statement is to be read in conjunction with the notes to the Financial Statements.
83
Annual Report 2020
64
AMPOL Limited
Annual Report 2020
A Overview
Notes to the Financial Statements
A Overview
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
A1 Reporting entity
Ampol Limited (Ampol or the Company formerly Caltex Australia Limited) is a company limited by shares, incorporated and
domiciled in Australia. The shares of Ampol are publicly traded on the Australian Securities Exchange. The Consolidated Financial
Statements for the year ended 31 December 2020 comprise of the Company and its controlled entities (together referred to as the
“Group”) and the Group’s interest in associates and jointly controlled entities. The Group is a for-profit entity and is primarily
involved in the purchase, refining, distribution and marketing of petroleum products and the operation of convenience stores.
A2 Basis of preparation
The consolidated financial statements were approved by the Ampol Board on 22 February 2021.
The financial report has been prepared as a general-purpose financial report and complies with the requirements of the
Corporations Act 2001 (Cth) (Corporations Act) and Australian Accounting Standards (AASBs). The consolidated financial
report also complies with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards
Board (IASB).
The consolidated financial report is prepared on the historical cost basis, except for derivative financial instruments, which are
measured at fair value, and the defined benefit liability, which is recognised as the net total of the plan assets, plus unrecognised
past service costs less the present value of the defined benefit obligation.
The consolidated financial Report is presented in Australian dollars, which is the Group’s functional currency.
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 dated 24 March 2016. In accordance with that
Instrument, amounts in the consolidated financial report and Directors’ Report have been rounded to the nearest hundred thousand
dollars, unless otherwise stated. This is a change compared to the 2019 Annual Financial Report which presented to the
nearest thousand. Comparative figures have been updated accordingly, to comply with the current period presentation.
The Group has adopted all the mandatory amended Accounting Standards issued that are relevant to its operations and effective
for the current reporting period. A number of new standards, amendments to standards and interpretations effective for annual
periods beginning on or after 1 January 2021 have not been applied in preparing these Consolidated Financial Statements.
Refer to note G8.
A3 Use of judgement and estimates
The preparation of a Consolidated Financial Report in conformity with AASBs requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These accounting
policies have been consistently applied by each entity in the Group, except as noted in section A4.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and future periods if the revision affects both current and future periods.
Judgements made by management in the application of AASBs that have a significant effect on the Consolidated Financial Report
and estimates with a significant risk of material adjustment in future financial years are found in the following notes:
Information about the assumptions and the risk factors relating to impairment is provided in notes C1 (Receivables), C3
(Intangibles) and C4 (Property, Plant and Equipment).
Note C4 (Property, Plant and Equipment) includes disclosure of the key assumptions and sources of estimates related to lease
liabilities.
Note C6 provides key sources of estimation, uncertainty and assumptions used in regard to estimation of provisions.
Note D1 provides consideration to the appropriateness of adopting the going concern basis in preparing the financial report,
including the impacts of COVID-19 pandemic.
Note D2 provides an explanation of the foreign exchange, interest rate, credit risk and commodity price exposures of the Group
and the risk in relation to foreign exchange, interest rate, credit risk and commodity price movements.
Note E1 provides information around the extent to which earnings from the Group’s Singaporean entities may be subject to
income tax in Australia.
84
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
A Overview continued
FOR THE YEAR ENDED 31 DECEMBER 2020
A4 Changes in significant accounting policies
AASB 12 Deferred taxes on intangible assets
The Group has adopted the International Financial Reporting Interpretations Committee final agenda decision on multiple tax
consequences of recovering an asset. As a result, the Group recognises a deferred tax liability on the carrying amount of indefinite
life acquired assets. Accordingly, the comparative information presented for 2019 has been restated as set out below.
65
Impacts on Financial Statements
Impacts on change in accounting policy
The change in accounting policy is summarised below:
Millions of dollars
Intangible assets
Deferred tax liabilities
There are no further impacts for the period.
2020
-
-
2019
5.6
(5.6)
85
Annual Report 2020
66
AMPOL Limited
Annual Report 2020
B Results for the year
Notes to the Financial Statements
B Results for the year
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
This section highlights the performance of the Group for the year, including revenue and other income, costs and expenses, results
by operating segment, earnings per share and dividends.
B1 Revenue and other income
Revenue
Sale of goods
Revenue from the sale of goods in the ordinary course of activities is measured at the fair value of consideration received or
receivable, net of product duties and taxes, rebates, discounts and allowances.
Gross sales revenue excludes amounts collected on behalf of third parties such as goods and services tax (GST). Sales revenue is
recognised when customers gain control, which is the date products are delivered to the customer.
Contracts entered into by the Group for the sale of petroleum are typically priced by reference to quoted prices. In line with market
practice, certain of these contracts are based on average prices over a period that is partially or entirely after delivery. Revenue
relating to such contracts is recognised initially based on the estimated forward price at the time of delivery and subsequently
adjusted as prices are finalised. Whilst these post-delivery adjustments are changed in the value of receivables, the distinction
between revenue recognised at the time of delivery and revenue recognised as a result of post-delivery changes in quoted
commodity prices relating to the same transaction is not considered to be significant. All revenue from these contracts, both that
recognised at the time of delivery and that from post-delivery price adjustments, is disclosed as revenue from sale of goods.
For contracts with variable considerations (i.e. changes in market price, quality and quantity variances), revenue is recognised to
the extent that it is highly probable that a reversal of previously recognised revenue will not occur.
Contract assets
On 5 July 2018, Ampol Limited entered into a new supply agreement for 15 years with a one-off upfront payment of $50.0 million.
This amount has been deferred and recognised against sale of goods over the life of the agreement. The closing balance as at
31 December 2020 in relation to this contract asset is $41.9 million (2019: $45.0 million).
Other revenue
Rental income from leased sites is recognised in the Consolidated Income Statement on a straight-line basis over the term of the
lease. Franchise fee income is deferred and recognised in accordance with the substance of the agreement. Royalties are
recognised in line with franchise agreements. Transaction and merchant fees are generated from AmpolCard and credit card
transactions processed across the network. Dividend income is recognised at the date the right to receive payment is established.
Other income
Net gain on disposal of property, plant and equipment and sale of investment in joint operations
The gain on disposal of property, plant and equipment and sale of investment in joint operations is brought to account at the time that:
the control of ownership of the property, plant and equipment and sale of investment in joint operations has been transferred to
the buyer.
the costs incurred, or to be incurred, in respect of the sale can be measured reliably; and
Assets that are held for sale are carried at the lower of the net book value and fair value less cost to sell.
Millions of dollars
Revenue
Sale of goods
Other revenue
Rental income
Royalties and franchise income
Transaction and merchant fees
Other
Total other revenue
Total revenue
Other income
Government assistance(i)
Net gain on sale of property, plant and equipment
Net gain on sale of investment in joint operations
Total other income
2020
2019
15,175.6
22,059.9
22.0
52.5
123.6
32.6
230.7
29.9
65.6
104.0
47.7
247.2
15,406.3
22,307.1
6.8
-
21.2
28.0
-
44.7
-
44.7
(i) Other income includes assistance from governments for wage support of $6.8 million received from Australia, New Zealand and Singapore
government programs.
86
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
B Results for the year continued
FOR THE YEAR ENDED 31 DECEMBER 2020
B2 Costs and expenses
Finance costs are recognised as incurred unless they relate to qualifying assets. Qualifying assets are assets which take more than
12 months to get ready for their intended use or sale. In these circumstances, finance costs are capitalised to the cost of the assets.
Where borrowings are not specific to an asset, finance costs are capitalised using an average rate based on the general borrowings
of the Group.
67
Millions of dollars
Finance costs
Interest expense
Finance charges on leases
Unwinding of discount on provisions
Less: capitalised finance costs
Finance costs
Finance income
Net finance costs
Depreciation and amortisation
Depreciation of:
Buildings
Leasehold property
Plant and equipment
Amortisation of:
Intangibles
Total depreciation and amortisation
Personnel expenses
Other expenses
Net loss on disposal of property, plant and equipment
Impairment of non-current assets
Total other expenses
Note
2020
2019
43.4
57.2
9.4
(0.3)
109.7
(0.6)
109.1
18.2
148.1
228.0
394.3
27.9
422.2
578.4
21.4
413.4
434.8
C4
C4
C4
C3
C3,C4
53.7
58.6
8.8
(0.1)
121.0
(1.2)
119.8
16.0
133.6
210.6
360.2
27.1
387.3
527.1
-
-
-
87
Annual Report 2020
68
AMPOL Limited
Annual Report 2020
B Results for the year (continued)
Notes to the Financial Statements
B Results for the year continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
B3 Segment reporting
B3.1 Segment disclosures
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating
segments’ operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its performance. These segments align to the areas of the business for which
discrete financial information is available. Segment results that are reported to the chief operating decision maker include items
directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Inter-entity sales are recognised based on an internally set transfer price. Sales between segments are based on arm’s length
principles appropriate to reflect prevailing market pricing structures at that time. Where possible, relevant import parity pricing is
used to determine arm’s length pricing between the two segments. Revenue from external parties reported to the chief operating
decision maker is measured in a manner consistent with that in the Consolidated Income Statement.
Income taxes and net financial costs are dealt with at a Group level and not within the reportable segments.
The performance of each reportable segment is measured based on segment replacement cost of sales operating profit before
interest and income tax excluding significant items. This measurement base excludes the impact of the rise or fall in oil or product
prices (key external factors) and presents a clearer picture of the reportable segments' underlying business performance. Segment
replacement cost of sales operating profit before interest and income tax excluding significant items is measured as management
believes that such information is most useful in evaluating the performance of the differing internal business units relative to each
other, and other like business units in the industry. Segment replacement cost of sales operating profit excluding significant items,
interest and income tax is also used to assess the performance of each business unit against internal performance measures.
Cost of goods sold measured on a replacement cost basis
Cost of goods sold measured on a replacement cost basis excludes the effect of inventory gains and losses, including the impact
of exchange rate movements. Inventory gains or losses arise due to movements in the landed price of crude oil and product prices
and represent the difference between the actual historic cost of sales and the current replacement value of that inventory.
The net inventory gain or loss is adjusted to reflect the impact of contractual revenue lags.
Types of products and services
The following summary describes the operations in each of the Group's reportable segments:
Convenience Retail
The Convenience Retail segment includes revenues and costs associated with fuels and shop offerings at Ampol’s network of
stores, including royalties and franchise fees on remaining franchise stores.
Fuels and Infrastructure
The Fuels and Infrastructure segment includes revenues and costs associated with the integrated wholesale fuels and lubricants
supply for the Group, including the Company’s international businesses. This includes Lytton refining, Bulk Fuels sales, Trading
and Shipping, Infrastructure, and the Gull and Seaoil businesses.
Transfer price between segments
The Group operates as a vertically integrated supply chain including trading and shipping, infrastructure, refining and marketing
of fuel products in Australia and internationally to customers, including retail service stations. Segment results are based on
commercial pricing between segments, most notably Fuels and Infrastructure and Convenience Retail, that is determined by a
reference to relevant import parity prices for refining output and other commercial arrangements between the business segments.
88
Notes to the Financial StatementsAmpol Limited
69
Notes to the Financial Statements
B Results for the year continued
FOR THE YEAR ENDED 31 DECEMBER 2020
B3 Segment reporting continued
B3.2 Information about reportable segments
Convenience Retail
Fuels and Infrastructure
Total operating segments
Millions of dollars
2020
2019
2020
2019
2020
2019
External segment revenue
4,067.4
5,201.1
11,338.9
17,106.0
15,406.3
22,307.1
Inter-segment revenue
-
-
2,176.1
3,611.0
2,176.1
3,611.0
Total segment revenue
4,067.4
5,201.1
13,515.0
20,717.0
17,582.4
25,918.1
Share of profit of associates and joint
ventures
-
-
10.7
4.2
10.7
4.2
Depreciation and amortisation
(210.2)
(194.3)
(183.4)
(177.0)
(393.6)
(371.3)
Replacement Cost of sales Operating
Profit (RCOP) before interest and
income tax(i)
Other material items:
Inventory loss
Capital expenditure(ii)
287.4
201.0
154.4
450.2
441.8
651.2
-
-
(62.1)
(100.7)
(513.8)
(135.1)
(19.3)
(155.2)
(513.8)
(197.2)
(19.3)
(255.9)
(i) Replacement Cost of sales Operating Profit (RCOP) (on a pre- and post-tax basis) is a non-International Financial Reporting Standards (IFRS) measure. It
is derived from the statutory profit adjusted for inventory (losses)/gains as management believes this presents a clearer picture of the Group’s underlying
business performance as it is consistent with the basis of reporting commonly used within the global downstream oil industry. This is un-audited. RCOP
excludes the unintended impact of the fall or rise in oil and product prices (key external factors). It is calculated by restating the cost of sales using the
replacement cost of goods sold rather than the historical cost, including the effect of contract-based revenue lags.
(ii) Capital expenditure includes the purchase of Property, Plant and Equipment (including acquisitions) and purchase of intangible software (excludes
intangible rights and licences).
B3.3 Reconciliation of reportable segment revenues, profit or loss and other material items
Millions of dollars
Revenues
Total revenue for reportable segments
Elimination of inter-segment revenue
Consolidated revenue
Profit or loss
Segment RCOP before interest and income tax, excluding significant items
Other expenses
RCOP before interest and income tax, excluding significant items
Significant items excluded from profit or loss reported to the chief operating decision maker:
Impairment of non-current assets
Ampol rebranding expense
Higher and Better Use sites
Gain on sale of investment in joint operation
Other expenses
Other income
Significant items before tax
RCOP before interest and income tax
Inventory loss before tax
Consolidated historical cost (loss)/profit before interest and income tax
2020
2019
17,582.4
25,918.1
(2,176.1)
(3,611.0)
15,406.3
22,307.1
441.8
(40.6)
401.2
(413.4)
(65.6)
(16.9)
21.2
(36.0)
6.8
(503.9)
(102.7)
(513.8)
(616.5)
651.2
(43.1)
608.1
-
-
52.7
-
-
-
52.7
660.8
(19.3)
641.5
89
Annual Report 2020
70
AMPOL Limited
Annual Report 2020
B Results for the year (continued)
Notes to the Financial Statements
B Results for the year continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
B3 Segment reporting continued
B3.3 Reconciliation of reportable segment revenues, profit or loss and other material items continued
Millions of dollars
Net financing costs
Consolidated (loss)/profit before income tax
RCOP income tax expense
Significant items tax benefit/(expense)
Inventory loss tax benefit
Consolidated historical cost income tax benefit/(expense)
Net (loss)/profit
2020
2019
(109.1)
(725.6)
(75.2)
166.9
154.1
245.8
(479.8)
(119.8)
521.7
(143.5)
(0.2)
5.8
(137.9)
383.8
Significant Items
Impairment of non-current assets
The Group has recognised a total impairment loss of $413.4 million on non-current assets. These impairments relate to the Lytton
refinery cash-generating unit (CGU) of $80.0 million at 30 June 2020, Convenience Retail site CGU of $233.0 million at 30 June
2020 and a further $58.6 million at 31 December 2020 and other specific assets of $41.8 million. This impairment loss has been
disclosed in other expenses in the Consolidated Income Statement. Refer to note C3 and note C4 for further information.
Ampol rebranding expense
The Group has recognised an expense of $65.6 million in respect to rebranding due to its contractual obligation to remove Caltex
signage and install Ampol branding at sites owned by a third party ($46.0 million), accelerated depreciation ($10.8 million) and other
operating expenses ($8.8 million). This expense is included within general and administration expenses for $54.8 million and selling
and distribution for $10.8 million in the Consolidated Income Statement.
Higher and Better Use sites
In 2019, the Group recognised a net gain of $52.7 million on sale from the divestment of the 25 Higher and Better Use (HBU)
sites after environmental remediation. The environmental remediation activity commenced in 2020 and a reassessment of the
remediation provision was undertaken as at 31 December 2020. This resulted in recognition of an additional provision of
$16.9 million. This expense has been disclosed in other expenses in the Consolidated Income Statement.
Gain on sale of investment in joint operation
On 1 October 2020, the Group sold its investment in the Sydney Joint User Hydrant Installations (JUHI) for proceeds of
$24.8 million and a net accounting gain of $21.2 million. The net gain is included within other income in the Consolidated
Income Statement. Refer to note F4 for further information.
Other expenses
Site remediation provision
The impairment of the non-current other specific assets discussed in note C4, includes the impact of the divestment of Convenience
Retail and Depot sites. An environmental remediation provision of $32.3 million has been recognised in respect of the cost of
remediating these sites for alternative use. This expense is included within general and administration expenses in the Consolidated
Income Statement.
Provision for doubtful debts
The provision for doubtful debt has increased by $3.7 million as a result of the expected impact on Ampol customers from
COVID-19. This expense is included within general and administration expenses in the Consolidated Income Statement.
Other Income
Assistance from government
Other income includes assistance from governments for wage support of $6.8 million received from Australia, New Zealand and
Singapore government programs. This income is included within other income in the Consolidated Income Statement.
Significant items tax benefit
Significant items tax benefit of $151.2 million represents tax at the Australian corporate tax rate of 30% on Significant items before
tax (2019 expense: $0.2 million) and utilisation of previously unrecognised capital losses (tax benefit of $15.7 million) which has
been applied to a capital gain on the sale of the 49% interest in 203 freehold Convenience Retail sites with a Charter Hall and
GIC consortium.
90
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
B Results for the year continued
FOR THE YEAR ENDED 31 DECEMBER 2020
B3 Segment reporting continued
B3.3 Reconciliation of reportable segment revenues, profit or loss and other material items continued
Other material items
71
Millions of dollars
Other material items 2020
Depreciation and amortisation
Inventory loss
Capital expenditure
Other material items 2019
Depreciation and amortisation
Inventory loss
Capital expenditure
Reportable
segment totals
Consolidated
totals
Other
(393.6)
(513.8)
(197.2)
(371.3)
(19.3)
(255.9)
(28.7)
-
(29.4)
(422.3)
(513.8)
(226.6)
(16.1)
(387.4)
-
(19.3)
(14.3)
(270.2)
B3.4 Geographical segments
The Group operates in Australia, New Zealand, United States and Singapore. External revenue is predominantly generated in
Australia. The Group generated the following revenue and holds the following non-current assets across the geographical
segments.
Millions of dollars
Australia New Zealand
Singapore
US
Total
2020
Revenue
Non-current assets
12,016.7
4,267.8
572.2
414.7
2,793.2
24.2
15,406.3
22.7
0.8
4,706.0
Millions of dollars
Australia New Zealand
Singapore
US
Total
2019
Revenue
Non-current assets
18,933.2
4,270.2
623.2
397.9
2,750.7
21.1
-
-
22,307.1
4,689.2
B3.5 Major customer
Revenues from one customer of the Group's Fuels and Infrastructure segment represent approximately $2.6 billion
(2019: $4.3 billion) of the Group's total gross sales revenue (excluding product duties and taxes).
B3.6 Revenue from products and services
Millions of dollars
Petrol
Diesel
Jet
Lubricants
Specialty and other products
Crude
Non-fuel income
Other revenue
2020
4,559.0
7,397.6
860.6
201.4
155.5
903.0
1,098.5
230.7
2019
7,226.3
10,246.1
2,688.8
229.2
221.7
563.0
884.8
247.2
Total product and service revenue
15,406.3
22,307.1
91
Annual Report 2020
72
AMPOL Limited
Annual Report 2020
B Results for the year (continued)
Notes to the Financial Statements
B Results for the year continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
B4 Earnings per share
Cents per share
Historical cost net (loss)/profit attributable to ordinary shareholders – basic
Historical cost net (loss)/profit attributable to ordinary shareholders – diluted
RCOP after tax and excluding significant items – basic
RCOP after tax and excluding significant items – diluted
2020
(194.2)
(194.2)
84.8
84.8
2019
151.3
151.1
135.9
135.7
Calculation of earnings per share
Basic historical earnings per share is calculated as the net loss attributable to ordinary shareholders of the parent entity divided by
the weighted average number of ordinary shares outstanding during the year ended 31 December 2020.
Diluted historical cost earnings per share is calculated as the profit attributable to ordinary shareholders of the parent entity divided
by the weighted average number of ordinary shares which has been adjusted to reflect the number of shares that would be issued if
all outstanding rights and restricted shares were exercised. When the Company has made a loss, basic and diluted earnings per
share are calculated using the same weighted average number of ordinary shares and exclude all outstanding rights and restricted
shares on issue as to include them in the calculation of diluted earnings per share would result in a lower loss per share.
Earnings per share has been disclosed for both the historical cost net loss as well as the RCOP segment method of reporting net
profit. The RCOP segment method, adjusts statutory profit for significant items and inventory gains and losses. A reconciliation
between historical cost net profit attributable to ordinary shareholders of the parent entity and RCOP after tax and excluding
significant items is included below.
Millions of dollars
Net (loss)/profit after tax attributable to equity holders of the parent entity
Add/Less: Significant items loss/(gains) after tax
Add/Less: Inventory losses after tax
RCOP excluding significant items after tax
Weighted average number of shares (millions)
Issued shares as at 1 January
Shares bought back and cancelled
Issued shares as at 31 December
Weighted average number of shares as at 31 December - basic
Weighted average number of shares as at 31 December - diluted
2020
(484.9)
337.0
359.7
211.8
2020
249.7
-
249.7
249.7
249.7
2019
382.8
(52.5)
13.5
343.8
2019
260.8
(11.1)
249.7
253.0
253.4
92
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
B Results for the year continued
FOR THE YEAR ENDED 31 DECEMBER 2020
B5 Dividends
A provision for dividends payable is recognised in the reporting period in which the dividends are declared, for the entire
undistributed amount.
B5.1 Dividends declared or paid
Dividends recognised in the current year by the Group are:
73
Millions of dollars
2020
Interim 2020
Final 2019
Total amount
2019
Interim 2019
Final 2018
Total amount
Date of
payment
Franked/
unfranked
Cents
per share
Total
amount
2 October 2020
3 April 2020
Franked
Franked
4 October 2019
5 April 2019
Franked
Franked
25
51
76
32
61
93
62.4
127.4
189.8
79.9
159.1
239.0
Subsequent events
Since 31 December 2020, the Directors declared the following dividend. The dividend has not been provided for and there are no
income tax consequences for the Group in relation to 2020.
Final 2020(i)
1 April 2021
Franked
23
54.8
(i)
The final dividend was calculated based on the ordinary shares on issue post the Off-market Buy-back of 238.3 million (a reduction of 11.4 million) which
closed on 22 January 2021.
B5.2 Dividend franking account
Millions of dollars
30% franking credits available to shareholders of Ampol Limited
for subsequent financial years
2020
2019
777.1
825.5
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.
The impact on the dividend franking account of dividends proposed after the balance sheet date but not recognised as a liability,
is to reduce the balance by $23.5 million (2019: $54.6 million).
93
Annual Report 2020
74
AMPOL Limited
Annual Report 2020
C Operating assets and liabilities
Notes to the Financial Statements
C Operating assets and liabilities
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
This section provides information on the assets used to generate the Group’s trading performance and the liabilities incurred
as a result.
C1 Receivables
The following balances are amounts due from the Group’s customers and others.
Millions of dollars
Current
Trade debtors
Accrued receivables
Allowance for impairment
Associated and joint venture entities
Derivative assets
Other debtors
Total current receivables
Non-current
Other loans
2020
2019
493.1
98.4
(8.6)
44.1
22.0
210.8
859.8
821.1
433.2
(6.4)
33.4
11.0
186.9
1,479.2
2.5
8.7
Receivables are initially recognised at fair value plus any directly attributable transaction costs and subsequently measured at
amortised cost less impairment losses.
Impairment testing is performed at reporting date. A provision for impairment losses is raised based on a risk matrix for expected
credit losses across customer categories.
Impaired receivables
As at 31 December 2020, current trade receivables of the Group with a nominal value of $8.6 million (2019: $6.4 million) were
provided for as impaired based on the expected credit loss model. No collateral is held over these impaired receivables.
As at 31 December 2020, trade receivables of $11.5 million (2019: $37.1 million) were overdue. The ageing analysis of receivables
is as follows:
Millions of dollars
Past due 0 to 30 days
Past due 31 to 60 days
Past due greater than 60 days
Total impaired receivables
Movements in the allowance for impairment of receivables are as follows:
Millions of dollars
At 1 January
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
Balance at 31 December
2020
11.5
-
-
11.5
2020
6.3
4.7
(2.4)
8.6
2019
26.7
4.7
5.7
37.1
2019
7.0
3.6
(4.2)
6.4
The creation and release of the provision for impaired receivables has been included in general and administration expenses in the
Income Statement. Amounts charged to the allowance account are written off when there is no expectation of recovering additional
cash. The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit
history of these other classes, it is expected that these amounts will be received when due.
94
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
C Operating assets and liabilities continued
FOR THE YEAR ENDED 31 DECEMBER 2020
C2 Inventories
Millions of dollars
Crude oil and raw materials
Inventory in process
Finished goods
Materials and supplies
Balance at 31 December
75
2020
389.8
50.8
869.9
23.1
2019
409.9
72.4
1,605.4
21.8
1,333.6
2,109.5
Inventories are measured at the lower of cost and net realisable value. Cost is based on the first in first out (FIFO) principle and
includes direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure incurred in
acquiring the inventories and bringing them into their existing location and condition.
The amount of any write-down or loss of inventory is recognised as an expense in the period it is incurred. Inventory write-downs
may be reversed when net realisable value increases subsequent to initial write-down. The reversal is limited to the original write-
down amount. There was no inventory written down to net realisable value at 31 December 2020 and 31 December 2019.
C3 Intangibles
Millions of dollars
Cost
At 1 January 2020
Additions and transfers
Disposals
Foreign currency translation
Balance at 31 December 2020
Cost
At 1 January 2019
Additions and transfers
Disposals
Foreign currency translation
Change in accounting policy(i)
Balance at 31 December 2019
Amortisation and impairment
At 1 January 2020
Amortisation for the year
Impairment losses(ii)
Disposals
Foreign currency translation
Balance at 31 December 2020
Amortisation and impairment
At 1 January 2019
Amortisation for the year
Disposal
Goodwill
Rights and
licences
Software
Total
430.7
-
-
(5.5)
425.2
426.9
-
(3.7)
1.9
5.6
87.5
16.0
(5.1)
(1.0)
97.4
77.1
10.4
-
-
-
254.9
22.6
-
-
773.1
38.6
(5.1)
(6.5)
277.5
800.1
217.7
38.0
(0.9)
0.1
-
721.7
48.4
(4.6)
2.0
5.6
430.7
87.5
254.9
773.1
(19.5)
-
-
-
-
(40.4)
(7.7)
-
-
0.1
(134.4)
(194.3)
(20.2)
(20.1)
-
0.5
(27.9)
(20.1)
-
0.6
(19.5)
(48.0)
(174.2)
(241.7)
(19.5)
-
-
(36.6)
(3.8)
-
(111.4)
(23.3)
0.3
(167.5)
(27.1)
0.3
Balance at 31 December 2019
(19.5)
(40.4)
(134.4)
(194.3)
(i) Refer to note A4 for further information.
(ii) Refer to note C4 (Impairment - Other specific assets) for further information.
95
Annual Report 2020
76
AMPOL Limited
Annual Report 2020
C Operating assets and liabilities (continued)
Notes to the Financial Statements
C Operating assets and liabilities continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
C3 Intangibles continued
Millions of dollars
Carrying amount
At 1 January 2020
Balance at 31 December 2020
Carrying amount
At 1 January 2019
Balance at 31 December 2019
Goodwill
Rights and
licences
Software
Total
411.2
405.7
407.4
411.2
47.1
49.4
40.5
47.1
120.5
103.3
106.3
120.5
578.8
558.4
554.2
578.8
The amortisation charge of $27.9 million (2019: $27.1 million) is recognised in selling and distribution expenses and general and
administration expenses in the Income Statement.
Goodwill
Goodwill arising on the acquisition of subsidiaries is stated at cost less any accumulated impairment losses. Goodwill is allocated to
cash-generating units and is tested annually for impairment. In respect of equity-accounted investees, the carrying amount of
goodwill is included in the carrying amount of the investment in the associate.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Amortisation
Amortisation is charged to the Consolidated Income Statement on a straight-line basis over the estimated useful lives of intangible
assets. Other intangible assets are amortised from the date they are available for use. The estimated useful lives in the current and
comparative periods are reflected by the following amortisation percentages:
Software development
Software not integrated with hardware
Rights and licences
7 to 17%
7 to 18%
4 to 33%
Impairment
The carrying amounts of intangible assets are reviewed to determine if there is any indication of impairment. If any such indication
exists, the cash-generating unit’s recoverable amounts are estimated and, if required, an impairment is recognised in the Income
Statement. There was impairment loss of $20.1 million recognised in the Income Statement in 2020 for software as detailed in
note C4 Impairment other specific assets.
Carrying value assessment of cash-generating unit groups containing goodwill and indefinite life intangibles
The Group tests the carrying amount of intangible assets for impairment to ensure they are not carried at above their recoverable
amounts at least annually for goodwill with indefinite lives and where there is an indication that the assets may be impaired.
As a result of the impact of COVID-19 on the Group’s business and the external operating environment it was determined that
there were indicators of impairment and accordingly the recoverable amount of CGU Groups have been estimated.
Goodwill and indefinite life intangibles have been allocated to the group of CGUs as follows:
Total goodwill and indefinite life intangibles
Millions of dollars
Goodwill
Indefinite life intangibles
Balance at 31 December 2020
Gull New
Zealand
Fuels and
Infrastructure
other
Convenience
Retail
224.3
20.1
244.4
68.2
1.1
69.3
113.2
-
113.2
Total
405.7
21.2
426.9
The recoverable amount of the group of CGUs including goodwill and indefinite life intangibles has been determined based on a value-
in-use calculation. There were no goodwill impairment losses recognised during the year ended 31 December 2020 (2019: nil).
96
Notes to the Financial StatementsAmpol Limited
77
Notes to the Financial Statements
C Operating assets and liabilities continued
FOR THE YEAR ENDED 31 DECEMBER 2020
C3 Intangibles continued
Carrying value assessment of cash-generating unit groups containing goodwill and indefinite life intangibles
continued
Key assumptions used in value-in-use calculations
Key assumption
Cash flow
Basis for determining value-in-use assigned to key assumption
Estimated future cash flows are based on the Group’s most recent best estimate of
cash flows covering a five-year plan period from 2021 to 2025. Cash flows beyond
the period in 2025 are extrapolated using estimated long-term growth rates.
Estimated long-term average growth rate
The cash flows have been extrapolated using a constant growth rate of:
Discount rate
Australia and New Zealand 2.5%.
The growth rates used do not exceed the long-term growth rate for the industry.
Pre-tax discount rates used vary depending on the nature of the business and the
country of operation. The cash flows have been discounted using post-tax discount
rates of 7.08% to 11.82% and pre-tax discount rates of 10.19% to 16.00% p.a.
Sensitivities
Determining recoverable amount requires the exercise of significant judgements for both internal and external factors. Changes in
the long-term view of both internal and external judgements may impact the estimated recoverable value. The recoverable amount
of the CGU Groups containing goodwill and indefinite life intangibles would equal its carrying amount if any of the following key
assumptions were to change:
CGU Groups
Gull New Zealand
Key assumptions
Cash contributions reduce by 44% for each year modelled
Post-tax discount rate increases from 8.3% to 13.0%
Fuels and Infrastructure other
Cash contributions reduce by 38% for each year modelled
Post-tax discount rate increases from 8.5% to 12.1%
Convenience Retail
Cash contributions reduce by 25% for each year modelled
Post-tax discount rate increases from 7.1% to 8.9%
97
Annual Report 2020
78
AMPOL Limited
Annual Report 2020
C Operating assets and liabilities (continued)
Notes to the Financial Statements
C Operating assets and liabilities continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment
Millions of dollars
Freehold land
At cost
Accumulated impairment losses
Net carrying amount
Buildings
At cost
Accumulated depreciation and impairment losses
Net carrying amount
Leasehold property
At cost
Accumulated depreciation and impairment losses
Net carrying amount
Plant and equipment
At cost
Accumulated depreciation and impairment losses
Net carrying amount
Capital projects in progress
At cost
Net carrying amount
Total net carrying amount
2020
2019
455.5
(70.1)
385.4
764.9
(326.6)
438.3
1,331.7
(379.7)
952.0
458.8
(37.3)
421.5
780.7
(287.9)
492.8
1,223.8
(250.3)
973.5
6,091.6
5,942.2
(4,636.9)
(4,403.0)
1,454.7
1,539.2
237.3
237.3
275.5
275.5
3,467.7
3,702.5
Owned assets
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of
materials, direct labour and an appropriate proportion of production overheads.
The cost of property, plant and equipment includes the cost of decommissioning and restoration at the end of their economic lives if
a present legal or constructive obligation exists. More details of how this cost is estimated and recognised is contained in note C6.
Subsequent expenditure
Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including
cyclical maintenance, is capitalised. Other subsequent expenditure is capitalised only when it is probable that the future economic
benefits embodied within the item will flow to the Group and the cost of the item can be reliably measured. All other expenditure is
recognised in the Consolidated Income Statement as an expense as incurred.
Major cyclical maintenance
Major cyclical maintenance expenditure is separately capitalised as an asset component to the extent that it is probable that future
economic benefits, in excess of the originally assessed standard of performance, will eventuate. All other such costs are expensed
as incurred. Capitalised cyclical maintenance expenditure is depreciated over the lesser of the additional useful life of the asset or
the period until the next major cyclical maintenance is scheduled to occur.
Depreciation
Items of property, plant and equipment, including buildings and leasehold property but excluding freehold land, are depreciated
using the straight-line method over their expected useful lives. Leasehold improvements are amortised over the shorter of the lease
term or useful life.
98
Notes to the Financial StatementsAmpol Limited
79
Notes to the Financial Statements
C Operating assets and liabilities continued
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment continued
The depreciation rates used in the current and prior year for each class of asset are as follows:
Freehold buildings
Leasehold property
Plant and equipment
Leased plant and equipment
2%
2% to 10%
3% to 25%
3% to 25%
Assets are depreciated from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed
and held ready for use.
Impairment of non-current assets
Carrying value assessment cash-generating units
The carrying amounts of assets are reviewed to determine if there is an indication of impairment. These tests for impairment are
performed by assessing the recoverable amount of each individual asset or, if this is not possible, then the recoverable amount of
the CGU to which the asset belongs. CGUs are the lowest levels at which assets are grouped and generate separately identifiable
cash flows. If any such indicator exists, the CGU recoverable amounts are estimated and, if required, an impairment is recognised
in the Income Statement.
Impairment Lytton refinery cash-generating unit
The global hydrocarbon demand weakness due to government travel restrictions arising from the COVID-19 pandemic, including
the impact on regional refiner margins and global trade balances, has impacted the profitability of Lytton refinery. With refiner
margins near historic low levels and hydrocarbon demand weakness globally and in Australia, the Group has assessed the
recoverable amount of its Lytton refinery CGU.
30 June 2020
The Group determined the recoverable amount of its Refinery assets with the assessment determining that the carrying value
of the refinery was $80 million in excess of its recoverable amount at 30 June 2020. An impairment loss of $80.0 million was
recognised with respect to plant and equipment at 30 June 2020. The loss has been recognised in other expenses in the
Consolidated Income Statement.
31 December 2020
The Group re-assessed the recoverable amount of its Refinery assets as at 31 December 2020 using a discounted value-in-use
cash-flow analysis. The analysis uses cash flows projected over a ten-year useful life with a discount rate of 8.07% post-tax (pre-tax
of 16.00%). Based on this assessment it was determined the carrying value of the refinery (post the 30 June 2020 impairment loss)
was supported by the recoverable amount.
Determining recoverable amount requires the exercise of significant judgement for both internal and external factors. This includes
but is not limited to external foreign exchange forecasts and reference to industry-specific external analyst forecasts of regional
refiner margins. Judgements for internal factors, including but not limited to applicable discount rate, production volumes, wage
growth and, other operating costs, have been made with reference to historical data and forward-looking business plans.
Assumptions have been risk adjusted as appropriate to take account of the inherent uncertainty of the future operating environment
and market conditions impacting Lytton refinery, arising from the COVID-19 pandemic.
On 8 October 2020, the Group announced it is undertaking a comprehensive review of the Lytton refinery to determine the best
operating model over the medium-term. The review is considering all options for the facility’s operations and for the connected
supply chains and markets it serves and will be completed in the first half of 2021. The assessment of the recoverable amount of
the refinery assets was based on the refinery producing at historic production levels, albeit the Group will continue to evaluate make
versus buy decisions based on prevailing market conditions. The Group believes that market conditions for refining will continue to
be highly uncertain, with the COVID-19 pandemic continuing to impact current conditions and outlook. Any decisions with respect to
the refinery operations may impact future assessments of the recoverability of non-current assets relating to Lytton refinery, and
these will be assessed when the review is completed in the first half of 2021.
Sensitivities
Changes in the long-term view of both internal and external judgements may impact the estimated recoverable value. The
discounted cash flows are most sensitive to the following assumptions:
Key assumption
Long-term refining margins decreasing by US$1/bbl over a ten-year period
Foreign exchange rate (USD/AUD) increasing by 1 cent
Reduction over a ten-year period in annual production volume by 100ML for each year modelled
Discount rate increase by 1%
Impact on
impairment
assessment
~$237 million +/-
~$30 million +/-
~$35 million +/-
~$25 million +/-
99
Annual Report 2020
80
AMPOL Limited
Annual Report 2020
C Operating assets and liabilities (continued)
Notes to the Financial Statements
C Operating assets and liabilities continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment continued
Impairment of non-current assets continued
Carrying value assessment cash-generating units continued
Impairment Convenience Retail site CGUs
The impact of demand reduction due to the uncertainty introduced by COVID-19 indicated that the assets at the site CGU level
may be impaired and caused the Group to assess the recoverability of the carrying value of CGUs for Convenience Retail sites.
30 June 2020
The Group determined the recoverable amount of the site level CGU assets with the assessment determining that the carrying
value of the Convenience Retail site assets was $233.0 million in excess of its recoverable amount at 30 June 2020. An impairment
loss of $233.0 million was recognised with respect to property, plant and equipment at 30 June 2020. The loss has been recognised
in other expenses in the Consolidated Income Statement.
31 December 2020
The Group re-assessed the recoverable amount of the site level CGU assets as at 31 December 2020 by using a value-in-use
discounted cash flow analysis. The analysis uses cash flow forecasts based on a five-year period. The forecasts have been risk
adjusted to reflect the uncertainty around the timing and level of recovery from the impact of COVID-19. Cash flows beyond this
period have been extrapolated using a long-term growth rate of 2.5%. Cash flow forecast, for leased site assets are consistent with
the term of the lease assessed under AASB 16. The recoverable amount of the CGUs was based on its value-in-use (with a
discount rate of 7.08% post-tax and pre-tax of 10.19%).
Based on this assessment at 31 December 2020 it was determined that the carrying value of the Convenience Retail site assets
(post 30 June impairment loss) was $58.6 million in excess of its recoverable amount. An impairment loss of $58.6 million was
recognised with respect to property, plant and equipment with a full year 2020 impairment loss of $291.6 million. The 2020
impairment loss has been recognised in other expenses in the Consolidated Income Statement.
Despite the challenges of the current environment, the fundamentals of Convenience Retail business remain strong with the
Convenience Retail CGU Group carrying value including goodwill assessed above its recoverable amount following recognition of
the site CGU impairments.
Determining recoverable amount requires the exercise of significant judgements for both internal and external factors. Judgements
for external factors, including but not limited to fuel margin has been made with reference to historical data and observable market
data. Judgements for internal factors, including but not limited to applicable discount rate, sale volumes, shop contribution, wage
growth and other operating costs have been made with reference to historical data and risk adjusted forward looking business plans
given the uncertainty caused by the COVID-19 pandemic.
Sensitivities
Changes in the long-term view of both internal and external judgements may impact the estimated recoverable value. The
discounted cash flows are most sensitive to the following assumptions:
Key assumption
EBIT reduction by 10%
Long-term growth rate reduction by 1%
Discount rate increase by 1%
Impact on impairment
assessment for site
level CGU’s
~$22 million
~$10 million
~$21 million
Impairment other specific assets
COVID-19 has had a significant impact on the operating environment and financial outlook for the Group. A review of company
priorities across projects and future investment has been undertaken, to ensure a clearer focus on the organisational priorities post
the COVID-19 impact. This has included ceasing IT projects and identifying Convenience Retail and Depot sites to be closed and
divested. Based on this assessment it was determined that an asset write down of $41.8 million was required in respect of software
intangible assets ($20.1 million), buildings and plant and equipment ($21.7 million).
100
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
C Operating assets and liabilities continued
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment continued
Millions of dollars
Freehold land
Carrying amount at the beginning of the year
Additions
Disposals
Impairment losses
Transfers from capital projects in progress
Foreign currency translation
Carrying amount at the end of the year
Buildings
Carrying amount at the beginning of the year
Additions
Disposals
Impairment losses
Transfers from capital projects in progress
Depreciation
Foreign currency translation
Carrying amount at the end of the year
Leasehold property
Carrying amount at the beginning of the year
Additions
Disposals
Impairment losses
Transfers from capital projects in progress
Depreciation
Foreign currency translation
Carrying amount at the end of the year
Plant and equipment
Carrying amount at the beginning of the year
Additions
Disposals
Impairment losses
Transfers from capital projects in progress
Depreciation
Foreign currency translation
Carrying amount at the end of the year
Capital projects in progress
Carrying amount at the beginning of the year
Additions
Borrowing costs capitalised
Transfers to property, plant and equipment and intangible assets
Reclassification
Carrying amount at the end of the year
81
2020
2019
421.5
1.8
(4.5)
(32.8)
0.8
(1.4)
385.4
492.8
0.3
(9.5)
(44.4)
17.4
(18.2)
(0.1)
438.3
973.5
207.0
(4.7)
(85.6)
10.4
428.2
8.6
(15.8)
-
0.5
-
421.5
509.0
-
(23.1)
-
22.9
(16.0)
-
492.8
998.4
93.7
(0.6)
-
15.6
(148.1)
(133.6)
(0.5)
952.0
-
973.5
1,539.2
1,573.6
255.6
(2.3)
(230.5)
121.3
(228.0)
(0.6)
1,454.7
275.5
128.1
0.3
26.2
(28.5)
-
178.9
(210.6)
(0.4)
1,539.2
274.4
195.2
(0.1)
(166.6)
(217.9)
-
237.3
23.9
275.5
101
Annual Report 2020
82
AMPOL Limited
Annual Report 2020
C Operating assets and liabilities (continued)
Notes to the Financial Statements
C Operating assets and liabilities continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment continued
C4.1 Leased assets
Definition of a lease
At the inception of a contract, the Group assesses whether a contract is, or contains, a lease based on whether it conveys the
right to control the use of an identified asset for a period of time in exchange for consideration.
At inception or on reassessment of a contract that contains a lease and non-lease component, the Group allocates the
consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices.
Non-lease components are items that are not related to securing the use of the underlying asset.
The Group as a lessee
The Group leases many assets including and predominantly related to property leases for service stations, terminals, pipelines
and wharves.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost. The cost comprises:
the amount of the initial measurement of the lease liability;
lease payments made at or before commencement, less lease incentive (if any);
initial direct costs incurred, including legal fees, agency fees or other fees in relation to negotiation or arrangement of the
lease and
estimated costs to be incurred in restoring the asset as required by the terms and conditions of the lease.
The right-of-use asset is subsequently measured at cost less any accumulated depreciation and impairment losses and adjusted for
certain remeasurements of the lease liability.
The right-of-use assets are depreciated to the earlier of the end of the useful life of the underlying asset or the lease term using the
straight-line method. Right-of-use asset depreciation expense is included in the “Selling and distribution expenses" and “General
and administration expenses” in the Income Statement based on the function of associated activities.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the Group’s incremental borrowing rate. The Group determines its incremental borrowing rate with reference to
external market data, making certain adjustments to reflect the terms of the lease and the type of assets leased. Lease payments
included in the measurement of the lease liability comprise the following:
fixed payments, less any lease incentive receivable and
the exercise price under a purchase option that the Group is reasonably certain to exercise lease payments in an optional
renewal period if the Group is reasonably certain to exercise an extension option and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
The lease term is determined to be the non-cancellable period of the lease, considering the broader economics of the contract
including economic penalties associated with exiting the lease and the useful life of the leasehold improvements on the relevant site.
The lease liability is subsequently increased by the interest cost on the lease liability (recognised in “Finance costs” in the Income
Statement) and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising
from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee,
or changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination
option is reasonably certain not to be exercised.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases,
including motor vehicles and IT equipment. The Group recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
102
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
C Operating assets and liabilities continued
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment continued
C4.1 Leased assets continued
Right-of-use assets
Right-of-use assets are presented within property, plant and equipment and leasehold property.
Millions of dollars
Balance at 1 January 2020
Additions
Disposals
Impairment losses
Depreciation charge for the year
Foreign currency translation
Balance at 31 December 2020
Balance at 1 January 2019
Additions
Depreciation charge for the year
Balance at 31 December 2019
Leasehold
property
Plant and
equipment
852.2
204.0
(4.7)
(64.1)
(134.1)
(0.3)
853.0
881.9
91.3
(121.0)
852.2
7.7
0.1
(0.7)
-
(3.4)
-
3.7
11.9
0.1
(4.3)
7.7
83
Total
859.9
204.1
(5.4)
(64.1)
(137.5)
(0.3)
856.7
893.8
91.4
(125.3)
859.9
Amounts recognised in Income Statement
Millions of dollars
Leases
Interest on lease liabilities
Expenses relating to short-term leases, leases of low-value assets and variable leases
2020
2019
57.2
59.9
58.6
52.9
Amounts recognised in the statement of cash flows
For the purposes of presentation in the cash flow statement, principal lease payments of $107.7 million (2019: $109.5 million) are
presented within the financing activities and interest of $57.2 million (2019: $58.6 million) within operating activities. Lease
payments of short-term leases and leases of low-value assets of $59.9 million (2019: $52.9 million) are included within operating
activities. In addition to the disclosure in the statement of cash flows, note D2.5 provides a maturity analysis of lease liabilities.
Extension options
Some leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract
period. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The
Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in
circumstances within its control.
Group as lessor
In contracts where the Group is a lessor, the Group determines whether the lease is an operating lease or finance lease at inception
of the lease. The accounting policies applicable to the Group as a lessor are not different from those under AASB 117.
However, when the Group is an intermediate lessor, the sub-leases are classified with reference to the right-of-use asset arising
from the head lease, not with reference to the underlying asset. The impact of sub-leases on the Financial Statements is immaterial.
The Group leases consist of owned commercial properties. All leases of owned property are classified as operating leases from a
lessor perspective. Rental income recognised by the Group during 2020 was $22.0 million (2019: $29.9 million).
103
Annual Report 2020
84
AMPOL Limited
Annual Report 2020
C Operating assets and liabilities (continued)
Notes to the Financial Statements
C Operating assets and liabilities continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
C4 Property, plant and equipment continued
C4.1 Leased assets continued
Group as lessor (continued)
The Group has granted operating leases expiring from one to forty-three years. The following table sets out a maturity analysis of
lease payments, showing the undiscounted lease payments to be received after the reporting date.
Millions of dollars
Operating leases under AASB 16
Within one year
Between one and five years
After five years
(i) Comparative information has been restated to appropriately reflect the actual 2019 balances.
C5 Payables
Millions of dollars
Current
Trade creditors unsecured
Other creditors and accrued expenses
Derivative liabilities
Non-current
Other creditors and accrued expenses
2020
2019(i)
7.1
16.5
1.1
24.7
13.1
17.2
2.2
32.5
2020
2019
935.8
485.4
67.9
2,354.2
335.4
43.0
1,489.1
2,732.6
16.0
21.3
Payables are recognised for amounts to be paid in the future for goods and services received, whether it is billed to the Group or
not. Trade accounts payable are normally settled on between 30-day and 60-day terms.
Payables are initially recognised at fair value plus any directly attributable transaction costs and subsequently measured at
amortised cost.
104
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
C Operating assets and liabilities continued
FOR THE YEAR ENDED 31 DECEMBER 2020
C6 Provisions
Millions of dollars
Balance at 1 January 2020
Provisions made during the year
Provisions used during the year
Provisions released during the year
Discounting movement
Balance at 31 December 2020
Current
Non-current
Site remediation
and dismantling
315.3
312.9
(44.0)
(3.9)
6.4
586.7
114.4
472.3
586.7
Other
16.8
77.3
(13.8)
-
-
80.3
64.3
16.0
80.3
85
Total
332.1
390.2
(57.8)
(3.9)
6.4
667.0
178.7
488.3
667.0
A provision is recognised when there is a present legal or constructive obligation as a result of a past event that can be measured
reliably and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of
which is uncertain.
The provision is the best estimate of the present value of the expenditure to settle the obligation at the reporting date. These costs
are reviewed annually and any changes are reflected in the provision at the end of the reporting period.
A provision is determined by discounting the expected future cash flows (adjusted for expected future risks) required to settle the
obligation at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Subsequent accretion to the amount of a provision due to unwinding of the discount is recognised as a financing cost.
In general, the further in the future that a cash outflow for a liability is expected to occur, the greater the degree of uncertainty
around the amount and timing of that cash outflow. Examples are of cash outflows that are expected to occur a number of
years in the future and, as a result, there is uncertainty on the amounts involved, including asset decommissioning and
restoration obligations.
Estimates of the amount of an obligation are based on current legal and constructive obligations, technology and price levels.
Actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions
and can take many years in the future. The carrying amounts of provisions are regularly reviewed and adjusted to take account of
such changes.
Site remediation and dismantling
Costs for future dismantling and removal of assets, and remediation of the site on which assets are located, are provided for and
capitalised upon initial construction of the asset, where an obligation to incur such costs arises under regulatory requirements
and/or the contractual terms of a lease. The present value of the expected future cash flows required to settle these obligations is
capitalised and depreciated over the useful life of the asset or the lease term.
A change in estimate of the provision is added to or deducted from the cost of the related asset in the period of the change, to the
extent that any amount deducted does not exceed the carrying amount of the asset. If an adjustment results in an addition to the
cost of the related asset, consideration will be given to whether an indication of impairment exists and the impairment policy will
be applied. An adjustment in circumstances where there is no such related asset is recognised in the Consolidated Income
Statement immediately.
Remediation identified in the period resulting from ongoing or past operations, where a legal or constructive obligation exists
and the amount can be reliably estimated is recognised as a provision with a corresponding expense to the Consolidated
Income Statement.
In assessing the value of provisions the Company uses assumptions and estimates. These include the current legal, contractual
or constructive obligations for remediation, expected timings of settlements and amounts (based on past experience or third-party
estimates of cost of asset removal, site assessment and additional soil remediation), discount rates and cost inflation rates.
The provision for environmental liabilities is estimated based on current legal and constructive requirements, technology, price
levels and expected plans for remediation. Actual costs and timing of cash outflows can differ from current estimates because of
changes in regulations, public expectations, prices, new information on site conditions and changes in technology. The timing and
amount of future expenditures relating to site dismantling and remediation liabilities are reviewed annually, together with the interest
rate used in discounting the cash flows. Changes in assumptions in relation to the Company’s provisions can result in material
changes to their carrying amounts.
105
Annual Report 2020
AMPOL Limited
86
Annual Report 2020
Notes to the Financial Statements
C Operating assets and liabilities (continued)
Notes to the Financial Statements
C Operating assets and liabilities continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
C6 Provisions continued
Site remediation and dismantling continued
Set out below are the key components of the site remediation and dismantling provision including, where relevant, a description of
material changes to the estimates made during the year:
the environmental remediation obligation associated with the Kurnell oil refinery following its conversion to an import terminal.
Following the completion of the Kurnell refinery processing plant demolition activities in 2019 the Group obtained an updated
environmental remediation cost estimate utilising a third-party expert. During the year the provision has been reassessed by
internal experts in the year taking into account progress against the Kurnell remediation management strategy, interaction with
regulatory and local government authorities, latest site information and the cost and scope of remediation activity. No material
change to the provision was identified. An updated cost estimate utilising a third-party expert will be obtained in 2021;
restoration and remediation costs for sites identified for divestment including the cost of restoration to a level of non-sensitive
industrial use. During the year, marginal Convenience Retail and Depot sites met this criterion which resulted in an increase in
the provision of $32.3 million;
restoration and remediation costs for 25 sites that were sold in 2019 for a “higher and better” use reflecting their significant
value as future residential sites. The expense reflects the Group’s commitment to remediate to these sites to a standard which
would allow residential development. During the year the provision was revised following reassessments of the cost of
remediation as site work progressed resulting in an increase in the provision of $16.9 million;
the estimated cost of dismantling and removal of assets from owned and leased operational sites. During the year the provision
for the cost of dismantling and removal of assets from owned and leased operational sites was reassessed. This followed
significant changes to the Group’s site network including site closures and changes to site use and was made to better reflect
the Group’s future estimates of the cost of legal and contractual restoration obligations. Estimated assumptions include current
legal, contractual or constructive obligations for dismantling assets and site restoration, expected timings of settlements,
expenses based on past experience or third party estimates of cost of asset removal, site assessment and additional soil
remediation, as well as discount rates and cost inflation rates. This resulted in an increase in the provision of $241.4 million and
a corresponding increase in Property, Plant and Equipment for owned and leased assets and
the estimated cost of remediation for site specific identified contamination. The estimated liability for these costs is dependent
on the actions required to meet regulatory standards and other requirements. There was no material change to the provision in
the year.
Other
The largest portion of Other includes the provision for rebranding obligations to third-party owned sites for $46.0 million that was
recognised in 2020 with the Income Statement expense treated as a significant item. The remainder of provision includes legal and
other provisions.
106
Ampol Limited
Notes to the Financial Statements
D Capital, funding and risk management
Notes to the Financial Statements
D Capital, funding and risk management
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
87
This section focuses on the Group’s capital structure and related financing costs. This section also describes how the Group
manages the capital and the financial risks it is exposed to as a result of its operating and financing activities.
D1 Going concern, liquidity and interest-bearing liabilities
The Group manages its capital to ensure Ampol will be able to continue as a going concern while maximising value for
shareholders.
Whilst COVID-19 has adversely impacted 2020 cash flows, Ampol’s liquidity position and balance sheet remain strong. The Group
has maintained substantial committed undrawn debt capacity with a diverse group of high-quality financial institutions, on
appropriate terms with a weighted average maturity of 3.6 years. Significant headroom remains key to financial covenants under
all the Group’s borrowing arrangements.
Management actions have also been taken to support cash flow, liquidity and strengthened the balance sheet including cost-out
initiatives, capital expenditure rationalisation, optimising funding sources made up of committed bank debt facilities and bonds,
operational responses and asset sales.
On 20 November 2020, Ampol completed an agreement with a Charter Hall and GIC consortium that acquired a 49% interest in
203 freehold convenience retail sites, which delivered net proceeds of $655.2 million in 2020.
On 23 November 2020, Ampol announced an Off-market Buy-back which was completed on 22 January 2021 for $300.4 million.
Refer to note G9 Events subsequent to the end of the year for further details.
On 9 December 2020, Ampol successfully issued $500.0 million of subordinated notes. These notes will diversify Ampol’s funding
sources, support its credit profile and increase its financial flexibility in line with its Capital Allocation Framework.
D1.1 Interest-bearing liabilities
Millions of dollars
Current
Bank facilities
Lease liabilities
Current interest-bearing liabilities
Non-current
Bank facilities(i)
Capital market borrowings(ii)
Subordinated notes(iii)
Lease liabilities
Non-current interest-bearing liabilities
Total interest-bearing liabilities
2020
2019
-
160.2
160.2
(5.3)
313.5
493.3
754.0
1,555.5
1,715.7
61.0
160.5
221.5
532.2
309.8
-
717.3
1,559.3
1,780.8
(i) Bank facilities comprises of no drawn bank debt at 31 December 2020 (less borrowing costs of $5.3 million (2019: $6.0 million)).
(ii) Capital market borrowings of $313.5 million (2019: $309.8 million) includes a fair value adjustment of $14.8 million (2019: $11.3 million) relating
to the fair value hedge of the $300.0 million Australian Medium-Term Notes (less borrowing costs of $1.3 million (2019: $1.4 million)).
(iii) Subordinated Notes were issued on 9 December 2020 and are unlisted. They are denominated in Australian dollars. The Notes have a maturity
date of 9 December 2080, with the first optional redemption date on 9 March 2026 totalling $500.0 million (less borrowing costs of $6.7 million).
Interest-bearing liabilities (excluding lease liabilities) are initially recorded at fair value, less transaction costs. Subsequently,
interest-bearing liabilities are measured at amortised cost, using the effective interest method. Any difference between proceeds
received net of transaction costs and the amount payable at maturity is recognised over the term of the borrowing using the
effective interest method.
Refer to note C4.1 for accounting policies on lease liabilities.
Significant funding transactions
During 2020, the Group extended the tenor on the AUD equivalent $1,503.0 million (2019: $1,773.8 million) of its existing bilateral
bank facilities and downsized its committed bank facilities by $200.0 million (2019: upsized by $400.0 million).
107
Annual Report 2020
88
AMPOL Limited
Annual Report 2020
D Capital, funding and risk management (continued)
Notes to the Financial Statements
D Capital, funding and risk management continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
D2 Risk management
The Group currently finances its operations through a variety of financial instruments including bank facilities, capital markets
borrowings, subordinated notes and leasing transactions. Surplus funds are invested in cash and short-term deposits. The Group
has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and
commodity price risk), as well as credit and liquidity risk.
Group Treasury centrally manages foreign exchange risk, interest rate risk, liquidity risk, financial institutional credit risk, funding
and capital management. Risk management activities with respect to customer credit risk are carried out by the Group’s Credit Risk
department, and risk management activities with respect to commodity price risk are carried out by Ampol Singapore.
The Group operates under policies approved by the Board of Directors. Group Treasury, Credit Risk and Ampol Singapore evaluate
and monitor the financial risks in close co-operation with the Group’s operating units.
The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to reduce potential
adverse effects on financial performance. The Group uses a range of derivative financial instruments to hedge market exposures.
The Group enters into derivative transactions; principally, interest rate swaps, foreign exchange contracts (forwards, swaps and
options) and crude and finished product swap and futures contracts. The purpose is to manage the market risks arising from the
Group's operations and its sources of finance.
Derivative financial instruments are recognised at fair value. The gain or loss on subsequent remeasurement is recognised
immediately in the Consolidated Income Statement. However, where derivatives qualify for hedge accounting, recognition of any
resulting gain or loss depends on the nature of the item being hedged.
It is the Group's policy that no speculative trading with derivative instruments shall be undertaken.
The magnitude of each type of financial risk that has arisen over the year is discussed in notes D2.1 to D2.5 below.
Hedge accounting
There are three types of hedge accounting relationships that the Group utilises:
Type of hedge Objective
Hedging
instruments
Accounting treatment
Cash flow
hedges
To hedge the Group’s exposure
to variability in cash flows of an
asset, liability or forecast
transaction caused by interest
rate or foreign currency
movements.
Foreign exchange
contracts (forwards,
swaps and options).
Interest rate swap
contracts (floating-to-
fixed).
Fair value
hedges
To hedge the Group’s exposure
to changes to the fair value of
an asset or liability arising from
interest rate movements.
Interest rate swap
contracts (fixed-to-
floating).
Net investment
hedges
Foreign currency
borrowings.
To hedge the Group’s exposure
to exchange rate differences
arising from the translation of
our foreign operations from
their functional currency to
Australian dollars.
108
The effective portion of changes in fair value of these
financial instruments is recognised in equity. The gain
or loss relating to the ineffective portion is recognised
immediately in the Consolidated Income Statement.
The cumulative gain or loss in equity is transferred to
the Consolidated Income Statement in the period
when the hedged item affects profit or loss. When
a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge
accounting, the cumulative gain or loss existing in
equity at the time remains in equity and is recognised
when the forecast transaction ultimately affects profit
or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that
was reported in equity is immediately transferred to
the Consolidated Income Statement.
Changes in the fair value of derivative financial
instruments that are designated and qualify as
fair value hedges are recorded in the consolidated
Income Statement, together with any changes in the
fair value of the hedged asset or liability or firm
commitment attributable to the hedged risk.
Foreign exchange differences arising from the
translation of the net investment in foreign operations,
and of related hedges that are effective, are
recognised in other comprehensive income and
presented in the foreign currency translation
reserve within equity. They may be released to the
Consolidated Income Statement upon disposal of the
foreign operation.
Notes to the Financial StatementsAmpol Limited
89
Notes to the Financial Statements
D Capital, funding and risk management continued
FOR THE YEAR ENDED 31 DECEMBER 2020
D2 Risk management continued
D2.1 Interest rate risk
Interest rate risk is the risk that fluctuations in interest rates adversely impact the Group’s results. Borrowings issued at variable
interest rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk.
Interest rate risk exposure
The Group’s exposure to interest rate risk (after hedging) for classes of financial assets and liabilities is set out as follows:
Millions of dollars
Financial assets
Cash at bank and on hand
Financial liabilities
Variable rate borrowings
Bank facilities
Subordinated notes
Fixed interest rate – repricing dates including lease liabilities:
12 months or less
One to five years
Over five years
2020
2019
367.6
367.6
144.8
73.3
160.2
1,171.2
166.2
1,715.7
35.0
35.0
323.2
-
160.5
819.6
477.5
1,780.7
Management of interest rate risk
The Group manages interest rate risk by using a floating versus fixed rate debt framework. The relative mix of fixed and floating
interest rate funding is managed by using interest rate swap contracts. Maturities of swap contracts are principally between one and
five years.
The Group manages its cash flow interest rate risk by entering into floating-to-fixed interest rate swap contracts. At 31
2020, the fixed rates under these swap contracts varied from 1.6% to 2.5% per annum, at a weighted average rate of 2.2% per
annum (2019:1.6% to 2.5% per annum, at a weighted average rate of 2.2% per annum).
December
The Group manages its fair value interest rate risk by using fixed-to-floating interest rate swap contracts.
The net fair value of interest rate swap contracts at 31 December 2020 was a $6.9 million gain (2019: $1.2 million gain).
Interest rate sensitivity analysis
At 31 December 2020, if interest rates had changed by -/+1% from the year-end rates, with all other variables held constant, the
impact on post-tax profit for the year for the Group and equity would have been:
Millions of dollars
Interest rates decrease by 1%
Interest rates increase by 1%
2020
2019
Post-tax
profit
Hedge
reserve
Post-tax
profit
Hedge
reserve
(5.1)
5.0
(10.7)
10.1
3.8
(3.8)
(7.1)
6.9
109
Annual Report 2020
90
AMPOL Limited
Annual Report 2020
D Capital, funding and risk management (continued)
Notes to the Financial Statements
D Capital, funding and risk management continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
D2 Risk management continued
D2.2 Foreign exchange risk
Foreign exchange risk is the risk that fluctuations in exchange rates will adversely impact the Group’s results.
Foreign currency transactions are recorded on initial recognition in Australian dollars by applying the exchange rate at the date of
the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at
the foreign exchange rate applicable for that date. Foreign exchange differences arising on translation are recognised in the
Consolidated Income Statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated
at fair value are translated to Australian dollars at foreign exchange rates at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated
into Australian dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated
into Australian dollars at the exchange rates at the date of the transactions. Foreign currency differences are recognised in the
Consolidated Statement of Comprehensive Income and accumulated in the foreign currency translation reserve.
The Group is exposed to the effect of changes in exchange rates on its operations and investments.
Foreign exchange risk exposure
Millions of dollars
(Australian dollar equivalent amounts)
Bank facilities
Cash and cash equivalents
Trade receivables
Trade payables
Forward exchange contracts (forwards, swaps and options)
Crude and finished product swap and futures contracts
US dollar
NZ dollar
-
65.5
264.3
(794.2)
(2.4)
(49.8)
-
9.6
4.4
(63.2)
(0.6)
-
Australian
dollar
-
292.5
593.6
2020
Total
-
367.6
862.3
(594.9)
(1,452.3)
-
-
(3.0)
(49.8)
2019
Total
Millions of dollars
(Australian dollar equivalent amounts)
US dollar
NZ dollar
Australian
dollar
Bank facilities
Cash and cash equivalents
Trade receivables
Trade payables
-
(292.2)
(301.0)
(593.2)
11.6
171.5
5.4
4.9
18.0
35.0
1,311.5
1,487.9
(2,202.5)
(31.9)
(486.3)
(2,720.7)
Forward exchange contracts (forwards, swaps and options)
Crude and finished product swap and futures contracts
(6.0)
(27.0)
(0.2)
-
-
-
(6.2)
(27.0)
Management of foreign exchange risk
In accordance with Group Treasury Policy, the Group’s transactional and translational foreign currency exposures are managed
as follows:
transactional foreign currency exposure - foreign exchange instruments (forwards, swaps and options) are used to
economically hedge transactional foreign currency exposure and
translational foreign currency exposure – foreign currency borrowings are used to hedge the Group's exposure arising from the
foreign currency translation risk from its net investment in foreign operations.
As at 31 December 2020, the total fair value of all outstanding foreign exchange contracts (forwards, swaps and options) amounted
to a $3.0 million loss (2019: $6.2 million loss).
110
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
D Capital, funding and risk management continued
FOR THE YEAR ENDED 31 DECEMBER 2020
D2 Risk management continued
D2.2 Foreign exchange risk continued
Foreign exchange rate sensitivity analysis
At 31 December 2020, had the Australian dollar strengthened/weakened by 10% against the following currencies respectively, with
all other variables held constant, the impact on post-tax profit for the year for the Group and equity would have been:
91
Millions of dollars
AUD strengthens against US dollar by 10%
AUD weakens against US dollar by 10%
AUD strengthens against NZ dollar by 10%
AUD weakens against NZ dollar by 10%
2020
2019
Post-tax
profit
Equity
(4.3)
13.4
-
-
-
-
-
-
Post-tax
profit
11.9
(14.6)
-
-
Equity
-
-
12.6
(15.4)
D2.3 Commodity price risk
Commodity price risk is the risk that fluctuations in commodity prices will adversely impact the Group’s results. The Group is
exposed to the effect of changes in commodity prices on its operations.
The Group utilises crude and finished product swap and futures contracts to manage the risk of price movements. The Enterprise
Commodity Risk Management Policy seeks to minimise adverse price timing risks and basis exposures brought about by purchase
and sales transactions.
As at 31 December 2020, the total fair value of all outstanding crude and finished product swap and futures contracts amounted to a
$49.8 million loss (2019: $27.0 million loss).
Commodity price sensitivity analysis
At 31 December 2020, if commodity prices had changed by -/+10% from the year-end prices, with all other variables held constant,
the impact on post-tax profit for the year for the Group and equity would have been:
Millions of dollars
Commodity prices decrease by 10%
Commodity prices increase by 10%
2020
2019
Post-tax
profit
Hedge
reserve
Post-tax
profit
Hedge
reserve
14.7
(14.7)
-
-
39.0
(49.1)
-
-
D2.4 Credit risk
Customer credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The credit risk on financial assets of the Group which have been recognised on the Consolidated Balance Sheet is the carrying
amount of trade debtors and other receivables, net of allowances for impairment (see note C1).
The Group has a Board-approved Credit Policy and manual which provide the guidelines for the management and diversification of
the credit risk to the Group. The guidelines provide the scope in which the credit risk of customers is assessed and the use of credit
rating and other information in order to set appropriate limits of trade with customers. The credit quality of customers is consistently
monitored in order to identify any potential adverse changes in the credit risk of the customers.
Expected customer credit losses are assessed on a portfolio basis between small business individuals and bulk fuel customers.
The Group also minimises concentrations of credit risk by undertaking transactions with a large number of customers across a
variety of industries and networks.
Security is required to be supplied by certain groups of Ampol customers to minimise risk. The security could be in the form of a
registered personal property security interest over the customer's assets and/or mortgages over real property. Bank guarantees,
other contingent instruments or insurance bonds are also provided in some cases.
111
Annual Report 2020
Bank facilities -
Drawn
Bank facilities -
Undrawn
Capital market
borrowings(i)
Subordinated notes(ii)
92
AMPOL Limited
Annual Report 2020
D Capital, funding and risk management (continued)
Notes to the Financial Statements
D Capital, funding and risk management continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
D2 Risk management continued
D2.4 Credit risk continued
Financial institution credit risk
Credit risk on cash, short-term deposits and derivative contracts is reduced by transacting with relationship banks which have
acceptable credit ratings determined by a recognised ratings agency. Interest rate swaps, foreign exchange contracts (forwards,
swaps and options), crude and finished product swap and futures contracts, bank guarantees, and other contingent instruments are
subject to credit risk in relation to the relevant counterparties, which are principally large relationship banks. The maximum credit
risk exposure on foreign exchange contracts, crude and finished product swap and futures contracts, bank guarantees, and other
contingent instruments is the fair value amount that the Group receives when settlement occurs, should the counterparty fail to pay
the amount which it is committed to pay the Group. The credit risk on interest rate swaps is limited to the positive mark-to-market
amount to be received from counterparties over the life of contracts.
D2.5 Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Due to the dynamic nature of
the underlying business, the liquidity risk policy requires maintaining sufficient cash and an adequate amount of committed credit
facilities to be held above the forecast requirements of the business. The Group manages liquidity risk centrally by monitoring cash
flow forecasts and maintaining adequate cash reserves and debt facilities. The debt portfolio is periodically reviewed to ensure there
is funding flexibility across an appropriate maturity profile.
The debt facility maturity profile of the Group as at 31 December 2020 is as follows:
Millions of dollars
2021
2022
2023
2024
Beyond
2024
Funds
available
Drawn
Undrawn
-
-
-
-
-
-
225.0
419.5
240.0
462.5
793.5
2,140.5
-
-
-
2,140.5
-
-
-
-
-
-
-
-
300.0
300.0
300.0
500.0
500.0
500.0
800.0
-
-
2,140.5
Total
225.0
419.5
240.0
462.5
1,593.5
2,940.5
(i) Capital market borrowings were drawn for the year ended 31 December 2020. Refer to note D1.1 annotation (ii) for the reconciliation back to
$313.5 million (2019: $309.8 million).
(ii) Subordinated notes were drawn for the year ended 31 December 2020. Refer to note D1.1 annotation (iii) for the reconciliation back to
$493.3 million.
The Group maintains a strong balance sheet and liquidity position by accessing diversified funding sources made up of committed
bank debt facilities and bonds, with a weighted average debt maturity profile of 3.6 years.
The total available funds at 31 December 2020 was $2,940.5 million (2019: $2,648.8 million), with $2,140.5 million (2019:
$1,816.6 million) in undrawn committed bank debt facilities.
The tables below set out the contractual timing of undiscounted cash flows on derivative and non-derivative financial assets and
liabilities at the reporting date, including drawn borrowings and interest.
Millions of dollars
Derivative financial instruments
Less than one year
One to five years
Over five years
Derivative
financial
liabilities
Derivative
financial
assets
(1,469.2)
1,462.3
(6.6)
-
17.1
-
2020
Net
derivative
financial
(liabilities)/
assets
(6.9)
10.5
-
3.6
Derivative
financial
liabilities
Derivative
financial
assets
(1,017.5)
1,008.4
(12.1)
(1.1)
16.2
1.9
2019
Net
derivative
financial
(liabilities)/
assets
(9.1)
4.1
0.8
(4.2)
112
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
D Capital, funding and risk management continued
FOR THE YEAR ENDED 31 DECEMBER 2020
D2 Risk management continued
D2.5 Liquidity risk management continued
Millions of dollars
Non-derivative financial instruments liabilities
Less than one year
One to five years
Over five years
Millions of dollars
Lease liabilities
Less than one year
One to five years
Over five years
93
2020
2019
(1,448.0)
(2,760.4)
(438.6)
(505.7)
(526.5)
(381.0)
(2,392.3)
(3,667.9)
2020
2019
(160.2)
(587.7)
(166.3)
(914.2)
(160.5)
(573.9)
(521.9)
(1,256.3)
D3 Capital management
The Group’s primary objective when managing capital is to safeguard the ability to continue as a going concern, while delivering on
strategic objectives.
The Group’s Financial Framework is designed to support the overarching objective of top quartile Total Shareholder Return, relative
to the S&P/ASX 100. The Framework’s key elements are to:
maintain an optimal capital structure that delivers a competitive cost of capital by holding a level of net debt (including lease
liabilities) relative to EBITDA that is consistent with investment-grade credit metrics;
deliver Return on Capital Employed (ROCE) that exceeds the weighted average cost of capital; and
make disciplined capital allocation decisions between investments, debt reduction and distribution of surplus capital to
shareholders.
The Group’s gearing ratio is calculated as net borrowings/total capital. Net debt is a non-statutory measure calculated as total
interest-bearing liabilities (excluding liabilities arising under AASB 16 Leases; refer to note D1.1) less cash and cash equivalents.
Total capital is calculated as equity as shown in the balance sheet plus net borrowings.
Millions of dollars
Interest-bearing liabilities
Less: cash and cash equivalents
Net borrowings
Total equity
Total capital
Gearing ratio
2020
801.5
(367.6)
433.9
3,224.7
3,658.6
11.9%
2019
903.0
(35.0)
868.0
3,270.5
4,138.5
21.0%
113
Annual Report 2020
94
AMPOL Limited
Annual Report 2020
D Capital, funding and risk management (continued)
Notes to the Financial Statements
D Capital, funding and risk management continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
D4 Fair value of financial assets and liabilities
The Group’s accounting policies and disclosures may require the measurement of fair values for both financial and non-financial
assets and liabilities. The Group has an established framework for fair value measurement. When measuring the fair value of an
asset or a liability, the Group uses market observable data where available.
Fair values are categorised into different levels in a fair value hierarchy based on the following valuation techniques:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value hierarchy, then
the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement.
The fair value of cash, cash equivalents and non-interest-bearing financial assets and liabilities approximates their carrying value
due to their short maturity.
Fair values of recognised financial assets and liabilities with their carrying amounts shown in the balance sheet are as follows:
Millions of dollars
Asset/(Liability)
Crude and finished product swap and futures
contracts
(49.8)
(49.9)
(22.0)
(27.9)
Total
(847.4)
(986.8)
(22.0)
(964.8)
(i) Relates to capitalised borrowing costs recorded at amortised cost on undrawn bank facility
Millions of dollars
Asset/(Liability)
31 December 2020
Interest-bearing liabilities
Bank facilities(i)
Capital market borrowings
Subordinated notes
Derivatives
Interest rate swaps
Foreign exchange contracts
(forwards, swaps and options)
31 December 2019
Interest-bearing liabilities
Bank facilities
Capital market borrowings
Derivatives
Interest rate swaps
Foreign exchange contracts
(forwards, swaps and options)
Carrying
amount
Fair value
total
Quoted
market price
(Level 1)
Observable
inputs
(Level 2)
Non-market
observable
inputs
(Level 3)
5.3
(313.5)
(493.3)
6.9
(3.0)
-
(347.9)
(592.9)
6.9
(3.0)
-
-
-
-
-
-
(347.9)
(592.9)
6.9
(3.0)
Carrying
amount
Fair value
total
Quoted
market price
(Level 1)
Observable
inputs
(Level 2)
Non-market
observable
inputs
(Level 3)
(593.2)
(309.8)
(590.4)
(344.5)
1.2
(6.2)
1.2
(6.2)
-
-
-
-
(590.4)
(344.5)
1.2
(6.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
Crude and finished product swap and futures
contracts
(27.0)
(27.0)
10.3
(37.4)
Total
(935.0)
(966.9)
10.3
(977.2)
114
Notes to the Financial StatementsAmpol Limited
95
Notes to the Financial Statements
D Capital, funding and risk management continued
FOR THE YEAR ENDED 31 DECEMBER 2020
D4 Fair value of financial assets and liabilities continued
Estimation of fair values
Interest-bearing liabilities
Bank facilities
These are estimated as the present value of future cash flows using the applicable market rate.
Capital market borrowings and subordinated notes
These are determined by quoted market prices or dealer quotes for similar instruments
Derivatives
Interest rate swaps
This is an estimated amount that the Group would receive or pay to terminate the swap at balance date taking into account current
interest rates and credit adjustments.
Foreign exchange contracts (forwards, swaps and options)
These are calculated by reference to current forward exchange rates for contracts with similar maturity profiles as at reporting date.
The fair value of foreign exchange options is determined using standard valuation techniques.
Crude and finished product swap and futures contracts
The fair value of crude and product swap contracts is calculated by reference to market prices for contracts with similar maturity
profiles at reporting date. The fair value of crude and product futures contracts is determined by quoted market prices.
D5 Master netting or similar agreements
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting
agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all
transactions outstanding in the same currency are aggregated into a net amount payable by one party to the other.
The Group purchases and sells petroleum products with a number of counterparties with contractual offsetting arrangements,
referred to as “buy sell arrangements”.
The following table presents the recognised amounts that are netted, or subject to master netting arrangements but not offset, as at
reporting date. The column “Net amount” shows the impact on the Group’s balance sheet if all set-off rights were exercised.
2020
Millions of dollars
(Australian dollar
equivalent amounts)
Derivative financial assets
Buy sell arrangements
Total financial assets
Derivative financial liabilities
Buy sell arrangements
Total financial liabilities
2019
Millions of dollars
(Australian dollar
equivalent amounts)
Derivative financial assets
Buy sell arrangements
Total financial assets
Derivative financial liabilities
Buy sell arrangements
Total financial liabilities
Gross
amount
Amount
offset in the
balance sheet
Amount in the
balance sheet
Related
amount
not offset
210.3
152.3
362.6
(256.2)
(204.3)
(460.5)
(188.3)
(125.5)
(313.8)
188.3
125.5
313.8
22.0
26.8
48.8
(67.9)
(78.8)
(146.7)
(6.5)
-
(6.5)
6.5
-
6.5
Gross
amount
Amount
offset in the
balance sheet
Amount in the
balance sheet
Related
amount
not offset
122.1
347.8
469.9
(154.2)
(343.2)
(497.4)
(111.2)
(317.1)
(428.3)
111.2
317.1
428.3
10.9
30.7
41.6
(43.0)
(26.1)
(69.1)
(2.9)
-
(2.9)
2.9
-
2.9
Net
amount
15.5
26.8
42.3
(61.4)
(78.8)
(140.2)
Net
amount
8.0
30.7
38.7
(40.1)
(26.1)
(66.2)
115
Annual Report 2020
AMPOL Limited
96
Annual Report 2020
Notes to the Financial Statements
D Capital, funding and risk management (continued)
Notes to the Financial Statements
D Capital, funding and risk management continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
D6 Issued capital
Millions of dollars
Ordinary shares
Shares on issue at beginning of period – fully paid
Shares repurchased for cash
Shares on issue at end of period – fully paid
2020
2019
502.6
-
502.6
524.9
(22.3)
502.6
In the event of the winding up of the Group, ordinary shareholders rank after all creditors and are fully entitled to any proceeds of
liquidation. The Group grants performance rights to Senior Executives; see the 2020 Remuneration Report for further detail. For
each right that vests, the Group intends to purchase shares on-market following vesting.
Subsequent to the year end the Group completed an Off-Market Buy-Back. Refer to note G9 for further details.
116
Ampol Limited
Notes to the Financial Statements
E Taxation
Notes to the Financial Statements
E Taxation
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
97
This section provides details of the Group’s income tax expense, current tax provision and deferred tax balances and the Group’s
tax accounting policies.
E1 Income tax benefit/(expense)
E1.1 Recognised in the Income Statement
Millions of dollars
Current tax (expense)/benefit
Current year
Adjustments for prior years
Total current tax expense
Deferred tax benefit/(expense)
Origination and reversal of temporary differences
Benefit of tax losses
Benefit of carry forward tax offsets
Adjustments for prior years
Total deferred tax benefit/(expense)
Total income tax benefit/(expense) in the income statement
E1.2 Reconciliation between income tax expense and profit before income tax expense
Millions of dollars
(Loss)/profit before income tax
Income tax benefit/(expense) using the domestic corporate tax rate of 30% (2019: 30%)
Effect of tax rates in foreign jurisdictions
Change in income tax benefit/(expense) due to:
Share of net profit of associated entities
Tax on minority interest portion of flow through entity profits
Income not subject to attribution under controlled foreign company regime
Capital tax losses utilised for which no deferred tax asset was recognised
Step-up to market value on pre-CGT sites
Research and development allowances
Other
Income tax under provided in prior years
Total income tax benefit/(expense) in the income statement
2020
2019
(18.5)
(12.1)
(30.6)
170.7
101.8
1.9
2.0
276.4
245.8
2020
(725.6)
217.7
(9.7)
3.2
1.3
12.8
16.2
13.4
0.4
0.6
(10.1)
245.8
(126.9)
2.6
(124.3)
(3.9)
-
-
(9.7)
(13.6)
(137.9)
2019
521.7
(156.5)
8.4
1.3
-
-
9.8
6.1
0.6
(0.5)
(7.1)
(137.9)
Income tax benefit/(expense) comprises current tax expense and deferred tax expense. Current tax is the expected tax payable on
the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustments to tax payable in respect of
previous years. Deferred tax expense represents the changes in temporary differences between the carrying amount of an asset or
liability in the statement of financial position and its tax base.
.
117
Annual Report 2020
98
AMPOL Limited
Annual Report 2020
E Taxation (continued)
Notes to the Financial Statements
E Taxation continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
E1 Income tax benefit/(expense) continued
Taxation of Singaporean entities
At the date of this report, the Australian Taxation Office (ATO) had not finalised its position in relation to the extent to which
earnings from the Group’s Singaporean entities would be subject to income tax in Australia. Due to the uncertainty over the ATO’s
final position, the Group has estimated and recognised tax liabilities for 2014 to date based on the income tax rate of 30%, being
the Australian corporate income tax rate. The Singaporean corporate income tax rate is 17%; however, due to some of the Group’s
Singaporean entities having status as Global Trader Companies, specified income of those entities is subject to a lower tax rate.
The cumulative current and deferred tax expense for the differential between the Australian and Singapore tax rates recognised
in the Financial Statements from 2014 to 31 December 2020 is $178.9 million (2019: $163.1 million). Under an administrative
agreement made with the ATO, 50% of the differential in tax on earnings under the Australian and Singaporean taxation rates for
the years 2014 to 2019 years has been paid or payable pending resolution of the matter. No Australian tax was paid or payable on
earnings in respect of the 2020 year because the Ampol Australian tax consolidated group was in a tax loss position. As a result,
as at 31 December 2020 in relation this matter, $81.0 million is recognised in current tax payable and $10.9 million (being the
Australian tax payable on the 2020 earnings of the Group’s Singaporean entities) has reduced the deferred tax asset recognised on
the Australian tax consolidated group’s carry forward tax loss. If the outcome of the ATO’s decision is in Ampol’s favour, an amount
of income tax expense recognised to date could be written back in future periods. If the tax matter is resolved such that the ATO’s
position is sustained, there would be no impact on the Ampol Income Statement or net assets.
E2 Deferred tax
Deferred tax is recognised using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Net movement in deferred tax
Millions of dollars
Net deferred income tax assets arising on temporary differences
Net deferred income tax liabilities arising on temporary differences
Tax losses – revenue recorded as asset
Total net deferred income tax assets
E2.1 Movement in deferred tax
Millions of dollars
Asset/(Liability)
Cash and receivables
Inventories
Property, plant and equipment and intangibles
Payables
Interest-bearing liabilities
Provisions
Lease liabilities
Tax asset recognised on tax losses
Other
Net deferred tax asset
118
2020
434.3
(61.1)
70.9
444.1
2019
172.2
-
-
172.2
Balance at
1 Jan 20
Recognised
in income
Recognised
in equity
Balance at
31 Dec 20
2.8
6.8
(208.8)
22.5
4.7
111.4
250.6
-
(17.8)
(3.5)
1.4
13.7
8.7
(0.6)
118.5
27.8
101.8
8.5
172.2
276.3
-
-
28.6
(0.6)
(0.5)
0.1
(0.1)
(30.9)
(1.0)
(4.4)
(0.7)
8.2
(166.5)
30.6
3.6
230.0
278.3
70.9
(10.3)
444.1
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
E Taxation continued
FOR THE YEAR ENDED 31 DECEMBER 2020
E2 Deferred tax continued
Millions of dollars
Asset/(Liability)
Cash and receivables
Inventories
Property, plant and equipment and
intangibles
Payables
Interest-bearing liabilities
Provisions
Lease liabilities
Other
Net deferred tax asset
(i) Refer to note A4.
Balance at
1 Jan 19
Adoption of
AASB 16
Recognised
in income
Recognised
in equity
(17.9)
(8.3)
(1.4)
-
50.8
(256.3)
22.1
15.1
2.3
(4.0)
(15.2)
39.5
4.6
131.7
-
-
-
267.9
(16.2)
184.2
-
6.2
0.1
(19.2)
(17.3)
(1.6)
(13.7)
E2.2 Deferred tax recognised directly in equity
Millions of dollars
Related to actuarial gains
Related to derivatives
Related to change in fair value of net investment hedges
Related to foreign operations – foreign currency translation differences
Related to share-based payments
Related to retained earnings
Ampol Property Trust – Divestment of Minority Interest
E2.3 Unrecognised deferred tax assets
Millions of dollars
Capital tax losses
99
Change in
accounting
policy(i)
Balance at
31 Dec 19
-
-
2.8
6.8
(5.6)
(208.8)
-
-
-
-
-
22.5
4.7
111.4
250.6
(17.8)
-
-
-
2.2
-
(1.1)
-
-
1.1
(5.6)
172.2
2020
0.1
(0.6)
(0.5)
(0.9)
0.5
-
(3.0)
(4.4)
2020
0.5
2019
(1.1)
1.8
0.4
-
-
6.2
-
7.3
2019
58.8
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be
available against which these benefits can be utilised by the Group. These have not been tax effected.
E3 Tax consolidation
Ampol recognises all current tax balances relating to its wholly owned Australian resident entities included in the tax consolidated
group (TCG). Ampol, in conjunction with the other members of the TCG, has entered into a tax funding arrangement which sets out
the funding obligations of members of the TCG in respect of tax amounts.
119
Annual Report 2020
100
AMPOL Limited
Annual Report 2020
F Group structure
Notes to the Financial Statements
F Group structure
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
This section provides information on the Group’s structure and how this impacts the results of the Group as a whole, including
details of joint arrangements, controlled entities, transactions with non-controlling interests and changes made to the structure
during the year.
F1 Controlled entities
Controlled entities are those entities controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns from its involvement with the entity and through
its power over the entity.
The following entities were controlled during 2020:
Name
Companies
Ampol Bendigo Pty Ltd
Ampol International Holdings Pte Ltd
Ampol Management Services Pte Ltd
Ampol Procurement Services Pte Ltd
Ampol Property (Holdings) Pty Ltd
Ampol Property Manager Pty Ltd (formerly Ampol Convenience REIT FinCo Pty Ltd)
Ampol Refineries (Matraville) Pty Ltd
Ampol Road Pantry Pty Ltd
Ampol Singapore Trading Pte Ltd
Ampol US Trading LLC
Ampol US Holdings LLC
Ampol US Management Services LLC
Ampol Shipping & Logistics Pte Ltd
Ampol Convenience PropCo Pty Ltd (formerly Australian Petroleum Marine Pty Ltd)
B & S Distributors Pty Ltd
Bowen Petroleum Services Pty Ltd
Ampol Aviation Pty Ltd (formerly Caltex Aviation Pty Ltd)
ALD Group Holdings NZ Limited (formerly CAL Group Holdings NZ Ltd)
Ampol LPG Pty Ltd (formerly Calgas Pty Ltd)
Ampol Retail Pty Ltd (formerly Calstores Pty Ltd)
Ampol Australia Custodians Pty Ltd (formerly Caltex Australia Custodians Pty Ltd)
Ampol Australia Management Pty Ltd (formerly Caltex Australia Management Pty
Caltex Australia Nominees Pty Ltd
Ampol Australia Petroleum Pty Ltd (formerly Caltex Australia Petroleum Pty Ltd)
Ampol Fuel Services Pty Ltd (formerly Caltex Fuel Services Pty Ltd)
Ampol Lubricating Oil Refinery Pty Ltd (formerly Caltex Lubricating Oil Refinery Pty
Ampol Petroleum (Qld) Pty Ltd (formerly Caltex Petroleum (Qld) Pty Ltd)
Ampol Petroleum (Victoria) Pty Ltd (formerly Caltex Petroleum (Victoria) Pty Ltd)
Ampol Petroleum Pty Ltd (formerly Caltex Petroleum Pty Ltd)
Ampol Petroleum Distributors Pty Ltd (formerly Caltex Petroleum Services Pty Ltd)
Ampol Refineries (NSW) Pty Ltd (formerly Caltex Refineries (NSW) Pty Ltd)
Ampol Refineries (Qld) Pty Ltd (formerly Caltex Refineries (Qld) Pty Ltd)
Centipede Holdings Pty Ltd
Circle Petroleum (Q'land) Pty Ltd
Cocks Petroleum Pty Ltd
Cooper & Dysart Pty Ltd
Graham Bailey Pty Ltd
Gull New Zealand Ltd
120
% Interest
Note
2020
2019
(xv)(xii)(iii)
(ii)
(ii)
(ii)
(iii)
(xiv)
(xii)
(xv)(xii)
(ii)
(x)
(x)
(x)
(ii)(xi)
(iii)
(iv)
(xv)(xii)
(v)
(iii)
(iii)
(iii)
(xii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iii)
(xv)(xii)
(x)
(iii)
(v)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
-
-
-
-
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
F Group structure continued
FOR THE YEAR ENDED 31 DECEMBER 2020
F1 Controlled entities continued
Name
Hanietee Pty Ltd
Hunter Pipe Line Company Pty Ltd
Jayvee Petroleum Pty Ltd
Jet Fuels Petroleum Distributors Pty Ltd
Link Energy Pty Ltd
Manworth Pty Ltd
Newcastle Pipe Line Company Pty Ltd
Northern Marketing Management Pty Ltd
Northern Marketing Pty Ltd
Octane Insurance Pte Ltd
Pilbara Fuels Pty Ltd
R & T Lubricants Pty Ltd
Real FF Pty Ltd
Ruzack Nominees Pty Ltd
Sky Consolidated Property Pty Ltd
Solo Oil Australia Pty Limited
Solo Oil Corporation Pty Ltd
Solo Oil Investments Pty Ltd
Solo Oil Pty Ltd
South Coast Oils Pty Ltd
South East Queensland Fuels Pty Ltd
Sydney Metropolitan Pipeline Pty Ltd
Teraco Pty Ltd
Terminals New Zealand Ltd
Tulloch Petroleum Services Pty Ltd
Western Fuel Distributors Pty Ltd
Zeal Achiever Ltd
Unit trusts
Ampol Property Trust (formerly Caltex Real Estate Investment Trust)
Eden Equity Unit Trust
Petroleum Leasing Unit Trust
Petroleum Properties Unit Trust
South East Queensland Fuels Unit Trust
101
% Interest
2020
2019
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
-
100
100
100
100
60
50
100
100
50
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
50
100
100
50
100
100
100
100
100
100
Note
(iii)
(iii)
(xv)(xii)
(iii)
(iii)
(iii)
(ii)
(iii)
(iii)
(xii)
(xii)
(iii)
(iii)
(xv)(xii)
(iv)
(v)
(xv)(xii)(iii)
(iv)
(xiii)
(ix)
(vi)
(vii)
(vii)
(viii)
Incorporated in Singapore.
(i) All companies are incorporated in Australia, except where noted otherwise.
(ii)
(iii) These companies are parties to a Deed of Cross Guarantee dated 22 December 1992 as amended, varied and restated with Ampol and each other.
(iv)
Included as controlled entities in accordance with AASB 10 Consolidated Financial Statements. In each case, control exists because a company within the
Group has the ability to dominate the composition of the entity's Board of Directors or enjoys the majority of the benefits and is exposed to the majority of
the risks of the entity.
Incorporated in New Zealand.
(v)
(vi) Ampol Petroleum Distributors Pty Ltd is the sole unit holder.
(vii) Solo Oil Pty Ltd is the sole unit holder.
(viii) Ampol Australia Petroleum Pty Ltd and Ampol Petroleum Distributors Pty Ltd each own half of the units in this trust.
(ix) On 20 November 2020, a Charter Hall and GIC consortium acquired a 49% interest of Ampol Property Trust.
(x)
(xi)
(xii) The directors of the companies listed above declared that the companies were solvent pursuant to section 494 of the Corporations Act 2001. The
Incorporated in Delaware, United States of America, on 12 November 2019.
Incorporated in Singapore, on 12 February 2019.
companies were wound up by their shareholders voluntarily on 20 December 2019.
(xiii) Australian tax resident incorporated in the British Virgin Islands.
(xiv) Incorporated in Australia, on 5 March 2020.
(xv) On 20 January 2021, the companies were deregistered with ASIC.
121
Annual Report 2020
102
AMPOL Limited
Annual Report 2020
F Group structure (continued)
Notes to the Financial Statements
F Group structure continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
F1 Controlled entities continued
F1.1 Deed of Cross Guarantee
The parent entity has entered into a Deed of Cross Guarantee through which the Group guarantees the debts of certain controlled
entities. The controlled entities that are party to the deed are shown in note F1.
Income Statement for entities covered by the Deed of Cross Guarantee
Millions of dollars
Revenue
Cost of goods sold – historical cost
Gross profit
Other income(ii)
Other expense
Selling, distribution and general and administration expenses
Results from operating activities
Finance costs
Finance income
Net finance costs
Share of net profit of entities accounted for using the equity method
Profit before income tax expense
Income tax benefit/(expense)(iii)
Net profit
Items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
Retained earnings at the beginning of the year
Adjustment adoption of AASB 16
Current year earnings
Movement in reserves
Shares bought back
Transactions with owners
Dividends provided for or paid
Retained earnings at the end of the year
2020
2019(i)
11,996.3
18,863.2
(10,978.0)
(17,390.4)
1,018.3
1,472.8
897.1
(434.8)
(1,380.5)
100.1
(109.7)
0.6
(109.1)
10.7
1.7
264.1
265.8
(0.3)
(0.1)
(0.4)
265.4
2,417.6
-
265.8
(0.4)
-
-
(189.8)
2,493.2
44.7
-
(977.5)
540.0
(121.0)
1.2
(119.8)
4.2
424.4
(290.6)
133.8
2.5
(3.9)
(1.4)
132.4
2,670.2
13.8
133.8
2.5
(237.9)
74.2
(239.0)
2,417.5
(i) Comparative information has been restated to appropriately reflect the actual 2019 balances.
(ii) Other income includes profit on sale of $869.0 million on a 49% interest in an unlisted real estate property trust.
(iii) An income tax benefit arises in the Deed of Cross Guarantee group in the current period due to the sale of assets to the Ampol Property Trust. The gain on
sale recorded for accounting purposes is larger than the taxable gain on this transaction creating a tax benefit in the Financial Statements.
122
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
F Group structure continued
FOR THE YEAR ENDED 31 DECEMBER 2020
F1 Controlled entities continued
F1.1 Deed of Cross Guarantee continued
Balance sheet for entities covered by the Deed of Cross Guarantee
Millions of dollars
Current assets
Cash and cash equivalents
Receivables
Inventories
Other
Total current assets
Non-current assets
Receivables
Investments accounted for using the equity method
Ampol Property Trust investment
Other investments
Intangibles
Property, plant and equipment
Deferred tax assets
Employee benefits
Other
Total non-current assets
Total assets
Current liabilities
Payables
Interest-bearing liabilities
Current tax liabilities
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Payables
Interest-bearing liabilities
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury stock
Reserves
Retained earnings
Total equity
(i) Comparative information has been restated to appropriately reflect the actual 2019 balances.
103
2020
2019(i)
286.5
1,037.4
801.2
49.7
2,174.8
415.0
173.0
728.5
4.2
283.0
3,732.5
443.5
2.9
43.5
5,826.1
8,000.9
1,423.4
230.9
169.6
65.1
173.0
24.8
606.0
1,186.7
202.2
2,019.7
54.0
154.9
-
19.2
295.6
3,522.1
161.9
4.0
48.9
4,260.6
6,280.3
1,247.3
217.6
97.0
50.5
81.4
2,062.0
1,693.7
16.0
2,415.0
9.7
39.9
484.0
2,964.6
5,026.6
2,974.3
502.6
(1.6)
(19.9)
2,493.2
2,974.3
21.3
1,361.9
-
40.5
242.9
1,666.6
3,360.4
2,919.9
502.6
(2.0)
1.7
2,417.6
2,919.9
123
Annual Report 2020
104
AMPOL Limited
Annual Report 2020
F Group structure (continued)
Notes to the Financial Statements
F Group Structure continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
F2 Business combinations
There were no material business combinations during the years ended 31 December 2020 or 31 December 2019.
F3 Equity-accounted investees
Associates are those entities over whose financial and operating policies the Group has significant influence, but not control. Joint
ventures are those entities whose financial and operating policies the Group has joint control over and where the Group has rights
to the net assets of the entity.
The Consolidated Financial Statements include the Group’s share of the total recognised gains and losses of associates and joint
ventures on an equity-accounted basis, from the date that significant influence or joint control commences until the date that it
ceases. When the Group’s share of losses exceeds the carrying amount of the associate or joint venture, the carrying amount is
reduced to nil and recognition of future losses is discontinued except to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the associate or joint venture.
Other movements in reserves are recognised directly in the consolidated reserves.
Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in
the entity. Unrealised losses arising from transactions with associates and joint ventures are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
F3.1 Investments in associates and joint ventures
Name
Investments in associates
Seaoil Philippines Inc.
Geraldton Fuel Company Pty Ltd
Bonney Energy (Tasmania) Pty Ltd (formerly Caltas Pty Ltd)(i)
Investments in joint ventures
Airport Fuel Services Pty Limited
Australasian Lubricants Manufacturing Company Pty Ltd(ii)
Cairns Airport Refuelling Service Pty Ltd
% Interest
Country of
incorporation
2020
2019
Philippines
Australia
Australia
Australia
Australia
Australia
20
50
50
40
50
20
50
-
40
50
33.33
33.33
(i) On 31 January 2020, Ampol Australia Petroleum Pty Ltd converted its $15.0 million 2016 convertible note to a 50% equity interest in
Bonney Energy (Tasmania) Pty Ltd. The carrying amount of this investment at 31 December 2020 was $15.6 million.
(ii) Australasian Lubricants Manufacturing Company Pty Ltd ceased joint venture operations on 17 April 2015 and had a nil carrying value at
31 December 2020.
The companies listed in the above table were incorporated in Australia and the Philippines, have a 31 December balance date and
are principally concerned with the sale, marketing and/or distribution of fuel products and the operation of convenience stores.
124
Notes to the Financial StatementsAmpol Limited
105
Notes to the Financial Statements
F Group structure continued
FOR THE YEAR ENDED 31 DECEMBER 2020
F3 Equity-accounted investees continued
F3.2 Investments in associates
Millions
of dollars
Revenue
(100%)
Profit
(100%)
Share of
associates’
net profit
recognised
Total
assets
(100%)
Total
liabilities
(100%)
Net assets
as reported
by
associates
(100%)
Share of
associates
net assets
equity
accounted
Elimination
of
unrealised
loss in
inventories Goodwill
Total
share of
associates’
net assets
equity
accounted
2020
2019
1,562.6
46.3
10.7
604.5
332.2
272.4
72.3
0.1
99.8
172.2
1,651.6
14.1
4.2
610.2
395.5
214.7
50.7
0.2
103.2
154.1
F3.3 Investments in joint ventures
Millions
of dollars
Revenue
(100%)
Profit
(100%)
Share of
joint ventures’
net profit
recognised
Total assets
(100%)
Total liabilities
(100%)
Net assets
as reported
by joint venture
(100%)
Share of joint
ventures’ net
assets equity
accounted
2020
2019
5.0
10.5
-
-
-
-
1.9
4.7
-
2.8
1.9
1.9
0.8
0.8
F4 Joint operations
Joint operations are those entities over whose financial and operating policies the Group has joint control, and where the Group has
rights to the assets and obligations for the liabilities of the entity.
The interests of the Group in unincorporated joint operations are brought to account by recognising in its Financial Statements the
assets it controls and the liabilities it incurs, and the revenue and expenses it incurs and share of income it earns from the the sale
of goods or services by the joint operation.
The Group has joint interests in multiple Joint User Hydrant Installations (JUHIs), which are based at airports across Australia. The
Group’s interest in the JUHIs ranges from 20% to 50%. The principal activity of the JUHIs is refuelling aircraft at the airports.
On 1 October 2020, the Group sold its interest in the Sydney JUHI for net proceeds on the sale of $24.8 million with a net gain on
disposal of $21.2 million.
For the year ended 31 December 2020, the contribution of the JUHIs to the operating profit of the Group was nil (2019: nil).
Included in the assets and liabilities of the Group are the Group’s interests in the assets and liabilities employed in the joint
operation.
Millions of dollars
Non-current assets
Plant and equipment
Less: accumulated depreciation
Total non-current assets
Total assets
2020
2019
62.7
(23.3)
39.4
39.4
84.1
(38.1)
46.0
46.0
125
Annual Report 2020
106
AMPOL Limited
Annual Report 2020
F Group structure (continued)
Notes to the Financial Statements
F Group structure continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
F5 Parent entity disclosures
As at and throughout the financial year ended 31 December 2020, the parent entity of the Group was Ampol Limited.
Millions of dollars
Result of the parent entity
Profit for the period
Other comprehensive income/(loss)
Total comprehensive income for the period
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising
Issued capital
Treasury stock
Reserves
Retained earnings
Total equity
2020
2019(i)
201.0
16.5
217.5
29.8
5,668.7
108.4
5,098.3
502.6
(1.6)
(18.8)
88.2
570.4
284.3
(18.6)
265.7
122.2
6,536.0
239.0
6,050.2
502.6
(2.0)
(18.0)
3.2
485.8
(i) Comparative information has been restated to appropriately reflect the actual 2019 balances.
Parent entity guarantees in respect of the debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee with the effect that each company agrees to guarantee all of the
debts (in full) of all companies that are parties to the deed subject to, and in accordance with, the terms set out in the deed.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in note F1.
The bank guarantee and letter of credit arrangements provided by the parent entity are consistent with those held by the Group as
disclosed in note G2.
126
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
F Group structure continued
FOR THE YEAR ENDED 31 DECEMBER 2020
F6 Non-controlling interest disclosures
Presented below is the financial information of the Group relating to Ampol Property Trust. This subsidiary of the Group has a
non-controlling interest (NCI) which is material to the Group. The information below is before the elimination of intercompany
transactions with the exception of the fair value adjustment that the Ampol Property Trust recorded in relation to the investment
properties acquired. This fair value adjustment is not recognised in the Consolidated Group accounts and is therefore not reflected
in the Net assets attributable to NCI shown in the Consolidated Financial Statements.
107
Millions of dollars
NCI percentage
Balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets attributable to unit holders
Net assets attributable to NCI(ii)
Income Statement
Revenue
Expenses
Total comprehensive income for the year
Profit allocated to NCI
Statement of cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash held
Transactions with non-controlling interests
Profit allocated to non-controlling interests(iii)
Distributions paid to non-controlling interests(iv)
2020
Ampol Property
Trust (i)
49%
7.0
522.9
(0.9)
-
529.0
259.2
8.9
(0.2)
8.7
4.3
2.7
(700.9)
698.2
0.0
4.3
(1.2)
(i) On 20 November 2020, the Group sold a 49% interest in the unlisted real estate property trust to a Charter Hall and GIC consortium.
(ii) Net assets to other non-controlling interests was $14.4 million (2019: $13.5 million) with total net assets of all non-controlling interests ($273.6 million).
(iii) Profit allocated to other non-controlling interests was $0.8 million (2019: $1.0 million) with total profit allocated to all non-controlling interests of $5.1 million.
(iv) Dividends paid to other non-controlling interests were nil (2019: $0.6 million).
127
Annual Report 2020
108
AMPOL Limited
Annual Report 2020
G Other information
Notes to the Financial Statements
G Other information
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
This section includes other information to assist in understanding the financial performance and position of the Group, or items to be
disclosed to comply with accounting standards and other pronouncements.
G1 Commitments
Capital expenditure
Millions of dollars
Capital expenditure contracted but not provided for in the
financial report and payable
2020
2019
23.0
7.4
On 25 August 2020, Ampol announced, after successfully applying to a tender with Transport for New South Wales that Ampol had
won the right to lease and redevelop four existing highway service centres located on the M4 Motorway at Eastern Creek and on
the M31 Hume Highway at Pheasants Nest. The estimated redevelopment capital expenditure of ~$100 million is expected to be
contracted and spent across 2021 and 2022.
G2 Contingent liabilities
Discussed below are items where either it is not probable that the Group will have to make future payments or the amounts of the
future payments are not able to be measured.
Legal and other claims
In the ordinary course of business, the Group is involved as a plaintiff or defendant in legal proceedings. Where appropriate, Ampol
takes legal advice. The Group does not consider that the outcome of any current proceedings is likely to have a material effect on
its operations or financial position.
A liability has been recognised for any known losses expected to be incurred where such losses are capable of reliable
measurement.
Bank guarantees
The Group has entered into letters of credit in the normal course of business to support crude and product purchase commitments
and other arrangements entered into with third parties. In addition, the Group has granted indemnities to banks to cover bank
guarantees given on behalf of controlled entities. The probability of having to make a payment under these arrangements is remote.
Deed of Cross Guarantee and class order relief
Details of the Deed of Cross Guarantee are disclosed in note F1.
G3 Related party disclosures
Associates
In 2020, the Group sold petroleum products to associates totalling $712,897,000 (2019: $407,088,000). The Group received income
from associates for rental income of $2,119,000 (2019: $938,000).
Details of associates are set out in note F3. Amounts receivable from associates are set out in note C1. Dividend and disbursement
income from associates is $1,877,000 (2019: $1,815,000).
The Group has interests in associates primarily for the marketing, sale and distribution of fuel products. Details of the Group’s
interests are set out in note F3.
Joint venture and joint operations
The Group has interests in joint arrangements primarily for the marketing, sale and distribution of fuel products and the operation of
convenience stores.
There were no other material related party transactions with the Group’s joint arrangements entities during 2020 (2019: nil). Details
of the Group's interests are set out in notes F3 and F4.
128
Notes to the Financial StatementsAmpol Limited
109
Notes to the Financial Statements
G Other information continued
FOR THE YEAR ENDED 31 DECEMBER 2020
G4 Key Management Personnel
The Key Management Personnel of the Group during 2020 and 2019 were:
Current Directors
Steven Gregg, Chairman and Independent Non-executive Director
Matthew Halliday, Managing Director and Chief Executive Officer
Mark Chellew, Independent Non-executive Director
Melinda Conrad, Independent Non-executive Director
Michael Ihlein, Independent Non-executive Director (from 1 June 2020)
Gary Smith, Independent Non-executive Director (from 1 June 2020)
Barbara Ward AM, Independent Non-executive Director
Penny Winn, Independent Non-executive Director
Former Directors
Bruce Morgan, Independent Non-executive Director (to 13 May 2020)
Senior Executives
Matthew Halliday, Managing Director and Chief Executive Officer (appointed Interim Chief Executive Officer from 2 March 2020
and then formally Managing Director and Chief Executive Officer from 29 June 2020)
Jeffrey Etherington, Interim Chief Financial Officer (from 2 March 2020)
Andrew Brewer, Executive General Manager, Infrastructure (from 1 December 2020)
Brent Merrick, Executive General Manager, Commercial (from 28 September 2020)
Joanne Taylor, Executive General Manager, Retail, Brand and Culture (from 1 April 2019)
Former Senior Executives
Julian Segal, Managing Director and Chief Executive Officer (to 1 March 2020)
Louise Warner, Chief Commercial Officer (to 27 September 2020)
Key Management Personnel compensation
Thousands of dollars
Short-term benefits
Other long-term benefits
Post-employment benefits
Termination benefits
Retention payments
Share-based payments
2020
6,421.2
138.3
268.3
1,311.8
2,655.1
299.9
2019
7,309.3
139.7
342.2
1,103.3
-
2,514.2
Total Key Management Personnel compensation
11,094.6
11,408.7
Information regarding Directors’ and Executives’ compensation and some equity instrument disclosures is provided in the
Remuneration Report section of the Directors' Report.
129
Annual Report 2020
110
AMPOL Limited
Annual Report 2020
G Other information (continued)
Notes to the Financial Statements
G Other information continued
For the year ended 31 December 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
G5 Notes to the cash flow statement
G5.1 Reconciliation of cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank
overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component
of cash and cash equivalents for the purpose of the Consolidated Cash Flow Statement.
For the purposes of the cash flow statement, cash and cash equivalents includes:
Millions of dollars
Cash at bank
Total cash and cash equivalents
G5.2 Reconciliation of net profit to net operating cash flows
Millions of dollars
Net (loss)/profit
Adjustments for:
Loss/(gain) on sale of property, plant and equipment
Impairment of fixed assets
Impairment of intangible assets
Finance charges on leases
Interest paid capitalised
Amortisation of finance costs
Depreciation of property, plant and equipment
Amortisation of intangibles
Treasury stock movements net of expense
Share of associates' and joint ventures' net profit
Movements in assets and liabilities:
Decrease/(increase) in receivables
Decrease/(increase) in inventories
(Increase)/decrease in other assets
(Decrease)/increase in payables
(Decrease)/increase in current tax balances
(Increase)/decrease in deferred tax assets
Increase/(decrease) in provisions
Interest and other finance costs paid
Income taxes paid
Net operating cash inflows
(i) Comparative information has been restated to appropriately reflect the actual 2019 balances.
2020
367.6
367.6
2020
(484.9)
0.2
393.3
20.1
57.2
(0.3)
3.9
394.3
28.0
(1.6)
(10.7)
625.6
775.9
(11.3)
(1,416.0)
(28.1)
(271.9)
350.0
(100.9)
(55.2)
267.6
2019
35.0
35.0
2019(i)
383.8
(44.7)
-
-
58.6
(0.1)
0.3
360.3
27.1
1.5
(4.2)
(295.9)
(493.4)
25.8
968.7
56.6
7.5
(20.7)
(113.1)
(73.8)
844.3
130
Notes to the Financial StatementsAmpol Limited
Notes to the Financial Statements
G Other information continued
FOR THE YEAR ENDED 31 DECEMBER 2020
G6 Auditor remuneration
Thousands of dollars
Audit and review services
Auditors of the Group - KPMG
Audit and review of financial statements – Group
Audit and review of financial statements – controlled entities
Assurance services
Auditors of the Group – KPMG
Regulatory assurance services
Other assurance services
Other services
Auditors of the Group – KPMG
Taxation advice and tax compliance services
Other services(i)
111
2020
2019
1,492.9
173.9
1,666.8
1,573.2
175.5
1,748.7
31.5
10.1
41.6
14.5
559.5
574.0
19.6
112.5
132.1
52.5
28.4
80.9
(i) Other services include transaction services in respect of Ampol’s disposal of a 49% interest in certain freehold convenience retail sites and remuneration
benchmarking services.
G7 Net tangible assets per share
Millions of dollars
Net tangible assets per share
2020
11.77
2019(i)
10.73
(i) Restated due to change in accounting policy. Refer to note A4 for further information.
Net tangible assets are net assets attributable to members of Ampol less intangible assets. The number of ordinary shares used in
the calculation of net tangible assets per share was 249.7 million (2019: 249.7 million).
G8 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after
1 January 2021 and have not been applied in preparing these Consolidated Financial Statements. None of these are expected to
have a significant effect on the Consolidated Financial Statements of the Group.
G9 Events subsequent to the end of the year
On 22 January 2021, the Group completed an Off-market Buy-back of 11,404,848 shares at a price of $26.34 per share which
included a capital component of $2.01 per share. The total amount paid for the buy back was $300.4 million and the impact of this
transaction on the issued share capital of the Company was to reduce it by $22.9 million with the remainder from retained earnings.
The number of issued shares post the buy back is 238.3 million.
On 22 February 2021, the Directors declared a fully franked final dividend. Refer to note B5 for further information.
At the date of issue of this report, the future impact of COVID-19 on global and domestic economies and the impact on the Group
remains uncertain. The Group continues to actively monitor this situation.
There were no other items, transactions or events of a material or unusual nature that, in the opinion of the Board, are likely to
significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group that have arisen in
the period from 31 December 2020 to the date of this report.
131
Annual Report 2020
Shareholder Information
As at 28 February 2021
Share capital
There are 238,302,099 fully paid ordinary shares on issue, held by 30,611 holders.
Holders with less than a marketable parcel
676 shareholders hold less than a marketable parcel of $500 based on a share price of $24.58 per share.
Shares purchased on-market
From 1 January 2020, 23,530 fully paid ordinary shares were purchased on-market at an average cost of $27.41 per share for
the purpose of the Ampol Limited Employee Share Plan.
From 1 January 2020, 19,079 fully paid ordinary shares were purchased on-market at an average cost of $20.27 per share for
the purpose of the Ampol Limited Equity Incentive Plan.
Number of
shares held
% of issued
capital
27,279,003
16,280,145
15,379,030
14,262,760
12,609,754
11.45
6.83
6.45
5.99
5.29
Total holders
Units
% of issued
capital
24,300
5,579
485
220
27
8,955,399
11,836,834
3,482,988
5,091,960
208,934,918
30,611
238,302,099
3.76
4.97
1.46
2.14
87.68
100.00
Substantial shareholders
Substantial shareholder
Australian Retirement Fund
BlackRock Inc
State Street Corporation
The Vanguard Group, Inc
Arlie Funds Mgt
Shareholder distribution
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
Over 100,001
Total
132
Ampol Limited Top 20 shareholders
Details of the 20 largest shareholders of Ampol Limited are listed in the table below.
Rank Shareholders
Number of
shares held
% of issued
shares
1
2
3
4
5
6
7
8
9
10
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
MUTUAL TRUST PTY LTD
MILTON CORPORATION LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AMP LIFE LIMITED
SUNSET POWER PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
BNP PARIBAS NOMINEES PTY LTD
UBS NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
11
12
13
14
15
16
17
18
19
20
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total remaining holders balance
Voting rights
79,135,389
71,596,786
23,770,302
11,321,143
5,889,689
5,170,169
5,120,419
1,624,074
656,813
635,038
469,701
412,329
394,000
363,204
317,154
262,150
254,707
230,355
194,114
187,820
208,005,356
30,296,743
33.21
30.05
9.96
4.75
2.47
2.17
2.15
0.68
0.28
0.27
0.20
0.17
0.17
0.15
0.13
0.11
0.11
0.10
0.08
0.08
87.29
12.71
Shareholders in Ampol Limited have a right to attend and vote at all general meetings in accordance with the company’s
Constitution, the Corporations Act 2001 (Cth) and the ASX Listing Rules.
Corporate Governance Statement
A copy of the Corporate Governance Statement can be found on our website. Visit: www.ampol.com.au
Australian Securities Exchange
The company’s fully paid ordinary shares (ASX:ALD) are listed on the Australian Securities Exchange.
Company secretaries
Michael Abbott is appointed as Company Secretary of Ampol Limited.
Annual Report 2020
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Directory
Share registry Boardroom
Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
GPO Box 3993
Sydney NSW 2001
T: 1300 737 760
(within Australia)
T: +61 2 9290 9600
(outside Australia)
F: +61 2 9279 0664
www.boardroomlimited.com.au
ampol@boardroomlimited.com.au
Queensland/Northern Territory
New South Wales
Ampol Refineries (Qld) Pty Ltd
Ampol Banksmeadow terminal
ACN 008 425 581
South Street
Lytton QLD 4178
Australia
T: +61 7 3362 7555
F: +61 7 3362 7111
Ampol Lytton terminal
Tanker Street, off Port Drive
Lytton QLD 4178
Australia
T: +61 7 3877 7333
F: +61 7 3877 7464
Penrhyn Road
Banksmeadow NSW 2019
Australia
T: +61 2 9695 3600
F: +61 2 9666 5737
Ampol Kurnell import terminal
2 Solander Street
Kurnell NSW 2231
Australia
T: +61 2 8543 8622
Victoria/Tasmania
Western Australia
Ampol Newport terminal
411 Douglas Parade
Newport VIC 3015
Australia
T: +61 3 9287 9555
F: +61 3 9287 9572
Level 1
2 Sabre Crescent
Jandakot WA 6164
Australia
T: +61 8 6595 2888
F: +61 8 9335 3062
Singapore
New Zealand
Ampol Singapore
Unit #31-63, Tower 2
1 Raffles Place
Singapore 048616
T: +65 6622 0010
Gull New Zealand
507 Lake Rd
Takapuna, Auckland 0622
New Zealand
T: +64 9 489 1452
www.ampol.com.au