Foundations
for the future
2021 Annual Report
Foundations for the future
Ampol is Australia’s leading
transport energy distributor
and retailer.
Our privileged infrastructure, international
footprint, supply chain expertise, deep
customer relationships, iconic brand and 8,300
passionate people underpin Ampol’s position
as Australia’s leading supplier of mobile energy
and provide the foundations to transform our
business as energy markets evolve.
While facing the re-emergence of COVID-19,
in 2021 Ampol demonstrated the resilience and
momentum required to deliver for our customers
and our economy today. This was shown through
the resilience of our valued employees, our
strong operational and financial performance,
our commitment to ongoing refining operations
at Lytton, and the continued growth of our
International business.
These base operations will play a critical role
in delivering the financial strength required to
invest in our evolving energy business.
In 2021, Ampol released its Future Energy
and Decarbonisation strategies, including an
ambition to achieve net zero emissions across
our operations by 2040. We also established
a strategic framework for how we will evolve
our business to support the changing needs of
customers through new solutions in electricity,
hydrogen, biofuels and carbon mitigation.
The unique Ampol brand remains one of the
leading fuel brands in market with 880 sites
rebranded at the end of 2021. This brand is
supported by our commitment to making a
difference in local communities, including through
our major partnerships with The Smith Family
and Surf Life Saving Australia. The refresh of
sites across our retail, reseller and distributor
networks further embeds the positive role that
we can play.
With an established management team,
fresh momentum, and a new head office in
Sydney, we will continue to balance today’s
business with investment for tomorrow, keeping
customers at the heart of everything we do.
We are Powering better journeys both today
and into the future.
About this report
This 2021 Annual Report for Ampol Limited (ACN 004 201 307)
has been prepared as at 21 February 2022. 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
Contents
02 2021 Highlights
04 Message from the Chairman and
the Managing Director & CEO
08 Future Energy and
Decarbonisation Strategies
10 Our Operations
12
Fuels and Infrastructure
16
Convenience Retail
20 Sustainability
24 Financial Report
1
2021 Highlights
We achieved strong financial and operational performance in
2021, continued to deliver on commitments to shareholders,
progressed growth strategies, continued our rebrand and put
the foundations in place to transform as energy markets evolve.
Convenience Retail
Group performance
Fuels and Infrastructure
See page 12
See page 16
Convenience Retail non-fuel
EBIT uplift
$52.6m
delivered to date1
On track to achieve
$85m EBIT uplift by 2024
Fuels and Infrastructure
RCOP EBIT
$417.6m
170% on 2020
20
new Ampol Woolworths
Metro sites added, with
26 sites now in operation
Significantly improved
performance in Fuels and
Infrastructure underpinned
by international growth and
an improving refiner margin
Lytton EBIT uplift of
~$300m
Completed
refinery review
with decision to continue
operating until at least 2027
1,881 sites in branded and
AmpolCard‑accepting network,
largest in Australia
Future
Energy and
Decarbonisation
strategies
launched
Retail network transforming
under Ampol as rebrand
delivered ahead of schedule
154.4
21
20
880
sites rebranded
to Ampol at
end 20212
RCOP EBITDA
$1.003b
Operating
cash flow
billion litres
22.04
57% on 2020
RCOP EBIT
$631.2m
$634.6m
when compared with the $144.8m
loss in 2020
Significant growth in
International volumes
38% on 2020
Record total sales volumes
Ampol Limited
Annual Report 2021
2
Delivering for shareholders
Operating sustainably
See page 6
See page 20
Franking credits
released
Dividend
$196m 93cps
total dividend
(fully franked)
expected net proceeds
from sale of 49% minority
interest in 20 freehold
Convenience Retail sites
$48m
subordinated
notes issued
Forms part of
Ampol’s ongoing
capital management
strategy
A$500m
We remain focused on capital returns
and delivering on promises to shareholders
We are committed to operating sustainably
and supporting our people and customers
Proposed
Z Energy
acquisition
announced
Successful completion will
create a Trans‑Tasman
transport fuels leader
Safety TRIFR
Fuels and Infrastructure
Convenience Retail
21
20
19
4.6
1.9
10.7
21
20
19
10.1
4.6
14.0
59%
improvement
54%
improvement
invested in community
programs through the
Ampol Foundation3
estimated reduction
in Scope 2 emissions
across our retail network as
a result of the establishment
of a renewable energy
procurement contract in WA
$3.17m
12%
C02-e operational emissions (million tonnes)
1. Cumulative EBIT uplift achieved
during 2020 and 2021.
2. Total rebranded sites includes
company-controlled sites, distributor
and Retail Owned Retail Operated
(RORO) sites, depots and terminals.
3. Total community investment includes
cash donations, funds raised from
customers in our retail network,
in-kind support (including provision
of fuel products), employee
contributions, volunteering hours and
management fees.
Terminals, lubricants and others
Convenience Retail
Lytton Refinery
(excluding lubricants)
0.0982
0.0271,2
0.6431,2
1
Scope 1
2
Scope 2
3
2021 Highlights
Message from the Chairman and the Managing Director & CEO
Dear shareholders,
2021 was a successful and
transformational year for Ampol.
Despite the ongoing uncertainty created by
COVID-19, the company delivered strong financial
and operational performance, including ongoing
improvements in safety outcomes.
We also made further progress
executing our established growth
strategies, continued our exciting Ampol
rebrand and put the foundations in
place to transform our business as
energy markets evolve.
There were many highlights from the
past 12 months. We achieved record
total sales volumes of 22.04 billion litres,
delivered significant growth in volumes
and earnings in our International
business and opened 20 new Ampol
Woolworths Metro sites as we
continued to execute our Convenience
Retail growth strategy.
We also remained focused on cost and
capital discipline and on delivering on
our commitments to shareholders. Our
$300 million Off-market Buy-back was
completed in January 2021, we made
strong progress on ongoing cost-out
initiatives, and we maximised value
from the decision to continue refining
operations at Lytton, supporting
the dual objectives of fuel security
and energy transition in partnership
with government.
The release of our Future Energy and
Decarbonisation strategies put the
foundations in place to evolve our
business for the future. We have a
pathway to achieve our ambition of
net zero emissions from operations
(Scope 1 and 2) by 2040 and are taking
steps to build new energy solutions
for customers.
Later in the year, we announced
a binding agreement to acquire
Z Energy in New Zealand, subject to
shareholder and regulatory approvals.
This demonstrated significant progress
towards our strategic objective of
regional market leadership.
Strong and resilient
financial performance
Ampol delivered strong financial
performance in 2021 with our highest
replacement cost of sales (RCOP)
earnings before interest and tax (EBIT)
result since 2018. Our RCOP EBIT result
was $631.2 million, up 57% on 2020.
Our record total sales volume of
22.04 billion litres represents a significant
achievement given ongoing uncertainty
in global markets and interruptions
caused by COVID-19. Significant growth
in international sales volumes more than
offset the impact that COVID-19 and
competitor supply chain decisions had on
Australian sales volumes. International
volumes were up 38% on 2020 and
RCOP EBIT for Fuels and Infrastructure
International increased 31% to a record
$110.9 million, demonstrating the strong
progress we have made on our strategy
to diversify and grow internationally.
Elsewhere in Fuels and Infrastructure,
safe and reliable operations at the Lytton
refinery drove increased production in an
improving refiner margin environment,
with our Lytton team delivering an RCOP
EBIT of $158.7 million and total volumes
of 6.14 billion litres. We also completed our
refinery review and made the decision to
continue operating in partnership with
government. Ampol was pleased that this
outcome delivers value for shareholders
and supports the government’s priorities
in energy security, while providing a path
forward for our valued employees at
Lytton and preserving manufacturing
skills that will be critical for success in
the energy transition.
The resumption of production at Lytton
displaced additional imported volumes
required in 2020 during the extended
turnaround and inspection (T&I). This was
the main contributor to the reduction
in Fuels and Infrastructure Australia’s
(ex-Lytton) RCOP EBIT to $110.2 million
in 2021.
In Convenience Retail, RCOP EBIT
declined to $253.7 million and total
volumes fell by 4.9%, with COVID-19
impacts affecting most of the second
half and offsetting positive trends
in first half fuel volumes, shop sales
and earnings. Rapidly rising crude
and product prices also put pressure
on fuel margins – particularly diesel
margins that take longer to respond –
but showed improvement towards the
end of the year. Despite this, we have
delivered a cumulative $52.6 million
of our non-fuel earnings uplift target
to date (FY2020 and FY2021), and
are on track to achieving our target of
$85 million in earnings uplift by 2024.
We also continued our focus on reducing
labour costs, waste and shrinkage.
Safety performance
continues to improve
The safety of our people and our
customers remains a priority and in 2021
we delivered strong improvement in our
safety performance. This was particularly
pleasing given the impacts and disruption
caused by COVID-19, and we are proud of
the way our people responded to these
challenges and maintained operational
excellence throughout the year.
Across the year, we delivered a
considerable reduction in recordable
injuries and in injuries requiring time
away from work. This improvement was
the result of our ongoing focus on safety
leadership and culture, and our efforts
to deliver targeted programs to improve
safety practices and procedures.
In Fuels and Infrastructure, we delivered
a 59% reduction in our Total Recordable
Injury Frequency Rate (TRIFR) and a
27% reduction in our Days Away from
Work Injury Frequency Rate (DAFWIFR).
We also delivered our annual T&I at
the Lytton refinery incident-free. In
Convenience Retail, TRIFR reduced by
54% and DAFWIFR by 50%.
Group RCOP EBIT
$631.2m
57% on 2020
401.2
21
20
Ampol Limited
Annual Report 2021
4
Senior appointments and
building organisational
culture
In 2021, we also made several important
appointments to the Ampol Board and
leadership team and continued our work
to build the right workplace culture to
support the success of our business.
In September, Elizabeth (Betsy)
Donaghey was appointed to the Ampol
Board as an Independent Non-executive
Director. Betsy brings significant
experience in the energy and oil and gas
sectors to Ampol and has already made
a strong contribution to the execution
of our strategy.
This appointment followed the
retirement of Barbara Ward as a
Non‑executive Director of Ampol after
six years on the Board. Barbara made a
valuable contribution to Ampol over this
time, including as Chair of the Human
Resources Committee and as a member
of the Audit Committee. We thank her
and wish her all the best for the future.
We also appointed Greg Barnes
as Group Chief Financial Officer in
July and in November welcomed
Meaghan Davis as Executive General
Manager, People and Culture. These
two appointments further bolster our
experienced leadership team and we are
confident we have the skills in place to
successfully execute our strategy.
Across our business, we continued to
implement programs to further build
a culture of high performance and to
remove barriers to more courageous
thinking in how we make decisions.
A key milestone late in 2021 was the
opening of our new Sydney head
office in Alexandria, a modern and
purpose‑built space which will support
our teams to work more closely and
collaboratively. We also delivered our
annual engagement survey, which
showed a pleasing improvement in
employee engagement. Engagement
levels rose 9 points to 72%, showing we
are on the right track to building the
culture required to support the delivery
of our strategy.
an important role in supporting fuel
security in New Zealand.
Ampol’s established trading and
shipping capabilities, regional supply
chain and broader fuels infrastructure in
Australia would strengthen fuel security
as the Marsden Point oil refinery
transitions and the country moves to a
fuel import market.
A combined entity would also create a
new and larger platform to accelerate
the energy transition from a position of
strength, building on the existing work
of both organisations in Australia and
New Zealand.
The transaction is still subject to
shareholder and regulatory approvals,
and we look forward to working
together with the Z Energy team in
2022 to deliver on the timetable for
completion.
In October 2021, we were excited
to announce the execution
of a scheme implementation
agreement to acquire Z Energy in
New Zealand. Z Energy is a logical
growth opportunity for Ampol, and
a natural fit with our established
international growth strategy.
Ampol and Z Energy have similar
operating models, underpinned by
market-leading infrastructure, deep
customer bases and knowledge of
local supply chains.
A combined entity would create a
Trans-Tasman leader in transport
fuels and convenience retail, with
significant additional scale.
The main opportunity for Ampol is
to leverage our knowledge of the
transition to a fuel import market
through our established trading
and shipping capabilities and we
believe this capability can also play
Growing our international platform with the
proposed Z Energy acquisition
CASE STUDY
Chairman, Steven Gregg, with Managing Director and CEO, Matt Halliday
5
Message from the Chairman and the Managing Director & CEO
Delivering on our promises
and maintaining a strong
balance sheet
We have again made excellent progress
delivering on our commitments to
shareholders. Over the past 12 months,
Ampol has delivered $479 million in
capital returns and released $196 million
in franking credits, as well as a fully
franked total dividend of 93 cents
per share.
Our balance sheet remains strong,
which has enabled Ampol to weather
market interruptions and lockdowns,
to operate safely and to progress the
implementation of our strategy.
Several capital initiatives were
completed in 2021. In December, we
successfully raised A$500 million
from an issue of subordinated notes
to wholesale investors in the domestic
fixed income market. We also
announced the sale of a further 20 core
freehold Convenience Retail sites to an
unlisted trust in which Ampol maintains
a controlling interest, expecting to
release $48 million in net proceeds.
Both of these initiatives ensure our
balance sheet is positioned well to
support our operational priorities
and growth strategies.
Ampol rebrand gathers
momentum
Our exciting Ampol rebrand continues to
gather positive momentum. 880 sites
across our network had been rebranded
at the end of 2021 and customer
feedback demonstrates that the
iconic Australian brand is resonating
strongly across our branded network.
The rebranded sites have outperformed
control sites on all key performance
indicators, including measures of total
transactions as well as volume measures
including total fuel, premium petrol and
AmpolCard. We have also delivered
ongoing improvement in prompted and
unprompted customer awareness of the
Ampol brand among all demographic
segments.
Across the year, we continued to
introduce our new brand and purpose to
customers and partners. Our ‘far and
wide’ multichannel brand campaign
launched nationally in April to showcase
how our business connects and is a
part of the fabric of Australian life.
This campaign was supported by our
major partnerships, including with the
National Rugby League as the naming
rights sponsor of the Ampol State of
Origin and with Red Bull Ampol Racing.
We also continued to build on our work
in local communities through the Ampol
Foundation, with a total contribution
to community programs of $3.17 million
across the year. Increased employee
volunteering, and the delivery of major
fundraising campaigns for The Smith
Family and Surf Life Saving Australia,
were two milestones throughout
the year.
Message from the Chairman and the Managing Director & CEO continued
We have rebranded 880 sites across our entire
network since we announced the brand transition
Foundations for
future energy
In 2021, we released our Future Energy
and Decarbonisation strategies,
including our ambition to achieve net
zero emissions operations (Scope 1
and 2) by 2040 and to invest more than
$100 million in future energy projects
by 2025.
Ampol is uniquely positioned to play
a key role in the energy transition.
Our integrated supply chain capabilities
and privileged assets, Australian brand,
customer relationships and industry
knowledge, when combined with our
financial strength, set us apart from
our competitors and will put us at
the forefront of building new energy
solutions to support change across
the Australian economy. The flexibility
to repurpose our market-leading
infrastructure and distribution networks
for multiple uses will support the most
efficient pathway for our customers’
decarbonisation ambitions and
underpins our competitive advantage to
participate in new energy opportunities.
Our decarbonisation efforts and new
initiatives to extend our customer
value proposition will be executed with
capital discipline to deliver sustainable
returns for shareholders over the
long term. As technology and policy
continues to evolve, we expect the
most commercially viable alternative
fuel solutions to include a combination
of electricity, hydrogen, biofuels and
carbon offsets. We will focus our
efforts on developing our customer
value proposition in these key areas and
seek to position Ampol as a partner of
choice for industry, government and
our communities.
To begin the execution of this strategy,
in 2021 we announced a funding
agreement with the Australian
Renewable Energy Agency (ARENA)
to commence the development
of a national electric vehicle (EV)
fast-charging network of over 200 bays
across more than 100 sites, finalised
a partnership with Endua to support the
delivery of a green hydrogen‑powered
off-grid clean energy solution, and
launched a carbon neutral fuel pilot
program for our business customers.
We also commissioned our three‑site
virtual power plant (VPP) pilot in
Adelaide, which includes on-site solar
panels and Tesla Powerwall batteries.
This has the potential to reduce Scope 2
emissions from retail operations and,
over the longer term, generate new
revenue streams.
“We have partnered
with Endua to support
the delivery of a green
hydrogen‑powered off-grid
clean energy solution.”
Paul Sernia, Endua CEO, with Matt Halliday,
Ampol Managing Director and CEO
Ampol Limited
Annual Report 2021
6
Looking ahead
While there remains
uncertainty over the timing
of the ongoing economic
recovery, in 2022 we will
focus on strong operational
performance and continue
to execute our strategy to
improve returns and deliver
growth for shareholders.
This will include the expansion of
our international operations toward
regional market leadership, which
will be shaped by the completion
of the transaction to acquire
Z Energy, which is targeted in the
first half subject to shareholder and
regulatory approvals. We will also
continue to execute our Convenience
Retail growth strategy, and further
strengthen our position as a proud
and independent Australian company
through the Ampol rebrand.
Finally, we will continue to progress
our work to decarbonise our
operations and support the energy
transition. Ampol has always been
about ensuring Australians can get
where they need to go – to move
around, to do business, to transport
goods from one place to another,
to stay connected. That will remain
central to our purpose as we move
forward and will underpin the
development of new energy solutions
for customers.
On behalf of the Board and leadership
team, we would like to thank our
employees for their resilience and
performance in a tough environment
over the past year. Our financial and
operational results reflect the skill,
commitment, and passion that our
team shows each day to operate
safely and deliver for customers.
We also thank our business partners,
suppliers and contractors that have
worked with us to deliver safely and
reliably for our customers.
We would also like to thank Ampol
shareholders for their continued
support. We look forward to another
successful year in 2022 as we continue
to build on the proud legacy of this
great Australian company.
Steven Gregg
Chairman
Matt Halliday
Managing Director and CEO
7
Message from the Chairman and the Managing Director & CEO
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Our Ambition
Net zero operations
on an absolute basis
(Scope 1 and 2) by 2040
Develop products to assist
our customers in achieving
their decarbonisation
objectives
More active advocacy
for policies that
support an orderly
transition to a
net zero economy
Help our customers and
supply chain partners
reduce emissions associated
with the sourcing, distribution
and use of our products
Reduce our carbon emissions
associated with operations targeting net
zero emissions on an absolute basis
(Scope 1 and 2) by 2040
Develop new products
and solutions
including biofuels and
carbon offset offerings to
help customers decarbonise
Create hydrogen
mobility solutions
while utilising our
assets for production
and energy storage
Move into the electricity market
to meet the evolving needs
of our mobility customers
Future Energy and Decarbonisation Strategies
Ampol is committed to reducing its carbon
footprint across the value chain and
supporting the energy transition.
Our financial strength, integrated end-to-end supply chain, including manufacturing and distribution capabilities, as well as our
iconic Australian brand, customer relationships, industry knowledge and market-leading position in the transport energy sector
will enable us to build energy solutions that can support the transition and broader change across the Australian economy.
Future Energy and Decarbonisation Strategies
Future energy highlights
Decarbonisation highlights
$100m in future energy projects by 2025
Commitment to invest a minimum of
By 2040 net zero emissions
from operations (Scope 1 & 2) with interim 2025
and 2030 targets in place
Carbon neutral
fuel pilot program
launched to business
customers
Development of
a green hydrogen
production pilot
at Lytton underway
Virtual power
plant pilot
commissioned in South
Australia, working with
Tesla and Enerven
Ampol is a founding
member of the Climate
Leaders Coalition
supporting development of
the 2030 Decarbonisation
Roadmap
12% estimated reduction
in Scope 2 emissions
across our retail network as
a result of the establishment
of a renewable energy
procurement contract in WA
Partnership with
ARENA announced
to begin roll-out of
national EV fast
charging network to
over 100 sites
Partnership
with CSIRO and
Main Sequence
established to launch
clean energy storage
start‑up, Endua
Inaugural sustainability-
linked loan
linked to our public
decarbonisation and
investment commitments
to 2025
Ampol Limited
Annual Report 2021
8
In 2021, we set the foundations for
our business to reduce emissions and
transform along with the energy needs
of our customers.
We launched our Future Energy Strategy,
which sets out steps we are taking to
extend our customer value proposition
and target new opportunities in
electricity, hydrogen, biofuels and carbon.
This Strategy will enable and accelerate
the transition for our customers as their
energy needs evolve.
Building our future energy team,
including increasing capability and
upskilling employees, was also a focus
in 2021. By the end of 2021, 42 new
roles had been created, with 48% of
these roles being fulfilled by existing
employees. Reskilling our current
employee base will continue to be a
focus over the coming years as we
evolve our assets.
Through our Decarbonisation Strategy,
we have set an ambition to reach net
zero emissions on an absolute basis
across our operations (Scope 1 and 2)
by 2040, with operational emissions
reduction targets set for 2025 and 2030,
consistent with meeting this objective.
Our strengths enable us
to successfully participate
in emerging future energy
markets
We believe that our strengths enable
us to successfully participate in
opportunities arising from the energy
transition. The combination of our
existing assets and infrastructure,
capabilities and brand will be key in
supporting the transition and allow us to
create new customer value propositions
aligned with their decarbonisation goals.
Our key strengths and
opportunities include:
– strong existing relationships with
mobility customers, embedded across
both consumer and business channels,
provide a natural starting point to
move into the electricity market to
serve their future energy needs;
– privileged existing industrial land
and assets (including Kurnell and
Lytton) which can be repurposed
for manufacturing, storage and
distribution of new energy solutions;
– drop-in and transitional solutions to
existing supply chains, such as biofuels;
– evolving our retail network, Australia’s
largest, as customer needs change;
– working with our significant business
customer platform to develop and
build new solutions; and
– a commodity risk management
capability and mindset.
We are already leveraging these
strengths to create new solutions for our
customers. Examples include the launch
of our carbon neutral fuel pilot program
with our business customers, which
provides an interim solution for customers
who are wanting to take immediate
climate action and offset emissions
associated with their consumption of
fuel, while helping to support important
environment and community projects
in Australia and overseas. We’ve also
taken steps in 2021 to evolve our
infrastructure positions through a green
hydrogen production plant pilot at
Lytton, and the evolution of our retail
network through the establishment of
a VPP pilot in South Australia and the
announcement of an EV fast-charging
station roll‑out nationally.
We are building partnerships
to support entry into new
markets
Ampol is working with a range of
partners to collaborate on solutions
across electricity and hydrogen.
This includes supporting the launch and
development of a new Australian clean
energy storage start-up, Endua, on the
delivery of a hydrogen-powered energy
storage solution that is sustainable,
reliable and affordable to key industries
across Australia. Endua is also supported
by CSIRO and Main Sequence, and we are
working closely with them and the Endua
team to support commercialisation of
this new technology.
Ampol has also installed Tesla Powerwall
batteries and solar systems at three
of our retail sites to form a VPP pilot.
This project is expected to provide
energy savings and reductions in Scope
2 emissions, as well as generating new
revenue streams for Ampol over the
longer term.
In July, we entered a funding agreement
with ARENA to commence the delivery
of a fast-charging network to support
the uptake of battery EVs in Australia.
As part of this agreement, we will deliver
EV fast charging to more than 200 bays
at over 100 retail sites across the country.
As part of our objective to utilise our
privileged infrastructure positions to
participate in the emerging hydrogen
industry, Ampol also entered an
agreement with Fusion Fuel Green to
pilot a green hydrogen production plant
at our Lytton refinery.
Decarbonising our operations
We have identified five decarbonisation
goals to guide our approach to reducing
our emissions, together with actions
through to 2025 to enable our efforts
and improve our emissions performance
over time.
Our goals are:
1. to reduce carbon emissions associated
with our operations targeting net
zero emissions on an absolute basis
(Scope 1 and 2) by 2040;
2. to help our customers reduce
emissions from their use of
energy products;
3. to increase our investment in lower
carbon energy over time;
4. to collaborate with our supply
chain partners to reduce emissions
associated with our industry; and
5. to advocate more actively for policies
that support a net zero economy.
Since announcing these goals in
May 2021 and putting in place
decarbonisation plans for both our
Convenience Retail and Fuels and
Infrastructure businesses, we have
taken tangible steps to decarbonise our
operations.
Key achievements included the
establishment of a sustainability-linked
loan, establishment of a two-year
renewable energy procurement contract
in WA supplying 100% renewable
energy to all of our retail sites, and
the commencement of our VPP trial
in South Australia. To support these
activities, we are establishing a
governance group, chaired by our Group
Chief Financial Officer, to oversee
group-wide decarbonisation activities.
We have also become founding
members of the Australian Climate
Leaders Coalition, advocating for a
net zero emissions economy by 2050.
9
Future Energy and Decarbonisation Strategies
We operate a portfolio of highly
strategic assets, including privileged
infrastructure located across key
demand centres, and have the
leading branded retail network
with 1,881 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.
In 2021, our trading and shipping
business sourced from 20 countries
across the globe.
This position and expertise enables 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 business
customers, a retail network that serves
approximately three million customers
each week and our market-leading
card offer with AmpolCard.
The flexibility and strength of our
positions highlight the significant
transformational opportunity the
energy transition presents for Ampol,
and our ability to participate in
emerging markets.
Houston
Houston Trading and
Shipping office, which
commenced trading in
October 2020
Retail network
Fuels and
Infrastructure
(Australia)
Gull network
(New Zealand)
Seaoil network
(Philippines)
Our Operations
Ampol is Australia’s market-leading transport
energy business, underpinned by strategic
infrastructure and customer positions.
Philippines
Strategic partnership
designed to augment
international growth
20% owned since 2018
New Zealand
Owner of Gull, New
Zealand’s leading
independent fuel brand
100% owned since 2017
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
Philippines
Strategic partnership
designed to augment
international growth
20% owned since 2018
New Zealand
Owner of Gull,
New Zealand’s leading
independent fuel brand
100% owned since 2017
Ampol Limited
Annual Report 2021
10
Principal activities
Through new formats, products, technology and services,
we are redefining what convenience means for Australians.
Our national network of 684 company-controlled sites delivers
customers a premium fuel and card offer through Amplify
and AmpolCard, with a growing convenience offer that is
disrupting the Australian market.
Over recent years, we have evolved our convenience offer to
meet the changing needs of customers and to capture the
growing convenience 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.
With capability and scale across the transport energy supply
chain, we are one of the leading operators in Australia and an
emerging player in the Asian and United States regions.
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 six years from
a single market supply function to a long-term growth
engine that has delivered increased volumes, capabilities
and geographies.
Convenience Retail
Fuels and Infrastructure
Our Convenience Retail business directly
operates a network of 684 sites to deliver
fuel, lubricants and a range of convenience
and essential products to approximately
three million customers every week.
Our Fuels and Infrastructure business
sources, imports, refines and
distributes fuels and lubricants
to a diverse customer base.
~80,000
B2B customers
~3 million
weekly customers at our
company-controlled network
684
company-controlled
retail sites
See page 12
See page 16
22.04BL
total sales
volumes in 2021
1,881
sites in branded and AmpolCard-accepting
network, largest in Australia
11
Our Operations
Fuels and Infrastructure
Our privileged assets, deep customer base, expansion
into international markets and the capabilities of our people
in managing complex supply chains underpins the success
of our Fuels and Infrastructure business.
22.04BL
record total sales,
a 9.7% increase on 2020
38%
In 2021, Fuels and Infrastructure delivered significantly
improved earnings, with growth supported by increased
Lytton earnings and execution of our strategy to
diversify and grow our international business. While
Australian volumes were impacted by COVID-19
and competitor supply chain decisions, growth in
international volumes led to record total sales in 2021.
Milestones included the first full year
of trading at our Houston office,
our announcement to continue
operating at Lytton and the proposed
Z Energy acquisition.
Financial performance
Fuels and Infrastructure delivered
an RCOP EBIT of $417.6 million, an
increase of 170% on the prior year,
with performance underpinned by
strong operating performance at
Lytton and earnings growth in our
international business.
During the year, safe and reliable
operations at the Lytton refinery drove
increased production in an improving
refiner margin environment. It delivered
an RCOP EBIT of $158.7 million, which
includes the benefit of $40 million
from the Federal Government’s
once‑off Temporary Refining
Production Payment to support
Lytton’s continued operations.
This compares with the loss of
$144.8 million incurred during 2020
when the refinery was shut down for
the extended T&I due to the impact
of COVID-19.
The resumption of production at
Lytton displaced additional imported
volumes required in 2020 during the
extended T&I. This was the main
contributor to the reduction in RCOP
EBIT to $110.2 million for Fuels and
Infrastructure Australia (ex-Lytton).
Overall, earnings from Fuels and
Infrastructure’s Australian operations
(including Lytton) increased by
approximately $230 million when
compared with 2020.
Pleasingly, the successful execution
of the strategy to diversify and grow
international earnings saw the Fuels
and Infrastructure International RCOP
EBIT grow to $110.9 million, up 31% on
the prior year. International volumes
also grew by 38% to 8.99 billion litres.
In May 2021, Ampol announced it
would maintain refining operations
at Lytton. The announcement
followed a formal review process
announced in October 2020, after
challenging conditions in 2020 led to
a loss of $144.8 million for the year.
Ampol engaged with the Federal
Government and Queensland
Government throughout the review,
with the decision delivering value for
shareholders and a path forward
for Ampol’s valued employees at
the refinery. The decision supports
the continued employment of
550 Australian manufacturing jobs
and the indirect employment of
hundreds more.
Lytton refinery to
continue supporting
550 manufacturing
jobs and enable the
energy transition
CASE STUDY
Decision to
continue
operating
at Lytton
Proposed Z Energy
acquisition
announced
increase in
international
volumes on 2020
1.9
down from
4.6 in 2020
TRIFR
Ampol Limited
Annual Report 2021
12
Matt Halliday, Managing Director and
CEO, said: “Through our constructive
engagement during the review, Ampol
and the Federal Government agreed on
a package of support initiatives that
will underpin the viability of the Lytton
refinery over the medium term and
enable the continued employment of
approximately 550 people in Australian
manufacturing jobs and the indirect
employment of hundreds more.
“The Queensland Government is also
committed to working with Ampol to
support ongoing refining operations,
deliver a transition to the production
of ‘future fuels’, and sustainable
growth–orientated industrial uses
at Lytton.
“We are pleased that the governments
have recognised the challenges faced
by the local refining industry, which
includes competition from large-scale
international refineries and the impacts
of COVID-19. Under the government
support initiatives, we expect Lytton
to generate an appropriate return on
capital through the cycle that will allow
for continued investment to deliver
both cost-competitive and ultra‑low
sulfur fuels, while also investing in future
energy initiatives at the site.”
“Ampol is an Australian
company with a long and
proud history and has been
refining at Lytton since
1965, and we look forward
to evolving the site as we
move forward.”
13
Fuels and Infrastructure
Fuels and Infrastructure continued
International growth
continues as we expand into
new markets and geographies
Our International strategy is
underpinned by our ambition to
accelerate expansion into international
markets by growing earnings, improving
our capability and agility to scale quickly
into new geographies, applying learnings
to unlock further potential in Australia
and enabling the energy transition.
We continued to focus on executing
this strategy in 2021, with a significant
RCOP EBIT uplift of 31% delivered in
Fuels and Infrastructure International
compared with 2020.
The International business is supported
by our trading and shipping operations,
which allows us to source petroleum
products from global markets into
Australia and overseas, manage price
volatility and expand our customer base
internationally. In 2021, we expanded
our customer base across the Pacific,
supplying 16 countries over the course
of the year.
2021 also represented the first full
year of operating in the United States,
following the commencement of trading
at our Houston-based Trading and
Shipping office in late 2020. Supporting
our Singapore Trading and Shipping
business, the Houston office has
enabled us to capitalise on the United
States’ position in international oil
markets, with our presence supporting
growth in the purchase and sale of
cargo related to the Americas, which
improves resilience across our supply
chain and increases commercial options
to grow our customer base.
Our Houston office has also enabled us
to diversify our crude supply capability
by building direct relationships with
US-based crude producers to reduce
landed crude costs and improve Lytton
financial performance.
Our Gull business in New Zealand
performed well during the year, despite
managing the continued impacts of
COVID-19 travel restrictions, adding
9 new sites to its network. Seaoil in
the Philippines, of which we own a
20% equity interest, also continued
to expand its network and added
an additional 71 branded sites to the
network in 2021.
In August, we also submitted a
non‑binding indicative proposal to
acquire 100% of the shares of Z Energy,
a Wellington-headquartered fuel
distribution and retailing company
that owns and manages over 300 fuel
stations in New Zealand. Z Energy
is a logical growth opportunity for
Ampol and forms part of our strategy
to continue to grow our international
footprint and earnings, and to build
scale as we transform our business
for the energy transition.
We are also tracking well against our
2019 commitment to deliver $70 million
in International earnings uplift by
2024, with a cumulative EBIT uplift of
$39 million delivered by the end of 2021.
Lytton operations to support
fuel security and the energy
transition
In May, we were pleased to announce
the outcome of our Lytton refinery
review, with the decision to continue
operating supported by the Federal
Government’s Fuel Security Program.
This important decision has enabled
Ampol to maximise shareholder value
and create the opportunity for a
controlled transition to alternative uses
of this strategic site, while preserving
and developing 550 manufacturing jobs
and hundreds more indirectly.
The Lytton refinery’s earnings
are underpinned by the Federal
Government’s variable support
payment of up to $108 million per
annum during periods of very low
margins, while retaining the full
benefit of higher margins. This support
has enabled Ampol to improve the
quality of Lytton’s earnings profile by
significantly reducing earnings volatility
and earnings downside risk. In 2021,
improved regional refiner margins
helped Lytton deliver an RCOP EBIT of
$158.7 million, which compares with the
loss of $144.8 million incurred during
2020 when the refinery was shut down
for the extended T&I due to the impact
of COVID-19. Ampol received a one-off
grant of $40 million from the Federal
Government’s Temporary Refining
Production Payment scheme relating to
the 2021 first half to support Lytton’s
continued operations, but did not
receive a Fuel Security Service Payment
for production in 2021.
The Federal Government package also
includes the opportunity for a funding
grant of up to $125 million to undertake
infrastructure upgrades to produce
ultra-low sulfur petrol. Work on scoping
this program is underway.
We will also be able to realise benefits
afforded to Australian refiners
under proposed minimum product
stockholding obligations, including lower
holding obligations, reduced working
capital requirements and avoidance of
costs on incremental storage. We have
been engaging with government on
the regulatory framework of these
obligations in 2021 and anticipate
being ready to meet compliance
requirements in 2022.
“The Houston office has
enabled us to capitalise
on the United States’
position in international oil
markets, with our presence
supporting growth in the
purchase and sale of cargo
related to the Americas.
This helps us to improve resilience
across our supply chain and increase
commercial options to grow our
customer base.”
We have launched our own into-plane refuelling
service at Sydney Airport
Ampol Limited
Annual Report 2021
14
More broadly, our leading infrastructure
and supply chain positions in key
demand centres across Australia,
including our 15 terminals and
55 wet depots, support fuel security
and provide us with optionality for
repurposing and developing as the
energy transition evolves. We will
continue to investigate opportunities
to augment our infrastructure position
and capture further value in 2022.
We continue to maintain a
leading position within the
Australian fuels market
The heart of our business continues
to be the scale of our demand base in
Australia, with approximately 80,000
business customers spanning a variety
of sectors, including defence, mining,
transport, marine, agriculture, aviation
and other commercial sectors. In 2021,
with the impact COVID-19 continued
to have on businesses, we remained
focused on leveraging our capability,
knowledge and scale to create value
for our customers.
Total Australian sales volumes were
13.05 billion litres in 2021, which is
3.9% lower than the 13.58 billion litres
in 2020. This reflects the full-year
impact of COVID-19 on jet volumes,
the impact of rolling lockdowns on
Australian retail market demand in
the second half, as well as competitor
supply chain decisions earlier in the
year that adversely impacted net
buy/sell volumes.
This year, Ampol successfully completed
the conversion to Mobil lubricants,
including repurposing our Queensland
lubricant manufacturing facility and
beginning distribution through both
business and retail channels.
Forming part of the Ampol rebrand,
this followed an announcement in late
2020 that Ampol and ExxonMobil had
entered a marketing alliance to blend,
distribute and market Mobil lubricants
across Australia. This alliance enables
Ampol to leverage its scale, Australian
expertise, manufacturing capability
and strong customer relationships to
bring Mobil lubricants to Australian
consumers and businesses. It also
supports our commitment to evolving
our lubricant offer to meet changing
customer needs.
We also launched our own into-plane
refuelling service at Sydney Airport,
which will support improved volumes
and earnings capability as jet fuel
volumes return over the coming years.
In 2022, we will continue to leverage
our strengths to improve performance
in the Australian business and
commercial markets, while at the
same time providing our customers
with new solutions to support
their decarbonisation and energy
transition journeys.
Improving our safety and
environmental performance
In 2021, Fuels and Infrastructure
delivered a 59% improvement (from
4.6 to 1.9) in its TRIFR. It also saw an
improvement in the DAFWIFR to 0.8.
This was another pleasing outcome,
delivered throughout a disruptive period
during COVID-19 lockdowns and the
Lytton review, and was a result of the
continued focus put on personal safety
through the delivery of fit-for-purpose
projects and campaigns led by
management, supervisors and front-line
personnel.
Key initiatives delivered throughout the
year included a peer support program
at the refinery to support employees
facing personal challenges affecting
their mental health and wellbeing, as
well as a Fit For Work program delivered
in the aviation business, focusing on
degenerative conditions across the
employee lifecycle. A major project at
the Kurnell terminal wharf also achieved
the milestone of 500 days injury-free.
For process safety, during the first
half Fuels and Infrastructure recorded
three Tier 2 process safety incidents,
all related to spill events. Detailed
investigations were delivered, with
improvements put in place in the
second half. These improvements
included an intensive Carrier Safety
Intervention (CSI) program delivered
for all third-party carrier incidents, as
well as field inspections and ongoing
engagements with carrier company
management teams.
Improving environmental outcomes
was also a focus in 2021, with several
programs delivered to reduce emissions.
This included commencing a fleet
replacement program to replace
Ampol’s truck fleet with modern, diesel
engine technology that is expected
to generate a material reduction in
fleet emissions, with emissions also
being offset through participation in
the carbon neutral fuel pilot program.
We also introduced our first EV to
our fleet to support our Brisbane
Depot operations.
“In 2022, we will continue
to leverage our strengths
to improve performance in
the Australian business and
commercial markets, while
at the same time providing
our customers with new
solutions to support their
decarbonisation and energy
transition journeys.”
15
Fuels and Infrastructure
Convenience Retail
Ampol was proud to launch an
internal program in the fourth
quarter to improve consistency
in customer service across our
network and support employees
to Power better journeys through
great experiences.
With the rapid growth in the
number of frontline retail employees
over the past four years – from
only a few hundred to over 6,500
today – a solution was required
to ensure that all employees have
a strong understanding of the
expectations and requirements of
Ampol in delivering a great customer
experience and operating safely.
Delivering for
our customers
The Ampol Way
CASE STUDY
Despite another challenging year due to the ongoing
impacts of COVID-19 on consumer demand and our
people, in 2021 the Convenience Retail team remained
focused on revitalising the Ampol brand, executing its
growth strategy and being agile and resilient to deliver
for our customers.
Milestones included rebranding more
than half of the network to Ampol,
receiving the AACS Awards’ Store of
the Year Award for Ampol Woolworths
Metro Kingsford, launching The Ampol
Way across our network, continuing
to improve safety performance and
activating fundraising campaigns for
The Smith Family and Surf Life Saving
Australia.
Financial performance
Convenience Retail delivered an RCOP
EBIT of $253.7 million in 2021. This was
lower than 2020 due to the COVID-19
impacts in the second half that offset
positive trends in first half fuel volumes,
shop sales and earnings.
For the full year, fuel sales volumes fell
4.9% (3.2% on a like-for-like basis) as
prolonged lockdowns in New South
Wales and Victoria reduced mobility in
the second half. Rapidly rising crude and
product prices throughout the year put
pressure on fuel margins, particularly
diesel margins that take longer to
respond, but showed improvement
towards the end of the year.
Pleasingly, in our first full year as a
company operated model, we have
seen the benefits of the focus on
safely reducing costs, waste and
shrinkage, with shop gross margin
(post waste and shrink) improving by
1.3 percentage points.
Our focus on optimising our network
saw the planned closure of 19
marginal sites and the addition of one
new-to-industry site. Combined with
divestments and transfers to alternate
operators, the company-controlled
retail network size reduced by 3.4% to
684 compared with 708 at the same
time last year.
The rebrand program is progressing well
with 880 sites completed at the end of
2021, including 450 company-controlled
retail sites. The rebranded sites are
outperforming the “control” sites in
key measures of total transactions,
as well as volume measures including
total fuel, premium petrol and
AmpolCard. We have also delivered
ongoing improvements in prompted
and unprompted customer awareness
of the Ampol brand among all
demographic segments.
Importantly, our people continued
to demonstrate resilience to ensure
that we continue to operate safely
for our customers, with COVID-19
protocols well embedded in our
operating rhythms.
Our Convenience Retail team
remained focused on executing
its growth strategy in 2021.
$52.6m
Convenience Retail non-fuel
cumulative EBIT uplift delivered to
date (2020 and 2021), on track to
achieve $85m EBIT uplift by 2024
4.6
down from
10.1 in 2020
TRIFR
$489,000
raised for The Smith Family and
Surf Life Saving Australia combined
through our retail stores
Ampol Woolworths
Metro Kingsford named
Australian Association of
Convenience Stores (AACS)
2021 Store of the Year
Launched
The Ampol Way
450
company-controlled retail
sites rebranded to Ampol
at end 2021. A total of 880 sites
rebranded across the entire network
Ampol Limited
Annual Report 2021
16
The Ampol Way, with the central
tool being The Ampol Way Playbook,
is a comprehensive guide that both
managers and employees alike can
utilise to access information, including
the 10 key customer drivers and 10 most
important customer touchpoints, as
well as minimum customer service
store standards and procedures.
The Playbook also features a Drive Time
routine, designed to prepare stores for
maximum efficiency across peak hours.
Joanne Taylor, Executive General
Manager, Consumer and B2B, said:
“We were really proud to launch
The Ampol Way in October 2021
to improve our engagement with
front‑line retail employees and support
an improved customer experience,
from car to counter.
“Having consistency across our network
is key to ensuring our customers have
a positive and memorable experience
and in turn support better customer
relationships and improved store
returns.
“Continuing to engage our people and
reinforce The Ampol Way will be a key
priority in 2022. There is already a high
level of engagement and support for
the program, and we look forward to
continuing to deliver great experiences
for our customers in the future,
The Ampol Way.”
“Continuing to engage
our people and reinforce
The Ampol Way will be
a key priority in 2022.”
new Ampol Woolworths
Metro sites added in 2021,
with 26 sites now in operation
20
17
Convenience Retail
Convenience Retail continued
Leveraging the rebrand to
transform our network and
connect with communities
The revitalisation of the Ampol brand is
a key part of our business strategy and
has provided a unique opportunity to
reinforce our customer connections and
engage our people and the communities
in which we operate.
We have made significant progress
with the revitalisation of our
iconic Australian brand across our
network, with 880 sites rebranded
across our entire network, including
450 company-controlled retail sites.
The brand is resonating extremely
well with customers, with quality,
community impact and trust being
key elements that consumers identify
with our brand.
The roll-out of Amplify premium fuels
and AmpolCard have been key elements
of the Ampol rebrand. In 2021, the
Amplify range completed an upgrade
to a new additive that helps increase
fuel efficiency, with positive responses
to the fuel brand by both retail and
business customers. The transition to
AmpolCard was also completed in 2021.
The rebrand has also presented an
opportunity to refresh the appearance
of our company-controlled network,
with rebranded sites transitioned
to either a Foodary or an Ampol
Woolworths Metro. Our broader
retail network of distributor and
Retail Owned, Retail Operated
(RORO) sites continue to be engaged
in the revitalisation of Ampol, with
384 distributor sites rebranded
to Ampol in 2021.
A major focus in 2021 was leveraging
our network to make a positive
impact on the communities in which
we operate. Two major fundraising
campaigns were delivered over the
course of the year, which raised over
$343,000 for The Smith Family and
$145,000 for Surf Life Saving Australia.
Retail employees also participated in
volunteering activities, including for the
Perth Homeless Support Group and
letter writing to local Ampol-sponsored
students from The Smith Family’s
Learning for Life program.
Our partnerships are key
to our success
Ampol Woolworths Metro, our Tier 1
format delivered in partnership with
Woolworths, continues to perform
well and has set a new benchmark
for convenience, service, product
quality and range as the sites become
central hubs for local communities in
metropolitan Sydney and Melbourne.
In recognising the success of the format,
the Ampol Woolworths Metro Kingsford
store was awarded Store of the Year
and Corporate Store of the Year at the
AACS Awards, demonstrating how the
format innovation, range optimisation
and enhancement, leading offers,
technology, loyalty programs and
excellent customer service available at
Kingsford caters to a range of shopping
missions and delivers a truly convenient
solution for customers.
In 2021, we made significant progress
with the roll-out, adding an additional
16 sites in Sydney and entering the
Melbourne market with 4 sites.
Our long-term partnership with
Woolworths continues to grow, and we
will be expanding the number of Ampol
Woolworths Metro sites in 2022 across
both New South Wales and Victoria,
working together to deploy the right
format at the right location.
Our QSR partners, including our direct
partnership with Boost, continues
to play a key role across our network
in generating traffic to our sites.
Our partnership with Uber has also
grown, with Uber Eats now available
at more than 400 Ampol sites across
the country, with 19 new sites added in
2021. Supported by the trend to online
delivery, sales via Uber Eats continued
to grow in 2021 and we expect this trend
to continue as customer needs evolve.
Shaping our network for
the future
We have remained focused on
improving the quality of our network
and building on work delivered in 2020
to refine our footprint and deliver
stronger returns.
In 2021, this included the planned
closure of 19 marginal sites, as well as
the addition of a new-to-industry site
in Yarrabilba, Queensland. We also
executed a property transaction with
Charter Hall Retail REIT for the sale of
a 49% minority interest in 20 freehold
sites, expecting the release of
$48 million in net proceeds.
During November 2021, we raised over $145,000 for Surf Life Saving through our
retail network
Ampol Limited
Annual Report 2021
18
Planning the redevelopment of four
existing highway service centres on the
M4 Motorway at Eastern Creek and on
the Hume Highway at Pheasants Nest
was a focus in 2021, with development
plans for Pheasants Nest submitted
to local council. These four Tier 1 sites
present a strong growth opportunity for
Ampol given their privileged location on
major motorways.
In 2022, we will remain focused on
maximising returns from our network,
with new-to-industry sites targeting
high-volume highway locations as well
as regional growth areas.
Operational excellence is
key to our growth
2021 was our first full year as a
company-controlled network, following
work delivered over the past four
years to transition from a franchise
model. As a result, the role of our retail
excellence team has become even more
important, with our retail workforce
having grown from only a few hundred
employees, to over 6,500 today.
Our retail excellence team is focused on
optimising performance and delivering
a consistent and exceptional experience
for our customers, with safety,
merchandising standards and in-store
presentation being the key focus areas.
In preparation for 2022, we launched
The Ampol Way to retail employees.
The Ampol Way sets out the minimum
standards for ensuring the customer
experience from car to counter is
delivered in line with Ampol values
and expectations.
The program also includes a Drive Time
routine, designed to prepare stores for
maximum efficiency across peak hours.
All managers and employees are
engaged in understanding their role
in delivering The Ampol Way, with
performance tracked through mystery
shopping and merchandise checks.
In addition to improved engagement
amongst retail employees, greater
control over our network has enabled
efficiencies across workforce
optimisation, waste and shrinkage,
and we were pleased to make further
progress reducing cost in these areas
in 2021.
Optimising range continues
to be a focus
Optimising the product range available
at our stores was a key focus in 2021,
with a range segmentation program
delivered to reduce waste, allocate stock
efficiently and forecast accurately.
The delivery of this program included
the segmentation of stores based on
their sales performance across a range
of categories. This resulted in a new
methodology for merchandise planning
where the breadth of range available at
a store is now determined by the store’s
performance profile. This new method
has proven to significantly reduce
waste, support profitable operations
and ensure the right product is placed
in the right store.
Key suppliers were engaged through the
development of this method to ensure
an aligned understanding of the needs
of our customers.
Strong improvement in
safety performance
With the transition from franchise
operations virtually complete, safety
values are now embedded across the
business, and this is reflected in a
reduction in injuries and improvement
in safety culture and leadership.
In 2021, our TRIFR reduced to 4.6, from
10.1 in 2020. Our year-on-year safety
improvement has resulted in both
TRIFR and DAFWIFR outperforming
the levels achieved in 2018 when there
was a significantly smaller cohort of
company‑operated stores.
Improvements have also been achieved
across all injury categories, with
significant reductions in the incidents
of slips, trips, falls as well as manual
handling. Pleasingly, there have been
no Category 2 injuries recorded in 2021.
Improvements in safety
performance have been achieved
through specific actions to continue
to strengthen our safety culture,
including leadership‑driven safety
communications, ongoing safe work
practice communication, dedicated
projects for the re-engineering of
higher risk tasks and a refreshed core
compliance assurance program. We also
continued to ensure that effective
COVID-19 controls were in place.
We will continue to deliver initiatives
aimed at improving safety culture and
performance in 2022.
Environmental risk was also a strong
focus during the year, with key initiatives
including the implementation of a
refreshed Underground Petroleum
Storage System (UPSS) risk model,
enhancement of our Statistical
Inventory Reporting Analysis (SIRA)
tools, proactive equipment integrity
testing and the commencement
of a multi-year risk-based UPSS
replacement program together
with the roll-out of Automatic Tank
Gauging (ATG).
“In preparation for 2022, we
launched The Ampol Way to
retail employees. The Ampol
Way sets out the minimum
standards for ensuring the
customer experience from
car to counter is delivered
in line with Ampol values
and expectations.”
19
Convenience Retail
Sustainability
Keeping our people, customers,
environment and community safe
was a strong focus in 2021.
Safety
People
Environment
Community
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.
In 2020, we also became a signatory to the
United Nations Global Compact.
Quality education
Affordable and clean energy
Decent work and economic growth
Industry, innovation and infrastructure
Reduced inequalities
Climate action
ASSOCIATED
UN SDGs
Total Recordable Injury
Frequency Rate1
Days Away from Work
Injury Frequency Rate2
Process safety
21
20
19
4.6
10.7
Fuels and Infrastructure
Fuels and Infrastructure
1.9
0.8
Fuels and
Infrastructure
681,148
(tCO2e Scopes 1 & 2)
14,720
children via the
Ampol Foundation6
Convenience Retail
97,613
(tCO2e Scope 2)
0
Tier 1
safety events
4.6
21
20
19
10.1
14.0
Convenience Retail
2.4
Convenience
Retail
3
Tier 2
safety events
Female representation
at leadership level
Carbon emissions3
Total community
investment5
Community
complaints
Supporting the
education of more than
Overall female
representation
Cultural health score
37.9%
41.9%
72%
0 significant
environmental
events4
0 major spills
(Vol (l) >= 8,000L)
1 marine spill
(Any quantity)
8 minor spills
(160 < Vol (l) < 8,000L)
$2.47m
21
20
34
21
20
$3.17m
28% on 2020
27
20.6% on 2020
Ampol Limited
Annual Report 2021
20
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 where
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. Emissions 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, diesel stops and marine fuels.
4. A Class 2 or 3 environmental event resulting in 3 months or more remediation effort.
5. Total community investment includes cash donations, funds raised from customers in our retail
network, in-kind support (including provision of fuel products), employee contributions, volunteering
hours and management fees.
6. Clontarf Foundation: 9,250; Stars Foundation: 2,500; The Smith Family: 480;
Ampol Best All Rounder: 2,040.
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Safe and
responsible business
Significant improvement in
personal safety performance
In 2021, Ampol delivered
significant improvement
in safety performance,
including a reduction in
both recordable injuries
and days away from work.
Fuels and Infrastructure achieved a
59% reduction in TRIFR (from 4.6 to 1.9)
and a 27% reduction in DAFWIFR as
a result of the continued focus put on
personal safety through the delivery of
fit-for-purpose projects and campaigns.
Key initiatives delivered included a
peer support program at the refinery
to support employees facing personal
challenges affecting their mental
health and wellbeing and a Fit For
Work program delivered in the aviation
business, focusing on degenerative
conditions across the employee lifecycle.
Convenience Retail delivered a 54%
reduction in TRIFR (from 10.1 to 4.6)
and a 50% reduction in DAFWIFR,
resulting from an improved and
embedded safety culture following
the completion of the transition from
franchise operations. Strengthening
safety culture was a key priority
during the year, with leadership-driven
safety communications, ongoing
safe work practice communication,
dedicated projects for re-engineering
higher risk tasks and a refreshed core
compliance assurance program driving
considerable improvements.
Protecting the environment
Several programs were delivered in
our Fuels and Infrastructure business
in 2021 to improve environmental
outcomes and reduce emissions.
This included the commencement of a
fleet replacement program to replace
Ampol’s truck fleet with modern, diesel
engine technology that is expected to
generate an estimated 23% reduction
in fleet carbon emissions. Emissions
from the use of fuel in our business
operations are also being offset through
participation in our carbon neutral
fuel pilot program. We also introduced
our first EV to our fleet to support our
Brisbane Depot operations.
21
Sustainability
Sustainability continued
In our Convenience Retail business,
a number of initiatives were delivered
to improve environmental risk
management, including implementing
a refreshed Underground Petroleum
Storage System (UPSS) risk model,
enhancing our Statistical Inventory
Reporting Analysis (SIRA) tools and
proactive equipment integrity testing,
as well as the commencement of a
multi-year risk-based UPSS replacement
program together with the roll-out of
Automatic Tank Gauging (ATG).
Engaging our people
We delivered our second Ampol Culture
Survey in 2021, which helps us measure
the key drivers of cultural health
and how the attributes of employee
motivation, positivity and cultural
inhibitors change over time. Our 2021
result showed a 9-point improvement
on the previous year, from 63% to 72%,
and is reflective of action taken to
improve our culture.
Diversity and inclusion was a key
focus area during the year, with a new
executive sponsor appointed to ensure
appropriate senior representation on
our Diversity and Inclusion Council.
Our employee-led working groups,
Women in the Fuels Industry (WIFI) and
the Rainbow Alliance, continue to play
an important role in driving key diversity
initiatives across the business. In 2021,
the Rainbow Alliance delivered LGBTQ+
awareness training to the Ampol
Leadership Team, rolled out the use of
gender pronouns, released an inclusive
language guide and collaborated with
WIFI to celebrate LGBTQ+ women.
Continuous improvement
and optimisation of assets
Reducing waste and improving
energy efficiency
Identifying cost-effective energy
efficiency and optimisation
opportunities remains a focus, and in
2021 we developed Energy Management
Plans for our Convenience Retail and
Fuels and Infrastructure businesses.
These outline the approach we will take
towards the implementation of energy
management measures to meet our
public carbon reduction commitments,
and include initiatives such as solar
PV installation, LED lighting upgrades,
power factor correction and behaviour
change opportunities across our retail
network. We will also be focused
on improving efficiency in our Fuels
and Infrastructure business through
process unit and utility optimisation,
furnace optimisation and heat transfer
projects at our refinery, as well as
solar PV installation, LED lighting
and air conditioning upgrades, power
factor corrections and other process
improvements at our terminals.
Waste reduction is also an area of
focus, with new programs put in place
during the year to improve resource
efficiency, from design through to our
operating practices. This has included a
range segmentation process to reduce
food wastage across our retail network,
as well as the commencement of a trial
with Oz Harvest to rescue and donate
fresh produce items from our Ampol
Woolworths Metro stores that would
otherwise be wasted.
Contribution to the
Australian economy
In 2021, as we continued
to revitalise the Ampol
brand and commit to
communities, we made
significant progress
with our community
investment strategy.
Despite the impact of COVID-19,
we increased the total financial
contribution to community programs
and increased employee volunteering
hours and contributions through
our workplace giving program,
Fuelling Change.
Leveraging our retail network
and employees
In 2021, Ampol was proud to leverage
its national retail network to make a
difference for communities by raising
funds for The Smith Family and Surf
Life Saving Australia.
Through the passion of front-line
employees and the generosity
of customers, Ampol raised over
$343,000 for The Smith Family’s
Winter Appeal, with funds going
directly to their Learning Clubs program,
which provides targeted educational
support to Australian children from
disadvantaged backgrounds based
on their individual needs.
The success of the Winter Appeal was
followed by the Donate to Save Lives
campaign for Surf Life Saving Australia,
delivered in November, with Ampol
raising $145,000 for Surf Life Saving.
Career mentoring and support
In 2021, 24 employees committed
more than 190 hours in various career
mentoring activities, including careers
forums with both Clontarf Foundation
and Stars Foundation and one-on-one
career mentoring.
Employees also participated in
The Smith Family’s iTrack program,
which connects students in Years 9 to
11 to adult mentors who provide advice
and help them explore post‑school
options. Ampol also delivered a Work
Inspiration session with The Smith
Family, where a class of students from
Western Sydney were provided insights
into Ampol’s operations and into the
range of potential careers across
the organisation.
We were proud to release our first
Modern Slavery Statement in 2021
The release of our Modern Slavery Statement followed a comprehensive
process to understand the risks and opportunities within our supply
chain. Pleasingly, our Modern Slavery Statement ranked 19th in
Monash University’s ASX100 2021 Modern Slavery Disclosure Quality.
Ampol Limited
Annual Report 2021
22
The experience included an education
session with a rugby league star,
stadium tour, tickets, jerseys, a
half-time game on the field as well as a
$5,000 grant. The Clontarf Foundation
also participated in the program by
supporting the young teams through
coaching and broader event support.
A total of $50,000 in grants were
provided to the participating schools
in 2021, helping to support grassroot
community sport and improve access
to sport for young children.
Relaunch of Fuelling Change
and employee volunteering
In 2021, we relaunched our workplace
giving program, Fuelling Change. Over
the past 10 years, more than $1.3 million
has been donated to selected charities
through this program.
Over the course of the year, following
a relaunch campaign that included the
implementation of a new registration
platform, engagement with executives
and an event at our Lytton refinery,
funds contributed to the program
increased by 51% on 2020.
Employee volunteering was also a
strong focus during the year, with
our people committing 404 hours to
support both our Foundation partners
and other charitable organisations
across the country.
Transition to a low
carbon future
2022 strategy
In 2021, we reviewed and updated our
approach to climate risk following
the delivery of our three-year climate
risk strategy established in 2019.
Our approach moving forward in 2022
will focus on four key areas, including:
strategic and business planning
to inform decision making; carbon
management; policy, disclosures
and engagement; and governance.
Enhancing our approach
to capital allocation and
climate modelling
To support our Future Energy and
Decarbonisation strategies, we
recognise that we will need to deploy
capital over the coming years and,
as a result, we have embedded
these considerations into our capital
allocation framework.
Our investments in future energy will
be return seeking, however we expect
payback periods to be longer given
the uncertain pace and development
of the energy transition. We have
adopted a phased and risk-managed
approach to capital allocation so that
we invest in a balance sheet efficient
manner. Our approach includes the
introduction of a carbon price into the
decision-making process and assessing
investments under a number of
climate scenarios.
In preparing the Future Energy and
Decarbonisation strategies, we also
engaged consultants to undertake
a climate scenario analysis for a
better understanding of how we are
positioned for different climate futures.
We have now brought our climate
modelling in house and have prepared
the Ampol Integrated Assessment
Model. This model focuses on three
core climate scenarios (1.5˚C, 2˚C
and ~2.6˚C trajectories) for how the
Australian economy could decarbonise.
This modelling will be used to help
inform strategic decision making and
portfolio optimisation, and to assess
the resilience of our portfolio and
investment decisions.
Linking climate performance
to remuneration
We have strengthened the link
between executive remuneration and
the delivery of our Future Energy and
Decarbonisation strategies. Measures
on operational emissions reductions
and on products sold to customers
now represent 10% of the short-term
executive scorecard.
From 2022, the 10% component
applied to executive remuneration
will be paid with respect to 2025
Scope 1 and 2 emissions targets and
abatement projects, as well as Scope 3
emissions intensity reduction goals,
including e-mobility, hydrogen and
biofuels initiatives.
Ampol is a proud member
of the Australian Climate
Leaders Coalition
The Australian Climate Leaders
Coalition is a group of Australian
corporate CEOs that support the
Paris Agreement commitments and
have set public decarbonisation
targets. In 2021, we contributed
to and welcomed the release of
the Climate Leaders Coalition’s
“Roadmap to 2030 – Shifting to a
Low Carbon Future”, a pragmatic
guide for business leaders to deliver
emissions reductions.
Part of Ampol’s partnership
with the National Rugby
League as naming rights
sponsor of Ampol State of
Origin, at each 2021 series
game Ampol delivered a
unique two-day experience
for under 9s boys and girls
school rugby league teams.
23
Sustainability
Financial Report
The 2021 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 2021
For the purposes of this report,
the Group refers to Ampol and
its controlled entities.
Contents
25 Directors’ Report
81
Financial Statements
136 Shareholder Information
Ampol Limited
Annual Report 2021
24
Directors’ Report
The Board
Introduction
The directors of Ampol Limited (Ampol) present the 2021
Directors’ Report and the 2021 Financial Report for Ampol
and its controlled entities (collectively referred to as the Group)
for the year ended 31 December 2021. An Independent Auditor’s
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, Elizabeth Donaghey,
Michael Ihlein, Gary Smith and Penny Winn.
Barbara Ward AM retired from the Ampol Board as an
Independent Non-executive Director, effective 13 May 2021.
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 and Chairman of Downer EDI 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.
1
3
5
7
2
4
6
8
25
The Board continued
4 Melinda Conrad
Independent Non-executive Director
Date of appointment: 1 March 2017
Board Committees: Human Resources Committee
(Chairman), Audit Committee and Nomination Committee
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, Stockland
Group, Penten Pty Ltd and a director of 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 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, the George Institute for Global Health
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.
5 Elizabeth (Betsy) Donaghey
Independent Non-executive Director
Date of appointment: 1 September 2021
Board Committees: Human Resources Committee, Safety
and Sustainability Committee and Nomination Committee
Betsy brings over 30 years’ experience in the energy and
oil and gas sectors including technical, commercial and
executive roles at EnergyAustralia, Woodside Energy and
BHP Petroleum. She is currently a non-executive director of
the Australian Energy Market Operator (AEMO) and Cooper
Energy Limited.
Betsy’s previous experience includes non-executive director
roles at Imdex Ltd, an ASX-listed provider of drilling fluids and
downhole instrumentation, St Barbara Ltd, a gold explorer
and producer, and the Australian Renewable Energy Agency.
She has performed extensive committee roles in these
appointments, serving on audit and compliance, risk and
audit, technical and regulatory, remuneration, and health
and safety committees.
Betsy holds a Bachelor of Civil Engineering from Texas A&M
University, a Master of Science in Operations Research from
the University of Houston and has completed the Harvard
Business School Advanced Management Program.
6 Michael Ihlein
Independent Non-executive Director
Date of appointment: 1 June 2020
Board Committees: Audit Committee (Chairman), Human
Resources 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 and a director of CSR Limited.
Mike is currently a director of Scentre Group 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.
7 Gary Smith
Independent Non-executive Director
Date of appointment: 1 June 2020
Board Committees: Audit 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 that 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 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 Technology) from the University of
New South Wales.
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, supply chain and retail marketing experience.
Penny is currently a director of CSR Limited, The Amphora
Group PLC (Accolade Wines) and the ANU Foundation.
She has previously served as Chair and a director of Port
Waratah Coal Services Limited, director of Coca-Cola Amatil
Limited, a director of Goodman Limited and Goodman
Funds Management Limited and 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’ 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.
Directors’ Report continued
Ampol Limited
Annual Report 2021
26
Leadership Team
1 Michael Abbott
Executive General Manager, Governance and Risk
Michael Abbott was appointed Executive General Manager,
Governance and Risk in January 2021. He is responsible for
risk, audit, legal, secretariat and government affairs.
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 Greg Barnes
Group Chief Financial Officer
Greg Barnes was appointed Group Chief Financial Officer
on 1 July 2021.
Greg has more than 25 years’ experience in finance, including
as Group Chief Financial Officer for Coca-Cola Amatil, Nine
Entertainment Co and CSR Limited. He has also held senior
finance roles in the industrial and manufacturing sectors in
the Asia Pacific region.
Greg is a qualified Chartered Accountant and holds a Bachelor
of Commerce from the University of Newcastle as well as
a Master of Business Administration from the Macquarie
Graduate School of Management. Greg is also a member
of the Australian Institute of Company Directors.
3 Andrew Brewer
Executive General Manager, Fuel Supply Chain
Andrew Brewer was appointed Executive General Manager,
Fuel Supply Chain in November 2020. He is responsible
for Ampol’s Australian and New Zealand manufacturing
and distribution assets, supply operations, planning and
value chain optimisation functions and 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 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.
1
3
5
7
2
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27
Leadership Team continued
4 Meaghan Davis
Executive General Manager, People and Culture
Meaghan Davis was appointed Executive General Manager,
People and Culture in November 2021.
Meaghan has more than 25 years’ experience in people and
culture, and has held a number of senior executive roles
at leading Australian companies. Prior to joining Ampol,
Meaghan spent seven years at Woolworths Limited before
joining Lendlease, where she held senior roles including Head
of People and Culture, and Program Director of Lendlease’s
global transformation program.
Meaghan holds a Masters of Management from the
Macquarie Graduate School of Management, and is a
member of the Australian Institute of Company Directors
and the Australian Human Resources Institute.
5 Brent Merrick
Executive General Manager, International and New Business
Brent Merrick was appointed Executive General Manager,
International and New Business in September 2020. Brent is
responsible for trading and shipping, international growth
and other new business, including building the future energy
business to enable low carbon 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.
6 Alan Stuart-Grant
Executive General Manager, Growth and Development
Alan Stuart-Grant was appointed as Executive General
Manager, Growth and Development in November 2017.
He 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, which followed more
than a decade of experience in private equity and investment
banking, 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.
7 Joanne Taylor
Executive General Manager, Consumer and B2B
Joanne Taylor was appointed Executive General Manager,
Consumer and B2B in August 2020. She is responsible for
Ampol’s retail business, B2B sales, brand and marketing,
corporate affairs 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 and communications 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.
Directors’ Report continued
Ampol Limited
Annual Report 2021
28
The purpose of the operating and financial review (OFR) is to enhance 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 81 to 135.
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 the outcome in relation to the matters to which the statements relate.
Company overview
Ampol is an independent Australian company and the nation’s leader in transport fuels.
Ampol Limited (previously Caltex Australia 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, with 880 sites rebranded at 31 December 2021.
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 and we
are also listed on the Australian Securities Exchange (ASX).
Ampol supplies fuel to approximately 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 approximately
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 include 15 terminals, 6 major pipelines, 55 wet depots, 1,881 branded sites (including 684 company-controlled
retail sites) and one refinery located in Lytton, Queensland. This network is supported by over 8,300 people across Australia and
overseas.
In recent years, we have deployed the capabilities of our Australian business to expand 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 growing retail network. Ampol also
owns a 20% equity interest in Seaoil, a leading independent fuel company in the Philippines.
In May 2021, Ampol released its Future Energy and Decarbonisation Strategies, which sets out our plans to transition our business
to future fuels and energy solutions, in line with customer demand and technology availability, and our ambition to achieve net zero
emissions across our operations by 2040, including interim targets. As Australia’s largest fuels provider, Ampol has an important
role to play in reducing our own emissions, as well as the emissions of our customers. Our integrated business generates strong
cash flows, compelling returns, diversified earnings and provides a strong foundation to evolve into new areas aligned to the energy
transition. We have committed to a minimum $100 million investment by 2025, to ensure we have the low carbon solutions that will
meet the needs of our customers well into the future.
Operating and financial review
29
Group strategy
Ampol’s strategy is focused on three elements underpinned by our market leading position in transport fuels, strategic assets,
customer positions and supply chain expertise.
Evolving our business to build the foundations for energy transition is one of the three key elements of Ampol’s strategy. Ampol’s
privileged assets, supply chain expertise and deep customer relationships mean we are uniquely placed to be part of the
decarbonisation solution by enabling an orderly energy transition and capitalising on opportunities that can deliver sustainable
returns for shareholders over the long term.
Directors’ Report continued
Operating and financial review continued
n
Purpose
Powering better journeys, today and tomorrow
Our strategy builds on our strengths in fuels
Our strategy focuses on our core business, and establishes a platform to grow and ultimately evolve
as energy markets transition
Enhance
the core business
Bring back Ampol
Bring back an iconic Australian brand and reinvigorate
our people and customer connection
Further cost savings
Take further action on costs to mitigate demand
impacts and reinforce competitive position
Improve retail network
We have released significant capital, with further
potential to improve returns
Restore Fuels and
Infrastructure
Australia ROCE
Our market leading position provides resilience, but we
will take action to further strengthen our infrastructure
and focus on capital effectiveness and cost efficiency
Expand
from rejuvenated
fuels platform
International
earnings growth
Leverage our scale and capabilities to accelerate our
growth in regional markets
Shop earnings growth
Leverage our strength in retail fuel to capture
opportunities from the evolving behaviours and
expectations of our customers
Evolve
energy offer for
our customers
Build foundations for
energy transition
Transition with our customers, focusing on a targeted
set of energy and decarbonisation themes with clear
linkages to our capabilities and assets
Strategy
Strengths
Strategic assets
and iconic brand
Deep customer base
Supply chain expertise
People and culture
Ampol Limited
Annual Report 2021
30
Foundations for the future
2021 has been a transformational year for Ampol. We have made significant progress on our strategic priorities while managing the
impacts of lockdowns related to COVID-19 and major flooding events.
In May 2021, we completed the Lytton refinery review and announced the decision to continue operating, with our eligibility for the
Fuel Security Program to maximise shareholder value. Continuing to operate ensures the future of approximately 550
manufacturing jobs and hundreds more indirectly, while supporting the Federal Government’s objectives of fuel security and an
orderly energy transition.
The rebrand to Ampol is progressing well, providing the opportunity to refresh the sites, improving their overall appearance, and to
simplify the retail model to the high-quality Foodary and the premium Ampol Woolworths Metro formats. Retail and wholesale
customers continue to respond positively to the return of the iconic Ampol brand.
We are on track to achieve our targeted $195 million EBIT uplift by 2024, with strong growth in our Fuels and Infrastructure
International business. In Convenience Retail, we have begun to see the benefits of the accelerated focus on reducing labour costs,
waste and shrinkage on shop performance.
On 11 October 2021, we announced the proposed acquisition of Z Energy, New Zealand’s leading fuels distribution and retail
business. This transaction is subject to the approval of the New Zealand Competition Commission (NZCC) and Overseas
Investment Office, including a condition to divest Gull. Regulatory decisions are expected in the first half of 2022. If successful, the
combination of Ampol and Z Energy would create the largest fuels distribution and retail network across Australia and New Zealand.
We have maintained our focus on cost and capital discipline, returning over $479 million to shareholders through a combination of
Off-market Buy-back and fully franked dividends. Late in 2021, we also successfully completed another $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 in line with Ampol’s Capital Allocation
Framework, which may include partly funding the acquisition of Z Energy.
Enhance
the core business
Bring back Ampol
880 sites rebranded
at end 2021; KPIs for rebranded sites
outperforming control sites
Maximise Lytton value
Reduced earnings downside
risk, while retaining full benefit
of refiner margin upside
Expand
from rejuvenated
fuels platform
Expansion into New Zealand
Z Energy Scheme
Implementation
Agreement signed;
to create Trans-Tasman
transport fuels leader
Shop earnings growth
Delivered
$53 million EBIT uplift
by end 2021; on track to achieve
$85m EBIT uplift by 2024
Evolve
energy offer for
our customers
Build foundations for
energy transition
Future Energy and Decarbonisation
Strategies released;
establishing team and
investing in trials
of low carbon solutions
31
Ampol results 31 December 2021
On an historical cost profit basis, Ampol recorded an after-tax profit attributable to equity holders of the parent entity of
$560.0 million, including a significant items loss of $24.4 million, and a product and crude oil inventory gain of $219.5 million after
tax. This represents a significant improvement in financial performance compared to the 2020 full year after-tax loss of $484.9
million, which included a significant items loss of $337.0 million, and a product and crude oil inventory loss of $359.7 million after
tax.
RCOP, excluding significant items (on a pre-tax and post-tax basis), is a non-International Financial Reporting Standards (IFRS)
measure and is unaudited. It is derived from the statutory profit adjusted for inventory (gains)/losses, as management believes this
presents a clearer picture of Ampol’s underlying business performance and is consistent with the basis of reporting commonly used
within the global oil industry. RCOP excludes the 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. Refer to note B4 in the Financial Statements for a reconciliation of Statutory Profit to Replacement
Cost basis profit.
A reconciliation of the RCOP result to the statutory HCOP result is set out in the following table:
Reconciliation of the underlying result to the statutory result
2021
$m
(after tax)
2020
$m
(after tax)
Net profit/(loss) attributable to equity holders of the parent entity
560.0
(484.9)
Significant items loss
24.4
337.0
Inventory (gain)/loss
(219.5)
359.7
RCOP NPAT (excluding significant items)
364.9
211.8
On an RCOP basis, Ampol recorded an after-tax profit, excluding significant items, of $364.9 million (2020: $211.8 million).
Dividend
The Board has declared a final fully-franked dividend of 41 cents per share for the second half of 2021, in line with the Dividend
Policy pay-out ratio of 50% to 70% of RCOP NPAT, excluding significant items. Combined with the fully-franked interim dividend of
52 cents per share for the first half, this equates to a total dividend of 93 cents per share for 2021.This compares with a total fully-
franked dividend of 48 cents per share for 2020.The payment dates for the final dividend are referenced on page 97.
180
165
265
262
294
296
135
120
204
175
256
341
287
344
263
209
92
161
0
100
200
300
400
500
600
700
2013
2014
2015
2016
2017
2018
2019
2020
2021
$m
RCOP NPAT
1H RCOP NPAT
2H RCOP NPAT
Directors’ Report continued
Operating and financial review continued
Ampol Limited
Annual Report 2021
32
Coronavirus (COVID-19)
The COVID-19 pandemic continued to impact the Group’s earnings with the emergence of the Delta strain during the full year
ending 31 December 2021. Ampol’s priority during this time has continued to be the health and safety of our people and customers,
and to maintain focus on cost and capital discipline. Despite the prolonged lockdowns of Australia’s two key economies of
New South Wales and Victoria during the second half, full year earnings were significantly improved compared to 2020.
The performance of the Australian business during the fourth quarter as momentum in key profitability drivers improved, coupled with
higher refiner margins, reinforced the responsiveness of Ampol’s earnings to more favourable market conditions. This encourages an
optimistic outlook as restrictions on mobility ease.
Income statement
For the year ended 31 December
2021
$m
2020
$m
1. Total revenue
21,629.9
15,409.1
Other income
53.3
28.0
Share of net profit of entities accounted for using the equity method
11.3
10.7
2. Total expenses(i)
(21,063.3)
(15,046.6)
Replacement cost earnings before interest and tax, excluding significant items
631.2
401.2
Finance income
0.4
0.6
Finance expenses
(113.1)
(109.7)
3. Net finance costs
(112.7)
(109.1)
Income tax expense(ii)
(116.1)
(75.2)
Non-controlling interest
(37.5)
(5.1)
Replacement cost of sales operating profit (RCOP)
364.9
211.8
4. Significant items loss after tax
(24.4)
(337.0)
5. Inventory gain/(loss) after tax
219.5
(359.7)
Historical cost net profit/(loss) after tax attributable to parent(iii)
560.0
(484.9)
Non-controlling interest
37.5
5.1
Historical cost net profit/(loss) after tax
597.5
(479.8)
Dividends declared or paid
Interim dividend per share
52c
25c
Final dividend per share
41c
23c
Earnings/(loss) per share (cents)
Historical cost basis including significant items – basic
234.2
(194.2)
Historical cost basis including significant items – diluted
233.5
(194.2)
Replacement cost basis excluding significant items – basic
152.6
84.8
Replacement cost basis excluding significant items – diluted
152.1
84.8
(i)
Excludes significant item loss of $24.4 million (2020: $337.0 million) and inventory gain of $219.5 million (2020: $359.7 million inventory loss).
(ii)
Excludes tax expense on inventory gain of $94.0 million (2020: $154.1 million tax benefit) and tax benefit on significant items loss of $10.5 million (2020:
$166.9 million).
(iii)
Statutory basis financial information is referred to throughout this document as Historical Cost Basis or “HCOP”.
33
Income statement continued
Discussion and analysis – Income statement
1.
Total revenue
▲ 40%
The increase in total revenue was driven by a 9.7% increase in total sales volumes (22.04 BL)
compared to 2020 (20.09 BL) reflecting successful execution of the strategy to grow sales in
international markets. Australian Dollar product prices were also on average 54% higher than 2020
driven by a higher weighted average Dated Brent crude oil price (2021: US $71/bbl vs 2020: US$42/bbl).
Other income increased due to the benefit of the Lytton refinery Temporary Refinery Production
Payment (TRPP) of $40.0 million (2020: $nil) and COVID-19 government wage support of $0.8 million
received from Australian and Singapore government programs (This compares to $6.8 million received
in 2020 from Australian, New Zealand and Singapore government programs).
2.
Total expenses –
replacement
cost basis
▲ 40%
Total expenses increased primarily as a result of higher replacement cost of goods sold, driven by
higher crude and product prices.
The impact of rising fuel costs was partially offset by $434.8 million in one-off expenses in 2020,
including impairments to the Lytton refinery ($80.0 million) and Convenience Retail ($292.2 million).
3.
Net finance costs
▲ 3%
Net finance costs increased by $3.6 million compared with 2020; mainly as a result of incremental
interest expense due to the substitution of the bilateral facilities for the hybrid facility in 2020, partially
offset by the unwinding of discounting for provision balances.
4.
Significant items
loss after tax
$24.4 million
The significant item loss before tax of $34.9 million (2020: $503.9 million) and after tax of $24.4 million
(2020: $337.0 million) relates to:
Ampol rebranding expense
An expense of $51.3 million (2020: $65.6 million) has been recognised relating to the rebranding
program currently being undertaken to remove Caltex signage and install Ampol branding at the Group’s
sites. Current period costs include $42.4 million rebranding costs (2020: $8.8 million) and $8.9 million
accelerated depreciation (2020: $10.8 million). In 2020, a provision of $46.0 million was also recognised
in relation to the contractual obligation to undertake rebranding work at sites owned by a third party, to
be completed before 31 December 2022.
Impairment of non-current assets
Total impairment losses of $31.0 million on non-current assets have been recorded. These impairments
relate to information technology assets of $24.5 million and Convenience Retail site impairments of
$15.5 million, partly offset by a reversal of prior impairments of $9.0 million relating to sites no longer
scheduled for closure. This compares to an impairment of $413.4 million reported at the end of 2020 for
the Lytton refinery cash-generating unit of $80.0 million, Convenience Retail site cash-generating units
of $292.2 million and other specific assets of $41.2 million.
Transaction costs
Preliminary transaction costs of $7.8 million for the Z Energy acquisition and divestment of Gull New
Zealand have been recognised.
Kurnell site remediation
As the site remediation advances, increased clarity on precise costings resulted in a $41.9 million
provision reduction, determined in the biennial third party review undertaken by Environmental
Resources Management Australia Limited (ERM).
Other income
Other income includes COVID-19 government wage support of $0.8 million received from Australian and
Singapore government programs. This compares to $6.8 million received in 2020 from Australian, New
Zealand and Singapore government programs.
Gain on sale
On 24 December 2021 a binding agreement was signed to sell the 17.16% interest in Car Next Door
Australia Pty Ltd. A profit of $12.5m, based on expected proceeds of $16.7m, has been recognised in
the current year.
Significant items tax benefit
Significant items tax benefit of $10.5 million (2020: $151.2 million) represents tax at the Australian
corporate tax rate of 30%. In 2020, utilisation of previously unrecognised capital losses of $15.7 million
were applied to a capital gain on the sale of a 49% interest in 203 freehold Convenience Retail sites with
a Charter Hall and GIC consortium.
5.
Inventory gain
after tax
$219.5 million
There was an inventory gain of $219.5 million after tax ($313.5 million before tax) in 2021. Ampol holds
crude and product inventory, the value of which varies due to fluctuations in the product price and
foreign exchange movements. The price at which inventory was purchased often varies from the current
market prices at the time of sale. This creates an inventory gain or loss at the time of sale.
Directors’ Report continued
Operating and financial review continued
Ampol Limited
Annual Report 2021
34
Income Statement continued
(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.
Discussion and analysis – Income statement
RCOP EBIT
breakdown(i)
Fuels and Infrastructure EBIT
Fuels and Infrastructure delivered an RCOP EBIT of $417.6 million, an increase of 170% on the prior year
underpinned by a strong operating performance at Lytton and earnings growth in our international business.
During the year, safe and reliable operations at the Lytton refinery drove increased production in an improving
refiner margin environment. It delivered an RCOP EBIT of $158.7 million, including the benefit of $40.0 million
from the Federal Government’s once-off Temporary Refining Production Payment. This compares with the loss
of $144.8 million incurred during 2020 when the refinery was shut down for the extended T&I due to the impacts
of COVID-19.
The resumption of production at Lytton displaced additional imported volumes required in FY 2020 during the
extended T&I. This was the main contributor to the reduction in RCOP EBIT to $110.2 million for Fuels and
Infrastructure Australia (ex-Lytton). Overall earnings from Fuels and Infrastructure’s Australian operations
(including Lytton) increased by approximately $230 million compared with FY 2020.
Successful execution of the strategy to diversify and grow international earnings saw Fuels and Infrastructure
International’s RCOP EBIT grow to a record $110.9 million, up 31% on the prior year. The Gull business in New
Zealand and Trading and Shipping International drove the growth in earnings.
The Fuels and Infrastructure result includes $6.9 million spend to establish the Future Energy team, mostly
incurred since launching the Future Energy and Decarbonisation strategies in May 2021, as well as $44.7 million
of foreign exchange gains compared with a $29.9 million gain in FY 2020.
Total Australian sales volumes were 13.05 billion litres in FY 2021, 3.9% lower than the 13.58 billion litres in
FY 2020. This reflects the full-year impact of COVID-19 on jet volumes, the impact of rolling lockdowns on
Australian retail market demand in the second half, as well as competitor supply chain decisions earlier in the
year that adversely impacted net buy/sell volumes. The decline in Australian sales volumes was more than offset
by growth in international sales to 8.99 billion litres, with total sales volumes for the Group reaching a record of
22.04 billion litres.
$417.6m
Convenience Retail EBIT
Convenience Retail delivered an RCOP EBIT of $253.7 million, with COVID-19 impacts affecting most of the
second half and offsetting positive trends in first half fuel volumes, shop sales and earnings.
For the full year, fuel sales volumes fell 4.9% (3.2% on a like-for-like basis) as prolonged lockdowns in New South
Wales and Victoria reduced mobility in the second half. Rapidly rising crude and product prices throughout the
year put pressure on fuel margins, particularly diesel margins that take longer to respond but showed
improvement towards the end of the year.
Pleasingly, in our first full year as the company operated model, we have seen the benefits of the focus on safely
reducing costs, waste and shrinkage, with shop gross margin (post waste and shrink) improving by 1.3
percentage points.
We continued to optimise the network with the closure of 19 marginal sites and the addition of one new-to-industry
site during the year. Combined with divestments and transfers to alternate operators, the company-controlled
retail network reduced by 3.4% to 684 sites compared with 708 at the same time last year.
The rebrand program is progressing extremely well, with 880 sites completed by the end of 2021 and the
rebranded sites outperforming the “control” sites in key measures of total transactions, as well as volume
measures including total fuel, premium petrol and AmpolCard. $51.3 million of rebranding expenses (before tax)
have been recognised as a significant item.
$253.7m
Corporate EBIT
Corporate operating expenses of $40.1 million remained materially in line with the prior year
(2020: $40.6 million).
($40.1m)
RCOP EBIT excluding significant items
$631.2m
35
Balance sheet
As at 31 December
2021
$m
2020
$m
Change
$m
1.
Working capital
906.6
386.9
▲519.7
2.
Property, plant and equipment
3,564.7
3,467.7
▲97.0
3. Intangibles
506.3
558.4
▼52.1
4. Interest-bearing liabilities net of cash
(1,697.3)
(1,348.1)
▲349.2
5. Other non-current assets and liabilities
66.5
159.8
▼93.3
Total equity
3,346.8
3,224.7
▲122.1
Discussion and analysis – balance sheet
1.
Working capital
▲ $519.7m
The increase in working capital was primarily driven by higher product and crude prices impacting
receivables, inventory and payables.
2.
Property, plant
and equipment
▲ $97.0m
The increase in property, plant and equipment is driven by net additions of $548.5 million, which
includes lease right of use assets ($183.9 million) and capital projects in progress ($272.1 million).
This is partially offset by disposal ($76.3 million) and depreciation ($363.9 million).
3.
Intangibles
▼ $52.1m
Intangibles decreased primarily due to amortisation of $17.1 million, adjustment on application of the
IFRS Interpretation on cloud computing arrangements of $28.2 million, and information technology
impairments of $24.5 million. This is partially offset by additions of $18.3 million.
4.
Interest-bearing
liabilities
▲$349.2m
Interest-bearing liabilities relate to net borrowings of $723.7 million (2020: $433.9 million) and lease
liabilities of $973.6 million (2020: $914.2 million) at 31 December 2021. The increase in interest-
bearing liabilities was primarily due to the $300.4 million Off-market Buy-back in January 2021.
Ampol’s gearing at 31 December 2021 was 17.8%, increasing from 11.9% at 31 December 2020.
On a lease-adjusted basis, gearing at 31 December 2021 was 33.6%, compared with 29.5% at
31 December 2020.
5.
Other non-current
assets and liabilities
▼$93.3m
Other non-current assets and liabilities decreased primarily due to the decrease in deferred tax
assets, which mainly relates to the reduction in deferred tax assets recognised in the 2020 financial
period tax loss. This has been fully utilised in 2021.
Directors’ Report continued
Operating and financial review continued
Ampol Limited
Annual Report 2021
36
Cash flows
For year ended 31 December
2021
$m
2020
$m
Change
$m
1.
Net operating cash (outflows)/inflows
634.6
267.6
▲367.0
2. Net investing cash (outflows)/inflows
(319.2)
462.6
▼781.8
3. Net financing cash (outflows)/inflows
(120.9)
(391.8)
▲270.9
Net increase in cash held(i)
198.7
332.6
▼133.9
(i)
Including effect of exchange rates on cash and cash equivalents.
Discussion and analysis – Cash flows
1.
Net operating
cash inflows
▲$367.0m
Net operating cash inflows were higher and primarily driven by improved earnings arising from the
increase in sales prices and volumes in 2021 compared to 2020. This resulted in an increase in
receipts from customers ($5,375.9 million), offset partially by an increase in payments to suppliers
($5,020.4 million).
2. Net investing
cash inflows
▼$781.8m
Investing cash flows represent capital expenditure for property, plant and equipment, Lytton T&I, and
purchase of intangibles. The decrease is primarily due to the reduction in major cyclical maintenance
at the Lytton refinery ($30.4 million) offset partially by an increase in capital expenditure on property,
plant and equipment ($132.6 million).
2020 includes the benefit from the net proceeds from the sale of a 49% interest in 203 freehold
convenience retail sites and the gain on sale of the investment in joint operations.
3.
Net financing
cash outflows
▲$270.9m
Financing cash flows primarily include a net proceed of borrowings ($500.0 million), offset with
dividend payment ($178.7 million), repayment of lease principal ($106.3 million) and a $300.4 million
Off-market Buy-back purchase which was completed in January 2021.
Capital expenditure
Capital expenditure totalled $324.2 million, including T&I spend at the Lytton refinery of $25.8 million and $76.8 million relating to
the rebranding program.
37
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 expectation,
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
Market conditions and outlook
The emergence of the Omicron variant of COVID-19 has had an impact on recent trading in FY 2022. Nonetheless, the improved
momentum demonstrated in the fourth quarter of FY 2021, coupled with higher refiner margins, reinforced the responsiveness of
Ampol’s earnings to more favourable market conditions. This provides cause for optimism for FY 2022 as mobility increases.
Ampol is well positioned to benefit from the expected recovery in Australian fuel demand. We welcome the announcement by the
Federal Government on the opening of international borders to inbound tourists, although jet demand is still likely to take several
years to recover to pre-COVID levels.
Global refining fundamentals have improved through increasing demand for refined products and the structural declines in capacity
caused by refinery closures. The Lytton refinery is well positioned to benefit from expansion in refiner margins, with reduced earnings
downside through the Fuel Security Services Payment, should the Government Margin Marker fall below a certain level.
Assuming market conditions improve, we anticipate growth in Convenience Retail earnings from both fuel and shop through our
market-leading convenience offer and shop formats, the ongoing focus on costs, waste and shrink combined with the benefit of
increasing demand over a largely fixed cost operating model.
We have made good progress on the steps to complete the acquisition of Z Energy and remain on track to complete the transaction
in the first half of 2022, with earnings and cash flow contributing to the Group’s earnings in the second half, subject to regulatory and
Z Energy shareholder approvals.
Key strategic priorities
We will continue to execute our business strategy in 2022 with a core focus on creating value for shareholders. We have a clear
set of priorities with an emphasis on delivering improved returns across the integrated business through improved cost and
capital efficiency as part of the Enhance pillar of our strategy.
The rebrand to Ampol is well progressed and is exceeding expectations, with rebranded stores performing ahead of the control
sites. Our focus for 2022 will be on completing the rebrand of the network and embedding the successful relaunch of the Ampol
brand. This includes evolving the brand through the energy transition into EV charging and decarbonisation products.
For the Expand pillar, a key priority will be the successful completion of the Z Energy transaction, divestment of Gull and to deliver
the synergies in line with the integration plan.
We have made good progress to date on our targeted $195 million EBIT uplift by 2024 and will be progressing key initiatives in our
Fuels and Infrastructure International strategy and in Convenience Retail to move closer to achievement of the target.
Since launching our Future Energy and Decarbonisation strategies in 2021, our thinking has further developed with clear priorities
for 2022 along two key themes of electrification of mobility and the deepening of our understanding of the hydrogen supply chain.
Key initiatives include progressing the roll-out of the EV fast-charging network, piloting a retail electricity offer and progressing a
small-scale hydrogen production pilot.
Decarbonising our operations to meet our 2025 intermediate targets will also be a priority with the roll-out of plans to reduce our
carbon footprint through a number of projects (including solar) in Fuels and Infrastructure and Convenience Retail during 2022.
Directors’ Report continued
Operating and financial review continued
Ampol Limited
Annual Report 2021
38
There are a number of material risks that have the potential to impact 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, as follows.
•
Board: customer and competitors, business transformation, business interruption and regulatory and compliance.
•
Audit Committee: cyber and information security, capital management and allocation, liquidity, financial markets, fraud and
ethical misconduct.
•
Safety and Sustainability Committee: climate change, process safety, personal safety, health and wellbeing, environment,
product quality – fuels and lubricants and product quality – food.
•
Human Resources Committee: organisational capability.
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
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.
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.
2.
Business
transformation
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.
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.
For further information on how Ampol is managing
climate-related risk, refer to the Future Energy and
Decarbonisation Strategy and 2021 Sustainability
Report available on the Ampol website.
Risk management
39
4.
Cyber and
information
security
As a leading transport fuels provider and
convenience retailer, Ampol (like many businesses)
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
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.
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.
For more on environmental management and
performance, refer to the Ampol Sustainability
Report.
7.
Personal safety,
health and
wellbeing
8.
Environmental
9.
Product quality –
fuels and
lubricants
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.
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.
10. Product quality –
food
11. Business
interruption
Business interruptions 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.
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.
Directors’ Report continued
Risk management continued
Ampol Limited
Annual Report 2021
40
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.
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
and is comprised of senior leaders with the
necessary governance and processes
to successfully prioritise and execute its capital
investments and manage capital allocation.
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.
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.
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.
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.
Social, compliance and conduct risks
15. Regulatory and
compliance
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 Ampol’s values or breach
its Code of Conduct.
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.
16. Fraud or ethical
misconduct
41
Events subsequent to the end of the year
Dividend
On 21 February 2022, the Directors declared a fully franked final dividend of 41 cents per share, representing a payout ratio of 61%
of the second half 2021 RCOP NPAT. As a result, a full year dividend of 93 cents per share is up 94% on 2020 (48 cents per
share).
COVID-19
The emergence of the Omicron variant of COVID-19 has impacted recent trading and the situation continues to evolve. The Group
continues to monitor and review the safeguarding and health of its people and customers, business continuity and cashflow.
Nonetheless, the improved momentum in key profitability drivers in the fourth quarter of 2021, coupled with higher refiner margins,
reinforced the responsiveness of the Group’s earnings to more favourable market conditions.
Other
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 2021 to the date of this report.
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 occupational health, safety and environmental practices to manage material health, safety and
environmental risks, so that these risks are managed in the best interests 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 (OEMS) is designed to ensure that, as far as reasonably practicable,
operations are carried out in an environmentally sound, safe, secure, reliable and efficient manner. OEMS 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.
Compliance with environmental regulations
For the year ended 31 December 2021, regulators were notified of a total of seven environmental reportable non-compliances. For
the period, the group received five formal notices from environmental agencies; four of these notices related to legacy
contamination. Remediation action has been taken in relation to the incidents and notices. The Company received no fines during
the period. All incidents were investigated, and lessons captured and shared as appropriate across the Group.
In June 2021, Ampol formally entered an Enforceable Undertaking (EU) with the ACT environmental regulator. Ampol was ordered
to pay $200,000 to environmental groups as a result of the release of an estimated 79,900 litres of ULP gasoline from an
underground petroleum storage tank at the Kippax Holt franchisee-operated site between 18 December 2019 and 14 February
2020.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 75 and forms part of the Directors’ Report for the financial year
ended 31 December 2021.
Directors’ Report continued
Ampol Limited
Annual Report 2021
42
Remuneration Report
Contents
Message from the Chair of the Human Resources Committee
1.
Overview of Key Management Personnel
2.
Ampol’s remuneration philosophy and framework
3.
2021 Senior Executive remuneration outcomes
4.
Remuneration governance
5.
Senior Executive remuneration in detail
6.
Outlook for 2022
7.
Senior Executive remuneration tables
8.
Non-executive Director remuneration
9.
Appendix: Consideration of the government
fuel security package
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 2021.
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).
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.
43
On behalf of the Board, I am pleased to present Ampol’s Remuneration Report for the year ended 31 December 2021.
Against a backdrop of continued COVID-19 impacts, we have delivered a strong result and made significant progress against our
strategic priorities.
I would like to acknowledge the hard work and commitment of our people who have demonstrated tremendous resilience during
yet another challenging year. Their outstanding delivery combined with an unwavering commitment to our purpose and values has
laid the foundations for our ongoing transformation.
Our integrated value chain has delivered strong earnings and returns for shareholders.
•
Ampol delivered our highest RCOP NPAT since FY 2018. This RCOP NPAT of $365 million represents a stretch outcome and
is $153 million above 2020.
•
We returned $479 million to shareholders during 2021 including a $300 million off-market buy-back completed in January.
•
The Company increased our total dividend from 48 cents per share to 93 cents per share (including the 52 cents per share
interim dividend in 1H 2021).
We have enhanced our core business and evolved our business to ensure we are positioned to partner with
our customers in energy transition.
We enhanced the core business through our Ampol rebrand and improved returns from Fuels and Infrastructure:
•
The rebrand is on track for completion ahead of schedule. We increased the value of the Convenience Retail portfolio through
the announcement of a new property trust with 20 freehold convenience sites. We closed 19 unprofitable sites, progressed the
redevelopment of four highway sites and added one new to industry (NTI) site in growth corridors.
•
After an extensive review, we determined that continued refining operations at Lytton with the proposed Federal Government
Fuel Security Package (Security Package) would enhance shareholder value, while retaining the optionality to transition the
strategically-located site to alternative uses in the future.
The decision to continue operations at Lytton combined with the Security Package significantly reduces earnings volatility and
downside risk while retaining full benefit to earnings upside.
The Security Package gave Ampol further confidence to increase its target leverage under the Capital Allocation Framework.
This enabled Ampol to significantly increase its debt capacity which will assist in the acquisition of Z Energy. It also ensured the
future of approximately 550 manufacturing jobs and hundreds more indirectly.
•
We improved returns for Fuels and Infrastructure Australia (including Lytton) through a $263 million increase in RCOP EBIT
compared to 2020, resulting in a 9 percentage point increase in ROCE to 11%.
We expanded earnings growth through our International business and Convenience Retail shop earnings:
•
The strategy to grow international earnings through our supply chain expertise saw a 38% increase in international sales
volumes. Fuels and Infrastructure International delivered a $39 million uplift in EBIT in 2021, on track to achieve the targeted
$70 million uplift by 2024.
•
Pleasingly, in our first full year as a company-operated model in our retail business, we have begun to see the benefits of the
accelerated focus on reducing labour costs, waste and shrinkage. Convenience Retail delivered a $53 million EBIT uplift in
2021, on track to achieve the targeted $85 million EBIT uplift by 2024.
•
We are well progressed in the Z Energy acquisition, which in addition to supporting our International growth strategy, also
supports our Future Energy and Decarbonisation ambitions. The scale of a combined entity provides an even greater
opportunity for energy transition in the region with both Ampol and Z Energy making great progress in meeting the evolving
energy needs of its customers.
We have evolved our business and taken significant steps to enable an orderly energy transition to support the changing needs of
customers:
•
The launch of our Future Energy and Decarbonisation strategies, including our ambition of achieving net zero scope 1 and 2
emissions from operations by 2040, provides a clear framework to meet our operational decarbonisation targets.
•
The decision to continue operating at Lytton provides a platform for future energy technology and capability growth.
•
We are investing in future energy solutions for our customers with a commitment to spend a minimum of $100 million on future
energy and decarbonisation projects by 2025. In 2021 the following four test and learn partnerships have been implemented:
–
partnership with Endua for microgeneration and storage of hydrogen at remote sites,
–
launched a green hydrogen production trial with Fusion Energy Green Fuels at our Lytton refinery,
–
in collaboration with Tesla, commissioned a virtual power plant (VPP) pilot at three sites in South Australia, and
–
securing ARENA funding to install electric vehicle (EV) fast chargers at 121 sites across Australia.
Directors’ Report continued
Message from the Chair of the Human Resources Committee
Ampol Limited
Annual Report 2021
44
Delivering value for our people, customers and communities is considered part of our holistic and strong
performance in 2021.
We provide a safe place to work with employees who are highly motivated by our strategy and growth prospects:
•
Effective COVID-19 controls made for a safe environment for our customers and employees.
•
The dedication and commitment of our people was exemplified through another strong personal safety outcome which
continues to position us in the top-quartile against industry peers.
•
While there were no Tier 1 process safety incidents (which has been the case since 2018), high workforce turnover at third-
party carriers has seen an increase in the number of spills above historical average. A comprehensive response plan is being
implemented resulting in improved performance in the second half of the year. Threshold performance for process safety
however was not met for 2021, resulting in a zero short-term incentive (STI) outcome for this scorecard component.
•
People and culture are a key part of Ampol’s five-year strategy. With a 78% participation rate in our 2021 culture survey,
overall cultural health increased by 9 percentage points to 72% driven by an increase in employee motivation and positivity. In
2022 we will continue to focus on making Ampol an even better place to work.
Our customers continue to respond positively to the return of the iconic Ampol brand:
•
The rebrand program is progressing well with 880 sites completed at the end of 2021.
•
In addition to the rebrand, we continue to optimise our retail network by simplifying the retail models to the high quality Foodary
and premium Ampol Woolworths Metro offering. In 2021, we completed a further roll-out of 20 new Ampol Woolworths Metro
stores, taking the total to 26.
•
The second Ampol customer summit was launched engaging B2B customers, including distributors, with a focus on energy for
“today and tomorrow”.
We have made significant progress in supporting the community through the Ampol Foundation, including:
•
Delivering our first full year of partnership with The Smith Family and Surf Life Saving Australia, including raising over $340,000
for The Smith Family and $145,000 for Surf Life Saving Australia, through our retail network, the first time we have fundraised
in this way.
•
Relaunching the Ampol Best All Rounder Award program, with 2,040 school registrations.
•
Relaunching our Fuelling Change workplace giving program, increasing funds contributed by 51% and increasing the number
of employees participating.
•
Contributing a total of $3.2 million to our communities through the Ampol Foundation in 2021.
2021 Remuneration Outcomes
The Board takes a holistic approach in assessing a range of quantitative and qualitative factors when evaluating the performance of
Ampol and its Senior Executives. The approach taken includes oversight and judgement across:
•
performance against a range of financial and non-financial performance objectives which cover both Company and business
area strategic priorities;
•
delivery within the Board-approved risk appetite;
•
performance, contributions, and outcomes through the lens of our shareholders, customers, employees and communities;
•
ability to attract and retain best-fit capability to drive sustainable value; and
•
adherence to our stated values, and code of conduct.
For 2021, the Board-approved an average 132% scorecard outcome for Senior Executives, between target and stretch. We believe
that the resulting STI outcome at an average 88% of maximum opportunity across Senior Executives, appropriately balances all
competing expectations and reflects the strong performance in 2021.
After robust consideration of all the relevant factors, the strong performance in 2021 sees the first STI payable to Senior Executives
after two years of nil STI.
The Board’s assessment of 2021 performance included a review of Significant Items. Through this review it was determined that
$10.4 million (after tax) of IT impairments would be included in the RCOP NPAT result for the purpose of determining remuneration
outcomes in 2021. This moved the RCOP NPAT result for remuneration purposes from $365 million to $355 million.
The assessment of the $355 million RCOP NPAT outcome includes $28 million (after tax) received through the Security Package
Temporary Refinery Production Payment (TRPP). We have developed a set of principles which have helped the Board in making
their final assessment of the Security Package. Section 9 of this report provides further information on this assessment.
Consistent with 2020, the 2021 RCOP NPAT result excludes JobKeeper and other wage subsidies, totalling $0.8 million.
45
2021 Remuneration Outcomes continued
As a result of remuneration framework changes introduced in 2021, STI outcomes will have 40% and 25% deferred for two years as
restricted shares for the MD & CEO and other Senior Executives, respectively.
The 2018 long-term incentive (LTI) award vested in April 2021 at 6.66%, as per disclosure in our 2020 remuneration report.
13.33% of the 2019 LTI will vest in April 2022, following performance testing over the three-year period to 31 December 2021.
There were no changes to permanent fixed remuneration for Senior Executives in 2021 and there were also no changes to Non-
executive Director (NED) fees in 2021.
Looking Beyond 2021
At Ampol, we are committed to making sustainability an integral part of our culture and strategy to deliver long-term value for our
shareholders, customers and the community. Our approach involves making sustainability core to decision-making at all levels in
our business and in a way that balances environmental, social and governance aspects with broader strategic objectives.
As Australia’s largest transport fuels provider, Ampol is committed to being an organisation that reduces its operational carbon
footprint as well as finding and developing new energy solutions that can meet our customers’ needs as they evolve. These dual
objectives are intrinsic to our strategy and longevity through delivering sustained value to our stakeholders. Therefore, commencing
from 2022, we are further strengthening the way ESG measures influence our performance by introducing climate measures which
will focus on decarbonisation across Scope 1, 2 and 3 emissions by measuring progress against annual climate performance.
Climate measures will form a tangible component in determining STI outcomes. Senior Executives will have 10% of their target STI
based upon climate measures. Section 6 of this report provides further information on this change.
There are no other remuneration framework changes anticipated for 2022.
On behalf of the Board, I would like to 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 – we look forward to your feedback.
Melinda Conrad
Chair, Human Resources Committee
Directors’ Report continued
Message from the Chair of the Human Resources Committee continued
Ampol Limited
Annual Report 2021
46
1. Overview of 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
Chairman and Independent, Non-executive Director
Mark Chellew
Independent, Non-executive Director
Melinda Conrad
Independent, Non-executive Director
Elizabeth Donaghey(i)
Independent, Non-executive Director
Michael Ihlein
Independent, Non-executive Director
Gary Smith
Independent, Non-executive Director
Penny Winn
Independent, Non-executive Director
Former Non-executive Directors
Barbara Ward AM(ii)
Independent, Non-executive Director
Current Senior Executives
Matthew Halliday
Managing Director and Chief Executive Officer
Greg Barnes(iii)
Group Chief Financial Officer
Andrew Brewer
Executive General Manager, Fuel Supply Chain
Brent Merrick
Executive General Manager, International and New Business
Joanne Taylor(iv)
Executive General Manager, Consumer and B2B
Former Senior Executives
Jeff Etherington(v)
Interim Chief Financial Officer
(i)
Ms Donaghey was appointed to the Board as an Independent, Non-executive Director effective 1 September 2021.
(ii)
Ms Ward AM retired from the Board as an Independent, Non-executive Director effective 13 May 2021.
(iii)
Mr Barnes was appointed Group Chief Financial Officer effective 1 July 2021.
(iv) Ms Taylor was a Senior Executive for the full 2021 performance period. Ms Taylor resigned from Ampol on 14 February 2022.
(v)
Mr Etherington remains employed with Ampol but ceased in the KMP role of Interim Chief Financial Officer effective 30 June 2021.
Changes for Key Management Personnel
Leading from our refreshed strategy, this year we made changes to KMP role accountabilities. These changes enable us to better
adapt to the changing needs of our customers. and to ensure our future energy and international growth ambitions have appropriate
focus. The key changes are:
•
Brent Merrick, Executive General Manager, International and New Business: Responsible for new business at Ampol, including
driving our future energy, decarbonisation, and sustainability strategies. Brent is also responsible for digital strategy and
leading Ampol’s Trading and Shipping business.
•
Joanne Taylor, Executive General Manager Consumer and B2B: Responsible for driving commercial value from the full
spectrum of customer relationships (B2B and B2C customers), including an integrated view of the Ampol branded network.
Joanne is also responsible for Brand, Internal Communications and Corporate Affairs.
•
Andrew Brewer, Executive General Manager, Fuel Supply Chain: Responsible for driving integrated value and optimisation
across our fuel supply chain including our Lytton refinery and portfolio of infrastructure assets. Andrew will also continue to
have accountability for our Information Technology team.
The changes in accountability were factored into our annual independent remuneration benchmarking process and led to fixed pay
changes for Mr Brewer and Mr Merrick, which will commence in 2022. These fixed pay changes are outlined in more detail in
section 6 of this report.
Remuneration Report
47
2. Ampol’s remuneration philosophy and framework
Our remuneration philosophy and framework are designed to support Ampol’s strategy to sustainably deliver value and growth for
our owners, people and customers.
Directors’ Report continued
Remuneration Report continued
Purpose
Powering better journeys, today and tomorrow
Strategy
Strategic
focus areas
Remuneration
Principles
Alignment with
shareholders’
interests
Performance
focused and
differentiated
Market
competitive
Fair and
Equitable
Sustainably deliver value and growth for our owners,
people and customers
Minimum requirement to demonstrate Ampol’s stated values and appropriate conduct.
Board oversight considering of the holistic quality of delivery including risk management, capital management and performance,
contributions, and outcomes through the lens of our Shareholders, Customers, Employees and Communities.
Purpose
Performance
Delivery
Fixed
Remuneration
To attract and retain the
best capability to deliver
the Ampol strategy.
Independent benchmarking to ensure
competitive positioning against
two Board-approved ASX listed
peer groups focused on where we
compete for capital and talent and
our market capitalisation.
Base salary, un-capped statutory
superannuation and other benefits.
Short-term
Incentive
Reward the achievement
of annual targets
aligned with sustainably
delivering value
and growth.
A combination of financial (RCOP
NPAT) and non-financial measures
(safety, brand, capability and culture)
as well as execution of business
strategic priorities.
A mix of cash and deferred
restricted shares.
Long-term
Incentive
Align Senior Executive
remuneration with
long-term shareholder
experience.
An equal combination of relative
Total Shareholder Return compared
against the ASX 100 and Return on
Capital to incentivise strong and
sustained shareholder returns.
Performance rights for nil
consideration as a right to receive a
fully paid ordinary share following
a three year performance period.
Trading is restricted for an additional
one year post any vesting.
There is also a minimum shareholding
requirement for Senior Executives
over a five year period.
Enhance
the core business
Expand
from rejuvenated
fuels platform
Evolve
energy offer for
our customers
Ampol Limited
Annual Report 2021
48
2. Ampol’s remuneration philosophy and framework continued
Remuneration structure
Ampol’s Senior Executive remuneration framework delivers total remuneration outcomes over a four-year period.
Our framework supports the achievement of strategic priorities; is an effective mechanism to attract and retain executive talent; and
provides strong alignment with the interests of shareholders.
Fixed remuneration consists of market competitive base salary and superannuation.
Variable remuneration represents performance based “at-risk” remuneration which is delivered through:
•
an annual STI program which delivers outcomes as a combination of cash and restricted shares;
•
a three-year LTI program which issues performance rights (subject to performance conditions and continued employment) as
well as trading restrictions out to the end of a four-year period; and
•
deferred (equity-based) remuneration, which is underpinned by our minimum shareholding requirement.
Further information about our Senior Executive remuneration structure, including variable remuneration terms, is provided in section
5.
Chart 1: Senior Executive remuneration structure
Remuneration mix
The mix of remuneration for Senior Executives has the largest weighting on variable remuneration and equity-based variable
remuneration represents the largest component of total remuneration at stretch performance.
The mix of maximum total remuneration, representing stretch performance, is outlined in chart 2 below for 2021.
Chart 2: Senior Executive remuneration mix
(i)
The remuneration mix for the MD & CEO reflects a base salary of $1,650,000 and the annual STI and LTI award reflects 105% and 150% of base salary
respectively.
(ii)
The remuneration mix for other Senior Executives reflects average base salary of the cohort and annual STI and LTI award both reflecting 90% of base
salary.
(iii)
Variable (Cash) remuneration includes the superannuation payable on the cash portion of the annual STI (60% for MD & CEO and 75% for other Senior
Executives) and assumes all annual objectives are assessed at stretch performance.
(iv)
Variable (Equity) remuneration includes the deferred portion of the annual STI (40% for MD & CEO and 25% for other Senior Executives) and assumes all
annual objectives and performance rights granted under the Ampol Equity Incentive Plan (AEIP) are assessed at stretch performance.
Year 1
Year 2
Year 3
Year 4
Fixed
Remuneration
Variable
Remuneration
Short-term
Incentive
Cash
Restricted Shares
Long-term
Incentive
Performance Rights
Restricted Shares
MD & CEO(i)
Other Senior
Executives(ii)
0
20
40
60
80
100
30%
19%
52%
37%
25%
38%
Fixed Remuneration
Variable (Cash)(iii)
Variable (Equity)(iv)
49
3. 2021 Senior Executive remuneration outcomes
A snapshot of 2021 remuneration outcomes is presented in table 1. A detailed overview of the 2021 performance measures and the
overall assessment of performance is provided further below, in this section.
Table 1: Summary of 2021 Senior Executive remuneration outcomes
Fixed Remuneration
Variable Remuneration
Short-term incentive
Long-term incentive
No changes were made to Senior
Executive fixed remuneration in 2021.
After consideration of holistic
performance, the Board approved an
average scorecard assessment of 132%
of target for Senior Executives.
2021 annual STI outcomes represent
88% of maximum opportunity, on
average.
6.66% of the 2018 LTI award vested in
April 2021.
For details on the 2019 LTI award which
is due to vest in April 2022, refer to the
‘Outlook for 2022’, in section 6.
Fixed remuneration
As reported in the 2020 Remuneration Report, there were no permanent increases to fixed remuneration for Senior Executives.
During her functional leadership of People and Culture, a higher duties salary was provided to Joanne Taylor during 2021. This
amount is included in the salary values reported in table 5.
Following our annual independent market benchmarking process and recent changes in Senior Executive accountabilities, two
Senior Executives will receive an increase in fixed remuneration in 2022. There will be no change to fixed remuneration for the MD
& CEO in 2022. These details are included in section 6.
Short-term incentive
The Board takes a holistic approach in assessing performance through the consideration of a range of inputs and outcomes. Our
STI framework rewards the achievement of annual scorecard performance measures aligned with sustainably delivering value and
growth. Assessment of these measures represents a key input into the Board’s assessment of performance and determination of
STI outcomes.
For 2021, performance measures include a combination of financial and non-financial measures through the Ampol (Company)
scorecard which accounts for 65% of target STI opportunity, with the remaining 35% of target STI opportunity determined through
objectives aligned to our business area strategic priorities.
The following table provides an overview of the 2021 performance assessment for the Senior Executives.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
50
3. 2021 Senior Executive remuneration outcomes continued
Table 2: 2021 performance commentary and assessment for short-term incentive
Performance measure
Commentary
Assessment
Ampol Scorecard (65%) (i)
Profit (40%) (ii)
Delivering annual RCOP NPAT to plan carries
the greatest weight in the Ampol Scorecard. This
ensures STI outcomes are heavily influenced by
the annual profit result and aligned to
shareholder experience. A profit gateway of 80%
RCOP NPAT to plan applies to the entire Ampol
Scorecard.
Our key financial measure of RCOP NPAT finished at $365
million, which is $153 million above 2020. This result represents
a stretch outcome.
The Board’s review of significant items determined that $10.4
million (after tax) of IT impairments would be included in the
RCOP NPAT result for the purpose of determining remuneration
outcomes in 2021, This moved the RCOP NPAT result for
remuneration purposes from $365 million to $355 million.
After careful consideration and assessment against a set of
robust principles, the Board determined that the $28 million
received through the TRPP in 2021 will remain included in the
RCOP NPAT result ($355 million). Section 9 in this report
provides further detail on this determination.
Stretch
Safety (15%) (iii)
Delivering safe, reliable, high-quality products
and services to our customers is a critical
measure of success. There are three safety
measures which include Total Recordable Injury
Frequency Rate (TRIFR) specific to both the
Fuels and Infrastructure and Convenience Retail
businesses, as well as recordable spills which is
specific to Fuels and Infrastructure only.
Performance gateways apply to each safety
measure.
The commitment to safety was exemplified through another
record-breaking personal safety outcome which continues to
position us in the top-quartile against industry peers. Personal
safety performance for the Fuels and Infrastructure and
Convenience Retail businesses was above stretch performance,
recording 1.9 and 4.6 TRIFR over the 2021 performance year,
respectively.
While there were no Tier 1 process safety events through 2021
(and none since 2018), three Tier 2 process safety events were
recorded which resulted in the performance gateway of a
maximum of two Tier 2 events in the year not being met and
therefore, no STI is payable against the process safety
measure.
Between
target and
stretch
Brand (10%)
2021 was a transformative year for Ampol,
relaunching the brand and accelerating site
conversions around Australia. We established a
clear approach to measure brand awareness and
preference and tracked these metrics through a
Brand Health monitor, managed by an external
third party.
We also set clear site conversion targets for
2021.
Customers have responded positively to the return of our iconic
Australian brand, Ampol.
Both Prompted Brand Awareness and Brand Preference
reached our targeted performance range in 2021.
With 880 sites rebranded in 2021, we are on track for
completion of the Ampol network(iv) ahead of schedule.
Between
target and
stretch
51
3. 2021 Senior Executive remuneration outcomes continued
Table 2: 2021 performance commentary and assessment for short-term incentive continued
Business Area Strategic Priorities (35%) (v)
Enhance the core business
•
The rebrand is on track for completion ahead of schedule. We increased the value of the Convenience Retail
portfolio through the announcement of a new property trust with 20 freehold convenience sites. We closed 19
unprofitable sites, progressed the redevelopment of four highway sites and added one NTI site in growth
corridors.
•
Our decision to continue our refinery operations at Lytton and the negotiation with the Australian Government of
the Fuel Security Services Payment (FSSP) significantly reduces earnings volatility and downside risk while
retaining full benefit to earnings upside.
•
Improved returns for Fuels and Infrastructure Australia (including Lytton) through a $263m increase in RCOP
EBIT compared to 2020.
Between
target and
stretch
Expand from a rejuvenated fuels platform
•
The strategy to grow international earnings through our supply chain expertise saw a 38% increase in
international sales volumes. Fuels and Infrastructure International delivered a $39 million in EBIT uplift in 2021
and is on track to achieve the targeted $70 million uplift by 2024.
•
Pleasingly, in the first full year of the company operated site model in our Convenience Retail business, we
have begun to see the benefits of the accelerated focus on reducing labour costs, waste, and shrinkage.
Convenience Retail delivered a $53 million EBIT uplift by end 2021 and is on track to achieve the targeted $85
million EBIT uplift by 2024.
Between
target and
stretch
Evolve the energy offer for our customers
•
Our Future Energy and Decarbonisation strategies, including our ambition of achieving net zero emissions
from operations by 2040 was released in Q2 2021 and provides a clear framework to meet our interim
operational decarbonisation targets.
•
We are investing in future energy solutions for our customers with a commitment to spend a minimum of $100
million on future energy and decarbonisation projects by 2025. In 2021 four test and learn partnerships were
delivered:
–
partnership with Endua for microgeneration and storage of hydrogen at remote sites,
–
launched a green hydrogen production trial with Fusion Energy Green Fuels at our Lytton refinery,
–
In collaboration with Tesla, commissioned VPP pilots at three sites in South Australia, and
–
secured ARENA funding to install EV fast chargers at 121 across Australia.
Between
target and
stretch
(i)
The Ampol Scorecard represents a common set of performance measures for all incentive eligible employees at Ampol, including Senior Executives. A
profit gate opener of 80% RCOP NPAT to target applies to this portion of the Scorecard.
(ii)
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. Through this review it was determined that $10.4 million (after tax) of IT impairments would be included in the RCOP NPAT result for the
purpose of determining remuneration outcomes in 2021. This moved the RCOP NPAT result for remuneration purposes from $365 million to $355 million.
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.
(iii)
TRIFR gateways of: Fatality = 0 and Category 2 injuries <=2. Fuels and Infrastructure recordable spills ( > 1bbl marine spills) gateway of; Tier 1 process
safety events <=1 and Tier 2 process safety events <=2
(iv) Excludes EG sites which have been delayed to the end of the program.
(v)
The Board has oversight across objectives specific to each Senior Executive’s strategic priorities. This includes financial and/or non-financial objectives to
incentivise the creation of value and growth in each business area on an annual basis.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
52
3. 2021 Senior Executive remuneration outcomes continued
Overall assessment for short-term incentive
While annual scorecard outcomes are the key driver of STI, the Board takes a holistic approach in assessing a range of quantitative
and qualitative inputs and outcomes in carefully considering the performance of Ampol and its Senior Executives.
The approach taken includes oversight and judgement across a range of factors not included in the annual scorecard, including:
•
management within the Board-approved risk appetite,
•
performance and reward appropriateness through the lens of our shareholders, customers, employees, and communities,
•
ability to attract and retain best fit capability to drive sustainable value, and
•
adherence to Ampol’s values, and Code of Conduct.
Taking all the relevant factors into account, the Board approved Senior Executive annual STI outcomes representing 88% of
maximum opportunity, on average. Table 3 below sets out the Senior Executive STI outcomes as a result of the 2021 performance
assessment.
Table 3: 2021 Senior Executive short-term incentive outcomes
2021 STI as % of base salary
2021 Outcome as
% of target
opportunity
2021 Outcome as
% of maximum
opportunity
Target
Opportunity
Maximum
Opportunity
Actual
Outcome
Current Senior Executives
Matthew Halliday
70%
105%
93%
133%
89%
Greg Barnes(i)
60%
90%
77%
128%
85%
Andrew Brewer
60%
90%
79%
131%
87%
Brent Merrick
60%
90%
78%
130%
87%
Joanne Taylor
60%
90%
83%
138%
92%
Former Senior Executives
Jeff Etherington(ii)
–
–
–
–
–
(i)
Mr Barnes was appointed Group Chief Financial Officer effective 1 July 2021. To attract Mr. Barnes to the role in the middle of the performance period, it
was agreed that he would be entitled to a full-year 2021 STI opportunity based upon full year contractual salary and meeting clear performance objectives
and in lieu of any sign-on arrangement. 25% of Mr Barnes’ STI outcome is deferred into restricted shares for two years.
(ii)
Mr Etherington remains employed with Ampol but ceased in the KMP role of Interim Chief Financial Officer effective 30 June 2021. Mr Etherington did not
participate in the Senior Executive remuneration framework for 2021.
A portion of STI outcomes will be deferred in restricted shares for two years, for the MD & CEO this represents 40% and for the
other Senior Executives it represents 25%. Further information on 2021 total remuneration outcomes for Senior Executives is set
out in table 5.
Long-term incentive
The 2018 LTI grant vested in April 2021, following Board assessment of performance measures over the 1 January 2018 to
31 December 2020 performance period. Overall, 6.66% of the 2018 LTI award vested in April 2021. This grant was subject to the
achievement of relative Total Shareholder Return (TSR) against S&P/ASX 100 companies (60%) and three strategic measures.
•
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 2021.
•
The vesting performance of the Fuels and Infrastructure profit growth measure (20%) and Convenience Retail EBIT growth
measure (10%) was below threshold.
•
As disclosed in Ampol’s 2020 remuneration report, performance of the franchisee transition measure (10%) was assessed at
target resulting in 66.6% of this measure having vested on 1 April 2021.
Refer to section 6 for vesting outcome of the 2019 LTI award that will vest in April 2022.
53
3. 2021 Senior Executive remuneration outcomes continued
Summary of 2021 total remuneration outcomes continued
Chart 3 illustrates 2021 total remuneration outcomes compared to the maximum opportunity under the Senior Executive
remuneration framework presented in chart 2 on page 49. This reflects the average of the variable remuneration outcomes
presented in table 5 where the detail of total remuneration earned in 2021 for each Senior Executive is provided.
Chart 3: 2021 total remuneration outcomes
(i)
For the MD & CEO the Variable (Equity) component includes restricted shares granted to Mr. Halliday as part of a sign-on arrangement upon
commencement in 2019, and which vests over four years. 30.2% of this grant vested in 2021. Further details are provided in tables 10 and 11.
(ii) The 2021 outcome represents an average STI outcome of 88% of maximum opportunity for the 2021 performance year and LTI vested during the year.
Maximum
opportunity
2021 outcome(i)
Maximum
opportunity
2021 outcome(ii)
$0
$2,000,000
$4,000,000
$6,000,000
Fixed Remuneration
Variable (Cash)
Variable (Equity)
MD & CEO
Other senior
Executives
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
54
3. 2021 Senior Executive remuneration outcomes continued
Link between Company performance and Senior Executive remuneration
Table 4 outlines Ampol’s TSR, dividend, share price, earnings per share, RCOP NPAT results and safety performance each year
from 2017 to 2021 together with a comparison to actual STI and LTI outcomes.
Our key financial measure of RCOP NPAT finished at $365 million, which is $153 million above 2020. This result represents the
highest RCOP NPAT result since 2018, despite the continued backdrop of COVID-19 disruptions. We delivered another record-
breaking personal safety outcome which continues to position us in the top-quartile against industry peers.
Ampol’s Senior Executive remuneration outcomes have maintained strong alignment to Company performance and shareholder
experience over time. Stretch RCOP NPAT performance for 2021 has resulted in STI being payable after two years of nil STI.
Table 4. Link between Company performance and Senior Executive remuneration (unaudited)
Summary of performance
2021
2020
2019
2018
2017
12-month TSR %(i)
7.0
-14.1
36.9
-21.7
11.8
Dividends paid (cents per share)
75
76
93
118
121
Share price(ii)
$29.66
$28.42
$33.95
$25.48
$34.05
RCOP NPAT excl. significant items earnings per share
$1.53
$0.84
$1.36
$2.06
$2.38
RCOP NPAT excl. significant items (million)(iii)
$365
$212
$344
$538
$621
Ampol safety – TRIFR(iv)
3.4
7.4
11.5
8.3
5.2
Ampol safety – DAFWIFR(v)
1.8
3.1
5.7
2.0
1.4
Link to remuneration
RCOP NPAT relative to annual target
153%
43%
65%
89%
119%
Average Senior Executive STI outcome (to target)
132%
0%
0%
88%
121%
LTI vesting outcome at end of performance period
Year of grant
2019
2018
2017
2016
2015
Vesting percentage
13.33%
6.66%
6.66%
21.22%
22.38%
(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.
55
3. 2021 Senior Executive remuneration outcomes continued
2021 Total remuneration earned by Senior Executives
The following table sets out the actual remuneration earned by Senior Executives in 2021. The value of remuneration includes the
long-term equity grants where the Senior Executive received control of the shares in 2021.
The purpose of this table is to provide a summary of the remuneration outcomes received in either cash or equity in 2021. The
values in this table will not reconcile with those provided in the statutory disclosures in table 9. For example, table 9 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. The following table discloses the value of the 2018 LTI grant which vested in
2021 as well as the full value of the deferred portion of 2021 STI to be granted in April 2022 which is not reflected in table 9 on the
same basis.
Table 5: Total remuneration earned by Senior Executives in 2021 (unaudited, non-statutory disclosure)
Fixed
Remuneration
(i)
STI (Cash) (ii)
STI (Restricted
Shares)
(iii)
LTI vested
during the
year
(iv)
Remuneration
‘earned’
for 2021
(v)
Current Senior Executives
Matthew Halliday (Managing Director and Chief Executive Officer)
2021
2,092,958
1,013,859
614,460
859,707
4,580,984
Greg Barnes (Group Chief Financial Officer)(vi)
2021
565,015
601,920
182,400
-
1,349,335
Andrew Brewer (Executive General Manager, Fuel Supply Chain)
2021
919,825
502,549
152,288
14,246
1,588,908
Brent Merrick (Executive General Manager, International and New Business)
2021
878,730
460,103
139,425
155,634
1,633,892
Joanne Taylor (Executive General Manager, Consumer and B2B)(vii)
2021
1,138,733
553,140
167,618
26,531
1,886,022
Former Senior Executives
Jeff Etherington (Interim Chief Financial Officer)(viii)
2021
461,864
158,389
-
15,987
636,240
Total
remuneration:
2021
6,057,125
3,289,960
1,256,191
1,072,105
11,675,381
(i)
Salary and fees comprise base salary, superannuation on base salary, annual leave and long service leave entitlements, and any fringe benefits tax
payable on non-monetary benefits.
(ii)
The cash portion of short-term incentive for the 2021 performance year payable in April 2022 including employer superannuation contribution.
(iii)
The grant value of the deferred portion of 2021 STI issued as restricted shares for two years to be granted in April 2022. 40% of the STI outcome is
deferred for the MD & CEO and 25% of the STI outcome is deferred for the other Senior Executives.
(iv) This refers to cash and equity based LTI plans from prior years that have vested in the current 2021 year. The value is calculated using the closing share
price of Company shares on the vesting date. The 2021 LTI figures reflect 6.66% of the 2018 LTI Award vested. For Mr Halliday, this amount refers to the
value of the restricted shares which were granted in 2019 as part of a sign-on arrangement, of which 28,095 shares vested to him during 2021 (refer to
table 10 for more detail). For Mr Merrick this amount includes the vesting value of tranche 1 of 2 of a one-off retention award of Share Rights granted in
2019.
(v)
This refers to the total value of remuneration earned during 2021, being the sum of the prior columns.
(vi) Mr Barnes was appointed Group Chief Financial Officer effective 1 July 2021. To attract Mr. Barnes to the role in the middle of the performance period, it
was agreed that he would be entitled to a full-year 2021 STI opportunity based upon full year contractual salary and meeting clear performance objectives
and in lieu of any sign-on arrangement.
(vii) Ms Taylor resigned from Ampol on 14 February 2022. The Board has exercised its discretion to pay STI for 2021 given the strong performance and
contribution over the full performance period. Upon cessation of employment, the Restricted Shares component of 2021 STI (being 25%), will be forfeited.
(viii) Mr Etherington remains employed with Ampol but ceased in the KMP role of Interim Chief Financial Officer effective 30 June 2021. Mr Etherington did not
participate in the Senior Executive remuneration framework for 2021.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
56
4. Remuneration governance
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, cultural health and engagement as well as diversity, equity and
inclusion.
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.
Throughout the performance year the Human Resources Committee support the Board by regularly monitoring performance against
the Board-approved Ampol Scorecard and strategic priorities for Senior Executives.
While annual scorecard outcomes are the primary driver of STI, the Board takes a holistic approach in assessing a range of
quantitative and qualitative inputs and outcomes in carefully considering the performance of Ampol and its Senior Executives. The
approach taken includes oversight and judgement across:
•
management within the Board-approved risk appetite,
•
performance and reward appropriateness through the lens of our shareholders, customers, employees and communities,
•
ability to attract and retain best fit capability to drive sustainable value, and
•
adherence to Ampol’s values, and our Code of Conduct.
The Board uses this assessment in considering the potential for a discretionary overlay either upward or downward at the Ampol
and/or individual level.
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).
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 2021, Ampol received no ‘remuneration recommendations’ (as defined in the Corporations Act).
Malus and Clawback
Ampol has malus and clawback provisions over Senior Executive remuneration that allows the Company to reduce (including to
zero) and/or recoup incentives that may have been awarded and/or vested to Senior Executives in certain circumstances. Triggers
to enact these provisions include where the Senior Executive acts fraudulently or dishonestly; is in breach of their obligations; has
brought a Group company into disrepute; delivers business performance which is unsustainable or involves unacceptably high risk;
where there has been a material failure of risk management by the Company; 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.
The Board may at any time exercise discretion if, acting in good faith, it determines that any trigger for malus and clawback exists or
has occurred. These actions include; deem any vesting equity award granted to the Senior Executive to be forfeited; reissue any
number of performance rights or restricted shares to the Senior Executive subject to new vesting conditions in place of any forfeited;
require reimbursement of cash already paid to the Senior Executive following vesting; adjust the Senior Executive’s future incentive
remuneration; and/or initiate legal action against the Senior Executive.
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 the
Ampol Equity Incentive Plan (AEIP). 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 Ampol 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.
57
5. Senior Executive remuneration in detail
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 considers 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 2021 annual total target and maximum remuneration is outlined below.
Table 6. MD & CEO total remuneration
Fixed
Remuneration
Variable Remuneration
STI (ii)
LTI (iii)
Target
$1,815,000(i)
$1,224,300 (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.
Maximum
$1,836,450 (105% 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.
Notes:
(i)
Fixed Remuneration consists of a base salary of $1,650,000 and superannuation contribution of 10.0%. The MD & CEO’s base salary remains unchanged
since his appointment effective 29 June 2020
(ii)
Values include the superannuation contributions of 10.0% on the cash component of STI (60%), the deferred component of restricted shares (40%) does
not attract superannuation.
(iii)
LTI performance rights are tested at the end of a three-year performance period and converted to shares subject to a 12-month restriction period.
Table 7. Summary of MD & CEO’s service agreement
Term
Conditions
Duration
Ongoing until notice is given by either party
Termination by MD & CEO
Six months’ notice
Company may elect to make payment in lieu of notice
Termination by Company for cause No notice requirement or termination benefits (other than accrued entitlements)
Termination by Company (other)
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.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
58
5. Senior Executive remuneration in detail continued
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.
Table 8. 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 Leading Results Program 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.
2021 Short-term Incentive Program
Plan
STI awards are made under the Leading Results Program.
Plan design
The plan considers Company performance against key financial and non-financial performance measures
defined in the Ampol (Company) Scorecard (65%) as well as individual contribution of the Senior Executive
in delivering objectives aligned to our business area strategic priorities (35%).
Period
The performance period is for the 12 months ending 31 December 2021.
Incentive
opportunity
For the MD & CEO the target STI opportunity is 70% of base salary and the maximum stretch STI
opportunity is 105% of base salary. For other Senior Executives the target STI opportunity is 60% of base
salary and the maximum stretch STI opportunity is 90% of base salary. Below threshold performance
results in 0%.
Financial gateway
RCOP NPAT performance, including the cost of incentives, must achieve 80% of target before STI is
payable for 65% of the Leading Results Program (the Ampol Scorecard).
Deferral
STI awards are delivered part in cash (60% for the MD & CEO, 75% for other Senior Executives), and part
in Restricted Shares deferred for two years (where the deferred component is over $25,000).
Superannuation is only payable on the cash portion of STI.
Restricted Shares
The number of Restricted Shares granted will be calculated by dividing the deferred portion of Senior
Executive STI outcome by the volume-weighted average price (VWAP) of the Company’s ordinary shares
for 20 trading days up to 1 January 2022. Restricted Shares will be granted on or around 15 April 2022
consistent with payment of the STI cash portion. Senior Executives will be restricted in trading shares until 1
April 2024 (Vesting Date).
Cessation of
employment
Unless the Board determines otherwise, if you cease employment with a Group Company prior to the
Vesting Date of Restricted Shares:
•
due to resignation or dismissal for cause, your Restricted Shares will immediately be forfeited;
•
for any other reason, (including due to retirement, Total and Permanent Disability, death or
redundancy), your Restricted Shares will remain on foot and will vest at the original Vesting Date.
Frequency
STI awards are paid annually. Payments are made in the April following the end of the performance period
and Board approval.
Board discretion
The Board has discretion to alter, remove or substitute performance measures at any time prior to payment
and has full discretion in relation to calculations and outcomes.
59
5. Senior Executive remuneration in detail continued
2021 Long-term Incentive Plan
Plan
The 2021 LTI award was granted under the AEIP.
LTI instrument
Performance rights are granted by the Company for nil consideration. Each Performance Right is an
entitlement to receive one Restricted Share (or a cash payment of equivalent value), subject to satisfaction
of the applicable performance conditions over the performance period and the cessation of employment
rules outlined further below.
Performance Rights do not carry any dividend or voting rights, or in general, a right to participate in other
corporate actions, such as bonus issues. Performance Rights are not transferable (except in limited
circumstances or with the consent of the Board).
Following vesting, performance rights are converted to restricted shares and may not be sold or otherwise
dealt with, until the end of the 12 month restricted period.
Restricted shares are not transferable (except in limited circumstances or with the consent of the Board).
Allocation
methodology
The number of Performance Rights granted has been calculated by dividing the maximum LTI opportunity
by the VWAP of the Company’s ordinary shares for 20 trading days up to the first day of the Performance
Period, discounted to recognise that the Performance Rights have no rights to receive dividends.
Performance
period
The performance period is three years commencing on 1 January in the year the awards are made.
For the 2021 awards, this is the three-year period from 1 January 2021 to 31 December 2023.
LTI 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
measures
Vesting of Performance Rights is subject to the following performance conditions:
•
50% of the Performance Rights are subject to a relative TSR measure, reflecting shareholder
experience; and
•
50% of the Performance Rights are subject to a return on capital employed (ROCE) measure,
reflecting the Company’s return on capital.
Vesting
Vesting will occur in the April following the performance period once the performance measures have been
assessed per the vesting schedule.
For the 2021 awards, this will be April 2024.
Vesting schedule
Relative TSR performance(i) and percentage of the rights that will vest:
•
Threshold (50th percentile): 50%
•
At or above Stretch (75th percentile): 100%
•
Pro-rata vesting occurs between threshold and stretch performance levels
ROCE is determined as RCOP EBIT over capital employed where capital employed is total equity plus net
debt. ROCE will be calculated by using the average RCOP EBIT and the average capital employed over the
three year performance period. ROCE performance(ii) and percentage of the rights that will vest:
•
Threshold: 33.3%
•
Target: 66.6%
•
Stretch: 100%
•
Pro-rata vesting occurs between threshold and target, and target and stretch performance levels
(i)
Relative TSR measures a return on an investment in Shares over the Performance Period, relative to companies that comprise Standard & Poor’s
S&P/ASX 100 index at the commencement of the Performance Period. The return is based on an investor’s return, defined as the percentage difference
between the initial amount invested in Shares and the final value of those Shares at the end date, assuming dividends were reinvested. Any effects from
Share price volatility on a particular day at the beginning or end of the Performance Period are smoothed out by calculating the average Share price over a
reasonable time period determined by the Board. The Board has discretion to adjust the comparator group to take into account events including, but not
limited to, takeovers, mergers or de-mergers that might occur during the Performance Period. The Board retains discretion to adjust the TSR measure or
vesting schedule in exceptional circumstances, including matters outside of management’s influence, to ensure that a participant is neither advantaged nor
disadvantaged by matters that may materially affect achievement of the TSR performance measure.
(ii)
Threshold ROCE performance has been set above our Weighted Average Cost of Capital (WACC) and target aligned to the three-year business plan target
approved in 2020. When testing the ROCE targets, the Board has full discretion in relation to its calculations and may include or exclude items, including 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. The Board considers ROCE targets as commercially sensitive, as disclosure could potentially indicate the
Company’s margins. Therefore, those targets will not be disclosed during the performance period. The Board will set out how Ampol has performed against
ROCE performance measures in the 2023 Remuneration Report, to be published in February 2024.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
60
5. Senior Executive remuneration in detail continued
2021 Long-term Incentive Plan continued
Allocation of
Shares upon
vesting
Following determination of the extent to which the performance conditions have been satisfied (at the end
of the three-year performance period), vested Performance Rights will be automatically exercised, and one
Restricted Share will be allocated for each vested Performance Right that is exercised (unless the Board
decides to settle any vested Performance Rights in cash).
The Company’s obligation to allocate Restricted Shares on vesting and automatic exercise will be satisfied
using shares that have been purchased on-market.
Price payable
for securities
No amount is payable in respect of the grant of Performance Rights, nor in respect of any Restricted
Shares allocated following vesting of the Performance Rights.
Cessation of
employment
The treatment of the Performance Rights and Restricted Shares upon cessation of employment is
summarised in the table below:
Date of cessation
Reason
Outcome
Less than six months after grant
date
Any
All Performance Rights will immediately lapse
At least six months after grant
date, but prior to vesting
Resignation or
dismissal for cause
All Performance Rights will immediately lapse
Any other reason
Unless the Board determines otherwise,
Performance Rights will continue and vest on the
original vesting date, subject to satisfaction of
the performance conditions. The Board has
discretion to determine that only a pro-rata
number of Performance Rights continue, based
on the Performance Period elapsed.
Following vesting (whilst holding
Restricted Shares)
Any
The restrictions on the Shares will immediately
be lifted.
The Board may exercise its discretion to determine a different treatment prior to or within 60 days of
the cessation date. In the event that any additional lapsing of Performance Rights is determined by the
Board, the lapse will be deemed to have taken effect on the cessation date.
Malus and
Clawback
The Plan provides the Board with the ability to reduce, vary or claw back Performance Rights, Restricted
Shares and Shares in circumstances where the Board considers that the Senior Executive received
inappropriate or unfair benefits in connection with their 2021 LTI, or any other remuneration. These
circumstances may include fraud, dishonesty, gross misconduct, material misstatement of accounts or risk
failures.
Change of control
provisions
Any unvested performance rights may vest at the Board’s discretion.
Senior Executive minimum shareholding requirements
A minimum shareholding requirement was introduced in 2021 and applies to the MD & CEO as 100% of fixed annual remuneration,
and other Senior Executives as 50% of fixed annual remuneration. The minimum shareholding is to be obtained within five years of
1 January 2021 or 1 July following Senior Executive commencement.
61
6. Outlook for 2022
Fixed remuneration
In 2021 a review of Ampol’s operating model was completed ensuring we balance today’s business with investment for tomorrow
and keep customers at the heart of everything we do. Senior Executive portfolios were revised as a new leadership team was
established. A comprehensive external and independent remuneration benchmarking exercise was completed following the
appointment of Senior Executives to new positions.
The benchmarking demonstrated that our remuneration framework remains competitive and delivers an appropriate mix of fixed and
variable remuneration. However, to ensure total remuneration levels appropriately reflect the scope of our Senior Executive roles,
two Senior Executives will receive adjustments to base salary, to take effect in 2022.
•
Andrew Brewer will receive a 3% increase following appointment to the Executive General Manager Fuel Supply Chain role;
and
•
Brent Merrick will receive an 8% increase following appointment to the Executive General Manager International and New
Business role.
Variable remuneration
Short-term Incentive plans
Commencing from 2022, climate measures will form a key input in determining STI outcomes. A 10% weighting to Climate
measures will be added to the Ampol Scorecard through a reweighting of both Safety and Brand measures. There are no other
anticipated changes to STIs for 2022.
At Ampol, sustainability has long been an integral part of our culture and strategy to deliver long-term value for our shareholders,
customers and the community. Our approach involves making sustainability core to decision-making at all levels in our business
and in a way that balances ESG aspects with broader strategic objectives.
Ampol is committed to being an organisation that reduces its operational carbon footprint as well as finding and developing new
energy solutions that can meet our customers’ needs as they evolve. These dual objectives are intrinsic to our longevity and
delivering sustained value to our stakeholders. Therefore, commencing from 2022, climate measures will form a key part of
determining STI outcomes.
Ampol’s climate measures will focus on decarbonisation across Scope, 1, 2 and 3 emissions by measuring progress against annual
climate performance. Performance will be determined by assessing progress made towards:
•
2025 Scope 1 and 2 emissions targets through the delivery of abatement projects; and
•
Scope 3 emissions intensity reduction goals through the delivery of targeted e-mobility, hydrogen and biofuels initiatives.
These focus areas are strongly aligned to our strategy and future success in delivering sustainable value to our stakeholders.
Long-term Incentive plans
There are no anticipated changes to the 2022 LTI plan. The terms of the 2021 LTI plan presented in section 5 of this report will
apply consistently to the 2022 LTI grant to be awarded in April 2022.
Following Board assessment of performance measures over the three-year performance period ending 31 December 2021, 13.33%
the 2019 LTI grant will vest in April 2022. This grant was subject to the achievement of relative TSR (60%) and a ROCE measure
(40%):
•
Ampol’s relative TSR performance compared to S&P/ASX 100 companies over the period was at the 44th percentile
representing below threshold (50th percentile) performance. No portion of the performance rights subject to this measure will
vest in April 2022.
•
Ampol’s ROCE performance over the period was 10.3% representing threshold performance. Consistent with the determination
of RCOP NPAT for remuneration purposes in 2021, IT impairments of $10.4 million (after tax) were included in the final
determination of the ROCE performance calculation over the three years ending 31 December 2021. ROCE threshold is
defined as WACC plus 1% with ROCE target defined per 2019 three-year Business Plan. Average annual pre-tax WACC over
the performance period was 9.2%. The at threshold assessment of ROCE results in 33.3% of the performance rights subject to
this measure vesting (13.33% of the total 2019 LTI award).
Where the Senior Executive does not meet their minimum shareholding requirement at the vesting date, 25% of the of the vested
portion of the 2019 LTI award will be converted to restricted shares with four-year dealing restriction (i.e., until April 2026). The
restricted shares will be converted to ordinary shares at the earlier of the four year restriction period; the Senior Executive meeting
their minimum shareholding requirement; or upon cessation of employment.
Performance of the 2020 LTI grant will be tested at the year ending 31 December 2022 with the potential to vest in April 2023.
The 2020 LTI grant is subject to equally weighted relative TSR and ROCE performance measures.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
62
7. Senior Executive remuneration tables
Table 9. Total remuneration for Senior Executives in 2021 (statutory disclosures)
The following table sets out the audited total remuneration for Senior Executives in 2020 and 2021, calculated in accordance with
statutory accounting requirements:
Post-
employment
Other
long-term
Equity
Total
Salary
and fees
(i)
Bonus
(short- term
incentive)
(ii)
Non-
monetary
benefits
(iii)
Super-
annuation
(iv)
Other
(v)
Retention
Award
(vi)
Share
benefits (vii)
Rights
benefits
(long-term
incentive)
(viii)
Current Senior Executives
Matthew Halliday(ix) (xi)
2021
1,964,671
921,690
64,414
114,800
41,242
255,500
691,102
871,953
4,925,372
2020
1,552,762
0
59,972
21,348
41,305
1,277,500
809,972
63,016
3,825,875
Greg Barnes(ix) (xii)
2021
536,580
547,200
4,668
66,504
11,982
–
56,088
192,018
1,415,040
2020
–
–
–
–
–
–
–
–
–
Andrew Brewer(ix) (xiii)
2021
866,674
456,863
11,148
68,317
19,371
–
46,828
104,651
1,573,852
2020
72,874
–
1,242
6,428
1,699
–
–
–
82,243
Brent Merrick(xiv)
2021
688,012
418,275
89,446
125,229
17,871
–
42,873
308,889
1,690,595
2020
195,306
–
29,360
17,124
4,597
–
–
53,164
299,551
Joanne Taylor(ix) (x)
2021
1,077,656
502,855
18,206
72,916
20,240
147,779
51,542
331,355
2,222,549
2020
882,719
–
20,632
21,348
20,240
738,897
–
(1,499)
1,682,337
Former Senior Executives
Jeff Etherington(ix) (xv)
2021
436,785
143,990
7,917
25,246
6,315
127,750
–
78,200
826,203
2020
620,225
–
13,550
16,098
12,748
638,750
–
(8,516)
1,292,855
Total remuneration:
2021
5,570,378
2,990,873
195,799
473,012
117,021
531,029
888,433
1,887,066
12,653,611
2020
3,323,886
–
124,756
82,346
80,589
2,655,147
809,972
106,165
7,182,861
63
7. Senior Executive remuneration tables continued
Table 9. Total remuneration for Senior Executives in 2021 (statutory disclosures) continued
(i)
Salary and fees include base salary and cash payments in lieu of employer superannuation. For 2021 the cash payments in lieu of employer
superannuation is on 2021 base salary only. These figures also include any annual leave accruals for Senior Executives.
(ii)
Bonus represents the cash component of the 2021 STI payable in April 2022 excluding employer superannuation contribution.
(iii)
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.
(iv) Superannuation includes the employer superannuation contributions paid, and includes the full value of employer superannuation on the cash component
of the 2021 STI payable in April 2022.
(v)
Other long-term remuneration represents the long service leave accruals for all Senior Executives.
(vi) As disclosed in the 2020 Remuneration Report, to mitigate the heightened retention risk during a protracted take-over bid and to ensure Senior Executive
team stability through the transition of MD & CEO, a one-off cash retention award was granted. This value represents the amount of the retention award
accrued for in 2021 being two out of 12 months of the total retention award. This value is not reported in table 5 as the full value of this award was reported
in table 4a of the 2020 Remuneration Report.
(vii) Share benefits represent the value of the deferred component of STI delivered in Restricted Shares that have been or that will be awarded to Senior
Executives. For Mr Halliday this includes the value of Restricted Shares granted to him upon commencement. These values have been calculated in
accordance with accounting standards with further details regarding these awards set out in table 10.
(viii) 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 2021 reporting year (and 2020
as a comparison). The accounting value of share-based payments may be negative where a Senior 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 amount includes the value of
a one-off retention award of Share Rights granted in 2019.
(ix) 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.
(x)
Ms Taylor resigned from Ampol on 14 February 2022. The Board has exercised its discretion to pay STI for 2021 given the strong performance and
contribution over the full performance period. Upon cessation of employment, the Restricted Shares component of 2021 STI (being 25%), will be forfeited.
Ms Taylor remains eligible for the 2019 LTI award subject to the terms of the offer and upon cessation of employment will forfeit eligibility for both the 2020
and 2021 LTI awards.
(xi) Mr Halliday was appointed MD & CEO effective 29 June 2020.
(xii) Mr Barnes was appointed Group Chief Financial Officer effective 1 July 2021.
(xiii) Mr Brewer was appointed Executive General Manager effective 1 December 2020.
(xiv) Mr Merrick was appointed Executive General Manager effective 28 September 2020.
(xv) Mr Etherington remains employed with Ampol but ceased in the KMP role of Interim Chief Financial Officer effective 30 June 2021. Mr Etherington did not
participate in the Senior Executive remuneration framework for 2021.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
64
7. Senior Executive remuneration tables continued
Table 10. Unvested shareholdings of Senior Executives during 2021
Unvested shares
at 31 Dec 2020
Restricted
shares granted
Shares vested
in current
performance year
Forfeited
Unvested shares
at 31 Dec 2021
Matthew Halliday(i)
60,630
–
28,095
–
32,535
(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 5 for further detail). 17.5% vested in October 2019, 17.5% vested in October 2020, and 30.2% vested in October 2021. The final
tranche of 34.8% will vest in October 2022.
Table 11. 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
65.1%
2022 (34.9%)
202,329
Table 12. 2021 Senior Executive performance rights
LTIs for Senior Executives are awarded as performance rights under the AEIP as detailed in section 5. The following table
demonstrates movement in performance rights held by Senior Executives during the year, including details of the performance
rights that vested as presented in table 5.
Performance
rights at
1 Jan 2021(i)
Granted
in 2021(ii)
Vested
in 2021(iii)
Lapsed
in 2021(iv)
Balance at
31 December
2021(v)
Current Senior Executives
Matthew Halliday
105,109
97,016
–
–
202,125
Greg Barnes(vi)
–
52,326
–
–
52,326
Andrew Brewer
8,717
25,612
(581)
(8,136)
25,612
Brent Merrick
45,653
23,630
(6,347)
(5,946)
56,990
Joanne Taylor
70,892
26,760
(1,082)
(15,163)
81,407
Former Senior Executives
Jeff Etherington(vii)
35,386
9,270
(652)
(9,133)
34,871
(i)
This relates to the 2018, 2019 and 2020 performance rights. If the service-based and performance-based vesting conditions are achieved, the 2019 and
2020 performance rights will vest in 2022 and 2023 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.
(ii)
This relates to the 2021 performance rights. If the service-based and performance-based vesting conditions are achieved, these performance rights will
vest in 2024. For Mr Halliday this includes additional allocation of 2020 performance rights following permanent appointment to the MD & CEO role
29 June 2020.
(iii)
This relates to the 2018 performance rights of which 6.66% vested. Senior Executives received one Ampol share for each right that vested. 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.
(iv) This relates to the 2018 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 5.
(v)
The performance rights for any former Senior Executives are as at the date they ceased employment or retired from their office.
(vi) Mr Barnes was appointed Group Chief Financial Officer effective 1 July 2021. To attract Mr. Barnes to the role in the middle of the performance period it
was agreed that he would be entitled to participate in the 2021 performance rights grant at a level equivalent to two thirds greater than his regular annual
entitlement. This grant represents deferred, equity based, performance conditioned remuneration in lieu of any sign-on arrangement.
(vii) Mr Etherington remains employed with Ampol but ceased in the KMP role of Interim Chief Financial Officer effective 30 June 2021.
65
7. Senior Executive remuneration tables continued
Table 13. 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.
2021 grant(i)(ii)
2020 grant(i)(ii)
2019 grant(i)
Relative
TSR against
S&P/ASX 100
ROCE
measure
Relative
TSR against
S&P/ASX 100
ROCE
measure
Grant date
07 April 2021
07 April 2021
03 April 2020
03 April 2020
4 April 2019
4 April 2019
24 May 2021
24 May 2021
20 May 2019
20 May 2019
15 July 2021
15 July 2021
Vesting date
1 April 2024
1 April 2024
1 April 2023
1 April 2023
1 April 2022
1 April 2022
Exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Volatility
33%
33%
29%
29%
20%
20%
34%
34%
20%
20%
34%
34%
Risk-free interest rate
0.3%
0.3%
0.2%
0.2%
1.4%
1.4%
0.2%
0.2%
1.2%
1.2%
Dividend yield
2.0%
2.0%
3.6%
3.6%
4.5%
4.5%
1.7%
1.7%
4.4%
4.4%
1.6%
1.6%
Expected life (years)
3.0
3.0
3.0
3.0
3.0
3.0
2.9
2.9
2.9
2.9
2.7
2.7
Share price at grant date
$24.57
$24.57
$23.00
$23.00
$26.50
$26.50
$29.02
$29.02
$27.01
$27.01
$29.30
$29.30
Valuation per right
$10.06
$23.18
$9.07
$20.65
$8.23
$23.19
$16.16
$27.69
$8.08
$23.83
$15.01
$28.03
(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
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. Table 9 reflects these values.
(ii)
The majority of Senior Executive awards are made in April of each year, with the MD & CEO’s awards were made after shareholder approval was obtained
at the Annual General Meeting held in May. Approval of Mr Halliday’s 2020 award was not sought as he was Interim CEO and not a Managing Director at
this time. In 2021 an AEIP performance rights grant was made to Mr Barnes upon commencement.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
66
8. Non-executive Director remuneration
Summary of 2021 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 2021 and no changes to NED fees are anticipated in 2022.
Superannuation contributions were made consistent with the Superannuation Guarantee. 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.
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 approved 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.
Table 14. 2021 Non-executive Director fees
The following table outlines the 2021 NED fees.
Board
Committees(i)
Chairman
Member
Committee Chairman
Member
2021 fee(ii)
$502,207
$167,403
$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 consistent with the Superannuation Guarantee for NEDs in addition to the above fees in 2021.
67
8. Non-executive Director remuneration continued
Non-executive Director remuneration
Table 15. Non-executive Director fees in 2021 (statutory disclosures)
The following table sets out the audited NED fees in 2020(i) and 2021, calculated in accordance with statutory accounting
requirements and which reflect the actual remuneration received during the financial year. NEDs are not eligible to receive any cash
or equity-based incentives.
Salary and fees
Superannuation(ii)
Total
Current Non-executive Directors
Steven Gregg (Chairman)
2021
502,207
48,965
551,172
2020
477,097
45,324
522,421
Mark Chellew
2021
207,403
20,222
227,625
2020
197,033
18,718
215,751
Melinda Conrad(iv)
2021
224,168
21,855
246,023
2020
197,253
18,718
215,971
Elizabeth Donaghey(v)
2021
69,134
6,913
76,048
2020
–
–
–
Michael Ihlein(iii)(vi)
2021
256,160
–
256,160
2020
133,915
6,652
140,567
Gary Smith(vii)
2021
207,403
20,222
227,625
2020
114,072
10,837
124,909
Penny Winn
2021
233,403
22,757
256,160
2020
221,733
21,065
242,798
Former Non-executive Directors
Barbara Ward AM(viii)
2021
86,367
8,183
94,550
2020
222,139
21,065
243,204
(i)
In 2020, NED fees were reduced by 20% for a period of three months to assist in the organisational response to COVID-19.
(ii)
Superannuation contributions are made on behalf of NEDs to satisfy Ampol’s obligations under the Superannuation Guarantee legislation. Fees paid to
NEDs may be subject to fee sacrifice arrangements for superannuation.
(iii)
These NEDs were provided a 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.
(iv) Ms Conrad was appointed Chair of the Human Resources Committee effective 13 May 2021.
(v)
Ms Donaghey was appointed to the Board as an Independent, Non-executive Director effective 1 September 2021.
(vi) Mr Ihlein was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(vii) Mr Smith was appointed to the Board as an Independent, Non-executive Director effective 1 June 2020.
(viii) Ms Ward AM retired from the Board as an Independent, Non-executive Director effective 13 May 2021.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
68
8. Non-executive Director remuneration continued
Shareholdings of Key Management Personnel
Table 16: 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.
Each NED is required to hold an interest in shares in Ampol with a market value no less than their Board base fee, within three
years of appointment to the Board. A minimum shareholding requirement is also in place for current Senior Executives (refer to
section 5).
Held at
31 Dec 2020
Purchased
Vested
Sold
Held at
31 Dec 2021(i)
Current Directors
Steven Gregg
6,000
10,000
–
–
16,000
Mark Chellew
1,400
5,500
–
–
6,900
Melinda Conrad
8,000
–
–
–
8,000
Elizabeth Donaghey(ii)
–
1,600
–
–
1,600
Michael Ihlein(iii)
–
7,720
–
–
7,720
Gary Smith(iv)
–
2,150
–
–
2,150
Penny Winn
5,911
1,550
–
–
7,461
Former Directors
Barbara Ward AM(v)
6,500
–
–
–
6,500
Current Senior Executives
Matthew Halliday
32,536
3,688
28,095
–
64,319
Greg Barnes(vi)
–
7,500
–
–
7,500
Andrew Brewer(vii)
17,063
–
581
–
17,644
Brent Merrick(viii)
874
–
–
–
874
Joanne Taylor
4,249
–
1,082
–
5,331
Former Senior Executives
Jeff Etherington(ix)
4,712
–
652
–
5,364
(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)
Ms Donaghey was appointed to the Board as an Independent, Non-executive Director effective 1 September 2021.
(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)
Ms Ward AM retired from the Board as an Independent, Non-executive Director effective 13 May 2021.
(vi) Mr Barnes was appointed Group Chief Financial Officer effective 1 July 2021.
(vii) Mr Brewer was appointed Executive General Manager, Infrastructure effective 1 December 2020.
(viii) Mr Merrick was appointed Executive General Manager, Commercial effective 28 September 2020. Mr. Merrick received vested share rights in cash.
(ix) Mr Etherington remains employed with Ampol but ceased in the KMP role of Interim Chief Financial Officer effective 30 June 2021.
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 2021 (2020: nil).
69
8. Non-executive Director remuneration continued
Board and Committee meetings
The Ampol Board met 17 times during the year ended 31 December 2021. In addition, Directors attended Board strategy sessions
and workshops, and special purpose Committee meetings during the year.
The number of Board and Committee meetings attended by each Director during 2021 are set out in the following table.
Table 17: Board and Committee meetings
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
17
17
–
–
–
–
1
1
–
–
Matthew Halliday
17
17
–
–
–
–
–
–
–
–
Mark Chellew
17
16
–
–
5
5
1
1
4
4
Melinda Conrad
17
17
7
7
5
5
1
1
–
–
Michael Ihlein(iii)
17
17
7
7
1
1
1
1
3
3
Gary Smith(iv)
17
17
1
1
4
4
1
1
4
4
Elizabeth Donaghey(v)
4
4
–
–
1
1
–
–
1
1
Penny Winn
17
17
7
7
–
–
1
1
4
4
Former Directors
Barbara Ward AM(vi)
5
5
3
3
2
2
1
1
–
–
(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.
(ii)
Includes out of session meetings but excludes strategy workshops and briefings.
(iii)
Mr Ihlein was appointed as Human Resources Committee member and ceased to be a member of the Safety and Sustainability Committee effective
18 October 2021.
(iv) Mr Smith was appointed as Audit Committee member, and ceased to be a member of the Human Resources Committee effective 18 October 2021.
(v)
Ms Donaghey attended all Board and Committee meetings where she is a member of the relevant Committee from the time of appointment as
Independent, Non-executive Director effective 1 September 2021.
(vi) Ms Ward AM retired from the Board as an Independent, Non-executive Director effective 13 May 2021.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
70
8. Non-executive Director remuneration continued
Shares and interests
The total number of ordinary shares on issue at 31 December 2021 was 238,302,099 shares (2020: 249,706,947 shares on issue).
The total number of rights on issue at the date of this report is 1,349,590 (2020: 1,385,590). 496,350 rights were issued during 2021
(2020: 426,101). 531,616 rights vested or lapsed during the year (2020: 757,022). 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.
Directors’ interests
The Directors’ relevant interests in the shares of Ampol Limited at 31 December 2021 are set out in the following table.
Table 18: Directors interests
Director
Shareholding
Nature of interest
Steven Gregg
16,000 shares
Indirect interest
Matthew Halliday
64,319 shares
Direct interest
202,125 performance rights
Direct interest
Mark Chellew
6,900 shares
Indirect interest
Melinda Conrad
8,000 shares
Indirect interest
Elizabeth Donaghey
1,600 shares
Direct Interest
Michael Ihlein
7,720 shares
Indirect interest
Gary Smith
2,150 shares
Indirect interest
Penny Winn
7,461 shares
Indirect interest
Former Directors(i)
Barbara Ward AM
6,500 shares
Direct interest
(i)
The shareholdings for any Former Directors are as at the date they ceased employment or retired from their office.
None of the above Directors have acquired or disposed of any relevant interests in the Company’s shares in the period from 1
January 2022 to the date of this Annual Report.
71
9. Appendix: Consideration of the government fuel security package
Following comprehensive management analysis and constructive engagement with the Government, Ampol determined to keep the
Lytton refinery open to support Australia in its dual objectives of fuel security and an orderly transition to renewable energy sources.
This Appendix sets out the background and principles the Board has used, and will use in future, to assess the extent to which
incentive outcomes are appropriate in light of any payments received under the Fuel Security Act 2021. These principles were also
applied to the treatment of the Temporary Refinery Production Payment in 2021.
Australia’s Fuel Security Package
The decision to continue operating at the Lytton refinery was confirmed by a comprehensive fuel security package (Security
Package) which has been legislated in the new Fuel Security Act 2021.
The Security Package is a multi-year arrangement that helps underpin the viability of Australia’s transport fuel refining industry
including Ampol’s Lytton refinery over the medium term, as well as supporting investment in infrastructure upgrades that will deliver
the manufacture of cleaner fuels.
The Security Package has three key components:
•
The potential to receive a variable Fuel Security Services Payment (FSSP) for six years up until mid-2027 (with Ampol having
an option to extend for another three years). The FSSP is structured to provide a variable payment when refining margins are
low, and no payment when refining margins are high, reducing volatility for refiners and ensuring payments are targeted to the
times they are most needed,
•
Grants for infrastructure upgrades at refineries to bring forward the introduction of better fuels from 2027 to 2024, and
•
Support in the design and implementation of Minimum Stockholding Obligations (MSO) aligned with overall fuel security.
Multi-year variable Fuel Security Services Payment
The FSSP is a partnership that has been negotiated with the Australian Government, helping Australia meet the dual objectives of
fuel security and energy transition. Payments under the partnership will only be received in periods of low refiner margins.
In 2021, Ampol did not receive any payments as part of the FSSP.
Temporary Refinery Production Payment
Separate to FSSP, in late 2020, the Federal Government announced that it would bring forward short-term and temporary refinery
production payments to 1 January 2021. The Temporary Refinery Production Payment (TRPP) represents a minimum one cent
payment for each litre of primary transport fuel (petrol, diesel, and jet fuel) from the major domestic refineries who continued
operations in Australia. For 1H 2021, the TRPP effectively mirrored the long-term intentions of the FSSP.
It was only once we had completed our comprehensive Refinery Review and announced our decision to continue operations at
Lytton in May 2021, that the $40m payment under the TRPP was made (representing $28m after tax).
Principles used in the consideration of the government fuel security package
Given the Security Package is a multi-year arrangement, each year the Board will assess the extent to which the incentive
outcomes are appropriate in light of any payments received and will exercise discretion as appropriate. In reviewing incentive
outcomes, the Board has adopted the following principles to guide its decision making. It will consider:
•
Principle 1: Ampol’s achievement towards the dual objectives of program being fuel security and energy transition as agreed
with the Government.
•
Principle 2: Management’s contribution to the broader performance of the Company and Lytton refinery to ensure there is no
unintended windfall gain or loss (perceived or real) arising from receiving Australian Government financial support.
•
Principle 3: The materiality of any payment received (or otherwise) – the greater the financial payment provided by the
Government, the greater need for the Board to focus on whether any judgement should be applied to adjust incentive
outcomes.
•
Principle 4: Evolving stakeholder views across the Government, employees, community, and shareholders as to impact of the
Security Package.
Directors’ Report continued
Remuneration Report continued
Ampol Limited
Annual Report 2021
72
9. Appendix: Consideration of the government fuel security package continued
2021 assessment against the principles
In 2021 the Board applied these principles and after careful consideration, determined that the $28 million received through the
TRPP in 2021 will remain included in the RCOP NPAT result ($355 million) for the following reasons:
Principle 1: There are strong indicators of Ampol’s achievement towards the dual objectives:
Fuel Security
•
Continuation of operations at Lytton allows us to process Australian based crude, therefore acting as an independent supply
line with a significantly shorter timeframe to distribute finished product when compared to the importation of product.
•
Continued productive collaboration with the Australian Government on the MSO.
Energy Transition
•
Commitment to spend a minimum of $100 million on future energy and decarbonisation projects by 2025. In 2021, four test and
learn partnerships were implemented.
•
Strong progress in our program of work to ultimately produce ultra-low sulphur fuel, which will allow for lower emissions from
vehicles and wider optionality for Australian motorists as we transition to alternative transport fuel sources.
Principle 2: Management has contributed to the broader performance of the Company and Lytton refinery:
•
Lytton has delivered a strong result in both volume yield and mechanical availability when comparing 2021 to historical refining
periods, and to broader industry.
Principle 3: The materiality of the payment is low:
•
The $28 million impact on RCOP NPAT received through the TRPP relates to a lower refining margin period in 1H 2021 and is
at the low-end of the scale of the equivalent potential Australian Government support under the FSSP. Lytton delivered strong
earnings in 2H 2021 and received no support through the FSSP.
Principle 4: Ampol’s key stakeholders are supportive of the keeping the refinery open:
•
Government: The Security Package was legislated with bi-partisan support. It assists with the recovery from the pandemic
whilst keeping manufacturing jobs in Australia.
•
Community: Lytton refinery is being used as a pilot plant for the production of green hydrogen and therefore supporting
Australia in meeting climate change objectives.
•
Employees: Provides continued employment to 550 manufacturing jobs and many more indirectly.
•
Shareholders: Significantly reduces earnings volatility and downside risk while retaining full benefit to earnings upside. This
negotiated arrangement enhances shareholder value, while retaining the optionality to transition the strategically located site to
alternative uses in the future.
73
Non-audit services
KPMG is the external auditor.
In 2021, 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 2021:
•
for audit and review services – total fees of $2,096,000
(2020: $1,666,800);
•
for assurance services – total fees of $148,500 (2020: $
41,600); and
•
for other services – total fees $17,400 (2020: $574,000).
The Board has received written advice from the Audit
Committee in relation to the independence of KPMG, as
external auditor, for 2021. 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 2021 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 2021 by KPMG did not
compromise the auditor independence requirements of
the Corporations Act for the following reasons:
–
the provision of non-audit services in 2021 was
consistent with the Board’s policy on the provision
of services by the external auditor;
–
the non-audit services provided in 2021 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 2021 that
would impair the impartial and objective judgement
of KPMG as external auditor.
Company Secretary
The following person is the current Company Secretary of
Ampol as at the date of this report:
Michael Abbott
Michael Abbott was appointed to this position in February
2021. He is responsible for risk, audit, legal, secretariat and
government affairs.
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.
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 indemnified 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 the Australian Securities
and Investments Commission Corporations Instrument
2016/191 applies. Amounts in the 2021 Directors’ Report and
the 2021 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, 21 February 2021
Directors’ Report continued
Ampol Limited
Annual Report 2021
74
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 2021 there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Julian McPherson
Partner
Sydney
21 February 2022
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.
75
In the opinion of the Directors of Ampol Limited (the Company):
a)
the Financial Statements and notes that are contained in pages 81 to 135 and the Remuneration Report set out on pages 43 to
73 are in accordance with the Corporations Act 2001 (Cth), including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2021 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 2021.
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 Group Chief Financial Officer for the financial year ended 31 December 2021.
Signed in accordance with a resolution of the Directors:
Steven Gregg
Chairman
Matthew Halliday
Managing Director & Chief Executive Officer
Sydney, 21 February 2022
Directors’ Declaration
Ampol Limited
Annual Report 2021
76
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 2021
and of its financial performance for the year
ended on that date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
•
Consolidated balance sheet as at 31 December 2021
•
Consolidated income statement, Consolidated statement
of comprehensive income, Consolidated statement of
changes in equity and consolidated cash flow statement
for the year ended
•
Notes including a summary of significant accounting
policies
•
Directors’ Declaration.
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 these requirements.
Key Audit Matters
The Key Audit Matters we identified are:
•
Taxation of Singaporean entities
•
Site remediation and dismantling provisions
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.
77
Taxation of Singaporean entities (A$208.7m)
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
reading documentation received from the ATO
as well as documentation prepared by the
Group’s internal and external advisors; and
o
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.
Site remediation and dismantling provisions (A$518.1m)
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
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, third party expert advice 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;
Ampol Limited
Annual Report 2021
78
•
The expected timing of the expenditure.
•
Working with our environmental specialists, we:
o
evaluated the scope, competence, experience
and objectivity of the Group’s internal and
external experts;
o
assessed the nature and quantum of cost
estimates in third party expert advice, including
contingency levels, against the industry
guidelines and standard practice;
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.
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.
79
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.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
Ampol Limited for the year ended 31 December
2021, complies with Section 300A of the
Corporations Act 2001.
Directors’ responsibilities
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
47 to 69 of the Directors’ report for the year ended 31
December 2021.
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
21 February 2022
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.
Ampol Limited
Annual Report 2021
80
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 Trade and other receivables
C2 Inventories
C3 Intangibles
C4 Property, plant and equipment
C5 Payables
C6 Provisions
D
Capital, funding and risk management
D1 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
D7 Reserves
E
Taxation
E1 Income tax
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 reporting date
81
Millions of dollars
Note
2021
2020
Revenue
B1
21,629.9
15,409.1
Cost of goods sold – historical cost
(19,389.8)
(14,203.3)
Gross profit
2,240.1
1,205.8
Other income
B1
53.3
28.0
Other expenses
B2
(50.4)
(434.8)
Net foreign exchange gain
13.6
39.1
Selling and distribution expenses
(1,150.3)
(1,125.7)
General and administration expenses
(207.8)
(339.6)
Profit/(loss) from operating activities
898.5
(627.2)
Finance costs
(113.1)
(109.7)
Finance income
0.4
0.6
Net finance costs
B2
(112.7)
(109.1)
Share of net profit of entities accounted for using the equity method
F3
11.3
10.7
Profit/(loss) before income tax expense
797.1
(725.6)
Income tax (expense)/benefit
E1
(199.6)
245.8
Net profit/(loss)
597.5
(479.8)
Profit/(loss) attributable to:
Equity holders of the parent entity
560.0
(484.9)
Non-controlling interest
F6
37.5
5.1
Net profit/(loss)
597.5
(479.8)
Basic and diluted historical earnings/(loss) per share
Cents per share - basic
B4
234.2
(194.2)
Cents per share - diluted
B4
233.5
(194.2)
The Consolidated Income Statement is to be read in conjunction with the notes to the Financial Statements.
Consolidated Income Statement
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
82
Millions of dollars
Note
2021
2020
Profit/(loss) for the period
597.5
(479.8)
Other comprehensive income
Items that will not be reclassified to income statement:
Actuarial gain/(loss) on defined benefit plans
3.5
(0.4)
Tax (expense)/benefit on items that will not be reclassified to income statement
E2.2
(1.1)
0.1
Total items that will not be reclassified to income statement
2.4
(0.3)
Items that may be reclassified subsequently to income statement:
Foreign operations – foreign currency translation differences
40.6
(13.7)
Net change in fair value of net investment hedges
-
1.6
Effective portion of changes in fair value of cash flow hedges
106.7
24.0
Net change in fair value of cash flow hedges reclassified to income statement
(88.8)
(22.1)
Tax on items that may be reclassified subsequently to income statement
(5.4)
(2.0)
Total items that may be reclassified subsequently to income statement
53.1
(12.2)
Other comprehensive income/(loss) for the period, net of income tax
55.5
(12.5)
Total comprehensive income/(loss) for the period
653.0
(492.3)
Attributable to:
Equity holders of the parent entity
615.5
(497.4)
Non-controlling interest
F6
37.5
5.1
Total comprehensive income/(loss) for the period
653.0
(492.3)
The Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes to the Financial Statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
83
Millions of dollars
Note
2021
2020(i)
Current assets
Cash and cash equivalents
566.3
367.6
Trade and other receivables
C1
1,576.2
936.1
Inventories
C2
2,064.9
1,354.3
Total current assets
4,207.4
2,658.0
Non-current assets
Trade and other receivables
C1
41.5
46.0
Investments accounted for using the equity method
F3
184.0
177.2
Intangibles
C3
506.3
558.4
Property, plant and equipment
C4
3,564.7
3,467.7
Deferred tax assets
E2
344.2
453.8
Employee benefits
5.6
2.9
Total non-current assets
4,646.3
4,706.0
Total assets
8,853.7
7,364.0
Current liabilities
Payables
C5
2,370.2
1,535.2
Interest-bearing liabilities
D1
159.6
160.2
Current tax liabilities
129.6
90.7
Employee benefits
129.8
98.9
Provisions
C6
104.9
178.7
Total current liabilities
2,894.1
2,063.7
Non-current liabilities
Payables
C5
12.8
16.0
Interest-bearing liabilities
D1
2,104.0
1,555.5
Deferred tax liabilities
E2
21.0
9.7
Employee benefits
5.1
6.1
Provisions
C6
469.9
488.3
Total non-current liabilities
2,612.8
2,075.6
Total liabilities
5,506.9
4,139.3
Net assets
3,346.8
3,224.7
Equity
Issued capital
D6
479.7
502.6
Treasury stock
(1.5)
(1.6)
Reserves
D7
65.5
5.6
Retained earnings
2,531.0
2,444.5
Total parent entity interest
3,074.7
2,951.1
Non-controlling interest
F6
272.1
273.6
Total equity
3,346.8
3,224.7
(i)
The prior period has been restated to reflect changes made in the current period to current and non-current classifications. Refer to Note A4 for further
information on the reclassification of Long Service Leave Liabilities.
The Consolidated Balance Sheet is to be read in conjunction with the notes to the Financial Statements.
Consolidated Balance Sheet
As at 31 December 2021
Ampol Limited
Annual Report 2021
84
Millions of dollars
Issued
capital
Treasury
Stock
Reserves
(i)
Retained
earnings
Total
Non-
controlling
interest
Total
equity
Balance at 1 January 2021
502.6
(1.6)
5.6
2,444.5
2,951.1
273.6 3,224.7
Change in accounting policy(ii)
-
-
-
(19.7)
(19.7)
-
(19.7)
Restated balance at 1 January 2021
502.6
(1.6)
5.6
2,424.8
2,931.4
273.6 3,205.0
Profit for the year
-
-
-
560.0
560.0
37.5
597.5
Total other comprehensive income
-
-
53.1
2.4
55.5
-
55.5
Total comprehensive income for the year
-
-
53.1
562.4
615.5
37.5
653.0
Acquisition of minority interest, net of tax
-
-
3.5
-
3.5
(3.5)
-
Proceeds from non-controlling interest
purchase of units in Ampol Property Trust
-
-
-
-
-
6.0
6.0
Ampol Property Trust - distribution
-
-
-
-
-
(40.3)
(40.3)
Own shares acquired
-
(2.4)
-
-
(2.4)
-
(2.4)
Shares vested to employees, net of tax
-
2.5
(1.8)
-
0.7
-
0.7
Expense on equity settled transactions, net
of tax
-
-
5.1
-
5.1
-
5.1
Shares bought back(iii)
(22.9)
-
-
(277.5)
(300.4)
- (300.4)
Dividends to shareholders
-
-
-
(178.7)
(178.7)
(1.2) (179.9)
Balance at 31 December 2021
479.7
(1.5)
65.5
2,531.0
3,074.7
272.1 3,346.8
Balance at 1 January 2020
502.6
(2.0)
19.4
2,737.0
3,257.0
13.5 3,270.5
(Loss)/profit for the year
-
-
-
(484.9)
(484.9)
5.1 (479.8)
Total other comprehensive (loss)/income
-
-
(12.2)
(0.3)
(12.5)
-
(12.5)
Total comprehensive (loss)/income for
the year
-
-
(12.2)
(485.2)
(497.4)
5.1 (492.3)
Ampol Property Trust - Divestment of
minority interest, net of tax
-
-
-
382.5
382.5
256.2
638.7
Ampol Property Trust - distribution
-
-
-
-
-
(1.2)
(1.2)
Own shares acquired
-
(0.4)
-
-
(0.4)
-
(0.4)
Shares vested to employees, net of tax
-
0.8
(0.2)
-
0.6
-
0.6
Expense on equity settled transactions, net
of tax
-
-
(1.4)
-
(1.4)
-
(1.4)
Dividends to shareholders
-
-
-
(189.8)
(189.8)
- (189.8)
Balance at 31 December 2020
502.6
(1.6)
5.6
2,444.5
2,951.1
273.6 3,224.7
(i)
Refer to Note D7 for further information.
(ii)
Adjustment on application of the IFRS Interpretation Committee decision on cloud computing arrangements, refer to Note A4 for further details.
(iii)
11,404,848 shares were bought back during the year ended 31 December 2021.
The Consolidated Statement of Changes in Equity is to be read in conjunction with the notes to the Financial Statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
85
Millions of dollars
Note
2021
2020
Cash flows from operating activities
Receipts from customers
28,642.9
23,267.0
Payments to suppliers, employees and governments
(27,865.4)
(22,845.0)
Shares acquired for vesting employee benefits
(2.4)
(0.4)
Dividends and distributions received
2.0
1.8
Interest received
0.4
0.3
Finance costs paid
(49.8)
(43.7)
Lease interest
(54.9)
(57.2)
Income taxes paid
(38.2)
(55.2)
Net operating cash inflows
G5.2
634.6
267.6
Cash flows from investing activities
Net proceeds from sale of investments
-
24.8
Proceeds from sale of non-controlling interest in Ampol Property Trust
-
682.0
Transaction costs from sale of non-controlling interest in Ampol Property Trust
-
(26.8)
Purchase of investment in associate
F3.1
(1.5)
-
Purchases of property, plant and equipment
(272.9)
(140.3)
Major cyclical maintenance
(34.0)
(64.4)
Purchases of intangibles
(17.3)
(21.9)
Proceeds from sale of property, plant and equipment, net of selling costs
6.5
9.2
Net investing cash (outflows)/inflows
(319.2)
462.6
Cash flows from financing activities
Proceeds from borrowings
8,429.8
9,675.9
Repayments of borrowings
(7,929.8)
(9,769.0)
Repayment of lease principal
(106.3)
(107.7)
Payments for shares bought back
(300.4)
-
Proceeds from non-controlling interest purchase of units in Ampol Property
Trust
F6
6.0
-
Distributions/dividends paid to non-controlling interest
F6
(41.5)
(1.2)
Dividends paid
B5
(178.7)
(189.8)
Net financing cash outflows
(120.9)
(391.8)
Net increase in cash and cash equivalents
194.5
338.4
Effect of exchange rate changes on cash and cash equivalents
4.2
(5.8)
Increase in cash and cash equivalents
198.7
332.6
Cash and cash equivalents at the beginning of the period
367.6
35.0
Cash and cash equivalents at the end of the period
G5.1
566.3
367.6
The Consolidated Cash Flow Statement is to be read in conjunction with the notes to the Financial Statements.
Consolidated Cash Flow Statement
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
86
A1 Reporting entity
Ampol Limited (“Ampol” or the “Company”) is a for-profit company, incorporated and domiciled in Australia. The Consolidated
Financial Statements for the year ended 31 December 2021 comprise 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 primarily involved in the purchase,
refining, distribution and marketing of petroleum products and the operation of convenience stores.
A2 Basis of preparation
The financial report was approved by the Ampol Board on 21 February 2022.
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 financial report also complies
with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB).
The 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 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 financial report and Directors’ Report have been rounded to the nearest hundred thousand dollars,
unless otherwise stated.
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 2022 have not been applied in preparing this financial report. 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 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.
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 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.
A4 Changes in significant accounting policies
Government grants
The introduction of the Temporary Refinery Production Package (TRPP) for Lytton refinery and the Australian Renewable Energy
Agency (ARENA) grant relating to the roll out of EV charging stations has led to the receipt of government grants in the current
reporting period. Consequently, the accounting treatment applied to government grants, AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance, is now considered a significant accounting policy of the Group.
Notes to the Financial Statements
A Overview
For the year ended 31 December 2021
87
A4 Changes in significant accounting policies continued
Government grants continued
The Group recognises grants only when there is reasonable assurance that the Group will comply with any conditions attached to
the grant and that the grant will be received.
Government grant related to income
The TRPP grant was a one-off grant to assist refiners in the peak of COVID-19 and its impact on production and operating profits.
The receipt of this grant has been recognised as income over the period in which the related costs or revenue shortfall, for which
they are intended to compensate, are recognised. The Group presents these government grants separately in ‘other income’. A
consistent approach will be taken should the Group receive any grants under the Fuel Security Services Payment, which would be
provided to the Group should Australian dollar refining margins fall below the Government’s external marker margin.
Government grant related to assets
The Group may present government grants related to assets in the statement of financial position as either deferred income and
amortised to the Consolidated Income Statement over the asset’s useful life or as a reduction to the capital cost of the asset,
reducing depreciation recorded over the asset’s useful life. The Group has elected to treat the ARENA grant of $7 million, which is a
grant to support the rollout of EV charging stations to Ampol forecourts, as a reduction to the capital cost of the assets.
Cloud computing arrangements
In April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda decision,
“Configuration or Customisation Costs in a Cloud Computing Arrangement”. The decision clarified whether configuration or
customisation expenditure relating to cloud computing arrangements could be recognised as an intangible asset, and if not, over
what time period the expenditure should be expensed.
During the period, the Company revised its accounting policy in relation to configuration and customisation costs incurred in
implementing cloud computing arrangements in response to the IFRIC agenda decision. The new accounting policy is presented
below.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Costs related to access, configuration, and customisation of cloud computing arrangements are recognised as an operating
expense.
Impact on adoption
Historically, the Group’s accounting policy has been to capitalise costs related to cloud computing configuration and customisation
as software intangible assets in the balance sheet. On adoption of the change in policy, the group has concluded that the impact on
the financial statements for the year ended 31 December 2020 was immaterial and no adjustment has been made to the
comparatives presented in this report. In relation to the adoption of the change in treatment from 1 January 2021 the following
adjustments have been made:
Balance Sheet
The capitalised value of costs incurred to implement, customise or configure a cloud provider's application software included in the
Group’s balance sheet was $28.2 million at 31 December 2020 ($27.6 million at 31 December 2019). The Group has recognised
the write off of the cumulative capitalised costs as an opening retained earnings adjustment resulting in a decrease in net assets
and a decrease in retained earnings as at 1 January 2021 of $19.7 million after tax ($28.2 million before tax).
Income Statement
For the 31 December 2021 year the change in policy has resulted in an additional $3.8 million of costs being expensed and a
reduction in amortisation expense of $3.9 million. In aggregate there has been a net decrease in expenses of $0.1 million.
Cashflow
Adoption of the new treatment has resulted in a change in classification of expenditure with additions of $3.9 million that would
previously have been classified within ‘investing activities’ as ‘payments for intangibles’ reclassified to ‘cash payments in the course
of operations’ within ‘operating activities’ for the year ended 31 December 2021.
Comparatives
Where applicable, various comparative balances have been reclassified to align with current period presentation.
Employee benefits
Historically, the Group has classified long service leave as either current or non-current based on the amounts which are expected
to be settled within 12 months and those expected to be settled beyond the next 12 months. In the current period the Group has
presented the current and non-current portions based on the legal obligation that the Group has for services performed up to the
balance date. The non-current portion has been measured as the present value of expected future payments to be made in respect
of services provided by employees up to period end in accordance with AASB 119 Employee Benefits. Accordingly, the comparative
information presented for 31 December 2020 has been reclassified to align with current period presentation resulting in an increase
in current provisions and a corresponding decrease in non-current provisions of $33.8 million.
Notes to the Financial Statements continued
A Overview continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
88
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
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, some 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 2021 in relation to this contract asset is $38.6 million (2020: $41.9 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. 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
Government grants
Refer to Note A4 for details on government grant accounting treatment.
Net gain on disposal of property, plant and equipment and sale of investments
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 costs incurred, or to be incurred, in respect of the sale can be measured reliably; and
•
the control of ownership of the property, plant and equipment and sale of investment has been transferred to the buyer.
B Results for the year
For the year ended 31 December 2021
89
B1 Revenue and other income continued
Millions of dollars
2021
2020
Revenue
Sale of goods
21,420.9
15,175.6
Other revenue
Rental income
19.5
22.0
Transaction and merchant fees
102.9
123.6
Other
86.6
87.9
Total other revenue
209.0
233.5
Total revenue
21,629.9
15,409.1
Other income
Government assistance – wage support(i)
0.8
6.8
Government assistance - refinery(ii)
40.0
-
Net gain on sale of investments
12.5
21.2
Total other income
53.3
28.0
(i)
Relates to COVID-19 government wage support of $0.8 million (2020: $6.8 million) received from the Australian and Singapore government
programs. In FY20 wage support was received from the Australian, New Zealand and Singapore governments.
(ii)
A total of $40.0 million was recognised under the Temporary Refinery Production Program during 2021. No amounts were received under the
Fuel Security Services Payment program. Refer to Note A4 for further information.
Notes to the Financial Statements continued
B Results for the year continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
90
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
relevant asset. Where borrowings are not specific to an asset, finance costs are capitalised using an average rate based on the
general borrowings of the Group.
Millions of dollars
Note
2021
2020
Finance costs
Interest expense
56.7
43.4
Finance charges on leases
54.9
57.2
Unwinding of discount on provisions
1.6
9.4
Less: capitalised finance costs
(0.1)
(0.3)
Finance costs
113.1
109.7
Finance income
(0.4)
(0.6)
Net finance costs
112.7
109.1
Depreciation and amortisation
Depreciation of:
Buildings
C4
14.7
18.2
Leasehold property
C4
146.1
148.1
Plant and equipment
C4
203.1
228.0
363.9
394.3
Amortisation of:
Intangibles
C3
17.1
27.9
Total depreciation and amortisation
381.0
422.2
Personnel expenses
578.2
542.3
Other expenses
Net loss on disposal of property, plant and equipment
15.2
21.4
Impairment of non-current assets
C3, C4
44.2
413.4
Impairment reversal of non-current assets
C4
(9.0)
-
Total other expenses
50.4
434.8
91
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 finance 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 (RCOP)
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 (RCOP EBIT) 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 RCOP EBIT excluding significant items,
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 fuel 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 Group’s international businesses. This includes Lytton refining, Bulk Fuels sales, Trading
and Shipping, Infrastructure, Future Energy 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.
Notes to the Financial Statements continued
B Results for the year continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
92
B3 Segment reporting continued
B3.2 Information about reportable segments
Convenience Retail
Fuels and Infrastructure
Total operating segments
Millions of dollars
2021
2020
2021
2020
2021
2020
External segment revenue
4,648.4
4,070.2
16,981.5
11,338.9
21,629.9
15,409.1
Inter-segment revenue
-
-
2,839.6
2,176.1
2,839.6
2,176.1
Total segment revenue
4,648.4
4,070.2
19,821.1
13,515.0
24,469.5
17,585.2
Total other income
-
0.3
40.8
27.7
40.8
28.0
RCOP EBIT excluding foreign
exchange and significant items(i)
253.7
287.4
372.9
124.5
626.6
411.9
RCOP foreign exchange gain
-
-
44.7
29.9
44.7
29.9
RCOP EBIT excluding significant
items(i)
253.7
287.4
417.6
154.4
671.3
441.8
Other material items:
Share of profit of associates and joint
ventures
-
-
11.3
10.7
11.3
10.7
Impairment of non-current assets
(21.2)
(305.8)
-
(88.6)
(21.2)
(394.4)
Depreciation and amortisation
(176.3)
(210.2)
(182.3)
(183.4)
(358.6)
(393.6)
Inventory gain
-
-
313.5
(513.8)
313.5
(513.8)
Capital expenditure(ii)
(97.6)
(62.1)
(139.5)
(135.1)
(237.1)
(197.2)
B3.3 Reconciliation of reportable segment revenues, profit or loss and other material items
Millions of dollars
2021
2020
Revenues
Total revenue for reportable segments
24,469.5
17,585.2
Elimination of inter-segment revenue
(2,839.6)
(2,176.1)
Consolidated revenue
21,629.9
15,409.1
Profit or loss
Segment RCOP EBIT excluding significant items(i)
671.3
441.8
Other expenses
(40.1)
(40.6)
RCOP before interest and income tax, excluding significant items
631.2
401.2
Significant items loss excluded from profit or loss (before tax)
(34.9)
(503.9)
(i)
RCOP (on a pre- and post-tax basis) is a non-International Financial Reporting Standards (IFRS) measure and is unaudited. 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. 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 and purchase of intangible software (excludes intangible rights and licences).
93
B3 Segment reporting continued
B3.3 Reconciliation of reportable segment revenues, profit or loss and other material items (continued)
Ampol rebranding expense
The Group has recognised an expense of $51.3 million (2020: $65.6 million) relating to the rebranding program currently being
undertaken to remove Caltex signage and install Ampol branding at the Group’s sites. Current period costs include accelerated
depreciation $8.9 million (2020: $10.8 million) and other operating expenses $42.4 million (2020: $8.8 million). In 2020, a provision
of $46.0 million was recognised in relation to the contractual obligation to undertake rebranding work at sites owned by a third party.
No work has been undertaken at these sites during 2021 however work is expected to be completed before 31 December 2022.
These expenses are included within general and administration expenses $42.4 million (2020: $54.8 million) and selling and
distribution for $8.9 million (2020: $10.8 million) in the Consolidated Income Statement.
Other Income
Assistance from government
Other income includes COVID-19 government wage support of $0.8 million received from the Australian and Singapore government
programs. (2020: $6.8 million). The FY20 was support was received from the Australian, New Zealand and Singapore government
programs.
Impairment of non-current assets
The Group recognised an impairment loss of $31.0 million (2020: $413.4 million). These impairments related to a number of
Convenience Retail sites of $15.5 million (2020: $291.6 million), a reversal of impairment of $9.0 million (2020: nil) of previously
impaired sites and other specific assets of $24.5 million (2020: $41.8 million). In 2020, there was a $80.0 million impairment related
to the Lytton refinery. Impairment losses are disclosed in other expenses in the Consolidated Income Statement.
Millions of dollars
2021
2020
RCOP before interest and income tax
596.3
(102.7)
Inventory gain/(loss) before tax
313.5
(513.8)
Consolidated historical cost profit/(loss) before interest and income tax
909.8
(616.5)
Net financing costs
(112.7)
(109.1)
Consolidated profit/(loss) before income tax
797.1
(725.6)
RCOP income tax expense
(116.1)
(75.2)
Significant items tax benefit
10.5
166.9
Inventory tax (expense)/benefit
(94.0)
154.1
Consolidated historical cost income tax (expense)/benefit
(199.6)
245.8
Net profit/(loss)
597.5
(479.8)
Profit/(loss) attributable to:
Non-controlling interest
37.5
5.1
Equity holders of the parent entity
560.0
(484.9)
Net profit/(loss)
597.5
(479.8)
Significant items excluded from profit or loss reported to the chief operating decision
maker:
Ampol rebranding expense
(51.3)
(65.6)
Other income
0.8
6.8
Impairment of non-current assets
(31.0)
(413.4)
Kurnell remediation provision release
41.9
-
Z Energy acquisition costs
(7.8)
-
Gain on sale of investments
12.5
21.2
Other expenses
-
(36.0)
Higher and Better Use sites
-
(16.9)
Significant items loss excluded from profit or loss (before tax)
(34.9)
(503.9)
Notes to the Financial Statements continued
B Results for the year continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
94
B3 Segment reporting continued
B3.3 Reconciliation of reportable segment revenues, profit or loss and other material items continued
Other expenses
Site remediation provision
An independent third-party review of cost assumptions included in the Kurnell remediation provision was performed in late 2021
which resulted in a reduction in the provision of $41.9 million (2020: nil). An environmental remediation provision of nil (2020: $32.3
million) was recognised in respect of the cost of remediating convenience retail and depot sites for alternative use. These expenses
were included within general and administration expenses in the Consolidated Income Statement.
Provision for doubtful debts
In 2020, a provision for doubtful debts of $3.7 million was raised as a result of the expected impact on Ampol customers from
COVID-19. This expense was included within general and administration expenses in the Consolidated Income Statement.
Gain on sale of investment
In December 2021 the Group sold its investment in Car Next Door Australia Pty Ltd for expected proceeds of $16.7 million and
recorded a net accounting gain of $12.5 million. In 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 was included within other
income in the Consolidated Income Statement.
Higher and Better Use sites (HBU)
In 2020, the Group recognised an environmental remediation provision in relation to the divestment of HBU sites of $16.9 million.
This expense is disclosed in other expenses in the Consolidated Income Statement.
Significant items tax benefit
Significant items tax benefit of $10.5 million (2020: $151.2 million) represents tax at the Australian corporate tax rate of 30%. In
2020, utilisation of previously unrecognised capital losses of $15.7 million were applied to a capital gain on the sale of a 49%
interest in 203 freehold Convenience Retail sites with a Charter Hall and GIC consortium.
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
2021
Revenue
15,409.7
728.7
5,068.1
423.4
21,629.9
Non-current assets
4,208.4
433.2
3.2
1.5
4,646.3
2020
Revenue
12,019.5
572.2
2,793.2
24.2
15,409.1
Non-current assets
4,267.8
414.7
22.7
0.8
4,706.0
B3.5 Major customer
Revenues from one customer of the Group's Fuels and Infrastructure segment represents approximately $3.2 billion
(2020: $2.6 billion) of the Group's total gross sales revenue (excluding product duties and taxes).
B3.6 Revenue from products and services
Millions of dollars
2021
2020
Petrol
6,455.8
4,559.0
Diesel
10,902.7
7,397.6
Jet
1,080.7
860.6
Lubricants
242.8
201.4
Specialty and other products
286.2
155.5
Crude
1,309.2
903.0
Non-fuel income
1,143.5
1,098.5
Other revenue
209.0
233.5
Total product and service revenue
21,629.9
15,409.1
95
B4 Earnings per share
Cents per share
2021
2020
Historical cost net profit/(loss) attributable to ordinary shareholders – basic
234.2
(194.2)
Historical cost net profit/(loss) attributable to ordinary shareholders – diluted
233.5
(194.2)
RCOP after tax and excluding significant items – basic
152.6
84.8
RCOP after tax and excluding significant items – diluted
152.1
84.8
Calculation of earnings per share
Basic historical earnings per share is calculated as the net profit attributable to ordinary shareholders of the parent entity divided by
the weighted average number of ordinary shares outstanding during the year ended 31 December 2021.
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 excludes 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 profit 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
2021
2020
Net profit/(loss) after tax attributable to equity holders of the parent entity
560.0
(484.9)
Add: Significant items loss after tax
24.4
337.0
Add/(Less): Inventory (gains)/losses after tax
(219.5)
359.7
RCOP excluding significant items after tax
364.9
211.8
Weighted average number of shares (millions)
Note
2021
2020
Issued shares as at 1 January
249.7
249.7
Shares bought back and cancelled
D6
(11.4)
-
Issued shares as at 31 December
238.3
249.7
Weighted average number of shares as at 31 December - basic
239.1
249.7
Weighted average number of shares as at 31 December - diluted
239.8
249.7
Notes to the Financial Statements continued
B Results for the year continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
96
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:
Millions of dollars
Date of payment
Franked/
unfranked
Cents
per share
Total
amount
2021
Interim 2021
23 September 2021
Franked
52
123.9
Final 2020
1 April 2021
Franked
23
54.8
Total amount
75
178.7
2020
Interim 2020
2 October 2020
Franked
25
62.4
Final 2019
3 April 2020
Franked
51
127.4
Total amount
76
189.8
Subsequent events
Since 31 December 2021, 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 2021.
Final 2021
31 March 2022
Franked
41
97.7
B5.2 Dividend franking account
Millions of dollars
2021
2020
30% franking credits available to shareholders of Ampol Limited
for subsequent financial years
592.6
777.1
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 $42.0 million (2020: $23.5 million).
97
This section provides information on the assets used to generate the Group’s trading performance and the liabilities incurred
as a result.
C1 Trade and other receivables
The following balances are amounts due from the Group’s customers and others.
Millions of dollars
2021
2020
Trade debtors
827.1
493.1
Accrued receivables
340.9
98.4
Allowance for impairment
(8.0)
(8.6)
Prepayments
25.2
53.1
Associated and joint venture entities
75.3
44.1
Derivative assets
71.2
40.6
Other debtors
246.6
217.7
Contract assets
39.4
43.7
Total trade and other receivables
1,617.7
982.1
Current
1,576.2
936.1
Non-current
41.5
46.0
Total trade and other receivables
1,617.7
982.1
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 2021, current trade receivables of the Group with a nominal value of $8.0 million (2020: $8.6 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 2021, trade receivables of $16.6 million (2020: $11.5 million) were overdue. The ageing analysis of receivables
is as follows:
Millions of dollars
2021
2020
Past due 0 to 30 days
16.6
11.5
Past due 31 to 60 days
-
-
Past due greater than 60 days
-
-
Total impaired receivables
16.6
11.5
Movements in the allowance for impairment of receivables are as follows:
Millions of dollars
2021
2020
At 1 January
8.6
6.3
Provision for impairment recognised during the year
1.5
4.7
Receivables written off during the year as uncollectible
(2.1)
(2.4)
Balance at 31 December
8.0
8.6
The creation and release of the provision for impaired receivables has been included in general and administration expenses in the
Consolidated 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.
Notes to the Financial Statements continued
C Operating assets and liabilities
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
98
C2 Inventories
Millions of dollars
2021
2020
Crude oil and raw materials
530.2
389.8
Inventory in process
41.6
50.8
Finished goods
1,467.3
890.6
Materials and supplies
25.8
23.1
Balance at 31 December
2,064.9
1,354.3
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 2021 or 31 December 2020.
C3 Intangibles
Millions of dollars
Goodwill
Rights and
licences
Software
Total
Cost
At 1 January 2021
425.2
97.4
277.5
800.1
Additions and transfers
-
1.4
16.9
18.3
Disposals
-
(0.9)
(3.0)
(3.9)
Foreign currency translation
1.0
0.1
-
1.1
Balance at 31 December 2021
426.2
98.0
291.4
815.6
Cost
At 1 January 2020
430.7
87.5
254.9
773.1
Additions and transfers
-
16.0
22.6
38.6
Disposals
-
(5.1)
-
(5.1)
Foreign currency translation
(5.5)
(1.0)
-
(6.5)
Balance at 31 December 2020
425.2
97.4
277.5
800.1
Amortisation and impairment
At 1 January 2021
(19.5)
(48.0)
(174.2)
(241.7)
Change in accounting policy(i)
-
-
(28.2)
(28.2)
Amortisation for the year
-
(6.3)
(10.8)
(17.1)
Impairment losses(ii)
-
-
(24.5)
(24.5)
Disposals
-
-
2.5
2.5
Foreign currency translation
-
(0.3)
-
(0.3)
Balance at 31 December 2021
(19.5)
(54.6)
(235.2)
(309.3)
Amortisation and impairment
At 1 January 2020
(19.5)
(40.4)
(134.4)
(194.3)
Amortisation for the year
-
(7.7)
(20.2)
(27.9)
Impairment losses(ii)
-
-
(20.1)
(20.1)
Disposals
-
-
-
-
Foreign currency translation
-
0.1
0.5
0.6
Balance at 31 December 2020
(19.5)
(48.0)
(174.2)
(241.7)
(i)
For further information on the adjustment on application of the IFRS Interpretation Committee decision, refer to Note A4.
(ii)
Refer to Note C4 (Impairment – Other specific assets) for further information.
99
C3 Intangibles continued
Millions of dollars
Goodwill
Rights and
licences
Software
Total
Carrying amount
At 1 January 2021
405.7
49.4
103.3
558.4
Balance at 31 December 2021
406.7
43.4
56.2
506.3
Carrying amount
At 1 January 2020
411.2
47.1
120.5
578.8
Balance at 31 December 2020
405.7
49.4
103.3
558.4
The amortisation charge of $17.1 million (2020: $27.9 million) is recognised in selling and distribution expenses and general and
administration expenses in the Consolidated 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
During the period, the Company revised its accounting policy in relation to configuration and customisation costs incurred in
implementing cloud computing arrangements in response to the IFRIC agenda decision clarifying its interpretation of how current
accounting standards apply to these types of arrangements.
The new accounting policy is presented below. The impact of the change in accounting policy on historical financial information is
disclosed in Note A4.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Costs related to access, configuration and customisation of unrestricted use of cloud computing arrangements are recognised as an
operating expense.
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
7 to 17%
Software not integrated with hardware
7 to 18%
Rights and licences
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 amount is estimated and, if required, an impairment is recognised in the Consolidated
Income Statement. In 2021, there was impairment loss of $24.5 million (2020: $20.1 million) recognised in the Consolidated Income
Statement for information technology assets as detailed in Note C4 Impairment – Other specific assets.
Carrying value assessment of Cash-Generating Units (CGUs) containing goodwill and indefinite life intangibles
The Group tests the carrying amount of indefinite life intangible assets, including goodwill, for impairment to ensure they are not
carried at above their recoverable amounts at least annually and where there is an indication that the assets may be impaired.
The recoverable amount of all CGUs containing goodwill have been estimated in the current reporting period.
Notes to the Financial Statements continued
C Operating assets and liabilities continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
100
C3 Intangibles continued
Carrying value assessment of Cash-Generating Unit (CGU) groups containing goodwill and indefinite life
intangibles continued
Goodwill and indefinite life intangibles have been allocated to the CGUs as follows:
Total goodwill and indefinite life intangibles
Millions of dollars
Gull New
Zealand
Fuels and
Infrastructure
other
Convenience
Retail
Total
Goodwill
225.5
68.0
113.2
406.7
Indefinite life intangibles
20.3
0.9
-
21.2
Balance at 31 December 2021
245.8
68.9
113.2
427.9
Each of the CGUs’ recoverable amount has been determined using a value-in-use approach. There were no impairments
recognised during the year ended 31 December 2021 (2020: nil).
Key assumptions used in value-in-use calculations
Key assumption
Basis for determining value-in-use assigned to key assumption
Cash flow
Estimated future cash flows are based on the Group’s most recent best estimate of
cash flows covering a five-year plan period from 2022 to 2026. Cash flows beyond
the period in 2026 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:
Australia 2.5% and New Zealand 2.0%.
The growth rates used do not exceed the long-term growth rate for the industry.
Discount rate
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 6.7% to 8.1% and pre-tax discount rates of 7.8% to 9.9% p.a.
Sensitivities
Determining recoverable amount requires the exercise of significant judgements which take into account both internal and external
factors. Changes in the long-term view of any of these factors may impact the estimated recoverable value. The recoverable
amount of the CGU Groups containing goodwill and indefinite life intangibles would equal their carrying amount if any of the
following key assumptions were to change:
CGU Groups
Key assumptions
Gull New Zealand
Cash contributions reduce by 55% for each year modelled
Post-tax discount rate increases from 8.1% to 15.7%
Fuels and Infrastructure other
Cash contributions reduce by 31% for each year modelled
Post-tax discount rate increases from 7.7% to 10.1%
Convenience Retail
Cash contributions reduce by 62% for each year modelled
Post-tax discount rate increases from 6.7% to 14.3%
In reaching its conclusions regarding the recoverable amounts of these CGUs the Group has considered the potential impacts that
clean energy transition and decarbonisation may have on its business through downside scenario analysis. Whilst the speed and
form of the transition is still highly uncertain, the Group has undertaken additional downside scenario analysis using current
expectations of the timing and speed of these changes. This has included reviewing recovery timeframes for carrying values against
anticipated timing of energy transition and cashflow growth rates required to break-even under 2035 and 2045 time horizons. No
impairment has been identified based on this scenario analysis.
101
C4 Property, plant and equipment
Millions of dollars
2021
2020
Freehold land
At cost
482.0
455.5
Accumulated impairment losses
(70.1)
(70.1)
Net carrying amount
411.9
385.4
Buildings
At cost
756.3
764.9
Accumulated depreciation and impairment losses
(335.0)
(326.6)
Net carrying amount
421.3
438.3
Leasehold property
At cost
1,520.5
1,331.7
Accumulated depreciation and impairment losses
(531.3)
(379.7)
Net carrying amount
989.2
952.0
Plant and equipment
At cost
6,194.1
6,064.0
Accumulated depreciation and impairment losses
(4,774.8)
(4,609.3)
Net carrying amount
1,419.3
1,454.7
Capital projects in progress
At cost
323.0
237.3
Accumulated impairment losses
-
-
Net carrying amount
323.0
237.3
Total net carrying amount
3,564.7
3,467.7
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.
Notes to the Financial Statements continued
C Operating assets and liabilities continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
102
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
2%
Leasehold property
2% to 10%
Plant and equipment
3% to 25%
Leased plant and equipment
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.
Some of the useful lives of the Group’s assets may be impacted by energy transition. All useful lives are reviewed taking into account
the Group’s current assessment of energy transition timeframes. To the extent that the Group’s assessment of the timing or pace of
this transition changes, the useful lives of the asset would change on a prospective basis.
Impairment of non-current assets
Carrying value assessment cash-generating units
The carrying amounts of each cash generating unit (“CGU”) are reviewed at each reporting period to determine if there are any
indicators of impairment. CGUs are the lowest levels at which assets are grouped and generate separately identifiable cash flows.
Where an indicator of impairment exists, a detailed recoverable amount test is performed for the relevant CGU. If the recoverable
amount test determines that a CGU is impaired an impairment expense is recognised in the Consolidated Income Statement.
All CGUs have been reviewed for indicators of impairment and triggers for a detailed review of recoverable amount.
Impairment Convenience Retail site CGUs
31 December 2021
In the current period the Group assessed triggers for impairment across the portfolio of convenience retail sites. Through this trigger
review 45 sites were identified which have been flagged for closure or lease relinquishment and 8 further sites were identified as
underperforming. There were no other sites triggered for a more detailed review. The 53 sites identified during this review have
been fully impaired in the current period and a $15.5 million impairment expense reflected in the Consolidated Income Statement.
In addition, the Group has carried out a review of previous impairments to determine whether any change in circumstance or
sustained improvement in performance, warranted a review of recoverable amount to determine whether reversal was required.
During this review, four convenience retails sites were identified that had previously been impaired due to planned closure however
a decision has been made to continue to trade at these sites. As a consequence, an impairment reversal has been recognised of
$9.0 million 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 used cash flow forecasts based on a five-year period. The forecasts were risk adjusted
to reflect the uncertainty around the timing and level of recovery from the impact of COVID-19. Cash flows beyond this period were
extrapolated using a long-term growth rate of 2.5%. Cash flow forecasts, for leased site assets were consistent with the term of the
lease assessed under AASB 16. The recoverable amounts of the CGUs were based on their value-in-use (using a discount rate of
7.1% post-tax and pre-tax of 10.2%).
Based on this assessment an impairment loss of $291.6 million was recognised with respect to property, plant and equipment for
the year. The 2020 impairment loss was recognised in other expenses in the Consolidated Income Statement.
Determining recoverable amount requires the exercise of significant judgements regarding both internal and external factors.
Judgements relating to external factors, including but not limited to fuel margin, were made with reference to historical and
observable market data. Judgements relating to internal factors, including but not limited to applicable discount rate, sale volumes,
shop contribution, wage growth and other operating costs were made with reference to historical data and risk adjusted forward
looking business plans given the uncertainty caused by the COVID-19 pandemic.
Impairment – Other specific assets
31 December 2021
During the current period the Group has performed a review of its information technology assets. As part of this review several
projects have been identified as impaired with an expense of $24.5 million recognised in the Consolidated Income Statement.
31 December 2020
COVID-19 had a significant impact on the operating environment and financial outlook for the Group. A 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. This 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 information technology
assets $20.1 million, buildings and plant and equipment $21.7 million.
103
C4 Property, plant and equipment continued
Property, plant and equipment
Millions of dollars
2021
2020
Freehold land
Carrying amount at the beginning of the year
385.4
421.5
Additions
28.6
1.8
Disposals
(4.2)
(4.5)
Impairment losses
-
(32.8)
Transfers from capital projects in progress
2.3
0.8
Foreign currency translation
(0.2)
(1.4)
Carrying amount at the end of the year
411.9
385.4
Buildings
Carrying amount at the beginning of the year
438.3
492.8
Additions
3.5
0.3
Disposals
(16.7)
(9.5)
Impairment losses
-
(44.4)
Transfers from capital projects in progress
10.9
17.4
Depreciation
(14.7)
(18.2)
Foreign currency translation
-
(0.1)
Carrying amount at the end of the year
421.3
438.3
Leasehold property
Carrying amount at the beginning of the year
952.0
973.5
Additions
207.9
207.0
Disposals
(29.4)
(4.7)
Impairment losses
(5.1)
(85.6)
Transfers from capital projects in progress
5.1
10.4
Depreciation
(146.1)
(148.1)
Reclassification
5.9
-
Foreign currency translation
(1.1)
(0.5)
Carrying amount at the end of the year
989.2
952.0
Notes to the Financial Statements continued
C Operating assets and liabilities continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
104
C4 Property, plant and equipment continued
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 Consolidated Income Statement based on the function of associated activities.
Millions of dollars
2021
2020
Plant and equipment
Carrying amount at the beginning of the year
1,454.7
1,539.2
Additions
36.4
255.6
Disposals
(26.0)
(2.3)
Impairment losses
(12.0)
(230.5)
Impairment losses reversal
9.0
-
Transfers from capital projects in progress
165.6
121.3
Reclassification
(5.9)
-
Depreciation
(203.1)
(228.0)
Foreign currency translation
0.6
(0.6)
Carrying amount at the end of the year
1,419.3
1,454.7
Capital projects in progress
Carrying amount at the beginning of the year
237.3
275.5
Impairment losses
(2.6)
-
Additions
272.1
128.1
Borrowing costs capitalised
0.1
0.3
Transfers to property, plant and equipment and intangible assets
(183.9)
(166.6)
Carrying amount at the end of the year
323.0
237.3
105
C4 Property, plant and equipment continued
C4.1 Leased assets continued
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
Consolidated 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.
Right-of-use assets
Right-of-use assets are presented within property, plant and equipment and leasehold property.
Millions of dollars
Leasehold
property
Plant and
equipment
Total
Balance at 1 January 2021
853.0
3.7
856.7
Additions
181.0
2.9
183.9
Disposals
(29.0)
-
(29.0)
Reclassification
(52.9)
-
(52.9)
Impairment losses
(5.1)
-
(5.1)
Depreciation charge for the year
(118.5)
(2.7)
(121.2)
Foreign currency translation
0.3
-
0.3
Balance at 31 December 2021
828.8
3.9
832.7
Balance at 1 January 2020
852.2
7.7
859.9
Additions
204.0
0.1
204.1
Disposals
(4.7)
(0.7)
(5.4)
Impairment losses
(64.1)
-
(64.1)
Depreciation charge for the year
(134.1)
(3.4)
(137.5)
Foreign currency translation
(0.3)
-
(0.3)
Balance at 31 December 2020
853.0
3.7
856.7
Amounts recognised in the Consolidated Income Statement
Millions of dollars
2021
2020
Leases
Interest on lease liabilities
54.9
57.2
Expenses relating to short-term leases, leases of low-value assets and variable leases
54.5
59.9
Notes to the Financial Statements continued
C Operating assets and liabilities continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
106
C4 Property, plant and equipment continued
C4.1 Leased assets continued
Amounts recognised in the statement of cash flows
For the purposes of presentation in the cash flow statement, principal lease payments of $106.3 million (2020: $107.7 million) are
presented within the financing activities and interest of $54.9 million (2020: $57.2 million) within operating activities. Lease
payments of short-term leases and leases of low-value assets of $54.5 million (2020: $59.9 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’s 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 2021 was $19.5 million (2020: $22.0 million).
The Group has granted operating leases expiring from one to nine 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
2021
2020
Operating leases under AASB 16
Within one year
6.2
7.1
Between one and five years
12.5
16.5
After five years
0.9
1.1
19.6
24.7
C5 Payables
Millions of dollars
2021
2020
Trade creditors unsecured
1,606.3
935.8
Other creditors and accrued expenses
652.0
529.0
Derivative liabilities
124.7
86.4
Total trade payables
2,383.0
1,551.2
Current
2,370.2
1,535.2
Non-current
12.8
16.0
Total trade payables
2,383.0
1551.2
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.
107
C6 Provisions
Millions of dollars
Site remediation
and dismantling
Other
Total
Balance at 1 January 2021
586.7
80.3
667.0
Provisions made during the year
63.1
2.6
65.7
Provisions used during the year
(65.0)
(26.5)
(91.5)
Provisions released during the year
(74.7)
(1.6)
(76.3)
Transfers
(1.9)
1.9
-
Inflationary movement
0.3
-
0.3
Discounting movement
9.6
-
9.6
Balance at 31 December 2021
518.1
56.7
574.8
Current
48.2
56.7
104.9
Non-current
469.9
-
469.9
Balance at 31 December 2021
518.1
56.7
574.8
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 be many years in the future. Factors such as climate change and energy transition, which are highly uncertain, could also
change the timing of these works. The carrying amounts of provisions are regularly reviewed and adjusted to take account of any
anticipated 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.
Notes to the Financial Statements continued
C Operating assets and liabilities continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
108
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
has been reviewed by a third-party expert in the current period. The outcome of this review was that the costs to remediate
have been revised and the provision reduced by $41.9 million. The reduction in anticipated costs related to savings achieved
through renegotiation of contractual arrangements and a reassessment of the contingency allowance now that the required site
works have been refined. In addition, there has been spend in the current period of approximately $17.7 million on site works.
•
During the year, restoration and remediation provisions for sites identified for divestment including the cost of restoration to a
level of non-sensitive industrial use reduced as works were carried out in relation to the identified sites.
•
Restoration and remediation provision for 25 sites that were sold in 2019 for a “higher and better” use reflecting their significant
value as future residential sites. The provision reflects the Group’s commitment to remediate to these sites to a standard which
would allow residential development. During the year the provision has been utilised as site work progressed resulting in a
decrease in the provision of $19.8 million.
•
The provision for dismantling and removal of assets from owned and leased operational sites has been increased by
$29.0 million for several of the Group’s sites where further detailed work has been undertaken to determine cost. 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.
•
The provision relating to remediation of site specific contamination has not changed significantly during the year. The estimated
liability for these costs depends on the actions required to meet regulatory standards and other requirements.
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.
109
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 Liquidity and interest-bearing liabilities
D1.1 Interest-bearing liabilities
Millions of dollars
2021
2020
Current
Bank facilities(i)
-
-
Lease liabilities
159.6
160.2
Current interest-bearing liabilities
159.6
160.2
Non-current
Bank facilities(i)
(6.8)
(5.3)
Capital market borrowings(ii)
304.9
313.5
Subordinated notes(iii)(iv)
991.9
493.3
Lease liabilities
814.0
754.0
Non-current interest-bearing liabilities
2,104.0
1,555.5
Total interest-bearing liabilities
2,263.6
1,715.7
(i)
Bank facilities comprise of no drawn bank debt at 31 December 2021 (2020: nil) (less borrowing costs of $6.8 million (2020: $5.3 million)).
(ii)
Capital market borrowings of $304.9 million (2020: $313.5 million) includes a fair value adjustment of $5.9 million (2020: $14.8 million) relating to the fair
value hedge of the $300.0 million Australian Medium-Term Notes (less borrowing costs of $1.0 million (2020: $1.3 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 $5.3 million (2020: $6.7
million)).
(iv)
Subordinated Notes were issued on 2 December 2021 and are unlisted. They are denominated in Australian dollars. The Notes have a maturity date of
2 December 2081, with the first optional redemption date on 19 March 2027 totalling $500.0 million (less borrowing costs of $2.8 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.
Refer to Note D2.5 for liquidity risk management.
Significant funding transactions
On 2 December 2021, Ampol successfully issued $500.0 million of subordinated notes. These notes will further diversify Ampol’s
funding sources, support its credit profile and increase its financial flexibility in line with its Capital Allocation Framework.
During 2021, the Group extended the tenor on the AUD equivalent $1,612.1 million (2020: $1,503.0 million) of its existing bilateral
bank facilities and upsized its committed bank facilities by $160.0 million (2020: downsized by $200.0 million). Further, Ampol
executed an additional net $1,299.0 million in new debt facilities in 2021 to support the proposed Z Energy acquisition announced
on 11 October 2021 (transaction is subject to Z Energy shareholders and New Zealand regulatory approvals). The utilisation of the
new Z Energy acquisition debt facilities is subject to the completion of the transaction.
Notes to the Financial Statements continued
D Capital, funding and risk management
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
110
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 may utilise:
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).
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.
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).
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.
Net investment
hedges
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.
Foreign currency
borrowings.
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.
111
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
2021
2020
Financial assets
Cash at bank and on hand
566.3
367.6
566.3
367.6
Financial liabilities
Variable rate borrowings
Bank facilities
143.2
144.8
Subordinated notes
341.9
73.3
Fixed interest rate – repricing dates including lease liabilities:
12 months or less
159.2
160.2
One to five years
1,166.4
1,171.2
Over five years
452.9
166.2
2,263.6
1,715.7
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
four years.
The Group manages its cash flow interest rate risk by entering into floating-to-fixed interest rate swap contracts. At 31 December
2021, the fixed rates under these swap contracts varied from 0.5% to 2.3% per annum, at a weighted average rate of 1.3% per
annum (2020:1.6% to 2.5% per annum, at a weighted average rate of 1.6% per annum).
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 2021 was a $15.5 million gain (2020: $6.9 million gain).
Interest rate sensitivity analysis
At 31 December 2021, 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:
2021
2020
Millions of dollars
Post-tax
profit
Hedge
reserve
Post-tax
profit
Hedge
reserve
Interest rates decrease by 1%
34.6
2.1
24.3
(10.7)
Interest rates increase by 1%
(34.4)
(2.1)
(24.0)
10.1
Notes to the Financial Statements continued
D Capital, funding and risk management continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
112
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
2021
Millions of dollars
(Australian dollar equivalent amounts)
US dollar
NZ dollar
Australian
dollar
Total
Bank facilities
-
-
-
-
Cash and cash equivalents
145.5
26.1
394.7
566.3
Trade receivables
464.3
0.7
1,097.9
1,562.9
Trade payables
(1,398.8)
(53.9)
(806.4)
(2,259.1)
Forward exchange contracts (forwards, swaps and options)
(18.8)
5.5
-
(13.3)
Crude and finished product swap and futures contracts
(55.8)
-
-
(55.8)
2020
Millions of dollars
(Australian dollar equivalent amounts)
US dollar
NZ dollar
Australian
dollar
Total
Bank facilities
-
-
-
-
Cash and cash equivalents
65.5
9.6
292.5
367.6
Trade receivables
264.3
4.4
687.5
956.2
Trade payables
(794.2)
(63.2)
(615.1)
(1,472.5)
Forward exchange contracts (forwards, swaps and options)
(2.4)
(0.6)
-
(3.0)
Crude and finished product swap and futures contracts
(49.8)
-
-
(49.8)
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 may be 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 2021, the total fair value of all outstanding foreign exchange contracts (forwards, swaps and options) amounted
to a $13.3 million loss (2020: $3.0 million loss).
113
D2 Risk management continued
D2.2 Foreign exchange risk continued
Foreign exchange rate sensitivity analysis
At 31 December 2021, 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:
2021
2020
Millions of dollars
Post-tax
profit
Equity
Post-tax
profit
Equity
AUD strengthens against US dollar by 10%
(7.1)
-
(4.3)
-
AUD weakens against US dollar by 10%
28.3
-
13.4
-
AUD strengthens against NZ Dollar 10%
(3.1)
-
-
-
AUD weakens against NZ Dollar 10%
17.6
-
-
-
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 2021, the total fair value of all outstanding crude and finished product swap and futures contracts amounted to a
$55.8 million loss (2020: $49.8 million loss).
Commodity price sensitivity analysis
At 31 December 2021, 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:
2021
2020
Millions of dollars
Post-tax
profit
Hedge
reserve
Post-tax
profit
Hedge
reserve
Commodity prices decrease by 10%
18.5
-
14.7
-
Commodity prices increase by 10%
(18.5)
-
(14.7)
-
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 and medium to large businesses.
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.
Notes to the Financial Statements continued
D Capital, funding and risk management continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
114
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 2021 is as follows:
Millions of dollars
2023
2024
2025
Beyond
2025
Funds
available
Drawn
Undrawn
Bank facilities - Drawn
-
-
-
-
-
-
-
Bank facilities -
Undrawn(i)
369.8
465.0
150.0
1,317.3
2,302.1
-
2,302.1
Capital market
borrowings(ii)
-
-
300.0
-
300.0
300.0
-
Subordinated notes(iii)
-
-
-
1,000.0
1,000.0
1,000.0
-
Total
369.8
465.0
450.0
2,317.3
3,602.1
1,300.0
2,302.1
(i)
This excludes the Z Energy acquisition facilities of $1,299.0 million, which are unavailable for use until the completion of the acquisition transaction.
(ii)
Capital market borrowings were drawn for the year ended 31 December 2021. Refer to Note D1.1 annotation (ii) for the reconciliation back to
$304.9 million (2020: $313.5 million).
(iii)
Subordinated notes were drawn for the year ended 31 December 2021. Refer to Note D1.1 annotation (iii)(iv) for the reconciliation back to $991.9 million
(2020: $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 4.0 years.
The total committed funds at 31 December 2021 was $3,602.1 million (2020: $2,940.5 million), with $2,302.1 million (2020:
$2,140.5 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.
2021
2020
Millions of dollars
Derivative
financial
liabilities
Derivative
financial
assets
Net
derivative
financial
(liabilities)/
assets
Derivative
financial
liabilities
Derivative
financial
assets
Net
derivative
financial
(liabilities)/
assets
Derivative financial instruments
Less than one year
(3,917.5)
3,901.8
(15.7)
(1,469.2)
1,462.3
(6.9)
One to five years
(5.8)
20.8
15.0
(6.6)
17.1
10.5
Over five years
-
-
-
-
-
-
(0.7)
3.6
115
D2 Risk management continued
D2.5 Liquidity risk management continued
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 strategic objective of sustainably delivering value and growth for our
owners, people and customers. 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 strong investment-grade credit rating;
•
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 divided by 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 on the balance sheet plus net borrowings.
Millions of dollars
2021
2020
Interest-bearing liabilities(i)
1,290.0
801.5
Less: cash and cash equivalents
(566.3)
(367.6)
Net borrowings
723.7
433.9
Total equity
3,346.8
3,224.7
Total capital
4,070.5
3,658.6
Gearing ratio
17.8%
11.9%
(i)
Interest-bearing liabilities excludes liabilities arising under AASB 16 Leases. Refer to note D1.1.
Millions of dollars
2021
2020
Non-derivative financial instruments liabilities
Less than one year
(2,286.2)
(1,448.0)
One to five years
(1,037.4)
(438.6)
Over five years
(506.7)
(505.7)
(3,830.3)
(2,392.3)
Millions of dollars
2021
2020
Lease liabilities
Less than one year
(159.6)
(160.2)
One to five years
(547.4)
(552.4)
Over five years
(626.4)
(691.7)
(1,333.4)
(1,404.3)
Notes to the Financial Statements continued
D Capital, funding and risk management continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
116
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)
31 December 2021
Carrying
amount
Fair value
total
Quoted
market price
(Level 1)
Observable
inputs
(Level 2)
Non-market
observable
inputs
(Level 3)
Interest-bearing liabilities
Bank facilities(i)
6.8
-
-
-
-
Capital market borrowings
(304.9)
(325.8)
-
(325.8)
-
Subordinated notes
(991.9)
(1,159.1)
-
(1,159.1)
-
Derivatives
Interest rate swaps
15.5
15.5
-
15.5
-
Foreign exchange contracts
(forwards, swaps and options)
(13.3)
(13.3)
-
(13.3)
-
Crude and finished product swap and futures
contracts
(55.8)
(55.8)
(69.4)
13.6
-
Total
(1,343.6)
(1,538.5)
(69.4)
(1,469.1)
-
(i)
Relates to capitalised borrowing costs recorded at amortised cost on committed bank facilities.
Millions of dollars
Asset/(Liability)
31 December 2020
Carrying
amount
Fair value
total
Quoted
market price
(Level 1)
Observable
inputs
(Level 2)
Non-market
observable
inputs
(Level 3)
Interest-bearing liabilities
Bank facilities(i)
5.3
-
-
-
-
Capital market borrowings
(313.5)
(347.9)
-
(347.9)
-
Subordinated notes
(493.3)
(592.9)
-
(592.9)
-
Derivatives
Interest rate swaps
6.9
6.9
-
6.9
-
Foreign exchange contracts
(forwards, swaps and options)
(3.0)
(3.0)
-
(3.0)
-
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)
-
117
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 consolidated balance sheet if all set-off rights were
exercised.
2021
Millions of dollars
(Australian dollar
equivalent amounts)
Gross
amount
Amount
offset in the
balance sheet
Amount in the
balance sheet
Related
amount
not offset
Net
amount
Derivative financial assets
380.5
(309.3)
71.2
(53.7)
17.5
Buy sell arrangements
318.9
(227.7)
91.2
-
91.2
Total financial assets
699.4
(537.0)
162.4
(53.7)
108.7
Derivative financial liabilities
(434.0)
309.3
(124.7)
53.7
(71.0)
Buy sell arrangements
(346.2)
227.7
(118.5)
-
(118.5)
Total financial liabilities
(780.2)
537.0
(243.2)
53.7
(189.5)
2020
Millions of dollars
(Australian dollar
equivalent amounts)
Gross
amount
Amount
offset in the
balance sheet
Amount in the
balance sheet
Related
amount
not offset
Net
amount
Derivative financial assets
210.3
(169.7)
40.6
(25.0)
15.6
Buy sell arrangements
152.3
(125.5)
26.8
-
26.8
Total financial assets
362.6
(295.2)
67.4
(25.0)
42.4
Derivative financial liabilities
(256.1)
169.7
(86.4)
25.0
(61.4)
Buy sell arrangements
(204.3)
125.5
(78.8)
-
(78.8)
Total financial liabilities
(460.4)
295.2
(165.2)
25.0
(140.2)
Notes to the Financial Statements continued
D Capital, funding and risk management continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
118
D6 Issued capital
Millions of dollars
2021
2020
Ordinary shares
Shares on issue at beginning of period – fully paid
502.6
502.6
Shares repurchased for cash(i)
(22.9)
-
Shares on issue at end of period – fully paid
479.7
502.6
(i)
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. Holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share at shareholders’ meetings. The number of issued shares post the buy back was
238.3 million. Refer to Note B4.
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 2021 Remuneration Report for further detail. For
each right that vests, the Group intends to purchase shares on-market following vesting.
D7 Reserves
Millions of dollars
2021
2020
Foreign currency translation reserve
Balance at beginning of reporting period
30.8
42.9
Included in other comprehensive income
40.6
(12.1)
Balance at reporting date
71.4
30.8
Hedging reserve
Balance at beginning of reporting period
(5.1)
(5.0)
Included in other comprehensive income
12.5
(0.1)
Balance at reporting date
7.4
(5.1)
Equity reserve
Balance at beginning of reporting period
-
-
Acquisition of non-controlling interests
3.5
-
Balance at reporting date
3.5
-
Equity compensation reserve
Balance at beginning of reporting period
(20.1)
(18.5)
Included in statement of profit or loss
3.3
(1.6)
Balance at reporting date
(16.8)
(20.1)
Total reserves at reporting date
65.5
5.6
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial
statements of operations where their functional currency is different to the presentation currency of the Group, as well as from the
translation of liabilities that hedge the Group’s net investment in foreign operations.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
relating to future transactions.
Equity reserve
The equity reserve accounts for the differences between the fair value of, and the amounts paid or received for, equity transactions
with non-controlling interests.
Equity compensation reserve
The equity compensation reserve is used to recognise the fair value of share-based payments issued to employees over the vesting
period, and to recognise the value attributable to the share-based payments during the reporting period.
119
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 (expense)/benefit
E1.1 Recognised in the Consolidated Income Statement
Millions of dollars
2021
2020
Current tax expense
Current year
(77.8)
(18.5)
Adjustments for prior years
-
(12.1)
Total current tax expense
(77.8)
(30.6)
Deferred tax (expense)/benefit
Origination and reversal of temporary differences
(47.6)
170.7
(Utilisation)/recognition of tax losses
(82.6)
101.8
(Utilisation)/recognition of carry forward tax offsets
(1.1)
1.9
Adjustments for prior years
9.5
2.0
Total deferred tax (expense)/benefit
(121.8)
276.4
Total income tax (expense)/benefit
(199.6)
245.8
E1.2 Reconciliation between income tax expense and profit before income tax expense
Millions of dollars
2021
2020
Profit/(loss) before income tax
797.1
(725.6)
Income tax (expense)/benefit using the domestic corporate tax rate of 30% (2020: 30%)
(239.1)
217.7
Effect of tax rates in foreign jurisdictions
75.4
13.6
Change in income tax (expense)/benefit due to:
Share of net profit of associated entities
3.4
3.2
Tax on minority interest portion of flow through entity profits
11.0
1.3
Current tax expense associated with depreciable assets in flow through entity
(5.7)
(0.7)
Income subject to attribution under controlled foreign company regime
(51.3)
(10.6)
Capital tax losses utilised for which no deferred tax asset was recognised
0.4
16.2
Step-up to market value on pre-CGT sites
-
13.4
Research and development allowances
0.3
0.4
Other
(3.5)
1.4
Income tax over/(under) provided in prior years
9.5
(10.1)
Total income tax (expense)/benefit
(199.6)
245.8
Income tax (expense)/benefit 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 consolidated statement of financial position and its tax base.
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 by the Group’s Singaporean entities from transactions with the Group’s Australian entities should be subject to corporate
income tax in Australia.
Due to the uncertainty over the ATO’s final position, the Group has recognised tax liabilities for the period 1 January 2014 to
31 December 2021 in relation to these earnings at the Australian corporate income tax rate of 30%, rather than at the rate payable
by the Group’s Singaporean entities in Singapore. The difference between these rates is a cumulative tax expense impact (both
current and deferred) of $208.7 million (2020: $178.9 million) for the period 1 January 2014 to 31 December 2021.
Notes to the Financial Statements continued
E Taxation
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
120
E1 Income tax (expense)/benefit continued
Taxation of Singaporean entities continued
Under an administrative agreement with the ATO, 50% of the current tax expense impact for the 2014 to 2019 and 2021 years has
been paid or is now payable, with the remaining 50% payable pending resolution of the matter. No Australian tax was paid on these
earnings in respect of the 2020 year given the Australian tax consolidated group was in a tax loss position. As at 31 December
2021, the Group has recognised $100.3 million (2020: $81.0 million) in current tax liability, in relation to this matter.
If the outcome of the ATO’s position is in the Group’s favour, an amount of income tax expense recognised to date could be written
back in future periods. If it is resolved such that the position filed with the ATO is sustained, there would be no impact on the
Group’s consolidated 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.
E2.1 Movement in deferred tax
(i)
For further information on the adjustment on application of the IFRS Interpretation Committee decision, refer to note A4.
Millions of dollars
Asset/(Liability)
Balance at
1 Jan 21
Change in
accounting
policy(i)
Income
Equity
Balance
Sheet
Net as at
31
December
2021
Deferred
tax assets
Deferred
tax
liabilities
Cash and receivables
(0.7)
-
9.4
-
-
8.7
8.7
-
Inventories
8.2
-
(23.2)
-
-
(15.0)
(6.8)
(8.2)
Property, plant and
equipment and intangibles
(166.5)
8.5
(33.4)
-
-
(191.4)
(159.9)
(31.5)
Payables
30.6
-
(5.0)
(5.4)
-
20.2
20.2
-
Interest-bearing liabilities
3.6
-
(2.0)
-
-
1.6
1.6
-
Provisions
230.0
-
(18.3)
(0.9)
-
210.8
209.5
1.3
Lease liabilities
278.3
-
19.8
-
-
298.1
280.7
17.4
Tax asset recognised on
tax losses
70.9
-
(69.1)
-
-
1.8
1.8
-
Other
(10.3)
-
-
-
(1.3)
(11.6)
(11.6)
-
Net deferred tax asset
444.1
8.5
(121.8)
(6.3)
(1.3)
323.2
344.2
(21.0)
Millions of dollars
Asset/(Liability)
121
E2 Deferred tax continued
E2.1 Movement in deferred tax continued
Millions of dollars
Asset/(Liability)
Balance at
1 Jan 20
Income
Equity
Net as at 31
December
2020
Deferred tax
assets
Deferred tax
liabilities
Cash and receivables
2.8
(3.5)
-
(0.7)
(0.7)
-
Inventories
6.8
1.4
-
8.2
8.2
-
Property, plant and equipment and
intangibles
(208.8)
13.7
28.6
(166.5)
(139.7)
(26.8)
Payables
22.5
8.7
(0.6)
30.6
29.9
0.7
Interest-bearing liabilities
4.7
(0.6)
(0.5)
3.6
3.6
-
Provisions
111.4
118.5
0.1
230.0
228.3
1.7
Lease liabilities
250.6
27.8
(0.1)
278.3
262.3
16.0
Tax asset recognised on tax losses
-
101.8
(30.9)
70.9
70.9
-
Other
(17.8)
8.5
(1.0)
(10.3)
(9.0)
(1.3)
Net deferred tax asset
172.2
276.3
(4.4)
444.1
453.8
(9.7)
E2.2 Deferred tax recognised directly in equity
Millions of dollars
2021
2020
Related to actuarial gains
(1.1)
0.1
Related to derivatives
(5.4)
(0.6)
Related to change in fair value of net investment hedges
-
(0.5)
Related to foreign operations – foreign currency translation differences
-
(0.9)
Related to share-based payments
0.2
0.5
Related to retained earnings
8.5
-
Ampol Property Trust – divestment of minority interest
-
(3.0)
2.2
(4.4)
E2.3 Unrecognised deferred tax assets
Millions of dollars
2021
2020
Capital tax losses
-
0.5
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.
Notes to the Financial Statements continued
E Taxation continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
122
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 2021:
% Interest
Name
Note
2021
2020
Companies
ALD Group Holdings NZ Limited
(v)
100
100
ALD NZ Property Holding Limited
(xxv)(v)
100
-
Ampol Australia Custodians Pty Ltd
(iii)
100
100
Ampol Australia Energy Pty Ltd
(iii)(xx)
100
-
Ampol Australia Management Pty Ltd
(iii)
100
100
Ampol Australia Petroleum Pty Ltd
(iii)
100
100
Ampol Aviation Pty Ltd
100
100
Ampol Bendigo Pty Ltd
(iii)(xv)
-
100
Ampol Convenience PropCo Pty Ltd
(iii)
100
100
Ampol Energy Pty Ltd
(iii)(xi)
100
-
Ampol Energy (Retail) Pty Ltd
(iii)(xxi)
100
-
Ampol Energy Services Pty Ltd
(iii)(xx)
100
-
Ampol Energy (Wholesale) Pty Ltd
(iii)(xxi)
100
-
Ampol Fuel Services Pty Ltd
(iii)
100
100
Ampol Holdings NZ Limited
(xix)(v)
100
-
Ampol Hydrogen Pty Ltd
(iii)(xx)
100
-
Ampol International Holdings Pte Ltd
(ii)
100
100
Ampol LPG Pty Ltd
100
100
Ampol Lubricating Oil Refinery Pty Ltd
(iii)
100
100
Ampol Management Services Pte Ltd
(ii)
100
100
Ampol Petroleum (Qld) Pty Ltd
(iii)
100
100
Ampol Petroleum (Victoria) Pty Ltd
(iii)
100
100
Ampol Petroleum Distributors Pty Ltd
(iii)
100
100
Ampol Petroleum Pty Ltd
(iii)
100
100
Ampol Procurement Services Pte Ltd
(ii)(xvi)
-
100
Ampol Property (Holdings) Pty Ltd
(iii)
100
100
Ampol Property Manager Pty Ltd
100
100
Ampol Property Manager 2 Pty Ltd
(xxii)
100
-
Ampol Refineries (Matraville) Pty Ltd
(xii)
100
100
Ampol Refineries (NSW) Pty Ltd
(iii)
100
100
Ampol Refineries (Qld) Pty Ltd
(iii)
100
100
Ampol Retail Pty Ltd
(iii)
100
100
Ampol Road Pantry Pty Ltd
(xv)
-
100
Ampol Shipping and Logistics Pte Ltd
(ii)
100
100
Ampol Singapore Trading Pte Ltd
(ii)
100
100
Ampol US Holdings LLC
(x)
100
100
Ampol US Management Services LLC
(x)
100
100
Ampol US Trading LLC
(x)
100
100
B & S Distributors Pty Ltd
(xxiii)
100
50
Bowen Petroleum Services Pty Ltd
(xv)
-
100
F Group structure
For the year ended 31 December 2021
123
F1 Controlled entities continued
% Interest
Name
Note
2021
2020
Caltex Australia Nominees Pty Ltd
(xiv)
-
100
Centipede Holdings Pty Ltd
100
100
Circle Petroleum (Q'land) Pty Ltd
(xv)
-
100
Cocks Petroleum Pty Ltd
(xii)
100
100
Cooper & Dysart Pty Ltd
100
100
Graham Bailey Pty Ltd
(iii)
100
100
Gull New Zealand Ltd
(v)
100
100
Hanietee Pty Ltd
(iii)
100
100
Hunter Pipe Line Company Pty Ltd
(iii)
100
100
Jayvee Petroleum Pty Ltd
(xv)
-
100
Jet Fuels Petroleum Distributors Pty Ltd
(iii)
100
100
Link Energy Pty Ltd
100
100
Manworth Pty Ltd
100
100
Newcastle Pipe Line Company Pty Ltd
(iii)
100
100
Northern Marketing Management Pty Ltd
100
100
Northern Marketing Pty Ltd
(iii)
100
100
Octane Insurance Pte Ltd
(ii)
100
100
Pilbara Fuels Pty Ltd
100
100
R & T Lubricants Pty Ltd
(iii)
100
100
Real FF Pty Ltd
(iii)
100
100
Ruzack Nominees Pty Ltd
(xiv)
-
100
Sky Consolidated Property Pty Ltd
100
100
Solo Oil Australia Pty Limited
100
100
Solo Oil Corporation Pty Ltd
(xiv)
-
100
Solo Oil Investments Pty Ltd
(iii)
100
100
Solo Oil Pty Ltd
(iii)
100
100
South Coast Oils Pty Ltd
(xv)
-
100
South East Queensland Fuels Pty Ltd
100
100
Sydney Metropolitan Pipeline Pty Ltd
60
60
Teraco Pty Ltd
(iii)(xxiii)
100
50
Terminals New Zealand Ltd
(v)
100
100
Tulloch Petroleum Services Pty Ltd
(xv)
-
100
Votraint No. 370 Pty Ltd
(xxiv)
100
-
Western Fuel Distributors Pty Ltd
(xxiii)
100
50
Zeal Achiever Ltd
(xiii)
100
100
Unit trusts
Ampol Property Trust
(ix)
51
51
Ampol Property Trust 2 (formerly known as Ampol Convenience REIT)
(xvii)
100
100
Eden Equity Unit Trust
(vi)
100
100
Petroleum Leasing Unit Trust
(vii)
100
100
Petroleum Properties Unit Trust
(vii)
100
100
South East Queensland Fuels Unit Trust
(viii)
100
100
Notes to the Financial Statements continued
F Group structure continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
124
F1 Controlled entities continued
(i)
All companies are incorporated in Australia, except where noted otherwise.
(ii)
Incorporated in Singapore.
(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.
(v)
Incorporated in New Zealand.
(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)
Incorporated in Delaware, United States of America.
(xi)
Incorporated on 14 May 2021.
(xii)
The directors of the company declared that the company was solvent pursuant to section 494 of the Corporations Act 2001. Its shareholder resolved to
wind up the company voluntarily on 20 December 2019.
(xiii)
Australian tax resident incorporated in the British Virgin Islands.
(xiv)
On 9 February 2021, this company was deregistered with ASIC.
(xv)
On 20 January 2021, this company was deregistered with ASIC.
(xvi)
The Accounting and Corporate Regulatory Authority application has approved a formal strike off on 6 September 2021.
(xvii)
Ampol Property Trust 2 (formerly known as Ampol Convenience REIT) is the sole unit holder.
(xviii) Incorporated on 2 March 2021.
(xix)
Incorporated on 12 October 2021.
(xx)
Incorporated on 28 October 2021.
(xxi)
Incorporated on 18 August 2021.
(xxii)
Incorporated on 21 October 2021.
(xxiii) On 4 November 2021, this entity became wholly owned.
(xxiv) On 4 November 2021, Ampol Australia Petroleum Pty Ltd acquired 100% of previously held 23.08% investment.
(xxv)
ALD NZ Property Holding Limited previously known as Charlton Properties (2004) Limited incorporated on 2 March 2015. Acquired by Ampol Australia
Petroleum Pty Ltd on 6 September 2021.
125
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.
Consolidated Income Statement for entities covered by the Deed of Cross Guarantee
Millions of dollars
2021
2020
Revenue
15,799.2
11,996.3
Cost of goods sold – historical cost
(14,114.8)
(10,980.8)
Gross profit
1,684.4
1,015.5
Other income
53.7
899.9
Other expense
(50.4)
(434.8)
Selling, distribution and general and administration expenses
(1,272.2)
(1,380.5)
Results from operating activities
415.5
100.1
Finance costs
(113.1)
(109.7)
Finance income
0.4
0.6
Net finance costs
(112.7)
(109.1)
Share of net profit of entities accounted for using the equity method
11.3
10.7
Profit before income tax expense
314.1
1.7
Income tax (expense)/benefit
(135.1)
264.1
Net profit
179.0
265.8
Items that will not be reclassified to profit or loss
2.4
(0.3)
Items that may be reclassified subsequently to profit or loss
12.5
(0.1)
Other comprehensive income for the period, net of income tax
14.9
(0.4)
Total comprehensive income for the period
193.9
265.4
Retained earnings at the beginning of the year
2,493.2
2,417.6
Acquired minority interest included in Deed of Cross Guarantee(i)
1.4
-
Current year earnings
179.0
265.8
Movement in reserves
2.4
(0.4)
Shares bought back
(277.5)
-
Dividends provided for or paid
(178.7)
(189.8)
Retained earnings at the end of the year
2,219.8
2,493.2
(i)
On 4 November 2021, Teraco Pty Ltd became wholly owned.
Notes to the Financial Statements continued
F Group structure continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
126
F1 Controlled entities continued
F1.1 Deed of Cross Guarantee continued
Consolidated Balance sheet for entities covered by the Deed of Cross Guarantee
Millions of dollars
2021
2020
Current assets
Cash and cash equivalents
407.6
286.5
Trade and other receivables
1,136.7
1,112.5
Inventories
1,150.6
821.9
Total current assets
2,694.9
2,220.9
Non-current assets
Trade and other receivables
730.0
458.5
Investments accounted for using the equity method
184.0
177.2
Ampol Property Trust investment
734.8
728.5
Property, plant and equipment
2,783.1
3,732.5
Intangibles
246.4
283.0
Deferred tax assets
365.2
443.5
Employee benefits
5.6
2.9
Total non-current assets
5,049.1
5,826.1
Total assets
7,744.0
8,047.0
Current liabilities
Payables
1,936.9
1,469.5
Interest-bearing liabilities
159.6
230.9
Current tax liabilities
199.1
169.6
Employee benefits
129.8
98.9
Provisions
95.5
173.0
Total current liabilities
2,520.9
2,141.9
Non-current liabilities
Payables
12.8
16.0
Interest-bearing liabilities
2,025.9
2,415.0
Deferred tax liabilities
21.0
9.7
Employee benefits
5.1
6.1
Provisions
464.9
484.0
Total non-current liabilities
2,529.7
2,930.8
Total liabilities
5,050.6
5,072.7
Net assets
2,693.4
2,974.3
Equity
Issued capital
479.7
502.6
Treasury stock
(1.5)
(1.6)
Reserves
(4.6)
(19.9)
Retained earnings
2,219.8
2,493.2
Total equity
2,693.4
2,974.3
127
F2 Business combinations
There were no material business combinations during the years ended 31 December 2021 or 31 December 2020.
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
% Interest
Name
Country of
incorporation
2021
2020
Investments in associates
Bonney Energy Group Pty Ltd(i)
Australia
50
50
Endua Pty Ltd(ii)
Australia
20
-
EVOS Technology Pty Ltd(iii)
Australia
-
-
Geraldton Fuel Company Pty Ltd
Australia
50
50
Seaoil Philippines Inc.
Philippines
20
20
Car Next Door Australia Pty Ltd(iv)
Australia
-
17.2
Investments in joint ventures
Airport Fuel Services Pty Limited
Australia
40
40
Australasian Lubricants Manufacturing Company Pty Ltd(v)
Australia
50
50
Cairns Airport Refuelling Service Pty Ltd
Australia
33.3
33.3
(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
Group Pty Ltd (formerly Caltas Pty Ltd). The carrying amount of this investment at 31 December 2021 was $16.9 million (2020: $15.6 million).
(ii)
On 19 May 2021, Ampol Energy Pty Ltd acquired a 20% equity interest in Endua Pty Ltd for $1.5 million.
(iii)
On 8 June 2021, Ampol Energy Pty Ltd acquired rights in EVOS Technology Pty Ltd whereby Ampol has the right to shares in EVOS. As this right is
currently exercisable at Ampol’s discretion, the investment is accounted for as an associate.
(iv) On 24 December 2021, the Group sold its investment in Car Next Door Australia Pty Ltd for proceeds of $16.7 million and recorded a net accounting gain
of $12.5 million.
(v)
Australasian Lubricants Manufacturing Company Pty Ltd ceased joint venture operations on 17 April 2015 and had a nil carrying value at
31 December 2021.
The companies listed in the above table were incorporated in Australia and the Philippines and have a 31 December balance date
with the exception of Bonney Energy Group Pty Ltd which has a 30 June balance date. These companies’ main course of business
primarily relate to the sale, marketing and/or distribution of fuel products and the operation of convenience stores with the exception
of Endua Pty Ltd (Endua), EVOS Technology Pty Ltd (EVOS) and Car Next Door Australia Pty Ltd. Endua is principally concerned
with the generation and storage of clean hydrogen power and EVOS with the design and manufacture of electric vehicle charging
products.
Notes to the Financial Statements continued
F Group structure continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
128
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(i)
2021
1,979.3
42.7
11.4
798.7
482.2
314.9
84.9
-
110.2
183.3
2020
1,562.6
46.3
10.7
629.0
332.2
296.9
76.5
0.1
99.8
176.4
(i)
Total shares of associates’ net assets equity accounted adjusted for $11.8 million cash injection on Seaoil Philippines, Inc.
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
2021
-
(0.4)
(0.1)
2.0
0.2
1.8
0.7
2020
5.0
-
-
1.9
-
1.9
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.
For the year ended 31 December 2021 the contribution of the JUHIs to the operating profit of the Group was nil (2020: 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
2021
2020
Non-current assets
Plant and equipment
63.5
62.7
Less: accumulated depreciation
(24.5)
(23.3)
Total non-current assets
39.0
39.4
Total assets
39.0
39.4
129
F5 Parent entity disclosures
As at and throughout the financial year ended 31 December 2021, the parent entity of the Group was Ampol Limited.
Millions of dollars
2021
2020
Result of the parent entity
Profit for the period
820.9
201.0
Other comprehensive income/(loss)
18.3
16.5
Total comprehensive income for the period
839.2
217.5
Financial position of parent entity at year end
Current assets
34.4
29.8
Total assets
5,453.3
5,352.5
Current liabilities
109.4
108.7
Total liabilities
4,841.5
5,098.6
Total equity of the parent entity comprising
Issued capital
479.7
502.6
Treasury stock
(1.5)
(1.6)
Reserves
(2.5)
(18.5)
Retained earnings
136.1
(228.6)
Total equity
611.8
253.9
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.
Notes to the Financial Statements continued
F Group structure continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
130
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.
Millions of dollars
Ampol Property Trust
2021
2020
NCI percentage
49%
49%
Balance sheet
Current assets
18.4
7.0
Non-current assets
516.7
522.9
Current liabilities
(0.8)
(0.9)
Non-current liabilities
-
-
Net assets attributable to unit holders
534.3
529.0
Net assets attributable to NCI
261.8
259.2
Income Statement
Revenue
92.9
8.9
Expenses
(17.6)
(0.2)
Total comprehensive income for the year
75.3
8.7
Profit allocated to NCI
36.9
4.3
Statement of cash flows
Cash flows from operating activities
83.0
2.7
Cash flows from investing activities
(12.2)
(700.9)
Cash flows from financing activities
(70.0)
698.2
Net increase/(decrease) in cash held
0.8
0.0
Transactions with non-controlling interests
Ampol Property Trust
Profit allocated
36.9
4.3
Distributions paid
(40.3)
(1.2)
Proceeds from purchase of units in Ampol Property Trust
6.0
-
Other non-controlling interests
Profit allocated
0.6
0.8
Distributions paid
(1.2)
-
Acquisition of minority interest, net of tax(i)
(3.5)
-
Net assets attributable to other NCI
10.3
14.4
(i)
On 4 November 2021, Ampol Australia Petroleum Pty Ltd wholly acquired Votraint No. 370 Pty Ltd, Teraco Pty Ltd and Western Fuel Distributors Pty Ltd.
Refer to Note F1 for further information.
131
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
2021
2020
Capital expenditure contracted but not provided for in the
financial report and payable
23.0
23.0
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 during 2022 and 2023. DA approval has not yet been granted as at 31 December 2021.
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
Associate related party transactions are as follows:
Dollars
2021
2020
Income Statement
Petroleum sales
1,164,983,000
712,897,000
Rental income
2,123,000
2,119,000
Dividend and disbursements
2,050,000
1,877,000
Total Income Statement impact
1,169,156,000
716,893,000
Balance Sheet
Receivables
75,211,000
33,404,000
Total Balance Sheet impact
75,211,000
33,404,000
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 2021 (2020: nil). Details
of the Group's interests are set out in notes F3 and F4.
Notes to the Financial Statements continued
G Other information
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
132
G4 Key Management Personnel
The aggregate remuneration of Key Management Personnel of the Group during 2021 and 2020 were:
Key Management Personnel compensation
Thousands of dollars
2021
2020
Short-term benefits
10,543.8
6,421.2
Other long-term benefits
117.0
138.3
Post-employment benefits
622.1
268.3
Termination benefits
-
1,311.8
Retention payments
531.0
2,655.1
Share-based payments
2,775.5
299.9
Total Key Management Personnel compensation
14,589.4
11,094.6
Information regarding Directors’ and Executives’ compensation and some equity instrument disclosures is provided in the
Remuneration Report section of the Directors' Report.
133
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 Consolidated Cash Flow Statement, cash and cash equivalents includes:
Millions of dollars
2021
2020
Cash at bank
566.3
367.6
Total cash and cash equivalents
566.3
367.6
G5.2 Reconciliation of net profit to net operating cash flows
Millions of dollars
2021
2020
Net profit/(loss)
560.0
(484.9)
Adjustments for:
Loss on sale of property, plant and equipment
2.7
0.2
Impairment of fixed assets
19.7
393.3
Impairment reversal of fixed assets
(9.0)
-
Impairment of information technology assets
24.5
20.1
Finance charges on leases
54.9
57.2
Interest paid capitalised
(0.1)
(0.3)
Amortisation of finance costs
4.0
3.9
Depreciation of property, plant and equipment
363.9
394.3
Amortisation of intangibles
17.1
27.9
Share based payment and treasury stock reserve movements net of expense
3.4
(1.6)
Share of associates' and joint ventures' net profit
(11.3)
(10.7)
Movements in assets and liabilities:
(Increase)/decrease in receivables
(635.6)
588.9
(Increase)/decrease in inventories
(710.6)
755.2
Increase/(decrease) in payables
999.1
(1,369.8)
Increase/(decrease) in current tax balances
38.9
(28.1)
Decrease/(increase) in net deferred tax assets
120.9
(271.9)
(Decrease)/increase in provisions
(65.0)
350.0
Finance cost paid
(49.8)
(43.7)
Lease interest paid
(54.9)
(57.2)
Income taxes paid
(38.2)
(55.2)
Net operating cash inflows
634.6
267.6
Notes to the Financial Statements continued
G Other information continued
For the year ended 31 December 2021
Ampol Limited
Annual Report 2021
134
G6 Auditor remuneration
Thousands of dollars
2021
2020
Audit and review services
Auditors of the Group – KPMG
Audit and review of financial statements – Group(i)
1,788.0
1,492.9
Audit and review of financial statements – controlled entities
308.0
173.9
2,096.0
1,666.8
Assurance services
Auditors of the Group – KPMG
Regulatory assurance services
100.0
31.5
Other assurance services
48.5
10.1
148.5
41.6
Other services
Auditors of the Group – KPMG
Taxation advice and tax compliance services
17.4
14.5
Other services
-
559.5
17.4
574.0
(i)
The 2021 audit fee includes one off audit work in respect of the impact of COVID-19 on financial statement balances.
G7 Net tangible assets per share
Millions of dollars
2021
2020
Net tangible assets per share
10.78
9.58
Net tangible assets are net assets attributable to members of the Group less intangible assets. The number of ordinary shares used
in the calculation of net tangible assets per share was 238.3 million (2020: 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 2022, 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 reporting date
Dividend
On 21 February 2022, the Directors declared a fully franked final dividend. Refer to Note B5 for further information.
COVID-19
The emergence of the Omicron variant of COVID-19 has impacted recent trading and the situation continues to evolve. The Group
continues to monitor and review the safeguarding and health of its people and customers, business continuity and cashflow.
Nonetheless, the improved momentum in key profitability drivers in the fourth quarter of 2021, coupled with higher refiner margins,
reinforced the responsiveness of the Group’s earnings to more favourable market conditions.
Other
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 2021 to the date of this report.
135
Share capital
There are 238,302,099 fully paid ordinary shares on issue, held by 27,894 holders.
Holders with less than a marketable parcel
469 shareholders hold less than a marketable parcel of $500 based on a share price of $29.01 per share.
Shares purchased on-market
From 1 January 2021, 25,388 fully paid ordinary shares were purchased on-market at an average cost of $27.60 per share for the
purpose of the Ampol Limited Employee Share Plan.
From 1 January 2021, 20,457 fully paid ordinary shares were purchased on-market at an average cost of $27.64 per share for the
purpose of the Ampol Limited Equity Incentive Plan.
Substantial shareholders
Substantial shareholder
Number of
shares held
% of issued
capital
Australian Retirement Fund
27,712,722
11.63
State Street Corporation
17,497,546
7.34
BlackRock Inc
15,309,973
6.42
Airlie Funds Mgt
12,354,008
5.18
Shareholder distribution
Range
Total holders
Units
% of issued
capital
1 – 1,000
22,044
7,955,199
3.34
1,001 – 5,000
5,165
11,047,361
4.64
5,001 – 10,000
457
3,283,338
1.38
10,001 – 100,000
198
4,791,116
2.00
Over 100,001
30
211,225,085
88.64
Total
27,894
238,302,099
100.00
Shareholder Information
As at 26 January 2022
Ampol Limited
Annual Report 2021
136
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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
88,668,079
37.21
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
66,528,024
27.92
3
CITICORP NOMINEES PTY LIMITED
25,530,588
10.71
4
NATIONAL NOMINEES LIMITED
10,357,653
4.35
5
BNP PARIBAS NOMINEES PTY LTD
4,845,524
2.03
6
BNP PARIBAS NOMINEES PTY LTD
3,510,545
1.47
7
CITICORP NOMINEES PTY LIMITED
1,852,975
0.78
8
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
1,849,125
0.78
9
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
1,528,145
0.64
10
UBS NOMINEES PTY LTD
1,159,632
0.49
11
WARBONT NOMINEES PTY LTD
937,000
0.39
12
MUTUAL TRUST PTY LTD
586,515
0.25
13
CITICORP NOMINEES PTY LIMITED
381,878
0.16
14
BNP PARIBAS NOMINEES PTY LTD
381,500
0.16
15
BNP PARIBAS NOMS PTY LTD
344,848
0.14
16
BNP PARIBAS NOMINEES PTY LTD BARCLAYS
289,408
0.12
17
BNP PARIBAS NOMINEES (NZ) LTD
217,129
0.09
18
BRISPOT NOMINEES PTY LTD
210,488
0.09
19
NETWEALTH INVESTMENTS LIMITED
197,870
0.08
20
BNP PARIBAS NOMINEES PTY LTD
172,585
0.07
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
209,549,511
87.93
Total remaining holders balance
28,752,588
12.07
Voting rights
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.
137
www.ampol.com.au
Registered office
29–33 Bourke Rd
Alexandria NSW 2015
T: 1800 240 398
(within Australia)
ampol.com.au
Investor relations
investor@ampol.com.au
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
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