Z Energy Limited Annual Report 2016

FY2016 Annual Report · Z Energy Limited

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2016
Annual
Report

Let’s Go

Keep on
moving
New Zealand

Do you have feedback?
We are committed to communicating clearly
about our business and our activities through
our reporting. To that end, we welcome your
comments and feedback on this report.
Please email us at yourviews@z.co.nz.

Visit z.co.nz/AR16 to download an
interactive PDF where you can click on bold
text to view additional content.

We’re known for selling fuel and petroleum
products across the country. But there’s
more to Z1 than that. What gets us up in the
morning is helping New Zealanders figure
out how to get them, their people and the
things they buy, sell and create from one
place to another, from one task to another,
from one job to another as quickly and as
hassle-free as we can, in whatever ways we
can. And when you understand that about
us, everything we’ll talk about in this report
makes plenty of sense.

We’re great believers in non-financial,
values-based reporting in addition to
reporting our financial performance.
We think there’s room for significant
change to the reporting of New Zealand
listed companies. We believe investors
have the right to understand how we
operate and why, and how we plan to
create economic, environmental and social
value over the long term. Such reporting is
commonplace overseas.

We don’t see why New Zealand should be
different. Business has widespread impact
on people’s lives. We think business needs
to be held to account for more than just
financials. It’s about striking the right
balance between what gets achieved
quarter by quarter and what happens over,
and for, the longer term.

From how we think about the environment
to how we work in communities, to the
fuel service revolution we’ve driven in
retail, to the new levels of relationships

we’re building with businesses of all sizes,
to the biodiesel plant we’ve built, to our
acquisition of Chevron’s assets in New
Zealand, Z’s not just a fast mover; we’re a
first mover.

Last year, we brought you our first Annual
Report in accordance with the Global
Reporting Initiative (GRI) international
sustainability reporting framework. This
year, we’ve moved even closer still to a fully
integrated view of our business activities
targeting four particular Integrated
Reporting2 principles: strategic focus
and future orientation; connectivity of
information; conciseness; and risks and
opportunities. Next year, we intend to
deliver a fully integrated report.

We’re a company with nothing to hide.
This is our report dated 12 May 2016.

Signed on behalf of the Board of Z Energy
Limited.

Peter Griffiths
Chair, Z Energy

Abigail Foote
Chair, Audit and Risk Committee

1. Z is a New Zealand incorporated company, operating only in New Zealand.

2. principles 3.3, 3.6, 3.36 and 4.23 found at http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf

Z at a glance

With the recent acquisition of
Chevron’s New Zealand assets we
will be selling around 48% of
New Zealand’s total transport fuel
once we settle the transaction.

We work with over 33,000
commercial customers in aviation,
shipping, fishing, trucking, farming
and heavy industry.

We’ve paid over $64M in
corporate taxes and GST
in FY16.

We own a stake in New Zealand’s
only refinery at Marsden Point.

We serve over 156,000
customers every day at our
retail service stations.

We’re a top 20 publicly
listed company, with around
9,000 shareholders and
nearly 9,000 bondholders.

Bank of Z

Our Shareholders

26.6 cents dividend per share

We directly employ over 300
people and indirectly a further
2,200 through our retail network.

We have built New Zealand’s
first, commercial-scale
biodiesel plant.

We’re listed on the New Zealand
(NZX) and Australian (ASX) stock
exchanges.

We’re still only six years old.

Please note: Z Energy Limited is incorporated in New Zealand and is not subject to chapters 6, 6A, 6B and 6C of the Australian Corporations Act 2001. The acquisition of securities in Z
Energy may be limited under New Zealand law by the Takeovers Code (which restricts the acquisition of control rights of more than 20% of Z Energy other than via a takeover offer under
the Code) or the effect of the Overseas Investment Act 2005 (which restricts the acquisition of New Zealand assets by overseas persons).

Find what you’re
looking for

Click the headings below to take you
directly to that section of the report.

Z continues to
benefit from its
supply chain
optimisation
strategy.

Page 12

For the first time,
many Kiwi motorists
and businesses will
have the choice
to use a more
sustainable fuel.

Page 13

Small steps lead
to giant strides

Progressing matters on four key fronts: our people; our communities;
our environment; and our finances.

We pride ourselves on thinking and acting differently.
These are some of the things we believe set Z apart.

New Zealand based and New Zealand
focused - we pride ourselves on being
a world class Kiwi company. We make
decisions in New Zealand to help our
business better serve New Zealanders.

We innovate effectively -
Z is pioneering greater use of biofuels by
investing in its own biodiesel plant and
has encouraged major fuel users such as
Fonterra to adopt use of our blended
B5 biodiesel product.

We've lifted service expectations -
service is how Z looks to add value.
We're committed to lifting the service
levels for commercial customers. Within
our retail network, we've added new
choices and ideas to give more people
more reasons to head our way.

Celebrating
Z's differences

We support communities -
Z's Good in the Hood has been a
runaway success because New
Zealanders love the way we encourage
change for the better in communities
across the country.

We're doing more to keep people
safe and healthy - from our
commitment to no harm to people
and the environment through to the
changes we've made this year to raise
awareness of, and action on, health
and safety, no one's worked as hard as
us in this industry to shift health and
safety expectations and culture in
New Zealand.

We've spoken out - if something bugs
us, and we think it's in New Zealanders'
interest for us to draw attention to
what's going on, we won't hesitate to
speak out. From diversity to climate
change, we're a company with opinions.

Our people

At Z, we do more than employ people. We are
committed to our employees’ growth and personal
development. We aspire to be a company that is
healthier, safer and that leads by example through
its culture. We want to continue our extraordinary
journey and we know it’s our people who are going
to get us there. More on this can be found on page
21 and from 69.

Our communities

We’re stepping up in communities. In last year’s
report, we said we’d reduce inequality and create
opportunity, lead on healthier lifestyles and safer
roads, and support more of what matters in Z’s
neighbourhoods year round. We continue to work
towards that.

For us that means being seen as part of the
community and taking the time to listen carefully
and do what we can to help communities with the
things they care about. More on this can be found
in our Communities section starting on page 34.

Our environment

Our new biodiesel plant is an important step in the
right direction, not just for what it does but also for
the signal that it sends. Think that’s daring? Try this.
Can you think of another fuel supplier that has stated
publicly that their goal is to leave more and more fossil
fuel in the ground? We did. In this ad: z.co.nz/tvc.
More on our environment can be found from page 30.

Our finances

Z is for New Zealanders, as customers, communities
and as investors. We need to deliver value for our
customers and we need to generate it through
our operations in order to deliver the returns that
investors deserve. Our goal is to invest wisely, to
think long term and to be a consistent high performer
in what we do and what we earn. You can find our
Financial Statements section starting on page 38.

Some of the
actions we took

Chevron
We talked with Chevron and agreed to buy
the Chevron New Zealand business including
(Caltex branded) service stations and
associated assets for $785 million. The sale
was referred to the Commerce Commission
which investigated the proposed sale
rigorously. They subsequently decided to
approve the sale, on the basis that it would
not substantially lessen competition for New
Zealand consumers and businesses.

Central government
We talked with a number of central
government ministries, authorities,
agencies and political parties about the
macro-environment in which we operate
and compete. Discussions ranged across
oil prices, alternative fuels, health and
safety, sustainability, climate change policy,
security of energy supply, the competitive
environment and creating jobs.

Local government, community
organisations, NGOs
We talked with local and community groups
as well as not-for-profit organisations about
many of the same issues, with perhaps more
of a focus on sustainability, environmental
issues and the best ways that we could make
a difference in our local communities. You can
find out about what we did on page 34.

Customers
We talked with our customers too, of course,
through advertising and about initiatives such
as Good in the Hood. You can read about how
they responded on pages 26 to 29.

Sustainability sector
We met with wide-ranging groups – non-
governmental organisations, business groups,
policy advisers and many others – to talk
about how we could make an environmental
and social difference and where we could do
with their help and guidance. You can learn
more about what happened as a result on
page 30.

Media
We are known for being totally accessible
and straight up. Our hope is that by actively
talking publicly, including through the media,
we can get more New Zealanders talking
openly and frankly about what’s good for
New Zealand. Here’s an example of that:
z.co.nz/radionz

Continuing to
talk and listen

It’s in our nature to be proactive, direct and straight up, and relationships
are a critical part of that. This year, we continued talking with all sorts of
people about all sorts of things that mattered to them.

Right now,
we’re here

Big stories of
the year

Here’s our Z performance
snapshot for the year ended
31 March 2016.

$64 million

Historical cost net profit after tax (Net Profit)

$785 million

Cost of purchase for Chevron New Zealand
(payable 1 June 2016)

$123 million

2,248 million litres

Replacement cost net profit after tax

Total fuel volume (retail and commercial)

$263 million

Replacement cost operating EBITDAF profit
($238m including Chevron New Zealand
expenses).

36.8 million

Vehicle traffic across our retail sites

26.6 cents

Total dividend per share

56.8 million

People transacting on our retail sites

30.8 cents

Replacement cost earnings per share

Electric vehicle charging stations in
the Z network

5.5 cents

Replacement cost earnings per litre

Truck stops in the Z network

$70 million

Capital expenditure

100%

Health, safety, security and environment
actions close-out rate

Environmental planning post-Paris
– the economics for biofuels and our
sustainability initiatives may not seem
obvious in a world where oil prices are so
low. But we believe that will change a lot
when governments get really engaged with
climate change. The Paris climate change
talks started that.

Retail – our new food offerings like vegan
pies, smoothies and froyos were a big
success, showing that New Zealanders are
keen to try new things.

Loyalty – our customers want their loyalty
rewarded in a range of ways. Some want
instant gratification through an offer or
discount. Many love Fly Buys. The learning
for us is that the loyalty market itself is
evolving – fast – and we need to keep
evolving too.

Robberies – disappointingly, the number
of robberies went up this year despite us
continuing to introduce new ways to deter
thieves. We aren’t giving up on our quest
to get to zero with new technological
initiatives in place.

Net Promoter Score – we were
disappointed to see our Net Promoter
Score, which measures our commercial
customer satisfaction, fall significantly
through the year. We will continue to
address this next year.

Fair Go

Speak up

Generative culture – we started work
on a “Just Culture” to encourage people
to speak up when things go wrong,
learning when things go right and to help
us continue to improve. These are small
steps in our new HSSE strategy to build a
generative culture by 2020. We’ve called
it giving our people a Fair Go.

Best employer – we continued building
our values and performance based
culture. We are now recognised as a 2015
Aon Hewitt Best Employer with 77% of our
people engaged.

Leadership – at Z, everyone is a
leader, regardless of role. We have been
recognised for this as an Aon Hewitt Top
Company for Leaders.

Biodiesel – Fonterra, New Zealand’s
largest company, became a foundation
customer for our new biodiesel, along with
New Zealand Post, Fulton Hogan, Air New
Zealand and Downer.

Te Mahi Hou – Refining NZ continued
to improve performance, with strong
refining margins. A $365 million upgrade
programme of Te Mahi Hou introduced
new efficiencies that helped lift volumes
and refining margins, while cutting
carbon emissions. We benefit from these
efficiencies as both a shareholder and a
customer.

Integrity – we act with integrity, no
matter how big or small the action
is. When we made a mistake with the
product sourcing for our vegan pies, we
told people straight away, recalled all our
stock and gave those affected pies away
to people in need. Then we changed the
mixture to make sure the mistake wasn’t
repeated.

Market reporting – we continue to
look towards a more integrated way of
reporting not just our financial results
but also our social, commercial and
environmental impacts.

New health and safety legislation –
HSSE is always on our minds. We’ve now
added specific health and safety expertise
at executive level. We welcome and are
ready for the new legislation.

ZORM (our operational risk management
system) – we’ve kicked off the most
integrated view we’ve ever had of
operational risk in our business and how
we need to manage it.

Non-fossil fuel alternatives – our
philosophy of starting small and working
our way up to significant change was
exemplified in projects like our new
biodiesel plant. There is 5% biofuel in
the mix to start, and that saves the
country tens of thousands of tonnes in
carbon emissions. We think that’s a great
beginning.

Community – once again this year,
Z backed New Zealanders helping in
their local communities. So far, Good
in the Hood has made millions of dollars
of difference.

Chairman and
Chief Executive’s
Review

The 2016 financial year was a big one for Z, with every part of the Z
team contributing to a safe and reliable performance from the core
business, all the while advancing the potentially transformational
acquisition of the Chevron New Zealand business.

Peter Griffiths

Mike Bennetts

Health, safety, security and the
environment
Running a safe business is the foundation
upon which Z is based, the licence for our
company to operate. Over the year we have
continued to make progress towards our
goal of a zero harm workplace and this
report contains a breakdown on how we have
tracked against some core health and safety
metrics on page 22.

On 4 April 2016, the new Health and Safety
at Work Act came into effect. Z has been
a strong supporter of this legislation and
believes that while new laws cannot in
themselves improve New Zealand’s poor
workplace safety record, it is an important
precursor to much-needed cultural change
in the way we think and communicate about
health and safety in New Zealand.

As this legislation was being developed, the
Board and management were also working
through internal reviews and external audits
to ensure Z is well equipped to operate under
the new regime and we are making good
progress in implementing the company’s
revised operational risk management system.

In a year in which there was much which
could have distracted the Z team, we’re
pleased that we’ve maintained our focus on
safe and reliable operations. Continually
improving our systems, processes and
culture ensures positive health, safety and
environmental outcomes for our business,
customers and communities.

Financial performance
This financial year all parts of the business
made important contributions to the overall
result in a highly competitive market.
It was also a year in which we made good
progress in executing our “Strengthen
the Core” strategy.

Z has delivered historical cost operating
profit of $64 million which was impacted
by the global oil price decreasing from $54
per barrel to $39 per barrel during the year.
However, looking past the change of value
of inventory, Z also reports its results on a
replacement cost basis (RC).

Z delivered Replacement Cost Operating
EBITDAF (RC EBITDAF) of $263 million when
adjusted for the one off costs of $25 million
associated with the acquisition of Chevron
New Zealand. This was at the upper end of
the $245 - $265 million range that Z guided.
This $263 million is $22 million (9%) higher
than the $241 million reported for the 2015
financial year.

This outcome continues Z’s track record
of delivering double digit1 growth in
replacement cost earnings.

Strategy delivers results in a
highly competitive market
The New Zealand fuels industry continues
to be highly competitive with new service
stations being built, a now constant flow
of significant discounts, more price-based
promotions and new customer offers. This
tussle for customers is vigorous, with
competitors increasing their investment
in fuel retailing. This increasing number
of choices is healthy and positive for the
industry, for consumers and for New Zealand.
We are the preferred New Zealand fuel brand
with distinctive and constantly evolving
customer offers.

Z welcomes competition for customers
head on, Z has refreshed and continued to
invest in its brand. The company’s strategy
continues to deliver against this highly
competitive backdrop.

Over the year Z opened four new-to-industry
service stations in growth areas, refurbished
two existing sites and continued to introduce
new high-margin products into its stores to
boost the already strong performance of Z’s
food and beverage offer. Z continues to grow
its contribution from non-fuels margin – up
from $61 million in 2015 to $64 million in 2016.

In the commercial markets Z continues
to optimise its commercial fuels portfolio
towards high value customers in parts of
the country where we are best positioned to
serve them.

Z continues to benefit from its supply chain
optimisation strategy. Refining NZ delivered
a stellar financial year, with contribution
from refining margins at $48 million, up from
$31 million in the previous financial year.
Additionally, the refinery completed its $365

1Growth in RC Operating EBITDAF over last 3 years - FY14: $219m, FY15: $241m, FY16: $263m (adjusted for one-off Chevron New Zealand expenses).

million Te Mahi Hou upgrade project at the
end of 2015 which will improve the efficiency
of the plant and the underlying performance
of refining margins by up to USD0.90-1.10
per barrel.

Additionally, Z’s crude oil procurement
collaboration with Refining New Zealand and
BP New Zealand delivered approximately $8
million of efficiency-related earnings on an
annual basis.

Z has ample financial and human capability
to continue to work through the third year of
its ‘Strengthening the Core’ strategy while
also integrating Chevron’s operations into our
business.

Chevron acquisition
On 2 June 2015, Z announced it had reached
an agreement to acquire the Chevron
New Zealand business for $785 million.
We appreciate this has been a significant
focus for investors and the market.

Before we discuss the transaction in any
detail, it would be remiss for us not to thank
the dedicated and passionate team from
across Z who originated this transaction,
negotiated the agreement, and worked on
both securing the regulatory approvals and
preparing two companies to come together
as one. This has been nearly two years of
hard work and we are proud of the fantastic
contribution of our people.

As we said when announcing this transaction,
the acquisition of Chevron has the potential
to be transformative for Z and, through
bringing a global company into local
management, to be positive for New Zealand.

The Commerce Commission’s consideration
of this application has taken almost a year.
It has been very thorough covering all
elements of all of the markets that make up
this industry. Z appreciates that a transaction
of this scale, in an industry with a high level
of public interest, deserves this level of
significant scrutiny. We are pleased with the
rigour that has characterised this application.

Subject to divesting 19 service stations and
one truck stop, the Commission has found
that the acquisition does not substantially
lessen competition. We will settle the
transaction and cut over the systems and
processes in order to run the two businesses
together from 1 June 2016.

We bought well – particularly so as the value
and performance of Chevron has improved
since the transaction was announced.
Z has bought a business with a track
record of disciplined, safe operations and a
focus on returns. The two businesses have

complementary business models and we
reiterate our commitment to two brands
for our service station network. We remain
confident in delivering the $25 - $30 million
of synergies identified. We have decided to
fund the transaction with debt and existing
cash and will not be pursuing an equity raise
as originally announced.

We expect Z’s debt to increase in the short
term to approximately 2.6x RC EBITDAF.
Debt is anticipated to reduce to 2.0x RC
EBITDAF within three years.

This financial
year, all parts of the
business made important
contributions to the
overall result in a highly
competitive market.

We want to thank our shareholders for their
support and patience while this transaction
was approved and also want to thank the
Chevron team. We acknowledge this has
been a very unsettling period for them and
we wish to recognise the professionalism
they brought to this process. In bringing our
teams and our two companies together we
are excited about the possibilities we can
jointly deliver for shareholders, customers
and for New Zealand.

Later in 2016 we will hold an investor day to
provide an update on progress. This will be
webcast, capable of being viewed online.

Sustainability
In June, Z will begin the production of
high-quality sustainable biodiesel from the
company’s $26 million biodiesel facility at
Wiri, Auckland. With a planned staged roll-
out into the commercial and retail markets
across the upper North Island, the plant
will produce 20 million litres of biodiesel
per annum by year end. The fuel will meet
the highest New Zealand and European
fuel specifications and will be blended into
mineral diesel at a 5% rate. For the first time,
many Kiwi motorists and businesses will have
the choice to use a more sustainable fuel.
There is more information on this exciting
move on page 25.

Governance
During the year Z has continued to grow
diversity and capability with the appointment
of Mark Cross and Julia Raue to the Board.
Mark brings a strong financial markets and

commercial background to the Board and
Julia, as the former CIO of Air New Zealand,
brings particular skills and experience in the
area of ICT and customer experience.

Deepened and more diverse
shareholder register
On 1 October 2015, Infratil sold its remaining
20% holding in Z and the New Zealand
Superannuation Fund sold down its holding
from 20% to 10%. The company continues to
have a high quality and diverse shareholder
register.

Z is part of the NZX20. Since listing, Z has
delivered total shareholder returns (TSR) of
116% (92nd percentile) and ranks within the
top five companies on the NZX50 on TSR.

Z remains focused on delivering value
to its shareholders. As with the Chevron
acquisition, Z will continue to develop and
initiate opportunities that deliver growth and
reward shareholders for their support of Z.

Conclusion
We’re proud of what our people and our
business has achieved in the 2016 financial
year. We’ve run the business safely and
reliably, and delivered strong financial results
from the core business while putting in place
the foundations for our future growth.

The Chevron acquisition has come to
fruition through the professionalism, hard
work and commitment of both the Z and
Chevron teams. This significantly changes
the shape and scale of our business but
it doesn’t change what we stand for. The
acquisition makes Z one of the biggest
companies in New Zealand and with that
comes more responsibility. Z will continue to
be a confident, distinctive and values-driven
company that delivers what it says it will,
that is prepared to take calculated risks and
stands for things that matter to us.

We are advantaged in having a highly
engaged team, a distinctive brand and the
backing of an engaged and enthusiastic
Board. We’re committed to continuing to earn
the confidence and trust of our shareholders
and recognise that continually delivering
against our strategy is the best way of
doing this.

Z is in particularly good shape for a busy,
challenging and rewarding 2017.

Thank you for your support of Z.

Mike and Peter

Supply disruption
is a key risk for us.
Our products reach
New Zealanders through
a long and complex
supply chain.

See the risk,
manage the risk

Like many businesses, we grapple with a range of risks that
have the potential to impact the safety of our people, our
performance, our reputation and our ability to provide our
customers with the service and services they expect. While some
risks can never be eliminated, we work very hard to identify their
significance and manage them.

Supply disruption is a key risk for us. Our
products reach New Zealanders through
a long and complex supply chain with
interlinked components, some of which rely
on joint ventures and third party contracts.
Our current business model relies on the
continuation of existing arrangements.
Disruption to any one or more of these
components, or sudden shifts in international
commodity and foreign exchange markets,
could limit what we can sell, where and for
how much, which in turn would impact our
customers’ profitability and cash flows.

We are very aware
of the need to carefully and
sustainably balance growth
with profitability.

Working with fuel
Working with and selling fuel presents health,
safety and environmental risks. We work
with our supply chain partners to transport
and store crude and refined products. If
these materials were to leak into air, land
or water, contamination and damage could
result. Crude oil and refined products are also

combustible so handling these substances
comes with the inherent risk of explosions
or fire. We look to mitigate these potentially
dangerous situations through our collective
commitment and focus on health and safety
procedures.

As a retail and commercial fuel market
participant, we’re subject to intense
price competition for market share. As
we’ve noted elsewhere in this report, the
widespread use of discounts, special offers
and loyalty cards continues to challenge our
margins. The entrance of new players into
what is already an intensely competitive
space could have a detrimental effect on
our ability to charge what we would see
as a fair price for what we offer. We also
rely on banks to provide working capital
funding, and on bondholders for funding. If
our relationships with these providers were
to adversely change, that could impact on
our financial performance and our financial
position.

Reputation
Because of the emphasis we put on trust
and service, our reputation and the value
associated with our brands could be
adversely impacted by any of the risks
identified above. We could also over-stretch
ourselves. We have a programme of on-

going substantial capital investment in our
business comprising both integrity capital
investment (for example, investment in
replacing storage tanks at terminals and
retail sites) and growth capital investment
(for example, investing in new retail service
station sites). We are very aware of the need
to carefully and sustainably balance growth
with profitability.

Market risks
There is a range of other risks that we
face. These are listed and discussed in
some detail in our IPO document found
at www.z.co.nz/ipo. Two particular risks
are worth noting. The first is that demand
for our transport fuel products may
decline over time as a result of increased
demand for alternative fuels. To an extent,
we are encouraging this through our
development of our B5 biofuel and electric
recharging stations, but if demand for
those alternatives was to suddenly surge
and to be accompanied by a dramatic
increase in the availability of alternatively
fuelled vehicles, that would impact our
fuel sales. Our principal competitors could
also have better access to alternative
fuels technology than we do. We don’t
think this is likely in the short to medium
term. Secondly, Z’s business is subject to

a wide range of legislation and regulatory
obligations. If we were to fail to comply with
these requirements or if the requirements
themselves were to materially change, that
could impact us financially and/or in terms
of our reputation. We have been very careful
in our pursuit of the Chevron business
to engage with regulators such as the
Commerce Commission and to provide them
with all the detail that we can in a timely
manner. One of our key assurances to them
throughout the process has been that, in
our opinion, the highly competitive nature
of the New Zealand fuels market will not be
compromised by our acquisition of Chevron.

As expected
These are the key risks as we see them.
Our current assessment is that we have a
good handle on all of them through our Risk
and Assurance function and our Enterprise
Risk Management System, all of which is
overseen by the Board’s Audit and Risk
Committee. There is nothing out of the
ordinary that we are aware of to cause
investors, customers, stakeholders or our
own people to be alarmed.

Meet our leaders -
the Z Board

Peter Griffiths
Chair
Member, Audit and Risk Committee
BSc (Hons), CMInstD

Peter is a professional Director and oil
industry veteran. He has held various
roles in New Zealand and overseas. Until
2009, he was Managing Director of BP
New Zealand. Peter previously served on
the Boards of The New Zealand Refining
Company Limited, Liquigas Limited and
New Zealand Oil and Gas Limited, Energy
Direct, Whanganui Gas Limited and
Bitumix Limited. He is currently a Director
of Marsden Maritime Holdings and New
Zealand Diving and Salvage Limited and a
member of the Civil Aviation Authority.

Paul Fowler
Director
Chair, HSSE Committee, Member, Audit and
Risk Committee
BS (Marine Engineering), ME (Nuclear Engineering),
MBA, FAICD

Paul has many years experience in primary
industries. He was the founding CEO of
Nyrstar NV, the world’s largest producer
of zinc metal. Before that he was COO of
Zinifex, an Australian zinc and lead mining
and smelting company, CEO of Fletcher
Challenge Forests and Carter Holt Harvey
Forests, and spent 15 years with BP in crude
oil trading, strategic planning, refining
and retail marketing. Paul has served on
the Boards of The New Zealand Refining
Company Limited and Evergreen Forests
Limited.

Alan Dunn
Director
Chair, HR and Nominations Committee,
Member, HSSE Committee
CMInstD

Alan is an experienced senior manager and
corporate leader. He was CEO and Chair
of McDonald’s Restaurants New Zealand
Limited from 1993 to 2004 before heading
to Chicago to become Vice President of
operations then Regional Vice President in
the Nordic region, and managing Director
of McDonald’s Sweden. He now manages
his own business, Trumpeter Consulting,
and is a Director of New Zealand Post
Limited, Burger Fuel Worldwide Limited
and a number of private companies.

Abby Foote
Director
Chair, Audit and Risk Committee, Member,
HSSE Committee
LLB (Hons), BCA, CMInstD, INFINZ (Cert) ,

Abby is a professional Director with
experience on both publicly listed and
Crown companies. Trained as a lawyer,
she has worked in a range of corporate,
treasury and legal roles over the last
20 years. Abby is a former Director of
Transpower New Zealand Limited. Her
current Directorships include the New
Zealand Local Government Funding
Agency Limited, Livestock Improvement
Limited and BNZ Life Insurance Limited.

Justine Munro
Director
Member, HR and Nominations Committee
and HSSE Committee
LLB (Hons) (Vic), MLitt (Law) (Oxon), MInstD

Justine is a change leader who focuses
on innovation, partnership, and leadership
and culture. A lawyer and NZ Rhodes
Scholar, Justine is a former McKinsey &
Company consultant and was previously
Executive Director of Education at Social
Ventures Australia. She has also led or
helped establish a number of organisations
including Global Women and DiverseNZ.
Her current Directorships include a
number of non-profits.

Mark Cross
Director
Member, Audit and Risk Committee and
HR and Nominations Committee
BBS, CA, MInstD

Mark is a professional Director with
20 years international experience in
investment banking. He holds diverse
Directorships spanning publicly listed
companies, institutional investment funds
and not-for-profit organisations. Mark
is a member of Chartered Accountants
Australia and New Zealand.

Julia Raue
Director
Member, HSSE Committee
GAICD, MInstD

Julia is a professional Director, with a
background of over 25 years in information
technology, business transformation and
strategic planning. Julia was the Chief
Information Officer at Air New Zealand for
eight years, and has also held management
positions in local government,
telecommunications and charitable
organisations. Julia is currently a Director
of Television New Zealand Limited and
Southern Cross Health Society.

Marko Bogoievski
Director
Member, Audit and Risk Committee and
HR and Nominations Committee
BCA, MBA, ACA, FCA

Marko is the CEO of Infratil Limited. Before
that, he was the CFO of Telecom New
Zealand Limited, responsible for corporate
finance, mergers and acquisitions, and
group strategy. Marko is a Director of a
number of Infratil and H.R.L. Morrison &
Co related subsidiaries in addition to being
a Director of NZ Airports Limited, Infratil
Limited and Trustpower Limited.

Z Energy is now
a leader in the gender
balance of its Board
Propero 2016

Our
Executive
team

Mike Bennetts
CEO
BBS, Diploma in Corporate Management, CMInstD

Mike has led Z since its inception in 2010.
Before that, he spent 25 years with BP
in a variety of downstream roles in New
Zealand, China, South Africa, the United
Kingdom and Singapore. Mike is also a
Director of The New Zealand Refining
Company Limited, in addition to being the
Chair of Punakaiki Fund Limited.

Chris Day
CFO
BBS, CA, CTP, CMInstD

Chris leads the finance and ICT team at Z.
Chris has held general management, CFO
and financial controller roles in a range of
listed and commercial companies. Before
joining Z he was Financial Controller
for Contact Energy Limited and before
that CFO for AXA New Zealand. He is
a member of Chartered Accountants
Australia and New Zealand and a Director
of Landcorp Farming Limited.

Meredith Ussher
General Counsel
LLB, BA

Meredith is responsible for all group legal
risks as well as relevant strategic and
legal advice in respect of all operational
matters including major contracts
with key suppliers and customers. An
experienced corporate lawyer in both
the energy and retail network industries,
Meredith previously worked with Todd
Energy Limited, the New Zealand Racing
Board/TAB and at Minter Ellison Rudd
Watts as a senior associate.

Jane Anthony
GM Marketing
BCom

Jane is responsible for building the Z
brand and the company’s marketing
programme. Prior to becoming a manager
at Z, Jane was with Shell for 14 years
in a variety of local and global brand,
marketing and operations positions
in New Zealand, Australia, the United
Kingdom and Europe. Jane is also a
Director of Loyalty New Zealand Limited.

David Binnie
GM Supply & Distribution
BEng (Hons.) Mechanical Engineering, MBA,
CMInstD

Dave manages Z’s supply assets and
logistics including terminals and aviation
depot. Dave held a number of senior
roles in the global energy industry.
Before joining Z, he spent 25 years
with BP in a range of roles globally.
He was also Managing Director of the
United Kingdom’s oil and gas industry’s
skills and competence development
organisation, OPITO, before moving to
New Zealand in 2011 to lead the New
Zealand Government’s petroleum and
minerals division.

Julian Hughes
GM HSSE
BSc, Masters of Health Science, CMinstD

Julian is responsible for ensuring we have
the capability and systems to keep our
people and our environment safe and free
from harm. With experience in health and
safety related roles in both the public and
private sectors, Julian’s role immediately
prior to Z was helping to set up and
head the Business Leaders’ Health
& Safety Forum, a group of over 200
chief executives committed to working
together to improve workplace health and
safety in New Zealand.

Lindis Jones
GM Transition
BCom (Hons), BSc, M.Fin

Lindis is currently overseeing the
incorporation of Chevron into our
business. Before that he was our GM
Commercial and GM Corporate. Prior
to joining Z, Lindis was with Shell for
13 years, primarily in retail operations
and strategy in Europe, Asia and New
Zealand, and later was Head of Property
at ANZ Bank.

Mark Forsyth
GM Retail
BCom, CMInstD

Mark looks after Z’s 200+ service
stations and about 2,200 of our team
working onsite, as well as managing
Z’s retail assets. He previously held
management positions with Shell in
New Zealand, the United Kingdom
and Ireland. He is a Director of
Loyalty New Zealand Limited.

Debra Blackett
Company Secretary
LLB (Hons), MInstD

Nicolas Williams
GM Commercial
LLB (Hons), BCom, MBA

Sharlene Taylor
GM People & Culture
PgCert

Debra is responsible for governance at
Z, working with Z’s Board of Directors,
Board Committees, subsidiaries and joint
ventures, as well as compliance with
Z’s listing requirements. Debra led the
Commerce Commission application for
clearance of the Chevron acquisition.
Previously, Debra held various roles in
corporate law including leadership of legal
teams at BP, ANZ, and Telecom. She has
private law firm experience from Chapman
Tripp and DLA Phillips Fox.

Nicolas is responsible for all our
business-to-business activity including
Z Card. Before that he was Strategy
Manager, responsible for Z’s strategy
development and managing merger and
acquisition activity. Prior to joining Z,
Nicolas held various corporate finance-
related roles at Macquarie and the
New Zealand Treasury.

Sharlene oversees all aspects of our
people and culture. Before joining
Z, Sharlene worked in various HR
management roles with Goodman
Fielder Limited across Australasia.
Most recently Sharlene was with
Fletcher Building Limited where she
spent four years working across various
businesses in the Building Products and
Corporate divisions in HR and change
management roles.

Looking out
for our people

People matter to us. We’re building a world class Kiwi company by giving people reasons to belong,
a bigger purpose to work towards and a hunger for the extraordinary.

Take the lead
Leadership is a continued focus for us
with our Leadership Framework being
underpinned by two core philosophies;
extraordinary leadership delivers
extraordinary results and you don’t need
to be a people leader to demonstrate
leadership. Everyone at Z is a leader,
whether a leader of people or a leader
of self.

We are recognised as an Aon Hewitt Top
Company for Leaders and continue to
provide dedicated leadership programmes
and coaching opportunities to all levels
across Z. We provide support to help our
employees go after what matters to them,
including internal leadership boosters
and other development opportunities.
Our journey of taking leadership
development to our frontline leaders has
continued this year and we aim to do the
same again next year.

Focus on development
We’re big on development – because
the only way Z can grow as a company
is if our people grow. It’s pretty clear to
us that good things happen when work
environments become opportunities for
personal growth rather than “just work”.
We believe in individual empowerment for
development which is why each employee
is encouraged to have an individual
development plan. We give our employees
exciting opportunities to continue their
development and add value in different
areas across the business, which is why
over a quarter of our vacant roles were
filled by internal employees this year.
These opportunities not only demonstrate
our commitment to back our people and
help them grow, but also to build capability
across the business. The Chevron New
Zealand acquisition project also enabled
a large group of senior leaders within the
business to take on new challenges and
develop new skills.

Highly engaged
Having engaged people is critical for Z’s
success. Our level of engagement tells
us how much our people are willing to go
above and beyond to make great things
happen here. We pride ourselves on having
strong engagement results and our scores
are reflective of this, having grown from
66% in 2012 to 77% this year at a corporate
level. This year’s result is down 1% on last
year. This year we will continue to focus on
connecting with our employees.

It’s results like these that put us into
the top quartile as a Best Employer as
judged by our engagement partners Aon
Hewitt in 2015. We are the only company
in Australasia to be recognised as a Best
Employer and a Top Company for Leaders
by Aon Hewitt and hold both awards
concurrently.

Think broadly
We’ve always been a company that
believes in diversity. Fresh perspectives
and capabilities encourage thinking
outside the box and diminish risk. We
have now set diversity targets that
extend from the Board all the way
through our organisation. For the year
ahead we agreed minimum targets of
20% inclusion of women at Board level,
40% at senior management level and
50% everywhere else in the business.
We reckon we’ll achieve these targets
pretty soon.

At an overall level, we ensure that all
employees have equal access to all of
our people processes and practices.

One hundred percent of all Z permanent
employees, including management,
have undertaken regular performance
reviews in 2016. One hundred percent
of the Executive and people leaders and
96% of leaders of self1 had individual
development plans at the time of our
annual drive in July.

1 Leader of self: Does not have direct reports.

Taking
a stand
on safety

People won’t perform well unless they’re
safe and healthy. More broadly, our
reputation as an employer and as a good
investment relies on us running a safe
business. Our commitment to HSSE goes
all the way back to the Stand we took to
operate safely with no harm to people and
the environment, and our HSSE strategy
to create a harm-free workplace with a
generative HSSE culture by 2020.

For more on HSSE, visit z.co.nz/hssestand

New health and safety legislation came in
to effect on 4 April, 2016 that impacts all
New Zealand workplaces. We have supported
this change and are ready for it. We believe it
is important and will go some way to improve
the overall health and safety culture in
New Zealand.

In December we confirmed a four year
strategy focused on building the leadership,
the system and the engagement needed to
create a generative safety culture. To kick
this off we have taken a more sophisticated
and consistent approach to managing our
operational risks by implementing ZORM,
our new operational risk management system.
We will complete this implementation
next year.

Health and safety leadership starts at the top.
This year our Directors and senior leaders
have gotten even more involved in HSSE, with
HSSE development programmes in place,
Directors completing deep dive reviews of
critical risks and our executives increasing
their visibility in operational activities through
safety walk and talks.

Key performance indicators - for the year ended 31 March 2016

Motor vehicle incidents

Robberies

FY15
11

FY16
16

FY15
3

FY16
11

HSSE
Leadership
“Walk and
Talks”

FY16
63

Number of spills
(Loss of containment to ground)

Total Recordable Case
Frequency (TRCF)

Lost time injury frequency (LTIF)

FY15
0

FY16
1

FY15
0.91

FY16
1.26

FY15
0.63

FY16
0.49

Total

Notes: Injury, occupational disease, and lost work day
information follow criteria based on US OSHA guidelines.

a For GRI purposes, contractors are noted as Retailers and
Mini Tankers franchisees.

Employees

1.99

0.83

1.48

Employees

1.33

0.58

Retailers and Mini Tankers franchiseesa

Exposure hours (millions)

HSSE actions closeout rate

Life saving rules infringement

Lost time injuries (LTIs)

Lost work days

Total recordable cases

Occupational diseases rate

Absentee rate

Work-related fatalities

Total

Employees

Contractors

Total

Employees

Contractors

Total

Employees

Contractors

Total

Employees

Contractors

Total

Employees

Contractors

Employees

Total

Employees

Contractors

HSSE Forum membership

% of total workforce

Tier 1 and Tier 2 process safety events

Total

FY15

FY16

4.4

0.3

4.1

3.6

0.5

3.1

100%

1.21%

1.33%

Practice makes safer
This year we reviewed our governance
practices with a comprehensive external
assessment. The review prompted a number
of changes including an improvement in
the quality and transparency of our HSSE
reporting, gaining a better handle on our
HSSE risk profile, and approaching HSSE
change over a multi-year programme.

We know that involving people in decisions
about the operational risks they face is
critical. This year we improved structures
and provided more opportunities for this
engagement to occur. Overall engagement in
HSSE at Z is very high and we have a series
of active HSSE discussions and committee
meetings.

Looking after our people and
our business
Health and safety is vitally important in our
retail environment where we have up to 57
million interactions with people each year.

We are troubled that we have seen an
increase in robberies - 11 this year, up
from three last year with a spike in the
last quarter of FY16. One robbery involved
physical harm which is unacceptable. We are
currently conducting a review in light of this
increase and a priority for next year will be
to find ways to get this risk reduced.

This year, we’ve added new ways to help
keep our people safe including automatic
number plate recognition, state of the art
digital CCTV and DNA sprays. We’re also
starting to publicise who robbed our retail
sites through social media and we’ve been
delighted with the help we’ve received from
New Zealanders which has led to the arrest
of those involved in these robberies.

We are also talking to our competitors to see
what we can tackle together in an industry
response.

A fair go for all
We can’t change what we don’t know. So this
year we launched our Fair Go programme.
This focuses on ensuring our people know
they will be treated fairly and consistently
if things do not go according to plan.
Importantly this programme also focuses
on recognising when they go right. In many
ways, it codifies things we’ve always held
dear – integrity, straight calls and taking
responsibility. We’re fully expecting a rise in
reported incidents in the year ahead – and
that would be a good thing. By removing
the fear of unreasonable repercussions,
we’re reinforcing honesty and transparency
everywhere in our business and encouraging
people to teach us how to learn from
mistakes and improve.

Getting our
products to you

Our risks as a business fluctuate all the time. This year, security
of supply and price, which have been bigger risks in the past,
have become more stable and don’t appear to be issues for the
foreseeable future. Current market conditions mean we are able
to source crude and product from overseas at better prices
than we have for many years.

However, we’ve also recognised this is no time
to sit back and take it easy. As we noted on page
14 and 15, we have a long and complex supply
chain with interlinking components that include
international crude supply, refined product
supply, maritime logistics, distribution and
infrastructure.

We focus on making the right choices in order
to run a safe and highly efficient supply chain
and achieve sustainable improvement. This year,
we’ve especially focused on what we can do to
drive further efficiencies and quality into that
supply chain which spans half the globe. We
have also constructed a world first biodiesel
plant that, while it certainly won’t get us out
of fossil fuels altogether, is another small step
towards that much bigger goal.

Heading our way
A replacement programme is currently
underway for coastal vessels. Coastal Oil
Logistics Limited (COLL) coordinates the
distribution of petroleum products from the
refinery at Marsden Point to ports throughout
the country on behalf of its shareholders. Z is
one of those shareholders.

Two coastal vessels currently serve the country
and a replacement programme has been
underway for some time now. The first of the
new vessels, the Matuku is expected in New
Zealand by June this year. The other vessel,
which will replace the Kakariki, has just been
agreed with our joint venture partners and will
be a bitumen capable vessel.

It took some convincing to get agreement from
our shareholder partners in COLL as they didn’t
immediately see a bitumen capable vessel was
necessary but we argued that this was the best
option to ensure we met New Zealand demand
for this vital roading product. We agreed
together to do the right thing and the vessel will
arrive in New Zealand by mid-2018. This decision
will also bring important cost and carbon
efficiencies.

Product and crude purchases by origin (barrels Net)

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5,000,000

4,000,000

3,000,000

2,000,000

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Crude

country of origin

The refinery has
new plant that increases
throughput by up to 500
million litres a year, and
it’s more efficient.

Refining the refinery
Refining NZ is a critically important investment
for us and at a crucial part of New Zealand’s
liquid transport fuel supply chain.

Three key things happened with the refinery
this year. First of all, the refinery itself is
becoming more efficient. It’s performing well
and making good margins thanks to improved
plant reliability, well-managed scheduled
shutdowns, a good safety record, and a
consistent stream of high quality products.

Secondly, the Te Mahi Hou project went live in
December 2015, on budget and on time. This
$365 million investment means the refinery
has a new plant that increases throughput
by up to 500 million litres a year. Part of the
benefit of the refinery is that it improves
efficiencies of the plant and decreases carbon
emissions. In today’s high gross refining margin
environment, that uplift in production means
greater margins for the partners and for the
refinery itself.

Finally, our joint venture with BP and Refining
NZ is going from strength to strength, saving
time and hassle by selecting better crudes
and optimising when we process those
crudes through the refinery. This year we’ve
performed even better than 2015, delivering $8
million of earnings. It’s only going to improve
with the acquisition of Chevron as we continue
to optimise refining arrangements with
Refining NZ and the other participants.

Customs claim settled
In May 2015, New Zealand Customs presented
us (and other industry participants) with an
invoice for historic petrol excise expenses.
That claim has now been settled, with Z
making an $18 million payment by way of
full and final settlement of the claim and
establishing an agreed basis for excise
charges going forward. In FY16, $13 million
of the settlement was expensed with the
remainder in prior years.

Looking ahead with tallow
The other big news this year is the opening
of New Zealand’s first, commercial-scale,
biodiesel plant. We believe this $26 million
investment is the first of its kind in the
world made without government mandate
or incentive. Not only is this a first for New
Zealand, it’s been built by Kiwis, made from
a by-product from the New Zealand meat
industry, and will supply New Zealanders
with low-carbon diesel fuel. A truly home-
grown success story.

The plant will produce 20 million litres
of biodiesel fuel per annum (available
in 400 million litres of normal diesel
with a 5% biofuel component). It will be
available to our retail and commercial
customers in the Auckland, Bay of Plenty
and Waikato regions. Fonterra has signed
up as a foundation customer, along with

Z purchased 51,356 litres of
biodiesel made from used
cooking oil or tallow in FY16

Fulton Hogan, NZ Post, Downer and TIL
Group. Foundation customers share Z’s
commitment to a sustainable future.

The 5% blend rate is important. That’s
the maximum amount of biofuel we can
add to current diesel and still meet the
diesel fuel specifications for non-modified
vehicles. The great news is that this amount
generates 4% less carbon at the blended
level than standard diesel. So there are big
gains to be made. If enough organisations
get behind this initiative, the potential is
there to save 37,000 carbon tonnes in just
12 months.

With oil prices so low, at the time of writing
this report, some might say we’re taking a
bit of a risk and to some extent they’d be
right. Our view is that our customers will
demand a low carbon solution soon, and if
the recent climate change negotiations in
Paris are anything to go by, alternative fuels
could be legislated in due course. We’ll be
ready.

However, we need to think even more
broadly than biofuels if we are to be
sustainable after fossil fuels. That’s why we
now have seven electric vehicle charging
stations that can rapid-charge an electric
vehicle in just 10-20 minutes and bike
pumps at all of our stations. It also explains
why we’re the country’s largest privately
funded public place recycling network. If
you’re going to move people, then you also
need to be thinking about how to better
move waste. We sell and re-use where
possible. And all of that makes a difference.

Experience matters:
that’ll be the Z factor

Looking to add value
Mixed messages are probably the best
way to describe the trading environment
we’re in right now. There’s no shortage
of oil in the market, so we have plenty of
places from which to potentially source.
We buy “short”, which means we buy in
the market for the price at that particular
time rather than buying through long-
term contracts that would lock us in for
significant time frames. It’s the option that
makes most sense to us in the current oil
production environment because there’s
plenty of choice and prices for crude
oil haven’t been so low for many years.
Should market conditions change, we will
adjust our sourcing as required.

Having increased service levels in
the industry, it’s clear that customer
expectations have also increased. The
challenging thing for us now is meeting
those new expectations while delivering
acceptable returns.

A lot of customers and businesses
want more service for the same price.
We’ve seen a big increase this year in
discounting where fewer than half the New
Zealanders who fill up with us are paying
the advertised rate for their fuel. We’ve
also seen an increase in the number of
unmanned stations opening up this year
with cheaper fuel.

There’s nothing new in this, so we’ll
be patient and persistent. Retail and
commercial fuel markets in New Zealand
are regularly subject to intense price
competition for market share through
discounts or loyalty cards as companies

look to buy volume. Our view is that
customers get what they pay for and
different customers are looking for
different things. So we’ll continue to listen
to our customers, to make sure we are
competitive on price, and we’ll stay very
focused on providing our customers with
the best value in the market and delivering
a world class full service offering.

Different
customers are looking
for different things.

Overall satisfaction scores

out of a total of 66,728 customer surveys that rated their
experience “very satisfied” or higher.

74% FY15
out of a total of 57,554 customer surveys that rated their experience
“very satisfied” or higher.

Z in business

One of the most consistent numbers around business
spend on fuel is the correlation between the growth in
diesel demand and overall economic growth. The fact
that correlation hasn’t changed in many years shows
that organic growth is limited – and so the opportunities
open to us under this dynamic are to take market share
from our competitors or to grow our profitability pool.
We’ve chosen to pursue a differentiation strategy by
investing in the customer experience.

Z locally

Our retail business continued to broaden
our in-store offering with the successful
introduction of new product lines such as
vegan pies, froyos and smoothies. These
were a great success, with store sales up 8%
year on year, and sales of smoothies topping
nearly 5,000 a week, and there’s more to
come yet. For us, this is a new market – and
it shows that people will buy more from us if
the choice is there and if that’s complemented

We continue
to look for ways to
make life easier for
our customers.

For larger customers, that’s about providing a
comprehensive fuel solution with nationwide
coverage: service station; truck stop; Mini
Tanker; home base; direct machine refuelling
(DMR). For our key customers, solving what
matters for a moving world revolves around
problem solving, logistics and increased
productivity. We’re constantly looking to
make business refuelling simple and easier for
these companies, with streamlined back office
functionality and a fuel expert on the team for
account managed customers.

For smaller businesses, it’s all about
making things simple and more efficient.
The partnership with Xero started last
year and allows around 1,500 customers
to receive their Z fuel invoice directly into
their Xero feed. They can also make an
online application for their Z Card. The
increasing number of small and medium
sized businesses completing their online
applications is a healthy sign that they value
convenience and access.

Net Promoter Score (NPS) is an
internationally recognised benchmarking
system that scores how actively commercial
customers promote use of your brand. It is
seen as a way to test how inclined business
customers are to choose one brand over
another and therefore how competitive a
brand is and its prospects for growth from
customer endorsement. In broad terms, there
are three types of customer rating: active
promoters (those who positively and actively
encourage use of your brand to others);
passive promoters (those who like your brand
but don’t evangelise your brand to others);
and aggressors (those who speak out against
your brand).

We were very disappointed that our NPS
fell this year, with the rating from smaller

Some important wins this year gave us
confidence that our strategy is right even
though it’s taking longer than we’d like
to see the gains we expect. We were
named Xero Partner of the Year 2015.
We enjoyed two record months for new
business acquisition in July and August.
Online enhancements to our Z Card made
it even easier for our business customers
to manage their usage and fuel spend.

businesses in particular falling much
further than we expected. The problem
isn’t that people don’t like what we’re
offering. It’s mainly that we have less
active promoters and more businesses
that are passive. What the NPS
change does show is that there is a big
opportunity for us to continue to pursue
building competitive difference through
catering to that rising tide of commercial
customer expectations faster and more
thoroughly than any of our competitors.

Lifting active promotion in our
commercial customer base by eliminating
dissatisfaction will be a key focus for the
year ahead. We’ll also focus more on the
basics – making sure our sites are reliable
and improving accessibility and interfaces.

by a light and bright environment and
great customer service. Certainly, after
the successes this year, we will continue
to develop our convenience offer beyond
the pies and coffee we’ve focused on over
the last couple of years. There’s plenty of
scope, as we see it, to cater more closely
to regional tastes and the changing taste
profiles of New Zealanders, and to offer a
wider range of healthier choices.

While having great stores, brilliant service
and awesome food and drink are all part
of being famous in our neighbourhoods,
we continue to look for ways to make
life easier for our customers. That gets
expressed in a whole lot of ways. On
the one hand, it’s about services like
car washes, parcel drop off/pick up and
offering Lotto sales, so that we offer
more of the things that matter to our
customers in one easy location. On the
other, it’s about showing we really mean it
through our actions: consistency; choice;
and being as individual and authentic as
possible.

Good in the Hood, our grass roots
community investment programme,
proves our commitment and gathers
many of the headlines – but what goes
unseen by most, but is absolutely loved
up and down the country, is the massive
effort that our retailers put into doing
right by the communities they are part
of. On any given day, our people are
rolling up their sleeves and really making
a difference. They’re hiring people who
might not otherwise get an opportunity.
They’re organising events. They’re
stepping in to help. Our frontline is
amazing. They’re led by strong, colourful,
committed characters. No two ways
about it, our teams prove that Z is for New
Zealanders.

While we’re on the subject of forecourts,
let’s quickly talk about where we see
retail heading. Our stores are a key part
of our conversion strategy. We would
like people to spend more with us. That
means we need to provide more reasons
for them to do so.

We set about putting measurement and
management systems in place and we have
been regularly reporting on how we are
tracking against our targets.

So how have we done? Waste was a win. Our
retail operation waste to landfill has reduced
by 60% (compared with our 70% target).
Introducing LED lighting into our retail
canopies saw us make an 11% power saving
and reduce carbon on our lighting. Our big
misses were water and corporate carbon.

A 50% water reduction was, frankly, not a
realistic goal. We are now making 90,000
cups of coffee a week through our stores. We
did reduce the amount of water we use in our
car washes thanks to clever recycling. That
initiative has led to 60% of the water used in
the car wash being recycled.

We didn’t reduce our corporate carbon
footprint anywhere close to the 25% we
aimed for, mainly because of travel (which
makes up over 75% of our corporate carbon
footprint), the need for which grew as our
employee base increased. The intensity of
our emissions per employee (excluding our
value chain) has reduced from 51 tCO2e to
25 tCO2e.

We reduced the kilometres travelled and the
emissions from our deliveries by 346,200km
and 439 tCO2e respectively, supported by
improved scheduling, SAFED driver training
and increased drop sizes.

Our Mini Tankers operation means that
customers can be refuelled on their site
rather than refuelling at truck stops. Over the
last year we reckon we’ve saved 45,000 litres
of fuel or 12 tCO2e.

We’ll be setting new targets for the years
ahead, which will be outcomes focused,
backed up by quantitative proof points.

Where we have had a real impact is as
a voice for change. We’ve been able to
use our media profile to good effect. For
example, we submitted a paper on the
Paris climate targets to the Ministry for
the Environment saying we saw no reason
why New Zealand shouldn’t match the
European Union’s 40% reduction target and
that the cost of inaction in our view was far
more than the cost of action. We received
positive feedback from stakeholders and
most importantly, our customers.

Certainly the feedback we’re getting is that
people value us using our influence in this
way. We’re seen as a progressive force and
a thought leader and, for our own part, we’re
very keen to be at the heart of solutions
and to back those with actions. It was great
to see us cited by Colmar Brunton in their
“Better Business, Better World” report as
the sixteenth prompted Green Brand.

Another way that we’re using our scale
for good is working with our suppliers on
sustainability-based standards. Our seven
top suppliers (based on spend, criticality
and interface with customers) now have
shared performance agreements. These will
help us achieve sustainability change within
our business and across our supply chain.

Of course the investment we’ve made
in biodiesel is a sign of just how serious
we are. But we are very aware that we
can’t stop there. There’s a realisation that
biodiesel is the start of our next fuel journey
and not the end point. The acquisition of

Landfill

Recycling
(cardboard and paper)

Recycling
(plastic, cans & glass)

Composting

1,461
tonnes

3,098
tonnes

832
tonnes

456
tonnes

5,847
tonnes
total waste

We collect data for approximately 50% of our waste streams from our retail sites.
We then use this data to estimate the total volume of waste we generate as a business.

How did we go against
our targets?

Key

Fail

Awesome

Use less, waste less

Score

Use 10% less electricity
in retail

Use 50% less water in retail

Reduce waste to landfill
by 70% in retail

Zero waste head office

Carbon intensity

Head office carbon
footprint reduced by 25%

15% reduction in distance
travelled for each litre of
fuel delivered

Reduce delivery
emissions by 25%

10% reduction in carbon
footprint of retail stores

Work with suppliers for
25% reduction in carbon

Help reduce customers’
fuel consumption

Fossil fuel reduction

Leading biodiesel supplier

Using biodiesel in
own business

Biodiesel not in
-
production FY16

Implementer of emergent
transport energy

Support New Zealand

Safety at home

Safety performance
best in class

Skilled worker days

Skills development
of own team

Neighbourhood investment

See z.co.nz/targets for more information.

Chevron also changes the scale at which
we will need to operate sustainably. Our
expanded operation will mean, for example,
that we are responsible for 37% more
fuel, which will automatically enlarge our
operational carbon footprint for example.
Integrating Chevron into Z’s sustainability
programme is a key objective for Z.

Sustainability
matters

To Z, sustainability means acting in a way that benefits the future
of the neighbourhoods we operate in and the planet we live on.
We think it’s good for business, good value and good sense.

Here at Z, we:

•

are committed to doing the right thing
by New Zealand

are a transport energy company, not an
oil company — so we’re not wedded to
fossil fuels

reckon we're in a unique position to
move from being a part of the problem
to being at the heart of the solution.

In 2011, recognising that we needed to
start somewhere, we established a list of
sustainability targets set out on the next
page for FY12 – FY15. They were ambitious
– we knew that at the time – but they were
meant to engender change and intended to
show we were serious.

Percentage and total
water recycled

Total water recycled
(kilolitres)

Water used as
percentage of
total water used

242,493
(kilolitres)

18.5%

We collect data for about 50% of our sites and
then use this to estimate the total volume of
water we use as a business.

Congratulations Z Bethlehem
Z Bethlehem is the latest Z site to be accredited by Conscious Consumers.
At the site, no food or coffee waste is sent to landfill and food waste at Z
Bethlehem goes to a certified pig farmer who supplies meat to charities
throughout the region including food banks and the homeless shelter.

In total, five of our sites nationwide have received Conscious Consumers
accreditation based on their standards for recycling, composting, generosity
and BYO containers. Each is assessed annually.

Non-renewable fuel
602,649 litres

Electricity
32,591,154 kWh

Total

Energy
consumption
within the
organisation

We use our electricity
data and actual fuel
use to monitor our
consumption.

Greenhouse gas emissions

Tonnes CO2e
Scope 1 – Z offices & retail sites

Scope 2 – Z offices & retail sites

Scope 3 – Z offices & retail sites

Scope 3 – New Zealand supply chain

Scope 3 – Share of refinery

Scope 3 – Rest of supply chain

Calendar
year 2012
(base year)

797

5,984

5,140

21,167

542,590

612,911

FY16

3,222

4,509

2,897

22,614

433,946

495,558

Scope 3 – Z product emissions from our customers

6,101,736

5,109,936

We estimate our emissions using the Greenhouse Gas Protocol’s
Operational Control Methodology.

Total emissions

Calendar year
2012 (base year)

FY16

7,290,325

6,072,683

Fonterra is a foundation
customer for our biofuel
Since early 2014, Fonterra has worked
closely with Z as a foundation customer for
the new B5 biodiesel, helping Z introduce
the lower carbon fuel to New Zealand.

The farmer owned co-operative is
committed to making a difference
by reducing its emissions as well as
supporting other Kiwis so they have the
option to make better energy choices.

Lower emission sources like biodiesel are
in keeping with Fonterra’s energy strategy
and are one of a range of ways that the
co-operative is looking to adjust its carbon
profile in the years ahead. This initiative
with Z is an effective way for Fonterra to
integrate carbon savings into its supply
chain almost immediately.

Fonterra tankers are a familiar sight on
New Zealand roads, travelling thousands of
kilometres every day. The Co-operative’s
500 tankers cover more than 90 million
kilometres of New Zealand roads annually –
and that takes a lot of fuel.

The co-operative’s
500 tankers cover more
than 90 million kilometres
of New Zealand roads
annually – and that takes
a lot of fuel.

Using B5 biodiesel in its tankers has the
potential to bring an almost 4% reduction in

emissions from each truck over the course
of a year, which will in turn reduce the
co-operative’s carbon costs. Because B5 is
a drop-in fuel, Fonterra’s trucks can use it
wherever it is available around the country,
but not have any issues should standard
diesel be the only option.

Fonterra says the initiative with Z is
important to them because of the co-
operative’s commitment to reduce its own
carbon emissions while also supporting Z
in making B5 more widely available for the
benefit of New Zealanders.

For more information on biodiesel, visit
z.co.nz/biodiesel.

Now at university
When Jessica McCleary received our
first full time university scholarship she
became the first person in her family to
attend university. The $12,000 award,
which is offered in partnership with First
Foundation, will go towards tertiary fees
along with paid work experience, a mentor
for Jessica and support to help her
successfully make the switch from school
to university. Jessica works for Z as a
part-time forecourt concierge. She is using
the scholarship to study Sociology at the
University of Otago. We wish Jessica all
the best this year. Read more of her story
at z.co.nz/jessica.

Next year, we want to focus on the
aspirations and achievements of our people
and find ways to help them be better off.

Helping our retailers’ people
One of our most important initiatives going
forward will be to look to give back to the
very people who give so much: the people on
our retail sites. Some of our team only stay
with us for a short amount of time. However,
a lot of our people are here to stay, provided
they’re looked after well. Our retailers are
committed to doing everything they can to
give them a fun and fulfilling place to work,
reward them well and encourage them to
expand their skills.

Next year, we want to focus on their
aspirations and achievements and find ways
to help our people to be better off. We’ve
started small, as we always do, but our
goal is to help our people make big strides
in critical life skills such as literacy and
budgeting which will improve their career
prospects and give them fresh confidence.

We piloted two educational scholarships
this year. The first, with Capable New
Zealand, has helped Joel Popplewell, Nathan
Taramai and Luana Tupou to study for a
degree in Applied Management from Otago
Polytechnic while they are working. In fact,
they can use their work experience as
credits towards their degree. The second is
our full time university scholarship awarded
to Jessica McCleary. Only Z retailers’
employees or their dependent family
members are eligible for this scholarship.

Z’s winning reputation
We were really pleased to be named the
fourth most respected company in the
Colmar Brunton 2016 Reputation Index
— see z.co.nz/reputation — an index
where key judging criteria are social
responsibility, fairness, success and trust.
Our rating was well above the global
average. Our CEO, Mike Bennetts believes
that our high rating reflected the huge
commitment that Z people make to doing
what matters for customers, listening
carefully and delivering consistently.

Dishing up support for Bellyful
Through Good in the Hood, we help all
sorts of organisations across the country to
make real differences in their communities.
One of the organisations we have helped
is Bellyful, a national community group
that works tirelessly to cook meals for
families with newborns or those with family
members struggling with illness.

This year, 12 of our retailers and site teams
across nine cities chose to support Bellyful.
As a result, the group raised more than
$17,000 towards paying for things like
the ingredients they need to cook meals.
Thanks New Zealand. Find out more about
Bellyful and their selfless work online at
z.co.nz/bellyful.

There’s more on how we give back at
z.co.nz/goodinthehood.

Community
matters:
it’s good
to belong

Five years ago, when we first asked
New Zealanders about what they
wanted from an energy company,
they said they wanted us to give
back to neighbourhoods, people
and places.

With Good in the Hood, we’ve done that,
and we’ve done it in a way that gives New
Zealanders the say in what and who gets
the support they need. People like the
fact that it’s a democratic process, that
it happens at a neighbourhood level and
that New Zealanders get to decide where
the money goes. Over the last four years,
we’ve returned more than $4 million to
neighbourhoods. It feels great to have done
that from all Z sites. It feels even better to
know that it’s made such a huge difference
— and will continue to do so.

This year we added to Good in the Hood
with a one-off ‘Supercharger’, giving away
an extra $250,000 to great causes that
needed some help. We gave $60,000
to Child Cancer’s Keeping in Touch
programme, for example, so that children
with cancer could use their iPads to stay
in touch with family and friends. The first
family has just received their iPad. They
were stoked. And so were we.

A true New Zealander
We’re thrilled that former Z Retailer Selwyn
Cook of Hamilton won this year’s Kiwibank
New Zealand Local Hero of the Year award.
The annual awards celebrate people who
use their passion for New Zealand to make
our country a better place and honour
those whose selflessness, creativity
and vision make us all proud to call New
Zealand home. Selwyn was recognised
for his tireless efforts in and for the local
community and his huge commitment to
giving people with disabilities opportunities
to work. We’re proud of you Selwyn and
even prouder now we have teamed up with
Workbridge in your new role as Disability
Employment Ambassador, creating more
employment opportunities for people with
disabilities.

Passing on skills
Our Skilled Volunteering Programme gives
our people opportunities to share their
skills in ways that help other community
organisations gain a lasting benefit. Here
are some examples of what we did this year:

•

Christine Langdon worked with the
Chief Executive of Women’s Refuge to
help bring an important plan together.

David Jones used his skills as an
ex-chef to run the camp kitchen for
Waimari Primary School.

Hannah Heberley gave a presentation
on internal communications to
more than 80 communications and
marketing volunteers at not-for-profit
organisations.

Kerry McCarty helped Ridgway School
plan out a better way for teachers to
communicate with parents.

Lisa Cole helped organise the
spreadsheets needed to allocate
resources for the Heart Foundation,
Wellington branch’s collection day.

Our people
are doing skilled
volunteering year
round to make a
lasting difference
for groups and
causes that matter
to them.

Find out more at
z.co.nz/skilledvolunteering

Helping those who care
We’ve entered into a new and exciting
national partnership with St John that will
see us working with them in a range of ways
including the purchase of defibrillators at
all Z sites to keep the community safer.
St John is a corporate partner that very
much aligns with our values and our local
community focus. The partnership will see
both organisations commit to projects and
initiatives that protect the well being of local
communities throughout the country.

In the words of St John Chief Executive
Peter Bradley, “St John is New Zealand’s
most trusted charity; there is clear alignment
between what our two organisations are
committed to. Local communities will benefit
from this exciting new partnership.”

The way we see it, this is all about New
Zealanders helping New Zealanders helping
New Zealanders.

Financial results matter:
How we got on this year

After announcing the Chevron transaction on 2 June 2015 we followed
through with obtaining regulatory clearances and getting “business
ready” in order to be ready to bring the two businesses together.

In a year likened by one of our Board members to “chewing gum and
skipping backwards” we also stayed focused on running our business
effectively while at the same time continuing to invest and deliver on a
range of big projects. As our CEO observed at half year, our ability to do
so is a strong reflection of organisational resilience, and the quality and
depth of the Z team.

We are pleased with this year’s financial
results not least because we earned good
money from across our business while at the
same time managing the risks associated
with a volatile market and the impact of the
excise dispute.

Refining NZ delivered its best margins ever
and our supply chain and commercial and
retail teams delivered strong results in very
competitive conditions. Operating expenses
(excluding Chevron and Customs) increased
2% mainly due to increases in project
expenses and employee bonuses.

As is the case in rising or falling oil markets
the profit recorded under accounting
standards, which is based on historical
cost of product, told a different story than
our preferred reporting metric which is
the replacement cost of product. The key
take-out for investors is that RC operating
EBITDAF was healthy across the business
over the course of the year, with all parts of
the business contributing to performance.

Our fourth placing in the New Zealand
Corporate Reputation Index underlines the
deep trust we have worked so hard to build
and reinforces our belief that Z is a company
of proven integrity. It also shows that our
brand and reputation are in good health and
that these are critical considerations for
sustaining future profitability.

To our mind, successful companies are
astute judges of capital allocation. They
balance their growth spend, such as the
Chevron acquisition, with integrity spend
(capex around maintenance of physical
assets and ICT systems). Most importantly,
they don’t allocate to one at the expense of
the other.

So while the Z Board has moved to quickly
capitalise on opportunities, it has also
displayed significant discipline and patience
when dealing with important capital
expenditure decisions. The approach
to upgrading and broadening Z’s ERP
system demonstrates how integrated

risk conversations are part of how we
do business. Knowing that ICT system
upgrades can represent potential risk
for investors, the Board has adopted a
staged approval process. The first stage
approved in December 2015 will see
development of a business case once the
Chevron transaction has been brought on
Board and “stabilisation” attained. Subject
to approval by the Board, work will begin
late in FY17 aimed at yielding efficiencies
and other tangible business benefits.

Our decision to invest in biofuels at a time
when oil prices are low should be seen in
the context of future proofing against a
world where oil falls out of favour. Over
time we’re confident in the contribution
this investment can make along with
it being a key part of Z’s sustainability
stand.

In closing, we’ve completed a very busy
year, generated strong financial results
and have protected the strength and
capacity of our balance sheet.

Statement of comprehensive income
for the year ended 31 March 2016

Revenue

Excise and carbon expense

Purchases of crude and product

Primary distribution expenses

Operating expenses

Share of earnings of associate companies (net of tax)

Earnings before interest, taxation, depreciation (including gains and (losses) on sale of fixed
assets), amortisation, impairment, fair value movements in interest rate derivatives and
movements in decommissioning and restoration provision (EBITDAF)

Depreciation and amortisation

Impairment

Loss on sale of fixed assets

Movements in decommissioning and restoration provision

Net financing expense

Fair value movements in interest rate derivatives

Net profit before taxation

Taxation (expense)/benefit

Net profit for the year

Net profit attributable to owners of the company

Notes

11,12

Our fourth placing
in the New Zealand
Corporate Reputation Index
underlines the deep trust
we have worked so hard to
build and reinforces our
belief that Z is a company
of proven integrity.

Revaluation of land and buildings net of tax

Movements in decommissioning and restoration provision recognised in asset revaluation reserve

Share of associate other comprehensive (loss) net of tax

Other comprehensive income/(loss) net of tax

Total comprehensive income for the year

Total comprehensive income attributable to owners of the company

Basic and diluted earnings per share (cents)

Chris Day
CFO

The accompanying notes form part of these financial statements.

2016
$m

2,521

(569)

(1,417)

(27)

(353)

178

2015
$m

3,064

(562)

(2,073)

(25)

(321)

(41)

(5)

(1)

(7)

(32)

(6)

(22)

100

(2)

162

(43)

(3)

(34)

(7)

(3)

(1)

(4)

Statement of changes in equity
for the year ended 31 March 2016

Statement of financial position
as at 31 March 2016

Notes

Capital
$m

432

Retained
earnings
$m

Employee
share
reserve
$m

Asset
revaluation
reserve
$m

(2)

Balance at 1 April 2014

Net profit for the year

Other comprehensive loss

Disposal of revalued assets

Total comprehensive income/(loss) for the year

Transactions with owners recorded directly in equity:

Own shares acquired

Dividends to equity holders

Supplementary dividends to equity holders

Tax credit on supplementary dividends

Total transactions with owners recorded directly in equity

Balance at 31 March 2015

Balance at 1 April 2015

Net profit for the year

Other comprehensive income

Disposal of revalued assets

Total comprehensive income for the year

Transactions with owners recorded directly in equity:

Own shares acquired

Share based payment

Dividends to equity holders

Supplementary dividends to equity holders

Tax credit on supplementary dividends

432

(1)

(88)

(4)

(88)

(59)

(100)

(7)

Total
equity
$m

591

(4)

(1)

(88)

(4)

(89)

505

162

(1)

(100)

(7)

(101)

141

(3)

(6)

135

(1)

(3)

(1)

Total transactions with owners recorded directly in equity

(1)

(100)

Balance at 31 March 2016

431

(94)

(3)

232

566

Shareholders’ equity

Represented by:

Current assets

Cash and cash equivalents

Accounts receivable and prepayments

Inventories

Derivative financial instruments

Income tax receivable

Total current assets

Non current assets

Property, plant and equipment

Intangible assets

Investments in associates and subsidiaries

Derivative financial instruments

Other non current assets

Total non current assets

Total assets

Current liabilities

Accounts payable, accruals and other liabilities

Provisions

Derivative financial instruments

Bonds

Total current liabilities

Non current liabilities

Other liabilities

Provisions

Derivative financial instruments

Bonds

Deferred tax

Total non current liabilities

Total liabilities

Net assets

2015
$m

505

206

163

304

693

536

105

680

2016
$m

566

234

203

549

674

115

845

1,394

1,373

278

147

440

283

388

828

566

351

367

430

501

868

505

Notes

14,15

The accompanying notes form part of these financial statements.

Approved on behalf of the Board
on 11 May 2016.

Peter Griffiths
Chair

Abigail Foote
Chair, Audit and Risk Committee

Statement of cash flows
for the year ended 31 March 2016

Cash flows from operating activities

Receipts from customers

Dividends received

Proceeds from insurance recoveries

Interest received

Payments to suppliers and employees

Excise and carbon paid

Interest paid

Taxation paid

Net cash inflow from operating activities

Cash flows from investing activities

Proceeds from sale of property, plant and equipment

Purchase of intangible assets

Deposit for Chevron acquisition

Purchase of property, plant and equipment

Net cash outflow from investing activities

Cash flows from financing activities

Purchase of shares

Dividends paid to owners of the company

Net cash outflow from financing activities

Net (decrease)/increase in cash

Cash balances at beginning of year

Cash and cash equivalents at end of year

2016
$m

2015
$m

2,557

3,113

(1,796)

(592)

(50)

(27)

127

(5)

(79)

(72)

(150)

(2)

(105)

(107)

(130)

206

(2,328)

(550)

(51)

(25)

182

(4)

(63)

(60)

(2)

(92)

(94)

178

206

Reconciliation of net profit for the year to cash flows
from operating activities

Net profit for the year

Adjustments to reconcile profit to net cash inflow from operating activities

Depreciation and amortisation

Impairment

Equity accounted earnings and income of associates

Bad debts expense

Fair value of derivatives

Dividends received

Other

Changes in assets and liabilities, net of non-cash, investing and financing activities

Change in accounts receivable and prepayments

Change in inventories

Change in accounts payable, accruals and other liabilities

Change in taxation

Net cash flow from operating activities

Notes

2016
$m

(23)

(1)

102

(74)

(12)

127

2015
$m

(10)

(3)

175

(78)

(28)

182

The accompanying notes form part of these financial statements.

Notes to the financial statements
for the year ended 31 March 2016

Basis of
accounting

Changes in
accounting
policies

Reporting entity
Z Energy Limited is registered in New Zealand
under the Companies Act 1993 and is a FMC
Reporting Entity in terms of the Financial Markets
Conduct Act 2013. The financial statements
have been prepared in accordance with the
requirements of these Acts and the Financial
Reporting Act 2013. Z Energy Limited is listed
on the New Zealand (NZX) and Australia (ASX
Limited) stock exchanges and has three series
of bonds quoted on the NZX Debt Market. The
financial statements presented are those of Z
Energy Limited (the Company, Parent or the
Parent Company) together with its subsidiaries,
interests in associates and jointly controlled
operations (“Z” or “the Group”).

Basis of preparation
The financial statements have been prepared
in accordance with New Zealand Generally
Accepted Accounting Practice (‘NZ GAAP’) and
the Financial Reporting Act 2013. They comply
with the NZ equivalents to International Financial
Reporting Standards (‘NZ IFRS’) as appropriate
for profit-oriented entities, and with International
Financial Reporting Standards (‘IFRS’). Z has
reported as a Tier 1 entity under the new External

Reporting Board (XRB) Accounting Standards
Framework. Z meets the definition of a Tier 1
entity because it is ‘publicly accountable’ and
‘large’ as defined by the XRB.

The functional and reporting currency used in
the preparation of the financial statements is
New Zealand dollars, rounded to the nearest
million ($m). The financial statements have been
prepared on a GST exclusive basis except billed
receivables and payables which include GST.

The financial statements are prepared on the
basis of historical cost, except certain financial
derivatives which are valued in accordance
with the accounting policy in note 22 and
Property, Plant and Equipment which is valued in
accordance with the accounting policy in note 11.

Basis of consolidation
A list of associates and subsidiaries is shown
in notes 14 and 15. Consistent accounting
policies are employed in the preparation and
presentation of the Group financial statements.
Intra-group balances and any unrealised income
or expenses arising from intra-group transactions
are eliminated in preparing the Group financial
statements.

No changes to accounting policy have been
made during the year and policies have been
consistently applied to all years presented in the
financial statements.

Presentational changes
Certain amounts in the comparative information
have been reclassified to ensure consistency with
the current period’s presentation.

Adoption status of relevant new
financial reporting standards and
interpretations
The Group has chosen not to early adopt the
following standards:

NZ IFRS 15 Revenue from Contracts with
Customers (effective for annual periods
beginning on or after 1 January 2018), which has
been issued. The adoption of this standard is
not expected to have a material impact on the
financial statements of Z.

NZ IFRS 9 Financial Instruments: Classification
and Measurement (effective for annual periods
beginning on or after 1 January 2018), which has
been issued. The adoption of this standard is
not expected to have a material impact on the
financial statements of Z.

NZ IFRS 16 Leases (effective for annual periods
beginning on or after 1 January 2019), which
has been issued. The adoption of NZ IFRS 16
introduces a single lessee accounting model
and requires a lessee to recognise assets and
liabilities for all leases with a term of more than
12 months, unless the underlying asset is of low
value. Accounting by lessors is unchanged under
NZ IFRS 16 and as such a lessor continues to
classify its leases as operating leases or finance
leases, and to account for those two types of
leases differently. The adoption of NZ IFRS 16
will have an impact on the financial statements
when adopted, but the impact has not yet been
assessed.

Critical
accounting
estimates and
judgements

Revenue

Operating
expenses

The preparation of financial statements requires
management to make judgements, estimates
and assumptions that affect the application of
policies and reported amounts of assets and
liabilities, income and expenses. Actual results
may differ from these estimates.

The principal areas of judgement in preparing
these financial statements are set out below.

Provisions
Liabilities are estimated for the decommissioning
and restoration of certain sites of operation.
Such estimates are valued at the estimated
future costs of the expenditure expected to
settle the obligation. Key assumptions have been
made as to the expected amount and timing of
expenditure to remediate based on the expected
lives of the assets employed on the sites,
discounted using a risk-free rate.

Valuation of investments in
associates and subsidiaries
Management performs an assessment of the
carrying value of investments at least annually
and considers objective evidence for impairment
on each investment taking into account
observable data on the investment, the fair
value, the status or context of capital markets,
its own view of investment value, and its long
term intentions. For more detail refer to note 14
and 15.

Measurement of fair value
A number of the Group’s accounting policies
and disclosures require the measurement of
fair values. For further information about the
assumptions made in measuring fair values refer
to the notes.

Revenue comprises the fair value of consideration received or receivable for the sale of goods in the
ordinary course of the Group’s activities. Sales of goods are recognised when a Group entity has
supplied products to the customer, the customer has accepted the products and the collectability of
the related receivables is reasonably assured.

Fuel

Non fuel

Total revenue

Selling commissions

Employee benefits

On-site expenses

Secondary distribution

Professional fees

Administration and other expenses

Marketing expenses

Storage and handling

Insurance

Operating expenses excluding gains/losses on foreign exchange and
commodity transactions

Losses on foreign exchange

Losses on commodity transactions

Total operating expenses

2016
$m

2,457

2,521

2015
$m

3,003

3,064

2016
$m

2015
$m

327

353

294

321

5. Continued

Net financing
expense

Accounts
receivable and
prepayments

Accounts
payable,
accruals and
other liabilities

Included in professional fees are fees paid to
auditors. These include audit and audit related
fees of $256,280 (2015: $225,360) and other
service fees of nil (2015: nil). Audit and audit
related fees comprise $216,820 (2015: $187,000)
for the audit and review of financial statements,
carbon emission reporting review of nil (2015:

$16,860), technical accounting opinions of
$21,460 (2015: $3,500), fees for audit of bank
covenants and trustee reporting of $12,000
(2015: $12,000) and agreed upon procedures for
licence fee return of $6,000 (2015: $6,000).

Included in employee benefits are Directors fees
of $0.8m (2015: $0.8m).

Interest revenues are recognised as accrued, taking into account the effective yield of the
financial asset.

Interest income from cash
Interest income from swaps
Other finance income
Total financing income

Interest expense on swaps
Interest expense on bonds
Financing fees
Other finance expense
Total financing expense

Net financing expense

2016
$m

4
20
2
26

(19)
(30)
(4)
(5)
(58)

(32)

2015
$m

2
20
1
23

(20)
(30)
(4)
(3)
(57)

(34)

Receivables, classified as loans and receivables, are initially recognised at fair value. Thereafter
they are measured at amortised cost less any provision for impairment. A provision for impairment
is established when there is objective evidence that the Group will not be able to collect the amount
due. Receivables which are no longer collectible are written off.

Trade receivables

Provision for doubtful debts

Prepayments

Deposit for Chevron acquisition

Other receivables

Accounts receivable and prepayments

Accounts payable

Accruals and other liabilities

Employee benefits payable

Accounts payable, accruals and other liabilities

2016
$m

135

234

2016
$m

241

278

2015
$m

149

(2)

163

2015
$m

308

351

Inventories

10.

Cash and cash
equivalents

11.

Property, plant
and equipment

Inventory is stated at the lower of cost or net realisable value. The cost of inventories is based on the
first-in-first-out principle. Net realisable value is the estimated selling price in the ordinary course of
business less applicable variable selling expenses.

Raw materials and consumables

Finished goods/trading products

Inventories

2016
$m

144

203

2015
$m

208

304

During the year the write down of inventories to net realisable value amounted to $9m (2015:
$9m). The write down is included in “Purchases of crude and product” in the Statement of
Comprehensive Income.

Cash and cash equivalents comprise cash on deposit at banks and investments in money market
instruments, excluding outstanding bank overdrafts.

Property, plant and equipment (PPE) are
measured at fair value based on periodical
valuations by an independent valuer less
accumulated depreciation and any impairment
after the date of revaluation. Additions to PPE
subsequent to the most recent valuation are
recorded at cost. Cost includes expenditure
that is directly attributable to the acquisition
of the item: the cost of all materials, direct
labour, resource management consent costs,
and an appropriate portion of variable and
fixed overheads. An assessment of fair value is
performed annually to assess the underlying
assumption of each asset class to determine

whether a full revaluation is required. At a
minimum, a full revaluation will be performed
on a recurring basis every five years. The last
recurring revaluation was performed on 1 April
2013. A non-recurring revaluation of land and
buildings has been performed at 31 March 2016
due to material changes in market conditions
impacting the fair value of land and buildings.

Depreciation is provided on a straight line basis.
The major depreciation periods (in years) are:

Buildings

Plant and machinery

Land improvements

Year ended
31 March 2016

Cost/valuation
Balance at beginning of year

Additions

Disposals

Transfers between asset
classes

Offset of accumulated
depreciation on revaluation

Impairment losses
recognised in profit and loss

Revaluation adjustment

Balance at end of year

Construction
in progress
$m

Buildings
$m

Land and
improvements
$m

Plant and
machinery
$m

(45)

(1)

(8)

(5)

113

156

(3)

206

336

(2)

373

10-35

5-35

15-35

Total
$m

598

(3)

(11)

(5)

115

759

11. Continued

Year ended
31 March 2016

Construction
in progress
$m

Buildings
$m

Land and
improvements
$m

Plant and
machinery
$m

Accumulated depreciation and impairment losses
Balance at beginning of year

Depreciation

Disposals

Offset of accumulated
depreciation on revaluation

Balance at end of year

Carrying amounts
At 1 April 2015

At 31 March 2016

(8)

(3)

(2)

111

(3)

(2)

153

204

Total
$m

(62)

(37)

(51)

(32)

(81)

(85)

285

292

536

674

Included in buildings ($46m) and plant and machinery ($1m) are assets held under finance leases
(2015: buildings $8m and plant and machinery $1m).

For each revalued class, the carrying amount that would have been recognised had the assets been
carried on a historical cost basis are buildings $32m (2015: $33m); land and improvements $78m (2015:
$76m); plant and machinery $215m (2015: $217m).

Construction
in progress
$m

Buildings
$m

Land and
improvements
$m

Plant and
machinery
$m

Total
$m

Year ended
31 March 2015

Cost/valuation

Balance at beginning of year

Additions

Disposals

Transfers between
asset classes

Balance at end of year

(67)

Accumulated depreciation and impairment losses

Balance at beginning of year

Depreciation

Disposals

Balance at end of year

Carrying amounts

At 1 April 2014

At 31 March 2015

(1)

(4)

(8)

154

(4)

156

(1)

(2)

(3)

153

289

(6)

336

(26)

(29)

(51)

263

285

542

(11)

598

(31)

(35)

(62)

511

536

11. Continued

Level 3 fair value
PPE is valued using a level three fair value measurement in accordance with the fair value hierarchy.

The following table shows the valuation technique used in measuring the fair value of PPE, as well as
the significant unobservable inputs used.

Valuation techniques

Land and buildings are valued
using the direct capitalisation
approach. This method
involves striking a sustainable
market rental which is
capitalised at an appropriate
rate of return or yield derived
from an analysis of sales of
comparable assets. The market
rental is built up from:

- fuel throughput margin and

- estimated shop rental (for

non-fuel sales)

A total value for land and
buildings is determined by this
approach. The value ascribed
to the land is determined using
a value estimated based on
recent land sales near each site
with the residual value being
allocated to buildings.

Plant and machinery, and land
and buildings at terminals are
valued using the depreciated
replacement cost approach.
This approach is based on the
gross current replacement
cost, reduced by factors
providing for age, physical
depreciation and technical
and functional obsolescence
taking into account an asset’s
total estimated useful life and
anticipated residual value (if
any).

Buildings subject to finance
leases are valued using the net
present value of contracted
rental cash flow at lease
commencement over the
remaining term of the lease.

Inter-relationship between
key unobservable inputs and
fair value measurement

The estimated fair value
would increase (decrease) if:
throughput margin were higher
(lower);

•

shop rental rates were
higher (lower);

capitalisation rates were
lower (higher).

Significant
unobservable inputs

Throughput rental rate (cents/
litre) 1.15 - 2.35 (retail) (2014:
1.20 – 1.75)

Throughput rental rate (cents/
litre) 1.00 (truck stop) (2014:
0.70 – 0.80)

Shop rental $125 - $450 per
square metre (2014: $150 -
$450)

Capitalisation rate 5.00% -
8.50% (2014: 6.5% - 10.25%)

Cost estimates sourced
from contracting machinery
suppliers and cost analysis of
recent projects.

The estimated fair value would
increase (decrease) if:

•

cost was higher (lower)
remaining useful life was
higher (lower)

technical and functional
obsolescence were lower
(higher).

Discount rate 6.5%.

Rental payments are sourced
from lease agreements.

The estimated fair value would
increase (decrease) if:

•

discount rate was lower
(higher)

net rental of the lease was
higher (lower)

remaining term of the lease
was longer (shorter)

Highest and best use
Z holds properties where the current market value in use is lower than the highest and best alternative
use. However Z holds these properties as part of its strategic network and therefore does not currently
intend to change the use of these assets. The assets are recorded at their highest and best alternative
use valuation.

12.

Intangible
assets

13.

Emissions
trading
scheme

14.

Investments
in associates

Emissions trading scheme
Units acquired are carried at cost less any
accumulated impairment as they are held for
settlement of emissions obligations.

Other intangibles
Other intangibles include software, franchise
rights, domain name, and occupation rights.

Acquired computer software licences are
capitalised on the basis of the costs incurred to
acquire and bring to use the specific software.
These costs are amortised over three years
on a straight line basis. Intangible assets with
indefinite lives and intangible assets not yet
available for use are tested for impairment
annually and whenever there is an indication
that the asset may be impaired.

Intangible assets – emissions units

Balance at beginning of year

Additions at cost

Utilised

Balance at end of year

Intangible assets – other

Balance at beginning of year

Additions at cost

Amortisation

Balance at end of year

Total intangible assets

2016
$m

(10)

(4)

2015
$m

(2)

(8)

The Group is required to deliver emission units to a government agency to be able to sell products
which emit pollutants. A provision is recognised in the Statement of Financial Position and is
measured at the average cost of units acquired to satisfy the emissions obligation.

Stock of units

Balance at beginning of year

Units acquired and receivable

Units utilised

Balance at end of year

Obligation

Obligation payable at 31 March

2016
units
millions

2015
units
millions

(2)

2016
units
millions

2015
units
millions

Associates are entities in which the Group has
significant influence, but not control, over the
operating and financial policies. The Group
financial statements include the Group’s share
of the net surplus of associates on an equity
accounted basis from the date significant
influence commences to the date significant
influence ceases.

The Group is considered to have significant
influence over its investment in Refining New
Zealand due to the fact that it has representation
on the Board of Directors and therefore has
equity accounted this investment. Based on
its closing share price of $3.10 the fair value of
the Group’s investment in Refining NZ is $149m
(2015: $2.60, $125m).

Carrying amounts

Listed

Refining NZ

Unlisted

Loyalty New Zealand Limited (Loyalty)

Coastal Oil Logistics Limited (COLL)

Total carrying amounts of investments in associates

Movements in carrying amounts

Carrying amount at beginning of year

Dividends received

Share of profits from associate

Share of other comprehensive loss from associate

Carrying amount at end of year

2016
$m

2015
$m

113

103

115

2016
$m

105

(13)

115

105

2015
$m

(1)

105

Summary financial information for equity accounted investments, not adjusted for the percentage
ownership held by the Group (all with a reporting date of 31 December, except for Loyalty NZ which
has a 31 March reporting date):

Listed
Refining NZ

Unlisted
Loyalty
New Zealand Oil Services Limited (NZOSL)
Wiri Oil Services Limited (WOSL)
Coastal Oil Logistics Limited (COLL)

Principal activity

Ownership

2016

2015

Refinery

15%

Marketing
Fuel storage
Fuel storage
Shipping operator

25%
50%
28%
25%

2016

Current assets
Non current assets
Current liabilities
Non current liabilities
Revenue
Profit
Other comprehensive income

Refining NZ
$m

Loyalty
$m

NZOSL
$m

WOSL
$m

COLL
$m

179
1,153
227
322
447

151
2

83
11
79
8
91
1
-

6
-
6
-
44
-
-

3
-
3
-
62
-
-

6
2
6
-
57
-
-

2015

Current assets
Non current assets
Current liabilities
Non current liabilities
Revenue
Profit
Other comprehensive loss

Refining NZ
$m

Loyalty
$m

NZOSL
$m

WOSL
$m

COLL
$m

178
1,076
156
453
233
10
(10)

85
7
73
13
85
3
-

5
-
5
-
43
-
-

3
-
3
-
17
-
-

10
2
11
-
54
-
-

15.

Investment in
subsidiaries
and joint
operations

16.

Taxation

Subsidiaries are those entities controlled,
directly or indirectly, by Z. The purchase
method of accounting is used to account for
the acquisition of subsidiaries by Z. Identifiable
assets acquired, and liabilities and contingent
liabilities assumed in a business combination
are measured initially at their fair values at the
acquisition date. The financial statements of
subsidiaries are included in the Group financial

statements from the date control commences to
the date control ceases.

The financial statements of the subsidiaries are
included in the Group’s financial statements. The
financial year-end of all subsidiaries is 31 March.

The subsidiaries of the Group and their activities
are shown below.

2016
holding

2015
holding

Principal
activity

Country of
incorporation

Subsidiaries

Harbour City Property Investments Limited

Z Energy ESPP Trustee Limited

Z Energy LTI Trustee Limited

100%

Property

New Zealand

100%

Trustee

New Zealand

Trustee

New Zealand

Joint operations are those entities over
whose activities the Group has joint control,
established by contractual agreement and
requiring unanimous consent for strategic
financial and operating decisions. The Group
financial statements includes the Group’s
proportionate share line by line.

The Group has participating interests in three
unincorporated jointly controlled operations
relating to the storage and distribution of

petroleum products. The revenues and
expenses are allocated on a performance/
usage basis rather than the share of the joint
arrangement. The Group has rights to the
assets and obligations for the liabilities relating
to the jointly controlled operations. At 31 March
2016 there were no contingent liabilities in
respect of the jointly controlled operations
(2015: nil). The value of assets in these interests
is $8m (2015: $9m).

Joint Operations

Joint user hydrant installation

Joint interplane fuelling services

Jointly owned storage facility

2016 holding

2015 holding

Principal activity

25%

50%

25%

50%

Fuel storage

Fuel distribution

Fuel storage

Taxation expense comprises both current and
deferred tax. Current tax is the expected tax
payable on the taxable income for the year, using
tax rates enacted or substantively enacted at
the balance date, and any adjustment to tax
payable in respect of previous years. Deferred
tax is recognised in respect of the differences
between the carrying amounts of assets and
liabilities for financial reporting purposes and
the amounts used for taxation purposes. The
following temporary differences are not provided
for: the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit.

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 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 asset is reduced to the extent that it is no
longer probable that the related tax benefit will
be realised. Additional income taxes that arise
from the distribution of dividends are recognised
at the same time as the liability to pay the related
dividend.

Income tax is recognised as an expense or
benefit in the Statement of Comprehensive
Income, except when it relates to items credited
or debited directly to other comprehensive
income or equity, in which case the deferred
tax is also recognised directly in other
comprehensive income or equity.

Taxation expense or benefit is determined as follows.

Net profit before taxation

Less share of earnings of associate companies (net of tax)

Net profit/(loss) before taxation excluding share of earnings from
associates

Taxation (expense)/benefit on (loss)/profit for the year at the corporate
income tax rate of 28% (2015: 28%)

Plus taxation adjustments:

Non-deductible expenditure

Tax subvention payment

Over/(under) provision in prior periods

Taxation (expense)/benefit

Comprising:

Current taxation

Deferred taxation

Taxation (expense)/benefit

2015
$m

(10)

(4)

(1)

(2)

2016
$m

(23)

(18)

(5)

(22)

(23)

(22)

Deferred tax
Deferred tax assets and liabilities are offset on the face of the Statement of Financial Position and
presented as a net deferred tax asset/(liability). The movement in deferred tax assets and liabilities is
provided below.

Property,
plant and
equipment
$m

Intangible
assets
$m

Employee
benefits
$m

Finance
lease
$m

Other
provisions
$m

Derivative
financial
instruments
$m

Balance at 1 April 2014

(34)

(1)

Recognised in the Statement of Comprehensive
Income

Recognised in other comprehensive income

(Over)/under provision in prior periods in the
Statement of Comprehensive Income

Balance at 31 March 2015

Balance at 1 April 2015

Recognised in the Statement of Comprehensive
Income

Recognised in other comprehensive income

(Over) provision in prior periods in the Statement
of Comprehensive Income

Balance at 31 March 2016

(1)

(33)

(14)

(1)

(43)

(1)

Other
items
$m

Total
$m

(22)

(18)

(3)

(14)

(1)

(2)

(32)

17.

Provisions

A provision is recognised in the Statement of
Financial Position when the Group has a present
legal or constructive obligation as a result of a
past event, and it is probable that an outflow of
economic benefits will be required to settle the
obligation.

Estimated decommissioning and restoration
costs are recognised at the estimated future
cost. The estimated future cost is calculated
using amounts discounted over the estimated
useful economic life of the assets. The discount
rate applied is a risk-free rate. Decommissioning

and restoration costs expected to be settled
within one year are classified as current
liabilities. Decommissioning and restoration
costs expected to be settled between one and
thirty years are classified as non current.

Estimated remediation costs of sites are
recognised on an accrual basis at the time
there is a formal plan or obligation, legal or
constructive, in place. The remediation costs are
expected to be settled between one and thirty
years depending on the location.

For the year ended
31 March 2016

Balance at beginning of year
Created
Utilised
Released
Unwind of discount
Balance at end of year

Current
Non current
Balance at end of year

For the year ended
31 March 2015

Balance at beginning of year
Created
Utilised
Released
Unwind of discount
Balance at end of year

Current
Non current
Balance at end of year

Decommissioning
and restoration
$m

Remediation
$m

Other
$m

Total
$m

26
12
(1)
(1)
2
38

3
35
38

3
1
(1)
-
-
3

1
2
3

8
15
(19)
(2)
-
2

2
-
2

37
28
(21)
(3)
2
43

6
37
43

Decommissioning
and restoration
$m

Remediation
$m

Other
$m

Total
$m

20
6
(1)
-
1
26

2
24
26

4
-
(1)
-
-
3

-
3
3

8
3
(2)
(1)
-
8

8
-
8

32
9
(4)
(1)
1
37

10
27
37

18.

Share
capital and
distributions

Ordinary shares (fully paid)

Total issued capital at beginning of year

Movements in issued and fully paid ordinary shares

Share based payment

Total issued capital at end of year

Ordinary shares (fully paid)

Total issued capital at end of year

2016
$m

432

(1)

431

2015
$m

432

2016
shares
millions

2015
shares
millions

400

All fully paid ordinary shares have equal voting rights and share equally in dividends and equity.
The issued shares have no par value. All authorised shares are issued.

1,274,941 shares at a cost of $5.5m are held by Z Energy LTI Trustee Limited for Z’s restricted share
long-term incentive plan (2015: 944,235, $3.6m).

Dividend

2014 Final dividend (paid June 14)

2015 Interim dividend (paid December 14)

2015 Final dividend (paid June 15)

2016 Interim dividend (paid December 15)

Final dividend declared subsequent to balance date not provided (refer to note 29).

19.

Earnings
per share

Profit after tax attributable to shareholders of the Parent Company ($m)

Weighted average number of shares (million)

Basic and diluted earnings per share (cents)

Cents
per share

14.0

8.0

16.5

8.5

2016

2015

400

20.

Interest-
bearing loans
and borrowings

22.

Financial risk
management

Facilities not utilised at reporting date

Secured bank facilities

2016
$m

2015
$m

400

Financing arrangements
The Group’s debt includes bank facilities
secured against certain assets of the Group. The
facilities require Z to maintain certain levels of
shareholder funds and securities and operate
within defined performance and gearing ratios.
The arrangements also include restrictions over
the sale or disposal of certain assets without
bank agreement.

Throughout the year the Group has complied
with all debt covenant requirements as imposed
by lenders.

At 31 March 2016 the Group had a secured
bank debt facility of $400m (2015: $400m). No
amounts were drawn on the bank debt facility at
31 March 2016 (2015: nil). The facility matures 21
October 2017.

The bank debt facilities are able to be drawn-
down as required subject to Z being in

compliance with undertakings in respect of
those facilities. All loans must be repaid on the
relevant due dates. Interest rates are determined
by reference to prevailing money market rates
at the time of draw-down plus a margin. Interest
rates paid during the year ranged from 3.7% to
4.7% (2015: 4.3% to 4.9%).

Borrowings are recorded initially at fair value,
net of transaction costs. Subsequent to initial
recognition, borrowings are measured at
amortised cost with any difference between the
initial recognised amount and the redemption
value being recognised in the Statement of
Comprehensive Income over the period of the
borrowing using the effective interest rate.
Bond and bank debt issue expenses, fees and
other costs incurred in arranging finance are
capitalised and amortised over the term of the
relevant debt instrument or debt facility using
the effective interest rate method.

21.

Bonds

Balance at beginning of year

Amortisation

Unwind of fair value loss on substitution

Balance at end of year

Current

Non current

Balance at end of year

Repayment terms and interest rates

Maturing on 15 October 2016, 7.35% per annum fixed coupon rate

Maturing on 15 August 2018, 7.25% per annum fixed coupon rate

Maturing on 15 November 2019, 6.50% per annum fixed coupon rate

Balance at end of year

2016
$m

430

(1)

430

147

283

430

147

149

134

430

2015
$m

430

(1)

430

148

149

133

430

Fixed coupon
The fixed coupon bonds on issue are at a face value of $1.00 per bond. Interest is payable bi-annually
on the bond maturing 15 October 2016, and quarterly on the bonds maturing 15 August 2018 and 15
November 2019.

The bonds require Z to maintain certain levels of performance, security and gearing.

The Group has exposure to the following risks
from its use of financial instruments:

• Credit risk

•

Liquidity risk

• Market risk

The Board of Directors has overall responsibility
for the establishment and oversight of the
Group’s risk management framework. The Board
has established an Audit and Risk Committee
with responsibilities which include reviewing
treasury practices and policies. The Group
has established a Treasury Management
Committee to review and set treasury strategy
within policy guidelines and report on market
risk positions and exposures. The Group has
developed a comprehensive, enterprise wide
risk management framework which guides
management and the Board in the identification,
assessment and monitoring of new and existing
risks. Management reports to the Audit and Risk
Committee and the Board on the relevant risks
and the controls and treatments for those risks.

Derivatives are not hedge accounted and
are required to be accounted for at fair value
through the Statement of Comprehensive
Income. Derivative financial instruments are
recognised initially at fair value at the date
they are entered into. Subsequent to initial
recognition, derivative financial instruments
are stated at fair value at each Statement of
Financial Position date. The resulting gain
or loss is recognised in the Statement of
Comprehensive Income.

Credit risk
Credit risk refers to the risk that a counterparty
will default on its contractual obligations,
resulting in financial loss to the Group. The
Group is exposed to credit risk in the normal
course of business including those arising from
trade receivables with its customers, financial
derivatives and transactions (including cash
balances) with financial institutions. The Group
has adopted a policy to assure the credit-

worthiness of our counterparties, as a means of
mitigating the risk of financial loss from defaults.
The Group minimises its exposure to credit risk
of trade receivables through the adoption of
counterparty credit limits and standard payment
terms. Derivative counterparties and cash
deposit transactions are limited to high-credit-
quality financial institutions and organisations
in the relevant industry. The Group’s exposure
and the credit ratings of counterparties
are monitored, and the aggregate value of
transactions concluded are spread amongst
approved counterparties. The carrying amounts
of financial assets recognised in the Statement
of Financial Position best represent the Group’s
maximum exposure to credit risk at the reporting
date. Generally, no security is held on these
amounts. Concentration of credit risk with
respect to trade receivables is limited due to the
Group’s large customer base. Less than 1% (2015
: 1%) of the Group’s receivables are more than 30
days overdue.

Liquidity risk
Liquidity risk is the risk that assets held by
the Group cannot readily be converted to
cash to meet the Group’s contracted cash
flow obligations. Liquidity risk is monitored
by continuously forecasting cash flows and
matching the maturity profiles of financial
assets and liabilities. The Group’s approach
to managing liquidity is to ensure, as far as
possible, that it will always have sufficient
liquidity to meet its liabilities when due, under
both normal and stress conditions. The Group
manages liquidity risk by maintaining an
adequate amount of committed credit facilities
and spreading debt maturities in accordance
with policy.

The following tables analyse the Group’s
financial liabilities into relevant maturity
groupings based on the earliest possible
contractual maturity date at the year end.
The amounts in the tables are contractual
undiscounted cash flows, which include interest
through to maturity.

22. Continued

At 31 March 2016

6 months
or less
$m

6-12
months
$m

1 to 2
years
$m

2 to 5
years
$m

5 years
+
$m

Contractual
cash flows
$m

Statement
of financial
position
$m

22. Continued

Non-derivative financial liabilities

Accounts payable

Finance leases

Bonds

Non-derivative
financial
liabilities

(237)

(1)

(15)

(4)

(1)

(162)

(2)

(20)

(7)

(306)

(253)

(167)

(22)

(313)

Derivative financial instruments (liabilities)/assets

Foreign exchange
contracts

Interest rate swaps

Commodity hedges

Derivative
financial
instruments
liabilities

(1)

(7)

(9)

(7)

(241)

(20)

(503)

(241)

(12)

(430)

(764)

(683)

(1)

(13)

(1)

(11)

(13)

(11)

At 31 March 2015

6 months
or less
$m

6-12
months
$m

1 to 2
years
$m

2 to 5
years
$m

5 years
+
$m

Contractual
cash flows
$m

Statement
of financial
position
$m

Non-derivative financial liabilities

Accounts payable
Finance leases
Bonds

(308)
(1)
(15)
(324)

-
(1)
(15)
(16)

-
(2)
(177)
(179)

Derivative financial instruments (liabilities)/assets

Interest rate swaps
Commodity hedges

-
(1)
(1)

-
-
-

-
(7)
(325)
(332)

(2)
-
(2)

-
(11)
-
(11)

(4)
-
(4)

(308)
(22)
(532)
(862)

(6)
(1)
(7)

(308)
(12)
(430)
(750)

(4)
(1)
(5)

Market risk

Interest rate risk
The Group’s primary interest rate risk arises
from its issued bonds (see note 21) which are
sourced at fixed interest rates. In accordance
with its Treasury Policy, Z manages its exposure
to interest rate risk by entering into interest
rate swaps (IRS). By managing the interest rate
risk, Z aims to minimise the cost of debt and
manage the impact of interest rate volatility on
the Group’s earnings. The aggregate notional
principal amount of the outstanding IRS at 31
March 2016 was $735m (2015: $790m). The fair
value of the IRS is $(10)m (2015: $(4)m).

Sensitivity analysis
At 31 March 2016, if bank interest rates at that
date had been 100 basis points higher/lower with
all other variables held constant, it would change
post-tax profit for the year by $9m higher/$10m
lower (2015: $7m higher/$7m lower).

Foreign currency risk
The Group has exposure to currency risk on
the value of its sales contracts, commodity/
product supply purchases, other transaction
flows, and assets/liabilities denominated in
foreign currencies. The Group enters into
forward exchange contracts under the terms of
its Treasury Policy to reduce the risk from price
fluctuations of foreign currency commitments
mainly associated with the purchase of
hydrocarbons.

Transactions in foreign currencies are translated
to the functional currency of the Group at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated
in foreign currencies at the reporting date are
translated to the functional currency at the
exchange rate at that date. The foreign currency
gain or loss on monetary items is the difference
between amortised cost in the functional
currency at the beginning of the period, adjusted
for interest and payments during the period,

and the amortised cost in foreign currency
translated at the exchange rate at the end of the
period. The resulting gain or loss is recognised
in the Statement of Comprehensive Income
immediately.

The aggregate notional principal amount of the
outstanding forward foreign exchange contracts
at 31 March 2016 was $26m (2015: $68m). At
balance date the fair value of forward foreign
exchange contracts outstanding was $(1)m
(2015: $0.1m).

Sensitivity analysis
At 31 March 2016, if the New Zealand dollar had
strengthened/weakened by 10% against the
currencies with which the Group has foreign
currency risk with all other variables held
constant, post-tax profit for the year would
change by $2m higher/$2m lower. (2015: $6m
higher/$7m lower).

Commodity hedges risk
The Group has exposure to purchase timing
risk on commodities. This is defined as the
difference in timing of when purchases of crude
and product are priced, and when volumes of
product are sold each month.

The Group enters into commodity swap
contracts under the terms of its Treasury Policy
to reduce the risk from price fluctuations, by
matching purchase and sales volumes in a
particular month. All hedging is within a six
month duration. At 31 March 2016 the fair value
of commodity hedges was $1m (2015: $(1)m).

Sensitivity analysis
At 31 March 2016, if the oil commodity price had
weakened/strengthened by 10% in which the
Group has Commodity price risk with all other
variables held constant, the value of commodity
derivatives would change post-tax profit for
the year by $2m lower/$2m higher (2015: $3m
lower/$3m higher).

Fair value measurement in the
financial statements
The carrying amount of financial assets and
financial liabilities recorded in the financial
statements is their amortised cost, with the
exception of derivatives which are held at fair
value.

The fair values of derivatives are calculated
using observable market rates based on
discounted cash flow analysis. The fair values
determined capture the applicable credit risk of
the counterparties and are a level two fair value
measurement per the requirements of NZ IFRS 7
(explained below).

Where the fair value of a derivative is calculated
using discounted cash flow analysis, the two
key types of variables used by this valuation
technique are:

•

f orward price curve (for the relevant
underlying interest rates, foreign exchange
rates or commodity prices), and

• discount rates.

The selection of variables requires judgement
and therefore there is a range of reasonably
possible assumptions in respect of these
variables that could be used in estimating the
fair value of these derivatives.

Asset and liability fair value classification

At 31 March 2016

Assets
Cash and cash equivalents
Derivatives
Deposit for Chevron acquisition
Trade receivables
Total assets

Liabilities
Bonds
Derivatives
Finance leases
Accounts payable
Total liabilities

Held for
trading at
fair value
$m

Loans
and
receivables
$m

Total
carrying
amount
$m

-
19
-
-
19

76
-
79
134
289

76
19
79
134
308

Held for
trading at
fair value
$m

Financial
liabilities at
amortised
cost
$m

Total
carrying
amount
$m

-
(30)
-
-
(30)

(430)
-
(12)
(241)
(683)

(430)
(30)
(12)
(241)
(713)

Fair
value
$m

76
19
79
134
308

Fair
value
$m

(464)
(30)
(12)
(241)
(747)

22. Continued

At 31 March 2015

Assets

Cash and cash equivalents

Derivatives

Trade receivables

Total assets

Liabilities

Bonds

Derivatives

Finance leases

Accounts payable

Total liabilities

Held for trading
at fair value
$m

Loans
and receivables
$m

Total carrying
amount
$m

206

149

355

206

149

365

Held for trading
at fair value
$m

Financial
liabilities at
amortised cost
$m

Total carrying
amount
$m

(15)

(430)

(12)

(308)

(750)

(430)

(15)

(12)

(308)

(765)

Fair
value
$m

206

149

365

Fair
value
$m

(465)

(15)

(12)

(308)

(800)

NZ IFRS 7 requires disclosure of fair value
measurements using the following fair value
measurement hierarchy:

•

Quoted prices (unadjusted) in active markets
for identical assets or liabilities (level one)

Inputs other than quoted prices included
within level one that are observable for the
asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from
prices) (level two)

Inputs for the asset or liability that are not
based on observable market data (that is,
unobservable inputs) (level three).

At 31 March 2016, the fair value of bonds
disclosed in the table above was a level one
measurement (2015: level one) and the fair value
of derivatives was a level two measurement
(2015: level two). The fair value disclosed for
bonds is the quoted price of the bonds on the
NZDX at 31 March 2016. The fair value disclosed
for derivatives is calculated using observable
market rates based on discounted cash flow
analysis and, for the remaining financial
instruments recorded in the Statement of
Financial Position, carrying value approximates
fair value.

Capital management
The key factors in determining Z’s optimal
capital structure are:

•

nature of activities

forecast of earnings and cash flows

capital needs over the forecast period

available sources of capital and relative cost

The Group’s capital includes share capital and
retained earnings. The Company’s borrowings
are subject to certain compliance ratios relevant
to the facility agreements or the trust deed
applicable to the borrowings. The Group will
seek to spread the maturities of its debt with no
more than 50% of core debt facilities maturing
in any forward 12 month period. Discussions on
refinancing of bank debt facilities will normally
commence at least six months before maturity
with facility terms agreed at least three months
prior to maturity. Bank facilities are maintained
with AA- or above rated financial institutions,
with a syndicate of four bank counterparties to
ensure diversification.

23.

Leases

Operating leases
Operating lease payments, where the lessor effectively retains substantially all the risks and benefits
of ownership of the leased items, are charged to the Statement of Comprehensive Income on a straight
line basis over the period of the lease term.

The Group has receivables from operating leases relating to the lease of premises. These receivables
expire as follows:

Operating lease receivables as lessor

Between 0 to 1 year

Between 1 to 5 years

More than 5 years

Operating lease receivables as lessor

2016
$m

2015
$m

The Group has various non-cancellable operating leases. The leases have varying terms, escalation
clauses and renewal rights. On renewal, the terms of the leases are renegotiated. The lease payables
are predominantly for the lease of land and buildings.

Operating lease payables as lessee

Between 0 and 1 year

Between 1 and 5 years

More than 5 years

Operating lease payables as lessee

2016
$m

2015
$m

184

141

Lease costs expensed and sub-lease income received through the Statement of Comprehensive
Income during the year were $23m (2015: $23m) and $1m (2015: $1m) respectively.

Finance leases as lessee
Finance leases, which transfer to the Group
substantially all the risks and benefits
incidental to ownership of the leased items, are
capitalised at the lower of fair value or present
value of the minimum lease payments. The
leased assets and corresponding liabilities
are therefore recognised and the assets
are depreciated in line with the Group’s
depreciation policy to reflect the estimated
useful lives. Each lease payment is allocated
between the liability and finance charges so as

to produce a constant periodic rate of interest
on the remaining balance of the liability for
each year.

The Group has finance leases arising from the
sale and leaseback of buildings and plant and
machinery. These lease contracts expire within
four to 13 years and have additional terms of
renewal. The Group also receives some sub-
lease income on these assets but this does not
have a significant impact on the Statement of
Comprehensive Income.

Present value of minimum lease payments

Between 0 and 1 year

Between 1 and 5 years

More than 5 years

Present value of minimum lease payments

2016
$m

2015
$m

23. Continued

Lease liability under finance leases

Between 0 and 1 year

Between 1 and 5 years

More than 5 years

Minimum lease payments

Less interest attributable to future years

Present value of minimum lease payments

Present value of minimum lease payments - short term

Present value of minimum lease payments - long term

Present value of minimum lease payment

2016
$m

(8)

2015
$m

(10)

24.

Share based
payments

Z Energy Restricted Share Long Term Incentive (LTI) Plan
Z provides an LTI for selected senior employees. Under the LTI plan, ordinary shares in Z Energy
Limited (Parent) are issued to, or purchased on-market by, Z Energy LTI Trustee Limited (the Trustee),
a subsidiary of the Parent. Participants purchase shares from the Trustee with funds lent to them by
the Parent Company.

The amount of shares that vest will depend on Z’s total shareholder return ranking within a peer group
of the NZX50 over a three year period, although a reduced period may be used in some cases. If the
individual is still employed by the Parent at the end of the vesting period, the employee is provided a
cash bonus which must be used to repay the loan and the shares are then transferred to the employee.

Balance at the
start of year

Granted
during year

Exercised
during year

Forfeited
during year

Balance at the
end of year

Vested and
exercisable at
end of year

Grant date

Vesting date

Exercise
price

Number of
shares

Number
of shares

2016

19 August 2013

31 March 2016

20 May 2014

31 March 2017

29 May 2015

31 March 2018

$3.71

$3.84

$5.98

Total

Weighted average exercise price

2015

19 August 2013

31 March 2016

20 May 2014

31 March 2017

$3.71

$3.84

Total

Weighted average exercise price

397,291

402,134

799,425

330,525

498,006

458,432

(25,834)

(28,358)

371,457

373,776

330,525

371,457

(54,192)

1,075,758

371,457

$4.00

$3.17

$3.71

(100,715)

(56,298)

(157,013)

$3.76

397,291

402,134

799,425

$3.78

Measurement of fair values
The fair value of the LTI plan has been determined using the framework of the Black-Scholes and
Margrabe option pricing models.

Vesting date of scheme

31 March 2018

31 March 2017

31 March 2016

Weighted average share price at grant date

$5.98

$3.84

$3.71

Contractual life

Risk free rate

2.84 years

2.86 years

2.61 years

3.1%

3.9%

3.7%

Standard deviation of Z share price

17.5%-22.5%

17.0%-22.5%

17.5%-22.5%

Standard deviation of NZX50

8.0%

9.2%

9.0%

Correlation between Z share price and NZX50

0.32-0.40

0.32-0.54

0.28-0.57

Estimated fair value per share

$2.24

$1.24

$1.26

Assumptions have been made that the
participants will remain employed with Z and will
achieve the minimum performance levels in each
period to the vesting date. Dividends paid on
shares are not material to the value of the shares
granted under the LTI plan.

The fair value of the share based payments is
recognised as an expense, with a corresponding

increase in equity, over the vesting period of
the plan. The expense relating to the LTI plan in
the year ended 31 March 2016 was $0.5m (2015:
$0.4m).

An employee share purchase programme also
exists which does not have a material impact on
these financial statements.

25.

Related
parties

Included in the Statement of Comprehensive
Income are sales and expenses which arise from
transactions between Group and associated
companies. Such transactions comprise sales
and purchases of goods and services in the
ordinary course of business on normal trading
terms, but also include dividends and interest.

Certain Z Directors have relevant interests
in a number of companies with which Z has
transactions in the normal course of business.

A number of Z Directors are also Non-Executive
Directors of other companies. Any transactions
undertaken with these entities have been
entered into as part of the ordinary business.

Key management personnel have been defined
as the Directors, the Chief Executive and the
Executive team for the Group. Executive
members also participate in the Group’s
restricted share LTI Plan (see note 24).

28.

Contingent
assets

29.

Events after
balance date

The Group has no contingent assets (2015: nil).

Dividend
On 11 May 2016 the Directors approved a fully
imputed dividend of $0.181 per share, which
is equal to $72.4m to be paid on 8 June 2016
(2015: $0.165 per share, $66m).

Business combination
On 2 June 2015, the Group signed an
agreement with a subsidiary of the Chevron
Corporation to acquire 100% of the assets
of Chevron New Zealand Limited. The Group
is paying $785m plus an adjustment for
movements in working capital for all of the
shares in Chevron New Zealand, the owner
of Chevron’s downstream operations in New
Zealand, including Chevron-owned service

stations, terminals and lubricant business.
The Group has made a $78.5m deposit for the
acquisition and has incurred acquisition-related
operating expenses of $25.4m and PPE spend
of $7.3m which are included in these financial
statements.

On 29 April 2016 the Commerce Commission
provided clearance under the Commerce Act
(1986) for Z to acquire Chevron New Zealand.
This satisfies the last regulatory condition of
the sale and purchase agreement. It is expected
that settlement will occur on 1 June 2016.

There were no business acquisitions in the year
ending 31 March 2016 (2015:nil).

25. Continued

26.

Commitments

27.

Contingent
liabilities

Transactions with related parties received/(paid)

Associates – sale of goods and services

Associates – purchase of goods and services

2016
$m

2015
$m

Refining NZ – processing fees, customs and excise duties

(557)

(465)

COLL – distribution

NZOSL

WOSL

Other

Infratil Group

Sales of goods and services

Tax subvention payment

Purchase of goods and services

Key management personnel

Short-term employee benefits

Other long-term benefits

Termination benefits

Balances at the end of year

Associates – payable

Refining NZ – processing fees, customs and excise duties

Other

(19)

(18)

(30)

(7)

(33)

(4)

(19)

(16)

(5)

(8)

(1)

(41)

(1)

Commitments relate to property, plant and equipment, the Good in the Hood community programme,
and contracts for the purchase of ETS units.

Committed to but not provided for

2016
$m

2015
$m

The Group has guaranteed an exposure of up to USD5m ($8m) to a financier of one of the Group’s
associate companies. There is no other contingent liability (2015: $20m).

Independent auditor’s report

Supplementary financial information
for the year ended 31 March 2016

The supplementary financial information does not form part of the financial statements. To assist in understanding the Group’s
performance, the Directors have provided additional disclosure of the Group’s results for the year on a replacement cost basis.

To the shareholders of Z Energy Limited

We have audited the accompanying consolidated financial statements of Z Energy Limited and its subsidiaries (“the
Group’’) on pages 39 to 65. The financial statements comprise the consolidated statement of financial position as at
31 March 2016, the consolidated statements of comprehensive income, changes in equity and cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information.

This report is made solely to the shareholders as a body. Our audit work has been undertaken so that we might state
to the company’s shareholders those matters we are required to state to them in the auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company’s shareholders as a body, for our audit work, this report or any of the opinions we have formed.

Directors’ responsibility for the consolidated financial statements

The Directors are responsible on behalf of the company for the preparation and fair presentation of the consolidated
financial statements in accordance with generally accepted accounting practice in New Zealand (being New Zealand
Equivalents to International Financial Reporting Standards) and International Financial Reporting Standards, and
for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing (New Zealand). Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the group’s preparation and
fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates, as well as evaluating the presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Our firm has also provided other services to the group in relation to assurance and general accounting services.
Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal terms
within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.

Opinion

In our opinion, the consolidated financial statements on pages 39 to 65 comply with generally accepted accounting
practice in New Zealand and present fairly, in all material respects, the consolidated financial position of Z Energy
Limited as at 31 March 2016 and its consolidated financial performance and cash flows for the year then ended in
accordance with New Zealand Equivalents to International Financial Reporting Standards and International Financial
Reporting Standards.

Income statement on replacement cost basis1

Revenue

Excise and carbon expense

Purchases of crude and product

Primary distribution expenses

Cost of sales adjustment (COSA)

Operating expenses

Replacement cost operating EBITDAF

Share of earnings of associate companies (net of tax)

Replacement cost EBITDAF

Depreciation and amortisation

Impairment and gains/(losses) on sale of fixed assets

Movements in decommissioning and restoration provision

Net financing expense

Fair value movements on interest rate derivatives

Replacement cost net profit before taxation

Taxation (expense)/benefit

Tax on COSA

Replacement cost net profit after taxation

Reconciliation from statutory net profit after tax to RC operating EBITDAF

Statutory net profit after tax

Replacement cost of sales adjustment

Tax on COSA

Replacement cost net profit after tax

Depreciation and amortisation

Impairment and gains/(losses) on sale of fixed assets

Movements in decommissioning and restoration provision

Net financing expense

Other

Taxation (including tax on COSA)

Share of earnings in associates

Replacement cost operating EBITDAF

2016
$m

2,521

(569)

(1,417)

(27)

(353)

238

261

(41)

(6)

(7)

(32)

(6)

169

(22)

(24)

123

2016
$m

(24)

123

(23)

238

2015
$m

3,064

(562)

(2,073)

(25)

158

(321)

241

251

(43)

(3)

(34)

(7)

164

(44)

121

2015
$m

158

(44)

121

(10)

241

11 May 2016

Wellington

1 Replacement cost is a non-GAAP measure used by the downstream fuel industry to report earnings on a replacement cost basis. The difference
between HC earnings and RC earnings is the cost of sales adjustment (COSA). Full reconciliation from statutory net profit after tax to RC
operating EBITDAF is provided.

Governance
matters

Our position
At Z everything we do is governed by our
values. Our determination to do things
differently threads through our entire
business. Corporate governance for us
focuses on implementing our values from top
to bottom.

One of Z’s core values is to be straight up.
We are committed to transparency at all
levels of the organisation because we think
it is necessary to give investors a complete
picture of what they are investing in. This
means including more than just financial
information in our Annual Reports and that is
where environmental, social and governance
(ESG) reporting comes in.

Environmental, social and corporate
governance are three factors that should be
measured and disclosed by a company in
order to assess that company’s sustainability
and ethical impact. To us, sustainability
means acting in a way that benefits the
future of the neighbourhoods we operate in
and the planet we live on. We think it’s good
for business, good value and good sense.

In order to assure investors of our longevity
in the market place or, in other words, that
we are a worthy investment, Z documents
and reports our progress, gaps and
ambitions in these three areas.

To support our ESG reporting, Z has
implemented the Global Reporting Initiative
(GRI) framework and is using some elements
of the Integrated Reporting framework
in this Annual Report. We will have the
framework fully implemented for the FY17
report.

Using these recognised international
frameworks will assist issuers to incorporate
sustainability factors into their reporting
effectively and enable investors and
stakeholders to draw comparisons between
issuers by providing an external standard

Corporate
governance for us
focuses on implementing
our values from top to
bottom.

against which a company’s non-financial
performance can be measured.

Z would like to see significant change in
reporting requirements for companies,
in order to require inclusion of ESG and
values based reporting. We have made
a submission to the NZX (see z.co.nz/
nzxsub), advocating that they make
reporting on non-financial aspects of
their business, as encompassed by ESG, a
legal requirement for listed companies.

Framework
This year, Z is using the Financial Markets
Authority’s nine fundamental principles
of corporate governance as a framework
for reporting our corporate governance
compliance. We chose this framework
because we believe there should be
every effort made to ensure consistency
between the various regimes in operation
in New Zealand and Australia. These nine
principles form the basis for the New
Zealand Corporate Governance Forum
and are broadly consistent with ASX
principles. NZX is currently proposing to
update their code using this structure.

Z considers that during the reporting
period, the corporate governance
principles we adopted and followed
did not materially differ from NZX’s
Corporate Governance Best Practice
Code except for in relation to Principle 2.7
(which is discussed further in paragraph
3 on page 72).

More information on Z’s corporate governance
is available in our Corporate Governance
Statement dated 12 May 2016, which details
Z’s compliance with the recommendations of
the ASX Corporate Governance Principles and
Recommendations during the reporting period.
That statement along with our suite of Board
policies, charters and codes are listed below
and most are available at: z.co.nz/gov

▶ Z Board Charter
▶ Constitution of Z Energy Limited
▶ Director Code of Ethics
▶ Code of Conduct
▶ Audit and Risk Committee Charter
▶

Human Resources and Nominations
Committee Charter

▶

Health, Safety, Security and
Environment Committee Charter

ASX Corporate Governance Statement

▶
▶ Diversity Policy
▶ Sustainability Policy
▶ HSSE Stand
▶
▶ Market Disclosure Policy
▶
▶ Risk Management Policy
▶

Insider Trading Policy

Investor Communications Policy

External Auditor Independence Policy

Principle 1:

Ethical
Standards

This principle is broadly
parallel with ASX Principle
3: Act ethically and
responsibly.

At Z we promote ethical and responsible decision making.

Code of Conduct
The Board maintains high standards of ethical conduct, and the CEO is responsible for ensuring these
standards are maintained by all employees. The Code of Conduct is a cornerstone of expected behaviour
and company culture. It’s designed to help guide and inform the choices that Z employees make on a daily
basis, to ensure they do the right thing and to help them succeed by making choices that are consistent with
our values and policies. Directors are also governed by the Directors’ Code of Ethics.

During the reporting period, Z had no significant fine or monetary sanctions imposed by any government
authority, and was not made aware that it had broken any material law.

This section contains data regarding ethical standards. The numbers reported pertain to Z corporate
employees only and do not include service station staff employed by Z’s Retailers.

Diversity and Inclusion
We are committed to a culture that promotes diversity and inclusiveness. We believe diversity within
our workforce makes our organisation stronger and more capable. For Z, diversity encompasses gender,
ethnicity, disability, age, sexual orientation, family responsibilities, education and diversity of thought.

With a diverse team we are better able to understand our diverse customer and stakeholder needs and to
respond effectively. We actively seek out people with a variety of thinking styles, backgrounds and abilities.
This in turn broadens our potential recruitment pool and encourages our people to be the best they can be
at work.

A copy of our Diversity Policy is available on our website.

As of October 2015, Z’s Board has approved measurable diversity objectives for Z’s gender composition.
These are modest targets, and we realise that we have a lot of work to do to get to where we want to be.
These objectives are a starting point for an ambitious drive in FY17 and beyond to create a comprehensive
diversity and inclusion strategy that will produce more wide-ranging and aspirational objectives.

Z is a signatory to, and a committed endorser of, the Women’s Empowerment Principles. These principles
were created by the United Nations and businesses are encouraged to support and follow them around
the world. They consist of seven principles which serve to empower women in the workforce, marketplace,
and community. Through Z’s commitment to Women’s Empowerment Principles, the Board evaluates the
company’s performance as having met the objectives of the Diversity Policy, other than the measurable
objectives for achieving gender diversity.

Board
Executives
Overall organisation
Note: These figures have been assessed at 31 March 2016.

Gender

Z gender composition

Objective %
Female
20%
40%
50%

Actual %
Female
38%
36%
41%

Below is the gender composition of Z permanent employees at 31 March 2016. By way of comparison, figures
for the past year are also included.

Female

Leader of self*

People leader**

Executive

Board

Total

Male
Leader of self*
People leader**
Executive
Board
Total

*Leader of self: does not have direct reports.
**People leader: has direct reports.
Note: Percentages are represented as whole numbers.

FY16

124

FY16

#
125
44
7
5
181

FY15

Reported differently
in FY15

118

FY15

Reported differently
in FY15

155

%
58
63
64
63
59

Z’s gender pay ratios

The ratios of female to male average pay for Z permanent employees as at 31 March 2016 are set out below.

Diversity by ethnicity

Average base salary female to male

Average remuneration female to male

Directors fees female to male

Leader
of self

People
leader

Executive

Board

Remuneration is composed of a base salary, a short term incentive (percentage on top of salary), health
insurance, any other allowances and a long term incentive for certain senior employees.

Note: The gender pay ratios for the Executive reflect that the highest paid individual (the CEO) is male. In
addition to this, the commercial roles in the Executive team are filled by males. The gender pay ratios for the
Board reflect that the Chair and two of the three Chairs of the Board Committees are male. These roles skew
the ratios, shown by the percentage differences in the above table.

Age

Z’s age composition

The age of Z permanent employees and Board at 31 March 2016 is as follows:

Under 30 years

30-50 years

Over 50 years

Leader
of self

People
leader

Executive

Board

Total number and rates of new permanent employee hires and permanent employee turnover by age
group and gender.

Male

Female

Under 30 years

30-50 years

Over 50 years

New
employee #

Employee
turnover

Total permanent employee numbers at the end of the year

297

Ethnicity
At Z we collect information from all Z permanent
employees and contractors on which ethnicity they
choose to identify with. We note our reporting fields
align with New Zealand census collection data although
we do allow employees to select “other” or choose not
to respond.

Compared to the latest New Zealand census data
(2013), we have the same proportion of European and
Asian people as the general population does. Key areas
for improvement for us are Maori and Pacific Island, as
our proportion of employees in these groups are much
lower than the general population of New Zealand.

The ethnicity of Z permanent employees and Board at
31 March 2016 is as set out in the adjacent pie graph
and overleaf.

NZ European/Pakeha

European

Asian (including Indian
and Pakistan)

Other ethnicity

Multiple ethnicities

Middle Eastern/Latin
American/African

Maori

Pacific Islander

Information not provided

Headcount

Leader
of self

People
leader

Executive

Board

Whole
company

Employee category

NZ European/Pakeha

European

Asian (including Indian
and Pakistan)

Multiple ethnicities

Other ethnicity

Middle Eastern/
Latin American/African

Maori

Pacific Islander

Information not provided

129

Total

216

Note: Percentages are represented in whole numbers.

196

305

Family responsibility

Employees’ dependants

The percentage of Z permanent employees with dependants at 31 March 2016 is as follows:

Percentage of employees with dependants

Leader of self

People leader

Executive

Board

Total

100

Return to work and retention rates after parental leave

All employees who are eligible by law are entitled to parental leave. The following table reports the return to
work and retention rates after the exercise of legal entitlements to parental leave for Z permanent employees at
31 March 2016.

Employees
due to return
to work from
parental
leave in FY16

Returned to
work after
leave
in FY16

Return to
work rate

Returned to
work after
leave prior
year

Employed
12 months after
return to work
from parental
leave

Retention
rate

Female

83%

71%

The total number of male employees who took two weeks parental leave funded by Z was five in FY16.

Education
The highest level of education reached by Z permanent employees and Z’s Board at 31 March 2016 is as follows:

Level of education reached

% secondary

% tertiary

% post-
graduate

% none or
unknown

Leader of self

People leader

Executive

Board

Total

Note: Percentages are represented in whole numbers.

Principle 2:

Board composition
& performance

This principle is broadly
parallel with ASX Principle
1: Lay solid foundations
for management and
oversight; and 2: Structure
the Board to add value.

Board composition
These are the Directors on the Board as at 31 March 2016, their appointment dates and how long they have
been on the Board

Peter Griffiths
Chair – Independent
2 April 2010
(6 years)

Marko Bogoievski
1 April 2010
(6 years)

Paul Fowler
Independent
2 April 2010
(6 years)

Alan Dunn
Independent
2 April 2010
(6 years)

Justine Munro
Independent
15 May 2013
(2 years, 10 months)

Mark Cross
Independent
28 August 2015
(0 years, 7 months)

Abby Foote
Independent
15 May 2013
(2 years, 10 months)

Julia Raue
Independent
15 February 2016
(0 years, 1 month)

*Bruce Harker left Z’s Board on 6 October 2015 after 1 year, 8 months.

Our Board actively seeks the most appropriate mix of diversity, skills and expertise because we see that as
crucial to guiding Z to the best outcomes. The skills, experience and expertise of each Director are set out in
the profiles on pages 16 and 17. The Human Resources and Nominations Committee is responsible for matters
relating to membership of the Board and its committees.

There is no formal process encouraging Board members to invest a portion of their Director’s fees in Z
securities (as recommended by Principle 2.7 of the NZX’s Corporate Governance Best Practice Code), but many
elect to do so.

The Board has determined that Peter Griffiths, Abby Foote, Alan Dunn, Julia Raue, Paul Fowler, Mark Cross, and
Justine Munro are independent Directors; and Marko Bogoievski is not an independent Director. Bruce Harker
was not an independent Director during his Directorship of Z.

In order for a Director to be considered independent, our Board must affirmatively determine that the Director
does not have a disqualifying relationship (other than solely as a consequence of being a Director). The
basis for determining whether a Director has a disqualifying relationship is set out in the Board’s Charter.
In accordance with the Board’s Charter, NZX Main Board / Debt Market Listing Rules and ASX Principles,
only relationships that are material will be considered for the purposes of assessing Director independence.
Materiality is considered from the perspective of Z, the relevant Director and the person or organisation with
which the Director is related (for example, the customer, supplier or adviser).

Performance of the Board and management
The Board is responsible for the affairs and activities of Z. It guides the company’s strategic direction, and
directs and oversees management. We want our Directors to have access to the best advice possible. With that
in mind, and in accordance with the Board’s Charter, our Directors may take independent professional advice
and professional development training at Z’s expense. That way, they remain on the ball about everything
happening at Z and in the broader market.

The role, structure, and governance of the Board are also set out in the Board’s Charter. That charter enables
the Board to delegate specific responsibilities to sub-committees and to the CEO, which the CEO can then sub-
delegate in accordance with the Delegation of Financial Authority, which was reviewed and updated this year.

The specific responsibilities of the Board and the Executive are outlined in the Board’s Charter.

Performance evaluation of Executives
The Board is responsible for monitoring the performance of the CEO and the Executive team against
established objectives.

Z’s Human Resources and Nominations Committee reviews and approves annual performance review programs
for executives and draws on external market information when considering remuneration arrangements. In
determining each executive’s total remuneration, external benchmarking is used to ensure comparability and
competitiveness alongside consideration of that individual’s performance, skills, expertise and experiences.
Information on Z’s executive remuneration arrangements (fixed remuneration, short and long-term performance
incentives) is set out under Principle 5: Remuneration, on page 74.

A performance evaluation of Executives took place during FY16 in accordance with this process.

Review of the Board and Director performance
The Board reviews and evaluates the performance of the Board, individual Directors and Committees regularly
to ensure they are operating consistently with the Board’s Charter and all relevant Board delegations. The
evaluation process itself was developed and is overseen by the Human Resources and Nominations Committee.

Our Board is regularly evaluated, using internal self-evaluation and external processes. Following the 2013 IPO,
in 2014 we engaged Propero Insights Partnership to conduct an in depth review of the Board, benchmarking
against best practice and to identify strengths and areas for development, with a goal of being a world class
Kiwi Board. Notable strengths included the Board’s relationship with the CEO and Executive team, and well
established performance and risk management processes. Areas for development included developing a
more streamlined induction process for new Directors and more closely aligning the Director development
programme with key strategic goals such as deep customer insight. Propero conducted a follow up review

Principle 3:

Board committees

This principle is broadly
parallel with ASX Principle
2: Structure the Board
to add value and ASX
Principle 4: Safeguard
integrity in corporate
reporting.

in April 2016, recording the Board had made good progress since the 2014 report, particularly on Board
gender composition, noting that the Z Board was now a New Zealand leader in this area. It was also noted that
improvements in Board leadership and culture had driven stronger engagement and open debate at the Board. A
further in depth review will follow in 2017.

Director induction
New Directors receive a thorough induction when joining Z including relevant paper based information (Z policies,
charters and publications), access to Board books and the resource centre online, organised site visits, one on
one time with each Director and member of the Executive, and meetings with the Board and Executive.

Feedback we have received from our external reviewer is that, while the new Director receives everything they
need to fully engage themselves with the business, the implementation of the process needs improvement. A plan
to streamline the Board Induction Programme is currently underway.

The Board has three standing committees to assist in carrying out its responsibilities.

Audit and Risk Committee (ARC)

Abby Foote (Chair), Marko Bogoievski, Paul Fowler, Mark Cross, Peter Griffiths.

The ARC helps the Board oversee all matters relating to risk and financial management, accounting, audit and
reporting.

Risk management and internal audit (assurance) are critical governance and management functions within the
company. Robust policy and compliance assurance in both risk management and financial audit is important
for investors in Z, financial markets more generally and for internal assurance as to the transparent, safe and
financially responsible management of the company. The skills and relevant qualifications of each member
of the Audit and Risk Committee are set out on pages 16 and 17. For more information about auditing and
reporting of Z’s financial performance, see Principle 4 on page 74.

Human Resources and Nominations (HRN) Committee

Alan Dunn (Chair), Justine Munro, Marko Bogoievski

The HRN Committee helps the Board oversee people policies and strategies and promotes the continual
improvement of good corporate governance, as expected of a NZX Main Board, NZX Debt Market and ASX
listed organisation, in accordance with the framework set out in the Human Resources and Nominations
Committee Charter.

The Committee is responsible for developing and recommending to the Board for its approval an annual
evaluation process of the Board and Board Committees. This includes identifying and recommending
individuals for nomination (including rotation and reappointment) to membership of the Board and Board
Committees, taking into account such factors that it considers are appropriate. These factors will include skills,
experience and expertise in transport fuels, marketing, retail and sales, finance and legal, as well as relevant
qualifications, judgements, the ability to work with other Directors and fit with the culture of Z.

The Committee also approves the remuneration of the CEO and the overall annual remuneration budget.

Health, Safety, Security, Environment (HSSE) Committee

Paul Fowler (Chair), Abby Foote, Alan Dunn, Justine Munro, Julia Raue

The HSSE Committee provides a specific governance focus on risks arising from the company’s physical (not
financial) operations, HSSE policy and risk mitigation programmes.

Attendance at Board meetings
Directors attended the following Board and Committee meetings during the year.

Director

Board meetings

ARC

HRN

HSSE and Reputation

Total number of meetings held

Peter Griffiths

Marko Bogoievski

Alan Dunn

Abby Foote

Paul Fowler

Justine Munro

Mark Cross

Julia Raue

Bruce Harker*

12/12

10/12

11/12

12/12

11/12

5/5

0/1

8/8

4/4

2/2

6/6

3/3

*Bruce Harker left Z’s Board on 6 October 2015.

Note: If a Director was not a member of a particular Committee at the time of the relevant meetings “-” has
been recorded.

Principle 4:

Reporting and
disclosure

Financial reporting
Z is committed to transparent reporting of its financial performance. The ARC plays a central role in this
regard. Their principal functions are:

•

to assist the Board in ensuring that appropriate accounting policies and internal controls are established
and followed

to assist the Board in producing an Annual Report along with accurate financial statements that comply
with all applicable legal requirements and accounting standards

•

to ensure the efficient and effective management of business risks.

This principle is broadly
parallel with ASX Principle
5: Make timely and
balanced disclosure

The external auditors are invited to attend ARC meetings when the ARC considers it appropriate. The ARC
itself comprises five non-executive Directors, four of whom are independent Directors. It’s chaired by an
independent Director who is not the Chair of the Board. A full description of the ARC’s role is contained
in the Audit and Risk Committee Charter and details regarding each member’s skills and relevant
qualifications are set out on pages 16 and 17.

Principle 5:

Remuneration

This principle is broadly
parallel with ASX Principle
8: Remunerate fairly and
responsibly.

Timely and balanced disclosure
Z is committed to maintaining a fully informed market through effective communication and complying with
the NZX Main Board / Debt Market and ASX Listing Rules. We have a Market Disclosure Policy that assists
the Board to keep investors and the markets informed in a timely, clear and balanced way.

The General Counsel and Company Secretary are our Market Disclosure Officers. They sit on a Disclosure
Committee (together with the Board Chair, the Chair of the ARC, the CEO, the Chief Financial Officer, and the
Communications and Investor Relations Manager) that is ultimately responsible for ensuring that Z complies
with its disclosure obligations. All market disclosures are made to the NZX Main Board, ASX and to Z’s
website (www.z.co.nz).

Environmental, social and governance reporting (ESG)
Z is committed to transparency at all levels of the organisation because we think it is necessary to give
investors a complete picture of what they are investing in. This means reporting on environmental, social
and governance factors in our Annual Report as well as financial performance. For further information please
refer to pages 30-36 and the GRI index at page 83.

The data in this section relates to Z permanent corporate employees and not employees of Z retail sites.

Human Resources and Nominations (HRN) Committee
Z’s remuneration framework and policies are managed by the HRN Committee in accordance with the Human
Resources and Nomination (HRN) Comittee Charter. The purpose and roles of the Committee, along with
who attended which HRN Committee meetings, are described under Principle 3 on page 73.

Remuneration
The Z Board and management are committed to a remuneration framework that aims to achieve a high-
performance culture, linking pay to the achievement of the company strategy and business objectives.
The HRN Committee, under delegated authority of the Board, is responsible for ensuring management is
motivated to create sustainable shareholder wealth.

Z’s remuneration strategy aims to attract, retain and motivate high-calibre employees at all levels of
the organisation. This in turn helps drive performance, a strong customer focus and personal growth.
Underpinned by a company-wide philosophy of paying for performance, the remuneration strategy supports
and promotes strategic business objectives, behaviours and values and is based on a practical set of guiding
principles that provide consistency, fairness and transparency.

All permanent Z employees have a base salary, a short term incentive (STI) component, and health insurance
(with Southern Cross) for themselves and their immediate family in their remuneration packages.
Z also makes a 5% employer contribution to KiwiSaver. A limited number of senior employees are also invited
to participate in a Restricted Share Long Term Incentive Plan (RSLTIP). All remuneration packages are
reviewed annually.

Base salary
The base salary model is informed and adjusted each year based on data from independent remuneration
specialists. Employees’ base salary is ascertained from a matrix of their own performance and their current
position in the market, and is reviewed annually.

Short Term Incentive (STI)
STI values are calculated as a percentage of base salary and determined based on the complexity of
the roles. Employees’ STI payments are determined following a review of the company and individual
performance, and may be paid out at a multiplier of zero to three times an individual’s STI target. This model
is focused on articulating performance goals, driving for outcomes, differentiating high performance and
rewarding delivery.

Restricted Share Long-Term Incentive Plan (RSLTIP)
Following listing, Z replaced its Long-Term Incentive Scheme (a cash-based scheme) with a RSLTIP for the
executive and selected senior employees. The RSLTIP is intended to incentivise the selected employees to achieve
long-term shareholder returns by ensuring that their incentives are aligned with the interests of shareholders. The
RSLTIP does this by providing a proportion of the employees’ remuneration on an “at-risk” basis aligned to the
achievement of defined performance targets. An amount of shares is held on trust for the employee for three years.
At the end of the three years, if the employee has achieved their defined performance targets and the company
achieves its total shareholder return (TSR) targets, they will be transferred the shares. The amount of shares is
calculated as a percentage of the employee’s base salary and depending on the performance of the company, may
be multiplied by zero to two times that percentage. The first time this scheme vested was April 2016.

Z Energy LTI Trustee Limited, a subsidiary of Z, purchased 330,706 shares at a weighted average purchase price of
$5.98 in FY16. These shares were purchased for the purpose of Z’s Restricted Share Long Term Incentive Plan.

Employee Share Purchase Plan (ESPP)
Z established an Employee Share Purchase Plan for eligible employees of Z to buy and hold shares in the company
at a discount to the listing price. The plan is an IRD approved DC12 plan and has a three year vesting period on
the shares purchased. Employees could purchase up to the amount of 786 shares for a price below the listing
value. Those shares are held for the employees by the ESPP Trust. Payment for these shares comes out of those
employees’ wages over a three year period. The shares held under this scheme will vest in November 2016. One
hundred and twenty eight employees currently participate in the plan.

Transactions in associated products
Z’s Insider Trading Policy prohibits Directors, officers, employees, contractors or secondees of Z or any of its
subsidiaries, where they are entitled to participate in any equity-based remuneration scheme, from entering into
any transaction that would limit the economic risk of participating in any unvested entitlement that they are eligible
for under that remuneration scheme.

Remuneration of Executives
At Z, our approach is to pay Executives a base salary and a performance based bonus which includes a short term
and a long term incentive. This ensures Executive motivation is aligned with the goals of the company in the short
and long term.

In determining Executive base salary, Z partners with EY to conduct market research on the specific role to ensure
that we are offering our Executives a competitive salary. Final decisions on Executive base salary are agreed upon
by Sharlene Taylor, our GM of People and Culture, and Mike Bennetts, our CEO. Along with this, Executives are
entitled to the same health insurance for themselves and their immediate families as all employees, as well as a 5%
KiwiSaver employer contribution.

The STI component is the same model as used for all permanent staff. Depending on their role, Executive STI is
calculated at 30% or 40% of their base salary and that figure can be multiplied zero to three times depending on
the performance of the company and their individual performance. All our Executives also participate in the RSLTIP.
The Executive RSLTI is calculated at 30% of their base salary and can go up to double that percentage depending
on company performance.

Chief Executive Officer remuneration
Mike Bennetts’s employment agreement for his role as CEO commenced on 1 April 2010.

The key terms of Mike’s employment are as follows:

•

Mike currently has a base salary of $750,000.00 per annum, which is reviewed annually with effect from
1 April each year.

In addition to his base salary, Mike may also be paid an annual short-term incentive payment with an on-target
value of 50% of his base salary and a maximum payment of 150% of his base salary. Payment of a short-term
incentive is fully discretionary and is assessed in the first quarter of each financial year, based on the business’
performance in the previous financial year and Mike’s performance in relation to certain key performance
indicators. If Mike is made redundant, then he will be entitled to a proportional short-term incentive-based
performance payment up to his departure.

Mike may also be entitled to long-term incentive payments calculated against his base salary. Mike’s potential
entitlements under the 2013 RSLTIP will be paid in 2016, based on the business’ performance against specific
financial objectives for each year relative to the performance of other NZX listed companies. The maximum
payment to which Mike may be entitled under the RSLTIP is 100% of his salary.

Z has also agreed to pay Mike’s reasonable accommodation and living expenses in Wellington, and the
reasonable travel expenses for national travel (particularly between Wellington and Auckland).

Either Z or Mike can terminate his employment on three months’ notice. Z can also terminate his employment
for redundancy or for ill health (in both cases, also on three months’ notice).

Mike has also agreed to non-solicitation commitments (applying to Z’s suppliers and employees) and a
restraint of trade (restricting him from involvement in the downstream oil industry in New Zealand). Both of
these generally apply for 12 months after the end of his employment as CEO, but the restraint of trade does not
apply if Mike is made redundant.

Remuneration of Directors
None of the Directors is entitled to any remuneration from Z other than by way of Directors’ fees and
reasonable travelling, accommodation and other expenses incurred in the course of performing duties or
exercising powers as Directors. No Directors are entitled to any retirement benefits.

In addition to Directors fees, additional fees are paid to the Chair and members in respect of work carried
out by Directors on various Board Committees to reflect the additional time involved and responsibilities of
these positions.

The total remuneration pool for Z’s non-executive Directors was set at $900,000 per annum at a time when
the Board comprised seven non-executive Directors. With the addition of Julia Raue in February 2016, the
size of Z’s Board has increased to eight non-executive Directors. To accommodate the additional Director,
the Board will recommend an increase to the total remuneration pool available for Z’s non-executive
Directors to $1,000,000 at the 2016 Annual General Meeting.

Details of the total remuneration of each Director and former Director of Z (including the value of all benefits
received) during FY16 are as follows:

Director

Peter Griffiths

Marko Bogoievski

Paul Fowler

Alan Dunn

Abby Foote

Fee

Director

$170,000

$100,000

$110,000

Justine Munro

Bruce Harker*

Mark Cross

Julia Raue

* Bruce Harker left Z’s Board on 6 October 2015.

Fee

$110,000

$46,479

$52,500

$10,110

Employee remuneration
The data in this section relates to Z permanent employees only. Total corporate employees = 335 (of which
297 are permanent).

There were 163 Z employees (or former employees) who received remuneration and other benefits in
excess of $100,000 in their capacity as employees during FY16, as set out in the table below. This includes
salary, short and long term performance bonuses, settlement payments and redundancy payments for all
permanent employees.

Amount of remuneration

Employees

Amount of remuneration

Employees

$100,000 to $110,000

$110,001 to $120,000

$120,001 to $130,000

$130,001 to $140,000

$140,001 to $150,000

$150,001 to $160,000

$160,001 to $170,000

$170,001 to $180,000

$180,001 to $190,000

$190,001 to $200,000

$200,001 to $210,000

$220,001 to $230,000

$230,001 to $240,000

$250,001 to $260,000

$260,001 to $270,000

$270,001 to $280,000

$300,001 to $310,000

$330,001 to $340,000

$340,001 to $350,000

$380,001 to $390,000

$400,001 to $410,000

$410,001 to $420,000

$430,001 to $440,000

$450,001 to $460,000

$460,001 to $470,000

$520,001 to $530,000

$540,001 to $550,000

$710,001 to $720,000

$780,001 to $790,000

1,750,001 to 1,760,000

risk management and internal control, the system is operating effectively in all material respects in relation to
financial reporting risks.

Risk controls are reviewed by Z’s Risk and Assurance Function. The Risk and Assurance Manager reports to the
Chair of the ARC for functional risk purposes and the CFO for administrative purposes. Risk and Assurance has
full and free access to the ARC, Z employees and Z records. The ARC approves Risk and Assurance’s priorities
and scope each year, and monitors the Z’s management’s response to their reviews.

KPMG has been the external auditor of Z and its subsidiaries for five years. The tenure and reappointment
procedure of the external auditor is detailed in the External Auditor Independence Policy. In accordance
with this and KPMG’s policy, FY16 was the last year that Brent Manning of KPMG was the engagement
partner for Z. Commencing in FY17, Graeme Edwards of KPMG will be the engagement partner. The
ARC oversees and monitors the performance of the external auditor and assesses the external auditor’s
independence to ensure that independence is maintained and its ability to carry out its statutory duties
is not impaired. All non-audit work performed by the external auditor must be approved by the Chair of
the ARC, which will detail what work is to be performed and how auditor independence and objectivity are
maintained.

The KPMG audit report is based on the audited Group financial statements. Total fees paid to KPMG in
their capacity as auditors for FY16 was $256,280 (2015: $225,360) and total fees paid to KPMG for other
professional services for FY16 was nil (2015: nil).

At Z we are committed to having our financial reports externally audited to meet international accounting
standards. We have not sought external assurance over our environmental, social and governance (ESG)
reporting.

In the past, Z’s external auditors have attended the Annual General Meeting where they have been available
to answer shareholders’ questions relevant to the audit. Z expects the auditor to attend the 2016 AGM.

Z is committed to high standards of communication. We want our investors and stakeholders alike to feel
that they have straight-forward access to all information they need to make prudent decisions about Z’s
value and prospects. We believe the way to make that happen is by providing timely, accurate and complete
information. Details on how we do that are covered in Z’s Investor Communications Policy.

We provide information about who we are, including our governance policies, on our website for investors to
access at any time.

The Board also encourages active participation by shareholders at the Annual General Meeting of the
company.

This year we are trialling a hybrid AGM which will include a traditional onsite meeting and an online
component, whereby shareholders can attend the AGM without being physically present. Z plans to hold
online only AGMs from 2017. This year’s AGM will be held in the Amokura Gallery, at the Museum of New
Zealand Te Papa Tongarewa in Wellington at 1pm on Friday 1 July 2016.

Shareholders are welcome to submit questions for the Board prior to or at the meeting.

The whole purpose of our corporate governance policies is to protect long term stakeholder interests. It’s
something we take very seriously and that the Board is highly mindful of. In keeping with our values, Z looks
to speak freely and openly about matters that influence and affect the company directly, and about matters
where we have an opinion to share.

Our submission to the NZX’s Review of Corporate Governance Reporting Requirements this year
demonstrates our commitment to our stakeholders. We are committed to increasing disclosure requirements
to allow investors to better understand the businesses they are dealing with and ensure that all aspects of
a business can be measured. And, we have taken a voluntary step in that direction through the disclosures
that we have made in this Annual Report.

Principle 7:

Auditors

This principle is broadly
parallel with ASX
Principle 4: Safeguard
integrity in corporate
reporting.

Principle 8:

Shareholder
Relations

This principle is broadly
parallel with ASX
Principle 6: Respect the
rights of the security
holders.

Principle 9:

Stakeholder
Interests

This principle is broadly
parallel with ASX
Principle 6: Respect the
rights of the security
holders.

Principle 6:

Risk management

This principle is broadly
parallel with ASX Principle 7:
Recognise and manage risk.

The ARC assists the Board in overseeing all matters relating to risk management. The proactive identification
of risks and implementation of risk controls are responsibilities of management. To learn more about how we
manage risks at Z please refer to page 14, where we have discussed our material business, ESG (see page 27),
and HSSE risks.

The ARC reviews Z’s risk management systems annually and receives quarterly reports relating to risk
management from Z’s Risk and Assurance Function and from Management as part of half-yearly CEO and CFO
certifications. These certifications provide assurance to the Board that, in their opinion, Z’s financial records
have been properly maintained and that the financial statements comply with GAAP and give a true and fair
view of Z’s financial position and performance. This opinion has been formed based on a sound system of

Further Disclosures required by the Companies Act 1993:

Disclosure of Z’s interests
The following table discloses Z’s subsidiaries and shareholdings in other companies at 31 March 2016:

Interest

Harbour City Property Investments Limited

Z Energy ESPP Trustee Limited

Z Energy LTI Trustee Limited

The New Zealand Refining Company Limited (RNZ)

New Zealand Oil Services Limited (NOSL)

Loyalty New Zealand

Wiri Oil Services Limited (WOSL)

Coastal Oil Logistics Limited (COLL)

Shareholding percentage

100%

15.4%

50%

25%

27.8%

25%

Disclosure of Directors’ interests
The following disclosures of interests have been made by Directors in terms of section 140(2) of the New Zealand Companies Act 1993
at 31 March 2016:

Director

Position

Company

Peter Griffiths Director

Member

Trustee

Director

Marko
Bogoievski

Alan Dunn

Director

Hemnestral Limited, Island Leader Limited, Marsden Maritime Holdings Limited, NZDS Properties (No 2)
Limited, Shoman Limited, Wings over Whales NZ Limited, Z Energy Limited, New Zealand Oil and Gas Limited
(resigned as at 16 February 2016), New Zealand Diving and Salvage Limited, Kupe Royalties Limited (resigned as
at 16 February 2016), National Petroleum Limited (resigned as at 16 February 2016), Nephrite Enterprises Limited
(resigned as at 16 February 2016), NZOG Services Limited (resigned as at 16 February 2016), Petroleum Equities
Limited (resigned as at 16 February 2016), Stewart Petroleum Co Limited (resigned as at 16 February 2016)

Civil Aviation Authority

NZ Business and Parliament Trust

Aotea Energy Holdings Limited, Aotea Energy Holdings No 2 Limited, Aotea Energy Investments Limited, Aotea
Energy Limited, HRL Morrison & Co (Asia) Limited, HRL Morrison & Co (Australia) Pty Limited, HRL Morrison
& Co Australia Holdings Limited, HRL Morrison & Co Capital Management (Int) Limited, HRL Morrison & Co
Capital Management Limited, HRL Morrison & Co Group GP Limited, HRL Morrison & Co Limited, HRL Morrison
& Co Offshore Limited, HRL Morrison & Co. Private Markets Pty Limited, Infratil 1998 Limited, Infratil Australia
Limited, Infratil Energy Limited, Infratil Energy New Zealand Limited, Infratil Europe Limited, Infratil Finance
Limited, Infratil Gas Limited, Infratil Infrastructure Property Limited, Infratil Insurance Co Limited, Infratil Limited,
Infratil No.1 Limited, Infratil No. 5 Limited, Infratil Outdoor Media Limited, Infratil PPP Limited, Infratil RV Limited,
Infratil Securities Limited, Infratil Trustee Company Limited, Infratil UK Limited, Infratil Ventures Limited, Infratil
Ventures 2 Limited, Infratil Investments Limited, Morrison & Co Funds Management (Australia) Pty Limited,
Morrison & Co Funds Management Limited, Morrison & Co Infrastructure Management (Australia) Pty Limited,
Morrison & Co Infrastructure Management Limited, Morrison & Co International Limited, Morrison & Co Property
Group Limited, Morrison & Co PIP Limited, Morrison & Co PPP GP 2 Limited, Morrison & Co Ventures Limited,
Morrison & Co Wealth Management Limited, Morrison Asian Investments Limited, Morrison Leasing Limited,
Morrison Pastures Limited, North West Auckland Airport Limited, NZ Airports Limited, Renew Nominees Limited,
Swift Transport Limited, Trustpower Limited, Woodward Capital Limited (currently in voluntary liquidation), Z
Energy ESPP Trustee Limited, Z Energy Limited, Z Energy LTI Trustee Limited, Zig Zag Farm Limited.

Burger Fuel Worldwide Limited, New Zealand Post Limited, Trumpeter Consulting Limited, Trumpeter Trustees
(2007) Limited, Vertical 4 Systems Limited, Z Energy ESPP Trustee Limited, Z Energy Limited, Z Energy LTI
Trustee Limited

Abby Foote

Director

BNZ Life Insurance Limited, BNZ Insurance Services Limited, Diligent Corporation, Livestock Improvement
Corporation Limited, New Zealand Local Government Funding Agency Limited, Z Energy Limited

Director
Paul Fowler
Justine Munro Director

Mark Cross

Director

Julia Raue

Trustee

Director

Member

Z Energy Limited

Maia Consulting Limited, Munro Crockett Trustees Limited, Z Energy ESPP Trustee Limited, Z Energy Limited, Z
Energy LTI Trustee Limited

Alpha Investment Partners Limited, Argosy Property Limited, Aspect Productivity Technology Limited, Emcee
Squared Limited, Genesis Energy Limited, MFL Mutual Fund Limited, Milford Asset Management Limited, Milford
Funds Limited, Milford Private Wealth Limited, Superannuation Investments Limited, Triathlon New Zealand
Incorporated, Virsae Group Limited, Z Energy Limited

Triathlon Youth Foundation

Rowdy Consulting Limited, Southern Cross Health Society, Television New Zealand, Z Energy Limited

Risk and Audit Committee of the Treasury

Directors’ interests in share transactions
Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following acquisitions and disposals of relevant
interests in shares during the year to 31 March 2016.

Director

Paul Fowler

Number of shares
purchased/(sold)

5000

4800

200

Consideration

Date of transaction

Interest

$29,600

$28,800

$1,256

1 July 2015

3 June 2015

2 June 2015

Directors’ interests in shares and bonds
Directors disclosed the following relevant interests in shares at 31 March 2016.

Director

Abby Foote

Number of shares or bonds which a relevant interest is held

Infratil Limited – 21,292 shares held by the Balmerino Trust
Z Energy Limited – 14,285 shares

Marko Bogoievski

Infratil Limited – 1,618,299 shares

Peter Griffiths

Paul Fowler

Infratil Limited – 21,903 shares, Z Energy Limited – 42,857 shares
The New Zealand Refining Company Limited – 18,744 shares

Caltex Australia Limited – 500 subordinated notes
Z Energy Limited – 10,000 shares

Executives’ interests in shares and bonds
Executives disclosed the following relevant interests in shares at 31 March 2016.

Executive

Mike Bennetts

Number of shares or bonds
which a relevant interest is held
Z Energy Limited – 28,571 shares held by
Kammjam Trust

Chris Day

Z Energy Limited – 7,142 shares –
by CW & CR Day Trust

Z RSLTIP interest
122,438 shares for the period ending 31 March 2016

126,421 shares for the period ending 31 March 2017

Z ESPP
interest
786 shares

83,970 shares for the period ending 31 March 2018
53,600 shares for the period ending 31 March 2016

786 shares

39,324 shares for the period ending 31 March 2017

25,930 shares for the period ending 31 March 2018

Lindis Jones

Z Energy Limited – 4,285 shares

40,766 shares for the period ending 31 March 2016

786 shares

Julian Hughes
Mark Forsyth

Z Energy Limited – 339.2 shares
Z Energy Limited – 5,714 shares

Meredith Ussher

Z Energy Limited – 1,428 shares

David Binnie

Jane Anthony

Sharlene Taylor
Nicolas Williams

30,078 shares for the period ending 31 March 2017

20,152 shares for the period ending 31 March 2018
15,450 shares for the period ending 31 March 2018
44,209 shares for the period ending 31 March 2016

32,618 shares for the period ending 31 March 2017

-
786 shares

21,630 shares for the period ending 31 March 2018
22,914 shares for the period ending 31 March 2016

786 shares

24,063 shares for the period ending 31 March 2017

9,740 shares for the period ending 31 March 2018
13,881 shares for the period ending 31 March 2017

19,817 shares for the period ending 31 March 2018
19,331 shares for the period ending 31 March 2017

15,450 shares for the period ending 31 March 2018
16,122 shares for the period ending 31 March 2018
10,860 shares for the period ending 31 March 2016

10,288 shares for the period ending 31 March 2017

16,794 shares for the period ending 31 March 2018

786 shares

-
786 shares

NZX Main Board and ASX waivers
Z has no waivers from the requirements of the NZX Main Board/Debt Market Listing Rules.

•

•
•

As part of its application to list on the ASX, Z applied for and was granted waivers from the ASX Listing Rules that are standard for a New Zealand
company listed on both the NZX Main Board and the ASX:
•

A waiver from ASX Listing Rule 6.10.3 to the extent necessary to permit Z to set the specified time to determine whether a security holder is
entitled to vote at a shareholders’ meeting in accordance with the requirements of the relevant New Zealand legislation.
A waiver from ASX Listing Rule 7.1 to permit Z to issue securities without security holder approval, subject to the following conditions:
Z remains subject to, and complies with, the NZX Main Board Listing Rules with respect to the issue of new securities
Z certifies to ASX on an annual basis (on or about 30 June each year) that it remains subject to, has complied with, and continues to
comply with the requirements of the NZX Main Board Listing Rules with respect to the issue of new securities
If Z becomes aware of any change to the application of NZX Main Board Listing Rules with respect to the issue of new securities,
or that Z is no longer in compliance with the requirements of the NZX Main Board Listing Rules with respect to the issue of new
securities, it must immediately advise ASX.
Without limiting ASX’s right to vary or revoke its decision pursuant to ASX Listing Rule 18.3, ASX reserves the right to revoke this
waiver if:
•
•

Z fails to comply with any of the above conditions, or
there are changes to the NZX Main Board Listing Rules in respect of the issue of new securities such that, in ASX’s opinion, the
regulation of the issue of new securities under those NZX Main Board Listing Rules ceases to be comparable to the regulation of
the issue of new securities under the ASX Listing Rules.

•

•
•

A waiver from ASX Listing Rule 15.7 to permit Z to provide announcements simultaneously to both ASX and NZX.
A waiver from ASX Listing Rules 15.13, 15.13A and 15.13B to the extent necessary to permit Z to divest shareholders of less than a minimum
holding in accordance with the procedure set out in Z’s constitution.

Donations
For the year ended 31 March 2016, Z made donations of $1,255,849. Z’s subsidiaries made no donations during the period.

Indemnity and insurance disclosure
As permitted by Z’s constitution, has entered into a deed to indemnify its Directors and its personnel who serve as Directors of related companies
for potential liabilities or costs they may incur for acts or omissions in their capacity as Directors of Z or its related companies. Z has a Directors’
and officers’ liability insurance policy in place. This provides insurance for the liabilities of the Directors and employees of Z for acts or omissions
in their capacity as Directors or employees. Neither the indemnity nor the insurance policies cover dishonest, fraudulent, malicious or wilful acts
or omissions.

Results disclosure
The reporting period for this Annual Report relates to the 12 months to 31 March 2016. The previous reporting period relates to the 12 months to
31 March 2015.

Dividend disclosure

FY16 Interim dividend

Record date

Payment date

FY15 Final dividend

Record date

Payment date

Amount per security (cents)

Imputed amounts per
security (cents)

8.5

16.5

3.3056

20/11/2015

2/12/2015

6.4167

22/5/2015

3/6/2015

Net tangible assets per security
Net tangible assets per security at 31 March 2016: 63 NZ cents (57 NZ cents: 31 March 2015).

Group disclosures – subsidiaries
Harbour City Property Investments Limited (HCPIL)

Directors: Michael John Bennetts and Mark Andrew Forsyth.

Disclosure of Z’s subsidiaries’ Directors’ interests

Harbour City Property Investments Limited (HCPIL)
Directors at 31 March 2016

Director

Michael Bennetts

Mark Forsyth

Position

Director

Company

Punakaiki Fund Limited
Auckland Iron Works Limited
The New Zealand Refining Company Limited

Loyalty New Zealand Limited

The Directors of HCPIL are employees of Z and do not receive any remuneration in their capacity as Directors. HCPIL has no employees.

Z Energy ESPP Trustee Limited
Directors at 31 March 2016

Director

Justine Munro

Alan Dunn

Marko Bogoievski

Z Energy LTI Trustee Limited
Directors at 31 March 2016

Director

Justine Munro

Alan Dunn

Marko Bogoievski

Position

Director

Position

Director

As listed on page 78

The Directors’ of Z Energy ESPP Trustee Limited and Z Energy LTI Trustee Limited do not receive any remuneration in their capacity as Directors of
those companies. Neither Z Energy ESPP Trustee Limited nor Z Energy LTI Trustee Limited has any employees.

Shareholder information
Z shares are quoted on the NZX Main Board and on the ASX. Z trades under the ticker ZEL on the NZX and ASX (until 30 March 2016, Z traded under
the ticker ZNZ on the ASX). Z has registered with the Australian Securities and Investment Commission (ASIC) as a foreign company. Z has been
issued an Australian Registered Body Number (ARBN) of 164 438 448.

At 31 March 2016, there were 400,000,000 fully paid ordinary shares in Z on issue. Each Z share confers on its holder the right to attend and vote at a
meeting of Z, including the right to cast one vote on a poll on any resolution.

The content of this shareholder information section was prepared on 31 March 2016, not more than six weeks before the release of the Annual Report.

There is currently no on-market buy back of Z shares.

Shareholders holding less than a marketable parcel
At 31 March 2016, there were five shareholders holding between one and 49 Z shares (less than a minimum holding number according to the NZX
Main Board/Debt Market Listing Rules) and, based on the market price of A$6.14, there were 15 shareholders that held less than a marketable parcel of
A$500 of Z shares under the ASX Listing Rules.

Distribution of ordinary shares and shareholders
At 31 March 2016

Size of holding

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Totals

Number of shareholders %

Number of shares %

1,613

17.35

5,238 56.35

1,555

16.73

833 8.96

56 0.60

9,295 100

1,157,265 0.29

13,612,654 3.40

11,137,017

2.78

17,106,712 4.28

356,986,352 89.25

400,000,000 100

Distribution of ordinary bonds and bondholders
At 31 March 2016

ZEL010

Size of holding

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Totals

Number of bondholders

299

821

1,944

108

3,172

9.43

25.88

61.29

3.40

100

Number of bonds

1,495,000

7,918,000

65,172,000

72,415,000

147,000,000

1.02

5.39

44.33

49.26

100

ZEL020

Size of holding

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Totals

ZEL030

Size of holding

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Totals

Number of bondholders

446

878

1,797

111

3,232

Number of bondholders

267

669

1,379

2,397

13.80

27.17

55.60

3.43

100

11.14

27.91

57.53

3.42

100

Number of bonds

2,230,000

8,462,000

58,811,000

80,497,000

150,000,000

Number of bonds

1,335,000

6,547,000

44,759,000

82,359,000

135,000,000

1.49

5.64

39.21

53.66

100

.99

4.85

33.15

61.01

100

Substantial product holders
According to notices given under the Financial Markets Conduct Act 2013, the following persons were substantial product holders of the company
at 31 March 2016.

Substantial product holders

Perpetual Limited and subsidiaries

NZ Superannuation Fund Nominees Limited

Accident Compensation Corporation

UBS Group AG and its related bodies corporate

Lazard Asset Management LLC

The Goldman Sachs Group, Inc.

Number of voting products
in substantial holding
(ordinary Z shares)

Percentage of shares
held at date of notice

47,929,027

41,950,000

20,302,908

20,570,825

36,462,849

31,579,784

11.98%

10.48%

5.07%

5.14%

9.11%

7.89%

Date of notice

6 October 2015

9 October 2015

13 October 2015

25 January 2016

29 January 2016

The total number of Z ordinary shares on issue at 31 March 2016 was 400,000,000.

20 largest shareholders
As at 31 March 2016

Rank

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Holder name
New Zealand Superannuation Fund Nominees Limited
HSBC Nominees (New Zealand) Limited
RBC Investor Services Australia Nominees Pty Limited
National Nominees New Zealand Limited
J P Morgan Nominees Australia Limited
Accident Compensation Corporation
National Nominees Limited
HSBC Nominees (New Zealand) Limited
HSBC Custody Nominees (Australia) Limited
JPMORGAN Chase Bank
Citibank Nominees (NZ) Ltd
Citicorp Nominees Pty Limited
Forsyth Barr Custodians Ltd
RBC Investor Services Australia Nominees Pty Limited
Custodial Services Limited
BNP Paribas Noms Pty Ltd
UBS Nominees Pty Ltd
BNP Paribas Nominees NZ Limited
Premier Nominees Limited
FNZ Custodians Limited

Holding
41,610,200
36,338,640
23,777,770
23,724,539
21,084,619
17,576,294
17,020,020
15,917,873
15,572,088
14,544,643
14,336,752
11,485,266
10,720,658
7,906,392
7,757,287
7,741,805
6,120,246
5,321,724
5,095,182
5,067,145

%
10.4
9.08
5.94
5.93
5.27
4.39
4.26
3.98
3.89
3.64
3.58
2.87
2.68
1.98
1.94
1.94
1.53
1.33
1.27
1.27

In the table above, the shareholding of New Zealand Central Securities Depository Limited (NZCSD) has been re-allocated to the underlying
beneficial owners.

GRI index

We’ve applied the Global Reporting Initiative (GRI) G4 Guidelines to a ‘Core’ level of compliance. We’ve chosen not to have our report third-
party verified this year.

Standard
disclosure

Standard disclosure title

Page
number

Standard
disclosure

Standard disclosure title

General standard disclosures

Strategy and analysis
G4-1

Statement by CEO and Chair

Organisational profile
G4-3

Name

G4-4

G4-5

G4-6

G4-7

G4-8

G4-9

G4-10

G4-11

G4-12

G4-13

G4-14

G4-15

G4-16

Primary brands, products, services

Head office

Locations

Legal form

Markets served

Scale of organisation

Workforce

Collective agreements

Supply chain

Business changes

Precautionary approach

Charters

Memberships

Identified material aspects and boundaries

G4-17

G4-18

G4-19

G4-20

Organisation

Report content and boundaries

Material issues

Boundaries inside organisation

G4-21

Boundaries outside organisation

G4-22

Restatements

G4-23

Changes

Stakeholder engagement

G4-24

G4-25

G4-26

G4-27

Stakeholder groups engaged

Selection of stakeholder

Organisation’s approach

Key topics and concerns

Report profile

G4-28

G4-29

G4-30

G4-31

G4-32

G4-33

Reporting period

Date of previous report

Reporting cycle

Contact

GRI compliance

Assurance

Governance

G4-34

Governance

12-13

2-3

2-3, 39

69-71

none

14-15

76-77

(a)

(b)

6-9

6-7

Identified per
indicator

No
restatements

No changes

Annual

Core

72-73

Ethics and integrity

G4-56

Values

Specific standard disclosures

Economic

Economic Performance
G4-DMA

G4-EC1

G4-EC2

Generic disclosures on management
approach
Direct economic value generated
and distributed
Financial implications and other
risks and opportunities for the
organization’s activities due to
climate change

Environmental
Energy
G4-DMA

G4-EN3

G4-EN6

Water

G4-DMA

G4-EN10

Emissions

G4-DMA

G4-EN15

G4-EN16

G4-EN17

G4-EN18

G4-EN19

Generic disclosures on
management approach
Energy consumption within
the organization
Reduction of energy consumption

Generic disclosures on management
approach
Percentage and total volume of water
recycled and reused

Generic disclosures on management
approach
Direct greenhouse gas (GHG)
emissions (Scope 1)
Energy indirect greenhouse gas (GHG)
emissions (Scope 2)
Other indirect greenhouse gas (GHG)
emissions (Scope 3)
GHG emissions intensity

Reduction of greenhouse gas (GHG)
emissions

Effluents and waste

G4-DMA

G4-EN23

G4-EN24

Generic disclosures on management
approach
Total weight of waste by type and
disposal method
Total number and volume of
significant spills

Page
number

39-43

14-15

(a) Zero Harm workplace, NZX Corporate Governance Best Practice Code, ASX Principles, Women’s Empowerment Principles.
(b) Sustainable Business Council, Sustainable Business Network.

Standard
disclosure

Transport

G4-DMA

G4-EN30

Standard disclosure title

Page
number

Standard
disclosure

Standard disclosure title

Page
number

Diversity and equal opportunity

Generic disclosures on management
approach
Significant environmental impacts of
transporting products and other goods
and materials for the organization’s
operations, and transporting members
of the workforce

G4-DMA

24-25, 31

G4-LA12

Generic disclosures on management
approach
Composition of governance bodies and
breakdown of employees per employee
category according to gender, age
group, minority group membership,
and other indicators of diversity

21, 69

69-71

Supplier environmental assessment

Equal remuneration for women and men

Generic disclosures on management
approach
Significant actual and potential
negative environmental impacts in the
supply chain and actions taken

G4-DMA

G4-LA13

Generic disclosures on management
approach
Ratio of basic salary and remuneration
of women to men by employee
category, by significant locations of
operation

G4-DMA

G4-EN33

Social

Labour practices and decent work
Employment

G4-DMA

G4-LA1

G4-LA2

G4-LA3

Generic disclosures on management
approach
Total number and rates of new
employee hires and employee turnover
by age group, gender and region
Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
Return to work and retention rates
after parental leave, by gender

Occupational health and safety

G4-LA5

G4-DMA

Generic disclosures on management
approach
Percentage of total workforce
represented in formal joint
management-worker health and safety
committees that help monitor and
advise on occupational health and
safety programs
Type of injury and rates of injury,
occupational diseases, lost days, and
absenteeism, and total number of
work-related fatalities, by region and
by gender
Training and education

G4-LA6

22-23

G4-DMA

G4-LA10

G4-LA11

Generic disclosures on management
approach
Programs for skills management and
lifelong learning that support the
continued employability of employees
and assist them in managing career
endings

Percentage of employees receiving
regular performance and career
development reviews, by gender and
by employee category

Society
Local communities

G4-DMA

G4-SO1

Compliance

Generic disclosures on management
approach
Percentage of operations with
implemented local community
engagement, impact assessments, and
development programs

G4-SO8

G4-DMA

Generic disclosures on management
approach
Monetary value of significant fines
and total number of non-monetary
sanctions for non-compliance with
laws and regulations
Asset integrity and process safety

G4-DMA

G4-OG13

Generic disclosures on management
approach
Number of process safety events, by
business activity

Product responsibility
Product and service labeling

G4-DMA

G4-PR5

Generic disclosures on management
approach
Results of surveys measuring
customer satisfaction about the
organisation as a whole and major
product or sevice categories

27, 28

Fossil fuel substitutes

G4-DMA

G4-OG14

Generic disclosures on management
approach
Volume of biofuels produced and
purchased meeting sustainability
criteria

Company directory

Registered and head office –
New Zealand
3 Queens Wharf
Wellington 6011

Directors

Peter Ward Griffiths (Chair)

Abigail Kate Foote

Marko Bogoievski

Alan Michael Dunn

Paul Lightle Fowler

Justine Mary Munro

Andrew Mark Cross
(Appointed 1 September 2015)

Julia Margaret Raue
(Appointed 15 February 2016)

Bruce Harker
(Resigned 6 October 2015)

Senior management

Michael Bennetts
Chief Executive

Christopher Day
Chief Financial Officer

Jane Anthony
General Manager Marketing

David Binnie
General Manager Supply and Distribution

Debra Blackett
Company Secretary

Mark Forsyth
General Manager Retail

Julian Hughes
General Manager Health, Safety, Security
and Environment
Lindis Jones
General Manager Transition

Sharlene Taylor
General Manager People and Culture

Auditor

KPMG
Maritime Tower
10 Customhouse Quay
PO Box 996
Wellington 6140

Meredith Ussher
General Counsel

Nicolas Williams
General Manager Commercial

Robert Wiles
General Manager Corporate
(Resigned 30 September 2015)

Registered office – Australia

c/- TMF Corporate Services (Aust)
Pty Limited
Level 16, 201 Elizabeth Street,
Sydney NSW 2000, Australia
PO Box A2224,
Sydney South NSW 1235, Australia

+61 2 8988 5800

Share registrars

Link Market Services – New Zealand
PO Box 91976
Auckland 1142
New Zealand

+64 9 375 5998

Link Market Services – Australia
Locked Bag
A14 Sydney
NSW, 1235
Australia

+61 2 8280 7100

Bankers
ANZ Bank New Zealand Limited
215–229 Lambton Quay
Wellington

ASB
ASB North Wharf
12 Jellicoe Street
Auckland Central
Auckland 1010

Bank of New Zealand
80 Queen Street
Auckland

Hong Kong and Shanghai Banking
Corporation
HSBC Tower
195 Lambton Quay
Wellington

Macquarie Bank Limited
1 Martin Place
Sydney NSW 2000
Australia

Westpac Banking Corporation
188 Quay Street
Auckland

Australia Registered
Business Number
164 438 448

z.co.nz