Plain-text annual report
Ahu whakamua me te wā
Moving with the times
Z ENERGY ANNUAL REPORT
For the year ended 31 March 2022
B
Te ara tukutuku—
Our integrated context
All of these elements together form
our integrated context, which we
capture like this:
Te pūtake
Our purpose
Ō tātou uara
Our values
Solving what matters
for a moving world
Since Z was formed in 2010, it has always
been a purpose- and values-driven
organisation. The way we behave, the
decisions we make and what we choose
to stand for bring together our purpose,
our values, our strategy and the issues
most material to our stakeholders.
Tū kaha | Stand out
We believe we can build a better business
and a better world. We are distinctive where it
really matters. We challenge the status quo by
being bold, innovative and passionate. We work
relentlessly to be a force for good for our
communities, our economy and our planet.
Tū māia | Speak up
We believe extraordinary outcomes are fuelled
by active participation and dialogue. We speak
up with courage around what’s important to us
and encourage others to do the same. In doing
so, we will create new possibilities together.
Tū kotahi | Side by side
We believe learning and growing together
delivers unlimited potential. We’re better
together — holding each other up as well as
challenging ourselves to grow and develop.
Side by side we build trusted partnerships with
our people, our customers and our communities.
Ngā take matua
Our material issues
Refer to page 10 for information on these issues.
Safety
and wellbeing
Climate change
and sustainability
Low carbon
future
Te rautaki
Our strategy
To solve what matters
for a moving world by
optimising our core business
so we can transition to a low
carbon future.
Ampol
transaction
Organisational
resilience
Supply chain
resilience
Market
transparency
and fairness
Cyber security
and data privacy
2
CONTENTS
Rārangi ūpoko—
Contents
4 Chief Executive Officer's review
23 TCFD report
8 Our numbers
26 Community
10 Stakeholders' most material issues
28 Diversity and inclusion
80 Auditor's report
84 TCFD index
86 GRI index
11 How we create value
31 Safety and wellbeing
89 Company directory
12 Our business model and strategy
34 Our people
14 Z's focus on organic growth
36 Our executive team
16 What we choose to stand for
37 Additional disclosures
17 Environmental sustainability
49 Financial statements
Te pūrongo o te wā—
About this annual report
Z is committed to the principles of
integrated reporting as the most
transparent way to discuss our business,
our performance and our strategy.
We report against the issues most
material to our stakeholders: customers,
policymakers, our own people and the
communities we serve.
We weight our reporting towards the
future — how we create value, the
business model we pursue, how we
approach strategy and Z’s role in a
rapidly evolving energy future.
The framework requires disclosure
around how we manage risk and report
against our environmental, social and
governance (ESG) commitments.
Supporting our use of the reporting
framework, we also choose to use
the Global Reporting Initiative (GRI)
Standards: Core option and the
Financial Stability Board’s Task Force
on Climate-related Financial Disclosures
(TCFD). The Financial Stability Board is
an independent international organisation
that makes recommendations to protect
global financial security.
Z’s commitment to TCFD reporting
requires us to progressively disclose
our climate-related risks, how they are
reflected in strategy and how we seek
to manage them. This is Z’s third year of
TCFD reporting.
In May 2022, all of the shares in Z were
acquired by Australian transport
energy company, Ampol. This followed
a shareholder vote in favour of the
acquisition, as well as approval from the
Overseas Investment Office, New Zealand
Commerce Commission and High Court
of New Zealand. The acquisition of
the shares in Z has seen the Z Board
dissolved and reconstituted.
Z has committed to ongoing transparent
reporting as a standalone Kiwi company,
as stakeholder interest in our company
remains high. We also have reporting
obligations to the holders of our
listed debt. There will be less detail
in future reporting given that some of
this information will be reported at a
parent company level.
This annual report will continue to report
against some of the core elements that
remain relevant within the NZX Corporate
Governance Code, including gender pay
gaps, safety and wellbeing, diversity and
inclusion, and remuneration.
Z’s operating cost base. Z’s performance
was also supported by the hedging of
Z’s FY22 position under the ETS that
benefitted from increases in the market
price of carbon.
We have continued to pay down debt and
deleverage our balance sheet, including
paying down a $150 million retail bond in
November 2021.
Despite these challenges, we have built
an increasingly resilient and efficient
business. We delivered Replacement
Cost Earnings Before Interest, Taxation,
Depreciation, Amortisation and Fair value
movements (EBITDAF) of $232 million,
down 2.5 percent over the prior year.
This included $43 million of one-off costs
of managing the Ampol transaction and
transforming the Z supply chain to an
import-only refined fuel model.
The Covid-19 downside was partially
offset by improved refining margins
and proactive steps taken in the
first quarter of the year, further reducing
Financial results
Operationally, FY22 was a disrupted
year in which many of the dynamics
of FY21 were repeated. There were
multiple Covid-19-related lockdowns
and an Omicron variant outbreak which
impacted our business.
New Zealand’s borders remained closed
for almost the entire year impacting
jet fuel demand, and retail volumes
also suffered again through a lack
of commuting and business traffic.
Impacted by the tragedy of the Russian
invasion of Ukraine, globally, crude oil
prices spiked to US$130 per barrel — the
highest prices since 2008. These prices
saw record high domestic pump prices
and subsequent margin pressure
and demand destruction. The price
of carbon, as measured through the
Emissions Trading Scheme (ETS), more
than doubled over the year, making up
approximately 18–20 cents per retail litre
in March 2022.
4
CHIEF EXECUTIVE OFFICER’S REVIEW
He kupu nā te kaiwhakahaere
matua—Chief Executive
Officer's review
Z is excited and energised about the
opportunities for New Zealand in building
a genuinely trans-Tasman transport
energy company at scale. There is
clear alignment on strategy between
Ampol and Z, particularly on leading
the development of a low carbon future.
Ampol understands the value of the
Z brand in the New Zealand market
and the role of culture in our company.
Together our two companies now have
the scale and resources to deliver the
future we are both committed to.
We are stronger together and have much
we can learn from each other. At a time
when there is heightened concern around
efficiency of supply chains, climate change
and energy security, we are now more
able than ever to serve our customers,
communities and economies.
Z remains the Kiwi transport energy
company serving almost half of the
domestic market and we remain more
committed than ever to our Brand
promise: ‘Z is for New Zealand’. We have
never been better equipped to deliver
against that promise.
Commitment to reporting
Over the last decade, and under a range
of different ownership structures, one
of the ways we have always sought
to demonstrate our commitment to
New Zealand lies in our transparency.
We have always reported to our
stakeholders on the most material issues
in our business and we will continue to do
so under Ampol’s ownership of Z.
We appreciate the significant local
stakeholder interest in our business and
are committed to using the principles of
integrated reporting to ensure we continue
to report openly and transparently on the
issues that matter most.
We remain committed to high-quality
climate-related disclosures, including
under the TCFD framework, and to
continuing to be transparent around
our financial performance, as well
as on issues such as diversity and
inclusion, safety and wellbeing,
environmental sustainability and how we
are responding to issues around modern
slavery and worker exploitation.
FY22 was the year in
which, after years of
effort and advocacy,
Z secured the optimal
industry structure
for our company and
country. We have the
right people, culture,
capabilities, and now the
industry and regulatory
structures we need
to deliver sustained
value for customers,
communities and our
new shareholder.
Part of this optimal structure lies with
Z’s new owner, Australian transport
energy company, Ampol. Ampol's offer
was in line with an independent valuation
of Z, and on 25 March 2022, shareholders
voted to accept the offer with more than
98.7 percent of the shareholder votes
supporting the transaction.
In March and April 2022, the New Zealand
Commerce Commission, Overseas
Investment Office and High Court of
New Zealand respectively approved
the transaction. The transaction was
completed on 10 May 2022.
$232m
$150m
replacement cost EBITDAF
FY21: $237m (restated as per Financial statements)
paying down a $150 million retail bond
REDUCING DEBT
$170m
in working capital (FY20–22)
RELEASED
$15m
in additional distributor earnings
COMMITTED
6
CHIEF EXECUTIVE OFFICER’S REVIEW
Now is the time for the next phase of our journey.
It is the most important phase of our journey to date
and we are ready and well prepared to face it.
Retail strategy
Our retail network is a core strength
for Z and an area where we have built
strong capabilities and are targeting for
growth. As part of our commitment to
recycling capital, in FY22 we advanced
the sale and lease-back of 52 freehold
retail convenience sites. This will result
in Z retaining a majority ownership stake
in the new controlling entity, and release
a material amount of capital that will
support further debt reduction or capital
investment, while retaining operational
use of the sites.
We are refreshing our store offer across
our top 50 retail sites by the end of FY24,
and completed the first three sites over
a Covid-19 impacted FY22. We expect to
grow retail market share, with the focus
for our retail offer on true hospitality.
We will introduce healthy smoothies
and an improved coffee offer across our
top 100 sites, with manually operated
espresso machines, new Rainforest
Certified organic coffee beans and
additional staff training to deliver an even
better quality offer.
Our digital capabilities, combined with
ongoing investment in new EV charging
infrastructure, provide us with platforms
we will increasingly need to serve our
customers in the future.
An optimal industry structure
New Zealand now has in place the
ideal industry structure to drive
competition, reduce costs and deliver
a more secure and environmentally
sustainable fuel supply.
On 1 April 2022, New Zealand moved
from refining crude oil to importing
all of its fuel as refined products.
This is the biggest structural change
in the New Zealand fuel industry since
refining was established at Marsden
Point in the 1960s.
This change will ensure more flexible
and reliable fuel supply arrangements,
with more days of fuel supply cover —
including in shipments on the water —
for the New Zealand economy. The move
to an import-only model will reduce the
volatility associated with being exposed
to global refining margins, and ensure a
fair, competitive playing field across all
market participants.
The improvements to Z’s business will be
significant and immediate. Over the last
three years, Z has paid $59 million in fee
floor payments to Refining NZ — now an
import fuel terminal trading as Channel
Infrastructure NZ Ltd — to compensate
for inadequate refining margins, and
these payments will no longer be
required. In addition, the shift to refined
fuel imports has already released the
$170 million in working capital costs over
FY20 to FY22 that had previously been
tied up in crude oil inventory.
Z’s last crude oil import was made in
February 2022. Our participation in
Ampol’s Asia-Pacific supply chain will
further strengthen our ability to deliver
supply security once Z's existing fuel
product contracts conclude at the end
of 2022.
Channel Infrastructure remains a critical
element of the New Zealand liquid fuel
supply chain. Refining had previously
been one of New Zealand’s largest
single sources of carbon emissions.
While we cannot ignore that emissions
are generated through refining wherever
in the world this occurs, this change will
reduce New Zealand’s domestic carbon
emissions by one million tonnes per year.
On behalf of the team at Z we want
to thank the entire team at Channel
Infrastructure — both past and present
— for their commitment and service to
this industry and New Zealand.
A clear regulatory environment
There has been a regulatory concern
over the New Zealand fuel industry for a
number of years and this has negatively
impacted Z as the country’s sole publicly
listed fuel company. Over FY22, there
has been positive regulatory change
which enhances industry transparency
and competition and removes regulatory
uncertainty for Z.
In particular, the Fuel Industry Act
2020 — the outcome of the Commerce
Commission Market Study into the
transport fuel market of 2019 — was
passed and implemented, with Z’s
support. The most material changes in
this legislation are the new requirements
on all fuel terminal operators to offer an
advertised price to wholesale customers,
to amend contract supply terms and to
provide transparent disclosure direct
to Government.
As Z has the largest fuel terminal
network in New Zealand, this change
opens up new commercial opportunities
to efficiently move fuel volume through
our network such as via a new large
distributor contract.
Momentum, clarity
on climate change
Since Z was formed in 2010, the company
has consistently advocated for blending
biofuels into mineral fuel as a tool in
transitioning to a lower carbon transport
energy economy..
The economics of biofuels have been
challenging and Government direction
and policy is needed to drive their
adoption. In FY22, the Government
confirmed a biofuels mandate which
will require fuel wholesalers to sell
1.2 percent of total fuel volumes as
biofuels in 2023, 2.4 percent in 2024 and
3.5 percent in 2025. Under this mandate
the objective is to cut transport-related
carbon emissions by 10 million tonnes
by 2035.
Z supports the mandate, and the scale of
Z’s fuel terminal network and the shift of
Channel Infrastructure into a fuel import
terminal support the introduction of
biofuels into New Zealand.
Through its national terminal network,
Z believes there will be significant
commercial opportunities for it to lead
the sale and distribution of biofuels
across the economy and has signed a
Heads of Agreement with Neste, the
world’s largest biofuels producer.
New Zealand’s Emissions Reduction
Plan was released on 16 May 2022.
Z welcomes the increasing political
consensus around New Zealand’s
emissions budgets as this provides
the certainty required to make
decarbonisation investments
with confidence.
A structured approach to
decarbonisation investment
In FY22, we formally reviewed
and reconfirmed our commitment
to commercial investments in
decarbonisation as a distinctive way to
deliver commercial value. We adopted
targets and structures to ensure
discipline and focus on how we choose
to invest and ensured we have the
right capabilities and oversight in
place. We will consider decarbonisation
opportunities on a case-by-case basis
with a view to integrating existing Z
assets and skills into carefully selected
commercial partnerships.
In obtaining clearance from the Overseas
Investment Office for the purchase of Z,
Ampol has committed to an additional
$125 million of capital expenditure in
New Zealand. This includes job creation
as part of its cadetship and graduate
recruitment programmes.
Our journey continues…
Since Z was purchased from Shell
in 2010, our company has been on
a journey. There have been multiple
ownership iterations and we delivered
strong shareholder value, particularly
in the first half of our existence.
In the second half of this journey, the
path has been bumpy as concern around
climate change has increased for all
stakeholders, as well as questions around
our role in leading the transition to a low
carbon economy.
Regulatory and supply chain challenges
have further impacted our business, but
throughout these challenges we have
achieved much we are proud of. We have
set new standards of transparency and
disclosure; we have led on best practice
ESG; we have built a highly engaged,
values-based culture which is the
foundation of our business; and we have
at all times been 100 percent committed
to a safe, reliable and profitable operation
that serves New Zealand. At this point,
I’d like to thank the previous Z Board for
their professionalism and dedication to Z,
particularly over this year. Z’s Directors
over FY22 invested a huge amount of
their time, at no additional cost to Z,
on both the governance around Z’s
response to Covid-19 and ensuring that
the Ampol transaction was in the best
interests of shareholders, our company
and New Zealand. These Directors
have helped set our company up for
continued success.
I also want to thank the outstanding
Z team for their commitment, passion and
professionalism during a challenging year.
Over the last two years, despite
significant headwinds, we have built the
capabilities we need to take our company
through the next stage of its journey and
have made the changes to our capital
structure to ensure we can deliver in
challenging times.
Now is the time for the next phase of our
journey. In many respects, it is the most
important phase of our journey to date
and we are ready and well prepared to
face it.
Kia haumaru te noho
Mike
Our people
and culture
2,094
Z’s direct employees, contractors and retail
network members
FY21: 2,121
99%
Safety and wellbeing actions complete rate
FY21: 99%
+61
Employee net promoter score
FY21: +53
8
OUR RESULTS
Ngā raraunga—
Our numbers
Up
Down No change
FY22
Annual results
FY21 comparison
+29
Retail net promoter score
FY21: +33
+11
Business net promoter score
FY21: +25
$269m
Historic net profit after tax
FY21: $63m (restated*)
3,156 million
litres
Total fuel volume Retail and Commercial
FY21: 3,086 million litres
52.3
million
transactions
Total transactions on Z-branded retail sites
FY21: 51.5m
$34m
Replacement cost net profit after tax
FY21: $9m (restated*)
$114m
Net capital expenditure
FY21: $42m
$232m
Replacement cost EBITDAF
FY21: $237m (restated*)
1.1cpl
Replacement cost net profit after tax per litre
FY21: 0.3cpl (restated*)
37,050
Carbon emissions offset
FY21: 37,500 tonnes CO2-e
tonnes
CO2-e
10.0
million
tonnes
Total carbon footprint — carbon dioxide
equivalent (tCO2e)
FY21: 9.4m tonnes
* FY21 restatements are as per the Financial statements.
10
OUR CONTEXT
Kei mua i te aroaro—
Stakeholders’ most
material issues
In determining materiality,
Z engages continuously
with stakeholders
in both a structured
and day-to-day way
and records feedback
and themes from our
engagements. Over FY22
these broad stakeholder
groups included:
staff; commercial and
retail customers; local
communities; central and
local government;
regulators and officials;
and members of
the media.
MATERIALITY
Our material
issues
Safety and wellbeing
Ampol transaction
Effectively managing risk and operational
safety will always be critically important
to our business and to our customers
and stakeholders.
FY22 was the second year in which
Covid-19 dominated our context.
As an essential service, our focus
was on keeping our own people, our
customers and the communities we
serve protected from the worst health
and wellbeing impacts of Covid-19, at the
same time as safely managing a supply
chain and physical assets vital to the
national economy.
Climate change and sustainability
Rapidly reducing the emissions from
the use of fossil fuels is arguably the
most material issue facing the world.
With transport-related emissions
making up 17 percent of New Zealand’s
total emissions (excluding agriculture),
climate change and Z’s response to it is
a consistently material issue across all
of our stakeholders — particularly Z’s
own people; politicians and policymakers;
and investors.
Low carbon future
There are few companies that have the
opportunity to make such a significant
and important contribution to the
decarbonisation of New Zealand as Z.
As New Zealand’s leading transport
energy supplier, Z has a critical role
to play in helping deliver a low carbon
future, including through leading the
introduction of biofuels into the market.
The ownership and operation of Z is
relevant to Z's stakeholders given the
recent acquisition of Z by Australian
transport energy company, Ampol.
Shareholders voted in favour of this
acquisition in March 2022.
Supply chain resilience
New Zealand has transformed its entire
fuel supply chain, exiting crude oil
refining and moving to an import-only
refined fuel model. The security of
the fuel supply chain under a different
operating model is of particular interest
to Government, industry and commercial
customers.
Organisational resilience
Z’s business is diversifying into new
areas. Ensuring we have the right skills
and expertise to respond to change and
add value in new areas — like digital —
is critical. Attracting and retaining talent
is important during a period described
globally as ‘the Great Resignation’.
Market transparency and fairness
The fairness of fuel pricing will always be
an acute subject of public and political
interest. Over FY22, global markets
spiked sharply, raising domestic fuel
prices to record levels. Legislation has
also been enacted introducing greater
transparency and competition into the
fuel market.
Cyber security and data privacy
Z is increasingly a digital business.
We hold more customer data than we
have in the past. This places additional
responsibility on Z to have the systems
and processes in place to maintain
real-time operations and protect this
data and the privacy of our customers.
Te whakatupu uara—
How we create value
One of the reasons why
we choose to embrace
Integrated Reporting is
that it is future focused
and requires us to
demonstrate how we
create value.
While Z’s strategy on how we create
value over the long term was set three
years ago, its focus and the commitments
within it are unchanged. Our strategy
has been endorsed by Ampol and the
essence of our strategy is now more
relevant than ever, post Covid-19 impacts
and disruptions.
Z is focused on delivering strong,
reliable returns.
We will create value by focusing on our
core business and operating a safe,
reliable fuels business.
We will ensure we generate fair
commercial returns for our scale, network
strength and the essential infrastructure
we own and operate.
We will manage our capital and balance
sheet with discipline at the same time
as we deliver strong returns, generate
options for our future, and ensure
we are advantaged under a range of
future scenarios.
Z has a strong, long-term future ahead
of it, with commitments to:
Remain a people- and
values-based company
• Committed to our purpose ‘to solve
what matters for a moving world’
and our ambition to be ‘a world-class
Kiwi company’
• Maintain high levels of employee
engagement and customer satisfaction
• Develop organisational capabilities and
individual talent for an uncertain future
Do good in Aotearoa New Zealand
by recognising our heritage and being
committed to future generations
• Contribute to a sustainable future at
a scale that few other companies can
by supporting the transition to a lower
carbon future
• Provide thought leadership where we
have a track record, especially in areas
like Safety and Wellbeing, Diversity and
Inclusion, and Customer Experience
• Actively support the communities in
which we operate on what matters
to them.
Optimise our market-leading position
• Z’s unrivalled supply chain
infrastructure provides competitive
advantage through scale and reach
• Z is one of New Zealand’s
most recognised and trusted
brands capable of extending to
adjacent markets
• Z’s scale provides options that allow
us to adapt and innovate in a market
that will be slowly disrupted by
long-term trends
Pursue a differentiated strategy that
generates long-term customer loyalty
• Focus on Z’s capabilities in customer
experience, productivity, innovation,
digitisation and brand
• Deliver distinctive customer
experiences that drive loyalty
• Reduce time to market and
lower investment risk through
human-centred design, innovation
and experimentation
Allocate capital with discipline
to maximise shareholder value
• Manage cash flows and capital to
deliver a sustainable return in line
with earnings growth
• Limit capital employed in our core
business to $2 billion by selling
the least productive assets to
fund growth
• Maintain a strong balance sheet with
the capacity to leverage debt to fund
non-organic investments
12
OUR STRATEGY
Tō tātou anga pakihi me
te rautaki—Our business
model and strategy
Always be safe and
reliable, deliver
awesome customer
experiences, generate
heaps of free cash flow,
and grow our non-fossil
fuels income.
In delivering against our strategy we
focus on the following six areas of
input and performance that form the
foundations of our business. We call
these our ‘capitals’ and they form the
basis of this report:
Our
assets
Z is the largest transport energy
company in New Zealand. We own a
network of strategically located assets
at genuine scale, providing unparalleled
commercial refuelling stations, retail
service stations and bulk fuel storage
terminals across the country.
These assets give Z economy of scale
and supply chain efficiency across
our operations and provide a highly
convenient and competitive offer
for customers across the country.
They provide the regional storage
to support New Zealand’s shift to an
import-only refined fuel supply chain
and will enable us to lead the transition
to a low carbon transport future, such as
through the national distribution and sale
of lower carbon biofuels.
Monetising the scale of our assets and
their economies of scale provides the
foundation for strong returns.
Our
finances
Delivering on our commitments to our
shareholder, our communities and our
planet requires Z to be profitable. Z has
taken a number of steps over the last
year to continue to reduce our cost base,
pay down debt, drive greater efficiency
and deliver an industry structure that will
reduce earnings volatility, free up capital,
improve security of fuel supply and foster
greater transparency and competition.
While Covid-19 constraints continued
over FY22, we have demonstrated
financial resilience under challenging
conditions while actively realising
significant new opportunities for organic
earnings growth.
Our
capabilities
Since Z was formed in 2010 our world has
changed significantly and Z has changed
with it. We are a very different company
to what we were more than a decade
ago and we have invested strategically
in building the capabilities we need to
operate in a very different context.
For example, teams across Z are not
only equipped with specific digital skills
that increase personal productivity and
team collaboration but they are more
frequently applying a digitisation lens
to their work. Our customer experience,
marketing and loyalty offers, supply
chain management and risk management
frameworks are increasingly digital
in nature.
We have transformed the skill base of
our organisation and have made changes
to ensure we have the right skills in
the right places to ensure we maximise
the benefits of the transformation of
New Zealand’s liquid fuel supply chain
and continue to deliver our strategy.
Our people
and culture
Our business is built on the foundation
of a values-based, purpose-driven
culture in which we actively foster
diversity of skills, thinking, background
and experience.
Over FY22 we continued to benefit
from previous investments in digital
infrastructure and capabilities. We have
maintained already world-class staff
engagement and wellbeing levels despite
prolonged Covid-19 lockdowns, the
challenges of working from home and the
uncertainty that has accompanied the
Ampol offer to acquire the shares in Z.
We have built a strong, focused and
committed team with the capabilities
we need. Our people are personally
connected to Z’s strategy and we have
changed the way we work to ensure
a continuous focus only on the issues
that matter.
Our focus on leadership has been
particularly important over the last
two years. The challenges of Covid-19
coupled with the changes in our
industry have reinforced the need for
our leaders to be equipped to lead in
an uncertain world. We have provided
targeted leadership development for
our senior people to ensure they are
leading powerfully, and believe this is
showing up in our globally-recognised
engagement results.
Ngā putanga
Our outcomes
Link: Z’s focus on organic growth
Link: Our numbers
Link: Z’s focus on organic growth
Link: How we create value
Link: TCFD report
Link: Financial Statements
Link: Z’s focus on organic growth
Link: Diversity and inclusion stand
Link: Safety and wellbeing stand
Link: Our people
Link: Environmental sustainability stand
Link: TCFD report
Link: How we create value
Link: Community stand
We are more able to deliver against
our strategy and the issues most material
to our stakeholders as part of the Ampol
business and we are committed to
continuing to report publicly against
these issues. Our commitment to
Aotearoa New Zealand remains simply
reflected in our unchanged brand
promise: ‘Z is for New Zealand’.
Z prioritises the following inputs and outcomes:
Te pūtake
Our purpose
Te whiriwhiri he aha ngā āhuatanga
matua ki te ao nekeneke
Solving what matters
for a moving world
Ngā tomonga
Our inputs
Our assets
Our finances
Our capabilities
Our people and culture
Our environment
Our place in New Zealand
Our
environment
Our place
in New Zealand
Over FY22, the Z Board revisited and
recommitted to our strategy to invest in a
low carbon future. We continue to live in
the ‘world of both’ where we optimise our
core business and increase profitability
to enable sustained investment in the
increasing commercial opportunities to
decarbonise our economy.
Z has put in place clear processes, new
governance structures and management
accountabilities to guide strategic
investments in a low carbon future. Z will
actively build partnerships and joint
ventures where we can to maximise the
efficiency and reduce the risk of any
capital investment.
We have adopted TCFD reporting early
and are well on our way to being able to
report against Aotearoa New Zealand's
mandatory regime when it comes into
effect. See pages 84 to 85 for our FY22
climate-related financial disclosures.
Z’s place in New Zealand has never
been more important. Over FY22 we
have again supported our customers
and communities through the trials of
Covid-19 and protected public safety,
while continuing safe, reliable operation
of an essential service.
We have provided leadership, support
and advocacy in the decision to exit the
crude oil supply chain and transform our
fuel supply chain to one that will better
serve New Zealand.
We have continued to focus on delivering
against the country’s climate change
commitments and have recommitted to
our leadership position on supporting the
development of a low carbon economy.
We have heard questions regarding the
acquisition of Z by Ampol. Our position
has always been that, regardless of who
ultimately owns the shares in Z, our
strategy and commitments are clear.
14
OUR FOCUS
Kia tupu, kia whanake a Z—
Z’s focus on organic growth
MATERIALITY
Supply chain resilience, market transparency
and fairness, low carbon future
• Enhanced, high-quality coffee offer
with manually operated espresso
machines to be rolled out to Z’s top
100 sites by FY24
• Z opened a new-to-industry flagship
retail site at Rolleston in Christchurch,
showcasing our new convenience
retail products, enhanced coffee offer
and new forecourt layout with four
EV charging bays.
In addition, Pay by Plate is now available
at 60 sites.
Convenience retailing
Z has made good progress in growing its
retail revenue:
• Despite significant Covid-19 disruption,
Z’s convenience network delivered
$404 million of sales revenue in FY22
• Over FY22, Z redesigned its
convenience retail offer and layout for
its tier one sites with a prototype site
developed inside a Napier warehouse
• Z has started the rollout of a refreshed
convenience retail offer and store
design with four redesigned stores
opened in FY22. This rollout was
delayed by Covid-19 but Z is targeting
50 sites for the new convenience retail
overhaul by FY24
In July 2021, Z hosted a Strategy Day
at which it outlined four priority areas
of focus to generate organic earnings
growth by the end of FY24.
These four areas go to the heart of Z’s
creation of value and Z is making strong
progress against each of them:
Import-only supply chain
On 1 April 2022, New Zealand exited
the crude oil supply chain and stopped
refining crude oil. New Zealand now
imports all of its fuel as refined products
with the Marsden Point refinery
converted into the country’s primary
fuel import terminal and now trading as
Channel Infrastructure.
This change delivers significant
efficiency, security and financial benefits
to Z and New Zealand:
• No more fee floor payments to top up
refining margins ($59 million paid by
Z over the last three years)
• No more refining and exporting at a
financial loss of by-product fuels that
domestic customers don’t want —
for example, marine fuel oil
• Release of $170 million of working
capital over FY20 to FY22 previously
tied up in crude oil on ships at sea or
awaiting processing
• Optimised supply chain through
relationships at scale with new term
agreements with two fuel suppliers for
refined fuels
• Improved supply chain flexibility and
fuel supply security
• Reduction of one million tonnes of
carbon emissions per annum through
ceasing domestic refining.
Wholesale strategy
Z supported the introduction of the
Government’s Fuel Industry Act 2020
requiring wholesale fuel terminal
operators to offer fuel at an advertised
price from the terminal gate. Z has the
largest fuel terminal network in the
country, with 191 million litres of fuel
storage — half of the country’s total fuel
storage capacity. With this scale, Z has
the opportunity to generate additional
commercial revenue through securing
new wholesale volume:
• Z committed to an additional
$15 million of earnings through
additional wholesale supply by the end
of FY24. Z has already delivered the
vast majority of this commitment from
one new large distributor contract
• Z has established a strong relationship
with Neste, the world's largest biofuel
supplier, as part of our work to meet
the commitments outlined in the
Government's proposed sustainable
biofuels mandate. There will be
additional commercial opportunities in
the wholesale supply of biofuels to the
New Zealand market
• Z continues to withdraw from the
National Inventory Agreement
(NIA) under which fuel companies
effectively share fuel across various
terminal locations in favour of the
independent, commercial operation
of our terminals. In February 2022,
Z gave notice to the industry and the
Commerce Commission of its intention
to withdraw from the NIA in Q2 FY23.
Network optimisation
Z is committed to reconfiguring its retail
network to meet changing customer
demand for both fuels and convenience
retailing. Z is committed to swapping
brands between the Z and Caltex
networks as time goes by and different
offers suit customers.
Similarly, Z will continue to open
new-to-industry sites, close low-volume
legacy sites and convert some tier three
sites into automated operations as part
of delivering an optimal network:
• Over FY22, Z closed four sites, opened
one new-to-industry site and switched
one site into automated operations
• Over FY22, Z advanced a sale and
leaseback of 52 freehold retail service
station sites. Z will retain a majority
ownership position in the new
controlling entity and ongoing access
to the sites. This transaction will
release a material amount of capital
to support further debt reduction or
capital investment
• Z has also consolidated the number
of retailers running clusters of Z retail
service station sites — from 25 at its
peak to 16 — bringing new operators
into the system and providing more
sites for some retailers to support
more efficient retail service delivery.
16
16
Tā tātou whakataunga
Tūtanga—What we
choose to stand for
Z chooses to stand
for the things most
important to our
customers, communities,
and our own people.
These ‘stands’ are the
areas in which we seek
to make a distinctive
contribution.
With the challenges posed by climate
change and Covid-19 continuing to
increase over FY22, and with global
concern increasing over worker
exploitation, racism and issues around
diversity and equality, our stands are
increasingly interconnected and tightly
linked to the issues most material to
our stakeholders.
This report has already canvassed a
range of developments and initiatives
underway in our business to advance
these four stands. The following section
of this report covers some of our
more detailed and specific reporting
against them.
Our performance against these stands
can have the greatest impact on the
10 UN Sustainable Development Goals
as identified above.
Environmental sustainability
Z will move from being a part of the
climate change problem to the heart of
the solution.
Community
A resilient and healthy Aotearoa
New Zealand that empowers our youth,
neighbourhoods and Z whānau.
Diversity and inclusion
Being successful being ourselves and
reflecting Aotearoa New Zealand.
Safety and wellbeing
Enhancing the lives of our people
and communities.
Te tiaki taiao—
Environmental sustainability
Z will move from being a part of the
climate change problem to the heart
of the solution.
In the context of the Ampol transaction,
one of the internal commitments we
made was to re-establish our leadership
role in the New Zealand energy transition.
We acknowledged that the leadership
position we had earned in the area of
climate change had been diminished
through responding to the challenges of
Covid-19 over the last two years and we
have recommitted to leadership in our
strategy and actions.
Capturing commercial value
through decarbonisation
Over FY22, Z reviewed and tested
our commitment to leading the
decarbonisation of New Zealand's
transport energy sector. At a Board level,
supported by external consultants, we
carefully re-examined the commercial
opportunities facing Z in terms
of decarbonisation in the current
market context.
Our assessment, including of policy
settings and global trends, confirmed
the opportunity we face to deliver
commercial value and increased earnings
through leadership in decarbonisation.
We have discussed the direction and
intent of our commitments with Ampol
and the two companies are aligned on
the strategy and the potential value that
can be realised.
Our commitment to realising commercial
decarbonisation opportunities reflects
a growing market confidence in
the potential value represented by
companies leading the energy transition.
This sentiment was clearly articulated by
the Chair and CEO of the US$6.6 trillion
fund manager, BlackRock, in his 2022
letter to company CEOs, at https://www.
blackrock.com/corporate/investor-
relations/larry-fink-ceo-letter
“Foresighted companies across a wide
range of carbon-intensive sectors
are transforming their businesses,
and their actions are a critical part
of decarbonisation… We believe the
companies leading the transition
present a vital investment opportunity
for our clients, and driving capital
towards these phoenixes will be
essential to achieving a net zero world."
SECTION TITLE These changes are driven by the optimal
industry structure Z has advocated for,
but we will continue to look for more
ways to cut our own emissions, such as
the use of biofuels in our distribution of
fuel and maximising efficiency across
all operations.
The following reporting covers the
progress we are making against a range
of sustainability targets and provides an
update on progress in our third year of
TCFD reporting. Metrics and emissions
reduction targets for the products we sell
will be agreed with our new owner.
1818
WHAT WE STAND FOR
MATERIALITY
Climate change and
sustainability, low carbon future
Structure and discipline in
decarbonisation investment
Z has put in place new management
and governance structures to ensure
discipline and a strong commercial focus
in future decarbonisation investments.
Nicolas Williams has moved from the
position of General Manager, Commercial
to the position of General Manager,
Strategy and Risk. Within this role,
Nicolas is accountable for a small
team of people working to deliver
new partnerships and commercial
opportunities in decarbonisation.
Before joining Z in 2010, Nicolas worked in
investment banking and brings a strong
commercial focus to the development of
decarbonisation options, as well as a deep
understanding of the Z business.
Areas of focus
With the capabilities and structures
in place, Z is working on a range of
potential decarbonisation investment
opportunities, including in the
following areas:
• Commercial investment in EV
charging infrastructure at Z retail
sites and beyond (our medium-term
goal is to have 150 EV fast charging
bays across 40 retail service station
sites, with 36 bays across 14 sites by
the end of FY23)
• Commercial wholesale biofuel storage
and supply to others in the market
• The development and commercialisation
of sustainable aviation fuels
• The commercial application of other
low carbon fuels, such as hydrogen,
which can use much of Z’s liquid fuel
storage and distribution infrastructure
• Carbon capture and storage
• Integrating existing assets and
infrastructure, such as Z’s stake
in the Mevo ride-sharing platform
and its ownership in Flick Energy
Limited (Flick).
A number of commercial decarbonisation
opportunities are now complementary
— for example, building EV charging
infrastructure on Z sites combined with
a refreshed convenience retail offer,
and the ability to provide unrivalled
storage and supply facilities for
biofuels as required under the new
Government mandate.
Z has also taken steps to reduce
risks associated with decarbonisation
investments, such as through developing
commercial joint ventures and Flick
securing a seven-year price hedge with
a major electricity generator over FY22.
It is now clear that future transport
energy providers must also be electricity
providers, and in this context Z has
recommitted to our investment in Flick.
The supply of electricity to our
customers will become an increasingly
important part of our future operations.
It is also the intention that while initial
capital will be required for the first
investments in decarbonisation projects,
further investments will rapidly become
self-funding.
Decarbonising our supply chain
While we look to future commercial
opportunities, we are also committed
to reducing the emissions of our own
operations. As the table on the following
pages outlines, in FY22 we committed
to a science-based emissions reduction
target of 42 percent by 2030 — the level
at which our operations contribute to
limiting global temperature rise to less
than 1.5 degrees Celsius.
We will reach this target in FY23, with the
bulk of the required emissions reductions
being delivered through the end of our
involvement in the charter of two coastal
fuel tankers and continued measures to
reduce operational emissions, such as
continued adoption of fleet EVs.
20
WHAT WE STAND FOR
How we are tracking on our outcomes and targets
Empower Communities
Our Goals
Our Outcomes and Targets
Progress
Status
We will actively
support local
communities in the
locations where we
operate, enabling
more New Zealanders
to live the lives they
value and empowering
the young people of
Aotearoa to reach
their full potential.
Our workplace is safe and
inclusive for everyone.
We are proactive in addressing and working to prevent racism and other forms
of abuse for our frontline workers. We have worked with our retailers to develop
a three-step de-escalation approach to better equip our site teams to manage
abusive behaviour and to empower sites to take required action, including the use
of trespassing.
Our staff are empowered to
connect with and support
their local communities.
We give staff two days per year to volunteer for not-for-profit causes. Despite
the disruptions of Covid-19, 114 staff contributed 103 days to volunteering or
approximately 824 hours of giving back in their communities.
Young people are
empowered to achieve
their full potential.
We continued our longstanding sponsorship of the Graeme Dingle Foundation's
Career Navigator programme, empowering young people to realise their
full potential.
Community groups who
care for New Zealanders
are enabled to do more
mahi, more effectively.
We gave $700,000 to 10 community groups through our Good in the Hood
campaign. Customers decided what mattered most to them by voting with their
orange token.
Z has donated $7.7 million to 3,500 groups since 2013.
We worked with the Ākina Foundation to develop a social impact model and
measurement framework so that we can better understand and increase our
impact through Good in the Hood.
Restore Nature and Wellbeing
Our Goals
Our Outcomes and Targets
Progress
Status
We leverage our
scale and unique
capabilities to
foster restorative
and regenerative
actions that have
a positive impact
on communities,
nature, and inter-
generational
wellbeing.
We bring a circular
economy mindset to the
design of our business
operations and offerings.
We remain committed to reducing our waste to landfill year-on-year from
our operations.
Waste to landfill was 1,417 tonnes.
We trialled new configurations of bins at selected retail sites to learn whether
we can improve recycling performance.
We measure our water use and aim to use water as efficiently as possible.
We increase the resilience
of nature and communities
through our procurement
choices and partnerships.
Government policy and
the collective actions of
business are strengthened
with our advocacy and
leadership.
We voluntarily finance climate change mitigation actions for the operational
emissions we have been unable to avoid. We purchased units from emissions
reduction or removal projects that have high environmental integrity and
contribute to our Sustainable Development Goals. A total of 37,050 tonnes CO2-e
were financed to offset our operational emissions in the period 1 April 2021 to
31 March 2022.
Our carbon credit retirement certificates are published at https://www.z.co.nz/
about-z/corporate-centre
We continue to enable customers to view and offset their emissions through My
Carbon Count in the Z App. We source all customer offsets through Permanent
Forests New Zealand, ensuring that emissions are locked in long-lived local
forest sinks, that both address the climate crisis and restore natural landscapes.
Z has established a $1 million nature fund to improve the resilience of Aotearoa
New Zealand's indigenous biodiversity. We are currently evaluating a range of
projects and expect to invest in high impact projects in 2022.
Our supplier code of conduct is embedded in all of Z’s Standard Supplier
Agreements. We refreshed commitments with existing suppliers and confirmed
commitments with new suppliers, consistent with our practice of confirming
compliance with this code on an annual basis.
We contribute to collective leadership and advocacy for the development of
effective policy to accelerate Aotearoa's low carbon transition, and restore nature
through our memberships in the Climate Leaders Coalition, Sustainable Business
Council (SBC) and the Sustainable Business Network. We supported submissions
made by the SBC on the Emissions Reduction Plan (ERP) discussion document
and the XRB's first consultation on Climate Standard 1.
We also made submissions of our own on the Sustainable Biofuels Mandate
consultation and the ERP discussion document.
Our stands are aimed at changing
the game for Aotearoa for the better.
While all our stands work together,
we believe there is an inherent
connection between our Community
and Environmental Sustainability stands.
We recognise that our wellbeing is
embedded in our environment and a
healthy environment is the foundation
for resilient, thriving communities, so
this year we updated our goals and
outcomes to deliver our ambition in
a more integrated way. To ensure an
equitable transition it is important
that we understand the complex
interconnections between nature, climate
change and communities. This is needed
not only to tackle environmental crises
but also to create meaningful jobs,
community resilience and prosperity.
In the spirit of integrated reporting,
we choose to use a broad definition
of the term ‘sustainability’ to include
both environmental outcomes and our
social impacts on people and local
communities.
Here we report our progress in FY22
against our new Community and
Environmental Sustainability 2030 Goals
and Outcomes. We intend to develop
more targets over time to measure our
progress more effectively.
We include a more fulsome update
overleaf in our four-year TCFD action
plan which carries us through to FY23.
This will enable us to be ready to report
in a meaningful way against climate-
related financial disclosures as and when
they apply.
Our Goals
Our Outcomes and Targets
Progress
Status
Lead Transition
We will take bold
action in response
to climate change
to reduce our own
impact, work with
our customers,
suppliers and
partners to
reduce theirs, and
provide solutions
that will enable
New Zealanders to
join us on the path to
a low carbon future.
Our operational emissions
are reduced in line with the
Paris Agreement to limit
warming by 1.5 degrees
Celsius.
Target: 42% reduction
from FY20 levels by FY30
More of our customers are
using low carbon products
and services.
We publicly disclose
decision-relevant
information about our
climate-related risks and
opportunities.
Our carbon footprint is published online and for the second year in a row has
been subject to independent assurance.
We reduced our operational emissions by 6.8% against our new base year of FY20.
We continue to invest in actions to reduce our emissions and aim to transition
our own corporate fleet to battery electric by 2025, as vehicle type allows. Z has
purchased 24 electric vehicles for the fleet. Over 40% of the corporate fleet will
be battery electric in FY23.
We exited crude oil refining and moved to an import-only refined product model.
These changes removed the need for two coastal fuel tankers and support
opportunities for reducing supply chain emissions.
Z has established a strong relationship with Neste, the world's largest supplier of
sustainable biofuels, to enable Z to meet the commitments of the Government's
proposed biofuels mandate.
We intend to respond to the sustainable aviation fuel RFP set by Air New Zealand
and MBIE.
We made key steps towards scaling up our EV charging network and making it
easier for our customers to charge on the go. We were successful in securing
co-funding from the Energy Efficiency & Conservation Authority (EECA) to
support the installation of 26 new charging bays at seven Z sites. We aim to have
high-capacity fast chargers at 14 sites that will provide 36 charging bays within
our Retail network by the end of 2022. We signed a Heads of Agreement with
Counties Energy, the owners of the OpenLoop EV Charging platform, to identify
opportunities for co-development, and ECL Group as the delivery partner for the
charging network.
Z has underwritten two long-term electricity purchase agreements entered into
by Flick with renewable electricity generators.
We remained on track with our four-year TCFD roadmap to enable Z to
understand and disclose our climate-related financial impacts by FY23.
Key
We’re on track and doing well
We’ve made some good progress but we need to do more
We are not on track and need to do more
2222
WHAT WE STAND FOR
Greenhouse gas emissions — tonnes CO2-e
Scope
Scope 1 — Z offices and Retail sites
Scope 2 — Z offices and Retail sites
Scope 3 — Z offices and Retail sites
Scope 3 — New Zealand supply chain
Total operational emissions2
% change from FY20
Scope 3 — Flick Electric
Scope 3 — Share of refinery
Scope 3 — International supply chain (rest of supply)
Scope 3 — Z product emissions from our customers
Total emissions
Base Year FY20
4,127t
3,371t
3,369t
29,785t
39,742t
N/A
N/A
520,708t
1,031,309t
9,990,103t
11,582,773t
FY21
3,398t
3,191t
2,434t
29,017t
37,149t
-6.5%
N/A
475,255t
852,236t
8,039,840t
9,405,371t
FY22
3,798t1
3,156t
2,182t
28,425t
37,042t
-6.8%
13t
367,525t
875,758t
8,760,150t
10,041,008t
1 Due to a correction in the methodology used to calculate the fuel consumption of Z’s Mini-Tankers fleet, an adjustment of 544t CO2-e was made to FY22 results.
2 Total operational emissions excludes emissions from line losses and upstream electricity, which are included in the sum totals above for Scope 3 – Z offices and retail sites
and New Zealand Supply Chain.
Figures in the above table have been rounded to the nearest whole number.
The inventory accounts for all Scope 1 and Scope 2 emissions and selected Scope 3 emissions of the six Kyoto Greenhouse Gases (CO2,
SF6, CH4, N2O, HFCs, PFCs) and are expressed as tonnes of carbon dioxide equivalent (tonnes CO2-e) in line with the GHG Protocol
Corporate Standard.
Where available, Ministry for the Environment emission factors (2020 release) are used to calculate the tonnes of carbon dioxide
equivalent generated.
A full greenhouse gas inventory is available to view at https://www.z.co.nz/about-z/corporate-centre
KPMG has provided an unmodified reasonable assurance opinion as to whether Z’s Greenhouse Gas statement has, in all material
respects, has been prepared in accordance with the Greenhouse Gas Protocol’s Corporate Standard requirements for the period
1 April 2021 – 31 March 2022.
Site waste data
Our retail operations generate the largest volume of waste in our business, which includes waste disposed by our customers at our sites. We
also aim to reduce waste across our corporate sites, including offices and terminals. The data below shows how our waste tracked in FY22.
Waste by composition, in metric tonnes (t)
Total waste generated
Waste diverted
from disposal
Waste directed
to disposal
Waste source
Retail
Corporate
Total waste
3,254t
46t
3,300t
1,878t
5t
1,883t
Waste diverted from disposal by recovery operation, in metric tonnes (t)
Non-hazardous waste
Retail sites
Corporate sites
Recycled cardboard & paper
Recycled composting & organics
Recycled plastic, cans & glass
Total waste diverted, in metric tons (t)
Hazardous waste,1 in metric tonnes (t)
Hazardous waste
Landfill
Total hazardous waste
978t
360t
540t
4t
2t
Retail sites
1,376t
Corporate sites
41t
1 Hazardous waste comprises mainly soil and spill from site remediation works such as fuel tank replacements. The material is safely disposed of in licensed waste facilities.
Figures in the above tables have been rounded to the nearest whole number.
All waste is disposed of via landfill or recycled offsite. There are no waste incineration facilities used.
Waste data is based on a combination of actual and estimated weights reported by our waste management providers. Where no data
was provided for a site an uplift has been applied.
1,376t
41t
1,417t
Total
981t
360t
542t
1,883t
Total
1,417t
1,417t
Pūrongo TCFD tau tuatoru—
TCFD Report year three
We also believe it is important for our
stakeholders to have a clear view of our
most material climate-related impacts,
risks and opportunities.
We consider climate-related financial
disclosures an essential part of our
response to climate impacts and for
providing transparency to stakeholders.
Ampol shares Z’s commitment to best
practice ESG and transparent reporting.
Globally, support for TCFD reporting is
gaining momentum with more countries
introducing mandatory regimes
requiring public reporting of physical
and transitional climate-related risks.
The New Zealand Government passed
legislation in October to make climate-
related disclosures mandatory for selected
entities including large, listed companies.
Z has understood and accepted for
some time the need to assess future
trends and climate risk to inform our
strategic decisions.
Our four-year TCFD roadmap
MATERIALITY
Climate change and
sustainability
Once the External Reporting Board
(XRB) issues its first reporting standard
regarding climate-related disclosures,
entities will be required to disclose for
financial periods that start on or after
1 January 2023. Z is now in its third year
of reporting.
FY20
FY21
FY22
FY23
Governance
• Gap analysis completed
• Internal alignment achieved
• Board approval
Strategy
• BEC Scenarios used to
• Scenarios expanded to
inform strategy
Risk
Management
• Approach to climate risk
management documented
include a 2 degrees Celsius
and one other comparison
scenario
• Qualitative risk assessments
identified physical and
transitional climate-related
risks
• Climate risks integrated into
risk management processes
Metrics and
Targets
• Carbon targets integrated
into business planning
• Climate metrics and targets
under review and agreed
• Climate scenario analyses
integrated into financial
modelling and informs
strategy
• Climate-related risks and
management process
reviewed for effectiveness
• Climate-related risks and
opportunities quantified, and
financial impacts identified
• Quality assurance of climate
risk management and
financial disclosures
Key
Complete
In progress
Planned
Note: TCFD Index can be found on pages 84–85.
In FY22, we continued with our four-year
TCFD roadmap. The disruption of
Covid-19 and the Ampol transaction
caused a minor impact on progress,
deferring independent quality assurance
planned for FY22 to FY23.
In FY21, Z focused on expanding the
development and use of climate change
scenarios and assessing Z’s material
risks and opportunities for both physical
and transitional risks.
In FY22, we drew on this earlier work
to develop our own long-term fuel
demand scenario and to further integrate
climate-related scenario analysis and risk
assessment into our strategy, financial
planning, and risk management systems.
The Government’s Emissions Reduction
Plan, released on 16 May 2022,
contains the policies and strategies
that New Zealand needs to meet our
country's first emissions budget.
This plan provides greater certainty for
long-term planning.
Incorporating climate-
related risks into strategy:
Z’s long-term fuel
demand model
Z adopted a range of scenarios for
long-term planning and to assess its
climate-related risks and opportunities.
Reference scenarios include the Business
Energy Council (BEC) Kea and Tūī
scenarios, the IPCC RCP 2.6 and 4.5
climate projections and Ministry for the
Environment (MfE) climate projections
for New Zealand.
2424
WHAT WE STAND FOR
Qualitative analysis of Z’s climate-related risks and opportunities
Demand Scenarios – Petrol
3,500
3,000
2,500
2,000
1,500
1,000
500
l
m
0
Physical
Risk Cause
Transitional
Temperature
Precipitation
Wind
Climate
Sea level rise
Markets
Policy/Legal
Technology
Reputation
Risk Consequence
• Social
• Workforce safety
and wellbeing
• Corporate
• Increased operating
costs (water and
cooling)
• Increased
environmental
regulation and
compliance costs
• Increased insurance
premiums
• Operations
• Asset damage and
maintenance costs
• Supply disruption
• Increased reliance
on third-party
infrastructure
mitigation
• Potential expansion of biodiesel delivery areas
• Ability to leverage scale to reduce supply disruption
• Partner with third-party asset owners to mitigate shared
infrastructure risks
Opportunity
• Operations
• Reduced
performance
of assets
• Corporate
• Increased cost of
capital
• Increased operational
costs due to higher
carbon price
• Increased litigation,
regulation and
compliance costs
• Re-pricing of asset
values
• Reduced revenue
through diminished
demand for product
• Social
• Reduced employee
wellbeing
• Reduced talent
attraction and
retention
• Inability to provide
products that
meet customer
expectations
• Invest in low carbon
• Leverage Z’s
products and
services
• Reduce exposure
to compliance and
regulation costs
distributed footprint
across NZ
• Optimise strategic
asset planning
• Attract talent
through proactive
approach to a low
carbon transition
• Enhance customer
experience through
low carbon offerings
Business Response
• Integrate risk assessment findings into business unit strategic
and financial planning
• Perform quantitative analysis of high-risk locations determined
by site value and physical risk exposure
• Develop and agree an engagement plan with third-party
asset owners
• Strengthen balance sheet and pay down debt
• Deliver additional cash flow through exiting crude oil supply
• Develop alternative, low carbon revenue streams
• Reduce operational emissions and exposure to carbon costs whilst
providing options for customers to do the same
• Build capabilities
• Provide transparent ESG Reporting
Demand Scenarios – Diesel
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
l
m
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
2
0
3
0
2
1
3
0
2
2
3
0
2
3
3
0
2
4
3
0
2
5
3
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
2
0
3
0
2
1
3
0
2
2
3
0
2
3
3
0
2
4
3
0
2
5
3
0
2
Year
Year
Tūī
CCC – Demonstration
Kea
CCC – Current Policy
Z House View
Actuals
Tūī
CCC – Demonstration
Kea
CCC – Current Policy
Z House View
Actuals
Following the release of the Climate
Change Commission’s (CCC) final
advice to Government in June 2021,
Z conducted further modelling to test
the two BEC scenarios (Tūī and Kea)
and the CCC’s transport emissions
‘demonstration path’ scenario. We then
built our own 20-year long-term fuel
demand model with global economics
consultancy Castalia, to run results,
undertake sensitivity analysis and test
scenarios. See 'Z House View: The Future
of Fuel Demand', https://www.z.co.nz/
about-z/corporate-centre
Our house view on fuel demand is not our
position on an optimum climate response,
but what we believe will take place based
on certain assumptions. We consulted
various agencies and drew data from a
range of sources for our own modelling,
the most significant being the CCC’s
advice for a 47 percent reduction of
transport emissions from 2018–2035.
We asked three key questions:
• What is the total land transport task
for Aotearoa?
• How will the task be delivered?
• What is the resulting fuel requirement?
While we differ from the CCC on some
assumptions, we strongly agree that the
time to act is now. Our view is that the
move away from fossil fuels will be slower
than the CCC predict. For the transition
to happen more quickly, policies will need
to change.
The results of our modelling for petrol
demand and diesel are above, relative to
the CCC demonstration path and BEC
scenarios. Our view differs for petrol
largely due to our approach to modelling
EV diffusion resulting in a slower EV
uptake (despite assuming a faster path
to price parity with ICE vehicles) and for
diesel assuming a larger freight transport
task and slower EV truck uptake.
Impact on financial planning
Stranded assets and significant decreases
in revenue have been identified as key
climate-related risks for Z. The long-term
fuel demand model helps inform business
and financial planning, providing a clear
view of expected demand for petrol and
diesel. Our investment decisions and
business strategy are informed by this
forecast. For example, in late 2021 our
fuel demand forecast was incorporated
into a strategic review of decarbonisation
investment opportunities supported by
McKinsey & Company.
Our investment decisions into our core
business (i.e. fossil fuels) are also limited
by a five-year financial payback given
the trend towards decarbonisation
and renewable energy. Our long-term
modelling will also help us to understand
the potential for stranded assets and
implications of movement in prices,
policy, and the physical impacts of
climate change. While ‘upstream’
activities face inevitable decline, we
consider that ‘downstream’ assets such
as our tanks and terminals will have a
long economic life yet and anticipate that
our existing sites will be repurposed
and upgraded as technology matures.
We continue to direct investment
towards the transition to low carbon
fuels and mobility solutions.
Integration into risk
management
Climate risk is classified as a principal
risk on our enterprise risk profile and
is actively monitored by management.
In FY22, as part of its annual process,
management reviewed and updated
its assessment of the climate-related
risks to Z's performance and strategy
to include changes in context, such as
new policy, and the Board approved this.
One final step is needed to quantify the
physical impacts of climate change to
our assets and operations and to better
assess the effectiveness of our controls
and mitigations, including the ability of
our Enterprise Risk Management System
(ERMS) to help manage and monitor our
climate risks.
Improving our metrics
KPMG provided reasonable assurance
opinions in relation to Z’s FY21 and
FY22 Greenhouse Gas (GHG) totals, as
presented in our GHG statements for these
periods. The purpose of this independent
assurance is to confirm whether the
GHG emissions totals reported in our
GHG statements are accurate and
reasonable in accordance with the GHG
Protocol Corporate Standard, and provide
recommendations for improvement where
opportunities exist.
Refer to pages 84 to 85 for further
information on our TCFD disclosures.
2626
WHAT WE STAND FOR
Hapori —
Community
Z, the cornerstone
of our communities .
We stand for a resilient
and healthy Aotearoa
that empowers our
youth, neighbourhoods
and Z whānau.
For the last two years, Z has provided
a particularly important leadership role
in supporting the local communities of
which we are a part. With a network of
193 Z-branded and 133 Caltex-branded
retail service stations, we provide
essential fuel and convenience retailing
to almost every part of the country.
Our convenience retailing service has
been particularly valuable for customers
during Covid-19 lockdowns, where they
may not want to queue at a supermarket
but want essential items quickly.
We have maintained a strong, reliable
supply chain of essential items during
lockdowns and have been well supported
by our local communities. Over the
period we have also maintained a safe,
reliable supply of fuels to customers
and essential services, and actively
protected the health and wellbeing of the
frontline Z and Caltex teams that deliver
our offers.
Investing in what matters most
While our role in supporting local
communities through our services has
never mattered more, we also continue to
actively invest in communities.
In October 2021 Z’s flagship community
investment programme, Good in the
Hood, refocused its efforts on supporting
a smaller group of national organisations
with a larger sum of money. According to
the number of customer votes received,
$700,000 was split amongst the
following 10 organisations:
1. Heart Kids New Zealand
2. Victim Support
3. Bellyful New Zealand
4. Child Cancer Foundation
5. Look Good Feel Better
6. St John
7. Hospice New Zealand
8. Graeme Dingle Foundation
9. Life Education Trust
10. Coastguard
Over the remainder of FY22, Z has
worked with the Ākina Foundation to
develop a social impact model to more
accurately measure the community
impact of Z’s Good in the Hood
programme and look at ways to maximise
and then measure the value it generates
within local communities.
The Graeme Dingle Foundation
Z remained a strong supporter of
the Graeme Dingle Foundation in its
commitment to ‘powering up future
generations’. Over FY22 Z’s Good in the
Hood programme provided $23,954 in
funding support, on top of the $50,000
in direct corporate support.
2828
WHAT WE STAND FOR
Ngā rerekētanga me
te whakaurutanga—
Diversity and inclusion
Being successful being
ourselves and reflecting
Aotearoa New Zealand
Z’s success depends on the authenticity
of our people. Only through embracing
diversity do we genuinely reflect our
customers. Only through being inclusive
can we genuinely enquire into and
understand the unique perspectives
of different customers and, as a result,
innovate in ways that delight customers
and keep our people safe, engaged and
thriving at work. Z has a clear Diversity
and Inclusion Policy which applies to all
Z people. Please refer to pages 38 to 40
for detailed breakdowns on Z's Diversity
and Inclusion commitments.
Our diversity is a source of distinctive
value, but we continue to face challenges
in continuing to build a genuinely diverse
and inclusive team. In particular, we
remain focused on Rainbow, Māori and
female representation. The graphic on
page 30 provides a snapshot of our
diversity across the current Z team
and how the composition of our team
is shifting.
More broadly, we have set the following
Diversity and Inclusion targets out to
2030 that we will continue to measure
and report against:
• We have made a material lift in our
representation of Māori and Pasifika,
and of women
• 20 percent Māori and Pasifika
representation
• A 45/45/10 gender ratio at every
career level in Z
• The gender pay gap is closed and at
zero by FY24.
While we continue to make progress
against our Diversity and Inclusion
targets, we have more work to do in this
space, as highlighted in the graphic on
page 30.
Māori and Pasifika
We’ve changed the way we recruit to
further spotlight Diversity and Inclusion,
increase our use of Te Reo and remove
gender bias. We’ve enhanced our
partnership with Māori and Pasifika
leadership development agency TupuToa,
with a commitment to take 15 interns
over the next three years, and we are
partnering with them to pilot a new
recruitment model.
We’ve engaged cultural consultancy
Groundwork to help us better understand
what Te Tiriti o Waitangi (The Treaty of
Waitangi) means to Z and how we can
better honour it. We have completed
an initial education session and
conversation with the Executive Team on
Te Tiriti o Waitangi. We have partnered
with Te Kurataiaho Kapea to interpret
our values with a Te Ao Māori lens, and
this year Te Kura spent time with our Te
Ao Māori advocates and stakeholders
to work through the translation and
interpretation of these foundational
elements with a Te Reo and Te Ao Māori
lens.
Z Rainbow Network
As a Rainbow Tick accredited company,
we are proud of our ongoing commitment
to the Rainbow community.
Z was recognised for its commitment to a
Rainbow inclusive workplace as a finalist
in the 2021 Rainbow Excellence Awards
across two categories: Innovation, for our
approach to the launch of the Z Rainbow
Network and definition of ‘allyship’; and
for Ambassadorship in recognition of the
role of Jeremy Clarke in the Z team for
his leadership in Z’s Rainbow Journey
and keeping the conversation alive.
At Rainbow Tick’s suggestion, over the
year Z hosted the Labour Party’s Rainbow
Caucus for a discussion on how we work
to create an inclusive workplace, policy
settings and what more could be done.
Gender diversity and gender
pay gap
Promoting gender equity is not new at
Z. We signed up to the UN’s Women’s
Empowerment Principles almost
10 years ago, received the Gender Tick in
March 2020 and have worked hard since
then to ensure our policies and practices
are set up to support all our people equally.
You can see this commitment in
everything from how we recruit, to our
flexibility and approach to parental leave.
An increased focus on representation in
recruitment has seen a number of female
appointments in the Supply side of Z’s
business, and an increased female ratio of
appointments across Z (49 percent), with
41 percent of our employees identifying
as female. We still have work to do in our
traditionally male-dominated areas of the
business and building our female pipeline
of senior leaders. At the other end of the
spectrum, 45 percent of the Z Executive
Team identify as female.
Several years ago, we started reporting on
our gender pay gap in our annual reports.
While our gender pay gap of 6.3 percent
is better than the New Zealand average
of 9.1 percent (FY21), we have work to do.
While we are committed to closing our
gender pay gap, we know real success
will require us to continue to monitor our
gap and be systematic in our response,
with initiatives and policies to support
us along the way. We’ve built gender pay
gap analysis into our remuneration review
process and developed a Diversity and
Inclusion assurance dashboard to support
us in this which is reviewed quarterly with
our Executive Team.
30
30
WHAT WE STAND FOR
SECTION TITLE
Here’s what Z would look like if it was a village of 100 people:
57 NZ European
FY21: 64
15 Asian
FY21: 15
10 European
FY21: 12
7 Māori
FY21: 3
2 Middle Eastern,
Latin American or African
FY21: 2
2 Pacific Islander
FY21: 1
2 Other
FY21: 2
4 Prefer not to say
FY21: 1
Has a disability
FY21: 11
Have a tertiary education
FY21: 51
FY21: 79
Have dependants
79
53
1.5% Absenteeism rate
42 Average age of Z
5.1% Pay gap men to women
employees
FY21: 42 years
FY21: 4.5%*
FY21: 2.2%
* Please note an adjustment to
the pay gap reported in our
FY21 report
35 Xennials (1977–1983)
FY21: 35
23 Millennials (1984–1996)
FY21: 23
23 Gen X (1965–1976)
FY21: 22
16 Baby Boomers (1946–1964)
FY21: 17
3 Gen Z (1997–present)
FY21: 3
62 Wellington
FY21: 60
18 Rest of New Zealand
FY21: 21
20 Auckland
FY21: 19
59 Male
FY21: 60
40 Female
FY21: 39
1
Non-binary and
Prefer not to say
FY21: 1
Haumarutanga me te hauora—
Safety and wellbeing
3.7
million
hours
Number of hours worked
(Z employees, retail sites, Mini-Tankers)
FY21: 4.01 million hours
Zero
Tier 1 and Tier 2 process
safety incidents
FY21: Zero
8
Robberies
FY21: 4
7Motor vehicle incidents
FY21: 3
Zero Zero
Number of spills
(loss of containment)
FY21: Zero
Work-related fatalities
(includes employees
and contractors)
FY21: Zero
Main types of work-related injury: Manual handling
FY21: Manual handling
Z employees:
Retailers and Mini-Tankers franchisees:
1.02 Total recordable case frequency (TCRF)*
0.69
Lost time injury frequency (LTIF)**
Z employees:
Retailers and Mini-Tankers franchisees:
FY22: 1.02
FY22: 0.35
FY21: 1.15
FY21: 0.72
FY21: 1.26
FY22: 0.25
FY22: 0.74
FY21: 0.90
FY21: 0.24
FY21: 1.07
* TRCF and LTIF are based on 200,000 hours worked.
Our risk management capability
has progressively improved through
improved access to high-quality data
where and when we need it.
The ZORM system is now well embedded
into our operations and culture, capturing
more and more data from right across
the business into a single digital system
providing much greater levels of clarity,
insight and control around incidents,
accidents, the controls we put in place,
and ownership and accountability for
risk management.
The ZORM system exemplifies the
benefits Z is generating and realising
through previous investments in
digital technology and capability.
Our approach to operational safety
and risk management is data-driven,
immediate, accessible and transparent
— from incidents occurring at our retail
sites, to the processes and controls we
are introducing to ensure supply chain
security during the transition to a new
operating model.
While providing a
coordinated response
to Covid-19 across the
business and supply
chain over FY22, Z’s
approach to safety and
risk management has
continued to mature.
Digital systems drive culture,
risk management
Effectively managing risk lies at the very
heart of Z’s business. With changes to
the operation of the entire supply chain,
combined with the requirements to
manage a Covid-19 environment for the
second year in a row, Z’s culture around
safety and its systems for effective
risk management have never been
more important.
Z introduced a comprehensive new
operational risk management system
(ZORM) in 2015/2016. ZORM was
designed to more effectively identify,
reduce and control risks and to ensure
there is clarity across the business
around personal accountability for
risk management. The system was
designed to help shift Z from a top-down,
compliance approach to safety and risk
management to one which was devolved
and decentralised to every person in the
organisation.
Over FY22, Z has continued to embed
its operational risk management system
across the business and our approach
to safety and wellbeing has continued
to mature. One of the greatest shifts
within Z’s approach to risk management
has been the development of a single
digital system in which all risk-related
data is held. This digitisation of risk
management systems has served to
make operational safety data easier to
record and much more accessible.
32
32
WHAT WE STAND FOR
MATERIALITY
Safety and
Wellbeing
Supporting our people through
Covid-19
The focus of our response to Covid-19
in FY22 has been on keeping our people
safe and keeping our business running
safely and reliably as an essential service.
Our objective was that our people
move through the Covid-19 pandemic
with a greater understanding of their
own wellbeing, enhanced connection
with their colleagues and an increased
awareness of how they can influence
their own wellbeing.
We embraced new technology to engage,
adapted our way of working to reflect the
home environment during lockdowns,
and recognised that broad levels of
support were needed that allowed
flexibility for our 500 people located
across 14 different geographic locations.
Communication was key. We engaged
internally through a variety of channels,
including frequent all staff meetings,
daily updates, a confidential inbox for
email enquiries, dedicated pages on our
intranet linking to support material, the
latest information from the Ministry of
Health and, most importantly, our safety
and wellbeing approach to help staff.
Through all of this our Executive Team
and Crisis Management Team (CMT)
were highly visible.
We consulted our team of 500 staff in
important Covid-19-related decisions,
(including vaccination requirements for
the return to office), to determine what
support they needed and valued rather
than making assumptions.
This approach led to the implementation
of several wellbeing initiatives including
the introduction of 10 days of special
leave, online support tools, payments to
support working from home, wellbeing
workshops, staff surveys, check-ins
and visibility by leadership in all staff
communications.
Discussions across a range of topics from
mindfulness to virology were provided
to all staff, depending on what was most
present for our people at the time based
on the feedback received/requested.
We sought to normalise conversations
on wellbeing in teams and with managers
in 1:1 conversation and remove any fear
around this. Recognising that wellbeing is
different for everyone, we used a range of
internal and external speakers to provide
context, research and the ability for a
different perspective.
This achieved results, with Z in the top
five percent of organisations globally,
as measured by our engagement
service provider, Peakon, in terms of
our employee health and wellness
Net Promotor Score across all four
key drivers:
• Mental Wellbeing
• Physical Wellbeing
• Social Wellbeing
• Organisational Support.
Adopt an Aucklander
Z acknowledges the sacrifice of
Aucklanders in particular during FY22
as they endured a 14-week lockdown
due to Covid-19, buying the country
critical time to raise vaccination rates.
In support of our Auckland team, our
non-Auckland-based people developed
an ‘adopt an Aucklander’ campaign
in which we actively supported and
protected the wellbeing of our Auckland
team. This took the form of additional
communication, contact and sending
personalised care packages to provide
some comfort and additional support.
Vaccination: keeping our whole
team safe
Z approached the question of staff
vaccination in a way that respects the
diversity of our team. As an essential
service we focused on keeping our whole
workforce safe, protecting the safety of
the consumers and customers we serve,
and balancing individual considerations
and organisational needs.
We worked with our people to develop
a Covid-19 vaccination approach that
was informed by credible scientific
information and Government guidance
and aligned with our Values and
our Diversity and Inclusion stand.
We consulted with our staff on the policy,
with 99 percent of people saying that the
policy protected them, made them feel
comfortable while being at work and was
aligned to our Purpose. We provided RAT
testing for staff as a way of providing
them with additional peace of mind.
In January 2022 we again closed our
offices and worked from home ahead of
the Omicron outbreak across the country.
Across the two years of Covid-19
disruption to our business, with multiple
regional and national lockdowns and
a heavy dependence on working from
home, Z has continued to benefit from
previous significant investments in
technology and the capability of our
people to use it and work from wherever
they are.
We have continued to focus on deliberate
communication with an emphasis on
protecting the wellbeing of our people
and their role in execution of strategy
throughout this period.
See the Our people section on page 35
for information on Z’s levels of staff
engagement over FY22.
Focus on retail as pressures rise
As Covid-19 has dragged through a
full second year and looks set to be a
significant factor in FY23, pressures
across many parts of the community
have increased. Unfortunately, these
pressures have shown up on our retail
service station forecourts in the form of
increased numbers of frustrated, angry
and abusive customers.
Prices for fuel across the world have
flowed through into the New Zealand
market, with record high prices seen in
the last quarter of FY22. Tobacco prices
have also increased over the year and
some customers have objected to mask
mandates with these factors contributing
to increased levels of on-site stress,
anxiety and aggression from customers.
Additionally, there remains a persistent
level of racism within all of our
communities towards members of our
team that we will not tolerate.
As well as the pressure our retail site
teams are feeling within their own families
while providing an essential service to
their local communities, we have focused
on how best to support teams in this
environment to protect their safety.
Over FY22 we invested significant time
and effort in a range of training initiatives
with our Retailer team to support them
in leading their teams and providing
training in de-escalating situations.
We have empowered our retail teams
to use our technology, such as closed-
door transactions, if they feel unsafe for
whatever reason, as well as to trespass
individuals where appropriate.
We’re deeply grateful for the work of our
retail teams across the country at a time
when our country and communities really
needed them. We’ve got their back and
will do whatever we can to ensure they
are safe and treated with the respect
they deserve.
34
OUR PEOPLE
Ko tātou
Tangata—
Our People
As we close our second
year characterised
by almost continuous
disruption and
uncertainty, actively
protecting our people
and culture has been
critical to our success.
We are proud of the way our people have
led through multiple Covid-19 disruptions
and the uncertainty for some people with
the sale of all Z shares to Ampol.
While working remotely for much of
the time and moving through various
Covid-19 lockdowns and alert levels, Z’s
people have focused tightly on execution
of strategy — particularly the critically
important elements like preparing for
safe and reliable transformation of the
fuel supply chain, transforming our
retail offer and managing an essential
nationwide supply chain while keeping
our people and our communities safe.
Engagement
The engagement of Z’s people is a
distinctive asset for Z, so we measure it
monthly. Z closed FY22 with an employee
engagement Net Promotor Score of +61
using the global Peakon staff engagement
measurement tool. This is more than
double the average for corporates
internationally (+27) and firmly positions
Z in the top 10 percent globally. This is
also an increase on our FY21 score of +53
which is a very strong result in light of the
level of disruption and uncertainty that
has faced the business over FY22.
Our staff engagement levels indicate
a highly committed team with clear
alignment between individual roles and
company strategy. Over the last two years
we have worked hard to clearly articulate
strategy and priorities, put in place the
right teams and structures, build the
capabilities we need and adopted agile
ways of working that maintain focus on
delivery and execution.
In December 2021, Z was awarded the
‘Results’ Award at the Betterworks
Global HR Summit. The judges described
Z’s achievements in engagement as
“astounding” with particular focus on how
increased engagement in strategy, goal
setting, communication and individual
development plans contribute to
excellence in execution.
MATERIALITY
Ampol transaction,
Organisational resilience
Ampol transaction
The Ampol transaction to acquire
the shares in Z would, for many
organisations, have generated a sense
of deep uncertainty and angst. Z has
sought to lead through this transaction
in a distinctive way and to realise the
significant opportunities that will likely
come through the transaction.
Internally, Z has committed to standing
for four elements throughout this
transaction:
• To maintain our integrity and focus on
executing our strategy objectives
• To ensure who we are is not lost
• To re-establish our leadership position
in New Zealand’s energy transition
• To ensure our people continue to
experience personal growth and
fulfillment through the transaction
and beyond.
We have welcomed the Ampol approach
to the transaction. Ampol has publicly
acknowledged the opportunity for each
organisation to learn from each other
and establish trans-Tasman centres of
excellence. Ampol has also committed
to Z operating as a local subsidiary with
a local management team. Ampol has
acknowledged the value of the Z brand
and the role of Z’s values in the
company’s culture, and has committed
to preserving them, as well as prioritising
the retention of key Z personnel.
As a result of the resilience we have
built across the Z team and the focus
on the transaction being a win-win
outcome for both companies, Z increased
staff engagement over the period of
the transaction and has approached
the transaction with optimism
and confidence.
36
OUR EXECUTIVE TEAM
Investing in development
We are committed to our people and
their development. In addition to
learning opportunities provided to build
organisational capabilities, all Z people
are encouraged to have an individual
development plan with 90 percent of our
people opting to create a formal individual
development plan in FY22. Individual
development plans can be focused on
improving performance in their current
role, or be more about the person’s future
aspirations or both.
Our people have embraced our
partnership approach to learning, and
blended learning options are embedded
in their individual development plan.
On average, 70 percent of learning
happens on the job, 20 percent from
developing through others and 10 percent
is more formal learning. Z people are
offered a range of learning opportunities
from eLearning, workshops, conferences,
coaching or mentoring, partnering with
thought leaders, stretch assignments,
webinars, 'lunch & learns', technical clinics
or curated content via our intranet.
Internal moves as a part of career
progression are common at Z with
35 percent of vacancies being filled
internally in FY22.
Over recent years, Z has invested in:
• Individualised leadership programmes
resulting in strong leadership capability
• Building organisational capabilities
in the areas of execution, customer
experience, digitisation and innovation.
With our capabilities and leadership
foundations in place, our leadership
development focus is on leveraging the
investment made and ensuring we have
the right skills, diversity of thinking
and capability to succeed in a rapidly
changing context.
Additional information about our people,
including parental leave, education
and remuneration can be found in the
Additional disclosures section on pages
37 to 48.
Tō tātou kāhui amorangi—
Our Executive Team
Ngā puakanga
tāpiri—Additional
disclosures
While Z’s reporting requirements have changed
with the company’s change of ownership, there
are a number of disclosures we choose to make
in the spirit of transparency. We acknowledge
that there remains significant interest in Z from
our stakeholders, our customers, our own people
and the communities we serve.
It is consistent with our values and commitment to
New Zealand to continue to demonstrate leadership
and commitment in the following areas.
Mike Bennetts
Chief Executive Officer
Joined 1 April 2010
Debra Blackett
General Counsel and
Chief Governance Officer
Joined 2 June 2015
Lindis Jones
Chief Financial Officer
Joined 10 May 2010
Helen Sedcole
Chief People Officer
Joined 29 January 2018
Nicolas Williams
General Manager,
Strategy and Risk
Joined 7 June 2011
Julian Hughes
General Manager,
Supply
Joined 16 February 2015
Mandy Simpson
Chief Digital Officer
Joined 19 February 2019
Andy Baird
General Manager,
Retail and Customer
Joined 1 April 2019
Nicola Law
General Manager,
Commercial
Joined 3 March 2014
• David Binnie left Z in December 2021 and was replaced as General Manager, Supply by Julian
Hughes, previously General Manager, Transition and General Manager, Strategy and Risk.
• Figen Ulgen, Chief Customer Officer, left Z in January 2022 with her functions moved to Z’s General
Manager, Retail and Customer and Z’s Chief Digital Officer.
38
ADDITIONAL DISCLOSURES
Modern slavery
On 23 November 2021, Z published its second Modern Slavery Statement, (for the 12 month period ending 31 March 2021), in compliance
with the Australian Modern Slavery Act 2018: https://modernslaveryregister.gov.au/statements/5695/
This statement outlines the steps Z has already taken, and those it intends to take, to continue to identify, manage and mitigate the
specific risks of modern slavery across its operations and supply chain.
The statement describes the types of risks for vulnerable workers in our supply chain and operations and the actions we took over the
course of FY21 to address them. The statement evaluated the effectiveness of our actions, noting the heightened risk for vulnerable
workers during the Covid-19 pandemic.
Z has not identified any situations or instances of modern slavery practices in its operations or supply chains for the 12 months ending
31 March 2022, and will continue to monitor the risk of modern slavery at Z.
We acknowledge that the Ministry of Business, Innovation & Employment (MBIE) is seeking feedback on a legislative response on
modern slavery and worker exploitation, and Z welcomes this as the risk of modern slavery practices requires a whole of society
response. The planned legislation is likely to be more extensive than that required under Australia’s Commonwealth Modern Slavery Act,
and Z is committed to taking further action on these practices and the ongoing development required throughout our business.
Fines or non-compliance
During the period, no significant fine or monetary sanction was imposed against Z by any government authority, nor was Z made aware
that it has broken any material law.
Z is not aware of any material non-compliance with any environmental laws and/or regulations.
Diversity
The following tables provide additional detail to our Diversity and Inclusion stand, refer pages 28 to 30.
Number of individuals by gender, age and ethnicity
Employees
Executive Team
FY22
FY21*
FY22
FY21
Gender
Female
Male
Non Binary/Not Disclosed
Age Group
Under 30 years
30–50 years
Above 50 years
Ethnicity
NZ European/Pākehā
European
Asian (including Indian and Pakistan)
Other Ethnicity
Information Not Provided
Middle Eastern/Latin American/African
Māori
Pacific Islander
194
284
3
87
280
114
276
49
73
12
21
9
32
9
194
303
1
80
299
119
318
60
75
10
5
10
15
5
4
5
0
0
4
5
8
1
0
0
0
0
0
0
4
6
0
0
4
6
8
2
0
0
0
0
0
0
Notes
* Please note an adjustment to the figures reported in our FY21 report which included permanent staff only. The above figures include fixed term contractors.
Age groups and diversity were expressed in percentages in the FY21 report.
Total number of employees by employment contract (permanent and temporary) by gender
Employee Type
Female
Permanent
Fixed Term
185
9
Male
276
8
Non Binary/
Not Disclosed
3
0
Total
464
17
Total number of employees by location (permanent and temporary) by gender
Region
Auckland
Canterbury
Otago
Mini-Tankers Driver
Bay of Plenty
Hawke’s Bay
Nelson
Wellington
Home Office
Female
Male
Non Binary/
Not Disclosed
Total
42
6
1
0
1
0
1
141
2
53
43
3
5
9
4
9
154
4
0
0
0
0
0
0
0
3
0
95
49
4
5
10
4
10
298
6
Total number of employees by employment type (full time and part time), by gender
Employee Type
Full Time
Part Time
On Parental Leave
Female
Male
Non Binary/
Not Disclosed
165
18
11
275
8
1
3
0
0
Total
443
26
12
Notes re total employees tables
1. Variations across the numbers above are due to the operational side of the business, with more males employed in those roles which are
predominantly based in regions outside of the main centres.
2. This data has been extracted from Z’s payroll system.
Gender pay ratios
Z’s primary method for tracking gender pay internally measures the gap across all career levels, excluding the Executive, as their
remuneration is driven by market rates for their individual roles.
When excluding our Executive, the gender pay gap across Z in FY22 was five percent in total. However, the methodology that is required
to be reported in this section includes our Executive and CEO, whose higher remuneration influences these figures significantly.
Z is committed to closing its gender pay gap to zero by FY24 across all employee levels and to supporting work in support of pay equity
across the economy.
The ratios of average female to male remuneration for Z’s permanent employees at 31 March 2022 are set out below.
Significant locations of operation are those regions where at least 20 males and females are employed.
Ratio of basic salary and remuneration of women to men
Ratio
Overall
Wellington
Auckland
Average base salary women to men (all Z)
Average base salary women to men (excl. CEO & Exec)
Average base salary women to men (excl. CEO)
0.94:1
0.95:1
0.96:1
0.89:1
0.92:1
0.92:1
0.82:1
0.82:1
0.82:1
40
ADDITIONAL DISCLOSURES
Ratio of basic salary and remuneration of women to men for each employee category
By role
Leader of Self
People Leader
Senior Leader
Exec
Parental leave
Wellington
Auckland
0.97:1
0.92:1
0.93:1
0.7:1
0.85:1
1.11:1
0.82:1
n/a
Parental leave at Z is based on supporting all staff to achieve a satisfying and productive life/work balance. The intent is to support staff
with a contribution of time and financial support to minimise personal and financial stress, maintain their job and career opportunities,
and maximise their ability to return to the workplace in good mental and physical health.
Total number of employees that were entitled to parental leave, by gender
Female
194
Male
284
Non Binary/
Not Disclosed
3
Total
481
Total number of employees that took parental leave, by gender
Female
23
Male
1
Non Binary/
Not Disclosed
0
Total
24
Total number of employees that returned to work in the reporting period
after parental leave ended, by gender
Female
12
Male
0
Non Binary/
Not Disclosed
0
Total
12
Total number of employees that returned to work after parental leave ended
that were still employed 12 months after their return to work, by gender
Female
8
Male
1
Non Binary/
Not Disclosed
0
Total
9
Return to work and retention rates of employees that took parental leave, by gender
Female
100%
89%
Male
100%
100%
Non Binary/Not
Disclosed
NA
NA
Return to work rate
Retention rate
Education
The following table provides information about the education levels of employees.
Employee education levels
Education Level
Tertiary
Post Graduate
Secondary
None or unknown
Number
268
110
60
43
New employee hires and employee turnover
The following tables provide information about new employees and turnover of existing employees.
Total number and rate of new employee hires during the reporting period,
by age group, gender and region
Number
Rate
Gender
Female
Male
Non Binary/Not Disclosed
Region
Auckland
Canterbury
Otago
Mini-Tankers Driver
Bay of Plenty
Hawke's Bay
Nelson
Wellington
Home Office
Age Groups
Under 30 years
30–50 years
Above 50 years
50
52
3
15
6
0
5
0
0
1
77
1
38
60
7
48%
50%
3%
14%
6%
0%
5%
0%
0%
1%
73%
1%
36%
57%
7%
Total number and rate of employee turnover during the reporting period,
by age group, gender and region
Number
Rate
Gender
Female
Male
Non Binary/Not Disclosed
Region
Auckland
Canterbury
Otago
Mini-Tankers Driver
Bay of Plenty
Hawke's Bay
Nelson
Wellington
Home Office
Age Groups
Under 30 years
30–50 years
Above 50 years
50
64
1
20
4
0
11
2
0
1
76
1
18
78
19
43%
56%
1%
17%
3%
0%
10%
2%
0%
1%
66%
1%
16%
68%
17%
4242
ADDITIONAL DISCLOSURES
Pay for performance
We believe in creating a clear link between performance and reward. We report on remuneration earned for the respective year of
performance, rather than remuneration paid, as a more appropriate way of illustrating how pay relates to performance.
Z seeks to benchmark total fixed remuneration (base pay) to the upper quartile of the external market. This means that with our
short-term incentive (STI) annual bonus payment (a cash bonus), the total rewards we offer are in the top 10 percent of the New Zealand
market when people deliver results above plan. This includes both individual targets and company-wide targets.
Every permanent Z employee’s remuneration package comprises a base salary, an STI component, and health insurance (with Southern
Cross) for themselves and their immediate family. Z also makes a five percent employer contribution to KiwiSaver.
All Z employees had regular performance and career development reviews during the reporting period.
The base-salary model is informed and adjusted each year based on data from independent remuneration specialists. An employee’s
base salary is determined from a matrix of their own performance and their current position in the market and reviewed annually.
Short-term Incentive (STI) scheme at Z FY22
Our STI model is focused on setting clear performance goals for Z overall, and rewarding all our people for working together to
deliver these.
STI payments are calculated as a percentage of base salary and are determined based on the complexity of individual roles. Employees’
STI payments are determined following a review of the company’s performance and may be paid out at a multiplier of between zero
to two times an individual’s STI target. While the value of the employee STI payments are solely driven by company performance,
(with the exception of the Executive Team and Commercial Sales employees), any individual who is underperforming is not eligible for
participation in this scheme.
In February/March 2021, the CEO and the Board agreed on the company objectives to be achieved in the following financial year. The
company objectives are targets aligned to the four strategic objectives which are: to always be safe and reliable, deliver awesome
customer experiences, generate heaps of free cash flow and grow non-fossil fuel income. The Z Board assessed them in April 2022, after
year end. In determining an overall performance rating, the Board assesses the key result areas individually and considers any additional
achievements beyond plan.
An STI bonus will be paid only if 85 percent of the annual company RC EBITDAF target has been met. Once this threshold has been
met, payment is subject to the overall company performance rating. The Board considered the following areas of performance when
determining the overall level of company performance:
• Significant Safety and Wellbeing incidents, such as fatalities
• Significant adverse reputational incidents, such as customer reaction to an operational failure
• The company’s reputational alignment with being a world-class Kiwi company.
The CEO Target bonus amounts for Z meeting expectations for both company and individual performance is 50 percent of base salary.
If the individual and/or the company’s overall performance is below or exceeds expectations a multiplier is applied.
Individual
performance
Extraordinary
Exceeds
Strong
performance
Below
expectations
Unacceptable
y
n
a
p
m
o
C
Unacceptable
Below
expectations
Strong
performance
Exceeds
Extraordinary
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.00
1.50
1.00
0.50
0.00
2.50
2.00
1.50
1.00
0.00
3.00
2.50
2.00
1.50
0.00
Z’s STI cash bonus is based on three things for the CEO:
1. Company performance ratings
2. Individual performance rating
3. Base salary and the on-target bonus for role.
Performance Rights Long-Term Incentive Plan (PRLTIP)
Prior to the implementation of the scheme of arrangement between Z and Ampol, the Z Executive team and selected senior employees
were also eligible to participate in a Performance Rights Long-Term Incentive Plan (PRLTIP). Each Performance Right under the PRLTIP
(Performance Right) entitled the holder to acquire one Z Energy Share, subject to the holder remaining employed by Z Energy until the
end of the vesting period, achieving performance hurdles, and Board discretion.
On 30 March 2022, the Board resolved to issue new Performance Rights, then to accelerate the vesting or lapse and cancellation of
all Performance Rights. Those Performance Rights that vested were either converted into Z Energy shares from treasury stock, then
transferred to participants, or were cash-settled. By 28 April 2022, there were no Performance Rights remaining, the PRLTIP was wound
up, and all remaining treasury stock had been cancelled.
See sections 3.18, 6.14, and 6.19 of the Scheme Booklet, as well as Z Energy’s announcement page at https://www.nzx.com/companies/
ZEL/announcements for more information.
4444
ADDITIONAL DISCLOSURES
Employee remuneration
Z employees’ remuneration
The total number of corporate employees is 481, of which 464 are permanent.
348 Z employees (or former employees) received remuneration and other benefits over $100,000 in their capacity as employees
during FY22, as set out in the table below. This includes salary, short-term incentive payments, settlement payments and redundancy
payments for all permanent employees.
This disclosure is based on actual amounts received in the year. Z notes the high proportion of employees (72 percent) earning above
$100,000 reflects Z’s business model decisions. For example, traditionally lower-earning employee roles (like call centre staff) are
presently outsourced to other New Zealand-based organisations.
Amount of remuneration
$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
$210,001 to $220,000
$220,001 to $230,000
$230,001 to $240,000
$240,001 to $250,000
$260,001 to $270,000
$270,001 to $280,000
$280,001 to $290,000
$290,001 to $300,000
$300,001 to $310,000
$310,001 to $320,000
$320,001 to $330,000
$340,001 to $350,000
$370,001 to $380,000
$460,001 to $470,000
$470,001 to $480,000
$550,001 to $560,000
$670,001 to $680,000
$680,001 to $690,000
$700,001 to $710,000
$840,001 to $850,000
$880,001 to $890,000
$1,990,001 to $2,000,000
Total
Employees
29
32
24
32
28
31
23
22
27
18
14
15
11
4
4
5
7
4
1
3
1
1
1
1
1
1
2
1
1
1
1
1
1
348
Flick Energy employees’ remuneration
The data in this table relates to Flick Energy permanent employees only and the figures include all remuneration and benefits.
Amount of remuneration
$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
$210,001 to $220,000
$220,001 to $230,000
$230,001 to $240,000
$240,001 to $250,000
$250,001 to $260,000
$260,001 to $270,000
$270,001 to $280,000
$280,001 to $290,000
$290,001 to $300,000
$300,001 to $310,000
$310,001 to $320,000
$320,001 to $330,000
$330,001 to $340,000
$340,001 to $350,000
$350,001 to $360,000
Total
Employees
5
1
3
1
3
2
1
1
1
0
0
0
0
0
0
1
0
1
0
1
0
0
0
0
0
1
22
4646
ADDITIONAL DISCLOSURES
Directors’ and senior officers’ interests in bonds
None of Z’s directors over the course of FY22 held any interest in Z Energy bonds.
None of Z’s Executive team hold any Z bonds.
Charitable donations
For the year ended 31 March 2022, Z made total donations of $780,121 (2021: $683,040).
Flick Energy Limited made donations of $nil (2021: $3,000) during this period.
Z Energy shares
Z Energy shares were suspended from trading on the NZX Main Board and ASX from close of trading on 28 April 2022 and ceased to be
quoted on the NZX Main Board and ASX from close of trading on 10 May 2022.
Distribution of ordinary bonds and bondholders
ZEL050 and ZEL060 continue to trade on the New Zealand Debt Market (NZDX) under the ZEL ticker.
At 31 March 2022
ZEL 050
Size of holding
1–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001 and over
Totals
ZEL 060
Size of holding
1–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001 and over
Totals
Number of bondholders
0
78
204
520
69
33
904
Number of bondholders
0
126
169
296
29
30
650
%
0.00
8.63
22.57
57.52
7.63
3.65
100
%
0.00
19.38
26.00
45.54
4.46
4.62
100
Number of bonds
0
390,000
1,976,000
14,500,000
5,726,000
47,408,000
70,000,000
Number of bonds
0
630,000
1,605,000
7,308,000
2,372,000
113,085,000
125,000,000
Our 20 largest registered bondholders
At 31 March 2022
ZEL 050
Rank Holder name
CUSTODIAL SERVICES LIMITED
FNZ CUSTODIANS LIMITED
FORSYTH BARR CUSTODIANS LIMITED
NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED
JBWERE (NZ) NOMINEES LIMITED
INVESTMENT CUSTODIAL SERVICES LIMITED
FORSYTH BARR CUSTODIANS LIMITED
HOBSON WEALTH CUSTODIAN LIMITED
FNZ CUSTODIANS LIMITED
KARL HEINZ LEHMANN & ANNE MARIE LEHMANN
JBWERE (NZ) NOMINEES LIMITED
KIWIGOLD.CO.NZ LIMITED
ZHAOXI LU
CUSTODIAL SERVICES LIMITED
1
2
3
4
5
6
7
8
9
10
11
12
12
13
14 GREEN LANE RESEARCH & EDUCATION FUND BOARD
15 CUSTODIAL SERVICES LIMITED
16 MATTHEW MARSHALL CAMPBELL
JBWERE (NZ) NOMINEES LIMITED
16
LUKENNEDY NOMINEES LIMITED
16
CHRISTOPHER GEOFFREY SIMMONDS &
JUDITH FLORENCE SIMMONDS
THE HENRY & WILLIAM WILLIAMS MEMORIAL TRUST (INC)
LINDSAY MORRELL JONES & DIANN MAY JONES
FEI LIU & TAO YANG
FNZ CUSTODIANS LIMITED
FORSYTH BARR CUSTODIANS LIMITED
16
17
18
19
20
20 WILLIAM FAUGHN HESTER & MARILYN JOYCE HESTER
20 HOBSON WEALTH CUSTODIAN LIMITED
20 ANGELA FRANCES MIDDLEMASS
16
Account
4
1-CUSTODY
NZ RESIDENT
1 E
RESIDENT CASH
DTA NON RESIDENT
<56413 A/C>
KIWIGOLD
6
12
CAMPBELL FAMILY
NR USA
SIMMONDS FAMILY
DRP NZ
1 NRL AIL
EQUITIES DTA
20 RICHARD WILLIAM STANNARD
20
JACOBUS JOHANNES MARIA VAN BERGEN &
RUTH MARIE VAN BERGEN & KFS TRUSTEES LIMITED
ESME & TOM TOMBLESON
CHARITABLE
HALCEYON INVESTMENT
Total units
14,287,000
8,864,000
5,537,000
3,918,000
2,843,000
2,522,000
2,280,000
1,327,000
824,000
600,000
308,000
300,000
300,000
265,000
250,000
221,000
200,000
200,000
200,000
200,000
200,000
180,000
167,000
155,000
150,000
150,000
150,000
150,000
150,000
150,000
% issued
capital
20.41
12.66
7.91
5.6
4.06
3.6
3.26
1.9
1.18
0.86
0.44
0.43
0.43
0.38
0.36
0.32
0.29
0.29
0.29
0.29
0.29
0.26
0.24
0.22
0.21
0.21
0.21
0.21
0.21
0.21
48
ADDITIONAL DISCLOSURES
ZEL 060
Rank Holder name
CUSTODIAL SERVICES LIMITED
FORSYTH BARR CUSTODIANS LIMITED
NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED
FNZ CUSTODIANS LIMITED
HOBSON WEALTH CUSTODIAN LIMITED
JBWERE (NZ) NOMINEES LIMITED
FORSYTH BARR CUSTODIANS LIMITED
NZX WT NOMINEES LIMITED
FNZ CUSTODIANS LIMITED
INVESTMENT CUSTODIAL SERVICES LIMITED
CUSTODIAL SERVICES LIMITED
1
2
3
4
5
6
7
8
9
10
11
12 HOBSON WEALTH CUSTODIAN LIMITED
13
14
15
16 CLUTHA NOMINEES LIMITED
16
16
17
18
19
20 ANDREW GEORGE ANSON & JOANNE PATRICIA ANSON
20 DUNEDIN DIOCESAN TRUST BOARD
20
20 KPS SOCIETY LIMITED
20 WOOLF FISHER TRUST INC
JBWERE (NZ) NOMINEES LIMITED
JBWERE (NZ) NOMINEES LIMITED
CUSTODIAL SERVICES LIMITED
FORSYTH BARR CUSTODIANS LIMITED
JBWERE (NZ) NOMINEES LIMITED
BEST FARM LIMITED
JBWERE (NZ) NOMINEES LIMITED
FNZ CUSTODIANS LIMITED
F S INVESTMENTS LIMITED
Pūrongo Pūtea—
Financial Statements
as at 31 March 2022
Account
4
1-CUSTODY
RESIDENT CASH
NZ RESIDENT
1 E
CASH
DTA NON RESIDENT
6
EQUITIES DTA
32086
DRP NZ
50986
<58225 A/C>
12
1 NRL AIL
<56413 A/C>
CENTURION FAMILY
INCOME FUND
Total units
41,877,000
19,450,000
17,199,000
13,669,000
6,961,000
5,757,000
1,036,000
850,000
746,000
619,000
557,000
451,000
400,000
300,000
253,000
250,000
250,000
250,000
234,000
220,000
205,000
200,000
200,000
200,000
200,000
200,000
% issued
capital
33.5
15.56
13.76
10.94
5.57
4.61
0.83
0.68
0.6
0.5
0.45
0.36
0.32
0.24
0.2
0.2
0.2
0.2
0.19
0.18
0.16
0.16
0.16
0.16
0.16
0.16
50
Statement of comprehensive income
for the year ended 31 March 2022
Statement of changes in equity
for the year ended 31 March 2022
Revenue
Expenses
Purchases of crude, product and electricity
Excise, carbon and other taxes
Primary distribution
Operating expenses
Share of loss of associate companies (net of tax)
Depreciation and amortisation
Net financing expense
Impairment
Net lease expenses
Fair value movements in interest rate derivatives
Loss on sale of property, plant and equipment
Increase in decommissioning and restoration provision
Total expenses
Net profit before taxation
Taxation expense
Net profit for the year
Net profit attributable to the owners of the company
Net profit/(loss) attributable to non-controlling interest
Other comprehensive income
Items that will not be reclassified to profit or loss
Valuation adjustment of land and buildings
Revaluation of investments
Decommissioning and restoration provision increase
Total items that will not be reclassified to profit or loss
Items that are or may be reclassified subsequently to profit or loss
Cash flow hedge and cost of hedging
Other comprehensive income net of tax
Total comprehensive income after taxation
Total comprehensive income attributable to owners of the company
Total comprehensive income/(loss) attributable to non-controlling interest
Basic and diluted earnings per share (cents)
Notes
6
3, 7
2, 12, 13
8
12, 13
10
17
9
5
12
15
2022
$m
5,002
2,762
1,270
40
360
18
118
36
-
34
(33)
1
12
4,618
384
115
269
266
3
179
27
(4)
202
(16)
186
455
452
3
52
Restated
2021
$m
3,520
1,765
1,149
43
274
1
134
38
-
32
(10)
-
1
3,427
93
30
63
67
(4)
15
(15)
-
-
17
17
80
84
(4)
12
Notes
Capital
$m
Retained
earnings
$m
Investment
revaluation
reserve
$m
Employee
share
reserve
$m
Hedging
reserve
$m
Asset
revaluation
reserve
$m
Non-
controlling
interest
$m
2
Balance at 1 April 2020
Prior period restatement
Restated balance at
1 April 2020
Net profit/(loss) for the year
(restated)
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners
recorded directly in equity:
Issue of shares
Equity raise costs
Share-based payments and
own shares acquired
Total transactions with owners
recorded directly in equity
Restated balance at
31 March 2021
Balance at 1 April 2021
Net profit/(loss) for the year
Other comprehensive income
Total comprehensive income
for the year
Transfers between reserves:
Share-based scheme
not vesting
Disposal of revalued assets
Transactions with owners
recorded directly in equity:
Cancelled shares
Share-based payments
Dividends to equity holders
Supplementary dividends to
equity holders
Tax credit on supplementary
dividends
Total transactions with owners
recorded directly in equity
430
-
430
-
-
-
347
(10)
-
337
767
767
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 March 2022
767
(17)
(11)
(28)
67
-
67
-
-
-
-
39
39
266
-
266
1
3
(1)
-
(109)
(9)
9
(110)
199
(76)
-
(76)
-
(15)
(15)
-
-
-
-
(91)
(91)
-
27
27
-
-
-
-
-
-
-
-
(64)
(6)
-
(6)
-
-
-
-
-
(2)
(2)
(8)
(8)
-
-
-
(1)
-
1
3
-
-
-
4
(5)
(1)
-
(1)
-
17
17
-
-
-
-
16
16
-
(16)
(16)
-
-
-
-
-
-
-
-
-
270
-
270
-
15
15
-
-
-
-
285
285
-
175
175
-
(3)
-
-
-
-
-
-
457
2
-
2
(4)
-
(4)
-
-
-
-
(2)
(2)
3
-
3
-
-
-
-
-
-
-
-
1
Total
equity
$m
602
(11)
591
63
17
80
347
(10)
(2)
335
1,006
1,006
269
186
455
-
-
-
3
(109)
(9)
9
(106)
1,355
FINANCIALS 52
Statement of financial position
At 31 March 2022
Statement of cash flows
for the year ended 31 March 2022
Notes
2
11
19
12
10
13
2, 13
15
19
9
17
18
19
10
17
19
2, 9
18
10
2022
$m
1,354
1
1,355
15
513
629
26
3
1,186
1,011
278
158
815
90
31
12
2,395
3,581
885
102
8
130
17
18
1,160
5
99
4
99
579
280
1,066
2,226
1,355
Restated
2021
$m
1,008
(2)
1,006
162
299
570
77
1
1,109
816
280
158
489
42
38
13
1,836
2,945
605
15
21
169
33
16
859
8
72
25
91
601
283
1,080
1,939
1,006
Shareholders’ equity
Equity attributable to owners of the company
Non-controlling interest
Total equity
Represented by:
Current assets
Cash and cash equivalents
Accounts receivable and prepayments
Inventories
Derivative financial instruments
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Investments
Derivative financial instruments
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Accounts payable, accruals and other liabilities
Income tax payable
Provisions
Short-term borrowings
Derivative financial instruments
Lease liability
Total current liabilities
Non-current liabilities
Other liabilities
Provisions
Derivative financial instruments
Deferred tax
Long-term borrowing
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Approved on behalf of the Board on 27 May 2022
Matthew William Halliday
Director
Gregory David Barnes
Director
Cash flows from operating activities
Receipts from customers
Interest received
Payments to suppliers and employees
Excise and other taxes paid
Interest paid
Taxation received/(paid)
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from assets held for sale
Proceeds from sale of property, plant and equipment
Lease payments received from leases
Purchase of intangible assets
Purchase of investments
Purchase of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Issue of shares
Equity raising costs
Net proceeds/(repayment) from bank facility
Purchase of shares
Dividends paid to owners of the company
Repayment of bonds
Payment of lease liabilities
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash
Cash balances at beginning of year
Cash at end of year
Notes
2
9
10
2
20
18
21
20
18
10
Reconciliation of net profit for the year to cash flows from operating activities
Notes
2
2
Net profit for the year
Adjustments to reconcile profit to net cash inflow from operating activities
Depreciation and amortisation
Impairment
Share of loss of associate companies (net of tax)
Change in ETS units
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
2022
$m
4,800
28
(3,714)
(879)
(80)
(20)
135
-
(1)
1
(11)
(34)
(63)
(108)
-
-
111
-
(118)
(150)
(17)
(174)
(147)
162
15
2022
$m
269
118
-
18
(371)
7
(214)
(59)
280
87
135
Restated
2021
$m
3,542
26
(2,394)
(995)
(80)
22
121
5
-
1
(16)
(11)
(47)
(68)
347
(10)
(231)
(3)
-
-
(13)
90
143
19
162
Restated
2021
$m
63
134
-
1
70
(38)
(2)
(5)
(143)
41
121
FINANCIALS 54
FINANCIALS
Notes to the financial statements
for the year ended 31 March 2022
(1) Basis of accounting
Reporting entity
Z Energy Limited is a profit-oriented company registered in New Zealand under the Companies Act 1993 and a FMC Reporting Entity for
the purposes of the Financial Markets Conduct Act 2013. Z Energy Limited is listed, its ordinary shares quoted on the NZX Main Board
equity security market (NZX Main Board), on the Australian Stock Exchange (ASX) and has bonds quoted on the NZX debt market.
The financial statements presented are those of Z Energy Limited (the Company, Parent) together with its subsidiaries, interests in
associates and jointly controlled operations (Z or “the Group”).
Basis of preparation
These financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand (NZ
GAAP) and part 7 of the Financial Markets Conduct Act 2013. They comply with the New Zealand equivalents to International Financial
Reporting Standards (NZ IFRS) as appropriate for profit-oriented entities and with International Financial Reporting Standards (IFRS).
Z has reported as a Tier 1 entity under the External Reporting Board (XRB) Accounting Standards Framework, as a listed entity.
The measurement basis adopted in the preparation of these financial statements is historical cost, modified by the revaluation of certain
assets, investments and financial instruments as identified in the accompanying notes. The functional and reporting currency used to
prepare the financial statements is New Zealand dollars, rounded to the nearest million ($m), unless otherwise stated. The financial
statements have been prepared on a GST-exclusive basis except billed receivables and payables, which include GST.
Basis of consolidation
Consistent accounting policies are employed in preparing and presenting 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.
(2) Changes in accounting policies
The accounting policies have been applied consistently to all years presented in these Group financial statements, except as
noted below.
The Group has amended its accounting policy on intangible software. This is subsequent to an agenda decision published by the IFRS
Interpretations Committee (‘IFRIC’) in April 2021 on the configuration and customisation costs incurred relating to a Software-as-a-
Service (‘SaaS’) arrangement. The nature and effect of the changes resulting from application of this policy is described below.
SaaS arrangements are arrangements in which the Group does not control the underlying software used in such arrangements.
Under the revised accounting policy, costs incurred to configure or customise SaaS arrangements that result in the creation of an
identifiable resource, and where the Group has the control to obtain the future economic benefits flowing from the underlying resource
and to restrict the access of others to those benefits, then these costs are recognised as a separate intangible software asset. The cost
is amortised over the useful life of the software on a straight-line basis. If costs do not meet the recognition criteria, they are expensed
when incurred. The amortisation is reviewed each reporting period and any changes are treated as changes in accounting estimates.
The Group has applied the new accounting policy retrospectively. The effects of this change in accounting policy are shown in the
following tables:
Balance as at
1 April 2020
$m
Adjustments
$m
Restated
balance as at
1 April 2020
$m
Audited
year ended
31 March 2021
$m
Adjustments
$m
Restated
Balance for
year ended
31 March 2021
$m
Statement of comprehensive income
Operating expenses
Depreciation and Amortisation
Taxation expense
Statement of financial position
Intangible assets
Deferred tax
Retained earnings
Statement of cash flows
Payments to suppliers
and employees
Purchase of intangible assets
628
(74)
(17)
(16)
5
(11)
612
(69)
(28)
273
143
28
497
(94)
44
(2,393)
(17)
1
(9)
2
(8)
3
(5)
(1)
1
274
134
30
489
(91)
39
(2,394)
(16)
No other changes to accounting policies have been made during the year and policies have been consistently applied to all
years presented.
(3) Critical accounting estimates and judgements
The preparation of financial statements requires management to make the following judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities, income and expenses.
Channel Infrastructure NZ transition to an import terminal service (ITS) model (notes 13, 15)
On 22 November 2021, Channel Infrastructure NZ Limited (previously Refining NZ) confirmed the final investment decision (FID)
had been made to cease domestic refining and transition the business to an import-only fuel terminal. This transition was made on
1 April 2022. Z, in addition to other existing Channel Infrastructure NZ customers, has entered into a long-term agreement for the
provision of import terminal services. It has been agreed by all customers and Channel Infrastructure NZ to withdraw existing dispute
notices issued under the refining Processing Agreement from the commencement of import terminal services under the terms of the
Terminal Services Agreement.
Z has assessed the financial impact and disclosure requirements in compliance with NZ IFRS, predominantly NZ IAS 36 Impairment of
Assets (NZ IAS 36), NZ IAS 37 Provisions, Contingent Liabilities and Contingent Assets (NZ IAS 37), NZ IAS 2 Inventories (NZ IAS 2) and
NZ IAS 10 Events after the Reporting Period (NZ IAS 10). There are some one-off conversion impacts of this change, including one-off
costs and a write-down in the value of the quantity of both partially refined and refined stock owned by Z at the refinery to facilitate the
conversion to an ITS.
The impact on the Channel Infrastructure NZ Processing and Distribution Agreement intangible asset has been assessed in note 13.
There will be no impact on the treatment of the investment in Channel Infrastructure NZ; this will continue to be recognised at the
NZX-listed share price at balance date, disclosed in note 15.
56
FINANCIALS
(3)
Critical accounting estimates and judgements
(continued)
Winding up of Coastal Oil Logistics Limited (note 15)
In January 2022, the joint venture partners of Coastal Oil Logistics Limited (COLL) confirmed they would be winding up the joint venture
arrangement, ceasing services provided by the joint venture. Z has assessed the financial impacts of this decision. Z is required to fund its
share of the one-off costs associated with termination of contracts within the joint venture. These costs have been recognised in ‘Share of
loss of associate companies (net of tax)’.
Useful Life (notes 10, 12, 13, 17)
Z accounts for some assets and liabilities within the Statement of financial position utilising their valuation based on the present value
of the expected future economic benefits or obligations. Where appropriate, Z has updated its estimates of the useful life of these
assets and liabilities based on Z’s House View of future fuels demand. Any updates to valuation as a result of a change in the expected
timing of cash flows is recorded consistent with a change in accounting estimate.
Provisions (note 17)
Liabilities are estimated for decommissioning and restoration (D&R) of certain sites of operation. The Decommissioning and Restoration
rates for tanks and terminals have been increased following a triennial independent valuation review. In addition, the estimated useful
economic lives have been reviewed and updated where relevant.
Measurement of fair value (notes 12, 15 and 19)
Some of the Group’s accounting policies and disclosures require the measurement of fair values.
Goodwill (note 13)
Goodwill is an indefinite-life intangible asset and is tested annually for impairment by estimating the future cash flows that the Group
is expected to generate. Estimating future cash flows requires key judgements including expected fuel volume growth or decline,
expected future margins, and the discount rate for valuing future cash flows.
Covid-19 Provisions
The Group has recorded the following provisions to account for the impacts of the Covid-19 pandemic on the 31 March 2022
financial results:
Recognition in the
Statement of comprehensive income
Balance at 1 April 2021
Created
Utilised
Released
Balance at 31 March 2022
Doubtful
debts
$m
Operating
expenses
Secondary
distribution
$m
Operating
expenses
7
-
-
(7)
-
-
2
-
-
2
2022
$m
7
2
-
(7)
2
The provisions have been updated to reflect the current estimate of the impact of the Covid-19 pandemic. Despite ongoing
lockdowns and traffic light setting changes over the year, Z has not observed the anticipated increase in customer debt defaults due
to the pandemic. Movements in the provision balances since 1 April 2021 relate to release of provisions no longer required and the
identification of additional distribution costs incurred as a result of the Covid-19 pandemic.
(4) Replacement cost reconciliation
Replacement cost (RC) is a non-GAAP measure used by the downstream fuel industry to report earnings. RC removes the impact
of changes in crude oil and refined product prices on the value of inventory held by Z. Z manages the Group’s performance based
on RC. The difference between Historical Cost (HC) earnings and RC earnings is a cost of sales adjustment (COSA), foreign exchange,
commodity gains and losses and the associated tax impact.
Income statement on RC basis
Revenue
Expenses
Purchases of crude, product and electricity
Excise, carbon and other taxes
Primary distribution
Operating expenses (net of foreign exchange and commodity gains/losses on fuel purchases)
Total expenses
RC operating EBITDAF*
Share of loss of associate companies (net of tax)
RC EBITDAF
Below RC EBITDAF expenses
Depreciation and amortisation
Net financing expense
Impairment
Lease depreciation
Lease interest income
Lease interest expense
Fair value movements in interest rate derivatives
Loss on sale of property, plant and equipment
Increase in decommissioning and restoration provision
Total below RC EBITDAF expenses
RC net profit before taxation
Taxation expense
RC net profit after taxation
2022
$m
5,002
3,064
1,270
40
378
4,752
250
18
232
118
36
-
23
(1)
12
(33)
1
12
168
64
30
34
Restated
2021
$m
3,520
1,755
1,149
43
335
3,282
238
1
237
134
38
-
20
(1)
13
(10)
-
1
195
42
33
9
* 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).
Reconciliation from statutory net profit after tax to RC net profit after tax
Statutory net profit after tax
COSA
Net foreign exchange and commodity (gains)/losses on fuel purchases
Tax expense on COSA
RC net profit after tax
2022
$m
269
(302)
(18)
85
34
Restated
2021
$m
63
10
(61)
(3)
9
58
FINANCIALS
(5) Non-controlling interest
(7) Audit fees
Included in operating expenses are fees paid to the auditors. There were no fees paid to the auditors other than for Audit and Audit-related
fees outlined (presented in whole dollars):
Audit fees
Audit and review of financial statements
Audit and review of 2020 financial statements additional fee
Cost of sales adjustment review
Total audit fees
Audit-related fees
Greenhouse Gas Statement reasonable assurance
Agreed upon procedures — licence fee return
Total audit-related fees
Total audit and audit-related fees
(8) Net financing expense
Financing income
Interest income from derivatives
Interest income from cash
Other finance income
Total financing income
Financing expense
Interest expense on bonds
Interest expense on derivatives
Interest expense on secured bank facilities
Interest expense on USPP notes
Financing fees
Other finance expense
Total financing expense
Net financing expense
2022
$
2021
$
448,025
-
10,500
458,525
30,000
4,600
34,600
493,125
348,900
30,000
10,250
389,150
30,000
4,500
34,500
423,650
2022
$m
2021
$m
26
1
1
28
12
28
3
16
1
4
64
36
24
1
1
26
14
25
2
16
1
6
64
38
Z owns 74% (2021: 70%) of Flick Energy Limited (Flick) with 26% (2021: 30%) owned by non-controlling interest (NCI). Z consolidates
100% of Flick’s results and presents the portion of profit/(loss) and other comprehensive income attributable to NCI.
In October 2021 Z had participated in a call option and the outcome was Z purchased an additional 3.39% shareholding in Flick Energy
Limited, increasing Z’s ownership from 70% to 74%.
Flick results for the year ended 31 March 2022
NCI Percentage
Assets
Cash
Other current assets
Intangible assets
Income tax receivable
Other non-current assets
Total assets
Liabilities
Trade payables
Deferred tax
Provisions
Income tax payable
Other non-current liabilities
Total liabilities
Net assets
Net assets attributable to NCI
Revenue
Net Gain/(Loss)
Other comprehensive income
Total comprehensive income/(loss)
Total comprehensive income/(loss) attributable to NCI before consolidation
Other losses attributable to NCI on consolidation
Total comprehensive income/(loss) attributable to NCI
Flick
2022
$m
26%
Flick
2021
$m
30%
1
11
2
1
20
35
(12)
(8)
-
-
-
(20)
15
4
54
14
-
14
4
(1)
3
3
31
3
-
1
38
(9)
-
-
(8)
-
(17)
21
6
47
(8)
-
(8)
(2)
(2)
(4)
(6) Revenue
Revenue from major business activities — fuel and convenience retail
Revenue comprises the fair value of consideration received or receivable for the sale of fuel, convenience retail or other, which contains
electricity income, in the ordinary course of the Group’s activities. The Group’s performance obligations are typically satisfied when the
Group has supplied the product to the customer, the customer has accepted the product and the collectability of the related receivable
is reasonably assured.
Fuel invoices are raised following delivery and settled in accordance with agreed payment terms. Some international customers are
required to pay prior to delivery. Transaction price is based on agreed contract rates and delivered volumes and is allocated on delivery.
Convenience revenue is recognised at the time of sale. Transaction price is based on the ticketed or contract price.
Fuel
Convenience retail
Other
Total revenue
2022
$m
4,869
69
64
5,002
2021
$m
3,399
65
56
3,520
60
FINANCIALS
(9) Taxation
Taxation expense or benefit is determined as follows:
Net profit before taxation
Share of loss of associate companies (net of tax)
Net profit before taxation excluding share of earnings from associates
Taxation expense on profit for the year at the corporate income tax rate of 28% (2021: 28%)
Taxation adjustments:
Non-deductible expenditure
Reinstatement of depreciation on buildings
Over-provision in prior periods
Taxation expense
Current taxation
Deferred taxation
Taxation expense
Notes
2
2022
$m
384
18
402
112
5
-
(2)
115
123
(8)
115
Deferred tax
Deferred tax assets and liabilities are presented as a net deferred tax asset/(liability) in the Statement of financial position.
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 2020
Prior period restatement
Restated balance at
1 April 2020
Recognised in the Statement
of comprehensive income
(restated)
Over-provision in prior
periods in the Statement of
comprehensive income
Reinstatement of
depreciation on buildings
Restated balance at
31 March 2021
Restated balance at
1 April 2021
Recognised in the Statement
of comprehensive income
Over-provision in prior
periods in the Statement of
comprehensive income
Recognised in Other
comprehensive income
Balance at 31 March 2022
(19)
5
(14)
5
(5)
(5)
(19)
(19)
11
-
(16)
(24)
(87)
-
(87)
3
-
-
(84)
(84)
8
1
-
(75)
1
-
1
-
(1)
-
-
-
1
1
-
2
3
-
3
-
3
-
6
6
-
-
-
6
Other
items
$m
4
-
4
7
-
7
17
-
17
(3)
(17)
(3)
(15)
-
-
4
4
(2)
-
-
2
-
-
-
-
(1)
-
-
(1)
1
-
2
2
(6)
(5)
-
(9)
(2)
(5)
(91)
(91)
11
(3)
(16)
(99)
2021
$m
93
1
94
26
-
5
(1)
30
8
22
30
Total
$m
(74)
5
(69)
Deferred tax expected to be settled within 12 months
Deferred tax expected to be settled after 12 months
Deferred tax
2022
$m
(31)
(68)
(99)
Restated
2021
$m
(19)
(72)
(91)
Imputation credits available for use in subsequent reporting periods are $92m (2021: $106m). These credits are available for use in
subsequent periods provided a 66% shareholder continuity is maintained as defined in the Income Tax Act 2007.
(10) Leases
Leases as a Lessee
Under NZ IFRS 16, Z recognises right-of-use assets and lease liabilities for most property leases.
On inception of a new lease, the lease liability is measured at the present value of the remaining lease payments, discounted using
Z’s incremental borrowing rate at that date. The right-of-use assets are measured at an amount equal to the lease liability and are
depreciated over the estimated remaining lease term on a straight-line basis. Z presents the right-of-use assets and lease liabilities
separately on the face of the Statement of financial position.
Z applies the following practical expedients when applying NZ IFRS 16:
• A single discount rate to a portfolio of leases with similar characteristics;
• Exemption to not recognise right-of-use assets for low-value leases; and
• Exemption to not recognise right-of-use assets for leases with less than 12 months remaining.
Nature of lease payments as a lessee
Z as the lessee has various non-cancellable leases predominantly for the lease of land and buildings. The leases have varying terms,
escalation clauses and renewal rights. On renewal, the terms of the lease are renegotiated.
Information about leases for which Z is a lessee is presented below:
Right-of-use assets
Balance at 1 April 2021
Depreciation charge for the year
Additions to right-of-use assets
Adjustments to existing right-of-use assets
Derecognition of right-of-use assets
Balance at 31 March 2022
2022
$m
280
(23)
19
4
(2)
278
2021
$m
282
(20)
9
9
-
280
Right-of-use assets related to leased properties that do not meet the definition of investment property are represented as property,
plant and equipment.
Amounts recognised in profit or loss
Leases under NZ IFRS 16
Lease depreciation
Interest expense on lease liabilities
Lease expense on short-term leases
Maturity analysis
Leases liabilities as lessee
Between 0 to 1 year
Between 1 to 5 years
More than 5 years
Lease liabilities as lessee
2022
$m
23
12
2
2022
$m
18
74
206
298
2021
$m
20
13
1
2021
$m
16
80
203
299
62
FINANCIALS
(10) Leases (continued)
Leases as a Lessor
Z acts as a lessor for subleases on sites that Z leases. Z assesses each sublease based on the right-of-use asset and expected useful life
of the head lease, and where a sublease is for a significant part of the expected life of the lease, Z derecognises part of the right-of-use
asset and records this as sublease receivable. Sublease receivables are measured using the present value of the future sublease income,
discounted using Z’s incremental borrowing rate at that date. Subleases which are not classified as being for a significant part of the
expected life of the lease or of marginal costs are classed as operating leases.
Z has receivables from leases as a lessor relating to the lease of premises as shown below:
Operating lease income as a lessor
Income from subleasing right-of-use assets
Total lease expenses/(income) as lessor and lessee
Lease interest income
Lease depreciation
Lease interest expense
Net lease expenses
2022
$m
1
2022
$m
(1)
23
12
34
2021
$m
1
2021
$m
(1)
20
13
32
Useful life
Z also reviewed the estimates of useful life of property leases based on Z’s House View of future fuels demand (see Note 3).
This resulted in:
• a decrease in the carrying value of the Right of use assets of $3m. This will result in a lower depreciation charge of $3m over the
asset’s remaining life
• a decrease in Lease liability of $6m. This will result in lower lease payments for the remaining useful life.
The net change to the Statement of financial performance for FY22 was a $3m gain against Net lease expenses.
(11) Inventories
Inventory is stated at the lower of cost or net realisable value (NRV). The cost of inventories is based on the first-in-first-out principle.
NRV is the estimated selling price in the ordinary course of business less applicable variable selling expenses. Inventory write down at
31 March 2022 was $6m (2021: $3m). The write down is recorded in cost of goods sold.
(12) Property, plant and equipment
Property, plant and equipment (PPE) is measured at fair value based on periodic valuations, less accumulated depreciation and any
impairment after the date of revaluation.
An independent revaluation of all land and buildings (including terminal plants) is undertaken by an independent valuer every five years
using a level 3 fair value methodology in line with the fair value hierarchy. In the years between independent valuations, the carrying
value of land is adjusted annually by a land inflation index provided by an independent valuer based on recent sales, as underlying land
values are considered the significant determinant of fair value changes for Z. An assessment of other PPE fair values is also performed
annually by Z to assess the underlying assumptions for each asset class and determine whether any revaluation is required. Additions to
PPE after the most recent valuation are recorded at cost.
Independent revaluation of land, buildings and terminal plant was performed at 31 March 2022, with the next revaluation scheduled for
March 2027.
Depreciation is provided on a straight-line basis. The major depreciation periods (in years) are:
Buildings
Plant and machinery
Land improvements
Terminal plant
9–35
2–35
14–35
5–35
Constr-
uction
in progress
$m
Buildings
$m
Land and
improve-
ments
$m
Plant and
machinery
$m
Terminal
plant
$m
Year ended 31 March 2022
Cost/valuation
Balance at beginning of year
Additions
Disposals
Transfers between asset classes
Impairment
Impairment reversal
Valuation adjustment
Offset accumulated
depreciation on revaluation
Balance at end of year
30
62
-
(28)
-
-
-
-
64
Accumulated depreciation and impairment
-
Balance at beginning of year
-
Depreciation
Disposals
-
Transfers between asset
classes
Offset accumulated
depreciation on revaluation
-
-
Balance at end of year
Carrying amounts
At 1 April 2021
At 31 March 2022
-
30
64
121
-
(1)
2
-
-
31
(34)
119
(37)
(10)
1
-
34
(12)
84
107
336
-
-
4
-
2
134
(10)
466
(16)
(3)
-
-
10
(9)
320
457
420
-
(9)
12
-
-
-
-
423
(214)
(34)
8
2
-
(238)
206
185
227
-
-
10
(1)
-
30
(68)
198
(51)
(15)
-
(2)
68
-
176
198
2021
Total
$m
1,087
46
(14)
-
-
-
15
-
1,134
(268)
(63)
13
-
-
(318)
2022
Total
$m
1,134
62
(10)
-
(1)
2
195
(112)
1,270
(318)
(62)
9
-
112
(259)
816
1,011
Included in buildings ($9m) and plant and machinery (nil) are assets held under finance leases (2021: buildings $13m 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 $46m (2021: $48m); land and improvements $132m (2021: $132m); terminals $146m (2021: $149m); plant and machinery
$169m (2021: $184m).
64
FINANCIALS
(12) Property, plant and equipment (continued)
The following table shows the valuation technique used in measuring the fair value of PPE, as well as the significant unobservable
inputs used.
(13) Intangible assets
Year ended 31 March 2022
Asset
class
Valuation techniques during full
revaluation
Significant
unobservable inputs
Land and
buildings
Terminal
plant, and
plant and
machinery
Direct capitalisation approach based on
a sustainable market rental is capitalised
at an appropriate rate of return or yield
derived from comparable asset sales.
The market rental is built up from:
- fuel throughput margin
- estimated shop rental
(for non-fuel sales).
The value ascribed to the land is allocated
using a value estimated based on recent
comparable land sales with the residual
value being allocated to buildings.
Depreciated replacement cost approach
is based on the gross current replacement
cost, reduced by factors providing for
age, physical depreciation, and technical
and functional obsolescence considering
an asset’s total estimated useful life and
anticipated residual value (if any).
Throughput rental rate
(cents/litre) 1.6-3.25
(Retail)
Throughput rental rate
(cents/litre) 2.5 (truck
stop)
Shop rental $150-$750
per square metre
Capitalisation rate
4%–7%
Cost estimates sourced
from contracting
machinery suppliers
and cost analysis of
recent projects.
Finance
leases
(buildings)
Net present value of contracted rental
cash flow at lease commencement over
the remaining term of the lease.
Discount rate 6.5%.
Rental payments are
sourced from lease
agreements.
Inter-relationship between
key unobservable inputs
and fair value measurement
The estimated fair value
would increase (decrease) if:
• throughput margins were
higher (lower)
• shop rental rates were
higher (lower)
• capitalisation rates were
lower (higher).
Valuation
adjustments
between full
revaluation
Land and land
improvements are
adjusted based on a
land inflation index
marker.
Land and buildings
are assessed
for impairment
annually.
Assessed for
impairment.
Assessed for
impairment.
The estimated fair value
would increase (decrease) if:
• cost was higher (lower)
• remaining useful life was
higher (lower)
• technical and functional
obsolescence was lower
(higher).
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.
Assets held for sale
There are no assets held for sale at 31 March 2022.
Useful life
Z also reviewed the estimates of useful life of PPE assets based on Z’s House View of future fuels demand (see Note 3). This resulted in
no change to the carrying value. It is estimated that there will be no material change to depreciation expense for FY23 onwards.
Software in
progress
$m
Goodwill
$m
Brands
$m
Contracts
acquired
$m
Emissions
units
$m
Other
$m
Balance at beginning of year
Prior period restatement
Restated balance at
beginning of the year
Additions
Transfers between
asset classes
Utilised
Reacquired/(leased)
Sale of units
Impairment
Amortisation
Balance at end of year
Cost
Accumulated impairment
Accumulated amortisation
Balance at end of year
2
-
2
11
(11)
-
-
-
-
-
2
2
-
-
2
158
-
158
-
-
-
-
-
-
-
158
193
(35)
-
158
7
-
7
-
-
-
-
-
-
(6)
1
37
-
(36)
1
249
-
249
-
-
-
-
-
(1)
(21)
227
445
(62)
(156)
227
191
-
191
372
-
-
-
-
-
-
563
563
-
-
563
40
-
40
-
11
-
-
-
-
(29)
22
190
-
(168)
22
2022
Total
$m
647
-
647
383
-
-
-
-
(1)
(56)
973
1,430
(97)
(360)
973
Restated
2021
Total
$m
786
(16)
770
154
-
(191)
37
(52)
-
(71)
647
1,051
(96)
(308)
647
Goodwill
Goodwill is the excess of purchase consideration over net identifiable assets acquired. Goodwill is not amortised, but it is tested for
impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, by estimating future
cash flow considering expected fuel volumes, margin and discount rates.
66
FINANCIALS
(13) Intangible assets (continued)
Chevron acquisition goodwill
On 1 June 2016, Z acquired 100% of the share capital of Chevron New Zealand (renamed Z Energy 2015 Limited), an importer, distributor
and seller of transport fuel and related products. The acquisition has strengthened the Group’s fuel network within New Zealand.
Z recognised $158m of goodwill as part of the purchase price allocation. As at 31 March 2022, an annual impairment test of the goodwill
was undertaken. The impairment test considered the impacts of Covid-19 on the carrying amount of the goodwill.
The recoverable amount of the cash generating unit (CGU) containing the goodwill has been calculated based on the present value of
future cash flows expected to be derived from the CGU (value in use). This was calculated using a Z Board approved discounted cash
flow valuation (DCF) to 2040. Significant assumptions within the DCF include:
• Post-tax discount rate of 8% (nominal terms), which is the current weighted average cost of capital (WACC) estimated by Z
• Terminal value growth rate of -3%
• Future sales volumes which have been estimated based on Z’s House View of future fuel demand (https://www.nzx.com/
announcements/376860), informed by extensive reference to external industry commentators and emissions forecasts, and in
particular the Climate Change Commission’s recommendations on a path to meet our international climate change commitments.
The forecast market demand profile has the most significant impact on value, shown in the sensitivity table presented below.
Change in key assumptions
Discount rate [+/-0.50%]
Retail margins [-/+ 1cpl]
Capital expenditure [+/- $10m] per annum
Market demand change [CCC Demonstration/Tailwinds]
Reduction in
valuation
$m
Increase in valuation
$m
Would the indicated
sensitivity result in
impairment?
(104)
(140)
(97)
(722)
207
233
97
(404)*
No
No
No
Yes
*Both Climate Change Commission demand scenarios tested present a downside case relative to our House View of Demand.
The Scheme of Arrangement with Ampol Limited to acquire 100% of Z shares at $3.78200 (including an Implementation Date
Adjustment of $0.02200 per share) received final Court approval on 26 April 2022. The acquisition price provides further market-tested
evidence of the recoverable amount of the CGU exceeding the carrying amount.
Z will continue to monitor market conditions on an ongoing basis and make necessary judgement on the need for impairment of
the goodwill.
Brands
Brands were acquired as part of the Chevron acquisition and are amortised over six years on a straight-line basis.
Chevron retail customer contracts
On 1 June 2016, Z acquired the Caltex NZ business from Chevron. Included in this purchase was an allocation for the intangible assets
relating to Caltex retail customer contracts. These were valued at the net present value of future cash flows and amortised over 21 years
on a straight-line basis. Contracts acquired are a finite life intangible asset that have a measurable life which can be amortised over a
measurable period. This type of asset must be tested for impairment when there is an indicator of impairment. There were no indicators
of impairment during the year.
Chevron commercial customer contracts
On 1 June 2016, Z acquired the Caltex NZ business from Chevron. Included in this purchase was an allocation for the intangible assets
relating to Caltex contracts with commercial customers, specifically distributors. These were valued at the net present value of
future cash flows and amortised over 21 years on a straight-line basis. Contracts acquired are a finite life intangible asset that have a
measurable life which can be amortised over a measurable period. This type of asset must be tested for impairment when there is an
indicator of impairment.
The passing into law of the Fuel Industry Amendment Regulations 2021 in July 2021 was an indicator of potential impairment of this
intangible asset, triggering an impairment test to be performed.
Cash flow projections are based on Z’s expected volume and margin for the relevant customers for year ending 31 March 2023 adjusted
for the estimated impact of the Fuel Industry Amendment Regulations. In estimating the cash flow projections beyond FY23, Z has
based subsequent years on the fuel volume change implied by Z’s House View of future fuel demand, with extensive reference to
external industry commentators and emissions forecasts, and in particular the Climate Change Commission’s recommendations on a
path to meet New Zealand’s international climate change commitments.
The assumptions for the 31 March 2022 impairment test are as follows:
• Discounted cash flow valuation with a forecast period out to 2040
• Terminal value growth rate of -3%
• Commercial gross margin based on FY22 actual margins for these contracts, and management’s long-term margin assumptions
• Post-tax discount rate of 8.0% (nominal terms), which is the current weighted average cost of capital (WACC) estimated by Z
• Future sales volumes which have been estimated based on Z’s House View of future fuel demand and tested against the CCC’s
Demonstration Path and Tailwinds scenarios.
Using these assumptions, the recoverable amount as at 31 March 2022 was determined to be greater than the carrying amount, meaning
no impairment is required to be recognised.
Channel Infrastructure NZ (previously Refining NZ) processing and distribution agreement
On 1 June 2016, Z acquired the Caltex business from Chevron. Included in this purchase was an allocation of $46m for the intangible
asset relating to the Processing Agreement (The Agreement) Chevron had with Channel Infrastructure NZ. Contracts acquired are a
finite life intangible asset that have a measurable life which can be amortised over a measurable period. This type of asset must be
tested for impairment when there is an indicator of impairment. There were no indicators of impairment during the year.
Other contracts acquired
Contracts acquired include customer contracts, supply agreements and leases acquired as part of the Chevron acquisition.
These contracts are amortised over 3 to 21 years on a straight-line basis. There were no indicators of impairment during the year.
Emissions trading scheme
Units acquired are carried at cost less any accumulated impairment. Refer to note 14 for the number of units held.
Other intangibles
Other intangibles include software, franchise rights, domain name and contacts acquired. Acquired computer software is capitalised
based on the costs incurred to acquire, bring to use the specific software and where Z has control over these related assets. See note 2 for
detail on accounting policy change. These costs are amortised over three years on a straight-line basis. Contacts acquired are amortised
over the useful life of the asset which is up to the lease’s first right of renewal date. 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.
Useful life
Z also reviewed the estimates of useful life of intangible assets based on Z’s House View of future fuels demand (see Note 3). There was
no change to the carrying values of the assets but a change in the useful life of the assets. This will result in an increase in amortisation
expense for FY23 of $5m.
(14) Emissions trading scheme
The Group is required to deliver emission units to a Government agency to be able to sell products that emit pollutants.
A provision for this obligation is recognised in the Statement of financial position.
Stock of units
Balance at beginning of year
Units acquired and receivable
Units sold
Units reacquired/(leased)
Units surrendered
Balance at end of year
Obligation
Obligation payable at 31 March
2022
Units
millions
2021
Units
millions
6
6
-
-
-
12
10
4
(2)
1
(7)
6
2022
Units
millions
9
2021
Units
millions
9
The Emissions Trading Scheme obligation of $391m (2021: $303m) is included within accounts payable, accruals and other liabilities and
is valued at the weighted average cost of units, where units have been acquired to settle the Group’s obligation. Any shortfall in units
needed to settle the obligation is measured at fair value.
68
FINANCIALS
(15) Investments
(17) Provisions
The Group’s investment in Channel Infrastructure NZ (previously Refining NZ) is recognised at the NZX-listed share price at
31 March 2022 of $1.04 (2021: $0.47) giving rise to a $27m increase in the fair value for the financial year, which is accounted for in
other comprehensive income.
Investment in Channel Infrastructure NZ (fair value hierarchy level 1)
Investment in associates
Total investments
The Group wholly owns or has a partial interest in the below associates and subsidiaries:
Associates and subsidiaries
Drylandcarbon One Limited Partnership
Mevo Limited
Loyalty NZ Limited
Wiri Oil Services Limited (WOSL)
Coastal Oil Logistics Limited (COLL)
Flick Energy Limited
Z Energy 2015 Limited (formerly Chevron New Zealand)
Z Energy ESPP Trustee Limited
Z Energy LTI Trustee Limited
2022
$m
50
40
90
2021
$m
23
19
42
2022
% Holding
2021
% Holding
Associate
Associate
Associate
Associate
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
37%
32%
25%
44%
50%
74%
100%
100%
100%
37%
32%
25%
44%
50%
70%
100%
100%
100%
(16) Investment in joint operations
The Group has participating interests in four unincorporated jointly controlled operations relating to the storage and distribution of
petroleum products. The revenues and expenses are allocated in the financial statements on a performance/usage basis rather than the
ownership 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 2022, there
were no contingent liabilities for the jointly controlled operations (2021: nil). The value of assets in these interests is $13m (2021: $13m).
Joint User Hydrant Installation
Joint Interplane Fuelling Services
Jointly Owned Storage Facility
Wiri to Auckland Airport Pipeline
Principal activity
Fuel storage
Fuel distribution
Fuel storage
Fuel distribution
2022
% Holding
2021
% Holding
33%
50%
50%
40%
33%
50%
50%
40%
Decommissioning and restoration (D&R) provision is recognised at the estimated future cost, discounted back to reporting date.
The inflation and discount rates applied to the different assets are the CPI and New Zealand Government Bond rates respectively as
per New Zealand Treasury. The terms and rates applied are as follows.
Homebase
Truckstop
Aviation
Terminals
Retail
BioDiesel
Caltex Retailer-operated
Term
(years)
30
10 – 12
14
30
10 – 30
30
10
CPI rates
(%)
NZ Govt Bond rates
(%)
2.15
2.2 - 2.22
2.19
2.15
2.15 - 2.22
2.15
2.2
3.05
2.45 - 2.53
2.61
3.05
2.45 - 3.05
3.05
2.4
The CPI and New Zealand Government bond rates are revised annually.
D&R costs expected to be settled within one year are classified as current liabilities. D&R costs expected to be settled between
1 and 30 years are classified as non-current liabilities.
Z engages a third party to provide an estimate of the D&R obligations for Z. Estimates are reviewed every three years. This was
completed in December 2021 with the resulting uplift making up the majority of the provision created in the table below. The next
review is due in FY25. The current D&R obligations are between $50k–$60k per tank for above-ground tanks and $80k–$95k per tank
for below-ground tanks.
Z also reviewed the estimates of useful life of assets that the D&R provision relates to, based on Z’s House View of future fuels demand
(see Note 3). This resulted in an increase in the carrying value of the D&R provision of $4m, recognised as accretion expense for $4m.
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 1 and 30 years, depending on the location.
For the year ended 31 March 2022
Balance at beginning of year
Created
Utilised
Released
Other movements
Balance at end of year
Current
Non-current
Balance at end of year
Decommissioning,
restoration and
remediation
$m
93
16
(2)
(2)
2
107
8
99
107
70
FINANCIALS
(18) Borrowings
Financing arrangements
The Group’s debt includes bank facilities, bonds and US Private Placement (USPP) notes secured against certain assets of the Group.
The facilities require Z to maintain securities and operate within defined performance and gearing ratios. The arrangements also
include restrictions over the sale or disposal of certain assets without lender agreement. The Group has complied with all debt covenant
requirements imposed by lenders for the year ended 31 March 2022.
Bank facilities and bonds are recorded initially at fair value, net of transaction costs. After initial recognition, bank facilities and bonds
are measured at amortised cost. Any difference between the initial recognised amount and the redemption value is recognised in the
Statement of comprehensive income over the period of the borrowing. USPP notes are recorded initially at fair value, net of transaction
costs, and are revalued monthly.
Bank facilities’, bonds’ and USPP notes’ 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 method.
Banking facilities
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 1.5% to 2.7% (2021: 1.5% to 2.3%).
Secured bank facilities available
Balance at end of year (facilities drawn down)
Current
Non-current
Balance at end of year
2022
$m
530
130
130
-
130
2021
$m
530
19
19
-
19
The facilities comprise a $180m revolving-term debt facility drawn to $0m plus a $350m working capital facility drawn to $130m, both
maturing in September 2024.
Bonds
Balance at beginning of year
Bonds repaid
Amortisation
Balance at end of year carrying value
Current
Non-current
Balance at end of year carrying value
Fair value of bonds
USPP notes
Balance at beginning of year
Movement in fair value hedge
Movement in foreign-exchange revaluation
Balance at end of year carrying value
Current
Non-current
Balance at end of year carrying value
Fair value of USPP notes
2022
$m
344
(150)
-
194
-
194
194
196
2022
$m
407
(25)
3
385
-
385
385
425
2021
$m
343
-
1
344
150
194
344
362
2021
$m
509
(35)
(67)
407
-
407
407
456
(19) Financial risk management
The Group has 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 that guides
management and the Board in identifying, assessing and monitoring 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.
Summary of the Group’s exposure to financial risk and the management of those:
Financial risk Exposure
Product
Management of risk
Market risk
Foreign
exchange
risk
Movement in foreign
exchange rates
Bills Libor
(Basis swap)
Forward
exchange
contract
Cross currency
interest rate
swaps (CCIRS)
Quarterly resetting notional (based on the actual FX spot rate of the
NZD/USD) on the 8-, 10- and 12-year basis swaps offset with the 2-year
basis swap, reviewed bi-annually for renewal.
Reduce price fluctuations risk of foreign currency commitments, mainly
associated with purchasing hydrocarbons.
Hedge variability risk in cash flows arising from price fluctuations of foreign
currency of the USD USPP notes.
To mitigate profit or loss volatility, the CCIRS is designated into a fair value
hedge and cash flow hedge relationship.
Sensitivity
to FX
Interest
rate risk
Sensitivity to
interest rate
Commodity
price and
timing risk
Sensitivity
to electricity
prices
Liquidity risk
Credit risk
Foreign-currency: At 31 March 2022, 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), after-tax profit
would change by $389k higher/$1m lower (2021: $3m higher/$7m lower) and the change in other comprehensive
income for the year would be $3m higher/$4m lower (2021: $5k higher/$2m lower).
Movement in
interest rates
Minimise the cost of debt (interest) and manage the volatility to the
Group’s earnings.
The CCIRS is designated into a fair value hedge and cash flow hedge
relationship to mitigate profit or loss volatility.
Reduce exposure on the basis cost of the CCIRS.
Interest rate
swaps (IRS)
Cross currency
interest rate
swaps
Bills Libor
(Basis swap)
At 31 March 2022, if bank interest rates at that date had been 100 basis points higher/lower (with all other variables
held constant), after-tax profit would change by $4m higher/$4m lower (2021: $6m higher/$2m lower) and the change
in other comprehensive income for the year would be $22k higher/$3m lower (2021: $2m higher/$13k lower).
Changes in crude and
product prices
Match commodity purchase and sales.
Commodity
swaps
At 31 March 2022, if forward electricity prices at that date had been $25/MWH higher/lower (with all other variables held
constant), after-tax profit would change by $3m higher/$3m lower (2021: $0m higher/$0m lower) and the change in other
comprehensive income for the year would be $1m higher/$1m lower (2021: $8m higher/$8m lower).
Risk that the Group will
not be able to meet its
financial obligations as
they fall due
Risk of loss to the
Group due to customer
or counterparty default
Risk of derivative
counterparties and cash
deposits being lost
Active management of cash flow, access to committed funds and lines of
credit and the maturity profile of its financial obligations.
Limited exposure due to credit checks carried out on new customers, credit
terms and standard payment terms. Less than 4% of the Group’s receivables
are overdue (2021: 2%).
Bank facilities are maintained with A or above rated financial institutions,
with a syndicate of 5 bank counterparties to ensure diversification.
The CCIRS is classified as level 2 in fair value hierarchy and are hedge accounted. All other products are level 2 and accounted for as fair
value through the Statement of comprehensive income.
The fair value of the CCIRS and IRS excludes accrued interest. All other derivatives do not contain interest components.
72
FINANCIALS
(19) Financial risk management (continued)
Recognition and measurement of derivatives
Derivative financial instruments are recognised initially at fair value at the date they are entered into (trade date). After 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 immediately, unless the instruments are designated in an effective hedge
accounting relationship.
Liquidity risk
The following tables analyse the Group’s financial liabilities into relevant maturity groupings based on the earliest possible contractual
maturity date at year end. The amounts in the tables are contractual undiscounted cash flows, which include interest through
to maturity.
At 31 March 2022
6 months or
less
$m
6 to 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
Working capital loan
Accounts payable
Lease liabilities
Bonds
USPP notes
Non-derivative
financial liabilities
Derivative financial instruments
IRS
Commodity hedges
CCIRS
Basis swap
Derivative financial
instruments
130
322
17
4
8
481
3
(16)
-
(1)
(14)
-
-
17
4
8
29
1
(2)
3
-
2
-
-
34
77
16
127
3
(9)
7
(1)
-
-
-
93
127
172
392
1
(11)
12
(1)
1
-
-
289
-
281
570
-
-
(3)
(1)
(4)
130
322
450
212
485
130
322
298
194
385
At 31 March 2021
6 months or
less
$m
6 to 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
Working capital loan
Accounts payable
Lease liabilities
Bonds
USPP notes
Non-derivative
financial liabilities
Derivative financial instruments
IRS
Commodity hedges
CCIRS
Basis swap
Derivative financial
instruments
19
151
16
7
8
201
(4)
32
3
1
32
-
-
16
155
8
179
(4)
10
3
1
10
-
-
31
8
15
54
(6)
6
5
9
14
-
-
117
205
175
497
(6)
-
8
-
2
-
-
291
-
289
580
-
-
1
(2)
(1)
19
151
471
375
495
1,511
19
151
299
344
407
1,220
(20)
(20)
48
20
9
57
48
26
3
57
Discussions on refinancing bank-debt facilities will normally begin at least six months before maturity with facility terms agreed at least
three months before maturity.
1,599
1,329
Interest rate risk analysis
8
(38)
19
(4)
(15)
7
(38)
(5)
-
(36)
At 31 March 2022
Interest-rate exposure borrowing
Cross-currency swaps
Interest-rate swaps
Net interest-rate exposure
At 31 March 2021
Interest-rate exposure borrowing
Cross-currency swaps
Interest-rate swaps
Net interest-rate exposure
Less than
1 year
$m
-
378
(55)
323
Less than
1 year
$m
150
378
(380)
148
1 to 2
years
$m
70
-
-
70
1 to 2
years
$m
-
-
200
200
2 to 5
years
$m
251
(126)
55
180
2 to 5
years
$m
321
(126)
(55)
140
5+
years
$m
252
(252)
-
-
5+
years
$m
252
(252)
125
125
Total
notional
$m
573
-
-
573
Total
notional
$m
723
-
(110)
613
74
FINANCIALS
(19) Financial risk management (continued)
Offsetting of financial instruments
Z enters into derivative transactions under International Swaps Derivatives Association (ISDA) master agreements. The ISDA
agreements do not meet the criteria for offsetting in the Statement of financial position for accounting purposes. This is because
Z does not have any current legally enforceable right to offset recognised amounts. Under the ISDA agreements, the right to offset is
enforceable only on the occurrence of future events such as a default on the bank loans or other credit events. The potential net impact
of this offsetting is disclosed in: ‘Amount after applying rights of offset under ISDA agreements’. Z does not hold and is not required to
post collateral against its derivative positions.
Derivative assets
Derivative liabilities
Derivative financial assets/(liabilities)
Derivative
position
2022
$m
Amount after
applying rights of
offset under ISDA
agreements
$m
Derivative
position
2021
$m
Amount after
applying rights of
offset under ISDA
agreements
$m
57
(21)
36
38
(2)
36
115
(58)
57
64
(7)
57
Electricity Price Hedges
To mitigate profit and loss volatility, some electricity derivatives are designated into cash flow hedge relationships. Z determines
the existence of an economic relationship between the hedging instrument and the hedged item based on the amount and timing of
their respective cash flows, reference nodes, maturities and volumes. Z assesses whether the derivative designated in each hedging
relationship is expected to be and has been effective in offsetting the changes in cash flows of the hedged item.
In these hedge relationships the main source of ineffectiveness is where the volume of electricity sold at fixed price is lower than the
volume of the derivative contracts for more than 10% of all half-hour intervals over the life of the hedge. Other sources of ineffectiveness
include location factor differences (location of hedging and consumption nodes) and credit risk.
The assessment of any hedge as ineffective has no impact on cashflow or tax payable as the amount in profit and loss will reverse over
time if the electricity derivative is held to settlement. There will only be realised gain at time of settlement which is offset against spot
price electricity purchases in the Statement of financial performance.
Electricity Price Hedge ineffectiveness for the year ended 31 March 2022 was $2m (2021: $10m).
The effect of Z’s hedge accounting policies in managing its foreign-exchange risk, interest-rate risk and electricity price risk related to
the underlying hedging instrument is presented in the tables below. The details of the hedging instruments and items at 31 March 2022
are recognised in the Statement of financial position within derivative financial instruments and borrowings as follows:
Hedge accounting
The nature and the effectiveness of the hedge accounting relationship will derive where the gains and losses on re-measurement are
recognised. The CCIRS derivatives are designated as either:
• Fair value hedges: the derivative is used to manage the variability in the fair value of recognised liabilities, to hedge the interest-rate
At 31 March 2022
Nominal
amount
(hedging
instrument)
Carrying
amount
(hedged item)
$m
Accumulated
fair value hedge
adjustment
to carrying
amount
(hedge item)
$m
Carrying value
of derivatives
(hedging
instrument)
$m
Life to date
change in
value used for
calculating
hedge
ineffectiveness
$m
Accumulated
cost of hedging
reserve
$m
risk (the hedged risk) arising from the USD USPP notes (the hedged items).
The following changes are recognised in profit or loss:
- The change in fair value of the hedging instruments
- The change in fair value of the underlying hedged items attributable to the hedged risk.
Once hedging is discontinued, the fair value adjustments to the carrying amount of the hedged item arising from the hedged risk is
amortised through profit or loss from that date through to maturity of the hedged item.
• Cash flow hedges: derivatives are used to manage the variability in cash flows of highly probable forecast transactions, to hedge
the variability in cash flows arising from interest rate and foreign currency exchange rate movements of the USD USPP notes (the
hedged items).
The following changes are recognised in profit or loss (interest costs):
- any gain or loss in relation to the ineffective portion of the hedging instrument
- fair value changes in the hedging instrument previously accumulated in other comprehensive income, transfer to profit or loss
when the underlying transactions are recognised in the Statement of comprehensive income.
Once hedging is discontinued, any cumulative gain or loss previously recognised in other comprehensive income is recognised in profit
or loss (interest costs) either:
- at the same time as the forecast transaction, or
- immediately if the transaction is no longer expected to occur.
Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated, exercised, or no longer qualifies for
hedge accounting.
Z designates the entire CCIRS to hedge its foreign-currency risk and interest-rate risk and applies a hedge ratio of 1:1, except for the
cross-currency basis elements of the CCIRS that are excluded from the designation and are separately accounted for as a cost of
hedging. This cost is recognised in other comprehensive income in a cost of hedging reserve. The Group’s Treasury Policy is for the
critical terms of the CCIRS contracts to align with the hedged item.
Z determines the existence of an economic relationship between the hedging instrument and the hedged item based on the currency,
amount and timing of the respective cash flows, reference interest rates, tenors, repricing dates, maturities and notional amounts.
Z assesses whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting the
changes in cash flows of the hedged item using the hypothetical derivative method.
In these hedge relationships, the main source of ineffectiveness is the effect of the counterparty and Z’s own credit risk on the fair value
of the CCIRS.
Hedge ineffectiveness for the year ended 31 March 2022 was $1m (2021: $1m).
Cash flow hedge and fair value hedge
Interest-rate risk and
foreign-currency risk
8 years, rate 3.83%
10 years, rate 4.04%
12 years, rate 4.14%
Commodity hedge
Commodity price risk
and timing risk
Outstanding notional
volumes
$90m USD
$90m USD
$90m USD
136,992 MWh
Total
(128)
(128)
(129)
-
(385)
2
1
-
-
3
1
2
2
5
10
2
2
3
5
12
-
(1)
(1)
-
(2)
The hedged item is recognised in Borrowings and the hedging instrument is recognised in Derivative financial instruments.
Nominal amount
(hedging
instrument)
Carrying
amount
(hedged item)
$m
At 31 March 2021
Accumulated
fair value hedge
adjustment to
carrying amount
(hedge item)
$m
Carrying value
of derivatives
(hedging
instrument)
$m
Life to date
change in
value used for
calculating
hedge
ineffectiveness
$m
Accumulated
cost of hedging
reserve
$m
Cash flow hedge and fair value hedge
Interest-rate risk and
foreign-currency risk
8 years, rate 3.83%
10 years, rate 4.04%
12 years, rate 4.14%
Commodity hedge
Commodity price risk
and timing risk
Outstanding notional
volumes
$90m USD
$90m USD
$90m USD
354,866 MWh
Total
(136)
(136)
(135)
-
(407)
(7)
(8)
(8)
-
(23)
9
9
8
31
57
10
10
9
31
60
(1)
(1)
(1)
-
(3)
76
FINANCIALS
(20) Share capital and distributions
Plan share balances
Ordinary shares (fully paid)
Total authorised and issued capital at beginning of year
Movements in issued and fully paid ordinary shares
Total authorised and issued capital at end of year
Issued capital
Total issued capital at end of year
The par value of one share is $1.
During March 2022, Z cancelled 199,125 shares.
2022
$m
767
-
767
2022
Shares
millions
520
2021
$m
430
337
767
2021
Shares
millions
520
Z holds Treasury stock of 475,320 shares at a cost of $1.4m (2021: 106,935, $0.7m) and 1,493,006 shares at a cost of $8m for Z’s
Performance Rights Long-Term Incentive Plan (PRLTIP) (2021: 1,861,391 shares, $8m).
Dividends
2021 Final dividend (paid June 2021)
2022 Interim dividend (paid December 2021)
(21) Share-based payments
$m
cents per share
73
36
14.0
7.0
Z Energy Restricted Share Long-Term Incentive Plan (RSLTIP)
Z provided the RSLTIP for selected senior employees between 2013 and 2019. Under the RSLTIP, ordinary shares in the Parent were
purchased on-market by Z Energy LTI Trustee Limited (the Trustee). Participants purchased shares from the Trustee with funds
lent to them by the Parent. Z stopped offering new offers under the RSLTIP after the year ended 31 March 2019. The last plan ended
31 March 2021.
Z Energy Limited — Performance Rights Long-Term Incentive Plan (PRLTIP)
In the year ended 31 March 2020, the Group moved to a new stock settled share rights scheme for selected senior employees (PRLTIP).
Under the scheme, performance rights have been granted at no cost to the holder. For each performance share right that vests, one
share will be issued.
Under the PRLTIP the number of shares that vest will depend on Z’s total shareholder return ranking within a peer group of the NZX 50
over a three-year period, although a reduced period may be used in some cases. If the individual is still employed at the end of the
vesting period, the shares are then transferred to the employee.
Modification of share-based payment arrangements
On 24 September 2021 the Board approved a change in the rules of the PRLTIP scheme to cater for a change of control of Z Energy
allowing for an acceleration of the vesting to participants should the Ampol acquisition occur. The ‘In-play’ tranches will vest at 100%
of on-target, proportionate to their relative years of maturity. On 11 October 2021 the CEO notified participants that the Board had
approved the acceleration of vesting of the outstanding offers in the event of a successful completion of the Ampol acquisition.
As a result of this change, the share-based payment expense increased by $1.5m in FY22. This was due to the fair value of the
performance rights being re-measured at 11 October 2021 and the amortisation period for the scheme being reduced. The net effect of
the change in fair value was the incremental change in the fair value of the performance rights at modification date using modified plan
terms against the fair value of the performance rights at modification date using original plan terms.
Following the 26 April 2022 approval by the High Court of New Zealand of the Scheme of Arrangement, 980,005 performance rights
were vested to participants on 27 April 2022.
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
Plan
type
Grant date
Vesting date
Exercise
price
Number of
shares
Number of
shares
Number of
shares
Number of
shares
Number of
shares
Number of
shares
2022
PRLTIP 11 April 2019 31 March 2022
PRLTIP 8 June 2020 31 March 2023
PRLTIP 10 June 2021 31 March 2024
$6.25
$2.97
$1.11
530,297
1,331,094
-
-
11,965
1,446,745
1,861,391
1,458,710
-
-
-
-
(56,918)
(226,351)
(172,892)
473,379
1,116,708
1,273,853
(456,161) 2,863,940
Weighted average exercise price
$0.00
$2.67
$2.68
2021
RSLTIP 22 May 2018 31 March 2021
PRLTIP 11 April 2019 31 March 2022
PRLTIP 8 June 2020 31 March 2023
$6.93
$6.25
$2.97
212,320
584,603
-
-
-
1,404,067
796,923
1,404,067
-
-
-
-
(212,320)
(54,306)
(72,973)
-
530,297
1,331,094
(339,599)
1,861,391
Weighted average exercise price
$0.00
$5.97
$3.90
-
-
-
-
-
-
-
-
Measurement of fair values
The fair value of the RSLTIP has been determined using the framework of the Black-Scholes and Margrabe option pricing models for the
schemes vesting 2017–2020. For the RSLTIP and PRLTIP schemes vesting after 2020, a Monte Carlo Simulation has been used.
Original fair value assumptions
For the measurement of fair value the table below summarises the input values used in the Monte Carlo Simulation valuation model and
the estimated fair value per share.
Weighted average share price at grant date
Contractual life
Risk-free rate
Standard deviation of Z’s TSR
Standard deviation of peers’ TSR
Correlation between Z’s TSR and peers’ TSR (average)
Estimated fair value per share
PRLTIP
Plan type
PRLTIP
PRLTIP
Vesting date of scheme
RSLTIP
31 March
2024
31 March
2023
31 March
2022
31 March
2021
$2.60
2.81 years
0.45%
26.3%-33.7%
13.2%-168.3%
0.20-0.34
$1.11
$3.11
2.81 years
0.25%
28%-40%
14%-90%
0.33-0.42
$0.89
$6.18
2.77 years
1.0%
19%-22%
9%-48%
0.12-0.15
$2.52
$7.45
2.85 years
2.0%
25%-27%
18%-21%
0.15-0.16
$3.78
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 RSLTIP.
78
FINANCIALS
(21) Share-based payments (continued)
(23) Commitments
Modification of PRLTIP
The modified fair value of the PRLTIP scheme has been determined using the framework of the Monte Carlo Simulation.
Modified fair value assumptions
For the measurement of fair value the table below summarises the input values used in the Monte Carlo Simulation valuation model and
the estimated fair value per shares.
Weighted average share price at grant date
Contractual life
Risk-free rate
Standard deviation of Z’s TSR
Standard deviation of peers’ TSR
Correlation between Z’s TSR and peers’ TSR (average)
Estimated fair value per share
Plan type
PRLTIP
PRLTIP
Vesting date of scheme
31 March
2024
31 March
2023
$2.87
2.48 years
1.19%
28.1%-33.3%
9.0%-126.9%
0.19-0.33
$1.91
$2.97
1.48 years
1.00%
28.1%-33.3%
9.0%-126.9%
0.19-0.33
$0.40
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 RSLTIP in the year ended 31 March 2022 was nil (2021: $0.7m) as the scheme ended
on 31 March 2021. The expense relating to the PRLTIP in the year ended 31 March 2022 was $3m (2021: $0.9m) mainly due to the
modification to the plan for the expected change of control to Ampol.
Employee benefits payable, excluding share-based payments are $20m (2021: $16m).
(22) Related parties
Certain Z Directors have relevant interests in several companies with which Z has transactions in the normal course of business.
Some Z Directors are also non-executive directors of other companies. Any transactions undertaken with these entities have been
entered into as part of ordinary business.
Key management personnel have been defined as the Directors, the CEO and the Executive team for the Group. Executive members also
participate in the Group’s Restricted Share Long-Term Incentive Plan (refer to note 21).
Included in operating expenses are directors’ fees of $1m (2021: $1m).
Transactions with related parties received/(paid)
Associates
Sale of goods and services
- Channel Infrastructure NZ
Processing fees, Customs and excise duties
- Channel Infrastructure NZ
Purchase of goods and services
- Coastal Oil Logistics Ltd — distribution
- Wiri Oil Services Ltd
- Loyalty New Zealand Ltd
Reimbursement of cost
- Coastal Oil Logistics Ltd
Key management personnel
- Short-term employee benefits
Balances at the end of period
- Channel Infrastructure NZ — processing fees, Customs and excise duties
2022
$m
2021
$m
1
-
(578)
(567)
(41)
(7)
(5)
6
(14)
27
(46)
(7)
(6)
9
(7)
42
Commitments relate to property, plant and equipment of $20m (2021: $23m) and Drylandcarbon One Limited Partnership investment
commitment of $4m (2021: $28m).
(24) Contingent assets and liabilities
Flick guarantees contingent liability
Z currently guarantees a total potential exposure relating to Flick Energy Ltd of up to $23m as per the table below.
Counterparty
Westpac
Mercury
Meridian
Genesis
NZ Wind Farms
Total exposure
2022
$m
2021
$m
9
10
-
3
1
23
7
4
4
3
-
18
The Group has no other guarantees (2021: nil).
(25) Events after balance date
Acquisition by Ampol Limited
On 26 April 2022, the High Court of New Zealand issued orders approving the Scheme of Arrangement under which Ampol Limited
would acquire all shares in Z Energy. The Scheme implementation date was 10 May 2022, with Ampol Holdings NZ Limited, a wholly
owned subsidiary of Ampol Limited, acquiring all Z Energy shares. Also on this date, Z Energy ordinary shares were delisted from the
NZX Main Board and ASX. Z’s Debt Securities (“ZEL050”) and (“ZEL060”) will remain listed on the NZX Debt Market.
Following the approval of the Scheme of Arrangement, the ‘in-play’ tranches of the Z Energy Limited Performance Rights Long-Term
Incentive Plan (PRLTIP) were vested to participants on 27 April 2022 in line with the modified vesting dates approved by the Board in
the event the Ampol acquisition successfully completed. 980,005 shares were transferred from treasury stock to eligible participants,
and 988,321 treasury shares were cancelled. These transactions reduced the Z treasury stock to nil.
As required by the Income Tax Act 2007, following Z Energy Limited’s change on 10 May 2022 to 100% ownership by Ampol NZ Holdings
Limited, a wholly owned subsidiary of Ampol Limited, Z’s Imputation Credit Account was debited by $96m, reducing the balance to Nil.
Z made subsequent taxation payments during May 2022, after the change of ownership, that were credited to the Imputation Credit
Account. Imputation credits now available for use are $100m.
Forest Partners
On 11 April 2022, Z entered into the Forest Partners partnership with 20.5% share, with a commitment to invest up to $55m over 5 years.
80
AUDITORS' REPORT
Pūrongo kaitātari—
Auditors' Report
© 2022 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Independent Auditor’s Report To the shareholder of Z Energy Limited Report on the audit of the consolidated financial statements Opinion In our opinion, the consolidated financial statements of Z Energy Limited (the ’company’) and its subsidiaries (the 'group') on pages 50 to 79: i.present fairly in all material respects the group’sfinancial position as at 31 March 2022 and itsfinancial performance and cash flows for theyear ended on that date, in accordance withNew Zealand Equivalents to InternationalFinancial Reporting Standards and InternationalFinancial Reporting Standards.We have audited the accompanying consolidated financial statements which comprise: —the consolidated statement of financial positionas at 31 March 2022; —the consolidated statements of comprehensiveincome, changes in equity and cash flows for the year then ended; and —notes, including a summary of significantaccounting policies. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Our responsibilities under ISAs (NZ) are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. Our firm has also provided other services to the group in relation to cost of stock adjustment review, greenhouse gas assurance, and royalty return agreed upon procedures. 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. Materiality The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the consolidated financial statements as a whole. The materiality for the consolidated financial statements as a whole was set at $15.8 million, determined with reference to a benchmark of group total revenue. We chose the benchmark because, in our view, this is a key measure of the group’s performance. The 2 group also evaluates its own performance on replacement cost profit, and we have benchmarked against this measure and historical cost profit. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements in the current period. We summarise below those matters and our key audit procedures to address those matters in order that the shareholder, as a body, may better understand the process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely for the purpose of, our statutory audit opinion on the consolidated financial statements as a whole, and we do not express discrete opinions on separate elements of the consolidated financial statements. The key audit matter How the matter was addressed in our audit Valuation of property, plant and equipment As disclosed in Note 12 of the consolidated financial statements, the group has property, plant and equipment of $1,011 million (2021: $816 million), with land and buildings and terminal plant making up the majority of this balance. The group has a policy of recording property, plant and equipment at fair value, with valuations undertaken at least every 5 years, with a material change assessment carried out in intervening years. Land and buildings and terminal plant ($762 million) Valuation of land and buildings and terminal plant is considered to be a key audit matter due to the significance of the assets to the group’s consolidated statement of financial position, and due to the judgement involved in the assessment of the fair value of these assets by the group’s Directors. The judgment relates to the valuation methodology used and the assumptions used in each of those methodologies. A full independent revaluation of land and buildings and terminal plant assets was carried out as at 31 March 2022. Our procedures to assess the land and buildings and terminal plant valuations included, amongst others: • Assessing the competence, independence and objectivity of the independent valuers used by the group; • In conjunction with our valuation specialists, assessing the key assumptions which are judgemental in nature and which have the largest impact on the value of land and buildings and terminal plant. This comprised: ▪ assessing the appropriateness of valuation methodologies applied across the land and buildings and terminal plant asset categories; ▪ assessing the capitalisation rate applied against market evidence from sales of comparable assets; ▪ assessing shop rental and land value data for sampled sites against recent market sales data; ▪ assessing the reasonableness of the throughput cents per litre applied for sites valued through the “Direct Capitalisation” method, by agreeing volumes sold within the calculation to audited sales volumes reports, and comparing the estimated throughput rent for sampled sites against available ‘market’ data; ▪ performing a comparison of fixed asset register information against valued sites to check all sites have been included in the year end revaluation exercise. We found the valuation methodologies and inputs used in the valuation of land and buildings and terminal plant assets to be appropriate. 82
AUDITORS' REPORT
Pūrongo kaitātari—
Auditors' Report (continued)
3 Other information The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual Report. Other information includes the Chief Executive Officer’s review. Our opinion on the consolidated financial statements does not cover any other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Use of this independent auditor’s report This independent auditor’s report is made solely to the shareholder as a body. Our audit work has been undertaken so that we might state to the shareholder those matters we are required to state to them in the independent 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 shareholder as a body for our audit work, this independent auditor’s report, or any of the opinions we have formed. Responsibilities of the Directors for the consolidated financial statements The Directors, on behalf of the company, are responsible 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; — implementing necessary internal control to enable the preparation of a consolidated set of financial statements that is fairly presented and free from material misstatement, whether due to fraud or error; and — assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated financial statements Our objective is: — to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error; and — to issue an independent auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs NZ will always detect a material misstatement when it exists. 4 Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. A further description of our responsibilities for the audit of these consolidated financial statements is located at the External Reporting Board (XRB) website at: http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/ This description forms part of our independent auditor’s report. The engagement partner on the audit resulting in this independent auditor's report is Ed Louden For and on behalf of KPMG Wellington 27 May 2022 84
TCFD
Te Kuputohu TCFD —
Task Force on Climate-related
Financial Disclosures (TCFD) Index
These are the 11 recommended disclosures from the Task Force on Climate-related Financial Disclosures, with an overlay to show
Z’s completed and planned disclosures:
Disclosure
Governance
Page no.
Further information
Disclose the organisation’s governance around climate-related risks
and opportunities
Describe the Board’s oversight
of climate-related risks and
opportunities
13, 17, 23,
25
The Z Board committed to responding to the challenge of climate change in an
integrated way. The Board agreed Z's approach to TCFD in FY20, with progress against
the roadmap reviewed in FY22.
In FY22, the Board provided oversight of Z’s Enterprise Risk Management System
(ERMS), including monitoring all of Z’s enterprise risks, including climate change, and
systems of internal control. Monitoring of risks, controls and opportunities for climate
change was performed through the Board's Audit and Risk Committee (ARC), which
met quarterly to review all Z's risks and conducted substantive reviews twice a year.
Describe management’s role
in assessing and managing
climate-related risks and
opportunities
4, 13, 17,
18, 25
The Chief Executive Officer (CEO) has overall responsibility for the management of Z.
Day-to-day management of Z’s operations is delegated to the General Managers who
make up the Executive Leadership Team (ELT). The ELT are responsible for providing
direction and assurance on Z’s ERMS, with each principal risk assigned to an ELT member.
Strategy
Z’s General Manager, Strategy and Risk is the responsible business owner for managing
climate-related risks and opportunities identified within the ERMS. The ELT as a whole
approves climate-related risks and opportunities identified within Z’s business strategy,
including Z's climate-related metrics and targets which are included in company
performance targets.
Disclose the actual and potential impact of climate-related risks and
opportunities on the organisation’s business, strategy and financial planning
where such information is material
Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium and long term
23, 24, 25
A qualitative assessment of Z’s climate-related risks and opportunities was completed
in FY21. Transitional and physical risks were considered over the short term
(2020–2025), medium term (2025–2040) and long term (2040–2060). See page 24.
Stranded assets and significant decreases in revenue have been identified as key
climate-related risks for Z.
Describe the impact of
climate-related risks and
opportunities on the organisation’s
businesses, strategy and
financial planning
7, 10, 23,
24, 25
The impact of climate-related risks and opportunities and Z's business response are
outlined in the 'Qualitative Analysis of Z's climate-related risks and opportunities'
infographic in the TCFD section of this report.
Z's long-term modelling will also help us to understand the potential for stranded assets
and implications of movement in prices, policy, and physical impacts of climate change.
Z is undertaking further work to quantify the impacts identified to integrate these into
financial planning.
Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2 degrees Celsius or
lower scenario
17, 23, 25
Z built a 20-year long-term fuel demand model to run results, undertake sensitivity
analysis and test scenarios. This model builds on the range of scenarios used previously
to assess climate-related risk and the Climate Change Commission's 'demonstration
path' transport emissions scenario. Our investment decisions and strategy are informed
by this forecast. Investment decisions on core business are also limited by a five-year
financial payback.
Disclosure
Page no.
Further information
Risk Management
Describe the organisation’s
processes for identifying and
assessing climate-related risks
Describe the organisation’s
processes for managing
climate-related risks
Describe how processes for
identifying, assessing and
managing climate-related risk are
integrated into the organisation’s
overall risk management
Metrics and Targets
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process
Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse
gas (GHG) emissions and the
related risks
Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets
25
24
25
22
Disclose how the organisation identifies, assesses and manages
climate-related risks
Z's risk management approach is informed by both a top-down assessment of risks
at the enterprise level and site-level surveys to identify transitional and physical
climate-related risks in line with TCFD guidance.
Further detail is provided under 'Risk Management' in the TCFD section of this report.
Z has developed a business response in the form of current or future controls for the
key climate-related risks identified, see the 'Qualitative Analysis of Z's climate-related
risks and opportunities' infographic.
The process for identifying, assessing and managing climate-related risks is in line
with Z's ERMS. Climate-related risks are incorporated into our ERMS as a principal
risk. In FY22, all principal risks were on the Board's watchlist for active monitoring.
Risks were updated by Z management and reviewed by the Board.
Disclose the metrics and targets used to assess climate-related risks and
opportunities where such information is material
Metrics highlighted in this report include a combination of quantitative data including
greenhouse gas emissions, carbon intensity and carbon emissions for our obligatory
and voluntary offsets, and qualitative data including climate risk reviews.
Z has paused making any new commitments on scope three emissions until after its
pending change of ownership is confirmed.
22
Scope 1, Scope 2, and Scope 3 greenhouse gas emissions are disclosed.
20-21
Z's progress against its FY30 operational emissions reduction target is described in the
Environmental Sustainability section of this report.
86
GRI
Te Kuputohu GRI —
Global Reporting Initiative (GRI) Index
GRI Disclosures: Description
General Standard Disclosures
102 - 1 Name of the organisation
102 - 2 Activities, brands, products, and services
102 - 3 Location of headquarters
102 - 4 Location of operations
102 - 5 Ownership and legal form
102 - 6 Markets served
102 - 7 Scale of the organisation
102 - 8 Information on employees and other workers
102 - 9 Supply chain
102 - 10 Significant changes to the organisation and its
supply chain
102 - 11 Precautionary principle or approach
102 - 12 External initiatives
102 - 13 Membership of associations
Strategy
102 - 14 Statement from senior decision-maker
102 - 15 Key impacts, risks, and opportunities
Ethics, Values & Integrity
102 - 16 Values, principles, standards, and norms
of behaviour
Governance
102 - 18 Governance structures
Stakeholder engagement
102 - 40 List of stakeholder groups
102 - 41 Collective bargaining agreements
102 - 42 Identifying and selecting stakeholders
102 - 43 Approach to stakeholder engagement
102 - 44 Key topics and concerns raised
Reporting practice
102 - 45 Entities included in the consolidated financial
statements
102 - 46 Defining report content and topic boundaries
102 - 47 List of material topics
102 - 48 Restatements of information
102 - 49 Changes in reporting
102 - 50 Reporting period
102 - 51 Date of most recent report
102 - 52 Reporting cycle
102 - 53 Contact point for questions regarding the report
102 - 54 Claims of reporting in accordance with the GRI
Standards
102 - 55 GRI content index
102 - 56 External Assurance
Page
Supporting Details
GRI Disclosures: Description
Page
Supporting Details
Material Topic Standard Disclosures
Economic Sustainability
103 - Management Approach
201 - 1 Direct economic value generated and
distributed
201 - 2 Financial implications and other risks and
opportunities due to climate change
Climate Change
103 - Management Approach
305 - 1 Direct (Scope 1) GHG emissions
305 - 2 Energy indirect (Scope 2) GHG emissions
305 - 3 Other indirect (Scope 3) GHG emissions
305 - 4 GHG emissions intensity
305 - 5 Reduction of GHG emissions
Fossil Fuel Substitutes (Future Fuels)
103 - Management Approach
GRI G4-DG14
Environmental Sustainability
103 - Management Approach
306 - 2 Waste by type and disposal method
306 - 3 Significant Spills
Responsible consumption & production, Product
Quality & Security of Supply
103 - Management Approach
308 - 1 New suppliers that were screened using
environmental criteria
308 - 2 Negative environmental impacts in the supply
chain and actions taken
Organisational Resilience
103 - Management Approach
401 - 1 New employee hires and employee turnover
401 - 2 Benefits provided to full-time employees that
are not provided to temporary or part-time employees
401 - 3 Parental leave
12-13, 14-15
8-9, 11, 14-15, 50-53
23-25, 71, 84-85
10, 13
22
22
22
22
18, 20-22
10, 17-21
20-21
22
31
14-15
20
18, 20-22
10, 34-36
41
42-43
40
0 litres biodiesel produced, 0 litres imported
Z corporate employees. This excludes retail
site staff
Front cover
4-7, 12-13, 14-15, 17-23
89
4-7, 13, 89
2
12-13, 14-15
8-9, 50
8, 13, 28-30, 31-33, 34-36, 39
4-7, 12-13, 14-15
2, 4-7, 10, 12-13, 14-15, 34-35
17-22, 23-25
10, 18, 20-22, 26, 28, 32-33,
46-48, 71, 78
10, 18, 23
4-7
Inside spread,
10-11, 20-21, 23-25
Inside spread, 12
36, 89
10
N/A
10
10
Inside spread, 10
54
2, 12-13
Inside spread, 10
4, 8, 22, 30, 38, 51, 60, 65
10
Front cover
2
2
89
2
86-88
22, 25, 80-82
Operates in New Zealand only
None
Financial year from 1 April to 31 March
88
GRI
Te Kuputohu GRI —
Global Reporting Initiative (GRI) Index
(continued)
GRI Disclosures: Description
Page
Supporting Details
Material Topic Standard Disclosures (continued)
Occupational Health, Safety & Wellbeing
103 - Management Approach
403 - 2 Hazard identification, risk assessment, and
incident investigation
403 - 6 Promotion of worker health
403 - 9 Work-related injuries
Asset Integrity and Process Safety
103 - Management Approach
G4 - OG13 Process Safety Events
Organisational Capability
103 - Management Approach
404 - 2 Programmes for upgrading employee skills
and transition assistance programs
404 - 3 Percentage of employees receiving regular
performance and career development reviews
Diversity & Inclusion
103 - Management Approach
405 - 1 Diversity of governance bodies and employees
405 - 2 Ratio of basic salary and remuneration of
women to men
Resilient Communities
103 - Management Approach
413 - 1 Operations with local community engagement,
impact assessments, and development programmes
Cyber Security & Data Privacy
103 - Management Approach
418 - 1 Substantiated complaints concerning breaches
of customer privacy and losses of customer data
Market Transparency & Fairness
103 - Management Approach
419 - 1 Non-compliance with laws and regulations in
the social and economic area
Customer Experience and Brand Values
103 - Management Approach
Own measure - Customer NPS Score
10, 31-33, 38
31-33
10, 31-33
31
31-33
31
12, 34-36
12, 36, 40
42
28
30, 38
28, 39-40
13, 26, 38
20, 26
10
10
10, 36
38
11, 13
8-9
100% retail sites allocated funding for and engaged
in local community activities
No substantiated complaints or data breaches
Business & Retail net promoter scores
Ngā Pārongo—
Company directory
Registered and head office —
New Zealand
3 Queens Wharf
Wellington 6011
z.co.nz
Contact us
For general enquiries phone:
0800 474 355 and select ‘0’ or
email: general@z.co.nz
Facebook: Z Energy
LinkedIn: Z Energy
Directors
Resigned 10 May 2022:
Abigail Foote (Chair)
Mark Cross
Blair O’Keeffe
Julia Raue
Mark Malpass
Stephen Reindler
Appointed from 10 May 2022:
Matthew Halliday
Greg Barnes
Penny Winn
Executive Team
Mike Bennetts
Chief Executive Officer
Pou Matua
Lindis Jones
Chief Financial Officer
Pou Tiaki Pūtea
Andy Baird
General Manager, Retail and Customer
Pou Hokohoko, Kiritaki
David Binnie
General Manager, Supply
Pou Punakora
(resigned 31 December 2021)
Debra Blackett
General Counsel and
Chief Governance Officer
Pou Arataki
Julian Hughes
General Manager, Transition
Pou Whakawhiti
(to 31 December 2021)
General Manager, Supply
Pou Punakora
(from 1 January 2022)
Nicola Law
General Manager, Commercial
Pou Pakihi
Helen Sedcole
Chief People Officer
Pou Tangata
Mandy Simpson
Chief Digital Officer
Pou Matihiko
Figen Ulgen
Chief Customer Officer
Pou Kiritaki
(Resigned 31 January 2022)
Nicolas Williams
General Manager, Strategy and Risk
Pou Rautaki, Tūraru
Share Registrar
Link Market Services — New Zealand
PO Box 91976
Auckland 1142
New Zealand
+64 9 375 5998
linkmarketservices.co.nz
Link Market Services — Australia
Locked Bag A14
Sydney South NSW1235
Australia
+61 2 8280 7111
Auditor
KPMG
Maritime Tower
10 Customhouse Quay
PO Box 996
Wellington 6140
Lawyers
Chapman Tripp
10 Customhouse Quay
Wellington 6140
Minter Ellison Rudd Watts
18/125 The Terrace
Wellington 6011
Bankers
ANZ Bank New Zealand Limited
215-229 Lambton Quay
Wellington
Bank of New Zealand
80 Queen Street
Auckland
Hong Kong and Shanghai
Banking Corporation
HSBC Tower
195 Lambton Quay
Wellington
MUFG Bank
Level 22, 151 Queen Street
Auckland
Westpac Banking Corporation
188 Quay Street
Auckland
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
Australia registered
business number
164 438 448
Z
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