Slide 1: Refining NZ 2020 Annual Results Presentation
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION REFI NI NG NZ 17 February 2021 2020 ANNUAL RESULTS use PRESENTATION 2020 FINANCIAL RESULTS BRIEFING
Slide 2: Disclaimer
REFINING NZ 2020 ANNUAL RESULTS DISCLAIMER PRESENTATION • This presentation contains forward looking statements concerning the financial condition, results and operations of The New Zealand Refining Company Limited (hereafter referred to as “Refining NZ”). • Forward looking statements are subject to
Slide 3: FY20 Performance, Strategic Review Update, Looking Forward to FY21
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION FY 20 PERFORMANCE STRATEGIC REVIEW UPDATE LOOKING FORWARD TO FY21
Slide 4: Summary
REFINING NZ 2020 ANNUAL RESULTS SUMMARY PRESENTATION Refining NZ has safely navigated the most challenging business environment in its 60-year history and established the pathway to future value creation for shareholders Best safety performance on record P Effective operational response to unprecede
Slide 5: 2020 Performance Highlights
REFINING NZ 2020 ANNUAL RESULTS 2020 PERFORMANCE HIGHLIGHTS Safely navigated COVID-19 impacts and reset cost base PRESENTATION FY 19 FY 20 Personal TRCF [1] 0.27 0 PSafe operations Process Tier 1 [1] 0 0 Tier 2 [1] 0 0 Releases outside of consent 1 5 Throughput Mbbl 42.7 29.9 PDeliver to customer pl
Slide 6: Safe Operations: Best safety performance on record
REFINING NZ 2020 ANNUAL RESULTS SAFE OPERATIONS Best safety performance on record PRESENTATION • Incident free operations during period of significant disruption through COVID-19: - No recordable injuries - No Tier 1 or Tier 2 [1] process safety events • Strong focus on risk and management of change
Slide 7: Deliver to Customer Plan
REFINING NZ 2020 ANNUAL RESULTS DELIVER TO CUSTOMER PLAN Effective operational response to unprecedented demand changes PRESENTATION FY 19 FY 20 Change • Unprecedented fuel demand destruction, due to COVID-19 travel restrictions Refinery Throughput Mbbl 42.7 29.9 12.8▼ 30% RAP Throughput Mbbl 20.8 1
Slide 8: Refining Margins: Second lowest GRM on record
REFINING NZ 2020 ANNUAL RESULTS REFINING MARGINS PRESENTATION Second lowest GRM on record FY 19 FY 20 Change US$/BARREL Singapore Complex Margin 1.02 (1.65) (2.67) (SCM)1 Freight 1.80 1.55 (0.25) Product quality 0.75 0.69 (0.06) Plant availability (0.13) (0.16) (0.03) Crude cost and yield 1.90 1.20
Slide 9: 2020 Financial Snapshot
REFINING NZ 2020 ANNUAL RESULTS 2020 FINANCIAL SNAPSHOT PRESENTATION Cash break-even maintained through COVID-19 impacts FY 19 FY 20 Change • Significant decline in revenue due to low margins and throughput – COVID-19 impacts Revenue - Refinery [1] NZ$M 297.8 189.9 107.9 ▼ 36% • Fee Floor in operati
Slide 10: 2020 v 2019 EBITDA Comparison
REFINING NZ 2020 v 2019 EBITDA COMPARISON Decline in revenue partly offset by Fee Floor payments and cost 2020 ANNUAL RESULTS PRESENTATION reductions Processing Fee Revenue ▼ (41)% FY20 $142m FY19 $242m GRM ▼ (69)% Other Income includes FY20: US$1.63/bbl Gain on assets sale $5.9m FY20 FFE1: US$4.40/
Slide 11: 2020 v 2019 Cost Comparison
REFINING NZ 2020 v 2019 COST COMPARISON Reset cost base to cash break-even at Fee Floor 2020 ANNUAL RESULTS PRESENTATION • Optimisation of capital budget in line with the latest asset management strategy • Deferral of platformer and crude distillation maintenance turnaround to 2021 • Compliance-base
Slide 12: Net Debt Lowered
REFINING NZ 2020 ANNUAL RESULTS NET DEBT LOWERED Strong cash focus to protect balance sheet PRESENTATION Covenant Actual 31 Dec 2020 Gearing Max 45% 27% Interest cover Min 4x 6x Total Interest cover Min 2x 4x Covenant compliant: • Cash-neutral operations through cost base reset • FY20 includes 12 mo
Slide 13: Balance Sheet Strengthened
REFINING NZ 2020 ANNUAL RESULTS BALANCE SHEET STRENGTHENED Creating runway for value creation through Strategic Review PRESENTATION • Refining NZ increased and extended its debt facilities in 2020: • Increased bank lines by $50 million • Extended maturities on $120 million of facilities • c.5 years
Slide 14: Strategic Review Update
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION FY 20 PERFORMANCE STRATEGIC REVIEW UPDATE LOOKING FORWARD TO FY21
Slide 15: Strategic Review Update
REFINING NZ STRATEGIC REVIEW UPDATE Refinery simplification implemented. Significant progress made 2020 ANNUAL RESULTS PRESENTATION assessing potential import terminal conversion • Refinery simplification has been in effect from the beginning of 2021 – to enable Refining NZ to maintain cash neutral
Slide 16: Refinery Simplification
REFINING NZ REFINERY SIMPLIFICATION Refinery simplified to enable cash neutral operations at the Fee 2020 ANNUAL RESULTS PRESENTATION Floor in 2021 • 18% reduction in primary crude • Asset maintenance strategy: intake: ‒ Campaign approach ‒ CDU1 1 continues to operate (equivalent to c.34m bbl p.a.)
Slide 17: Import Terminal Overview
REFINING NZ IMPORT TERMINAL OVERVIEW Safe, reliable and efficient fuel supply to Auckland and 2020 ANNUAL RESULTS PRESENTATION Northland markets (c.40% of total New Zealand market) Import Terminal System (ITS)1 2 jetties with multi-product Jetty capability Green shaded area is an Truck Loading Combi
Slide 18: Emissions Reduction
REFINING NZ EMISSIONS REDUCTION Potential for significant reduction in New Zealand’s direct 2020 ANNUAL RESULTS PRESENTATION emissions • Conversion to an import terminal would result in a significant reduction in Refining NZ’s Scope 1 and 2 emissions - 98% or c.1.2 million tonnes CO2 equivalent p.a.
Slide 19: Cost Estimates
REFINING NZ COST ESTIMATES Phased transition and conversion costs over 4-5 years, 2020 ANNUAL RESULTS PRESENTATION with significantly lower ongoing cash costs • Total one-off transition and conversion costs are currently estimated at c.$200m over 4-5 years (excludes refinery demolition costs) ‒ Appr
Slide 20: Commercial Framework
COMMERCIAL FRAMEWORK Focused on agreeing a price which is both acceptable to customers REFINING NZ 2020 ANNUAL RESULTS PRESENTATION and fair to non-customer shareholders Current arrangements Potential future import terminal arrangements • Current refinery Processing Agreements were entered • Would r
Slide 21: Indicative Timeline
REFINING NZ INDICATIVE TIMELINE 2020 ANNUAL RESULTS PRESENTATION Earliest possible terminal commencement timing is 20221 Key milestones: Term sheet agreed Final Investment Decision / Import terminal commencement with customers Refining NZ board approval Today Customer negotiations FEED2 and detailed
Slide 22: Next Steps
REFINING NZ NEXT STEPS 2020 ANNUAL RESULTS PRESENTATION Focused on concluding customer negotiations in Q1 2021 • Refinery simplification has been in effect from the beginning of 2021, to enable Refining NZ to maintain cash neutral refinery operations at the Fee Floor in 2021 ‒ Strong focus on mainta
Slide 23: Looking Forward to FY21
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION FY 20 PERFORMANCE STRATEGIC REVIEW UPDATE LOOKING FORWARD TO FY21
Slide 24: Outlook
REFINING NZ OUTLOOK 2020 ANNUAL RESULTS PRESENTATION • Outlook for refining margins remains challenging in the near term: • Global oil demand has improved but remains 5.0-6.0% lower than pre-pandemic levels. • COVID-19 travel restrictions likely to affect jet fuel demand through 2021 • Significant r
Slide 25: 2021 Priorities
REFINING NZ 2020 ANNUAL RESULTS 2021 PRIORITIES PRESENTATION Safe, reliable and compliant operations throughout 2021 Provides time to negotiate Turnaround 2021 executed safely, on time and within budget with customers Cash break-even operations at the Fee Floor 1 Conclude import terminal negotiation
Slide 26: Appendices
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION REFI NI NG NZ 17 February 2021 2020 ANNUAL RESULTS use PRESENTATION 2020 FINANCIAL RESULTS BRIEFING APPENDICES
Slide 27: Appendix 1: Glossary
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION APPENDIX 1 GLOSSARY • Concawe – an organisation that benchmarks safety performance for member companies and JV’s in the EU, Norway and Switzerland. The latest benchmarking study was carried out in respect of 2019 performance, covering 42 member organisati
Slide 28: Appendix 2: Non-GAAP Measures
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION APPENDIX 2 NON-GAAP MEASURES Refining NZ’s standard profit measure prepared under New Zealand Generally Accepted Accounting Practice (NZ GAAP) is net profit/(loss) after tax. Refining NZ has used non-GAAP measures when discussing financial performance in
Slide 29: Appendix 3: Covenants
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION APPENDIX 3 COVENANTS Refining NZ’s banks have been granted the benefit of a Negative Pledge Deed, which sets out a number of covenants that the Company agrees to comply with. These are outlined as follows: Senior Interest Cover Ratio The ratio of Negative
Slide 30: Refining NZ 2020 Annual Results Presentation
REFINING NZ 2020 ANNUAL RESULTS PRESENTATION REFI NI NG NZ 17 February 2021 2020 ANNUAL RESULTS use PRESENTATION 2020 FINANCIAL RESULTS BRIEFING