Slide 1: 2020 Interim Results Presentation
2020 INTERIM RESULTS PRESENTATION REFINING NZ 2020 INTERIM RESULTS PRESENTATION For the six months ended 30 June 2020 use 17 August 2020
Slide 2: Disclaimer
DISCLAIMER REFINING NZ 2020 INTERIM RESULTS 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 t
Slide 3: HY 20 Highlights
REFINING NZ 2020 INTERIM RESULTS PRESENTATION HY 20 HIGHLIGHTS • Outstanding safety and operational performance • Refinery and RAP throughput impacted by COVID-19 • Fee Floor protected the Company against low refining margins and COVID-19 impacts • Reset the 2020 cost base to reduce cash-breakeven t
Slide 4: Safety & Environment
SAFETY & ENVIRONMENT REFINING NZ Incident free operations during period of significant disruption 2020 INTERIM RESULTS PRESENTATION TOTAL RECORDABLE CASES[1] Other TRC (medical treatment, restricted work cases), LHS Number Lost time injuries, LHS #/200k hours LTIF, RHS 10 TRCF, RHS 1.0 8 0.8 • No re
Slide 5: Demand
DEMAND Effective operational response to unprecedented demand reduction2020REFINING NZ INTERIM RESULTS PRESENTATION HY 19 HY 20 Change Refinery Throughput Mbbl 21.2 15.4 5.8 ▼ 27% RAP Throughput Mbbl 10.3 7.5 2.8 ▼ 27% • Unprecedented fuel demand destruction, due to COVID-19 travel Operational avail
Slide 6: Refining Margins
REFINING MARGINS REFINING NZ Volatile, depressed refining margins due to COVID-19 2020 INTERIM RESULTS PRESENTATION HY 19 HY 20 Change US$/BARREL Singapore Complex Margin* 0.21 (1.60) (1.81) Freight 2.00 1.61 (0.39) Product quality 0.65 0.76 0.11 Plant availability (0.14) (0.22) (0.08) Crude cost an
Slide 7: Financial: Reset the cost base while operating at the Fee Floor
FINANCIAL REFINING NZ Reset the cost base while operating at the Fee Floor 2020 INTERIM RESULTS PRESENTATION HY 19 HY 20 Change Revenue - Refinery [1] NZ$M 146.1 96.5 49.6 ▼ 34% • Significant decline in revenue due to low margins and throughput – COVID-19 impacts Revenue - Infrastructure [1] NZ$M 25
Slide 8: Adjusted EBITDA Variances to HY19
ADJUSTED EBITDA VARIANCES TO HY19 Decline in revenue partly offset by Fee Floor payments and cost REFINING NZ reductions 2020 INTERIM RESULTS PRESENTATION NZ$m Processing Fee Revenue ▼ (27%) 70 NZ$86 m 56 Refining 60 margin • Lower variable costs (cyclic mode) 50 • Stopped non-essential activity 40
Slide 9: c$70M Reduction in 2020 Opex and Capex
c$70M REDUCTION IN 2020 OPEX AND CAPEX Provides foundation for operating cash neutral from Q2 in 2020 REFINING NZ 2020 INTERIM RESULTS PRESENTATION NZ$m 300 ▼25% Opex 250 • Deferral of platformer and crude distillation shutdown into Capex 2021 200 (32) • Optimisation of capital budget, in line with
Slide 10: Financial: Strong net tangible asset backing
FINANCIAL REFINING NZ Strong net tangible asset backing 2020 INTERIM RESULTS PRESENTATION • Share price over the previous 12 months has tracked the decline in GRM, well below the post-impairment NTA of $1.74 per share • Impairment testing has been undertaken based on existing refining business model
Slide 11: Balance Sheet Strengthened: Maintaining cash neutral position
BALANCE SHEET STRENGTHENED REFINING NZ Maintaining cash neutral position 2020 INTERIM RESULTS PRESENTATION • February 2020 matrix guidance withdrawn: - Steps taken to maintain cash neutral position - $70 million reduction in FY20 planned expenditure • Covenant compliant: - 12 months to 30 June 2020,
Slide 12: Balance Sheet Strengthened: Creating runway for value creation
BALANCE SHEET STRENGTHENED REFINING NZ Creating runway for value creation through Strategic Review 2020 INTERIM RESULTS PRESENTATION • Increased and extended debt facilities: • $50m of additional lines • extended maturities on $120m debt • 5.3 years average tenor and no significant maturities in nea
Slide 13: Strategic Review
STRATEGIC REVIEW REFINING NZ Focused on unlocking the full value of our assets 2020 INTERIM RESULTS PRESENTATION Phase I complete, with two options taken forward to Phase II (detailed planning) – next update around end of Q3 ▪ Focused on achieving a structural reduction in complexity and operating c
Slide 14: Outlook
OUTLOOK REFINING NZ Uncertain market conditions persist, exacerbated by COVID-19 2020 INTERIM RESULTS PRESENTATION • GRM expected to remain volatile in the near term • COVID-19 impacts & recovery, USA-China tensions and Chinese exports • Singapore Complex Margin forecast to improve from H1, but rema
Slide 15: Looking Ahead
REFINING NZ 2020 INTERIM RESULTS PRESENTATION LOOKING AHEAD • Challenging and volatile market conditions persist, exacerbated by COVID-19 • Maintain cash break-even through 2020 at Fee Floor • Strategic Review well progressed – simplification plans to be finalised end Q3 for implementation
Slide 16: 2020 Interim Results Presentation
2020 INTERIM RESULTS PRESENTATION REFINING NZ 2020 INTERIM RESULTS PRESENTATION For the six months ended 30 June 2020 use 17 August 2020
Slide 17: Appendix 1: Glossary
REFINING NZ 2020 INTERIM 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 organisat
Slide 18: Appendix 2: Non-GAAP Measures
REFINING NZ 2020 INTERIM 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 19: Appendix 3: Covenants
REFINING NZ 2020 INTERIM RESULTS PRESENTATION APPENDIX 3 COVENANTS Refining NZ’s banks have been grated 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