last shell site standing… - z

COMMERCIAL E-NEWSLETTER | JUNE 2012

z.co.nz

Greetings,

At Z we are proud to be transparent when it comes to sharing our financial results. In the year to March 31 2012 we managed to post strong results in what is a very competitive market. The industry itself has low margins of profit and these need to improve if we are going to continue to invest in much needed infrastructure.

The roll out of our new Point of Sale (POS) at truck stops is an example of this commitment to investing in New Zealand. We will continue to invest as we are committed to New Zealand.

If you have any questions about anything you read in The Energy Drop, please do not hesitate to contact us by reply email to [email protected]

Until next time,

Lindis JonesGM Commercial

1. Our new POS system!

2. The diesel flow rate compared to our service stations is a lot quicker

3. Less traffic

4. Truck stops are usually located on main trucking routes and are a lot easier to pull in and out of than services stations.

5. No risk of hitting the canopy of one of our service stations.

Top 5 reasons to use our truck stops:Below: A customer exiting one of our service stations. His truck went up onto the kerb causing the front trailer to hit the canopy. This closed down three lanes on the site for 8hrs while we had the situation assessed by engineers on the safest way to remove the truck with the least damage.

The 29 June marks the date that the last Shell branded service station will be re-branded as a Z service station.

Shell Addington is the last of 220 Z service stations and 90 Z truck stops that have been re-branded since we made the decision to launch a kiwi brand in May 2011.

Last Shell site standing…


z.co.nz

As a customer, we think you have a right to know how we’ve performed from a financial perspective.

In May of this year we announced our first annual results under the Z brand, almost exactly a year after we launched the Z brand in May 2011.

Z posted Earnings Before Interest, Depreciation, Amortisation and Financial Instruments of $177 million for the year ended 31 March 2012. This is up from $167 million for the previous financial year. Net profit after tax was $77 million, down from $203 million for the 2011 financial year (although that included the effect of a $121 million revaluation of the company’s assets).

The result was at the lower end of predictions due to low refining margins in the last quarter and significant price discounting across the retail fuels market. With 91 octane fuel consistently above $2 per litre, on-going public scrutiny of prices was to be expected.

Z Chief Executive Mike Bennetts said “The 12 months to 31 March 2012 were all about building a new brand and implementing the company’s strategy. These two elements in partnership are the cornerstone of being a local company and have already enabled us to post strong results in very competitive market conditions.”

Z’s financial results for the year ending 31 March 2012

A real highlight over the last financial year is our brand tracking shows that Z is already a strong preference for Kiwis, with those surveyed more likely to recommend Z than any competitor. This is very satisfying given that when the survey was conducted, only two thirds of the network had been re-branded. Customers are enjoying our commitment to bringing service back to forecourts, Z being locally owned, and our contributions to local neighbourhoods.

One thing we are very aware of is the impact of prices on customers so we are committed to being as straight up and transparent as possible on prices and margins.

“When you boil it down, if you take all of the money we made – including our shop sales – and divide that by the total litres of fuel sold, we made a bottom line profit of about 2.1 cents per litre; that’s a return on capital employed of 9.6 per cent,” said Mike.

Mike adds “[the fuel industry] remains a highly competitive, low margin industry. We are getting to the point where returns are only now providing the confidence we need to commit to the major infrastructure investment that we have been expressing concerns about for the past year or so.”

Z Energy recently took one step closer to becoming a stand-alone company by terminating our long term product supply arrangement with Shell. From mid-May, Z Energy will be sourcing all our refined products (petrol and diesel) through a new arrangement with Marcquarie Bank. Through this arrangement we will source most of our product from Hyundai Oilbank in South Korea.

In April, members of Z’s supply team travelled to Daesan, South Korea to strengthen the relationship with the team at the Hyundai refinery. A key part of the trip was to inspect the processes to ensure our customers have the highest quality products equal to the quality we had experience from Shell. Z wanted to review the Refinery Operation and especially the manufacture and storage of product, and how the product would be supplied to our import tankers.

“We had detailed discussions with Hyundai and Macquarie on issues that could occur with the manufacture of our fuel and the need to ensure no contamination occurred either during loading or on the ship” says Dave Jacobson, Z’s product quality and technical manager. After this initial visit Z is very confident that there are no causes for concern.

Z is sourcing its own fuel


In May, the three man Z team returned to Daesan to attend the loading of the first tanker supplied with prouct from Hyundai Oilbank. The vessel that was chartered for this inaugural shipment was the Ocean Autumn, a three year old boat which can carry around 45 million litres of product. On 16 May the loading of 18 million litres of diesel, 15 million litres of Unleaded 91 petrol and 14 million litres of Unleaded 95 petrol began.

After 17 days at sea, the Ocean Autumn arrived in New Zealand waters with the first port of call Marsden Point. After this she carried on to make deliveries to Lyttleton and Nelson.

As mentioned in our last issue, at Z we are committed to doing what matters, and Health and Safety is the most important element of our business. Last year’s Rena catastrophe off the Bay of Plenty coast reminds us why we need to remain vigilant when managing the risks of shipping operations. At Z, this is acknowledged as one of our highest risk areas, and as a customer, you have a right to know what we do to manage marine risk for vessels we use to import crude oil and refined product.

We approach the safety of shipping operations on multiple levels.

The first level is to make sure that vessels for importing crude oil and refined products into New Zealand meet International Oil Company shipping standards. To do this Z belong to the Oil Companies International Marine Forum (OCIMF) and access vessel reports called Ship Inspection Reports (SIRE report). A SIRE report is an independent audit that every vessel must undertake at least twice per year to be an eligible vessel for Z to use. A SIRE report reviews the vessel’s operations, its management, crew training, ship maintenance, ship appearance and procedures.

Z employs a specialised ship vetting organisation, RightShip to review the SIRE report for all vessels we consider using for imports. RightShip completes thousands of ship assessments every year for a wide range of organisations. RightShip has a pool of highly experienced Master Mariners and Nautical Engineers who give us advice on the suitability of vessels.

The second step involves Z and Terminal Operators assessing the vessel’s physical characteristics against the ports terminals it will potentially go to. This is to ensure that the vessel is able to berth safely.

As Z operates within multiple joint ventures, we also request that our joint venture partners review vessels we are considering for use. For crude oil imports to Marsden Point refinery, Refining New Zealand assesses the suitability of each vessel and has the right to decline any vessel they believe is not suitable. We only class a vessel

Partners in Safetyas suitable for use following approval from RightShip and SIRE, the terminals, and our joint venture partners.

Once a vessel is chartered, the ship and Z jointly employ an Agent for that vessel. One of the Agent’s responsibilities is to supply port information to the Vessel Master to ensure safe passage into and out of the wharf.

And lastly, once a vessel arrives at the terminal there is an extensive “Ship to Shore” check list that ensures the discharge operations are undertaken safely. This includes regular rechecking of operations during the discharge.

Z understands the importance of mitigating all risks concerning the vessels we use to import products into our shores, and you as our Commercial customers can rest easy knowing the fuel products you use are brought into New Zealand in the safest possible way.


z.co.nzz.co.nz

Meet Danusia WypychZ Position:Sustainability Manager

Z career: Last year, after Mike (CEO) and Lindis (Commercial General Manager) each took a knock to the head, it was decided to hire a Sustainability Manager. No seriously, there are critical financial viability and environmental impacts we need to address. Working with the integrated Z team, my job is to get us match fit so we can reduce our environmental impact and ensure the long term success of transport energy in NZ. What we move and how we move might change over the years to come but Z plays a key role in powering NZ on the move.

People profile

All Shell trademarks are used under license by Z Energy Limited.

On 30 May we installed the first of our new card reader systems at a customer’s truck stop in Hamilton. This is the first of three sites where we are installing the technology as part of a pilot to test how everything works before we roll it out to all of our sites across the country.

Once completed, the new card reader system will make our truck stops a lot more reliable and user friendly. You will have the option of taking a receipt, and if you don’t want one, it won’t print one, so the machine will no longer get jammed with paper. The card reader itself will work much better and be more like an ATM rather than the current swipe technology that can sometimes be unreliable. The system is designed for the outdoors, has the very latest technology and will even have an interactive screen that can let you know if the site is stocked out and how far away a delivery will be.

Point-of-sale trialThe next two trial sites to get the new system are in Methven and Manukau City, and both of these will be installed by 10 July. If you are a customer of one of these sites, you will be advised by letter when the site will be unavailable as it takes eight hours to install the new technology.

We will have a full list available on our website once we start installing the system at all sites from August. The full roll-out of this technology is expected to take three months. This list will allow you to plan well in advance when the truck stop you use is affected. We will also be in contact directly to let you know when installations are happening at the sites you regularly use.

Over the past 9 months we started getting our own corporate operations in order and set ourselves some ambitious sustainability goals for 2015 including working with customers to increase their fuel efficiency, leading the supply of biofuels in NZ and reducing the impacts of our products and business. How serious are we? Check it out in our annual report. We’ll progress, measure and report on our sustainability goals each year.

Favourite part of the job: I love the challenge in the variety of the role. One day it’s “how could we make fuel from trees?” the next it’s working on recycling at retail sites or reducing the rubbish from our offices.

If I’m allowed two favourites, I’ll add the expertise and intensity of the customers I meet and the expert colleagues I work with. You always have to bring your A game.

Vision for future of Z Energy: Z is NZ’s most sought after supplier for transport energy. We’ve earned a reputation for delivering value to customers and innovating NZ’s transport energy with them.

Hobbies/interests outside work: My three young boys keep me out of trouble and in-touch with concussion care, Lego and computer games. I completed my first triathlon this year as part of my commitment to support a friend’s weight loss. Now I’m staring down my fear of swimming in the sea most Sunday mornings. In a wetsuit - it is Wellington.

If I end up with time on my hands and sun in the sky you’ll find me out in the garden.

last shell site standing… - z

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