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04/12/2012 - General News

Z Broadway opens its doors

Z Energy has this morning opened its newest Z-branded service station, Z Broadway. This will be a six lane refitted site, with the full Z service and convenience offer as well as a carwash.

Located near the airport on the corner of Calabar Road and Broadway, Z Broadway was officially opened this morning by local Rongotai MP Annette King.

The site was formerly operated as a retail service station by a competitor and closed in August 2012.

Z’s Retail General Manager, Mark Forsyth, said that Z was pleased to be taking over the Strathmore site.

“We’re stoked to be the first service station to welcome both visitors and returning Wellingtonians to the world’s coolest little capital,” said Mark.

 

Z is jointly owned by the New Zealand Superannuation Fund and Kiwi company Infratil. Since making the decision to rebrand as Z Energy, the New Zealand company has stayed committed to investing in New Zealand’s fuel infrastructure and growing their network.

“The opening of Z Broadway reflects our commitment by continued investment in New Zealand, and offering New Zealanders, and in this case Wellingtonians, greater choice and convenience,” Mark said.

Mark said the Broadway site is a very important addition to Z’s Wellington retail network and expects it to be an extremely busy site that will serve the growing airport area very well.

“If you’re heading to or from the airport or just in the neighbourhood, pop in to Z Broadway to fuel up. While you’re there, try our delicious espresso coffee and fresh café quality food,” said Mark.

 

06/11/2012 - General News

Z Energy results announcement for the six months to 30 September 2012

Z Energy’s strengthening local brand and progress with its strategy implementation saw the company deliver solid underlying performance for the first six months of the 2013 financial year, despite vigorous competition and a stubbornly slow domestic economy.

Z’s statutory reported Net Surplus for the six months ended 30 September was $2.3 million, down 90 per cent from $22.9 million for the previous corresponding period. Z’s statutory reported numbers are calculated on an historic cost basis as required by International Financial Reporting Standards (IFRS). Historic cost calculates the cost of fuel sold on a first in, first out basis. Therefore historic cost earnings take into account changes in the value of inventory, which may be volatile depending on how much the price of oil fluctuates. Dubai crude started the period at $NZ147 per barrel and finished at $NZ133.

Z’s management (and capital providers) focus on current cost earnings as this reflects the underlying business model, with Z constantly selling fuel and buying product to replenish its inventory. Z uses various risk management tools including currency and commodity hedging to protect margin in a business which is high volume and low margin.

Current cost is calculated by revaluing the cost of fuel to its current value. The difference between historic cost earnings and current cost earnings reflects the differing valuations of the period’s opening and closing fuel (or inventory). Over time the two measurements should be similar, but there will be differences in any one accounting period and generally historic cost earnings will be more volatile.

Z’s recorded Current Cost Operating EBITDAF for the six months was $96.8 million, up 17 per cent from $82.8 million for the previous corresponding period.

Z Chief Executive Mike Bennetts said he was particularly pleased with how Z’s ongoing strategy implementation and the evolving Z brand was helping deliver consistent earnings despite continued volatility in both global and domestic fuel markets.

Volumes across the industry declined over the six months, reflecting petrol prices above $2 per litre and subdued economic activity. Within the industry, strong competition in the retail market in particular has seen shifts in market share, with Z’s petrol sales down seven per cent compared to the same period last year. This has been impacted by the closure of many Z sites over the period for rebranding and refitting.

“It’s now one year since the commitment was made to the Z brand, resulting in one of the country’s most visible rebranding projects. It’s now three months since the rebrand of 300 sites was completed, on time and on budget, with Z now a wholly independent, locally owned company trading under a distinct local brand,” said Mike Bennetts.

“Given the investment in building and owning the Z brand rather than leasing a global brand, we have been encouraged with the way the new Z brand is resonating with customers.

“Independent brand tracking now shows Z as New Zealand’s most preferred and recommended brand in this category, with increasing customer loyalty.”

Additionally, Z’s new convenience offer is landing well, with shop sales in reformatted Z stores delivering a 5.5 per cent growth in sales year on year. All 100 tier one sites will be refitted by the end of the financial year.

Mike Bennetts said progress continued to be made against strategy.

“We’ve completed our $12 million investment in a new retail state-of-the-art point of sale system for a faster, more reliable customer experience and we now in the resource consenting process for significant investments in boosting the country’s tight fuel supply chain.

“We’ve decided Mount Maunganui and Lyttelton represent the most strategically important locations for additional bulk fuel storage and we’re now in the preliminary engineering and consent phases for a $40 million investment in 35 million litres of new bulk fuel storage at these ports.

“On top of the 30 million litres we commissioned at Lyttelton last year, this additional tankage will start to address some of the serious infrastructure deficit that has developed over the last 20 - 30 years and enable a more secure and reliable supply of fuel to New Zealand. It will also enable Z to procure larger shipments of imported products that will lower freight costs.”

Mike Bennetts said Z remained committed to transparency around prices, margins and profitability.

“In a $2 per litre plus market, the New Zealand public expect to be told how much money a local company like Z makes. Over the six month period there was volatility in fuel margins but, at the end of the period, Z’s current cost net profit after tax equates to a margin of 2.6 cents per litre compared to 2.4 cents per litre for the previous corresponding period.

“While there has been a much-needed, short-term improvement in gross margins, this was mostly offset by growing operating and financing costs, meaning we are still a high volume, low margin industry with real need for major capital investment. Commentators like the AA repeat that fuel margins are higher than historical averages but they miss the point that the post tax profits are largely the same. It is also Z’s view that the history of this industry has not served New Zealand or the motorist well and that the current state of the industry and its infrastructure is something to be fixed rather than be proud of.”

Mike Bennetts said Z remained committed to building a more efficient and effective company that delivered the best value to customers.

“We’ve taken real gains over the last six months which enable us to grow our shop and carwash income, generate efficiencies, refocus attention on profitable commercial customers and enable us to focus on reinvestment in our business and in meeting our customers’ needs.

“Z’s recent contract to buy petrol and diesel from a Korean refinery will cut $5 million of annual costs out of the business and in March 2013 Z will settle an unconditional contract to sell and lease back 44 retail service station properties across New Zealand.

“This contract follows eight properties already sold and leased back and will free up a further $84 million of capital for reinvestment back into the growth of the core business.”

Mike Bennetts said he expects conditions to remain challenging over the remainder of the financial year, with the volatility that has characterised the first half, but reaffirmed the company’s full year current cost EBITDAF guidance at $185 - $200 million.

Reconciliation from Operating EBITDAF (Current Cost) to Net Surplus (per statutory accounts)
Operating EBITDAF (Current Cost) 96.8
Cost of sales adjustment (42.5)
Associate earnings 3.6
EBITDAF (Historic Cost) 57.9
Interest other (22.9)
Interest shareholder (13.5)
Depreciation and Amortisation (20.5)
Impairments (0.2)
Asset Revaluations (1.6)
Hedge Revaluations 4.4
Income Tax (1.3)
Net Surplus (per statutory accounts) 2.3

The Z Energy Group provides information on its earnings based on both a Historic Cost and Current Cost basis. The cost of sales adjustment (COSA) is the difference between earnings calculated on an historic cost basis and a current cost basis and reflects the differing valuations of the period’s opening and closing fuel (or inventory). Historic cost (as required by IFRS and disclosed on the statutory financial statements) calculates the cost of inventory on a first in, first out basis. Current cost revalues all stock to its current value. Current cost is a non-IFRS number but is used by management and capital providers as it reflects the underlying business model.

Historic cost earnings are subject to fluctuations in the value of the stock held on the balance sheet due to changes in the price of oil and exchange rates. Over time historic cost and current cost measures should deliver similar results but there will be differences in any one accounting period.

01/11/2012 - General News

Applications now open for $1m in funding for neighbourhood groups

Charities and community groups helping people in need within local neighbourhoods can now apply for funding from their local Z service station, via z.co.nz/goodinthehood. 

Z Energy last week announced that it will contribute over $1 million to neighbourhood groups and projects that matter the most to its customers, through the Z ‘Good in the Hood’ programme.

Applications are now open and Z’s team of passionate Retailers around the country are looking forward to viewing the applications and supporting organisations that are making a difference in their local neighbourhoods.

Z Energy CEO, Mike Bennetts, said the approach was as decentralised as possible.

“We want our 210 Z service stations to be at the heart of their neighbourhoods so we’re going for a truly local approach which will ultimately be determined by our customers.

“It doesn’t make any sense for me or somebody else in Wellington to try and decide what matters in Ashburton or Tauranga, so we’re asking the locals to tell us and for our customers to vote.”

The criteria that the group or project needs to fulfill to apply for ‘Good in the Hood’ include:

  • be active in the local neighbourhood around a specific Z station
  • be focused around helping people who need it and
  • be for a specific project or to fulfill a specific need.

Applications will be received over the month of November, with each of the 210 Z service stations then selecting four local neighbourhood groups or projects to support. These groups and projects will be announced on z.co.nz in February 2013.

Following that, every customer visiting a Z station for a period of time will be given an orange token and invited to physically vote for the organisation they wish to support. From that point, the votes will be tallied, the results will be announced and the cheques presented.

Each service station will have $5,000 to contribute through the Z Good in the Hood programme, with $4,000 through the on-site customer voting element and $1,000 for discretionary neighbourhood support over the year.

“We feel that it’s only fair to support the people who support us, and we think that ‘Good in the Hood’ will make a real difference in neighbourhoods across New Zealand. It’s one way we’re choosing to live our brand promise that Z really is for New Zealand,” says Mike. 


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There is more information about Good in the Hood, and the ability to submit your application, in the Good in the Hood section.

15/10/2012 - General News

‘Good in the Hood’: over $1 million to support what matters most

Z Energy today announced it will contribute over $1 million to neighbourhood groups and projects that matter the most to its customers, in the Z ‘Good in the Hood’ programme.

 

“Our customers have told us that they expect a Kiwi company to give back to local neighbourhoods and support the things that matter most to New Zealanders, so that’s what we’re doing with ‘Good in the Hood’,” said Z Chief Executive Mike Bennetts.

 

“We want our 210 Z service stations to be at the heart of their neighbourhoods so we’re going for a truly local approach which will ultimately be determined by our customers.”

 

On 1 November, through z.co.nz, neighbourhood groups and projects from across the country will be able to apply to a specific Z service station to be part of the programme.

 

The only criteria that the group or project needs to fulfill to apply for ‘Good in the Hood’ are:

 

• be active in the local neighbourhood around a specific Z site and

• be focused around helping people who need it.

 

For the month of November, applications will be received, with each of the 210 Z service stations then selecting four local neighbourhood groups or projects to support. These groups and projects will be announced on z.co.nz in February 2013.

 

Following that, every customer visiting a Z station for a period of time will be given an orange token and invited to physically vote for the organisation they wish to support. From that point, the votes will be tallied, the results will be announced and the cheques presented.

 

Each service station will have $5,000 to contribute through the Z Good in the Hood programme, with $4,000 through the on-site customer voting element and $1,000 for discretionary neighbourhood support over the year.

 

Mike Bennetts said the approach was as decentralised as possible. “It doesn’t make any sense for me or somebody else in Wellington to try and decide what matters in Ashburton or Tauranga, so we’re asking locals to tell us and for our customers to vote.

 

“What we’ve seen in the first year in which we trialed this approach is that we’ve been able to support all sorts of grass roots organisations making a real difference in local neighbourhoods.

 

“We think that ‘Good in the Hood’ will make a real difference in neighbourhoods across New Zealand. It’s one way we’re choosing to live our brand promise that Z really is for New Zealand.”



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There is more information about Good in the Hood, and the ability to submit your application, in the Good in the Hood section.

12/10/2012 - General News

Z and Hampsta partner towards a debt free Christmas

Z Energy is pleased to partner with Hampsta to help Kiwis save towards a debt free Christmas.

Hampsta is a Christmas savings card that helps people to put aside money each week to enjoy a great Christmas at the end of the year. Savings will automatically become available on the 1st of December every year until 10th January the following year, and can be used at participating stores nationwide.

Z’s General Manager of Retail, Mark Forsyth said that Z decided to become a participating hampsta retailer because it recognises how Christmas can be an expensive and stressful time of year.

“Christmas can be a stressful time for families, but budgeting in advance and squirrelling away a little bit of money each week to your hampsta card can help reduce the financial stress so often felt by Kiwis over the Christmas period,” says Mark.

More information on hampsta and other participating retailers can be found on www.hampsta.co.nz

28/09/2012 - General News

Z plans sale and leaseback of nine service station properties

Nine Z Energy service station properties throughout New Zealand have been placed on the market for sale through Colliers International.

The properties, located in Tauranga, Rotorua, Ngatea, Paeroa, Te Aroha, Hawera and Opotiki in the North Island and Blenheim and Dunedin in the South Island, will all be leased back by Z and will remain in the company’s nationwide network of service stations under registered leases.

The operation of the sites and the associated businesses are not for sale and Z plans to maintain its presence in these neighbourhoods.

The properties are for sale by deadline private treaty closing on Wednesday 31 October 2012 (unless sold before the deadline date) on initial lease terms of three to 12 years.

Z’s Asset Manager Gail Calder said that the property sales are part of Z Energy’s long term plan to enable further investment in capital to support the growth of its core business.

“We’re selling the freehold interest in these properties to release capital for reinvestment in the business,” she says.

“It’s an opportunity for us to direct capital into building new sites, while at the same time keeping these stations operating under the Z brand as part of our network.”

The offering follows the successful sale and leaseback of eight Z service station properties earlier this year.

The properties will be marketed by Colliers International, who co-ordinated Z’s successful sale and leaseback programme last year.

06/09/2012 - General News

The Z experience - becoming up to five times faster!

You know the feeling… you find yourself in the queue and all you want to do is pay and get on with your day. Maybe the kids are in the car. But each electronic transaction just drags on… the seconds become minutes… you feel your blood pressure begin to rise…

This all too common retail experience will soon be a thing of the past at Z Energy sites. The company is nearing completion of a $12 million project to replace the electronic point of sale systems in all 203 of the company’s service stations and 93 truckstops which will cut average EFTPOS transaction times from as high as 15 seconds to just a few.

Z’s General Manager of Retail, Mark Forsyth, said the most consistent feedback from Z’s customers was that they valued speed. He said the project will see a slow, 20-year-old system replaced with state-of-the-art Kiwi-made technology, cutting queues and getting customers in and out as quickly as possible.

“We’re investing heavily in giving our customers the speed they have told us they value and we’ve partnered with leading Kiwi technology company, Fusion Transactive, to deliver this project and the technology for us.

“Cutting 10 plus seconds off a transaction time doesn’t sound like much in itself, but the time savings add up, particularly during busy times, and will help minimise inconvenience for our customers. It will cut times in queues and help stop them from forming in the first place. It’s another example of Z listening to our customers and then taking action,” he said.

The replacement project is now underway, with the new system operational in around half the company’s retail sites. The project will be complete in November.

13/08/2012 - General News

Z Energy bond offer closes oversubscribed at $135 million

Z Energy Limited (‘Z Energy’) closed its retail bond offer on 10 August 2012, having successfully raised $135 million (which includes $35 million in oversubscriptions).

The offer opened on 18 July 2012 with an interest rate of 6.50% p.a. (paid quarterly in arrears) and a maturity date of 15 November 2019. The bonds are senior, secured, fixed rate obligations of Z Energy, and will rank equally with each other and with existing bonds issued by Z Energy.*

This issue represents the Z Energy group’s third successful retail issue in as many years since the New Zealand Superannuation Fund and Infratil acquired Shell’s New Zealand downstream oil and fuel operations in April 2010.** The proceeds of the issue will primarily be used to pay down bank debt.

Z Energy Chief Executive Mike Bennetts today said he was very pleased with the level of ongoing investor support for Z Energy.

“We are delighted to have previous and new investors choosing to continue to support Z Energy. We’re very pleased with the level of investor confidence and support both for Z Energy and the New Zealand market and we are determined to reward that support through building a world-class Kiwi company.” he said.

 

* The bonds are fully and unconditionally guaranteed by Z Energy, Aotea Energy Limited, Z Energy Holdings Limited, Greenstone Energy Finance Limited, Harbour City Property Investments Limited and Mini Fuels & Oils Limited ("Guarantors").  The guarantee is secured over all assets of the Guarantors, except for certain excluded assets. The Z Energy group's banks and bondholders share the same security over the Guarantors' assets on an equal ranking basis. Both groups rank behind security held by Z Energy’s suppliers over crude oil and refined products (and their proceeds), in each case to the extent that the supplier has not received payment of the purchase price for them.   The security also ranks behind statutorily preferred creditors and (in certain circumstances) other working capital providers.

** The ultimate joint owners of Z Energy, the New Zealand Superannuation Fund and Infratil, do not guarantee the bonds.

 

05/07/2012 - General News

Z Energy announces bond offer to New Zealand investors

Z Energy Limited (Z Energy) has today registered a Simplified Disclosure Prospectus (SDP) for an offer of bonds to the public with a principal amount of up to $100 million (with the option to accept oversubscriptions of up to $50 million) and a term of approximately seven years, maturing 15 November 2019.

Z Energy is pleased to be offering the bonds to New Zealand investors, following its two successful bond offerings in 2010 and 2011. This offer represents an opportunity to invest in the bonds of a locally owned and strategically important New Zealand energy company which distributes around one third of New Zealand’s total fuel.

The offer is expected to open on Wednesday 18 July 2012 and to remain open until Friday 10 August 2012, or such other date determined by Z Energy. The interest rate applicable to the bonds will be determined and announced prior to the offer open date. The bonds are expected to be quoted on the NZX Debt Market (NZDX) from 16 August 2012.*

The bonds are senior, secured, fixed rate obligations of Z Energy, and will rank equally with each other and with existing bonds issued by Z Energy. The bonds are fully and unconditionally guaranteed by the Z Energy Group.**

Bondholders and the Z Energy Group’s banks share the same security on an equal ranking basis. Both groups rank behind security held by Z Energy’s suppliers over crude oil and refined products (and their proceeds), in each case to the extent that the supplier has not received payment of the purchase price for them. The security also ranks behind statutorily preferred creditors and (in certain circumstances) other working capital providers.

Interest will be paid quarterly in arrears, with the first interest payment date scheduled for 15 November 2012. Early bird interest will accrue (to the extent applications are successful), at the interest rate, from the date on which subscription money is banked into the offer trust account to the issue date and be paid shortly after the issue date.

The Joint Lead Managers are:
ANZ: 0800 269 476, www.anz.co.nz/ipo
Craigs Investment Partners: 0800 226 263, www.craigsip.com
Forsyth Barr: 0800 367 227, www.forsythbarr.co.nz
Westpac Institutional Bank: 0800 601 901

Investors should contact any of the Joint Lead Managers or their financial advisor to request a free copy of the SDP.***

For further information contact one of the Joint Lead Managers on the contact details above.

* Application has been made to NZX Limited (NZX) for permission to list the Bonds on the NZDX and all the requirements of NZX relating to that application that can be complied with on or before the date of the SDP have been duly complied with. However NZX accepts no responsibility for any statement in the SDP or this announcement. NZX is a registered exchange, and the NZDX is a registered market, each regulated under the Securities Markets Act 1988.

** ‘Z Energy Group’ means Z Energy, Aotea Energy Limited, Z Energy Holdings Limited, Greenstone Energy Finance Limited, Harbour City Property Investments Limited and Mini Fuels & Oils Limited. The guarantee is secured over all assets of the Z Energy Group, except for certain excluded assets.

*** Applications for bonds can only be made using the application form included in the SDP. No applications for bonds will be accepted or money received unless the subscriber has received a copy of the SDP. The minimum application amount is for bonds with a principal amount of at least $5,000 and in multiples of $1,000 thereafter.

Contact:

Richard Norris, Treasurer: 04 462 4611
Jonathan Hill, Corporate Communications: 04 498 0212

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