Z Energy

Z Energy (NZX: ZEL[1]) is a New Zealand fuel distributor with branded service stations. It comprises some of the former assets of Shell New Zealand and Chevron New Zealand. Since mid-August 2013, it has been listed on the NZX with the code ZEL. The largest shareholders were Infratil and the New Zealand Superannuation Fund, each with 20%. It is also listed on the ASX with the code ZNZ. Shell exited the New Zealand fuel distribution business in April 2010, selling its operations to Infratil and NZ Super.[8] The former Shell operations were rebranded as Z Energy in 2011.

Z Energy Limited
Z
Public
Traded asNZX: ZEL[1]
ASX: ZEL[2]
IndustryOil and Gas
PredecessorsShell New Zealand Limited (1911-2010) Greenstone Energy Limited (2010-2011)
Founded1911 (1911) in Auckland, New Zealand as Shell New Zealand Ltd
Headquarters3 Queens Wharf,
Wellington, 6011
,
New Zealand[3]
Number of locations
305[4] (2016)
Area served
New Zealand and Australia
Key people
  • Mike Bennetts (CEO)
  • Chris Day (CFO)
  • Peter Griffiths (Independent Chairman)
[1]
ProductsDiesel, Petrol and Oil
ServicesFuel Stations
Revenue $5,450,000,000[5] (2019)
$252,000,000[5] (2019)
Total assets $2,847,000,000[5] (2019)
Total equity$920,000,000 (2019)
Number of employees
2,656[5] (2019)
Subsidiaries
  • New Zealand Oil Services Limited (50%)[6]
  • Wiri Oil Services Limited (28%)[6]
  • Loyalty New Zealand Limited (25%)[6]
  • Coastal Oil Logistics Limited (25%)[6]
  • The New Zealand Refining Company (15%)
  • Chevron NZ Limited[7]
Websitez.co.nz

Background

Shell exited the fuel distribution market in New Zealand in 2010. Shell and its assets including a 17.1% stake in listed Refining NZ were acquired by Infratil and the New Zealand Super for $891 million.[9] However the Taranaki based exploration and production division were not part of this sale portfolio.[10]

Z Energy currently competes with BP, ExxonMobil subsidiary Mobil NZ and several smaller independent groups such as Gull. Former competitors include Chevron subsidiary Caltex of which Z Energy acquired in June 2016.

Founding

In 2010 the branding remained as Shell whereas the holding company was renamed from Shell NZ to Greenstone Energy. After surveying 17,000 customers the following, the company changed its names to Z Energy Limited and branded the service stations as Z.[11] The rebranding exercise is believed to cost around NZ$60m, compared to the NZ$10m/year cost of licensing the Shell brand.[12] The company said it would focus on better forecourt service and better food.[12]

Following the re-branding and after adding five new service stations, the market share for petrol held by Z Energy slipped from 31.6% in 2011 to 29.0% in 2013.[13]

Following the change in ownership, the firm has employed more New Zealanders in positions that were previously outsourced overseas including: IT,[14] finance and call centre services.[15]

Acquisition

In 2010, Infratil and New Zealand Super paid for the Shell acquisition and its 17.1% shareholding in NZ Refining with $420 million of equity funding.[9]

At the time of the acquisition from Shell, Z Energy had an ungeared balance sheet. The balance of the acquisition cost was met by borrowings by Z Energy.[9]

The stake in NZ Refining was sold to Z Energy after the IPO for $100 million.[13] The net outlay by Infratil and New Zealand Super for 100% of Z Energy in 2010 was effectively $320 million.

Z Energy had $430 million of retail bonds at March 2013,[13] up from zero debt in 2010 when Infratil and NZ Super acquired it.

IPO

Before the IPO

The majority of the Z Energy service stations are off-balance sheet. 152 service stations are leased by Z Energy from third parties and five are independently owned. Z Energy owns 56 service stations freehold. Z Energy sold and leased back 47 service stations in 2012-13 for cash proceeds of $87 million.[13]

Z Energy revalued upwards its remaining property plant and equipment by 54% or $170 million to a total of $481 million in April 2013.[13]

The company also paid dividends totaling $224 million to Infratil and the New Zealand Super in the three-year period before the IPO, including $70 million between April 2013 and the IPO.[13]

IPO

In July 2013, shares in Z Energy were offered in an IPO which was priced at $3.50 per share.[13] That IPO valued Z Energy at $1.4 billion. This value was almost four and half times the net cash outlay by Infratil and NZ Super to acquire it three years earlier.

The IPO prospectus showed that Z Energy expected to declare total dividends to shareholders equivalent to 6 cents per litre of fuel sold in 2013-14. This includes dividends to be paid to Infratil and NZ Super immediately prior to the IPO.

Tim Hunter, deputy editor of the Fairfax Business Bureau, said that in completing the IPO, Infratil and NZ Super will "have pulled off a piece of exceptional business".[16]

Z Energy issued a prospectus for its non-underwritten IPO on 25 July 2013. The IPO will raised $840 million from a mixture of shares sold by the current parent and new shares issued.[13]

All of the proceeds went to Infratil and New Zealand Super, including funds raised by the issue of new shares in Z Energy Limited. Z Energy purchased the 17.1% stake in NZ Refining for $100 million from Infratil and New Zealand Super after the IPO.

Following the IPO, Z Energy has 400 million shares in total. The IPO price was $3.50. This provided a market capitalisation of $1,400 million.[13]

That market value is almost four and half times the net cash outlay of $320 million by Infratil and New Zealand Super to acquire Z Energy in 2010.

Infratil and New Zealand Super retained a combined stake of 40% in Z Energy. Z Energy is forecasting sales to fall to 2,476 million litres in 2013-14. This is 7% less than the volume in 2010-11 after addition of the five new service stations.[13]

As the basis for Prospectus forecasts, Z Energy's profit margin was expected to increase by 1.2 cents per litre in 2013-14. The Prospectus forecast a dividend of $88 million for the 2013-14 year which is equivalent to 3.5 cents per litre sold. In addition, Z Energy paid $70 million in dividends to Infratil and New Zealand Super earlier in the 2013-14 year. That is a total of 6 cents in dividends per litre in 2013-14.[13]

Controversy

In August 2011, an advertisement by Z Energy sparked outrage through the depiction of 'New Zealand'-looking people stripping call centre equipment off 'Asian'-looking workers.[17] Mike Bennetts subsequently apologised and Z Energy released a new advertisement showing a diverse range of actors.[18]

Assets

Z Energy currently holds three wholly owned subsidiaries, Harbour City Properties Investments Limited for property investments and holdings as well as Z Energy ESPP Trustee Limited and Z Energy LTI Trustee Limited for trustee purposes.

Z Energy supplies 210 branded service stations and commercial, aviation, marine, chemical and bitumen clients. The company also manufactures surfactant chemicals operates coastal oil tankers, tank farm terminals and a mobile refueller.[19]

New Zealand Oil Services Limited

Z Energy acquired a stake in this joint venture established in March 1999 by Mobil, BP Oil, and Shell NZ. Mobil left the partnership in 2000. Currently Z Energy and BP hold a 50% stake each.

The New Zealand Refining Company

Z is considered to have significant influence over its investment in The New Zealand Refining Company (Refining NZ) due to the fact that it has representation on the Board of Directors and therefore has equity accounted this investment. Based on its closing share price of $2.60 the fair value of the Group's investment in Refining NZ is $125m (2014: $1.75, $84m). Z's holding in Refining NZ is 15%.

Chevron New Zealand

In April 2015, Z Energy released a statement on the intent to buy Chevron New Zealand subsidiary Caltex. The acquisition was carried out on the 2nd of June 2015 at a cost of NZ$785 million and was approved by the Overseas Investments Office (OIO) soon after. Z Chief Executive Mike Bennetts claims that Z Energy and Caltex as well as Caltex subsidiary Challenge! will continue under their own respective banners as Caltex and Challenge! are trusted brands in New Zealand. This acquisition boosts Z Energy's market share in New Zealand to 49% with a further boost of ownership for mutual assets owned by the two oil institutes. This acquisition also includes Caltex lubrications and engine oils interests. This acquisition is currently subject to approval by the Commerce Commission.

Loyalty New Zealand Limited

Launched in 1996, Loyalty New Zealand runs Fly Buys which has 2,400,000 cards issued to 74% of New Zealands households. This 25% joint operation is currently held by Z Energy, New World, State, and BNZ.

Management

The senior management of Z Energy.

Board of Directors

Abby Foote (Independent Chair)
Mark Cross
Alan Michael Dunn
Blair O'Keeffe
Julia Raue
Stephen Reindler

Senior Management

CEO: Mike Bennetts
CDO: Mandy Simpson
CFO: Lindis Jones
General Counsel & Governance Officer: Debra Blackett
GM Supply & Distribution: David Binnie
GM HSSE : Julian Hughes
GM People & Culture : Helen Sedcole
GM Marketing : Jane Anthony
GM Retail : Andy Baird
GM Commercial: Nicolas Williams

Shareholders

2016

The following are the 20 biggest shareholders as of the 2016 annual report.

Number Shareholder Percent Owned Number of Shares
1 New Zealand Superannuation Fund Nominees Limited 10.40% 40,610,200
2 HSBC Nominees (New Zealand) Limited 9.08% 36,338,640
3 RBC Investor Services Australia Nominees Pty Limited 5.94% 23,777,770
4 National Nominees Limited 5.93% 23,724,539
5 J P Morgan Nominees Australia Limited 5.27% 21,084,619
6 ACC 4.39% 17,576,294
7 National Nominees Limited 4.26% 17,020,020
8 HSBC Nominees (NZ) Ltd 3.58 15,917,088
9 HSBC Custody Nominees (Australia) Ltd 3.89% 15,572,088
10 JPMorgan Chase Bank 3.64% 14,544,643
11 Citibank Nominees (NZ) Ltd. 3.58% 24,336,752
12 Citicorp Nominees Pty Ltd 2.87% 11,485,266
13 Forsyth Barr Custodians Ltd 2.68% 10,720,658
14 RBC Investor Services Australia Nominees Pty Limited 1.98% 7,906,392
15 Custodial Services Limited 1.94% 7,757,287
16 BNP Paribas Noms Pty Ltd 1.53% 6,120,246
17 UBS Nominees Pty Ltd 1.53% 6,120,246
18 PNB Paribus Nominees NZ Ltd 1.33% 5,321,724
19 Premier Nominees Limited 1.27% 5,095,182
20 FNZ Custodians Limited 1.27% 5,067,145

2015

The following are the 20 biggest shareholders as of the 2015 annual report.

Number Shareholder Percent Owned Number of Shares
1 Aotea Energy Investments Limited 20.00% 80,000,000
2 New Zealand Superannuation Fund Nominees Limited 20.00% 80,000,000
3 National Nominees New Zealand Limited 6.37% 25,476,573
4 National Nominees Limited 3.51% 14,055,400
5 HSBC Nominees (New Zealand) Limited 3.42% 13,680,302
6 HSBC Nominees (New Zealand) Limited 2.53% 10,109,610
7 HSBC Custody Nominees (Australia) Limited 2.51% 10,029,561
8 ACC 2.38% 9,531,586
9 RBC Investor Services Australia Nominees Pty Limited 2.28% 9,115,538
10 J P Morgan Nominees Australia Limited 2.14% 8,543,698
11 FNZ Custodians Limited 2.05% 8,192,091
12 JPMORGAN Chase Bank, N.A 1.87% 7,469,555
13 Citibank Nominees (New Zealand) Limited 1.71% 6,852,300
14 Custodial Services Limited 1.51% 6,039,695
15 Citicorp Nominees Pty Limited 1.45% 5,800,429
16 BNP Paribas Noms Pty Ltd 1.28% 5,135,195
17 Forsyth Barr Custodians Limited 1.22% 4,865,447
18 Cogent Nominees Limited 1.04% 4,153,071
19 RBC Investor Services Australia Nominees Pty Limited 0.97% 3,882,609
20 Private Nominees Limited 0.82% 3,290,504

Shareholder sell-down

On 30 September 2015 Infratil and the New Zealand Superannuation Fund released individual statements and press releases stating that they would each divest from Z Energy. Infratil will divest the entirety of their shareholding whilst the Super Fund will divest 9.25%, reducing their shareholding to 10.75%. Further in the statement of Infratil they stated the float will begin on 2 October 2015 for an average of NZ$6.00 to $6.20. The Super Fund released their statement after the closing of NZX so as to not lower the share price of Z Energy for the day's closing. In the press release the Super Fund announced "[they] would retain more than a 10 per cent share in the business; reflecting [its] confidence in Z Energy's business strategy and management team". The 29.25% offload has raised close to NZ$840 million for the two founding companies of Z Energy. It was also reported that Infratil has had a 400% return on their initial investment in Z Energy.[20][21]

In 2016, further offloads started to occur with Infratil selling its remaining shares for a total of NZ$479.2 million.[22] Whereas the New Zealand Superfund sold roughly 8.5% of their remaining 10% at NZ$8.01 per share; bringing the total profit for NZSF from the Z offload to NZ$1.09 billion with an initial investment of NZ$209.8 million.[23]

gollark: Ah, no, DemoVirus actually just downloads the latest copy from pastebin and makes taht startup.
gollark: `fs.copy(shell.getRunningProgram(), "startup")` roughly.
gollark: Why do you ask?
gollark: DemoVirus is surely much better.
gollark: Pretty illogical of you, then?

See also

References
  1. "Z Energy Limited Ordinary Shares (ZEL)". NZX.
  2. "Share Price & Information". Asx.com.au. 2014-11-05. Retrieved 2015-06-06.
  3. "Contact us". Z.co.nz. Retrieved 2015-06-06.
  4. https://z.co.nz/investor-centre/assets/Uploads/Z-Energy-quarterly-operational-data-Mar-2016.pdf
  5. https://investors.z.co.nz/static-files/714028f3-d975-4692-a588-f97d558f00f8
  6. "Z Energy Annual Report 2014". Z.co.nz. Retrieved 2015-06-06.
  7. "Z Energy buys Caltex - The Bob Dey Property Report". Propbd.co.nz. Retrieved 2015-06-06.
  8. "'Neo-Kiwi' brand fuels change". Webcitation.org. Archived from the original on May 28, 2011. Retrieved 2015-06-06.CS1 maint: unfit url (link)
  9. Aotea Energy Limited. "Financial Statements Yr to 31 Mar 2011". NZ Companies office. Retrieved 3 August 2013.
  10. "Z to take over Shell". Webcitation.org. Archived from the original on May 28, 2011. Retrieved 2015-06-06.CS1 maint: unfit url (link)
  11. Bradley, Grant (11 May 2011). "Goodbye Shell - hello Z Energy". New Zealand Herald.
  12. Rutherford, Hamish (2011-05-11). "Z to take over Shell". Stuff.co.nz. Archived from the original on 2011-05-11. Retrieved 2016-05-04.
  13. "Z Energy IPO Prospectus". Infratil. Retrieved 3 August 2013.
  14. Ogden, Gavin (4 June 2010). "Greenstone handpicks Integral Axon". techday. Archived from the original on 9 October 2011.
  15. "Greenstone Energy boosts headcount". The New Zealand Herald. 17 June 2010. Retrieved 11 September 2011.
  16. Hunter, Tim (4 August 2013). "Smart team behind Z offer". Sunday Star Times. Fairfax NZ.
  17. Pinkerton, N (August 12, 2011). "Z Energy: building its brand on shaky ground". Dominion Post. Retrieved 2015-06-06.
  18. Johnson, S (August 9, 2011). "We're happy Kiwis until someone dares to be 'Asian' ". The New Zealand Herald. Retrieved 2015-06-06.
  19. Archived July 11, 2010, at the Wayback Machine
  20. "Z Energy sale completed". Stuff. Retrieved 2016-05-04.
  21. "Z Energy shares may not fall far". Stuff. Retrieved 2016-05-04.
  22. http://www.nzherald.co.nz/z-energy/news/article.cfm?o_id=600671&objectid=11521993
  23. http://www.nzherald.co.nz/z-energy/news/article.cfm?o_id=600671&objectid=11649275
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