GROUP OVERVIEW
GROUP OVERVIEW 2
Financial and operational highlights ...... 3 What we do ...... 4 Business model ...... 6 Where we operate ...... 7 Chairman’s statement ...... 8 Chief Executive’s strategic review ...... 11 Responding to COVID-19 ...... 17 Case studies ...... 19 Market context ...... 25 Our strategy ...... 32 Our ESG principles and commitments ..... 37 Stakeholder engagement ...... 39 Key performance indicators ...... 43
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
FINANCIAL AND
OPERATIONAL HIGHLIGHTS Financial highlights Operational highlights Two years into our five-year transformation plan, we delivered a US$2.8M 14,533K M3 75% solid financial performance and achieved Operating profit Throughput volumes Engagement with 3 key operational improvements as we (2019 US$-327m) (2019 14,195k m ) employee survey continued to transform our business while dealing with the unprecedented challenges of COVID-19. US$533M US$1,205M US$1.4M EBITDA (including discontinued Gross profit Invested in learning operations and excluding IFRS 16 (2019 US$1,265m) and development 3 impact) (2019 US$530m) Delivering on our commitments • Protecting customers and employees during US$143M US$78.9M the pandemic Organic capital expenditure, net Operational improvements 20,118K M3 (2019 US$146m) in 2020 • Continuing to deliver high-quality and Sales volumes competitively priced fuels, lubricants and (2019 22,441k m3) other products for customers 0.47 • Supporting communities US$2,037M Lost Time Injury Net tangible fixed assets Frequency Rate (LTIFR) • Completing AU$425m divestment of Australia US$9,944M (2019 US$2,421m) fuels business on time Net sales (2019 US$14,598m) • Generating a total of US$355m net cash inflow from divestments • Delivering US$65m costs savings • Prepaying US$300m 3-year term loan maturing in May 2021
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
WHAT WE DO
1 Marine storage 10 Energy accessibility for communities From giving the people who visit our retail sites 2 Inland storage 11 Renewable and hybrid power a great experience to working closely with 3 Retail generation for industry 4 Commercial 12 Energy storage and management industrial businesses to help them optimise 5 Lubricants their operations – we focus on delivering 6 Aviation 7 Bitumen the very best for our customers. Video link to: 8 LPG What we do animation 6 9 Refining
10 3 4 1 2 7 9
8 12 11 5 4
Infrastructure Downstream Future Energies
Working as their trusted partner, we meet the needs of our From great shopping destinations for local communities to fuel We are energising communities in new ways. To support the energy Infrastructure customers through our world-class global and lubricants for global businesses – we provide a wide range transition, we are powering our own assets with renewables and network of storage facilities on five continents. of energy solutions to our retail and commercial customers. working with our industrial and commercial customers to develop more reliable and sustainable energy solutions for their businesses.
Supported by global functions
Our global functions provide best-practice support and guidance for our business units, aligned to our purpose and customer-led strategy.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
WHAT WE DO 44 7,100+ Countries in Employees and which we operate contractors To meet the current and future energy needs of our different customers, we are organised into three core business units: Infrastructure, Downstream and Future Energies.
Infrastructure Downstream Future Energies
Our Infrastructure business unit To this end we serve our Our Downstream business solutions for businesses in Our Future Energies business Through Future Energies we is the home for our world-class Downstream business unit, unit focuses wholeheartedly different segments. focuses on the new world of aim to play a leading part in the network of major storage providing essential security on providing the very best sustainable energy – for our transition to renewable energy • Retail terminals. In Infrastructure, of supply. We also look to energy solutions for retail, business, for our Downstream solutions across our chosen we focus on making the most maximise opportunities to commercial and industrial • Commercial and Infrastructure customers high-potential markets. of these assets in order to attract new customers customers in our chosen high- • Lubricants and for the communities in 5 optimise value creation. from around the world. potential countries. To grow and • Aviation which we live and work. lead here, we develop and • Bitumen deliver compelling customer value propositions – from an • Storage and Refining outstanding end-to-end retail experience to targeted energy
18 5.5M M3 34 2,545 922 87 5 US$5M >3,000 Countries Storage Terminals Retail sites Convenience Airports Countries with Future Invested to install Potential sites capacity stores served Energies projects solar assets and identified implemented batteries in 2020
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
BUSINESS MODEL Our way of creating value for our stakeholders
Guided by Taking into account Creating value by For all our stakeholders Our purpose Our six capitals • Generating revenues - Future Energies, • Making social Customers We are guided and inspired Together the six capitals and profits from: e.g. solar investments We deliver high-quality, by our purpose of provide a full picture of - Fuel products and - Transportation • Contributing to competitively priced products energising communities value across the Group. services, e.g. oil, and storage communities and services to our customers to help drive growth and – quickly and reliably. We add lubricants, bitumen • Recruiting, training, prosperity by sustainably value by ensuring we are always - Non-fuel products developing and serving our customers’ there for our customers and are and services, e.g. rewarding our people needs in high-potential easy to do business with. countries around the world. convenience retail Communities We contribute significantly to our Our market context Financial Our people strength communities, through local taxes We live in an exciting, and employment. We also add fast-changing world in value as a long-term, responsible 6 need of the right energy partner engaging in many social, solutions. Read more here environmental and educational Customer-led strategy programmes. We have a clear three-part Employees transformation plan to Our people are well rewarded Customers and Physical deliver our customer- communities assets and enjoy the opportunity focused strategy. to develop their skills and entrepreneurship to achieve Underpinned by our values their full potential. They OPERATIONAL FOCUSED NEW BUSINESS We live our values every day. contribute in many ways to EXCELLENCE GROWTH DEVELOPMENT They get to the heart of our Customer Lead by our diverse, collaborative, Collaboration Agility Read more here way of energising communities focus example customer-focused company. around the world. Our ESG framework Natural Our products Shareholders and commitments resources and brands Financial stability and We are embedding our sustainable business practices Environmental, Social are critical to our success. We and Governance (ESG) aim to create long-term value for framework across all Key strengths drive us forward our shareholders by managing our operations. Our customer focus Our presence in high- Our energetic Our great our business growth carefully and maximising returns Read more here and relationships potential countries spirit people on investment.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
Downstream Infrastructure 3 ) WHERE WE OPERATE
Retail Convienience Storage Airports Lubricants Bitumen Terminals stations stores capacity (m In exciting, fast-changing parts of the world, we West Americas Belize 15 3 1 • Belize 1 26,000 provide the energy solutions our customers need Chile – – – • El Salvador 2 318,000 Colombia 103 – 2 • Guatemala 4 298,600 to succeed. We organise Downstream into two core El Salvador 101 33 1 • • Honduras 2 133,800 Guatemala 284 32 1 • Panama 1 86,700 regions: West (the Americas) and East (Africa and Honduras 216 25 – • • Puerto Rico 2 395,200 Asia). Infrastructure is organised globally. Future Nicaragua 52 36 1 • • US Virgin Islands 1 4,700 Panama 74 20 1 • Europe Energies operates in the Americas, Africa and the Puerto Rico and US Virgin Islands 322 286 4 • Estonia 2 894,600 Spain – – – • Finland 1 250,000 Middle East and Asia-Pacific. United Kingdom ––– • Norway 1 95,100 East United Kingdom 4 1,625,300 Angola 79 79 4 • • Africa Benin 16 – 1 • • Ghana 4 168,700 Botswana 41 21 4 • Mozambique 2 276,700 Republic of the Congo 34 4 – • • Namibia 2 122,200 7 Congo DRC – – 1 • Tanzania 2 85,900 Eswatini 24 – 1 Middle East & Asia-Pacific Ghana 84 16 1 • Australia* 1 240,500 Ivory Coast 34 1 – • • Myanmar 1 91,000 Lesotho 34 11 – • United Arab Emirates 1 412,100 Malawi 61 60 2 • 34 5,525,100 Mozambique 30 24 8 • *Under construction, planned capacity. Namibia 61 53 3 • Nigeria – – 1 • Senegal 5 5 2 • South Africa 110 92 8 • Tanzania 57 13 8 • Future Energies Zambia 58 32 3 • • Zimbabwe 89 45 5 • Australia – – – • Solar energy China – – – • Americas India – – – • Honduras • Malaysia – – – • Nicaragua • Myanmar – – 11 • Puerto Rico and US Virgin Islands • Pakistan 470 13 – • Africa Papua New Guinea 91 18 11 • • Ghana • Vietnam – – – • Middle East & Asia-Pacific 2,545 922 87* 26 19 Papua New Guinea • *We are resellers of fuel to airports in Paraguay and Burundi, Where we operate which are included in this total.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHAIRMAN’S STATEMENT We live in a world that needs reliable, Confronting COVID-19 Capitalising on the energy 2020 was an exceptional year dominated by transition opportunity affordable and increasingly sustainable the global COVID-19 pandemic. The human The energy transition is a core part of this story energy solutions – nowhere more so than and economic impact around the world was and in recent years, we have seen a significant immense. We faced many significant challenges, acceleration of commitment to and investment in the fast-growing parts of the world notably turmoil in the oil market, lockdowns in in renewable energy. Again, looking at it through where Puma Energy is an established the countries where we operate and a collapse our lens, much of the investment so far has of the aviation market. been in areas of the world where we tend not presence. This is an exciting opportunity to operate. In our countries of focus by contrast, When I look at the year for Puma Energy as a from Puerto Rico to Ghana to Papua New at the heart of our current business, whole, I would say that, because of the diversity Guinea, there is a growing need for sustainable of our portfolio, many of the countries and future growth and success. energy solutions. We believe we are well placed markets in which we operate have been less 8 to play a leading role in meeting this need. Our impacted than others in the industrialised world. strategy makes this a central pillar of our future. That is not to underplay the pandemic, which of Indeed, with the creation of our Future Energies course has been a major event for everyone, our business unit in 2020, we have taken a big step Video link to: business included. It is simply to put it in a more René Médori’s forward in this direction. Chairman’s statement Puma Energy-focused context. That context is one of an increasingly customer-led Company Enhancing our governance dedicated to fulfilling its core purpose of When I joined Puma Energy as Chairman on In an extraordinary year, energising communities in selected high- 3 March 2020, I highlighted one of my key potential countries around the world. responsibilities as ensuring we continue to we took on the challenge enhance our governance structures. This is We are not everywhere, nor do we do a fundamental aspect of delivering on our of COVID-19 and emerged everything. Our strategy and the focus of our strategy and achieving sustainable and investment, commitment and capabilities is stronger. We are accelerating profitable growth that benefits all stakeholders. to provide the right energy solutions for our with greater focus and customers and their communities in some In this spirit, the Board was very active in 2020. conviction along our path very particular parts of the world. Ordinarily we have four Board meetings a year. However, 2020 saw us hold two extraordinary of energising communities Board meetings, six meetings in all, as we in high-potential countries focused on major issues and changes in a around the world. remarkable, transformative year for our business. René Médori, Chairman
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHAIRMAN’S STATEMENT
We strengthened and expanded the role of Downstream, Infrastructure and Future Energies I do believe Puma Energy is increasingly well the Audit Committee. We now have a more – supported by global functions. We slimmed placed to navigate these risks and challenges We also took a major step systematic view of the entire audit landscape. down our Executive Committee by a third, through decisive leadership and an appropriate to create a leadership structure designed for strategy and plan. forward in enhancing our The Remuneration Committee continued its agile, efficient and effective management. focus on aligning the compensation of Puma Leading us through governance with the launch We accelerated the refocusing of our portfolio Energy’s senior leadership to the strategic Our CEO Emma and her team have done a onto key markets, with divestments of assets of our environmental, social goals and performance of the business. tremendous job in leading Puma Energy through within non-core countries. and governance (ESG) Through the year, there was a particular all the challenges and uncertainties. They were emphasis by its shareholders and Board We now have a clear strategic plan endorsed very quick to accelerate the strategy together framework. We are now on supporting Puma Energy’s ongoing by the Board and the organisation and with a substantial programme of cost reductions, ensuring it is embedded transformation and the related imperative leadership to implement it. backed by the Board. The highly transparent, to retain and attract the very best talent. collaborative and dynamic style of the senior 9 Engaging closely with our shareholders in every facet of Puma leadership team and the high degree of We also took a major step forward in enhancing The level of engagement with our two main engagement with both the Board and employees Energy’s operations and our governance with the launch of our shareholders was also very high, as indeed have been key in enabling Puma Energy to bring environmental, social and governance (ESG) was their support for the business. I would like gathering examples and stakeholders with them on their journey and framework. We are now ensuring it is embedded to take this opportunity to thank Trafigura achieve ongoing buy-in and support. data from across our in every facet of Puma Energy’s operations and and Sonangol for their strong and continued business to show that gathering examples and data from across our backing of Puma Energy. In particular, we Starting to see the benefits business to show that commitment in action. greatly appreciate the price adjustment support We are starting to see the benefits of the commitment in action. our core supplier shareholders Trafigura and acceleration. It is about much more than just Accelerating our transformation Sonangol provided in the second quarter of driving down and managing our costs. The focus Alongside dealing with the unprecedented 2020. This was key in enabling us to weather is on driving up, in a concerted way, how we challenges of COVID-19, we also pressed on the worst of the COVID-19 storm. choose to work with partners, customers and with, and indeed accelerated, our strategy. We communities to energise them in the short implemented change at a faster pace across the Looking on the bright side, the rollout of and long term. We now have a simpler, three pillars of our transformation framework: vaccines makes the future for everyone less sharper operating model focused on excelling operational excellence, focused growth and new perilous and uncertain. However, I do not for our customers and growing value for business development. We undertook a major underestimate the extent of the crisis and our stakeholders. We are emerging from reorganisation of our operating model to form its impact that we faced this year, nor the COVID-19 stronger, leaner and fitter. three customer-focused business units – risks that remain in 2021 and beyond, but
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHAIRMAN’S STATEMENT
Board changes With my fellow Board members, I have been During 2020, José Larocca stepped down from evaluating a range of options to address the We are starting to the Board and I would like to thank him for his weakness of our balance sheet and expect to see the benefits of contribution and wish him well for the future. determine a course of action during the first We welcomed Hadi Hallouche as a new Board quarter of 2021. the acceleration of member and look forward to continuing to Looking ahead work closely with him. our strategy. It is about I am proud to say we are a business that plays a much more than just Recognising our great people critical part in the lives of people, businesses and The whole team at Puma Energy has been communities around the world. Looking ahead, driving down and outstanding. I would like to thank all our people we are intent on playing an increasingly valuable managing our costs. who have shown such resilience, verve and and welcome role as we continue to accelerate dedication in continuing to deliver for our our strategy and go further, faster in energising 10 The focus is on driving customers, while facing often extremely tough communities around the world. up how we energise challenges, and at the same time doing so much to keep transforming Puma Energy partners, customers for the better. and communities. Strengthening our balance sheet In June 2020, we completed the sale of our René Médori, Australian fuels business for AU$425m and we Chairman continue to target further proceeds from non- core divestments during 2021. This along with significant cost reductions and a range of operational improvements means that during 2020, we were able to prepay US$300m of the three-year term loan that falls due in May 2021.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHIEF EXECUTIVE’S STRATEGIC REVIEW We started 2020 strongly – forging ahead In the first two months of the year, we delivered Stable performance and strong strong growth on all fronts. Nevertheless, shareholder backing with our customer-led strategy, driven on when COVID-19 hit, we saw an extreme and COVID-19 inevitably put a brake on our by our purpose of energising communities unprecedented change in our markets and growth trajectory. Nevertheless, we succeeded sector and rapid social change in the in delivering an EBITDA for 2020 broadly to help drive growth and prosperity by communities we serve. Our strategy switched similar to 2019, a significant achievement in sustainably serving our customers’ needs from driving focused growth to creating the the circumstances. This outcome was achieved foundations around which we built our quick with the strong support of our core supplier in high-potential markets. and effective response to the global pandemic. shareholders who agreed a discount to the Throughout, we continued to deliver for our purchase price which we paid for shareholder- customers around the world, and reorganised supplied oil products during the early months ourselves to be fitter, sharper and more agile of the crisis. This ensured that the impact of 11 in living our purpose. the sharp decline in demand did not have a material effect on our overall gross margins. Living our purpose It also gave us the breathing space to position Through an extraordinarily tough and tumultuous the business correctly for the duration of the Video link to: 2020, our purpose of energising communities Emma FitzGerald’s pandemic. In Q2 2020, Puma Energy benefited was key. It really was our unifying glue, which Strategic Review from core supplier shareholder price adjustments kept us all together and gave us the energy to amounting to US$82m. move forward in the face of extreme challenges.
2020 has been about staying true to our purpose, trusting Key events In this extraordinary year dominated by the COVID-19 our customer-led strategy, crisis, we ensured we protected our people, customers of the year and communities, and pressed on with energising learning quickly and improving communities around the world. We highlight some as we go to navigate the of the key events of the year here. unknown, to emerge stronger so we can accelerate our COVID-19 To add context, we highlight some of the milestones growth trajectory. in the COVID-19 story through the year.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHIEF EXECUTIVE’S STRATEGIC REVIEW
Reorganising and accelerating of Paraguay and Australia as our key deleverage In order to address the significant balance COVID-19 was also a catalyst for us to bring actions and at the end of June 2020 we completed sheet leverage and the debt maturity in 2021, We now have a Downstream forward the timescales for creating a simpler, the sale of our Australian fuels business for the Board, chaired by René Médori our newly business that is focused clearer, more focused organisation. We now AU$425m. Throughout the year we have appointed Independent Chairman, has been have three distinct business units – Downstream, generated a total of US$355m of net cash inflow evaluating a range of options for recapitalisation entirely around delivering Infrastructure and Future Energies – supported by from divested operations, assets and investments. of Puma Energy. The preferred route for solutions for our Retail and global functions. We accelerated our programme We also carried out standard impairment testing of recapitalisation is expected to be determined of cost reductions. These actions were always the carrying value of all assets, which resulted in in Q1 2021. Commercial customers in part of the strategic plan. We simply did them impairments of US$236m in the third quarter with Innovating sooner, and we are all the stronger for it. the two largest adjustments made for Puerto Rico priority growth markets. Throughout 2020, we were called upon to do and Ghana. Strengthening our balance sheet things differently, faster, better – from finding Since the beginning of 2019, the restructuring Addressing the capital structure of and securing new routes to market to continuing 12 of the Puma Energy balance sheet has been one the company to deliver essential services for our commercial of my top priorities in order to materially reduce In October 2019, Sonangol announced its customers, to ensuring our retail sites could the unsustainable leverage on the balance sheet intention to sell its stake in Puma Energy safely provide communities with fuel and caused by the historic acquisition programme. as part of its ongoing privatisation process. convenience retail services our customers most We continue to explore a number of options needed. Throughout we demonstrated our We selectively reduced fixed costs by US$65m and to enable Sonangol to exit its position in innovative can-do Puma Energy Spirit like never pressed on with streamlining our portfolio. During Puma Energy whilst at the same time achieving before. The pandemic called for quick, decisive 2019 and into 2020 we prioritised the divestment further deleveraging of the balance sheet.
JANUARY FEBRUARY MARCH APRIL Completion of sale of Paraguay business to New retail stations in South Africa, Malawi René Médori appointed Chairman of the Board Successfully closed a one-year revolving credit facility Impala for US$200m across 2019 and 2020 and Mozambique open in excess of US$310 million Thousands of Puma Energy colleagues start to work from home The Puma Energy Foundation and Trafigura Foundation donate US$200,000 to ensure the North Star Alliance Shareholding restructuring announced: Cochan is continues to provide healthcare and COVID-19 support no longer a significant shareholder Donation of 20 shipping containers to support the COVID-19 relief effort in Papua New Guinea
The World Health Organization (WHO) declares COVID-19 WHO announces the disease caused by the novel WHO declares COVID-19 a pandemic as more than Over one million COVID-19 cases reported worldwide, a public health emergency of international concern coronavirus is to be named COVID-19 100 countries report cases a more than tenfold increase in less than a month
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHIEF EXECUTIVE’S STRATEGIC REVIEW
action and we rose to that challenge around 2020 and will be rolled out to a further eight Responding quickly and effectively to COVID-19 the world in many different ways across countries in 2021. This is a good example of our We responded very quickly to the pandemic, In many ways, the pandemic our businesses. more insight-led, strategic approach to projects, in terms of business continuity planning (BCP), where we make the best use of data to inform adopting new ways of home working for office- brought out our resilience We innovated for customers. In Retail the creation of pilots, implement, learn and based staff and evolving our procedures at for example, we pushed ahead with our and creativity and improve – then rollout at pace and scale. our front-line locations to protect our employees development of community hubs, and fast- and customers as they ensured we could encouraged us to be laser tracked our introduction of convenience retail We innovated in our ways of working, too. continue to deliver our essential services. We services like Click and Collect and home delivery, For example, we continued to roll out ePuma, focused on what’s really also moved very quickly to right size our cost which will now be core aspects of our offering. our customer-focused IT platform, entirely base, in anticipation of the situation. That was important – from protecting We also developed high-performance lubrication virtually, without missing a beat. A project of this accelerated later in 2020 with the operating solutions tailored to the needs of different size, importance and complexity would formerly our people, customers and model changes. As a management team, we business segments for our mining and other have involved a great deal of time, teams and 13 immediately controlled what we could control. communities to investing industrial segment customers. travel to implement physically. Another major change implemented virtually was the setting Throughout, we prioritised our people and in the strongest sources In addition, we introduced our first-ever up of our shared service centre in Latin America. our customers. I’m proud to say, we have been customer loyalty programme – a best-in-class of value to create safe and We carried this out smoothly, efficiently and on congratulated in many places around the world programme rooted in extensive customer time, in the midst of the pandemic. for the standards that we set for safety on sites. affordable energy solutions. insights. Called PRIS, the programme was We were in many cases the industry leader in launched in Angola and Panama in December setting the bar for that.
MAY JUNE JULY AUGUST Going the Extra Mile (GEM) winners announced, Completion of sale of the Australian fuels business The Chilimbulu site in Lusaka opens – one of 58 sites Puma Energy delivers operational improvements of recognising their exceptional contribution to for AU$425 million in Zambia to be rebuilt in line with the new retail US$37m in the first half of 2020, in line with the Puma Energy’s COVID-19 effort visual identity Company’s commitment to operational excellence Six new Super 7 stores open in the Americas and ahead of budget Launch of a new Click and Collect option in the Puma Protect, a branded sanitiser spray and gel, is Puma FastPay app in the Americas Westerleigh Terminal, UK, achieves 1,000 days announced by the Lubricants Supply Chain Team without a Lost Time Injury (LTI)
Cases of COVID-19 surpass six million globally WHO welcomes initial clinical trial results from the WHO experts begin work with their Chinese counterparts The COVID-19 global death toll reaches 700,000 UK showing dexamethasone could be lifesaving for to ascertain how the disease jumped between animals patients critically ill with COVID-19 and humans
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHIEF EXECUTIVE’S STRATEGIC REVIEW
Supporting communities Embedding the highest We aim to further strengthen and embed our I am also extremely proud of how much support health and safety standards strong health and safety culture throughout We have a highly we gave to the communities we live and work A great example of our focus on global Puma Energy. We are building upon the platform collaborative can-do with, both as a Group and through the dedication excellence is in the all-important area of health we’ve created, to drive for continuous and efforts of our people to raise funds and safety. Safety is a critical enabler that will improvement. To this end, our Head of Health, Puma Energy culture and volunteer to help those most in need. help us to deliver successfully in the future Safety, Security and Environment (HSSE) reports – it’s a fantastic place In communities around the world, Puma Energy and is at the core of our commitment to our directly to me. We are also reframing the global people went the extra mile on the ground to people and to our customers. We are committed Safety Steering Committee to be truly where people really help. Playing this active, responsible role in to setting and living the highest standards, representative of key safety change leaders in can make a difference, communities goes right to the heart of our and I am pleased to report a strong safety the organisation – key people in critical positions purpose – it really is a big part of what performance across the Group in 2020. with the passion to champion and drive individually and energising communities is all about. behavioural change across the Puma Group. On a constant perimeter basis, excluding 14 collectively. Excelling globally Australia, we saw a reduction in our Lost Time Making the most of our global-local difference Another core Puma Energy characteristic we Injury Frequency Rate (LTIFR) from 0.74 to Our goal is to create global cohesion while emphasised and accelerated in 2020 was our 0.47. That is a more than 30% reduction and retaining a degree of local autonomy to tailor commitment to global excellence. We develop consistent with the reduction we saw in the prior our offerings to the local context, so that we and share best practice through our global year too. So it’s a continuing trend that we will connect with, and excel in serving our customers centres of excellence, provide expert support focus on improving further. and communities. Our local teams in each and guidance to the lines of business to help country are the ones who really bring our them deliver our customer-led strategy locally.
SEPTEMBER OCTOBER NOVEMBER DECEMBER Puma Energy Distribution Ghana wins first prize in New operating model goes live Pumangol voted by consumers as a national Superbrand PRIS loyalty scheme launches in Angola and Panama four categories at the Health Environment Safety for 2020 and Security Awards The Altona Bitumen Terminal, Australia, achieves 1,000 Winners of Puma Energy Awards 2020 announced incident-free days A super-sized, deluxe service station, the largest, most advanced Approximately 80 women in Papua New Guinea have now and innovative facility of its kind, prepares for opening in graduated from business training courses, supported by Puma Bitumen Australia supplies first consignment of Papua New Guinea the Puma Energy Foundation OLEXOCRUMB®, a brand new product in the portfolio The 2nd annual Customer Week campaign launches, incorporating 10% recycled tyre rubber championing customer service, retail excellence and health and safety
The world surpasses 1 million COVID-19 deaths Confirmed COVID-19 cases surpass 50 million globally Pfizer-BioNTech and Moderna both announce successful First person receives Pfizer vaccine in UK trials of vaccines
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHIEF EXECUTIVE’S STRATEGIC REVIEW purpose alive and deliver the global priorities reinforcing our culture and building our people’s We are focusing on three angles. First, we are to build the right relationships on the ground skills, capabilities and opportunities to grow, solarising our own assets, to increase our energy with our stakeholders. There is an important and creating an employee experience that is efficiency, drive down our carbon emissions, Puma Energy is serving our global-local difference to the way we do things attractive for future talent – all in the service of demonstrate our commitment and capabilities, customers with sustainable here at Puma Energy, which we are keenly our purpose and our customer-led strategy. and learn and improve as we go. Second, we are focused on optimising. We will continue to nurture and channel our working closely with our Downstream customers and profitable energy energies as One Puma to push on at a higher to help them develop their own sustainable Valuing and encouraging our people solutions in high-potential pace along our chosen path. energy solutions. We are having many 2020 drove the point home intensely – without productive conversations with our commercial markets – as we help to any doubt, our people really are our key asset. Leading in the energy transition customers and anticipate this will accelerate in It is the quality and commitment of our people ESG and our Future Energies business are drive growth and prosperity. 2021. Third, Future Energies is exploring to deliver for our customers, our communities critical enablers for our success, and our standalone power generation and battery and our stakeholders that makes all the ambition is exciting and full of great In addition, the energy 15 projects with governments and power difference. So of course, the calibre of the people opportunities. Puma Energy is serving our generators in some of our key markets to transition presents us with we attract, retain and develop and reward could customers with sustainable and profitable accelerate the supply of electricity to rural areas. not be more important. When I say calibre, energy solutions in high-potential markets – a unique opportunity to I don’t just mean core skills, capabilities and as we help to drive growth and prosperity. In The sky really is the limit here – especially when create the most relevant experience – important though these are. I also addition, the energy transition presents us with you consider the great need and demand for mean a passionate mind-set and the adaptability a unique opportunity to create the most relevant reliable, affordable, increasingly off-grid, and affordable energy and ability of our people to really contribute and affordable energy solutions for customers. sustainable energy solutions in the high-potential solutions for customers. towards and thrive in our distinctive and countries we focus on and care so much about. Our Future Energies business is our way of dynamic Puma Energy culture. To date these countries have not yet had the supporting customers, governments and investment in energy transition they deserve. Nurturing our culture communities in the countries that we serve to We want to be a catalyst and leader in changing We are immensely proud of our Puma Energy thrive in the context of the energy transition. this for the better. Working with key partners Spirit. We have distilled it down to our four To this end, we are building on the strong local who share our vision of energising communities core values: customer focus, lead by example, relationships and trust established through in the most sustainable way, we will make the collaboration and agility. These values are at the providing essential services to customers and most of this great Future Energies opportunity. heart of how we go about living our purpose of communities over many years. We aim be the energising communities. Through our People partner of choice in their transition to sustainable and Culture function, we are focusing on energy solutions.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CHIEF EXECUTIVE’S STRATEGIC REVIEW
To share just one example of the potential, take and reduce CO2-eq by 284MT. All of these Committee. I would like to take this opportunity Looking ahead Papua New Guinea, where we have the capability projects mark the start of an exciting new phase to thank my former ExCom colleagues for their I am proud of the agility and resilience we have to meet pretty much 100% of the energy needs in our purpose of energising communities. outstanding contributions over the years. They shown, proud of the outstanding contributions of the country. Yet currently only around three have been instrumental in getting Puma Energy our people have made to the business and to our Launching our environmental, social and million of the nine million population are on to where it is today and it has been a pleasure communities. I am also hungry for growth and governance (ESG) framework mains electricity. There is a huge opportunity to work with them since becoming CEO. I look creating value across all parts of our business. Future Energies is a central tenet of our wider to close that gap with more innovative and forward to taking Puma Energy on to new We have a great deal more to do in bringing commitment to strong environmental, social and sustainable energy solutions. heights with the streamlined ExCom team. alive our purpose of energising communities. governance (ESG). We launched our ESG The focus now is for us to continue to deliver We are starting small so that we can framework in 2020 and have begun to embed Coming together to deliver for our customers at pace – for ourselves, for our business, for all demonstrate best practice before we scale up. its principles and commitments throughout and communities our stakeholders. To this end in 2020, we invested US$5m in Puma Energy. This is a pivotal part of our future 2020 really was extraordinary – an exceptional Papua New Guinea, Ghana, Honduras, Nicaragua and we are identifying and focusing on our year of challenge and change. A year where we 16 and Puerto Rico. For example, our 1,200kW most pressing ESG issues, updating our Code have all come together to create a sustainable project in Bayamon Puerto Rico terminal is under of Business Conduct, and establishing platform for medium term growth – our construction and will generate 2,050MWh per measurement protocols. We have also engaged colleagues, our customers, our communities, annum, displacing 92% of the terminal’s energy the Carbon Disclosure Project (CDP) and we our shareholders and investors. I’d like to thank Emma FitzGerald, consumption and reducing CO2-eq by 1,449MT. are participating in the S&P Global Corporate all my colleagues in Puma Energy who have Chief Executive Officer Smaller rooftop projects in Nicaragua and Sustainability Assessment (CSA) to support our demonstrated such dedication and commitment Honduras are providing proof of concept, implementation, ensuring we focus on the right to our purpose. They have been truly magnificent producing 98MWh and reducing CO2-eq by actions to maximise our impact in our business whilst also juggling unprecedented personal 70MT per annum. In Ghana, 10 of our retail and in the communities that we serve. pressures created by the pandemic. I would stations and four of our terminals and depots also like to thank our shareholders and investors Streamlining our Executive Committee will serve as proof of concept. In addition, in who have continued to believe in us and back To complement our strategy refresh and the Papua New Guinea, the Speybank and Aircorps us throughout very testing times. Without all our implementation of our new operating model in Terminals in Lae will have 278kW of rooftop solar stakeholders, we would not be here; and indeed, October 2020, we streamlined the Executive we are here for our stakeholders.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
RESPONDING TO We had a number of projects and COVID-19 improvements in the pipeline, for example We were quick off the mark when COVID-19 Click and Collect for first appeared and throughout the pandemic our retail customers. COVID-19 brought the focused on ensuring our people, our customers introduction of many and the communities we live and work in of these initiatives were kept as safe and supported as possible. forward. The crisis This was a massive, multi-faceted task that proved to be a catalyst constantly shifted and changed as the for improving the way pandemic escalated and evolved. It’s a we serve and excel for challenge that continues to this day. our customers. 17
We set high global standards Adapting to changing In response we focused retail spaces destinations 6. The further development of crisis management and customer needs on seven key work streams within their communities of a highly effective business continuity planning in retail: 3. The development of the e-commerce platform for and applied them in the most and priorities B2B and B2C customers 1. The further development mini-market concept appropriate and tailored way COVID-19 has changed our of forecourt sales 4. The creation of 7. The further development across our various operations retail customers’ needs and a truly contactless and growth of Click and offices around the world. 2. The creation of service priorities. They are now very customer journey and Collect It was an example of the global- conscious of hygiene and how hubs, offering postal local ‘Puma Way’ at its best; to protect themselves from services, remittances, 5. The implementation a testament to the great disease transmission in public insurance, laundry and of home delivery agility and dedication of places. They want to limit their more, all within our Puma our people everywhere. contact with strangers, Energy retail villages – reduce their travel and providing a one-stop-shop We highlight some of the for all our customers’ daily standout stories here. wherever possible they are looking for contactless service. needs and making our
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
RESPONDING TO COVID-19
We are committed Continuing to deliver Protecting Transforming to accelerating our for our customers employees our business customer-led strategy. COVID-19 created major Our first priority was to In the midst of the global disruptions and difficulties ensure Puma Energy people pandemic when many If one thing came out around the world. We know across our sites and offices countries were locked of the COVID-19 crisis, how critical it is for us to were properly protected down, we pressed on with it is that we don’t keep delivering for our and looked after. We setting up our shared customers and communities implemented a rigorous service centre in Latin need to change our and we have built a strong and intense campaign America; transferring all strategy – we need to track record of security of engagement and the relevant operations accelerate it. And of supply over the years. communication to ensure and data. This major we’ve been doing that Throughout the pandemic Supporting local everyone was informed of Working flexibly undertaking was done we continued to deliver, and communities essential safety measures, smoothly, efficiently and in a number of ways. indeed this commitment such as social distancing and We quickly set up and supported on time – completely and reliability won us new Our essential role in the mask-wearing. Throughout our people around the world virtually. Our finance and 18 business from commercial community didn’t end when the pandemic we have so they could work from home. customer service functions customers who valued a the crisis began – it adapted to maintained colleague This was a necessity during transferred seamlessly to strong, proven partner in continue to serve the people and engagement and the pandemic, but we took the the new shared service. times of real need. places we care so much about. communication, for example opportunity for it to be the start We could have postponed For example, when our retail through “Puma Energiser” of a reassessment of the way we it until 2021; many would restaurants and cafes had to emails and microsite access work – a more flexible way of have seen this as the close, we turned a number of for all Puma Energy working, rooted in mutual trust wise thing to do. But we them into bakeries for the colleagues detailing the and a shared focus on great saw the need and the community, where people could latest global information, output in support of our purpose opportunity to get on safely obtain their daily bread. focusing on their wellbeing, and strategy. It’s about high- and do it. This is just one Moreover, our people played health and safety and quality, productive endeavour, example of how, in true a big part in raising funds and keeping them informed as to rather than simply hours spent ‘let’s do it’ Puma Energy donating their time to help how we are working together at a place of work. At Puma Spirit, we undertook major Read more about how those most in need across the Energy our colleagues have found we responded to COVID-19: to serve our communities. transformations while communities we live and work in. that ‘work has become the place dealing with the pandemic. Chairman’s statement to meet, rather than just a place to Chief Executive’s strategic review work’ and whilst obeying the local Business review restrictions to protect people, we Our People & Culture have all appreciated returning to Health and safety the office to see our colleagues as Financial review restrictions have eased. Risk management
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
CASE STUDIES ENERGISING COMMUNITIES IN ACTION 19 In this section of the report we highlight a few key stories of how, in different ways around the world, we have been living up to our purpose of energising communities.
From delivering for our customers without fail to building customer loyalty by listening closely, from providing essentials for communities throughout the pandemic to playing our part in the future of energy – we’re proud of the positive impact we make.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
These craft and the people who operate them are the unsung heroes of the story. Over the DELIVERING FOR years, we have been proud to provide the fuel so they can continue carrying out their vital role – and with our help, this exceptionally OUR CUSTOMERS challenging year was no exception. As a safety measure during the pandemic for example, WITHOUT FAIL we were happy to deliver fuel from our storage terminal to our various customers’ facilities using our trucks. This meant customers no We take pride in delivering longer had to have their own trucks and time and time again with a drivers coming to our terminal to pick up fuel. We were also able to keep physical contact super-reliable high-quality to the minimum and customer service to the service for our customers maximum with the help of our ePuma tool. Launched in Panama in 2018, ePuma means around the world. we can work closely with our customers 20 electronically, for example to manage upcoming Over the years we have built up a strong orders. It’s quicker, more efficient, and in these track record on this front and despite the days of COVID-19, safer too. extreme challenges of COVID-19 in 2020, we were determined not to let any of our customers down. Take for example, the complex operations of the various Puma Energy customers around the Panama Canal. If you picture the Canal, the chances are you see great big cargo ships This is one of those moving slowly and steadily along this vital artery situations where the focus connecting the Pacific and Atlantic oceans. is on ensuring we provide Indeed, every year thousands of ships carry essential service and billions of dollars’ worth of cargo along support day after day, the Canal. so that our customers But look a little more closely and you will see can concentrate on their tugboats, large cranes, dredgers and other small boats carrying out critical tasks that core operations. keep international trade flowing. Enrico Ferrari, Commercial
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
So for example, we’ve made it super easy to sign up and use. And we also enable BUILDING customers to get more for their money, as they can earn points for fuel discounts, PRIS is testament to our for offers at Super 7 convenience stores and determination to become CUSTOMER other participating leading merchants from the communities where we operate. a leading customer-driven retailer in our key markets. LOYALTY BY Launched in Angola and Panama this year and set to be rolled out to a further eight We appreciate our customer countries in 2021 – PRIS is proving very loyalty and the launch of PRIS LISTENING popular. It’s a great example of excelling is an excellent opportunity through engagement. to reward them in ways that CLOSELY are meaningful to them. Deborah Binks-Moore, Chief Customer Experience and We are doing everything we 21 can to put our customers at Communications Officer the heart of our business.
It starts with listening more intensely to what they really want and need, so we can come up with products and services that truly make them smile. Call it data-driven delight. The launch of PRIS – our brand new customer loyalty programme – is a good case in point. We took a truly customer-centric, genuinely insights-led approach, creating a best-in-class programme rooted in deep customer insights gathered through extensive qualitative and quantitative research. We listened closely to what people really want and like when it comes to loyalty and built our unique programme around this.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
a complex river system to multiple intermediate The relationship between storage and then more than 140km of road Ok Tedi and Puma Energy WINNING freight to supply the mine. The region receives 10-12m of rainfall a year which both complicates is a really valuable one. and facilitates the supply chain through Knowing that we have a BUSINESS WITH adequate river levels for the safe passage of supplier we can rely on to fuel vessels. deliver consistently to meet OUTSTANDING Our in-country refining capability of PNG made a highly complex supply fuel, superior storage infrastructure and flexible customer-focused approach helped us retain chain and help us manage END-TO-END this key strategic partner. Our solution combines our fuel after it has been managing the highly complex supply chain delivered, gives me the with technical advice beyond the supply of SOLUTIONS confidence I need to the product, including helping with product stewardship, which is particularly important in support operations. Rather than simply sell a remote and challenging location like Ok Tedi. products, we look to Once delivered, it is essential to Ok Tedi that this Puma Energy has a really 22 build strong long-term critical material is stored and managed, so it is flexible team and they available at the right quality, every time. So we understand us and the partnerships with our not only promise to deliver the fuel without fail but also advise on how best to store it and get constraints within which commercial customers. the best use out of it. we work. We focus on really The Manager of OTML’s Supply Department, Cameron McGregor, understanding their needs Cameron McGregor, understands the value of Supply Manager, Ok Tedi Mining Ltd effective partnerships. “The relationship between and delivering outstanding Ok Tedi and Puma Energy is a really valuable end-to-end solutions. one. Knowing that we have a supplier we can rely on to deliver consistently to meet a highly Ok Tedi Mining Ltd (OTML) were looking for complex supply chain and help us manage our a partner they could trust to provide fuel they fuel after it has been delivered, gives me the needed for their mining operations in Papua confidence I need to support operations. New Guinea. The fuel is used to generate power Puma Energy has a really flexible team and for its processing mills, keeping its mining they understand us and the constraints within fleet operating, and providing electricity to its which we work.” Tabubil township, and the local neighbouring It is a great example of bringing together communities. But getting the fuel there is not security of supply, flexibility and excellent easy, starting with an 11-12 day round trip in service for our customers.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
competitive advantage by enabling us to motivate and retain our colleagues and attract PLAYING OUR ADOPTING talent from a very diverse range of industries. It is also to equip our colleagues, and help us remain on track to execute our strategy and PART IN THE NEW WAYS five-year business plan. We have set out the future of in our New Ways of FUTURE OF OF WORKING Working White Paper, and are beginning to invest across our Platform, Productivity and People The pandemic has accelerated framework. And we are looking forward to ENERGY accelerating these changes for the better, so that many changes, not least in the together we can create more value, more flexibly Decarbonised, decentralised ways many of us work – how and enjoyably, across Puma Energy. and digitised – the future of building out the first phase of this pipeline of we work, where we work, our projects in Puerto Rico, Ghana, Papua New The 3Ps energy is full of change and Guinea, Nicaragua and Honduras. work culture. At Puma Energy, 23 opportunity. At Puma Energy, We have set ourselves the target of deploying we are embracing this change we are determined to play a solar and/or battery storage at 75% or more of by focusing on new ways of our company owned and operated retail sites, leading part in this across our Productivity Platform depots and terminals by 2023, saving up to working and adopting a future New high-potential markets. 12,000MT CO₂ per annum. One of these sites is of work framework centred ways of El Carrizal, Honduras where Future Energies working With the creation of our Future Energies installed a 35kW rooftop solar solution. around Platform, Productivity business unit, we are playing a key role in Together with solar installations in our own and People – the 3Ps. the energy transition across Africa, Asia People & Culture assets, we have engaged with our commercial and the Americas. The opportunities for customers to offer solutions that will help Platform focuses us on providing the tools Future Energies to increase energy access, with their energy transition. We are working for flexible work, for example interactive responsibly, are immense. We will help alongside governments to support them as workspaces. Productivity is about ensuring customers and communities enjoy affordable, resilience in the new normal, for example by they prepare their energy transitions with reliable and sustainable energy. strengthening people’s remote learning skills. emerging policies and regulatory frameworks. People puts the emphasis on transforming We are investing in solar projects within our By removing barriers, we aim to promote wellbeing, for example through various own assets, focusing on reducing the carbon investment in clean, distributed energy solutions Together, the 3Ps are the basis education, awareness and support initiatives. footprint of our operations, reducing energy that will increase electrification rates sustainably. for a key change in focus from costs and most importantly, showcasing our Together, the 3Ps are the basis for a key change This is just the beginning – for our customers, activity to productivity – from time capabilities to external customers, learning in focus from activity to productivity – from time our communities and our company, the and improving as we go. In 2020, we began spent in a fixed place to value created from spent in a fixed place to value future of energy is bright. wherever works best. The aim is to give us a created from wherever works best.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
Our Sandino Marine Terminal is located around operational improvements and cost savings. 60 km from the Refinery. It receives and stores A key part of the process was to work closely EXCELLING IN crude transported to the Refinery by pipeline, TAILORING OUR with the mine’s engineers to identify where to then be transformed into finished products. we could really add value to the business. By moving to our synthetic, high-performance Our Corinto Marine Terminal is located 150 HEALTH AND SOLUTIONS lubricant for vehicle transmissions for example, km from Managua, Nicaragua’s capital city. our customer is improving machinery up-time It serves as an important logistical site and performance. SAFETY where clean products and fuel oil vessels TO DELIVER are received, stored and dispatched to By focusing in this way on adding value to Our Corinto Maritime Terminal complement refinery production and meet businesses we are going further in creating Nicaragua’s growing demand. REAL BUSINESS greater value for our own business – so in Nicaragua has achieved an everybody wins. As our CEO Emma FitzGerald says: “I am so incredible 58 years without a proud of all my colleagues working at the BENEFITS Lost Time injury (LTI). Corinto Maritime Terminal. This is a remarkable achievement from a team who have demanded From saving money to the highest safety standards from themselves Throughout Puma Energy, we’re dedicated to 24 setting and achieving the highest health and and each other. There is no secret to best-in- increasing efficiency – safety standards, and Corinto is a standout class health and safety – it is about rigorous we focus on helping our example of living up to this commitment, not process, well-communicated protocols and just here or there or now and then – but colleagues feeling empowered to take commercial customers constantly, without fail, for close to six decades. responsibility for applying them to keep achieve real business everyone safe.” This outstanding performance is the result benefits. of the team’s consistent hard work and diligent commitment to applying systems, To this end, we organise ourselves around application and products guidelines, and serving the needs of key customer segments safety policies (SAPS). It takes every member – from mining to agriculture, transportation to of the team committing to uphold the power generation and marine. Across these highest standards in safety, every single day, segments, we work closely with each and support from our Managua Refinery and customer, especially with end-users of our Sandino Terminal operations staff to achieve products to build our understanding of their such a safety record. particular needs and objectives, so we can tailor our solution and help their business All three locations work as a team in order to as much as possible. achieve Puma Energy’s goals and to pursue new challenges every day – they are always In Zambia for example, we created a committed to maintaining a safe environment combined fuels and lubricants solution for for our team, contractors and customers. a copper mine, which is delivering significant
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT THE WORLD WE LIVE IN Our world of energising communities in high- potential countries is changing fast and we are changing with it. As we help to drive sustainable growth and prosperity across the Americas, Africa and Asia we believe we are well positioned to thrive in this world in the interests of all our stakeholders. 25 The world we live in is characterised by a number of key trends. We outline them here, focusing on what is happening, what it means for Puma Energy and how we are responding.
Following the extreme challenges of a year Key trends inevitably characterised by COVID-19, we see new opportunities opening up. Exciting opportunities for high-potential countries to grow faster and The advent of a The continued The growing power The criticality of The continuing better, to forge ahead with new sustainable new growth cycle rise of renewables and importance environmental, social demand for fuels of customers and governance energy solutions, to advance and prosper like (ESG) issues never before. We are looking forward to being at the heart of this future as we continue to pursue our purpose of energising communities.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT
The advent of a new growth cycle High-potential countries are set to grow faster If we focus on Puma Energy’s core high-potential In the run-up to 2020, we saw the peak of the countries, the growth prospects are even more last cycle of global growth in 2018, followed by a promising. Non-OECD countries are set to grow period of slowing growth through much of 2019, faster than OECD countries. There are a number characterised by the trade war between the US of strong drivers for growth here including and China. However, towards the end of 2019 internal factors such as population growth, this began to turn around. Tensions eased; urbanisation, income growth and in turn, growth picked up. The prospects for increased disposable income. Rising commodity 2020 were looking good. prices are also good news for commodity-rich Then COVID-19 hit. This had a devastating impact countries, as is a weakening US dollar, which on societies and economies around the world. increases purchasing power. Continued low Countries were affected in different ways and to interest rates will also be favourable for debt- different degrees. Looking at the year as a whole, financed investment. From China to Japan, from the US to Europe – as the rest of the world many of the high-potential countries we focus on 26 were relatively less hard hit. Moreover, turning returns to growth, our high-potential countries towards 2021 and beyond, the future for global will be major beneficiaries. growth looks positive, particularly if the global High levels of debt effort to control COVID-19 remains on track. Global debt reached unprecedented levels in Beginning to rebound 2020. It was set to exceed US$277tn, equivalent Many economies started to rebound from the to 365% of global gross domestic product middle of 2020, led by strong growth in China (GDP), according to a report by the Institute of and the rollout of vaccines is another major International Finance in November 2020. High boost. The new administration in the US has levels of personal, corporate and national debt indicated strong support for global efforts to do create significant risks which need to be mitigate climate change. So Puma Energy is managed carefully. Indeed, there have been well set for a new cycle of global growth in major issues, with Zambia for example becoming the years ahead. the sixth developing country to default or restructure debts in 2020. But broadly speaking, we see debt levels as sustainable, provided they are closely monitored and well managed, not least because interest rates are likely to say lower for longer. 10% The OECD forecasts that by the end of 2021 China’s economy will be 10% larger than at the end of 2019.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT
A dynamic market attracting So, the big players are increasingly in action here The continued rise many different players and there are plenty of small players, too. In this of renewables Against the broader backdrop of a global busy market full of opportunity, Puma Energy’s recovery, downstream energy in high-potential unique blend of global capabilities and expertise A green recovery countries offers a particularly compelling story and deep-rooted local experience and know-how The new phase of global growth will not of dynamic change and great growth. So it is no stands out. simply be a repeat of growth that has gone surprise that it is attracting traditional and new before. This time, it will be driven in great What this means for Puma Energy players and prompting continued M&A activity. measure by investment in energy, With our geographical footprint, experience International Oil Companies (IOCs) continue to infrastructure and development across the and capabilities, strong local presence and expand into emerging markets and to extend Americas, Africa and Asia – the parts of the relationships, we are well positioned to their offer beyond oil, to both the fast-growing world where Puma Energy operates. Moreover, benefit from the growth in high-potential world of convenience retail and the world of in many ways it will be a green recovery countries. Our five-year strategy focuses us renewables, which is at an earlier stage of focused on sustainable energy solutions. on sustainable growth, notably by excelling development in those markets. At the same time, for retail and commercial customers in these The opportunity is to build back better. And the major retailers are expanding and acquiring high-potential countries. time to get involved is now – at the start of the 27 convenience stores and petrol stations. new growth cycle, to catch the full energy of the rising wave, particularly in emerging markets. Electricity Access Innovative, distributed, sustainable Under the Stated Policies To meet the future energy demands of this Scenario, there are still growth new, sustainable solutions will be around 560 million people required. These solutions will draw on without access in 2030 in innovative technologies, such as digital sub-Saharan Africa, in the energy management systems and apps. face of rapid population They will be increasingly distributed, more local and smaller in scale, with for example growth and increased 1 micro-grids coming to the fore. difficulties due to COVID-19.
Individual consumers can become both 1 Source: IEA (2020), SDG7: producer and user of energy by combining Data and Projections, IEA, Paris solar panels on their roofs with batteries in their homes or cars and so largely manage their own power needs. Puma Energy is in active discussions with commercial customers to develop smart, new hybrid energy solutions for their businesses.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT
The solar boom This in turn puts a premium on local presence, The new world of energy will be a mix. Natural knowledge and expertise. It takes a great deal of 80% gas, for example, has a role to play in helping commitment and investment over time to build According to the International to provide security of supply. Wind is growing this advantage on the ground. It is at the heart Energy Agency’s World in popularity, for example in the UK, where of the local relationships we have developed Energy Outlook 2020, there is a major commitment to offshore wind. over the years in the countries we focus on. renewables are expected to But the real star of the story, particularly in our The opportunity to leap ahead account for 80% of energy predominantly sunny parts of the world, is solar. In high-potential countries, where there are fewer demand by 2050, with solar Super-clean and increasingly cheap, solar is now entrenched traditional energy supply networks being the “king” technology often not just a competitive option but the most and established interests, there is an opportunity in the mix. cost-effective choice. The economics are aligned to leap ahead with sustainable energy. Just as the with the environment here. Moreover, this is only lack of a fixed telecoms infrastructure in Africa the beginning – as the technology continues to encouraged the take-up of mobiles in previous improve and take up increases, the costs will decades, so the lack of a widespread, reliable come down further still. energy grid leaves the field open for the new 28 Solar is being rolled out at an increasing pace world of distributed, renewable energy solutions. across the developed world, but the biggest The commodity boost from energy transition untapped potential is in emerging markets where The transition to renewables will also increase there is a real demand for renewable solutions and, I firmly believe that 2021 can demand for commodities such as copper, nickel, to date, little development to meet this demand. zinc and lithium. So looking ahead, commodity- be a new kind of leap year – Partnerships are key rich countries are set to gain on both counts – the year of a quantum leap Partnerships with technology experts, finance from the transition to more sustainable energy towards carbon neutrality. providers, governments, regulators, customers and from the demand for materials that go into and communities are key for the energy this transition. In a sense, it is a double boost to António Guterres, Growth in Electricity transition. Public private partnerships, for the growth and development of these countries. UN Secretary-General Generation from example, will be increasingly important, where What this means for Puma Energy governments provide financing and companies Renewables 2020- With the creation of our Future Energies business 1 provide the expertise, scale and technology. 2030 (excluding Hydro): unit, we are helping customers, governments Partnerships with customers will also be critical. and communities to reap the benefits of the Sub-Saharan Africa: 589% The energy transition puts greater emphasis renewable energy transition. We aim to be the Americas: 131% on customers, as choosers and consumers partner of choice in this transition in the countries of energy, and increasingly as producers. and sectors that we serve. Asia-Pacific: 327% Take a mine for example, deciding to produce its own solar energy and feeding excess energy 1 Source: Bloomberg New Energy Finance (BNEF) back into the local grid.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT
Commercial customers The impact of COVID-19 What this means for Puma Energy From mines to cement makers, construction as a change accelerator We have embraced the opportunities to companies to transport businesses – accelerate change for the better in Puma commercial customers increasingly need COVID-19 has led to fundamental changes Energy. From fundamentally organising our and demand value-adding, tailored solutions, to many aspects of life but it has also operating model to introducing trust-based rather than just products. This calls for accelerated and reinforced trends that flexible working that changes the focus from relationship building and a genuine focus have been developing around the world time spent in a fixed place to value created on delivering business benefits. Rather than for some time. from wherever works best. We looked for just be sold fuel or lubricants for example, Accelerating technology every opportunity to create meaningful businesses want to buy energy solutions that Take the rise of technology. From ubiquitous positives from the crisis. help them save, make money and succeed. smartphones to the growing internet of things Retail customers – tech was well and truly there beforehand, Really getting to know what customers but COVID-19 turbocharged it. In our personal want and need is also at the core of retail and professional lives, we are all avid video excellence. It’s the foundation for insight- conferencers now. 29 driven value propositions that win customers Accelerating innovation for customers and build loyalty. COVID-19 has encouraged innovation for What this means for Puma Energy customers, too – for example Click and Collect We are wholeheartedly customer-led. and home delivery services. These new products The growing power and As a company, we are increasing our focus on and services were in the Puma Energy pipeline; importance of customers data gathering and analysis, so we can make but the pandemic brought them forward, as we better-informed decisions and develop more focused on responding to the changing needs The consumerisation of energy compelling, insight-driven products, services of customers in the midst of the crisis. In the new world of energy, consumers will be and experiences for our customers. Examples Accelerating flexible working much more involved and powerful. Whether here include the launch of our PRIS loyalty that is customers being able to choose between Confronting a global pandemic in a technology scheme for retail customers, the rollout of our age in turn added impetus to another change different providers, or managing their energy use new Super 7 convenience stores and our via an app, or taking part in energy generation that was already growing: flexible working. detailed segmenting and profiling of corporate With COVID-19, almost overnight in 2020 it through their own solar panels. Call it the customers in our Commercial business, all of consumerisation of energy. This is where getting became the new norm as working from home which helps us to extract more value from the was the only option for many. close to customers, really trying to understand energy solutions we deliver. them and being much more responsive and flexible to meet their needs becomes paramount.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT
The criticality of environmental, In September 2020, five global organisations, social and governance (ESG) issues whose frameworks, standards and platforms guide the majority of sustainability and Another key trend that gained significant integrated reporting, announced a shared momentum in 2020 was the rise of vision of what is needed for progress towards environmental, social and governance (ESG) comprehensive corporate reporting. Going as a core consideration for companies, forward, Carbon Disclosure Project (CDP), the investors, employees and indeed all stakeholders. Climate Disclosure Standards Board (CDSB), ESG is closely allied to energy transition, of course. the Global Reporting Initiative (GRI), the It also aligns with the UN SDGs and UN-supported International Integrated Reporting Council (IIRC) Principles for Responsible Investment (PRI). and the Sustainability Accounting Standards Moreover, it complements and strengthens the Board (SASB) will be working together on this. broader groundswell behind the acceptance that A must-have for long-term strong, purpose-led, values-based companies will competitive advantage thrive now and in the long term. So, strong ESG is not an optional add-on. It is a 30 A focus for increasing regulation must-have. Indeed, it is becoming a signature, From new rules surrounding low sulphur fuels to and a key source of long-term competitive mounting requirements on disclosing greenhouse advantage. Whether you look at it from the gas emissions – much of the increasing regulation point of view of reinforcing relationships with in our sector is focused around ESG. We make shareholders, or accessing new opportunities sure we stay on top of and abide by all the for funding, or attracting and retaining top regulation, and support all moves to strengthen talent, or increasing customer loyalty, or simply environmental, social and governance best practice. doing the right thing for its own sake – ESG is We partner with our commercial customers, for a critical factor. It is here to stay – here for good, example in the marine and transportation sectors, in both senses of that phrase. to help them operate successfully in line with What this means for Puma Energy Looking ahead, there will be a premium changing regulation. We also play an active part We are committed to ensuring we embed strong in working with governments to help raise ESG throughout Puma Energy. To this end, we for companies that have higher standards standards. Our Lubricants business, for example, created and launched our ESG framework this around ESG. This is the name of the game engages with governments to ensure quality in year. The framework is designed to integrate now. It is a source for growth, for new capital, 61% In 2019, 61% of global countries which are not currently highly best practice ESG into our everyday action for sustaining business, for innovation, regulated for lubricants products. throughout Puma Energy, and to create a institutional investors for attracting, retaining and developing top increased their investment Towards standardised assessments bold and ambitious set of principles and accompanying commitments against which talent, for reaching new customers. You need allocation to companies In a mark of its growing maturity, ESG excelling in ESG factors.1 assessments are becoming more rooted and to hold ourselves accountable. to embrace it and say: this is a catalyst, not recognised, and indeed more coordinated. 1 Source: 2019 Edelman Trust Barometer, a cost – take it to heart and grow with it. Special Report, Institutional Investors.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
MARKET CONTEXT
The continuing demand A strengthening oil market for fuels High levels of volatility, with demand and price plunges at the beginning of 2020, gave Fuels are here to stay, for the time being way to a relatively more stable period in In our high-potential countries, energy the latter half, followed by a strengthening transition is undoubtedly a big opportunity of both demand and prices at the tail end. for the future. But at the same time, as these countries grow their populations and This upward trend in prices is likely to continue economies, there will still be major demand in 2021 and beyond. This will be due not only for traditional road transport fuels for some to growing demand from countries such as time to come. Peak oil demand in these China, India and Puma Energy’s high-potential countries will almost certainly come later countries. It will also be fed by limits on the than in the developed world, where regulation supply side due to under-investment in and demographics will hasten its arrival. new capacity. Having said this, around the world COVID-19 What this means for Puma Energy 31 has increased people’s wariness of using For Puma Energy, this means a growing public transport and their preference for demand from both people and businesses for using their own cars, which is in turn fuelling fuel and lubricants, alongside the increasing the demand for petrol and diesel, at least in desire for sustainable energy solutions. the short-term. It also increases the importance of offering customers the fuels they want, such as lower- sulphur and higher-performance fuels. We are well positioned to serve both the immediate needs of retail and commercial customers for reliable, affordable fuels and the future needs of communities for renewable energy. We are looking forward to pressing on with meeting We see a growing demand from all these needs in our world of energy. both people and businesses for fuel and lubricants, alongside the increasing desire for sustainable energy solutions.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
OUR STRATEGY
Our transformation is driven through We have a clear strategy which puts focusing on three pillars our customers at the heart of our business. We have accelerated the implementation of our strategy and transformed our business EBIT growth to drive greater growth and value.
Focusing intensely on In addition, we established OPERATIONAL FOCUSED NEW BUSINESS our customers an arm’s-length cooperation The customer-led strategy and agreement with Trafigura to EXCELLENCE GROWTH DEVELOPMENT transformation framework we manage our supply and trading established in 2019 remains the activities. This will enable us to same. By relentlessly focusing extract more value in supporting 32 on implementing our strategy our Downstream business – and making the most of our optimising our working capital opportunities to transform requirements and leveraging through the three pillars of Trafigura’s global scale and the framework – Operational expertise. We have created Excellence, Focused Growth a Value Chain Optimisation Improving Optimising business presence Finding new and New Business Development organisation to work closely performance and product portfolio sources of value – we are operationalising our with Trafigura in ensuring we purpose to energise deliver the best possible fuel Objectives Improve management and Attract new customers and New products in existing control of existing assets increase turnover geographies communities. Achieve operational Expand Puma Energy’s New businesses in existing Refreshing our strategy improvements target product portfolio geographies During the year we took of US$67.8m In 2019 we defined Optimise network presence Market entry into new the opportunity to refresh a clear purpose Improve our value proposition and continue to target geographies our strategy and structure. to customers non-core asset disposals On 1 October 2020, we Exploring opportunities to and strategy; in 2020 Embed our ESG framework renegotiate contract terms implemented our new across all business lines with suppliers operating model: creating we focused on delivering three distinct business units and accelerating it. – Downstream, Infrastructure Enablers Alan McGown, Operational model Culture Digitalisation and Future Energies – Chief Transformation Officer, supported by global functions. Value Chain Optimisation & Procurement
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
OUR STRATEGY quality and the lowest country. A focused governance possible cost-to-serve for process kept momentum Our strategic journey our customers. and ensured delivery of an Our new operating incremental gross margin of We are on an exciting journey to unlock ever-greater customer value by being at the heart model is a step change We are also working closely approximately US$78.9m of energising communities with sustainable solutions. with the Trafigura portfolio from these programmes. for us. It ensures we team to execute our portfolio are fit for growth and Portfolio Transformation: From managing assets to unlocking customer value strategy as quickly and We completed two major in the best possible effectively as possible. transactions, Paraguay EBIT shape to create the Creating more value – faster (divested in 2019) and Australia SERVING most value for our The changes further sharpen fuels (divested in June 2020), and align our leadership, as well as some non-core COMMUNITIES stakeholders. It will structure, processes, systems market divestments, generating WITH SUSTAINABLE enable us to drive US$466m of net cash inflow and capabilities to our strategy, SOLUTIONS sustainable profit values and purpose. Our new in 2019 and 2020. UNLOCKING growth in the medium 33 streamlined organisational Organisational model CUSTOMER VALUE model provides better Downstream is capitalising on its term, and to live our accountability, faster and more simplified structure, continuing to purpose to energise focused decision-making, and build capability and supporting communities in the greater efficiencies. Our aim the transformation programme, MANAGING is to intensify and accelerate years ahead. to create a more competitive and ASSETS “Digitalisation and the implementation of our sustainable market position. the future of energy” strategy to become even more customer-led, more Infrastructure will provide cost-effective and to target enhanced operating performance. “Gaining a deeper resources and investment Future Energies is an avenue understanding of our where it will have most impact. for growth through the energy customers to offer transition. We are leveraging Through 2020 we made good “Building a more compelling progress in implementing the the Puma Energy footprint to deliver affordable, reliable and Downstream and value propositions” strategy despite the tough Midstream network” operating environment. sustainable energy solutions that serve our customers Transformation Programme and communities. We delivered above budget in 2020 on the two pillars – Operational Excellence and 2010 2019 2023 Time Focused Growth – across all We are here lines of business and in each
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
OUR STRATEGY
Making operational • Implementing a Vendor OPERATIONAL improvements Management Inventory Communication, Key operational Despite the challenges of (VMI) model improvements COVID-19, we made substantial cooperation and EXCELLENCE It was a true team effort progress on several operational • Transport optimisation including people from a range of teamwork have been improvements (OIs). We focused different areas such as business on optimising our operations, at the heart of our support, credit, procurement, • Optimising returns from differentiating ourselves from success in delivering sales and transport. It enabled our Retail-owned others, increasing the size of our us to generate US$4m of value strong results through portfolio current business, and generating in 2020. our operational sustained performance. • Developing a lubricants Looking ahead improvements. In total, we achieved US$78.9m distributor network We have a strong pipeline of of benefits from our OIs OIs to support our business We are working in 2020, beating our target • Enhancing partner transformation. Key initiatives together on a of US$67.8m. capability to deliver 34 focused on improving standardised best our customer offer Spotlight on transport Operational Excellence include: way that helps us optimisation method of site operation • Increasing lubricants We implemented several (MOSO) best practices, transform our volume in Africa through actions to optimise our transport optimisation, processes and our high-performance transport and logistics procurement optimisation, mind-set – in order lubrication solutions process to be more efficient and cost reduction and process and reduce our transport improvement initiatives in to be more efficient costs. These include: Finance and IT. and more profitable. • Negotiating lower In addition to improving our The key is to apply transport rates own operations, other strategic these global best ways • Enforcing more efficient initiatives are improving the in the right way locally distribution rules, for example customer experience and cut-off time for ordering and adding value to our business across our footprint. payment, delivery windows too. These include our Loyalty and order size programme, convenience retail • Optimising delivery development projects, global scheduling and the utilisation fleet card and optimum retail of trucks network planning. US$78.9M • Streamlining the loading Value generated from process in terminals operational improvements in 2020
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
OUR STRATEGY
Divesting our non-priority impacted by this transaction Key divestments markets and we will continue to invest FOCUSED In line with our strategy, Streamlining our to enhance our service to GROWTH we continued to divest from portfolio allows us bitumen customers. These noncore countries in order to to focus, simplify two key transactions help us US$200M Completion of sale streamline our Downstream and accelerate where demonstrate our commitment portfolio so that we can increase to focus on core growth of Paraguay business our focus on our core countries we believe we can markets. They have also given to Impala during 2019 where we have the strongest make the greatest our former operations in and 2020 foundation and potential to difference and deliver Paraguay and Australia a bright grow and excel as the No1 or new future of investment and No2 Downstream energy the most value. growth under new ownership. business. By concentrating on AU$425M In total we have generated core high-potential countries, Sale of our Australian US$355m net cash inflow from we gain the twin advantage of Streamlining our commercial and retail divestments in 2020, which we 35 greater simplicity and greater Downstream portfolio fuels business will use primarily to invest in our impact, which in turn will help Closing our transactions core high-potential countries. us to accelerate our growth in Paraguay and Australia and success. In January 2020, we successfully Looking ahead completed the sale of our Our portfolio prioritisation While exploring the options to business operations in Paraguay is underpinning the focused secure the best possible future to Impala Terminals Group, growth pillar and is for our operations in non-core a joint venture between complemented by our strategic countries, we have continued Trafigura and the IFM Global investment programmes. to manage and maintain them Infrastructure Fund. This to the highest standards. Our transaction generated priority is always to ensure safe, US$200m in 2019 and 2020. secure operations and to keep delivering for our customers. Despite the challenges of In addition, throughout the COVID-19, we also successfully divestment process we engage closed on time on 30 June closely with the Puma Energy 2020, the sale of our Australian employees in the affected commercial and retail fuels operations, keeping them business to Chevron Australia informed and supported all Downstream Pty Ltd, for the way. AU$425m. Our bitumen business in Australia is not
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
OUR STRATEGY
Forging ahead with • Putting the customer at the Future Energies heart of everything we do. Our Phase 1 projects NEW BUSINESS Our Future Energies business • Incorporating commercial and unit is a key engine driving the Puerto Rico Status: Under construction risk management into our Enhancing the • 1,200kW ground mounted solar DEVELOPMENT third pillar of our strategic daily activities to drive supply security • 2,050MWh generation per annum transformation framework: shareholder value. of our energy • 92% grid consumption displaced per annum
New Business Development • Deploying creative solutions at Bayamon • 1,449MT reduction in CO2-eq emissions Finding New Sources of Value: across our value chain. terminal with per annum 1. Saving costs and enhancing • Implementing projects solar power Puma Energy’s commitment in a safe, disciplined and to sustainability by supplying timely manner. Ghana Status: Under construction our assets with renewable • Operating with our purpose at Solarising our • 10 retail stations plus 4 Terminals/Depots energy delivering cleaner, the heart of everything we do. retail stations • 421kW rooftop solar cheaper and more and aviation • 227kWh battery storage reliable electricity We are implementing our depot • 524MWh generation per annum 36 2. Developing projects Future Energies projects in • 35% grid and diesel consumption alongside our existing phases to showcase our skills displaced per annum and expertise to our core customers in existing • 370MT reduction in CO2-eq emissions per annum Puma Energy geographies markets and customers. For Phase 1, we are investing in 3. Developing new customers, Papua New Status: Under construction solar projects across assets new partnerships and new Guinea • Speybank and Aircorps terminals in Lae in some of our key markets projects in existing and Implementing • 278kW rooftop solar including Puerto Rico, Ghana, new geographies. solar systems • 401MWh generation per annum Papua New Guinea, Nicaragua across our • 79% grid and diesel generator Future Energies: and Honduras. terminals consumption displaced Our vision is to enable energy Looking ahead • 284MT reduction in CO2-eq emissions per annum equity for all as the leading Building on the success of energy services provider in Phase 1, we have approval to Nicaragua and Status: Completed in March* high-potential markets. embark on Phase 2, where Honduras • Two retail stations in Nicaragua and Honduras We will achieve this by: we will continue to invest in Working with • 66kW rooftop solar • Improving energy access as implementing more projects in best-in-class • 53MWh generation per annum (Honduras) We are implementing our Future a trusted supplier of clean our selected countries in 2021. local providers • 45MWh generation per annum (Nicaragua) energy to our customers to bring solar • 18% grid and diesel consumption Energies projects in phases to Read more in the Future and local communities. solutions displaced per annum Energies section on page 65. showcase our skills and expertise to • 70MT reduction in CO2-eq emissions per annum our core markets and customers. * Out of period: completed March 2021.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
OUR ESG PRINCIPLES AND COMMITMENTS Looking ahead Ensuring strong governance ESG is a key energiser for us. We make sure we listen to all our stakeholders but we Our commitment to corporate responsibility is It helps us sharpen our long- lead our ESG from the top, with oversight from both held commitment to the Board and the Executive Committee. rooted in our purpose, values and culture. We responsibility and delivering know our commitment to robust environment, a sustainable positive impact for all our key stakeholders. ESG framework governance social and governance (ESG) principles is Looking ahead, our aim is and accountability essential to the sustainable growth and success to optimise and further operationalise ESG throughout of our business and to the communities we serve. Puma Energy. We want to Board Level Excom make it part and parcel of our Accountability Accountability everyday operations, helping to Creating our ESG framework In creating our framework, Assessing our guide our decisions, set targets, 37 for energising communities we embedded best practice ESG performance assess our performance and Taking a responsible approach insights and considered the key Since launching our ESG colour our future. to providing reliable, affordable, needs of all our stakeholders. framework in 2020, we have Excom/Excom -1 high-quality energy solutions for Just as our values guide us all Read more about our ESG framework at been focusing on the right local people and businesses in https://pumaenergy.com/en/ in living our purpose, our ESG Steering Committee responsibility/esg actions to achieve maximum often remote and underserved principles and commitments impact. To help us with this task, communities has always been at Focusing for maximum provide the blueprint for action. we have engaged the Carbon the heart of our business, as has positive impact To this end, in 2021 we will Disclosure Project (CDP) and our passionate, agile, can-do Our aim is to focus where we enhance our ESG governance are participating in the S&P ESG Core Working Group spirit. Building on this strong can make the biggest positive and embed our ESG principles Global Corporate Sustainability chaired and supported by Head of ESG foundation of enterprise and difference long-term. In this and commitments so they Assessment (CSA). We are also responsibility, we created and spirit, we are concentrating inform the things we do, assessing our material KPIs and launched our ESG framework our efforts to drive substantial and don’t do, to energise will be implementing our strategy in 2020. and tangible impact on the UN communities around the world. Sustainable Development Goals and plan to drive the most impact The framework is designed to (SDGs) where we can make on these key areas in 2021. integrate best practice ESG into the biggest impact. So we are Continuing to evolve our everyday action throughout focusing above all on goal 7: and enhance Puma Energy, and to create a ensuring access to affordable, We continue to evolve and Named individuals from within the business units and functions bold and ambitious set of reliable, sustainable and enhance our ESG governance, tasked with embedding policy, delivering campaigns and ensuring principles and accompanying adherence to the framework. modern energy for all. management and accountability. commitments against which to hold ourselves accountable.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
ESG link: OUR ESG PRINCIPLES AND COMMITMENTS Throughout the report, we use this icon to highlight progress against our ESG framework.
1. Assess all 2. Apply good 3. Promote 4. Invest in 5. Achieve zero 6. Target net zero 7. Connect 8. Keep local 9. Provide our 10. Promote equal business activities, industry practice transparent technology carbon in our environmental communities to prosperity employees and opportunities strategy and an ethical and participatory and solutions operations loss a secure, reliable at our heart business partners and foster developments, approach engagement to support the by 2030 and sustainable with a safe and a just and and new investment wherever on key ESG equitable energy power supply healthy working inclusive culture and offset decisions we operate issues with all transition and unleash the environment Our principles against ESG stakeholders transformational principles opportunities this brings
1.1 Achieve robust 2.1 Operate in 3.1 Actively 4.1 Grow our 5.1 Optimise our 6.1 Achieve zero 7.1 Improve access 8.1 Enhance local 9.1 Achieve zero 10.1 Ensure equal 38 baseline ESG an ethical and engage with local energy transition energy use and major spills to reliable, economic harm for our opportunities assessments and transparent way communities on all offer for customers move to renewable 6.2 Create sustainable power prosperity, employees and throughout the data across all 2.2 Respect relevant ESG issues 4.2 Partner with energy sources biodiversity supply in high- especially in business partners employee life cycle (material) ESG international best 3.2 Galvanise peers, trusted local 5.2 Reduce our management plans potential markets, high-potential 9.2 Meet world- 10.2 Create an issues and regions practice principles convene expertise entities to develop scope 1 and 2 for sensitive areas and beyond markets class standards inclusive and 1.2 Develop the 2.3 Report our and support energy transition emissions intensity and all new 7.2 Support local 8.2 Protect and on emergency respectful work internal capacity ESG performance governments and solutions and year-on-year developments markets and create jobs and preparedness environment to effectively annually, in line regulators to drive capacity, with 5.3 Embed 6.3 Improve our governments to businesses 9.3 Set the industry 10.3 Champion implement the with international ESG progress a focus on high- decarbonisation water usage at enable the highest 8.3 Invest in the benchmark for human rights ESG framework good practice 3.3 Join, and potential markets ambition into our all sites and fuel quality communities in road safety across our business and deliver on our standards where appropriate, supply chain and retail stations standards possible which we operate and supply chain commitments and investor lead industry build capacity to throughout the 6.4 Take a circular transition journey 8.4 Understand 1.3 Apply our expectations dialogue and best enable this shift approach to social impact in ESG framework practice business activity, our communities to all investment programmes in maximising and mitigate decisions and ESG application, recycling and accordingly business activities decarbonisation minimising waste and reporting 8.5 Align social Our commitments 6.5 Align to good investment with international local development industry priorities and environmental achievement of practice principles the UN SDGs and standards
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
STAKEHOLDER Our business thrives on close engagement with ENGAGEMENT our key stakeholders. In 2020, not least due At Puma Energy, building a strong, to the extraordinary sustainable business means energising demands of COVID-19, we increased the communities through positive economic, intensity of our social and environmental impact. engagement to ensure everyone was kept fully informed and involved. In a very challenging To do this well, we work closely respond appropriately. year, we emphasised with a diverse range of partners This section highlights who and stakeholders. We take time our key stakeholders are, and strengthened 39 to engage with all our key what they tell us matters to our key stakeholder stakeholders, not just to tell them and how our business relationships more them what we are doing but responded in 2020. also to listen to them and than ever.
Our key stakeholders are:
Retail customers Commercial customers Employees Business partners Local communities Governments and Investors Our products and Our commercial Our employees are We build strong We aim to support regulators Our shareholders and services are used by customers rely on us at the heart of our relationships with all and empower the As a responsible debt providers play an millions of people to provide them with success. We aim to our business partners communities where business, we are important long-term around the world. high-quality tailored create a safe, trusting, to ensure we are we live, work and sell. committed to engaging part in our business. The continued strong energy solutions to respectful and collectively energising By ensuring we make constructively with We maintain close and performance of our support their growth inclusive culture so communities. Our a positive contribution, governments and supportive relationships business would not and success. our colleagues can business partners include we can help build regulators in the characterised by be possible without be proud of their suppliers, contractors, thriving communities and countries in which openness, transparency understanding our work and empowered franchisees and dealers. strengthen our business. we operate. and mutual understanding. customers’ needs to succeed. and expectations.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
STAKEHOLDER ENGAGEMENT
Retail customers How we responded in 2020 Commercial customers • Direct support for communities and How we engage customers during the pandemic How we engage • We conduct regular market research to • We have regular dialogue and meetings • Keeping our retail outlets open, providing understand what our consumers think with commercial customers security of supply of fuel and other essential • Feedback from our Puma Energy colleagues items in safe, clean convenience stores • We attend industry events and conferences who serve customers every day • Acceleration of digital offers such as Click What mattered most to them in 2020 What mattered most to them in 2020 and Collect and online deliveries, reducing • Price and quality of products and services • Price and quality of products and services COVID-19 risks and giving customers • Security of supply • Security of supply of fuel and other more choice in how they shop • Trust essential products • Global Customer Week, a week-long • Data privacy • Safety and security during the pandemic celebration including customer engagement • Climate change and the environment • Climate change and the environment and rewards to outstanding dealers, retailers and business partners How we responded in 2020 40 Development of the retail offer, including: • Further rollout of our eAviation technology • Launching the PRIS loyalty programme • Research and development and testing • Boosting convenience retailing through the for new products in bitumen Super 7 refurbishment programme • Implementation of high-performance • Developing Super 7 online to drive category lubrication solutions for businesses management and execution • Exploring renewable energy solutions to support the energy transition and meet the future energy needs of our customers
See the Business review from page 50 See the Business review from page 54
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
STAKEHOLDER ENGAGEMENT
Employees Business partners How we engage How we engage • We know that employee experience drives • We work closely with business partners customer experience – that engaged and to share our plans and policies, provide energised colleagues deliver for our information and support, and develop customers and energise communities joint initiatives for mutual gain • We have an open, collaborative and inclusive What mattered most to them in 2020 management culture and structure • Clear standards and policies • We engage regularly with our employees, • Support for their aims and ambitions through site visits, regular town hall meetings, email, safety briefings and team meetings How we responded in 2020 together with the intranet and our regular • Dedicated dealer training and smart Energiser emails/notes to all employees support tools • We have a new ‘Your Voice’ annual • New risk-based policies for agents 41 employee engagement survey and intermediaries • We support career development and • Set up a new Shared Service Centre progression through training programmes • Appointing P&C business partners to work • Recognising and celebrating success with in Latin America and the appraisal process closely with the business segments the Puma Awards, Going the Extra Mile What mattered most to them in 2020 • Creating a contemporary digital learning (GEM) and Making a Great Individual • Opportunities for development and progression platform with an emphasis on licence-to- contribution (MAGIC) programmes • Opportunities to share ideas and make operate skills, general business skills and • Provided access to wellbeing programmes a difference dedicated Pumaway learning (e.g. Commercial and encouraging leaders to carry out • Providing a safe place to work Academy and Leadership Development wellbeing checks with their teams programmes) • Diversity and inclusion • Established a working group to make the • Developing training to grow the Future most of flexible working for employees How we responded in 2020 Energies business • Working with the Remuneration Committee • Developing a new People & Culture (P&C) • Enhancing safety tracking to provide to introduce changes to strengthen talent strategy that aligns closely with the purpose better granularity to identify risks and attraction and retention and Group strategy improve performance • Launching the Women’s Initiative Network • More regular communication with employees • Embedding the Puma Values through the talent to help female colleagues accelerate the including pulse surveys throughout the attraction and onboarding process as well as development of their capabilities and pandemic and the first company-wide the performance management process leadership qualities, and engage with the ‘Your Voice’ survey of employees, which wider community and local women’s initiatives achieved an engagement rate of 75% in 2020 See the People & Culture section on page 71
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
STAKEHOLDER ENGAGEMENT
Local communities Governments and regulators Investors How we engage How we engage • We have deep links with the communities • We have regular dialogue with our we serve and are part of. In many cases these shareholders. In doing so we ensure that relationships have been built up over a number shareholder views are brought into our boardroom of years through our ongoing local presence and considered in our decision-making • Our links are further strengthened through • We arrange debt facilities from a diverse group targeted community development of providers. We engage with these providers programmes, for example on road safety and credit ratings agencies through regular meetings, presentations and webcasts to What mattered most to them in 2020 ensure that they remain fully informed on • Maintenance of fuel supply, including during all relevant areas of our business incidences of pandemics or natural disasters What mattered most to them in 2020 • Environment and climate change • Openness and transparency 42 • Behaving in an ethical and responsible manner • Financial performance • Road safety • Business resilience during the pandemic How we responded in 2020 • Capital structure and debt profile • Support throughout the pandemic • Strategy and business model • Be Puma Safe: road safety campaign • Credit rating • Ongoing community initiatives to support • ESG performance local communities where we can make How we engage How we responded in 2020 most difference How we responded in 2020 • We build strong relationships with governments • Ongoing dialogue to ensure security • More active and regular dialogue with and regulators through ongoing communication of supply during the pandemic shareholders and banks and information sharing and regular face-to- • Stakeholder mapping exercise across • Launched our ESG framework face meetings, including senior level contact our markets • Engaged the Carbon Disclosure Project (CDP) What mattered most to them in 2020 • Publication of our ESG framework showing and are participating in the S&P Corporate • Security of energy supply all our stakeholders how we will approach Sustainability Assessment (CSA) • Post COVID-19 recovery and growth the energy transition, corporate governance • Successful sale of Australian fuels business in and social responsibility June and completion of Paraguay sale during • Supporting the transition to lower- 2019 and into 2020 carbon economies • Prepaid US$300m of the 3-year term loan • Road safety maturing in May 2021 • Appointment of our independent Chairman, Image above: See the Communities section on page 81 Donation to Botswana police René Médori
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
KEY PERFORMANCE INDICATORS We assess our performance across a range of financial and non-financial measures. In 2020, we added two new KPIs: operational improvements and talent.
Financial and operational KPIs 43 Rationale and performance Sales volumes (k m3) This figure is a strong indicator of the Group’s In 2020 volumes have declined by about 10% versus 2020: 20,118 Downstream market share. Management targets the prior year across most of our countries due to Volume of oil products sold to Puma Energy growth in sales volumes that exceeds growth COVID-19 related lockdowns and reduced demand. 2019: 22,441 customers from the retail, wholesale, in target markets. B2B, aviation, LPG, bitumen and 2018: 22,171 lubricant sub-segments. 2017: 22,794
2016: 21,968
Rationale and performance Throughput volumes (k m3) This figure reflects the level of Midstream business In 2020 our throughput volume has shown a slight 2020: 14,533 done with third-party customers, through increase with reduced activity mainly at our terminals Volume of oil products handled on behalf throughput agreements. in Estonia and Ivory Coast, which was offset by 2019: 14,195 of third-party customers. This figure includes increased throughput at our terminals in the UAE A large part of storage revenues are generated 2018: 13,435 neither storage volumes for our own and Angola. Downstream business, nor volumes stored by capacity rental agreements (not reflected in 2017: 16,634 for third-party customers under capacity throughput volumes). At the same time, a large share of our terminals is used to support our Downstream rental agreements. 2016: 19,693 activities, and is therefore not reflected in this statistic.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
KEY PERFORMANCE INDICATORS
Financial and operational KPIs continued…
Rationale and performance Gross profit (US$m) This figure provides a top-line view of our profitability, Gross profit in 2020 was impacted by the decline in our 2020: 1,205
especially in Downstream markets. We optimise sales sales volume as a result of COVID-19 related restrictions 2019: 1,265 Revenue from sales, less the cost of purchase performance by increasing sales volume and/or partly compensated by US$82m of support from our and delivery of products. adjusting pricing to increase unit margin. Gross profit core shareholder suppliers in the form of an interim 2018: 1,280
shows the effectiveness of these two strategies price adjustment in the second quarter of the year. 2017: 1,672 in combination. 2016: 1,601
Rationale and performance Unit margin (US$/m3) This measures pricing performance in free markets Unit margins have increased in 2020 as a result of 2020: 52 and is usually the key factor to determine profitability reduced volumes, but gross margin benefiting from 2019: 48 44 Downstream gross profit divided by sales and the return on investments in regulated markets. core shareholder suppliers support in the second volumes. This is the main indicator of basic quarter of the year. 2018: 52 profitability after deducting the purchase price 2017: 66 and variable costs from the sales price. 2016: 66
Rationale and performance EBITDA (US$m) (including discontinued EBITDA is a key measure of profitability. It EBITDA is largely unchanged when compared to the 2020: 533 operations and excluding IFRS 16 impact) demonstrates the ability to generate cash flow that prior year as the reduction in gross margin has been 2019: 530 Earnings before interest, tax, depreciation can be reinvested to stimulate future growth and is offset by swift measures to adjust our cost base. and amortisation. used as a base for the valuation of a company. 2018: 554
2017: 740
2016: 755
Rationale and performance Operating profit (US$m) Operating profit was impacted by lower gross profit, 2020: 2.8
and non-recurring impairment expenses recorded on 2019: -327 Profit after depreciation and amortisation goodwill and fixed assets mainly on our operations but before interest and tax. in Ghana and Puerto Rico but also as fair value 2018: 161
adjustments on assets which are part of the ongoing 2017: 322 divestment programme of non-core operations. 2016: 383
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
KEY PERFORMANCE INDICATORS
Financial and operational KPIs continued…
Rationale and performance Net tangible fixed assets (US$m) Indicative total value of our underlying asset base. The decrease in fixed assets is due to both 2020: 2,037
Fixed assets are kept at historic costs less depreciation expenses and negative foreign 2019: 2,421 Total value of property, plant and equipment accumulated depreciation. currency translation effects, while capex was less cumulative depreciation. maintained at reduced levels as a result of 2018: 3,159 a focused investment programme. 2017: 3,614
2016: 3,329
Rationale and performance Consolidated net worth (US$m) This gives an indicative value for the business. It is not The decrease in net worth mainly reflects the loss for 2020: -387 a proxy for fair market value as no allowance is made the year of US$348m as a result of impairments and 2019: 447 45 Consolidated value of shareholders’ equity. for future growth, but it does give shareholders an also US$58m of foreign currency translation effects This reflects the net book value of Puma indication of the minimum value of the business. as part of other comprehensive income from the 2018: 1,581 Energy’s assets at the year end. devaluation of some of the Group’s currencies against the US Dollar. The consolidated net worth was also 2017: 2,263
reduced by US$403m repurchase of shares. 2016: 1,900
Rationale and performance Compound annual This measure is used to monitor medium-term After significant growth up to 2016 we have been 2020: -10%
growth rate (CAGR) sustainable growth. Three-year averaging limits experiencing lower EBITDA due to compressed 2019: -11% the distorting effect of a specific, major transaction unit margins in some of our key markets such Annualised overall gain in EBITDA averaged in a single 12-month period. as Angola and Australia. 2018: -6% across a three-year period. 2017: 4%
2016: 11%
Rationale and performance Operational improvements Our operational improvements include optimising returns Despite the challenges of COVID-19, we made New KPI for 2020 from our Retail portfolio by upgrading our network and substantial progress on several operational US$78.9M Our key operational improvements focused enhancing our customer offer with a greater number of improvements (OIs). In total, we achieved Value generated from on improving and optimising our business convenience outlets; optimising transportation costs; US$78.9m of benefits from our OIs in 2020, operational improvements processes, differentiating ourselves from others enhancing partner capability to deliver our customer beating our target of US$67.8m. in 2020 and generating sustained performance. offers and increasing lubricants market share in Africa by providing high-performance lubrication solutions.
PUMA ENERGY ANNUAL REPORT 2020 GROUP OVERVIEW
KEY PERFORMANCE INDICATORS
Non-financial KPIs
Rationale and performance Work-related fatal injuries We monitor Puma Energy’s safety procedures both 2020 0 2017 0 within our own direct operations and within our dealer 2019 0 2016 0 Total number of direct work-related retail network. We had zero fatalities at both fatalities among Puma Energy’s employees employee and directly supervised contractor levels 2018 1 and directly supervised contractors. in 2020, reinforcing our vision of zero harm.
Rationale and performance Lost Time Injury Frequency Rate This is an absolute measure of safety levels in facilities. On a constant perimeter basis, excluding our Australia 2020: 0.47
We acknowledge that any injury resulting in an fuels business, we saw a reduction in our LTIFR from 2019: 0.74 Number of lost time injuries multiplied by employee or directly supervised contractor being off 0.74 to 0.47. This represents a more than 30% 1,000,000 divided by total man-hours worked. 2018: 1.6 work for any length of time comes at both a huge improvement in performance. 46 Also known as LTIFR. personal cost and considerable business impact. 2017: 1.9 Management closely monitors LTIFR trends to inform 2016: 0.9 corrective measures that must be applied and to continuously improve safety performance.
Rationale and performance Workforce (by continent) This indicates the total employees managed by Our workforce comprises 54% African, Africa Puma Energy, both permanent and temporary, on the 15% Latin American, 10% European and Europe The number of employees directly managed payroll and employed through agencies. Monitoring 21% Asia-Pacific employees. LATAM by Puma Energy, broken down by continent. headcount is key to ensuring effective control and MEAP efficiency of the organisation.
Rationale and performance Talent New KPI for 2020 Retaining our most talented colleagues, especially In 2020, we retained 98% of our critical and strategic those in strategic roles is a key metric for us. In 2020, talents and regrettably lost under 2%. Succession People are at the heart of our purpose of serving we equipped our leaders to become better remote plan was reviewed and put in place for all target our customers and energising communities. We managers, offered an employee assistance senior leadership roles. We constantly measure our understand the critical role the right people in programme and conducted a global employee survey internal versus external appointment ratio which the right positions play in helping us deliver our – YOUR VOICE, to gain insights into what matters partially contributes to measuring our ability to strategy. We therefore focus our investment most to our colleagues. We retained employment attract and develop the right talent and set targets on succession and capability development for and pay during the peak of the pandemic. for our business. highly-valued individuals in strategic positions.
PUMA ENERGY ANNUAL REPORT 2020