Gull New Zealand Limited

March 2010 Biosciences Enterprise Forum

Agenda Gull Who We Are and our Market Gull Philosophy Gull and Biofuels Green Wash or Real / Commercial and

Sustainable

NZ Fuel Market Homogeneous Product

Location Location Location Tyres Tampons and Petrol Every survey = we hate time loss Low margin, high turnover Shops vital support for the business “Bloody Price of Petrol”

NZ Fuel Market

BP

Shell

Caltex

Mobil

Gull

Gull Overview Family owned, Western Australia based Operating for 34 years in Perth Several divisions Two Countries

Gull Overview Gull Western Australia (Marketing) Gull New Zealand (Marketing) Terminals West

(Terminalling) Terminals New Zealand (Terminalling) Ecotech Biodiesel (Bio Diesel

Production)

Gull Overview Commenced operation with one service

station 1976 Opened Kwinana (Perth) Terminal in

1992 Opened first New Zealand outlet 1998 Opened New Zealand Terminal 1999 Acquired Eco Tech Biodiesel 2006

Gull Overview Key Highlights Australia

First independent to own and operate a terminal facility

Introduced fuel discounting to West Australian market

First retailer in West Australia to sell a biofuel at retail ( Gull BioD)

Gull Overview Key Highlights New Zealand

The second independent to enter the NZ market

Relocation of bulk tanks ex Marsden Point First to offer low sulphur diesel in New

Zealand First to sell a biofuel in the New Zealand

market

Gull Overview NZ Terminal

Largest terminal at Mount Maunganui State of the art Enables import of fuel

Key for biofuels One Terminal

One place to receive product One place to blend Never used water in our processes

New service stations Environmentally sound equipment New equipment No 30 year old tank deposits

Agenda Gull Who We Are and our Market

Gull Philosophy Gull and Biofuels Green wash or Real / Commercial and

Sustainable

Philosophy

Vision Purpose Values

Practical, real, understood Not widely consulted Not used externally

Values

Values

Values

Values

Do we live our Values ??? I believe we do

Agile, Win, Accountable – daily words If we do not the consumers will desert us

and we will not be here Our survival is differentiation from the oil

majors

Biofuel Philosophy ? Authentic Accountable Win Value our customers

Biofuel Cynicism We buy it sell it make money

Petrol, diesel, Moro bars, ethanol, biodiesel

Market Reality People love the freedom of their vehicle No one will take that away People do not like being told People are afraid of changes with fuel Rome was not built in a day

Agenda Gull Who We Are and our Market Gull Philosophy

Gull and Biofuels Ethanol Biodiesel

Green wash or Real / Commercial and Sustainable

Biofuels 101 Ethanol

Ethanol mixes with petrol E10 = 10% ethanol Ethanol is what makes you happy in a beer /

wine / vodka Henry Ford designed the Model T to run on

ethanol The future – fermented pinus radiata or

municipal garbage or CO

Biofuels 101 Biodiesel

Biodiesel mixes with diesel B10 = 10% biodiesel Made from vegetable oils or animal fats Von (Van?) Diesel invented a new engine

that ran on peanut oil 18?? The Future ? – Oil from algae from sewage

ponds

Our Icon

Gull Force 10 First biofuel sold in NZ 1 August 2007 E10 blend. 10% ethanol, 90% premium

gasoline Blended at Mount Maunganui 98 octane Substitution for 95 RON Premium

Gull Force 10 Sold at all NZ Gull branded sites (38 as of

1 March) “Premium” fuel circa 10 - 15% of retail

fuel sold. (91 octane and Diesel dominant)

Premium Newer vehicles Performance seekers

Gull Force 10 AA - Same fuel economy as competitor

fuel but lower price Motor sport testing – better performance

than Ultimate and Avgas 100 Used by 8 out of 10 top place getters in

NZ Rally championships

Gull Regular Plus Launched 2 August 2008 91 Octane E10 fuel Again a substitution for 100% mineral

product 8 Outlets Volume from Regular Plus outsells GF10

2:1

Some Data 30% of our fuel sold has a biofuel content 40% of our service station fuel sold has a

biofuel content Estimate over 140,000 sales of biofuel in

February Two complaints on fuel quality

Our Ethanol Until November 2009 100% ex Fonterra

Fermented Dairy Industry by product Made in NZ Previously exported as the surplus from the

industrial and potable industries Fonterra at capacity

Purchased in November Brazilian Ethanol South Central Region of Brazil

Economics Ethanol is Excise Tax Free

44 cpl not paid to Government Without excise tax break ethanol blends

more expensive than mineral fuel

OK but what does this do ? 300 tonne of carbon reduced per month

Best case ! It ain’t going to solve world hunger But not bad for a staff of 12 !

Gull 3 – 4% of market Potential 10,000 tonnes / month NZ industry

Biodiesel The chemistry is not complex

Used cooking oil The right ingredients Stir for 5 minutes on the bench It will run your tractor

This stuff does not make 140,000 customers / month happy

Biodiesel The Issues Tallow and edible oil prices track diesel

prices Tallow is only a portion of the cost of a

bar of soap It is too expensive to bring to market just

now This is with a 42cpl government

production subsidy

Biodiesel The Issues Our Australian Production Plant is in

“Care and Maintenance” The Biodiesel being sold in NSW is now

primarily made in the US with twin government subsidies !! But still good for the environment ?

Biodiesel How ? Small volumes will flow to boutique users Diesel is a commodity and thus price is

king Obligation possibly the only driver Even Emissions Trading only offers half a

cent for a B10

Agenda Gull Who We Are and our Market Gull Philosophy Gull and Biofuels

Green wash or Real / Commercial and Sustainable

Basic Issues – “Petrol is bad” Liquid fossil fuels are so portable;

enormously powerful; and damn cheap There is actually a lot of it left The extension cord doesn’t yet go more

than 150 kms People do not like public transport The ICE has driven freedom

BUT BUT BUT The carbon will kill us

Market Reality People love the freedom of their vehicle No one will take that away People do not like being told People are afraid of changes with fuel Rome was not built in a day

Some Home Truth People are lazy “Not me not today”

Our biofuels are less expensive than conventional fuels (No Excise)

They have grown our business Estimate majority of that growth is price

driven not green driven To effect change cannot directly oppose

The Journey to Nirvana Cannot take away the car Politically unpopular to triple the price of

fuel Long term reality is that western

government income is underwritten by excise tax so it will apply to all fuel somehow

What is Nirvana Cars powered off algae from ponds /

reactors ? Waste distilled to fuel ? Hydrogen ? Nuclear ? Carbon Capture + Storage ? CO to ethanol ? Do biofuels play a part ?????

Oh for a crystal ball… Gull belief

Liquid fuel important for foreseeable future Transport and communication due for major

change All fuels will contribute

Fuel oil for ships will produce petrol ! Electric, 1st Gen, 2nd Gen Biofuels all grow in

importance

Pricing carbon is a great step

Gull’s Position Believe we will refuel the motorist and her

transport mechanism There will be a lot less total automotive

fuel sold A lot less locations to get fuel at Vehicles will be a lot more efficient A changing category mix Gull will (must) lead that change

BUT BUT BUT again “The damn stuff you are playing with is

causing issues”

Almost always from a position that forgets that petrol emits 2.3 kgs of C02 for each litre.

Ethanol some issues Food for Fuel

Any one for an Otago Pinot ? US Corn 1 in 80% out ??? To distil you boil a lot of liquid

Biodiesel some Issues Food for Fuel

American / South American Soy “Splash and Dash” Palm oil

Orangutan hair in my chocolate Forest removal, carbon emission, erosion,

Responsibility is the answer Brazilian sugar beats US Corn and

Pakistani wheat No Palm Oil What are Governments subsidizing

So do we need “Standards ??”

Sustainability - consultants dream What Standard ?

European ISO Government Common sense

What Indirect effects ? You want $15,000 to give me a

certificate ?

Where do we sit Where is the sustainability standard for

petrol and diesel ? Common sense

No Palm oil policy since 2006 Ethanol ex NZ and Brazil

Informed consumer – open supplier Ask Cadbury

Nah “Sorry you’re just here for $” No apologies we are here to pay a return By definition of an independent we will

look for the differentiation I hope it is deeper than that I believe it is deeper than that The consumer will judge our actions

No, we are good guys Founding Sponsor AA Energywise rally Installing electric vehicle recharge points Sustainability Champion Supported for biofuels obligation Forecourt recycling Biodiesel investment

Even if we are sons of Satan …. Remember 2.3kgs of C02 for every litre is

the base – we don’t start at zero Proof the fuel can change Proof the NZ vehicle fleet will not fall over 2nd Generation has a market

I’ll finish with our values We do give a damn Agility is needed to make it happen Winning is the culture and Biofuels are

our biggest wins Respect for each other and for the future

“Thanks” and “Questions ?”