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199819971996
Operating profit/(loss) after abnormal items and income tax
Reported result masks underlying strengthCaltex Australia in 2001 recorded a full year net loss after tax of $186.1 millioncompared with a profit after tax of $36.1 million in 2000. If the impact of the fallin crude oil prices – a key external factor – is excluded, the replacement cost ofsales operating profit (before significant items, interest and tax) in 2001 was$200.9 million, up from $115.7 million in 2000. Inventory losses totalled$186.1 million in 2001 (2000: $40.1 million gain).
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The price of regional benchmark Tapis
crude oil fell from US$27.38 a barrel in
December 2000 to US$18.64 a barrel in
December 2001, averaging US$24.99 for
the year (2000: US$29.45), reflecting a
global downturn in demand.
Crude oil price (US$)
A$m
Return to full
production
The Kurnell refinery
returned to full
operating capacity
in March with the
completion of a project
to replace a damaged
exhaust stack.
Negative refiner
margins
Refiners’ margins fell
sharply to negative
levels between May
and August.
Lytton shutdown
A planned
maintenance
shutdown was
successfully carried
out at the Lytton
refinery in
October/November.
Statutory profit and replacement cost of sales operating profit
200120001999
Replacement cost of sales operating profit after income tax
Regional oversupply of petrol led to sharp
falls in refiners’ margins to negative levels
between May and August, falling as low as
-US$2.08 a barrel in July. Singapore margins
averaged US$1.61 a barrel in 2001, down
from US$3.05 a barrel the previous year.
Refiners’ margin is the difference between
the price of the Tapis crude oil feedstock
and the quoted Singapore ex-refinery price
of petroleum products.
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Feb
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Refiners’ margin (US$)
Note: The replacement cost of sales operating profit excludes losses
or gains from inventory, which are calculated with reference to the
underlying US dollar crude oil costs. A fall in crude prices results in a gap
between what the company paid for its crude inventory and the price at
which refined products can be sold in the marketplace. The impact is
approximately A$20 million less profit before tax for every US$1 a barrel
fall in crude price. The reverse situation applies in a rising crude market.
Improved earnings
Stronger marketing
earnings were
achieved by focusing
on profitable business
rather than volumes.
Network growth
The national
convenience store
network continued to
grow in size and
average store turnover
in 2001.
Premium fuel sales
The rollout of Vortex
and Ampol Gold,
Caltex’s premium
unleaded petrol was
completed in 2001.
1Caltex Annual Review 2001
3 Report by Chairman and Managing Director
6 Review of Operations Index
8 Manufacturing and Supply Review
12 Marketing Review
16 Corporate Review
20 Directors’ Report
26 Corporate Governance
30 Statement of Financial Performance
31 Discussion and Analysis of the Statement of Financial Performance
32 Statement of Financial Position
33 Discussion and Analysis of the Statement of Financial Position
34 Statement of Cash Flows
35 Discussion and Analysis of the Statement of Cash Flows
36 Notes to the Concise Financial Statements
40 Audit Report
40 Directors’ Declaration
41 Comparative Financial Information
42 Replacement Cost of Sales Basis of Accounting
43 Shareholder Information
46 Financial Calendar
47 Statistical Information
48 Directory
Contents
2 Caltex Annual Review 2001
Advice to shareholdersThe 2001 Annual Review for Caltex Australia
Limited and its controlled entities provides an
overview of Caltex Australia’s main operating
activities for the year ended 31 December 2001.
The 2001 Concise Financial Report for Caltex
Australia Limited and its controlled entities,
which is included at pages 30 to 40 of the 2001
Annual Review, provides a summary of Caltex
Australia’s financial performance, financial
position, and operating, investing and financing
activities during the year ended 31 December
2001. Detailed financial information for Caltex
Australia Limited and its controlled entities for
the year ended 31 December 2001 is set out in
the 2001 Full Financial Report.
The 2001 Full Financial Report is available free of
charge from Caltex Australia. To request a copy of
the 2001 Full Financial Report, please write to the
Company Secretary at Caltex Australia Limited.
Please note that financial information for Caltex
Australia, including the 2001 Annual Review and
the 2001 Full Financial Report, can be found at
Caltex Australia’s web site, www.caltex.com.au.
3Caltex Annual Review 2001
2001 was also a year in which the company improved its
underlying performance with a substantial increase in the
replacement cost of sales operating profit illustrated on the
previous pages.
If the impact of the fall in crude oil prices – a key external factor –
is excluded, the replacement cost of sales operating profit (before
significant items, interest and tax) in 2001 was $200.9 million,
up from $115.7 million in 2000. Inventory losses totalled
$186.1 million in 2001 (2000: $40.1 million gain).
There was improved refinery reliability and safety performance and
stronger marketing earnings achieved by focusing on profitable
business rather than volumes.
The focus on these will continue in 2002 and we are confident that
the improvements are sustainable.
The board remains very conscious of its stated objective of paying
consistent dividends. However, taking into account the company’s
level of earnings, available cash flows and taxation position – the
key factors upon which payment of a dividend is dependent – the
directors determined that no dividend will be paid for 2001.
This decision reflects the disappointing result for the year and the
need to reduce debt levels and improve gearing. In focusing on
improving these factors, the company is working to position itself
to better withstand the impact of external factors beyond its
control and return to profit and cash flow levels which will support
payment of a consistent dividend.
Working capital benefited from the fall in crude prices but this was
partially offset by the higher inventory volumes to accommodate the
planned major maintenance shutdown at the company’s Lytton
refinery in Brisbane in the final quarter. This was reflected in the net
debt of $1.26 billion at the end of 2001 ($1.28 billion at 30 June 2001).
Caltex refineries recorded a strong improvement in reliability and
safety performance in 2001 in line with the commitment by the
Caltex board and management to eliminating unplanned shutdowns.
In March, a team of independent international and local experts
commissioned by the board recommended improvements covering
technical actions, management systems and people systems. Work
commenced immediately on putting these recommendations
into practice, and progress was demonstrated by the strong
improvements in refinery reliability in the second half of the year.
Report by Chairman and Managing Director
Building on underlying strength
Caltex Australia in 2001 recorded a full year net loss after tax of $186.1 millioncompared with a net profit after tax of $36.1 million in 2000. It included a$147.5 million write-off of goodwill relating to the company’s purchase of PioneerInternational Limited’s 50% interest in Caltex Australia Petroleum Pty Ltd in 1997,booking of a $16 million profit on a transaction relating to a vessel chartered byCaltex, and full provision for the $11.4 million ($8.0 million after tax) debt owed to Caltex by Ansett. Excluding the goodwill write-off, the company made an aftertax loss of $38.6 million.
Refinery reliability
A team of independent experts
commissioned by the board made
recommendations in March covering
technical actions and management and
people systems at the refineries. Progress
was evident by the end of the year.
Rollout of the brand
Caltex’s profile was further strengthened
in 2001 through advertising and promotion
campaigns and continued progress in rolling
out the new logo and livery to Caltex sites.
Report by Chairman and Managing Director continued
4 Caltex Annual Review 2001
Refiners’ margins – the difference between the cost of crude oil and
the price received by refiners – were at record low levels during the
year and were negative for eight weeks. The average margin was
US$1.61 a barrel compared with US$3.05 a barrel in 2000. In
Australian dollar terms, this impact was partly offset by the lower
value of the Australian dollar.
In marketing, the company increased its returns from fuels sales
in an intensely competitive market. Caltex maintained its domestic
transport fuels marketshare leadership and recorded growth in
sales of specialty products and some key finished lubricants.
There was further growth in earnings from the convenience
store network and related non-fuel activities. By the end of 2001,
Caltex’s national store network, launched four years ago, had
grown to 405 Star Marts and Star Shops (2000: 359). Average
Star Mart store sales grew 5% and sales from the smaller
Star Shop were 6% higher than the previous year.
A company-wide strategic procurement program delivered further
benefits in 2001, and the refineries also continued to make substantial
gains from profit improvement and cost savings programs.
Australia faces challenges in upgrading its petroleum refineries
to manufacture clean fuels, in order to reduce air pollution and
greenhouse gas emissions. In this regard, Caltex welcomes the
Prime Minister’s continued commitment to Measures for a Better
Environment, including incentives for the early introduction of
ultra low sulfur diesel to the Australian market.
Longer term, it seems inevitable there will be further tightening
of fuel and vehicle standards. Australia could potentially gain
competitive advantage by facilitating investment by its refineries
in clean fuels ahead of their Asian competitors, while reducing air
pollution and greenhouse gas emissions. This strategy should be
considered by industry and government. Caltex advocates early
action incentives, in the form of a small excise differential between
mandated and cleaner grades of fuel, for both petrol and diesel
production.
Fuel pricing and marketing regulation remain significant public
policy issues and subject to state government initiatives, such as
the highly complex and anti-competitive regulation in Western
Australia. There are also some concerns at the federal level, such
as potential changes to s46 of the Trade Practices Act and a greater
role for the ACCC in pricing. Caltex will continue to take a strong
stance in favour of market forces and against excessive regulation
as the interests of consumers and industry are best served by
a competitive, deregulated market.
A decision on early investment on ultra low sulfur diesel will be
made once it is clear that the diesel sulfur excise differential will
be introduced on schedule from January 2003.
Caltex is concerned at the Commonwealth Government’s decision
to permit continued use of MTBE as a petrol additive until 1 January
2004, as part of the new mandatory national fuel quality standards.
MTBE is a threat to water supplies as even trace quantities of MTBE
in drinking water make it undrinkable. Australian refiners do not
currently add MTBE to petrol. If sub-standard imports continue to
be allowed in direct competition with environmentally preferable
Australian refined products, they will adversely affect prospects for
refinery investment.
ChevronTexaco merger
The merger of Chevron Corporation and
Texaco Inc in October 2001 will generate
benefits for Caltex Australia in the sharing
of best practices in both manufacturing
and marketing.
5Caltex Annual Review 2001
OutlookIn positioning itself for the future, the company has improved
refinery productivity, reliability efficiency and cost savings and
developed more effective and better-targeted marketing strategies.
This enhanced underlying performance has been achieved in an
environment of refiners’ margins that have fallen by 25% in the
four years since the Asian economic crisis and an increasingly
competitive domestic market.
Caltex’s core business of refining and marketing petrol is sound
and the fundamentals of our company remain strong. While
maximising returns from investment in real estate and its retail
network, the company continues to build up non-fuel revenue
streams to improve its consistency of earnings.
The 2001 merger of Chevron Corporation and Texaco Inc has begun
to generate a number of benefits for Caltex Australia and this will
increase in the future. These benefits will be in the areas of
strategic alignment and the sharing of best practices in both
manufacturing and marketing.
The company is strongly committed to achieving world class safety,
health, environmental and reliability performance, which is the key
to sustainable low cost operations. We are strongly focussed on
extracting greater value from our manufacturing and marketing
activities and where possible stabilising returns by maximising
profits from those areas not impacted by international oil prices.
The company’s key objective is to maximise profit and cash flow
to improve gearing. Our primary focus will be on reducing debt
while maintaining capital expenditure.
Managing Director Tony Blevins
and Chairman Dick Warburton.
RFE Warburton
Chairman
TC Blevins
Managing Director & CEO
Review of Operations
6 Caltex Annual Review 2001
In this section:8 Manufacturing and
supply Review
12 Marketing Review
18 Corporate Review
Kurnell refineries
The Kurnell fuels and lubricants refineries,
in southern Sydney NSW, are a key part of
Caltex’s overall refining capability.
Planned total shutdown of Lytton refinery
Maintenance and capital improvements to
the refinery’s electrical, steam, fuel gas and
flare systems in October/November made
Lytton more robust in dealing with the
consequences of any external power failure.
Stack rebuilt at Kurnell
The construction and commissioning of a
new exhaust stack at Kurnell refineries was
completed in only three and a half months
with no injuries or lost time accidents.
Manufacturing and Supply Review
8 Caltex Annual Review 2001
Summary of Key Points● Reliability and safety performance improved
● Refiner margins at record low levels
● Fall in crude prices generated significant losses on inventory
● Successful Lytton maintenance shutdown
● Ongoing benefits delivered from profit improvement and
cost savings programs
Costs and MarginsThe operating profit from Manufacturing and Supply was significantly
lower than the previous year mainly due to a $186.1 million loss on
inventory in 2001 (2000: gain of $40.1 million).
Inventory losses were generated by a significant fall in crude oil
prices, particularly in the second half of the year. The price of
regional benchmark Tapis crude fell from US$27.38 a barrel in
December 2000 to US$18.64 a barrel in December 2001, averaging
US$24.99 for the year (2000: US$29.45). Falls in crude prices mean
a gap between what the company paid for its crude inventory and
the price that can be recouped in the marketplace. The impact is
approximately A$20 million less profit before tax for every US$1
a barrel fall in crude price. The reverse situation applies in a rising
crude market.
Regional oversupply of petrol led to sharp falls in refiners’ margins1
to negative levels between May and August, falling as low as
minus US$2.08 a barrel in July. Regional refineries had ramped up
production in response to what proved to be erroneous reports
of expected shortages of petrol supplies for the North American
summer driving season. The oversupply situation resulted in
Singapore margins averaging US$1.61 a barrel in 2001, down
from US$3.05 a barrel the previous year.
The Manufacturing and Supply division purchases crude oil from Australia andoverseas for refining at Caltex’s fuels refineries in Sydney and Brisbane and theassociated lubricants refinery in Sydney. The refineries produce petrol, diesel, jet fueland a range of lubricants that are then distributed via ship, road or pipeline to thecompany’s finished product terminals and on to retail and wholesale customers.The refineries also produce a range of specialty products including petrochemicalfeedstocks, LPG, wax and bitumen.
1 Refiners’ margin is the difference between the price of the Tapis
crude oil feedstock and the quoted Singapore ex-refinery price of
petroleum products.
9Caltex Annual Review 2001
Initiatives to improve refinery economics were implemented in
accordance with the intensive profit improvement study conducted
in 2000. Improved catalytic cracker production at Lytton resulted in
an increase in liquid recovery.
Total improvements implemented to date are delivering benefits
at an annualised rate of $25 million, with the fully implemented
program in 2003 estimated to deliver benefits of $50 million
per annum.
Overall operating costs were 11% higher than those for the
previous year due to exchange rate impacts on shipping, higher
insurance costs, increased provisions for major maintenance and
increases in other costs due to wage increases and work done on
improving refinery reliability.
Capital expenditure of $46.7 million in 2001 was more than double
that of the previous year. Major expenditure in 2001 was related
to improving plant reliability and integrity at both refineries (see
below) including $11.5 million on capital projects during the
planned maintenance shutdown and turnaround at Lytton refinery,
in addition to the $27 million cost of the shutdown. Other funds
were directed to enhancing LPG production and marketing
facilities at both Kurnell and Lytton and preparing for new national
fuel standards.
Cost efficiency remains an important focus of the Manufacturing
and Supply division, with further successful initiatives in 2001 in
the area of purchasing and contract maintenance.
Production and ReliabilityCaltex refinery production of petrol, diesel and jet fuels in 2001
was slightly higher than that for the previous year. Production of
specialties increased by 4.5%, particularly LPG. The refineries
operated at below rated capacity due to the impact of several
unplanned events.
The Kurnell fuels refinery operated at only 90% of its finished
product capacity for the first quarter of the year until the
completion of a project to replace an exhaust stack that developed
a structural fault in November 2000. At the Lytton refinery in
Queensland, external power failures in March and April resulted
in brief refinery shutdowns.
In the second half of the year, operations were significantly more
reliable with the major event affecting refinery production being
the planned total plant shutdown at the Lytton refinery in
October/November. The shutdown’s inspection and maintenance
program was completed successfully and it also enabled major
capital improvements to be made to electrical, steam, fuel gas and
flare systems to make Lytton more robust in dealing with the
consequences of any external power failure.
The impact of the shutdown on supply was minimised by planning
well in advance for inventories to be built up and Lytton supplies to
be supplemented by products from Caltex’s Kurnell refinery and
imports.
There was a general improvement in supply reliability in 2001
over 2000 both in the Caltex refinery supplied areas of NSW and
Queensland and in states normally supplied from competitor
refineries.
Increased production of specialties
2001 was an excellent year for specialty
products with increased production and
sales. Products such as LPG, bitumen, wax,
marine fuels and petrochemical feedstocks
currently account for over 7% of refinery
production.
Progress in inventory management
Inventory forecasting and management
by the Supply Department supported
improvements in refinery optimisation,
product supply reliability and working
capital management.
Profit improvement program
A new LPG load-out system and storage
vessel at Lytton refinery will enable Caltex
to increase revenue from the sale of
commercial butane.
Wharf upgrade at Kurnell
A $4 million upgrade to the Kurnell refinery
wharf was completed in 2001. Forty million
barrels of crude oil and other feedstocks are
fed into the refinery through the 1.5 km-long
wharf facility each year.
Manufacturing and Supply Review continued
10 Caltex Annual Review 2001
Improvement ProgramsIncident-free operationsElimination of unplanned incidents is the refineries’ prime thrust
to improve productivity, with an intensified focus on safety, health,
environmental and reliability performance. In March 2001, a
major independent review of operations and management at
both Kurnell and Lytton refineries was concluded by a team of
international and local experts. The team evaluated the root causes
of the reliability incidents which caused unscheduled production
interruptions at both refineries in 2000.
The team’s report confirmed that while existing refinery risk
reduction and safety initiatives were sound, a large number of
improvements could be made covering technical actions,
management systems and people systems.
A priority list of actions and improvements was made – some specific
to one refinery, but many common to both refineries – and during
2001 significant progress was achieved, contributing to the improved
reliability and safety performance in the second half of 2001.
The program to achieve incident-free operations by implementing
the report’s recommendations will be continued over the next two
years. Examples of key elements are:
Management of change – A new system called “Request for Change”
has been developed, drawing on the best of ChevronTexaco’s
systems and existing systems at both refineries. It will form part
of Caltex’s new Process Safety Management System which is
being implemented across both refineries.
The improved management of change process was launched
at the Kurnell refinery in December 2001 and is currently being
introduced at Lytton. Recommendations being put in place include
ensuring all people involved are trained at the right level, detailed
checklists and prompts, a process for ensuring that all changes
have the appropriate level of technical evaluation, methodology
for safety and design reviews and regular auditing.
Equipment upgrades – A number of the report’s recommendations
on specific equipment upgrade requirements for Kurnell refinery
started being put into place in 2001. Planning also commenced for
major projects including a new replacement furnace for No 3 crude
unit and the replacement of three large solvent pumps on a key
specialties’ processing unit .
At Lytton, the largest reliability risk identified was the refinery
utility systems. The refinery has a steam system reliability
improvement program and has identified issues related to
hardening the electricity system to better withstand short power
dips. This includes the need for a back up source of energy for
furnaces and boilers and an additional source of fuel to the
refinery gas system was added with the installation of an
emergency LPG vaporiser in October. This has substantially
improved Lytton’s reliability in emergency scenarios such
as power upsets.
Human factors – Programs are under way to improve work
practices and systems, redefine roles and responsibilities and
implement leadership and supervisory training. Among them is
the development of a behavioural safety program which works to
provide clear direction, increase awareness of safety-related issues
and encourage employees to observe their workplace and draw
attention to any hazards.
11Caltex Annual Review 2001
Preparation for clean fuelsThe Commonwealth Government has set national standards for
petrol and diesel which came into force on 1 January 2002. Caltex
participated actively in the development of those standards and
was producing petrol and diesel meeting the standards prior to
1 January.
To continue operating from 2006, onwards Australian refineries
will be required to make changes to diesel and petrol processing
units to manufacture fuels to comply with the new fuel
specifications. Commonwealth regulations require the level of
sulfur in diesel sold in Australia to be reduced from current levels
of around 1,000 parts per million (ppm) to no more than 500 ppm
by the end of 2002 and 50 ppm by 2006. The standard for sulfur in
unleaded petrol is to be reduced from 500 ppm to 150 ppm in
2005 and the standard for benzene is to be reduced from 5% by
volume to 1% in 2006.
Caltex has been conducting feasibility studies and reviewing
process design and technical options for both refineries to
produce fuels that meet these specifications. It is estimated that
the company will need to invest to meet the new standards for
benzene in petrol and sulfur in both petrol and diesel required in
2005 and 2006, but is able to meet the other requirements with
no or minor investment. The bulk of any investment in clean fuels
would be required in 2004 and 2005.
The Prime Minister has said the government will continue its
commitment to the Measures for a Better Environment program,
including providing incentives for the early introduction of ultra
low sulfur diesel to the Australian market. Such a scheme would
benefit the environment and assist oil refiners to fund the large
investments required to meet the new national standards.
South Korea
North Korea
China Japan
Vietnam
Taiwan
Philippines
Malaysia
IndiaArabian
Sea
Indonesia
Australia Lytton
Singapore
Kurnell
Margins a regional matter
The returns Australian refiners receive for manufacturing
petrol, diesel and other products depend on supply and
demand for petroleum products in the Asia-Pacific region.
This market stretches from the Arabian Gulf in the west to
the US West Coast, and from China in the north to Australia
in the south.
In the region, the commonly-used benchmarks are product
prices in Singapore, which is the major export refining centre.
Prices for supply from refineries around the region are quoted
relative to Singapore prices for petrol, diesel, jet fuel and
other products. Singapore product prices relative to crude oil
– known as Singapore refiner margins – vary with regional
product supply/demand balances.
The prices received by Caltex’s Australian refineries for
petroleum products are related to Singapore prices plus
product freight – the cost of the imported product alternative
supply. Petroleum product freight rates are higher than the
crude oil freight rates paid by Australian refiners for crude oil
supplies, which gives refiners a small freight cost advantage
relative to imported product competition.
The Marketing division promotes and sells Caltex’s diverse range of fuels, lubricants and specialty products through a national network of service stationsand distributors and directly to commercial accounts. The division also operates theCaltex/Ampol service station and convenience store network. It is also responsiblefor building brand awareness through advertising and the management of Caltex’smotorsport sponsorships.
Automation at fuels terminals
A new terminal automation system is being
installed at Caltex’s main terminals. The
system controls product movement, storage
and truck loading and manages business
transactions, allocations and inventory.
Fuel testing at service stations
To validate fuel quality and protect brand
integrity, Caltex launched a program of
random fuel testing in late 2001 at Caltex
and Ampol sites.
Marketing Review
12 Caltex Annual Review 2001
Summary of Key Points● Earnings up from the previous year
● Caltex sales volumes and market share were lower, but market
leadership retained
● Further growth in earnings from convenience stores and
related non-fuel activities
● Growth of customer preference and recognition of the
Caltex brand
Fuel SalesCaltex improved its returns from fuels sales despite intense market
competition in 2001. This was achieved by focusing on profitable
business rather than volume increase. Total Caltex transport fuel
sales were 1.4% lower than those of the previous year but grew in
the more profitable retail channel.
The Australian market for major transport fuels grew 1.3% in 2001
after contracting the previous year. Demand for petrol and diesel
was up but jet fuel sales declined. Caltex’s total transport fuels
market share decreased to 27.3% (2000: 28.1%) but retained
market leadership.
Service stations – Retail sales of petrol and diesel were 2% higher
in volume than the previous year, with premium unleaded petrol
(including Vortex and Ampol Gold) accounting for 7.4% of retail
petrol sales in 2001. The average petrol throughput in company-
operated, commission agent and franchised service station sites
increased slightly to almost 300,000 litres per month in 2001
which compares well with international standards.
Aviation fuel a growth area
The aviation fuel business currently accounts
for 14% of all Caltex’s fuel sales and has
grown steadily in the last six years. Clients
range from Qantas and other international
carriers to the RAAF.
Motorsport sponsorship (above)
2001 was a big year for Caltex motorsport
sponsorship with wins at the Honda Indy 300
and Australian Rally Championship. All racing
teams sponsored by Caltex use standard
Havoline oil products.
13Caltex Annual Review 2001
Commercial and Industrial – Diesel and aviation fuel sales volumes
were slightly down on those of last year but margins recovered
from the previous year with diesel supply agreements renegotiated
to cover increased sea freight costs and a reduction of credit terms.
Despite a slowing of international demand for aviation fuel
following the terrorist attacks in the US in September, Caltex sales
recovered and were down only 0.8% on 2000 volume by the end of
the year. Aviation profit was adversely impacted by provision for the
$11.4 million bad debt following the collapse of the Ansett group.
Specialty products recorded improved sales and margins with a
strengthening of marine, bitumen and LPG sales.
Distributors and Independent resellers – Regional supply
disruptions and adverse weather conditions in harvest areas had
a negative impact on fuel sales to distributors and independent
resellers, with diesel and petrol sales in these channels down
significantly from the previous year.
A full strategic review of the Caltex StarCard business was
conducted in 2001 and a number of revenue enhancing and cost
reduction initiatives introduced. Further initiatives will be rolled
out during 2002 and 2003.
Lubricants Finished lubricants volumes suffered due to the downturn in some
key industry sectors, but margins were stronger and there was
sound growth in sales of some products.
Sales of the flagship diesel engine oil Delo 400 more than doubled
from the previous year in response to successful promotion and
sales strategies. Crop spray oils also recorded continued strong
growth, up 30% from the previous year.
Convenience Store NetworkThe convenience store program has contributed significantly
to non-fuel earnings income of $41.2 million in 2001, up from
$37.5 million the previous year.
The national convenience store network continued to grow in size
and average store turnover. At the end of 2001, there were 174
Star Mart convenience stores supported by a network of 231
smaller Star Shops.
Average Star Mart store sales grew 5% and Star Shop sales were
6% higher than the previous year. Growth continued in sales of
both convenience items and core grocery lines, with store turnover
boosted by fast-growing areas such as new age beverages,
telephone cards, instore bakery and packaged bread sales that
more than doubled during the year.
The focus on pizza was extended during the year, with Caltex
replacing an external supplier with its own Pizza Plus brand and
adding pasta and other quick serve meals to the range. These will
be further extended in 2002.
The retail network also benefited from increased sales of Caltex
motor oil Havoline Formula 3 that followed a major promotional
push in September/October.
The supply chain for Caltex’s convenience store network is being
transformed with the rollout of the company’s new centralised
distribution system. Under this system, store orders are collated for
suppliers, then delivered to a central cross dock warehouse in each
state for delivery at set times to stores. This was successfully
introduced for a number of sites in NSW and Queensland during
the year and will be extended in 2002.
Car wash network upgraded
The Olmos family, who have four franchise
sites in the ACT, say their state of the art car
wash at their Braddon site helps attract
customers.
Sales expand to fleet customers
A substantial percentage of retail fuels sales
are transacted via Caltex StarCard accounts.
Fleet StarCard sales increased in 2001 with
particular growth in accounts with leading
national businesses.
Marketing Review continued
14 Caltex Annual Review 2001
The year saw an increase in the number of independent operators
that have chosen the Caltex Star Mart and Star Shop offers to
complement their new site developments. This highlights a
significant shift for Caltex in the role as franchisor. In the past the
company has traditionally owned or leased property and facilities
and then appointed a franchisee. This new approach has seen the
company reduce investment significantly in new developments
and has independent operators paying Caltex a royalty for the
significant value it is providing in the convenience store and fuel
forecourt offers. These stores look no different to the company
operated or traditional franchised outlets; however, they provide
Caltex with a lower risk income stream and confirmation that its
Star Mart and Star Shop franchises are creating significant value
for both the company and its franchisees.
Additional ActivitiesCaltex continued to develop activities to expand retail
opportunities at its sites throughout Australia.
New initiatives during the year included the launch of a trial
venture with Midas for car repair and maintenance workshops
at Caltex service stations.
The company also launched a program to upgrade and expand its
38-site car wash network, buying the car wash equipment owned
by Robo Wash HK at 13 sites and announcing plans to replace
facilities at older sites and increase the number of sites carrying
the service.
In May, Caltex launched a service known as Caltex Pick Up Point
that enables Internet shoppers to collect their goods from a local
Caltex service station. The service has initially been offered at
83 Caltex sites across Australia with extended trading hours.
Travelmate (travelmate.com.au), Caltex’s one stop shop web site
devoted to Australian road travel, has continued to experience
strong growth in site traffic, accommodation bookings and
revenue. In October, Caltex launched an associated web site
(needitnow.com.au), an accommodation service for last minute
travellers, which has exceeded expectations for revenue growth.
The program of installing National Australia Bank automatic teller
machines at Caltex sites continued during the year, with ATMs now
at 229 sites, including all Star Marts.
Franchisee ProgramsDuring the year, Caltex introduced some significant elements to its
new retail operating model for Caltex franchisees with Star Marts
and Star Shops.
In April, the company launched a national All Stars program to
introduce and monitor standards, systems and brand image
throughout the retail franchise network.
Areas covered by the program include customer service, promotional
compliance, merchandising, brand and site presentation, food safety,
security and environment, health and safety. It succeeds the earlier
Mystery Shopper program and moves the improvement focus from
the back office to the shop floor for Caltex’s 550 franchisees and
90 company owned and operated Calstores.
Feedback from sites during the initial All Stars period has been
very positive, resulting not only in higher scores but improved
consistency of offer across the network. The program enables sites
to measure and compare their performance with others in the
Caltex network, with participants offered rewards or penalties
based on audit results.
Coffee makes a difference
Caltex’s coffee dispenser, which won a
design award in 2001, is popular with Star
Mart customers. Caltex teamed up with
Nescafé and state roads and traffic
authorities for a successful national “Stop,
Revive, Survive” safe driving campaign.
Nice’nEasy TV commercial
Caltex launched another successful TV
commercial in July using the Nice’nEasy
theme. Research showed an increase in the
percentage of motorists who considered
Caltex the service station brand of choice.
15Caltex Annual Review 2001
An increasing number of franchisees are using Caltex’s online
services. These were expanded during the year with the upgrading of
the company’s online Business Centre, which provides franchisees
and other business partners with a range of Internet-based facilities
such as price information, electronic ordering, bill payment, account
enquiry, online manuals, merchandising and contact data.
In August, an online operations manual was launched to provide
an easy-to-access and frequently-updated guide to the basic
requirements and procedures for managing a Star franchise.
It is planned to expand the Business Centre to provide the retail
network with a forum, bulletin board, brand, local site marketing
manual and links to order from external suppliers online.
Caltex Brand and Customer Preference An integrated advertising communications program and continued
progress in upgrading Caltex sites with the new Delta logo further
strengthened Caltex’s profile during 2001.
This year, the distinctive new Caltex logo and livery were installed
at a further 144 sites, including 28 Star Marts and 80 Star Shops,
bringing the total number of re-branded sites to 375 – nearly half
of the equity sites in the Caltex/Ampol retail network.
The year also marked the start of major activity in rebranding smaller,
independent sites mainly in the distributor network, which is helping
the new logo gain recognition in rural and regional areas.
The rebranding project commenced in 1999 and is scheduled for
completion in 2005/6.
Research showed that Caltex Nice’nEasy TV commercials during
the year made a strong and positive impression on consumers.
A new television commercial on the Caltex Nice’nEasy theme was
launched in July and this and existing Caltex TV commercials were
screened during the year with particular focus on Sydney, Brisbane
and Perth where the new Caltex livery is most heavily concentrated.
Consumer brand awareness and preference for Caltex service
stations continued to increase. Particularly good results were
achieved in the key Sydney market, where independent research
in October revealed Caltex to be the preferred convenience store
for Sydney shoppers. This was the result of advertising and the
increased presence of Star branded stores in the market, with
Sydney consumers indicating that they perceived Star Mart stores
to be “leading” in terms of offer and appearance.
Brand building for key Caltex oils Havoline and Delo continued
with participation in motorsport activities, TV, radio and print
media. Promotion of Havoline motor oil is based around proof of
performance in motorsport, and the win by the Caltex Havoline
Indy Car at the Gold Coast Indy in October generated widespread
publicity.
Awareness of the Havoline brand also increased as a result of
radio advertising and on site broadcasting on the Triple M network.
A major promotion took place in October to coincide with the
Bathurst 1000 and the Gold Coast Indy races.
The Delo diesel engine oil brand was supported by a successful
regional consumer promotion and advertising campaign that was
conducted in the latter part of the year.
Caltex conducted a road safety awareness campaign at Easter
with a “Driver Fatigue. Look for the Signs” advertising campaign in
newspapers around Australia. At Christmas, Caltex combined with
Nescafé to conduct a “Stop, Revive, Survive” safe driving campaign
supported by radio advertising around Australia to encourage
motorists to stop for a free cup of coffee at a participating Star Marts.
Safe shutdown a big fundraiser
Safety performance during the planned
Lytton refinery shutdown was linked to an
incentive scheme that raised $16,000 for the
Starlight Children’s Foundation. For every day
without a treatable workplace injury, funds
were donated by Caltex, alliance partner
Transfield and other contractors.
Oil spill rapid response
Training of emergency teams for rapid
and effective response to any oil spill is
conducted year round at both refineries,
both internally and in conjunction with
outside agencies.
Corporate Review
16 Caltex Annual Review 2001
Environment, Health, Safety and Risk ManagementIn 2001, Caltex recorded improved performance in a number of
key EHS measures. There was a significant reduction in lost time
injuries, fewer incidents directly relating to key risks and continued
steady reduction in the number of spills at Caltex facilities.
This was a particularly sound achievement in a year where there
were major construction, repair and maintenance activities at both
Caltex refineries involving large numbers of outside contractors.
Caltex continued to take corrective actions to improve control of
significant risks, as outlined in its key risk management plans.
There was further work done on existing safety management
systems and in developing new strategies. At the refineries, a
major independent review of operations and management by a
team of international and local experts provided recommendations
which are being implemented in relation to process and safety
management systems (PSM). A team with international expertise
was established to ensure that common standards and procedures
are put in place, knowledge and expertise is shared and effective
training and communication takes place in every area of refinery
operations.
Caltex further strengthened its rigorous program of EHS risk
auditing to ensure compliance with the company’s EHS policy
and to identify opportunities for improvement. During the year,
additional review and follow up processes were developed and a
total of eight EHS risk management system audits were conducted
in different business units. These included audit of the Marketing
division assisted by personnel from ChevronTexaco.
Occupational health and safety performance – Caltex made
further progress towards its goal of achieving incident-free
operations throughout the business. The company continued to
monitor closely and assess its performance against EHS targets to
identify areas for improvement. EHS targets were part of Caltex’s
2001 short term incentive bonus scheme for employees.
There was significant improvement in health and safety
performance in 2001, as measured by the number of injuries
that required medical treatment and the number of injuries that
resulted in time lost time for each million hours worked. Compared
with the previous year, the Lost Time Injury Frequency Rate (LTIFR)
and the Total Injury Frequency Rate (TTIFR) have decreased by 30%
for employees and contractors as a result of the efforts of workers
to maintain focus on safety.
Health and safety performance 2000 vs 20012000 2001
LTIFR – Contractors 11.2 2.1
LTIFR – Employees 2.6 1.8
TTIFR 15.9 10.7
The reduction in injury rate was due to new and revised programs
including random auditing, increased focus by management, more
detailed planning and improved injury management.
Emergency and crisis management – Caltex’s Crisis Management
System was the subject of a company-wide audit in 2001. As a
result, the company updated its overall crisis management system
and 24-hour emergency response capabilities and developed a
business continuity plan that ensures company operations at its
head office can continue in the event of a major crisis.
Minimising impact on the environment
Care is taken at Caltex refineries to minimise
the operations’ impact on adjacent wetlands,
national parks and other natural features
surrounding the refineries.
Advanced new fire training facility (above)
Caltex is a partner with Queensland
government agencies in an advanced
fire training facility, opened in October
on Lytton refinery land in Brisbane.
17Caltex Annual Review 2001
Local emergency response plans at the refineries and fuels
terminals were tested by both desktop and field exercises involving
local and regional authorities.
Environmental performance – Standards for environment
protection continue to increase and Caltex continued to work
on minimising environmental impact from activities as well as
making more environmentally friendly products for its customers.
Reduction in major spills
Over the past four years there has been a steady reduction in the
number of major spills, that is any crude oil or petroleum product
spill which poses significant risks to safety, human health or
ecosystems.
Caltex provided information on emissions from its refineries and
fuels terminals to each state environment protection agency for
the National Pollutant Inventory (NPI) in 2001. This information is
available to the public and provides information on emissions for
NPI listed substances. NPI data submitted for Caltex sites is
available at www.npi.ea.gov.au. Caltex has submitted the 2001
data to the state environmental protection agencies and it is
scheduled for release on the NPI web site in 2002.
0
3
6
9
12
15
1998 1999 2000 2001
Human ResourcesAll major enterprise bargaining agreements at Caltex refineries,
terminals and Sydney airport were renewed during the year. Most
are not scheduled to be renegotiated until 2003, although the
Kurnell operators’ enterprise bargaining agreement will be
renegotiated in 2002.
At the Kurnell refineries in Sydney, the long-running EBA negotiation
with refinery operators was eventually concluded by an arbitration
by the Full Bench of the Australian Industrial Relations Commission
in July 2001. The result supported management directing training
and conducting regular competency assessments of employees,
appointing supervisors and ensuring that employees appointed to
leadership roles are able to be held accountable for their performance
in these roles.
At the Lytton refinery in Queensland, EBA negotiations with both
maintenance and operator employees were concluded without
disruption. Similar agreements were reached with maintenance
groups at Kurnell.
In training programs for 2001, a priority was to continue to build
leadership skills for team leaders and potential first line managers.
A further 51 people from across the company attended a
Leadership for Team Leaders program.
During the year, 55 people attended a company negotiation skills
workshop, which aims to develop skills in business/commercial
negotiations. The program was introduced in 2001 to support
current procurement initiatives to get the best value for the
company’s significant purchases of goods and services.
Fuel Taxation Inquiry
Excise incentives for clean fuels would
facilitate lower air pollution and greenhouse
gas emissions, stimulate investment in
petroleum refining, encourage fuel
innovation and facilitate vehicle
innovation – Caltex submission.
Training at the refineries
One of the initiatives to achieve incident-free
operations is competency testing to refresh
skills of refinery technicians.
Corporate Review continued
18 Caltex Annual Review 2001
A revised induction program for new employees was launched
in August. The two-day program provides a detailed overview of
all areas of the business and an opportunity to meet with senior
managers and visit the Kurnell refineries, the Banksmeadow
Customer Service Centre and a Star Mart convenience store.
Despite a lower share price, there was continued high level of
employee participation in the Caltex Australia Limited Employee
Share Plan, which was in its second year of operation.
A number of appointments to senior positions across the
company during the year helped to improve the company’s
overall “benchstrength”.
ProcurementThroughout 2001, the Strategic Procurement Initiative has
continued to gain support from all areas of the company, resulting
in significant benefits to the business and shareholders. With
a small central team working cooperatively with each of the
business units, a further $10 million in savings and cost avoidance
has been achieved. The key strategy adopted has been the use of
a formalised commercial process using specialised procurement
tools, ongoing training of business owners in the application of
these tools, and motivating suppliers to search for innovative and
cost effective solutions to the issues facing Caltex.
The success of this process within Caltex has been recognised
externally. Two major suppliers who were unsuccessful in their
bid for Caltex’s business have approached Caltex to gain a better
understanding of the Strategic Procurement process so that they
can become ’more innovative and cost effective providers'.
It is intended to further capitalise on this continued success
during 2002, providing additional benefit and support to
company profitability.
Corporate AffairsCaltex continued to lobby strongly for an appropriate regulatory
environment for refining and marketing. A major policy thrust was
for development of a long term Commonwealth industry policy to
support investment in Australian refining. Caltex’s submission to
the fuel taxation inquiry advocated excise incentives for clean
petrol and diesel, a level playing field for conventional and
alternative fuels, and simplification of the administration of fuel
taxation. Lobbying continued on new national fuel standards,
including a ban on MTBE and appropriate regulation of ethanol.
Caltex took a strong stance against excessive marketing regulation,
particularly in Western Australia where rigorous price control
legislation has been passed.
Recognition of students’ success
Megan Stride won the Caltex Best All
Rounder award in 2001 at Duval High School
in Armidale, NSW. More than 97% of all
Australian secondary schools participated in
the Caltex-sponsored program.
(Photo: Armidale Express)
Tree regeneration at Lytton refinery
With the help of the Australian Trust for
Conservation Volunteers, 6,000 native
seedlings are being planted next to the
Lytton refinery in Brisbane to create a natural
habitat for native birds and fauna.
Caltex supports lifesaving clubs in the
areas near its refineries (above)
19Caltex Annual Review 2001
A new colour magazine for Caltex employees, distributors and
franchisees was launched in June 2001. The Star will be published
six times a year and focuses on Caltex business activities.
Caltex provides contributions and ongoing sponsorships for a
range of community, arts, welfare and education activities. In
addition to contributions to a wide range of local community
organisations close to key company facilities and service stations,
some of the major activities in 2001 included:
Education ● Best All Rounder – Caltex each year invites all secondary
schools around Australia to select a student who is a good all
rounder excelling in many fields. In 2001, 97% of Australia’s
secondary schools participated and the winner from each was
presented with a medallion and certificate from Caltex at the
schools’ presentation night. Winners are also eligible to enter
an essay competition run in conjunction with The Bulletin
magazine where the best entries are published and $500 is
awarded to the school and the student.
● Innovation in Teaching – To encourage innovations in primary
and secondary school education Caltex and the Rotary Club of
Sydney jointly recognise up to three teachers each year who
develop creative programs at their schools. In 2001, three
award-winning teachers from NSW received a return airfare
to visit an agreed school or institution overseas or in Australia
with accommodation and travelling expenses paid.
EnvironmentCaltex sponsors a number of ongoing environmental projects.
Among these is support for National Parks and Wildlife Service
projects in areas surrounding the Kurnell refinery in Sydney. In
Queensland, the Lytton refinery assists the Australian Trust for
Conservation Volunteers, and refinery staff are helping in the work
of revegetating the buffer zone between the refinery and the
adjacent Fort Lytton National Park.
The Arts Caltex supports the Australian Chamber Orchestra and in 2001
sponsored a national tour by Mezzo soprano Bernada Fink.
Starlight FoundationCaltex is a major sponsor of the Starlight Children’s Foundation of
Australia, a non-profit organisation dedicated to brightening the
lives of seriously ill children between the ages of four and 18. In
2001, in addition to a major contribution from the company,
Caltex staff volunteers raised record funds through selling Starlight
merchandise to the public on Star Day in May and a special
“Teams for Dreams” fundraising competition at the end of the
year. A safety incentive program to raise funds during the
planned maintenance shutdown of the Lytton refinery in
October/November also attracted substantial sponsorship
from the company and contractors.
Directors’ Report
20 Caltex Annual Review 2001
TC (Tony) BlevinsBAccounting, BSc
(Stephen F Austin State University)
Managing Director & Chief Executive Officer
Date of birth: 14 November 1943
(Age: 58 years)
Tony was appointed as Chief Executive
Officer in April 2000 and appointed
Managing Director with effect from
20 April 2000.
Tony joined Texaco Inc (now part of the
ChevronTexaco Group) in 1966 and held
several accounting positions with the
company in the USA and Europe. He also
served as the General Accounting Manager,
Downstream at Texaco Inc from 1988 to
1991, and then as Finance Director at
Texaco Limited (UK) from 1991 to 1995.
Tony was the Chief Executive Officer at
Texaco Brazil SA from 1995 to March 2000.
External directorship● Chair of the Australian Institute
of Petroleum.
RFE (Dick) Warburton
Chair, Non-executive director
Date of birth: 14 December 1940
(Age: 61 years)
Dick was appointed as a non-executive
director with effect from 29 July 1999 and
as Chair with effect from the end of the
Annual General Meeting held on 26 April
2001. Dick is the Chair of the Human
Resources Committee and attends
meetings of the Audit & Risk Committee
in an ex-officio capacity.
External directorships● Chair of David Jones Limited, AurionGold
Limited and the Board of Taxation.
● Director of Nufarm Limited, Southcorp
Limited and Tabcorp Holdings Limited.
● Member of the Reserve Bank Board and
the Garvan Research Foundation.
MG (Malcolm) Irving AMBComm (UNSW), Hon. D.Litt (Macquarie)
Non-executive director
Date of birth: 30 October 1929
(Age: 72 years)
Malcolm was appointed as a non-executive
director with effect from 1 December 1990.
Malcolm is the Chair of the Audit & Risk
Committee and a member of the Human
Resources Committee. Malcolm previously
served as Chair of Caltex Australia Limited
from 30 September 1995 to 26 April 2001.
External directorships● Chair of Cabonne Limited, Keycorp
Limited, and a number of other
companies.
Directors’ Report to the membersThe directors of Caltex Australia Limited present this report for Caltex Australia Limited and its controlled entities for the year ended 31 December 2001.
Board of DirectorsThe board of directors of Caltex Australia Limited is currently comprised of Mr Richard (Dick) Warburton (Chair), Mr Tony Blevins (Managing Director & Chief Executive Officer), Mr Malcolm Irving, Mr Leo Lonergan, Mr Ken Watson and Mr Michael Wirth.
Directors’ profiles
21Caltex Annual Review 2001
LG (Leo) LonerganBSc (Victoria University, New Zealand)
Non-executive director
Date of birth: 18 July 1953
(Age: 48 years)
Leo was appointed as a non-executive
director with effect from 1 July 2001,
and is a member of the Audit & Risk
Committee and the Human Resources
Committee. Leo previously served as a
non-executive director of Caltex Australia
Limited from 29 January 1998 to
29 July 1999.
Leo is President, Joint Ventures and New
Business Development at ChevronTexaco
Global Energy Inc (formerly known as
Caltex Corporation) in Singapore. He has
held a number of senior management
positions with companies in the
ChevronTexaco Group.
KT (Ken) WatsonLLB (Sydney), LLM (Virginia)
Non-executive director
Date of birth: 6 July 1943
(Age: 58 years)
Ken was appointed as a non-executive
director with effect from 9 February 1996
and is a member of the Audit & Risk
Committee.
Ken is a partner of Minter Ellison, Sydney,
and is admitted to practise as a solicitor in
New South Wales, Victoria and
Queensland.
Memberships● Australian Mining and Petroleum Law
Association.
● Australian and New Zealand Institute
of Insurance and Finance.
MK (Michael) WirthBS (Chemical Engineering) (University
of Colorado)
Non-executive director
Date of birth: 5 October 1960
(Age: 41 years)
Michael was appointed as a non-executive
director with effect from 1 July 2001.
Michael is President, Marketing and
Corporate Vice-President at ChevronTexaco
Global Energy Inc (formerly known as
Caltex Corporation) in Singapore. He has
held a variety of refining and marketing
positions with companies in the
ChevronTexaco Group.
Directors’ Report continued
22 Caltex Annual Review 2001
Meetings of DirectorsThe board of directors of Caltex Australia Limited formally met on 11 occasions during the year ended 31 December 2001. In addition,
board papers were circulated to the directors on three other occasions, whilst a separate strategy meeting was held over two days during
the year.
The Audit & Risk Committee and the Human Resources Committee each met on three occasions during the year. Special purpose
committees were convened on two occasions during the year.
The number of directors’ meetings and committee meetings attended by each director are set out in the following table:
Director Board of Audit & Human Resources Special Purpose Directors Risk Committee Committee Committees
Current directorsMr Richard Warburton 11 (11) 3 (3) 3 (3) 1 (1)
Mr Tony Blevins 10 (11) – – – – 1 (1)
Mr Malcolm Irving 10 (11) 3 (3) 2 (3) 2 (2)
Mr Leo Lonergan 5 (5) – – 1 (1) – –
Mr Ken Watson 11 (11) 3 (3) – – 2 (2)
Mr Michael Wirth 5 (5) – – – – – –
Former directorsMr John Banner 6 (6) – – 1 (2) – –
Mr Joseph Bernitt 5 (6) – – – – – –
Mr Robert Bothwell 6 (7) – – – – – –
Mr Desmond Mackney 6 (6) 1 (1) – – – –
Mr Shariq Yosufzai 5 (6) – – – – – –
Note: (1) This table shows the number of meetings attended by each director in the year ended 31 December 2001. The number of meetings heldduring each director’s time in office for the year is shown in brackets.
(2) Mr Johannes (Steve) de Bruyn, who served as an alternate director for Mr Banner, Mr Bernitt and Mr Yosufzai, did not attend any directors’meetings during the year.
Principal ActivitiesThe principal activities of the consolidated entity during the
year were the purchase, refining, distribution and marketing of
petroleum products and the operation of convenience stores
throughout Australia. There were no significant changes in the
nature of the consolidated entity’s activities during the year.
Consolidated ResultThe consolidated net loss after income tax attributable to members
of Caltex Australia Limited for the financial year amounted to
$186,169,000 (2000: net profit after tax $36,062,000).
Review of OperationsFor a detailed review of operations during the year, members
are referred to the Report by Chairman and Managing Director
(pages 3 to 5), Manufacturing and Supply Review (pages 8 to 11).
Marketing Review (pages 12 to 15), Corporate Review (pages 16
to 19), and Corporate Governance Report (pages 26 to 29), which
are included in the Annual Review and form part of the
Directors’ Report.
Appointments and ResignationsDuring the year ended 31 December 2001:
● Mr Leo Lonergan and Mr Michael Wirth were appointed as
directors with effect from 1 July 2001; and
● Mr John Banner, Mr Joseph Bernitt, Mr Desmond Mackney
and Mr Shariq Yosufzai resigned as directors with effect from
1 July 2001. Also, Mr Robert Bothwell resigned as a director
with effect from 27 August 2001.
As a result of the resignations of Mr Banner, Mr Bernitt and
Mr Yosufzai, Mr Steve de Bruyn’s appointment as an alternate
director ended with effect from 1 July 2001. Mr de Bruyn has
subsequently been appointed as an alternate director for
Mr Lonergan and Mr Wirth with effect from 21 February 2002.
On 1 March 2002, Caltex Australia Limited announced that
Mr Tony Blevins had advised the board of Caltex Australia Limited
that he intended to retire. It was also announced that, subject to
the finalisation of terms, Mr Jeet Bindra would be appointed as
the incoming Managing Director & Chief Executive Officer.
23Caltex Annual Review 2001
Dividends Paid and RecommendedThe following dividends have been paid or declared by Caltex
Australia Limited since the end of the previous financial year:
As proposed and provided for in last year’s annual review:
Final dividend (fully franked at 34%) of
6 cents per share paid on 21 March 2001 $16,200,000
No dividends have been paid or proposed in respect of the current
financial year.
Significant Change in State of AffairsDuring the financial year the directors resolved to write off the
$147.5 million balance of goodwill relating to its purchase of
Pioneer International Limited’s 50% interest in Caltex Australia
Petroleum Pty Ltd (acquired in 1997) due to a deterioration in the
economic conditions when compared to the assumptions upon
which the acquisition was based.
Other than the write-off of goodwill, it is the opinion of the
directors that there were no other significant changes in the state
of affairs of the consolidated entity that occurred during the
financial year under review.
Significant Events after Balance DateThere has not arisen in the interval between the end of the
financial year and the date of this report, any item, transaction or
event of a material or unusual nature likely, in the opinion of the
directors of Caltex Australia Limited, to affect significantly the
operations of the consolidated entity, the results of those
operations or the state of affairs of the consolidated entity
in subsequent financial years.
Likely DevelopmentsThe consolidated entity will continue to purchase, refine, distribute,
and market petroleum products and operate convenience stores
throughout Australia. The directors of Caltex Australia Limited
make no further reference to other likely developments in the
operations of the consolidated entity (or expected results of those
operations) other than disclosed elsewhere in the Annual Review
as such inclusions would, in the opinion of the directors,
unreasonably prejudice the interests of the consolidated entity.
Environmental RegulationsEHS and risk managementThe consolidated entity has business-focused environment, health,
safety (EHS) and risk management systems in place that allow
compliance with Australian laws, regulations and standards.
EHS targets are set and regular reports are prepared that allow
the directors of Caltex Australia Limited to gauge the consolidated
entity’s performance against these targets. In addition to the
directors’ review, the Managing Director, General Managers and
Business Unit Managers meet regularly to critically review EHS and
risk performance and ensure that issues are adequately addressed.
During 2001, EHS audits were carried out by the business units
to ensure compliance with relevant legislation and the standards
imposed by the consolidated entity. These audits found no major
non-compliance issues but did identify areas where opportunity
for improvement existed. Results of all EHS management system
audits along with resultant action items are reported to the Audit
& Risk Committee.
ComplianceFourteen pollution control licences were held by the consolidated
entity in 2001 and they covered the three refineries, eight
terminals and three depots.
Licence conditions were exceeded on seven occasions in 2001
which required notification and reporting to the relevant
Government environmental agency. These breaches have been
investigated and the management team remains committed
to achieving 100% compliance.
Infringements and prosecutionsDuring 2001, there were no prosecutions against the consolidated
entity under Environment, Health and Safety Law.
Strong relationships with regulatory authorities and commitment
to continued improvement of EHS management systems have
contributed to this positive outcome.
Further information regarding the consolidated entity’s EHS
systems and performance can be found in the Corporate Review
on pages 16 to 19 of the Annual Review.
Directors’ InterestsThe relevant interests of each current director of Caltex Australia
Limited in the company’s share capital, as at 31 December 2001,
are shown in the following table:
Director No of shares
Mr Richard Warburton 10,000
Mr Tony Blevins 5,000
Mr Malcolm Irving 25,000
Mr Leo Lonergan 2,000
Mr Ken Watson 7,500
Mr Michael Wirth –
No shares in Caltex Australia Limited have been acquired or
sold by any current director, or by their related entities, since
31 December 2001.
The directors of Caltex Australia Limited do not hold relevant
interests in any other companies in the Caltex Australia Group.
Directors’ Report continued
24 Caltex Annual Review 2001
Emoluments of Directors and Senior ExecutivesDirectorsAt the Annual General Meeting of Caltex Australia Limited held in
March 1998, shareholders approved an annual aggregate amount
of $650,000 for non-executive directors’ fees.
Within this approved aggregate amount, for the year ended
31 December 2001:
● the Chair of Caltex Australia Limited was paid at the annual
rate of $150,000, inclusive of committee fees;
● fees to non-executive directors (other than the Chair) were
paid at the annual rate of $50,000, plus superannuation
guarantee charge (where applicable); and
● non-executive directors (other than the Chair) who served on
the Audit & Risk and Human Resources Committees received
an additional $5,000 for each committee membership, which
increased to $10,000 for each non-executive director who
served as chair of a committee.
Retirement payments to directorsAustralian resident non-executive directors are entitled to a
retirement payment equal to:
● one year’s total emoluments, after three years of service; and
● three year’s total emoluments, after nine years of service.
The retirement benefit accrues on a pro-rata basis between years
three and nine.
Role of the Human Resources CommitteeThe Human Resources Committee is responsible for decisions on
remuneration issues for senior executives of the company.
Remuneration policy is designed to ensure that remuneration for
senior executives is commensurate with the executive’s duties,
responsibilities and accountabilities, and that remuneration is
market-competitive and, therefore, enables the company to attract,
retain and motivate exceptional performers. Remuneration,
particularly incentive-based remuneration, reflects closely the
company’s financial and operational performance. Specifically,
senior executives may receive short-term cash bonuses and longer-
term share-based incentives provided that predetermined goals and
objectives, related to their own performance and the performance
of the company, are achieved.
EmolumentsDetails of the nature and amount of each element of the emoluments of each director of Caltex Australia Limited and each of the five
most highly paid executive officers of Caltex Australia Limited and its controlled entities, are set out below:
Super Non-Cash Retirement
Directors’ Fees Salary Bonus Contributions Benefits Plan Benefits Total
$ $ $ $ $ $ $
Director
Current directors
Mr Richard Warburton 121,666 – – 9,733 – – 131,399
Mr Tony Blevins – 473,940 – – 201,588 – 675,528
Mr Malcolm Irving 93,333 – – – – – 93,333
Mr Leo Lonergan 27,500 – – – – – 27,500
Mr Kenneth Watson 55,000 – – 2,200 – – 57,200
Mr Michael Wirth 25,000 – – – – – 25,000
Former directors
Mr John Banner 27,500 – – – – – 27,500
Mr Joseph Bernitt 25,000 – – – – – 25,000
Mr Robert Bothwell 33,333 – – 2,933 – 50,147 86,413
Mr Desmond Mackney 27,500 – – 2,200 – 109,160 138,860
Mr Shariq Yosufzai 25,000 – – – – – 25,000
Officer
Mr Ken Bania – 342,000 74,976 22,451 2,301 – 441,728
Mr Alex Strang – 327,560 70,246 21,514 2,301 – 421,621
Mr Simon Hepworth – 326,245 69,063 21,415 2,301 – 419,024
Ms Helen Conway – 236,256 45,792 15,462 – – 297,510
Mr Steven Parker – 232,545 45,331 15,023 – – 292,899
Note: Mr Steve de Bruyn, who served as an alternate director for Mr Banner, Mr Bernitt and Mr Yosufzai during the year ended 31 December 2001, did not receive a director’s fee.
25Caltex Annual Review 2001
Deeds of indemnity and insurance have previously been entered by
Caltex Australia Limited with other current directors and officers,
and with former directors and officers, under which similar
indemnity provisions and insurance obligations apply.
Contract of insuranceThe company has paid or agreed to pay a premium in respect of a
contract insuring the directors and officers of the company against
a liability.
The directors have not included details of the nature of the
liabilities covered or the amount of the premium paid in respect of
the directors’ and officers’ liability, as such disclosure is prohibited
under the terms of the contract.
Rounding of AmountsCaltex Australia Limited is an entity to which ASIC Class Order
[CO 98/100] applies and, in accordance with the class order,
amounts have been rounded off to the nearest thousand dollars,
unless otherwise stated in the 2001 Concise Financial Report and
the 2001 Full Financial Report.
Signed in accordance with a resolution of the board of directors
of Caltex Australia Limited:
Sydney, 22 February 2002
RFE Warburton
Director
TC Blevins
Director
In addition to the emoluments disclosed above, directors and
officers are eligible to receive a discount on private fuel purchases
in line with that available to all employees of the consolidated
entity.
Indemnities and InsuranceDeeds of indemnity and insuranceDuring the year ended 31 December 2001, Caltex Australia Limited
entered into deeds of indemnity and insurance with Mr Leo
Lonergan and Mr Michael Wirth, who were appointed as directors
during the year, and Mr John Willey, who was appointed as a
secretary during the year.
Under the deeds, Caltex Australia Limited has agreed to indemnify
these persons (to the extent permitted by law) on and from the
date of their appointment against:
● liabilities incurred as a director or secretary of Caltex Australia
Limited or a subsidiary (as the case may be), except for those
incurred in relation to the matters set out in section 199A(2)
of the Corporations Act 2001 (Cth); and
● reasonable legal costs incurred in defending an action for a
liability or alleged liability as a director or secretary of Caltex
Australia Limited or a subsidiary (as the case may be), except
for those incurred in relation to the matters set out in section
199A(3) of the Corporations Act 2001 (Cth).
The total liability of Caltex Australia Limited for any single claim
is limited to the company’s total net assets, as disclosed in the
company’s most recently audited accounts prior to the claim.
Caltex Australia Limited has also agreed to effect and maintain,
and pay the premium on, a directors’ and officers’ insurance policy
on terms that are no less favourable than:
● the policies of the directors of Caltex Australia Limited and
its subsidiaries; or
● if there is no policy for the directors of Caltex Australia Limited
and its subsidiaries, policies typically maintained by other
groups of companies that are similar to Caltex Australia
Limited and its subsidiaries.
The obligation to effect and maintain, and pay the premium on,
a policy continues for a period of seven years after the party has
ceased to be a director or secretary (as the case may be).
This policy must not seek to insure against liabilities (other than
for legal costs) arising out of:
● conduct involving a wilful breach of duty in relation to Caltex
Australia Limited or a subsidiary; or
● a contravention of sections 182 or 183 of the Corporations
Act 2001 (Cth).
Corporate Governance
26 Caltex Annual Review 2001
Board of DirectorsRoleCaltex Australia Limited’s Constitution provides that the company’s
business is to be managed by, or under the direction of, the directors,
except for matters that the Constitution, the Corporations Act 2001
(Cth) or the Australian Stock Exchange (ASX) Listing Rules require to
be exercised by the company in general meeting.
Accordingly, the board of directors of Caltex Australia Limited is
responsible for the company’s overall direction and for setting the
strategic, financial and operational goals for the Caltex Australia
Group. The directors are, in turn, accountable to the shareholders
for their stewardship of the company.
The board of directors views its primary responsibility as achieving
long-term value for all of the company’s shareholders. At the same
time, the board is aware that, as a major Australian corporation, and
as one of Australia’s leading oil refining and marketing companies,
it is also important that Caltex Australia Limited is a good
corporate citizen.
The responsibility for daily management of the Caltex Australia
Group is delegated to the Managing Director & Chief Executive
Officer. However, the board closely monitors the performance of
the Caltex Australia Group against the strategic, financial and
operational goals that it sets.
Size and compositionThe Constitution requires that Caltex Australia Limited must have
at least three directors, and no more than 12 directors. The number
of directors in office is determined by the directors within the
minimum and maximum numbers, subject to the constraint that
the number of directors cannot be reduced below the number in
office at that time. The minimum and maximum numbers of
directors may, however, be increased or decreased by the
company’s shareholders in general meeting, subject to the
requirements of the Corporations Act 2001 (Cth).
There are currently six directors of Caltex Australia Limited, five
of whom are non-executive directors. The board of directors
is comprised of Mr Richard Warburton (Chair), Mr Tony Blevins
(Managing Director & Chief Executive Officer), Mr Malcolm Irving,
Mr Leo Lonergan, Mr Ken Watson and Mr Michael Wirth.
Term of appointment of directorsNon-executive directors are typically appointed for a period of
around three years, subject to the rules that apply in relation to
directors who are appointed to fill casual vacancies and the
rotation of directors, as set out in the Constitution and the ASX
Listing Rules.
Introduction
The main corporate governance practices of the Caltex Australia Group are set out,in broad terms, in this report.
Conflicts of interests of directorsUnder the Corporations Act 2001 (Cth), the directors of a company:
● are required to give notice, to each other director, of material
personal interests that they have in matters that relate to the
company’s affairs; and
● may give standing notice of any other matters.
At all meetings of the Caltex Australia Limited board, directors
have the opportunity, as the first agenda item for the meeting,
to disclose details of any interests, conflicts or changes in
circumstances that have arisen since the last meeting.
It is the policy of the board that, in accordance with the Corporations
Act 2001 (Cth), a director who has a material personal interest in
a matter that is being considered by the board must not:
● be present whilst the matter is being considered by the board; or
● vote on the matter.
Related party questionnaireA related party questionnaire is sent at the end of each financial
year to current directors, and to other persons who have served as
directors during the year, to request details of any related party
transactions between the director (including their related entities)
and companies in the Caltex Australia Group to ensure full and
accurate disclosure in Caltex Australia’s financial statements.
Information provided to directorsFor each board meeting, management at Caltex Australia provide
detailed board papers for the directors’ review and consideration,
and regularly attend board meetings to answer any questions
that the directors may have. Directors are free to liaise with
management to obtain any further information they may require.
Legal adviceThe directors have access to the Caltex Australia Legal and
Corporate Secretariat departments to obtain guidance in relation
to legal and corporate governance matters. Directors may also
obtain external legal advice which, subject to board approval,
will be paid for by Caltex Australia Limited.
Access to company books and recordsThe Corporations Act 2001 (Cth) gives directors a right of access to a
company’s financial records at all times. Current and former directors
also have a statutory right of access to inspect a company’s books.
Caltex Australia Limited has formal arrangements in place with its
directors under which they have a similar right of access to the
company’s books.
27Caltex Annual Review 200127
Director trainingThe Company Secretary & General Counsel arranges for newly
appointed and current directors to attend director training courses
as required.
Board meetingsThe board of directors formally met on 11 occasions during the
year ended 31 December 2001. In addition, board papers were
circulated to the directors on three other occasions when no
meeting was held. One of the board meetings was combined with
a detailed operational review at the Kurnell refinery. The board
also held a separate strategy meeting over two days. Between
meetings, the directors liaise with, and provide advice to,
senior management.
Board CommitteesAudit & Risk CommitteeThe Audit & Risk Committee is currently comprised of three non-
executive directors, Mr Malcolm Irving (Chair), Mr Leo Lonergan
(with effect from 1 January 2002) and Mr Ken Watson.
During the year ended 31 December 2001:
● Mr Richard Warburton served as a member of the Audit &
Risk Committee until 31 December 2001, and as Chair until
26 April 2001. Mr Warburton currently attends meetings in
an ex-officio capacity.
● Mr Irving was appointed as Chair with effect from 26 April 2001
and, before this time, attended meetings in an ex-offico capacity.
● Mr Desmond Mackney served on the committee until 1 July 2001,
when his resignation as a director took effect.
Representatives of the external auditors, KPMG, and Caltex
Australia management also attend committee meetings.
The committee meets at least three times a year.
The Audit & Risk Committee is principally responsible for:
● reviewing the interim and annual financial statements for the
Caltex Australia Group;
● reviewing accounting policies adopted by the Caltex Australia
Group;
● reviewing and assessing the external and internal audits of,
and audit plans for, the Caltex Australia Group, including any
material issues that arise during audits;
● reviewing and assessing the adequacy of the financial controls
for the Caltex Australia Group;
● reviewing and assessing risk management including environment,
health and safety, legal compliance (including compliance with
the ASX Listing Rules), and ethical guidelines; and
● making recommendations to the board of Caltex Australia
Limited in relation to the appointment of external auditors.
Before a committee meeting, the committee members meet with
Caltex Australia’s external auditors, KPMG, in the absence of
management, to provide a forum for issues or concerns (if any) to
be raised free of management influence. Also, the Internal Audit
Manager at Caltex Australia is able to directly approach the Chair
or any member of the Audit & Risk Committee at any time.
Human Resources CommitteeThe Human Resources Committee is currently comprised of
three non-executive directors, Mr Richard Warburton (Chair
with effect from 26 April 2001), Mr Malcolm Irving (who served as
Chair until 26 April 2001) and Mr Leo Lonergan (with effect from
1 July 2001). Mr John Banner also served on the Human Resources
Committee until 1 July 2001, when his resignation as a director
took effect. Caltex Australia management also attend committee
meetings. The committee meets at least twice a year.
The Human Resources Committee is principally responsible for:
● identifying and reviewing, from time to time, the terms of
employment (including remuneration) and performance of
the Managing Director & Chief Executive Officer and senior
management at Caltex Australia;
● monitoring director and employee remuneration
arrangements; and
● monitoring and planning for director and senior management
succession.
In relation to director succession, the committee:
● identifies the skills, experience and personal qualities required
of potential candidates;
● engages external consultants to assist in identifying
appropriate candidates; and
● makes recommendations to the board as to the suitability of
the selected candidates.
Any director who is appointed to the board of Caltex Australia
Limited as a casual vacancy holds office until the end of the next
Annual General Meeting, but is eligible for election at that meeting.
Other committeesOther special purpose directors’ committees are established, as
necessary, to consider specific matters. During the year ended
31 December 2001, special purpose committees were convened
on two occasions.
Remuneration PolicyDirectors’ remunerationAt the Annual General Meeting of Caltex Australia Limited held in
March 1998, shareholders approved an annual aggregate amount
of $650,000 for non-executive directors’ fees. The allocation of
directors’ fees within this aggregate amount was last considered
by the board of Caltex Australia Limited in August 2000. On that
occasion, the board considered independent data from an external
expert when setting the level of fees for non-executive directors to
ensure that remuneration was appropriate given market practice.
28 Caltex Annual Review 2001 28
Corporate Governance continued
On the basis of this data, the board determined that, with effect
from 1 September 2000:
● the Chair would receive a director’s fee of $150,000 per annum,
inclusive of committee fees; and
● directors’ fees for non-executive directors (other than the
Chair), would be paid at the rate of $50,000 per annum,
exclusive of committee fees.
The board also determined that it would not review the level
of directors’ fees again until August 2002.
There has been no change in the quantum of committee fees paid to
directors since April 1998, when committee fees were set at $5,000 for
each committee membership and $10,000 for the chair of a committee.
Retirement payments to directorsAustralian resident non-executive directors are entitled to a
retirement payment equal to:
● one year’s total emoluments, after three years of service; and
● three year’s total emoluments, after nine years of service.
The retirement benefit accrues on a pro-rata basis between years
three and nine.
Senior management remunerationThe Human Resources Committee determines the remuneration
of the Managing Director & Chief Executive Officer and senior
management at Caltex Australia. In broad terms, remuneration is
set by reference to independent data, external professional advice,
the Caltex Australia Group’s circumstances, the skills that
management bring to their positions, and the requirement
to attract and retain high calibre management.
Share Trading PoliciesShare trading guidelinesCaltex Australia has developed guidelines in relation to dealings in
the shares of Caltex Australia Limited by employees of companies
in the Caltex Australia Group. These guidelines have been endorsed
and approved by the board of Caltex Australia Limited, with the
directors also subject to these guidelines.
The guidelines serve as an important notice to employees that,
from time to time, they may have access to information that is not
generally available to the public and could have a material effect on
Caltex Australia Limited’s share price. Employees are reminded that,
when they have access to price sensitive information, the insider
trading provisions of the Corporations Act 2001 (Cth) require that
they must not trade in Caltex Australia Limited’s shares.
To minimise the potential for insider trading, the guidelines suggest
that employees should not trade in Caltex Australia Limited’s shares
except in the period of 30 days following a public announcement of
Caltex Australia’s half yearly and yearly financial results.
Disclosure of share trading by directorsThe board of Caltex Australia Limited is committed to ensuring
that directors’ transactions in the company’s shares are publicly
disclosed within five business days, in accordance with the ASX
Listing Rules.
Each of the current directors has agreed to give details of their
transactions in Caltex Australia Limited’s shares to the company
within three business days of the transaction.
Ethical StandardsCode of ethicsCaltex Australia’s code of ethics, which has been adopted by the
board of Caltex Australia Limited, is designed to provide guidance
to employees of the Caltex Australia Group in dealings with
shareholders, customers, government agencies, the general
public, and each other.
Amongst other principles, Caltex Australia is committed to:
● recognising the essential dignity of each and every person;
● being actively concerned for the well-being of the community
and the environment;
● providing a challenging and safe workplace; and
● ensuring that all relevant laws and accounting procedures are
complied with.
Political donationsIt is the policy of Caltex Australia that political donations not be
made by any company in the Caltex Australia Group.
In accordance with this policy, the Caltex Australia Group did not
make any donations to political parties in the year ended 31
December 2001.
Corporate giftsThe Caltex Australia gift policy provides that an employee must not
accept gifts from customers or suppliers, directly or indirectly, if
these are likely to influence the employee’s judgment or place the
employee in a position of compromise.
Caltex Australia management also discourage the practice of
offering gifts to customers and suppliers.
Other policiesThe board of Caltex Australia Limited has adopted policies in
relation to trade practices compliance, environment, health and
safety, equal opportunity and privacy, to provide guidance to
employees in these areas. The policy in relation to privacy was first
adopted by the board in December 2001 in compliance with the
Privacy Amendment (Private Sector) Act 2000 (Cth), which came
into effect on 21 December 2001.
Corporate SponsorshipsCaltex Australia is a sponsor of a range of community, arts, welfare
and education activities and programs, including the Starlight
Children’s Foundation of Australia, and the Caltex Best All Rounder
and Innovation in Teaching programs.
Caltex Australia views its contributions and sponsorships as long-
term investments in the community. In this way, Caltex Australia
has the opportunity to develop close relationships with community
groups and organisations, and through the positive publicity
associated with these contributions and sponsorships, Caltex
Australia’s public profile and brand recognition is enhanced.
29Caltex Annual Review 2001
Disclosure of and Access to CompanyInformationHalf yearly and yearly announcementsThe Managing Director & Chief Executive Officer makes two
presentations in relation to the financial performance of the Caltex
Australia Group, including Caltex Australia Limited, in respect of
each financial year.
Results presentations are held in relation to the financial
performance for:
● the half-year to 30 June, around August of that year; and
● the year to 31 December, around February of the following year.
All shareholders, the press and members of the public are welcome
to attend these presentations.
Continuous disclosureCaltex Australia Limited is committed to ensuring that information
that is expected to have a material effect on the price or value of the
company’s shares is immediately notified to the ASX for dissemination
to the market in accordance with the ASX Listing Rules.
Ms Helen Conway, Company Secretary & General Counsel, has
been appointed by the board of Caltex Australia Limited as the
primary person responsible for communications with the ASX in
relation to listing rule matters.
Shareholder access to informationEach year, shareholders in Caltex Australia Limited receive a concise
financial report and a half yearly report. In addition, shareholders
may request a copy of:
● the company’s full financial report, directors’ report and
auditor’s report;
● the company’s Constitution; and
● any minutes of shareholders’ meetings, or extracts from those
minutes.
Shareholders are asked to send their requests in writing to the
Company Secretary, Caltex Australia Limited, Level 12, MLC Centre,
19-29 Martin Place, Sydney New South Wales Australia 2000.
Please note that information about Caltex Australia can be found
at www.caltex.com.au. The Caltex Australia web site, which was
substantially re-designed at the end of 2001, allows shareholders
to access:
● corporate information about Caltex Australia;
● investor relations information, including previous annual
reviews, full financial reports and half yearly financial
information; and
● recent media releases and management addresses to external
bodies.
IndemnitiesThe Constitution of Caltex Australia Limited provides that, to the
extent permitted by law and subject to sections 199A and 199B
of the Corporations Act 2001 (Cth), Caltex Australia Limited
indemnifies every person who is, or has been, an officer of Caltex
Australia Limited or a subsidiary against:
● any liability, other than a liability for legal costs, incurred by
that person as an officer of Caltex Australia Limited or a
subsidiary; and
● reasonable legal costs incurred in defending an action for a
liability or alleged liability incurred by that person as an officer
of Caltex Australia Limited or a subsidiary.
It is the practice of Caltex Australia Limited to enter into deeds of
indemnity with its directors and secretaries.
Internal ControlsThe Caltex Australia Group has established controls at the board,
executive and business unit level that are designed to safeguard the
group’s interests and ensure the integrity of its reporting. These
include accounting, financial reporting, environment, health and
safety and other internal control policies and procedures, which are
directed at ensuring that all companies in the Caltex Australia
Group fully comply with all regulatory requirements and
community standards.
An Internal audit function operates under a charter, which
defines the purpose, authority and responsibility of the Internal
Audit Group. The Group’s mission is to provide an independent
assessment of risk and the effectiveness of the company’s
recommendations are reported on a timely basis to management.
The Caltex Australia Group also has policies relating to interest rate
management, foreign exchange risk management and credit risk
management. Through these and other policies, the company
seeks to minimise the risk that arises through its activities.
Comprehensive practices are in place for ensuring that:
● capital expenditure and revenue commitments above a certain
amount obtain board approval; and
● financial exposures, including the use of derivatives,
are minimised.
Risk Management System The Caltex Australia Group intends to be a high performance,
low risk organisation. A large proportion of the group’s physical risk
comes from exposures associated with the environment, health
and safety. In order to manage these risks in a cost-effective
manner, the group has:
● identified and prioritised the key risks which face the company;
● developed risk management plans to reduce these risks; and
● developed an ongoing set of indicators which are used to
measure and reduce risk in all aspects of Caltex’s operations.
Statement of Financial Performancefor the year ended 31 December 2001
30 Caltex Annual Review 2001
Consolidated
Thousands of dollars Note 2001 2000
Gross sales revenue 7,932,222 8,347,045
Product duties and taxes (3,236,598) (3,441,071)
Net sales revenue 4,695,624 4,905,974
Other revenue from ordinary activities 4 200,779 181,565
Revenue from ordinary activities 4,896,403 5,087,539
Changes in inventories of finished goods and inventory in process (78,659) 67,670
Raw materials and consumables used (3,958,245) (4,252,803)
Employee expenses (180,809) (173,145)
Depreciation and amortisation expenses 5 (272,501) (122,691)
Borrowing costs 5 (91,105) (97,736)
Other expenses (534,156) (449,910)
Share of net profit or loss of associates and joint
ventures accounted for using the equity method 912 1,601
(Loss)/profit from ordinary activities before income tax expense (218,160) 60,525
Income tax benefit/(expense) 32,638 (23,302)
Net (loss)/profit (185,522) 37,223
Net profit attributable to outside equity interest (647) (1,161)
Net (loss)/profit attributable to members of the parent entity (186,169) 36,062
Basic earnings per share (cents per share) 8 (69.0) 13.4
Diluted earnings per share (cents per share) 8 (69.0) 13.4
The statement of financial performance is to be read in conjunction with the discussion and analysis on page 31 and the notes to the concise financial statements.
Concise Financial Report
31Caltex Annual Review 2001
Discussion and Analysis of the Statement of Financial Performance
● The consolidated entity’s net loss attributable to members
of the parent entity for the year was $186.1 million, down
$222.2 million from the $36.1 million net profit recorded
in 2000.
● The major driver for this result was the dramatic fall in
crude prices during 2001 which saw the price of the regional
benchmark Tapis crude move from US$27.38 per barrel in
December 2000 to US$18.64 per barrel in December 2001.
[A fall in crude prices results in a gap between what the
company paid for its crude inventories and the price refined
products can be sold in the marketplace. The impact is
approximately $20 million less net profit (before tax) for
every US$1 per barrel fall in crude price. In 2001 there was
an inventory loss of $186.1 million (before tax)].
● There were three other significant items which affected the
consolidated entity’s results in 2001. These were:
– the write-off of the $147.5 million balance of goodwill
(nil tax effect) relating to the purchase of Pioneer
International Limited’s 50% interest in Caltex Australia
Petroleum Pty Ltd (acquired in 1997) due to a deterioration
in the economic conditions when compared to the
assumptions upon which the acquisition was based;
– a net profit before tax of $15.5 million ($15.8 million after
tax) arising from the release of obligations with respect to
a vessel chartered by the consolidated entity; and
– full provision made against the $11.4 million debt owed
by Ansett Airlines ($8.0 million after tax).
● Gross sales revenue fell in line with the easing in crude prices
over the year and a lower sales volume year on year.
● Trading profit was also affected by a regional over-supply of
petrol which led to sharp falls in refiners’ margins in the middle
of the year, and by instances of unreliability in the first quarter
at the refineries. However, offsetting this weakness on the
refining side of the business, marketing margins proved to be
extremely robust – showing a significant increase year on year.
● Borrowing costs eased year on year due to improved working
capital management, which led to lower average borrowings
over 2001, and the flow through benefit of interest rate cuts
on the consolidated entity’s net debt.
● Earnings per share decreased to negative 69.0 cents per share
from positive 13.4 cents per share in 2000.
● The return on equity (net profit or loss attributable to members
of the parent entity, after tax excluding significant items, on
parent entity interest in total equity) moved from 3.6% in 2000
to negative 5.7% in the current year.
Concise Financial Report
Statement of Financial Positionas at 31 December 2001
32 Caltex Annual Review 2001
Consolidated
Thousands of dollars Note 2001 2000
Current assets
Cash assets – 41,711
Receivables 523,146 666,290
Inventories 492,736 562,671
Tax assets 5,738 10,332
Other 24,923 26,366
Total current assets 1,046,543 1,307,370
Non-current assets
Receivables 23,443 28,232
Investments accounted for using the equity method 12,577 11,345
Property, plant and equipment 1,664,534 1,662,458
Intangibles – 158,011
Other 15 15
Total non-current assets 1,700,569 1,860,061
Total assets 2,747,112 3,167,431
Current liabilities
Payables 466,801 632,839
Interest bearing liabilities 228,848 246,616
Provisions 36,891 56,879
Total current liabilities 732,540 936,334
Non-current liabilities
Interest bearing liabilities 1,035,852 1,036,286
Deferred tax liabilities 130,561 159,197
Provisions 26,949 26,480
Total non-current liabilities 1,193,362 1,221,963
Total liabilities 1,925,902 2,158,297
Net assets 821,210 1,009,134
Equity
Contributed equity 543,415 543,415
Reserves – 319,865
Retained profits 9 270,017 136,321
Parent entity interest 813,432 999,601
Outside equity interest 7,778 9,533
Total equity 10 821,210 1,009,134
The statement of financial position is to be read in conjunction with the discussion and analysis on page 33 and the notes to the concise financial statements.
Concise Financial Report
33Caltex Annual Review 2001
Discussion and Analysis of theStatement of Financial Position
● The consolidated entity’s net assets decreased by
$187.9 million during the year to $821.2 million.
● The consolidated entity’s total assets decreased by 13.3%
during the year to $2,747.1 million due to movements in
three specific asset groups:
– lower receivables on the back of a fall in price of the
regional benchmark Tapis crude (from US$27.38 per
barrel in December 2000 to US$18.64 per barrel in
December 2001);
– lower inventories year on year reflecting the lower crude
price, but offset by higher inventory volumes held to
accommodate the major planned shutdown at Lytton
in the fourth quarter of 2001; and
– the write-off of the $147.5 million balance of goodwill
relating to the purchase of Pioneer International Limited’s
50% interest in Caltex Australia Petroleum Pty Ltd.
● The decrease in payables balance of $166 million (or 26%)
reflects the 32% decline in crude prices year on year, offset by
a further depreciation of the Australian dollar as against the
US dollar.
● Net debt at 31 December 2001 stood at $1,264.7 million, an
increase of $23.5 million from 31 December 2000. As a result,
the consolidated entity’s gearing (borrowings less cash, to
borrowings less cash plus equity) was 60.6%, up from 59.3%
at the end of the prior year (when measured on a comparative
basis, excluding goodwill).
● During 2001, the parent entity transferred all realised capital
profits from the applicable equity reserve into retained profits.
● Net tangible asset backing per share (net assets attributable to
members of the parent entity less intangible assets, on number
of shares in issue) decreased from $3.12 to $3.01.
Concise Financial Report
Statement of Cash Flows for the year ended 31 December 2001
34 Caltex Annual Review 2001
Consolidated
Thousands of dollars Note 2001 2000
Cash flows from operating activities
Receipts from customers 9,541,226 9,047,513
Payments to suppliers, employees and governments (9,374,411) (8,896,306)
Dividends received 1,080 1,777
Interest received 842 1,254
Interest and other borrowing costs paid (87,542) (100,942)
Income taxes refunded/(paid) 7,719 (56,654)
Net operating cash flows 88,914 (3,358)
Cash flows from investing activities
Purchase of controlled entities, net of cash
acquired – 622
Proceeds from sale of controlled entities 4 655 2,250
Purchases of property, plant and equipment (90,200) (80,557)
Maintenance and shutdown expenditure capitalised (43,854) –
Proceeds from sale of property, plant and equipment 4 24,649 23,001
Proceeds from sale of intangibles 4 17,000 –
Proceeds from sale of investments 4 – 120
Purchases of operating licences and goodwill (2,003) (1,295)
Loans to associates – (7,100)
Net investing cash flows (93,753) (62,959)
Cash flows from financing activities
Proceeds from borrowings 6,195,000 8,127,000
Repayments of borrowings (6,221,000) (7,963,300)
Repayments of finance lease principal (2,896) (2,500)
Dividends paid (16,200) (64,800)
Net financing cash flows (45,096) 96,400
Net (decrease)/increase in cash held (49,935) 30,083
Cash at the beginning of the year 41,711 11,628
Cash at the end of the year (8,224) 41,711
The statement of cash flows is to be read in conjunction with the discussion and analysis on page 35 and the notes to the concise financial statements.
Concise Financial Report
35Caltex Annual Review 2001
Discussion and Analysis of the Statement of Cash Flows
● Net operating cash flows in 2001 were positive in spite of the
consolidated entity reporting a book loss for the year. This
resulted from lower crude prices decreasing the working
capital requirements of the business. Operating expenses
were in line with those for the prior year. Interest and other
borrowing costs eased year on year due to improved working
capital management, which led to lower average borrowings
over 2001, and to the benefit of interest rate cuts on the
consolidated entity’s net debt.
● Capital expenditure for the year was $90.2 million with the
focus on developing a consolidated retail network under
the Caltex delta image, yield and risk improvements at the
refineries, and information technology and environmental
projects. A further $43.9 million was outlaid on maintenance
and shutdown expenditure for:
– the one-in-ten year total steam shutdown at the Lytton
Refinery in Brisbane;
– ship maintenance payable by Caltex under shipping
contracts; and
– other qualifying maintenance expenditure.
There was also a $17 million inflow arising on a transaction
which released Caltex from obligations with respect to a vessel
chartered by the consolidated entity.
● Dividend payments in 2001 were down on 2000 as no dividend
was declared in relation to the 2001 year. While there were
adequate operating cash flows, there were insufficient
earnings to justify a distribution.
Concise Financial Report
Notes to the Concise Financial Statementsfor the year ended 31 December 2001
36 Caltex Annual Review 2001
1 Basis of preparation of concise financial reportThe concise financial report has been prepared in accordance
with the Corporations Act 2001, Accounting Standard AASB 1039
“Concise Financial Reports” and applicable Urgent Issues Group
Consensus Views. The financial statements and specific
disclosures required by AASB 1039 have been derived from the
consolidated entity’s full financial report for the year. Other
information included in the concise financial report is consistent
with the consolidated entity’s full financial report. The concise
financial report does not, and cannot be expected to, provide as
full an understanding of the financial performance, financial
position and investing and financing activities of the
consolidated entity as the full financial report.
It has been prepared on the basis of historical cost and except
where stated, does not take into account changing money
values or current valuations of non-current assets.
These accounting policies have been consistently applied by
each entity in the consolidated entity and, except where there
is a change in accounting policy, are consistent with those of
the previous year.
A full description of the accounting policies adopted by the
consolidated entity may be found in the consolidated entity’s
full financial report.
2 Reclassification of financial informationSome line items reported in the previous year have been
reclassified and repositioned in the financial statements as
a result of the first time application on 1 January 2001 of
the revised standards AASB 1018 “Statement of Financial
Performance”, AASB 1034 “Financial Report Presentation and
Disclosures” and the new AASB 1040 “Statement of Financial
Position”.
The following assets and liabilities have been removed from
previous classifications and are now disclosed as separate line
items on the face of the statement of financial position:
● “Investments accounted for using the equity method”,
previously presented within “non-current investments”;
● “Tax assets” as a current asset, previously presented within
“current receivables”; and
● “Deferred tax liabilities”, previously presented within
“non-current provisions”.
3 Change in accounting policyThe consolidated entity applied AASB 1041 “Revaluation
of Non-Current Assets” for the first time from 1 January 2001.
This did not result in any change to the consolidated entity’s
accounting policies, as the carrying amounts of all non-current
assets are valued on a cost basis and are reviewed at least
annually to determine whether they are in excess of their
recoverable amount. If the carrying amount of a non-current
asset exceeds the recoverable amount, the asset is written
down to the lower value. In assessing recoverable amounts,
the relevant cash flows have not been discounted.
Concise Financial Report
37Caltex Annual Review 2001
Consolidated
Thousands of dollars 2001 2000
4 Other revenue From operating activities
Interest received or due and receivable from:
Other corporations 842 1,254
Rental income 38,501 45,196
Royalties and franchise income 54,642 46,014
Other income 64,490 63,730
From outside operating activities
Proceeds from the sale of property, plant and equipment 24,649 23,001
Proceeds from sale of intangibles (a) 17,000 –
Proceeds from sale of controlled entities 655 2,250
Proceeds from sale of investments – 120
200,779 181,565
(a) During the year, Caltex agreed to be released from its obligations with respect to a vessel chartered by the consolidated entity.
The proceeds on this transaction were $17 million, and the net profit after tax was $15.8 million.
5 Costs and expenses Cost of goods sold 4,361,586 4,418,613
Borrowing costs:
Interest paid or due and payable to:
Other corporations and persons 89,036 95,761
Finance charges on capitalised leases 2,069 1,975
91,105 97,736
Depreciation of:
Freehold buildings 8,276 8,308
Plant and equipment 99,474 96,641
107,750 104,949
Amortisation of:
Leasehold property 5,632 5,640
Leased plant and equipment 743 722
Intangibles 158,376 11,380
164,751 17,742
Total depreciation and amortisation 272,501 122,691
Operating leases rental expense 78,332 74,267
Finance lease contingent rentals 401 58
Net expense from movement in provision for:
Bad and doubtful debts 15,580 3,953
Employee entitlements 1,610 (2,483)
Net foreign exchange losses 23,928 43,592
Loss on disposal of non-current assets 473 533
Notes to the Concise Financial Statementsfor the year ended 31 December 2001
Concise Financial Report
Notes to the Concise Financial Statementsfor the year ended 31 December 2001 – continued
38 Caltex Annual Review 2001
6 Individually significant items There were three significant items which affected the consolidated entity’s results in 2001. These were:
(a) The directors resolved to write-off the $147.5 million balance of goodwill relating to the purchase of Pioneer International Limited’s
50% interest in Caltex Australia Petroleum Pty Ltd (acquired in 1997) due to a deterioration in the economic conditions when
compared to the assumptions upon which the acquisition was based (nil tax effect);
(b) A net profit before tax of $15.5 million arising from the release of obligations with respect to a vessel chartered by the consolidated
entity ($15.8 million after tax); and
(c) Full provision has been made against the $11.4 million debt owed by Ansett Airlines ($8.0 million after tax).
Consolidated
Thousands of dollars 2001 2000
7 DividendsDividends paid and proposed
Dividends provided for or paid by the parent entity are:
No final dividend has been declared (2000: 6 cents per share, fully franked at 34%) – 16,200
No interim dividend was paid (2000: 10 cents per share, fully franked at 34%) – 27,000
– 43,200
8 Earnings per shareBasic earnings per share (cents per share) (69.0) 13.4
Diluted earnings per share (cents per share) (69.0) 13.4
Weighted average number of ordinary shares used in the calculation of earnings per share was 270 million
(2000: 270 million shares).
9 Retained profits Retained profits at the beginning of the year 136,321 143,459
Net (loss)/profit attributable to members of the parent entity (186,169) 36,062
Transfer of realised capital profits from reserve to retained profits 319,865 –
Dividends – (43,200)
Retained profits at the end of the year 270,017 136,321
10 Total equity reconciliation Total equity at the beginning of the year 1,009,134 1,016,225
Total changes in parent entity interest recognised in the statement of financial performance (186,169) 36,062
Dividends – (43,200)
Total changes in outside equity interest (1,755) 47
Total equity at the end of the year 821,210 1,009,134
11 Contingent liabilitiesThe details and estimated maximum amounts of contingent liabilities (for which no provisions are included in the financial report) are
set out below. The directors are not aware of any circumstance or information which would lead them to believe that these liabilities
will crystallise and consequently no provisions are included in the financial report in respect of these matters.
(a) Legal and other claims 2,000 2,000
Concise Financial Report
39Caltex Annual Review 2001
Notes to the Concise Financial Statementsfor the year ended 31 December 2001 – continued
(b) Bank guarantees
The parent entity has granted indemnities to banks to cover
bank guarantees given on behalf of controlled entities to
a maximum exposure of $8,460,000 (2000: $7,518,000).
At 31 December 2001, the total outstanding was $2,506,000
(2000: $3,429,000).
(c) Class order relief
Pursuant to ASIC Class Order 98/1418, relief has been granted
to certain of the parent entity’s wholly owned controlled
entities as listed in note 28 of the full financial report from
specific accounting and financial reporting requirements.
(d) Environmental matters
In addition to the environmental exposures already provided for
in the financial statements in accordance with the consolidated
entity’s accounting policy, the consolidated entity may be
subject to contingent liabilities as a result of environmental
laws that at some time in the future may require the
consolidated entity to take action to correct the environmental
effect of past disposal or release of petroleum substances by
the consolidated entity or by others. The amount of future cost
is indeterminable due to such factors as the unknown nature
of new laws, the magnitude of possible contamination, the
unknown timing and extent of corrective factors that may be
required, the determination of the consolidated entity’s
possible liability in proportion to other possible responsible
parties and the extent to which such costs are recoverable
from insurers.
The consolidated entity is a member of the Cristal Fund and the
International Oil Pollution Compensation Fund and as such may
be called upon to meet a share of the cost of future claims
made to the two funds. There are no calls outstanding which
the consolidated entity has not provided for and there is no
indication of when future claims will occur or the amount of
future claims.
(e) Merger warranties
In connection with the merger of its former petroleum and
marketing business with that of Ampol Limited in 1995, the
parent entity gave certain warranties regarding the financial
position of its refining and marketing subsidiaries and entered
into a tax indemnity deed and an environmental indemnity
deed. The Tax Indemnity Deed between Pioneer International
Limited (Pioneer), the parent entity and Caltex Australia
Petroleum Pty Ltd entered into at the time of the merger
continues in force and other merger agreements have been
either terminated or varied as appropriate.
There are no existing claims under these warranties and the
directors are not aware of any potential claims likely to emerge
in the future.
Pioneer entered into a deed with the parent entity on
31 December 1997 under which Pioneer undertook to be
liable for one-half of any tax, environmental and third party
liability of any company in the Caltex Australia Petroleum
Pty Ltd consolidated entity arising out of the conduct of its
business in the period from 1 January 1995 to the date of
completion (31 December 1997) which has not been paid
or adequately provided for in the Caltex Australia Petroleum
Pty Ltd accounts to the extent that the amount of such
liabilities (after recoveries) exceeds $2.5 million. Pioneer’s
obligation will apply for seven years for tax liabilities, eight
years for environmental liabilities and two years for third party
liabilities as from 31 December 1997. Pioneer’s maximum
potential liability under this deed is one-half of the net assets
of the Caltex Australia Petroleum Pty Ltd consolidated entity
as at 31 December 1997.
(f) Contingent consideration amounts
Part of the consideration for the acquisition by the parent
entity of the remaining 50% interest in Caltex Australia
Petroleum Pty Ltd at 31 December 1997 comprised a
contingent consideration amount in respect of each of the
five years ending 31 December 1998 to 2002. This amount
is calculated on the following basis:
● a maximum payment in each of the five years of $12 million
will be payable if the Caltex Australia Petroleum Pty Ltd
consolidated earnings before interest and tax after certain
adjustments (EBIT) equals or exceeds the high benchmark
set for that relevant year;
● no payment will be made in any year if EBIT equals or
is below the relevant low benchmark in that year; and
● if the EBIT in any of the five years is between the relevant
high and low benchmarks, the contingent consideration
amount will be calculated on a straight line pro-rata basis.
No amount has been provided for future years in respect of
this contingent consideration in these financial statements
(2000: nil).
12 Segment reportThe consolidated entity operates within one geographic region
– Australia. The consolidated entity’s activity is in the oil
industry through the purchase, refining, distribution and
marketing of petroleum products and the operation of
convenience stores.
Concise Financial Report
Audit Report Directors’Declaration
40 Caltex Annual Review 2001
Independent audit report on Concise Financial Reportto the members of Caltex Australia Limited
ScopeWe have audited the Concise Financial Report of Caltex Australia
Limited (“the parent entity”) and its controlled entities for the
financial year ended 31 December 2001, consisting of the
statement of financial performance, statement of financial
position, statement of cash flow, accompanying notes 1 to 12,
and the accompanying discussion and analysis on the statement
of financial performance, statement of financial position and
statement of cash flows set out on pages 30 to 40 in order to
express an opinion on it to the members of the parent entity.
The parent entity’s directors are responsible for the concise
financial report.
Our audit has been conducted in accordance with Australian
Auditing Standards to provide reasonable assurance whether the
concise financial report is free of material misstatement. We have
also performed an independent audit of the full financial report
of Caltex Australia Limited and its controlled entities for the year
ended 31 December 2001. Our audit report on the full financial
report was signed on 22 February 2002, and was not subject to
any qualification.
Our procedures in respect of the audit of the concise financial
report included testing that the information in the concise
financial report is consistent with the full financial report and
examination, on a test basis, of evidence supporting the amounts,
discussion and analysis, and other disclosures which were not
directly derived from the full financial report. These procedures
have been undertaken to form an opinion whether, in all material
respects, the concise financial report is presented fairly in
accordance with Accounting Standard AASB 1039 “Concise
Financial Reports” issued in Australia.
The audit opinion expressed in this report has been formed on the
above basis.
Audit opinionIn our opinion the concise financial report of Caltex Australia
Limited and its controlled entities for the year ended 31 December
2001 complies with AASB 1039 “Concise Financial Reports”.
Sydney, 22 February 2002
In the opinion of the directors of Caltex Australia Limited, the
accompanying concise financial report of the consolidated entity,
comprising Caltex Australia Limited and its controlled entities for
the year ended 31 December 2001, set out on pages 30 to 39:
(a) has been derived from the full financial report for the
financial year; and
(b) complies with Accounting Standard AASB 1039
“Concise Financial Reports”.
Signed in accordance with a resolution of the board of directors:
Sydney, 22 February 2002
RFE Warburton
Director
TC Blevins
Director
SA Gatt
Partner
KPMG
Concise Financial Report
41Caltex Annual Review 2001
Comparative Financial Information
Caltex Australia Limited1 Consolidated Results
2001 2000 1999 1998 21997
Profit and Loss ($m)
Net profit before significant items, interest and tax 14.6 155.8 216.7 198.2 42.0
Interest income 0.8 1.3 1.4 0.8 8.4
Interest expense (91.1) (97.7) (72.8) (70.2) (7.0)
Income tax expense before significant items 29.3 (23.3) (59.0) (49.5) (1.5)
Net (loss)/profit after tax and before significant items (46.4) 36.1 86.3 79.3 41.9
Significant items (net of tax) (139.7) – 16.3 – (193.8)
Net (loss)/profit after income tax (186.1) 36.1 102.6 79.3 (151.9)
Dividends
Amount paid and payable ($/share) – 0.16 0.22 0.22 0.18
Times covered (excluding significant items) – 0.84 1.45 1.34 1.29
Other data
Equity attributable to members of the parent entity ($m) 813.4 999.6 1,006.7 960.7 4941.4
Total equity ($m) 821.2 1,009.1 1,016.2 969.4 950.9
Return on equity attributable to members of the
parent entity after tax, excluding significant items (%) (5.7) 3.6 8.6 8.3 36.8
Total assets ($m) 2,747.1 3,167.4 2,974.1 2,721.8 42,894.7
Net tangible asset backing ($/share) 3.01 3.12 3.10 2.89 42.78
Debt ($m) 1,264.7 1,282.9 1,118.6 1,168.0 4972.6
Net debt ($m) 1.264.7 1,241.2 1,106.9 1,152.4 929.0
Net debt to net debt plus equity (%) 60.6 555.2 52.1 54.3 49.4
1 Caltex Australia Limited (CAL) owned 50% of Caltex Australian Petroleum Pty Ltd (CAPPL) (then known as Australian Petroleum Pty Ltd) up until 31 December 1997 when it acquired the remaining 50%. Prior to 31 December 1997, CAL only recognised dividend income from CAPPL. For comparativepurposes, in this document references to 1997 financial data relate to CAL, while references to 1997 operational and sales data relate to CAPPL.
2 Earnings included 50% interest in CAPPL.
3 Calculated on figures excluding the issue of shares to Pioneer International Limited in partial consideration of the purchase of its interest in CAPPL.
4 Consolidation of 100% ownership of APPL on 31 December 1997.
5 Gearing at 31 December 2000 was 59.3% when measured excluding goodwill. Therefore four-fifths of the year on year movement between 2000 and2001 arose as a result of the write-off of the $147.5 million balance of goodwill in 2001.
Replacement Cost of Sales Basis of Accounting
42 Caltex Annual Review 2001
● To assist in understanding the group’s operating performance, the directors have provided additional disclosure of the group’s results
for the year on a replacement cost of sales basis1, which excludes net inventory gains and losses.
● On a replacement cost of sales basis, the group’s net profit after income tax for the year was $83.7 million, compared to a profit of
$9.5 million in 2000.
● 2001 net profit before significant items, interest and income tax on a replacement cost of sales basis was $200.9 million, an increase of
$85 million over 2000.
Cumulative Five years 22001 22000 21999 21998 31997
Historic cost net profit before interest,
income tax and significant items 786.1 14.8 155.8 216.7 198.2 200.6
Add/(deduct) inventory losses/(gains)4 176.2 186.1 (40.1) (144.9) 100.1 75.0
Replacement cost net profit before interest,
income tax and significant items 962.3 200.9 115.7 71.8 298.3 275.6
Net interest expense (422.7) (90.3) (96.5) (71.4) (69.4) (95.1)
Historical cost tax expense (114.0) 28.9 (23.3) (28.9) (49.5) (41.2)
Add/(deduct) tax effect of inventory (losses)/gains (53.0) (55.8) 13.6 52.2 (36.0) (27.0)
Replacement cost profit after income tax 5 372.6 83.7 9.5 23.7 143.4 112.3
1 Caltex Australia Limited’s results are signifcantly impacted by external factors such as crude oil price movements. Such price movements are outside thecontrol of the company. As a general rule using the historic cost basis of accounting, rising crude prices will result in increased profit for Caltex, fallingcrude prices will result in decreased profit. This movement in profit, often referred to as an inventory gain or loss, can create large variations in Caltex’sresults as calculated by the historic cost method. Consequently, in order to provide a better insight into the operating performance of the company, CaltexAustralia Limited’s financial reporting includes earnings on a replacement cost of sales basis. Replacement cost of sales earnings exclude inventory gainsand losses and are calculated by restating cost of sales using the replacement cost of goods sold rather than the historic cost.
2 Caltex Australia Limited.
3 Caltex Australia Petroleum Pty Ltd (formerly Australian Petroleum Pty Ltd).
4 Historic cost results include gross inventory gains or losses from the movement in crude oil prices. In 2001, the historical cost result includes $186.1 million in inventory losses (2000: $40.1 million in inventory gains). Net inventory gain/(loss) is adjusted to reflect impact of revenue lags.
5 Replacement cost profit after income tax is calculated before taking into account any significant items over the five years. The total effect of thesesignificant items in each year was:
1997: $36.1 million profit before tax ($23.1 million after tax);
1998: no significant items;
1999: $21.6 million loss before tax ($13.8 million loss after tax);
2000: no significant items; and
2001: $143.4 million loss before tax ($139.7 million loss after tax).
43Caltex Annual Review 2001
Shareholder Information
Shareholder EnquiriesShareholders with queries about their shares or dividend
payments should contact the company’s share registry on
telephone 02 8234 5222 or facsimile 02 8234 5050, or through
its web site www.computershare.com using their holder
identification number or shareholder reference number to
access their shareholder specific information, or write to:
Computershare Investor Services Pty Limited
GPO Box 7045
Sydney NSW 1115.
All enquiries should include a shareholder reference number
which is recorded on the holding statement.
Dividend PolicyThe board aims to maintain a consistent pattern of dividend
payments in line with the sustainable earnings of Caltex Australia
Limited. The levels of dividend and franking credits depend on a
number of factors including the company’s profitability, available
cash flows and taxation position.
Payment of DividendsAustralian shareholders are encouraged to have dividends paid
directly into a bank, building society or credit union account in
Australia to facilitate receipt on payment date. A form for this
purpose, or for advising a change of account details, is included
with this mailout, or is available from the company’s share registry.
Change of AddressShareholders on the issuer sponsored sub-register who have
changed their address should notify the company’s share registry
in writing. CHESS holders should notify their controlling sponsor.
Caltex Australia PublicationsThe company’s Annual Review (including concise financial report)
which is published in March each year is the main source of
information for shareholders. Shareholders who do not wish to
receive an Annual Review or half yearly report should notify the
company’s share registry in writing. Alternatively, shareholders
who have previously requested not to receive an Annual Review
may now wish to change their election and receive an Annual
Review by notifying the company’s share registry in writing.
Shareholders can also receive the full financial report by notifying
the company’s share registry.
Voting RightsThe share capital of Caltex Australia Limited is comprised of
270 million fully paid ordinary shares.
Shareholders in Caltex Australia Limited have a right to attend and vote
at all general meetings, in accordance with the company’s Constitution,
the Corporations Act 2001 (Cth) and the ASX Listing Rules.
At a general meeting, individual shareholders may vote their
shares in person or by proxy. A corporate shareholder may vote its
shares by proxy or through an individual who has been appointed
as the company’s body corporate representative. Shareholders with
at least two shares may appoint up to two proxies to attend and
vote at a general meeting on their behalf.
If shares are held jointly and two or more of the joint shareholders
purport to vote, the vote of the shareholder named first in the
register will be counted, to the exclusion of the other joint
shareholder or shareholders.
Shareholders who are entitled to vote at the meeting should
note that:
● on a poll, each shareholder has one vote for each share they
hold; and
● on a show of hands, each shareholder has one vote. If the
shareholder has appointed a proxy, the proxy may vote but,
if two proxies have been appointed, neither proxy may vote.
For a complete analysis of shareholders’ voting rights, it is
recommended that shareholders seek independent legal advice.
Stock Exchange ListingThe company’s shares are listed on the Australian Stock Exchange.
General EnquiriesThe Manager, Investor Relations 02 9250 5595 or the Company
Secretary’s office 02 9250 5481 are always available to deal with
other enquiries during business hours.
Shareholder Information continued
44 Caltex Annual Review 2001
1.4 The shareholding is distributed as follows:
No of Holders No of Shares %
a)
1 – 1,000 15,798 9,298,727 3.45
1,001 – 5,000 10,894 29,393,338 10.89
5,001 – 10,000 1,997 15,804,523 5.85
10,001 – 100,000 1,162 27,233,577 10.09
100,001 – over 56 188,269,835 69.73
29,907 270,000,000 100.00
b) There are 3,555 shareholders holding less than a marketable parcel of shares in the company.
1.5 The 20 largest shareholders held 67.52% of the ordinary shares in the company.
1.6 The 20 largest holders of ordinary shares, the number of ordinary shares and the percentage of capital held by each are as follows:
No of Shares %
1 ChevronTexaco Global Energy Inc 135,000,000 50.00
2 RBC Global Services Australia Nominees Pty Limited 14,582,196 5.40
3 Rubicon Nominees Pty Ltd 8,608,436 3.19
4 National Nominees Ltd 5,670,345 2.10
5 Westpac Custodian Nominees Ltd 4,108,593 1.52
6 AMP Life Limited 2,806,824 1.04
7 ANZ Nominees Limited 1,465,254 0.54
8 AMP Nominees Pty Ltd 1,391,257 0.52
9 Chase Manhattan Nominees Ltd 1,374,801 0.51
10 Commonwealth Custodial Services Limited 1,169,768 0.43
11 Citicorp Nominees Pty Limited 966,772 0.36
12 S H Kam Investment Pty Ltd 800,000 0.30
13 AA Brofay Pty Limited 645,717 0.24
14 Equipart Nominees Pty Ltd 636,983 0.24
15 Transport Accident Commission 616,438 0.23
16 Fortis Clearing Nominees Pty Ltd (SGAEL Custodian Account) 568,037 0.21
17 Chemical Trustee Limited 500,000 0.19
18 Ms Pamela Margaret Ryan 500,000 0.19
19 Guardian Trust Australia Ltd (Meridian Account) 479,723 0.18
20 Questor Financial Services Ltd (TPS RF Account) 355,297 0.13
General InformationThe following additional information is furnished as required
by Listing Rule 4.10 of the Australian Stock Exchange:
1 As at 31 January 2002:
1.1 Substantial shareholders: ChevronTexaco Global Energy Inc holding 135,000,000 ordinary shares.
1.2 There is only one class of equity securities (namely fully paid ordinary shares) and the number of holders is 29,907.
45Caltex Annual Review 2001
2 Company Secretaries: Ms Helen Conway, Mr John Willey.
3 The address and telephone of the registered office is:
Level 12, MLC Centre, 19-29 Martin Place Sydney NSW 2000
Telephone 02 9250 5000 Facsimile 02 9250 5742
with the postal address being GPO Box 3916, Sydney NSW 2001
Web site www.caltex.com.au
4 The address at which the register of shares (being the only securities on issue) is kept is:
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street, Sydney NSW 2000
Telephone 02 8234 5222 Facsimile 02 8234 5050
with the postal address being GPO Box 7045, Sydney NSW 1115
Web site: www.computershare.com
Financial Calendar
Financial Calendar for Caltex Australia LimitedYear ended 31 December 2001
Annual General Meeting 2 May 2002
Year ending 31 December 2002*
Half year results and interim dividend announcement 30 August 2002
Record date for interim dividend entitlement 18 September 2002
Interim dividend payable 2 October 2002
Full year results and final dividend announcement 21 February 2003
Record date for final dividend entitlement 12 March 2003
Final dividend payable 26 March 2003
Notice of Annual General Meeting and
2002 Annual Review 2002 mailed 26 March 2003
Annual General Meeting 1 May 2003
* These dates are tentative and may be subject to change.
46 Caltex Annual Review 2001
Statistical Information
Year ended 31 December 2001 2000 1999 1998
People
Employees 11,558 11,469 11,610 11,680
Assets
Fuels refineries 2 2 2 2
Lube oil refinery 1 1 1 1
Lube blending plants – – – 3
Road tankers 27 27 34 36
Rail cars (operational) 68 68 68 68
Storage terminals (owned or leased, and operational) 11 11 11 13
Star Mart convenience stores 174 166 138 110
Service stations (owned or leased) 651 658 777 915
Depots 126 127 130 140
Operations
Nameplate refining capacity (barrels per day):
Caltex Refineries (NSW) Pty Ltd 124,500 124,500 124,500 116,700
Caltex Refineries (Qld) Ltd 105,500 105,500 105,500 104,000
Caltex Lubricating Oil Refinery Pty Ltd 3,750 3,750 3,750 3,750
Fuel production (ML) 11,045 10,928 10,908 11,050
Lubes production (ML) 169 186 167 161
Total sales volumes (ML) 11,669 12,257 11,881 11,908
(LTIFR) (lost time injury frequency rate) 1.8 2.6 0.9 2.2
1 Excludes employees of Calstores Pty Ltd (1,257) and Caltex 100% owned distributors (119).
47Caltex Annual Review 2001
Directory
48 Caltex Annual Review 2001
Corporate OfficesCaltex Australia LimitedABN 40 004 201 307
Level 12, MLC Centre
19-29 Martin Place
Sydney NSW 2000
Australia
Mail GPO Box 3916
Sydney NSW 2001
Australia
Telephone: 02 9250 5000
Facsimile: 02 9250 5742
Web site: www.caltex.com.au
Share RegistryComputershare Investor Services Pty Limited
GPO Box 7045
Sydney NSW 1115
Australia
Tollfree: 1300 850 505
(enquiries within Australia)
Telephone: 61 3 9611 5711
(enquiries outside Australia)
Facsimile: 02 8234 5050
Web site: www.computershare.com
RefineriesCaltex Refineries (Qld) LtdABN 46 008 425 581
South Street
Lytton Qld 4178
Telephone: 07 3362 7555
Facsimile: 07 3362 7111
Environmental hotline: 1800 675 487
Caltex Refineries (NSW) Pty LtdABN 19 000 108 725
Solander Street
Kurnell NSW 2231
Telephone: 02 9668 1111
Facsimile: 02 9668 1188
Community hotline: 02 9668 1244
Caltex Lubricating Oil Refinery Pty LtdABN 44 000 352 205
Sir Joseph Banks Drive
Kurnell NSW 2231
Telephone: 02 9668 1111
Facsimile: 02 9668 1188
Marketing OfficesNew South WalesCaltex Banksmeadow Terminal
Penrhyn Road
Banksmeadow NSW 2019
Telephone: 02 9695 3600
Facsimile: 02 9666 5737
Queensland/Northern TerritoryCaltex Lytton Terminal
Tanker Street, off Port Drive
Lytton Qld 4178
Telephone: 07 3877 7333
Facsimile: 07 3877 7464
Victoria/South Australia/TasmaniaCaltex Newport Terminal
Douglas Parade
Newport Vic 3015
Telephone: 03 9287 9555
Facsimile: 03 9287 9572
Western AustraliaCaltex Fremantle Terminal
85 Bracks Street
North Fremantle WA 6159
Telephone: 08 9430 2888
Facsimile: 08 9335 3062
Customer SupportFeedback Line (complaints,
compliments and suggestions) 1800 240 398
Mon-Fri 8.30am to 5.00pm (EST)
Card Support Centre 1300 365 096
Card enquiries 24 hours/seven days
Lubelink 1300 364 169
Mon-Fri 8.00 am to 6.00 pm (EST)
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