Caltex Australia Limited Australia Caltex 2018 Annual Report Annual 2018 2018 Annual Report Capability Scale For personal use only FUELS & INFRASTRUCTURE International sourcing and supply 0700 HRS Kurnell Fuel Import Terminal Caltex Australia Limited 2018 Annual Report Caltex Supply Chain 2 Refining 3 Integrated Australian fuel supply chain 5 Retail fuel and convenience 7 Network of Assets 8 2018 Highlights 10 Message from the Chairman and the Managing Director & CEO 12 Operations Reports 16 Fuels & Infrastructure 17 Convenience Retail 21 Our people taking us further 25 Our approach to sustainability 29 2018 Financial Report 33 On the Cover Ampol is Caltex’s international trading and shipping team based in Singapore. It sources petroleum products from global markets and connects their supply chains with our market leading infrastructure positions, such as our import terminal in Kurnell, New South Wales (pictured). This international supply capability underpins Caltex’s reputation for reliable supply to wholesale customers, while ensuring the competitiveness of our refining and retail operations. Ampol also manages supply to our first international acquisition, Gull New Zealand, our partner Seaoil in the Philippines, in which Caltex holds a 20% equity interest, and our other international wholesale customers. About this Report This 2018 Annual Report for Caltex Australia LimitedFor personal use only (ACN 004 201 307) has been prepared as at 26 February 2019. Please note that terms such as Caltex and Caltex Australia have the same meaning as Caltex Group, unless the context requires otherwise. An interactive version of the Annual Report is available on our website. Visit www.caltex.com.au to download or view a copy. Shareholders can request a printed copy of the Annual Report free of charge by emailing [email protected] or writing to the Company Secretary, Caltex Australia Limited, Level 24, 2 Market Street, Sydney Lani Rauschenbach, CSA, NSW 2000 Australia. The Foodary, Narangba. 1 No other organisation in Australia has the capability and scale of Caltex in the transport fuels and convenience retail industries. Our 6,629 employees, peerless infrastructure and network assets, industry knowledge and customer relationships allow us to safely and reliably deliver the fuels that keep Australia’s economy moving and the everyday retail products that make life easier. Caltex has a proud and long history in Australia and over the last five years has transformed to focus on our two connected businesses – Fuels & Infrastructure and Convenience Retail. The capability and scale of both businesses underpin our performance and provide the building blocks for our future. The ongoing international expansion of Fuels & Infrastructure and development of our Convenience Retail offer are central to our growth strategy. For personal use only OUR CORE BUSINESSES FUELS & INFRASTRUCTURE CONVENIENCE RETAIL 2130 HRS | The Foodary, Narangba 2 CALTEX AUSTRALIA 2018 Annual Report Our Fuels & Infrastructure division sources, imports, refines and distributes the fuels and lubricants that meet one-third of Australia’s transport needs. For personal use only 3 FUELS & INFRASTRUCTURE Refining 1830 HRS | Lytton Refinery Caltex’s Lytton refinery is one of the most efficient small refineries in Asia, representing a major centre of technical capability, delivering core earnings and supporting our broader value chain. Processing crude and feedstocks sourced and shipped by Ampol, the refinery produces over 6 billion litres of product each year used by our customers or sold to wholesalers in the Queensland market. 6.2BL of total production in 2018 99%+ of inputs converted to high value products For personal use only 4 CALTEX AUSTRALIA 2018 Annual Report For personal use only Caltex has a proud and long history in Australia and continues to succeed in an increasingly competitive market. 5 FUELS & INFRASTRUCTURE Integrated Australian fuel supply chain 1330 HRS | Brisbane Airport Caltex owns the largest finished product import terminals in both Australia and New Zealand and a broad network of assets that allow us to safely and reliably store and distribute high quality petrol, jet fuel, diesel and lubricants sold in our retail business and used by business and commercial customers. With our broad network and our capable team, we are proud to supply our customers anywhere they need our products and services across Australia. The scale of our wholesale demand base in Australia sustains Ampol’s competitive advantages and supports Lytton production. ~80,000 total B2B customers For personal use only 94 bulk fuel storage and distribution hubs 300KM+ of fuel pipelines 6 CALTEX AUSTRALIA 2018 Annual Report Through new formats, new products, new technology and new services we are redefining what convenience means for Australians in the petrol and convenience market. For personal use only 7 CONVENIENCE RETAIL Retail fuel and convenience 2130 HRS | The Foodary, Narangba Our network of ~800 Caltex-controlled sites deliver fuel, lubricants and a range of convenience products and services to more than three million Australian consumers and our 70,000 business customers each week. Our stable and profitable fuels business and network of strategically located sites underpin a strong and evolving retail offer. Through new formats, new products, new technology and new services we are redefining what convenience means for Australians in the petrol and convenience market. 5,000 Convenience Retail employees 3.0 M ~800 Australian customers Caltex-controlled sites each week 55 36M+ For personal use only The Foodary sites StarCard across Australia transactions Approximately 70,000 B2B customers using StarCard at ~2000 branded and unbranded sites 8 CALTEX AUSTRALIA 2018 Annual Report Philippines (20% OWNED) Singapore Network of Assets WeFor personal use only control a hard to replicate, privileged network of retail and distribution assets. Our strong network of assets provides a platform for growth. 9 New Zealand Australia (100% OWNED) For personal use only Fuels & Infrastructure network (New Zealand) Retail network Fuels & Infrastructure network (Philippines) Fuels & Infrastructure network (Australia) 10 CALTEX AUSTRALIA 2018 Annual Report 2018 Highlights Caltex made significant progress executing the Fuels & Infrastructure and Convenience Retail strategies, setting the company up for sustainable growth. Approximately $558M $260M RCOP NPAT Off-market Buy-back 6.2 BL 182 produced at franchise sites transitioned Lytton refinery to company ownership Replacement cost of sales operating profit Earnings per share – RCOP (cents per share) (RCOP) ($ million) (excl. significant items) 628 638 558 233 238 524 214 493 199 183 332 For personal use only 123 13 14 15 16 17 18 Year 13 14 15 16 17 18 Year NPAT of $558 million on a replacement cost of sales operating profit (RCOP) basis, down 12% on 2017. 11 Over the last five years we have nearly doubled EPS, maintained our position as the market leader in Australian transport fuels, progressed our retail strategy and established our international footprint. 20.4 BL 7% of transport fuels sold on 2017 55 32 The Foodary retail stores opened in 2018 across Australia (end 2018) Shareholder returns International volumes (cents per share) (billion litres) 100* 100* 3.51 117 121 2.53 For personal use only 118 1.75 70 102 0.61 N/A 14 15 16 17 18 Year 14 15 16 17 18 Year * Off-market Buy-back 12 CALTEX AUSTRALIA 2018 Annual Report Message from the Chairman and the Managing Director & CEO Dear shareholders, Safety performance In 2018, Caltex made significant progress executing Safety is of paramount importance to the Board, the Fuels & Infrastructure and Convenience Retail executive and all who work at Caltex. Our strategies, setting the company up for sustainable safety performance underpins the engagement growth over 2019-2024, and for long-term success. and productivity of our workforce and our It was a year of ongoing transformation and RCOP commitment to our customers. NPAT was down slightly on 2017. In Fuels & Infrastructure, the business which There were many highlights from the last 12 months, manages our most hazardous operations, the including the ongoing expansion of our international measures for Total Recordable Injury Frequency business, solid growth in Australian wholesale sales Rate (TRIFR) and Days Away From Work Injury volumes, the retention of our fuel supply contract Frequency Rate (DAFWIFR) improved this year; with Woolworths, the implementation of the loyalty and our measure for contractor days away from and rewards aspects of our broader Woolworths work was the best result we’ve had in our history. partnership and the continued roll-out of our The In Convenience Retail, outcomes for TRIFR Foodary retail format, which stood at 55 stores by and DAFWIFR increased slightly as we began the end of 2018. to embed Caltex’s high standards for injury We also announced an Off-market Buy-back of reporting and proactive care to transitioned approximately $260 million which we believe will franchise sites. benefit all shareholders. In 2019, we will aim to improve Convenience The foundations for long-term success Retail safety performance by implementing On 1 January 2018 we commenced the reporting programs that reinforce safe work practices and of our earnings under two core businesses – embed the right safety behaviours. This includes Fuels & Infrastructure and Convenience Retail. the introduction of safe work practice reviews and observations, leadership