Caltex Australia : 2017 Half Year Report

CALTEX AUSTRALIA LIMITED

ACN 004 201 307

2017 HALF YEAR REPORT

HALF YEAR INFORMATION GIVEN TO THE ASX UNDER LISTING RULE 4.2A.3

THE 2017 HALF YEAR REPORT SHOULD BE READ IN CONJUNCTION WITH THE 2016 FINANCIAL REPORT

CALTEX AUSTRALIA LIMITED LEVEL 24, 2 MARKET STREET SYDNEY NSW 2000 AUSTRALIA

Results for Announcement to the Market

Comments update

• On an HCOP basis, Caltex's after tax profit was $265 million for the first half of 2017, including a net $2 million gain on significant items. Significant items represent the profit on sale of Caltex's fuel oil business, offset by the establishment of the previously announced $20 million Franchisee Employee Assistance Fund. The interim HCOP result of $265 million is down 16% on the $318 million after tax profit for the first half of 2016. The 2017 half year result includes crude and product inventory losses of $44 million after tax, compared with crude and product inventory gains of $64 million after tax for the half year to 30 June 2016.

• On an RCOP basis, Caltex's after tax profit was $307 million for the first half of 2017, up 21% on $254 million for the first half of 2016 and aligns with the 2017 half year profit guidance (announced 22 June 2017) of between $290 million and $310 million, excluding significant items.

• Net debt at 30 June 2017 was $730 million, which compares with $454 million at 31 December 2016 and

  $693 million at 30 June 2016. The increase in debt reflects the $95 million Milemaker acquisition and timing of tax payments. This equates to a gearing ratio of 20% (net debt / net debt plus equity) or 34% on a lease adjusted basis. Subsequent to 30 June 2017, Caltex completed the $325 million Gull NZ acquisition. Normalised for this transaction, gearing levels would approximate 27% (39% lease adjusted) based on a pro-forma net debt of approximately $1,055 million. Caltex remains committed to a BBB+ credit rating, which has been recently reaffirmed by Standard & Poors (S&P).

• The Board has declared an interim fully franked dividend of 60 cps for the first half of 2017, in line with the target dividend pay-out ratio of 40% to 60%. This compares with Caltex's 2016 interim dividend of 50 cps, fully franked. The record and payment dates for the interim dividend are 12 September 2017 and 6 October 2017, respectively.

  1 Replacement Cost Operating Profit (RCOP) (on a pre and post tax basis) is a non-International Financial Reporting Standards (IFRS) measure. It is derived from the statutory profit adjusted for inventory (losses)/gains as management believes this presents a clearer picture of the company's underlying business performance as it is consistent with the basis of reporting commonly used within the global downstream oil industry. This is un- audited. RCOP excludes the unintended impact of the fall or rise in oil and product prices (key external factors). It is calculated by restating the cost of sales using the replacement cost of goods sold rather than the historical cost, including the effect of contract based revenue lags.

  2 There is no Conduit foreign income component distributed in relation to the dividend. There is no Dividend Reinvestment Plan in operation.

• 2017 Half Year Financial Report

  Key Performance Indicators

  Half year ended 30 June
  2017	2016	2015	2014	2013
  Profit before interest and tax ($m)	408	488	551	275	319
  - Historical cost basis (including significant items)
  - Historical cost basis (excluding significant items)1	409	488	519	275	319
  - Replacement cost basis (excluding significant items)	472	397	383	290	284
  Profit after interest and tax ($m)	265	318	375	163	195
  - Historical cost basis (including significant items)
  - Historical cost basis (excluding significant items)1	263	318	346	163	195
  - Replacement cost basis (excluding significant items)	307	254	251	173	171
  Inventory gains/(losses) before tax ($m)	(64)	91	136	(15)	34
  Basic earnings per share (cents)	101.4	119.6	138.7	60.2	72.2
  - Historical cost basis (including significant items)
  - Replacement cost basis (excluding significant items)	117.7	95.5	92.9	64.0	63.3
  Return on equity attributable to members of the parent entity after tax, annualised (%)	18	24	27	12	17
  - Historical cost basis (including significant items) 2
  - Replacement cost basis (excluding significant items)2	21	19	18	13	15
  Net tangible asset backing per share ($)3	10.14	9.13	9.47	9.31	8.06
  Net debt ($m)	730	693	715	827	729
  Gearing (net debt to net debt plus equity) (%)	20	21	21	23	24
  Gearing (lease adjusted) (%)	34	34	31	33	34

  Transport Fuels4 Production and Sales (Billion litres)

  9

  8.08

  8

  7.72

  7.73

  7.96

  7

  6

  5.3

  5

  4

  3

  3.0

  3.0

  2

  1

  0

  1H14

  1H15

  1H16

  1H17

  Production volume

  Sales volume

  2.2

  1 Historical cost basis excluding significant items (on a pre- and post-tax basis) is a non IFRS measure. It is derived from the statutory profit adjusted for significant items relating to the establishment of an assistance fund for franchise employees offset by the profit on sale of Caltex's fuel oil business. Significant items are events that Management and the Board consider to be outside the scope of usual business. These are excluded to give a clearer reflection of underlying financial performance from one period to the next. This is un-audited.

  2 This is a non-IFRS un-audited measure that management and the Board consider key for users of the financial statements.

  3 Net tangible asset backing per share is derived by dividing net tangible assets by the number of shares issued. Net tangible assets are net assets attributable to members of Caltex less intangible assets. The weighted average number of ordinary shares used in the calculation of net tangible assets per share was 261 million (2016: 263 million).

  4 Transport fuels comprise unleaded petrol, diesel and jet.

• 2017 Half Year Financial Report

2017 HALF YEAR FINANCIAL REPORT

FOR

CALTEX AUSTRALIA LIMITED

ACN 004 201 307

The 2017 Half Year Financial Report for Caltex Australia Limited includes the:

• Directors' Report

• Directors' Declaration

• Independent Review Report

• Half Year Financial Statements

• Notes to the Half Year Financial Statements for the half year ended 30 June 2017.

  Caltex Australia Group For the purposes of this report, the Caltex Australia Group refers to:

• Caltex Australia Limited, the parent company of the Caltex Australia Group listed on the Australian Securities Exchange (ASX)

• major operating companies, including Caltex Australia Petroleum Pty Ltd

• wholly owned entities and other entities that are controlled by the Caltex Australia Group.

Please note that terms such as Caltex and Caltex Australia have the same meaning in this report as the Caltex Australia Group, unless the context requires otherwise.

THE 2017 HALF YEAR FINANCIAL REPORT SHOULD BE READ IN CONJUNCTION WITH THE 2016 FINANCIAL REPORT