PEOPLE | PARTNERSHIP | PERFORMANCE

2008 Half Year Review

Simplified Financial Report

Discussion and Analysis

1

34%

Total Revenue

Total revenue increased primarily due to:

Higher crude price (increasing from US$68.93 per barrel in 1H07 to US$113.31 per barrel in 1H08) and sales volumes than prior year.

This was partly offset by:

The impact of the stronger Australian dollar on domestic wholesale prices.

2

37%

TOTAL expenses – replacement cost basis

Total expenses increased primarily due to:

Increased cost of sales, reflecting increased crude oil price; and
Higher operating expenses including increased employee costs and increased shutdown expenses due to the planned and unplanned shutdowns in 1H08. However, operating expenses were lower than in 1H07 on a cents per litre basis due to increased sales volumes.

This was partly offset by:

The impact of the stronger Australian dollar on US dollar denominated crude and product imports.

3

33%

Replacement cost EBIT

Decrease in Caltex’s underlying performance primarily resulted from:

Planned and unplanned refinery shutdowns, increasing crude oil price, the stronger AUD and weaker gasoline margins.

This was partly offset by:

Higher marketing sales volumes and margins.

4

19%

Net borrowing costs

Net borrowing costs were lower in 1H08 versus 1H07. In accordance with accounting standards, Caltex capitalises interest associated with large capital projects. During 1H08, approximately $8 million was capitalised to projects such as the new Lytton Diesel Hydrotreater Unit. 1H07 did not include any individually material projects and minimal interest was capitalised.

5

114%

Inventory gain after tax

Regional crude oil prices rose significantly in 2008 (averaging US$131.30 per barrel in June 2008 compared with US$96.76 per barrel in January 2008). This increase resulted in net inventory gains of $226 million ($158 million after tax) compared with net inventory gains of $105 million ($74 million after tax) in 1H07.

6

36 cents per share

Interim dividend

The Board declared an interim fully franked dividend of $97.2 million or 36 cents per share. The dividends have a franking credit of 100%. The record date is 5 September 2008, with the dividend payable on 26 September 2008.

Income Statement

for the half year ended 30 June 2008

Millions of dollars		2008	2007
1	Total revenue[1]	12,145	9,082
2	Total expenses[2]	(11,843)	(8,637)
3	Replacement cost EBIT	302	445
4	Net borrowing costs	(20)	(25)
	Income tax expense	(86)	(126)
	Replacement cost profit (RCOP)[3]	196	294
5	Inventory gain – after tax	158	74
	Historical cost net profit	354	368
6	Interim dividend per share	36c	47c
	Final dividend per share	N/A	33c
	Basic earnings per share
	– Replacement cost	72.7c	108.9c
	– Historical cost	131.3c	136.2c
	RCOP earnings per litre	1.9c	2.6c

Excludes interest revenue.
Excludes interest expense, inventory gains/(losses).
The replacement cost of sales operating profit (RCOP) excludes the impact of the rise or fall in oil prices (a key external factor) and presents a clearer picture of the company’s underlying business performance. 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.