The above figures reflect the total profits the Sapia member companies earn from their oil importing, refining and marketing activities, including their export trade. As the companies purchase their crude oil and any refined oil requirements on world markets at ruling international prices, they do not earn any further undisclosed profits. (See ** below for the details of the members whose results are included in this aggregation. Note the changes in membership in 2000 and 2001.)

The figures reported above for 2000 have been restated from those reported in the 2001 Annual Report. This is because it has been decided that in the interests of consistency only those parts of the operations of the synfuel producers that are akin to conventional refining and marketing should be included in this aggregation.

SALES VOLUMES were at the level of 26,9bn litres in 2001, 41% above the 1992 level.

OPERATING PROFIT BEFORE TAX AND INTEREST in 2001, R5,7bn, was at a similar level to the restated 2000 figure.

NET INCOME AFTER TAX AND INTEREST however declined to R3,3bn from R3,7bn as a result of a higher level of taxation.

In the light of the very volatile behaviour of oil prices and the dollar:rand exchange rate in recent years, in order to better understand the underlying trends, it is necessary to examine the net income figures before the impact of stock profits and losses.

After adjusting for stock profits and losses the figures on a replacement cost basis are:

1996 R0,8bn
1997 R1,5bn
1998 R1,2bn
1999 R0,7bn
2000 R3,0bn
2001 R2.8bn

The decline in replacement cost profit in 1999 reflected the low level of refining margins that prevailed during that year. The industry was in a break-even situation in its refining activities during 1999. In 2000 the figures reflect improved refining margins and include the results of Sasol for the first time. The decrease in 2001 reflects weaker marketing and refining margins and higher taxation, offset by the PetroSA results being included for the first time.

TOTAL ASSETS increased from a restated R34,4bn in 2000 to R41,5bn in 2001. This increase reflects continued fixed and working capital investment in the industry and the inclusion of the PetroSA results. Fixed asset investment amounted to R2,6bn in 2001.

AGGREGATE CAPITAL INVESTMENT for the ten years from 1992 to 2001 was R16,5bn. This exceeded the net income after tax, R16,2bn over the same period, by R0,3bn.

TOTAL INCOME TAX PAYMENTS during the ten years were R7,2bn. In addition to this the members, during this period, collected R132,4bn in taxes and levies on petroleum products on behalf of the State.

AFTER TAX RETURN ON ASSETS fell to 8,0%, down from the level of 10,7% achieved in 2000. After tax profit, expressed as cents per litre, fell from 13,7c/l in 2000 to 12,4c/l in 2001.

Adjusting to a replacement cost basis, 2001 profits represent a return on assets of 6,7% and a margin of 10,4c/l.

These returns, not even as good as the return on a bank deposit on a First In First Out (FIFO) basis, and still lower on a replacement cost basis, do not adequately reward investment in the industry and thus could place the continued viability of the local refining industry in jeopardy.

The ability of Sapia members to continue making large investments in fixed and working capital will be dependent on Government implementing clear policies, which encourage investment in the industry.

** Sapia membership currently consists of the South African oil refining and marketing companies i.e. BP, Caltex, Engen, PetroSA, Sasol, Shell, and Total. As Sasol joined Sapia during 2000 their results are included in the above aggregation only with effect from 2000, and PetroSA, which joined in 2001, is included from 2001.

The aggregation of the financial results of its members oil refining and marketing activities, shown in appendices 1 and 2, has been carried out on Sapia's behalf by Sizwe Ntsaluba VSP (SNVSP).

SNVSP aggregated the above financial information from amounts and statistics provided by the Sapia members concerned. SNVSP did not perform any audit on the information supplied nor was the information verified by them in any way.