what does it mean to lead?
TOLL HOLDINGS LIMITED CONCISE ANNUAL REVIEW 2001
For Australia’s foremost logis
being focused.
On technical leadership, thou
leadership and marketplace
employees and shareholders
measured by our performanc
About how we plan and exec
And match it with superior p
This year’s annual report tak
through the eyes of Toll peop
mean to lead?’
Contents
2 Superior results
4 Chairman & Managing Director’s review
10 Staying focused on key competitive advantages
12 Concentrating on key market sectors
28 Technology
30 Senior Operational Management
31 Toll Service Divisions
32
34
36
42
52
54
IBC
IBC
Board of Directors
Corporate Governance
Report by Directors
Short form concise financial report
Nine year summary
Shareholder information
Company information
Toll People – Industry Sectors
tics firm it means
ght leadership, financial
leadership. For customers,
alike, leadership is
e.
ute our corporate strategy.
erformance.
es a close look at leadership
le by asking: ‘what does it
Value through
Opportunities
1
what does it mean to lead?
superior results
$m
cents
$m
1,197.7
77.79
20.2
66.3
16.9
14.9
51.4
596.3
7.9
26.8
22.3
333.3
5.4
141.9 141.9
’97
’98
’99
’00
’01
’97
’98
’99
’00
’01
’97
’98
’99
’00
’01
MARKET CAPITALISATION
E P S ( F U L LY D I L U T E D )
T O TA L D I V I D E N D S PA I D
The company is now in the ASX
top 100 and market capitalisation
continues to reflect our growth
Earnings per share has improved
on the back of improved margins
Shareholders continue to share
in the performance growth
year-on-year
FINANCIAL PERFORMANCE
2001
2000
% change
1,602.8
66.0
16.4
49.6
77.8
25.1
33.0
1,360.1
47.9
7.3
40.7
66.3
25.5
28.0
17.8
37.8
124.6
21.9
17.3
(1.6)
17.8
For the year
Revenue ($m)
Profit before income taxes ($m)
Income tax ($m)
Profit after income tax ($m)
Earnings per share fully diluted (¢)
Return on shareholders’ funds (%)
Dividends per share (¢)
✓ Best ever Toll Holdings result since listing
2
TOLL HOLDINGS LIMITED
✓
✓
✓
✓
✓
PERFORMANCE
PLUS
RESULTS
S U S TA I N E D P E R F O R M A N C E S I N C E L I S T I N G
Revenue ($m)
Profit before income taxes ($m)
Income tax ($m)
Profit after income tax for members ($m)
Earnings per share fully diluted (¢)
Return on shareholders’ funds (%)
Dividends per share (¢)
2001
1994
% change
1,602.8
66.0
16.4
49.6
77.8
25.1
33.0
118.5
8.8
2.5
6.1
25.3
18.8
12.0
1,252.6
650.0
556.0
713.1
207.5
33.5
175.0
3
what does it mean to lead?
A commitment to a focused strategy, disciplined
execution and outstanding productivity.
Dear fellow investor,
Another year of great news. Our eighth year of record performance,
and our most profitable year-to-date. Our market capitalisation –
probably one of the most important measures of progress for
shareholders more than doubled to $1.197 billion, the share price
rose 98 percent and earnings per share again reached record
levels, rising by 17.3 percent to 77.8 cents.
The results are very satisfying as the benefits of the sound
strategy we articulated more than 10 years ago continues to
be well received by our customers and shareholders. It is our
unwavering focus on executing that strategy, of being the best
fully-integrated logistics supplier we possibly can, that ensures
our leadership status.
A strategy and position that provides a solid platform to build
shareholder value. For Toll and our shareholders 2001 has
been nothing short of a very rewarding year.
4
TOLL HOLDINGS LIMITED
Chairman and Managing Director’s review
Chairman Peter Rowsthorn and Managing Director Paul Little
What are the key drivers?
Our ability to consistently deliver strong financial
results is a reflection of Toll’s commitment to the
same key drivers we had when the company listed
in 1993. They are a core focus and contributed
strongly to another record EBIT this year.
Operational cost control, better purchasing and
lower overheads are the traditional drivers. But
increasingly the use of technology to improve
efficiencies across the whole supply chain is a
consistent contributor. With the results benefitting
our customers as well as Toll.
How quickly and effectively we integrate our
acquisitions has also driven EBIT improvement.
With any acquisition, and Toll has acquired and
very successfully integrated 25 businesses in
the last 10 years, there is a ‘bedding in’ period
before benefits begin to flow in real positive
terms. In line with expectations the real benefit
of the Finemores integration will show in the next
fiscal year.
And finally, new infrastructure, transport
equipment, operating systems, new depots and
upgrade of port facilities all contributed to
increased capacity and greater synergies between
the operating businesses, improving integration,
increasing the efficiency, and ultimately the
profitability of the whole organisation.
A very important part of the company’s
infrastructure is technology. As we said in last
year’s report it is how you use technology, not
technology per se, that makes the difference. And
nothing could be more true. Toll is defining and
establishing itself as the leader – a logistics
technology company – working towards seamless
operations, enabling all our existing, and indeed
our newly acquired businesses, to work as one,
where the use of smart technology ‘value adds’
at every step of the total supply chain.
Such investment, in turn, is reflected in our ability
to win and service new contracts. 2001 was no
different: all parts of the business won significant
new contracts maintaining a consistent trend.
5
And what does it take to sustain
this excellence from year-to-year?
To elaborate, first, our relationships with our
customers. Over time, building strong and mutually
beneficial relationships has become a sustainable
competitive advantage for Toll. Each year that
goes by we get better at strengthening these
relationships.
Put simply, the best people. Having the right
strategy, vision and business model are only part
of a leadership story – sustainable company
excellence comes from having great people. Great
people are this organisation’s glue, they all have
a real ‘can-do’ attitude, it is an exciting place to
work and, in logistics, the only place to work.
Toll people clearly understand what has made
this company successful, they continue to maintain
performance, keeping costs under control,
focused on drivers to deliver outcomes reflected
in our performance.
Third privatisation. Opportunities still lie ahead for
Toll, in infrastructure assets, rail systems and port
facilities. Privatisation has provided Toll with
strong building blocks to grow the company in
the past and we see similar opportunities ahead.
Why are you confident that Toll’s
growth is sustainable?
In today’s environment companies need to
concentrate on their core business, not the
complexities of their logistics.
And Toll’s strategy of total supply chain
management continues to gain broad acceptance
in the marketplace – primarily, our business model
is very sound.
There are good reasons for this.
To be the leader in logistics today, we believe,
you need to effectively manage all stages of the
supply chain. You must have the resources and
critical mass to be able to offer a comprehensive
range of solutions up and down that supply chain.
You need a desire and a commitment to invest
in infrastructure and technology – to create
a platform that is ‘smart’, reliable, secure,
scalable – and fast. And you have to be very
good at integrating businesses to work together
– to achieve the necessary synergies to make
a good business better.
Our business model is a reflection of what the
customer wants. Which adds up to a strong base
for sustainable growth.
$2.10
6
TOLL HOLDINGS LIMITED
Oct. 1993
Fourth acquisitions. Logistics is a sector which
remains fragmented. With our acquisition strategy
well defined, our strong balance sheet will enable
us to aggressively pursue new acquisitions. As
already mentioned, Toll has a convincing track
record in acquisitions and their successful
integration into the company, achieving significant
operating and financial performance gains.
And lastly organic growth. Our expanding range
of services not only generate additional revenue
but as customers outsource more and more,
opportunities for organic growth likewise increase.
1993/2001 S H A R E P E R F O R M A N C E
A growing share price is evidence
of support for our strategic direction
and focus on shareholder value
Second outsourcing. The idea of outsourcing
is simple enough. A company turns over
management and control of their logistics
to a specialised logistics partner. In Australia
outsourcing levels are reasonably low by global
standards, but beginning to show steady growth,
presenting Toll with considerable sustainable
growth opportunities.
How much influence has new
technology had on the Group’s
ongoing earnings?
The influence of technology cannot be over
estimated at Toll. There is no question that the use
of sophisticated ‘smart technology’ alters the way
our industry delivers value to customers, and
that rapid growth in technology will play an ever
increasing role in the relationships between Toll
and its customers.
It is clear that technology is less about how fast
you introduce and adopt it, and more about
momentum, how mass times velocity impacts
much more powerfully. How technology influences
logistics is now defined by larger companies that
have big offline businesses and leading market
positions. Toll is a market leader with technology
solutions to support the enormous physical
capability we have across the whole business.
It is changing how we take and fulfil orders,
provide services, buy goods and services, link
with our suppliers and support thousands of our
employees in over 300 locations nationwide, to
collaborate and work in real time. And importantly
as one company. So customers have faster and
easier ways to do business with Toll.
Technology is now Toll’s backbone, but understand
our technology is for many customers, part of their
backbone as well. Today, customers want an
electronic view of the supply chain and Toll
Technologies’ solutions centre is at the forefront of
designing innovative technology solutions for
customers, by drawing on resources either from
within Toll or sourcing ‘best-practice’ externally,
to deliver the best possible outcome.
The payoffs: stronger customer relationships,
greater marketplace agility to reach existing and
new customers. Translating to lower operating
costs and improved margins, all which impact very
positively on ongoing earnings.
Infrastructure management
presents Toll with an opportunity
to differentiate its service from
the competition. How?
It is central to the outcome. Thinking
customers today understand that you can’t
fully manage logistics without control of
the supply chain – to make sure you really
can deliver what is being proposed. They
understand they need a partner that can
look across the whole supply chain and
see how to put it together efficiently
and remove waste. So to win you need
infrastructure. We are the only Australian
logistics operator to have invested as
heavily in infrastructure.
It is our clear differentiator.
And a solid and very strong
growth platform.
$9.85
June 30/00
$19.51
June 30/01
With an economy and talk of
a downturn what is the outlook
for Toll?
Whilst there are fluctuations across various
sectors of the economy, Toll is well placed to
manage its business under any economic cycle. In
fact a downturn in some sectors has a favourable
outcome for our business – customers tend to
outsource more in pursuing more cost effective
ways of managing their supply chains.
In addition, the spread of our business is such that
we service a range of different market sectors, be
it automotive, beverage, food and retail, industrial,
ports, relocations and resources where we have
high levels of contracted business in each.
And the types of sectors we operate in are,
in many cases, natural hedges against a downturn.
Take for example the food and beverage market
sectors – they account for 45% of turnover
but are more resilient during a downturn in
the economy.
The Australian automotive manufacturers are
another great example. Australia will export
100,000 plus vehicles next year and Toll has
an involvement in most stages of the process
in parts (OE*), vehicle transport, the after market,
importing and exporting, stevedoring and the predelivery – so a certain amount of insulation is now
built into Toll’s larger contracts and subsequently
our business model.
In tougher times two things happen in logistics:
consolidation activity tends to increase, and
customers look to outsourcing to become more
efficient. Toll’s opportunities in both are strong
giving this company opportunities to ride out
tougher economic conditions.
What are the key elements
of the Group’s future growth?
Top of the list is the opportunity to create true
‘partnershipping’ arrangements with our customers
– avenues for growth holding enormous
opportunities.
Customers are truly understanding the value of a
fully integrated logistics partner. The advantages
of scale, of infrastructure, of technology, of solving
their logistics problems, quickly and efficiently.
As our relationships deepen and we manage more
of our customers’ logistics business, the gain for
Toll is more consistent strong growth.
The increase in outsourcing as Australian
businesses follow the global trend is a close
second. Customers know that outsourcing non-core
activities is sound business practice and while
it is good for our customers, it is very good for Toll.
Outsourcing is a growing source of revenue.
We are very proud of our infrastructure and
its continued development and expansion.
The contribution infrastructure makes to growth
is a hard one to quantify, but it is integral in the
offer we take to market. It is a core part of the
company’s growth strategy.
REVENUE
1,603
1,296
1,360
’99
’00
$m
854
470
’97
*OE – original equipment
8
TOLL HOLDINGS LIMITED
’98
’01
Revenue has more than tripled since 1997 mainly due to
major acquisitions, new contracts and organic growth
A key contributor of past growth has been the
opportunities provided by acquisition and industry
consolidation. For the foreseeable future this
will not change. Toll will aggressively pursue
acquisitions when and where assets strategically
fit with the company. But Toll’s size now affords
us additional benefits not necessarily offered
to smaller players. Customers want strategic
alliances with Toll, so either way Toll benefits.
And lastly, the trust we engender – it is an
underestimated element of future growth. More
and more customers are trusting in Toll. Our
relationships are stronger, becoming more
productive than ever before. We are confident
of consistent, sustainable long-term growth.
Applying our financial management, resources
and minds to improve what we offer customers,
adding value to the company and our shareholders.
Toll’s market share is increasing, we are expanding
our range of services, with great growth
opportunities in Australia and in the future, the
markets of Asia. We are building a great company
– the leader in its category.
As a fellow shareholder we thank you all for
investing in Toll Holdings. You have given us
the opportunity to turn a strategy and focus in
integrated logistics, into a profitable reality.
The journey so far has been very rewarding,
but we feel, we’ve only just begun.
After years of hard work, we’ve got the most
capable logistics services organisation in this
region. And a tremendous platform for future
growth here in Australia and Asia.
How do you see the future?
Looking very good – we are confident and excited,
in fact we have never felt so energised. There
is a spirit, a real can-do attitude, where we enjoy
the competition and the prospect of rolling up
our sleeves to get the job done. Better than
anybody else.
DIVIDENDS PAID PER ORDINARY SHARE
33
Peter Rowsthorn
Chairman
Paul Little
Managing Director
SHAREHOLDERS’ EQUITY
¢
197.7
28
$m
158.6
22
126.4
109.9
12
’97
14
61.7
’98
’99
’00
’01
Dividends paid or declared per ordinary share
for each year continues to grow
’97
’98
’99
’00
’01
Shareholders’ equity has increased over the
years as the company’s expansion required
additional capital and generated improved profit
9
what does it mean to lead?
Staying focused on key competitive
To lead an industry means being better than the competition. Toll achieves this by being
advantages that count. It’s everywhere you look. And it’s in everything we do.
1. Approach – fully integrated 2. Philosophy – customers are
3. Modal choice – total
solutions
partners
transportation flexibility
By combining sea, rail, road and
air, Toll offers fully integrated,
intermodal solutions. For our
customers, it means they can be
assured of time and money
efficiencies across all elements
of the supply chain. That, in turn,
adds value to their bottom line.
Tolls’ capabilities are like no
other Australian competitor.
Being partners in business with
our customers demands a longterm dialogue and commitment.
To that end, Toll listens, advises
and acts. We have developed a
reputation for dynamic problemsolving and deliver quality
assurance. Strategic partnering
requires trust, communications
and a willingness to embrace
an ever-changing and evolving
marketplace.
From warehouse to ports. From
ships, trains, trucks or planes
that deliver any way, any how,
any time to meet our customers’
needs. This gives our customers
options, choices and flexibility in
terms of speed and cost. These
choices help our customers
leap both the seen and unseen
obstacles of urgency, bad
weather or industrial disputes.
Being able to achieve tailored
solutions is unparalleled in this
country, in this industry.
Market leadership indicators
ANNUAL
TURNOVER
MARKET
CAPITALISATION
$1.6
$1.2
Up
billion
18% from last year
Up
101% from last year
+ MILLION
+
13,000 15
registered vehicles
& equipment
Up
10
TOLL HOLDINGS LIMITED
124% from last year
billion
TONNES
freight turnover excluding Ports
Up
50% from last year
advantages
strong in the key competitive
4. Efficiency – technology
5. People – experienced
6. Network – comprehensive
and innovation
and dedicated
and nationwide
Toll’s edge? Knowing how to use
technology to get the best from it.
As our information systems greet
new challenges we bring our
staff, and customers, with us.
The marriage of e-business
and our core activities has only
just begun.
People are the most important
factor in every service company.
They are living assets. We
recognise their value, we know
they are an integral part of our
success. We are proud of our
balance of youth and
experience. Together, they bring
passion, energy and vision to
move the company forward.
Nurturing, training, educating
and encouraging staff is one of
the best investments a company
can make, and we do just that.
Toll’s nationwide infrastructure
is unsurpassed in Australia, yet
we continue to improve existing
holdings, we look to expanding
facilities and always have an eye
to the future. Opportunities are
assessed every day and include
both national and international
markets.
TOTAL TANGIBLE
ASSETS
NUMBER OF EMPLOYEES
8,984
+
$640m
Up
68% from last year
5,635
5,980
99
00
4,500
1,700
97
98
+
01
1,000,000 m 300
warehouse capacity
Up
138% from last year
leading
2
+
operations sites
Up
30% from last year
the market.
11
what does it mean to lead?
Concentrating on key market sectors:
food & retail
Alan Mitchell
General Manager
Talking about…Page 20
ports &
resources
Steven Ford
General Manager
Talking about…
Page 17 and 24
relocations
Helen Newell
General Manager
Talking about…Page 27
In an increasingly competitive world, customers
need to concentrate on their core business, not their
logistics. And when you get right down to it they
depend on two things: reliability and scalability.
We consider these two factors to be among the core
competencies that have made Toll so successful.
We’ve stayed 100 percent focused on our driving
vision of building the region’s most successful
provider of integrated total logistics to industries.
12
TOLL HOLDINGS LIMITED
Delivering fully integrated time critical solutions.
Leveraging the advantage of scale that is now
Toll – maximising the size and scope of the entire
organisation to deliver premium services to the
Group’s specialised market sectors.
In short, keeping our customers competitive, keeps
us competitive.
And in the process Toll has earned the recognition as
the region’s leading fully integrated logistics provider.
industrial, resources, beverage, food & retail, automotive,
ports, and relocations.
beverage
Ken Noye
General Manager
Talking about…
Page 19
automotive
industrial
Wayne Hunt
Garry Harding
General Manager
Talking about…
Page 23
General Manager
Talking about…Page 14
13
what does it mean to lead?
Leading comes down to a matter of trust. Our
customers trust Toll, they invite us to be their
business partners, to be ‘supply-chain managers’
for their business.
Trust and simple economics of a single
logistics manager are definitely strong factors
that contribute to increasing market share in the
Industrial sector. In the last 12 months there
has been a significant shift in understanding
and acceptance of the benefits of ‘total supply
chain management’.
This means strong organic growth, despite
flat economic conditions, as our customers continue
to outsource ‘non-core’ activities and select Toll
as the supply chain manager of choice.
Innovative solutions for our customers.
For Amcor and Pilkington we helped design and
produce ‘purpose specific’ equipment to handle
and transport their goods safely and efficiently.
392
340
00
Through quality and depth of management,
success in achieving targets whether they are
financial, growth or service, meeting key
performance indicators to build strong customer
relationships, Toll is leading. If you can win new
business, that’s good. Growing new business from
existing customers is better. That’s the sign of trust.
And of leadership.
369
REVENUE
($ millions)
99
We solved a large mining company’s concerns by
developing an automated stretch wrapping process.
So, you can see that we concentrate on our
customers’ needs and their customers’ needs
in delivering the total supply chain management.
THERE IS AN INCREASED
WILLINGNESS OF KEY
CUSTOMERS TO ENTER
LONG TERM CONTRACTS
01
Significant new long term contracts have been secured or
renewed with major customers such as Amcor, Pilkington
and Comalco for terms of between 3 to 5 years
industrial
14
TOLL HOLDINGS LIMITED
Garry Harding
General Manager
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
21%
LEADING THE INDUSTRY
GROWTH INDICATORS
• Use of route models, warehouse management and load
management systems ensures we deliver efficient logistic
solutions to customers such as Pilkington and Shell
• Being connected. Toll is a registered system user on Amcor’s
network with access to their production and inventory
systems. This way, we can manage, forecast and deliver a
quality logistics service
• Most large Australian companies
ensure Toll is now on their tender
invitation list. We are now known as
a quality value add provider of service
• All key customer contracts due for
renewal over the past twelve months
were successfully extended
15
what does it mean to lead?
Steven Ford
General Manager
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
13%
*
*Ports and resources combined
16
TOLL HOLDINGS LIMITED
LEADING THE INDUSTRY
GROWTH INDICATORS
• Substantial growth in project freight operations
• Quality accreditation of Resource sector operations
throughout Australia nears completion
• Increased tender activity in Darwin
and Timor gasfields
• Renewed interest in gas pipeline and
on-shore processing facilities in Darwin
Specialisation. I believe successful companies,
successful teams and every successful project runs
better if managed by specialists. And in the resources
sector Toll is a recognised specialist.
And this is just what is required in this demanding
sector. As a specialist in the Oil & Gas industry,
Toll has consistently expanded its market share
in a very competitive environment. We are currently
serving the Bass Strait oil and gas fields and provide
supply chain services to assist oil exploration in
developing fields.
This is reflected in our strong loyal customer base
such as multi-nationals Chevron, Apache Oil and
Esso. Toll is a leading freight carrier in both
Northern Territory and North Queensland, and
we hope to leverage our strong relationships
to expand our resources business throughout
the region.
Orders and pick ups have significantly increased
in WA during the past year. We have gained the
largest share of the logistics management for new
projects being developed. Leading in the most
important areas: depth of people skills and breadth
of services which include air, road, rail,
warehousing, emergency response and barging.
Foreign markets are growth opportunities and
are becoming a bigger part of everyday resource
sector management. Exciting new discoveries, such
as the oil fields in the Timor Sea, hold considerable
promise for Toll in the next 12 months.
Toll continues to actively pursue growth in this
sector. It is an exciting time for the resource sector
with many opportunities for a specialist provider.
190
177
192
PROJECT VOLUMES
INCREASED BY CLOSE TO
40%
DURING
THE YEAR
REVENUE*
($ millions)
99
00
01
* Resources & Ports combined
resources
17
what does it mean to lead?
Ken Noye
General Manager
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
11%
18
TOLL HOLDINGS LIMITED
LEADING THE INDUSTRY
GROWTH INDICATORS
• Working with customers such as Coca-Cola, Tooheys and
CUB, we have the expertise to design and deliver specialised
delivery vehicles
• Use of vehicle routing and scheduling systems maximises
efficiency for retail deliveries
• Wine industry growth. Signed a
5 year distribution and warehousing
agreement with the Australian Wine
Exchange
• 100% contract renewal success with
all key customers
Leaders think – make that know – that they can make
a difference. It’s an absolute attitude to service,
to business performance and technology utilisation.
It’s what sets Toll apart.
And it showed in a record year for this sector.
Awarded more of the logistic services for key
customers like CUB, Tooheys, and Coca Cola Amatil
through the time-critical Olympics Toll continued to
improve service and business performance levels.
A special recognition of Toll’s outstanding service
was awarded by Coke’s National Sales Director.
Continued consolidation of the beverage routes
and warehousing and organic growth from the
route distribution market offers significant growth
opportunities in the near future. Existing routes
offer the chance to deliver more products and
services, like foodstuffs. More often.
177
The wine industry is an example of a key
growth market. We are seeing Toll manage
more, from local, to national and international
warehousing, import and export opportunities
– adding value from the production floor to
warehousing, managing the whole process.
Development of new proprietary technology
allows us to better manage our vehicles and
improve asset utilisation. We now leverage the
company’s size and scope to help achieve improved
service and satisfaction for our customers.
Constantly improving service levels, smarter
technology utilisation at better cost levels put
Toll in the leadership position.
192
154
REVENUE
($ millions)
99
00
01
MAJOR CONTRACTS RENEWED DURING
THE PAST 12 MONTHS INCLUDED COCA-COLA
AMATIL IN WESTERN AUSTRALIA AND CUB
IN SOUTH AUSTRALIA
beverage
19
what does it mean to lead?
It’s about the advantage of scale. As the largest, most
capable logistics services organisation in Australia
it’s what we can offer that no one else can. And about
implementing best practice in everything we do.
Always looking to the future in this fiercely
contested market, Toll has improved its infrastructure
with technological improvements in warehousing,
load optimisation, and ‘track and trace’ capabilities.
They all add up to providing tremendous competitive
and cost-saving advantages for our customers.
The successful integration of Finemores under
the Toll umbrella has been well-received by both
staff and customers. It has also brought new
clients into the fold. They include Bonlac, and
additional business from Goodman Fielder,
David Jones and Woolworths.
Maximising control and minimising costs for our
customers is critical to our success. For example:
we developed a new inventory reduction program
in partnership with Unilever which achieved
considerable savings for both parties. In an
endeavour to save on fuel costs, new gas-powered
trucks are being trialed right now with Woolworths.
Growth is expected on a number of fronts.
The retail sector of the market is forecast to expand
approximately 10% pa. New acquisitions, such as
Finemores, bring growth opportunities. We aim
to leverage our unique market intelligence and
outstanding service and systems to new markets
in Asia.
It’s having the scale to deliver better total logistics
management – being at the right place at the
right time.
531
TOLL WILL MAKE A
SIGNIFICANT INVESTMENT OF
$10
577
464
REVENUE
($ millions)
million+
IN NEW EQUIPMENT
AND IT SYSTEMS
99
00
01
New distribution contracts with Woolworths in WA and NSW will see over
20 new delivery vehicles introduced into the distribution of dry products
food & retail
20
TOLL HOLDINGS LIMITED
Alan Mitchell
General Manager
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
LEADING THE INDUSTRY
GROWTH INDICATORS
35%
• Only the best will do when warehouse management systems
are needed. Our IT support group search the world selecting
systems that best suit our customers’ needs
• Innovative distribution solutions have lead to demand for
centralised consolidation and delivery centres more than
doubling
• 40,000m2 of warehousing integrated
this year for clients including Bonlac,
Goodman Fielder and David Jones
• 100% renewal success with existing
key contracts
21
what does it mean to lead?
Wayne Hunt
General Manager
a
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
13%
22
TOLL HOLDINGS LIMITED
LEADING THE INDUSTRY
GROWTH INDICATORS
• Use of dynamic scheduling and onboard computer terminals, • Full supply chain service capability
increases efficiency and reduces customer inventory levels
from wharf or supplier to manufacturer
• During the year we introduced automotive stevedoring in
and to dealer showrooms = growth
Melbourne’s Webb Dock, car carrying and pre-delivery services • Servicing the best in domestic and
imported vehicle manufacturers
Leaders work with other leaders. Linking our
strategies to leading-edge customers, Toll continues
to grow with auto industry suppliers. Across the
complete supply chain.
It’s been a very exciting year for the automotive
sector of Toll. The acquisition and integration of
Finemores this year gives Toll specialised vehicle
transport capabilities. Combine this with the Strang
acquisition, it allows Toll to provide ‘from wharfto-end customer’ logistics solutions. It increases
our presence in the Melbourne market. Add ports
and wharves to road, rail and sea, Toll offers the
complete package, total supply chain management.
The simplicity of a single supplier gives our
customers competitive advantages of increased
efficiencies, flexibility and on-time delivery and
performance. With an automated dynamic routing
and dispatcher system which was expanded
recently we are able to move more in shorter time
frames – giving our customers even greater
confidence. Yet we are constantly researching ‘best
practice’ trends the world over and implementing only
the ‘best of the best’. The sheer size of Toll allows for
significant investment in this endeavour.
We’re very proud of our awards this year.
Ford and Mitsubishi have awarded Toll their
Supplier Excellence Awards for jobs well done.
And we have been well in front servicing this
sector for the past four or five years.
Achievement like this happens when leaders
work with other leaders. It’s that simple.
Laurie Brothers
160
General Manager
90
108
REVENUE
($ millions)
99
Over
00
01
Supplier Excellence Awards 2000.
Mitsubishi and Ford recognise Toll’s
commitment to the automotive industry
90% of contracts have been renewed over the past two years
utomotive
23
what does it mean to lead?
You must deliver consistently. To do so you start with focused
people, build a superior infrastructure-delivery capability, with
state-of-the-art systems and service. How does Toll measure
up? By hitting its targets and goals. Every time.
An integral component to the supply chain,
especially for bulk, is ports. It means coordinating
the wharf operator, stevedore, transport company,
storage company and the customer. It’s concentrating
on the entire supply line and supply chain process.
We are not just landlords, we develop facilities, the
infrastructure, provide equipment and we also supply
the people. And the recent acquisition of the Strang
stevedoring business brings new vigour and
potential to ports.
Toll is very strong in bulk product handling,
particularly in fertilisers out of its facility in
Geelong. It is one of the best in the country, in terms
of flexibility, productivity and storage capacity. We
are fast becoming the key player of ports in regional
Australia. Of special note is the new woodchip
facility in the Port of Albany which is nearing
completion.
Customers see the advantages of Toll and our
total logistics capabilities. This is evidenced by
the ports business growing by a factor of 12 in just
under 8 years...with potential to grow significantly
larger than it is today.
From here we want to develop stronger links with
regional areas, acquire more stevedoring operations
and develop port services to service the minerals,
oil, gas and automotive sectors.
To compete consistently you must execute
consistently. It’s how leaders deliver.
190
177
192
INVESTED OVER
$30
REVENUE*
($ millions)
million
IN FACILITIES AND
ACQUISITIONS
99
00
01
* Ports & Resources combined
$12 million
Port of Albany –
woodchip export facility which will
predominantly handle bluegum plantation woodchip
ports
24
TOLL HOLDINGS LIMITED
Steven Ford
General Manager
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
13%
*
*Ports and resources combined
LEADING THE INDUSTRY
GROWTH INDICATORS
• Integration of port facilities and services to customers needs
• Recognised leader in specialised port facilities management
and design expertise
• The leader in interfacing bulk and general port and land
transport services
• Breadth of services expanded to include stevedoring
• Significant increase in volume
through ports
• Doubled Newcastle port storage
facilities to 30,000m2
• Number of port operations doubled
in 2001
25
what does it mean to lead?
Helen Newell
General Manager
r
A N N U A L I S E D P E R C E N TA G E
OF GROUP’S REVENUE
7%
LEADING THE INDUSTRY
GROWTH INDICATORS
• Largest purchaser of removalist services in Australia
• The largest service capability to corporate, public and
private sectors
• Continued expansion and upgrading of services
• Over 28,000 domestic and
international relocations per annum
• Launch of 1st and leading relocations
web portal
• 10 offices nationally. 106 offices
worldwide through RRI* affiliation
*Relocation Resources International
26
TOLL HOLDINGS LIMITED
Leaders bring in new ideas, with new people and new
partners with new ideas. There is always a need to
refresh the organisation, to question old practices,
so you can be more effective.
It’s one thing to transport freight, quite another
to help people move home. It takes a personal
touch, understanding, keeping costs to a minimum
and delivering on time.
What was previously three distinct relocations
businesses: Removals Australia, International
Corporate Relocations and movinghome.com.au
is now Toll Transitions.
Applying new thinking to an old problem.
For example: the Internet side of the business
(movinghome.com.au) is the only successfully
operating company on the web in this sector.
Complemented by Toll’s buying power and
logistics expertise it totally overshadows other
removalists or relocators.
Areas of growth are provided by the strong
existing contracts and relationships with existing
suppliers but also Toll’s existing customers.
We believe they will want to take advantage
of a new, personal and individual service. We’re
looking to expand into the Asian market with our
goal to rapidly grow the Asian revenue base
in this sector.
By introducing new thinking, adopting new
methods, in a way we are creating the market.
We are unquestionably a leader. With
enormous potential.
113
REVENUE
($ millions)
27
99
00
01
10
Over
new significant corporate clients won including
ANZ and Westpac
$100
Over
million per annum spent on purchasing
removalist services in Australia
elocations
27
what does it mean to lead?
Technology is fundamentally changing every business.
And Toll is no exception. But it is what we do with
technology, how we apply it, so customers can quickly
and easily do business with Toll, that makes us different.
Value in a technological environment occurs
when everything is linked. The benefit: customers
view Toll as one company. And Toll designed
technology is helping achieve that goal.
Our competitive advantage rests in three things:
1. Technology innovation. The ability to design
our own solutions is of paramount importance.
That’s why technologies is really two distinct areas:
– a business development centre, focused on
developing innovative logistics and supply
chain solutions; and
– our IT group, in charge of technology
implementation and management.
2. Customer integration. At our core is one of the
most advanced freight transport management
systems in the industry, TollWorks. Continually being
expanded TollWorks allows for application-toapplication, business-to-business integration,
planning and optimisation tools, and mobile data
technology. It’s a productivity tool and workflow
manager rolled into one. The benefit for Toll, and
our customers, is a smarter, collective working
environment.
3. It’s about greater utilisation, handling more
for more customers, across more business divisions.
It’s about being the backbone of the largest single
supply-chain manager in the region.
What counts. Delivery. Performance. Results.
It’s how we do it that makes Toll different. And the
technological leader in this industry.
OVER THE NEXT THREE YEARS
TOLL WILL INVEST
$60
million
TO FURTHER DEVELOP
TECHNOLOGY CAPABILITIES
Increased number of users of Web based facilities from 750 in June 2000
to
2,300 in June 2001
All acquisitions now integrated into 180 Wide Area Network locations
technolo
28
TOLL HOLDINGS LIMITED
Martin Dunne
General Manager
Information Technology
gy
LEADING THE INDUSTRY
GROWTH INDICATORS
• Development of TollWorks – one of the most advanced
freight transport management systems in the country
• Developing advanced customer integration solutions
• Developing open systems to increase visibility across supply
chain for customers and Toll alike
• Take up of customer generated
consignment notes using Toll
Connect grew 42% in 2001
• B2B Integration requests quadrupled
in 2001
29
SENIOR OPERATIONAL MANAGEMENT
John Ludeke
Terry Mallon
Mark Rowsthorn
Don Telford
Stephen Stanley
Divisional Director
Long Distance
Divisional Director
Toll North
Divisional Director
Logistics
Director Development
Joined industry in 1988
Joined industry in 1975
Transferred to Toll with
Interlink in October 1995
Joined industry in 1980
Transferred to Toll with
Carpentaria Transport in
December 1997
Executive Director
Operations & CEO Toll
Technologies
Joined industry in 1977
Joined Toll in 1987
Joined industry in 1968
Joined Toll in April 1999
Transferred to Toll with TNT
Logistics in December 1997
Michael Fox
Rod Walters
Graham Lyon
Robert Jeremy
General Manager
Property
General Manager HR
Toll Group
Director Operations
Toll Technologies
Commercial Director
Toll Group
Joined property
industry in 1986
Joined Toll in 1997
Joined industry in 1994
Transferred to Toll with
Interlink in October 1995
Joined industry in 1971
Joined Toll in June 1994
Joined industry in 1995
Joined Toll in April 1998
30
TOLL HOLDINGS LIMITED
TOLL SERVICE DIVISIONS
The following divisional structure incorporates
the businesses which provide integrated services
to our key market sectors
LOGISTICS
• Revenue $438m
• % of Group Revenue* 27%
• Employees and
Sub contractors 3,200
LONG DISTANCE
• Revenue $713m
• % of Group Revenue* 45%
• Employees and
Sub contractors 4,300
Toll Logistics autonomous,
industry-focused business units
within a large capable infrastructure
providing customer-specific logistics
solutions, including design and
development of purpose-built
facilities and equipment
Toll Express Less-than-full load
express and general transport-related
services throughout Australia,
with a focus on unitised/palletised
consignments greater than
100 kilograms
services between mainland Australia
and Tasmania
Toll SPD Multimodal transportation
of full container truck loads
between all capital cities and larger
regional locations
TOLL NORTH
• Revenue $337m
• % of Group Revenue* 21%
• Employees and
Sub contractors 1,400
TOLL TECHNOLOGIES
• Revenue $115m
• % of Group Revenue* 7%
• Employees and
Sub contractors 84
Edwards Transport Temperaturecontrolled distribution specialist
operating primarily along the eastern
seaboard and Tasmania
Toll Refrigerated Provider of cold
chain transport and logistics services
to selected markets
Toll Rail Dedicated train line haul
operations across Australia
Toll International Full door-to-door
export services around the globe
by sea or air
Toll IPEC Time-sensitive parcel and
priority satchel express services for
lightweight freight consignments
Toll Finemores Transport Regional
Country NSW less-than-full load
general transport service
Toll Tasmania Bass Strait freight
forwarder providing distribution
Toll Fleet Management Workshop and
fleet maintenance provider to the group
NQX Time-sensitive and time-certain
multimodal services to, from and
within Queensland and the
Northern Territory
W&M Meat Transport Distribution
of meat, fruit and vegetables across
Queensland and Northern NSW
QRX Northbound and southbound
distribution of refrigerated food
products by road and rail
R&H Transport Bulk handling
transport services and specialised
services to mining sectors in NSW
and Queensland
Carpentaria International resource
and mining sector project logistics
and supply chain management for
international and domestic clients
Freshmark Northbound and
southbound distribution of general
freight and refrigerated products
by road and rail
Toll Transitions A specialist
relocation service providing seamless
management of relocation of
households, workplaces and people
Toll Transitions includes
Removals Australia, International
Corporate Relocations and
movinghome.com.au
Australian Wine Exchange (AWX)
– 21% investment. Creating a new
capital and investment market for
trading premium wine securities
through alliances with providers
of integrated trading, registry,
technology and fulfilment
infrastructure
* % of 2001 Group Revenue
31
BOARD OF DIRECTORS
The Board warmly welcomes Ross Dunning as a Non-Executive
Director of Toll Holdings.
Ross brings a wealth of experience in logistics and infrastructure
related industries.
Peter Rowsthorn
Non-Executive Chairman (71)
FAICD, FCIT, FAIM
31 years in the Transport
Industry. Chairman for 15 years.
John
Bill
Mark
John Moule AM
Mark Rowsthorn
William (Bill) Farrands
Non-Executive Director (62)
FCA, FAICD
Executive Director Operations and
CEO Toll Technologies (46)
BEc, Grad Dip. Bus.
Non-Executive Director (68)
B.Com.
Appointed to the Board November 1995
24 years in the Transport Industry.
Executive Director Operations for 14 years
32
TOLL HOLDINGS LIMITED
Appointed to the Board in March 1997
Paul Little
Managing Director (53)
FAICD, FCIT
33 years in the Transport
Industry. Managing Director
for 15 years
Ross
Ron
Neil
Ronald (Ron) Paul AM
Neil Chatfield
Ross Dunning
Non-Executive Director (69)
D.Univ
Chief Financial Officer (47)
FCPA
Non-Executive Director (59)
B.E. (Hon) B.Com.
Appointed to the Board in July 1998
Joined Toll in December 1997.
Appointed to the Board in July 1998.
27 years experience in the Transport
and Resource industries
Appointed to the Board in July 2001
33
CORPORATE GOVERNANCE
Keeping a leading reputation requires the discipline and
courage to consider the ‘big picture’ and the consequences
of our decisions and actions as a corporate citizen.
Corporate governance is not restricted to how we manage
the Board and its Committees. It has a broad scope that
encompasses all stakeholders who have an interest in the
success of Toll Holdings. Our responsibility extends to
shareholders, customers, suppliers, employees, unions,
government and consumers. It is by our commitment to
ethics, quality, occupational health and safety and the
environment that we set goals and measure our success.
Think global and act local embodies our environment
obligation. We want employees to go beyond minimum
legal standards and do everything they can to protect the
environment. We encourage the use of recyclables and the
conservation of energy resources like electricity, fuel and gas.
At Company warehouses, offices and yards, laws relating
to the storage and transport of dangerous goods, workshop
run-off and underground fuel storage safety are strictly
followed. Heavy vehicles have an effect on the environment
and we support the use of rail linehaul and coastal shipping
services wherever practical and affordable.
To help reduce vehicle pollution, Company vehicles and
those of our contractors are kept within legislative limits
through regular maintenance. Part of being a caring
corporate citizen is recognising that we do not own the
environment but are merely trustees for our children. For this
reason, we continually consider ways to reduce the impact
of transportation on the environment.
Whilst the Board is ultimately responsible for strategy,
resource allocation and planning, the following Board
Committees assist in managing these responsibilities:
Corporate Governance Committee
Audit and Financial Risk Committee
Remuneration and Succession Planning Committee
See page 39 for committee composition and frequency
of meetings.
Each committee is chaired by a non-executive director and
comprises a majority of non-executive directors.
Corporate Governance Committee
The Corporate Governance Committee is responsible
for establishing and monitoring the ethical standards
of the Toll group.
The Committee periodically reviews the Corporate Code
of Practice, as well as procedures to promote compliance.
Ethics are about being fair, respecting all things
and behaving in a way that you can be proud of.
34
TOLL HOLDINGS LIMITED
All our staff are expected to act with the utmost integrity
and objectivity, striving to enhance the reputation and
performance of the Group. Every employee, including
executives, has a nominated supervisor to whom they may
refer code of practice issues.
Our Code of Practice is outlined in a user-friendly booklet
which has been issued to all staff. The objective of the code
is to give staff a clear understanding of their rights and
responsibilities and where Toll as an organisation stands.
Key business issues explained in the code include the
environment, occupational health and safety, conflicts of
interest and equal opportunity. It also covers insider trading,
pirated software, expenses and use of Company property. The
booklet is a written expression of what we believe Toll is in
practice – an honest, trustworthy and dependable company.
The Committee also approves and reviews policies on
sensitive issues or practices such as Environmental, Equal
Opportunity and Conflicts of Interest.
It makes recommendations regarding Board structure and
operating guidelines and also selection criteria for new or
additional directors.
Audit and Financial Risk Committee
The Audit and Financial Risk Committee considers matters
relating to the financial affairs of the Group. The committee
monitors compliance with the Corporations Law and Stock
Exchange Listing Rules, matters outstanding with auditors,
Australian Taxation Office, Australian Securities and
Investments Commission, Australian Stock Exchange and
financial institutions, corporate risk assessment and
the internal controls instituted as directed by the Board
of Directors.
It also reviews:
• accounting policies and recommends changes where
appropriate
• effectiveness of internal audit and cross divisional reviews
• monitors risks relating to Business Continuity, Disaster
Recovery, Reputation, Currency and Interest Rate exposures
• the performance and compensation of the external
auditors, the annual audit plan, and information derived
from the audit
• adequacy of insurance coverage
• interim financial information and compliance with certain
government regulations.
The Board is responsible for an internal control framework,
designed to identify errors and irregularities.
• compliance with statutory responsibilities relating to
remuneration disclosure
The framework is as follows:
• establishment and monitoring executive succession
planning.
Financial reporting
– comprehensive budgeting, monthly reporting and
half-yearly reports to shareholders.
– compliance with continuous disclosure requirements
of the Corporations Law and the Stock Exchange.
Quality and integrity of personnel
– our quality management system requires the involvement
and total commitment of management, employees and
subcontractors to ensure continuous improvement.
– policies are in place in respect to Occupational Health
and Safety, Equal Opportunity, Affirmative Action and
Management Performance Review and Development.
Operating Unit controls
– financial controls and procedures including information
systems controls are in place and are updated regularly.
Risk Management
Our Risk Management Committee manages our integrated
framework of control which monitors risk exposure and
develops standardised key reporting indicators pertaining to,
environmental, occupational health and safety and incident
reporting and management. It seeks to identify the key
business and financial risks which would prevent the group
from achieving its objectives, and it ensures that appropriate
controls are in place to effectively manage these risks. This
committee which is chaired by Mark Rowsthorn, Executive
Director Operations, comprises all Divisional Directors, the
Chief Financial Officer, the Company Secretary and a number
of senior management members.
The committee responsibilities are to:
• develop the Risk Management Charter
Investment appraisal
– capital expenditure guidelines clearly define annual
budgets, detailed appraisal and review procedures and
appropriate levels of authority.
• monitor the management of previously
identified risks
Remuneration and Succession Planning Committee
• introduce regular reporting by the risk management group
to the Board
The Remuneration and Succession Planning Committee,
reviews and makes recommendations to the Board on
remuneration packages and policies applicable to all staff.
An objective of the committee, is to attract, develop and
retain appropriately qualified and experienced directors,
senior executives and staff.
The duties of the committee are to review and recommend
or approve with regard to:
• the Board, the Managing Director and Executive Directors
remuneration, allowances and incentives
• the Board and Non-Executive directors fees
• senior executive remuneration, allowances and incentives
• policies relating to employee share and option plans and
fringe benefits
• identify new risks and implement appropriate actions
to manage them
At the end of another pleasing year of solid performance, it is
evident that a clear focus, on all aspects of how we manage
the company, is crucial. Setting standards for company
behaviour, and accepting responsibility for our obligations to
stakeholders, is a large component of our success. To be the
best possible corporate citizen we also need to respect the
decisions of the past and apply lessons learned to promote
strategic growth for the future.
Bernard McInerney
Company Secretary (43)
Joined Industry in 1984
Joined Toll in 1994
• Company‘s superannuation plan and compliance with
relevant laws and regulations
• Board, senior executive retirement and termination
payments
• adequacy of professional indemnity and directors and
officers‘ liability insurance
35
REPORT BY DIRECTORS
The directors present their report together with the financial
report of Toll Holdings Limited (‘the Company’) and the
consolidated financial report of the consolidated entity, being
the Company and its controlled entities (‘the Group’), for the
year ended 30 June 2001 and the auditors’ report thereon.
Directors
The following persons held office as directors of Toll Holdings
Limited during or since the financial year:
The consolidated profit for the year attributable to the members
of Toll Holdings Limited was:
2001
$’000
2000
$’000
Operating profit after income tax attributable
to members of Toll Holdings Limited
49,238
40,404
Director
Earnings per share
Mr Peter Rowsthorn (Chairman)
Mr Paul Little (Managing Director)
Mr Mark Rowsthorn
Mr John Moule AM
Mr Bill Farrands
Mr Ron Paul AM
Mr Neil Chatfield
Mr Ross Dunning
Principal Activities
The principal activities of the consolidated entity during the year
consisted of:
• National less than full load express and economy freight
forwarding service using all modes of transport;
• National full load road, rail freight and sea forwarding service
including transcontinental rail linehaul operation;
• National temperature controlled transport service for full load
and less than full load clients;
• Warehousing and distribution of bulk dry and refrigerated
goods in all capital cities;
• National wharf cartage, container handling and storage;
• National contract distribution services;
• National time sensitive parcel freight distribution services;
• Specialised international forwarding services;
• Ports management and stevedoring services;
• National removals and relocation brokerage service;
• Vehicle transport and distribution; and
• Bulk liquid transportation.
The following significant changes in the nature of the activities
of the consolidated entity occurred during the year:
The Group acquired the business of AR Neal on 19 January 2001,
100% of the shares in Finemore Holdings Limited on 2 March
2001 and part of the Strang Stevedoring Group of companies
on 5 April 2001.
There were no other significant changes in the nature of the
activities of the consolidated entity during the year.
36
Consolidated Result
TOLL HOLDINGS LIMITED
2001
2000
Basic earnings per share
80.49¢
67.67¢
Diluted earnings per share
77.79¢
66.28¢
Review of Operations
Results for the year were another record for the company with
EBIT for the full year growing by over 38% to $70.6 million, on
operating revenues which increased 18% to $1.603 billion.
EBIT margin increased 17.6% to 4.41%, which continued the
strong margin expansion experienced over the past four years.
Excluding the results of the Finemore acquisition since March
2001, the EBIT margin improved by over 23% to 4.64%. Margin
improvement was achieved by all divisions.
Earnings continued to be driven by greater asset efficiencies
and investment in new infrastructure, together with sound cost
control and efficiencies brought on by technology developments.
Recent acquisitions including Finemores, although slightly
earnings per share positive and in line with plan, did not have a
material impact on earnings for the year.
Profit after tax of $49.2 million for the year was another record
for the company, increasing 25% over the previous corresponding
period of $39.3 million (before an abnormal income tax gain of
$1.06 million).
The Long Distance division performed well for the year with EBIT
margins growing strongly across all operations. The increase in
revenue came largely from Toll Express and Toll IPEC, whilst
planned lower revenues resulted from Refrigerated Roadways.
Toll Express and Toll IPEC performed exceptionally well during
the year, building on their sound market position and producing
strong EBIT and margin growth.
All other Long Distance businesses, including Toll SPD and Toll
Tasmania recorded higher EBIT compared to the previous year.
Refrigerated Roadways continued its improvement with
performance well ahead of the previous corresponding period.
The Toll North division traded strongly in the year with EBIT
growth being generated through new depots developed during
the year and sound cost control programs.
Both NQX and QRX performed above plan and benefited from
reduced cost structures, whilst flat conditions in both the mining
and buildings sectors, particularly in the first half of the year,
restricted revenue growth.
Toll Logistics division continued to improve earnings margins
due to cost reductions, technology improvements and greater
operational efficiencies. EBIT growth was particularly strong in
the Ports, Food and Retail and Automotive sectors.
Toll Technologies increased its revenue from $29 million in
2000 to $109 million for the year due to the full year impact
of Removals Australia, which was acquired in February 2000.
Since the end of the financial year Removals Australia,
movinghome.com.au and the International Corporate Relocations
businesses have been integrated into Toll Transitions, forming a
total relocation management service organisation.
• In respect of the current year:
2001
$’000
2000
$’000
Ordinary Shares
The operations of the Group in Australia are subject to various
environmental regulations under both Commonwealth and State
legislation.
In making this report, the directors note that the Group’s
operations frequently involve the use or development of land,
the transport of goods and the storage, transport and disposal
of waste. Some of these activities require a licence, consent or
approval from Commonwealth or State regulatory bodies. This
regulation of the Group’s activities is typically of a general
nature, applying to all persons carrying out such activities, and
does not in the directors’ view comprise particular and significant
environmental regulation.
The directors believe the environmental performance of the
Group is sound and that the Group has appropriate systems
in place for the management of its ongoing corporate
environmental responsibilities.
Events Subsequent to Balance Date
9,191
7,820
The final dividend declared by the directors
of the Company in respect of the year ended
30 June 2001 is an ordinary dividend of
18 cents per share franked to 70% with
Class C (30%) franking credits (2000:
15 cents 50% franked Class C (34%))
11,050
9,078
The total dividends provided for or paid
in respect of the year ended 30 June 2001
Environmental Regulation
Based upon enquiries within the Group, the directors are
not aware of any breaches of particular and significant
environmental regulation affecting the Group’s operations.
Dividends – Toll Holdings Limited
An interim ordinary dividend of 15 cents per
share franked to 60% with Class C (34%)
franking credits was paid on
30 March 2001 (2000: 13 cents 20%
franked Class C (36%))
(c) The issue of 6,753,588 unsecured, subordinated convertible
notes @ $17 each in May 2001.
20,241 16,898
Significant Changes in the State of Affairs
Significant changes in the state of affairs of the consolidated
entity during the financial year were:
(a) An increase in paid up capital of $9.9 million to $108.6 million
which included the following:
On 5 September 2001, the Company announced it would form a
consortium with Lang Corporation to bid for the sale of National
Rail Corporation and FreightCorp. Other than the above item,
there 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 and unusual nature likely, in the opinion
of the directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity,
in future financial years.
Likely Developments and Expected Results
of Operations
Information as to likely developments in the operations of the
consolidated entity and the expected results of those operations
in future financial years has not been included in this report
because, the directors believe on reasonable grounds, that
to include such information would be likely to result in
unreasonable prejudice to the consolidated entity.
• Issue of 865,108 fully paid ordinary shares in accordance
with the Dividend Reinvestment Plan;
(b) An increase in assets and liabilities due to the acquisitions of
the AR Neal business on 19 January 2001, Finemore Holdings
Group on 2 March 2001 and the Strang Stevedoring Group on
5 April 2001.
37
R E P O R T B Y D I R E CT O R S continued
Information on Directors
The directors of the Company in office at the date of this report are listed below:
Director
Experience and Qualifications
Age
Special Responsibilities
Mr P Rowsthorn
FAICD, FCIT, FAIM
Chairman
Non-Executive Director
31 years in the Transport Industry
Chairman for 15 years
Director since 1986
71
Chairman of Board of Directors
Chairman of Remuneration
and Succession Planning Committee.
Member of Corporate Governance
& Audit and Financial Risk Committees
Mr P A Little
FAICD, FCIT
Managing Director
33 years in the Transport Industry
Managing Director for 15 years
Director since 1986
53
Member of the Corporate Governance
Committee
Mr M Rowsthorn
B.Ec, Grad Dip. Bus.
Executive Director Operations
24 years in the Transport Industry
Executive Director Operations for 14 years
Director since 1988
46
Chairman of Risk Management Committee
Mr J A Moule AM
FCA, FAICD
Non-Executive Director
Chairman Austrim Nylex Limited,
Gribbles Group Limited,
Former Managing Partner
Deloitte Touche Tohmatsu
Director since 1995
62
Chairman of Audit and Financial Risk
Committee, Member of Corporate
Governance and Remuneration and
Succession Planning Committees
Mr W Farrands
B. Com
Non-Executive Director
Former Group General Manager
of the Building & Industrial Products
Division and for the Coated Products
Division within BHP Steel
Director since 1997
68
Chairman of Corporate Governance
Committee, Member of Audit
and Financial Risk and Remuneration
and Succession Planning Committees
Mr R Paul AM
D.Univ
Non-Executive Director
Former Chairman Evans Deakin
Industries Limited
Director since 1998
69
Member of Audit and Financial Risk,
Corporate Governance and Remuneration
and Succession Planning Committees
Mr N Chatfield
FCPA
Chief Financial Officer
27 years experience in
transport and resource industries
Director since 1998
47
Member of the Audit and Financial
Risk Committee
Mr R Dunning
B.E. (Hons) B.Com
Non-Executive Director
Director Downer EDI Ltd,
59
Brisbane Airport Corporation Ltd
Chairman – Powercoal Pty Ltd
Port of Brisbane Corporation, Pacific Power
Appointed Director 25 July 2001
Member of Audit and Financial Risk,
Corporate Governance and Remuneration
and Succession Planning Committees
Directors’ Interests
The relevant interest of each director in the shares, options or convertible notes issued by the companies within the consolidated
entity and other related body corporates, as notified by the directors to the Australian Stock Exchange in accordance with S205G(1)
of the Corporations Act 2001, at 28 August 2001 is as follows:
Toll Holdings Limited
Ordinary Shares
Options Over Ordinary Shares
Convertible Notes
Mr P Rowsthorn
3,112,160
–
–
Mr P A Little
8,984,147
400,000
748,678
Mr M Rowsthorn
9,235,850
400,000
769,652
174,062
–
–
Mr W Farrands
20,000
–
1,666
Mr R Paul AM
20,000
–
–
Mr N Chatfield
67,562
110,000
623
–
–
–
Mr J A Moule AM
Mr R Dunning
38
TOLL HOLDINGS LIMITED
Meetings of Directors
The following table sets out the number of meetings of the Company’s directors (including meetings of committees of directors) held
during the year ended 30 June 2001 and the number of meetings attended by each director who held office during the financial year.
Directors’
Meetings
Audit and Financial
Risk Committee
Meetings
Remuneration and
Succession Planning
Committee Meetings
Corporate
Governance
Committee Meetings
No. of Meetings
No. of Meetings
No. of Meetings
No. of Meetings
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Mr P Rowsthorn
12
12
4
4
2
2
2
2
Mr P A Little*
12
12
4
4
–
–
–
–
Mr M Rowsthorn*
12
12
–
–
–
–
1
1
Director
Mr J A Moule AM
11
12
4
4
2
2
2
2
Mr W Farrands
12
12
4
4
2
2
2
2
Mr R Paul AM
11
12
4
4
2
2
2
2
Mr N Chatfield*
12
12
4
4
–
–
2
2
During the year, a due diligence committee was established for the issue of the Convertible Notes. Mr J A Moule AM (Non-Executive
Director) was appointed Chairman. Executive Directors Mr P A Little and Mr N Chatfield and the Company Secretary Mr B McInerney
were appointed members of the committee.
* Mr P A Little was appointed to the Corporate Governance Committee on 27 June 2001 and may attend Meetings of the other
Committees as an invitee.
* Mr M Rowsthorn may attend Meetings as an invitee.
* Mr N Chatfield was appointed to the Audit and Financial Risk Committee on 27 June 2001 and may attend Meetings of the
Corporate Governance Committee as an invitee.
Share Options
During or since the end of the financial year, the Company granted options over unissued ordinary shares to the following directors and
executives who are amongst the five most highly remunerated officers as part of their remuneration.
Directors
Number of options granted
Exercise Price
Expiry Date
Mr P Little
200,000*
$11.8242
1 November 2005
Mr M Rowsthorn
200,000*
$11.8242
1 November 2005
Mr N Chatfield
100,000*
$7.9700
28 May 2005
* All options were granted during the financial year in accordance with resolutions passed by shareholders at the Company’s
Annual General Meeting held on 2 November 2000.
39
R E P O R T B Y D I R E CT O R S continued
Senior Executive Option Plan and Executive Share Option Scheme
Options to take up ordinary shares in the capital of Toll Holdings Limited have been granted as follows:
As at 28 August 2001, unissued ordinary shares of the Company under option are:
Grant Date
Total Options Granted
Unexpired Options
No. of Executives
Exercise Price $
Expiry Date
1 Jul 1998
1,025,000
470,000
22
2.1460
30 Jun 2003
23 Jun 1999
100,000
100,000
1
5.4150
22 Jun 2004
6 Aug 1999
400,000
400,000
2
5.4576
5 Aug 2004
22 Dec 1999
10,000
10,000
2
2.1460
30 Jun 2003
29 May 2000
1,115,000
1,110,000
40
7.9700
28 May 2005
26 July 2000
5,000
5,000
1
7.9700
28 May 2005
2 Oct 2000
25,000
25,000
1
7.9700
28 May 2005
2 Nov 2000
100,000
100,000
1
7.9700
28 May 2005
2 Nov 2000
400,000
400,000
2
11.8242
1 Nov 2005
27 Jun 2001
40,000
40,000
2
19.9100
26 Jun 2006
Each option is convertible into one ordinary share at any time after
the initial qualifying period, which is usually between three and
five years after the grant date. The options granted are only
exercisable on the satisfaction of specific hurdle criteria with
regard to the Company’s Total Shareholder Return and diluted EPS
growth relative to the All Industrials (excluding banks) or ASX 200
Industrials diluted EPS growth, during the period from grant date
to the end of the qualifying period (generally a three year period).
No ordinary shares were issued during the financial year on the
exercise of options granted under either the Senior Executive
Option Plan or the Executive Share Option Scheme (2000:
230,000 shares). 485,000 ordinary shares have been issued since
the end of the financial year on the exercise of options granted
under the scheme. (2000: Nil shares)
Directors’ and Senior Executives’ Emoluments
The Remuneration and Succession Planning Committee is
responsible for making recommendations to the Board on
remuneration policies and packages applicable to the Board
members and senior executives of the Company.
Executive remuneration and other terms of employment
are reviewed annually by the Committee having regard to
performance against goals set at the start of the year, relevant
comparative market information and independent expert advice.
The broad remuneration policy is to ensure that remuneration
packages properly reflect a person’s duties and responsibilities,
and that remuneration is competitive in attracting, retaining and
motivating people of the highest quality.
Executives are also eligible to participate in the Senior Executive
Option Plan. The ability to exercise options is conditional on the
Company achieving certain performance hurdles.
Non-executive directors’ remuneration is determined by the
Board within the maximum amount approved by shareholders
from time to time. Non-executive directors do not receive any
performance related remuneration.
Details of the nature and amount of each major element of
emoluments of each director of the Company and each of the
five most highly remunerated officers of the Company and the
consolidated entity receiving the highest emolument are:
Non-executive Directors of Toll Holdings Limited
Name
Directors Fee
$
Non-Cash Benefits
$
Superannuation
$
Total
$
141,302
7,114
–
148,416
55,000
–
4,400
59,400
Mr W Farrands
55,000
–
4,400
59,400
Mr R Paul AM
55,000
–
4,400
59,400
Mr P Rowsthorn (Chairman)
Mr J Moule AM
Executive Directors of Toll Holdings Limited
Name
Mr P Little
Managing Director
Mr M Rowsthorn
Executive Director Operations
Mr N Chatfield
Chief Financial Officer
40
TOLL HOLDINGS LIMITED
Base Salary
Non-Cash
Benefits
$
Superannuation
$
Performance
Incentive
$
619,547
255,000
16,241
44,213
588,080* 1,523,081
553,159
260,000
18,426
8,416
588,080* 1,428,081
341,059
50,000
40,555
8,416
343,367** 783,397
$
Option
Value
$
Total
$
Executive Officers of Toll Holdings Limited and Consolidated Entity
Name
Base Salary
Non-Cash
Benefits
$
Superannuation
$
Performance
Incentive
$
Total
$
Option
Value
$
Mr D Telford
Divisional Director
Toll Logistics
370,000
50,000
–
40,000
–
460,000
Mr J Ludeke
Divisional Director
Long Distance
320,000
50,000
40,000
50,000
–
460,000
Mr S Stanley
Director
Development
402,501
22,500
–
29,999
–
455,000
Mr T Mallon
Divisional Director
Toll North
230,821
50,000
34,179
85,000
–
400,000
Mr G Lyon
Divisional Director
Toll Technologies
270,000
50,000
52,000
28,000
–
400,000
$
* 200,000 options were granted each to P Little and M Rowsthorn on 2 November 2000 at an exercise price of $11.8242. The
exercising of these options is dependent upon the satisfaction of two performance hurdles, being Total Shareholder Return over
the three year period from the grant date must be at least equal to 35% and Earnings Per Share (EPS) diluted growth over the
same period must be at least equal to the growth in the EPS of the ASX 200 Industrials. These options have been valued at
grant date at a maximum value of $2.94 per option using the Binomial Method.
** 100,000 options were granted to N Chatfield on 2 November 2000 at an exercise price of $7.97. These options are dependent on
the same performance hurdles as above and were valued in the same manner. These options have been valued at grant date at
a maximum value of $3.43 per option.
Insurance of Officers
During the financial year, Toll Holdings Limited paid premiums of
$78,458 (2000: $44,502) to insure officers of the Company and
related bodies corporate.
The officers of the Company covered by the insurance policy
include the directors, P Rowsthorn, P A Little, M Rowsthorn,
J A Moule AM, W Farrands, R Paul AM, N Chatfield, R Dunning
and the secretary B B McInerney. Other officers covered by the
policy are directors or secretaries of controlled entities who are
not also directors or secretaries of Toll Holdings Limited, past
directors of companies within the Toll Group and managers of
the consolidated entity.
The liabilities insured, subject to specific exclusions, include
costs and expenses that may be incurred in defending civil or
criminal proceedings that may be brought against the officers
in their capacity as officers of the Company or a related
body corporate.
arises out of conduct involving a lack of good faith. The
agreement stipulates that the Company will meet the full
amount of any such liabilities, including costs and expenses.
Rounding off
The Company is of the kind referred to in ASIC Class Order
98/100 dated 10 July 1998 and in accordance with that Class
Order, amounts in the financial report, and directors’ report have
been rounded off to the nearest thousand dollars, unless
otherwise stated.
Auditor
KPMG continues in office in accordance with section 327 of the
Corporations Act 2001.
This report is made in accordance with a resolution of the directors.
Indemnification of Officers
The Company has agreed to indemnify the directors of the
Company, and its controlled entities, against all liabilities to
another person (other than the Company or a related body
corporate) that may arise from their position as directors of the
Company and its controlled entities, except where the liability
P Rowsthorn
Director
P A Little
Director
Dated at Melbourne this 5th day of September 2001.
41
D I S C U S S I O N & A N A LY S I S O F
S TA T E M E N T O F F I N A N C I A L P E R F O R M A N C E
FOR YEAR ENDED 30 JUNE 2001
Revenue Up $254 million to $1.638 billion
Total revenue, including operating revenue of $1.603 billion, increased by 18.3% to $1.638 billion,
mainly due to the full year impact of Removals Australia which was acquired in February 2000 and
additional revenue from the Finemore Group which was acquired in March 2001.
Profits Up $18 million to $66 million
Operating profit before tax increased by 37.7% to $66 million. This increase was due mainly to
strong results across all Toll divisions, in particular, Toll Express, Toll IPEC and Toll North, as well as
Toll Logistics’ Food and Retail and Automotive sectors. The full year impact of the Removals
Australia business also contributed to the result.
Income Tax Up $9.1 million to $16.4 million
Income tax expense increased by 125.3% to $16.4 million due mainly to the significant increase in
operating profit before tax of $18 million. The level of restructure cost expenditure has been lower
than in prior years as well as a higher level of non-deductible expenditure this year. This was offset
slightly by a reduction in the company tax rate from 36% to 34%. The effective tax rate increased
from 15.2% to 24.9%.
Dividends Up $3.3 million to $20.2 million
Ordinary dividends increased to 33 cents per share, up 17.8% from last years 28 cents per share.
Earnings Per Share Up 18.9% to 80.49 cents per share
Basic earnings per share increased 18.9% to 80.49 cents per share. Diluted earnings per share
increased by 17.3% to 77.79 cents per share. Both increases were due to the 21.9% increase in net
profit attributable to members. The diluted earnings per share has been impacted by the issue of
convertible notes in May 2001 and also the full year effect of the issue of executive share options in
May 2000.
Return on revenue increased from 2.92% to 3.01%.
EBIT margin increased 17.6% to 4.41%.
42
TOLL HOLDINGS LIMITED
S TAT E M E N T O F F I N A N C I A L P E R F O R M A N C E
for the year ended 30 June 2001
Consolidated
2001
$’000
2000
$’000
Revenue from ordinary activities
1,637,927
1,384,339
Expenses from ordinary activities
1,536,805
1,311,393
101,122
72,946
5,727
3,542
29,793
21,452
414
–
Profit from ordinary activities before income tax
66,016
47,952
Income tax relating to ordinary activities
16,415
7,285
Profit from ordinary activities after income tax
49,601
40,667
363
263
49,238
40,404
Net exchange difference on translation of financial statements of self sustaining foreign operations
(48)
–
Total changes in equity from non-owner related transactions attributable to the members
of the parent entity
49,190
40,404
Basic earnings per share
80.49¢
67.67¢
Diluted earnings per share
77.79¢
66.28¢
Earnings before borrowing costs, tax, depreciation and amortisation
Borrowing Costs
Depreciation and amortisation
Share of net profits of associates and joint ventures accounted for using the equity method
Net profit attributable to outside equity interest
Net profit attributable to members of the parent entity
Non-owner transaction changes in equity
The above statement of financial performance is to be read in conjunction with the accompanying notes to the financial statements
set out on pages 48 to 49.
43
D I S C U S S I O N A N D A N A LY S I S O F
S TA T E M E N T O F F I N A N C I A L P O S I T I O N
AS AT 30 JUNE 2001
Net Assets Up $39 million to $198 million
Total Assets Up $295 million to $699 million
Total assets increased by 73% due mainly to:
• A $20 million increase in cash.
• A $57 million increase in receivables due mainly to higher levels of trading and the inclusion of
the Finemores Group during the year.
• A $145 million increase in property, plant and equipment due to the net combination of capital
expenditure, depreciation charges and asset sales during the year. The main reason for the
increase has been assets acquired through the purchase of the Finemore Group, AR Neal and
Strang Stevedoring during the year.
• A $18 million increase in investments accounted for using the equity method through the
acquisition of the Finemores Group.
• A $46 million increase in intangible assets due mainly to the acquisition of the Finemores Group,
as well as the acquisition of AR Neal and Strang Stevedoring.
Total Liabilities Up $256 million to $501 million
Total liabilities increased by 105% to $501 million due mainly to:
• A $46 million increase in payables due mainly to the acquisition of the Finemore Group and a
higher level of trading than the prior year.
• A $142 million increase in interest bearing liabilities due mainly to the issue of $114 million of
convertible notes in May 2001. Increases also occurred in finance lease and hire purchase
liabilities as a result of acquisitions during the year.
• A $42 million increase in provisions due to a combination of:
• An increase in the restructure provision of $10 million due to the acquisition of the Finemore
Group, AR Neal and Strang Stevedoring.
• An increase in the provision for dividends of $2 million due to a higher dividend per share.
• An increase in the provision for employee entitlements of $17 million due mainly to the
acquisition of the Finemore Group, AR Neal and Strang Stevedoring.
• An increase in other provisions of $13 million relating to the acquisition of the Finemore
Group, AR Neal and Strang Stevedoring and other general provision increases.
Equity Up $39 million to $198 million
Total equity increased by 24.6% to $198 million due mainly to:
• A $10 million increase in contributed equity due to 865,108 shares issued under the Company’s
Dividend Reinvestment Plan.
• A $29 million increase in retained profits during the year.
44
TOLL HOLDINGS LIMITED
S TAT E M E N T O F F I N A N C I A L P O S I T I O N
as at 30 June 2001
Consolidated
2001
$’000
2000
$’000
Cash assets
46,896
26,691
Receivables
214,943
158,123
7,596
4,140
21,932
27,916
291,367
216,870
3,174
3,746
17,813
–
9,145
5,613
317,484
172,236
Intangible assets
45,748
–
Deferred tax assets
12,485
4,808
1,526
–
Total Non-Current Assets
407,375
186,403
Total Assets
698,742
403,273
163,719
117,740
7,403
2,273
Current tax liabilities
18,158
6,531
Provisions
94,339
58,556
283,619
185,100
180,190
42,886
Deferred tax liabilities
23,400
9,482
Provisions
13,840
7,154
Total Non-Current Liabilities
217,430
59,522
Total Liabilities
501,049
244,622
Net Assets
197,693
158,651
108,625
98,756
(48)
–
88,566
59,569
197,143
158,325
550
326
197,693
158,651
Current Assets
Inventories
Other
Total Current Assets
Non-Current Assets
Receivables
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Other
Current Liabilities
Payables
Interest bearing liabilities
Total Current Liabilities
Non-Current Liabilities
Interest bearing liabilities
Equity
Contributed equity
Reserves
Retained profits
Total parent entity interest
Outside equity interests
Total Equity
45
D I S C U S S I O N A N D A N A LY S I S O F
S TA T E M E N T O F C A S H F LO W S
FOR YEAR ENDED 30 JUNE 2001
Operating Activities Net cash inflow increased $36 million
Net cash inflows from operating activities increased $36 million due mainly to an increase in the
activity levels of the Group.
Cash receipts and payments in the course of operations increased, reflecting the effect of the
acquisition of the Finemore Group, AR Neal and Strang Stevedoring as well as increased activity
levels in existing businesses.
Investing Activities Net cash outflow increased $120 million
An increase of $123 million in payments for businesses acquired during the year, increased
capital expenditure of $7 million, offset by increased proceeds from disposal of property, plant
and equipment of $10 million resulted in a larger cash outflow this year.
Financing Activities Net cash inflow increased $100 million
An increase in proceeds from borrowings of $91 million mainly related to the issue of $114 million
of convertible notes in May 2001 resulted in a larger cash inflow this year.
46
TOLL HOLDINGS LIMITED
S TAT E M E N T O F C A S H F L O W S
for the year ended 30 June 2001
Consolidated
2001
$’000
2000
$’000
Cash receipts in the course of operations
1,659,799
1,350,718
Cash payments in the course of operations
(1,544,343)
(1,276,084)
Restructure costs paid
(6,118)
(10,957)
Interest received
1,113
472
551
329
Interest and other costs of finance paid
(5,729)
(3,239)
Income taxes paid
(8,009)
(165)
Net cash inflow/(outflow) from operating activities
97,264
61,074
1,213
–
(132,536)
(9,917)
Payment for property, plant and equipment
(58,101)
(50,958)
Proceeds from sale of property, plant and equipment
30,244
20,261
Payment for investments
(1,615)
(350)
(160,795)
(40,964)
Proceeds from borrowings
125,298
34,605
Repayment of borrowings
(32,332)
(40,688)
Dividends paid
(12,538)
(10,438)
4,291
183
(983)
–
Net cash inflow/(outflow) from financing activities
83,736
(16,338)
Net increase/(decrease) in cash held
20,205
3,772
Cash at the beginning of the financial year
26,691
22,919
Cash at the end of the financial year
46,896
26,691
Cash flows from operating activities
Dividend received
Cash flows from investing activities
Proceeds on disposal of controlled entities
Payment for entities and businesses, net of cash acquired
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from share issue
Finance lease payments
The above statement of cash flows are to be read in conjunction with the accompanying notes to the financial statements set out on
pages 48 to 49.
47
N OTE S
TO T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
FOR YEAR ENDED 30 JUNE 2001
1. Basis of Preparation of Concise Financial Report
The concise financial report has been prepared in accordance with the Corporations Act 2001, Accounting Standard AASB1039
‘Concise Financial Reports’ and applicable Urgent Issues Group Consensus Views. The financial statements and specific disclosures
required by AASB1039 have been derived from the consolidated entity’s full financial report for the financial 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 financing
and investing activities of the consolidated entity as the full financial report.
It has been prepared on the basis of historical costs, and except where stated, does not take into account changing money values or
current valuation of non-current assets.
These accounting policies have been consistently applied by each entity in the consolidated entity and are consistent with those of
the previous year.
Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year
amounts and other disclosures.
A full description of the accounting policies adopted by the consolidated entity may be found in the consolidated entity’s full
financial report.
2. Dividends Paid and Declared
Consolidated
2001
$’000
2000
$’000
–
11
9,191
7,820
11,050
9,078
20,241
16,909
8,165
8,139
Ordinary
(i) a final ordinary dividend of 12 cents per share franked to 50% with Class C (36%)
franking credits paid 30 September 1999, in relation to shares issued following the
exercise of Executive Share Options exercised on 19 July 1999 and 15 September 1999
(ii) an interim ordinary dividend of 15 cents per share franked to 60% with Class C (34%)
franking credits, paid 30 March 2001 (2000: 13 cents 20% franked Class C (36%))
(iii)a final ordinary dividend of 18 cents per share franked to 70% with Class C (30%)
franking credits (2000: 15 cents 50% franked Class C (34%)) has been declared by the directors
Dividend franking account
Class C (30%) (2000:34%) franking credits available to
shareholders of Toll Holdings Limited for subsequent financial years.
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax
(b) franking debits that will arise from the payment of dividends recognised as a liability at year-end
(c) franking credits that will arise from the receipt of dividends recognised as receivables at year-end
(d) franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.
48
TOLL HOLDINGS LIMITED
3. Contributed equity
(a) Issued and Paid Up Capital
Consolidated
61,387,592 ordinary shares fully paid (2000 – 60,522,484)
2001
$’000
2000
$’000
108,625
98,756
4. Segment Information
The Group derives revenue from the provision of the total logistics solution through use of economy and express freight forwarding
services, storage, warehousing and distribution of freight nationally by road, rail and sea, rail linehaul operations, international
forwarding, ports management and time sensitive freight distribution services. These activities are inter-dependent and inter-related
as a collection of related services forming one segment within the transport and logistics industry.
Geographical Segments
The consolidated entity operates predominantly in Australia and all material revenue, operating profit before income tax and segment
assets relate to operations within Australia.
5. Event Subsequent to Balance Date
On 5 September 2001, the Company announced it would form a consortium with Lang Corporation to bid for the sale of National Rail
Corporation and FreightCorp. Other than the above item, there 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 and unusual nature likely, in the opinion of the directors of
the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs
of the consolidated entity, in future financial years.
6. Full Financial Report
Further financial information can be obtained from the full financial report which is available, free of charge, on request from the
Company at Level 8, 380 St Kilda Road Melbourne, Vic, 3004. Alternatively, both the full financial report and the concise financial
report can be accessed via the internet at :http://www.toll.com.au.
49
D I R E CTO R S ’ D E C LA R AT I O N
In the opinion of the directors of Toll Holdings Limited the accompanying concise financial report of the consolidated entity,
comprising Toll Holdings Limited and its controlled entities for the year ended 30 June 2001, as set out on pages 42 to 49.
(a) has been derived from or is consistent with the full financial report for the financial year; and
(b) complies with Accounting Standard AASB1039 ‘Concise Financial Reports’.
Signed in accordance with a resolution of the directors:
P Rowsthorn
Director
P A Little
Director
Dated at Melbourne this 5th day of September 2001.
50
TOLL HOLDINGS LIMITED
INDEPENDENT AUDITOR’S REPORT
To the members of Toll Holdings Limited
Scope
We have audited the concise financial report of Toll Holdings Limited and its controlled entities for the financial year ended 30 June
2001, consisting of the statement of financial performance, statement of financial position, statements of cash flows, accompanying
notes 1 to 6, 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 42 to 49 in order to express an opinion on it to the members of the Company. The
Company’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 Toll
Holdings Limited and its controlled entities for the year ended 30 June 2001. Our audit report on the full financial report was signed
on 5 September 2001, 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 opinion
In our opinion the concise financial report of Toll Holdings Limited and its controlled entities for the year ended 30 June 2001 complies
with AASB 1039 Concise Financial Reports.
KPMG
JJ O’Connell
Partner
Melbourne
5 September 2001
51
9
NINE YEAR
SUMMARY
June 1993
June 1994
June 1995
June 1996
June 1997
June 1998
June 1999
66,934
8,144
1,554
6,590
1,644
4,946
2,321
118,529
12,796
2,832
9,964
1,158
8,806
2,540
178,709
12,833
4,542
8,291
1,693
6,598
963
234,297
16,805
6,586
10,219
2,631
7,588
2,214
469,998
27,290
11,728
15,562
3,605
11,957
2,857
854,440
43,411
21,723
21,688
3,593
18,095
3,157
1,295,855
63,315
21,661
41,654
3,303
38,351
7,841
Operating Profit after Tax
Outside Equity Interests
2,625
(4)
6,266
160
5,635
106
5,374
0
9,100
0
14,938
193
30,510
370
Profit Attributable to Members
Profit Attributable to Members before Abnormal Items
2,629
2,629
6,106
6,276
5,529
5,529
5,374
3,285
9,100
7,743
14,745
13,742
30,140
29,210
CPS Dividend
Ordinary Dividends
Ordinary Payout Ratio (%)
Overall Dividend Payout Ratio (%)
1,150
43.74
3,642
59.65
3,700
66.92
3,141
58.45
637
4,772
56.39
59.44
1,705
6,241
47.86
53.89
3,240
11,631
43.24
49.34
1,040
8,572
24,896
451
2,857
37,816
13,466
20,245
33,711
4,105
10,163
14,542
38,269
654
3,186
66,814
17,890
16,444
34,334
32,480
5,705
17,831
48,093
1,730
3,906
77,265
18,517
23,395
41,912
35,353
5,718
37,747
80,836
5,144
7,613
137,058
45,850
52,877
98,727
38,331
6,683
58,206
70,332
6,806
7,584
149,611
46,111
41,751
87,862
61,749
20,323
132,201
177,085
8,470
4,606
342,685
173,092
59,661
232,753
109,932
22,919
144,264
170,172
9,044
0
346,399
169,714
50,314
220,028
126,371
(4)
3,909
200
4,105
156
26,242
6,082
32,480
0
29,145
6,208
35,353
0
32,033
6,298
38,331
0
53,087
8,662
61,749
1,846
96,473
11,613
109,932
64
36,074
90,233
126,371
Basic Earnings per ordinary share before abnormal items:
Based on weighted average number of shares issued during the year
Based on number of shares issued at the end of the period
2.629
2.629
0.260
0.206
0.181
0.178
0.105
0.104
0.189
0.178
0.283
0.269
0.571
0.440
Basic Earnings per ordinary share after abnormal items:
Based on weighted average number of shares issued during the year
Based on number of shares issued at the end of the period
2.629
2.629
0.253
0.201
0.181
0.178
0.172
0.171
0.225
0.212
0.307
0.292
0.592
0.456
1.15
100
100
0.80
0.12
100
100
0.94
0.12
100
100
0.96
0.10
100
100
0.81
0.12
100
100
0.935
0.14
75
65
1.271
0.22
35
50
2.142
12.17
9.85
3.93
17.43
63.98
0.64
4.01
46.93
10.80
8.41
5.15
14.91
18.89
1.31
8.60
28.84
7.18
4.64
3.09
10.73
15.64
1.14
4.90
14.60
7.17
4.36
2.29
7.46
14.02
0.85
3.88
29.18
5.81
3.31
1.94
10.40
14.74
1.05
4.32
23.89
5.08
2.54
1.73
6.33
13.64
0.97
6.04
17.45
4.89
3.21
2.33
12.02
23.86
1.10
12.61
20.45
467.84
19.34
50.04
123.03
56.79
35.78
21.68
1,000,000
1,000,000
24,161,429
30,409,816
30,595,515
31,040,306
31,242,934
31,488,977
37,631,329
39,974,761
42,534,966
44,729,677
45,470,121
58,999,489
3,333,334
0
0
13,333,334
0
0
1,310
1,700
3,517
4,500
4,889
5,635
Operating Results ($’000)
Group Sales
Profit before Depreciation, Amortisation and Interest (EBDAIT)
Depreciation and Amortisation
Profit before Interest and Tax (EBIT)
Interest
Profit before Tax
Income Tax Expense
Financial Position ($’000)
Cash
Other Current Assets
Other Non-Current Assets
Future Income Tax Benefits
Intangible Assets (Goodwill and Other)
Total Assets
Other Liabilities
Borrowings
Total Liabilities
Net Assets
Outside Equity Interests
Reserves and Retained Profits
Paid Up Capital
Total Shareholders’ Equity
Per Ordinary 20¢ Share ($)
Dividend Paid or Declared per share
Franking (%) Interim
Final
Net Tangible Asset Backing
Analytical Information
EBDAIT to Sales (%)
EBIT to Sales (%)
Group Profit After Tax to Sales (%)
EBIT to Total Assets (%)
Return on Members’ Equity (%)
Current Assets to Current Liabilities (x)
EBIT Interest Cover (x)
Effective Tax Rate (%)
Gearing
Net Borrowings to Equity (%)
Other
Ordinary Shares
Weighted average number of shares on issue during the year
Shares on issue at year end
Preference Shares
Cumulative shares on issue at year end
Non-Cumulative shares on issue at year end
Convertible Notes
Notes on issue at year end
Number of shareholders at year end
Number of employees at year end Est
52
TOLL HOLDINGS LIMITED
6
310
977
490
919
786
945
1,800
June 2000
June 2001
1,360,098
72,474
21,452
51,022
3,070
47,952
7,285
1,602,798
100,423
29,793
70,630
4,614
66,016
16,415
40,667
263
40,667
363
40,404
40,404
49,238
49,238
0
16,909
41.85
41.85
0
20,241
41.11
41.11
26,691
190,179
181,595
4,808
0
403,273
199,463
45,159
244,622
158,651
46,896
244,471
349,142
12,485
45,748
698,742
313,456
187,593
501,049
197,693
326
59,569
98,756
158,651
550
88,518
108,625
197,693
0.677
0.668
0.805
0.802
0.677
0.668
0.805
0.802
0.28
20
50
2.621
0.33
60
70
2.475
Profit before interest and tax (EBIT)
($m)
70.6
38% to $70.6m
51.0
41.7
Profit growth continues to reflect
6.6
93
10.0
8.3
10.2
94
95
96
15.6
97
benefits of acquisitions achieved
21.7
during the past 8 years
98
99
00
01
Total shareholders’ equity
($m)
197.7
158.6
126.4
Shareholders’ equity in the company
61.7
32.5
6.27
4.41
3.07
10.11
24.98
1.92
15.31
24.87
reflects our growth strategy
35.4 38.3
4.1
93
94
95
96
97
98
99
00
01
EBIT to sales
(%)
9.8
8.4
19% to 4.4%
4.6
5.33
3.75
2.97
12.65
25.52
1.43
16.62
15.19
25% to $197.7m
109.9
4.4
3.3
2.5
93
94
95
96
97
98
3.2
3.7
4.4
Rationalisation, integration and cost
constraints have generated an improved
EBIT margin
99
00
01
25.5
25.0
Return on members’ equity
(%)
11.64
71.17
23.9
2.7% to 25%
18.9
59,709,722
60,522,484
61,171,908
61,387,592
0
0
0
0
15.6
14.0
14.7
Return on members’ equity is relatively
13.6
steady given the company’s increased
profitability and equity base
Pre float 94
95
96
97
98
99
00
01
6,753,588
6,992
5,980
7,913
8,984
53
SHAREHOLDER INFORMATION
Additional information required by the Australian Stock Exchange Listing Rules not elsewhere disclosed in this report. The shareholder
information set out below was applicable as at 28 August 2001.
A. Distribution of Shareholders
(a) Analysis of numbers of shareholders by size of share holdings for ordinary securities.
Number
Units
%
1–
1,000
4,599
2,064,219
3.33
1,001 –
5,000
2,683
6,287,416
10.16
5,001 –
10,000
356
2,547,292
4.12
10,001 – 100,000
236
6,617,626
10.70
100,001 – and over
39
44,356,039
71.69
7,913
61,872,592
100.00
There were one hundred and fifty seven holders with less than a marketable parcel of ordinary shares.
Each ordinary share is entitled to one vote per share.
B. Twenty Largest Shareholders
The names of the twenty largest shareholders are listed below:
Number of
Ordinary
Shares Held
Percentage of
Issue Shares
%
1 Mostia Dion Nominees Pty Ltd
8,908,691
14.40
2 Mr Paul Alexander Little
8,736,077
14.12
3 PGA (Investments) Pty Ltd
3,665,000
5.92
4 Mr Peter Rowsthorn
3,071,749
4.96
5 Chase Manhattan Nominees Limited
2,619,338
4.23
6 National Nominees Limited
2,501,198
4.04
7 Australian Foundation Investment Company Limited (Investment Portfolio A/C)
2,233,334
3.61
8 Westpac Custodian Nominees Limited
1,344,800
2.17
Name
9 Perpetual Nominees Limited (JBEMEP A/C)
1,037,764
1.68
1,000,000
1.62
11 ANZ Nominees Limited
920,617
1.49
12 Queensland Investment Corporation
897,408
1.45
13 Djerriwarrh Investments Limited
600,000
0.97
14 Commonwealth Custodial Services Limited (No 17 A/C)
587,940
0.95
15 The National Mutual Life Association of Aust Limited
580,468
0.94
16 Camrock (Australia) Pty Limited
571,755
0.92
17 NRMA Nominees Pty Limited
560,835
0.91
18 Mr Richard John Raw and Mrs Rosemary Joan Raw
442,492
0.72
19 Citicorp Nominees Pty Limited
408,283
0.66
20 Mr Ashley William Lyons Hancock and Mrs Raelene Joy Hancock
404,875
0.65
41,092,624
66.41%
10 Cable Nominees Pty Ltd (33390 A/C)
Total
54
TOLL HOLDINGS LIMITED
C. Substantial Shareholders
The following are registered by the Company as substantial shareholders, having declared a relevant interest in the number of voting shares
shown adjacent as at the date of giving the notice.
Number and Percentage of
Shares in which interest held
in Ordinary Shares
Name
Number
Interest %
(a) Mr Mark Rowsthorn and related bodies corporate
9,235,850
14.93
(b) Mr Paul Alexander Little and related bodies corporate
8,984,147
14.52
(c) PGA (Investments) Pty Ltd and related bodies corporate
4,665,000
7.54
(d) Mr Peter Rowsthorn
3,112,160
5.03
55
SHAREHOLDER INFORMATION
On the Internet www.toll.com.au
Newsletters, detailed company updates, industry news and our corporate profile are a click away at www.toll.com.au. Our website
is the best place to find the latest investor information about Toll and its high-value services. By expanding www.toll.com.au we are making
e-commerce opportunities a commercial reality – rate enquiries, quotations, freight bookings and tracking are key development areas
to look forward to. You can also access comprehensive information about your holdings either via the link on our website, or direct to the
share registry on www.computershare.com
Latest Toll updates,
media information and news
Access shareholder
information – Annual
Reports in online
interactive and PDF formats
what does it mean to lead?
TOLL HOLDINGS LIMITED CONCISE ANNUAL REVIEW 2001
www.toll.com.au
56
TOLL HOLDINGS LIMITED
COMPANY DIRECTORY
Directors
Chairman
Peter Rowsthorn
Managing Director
Paul Little
Executive Directors
Mark Rowsthorn
Neil Chatfield
Non-Executive Directors
John Moule AM
William Farrands
Ronald Paul AM
Ross Dunning
Divisional Directors
John Ludeke
Long Distance
Don Telford
Logistics
Terry Mallon
Toll North
Graham Lyon
Toll Technologies
Stephen Stanley Development
Secretary
Bernard McInerney
Principal Registered Office
in Australia
Level 8, 380 St Kilda Road
Melbourne Vic 3004
Telephone: (03) 9694 2888
Facsimile: (03) 9694 2880
Divisional Offices
Long Distance & Logistics
Level 1, 32 Walker Street
North Sydney NSW 2060
Telephone: (02) 8923 2333
Facsimile: (02) 8904 0219
Toll North
146 Kerry Road
Archerfield Qld 4108
Telephone: (07) 3275 0400
Facsimile: (07) 3275 0444
Toll Technologies
Level 8, 380 St Kilda Road
Melbourne Vic 3004
Telephone: (03) 9694 2888
Facsimile: (03) 9694 2880
Share Register
Computershare Investor Services
Level 12, 565 Bourke Street
Melbourne Vic 3000
Telephone: (03) 9611 5711
Facsimile: (03) 9611 5710
Website: www.computershare.com
Stock Exchange Listing
Toll Holdings Limited shares are listed
on the Australian Stock Exchange
The home exchange is in Melbourne
Auditors
KPMG
Level 5, 161 Collins Street
Melbourne Vic 3000
Bankers
National Australia Bank
271 Collins Street
Melbourne Vic 3000
Solicitors
Clayton Utz
Solicitors & Attorneys
Level 18, 333 Collins Street
Melbourne Vic 3000
TOLL PEOPLE – INDUSTRY SECTORS
All names are from left to right
Industrial – pages 14 and 15
Paul Ebsworth, General Manager, Toll
Tasmania and Edwards Transport
Garry Harding, General Manager, Industrial
Logistics
Warren Aron, Business Manager, Industrial
Logistics
Sam Hunter, National Manager, Paper
& Packaging, Industrial Logistics
Fred Tonkies, Contract Manager, Industrial
Logistics
Resources – pages 16 and 17
John Kempe, Regional Manager, WA
– Ports & Resources Logistics
Graeme Sargent, National Development
Manager, Ports & Resources Logistics
Steven Ford, General Manager, Ports
& Resources Logistics
Beverage – pages 18 and 19
Ken Noye, General Manager, Beverage
Logistics
Steve Innes, Business Manager CCA,
Beverage Logistics
Tom Keipert, National Operations Manager,
Beverage Logistics
Food & Retail – pages 20 and 21
Rob Sadler, General Manager, Toll
Refrigerated
Hugh Cushing, General Manager, Group
Development, Toll North
Neil Pollington, NSW State Manager,
Toll Express
Alan Mitchell, General Manager, Food
& Retail Logistics
Roger Duckett, National Manager Transport,
Food & Retail Logistics
Des Breust, General Manager, Business
Development, Logistics
Automotive – pages 22 and 23
David Jackson, General Manager, Toll SPD
Wayne Hunt, General Manager, Automotive
Logistics
Karin Diep, Senior Logistics Analyst,
Automotive Logistics
Peter Keane, Lead Logistics Manager,
Ford Contract, Automotive Logistics
Julie Feehan, Victorian State Manager,
Toll IPEC
Laurie Brothers, General Manager, Toll Vehicle
Distribution
Ports – pages 24 and 25
Steven Ford, General Manager, Ports &
Resources Logistics
Vincent Tremaine, Regional Manager, Vic, SA,
Tas. Ports & Resources Logistics
Paul Garaty, NSW Regional Manager, Ports
& Resources Logistics
Relocations – pages 26 and 27
Bob Buchanan, Operations Manager, Toll
Transitions – Victoria, Tasmania and Riverina
Helen Newell, General Manager,
Toll Transitions
Brian Crawford, National Account Manager,
Toll Transitions
Paul Gray, Operations Manager,
movinghome.com.au
Tony Barker, National Account Manager
Defence, Toll Transitions
Margaret Kelly, Group Development Manager,
Toll Transitions
Brad Green, Operations Manager,
movinghome.com.au
Technology – pages 28 and 29
Martin Dunne, General Manager, Information
Technology, Toll Group
Steve Zangari, TollWorks Project Director,
Toll Group
Alan Barraclough, IT Project Manager,
Toll Group
Designed and produced by The Ball Group Melbourne and Sydney 9/01 THL0055
We set the standard for
excellence of integrated logistics
and distribution through total
commitment to quality people
and services, with superior
financial results.
TOLL HOLDINGS LIMITED ABN 25 006 592 089