Orica Limited · ASX:ORI
Orica — Merger or Acquisition (May 2006)
10 slides from Orica's merger presentation, May 10, 2006
Slide 1: Sale of IPL Stake by Orica
SALE OF IPL STAKE BY ORICA ASX Announcement 10 MAY 2006
Slide 2: Rationale for the Sale
RATIONALE FOR THE SALE • Creating value for Orica shareholders. • Due to seasonal variations in rainfall, the cyclicality of international urea prices, and foreign exchange movements IPL’s earnings can be volatile. • Makes strategic sense for both Orica and IPL. • IPL can play a broader role in the
Slide 3: Estimated Profit on Sale
ESTIMATED PROFIT ON SALE* A$ millions Gross Proceeds – 1st Tranche 692 Gross Proceeds – 2nd Tranche 165 857 Carrying Value 30/4/06 (400) Estimated Transaction Costs & Related Provisions (41) Estimated Tax (17) Estimated After Tax Profit on Sale 1 399 1 Recognised as an individually significant item
Slide 4: Other Financial Impacts
OTHER FINANCIAL IMPACTS • IPL’s 22 cents fully franked interim dividend will accrue to Orica for the total 70% stake. • Orica will own only 13.5% from 10 May until the second tranche of sale (buyback) is complete. Therefore, IPL’s second half earnings will only accrue to Orica from April 1 to 10 May
Slide 5: Other Financial Impacts (continued)
OTHER FINANCIAL IMPACTS (continued) Impact on Franking of Orica Dividends: • IPL contributed 16.85 cents and 9.27 cents to franking of Orica’s 2004 and 2005 dividends respectively. • The loss of IPL’s franked dividends will negatively impact Orica’s ability to pay franked dividends. • Orica currentl
Slide 6: Earnings Contributions of Business Platforms
EARNINGS CONTRIBUTIONS OF BUSINESS PLATFORMS Including IPL Excluding IPL EBIT by business platform 2005 EBIT by business platform 2005 (1) Chemicals Services Chemnet Chemnet Chemicals 13.5% 9.2% 11.8% Services Consumer 10.5% Products 15.2% Consumer Products 17.4% Fertilisers 12.6% Mining Mining Serv
Slide 7: Earnings Contribution by Geography
EARNINGS CONTRIBUTION BY GEOGRAPHY Including IPL Excluding IPL EBIT by geographic area 2005 EBIT by geographic area 2005 (1) Other Other 12.6% 14.4% Americas 16.1% Americas 18.4% New Zealand 9.5% New Zealand 10.9% Australia Australia 56.3% 61.8% (i) Excluding Fertilisers 7
Slide 8: Gross Sales by Business Platforms
GROSS SALES BY BUSINESS PLATFORMS Including IPL Excluding IPL Gross sales by business platform 2005 Gross sales by business platform 2005 (1) Chemicals Chemnet Chemnet Services 19.5% 24.5% 7.8% Consumer Chemicals Products Services 14.6% 9.8% Mining Mining Services Consumer 47.3% Services Products 37
Slide 9: Gross Sales by Geography
GROSS SALES BY GEOGRAPHY Including IPL Excluding IPL Gross sales by geographic area 2005 Gross sales by geographic area 2005 (1) Other Other 11.4% 14.3% Americas 17.9% Americas 22.4% New Zealand 9.4% New Zealand Australia 51.5% Australia 11.8% 61.3% (i) Excluding Fertilisers 9
Slide 10: Use of Funds
USE OF FUNDS Orica will use the funds generated by the sale of its IPL stake to: • Reduce short term debt by up to $400 million (short term excess cash will be held on deposit). • Fund growth opportunities that meet Orica’s 18% return On Net Assets criteria, including: – brownfields or greenfields c