Slide 1: 2007 Full Year Results Pack
For personal use only 2007 Full Year Results Pack
Slide 2: Orica - overview
For personal use only Orica - overview • Australian owned publicly listed company trading on the Australian Stock Exchange (ORI) • Market capitalisation of approximately A$8.95bn (US$8.03bn) • Ranked in top 40 Australian companies based on market capitalisation • Inception in 1874 as a small explosi
Slide 3: Orica – what we do
For personal use only Orica – what we do Mining Services Commercial explosives, initiating systems Market and Blast Based Services Leadership Minova (including Excel Mining Systems) Leading Chemical consumables, equipment and Brands services for the underground mining, tunnelling and civil engineeri
Slide 4: Orica – business characteristics
For personal use only Orica – business characteristics Mining Services • Global business • Largest commercial explosives company in the world Chemical Services • Superior assets and technology • Largest Chemical business in • Complete product offering Australia and New Zealand • Strong asset positio
Slide 5: Business dimensions
Business dimensions For personal use only Full year ended 30 September 2007 Sales Revenue EBIT Operating Net Assets Employees 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Mining Minova OCP Chemnet Chemical Services Orica Full Year Results 2007 5
Slide 6: Cumulative total shareholder returns
For personal use only Cumulative total shareholder returns Cumulative Shareholder Return 330 280 230 180 Orica % 130 ASX 100 80 30 -20 2003 2004 2005 2006 2007 Source: Orica Annual Report, Base year 2001 Growth strategy has delivered superior returns Orica Full Year Results 2007 6
Slide 7: Group performance
For personal use only Group performance Year ended 30 September (A$M) 2007 2006 % Sales 5,527.2 5,359.2 3.1 u Gross margin 2,474.0 2,125.2 16.4 u EBITDA 995.9 814.6 22.3 u EBIT 812.7 657.7 23.6 u Net profit after tax pre significant items 497.8 380.3 30.9 u Net profit after tax after significant ite
Slide 8: EBIT growth
For personal use only EBIT growth A$M 900 62 850 78 813 800 (80) 95 750 700 658 650 600 FY06 EBIT Ex-Dyno Underlying Minova Divested FY07 EBIT Business Businesses Growth Orica Full Year Results 2007 8
Slide 9: Significant items
For personal use only Significant items Year ended 30 September 2007 (A$M) Restructuring & rationalisation – Marplex 1 (16.4) Dyno Nobel expenditure – integration costs (33.4) Adhesives & Resins profit on sale 23.7 Tax indemnity – Crop Care 16.0 Total significant items after tax and minority interes
Slide 10: Divisional return on net assets (RONA)
For personal use only Divisional return on net assets (RONA) RONA (%) Average Net Assets ($) Year ended 30 September 2007 2006 2007 2006 Mining Services 25.6 25.1 2,245.6 1,644.2 Minova 1 10.1 - 905.6 - Consumer Products 2 43.7 44.4 232.6 219.2 Chemical Services 3 17.4 17.7 394.2 379.7 Chemnet 4 16.
Slide 11: Return on shareholders’ funds
For personal use only Return on shareholders’ funds 30% 25.5% 23.9% 25% 19.6% 19.3% 19.2% 20% 18.0% 15% 10% 4.5% 5% 0% 2001 2002 2003 2004 2005 2006 2007 Orica Full Year Results 2007 11
Slide 12: Net profit after tax
For personal use only Net profit after tax A$M +30.9% 500 +11.9% 400 +4.4% +20.5% +13.0% 300 +283.8% 200 100 0 2001 2002 2003 2004 2005 2006 2007 Cumulative average growth rate since 2001 is 41.4% Orica Full Year Results 2007 12
Slide 13: Divisional performance
For personal use only Divisional performance
Slide 14: Orica Mining Services
For personal use only Orica Mining Services Year ended 30 September (A$M) 2007 2006 % Sales 3,111.2 2,620.9 18.7 u EBITDA 697.9 506.0 37.9 u EBITDA margin (%) 22.4 19.3 16.1 u EBIT 575.1 412.0 39.6 u EBIT margin (%) 18.5 15.7 17.8 u Return on net assets (%) 25.6 25.1 Average operating net assets 2,2
Slide 15: Orica Mining Services
Orica Mining Services Sales $3,111M; EBIT $575M; Average Net Assets $2,246M; RONA 26% For personal use only A$M 700 20% 700 18% 600 16% 650 35 EBIT MARGIN 500 14% 49 EBIT A$M (29) 400 12% 600 (18) 575 10% 53 (17) (5) 300 8% 550 6% 95 200 500 4% 100 2% 450 0 0% 412 2004 2005 2006 2007 400 350 1st Hal
Slide 16: Orica Mining Services by geography
For personal use only Orica Mining Services by geography Australia/Asia North America 350 24% 90 12% 22% 80 300 20% 10% 70 EBIT MARGIN 18% EBIT MARGIN 250 60 8% EBIT A$M EBIT A$M 16% 200 14% 50 12% 6% 150 10% 40 8% 30 4% 100 6% 20 50 4% 2% 2% 10 0 0% 0 0% 2004 2005 2006 2007 2004 2005 2006 2007 1st
Slide 17: Acquired ex Dyno business performance
For personal use only Acquired ex Dyno business performance EBIT (A$M) 2007 Underlying trading performance of Ex Dyno Businesses 59.7 Synergies delivered 70.4 Amortisation of intangibles (8.9) 2007 EBIT 121.2 Synergy Benefit (A$M) 2007 2008 2009 Current View 70 90 90 March 2007 50-60 80-90 90 Orica
Slide 18: Acquired ex Dyno business - integration costs
For personal use only Acquired ex Dyno business - integration costs 2006 2007 Cumulative Integration cost category (A$M) Actual Actual Actual Asset write-offs – non cash 45 7 52 Redundancies 41 5 46 Transitional salaries/other 7 6 13 Synergy implementation costs 4 10 14 Total Integration costs 97 28
Slide 19: Minova
For personal use only Minova Nine months ended 30 September (A$M) 2007 Sales 332.1 EBITDA 75.1 EBITDA margin (%) 22.6 EBIT 61.6 EBIT margin (%) 18.5 Underlying EBIT 1 68.2 Return on net assets (%) 2 10.1 Average operating net assets 905.6 1 Underlying EBIT excludes the $6.6M one-off acquisition acco
Slide 20: Minova
Minova Sales $332M; EBIT $62M; Net Assets $906M; Pro forma RONA 10.1% For personal use only A$M 80 75 3 10 70 (7) 65 62 61 (4) (1) 60 55 50 FY06 Business Cost AIFRS Acq FX Amortisation FY07 EBIT Pro-rata Growth Synergies Accounting EBIT Adj 9 Underlying EBIT growth of 12% 9 Result includes AIFRS one
Slide 21: Chemical Services
For personal use only Chemical Services Year ended 30 September (A$M) 2007 2006 % Sales 425.1 477.0 10.9 v EBITDA 87.8 85.0 3.3 u EBITDA margin (%) 20.7 17.8 15.9 u EBIT 68.7 67.1 2.4 u EBIT margin (%) 16.2 14.1 14.9 u Underlying EBIT 1 65.8 59.1 11.3 u Return on net assets (%) 17.4 17.7 Average ope
Slide 22: Chemical Services
Chemical Services Sales $425M; EBIT $69M; Average Net Assets $394M; RONA 17% For personal use only A$M 80 18% 80 2 4 70 16% 75 60 14% 6 EBIT MARGIN (5) EBIT A$M 12% 50 70 69 10% 67 (4) (1) 40 8% 65 30 6% 20 4% 60 10 2% 0 0% 55 2004 2005 2006 2007 50 FY06 EBIT Mining Miex Watercare A&R Watercare Wate
Slide 23: Chemnet
For personal use only Chemnet Year ended 30 September (A$M) 2007 2006 % Sales 927.7 987.4 6.0 v EBITDA 66.4 66.0 0.6 u EBITDA margin (%) 7.2 6.7 7.1 u EBIT 58.7 57.7 1.7 u EBIT margin (%) 6.3 5.8 8.3 u Return on net assets (%) 16.9 15.4 Average operating net assets 346.4 375.6 Underlying EBIT in lin
Slide 24: Chemnet
Chemnet Sales $928M; EBIT $59M; Average Net Assets $346M; RONA 17% For personal use only A$M 90 12% 75 80 1 1 10% 70 11 70 EBIT MARGIN 60 8% EBIT A$M 65 50 6% 60 59 40 58 (12) 30 4% 55 20 2% 10 50 0 0% 45 2004 2005 2006 2007 40 1st Half EBIT 2nd Half EBIT EBIT MARGIN FY06 EBIT Fixed Latin Profit on
Slide 25: Orica Consumer Products
For personal use only Orica Consumer Products Year ended 30 September (A$M) 2007 2006 % Sales 826.3 785.0 5.3 u EBITDA 116.3 111.5 4.3 u EBITDA margin (%) 14.1 14.2 0.9 v EBIT 101.6 97.3 4.4 u EBIT margin (%) 12.3 12.4 0.8 v Underlying EBIT1 111.1 97.3 14.2 u Return on net assets (%) 43.7 44.4 Avera
Slide 26: Orica Consumer Products
Orica Consumer Products Sales $826M; EBIT $102M; Average Net Assets $233M; RONA 44% For personal use only A$M 120 14% 125 11 100 12% 120 10% 115 (4) (1) EBIT MARGIN 80 EBIT A$M 13 8% 110 60 6% 105 (10) 102 40 (4) 4% 100 97 20 2% 95 90 0 0% 2004 2005 2006 2007 85 1st Half EBIT Yates Restructure Impac
Slide 27: Corporate centre and other support services
For personal use only Corporate centre and other support services Year ended 30 September (A$M) 2007 2006 $ Corporate centre costs 39.3 36.3 3.0 v Other support costs 13.7 14.4 0.7 u TOTAL COSTS 53.0 50.7 2.3 u 9 Qenos doubtful debt provision reversal È Takeover defence and unsuccessful ($8M) – non-
Slide 28: Capital management - highlights
For personal use only Capital management - highlights Year ended 30 September 2007 2006 Net Debt 1 (A$M) 1,305.7 302.1 Net Interest expense (A$M) 122.6 92.2 Interest Cover (times) 6.6 7.1 Cash Conversion 2 (%) 63.8 52.5 Rolling TWC to Sales (%) 14.8 16.6 Gearing (%) 33.2 10.2 Gearing adjusted (%) 3
Slide 29: Cashflow
For personal use only Cashflow Year ended 30 September (A$M) 2007 2006 $ EBITDA 995.9 814.6 181.3 u Net interest paid (108.3) (90.3) 18.0 v Net tax paid (141.4) (101.6) 39.8 v Trade working capital movement (49.2) (212.6) 163.4 u Non trade working capital movement (172.7) 3.8 176.5 v Net operating c
Slide 30: Net debt and gearing
For personal use only Net debt and gearing Target gearing range shaded 1,600 50 Gearing and Adjusted Gearing % 1,400 40 Net Debt (A$M) 1,200 30 1,000 800 20 600 10 400 200 0 HY01 FY01 HY02 FY02 HY03 FY03 HY04 FY04 HY05 FY05 HY06 FY06 HY07 FY07 Accounting gearing 33.2% Adjusted gearing 39.6% (SPS sec
Slide 31: Cash Conversion
For personal use only Cash Conversion1 100% 87.8% 90% 80% 75.2% 68.1% 70.2% 70% 62.2% 63.8% 60% 52.5% 50% 40% 2001 2002 2003 2004 2005 2006 2007 1 Cash conversion is calculated as EBITDA add/less movement in working capital less sustenance capital spend. Orica Full Year Results 2007 31
Slide 32: Rolling TWC to Sales %
For personal use only Rolling TWC to Sales % 25.0% TWC Project started May 2006 20.0% 15.0% 10.0% 5.0% 1 2 3 4 5 6 7 t'0 t'0 t'0 t'0 t'0 t'0 t'0 p p p p p p p Se Se Se Se Se Se Se Continuous improvement Reduced from 17.5% in May 2006 to 14.8% in 2007 Orica Full Year Results 2007 32
Slide 33: Capital expenditure
For personal use only Capital expenditure 160 120% Sustenance Spend A$M as a % of depreciation 140 100% 120 80% 100 60% 80 40% 60 20% 40 0% 2001 2002 2003 2004 2005 2006 2007 Sustenance % of Depreciation Sustenance capital $139M and Depreciation $153M in 2007 Orica Full Year Results 2007 33
Slide 34: Orica’s approach – value drivers
For personal use only Orica’s approach – value drivers Orica Full Year Results 2007 34
Slide 35: Gross margin growth
For personal use only Gross margin growth A$M 2,600 16.4% 2,400 2,200 7.6% 4.3% 2,000 13.9% 1,800 8.2% 0.1% 6.1% 1,600 1,400 1,200 1,000 2001 2002 2003 2004 2005 2006 2007 Cumulative average growth rate since 2001 is 8.3% Orica Full Year Results 2007 35
Slide 36: Productivity
For personal use only Productivity 100% 95% 91.8% 90% 85% 78.9% 80% 75.1% 74.0% 73.2% 72.8% 75% 69.8% 70% 65% 60% 55% 50% 2001 2002 2003 2004 2005 2006 2007 Productivity is measured as fixed costs (incl. depreciation and amortisation) as a percentage of gross margin. Orica Full Year Results 2007 36
Slide 37: Growth priorities
For personal use only Growth priorities Business Strategic growth opportunity Mining Services - Organic and geographic growth – resource cycle - Lowest cost AN sourcing - Electronic blasting systems (EBS) - Enhanced product offerings - Small bolt-on M&A Minova - Integration of Excel – deliver the sy
Slide 38: Excel acquisition
For personal use only Excel acquisition • Strategy behind the acquisition: – Complementary to Minova – Resource sector growth – Underground mining growth – Safety focus • Established 2 teams to deliver the synergies - commercial and operational • Tax and finance structuring synergies already deliver
Slide 39: SH&E - Environmental
For personal use only SH&E - Environmental • Botany – Groundwater Treatment Plant - operating well – Plume is contained – Recycled water being utilised • Hexachlorobenzene – Appeal process • No other significant matters identified in current year Orica Full Year Results 2007 39
Slide 40: SH&E - Sustainability
For personal use only SH&E - Sustainability • Challenge 2010 targets well established • Carbon Trading manager appointed • Working on solutions globally as markets continue to evolve • Initiatives being developed to reduce emissions from major manufacturing facilities Orica Full Year Results 2007 40
Slide 41: Outlook
For personal use only Outlook Subject to global economic conditions, we expect Group net profit (before significant items) in 2008 to be higher than that reported in 2007. This is a result of an additional three months contribution from Minova, 11 months contribution from Excel Mining Systems and im
Slide 42: Supplementary information
For personal use only Supplementary information
Slide 43: EBIT contribution by business platform
For personal use only EBIT contribution by business platform1 September 2006 2 September 2007 3,4 Chemnet Chemical Chemnet 9% 7% Services Chemical 8% Services 11% Minova 9% Consumer Products Mining Mining Consumer Services 15% Services Products 64% 65% 12% 1 Excludes corporate costs 2 September 2006
Slide 44: Gross sales by geography
For personal use only Gross sales by geography September 2006 1 September 2007 Europe Europe Asia 7% 13% 8% Asia 8% Latin America 10% Australia Australia 49% Latin America 45% 12% North America 17% North America New Zealand 15% New Zealand 9% 7% 1 September 2006 sales exclude IPL Orica Full Year Res
Slide 45: Net interest expense
For personal use only Net interest expense Year ended 30 September (A$M) 2007 2006 $ Net interest expense 123 92 31 u Comprising: Interest on net debt 113 101 12 u Less: Capitalised interest (1) (14) 13 v Add: Unwinding of discount on provisions 11 5 6u Net interest expense 123 92 31 u Interest on n
Slide 46: Impact of Excel – gearing
For personal use only Impact of Excel – gearing (A$M) Rating Pro-forma Agency Post Excel Current borrowings 582.7 582.7 Non-current borrowings 1,093.7 1,868.7 SPS adjustment 2 250.0 250.0 Less: Cash (370.7) (370.7) Net Debt 1,555.7 2,330.7 Parent entity equity 1 2,566.8 2,566.8 Minority interests 60
Slide 47: Step-Up Preference Securities (SPS)
For personal use only Step-Up Preference Securities (SPS) • SPS treated as 100% equity for financial reporting purposes • SPS distributions are treated as dividends and NOT interest • EPS calculation adjusted for SPS distributions on an after tax basis • Rating agencies treat SPS as 50% equity / 50%
Slide 48: Impact of SPS – earnings per share
For personal use only Impact of SPS – earnings per share Reported per Accounts A$M Reported net profit from continuing operations 513.4 Less: Net profit attributable to minorities (25.7) After tax distributions to SPS holders 1 (30.5) Adjusted net profit 457.2 Weighted average ordinary shares on iss
Slide 49: Impact of SPS – gearing
For personal use only Impact of SPS – gearing (A$M) Reported per Rating Accounts Agency Current borrowings 582.7 582.7 Non-current borrowings 1,093.7 1,093.7 SPS adjustment 2 - 250.0 Less: Cash (370.7) (370.7) Net Debt 1,305.7 1,555.7 Parent entity equity 1 2,566.7 2,566.7 Minority interests 60.9 60
Slide 50: Impact of SPS – interest cover
For personal use only Impact of SPS – interest cover (A$M) Reported per Rating Accounts Agency Financial expense 157.4 157.4 Financial income (34.8) (34.8) SPS distribution adjustment 1 - 19.5 Net borrowing costs 122.6 142.1 EBIT 812.7 812.7 Less net profit attributable to minorities - (25.7) Adjust
Slide 51: Debt maturity – long term debt
For personal use only Debt maturity – long term debt A$M 300 275 250 225 200 USD 175 NZD 150 EUR 125 CAD 100 AUD 75 50 25 0 2008 2009 2011 2013 2015 2016 2017 2019 Average term of debt is approximately 7 years NB: The time scale on the table above is not linear, as some years have no debt repayment
Slide 52: Foreign currency - snapshot
For personal use only Foreign currency - snapshot Material exposures include: Offshore EBIT (Translation) Transactional Exposures • North America • AUD/USD • Europe • USD/LATAM region • New Zealand • USD/CAD • LATAM • NZD/USD • Nordics • NOK/SEK Net impact of a 1% move in exchange rates on a diversi
Slide 53: Important notice
For personal use only Important notice This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products. The information contai