Orica Limited · ASX:ORI
Orica — H1 2006 Earnings Presentation
44 slides from Orica's earnings presentation, May 23, 2006
Slide 1: 1H 2006 Results Announcement
& ORICA 1H 2006 Results Announcement 23 May 2006 pat
Slide 2: 1H 2006 presentation outline
1H 2006 presentation outline va) ORICA, —2 Overview of Results = Business Performance _ 2 Cashflow | _ + IPL Divestment _ + Chemnet | Restructure + Dyno Acquisition er ~* Outlook | - - . — - - . _
Slide 3: Highlights
Half year ended 31 March 2006 2 Highlights _ = Sales Revenue +9% » EBIT +13% =» NPAT +14% = EPS +6% = Record Result in Mining Services & Chemical Services # Improving Cashflow Performance = Successful Capital Raisings to Fund Dyno Acquisition Continued growth in shareholder value
Slide 4: Financial summary
Half year ended 31March 2006 Financial summary 2006 =2005_ % Change Results including significant items: NPAT including significant items ASM 123 125 (1) Significant items after tax ASM (23) (3) Underlying Results: Sales Revenue asm) =62,599 2,384 9 EBIT (excluding significant items) ASM 276 245 13
Slide 5: Significant items (A$M)
Half year ended 31 March 2006 Significant items (A$M) Legacy Issues Fertilisers Environmental Provision Business Acquisition Costs Mining Services Integration (Dyno) Financing (Dyno) AIFRS Transition Restructuring provision reversal TOTAL (after Tax) 2006 (13.8) (22.8) N o o on (3.4) ORICA,
Slide 6: Shareholder scorecard
Half year ended 31 March 2006 2 Shareholder scorecard 2006 2005 % Change Results (after significant items) Earnings per share cents 41.7 45.7 (9) Return on shareholders’ funds % 13.1 18.9 Results (before significant items) Earnings per share cents 49.5 46.9 6 Return on shareholders' funds % 15.5 19.
Slide 7: Orica's approach — value drivers
Orica’s approach — value drivers S«< STRATEGY
Slide 8: Cost productivity
Half year ended 31 March 2006 Cost productivity 2006 2005 Increase $M $M $M % Sales revenue 2,599 2,384 215 9 Variable costs 1,589 1,442 147 10 Gross margin 1,010 942 68 7 Gross marginlisales 38.9% 39.5% Cash fixed costs 692 644 48 7 Cash fixed costs/gross margin 68.5% 68.4% Depn and amortisation 74
Slide 9: Capital productivity
Half year ended 31 March 2006 2 Capital productivity -_ 1H 2006 FY 2005 FY 2004 Major Plant Capacity - ktpa Yarwun AN 295 295 275 Yarwun Sodium Cyanide 60 60 50 Kooragang Island 430 * 400 290 Expansion Capex - $M 178 207 53 Sustenance Capex - $M 103 147 146 Active Capital Management - $M Share Buy-B
Slide 10: Orica's strategy
Orica’s strategy Three Key Principles: « Market leadership = Earning the “right to grow” = Growing “close to the core” No change to existing strategy ORICA, 10
Slide 11: Orica — our culture
Orica — our culture =» SH&E = Commercial Ownership - Group Procurement - Supply chain improvement - Manufacturing efficiency «= Creative Customer Solutions - Customer driven - Technology # Working Together ORICA, ‘Deliver the Promise’ 1
Slide 12: Business Performance, Cash Flow, Balance Sheet
| pe "Business Performance = Cash’ Flow _ | Balance Sheet |
Slide 13: Financial results
Half year ended 31 March 2006 2 Financial results 25% + 20% ; 15% & ROSH r 10% NPAT (A$M) | 5% 0% Expanded capital base impacted ROSHF * pre significant items * pre 2005 not AIFRS adjusted ORICA, 13
Slide 14: NPAT analysis
Half year ended 31 March NPAT analysis 4 160 4 3 / AE ORICA, NPATBSI 6 iS oo os ae = 4 Proms) 2 - 1 + 440 4 130 7 128 120 7 4HOS Existing SLB Acquisitions Qcc Interest Insurance Elders case Other THO NPATBS!I Businesses ¥ EBIT up 13% v Sale and Leaseback v Record result for Mining Services and ¥ Con
Slide 15: Mining Services
Mining Services ORICA, Sales $1,134M, EBIT $151M, Net Assets $1,387M 400 15 350 4 8 7 300 4 + 14 2 3 250 4 LA) 5 - 200 }i3 g i 150 4 bE a 100 4 Fig Ww 50 o 4 ; ; L 44 2003 2004 2005 2006 ME ist Half EBIT = CC 2nd Half EBIT 1st Half EBIT Margin ASM 260- 240°| 2207] 200 | 1807] 1607 1407) 1207] 1007 1
Slide 16: Mining Services by geography
Mining Services by geography ORICA. Australia/Asia North America 250 22 80 8 2 70 2 200 4 p21 s z = 0 6 z = } 20 & 5 @ 150 4 ra g 50 & hal fig € E = E = & 40 4 Ss Fr] 100 4 1 48 E wi 30 5 ty ub 50 4 47 20 2 10 oe " » 16 o4 : : Lo 2008 2004 2005 2006 2003 2004 2005 2006 MMB (st Half EBIT $C 2nd Half
Slide 17: Fertilisers (now divested)
Fertilisers (now divested) Sales $396M, EBIT $42M, Net Assets $745M ORICA, 120 12 100 4 et) BS 80 4 }8 2 = fo} 2 604 (6 & E = oo 40 4 4 bE wi a 20 p 2% o 4H ae) 99 4.2003 2004 20052006 | , ME ist Half EBIT = CC 2nd Half EBIT 1st Half EBIT Margin ASM 80 - "4 . ol 60 4 50 4 14 40 4 30 4 28 “THOS EBIT
Slide 18: Consumer Products
Consumer Products Sales $402M, EBIT $48M, Net Assets $236M va) ORICA, 120 16 100 4 4 80 8 1 z = 10% < % e 604 ;8 < a = E 40 4 6 a 4 rey 20 L > 0 r 0 2003 2004 2005 2006 MM ist Half BIT Co) 2nd Half EBIT —— ist Half EBIT Margin ASM 529 2 5057 49 | 2 Z| a -1 [a 48 -3 -1 48 4 46 5 “THOS EBIT Yates Net
Slide 19: Chemnet
Chemnet % Sales $505M; EBIT $29M; Net Assets $425M 80 4 40 455 7 4 |” 3¢ 4 = 0 4 68 # 407 38 A 50 4 ee a rs § J FA 40 + rE 35 7 za 30 4 L4 @ ty ~2 20 4 30 4 s aumm 7° 1004 ; 2 ~3 “1 o J Lo 254 2003 2004 2005 2006 20- - ME (st Half BIT 2nd Half EBIT —— ‘st Half EBIT Margin THOSEBIT. Pree / Mix Volume
Slide 20: Chemical Services
Chemical Services ORICA, Sales $231M; EBIT $32M; Net Assets $387M 90 18 80 4 _ + 16 SS 70 4 +14 > s 60 7 12 6 @ 50 4 Lio & i = am 40 4 pe ok w 30 4 6 @ lu 20 4 4 10 4 2 ) - : + 0 2003 2004 2005 2006 WB ist HalfEBIT Co 2nd Half EBIT =—— ist Half EBIT Margin ASM 354 307 257 2 > OS 132 2 a 4 “1 1HOSEBI
Slide 21: Corporate centre and other support services
Corporate centre and A) other support services (A$M) 2006 2005 $ Change Corporate Centre (17.7) (19.9) 2.2 Other Support Costs (6.8) (6.7) (0.1) (24.5) (26.6) 2.2 Corporate Centre Other Support Services ¥ Lower head count * Higher insurance costs v¥ Lower corporate initiative spend 21
Slide 22: Cashflow
Half year ended 31 March 2006 Cashflow A$M 2006 2005 Change EBITDA 350 312 38 Net interest paid (49) (44) (5) Net tax paid (52) (154) 102 Trade working capital (223) (170) (53) Non-trade working capital (44) (76) 32 Net operating cash flows (17) (133) 116 Net investing cash flows (1,151) (166) (985)
Slide 23: Sustenance capex
Sustenance capex ORICA 160 140 4 g : 120 4 2 z s § 100 4 ° a. i 804 2. 3 3S G00 5 3 40 + 3° 3 2 A 20- 0 2002 2003 2004 2005 1H 06 Mmm Sustenance == % of depn Sustenance capex steady (excluding major turnarounds) 23
Slide 24: Balance sheet (A$M)
Half year ended 31 March 2006 Balance sheet (A$M) March Sept March 2006 2005 2005 Trade working capital 875 604 949 Net property, plant & equipment 1,774 1,606 1,560 Net other assets 1,392 422 433 Net debt (1,423) (1,112) (1,441) Net Assets 2,618 1,520 1,501 Orica shareholders’ equity 2,432 1,328 1,
Slide 25: Capital raisings 1H 2006
Capital raisings 1H 2006 am » _Renounceable Rights Issue $508M 1 for 8 renounceable share issue at $15 = Hybrid Equity $491M Priced at 135 bp over 6 month BBSW = Other $113M DRP and executive share options exercise TOTAL $1,112M Capital raisings successfully completed | 95
Slide 26: Net debt and gearing
Net debt and gearing ORICA, 1500 60 1400 - Target gearing range | / shaded 4 | + 50 1300 - /™» — = 1200 dtr ren erm meme centr - 40 < 1100 - ss ask ~ ee --! r 30 $ 1000 - = 2 900 5 | 20 800 5 r 10 700 + 600 : T a T T T T T T T 0 HY02 FY02 HYO03 FYO3 HY04 FY04 HYO05 FYO05 HY06 Gearing % Book Gearing
Slide 27: Environmental provisions update
Environmental provisions update Carrying amount 30 September 2005 $186M Provisions made 1H 2006 $31M - Cockle Creek $28M - Botany Ground Water $3M Cash Payments made 1H 2006 $24M - Botany Ground Water $16M - HCB Management $3M - Other $5M Carrying amount 31 March 2006 $193M va) ORICA, $48M of $193M
Slide 28: A-IFRS 1H 2005 (pcp) reconciliation
A-IFRS 1H 2005 (pcp) reconciliation c Year Ended 31 March 2005 AGAAP Adjustments A-IFRS Sales Revenue 2,384M - 2,384M Share Based Payments (9.8M) Goodwill Amortisation 17.8M EBIT 236.9M 8.0M 244.9M Tax Expense (9.2M) Minority Interests (1.4M) NPAT before significant items 130.7M (2.6M) 128.1M Signif
Slide 29: Summary
Summary 4 «= Strong half year result despite weakness in some business platforms «= Record Mining Services and Chemical Services result «= Resilience to cost increases « Financial discipline and improved cashflow performance «= Strong balance sheet capable of funding future growth ‘ disciplined and
Slide 30: IPL Divestment, Chemnet Restructure, Dyno Acquisition, Outlook
Slide 31: IPL divestment
va) IPL divestment a Rationale - less earnings volatility going forward - allows each entity to pursue an independent strategy * Orica capital management - Capital projects relating to existing businesses - M&A across remaining businesses = Gross proceeds from sale $857M = After tax gain $399M (to b
Slide 32: EBIT contribution by business platform
EBIT contribution by % business platform Including IPL Excluding IPL EBIT by business platform 2005 EBIT by business platform 2005 Chemicals Services Chemnet . Chemnet 9.2% 11.8% Chemicals 13.5% Services 10.5% Consumer Products 15.2% Consumer Products 174% Fertilisers 12.6% Mining Mining Services Se
Slide 33: Gross sales by geography
Gross sales by geography Including IPL Gross sales by geographic area 2005 Other A 14% Americas 17.9% New Zealand 9.4% Australia 61.3% Excluding IPL Gross sales by geographic area 2005 Other 14.3% Americas 22.4% Y Australia 51.5% New Zealand 11.8% ORICA, Continuing the “internationalisation” of Oric
Slide 34: EBIT performance (exc. IPL)
EBIT* performance (exc. IPL) EBIT $AM Past Performance Orica Today 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ™=" Current Business EBIT ~~~ EBIT as reported Earnings less cyclical going forward * excluding corporate costs va) ORICA, 34
Slide 35: Chemnet restructure costs
Chemnet restructure costs od) A$ millions (before tax) notes Cash Non _ Total Cash Cost Redundancies 10 10 Asset Rationalisation 1 3 30 33 General transition costs 5 5 Total Restructuring costs 1. Includes warehouse and site rationalisation, and product line exits 2. Will be disclosed as individuall
Slide 36: Dyno acquisition - update
Dyno acquisition - update oo Dyno businesses already transferred to Orica: Venezuela Thailand Slovakia Switzerland Philippines Papua New Guinea Indonesia Chile Transferred businesses represent 16% of Dyno revenue We remain confident of achieving synergy targets 36
Slide 37: Dyno acquisition - update
Dyno acquisition - update oo Integration Progress to Date: — 10 person integration team based in London — Appointed MD’s of EMEA & Latin America — No loss of customers from Dyno businesses — Safety performance maintained We remain confident of achieving synergy targets 37
Slide 38: Outlook
Outlook ray After the divestment of Incitec Pivot Limited, and excluding earnings from newly acquired Dyno Nobel businesses, earning growth in 2006 compared with 2005, influenced by general economic conditions. 38
Slide 39: 1H 2006 Results Announcement
& ORICA 1H 2006 Results Announcement 23 May 2006 pat
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Slide 41: Balance sheet — excluding IPL
Half year ended 31 March 2006 Balance sheet — excluding IPL* va) March 2006 Sale of IPL Proceeds Orica excl IPL Trade working capital 875M (263M) 612M Net property, plant & equipment 1,774M (312M) 1,462M Net other assets 1,392M 15M 1,407M Net debt (1,423M) 0 799M (624M) Net Assets 2,618M (560M) 799M
Slide 42: Profit & loss — excluding IPL
Half year ended 31 March 2006 2 Profit & loss — excluding IPL* ~~ March Orica excl IPL Orica excl IPL 2006 Sale of IPL March 2006 March 2005 % change Sales Revenue 2,599M (396M) 2,203M 1,945M 13.3 Underlying Results EBIT 276M (42M) 234M 215M 8.8 Net Interest (56M) 4M (51M) (44M) 15.9 Tax (61M) 8M (5
Slide 43: Foreign currency - snapshot
Foreign currency - snapshot $A Call Options: hedging of USD exposure as at 31 March 2006 va) ORICA, Offshore Business Manufactured Hedge Sales Nitrogen Product_| | Premium Year | Cover Strike Cover Strike expense A$M Rate A$M Rate A$M 2006 54 67 cents 44 68 cents 4.5 2007* - - 22 68 cents 0.8 _No fu
Slide 44: Foreign currency - sensitivity
Foreign currency - sensitivity (excluding IPL) Every one cent movement in the USD/AUD exchange rate will impact EBIT: 2006 +/- $0.5M 2007 +/- $1.0M va) ORICA, 50% of Orica’s AUD/USD exposure came from IPL 44