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Office of the Company Secretary ABN 42 004 080 264 Registered Office: Level 8, 28 Freshwater Place Southbank Victoria 3006 Tel: (61 3) 8695 4400 Fax: (61 3) 8695 4419 25 November 2011 www.incitecpivot.com.au The Manager Company Announcements Office Australian Securities Exchange Level 45, South Tower Rialto 525 Collins Street MELBOURNE VIC 3000 Dear Sir or Madam Electronic Lodgement 2011 Annual Report In accordance with the listing rules, I attach a copy of Incitec Pivot Limited’s Annual Report for 2011 for release to the market. Yours faithfully Kerry Gleeson Company Secretary Attach. For personal use only 2011ANNUAL REPORT 2011 For personal use only STRATEGY ON TRACK AND DELIVERING CANADA Boisbriand Calgary North Bay Lausanne Louisiana Maitland Tirana St Helens Ormstown Bucharest Simsbury Ankara Salt Lake City USA Port Ewen Soma Cheyenne Donora TURKEY Carthage Duffield Wolf Lake CHINA Linyi (Fabchem) Savannah PAKISTAN Graham New Delhi Dinamita Hong Kong INDIA MEXICO TKEB PAPUA Arkon Binungan, Lati NEW GUINEA & Sambarata SOUTH Martabe AFRICA Adaro Lihir Jakarta INDONESIA Moranbah Port Hedland Townsville Mt Isa Moura (Queensland Nitrates) LATIN Phosphate Hill AMERICA AUSTRALIA Gibson Island Kalgoorlie Helidon La Serena Johannesburg (SASOL) Perth Kooragang Island Santiago Port Adelaide Johannesburg (DetNet) Melbourne Portland Geelong Devonport “Incitec Pivot’s strategy is Incitec Pivot Limited to leverage value from the Company Headquarters industrialisation and urbanisation Incitec Pivot Fertilisers Nitromak of Asia by positioning ourselves Corporate Office Corporate Office For personal use only on the input side of the value Manufacturing/Distribution Manufacturing/Distribution chain for both hard and soft Dyno Nobel Southern Cross International Corporate Office Corporate Office commodities, that is, in Manufacturing/Distribution Manufacturing explosives and fertilisers.” Joint Ventures/Investments Quantum Joint Venture John C Watson AM Chairman Shareholder Information Annual General Meeting 2.00 pm Tuesday 20 December 2011 The Auditorium, Level 2, Melbourne Exhibition Centre, 2 Clarendon Street, Southbank Victoria, Australia Securities Exchange Listing Incitec Pivot Limited’s shares are listed on the Australian Securities Exchange (ASX) and are traded under the code IPL Share Registry Link Market Services Limited Level 12, 680 George Street, Sydney New South Wales 2000, CANADA Boisbriand AustraliaCalgary North Bay Lausanne LockedLouisiana Bag A14, Maitland Tirana SydneySt Helens South New South Wales 1235, Ormstown Bucharest Australia Simsbury Ankara Salt Lake City Port Ewen Telephone: 1300 303 780 USA Soma Cheyenne Donora TURKEY (forCarthage callers within Australia) Duffield International:Wolf Lake +61 2 8280 7765 CHINA Linyi (Fabchem) Savannah PAKISTAN General Facsimile: +61 2 9287 0303 Graham New Delhi ProxyDinamita Facsimile: +61 2 9287 0309 Hong Kong Contents INDIA Email: [email protected] Website: www.linkmarketservices.com.auMEXICO Chairman’s Report 2 Auditor Managing Director’s Report 4 KPMG TKEB PAPUA Binungan, Lati 147 Collins Street, Board of Directors 6 Arkon NEW GUINEA Melbourne Victoria 3000, Martabe & Sambarata SOUTH Australia Executive Team 7 AFRICA Adaro Lihir Jakarta Incitec Pivot Limited Directors’ Report 8 – Remuneration Report 13 Moranbah Registered address and head office: INDONESIA – Corporate Governance Townsville Level 8, 28 Freshwater Place, Port Hedland Southbank Victoria 3006, Statement 31 Mt Isa Moura Australia LATIN Phosphate Hill (Queensland Nitrates) Financial Report 41 GPO Box 1322, AMERICA AUSTRALIA Gibson Island Kalgoorlie Helidon Melbourne Victoria 3001, La Serena Johannesburg (SASOL) Perth Kooragang Island Australia Santiago Port Adelaide Johannesburg (DetNet) Melbourne Telephone: +61 3 8695 4400 Portland Geelong Facsimile: +61 3 8695 4419 Devonport www.incitecpivot.com.au Explosives Fertilisers Trading Customers in the mining, Incitec Pivot Fertilisers is a Southern Cross International quarry, construction, pipeline key supplier of Australia’s soil is focussed on sales to and geophysical exploration health and nutrition needs, Australian distributors and For personal use only industries trust Dyno Nobel, a helping farmers maximise export sales to Asia Pacific, global leader in the commercial productivity to remain the Indian sub-continent explosives industry, to deliver competitive in global markets. and Latin America. Groundbreaking Performance through Practical Innovation. Chairman’s Report At the core of Incitec Pivot is our strong culture, underpinned by our Group’s Values. I see these values being lived across the many facets of our business. I am pleased to report another successful The 2008 Dyno Nobel acquisition In addition, throughout the years we year for Incitec Pivot. Despite a two- established our exposure to the global have maintained focus on developing speed Australian economy and mixed resources industry. businesses that are “fit for purpose” for conditions globally, Incitec Pivot achieved As the Group has grown, debt financing the economic environment, applying an underlying growth in Net Profit After risk has been actively managed following the disciplines of our business efficiency Tax, before individually material items principles established under the Group’s programs. This has been illustrated more (IMIs), of 20% to $530.1 million. A comprehensive capital management recently through our Velocity program, highlight of the result was the return strategy. The key principle of this Board which has delivered cumulative benefits to shareholders, including a full year endorsed strategy is a commitment of US$204 million as at the end of 2011, dividend of 11.5 cents per share, a 47% to an investment grade credit profile, and also through our other business increase on the 2010 dividend, and including a requirement for diversification specific strategies, which have included Earnings Per Share, before IMIs, rising of funding sources and a spread of debt realigning our channels to market, 19% to 32.5 cents per share. maturities. The implementation of this developing technological solutions Incitec Pivot’s strategy is to leverage strategy has resulted in an enviable for customers and applying rigorous value from the industrialisation and outcome, including an average interest maintenance programs to increase plant urbanisation of Asia by positioning rate paid on our debt of 5.7%. reliability and productivity. ourselves on the input side of the value In the past year, risk mitigation has also 2012 will see Incitec Pivot embark chain for both hard and soft commodities, been evidenced by the steps taken to on its next phase of continuous that is, in explosives and fertilisers. actively manage the volatility in the improvement, building from its strong Incitec Pivot achieves this with vertically unprecedented Australia/United States disciplines applied in Velocity, and its integrated manufacturing through a currency exchange rates. Incitec Pivot’s predecessor, Tardis. This next phase, multi-regional approach with customer hedging program delivered a benefit which is known as BEx, from “Business aligned channels to market. of $95 million through a transactional Excellence”, will transform the way This strategy is driven by a motivated Australian dollar exchange rate of Incitec Pivot does business and will senior management team whose US$0.91 in 2011 which was US$0.12 drive long term and sustainable disciplined execution focusses both on better than the average spot rate. For productivity improvement in the the “controllables” and on ensuring the 2012, Incitec Pivot continues to actively Group. BEx will introduce well known impacts of the “uncontrollables”, such as manage currency risk and we have methodologies, such as Lean principles, weather conditions and the recent global significant cover in place for 2012 and which I have seen in operation when economic crisis, are mitigated. a foundation level of cover for the 2013 visiting some of our North American financial year. In recognition of the plants, and will empower all of our Good management demands that employees in continuous improvement the business is managed for the long- Treasury Team’s outstanding performance, they were named Corporate Treasury – ultimately across every part of our term and, through the evolution of international business. the strategy, we have addressed the Team of the Year at the 2011 CFO “uncontrollables” and, to a large extent, Dealbook Awards. mitigated their impacts on the business. The merger in 2003 of the Company, then southern Australian-based, with the northern-based Incitec Fertilizers, provided greater geographic spread to mitigate the impacts of localised weather conditions. The acquisition of Southern Cross Fertilisers in 2006, including the prized Phosphate Hill plant, For personal use only mine and assets, continued the focus on manufacturing and moved the Group’s business further up the value chain. The creation of the trading businesses, Southern Cross International in 2007 and Quantum last year, provided the capacity to trade fertilisers on global markets and helped to manage the impacts of demand fluctuations in Australia. August 2011 Board tour of Western Australian operations. 2 Incitec Pivot Limited Annual Report 2011 The IPL Group Values Own.Breakout.Deliver embodies the IPL Group’s Values which are at our core. They reflect the fairness and trust in which we believe and are the guiding principles which we draw upon in our day-to-day decision making.