2020 Annual Report (PDF 10.9MB)
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ORICA | Annual Report 2020 teCHnoloGY DRIVInG GRoWtH AnnuAl RepoRt 2020 Annual Report 2020 01 At A GlAnCe FY2020 ContentS SAFETY AND SECURITY REMAIN WE ARE DELIVERING WE ARE WORKING TOWARDS OUR PRIORITY, ALWAYS INNOVATIVE SOLUTIONS A DECARBONISED FUTURE At a Glance FY2020 IFCIFC Chairman’s Message 02 FOR OUR CUSTOMERS Managing Director’s Message 04 Our Operations 06 Who We Are 08 Our Strategy 10 Our Stakeholders 12 29% COVID-19 Response 14 Risk Management 16 Reduction in Serious Injury Case Rate 21% Sustainability 20 to 0.16 per 200,000 hours worked Increase in Net Promoter Score Governance 26 Board of Directors 30 Executive Team 31 Review of Operations 32 Directors’ Report 46 ZERO Directors’ Report – Remuneration Report 2020 50 11,500+ Lead Auditor’s Independence Declaration 71 Key safety controls verified through the FATALITIES 1,000+ IncomeIncome StatementStatement 72 Statement of Comprehensive Income 73 Major Hazard Management program For three consecutive years WebGen™ blasts with first 40% Balance Sheet 74 adopter customers New target to reduce operational Statement of Changes in Equity 75 Statement of Cash Flows 76 Scope 1 and Scope 2 emissions Notes to the Financial Statements 77 by at least 40% by FY2030, from Directors’ Declaration 125 WE ARE BUILDING A DIVERSE, FY2019 levels7 IndependentIndependent Auditor’sAuditor’s ReportReport 126 INCLUSIVE AND INSPIRED TEAM Five Year Financial Statistics 134 Shareholders’ Statistics 136 9% Corporate Directory 138 Reduction in Scope 1 and Scope 2 25% greenhouse gas emissions Women in senior leadership1, achieving our 2020 target FOUR PROGRESSED AWARDS IMPLEMENTATION EIGHT 8 48% For design and improvements OF OUR TCFD POINT Ethnic and cultural diversity to industry for our FRAGTrack™ Improvement in employee in senior leadership aligned automated rock-sizing ROADMAP health score since 2018 to our revenue profile measurement technology ENVIRONMENT WE HAVE DELIVERED A STRONG FINANCIAL PERFORMANCE WE ARE DRIVING SOCIAL IMPACT IN A CHALLENGING GLOBAL ENVIRONMENT FOR COMMUNITIES 1 Includes those acting in positions (less than 3 per cent). 2 Includes ammonium nitrate (AN) prill and solution as well as emulsion products including bulk emulsion and packaged emulsion, excluding Exsa volumes of 2 4 AN VOLUMES GEARING Global community 98 thousand tonnes. investment and COVID-19 3 Prior corresponding period. ZERO support package to support 4 Net debt/(net debt + equity), where net debt excludes lease 3.83Mt 36.4% liabilities, as disclosed within Note 3 to the financial statements. the most vulnerable SIGNIFICANT (down 4% on the pcp³) (up 1.5 points on the pcp) 5 Equivalent to profit/(loss) before financing costs and income in the community tax, as disclosed in Note 1(b) to the financial statements, ENVIRONMENTAL Demonstrating resilience Within debt covenant before individually significant items. in a challenging year and target range 6 Dividend amount/net profit after tax, before individually INCIDENTS significant items. 5 7 Applies to existing operations. Base year emissions will be UNDERLYING EBIT DIVIDEND recalculated consistent with emissions accounting protocols if structural changes occur such as acquisitions or divestments. $605M 33.0cps 8 Taskforce on Climate-related Financial Disclosures. (down 9% on the pcp) 45% payout ratio⁶ A strong first half result followed by a $3.2M This report is part of our Annual Reporting Suite for focus on controllable factors to mitigate Distributed to communities globally the 2020 financial year (FY2020). You can find more COVID-19 impacts in the second half information about how we performed in our Full Year Results Investor Presentation and Sustainability Report. 02 ORICA Annual Report 2020 03 CHAIRMAn’S MeSSAGe 29% 33.0cps Malcolm Broomhead reduction in Serious full year dividend Chairman Injury Case Rate 45 per cent payout ratio 2020 has been a uniquely challenging year, with the COVID-19 pandemic disrupting our We have been pleased with the progress We are also focused on ensuring future pursuing growth opportunities where we we are making to reduce our impact on generations of female leaders, with women see opportunity to deliver enduring value operations and those of our customers all over the world. We are extremely proud of how the environment, having met or exceeded making up half of the intake of this year’s for our shareholders. our people around the globe responded by keeping health and safety their highest priority, several key targets. Our operational Scope 1 Enterprise Leadership Program. Our priorities will be to build upon the and Scope 2 greenhouse gas (GHG) while upholding their steadfast commitment to ensuring our operations run safely and Ethnic and cultural diversity remains key successes of this year and, along with emissions are nine per cent lower than last strong, with 48 per cent of roles in senior our high growth technology portfolio, deliver reliably for our customers. year. We have now also set an ambitious leadership held by people who identify capitalise on the opportunities that will target of reducing operational (Scope 1 their nationality as other than Australian come our way as the world returns to Safety is our priority, always, and nothing CApItAl MAnAGeMent dividend to 33.0 cents per share, down and Scope 2) GHG emissions by at least is more important than keeping our people, 22.0 cents per share, reflects a payout ratio or New Zealander, which is aligned to a more normal operating environment. This year, we completed both an 40 per cent from FY2019 levels by FY20301, customers and communities safe. We are of 45 per cent of underlying earnings. Orica’s revenue profile. The Board and I would like to thank the equity capital raising and a long-term based on an achievable and credible proud to report that, once again, we had executive team and our colleagues right US Private Placement bond issue which Gearing at 36.4 per cent remains within pathway towards decarbonisation. You can read full details of our progress no fatalities and that our Serious Injury Case across the world for their remarkable have further strengthened our capital the company’s target range of 30 to in creating a more resilient business in Rate declined by 29 per cent over the year, efforts this year. Their hard work and structure and increased the average 40 per cent meaning we are well set to line with our values, our commercial our lowest level in the past four years. We see great opportunity commitment are deeply appreciated. maturity of our debt facilities. The fact support our business goals and maximise strategy and the expectations of our In addition, we remained vigilant of the We also thank our shareholders for their that both were oversubscribed reflects financial performance. in the world’s move to people and stakeholders in our 2020 strain on physical and mental wellbeing continued support and look forward the resilience of the business and the Sustainability Report. on our people caused by the pandemic a low carbon economy, to delivering even more long-term, market’s strong confidence in our and provided support to teams right not just in playing our The Board has been particularly proud to sustainable value in the year ahead. capital structure and strategy for BoARD ReneWAl around the world. see how our people have supported their growth. It was gratifying to receive part to help achieve In October 2019, Lim Chee Onn retired local communities through the pandemic. such support from both our investor after nine years of service to the Orica global goals, but also in In addition to providing funds and supplies base and bond holders. StRonG peRFoRMAnCe unDeR Board. We thank Chee Onn for his valuable transforming our own for the most vulnerable in the community, DIFFICult CIRCuMStAnCeS contribution to the Board and to Orica’s we also adapted our manufacturing sites shareholders during his tenure. In February company’s operations Before COVID-19 struck, we set ourselves As a result, our strong to produce hand sanitiser for local this year we welcomed the addition of John and driving long-term an ambitious agenda, and I am pleased to community organisations, repurposed the balance sheet provides Beevers to the Board. Having worked for report that we have delivered all the key sustainability. technologies on our trucks and hoses to the company for 27 years, and then as initiatives that were in our control, including significant headroom provide sanitisation in outdoor communal CEO of GroundProbe for five and a half the strategic acquisition of Exsa in Peru, against our debt covenants We are also making good progress in our areas, and worked with education partners years prior to its acquisition by Orica, John commencement of operations at the aim to make Orica an even more diverse to digitise learning programs to connect and is complemented knows our business intimately. His deep Burrup plant in Western Australia which and inclusive place to work, recognising remote students. insights and operational expertise will be has been producing good quality product, by total liquidity of that this will fuel innovation and creativity. of tremendous value to the company as and the completion of the final phase of $2.4 billion including we enter our next phase of growth. This year we achieved our target of StRAteGIC pRIoRItIeS the SAP project. both cash and undrawn 25 per cent female representation in The Board has great confidence in Orica’s Statutory net profit after tax was senior leadership roles, while also increasing committed bank facilities.