IPL ANNUAL REPORT 2022
Incitec Pivot Limited
ABN 42 004 080 264
Level 8, 28 Freshwater Place
Southbank, Victoria, Australia, 3006
Telephone: +61 3 8695 4400
Facsimile: +61 3 8695 4419
www.incitecpivot.com.au
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Incitec Pivot Limited Annual Report 2022
CONTENTS
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6
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10
13
14
16
18
20
37
38
40
42
46
48
51
52
54
56
59
60
63
84
124
129
130
131
133
134
ABOUT US
Key Operations
Who We Are
IPL Strategy Snapshot
PERFORMANCE AND OUTLOOK
2022 Year in Review
Chairman’s Report
Managing Director & CEO’s Report
Operating and Financial Review
BEING A SUSTAINABLE BUSINESS
Zero Harm: Our Number One Company Value
Our People
Sustainability Overview
Climate Change
Caring for Our Communities
GOVERNANCE
Corporate Governance
Board of Directors
Executive Team
FINANCIAL AND STATUTORY REPORTS
Directors’ Report
Remuneration Report
Financial Report
Independent Auditor’s Report
ADDITIONAL INFORMATION
Shareholder Information
Five Year Financial Statistics
Glossary
Corporate Directory
3
Incitec Pivot Limited Annual Report 2022 4
Incitec Pivot Limited Annual Report 2022 ABOUT US
“IPL is a leading technology
supplier to the resources
and agricultural sectors
committed to helping
create a sustainable and
decarbonised world.
”
5
Incitec Pivot Limited Annual Report 2022 KEY OPERATIONS
Rainy River
Cheyenne
Calgary
St Helens
Salt Lake City
(WESCO)
Littleton
(Buckley Powder)
Carthage
Dinamita
Gomez Palacio
Louisiana
CANADA
USA
MEXICO
Calama
Coquimbo
Santiago
CHILE
Incitec Pivot Limited
Dyno Nobel
Company Headquarters
Corporate Office
Incitec Pivot Fertilisers
Corporate Office
Manufacturing/Distribution
Manufacturing/Distribution
Emulsions
Initiation Systems
Ammonium Nitrate
Explosive Services
Industrial Chemicals
Agricultural Products
Feedstock
Fertiliser Services
Joint Ventures/Investments
Joint Ventures/Investments
Wolf Lake
Graham
Ormstown
Augusta
(Maine Drilling and Blasting)
Simsbury
New Galilee
(Wampum Hardware)
Grundy
(Vedco)
Waggaman
Pontailler
Vonges
Amailloux
Ankara
Soma
Kayseri
FRANCE
MONGOLIA
Ulaanbaatar
(Titanobel Mongolia)
TURKEY
SENEGAL
BENIN
Dakar
Cotonou
CAMEROON
Douala
SINGAPORE
Berau
Toka Tindung
PAPUA NEW GUINEA
Martabe
Singapore
Jakarta
Tujuh Bukit
Mt Isa
Phosphate Hill
Perth
INDONESIA
Geelong
Melbourne
(Australian Bio Fert)
AUSTRALIA
NEW
Noumea
CALEDONIA
(Katiramona Explosif SAS)
(Nord Sud Dynamitage Sofiter)
Lihir
Moranbah
Blackwater & Curragh
Moura
(Queensland Nitrates QNP)
Gibson Island
Helidon
Hunter Valley
Pretoria
(DetNet)
(Enviro Blasting Services)
Johannesburg
(SASOL Dyno Nobel)
SOUTH
AFRICA
1.4
million tonnes
ammonium nitrate sold
2.5
million tonnes
fertiliser sold
Operations across
6 continents
6
Incitec Pivot Limited Annual Report 2022
Incitec Pivot Limited
Dyno Nobel
Company Headquarters
Corporate Office
Incitec Pivot Fertilisers
Corporate Office
Manufacturing/Distribution
Manufacturing/Distribution
Emulsions
Initiation Systems
Ammonium Nitrate
Explosive Services
Industrial Chemicals
Agricultural Products
Feedstock
Fertiliser Services
Joint Ventures/Investments
Joint Ventures/Investments
Rainy River
Cheyenne
Calgary
St Helens
Salt Lake City
(WESCO)
Littleton
(Buckley Powder)
Carthage
Dinamita
Gomez Palacio
Louisiana
CANADA
USA
MEXICO
Wolf Lake
Graham
Ormstown
Augusta
(Maine Drilling and Blasting)
Simsbury
New Galilee
(Wampum Hardware)
Grundy
(Vedco)
Waggaman
Pontailler
Vonges
Amailloux
Ankara
Soma
Kayseri
FRANCE
MONGOLIA
Ulaanbaatar
(Titanobel Mongolia)
TURKEY
SENEGAL
BENIN
Dakar
Cotonou
CAMEROON
Douala
Calama
Coquimbo
Santiago
CHILE
Pretoria
(DetNet)
(Enviro Blasting Services)
Johannesburg
(SASOL Dyno Nobel)
SOUTH
AFRICA
Martabe
Singapore
Jakarta
Tujuh Bukit
Mt Isa
Phosphate Hill
Perth
SINGAPORE
Berau
Toka Tindung
PAPUA NEW GUINEA
INDONESIA
Lihir
Moranbah
Blackwater & Curragh
Moura
(Queensland Nitrates QNP)
AUSTRALIA
NEW
CALEDONIA
Noumea
(Katiramona Explosif SAS)
(Nord Sud Dynamitage Sofiter)
Geelong
Melbourne
(Australian Bio Fert)
Gibson Island
Helidon
Hunter Valley
5,822 42.9%
employees
worldwide
women
on our Board
2.9%
Indigenous Australians
in our workforce
7
Incitec Pivot Limited Annual Report 2022
WHO WE ARE
IPL is a leading supplier to the resources and agricultural sectors. With a team of just over 5800
dedicated employees, we have a strong safety culture that we’re committed to building on.
With iconic brands, leading technology solutions and great customers, we operate in the resilient
markets of agriculture, mining and quarry and construction. And of course, we are committed
to a sustainable and decarbonised world.
An ASX100 company, IPL has two customer facing businesses,
Dyno Nobel based in the Americas, Europe, Middle East, Africa
(EMEA) and Asia Pacific and Incitec Pivot Fertilisers, a leading
integrated manufacturer and distributor of fertilisers across the
east coast of Australia. We are an international business with
world-scale explosives and fertiliser manufacturing, leading
technology solutions, marketing and servicing operations.
We are proud to be considered a trusted partner by customers
and suppliers.
Our explosives are used to unlock resources ranging from gold,
iron ore and copper, to quarry and construction materials. Those
resources contribute to new technologies, such as electric vehicles
and wind turbines, and critical infrastructure. Our fertiliser products
play an important role in enabling sustainable food production to
meet the rapidly rising demand for food around the world.
With a rich technology heritage, IPL’s key technology drivers
are to improve safety, productivity & efficiency, and sustainability.
And we continue to invest in the development of new technologies
and our service offering.
We have an ambition to reach Net Zero operational emissions by
2050, or sooner if practicable. Our climate change management
strategy is focused on four key pillars:
1. Ensuring strong governance;
2. Reducing operational emissions;
3. Delivering products and strategies that reduce
Scope 3 emissions; and
4. Managing strategic business risks and opportunities.
Our Net Zero Pathway shows the key enablers and technologies
required to reduce our emissions, along with the expected
timeframe for each.
Global footprint
Serving high quality customers with technological solutions across
six continents, including Australia, North America, Europe, Asia,
South America and Africa, we manufacture ammonium nitrate-
based explosives and initiating systems, nitrogen and phosphorus
fertilisers, and nitrogen related industrial and specialty chemicals.
We have major manufacturing sites across Australia and the US, with
key sites in Cheyenne (Wyoming, USA), Louisiana (Missouri, USA),
Waggaman (Louisiana, USA), Moranbah (QLD, Australia), Geelong
(VIC, Australia) and Phosphate Hill (QLD, Australia).
Further strengthening each business are a number of key
investments. The acquisition of Titanobel – a leading French
industrial explosives manufacturer – allows the Dyno Nobel
business to leverage its technology into new and profitable
markets in Europe, Middle East and Africa. The Incitec Pivot
Fertilisers business has acquired a majority stake in Australian Bio
Fert Pty Ltd (ABF), with plans to develop and deliver a new category
of sustainable fertilisers. And finally, our Easy Liquids (formerly Yara
Nipro) acquisition will enable IPF to better serve customers through
a strengthened storage and distribution network and improve
security of supply of a diverse range of liquid products for dealers,
agents, and agronomists.
Dyno Nobel
Delivering advanced technology through
practical innovation
Dyno Nobel is IPL’s international explosives and technical blasting
services business and one of the largest industrial explosives
distributors in North America and Australia. Blasting is an essential
step in extracting the minerals required to meet the world’s demand
for power, infrastructure and consumer goods. Construction, mines,
quarries and seismic explorers use Dyno Nobel products to achieve
safety goals and improve operational efficiency.
We provide a full range of reliable explosives products from
manufacturing plants around the world and extensive blasting
services. In fact, we boast some of the most highly trained blasters
and technical experts in the industry, and operate in Australia,
Canada, the United States, Indonesia, Mexico, Chile, Papua New
Guinea, Turkey and France. Our research & development focuses
on practical ways to use new technologies to benefit our customers
and include DIFFERENTIAL ENERGY®, DigiShot® Plus.4G and
CyberDet® I (1).
(1)
®DigiShot and CyberDet are registered trademarks of DetNet South Africa (Pty) Limited.
8
Incitec Pivot Limited Annual Report 2022 Incitec Pivot Fertilisers
Trusted partner in soil health
As a leading fertiliser manufacturer and distributor on the east
coast of Australia, Incitec Pivot Fertilisers is on a journey to become
the nation’s leading soil health business. Our people, products
and services support farming communities and contribute
to our growers’ production, which in turn helps feed millions
around the globe. Resilient, diverse and proud, we are driven by
science, innovation and maximising soil potential. Through our
comprehensive “Agronomy in Practice” training course we help
educate and develop the capability of Australian agronomists.
Using an interactive and engaging program with hands-on activities
and assessments at every step of the way, it’s the ultimate course
in best practice soil, plant tissue and water sampling, testing,
interpreting analysis results and making fertiliser recommendations.
Incitec Pivot Fertiliser’s leading brands include Granulock®,
SuPerfect® and our patented de-nitrification inhibitor eNpower®.
With a dedicated network of suppliers and agents across the
east coast of Australia, as well as our NATA-accredited Nutrient
Advantage® Laboratory, Incitec Pivot Fertilisers supports farmers
with the crop nutrition insights and products they need to maximise
yield potential in an efficient way. Further afield, through our
global trading business Southern Cross Fertilisers, we sell and trade
in major offshore agricultural markets including Asia Pacific, the
Indian subcontinent, the United States, Latin America and
other international locations.
The future looks different
The way we operate at IPL and what our customers want from us,
has changed. It is being driven by the increasing importance of
food security and mining extraction for the world’s future, as well
as the global trend in decarbonisation. With a clear opportunity to
accelerate our growth through the development of technology and
customer solutions, we can capitalise on the significant potential in
the mining and agricultural sectors.
And this is why in May 2022 we announced our demerger proposal,
with the intention to create two market leading companies. Under
this proposal, Dyno Nobel and Incitec Pivot Fertilisers will each
have a dedicated purpose, vision and leadership. With technology
solutions and prioritised capital allocation, each company will
have the opportunity to accelerate its growth ambitions.
This will help drive value for shareholders, and better serve our
customers, employees and the communities in which they operate.
The demerger will enable each business to create focussed solutions
to meet GHG emission reduction targets, and to assist their direct
and indirect customers in achieving their own net zero ambitions.
Building on impressive one-hundred-year histories, there is a clear
and compelling path for Dyno Nobel and Incitec Pivot Fertilisers
to thrive as two independent companies. To be trusted partners
delivering technology-driven solutions to customers. The demerger
is subject to final Board approval, shareholder and other third-party
approvals.
9
Incitec Pivot Limited Annual Report 2022 IPL STRATEGY SNAPSHOT
At the heart of our IPL strategy, we strive to be a safe, efficient and
industry leading company.
This means we want to be an industry leader for our safety performance.
We go further by actively shaping the safety performance of the industries
in which we operate. Efficient is having a sound operating model that is
simple and enables our people to be their very best and deliver on our
strategy. We want the most talented workforce, who are proud to call
us their employer.
Our strategy is underpinned by six drivers and these direct our focus,
effort and resources. The activities – necessary to deliver our strategy – are
expressed as yearly milestones. And of course, bringing our strategy to life,
relies on our people living our values every day, in every way.
We have an ambition to reach Net Zero operational emissions by 2050, or
as soon as practicable. Our climate change management strategy is focused
on four key pillars: 1. Ensuring strong governance 2. Reducing operational
emissions 3. Delivering products & strategies that reduce Scope 3 emissions
and 4. Managing strategic business risks & opportunities.
IPL IS A LEADING SUPPLIER
TO THE RESOURCES AND
AGRICULTURAL SECTORS,
COMMITTED TO A
DECARBONISED WORLD.
PURPOSE
Unlocking the Potential
in the Earth to
Help People Grow.
AMBITION
IPL will be a safe,
efficient and industry
leading company.
VALUES
Zero Harm
for Everyone
Everywhere
Think
Customer.
Everyone.
Every day.
Treat the
Business as
our Own
Value people
– Respect,
Recognise &
Reward
Care for the
Community
& our
Environment
Challenge &
Improve the
Status Quo
Deliver on
our Promises
STRATEGIC DRIVERS
Zero Harm
Zero Harm is
good business.
It’s achieved
through
industry leading
performance in
occupational health,
personal safety,
process safety and
the environment.
Talented &
Engaged People
The right people
with the right
skills, in the right
roles working
collaboratively. This
enables us to gather
and capture diverse
ideas across our
organisation.
Customer
Focus
Deepening
our customer
relationships
and strategic
partnerships across
our businesses
ensures we can
innovate and
share technologies
and solutions
that improve
our customers’
businesses.
Leading
Technology
Solutions
Improve
safety, reduce
environmental
impacts and
create a positive
social impact,
whilst increasing
productivity
and efficiency in
our customers’
operations.
Manufacturing
Excellence
Be a world class
manufacturing
organisation,
delivering personal
and business
growth. Achieved
through Zero Harm,
reliable operations
and being cost
competitive.
Profitable
Growth
Focussed on growth
opportunities that
are distinctive to
our differentiated
technology, core
markets, core
capabilities and
advantaged market
segments.
Be the clear leader in
premium explosives
solutions in selective
global markets
Be the clear
plant nutrition &
soil health leader
» Drive value through innovation on the ground.
» Support Australasian food security.
»
Industry leading products, technology solutions and support
driving safety for our customers.
» Leverage 100+ years of plant nutrient experience to develop
and deliver sustainable soil health solutions for growers.
»
Integrated model to support our value proposition.
» Continue to build on our winning customer value proposition
» Play in the right markets with the right innovation to win,
underpinned by innovative products and services.
with a focus on ESG.
» Transform Gibson Island to a world scale Primary Distribution
Centre & green energy hub.
10
Incitec Pivot Limited Annual Report 2022 11
Incitec Pivot Limited Annual Report 2022 12
Incitec Pivot Limited Annual Report 2022 PERFORMANCE
AND OUTLOOK
“As we look towards 2023,
we are focused on capitalising
on the current favourable
market conditions.
”
13
Incitec Pivot Limited Annual Report 2022 2022 YEAR IN REVIEW
Financial
Highlights
EBITDA (1)
$1,858M
NPAT (1)
$1,027M
Safety and
Zero Harm
99%
UP ON
FY21
0
Significant
Environmental
Incidents
186%
UP ON
FY21
0
Fatalities
FOR 2 YEARS
Technology
10
millionth
electronic detonator
assembled at
IPL’s Helidon
manufacturing plant
(Queensland,
Australia)
1st
regulator approved
pre-charged blast
using wireless
detonators in
Western Australia
Sustainability
Climate Change
strategy in action
Operational GHG projects
identified which support a
>42%
reduction pathway
to 2030
Y
k
2022
(1) Excludes IMIs.
14
Incitec Pivot Limited Annual Report 2022 Key business announcements & highlights
Future looks
different
IPL’s demerger proposal, with the intention to create two market leading companies in Dyno Nobel and
Incitec Pivot Fertilisers, was announced. The demerger is subject to final Board approval, shareholder and
other third-party approvals. Strategic review of Waggaman plant to be undertaken in light of positive
outlook for global ammonia market and external interest in the plant.
Titanobel acquisition
Acquired 100% of the shares in Explinvest, the holding company of the Titanobel Group – a leading
French industrial explosives manufacturer and drilling, blasting and technical services provider.
Waggaman CO2
Sequestration Plans
A Front End Engineering Design (FEED) study is underway for a Carbon Capture Facility at Waggaman
capable of processing up to 950,000 metric tonnes of CO2 to transport via a pipeline to a permanent
geological sequestration site. Emissions from the plant represent 45 per cent of Dyno Nobel’s
total greenhouse gas emissions. If it proceeds, this project alone could reduce these emissions by
approximately 30% against the 2020 baseline, or about 800,000 tonnes of CO2e per year.
Easy Liquids
acquisition
Green ammonia
production a
step closer
National AdBlue
critical shortage
response
Majority stake
in Australian
Bio Fertilisers
Gibson Island
transition
Acquired the Easy Liquids (formerly Yara Nipro) business to provide increased liquid fertiliser options
and enhanced security of supply for farmers across the east coast of Australia.
Partnering with Fortescue Future Industries, IPL commenced a FEED study into the industrial-scale
production of green ammonia at our Gibson Island fertiliser manufacturing facility. The proposal under
investigation involves the construction of a new ~500MW hydrogen electrolysis facility at the site to
produce green hydrogen as well as the retrofitting of IPL’s existing ammonia manufacturing facility to
run on the green hydrogen produced onsite. Should the project proceed to a final investment decision,
it would be Australia’s first industrial scale green ammonia production facility.
Working closely with the Federal Government, IPL mobilised expert teams to work on expanding
manufacturing capability and increase Australia’s supply of AdBlue – an essential product to keep
diesel vehicles moving.
Acquired a majority stake in Australian Bio Ferts (ABF) which is seeking to develop a new category
of sustainable fertilisers for Australian farmers.
Made the difficult decision to cease traditional fertiliser manufacturing at IPL’s Brisbane-based Gibson
Island plant after exhaustive efforts were unable to secure an affordable long-term gas supply.
The potential conversion of Gibson Island manufacturing assets shows our commitment to pursuing
opportunities to help create a more sustainable world in the new and emerging opportunities stemming
from green ammonia.
Recognised
World Safety Day
and International
Women’s Day
Held World Safety Day events globally throughout IPL as a well-timed opportunity to affirm on our
commitment to Zero Harm and our safety fundamentals. Also celebrated the women in our lives and
their achievements as part of International Women’s Day 2022, with a focus on “break the bias”.
Encouraging a gender equal world free of bias, stereotypes, and discrimination, where difference
is not only valued but celebrated were some of the ideas explored.
15
Incitec Pivot Limited Annual Report 2022 CHAIRMAN’S REPORT
2022 has been a stand-out year for the IPL Group, marked by a record result against a backdrop
of geo-political and economic challenges in the aftermath of the pandemic.
As we look towards 2023, our improved performance and strategic progress has positioned the
business well to capitalise on the favourable market conditions. We have very good momentum
and we remain absolutely focused on our corporate strategy.
We also continue to focus on improving our return on invested
capital (ROIC) and in 2022 we achieved a 13.8% ROIC, up from 5.8%
in the prior year.
The Board will continue to focus on ensuring we have an appropriate
capital structure to support the opportunities ahead for the
business, as well as delivering strong returns for shareholders.
The strategic progress of both our explosives and fertilisers
businesses during the year led to our announcement in May
of our intention to demerge these two different businesses during
2023. With two separate dedicated boards, leadership teams,
and appropriate capital structures, these two iconic businesses
will be positioned to thrive and pursue their respective strategies
unencumbered.
Also, in November 2022 and consistent with our long-term strategy,
we announced a strategic review of our ownership in our ammonia
production plant in Waggaman, Louisiana, with the timing driven
by interest from a number of credible counterparties. The strategic
review of Waggaman means that the timeline for the demerger will
be delayed by approximately 6-12 months.
We continue to invest significantly in a number of projects to
address climate change on our journey to Net Zero by 2050.
These projects are positioned to deliver our medium term absolute
GHG reduction target and, have the potential to deliver a more than
42% emission reduction for IPL’s current portfolio by 2030.
I am pleased to announce that we were once again included in the
S&P Global Dow Jones Sustainability Index due to our Company
Benchmarking Score for 2022. We improved our 2021 score,
positioning ourselves well against our industry peers and improving
our own score by 15 points over the past decade. These results
validate the work we are doing to improve the sustainability of
your company.
Financial performance
We reported a 162% increase in Earnings Before Interest and Tax
(EBIT) excluding individually material items (IMIs) to $1,485m.
Our Net Profit after Tax (excluding IMIs) of $1,027m, is up 186%
compared to the prior year.
Dyno Nobel Americas reported EBIT of US$532.8m, up from
US$141.2m, with strong second half manufacturing performance
capturing favourable commodity markets. However, a lag in
passing through price increases to address inflation impacted
explosives margins in the second half.
Dyno Nobel Asia Pacific delivered EBIT of $162m, up 16%,
reflecting strong volumes and growth from technology sales.
Fertilisers EBIT increased to $614m, up from $268.4m, with
manufacturing more than doubling earnings during the year.
We retained a strong balance sheet with net debt of $1bn
and Net Debt/ EBITDA ratio ex IMIs of 0.5x, down from 1.1x.
With the improved earnings performance, strong cash
generation and balance sheet strength, the Board was
pleased to announce a record final dividend of 17 cents
per share, taking our total dividend to 27 cents per share.
In addition, the Board has announced an on-market share
buyback of up to $400m over the next 12 months.
16
Incitec Pivot Limited Annual Report 2022 Towards the demerger
The Board believes that significant value can be unlocked by the
separation of the explosives and fertilisers businesses, with both
operating in large and attractive markets that value their industry
leading technology and products.
With increased focus and appropriate capital structures, processes
and policies for each business, these two iconic, but different
businesses will be unencumbered to pursue their respective and
unique destinies.
Our people
During the year, as travel once again became possible, the Board
was able to visit our people on the ground with Board visits to
Townsville, Gibson Island, Geelong and Werribee in Australia and
Salt Lake City, Waggaman and Carthage in the USA. These visits
provide us with important opportunities to gain more insights
into the business, our people and our customers.
In the lead up to the demerger, we have made some exciting
appointments for a future, stand-alone fertilisers business.
In June, we were delighted to announce Michael Carroll as Chairman-
designate of the fertilisers business. Mike is a highly experienced
director and has a long history working in the agricultural sector
across finance, fertilisers and agricultural services.
In addition, current IPL Board member, Greg Robinson, will join
Mike on the future board as a non-executive director. Greg will
be a valuable addition, bringing knowledge of the fertilisers
business, along with extensive experience across the resources,
energy and finance sectors.
We have also appointed the CEO-designate and CFO-designate for
the fertilisers business with Christine Corbett and Chris Opperman
taking on these roles and establishing what is a very capable senior
management team to lead the business both in the lead up to, and
following, the demerger.
I would like to sincerely thank our Managing Director & CEO Jeanne
Johns and the Executive Team for their impressive leadership, and
all our people for their incredible hard work and dedication to IPL
throughout the year.
I would also like to thank my fellow Board members for their
contribution throughout the year.
Looking ahead, your company is in a strong position as we enter
FY23 with both of our businesses performing well in very attractive
markets and with great opportunities to be able to continue creating
value for our shareholders and all other stakeholders. We have clear
strategic directions established for both businesses and will be
working diligently to deliver on those strategies over the coming
year.
Brian Kruger
Chairman
Now, more than ever, we are seeing the increasing importance of
food security and mining extraction to the world, as well as the rapid
acceleration towards decarbonisation and electrification.
There is unprecedented opportunity for us to accelerate our growth
through the development of technology and customer solutions and
to capture the significant potential in the resources and agricultural
sectors.
And given how quickly the world is changing and the opportunity
set in front of both businesses – it is clear that separating the two
companies will further empower them to more successfully capture
these markets.
The progress that Jeanne and the team have made to improve the
reliability of our assets and develop and grow technology, coupled
with our overall balance sheet capability, mean that we will pursue
a separation from a position of strength.
This allows us to ensure both businesses will have capital structures
that reflect their different earnings profiles and have the capacity
to invest in the compelling growth opportunities they have in front
of them.
Also, we know there is a high level of interest for an opportunity
for separate exposures to either a premium explosives business,
or a focused Australian fertilisers business from both existing
shareholders and prospective shareholders. This reinforces our
view that increased choice for investors will be an important
contributor in unlocking value from the separation.
We look forward to presenting the demerger proposal in further
detail over coming months and to the shareholder vote expected
within the next 12 months.
Waggaman strategic review
Our corporate strategy is focused on adding value through
technology solutions for our customers in both of our businesses
to grow recurring earnings.
The review of Waggaman is in direct alignment with our long term
corporate strategy and addresses the excess commodity exposure
to ammonia in our current portfolio.
Given the current performance of Waggaman, the outlook for
the global ammonia market and the external interest in this
asset, we believe that now is the optimum time for the review
and so completing the review will result in a short delay in the
demerger process.
We will, of course, look to minimise the delay so as to retain the
momentum we have established with the demerger process.
17
Incitec Pivot Limited Annual Report 2022 MANAGING DIRECTOR & CEO’S REPORT
It is my pleasure to report a company record performance for the 2022 financial year along with the
significant strategic progress made during the year.
This performance is the result of a resilient and adaptive team working to offset the impacts of the
pandemic, supply chain disruptions, shortages of key materials and skilled people, and inflationary
pressure. I thank our people across the business for both their extraordinary efforts and the terrific
outcome under these challenging circumstances.
We also made significant progress in identifying and measuring the
Scope 3 GHG emissions in our supply chains. In collaboration with a
customer, we measured GHG emission reductions of 25% with the
use of our premium technology DeltaE, which is currently being
verified by an independent third party. Our enhanced efficiency
fertilisers have also demonstrated an ability to reduce emissions
from their use by up to 70% (1) dependent upon the application,
for our farming customers.
I am particularly proud of our cross functional team including those
at Gibson Island who responded to the Australian government’s
concerns about AdBlue supply shortage over year-end 2021/22.
IPL worked closely with the Australian government to increase
our production from our normal 10% market share up to, at times,
80%. It was an extraordinary team effort over a normally peak
vacation period and I want to acknowledge all the sacrifices
made by our people to keep Australian trucks and other essential
vehicles moving.
Our company prospered throughout the 2022 financial year and
is well positioned going into next year. Our customers value our
reliability of supply and our distinctive technology that supports
their safety, environmental, and productivity goals. We produce
essential products which underpin the agricultural and resource
industries. Our business and supply chain teams have worked
tirelessly to keep our customers supplied and our business
performing at a high level.
Safety and sustainability
Our Zero Harm value has served us well during the peak of COVID-19
in January of this year. I am proud of how the team responded to the
COVID-19 crisis – showing care for each other and our customers,
putting in place the processes and systems to keep people safe.
Our COVID-19 response has now been integrated into our overall
safety management system.
Our safety journey continued to improve as the number of
process safety incidents decreased by 34%. While our personal
safety recordable rate stayed flat, I was pleased that injuries
that resulted in serious harm continued to decrease for the
third year running.
We continue on our journey to Net Zero by 2050, or earlier if
practicable. In 2022, we progressed four significant projects to
achieve this – Moranbah tertiary nitrous oxide abatement,
Waggaman geological sequestration, the conversion of our
Gibson Island manufacturing facility to green ammonia, and
nitrous oxide abatement for our Louisiana, Missouri, facility.
I am pleased that these four projects aim to deliver in excess
of 42% GHG emission reductions against our 2020 baseline,
for our current portfolio. We will be re-visiting our medium-term
target next year as these projects progress and following the
release of the Science Based Targets Initiative target setting
methodology for the chemicals sector.
(1) Results from a field trial conducted in a ryegrass pasture system in south–western
Victoria show the application of EEF with the inhibitor DMPP reduced N2O
emissions by 73% when compared to urea application alone. See the Australian
Government Department of Agriculture, Water and the Environment Climate
Research Program: Reducing Nitrous Oxide Emissions, p.5
18
Incitec Pivot Limited Annual Report 2022 Leadership
We are pleased to have CEO-designate of our fertiliser business,
Christine Corbett, join the business. Christine joins the company
with a wealth of executive experience in energy, e-commerce, retail
and logistics, and will join the Executive Team running the fertilisers
business until the demerger takes place.
Further strengthening our Executive Team, I am very pleased to
welcome Paul Victor as our CFO. Paul brings strong financial and
business experience from his previous CFO role with the publicly
listed entity Sasol of South Africa.
We are proud of our culture of valuing people and their development
which has led to the opportunity to promote some of our key talent.
Upon embedding the manufacturing facilities inside our business
units, I was pleased to appoint Stephenie DeNichilio as our Chief HSE
and Operations Excellence Officer during the year. Rob Mill likewise
joined the Executive Team as Chief People Officer.
I want to offer my thanks to the dedicated teams across our
businesses for their contributions to the company’s success.
I would also like to extend my thanks to the Board for their
invaluable support during the year.
Looking forward
The supply/demand fundamentals for our products continue to look
very favourable as we enter the new year. Our priority is to capture
these tailwinds while managing supply disruptions and inflationary
pressure. We remain focused on safe, reliable operations, serving our
customers with leading technology solutions, and enhancing our
supply chain resilience.
We continue to invest in both our businesses in line with the macro
trends of decarbonising the world’s energy while meeting growing
demand for food and materials. With investment in our strategy, we
are targeting in the medium term for mid-to-high single digit growth
in our explosives business and doubling our fertiliser distribution
earnings through soil health offerings and improved supply
positions.
Our focus entering the new year is to maintain our momentum in
earnings while we pursue the strategic option review for Waggaman.
Demerger preparations will continue as we look to unlock additional
value from these two iconic companies so they can pursue their
respective destinies.
Jeanne Johns
Managing Director & CEO
Business performance
2022 represents the best financial performance in IPL corporate
history with $1,027m NPAT excluding IMIs.
Our Waggaman plant delivered US$344m in FY22 after US$70m in
insurance recovery related to the February outage caused by a third-
party original construction issue. I am very pleased to report that
the plant continues to run reliably above the 95% manufacturing
excellence target since its restart in April.
Our explosive businesses operate in two of the best mining regions
in the world, Australia and North America.
In North America, our explosives EBIT of US$110m was down 13%
due to the lag in recovering energy, inflation, and supply chain cost
increases. Overall volumes grew with good sales growth of our
premium technology of electronic detonators and further Delta E
uptake. The volume growth was driven by strong performance in
Quarry and Construction and an increase in coal demand. Metals
were slightly down due to temporary customer mine outages,
partially offset by growth in the Western US and Eastern Canada.
Our manufacturing Agriculture and Industrial Chemicals segment
delivered a record US$79m due to strong operations at St. Helens
facility post the 2021 turnaround, capturing the available margin.
In our Asia Pacific region, EBIT increased 16% to $162m reflecting
strong customer and technology growth with a 14% increase in
premium emulsions and an 18% increase in electronic detonators.
Ammonium nitrate supply continues to be tight in both of our
explosives markets and our businesses are well situated to capture
projected positive pricing upon contract renewals over the next
few years.
Our fertilisers business delivered an EBIT of $614m, up 129%, as
the business captured the upswing in commodity pricing while
delivering a major planned turnaround at Phosphate Hill. The
disruption in contracted natural gas supply from the Northern
Territory to Phosphate Hill was managed to ensure the plant
continued throughout the period at full rates. Natural gas will be
secured for the coming year until full contracted supply is expected
to resume in February. Distribution earnings remained resilient
in a volatile supply and pricing environment, supported by good
demand and agricultural conditions.
Progressing our strategic agenda
We made excellent progress across our strategic agenda for both
businesses during the year.
We completed our purchase of Titanobel, entering the French
quarry and construction market and providing access to Western
African markets, with future facing mineral opportunities. The low
penetration of technology in key European and African markets,
especially electronic detonators, is a large opportunity for this
business. When combined with our existing Nitromak business in
Turkey, we have a compelling foundation to grow our explosives
business across the EMEA region.
Our soil health strategy was furthered with the purchase of Yara
Nipro (now renamed Easy Liquids) and the increased ownership in
Australian BioFerts. With these purchases, we will extend our fertiliser
offering to more organic bio fertilisers and expand our offer in
liquid specialty products, which are both growing segments of the
fertilisers market.
Along with our pathway to Net Zero for each of our businesses,
these purchases set the foundation for our intention to demerge
and create two sector leading companies to pursue their different
destinies.
19
Incitec Pivot Limited Annual Report 2022 OPERATING AND FINANCIAL REVIEW
Group Overview
IPL is a leading supplier in the resources and agricultural sectors
with an unrelenting focus on Zero Harm. With a team of 5000 plus
dedicated employees, the Company adds value to its customers
through manufacturing excellence, leading technology solutions,
innovation and world class services focused on the needs of its
customers. Sustainability is interlinked with IPL’s strategy which is
aimed at delivering sustainable growth and shareholder returns,
while proactively managing those issues most material to the
long-term sustainability of our business, the broader environment,
and the communities in which we operate. IPL has an ambition of
achieving Net Zero greenhouse gas emissions by 2050 or sooner if
practical.
IPL operates through three business units, details of which are set
out in this review:
» Dyno Nobel Americas;
» Dyno Nobel Asia Pacific; and
» Fertilisers Asia Pacific.
Through Dyno Nobel, the Company plays a critical role in releasing
the worlds natural resources, to help build infrastructure and
generate the energy we need to live in a modern world.
Through Incitec Pivot Fertilisers’ 100-year heritage in Australian
agriculture, IPL plays an important role in enabling sustainable food
production to meet the rapidly rising demand for food around the
world.
IPL leverages its nitrogen manufacturing expertise with a global
approach to standards and processes, complemented and enhanced
by regional oversight and operational discipline.
The Company has operations in Australia, North America, Europe,
Asia, Latin America and Africa.
Dyno Nobel Americas
The Dyno Nobel Americas business comprises three businesses:
» Explosives;
» Agriculture & Industrial Chemicals; and
» Waggaman operations.
Explosives
Dyno Nobel is the second largest industrial explosives distributor in
North America by volume. It provides ammonium nitrate, initiating
systems and services to the Quarry & Construction sector across the
US; the Base & Precious Metals sector in the US mid-West, US West
and Canada; and to the Coal sector in the Powder River Basin, Illinois
Basin and Appalachia.
In North America, Dyno Nobel manufactures ammonium nitrate
at its Cheyenne, Wyoming and Louisiana, Missouri plants. The
Cheyenne, Wyoming plant is adjacent to the Powder River Basin,
North America’s most competitive thermal coal mining region and is
well positioned to service Base & Precious Metals in Western US. The
Louisiana, Missouri plant has a competitive logistic footprint from
which to support mining in both the Illinois Basin and Appalachia, as
well as Quarry & Construction in the US mid-West.
Initiating systems are manufactured at Dyno Nobel’s facilities in
Connecticut, Kentucky, Illinois, Missouri, Chile and Mexico, and are
also sourced from DetNet South Africa (Pty) Ltd (DetNet), an IPL
electronics joint venture.
Agriculture & Industrial Chemicals
The Dyno Nobel Americas business manufactures and distributes
nitrogen-based fertilisers in the United States from its St Helens,
Oregon and Cheyenne, Wyoming plants.
Waggaman Operations
The Dyno Nobel Americas business manufactures and distributes
ammonia at its Waggaman, Louisiana plant in the United States.
Ammonia produced at Waggaman is used in Dyno Nobel’s
manufacturing process and is also sold to third parties under long
term contractual arrangements.
Dyno Nobel Asia Pacific
Through Dyno Nobel Asia Pacific, IPL provides ammonium nitrate
based industrial explosives, initiating systems and services to the
Metallurgical Coal and Base & Precious Metals sectors in Australia,
and internationally to a number of countries including Indonesia,
France, Papua New Guinea and Turkey through its subsidiaries and
joint ventures. Ammonium nitrate is often sold in conjunction with
proprietary initiating systems and services.
Dyno Nobel is the second largest industrial explosives distributor
in Australia by volume, which in turn is the world’s third largest
industrial explosives market. In Australia, Dyno Nobel primarily
supplies its products to metallurgical coal mines in the east and to
iron ore mines in the west.
In Australia, Dyno Nobel manufactures ammonium nitrate at its
Moranbah ammonium nitrate plant, which is located in the Bowen
Basin, the world’s premier metallurgical coal region. It also sources
third party ammonium nitrate including in Western Australia to
service the Iron ore and Underground sectors.
Initiating systems are manufactured in Australia at Dyno Nobel’s
Helidon, Queensland facility and are also sourced from IPL facilities in
the Americas and from DetNet (South African joint venture).
In FY22 the Group acquired 100% of Titanobel, a business which
is highly complementary to Dyno Nobel’s existing operations and
provides access to new markets where Dyno Nobel can leverage
its premium technology offering. Titanobel is a leading industrial
explosives manufacturer and drilling, blasting and technical services
provider based in France.
Fertilisers Asia Pacific
IPL’s Fertilisers business in Australia is the largest domestic
manufacturer and supplier of fertilisers by volume.
Internationally, the Fertilisers business sells to major offshore
agricultural markets in Asia Pacific, the Indian subcontinent, Brazil
and the United States. It also procures fertilisers from overseas
manufacturers to meet domestic seasonal peaks.
The Fertilisers business manufactures the following fertilisers at three
locations:
» Phosphate Hill: Di/mono-ammonium phosphate (DAP/MAP);
» Gibson Island: Ammonia (Big N), Granulated ammonium sulphate
(GranAm) and Urea (noting planned manufacturing closure in
early FY23); and
» Geelong: Single Super Phosphate (SSP).
In FY22, IPL completed the purchase of the Yara Nipro liquid fertiliser
business in Australia and acquired a majority stake in Australian
Bio Fert Pty Ltd with the intent to construct a large scale plant and
develop and deliver a new category of sustainable fertiliser. Each
acquisition is aligned to the strategy of the business to be a soil
health leader.
20
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Group Summary
IPL GROUP
Reported Revenue and Earnings
Revenue
EBITDA ex IMIs
EBIT ex IMIs
NPAT ex IMIs
IMIs after tax
Group NPAT
Shareholder Returns
Cents Per Share
Earnings per share ex IMIs
Total Dividend
Credit Metrics
Net debt (1)
Net Debt incl TWC facilities /
EBITDA (2)
Net debt / EBITDA (ex IMIs) (3)
Interest Cover (4)
Year ended 30 September
FY22
A$m
FY21
A$m
Change
A$m
6,315.3
4,348.5
1,966.8
1,857.7
1,485.2
1,027.1
934.9
566.4
358.6
922.8
918.8
668.5
Net Debt
Net debt increased by $32m to $1,036m at 30 September 2022
(pcp: $1,004m) and Net Debt/EBITDA ex IMIs decreased to 0.5x
(pcp: 1.1x). Net debt increased during the year as a result of the
acquisitions of Titanobel and Yara Nipro ($144m), investments in
sustenance (including turnarounds) and minor growth projects
($434m), dividends paid to shareholders ($355m), lease liability
payments ($43m) and other non-cash movements in net debt
($139m) offsetting almost $1.1b of operating cashflows. The Group’s
investment grade credit ratings were maintained:
» S&P: BBB (stable outlook)
(13.4)
(209.5)
196.1
» Moody’s: Baa2 (stable outlook)
1,013.7
149.1
864.6
52.9
27.0
18.5
9.3
30-Sep-22 30-Sep-21
(1,036.2)
(1,004.2)
0.7x
0.5x
20.3x
1.4x
1.1x
9.7x
Zero Harm
IPL’s Total Recordable Injury Frequency Rate (5) (TRIFR) for the
rolling twelve-month period ended 30 September 2022 was
0.89, an increase from 0.87 at 30 September 2021. There were 25
Process Safety Incidents (6) recorded in FY22 (pcp:38). The Company
maintained its strong environmental safety record with zero
Significant Environmental Incidents (7) during the year (pcp: 0). IPL
has refreshed its safety programs to drive improvement.
Financial Performance
Year ended 30 September
FY22
A$m
FY21
A$m
Change
%
INCOME STATEMENT
Revenue
Business Revenue
DNA
DNAP
Fertilisers APAC
Eliminations
Group Revenue
EBIT
Business EBIT ex IMIs
DNA
DNAP
Fertilisers APAC
Eliminations
Corporate
Group EBIT ex IMIs
EBIT margin
NPAT
Net Profit After Tax (NPAT) excluding Individually
Material Items (ex IMIs)
IPL reported NPAT (excl. IMIs) of $1,027m, an increase of 186%
compared to $359m in the pcp.
Individually Material Items (IMIs)
NPAT for FY22 includes a loss of $13m (FY21 a loss of $209m) of after-
tax IMIs relating to costs incurred in preparing for IPL’s proposed
demerger ($9.2m pre-tax) and additional costs associated with the
preparations for the closure of IPL’s gas manufacturing facilities at
Gibson Island, Queensland, ($10m pre-tax).
Capital Management
Earnings per share (EPS) ex IMIs of 52.9 cents per share increased by
34.4 cents per share compared to FY21 EPS of 18.5 cents.
A final dividend of 17 cents per share 100% franked has been
announced, representing a 51% payout ratio of NPAT (excl. IMIs).
In addition to the final dividend, IPL announced its intention
to undertake an on-market share buyback of $400 million
over a 12 month period. This announcement is in line with the
Capital Allocation Framework announced at IPL’s Investor Day
on 6 September 2022. IPL has established its Capital Allocation
Framework with the objective of enhancing shareholder value
through optimising its weighted average cost of capital while
retaining an appropriately strong credit profile in support of its
investment grade credit ratings.
The buyback is expected to benefit shareholders by reducing the
shares on issue with a resultant improvement in earnings per share,
dividends per share and returns on equity.
IPL has sufficient cash reserves and committed bank facilities to
complete the buyback. The share buyback will be conducted in the
ordinary course of trading and the exact amount and timing of share
purchases will be dependent on regulatory requirements and market
conditions.
2,532.9
1,588.7
1,200.4
937.8
2,647.8
1,894.6
(65.8)
(72.6)
6,315.3
4,348.5
759.3
162.5
613.7
0.8
(51.1)
189.9
140.2
268.4
(1.8)
(30.3)
1,485.2
566.4
23.5%
13.0%
59
28
40
9
45
300
16
129
nm*
(69)
162
6
(7)
5
(269)
nm*
186
94
580
Underlying interest expense (8)
(101.4)
(107.4)
Non-cash unwinding liabilities
(5.8)
(5.4)
Net borrowing costs
Tax expense ex IMIs
Minority interest
NPAT excluding IMIs
IMIs after tax
Group NPAT
*not meaningful
(107.2)
(112.8)
(350.8)
(95.0)
(0.1)
–
1,027.1
(13.4)
1,013.7
358.6
(209.5)
149.1
(1) Net debt comprises the net of interest-bearing liabilities, cash and cash equivalents, and the fair value of derivative instruments economically hedging the Group’s interest-bearing liabilities.
(2) Net debt (adjusted for average exchange rate for the year)/EBITDA incl TWC facilities ratio is calculated using 12 month rolling EBITDA ex IMIs. Net debt for this ratio has been adjusted to include the
usage of factoring and reverse factoring facilities.
(3) Net debt (adjusted for average exchange rate for the year)/EBITDA ratio is calculated using 12 month rolling EBITDA ex IMIs.
(4) Interest Cover = 12 month rolling EBITDA ex IMIs/net interest expense before accounting adjustments.
(5) TRIFR is calculated as the number of recordable incidents per 200,000 hours worked and includes contractors. TRIFR results are subject to finalisation of the classification of any pending incidents.
(6) Tier 1 and Tier 2 Process Safety Incidents as defined by the Center for Chemical Process Safety.
(7) Significant Environmental Incidents as assessed against IPL’s internal risk matrix with actual consequences of 5 or higher on a 6-level scale.
(8) Underlying interest expense represents total borrowing costs less non-cash interest unwind, representing the discount unwind on the Group’s long-term liabilities.
21
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022
Supply Chain/Inflation: Despite management action to address
cost pressures through efficiency improvements and contract
pricing, the speed and extent of global supply chain pressures
and rising inflation had a negative impact on the FY22 result. The
impact was most prominent in the DNA business ($41m of the
$54m) and includes higher cost of energy, raw materials related to
Initiating Systems and abnormal freight costs driven by supply chain
disruptions. The lag in recovery of these cost increases is expected to
materially reduce in FY23.
Commodity Prices & Foreign Exchange: Higher commodity
prices, primarily ammonia and DAP, contributed $920m to the result
compared to pcp, with a weaker Australian dollar contributing a
further benefit of $80m.
Corporate: Corporate costs increased compared to the pcp.
The increase includes provisioning for legal claims.
Strategic review of WALA and implications for
structural separation of the Explosives and
Fertilisers businesses
On 15 November 2022, IPL announced that it had received a number
of unsolicited approaches in relation to a potential acquisition of its
ammonia manufacturing facility located in Waggaman, Louisiana,
USA (WALA). The Company will undertake a review of the strategic
options for WALA in the near-term. Under any scenario, IPL intends
to maintain the strategic value of long-term supply of ammonia from
WALA into the Dyno Nobel Americas business. An estimate of the
financial impact cannot be made at this point.
The strategic review process will have implications for the timing
of the proposed structural separation of the Incitec Pivot Fertilisers
and Dyno Nobel businesses which was announced on 23 May
2022. It is currently anticipated that the previously communicated
target completion date for the separation of early 2023 will likely be
extended by 6-12 months, pending the completion of the strategic
review process for WALA. There has been no impact on the financial
statements for FY22 in relation to the proposed structural separation
other than the costs incurred to date which have been classified
as an individually material item and disclosed in the notes to the
financial statements.
FY22 Business Review
The Group reported FY22 Earnings Before Interest and Tax excluding
IMI’s (EBIT) of $1,485m, an increase of $919m compared to pcp. Major
movements for the year were as follows:
Manufacturing Performance: Aside from the one-off incident at
WALA, the plant operated at nameplate capacity throughout the
year. With the exception of Phosphate Hill where production rates
were below nameplate leading into the turnaround, manufacturing
reliability saw strong improvements at IPL’s other ammonia plants.
This is a positive reflection of the investment made by IPL into
improving plant reliability over the past 4 years.
The net financial impact of planned turnarounds was negligible
with the favourable impact of turnarounds in FY21 at Waggaman,
Moranbah and St Helens offset by the impact of the Phosphate Hill
turnaround in FY22. The Cheyenne turnaround, scheduled for later in
FY23, is the last of the plants scheduled for its turnaround as part of
the reliability improvement plan.
Reliable production at around nameplate capacity has been
achieved at all plants following the turnarounds.
Phosphate Hill Gas: Phosphate Hill’s contracted gas supply was
disrupted throughout the year due to the performance of a third
party provider. To maintain production and capitalise on a high DAP
price, gas was purchased on the spot market at an incremental cost
to contract of $41m. IPF’s gas supplier has advised that full quantities
are expected to be restored by February 2023.
Depreciation: The $7m net favourable depreciation impact is largely
driven by the impairment of the Gibson Island manufacturing
facility (recognised in September 2021) resulting in a decrease
in depreciation expense of $23m in the fertilisers business. This
was partially offset by additional charges resulting from the three
major turnarounds completed in FY21 (Waggaman, St Helens and
Moranbah).
WALA Incident: An incident occurred in mid-February 2022
(net $83m) which brought the plant down for repairs for
approximately 8 weeks at a cost of $182m (US$128m). The insurance
claim was finalised during the year and resulted in a recovery of
approximately $99m (US$70m).
Americas Explosives: The $11m improvement was supported by
strong market growth primarily across the Coal and Q&C sectors.
End market coal production has been supported by elevated natural
gas prices, while construction rates remain strong despite escalating
inflation. Further to this, the business results were negatively
impacted by a lagging impact of passing on the continuous price
increases experienced during the year.
Asia Pacific Explosives: Dyno Nobel’s premium technology
suite continues to deliver strong results underpinning the $32m
improvement in earnings. Increased sales of key offerings such as
Delta E, Cyber Det and Electronics contributed an additional $8m in
earnings compared with the pcp, with a further $7m benefit coming
from new customers looking to gain access to Dyno’s advanced
technology. As previously communicated to the market, a further
$11m earnings improvement came from the less profitable WA
contracts rolling off in FY22. The international businesses continue
to recover from the impacts of COVID with an increase in offshore
earnings (primarily Turkey) of approximately $10m. Unfavourable
weather conditions negatively impacted the result by $4m.
Asia Pacific Fertilisers: The $9m decrease in distribution earnings
primarily relates to a reduction in domestic sales volume and costs
associated with investment in the distribution network. Heavy rains
in key regions in Southern Queensland and NSW impacted fertiliser
application, while high prices also resulted in reduced demand.
The extreme price volatility during the year was managed through
selective procurement and stock management decisions – resulting
in year on year volume reduction. However, strong margins (on a
dollar per tonne basis) were realised.
22
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Financial Position
Liabilities
BALANCE SHEET
A$m
Assets
TWC – Fertilisers APAC
TWC – Explosives
Group TWC
Net PP&E
Lease assets
Intangible assets
Total Assets
Liabilities
Year ended 30 September
30 Sep
2022
30 Sep
2021
Change
A$m
104.6
511.3
(120.6)
225.2
241.3
270.0
615.9
120.7
495.2
4,246.9
3,928.9
318.0
221.0
214.5
6.5
3,281.4
3,000.9
280.5
» Environmental & restructure liabilities: Increase of $6m ($1m
excluding the impact of FX translation). Mainly driven by an
increase in the Gibson Island closure provision of $10m and
the interest unwind on long term asset restoration obligation
provisions of $5m. This was offset by spend against provisions for
the year, primarily in relation to Gibson Island closure preparation.
» Net other assets: Increase of $137m. Mainly due to Phosphate
Hill security deposit paid in relation to spot gas purchases
of $46m, WALA insurance proceeds accrual $35m (of which
approximately $25m has since been received) and settlement of
the payable owing to the bank as part of the trade receivables
facility at 30 September 2021 of $58m.
8,365.2
7,265.0
1,100.2
» Net Debt: Increase of $32m (decrease of $77m excluding the
Environmental & restructure liabilities
(248.7)
(242.7)
(6.0)
Tax liabilities
Lease liabilities
Net other assets
Net debt
(689.3)
(415.0)
(274.3)
(245.9)
(242.5)
144.6
8.0
(1,036.2)
(1,004.2)
(3.4)
136.6
(32.0)
Total Liabilities
(2,075.5)
(1,896.4)
(179.1)
Net Assets
Equity
Key Performance Indicators
6,289.7
5,368.6
6,289.7
5,368.6
921.1
921.1
Net Tangible Assets per Share
1.55
1.22
Fertilisers APAC – Ave TWC % Rev (1)
17.2%
15.3%
Explosives – Ave TWC % Rev (1)
15.4%
16.9%
Group – Average TWC % Rev (1)
16.2%
16.2%
Credit Metrics
Net debt (2)
Net debt incl. TWC facilities / EBITDA (3)
Net debt / EBITDA (ex IMIs) (4)
Interest Cover (5)
(1,036.2)
(1,004.2)
0.7x
0.5x
20.3x
1.4x
1.1x
9.7x
Major movements in the Group’s Balance Sheet during the year
include:
Assets
» Trade Working Capital (TWC): Net increase of $495m. The
movement was mainly due to the impact of higher commodities
in both the Fertilisers and Explosives businesses ($292m) and
the lower utilisation of trade working capital financing facilities
($64m). Change in accounting method to transfer precious metals
to inventory ($48m) and business acquisitions/new business
($91m). Underlying trade working capital (excluding the impact
of financing facilities) as a percentage of sales remained flat with
the pcp at 16.2%.
» Net Property, Plant & Equipment (PP&E): Increase of
$318m ($140m excl impact of FX translation). Mainly driven
by sustenance and turnaround capital expenditure of $316m,
growth and sustainability capital spend of $119m and the fixed
assets acquired through the purchase of Titanobel and Yara Nipro
($32m). This is partially offset by depreciation expense for the
year of $303m, disposals and writedowns of $11m and transfers
to inventory of $12m.
»
Intangible Assets: Increase of $281m ($90m excluding the
impact of FX translation). Mainly driven by the goodwill and
other intangibles recognised upon acquisition of Titanobel and
Yara Nipro of $92m. Amortisation charges for the year are mostly
offset by minor additions.
impact of FX translation). Mainly due to strong cash generation
driven by rising commodity prices offset by a reduction in the use
of trade working capital financing facilities (-$64m), payments
related to sustenance capital expenditure (-$343m), growth
capital (-$91m) and payment for acquisitions of Titanobel and
Yara Nipro (-$144m). Further details of movements in Net Debt
are provided in the Cashflow section of this report.
Net Debt
NET DEBT
A$m
Maturity
Month/Year
Facility
Amount
Drawn
Amount
Undrawn
Amount
Syndicated Term Loan
EMTN / Regulation S notes
Medium Term Notes
EMTN / Regulation S Notes
US Private Placement Notes
US Private Placement Notes
Total Debt
04/24
02/26
03/26
08/27
10/28
10/30
797.3
109.2
431.3
469.7
384.2
384.2
–
797.3
109.2
431.3
469.7
384.2
384.2
–
–
–
–
–
2,575.9
1,778.6
797.3
Fair value and other adjustments
Loans to JVs, associates/other short term facilities
Cash and cash equivalents
Fair value of hedges
Net debt
Net debt / EBITDA (ex IMIs) (4)
(115.7)
49.1
(763.5)
87.7
1,036.2
0.5x
The fair value of Net debt hedges at 30 September 2022 was a
liability of $88m, a decrease of $101m compared to an asset balance
at 30 September 2021 of $13m. The decrease was mainly due to
interest rate movements on derivatives hedging the Group’s fixed
rate bonds.
FINANCIAL INDEBTEDNESS
Net debt (2)
Lease liabilities
Trade working capital financing facilities
30 Sep
2022
A$m
30 Sep
2021
A$m
1,036
1,004
246
268
243
332
Total Financial Indebtedness
1,550
1,579
Change
A$m
32
3
(64)
(29)
Financial indebtedness reduced by $29m through the year. Net
debt increased by $32m with strong operating cashflows ($1,157m
– excluding $64m of trade working capital facilities reduction)
offset by sustenance capital expenditure ($343m), growth capital
expenditure ($91m), payments for acquisitions (net of debt acquired)
($174m), dividends to shareholders ($355m) and FX on translation
of foreign denominated debt ($115m). Reliance on trade working
capital financing facilities has been reduced by $144m since
September 2020 to $268m at year end.
(1) Average TWC as % of revenue = 13-month average trade working capital/12 months rolling revenue.
(2) Net debt comprises the net of interest-bearing liabilities, cash and cash equivalents, and the fair value of derivative instruments economically hedging the Group’s interest-bearing liabilities.
(3) Net debt (adjusted for average exchange rate for the year)/EBITDA incl TWC facilities ratio is calculated using 12 month rolling EBITDA ex IMIs. Net debt for this ratio has been adjusted to include the
usage of factoring and reverse factoring facilities.
(4) Net debt (adjusted for average exchange rate for the year)/EBITDA ratio is calculated using 12 month rolling EBITDA ex IMIs.
(5) Interest Cover = 12 month rolling EBITDA ex IMIs/net interest expense before accounting adjustments.
23
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022
Credit Metrics
Capital Allocation
IPL’s capital allocation process is centralised and overseen by
the Group’s Corporate Finance function. Capital is invested on
a prioritised basis and all submissions are assessed against risk
factors including HSE, sustainability, operational, financial and other
strategic risks. Capital is broadly categorised into first order capital
(sustenance, turnaround, sustainability and minor growth) and
second order capital (major growth).
Other than the company acquisitions during the year, there was no
second order capital investment.
The table below includes a summary of cash spend per business on
growth and sustenance capital:
IPL GROUP
Capital Expenditure
DNA
DNAP
Fertilisers
Minor growth capital
DNA
DNAP
Fertilisers
Sustenance
DNA
DNAP
Fertilisers
Turnaround
DNA
DNAP
Fertilisers
Sustainability
Total
Year ended 30 September
FY22
A$m
FY21
A$m
Change
A$m
28.7
33.3
29.2
91.2
118.3
19.5
64.3
24.6
18.6
8.0
51.2
82.6
22.3
49.1
202.1
154.0
82.9
53.5
4.1
14.7
21.2
40.0
35.7
(2.8)
15.2
48.1
(62.4)
(48.2)
20.5
5.3
87.1
112.9
22.9
4.9
–
27.8
434.0
13.4
73.7
149.8
–
–
–
–
355.0
(36.9)
22.9
4.9
–
27.8
79.0
Subject to currency fluctuations, sustenance spend is expected to
be in the range of $180m to $220m. Turnaround spend is expected
to be approximately $60m to $80m with spending on sustainability
targeted to be between $50m and $60m. These amounts don’t
include one-off strategic sustenance expenditure on upgrades
of Gibson Island distribution assets in order to return volumes to
historical market share levels.
Net Debt/EBITDA: The ratio of 0.5x improved by 0.6x compared with
the pcp. The improvement is primarily a result of higher earnings in
FY22 with EBITDA (excl. IMIs) improving 99% over the pcp.
Interest Cover: Improved to 20.3x (pcp: 9.7x).
Credit Ratings: Investment Grade credit ratings remained
unchanged:
» S&P: BBB (stable outlook)
» Moody’s: Baa2 (stable outlook)
Debt Facilities
IPL has sufficient liquidity and headroom with $797m of available
undrawn committed debt facilities at 30 September 2022.
The average tenor of the Group’s debt facilities at 30 September 2022
is 4.2 years (September 2021: 5.1 years). No committed debt facilities
are due to mature until April 2024.
Trade Working Capital Facilities
IPL uses trade working capital facilities to effectively manage the
Group’s cash flows, which are impacted by seasonality, demand and
supply variability.
The Group has a non-recourse receivable purchasing agreement to
sell certain domestic and international receivables to an unrelated
entity in exchange for cash. As at 30 September 2022, receivables
totalling $95m (30 September 2021: $124m) had been sold under
the receivable purchasing agreement.
IPL also offers suppliers the opportunity to use supply chain
financing. The Group evaluates supplier arrangements against
several indicators to assess whether to classify outstanding amounts
as payables or borrowings. The balance of the supply chain finance
program, classified as payables, at 30 September 2022 was $173m
(30 September 2020: $208m).
24
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022
Year ended 30 September
FY22
A$m
FY21
A$m
Change
A$m
1,857.7
(83.4)
(117.0)
(397.9)
(43.4)
7.9
(6.4)
(13.7)
(110.5)
934.9
(108.7)
(33.1)
922.8
25.3
(83.9)
(126.1)
(271.8)
(41.9)
44.6
(4.8)
(19.1)
4.4
(1.5)
(36.7)
(1.6)
5.4
(114.9)
443.1
1,093.3
650.2
(91.2)
(51.2)
(40.0)
(342.8)
(303.8)
(39.0)
(3.4)
5.7
–
(4.4)
5.7
19.9
1.0
–
(19.9)
Operating Cash Flow
Operating cash flows of $1,093m increased by $443m compared to
the pcp. Significant movements included:
» EBITDA: Increased by $923m driven by favourable realised
commodity price movements ($920m) and favourable
movements in the A$:US$ exchange rate ($80m). The
unfavourable one-off net impact of the WALA incident in mid-
February of $83m and the Phosphate Hill gas supply disruption of
$41m was partially offset by improved manufacturing reliability,
particularly at Waggaman of $75m. Downstream business
earnings (excluding manufacturing, non-controllables and
supply chain/inflation impacts) improved by $34m primarily due
to growth in the DNAP business. The impact of supply chain
disruptions and inflation was $54m.
» Net Interest Paid: Decreased by $25m, principally as a result
of a one-off interest cost in FY21 relating to the bond buy-back
($14m) and lower levels of borrowings in FY22 versus pcp,
partially offset by increasing interest rates and a weakening AUD.
» TWC Movement: Increased $272m compared to the pcp largely
as a result of higher commodities driving higher TWC balances
at the end of FY22 and lower usage of trade working capital
financing facilities (down $64m on pcp).
» Dividends received from JV’s: Decreased by $37m with one of
IPL’s larger JV partners (QNP) not paying a dividend in FY22 due to
a turnaround taking place during the year. Turnarounds generally
take place every 4 years. Additionally, a large US based joint
venture declared a lower dividend in FY22 compared with FY21.
(143.9)
(8.5)
(135.4)
» Other Non-TWC: Decreased $115m compared to the pcp
CASH FLOW
CASH FLOW
Operating Cash Flow
EBITDA ex IMIs
Net Interest paid
Net income tax paid
TWC movement (excl FX movements)
Profit from JVs and associates
Dividends received from JVs
Environmental and site clean-up
Restructuring costs
Other Non-TWC
Operating Cash Flow
Investing Cash Flow
Minor growth capital
Sustenance (including turnaround and
sustainability)
Payments – Central Petroleum Joint
operation
Proceeds from asset sales
(Loans to) / repayments from JV
Acquisition of subsidiaries
& non-controlling interests
Receipts / (Payments) relating to
derivatives
Investing Cash Flow
Financing Cash Flow
Dividends paid to members of IPL
Lease liability payments
Purchase of IPL shares for employees
Realised market value gain / (loss) on
derivatives
Non-cash loss on translation of US$
Net Debt
Non-cash movement in Net Debt
Financing Cash Flow
Change to Net debt
0.9
(0.1)
1.0
(574.7)
(342.4)
(232.3)
(355.4)
(42.9)
(9.0)
(19.4)
(41.4)
(1.0)
(336.0)
(1.5)
(8.0)
(3.9)
8.5
(12.4)
(106.6)
(225.9)
(32.8)
(4.1)
119.3
(28.7)
(550.6)
(283.3)
(267.3)
(32.0)
24.5
(56.5)
Opening balance Net debt
(1,004.2)
(1,028.7)
24.5
Closing balance Net debt
(1,036.2)
(1,004.2)
(32.0)
largely as a result of timing of payments and accruals including
the Phosphate Hill security deposit paid in relation to spot gas
purchases of $46m and WALA insurance proceeds accrual of
$35m.
Investing Cash Flow
Net investing cash outflows of $575m increased $232m as compared
to the pcp. Significant movements included:
» Minor growth capital: Higher growth spend of $40m supporting
plant efficiency projects and other projects supporting volume
growth and technology investments. These projects have a short
pay-back period.
» Sustenance capital: Higher sustenance spend reflects the
impact of the largest turnaround on record at Phosphate Hill/
Mt Isa ($87m in FY22), decarbonisation projects required to
meet our greenhouse gas reduction targets and investment
in manufacturing and distribution facilities to drive reliability
improvement.
» Acquisition of subsidiaries and non-controlling interests: Cash
outflow for the acquisition of Titanobel ($124m) and Yara Nipro
($20m).
Financing Cash Flow
Net financing cash outflow of $551m was $267m higher compared
with the pcp. Significant movements included:
» Dividends paid to members of IPL: Higher dividend of $336m in
line with increased earnings. Payout ratio of 51% of Group NPAT
(excl IMI’s).
» Foreign Exchange on Net Debt: The non-cash increase of $107m
reflects the impact from translating US dollar denominated debt
at a lower exchange rate.
25
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022
Dyno Nobel Americas
EBIT US$m
Explosives
WALA
303
533
500
300
200
100
0
103
60
(58)
(8)
141
5
8
8
(29)
Increase
Decrease
Total
FY21
Manufacturing
Reliability
Growth
Supply Chain /
Inflation
Manufacturing
Reliability
Commodities
Manufacturing
Reliability
Incident
(Incl. Insurance)
Depreciation
Commodities
FY22
While Metals volumes were down overall (-4%) due to customer
mine closures, 2H22 volumes were supported by the start-up of
several new customers.
Supply Chain / Inflation: Inflationary pressure, higher energy costs,
and supply chain dislocation led to a US$29m unfavourable impact
to earnings:
»
Inflationary Pressure: US$9m unfavourable impact due to high
demand for raw materials and tightness in supply driving up
material costs at a quicker rate than price recovery.
» Higher Energy cost: US$12m increase due to elevated utility and
commodity prices. Elevated ammonia and fuel costs, together
with higher electricity charges, impacted the cost of production
and supply.
» Supply Chain Dislocation: US$8m increase in costs related
to scarcity of raw materials, which results in additional freight
movements to supply customers and plants, and led to elevated
costs to meet customer demand. The rate of inflation increases
was unprecedented. Management has worked to reduce the lag
caused by continuous cost increases.
Market Summary
Quarry & Construction
42% of Explosives revenue was generated from the Quarry &
Construction sector in FY22 (43% pcp). The strong growth in this
sector in 1H22 carried over into 2H22 as US infrastructure spending
and a healthy construction market supported 9% volume growth
compared to pcp.
Base & Precious Metals
36% of Explosives revenue was generated from the Base & Precious
Metals sector in FY22 (39% pcp). Volumes decreased by 4% during
the year with revenues (in dollar terms) near flat compared to the
pcp. The primary driver of the decreased volume was temporary
customer mine closures and lower seasonal Arctic shipments which
are expected to return to previous levels in 2H23. These volume
decreases were partially offset by volume growth in the Western US.
Coal
22% of Explosives revenue was generated from the Coal sector in
FY22 (18% pcp). Volumes were up 19% versus the pcp as elevated
natural gas prices have incentivised the power sector to temporarily
switch back to more coal-generated power.
Dyno Nobel Americas
Explosives
Waggaman
Ag & IC
Total Revenue
Explosives
Waggaman
Ag & IC
EBIT
EBIT margin
Explosives
Waggaman
Ag & IC
A$m
Revenue
EBIT
Notes
Year ended 30 September
FY21
US$m
Change
%
FY22
US$m
956.7
560.9
279.4
883.3
175.9
133.5
1,797.0
1,192.7
110.3
343.8
78.7
126.7
3.6
10.9
532.8
141.2
11.5%
61.3%
28.2%
14.3%
2.0%
8.2%
8
219
109
51
(13)
9,450
622
277
2,532.9
1,588.7
759.3
189.9
59
300
Average realised A$/US$ exchange rate
Urea (FOB NOLA) Index Price (US$/mt)
0.70
713
0.74
364
Dyno Nobel Americas FY22 earnings of US$533m increased
US$392m, or 277%, compared to the pcp. Outlined below are the
major earnings movements during the year for each business
segment.
Explosives
Business Performance
Explosives earnings for FY22 of US$110m was US$16m lower than
the pcp principally due to the following:
EBIT Margins: The rapid impact of inflation, energy costs and supply
chain interruptions has had a temporary negative impact on EBIT
margins.
Manufacturing: The positive earnings impact of US$5m reflects the
recovery from outages in FY21 at the Cheyenne, WY. and Louisiana,
MO, plants. The recovery was partially offset by the impact of minor
outages at the Louisiana, MO, plant in 2H22.
Customer Growth: US$8m growth in volumes, primarily driven by
Quarries & Construction, where volumes were up 9% on pcp due to
strong market fundamentals and market share gain. The elevated
natural gas prices also led to a resurgence in end market coal
demand (volumes up 19%), driving elevated volumes vs pcp.
26
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022AG & IC Agriculture & Industrial Chemicals (Ag & IC)
Business Performance
Ag & IC FY22 earnings of US$79m was US$68m more than the pcp,
primarily due to the following:
Manufacturing/Turnaround: Earnings recovered US$8m from FY21
impacts of the planned outage at the St. Helens, OR plant (US$5.3m),
along with strong manufacturing performance post turnaround
(US$4.2m) offset in part by higher depreciation costs of US$1.5m.
Commodity Prices: Favourable Urea and UAN pricing improved
earnings by US$60m versus the pcp.
Discount to Tampa Ammonia price: The discount realised on sales
priced at Tampa benchmark in FY22 was approximately 8% prior to
the 8-week outage. The timing of sales volumes contributes to the
disconnect between the realised price and the benchmark index, as
the outage coincided with highest benchmark months.
The discount realised on sales priced on other benchmarks (primarily
sales to Dyno’s Louisiana MO facility) performed as expected in the
elevated Tampa Ammonia pricing market, with FY22 being the first
year since operations commenced where the pricing resulted in a
discount to Tampa rather than a premium. Ammonia supply (into
Dyno’s Louisiana, MO facility) and offtake (from Waggaman, LA
facility) decisions are continuously evaluated to maximise cash flow
to the Dyno Nobel Americas business.
Waggaman Operations
Manufacturing
WAGGAMAN
Thousand metric tonne
Ammonia manufactured at Waggaman
Ammonia sold
US$m
External Revenue
Internal Revenue
Total Revenue
EBIT
EBIT margin
Notes
Ammonia Realised Price (US$/mt) (1)
Realised Gas Cost (US$/mmbtu)
(delivered)
Ammonia Tampa Index Price (US$/mt) (1)
Index Gas Cost (US$/mmbtu) (2)
Gas efficiency (mmbtu/mt)
Year ended 30 September
FY22
FY21
Change
%
700.6
745.9
437.2
563.5
60
32
219
74
193
175.9
39.0
214.9
3.6
9,450
2.0%
381
3.33
401
3.05
40
560.9
67.9
628.8
343.8
61.3%
843
6.86
1,049
6.54
35
Manufacturing performance in the Explosives and Ag & IC businesses
during FY22 was as follows:
Cheyenne, Wyoming: Cheyenne ammonia operations recovered
from unplanned outages in FY21. As a result, ammonia production
was up 3% compared to pcp. Nitric Acid production was negatively
impacted due to an unplanned electrical feed outage, resulting in
decreased production of 2% compared to pcp.
Louisiana, Missouri: Overall production was up 16% on the pcp.
St Helens, Oregon: Urea and ammonia production from the St
Helens plant increased 25% and 28% respectively, compared to
the pcp, with plant production slightly above expectations post
turnaround.
Waggaman, Louisiana: As previously disclosed, the plant operated
at nameplate capacity up to the February incident that resulted in
an 8-week closure of the facility. Following a successful re-start in
mid-April 2022, the plant operated at nameplate capacity for the
remainder of FY22.
Business Performance
Waggaman earnings of US$344m, increased US$340m compared to
the pcp due to the following:
Commodity Prices: The strong upswing in global ammonia prices
driven by the impact of high European gas prices on ammonia
supply resulted in higher domestic ammonia prices. Elevated natural
gas prices partially offset this favourable movement resulting in a net
favourable earnings impact of US$303m.
Manufacturing Reliability: Production at the Waggaman plant
was at nameplate capacity preceding, and at nameplate after, the
reported 1H22 incident. The recovery from the turnaround and
weather outages in the pcp resulted in a US$103m benefit.
1H22 outage: As previously disclosed, the FY22 results were
impacted by an 8-week closure of the facility, which resulted in a
US$128m negative impact to the result. IPL recovered approximately
US$70m from property insurance coverage, resulting in a net impact
from the outage of US$58m.
Depreciation: US$8m higher than pcp. As previously disclosed,
depreciation is higher primarily as a result of the FY21 turnaround.
(1) Waggaman’s ammonia sales prices are based on a combination of index Ammonia Tampa prices and 1-month lagged index Ammonia Tampa prices. The index price shown in the table represents the
average index price for the financial year adjusted for the one-month lag.
(2) Average closing price of Nymex Henry Hub 1-month futures.
27
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Dyno Nobel Asia Pacific
190
180
170
160
150
140
130
120
FY21
WA Contracts
(Previously Announced)
Growth -
Customer
Growth -
Technology
International
Weather
Manufacturing
Reliability
Depreciation
Supply Chain
Inflation
FY22
Year ended 30 September
DYNO NOBEL ASIA PACIFIC
FY22
FY21
Thousand metric tonne
Ammonium Nitrate – manufactured
at Moranbah
Ammonium Nitrate sold
A$m
Australian Coal
Base & Precious Metals
International
Total Revenue
EBIT
EBIT margin
370.9
720.0
346.5
683.7
499.2
489.5
211.7
1,200.4
162.5
13.5%
471.6
377.3
88.9
937.8
140.2
15.0%
Change
%
7
5
6
30
138
28
16
Business Performance
Dyno Nobel Asia Pacific FY22 earnings of $162m, increased $22m
compared to the pcp. due to the following:
W.A. Contracts: $11m increase, in line with previous guidance.
Growth Customer: $7m growth on the pcp, mostly driven by new
hard rock and underground business.
Growth Technology: $8m growth on the pcp, largely in line with
guidance provided in FY20, driven by strong electronics and
Differential Energy volumes.
International: $10m increase, mostly driven by business recovery in
Turkey.
Weather: $4m decrease on the pcp driven by wet weather mainly
impacting Australian Coal.
Manufacturing Reliability: $8m increase on the pcp driven by
increased reliability of the Moranbah Plant post the FY21 turnaround.
Depreciation: $5m negative impact mostly driven by the FY21
Moranbah turnaround capital expenditure.
Supply Chain/Inflation: $13m impact mostly driven by higher cost
Urea and general inflation across the fixed cost base of the business.
Market Summary
Australian Coal
41% of Dyno Nobel Asia Pacific revenue for the year was generated
from the Australian Coal sector, most of which was from supply to
the metallurgical coal mines in the Bowen Basin.
Volumes from the Australian Coal sector increased 6% compared to
pcp mainly due to stronger Trade volumes.
Base & Precious Metals
41% of Dyno Nobel Asia Pacific revenue was generated from the
Base & Precious Metals sector, which comprises iron ore mines in
Western Australia and hard rock and underground mines throughout
Australia.
Volumes from the sector remained relatively flat compared to pcp
with stronger hard rock and underground business volumes offset
by slightly lower iron ore volumes.
International
18% of Dyno Nobel Asia Pacific revenue was generated
internationally in Indonesia, Turkey, Papua New Guinea and France.
Volumes increased by 26% compared to the pcp, mainly driven by
the acquisition of the Titanobel business, and stronger volumes in
the Indonesia business.
Titanobel
In May 2022 the Group acquired 100% of Titanobel, a business which
is highly complementary to Dyno Nobel’s existing operations and
provides access to new markets where Dyno Nobel can leverage
its premium technology offering. Titanobel is a leading industrial
explosives manufacturer and drilling, blasting and technical services
provider based in France.
Manufacturing
Moranbah performed well producing 371k mt of ammonium nitrate
during the year and achieving Ammonia Plant reliability of 95% post
the FY21 Turnaround.
28
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022IncreaseDecreaseTotal140117810(4)8(5)(13)162EBIT A$m
FERTILISERS ASIA PACIFIC
800
700
600
300
200
100
FY21
Commodities
& FX
Cost of Gas
- Phos Hill
Depreciation
Phos. Hill
Turnaround
Manufacturing
Reliability
Distribution
Volume &
Margin
FY22
Year ended 30 September
FY22
FY21
Change
%
Business Performance
Fertilisers Asia Pacific earnings of $614m was 129% higher than the
pcp. Major movements for the year were due to the following:
FERTILISERS ASIA PACIFIC
Thousand metric tonne
Phosphate Hill production
(ammonium phosphates)
Gibson Island production
(urea equivalent)
A$m
Manufacturing
Distribution
Fertilisers APAC Revenue
Manufacturing
Distribution
Fertilisers APAC EBIT
EBIT margin
EBIT margin
Manufacturing
Distribution
Notes
Fertilisers APAC
735.9
958.4
(23)
404.5
498.5
(19)
19
57
40
170
(15)
129
991.3
836.4
1,656.5
1,058.2
2,647.8
1,894.6
563.1
50.6
613.7
23.2%
208.8
59.6
268.4
14.2%
56.8%
3.1%
25.0%
5.6%
Realised A$/US$ Exchange Rate
0.72
0.76
Total Fertilisers APAC volumes sold (k mt)
2,575.9
3,220.1
Domestic Fertilisers APAC volumes sold
(k mt)
1,868.7
2,234.7
Phosphate Hill
Realised AP Price (US$/mt)
Phosphate Hill production sold (k mt)
Realised AP Freight Margin (US$/mt)
Realised Cost per Tonne of AP (A$/mt)**
Gibson Island
Realised Urea Price (US$/mt)
Gibson Island production sold subject to
urea price movement (k mt)
* Not meaningful
** Weighted average of AP including port costs
851
747
14.1
705
710
336
524
949
4.8
484
373
364
Foreign Exchange and Commodity Prices: $472m net increase,
primarily driven by higher DAP price ($851/t vs $524/t), higher Urea
price ($710/t vs $373/t) and lower AUD:USD exchange rate (0.72 vs
0.76), partially offset by higher cost sulphur/sulphuric acid.
Cost of Gas – Phosphate Hill: Gas supply disruptions at Phosphate
Hill increasing FY22 gas cost by $41m (~A$10m incurred in 1H22).
Power and Water Corporation (gas supplier) expect full supply to
be restored in February 2023. Additional top-up gas volumes to be
purchased to make up shortfalls to February 2023 at an estimated
cost of approximately $60m to $70m in FY23.
Depreciation: Net $23m reduction in depreciation charges due to
the impairment of Gibson Island assets in September 2021 offset
in part by higher depreciation at Phosphate Hill mainly related to
capital expenditure for the construction of critical infrastructure.
Planned Plant Shutdowns: Phosphate Hill turnaround completed
during 2H FY22. This planned shutdown negatively impacted
earnings by $74m compared to the pcp.
Manufacturing Reliability: $25m net decrease due to lower than
expected production and plant efficiency at Phosphate Hill in the run
up to the turnaround.
Volumes and Margins: Distribution volumes were lower as a result
of lower demand, largely due to higher pricing, wet weather and
global fertiliser supply constraints. Distribution margins when
measured as a function of revenue will naturally decrease when
commodity prices increase. Distribution EBIT margin per tonne in
FY22 was up slightly versus pcp.
Market Summary
Total Fertilisers Asia Pacific sales volumes of 2,576k metric tonnes
was 20% lower than FY21 sales of 3,220k metric tonnes. The planned
8 week turnaround at Phosphate Hill adversely impacted sales
volumes in FY23 as did lower demand, largely due to higher pricing,
wet weather and global fertilisers supply constraints.
Global fertiliser prices traded significantly higher in FY22 with
realised Ammonium Phosphate prices improving by more than 62%
compared with the pcp while, despite its volatility, realised Urea
prices increased 90% over the pcp. The supply and demand dynamic
remains broadly favourable to support strong prices in the near term.
Progress on the soil health strategy continues, highlighted by an
increase in Nutrient Advantage earnings and the acquisition of the
Yara Nipro liquid fertiliser business.
29
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022ManufacturingDistribution268472(41)23(74)(25)(9)614EBIT A$mIncreaseDecreaseTotal Manufacturing
Manufacturing performance in the Fertilisers Asia Pacific business in
FY22 was as follows:
Phosphate Hill
Ammonium phosphate production decreased to 736k mt, down 23%
on pcp. The lower production was a combination of the planned
turnaround as well as some critical pieces of equipment operating at
below capacity leading into the turnaround that commenced in early
May 2022.
Ammonium phosphates cost per tonne was impacted by a number
of factors, the most consequential being the increased cost of gas
and sulphur. Higher depreciation and some additional repair costs
leading into the turnaround also contributed to the higher cost per
tonne.
Gibson Island
In response to the critical shortage of AdBlue in the Australian
market resulting from international supply chain disruptions, IPL’s
Gibson Island plant, with the assistance of the Federal Government,
was able to rapidly reconfigure its production to uprate the
production of AdBlue and satisfy the Australian demand.
The plant produced 405k mt of urea equivalent product, down
19% on pcp. The majority of the reduced production resulted from
various minor equipment failures and inefficiencies, the majority of
which have been addressed. The plant is on track to close at the end
of the calendar year.
OUTLOOK AND SENSITIVITIES
IPL does not generally provide profit guidance, primarily due to the
variability of commodity prices and foreign exchange movements.
Instead, IPL provides an outlook for business performance
expectations and sensitivities to key earnings drivers based on
management’s current view at the time of this report.
Outlook
Dyno Nobel Americas
» The explosives business is well placed to benefit from heightened
ammonium nitrate pricing.
» Apart from a potential outage of up to 4 weeks to allow the
installation of a replacement cooler (if required) the Waggaman
plant is expected to produce at nameplate capacity in FY23.
The operational earnings of Waggaman remain subject to
movements in ammonia and natural gas prices.
» Tampa Discount – Ammonia sales from the Waggaman facility
should return to the historical contract mix, with tonnes that
are priced off the Tampa index returning to a 6-8% discount to
Tampa. Should the Tampa benchmark price remain at the recent
level of circa US1,000/mt, when factoring in those sales that
are not linked to the Tampa benchmark, the overall discount
is expected to be between 13% and 15% in FY23.
» Agriculture & Industrial Chemicals earnings remain subject to
movements in global fertiliser prices, particularly Urea.
» The St. Helens fertiliser plant is scheduled for a 28 day outage
in February 2023 for mid-cycle maintenance.
» The Cheyenne, WY ammonia facility is scheduled for a 55 day
planned turnaround in June/July 2023.
» Coal demand is expected to be flat to FY22 as higher demand
based on elevated natural gas prices and low electric generator
inventory levels lead to restocking.
» Quarry and Construction growth is expected to continue driven
by residential and infrastructure spending. Growth of 3% to 5%
is expected.
» Metals - Growth in the overall metals sector is expected to be in
the low single digits.
» Dyno’s market leading technology is expected to support growth
in future facing commodity markets, with a recent contract win in
Chile a good example.
» The negative impacts of higher inflation, energy costs and supply
chain dislocations are expected to be mostly recovered in FY23
through price escalations and contract negotiations.
» The full year earnings from WALA that are attributable to the
DNA business in FY23 could be impacted by the outcome of the
announced strategic review, and the timing of the settlement of
any sale transaction that may result.
Dyno Nobel Asia Pacific
» Favourable pricing conditions on the East Coast of Australia are
expected over the re-contracting cycle.
» Technology growth is expected to continue at a run-rate similar
to the guidance provided in FY20 as customers look to drill more
complex ore bodies and increasingly value productivity, safety
and environmental improvements.
» Moranbah is expected to be negatively impacted by
approximately $10m due to the cessation of ammonia supply
from Gibson Island (20kt per annum).
» Supply Chain and inflationary costs continue to challenge and
impact the business. Although efficiency improvements are
expected to mitigate the impact, FY23 is expected to see a lag in
being able to recover some of these costs through re-pricing.
30
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Fertilisers Asia Pacific
» Fertiliser’s earnings will continue to be dependent on global
fertiliser prices, the A$:US$ exchange rate and weather
conditions.
» Despite the severe flooding in NSW and southern Queensland,
agricultural conditions across Eastern Australia are generally
favourable. Increased soil moisture levels in most districts on the
East Coast, coupled with high dam levels is expected to drive
demand for fertiliser through the year. This is further subject to
weather conditions in FY23.
» Farm economics are expected to remain favourable through FY23
with farmer cashflows supportive of strong fertiliser demand,
although high fertiliser prices can influence volumes.
» Distribution earnings expected to benefit further from IPL’s soil
health strategy.
» Distribution margins and volumes will continue to be influenced
by Australian East Coast agronomic conditions and global
fertiliser prices. Global supply constraints ex China and Europe
may pose a risk for fertiliser import volumes in FY23.
» Phosphate Hill is expected to produce approximately 1,000kt
in FY23 after a successful turnaround in FY22. Gas supply
disruptions at Phosphate Hill are expected to continue in 1H
FY23. Power and Water Corporation (gas supplier) confirmed
full quantities to be restored in February 2023. Additional gas
volumes to be purchased to make up shortfalls at an estimated
incremental cost of approximately $60m to $70m.
» Production of Ammonia at Gibson Island will cease in early
January 2023 with a staged shutdown of downstream production
anticipated to cease by end February 2023.
Group
Corporate: Corporate costs are expected to be approximately $40m
in FY23 (excluding impact of demerger). This includes an allowance
for increased spend on international business development,
an allowance for wage growth and minor investment in energy
transition and HR Organisational Development.
Borrowing Costs: Net borrowing costs for FY23 are expected to be
approximately $133m. The increase is primarily related to higher
interest rates and amortisation charges.
Taxation: IPL’s effective tax rate for FY23 is expected to be between
24% and 26%.
Hedging Program: US$350m of FY23 US$ linked fertilisers sales
are hedged at a rate of $0.7418 with a further US$240m hedged via
a collar (cap of $0.7500 and a floor of $0.6184). All remaining US$
linked fertilisers sales and offshore business earnings are unhedged
and subject to the spot rate.
Sensitivities
The table provides sensitivities to key earnings drivers and should be
read in conjunction with the footnotes below.
Commodity
Americas
Ammonia (1)
Natural Gas (2)
Urea (3)
FX EBIT Translation (4)
Asia Pacific
AP (5)
Urea (6)
Proxy Index
EBIT Sensitivities
CFR Tampa
Henry Hub
FOB NOLA
+/- US$10/mt = +/- U$6.0m
+/- US$0.10/mmbtu = -/+ US$2.1m
+/- US$10/mt = +/- U$1.7m
+/- A$/US$0.01 = -/+ A$10.4m
FOB China/Saudi
+/- US$10/mt = +/- A$14.1m
FOB Middle East
+/- US$10/mt = +/- A$1.3m
FX EBIT Transactional (5,6)
+/- A$/US$0.01 = -/+ A$18.3m
Note: Proxy Index prices are available on Bloomberg.
(1) Based on 800k mt Waggaman plant nameplate production less an allowance for a potential 4 week outage to allow for the installation of a replacement cooler (if required) and internal sales volumes
of 140k mt.
(2) Based on 800k mt Waggaman plant nameplate production less an allowance for a potential 4 week outage to allow for the installation of a replacement cooler (if required) and internal sales volumes
of 140k mt. and gas efficiency of 35 mmbtu/tonne of ammonia (the efficiency achieved in FY22).
(3) Based on St Helens plant capacity of 175k mt of urea equivalent product.
(4) Based on actual FY22 Dyno Nobel Americas EBIT of US$533m and an average foreign exchange rate of A$/U$ 0.71.
(5) Based on Phosphate Hill plant nameplate production of 1 million tonnes; average FY22 realised AP price of US$851; and an average foreign exchange rate of A$/U$ 0.71.
(6) Based on estimated FY23 Gibson Island production sold subject to urea price movement of 118k mt; average realised FY22 urea price of US$710; and an average foreign exchange rate of A$/U$ 0.71.
31
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Principal Risks
Set out below are the principal risks and uncertainties associated with IPL’s business and operations. These risks, which may occur individually
or concurrently, could significantly affect the Group’s business and operations. For some of the risks described below, factors such as
continuing global geopolitical uncertainty, supply chain disruptions, inflationary pressures and global recessionary risks have the potential
to exacerbate those risks. IPL is also undertaking a demerger to implement a structural separation of its fertilisers and explosives businesses
to create two separately listed companies on the ASX. Some of these risks may be heightened for the businesses on a stand-alone basis.
There may be additional risks unknown to IPL and other risks, currently believed to be immaterial, which could become material. In addition,
any loss from such risks may not be recoverable in whole or in part under IPL’s insurance policies. The treatment strategies noted below are not
exhaustive and do not remove the risks; while in some cases they may either partially or fully mitigate the exposure, residual risk remains.
The Group’s process for managing risk is set out in the Corporate Governance Statement.
Broad Risk Category Description and potential consequences
Treatment strategies employed by IPL
Strategy & Climate
Change
»
»
»
»
»
IPL seeks to maintain or develop competitive cost
positions in its chosen markets, whilst maintaining
quality product and service offerings.
IPL continues to invest in new technologies and
premium product offerings in order to meet the needs
of our customers while limiting and improving both
IPL’s, and our customers’, carbon footprints.
IPL monitors long term growth trends in the mining
sector through industry forecasts of commodities
demand. These trends have been incorporated into
our business strategy through aligning our explosives
business growth with predicted customer demand
profiles by segment and the delivery of technology
solutions to leverage these.
IPL is progressing the feasibility study into
industrial-scale production of green ammonia
at Gibson Island. A comprehensive site
decommissioning plan and project team is in
place to manage the manufacturing site closure
and potential transition to green ammonia.
IPL has implemented a business separation process
with strong governance processes in place that are
designed to minimise cost and disruption to normal
operations and meet market expectations of the
demerger process.
» Communication strategy with stakeholders.
» Through engagement with an expert third party
in 2021, a comprehensive assessment has been
completed of IPL’s physical and transitional risks
and opportunities associated with climate change.
The scenarios used for this assessment are included
in IPL’s 2022 Climate Change Report.
IPL operates in highly competitive markets with varying
competitor dynamics and industry structures. The actions
of established or potential competitors could have a
negative impact on sales and market share and hence
the Group’s financial performance.
In respect of IPL’s advanced technologies, there is a
risk that the intellectual property may be replicated
or challenged, resulting in potential loss of business.
The global energy transition that is occurring in response
to climate change is changing market dynamics and
presents strategic risks and opportunities for IPL. These
may include a rapid transition away from fossil fuels,
which would likely significantly decrease demand for
thermal coal, and a shift to new technologies, such as
renewable hydrogen. Growing demand for green and
blue ammonia creates opportunities in these developing
markets.
Geopolitical uncertainty borne out of the continuing
supply chain challenges in China, impacts from Russia’s
invasion of Ukraine and global inflationary pressures
could have a negative impact on IPL’s cost base, sales
and market share and hence the Group’s financial
performance.
The execution of IPL’s proposed demerger to implement
a structural separation of its fertilisers and explosives
businesses to create two separately listed companies
on the ASX may also adversely impact IPL’s financial
performance or reputation.
Increased engagement by stakeholders in relation to
matters such as supply chain and climate change may
also adversely impact IPL’s financial performance
and reputation.
The impact of carbon emissions, and governments’
policies and actions to limit them, may have an impact
on IPL’s operations and supply chains. A detailed
discussion of the risks and opportunities identified
through IPL’s comprehensive assessment of both physical
and transitional risks can be found in IPL’s 2022 Climate
Change Report. (1)
(1) Refer to IPL’s Climate Change Policy (available on IPL’s website) for further details. IPL acknowledges the mainstream scientific direction on the existence of climate change. We support the
international climate agreement developed at the 2015 Paris Conference of Parties, as well as the Nationally Determined Contributions of the countries in which we operate.
32
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Broad Risk Category Description and potential consequences
Treatment strategies employed by IPL
Health, Safety,
Environment,
Community
Compliance
IPL’s operations are inherently dangerous. IPL operates
15 key manufacturing and assembly sites and is exposed
to operational risks associated with the manufacture,
transportation and storage of fertilisers, ammonium
nitrate, initiating systems, industrial chemicals and
industrial explosives products.
These operational risks include an unintended detonation
of explosives, or unintended toxic release or fire/
explosion during manufacture, transportation or storage.
IPL’s business, and that of its customers and suppliers,
is subject to environmental laws and regulations that
require specific operating licences and impose various
requirements and standards. Changes in these laws and
regulations, failure to abide by the laws and/or licensing
conditions, or changes to licence conditions, may have
a detrimental effect on IPL’s operations and financial
performance.
IPL’s business, and that of its customers and suppliers,
is subject to various laws, policies and regulatory
provisions across the jurisdictions in which it operates,
including anti-bribery and corruption laws, sanctions,
anti-trust laws, modern slavery, domestic or international
laws relating to import and export quotas, tariffs and
geopolitical risks relating to countries with which IPL,
or its customers and suppliers, engages to buy or sell
products and materials.
Failure to abide by, or changes in, these laws and
regulatory provisions in any of the countries in which
IPL operates or in which it has dealings may adversely
impact its business, financial condition and operations,
or the business, financial condition and operations of IPL’s
customers and suppliers, including reputational damage
to IPL as well as legal action, and could impact on the
willingness of parties, including financiers, to transact
with IPL.
IPL is also exposed to potential legal and other claims or
disputes in the course of its business and in connection
with its operations.
People
IPL has operations in regional and remote locations
where it can be difficult to attract and retain critical and
diverse talent. A shortage of skilled labour or loss of key
personnel could disrupt IPL’s business operations or
adversely affect IPL’s business and financial performance.
» A comprehensive Health, Safety, Environment and
Community (HSEC) management system is in place.
» HSEC risk identification, mitigation and management
strategies are employed at all times and across all sites.
» The Group continues to foster and encourage a Zero
Harm culture with a focus on leadership development
and creating an atmosphere of “Safe Ground” through
programs such as SafeTEAMS.
» Systems and procedures, including Standard
Operating Procedures and Work Instructions,
are established, documented, implemented and
maintained to reduce HSEC risk in all work activities.
» The Group has strict processes around the
stewardship, movement and safe handling
of dangerous goods and other chemicals.
» Corporate functions are in place to provide sufficient
support and guidance to ensure regulatory risks are
identified and addressed, including regular reviews
of country regulatory risk, comprehensive checks
of customers and suppliers for compliance with
relevant sanctions and modern slavery laws, and the
undertaking of due diligence processes as required.
»
IPL has dedicated resources to manage and
monitor business processes against the compliance
requirements for ethical procurement, including
modern slavery.
» Where possible, IPL appoints local business leaders
and management teams who bring a strong
understanding of the local operating environment
and strong customer relationships.
»
IPL engages with governments and other key
stakeholders to ensure potential adverse impacts
of regulatory changes are understood and, where
possible, mitigated.
» Regular training is provided to relevant staff on
their obligations and reporting requirements under
appropriate anti-bribery and corruption laws.
»
»
IPL provides a whistleblower hotline where employees
and third parties can anonymously notify the
Group’s General Counsel and Chief Risk Officer of any
suspected fraudulent, illegal or unethical activity.
IPL operates and manufactures products using
detailed quality management systems. Quality
assurance plans are in place for manufactured
products intermediaries, procured products and
raw materials.
» Management identifies critical roles and implements
policies to help ensure that appropriate succession
and retention plans are in place for those roles.
33
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Broad Risk Category Description and potential consequences
Treatment strategies employed by IPL
Manufacturing
IPL’s manufacturing systems are vulnerable to equipment
breakdowns, energy or water disruptions (including
high baseline water stress, resulting from climate
change), natural disasters and severe weather events,
unforeseen human error, legacy design issues, sabotage,
terrorist attacks and other unforeseen events which may
disrupt IPL’s operations and materially affect its financial
performance.
There is a risk that a reliable, committed source of natural
gas (a major input required for ammonia production) at
economically viable prices may not be available for IPL’s
global manufacturing operations, as demonstrated with
the closure of Gibson Island.
Sulphuric acid is a major raw material required for the
production of ammonium phosphates. Sulphuric acid
supply into Phosphate Hill would likely be negatively
impacted, from a volume and/or price perspective,
should the Mt Isa Mines copper smelter close.
» The Group continues to implement its Operations Risk
Management (ORM) Program designed to effectively
manage process safety risks.
»
IPL undertakes business continuity planning and
disaster preparedness across all sites.
» Global industrial special risk insurance is obtained
to ensure the appropriate coverage is in place with
regard to damage to the Group’s plants and property
and the associated costs arising from business
interruptions.
» The Group has medium term gas contracts in place for
its Australian manufacturing sites. The contracts have
various tenures and pricing mechanisms. IPL explores
new gas supply arrangements as an ongoing part of
its operations.
» The Group has started a life of mine project at
Phosphate Hill with one leg of the work specifically
looking at alternative sources of sulphuric acid for the
Phosphate Hill operation to mitigate any potential loss
of sulphuric acid from a Glencore smelter closure.
» The Group seeks to maintain or achieve low cost
positions in its chosen markets, which helps its
businesses to compete in changing and competitive
environments.
Customer
Supply Chain
IPL has strong relationships with key customers for the
supply of products and services, and these relationships
are fundamental to the Group’s financial performance.
The loss of key customer(s) may have a negative impact
on the Group’s financial performance.
Customers’ inability to pay their accounts when they fall
due, or inability to continue purchasing from the Group
due to financial distress, may expose the Group
to customer credit risks.
» The Group attempts to diversify its customer base to
reduce the potential impact of the loss of any single
customer.
» Where practical, for customers in the Explosives
sector, IPL prefers to engage in long term customer
contractual relationships.
» When appropriate, the Group purchases trade credit
insurance to minimise credit risk.
Timely and economic supply of key raw materials
represents a potential risk to the Group’s ability to
manufacture and supply products. In some markets in
which IPL operates, economic supply of key raw materials
is reliant on only a few external parties and in some cases,
only one.
In some markets, the availability of transportation routes
for moving raw materials and finished product is reliant
on only a few external parties. There is a risk that if
these transportation routes or methods are disrupted,
IPL’s manufacturing and distribution capacities may be
reduced, impacting plant uptime and earnings.
» Where possible, flexible supply chain and alternative
sourcing solutions are explored and maintained as a
contingency.
» Reviews of single-point sensitivity exposures within
IPL’s supply chain are undertaken.
» Plants have storage capacity, as well as logistics
capability, that allows for offtake to be distributed via
various channels, including via rail, truck, barge and
pipeline.
»
Integrated Business Planning (IBP) and inventory
processes assist in optimising inventory to reduce
price risk of stock on hand and provide flexibility to
mitigate the impacts of short term disruptions.
» More detail on management strategies to mitigate
the impacts of future extreme weather events on
IPL’s supply chains are described in IPL’s 2022 Climate
Change Report.
Commodity Price
The pricing of internationally traded commodities is
based on international benchmarks and is affected
by global supply and demand forces, therefore
price fluctuations in these products, combined with
fluctuations in foreign currency exchange rates,
particularly the A$/US$ rate, could adversely affect IPL’s
manufacturing operations and financial performance.
Weaker hard and soft commodity prices (particularly coal,
iron ore, gold, corn, wheat, cotton and sugar) could have
an adverse impact on the Group’s customers and has the
potential to impact the customers’ demand, impacting
volume and market prices.
»
IPL manages commodity price risk via a trading book
approach which allows the business to better manage
its short and medium-term exposures to commodity
price fluctuations, while taking into account its
commercial obligations and the associated price risks.
» The Group may enter into derivative contracts, where
available on a needs basis, to mitigate commodity
price risk. However, in some instances price risk
exposure cannot be economically mitigated by either
contractual arrangements or derivative contracts.
» To ensure volume and price commitments are upheld,
the Group has firm and enforceable customer supply
contracts.
34
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 Broad Risk Category Description and potential consequences
Treatment strategies employed by IPL
Demand
Finance
Security
Cyber
The current global economic and business climate,
energy situation, and any sustained downturn in the
North American, South American, Asian, European
or Australian economies may adversely impact IPL’s
overall performance by affecting demand for industrial
explosives, industrial chemicals and fertilisers and
related products and services, and profitability in
respect of them.
Seasonal conditions (particularly rainfall), are a key
factor for determining demand and sales of explosives
and fertilisers. Any prolonged change in weather
patterns and severity of adverse weather conditions,
as well as changes to growing regions in the Fertiliser
business, could impact the future profitability and
prospects of IPL.
» Diversification across explosives and fertilisers markets
in numerous geographical locations helps manage
exposures: IPL’s international explosives business
operates across geographically diverse locations
with exposures to diverse sectors including coal, iron
ore, quarry & construction and metals mining; IPL’s
Australian fertilisers business operates in all Australian
States other than Western Australia and has diversity
across market segments and customers serviced.
» Continuous review of country specific risks helps
proactive management of potential exposures.
» The Company’s Integrated Business Planning process
incorporates forecasting on a rolling 24-month basis
which enables scenario planning and some supply
flexibility. Forecasts are based on typical weather
conditions and are reviewed on an ongoing basis as
the seasons progress to help align supply to changing
demand.
Foreign exchange movements against the Australian
dollar may materially affect IPL’s financial performance
through the translation of US$, CAD$ or EU$
denominated sales, borrowings and related interest
payable.
Other financial risks that can impact IPL’s earnings and/
or ability to operate include the cost and availability of
funds to meet its business needs, movements in interest
rates and the imposition or removal of tariffs.
Changes in tax legislation or compliance requirements in
the jurisdictions in which IPL operates, or changes in the
policy or practices of the relevant tax authorities in such
jurisdictions, may result in additional compliance costs
and/or increased risk of regulatory action.
»
IPL’s capital management strategy is aimed at
maintaining an investment grade credit profile, an
appropriate mix of A$/US$ debt, funding flexibility
by accessing different debt markets and reducing
refinancing risk by ensuring a spread of debt
maturities. A detailed discussion of financial risks is
included in Note 18 (Financial Risk Management).
» Financial risk management is undertaken in
accordance with policies, including hedging
strategies, that are approved by the Board.
»
IPL engages with governments and other key
stakeholders to ensure potential adverse impacts of
proposed fiscal and/or tax changes are understood
and, where possible, mitigated.
IPL’s operations are exposed to sabotage, terrorist attacks
and other unforeseen events which may disrupt IPL’s
operations and supply chain and materially affect its
financial performance.
» The Group has strict processes around the
stewardship, movement and safe handling
of dangerous goods and other chemicals.
»
IPL undertakes business continuity planning
and disaster preparedness across all sites.
Sensitive data, pertaining to IPL, its employees, associates,
customers or suppliers, may be lost or exposed, resulting
in a negative impact to reputation or competitive
advantage, and potential breach of regulatory
compliance obligations.
IPL may be the target of cyber-attacks which could result
in commercial, financial, health and safety, environmental,
community or reputational impacts.
» Policies, procedures and practices are in place
regarding the use of company information, personal
storage devices, IT systems and IT security.
» A data breach response plan has been established to
respond to, and mitigate the effects of, any instances
of sensitive data breaches that may occur.
» Security Operations Centre, threat intelligence,
advanced threat analytics, system/network
controls and industry standard cyber frameworks
are collectively leveraged for the prevention and
detection of, and response against, cyber threats.
» To ensure a degree of risk transfer in the event of
a major cyber security incident, IPL retains a cyber
insurance policy.
35
OPERATING AND FINANCIAL REVIEWIncitec Pivot Limited Annual Report 2022 36
Incitec Pivot Limited Annual Report 2022 BEING A
SUSTAINABLE
BUSINESS
“At IPL, we pride ourselves
on making a positive social
and economic contribution
to the communities in which
we operate.
”
37
Incitec Pivot Limited Annual Report 2022 ZERO HARM: OUR NUMBER ONE
COMPANY VALUE
Nothing matters more than ensuring our people get home safely every day. The safety of our people,
customers, and community is our core value and integral to the way we work and operate.
Zero Harm is fundamental in everything we do – it is our core company value. This year we continued to work towards our ambition to achieve
industry leading performance in occupational health, personal safety, process safety and reducing our impact on the environment.
Our safety performance is tracked against our three-year strategic plan which targets the delivery of global Zero Harm initiatives and is
supported by our global collaboration networks.
2022 safety performance
The Total Recordable Injury Frequency Rate (TRIFR) has
plateaued in FY22 with a Group TRIFR of 0.89. Even though our
overall TRIFR target was not achieved, injuries that have resulted
in serious harm have continued to decrease by 73% over the last
three years, with zero fatalities for 2 years.
The Group focus continues to be on improving personal safety
performance through maintaining operating discipline, effective
visible safety leadership with quality safety conversations, and
targeted injury reduction programs such as our Safe Hands
campaign. Our SafeTEAMS training has also continued to be
effective with our global workforce emphasising psychological
safety and reporting to reinforce a learning culture.
We have been able to sustain our excellent environmental
performance with Zero Significant Environmental Incidents
reported through implementation of key environmental
compliance initiatives.
Process Safety Incidents decreased with 25 in FY22 compared
to 38 last year delivering a year-on-year improvement of 31%.
The significant improvement reflects the implementation of
process safety improvement plans for both group and business
units with continued focus on delivering effective operational
risk management and learning from Significant Events. A detailed
understanding of loss of containment process safety events has
enabled the identification of effective strategies for further reducing
the frequency of these events. (1)
The targeted performance in significant event management
for investigations completed was achieved. The quality of our
investigations has significantly improved with a focus on embedding
our learnings with establishment of our Global Significant Event
Governance Forum. We have also seen a significant increase
in the hazard/near-miss-to-incident ratio in Significant Events,
with a 94% improvement over the last 3 years, demonstrating
continuous improvement in hazard awareness and reporting,
and active learning from Significant Events to prevent harm to
people and the community. Transport related Significant Events
have also diminished as a result of implementation of controls
and intervention strategies during FY22.
Zero Harm snapshot
IPL TRIFR (2) (Number of recordables)
TARGET
Environment
2022 Goal
Zero Significant
Environmental Incidents
TARGET ACHIEVED
TARGET EXCEEDED
Process Safety
Management
2022 Goal
Target achieved for Tier 1 and
Tier 2 Process Safety Incidents
ZERO
Significant
Environmental
Incidents (3)
ZERO FATALITIES
for 2 years
(1) Tier 1 and 2 Process Safety Incidents as defined by the Centre for Chemical Process Safety.
(2) TRIFR is calculated as the number of recordable injuries per 200,000 hours worked and includes contract workers.
(3) Significant Environmental Incidents as assessed against IPL’s internal risk matrix with consequences of 5 or higher on a 6-level scale.
38
1.210.970.730.820.950.940.800.580.870.890.000.200.400.600.801.001.201.40FY13FY14FY15FY16FY17FY18FY19FY20FY21FY22(109)(92)(76)(58)(65)(66)(68)(59)(41)(64)Incitec Pivot Limited Annual Report 2022 Keeping everyone safe
from COVID-19
Throughout FY22, we continued to operate in a
COVID-19 environment with a key focus on both
the physical and mental health and safety of
our people.
This included the development of strategies to
support our employees transition safely back
to the office as lockdowns were lifted, ensuring
business continuity, and supporting and
encouraging vaccination of our workforce.
As we have been operating in a COVID-19
environment over the last two years, all
required systems have been well integrated
across our organisation. All reporting is now
integrated into our standard HSE reporting
protocols and monitored. The COVID-19 Crisis
Management Team (CMT) was stood down in
March 2022 and has the ability to be quickly
re-instated if required.
Snapshot of IPL’s Zero Harm key activities in FY22
C
B
A
Simplify
We support people with
easy to understand and
use systems.
Get the
Fundamentals Right
We define our minimum
expectations: we will be
excellent at the fundamentals.
Lead and Engage
We empower, develop
and expect everyone to
be leaders in Zero Harm.
Strengthen our
Learning Culture
We learn, we share
and we fix for good.
Significant Event
Management process
simplification and system
improvements to drive
quality investigation
outcomes and improve
significant event reporting.
83% of all IPL sites
had zero recordable
injuries in FY22.
Standardised company
Health & Wellbeing Program
including a health calendar
with monthly topics,
mental health workshops,
psychosocial risk assessments,
Mental Health Guidelines
and global campaigns such
as World Safety Week
and R U OK? Day.
Full online system
monitoring of
environmental system
compliance actions
completed on time.
Reduction in number of
HSEC material risks and
focus on ensuring operating
discipline of risk escalations
through a revised decision
accountability model.
74% of Significant Events
in FY22 identified at least
one hard barrier to be
implemented indicating
the shift from identifying
administrative actions /
controls to hard controls.
Design and development
of new Global Document
and Records Management
system to simplify and
improve user experience.
Significant reduction in
environmental consequence
4+ events by 77% over the
last three years.
Increased visible safety
leadership in the field post
COVID-19 to improve
HSE performance.
Establishment of a
Global Significant Event
Management Governance
Forum and development
of a global dashboard to
understand and share
systemic learnings and
embed into processes
and systems.
Improvement in quality
of significant event
investigations with 92%
of learning shared across
the business in FY22.
Implementation of positive
reward and recognition
programs for increased
hazard, near miss reporting
and enhanced learning
culture (94% improvement
from FY20).
39
Incitec Pivot Limited Annual Report 2022 OUR PEOPLE
Our People First Strategy (in place for the financial year period 2021 to 2023) was developed around
four strategic themes: Engaging Leaders, Talented People, Inclusive Workplace and Partnership.
Delivering on our People First strategic commitments provides employees with a leadership
experience grounded in a set of human principles that brings meaning and purpose to the
work they fulfil, performed in inclusive, collaborative environments, offering growth
opportunities that inspire and engage.
We encourage our People to participate through partnering with teams across our
global footprint to share experiences and ideas at all levels of our organisation.
We believe the whole is greater than the sum of its parts and it’s through this
principle that we build a strong, sustainable future for all stakeholders.
40
Incitec Pivot Limited Annual Report 2022 Strategic focus area
2022 highlights
Engaging leaders
We are committed to developing
connected and aligned leadership
with a deep understanding of the
role we play in enhancing the
health of our culture.
Talented People
We are committed to attracting
and growing the best talent
aligned to our strategic objectives
and to deliver our business goals.
Inclusive workplace
We are committed to providing
an inclusive workplace experience
where our people have the space
to authentically be themselves,
collaborate, be curious and
inspired to deliver.
A review of the female leadership program, My Potential, was conducted to ensure it
continues to engage and develop our female employees in a meaningful way. Pilots of the
revised program commenced in September 2022 in both the Americas and Asia Pacific regions.
The Leadership Foundations program, specifically designed for frontline leaders, started
to be offered to US manufacturing sites and Australian operational sites and offices.
Provided opportunities to internal talent to retain skills and knowledge and continued to offer
attractive career paths. Our internal promotions increased by 12.6%, demonstrating the depth
of expertise and capability we have amongst our people. Our focus on candidates with diverse
backgrounds continues as a key pillar in ensuring that we build a diverse workforce to deliver
global outcomes.
The Americas region launched a centralised Internship Academy as part of the Nobel
Academy program, with 67% of the interns diverse in at least one recognised category and
43% women.
Our Australian Graduate Program comprised 58% female engineers in 2022 and has had 0%
turnover since the program began in 2018.
Inclusive behaviour remains a priority and we continued to build this capability. Inclusive
Leader & Respect in the Workplace programs were conducted in the Americas region and
the Upstander Program was utilised in Australia to further broaden inclusive behaviours.
Our first cultural inclusion survey was piloted in the Americas region to better understand our
workplace culture as it relates to Diversity, Equity and Inclusion. This approach is currently being
considered for global implementation.
As part of delivering our Reconciliation Action Plan commitments in Australia we designed a
Cultural Awareness Program delivered via e-learning. This program is focused on education and
continuing to support our efforts in reconciliation and has seen excellent participation across the
Australian business.
Our approach to work flexibility has matured to enable the balance between workplace
collaboration and the shift in employees’ expectations of work life balance. For employees in
operational roles, we continue to seek opportunities to provide greater flexibility. For employees
in nonoperational roles, we have a hybrid model allowing for office and homebased working
arrangements (depending on the nature of the role). Our approach to flexible work is also
underpinned by Flexible Work policies, enabling collaboration between leaders and employees to
determine flexibility that works for the business and the employee.
In 2022, female employees represent 18.5% of our global workforce, a 0.8 percentage point
increase on last year’s figure and a 4.5% annual increase on last year’s numbers. IPL’s Indigenous
Australian workforce increased by 0.5 percentage points to 2.9%, just short of its 3.0% target.
Women on our Board
Women on our Executive Team
Women in Senior Management
Women in Management
Women in Professional Roles
Women in our Global Workforce *
Indigenous Australians in our Australian Workforce
*includes all IPL’s geographies
FY22
42.9%
30.0%
21.0 %
20.1%
23.7%
18.5%
2.9%
FY21
42.9%
37.5%
20.5%
19.0%
21.1%
17.7%
2.5%
Partnerships
We are committed to key
partnerships that allow us
to share expertise, innovate
and learn together.
We celebrated the anniversary (July 2022) of our ammonia plant coming into operation and 10
years being part of the Moranbah (QLD, Australia) community. As part of the celebrations, IPL
donated two paintings by Barada Barna Traditional Owner Benjamin Isaacs to Moranbah
East Primary School and Moranbah State Primary School. The Moranbah State High School was
also gifted equipment including a lathe and welders to help students progress their metal
work skills.
Our efforts continue in Australia to partner with our local traditional owners to provide
employment and training opportunities to indigenous individuals. In 2022, we launched
the IPL & University of Queensland Indigenous Scholarship Program.
We continued our American Australian Association Veteran’s scholarship, which provides
education opportunities for veterans with future employment possibility.
41
Incitec Pivot Limited Annual Report 2022 SUSTAINABILITY OVERVIEW
Our sustainability strategy
To deliver sustainable growth and shareholder returns while caring for our people, our communities
and our environment.
IPL is committed to operating in a manner which acknowledges and proactively manages those issues which are most material to the
long term sustainability of our business, our people, the environment and the communities in which we operate. This commitment is
driven by our Company Values, which are core to our business, and built into our six Strategic Drivers.
In order to identify those issues most material for our stakeholders and our business, we conduct a biennial materiality review. The steps in this
process follow Global Reporting Initiative (GRI) guidelines, with our most recent materiality assessment conducted in 2021. This materiality
assessment was designed to identify the broader megatrends that are currently shaping our operating environment and impacting the ways
in which we create value. These are shown on the following page along with 2022 highlights.
During 2022, and in keeping with our announced plans to structurally separate our explosives and fertilisers businesses, we also reviewed our
materiality assessment in terms of each of our business units, Dyno Nobel and Incitec Pivot Fertilisers. Our 2022 Sustainability Report will be
released in February 2023 ahead of the Annual General Meeting and will describe in detail the megatrends and identified material issues and
topics for each of these businesses, and how they are leveraging key environmental, social and governance (ESG) trends to create value. It will
also describe the materiality assessment process, our key stakeholders and our stakeholder engagement process. Our annual Sustainability
Reports and GRI Index and Data supplements can be accessed at https://www.incitecpivot.com.au/sustainability/sustainability-report.
Creating shared value sustainably
The natural resources our products unlock are
central to modern life and essential nutrition.
Our businesses are committed
to unlocking the potential in the
Earth, by sustainably delivering
products to our mining, quarry
& construction, and farming
customers into the future.
During 2022, our products were
used to help our customers
unlock approximately:
IRON ORE
506
million
tonnes
DIAMONDS
10.6
million
carats
HORTICULTURE
(CARROTS, ONIONS,
POTATOES,
TOMATOES)
0.9
million
tonnes
OTHER
BROADACRE
GRAINS
6
million
tonnes
COTTON
0.2
million
tonnes
COPPER
621
kilotonnes
GOLD
10.5
million
ounces
QUARRY &
CONSTRUCTION
MATERIALS
748
million
tonnes
MET COAL
116
million
tonnes
THERMAL
COAL
174
million
tonnes
SUGAR
CANE
21
million
tonnes
(cut for crushing)
PASTURE
(BEEF,
LAMB &
DAIRY)
6
million
tonnes
WHEAT
11
million
tonnes
FA S H I O N
S U P E R M A R K E T
J E W E L L E R Y
42
Incitec Pivot Limited Annual Report 2022 ESG megatrends
shaping how
we create value
2022 highlights
» Approval of Moranbah Tertiary N2O Abatement, with installation planned for 2024, to support our short term
absolute GHG reduction target of 5% by 2025. (1)
» Projects identified which support a >42% reduction pathway to 2030.
Transitioning to a low
carbon economy
» FEED(2) study underway for the Gibson Island Green Ammonia project, with a $13.7m ARENA grant secured.
» FEED study underway for a Carbon Capture Facility at our Waggaman, Louisiana ammonia plant, with MOUs
signed with potential partners for transport and permanent geological sequestration of the captured CO2.
Integration of Scope 3 (3) GHG management into Business Unit strategies.
»
»
Investigation of Science Based Targets via engagement of an expert third party.
» 11% reduction in Australian municipal water use due to the Gibson Island recycled water pipeline project.
» A further 736,378kL litres of water recycled at on-site treatment facilities.
Water Stewardship
» 9,256kL of high nutrient waste-water recycled for use as fertiliser or in another product.
» Conducting an external program review to assess the maturity and effectiveness of our approach to managing
human rights and modern slavery in the supply chain.
» Our first comprehensive, ‘deep dive’ Modern Slavery supplier audit completed.
» Rolling out the new Modern Slavery General Awareness e-learning module globally.
Supply Chain Resilience
» Diversification of suppliers and geographies to mitigate risk and strengthen global supply chains.
» 83% of all sites recordable injury free.
» Piloting of an updated IPL ‘My Potential’ program in the Americas and Asia Pacific regions, to develop
female leadership.
» Maturing our approach to work flexibility post COVID-19.
Future of Work
» Launching the IPL and University of Queensland Indigenous Scholarship Program.
» Piloting of the first cultural inclusion survey in our Americas operations.
» Expansion of Enhanced Efficiency Fertiliser (EEF) sales into new market segments.
»
Investing $4.3m across Tasmania and the mainland to expand our EEF product coating capacity.
» Patents under development due to our research partnerships on ‘Smart Fertilisers,’ with $3.8m
Soil Health
being invested.
» Completing a customer partnership trial to support external verification of the GHG reductions associated
with using our DeltaE explosives technology.
» 7 new products introduced which improve sustainability outcomes.
» Electric Mobile Processing Unit (MPU) under development, with construction of our first fully electric
on-mine explosives delivery vehicle targeted for 2023.
Innovation and
Technology
» Achieving our 2022 Target of Zero Significant Environmental Incidents.
» Achieving ISO:14001 certification of our Carthage, Missouri IS manufacturing facility.
» Establishing the IPL Human Rights Working Group.
Broader awareness of
the importance of ESG
» Formally committing to, and participating in, the UN Global Compact corporate responsibility initiative
and its principles in the areas of human rights, labour, the environment, and anti-corruption.
(1) Our short and medium term absolute GHG reduction targets are set against our 2020 operational Scope 1&2 baseline of 3,991,396 tCO2e. We have a medium term absolute reduction target of 25% by
2030 and we have identified projects which establish a pathway to a reduction of greater than 42% of operational (Scope 1&2) GHG by 2030.
(2) FEED represents the Front End Engineering Design phase of a project.
(3) Scope 3 emissions are indirect greenhouse gas emissions (other than Scope 2 emissions associated with purchased electricity) that result from activities at assets not owned or controlled by the
reporting organisation, but arise from activities in the organisation’s value chain.
43
Incitec Pivot Limited Annual Report 2022 Our use of natural resources in 2022
Energy and GHG
The manufacture of nitrogen-based products is energy intensive as
it requires natural gas as both an energy source and a raw material,
with carbon dioxide being liberated during manufacturing. For this
reason, the production of these essential agricultural and mining
products is currently based on a hard-to-abate chemical process.
Last year, we investigated new technologies required to decarbonise
and developed a potential Net Zero Pathway to 2050. During 2022,
we focussed on progressing a range of projects to meet our 2025
reduction target and to support a more ambitious 2030 target.
Our 2022 progress has allowed us to:
» Approve a project to underpin our short-term absolute reduction
»
target of 5% of operational (Scope 1 & 2) GHG by 2025;
Identify projects that create a pathway to a greater than 42%
reduction by 2030; and
» Reaffirm our ambition to achieve Net Zero GHG by 2050 or
sooner if practicable.
During 2022, we also made significant progress on managing our
Scope 3 GHG emissions, engaging a specialist third party to review
our Scope 3 calculations methodology and reduction opportunities,
and to investigate Science Based Targets for IPL and its businesses.
For more detail on Scope 3 progress and the projects identified to
support our operational targets see the Climate Change section on
the following pages, and IPL’s 2022 Climate Change Report.
Our 2022 global energy use increased by 11% since 2021 due to
a 16% increase in ammonia production, as production recovered
against major plant outages in 2021. This also increased our Scope 1
GHG emissions by 13%. Increased plant efficiencies reduced our GHG
per tonne of ammonia by 3% on last year, which is an 11% reduction
against our 2015 intensity baseline. Our purchased electricity and
Scope 2 GHG emissions remained stable (changing by 1.2% and
-3.8% respectively). Our Scope 3 Value Chain emissions decreased
by 5%. (4) This data is shown graphically below.
Total direct and indirect greenhouse gas emissions
Million tonnes of CO2e
5
Scope 1 Scope 2 Total GHG emissions
TOTAL GLOBAL ENERGY USE
67,354,920 GJ
PURCHASED ELECTRICITY
2,098,759 GJ
4
3
2
1
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
GHG intensity per tonne of ammonia produced
tCO2e
3.0
Trend
2.5
2.0
1.5
11%
1.2%
(3.1% of total global energy use)
SCOPE 1 GHG
3.5m tCO2e
SCOPE 2 GHG
0.3m tCO2e
SCOPE 3 GHG
9.2m tCO2e
13%
3.8% (5)
5.0%
Total Operational GHG: 3.8m tCO2e
Value Chain Emissions
OPERATIONAL GHG INTENSITY & PRODUCTION
11%
16%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
tCO2e/tAmmonia
against 2015 baseline
Ammonia Production
against 2021
Water Use and Discharge
Cooling water is also a key necessity for nitrogen manufacturing.
In addition to IPL’s comprehensive annual risk management process
and climate scenarios, the World Resources Institute (WRI) Water Tool
is completed each year for long term projections and reviewed by
IPL’s Chief Risk Officer.
Our 2022 total global water withdrawal increased by 16% on 2021
withdrawal, to 48,467 megalitres (ML). We discharged 29,648 ML
to the environment, 95.7% of which was clean cooling water
returned under EPA licence to the US rivers from which it was taken.
This brings our net water use to 18,819 ML in 2022. For more details
on our assessment of water risks and water management strategies,
see IPL’s 2022 Climate Change Report, currently available on IPL’s
website, and IPL’s 2022 Sustainability Report, which will be available
on IPL’s website after its release in February 2023.
(4)
IPL’s 2020 Scope 3 baseline and 2021 Scope 3 emissions have been restated due to an
external review which aligned our calculation methodology more fully with the GHG
Protocol. This has resulted in an increase due to the use of LCA based ‘cradle to gate’
emissions factors for purchased products and the inclusion of emissions values for
categories not previously included, such as employee commuting. See IPL ‘s 2022
Climate Change Report for more details.
(5) Although global electricity use increased by 1.2% since 2021, Scope 2 GHG fell by 3.8%
due to decarbonisation of the grids from which we purchased electricity globally.
44
Water Withdrawal
by Source
Surface water:
Ground water:
Municipal water:
Recycled water:
Storm water:
Desal water:
2022
2021
71.8% 69.3%
18.8% 18.2%
7.6% 11.7%
0.5%
1.6%
0.5%
0.2%
0.006% 0.003%
Water Discharge
by Destination
Surface water:
Ground water:
Sewers:
2022
2021
99.0% 99.1%
0.999%
0.9%
0.001% 0.003%
95.7% clean water
to surface waters
48,467 ML
Clean
water to
surface
waters
Incitec Pivot Limited Annual Report 2022 Benchmarking our performance
As part of our commitment to transparent reporting, IPL’s sustainability is assessed against leading indices. This gives us the opportunity to
benchmark our performance against other organisations in our sector, gain insight into areas for improvement, and provides investors and
other stakeholders with an objective measure of our environmental, social and governance (ESG) risk management and business practices.
The Dow Jones Sustainability Index (DJSI) is widely recognised as the leading reference point in the growing field of Sustainability investing
due to the robustness of its assessment process. Since 2010, IPL has been included in the DJSI, where our performance is benchmarked against
peers in the global Chemicals sector. The results since 2017 are represented below.
Dimension
Economic
Environmental
Social
Total for IPL
Chemicals sector average
2017
2018
2019
2020
2021
2022
73
61
68
68
53
71
64
57
65
44
72
73
60
69
47
78
71
58
69
36
81
69
65
72
30
78
72
69
73
26
Y
k
2022
In 2022, the FTSE Group confirmed that IPL has been independently assessed according to the FTSE4Good criteria and has satisfied the
requirements to remain a constituent of the FTSE4Good Index Series for the ninth consecutive year. Companies in the FTSE4Good Index
Series have met stringent environmental, social and governance criteria.
IPL has been a voluntary CDP (formerly Carbon Disclosure Project) Climate Change reporter since 2009 and a voluntary CDP Water Security
reporter since its introduction in 2014. Our most recent CDP reports can be downloaded from our website. Other indices and memberships
are shown below.
FTSE4Good
Member since 2014
CDP
Reporter since 2009
EcoVadis Member since 2015
EcoVadis is assessed biennially.
Bloomberg GEI
Member since 2019
Collaborating on ESG
As part of our commitment to corporate sustainability IPL became a participant in the United Nations Global
Compact (UNGC) in August 2022. The UNGC is the world’s largest coporate sustainability initiative. We will
be reporting annually on our progress towards implementing the UNGC’s Ten Principles on human rights,
labour, environment and anti-corruption. We are also participating in the Global Compact Network Australia’s
(UNGCNA) Modern Slavery Community of Practice (CoP).
We are committed to The UNGC’s 10 Principles:
Principle 1
Businesses should support and respect the protection
of internationally proclaimed human rights; and
Principle 7
Business should support a precautionary approach
to environmental challenges;
Principle 2
Make sure that they are not complicit in human rights abuses.
Principle 3
Businesses should uphold the freeedom of association and the
effective recognition of the right to collective bargaining;
Principle 4
The elimination of all forms of forced and compulsory labour;
Principle 5
The effective abolition of child labour; and
Principle 6
The elimination of discrimination in respect of employment
and occupation.
Principle 8
Undertake initiatives to promote greater environmental
responsibility; and
Principle 9
Encourage the development and diffusion of environmentally
friendly technologies.
Principle 10
Businesses should work against corruption in all its forms,
including extortion and bribery.
45
Incitec Pivot Limited Annual Report 2022 CLIMATE CHANGE
We recognise the challenge of reducing our own emissions while continuing to provide explosives and fertiliser products, through
our Dyno Nobel and Incitec Pivot Fetilisers businesses, which help people grow by unlocking the potential in the Earth. We believe that
innovative products and services will play an increasingly important role in reducing GHG, while increasing yields of food and fibre, and
efficiently accessing the minerals and aggregates required for renewable technologies and infrastructure rebuilding in a world impacted
by climate change.
Our Climate Change Policy describes how the management of the risks, opportunities and impacts associated with climate change
is integrated into our six strategic drivers, on which the success of the Company is built.
Together with our policy commitments, these strategic driver components, shown in the diagram below, form the four pillars of our
Climate Change Strategy. For detailed information on our governance, GHG reduction projects, Scope 3 strategies and management
of risks and opportunities, including physical risks, see IPL’s 2022 Climate Change Report.
Our Climate Change Strategy
1
2
3
4
OUR CLIMATE
STRATEGY
PILLARS
IPL’S SIX
STRATEGIC
DRIVERS
ENSURING STRONG
GOVERNANCE
Talented and Engaged
People: The right people
in the right roles, within
a culture of innovation,
with climate change
management roles,
responsibilities and
accountabilities
clearly defined.
REDUCING
OPERATIONAL
EMISSIONS
Manufacturing
Excellence: Reduce
emissions, increase
efficiencies and explore
new technologies.
DELIVERING
PRODUCTS
AND STRATEGIES THAT
REDUCE SCOPE 3
EMISSIONS
Leading Technology
Solutions: Develop and
deliver products and
services which reduce
customer GHG.
Customer Focus: Partner
strategically for customer
solutions and sustainable
product use.
MANAGING STRATEGIC
BUSINESS RISKS AND
OPPORTUNITIES
Profitable Growth:
Manage climate-related
financial risks and
opportunities strategically.
Zero Harm: Build
resilience to physical
climate change risks
and advocate for a
just transition
Our operational GHG absolute reduction targets
5%
SHORT TERM
TARGET
NET
ZERO
LONG TERM
AMBITION
2025 (6)
2030 (7)
2050 (8)
MOR N20 ABATEMENT (~5%)
CLEAR
PATHWAY
TO
>42%
GIBSON ISLAND
GREEN AMMONIA (~12%)
WAGGAMAN CCS
(PERMANENT GEOLOGICAL
SQUESTRATION) (~22%)
LOMO N20 ABATEMENT (7-11%)
(6) Absolute GHG reduction target is set against IPL’s 2020 operational Scope 1&2 baseline of 3,991,396 tCO2e which is based on IPL’s current asset protfolio. IPL has identified a pathway
to >42% reduction of operational (Scope 1&2) GHG emissions by 2030. Refer to Chapter 2 of IPL’s 2022 Climate Change Report for further details on the key projects being explored.
(7) Funding for the Moranbah tertiary N2O abatement project has been approved. The other projects remain subject to satisfactory completion of Front End Engineering Design and
Final Investment Decision.
(8)
IPL’s ambition to achieve Net Zero emissions by 2050 is based on the Following assumptions: (a) green hydrogen reaches economic parity with natural gas for hydrogen production
by 2040; and (b) carbon offsets are available for residual emissions that are not practical to abate.
46
Incitec Pivot Limited Annual Report 2022 Our GHG reduction projects
In 2022 we approved a project that will deliver our 2025 reduction target, progressed a range of
proposed decarbonisation projects to develop a pathway to more than 42% by 2030, and moved
towards setting Scope 3 targets.
Pathway to more than 42% operational GHG reduction by 2030 (9)
IPL 2020
BASELINE
4000kt
>42%
reduction
against
2020
baseline
MORANBAH N20 ABATEMENT
WAGGAMAN CCS
(PERMANENT GEOLOGICAL
SQUESTRATION)
2020
Moranbah N2O Tertiary Abatement
Dyno Nobel’s Moranbah ammonium nitrate manufacturing facility
was built in 2012 with secondary N2O abatement on the nitric acid
plant. This has reduced GHG emissions by ~400,000 tCO2e each year
for the past nine years.
During 2022, IPL approved the installation of tertiary N2O abatement,
which will provide even greater reductions. A further ~200,000 tCO2e
will be abated annually, which equates to a 5% reduction against
IPL’s 2020 baseline. The project is expected to be installed in 2024
and will underpin the achievement of IPL’s 5% by 2025 reduction
target. A similar project is being investigated for our Louisiana,
Missouri AN facility which if adopted, would achieve a further 7-11%
reduction against our 2020 baseline. (8)
Waggaman Carbon Capture & Storage (CCS)
During 2022, a FEED study was approved for a Carbon Capture
Facility (CCF) at the Waggaman, Louisiana ammonia manufacturing
facility. If adopted, the CCF would capture the pure stream of CO2
created during the ammonia manufacturing process. Due to its high
concentration, this CO2 stream is much more economic to process
than many other industries’ CO2 streams, with only drying and
compression required before transport via pipeline to a permanent
geological sequestration site. Memorandums of Understanding
(MOU’s) have been established with several shortlisted parties to
work through options for transport and deep well injection.
Louisiana is an ideal site for CCS due to its geology, its existing CO2
pipeline infrastructure, and a range of potential local partners with
experience in using proven technology and management techniques
to meet the very stringent regulatory requirements set by the US EPA
for Class VI wells. Subject to the successful completion of the FEED
study, and subject to a final investment decision, construction of the
carbon capture unit at Waggaman is expected to begin in 2024 and
be completed by the end of 2025. If adopted, this would result in a
22% reduction against IPL’s 2020 baseline.
Gibson Island Green Ammonia
The Gibson Island Green Ammonia project is a partnership between
IPL and Fortescue Future Industries (FFI) to investigate green
ammonia production at the Incitec Pivot Fertilisers Gibson Island
site. The site has used natural gas to produce hydrogen (H2) for the
manufacture of ammonia (NH3) since it was built in 1969 (obtaining
GIBSON ISLAND
GREEN AMMONIA
LOUISIANA MISSOURI (LOMO)
N2O ABATEMENT
2030
the nitrogen (N) required from the air). The current model under
consideration would involve FFI constructing an on-site water
electrolysis plant to produce hydrogen from the electrolysis of
water (H2O) using renewable electricity, thereby dramatically
reducing GHG emissions. FFI would develop and operate the
hydrogen manufacturing facility, with IPL operating the ammonia
manufacturing facility.
We are excited to report that the project progressed to FEED stage
in 2022 and secured a $13.7m ARENA grant. Should the project
proceed to a final investment decision, it would be Australia’s first
industrial scale green ammonia production facility, demonstrating
existing infrastructure can be retrofitted to utilise zero-emissions
energy sources.
If adopted, the proposed water electrolysis facility would produce
up to 50,000 tonnes of renewable hydrogen per year and replace
all of Gibson Island’s current gas feedstock and 95% of its natural
gas energy use. This would result in a 12% reduction against IPL’s
2020 baseline.
Investigating Science Based and Scope 3 Targets
During 2022, we engaged a specialist third party to assist us to
investigate Science Based Targets (SBTs) which are targets verified
by the Science Based Target Initiative. Part of the work on the way
to preparing SBTs includes an independent review of Scope 1, 2 and
3 calculations, as well as preparing Scope 1&2 and Scope 3 future
emissions trajectories based on our business plans. An assessment
of our proposed operational decarbonisation projects and Scope 3
reduction opportunities was also completed.
This work has confirmed our global Scope 1&2 emissions calculations
with only minor changes. It also aligned our Scope 3 calculation
methodology more fully with the GHG Protocol Scope 3 Calculation
Guidance, resulting in a more complete Scope 3 inventory and
baseline from which to move forward.
Our business units integrated Scope 3 emissions management
into their business strategies this year, and are targeting FY23
delivery of a management framework with systems in place to
track and manage Scope 3 by FY25. To assist, a supply chain
partner with experience in Scope 3 has been engaged to assist
IPL’s businesses in obtaining supplier specific emissions factors and
seek to work with value chain partners to collaborate on reducing
Scope 3. For more information on our GHG reduction projects see
IPL’s 2022 Climate Change Report.
(8) IPL’s 2020 operational (Scope 1&2) baseline has been restated from 3,961,222 tCO2e to 3,991,396 tCO2e due to external verification of our global GHG data set by an expert third party.
(9) This diagram is not indicative of firm implementation timeline for each individual project.
47
Incitec Pivot Limited Annual Report 2022 CARING FOR OUR COMMUNITIES
Guided by our company value of “Care for the Community & our Environment”, we continue to be
committed to building long lasting and meaningful relationships with our local communities.
At IPL, we believe we have a responsibility to make a positive social
and economic contribution to the communities in which we operate,
by providing local employment, prioritising local suppliers whenever
possible, and creating shared value for our urban, regional, mining
and farming communities.
We support our site-based teams to engage with their local
community members, business representatives, charities,
governments, indigenous suppliers, and community organisations
to ensure that engagement decisions are made locally and at the
site level, where community needs are best understood.
In addition to our robust safety measures, many of our sites are
required by law to communicate regularly with our communities
regarding safety plans and emergency procedures. In the Americas,
64% of our sites fall into this category. These sites regularly engage
with communities and first responders to share community safety
plans and emergency procedures in the event of a potential incident.
In the Asia Pacific region, 18% of sites also fall into this category.
Some of these sites are classified as Major Hazard Facilities and
these follow Safe Work Australia guidelines in communicating with
their communities.
Guiding our approach to community engagement, social
investment, cultural heritage and working with Indigenous
communities is our Sustainable Communities Policy, which
outlines our commitment to:
»
»
»
listen to and work with the community;
strive to be a valued corporate citizen; and
respect our neighbours, their values and cultural heritage,
and be considerate of them in carrying out our operations.
Community safety
The safety of our people and the communities in which we operate
must always come first, which is why IPL has robust safety measures
in place to monitor, manage, and prevent any potential risk or impact
to our workforce and the local communities in which we operate.
Due to the potentially hazardous nature of industrial and agricultural
chemicals, IPL’s on site staff are well trained to cooperate and engage
with local community leaders and first responders on how to keep
the community safe in the unlikely event of an incident.
Community investment
There are two key components of our Community Investment
Framework. The first is our Dollar-for-Dollar program. It matches
employee donations and site-based fundraising efforts (up to
$20,000 annually) where they align with our Principles for Giving.
The second is our Workplace Giving program. This is a voluntary
workplace giving scheme for Australian employees whereby they
can donate to one or more of the company’s nominated not-
for-profit charities with the assurance that IPL will match these
donations up to a total of $20,000 each year.
During 2022, $691,937 of community investment was made globally
through IPL’s Dollar-for-Dollar program, the Australian Workplace
Giving program and various site-based initiatives, including in-kind
donations and employee volunteer hours.
100% of both local and Group donations were made in line with
our Principles for Giving, with 2% allocated to improving education,
20% contributing towards health and sport initiatives, and 78%
to local community development, including emergency and
disaster relief.
Local Sites
Education
OUR
PRINCIPLES
FOR
GIVING
OUR
AREAS
OF FOCUS
Local
Initiatives
IPL Values
Community
Development
48
IPL Community Investment
Framework
Our framework preferences local approaches, enabling
each IPL business and site to respond to the distinct needs
of their communities.
Education: Providing support for childhood, adult and
indigenous specific education activities.
Health: Providing support for activities and organisations
working towards better physical and mental health.
Health
Community Development: Supporting activities that
enrich community life & enhance the environmental,
social & economic sustainability of local communities.
IPL Values: We fund initiatives that are aligned to our values
& business strategy and are integral to the sustainability of
our communities.
Local Initiatives: We support initiatives that help local
organisations develop skills & resources to bring positive
and lasting benefits to communities.
Local Sites: We support activities that provide solutions
to local challenges & opportunities in the communities
where our people work and live.
Incitec Pivot Limited Annual Report 2022 Community activity highlights
In FY22, IPL continued to host community events and activities to support the places that we live and work. A snapshot of events from
our global community include:
IPL supports Queensland and New South Wales’
flood affected communities get back on their
feet, Australia
From February to March 2022 north-eastern Australia was inundated
with severe flooding events. In March 2022, IPL donated $100,000
to GIVIT in support of their Storms and Flooding Appeal, which
helped people who suffered devastating losses due to flooding
in Queensland. These funds were used to buy essential items for
over 90 families including beds, fridges, washing machines, kettles,
toasters and much more.
IPL also donated $100,000 to Rural Aid’s Flood Appeal in support
of Northern New South Wales and Queensland farmers who had
been ravaged by catastrophic flooding. Rural Aid was able to
support to these communities by providing counselling, financial
and fodder assistance.
In addition, IPL employees generously contributed $10,354 to GIVIT,
which included fund matching by IPL. Delegates from IPL also
purchased seats and attended Rural Aid’s Long Lunch in April 2022.
Moranbah plant celebrates 10th anniversary,
Australia
IPL’s Queensland based Moranbah plant celebrated 10 years of
being a part of the community. The anniversary marks a long-term,
genuine investment in the Moranbah community through both
housing their workforce and continuing to be a major supporter
of local initiatives and events.
As part of the celebration, IPL donated two paintings by Barada
Barna Traditional Owner Benjamin Isaacs to Moranbah East Primary
School and Moranbah State Primary School. Moranbah State High
School was also gifted with vital equipment including lathe and
welders for their Blue Shed workshop to help students progress
their metal working skills.
Dajarra Campdraft, Rodeo & Gymkhana
in Mt Isa, Australia
IPL continued as the major sponsor for the annual Dajarra
Campdraft, Rodeo and Gymkhana which was held in September
2022 in North-Western Queensland. It is one of the biggest bush
and social events in the Mt Isa region. This year a team of 11
employees from IPL’s Phosphate Hill site also volunteered to operate
the canteen for the three-day event. All funds raised from the
weekend go to help local community groups in the Dajarra area.
Celebrating Children’s Day at Planta Austral, Chile
Our Planta Austral site in Chile honoured the anniversary of the
United Nations adoption of the Universal Declaration of the Rights of
the Child. In August 2022, staff members were given presents to give
to their children and gifts were donated to the Las Barrancas School.
Generator donation leads to United Way
support, USA
On 28 August 2021, Category 4 Hurricane Ida hit Dyno Nobel’s
Waggaman Plant and surrounding areas. Most employees and
the plant were left without power for two to three weeks in
sweltering summer conditions. Thanks to donations from
Dyno Nobel plants from across the US, employees in need
were supplied with a generator, allowing them and their
families to live more comfortably.
Once life returned to normal in the Waggaman community,
Dyno Nobel decided to auction the generators to their
employees, so they could be used when needed. As a result
of the auction, IPL was able to donate over $12,300 to United
Way, a local initiative which supports community programs in
education, economic mobility, health and basic needs.
Porgera Memorial Golf Day, Australia
IPL’s team at Helidon continued the tradition of hosting the annual
Porgera Memorial Golf Day. The day included 110 players as well as
IPL volunteers who ensured the day went smoothly. The tournament
included ‘hole sponsorships’ and prize donations which allowed IPL
to raise $18,000. Funds raised were split between Autism Spectrum
Australia and the Salvation Army Christmas Food Appeal. Ongoing
since December 2019, staff from the Helidon site also volunteer to
collect food and pack and distribute hampers for the Salvation Army
as part of the appeal.
Supporting Louisiana’s youth, USA
Throughout 2022, our Louisiana operations supported numerous
initiatives towards children’s health and wellbeing. Highlights
include sponsoring a golf team for the Pike County Memorial
Hospital Foundation’s “Tee Off Fore Tots” Golf Tournament, where
all raised proceeds were used to support the health needs of area
children. IPL was also a sponsor for the Back to School Fair for the
Pike Community Care Partnership. This program assists thousands
of local children and families by obtaining much needed school
supplies and backpacks. In addition to helping prepare kids for
back to school, the partnership provides supplies to families in
need throughout the year.
Thanksgiving meals provided to Wyoming
families, USA
Dyno Nobel’s Cheyenne, Wyoming Nitrogen Plant employees buy,
package, and deliver a full thanksgiving meal to 15 local families
each year in November. The plant partners with CASA of Laramie
County, a non-profit organization that advocates for children in
the community. With CASA’s help, families requiring support are
identified and provided with a meal to celebrate the holiday.
49
Incitec Pivot Limited Annual Report 2022 50
Incitec Pivot Limited Annual Report 2022 GOVERNANCE
“High standards of corporate
governance are fundamental
to the continued growth and
success of IPL.
”
51
Incitec Pivot Limited Annual Report 2022 CORPORATE GOVERNANCE
We are committed to doing business ethically and in accordance with high standards of corporate
governance – which is fundamental to the continued growth and success of IPL, for our shareholders
and other stakeholders.
Corporate governance framework
IPL’s Board of Directors is responsible for charting the direction,
policies, strategies and financial objectives of the Company. The
Board serves the interests of IPL and its shareholders, as well as other
stakeholders such as employees, customers and the community, in
a manner designed to create and continue to build sustainable value.
IPL’s Board operates in accordance with its charter and has reserved
certain powers for itself. The Board has established four standing
Committees to assist the Board with effectively discharging its
responsibilities:
» Audit and Risk Management Committee;
» Nominations Committee;
» Remuneration Committee; and
» Health, Safety, Environment and Community Committee.
The Board has delegated the day-to-day management of IPL,
and the implementation of approved business plans and corporate
strategies, to the Managing Director & CEO, who in turn may further
delegate to senior management.
IPL’s governance framework:
» plays an integral role in helping the business deliver
on its strategy;
» provides the structure through which strategy and business
objectives are set, performance is monitored, and risks are
managed;
» provides guidance on the standards of behaviour that IPL
expects of people; and
» aligns the flow of information and accountability from our people,
through the management levels, to the Board and ultimately our
shareholders and key stakeholders.
Shareholders
Board
Assurance and
oversight through
reporting
Nominations
Remuneration
Health, Safety,
Environment and
Community
Audit and Risk
Management
Company
Secretary
Board Committees
Assurance
Managing Director
& CEO
Executive Team
Our People
Internal
Audit
External
Auditor
Accountability
Delegation of Authority
52
Incitec Pivot Limited Annual Report 2022 Board composition
Under IPL’s Board Charter, the composition of the Board is
determined having regard to what is appropriate to achieve
efficient and prudent decision making. The Board is committed
to ensuring that it is comprised of individuals with an appropriate
range of skills, experience, expertise and diversity to deal with
current and emerging issues in our business. The Board currently
comprises seven directors, including six Non-executive Directors
and one executive Director (being the Managing Director & CEO),
and details of their qualifications and experience is provided under
the Board of Directors section of this Annual Report.
Corporate Governance Statement
Our corporate governance framework and practices have
complied with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (4th Edition)
(ASX Recommendations) throughout the 2022 financial year.
The Board continually reviews IPL’s governance policies and
practices to ensure that they remain appropriate in light of corporate
governance developments and changes in expectations, including as
reflected in the revised 4th Edition of the ASX Recommendations.
IPL’s 2022 Corporate Governance Statement, which can
be viewed at www.incitecpivot.com.au/about-us/
about-incitec-pivot-limited/corporate-governance,
provides detailed information on IPL’s corporate governance
practices for the year ended 30 September 2022.
IPL policies and practices
As part of our commitment to operating to the highest standards
of ethical behaviour, we have a range of policies and practices that
set ethical standards for directors, employees, contractors and third
parties. These policies describe core principles designed to ensure
ethical conduct is maintained in the interests of shareholders and
other stakeholders.
The IPL Code of Conduct is our global code for business conduct
– it contains principles and standards of conduct which are based
on IPL’s values and represents our commitment to uphold ethical
business practices and meet applicable legal requirements.
The Code of Conduct applies to all directors and employees of the
Company and each subsidiary, partnership, venture and business
association, including agents and other contractors that are
effectively controlled by the Company or act on its behalf.
The Code of Conduct is supported by a number of governance
policies to guide how IPL does business and outline expected
standards of behaviour, including:
» Continuous Disclosure Policy – establishes IPL’s procedure for
compliance with its continuous disclosure obligations and
provides guidance for the identification of material information
and timely disclosure of IPL’s activities to the market.
» Securities Trading Policy – prohibits IPL directors, employees and
contractors and their related parties from dealing in IPL securities
if they are in possession of price sensitive information, provides
for blackout periods during which directors and employees must
not trade in IPL securities, and sets out the procedure for
obtaining required approvals to trade in IPL securities.
» Anti-bribery Policy – prohibits the making of unlawful or
improper payments to any individual or entity with the
intent of securing a business advantage for IPL.
» Human Rights Policy – articulates the fundamental elements of
IPL’s approach to human rights and how IPL demonstrates its
commitment to respect human rights in line with the Universal
Declaration of Human Rights and other international frameworks.
» Modern Slavery Policy – defines the processes that identify and
address modern slavery risks in IPL’s supply chains and within IPL’s
own operations.
» Supplier Code of Conduct – illustrates the guiding principles
that IPL has adopted as part of its sourcing and procurement
processes.
» Risk Management Policy and Group Risk Framework – provides
guidance and direction on the management of risk in IPL and
states IPL’s commitment to the effective management of risk.
» Whistleblower Protection Policy – encourages IPL directors,
employees and contractors to confidentially report unethical or
illegal conduct and raise concerns regarding actual or suspected
contraventions of ethical or legal standards, without fear of
victimisation, reprisal or harassment.
53
Incitec Pivot Limited Annual Report 2022 BOARD OF DIRECTORS
Brian Kruger
BEc
Independent Non-executive Chairman
Mr Kruger was appointed as a non-executive
director on 5 June 2017 and was appointed
Chairman on 1 July 2019.
Committee memberships
Chairman of the Nominations Committee
Member of the Health, Safety, Environment and
Community Committee
Skills and experience
Mr Kruger is the former Managing Director & Chief
Executive Officer of Toll Holdings Limited, having
joined Toll in 2009 as Chief Financial Officer,
before being appointed Managing Director &
Chief Executive Officer in 2012. Prior to joining
Toll, Mr Kruger had a career spanning 25 years in
the resources and industrial sectors in Australia
and the U.S.
Mr Kruger brings to the Board significant
experience in the industrial sector and a deep
knowledge of manufacturing operations
including in North America, as well as executive
leadership experience in the Australian listed
company environment.
Other directorships/appointments
Racing Victoria Limited – Chairman
Bruce Brook
BCom, BAcc, FCA, MAICD
Independent Non-executive Director
Mr Brook was appointed as a non-executive
director on 3 December 2018.
Committee memberships
Chairman of the Audit and Risk Management
Committee
Member of the Nominations Committee
Member of the Remuneration Committee
Skills and experience
Mr Brook was the Chief Financial Officer of
Western Mining Resources Limited and Deputy
Chief Financial Officer of the Australian & New
Zealand Banking Group. Mr Brook brings to
the Board extensive executive experience in
Australia, America, the UK and Africa, across a
range of industries including mining, finance,
manufacturing and chemicals.
Other listed company directorships in the past
three years
CSL Limited – Non-executive Director
(from 2011)
Newmont Corporation – Non-executive Director
(from 2011)
Djerriwarrh Investments Limited
– Non-executive Director (from 2021)
Other directorships/appointments
Australian Institute of Company Directors,
Corporate Governance Advisory Committee
– Member
Guide Dogs Victoria – Director
Jeanne Johns
B.S Chemical Engineering,
magna cum laude
Managing Director & CEO
Ms Johns was appointed as Managing Director &
CEO on 9 August 2017 and commenced in the role
on 15 November 2017.
Committee memberships
Member of the Health, Safety, Environment and
Community Committee
Skills and experience
Ms Johns is an experienced executive and
chemical engineer, having held numerous
senior management and executive roles
during her career in the international refining,
petrochemicals, oil and gas industries.
Ms Johns brings to the Board her significant
management and executive experience in
strategy, operations, manufacturing and safety
following her 30-year international career with
BP in North America, UK, China, Europe and
Asia. Ms Johns international experience in the
chemical and energy sectors provides her with
a deep understanding of the strategic and
operational issues facing companies in cyclical
and commodity-based businesses.
Other directorships/appointments
International Fertilizer Association – Chair
Market Intelligence Committee and Executive
Board Member
Australian Climate Leaders Coalition (CLC)
– Founding Member
American Chamber of Commerce in Australia
(AMCham) – Director and Chair of Victorian
Council of Governors
Liveris Academy for Innovation and Leadership,
the University of Queensland – Advisory Board
Member
Melbourne Business School – Board Member
Chemistry Australia – Board Member
54
Incitec Pivot Limited Annual Report 2022 Xiaoling Liu
PhD (Extractive Metallurgy),
BEng (Extractive Metallurgy),
GAICD, FAusIMM, FTSE
Independent Non-executive
Director
Dr Liu was appointed as a non-
executive director on 25 November
2019.
Committee memberships
Chairman of the Health, Safety,
Environment and Community
Committee
Member of the Audit and Risk
Management Committee
Skills and experience
Dr Liu is a metallurgical engineer
and experienced non-executive
director who has had extensive
executive experience in leading
global mining and processing
businesses, as well as managing
complex manufacturing operations
in metals and industrial chemicals
during her 26-year career with Rio
Tinto. Dr Liu brings to the Board
her extensive executive experience
in Australia, America, Asia and
Europe, across a range of industries
including global mining and
processing businesses.
Other listed company
directorships in the past three
years
South32 Limited – Non-executive
Director (from 2017)
Newcrest Mining Limited - Non-
executive Director (2015-2020)
Gregory Robinson
Bsc(Hons), MBA, MAICD
George Biltz
BChE, MBA, NACD.DC
Independent Non-executive
Director
Mr Biltz was appointed as a non-
executive director on 1 December
2020.
Committee memberships
Member of the Health, Safety,
Environment and Community
Committee
Skills and experience
Mr Biltz is a chemical engineer and
an experienced non-executive
director who has extensive
global executive experience
in the industrial chemicals
manufacturing sector. Mr Biltz
is based in the United States.
Mr Biltz brings to the Board
significant skills and expertise
in strategy, governance and
risk, operations, capital projects,
acquisitions and integration,
finance, industrial chemicals and
engineering in the United States
and internationally.
Other directorships/
appointments
Kymera International – Executive
Chair of the Board
Independent Non-executive
Director
Mr Robinson was appointed as
a non-executive director on 25
November 2019.
Committee memberships
Chairman of the Remuneration
Committee
Member of the Audit and Risk
Management Committee
Member of the Nominations
Committee
Skills and experience
Mr Robinson has held various senior
management and executive roles
during his executive career which
spans over 30 years, including
as a Director of Merrill Lynch
Investment Banking, CFO/ CDO of
BHP Petroleum, Finance Director
and ultimately Managing Director &
Chief Executive Officer of Newcrest
Mining Limited. Mr Robinson brings
to the Board significant senior
executive experience in strategy,
projects, operations, finance,
accounting, capital management
and risk management within the
mining, oil and gas industries in
Australia and internationally.
Other listed company
directorships in the past three
years
Rex Minerals Limited – Non-
executive Director (from 2021)
Other directorships/
appointments
Royal Automobile Club of Victoria
(RACV) – Deputy Chairman and
Non-executive Director
RACV Finance Limited – Chairman
Tonianne Dwyer
BJuris (Hons), LLB (Hons),
GAICD
Independent Non-executive
Director
Ms Dwyer was appointed as a non-
executive director on 20 May 2021.
Committee memberships
Member of the Audit and Risk
Management Committee
Member of the Remuneration
Committee
Skills and experience
Ms Dwyer has extensive executive
experience in investment banking,
funds management, real estate
and corporate strategy and is
an experienced non-executive
director. Ms Dwyer brings to the
Board her international executive
experience and extensive non-
executive director experience
within the Australia listed company
environment.
Other listed company
directorships in the past three
years
ALS Group Limited – Non-executive
Director (from 2016)
OZ Minerals Limited – Non-
executive Director (from 2017)
Metcash Limited – Non-executive
Director (2014-2021)
DEXUS Property Group – Non-
executive Director (2011-2022)
DEXUS Wholesale Property Fund
– Non-executive Director
(2011-2022)
Other directorships/
appointments
The University of Queensland –
Deputy Chancellor and Senate
Member
Sir John Monash Foundation –
Director
55
Incitec Pivot Limited Annual Report 2022 EXECUTIVE TEAM
Jeanne Johns B.S. Chemical Engineering, magna cum laude
Sunil Salhotra BCom, MBA
Chief Strategy & Sustainability Officer
Sunil commenced as Chief Strategy & Sustainability
Officer on 1 October 2021. With more than 30 years’
international experience, Sunil has worked across a range
of industries including energy and resources, oil and gas,
telecommunications and management consulting for
leading private and listed companies across Australia
and Asia. Prior to joining IPL, Sunil held a number of
executive and strategy leadership roles including as Chief
Executive of Pangaea Resources, Group Executive Strategy
and Planning at Santos, and Vice President, Planning
& Regional Development at Unocal South ASEAN.
Rob Mill Psychologist (Psychology Board of Australia), BSc
Honours (Physiol. & Psych.), BAppSc (Physiol. & Psych.)
Chief People Officer
Rob leads IPL’s Human Resources Function and Corporate
Affairs Group. He has more than twenty years of experience
in senior human resources and psychology roles including
with BHP and over a decade with Rio Tinto. He joined
IPL in 2018. Prior to commencing as IPL’s Chief People
Officer in December 2021, Rob was the Vice President
of Human Resources for Dyno Nobel Asia Pacific, Incitec
Pivot Fertilisers, Australian Manufacturing and the Global
Technology Group. Rob is a Registered Psychologist with
the Australian Health Practitioner Regulation Agency’s
Psychology Board of Australia and has held roles within the
Organisational Psychology Unit of Queensland Rail and as a
Senior Psychologist in management consulting.
Robert Rounsley
MSc (Chem), BSc Hons (Chem), MBA
Chief Technology Officer
Robert was appointed as Chief Technology Officer in January
2018 and leads IPL’s Global Technology Group, bringing an
increased focus on value creation for IPL’s global explosives
and fertiliser customers through technology and innovation.
With over 30 years’ corporate experience, Robert has worked
in many technical and commercial roles across the global
breadth of IPL and the former Dyno Nobel businesses. Prior
to being appointed as the Chief Technology Officer, Robert
was the SVP Global Marketing and Technology for the Dyno
Nobel business.
Margot Sharapova BA
Executive Chief Information Officer
Appointed in April 2019, Margot’s role is to ensure
the IPL Group’s enterprise technology supports our
commitments to customers, employees, and shareholders.
Margot brings experience in large and complex, multi-site
IT transformations, leveraging technology to engage clients
and consumers, and is pivotal in supporting IPL’s Strategic
Value Drivers for the Group’s performance and growth.
With a career spanning over 25 years, Margot has held senior
executive positions as CIO in large global and
regional matrix organisations.
Managing Director & CEO
See Board of Directors page.
Paul Victor BCompt (Hons), CA (SA), International Tax
Law (Hons)
Chief Financial Officer
Paul brings more than 30 years of international experience
to IPL, including a wealth of experience across regional,
divisional, enterprise and Group CFO roles, working
across functions including finance, treasury, tax, financial
planning and analysis, control, M&A, investor relations and
IT functions. Prior to his appointment as Chief Financial
Officer at IPL, Paul gained invaluable experience during his
ten-year tenure at Sasol, where he was CFO, Group Financial
Controller and CFO of Sasol Synfuels, a subsidiary of Sasol
Limited. Paul was also the Financial Manager for Harmony
Gold Mining for four years. Paul is a qualified Chartered
Accountant and is also recognised by the Australian
Chartered Accountant Board as a practising CA in Australia.
He completed his articles at PriceWaterhouseCoopers
in 1996.
Greg Hayne BCom, MBA
President, Dyno Nobel Asia Pacific and
Interim President, Incitec Pivot Fertilisers
Greg was appointed as President, Dyno Nobel Asia Pacific
in January 2018 and the Interim President, Incitec Pivot
Fertilisers on 1 August 2022. With over 25 years’ experience
in international business development, operations and
P&L management, Greg has held a number of senior
leadership positions within IPL, including as Vice
President of Marketing where he led the establishment
of the foundation contracts for Dyno Nobel Moranbah,
Vice President of International Operations responsible
for Dyno Nobel’s Indonesian expansion, and as Senior
Vice President, Retail Sales & Operations for Dyno Nobel
Americas, supporting the growth of the company’s
distribution network across the region.
Braden Lusk PhD, P.E.
President, Dyno Nobel Americas
Braden has more than 25 years’ experience in the mining
and explosives industry and was appointed as Dyno Nobel
Americas President in July 2020. Braden has been with
IPL’s Dyno Nobel Americas business since 2018 and prior
to being appointed President, served as Senior Vice President
Corporate Accounts and Tech Services. In that
role, he leveraged expertise in mining and blasting
optimisation to develop outcome-based offerings that
provided significant downstream value for critical customers.
Braden has a combination of practical on-site skills, including
working as a mine supervisor, international consultant, and
trainer, along with extensive academic experience. Prior
to joining Dyno Nobel, Braden was Chair of Mining and
Nuclear Engineering at Missouri University of Science and
Technology where he had previously earned a PhD in mining
engineering, with an emphasis in explosives engineering.
Stephenie De Nichilo BEng(Mech)(Hons), MBA
Chief HSE & Operations Excellence Officer
Stephenie was appointed Chief HSE & Operations Excellence
Officer in December 2021 and has over 25 years’ experience
in manufacturing, mining and oil and gas industries.
Stephenie commenced with IPL in 2018 as the Group’s Vice
President of Corporate HSE and most recently, was IPL’s Vice
President Global Asset Management, Technology & HSE.
Before joining IPL, Stephenie spent 16 years at Santos where
she held a number of senior leadership positions where she
drove sustainable change in business performance and team
culture through the development and operationalisation
of strategic business plans in the fields of Maintenance,
Reliability, Asset Management, Operations Management for
Onshore and Offshore Hazardous Facilities and Corporate
Health and Safety.
56
Incitec Pivot Limited Annual Report 2022 57
Incitec Pivot Limited Annual Report 2022 58
Incitec Pivot Limited Annual Report 2022 FINANCIAL AND
STATUTORY
REPORTS
“Record profitability
and returns to
shareholders for FY22.
”
59
Incitec Pivot Limited Annual Report 2022 DIRECTORS’ REPORT
The directors of Incitec Pivot Limited (the Company or IPL) present their report together with the financial report of the Company and its
controlled entities (the Group) for the year ended 30 September 2022 and the auditor’s report.
The following sections of the Annual Report form part of, and are to be read in conjunction with, this Directors’ Report:
» Board of Directors
» Operating and Financial Review (OFR)
» Remuneration Report
» Auditor’s Independence Declaration
Directors
Particulars of the qualifications, other directorships, experience and special responsibilities of each Director as at the date of this report are set
out in the Board of Directors section.
Directors’ meetings
The number of Board and Board Committee meetings attended by each of the directors of the Company during the financial year
are listed below:
Audit and Risk
Management
Committee
Board
Remuneration
Committee
Nominations
Committee
Health, Safety,
Environment and
Community
Committee
Additional
Meetings (3)
Director – Current (1)(2)(4)
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
B Kruger
G Biltz
B Brook
T Dwyer
X Liu
G Robinson
J Johns
9
9
9
9
9
9
9
9
9
9
9
9
9
9
–
–
5
5
5
5
–
4
4
5
5
5
5
5
–
–
7
7
–
7
–
6
3
7
7
7
7
7
2
–
2
–
–
2
–
2
–
2
2
2
2
–
4
4
–
–
4
–
4
4
4
1
4
4
4
4
8
6
8
6
6
6
8
8
6
8
6
6
6
8
Chairman Member
(1)
(2)
‘Held’ indicates the number of meetings held during the period that the director was a member of the Board or Committee.
‘Attended’ indicates the number of meetings attended. Directors who are not members of the Board Committees do attend Committee meetings from time to time
(as non-executive directors have a standing invitation to attend all Committee meetings).
(3) Reflects the number of additional formal Board meetings attended by each director during the financial year, and includes attendance at Board Sub-Committee meetings where any two directors
(4)
are required to form a quorum.
In addition to the Board and Committee meetings held during the year, the directors attended site visits at Townsville PDC, Townsville Port, Gibson Island, Geelong SSP, Oyster Cove PDC, Werribee
Laboratory, Waggaman, Tradestar, Carthage and Salt Lake City.
60
DIRECTORS’ REPORTIncitec Pivot Limited Annual Report 2022 Directors’ interests in share capital
The relevant interests of each director in the share capital
of the Company as at the date of this report is disclosed in
the Remuneration Report.
Company Secretary
Ms Richa Puri was appointed to the role of Company Secretary on 8
August 2019. Ms Puri (LLB (Hons), B. Com (Accounting), FGIA, GAICD)
is a corporate lawyer and governance adviser with over 15 years
relevant professional experience. She has practiced as a lawyer for
legal firms in Australia and has experience in providing in-house
legal, governance and company secretarial advice to ASX listed
companies.
Principal activities
The principal activities of the Group during the course of the
financial year were the manufacture and distribution of industrial
explosives, industrial chemicals and fertilisers, and the provision
of related services. No significant changes have occurred in the
nature of these activities during the financial year.
Dividends
Dividends since IPL’s 2021 Annual Report:
Dividend type
Dividend
per share
Total
amount
$mill
Franked
percentage Date of payment
Paid during the financial year
2021 final dividend
8.3 cents
161.2 14% franked
16 Dec 2021
2022 interim dividend 10.0 cents
194.2 100% franked
5 Jul 2022
To be paid after end of the financial year
2022 final dividend
17.0 cents
330.2 100% franked 21 December 2022
Review and results of operations
A review of the operations of the Company during the financial
year, the results of those operations and the Company’s financial
position is contained in the OFR.
Significant changes in the state of affairs
There have been no significant changes to the Group’s state of affairs
during the financial year other than as noted in the OFR.
Events subsequent to reporting date
Capital Management
On 15 November 2022, IPL announced a final dividend of 17
cents per share, 100% franked, to be paid on 21 December 2022.
The record date for entitlement to this dividend is 6 December
2022. The total dividend payment will be $330.2m.
On 15 November 2022, IPL also announced that it intends
to undertake an on-market share buy back of up to $400m.
The proposed buy back will be conducted in the ordinary
course of trading and the exact amount and timing of share
purchases will be dependent on regulatory requirements and
market conditions.
Strategic review of WALA and implications for structural
separation of the Explosives and Fertilisers businesses
On 15 November 2022, IPL announced that it has received a number
of unsolicited approaches in relation to a potential acquisition of its
ammonia manufacturing facility located in Waggaman, Louisiana,
USA (WALA). The Company will undertake a review of the strategic
options for WALA in the near-term. Under any scenario, IPL intends
to maintain the strategic value of long-term supply of ammonia from
WALA into the Dyno Nobel Americas business. An estimate of the
financial impact cannot be made at this point.
The strategic review process will have implications for the timing of
the proposed structural separation of the Incitec Pivot Fertilisers and
Dyno Nobel businesses which was announced on 23 May 2022.
It is currently anticipated that the previously communicated target
completion date for the separation of early 2023 will likely be
extended by 6-12 months, pending the completion of the strategic
review process for WALA. There has been no impact on the financial
statements for FY22 in relation to the proposed structural separation
other than the costs incurred to date which have been classified
as an individually material item and disclosed in the notes to the
financial statements.
Other than the matters reported on above, the directors have not
become aware of any other significant matter or circumstance that
has arisen since the end of the financial year, that has affected or may
affect the operations of the Group, the results of those operations, or
the state of affairs of the Group in subsequent years, which has not
been covered in this report.
Likely developments
The OFR contains information on the Company’s 2022 financial
performance and prospects for future financial years, and refers to
likely developments in the Company’s operations and the expected
results of these operations in future financial years. Information on
likely developments in the Company’s operations for future financial
years and the expected results of those operations together with
details that could give rise to material detriment to the Company
(for example, information that is commercially sensitive, confidential
or could give a third party a commercial advantage) have not been
included in this report where the directors believe it would likely
result in unreasonable prejudice to the Company.
Environmental regulation and performance
The operations of the Group are subject to environmental regulation
under the jurisdiction of the countries in which those operations
are conducted including Australia, United States of America, Mexico,
Chile, Canada, Indonesia, Papua New Guinea, Turkey and France. The
Group is committed to complying with environmental legislation,
regulations, standards and licences relevant to its operations.
The environmental laws and regulations generally address certain
aspects and potential impacts of the Group’s activities in relation to,
among other things, air and noise quality, soil, water, biodiversity
and wildlife. The Group operates under a Global Health, Safety and
Environment Management System which sets out guidelines on
the Group’s approach to environmental management, including
a requirement for sites to undertake an Environmental Site
Assessment.
In certain jurisdictions, the Group holds licences for some of its
operations and activities from the relevant environmental regulator.
The Group measures its compliance with such licences and reports
statutory non-compliances as required.
Measurement of the Group’s environmental performance, including
determination of areas of focus and assessment of projects to be
undertaken, is based not only on the actual impact of incidents,
but also upon the potential consequence, consistent with IPL’s
risk-based focus.
During the year, the Group has continued to focus on licence
compliance and identification and mitigation of environmental
risks. Remediation works have progressed at a number of sites
in Australia and the United States.
Environmental performance has maintained last year’s improvement
with zero Significant Environmental Incidents reported in the
2022 financial year. This result has highlighted the importance
of delivering specific environmental improvement plans to
achieve sustainable improvement. The implementation of our
Compliance Management Framework and in particular the new
Environmental Licence Compliance Procedure, with a continued
focus on environmental compliance across the organisation through
automation, increased controls, and improved practices
has delivered improvement in our environmental performance.
61
DIRECTORS’ REPORTIncitec Pivot Limited Annual Report 2022 The Board also notes:
»
»
the engagements for all non-audit services provided by Deloitte
were reviewed by the Chief Financial Officer, and where relevant,
approved by the Audit and Risk Management Committee, in
accordance with the Committee’s Charter and the Company’s
policy on the engagement of the external auditor for the
provision of non-audit services to ensure they do not impact the
integrity and objectivity of the auditor; and
the non-audit services provided by Deloitte did not undermine
the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants, as
they did not involve reviewing or auditing the auditor’s own
work, acting in a management or decision making capacity for
the Group, acting as an advocate for the Group or jointly sharing
economic risks or rewards.
Deloitte provided non-audit services to the amount of $730k during
the year ended 30 September 2022 (refer to note 24 to the financial
statements).
The lead auditor has provided a written declaration that no
professional engagement for the Group has been carried out
during the year that would impair Deloitte’s independence as
auditor. A copy of the auditor’s independence declaration is set
out on page 83 and forms part of this report.
Proceedings on behalf of IPL
No application has been made under section 237 of the
Corporations Act 2001 in respect of IPL, and there are no proceedings
that a person has brought or intervened in on behalf of IPL under
that section.
Rounding
As the Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191,
the amounts shown in this report and in the financial statements
have been rounded off, except where otherwise stated, to the
nearest one hundred thousand dollars.
The Directors’ Report, which includes the OFR and the
Remuneration Report, is signed in accordance with a
resolution of the directors of Incitec Pivot Limited.
Brian Kruger
Chairman
Jeanne Johns
Managing Director & CEO
15 November 2022
During the 2022 financial year in Australia, two incidents (one
at Mount Isa and one at Phosphate Hill) led to four Penalty
Infringement Notices (PIN) being issued by the Queensland
Department of Environment and Science. Along with a PIN received
for an incident at Gibson Island which occurred in the 2021 financial
year, the five PINs amounted to fines of AU$65,148. Three incidents
involved losses of containment from pipe networks to ground or to
surface water. Corrective actions have been implemented for these
incidents including clearer inspection and maintenance regimes
and defined responsibilities.
At Gibson Island, the obligations and associated milestones under
the two Environmental Protection Orders relating to stormwater
release quality and groundwater contamination issued in 2021
have consistently been met during the year. These orders enforce
commitments made by site operations to improve infrastructure,
systems and materials handling to significantly reduce the risk
of unacceptable releases to the environment.
In the United States, ongoing compliance monitoring and
implementation of physical improvements at the Carthage and
Louisiana, Missouri sites and St. Helens, Oregon are progressing
to plan under two separate Consent Decrees. Regular reports
are submitted to the Environmental Protection Agency (EPA)
documenting the status of this progress and to date the sites
have met all Consent Decree milestones. It is expected that the
remaining tasks for both Consent Decrees will be completed by
the end of calendar year 2022.
Indemnities and insurance
The Company’s Constitution provides that, to the extent permitted
by law, the Company must indemnify any person who is, or has been,
a director or secretary of the Company against any liability incurred
by that person including any liability incurred as an officer of the
Company or a subsidiary of the Company and legal costs incurred by
that person in defending an action.
The Constitution further provides that the Company may enter
into an agreement with any current or former director or
secretary or a person who is, or has been, an officer of the
Company or a subsidiary of the Company to indemnify the
person against such liabilities.
In accordance with the Company’s Constitution, the Company has
entered into Deeds of Access, Indemnity and Insurance with each
director of the Company and certain officer’s and members of senior
management. Pursuant to those deeds, the Company has paid a
premium in respect of a contract insuring directors and officers of
the Group against any liability for costs and expenses incurred by
them in defending civil or criminal proceedings involving them
as such officers, with some exceptions. The contract of insurance
prohibits disclosure of the nature of the liability insured against
and the amount of the premium paid.
Auditor independence and non-audit services
Deloitte Touche Tohmatsu (Deloitte) was appointed as the
Company’s external auditor at the 2011 Annual General Meeting
and continues in office in accordance with section 327B(2) of the
Corporations Act 2001. Mr Tim Richards is the Company’s lead audit
partner for the 2022 financial year.
The Group may decide to engage the auditor, Deloitte, for the
provision of non-audit services, where such services are not in
conflict with their role as auditor and their expertise and/or detailed
experience with the Company may allow cost efficiencies for the
work.
The Board has considered the position and, in accordance with
advice received by the Audit and Risk Management Committee, is
satisfied that the provision of non-audit services during the year by
Deloitte is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001 and does not
compromise the external auditor’s independence.
62
DIRECTORS’ REPORTIncitec Pivot Limited Annual Report 2022 REMUNERATION REPORT
Introduction from the Chairman of the Remuneration Committee
Dear Shareholders,
On behalf of Incitec Pivot Limited’s (IPL or the Company)
Remuneration Committee and the Board, I am pleased to
present the Remuneration Report for 2022 which sets out the
remuneration information for the Managing Director & Chief
Executive Officer (MD&CEO), Executive Key Management
Personnel (KMP) and the Non-executive Directors.
Our approach
The Remuneration Committee’s objective is to ensure our
remuneration framework provides a bridge between shareholder
value and individual performance, whilst ensuring alignment with
our other key stakeholders.
We ensure individual performance is measured using targets that
align to IPL’s values, long-term strategy and metrics, shorter term
financial targets and relevant individual goals.
Financial Year 2022 in review
The Company’s safety and sustainability performance continued
to gain positive momentum. Although TRIFR (1) has been flat, FY22
has seen a material reduction in injury severity and environmental
incidents. This year we have made good progress on our journey
to Net Zero with a range of projects advanced to decarbonise
our operations. The Board and Management remain focused on
continued progress to our sustainability performance.
The 2022 financial year was characterised by higher commodity
prices, supply chain challenges, and ongoing COVID-19
uncertainties. These factors continued to make financial target
setting very challenging. For financial year 2022, higher commodity
prices helped deliver a record Headline Group NPAT result of
$1,027.1 million. With strong financial results the Company’s share
price increased 19.4% from $2.94 to $3.51. Pleasingly with increased
profitability in 2022, dividends payments were increased 190%
from 9.3 cents to 27 cents per share and a share buyback of up
to $400 million has been announced.
High commodity prices offset manufacturing related issues
experienced at both our Waggaman, Louisiana, USA (WALA)
and Phosphate Hill plants. We remain focused on consistent
and reliable production.
Some significant strategic steps have been progressed with the
planned demerger of the fertiliser and explosives businesses, the
acquisition of Titanobel in France, and assessments to convert the
Gibson Island ammonia plant to run on green hydrogen.
Post the end of the financial year, the 2023 strategic objectives have
been expanded to include the strategic review of the Waggaman
ammonia plant. The strategic review process will have implications
for the timing of the proposed demerger of the Incitec Pivot
Fertilisers and Dyno Nobel businesses. The deliverables for both
projects have been incorporated into relevant executive strategic
objectives for FY23.
Executive changes in FY22
Mr Paul Victor commenced as the new Chief Financial Officer (CFO)
on 1 July 2022. Mr Victor has over 30 years’ experience across a range
of industries, including upstream oil and gas, gold and coal mining,
chemicals and energy industries for international listed companies.
Former CFO, Nick Stratford, left the Company on 31 December 2021
(refer section 4.6).
Mr Stephan Titze (President – Incitec Pivot Fertilisers) has retired
and left the Company on 30 September 2022 (refer section 4.6).
We thank both for their significant contributions to the Company.
Fixed remuneration in FY22
A new regional manufacturing model was introduced this year.
Duties for the previous Global Manufacturing & HSE (Health Safety
& Environment) role were reassigned geographically to the President
– Dyno Nobel Americas, the President – Dyno Nobel Asia Pacific,
and the President – Incitec Pivot Fertilisers, resulting in increases
to their fixed remuneration (refer section 2.2). The MD&CEO did not
receive an increase to fixed remuneration in 2022.
Short-term incentive in FY22
The MD&CEO achieved an STI outcome of 64% of maximum and
the average Executive KMP STI outcomes was 59.3% of maximum.
The STI outcomes were as a result of record Headline Group NPAT
and strong performance by Executive KMP against their personal
measures. Strategic objectives that have progressed well during
FY22 include the planned demerger, acquisition of Titanobel and
progress on decarbonisation initiatives.
HSE overall outcomes for the year showed improvement and
achieved an at target result (refer section 2.3). Sustainability
measures attached to each Executive KMP’s STI delivered above
target outcomes for all but the President – Incitec Pivot Fertilisers,
who delivered a result between threshold and target. Group
Adjusted NPAT (2) was impacted by manufacturing-related issues,
which resulted in an overall outcome below threshold level.
For the Dyno business units, adjusted EBIT results for DNA
did not reach threshold and DNAP was between threshold and
target levels. The IPF business unit did not reach threshold for
adjusted EBIT, largely due to Phosphate Hill production issues.
Section 2.1 outlines additional information on the Company’s
FY22 performance and resulting STI outcomes are provided in
section 2.3 of this report.
Long-term incentive
The 2019/22 LTI plan shifted its performance period for the Relative
TSR condition from an end of financial year to a November 2022
testing date. The decision to move this Relative TSR performance
period was to align the end of the testing period with the release
of the Company’s annual results.
As a result, only non-TSR performance conditions attached to the
2019/22 LTI plan can be commented on in this year’s report (refer
to Section 2.5), with detailed reporting on the 2018/21 tranche
included under Section 2.4. The three metrics for the 2019/22 plan
are Relative TSR, Return on Invested Capital, and Long Term Value
Metrics. Although final performance for the Relative TSR component
was not known at the time of this report, we expect a higher level of
vesting for the 2019/22 LTI at around 60% to 80%.
As previously disclosed, for the 2018/21 LTI plan with the
performance period that ended on 30 September 2021, 15%
of performance rights vested.
FY23 Remuneration framework
The FY23 STI remuneration framework is expected to remain largely
the same as FY22. With the strategic review of Waggaman, timing
of the demerger of the Incitec Pivot Fertilisers and Dyno Nobel
businesses is likely to be extended by 6 to 12 months (refer to
section 5 for proposed FY23 STI weightings for each Executive KMP).
After a recent salary review, the MD&CEO’s fixed remuneration will
be increased by 3.9% in January 2023, the first increase since January
2019. The performance conditions for the LTI 2022/25 are expected
to be largely the same as the LTI 2021/24. We are reviewing the
Return on Invested Capital (ROIC) metric and expect to move to a
three-year average calculation.
We continue to review market trends to ensure our remuneration
framework supports the execution of our strategies to increase
shareholder value. This objective is balanced with retaining and
motivating our key talent and ensuring alignment with our other
key stakeholders.
We look forward to ongoing dialogue with, and the support of our
shareholders, and welcome your feedback and comments on any
aspect of this Report.
Greg Robinson
Chairman
(1) Total Recordable Injury Frequency Rate.
(2) Group Adjusted NPAT means that results have been normalised to remove the impact of foreign exchange and commodity price movements.
63
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 REMUNERATION REPORT
CONTENTS
65
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73
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1.
Introduction
2. Remuneration Outcomes in 2022 Financial Year & Link
to the 2022 Financial Year Performance
2.1 Analysis of relationship between the Company’s performance,
shareholder wealth and remuneration
2.2 2022 Fixed annual remuneration
2.3 2022 STI outcomes
2.4 LTI 2018/21 outcomes
2.5 LTI 2019/22 outcomes
3. Executive Remuneration & Governance
3.1 Executive remuneration overview
3.2 Executive remuneration strategy
3.3 Executive remuneration governance
4. 2022 Executive Remuneration Framework
4.1 Overview
4.2 Fixed annual remuneration
4.3 Short-term incentive
4.4 Long-term incentive
4.5 LTI performance conditions
4.6 Executive service agreement terms
4.7 Performance related remuneration
4.8 Further details of Executive remuneration
5. Overview of Remuneration Changes for the 2023 Financial Year
6. Non-executive Director Remuneration
7. Shareholdings in IPL
8. Other KMP Disclosures
I
n
c
i
t
e
c
P
i
v
o
t
L
i
m
i
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e
d
A
n
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a
l
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p
o
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64
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORT
1. Introduction
The directors of IPL present the Remuneration Report prepared in accordance with the Corporations Act 2001 (Cth) for the Company for the
year ended 30 September 2022. This Remuneration Report is audited.
This Remuneration Report sets out remuneration information for KMP who had authority and responsibility for planning, directing and
controlling the activities of the Company during the 2022 financial year, being each of the Non-executive Directors and designated Executives.
The use of the term “Executives” in this report is a reference to the MD&CEO and certain direct reports during the 2022 financial year. Refer
to Table 1 below for all individuals comprising IPL’s KMP for the 2022 financial year. All KMP held their positions for the entirety of the 2022
financial year, unless noted otherwise.
Table 1 – Individuals forming IPL’s KMP for the 2022 reporting period
Non-executive Directors
Current
Mr Brian Kruger
Mr George Biltz
Mr Bruce Brook
Chairman and Independent, Non-executive Director
Independent, Non-executive Director
Independent, Non-executive Director
Ms Tonianne Dwyer
Independent, Non-executive Director
Dr Xiaoling Liu
Independent, Non-executive Director
Mr Gregory Robinson
Independent, Non-executive Director
Executives
Current
Ms Jeanne Johns
Managing Director & Chief Executive Officer
Mr Paul Victor (1)
Mr Greg Hayne
Dr Braden Lusk
Former
Chief Financial Officer
President, Dyno Nobel Asia Pacific
President, Dyno Nobel Americas
Mr Stephan Titze (2)
President, Incitec Pivot Fertilisers
Mr Nick Stratford (3)
Chief Financial Officer
(1) Mr Victor commenced as CFO and was appointed a KMP on 1 July 2022.
(2) Mr Titze ceased as a KMP on 27 July 2022. From that date, Mr Hayne began acting as Interim President, Incitec Pivot Fertilisers.
(3) Mr Stratford ceased as a KMP on 14 November 2021 and left the Company on 31 December 2021. Mr Chris Opperman acted as Interim CFO from 15 November 2021 to 30 June 2022,
when Mr Paul Victor was appointed.
65
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 A summary of the Company’s approach to Executive remuneration for the 2022 financial year, including performance conditions and their link
to the overall remuneration strategy is set out below:
Performance Conditions
Remuneration Strategy/Performance Link
Fixed Annual
Remuneration
Salary and
other benefits
(including statutory
superannuation).
Refer section 4.2
for more details
Short Term
Incentive
Annual incentive
opportunity
delivered 50/50 in
cash/restricted shares
for the MD&CEO
(if Minimum
Shareholding
Requirement
(MSR) has yet to be
achieved) or 100%
in cash if MSR has
been achieved. For
all other Executives,
opportunity
delivered 75/25 in
cash/restricted shares
(if MSR has yet to be
achieved) or 100% in
cash if MSR has been
achieved.
Refer section 4.3
for more details
Considerations
Scope of individual’s role
Individual’s level of knowledge, skills and expertise
»
»
» Company and individual performance
» Market benchmarking
Zero Harm ‘gate’
The award payable for the Zero Harm performance condition
may be forfeited in the event of a fatality or major incident
having regard to its circumstances.
Set to attract, retain and motivate the right talent to deliver
on IPL’s strategy and contribute to the Company’s financial
and operational performance.
For the Company’s Executives, the aim is to set fixed
remuneration at market relevant levels and link any future
increases to individual performance and effectiveness
whilst continuing to have regard to market relevance.
To align with the Company’s commitment to “Zero Harm for
Everyone, Everywhere”.
Safety measures (generally 10% of STI award)
»
Safety performance balanced scorecard across the
dimensions of behavioural safety and process safety
management comprising input and output measures.
In assessing the safety balanced scorecard, the Board may,
in its discretion, have regard to the results achieved against
the measures comprising the scorecard without applying a
specific weighting to any particular measure.
Net Profit After Tax (NPAT) ‘gate’
Requires achievement of a designated Group NPAT as
determined by the Board.
» A minimum NPAT performance level must be achieved
for the gate to open. If the NPAT performance level gate is not
achieved, all non-safety components of the STI will be capped
at target.
To ensure awarded STI aligns not only with underlying
performance, but also with the overall profitability of the
business. Commodity price impacts could result in poor
profitability which would be inconsistent with stretch
bonus payouts.
Financial measures
(generally a maximum of 70% of STI award, incorporating metrics
relevant to an Executive’s area of influence)
» Group NPAT
» Group Adjusted NPAT
»
» Manufacturing Reliability
Business Unit Adjusted EBIT (Earnings Before Interest and Tax)
To ensure robust alignment of performance in a particular
Business Unit with reward for the Executive managing that
Business Unit.
Performance conditions are designed to support the
financial direction of the Company (the achievement of
which is intended to translate through to shareholder
return) and
are clearly defined and measurable.
Sustainability measures (generally 10% of STI award)
»
Sustainability measures targeted at an Executive’s area
of influence
» Greenhouse gas reduction targets
Performance conditions are designed to align with the
overall Sustainability strategy of the business and focuses
an Executive on the key short term objectives within their
area of influence, that contribute towards the Company’s
longer term milestones.
Strategic objectives
(generally, a maximum of 20% of STI award) aligned to personal
strategic objectives. Examples include:
» Cost reduction and cash conversion initiatives
»
»
Input to demerger of the fertiliser and explosives businesses
Product innovation
Key strategic and growth objectives targeted at delivering
ongoing benefit to the Company.
Long Term Incentive
Three-year incentive
opportunity
delivered through
performance rights.
Refer section 4.4 and
4.5 for more details
Performance conditions
Distinct categories of performance that are weighted to align
with the Group’s focus over the three-year period that each
tranche of the plan spans.
»
»
»
Relative total shareholder return (TSR)
Long Term Value Metrics (formerly Strategic initiatives)
Return on invested capital (ROIC)
Performance conditions designed to encourage Executives
to focus on the key performance drivers which underpin
sustainable growth in shareholder value. The mix of
performance conditions is designed to ensure the share
price growth is supported by the Company’s absolute ROIC
performance as well as long term value metrics, and not
market factors alone.
Minimum Shareholding Requirement
Executive KMP are required to attain and maintain a MSR to better align Executive and Shareholder interests. It requires the MD&CEO to defer 50% of any STI
awarded until holding the equivalent of 100% of Fixed Annual Remuneration (FAR) in IPL shares. This must be achieved within 5-years, or direct purchases of
shares would be required. Other Executive KMP must defer 25% of any STI awarded until holding the equivalent of 50% of FAR in IPL shares.
Total Remuneration
The combination of these elements is designed to attract, retain and motivate appropriately qualified and experienced individuals, encourage a strong focus
on performance, support the delivery of outstanding returns to shareholders and align Executive and stakeholder interests through share ownership.
6666
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 2. Remuneration Outcomes in 2022 Financial Year & Link to the 2022
Financial Year Performance
2.1 Analysis of relationship between the Company’s performance, shareholder wealth and remuneration
In considering the Company’s performance, the benefit to shareholders and appropriate remuneration for the Executives, the Board, through
its Remuneration Committee, has regard to financial and non-financial indices, including the indices shown in the below table in respect of the
current financial year and the preceding four financial years.
Table 2 – Indices relevant to the Board’s assessment of the Company’s performance and the benefit to shareholders
NPAT before IMIs and excluding non-controlling interests ($m)
EPS before IMIs (cents)
Dividends per share (DPS) paid in the financial year (cents)
DPS declared in respect of the financial year (cents)
Share price ($) (Financial Year End) (1)
TSR (%) over 3 years (2)
On-market share buyback ($m)
Equity Raising (net of cost) ($m)
(1) Share Price as at the end of the 2017 financial year was $3.60.
2018
347.4
20.9
9.4
10.7
3.98
14
(210.3)
–
2019
152.4
9.5
7.5
4.7
3.39
30
(89.7)
–
2020
188.2
10.9
3.4
–
2.03
(37)
–
645.5
2021
358.6
18.5
1.0
9.3
2.94
(25)
–
–
2022
1,027.1
52.9
18.3
27.0
3.51
–
–
–
(2) TSR is calculated in accordance with the rules of the LTI 2015/18, LTI 2016/19, LTI 2017/20, LTI 2018/21 as applicable over the three-year performance period, having regard to the volume weighted
average price (VWAP) of the shares over the 20 business days up to but not including the first and last day of the performance period. For LTI 2019/22 the VWAP performance period is over the 5
business days immediately following the day that IPL’s annual results are released in November 2022. This was not known at the time of printing and will be disclosed in next year’s report.
Relationship between the Company’s performance and Executive
KMP STI outcomes
Relationship between the Company’s performance and Executive
KMP LTI outcomes
The below graph shows the relationship between the Company’s
performance and STI awards for Executive KMP in respect of the year.
For the 2022 financial year, Group NPAT (before IMIs and excluding
non-controlling interest) increased by 186% to $1,027.1m. The
financial gate for the STI opened as outlined in section 4.3 of this
report, resulting in Executives earning on average, 59.3% of
Maximum 2022 STI awards.
The below graph shows the relationship between IPL’s TSR percentile
ranking relative to its S&P/ASX 100 peer group over the three years
that each plan operated, and the overall LTI vesting percentage
that occurred for each plan. The LTI 2018/21 that vested in the
2022 financial year delivered 15% of total opportunity available
for that plan. The 2019/22 outcomes will be outlined in next year’s
report (refer to footnote (2) under Table 2 above).
Group performance and STI outcomes
ASX 100 Percentile TSR Ranking and LTI Vesting %
$mill
8
6
4
2
0
2018
2019
2020
2021
2022
Total STI awarded
NPAT before IMIs and excluding
non-controlling interests
$mill
1200
1050
900
750
600
450
300
150
0
%
50
40
30
20
10
0
2018
2019
2020
2021
IPL Percentile Ranking in ASX 100
LTI Vesting
2022 Total STI awarded includes 4 Executive KMP and on average delivered higher outcomes
than 2021 which included 5 Executive KMP.
LTI Vesting outcomes are based on 3 year averages
67
Total STI awardedNPAT before IMIs and excluding non-controlling interestsREMUNERATION REPORTIncitec Pivot Limited Annual Report 2022
2.2 2022 Fixed annual remuneration
The current policy for reviewing Executive remuneration is to use a primary benchmark against the market median of ASX companies with
market capitalisation of 50% to 200% of IPL’s, with support references against other benchmarking sources including the ASX100, and a select
group of 21 S&P ASX listed companies from the Industrials, Materials and Energy Sectors (refer to Section 3.1 for more detail).
Market surveying specialist, HR Ascent, was engaged to source listed company remuneration data. The primary benchmarking was undertaken
based on IPL’s market capitalisation of $5.65 Billion at 31 March 2021, which covered all ASX companies with market capitalisation of $2.8
Billion to $11 Billion as at 31 March 2021.
For roles located outside Australia, market-specific information sourced from US data providers Korn Ferry, Mercer and Equilar was used for
benchmarking purposes.
The benchmarking analysis was considered along with the internal restructuring of the Global Manufacturing role that saw duties for this role
reassigned geographically to the President – Dyno Nobel Americas, the President – Dyno Nobel Asia Pacific, and the President – Incitec Pivot
Fertilisers, which delivered the following fixed annual remuneration (FAR) increases to these Executive KMP:
» Ms Jeanne Johns received a 0% increase in the 2022 financial year and her most recent increase was in January 2019.
» Dr Braden Lusk
16% (to US$640,000, effective 17 July 2021). Dr Lusk’s most recent increase prior to this review was in July 2020
when he was promoted to the role of President – Dyno Nobel Americas.
15% (to $770,000, effective 17 July 2021). Mr Hayne’s most recent increase prior to this review was in October 2019.
» Mr Greg Hayne
» Mr Stephan Titze 15% (to $720,000, effective 1 January 2022). Mr Titze had not received an increase since joining the Company
in January 2019.
The combined increases account for approximately 60% of the FAR that the President – Global Manufacturing & HSE was paid prior to exiting
the Company. Increases for both Dr Lusk and Mr Hayne took effect in October 2021 but were backdated to when they assumed additional
responsibilities in July 2021.
2.3 2022 STI outcomes
The following table outlines detailed STI outcomes for the MD&CEO. Outcomes have been determined on the basis that the STI Financial Gate
of $281.3m was exceeded. Refer to Section 4.3 for detail on the STI Financial Gate.
Measure
Weighting
(at Target)
Health, Safety & Environment
Balanced
Scorecard
10%
Target
Threshold
Target
Stretch
Performance
Outcome
Weighted
Outcome
Commentary
Lag Indicators: Personal
Safety; Process Safety;
Environmental Incidents
Leading Indicators:
Significant Event Management;
Zero Harm Plan
Scorecard
achieved
Target result
10%
Overall, progress on the Zero Harm Plan continues to gain
momentum. Although FY22 Total Recordable Incident
Frequency Rate (TRIFR) delivered a flat result, a step change in
Process Safety performance and improvement in Environmental
Incidents were delivered compared to FY21. The severity of
recordable incidents decreased year on year.
Headline Financial
Group
Headline
NPAT (1)
Adjusted Financial
Group
Adjusted
NPAT (1)
30%
$453m (excluding individually
significant items)
$1,027m
45%
The stretch objective for this measure was comfortably
exceeded with strong support from the positive movement in
commodity prices experienced throughout FY22.
20%
$453m
$360m
0%
The threshold Adjusted NPAT level was not met, with
downtimes at Phosphate Hill and WALA being the major
contributors to the below threshold outcome delivered.
Manufacturing Reliability
Output
Tonnes
and TAR to
Schedule,
Cost
& Safety
Sustainability
15%
Output Tonnes:
WALA (5%)
PhosHill (5%); PhosHill
Turnaround Review,
Cost & Safety (5%)
Delivery
of various
Sustainability
-related
projects
10%
Progress on operating emission
reduction projects:
Moranbah tertiary
abatement project;
WALA sequestration;
Gibson Island
green ammonia project;
Delta E greenhouse gas (GHG)
emission reduction (Scope 3)
Individual Objectives
Completion
of Key
Projects
15%
Overall STI Outcome
Progress demerger of the
fertiliser and explosives
businesses and other
strategic initiatives. Deliver
an improvement in employee
engagement scores and
Executive Team effectiveness.
33%
(PhosHill TAR
achieved at
Target)
5%
Underperforming manufacturing outputs and reliability at both
WALA and Phosphate Hill delivered sub-threshold outcomes.
The Phosphate Hill Turnaround Review was completed to a high
standard with this element delivering a target outcome.
Projects
achieved
Stretch
result
Progress on operating emission reduction projects:
sustainability strategies were developed, incorporated and
integrated into business strategies. This includes pathways
to net zero for both future businesses and initial insights into
Scope 3.
WALA sequestration: Non-binding MOU’s have been signed.
This forms part of IPL’s net zero pathway and in contributing
towards reaching a Paris-aligned 2030 target
15%
Gibson Island green ammonia project: the GI project
successfully passed the technical gate and has received
contingent funding.
Moranbah tertiary abatement project: the project was
sanctioned in March 2022 and resulted in meeting IPL’s 2025
Scope 1 & 2 target.
Delta E GHG emission reduction: Certification significantly
progressed, with initial study showing 25% GHG reduction,
based on 10% less material.
Launch of demerger of the fertilisers and explosives businesses,
as well as one additional strategic project completed and
a further strategic project positioned to deliver strong
shareholder outcomes in the future. Significant improvement
in engagement at the Executive Team and Leadership levels
despite the demerger disruptions.
Projects
achieved
between
Target and
Stretch
result
21%
96%
64%
% of Target Opportunity Awarded
% of Maximum Opportunity Awarded
Stretch
Between Target & Stretch
Target
Between Threshold & Target
Threshold
Below Threshold
(1) Adjusted means that results have been normalised to remove the impact of foreign exchange and commodity price movements.
6868
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022
Individual STI outcomes for other Executive KMP are summarised below:
Executive
KMP
Objectives
Weighting
(at Target) Threshold
Target
Stretch
Weighted
Outcome
"Result
% Target
/ % Max" Commentary
Health, Safety & Environment (HSE)
Headline NPAT
G Hayne
Business Unit Adjusted EBIT
Manufacturing Reliability
Sustainability
Individual Strategic Objectives
Health, Safety & Environment (HSE)
Headline NPAT
B Lusk
Business Unit Adjusted EBIT
Manufacturing Reliability
Sustainability
Individual Strategic Objectives
Health, Safety & Environment (HSE)
Headline NPAT
S Titze
Business Unit Adjusted EBIT
Manufacturing Reliability
Sustainability
Individual Strategic Objectives
10%
30%
30%
10%
10%
10%
10%
30%
20%
20%
10%
10%
10%
30%
20%
5%
10%
25%
18%
60%
11%
10%
20%
20%
9%
60%
0%
10%
20%
10%
5%
60%
0%
0%
5%
25%
139.5%
69.8%
Mr Hayne achieved very strong results
against all of his individual HSE,
sustainability and strategic objectives.
Manufacturing Reliability across his
portfolio delivered an on-target outcome,
however, Adjusted EBIT delivered a result
between threshold and target.
109.0%
54.5%
Dr Lusk delivered outstanding outcomes
against his individual sustainability metrics,
and his Business Unit contributed strongly
to the Group’s Headline NPAT result. HSE and
Manufacturing Reliability delivered results
of betweeen threshold and target and
individual strategic objectives were
on target.
95.0%
47.5%
The fertiliser business under Mr Titze’s
leadership contributed very strongly to the
Group’s Headline NPAT outcome. Individual
strategic objectives were delivered on-
target, however all other metrics produced
outcomes below target.
Stretch
Between Target & Stretch
Target
Between Threshold & Target
Threshold
Below Threshold
Table 3 – Short term incentives awarded for the year ended 30 September 2022
Details of the vesting profile of the STI payments awarded for the year ended 30 September 2022 as remuneration to each Executive are set
out below:
Executives – Current
J Johns
G Hayne
B Lusk (1)
Executives – Former
S Titze (2)
N Stratford (3)
Short term incentive for the year ended 30 September 2022
Cash STI
$000
Minimum share
holding allocation (A)
$000
Included in
remuneration
$000
% earned of
maximum
opportunity
% forfeited
of maximum
opportunity
1,574
608
482
410
–
–
36
161
–
–
1,574
644
643
410
–
64
70
55
48
–
36
30
45
52
100
(A) Under the terms of the 2022 STI, to the extent that Executives have not achieved their MSR the following applies: 50% of the MD&CEO’s award is delivered in cash and the remainder is delivered
in restricted shares. For all other Executives, 75% of their award is delivered in cash and the remainder is delivered in restricted shares. Cash is generally paid and shares generally allocated
around December.
(1) Dr Lusk’s STI payment was converted from US$ to A$ at the year-end rate of 30 September 2022, being $1.5367.
(2) Mr Titze ceased as a KMP on 27 July 2022. From that date, Mr Hayne began acting as Interim President, Incitec Pivot Fertilisers.
(3) Mr Stratford ceased as a KMP on 14 November 2021 and left the Company on 31 December 2021. Mr Chris Opperman acted as Interim CFO from 15 November 2021 to 30 June 2022, when
Mr Paul Victor was appointed.
2.4 LTI 2018/21 outcomes
The performance period for the LTI 2018/21 ended on 30 September 2021. Following testing against the performance conditions, the Board
determined that 15% of the performance rights granted under the plan will vest (with the remaining 85% to lapse). Details in relation to each
of the performance conditions are set out below.
TSR Condition
In relation to the TSR Condition, the Company’s relative TSR performance over the period did not achieve median percentile performance of
the comparator group of S&P/ASX 100 companies. Accordingly, 0% of the performance rights granted subject to the TSR Condition vested
(out of a maximum of 40% of performance rights granted under the plan).
69
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 Long Term Value Metrics (formerly Strategic Initiatives) Condition
In relation to the Long Term Value Metrics Condition – the Board assessed this component against a balanced scorecard and determined the
outcome partially achieved the performance goals across the entirety of the scorecard. The Board determined that 50% of the performance
rights granted subject to this condition vested (out of a maximum of 30% of performance rights granted under the plan). Commentary on the
performance against the scorecard is set out in the following table.
Long Term Value
Metric Condition
Manufacturing
Excellence
Profitable
Growth
Customer,
Practical
Technology
& Innovation
Performance Goals
Threshold
Target
Stretch
Commentary
Achievement of
Manufacturing Production
Rates across six major
facilities within IPL’s US and
Australian operations.
The goal for cumulative
productivity benefits was to
deliver a minimum aggregate
dollar saving over the three-
year performance period.
Revenues from Technologies:
cumulative growth in total
margin from sales of certain
technologies.
Net Promoter Score:
improvement in NPS
over the initial baseline.
Key Customer Retention:
the retention of IPL’s top 10
customers by size and/or
strategic importance, whilst
not sacrificing margin above
forward outlook
Phosphate Hill and Gibson Island achieved target rates of
production throughout financial year 2021. Two other sites
delivered production rates of between threshold and target, and
two sites operated below threshold levels, with Waggaman being
the worst performed of these.
A stretch level of cumulative productivity benefits was delivered
across the measurement period.
The stretch target for this metric was cumulative improvement
over the 2018 baseline, which was achieved.
The stretch objective for this measure was improvement over
the 2018 baseline. Noticeable improvement was delivered which
equated to a target level of achievement.
Target objective of retention was achieved at a margin level no
worse than the expected forecast.
Vesting for this
component (%)
50%
Having regard to the outcomes in relation to the input and
output measures, the Board determined that 50% of the
performance goals were delivered against the balanced
scorecard.
Stretch
Between Target & Stretch
Target
Between Threshold & Target
Threshold
Below Threshold
ROE Growth Condition
In relation to the ROE Condition, the Company’s ROE Growth over the period did not achieve threshold performance of 7% compound.
Accordingly, 0% of the performance rights granted subject to the ROE Growth Condition vested (out of a maximum of 30% of performance
rights granted under the plan).
2.5 LTI 2019/22 outcomes
The performance period for the Absolute ROIC and Long Term Value Metrics conditions of the LTI 2019/22 ended on 30 September 2022.
The performance period for the Relative TSR condition will end after the disclosure of the Company’s full year results in November 2022
and therefore after the date of this report.
In relation to the conditions that can be reported for the LTI 2019/22 to date, 30% allocated to Absolute ROIC will vest in full, and the
30% allocated to Long Term Value Metrics will vest at 50%.
Current projections are for the Relative TSR component (worth 40%) to partially vest as a result of surpassing 50th percentile performance
against the ASX 100 index.
Total vesting of the LTI 2019/22 is therefore currently expected to be in the range of 60% - 80% of maximum opportunity.
Details on the number of rights vested and lapsed in relation to each of the performance conditions attached to this tranche, will be updated
at the coming Annual General Meeting and reported in full in the 2023 Remuneration Report.
7070
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022
Table 4 – Actual Pay
The table below provides a summary of actual remuneration paid to the Executives in the 2022 financial year. The accounting values of the
Executives’ remuneration reported in accordance with the Accounting Standards may not always reflect what the Executives have actually
received, particularly due to the valuation of share based payments. The table below seeks to clarify this by setting out the actual remuneration
that the Executives have been paid and rights that vested during the 2022 financial year. STI awarded in relation to the 2022 financial year will
be paid during the 2023 financial year.
Executive remuneration details prepared in accordance with statutory requirements and the Accounting Standards are presented in Table 7
of this report.
Short term
incentive
& other
bonuses (A)
Salary
& Fees
Other
short term
benefits (B)
Superannuation
benefits
Other
long term
benefits (C)
Termination
benefits
Year
$000
$000
$000
$000
$000
$000
Executive KMP – Current
J Johns
Managing Director & CEO
P Victor (1)
Chief Financial Officer
G Hayne
President, Dyno Nobel Asia Pacific
B Lusk
President, Dyno Nobel Americas
Executives – Former
S Titze(2)
President, Incitec Pivot Fertilisers
N Stratford (3)
Chief Financial Officer
T Wall (4)
President, Global Manufacturing
Total Executives
2022
2021
2022
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
1,640
1,640
256
1,279
311
–
766
648
929
741
559
628
113
878
–
573
534
–
576
42
468
–
648
–
469
80
40
28
27
2
1
30
67
2
–
2
1
–
1
4,263
5,108
3,974
433
103
98
–
–
–
24
22
–
–
20
22
–
22
–
17
44
83
298
156
–
62
27
16
–
58
–
282
41
–
–
716
224
–
–
–
–
–
–
–
_
–
143
–
–
–
143
–
(A) For Ms Johns and Mr Wall in the prior year, this represents rights that vested under short-term incentive awards. For Dr Lusk in the prior year, this represents a short-term incentive
relating to the 2020 financial year, prior to him becoming a KMP.
(B) Other short term benefits include rent and mortgage interest subsidies, relocation allowances and other allowances, where applicable.
(C) Other long term benefits include long service leave paid on cessation of employment and the value of shares that vested under the Group’s LTI plans. Long Term Incentives include
all plan-related instruments that vested during the year. The theoretical cash price is based on the IPL share price on the day that shares were purchased.
(1) Mr Victor commenced as CFO and was appointed a KMP on 1 July 2022.
(2) Mr Titze ceased as a KMP on 27 July 2022 and the disclosures for the 2022 financial year are up until that date and do not represent a full financial year.
(3) Mr Stratford ceased as a KMP on 14 November 2021 and the disclosures for the 2022 financial year are up until that date and do not represent the full financial year. Disclosure includes
all contractual entitlements.
(4) Mr Wall ceased as a KMP on 16 July 2021 and the disclosures for the 2021 financial year are up until that date and do not represent a full financial year.
3. Executive Remuneration & Governance
Total
$000
3,257
2,135
283
1,388
698
1,551
850
1,107
650
1,188
942
469
671
9,243
5,946
3.1 Executive remuneration overview
In alignment with its remuneration strategy, the Board’s policy
on Executive remuneration is that it comprises both a fixed
remuneration component (FAR) and “at risk” or performance-related
components (short term incentive (STI) and long term incentive
(LTI)) where:
(i) the majority of Executive remuneration is “at risk”; and
(ii) the level of FAR for Executives is benchmarked against that
paid for similar positions at the median of comparator groups
of ASX companies:
Comparator groups
S&P ASX listed companies with market capitalisation between
50% and 200% of IPL market capitalisation (Primary Benchmark).
S&P ASX 100 listed companies.
A select group of 21 S&P ASX listed companies from the Industrials,
Materials and Energy Sectors, selected on the basis of market
capitalisation and related industry exposure, consisting of: Adelaide
Brighton, AGL Energy, ALS, Ampol Australia, Atlas Arteria, Aurizon,
BlueScope Steel, Boral, Brickworks, CIMIC Group, Cleanaway, CSR,
Downer EDI, Fletcher Building, Orica, Origin Energy, Orora, Qube,
Reliance Worldwide, Seven Group and Sims.
For roles located outside Australia, market-specific data is used
as an additional reference point for benchmarking purposes.
71
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 3.2 Executive remuneration strategy
IPL’s purpose is to unlock the potential in the Earth to help people grow. IPL embraces a set of Strategic Value Drivers that underpin the
Company’s business and form the platform for the Company’s future earnings growth and shareholder returns. The Company’s commitment
to addressing climate change challenges and looking for opportunities in the decarbonisation of the world’s energy systems is at the heart
of the business strategy and integrated across all the Strategic Value Drivers:
Zero Harm – Broadening and setting year-on-year improvement objectives across key metrics including environmental care
and process safety.
Talented and Engaged People – One IPL collaborative culture with engaged, diverse and inclusive teams focused on customers
and value creation.
Customer Focus – Partnering with our customers to create added value and practical solutions for today and the future.
Manufacturing Excellence – Driving consistently high performance across all of our assets and investigating ways to address our
greenhouse gas emissions.
Leading Technology Solutions – Innovation on the ground with practical innovations that our customers can use today to improve
their operations and environmental outcomes.
Profitable Growth – Focus on opportunities that are distinctive to our differentiated technology, core markets, core capabilities
and market segments.
Under the Strategic Value Driver of ‘Talented and Engaged People’, IPL recognises that to generate competitive returns for its shareholders, it
requires talented people who are capable, committed and motivated. IPL’s remuneration strategy is designed to support the objectives of the
business and to enable the Company to attract, retain and reward Executives of the requisite skill and calibre.
The key principles of the Company’s remuneration strategy are to:
»
»
reward strategic outcomes at both the Group and business unit level that create top quartile long term shareholder value;
require integrity and encourage disciplined risk management in business practice;
» drive strong alignment with shareholder interests through delivering part of the reward in the form of equity;
»
structure the majority of executive remuneration to be “at risk” and linked to demanding financial and non-financial
performance objectives;
» attract and retain the best available talent;
»
reward Executives for high performance within their role and responsibilities, and ensure rewards are competitive within
the industry and market for their role in respect of pay level and structure; and
» ensure the remuneration framework is simple, transparent and easily implemented.
3.3 Executive remuneration governance
The remuneration of the Executives is set by the Board, having regard to recommendations from the Remuneration Committee.
Where appropriate, the Remuneration Committee of the Board engages external advisors to provide input into the process of reviewing
Executive and Non-executive Director remuneration. For the 2022 financial year, the Remuneration Committee received market and
benchmarking data from various sources, but this information did not constitute a remuneration recommendation for the purposes
of the Corporations Act 2001 (Cth).
Further information in relation to the Board and the Remuneration Committee can be found in IPL’s Corporate Governance Statement
available on IPL’s website.
4. 2022 Executive Remuneration Framework
4.1 Overview
The charts below set out the theoretical breakdown of the Executives’ total remuneration package for the 2022 financial year. The FAR
component is inclusive of cash and superannuation only, whilst “at risk” compensation is based on maximum entitlement that could
potentially be awarded under the STI and LTI plans.
The restricted shares component of the STI (50% for the MD&CEO, 25% for other Executive KMP) must be deferred until an Executive’s
MSR is attained.
MD&CEO
STI – cash/
restricted shares 38%
Other Executives
STI – cash/
restricted shares 40%
Fixed
25%
FAR
25%
LTI
37%
At Risk
75%
Fixed
33%
At Risk
67%
FAR
33%
LTI
27%
7272
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 4.2 Fixed annual remuneration
Executives receive their fixed annual remuneration (FAR) in a variety of forms, including cash, superannuation, and any applicable fringe
benefits. The Executives’ FAR is set by reference to appropriate benchmark information for each Executive’s role, level of knowledge, skill,
responsibilities and experience. The level of remuneration is reviewed annually in alignment with the financial year and with reference
to, among other things, Company and individual performance and market data provided by an appropriately qualified and independent
external data specialist.
4.3 Short-term incentive
The STI is an annual “at risk” incentive which is dependent on the achievement of particular performance measures. The following table
summarises the STI plan that applied in the 2022 financial year (2022 STI):
What was the performance
period?
The performance period for the 2022 STI was the financial year from 1 October 2021 to 30 September 2022.
Who was eligible for the STI? The MD&CEO and all other Executives participated in the 2022 STI.
What was the target and
maximum STI opportunity?
Target STI opportunity was 100% of FAR for the MD&CEO, and 60% of FAR for all other Executives. Maximum STI opportunity
(for stretch outcomes) was 150% of FAR for the MD&CEO, and 120% of FAR for all other Executives.
What were the Performance
Conditions and Measures?
Performance conditions under the STI are determined by the Board for each financial year. The performance conditions
for the 2022 STI are set out below:
Performance Conditions Measures to assess satisfaction
Rationale for the Performance Conditions
of Performance Conditions
Zero Harm
Safety performance balanced scorecard
across the dimensions of behavioural and
process safety management comprising
input and output measures. (1)
To align with the Company’s commitment to “Zero
Harm for Everyone, Everywhere”. In 2017, the Company
adopted its second five-year Global HSE Strategy to
continue to drive improvement in the Group’s health,
safety and environmental performance.
Group Financial
Performance
Group NPAT (Net Profit After Tax). Group
Adjusted NPAT (2)
To align Executive KMP with targeted profits that
would contribute to shareholder returns.
Business Unit Financial
Performance
Business Unit Adjusted EBIT (Earnings
Before Interest and Tax) (2)
To ensure robust alignment of performance in a
particular business unit with reward for the Executive
managing that business unit.
Sustainability measures
Sustainability measures targeted at an
Executive’s area of influence.
Strategic Outcomes
Measures based on performance criteria
for the execution and implementation
of strategic objectives and business
priorities. These include measures related
to greenhouse gas reduction targets, cost
reduction initiatives, cash conversion
requirements, product innovation and
progress towards the demerger of the
fertiliser and explosives businesses.
Performance conditions are designed to align with
the overall Sustainability strategy of the business and
focuses an Executive on the key short term objectives
within their area of influence, that contribute towards
the Company’s longer term milestones.
Tailored to individual Executive’s role, to drive
performance and behaviours consistent with achieving
critical aspects of the Group’s strategy.
(1)
In assessing the safety balanced scorecard, the Board may, in its discretion, have regard to the results achieved against the measures comprising the
scorecard without applying a specific weighting to any particular measure. The balanced scorecard category measures include: Personal Safety, Process
Safety; Environmental; Significant Event Management and the Zero Harm Plan.
(2) Adjusted means that results have been normalised to remove the impact of foreign exchange and commodity price movements.
Where any Individually Material Item (IMI) is separately recognised in the financial report, the Board will have discretion to
include or exclude the IMI for the purpose of determining any STI award, taking into account the nature of the IMI and having
regard to whether, in the circumstances, it would be appropriate for the IMI to be attributable to Management.
Determination of the extent to which each of the above measures was satisfied was based on a review by the Board of the
audited financial report and performance of the Group for the financial year, following the annual performance review process
for the Executives.
Are there minimum
performance levels
which must be achieved
before awards can be
made under the STI?
For the 2022 financial year, to ensure STI awards are aligned with business performance outcomes, the Board determined that an
“STI Financial Gate” would operate. The STI Financial Gate reflects a requirement to exceed a designated level of the Group’s NPAT
performance, or all non-safety components of the STI will be capped at a maximum of target payment.
The STI Financial Gate does not apply to any awards payable in relation to the Zero Harm performance condition, reflecting the
primacy of safety.
In relation to the Zero Harm performance condition, the Board retains a discretion to forfeit all or part of the award payable for
this performance condition in the event of a fatality or major incident having regard to the circumstances of the incident.
73
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 What were the weightings
for the STI performance
measures?
The weighting of Executives’ STI performance measures (as a percentage of 100%) for 2022 were:
Table 5
Financial
Group
NPAT
Group
Adjusted
NPAT
Business
Unit
Adjusted
EBIT
Non-financial/
Business/Strategic
Manufacturing
Reliability
Safety Sustainability
Strategic
Outcomes
Executives – Current
J Johns*
Managing Director & CEO
30%
20%
15%
10%
10%
15%
G Hayne**
President, Dyno Nobel Asia Pacific
B Lusk**
President, Dyno Nobel Americas
30%
30%
30%
10%
10%
10%
10%
20%
20%
10%
10%
10%
Executives – Former
S Titze** (1)
President, Incitec Pivot Fertilisers
N. Stratford* (2)
Chief Financial Officer
*Group role **Business Unit role
30%
20%
5%
10%
10%
25%
30%
40%
10%
10%
10%
(1) Mr Titze ceased as a KMP on 27 July 2022. From that date, Mr Hayne began acting as Interim President, Incitec Pivot Fertilisers.
(2) Mr Stratford ceased as a KMP on 14 November 2021 and left the Company on 31 December 2021. Mr Chris Opperman acted as Interim CFO from 15
November 2021 to 30 June 2022, when Mr Paul Victor was appointed.
Is there an STI deferral
component?
A mandatory 25% STI deferral (50% for the MD&CEO) continues until an Executive’s MSR is achieved. The MSR is 50% of FAR for
Executives (100% for the MD&CEO). All deferred shares are subject to a maximum 15-year sale restriction.
How is the STI delivered?
The STI is delivered partly in cash and partly in the form of restricted shares. The split between cash and restricted shares is
determined based on each participant’s shareholding under the MSR.
Was there a mechanism
for clawback?
The 2022 STI included a clawback provision, which requires the repayment of all or part of any STI awarded within three years
after a payment is made, in the event of a material misstatement or omissions in IPL’s financial statements which results in a
restatement of the audited financial report, or where a participant has materially breached their obligations to the Company.
7474
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 4.4 Long-term incentive
The LTI is the long term incentive component of remuneration for Executives. The LTI is provided in the form of performance rights.
What LTI plans were
granted for the 2022
financial year?
The LTI Plan granted during the 2022 financial year was the:
»
Long Term Incentive Performance Rights Plan for 2021/24 (LTI 2021/24);
Under the LTI Plan, participants are entitled to acquire ordinary shares in the Company, on a one right to one share basis, for no
consideration at a later date. The performance rights are issued by IPL and the entitlement of the participants to acquire ordinary
shares is subject to the satisfaction of certain conditions. As no shares are provided to participants until vesting, performance
rights have no dividend entitlement. Performance rights expire on vesting or lapsing of the rights.
What is the purpose
of the LTI?
The LTI is designed to link reward with the key performance drivers which underpin sustainable growth in shareholder value.
As rights under the LTI Plans result in share ownership on the achievement of demanding targets, the LTI ties remuneration to
Company performance, as experienced by shareholders. The arrangements also support the Company’s strategy for retention
and motivation of the Executives.
What is the process for
determining eligibility?
The decision to grant performance rights under the LTI Plans and to whom they will be granted is made annually by the Board,
noting that the grant of performance rights to the MD&CEO is subject to shareholder approval. Grants of performance rights to
participants are based on a percentage of the relevant Executive’s FAR.
What is the maximum
LTI opportunity under
the LTI Plans?
The maximum LTI opportunities under each LTI Plan are:
»
»
for the MD&CEO, 150% of FAR; and
for all other Executives, 80% of FAR.
How was the number
of performance rights
calculated under the
LTI Plans?
For the LTI 2021/24 the number of performance rights issued to a participant was based on the market value of the on the
market value of the Company’s shares over the 5 business days immediately after the release of the Company’s full year results in
the first year of the performance period, being 12 November 2021.
Each issuance was determined by dividing the dollar value of the relevant participant’s LTI opportunity by these outcomes.
What are the performance
conditions, performance
periods and status of
current LTI Plans?
LTI Plan
Performance Conditions Weighting of
Performance
Condition
Performance Period
Status
LTI 2021/24
TSR Condition
Long Term Value
Metrics Condition
Absolute ROIC Condition
Sustainability Condition
40%
15%
35%
10%
November 2021 to
November 2024 (TSR
Condition only)
Testing to occur after completion of
performance period
1 October 2021 to 30
September 2024 (other
conditions)
When are the performance
conditions measured?
After the expiry of the relevant performance period, the Board determines whether the performance conditions of the relevant
LTI Plans are satisfied. The performance conditions are tested once, at the end of the relevant performance period. If the
performance conditions are satisfied and the rights vest, the participant is entitled to receive ordinary shares in the Company.
The participant does not pay for those shares.
To the extent the performance conditions are not satisfied during the performance period, the performance rights will lapse.
What happens if a
participant leaves the
Company?
Generally, the performance rights granted under the LTI Plans will lapse on a cessation of employment except where the
participant has died, becomes totally and permanently disabled, is retrenched, retires or is terminated without cause. In those
circumstances (subject to Board discretion), the number of performance rights retained by the participant will be reduced pro
rata to reflect the proportion of days worked during the relevant performance period and will be tested in the ordinary course.
In what other circumstances
may the performance rights
vest (which may be before
or after the expiry of the
performance period) under
the LTI Plans?
The Board may provide a notice to the participants specifying that the performance rights will vest at a time stipulated in the
notice on the occurrence of one of the following events in relation to the Company:
»
»
»
a takeover bid;
a change of control;
the Court ordering a meeting be held in connection with a scheme for the reconstruction of the Company or its
amalgamation with any other companies; or
»
a voluntary or compulsory winding-up.
Is there a mechanism
for clawback?
The LTI Plan includes a clawback provision, which requires the repayment of vested awards where payment has exceeded the
restated position. This includes overpayments resulting from a material misstatement or omissions in IPL’s financial statements
on where a participant has materially breached their obligations to the Company.
75
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 4.5 LTI performance conditions
Details of the performance conditions for the LTI 2021/24 are set out below.
TSR Condition (40%)
The TSR Condition requires growth in the Company’s TSR to be at or above the median of the companies in the comparator group, being the
S&P/ASX 100. This condition provides shareholder alignment as it takes into account the Company’s share price movement as well as dividends
paid, relative to other organisations comparable to the Company.
The S&P/ASX 100 has been chosen as the comparator group because, having regard to the business segments in which the Company operates
and, specifically, the absence of a sufficient number of direct comparator companies, the Board considers the S&P/ASX 100 to represent the
most appropriate, and objective, comparator group. It also represents the group of companies against which the Company competes for
shareholder capital. The Board has the discretion to vary the comparator group at any time, including to remove companies from, or include
companies in, the comparator group.
The table below sets out the TSR Condition, and the percentage of the performance rights that will vest based on satisfaction of this condition.
Relative TSR ranking of IPL
Less than 50th percentile
% of performance rights subject to the TSR Condition that will vest
Nil
At or greater than 50th percentile but less than 75th percentile
Pro rata from 50% on a straight-line basis
At 75th percentile or greater
100%
Long Term Value Metrics Condition (15%)
The Long Term Value Metrics Condition relates to the delivery of significant aspects of the Board approved strategy. The Long Term Value
Metrics Condition comprises components aligned with the Company’s strategic drivers: Manufacturing Excellence, Profitable Growth and
Customer, Practical Technology & Innovation. Each of these strategic drivers has a direct impact on financial outcomes.
The table below summarises the Long Term Value Metrics components for the LTI 2021/24:
Long Term Value
Metrics Condition
Manufacturing
Reliability
Margin from
Technologies
Explosives Global
Growth
Rationale
Measurement criteria
Performance goals
Scorecard
Our integrated platforms and facilities
across high quality markets enable us
to drive advantage in management
of our supply chain and deliver
competitive value to customers.
The stretch goal is Reliability of
95% by FY24 vs historical baseline
average of 85%. This represents
upper second quartile reliability
by FY24.
If FY24 reliability performance exceeds the reliability
measures, the relevant condition will have been
satisfied.
Our explosives technology enables
us to capture market share in a
world which increasingly relies
on innovative solutions to meet
customer needs.
Our competitive position in our
existing markets allows for strategic
geographic expansion, facilitating
diversification to different mining
sectors and grow exposure to future
facing minerals.
Internal Margin Calculation.
Delivery against a Board-determined Compound
Annual Growth Rate (CAGR) schedule.
Growth in EBITDA.
Board-determined EBITDA target that requires a capital
internal rate of return (IRR) of 12%-15%.
Details of the scorecards and specific performance goals for each component of the Long Term Value Metrics Condition were notified to
Executives on commencement of the LTI 2021/24 plan. Some of the performance goals involve commercial-in-confidence quantitative
targets and, as such, some detailed performance goals are not disclosed, but performance against the goals is disclosed at the end of the
performance period. For the LTI 2018/21, these details are set out in section 2.4. For the LTI 2021/24, the relevant details will be set out in the
2025 Remuneration Report.
The Board will determine the outcome for the relevant component of the Long Term Value Metrics Condition under each LTI plan having regard
to the results achieved against the performance goals across the entirety of the Scorecard for that component. If the Board determines that
all of the performance goals in respect of a component of the Long Term Value Metrics Condition have been achieved, all of the performance
rights subject to that component will vest.
If not all performance goals in respect of a component of the Long Term Value Metrics Condition are met over the performance period, the
extent to which that component of the Long Term Value Metrics Condition has been satisfied (if at all) will be determined by the Board. In
doing so, the Board will have regard to the results achieved against the performance goals across all of the components of the relevant
Scorecard, without applying a specific weighting to any particular performance goal.
7676
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 Absolute ROIC Condition (35%)
The Absolute ROIC Condition was introduced for the LTI 2019/22, to replace the ROE Growth Condition. ROIC has been selected as it is a key
determinant of efficient use of the capital entrusted to management by shareholders. It also reflects factors that improve shareholder value,
including operational efficiency, capital efficiency, asset utilisation and profitability. ROIC is defined as Net Profit After Tax, excluding interest
and individually material items, divided by total invested capital (on a rolling 13 month average basis).
The table below sets out the Absolute ROIC Condition for the LTI 2021/24, and the percentage of performance rights that will vest based on
satisfaction of this condition:
Absolute ROIC Targets
Less than 6.4%
% of performance rights subject to the Absolute ROIC Condition that will vest
Nil
At or above 6.4% but less than 6.8%
Pro rata from 50% on a straight-line basis
6.8% or greater
100%
Sustainability Condition (10%)
The Sustainability Condition was introduced for the LTI 2021/24 as an additional metric. This Condition will measure the Company’s
organisational performance against the Sustainability strategy, and progress towards 2030 targets, and its development of a Scope 3 emissions
reduction strategy. Key successes during this 3-year period will be driven by demonstrating material progress on implementation of the
Moranbah tertiary abatement project, and the WALA sequestration MoU/project. The Board has the discretion to determine the vesting
outcome between 0% and 100% for this Condition as it considers appropriate.
4.6 Executive service agreement terms
Remuneration and other terms of employment for the Executives are formalised in service agreements. Most Executives are engaged on
similar contractual terms, with minor variations to reflect differing circumstances. Each agreement is unlimited in term; however, each
agreement provides that the Company may terminate an Executive’s employment immediately for cause without any separation payment,
save for accrued amounts such as leave, or otherwise without cause, with or without notice, in which case the Company must pay a separation
payment plus accrued amounts such as leave.
The notice period to be provided by the Executives is set out in the table below:
Current Executives
J Johns (1)
P Victor
G Hayne (2)
B Lusk
Former Executives
S Titze (3)
N Stratford (4)
Notice period to be
provided by the Executive
Notice period to be
provided by the Company
52 weeks
26 weeks
26 weeks
26 weeks
52 weeks
26 weeks
52 weeks
26 weeks
Notice period
provided by the Executive
Notice period
provided by the Company
26 weeks
26 weeks
26 weeks
52 weeks
(1) Ms Johns’ separation payment is equal to 52 weeks of FAR as at the date of termination (subject to the provisions relating to the terminations benefits in Part 2D.2 of the Corporations Act 2001).
(2) Mr Hayne operates under an historical contract which provides for a separation payment equal to 52 weeks of FAR (subject to the termination provisions in the Corporations Act).
(3) Mr Titze ceased as a KMP on 27 July 2022.
(4) Mr Stratford ceased as a KMP on 14 November 2021.
77
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 4.7 Performance related remuneration
Table 6 – Details of performance rights granted and vested in the year ended 30 September 2022 and the vesting profile of
performance rights granted as remuneration.
LTI
Details of performance rights vested and forfeited set out in the table below relate to the performance rights granted under the LTI 2018/21
(performance period: 1 October 2018 to 30 September 2021) which, following testing in November 2021 resulted in the Board determining
that 15% vested.
The 2019/22 LTI plan shifted its performance period for the Relative TSR condition to a November 2022 testing date. The decision to move this
Relative TSR performance period was taken by the Board in 2019 to align with the Company’s annual results and when the market is therefore
its most informed.
As a result, only non-TSR performance conditions attached to the 2019/22 LTI can be commented on in this year’s report (refer to Section 2.5
of this Report), with detailed reporting on the 2018/21 tranche included under Section 2.4.
STI
Details of performance rights in relation to short term incentive plans are set out in the table below.
Key Management Personnel
Executives – Current
J Johns
Long term incentive rewards
LTI 2018/21
LTI 2019/22
LTI 2020/23
LTI 2021/24
P Victor (1)
Medium term incentive rewards
Grant date
5 February 2019
13 January 2020
14 January 2021
17 January 2022
Performance period: 1 July 2022 to 30 June 2023
Performance period: 1 July 2022 to 30 June 2024
1 July 2022
1 July 2022
G Hayne
Long term incentive rewards
LTI 2018/21
LTI 2019/22
LTI 2020/23
LTI 2021/24
B Lusk
Long term incentive rewards
LTI 2020/23
LTI 2021/24
Executives – Former
S Titze (2)
Long term incentive rewards
LTI 2018/21
LTI 2019/22
LTI 2020/23
LTI 2021/24
N Stratford (3)
Long term incentive rewards
LTI 2018/21
LTI 2019/22
LTI 2020/23
5 February 2019
13 January 2020
14 December 2020
17 January 2022
14 December 2020
17 January 2022
5 February 2019
13 January 2020
14 December 2020
17 January 2022
5 February 2019
13 January 2020
14 December 2020
Granted
during 2022 as
remuneration (A)
$000
Exercised
in year
$000
Vested
in year
%
Forfeited
in year %
Financial
year in
which grant
vested or
could vest
Maximum
value of
outstanding
rights (A)
$000
–
–
–
1,816
139
130
–
–
–
455
–
491
–
–
–
425
–
–
–
298
15
85
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
62
15
85
–
–
–
–
–
–
–
–
–
–
58
15
–
–
–
82
–
–
–
–
–
15
–
–
–
–
–
–
–
85
2
35
69
85
100
100
2021
2022
2023
2024
2023
2024
2021
2022
2023
2024
2023
2024
2021
2022
2023
2024
2021
2022
2023
–
1,755
2,386
1,816
139
130
–
382
520
455
593
491
–
364
327
133
–
–
–
(A) For the long term incentive awards, the value of rights granted in the year is the fair value of those rights calculated at grant date using a Black-Scholes option-pricing model. The value of these
rights is included in the footnotes under Table 7. This amount is allocated to the remuneration of each Executive over the vesting period (that is, in the 2022, 2023 and 2024 financial years).
The maximum value of outstanding rights is based on the fair value of the performance rights at the grant date. This may be different to the value of the rights in the event that they vest.
The minimum value of rights yet to vest is zero, as the performance criteria may not be met.
(1) Mr Victor commenced as CFO and was appointed a KMP on 1 July 2022. On commencement, he received performance rights with a fair value of $269,000 in recognition of incentives forgone upon
joining IPL. These will vest upon achievement of the performance hurdle over two tranches: 1 July 2023 and 1 July 2024.
(2) Mr Titze ceased as a KMP on 27 July 2022. Mr Titze’s balance of rights represents the performance rights pro-rated according to his exit date of 30 September 2022.
(3) Mr Stratford ceased as a KMP on 14 November 2021. Mr Stratford forfeited all of his outstanding performance rights on his exit date of 31 December 2021.
Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions (including rights) granted to a KMP have been altered or modified by the issuing
entity during the reporting period.
7878
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022
Table 7 – Movements in rights over equity instruments in the Company
The movement during the reporting period in the number of rights over shares in the Company, held directly, indirectly or beneficially, by each
KMP, including their related parties, is as follows:
Key Management Personnel
Opening balance
Granted as
compensation (A)
Vested (B)
Forfeited (C)
Closing balance
Number of Rights
Executives – Current
J Johns
Long term incentive rewards
2,503,629
751,649
(92,404)
(523,628)
2,639,246
P Victor (1)
Medium term incentive rewards
G Hayne
–
86,946
–
–
86,946
Long term incentive rewards
538,593
188,218
(19,096)
(108,217)
599,498
B Lusk
Long term incentive rewards
289,187
203,170
–
–
492,357
Executives – Former
S Titze (2)
Long term incentive rewards
519,447
175,996
(18,066)
(312,295)
365,082
N Stratford (3)
Long term incentive rewards
728,221
–
(25,473)
(702,748)
–
(A) For the 2022 financial year, this represents the rights granted to Executives during the reporting period under the LTI 2021/24. The grant of rights under the LTI 2021/24 to Ms Johns was approved by
shareholders at the Company’s 2021 Annual General Meeting.
(B) For the 2022 financial year, this represents the number of rights vested during the reporting period under short term incentive rewards and the LTI 2018/21. Each right entitles the participating
Executive to acquire a fully paid ordinary share in IPL for zero consideration.
(C) For the 2022 financial year, this represents rights that were forfeited by Executives during the period under the LTI 2018/21. In addition, in the case of Mr Stratford who ceased as a KMP on 14
November 2021, this also represents his balance of rights held under the LTI 2019/22 and LTI 2020/23.
(1) Mr Victor commenced as a KMP on 1 July 2022 and did not participate in the LTI 2021/24.
(2) Mr Titze ceased as a KMP on 27 July 2022. His balance of rights represents the performance rights according to his exit date of 30 September 2022.
(3) Mr Stratford ceased as a KMP on 14 November 2021. However, his balance of rights represents the performance rights according to his exit date of 31 December 2021.
4.8 Further details of Executive remuneration
Table 8 – Executive remuneration
Details of the remuneration for each Executive for the year ended 30 September 2022 in accordance with Accounting Standards
are set out below:
Short-term benefits
Post
employment
benefit
Other
long term
benefits (C)
Termination
benefits
Short term
incentive
& other
bonuses (A)
Other
short term
benefits (B)
Salary
& Fees
Superannuation
benefits
Share-based payments
Accounting values
Prior
periods
expense
write-
back (D)
Current
period
expense (D)
Total share-
based
payments
Total
Year
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
Executive KMP – Current
J Johns
Managing Director & CEO
P Victor (1)
Chief Financial Officer
G Hayne
2022
2021
2022
2022
President, Dyno Nobel Asia Pacific
2021
B Lusk (2)
President, Dyno Nobel Americas
Executives – Former
S Titze (3)
President, Incitec Pivot Fertilisers
N Stratford (4)
Chief Financial Officer
T Wall (5)
President, Global Manufacturing
Total Executives
2022
2021
2022
2021
2022
2021
2021
2022
2021
1,640
1,640
256
1,574
1,302
–
766
648
929
741
559
628
113
878
644
534
643
576
410
468
–
648
573
4,263
5,108
469
3,271
3,997
40
43
27
2
1
30
67
2
–
2
1
1
103
113
–
–
6
24
22
–
–
20
22
–
22
17
50
83
32
25
1
56
13
–
–
11
6
2
16
7
102
67
–
–
–
–
–
–
–
360
–
143
–
183
503
183
1,986
1,723
51
452
372
361
198
372
359
–
503
(298)
(501)
–
(62)
(100)
–
–
(58)
(75)
(667)
(136)
1,688
1,222
51
390
272
361
198
314
284
(667)
367
4,974
4,232
341
1,882
1,490
1,963
1,582
1,676
1,408
(407)
1,932
248
(96)
152
1,402
3,222
(1,085)
2,137
10,429
3,403
(908)
2,495
12,046
(A) For Ms Johns this includes STI rights granted in the prior year under the 2018 STI.
(B) Other short term benefits include rent and mortgage interest subsidies, relocation allowances and other allowances, where applicable.
(C) Other long term benefits represent long service leave accrued during the reporting period.
79
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 (D) In accordance with accounting standards, remuneration includes the amortisation of the fair value at grant date of performance rights issued under the LTI Plans that are expected to vest, less any
write-back on performance rights lapsed or expected to lapse as a result of actual or expected performance against non-market hurdles (“Option Accounting Value”). The value disclosed in the above
Table 8 represents the portion of fair value allocated to this reporting period and is not indicative of the benefit, if any, that may be received by the Executive should the performance conditions with
respect to the relevant long term incentive plan be satisfied.
Fair value per share treated as rights at grant date
LTI 2018/21 – TSR
LTI 2018/21 – Long Term Value Metrics (formerly Strategic Initiatives)
LTI 2018/21 – ROE Growth
LTI 2019/22 – TSR
LTI 2019/22 – Long Term Value Metrics (formerly Strategic Initiatives)
LTI 2019/22 – Absolute ROIC
LTI 2020/23 – TSR
LTI 2020/23 – Long Term Value Metrics
LTI 2020/23 – Absolute ROIC
LTI 2021/24 – TSR
LTI 2021/24 – Long Term Value Metrics
LTI 2021/24 – Absolute ROIC
LTI 2021/24 – Sustainability
$1.82
$3.13
$3.13
$1.58
$2.99
$2.99
$1.69
$2.29
$2.29
$1.75
$2.86
$2.86
$2.86
(1) Mr Victor commenced as a KMP on 1 July 2022. Disclosure for the 2022 year is from 1 July 2022 to 30 September 2022.
(2) Fixed remuneration payments for Dr Lusk were converted from US$ to A$ at the average rate for 1 October 2021 to 30 September 2022, being $1.405.
(3) Mr Titze ceased being a KMP on 27 July 2022. Disclosure for the 2022 year is from 1 October 2021 to 27 July 2022. Termination benefits accrued for Mr Titze in the 2022 financial year include
a separation payment of $360,000 in accordance with his contract of employment.
(4) Mr Stratford ceased being a KMP on 14 November 2021. Disclosure for the 2022 year is from 1 October 2021 to 14 November 2021. Termination benefits for Mr Stratford in the 2022 financial
year include a separation payment of $142,954 in accordance with his contract of employment.
(5) Mr Wall ceased being a KMP on 16 July 2021. Disclosure for the 2021 year is from 1 October 2020 to 16 July 2021. Termination benefits accrued for Mr Wall in the 2021 financial year include
a separation payment of $183,314 in accordance with his contract of employment.
5. Overview of Remuneration Changes for the 2023 Financial Year
A fixed salary increase to the MD&CEO of 3.9% has been approved for the new financial year. This will be Ms Johns’ first increase since
January 2019.
With the strategic review of Waggaman, timing of the demerger of the Incitec Pivot Fertilisers and Dyno Nobel businesses is likely to be
extended by 6 to 12 months. The proposed weightings of Executives’ STI performance measures have been updated to ensure focus on both
important projects in FY23. The MD&CEO, the CFO and the President, Dyno Nobel Americas now have specific objectives included within the
Strategic Outcomes component of their STIs.
The proposed updated FY23 weightings for each Executive KMP are outlined below:
Financial
Non-Financial/Business/Strategic
Group NPAT
Group
Adjusted
NPAT
Business Unit
Adjusted EBIT
Manufacturing
Reliability
Safety
Sustainability
Strategic
Outcomes(1)
J Johns
Managing Director & CEO
30%
20%
P Victor
Chief Financial Officer
30%
20%
G Hayne
President, Dyno Nobel Asia Pacific
30%
B Lusk
President, Dyno Nobel Americas
30%
10%
10%
10%
15%
10%
10%
10%
10%
30%
20%
10%
10%
10%
10%
20%
20%
10%
15%
(1)
Includes objectives for the MD&CEO, the CFO and the President, Dyno Nobel Americas relating to the strategic review of the Waggaman ammonia plant and the planned demerger of the explosives
and fertiliser businesses.
The ROIC component of the LTI 2022/25 is proposed to be updated from being calculated via a point-to-point methodology, to being
calculated via a three-year average. This adjustment will account for intra-year movements in the forward budgeting of ROIC and aligns
with the impacts of commodity price volatility.
8080
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022
6. Non-executive Director Remuneration
IPL’s policy is to:
»
»
remunerate Non-executive Directors by way of fees and payments which may be in the form of cash and superannuation benefits; and
set the level of Non-executive Directors’ fees and payments to be consistent with the market and to enable the IPL Group to attract and
retain directors of an appropriate calibre.
Non-executive Directors are not remunerated by way of options, shares, performance rights, bonuses nor by incentive-based payments.
Non-executive Directors receive a fee for being a director of the Board and Non-executive Directors, other than the Chairman of the Board,
receive additional fees for either chairing or being a member of a Board Committee. The level of fees paid to a Non-executive Director is
determined by the Board after an annual review and reflects a Non-executive Director’s time commitments and responsibilities.
For the 2022 financial year, there were no increases to Non-executive Directors’ fees. Fees paid to Non-executive Directors amounted to
$1,690,000 which was within the $2,000,000 maximum aggregate fee pool approved by shareholders at the 2008 Annual General Meeting.
For the 2023 financial year, the Board has determined that there will be a minor uplift to fees paid to the Remuneration Committee, resulting
from the increase in workload that this Committee has experienced over recent years. The Remuneration Committee Chairperson will now
be paid $40,000 (formerly $35,400) with Remuneration Committee Members receiving $20,000 (formerly $17,700). This is the first alteration
to the Non-executive Director fee schedule since 1 October 2014.
The table below sets out the Board and Committee fees that will be effective as at 1 October 2022:
Board Fees
Committee Fees
Chairperson
Members
Audit and Risk Management Committee
Chairperson
Members
Remuneration Committee
Chairperson
Members
HSEC Committee
Chairperson
Members
Nominations Committee
Chairperson
Members
$532,500
$177,500
$47,200
$23,600
$40,000
$20,000
$35,400
$17,700
N/A
$8,250
Table 9 – Non-executive Directors’ remuneration
Details of the Non-executive Directors’ remuneration for the financial year ended 30 September 2022 are set out in the following table:
Non-executive Directors – Current
B Kruger, Chairman
G Biltz (1)
B Brook
T Dwyer (2)
X Liu
G Robinson
Non-executive Directors – Former
R McGrath (3)
Total Non-executive Directors
Board and
Committee Fees
Cash allowances
and other short
term benefits (A)
Post-employment
benefits
Other long
term benefits
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2021
2022
2021
Fees
$000
510
511
195
162
239
245
199
73
237
227
222
217
53
1,602
1,488
$000
–
–
10
–
–
–
–
–
–
–
-
–
–
10
–
Superannuation
benefits
$000
$000
23
22
–
–
12
6
20
7
–
5
23
21
–
78
61
–
–
–
–
–
–
-
–
–
–
-
–
–
–
–
Total
$000
533
533
205
162
251
251
219
80
237
232
245
238
53
1,690
1,549
(A) Cash allowances and other short term benefits include travel allowances.
(1) Mr Biltz was appointed as an Independent, Non-executive Director with effect from 1 December 2020. The disclosures for the 2021 financial year do not represent a full financial year.
(2) Ms Dwyer was appointed as an Independent, Non-executive Director with effect from 20 May 2021. The disclosures for the 2021 financial year do not represent a full financial year.
(3) Ms McGrath retired from the Board as an Independent, Non-executive Director on 18 December 2020.
81
REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 7. Shareholdings in IPL
The MSR for Non-executive Directors is an initiative to better align Director and Shareholder interests and requires each Director to hold the
equivalent of 100% of their base Board fee in IPL shares and/or rights to shares (that have been fully sacrificed for under IPL’s Non-executive
Director Fee Sacrifice Plan) at the completion of 5-years of service.
Table 10 – Movements in rights in the Company
IPL’s Non-executive Director Fee Sacrifice Plan (the Plan) commenced in 2019. The next tranche of rights are scheduled to vest in November
2022. These rights, as well as those that subsequently convert to shares, combine to form part of the Non-executive Director’s MSR that is
outlined in further detail below.
The movement during the reporting period in the number of rights for each Non-executive Director, including their related parties, is set out
in the table below:
B Kruger
G Biltz
B Brook
T Dwyer
X Liu
G Robinson
Opening balance
Rights acquired
18,925
–
6,308
–
9,462
–
33,367
–
11,122
9,625
9,465
–
Number of Rights (A)
Vested (B)
(37,854)
–
(12,618)
–
(18,927)
–
Forfeited
Closing balance
–
–
–
–
–
–
14,438
-
4,812
9,625
–
–
(A)
Includes movements of rights acquired under the Plan.
(B) For the 2022 financial year, this represents the number of rights vested during the reporting period under the Plan.
Table 11 – Movements in shares in the Company
The movement during the reporting period in the number of shares in the Company held directly, indirectly or beneficially, by each KMP, including their related
parties, is set out in the table below:
Opening balance
Shares acquired
Shares disposed (B)
Closing balance (C)
Number of Shares (A)
Non-executive Directors – Current
B Kruger
G Biltz
B Brook
T Dwyer
X Liu
G Robinson
Executive Director – Current
J Johns
Executives – Current
P Victor (1)
G Hayne
B Lusk
Executives – Former
S Titze (2)
N Stratford (3)(4)
93,418
100,000
66,580
–
58,685
67,020
819,525
–
35,323
–
–
58,332
77,854
–
12,618
7,000
18,927
–
92,405
–
59,886
43,888
53,815
25,372
–
–
–
–
–
–
–
–
–
–
–
(83,704)
171,272
100,000
79,198
7,000
77,612
67,020
911,930
–
95,209
43,888
53,815
–
(A)
Includes fully paid ordinary shares and shares acquired under IPL’s incentive plans. Details of these plans are set out in note 18, Share-based payments.
(B) Shares disposed include withholding tax payments.
(C) Where a director or an Executive has ceased to be a KMP during the reporting year, the balance stated in this column represents the number of shares held as at the date the Director or Executive
ceased to be a KMP.
(1) Mr Victor commenced as a KMP on 1 July 2022.
(2) Mr Titze ceased as a KMP on 27 July 2022. However, his balance of rights represents the performance rights according to his exit date of 30 September 2022.
(3) Mr Stratford had shares sold on his behalf to fulfill United States withholding tax obligations associated with his shares acquired under IPL’s Long Term Incentive Plan.
(4) Mr Stratford ceased as a KMP on 14 November 2021. However, his balance of rights represents the performance rights according to his exit date of 31 December 2021.
8. Other KMP Disclosures
Loans to KMP
In the year ended 30 September 2022, there were no loans to key management personnel and their related parties (2021: nil).
Other KMP transactions
In the year ended 30 September 2022, there were no transactions entered into during the year with key management personnel
(including their related parties).
8282
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022REMUNERATION REPORTIncitec Pivot Limited Annual Report 2022 Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Tel: +61 3 9671 7000
www.deloitte.com.au
The Board of Directors
Incitec Pivot Limited
Level 8, 28 Freshwater Place
Southbank Victoria 3006
15 November 2022
Dear Board Members
IInncciitteecc PPiivvoott LLiimmiitteedd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of Incitec Pivot Limited.
As lead audit partner for the audit of the financial statements of Incitec Pivot Limited for the financial year ended
30 September 2022, I declare that to the best of my knowledge and belief, there have been no contraventions
of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific and the Deloitte organisation
83
Incitec Pivot Limited Annual Report 2022
FINANCIAL REPORT
CONTENTS
85
85
86
87
88
89
90
123
Introduction
Content and Structure of the Financial Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Directors’ Declaration on the Consolidated Financial Statements
set out on pages 85-122
124
Independent Auditor’s Report
I
n
c
i
t
e
c
P
i
v
o
t
L
i
m
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t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
2
84
FINANCIAL REPORT
Introduction
This is the consolidated financial report of Incitec Pivot Limited (the Company, IPL, or Incitec Pivot) a company domiciled in Australia,
and its subsidiaries including its interests in joint ventures and associates (collectively referred to as the Group) for the financial year
ended 30 September 2022.
Content and Structure of the Financial Report
The notes to the financial statements and the related accounting policies are grouped into the following distinct sections in the 2022 financial
report. The accounting policies have been consistently applied to all years presented, unless otherwise stated.
Section
Financial performance
Shareholder returns
Capital structure
Capital investment
Risk management
Other
Description
Provides detail on the Group’s Consolidated Statement of Profit or Loss and Other Comprehensive Income and
Consolidated Statement of Financial Position that are most relevant in forming an understanding of the Group’s
financial performance for the year.
Provides information on the performance of the Group in generating shareholder returns.
Provides information about the Group’s capital and funding structures.
Provides information on the Group’s investment in tangible and intangible assets, and the Group’s future capital
commitments.
Provides information about the Group’s risk exposures, risk management practices, provisions and contingent
liabilities.
Provides information on items that require disclosure to comply with Australian Accounting Standards and the
requirements under the Corporations Act. 2001.
Information is included in the notes to the financial report only to the extent it is considered material and relevant to the understanding of the
financial report. A disclosure is considered material and relevant if, for example:
»
»
»
»
the dollar amount is significant in size (quantitative factor)
the item is significant by nature (qualitative factor)
the Group’s result cannot be understood without the specific disclosure (qualitative factor)
it relates to an aspect of the Group’s operations that is important to its future performance.
85
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 30 September 2022
Notes
2022 $mill
2021 $mill
Revenue
Financial and other income
Share of profit of equity accounted investments
Operating expenses
Changes in inventories of finished goods and work in progress
Raw materials and consumables used and finished goods purchased for resale
Employee expenses
Depreciation and amortisation
Financial expenses
Purchased services
Repairs and maintenance
Outgoing freight
Lease payments – operating leases
Asset impairment write-downs and site exit costs
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss
Actuarial gain on defined benefit plans
Income tax relating to items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Fair value loss on cash flow hedges
Cash flow hedge loss transferred to profit or loss
Exchange differences on translating foreign operations
Net (loss)/gain on hedge of net investment
Income tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year
Profit attributable to:
Members of Incitec Pivot Limited
Non-controlling interest
Profit for the year
Total comprehensive income attributable to:
Members of Incitec Pivot Limited
Non-controlling interest
Total comprehensive income for the year
Earnings per share
Basic (cents per share)
Diluted (cents per share)
86
(2)
(2)
(14)
(2)
(2)
(3)
(21)
(18)
(18)
(18)
6,315.3
149.3
43.4
295.1
(3,273.2)
(787.7)
(372.5)
(108.8)
(243.0)
(216.2)
(322.7)
(26.0)
(4.5)
(89.7)
1,358.8
(345.0)
1,013.8
17.2
(4.9)
12.3
(39.1)
20.1
344.1
(70.3)
1.5
256.3
268.6
4,348.5
33.4
41.9
104.2
(2,158.5)
(701.5)
(368.5)
(114.7)
(198.6)
(181.5)
(286.6)
(25.9)
(270.5)
(61.5)
160.2
(11.1)
149.1
30.8
(8.3)
22.5
(20.8)
22.4
(22.9)
25.3
6.9
10.9
33.4
1,282.4
182.5
1,013.7
0.1
1,013.8
1,282.3
0.1
1,282.4
(5)
(5)
52.2
52.1
149.1
–
149.1
182.5
–
182.5
7.7
7.7
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Consolidated Statement of Financial Position
As at 30 September 2022
Notes
2022 $mill
2021 $mill
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Other financial assets
Total current assets
Non-current assets
Trade and other receivables
Other assets
Other financial assets
Equity accounted investments
Property, plant and equipment
Right-of-use lease assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Interest bearing liabilities
Other financial liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Interest bearing liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
Retirement benefit obligation
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Non-controlling interest
Total equity
(8)
(4)
(4)
(18)
(4)
(18)
(14)
(9)
(10)
(11)
(3)
(4)
(10)
(8)
(18)
(17)
(4)
(10)
(8)
(18)
(17)
(3)
(21)
(7)
763.5
756.6
993.6
111.4
29.2
651.8
487.6
577.7
46.9
55.4
2,654.3
1,819.4
28.7
35.9
8.1
379.4
4,246.9
221.0
3,281.4
8.0
8,209.4
10,863.7
29.4
27.1
33.6
324.8
3,928.9
214.5
3,000.9
12.0
7,571.2
9,390.6
1,393.4
1,229.3
42.1
21.1
57.6
166.7
144.4
45.0
18.8
47.2
101.3
86.8
1,825.3
1,528.4
23.0
203.8
1,690.9
95.0
170.6
552.9
12.5
2,748.7
4,574.0
6,289.7
3,806.2
41.7
2,441.7
0.1
6,289.7
21.0
197.5
1,650.0
46.3
209.0
340.2
29.6
2,493.6
4,022.0
5,368.6
3,806.2
(208.7)
1,771.1
–
5,368.6
87
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Consolidated Statement of Cash Flows
For the year ended 30 September 2022
Cash flows from operating activities
Profit after tax for the year
Adjusted for non-cash items
Net finance cost
Depreciation and amortisation
Write-down of property, plant and equipment
Share of profit of equity accounted investments
Net loss/(gain) on sale of property, plant and equipment
Non-cash share-based payment transactions
Income tax expense
Changes in assets and liabilities
Increase in receivables and other operating assets
Increase in inventories
Increase in payables, provisions and other operating liabilities
Adjusted for cash items
Dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment and intangibles
Proceeds from sale of property, plant and equipment
Payments for acquisition of subsidiaries, non-controlling interest and equity investments
Payments towards investment in joint arrangement
Loan repayments from equity accounted investees
Receipts from/(payments for) settlement of net investment hedge derivatives
Net cash flows from investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Dividends paid to members of Incitec Pivot Limited
Lease liability payments
Realised market value (loss)/gain on derivatives
Purchased shares for IPL employees
Net cash flows from financing activities
Net increase in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash and cash equivalents held
Cash and cash equivalents at the end of the year
Notes
2022 $mill
2021 $mill
Inflows (Outflows)
Inflows (Outflows)
1,013.8
107.2
372.5
4.5
(43.4)
0.8
3.1
345.0
(254.9)
(323.8)
61.0
1,285.8
7.9
1.6
(85.0)
(117.0)
1,093.3
(434.0)
5.7
(143.9)
(3.4)
–
0.9
(574.7)
(5.4)
3.4
(355.4)
(42.9)
(3.9)
(9.0)
(413.2)
105.4
651.8
6.3
763.5
(2)
(9)
(14)
(2)
(19)
(3)
(14)
(8)
(8)
(6)
(8)
149.1
112.8
368.5
213.1
(41.9)
(0.3)
3.2
11.1
(127.4)
(100.6)
159.8
747.4
44.6
1.9
(110.6)
(33.1)
650.2
(355.0)
5.7
(8.5)
(4.4)
19.9
(0.1)
(342.4)
(157.9)
–
(19.4)
(41.4)
8.5
(1.0)
(211.2)
96.6
554.6
0.6
651.8
88
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Consolidated Statement of Changes in Equity
For the year ended 30 September 2022
Issued
capital
$mill
Notes
Cash
flow
hedging
reserve
$mill
Share-
based
payments
reserve
$mill
Foreign
currency
translation
reserve
$mill
Fair
value
reserve
$mill
Retained
earnings
$mill
Non-
controlling
interest
$mill
Balance at 1 October 2020
3,806.2
(64.3)
27.1
(164.9)
(19.7)
1,618.9
Profit for the year
Total other comprehensive income for the year
Dividends paid
Purchased shares for IPL employees
Share-based payment transactions
(6)
(19)
–
–
–
–
–
–
0.9
–
–
–
Balance at 30 September 2021
3,806.2
(63.4)
–
–
–
(1.0)
3.2
29.3
–
10.0
–
–
–
–
–
–
–
–
149.1
22.5
(19.4)
–
–
(154.9)
(19.7)
1,771.1
Balance at 1 October 2021
3,806.2
(63.4)
29.3
(154.9)
(19.7)
1,771.1
–
–
–
–
–
–
–
–
Total
equity
$mill
5,203.3
149.1
33.4
(19.4)
(1.0)
3.2
5,368.6
5,368.6
Profit for the year
Total other comprehensive income for the year
Dividends paid
Purchased shares for IPL employees
Share-based payment transactions
(6)
(19)
–
–
–
–
–
–
(13.0)
–
–
–
Balance at 30 September 2022
3,806.2
(76.4)
–
–
–
(9.0)
3.1
23.4
–
269.3
–
–
–
–
–
–
–
–
1,013.7
12.3
(355.4)
–
–
0.1
1,013.8
–
–
–
–
268.6
(355.4)
(9.0)
3.1
114.4
(19.7)
2,441.7
0.1
6,289.7
Cash flow hedging reserve
This reserve comprises the cumulative net change in the fair value of the effective portion of cash flow hedging instruments related
to hedged transactions that have not yet occurred.
Share-based payments reserve
This reserve comprises the fair value of rights recognised as an employee expense under the terms of the Long Term Incentive Plans.
Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled operations are taken to the foreign currency translation reserve.
The relevant portion of the reserve is recognised in the profit or loss when the foreign operation is disposed of.
The foreign currency translation reserve is also used to record gains and losses on hedges of net investments in foreign operations.
Fair value reserve
This reserve represents the cumulative net change in the fair value of equity instruments. The annual net change in the fair value of
investments in equity securities (including both realised and unrealised gains and losses) is recognised in other comprehensive income.
Non-controlling interest
This represents equity interest outside the Incitec Pivot Limited Group. Refer to Note 15 for the list of subsidiaries that are not 100%
owned by the Group.
89
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements
For the year ended 30 September 2022
Basis of preparation
Financial performance
1 Segment report
2 Revenue and expenses
3 Taxation
4 Trade and other receivables and payables
Shareholder returns
5 Earnings per share
6 Dividends
Capital structure
7 Capital management
8 Net debt
Capital investment
9 Property, plant and equipment
10 Leases
11 Intangibles
12 Impairment of goodwill and non-current assets
13 Commitments
14 Equity accounted investments
15 Investments in subsidiaries, joint arrangements and associates
16 Business combinations
Risk management
17 Provisions and contingencies
18 Financial risk management
Other
19 Share-based payments
20 Key management personnel disclosures
21 Retirement benefit obligation
22 Deed of cross guarantee
23 Parent entity disclosure
24 Auditor’s remuneration
25 Events subsequent to reporting date
90
91
92
94
95
96
97
97
98
99
101
102
103
104
106
106
107
109
110
111
119
119
120
121
121
122
122
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Basis of preparation
For the year ended 30 September 2022
Basis of preparation and consolidation
Rounding of amounts
The consolidated financial statements of the Group have been
prepared under the historical cost convention, except for certain
financial instruments that have been measured at fair value.
The financial results and financial position of the Group are
expressed in Australian dollars, which is the functional currency of
the Company and the presentation currency for the consolidated
financial statements. Where applicable, comparative disclosures have
been reclassified for consistency with the current period if material.
The consolidated financial statements were authorised for issue
by the directors on 15 November 2022.
Subsidiaries
Subsidiaries are entities that are controlled by the Group.
The financial results and financial position of the subsidiaries
are included in the consolidated financial statements from
the date control commences until the date control ceases.
The Company is of a kind referred to in ASIC Legislative Instrument,
ASIC Corporations (Rounding in Financial/ Directors’ Reports)
Instrument 2016/191, issued by the Australian Securities and
Investments Commission dated 24 March 2016 and, in accordance
with that Legislative Instrument, the amounts shown in this report
and in the financial statements have been rounded, except where
otherwise stated, to the nearest one hundred thousand dollars.
Global economic challenges
Various global challenges including inflation, the war in Russia/
Ukraine, global supply chain disruption, tighter global financial
conditions, renewed Covid-19 outbreaks and lockdown continue to
pose future uncertainties. To date, the negative impact on IPL
Group results has not been significant and no structural changes
that impact the longer term operations and cash flows have
been identified.
A list of the Group’s subsidiaries is included in note 15.
Structural Separation
Joint arrangements and associates
A joint venture is an arrangement where the parties have rights
to the net assets of the venture.
A joint operation is an arrangement where the parties each have
rights to the assets and liabilities relating to the arrangement.
Associates are those entities in respect of which the Group has
significant influence, but not control, over the financial and
operating policies of the entities.
Investments in joint ventures and associates are accounted for
using the equity method. They are initially recognised at cost,
and subsequent to initial recognition, the consolidated financial
statements include the Group’s share of the profit or loss and
other comprehensive income of the investees.
The interests in joint operations are brought to account recognising
the Group’s share of jointly controlled assets; liabilities; expenses; and
income from the joint operation.
A list of the Group’s joint arrangements and associates is included
in note 15.
Statement of compliance
The consolidated financial statements are general purpose financial
statements which have been prepared in accordance with Australian
Accounting Standards (including Australian Interpretations) and
the Corporations Act 2001. The consolidated financial statements of
the Group comply with International Financial Reporting Standards
(IFRS) and interpretations. The Company is a for-profit entity.
Key estimates and judgments
Key accounting estimates and judgments are continually evaluated
and are based on historical experience and other factors, including
expectation of future events that may have a financial impact
on the Group and that are believed to be reasonable under the
circumstances.
The resulting accounting estimates will, by definition, seldom equal
the subsequent related actual result. The estimates and judgments
that have a significant risk of causing a material adjustment to the
carrying amounts of the assets and liabilities within the next financial
year are set out in the notes.
On 23 May 2022 the Company announced that it intends to
implement a structural separation of its Incitec Pivot Fertilisers and
Dyno Nobel businesses to create two separately listed companies on
the Australian Securities Exchange (ASX). There has been no impact
on the financial statements for FY2022 other than the costs incurred
to date which have been classified as an individually material item
and disclosed in the notes to the financial statements.
Accounting standards issued
The Group adopted any amendments to Standards and
Interpretations issued by the Australian Accounting Standards
Board (AASB) that are relevant to its operations and effective
for the current year. The adoption of these revised Standards
and Interpretations did not have a material impact on the
Group’s result.
Certain new accounting Standards and Interpretations have
been issued that are not mandatory for the 30 September 2022
reporting period and have not been early adopted by the Group.
These Standards and Interpretations are not expected to have a
material impact on the Group in the current or future reporting
periods or on foreseeable future transactions.
The London Interbank Offered Rate (LIBOR) and other benchmark
interest rates are being replaced by alternative risk-free rates (ARR)
as part of interbank offer rate (IBOR) reform. USD LIBOR will no
longer be published after 30 June 2023. As at 30 September 2022,
the Group has not transitioned any of its existing cross currency
and interest rate swaps to alternative risk-free rates, however it
is expecting to commence active transition of the existing cross
currency and interest rate swaps portfolio to alternative benchmark
rates (e.g SOFR benchmark rate) during the first half of FY2023.
The Group is working closely with its Treasury system provider to
fully manage the transition to alternative benchmark rates.
The group has assessed the implication of IBOR reform and expects
the impact to be minimal.
91
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Financial performance
For the year ended 30 September 2022
1. Segment report
The Group operates a number of strategic divisions that offer
different products and services and operate in different markets.
For reporting purposes, these divisions are known as reportable
segments. The results of each segment are reviewed monthly by the
executive management team (the chief operating decision makers)
to assess performance and make decisions about the allocation of
resources.
Americas
Dyno Nobel Americas (DNA): manufactures and sells industrial
explosives and related products and services to the mining,
quarrying and construction industries in the Americas (Canada,
Mexico and Chile) and initiating systems to businesses in Australia,
Turkey and South Africa. It also manufactures and sells industrial
chemicals to the agricultural sector and other specialist industries.
Description of reportable segments
Corporate
Corporate costs include all head office expenses that cannot be
directly or reasonably attributed to the operation of any of the
Group’s businesses.
Group Eliminations (Group Elim): represent elimination of sales
and profit in stock arising from intersegment sales.
Asia Pacific
Fertilisers Asia Pacific (Fertilisers APAC): manufactures and
sells fertilisers in Eastern Australia and the export market.
It also manufactures, imports and sells industrial chemicals
to the agricultural sector and other specialist industries.
Dyno Nobel Asia Pacific (DNAP): manufactures and sells industrial
explosives and related products and services to the mining industry
mainly in the Asia Pacific region, Turkey and France.
Asia Pacific Eliminations (APAC Elim): represent elimination of sales
and profit in stock arising from Fertilisers APAC sales to DNAP.
Reportable segments – financial information
30 September 2022
Revenue from external customers
Share of profits of equity accounted investments
EBITDA(ii)
Notes
(2)
(14)
Depreciation and amortisation
(2)
(95.3)
(88.5)
613.7
162.5
EBIT(iii)
Net interest expense
Income tax expense (excluding IMIs)
Profit after tax(iv)
Non-controlling interest
Individually material items (net of tax)
(2)
Profit attributable to members of IPL
Asia Pacific
Americas
Fertilisers
APAC
$mill
DNAP
$mill
APAC
Elim
$mill
Total
$mill
DNA
$mill
Group
Elim
$mill
Corporate(i)
$mill
Consolidated
Group
$mill
2,647.8
1,200.4
(27.8)
3,820.4
2,532.9
(38.0)
–
15.1
709.0
251.0
–
–
–
–
15.1
28.3
960.0
939.8
(183.8)
(180.5)
776.2
759.3
–
0.4
0.4
0.8
–
–
(42.5)
(8.6)
(51.1)
6,315.3
43.4
1,857.7
(372.5)
1,485.2
(107.2)
(350.8)
1,027.2
(0.1)
(13.4)
1,013.7
Segment assets
Segment liabilities
Net segment assets(v)
Deferred tax balances
Net assets
2,000.7
2,878.2
(1,122.2)
(326.5)
878.5
2,551.7
–
-
-
4,878.9
5,127.9
(1,448.7)
(939.1)
3,430.2
4,188.8
–
–
–
848.9
10,855.7
(1,633.3)
(4,021.1)
(784.4)
6,834.6
(3)
(544.9)
6,289.7
(i) Corporate assets and liabilities include the Group’s interest bearing liabilities and derivative assets and liabilities.
(ii) Earnings Before Interest, related income tax expense, depreciation and amortisation and individually material items.
(iii) Earnings Before Interest, related income tax expense and individually material items.
(iv) Profit after tax (excluding individually material items).
(v) Net segment assets exclude deferred tax balances.
92
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Financial performance
For the year ended 30 September 2022
30 September 2021
Revenue from external customers
Share of profits of equity accounted investments
EBITDA(ii)
Depreciation and amortisation
EBIT(iii)
Net interest expense
Income tax expense (excluding IMIs)
Profit after tax(iv)
Notes
(2)
(14)
(2)
Individually material items (net of tax)
(2)
Profit attributable to members of IPL
Asia Pacific
Americas
Fertilisers
APAC
$mill
DNAP
$mill
APAC
Elim
$mill
Total
$mill
DNA
$mill
Group
Elim
$mill
Corporate(i)
$mill
Consolidated
Group
$mill
1,894.6
937.8
(25.8)
2,806.6
1,588.7
(46.8)
–
382.1
(113.7)
268.4
14.5
219.5
(79.3)
140.2
–
–
–
–
14.5
601.6
27.4
359.9
(193.0)
(170.0)
408.6
189.9
–
(2.1)
0.3
(1.8)
–
–
(24.5)
(5.8)
(30.3)
4,348.5
41.9
934.9
(368.5)
566.4
(112.8)
(95.0)
358.6
(209.5)
149.1
Segment assets
Segment liabilities
Net segment assets(v)
Deferred tax balances
Net assets
1,558.4
2,588.1
(1,059.9)
(236.4)
498.5
2,351.7
–
–
–
4,146.5
4,450.4
(1,296.3)
(669.0)
2,850.2
3,781.4
–
–
–
(3)
781.7
9,378.6
(1,716.5)
(3,681.8)
(934.8)
5,696.8
(328.2)
5,368.6
(i) Corporate assets and liabilities include the Group’s interest bearing liabilities and derivative assets and liabilities.
(ii) Earnings Before Interest, related income tax expense, depreciation and amortisation and individually material items.
(iii) Earnings Before Interest, related income tax expense and individually material items.
(iv) Profit after tax (excluding individually material items).
(v) Net segment assets exclude deferred tax balances.
Geographical information – secondary reporting segments
The Group operates in five principal countries being Australia (country of domicile), USA, Canada, Turkey and France.
In presenting information on the basis of geographical information, revenue is based on the geographical location of the entity making
the sale. Assets are based on the geographical location of the assets.
30 September 2022
Australia
$mill
USA
$mill
Revenue from external customers
3,639.0
2,199.0
Non-current assets other than financial
assets and deferred tax assets
Trade and other receivables
3,544.2
4,277.8
378.2
255.6
30 September 2021
Revenue from external customers
Non-current assets other than financial
assets and deferred tax assets
Trade and other receivables
Australia
$mill
2,739.7
3,435.3
258.9
USA
$mill
1,278.3
3,863.0
142.6
Canada
$mill
315.8
104.4
66.0
Canada
$mill
285.7
99.1
73.5
Turkey
$mill
74.6
1.9
21.3
Turkey
$mill
38.9
2.4
12.5
France
$mill
41.5
108.2
37.8
Other/Elim
$mill
Consolidated
$mill
45.4
6,315.3
156.8
26.4
8,193.3
785.3
France
$mill
Other/Elim
$mill
Consolidated
$mill
–
–
–
5.9
4,348.5
125.8
29.5
7,525.6
517.0
93
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Financial performance
For the year ended 30 September 2022
2. Revenue and expenses
Individually material items
Notes
2022
$mill
2021
$mill
Profit after tax includes the following expenses whose disclosure
is relevant in explaining the financial performance of the Group:
6,315.3
6,315.3
4,348.5
4,348.5
30 September 2022
Demerger cost (1)
Gibson Island manufacturing plant closure (2)
- Closure costs
1.6
1.9
Total individually material items
Gross
$mill
9.2
Tax
$mill
(2.8)
10.0
19.2
(3.0)
(5.8)
Net
$mill
6.4
7.0
13.4
Revenue
External sales
Total revenue
Financial income
Interest income
Other income
Profit before income tax includes the following specific expenses:
(3) Closure costs include employee redundancies ($26.1m) and decommissioning and other closure
Royalty income and management fees
(14)
Net (loss)/gain on sale of property, plant
and equipment
Other income from operations (1)
Total financial and other income
31.0
(0.8)
117.5
149.3
29.5
0.3
1.7
33.4
(1) Other income includes insurance proceeds of $99m in relation to the incident at the Waggaman,
Louisiana plant in February 2022.
Expenses
Notes
2022
$mill
2021
$mill
Depreciation and amortisation
Depreciation
property, plant and equipment
leases
Amortisation
Total depreciation and amortisation
Assets impairment write downs
(9)
(10)
(11)
303.2
45.0
24.3
372.5
4.5
4.5
0.7
4.6
9.3
0.1
18.5
8.7
25.7
35.8
3.0
5.3
5.8
1.1
property, plant and equipment
(9)
Total assets impairment write downs
Amounts set aside to provide for:
impairment losses on trade and other
receivables
inventory losses and obsolescence
employee entitlements
environmental liabilities
legal and other provisions
restructuring and rationalisation
costs
Research and development expense
Defined contribution superannuation
expense
(4)
(4)
(17)
(17)
(17)
(17)
Defined benefit superannuation expense
(21)
Financial expenses
Interest on lease liabilities
Unwinding of discount on provisions
Net interest expense on defined benefit
obligation
Interest expenses on financial liabilities
Total financial expenses
(10)
(17)
(21)
94
96.6
108.8
101.9
114.7
(1) Demerger costs include transition support and advisory costs. One-off separation costs are
expected to be in the range of $60m – $80m net of tax.
(2) The Gibson Island closure provision was increased by $10m following a detailed review. The
increase was primarily a result of contractor rate escalations since the provision was recognised.
30 September 2021
Gross
$mill
Tax
$mill
Cheyenne manufacturing plant impairment
107.4
(28.0)
Gibson Island manufacturing plant closure
- Impairment of assets
- Closure costs (3)
Total individually material items
102.5
83.5
293.4
(30.8)
(25.1)
(83.9)
Net
$mill
79.4
71.7
58.4
209.5
related costs ($57.4m).
Key accounting policies
Revenue
Revenue is measured at the fair value of the consideration received
or receivable by the Group. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third
parties. Revenue is recognised for the major business activities on
the following basis:
» Sale of goods and services: revenue from the sale of goods and
services is recognised at the point in time when the performance
obligations under the customer contract are satisfied. This is
typically when control of goods or services is transferred to
the customer. The fee for the service component is recognised
separately from the sale of goods.
» Take-or-pay revenue: revenue is recognised in line with the sale
of goods policy. In circumstances where goods are not taken by
the customer, revenue is recognised when the likelihood of the
customer meeting its obligation to ‘take goods’ becomes remote.
Interest income is recognised as it accrues using the effective
interest method.
»
The Group disaggregates its revenue per reportable segment as
presented in note 1, as the revenue within each business unit is
affected by economic factors in a similar manner.
Goods and services tax
Revenues, expenses, assets and liabilities (other than receivables and
payables) are recognised net of the amount of goods and services
tax (GST). The only exception is where the amount of GST incurred is
not recoverable from the relevant taxation authorities.
In these circumstances, the GST is recognised as part of the cost
of the asset or as part of the item of expenditure.
Other income
Other income represents gains that are not revenue. This includes
Government grants, royalty income and management fees from
the Group’s joint ventures and associates, income from contractual
arrangements that are not considered external sales and
government grants. IPL received Government grants during the year
of $48m to fund the increased production of AdBlue at the Gibson
Island facility given the shortage in the domestic market. Grant
income is recognised as a deduction from the related expense with
any excess income reported as other income. Government grants
received in advance are recognised on the balance sheet as deferred
income and released to the profit and loss once the related expense
is incurred.
303.0
42.5
23.0
368.5
213.1
213.1
0.4
1.4
7.7
4.1
0.5
83.5
20.7
32.8
2.7
5.6
5.4
1.8
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Financial performance
For the year ended 30 September 2022
3. Taxation
Income tax expense for the year
Movements in net deferred tax liabilities
The table below sets out movements in net deferred tax balances for
the period ended 30 September:
2022
$mill
2021
$mill
Current tax expense
Current year
Adjustments in respect of prior years
Deferred tax expense
Current year
Total income tax expense
165.4
(1.6)
163.8
181.2
345.0
Income tax reconciliation to prima facie tax payable
Profit before income tax
Tax at the Australian tax rate of 30% (2021: 30%)
Tax effect of amounts which are not deductible/
(taxable) in calculating taxable income:
Joint venture income
Sundry items
Difference in overseas tax rates
Adjustments in respect of prior years
Income tax expense attributable to profit
2022
$mill
1,358.8
407.6
(10.9)
(15.8)
(34.3)
(1.6)
345.0
96.7
1.8
98.5
(87.4)
11.1
2021
$mill
160.2
48.1
(11.7)
(17.7)
(9.4)
1.8
11.1
Tax amounts recognised directly in equity
The aggregate current and deferred tax arising in the financial
year and not recognised in net profit or loss but directly charged
to equity is $3.4m for the year ended 30 September 2022
(2021: credit of $1.4m).
Net deferred tax assets/(liabilities)
Deferred tax balances comprise temporary differences attributable
to the following:
Employee entitlements provision
Retirement benefit obligations
Provisions and accruals
Lease liabilities
Tax losses
Property, plant and equipment
Right-of-use lease assets
Intangible assets
Joint venture income
Financial instruments
Other
2022
$mill
19.5
2.8
112.3
66.3
0.6
(616.4)
(60.3)
(91.6)
(15.5)
38.7
(1.3)
2021
$mill
19.7
8.7
95.1
69.1
188.4
(565.7)
(60.8)
(87.2)
(12.7)
18.2
(1.0)
Net deferred tax liabilities
(544.9)
(328.2)
Presented in the Consolidated Statement of Financial Position as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
8.0
(552.9)
(544.9)
12.0
(340.2)
(328.2)
Opening balance at 1 October
(Debited)/credited to the profit or loss
Charged to equity
Foreign exchange movements
Adjustments in respect of prior years
2022
$mill
(328.2)
(181.2)
(3.4)
(33.1)
1.0
2021
$mill
(415.5)
87.4
(1.4)
1.3
–
Closing balance at 30 September
(544.9)
(328.2)
Key accounting policies
Income tax expense
Income tax expense comprises current tax (amounts payable or
receivable within 12 months) and deferred tax (amounts payable or
receivable after 12 months). Tax expense is recognised in the profit or
loss, unless it relates to items that have been recognised in equity (as
part of other comprehensive income). In this instance, the related tax
expense is also recognised in equity.
Current tax
Current tax is the expected tax payable on the taxable income
for the year. It is calculated using tax rates applicable at the reporting
date, and any adjustments to tax payable in respect
of previous years.
Deferred tax
Deferred tax is recognised for all taxable temporary differences
and is calculated based on the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for taxation purposes. Deferred tax is measured at the tax rates that
are expected to be applied when the asset is realised or the liability
is settled, based on the laws that have been enacted or substantively
enacted at the reporting date.
Deferred tax assets are recognised only to the extent that it is
probable that future taxable profits will be available against which
the assets can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer
probable that the related tax benefits will be realised.
Offsetting tax balances
Tax assets and liabilities are offset when the Group has a legal right
to offset and intends either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
Tax consolidation
For details on the Company’s tax consolidated group refer
to note 23.
Key estimates and judgments
Uncertain tax matters
The Group is subject to income taxes in Australia and foreign
jurisdictions and as a result, the calculation of the Group’s
tax charge involves a degree of estimation and judgment in
respect of certain items. In addition, there are transactions
and calculations relating to the ordinary course of business for
which the ultimate tax determination is uncertain. The Group
recognises liabilities for potential tax audit issues in deferred
tax liabilities based on management’s assessment of whether
additional taxes may be payable and calculates the provision in
accordance with the applicable accounting standards including
IFRIC 23 Uncertainty over income tax treatments. Where the
final tax outcome of these matters is different from the amounts
that were initially recorded, these differences impact the
current and deferred tax provisions in the period in which such
determination is made.
95
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Financial performance
For the year ended 30 September 2022
4. Trade and other receivables
and payables
The Group’s total trade and other receivables and payables consists
of inventory, receivables and payables balances, net of provisions
for any impairment losses.
The graph below shows the Group’s trade working capital (trade
assets and liabilities) performance over a five year period.
13 month rolling average trade working capital*/
Annual net revenue
30 September 2022
Inventories
Receivables
Payables
30 September 2021
Inventories
Receivables
Payables
Inventories by category:
Raw materials and stores
Work-in-progress
Finished goods
Provisions
Total inventories balance
Provision movement:
30 September 2022
Carrying amount at 1 October 2021
Subsidiaries acquired
Provisions made during the year
Provisions written back during the year
Amounts written off against provisions
Foreign exchange rate movements
Trade
$mill
993.6
696.1
Other
$mill
–
89.2
Total
$mill
993.6
785.3
(1,073.8)
(342.6)
(1,416.4)
615.9
(253.4)
362.5
Trade
$mill
Other
$mill
Total
$mill
577.7
470.8
(927.8)
120.7
–
46.2
(322.5)
(276.3)
577.7
517.0
(1,250.3)
(155.6)
2022
$mill
251.8
117.3
641.6
(17.1)
993.6
2021
$mill
130.9
77.9
382.2
(13.3)
577.7
Trade
receivables
$mill
Inventories
$mill
(17.2)
(1.0)
(0.7)
0.8
0.1
2.0
(13.3)
–
(4.6)
0.6
0.3
(0.1)
Carrying amount at 30 September 2022
(16.0)
(17.1)
Receivables ageing and credit loss provision
Included in the following table is an age analysis of the Group’s trade
receivables, along with credit loss provisions against these balances
at 30 September:
Gross
$mill
670.8
20.4
20.9
712.1
Gross
$mill
455.3
18.4
14.3
488.0
Credit loss
provision
$mill
(1.8)
(1.3)
(12.9)
(16.0)
Credit loss
provision
$mill
(0.7)
(2.2)
(14.3)
(17.2)
Net
$mill
669.0
19.1
8.0
696.1
Net
$mill
454.6
16.2
–
470.8
30 September 2022
Current
30–90 days
Over 90 days
Total
30 September 2021
Current
30–90 days
Over 90 days
Total
96
Explosives (DNA, DNAP) Fertilisers Group
* Trade working capital is reported gross of debtor factoring and supply chain financing
arrangements.
Key accounting policies
Inventories
Inventories are valued at the lower of cost and net realisable value.
The cost of manufactured goods is based on a weighted average
costing method. For third party sourced goods, cost is net cost
into store.
Trade and other receivables
Trade and other receivables are initially recognised at fair value
plus any directly attributable transaction costs. Subsequent to
initial measurement they are measured at amortised cost less any
provisions for expected impairment losses or actual impairment
losses. Credit losses and recoveries of items previously written
off are recognised in the profit or loss.
Where substantially all risks and rewards relating to a receivable
are transferred to a third party, the receivable is derecognised.
To manage cash inflows which are impacted by seasonality and
demand and supply variability, the Group has a nonrecourse
receivable purchasing agreement to sell certain receivables to an
unrelated entity in exchange for cash. As at 30 September 2022,
receivables totalling $94.9m (2021: $124.2m) had been sold under
this arrangement. The receivables were derecognised upon sale as
substantially all risks and rewards associated with the receivables
passed to the purchaser.
Trade and other payables
Trade and other payables are stated at cost and represent liabilities
for goods and services provided to the Group prior to the end of
financial year, which are unpaid at the reporting date.
To manage the cash flow conversion cycle on some products
procured by the Group, and to ensure that suppliers receive payment
in a time period that suits their business model,
the Group offers some suppliers the opportunity to use supply
chain financing. At 30 September 2022, the balance of the supply
chain finance program was $173.1m (2021: $207.9m). The Group
evaluates supplier arrangements against a number of indicators
to assess if the payable continues to have the characteristics of a
trade payable or should be classified as borrowings. These indicators
include whether the payment terms exceed customary payment
terms in the industry. At 30 September 2022, the Group has
assessed that on balance the payables subject to supplier financing
arrangements did not meet all of the characteristics to be classified
as borrowings and accordingly the balances remained in trade and
other payables.
FINANCIAL REPORTIncitec Pivot Limited Annual Report 20220.0%2.5%5.0%7.5%10.0%12.5%15.0%17.5%20.0%22.5%25.0%27.5%FY18FY19FY20FY21FY22
Notes to the Consolidated Financial Statements: Shareholder returns
For the year ended 30 September 2022
The graph below shows the Group’s earnings per share and dividend
payout over the last five years.
Company performance and dividends paid
Key estimates and judgments
The expected impairment loss calculation for trade receivables
considers the impact of past events, and exercises judgment
over the impact of current and future economic conditions
when considering the recoverability of outstanding trade
receivable balances at the reporting date. In establishing
the expected impairment loss provision, the Group also
assessed the impact of the global economic challenges and its
potential to affect customers’ repayment ability. Subsequent
changes in economic and market conditions
may result in the provision for impairment losses increasing or
decreasing in future periods.
5. Earnings per share
Earnings per Share (including individually material items)
Earnings per Share (before individually material items)
Dividend paid in respect of the financial year
2022
Cents
per share
2021
Cents
per share
52.2
52.9
52.1
52.8
7.7
18.5
7.7
18.4
6. Dividends
Dividends paid or declared by the Company in the year ended 30
September were:
2022
$mill
2021
$mill
Ordinary shares
Interim dividend of 1.0 cents per share, fully
franked, paid 2 July 2021
–
19.4
Number
Number
Final dividend of 8.3 cents per share, 14 percent
franked, paid 16 December 2021
1,942,225,029
1,942,225,029
Interim dividend of 10.0 cents per share, fully
franked, paid 5 July 2022
161.2
194.2
–
–
Basic earnings per share
including individually material items
excluding individually material items
Diluted earnings per share
including individually material items
excluding individually material items
Weighted average number of ordinary
shares used in the calculation of basic
earnings per share
Weighted average number of ordinary
shares used in the calculation of diluted
earnings per share
1,946,332,645
1,946,321,171
Reconciliation of earnings used in the calculation
of basic and diluted earnings per share
Notes
2022
$mill
Profit attributable to ordinary shareholders
1,013.7
Individually material items after income tax
(2)
13.4
2021
$mill
149.1
209.5
Profit attributable to ordinary shareholders
excluding individually material items
1,027.1
358.6
Total ordinary share dividends
355.4
19.4
Since the end of the financial year, the directors have determined
to pay a final dividend of 17.0 cents per share, 100% franked, to be
paid on 21 December 2022. The record date for entitlement to this
dividend is 6 December 2022. The total dividend payment
will be $330.2m.
The financial effect of this dividend has not been recognised in
the 2022 Consolidated Financial Statements and will be recognised
in subsequent Financial Reports.
The dividend reflects a payout ratio of approximately 51 percent
of net profit after tax (before individually material items).
97
FINANCIAL REPORTIncitec Pivot Limited Annual Report 202205101520253035404550556020182019202020212022Cents
Notes to the Consolidated Financial Statements: Capital structure
For the year ended 30 September 2022
Franking credits
Key financial metrics
Franking credits available to shareholders of the Company were
$7.3m (2021: $10.1m).
Key accounting policies
A provision for dividends payable is recognised in the reporting
period in which the dividends are paid. The provision is for the total
undistributed dividend amount, regardless of the extent to which
the dividend will be paid in cash.
7. Capital management
Capital is defined as the amount subscribed by shareholders
to the Company’s ordinary shares and amounts advanced by
debt providers to any Group entity. The Group’s objectives when
managing capital are to safeguard its ability to continue as a going
concern and invest in business growth, while providing returns to
shareholders and benefits to other stakeholders.
The Group uses a range of financial metrics to monitor the efficiency
of its capital structure, including EBITDA interest cover and Net debt/
EBITDA before individually material items. Financial metric targets
are maintained inside debt covenant restrictions. At 30 September
the Group’s position in relation to these metrics was:
Target range
2022
2021
Net debt/EBITDA (times) (1)
Interest cover (times)
equal or less than 1.5
equal or more than 6.0
0.5
20.3
1.1
9.7
(1) Consistent with IPL debt covenants, net debt does not include trade working capital facilities.
The Group’s capital management framework allows for a short term tolerance of 2.5 times for major
growth opportunities.
These ratios are impacted by a number of factors, including the level
of cash retained from operating cash flows generated by the Group
after paying all of its commitments (including dividends or other
returns of capital), movements in foreign exchange rates, changes
to market interest rates and the fair value of hedges economically
hedging the Group’s net debt.
The Group’s key strategies for maintenance of an optimal capital
structure include:
Self-insurance
» Aiming to maintain an investment grade credit profile and the
requisite financial metrics.
» Securing access to diversified sources of debt funding with a
spread of maturity dates and sufficient undrawn committed
facility capacity.
» Optimising over the long term, to the extent practicable,
the Group’s Weighted Average Cost of Capital (WACC), while
maintaining financial flexibility.
In order to optimise its capital structure, the Group may undertake
one or a combination of the following actions:
»
change the amount of dividends paid to shareholders and/or
offer a dividend reinvestment plan with or without a discount
and/or with or without an underwriting facility
when appropriate;
»
return capital or issue new shares to shareholders;
» vary discretionary capital expenditure;
»
raise new debt funding or repay existing debt balances; and
» draw down additional debt or sell non-core assets to
reduce debt.
The Group also self-insures for certain insurance risks under the
Singapore Insurance Act. Under this Act, authorised general insurer,
Coltivi Insurance Pte Limited (the Group’s self-insurance company),
is required to maintain a minimum amount of capital. For the
financial year ended 30 September 2022, Coltivi Insurance Pte
Limited maintained capital in excess of the minimum requirements
prescribed under this Act.
Issued capital
Ordinary shares
Ordinary shares issued are classified as equity and are fully paid, have
no par value and carry one vote per share and the right to dividends.
Incremental costs directly attributable to the issue of
new shares are recognised as a deduction from equity, net of
any related income tax benefit.
Issued capital as at 30 September 2022 amounted to $3,806.2m
(1,942,225,029 ordinary shares).
98
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Capital structure
For the year ended 30 September 2022
8. Net debt
The Group’s net debt comprises the net of interest bearing
liabilities, cash and cash equivalents, and the fair value of derivative
instruments economically hedging the foreign exchange rate and
interest rate exposures of the Group’s interest bearing liabilities
at the reporting date. The Group’s net debt at 30 September is
analysed as follows:
Interest bearing liabilities
Cash and cash equivalents
Notes
2022
$mill
1,712.0
(763.5)
Fair value of derivatives
(18)
87.7
2021
$mill
1,668.8
(651.8)
(12.8)
Net debt
1,036.2
1,004.2
At 30 September 2022, the Group’s Net debt/EBITDA before
individually material items was 0.5 times (2021: 1.1 times).
Refer to note 7 for detail on the key financial metrics related
to the Group’s capital structure.
Interest bearing liabilities
The Group’s interest bearing liabilities are unsecured and expose it
to various market and liquidity risks. Details of these risks and their
mitigation are included in note 18.
The following table details the interest bearing liabilities of the
Group at 30 September:
Current
Other current loans
Loans from joint ventures
Non-current
Other non-current loans
Fixed interest rate bonds
Total interest bearing liabilities
2022
$mill
–
21.1
21.1
28.0
1,662.9
1,690.9
1,712.0
2021
$mill
2.2
16.6
18.8
0.7
1,649.3
1,650.0
1,668.8
Fixed Interest Rate Bonds
The Group has on issue the following fixed interest rate bonds:
» USD500m of Notes as a private placement in the US
market. USD250m has a fixed rate semi-annual coupon
of 4.03 percent and matures in October 2028 and USD250m
has a fixed rate semi-annual coupon of 4.13 percent and
matures in October 2030.
» HKD560m 7 year bond as a private placement in the Regulation
S debt capital market. The bond has a fixed rate annual coupon of
4.13 percent and matures in February 2026.
» AUD431.3m 7 year bond on issue in the Australian debt capital
market. The bond was issued in March 2019 for AUD450m and
reduced by AUD18.7m as a result of the buy-back in November
2020. The bond has a fixed rate semi-annual coupon of 4.30
percent and matures in March 2026.
» USD305.7m 10 year bond on issue in the Regulation S
debt capital market. The bond was issued in August 2017
for USD400m and reduced by USD94.3m as a result of the
buy-back in November 2020. The bond has a fixed rate semi-
annual coupon of 3.95 percent and matures in August 2027.
Bank Facilities
The Group holds committed Syndicated Term facility domiciled in
Australia and consisting of two tranches: Tranche A has a limit of
AUD490m and Tranche B has a limit of USD200m. The facility matures
in April 2024.
Tenor of interest bearing liabilities
The Group’s average tenor of its drawn interest bearing liabilities
at 30 September 2022 is 5.4 years (2021: 6.3 years) and the average
tenor of its total debt facilities is 4.2 years (2021: 5.1 years).
The table below includes detail on the movements in the Group’s interest bearing liabilities.
30 September 2022
Current
Other loans
Loans from joint ventures
Non-current
Other loans
Fixed interest rate bonds
Total liabilities from financing activities
Derivatives held to hedge interest
bearing liabilities
Debt after hedging
Cash flow
Non-cash changes
1 October
2021
$mill
Proceeds from
borrowings
$mill
Repayments
of borrowings
$mill
Acquisition of
subsidiaries
$mill
Reclassification
$mill
Foreign
exchange
movement
$mill
Funding costs
& fair value
adjustments
$mill
30 September
2022
$mill
2.2
16.6
0.7
1,649.3
1,668.8
(12.8)
1,656.0
0.2
3.2
–
–
3.4
–
3.4
(2.8)
(0.6)
(2.0)
–
(5.4)
–
(5.4)
–
–
29.9
–
29.9
–
29.9
0.7
–
(0.7)
–
–
–
–
(0.3)
1.9
0.1
120.9
122.6
(7.3)
115.3
–
–
–
(107.3)
(107.3)
–
21.1
28.0
1,662.9
1,712.0
107.8
87.7
0.5
1,799.7
99
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Capital structure
For the year ended 30 September 2022
30 September 2021
Current
Other loans
Loans from joint ventures
Non-current
Other loans
Fixed interest rate bonds
Total liabilities from financing activities
Derivatives held to hedge interest bearing
liabilities
Debt after hedging
Interest rate profile
The table below summarises the Group’s interest rate profile of its
interest bearing liabilities, net of hedging, at 30 September:
Fixed interest rate financial instruments
Variable interest rate financial instruments
2022
$mill
936.8
775.2
2021
$mill
942.2
726.6
1,712.0
1,668.8
Detail on the Group’s interest hedging profile and duration
is included in note 18.
Funding profile
The graph below details the Group’s available funding limits, its
maturity dates and drawn funds at 30 September 2022:
The Group has undrawn financing facilities of $797.3m (2021: $768.6)
at 30 September 2022.
Cash flow
Non-cash changes
1 October
2020
$mill
Proceeds from
borrowings
$mill
Repayments
of borrowings
$mill
Reclassification
$mill
Foreign
exchange
movement
$mill
Funding costs
& fair value
adjustments
$mill
30 September
2021
$mill
4.8
16.4
5.2
1,843.9
1,870.3
(287.0)
1,583.3
–
–
–
–
–
–
–
(7.2)
–
–
(150.7)
(157.9)
–
(157.9)
4.5
–
(4.5)
–
–
–
–
0.1
0.2
–
(8.1)
(7.8)
233.6
225.8
–
–
–
(35.8)
(35.8)
40.6
4.8
2.2
16.6
0.7
1,649.3
1,668.8
(12.8)
1,656.0
Cash and cash equivalents
Cash and cash equivalents at 30 September 2022 were $763.5m
(2021: $651.8m) and consisted of cash at bank of $264.5m (2021:
$251.9m) and short term investments of $499.0m (2021: $399.9m).
Key accounting policies
Interest bearing liabilities
Interest bearing liabilities are initially recognised at fair value
less any directly attributable borrowing costs. Subsequent to initial
recognition, interest bearing liabilities are measured at amortised
cost using the effective interest method, with any difference
between cost and redemption value recognised in the profit
or loss over the period of the borrowings.
The Group derecognises interest bearing liabilities when its
obligation is discharged, cancelled or expires. Any gains and losses
arising on derecognition are recognised in the profit or loss.
Interest bearing liabilities are classified as current liabilities, except
for those liabilities where the Group has an unconditional right to
defer settlement for at least 12 months after the year end, which are
classified as non-current.
Available limits Drawn funds
Cash and cash equivalents
Maturity
Date
Apr 24
Apr 24
Feb 26
Mar 26
Aug 27
Oct 28
Oct 30
Cash includes cash at bank, cash on hand and short term
investments, net of bank overdrafts.
Borrowing costs
Borrowing costs include interest on borrowings and the amortisation
of premiums relating to borrowings.
Borrowing costs are expensed as incurred, unless they relate
to qualifying assets (refer note 9). In this instance, the borrowing
costs are capitalised and depreciated over the asset’s expected
useful life.
100
FINANCIAL REPORTIncitec Pivot Limited Annual Report 20220200400600AUDmBank facilityAUD490mBank facilityUSD200mReg S HKD560mBondAUD431.3mReg SUSD305.7mUSPP Tranche 1USD250mUSPP Tranche 2USD250m
Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
9. Property, plant and equipment
Notes
Freehold land
and buildings
$mill
Machinery, plant
and equipment
$mill
Work in progress
$mill
Total
$mill
At 30 September 2020
Cost
Accumulated depreciation
Net book amount
Year ended 30 September 2021
Opening net book amount
Additions
Disposals
Depreciation
Impairment of assets
Reclassification from work in progress
Foreign exchange movement
Closing net book amount
At 30 September 2021
Cost
Accumulated depreciation
Net book amount
Year ended 30 September 2022
Opening net book amount
Additions
Subsidiaries acquired
Disposals
Depreciation
Impairment of assets
Reclassification from work in progress
Transfers to Inventory
Foreign exchange movement
Closing net book amount
At 30 September 2022
Cost
Accumulated depreciation
Net book amount
Key accounting policies
(2)
(2)
(2)
(2)
1,040.7
(352.7)
688.0
688.0
2.3
(1.1)
(28.4)
–
26.9
(0.3)
687.4
1,067.3
(379.9)
687.4
5,335.2
(2,165.4)
3,169.8
3,169.8
2.2
(4.3)
(274.6)
(213.1)
331.0
(5.2)
3,005.8
4,860.0
(1,854.2)
3,005.8
687.4
3,005.8
9.0
17.0
(0.5)
(35.0)
–
20.0
–
24.6
722.5
1,169.4
(446.9)
722.5
3.2
13.8
(6.0)
(268.2)
(4.5)
241.0
–
141.3
3,126.4
5,433.7
(2,307.3)
3,126.4
213.9
–
213.9
213.9
377.8
–
–
–
(357.9)
1.9
235.7
235.7
–
235.7
235.7
422.3
1.1
–
–
–
(261.0)
(12.3)
12.2
398.0
398.0
–
398.0
6,589.8
(2,518.1)
4,071.7
4,071.7
382.3
(5.4)
(303.0)
(213.1)
–
(3.6)
3,928.9
6,163.0
(2,234.1)
3,928.9
3,928.9
434.5
31.9
(6.5)
(303.2)
(4.5)
–
(12.3)
178.1
4,246.9
7,001.1
(2,754.2)
4,246.9
Property, plant and equipment is measured at cost, less accumulated
depreciation and any impairment losses. Subsequent costs are
included in the asset’s carrying amount or recognised as a separate
asset, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the
item can be measured reliably.
Borrowing costs in relation to the funding of qualifying assets
are capitalised and included in the cost of the asset. Qualifying assets
are assets that take more than 12 months to get ready
for their intended use or sale. Where funds are borrowed,
generally a weighted average interest rate is used for the
capitalisation of interest.
Property, plant and equipment is subject to impairment testing.
For details of impairment of assets, refer note 12.
Depreciation
Property, plant and equipment, other than freehold land, is
depreciated on a straight-line basis. Freehold land is not depreciated.
Depreciation rates are calculated to spread the
cost of the asset (less any residual value), over its estimated
useful life. Residual value is the estimated value of the asset
at the end of its useful life.
Estimated useful lives for each class of asset are as follows:
» Buildings and improvements
» Machinery, plant and equipment
20 – 50 years
3 – 50 years
Residual values and useful lives are reviewed and adjusted
where relevant when changes in circumstances impact the
use of the asset.
101
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
10. Leases
The Group has lease contracts for various items of property, plant
and equipment used within its operations and office premises.
These assets have lease terms ranging from 1 to 48 years for land
and buildings, and 1 to 8 years for machinery, plant and equipment.
The carrying value of right-of-use lease assets and lease liabilities
is presented below:
Right-of-use lease assets
Amounts recognised in the income statement
Amounts recognised in the income statement relating to the Group’s
lease arrangements are as follows:
Depreciation
Interest
Total
Notes
(2)
(2)
2022
$mill
45.0
5.3
50.3
2021
$mill
42.5
5.6
48.1
Key accounting policies
All leases except for short term or low value leases are recognised
on the balance sheet as a right-of-use asset and a corresponding
lease liability. Short term (12 months or less) and low value leases are
recognised in the profit or loss as a lease expense.
Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement
date less any lease incentive received. Right-of-use assets are
depreciated on a straight line basis in the profit or loss over the lease
term.
Lease liabilities are recognised by the Group at the commencement
date of the lease and are measured at the present value of lease
payments to be made over the lease term. Lease payments include
fixed payments and variable lease payments that depend on an
index or rate.
Key estimates and judgments
Extension options - The Group considers whether an option
to extend a lease is reasonably certain on a lease-by-lease
basis, which considers the importance of the lease to the
Group’s operations and its economic incentive to extend the
lease. The lease term is reassessed upon the occurrence of
a significant event or change in circumstance.
Incremental borrowing rate – To calculate the present
value of lease payments, the Group uses an incremental
borrowing rate at the commencement date of the lease.
The incremental borrowing rate reflects the duration and
the financing characteristics of the lease. Where the interest
rate implicit in the lease is not readily available, the Group
uses its incremental borrowing rate applicable to a portfolio of
leases with reasonably similar characteristics.
Land and
buildings
$mill
Notes
Machinery,
plant and
equipment
$mill
Year ended 30 September 2021
Opening net book amount
Additions
Disposals
Depreciation
Foreign exchange movement
Closing net book amount
At 30 September 2021
Cost
Accumulated depreciation
Net book amount
Year ended 30 September 2022
Opening net book amount
Additions
Subsidiaries acquired
Disposals
Depreciation
Foreign exchange movement
Closing net book amount
At 30 September 2022
Cost
Accumulated depreciation
Net book amount
Lease liabilities
(2)
(2)
165.1
15.8
(1.1)
(19.7)
(0.1)
160.0
192.2
(32.2)
160.0
160.0
9.5
2.1
(0.5)
(20.9)
4.2
154.4
191.5
(37.1)
154.4
Opening carrying amount at 1 October
Additions
Disposals
Payments made during the year
Subsidiaries acquired
Interest unwind
Foreign exchange movement
Carrying amount at 30 September
Current
Non-current
Total
$mill
221.1
37.9
(1.6)
(42.5)
(0.4)
214.5
285.3
(70.8)
214.5
214.5
28.2
16.1
(1.3)
(45.0)
8.5
221.0
56.0
22.1
(0.5)
(22.8)
(0.3)
54.5
93.1
(38.6)
54.5
54.5
18.7
14.0
(0.8)
(24.1)
4.3
66.6
146.1
(79.5)
66.6
337.6
(116.6)
221.0
2022
$mill
242.5
28.2
(1.2)
(48.2)
12.5
5.3
6.8
2021
$mill
247.7
37.9
(1.4)
(47.0)
–
5.6
(0.3)
245.9
242.5
42.1
203.8
45.0
197.5
Refer to note 18 for the maturity profile of the Group’s committed
lease liabilities before discounting.
102
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
Notes
Software
$mill
Goodwill
$mill
Patents, trademarks
& customer contracts
$mill
Brand names
$mill
Total
$mill
11. Intangibles
At 30 September 2020
Cost
Accumulated amortisation
Net book amount
Year ended 30 September 2021
Opening net book amount
Additions
Amortisation
Foreign exchange movement
Closing net book amount
At 30 September 2021
Cost
Accumulated amortisation
Net book amount
Year ended 30 September 2022
Opening net book amount
Additions
Subsidiaries acquired
Amortisation
Foreign exchange movement
Closing net book amount
At 30 September 2022
Cost
Accumulated amortisation
Net book amount
(2)
(2)
129.8
(102.0)
27.8
27.8
6.5
(7.0)
0.2
27.5
107.1
(79.6)
27.5
27.5
22.7
0.7
(9.8)
2.4
43.5
116.2
(72.7)
43.5
2,638.1
–
2,638.1
2,638.1
4.6
–
(5.9)
2,636.8
2,636.8
–
2,636.8
2,636.8
–
77.5
–
158.7
2,873.0
2,873.0
–
2,873.0
298.5
(248.2)
50.3
50.3
0.8
(16.0)
(0.8)
34.3
298.4
(264.1)
34.3
34.3
–
13.7
(14.5)
2.1
35.6
338.1
(302.5)
35.6
Allocation of indefinite life intangible assets
The Group’s indefinite life intangible assets are allocated to groups of cash generating units (CGUs) as follows:
30 September 2022
Fertilisers APAC
Titanobel
Dyno Nobel Asia Pacific (DNAP)
Dyno Nobel Americas (DNA)
Goodwill
$mill
Brand names
$mill
Total
$mill
30 September 2021
Goodwill
$mill
Brand names
$mill
196.3
68.0
908.5
1,700.2
2,873.0
–
–
196.3
Fertilisers APAC
68.0
Titanobel
40.3
948.8
Dyno Nobel Asia Pacific (DNAP)
289.0
1,989.2
Dyno Nobel Americas (DNA)
329.3
3,202.3
186.4
–
908.5
1,541.9
2,636.8
303.5
–
303.5
3,369.9
(350.2)
3,019.7
303.5
3,019.7
–
–
(1.2)
302.3
302.3
–
302.3
11.9
(23.0)
(7.7)
3,000.9
3,344.6
(343.7)
3,000.9
302.3
3,000.9
–
–
–
27.0
329.3
329.3
–
329.3
22.7
91.9
(24.3)
190.2
3,281.4
3,656.6
(375.2)
3,281.4
Total
$mill
186.4
–
–
–
40.3
948.8
262.0
1,803.9
302.3
2,939.1
103
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
Key accounting policies
Goodwill
Goodwill on acquisition of subsidiaries is measured at cost less any
accumulated impairment losses. Goodwill is tested for impairment
annually, or more frequently if events or circumstances indicate that
it might be impaired.
Brand names
Key assumptions
Details of the key assumptions used in the recoverable amount
calculations at 30 September are set out below:
Key assumptions
1 – 5 years
2022
US$
2021
US$
Brand names acquired by the Group have indefinite useful lives
and are measured at cost less accumulated impairment. They are
tested annually for impairment, or more frequently if events or
circumstances indicate that they might be impaired.
DAP (1)
Gas (DNA CGU) (2)
Ammonia (3)
AUD:USD (4)
467 to 786
427 to 541
4.60 to 5.50
3.00 to 3.50
528 to 1175
356 to 480
0.71 to 0.74
0.74 to 0.76
Terminal value
(after 5 years)
2022
US$
560
4.80
685
0.73
2021
US$
520
3.50
454
0.74
Other intangible assets
Other intangible assets acquired by the Group have finite lives.
They are stated at cost less accumulated amortisation and
impairment losses.
Subsequent expenditure
Subsequent expenditure on intangible assets is capitalised only
when it increases the future economic benefits of the asset to which
it relates. All other such expenditure is expensed as incurred.
Amortisation
Goodwill and brand names are not amortised.
For intangible assets with finite lives, amortisation is recognised in
the profit or loss on a straight-line basis over their estimated useful
life. The estimated useful lives of intangible assets in this category are
as follows:
» Software
» Product trademarks
» Patents
» Customer contracts
3 – 10 years
4 – 10 years
13 – 15 years
10 – 17 years
Useful lives are reviewed at each reporting date and adjusted
where relevant.
12. Impairment of goodwill and
non-current assets
Impairment testing of goodwill
The Group performs annual impairment testing as at 30 September
for intangible assets with indefinite useful lives. More frequent
reviews are performed for indicators of impairment of all the Group’s
assets, including operating assets. The 30 September impairment
testing resulted in no impairment of any CGU as the recoverable
amounts of the CGU’s, being Fertilisers APAC, DNAP, DNA and
Titanobel exceeded their carrying amounts.
(1) Di-Ammonium Phosphate price (FOB China/Saudi – USD per tonne).
(2) Henry Hub natural gas price (USD per mmbtu).
(3) Ammonia price (CFR Tampa – USD per tonne).
(4) AUD:USD exchange rate.
For both DNAP and Fertilisers APAC, the gas price assumption for
impairment testing purposes for the first period after the current gas
contracts expire, is based on external long term gas production cost
forecasts of between $8.64 and $9.63 per gigajoule.
Fertiliser prices, foreign exchange rates and natural gas prices are
estimated by reference to external market publications and market
analyst estimates where available, and are updated at each reporting
date.
Discount and growth rates
The post-tax discount rate used in the calculations is 9% for the
Fertilisers APAC CGU (2021: 9%), 8.5% for the DNA and DNAP CGUs
(2021: 8.5%) and 9% for the Titanobel CGU. The rate reflects the
underlying cost of capital adjusted for market and asset specific risks.
The terminal value growth rate represents the forecast consumer
price index (CPI) of 2.5% (2021: 2.5%) for all CGUs. Sensitivity analyses
on the discount and growth rates, considering the current volatile
market conditions, are provided below.
Carbon price impact and Investment in Sustainability
The commodity forecast assumptions used in the impairment
models were obtained from external sources which include the
impacts of sustainability and carbon costs.
Capital forecasts in the cash flows used in the impairment models
include investment in sustainability related projects that have either
commenced or are committed, including the earnings attributable to
these capital projects.
104
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
Sensitivity analyses
Included in the table below is a sensitivity analysis of the recoverable amounts of the CGUs and, where applicable, the impairment
charge considering reasonable change scenarios relating to key assumptions at 30 September 2022.
Each of the sensitivities below assumes that a specific assumption moves in isolation, while all other assumptions are held constant.
A change in one assumption could be accompanied by a change in another assumption, which may increase or decrease the
net impact.
Post-tax
discount
rate
Terminal
value
growth rate
+0.5%
-1.0%
Natural
gas price
+AU$1 per
gigajoule
Post-tax
discount
rate
+0.5%
Ammonia
price
-US$50
per tonne
Terminal
value growth
rate
-1.0%
Natural gas
price
+US$1
per mmbtu
DNAP
AU$mill
AU$mill
AU$mill
DNA
US$mill
US$mill
US$mill
US$mill
Change in
recoverable amount
Impairment charge
(199.7)
–
(303.3)
(33.8)
(69.1)
–
Change in
recoverable amount
(392.2)
(389.5)
(594.2)
(270.5)
Impairment charge
–
–
–
–
Post-tax
discount rate
AUD:USD
exchange rate
Terminal value
growth rate
DAP
Price
+0.5%
AU$mill
(123.2)
+5c
AU$mill
(445.6)
-1.0%
AU$mill
(182.5)
-US$50
per tonne
AU$mill
(653.0)
Natural gas
price
+AUD1 per
gigajoule
AU$mill
(58.8)
Post-tax
discount rate
Terminal value
growth rate
+0.5%
-1.0%
Titanobel
EUR €mill
EUR €mill
Change in
recoverable amount
(9.4)
(14.3)
Fertilisers APAC
Change in
recoverable amount
Impairment charge
–
–
–
–
–
Impairment charge
–
–
Transition of the world’s energy systems and sustainability forms part
of our strategy and these have been considered in the market data
utilised to assess growth rates for each CGU.
Impairment losses
An impairment loss is recognised whenever the carrying amount
of an asset (or its CGU) exceeds its recoverable amount.
Impairment losses are recognised in the profit or loss.
Impairment losses recognised in respect of CGUs are allocated
against assets in the following order:
» Firstly, against the carrying amount of any goodwill allocated
to the CGU.
» Secondly, against the carrying amount of any remaining assets
in the CGU.
An impairment loss recognised in a prior period for an asset (or
its CGU) other than goodwill may be reversed only if there has
been a change in the estimates used to determine the recoverable
amount of the asset (or its CGU) since the last impairment loss was
recognised. When this is the case, the carrying amount of the asset
(or its CGU) is increased to its recoverable amount.
Impairment of other property, plant and
equipment
During the year ended 30 September 2022 other property, plant
and equipment was impaired by $4.5m (2021: $3.2m) as a result
of the Group’s fixed asset verification procedures. Additional
impairment of $209.9m in relation to the Cheyenne and Gibson
Island facilities was recognised as an Individually Material Item
in the prior year.
Key accounting policies
Impairment testing
The identification of impairment indicators involves management
judgment. Where an indicator of impairment is identified, a
formal impairment assessment is performed. The Group’s annual
impairment testing determines whether the recoverable amount
of a CGU or group of CGUs, to which goodwill and/or indefinite life
intangible assets are allocated, exceeds its carrying amount.
A CGU is the smallest identifiable group of assets that generate cash
flows largely independent of cash flows of other groups of assets.
Goodwill and other indefinite life intangible assets are allocated to
CGUs or groups of CGUs which are no larger than one of the Group’s
reportable segments.
Determining the recoverable amount
The recoverable amount of an asset is determined as the higher of its
fair value less cost of disposal and its value-in-use. Value-in-use
is a term that means an asset’s value based on the expected future
cash flows arising from its continued use in its current condition,
discounted to present value. For discounting purposes, a post-tax
rate is used that reflects current market assessments of the risks
specific to the asset. The Group has prepared value-in-use models for
the purpose of impairment testing as at 30 September 2022, using
five year discounted cash flow models based on Board approved
forecasts. Cash flows beyond the five year period are extrapolated
using a terminal value growth rate.
105
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
Key estimates and judgments
The Group is required to make significant estimates and
judgments in determining whether the carrying amount
of its assets and/or CGUs has any indication of impairment,
in particular in relation to:
» key assumptions used in forecasting future cash flows;
» discount rates applied to those cash flows; and
»
the expected long term growth in cash flows.
Such estimates and judgments are subject to change as a
result of changing economic, operational, environmental and
weather conditions. Actual cash flows may therefore differ
from forecasts and could result in changes in the recognition
of impairment charges in future periods.
13. Commitments
Capital expenditure commitments
Capital expenditure contracted but not provided for or payable
at 30 September:
No later than one year
2022
$mill
102.3
102.3
2021
$mill
39.1
39.1
14. Equity accounted investments
The Group has performed an analysis of the statements of financial
position and the results of each of its joint ventures and associates
(as listed in note 15) at 30 September 2022 and considers them to
be individually immaterial to the Group. As a result, no individual
disclosures are included for the Group’s investments in joint ventures
and associates.
Included in the table below is the summarised financial information
of the Group’s joint ventures and associates at 30 September:
Carrying amount of joint ventures and associates
Carrying amount at 1 October
Share of net profit
Share in joint ventures acquired during the year
Dividends received
Foreign exchange movement
Carrying amount at 30 September
Carrying amount of investments in:
Joint ventures
Associates
Carrying amount of investments in joint
ventures and associates
2022
$mill
324.8
43.4
2.5
(7.9)
16.6
379.4
2021
$mill
326.3
41.9
–
(44.6)
1.2
324.8
286.2
93.2
250.0
74.8
379.4
324.8
Transactions between subsidiaries of the Group and joint
ventures and associates
Sales of goods/services
Purchase of goods/services
Management fees/royalties
Interest expense
Dividend income
2022
$mill
453.9
(70.7)
31.0
(0.4)
7.9
2021
$mill
348.9
(53.2)
29.5
(0.4)
44.6
Joint ventures and associates transactions represent amounts that
do not eliminate on consolidation.
Outstanding balances arising from transactions with joint
ventures and associates
Amounts owing to related parties
Amounts owing from related parties
Loans with joint ventures and associates
2022
$mill
3.2
63.5
2021
$mill
6.4
72.1
Loans from joint ventures and associates
21.1
16.6
Outstanding balances arising from transactions with joint ventures
and associates are on standard market terms.
106
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
15. Investments in subsidiaries, joint arrangements and associates
The following list includes the Group’s principal operating subsidiaries. Other than as noted below, there were no changes in the Group’s
existing shareholdings in its subsidiaries, joint ventures and associates in the financial year.
Subsidiaries
Name of entity
Company
Incitec Pivot Limited (1)
Controlled Entities – operating
Incorporated in Australia
Incitec Fertilisers Operations Pty Ltd (1)
TOP Australia Pty Limited (1)
Southern Cross Fertilisers Pty Ltd (1)
Southern Cross International Pty Ltd (1)
Incitec Pivot LTI Plan Company Pty Limited
Incitec Pivot Explosives Holdings Pty Limited (1)
Queensland Operations Pty Limited
Incitec Pivot Investments 1 Pty Ltd (1)
Incitec Pivot Investments 2 Pty Ltd
Incitec Pivot US Holdings Pty Ltd
Incitec Pivot Finance Australia Pty Ltd (1)
Dyno Nobel Pty Limited
Dyno Nobel Europe Pty Ltd
Dyno Nobel Management Pty Limited
Industrial Investments Australia Finance Pty Limited
Dyno Nobel Asia Pacific Pty Limited (1)
Dampier Nitrogen Pty Ltd
DNX Australia Pty Ltd (1)
Dyno Nobel Moranbah Pty Ltd (1)
Dyno Nobel Moura Pty Limited (1)
Incited Pivot Queensland Gas Pty Ltd
Easy Liquids Pty Ltd (2)(3)
Australian Bio Fert Pty Ltd (3)
OZBIOFERT Pty Ltd (3)
Incorporated in USA
Incitec Pivot US Investments
Incitec Pivot Management LLC
Incitec Pivot Finance LLC
Dyno Nobel Australia LLC
Dyno Nobel SPS LLC
Dyno Nobel Holdings IV LLC
Dyno Nobel Holdings USA III, Inc.
Dyno Nobel Holdings USA II
Dyno Nobel Holdings USA II, Inc.
Dyno Nobel Holdings USA, Inc.
Dyno Nobel Inc.
Dyno Nobel Transportation Inc.
Simsbury Hopmeadow Street LLC
Dyno Nobel Holdings V LLC
Tradestar Corporation
CMMPM, LLC
CMMPM Holdings L.P.
Dyno Nobel Louisiana Ammonia, LLC
Nobel Labs, LLC
Mine Equipment & Mill Supply Company
Controlled Explosives, Inc.
Drisk Insurance Inc.
Falconi Construction, Inc
Alpha Dyno Nobel
Ownership
interest
Name of entity
Ownership
interest
Controlled Entities – operating (continued)
Incorporated in Canada
Dyno Nobel Canada Inc.
Dyno Nobel Transportation Canada Inc.
Dyno Nobel Nunavut Inc.
Incitec Pivot Finance Canada Inc.
Polar Explosives 2000 Inc.
Dene Dyno Nobel (Polar) Inc.
Dyno Nobel Waggaman Inc.
Incorporated in Hong Kong
Incitec Pivot Holdings (Hong Kong) Limited
Quantum Fertilisers Limited
Incorporated in Singapore
Coltivi Insurance Pte Ltd
Southern Cross Fertilisers Pte. Ltd.
Incorporated in Chile
Dyno Nobel Explosivos Chile Limitada
Incorporated in Peru
Dyno Nobel Peru S.A.
Incorporated in Mexico
Dyno Nobel Mexico, S.A. de C.V. (2)
Incorporated in Papua New Guinea
DNX Papua New Guinea Ltd (2)
Incorporated in Indonesia
PT DNX Indonesia
Incorporated in Turkey
Nitromak Dnx Kimya Sanayii Anonim Sirketi
Incorporated in Romania
RomNitro Explosives SRL
Incorporated in Albania
Nitro Industria Kimike Shpk
Incorporated in Switzerland (3)
Dyno Nobel Holdings Europe SA
Incorporated in France (3)
Dyno Nobel Holdings France Sas
Explinvest SASU (2)
Titanobel SASU (2)
Société Civile Immobilière des Champs Chanaux (2)
Société d’Explosifs du Centre-Est SA (2)
Société Financière de Terrassement SAS (2)
Groupement Forestier Minez Clegueric (2)
C.E.M.E SARL (2)
Incorporated in South Africa (3)
Titanobel Southern Africa (Pty) Limited (2)
Enviro Blasting Services (Pty) Limited (2)
Incorporated in New Caledonia (3)
Nord-Sud Dynamitage-Sofiter SARL (2)
Incorporated in Benin (3)
Titanobel Benin SASU (2)
Incorporated in Cameroon (3)
Titanobel Cameroun SASU (2)
Incorporated in Senegal (3)
Afrique Ouest Drilling Sofiter SARL (2)
(1) A party to Deed of Cross Guarantee dated 30 September 2008.
(2) This entity has a 31 December financial year end.
(3) Entities added to the Group during the year.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
64%
64%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
99.51%
66%
51%
100%
74%
51%
100%
100%
100%
107
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Capital investment
For the year ended 30 September 2022
Joint arrangements and associates
Name of entity
Associates
Incorporated in USA
Maine Drilling and Blasting Group
Independent Explosives
Maine Drilling and Blasting, Inc.
MD Drilling and Blasting, Inc.
Incorporated in Canada
Labrador Maskuau Ashini Ltd
Innu Namesu Ltd
Incorporated in French Guiana (4)
Guyanexplo Société en Nom collectif (1)
Joint operations
Ownership
interest
49%
49%
49%
49%
49%
49%
35%
IPL has a 50% interest in an unincorporated joint operation with Central
Petroleum Limited for the development of gas acreage in Queensland,
Australia, which commenced in the 2018 financial year.
(1) This entity has a 31 December year end.
(2) Due to legal requirements in the Canadian Northwest Territories, the Group cannot
own more than 49 percent of shares in Qaaqtuq Dyno Nobel Inc. However, under
the joint venture agreement, the Group is entitled to 75 percent of the profit of
Qaaqtuq Dyno Nobel Inc.
(3) Due to legal requirements in the Canadian Northwest Territories, the Group cannot
own more than 49 percent of shares in Dene Dyno Nobel (DWEI) Inc. However, under
the joint venture agreement, the Group is entitled to 100 percent of the profit of Dene
Dyno Nobel (DWEI) Inc.
(4) Entities added to the Group during the year.
Name of entity
Joint ventures
Incorporated in USA
Buckley Powder Co.
IRECO Midwest Inc.
Wampum Hardware Co.
Western Explosives Systems Company
Warex Corporation
Warex, LLC
Warex Transportation, LLC
Vedco Holdings, Inc.
Virginia Explosives & Drilling Company, Inc.
Austin Sales LLC
Virginia Drilling Company, LLC
DetNet Americas, Inc.
Incorporated in Canada
Qaaqtuq Dyno Nobel Inc. (2)
Dene Dyno Nobel (DWEI) Inc. (3)
Incorporated in Australia
Queensland Nitrates Pty Ltd
Queensland Nitrates Management Pty Ltd
Incorporated in South Africa
DetNet South Africa (Pty) Ltd
Sasol Dyno Nobel (Pty) Ltd
Incorporated in Mexico
DNEX Mexico, S. de R.L. de C.V.
Explosivos de la Region Lagunera, S.A. de C.V.
Explosivos de la Region Central, S.A. de C.V.
Nitro Explosivos de Ciudad Guzmán, S.A. de C.V.
Explosivos y Servicios Para la Construcción, S.A. de C.V.
Incorporated in France (4)
Titanobel-NPGM Equipment SAS (1)
Newcomat SARL (1)
Incorporated in New Caledonia (4)
Katiramona Explosifs SAS (1)
Incorporated in Mongolia (4)
Titanobel Mongolia LLC (1)
Nitrosibir Mongolia LLC (1)
Incorporated in Nigeria (4)
Titanobel & Dynatrac Limited (1)
Ownership
interest
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
49%
49%
50%
50%
50%
50%
49%
49%
49%
49%
49%
51%
10%
50%
49%
100%
55%
108
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Capital Investment
For the year ended 30 September 2022
16. Business combinations
Australian Bio Fert Pty Ltd
On 9 December 2021, IPL acquired a majority stake in Australian Bio Fert Pty Ltd with the intent to construct a large scale plant and develop
and deliver a new category of sustainable fertilisers. IPL’s ownership interest in Australian Bio Fert Pty Ltd is 64% as at 30 September 2022 with
36% representing the non-controlling equity interest. The purchase price and goodwill recognised at acquisition was immaterial.
Titanobel
On 28 April 2022, the Group acquired 100% of the equity of Explinvest, the holding company of the Titanobel Group (Titanobel) for an upfront
payment of €77m. This acquisition is highly complementary to Dyno Nobel’s existing operations and provides access to new markets where
Dyno Nobel can leverage its premium technology offering through substitution and growth strategies. Titanobel is a leading industrial
explosives manufacturer and drilling, blasting and technical services provider based in France. IPL acquired control of Explinvest through the
acquisition of 100% of its share capital.
The fair value of assets and liabilities acquired were:
Assets and liabilities acquired
Cash and cash equivalents
Trade and other receivables
Other assets
Inventories
Equity accounted investments
Property, plant and equipment
Right of use assets
Intangible assets
Total assets
Trade and other payables
Lease liabilities
Interest bearing liabilities
Provisions
Current tax liabilities
Deferred tax liabilities
Retirement benefit obligation
Total liabilities
Fair value of identifiable net assets
Total consideration
Goodwill recognised at acquisition
EUR €mill
AUD $mill
10.1
31.9
1.9
13.3
1.7
19.1
8.9
9.8
15.0
47.3
2.8
19.7
2.5
28.3
13.2
14.5
96.7
143.3
22.8
7.4
20.2
0.5
1.7
2.8
2.7
58.1
38.6
77.3
38.7
33.8
11.0
29.9
0.7
2.5
4.2
4.0
86.1
57.2
124.1
66.9
Business acquisition and integration costs of $2.7m were incurred during the year which have been recognised in the Consolidated Statement
of Profit or Loss.
Yara Nipro
On 30 September 2022, Incitec Pivot Limited completed the purchase of the Yara Nipro liquid fertiliser business in Australia through the
acquisition of 100% of the shares in Yara Nipro Pty Ltd (Nipro). Nipro is an Australian provider of liquid fertilisers with an integrated value chain
from production to delivery to farm.
The acquisition was for a purchase price of $19.8m on a debt free and cash free basis. Given the timing of the acquisition, further work
is required to determine the final fair values of the assets acquired and the liabilities assumed, the finalisation of these fair values will be
completed in FY23. As at 30 September 2022, provisional assets and liabilities have been consolidated into the Group’s balance sheet with
goodwill of $6.7m recognised.
109
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
17. Provisions and contingencies
Provisions at 30 September 2022 are analysed as follows:
30 September 2022
Carrying amount at 1 October 2021
Provisions made during the year
Provisions written back during the year
Payments made during the year
Subsidiaries acquired
Interest unwind
Foreign exchange movement
Carrying amount at 30 September 2022
Current
Non-current
Key accounting policies
Employee
entitlements
$mill
Restructuring and
rationalisation
$mill
Environmental
$mill
Asset retirement
obligations
$mill
Legal
and other
$mill
Total
provisions
$mill
63.9
9.3
(5.1)
(4.1)
0.2
0.6
0.2
65.0
64.1
0.9
92.1
8.7
–
(13.6)
–
–
(0.4)
86.8
82.7
4.1
42.2
0.1
–
(6.1)
0.7
0.4
1.9
39.2
12.2
27.0
108.4
6.4
–
(0.4)
–
4.8
3.4
122.6
3.6
119.0
3.7
18.5
–
(0.2)
0.8
–
0.9
23.7
4.1
19.6
310.3
43.0
(5.1)
(24.4)
1.7
5.8
6.0
337.3
166.7
170.6
Provisions are measured at management’s estimate of the
expenditure required to settle the obligation. This estimate is based
on a “present value” calculation, which involves the application of
a discount rate to the expected future cash flows associated with
settlement. The discount rate takes into account factors such as risks
specific to the liability and the time value of money.
Employee entitlements
Provisions are made for liabilities to employees for annual leave, long
service leave and other employee entitlements. Where the payment
to employees is expected to take place in 12 months
time or later, a present value calculation is performed. In this
instance, the corporate bond rate is used to discount the liability
to its present value.
Restructuring and rationalisation
Provisions for restructuring or rationalisation are only recognised
when a detailed plan has been approved and the restructuring or
rationalisation has either commenced or been publicly announced.
Environmental
Provisions relating to the remediation of soil, groundwater, untreated
waste and other environmental contamination are made when
the Group has an obligation to carry out the clean-up operation as
a result of a past event. In addition, a provision will only be made
where it is possible to reliably estimate the costs involved.
Asset retirement
In certain circumstances, the Group has an obligation to dismantle
and remove an asset and to restore the site on which it is
located. The present value of the estimated costs of this process
is recognised as part of the asset that is depreciated and also as
a provision.
At each reporting date, the provision is remeasured in line with
changes in discount rates and the timing and amount of future
estimated cash flows. Any changes in the provision are added to or
deducted from the related asset, other than changes associated with
the passage of time. This is recognised as a borrowing cost in the
profit or loss.
Legal and other
There are a number of legal claims and other exposures, including
claims for damages arising from products and services supplied
by the Group, that arise from the ordinary course of business.
A provision is only made where it is probable that a payment
or restitution will be required and the costs involved can be
reliably estimated.
110
For example, in April 2022, a jury awarded damages of US$46.75m
(comprising punitive damages US$30m and compensatory damages
US$16.75m) to a plaintiff in a personal injury legal case in the DNA
business in relation to a nitrogen oxide release at one of its plants in
2015. In relation to this particular matter, the Company intends to
vigorously pursue all available review and appeal rights.
Key estimates and judgments
Provisions are based on the Group’s estimate of the timing
and value of outflows of resources required to settle or satisfy
commitments and liabilities known to the Group at the
reporting date.
Contingencies
The following contingent liabilities are considered unlikely. However
the directors consider they should be disclosed:
» Under the terms of the ASIC Legislative Instrument, ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785,
issued by the Australian Securities and Investments Commission
dated 17 December 2016, which relieved certain wholly-owned
subsidiaries from the requirement to prepare audited financial
statements, IPL and certain wholly-owned subsidiaries (identified
in note 15) have entered into an approved deed for the cross
guarantee of liabilities. No additional liabilities subject to the
Deed of Cross Guarantee at 30 September 2022 are expected
to arise to IPL or the relevant subsidiaries.
» The Group is regularly subject to investigations and audit
activities by the revenue authorities of jurisdictions in which the
Group operates. The outcome of these investigations and audits
depends upon several factors which may result in further tax
payments or refunds of tax payments already made by the Group
over and above existing provisions. Refer to note 3 for further
details.
» Contingent liabilities arise in the normal course of business
and include a number of legal claims, environmental cleanup
requirements and bank guarantees.
The Directors are of the opinion that no additional provisions are
required in respect of these matters, as it is either not probable
that a future sacrifice of economic benefits will be required or
the amount is not capable of reliable measurement.
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
18. Financial risk management
The Group is exposed to financial risks including liquidity risk, market risk and credit risk. This note explains the Group’s financial risk exposures
and its objectives, policies and processes for measuring and managing these risks.
The Board of Directors (the Board) has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Board established the Audit and Risk Management Committee (ARMC) which is responsible for, amongst other things, the monitoring of
the Group’s risk management plans. The ARMC is assisted in its oversight role by the Group’s Risk Management function. The Risk Management
function performs reviews of the Group’s risk management controls and procedures, the results of which are reported to the ARMC. The ARMC
reports regularly to the Board on its activities.
The Group’s financial risk management framework includes policies to identify, analyse and manage the Group’s financial risks. These policies
set appropriate financial risk limits and controls, identify permitted derivative instruments and provide guidance on how to monitor and report
financial risks and adherence to set limits. Financial risk management policies, procedures and systems are reviewed regularly to ensure they
remain appropriate given changes in market conditions and/or the Group’s activities.
Financial risks
Liquidity risk: The risk that the Group is not able to refinance its debt obligations or meet other cash
outflow obligations when required.
Source of risk
Exposure to liquidity risk derives from the Group’s operations
and from the external interest bearing liabilities that it holds.
Risk mitigation
Liquidity risk is managed by ensuring there are sufficient
committed funding facilities available to meet the Group’s financial
commitments in a timely manner.
The Group’s forecast liquidity requirements are continually
reassessed based on regular forecasting of earnings and
capital requirements.
Outstanding financial instruments
This includes stress testing of critical assumptions such as input
costs, sales prices, production volumes, exchange rates and
capital expenditure.
The Group aims to hold a minimum liquidity buffer of at least $500m
in undrawn non-current committed funding to meet any unforeseen
cash flow requirements. Details on the Group’s committed finance
facilities, including the maturity dates of these facilities, are included
in note 8.
The Group’s exposures to liquidity risk are set out in the tables below:
Contractual
cash flows (1)
$mill
0 – 12
months
$mill
1 – 5
years
$mill
more than
5 years
$mill
30 September 2022
Non-derivative financial
liabilities
30 September 2021
Non-derivative financial
liabilities
Contractual
cash flows (1)
$mill
0 – 12
months
$mill
1 – 5
years
$mill
more than
5 years
$mill
Interest bearing liabilities
1,712.0
21.1
963.5
727.4
Interest bearing liabilities
Interest payments
396.8
56.6
261.4
78.8
Interest payments
1,668.8
462.8
18.8
55.0
531.8
1,118.2
286.0
121.8
Trade and other payables
1,416.4
1,393.4
Lease liabilities
Bank guarantees
236.8
55.9
42.6
31.3
23.0
96.3
24.4
–
Trade and other payables
1,250.3
1,229.3
97.9
0.2
Lease liabilities
Bank guarantees
223.0
127.5
44.6
22.7
21.0
87.2
23.8
–
91.2
81.0
Total non-derivative cash
outflows
Derivative financial
(assets)/liabilities
Forward exchange contracts
Foreign exchange options
Cross currency interest
rate swaps
Interest rate swaps
Commodity swaps
Net derivative cash
outflows/(inflows)
3,817.9
1,545.0 1,368.6
904.3
Total non-derivative cash
outflows
Derivative financial
(assets)/liabilities
3,732.4
1,370.4
949.8
1,412.2
6.2
–
(8.1)
122.5
–
6.2
–
–
44.2
–
–
–
(8.1)
73.7
–
–
–
–
4.6
–
120.6
50.4
65.6
4.6
Forward exchange contracts
(25.6)
(13.1)
(12.5)
Foreign exchange options
Cross currency interest
rate swaps
Interest rate swaps
Commodity swaps
Net derivative cash
outflows/(inflows)
7.9
7.9
–
0.6
17.1
7.1
(0.8)
3.5
7.1
1.4
11.9
–
7.1
4.6
0.8
–
–
–
1.7
–
1.7
(1) Contractual cash flows are not discounted, and are based on foreign exchange rates at year end. Any subsequent movements in foreign exchange rates could impact the actual cash flows
on settlement of these assets and liabilities.
111
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
Market risk: The risk that changes in foreign exchange rates, interest rates and commodity prices
will affect the Group’s earnings, cash flows and the carrying values of its financial instruments.
Foreign exchange risk
Source of risk
Risk mitigation
The Group is exposed to changes in foreign exchange rates (primarily
in USD) on the following transactions and balances:
Foreign exchange exposure to sales and purchases is managed
by entering into formal hedging arrangements.
» Sales and purchases
» Trade receivables and trade payables
»
Interest bearing liabilities
The Group is also exposed to foreign exchange movements
(primarily in USD) on the translation of the earnings, assets
and liabilities of its foreign operations.
Outstanding financial instruments and sensitivity analysis
The Group hedges both specific transactions and net exposures
by entering into foreign exchange rate derivative contracts.
The translation risk of USD denominated interest bearing liabilities
and net investments in foreign operations and their earnings is
also managed by entering into foreign exchange rate derivative
financial instruments.
The table below summarises the Group’s exposure to movements in the AUD:USD exchange rate and the derivative financial instruments that
are in place to hedge these exposures at 30 September:
Transactional exposures
Trade and other receivables
Trade and other payables
Gross exposure (before hedging)
Hedge of transactional exposures
Trade and other payables
Forward exchange contracts
Total hedge contract values
Net exposure (after hedging)
Hedge of forecast sales and purchases
Forward exchange contracts
Cross currency interest rate swaps
Foreign exchange options
Total hedge contract values
Translational exposures
Net investment in foreign operations
Gross exposure (before hedging)
Hedge of translational exposures
Cross currency interest rate swaps
Interest bearing liabilities
Total hedge contract values
2022
USD mill
2021
USD mill
1.1
(276.0)
(274.9)
269.3
269.3
(5.6)
372.1
372.1
(3.7)
2022
USD mill
2021
USD mill
(350.0)
–
(240.0)
(590.0)
(139.3)
(151.6)
(400.0)
(690.9)
2022
USD mill
2021
USD mill
2,293.7
2,293.7
2,195.7
2,195.7
–
(500.0)
(500.0)
(251.4)
(500.0)
(751.4)
Net contract
amounts
mill
2022
Strike (1)
2022
Net contract
amounts mill
2021
Strike (1)
2021
Foreign exchange options
0.4
Contracts maturing within 1 year
(376.2)
(375.8)
Bought AUD Call
Sold AUD Put
USD 240
USD 240
0.75
0.62
USD 400
USD 89
0.81
0.77
(1) AUD:USD foreign exchange rate
Foreign exchange rates
The AUD:USD foreign exchange rates used by the Group to translate
its foreign denominated earnings, assets and liabilities are set
out below:
30 September foreign exchange rate
Average foreign exchange rate for the year
2022
AUD:USD
2021
AUD:USD
0.6508
0.7127
0.7180
0.7521
Foreign exchange rate sensitivity on outstanding financial
instruments
The table below shows the impact of a 1 cent movement (net of
hedging) in the AUD:USD exchange rate on the Group’s profit and
equity before tax in relation to foreign denominated assets and
liabilities at 30 September:
+ 1c
AUD:USD
AUD mill
2022
- 1c
AUD:USD
AUD mill
2022
+ 1c
AUD:USD
AUD mill
2021
- 1c
AUD:USD
AUD mill
2021
Foreign exchange sensitivity – (net of hedging)
Trade and other
receivables and payables
– (profit or loss)
Hedge of forecast
transactions – (equity)
Investments in foreign
operations – (equity)
0.1
8.1
(0.1)
(8.4)
0.1
7.3
(0.1)
(7.5)
(41.7)
43.0
(27.6)
28.4
Net exposure (after hedging)
1,793.7
1,444.3
112
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
The fertiliser sales sensitivity calculation is based on actual tonnes
manufactured by the Australian fertiliser plants and sold during
the year, the average AUD:USD exchange rate for the year, and
the average USD fertiliser price.
The North American earnings translation sensitivity calculation
is based on the earnings before interest and tax from the North
American business for the year and the average AUD:USD exchange
rate for the year.
Sensitivity to foreign exchange rate movements during the year
(unhedged)
The table below shows the impact of a 1 cent movement in the
AUD:USD foreign exchange rate on the Group’s profit before
tax, in relation to sales and earnings during the year that were
denominated in USD.
+ 1c
AUD:USD
AUD mill
2022
- 1c
AUD:USD
AUD mill
2022
+ 1c
AUD:USD
AUD mill
2021
- 1c
AUD:USD
AUD mill
2021
USD Fertiliser sales from
Australian plants
North American USD
earnings
(17.0)
17.5
(11.0)
11.3
(10.3)
10.6
(2.5)
2.5
Market risk
Interest rate risk
Source of risk
Risk mitigation
Exposure to interest rate risk is a result of the effect of changes in
interest rates on the Group’s outstanding interest bearing liabilities
and derivative instruments.
The exposure to interest rate risk is mitigated by maintaining a mix
of fixed and variable interest rate borrowings and by entering into
interest rate derivative instruments.
Outstanding financial instruments and sensitivity analysis
The tables below include the Group’s derivative contracts that are exposed to changes in interest rates at 30 September:
Interest rate swaps
2022
Less than 1 year
Less than 1 year
1 to 5 years
1 to 5 years
1 to 5 years
1 to 5 years
2021
Less than 1 year
Less than 1 year
Less than 1 year
1 to 5 years
1 to 5 years
1 to 5 years
1 to 5 years
Average
pay/(rec)
fixed rate
LIBOR
Average
pay/(rec)
fixed rate
BBSW
Average
pay/(rec)
fixed rate
HIBOR
Duration
(years)
Net contract
amounts
mill
2.02%
(0.27%)
2.58%
(0.59%)
–
–
2.00%
(1.64%)
2.36%
(0.52%)
–
–
–
–
–
(0.25%)
–
–
–
–
–
0.2 USD 350
0.2 USD 300
2.2 USD 200
3.5 USD 400
2.0 AUD 181
–
–
–
–
–
–
–
–
(4.13%)
3.4 HKD 560
–
–
–
–
–
–
–
6.1 USD 200
0.2
0.7
1.0
USD 50
USD 600
AUD 181
2.0 AUD 181
1.9 USD 550
3.1 USD 600
(4.13%)
4.4
HKD 560
–
6.2 USD 200
–
–
(0.20%)
(0.25%)
Later than 5 years
(2.02%)
Later than 5 years
(2.02%)
Interest rate sensitivity on outstanding financial instruments
The following table shows the sensitivity of the Group’s profit
before tax to a 1 per cent change in interest rates. The sensitivity
is calculated based on the Group’s interest bearing liabilities and
derivative financial instruments that are exposed to interest rate
movements and the AUD:USD exchange rate at 30 September:
Interest rate sensitivity
LIBOR
BBSW
+ 1%
AUD mill
2022
- 1%
AUD mill
2022
+ 1%
AUD mill
2021
- 1%
AUD mill
2021
(5.6)
(2.8)
5.6
2.8
(7.7)
0.7
7.7
(0.7)
The sensitivity above is also representative of the Group’s interest
rate exposures during the year.
113
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
Market risk
Commodity price risk
Source of risk
Risk mitigation
Exposure to changes in commodity prices is by virtue of the
products that the Group sells and its manufacturing operations,
and can be categorised into five main commodities, namely:
Ammonia, Ammonium Nitrate, Ammonium Phosphate, Urea
and Natural Gas.
Where possible, commodity price risk exposure is managed by
entering into long term contracts with customers (i.e Ammonium
Nitrate and Ammonia) or derivative contracts for input cost (i.e US
natural gas). However, in some instances price risk exposure cannot
be economically mitigated by either contractual arrangements or
derivative contracts by virtue of the products that the Group sells.
Natural gas swaps
fixed payer
–
–
70,000
2.58
Natural gas price
sensitivity
Outstanding financial instruments and sensitivity analysis
The table below includes the Group’s derivative contracts that are
exposed to changes in natural gas prices at 30 September:
Total
volume
(MMBTU)(1)
2022
Price/
Strike
USD (2)
2022
Total
volume
(MMBTU)(1)
2021
Price/
Strike
USD (2)
2021
Natural gas
Contracts maturing within 1 year
Natural gas swaps
fixed payer
–
–
610,000
2.52
Contracts maturing between 1 and 5 years
(1) Million Metric British Thermal Units
(2) Nymex Henry Hub gas price
Natural gas price sensitivity on outstanding financial instruments
The table below shows the sensitivity of the Group’s equity before
tax to a change of US 10c per MMBTU in the US Henry Hub natural
gas price. The sensitivity is based on natural gas derivative contracts
held by the Group at 30 September. Gains or losses recognised in
equity will be reclassified to the profit or loss as the underlying
forecast transaction occurs:
+US 10c
per 1
MMBTU
AUD mill
2022
-US 10c
per 1
MMBTU
AUD mill
2022
+US 10c
per 1
MMBTU
AUD mill
2021
-US 10c
per 1
MMBTU
AUD mill
2021
Natural gas price
sensitivity
Sensitivity to natural gas price movements during the year
The table below shows the sensitivity of the Group’s profit before tax
to a change of US 10c per MMBTU in the US Henry Hub natural gas
price. The sensitivity is based on the average natural gas price, the
average AUD:USD exchange rate (excluding the impact of hedging)
and the current annual natural gas consumption of the Group’s
manufacturing operations in the Americas that are exposed to
changes in natural gas prices:
+US 10c
per 1
MMBTU
AUD mill
2022
-US 10c
per 1
MMBTU
AUD mill
2022
+US 10c
per 1
MMBTU
AUD mill
2021
-US 10c
per 1
MMBTU
AUD mill
2021
Henry Hub USD
(2.7)
2.7
(1.7)
1.7
Sensitivity to fertiliser price and ammonia movements during
the year
The table below shows the sensitivity of the Group’s profit before
tax to a US$10 per tonne change in Ammonium Phosphates, Urea
and Ammonia prices. The sensitivity is based on actual tonnes
manufactured and sold by the Group that is sensitive to commodity
price changes and the average AUD:USD exchange rate (excluding
the impact of hedging) for the year:
+ US$10
per tonne
AUD mill
- US$10
per tonne
AUD mill
3.4
10.5
2.4
7.9
4.9
12.6
1.6
4.2
(3.4)
(10.5)
(2.4)
(7.9)
(4.9)
(12.6)
(1.6)
(4.2)
Price sensitivity
2022
Henry Hub USD
–
–
0.1
(0.1)
Granular Urea (FOB Middle East)
DAP/MAP (FOB China/Saudi)
Urea (FOB NOLA)
Ammonia (FOB Tampa)
2021
Granular Urea (FOB Middle East)
DAP/MAP (FOB China/Saudi)
Urea (FOB NOLA)
Ammonia (FOB Tampa)
114
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
Included in the table below are details of the Group’s derivative instruments at 30 September 2022, classified by hedge accounting type and
market risk category:
Balance at 30 September 2022
During the period
Carrying
amount of
hedging
instrument
asset
$mill
Carrying
amount of
hedging
instrument
liability
$mill
Fair value
hedge
adjustment of
hedged item
$mill
Balance
of gains/
(losses) in
reserves
before tax
$mill
Gains/
(losses)
recognised in
reserves (1)
$mill
Reclassification
of (gains)/ losses
from reserves to
profit or loss (1,4)
$mill
Note
30 September 2022
Cash flow hedges
Foreign exchange risk on forecast sales & purchases
Forward exchange contracts
Foreign exchange options
Cross currency interest rate swaps
Discontinued hedge (2)
Commodity price risk on forecast purchases
Commodity swaps
Discontinued hedge (2)
Interest rate risk on highly probable debt
Interest rate swaps
Cross currency interest rate swaps
Discontinued hedge (2)
Total cash flow hedges
Net investment hedges
Foreign exchange risk on foreign operation
Cross currency interest rate swaps
Interest bearing liabilities
Discontinued hedge (2)
Total net investment hedges
Fair value hedges
Foreign exchange risk on HKD borrowings
Cross currency interest rate swaps
Interest rate risk on fixed USD, HKD and AUD bonds (3)
Interest rate swaps
Discontinued hedge
Total fair value hedges
Equity instruments
Total net
(8)
16.3
–
–
–
–
–
(22.5)
(6.7)
–
–
–
–
12.9
(27.6)
–
–
–
–
29.2
(56.8)
–
–
–
–
8.1
–
–
8.1
–
–
–
–
–
–
(95.8)
–
(95.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
102.6
6.2
108.8
(3.4)
(6.7)
–
(56.6)
0.1
0.2
12.4
–
(52.2)
(106.2)
–
(121.3)
(531.7)
(653.0)
–
–
–
–
–
(17.0)
(12.1)
5.8
4.8
(52.6)
7.0
4.4
3.6
(0.1)
0.1
(39.1)
25.0
(71.9)
(23.4)
(70.3)
–
–
–
–
–
–
–
3.9
–
–
–
–
16.2
20.1
–
–
–
–
–
–
–
–
–
37.3
(152.6)
108.8
(776.2)
(109.4)
20.1
(1) Gains or losses recognised in the reserves will be reclassified to the same line item in the profit or loss as the underlying hedged item when the underlying forecast transaction occurs.
(2) Gains or losses on discontinued hedges that were in cash flow hedge or net investment hedge relationships remain in the reserves until the underlying transactions occur or upon disposal of the
underlying net investment. Any changes in the market value of the discontinued hedges are recognised in the profit or loss from discontinuation.
(3)
Interest rate swap contracts effectively convert USD500m, AUD181m and HKD560m of the Group’s fixed interest rate borrowings to floating interest rates. The fair value hedge adjustment
of a hedged item where the hedging instrument is discontinued remains in the carrying amount of the hedged item and is amortised to the profit or loss over the life of the hedged item.
(4) At 30 September 2022, there were no gains/losses that were transferred from reserves to profit or loss in relation to ineffective hedges.
115
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
Included in the table below are details of the Group’s derivative instruments at 30 September 2021, classified by hedge accounting type and
market risk category:
30 September 2021
Cash flow hedges
Foreign exchange risk on forecast sales & purchases
Forward exchange contracts
Foreign exchange options
Cross currency interest rate swaps
Discontinued hedge (2)
Commodity price risk on forecast purchases
Commodity swaps
Commodity options
Discontinued hedge (2)
Interest rate risk on highly probable debt
Interest rate swaps
Cross currency interest rate swaps
Discontinued hedge (2)
Total cash flow hedges
Net investment hedges
Foreign exchange risk on foreign operation
Cross currency interest rate swaps
Forward exchange contracts
Interest bearing liabilities
Discontinued hedge (2)
Total net investment hedges
Fair value hedges
Foreign exchange risk on HKD borrowings
Cross currency interest rate swaps
Interest rate risk on fixed USD, HKD and AUD bonds (3)
Interest rate swaps
Cross currency interest rate swaps
Discontinued hedge
Total fair value hedges
Held for trading (4)
Cross currency interest rate swaps
Total held for trading
Equity instruments
Total net
Balance at 30 September 2021
During the period
Carrying
amount of
hedging
instrument
asset
$mill
Carrying
amount of
hedging
instrument
liability
$mill
Fair value
hedge
adjustment of
hedged item
$mill
Balance
of gains/
(losses) in
reserves
before tax
$mill
Gains/ (losses)
recognised in
reserves (1)
$mill
Reclassification
of (gains)/ losses
from reserves to
profit or loss (1,5)
$mill
Note
42.3
16.7
0.8
–
1.9
–
–
0.1
0.1
–
61.9
–
–
–
–
–
0.1
23.7
–
–
23.8
0.3
0.3
3.0
89.0
(16.8)
(24.4)
–
–
(9.0)
–
–
(30.8)
–
–
(81.0)
(1.5)
–
–
–
(1.5)
–
(10.7)
(0.3)
–
(11.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(7.8)
–
2.9
(4.9)
–
–
–
8.7
(12.5)
(4.8)
(7.9)
(6.9)
–
(4.2)
8.8
0.1
(68.5)
(87.2)
(25.0)
–
(49.4)
(508.3)
(582.7)
–
–
–
–
–
–
–
(17.0)
(93.5)
(4.9)
(686.9)
10.3
(12.2)
(4.8)
(17.7)
(10.1)
(0.4)
2.4
28.6
–
(16.9)
(20.8)
(98.3)
(90.5)
(49.4)
263.5
25.3
–
–
–
–
–
–
–
–
4.5
–
–
–
12.5
–
–
(2.2)
–
–
12.1
22.4
–
–
–
–
–
–
–
–
–
–
–
–
–
22.4
(8)
(1) Gains or losses recognised in the reserves will be reclassified to the same line item in the profit or loss as the underlying hedged item when the underlying forecast transaction occurs.
(2) Gains or losses on discontinued hedges that were in cash flow hedge or net investment hedge relationships remain in the reserves until the underlying transactions occur or upon disposal of the
underlying net investment. Any changes in the market value of the discontinued hedges are recognised in the profit or loss from discontinuation.
(3)
Interest rate swap contracts effectively convert USD500m, AUD181m and HKD560m of the Group’s fixed interest rate borrowings to floating interest rates. The fair value hedge adjustment
of a hedged item where the hedging instrument is discontinued remains in the carrying amount of the hedged item and is amortised to the profit or loss over the life of the hedged item.
(4) Derivatives which are classified as held for trading are in economic hedge relationships that do not qualify for hedge accounting. These hedges are effective economic hedges or offsetting hedges
based on contractual amounts and cash flows over the life of the underlying item.
(5) At 30 September 2021, there were no gains/losses that were transferred from reserves to profit or loss in relation to ineffective hedges.
116
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
Credit risk: The risk of financial loss to the Group as a result of customers or counterparties to financial
assets failing to meet their contractual obligations.
Source of risk
Credit risk exposure
The Group is exposed to counterparty credit risk from trade and
other receivables and financial instrument contracts that are
outstanding at the reporting date.
The Group’s maximum exposure to credit risk at 30 September is the
carrying amount, net of any provision for impairment, of the financial
assets as detailed in the table below:
Risk mitigation
The Group minimises the credit risk associated with trade and
other receivables balances by undertaking transactions with
a large number of customers in various countries.
The creditworthiness of customers is reviewed prior to granting
credit, using trade references and credit reference agencies. Credit
limits are established and monitored for each customer, and these
limits represent the highest level of exposure that a customer can
reach. Trade credit insurance is purchased when required.
The Group mitigates credit risk from financial instrument contracts
by only entering into transactions with counterparties that have
sound credit ratings and, where applicable, with whom the Group
has a signed netting agreement. Given their high credit ratings,
the Group does not expect any counterparty to fail to meet its
obligations.
Trade and other receivables
Cash and cash equivalents
Derivative assets
2022
$mill
785.3
763.5
37.3
2021
$mill
517.0
651.8
86.0
1,586.1
1,254.8
Financial assets and financial liabilities that are subject to
enforceable master netting arrangements and are intended to be
settled on a net basis are offset in the Statement of Financial Position.
At 30 September 2022, the amount netted in other financial assets
and other financial liabilities is $79.8m (2021: nil).
Fair value
Fair value of the Group’s financial assets and liabilities is calculated
using a variety of techniques depending on the type of financial
instrument as follows:
» The fair value of financial assets and financial liabilities traded
in active markets (such as equity securities and fixed interest rate
bonds) is the quoted market price at the reporting date.
» The fair value of financial assets and financial liabilities not traded
in active markets is calculated using discounted cash flows. Future
cash flows are calculated based on observable forward interest
rates and foreign exchange rates.
» The fair value of forward exchange contracts, interest rate swaps,
cross currency interest rate swaps, commodity swaps and forward
contracts is calculated using discounted cash flows, reflecting
the credit risk of various counterparties. Future cash flows are
calculated based on the contract rate, observable forward interest
rates and foreign exchange rates.
» The fair value of option contracts is calculated using the contract
rates and observable market rates at the end of the reporting
period, reflecting the credit risk of various counterparties.
The valuation technique is consistent with the Black-Scholes
methodology and utilises Monte Carlo simulations.
Fair value hierarchy
The table below analyses financial instruments carried at fair
value by valuation method. The different levels have been
defined as follows:
» Level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities.
» Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
» Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
2022
Derivative financial assets
Derivative financial liabilities
Investment in Equity Instrument
2021
Derivative financial assets
Derivative financial liabilities
Investment in Equity Instrument
Level 1
$mill
–
–
–
Level 1
$mill
–
–
–
Level 2
$mill
37.3
(152.6)
–
Level 2
$mill
86.0
(93.5)
–
Level 3
$mill
–
–
–
Level 3
$mill
–
–
3.0
» The fair value of commodity swaps and commodity forward
Fair value of financial assets and liabilities carried at amortised cost
contracts is calculated using their quoted market price, where
available. If a quoted market price is not available, then fair value
is calculated using discounted cash flows. Future cash flows are
estimated based on the difference between the contractual price
and the current observable market price, reflecting the credit risk
of various counterparties. These future cash flows
are then discounted to present value.
» The nominal value less expected credit losses of trade receivables
and payables are assumed to approximate
their fair values due to their short term maturity.
Cash and cash equivalents, trade and other receivables, and trade
and other payables are carried at amortised cost which equals their
fair value.
Interest bearing liabilities are carried at amortised cost and have
a carrying value of $1,712.0m (2021: $1,668.8m) – refer to note 8.
The fair value of the interest bearing financial liabilities at
30 September 2022 was $1,655.0m (2021: $1,763.5m) and was based
on the level 2 valuation methodology.
117
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Risk management
For the year ended 30 September 2022
Key accounting policies
Foreign currency transactions and balances
The Group presents its accounts in Australian dollars. Foreign
currency transactions are translated into Australian dollars using
the exchange rates at the date the transaction occurs.
Monetary assets (such as trade receivables) and liabilities (such as
trade creditors) denominated in foreign currencies are translated
into Australian dollars using the exchange rate at 30 September.
Non-monetary items (for example, plant and machinery) that
are measured at historical cost in a foreign currency are not
re-translated.
Foreign exchange gains and losses relating to transactions are
recognised in the profit or loss with the exception of gains and losses
arising from cash flow hedges and net investment hedges that are
recognised in other comprehensive income.
Foreign operations
The assets and liabilities of the Group’s foreign operations are
translated at applicable exchange rates at 30 September. Income and
expense items are translated at the average exchange rates for the
period.
Foreign exchange gains and losses arising on translation are
recognised in the foreign currency translation reserve (FCTR).
If and when the Group disposes of the foreign operation, these gains
and losses are transferred from the FCTR to the profit or loss.
Derivatives and hedging
The Group uses contracts known as derivative financial instruments
to hedge its financial risk exposures.
On entering into a hedging relationship, the Group formally
designates and documents details of the hedge, risk management
objective and strategy for entering into the arrangement. The Group
applies hedge accounting to hedging relationships that are expected
to be highly effective in offsetting changes in fair value, i.e. where the
cash flows arising from the hedge instrument closely match the cash
flows arising from the hedged item.
Hedge accounting is discontinued when:
» The hedging relationship no longer meets the risk
management objective.
» The hedging instrument expires or is sold, terminated
or exercised.
Derivatives are measured at fair value. The accounting treatment
applied to specific types of hedges is set out below.
Cash flow hedges
Changes in the fair value of effective cash flow hedges are
recognised in equity, in the cash flow hedge reserve. To the
extent that the hedge is ineffective, changes in fair value are
recognised in the profit or loss.
Fair value gains or losses accumulated in the reserve are taken
to profit or loss when the hedged item affects profit or loss.
When the hedged item is a non-financial asset, the amount
recognised in the reserve is transferred to the carrying amount
of the asset when the asset is purchased.
Net investment hedges
Hedges of a net investment in a foreign operation are accounted for
in a similar way as cash flow hedges. Gains or losses on the effective
portion of the hedge are recognised directly in equity (in the FCTR)
while any gains or losses relating to the ineffective portion are
recognised in the profit or loss.
On disposal of the foreign operation, the cumulative value of gains
or losses recognised in the FCTR are transferred to profit or loss.
Fair value hedges
The change in the fair value of the hedging instrument and the
change in the hedged item are recognised in the profit or loss.
Hedge ineffectiveness
The Group aims to transact only highly effective hedge relationships,
and in most cases the hedging instruments have a 1:1 hedge
ratio with the hedged items. However, at times, some hedge
ineffectiveness can arise and is recognised in profit or loss in the
period in which it occurs. Key sources of hedge ineffectiveness for
the Group are as follows:
» Maturity dates of hedging instruments not matching the maturity
dates of the hedged items.
» Credit risk inherent within the hedging instrument not matching
the movement in the hedged item.
»
Interest rates of the Group’s financing facilities not matching the
interest rates of the hedging instrument.
» Forecast transactions not occurring.
» The hedge no longer qualifies for hedge accounting.
Classification of financial instruments
Financial instruments are classified into the following categories:
» Amortised cost (cash and cash equivalents, interest bearing
liabilities and trade and other receivables and payables).
» Fair value through other comprehensive income
(listed equity securities).
» Fair value through profit or loss (derivative financial instruments
except those that are in a designated hedge relationship).
118
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022 Notes to the Consolidated Financial Statements: Other
For the year ended 30 September 2022
19. Share-based payments
20. Key management personnel
disclosures
Key management personnel remuneration
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
2022
$000
9,249
128
102
503
2,137
12,119
2021
$000
10,706
144
67
183
2,495
13,595
Determination of key management personnel and detailed
remuneration disclosures are provided in the Remuneration Report.
Loans to key management personnel
In the year ended 30 September 2022, there were no loans to
key management personnel and their related parties (2021: nil).
Other key management personnel transactions
In the year ended 30 September 2022, there were no transactions
entered into during the year with key management personnel
(including their related parties).
Incentive Plans
The Long Term Incentive Plans (LTIs) are designed to link reward with
the key performance drivers that underpin sustainable growth in
shareholder value. With regard to the 2019/22, 2020/23 and 2021/24
LTIs, the performance conditions comprise relative total shareholder
return, the delivery of certain long term value metrics, absolute
return on invested capital and sustainability conditions
for the LTI 2021/24 plan.
Certain Executives have been awarded performance rights under
Short Term Incentive Plans (STIs) based on financial, safety and
strategic outcomes.
These arrangements support the Company’s strategy for retention
and motivation of its executives.
Expenses arising from share-based payment
transactions
Total expenses arising from share-based payment transactions
recognised during the period as part of employee benefit expense
were as follows:
Accounting value of performance rights issued
under the LTI and STI performance plans
2022
$mill
2021
$mill
3.1
3.2
2022
Number
2021
Number
Number of performance rights outstanding
under the LTI and STI performance plans
5,887,136
6,285,054
Details of the movements in LTI and STI performance rights are
disclosed in the Remuneration Report.
Key accounting policies
The rights to shares granted to employees under the terms
of the plans are measured at fair value. The fair value is
recognised as an employee expense over the period that
employees become unconditionally entitled to the rights.
There is a corresponding increase in equity, which is reflected
in the share based payments reserve.
The amount recognised as an expense is adjusted to reflect
the actual number of rights taken up, once related service
and other non-market conditions are met.
119
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Other
For the year ended 30 September 2022
21. Retirement benefit obligation
The Group operates a number of defined benefit plans in the
Americas and Asia Pacific to provide benefits for employees
and their dependants on retirement, disability or death.
The Group also makes contributions to defined contribution
schemes.
Financial position and performance
Net defined benefit obligation at 30 September
Present value of obligations
Fair value of plan assets
Net defined benefit obligation
2022
$mill
249.9
(237.4)
12.5
2021
$mill
307.2
(277.6)
29.6
Maturity profile of the net defined benefit obligation
The expected maturity analysis of the undiscounted defined benefit
obligation is as follows:
Within next 10 years
Within 10 to 20 years
In excess of 20 years
2022
$mill
198.2
113.8
39.7
Return on plan assets for the year ended 30 September
Actual return on plan assets
Composition of plan assets at 30 September
2022
$mill
(43.7)
2021
$mill
200.3
116.4
43.0
2021
$mill
33.9
Key assumptions and sensitivities
Principal actuarial assumptions
Discount rate (gross of tax)
Future salary increases
Sensitivity analysis
2022
2021
5.0% - 7.7% 2.3% – 7.7%
3.5% - 5.0% 2.0% – 5.0%
The sensitivity analysis is based on a change in a significant actuarial
assumption while holding all other assumptions constant. The
following table summarises how the defined benefit obligation as at
30 September 2022 would have increased/(decreased) as a result of
a change in the respective assumption by 1 percentage point:
Discount rate
Rate of salary increase
Key accounting policies
1 percent
increase
1 percent
decrease
(21.9)
1.4
26.0
1.3
All employees of the group are entitled to benefits from the Group’s
superannuation plan on retirement, disability or death or can direct
the group to make contributions to a defined contribution plan of
their choice. The Group’s superannuation plan has a defined benefit
section and a defined contribution section. The defined benefit
section provides defined lump sum benefits based on years of
service and final average salary. The defined contribution section
receives fixed contributions from group companies and the Group’s
legal or constructive obligation is limited to these contributions.
The liability or asset recognised in the Consolidated Statement of
Financial Position in respect of defined benefit superannuation plans
is the present value of the defined benefit obligation at the end of
the reporting period less the fair value of plan assets.
The percentage invested in each asset class:
Equities
Fixed interest securities
Property
Other
2022
2021
11%
79%
4%
6%
8%
85%
3%
4%
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are recognised
in the period in which they occur, directly in other comprehensive
income. They are included in retained earnings in the Consolidated
Statement of Changes in Equity and in the Consolidated Statement
of Financial Position.
Movements in plan assets/liabilities
Amounts recognised in Other Comprehensive Income
Notes
2022
$mill
2021
$mill
Gains arising from changes
in actuarial assumptions
Return on plan assets (less than)/greater
than discount rate
Total profit recognised in other
comprehensive income
Amounts recognised in Profit or Loss
67.4
(50.2)
17.2
Net interest expense
Defined benefit superannuation expense
(2)
(2)
(1.1)
(3.0)
1.9
28.9
30.8
(1.8)
(2.7)
Changes in the present value of the defined benefit obligation
resulting from plan amendments or curtailments are recognised
immediately in profit or loss as past service costs.
Contributions to the defined contribution section of the Group’s
superannuation fund and other independent defined contribution
superannuation funds are recognised as an expense as they become
payable.
Key estimates and judgments
The present value of the defined benefit obligation at the
reporting date is based on expected future payments arising
from membership of the fund. This is calculated annually
by independent actuaries considering the expected future
wage and salary levels of employees, experience of employee
departures and employee periods of service.
Expected future payments are discounted using market yields
on corporate bonds at the reporting date, which have terms to
maturity and currency that match, as closely as possible, the
estimated future cash outflows.
120
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Other
For the year ended 30 September 2022
22. Deed of cross guarantee
Entities that are party to a Deed of Cross Guarantee are included in
note 15. The Statement of Profit or Loss and Other Comprehensive
Income and the Statement of Financial Position for this closed group
are shown below:
Statement of Profit or Loss and Other
Comprehensive Income
Profit before income tax
Income tax (loss)/benefit
Profit for the year
2022
$mill
870.4
(164.8)
705.6
2021
$mill
177.5
5.7
183.2
23. Parent entity disclosure
Throughout the financial year ended 30 September 2022 the parent
company of the Group was Incitec Pivot Limited.
Parent entity guarantees in respect of debts
of its subsidiaries
The parent entity is part of a Deed of Cross Guarantee, under which
each entity guarantees the debt of the others.
Statement of Profit or Loss and Other
Comprehensive Income
Retained profits at 1 October
1,569.7
1,401.4
Profit for the year
Other movements in retained earnings
Dividend paid
705.6
6.2
(355.4)
183.2
4.5
(19.4)
Results of the parent entity
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Retained profits at 30 September
1,926.1
1,569.7
Statement of Financial Position
Statement of Financial Position
2022
$mill
2021
$mill
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Other financial assets
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Right-of-use lease assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Other financial liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Interest bearing liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
Retirement benefit obligation
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
548.2
470.7
671.7
23.0
23.6
1,737.2
5,221.2
2,165.6
111.3
249.7
235.6
7,983.4
9,720.6
1,097.3
18.5
57.7
148.9
118.9
1,441.3
574.0
115.6
1,242.5
95.0
97.0
388.2
2.3
2,514.6
3,955.9
5,764.7
3,806.2
32.4
1,926.1
5,764.7
566.4
235.3
385.3
20.3
64.6
1,271.9
5,045.4
2,066.0
123.9
240.2
229.7
7,705.2
8,977.1
1,051.0
21.4
52.9
77.2
82.4
1,284.9
204.2
125.6
1,236.4
46.3
165.4
348.0
17.0
2,142.9
3,427.8
5,549.3
3,806.2
173.4
1,569.7
5,549.3
2022
$mill
962.8
(20.9)
941.9
2022
$mill
1,214.7
9,219.5
1,110.0
4,317.6
4,901.9
2021
$mill
76.5
10.3
86.8
2021
$mill
930.2
8,847.2
1,003.7
4,531.3
4,315.9
3,806.2
3,806.2
(99.5)
1,195.2
4,901.9
(72.4)
582.1
4,315.9
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Reserves
Retained earnings
Total equity
Parent entity contingencies and commitments
Contingent liabilities of Incitec Pivot Limited are disclosed
in note 17.
Capital expenditure – commitments
Contracted but not yet provided for and payable:
2022
$mill
2021
$mill
Within one year
7.6
6.5
Tax consolidation
The Company and its wholly-owned Australian resident entities have
formed a tax consolidated group. As a result it is taxed as
a single entity. The head entity of the tax consolidated group is
Incitec Pivot Limited.
121
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Notes to the Consolidated Financial Statements: Other
For the year ended 30 September 2022
24. Auditor’s remuneration
25. Events subsequent to
2022
$000
2021
$000
reporting date
Capital Management
1,422.5
579.9
2,002.4
1,218.5
583.8
1,802.3
On 15 November 2022, IPL announced a final dividend of 17
cents per share, 100% franked, to be paid on 21 December 2022.
The record date for entitlement to this dividend is 6 December
2022. The total dividend payment will be $330.2m.
On 15 November 2022, IPL also announced that it intends to
undertake an on-market share buy back of up to $400m.
The proposed share buy back will be conducted in the ordinary
course of trading and the exact amount and timing of share
purchases will be dependent on regulatory requirements and
market conditions.
Strategic review of WALA and implications for
structural separation of the Explosives and
Fertilisers businesses
On 15 November 2022, IPL announced that it has received a number
of unsolicited approaches in relation to a potential acquisition of its
ammonia manufacturing facility located in Waggaman, Louisiana,
USA (WALA). The Company will undertake a review of the strategic
options for WALA in the near-term. Under any scenario, IPL intends
to maintain the strategic value of long-term supply of ammonia from
WALA into the Dyno Nobel Americas business. An estimate of the
financial impact cannot be made at this point.
The strategic review process will have implications for the timing of
the proposed structural separation of the Incitec Pivot Fertilisers and
Dyno Nobel businesses which was announced on 23 May 2022.
It is currently anticipated that the previously communicated target
completion date for the separation of early 2023 will likely be
extended by 6-12 months, pending the completion of the strategic
review process for WALA. There has been no impact on the financial
statements for FY2022 in relation to the proposed structural
separation other than the costs incurred to date which have been
classified as an individually material item and disclosed in the notes
to the financial statements.
Other than the matters reported on above, the directors have not
become aware of any other significant matter or circumstance that
has arisen since the end of the financial year, that has affected or may
affect the operations of the Group, the results of those operations, or
the state of affairs of the Group in subsequent years, which has not
been covered in this report.
Deloitte and related network firms
Audit or review of financial reports
Group
Subsidiaries and joint operations
Other assurance and agreed-upon procedures
under other legislation or contractual
arrangements not required to be provided
by the auditor
Other services:
Other consulting services
Total remuneration
Non-Deloitte audit firms
Audit services
Total remuneration of non-Deloitte audit firms
649.3
70.4
80.9
–
2,732.6
1,872.7
2.6
2.6
8.3
8.3
From time to time, the auditors provide other services to the Group.
These services are subject to strict corporate governance procedures
which encompass the selection of service providers and the setting
of their remuneration. The Audit and Risk Management Committee
must approve individual non audit assurance engagements provided
by the Group’s auditor above a value of $100,000, as well as where
the aggregate amount exceeds $250,000 per annum.
122
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Directors’ Declaration
on the Consolidated Financial Statements set out on pages 85 to 122
In accordance with a resolution of the directors of Incitec Pivot Limited (the Company), we state that:
1.
In the opinion of the directors:
(a) the consolidated financial statements and notes, set out on pages 85 to 122, are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the financial position of the Company and the Group as at 30 September 2022 and of their
performance for the year ended on that date; and
(ii) complying with Accounting Standards in Australia (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed on page 91; and
2.
3.
(c) there are reasonable grounds to believe the Company will be able to pay its debts as and when they become due and payable.
There are reasonable grounds to believe that the Company and the controlled entities identified in note 15 will be able to meet
any obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between the
Company and those subsidiaries pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The directors have been given the declaration by the Chief Executive Officer and the Chief Financial Officer as required by section 295A
of the Corporations Act 2001 for the financial year ended 30 September 2022.
Brian Kruger
Chairman
Jeanne Johns
Managing Director & CEO
Melbourne, 15 November 2022
Melbourne, 15 November 2022
123
FINANCIAL REPORTIncitec Pivot Limited Annual Report 2022
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Tel: +61 3 9671 7000
www.deloitte.com.au
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee mmeemmbbeerrss ooff IInncciitteecc PPiivvoott LLiimmiitteedd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Opinion
We have audited the financial report of Incitec Pivot Limited (the “Company”) and its subsidiaries (the “Group”),
which comprises the consolidated statement of financial position as at 30 September 2022, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 30 September 2022 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company,, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific and the Deloitte organisation
124
Incitec Pivot Limited Annual Report 2022
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr
CCaarrrryyiinngg vvaalluuee ooff ggooooddwwiillll aanndd nnoonn--ccuurrrreenntt
aasssseettss
Refer to Note 9 Property, plant and
equipment, Note 11 Intangibles and Note
12 Impairment of goodwill and non-current
assets in the financial statements.
As at 30 September 2022, the Group held
goodwill of $2,873.0 million, intangible
assets of $408.4 million and property, plant
and equipment of $4,246.9 million, which is
allocated to the Group’s cash generating
units (CGUs).
The assessment of the recoverable amount
is subject to a high level of judgement and
is based on management’s view of key
variables and market conditions. The Group
has prepared a value-in-use model to
determine the recoverable amount of each
CGU.
The Group’s Dyno Nobel Asia Pacific
(‘DNAP’) model
is highly sensitive to
changes in terminal value assumptions,
including natural gas prices, commodity
prices, terminal value growth rate and
discount rate.
Forecast assumptions used in assessing the
recoverable
incorporate
amount
management’s estimates of the potential
impacts of climate change
through
sustainability projects and de-carbonisation
initiatives which are subject to judgement.
Given the sensitivities of the terminal value
in the DNAP model, we
assumptions
consider this to be a Key Audit Matter.
Other Information
Our procedures included, but were not limited to:
• Understanding the relevant controls and process that
management has undertaken to assess the recoverable
amount
• In conjunction with our valuation specialists:
o Evaluating the appropriateness of the model used by
management to calculate the value-in-use of the CGUs.
o Assessing and challenging the key inputs to the DNAP
model and terminal value by:
§ Corroborating the key independent market based
into the terminal value to
assumptions built
external analysts’ reports, published
industry
growth rates and industry reports, considering the
impacts of climate change, where
potential
applicable;
§ Corroborating
key non-market based
assumptions,
from
sustainability projects and other Board approved
climate and de-carbonisation
initiatives, by
comparing Board approved forecasts to historical
performance to test the accuracy of management’s
forecasts;
§ Agreeing
and pricing
assumptions in the model to the Board approved
forecasts;
the
including
contracted
volumes
flows
cash
§ Comparing the discount rates applied to the
terminal value with an independently developed
rate; and
in the terminal value
§ Performing a range of sensitivity analysis on the key
including
assumptions
discount rates, natural gas prices, commodity
prices and foreign exchange rates used in the cash
flow forecasts.
We have also assessed the adequacy of the disclosures
included in the Notes 9, 11 and 12 to the financial statements.
The directors are responsible for the other information. The other information comprises the Directors’ Report,
which we obtained prior to the date of the auditor’s report, and also includes the following information which will
be included in the Group’s annual report (but does not include the financial report and our auditor’s report
thereon): About Us company information, Performance and Outlook, Sustainability, Corporate Governance and
additional securities exchange information, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed,
125
Incitec Pivot Limited Annual Report 2022
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
• Conclude on the appropriateness of the director’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group’s audit. We remain solely responsible for our
audit opinion.
126
Incitec Pivot Limited Annual Report 2022
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 63 to 82 of the Director’s Report for the year ended
30 September 2022.
In our opinion, the Remuneration Report of the Incitec Pivot Limited, for the year ended 30 September 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Melbourne, 15 November 2022
Terry Ludeman
Partner
Chartered Accountants
Melbourne, 15 November 2022
127
Incitec Pivot Limited Annual Report 2022
128
Incitec Pivot Limited Annual Report 2022 ADDITIONAL
INFORMATION
“Nothing matters more
than ensuring our people
get home safely every day.
”
129
Incitec Pivot Limited Annual Report 2022 SHAREHOLDER INFORMATION
As at 18 November 2022
Distribution of ordinary shareholder and shareholdings
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
shareholders
Number
of shares
Percentage of
issued capital
11,468
20,212
6,658
5,978
139
44,455
5,202,910
58,953,781
48,868,838
128,303,873
1,700,895,627
1,942,225,029
0.27
3.04
2.52
6.60
87.57
100%
The number of shareholders holding less than a marketable parcel of shares ($500) was 1,643 (based on the closing market price on
18 November 2022 of $3.91).
The holdings of the 20 largest holders of fully paid ordinary shares represent 86.04% of that class of shares.
Twenty largest ordinary fully paid shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Merrill Lynch (Australia) Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO EDA
BNP Paribas Noms(NZ) Ltd
Netwealth Investments Limited
Incitec Pivot LTI Plan Company Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
UBS Nominees Pty Ltd
Brazil Farming Pty Ltd
Total
Substantial shareholders
Number
of shares
Percentage of
issued capital
671,349,936
372,373,518
234,833,900
121,578,938
67,029,164
61,024,543
60,322,138
16,264,192
14,627,187
12,318,321
8,347,957
8,250,012
6,341,240
4,124,020
3,712,641
2,228,610
2,014,257
1,606,258
1,577,506
1,200,000
34.57
19.17
12.09
6.26
3.45
3.14
3.11
.84
.75
.63
.43
.42
.33
.21
.19
.11
.10
.08
.08
.06
1,671,124,248
86.04
The number of shares to which each substantial holder and the substantial holders’ associates have a relevant interest, as disclosed
in substantial holding notices given to IPL under the Corporations Act, are as follows:
Name
Janchor Partners Limited
State Street Corporation
Vanguard Group
Date Notice
Received
14 November 2022
14 September 2022
23 June 2022
Votes/Number
of shares
114,754,979
109,316,789
99,903,739
Percentage of
issued capital
5.91
5.63
5.14
Voting Rights for Ordinary Shares
Votes of shareholders are governed by the Company’s Constitution. In broad summary, but without prejudice to the provisions of these rules,
the Constitution provides for votes to be cast:
(a) on a show of hands, one vote for each shareholder; and
(b) on a poll, one vote for each fully paid share.
Unquoted Equity Securities
As at 18 November 2022, there were 5,916,011 of rights on issue, comprising of:
» 5,887,136 performance rights with 14 holders were on issue pursuant to Incitec Pivot employee incentive plans; and
» 28,875 share rights with 3 holders were on issue pursuant to the Non-executive Director minimum shareholding plan.
Performance rights and share rights do not carry any voting rights.
On-Market Share Purchases
During the 2022 financial year, 2,476,257 ordinary shares were purchased on-market at an average price of $3.65 per share for the purposes of
awards under IPL employee incentive plans and the Non-executive Director minimum shareholding plan. Please note that this is the average
price per security at which the securities were purchased during the financial year as required under the Listing Rules, not the actual price.
On-Market Share Buyback
On 15 November 2022, IPL announced its intention to undertake an on-market share buyback of up to $400m, to be conducted over the next
twelve months.
130
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022 FIVE YEAR FINANCIAL STATISTICS
Incitec Pivot Limited and its controlled entities
2022
$mill
2021
$mill
2020
$mill
2019
$mill
2018
$mill
Sales
6,315.3
4,348.5
3,942.2
3,918.2
3,856.3
Earnings before depreciation, amortisation, net borrowing costs, individually
material items (IMIs) and tax
Depreciation and amortisation (excluding IMI's)
Earnings before net borrowing costs, IMIs and tax (EBIT)
Net borrowing costs (excluding IMIs)
IMIs before tax
Taxation (expense) / benefit
Operating profit after tax and IMIs
Operating profit/(loss) after tax and IMIs attributable to non-controlling interest
1,857.7
(372.5)
1,485.2
(107.2)
(19.2)
(345.0)
1,013.8
0.1
Operating profit after tax and IMIs attributable to shareholders of Incitec Pivot Limited
1,013.7
934.9
(368.5)
566.4
(112.8)
(293.4)
(11.1)
149.1
–
149.1
(209.5)
358.6
19.4
1,819.4
3,928.9
324.8
730.5
(356.0)
374.5
(135.7)
(87.9)
(27.5)
123.4
–
123.4
(64.8)
188.2
54.6
1,529.9
4,071.7
326.3
605.3
(301.6)
303.7
(144.1)
–
(7.5)
152.1
(0.3)
152.4
–
152.4
121.7
851.0
(294.3)
556.7
(128.0)
(236.0)
18.1
210.8
2.9
207.9
(139.5)
347.4
157.4
1,550.8
4,190.0
357.7
1,471.5
4,004.3
336.1
(13.4)
1,027.1
355.4
2,654.3
4,246.9
379.4
3,281.4
3,000.9
3,019.7
3,179.5
3,046.6
301.7
316.6
343.4
101.5
95.5
10,863.7
9,390.6
9,291.0
9,379.5
8,954.0
1,658.6
1,427.1
1,227.2
2,418.0
1,331.8
166.7
101.3
102.3
86.1
75.6
IMIs after tax
Operating profit after tax before IMIs (net of tax)
Dividends paid
Current assets
Property, plant and equipment
Equity accounted investments
Intangible assets
Other non-current assets
Total assets
Current borrowings, payables and other liabilities
Current provisions
Non-current borrowings, payables and other liabilities
2,578.1
2,284.6
2,632.7
2,071.1
2,698.4
Non-current provisions
Total liabilities
Net assets
Shareholders’ equity
Equity attributable to non-controlling interest
Total shareholders’ equity
170.6
209.0
125.5
116.5
104.0
4,574.0
4,022.0
4,087.7
4,691.7
4,209.8
6,289.7
5,368.6
5,203.3
4,687.8
4,744.2
6,289.6
5,368.6
5,203.3
4,687.8
4,737.7
0.1
–
–
–
6.5
6,289.7
5,368.6
5,203.3
4,687.8
4,744.2
Ordinary Shares
thousands
1,942,225
1,942,225
1,942,225
1,605,784
1,630,214
Number of shares on issue at year end
thousands
1,942,225 1,942,225
1,942,225 1,605,784 1,630,214
Weighted average number of shares on issue (investor and ordinary)
thousands
1,942,225
1,942,225
1,734,435
1,610,122
1,664,617
Earnings per share
before IMIs
including IMIs
Dividends (declared)
Dividends (paid)
Dividend franking
Share price range
Stockmarket capitalisation at year end
Net tangible assets per share
Net Debt/EBITDA
Interest Cover
Net capital expenditure on plant and equipment (cash flow)
Net capital expenditure on acquisitions (cash flow)
Return on average shareholders funds
before IMIs
including IMIs
cents
cents
cents
cents
%
High
Low
Year end
52.9
52.2
27.0
18.3
100
$4.06
$2.97
$3.51
18.5
7.7
9.3
1.0
24
$2.94
$1.92
$2.94
10.9
7.1
–
3.4
–
$3.63
$1.67
$2.03
9.5
9.5
4.7
7.5
22
$4.24
$3.05
$3.39
20.9
12.5
10.7
9.4
12
$4.03
$3.34
$3.98
$mill
6,817.2
5,710.1
3,942.7
5,443.6
6,488.3
$
1.55
1.22
1.12
0.94
1.04
times
times
$mill
$mill
%
%
0.5
20.3
428.3
143.9
17.6
17.4
1.1
9.7
349.3
8.5
6.8
2.8
1.4
6.1
271.0
23.4
3.8
2.5
2.8
4.6
337.3
5.3
3.2
3.2
1.6
7.3
319.1
5.8
7.3
4.4
131
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022
I
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e
c
P
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o
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i
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t
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A
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132
ADDITIONAL INFORMATION
GLOSSARY
Our Company
Board
DNA
DNAP
IPF
Board of directors of Incitec Pivot Limited
Dyno Nobel Americas
Dyno Nobel Asia Pacific
Incitec Pivot Fertilisers
IPL or the Company
Incitec Pivot Limited
The Group, We, Us or Our
Incitec Pivot Limited and its subsidiaries
Titanobel
Titanobel, France
Financial and Remuneration
AASB
Australian Accounting Standards Board
BBSW
CGU
CPI
DRP
EBIT
EBITDA
EPS
FAR
FCTR
HIBOR
IMI
KMP
LIBOR
LTI
NPAT
PCP
ROE
ROIC
STI
TSR
TWC
Other
ASIC
ASX
CDP
CO2
Corporations Act
DJSI
ESG
GHG
GRI
IBP
LTIFR
TRIFR
TCFD
Bank bill swap rate
Smallest indentifiable group of assets that generate independent cash flows
Consumer price index
Dividend Reinvestment Plan
Earnings before interest and tax
Earnings before interest, tax, depreciation and amortisation
Earnings per share
Fixed annual remuneration
Foreign currency translation reserve
Hong Kong Interbank Offered Rate
Individually material items
Key Management Personnel
London Inter-Bank Offered Rate
Long term incentive
Net profit after tax
Previous calendar period
Return on equity
Return on invested capital
Short term incentive
Total Shareholder Return
Trade working capital
Australian Securities and Investments Commission
Australian Securities Exchange
Carbon disclosure project
Carbon dioxide
Corporations Act 2001 (Cth)
Dow Jones Sustainability Index
Environmental, social and governance
Greenhouse gas
Global reporting intiative
Integrated business planning
Lost Time Injury Frequency Rate
Total Recordable Injury Frequency Rate
Task Force on climate-related financial disclosures
133
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022 CORPORATE DIRECTORY
For enquiries about the operations of the Company,
please contact our Investor Relations team:
Incitec Pivot Limited
Level 8, 28 Freshwater Place
Southbank Victoria 3006
Australia
Email: investor.relations@incitecpivot.com.au
Website: www.incitecpivot.com.au
Shareholder Information
The Company has an online share registry facility,
where shareholders can:
»
check their current and previous holding balances;
» update their address details;
» update their bank details;
»
»
review their transaction and dividend history;
confirm whether they have lodged a TFN/ABN exemption;
» elect to receive electronic communciations and
Company information eletroncially and change
their Annual Report election;
» download commonly used forms; and
»
subscribe to email announcements.
The online share registry can be accessed at https://investors.
incitecpivot.com.au/shareholder-information/shareholder-services.
For security reasons, shareholders will be required to verify their
identity before being able to access their records.
Annual General Meeting
Incitec Pivot Limited’s 2022 Annual General Meeting will be held on
16 February 2023.
Registered Office
Incitec Pivot Limited
Level 8, 28 Freshwater Place
Southbank Victoria 3006
Australia
Telephone: +61 3 8695 4400
Facsimile: +61 3 8695 4419
www.incitecpivot.com.au
Company Secretary: Richa Puri
Auditor
Deloitte Touche Tohmatsu
477 Collins Street
Melbourne Victoria 3000
Australia
Securities Exchange Listing
Incitec Pivot Limited shares are listed on the
Australian Securities Exchange (ASX: IPL).
Notes issued under Incitec Pivot’s
US$1,500,000,000 Euro Medium Term
Note Programme are listed on the
Singapore Exchange.
Incitec Pivot Limited ordinary shares are
traded in the US in the form of American
Depository Receipts (ADR) issued by the
Bank of New York Mellon as Depositary.
Share Registry and Other Enquiries
If you have any enquiries in relation to your
shareholding, share transfers or dividends,
please contact our share registry:
Link Market Services Limited
Locked Bag A14
Sydney South
New South Wales 1235
Australia
Telephone: +61 1300 303 780
General Facsimile: +61 2 9287 0303
Proxy Facsimile: +61 2 9287 0309
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
For enquiries about American Depositary Receipts:
Computershare Investor Services
150 Royall St., Suite 101
Canton, MA 02021
United States of America
Telephone: 1-888-269-2377
International: +1-201-680-6825
Email: shrrelations@cpushareownerservices.com
Website: www-us.computershare.com/investor
134
ADDITIONAL INFORMATIONIncitec Pivot Limited Annual Report 2022 135
Incitec Pivot Limited Annual Report 2022 Incitec Pivot Limited ABN: 42 004 080 264
Level 8, 28 Freshwater Place, Southbank Victoria 3006, Australia
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