ANNUAL
REPORT
2022
OUR PURPOSE
IS TO SUSTAINABLY
MOBILISE THE EARTH’S
RESOURCES
From the production and
supply of explosives, blasting
systems, mining chemicals
and geotechnical monitoring
to our advanced suite of digital
solutions and comprehensive
range of services, Orica is
one of the world’s leading
mining and infrastructure
solutions providers.
As a company with a proud history
of technical innovation, we continue to
help our customers improve operational
safety, productivity and efficiency.
More materials, metals and minerals
will be required to help the global
economy grow and transition to net
zero emissions. Our priority is to help
mobilise those resources, advance
technology and innovation from
mine-to-mill and accelerate our
decarbonisation. We’re collaborating with
our customers and other stakeholders
to find solutions to our industry’s
biggest challenges and move towards
a lower-carbon future, together.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
CONTENTS
Our FY2022 reporting suite
FY2022 year in review
FY2022 financial performance
Letter from our Chairman and Managing Director
Chief Financial Officer’s review
Reporting what matters
Our Business
Our global footprint
How we create value
Our operating context
Our strategy
Progress against our strategy
Risk
Our business model
Key performance indicators
Our stakeholders
Our Performance
Safe and responsible business
Financial performance
Technology and innovation
People and capabilities
Climate and the natural environment
Community and relationships
Governance
Board of Directors
Directors’ Report
Remuneration Report
Financial Report
Other Information
02
04
06
08
12
14
15
18
20
22
24
26
28
34
36
38
40
41
48
58
64
68
81
88
89
95
99
125
198
Our
strategy
24
Key
performance
indicators
36
Orica Annual Report 2022 |
01
OUR FY2022
REPORTING SUITE
Navigating this report
Reporting suite
Welcome to our FY2022 Annual Report,
which forms part of our corporate
reporting suite for the 2022 financial year.
We produce a suite of reports
to meet the needs of a wide
range of stakeholders.
STRUCTURE AND CONTENT
The elements of the Directors’ Report required by ASIC Regulatory
Guide 247 are covered on pages 04 to 124. This includes the Operating
and Financial Review (OFR) which is presented on pages 04 to 87.
Specific commentary on Orica’s financial performance is contained
on pages 48 to 57.
This report covers Orica operations worldwide over which we had control
for the financial year ending 30 September 2022, unless otherwise stated
(collectively ‘the Orica Group’, or ‘the Group’). All monetary amounts
are subject to rounding and are reported in Australian dollars, unless
otherwise stated.
INTEGRATED REPORTING
This report is designed to be read in its entirety and discloses both
financial and non-financial performance. Building on FY2021 progress,
it has been prepared in accordance with the Content Elements of the 2021
International Integrated Reporting Framework. An index is provided
on page 205. We have used the framework to demonstrate how our
purpose and values, and consideration of risks and opportunities, drive
our strategy. We have also articulated how we create and measure value
beyond financial performance. An overview of our value creation process
is provided on page 20.
The Orica Board has provided strategic oversight and governance
throughout the report drafting and review process. The FY2022 Annual
Report was approved at the November 2022 Board meeting.
VERIFICATION AND ASSURANCE
The Remuneration Report (pages 99 to 123) and Financial Statements
(pages 125 to 190) have been audited by KPMG. KPMG was also engaged
to provide limited assurance as to whether the Content Elements of the
2021 International Framework have been addressed in this report.
This assurance considers whether the Content Elements have been included
but does not extend to assessing the accuracy or validity of any statement
made throughout this report.
Ernst & Young (EY) have provided limited assurance over a selection
of material non-financial metrics including greenhouse gas (GHG)
emissions, gender diversity and potable water. The Limited Assurance
Statement will be published on our website together with Orica’s
Reporting Suite by the end of November 2022. We are progressively
extending external assurance over key metrics linked to our non-financial
performance and public improvement targets.
Material statements and other relevant information contained in this
report have been subject to an internal review and approval process
defined by our Corporate Reporting Verification Framework.
FY2022 CORPORATE
GOVERNANCE
STATEMENT
FY2022
CLIMATE
ACTION REPORT
In accordance with the
ASX Council’s Corporate
Governance Principles
and Recommendations
(4th Edition).
Climate-related
information aligned to the
recommendations of the Task
Force on Climate-related
Financial Disclosures (TCFD).
FY2022
MODERN SLAVERY
STATEMENT
FY2022 TAX
TRANSPARENCY
REPORT
In accordance with the
Australian Modern Slavery
Act 2018 (Cth) and the UK
Modern Slavery Act 2015.
Overview of our approach
to tax, governance structure,
and tax position.
The following documents are available
at orica.com/Investors
– Full Year Results Investor Presentation
– Full Year Results ASX Announcement
– Appendix 4E
DISCLAIMER: This report contains information that is based on projected and/or estimated expectations, assumptions or outcomes. Forward looking statements are subject to
a range of risk factors. Orica cautions against reliance on any forward-looking statements, particularly in light of the volatile and uncertain geopolitical and economic landscape.
Orica has prepared this information based on its current knowledge and understanding and in good faith, there are risks and uncertainties involved which could cause results
to differ from projections. Orica will not be liable for the correctness and/or accuracy of the information, nor any differences between the information provided and actual
outcomes, and reserves the right to change its projections from time to time. Orica undertakes no obligation to update any forward-looking statement to reflect events or
circumstances after the date of this report, subject to disclosure obligations under the applicable law and ASX listing rules.
02 | Orica Annual Report 2022
CORPORATE GOVERNANCE STATEMENT2022CLIMATE ACTION REPORT2022MODERN SLAVERY STATEMENT2022TAX TRANSPARENCY REPORT2022 Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
The United Nations Sustainable
Development Goals (SDGs) are
a set of 17 interconnected goals
that form a global benchmark
for achieving a sustainable
future for all. We are committed
to the SDGs, and our role in
advancing them.
Our material topics (refer page
14) have been mapped against
the SDGs to determine which
goals best reflect our business
context and strategy, capabilities
and key risks and impacts
across our value chain, with six
SDGs identified as a priority.
The SDG goals and targets
have informed our sustainability
strategy and are mapped
against our sustainability pillars,
as per right.
u i d e o ur work, every d
2
3
1
a
y
9
1
2
a
n
d
1
3
e
bility pilla r s g
1
9
3
Innovating
sustainable
solutions
Building
climate change
resilience
and circularity
v
e
r
y
w
h
e
r
e
a
ain
t
s
u
s
r
u
O
Fostering
relationships and
transparency
Protecting
our people,
communities and
the environment
6
1
8
9
1
6
3
1
1 2
8
3
An ESG Data Centre will be available on our website
by the end of November 2022. This will include
a Global Reporting Initiative (GRI) index that outlines
which topic specific GRI standards have been used
in the preparation of our reporting suite. A TCFD index
and Climate Action 100+ index is also included.
Orica Annual Report 2022 | 03
FY2022
YEAR IN REVIEW
$579m
UNDERLYING
EBIT1
FY2021: $427m
$60m
NPAT2
FY2021: $174m NLAT
14%
REDUCTION OF NET
SCOPE 1 AND 2
GHG EMISSIONS
SINCE FY2019
BASE YEAR3
FY2021: 13%
19.7%
GEARING4
FY2021: 34.6%
DIVIDEND
35.0
CPS
48% payout ratio5
TRAGICALLY
WE REPORTED
two
fatalities6
SICR7
0.157
FY2021: 0.210
04 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Strategic highlights
TECHNOLOGY OFFERING
STRENGTHENED THROUGH
THE ACQUISITION OF AXIS
MINING TECHNOLOGY AND
INTRODUCTION OF 17 NEW
PRODUCTS AND SERVICES
MAINTAINED SECURITY
OF PRODUCT SUPPLY FOR
OUR CUSTOMERS IN A
DISRUPTIVE MARKET
Enabled by the strength
and resilience of our global
manufacturing footprint
and supply network
INCREASED
ACCOUNTABILITY FOR
DELIVERING ON OUR
SUSTAINABILITY
COMMITMENTS
Announced a new target to
source 100 per cent renewable
electricity by 2040 and successfully
deployed emissions abatement
technology at Carseland, Canada
(1) Equivalent to profit / (loss) before financing costs and income tax, as disclosed in Note 1(b) to the financial statements, before individually significant items.
Includes contribution from discontinued operation (Minova).
(2) Net profit/loss after tax attributable to shareholders of Orica Limited.
(3) Target to reduce Scope 1 and 2 emissions by at least 40 per cent by 2030, from 2019 levels. FY2022 outcome of 14 per cent below FY2019 levels includes
the surrender of 60,000 Australian Carbon Credit Units to proactively maintain our net emissions below a regulatory emissions limit in Australia.
(4) Net debt/(net debt + equity), where net debt excludes lease liabilities, as disclosed in Note 3 to the financial statements.
(5) Dividend amount/Net profit after tax before individually significant items attributable to shareholders of Orica Limited.
(6) An incident at a customer site in remote far east Russia resulted in the fatality of one of our employees in July 2022. We are also reporting a contractor
fatality in Kazakhstan from FY2021. The incident – a fall from an Elevated Work Platform (EWP) – was reported through our Whistleblowing channels
and was subject to a thorough investigation. Further detail is provided on page 41 of this report.
(7) Serious injury case rate (unit of measure: per 200,000 hours worked).
Orica Annual Report 2022 | 05
FY2022
FINANCIAL
PERFORMANCE
Segment
results
Our improved
financial performance
in FY2022 reflects
solid volume growth,
increased utilisation of
manufacturing plants,
improved commercial
discipline in both
customer and supply
contracts and increased
customer preference
for premium products.
06 | Orica Annual Report 2022
AUSTRALIA PACIFIC
AND ASIA
NORTH AMERICA
The 31 per cent increase in EBIT
on the prior corresponding
period (pcp) was largely driven by
contract improvements, increased
ammonium nitrate (AN), electronic
blasting system (EBS) and cyanide
volumes, a shift to premium
products, and improved fixed cost
recovery from higher utilisation
of manufacturing plants.
The 23 per cent EBIT
increase on the pcp was
largely driven by new
contract wins in Canada,
higher services contribution,
improved contract terms
negotiated and favourable
foreign exchange.
External sales revenue
$2,723.6m
FY2021 $2,105.9m
External sales revenue
$1,570.9m
FY2021 $1,229.6m
EBITDA1
$550.6m
FY2021 $453.9m
EBIT2
$366.6m
FY2021 $279.7m
EBITDA1
$191.3m
FY2021 $168.9m
EBIT2
$132.4m
FY2021 $107.9m
AN and Emulsion Volumes
(‘000 tonnes) 1,767
FY2021 1,745
AN and Emulsion Volumes
(‘000 tonnes) 1,106
FY2021 1,013
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
LATIN AMERICA
EUROPE, MIDDLE EAST
AND AFRICA
ORICA MONITOR
The significant increase in
EBIT on the pcp was largely
driven by commercial
discipline on both customer
and supply contracts,
improved product mix and
technology penetration.
The significant increase in
EBIT on the pcp was driven
by positive product mix
benefits in Initiating Systems,
contractual improvements
and contribution from new
growth projects in Africa
and the Emirates.
The growth in the Orica
Monitor result was driven
by growth in radar sales
and recurring service plans
and commercial discipline.
External sales revenue
$1,656.5m
FY2021 $956.5m
External sales revenue
$1,027.0m
FY2021 $801.4m
External sales revenue
$118.4m
FY2021 $114.5m
EBITDA1
$99.5m
FY2021 $73.3m
EBIT2
$53.2m
2021 $28.9m
EBITDA1
$76.7m
FY2021 $56.1m
EBIT2
$45.5m
FY2021 $25.0m
EBITDA1
$48.5m
FY2021 $43.6m
EBIT2
$34.6m
FY2021 $30.7m
AN and Emulsion Volumes
(‘000 tonnes) 973
FY2021 929
AN and Emulsion Volumes
(‘000 tonnes) 415
FY2021 406
(1) EBIT before individually significant items and depreciation and amortisation expense.
(2) Equivalent to profit/(loss) before financing costs and income tax as disclosed in Note 1(b) within the financial statements.
Orica Annual Report 2022 | 07
LETTER FROM OUR
CHAIRMAN AND
MANAGING DIRECTOR
The strength and
resilience of our team,
and a commitment to
our refreshed strategy
have resulted in improved
financial performance
and growth across our
business. We faced risks
and challenges, many
outside of our control,
however, our team has
remained focused on our
competitive advantages
and opportunities to
capitalise on current
market conditions.
While we have made
progress this year, we
are deeply committed
to continually improving
performance across all
areas of our business.
“
Beyond blasting,
we are accelerating
customer adoption
of our new technologies
and demonstrating our
unique strengths and
capabilities in providing
digital workflows
and solutions, from
mine-to-mill.
”
08 | Orica Annual Report 2022
SAFETY AND WELL-BEING
Safety is our most important
priority, always. Tragically, we are
reporting two fatalities, one relating
to an incident at a customer site
in far-east Russia this year, and an
event in 2021 at a site in Kazakhstan.
Any workplace fatality has a
devastating and profound impact
on us. Our thoughts and sympathies
are with the affected families,
friends, and colleagues. We continue
to support those affected and
ensure we learn from the events and
reinforce the critical safety measures
in place to keep our people,
customers, and communities safe.
Positively, this year we achieved a
reduction in our Serious Injury Case
Rate (SICR) compared to FY2021.
A critical review of our key controls
of the Major Hazard Management
(MHM) program is underway and
will remain our priority for the
year ahead to improve our safety
performance.
OUR OPERATING
ENVIRONMENT
This year has presented both
challenges and opportunities for
our business, including geopolitical
tensions, trade sanctions, strong
global commodity prices, and
security of supply risks.
The Russia-Ukraine conflict caused
significant pressure on global
supply chains and input costs.
The strength and flexibility of our
global manufacturing and supply
network remain a key competitive
advantage for us and allowed Orica
to respond quickly to a changing
environment and focus on delivering
the needs of our customers.
Elevated commodity prices have
grown demand for copper, nickel,
and other future-facing commodities,
and the disruption of energy markets
has increased demand for coal. With
these being key commodity markets
for Orica, this has driven demand for
Orica’s products and services around
the world.
The escalation of the Russia-Ukraine
conflict, and imposed sanctions
and export restrictions, led to a
responsible and structured exit from
our Russian operations in FY2022.
Our focus during this transition,
was on the well-being of our
employees, engaging regulators
to ensure sanctions compliance,
managing supply interruptions,
and ensuring the safe and secure
supply of our products across our
global network.
Environmental Social and
Governance (ESG) performance
and climate change continue to
gain momentum across our industry
including changes to policy and
growing societal expectations.
Orica is committed to increasing
our accountability and continuing
to take tangible action to achieve
our ambition of net zero emissions
by 2050.
Inflation has emerged as a key
driver of volatility and uncertainty
for the global economy. While Orica
is experiencing rising costs including
salaries and raw material inputs, our
increased commercial discipline and
collaborative culture, and continued
focus on sustainable cost reduction
are providing a level of mitigation.
OUR PERFORMANCE
In November 2021, we refreshed
our strategy centred on optimising
our operations, delivering smarter
solutions, and partnering for
progress across our four business
verticals of mining, quarry and
construction, digital solutions,
and mining chemicals.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Sanjeev Gandhi
Managing Director and
Chief Executive Officer
Malcolm Broomhead AO
Chairman
At the core, we continue to pursue
organic growth from blasting.
We identified and capitalised on
further opportunities for growth
in quarry and construction, and
by expanding Orica’s presence
across future-facing commodities.
Beyond blasting, we are accelerating
customer adoption of our new
technologies and demonstrating
our unique strengths and capabilities
in providing digital workflows
and solutions from mine-to-mill.
Mining Chemicals also continues
to present growth opportunities
for our business.
Importantly, we are continuing to
progress with our strategic priorities
for climate change and understand
the opportunities ahead of us to
harness our technologies and
support a lower-carbon future.
Business performance
Our financial results in FY2022
are strong. Underlying earnings
before interest and tax (EBIT)
were $579 million, an increase
of 36 per cent on the previous
year. Statutory net profit after tax
(NPAT) in FY2022 was $60 million
including a $257 million significant
items expense after tax.
This positive performance reflects
the exceptional efforts of our team
to deliver in line with our refreshed
strategy. Our commercial discipline,
combined with the strength of our
global network has positioned us well
to capitalise on the current market
conditions and opportunities presented
by a growing commodities market.
In a difficult operating environment,
we strengthened our position as an
independent and consistent source
of supply with the ability to meet the
rising demands of customers across
the globe.
It was pleasing to see improved
performance across all regions, with
volume growth in Indonesia, and
Latin America, and a greater demand
for premium products across the
globe, in particular Australia, Latin
America, North America, Africa,
and the Nordics.
In August 2022, we announced
the acquisition of Axis Mining
Technology to position Orica as a
leading orebody intelligence provider
and broaden our customer offering,
from mine-to-mill. We also took
the opportunity to strengthen our
balance sheet with an equity raise,
which included funds towards
incremental trade working capital
requirements to manage volatility
and capitalise on opportunities
in our operating environment.
We continued our disciplined
approach to the balance sheet
and capital management, and
we are focused on improving
our operating cash generation.
We accelerated our customer
adoption of premium products,
blasting technologies and digital
solutions, increasing our digital
solutions adoption rate across
the globe by 63 per cent on the
previous year, well above target.
In addition, our technology portfolio
increased, with 17 new products
and services introduced to the
market, including our second
generation WebGen™ 200, 4D™
bulk explosives technology, and
Avatel™ in partnership with Epiroc.
This year we achieved a return on
net assets (RONA) of 11.4 per cent
which is within our target range of
10-12 per cent. The increase from
the prior year was driven by our
improved earnings performance.
Orica Annual Report 2022 | 09
LETTER FROM OUR CHAIRMAN AND MANAGING DIRECTOR
The final ordinary dividend of 22.0
cents per share unfranked, brings
the total dividend to 35.0 cents
per share, reflecting a payout
ratio of 48 per cent of underlying
earnings, which is in line with our
target range of paying out 40 to
70 per cent of underlying earnings.
People and culture
To support our future growth,
our people strategy focused on
building our talent and capabilities.
In FY2022, we implemented our
global culture and engagement
survey Our Say to understand
how we are tracking, and
opportunities to enhance the
employee experience. With a
participation rate of 65 per cent,
we achieved an overall engagement
score of 88 per cent, outperforming
global industry benchmarks.
While this is a good result, there
is always work to do. The results
of the Our Say survey identified
opportunities for greater support in
learning and development, increased
recognition of performance, and
flexibility and clarity of roles.
In response, we implemented a
series of programs and actions
designed to enhance the way we
work and support new learning and
development initiatives for our people.
We also commenced the design of a
new global reward and recognition
program to strengthen our high-
performance culture at Orica.
Sustainability performance
Sustainability is at the heart of our
purpose – to sustainably mobilise
the earth’s resources.
By accelerating our approach
to decarbonisation through
low-emissions technology and
creating innovative and sustainable
solutions, we are playing our
role to advance a safer and more
sustainable industry and society.
10 | Orica Annual Report 2022
To reach our target and reduce
operational emissions by at least
40 per cent by 2030 and achieve
our ambition of net zero emissions
by 2050, we are prioritising the
decarbonisation of manufacturing
processes, sourcing renewable
energy and deepening engagement
with suppliers across our value chain.
Our net Scope 1 and 2 emissions
were 1,883 ktCO2-e, a one per cent
decrease on the previous year.
We remain on track to meet our
targets with net Scope 1 and
Scope 2 greenhouse gas emissions
(GHG) 14 per cent below 2019
baseline levels.
In FY2022, we installed tertiary
abatement technology in one of our
nitric acid plants at our Carseland
manufacturing site in Canada,
which is now delivering 95 per cent
abatement efficiency from unabated
levels and enabling the production of
a lower-carbon intensity ammonium
nitrate (AN) for customers.
We continue to leverage our expertise
in technology to respond to a growing
interest in renewables, recycled,
lower-carbon and circular solutions
such as Cyclo™ and Fortis™ Protect.
We commenced the construction
and installation of low-emissions
technology at Kooragang Island,
Australia and formed Hydrogen
Hub partnerships with Origin Energy
and The Hydrogen Utility™ to
develop future green hydrogen
and ammonia opportunities.
Additionally, we announced our
commitment to source 100 per cent
renewable electricity by 2040 and
signed our first Power Purchase
Agreement (PPA) with Lightsource
bp for renewable electricity. We also
converted $1.3 billion of existing bank
debt facilities into sustainability-
linked loans, aligning our financing
strategy with our ESG goals.
Our Orica Impact Fund supports
our communities with the aim to
improve social equity and well-being,
education, and environmental
outcomes, and foster community
togetherness. We increased our
global contribution by 54 per cent
this year to $3.7 million helping
build safe, resilient, and thriving
communities.
GOVERNANCE
In FY2022, we welcomed Gordon
Naylor to the Orica Board as an
independent, Non-executive Director.
Gordon brings over 30 years of
experience in operational and
financial leadership roles and deep
expertise in engineering, global
supply chain, and information
systems strategy and implementation.
In October 2022, we announced a
change to our Executive Committee
with Christopher Davis, Chief
Financial Officer, leaving Orica and
Kim Kerr appointed to the position.
Kim joined Orica in September 2022
in the position of Vice President
of Group Finance and brings over
16 years of experience in finance,
treasury, investor relations, and
commercial leadership.
We updated Orica’s Whistleblower
Policy and implemented important
updates to our Code of Business
Conduct to reflect changing societal
expectations, support our culture
of safety, and emphasise our
strong position on respect for
First Nations Peoples, human
rights, modern slavery, and
workplace sexual harassment.
OUTLOOK
Safety remains our number one
priority. We are committed to
improving our safety performance,
living up to our values and keeping
our people, customers and
communities safe.
Our customers’ appetite for new
technology and our refreshed
strategy sets us on a clear pathway
to drive growth from blasting
technology and accelerate the
adoption of our new technologies
and digital solutions from mine-to-
mill, growing beyond blasting.
By maintaining our disciplined
approach to commercial
management, we will continue
to capitalise on opportunities
presented by market conditions
and diversify our portfolio in
future-facing commodities and
quarry and construction markets.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
We expect the demand for critical
minerals to remain strong in the year
ahead, and we are well-positioned
to navigate ongoing external
challenges with the strengths of
our global network and culture,
and a strengthened balance sheet.
We are making significant progress
towards a simpler, more efficient,
and more sustainable organisation.
We are committed to accelerating
our sustainability agenda and
helping our customers achieve their
targets while remaining competitive
in a lower-carbon future and
delivering value for our shareholders
and other stakeholders.
On behalf of our Board and the
Executive team, we would like to
thank the entire Orica team for their
ongoing dedication and commitment
in what has been another tough
year. We are in a good position to
continue our momentum and drive
our strategy for growth.
We thank our shareholders,
customers, and industry partners,
for your continued support of Orica.
Malcolm Broomhead AO
Chairman
Sanjeev Gandhi
Managing Director and
Chief Executive Officer
“We are making
significant progress
towards a simpler,
more efficient, and
more sustainable
organisation.”
Orica Annual Report 2022 |
11
CHIEF FINANCIAL
OFFICER’S REVIEW
I am pleased to present
an improved financial
performance this year,
despite the volatile
external environment.
Underlying earnings
before interest and
tax (EBIT) increased
by 36 per cent to
$579 million.
The growth in earnings was driven
by improved commercial discipline in
both customer and supply contracts,
solid volume growth from strong
commodity market conditions, and
customers moving to more premium
products. We also increased our
utilisation rates at our manufacturing
plants to support increased demand,
improving our returns from those
assets and continued to grow
earnings from our digital solutions.
Statutory net profit after tax
(attributable to shareholders of
Orica Limited) was $60 million,
which included $257 million after tax
of net unfavourable significant items.
The charges reflect our decision to
exit our operations in Russia given
the difficult operating environment,
the significant decline in the local
economy in Turkey, and the flow
on impacts across our EMEA region.
It also includes the accounting
implications of the sale of non-core
businesses Nitro Consult AB and
Minova. For further details of the
significant items, refer to note 1(e)
of the financial statements on
page 137.
We continue to implement
cost reduction initiatives across
the business, in supply chain,
manufacturing and overheads
to address continued inflationary
pressures, high energy costs,
and supply chain dislocations,
which will remain an ongoing
challenge next year.
Now that we have stabilised
the ERP system (SAP), we are using
it to provide critical insights into
customers and contracts to ensure
pass-through mechanisms are
operating effectively, debtors are
being collected in a timely matter
and we are prioritising quality
contracts in a constrained supply
environment. This will contribute to
our focused effort on improving
our cash generation.
Return on net assets (RONA) is
a key measure of how efficiently we
use our assets. This year we achieved
11.4 per cent which is within our
target range of 10-12 per cent.
The increase from prior year was
driven by our improved earnings
performance.
12 | Orica Annual Report 2022
Kim Kerr
Chief Financial
Officer
We continue to deliver on our
strategic objective to monetise
non-core asset sales. We completed
the sale of Minova, and Nitro
Consult AB, as well as the Nowra
and Tappen land sales this year.
Additionally, in response to the
Russia-Ukraine conflict, we sold
and exited our operations in Russia.
INVESTING FOR GROWTH
IN DIGITAL SOLUTIONS
During the year we entered into
a binding agreement to acquire
100 per cent of Axis Mining
Technology (Axis). The transaction
was completed on 3 October 2022,
when payment of the upfront
acquisition purchase price of
$258 million was made. A deferred
earn-out payment up to a maximum
of $90 million, contingent on financial
performance and other conditions
being met, was also agreed.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
The transaction was funded by a
fully underwritten share placement
and a share purchase plan, which
together raised $691 million
in gross proceeds. After providing
for the upfront and deferred cost of
the Axis acquisition and associated
transaction and funding fees, the
remaining proceeds are being used
to fund incremental trade working
capital requirements and provide
balance sheet capacity.
The increase in trade working capital
requirements was predominantly
due to management’s decision to
increase inventory holdings in order
to ensure security of supply for our
customers, as well as the impact of
higher input prices, both impacted
by the Russia-Ukraine conflict.
I would like to thank our shareholders
for their support as we invest in
growth whilst ensuring we maintain
a strengthened balance sheet.
OUR CAPITAL MANAGEMENT
FRAMEWORK REMAINS
UNCHANGED
Our capital management framework
is based on three key objectives:
– maintaining our investment
grade credit rating;
– preserving the flexibility for
growth investment and to respond
to changes in the external
operating environment; and
– maximising returns to
shareholders.
Post completion of the successful
equity raising, Standard & Poor’s
revised our BBB investment grade
credit rating from ‘negative watch’
to ‘stable’.
We continued to apply our
disciplined approach to capital
expenditure to support the base
business and pursue growth
opportunities. Total capital
expenditure for the year was
$349 million, which was within
the guidance range of $340 million
to $360 million.
OUR STRENGTHENED
BALANCE SHEET PROVIDES
RESILIENCE DURING
VOLATILE TIMES
At year end, our net debt balance
was $912 million, our gearing of
19.7 per cent was below our target
range of 30 to 40 per cent, and we
had $2,678 million liquidity available
in cash and undrawn committed
bank debt facilities. Note that these
measures are before the $258 million
payment made in October 2022 for
the acquisition of Axis.
We refinanced $299 million of
committed bank debt facilities during
the year, and our average drawn
debt maturity is now 4.3 years.
We absorbed the redemption
of a bond maturity in October via
the utilisation of existing bank
committed debt facilities and our
next material bond maturity occurs
in September 2023 which we are
well placed to manage.
We recently converted $1.3 billion
of existing committed bank debt
facilities into sustainability-linked
loans. Our financiers have joined
Orica in recognising and supporting
our commitment to improving our
sustainability performance.
The dividend for the first half of
the year was 13.0 cents per share.
The final dividend of 22.0 cents per
share brings the full year dividend to
35.0 cents per share. This equates
to a full year payout ratio of 48
per cent, which is in line with our
range of paying out 40 to 70 per
cent of underlying earnings.
OUR PATHWAY TOWARDS
PROFITABLE GROWTH AND
VALUE CREATION
Our financial position is prudent
in the current volatile external
environment.
We remain focused on improving
our operating cash generation and
we will continue to apply our capital
management framework to guide
our investment decisions.
And as we continue to successfully
progress against our strategic
priorities, I am confident in our
ability to create value for all our
stakeholders.
I would also like to acknowledge
and thank the Orica finance
community for their support, and
everyone across the business for
their contribution to our improved
results in FY2022.
Kim Kerr
Chief Financial Officer
Orica Annual Report 2022 | 13
REPORTING
WHAT MATTERS
Each year, we perform a materiality assessment
to understand the topics that matter most to our
stakeholders. We use the results to inform our strategy,
prioritise resources, establish sustainability targets
and shape external reporting.
Our materiality assessment was refreshed this year in line with the International
Framework. Integrated Reporting methodologies prioritise topics which can substantively
affect Orica’s ability to create enterprise value and are most relevant to stakeholders
making economic decisions.
During FY2022 we confirmed existing topics remained relevant and considered
major global and industry developments as well as Orica’s sustainability commitments
and strategies. Internal and external stakeholder insights and employee engagement
surveys supported the validation of our material topics.
Material topics in FY2022
Over 30 material topics have been identified and prioritised with our most
material topics outlined in the table below. A full summary of material topics
and our FY2022 assessment is available on our website.
TOP 10 MATERIAL TOPICS
SDG LINK
Business resilience: The ability to quickly adapt to
disruptions while maintaining continuous business operations,
security of supply and safeguarding people and assets.
8
9
Economic performance: Orica’s financial performance,
operational performance, and organisational effectiveness.
8
9
Transition to a lower-carbon economy: Resilience to
climate-related impacts and risks, adapting the business
to enhance competitiveness across the value chain.
Product safety and security: Transparent processes
and systems for ensuring products are used for their
intended purpose.
Product quality and performance: Product conformance
to regulatory and industry standards to satisfy customer needs.
Safety: Worker health, safety and well-being throughout
the supply chain.
12
13
3
8
3
3
Ethical business conduct: Ensuring our business activities
and culture are responsible, transparent and compliant with
our legal and ethical obligations (e.g., anti-bribery, trade
sanctions, corruption, tax transparency).
8
16
Corporate governance: Oversight and accountability
corporate governance; managing ESG risk; compliance with
government sanctions and public disclosure requirements.
16
Environmental risk and compliance: Managing
environmental risks and impacts and managing the environmental
compliance of our operations and supply chain.
12
16
Greenhouse gas emissions: Arising in our operations
and supply chain from material sourcing, manufacturing,
transportation, workplaces and other business activities.
13
14 | Orica Annual Report 2022
Our most material topics have remained
largely unchanged however some changes
were made to other topics outside our
top 10, reflecting changing global and
business circumstances.
– We changed the topic name supply chain
sustainability to responsible sourcing
for improved clarity. Supply chain and
security of supply issues are covered in
our business resilience topic, which has
attracted greater focus this year due to
the disruption of global AN supply.
– Human rights, corporate culture and
Indigenous/First Nations Peoples
engagement topics are a key priority
reflecting growing scrutiny in our
industry and greater focus on improving
social outcomes in our communities.
– The focus on biodiversity has increased
significantly as our stakeholders raise
their expectations for companies to
protect and enhance nature.
FUTURE SUSTAINABILITY
STANDARDS
Various standard setters and regulatory
bodies1 have begun to refine the
concept of sustainability materiality
with the introduction of double and
dynamic materiality.
Double materiality acknowledges that
businesses should assess both the risks
and opportunities linked to ESG topics that
can influence enterprise value creation
(inward impacts) and the ESG impacts that
a company can have on the planet and
society (outward impacts). The concept
of dynamic materiality recognises that
the financial materiality of an ESG impact
can evolve over time and what appears
immaterial today, can become critical
tomorrow and into the future. In response
we have adjusted our approach and are
increasingly embedding material financial-
related ESG topics into our strategic and
financial planning to better navigate the
evolving ESG landscape and enhance our
oversight of emerging risks and issues.
We continue to monitor and respond
to evolving reporting standards and
approaches to materiality.
(1) European Union Corporate Sustainability Reporting
Directive (CSRD) and the International Sustainability
Standards Board (ISSB).
OUR
BUSINESS
Orica Annual Report 2022 |
15
IN FY2021, WE SHARED OUR REFRESHED PURPOSE
TO SUSTAINABLY
MOBILISE THE
EARTH’S RESOURCES
United with a common goal, our purpose
is the compass that will help us deliver value
to our stakeholders through our strategy,
our behaviours and our commitments.
Our values
We work as one team, always guided by our values. As a purpose-led,
responsible business, how we deliver value to our stakeholders
is as important as what we deliver.
Safety is our priority. Always
The most important thing is that we all return
home, safely, every day.
We respect and value all
Our care for each other, our customers, communities,
and the environment builds trusted relationships.
We act with integrity
We are open and honest, and we do what is right.
Together we succeed
Collaboration makes us better, individually, and collectively.
We are committed to excellence
We take accountability for our business and
for delivering outstanding results.
16 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
CASE STUDY: LIVING OUR VALUES
Together we succeed
Every day, our people bring our purpose
and values to life through a commitment
to safety, focus on teamwork and
collaboration, and a drive to deliver
positive outcomes for our customers,
community and other stakeholders.
Working with our customer, LKAB, we initiated
our WebGen™ wireless technology at the Kiruna
iron ore mine in Sweden. While the blast at
Kiruna was one of many for Orica – WebGen™
has fired more than 125,000 units in over 4,000
blasts globally across our sites – it was also a
unique milestone.
WebGen™ wireless technology delivers benefits
in safety and productivity, with no need for
downlines or connecting wires, and the ability
to initiate blasts on-demand, reliably and safely,
removing people from harm’s way. As part of
our early engagement with LKAB, our team
conducted surveys and testing at the Kiruna
iron ore mine in 2018 to discover the wireless
signal could not penetrate the magnetite ore.
While WebGen™ wireless technology initiates
groups of blastholes using communication
through rock and water, the highly magnetic
qualities of the magnetite ore created challenges
for our system to achieve a communication
signal and initiate blasts in this environment.
This was the first time this challenge had been
encountered. We engaged our global team of
WebGen™ experts and worked in collaboration
with LKAB to better understand the magnetite
orebody properties and used advanced diagnostic
tools to understand the surrounding environment.
The first blast using WebGen™ at Kiruna
was successfully initiated in June 2022.
This was an outstanding result in support of
our customer’s safety and productivity goals.
Orica Annual Report 2022 |
17
OUR
GLOBAL
FOOTPRINT
Our story began in 1874, when we first supplied explosives
to the Victorian goldfields in Australia. Since then, we have
grown to become one of the world’s leading mining and
infrastructure solutions providers.
GLOBAL REACH
With nearly 150 years of expertise
behind us, our community of on-site
crew, operators, engineers, scientists,
technologists and business specialists
support customers in surface and
underground mines, quarry, construction,
and oil and gas operations.
Our global network comprises continuous
and discrete manufacturing operations,
technical and monitoring centres, and
support offices. It is supported by a
network of joint ventures, ammonium
nitrate emulsion (ANE) plants and bulk
depots strategically located to serve
our customers around the world.
Sustainability is integral to our operations.
Our approach to sustainability begins
with ensuring we operate our business
responsibly, and by prioritising the safety
of our people, customers and communities.
We are in a unique position to leverage
our expertise in technology to create
safer and more responsible solutions
and deliver positive economic, social,
and environmental contributions through
our business activities.
18 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
DIVERSIFIED GLOBAL BUSINESS
Revenue by region(1)
2%
15%
23%
38%
22%
Australia Pacific and Asia
North America
Latin America
Europe, Middle East
and Africa
Orica Monitor
(1) Based on external sales, excluding Minova.
(2) Includes Orica Monitor.
Revenue by commodity(1)
Revenue by product/service type(1)
25%
21%
6%
8%
11%
13%
16%
Copper
Gold
Thermal Coal
Quarry and Construction
Other(2)
Iron Ore
Metallurgical Coal
6%
12%
4%
5%
36%
22%
15%
Bulk Emulsion
AN/ANFO
Initiating Systems
Onsite Services
Packaged Products
Mining Chemicals
Other
CUSTOMERS
IN MORE THAN
100
COUNTRIES
12,000+
EMPLOYEES
$6.8 b(3)
MARKET
CAPITALISATION
MAJOR OPERATIONS
Head Office
Regional Head Office
Monitoring Centre
Technology Innovation Centre
Discrete Manufacturing for Initiating Systems
and Packaged Explosives
Continuous Manufacturing Ammonium Nitrate
Continuous Manufacturing Sodium Cyanide
Emulsion Plants
Emulsifiers
Orica Presence
(3) As at 18 November 2022.
Orica Annual Report 2022 | 19
HOW WE CREATE VALUE
Operating safely and responsibly is the
cornerstone of our business. Our safety
and sustainability strategies underpin
everything we do and are designed to
empower our people to deliver enduring
value to our stakeholders.
We leverage our experience in technology
development, and our talented workforce,
to advance our core products and services
and innovate industry-leading, digital and
automated technologies. The execution
of our strategy and investment in growth
opportunities is also enabled through
access to financial capital, optimising the
use of natural resources, and the strength
of our global manufacturing and supply
network. We proactively collaborate with
stakeholders including customers, industry
partners and research bodies to drive
sustainable growth, contribute to
communities and solve shared challenges.
Our risk appetite guides our strategic
decision-making, supporting the allocation
of assets and resources.
Orica’s value creation process (below)
is based on the framework.
Our value creation reporting focuses
on the key inputs and activities that
lead to the outcomes aligned with
achieving our vision of becoming
the world’s leading mining and
infrastructure solutions company.
We discuss each component in more
detail throughout the Our Business and
Our Performance sections.
Our operating context
Page 22 We proactively monitor and respond to changes in our operating environment.
COMMODITY
DEMAND
ESG
ACTIONS
GEOPOLITICAL
TENSIONS
INFLATION
TECHNOLOGICAL
CHANGE
Our strategy
Page 24
We deliver solutions and technology
that drive productivity for our
customers across the globe.
– Smarter solutions
– Optimised operations
– Partnering for progress
r e b u s iness activities P
e n c e
Desig
n a
n
d
a
g
e 3
4
o
r c
u
O
Oreb o d y i n t e lli g
m
o
d
e
l
g
n
ti
s
Bla
Purpose
TO SUSTAINABLY
MOBILISE THE
EARTH’S
RESOURCES
O
r
e
p
r
o
c
e
s
s
i
n
g
o
p
t
i
m
i
s
a
t
i
o
n
Measure and m o n i
t o r
Risk appetite
Page 28
We execute our strategy within
the defined parameters of our risk
appetite which includes zero appetite
for fatalities, and a high appetite
for growth and innovation.
Our stakeholders
Page 38
We prioritise strong relationships with our stakeholders
to identify opportunities to better respond to their needs.
What we rely on
Our value drivers
SAFE AND
RESPONSIBLE
OPERATIONS
FINANCE
$
TECHNOLOGY
AND INNOVATION
PEOPLE AND
CAPABILITIES
CLIMATE AND
THE NATURAL
ENVIRONMENT
COMMUNITY AND
RELATIONSHIPS
20 | Orica Annual Report 2022
bility pilla r s g
a
in
a
t
s
u
s
r
u
O
u i d e o ur work, every d
a
y
a
n
d
e
v
e
r
y
w
h
e
r
e
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Sustainability
Page 25
Advancing safer, more
productive and socially
responsible practices to
contribute the raw materials
needed to support a net
zero emissions economy and
support societal ambitions.
bility pilla r s g
u i d e o ur work, every d
a
y
a
n
d
Innovating
sustainable
solutions
Building climate
change resilience
and circularity
e
v
e
r
y
w
h
e
r
e
a
in
a
t
s
u
s
r
u
O
Fostering
relationships and
transparency
Protecting
our people,
communities and
the environment
Outcomes
SAFE AND RESPONSIBLE OPERATIONS
Page 41
We are a values-driven organisation that is relentlessly focused on
preventing fatalities and serious injuries. The health and safety of
our people, customers and communities is our number one priority.
DELIVERING LONG-TERM SHAREHOLDER VALUE
Page 48
$
We aim to maintain a dividend pay-out ratio of 40 per cent
to 70 per cent of underlying earnings and a gearing target
of 30 per cent to 40 per cent so we can pursue growth
opportunities while meeting our debt compliance obligations.
ENABLING CUSTOMERS FOR THE FUTURE
Page 58
We are an agile and innovative organisation. We are
responding to the changing technological landscape of the
mining and infrastructure industries and supporting our
customers growth and sustainability goals. We partner with
industry stakeholders to solve shared challenges across the
mining value chain.
EMPOWERING A TALENTED AND DIVERSE WORKFORCE
Page 64
We strive to ensure our workforce is engaged through diversity
of thought and a culture of collaboration. We are investing in a
talent pipeline aligned with our net zero ambition and evolving
technology and stakeholder needs.
MINIMISING ENVIRONMENTAL IMPACT
Page 68
We aim to be a resourceful and resilient, solutions-focused
business which prioritises the protection and stewardship of the
environment. Managing physical and transitional climate risks is
positioning our business to prosper in a lower-carbon economy.
FOSTERING STRONG AND COLLABORATIVE RELATIONSHIPS
Page 81
We are maturing our stakeholder engagement processes to
better understand and respond to changing stakeholder needs
and expectations and contribute to local economic growth.
Orica Annual Report 2022 | 21
OUR OPERATING
CONTEXT
The last year has seen
unprecedented global
volatility, creating both
risks and opportunities
that impact how we
create value through
our business model.
22 | Orica Annual Report 2022
EXPECTATIONS
IN RELATION TO
ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
(ESG) ACTIONS
Link to key
value drivers
Changing societal expectations for
delivering positive ESG performance is
impacting the global resources sector with
market and policy momentum continuing
to gather pace, particularly on climate
change. Alongside climate, biodiversity,
other environmental concerns and social
issues such as diversity, equity and inclusion
and worker well-being are poised to remain
in the spotlight.
We are committed to addressing
material sustainability issues and providing
transparent disclosure on our performance.
We engage in regular, meaningful and
inclusive dialogue with our stakeholders.
Our collaborative, shared value approach
helps us anticipate, assess and address
risks, opportunities and impacts relating
to increasing societal expectations.
Our Stakeholders page 38.
CHANGING COMMODITY
DEMAND
Link to key
value drivers $
As much of the world continues to move
towards an energy transition, the demand
for copper, nickel and other future-facing
commodities which are crucial for the
manufacture of low-emission technologies
(such as batteries for electric vehicles, solar
panels and wind turbines for renewable
energy) remains strong. To achieve the
goals of the Paris Agreement, production
of these commodities will need to continue
to increase at pace, despite price
fluctuations in several commodities.
The Russia-Ukraine conflict has created
a global energy crisis. Energy flows and
markets has been disrupted, leading many
countries to continue to rely on thermal
coal as a key part of their energy mix.
While thermal coal production is still
expected to decline, shorter term
production remains strong, particularly
in the United States (US) and Australia.
We will continue to supply and service
our coal customers throughout the
energy transition.
We are continuing to actively grow our
presence in future-facing commodities,
which form a considerable proportion of
Australia Pacific and Latin America’s mining
pipeline. This provides growth opportunities
for our blasting business as well as digital
solutions, particularly in exploration and
resource definition activities, and processing
phases of the mining value chain.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
GEOPOLITICAL TENSIONS
AND SECURITY OF SUPPLY
INFLATION AND THE
RISK OF RECESSION
TECHNOLOGICAL
CHANGE
Link to key
value drivers $
Link to key
value drivers
$
Link to key
value drivers
Inflation has emerged as a key driver
of volatility and uncertainty for the
global economy.
Orica is not immune to inflationary impacts
as we experience rising costs including
salaries and raw material inputs. While our
commercial discipline and pass-through
mechanisms in contracts provide a level
of mitigation to these rising input costs, our
diverse customer and commodity portfolio
and digital solutions business, also limits
our strategic reliance on any one sector.
Our global network means we are inevitably
impacted by geopolitical tensions and other
global events that have the potential to
disrupt our operations, as well as that of
our customers. As countries prioritise their
domestic chemical requirements over export
and impose sanctions on many Russian
chemical producers, security of supply
of key production inputs has never been
more important.
Despite the difficult operating conditions,
the strength of our global manufacturing
and supply network means we have
been able to maintain security of supply for
our customers. Our AN plants in Australia,
Indonesia and Canada continue to provide
an independent and consistent source of
supply. Our ability to purchase third-party
explosive grade AN at scale has enabled us
to maintain continuity of supply in other
regions, including Latin America and
Africa. With global AN supply expected
to remain constrained in the near term,
our manufacturing and supply networks
will continue to be a source of competitive
advantage to Orica.
Our material risks
and opportunities
on pages 32 and
33 reflect these
trends and further
detail how Orica
is managing
their impact.
The pace of technological change is
accelerating across the mining and
infrastructure industries, including higher
customer adoption rates for solutions that
improve safety, sustainability and productivity.
Competition is also increasing from businesses
focused on blasting related technologies,
and other players who are bringing digital
technology to our customers from other
industries. However, with our industry
leading digital solutions and blasting
technologies, we are uniquely positioned
to service the industry as it evolves.
We continue to build our mine-to-mill
portfolio of digital solutions. The acquisition
of Axis Mining Technology strengthens
our position in orebody intelligence and
increases our exposure to the exploration
and resource definition phase of the mining
value chain. Building on established
solutions, like BlastIQ™ and FRAGTrack™,
our digital growth strategy seeks to expand
our portfolio beyond blasting, through
acquisition and product development.
Adoption rates for WebGen™ are increasing
with the forthcoming commercial release
of WebGen™ 200 expected to create
opportunities in large-scale surface
mines. Customer trials of 4D™ are proving
successful and our first commercial trials
of Avatel™ are scheduled to occur in
late 2022.
With mineral conditions becoming more
complex as miners develop new projects
and prices fluctuate, we expect demand for
digital and technological solutions that
improve the understanding of orebodies and
deliver efficiencies across the mining value
chain to increase. Our digital solutions and
other technology offerings are well placed
to deliver value in this environment.
Orica Annual Report 2022 |
23
OUR
STRATEGY
To deliver our vision in a focused way,
we have a detailed strategy which
sets the direction of our business.
Smarter
Solutions
Excellence in service delivery
Speed to market
Proactively sell solutions
to create and share value
Optimised
Operations
Safe and cost competitive
manufacturing
Optimised, reliable and
secure supply chain
Partnering
for Progress
Empowering our diverse
teams of talented people
Champion for a safer,
and more sustainable
industry
In FY2021, we refreshed our
strategy to centre around optimising
our operations, delivering smarter
solutions and partnering for
progress to drive profitable growth.
While we continue to report our
results based on geographic
segment, to deliver on our strategy
and position ourselves for the future,
we are refocusing our strategic
priorities based on our four key
business verticals: mining, quarry
and construction, digital solutions,
and mining chemicals.
Blasting in mining for metals and
coal remains the core of our business
however we are growing our market
share in quarry and construction and
future-facing commodities. We have
a strong presence in copper and are
continuing to focus on growing our
exposure to other future-facing
commodities, particularly nickel
and lithium in Australia.
Beyond blasting, we are taking
our expertise in blasting solutions
upstream and downstream, with
our digital solutions vertical focusing
on integrated workflows from
mine-to-mill. Mining chemicals also
offer a number of opportunities in
the downstream processing phase
of the mining value chain.
Our sustainability strategy is
fundamental to our long-term success,
and nothing is more important
than keeping people safe. We are
deploying technologies that improve
safety outcomes for our people and
customers. Considerable progress is
being made to embed sustainability
into our policies, business strategy
and practices to capture new
opportunities, more ambitious
commitments and stakeholder
propositions. We are well positioned
to remain competitive in response
to macro environments and
trends, and the scale and pace
of economic transition.
Accelerating decarbonisation is a
critical component of our sustainability
agenda. We will continue to reduce
our operational GHG emissions and
collaborate with our suppliers and
customers to further reduce our
value chain emissions.
To support the delivery of our
commercial objectives, our people
strategy was refreshed in FY2022
with a renewed focus on attraction,
development and retention. Four key
priority pillars support an improved
employee experience to help build
the distinctive capabilities we need
to deliver our net zero ambition
and meet evolving technology and
stakeholder needs.
Robust governance and risk
management processes are in
place to support our strategy.
Orica Investor Day
Presentation 2022
24 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
What
sets us
apart
SUPERIOR,
INNOVATION-LED
CUSTOMER
OUTCOMES
SECURE, RELIABLE
LOCATIONALLY-
ADVANTAGED
SUPPLY
Leveraging our
competitive advantage
To successfully execute our
strategy, our core strengths of
delivering superior customer
outcomes and security of supply
are more important than ever.
The strength of our global
manufacturing and supply
network, our ability to leverage
our purchasing scale, logistics
capabilities, commercial agility,
and a commitment to excellence
by our teams, has enabled us to
continue to meet customer
needs as we navigate difficult
operating conditions, particularly
the global AN market disruption
arising from the ongoing
Russia-Ukraine conflict and
elevated energy prices in Europe.
ENABLING ENDURING BUSINESS PERFORMANCE
THROUGH SUSTAINABILITY
As one of the world’s leading
mining and infrastructure solutions
provider with global manufacturing
capability, responsibly managing
our impacts to society and
supporting a transition to a net
zero economy is fundamental
to creating sustainable value for
our stakeholders.
We recognise the responsibility
we are entrusted with, and the
unique opportunity to harness our
technology and digital solutions
to advance and champion for a
safer and more sustainable industry.
In FY2021, we developed our
comprehensive sustainability strategy
and roadmap. A core pillar of the
strategy is our stated ambition to
achieve net zero emissions by 20501.
We have developed a range of
measurable environment and social
actions and targets to deliver our
strategy, against which we will
continue to transparently disclose
progress. We are growing our
in-house sustainability capabilities
and progressively improving our
own sustainability performance
however, there is much more to do.
To support the global transition to
a lower-carbon economy, ammonia
and AN need to be decarbonised.
Today ammonia is made from
natural gas, with carbon dioxide
produced as a by-product. Green
ammonia can, however, be made
from hydrogen produced from
renewable energy and sustainably
sourced water.
Our industrial manufacturing
facilities have long lifespans.
This means the investment
decisions we make in coming
years will influence our efforts to
decarbonise as we consider lower
emissions technology options.
Demand for critical energy minerals
is expected to grow dramatically.
Major economic opportunities exist
in mining and minerals extraction for
copper, lithium, cobalt, nickel and
other future-facing commodities.
We are actively partnering with
our stakeholders to capitalise on
these opportunities and drive
sustainable growth.
(1) Our net zero emissions ambition covers
our global Scope 1 and Scope 2 emissions
under our direct control, and material
Scope 3 emission sources. Achieving this
ambition will require effective government
policy frameworks, supportive regulation
and financial incentives, and access to new
lower-carbon technologies operating at
commercial scale.
Future-facing
commodities
Quarries
Thermal and
metallurgical coal
Metals
G
MININ
Ore
processing
M
I
N
I
N
G
C
H
E
Construction
Tunnelling
QUARRY A
N
D
C
O
N
S
T
R
U
C
T
I
O
N
CUSTOMERS
S
N
L S O LUTIO
A
D I G I T
Orebody
intelligence
M
IC
A
LS
Chemical
stabilisation
Blast design
and execution
Recovery
and treatment
Measurement
and monitoring
Orica Annual Report 2022 | 25
PROGRESS AGAINST
OUR STRATEGY
We rely on our value drivers (page 20) and strong stakeholder
relationships, drawing on our technical expertise and culture to deliver
our strategy. We made good progress in FY2022 but there is more to
be done to realise the full potential of our technology solutions and to
support the global transition to a lower-carbon economy.
QUARRY A
N
D
C
O
N
S
T
R
U
C
T
I
O
N
CUSTOMERS
MINING AND QUARRY AND CONSTRUCTION (Q&C)
G
MININ
M
I
N
I
N
G
C
H
E
M
IC
A
LS
S
N
L S O LUTIO
A
D I G I T
AUSTRALIA PACIFIC AND ASIA (APA)
Australia Pacific maintains a diverse
commodity portfolio across iron ore,
gold, other metals and coal, backed by
world-class manufacturing plants at
Kooragang Island (KI) (ammonia and AN),
Yarwun (AN and cyanide), Burrup (AN)
and Helidon (EBS).
Asia has a growing population with
significant infrastructure needs translating
into strong demand for quarrying and
construction solutions. There is also
exciting long-term growth potential
for metals.
NORTH AMERICA
North American mining activity remains
resilient throughout the mining cycle.
We are uniquely positioned to benefit
from current AN market conditions
due to our manufacturing footprint
and long-term supply agreements.
26 | Orica Annual Report 2022
Strategic priorities
Progress in FY2022
– Diversify and grow our metals portfolio
– Increased exposure to copper and gold.
while continuing to capture a deepening
portion of future-facing commodities
exposure.
– Maintain manufacturing efficiency and
reliability to maximise volume growth
in a tight global AN market.
– Decarbonise our operations and capture
new growth opportunities to increase
resilience and support the transition.
– Create value for our customers through
our technology, including digital
solutions WebGen™ and 4D™.
– Become a premium supplier of EBS,
including to capitalise on the opportunity
created by China’s mandate to convert
all detonators used in the country
to electronic by 2026.
– Increase penetration into the
Indian market.
– Continued strong technology uptake,
notably in Digital Solutions.
– Strong commercial discipline resulted
in favourable contract renewals and
new contracts.
– Construction and installation of low
emissions technology at Kooragang
Island is underway.
– Hydrogen Hub partnerships formed
with Origin Energy and The Hydrogen
Utility™ to develop future green
hydrogen and ammonia opportunities.
– New ammonium nitrate emulsions
(ANE) plant in Malaysia on track
to deliver growth in country.
– Developed Reconciliation Action Plan
and implemented industry Respect@
Work toolkit, reinforcing our strong
position on Indigenous rights and
appropriate workplace behaviour.
Strategic priorities
Progress in FY2022
– Maintain strong commercial discipline
– Executed successful commercial
in an inflationary and tightening
supply environment.
– Drive growth in Q&C, focusing on
the US market following significant
infrastructure spend commitments
by the US government.
– Deliver profitable growth through
products that enhance sustainability
outcomes (e.g., explosives that reduce
fume and nitrate run-off).
negotiations across several key contracts.
– Grew Q&C revenue by 11 per cent
in FY2022.
– Carseland, Canada tertiary catalyst
abatement delivering 95 per cent
abatement of nitrous oxide emissions,
from unabated levels.
– Strong sales of Fortis™ Protect emulsion
that reduces risk of nitrate leaching.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
LATIN AMERICA (LATAM)
The LATAM mining industry is expected
to make a strong recovery as the impacts
of COVID-19 diminish. As a result of the
global energy transition, the region is also
poised to see significant growth in copper
and other future-facing commodities.
Strategic priorities
Progress in FY2022
– Drive synergies and sourcing benefits
through the discrete manufacturing
network, including increased EBS
assembly capacity and an increase
in component manufacturing for
initiating systems.
– Drive growth of digital solutions.
– Pursue customer growth in copper
and gold sectors.
– Improved commercial discipline
and pass-through mechanisms in
contracts to mitigate rising costs.
– Increased technology penetration
of digital solutions.
– Strong growth in copper.
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
Due to its large geographic footprint,
EMEA has a broad commodity exposure.
After exiting our Russia operations in
FY2022, the region has restructured its
business to focus on growth in mining
(predominantly in West Africa) and Q&C .
Strategic priorities
– Deliver technology-led differentiation in
the African copper and gold segments,
specifically in underground mining.
– Selective footprint expansion
focused on global miners and
future-facing commodities.
– Support our customers’ ESG priorities,
notably in Europe, leading to strong
growth in EBS products that are less
environmentally intense, and through
specialised bulk emulsions
that allow for safer blasting in
challenging environments.
Progress in FY2022
– Delivered on our commitment to exit
our Russia operations responsibly.
– Strong technology growth particularly
in Digital Solutions.
– New contracts in Africa beginning to
deliver profitable growth, particularly
in copper.
DIGITAL SOLUTIONS
G
MININ
M
I
N
I
N
G
C
H
E
M
IC
A
LS
QUARRY A
N
D
C
O
N
S
T
R
U
C
T
I
O
N
CUSTOMERS
S
N
L S O LUTIO
A
D I G I T
Strategic priorities
– Accelerate adoption of digital solutions.
– Integrate and optimise recently acquired
orebody intelligence businesses including
HIG, RIG Technologies International,
RHINO and Axis Mining Technology.
– Expand GroundProbe technology
offerings to cover all geotechnical
solutions.
Digital technologies are enabling blast
automation and allowing us to connect,
monitor and track information to make
blasts more predictable, more productive
and much safer. We are working to deliver
a suite of digital solutions that integrate
workflows, providing actionable data
and insights, from mine-to-mill.
Progress in FY2022
– Acquired Axis Mining Technology,
positioning Orica to become the
industry’s first integrated solutions
provider, from mine-to-mill.
Commodities central to the energy
transition, particularly copper and nickel,
MINING CHEMICALS
QUARRY A
N
D
C
O
N
S
T
R
U
C
T
I
O
N
Our premium emulsifiers business with a
manufacturing base in Deer Park, Australia,
provides a critical component to explosives
manufacturing across the world.
CUSTOMERS
Strategic priorities
G
MININ
M
I
N
I
N
G
C
H
E
M
IC
A
LS
S
N
L S O LUTIO
A
D I G I T
– Increase cyanide production volumes
at Yarwun through low-capital
debottlenecking efforts.
– Convert cyanide customers to sparge
product by leveraging our network of
transfer stations, decreasing the risk
of loss of containment.
– Drive technology-led services to support
customers in optimising their leaching
practices and maximising gold recovery.
Our cyanide business, which services over
80 customers globally, is underpinned by
our integrated manufacturing facility at
Yarwun and supported by a network of
transfer stations in key gold mining regions
(Malaysia, Ghana and Peru).
are becoming more complex and
expensive to mine. Digital orebody
technologies that can reduce risks
and cost will be vital.
– Increasing take-up of digital solutions,
with a 63 per cent increase in adoptions
in FY2022 compared to FY2021.
– Formulated an ESG Data Strategy and
minimum viable IT solution deployed
at our Kooragang Island manufacturing
site. The platform will be progressively
enhanced to support customer ESG
provenance and data transparency from
mine-to-mill.
Progress in FY2022
– Expanded our global cyanide distribution
network with the opening of a transfer
station in Port Klang, Malaysia, growing
our ability to provide industry leading
sparge technology.
– Expanded our customer base in an
increasingly tight cyanide market,
driven by strong global demand for
gold resulting in a 10 per cent increase
in cyanide volumes from prior year.
Orica Annual Report 2022 | 27
RISK
Our approach to risk management
Oversight and monitoring by the Board
Context
Our strategy and
risk appetite settings
are approved by
the Board.
Risk Identification
and Analysis
Risks are identified
and their impact
analysed by the business
on a regular basis.
Risk Treatment
and Evaluation
Adequate risk responses and
actions are implemented by
risk owners to reduce the
level of exposure, or capture
opportunities, within
approved appetite settings.
Risk Monitoring
Risk appetite performance
and material risks are
monitored through
regular reviews, deep
dives, key risk indicators
and other sources
of assurance.
Communication
and Reporting
Risk appetite and
material risk information
is communicated
and reported across
the business and
to the Board.
Risk identification, analysis and treatment by the business
OUR RISK APPETITE
In FY2021 we enhanced our risk management system by defining
risk appetite statements for the material risk categories of our business.
Our risk appetite statements, settings and risk limits set the boundaries
for our decision-making, ensuring we understand how to deliver our
strategic objectives and manage our operations within the risk appetite
set by the Board. Clear triggers for action were also established,
should we approach the approved risk limits.
Our risk appetite settings assist with the efficient allocation of capital
and resources, and the level of internal control required to reduce
risk exposures.
Risk Appetite Spectrum
Zero
Averse
Cautious
Recognise
& Monitor
Active
s
g
n
i
t
t
e
S
During FY2022, we continued to embed and refine our current
risk appetite statements. Our risk appetite dashboard became part
of regular risk reporting to enable effective monitoring and oversight
which has further strengthened the Board’s level of oversight,
as well as risk awareness across the business.
We continue to evolve the scope of our risk appetite statements
in response to our operating environment, stakeholder expectations
and strategic priorities. Climate change and human rights risk appetite
statements, and associated risk limits, are currently under development
and review.
Our risk management
system is informed and
shaped by our strategic
objectives, purpose,
values and risk appetite.
It allows for a proactive approach
to managing material risks and
emerging risks which have the potential
to significantly impact our operations.
Our approach continues to evolve in
response to the need for greater
business agility in an environment of
persistent and disruptive volatility.
To manage threats and opportunities,
risk management is embedded at every
level of the organisation. Risk strategy,
policy and processes are set at Group
level with the business responsible
for implementation.
Our risk management system
provides a framework through
which we can consistently identify,
assess, prioritise, manage, monitor
and report risks across the business
and is aligned with the principles
of the International Organization for
Standardization’s Risk Management
Guideline, ISO 31000:2018.
28 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
RISK OVERSIGHT AND GOVERNANCE
The ‘three lines model’ provides assurance that risks are effectively managed
in line with our policies, standards and procedures. It is the foundation
of our risk oversight and governance approach.
Orica Board
The Board oversees our risk management and internal control systems.
It sets and monitors the amount of risk that Orica is willing to accept in pursuing
our strategic objectives – our risk appetite. The Board also oversees our material risks
and regularly reviews and challenges, either directly or through its committees,
the effectiveness of the risk management process.
Executive Committee
The Executive Committee owns our material risks and is responsible for interrogating
the effectiveness of risk mitigation strategies and for monitoring our performance
against the approved risk appetite settings.
Line 1
Line 2
Line 3
Management is
responsible for
identifying, owning,
monitoring and
managing risks and
controls. They are
responsible for
risk leadership and
instilling a strong risk
management culture
across the business.
Our group functions
establish standards,
systems and processes
for identifying and
managing the risks
material to delivering our
strategy. They coach and
challenge the First Line
while working with other
risk disciplines.
Our Internal Audit function
provides independent
and objective assurance
over risks and controls.
They evaluate the
effectiveness of key
internal controls, risk
management and
governance processes
and communicate directly
with the Board and the
Executive Committee.
In line with our FY2021 refreshed strategy,
and in response to increased volatility in the
external environment, a detailed business-wide
risk assessment was undertaken in FY2022.
We assessed the impact of risks across several
dimensions including financial, safety, health,
environment and security (SHES), reputation,
legal and compliance, key projects, and customer
and production. Our material risks are described
on pages 32 and 33.
We embed risk
management at every
level of the organisation
to manage threats
and opportunities.
Orica Annual Report 2022 | 29
Harassment and
Respect@Work
We have a zero-tolerance approach to sexual harassment. To understand the adequacy
of our existing support and investigation processes with regard to the reporting of sexual
and other forms of harassment across our Australian operations, a review was conducted by
our Group Risk function. Key activities included stakeholder discussions and a review of our
policy and procedural framework against the Minerals Council of Australia’s Industry Code on
Eliminating Sexual Harassment. The Code establishes clear expectations for organisations to
develop a culture of respect that empowers individuals to raise concerns in a supportive and
protected way. As part of this process, we worked with external diversity and inclusion
experts to understand the risks to our business and the industry more broadly and identified
areas for improvement across our operations.
We have taken significant action to prevent sexual harassment through clear leadership
statements and increased education and awareness of the reporting channels available.
While important progress has been made, we continue to monitor the work environment
and progress towards a more diverse and inclusive workplace.
30
| Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Russia-Ukraine conflict
BUSINESS SCENARIO ANALYSIS
As the conflict in Ukraine escalated and sanctions and export restrictions were imposed
on Russia, our ability to do business in Russia was impacted. We immediately established
a cross-functional team to conduct a review of our operations in Russia, which ultimately
resulted in the divestment of our Russian operations. The team analysed plausible scenarios
to better understand the critical outcomes and key risks associated with each scenario.
In addition to sanctions, key risks which were considered included:
– safety and well-being of our people and communities
– sanctions compliance and reputation
– financial implications
– supply chain interruptions, specifically ammonium nitrate supply
– information technology including cyber-attacks
– loss of intellectual property
– insurance implications
Orica Annual Report 2022 |
31
Material risks and opportunities
Risk
Risk movement from prior year
Our response
Macroeconomic factors:
commodity demand
Uncertainty in the economic
growth outlook and material
fluctuations in commodity
demand could impact demand
and margins of the products
and services sold by Orica.
The volatility in macroeconomic
factors such as inflation, talent
availability, constrained global
supply chains and monetary
policy, is elevating the risk
of recession and uncertain
macroeconomic outcomes.
Our climate change scenario analysis on future commodity
demand helps us explore the relevant trends which have the
potential to impact the market demand for our existing
products and services.
We employ leading macroeconomic indicators to inform
our strategic planning.
We maintain a globally diverse customer base.
We continue to position our portfolio towards higher growth
commodities, including future-facing commodities. We are
servicing mines focused on future-facing commodities,
particularly nickel and lithium in Australia.
Our focus remains on ensuring contractual mechanisms
reflect our cost base and regional pricing strategies.
We continue to identify opportunities to improve profitability
through supply chain efficiencies.
Political and regulatory
Uncertain geopolitical dynamics
and regulatory changes could
impact our operations, result in
additional compliance obligations,
and increase our cost of
compliance.
Climate change
Transitioning to a lower-carbon
economy and physical climate
change effects have the potential
to impact the demand for our
products, disrupt our supply
chain and impede our ability to
maintain production levels and
service customer demand.
Geopolitical challenges
are increasing with policy
and security threats to
globalisation, free markets
and business continuity
driving greater uncertainty.
We actively monitor the political situation around our
operations and assess our exposure to political and regulatory
risks before selling or operating in new countries.
We engage regularly with stakeholders to remain informed,
enabling us to respond quickly to comply with the latest
regulations, economic sanctions and trade rulings.
Climate-related risks and
opportunities are increasing,
affecting government policy,
markets, the transition to
a lower-carbon economy
and rising stakeholder
expectations.
We expanded our practice of shadow carbon pricing,
established new commitments, deployed low emissions
technology and partnered with Origin Energy to collaborate
on the development of a green hydrogen production facility
in the Hunter Valley, Australia.
We are embedding climate risk into strategic and financial
planning to accelerate decarbonisation and enable action
across the value chain.
We assessed physical climate change impacts to our assets,
operating locations, major customer sites and critical ports
to inform the physical climate exposure posed over three
temperature scenarios.
We identify short-term emissions reduction initiatives and
exposure to carbon markets to increase resilience to transitional
risks and position our business for future opportunities.
We focus on opportunities to enhance our competitiveness
by working towards offering lower-carbon AN products.
Increasing society and
investor expectations
Failure to respond to the rapidly
shifting ESG expectations of our
key stakeholders could impact our
reputation and ability to operate.
Societal standards for
businesses to act responsibly
are increasing. Failing to
anticipate or respond could
see increased regulatory
burden, supply and/or
operational disruption,
damaged stakeholder
relationships and reputation.
We proactively engage our stakeholders to demonstrate
plans and actions with respect to our sustainability strategy
and roadmap.
We are strengthening the due diligence related to identifying
and managing the modern slavery and human rights impacts
across our operational activities.
We recognise the opportunity to create differentiation through
continuing to contribute to local communities and lift our ESG
ambitions, commitments and delivery.
Customer and technology
disruption
Rising adoption of new
technology and fast paced
competitor development could
impact our ability to commercialise
or generate an adequate return
on previous investments in
technology and services.
Competitor and customer
investment in technology
continues to accelerate
with a focus on automation,
digitalisation, data, hydrogen
and renewable energy
technology.
We continue to develop our products and maintain a
focus on accelerating adoption of our technology and
solutions to further support our customers in their growth
and productivity goals.
We are developing and implementing material and human
capital resource plans that underpin our new technology
growth aspirations and factor in speed-to-market and
excellence in service delivery.
We focus on the opportunities to accelerate the development
and commercialisation of new products and technology to
grow our market position.
32 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Risk
Risk movement from prior year
Our response
Cyber security
A compromise to the confidentiality,
availability and/or integrity of our
critical technology services and
data could impact our reputation
and ability to operate.
Global cyber threats continue
to outpace societies’ ability
to effectively prevent and
manage them.
Increased sophistication of
attacks drives the need for
constant control environment
improvement.
Ethical business practices
and good governance
Non-compliance with laws and
regulations including those relating
to competition, anti-bribery and
corruption could expose us to
penalties in the form of fines,
criminal sanctions, civil suits and
reputational damage.
A greater focus on strengthening
anti-bribery and corruption
laws, increasing penalties and
the adoption of protectionist
measures by countries has
increased the complexity of
trade compliance requirements.
Imposition of sanction
regimes on countries across
our global operations has
increased the compliance
risks of doing business.
We continuously review and strengthen our information
technology security controls to protect the confidentiality,
availability and/or integrity of our business systems and
operational technologies.
We train our people to increase awareness of security threats
and invest in systems and technologies to protect our data and
network access.
We assess our preparedness and response plans through
simulated scenario exercises.
We continue to focus on uplifting the security of our business
and implementing a robust cyber security framework to attract
new customers and suppliers.
We implement extensive compliance procedures and controls,
including for entering or selling our products and services into
new countries and screening our customers and vendors for
potential non-compliance to sanction regimes.
We maintain a comprehensive Code of Business Conduct and
review our high-risk business partners and joint venture partners.
We provide training to our people to ensure they do the
right thing and provide an independent ‘Speak-Up’ service
where they can raise concerns, anonymously if they wish.
We exited our Russian business operations responsibly.
Our number one priority is the prevention of harm. Our key
controls include compliance protocols, audit and inspection
programs, plant and equipment design standards, and asset
maintenance programs. Our Major Hazard Management (MHM)
program defines key safety controls and establishes rigorous
verification protocols. If harm were to occur, we have stringent
first response and emergency response management plans in
place across all our operations.
Our performance requirements and expectations for
environmental practices across our global network of sites,
supply chain and other operations requires us to identify and
understand our key environmental risks and to proactively
manage them to prevent or minimise impact to the environment.
We continue to explore opportunities to improve industry safety
standards and embed a culture of continuous learning where
we operate.
We monitor our comprehensive COVID-19 response plan
and adjust as circumstances change. Our core priorities are
protecting our people; maintaining reliable operations and
supply chains; supporting our communities; and monitoring
the impact of any disruption on our cash flow.
Our technology and connectivity enhance mobility and
collaboration in workplaces, creating further opportunities
for knowledge sharing, cross-business deployments, and
process efficiencies.
The COVID-19 curve
continues to flatten as
infection rates decrease and
vaccination rates increase.
Countries are emerging
from lockdowns.
Global supply chains have
increased susceptibility to
disruption and operational
complexities due to demand
increase, extreme weather
events and geopolitical
tensions which have resulted
in capacity constraints on
the major shipping lanes
and pricing pressures.
Our supply partners undergo risk assessments and our
assets have preventative maintenance programs in place.
Detailed planning and forecasting allow us to predict ongoing
demand and build capacity into our supply chains. This reduces
our reliance on key suppliers, where possible.
We explore opportunities to improve our supply chain efficiency
by optimising and diversifying our resources and relationships.
We focus on securing AN supply to meet customer needs and
drive growth opportunities.
We monitor our sites against clear performance metrics
and enact improvement programs where required.
We focus on global and regional supplier due diligence processes
to assess capability of our suppliers, establish contractual
quality requirements, and monitor their ongoing performance.
We continue to implement systems and methodologies
across the key pillar areas of People and Culture, Supplier
Quality Management Process Quality Control, and
Management of Change.
Orica Annual Report 2022 | 33
Safety, health, environment,
and security (SHES)
The inherent nature of our
business presents safety,
environmental (including
biodiversity), health and security
risks. Improper management and
response to these risks could
directly impact our employees,
customers and the communities
in which we operate. Risk events
could also disrupt our operations,
lead to financial penalties and
impact our reputation.
COVID-19 pandemic
Changes to government responses
in relation to the COVID-19
pandemic, or increased rates of
infection due to the emergence
of new variants, could impact
our ability to maintain reliable
operations and financial outcomes.
Supply chain disruption
Interruption to the integrity
and/or continuity of our supply
chain could impact our margins
and our ability to maintain security
of supply for our customers.
Product quality
Poor-quality products or services
could impact performance against
required outcomes causing harm
to people and the environment,
impacting our reputation and
resulting in regulatory actions
or penalties.
OUR BUSINESS MODEL
Beyond blasting
Our business activities
Mine-to-Mill
OREBODY
INTELLIGENCE
DESIGN
AND MODEL
BLASTING
MEASURE
AND MONITOR
Upstream from
blasting, we are
actively taking
steps to help our
customers better
understand
the orebody.
Recent digital
acquisitions,
including Axis Mining
Technology, give
us a market
position in orebody
intelligence.
We are collaborating with
customers and industry to
develop technologies and
integrate vast amounts of
complex geotechnical data
into the blast design
processes. Our SHOTPlus™
Blast Design and OREPro™
3D modelling software
helps to ensure the right
explosives are delivered
into the right holes and
initiated at the right time
to achieve desired
customer outcomes.
The blasting segment
of the mining value
chain remains at the
core of our business.
The convergence of
new technologies and
solutions such as
WebGen™ and 4D™
is enabling us to
adjust and optimise
customers’ mine
plans, allowing them
to operate more
efficiently, precisely
and responsibly.
We have made significant
investments in post-blast
monitoring, including
GroundProbe™
technologies and
measurement technologies
that deliver insights
around blast outcomes.
FRAGTrack™, for example,
captures 2D and 3D blast
fragmentation imagery
and data with
auto-analysis capability.
ORE
PROCESSING
OPTIMISATION
Further downstream, we
deliver mining chemicals
and technologies to aid
with processing and we
are building capability and
technologies in ore
processing with digital
tools like IES and Design
for Outcome (DfO),
helping our customers
to optimise their entire
mining value chain.
Our products and services
Digital solutions
• Orebody intelligence (e.g., RIG, HIG Technologies
International, RHINO™, Axis Mining Technology)
• Blast design and modelling (e.g., SHOTPlus™,
OREPro™ 3D)
• Blast execution (e.g., BlastIQ ™, LOADPlus™)
• Blast measurement (e.g., FRAGTrack™,
ORETrack™, BlastVision™)
• Process optimisation (e.g., Integrated
Extraction Simulator (IES))
Explosives
• Ammonium nitrate (AN)
• Ammonium nitrate emulsion (ANE)
• Bulk explosives (e.g., 4D™)
• Packaged explosives
Blasting systems
• Boosters
• Conventional initiating systems
• Electronic blasting systems (e.g., i-kon™ III)
• Wireless blasting systems (e.g., WebGen™ 200)
Monitoring
• Radar and laser-based monitoring systems
(e.g., GroundProbe™ RGR-Velox™)
• Advanced processing and analytic
software (e.g., MonitorIQ™)
Mining chemicals
• Sodium cyanide
• Emulsifiers
• Sodium cyanide delivery systems
(e.g., Sparge)
• Analysers and mineral processing
optimisation (e.g., PROService™)
• Process simulator software
(e.g., LeachIT™)
Service and support
• Technical and specialist services
• Delivery systems (e.g., Bulkmaster™ 7)
• Avatel™
• Cyclo™
34 | Orica Annual Report 2022
Our business activities
Mine-to-Mill
OREBODY
INTELLIGENCE
DESIGN
AND MODEL
BLASTING
MEASURE
AND MONITOR
ORE
PROCESSING
OPTIMISATION
Upstream from
blasting, we are
actively taking
steps to help our
customers better
understand
the orebody.
Recent digital
acquisitions,
We are collaborating with
The blasting segment
We have made significant
Further downstream, we
customers and industry to
develop technologies and
integrate vast amounts of
of the mining value
chain remains at the
core of our business.
complex geotechnical data
The convergence of
investments in post-blast
deliver mining chemicals
monitoring, including
GroundProbe™
technologies and
and technologies to aid
with processing and we
are building capability and
into the blast design
new technologies and
measurement technologies
technologies in ore
processes. Our SHOTPlus™
solutions such as
that deliver insights
processing with digital
Blast Design and OREPro™
WebGen™ and 4D™
around blast outcomes.
tools like IES and Design
3D modelling software
is enabling us to
FRAGTrack™, for example,
for Outcome (DfO),
including Axis Mining
helps to ensure the right
adjust and optimise
captures 2D and 3D blast
helping our customers
Technology, give
us a market
explosives are delivered
into the right holes and
position in orebody
initiated at the right time
intelligence.
to achieve desired
customer outcomes.
plans, allowing them
to operate more
efficiently, precisely
and responsibly.
customers’ mine
fragmentation imagery
to optimise their entire
and data with
mining value chain.
auto-analysis capability.
Our products and services
Digital solutions
• Orebody intelligence (e.g., RIG, HIG Technologies
International, RHINO™, Axis Mining Technology)
• Blast design and modelling (e.g., SHOTPlus™,
OREPro™ 3D)
• Blast execution (e.g., BlastIQ ™, LOADPlus™)
• Blast measurement (e.g., FRAGTrack™,
ORETrack™, BlastVision™)
• Process optimisation (e.g., Integrated
Extraction Simulator (IES))
Explosives
• Ammonium nitrate (AN)
• Ammonium nitrate emulsion (ANE)
• Bulk explosives (e.g., 4D™)
• Packaged explosives
Blasting systems
• Boosters
• Conventional initiating systems
• Electronic blasting systems (e.g., i-kon™ III)
• Wireless blasting systems (e.g., WebGen™ 200)
Monitoring
• Radar and laser-based monitoring systems
(e.g., GroundProbe™ RGR-Velox™)
• Advanced processing and analytic
software (e.g., MonitorIQ™)
Mining chemicals
• Sodium cyanide
• Emulsifiers
• Sodium cyanide delivery systems
(e.g., Sparge)
• Analysers and mineral processing
optimisation (e.g., PROService™)
• Process simulator software
(e.g., LeachIT™)
Service and support
• Technical and specialist services
• Delivery systems (e.g., Bulkmaster™ 7)
• Avatel™
• Cyclo™
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Orica Annual Report 2022 |
35
KEY PERFORMANCE
INDICATORS
Orica uses a range of financial and non-financial metrics to measure the
Group’s performance. These metrics, and associated targets, are regularly
reviewed in response to changes in our operating environment, stakeholder
expectations and strategy.
Externally assured data
Denotes information subject to limited
assurance by EY.
Link to Executive remuneration
Denotes a KPI which is directly linked to FY2022
Executive STI performance metrics.
KPI: EBIT1
KPI: RONA – continuing operations1
Earnings prior to deducting interest and tax
expenses from continuing operations, before
individually significant items.
FY22
FY21
FY20
$427m
$579m
$614m
A measure of how efficiently we use our assets. RONA is
calculated by dividing 12-month EBIT by rolling 12-month
average operating net assets where operating net assets =
property, plant and equipment, intangibles, equity accounted
investees and working capital excluding environmental
provisions, excluding Minova.
FY22
FY21
FY20
8.1%
11.4%
11.8%
KPI: Cash generation efficiency – continuing operations1
KPI: Serious injury case rate including fatalities1
Our ability to generate cash from current business operations.
Calculated as earnings before interest, tax, depreciation and
amortisation (EBITDA) less (average trade working capital
movements, income tax paid, net dividends/(earnings) from
associates, and sustaining capital expenditure) divided by EBITDA.
The number of serious injuries or illnesses that occur in the
workplace for every 200,000 hours worked. Serious injuries
are those which result in lost work time, and include fatalities,
temporary or permanent disablement, hospitalisations, and
less significant injuries where the affected person is unable
to attend work for a day or more.
FY22
FY21
FY20
NOT MEASURED
47.0%
48.9%
FY22
FY21
FY20
0.157
0.169
0.210
KPI: Women in senior leadership
KPI: Scope 1 and 2 emissions1
The percentage of high level executive positions
within the Band D (Senior Manager) level and above
(i.e., CEO 2 (Band D+)) that are held by women.
FY22
FY21
FY20
28.9%
28.0%
30.9%
The total amount of net greenhouse gas emissions measured
in kilotonnes of carbon dioxide equivalent that can be directly
attributed to Orica’s business activities (Scope 1, i.e., chemical
processes) or indirectly from purchased electricity, heat, steam,
or cooling (Scope 2).
FY22
FY21
FY20
1,883
1,898
2,116
(1) Refer section 3.2 of our Remuneration Report for the formal definitions used for FY2022 STI purposes.
36 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
KPI: Loss of containment1
KPI: Inclusion index
The number of incidents where a contained substance
escapes from containment and results in a Severity 1 or
greater environmental impact on water or soil.
An index used to measure sense of belonging and inclusion
by our people. This data is collected through our employee
engagement survey ‘Our Say’.
FY22
FY21
FY20
23
28
FY22
86%
FY21
NOT MEASURED
68
FY20
NOT MEASURED
KPI: Digital technology adoption
KPI: Total community investment
Global adoption of our digital technologies represented as
percentage increase year on year.
The amount of investment in supporting community
projects and initiatives, contributing to society, and
benefiting future generations.
FY22
FY21
FY20
63%
123%
107%
FY22
FY21
FY20
$3.7m
$2.4m
$3.2m
Remuneration of Orica executives and employees
is aligned to the successful delivery of our strategy.
We use several of our KPIs as specific measures in
determining incentive plan outcomes to ensure
incentives are linked to actual performance.
The Board has an overriding discretion to adjust
final outcomes under the terms of the STI plan, to
ensure Executive reward outcomes are reflective of
our overall financial and non-financial performance
and aligned to shareholder experience.
Those KPIs not explicitly linked to Executive short-term
incentive (STI) performance outcomes are considered
important measures of strategic performance and
long-term value creation, and form part of key internal
management reporting and decision-making.
Remuneration Report on pages 99 to 123.
Where applicable with respect to our non‑financial metrics, prior period information
has been restated to align with the presentation in the current period to reflect
updated methodologies or classifications.
(1) Refer section 3.2 of our Remuneration Report for the formal definitions used for FY2022 STI purposes.
Orica Annual Report 2022 | 37
OUR
STAKEHOLDERS
We proactively engage with a diverse
set of global stakeholders who express
an interest in our business. Our engagement
is collaborative, proactive and transparent
to build trust, support the delivery
of our business strategy and create
long-term value.
This year has been challenging as we have navigated
the COVID-19 pandemic, geopolitical events, extreme
weather and disrupted global AN supply chains.
Throughout, we have sought to be transparent
and responsive.
To engage our stakeholders, we undertake a range
of activities that enable us to better understand their
interests and concerns and identify opportunities
to better respond to their needs. See our website
for more details.
We also work with and engage civil society including
industry associations, non-government organisations,
research and technical institutions.
Our Performance on page 40
Creating
long-term
value
Stakeholder
How we engage
What issues are
important to them?
Examples of how we responded
– Global culture and
engagement survey
‘Our Say’.
– Interactive webcasts
with CEO and
Executive Committee.
– Direct people leader
communication.
– Performance and
development reviews.
– Internal
communications
channels, including
intranet and Yammer.
– ‘Voice of Customer’
platform capturing
feedback on
customers’ experience.
– Contract reviews.
– Executive
engagements.
– Sustainability forums.
– Skills and capability
development.
– Safety, health and
well-being.
– Diversity and inclusion.
– Implemented three global programs of work
to support employee engagement: leadership
development; recognition and reward; and
New Ways of Working.
– Upgraded major hazard controls for flyrock and
elevated platform work risks following fatality
events this year.
– Refreshed our Flexible Working Policy for
Australian employees.
– Updated our Code of Business Conduct
strengthening our positions on workplace sexual
harassment and rights of First Nations Peoples.
– Implemented Australian industry
Respect@Work toolkit.
– Security of supply.
– Sustainability of
products and services.
– Product innovation and
new technology.
– Maintained security of product supply while
meeting growing demand for premium products
and technology.
– Commercialised WebGen™ 200 increasing
productivity, safety and reducing operating costs.
– Technology offering strengthened through
acquisition of Axis Mining Technology.
– Delivered solutions to improve efficiency and
sustainability outcomes e.g. Cyclo™ and Fortis™
Protect.
– Progressed the decarbonisation of our operations
helping our customers reduce their value
chain impacts.
Employees and
contractors
Our people are key to
delivering on our purpose.
Their engagement and
dedication are essential
to making our strategy a
reality. We communicate
with and listen to our
people and strive to provide
them with development
opportunities within an
inclusive workplace.
Customers
We aim to deliver solutions
and technology that drive
productivity for our
customers across the
globe. Listening to their
feedback helps identify
opportunities to improve
our products and customer
service. We aim to raise
awareness of automation
and digital solutions in
enabling more productive
and safer mining.
38 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Stakeholder
How we engage
What issues are
important to them?
Examples of how we responded
– Sourcing and
procurement activity.
– Contract reviews.
– Supplier sustainability
questionnaires.
– Supplier forums.
– Security of supply.
– Managing supply chain
risks, including
sustainability risks.
– Sustainable product
offerings.
Suppliers and business
partners
Orica provides important
economic contributions to
many people and businesses
working in our supply chain.
We aim to treat suppliers
fairly and ethically and
seek to be a partner of
choice. Collaborating with
others across our supply
chain helps us to address
social and environmental
challenges and deliver
on our strategic goals.
Investors and financiers
Engaging with providers
of financial capital is key
to promoting a strong
understanding of Orica’s
value proposition, strategy,
and performance.
As investment decisions
increasingly integrate
environmental, social, and
governance criteria, we are
confident our sustainability
performance is driving
competitive advantage.
– Interim and full-year
results briefings.
– Investor Day.
– Annual General
Meeting.
– Disclosure documents,
including results
announcements,
investor presentations
and other ASX
lodgements.
– Annual Reporting
Suite.
– Financial performance.
– Business strategy and
growth opportunities.
– Corporate governance.
– Sustainability
approach,
commitments and
progress.
– Exited Russia operations and increased
resilience of supply chains to maintain
security of product supply.
– Established new AN supply arrangements
and supplier partnerships.
– Our guidance to suppliers on our safety and
sustainability requirements continued to evolve. We:
– sought more detailed information on
supplier modern slavery risks as part of
our due diligence practices;
– engaged ammonia and AN suppliers on their
product footprints to improve the accuracy
of our Scope 3 emissions accounting; and
– worked with suppliers to address growing
legislative requirements and societal
expectations on ethical supply chains.
– Collaborated on future product roadmaps
for our Mobile Manufacturing Units and switching
to electric or alternative zero emissions fuels.
– Delivered investor returns as a result of
our commercial discipline, and strong global
manufacturing and supply network.
– Strengthened our balance sheet with net debt
of $912 million, and $2,678 million liquidity
available in cash and undrawn committed bank
debt facilities at year end.
– Continued to execute strategic initiatives including
accelerating our approach to decarbonisation
through low-emissions technology and creating
innovative and sustainable solutions.
– Hosted an investor day to enhance understanding
of our strategy, performance and technology
offerings.
– Continued to increase disclosure and transparency
of financial and non-financial performance.
– Engaged proactively and constructively with
shareholder interest groups such as Climate
Action 100+.
– Improved our performance on human rights and
modern slavery. See our Modern Slavery Statement.
Local communities
– Stakeholder
From understanding
grievances and local
expectations to forming
close partnerships, engaging
with local communities
helps inform our strategy,
define our priorities, and
advance sustainable
solutions to common
challenges.
engagement plans.
– Community investment
programs.
– Local stakeholder
engagement sessions.
– Grievance mechanisms
and other feedback.
– Product safety and
security.
– Strong partnerships.
– Investment in
communities.
– Local operational
impacts including
water, air, and noise.
– Support following
natural disasters.
– Economic
opportunities including
employment and
procurement.
– Using technology to help customers protect
Indigenous cultural heritage in Queensland.
– Sought input and feedback from a variety
of Australian community stakeholder groups
on our Reconciliation Action Plan.
– Increased our financial contributions to local
communities through the Orica Impact Fund
and provided financial assistance in America
and Australia following natural disasters.
– Installed a new prill tower scrubber at Kooragang
Island reducing particle emissions by 99 per cent.
– Performed an assessment of our Yarwun facility’s
economic contribution to the local community
and identified opportunities to enable green jobs
in Queensland.
Government and
regulators
Dialogue with national
and local governments
and regulators allows us to
understand their priorities
and concerns and share
our views and objectives.
We engage with governments
and regulators on topics
that may impact trade,
competition, operating
licenses and operational
competitiveness.
– Meetings with political
stakeholders, public
officials and regulators.
– Hosting site
– Regulatory compliance,
good governance and
ethical business
conduct.
familiarisation tours.
– Effective policy
– Submissions to
government and
regulatory
consultations.
– Applications for
grant funding.
development and
probity.
– Innovation, research
and development.
(1) In late 2020, improperly stored AN stockpile in the Port of Beirut exploded.
– Deepened engagement with regulators in relation
to our safe AN storage practices following the
Beirut blast in 20201.
– Hosted international and domestic officials and
their representatives at our major manufacturing
sites to build understanding of our socio-economic
contribution and key issues.
– Responded quickly to sanctions against Russia.
– Responded to government consultations in
Australia and Canada including Safeguard Crediting
Mechanism; Safeguard Mechanism Reform;
Technology Innovation and Emissions Reduction
Regulation Review.
– Met obligations pertaining to grant funding
agreements for the Kooragang Island
Decarbonisation Project and Alpha HPA project
in Australia.
Orica Annual Report 2022 | 39
OUR
PERFORMANCE
Non-International Financial Reporting
Standards (Non-IFRS) information
This report makes reference to certain non‑IFRS
financial information. This information is used by
management to measure the operating performance
of the business and has been presented as this
may be useful for investors. This information
has not been reviewed by the Group’s auditor.
Where applicable with respect to our non‑financial
metrics, prior period information has been restated
to align with the presentation in the current period
to reflect updated methodologies or classifications.
40 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
SAFE AND
RESPONSIBLE
BUSINESS
We operate in a complex global
environment. The decisions we make
at work can have far reaching impacts
on our business, our colleagues, our
customers, our communities and
the world we live in.
Orica has an unwavering commitment
to health and safety. This year we fell
short of our promise to keep people
out of harm’s way. We are reporting
two tragic fatalities. We are committed
to doing better, upgrading critical
controls and learning from the past.
2
FATALITIES
0.1571
SICR
0.0172
SLICR
Workplace safety
Tragically, we are reporting two
fatalities this year relating to an
event in FY2022 and a previously
unreported event in FY2021.
In response to the incidents, we
conducted a detailed review of
key controls in our Major Hazard
Management (MHM) program
relating to flyrock and elevated work
platform (EWP) risks. We have taken
disciplinary action in response to
the unreported fatality in FY2021,
which breached our Code of
Business Conduct (Our Code).
We are deeply disappointed with
this performance and know we
must do better. We are committed
to re-establishing the trust of our
stakeholders and living up to our
values to keep people safe, always.
FY2022 AND FY2021
FATALITIES
Flyrock fatality, Russia
In July 2022, an Orica blasting
crew were performing a trial blast
at a customer site in far-east Russia
when flyrock was ejected outside
the designated blast exclusion
zone. Two Orica employees were
struck and tragically, an Orica
bench assistant was fatally injured.
The second employee was seriously
injured requiring medical treatment.
We activated emergency services
and initiated support for family and
colleagues. We immediately ceased
all blasting operations, including
a safety stand-down across all sites
in Russia. A full internal investigation
was conducted, supported by
Orica’s Surface Expert Panel.
The investigation found a
number of factors contributed
to the tragedy. We are working
to apply these learnings within
our MHM program and reinforce
critical safety measures.
Committed
to doing
better
Elevated Work Platform (EWP)
fatality, Kazakhstan
We are also reporting a contractor
fatality in Kazakhstan from FY2021.
The incident – a fall from an
EWP – was reported through our
Whistleblowing channels and was
subject to a thorough investigation.
In response, we are updating our
procedures for working from heights
to provide additional guidance
around work from EWPs. We are
reviewing contractor management
processes and requirements around
monitoring contractor work on site.
Disciplinary action has been taken
against site management personnel
who were aware of the event and
did not report it. These actions are
not reflective of Orica’s values and
are in breach of Our Code.
(1) Serious injury case rate (unit of measure: per 200,000 hours worked).
(2) Serious life-changing injury case rate (unit of measure: per 200,000 hours worked).
Orica Annual Report 2022 | 41
SAFE AND RESPONSIBLE BUSINESS
SERIOUS INJURY PERFORMANCE
In FY2022 we recorded 0.017 Serious Life-Changing Injuries (SLICR) per 200,000 hours worked against
a target of 0.030. Our Serious Injury Case Rate (SICR) was 0.157, which is a 25 per cent improvement on
our FY2021 performance, but above our target of 0.138 serious injuries per 200,000 hours worked.
Serious Injury Case Rate
Serious Life-Changing Injury Case Rate
0.188
0.220
0.169
1,628
0.210
0.157
0.017
0.012
0.006
FY2018
FY2019
FY2020
FY2021
FY2022
FY2020
FY2021
FY2022
Metric introduced in FY2020
Orica’s smarter solutions to remove
people from harm’s way
WEBGEN™ 200
i-kon™ DETONATORS
WebGen™ is the world’s first fully
wireless initiation system which can
communicate through hundreds
of metres of rock, air and water to
initiate blasts. By eliminating the
need for downlines and surface
connecting wires, WebGen™ allows
mine personnel to spend less time
in the dangerous zones of the mine
compared to traditional blasting
systems. This year we commercialised
the second generation of WebGen™.
WebGen™ 200 has enhanced safety
and security capabilities including
a beacon system and LockSafe.
The beacon improves procedural
controls to ensure the correct blast
is fired, which is a unique hazard
of wireless blasting. Each beacon
is encoded to a specific blast and
must be present for the blast to fire.
LockSafe uses Inertial Movement
Units and an algorithm to detect if
the primer has moved from the hole
and sends a disarm signal to the unit
to prevent the unit from receiving the
firing signal, which helps customers
avoid potentially unsafe blasting
outcomes. LockSafe is progressing
toward commercialisation.
The i-kon™ III electronic detonator
is our most sophisticated EBS, designed to
perform safely and reliably under extreme
conditions. The detonators have multiple
safety features enabling protection
against the high voltage electrostatic
discharge which occurs in lightning
strikes. Work continues on incorporating
GPS tracking capability into our next
generation i-kon™ detonators, which
would make it impossible to initiate a
blast from within a digital exclusion zone.
AVATEL™
Our partnership with Epiroc is
progressing toward commercialisation
of our Avatel™ system, the world’s first
mechanised development charging
system. The technology allows a single
operator to locate, clean, prime and load
our bulk explosives and wireless initiating
systems from the safety of an enclosed
cabin, several metres from the face and
out of harm’s way.
42 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
“In FY2022,
we completed
over 83,000 safety
interactions up
4 per cent on last
year’s performance.”
IMPROVING VEHICLE
SAFETY
In FY2022, we conducted a driver
assistance trial in LATAM to identify
new ways to improve vehicle safety.
The trial tested a ‘virtual co-pilot’
to provide real-time information on
the risks and hazards of the defined
route to drivers. We are also working
with our contractors to provide
training and awareness sessions on
our requirements and fundamentals
of vehicle stability and encourage
immediate feedback about driver
behaviour and performance.
STRENGTHENING AND
EXPANDING OUR MHM
PROGRAM
Our MHM program is integral to
our strategic safety focus areas,
defining key safety controls and
establishing rigorous verification
protocols. This year, our leaders
completed over 18,500
independent verifications
of our key hazard controls.
Following the fatality in Russia
this year, our Surface Expert Panel
commenced a review of key controls
for Major Hazard ‘Struck by Flyrock’.
Recommendations from the review
will be implemented, upgrading
our controls as appropriate to
keep people safe.
MHM is reinforced in everyday
work through our Safety Leadership
Interaction program. This program
leverages the relationship between
supervisor and worker to enhance
communication around safety
controls. In FY2022, we completed
over 83,000 safety interactions up
4 per cent on last year’s performance.
Creating a culture of safety in which
all employees are empowered and
expected to call an immediate stop
to work if they observe a potentially
hazardous situation is core to our
MHM program and reinforced by the
recent updates to Our Code and
Whistleblower Policy. We regularly
communicate MHM stops internally
to encourage our people to speak-up
and call a stop if they feel unsafe.
In FY2022, the number of stops
called increased to over 2,700,
up from approximately 1,700 in
FY2021, signalling our employees
are aware they have this option
and feel empowered to exercise it.
Our MHM program was
expanded during the reporting
period to include contractors,
with MHM elements included in
contractor site inductions. A trial
pre-qualification approach for
contractors was conducted, based
on a tiered risk approach using MHM
and will lead to further refinements.
MENTAL AND PHYSICAL
HEALTH IN THE WORKPLACE
With mental and physical well-being
critical for our people to thrive, our
employee engagement survey was
updated to include leading indicators
on mental health and well-being.
A review of risk assessment tools has
also been undertaken to identify and
assess psychosocial factors in the
workplace and will be deployed in
key business areas where increased
risk is prevalent.
In FY2022, we:
– reviewed and updated our
Orica Assignee Deployment
Medicals to ensure people are
medically fit to undertake
international assignments;
– published a standardised
Occupational Exposure Limit
and Biological Exposure Indices
Listing in the Group Standard
for Health; and
– developed a respiratory Health
Surveillance Guideline to establish
the minimum requirements
and frequency of testing for
respiratory health surveillance.
This is currently being reviewed
by the regions.
Orica Annual Report 2022 | 43
SAFE AND RESPONSIBLE BUSINESS
PRODUCT SECURITY
CYBER SECURITY
Crisis Response Preparedness
As a manufacturer of commercial
explosives and blasting initiating
systems, we have specific responsibilities
to ensure we partner with and
sell to organisations that will use our
products for their intended purpose.
We also have a responsibility to
eliminate or minimise any risks to
safety, health or the environment
across the lifecycle of our products
and services.
We take our product security
responsibilities seriously and strive to
be champions of a safe and secure
value chain. We select our partners
following detailed due diligence
covering security across the product
lifecycle, from transport to storage and
final end-use. No product security
incidents categorised as a Severity 3(1)
or higher were recorded in FY2022.
Through deep engagement with our
carriers and increasing the security
posture during transport, we have
observed reduced product security
events related to transport this year.
Of the six Severity 2(2) product security
events that occurred, one was
related to transport, compared
to four out of six in FY2021.
Track and Trace is being
implemented in line with
our product stewardship.
This technology, while enabling
higher accuracy inventory control,
will enable us to provide detailed
information to authorities in the
event of lost or stolen product,
or product recovered in the
hands of unauthorised persons.
We participate in global discussions
and organisations to contribute
to industry security standards and
approaches. Orica is a member of
the Global Congress on Chemical
Security and Emerging Threats
Industry Advisory Group, which is
focused on preventing access of
explosives precursor chemicals.
The Global Congress is co-sponsored
by INTERPOL, the US Department of
Homeland Security, the FBI and US
Defence Threat Reduction Agency.
Cyber security is key to protecting
Orica’s people, products, sites and
sensitive information. Orica’s cyber
strategy is focused on three key
outcomes:
– appropriate cyber controls
across Business, Customer
and Manufacturing systems;
– detect and respond rapidly
to malicious software or
intruders in our network; and
– improved data security,
safeguarding our own and
our customers data.
In FY2022, we strengthened our
cyber controls, including priority
controls at our key sites to protect
against cyber-attacks. Our Cyber
Security Management team
has doubled in size in the
last 12 months, and we have
embedded additional dedicated
cyber experts with manufacturing
expertise into the manufacturing
team to improve capabilities.
We have matured our cyber
awareness program with regular
training and phishing email
simulations that build company-wide
capability. We also provide bespoke
training for higher risk roles, so our
people are well equipped to raise
and address cyber security concerns
and prevent potential cyber-attacks.
Progress against our internal cyber
security roadmap and cyber key risk
indicators is reported to the Board
quarterly and we obtain external
independent assessments to gauge
the effectiveness of our cyber
security measures.
Vendor cyber controls
We have commenced work to
assess the cyber controls of our top
260 vendors – representing around
80 per cent of our vendor spend –
to understand how they manage
confidential data and if their cyber
controls meet Orica’s standards.
Our cyber security posture is
tested with crisis simulations,
penetration testing and by using
external cyber professionals to
perform ethical hacking exercises.
To prepare for malicious cyber
events and ensure our corporate
crisis management processes and
procedures have been adopted
correctly, we have performed
simulations of a cyber-attack at
one of our manufacturing sites.
The response to the simulation
was positive.
ETHICAL BUSINESS
CONDUCT
Our Code of Business
Conduct (Our Code)
Our Code is our guide to doing the
right thing. It establishes how we
will conduct ourselves to deliver on
Orica’s purpose, vision, strategy and
values as outlined in Our Charter.
As our company evolves, so too does
Our Code. We updated Our Code in
July 2022 to reflect changing societal
expectations, strengthen our culture
of safety and emphasise our strong
position on respect for First Nations
Peoples and cultural heritage,
human rights, modern slavery
and workplace sexual harassment.
The updates highlighted everyone’s
authority and obligation to stop
work to protect our people, the
environment and Indigenous
cultural heritage.
The update reinforces the
importance of speaking up and
we are committed to ensuring
everyone can raise concerns freely
and without fear. Concerns are
dealt with swiftly, fairly and
confidentially using our Speak-Up
service (operated by third-party
provider Navex) and authorised
internal and external recipients
as per the Whistleblowing Policy.
Our Code is publicly available
at orica.com.
(1) Severity 3: Misuse of security sensitive Orica product to cause actual harm while Orica has no control of the product; or Significant regulatory action taken
with total cost of legal action/fines or prosecution between $1,000,000 and $10,000,000; or Sustained adverse media reporting at the national level.
(2) Severity 2: Loss of a security sensitive Orica product. The product may or may not be recovered and if recovered was in the possession of an unauthorised
third party; or Significant regulatory action taken with total cost of legal action/fines or prosecution between $100,000 and $1,000,000; or
Sustained adverse media reporting at the sub‑national level.
44 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Respect@Work
We take a strong and unequivocal
stance on sexual harassment.
In August 2022, we released
updates to our Respect@Work
approach which applies to Orica
Australia, including:
– a revised ‘Respectful Behaviours
At Work’ policy;
– end-to-end approach in place
to investigate, and support
individuals who make a claim
regarding behaviours that are
inconsistent with our values; and
– mandatory leader and employee
learning modules to understand
the expectations and obligations
of our Orica team.
Our policy is in line with the Minerals
Council of Australia’s Industry Code
on Eliminating Sexual Harassment.
Reporting issues
and grievances
In FY2022, we updated our
Whistleblower Policy in line
with the Australian Securities and
Investments Commission’s (ASIC)
recommendations. This included
revising our language to provide
clarity on what should be reported,
key steps involved in handling and
investigating reports, what
protections are afforded to
whistleblowers, and how Orica
enforces these protections.
We also translated the updated
Whistleblower Policy into
13 languages to increase accessibility.
Following the communication of
our revised Whistleblower Policy,
reports were received regarding
the unreported fatality incident
in Kazakhstan.
Our Whistleblower Policy is in
place to support people, including
all employees, their families and
other Orica stakeholders (including
customers, suppliers, contractors
and visitors) to report misconduct
via our external and confidential
Speak-Up Service. Employees can
also raise misconduct concerns with
Authorised Recipients, who are
identified in the policy. Externally,
reporters can also raise concerns
with ASIC, the Australian Prudential
Regulation Authority (APRA), and
the Commissioner of Taxation for
reports that relate to Orica’s
tax affairs.
A breach of our Whistleblower
Policy is considered a breach of
Our Code and may have serious
consequences. Retaliatory behaviour
against reporters is not tolerated and
will be subject to disciplinary action,
up to and including termination
of employment.
During the reporting period we
received 107 whistleblowing reports,
equivalent to 0.9 reports
per 100 employees. Based on
benchmarking supplied by our
Speak-Up service provider Navex,
1.3 reports per 100 employees
represents an optimal rate that
is high enough to demonstrate
broad employee awareness of
whistleblowing processes but low
enough to indicate there are not
excessive issues and grievances.
In FY2022, 66 per cent of
whistleblower reports related to
workplace and personal grievances.
Quarterly whistleblowing reports
are provided to the Board Audit
and Risk Committee.
Report by Outcome
6%
22%
37%
35%
Under Investigation
Substantiated
Not Pursued
Unsubstantiated
When concerns are raised through available
mechanisms, a review process is undertaken,
and a response determined according
to the framework in our Group procedure.
In FY2022, 35 per cent of reports were
substantiated. Where allegations were
substantiated, appropriate action was taken
to remedy and prevent re-occurrence,
including termination of contract.
Report by Category
7%
27%
66%
Ethics or Compliance
Theft, Fraud,
Security Issues
Personnel
Matters, Misuse
of Equipment
Orica Annual Report 2022 | 45
SAFE AND RESPONSIBLE BUSINESS
Ethics and compliance
Tax transparency
Tax transparency is a critical
element of ethical business
behaviour. We comply with all
relevant taxation laws in a
responsible manner, with all taxes
properly due, accounted for and
paid. A tax standard and relevant
procedures are in place to ensure
our tax compliance obligations are
managed. Our effective tax rate
before individually significant items
is 32.2 per cent, which is in line
with FY2021.
FY2022 Tax Transparency Report
HUMAN RIGHTS
We are committed to respecting
and upholding the human rights
of our people and those who may
be impacted by our operations
and business activities. With the
mining and metals industry facing
increased scrutiny over its human
rights obligations and approaches,
we continue to work to meet
stakeholder expectations and support
the industry in raising human rights
protections and processes.
Our approach to respecting
human rights is guided by
internationally recognised standards
such as the UN Declaration of
Human Rights, the UN Guiding
Principles on Business and Human
Rights, and the International Labour
Organisation’s Declaration on
Fundamental Principles and Rights
at work. Our approach is embedded
within Our Charter, Our Code,
risk management approach and
organisational policies.
First Nations engagement and
cultural heritage protection
In FY2021, we developed our
First Nations Engagement and
Cultural Heritage Protection
Roadmap. This followed a third-party
assessment of our First Nations
engagement and cultural heritage
management, benchmarked against
the United Nations Declaration on
the Rights of Indigenous Peoples and
external stakeholder expectations.
Our Ethics and Compliance
system supports us to act with
integrity and is the system used to
log proposed gifts, entertainment,
sponsorship and donations, and
to receive information, advice
and approvals from the Ethics
and Compliance team.
In FY2022, we improved our
Ethics and Compliance system
to make it more user friendly,
with streamlined forms to log a
transaction and automated alerts
to track the transaction.
Our Code
46 | Orica Annual Report 2022
The roadmap includes commitments
to strengthening our policies and
governance, risk management and
stakeholder engagement systems,
and maps opportunities for
improving Indigenous relationships
and increasing participation in
employment, procurement,
community investment, as well as
building Orica’s cultural competency.
In FY2022 we:
– strengthened our position on
respect for First Nations Peoples
and their cultural heritage in
the refresh of Our Code, by
embedding a ‘stop work’ directive
to empower our people to cease
work if they identify a risk to
Indigenous cultural heritage;
– drafted a Human Rights Risk
Appetite Statement (RAS) which
includes monitoring of cultural
heritage protection across our
operations. This will be finalised
and included in our risk
management framework
in FY2023; and
– laid the groundwork for
improving our engagement
approach with Aboriginal and
Torres Strait Islander stakeholders
in Australia, including drafting
our first Reconciliation Action
Plan (RAP) in association with
Reconciliation Australia.
Our Australian Reflect RAP will
be launched in early FY2023.
A Reflect RAP is the first stage in an
organisation’s reconciliation journey
and allows us to scope and develop
relationships with Aboriginal and
Torres Strait Islander stakeholders,
outlining our vision for reconciliation,
exploring our spheres of influence
and establishing meaningful actions
for participation around the pillars
of Respect, Relationships and
Opportunities. We will review and
report on progress made against the
goals outlined in our RAP and work
with Reconciliation Australia to
renew our plan.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Using our technology
to protect cultural
heritage
We continue to explore how our blast monitoring technology can protect Indigenous
cultural heritage located close to mining and construction activity.
The Children Dreaming rock structures are of cultural significance to the Yulluna people,
a First Nations community located south of the Selwyn Range in north-west Queensland,
Australia. To help protect the structures and minimise impact from blasting, Orica was
engaged by a customer to conduct trial blasting to capture ground vibration transmission
characteristics and the vibration frequency response of the rock structures.
Using customised accelerometers and GroundProbe Geotech Monitoring LiDAR, we
provided our customer with an accurate vibration prediction model to support the
development of initial blast timing sequences and instantaneous charge weights to avoid
generating disruptive frequencies that would damage the rock structures. This indicated
no permanent displacement or deformation of the rock structures would occur and
provided confidence to the Yulluna people, the community and the customer that
blasting could be executed safely without compromising this cultural heritage site.
Modern slavery
Addressing modern slavery requires
ongoing, dedicated and collaborative
effort from many stakeholders
including governments, non-
government organisations and
business. We continue to strengthen
our approach to managing
our modern slavery risk across our
operations and supply chain but
recognise there is much more to do.
In FY2022, we made progress
against our commitments, deepened
our understanding of incoming
global legislative changes and trends
and their implications for our
business, and worked to enhance
the human rights (including modern
slavery) due diligence approach in
our operational activity.
This included a third-party review of
our current approach, identification
of gaps and opportunities, and
delivery of a process and tools to
support broader organisational
understanding and human rights
due diligence.
FY2022 Modern Slavery Statement
FY2023 Priorities:
– Publish our first Australian RAP.
– Continued development of our
Major Hazard Management
(MHM) program to integrate
fatality lessons.
– Roll-out of a Safety Leadership
program for Supervisors in
key areas.
– Completion of a psychosocial
risk profiling program to
understand potential mental
well-being challenges.
Orica Annual Report 2022 | 47
FINANCIAL
PERFORMANCE
Footnotes that apply to financial performance are described on page 57.
Group results
Year ended 30 September
2022
A$M
2021
A$M
Change
%
Sales revenue from continuing operations
7,096.4
5,207.9
EBITDA from continuing operations(1)
EBIT from continuing operations
EBIT from Minova (discontinued operations)
Total EBIT(2)
Net interest expense
Tax expense before individually
significant items
Non-controlling interests before
individually significant items
NPAT before individually
significant items(4)
Individually significant items after tax
NPAT/(NLAT) after individually
significant items (statutory)(3)
949.6
563.8
14.7
578.5
762.7
404.6
22.0
426.6
(100.3)
(105.6)
36%
25%
39%
(33%)
36%
(5%)
(154.0)
(102.7)
50%
(7.2)
(9.9)
317.0
(256.9)
208.4
(382.2)
52%
60.1
(173.8)
GROUP COMMODITY EXPOSURE
Revenue by commodity from continuing operations(i)
6%
8%
25%
11%
13%
21%
16%
Copper
Gold
Thermal Coal
Q&C
Other(ii)
Iron Ore
Metallurgical Coal
Commodity prices remained elevated
through the year, driving increased
demand for Orica products and
services in most markets.
Copper became the highest
commodity exposure for Orica
during the year, driven by strong
recovery in customer demand,
particularly in Latin America.
Q&C revenue grew in each region,
however at a slower pace than
other commodities.
Demand for thermal coal increased in
the United States and Indonesia driven
by strong commodity prices being
fueled by high energy costs globally.
48 | Orica Annual Report 2022
(i) Excludes Minova previously included in the “Other” category.
(ii) Includes Orica Monitor.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
GROUP COMMODITY EXPOSURE
(i) Nitro Consult AB sold in February 2022.
(ii) Change in underlying EBIT contribution from Discontinued operations.
Financial performance
The improved full year result reflects
solid volume growth, increased
utilisation of manufacturing plants,
improved commercial discipline in
both customer and supply contracts
and increased customer preference
for premium products.
Foreign exchange
In 2022 the US dollar strengthened
against the Australian dollar
resulting in a favourable impact
to EBIT on translation of foreign
denominated earnings.
Volume
Total ammonium nitrate (AN) volumes
increased 4 per cent on the prior
corresponding period (pcp) from
increased mining activity driven by
strong commodity prices, and Orica’s
ability to provide security of supply to
customers in a tight supply market.
Electronic blasting systems (EBS)
volumes were up 10 per cent on the
pcp as mining activity increased and
customers shifted away from
conventional detonators. EBS
accounted for 38 per cent of the
volume uplift contribution in EBIT.
Manufacturing
Mining Chemicals
Manufacturing performance
improved as a result of increased
volumes at the large continuous
plants in Australia and Indonesia,
partially offset by higher costs for
alternate sourcing of AN during
the Carseland plant turnarounds
in North America.
The pcp result included costs
incurred from an incident at the
La Portada manufacturing plant in
Latin America which have not been
repeated in the 2022 financial year.
Mix and margin
Margin growth was led by
commercial discipline and emphasis
on quality of earnings across
the regions.
Rise and fall mechanisms worked
effectively to pass through volatile
ammonia and gas prices.
Product mix improved as customers
adopted more technology and
shifted to premium products as
strong commodity prices increased
focus on productivity gains.
Cyanide volumes were 10 per
cent up on the pcp from new
business and higher demand from
existing customers in Australia and
Asia. Higher utilisation of the
cyanide plant also led to lower
conversion cost.
Orica Monitor
Strengthened radar sales and growth
in recurring contracts, couple with
improved pricing led to growth in
EBIT contribution from Monitor.
The pcp result included full year
earnings for Nitro Consult AB which
was sold in February 2022.
Discontinued operations
The Minova business sale completed
in the first half of 2022, resulting
in only five months of earnings
contribution versus a full 12 months
in the pcp.
Orica Annual Report 2022 | 49
UnderlyingEBIT FY22Discontinuedoperations(ii)GlobalSupportOricaMonitor(1)MiningChemicalsMix andmarginManufacturingVolumeForeignexchangeUnderlyingEBIT FY214271213552043(7)57952 FINANCIAL PERFORMANCE
Business Summary
A summary of the performance of the segments for the 2022 and 2021 financial years is presented below:
Year ended 30 September
A$M
Australia Pacific and Asia (APA)
North America
Latin America
Europe, Middle East and Africa (EMEA)
Orica Monitor
Global Support
Continuing Operations
Minova (discontinued operations)
Total
External
sales
revenue
2,723.6
1,570.9
1,656.5
1,027.0
118.4
–
7,096.4
231.1
7,327.5
2022
EBITDA(1)
550.6
191.3
99.5
76.7
48.5
(17.0)
949.6
14.7
964.3
External
sales
revenue
2,105.9
1,229.6
956.5
801.4
114.5
–
5,207.9
474.3
5,682.2
EBIT(2)
366.6
132.4
53.2
45.5
34.6
(68.5)
563.8
14.7
578.5
2021
EBITDA(1)
453.9
168.9
73.3
56.1
43.6
(33.1)
762.7
33.7
796.4
EBIT(2)
279.7
107.9
28.9
25.0
30.7
(67.6)
404.6
22.0
426.6
Australia Pacific and Asia
Year ended 30 September
2022
2021
Change
External sales revenue (A$M)
2,723.6
2,105.9
EBITDA(1) (A$M)
EBIT(2) (A$M)
Total AN and Emulsion Volumes
(‘000 tonnes)
550.6
366.6
1,767
453.9
279.7
1,745
29%
21%
31%
1%
External revenue by commodity
12%
14%
Copper
Gold
15%
Thermal Coal
Q&C
Other
Iron Ore
31%
Metallurgical Coal
14%
8%
6%
Market conditions
Elevated commodity prices and strong
mining activity drove high demand for
ammonium nitrate (AN), electronic blasting
systems (EBS), cyanide and blasting
services. This increased demand, coupled
with commercial discipline enabled contract
improvements. Market conditions are
also increasing customers interest in
productivity gains from technology.
Across the region there was growth in
the metals sector, primarily driven by
increased activity in gold and copper
markets in Australia and copper in
Indonesia. Demand in the thermal coal
sector in Indonesia and south-east Asia
increased, however, has reduced in
Australia due to wet weather on the east
coast and lower domestic consumption.
50 | Orica Annual Report 2022
Tight global supply of ammonia has led
to a significant increase in AN prices and
cost inflation continued to rise sharply.
COVID-19 absenteeism and labour
shortages continue to impact mining
activity and supply chains.
Segment performance
The 31 per cent increase in EBIT on
the pcp was largely driven by contract
improvements, increased AN, EBS and
cyanide volumes, a shift to premium
products, and improved fixed cost
recovery from higher utilisation of
manufacturing plants.
Sustainable growth has been achieved
through commercial discipline on
new and renewed contracts including
improved rise and fall terms, investments
in the resilience and flexibility of plants
and supply chains, and security of supply
provided to customers.
The region saw strong revenue growth
across all commodities and products.
While wet weather conditions in
Eastern Australia constrained AN volume
growth, it led to a shift towards more
premium products.
Record production was achieved at
Yarwun and Bontang continuous plants.
The Yarwun turnaround was completed
in November 2021 and the Kooragang
Island turnaround for installation of tertiary
abatement technology commenced
in September 2022.
A new sparge site was commissioned
in Malaysia, enabling the sale of safer
cyanide across our Asian markets.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
North America
Year ended 30 September
2022
2021
Change
External sales revenue (A$M)
1,570.9
1,229.6
EBITDA(1) (A$M)
EBIT(2) (A$M)
Total AN and Emulsion Volumes
(‘000 tonnes)
191.3
132.4
1,106
168.9
107.9
1,013
28%
13%
23%
9%
External revenue by commodity
7%
11%
9%
10%
25%
Copper
Gold
Thermal Coal
Q&C
Other
Iron Ore
25%
13%
Metallurgical Coal
Market conditions
Segment performance
Operating conditions in North America
were strong across the region during
the year.
Mining activity improved due to high
commodity prices, with labour shortages
in a high inflationary environment being
the major constraint.
High domestic energy prices in the
United States led to increased demand
for thermal coal.
Quarry and construction activity in the
United States and in Canada, remained
flat year on year, project growth is being
constrained by labour shortages and
inflation. Gold and copper mining activity
across the region increased, driving higher
demand for Orica products and services.
All commodity sectors were impacted by
global supply chain challenges including
increased freight costs and some raw
material and product shortages. Industrial
action in Mexico towards the end of the
last quarter further tightened supply
in the region.
The 23 per cent EBIT increase on the pcp
was largely driven by new contract wins
in Canada, higher services contribution,
improved contract terms negotiated and
favourable foreign exchange.
Revenue from all commodities and
product types increased due to higher
demand and increased customer activity,
which coupled with commercial discipline,
enabled contract improvements.
Discrete network optimisation, supply chain
initiatives and pass-through mechanisms
were effective in reducing the impacts of
supply chain challenges from raw material
shortages, inflationary pressure and
increased gas and freight costs.
Major planned maintenance turnarounds
were completed at the Carseland AN
manufacturing plant. Tertiary catalyst
abatement technology installed is
performing above expectations.
The US dollar appreciated against the
Australian dollar, resulting in a favourable
impact to EBIT on translation of foreign
denominated earnings.
Orica Annual Report 2022 | 51
FINANCIAL PERFORMANCE
Latin America
Year ended 30 September
2022
2021
Change
External sales revenue (A$M)
1,656.5
956.5
EBITDA(1) (A$M)
EBIT(2) (A$M)
Total AN and Emulsion Volumes
(‘000 tonnes)
99.5
53.2
973
73.3
28.9
929
73%
36%
84%
5%
External revenue by commodity
4%
5%
4%
4%
21%
62%
Copper
Gold
Thermal Coal
Q&C
Other
Iron Ore
Supply initiatives including negotiating
improved supplier terms, and changes
to shipment loadings and movements
also contributed to the region’s improved
performance.
AN previously supplied from Russia was
largely replaced with product from
alternative sources, albeit at higher costs
and shorter payment terms.
Rise and fall pass through mechanisms
have been shortened and are working
effectively to fully pass through higher
costs. Terms in many customer contracts
were updated to include clauses for the
pass through of freight costs.
Global manufacturing optimisation plans,
including the rationalisation of initiating
systems manufacturing, are on track
in the region. Exsa is performing above
the business case.
Market conditions
Mining activity in the region was stable
on balance compared to the pcp.
Increases in ammonia prices and sea freight
costs along with general cost inflation
continued to drive higher costs. Improved
commercial discipline and changes to rise
and fall clauses were implemented.
Security of supply for customers was
paramount as AN trade flows into Latin
America from Russia were constrained
due to the Russia-Ukraine conflict.
Alternative AN sourcing options were
used to continue servicing customers.
Segment performance
The significant increase in EBIT on
the pcp was largely driven by commercial
discipline on both customer and supply
contracts, improved product mix and
technology penetration.
Demand for premium products and
electronic blasting systems increased
on the pcp. Technology adoption in the
region is growing at pace with Orica
leading the mining digital transformation
in Latin America.
52 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Europe, Middle East and Africa
Year ended 30 September
2022
2021
Change
External sales revenue (A$M)
1,027.0
801.4
EBITDA(1) (A$M)
EBIT(2) (A$M)
Total AN and Emulsion Volumes
(‘000 tonnes)
76.7
45.5
415
56.1
25.0
406
28%
37%
82%
2%
External revenue by commodity
2%
15%
17%
33%
32%
1%
Copper
Gold
Thermal Coal
Q&C
Other
Iron Ore
Market conditions
Segment performance
European gas prices increased significantly
during the year, leading to the closure of
several ammonia plants in the region and
driving a tightening of supply.
The Russia-Ukraine conflict has created
further uncertainty around activity in Russia
and the surrounding region with significant
disruption to ammonia, ammonium nitrate
(AN) and energy trade flows.
Following the sanctions placed on Russia,
Orica completed the exit of its operating
business in Russia in September 2022 and
related assets have been fully impaired.
Copper activity in Africa remained
strong. The economic outlook in Europe
has deteriorated since the first half,
resulting in lower than expected quarry
and construction activity in the Nordics
and Western Europe.
The significant increase in EBIT on the
pcp was driven by positive product mix
benefits in Initiating Systems, contractual
improvements and contribution from new
growth projects in Africa and the Emirates.
Initiating System volumes grew with a
favourable mix shift towards electronic
blasting systems for new projects in the
Nordics and Africa. AN volumes remained
stable with the pcp.
Supply to the region was secured from
alternative sources following the initial
quotas put in place by the Russian
authorities effective December 2021.
Rise and fall mechanisms were effective
in passing through elevated sourcing
and logistics costs to customers.
Revenue from gold and copper
customers increased as Orica’s exposure
to Africa grows.
Orica Annual Report 2022 | 53
FINANCIAL PERFORMANCE
ORICA MONITOR
Year ended 30 September
External sales revenue
EBITDA(1)
EBIT(2)
2022
A$M
118.4
48.5
34.6
2021
A$M
114.5
43.6
30.7
Change
3%
11%
13%
The growth in the Orica Monitor
result was driven by growth in radar
sales and recurring service plans
and commercial discipline. Growth
was suppressed by the loss of
contribution from Nitro Consult
AB which was sold in the first half,
and the cessation of sales to Russia.
Shipping delays and increased freight
costs were mitigated by effective
supply chain improvements in place
from the second half.
Synergies are being achieved by
leveraging the wider Group’s existing
customers. In addition, there was
strong growth in contracts for care
plans and geotechnical remote
monitoring support services,
particularly in Brazil where we
opened a new regional geotechnical
support services office.
Demand for radars is expected
to grow, driven by sustainability
objectives of customers globally.
A second assembly line is underway
in North America to double production
capacity, reduce landed cost and
improve speed to global markets.
Growth is also expected from
the broadening and integration
of Orica Monitor’s sensors and
software suite with Orica Digital
Solutions end-to-end digital
workflows.
GLOBAL SUPPORT
Year ended 30 September
EBIT(2)
Global Support costs were in line with the pcp.
GROUP CASH FLOW
Year ended 30 September
Net operating cash flows
Net investing cash flows
Net operating and investing cash flows
Dividends – Orica Limited
Dividends – non-controlling interest shareholders
Adjusted net cash flows
Movement in borrowings and other net financing cash flows(8)
Net cash inflow/(outflow)(9)
2022
A$M
(68.5)
2021
A$M
(67.6)
Change
(1%)
2022
A$M
362.3
(229.2)
133.1
(90.6)
(7.0)
35.5
613.1
648.6
2021
A$M
618.9
(195.9)
423.0
(72.4)
(7.2)
343.4
(669.0)
(325.6)
Variance
A$M
(256.6)
(33.3)
(289.9)
(18.2)
0.2
(307.9)
1,282.1
974.2
NET OPERATING
CASH FLOWS
NET INVESTING
CASH FLOWS
NET FINANCING
CASH FLOWS
Whilst earnings were higher in
FY2022, net cash generated from
operating activities was lower
compared to the pcp due to an
increase in trade working capital
(TWC). This is predominantly due to
the business decision to maintain
higher levels of inventory in order to
ensure security of supply, as well as
higher input prices, both impacted
by the Russia-Ukraine conflict.
54 | Orica Annual Report 2022
Net investing cashflows were higher
than the pcp, reflecting increased
investment in growth projects,
further spend on sustainability-
related projects, and lower proceeds
from sales of non-core assets.
Cash generated from financing
activities in the current year includes
net proceeds of $682 million from
the successful completion of the
equity raise. The prior year included
the US Private Placement (USPP)
bond redemption which was repaid
in October 2020.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
GROUP BALANCE SHEET
Movement in net assets (A$M)
Trade working capital(10)
was $247 million higher than the
pcp. Trade debtors increased by
$225 million driven by higher sales
revenue, partially offset by improved
collections. Inventory increased by
$237 million predominantly due to
the decision to increase inventory
holdings in order to ensure security
of supply, as well as rising input prices,
both impacted by the Russia-Ukraine
conflict. Trade creditors increased
by $215 million driven by increased
purchasing activity associated with
higher sales volume as well as higher
input costs.
Non trade working capital(11)
net liability was lower by $115 million
due to a reduction in the defined
benefits provisions by $126 million
as a result of an increase in
discount rates and the sale of
Nitro Consult AB; and a reduction
of $77 million in environmental
and decommissioning provisions
due to payments from provisions
and an increase in discount rates.
Other payables increased by
$120 million due to an increase in
employee provisions and the RIG
Technologies acquisition deferred
earn-out consideration. The increase
in other receivables is due to the
remaining receivable from the sale
of Minova.
Net fixed, intangible and right
of use assets increased by
$35 million against the pcp.
Additions of $418 million and
foreign exchange translation of
$155 million was largely offset by
depreciation and amortisation
expense of $386 million, impairment
expense of $100 million, disposals
of $31 million and a net decrease in
capitalised provisions of $21 million.
Other net assets increased by
$79 million from the pcp, driven
by increases in the carrying value
of investments in associates and
an increase in the revaluation of
financial instruments with the
weakening of the Australian Dollar,
partially offset by an increase in
current and deferred tax liabilities.
Net debt (incl. leases) liability was
$621 million lower than the pcp due
to the net cash flow generated from
operating and investing activities
across the year, and funding from
the equity raise undertaken during
the year. The $258 million upfront
payment for the acquisition of
Axis Mining Technology was made
on 3 October 2022.
Minova (discontinued
operations) net assets decreased
by $160 million upon disposal of
the business.
Orica Annual Report 2022 | 55
Net assets30 September2022Minova(discontinuedoperations)Net debt(inc. leases)Other netassetsNet fixed,intangible& right ofuse assetsNon tradeworkingcapital11Tradeworkingcapital10Net assets30 September20212,7922471153579621(160)3,729 2021
Variance
(1,521.4)
42.4
(250.8)
(9.6)
609.2
(42.4)
11.3
9.6
620.5
(32.8)
(14.9 pts)
FINANCIAL PERFORMANCE
DEBT MANAGEMENT AND LIQUIDITY
As at 30 September
Net debt – continuing operations(6) (A$M)
Net debt – held-for-sale(6) (A$M)
Lease liabilities – continuing operations (A$M)
Lease liabilities – held-for-sale (A$M)
2022
(912.2)
–
(239.5)
–
Net debt including lease liabilities – continuing operations (A$M)
(1,151.7)
(1,772.2)
Net debt including lease liabilities – held-for-sale (A$M)
Gearing % – excluding Lease liabilities(7) (%)
–
19.7%
32.8
34.6%
Interest bearing liabilities of
$2,168 million comprise $2,161 million
of US Private Placement bonds
and $7 million of committed and
other bank facilities. The average
tenor of drawn debt is 4.3 years
(September 2021: 5.4 years).
Cash increased by $662 million to
$1,255 million(i) from $594 million
in the pcp primarily as a result
of the equity raise completed in
August that generated $691 million
in gross proceeds.
Use of the proceeds will be
applied to fund the acquisition of
Axis, incremental trade working
capital requirements, and to provide
balance sheet capacity. The cash
balance provides for a strong
liquidity position, complemented
by undrawn committed bank
facilities of $1,423 million.
Gearing excluding lease liabilities
at 19.7 per cent is below the
Group’s target range of 30 to
40 per cent and is below the
57.5 per cent covenant default
measure. The interest cover ratio
at 6.5x is above the minimum
2.0x requirement.
The chart below illustrates the
movement in net debt from
30 September 2021.
(i)
Includes $258 million up‑front consideration paid
on 3 October 2022 for the Axis acquisition.
MOVEMENT IN NET DEBT (A$M)
(i) The net debt balance at 30 September 2021 includes Minova cash of $42 million.
(ii) Impact of foreign exchange translation.
INDIVIDUALLY SIGNIFICANT ITEMS
Year ended 30 September 2022
Impairment expense
Gain on sale of Nitro Consult AB before FCTR release
FCTR release on sale of Nitro Consult and Russia
Individually significant items from continuing operations
Non-controlling interests in individually significant items
Individually significant items attributable to shareholders of Orica
from continuing operations
Gain on sale of Minova before FCTR release
FCTR release on sale of Minova
Individually significant items from discontinued operations
Individually significant items attributable to shareholders of Orica
56 | Orica Annual Report 2022
Gross
A$M
(167.9)
18.5
(39.6)
(189.0)
18.3
(170.7)
10.7
(95.7)
(85.0)
(255.7)
Tax
A$M
(1.8)
–
9.3
7.5
–
7.5
(2.1)
(6.6)
(8.7)
(1.2)
Net
A$M
(169.7)
18.5
(30.3)
(181.5)
18.3
(163.2)
8.6
(102.3)
(93.7)
(256.9)
Net debt31 September 2022(exc. leases)Non cashmovementson net debt(ii)Sub-totalNetfinancingcashflowsNetinvestingcashflowsNetoperatingcashflowsNet debt30 September 2021(exc. leases)(i)1,479229830(516)82912(362) Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Impairment expense
Russia
The escalation of the Russia-Ukraine
conflict, and imposed sanctions and
export restrictions, led to our decision
to exit our Russian operations.
On 9 September 2022, the Group
executed a contract to sell JSC
“Orica CIS” Joint-Stock Company
for cash consideration of $13 million.
Orica has risk adjusted the proceeds
given the trade sanctions imposed
on Russia.
The Group has recognised a gross
expense of $131 million consisting
of an impairment charge of
$90 million reducing the value
of the Russian business to nil and
$41 million relating to the release
of foreign currency translation
reserve as required by Australian
Accounting Standards on the sale
of this business. $8 million was
booked as a credit to tax expense.
Turkey
The significant decline in the local
economy and the devaluation of the
Lira has resulted in the impairment of
Orica’s investment in Turkey during
the year. The total impairment
charge is $33 million after tax, of
which $18 million is attributable to
non-controlling interest.
At 30 September 2022 there was a
foreign currency translation reserve
balance of $92 million debit (of
which $46 million is attributable
to non-controlling interests) which
would be released on sale,
liquidation, repayment of share
capital or abandonment of the entity.
EMEA Goodwill
Following the impairments for
Russia and Turkey the future cash
flows for EMEA were reviewed,
resulting in the remaining $45 million
of goodwill being impaired.
Sale of Nitro Consult AB
On 7 March 2022 Orica completed
the sale of Nitro Consult AB,
recording a net profit after tax of
$20 million including $1 million gain
on release of non-cash foreign
currency translation reserve.
Sale of Minova
On 28 February 2022 Orica completed
the sale of the Minova business to
Aurelius Group. Cash of $149 million
was received at completion.
A further $28 million for debt and
working capital true ups is expected
to be received in FY23. Orica
recorded a cash net profit on sale
of $11 million, offset by the release
of $96 million of non-cash foreign
currency translation reserve and
tax of $9 million, resulting in
a net statutory loss after tax of
$94 million.
OUTLOOK
– 2023 financial year EBIT
from continuing operations is
expected to increase on the
pcp attributable to:
– Anticipated growth in global
commodities demand
– Continued commercial discipline
– Increased adoption of
advanced technology offerings,
and contributions from the
newly acquired Axis Mining
Technology business
– Inflationary pressures and
higher energy costs, as well as
supply chain dislocations, will
remain an ongoing challenge in
the 2023 financial year. Orica
will continue to implement cost
reduction initiatives to reduce the
impact from these pressures
– Capital expenditure expected to be
within $400 million to $420 million,
higher than pcp due to sustainability
and sustenance projects;
depreciation and amortisation
to be in line with the pcp
– Continued focus on balance
sheet and cash flow optimisation,
with gearing expected to remain
below the stated range of
30-40 per cent
– Net finance costs expected to
increase on pcp due to higher
interest rates, and the effective
tax rate to be within the range
of 30-32 per cent
Going forward we expect the
FY2023-FY2025 3-year average
RONA to be 10.5-13.0 per cent.
Financial Performance Footnotes:
(1) EBIT before individually significant items and depreciation and amortisation expense.
(2) Equivalent to profit/(loss) before financing costs and income tax as disclosed in Note 1(b) within the financial statements, before individually significant items.
(3) Equivalent to net profit/(loss) for the year attributable to shareholders of Orica limited, as disclosed in the Income Statement within the financial statements.
(4) Equivalent to profit after income tax expense before individually significant items attributable to shareholders of Orica Limited, as disclosed in Note 1 (b) within the
financial statements.
(5) Equivalent to net cash flows from financing activities (as disclosed in the Statement of Cash Flows within the financial statements) excluding proceeds and repayment of borrowings.
(6) Interest‑bearing liabilities – excluding lease liabilities less cash and cash equivalents, as disclosed in Note 3 within the financial statements.
(7) Net debt / (net debt + total equity), where net debt excludes lease liabilities.
(8) Equivalent to net cash flows from financing activities (as disclosed in the Statement of Cash Flows within the financial statements) excluding dividends paid to Orica ordinary
shareholders and non‑controlling interests.
(9) Equivalent to net increase/(decrease) in cash held, as disclosed in the Statement of Cash Flows within the financial statements.
(10) Comprises inventories, trade receivables and trade payables, as disclosed in the Balance Sheet within the financial statements.
(11) Comprises other receivables, other payables, and provisions, as disclosed in the Balance Sheet within the financial statements.
Orica Annual Report 2022 | 57
TECHNOLOGY
AND INNOVATION
We bring together
talented people, leading
technology and a
collaborative approach
to find solutions for the
challenges of today
and into the future.
With almost 150 years of experience
and expertise in innovation, research
and technology development, we
are committed to unlocking value
for our customers along every stage
of the mining value chain.
We respond to the changing
needs of our industry and customers
and focus on delivering technologies
and solutions to remove people
from harm, drive recovery and
productivity, and reduce the
overall footprint of mining and
infrastructure operations.
Our blasting solutions are automated,
digitised and connected, providing
actionable data and insights for our
customers to improve downstream
benefits. Beyond blasting, we are growing
our digital products and solutions and are
the first to market with digital workflow
solutions from mine-to-mill.
Driven by our purpose to sustainably
mobilise the earth’s resources,
our extensive network of scientists,
engineers and technology experts
work together with our customers,
industry and world-leading academia
to solve shared challenges.
We invest in research and new
technologies, from the early stages
of innovation through to product
development and commercialisation,
with our dedicated technology centres
located in Australia, the United States,
Canada, Sweden, Germany, Singapore,
United Kingdom and Chile.
OUR TECHNOLOGY
ROADMAP
Sustainability
Productivity
TECHNOLOGY
ROADMAP
Recovery
Safety
Safety
We aim to reduce, or completely remove,
safety risks for our customers and reduce
the need for human intervention in mining
and mineral extraction.
We continue to introduce technologies
focused on the safety needs of our
customers, including Avatel™, the world’s
first mechanised development charging
system. This new technology was
developed in partnership with Epiroc, and
enables the operator to remotely locate,
clean, prime and load our bulk explosives
and WebGen™ wireless initiating systems.
In FY2022, the technology was tested in
collaboration with Epiroc.
The safety and productivity of our
BlastVision™ technology continues
to improve. Using artificial intelligence
(AI) learning algorithms, BlastVision™
translates high-quality drone blast footage
to record measurements of ground
movement. Originally designed to monitor
highwall stability immediately after
blasting, this product is providing
further benefits in blast performance
during initiation.
Sustainability
We are harnessing our technology
to help enable improved social and
environment outcomes. WebGen™, 4D™
and Avatel™ are helping our customers
improve safety and productivity, while
recycled or lower-carbon and circular
solutions such as Cyclo™ are helping to
lower environmental footprints.
148 years
of experience
and expertise in
innovation, research
and technology
development
58 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Integrated Extraction Simulator (IES),
a cloud-based software platform, is helping
our customers reduce the use of energy
and water in mining by applying simulation,
optimisation and machine learning.
Developed by the Cooperative Research
Centre for Optimising Resource Extraction
(in Australia), IES integrates with our
blasting design technologies to provide
a comprehensive and integrated
workflow solution, from mine-to-mill.
At our Carseland manufacturing site
in Canada, we implemented low-emissions
abatement technology, reducing nitrous
oxide emissions by 95 per cent from
unabated levels, and enabling lower-carbon
AN for our customers.
Productivity
With blasting at the core of our business
model, new technologies and solutions
such as WebGen™ and 4D™ are enabling
industry to think and mine differently,
and operate more efficiently, precisely
and responsibly.
Advancements in orebody intelligence,
including our recent acquisitions of RIG,
HIG Technologies International, RHINO™
and Axis Mining Technology, has provided
us with a full suite of orebody intelligence
solutions, expertise and leading products to
better understand the geology of the rock
prior to blasting. This is enabling digital
workflow solutions, from mine-to-mill.
The integration of complex geotechnical
data into products such as SHOTPlus™
blast design and OREPro™ 3D modelling
software, ensures we deliver the right
explosives into the right holes at the right
time to achieve the desired outcomes for
our customers.
At the other end of the blasting process,
FRAGTrack provides customers with
increased visibility over fragmentation
and assists in the management and
productivity of blast operations and
downstream processes.
Our technology solutions and digital
integration from mine-to-mill, is driving
us closer to our goal of improving
productivity for our customers by up
to 25 per cent by 2025.
Recovery
We focus on precision across the blasting
process to help achieve better recovery rates
and reduce energy usage for our customers.
In the exploration process, geospatial
tools (such as the new capabilities
in orebody intelligence available
with the acquisition of Axis Mining
Technology), help our customers identify
the location of drill holes with the highest
levels of precision. Additional technology
solutions from our orebody intelligence
offering, provides geophysical
measurements for each hole allowing
for detailed and timely characterisation
of the orebody.
We achieve further precision with
products such as RHINO™, a geophysical
sensor mounted on a drill that provides
unconfined compressive strength using
fine spatial sampling, while drilling and
streaming in real-time to the cloud.
Customers combine this intimate
knowledge of the orebody with our new
4D™ bulk explosive technology to match
the rock conditions and enable a greater
range of explosive energy. This results in
optimised blast outcomes and improved
recovery of ore.
PROGRESS IN FY2022
By uniting our market-leading explosives,
unique wireless initiating systems, digital
workflow optimisation, and advanced
automated delivery systems with
automated solutions, we focused on
creating world-leading solutions, from
mine-to-mill.
We expanded our capabilities and expertise
within our global network, acquiring Axis
Mining Technology (Axis) in August 2022,
to further strengthen our portfolio of
digital solutions and provide customers
with the most comprehensive orebody
intelligence available in the market today.
The Axis acquisition was completed
in October 2022.
Our team of experts continues to grow,
with specialists at every step of the mining
value chain, including geophysicists to
better understand the ore, engineers to
enhance our drill and blasting, geotechnical
specialists focused on stope stability,
metallurgists and mineral experts to solve
challenges, and developers and data
scientists to progress our approach to
innovation and automation.
17
new products
and services
introduced
17
new products
and services
introduced
We introduced 17 new products and
services to the market, including the release
of our second generation WebGen™
200 range, the latest offering to surface
and underground mining, and enabling
automation with Avatel™.
We released our new 4D™ bulk
explosives technology, an exciting
product development with benefits in
blasting efficiencies and recovery. We
completed commercial trials of our 4D™
Coal products at customer sites in Australia
and Asia, and our 4D™ Clear range of bulk
explosives successfully demonstrated
further benefits of 4D™ in reducing fume
risk during blasting.
We remained focused on responding to
market needs, and in partnership with
Epiroc, introduced new technologies with
our Avatel™ product, completing advanced
testing during FY2022 in Sweden, and
progressing towards production trials
scheduled for FY2023.
The adoption of our new technology
continues to grow, increasing our digital
solutions adoption rate by 63 per cent
on the previous year.
Orica Annual Report 2022 | 59
DIGITAL SOLUTIONS &
BLASTING TECHNOLOGY
ADOPTIONS
Europe,
Middle East
& Africa
62 Technology
adoptions
FY22
FY21
FY20
417
TECHNOLOGY
ADOPTIONS
GLOBALLY
North
America
90 Technology
adoptions
FY22
FY21
FY20
Latin
America
89
Technology
adoptions
FY22
FY21
FY20
Head Office
Regional Head Office
Monitoring Centre
Technology Innovation Centre
0
1–10
11–20
21–30
31+
Bar graph represents number of adoptions during each financial year.
60 | Orica Annual Report 2022
Australia
Pacific
and Asia
176 Technology
adoptions
FY22
FY21
FY20
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Europe,
Middle East
& Africa
62 Technology
adoptions
FY22
FY21
FY20
417
TECHNOLOGY
ADOPTIONS
GLOBALLY
Australia
Pacific
and Asia
176 Technology
adoptions
FY22
FY21
FY20
Orica Annual Report 2022 | 61
North
America
90 Technology
adoptions
FY22
FY21
FY20
Latin
America
89
Technology
adoptions
FY22
FY21
FY20
Head Office
Regional Head Office
Monitoring Centre
Technology Innovation Centre
0
1–10
11–20
21–30
31+
Blasting
Technologies
OPTIMISING RECOVERY WITH WEBGEN™
Together with Canadian gold company, Agnico Eagle, we initiated our WebGen™ 100 wireless
blasting technology to help improve outcomes in the uphole stopes at the LaRonde complex in
Quebec, Canada.
WebGen™ enables flexibility to change the blasting sequence to suit the available void without
exposing workers to the hazards of re-entering the stope to connect blast holes. This type of
optimisation is usually not possible with conventional blasting methods or wired initiation systems.
Our WebGen™ specialists, together with the team at Agnico Eagle, reviewed the uphole stope
design at the underground gold mine and implemented improvements to optimise the void for
each blast. The team also changed the drill pattern and hole angles for the first initial blast by
25 per cent. Following the success of the first uphole stope, several upper stopes were mined
using WebGen™ 100.
Agnico Eagle’s Mining Engineer, Vincent Bouillon said the implementation of WebGen™ 100
greatly improved recovery in their upper stopes, allowing them to perform several blasts and have
an adequate void volume.
“The success of our WebGen trials allow us to believe in the possibility of applying this technology
to perform mining in sectors previously not possible. This is a significant gain for us.”
Digital Technologies
FRAGTRACK™ DELIVERING INSIGHTS AND VALUE
AT STEVENSON AGGREGATES NEW ZEALAND
Drury Quarry is one of the largest quarries in New
Zealand, producing approximately three million tonnes
of aggregate each year. Operated by Stevenson
Aggregates, the quarry has been in operation since
1939 and is committed to sustainability and operational
efficiencies using technologies and innovation.
Stevenson Aggregates had identified challenges in
gaining valuable data from post-blast fragmentation
analysis conducted in-pit using manual sampling. This
was time-consuming and not a sustainable process for
the long-term. Orica proposed FRAGTrack™ Crusher, an
automated pre-crusher fragmentation measurement
tool delivering operational continuity in a safe and
reliable way. The technology leverages the latest deep
neural network artificial intelligence (AI) framework
along with the industry-proven hybrid 2D and 3D particle
size distribution (PSD) processing methods to deliver a
fully autonomous adaptive fragmentation monitoring
solution at the crusher dump pocket and enabling
customers to measure material on the truck during tipping
operations. The smart trigger settings ensure only true
samples are recorded and every image is processed and
uploaded to the FRAGTrack™ website to view at any
time. This allows managers and engineers to assess the
blast fragmentation performance on a continuous loop.
Stevenson Aggregates Performance Manager,
Daniel Topp said: “FRAGTrack is allowing us to obtain
information that we’ve never typically had. What we’re
getting is information to better understand our rock and
resource. This is data we can feedback and analyse and
that’s pretty revolutionary.”
The data can also be correlated to the crusher throughput
analytics to measure production rates, blockages and
amount of primary crushing versus secondary crushing.
This helps the customer assess the wear and tear on
components in the crusher at various stages throughout
the process.
Stevenson Aggregates General Manager, Kurt Hine said:
“Having a partner like Orica is great for us. We love our
supply partners coming to us so that we can continue to
innovate, improving our processes and deliver a quality
product to our customers in a more sustainable way.”
FRAGTrack has saved Stevenson Aggregate over 800
hours of manual processing and provided access to
more than 5,000 fragmentation images, delivering an
accurate and unbiased PSD baseline for optimum sizes,
maximising crusher performance and reducing scalp yield.
FRAGTrack Crusher has been adopted by Drury Quarry
to reduce overall cost per ton of aggregate, provide
critical data for specific Drill and Blast optimisation,
and help reduce carbon footprint as the demand for
aggregate production in the region continues to rise.
62 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
How we
go about it
How we deliver value for our customers
is as important as what we deliver.
Our extensive network of scientists,
engineers and technology experts are
driven by a shared purpose to sustainably
mobilise the earth’s resources.
In FY2022, our wireless blasting
technology team reached a significant
milestone, firing the 125,000 units
WebGen™ primer across more than
4,000 blasts. This was an exceptional
team effort involving thousands of hours
of research and development, testing,
collaboration and teamwork.
Blasting is core to our business, and
rapid commercialisation of our products
is key to our technology strategy.
Our team of engineers and technology
experts understand the importance of
every blast design and execution and
bring an energy to unlocking maximum
value for our customers.
Orica Senior Manager Technology
Digital Solutions, Alison McDonald said:
“With every blast design, we focus
on the elements that are unique.
We carefully examine the environment,
the various blast techniques and the
desired outcomes. We design a tailored
solution for our customers with the
priorities of safety and productivity.
We are very fortunate to have an
experienced and diverse team of experts
to draw from, and every day presents
an opportunity to learn and contribute
to our success.”
With Orica technology centres located
around the world, recent acquisitions
in orebody intelligence further expand
our expertise and digital capability,
with a particular focus on geophysics
measurements and sensor technology.
Orica Principal Research Fellow Digital
Solutions, Tim Hopper said: “We are
excited by the opportunities to bring
together our advanced geophysics
expertise, measurements, and
instrumentation into the broader Orica
system. This expansion of our digital
capability will further support our
customers with their goals to operate
more efficiently, sustainably, and safely,
from mine to mill.”
The best outcomes are always
achieved through genuine teamwork.
Our commitment to customer
collaboration and skills across our global
network enables us to reduce risks,
increase speed to market, and find
efficiencies and value for our customers.
This unrivalled experience and deep
expertise of our people gives us
a clear advantage.
Since 2017, WebGen™
has been deployed in
12 countries across six
continents, enabled seven
revolutionary mining
methods and delivered
unprecedented value
for customers across six
unique industries.
FY2023 priorities
Blasting technologies
– Expand market adoption
of new blasting technologies.
– Introduce Avatel™ automation
technology into Newcrest,
Cadia mine.
– Commercialise second
generation WebGen™ 200
and grow surface market
penetration.
– Expand 4D™ explosives
technology growth beyond
Australia Pacific region.
– Enhance our collaboration
programs with key customers
to focus on sustainability and
automation outcomes.
– Extend Orica’s ESG data
strategy and IT platform.
Digital technologies
– Integrate and optimise acquired
orebody intelligence businesses
including HIG, RIG Technologies
International, RHINO™ and
Axis Mining Technology.
– Increase delivery of digital
solutions to optimise workflows
from mine-to-mill.
– Expand GroundProbe
production and technology
offerings to cover all
geo-technical solutions.
Orica Annual Report 2022 | 63
PEOPLE AND
CAPABILITIES
88%
EMPLOYEE
ENGAGEMENT
We are cultivating an inclusive and respectful
environment to empower our people to fulfill their
potential and shape Orica’s future.
EMPLOYEE ENGAGEMENT:
GAINING EMPLOYEE INSIGHTS
THROUGH ORGANISATIONAL-
WIDE LISTENING
In FY2022 our global culture and
engagement survey, ‘Our Say’, was
deployed across the organisation, with
a participation rate of 65 per cent.
Despite internal and external pressures,
the results showed our people are
engaged, energised and enabled with
a score of 88 per cent outperforming
global industry benchmarks. Safety
results continue to be an area of key
strength, demonstrating that our people
feel safe coming to work every day.
Overall, the results were similar to the
results of our 2019 Organisational
Health survey.
– Our people are proud to be
associated with Orica (92 per cent),
and willing to recommend Orica as
a great place to work (85 per cent).
– Our frontline workforce is one of
the most engaged groups, leading
the way with motivation, satisfaction
and intent to stay. In comparison,
our senior leaders and middle
managers remain engaged but
scored lower across the overall
engagement category (82 per cent).
– The categories of role clarity and
development (76 per cent) and work
environment and well-being (80 per
cent) were among the lowest scoring.
The feedback received from the
‘Our Say’ survey has shaped three
global programs of work:
– leadership and career development;
– recognition and reward program; and
– new ways of working.
We have moved away from a ‘one size
fits all’ action planning approach to a
more personalised employee experience,
recognising that engaging the workforce
is a shared responsibility. Our regions
and functions are empowered to take
ownership of their own focus areas,
each rolling back up to the enterprise
plan, with progress and impact to be
measured by ongoing pulse listening
strategies throughout FY2023.
CHARTING A COURSE
DURING A PERIOD OF
UNPRECEDENTED CHANGE
Our people are our most valuable
resource and we are committed to
strengthening the capabilities of our
talented and diverse team. In FY2022,
our focus was on continuing the
progress made against our people
strategy, amidst the ongoing global
disruption caused by geopolitical
events and the COVID-19 pandemic.
This was compounded by shifting
employee expectations, a highly
competitive talent market and our
ongoing work to mitigate inflationary
pressures. Safeguarding the health,
safety and well-being of our people,
ensuring our team are resilient and
adaptable, and that we have the right
team in the right place at the right
time, remains our priority despite
the challenges faced.
Several key initiatives have focused
on strengthening the quality and
diversity of our internal talent pipeline.
This includes our flagship Frontline
Leadership Development program,
Enterprise Executive Mentoring
program and targeted regional and
functional initiatives to support the
delivery of our global people strategy.
64 | Orica Annual Report 2022
REFINING AND
REFOCUSING OUR
PEOPLE PRIORITIES
To align with the results of the
‘Our Say’ survey, our people strategy
was refreshed with a renewed focus
on attraction and retention. Four key
priority pillars support an improved
employee experience to help build the
distinctive capabilities we need to
deliver on our business imperatives.
– Engaging our people and
enhancing a performance
culture: Empowering our people
to achieve their potential and
fulfil their passion means a
continued focus on a culture of
empowerment, inclusive leadership
and a clearly defined employee
value proposition.
– To strengthen the alignment
between our values and culture,
Our Code was revised in FY2022,
strengthening our positions on
modern slavery, sexual harassment
and the protection of Indigenous
cultural heritage sites. Our Code
applies to anyone who works for us
or on our behalf and sets out clear
expectations for the way we work.
– Developing capabilities to drive
our competitive advantage:
Our targeted capability strategy
continues to focus on developing
and deploying leadership
development programs which
address the unique challenges
faced by our management teams.
– Talent and career management:
Career development will be
supported through enterprise
and regional mentoring programs,
talent assessment and high
performing teams. In addition to
pro-actively sourcing, accelerated
pathways for early and emerging
talent will be enabled.
– Standardising and automating
employee self-service: Digitizing
the employee experience helps
streamline, standardise and improve
employee self-service, transform
our workforce footprint and build
the skills we need for the future.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Executive Mentoring
program
Strengthening and diversifying our leadership and talent are core workforce
transformation initiatives. The Executive Mentoring program is helping develop
a strong pipeline of future enterprise leaders.
Mentoring takes many forms but at its core,
is about connecting people and ideas.
The Executive Mentoring program enables mentees
across 14 countries to take a proactive and
targeted approach to professional development,
providing experience, education and exposure
to diverse environments across the organisation.
Key development activities throughout the
10-month program include high-quality
partnerships with Executive Committee
members to expand mentees’ leadership skills
and business context, and tackling real-life
issues directly aligned to our refreshed strategy
to enable cross-functional problem solving.
The enterprise program has been refined
for another cohort extending into FY2023,
providing opportunities to implement
recommendations across greater mentoring
meeting effectiveness and line leader
engagement.
“Building a mentoring relationship with our
CEO – learning from their insights, guidance
and experience has helped to shape and grow
my career. I also deepened my understanding
of the Orica strategy, and how I can support the
execution of this. I expanded my Orica network
with future leaders, shared knowledge, and
worked on a real business challenge outside
our areas of expertise.”
Rachael Sandel
Head of Digital Workplace, Australia
‘’I was able to develop a professional
relationship with a member of the executive
committee based on honest and transparent
discussions. The discussions around family
and work balance were also very enriching.’’
Eric Dumaresq
Area Business Manager, Canada
”I was able to get support from my mentor
as I was transitioning into a new role.
Additionally, I built connections with peers
across the organisation to move completely
outside of my comfort zone, giving me
exposure to challenges faced by other
parts of the business.”
Tomas Carmona
Manufacturing Centre Manager,
Discrete Manufacturing, Chile
Following the success
of the Executive
Mentoring program,
regional programs have
now been developed
and implemented.
Orica Annual Report 2022 |
65
PEOPLE AND CAPABILITIES
Strengthening our operational
leadership pipeline
The Frontline Leadership Program
(FLP) is an initiative directly linked
to the global ‘Our Say’ survey
focus areas and is designed to
address the unique challenges faced
by operational management across
our Commercial and Manufacturing
functions. Self-awareness, personal
effectiveness, communication and
applied leadership emerged as key
capability topics.
With a blend of virtual workshops
and self-led activities, participants
were encouraged to maximise their
extended networks gained from
the program. FLP deployment will
extend into FY2023 and FY2024,
ensuring our 1,200+ frontline
leaders are provided with
opportunities to participate.
Improving visibility of career
pathways across Technology
and Innovation
Feedback from the Technology
and Innovation function highlighted
the need to provide greater visibility
of career journeys across different
teams. Three core pathways were
identified, allowing employees
to move between different
functional streams:
– deepening expertise: increases
career options for subject matter
experts who wish to continue
building knowledge in their
chosen field;
– vertical progression: development
experiences that enable upward
career mobility; and
– building lateral experience:
movement across different streams
and programs of work to gain
broad experience and exposure.
The career framework has been
intentionally designed with options
available across leadership and
technical pathways, allowing
employees to fulfill with their own
career preferences and discover new
opportunities in an environment
structured for sustainable growth.
FOSTERING A DIVERSE,
EQUITABLE AND INCLUSIVE
CULTURE
To attract and retain a diverse
workforce, we are enabling and
fostering the right culture and
inclusive work environment.
A renewed focus on our diversity,
equity and inclusion agenda is critical
and with the constrained talent
market across our geographic
areas of operation, a priority focus
in FY2022 – FY2024.
1,200+
FRONTLINE
LEADERS
Our ambition is to accelerate our
progress in talent diversification
and representation to align with
our refreshed people strategy.
We have three priorities:
– build an attractive talent
brand to further strengthen
our talent pipeline and attract
a diverse pool of talent
to Orica;
– enable an inclusive culture
and new ways of working
by empowering our people
to embrace new ways of
working through systems,
policies and behaviours; and
– increase leadership
accountability through clear
leadership expectations and
measurable behavioural outcomes.
“A renewed focus
on our diversity,
equity and inclusion
agenda is critical.”
66 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
KEY MEASURES THAT
REFLECT OUR DIVERSE AND
TALENTED WORKFORCE
We employ over 12,000 people in
more than 45 countries, bringing
together a diverse range of
backgrounds, experiences and skill
sets. We are committed to creating
a respectful and inclusive work
environment, where differences are
valued as strengths and our people
can reach their full potential. Our
Diversity and Inclusion Policy outlines
our continued vision, commitment
and approach and is available in the
Governance section of our website.
Inclusion index
In FY2022, an Inclusion Index
measuring our people’s sense
of opportunity, belonging and
impartiality was introduced. Overall,
our workforce has a positive outlook
on inclusion (86 per cent) reflective
of high-performing organisations.
However, differences exist among
self-reported demographics in
selected areas of the business.
Meaningful action at a local level
remains the most impactful to
driving change and ensuring all
employees have confidence they
can be their best selves at work.
Cultural diversity
With a global workforce across
four regions, employees representing
over 80 nationalities collaborate
to deliver on Orica’s immediate,
medium and long-term goals.
Our employees are led by a senior
leadership team comprised of
16 different nationalities, helping
to foster diversity of thought and
a culture of innovation. A greater
focus on global career mobility will
enable more diverse teams and
different perspectives to flourish
in an inclusive environment.
Women in our workforce
The representation of women
in our workforce, 18.6 per cent,
is aligned to industry norms.
The percentage of women in
our senior leadership population
marginally increased from 28.0 per
cent in FY2021 to 28.9 per cent in
FY2022, reflecting voluntary attrition
in an extremely competitive talent
market and a reduction in the
senior leadership population
(due to restructures and lateral
movements). Significant progress
is required if we are to address
our current gender diversity gap.
Female representation on our Board
remained at 33.3 per cent (three of
our nine Directors), exceeding our
target of ≥30 per cent.
Actions for further progress
Our medium and long-term
commitments aim to foster an
environment of inclusion and
equitable opportunity for under-
represented groups in the workforce.
Progress will be monitored as part
of our continuous listening strategies
and to assess progress towards
our FY2024 diversity, equity and
inclusion objectives.
A full scorecard for FY2022
(and FY2023 targets) is disclosed
as part of the ESG Data Centre
on our website.
FY2023 priorities
– Deploy leadership accountabilities
and subsequent leadership
development programs.
– Review of employee benefits
and deployment of global
recognition program.
– Complete global collaboration-
ways of working review.
80+
NATIONALITIES
18.6%
WOMEN IN OUR
WORKFORCE
Orica Annual Report 2022 | 67
CLIMATE AND
THE NATURAL
ENVIRONMENT
We continue to demonstrate strong environmental
stewardship across our value chain. From decarbonising
our own operations and optimising our use of resources
to innovating sustainable customer solutions, we are
working toward our own sustainability goals and
helping our customers with theirs.
Climate change
Net zero
ambition by 20501.
0.8% reduction
in global net Scope 1 and 2 GHG
emissions; 14% below 2019
baseline levels2.
New target to source
100%
renewable electricity
by 2040, with an interim step of
60 per cent by 20303.
46%
revenue contribution
from gold and copper markets.
95%
nitrous oxide emissions reduction
from unabated levels at Carseland
following installation of tertiary
catalyst abatement technology.
Signed
10-year PPA
securing renewable electricity from 2025
via the Wellington North Solar Farm in
Australia.
68 | Orica Annual Report 2022
We accept human activities
are influencing the climate and
support efforts to limit global
warming in line with the goals of
the Paris Agreement. We believe a
transition to a net zero emissions
economy is required and are
committed to doing our part.
Despite difficult operating
conditions, particularly the global
AN supply chain disruption arising
from the ongoing Russia-Ukraine
conflict, we achieved important
milestones this year towards our
climate change goals of building
economic resilience, accelerating
decarbonisation, and embedding
climate in decision-making.
As a global leader in mining services,
we recognise we have a role to
play in mobilising the commodities,
raw materials and technologies
fundamental to the lower-carbon
transition. Advanced computing,
manufacturing, lower-emissions
energy systems and transport
electrification are all made possible
by future-facing commodities and
critical minerals. We are advancing
strategies to rebalance our
commodity portfolio and reimagine
our manufacturing processes to
enhance our competitiveness for
a lower-carbon future.
For detailed climate disclosures in
line with the recommendations of
the Task Force on Climate-related
Financial Disclosures (TCFD)
see our FY2022 Climate Action
Report (CAR).
(1) Covers our global Scope 1 and Scope 2 GHG
emissions under our direct control, and material
Scope 3 GHG emission sources. Material means the
GHG emissions embodied in purchased ammonia
and ammonium nitrate included in the Scope 3
reporting category of purchased goods and
services. These comprise around two‑thirds of
Orica’s Scope 3 emissions footprint.
(2) Includes the surrender of 60,000 Australian
Carbon Credit Units to proactively maintain
our net emissions below a regulatory emissions
limit in Australia.
(3) The renewable electricity target boundary excludes
small sites (e.g. single remote offices, depots etc),
markets where total consumption is less than
100 MWh per year, and countries where credible
renewable electricity sourcing options do not exist.
This approach is consistent with industry standards.
Steam, heat and cooling energy is excluded.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
FY2022 PERFORMANCE
Our gross Scope 1 and 2 emissions in FY2022 were 1,943 ktCO2-e, a two
per cent increase since FY2021. We surrendered 60,000 Australian Carbon
Credit Units (ACCUs) to meet our forecast compliance obligations under the
Safeguard Mechanism in Australia, bringing our net Scope 1 and 2 emissions
to 1,883 ktCO2-e. We remain on track to meet our targets with net Scope 1
and 2 GHG emissions 14 per cent below 2019 base year levels.
This year, we increased our accountability for reducing operational Scope 2 GHG
emissions by committing to source 100 per cent renewable electricity by 2040.
We have signed a 10-year Power Purchase Agreement (PPA) securing renewable
electricity from the Wellington North Solar Farm Australia which will supply
around 50 per cent of Orica’s Australian electricity needs from 2025.
Wellington North solar farm case study on page 73
Global GHG emissions by source (Scope 1 and Scope 2)
4%
11%
20%
Electricity (Scope 2)
15%
Natural Gas Combusted (Scope 1)
Nitrous Oxide Process Emissions
(Scope 1)
Natural Gas used as Feedstock
(Scope 1)
Other (Scope 1 and 2)
50%
Global Scope 1 and Scope 2 GHG emissions (ktCO2-e)
260
242
267
271
265
60
2,244
2,092
1,849
1,628
1,678
1,883
FY2018
FY2019
FY2020
FY2021
FY2022
FY2022 (Net)
Total Scope 1 Emissions
Total Scope 2 Emissions
Compliance Surrender
IMPACT OF GEOPOLITICS
AND CONFLICT IN UKRAINE
In FY2022, the ongoing Russia-
Ukraine conflict disrupted global AN
supply chains and trade conditions,
impacting how we do business.
Global demand for AN increased
as commodity prices spiked while
supply decreased due to trade
sanctions imposed on Russia and
rising energy prices curtailing
European production. We responded
by increasing manufacturing output
to compensate for reduced purchase
volumes and to ensure security of
supply for our customers.
This has caused a shift in the
distribution of our GHG emissions
from Scope 3 (purchased AN) to
Scope 1 and 2 (manufactured AN).
Most notably, production volumes
and emissions increased from our
manufacturing facilities at Bontang,
Indonesia and Yarwun, Australia.
Both sites produced record product
volumes this year. Yarwun is one
of our higher product emissions-
intensity continuous manufacturing
plants. This reinforced our efforts
to complete pre-feasibility for the
Yarwun Nitrates Decarbonisation
Project in 2023, which commenced
in January 2022.
Net Scope 1 and 2 GHG emissions
compared to FY2021 remained
relatively stable despite increased
AN production volumes through
the continued implementation
of our decarbonisation strategy.
We surrendered 60,000 ACCUs
to meet our forecast compliance
obligations at Yarwun, Australia
under the Safeguard Mechanism.
Our FY2022 Climate Action Report
provides details on the eligible
ACCUs surrendered this year and
our approach to managing and
accounting for carbon credits.
FUTURE-FACING
COMMODITIES FOR A
LOWER-CARBON ECONOMY
The mining, metals and raw material
sectors are enabling the energy
transition and decarbonisation
technologies. Vast quantities of
metals and minerals such as lithium,
copper and rare earth elements
are needed to drive the massive
technological transition ahead.
This represents a significant
opportunity for the industry
and Orica.
We continue to diversify our
commodity exposure and position
our portfolio towards higher growth
commodities, including future-facing
resources. We have a strong global
presence in copper and are serving
future-facing mines, particularly
nickel and lithium in Australia.
Our commodity mix reflects a
diversified portfolio across coal
and metals markets. Gold and
copper markets remain the largest
commodity exposure, collectively
representing 46 per cent of FY2022
revenue with copper growing this
year across all operating regions.
Copper as a proportion of total
revenue grew by 6 per cent in
FY2022. Thermal coal revenue
exposure was 16 per cent in FY2022.
In Latin America, the ongoing
shift in the region’s commodity
exposure reflects strong recovery in
copper customer demand and the
large proportion of our customers’
mining pipelines focused on future-
facing commodities.
To increase revenue exposure to the
growing battery technology market,
we advanced our partnership with
Alpha HPA in Gladstone, Australia.
We also established two new
partnerships along the east coast
of Australia, the Hunter Valley
Hydrogen Hub and H2-Hub™
Gladstone, offering new product
and market opportunities in green
hydrogen and green ammonia.
Orica Annual Report 2022 | 69
CLIMATE AND THE NATURAL ENVIRONMENT
Engaging
constructively
with investors
We maintain proactive and transparent engagement
with investors on our sustainability initiatives.
Climate Action 100+ (CA100+) tracks the progress of
companies against several key indicators through regular
engagement, progress reporting and benchmarking.
The positive dialogue maintained this year with Orica
has been acknowledged by our lead investor, Australian
Retirement Trust (ART). ART’s latest Sustainable Investment
Report published on 31 October 2022, highlights Orica’s
progress in relation to the setting of a net zero emissions
ambition by 2050 covering Scope 1 and 2 GHG emissions
and its most material Scope 3 emissions; a reduction in
Scope 1 and 2 GHG emissions since 2019; and the setting
of a credible roadmap to achieve the targets in place
by prioritising technology solutions, collaborating with
suppliers and customers, and providing better disclosure
of performance against targets in line with the Task Force
on Climate-related Financial Disclosures requirements.
Decarbonisation of our operations is underway, and we are
mitigating the risks and capturing opportunities presented by
climate change.
We anticipate our ongoing engagement with CA100+
will further improve investor understanding of our climate
strategy and progress towards meeting our commitments.
70 | Orica Annual Report 2022
Global infrastructure developments are
driving quarry and construction presenting
opportunities for Orica. We are well
positioned in our core quarry business
regions (North America and Europe), and
increasing our exposure in developing
markets, particularly in the Asia Pacific,
as ongoing urbanisation continues to
drive demand over the long term.
We believe the transition to a lower-
carbon economy is necessary and
must be responsible and co-ordinated.
We will:
– continue to service our coal customers
in the medium term, acknowledging
the right to the development of
emerging economies, while seeking
opportunities to become a partner in
our customers’ efforts to transition
to a lower-carbon economy;
– leverage our expertise in science and
technological innovation to help develop
sustainable products and services for
our customers, and foster smarter,
safer mining with the potential to
enable emissions savings across the
mining sector’s value chain;
– minimise exposure to carbon
pricing by accelerating our own
decarbonisation; and
– continue to strengthen our scenario
analysis, assess and capture growth
and diversification opportunities.
DECARBONISING INDUSTRIAL
PROCESS EMISSIONS
Eliminating Scope 1 nitrous oxide
emissions from our Nitric Acid Plants
(NAPs) continues to be central to our
decarbonisation efforts. Nitrous oxide
currently accounts for 50 per cent of our
operational emissions. Over the fiscal
year, we invested $21 million in low-
emissions technology and emissions
reduction initiatives. This year, we realised
NAP emission intensity reductions
following the commissioning of tertiary
catalyst abatement at one of two NAPs
at Carseland, Canada.
In the first year of operation, the
Carseland project reduced nitrous oxide
emissions on one plant by 95 per cent
from unabated levels, and reduced
Scope 1 and Scope 2 emissions
intensity per tonne of AN produced
by 46 per cent.
Important milestones were achieved
towards the Kooragang Island
Decarbonisation Project. Three tertiary
abatement reactors were delivered in
August 2022, with installation proceeding
at NAP No. 1 in September 2022, and
commissioning to occur during October
and November 2022.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
The tertiary catalyst abatement
technology will be deployed across
the remaining two NAPs in FY2023.
The $37M project represents a
partnership with the NSW
government and the Clean Energy
Finance Corporation.
Our continuous manufacturing site
at Yarwun, Australia, has three NAPs
and is in the early stages of pre-
feasibility engineering. This year, we
registered an Emissions Reduction
Fund project with the Clean Energy
Regulator and secured a Carbon
Abatement Contract with the
Australian Government. While these
steps are fundamental to realising
the underlying investment case for
the Yarwun Nitrates Decarbonisation
Project, we have temporarily set
aside a final investment decision.
Changing climate policy and
regulatory settings present increased
investment uncertainty in Australia
Global nitric acid plant emissions intensity (Scope 1 Nitrous Oxide)
(tCO2-e per tonne of nitric acid produced)
1.30
1.09
0.99
0.83
0.81
FY2018
FY2019
FY2020
FY2021
FY2022
and a final investment decision is
dependent upon the Australian
Government finalising Safeguard
Mechanism reforms and a review
of the Australian carbon market.
Overall, nitric acid nitrous oxide
emission intensity fell 2.4 per cent
to 0.81 tCO2-e per tonne of nitric
acid produced.
OUR DECARBONISATION PATHWAY
OPERATIONS
VALUE CHAIN
H2
2019
Base
Year
GHG
Emissions
Scope
1, 2 & 3*
2050
N
e
t
z
e
r
o
e
m
i
s
s
i
o
n
s
a
m
b
i
t
i
o
n
^
Decarbonisation
Levers
Nitrous Oxide
Abatement
Renewable
Energy
Description
Key Projects
Deploying
secondary and
tertiary catalyst
abatement across
nitric acid plants
Sourcing renewable
electricity and
deploying onsite
generation
Secondary abatement
Bontang
Carseland (1 plant)
Yarwun (1 plant)
Tertiary abatement
Carseland (1 plant)
Kooragang Island
Yarwun
Offsite generation
(e.g. PPAs)
NSW Australia
QLD Australia
Canada
Onsite generation
Gomia, India
(solar expansion)
Groundprobe,
QLD Australia
Energy
Optimisation
Driving energy
optimisation
initiatives
Energy and waste
heat recovery
Energy efficiency
initiatives
Fuel and
Feedstock
Switching/CCUS
Lower-Carbon
Sourcing
Supplier
Engagement
Carbon
Offsets
Alternative hydrogen
and other feedstocks
Carbon capture,
utilisation and
storage
Sourcing of
advanced bio-fuels,
and other
lower-carbon
chemical feedstocks
Engaging
with suppliers
to collect accurate
emissions data and
influencing climate
initiatives
Avoiding or
sequestering
greenhouse gas
emissions from
the atmosphere
Hunter Valley
Hydrogen Hub,
NSW Australia
MCi
demonstration
plant, NSW
Australia
Specialised
mobile fleet
electrification
H2-HubTM
Gladstone, QLD
Australia
Supplier carbon
risk and emissions
profiling
Carbon market
and offset
strategy
Targeted
engagements on
product-specific
emissions
intensity and
decarbonisation
plans
*^ Our net zero emissions ambition covers our global Scope 1 and 2 emissions under our direct control, and material Scope 3 emission sources. Material means the GHG emissions
embodied in purchased ammonia and ammonium nitrate included in the Scope 3 reporting category of purchased goods and services. These comprise around two-thirds of Orica’s
Scope 3 emissions footprint. Achieving this ambition will require effective government policy frameworks, supportive regulation and financial incentives, and access to new
lower-carbon technologies operating at commercial scale.
Emerging technologies
Feasibility
Implementation
Completed
Refer to our FY2022 Climate Action Report for more information on our decarbonisation initiatives
at a continuous manufacturing asset level.
Orica Annual Report 2022 | 71
CLIMATE AND THE NATURAL ENVIRONMENT
Catalysing green hydrogen
and ammonia technologies
and markets
Catalysing green
hydrogen and ammonia
technologies and markets
Orica is positioning as a key collaborator
for lower-carbon industrial precincts,
which offer new markets, partnerships
and commercial opportunities. This year,
we formalised partnerships in our
Australian manufacturing regions to
develop and deploy green hydrogen
and green ammonia technologies for
hard-to-abate sectors.
HUNTER VALLEY
HYDROGEN HUB
Our partnership with Origin Energy
assesses the viability of the Hunter
Valley Hydrogen Hub, a green hydrogen
production facility and associated value
chain in the Hunter Valley, Australia.
The Hub aims to deliver a safe, reliable and
commercial scale green hydrogen supply
chain in the Newcastle industrial and port
zone. Under the plan, green hydrogen
would be produced from sustainably
sourced water and renewable electricity
from Origin’s portfolio, using a grid
connected 55MW electrolyser.
“Both Origin and Orica are well
established in the Hunter region and
bring considerable expertise in different
aspects of the hydrogen value chain, which
will help contribute to the continued
development of this emerging industry.”
Frank Calabria, Origin Energy CEO
H2-HUB™ GLADSTONE
Our partnership with H2U – Hydrogen
Utility® initiates the master plan study
for the H2-Hub™ in Gladstone, Australia,
a proposed multi-billion industrial-scale
green hydrogen and green ammonia
production facility with export potential.
We will explore opportunities for an
exclusive green ammonia offtake and
supply agreement that would see
green ammonia supplied directly to
our Yarwun manufacturing plant from
H2U’s proposed Yarwun green ammonia
production plant. The partnership will
also explore the potential of a green
ammonia export terminal at the Port
of Gladstone, leveraging our existing
ammonia storage capacity at the
Fisherman’s Landing Wharf and the
associated connecting infrastructure in
the Gladstone State Development Area,
to facilitate large-scale exports.
72 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
RENEWABLE ELECTRICITY
This year, we announced a
renewable electricity target which
will see our business powered by
100 per cent renewable electricity
by 2040, with an interim step of 60
per cent by 20301. This commitment
expands our focus from Scope 1
industrial process emissions to
address our Scope 2 emissions and
will enhance our competitiveness
in a lower-carbon economy.
With volatile global energy prices this
year, we are focused on finding value
in the energy market to reduce costs
and our environmental footprint. In
addition to optimising our energy
use, corporate Power Purchase
Agreements (PPAs) were identified
as a useful mechanism in avoiding
volatile market prices. PPAs secure a
fixed renewable electricity price and
can help hedge against market risks.
In FY2022, a 10-year PPA was signed
with Lightsource bp helping increase
renewable energy capacity in the
market. The PPA will help underpin
an extension to the Wellington Solar
Farm near Dubbo, Australia.
The Wellington North solar farm
is expected to be constructed
and operational from 2025.
Looking ahead, we are
pursuing onsite generation
and offsite procurement
options to grow the
proportion of renewables
in our electricity mix
and meet our
corporate targets.
(1) The renewable electricity target boundary excludes small sites (e.g. single remote offices, depots etc), markets where total consumption is less than 100 MWh per year, and
countries where credible renewable electricity sourcing options do not exist. This approach is consistent with industry standards. Steam, heat and cooling energy is excluded.
Wellington North
solar farm to supply
renewable electricity
to Orica
To accelerate our journey towards
sourcing 100 per cent renewable
electricity, Orica entered into a
PPA with Lightsource bp for renewable
electricity generated by its Wellington
North solar farm. The PPA will
underpin an extension of the existing
Wellington solar farm and is expected
to create over 400 jobs during
construction and eight full-time
equivalent roles once fully operational
in 2025. The solar farm will generate
a total of 915 gigawatt hours of
renewable electricity per year,
saving over 730,000 metric tonnes
of carbon emissions.
As part of the PPA, Wellington North
will supply around 50 per cent of our
Australian electricity needs, reducing
our global Scope 2 emissions by
over 60,000 metric tonnes of GHG
emissions annually. Globally, the
proportion of our electricity sourced
from renewables will be around
30 per cent once Wellington North
is fully operational in 2025.
Orica Annual Report 2022 |
73
CLIMATE AND THE NATURAL ENVIRONMENT
VALUE CHAIN EMISSIONS
We are committed to playing our
part to mitigate the impact of our
value chain emissions. However, the
nature of Scope 3 emissions is that
many are outside our direct control.
Our actions are focused on
understanding the sources of our
Scope 3 emissions, accurately
quantifying them and identifying
opportunities to reduce the emissions.
Last year, we established a baseline
Scope 3 emissions inventory and
announced our net zero emissions
ambition which covers Scope 3
emissions from purchased ammonia
and AN.
This year, our focus turned to
maintaining security of supply. With
our existing supply arrangements
altered due to the ongoing Russia-
Ukraine conflict, we sourced
ammonia and AN from a range
of new suppliers, where it was
globally available.
Supplier engagements have been
prioritised this year to further
understand product and transport
emissions and improve the accuracy
of reported Scope 3 emissions
from our purchased goods and
services. Looking ahead, we
continue to develop a value chain
decarbonisation strategy and consider
a range of possible commitments,
actions and collaborations to deliver
on our net zero emissions ambition.
FY2022 Climate Action Report
Joining efforts with our financial lenders
to improve sustainability
Joining efforts
with our financial
lenders to improve
sustainability
Orica’s sustainability performance
is critical to our financial success.
In FY2022, Orica converted $1.3 billion
of existing bank debt facilities into
sustainability-linked loans.
While financing terms of the existing
loan facilities remain unchanged,
the structure provides an incentive
for Orica to deliver against
sustainability key performance
indicators as the cost of the loans
will vary with performance.
Orica’s sustainability performance
outcomes will now result in changes
to our cost of capital.
Progress against key performance
indicators will be measured against
ambitious performance targets
aligned to our public commitments.
Performance is rewarded against
agreed target milestones with discounts
on the loan margin and penalties if
those milestones are missed.
Key performance indicators
are comprised of:
– reducing Scope 1 and 2
GHG emissions;
– reducing potable water
intensity; and
– increasing representation of
women in senior leadership.
The transaction was developed
with reference to the Sustainability-
Linked Loan Principles (SLLP) 20221.
A second-party opinion was
provided by Sustainalytics while EY
provided external data assurance.
The establishment of sustainability-
linked loans integrates sustainability
into our financial framework and
deepens our relationships with
the banks who provide important
sources of capital.
(1) Asia Pacific Loan Markets Association (APLMA), Loan Market Association (LMA) and Loan
Syndications and Trading Association (LSTA) Sustainability-Linked Loan Principles 2022.
74 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Stewarding natural resources
31%
TOTAL WATER
CONSUMPTION FROM
RECYCLED WATER
POTABLE WATER
1.72 kL/t AN;
MANUFACTURED
(NEW METRIC)
Growing demand
FOR CYCLO™ AND FORTIS™
PROTECT PRODUCTS
Loss of containment
events down
18%
COMPARED TO FY2021
Avoiding environmental
harm
Managing our environmental
risks and preventing loss of
product events are the primary
goals of our environmental
strategy. In FY2022, we took
several actions to improve
our approach to managing
environmental risks including
adopting the MHM framework
that underpins our safety
approach. The framework
defines key controls and ensures
verification protocols are in
place to systematically mitigate
adverse environmental impacts.
Our focus on spill prevention and
response has seen a continued
decline in loss of containment
events across the business.
In FY2022, we recorded 23
events equal to or greater than
severity 12 against a target of 29.
This was a decrease of 18 per
cent compared to FY2021 and
achieved our target of zero
severity 32 or greater significant
environmental events.
OPTIMISING
RESOURCE USE
Water
The management of freshwater
resources is an issue that directly
impacts the communities and
ecosystems in which we operate.
With competition for water resources
increasing globally due to multiple
pressures, particularly climate change,
population growth and pollution,
we are increasing our focus on
optimising our water use.
We are working towards reducing
our dependency on potable water
by increasing the efficiency with
which we use water and maximising
our use of recycled water, wherever
possible. Our aim is to limit the
impact on our host communities
and ecosystems and increase
resilience to water stress.
Gross water consumption fell one per
cent to 8.5 million kL. While recycled
water increased to a record 31 per cent
of total consumption, potable water
consumption also increased five per cent
to 2.6 million kL. This was due to a
13 per cent decrease in water obtained
from groundwater sources with the
shortfall made up by surface and
potable water sources.
We have changed our potable water
intensity metric from kL per tonne
of AN sold to kL per tonne of AN
manufactured1. This will allow us
to better track our progress as we
seek to improve the water efficiency
of our manufacturing processes.
In FY2022, we used 1.72 kL per
tonne of AN manufactured.
We achieved our existing potable water
intensity target consuming 0.61 kL of
water per tonne of AN sold against our
target of <0.67 kL per tonne AN sold.
Potable water consumption and intensity
1.74
1.89
1.67
1.72
1.51
2.30
2.75
2.82
2.37
2.56
FY2018
FY2018
FY2019
FY2019
FY2020
FY2020
FY2021
FY2021
FY2022
FY2022
Potable (million kL)
Potable Intensity (kL/tonne AN)
Note: material sites include Kooragang Island, Yarwun, Bontang, Carseland, Brownsburg and Congata only.
Gross water consumption by source (million kL)
2.90
1.06
2.20
2.47
2.46
1.20
2.16
2.91
2.20
1.21
2.19
2.94
2.65
1.06
2.46
2.48
2.65
1.13
2.12
2.60
FY2018
FY2019
FY2020
FY2021
FY2022
Potable
Groundwater
Surface water
Recycled/wastewater
(1) Metric boundary covers our top 6 consuming manufacturing plants representing 96% of global potable water use.
(2) Severity 1 events are minor, reversible environmental effects. Short term impacts only in the immediate vicinity of the release. Minor clean‑up required with the total
cost of any clean‑up is less than $100,000; severity 2 environmental events have localised but measurable environmental effect that is reversible after clean‑up; severity 3
environmental events result in relatively wide‑spread serious environmental damage, with some impairment of ecosystem function that will recover after remediation.
Orica Annual Report 2022 | 75
CLIMATE AND THE NATURAL ENVIRONMENT
Joining efforts with our financial lenders
to improve sustainability
Fortis protect – lowering environmental impact
of bulk explosives on waterways
Fortis™ Protect – lowering
environmental impact of bulk
explosives on waterways
To reduce the risk of nitrate leaching from using
ammonium nitrate-based explosives, we developed
a holistic management framework and solution.
The Nitrate Risk Reduction framework is a
three-pronged approach that investigates the
fundamental mechanisms for nitrate loss at a
customer site, benchmarks existing approaches
to best practices, and recommends solutions to
improve nitrate risk management.
Central to the Nitrate Risk Reduction Framework
are our Fortis™ Protect bulk explosives products,
which were developed to minimise nitrate leaching
arising from blasting operations. Using our
emulsification technology, the products deliver
optimal stability and emulsion refinement
characteristics into blast holes and minimise
nitrate contribution to groundwater and
post-blast nitrate/nitrite fumes.
Orica is partnering with De Beers Canada at its
Gahcho Kué mine in remote Northern Canada
to assess Fortis™ Protect. Gahcho Kué operates in
an extremely sensitive environment and De Beers
is committed to achieving high environmental
protection standards, including water quality.
After one-month blasting with Fortis™ Protect in
August 2021, the nitrate management committee
at Gahcho Kué decided the preliminary results
warranted an extended eight-month evaluation to
measure the benefits in all seasons, including the
Spring freshet season, when water influx into the
mine is greatest.
The Fortis™ Protect evaluation and water quality
measurements are ongoing.
WASTE
In FY2022, we completed the sale
of our Minova business which
materially changed the volume and
profile of our waste generation.
Historic waste data has been
restated to exclude Minova and
allow for meaningful comparisons
with current performance.
Total waste generated in FY2022
was 12.5 kt, down 19 per cent
from FY2021. Waste diverted from
landfill was 70 per cent, in line with
FY2021 performance.
Gross waste disposal by destination and waste diverted
from landfill
73%
4.00
0.42
4.77
3.48
71%
4.89
0.20
4.08
3.82
77%
4.81
0.31
4.82
2.90
70%
70%
3.65
0.24
6.81
4.66
3.77
0.13
4.81
3.80
FY2018
FY2019
FY2020
FY2021
FY2022
Landfill (on or offsite) (kt)
Treated/destroyed (kt)
Reused (kt)
Recycled (kt)
Waste diverted from landfill (%)
* FY2018 and FY2019 data includes waste from Minova.
76 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Fortis protect – lowering environmental impact
of bulk explosives on waterways
Harnessing the principles
of a circular economy
We are advancing our strategic focus
on optimising resource use through
circularity with a growing list of
start-up and commercial initiatives
creating value from waste.
MINERAL
CARBONATION
INTERNATIONAL (MCi)
Carbon dioxide is an industrial
waste product of our current
hydrogen production process.
Along with pursuing alternative
sources of hydrogen, carbon capture
utilisation and storage (CCUS) is a
decarbonisation lever that could be
deployed to meet our long-term
net zero ambition.
We continue to support our
long-term joint venture with
Mineral Carbonation International
(MCi) as they drive their CCUS
technology toward commercialisation.
This year, we supported the design,
engineering and approvals for
construction of a demonstration-
scale mineral carbonation plant
at our site in Kooragang Island,
Australia. The plant is scheduled for
completion in 2024 and will react
waste CO2 with alkaline materials to
produce a range of lower-carbon
products for construction,
manufacturing and consumer
markets. It is envisioned that future
MCi carbon plants could scale
up to several million tonnes of CO2
conversion and removal in any
suitable industrial site.
At COP 261 in Glasgow last year,
MCi won ‘Best Clean Energy Startup’
from a field of 2,700 global solutions.
ALPHA HPA
Orica has entered a supply and
offtake agreement with high purity
alumina producer Alpha HPA. High
purity alumina is a key-component in
the technologies necessary to drive
the lower-carbon future. Alpha HPA
intend to deliver high-quality product
for use in the lithium-ion battery and
LED lighting industries.
The agreement leverages process
synergies that exist between Alpha
HPA’s facility in Gladstone and our
nearby manufacturing facility in
Yarwun, Australia. Alpha HPA’s
proprietary technology requires
reagents manufactured by Orica
and produces a waste by-product
that is highly complementary to
our existing processes at Yarwun.
The project demonstrates how
industrial partnerships can optimise
resource use, simultaneously
creating value and reducing waste.
CYCLO™
Last year we commercialised Cyclo™,
an innovative service that transforms
used oil for application in explosives.
The modular, relocatable units allow
oil processing to occur onsite and
replaces up to 50 per cent of the
virgin diesel used to make emulsion.
In FY2022, we saw growing demand
for Cyclo™ and continued to deliver
units across mine sites in Africa and
Papua New Guinea. We conducted
a GHG lifecycle analysis of Cyclo™,
finding total lifecycle emissions of
treated waste oil were 20 per cent
lower than virgin diesel when
the units were deployed onsite.
By deploying the technology
onsite, customers can simultaneously
reduce waste and GHG emissions.
(1) The 2021 United Nations Climate Change
Conference held at the SEC Centre in Glasgow,
Scotland, United Kingdom, from 31 October
to 13 November 2021.
Orica Annual Report 2022 | 77
CLIMATE AND THE NATURAL ENVIRONMENT
AN INCREASING FOCUS
ON BIODIVERSITY
Effective management of
biodiversity is rapidly emerging as
a core tenet of natural stewardship.
With the Taskforce on Nature-related
Financial Disclosure’s (TNFD)
incoming recommendations, there
is increased emphasis on businesses
to understand their impacts on
nature and biodiversity, and methods
to maintain and regenerate areas
of high nature value and prevent
significant ecosystem degradation.
We consider ecosystem health across
our operational and commercial
activities. Our management of
environmental risks, water, waste
and climate all contribute to
protecting biodiversity and we
deploy innovative remediation
techniques that provide biodiversity
co-benefits.
However, we recognise that
increasing stakeholder expectations
will require a more targeted and
sophisticated approach to nature
and biodiversity that leverages
emerging methods to manage and
account for impacts. We are actively
monitoring the rapidly evolving
landscape of standards, metrics
and indices relating to nature
management and disclosures to
determine the most effective nature
and biodiversity management plan.
We are also working to gain a
more comprehensive understanding
of our nature-related risks and
opportunities to support our
customers.
We are monitoring
the rapidly evolving
landscape of
biodiversity standards,
metrics and indices to
determine the most
effective nature
management plan.
78 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Environmental remediation
We work with technology and nature to progress environmental remediation
where our operations have impacted natural systems and resources. Our aim
is to remediate land to permanently reduce risks to human health and the
environment and to allow divestment and reuse.
We seek out opportunities to
innovate and collaborate on our
remediation goals, leveraging
knowledge and skills from around
the globe. Our major remediation
projects are associated with legacy
issues at our former chemical
manufacturing sites but also arise
from ongoing manufacturing
activities. A core team of
remediation experts is responsible
for progressing our complex,
ongoing chemical remediation
projects and providing technical
advice to regional SHES teams
where necessary.
Stage two of Yarraville
thermal remediation Clean
Up Plan implemented
Fifth shipment of HCB
waste completed after
COVID-19 delay
Following on from the success
of an Australian first in-situ thermal
remediation system at Yarraville in
FY2021, we commenced the second
stage of the Clean Up Plan for the
site. The technology treats organic
contaminants at the legacy chemical
manufacturing site through
a system of heating and gas/vapour
extraction. Completion of the
thermal remediation, which is
occurring at an adjacent piece
of land owned by a third party,
will conclude the remediation
of the Yarraville site allowing for
divestment or reuse.
Although our ongoing program
for the safe destruction of the
hexachlorobenzene (HCB) stockpile
in New South Wales, Australia was
delayed in FY2021 due to COVID-19
related issues, the fifth shipment of
waste to specialist treatment plants
in Sweden and Finland was
completed this year. The program to
eliminate this long-term legacy safely
and responsibly is continuing with
9,000 tonnes HCB shipped to date.
Orica Annual Report 2022 | 79
CLIMATE AND THE NATURAL ENVIRONMENT
Indicative
average lead
uptake of
23mg/kg for
vetiver roots
Gomia phytoremediation yields
promising results
Toward the end of FY2021 more
than 50,000 seedlings were selected
and planted in Gomia, India, as part
of a large-scale phytoremediation
project to address elevated
concentrations of contaminants
including nitrates, lead and
perchlorate in surface water
and groundwater.
Phytoremediation uses plants to
consume and absorb contaminants
as they grow and prevent
contaminants from spreading further
to surrounding areas. Through this
process, contaminants are either
degraded into harmless substances
or accumulated and removed when
the plants are harvested.
Phytoremediation can also be used
to immobilise contaminants in the
soil to the root zones and to control
or reduce the flow of surface water
and ground water.
Three rounds of harvest have now
been completed in Gomia with initial
testing indicating good uptake of
contaminants. At the site, indigenous
reeds were used to treat soil and
water and restore the surrounding
environment. Indigenous plants
80 | Orica Annual Report 2022
increase biodiversity value and
support rebuilding local wildlife
habitats. They also stabilise the
slope that was constructed to help
prevent the contaminants from
leaking into the surrounding
environment. The project has helped
to prove this phytoremediation effort
is environmentally friendly, low cost
and superior to more traditional
methods.
Innovative bioremediation
technique deployed in Yarwun
groundwater
Cyanide (CN) impacted groundwater
was discovered at the Yarwun
manufacturing site in 1999 with
the source traced to an in-ground
dissolving tank that was
subsequently decommissioned and
replaced. While the plume remains
within the site boundary and does
not pose an unacceptable risk,
recent changes in the plume
necessitated further assessment
of potential remediation options
should it be required in the future.
A treatability study completed in
2016 concluded enhanced in-situ
bioremediation using oxygen delivery
to the groundwater through
Waterloo Emitters™ had the potential
to successfully treat CN impacted
groundwater however, a field pilot
test to refine the critical design
parameters would be required.
Enhanced in-situ bioremediation
is an engineered technology that
introduces physical, chemical
and biological changes to the
groundwater to create the conditions
necessary for micro-organisms to
degrade the cyanide. This is a novel
approach to cyanide remediation
requiring the installation of 13
injection wells with Waterloo
Emitters™ to act as a bio-barrier
of enhanced biological activity
stimulated by oxygen delivery
to the groundwater.
In line with commitments made
to the regulator, detailed design
of the pilot trial was completed
in April 2022 and the pilot plant
was constructed and commenced
operation in July 2022. At the
completion of the six-month trial,
the effectiveness of the technology
will be evaluated and, based
on cyanide concentrations in
groundwater and associated risk
at that time, consideration will
be given to whether any ongoing
remediation is required.
FY2023 priorities:
– Commission tertiary catalyst
abatement technology at
Kooragang Island.
– Reconsider final investment
decision for Yarwun Nitrates
Decarbonisation Project.
– Advance commercial partnerships
for green hydrogen and green
ammonia technologies, and
progress sourcing for future
renewable electricity supply.
– Develop water stewardship
strategy and establish new
potable water targets backed
by planned actions.
– Internal assessment to assess
our biodiversity performance
and disclosures and understand
commitments we can make to
support biodiversity and nature
positive initiatives.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
COMMUNITY
AND RELATIONSHIPS
Fostering strong and collaborative partnerships with our host
communities, suppliers, customers, industry and government partners
will create shared and enduring value.
Developing strong relationships
with our stakeholders at a corporate,
regional and local level is vital
for the success of our business.
We partner with our stakeholders
to build trust and develop innovative
solutions to meet the needs of
customers and communities, deliver
commercial value and address
critical environmental and social
sustainability issues across our
entire value chain. Our approach
to stakeholder engagement is
detailed on pages 38 to 39
of this report.
CUSTOMERS
Our Voice of Customer (VoC)
program independently and
consistently captures customer
feedback across our operations,
with nearly 900 customers providing
insights in FY2022. The main metric
to measure customer loyalty and
satisfaction is our Net Promoter
Score (NPS) which declined for
the first time after four consecutive
years of improvement.
Notwithstanding the decline in
our NPS from FY2021, the FY2022
result represents a 33.3 per cent
increase in customer satisfaction
since the inception of our VoC
program in 2017 with customers
acknowledging the value delivered
by our technology solutions and
research and development approach.
They also commended the ease
of doing business with Orica,
notably our proactive and
transparent engagement.
Our focus in FY2022 was on
improving VoC response rates,
as well as taking strategic action
to address constructive feedback
including addressing billing delays
and continuing to manage supply
constraints resulting from the
Russia-Ukraine conflict. We are
also prioritising communicating
the value proposition of our new
technology offerings for customers.
In FY2023 we will target further
increasing our VoC response rate
so that strategic actions can be taken
to drive continuous improvements
in support of our customers.
We will also continue with the
review of our VoC program and
approach to ensure it is fit for
purpose for our customers
and Orica.
COMMUNITY
We are committed to building safe,
resilient and thriving communities
in our areas of operation. From our
focus on safety and management of
natural resources, to our contribution
to social and economic development
we strive to prevent harm and
promote community growth.
Our focus is on building long –
term relationships based on trust
and transparency and providing
targeted and strategic investment
guided by our Community Impact
and Investment Framework.
In FY2022, our community
investment totalled $3.7 million,
up 54 per cent from the prior year.
Community investment
by year ($m)
Community investment
by region (%)
4%
18%
11%
67%
3.7
3.2
2.4
1.9
1.8
FY2018
FY2019
FY2020
FY2021
FY2022
APA
EMEA
LATAM
NA
$15 million
We are on track to achieve our
five-year community investment
target of at least $15 million
by 2025, having contributed
$6.1 million since FY2021.
This includes investments made
through the Orica Impact Fund,
regional spend and matched
payroll giving.
Orica Annual Report 2022 | 81
Supporting
communities
in crisis
When a crisis or natural disasters hit, we work
to ensure the safety of our employees and help
the community recover from the devastation.
AUSTRALIAN FLOOD RESPONSE
In February 2022, our local team responded
to the widespread flooding event in Queensland,
Australia, safely shutting down and securing our
operations and buildings to protect all staff and
communities. We continued to monitor the situation
until it was safe to reopen. The team also contributed
$10,000 to the Lockyer and Laidley community
centres to assist in restocking the community pantry
and providing care packages for local community
members impacted by the floods.
TORNADOES IN THE US
When tornadoes tore across five US states in early
FY2022, we supported the impacted communities
and offered use of equipment and our personnel
to assist with search and recovery. This included
delivering pallets of fresh water to impacted areas.
Orica US also donated to the American Red Cross
to assist with the tornado recovery efforts.
FIRES ACROSS WEST EUROPE
Orica Mining Services Portugal engaged with local
communities in Portugal during the devastating fires
that swept through West Europe in FY2022, providing
support for firefighters around the Aljustrel plant and
Castro Daire municipality to reinforce their resources
in this peak period.
COMMUNITY AND RELATIONSHIPS
$1.8m
SPEND APPROVED VIA
ORICA IMPACT FUND
55
APPLICATIONS
RECEIVED
$50,000
MEDIAN FUNDING
REQUEST
71%
PROJECTS
APPROVED FOR
FUNDING
Orica Impact Fund
In FY2021, we launched the
Orica Impact Fund (the Fund)
as part of our revised Community
Investment and Impact Framework.
The Fund enhances our existing
regional community investment
and prioritises support for local,
grassroots initiatives across our
global operations that improve
social equity and well-being,
education and environmental
outcomes, and foster community
togetherness.
Consistent with the revised
framework, the Fund is re-orienting
Orica’s community investment
spend with better global distribution
and supporting projects of higher
value (grants between $10,000 to
$100,000 per year, for up to three
years) to drive meaningful impact
and enable deeper social and
environmental benefits.
This year we launched round
two of the Fund with applications
received from across our global
operations, on behalf of local
community partners, increasing
83 per cent from FY2021.
82 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Image: Onebygamba project
Investing
in First Nations
communities
THE CLONTARF
FOUNDATION,
AUSTRALIA
We continued our national
partnership and support for the
Clontarf Foundation. The Foundation
helps to improve the education,
discipline, life skills, self-esteem
and employment prospects of
young Aboriginal and Torres Strait
Islander men by setting up school
engagement and mentoring
programs in school communities
around Australia. This support of
young Indigenous males to stay at
high school longer and receive a
better education will help address
the disadvantage cycle across
health, education, employment
and incarceration. More than
10,000 boys are enrolled nationwide
through the Foundation’s
139 academies.
In FY2022, we contributed
over $140,000 to the Clontarf
Foundation. Clontarf’s CEO and
Founder, Gerard Neesham said:
“Whether it is attendance to our
employment forums, hosting a
work site visit, participating in a
community event, or showing
support at end of year awards
nights, the boys in the Clontarf
program gain so much valuable life
experience through engagement
with the Foundation’s partners.
I’m thrilled that Orica is part of
the Clontarf journey and I look
forward to seeing what we’re
able to achieve together.”
We continue to seek opportunities
to work with Clontarf and provide
insight on our industry through
participation in our site tours and
sharing information about
employment opportunities and
career pathways.
Image: The Clontarf Foundation, Australia
ONEBYGAMBA
PROJECT, AUSTRALIA
Local theatre company Curious
Legends joined forces with the
Newcastle Worimi people to deliver
Onebygamba, a creative project
made possible through a $30,000
grant from Orica. Onebygamba is
the traditional name for the area of
Carrington. The initiative explores
connection to country through
performances, school engagement,
and sustainability activities.
Sustainability is a key theme for
the project; traditional fishing
and gathering techniques at the
Throsby Creek catchment, explored
in line with Worimi practices, and
they meet at weekly gatherings
at Carrington Parklands to share
Worimi traditions with the
wider community.
Orica Annual Report 2022 | 83
COMMUNITY AND RELATIONSHIPS
INSPIRING YOUNG PEOPLE TO PURSUE CAREERS IN STEM
(SCIENCE, TECHNOLOGY, ENGINEERING, MATHS)
YCAB Foundation: building
pathways for women
in STEM, Indonesia
For the fourth year, Orica Indonesia
is partnering with the Yayasan Cinta
Anak Bangsa (YCAB) Foundation to
provide online STEM training and
mentorship to over 7,000 female
students. The innovative program
is designed to build skills and inspire
women and girls to pursue careers
in STEM. Students involved in the
program have an opportunity to
apply their training through
internship programs at Orica.
The program also includes training
for 100 high school teachers in
STEM topics.
Wonder of Science
program, Australia
Orica and GroundProbe have
partnered with the Wonder of
Science program to help teach
STEM subjects to schools in regional
Australia. The program is targeted
at students aged nine to fifteen and
connects problem-solving skills,
critical, creative, collaborative and
ethical thinking to real-world
applications of STEM. The $300,000
investment is helping Orica build
long-term partnerships with senior
education providers, government
and industry. By supporting the
STEM program, we are also building
a potential future workforce.
NATURE AND BIODIVERSITY
Kottaberget, Sweden
Through the Fund, we partnered with BikeinBergslaen and Makr Konsult
AB to create flowtrails for cyclists on Kottaberget mountain, located near
our factory in Gyttorp, Sweden. The project launched in FY2021 and has
generated approximately 450 metres of flowtrails. Together with funding
from other financiers, Kottaberget has a 1.3 km downhill and uphill trail.
The partnership has helped transform deforested land into a fun mountain
biking trail, encouraging tourism and local economic development.
In September 2022, a ‘try on’ event was held for our employees in Sweden
to learn more about the trails.
84 | Orica Annual Report 2022
Birdlife’s Woodland
Birds for Biodiversity, Australia
We work with experts to study
and protect animals and the natural
environment. As birds are a key
indicator to monitor biodiversity,
and with the critically endangered
Swift Parrot believed to number only
750 in the wild, we collaborated
with Birdlife Australia and our Kurri
teams to carry out surveys in the
Kurri Kurri region, an area with
historical sightings of the parrot.
The Kurri Kurri Technical Centre (KTC)
adjoins some areas where Swift Parrots
have been spotted and has some
undisturbed habitat suitable for the
birds. Identifying Swift Parrots in the
area will help enhance conservation,
protect high biodiversity value areas
and encourage the recovery of the
species. In collaboration with Birdlife
Australia, our Kurri teams carried out
surveys to track the birds during the
migration season. The Research and
Innovation team and other groups
worked together across the site to
develop planning and safety protocols
and provide chaperoned access to
surveyors. In July 2022, Birdlife surveyors
identified seven Swift Parrots, equivalent
to ~one per cent of Australia’s Swift
Parrot population, as well as two
vulnerable Glossy-black Cockatoos.
In FY2023, we will continue to
support Birdlife’s Regent Honeyeaters
and Swift Parrot surveys to collect
crucial data on bird population,
distribution and environmental trends.
By tracking these birds, Birdlife
Australia gains insights into how
the environment is changing and
how to support the local wildlife.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
RONALD MCDONALD HOUSE, AUSTRALIA
We have a longstanding relationship
with Ronald McDonald House (RMH)
located at the John Hunter Hospital
in Australia.
In FY2022, we announced our
partnership with RMH Charities
Northern NSW with a $10,000
sponsorship of the Lounge Room
in the neo-natal intensive care
unit family room.
Our Kurri team also participated in
the ‘Meals from the Heart’ initiative
for a day each month throughout
the year, planning, preparing and
cooking dinner for the residents of
RMH. While homecooked meals
could not be provided under
COVID-19 restrictions, the Graduate
Sustainability Committee funded
three pizza nights over three
weeks with site management
contributing for desserts. The Kurri
team also funded a pizza night
every six weeks until they could
resume providing meals in person.
We are proud of the relationships we
have built through this engagement
and the positivity and relief our
teams can bring to families during
challenging periods.
SUPPLIERS
The strength of our global supply network is a key
differentiator that allows us to be a trusted partner
for our customers. As security of supply is critical to
our customers’ operations, we build strong supplier
relationships to ensure we can continue to deliver.
In FY2022, we procured products and services from
13,8001 suppliers in over 45 countries around the world.
Around 85 per cent of our third-party spend originated
from 10 countries (Australia, Brazil, Canada, Chile,
Indonesia, Mexico, Peru, Russia, Singapore and the
United States of America). Of the remaining 15 per cent,
the majority originated from 10 countries (Argentina,
Ghana, India, Kazakhstan, Norway, the Philippines,
Sweden, Tanzania, United Kingdom and Zambia).
Suppliers are critical to our business. We seek to work
with suppliers that share our commitment to excellence,
are aligned to our values, committed to acting ethically
and to improving their environmental and social impact.
We strive to work collaboratively with these suppliers to
meet sustainability challenges together and implement
improvement plans where gaps or risks are identified.
Maintaining security of supply amid global
challenges
The strength of our global manufacturing and supply
network has been critical this year as we navigated
difficult operating conditions. Geopolitical tensions and
rising commodity prices have increased global demand
for AN and constrained supply.
We leveraged established global relationships with
nitrogen producers to negotiate and secure alternative
supply. While some deals were short term, others have
now been converted to long-term contracts. Through
these measures, and by ramping up our own
manufacturing capacity, we have maintained deliveries
to our customers through this major disruption.
Climate and the natural environment page 68
Responsible sourcing
We work with our suppliers to mitigate sustainability
impacts and promote sustainable practices across our
value chain. As part of our commitment to creating
a more sustainable, inclusive and resilient value chain,
we developed our first Responsible Sourcing Statement
in FY2022. The Statement enhances the principles
outlined in Our Code and details our expectations
of suppliers on ethical business practices, human and
labour rights, and social and environmental impacts.
Modern slavery in supply chain response
We have a responsibility to understand and address
modern slavery risks in our supply chain as well as
our operations.
Our Supply Chain Modern Slavery Risk Management
Plan (MS Risk Plan) details an identification and
management process, training program and related
tools which includes self-assessment questionnaires.
In FY2022, we engaged more broadly, sending self-
assessment questionnaires to 55 of our high-risk suppliers
and building on our MS Risk Plan Pilot in FY2021.
These questionnaires enable us to better understand
the supplier’s context and specific gaps or areas
of risk within a supplier’s operations and supply chain.
FY2022 Modern Slavery Statement
Addressing Scope 3 emissions and working
towards a decarbonised supply chain
We engage suppliers on decarbonisation to support
our ambition to achieve net zero emission by 2050.
As new and emerging technologies scale and become
commercial, we will partner with suppliers to source
lower emissions intensity AN and ammonia products.
The purchase of these products currently accounts for
approximately two thirds of our total Scope 3 emissions.
We are engaging directly with our strategic suppliers
to better understand their activities in managing
emissions, identify pathways for future collaboration,
and work together towards technological solutions
for decarbonisation.
FY2022 Climate Action Report
(1) The increase of our supply base from FY2021 (8,500 suppliers) is in part a result of an increase in multi‑sourcing targeted at optimising cost and improving supply. Orica will
undergo another active review of our strategic sourcing program in the next financial year which may significantly affect the number of our supplier base in FY2023.
Orica Annual Report 2022 | 85
COMMUNITY AND RELATIONSHIPS
PARTNERING FOR PROGRESS
We collaborate with industry, non-government organisations (NGO), and research and educational
institutions to develop and deploy sustainable, commercially driven solutions. Our work with external
partners delivers a range of commercial, environmental, and social benefits. We continue to seek out
opportunities to collaborate with innovative, values-aligned organisations who share our goals. Some
examples of recent partnering arrangements are detailed below.
Hydrogen to ammonia research and development project
In FY2022 we completed a research and development project with CSIRO
funded by ARENA. The project demonstrated the conversion of hydrogen to
ammonia at significantly lower pressures than conventional processes, thus
requiring lower-energy inputs.
Mineral Carbonation International joint venture
With the Australian and NSW governments, we have invested in clean
technology start-up MCi since 2013. MCi has developed a scalable carbon
capture technology that reacts waste CO2 with alkaline materials to produce
carbonate products for use in construction, manufacturing and consumer
markets. A demonstration plant is under construction at our Kooragang Island
site in Australia, expected for completion in FY2024.
Reagent and offtake agreement
Orica and Alpha HPA entered an agreement relating to the supply and offtake
of reagents and process by-products at their adjacent facilities in Yarwun,
Australia. This leverages process synergies that exist between the two companies.
Alpha HPA’s proprietary technology requires reagents manufactured by Orica,
producing a waste by-product that is highly complementary to our existing
processes at Yarwun.
Hunter Valley Hydrogen Hub
We signed a Memorandum of Understanding (MoU) with Origin Energy to
conduct a feasibility study into the viability of a green hydrogen production
facility and downstream value chain opportunities. The partnership will
assess opportunities to collaborate on the development of a green hydrogen
production facility and associated value chain in the Hunter Valley, Australia.
Kooragang Island Decarbonisation Project
This $37 million public-private partnership is installing nitrous oxide abatement
technology at our Kooragang Island (KI) site in Australia. The project will reduce
KI’s emissions by close to 50 per cent and contribute to a government target
to reduce NSW emissions by 50 per cent by 2030. The project is made possible
through co-investment from the NSW Government and financing from the CEFC.
H2-Hub™ Gladstone
Orica has signed a Memorandum of Understanding (MoU) with H2U – Hydrogen Utility®
on a master plan study where both parties will explore opportunities for an exclusive
domestic green ammonia offtake and supply agreement. The potential agreement
would see green ammonia supplied directly to Orica’s Yarwun manufacturing plant
from H2U’s proposed Yarwun green ammonia production plant in Australia.
86 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
Avatel™ semi-automated explosives delivery
Our partnership with Epiroc has developed a semi-automated explosives
delivery system to keep people out of harm’s way. The innovative Avatel™
system combines Epiroc’s industry leading underground equipment design
expertise with our fully wireless breakthrough initiation system WebGen™.
Partnering for energy transition
Orica joins some of Australia’s biggest companies in support of the Australian
Industry Energy Transitions Initiative (Australian Industry ETI). The initiative aims
to work together to develop pathways and action towards decarbonisation across
hard-to-abate sectors and critical supply chains.
Yara Pilbara Nitrates
Orica operates a technical ammonium nitrate (TAN) facility on the Burrup
Peninsula in a commercial joint venture with Yara Pilbara Nitrates Pty Ltd,
operated by Yara International ASA and marketed by Orica Mining Services
Pilbara (OMSP). The joint venture has been operating since 2016.
Nelson Brothers
Orica has a joint venture with Nelson Brothers Mining Services LLC, who offer
Orica manufactured initiation products, advanced technology and innovative
delivery systems to service open pit surface mining in Wyoming, Montana and
the Dakotas.
Orica Annual Report 2022 | 87
FY2022 Climate Action
Report for our climate‑related
industry partnerships
FY2023 priorities
– Strengthen our foundations
in managing modern slavery
risk in our supply chain and
focus on training and building
capability of procurement and
supply chain staff.
– Launch and complete Orica
Impact Fund Round 3.
– Strengthen measurement
and reporting framework
for community investments,
globally.
GOVERNANCE
88 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
BOARD OF DIRECTORS
JOHN BEEVERS
BEng, MBus, MAICD
John Beevers was appointed Non-executive Director
in February 2020. He is a member of the Safety and
Sustainability Committee, the Innovation and Technology
Committee and the Nominations Committee. He is also
a Non-executive Director of Syrah Resources Limited and
former Director of QUT Bluebox, the commercialisation
arm of the Queensland University of Technology.
He previously held the role of Managing Director and
Chief Executive Officer of GroundProbe and executive
roles within the Orica Group, including Global Technology
Manager, Group General Manager of Chemical Services
and Chief Executive Officer of Orica Mining Services.
MAXINE BRENNER
BA LLB
Maxine Brenner was appointed Non-executive Director
in April 2013. She is Chairman of the Human Resources
and Compensation Committee, member of the Board
Audit and Risk Committee and the Nominations
Committee. She is a Director of Origin Energy Limited,
Qantas Airways Limited, and Woolworths Group
Limited and former Director of Growthpoint Properties
Australia limited, Neverfail Australia Ltd, Treasury
Corporation of NSW and Federal Airports Corporation.
She is also the former Managing Director of Investment
Banking at Investec Bank (Australia) Ltd and a former
member of the Takeovers Panel.
MALCOLM BROOMHEAD AO
BE, MBA
Malcolm Broomhead AO was appointed Chairman
of Orica Limited as of 1 January 2016 and has been
a Non-executive Director since December 2015.
He is Chairman of the Nominations Committee.
He is a Director of BHP Group Limited and a former
Chairman of Asciano Limited. He is also a Director
of the Walter and Eliza Hall Institute and Council
Member of Opportunity International Australia.
BOON SWAN FOO
BA, MBA
Boon Swan Foo was appointed Non-executive
Director in May 2019 and is a member of the
Innovation and Technology Committee, Board Audit
and Risk Committee and the Nominations Committee.
He is Chairman and Non-executive Director of
SGX-ST-listed Global Investments Limited, Chairman
of Allgrace Investment Management Private Limited,
and Chairman of Singapore Consortium Investment
Management Limited. He is an external Director
of China Baowu Steel Group Corporation Ltd, and
Senior Advisor to Temasek International Pte Ltd.
Previously, he was an external Director of China
Huadian Power Company Ltd.
SANJEEV GANDHI
BEng, MBA
Sanjeev Gandhi was appointed Managing Director
and Chief Executive Officer in April 2021, after
previously holding the role of Group Executive and
President, Australia Pacific and Asia. He is a former
Executive Director of publicly listed German chemical
company BASF SE. During his 26-year career with
BASF, he held several senior marketing, commercial
and business leadership roles including Head of
Asia Pacific and Head of Global Chemicals Segment
(Intermediates and Petrochemicals).
DENISE GIBSON
BA, MBA
Denise Gibson was appointed Non-executive
Director in January 2018 and is Chairman of the
Innovation and Technology Committee and member
of the Human Resources and Compensation
Committee and the Nominations Committee.
She is co-founder and Chairman of Ice Mobility,
Director of Aerial Technologies Inc., NASDAQ-listed
VOXX International Corporation, a director of
the Consumer Technology Association, and the
Consumer Technology Association Foundation,
both not-for-profit organisations. She is the founder
and former CEO of Brightstar US.
KAREN MOSES
BEc, DipEd, FAICD
Karen Moses was appointed Non-executive Director
in July 2016. She is Chairman of the Safety and
Sustainability Committee, and member of the Human
Resources and Compensation Committee and the
Nominations Committee. She is a Director of Boral
Limited, Charter Hall Group, Snowy Hydro Limited,
Music In The Regions Limited, a Fellow of the Senate of
Sydney University and Chair of the NSW Artform Board
for Dance and Physical Theatre. She is also a former
Director of Sydney Dance Company, SAS Trustee
Corporation, Australia Pacific LNG Pty Limited, Origin
Energy Limited, Contact Energy Limited, Energia
Andina S.A., Australian Energy Market Operator Ltd,
VENCorp and Energy and Water Ombudsman (Victoria)
Limited and Sydney Symphony Limited.
GORDON NAYLOR
BEng (Mechanical), MBA, GradDip
(Computing Studies), GAICD
Gordon Naylor was appointed Non-executive Director
on 1 April 2022 and is a member of the Board Audit
and Risk Committee and the Nominations Committee.
He is the non-executive Chair of Medical Developments
International, a former President of Seqirus, a member
of the CSL Group and held executive leadership roles
within the CSL Group, including Chief Financial Officer.
GENE TILBROOK
BSc, MBA, FAICD
Gene Tilbrook has been a Non-executive Director
since August 2013. He is Chair of the Board Audit
and Risk Committee and member of the Safety and
Sustainability Committee and the Nominations
Committee. He is also a Non-executive Director of
Woodside Petroleum, a former Director of Aurizon
Holdings, Fletcher Building and GPT Group, and
former Executive Director of Wesfarmers Limited.
Company
Secretaries
KIRSTEN ANDERSON LLEWELLYN
LLB, BA, LLM, FGIA
ERIN O’CONNOR
LLB (Hons), BCom, FGIA
Orica Annual Report 2022 | 89
EXECUTIVE COMMITTEE
LEAH BARLOW
BEng (Chemical Engineering), BBus
(Management and Accounting)
President – SHES, Discrete Manufacturing
and Supply
JAMES BONNOR
BCom (Economics, Marketing)
President – Europe, Middle East and Africa
DELPHINE CASSIDY
BBus (Accounting), MBA, FAICD
Chief Communications Officer
JAMES CROUGH
BCom (Accounting), MBA, FCPA, GAICD
President – North America
SANJEEV GANDHI
BEng (Chemical Engineering), MBA
Managing Director and Chief Executive Officer
BRIAN GILLESPIE
BSc (Hons), MBA, FIET
President – Latin America
ADAM L. HALL
BCom, LLB (Hons), MBA (HD)
President – Asia and Chemicals
JENNIFER HAVILAND
BCom (Economics), Dip-Enterprise
Systems and Analysis, GAICD, CPA
Chief People and Corporate Services Officer
KIM KERR
BBus (Accounting), GAICD, Chartered Accountant
Chief Financial Officer
ANGUS MELBOURNE
BEng (Hons) Mechanical Engineering,
BSc Applied Mathematics
Chief Technology Officer
GERMÁN MORALES
MSc (Civil Engineering), Executive MBA
President – Australia Pacific
ANDREW STEWART
BEng (Hons) Mechanical Engineering, MBA
Chief Development and Sustainability Officer
Full biography details can be found on our website
90 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
GOVERNANCE
Orica is committed to maintaining
a high standard of governance,
transparency and accountability.
Strong corporate governance creates stakeholder
value by ensuring the interests of our Board and
management are aligned with our external stakeholders,
cultivating a company culture of integrity, and facilitating
better decision-making through clearly defined roles
and responsibilities, and robust processes.
Our governance framework is fundamental to the
effectiveness of our Board. To align our approach
with best practice, we periodically review and update
our corporate governance documents and practices.
Throughout FY2022, we complied with the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations (4th Edition)
(ASX Principles and Recommendations).
Further detail on our corporate governance
framework is available in our FY2022 Corporate
Governance Statement
Role of our Board
Our Board oversees the business
and affairs of the Group, setting
our strategic direction, overseeing
financial and non-financial
performance and risk management,
and providing leadership and
direction on workforce culture
and values.
The day-to-day responsibility for
managing the Group is delegated
to our Managing Director and CEO
who operates within delegated
authority limits determined
by our Board.
COMMITTEES
Five standing Committees have
been established by our Board.
Each Committee operates under its
own Terms of Reference which sets
out its roles and responsibilities.
Further details are available in the
Board, Executive and Committees
section of our website.
Board Committees
Board Audit
and Risk
Nominations
Human Resources
and Compensation
Safety and
Sustainability
Innovation and
Technology
Orica Annual Report 2022 | 91
GOVERNANCE
COMPOSITION AND SUCCESSION PLANNING
Our Board is structured to comprise individuals with appropriate skills,
knowledge, experience and diversity to develop and support Orica’s
strategy, enable it to discharge its responsibilities and create long-term
stakeholder value.
To remain effective, succession planning is critical. Responsibility
for overseeing Board composition and succession planning sits with
our Nominations Committee who assess the skills, experience and
competencies of potential candidates in relation to the Board’s current
and future skill and experience requirements, and diversity.
On 1 April 2022, Mr Gordon Naylor was appointed as an Independent
Non-executive Director. Mr Naylor’s extensive engineering background
and global leadership experience (including global supply chain and
information systems strategy and implementation) complement Orica’s
future strategy, manufacturing network and broader operations.
Mr Naylor will stand for election at the 2022 Annual General Meeting.
BOARD SKILLS AND EXPERIENCE
A skills matrix is used to ensure the key skills and experience required
to serve on our Board are represented. Each Director updates the matrix
by rating their skills, expertise and experience for each identified skill
using two key categories, ‘awareness’ or ‘high competence/practiced’.
These individual ratings are then considered and approved by all
Board members.
The collective skills held by our Board are:
Leadership
Financial acumen
Board, CEO or Senior
Executive experience in major
organisations, enterprises, or
listed companies in Australia
or overseas.
Mining
Financial knowledge or
related financial management
or accounting qualifications
and experience, including
understanding of financial
statements.
Experience, knowledge and
expertise in the Australian or
the international resources
sector and/or related operations.
Mergers and acquisitions
Experience in merger and
acquisition transactions
involving complex issues.
Global perspective
Governance and legal
Experience in international
markets with exposure to
a range of political, cultural,
regulatory and business
environments.
Technology trends and
innovation
Experience and knowledge in
governance issues (including the
legal, compliance, environmental
and regulatory environment
applicable to the Australian or
international resources sector).
Safety and sustainability
Experience, knowledge and
expertise in the development
and commercial application of
new and emerging technologies
and cyber security.
Experience in workplace health
and safety, environmental
management and social
responsibility, community,
climate change and sustainability.
92 | Orica Annual Report 2022
DIVERSITY
PROFILE
33.3%
WOMEN
44.4%
INTERNATIONAL
EXPERIENCE
AVERAGE TENURE
OF NON-EXECUTIVE
DIRECTORS
Under 3 years
3–6 years
2
2
6–9 years
Over 9 years
4
0
PROFESSIONAL
DEVELOPMENT
Our Non-executive Director Business
Understanding program delivers
ongoing learning for Directors to
deepen their understanding of our
business and operations and ensure
they can make fully informed decisions
on our strategic direction. The program
is delivered through a combination
of site visits, business briefings,
deep-dive education sessions at
Board and Committee level, and
in one-on-one discussions with
management, as appropriate.
In FY2022, Board members participated
in deep-dive education sessions on the
external environment, governments
and communities affected by our
activities, our customers and investors,
decarbonisation, and the application
and opportunities presented by artificial
intelligence. Our Board also visited
the Yarwun major manufacturing
facility and GroundProbe research and
development centre in Queensland and
Kurri Kurri research and development
centre in New South Wales.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
FY2022 Focus Areas
The Board and its Committees have an annual program in place that covers key strategic, operational,
oversight and governance activities. The program guides the content and structure of Board and Committee
meetings to enhance effectiveness in achieving our purpose and supporting strategic decision-making.
The topics below provide insight into our Board’s activities during FY2022, however are not an exhaustive
summary of the Board program.
Our Board
Link to our value drivers
– Continued commitment to and oversight of Orica’s workplace health, safety and
employee well-being strategic plan including deep dives into safety across regional
operations and key employee health risks and their management.
– Approved target to source 100 per cent of Orica’s electricity from renewable sources
by 2040.
– Approved entry into a Power Purchase Agreement for Orica’s New South Wales
manufacturing operations, towards our commitment to source 100% renewable
electricity by 2040.
$
– Reviewed sustainability performance targets tied to Orica’s existing committed debt
facilities, transitioning our loan agreements to a Sustainability Linked Loan structure.
– Oversight of Orica’s exit from all Russian operations as a result of the ongoing
Russia-Ukraine conflict.
– Approved the acquisition of digital orebody intelligence business, Axis Mining
Technology.
– Oversight and approval of the raising of over $690 million in capital through
an institutional placement and share purchase plan.
– Approved a refresh of the Orica Code of Business Conduct clarifying everyone’s
authority to stop work to protect people’s safety, the environment and indigenous
cultural heritage.
– Approved updates to our Whistleblower Policy ensuring alignment with all
legal requirements and regulator expectations.
– Oversight of the sale of the Minova business.
Orica Annual Report 2022 | 93
GOVERNANCE
94 | Orica Annual Report 2022
An overview of the key focus areas
for the standing Committees is set
out in the table below.
SAFETY AND
SUSTAINABILITY
COMMITTEE
Oversees safety and sustainability related
issues that have strategic, business and
reputational implications for Orica, and
public disclosures and position statements,
including climate change.
Key activities:
– Oversight of safety and sustainability
performance.
– Review of material safety, health,
environmental and sustainability
(SHES) risks.
– Oversight of the five-year SHES strategic
plan and sustainability roadmap.
– Review of material environmental
remediation projects.
– Endorse public sustainability disclosures
INNOVATION
AND TECHNOLOGY
COMMITTEE
Oversees our technology strategy
and technology related risks.
Key activities:
– Oversight of the introduction and
commercialisation of new technology
and the research and development
pipeline.
– Oversight of technology risk, including
cyber security and enterprise-wide
business systems.
– Review of the intellectual property
strategy and portfolio.
BOARD AUDIT
AND RISK COMMITTEE
Oversees the integrity of financial
statements and reporting and the
Group risk and assurance functions.
Key activities:
– Oversight of our financial performance
and associated reporting processes,
including the review of half and full
year financial results.
– Annual review of the effectiveness
of our risk management framework.
– Oversight of the status and closure
actions for key internal audit activities.
– Review of reports from management
on ethics, compliance and business
conduct matters.
NOMINATIONS
COMMITTEE
Oversees Board composition and Board
and CEO succession planning.
Key activities:
– Board renewal.
– Review of the methodology and outcomes
of the annual Board performance review
and recommended improvement actions.
– Approval of the Non-executive Director
business understanding program.
HUMAN RESOURCES
AND COMPENSATION
COMMITTEE
Oversees human resource strategy
and policy, and Director and Executive
Remuneration frameworks.
Key activities:
– Oversight of the preparation of
Orica’s Remuneration Report.
– Executive succession planning and
talent strategy.
– Diversity and inclusion strategy and
related public disclosures.
– Organisational culture and engagement.
– Oversight of the short – and long-term
incentive design and principles for
target setting.
– Review of CEO performance.
DIRECTORS’
REPORT
Orica Annual Report 2022 |
95
DIRECTORS’
REPORT
The Directors of Orica Limited (‘the Company’ or ‘Orica’) present the Annual Report of the Company and its controlled entities
(collectively ‘the Group’) for the year ended 30 September 2022 and the Auditor’s Report thereon.
DIRECTORS
The Directors of the Company during the financial year and up to the date of this report are:
M W Broomhead, Chairman
S Gandhi, Managing Director and Chief Executive Officer (‘CEO’)
M N Brenner
Boon S F
D W Gibson
K A Moses
G T Tilbrook
J R Beevers
G Naylor (appointed on 1 April 2022)
E O’Connor and K Anderson Llewellyn are each Company Secretary of Orica Limited.
Particulars of Directors’ and Company Secretary qualifications, experience and special responsibilities are detailed in the
Annual Report.
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each
of the directors of the Company during the financial year are listed below:
Director
Scheduled Board
Meetings(1)
Ad‑hoc Board
Meetings(1)(2)
Audit and Risk
Committee(1)
Human Resources
& Compensation
Committee(1)
Nominations
Committee(1)
Safety &
Sustainability
Committee(1)
Innovation
& Technology
Committee(1)
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
M W Broomhead(3)
J R Beevers
M N Brenner
S Gandhi(4)
D W Gibson
K A Moses
G Naylor(5)
Boon SF
G T Tilbrook
9
9
9
9
9
9
4
9
9
9
9
8
9
9
9
4
9
9
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
–
–
5
–
–
–
1
5
5
–
–
5
–
–
–
1
5
5
–
–
6
–
6
6
–
–
–
–
–
6
–
6
6
–
–
–
4
4
4
–
4
4
2
4
4
4
4
4
–
4
4
2
4
4
–
5
–
–
–
5
–
–
5
–
5
–
–
–
5
–
–
5
–
4
–
–
4
–
–
4
–
–
4
–
–
4
–
–
4
–
(1) Shows the number of meetings held and attended by each Director during the period the Director was a member of the Board or Committee.
(2) Ad‑hoc board meetings were held on 13 July 2022 and 1 August 2022.
(3) The Chairman of the Orica Board attends all Board Committee meetings as an ‘ex officio’ member of that Committee.
(4) The Managing Director and CEO attends Committee meetings on an ‘as needs’ basis.
(5) Gordon Naylor was officially appointed to the Orica board on 1 April 2022 and became a member of the Audit & Risk Committee on 1 September 2022.
96 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ INTERESTS IN SHARE CAPITAL
The relevant interest of each Director in the share capital of the Company is disclosed in the Remuneration Report.
PRINCIPAL ACTIVITIES
The principal activities of the Group in the course of the financial year were the manufacture and distribution of commercial
blasting systems including technical services and solutions, mining and tunnelling support systems to the mining and infrastructure
markets, and various chemical products and services.
LIKELY DEVELOPMENTS
Likely developments in the operations of the Group and the expected results of those operations are covered generally in the
review of operations and financial performance of the Group in the Annual Report.
REVIEW AND RESULTS OF OPERATIONS
A review of the operations of the Group during the financial year and of the results of those operations is contained in the
Annual Report.
CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year ended 30 September 2022.
DIVIDENDS
Dividends paid or declared since the end of the previous financial year were:
Final dividend declared at the rate of 16.5 cents per share on ordinary shares, unfranked, paid 22 December 2021
Interim dividend declared at the rate of 13.0 cents per share on ordinary shares, unfranked, paid 8 July 2022
Total dividends paid
$m
67.2
53.1
120.3
Since the end of the financial year, the Directors have declared a final dividend to be paid at the rate of 22.0 cents per share
on ordinary shares. This dividend will be unfranked.
EVENTS SUBSEQUENT TO BALANCE DATE
Acquisition of business
On 3 October 2022, the Group acquired 100% of the shares of Axis Mining Technology Pty Ltd and DV8 Technology Ltd,
who design, develop and manufacture specialised geospatial tools and instruments for the mining industry. The purchase price
comprises $258 million paid on completion and potential earn out payments of up to $90 million based on the achievement
of cumulative EBITDA generated from 1 October 2022 to 31 December 2024, and contingent on certain key management
remaining employed by Orica during the earn‑out period. Goodwill of $177 million will be recognised on this transaction.
Dividends
On 8 November 2022, the Directors declared a final dividend of 22.0 cents per ordinary share payable on 22 December 2022.
The financial effect of this dividend is not included in the Annual Report for the year ended 30 September 2022 and will be
recognised in the FY2023 Annual Report.
The Directors have not become aware of any other significant matter or circumstance that has arisen since 30 September 2022,
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.
Orica Annual Report 2022 | 97
DIRECTORS’ REPORT (CONTINUED)
ENVIRONMENTAL REGULATIONS
Orica seeks to be compliant with applicable environmental laws and regulatory permissions relevant to its operations.
Where instances of non‑compliance occur, Orica’s procedures require that relevant governmental authorities are notified in
accordance with statutory requirements and internal investigations are conducted to determine the cause of the non‑compliance
to ensure the risk of recurrence is minimised.
The Company has committed major investments, both in terms of capital and resources, to improve its environmental performance
at key sites in addition to its general maintenance program. The Company is working closely and co‑operatively with regulators and
government agencies in relation to these initiatives, as well as enhancing community engagement and consultation.
More specific details about Orica’s sustainability initiatives and performance, including safety, health and environment, can be
found on the Orica website www.orica.com/sustainability.
INDEMNIFICATION OF OFFICERS
The Company’s Constitution requires the Company to indemnify any person who is, or has been, an officer of the Company,
including the Directors, the Secretaries and other Executive officers, against liabilities incurred whilst acting in good faith as
such officers to the extent permitted by law.
In accordance with the Company’s Constitution, the Company has entered into a Deed of Access, Indemnity and Insurance
with each of the Company’s Directors and, in certain instances, specific indemnities have been provided. No Director or officer
of the Company has received benefits under an indemnity from the Company during or since the end of the year.
The Company has paid a premium in respect of a contract insuring officers of the Company and of its controlled entities, against
a liability for costs and expenses incurred by them in defending civil or criminal proceedings involving them as such officers, with
some exceptions. The insurance contract prohibits disclosure of the nature of the liability insured against and the amount of the
premium paid.
NON‑AUDIT SERVICES
During the year, KPMG, the Company’s auditor, performed certain other services in addition to its audit responsibilities.
The Board is satisfied that the provision of non‑audit services during the year by the auditor is compatible with, and did not
compromise, the auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
– all non‑audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed
by the Board Audit and Risk Committee to ensure they do not impact the integrity and objectivity of the auditor; and
– the non‑audit services provided do not undermine the general principles relating to auditor’s independence as set out in
APES 110 Code of Ethics for Professional Accountants (Including Independence Standards), as they did not involve reviewing
or auditing the auditor’s own work, acting in a management or decision‑making capacity for the Company, acting as an
advocate for the Company or jointly sharing risks and rewards.
A copy of the lead auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is contained
on page 124 of the Annual Report and forms part of this Directors’ Report.
Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non‑audit services
provided during the year are disclosed in note 21 to the Annual Report.
98 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION
REPORT
our Executives and all employees who
adapted as needed and worked
collectively across regions and functions
to deliver strong performance outcomes
for the Group.
Significant strides were also made in the
execution of our refreshed corporate
strategy which was designed and
rolled‑out at the start of FY2022 to
ensure a long‑term sustainable future
for the business. Key milestones
included the introduction of new
products and services as part of the
continued evolution of our industry
leading suite of blasting technology
and solutions; increasing our exposure
to future‑facing commodities and
emerging growth areas; and the
successful operation of emissions
abatement technology at Carseland
as just one of many positive steps taken
during FY2022 to meet our sustainability
commitments (refer to page 68 of the
Annual Report for further detail).
Tragically, we are reporting two fatalities
this year, one relating to an incident at a
customer site in remote far east Russia
that occurred during the transition of the
Russian business and an event in 2021 at
a site in Kazakhstan. Our focus has been
on ensuring that we learn from these
events and make improvements where
we can, to ensure our people return
home safely. It is also important
to us that all Executives are accountable
for safety, so the Board, supported by
management agreed there should be a
downward adjustment to all Executives’
FY2022 STI outcomes.
FY2022 Short‑Term Incentive
Last year, the Board exercised its
discretion to zero out STI payments to
the CEO and all other Executives (despite
a positive scorecard outcome for some
metrics) to align with the shareholder
experience. Given the strength of our
performance this year, it is pleasing to
report that the outcomes in relation to
our two key financial metrics, EBIT and
RONA, were well above set targets.
To drive those outcomes, management,
with the support of the Board, made two
key decisions. First, to rapidly increase
production at our Yarwun and Bontang
manufacturing sites and second, to
significantly increase our levels of
inventory. These two decisions enabled
us to offset the supply impact of
restrictions on the sale of Russian AN
and ensure security of supply to our
customers. Without the need to hold
significantly higher AN inventory from
December 2021 onwards, our Cash
Generation Efficiency (CGE) outcome
would have been well ahead of target.
Similarly, without increasing production,
we would have exceeded our Scope 1
and 2 emissions reduction target.
As our CGE metric outcome changed
as a direct result of the Board endorsed
inventory decision, the Board has
exercised its discretion to calculate CGE
after removing the impact of higher AN
inventory volumes that were held as a
result of the disruption in Russian AN
supply from December 2021. While our
Scope 1 and 2 emissions reduction
metric outcome was impacted by the
same exogenous factors and Board
endorsed decision to increase
production, the Board, with the support
of management, chose not to adjust this
outcome as we wanted to demonstrate
our strong commitment to our
sustainability objectives so early on
in our journey.
As safety is core to who we are and
what we do, there will be a downward
adjustment of 10% of total STI
for all Executives in acknowledgment
of the two fatalities. This will result
in the CEO’s final STI being 124.4%
of his target opportunity (82.9%
of maximum). Outcomes for other
Executives were mixed, reflecting
individual performance throughout
the year. STI scorecard outcomes and
commentary are provided in Section 3.2
of this report.
FY2019‑21 Long‑Term Incentive
The FY2019‑21 LTI award (with a
performance period from 1 October 2018
to 30 September 2021) did not vest
following testing in November 2021,
with average RONA performance
under the required threshold due
to a COVID‑19‑impacted FY2020 and
FY2021 EBIT that was well below
our expectations. Vesting outcomes
under the FY2020‑22 LTI award will
be determined following the release
of FY2022 full‑year results; however,
with a three‑year average RONA
target from 1 October 2019 to
30 September 2022, no vesting
is anticipated.
Orica Annual Report 2022 | 99
Cover Letter (unaudited) to
the Remuneration Report
Dear Shareholders,
On behalf of the Board, I am pleased to
present Orica’s FY2022 Remuneration
Report, for which we seek your support
at our Annual General Meeting.
A STRONG PERFORMANCE BY
ORICA AND ITS PEOPLE
Orica and its people have performed
well in a year which was mired in global
uncertainty, extensive supply chain
disruption and high inflation that is
expected to continue into FY2023.
This environment impacted us at many
levels. The dislocation of AN supply due
to the Russia‑Ukraine conflict required a
decisive change, leading to a significant
ramp up in production and expansion in
our inventory levels to ensure we could
maintain security of supply at all times
for our customers.
It also led to the structured exit by Orica
in mid‑September 2022, of our operations
in Russia with a sale of the business to
local management. Our focus during this
transition was on the well‑being of our
employees, engaging regulators to ensure
compliance with sanctions, managing
supply interruptions and ensuring the safe
and secure supply of our products across
our global network.
Against this backdrop, management and
our people delivered financial outcomes
that well exceeded the set targets. At the
same time, we also strengthened our key
customer relationships by ensuring
continuity of product supply, and
increasing our production and inventory
levels, within a disrupted market. These
achievements were enabled by the
strength and resilience of our global
manufacturing footprint and supply
network, together with the efforts of
REMUNERATION REPORT (CONTINUED)
EXECUTIVE KMP CHANGES
DURING FY2022
Following a strategic review of
Orica’s operating model, a decision
was made to regionalise the business
units from 1 October 2021, with
stronger accountability for regional P&L
ownership, customers and continuous
manufacturing, where applicable. At the
same time, strategy development and
resource allocation were centralised to
improve the efficiency and consistency of
operations across the regions. As part of
this change, there was a centralisation
of decision‑making authority such that
significant Group‑wide commercial
decisions are now made primarily
by the CEO alongside the relevant
functional Group Executive. Effective
1 July 2022, Leah Barlow also took on
full accountability for Group Safety,
Health Environment and Security (SHES),
and as a result was promoted to
President SHES, Discrete Manufacturing
& Supply. The outcome of these
operational and role movements is
a change in our key management
personnel (KMP) for FY2022 to include
the CEO, Chief Financial Officer, Chief
Technology Officer and from her
promotion, the President – SHES,
Discrete Manufacturing & Supply.
LOOKING AHEAD TO FY2023
As noted in the FY2021 Remuneration
Report, several changes were made to
the Executive STI and LTI plan designs
for FY2022 including a reduction in both
the STI maximum opportunity and LTI
grant for the CEO, the introduction of
a Scope 1 and 2 emissions reduction
metric in the FY2022 STI and relative
Total Shareholder Return (rTSR) as a
second metric within the LTI.
Following the Board’s annual review
of executive incentives, a decision
was made to focus on embedding the
operational and remuneration changes
made in FY2022. The existing executive
remuneration structure will therefore
be retained for FY2023.
We are however, in the midst of an
extremely challenging global talent
market, with skills shortages across
the globe. With over 12,000 employees
in over 45 countries, including Executives
based in each of our key regions,
Orica is not immune to this challenge.
Alongside empowering our people
and providing them with opportunities
to fulfill their potential and shape Orica’s
future, we therefore need to ensure our
remuneration arrangements continue
to attract, retain and motivate the
talent we need. During FY2023, the
Board intends to commence a full
review of the Executive remuneration
framework to test whether it remains
appropriate in supporting our long‑term
objectives under the refreshed strategy
and delivers outcomes aligned with
shareholder returns, whilst also ensuring
we are rewarding people competitively
As in prior years, we welcome feedback
from our shareholders as we undertake
this review.
Maxine Brenner
Chairman, Human Resources and
Compensation Committee
100 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
EXECUTIVE SUMMARY
FY2022 Remuneration Strategy and outcomes linked to business priorities and performance
At Orica, remuneration is linked to the drivers of our business strategy, helping to create long‑term success for shareholders.
The at‑risk components of remuneration are tied to measures that reflect operating and capital efficiencies in both the short and long‑term.
Strategic drivers are reflected in STI and LTI performance measures ensuring Executive incentives are linked to actual performance.
OBJECTIVE: COMPETITIVE REMUNERATION THAT ALIGNS EXECUTIVES
WITH THE LONG-TERM SUCCESS OF ORICA AND ITS SHAREHOLDERS
D
R
A
O
B
S
E
I
T
I
R
O
R
P
I
Strong alignment
with shareholder returns
Fit for purpose,
aligned to business
strategy and driving desired
business behaviours
Simple and transparent
Globally competitive,
enabling Orica to attract
and retain the best talent
COMPONENT
FIXED ANNUAL
REMUNERATION (FAR)
SHORT‑TERM INCENTIVE (STI)
LONG‑TERM INCENTIVE (LTI)
PURPOSE
AND LINK TO
STRATEGY
POLICY MIX
(AT TARGET):
Cash
Equity
DELIVERY
Provide competitive base pay in a challenging
talent market that will attract and retain the
skills needed to manage a complex
global business.
We target remuneration at the median of
an ASX listed comparator group comprising
companies of similar size, operations and
global business complexity.
The CEO receives a portion of FAR in equity
to ensure immediate and ongoing alignment
with our shareholders.
CEO:
20.6%
Other Executives:
35.7%
4.4%
12.5% 12.5%
Other Executives:
14.3%
7.1%
Portion as cash
payment (50% for
CEO; 66.7% for
other Exec utives).
Base salary,
superannuation
(or pension equivalent)
and allowances (per
local market practice).
For the CEO, 17.6%
of FAR is delivered in
fixed equity that vests
monthly, but is subject
to a trading restriction
until the CEO’s
minimum shareholding
guideline is met.
Orica’s benchmarking comparator group was
again reviewed against the existing principles
with changes made to reflect changes in
company size and corporate restructures prior
to Executive benchmarking being undertaken
in FY2022.
Drive performance aligned to near term
strategy and underpinning long term
value creation.
Scorecard metrics support a focus on:
– reducing serious injuries;
– minimising the impact of our operations
on the environment;
– driving sustainable productivity
improvement and efficient capital
allocation across the Group and
equally within each Region; and
– key strategic priorities including operating
efficiency, innovation and technology,
and adjacency growth.
Deferred equity component provides long‑term
shareholder alignment over an additional
three‑year time horizon post‑vesting.
CEO:
Drive long term value creation for
shareholders by encouraging an owner’s
mindset and decision‑making that
supports sustainable performance.
The LTI design:
–
reinforces a focus on sustainable
productivity improvement and efficient
capital allocation during the three‑year
vesting period; and
– provides long‑term shareholder
alignment over a five‑year time horizon.
CEO:
50.0%
Other Executives:
42.9%
Portion deferred
into shares for one
year with a further
three‑year holding
lock (50% for CEO;
33.3% for other
Exec utives).
Performance rights (vesting after three years
subject to performance hurdles) with a further
two‑year holding lock.
The LTI is granted at face value, based on
the volume weighted average price (VWAP)
of Orica shares during the five trading days
following the full year results announcement.
FY2022 scorecard changes:
–
–
introduction of a Scope 1 and 2
emissions reduction metric within the
Safety and Sustainability component
of the STI; and
re‑weighting of Safety, Environmental
and Financial metrics to ensure sufficient
focus on each (refer section 3.2 for
weightings within the CEO’s STI scorecard).
STI outcomes were generally above target
in FY2022, primarily driven by improved
financial performance, with these metrics
all assessed above stretch. Executives also
made significant progress against our
sustainability and key strategic objectives
setting a foundation for future growth.
Deferred shares allocated under the
FY2018, FY2019 and FY2020 plans remain
in a holding lock and have therefore seen
fluctuations in value aligned with our share
price. The FY2018 award will be released
from restriction in December 2022.
No deferred shares were allocated in FY2022
as no STI payments were made in FY2021.
FY2022‑24 LTI grant included two separate,
equally weighted performance metrics: relative
total shareholder return (rTSR) measured
against constituents of the ASX 100 index,
and RONA.
The FY2019 LTI (tested in November 2021)
did not vest with three‑year average RONA
below the required threshold.
Orica Annual Report 2022 | 101
KEY CHANGES
DURING FY2022
Refer section 3.1 for FY2022 primary
comparator group constituents.
The CFO received a base salary increase
effective 1 April 2022. This was the first
increase since January 2020 and recognised
the additional accountabilities taken on
following departure of the former CEO.
FY2022
REMUNERATION
OUTCOMES
REMUNERATION REPORT (CONTINUED)
CONTENTS
Section 1. Key Management Personnel
1.1 Executive Key Management Personnel
1.2 Non‑Executive Directors Key Management Personnel
Section 2: Key stakeholder questions
2.1 How is Executive remuneration structured?
2.2 How does the CEO’s fixed equity component operate?
2.3 When is remuneration earned and received?
2.4 How much were Executive KMP paid in FY2022?
2.5 Will there be any changes to the FY2023 Executive incentives?
Section 3. Executive remuneration
3.1 Executive Remuneration Framework
3.2 Short‑term incentive outcomes – link to performance
3.3 Long‑term incentive outcome
3.4 Equity granted in FY2022
3.5 Overview of business performance – five‑year comparison
3.6 Service agreements
Section 4. Non‑Executive Director arrangements
4.1 Overview
4.2 Fees and other benefits
Section 5. Remuneration governance
5.1 Responsibility for setting remuneration
5.2 Use of remuneration advisors during the year
5.3 Securities dealing policy and Malus
5.4 Executive and Director share ownership
Section 6. KMP statutory disclosures
6.1 Executive KMP remuneration
6.2 Summary of awards held under Orica’s Executive equity arrangements
6.3 Non‑Executive Director remuneration
103
103
104
104
104
105
105
106
106
107
107
110
112
113
113
114
115
115
115
116
116
116
116
117
118
118
120
122
102 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
SECTION 1. KEY MANAGEMENT PERSONNEL
1.1 Executive Key Management Personnel
The table below lists the Executives of the Company who, together with the Non‑Executive Directors, were defined as Key
Management Personnel (KMP) under Australian Accounting Standards for FY2022. For the purpose of this Remuneration Report,
references to Executives are to the Executive KMP and other Executive Committee members with the same remuneration
arrangements as the Executive KMP.
With reference to Orica’s recent organisational structure and operational changes to improve the efficiency and consistency of our
operations across all regions, the Board and management reviewed all Executive Committee roles to consider which have “authority
and responsibility for planning, directly and controlling the activities” of the Group. Given centralisation of strategy development,
resource allocation and global decision‑making authority, the view is that this now sits with Orica’s most senior functional
executives, with the Regional Presidents focused on the execution of Group strategy within their local markets.
Effective from 1 October 2021, Orica’s Executive KMP therefore includes the Managing Director and Chief Executive Officer (CEO),
Chief Financial Officer, Chief Technology Officer and following her promotion and increased role scope effective from 1 July 2022,
the President – Safety, Health, Environment and Security (SHES), Discrete Manufacturing & Supply.
Name
Role in FY2022
Commencement date in role Country of residence
Executive Director
Sanjeev Gandhi
Executive KMP
Managing Director and CEO
1 April 2021
Australia
Christopher Davis(1)
Chief Financial Officer
Angus Melbourne
Chief Technology Officer
1 October 2018
1 April 2021
Leah Barlow(2)
President – SHES, Discrete Manufacturing & Supply
1 July 2022
Former Executive KMP(3)
James Bonnor
Brian Gillespie
President – Europe, Middle East and Africa
President – Latin America
Germán Morales
President – Australia Pacific
1 July 2021
3 May 2021
1 April 2021
Australia
Australia
Australia
United Kingdom
Chile
Australia
(1) As announced at the start of FY2023, Christopher Davis ceased as Chief Financial Officer and Kim Kerr, former Vice President Group Finance was
appointed to the role effective 11 October 2022. To support an orderly transition, Mr Davis will remain with the business until the end of December 2022.
In addition to his statutory entitlements to accrued annual and long service leave at the separation date, he will receive a severance payment equivalent
to the balance of his notice period. Mr Davis remained entitled to receive an FY2022 STI and will retain his vested FY2020 and FY2019 STI deferred shares
subject to the original disposal restrictions, however, the Board determined that all unvested LTI awards would lapse on cessation of employment.
(2) Promoted to President – SHES, Discrete Manufacturing & Supply role and became KMP effective 1 July 2022.
(3) Ceased to be KMP effective 1 October 2021 following operational and role accountability changes.
Executive Committee member qualifications are detailed on page 90 of the Annual Report. Full biography details can be found
on our website.
Orica Annual Report 2022 | 103
REMUNERATION REPORT (CONTINUED)
1.2 Non‑Executive Directors Key Management Personnel
The Non‑Executive Directors who held office during FY2022 are set out below. This includes Gordon Naylor, who commenced
as a Non‑Executive Director with Orica effective 1 April 2022 and will stand for election at the 2022 Annual General Meeting.
These directors have oversight of the strategic direction of the Company but have no direct involvement in the day‑to‑day
management of our business.
Name
Role in FY2022
Commencement date in role
Country of residence
Current Directors
Malcolm Broomhead
Non‑Executive Director, Chairman
1 December 2015
John Beevers
Maxine Brenner
Boon Swan Foo
Denise Gibson
Karen Moses
Gordon Naylor
Gene Tilbrook
Non‑Executive Director
1 February 2020
Non‑Executive Director
Non‑Executive Director
8 April 2013
6 May 2019
Non‑Executive Director
1 January 2018
Non‑Executive Director
Non‑Executive Director
1 July 2016
1 April 2022
Non‑Executive Director
14 August 2013
Australia
Australia
Australia
Singapore
United States
Australia
Australia
Australia
SECTION 2: KEY STAKEHOLDER QUESTIONS
2.1 How is Executive remuneration structured?
Our Executive Remuneration Framework is weighted towards variable (at‑risk) remuneration to align with the interests of our
shareholders and drive performance against short‑term and long‑term business objectives.
Assuming target STI and the face value of LTI granted to Executives, the current policy remuneration mix is:
– CEO: 75.0% variable based on performance, 62.5% of which is delivered as deferred shares or performance rights.
– Other Executives: 64.3% variable based on performance, 50.0% of which is delivered as deferred shares or performance rights.
50.0%
CEO
33% Cash
67% Equity
20.6%
4.4%
12.5%
35.7%
42.9%
Other
Executives
50% Cash
50% Equity
12.5%
7.1%
14.3%
Fixed Cash
Fixed Equity
STI Cash
STI Equity
LTI Rights
Fixed Cash
STI Cash
STI Equity
LTI Rights
104 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
2.2 How does the CEO’s fixed equity component operate?
On Sanjeev Gandhi’s appointment to the CEO role in FY2021, the Board determined it appropriate for a substantial portion of his
FAR to be delivered in the form of Orica equity to ensure immediate and ongoing alignment with shareholders. At the same time,
the CEO’s minimum shareholding requirement was also increased from 100% to 150% of FAR and the time period allowed to
reach this holding reduced from six to five years from appointment.
The fixed equity component of Mr Gandhi’s FY2022 FAR was again equal to 17.6% of his total FAR, granted in the form of
restricted rights which vest monthly in alignment with the payment of fixed cash. The allocation value for the FY2022 Fixed Equity
grant made in December 2021 was based on the five‑day VWAP following FY2021 full‑year financial results, consistent with the
FY2022‑24 LTI plan.
Oct 21
Nov 21 Dec 21
Jan 22
Feb 22 Mar 22 Apr 22 May 22
Jun 22
Jul 22
Aug 22
Sep 22
Grant of restricted rights
Fixed Cash – monthly cash payments
Fixed Equity – monthly vesting in equal tranches; October and November tranches were granted in December as fully vested rights
Vesting date
Holding lock until CEO holds
150% x FAR in vested equity
Vested Rights are exercisable for a five‑year period from grant, with the underlying shares subject to a holding lock until the CEO
exceeds his minimum shareholding requirement, except where the sale of shares is required to meet tax obligations.
Further information on the CEO’s fixed equity is detailed in Section 3.1.
2.3 When is remuneration earned and received?
Remuneration is structured to reward Executives progressively across different timeframes with an emphasis on alignment with
shareholders through extended holding locks and a five‑year effective holding period. The diagram below illustrates the period over
which FY2022 remuneration is earned and delivered, and when holding locks are lifted.
FY2022
FY2023
FY2024
FY2025
FY2026
Fixed Cash
Fixed Equity
Holding lock until minimum shareholding guideline is met
Cash STI
STI Deferred Shares
One year deferral
Three year holding lock post vesting
D
E
X
I
F
E
L
B
A
R
A
V
I
LTI Performance Rights
Two year holding lock post vesting
End of performance period
Vesting date
Five-year plan
periods for
STI and LTI
Orica Annual Report 2022 | 105
REMUNERATION REPORT (CONTINUED)
2.4 How much were Executive KMP paid in FY2022?
The table below presents the remuneration paid to, or vested for, Executive KMP in FY2022.
Fixed pay(1)
$000
STI to be paid
in cash(2)
$000
Total cash
payment
$000
Equity awards
vested during
year(3)
$000
Total
remuneration
received
$000
Other(4)
$000
Executive KMP
Sanjeev Gandhi(1)
Christopher Davis
Angus Melbourne
Leah Barlow
Total
1,400.0
912.5
919.8
187.5
1,057.4
273.8
603.4
121.1
3,419.8
2,055.7
2,457.4
1,186.3
1,523.2
308.6
5,475.5
532.9
98.3
86.2
–
717.4
52.7
1.8
1.6
5.0
61.0
3,043.0
1,286.4
1,611.0
313.6
6,254.0
(1) Fixed Pay includes actual base pay received in cash and superannuation (or equivalent pension) contributions for each individual’s applicable KMP period.
For Sanjeev Gandhi, it therefore does not include the equity component of his fixed annual remuneration (i.e., the FY2022 fixed equity) which is captured
under the ‘Equity awards vested during the year’ column.
(2) Refers to FY2022 Executive STI plan cash payments that will be received by Executives in December 2022 (in accordance with the STI plan rules,
associated deferred shares will also be granted in December 2022 to all Executives aside from Christopher Davis who will receive the STI in cash as
he will cease to be employed with Orica at the end of 2022). For Leah Barlow, the STI amount shown relates only to her KMP period (from 1 July 2022).
(3) Refers to the face value of equity awards (using the share price at the vesting date) that vested during FY2022, including deferred shares from FY2020
that vested in December 2021, but remain subject to holding locks until December 2024. No shares were acquired under the LTI as the FY2019 LTI did
not vest. For Sanjeev Gandhi, the amount also includes FY2022 fixed equity, which is part of his FAR, and the second and final tranche of a sign‑on
award that was granted on commencement of employment in FY2020 and vested on 31 December 2021.
(4) Refers to other benefits and allowances provided (where applicable) including trailing tax obligations associated with international assignments and/or
permanent relocation to Australia. Movements in annual leave and long‑service leave balances have not been shown.
For information on the determination of FY2022 STI outcomes, refer to section 3.2 – Short‑term incentive outcomes. Refer to
section 6.1 – FY2022 Executive KMP remuneration table prepared in accordance with the accounting standards.
2.5 Will there be any changes to the FY2023 Executive incentives?
Following several changes to Executive incentives for FY2022, the Board has determined to retain a consistent approach for
FY2023, allowing the recent operational and incentive plan changes to be embedded within the business.
The CEO’s FY2023 STI scorecard is set out below. Targets will be retrospectively disclosed in the FY2023 Remuneration Report.
FY2023 CEO Scorecard
Measure
Metric
Weighting (at target)
Safety and Sustainability
Serious Injury Case Rate
Loss of Containment
10%
5%
Financial
Global Scope 1 and 2 GHG emissions reduction
10%
EBIT
RONA
Cash Generation Efficiency
30%
30%
15%
Executive FY2023 STI scorecards will continue to have a Strategic component that includes a sustainability‑related metric relevant to
their role, and for the Chief Technology Officer and Regional Presidents metrics, linked to the commercialisation of new technology.
Looking forward, following changes to Orica’s organisational structure and Executive team over the past 18 months and with the
refreshed strategy in place, the Board intends to undertake a formal review of the Executive Remuneration Framework during FY2023.
The focus of this review will be to ensure the appropriateness of the framework in supporting our strategic objectives, delivering
outcomes aligned with long‑term shareholder returns, and supporting with the motivation and retention of our critical talent.
A consultation process will occur with shareholders as we progress with the review.
106 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
SECTION 3. EXECUTIVE REMUNERATION
3.1 Executive Remuneration Framework
The following table outlines the FY2022 Executive Remuneration Framework.
Remuneration Positioning
Market position
Comparators
Median for FAR and between Median and 75th percentile for total remuneration where outstanding
performance is delivered.
Primary comparator group – 15 ASX listed companies similar in size, operations and complexity to Orica,
with reference to market capitalisation, revenue, industry and the extent of international operations.
The primary comparator group was last reviewed as at 30 June 2022 and comprised the following
companies: Amcor Plc, Ansell Limited, BlueScope Steel Limited, Brambles Limited, Cochlear Limited, Incitec
Pivot Limited, James Hardie Industries Plc, Newcrest Mining Limited, Nufarm Limited, Orora Limited, Sims
Limited, Santos Limited, South 32 Limited, Woodside Petroleum Limited and Worley Limited.
Secondary comparator group (reference) – ASX listed companies with market capitalisation between
50% and 200% of Orica’s 12‑month average market capitalisation, as at 30 June of the relevant
financial year.
Where appropriate, particularly for roles located outside of Australia, additional sector or local industry
specific data is taken into consideration in benchmarking Executive remuneration.
FAR (Cash)
Payment vehicle
Cash salary, superannuation (or pension equivalent) and allowances (per local market practice).
FAR (Equity)
Payment vehicle
Restricted rights (each vested right providing a 1:1 entitlement to Orica shares).
Opportunity (face value)
CEO: 17.6% of Total FAR, equivalent to $300,000 per annum for FY2022.
Vesting period
Vesting schedule
Exercise period
Holding locks
The actual number of restricted rights issued was determined by dividing FAR (Equity) opportunity by the
five‑day VWAP immediately after the announcement of our FY2021 annual results ($15.13).
1 October 2021 to 30 September 2022.
Vests in equal monthly tranches subject to continued employment until the end of the relevant month.
Due to timing of the grant, the first two tranches were granted as fully vested rights.
Between vesting and five‑years from grant.
Shares allocated following exercise of vested rights will be subject to a holding lock until the CEO’s minimum
shareholding requirement (150% x FAR) has been met.
Cessation of employment
Unvested rights lapse on cessation, subject to Board discretion to determine otherwise. Vested rights are
retained with no holding locks attached to the underlying shares.
Change of control
Board discretion to determine an appropriate treatment.
Access to dividends
Entitlement to dividend equivalent payments in relation to vested rights.
STI
Changes in FY2022
Changes to FY2022 STI metrics: High Potential Incident Injury Ratio removed, and Scope 1 and 2 emissions
reduction added to the new ‘Safety and Sustainability’ component of the STI. Weighting on Serious Injury
Case Rate (SICR) increased to ensure a 10% Safety scorecard weighting; re‑weighting of EBIT, RONA and
Cash Generation Efficiency (CGE) recognising the importance of improving earnings performance
in FY2022.
No deferred shares were granted during FY2022 as the Board exercised its discretion to zero out all FY2021
Executive STI payments. However, the deferred STI framework is still outlined below for reference.
Payment vehicle
Cash and deferred shares.
Opportunity
CEO: 0 to 150% of FAR; 100% at target.
Other Executives: 0 to 120% of FAR; 60% at target.
For Executives based outside of Australia, opportunities are referenced to base salary only.
Orica Annual Report 2022 | 107
REMUNERATION REPORT (CONTINUED)
Performance Measures
CEO: Safety and Sustainability (25%); Financials (75%) comprising EBIT, RONA and CGE(1).
Other Executives: Safety and Sustainability (25%); Financials (50%); Strategic priorities (25%).
For each measure, levels for threshold, target and maximum are set. Below threshold, no incentive is paid.
Above threshold, straight‑line vesting applies between threshold and target, and between target
and maximum.
While not specifically included as an STI metric for the CEO, the Board continues to measure progress
against Orica’s corporate plan, organisational health baselines, key people metrics and in strengthening
business conduct and compliance frameworks.
The determination of final performance outcomes for all Executives includes input from Board Committee
Chairs and senior functional leaders (e.g., covering finance, legal, risk, safety, sustainability and people).
Deferred STI
CEO: 50% of STI delivered in deferred shares which vest after one‑year and are subject to risk of forfeiture.
Other Executives: one‑third of STI delivered in deferred shares which vest after one‑year and are subject
to risk of forfeiture.
The number of deferred shares granted is calculated using the five‑day VWAP immediately after the
announcement of our annual results.
Holding lock
Cessation of employment
Following the one‑year vesting period, vested deferred shares are subject
to a further three‑year holding lock during which time Executives are
restricted from trading in shares. Disposal restrictions may be lifted only
where an Executive is required to fund personal tax obligations arising
on vested shares (applicable for certain non‑Australian based Executives)
or on cessation.
Unvested deferred shares lapse on resignation or termination for cause.
In other circumstances, being good leaver events, unvested shares may
be retained subject to the original vesting period and holding lock.
Vested deferred shares: retained on cessation, subject to the original
holding lock.
The Board retains discretion to determine a different treatment
on cessation if considered appropriate in the circumstances.
Change of control
Board discretion to determine an appropriate treatment.
Access to dividends
During both the deferral and holding lock periods, Executives are entitled
to accumulate dividends.
LTI
Changes in FY2022
Relative Total Shareholder Return introduced as a second equally weighted metric alongside RONA.
Payment vehicle
Performance rights (each vested right providing a 1:1 entitlement to Orica shares).
Opportunity (face value)
CEO: 200% of FAR grant at face value.
Other Executives: 120% of FAR grant at face value.
For Executives based outside of Australia, opportunities are referenced to base salary only.
The actual number of performance rights issued to each Executive was determined by dividing their
respective grant values by the five‑day VWAP of Orica shares following the announcement of our FY2021
annual results ($15.13).
Performance period
Performance is measured over three financial years (FY2022, FY2023 and FY2024).
(1) For STI purposes, EBIT is defined as earnings from Continuing Operations before interest, tax and individually significant items; RONA is defined as EBIT/
Net operating assets. Net operating assets is defined as rolling 12‑month average assets including net property, plant and equipment; intangibles at NBV;
current and non‑current investments in associates at current carrying value; trade working capital; non‑trade working capital excluding environmental
provisions; CGE is defined as Net cash from operating activities (incorporating movement in 12‑month average trade working capital) excluding cash
outlays related to growth capital or other investments, non‑trade working capital, and payments to and from shareholders and debt, but including
sustaining capital/Earnings Before Interest, Taxes, Depreciation and Amortisation.
108 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
Performance measure
50% of Rights are subject to RONA(2) – calculated as annual EBIT/rolling 12‑month Net Operating Assets
(calculated on an average basis over three financial years).
Targets and
vesting schedule
50% of Rights are subject to Relative Total Shareholder Return (rTSR) performance.
RONA Component (50%)
The FY2022 vesting schedule for the RONA performance measure is as follows:
Average RONA over 3 years
% of Rights vesting
Below 10.2%
At 10.2%
No vesting
30% of rights vest
Between 10.2% and 11.0%
Straight line vesting between 30% and 60%
At 11.0%
60% of rights vest
Between 11.0% and 11.8%
Straight line vesting between 60% and 100%
At or above 11.8%
100% of rights vest
The FY2022 LTI RONA targets reflected the Board’s expectations in late 2021 for returns through the current
industry/market cycle, our corporate plan and transformation program, and long‑term growth expectations.
As with prior LTI grants, to achieve target or above‑target vesting, EBIT growth must be significantly above
the Board’s view of underlying explosives market growth.
Relative TSR Component (50%)
Orica’s TSR performance over the performance period will be measured against the performance of
constituents within the ASX 100 index, defined as at the start of the performance period (1 October 2021).
Orica TSR percentile ranking
(against constituents of ASX 100) % of Rights vesting
Below 50th
0%
50th (Target Performance)
50% of rights vest
Between 50th and 75th percentile
Straight line vesting between 50% and 100%
75th or above (Stretch performance)
100% of rights vest
Holding locks
Following the three‑year performance period, vested performance rights are converted into shares and are
subject to a further two‑year holding lock during which time Executives are restricted from dealing in those
shares. The holding lock is designed to support an owner’s mindset and provide alignment with shareholders.
Disposal restrictions may be lifted where an Executive is required to fund personal tax obligations arising
from the vesting of performance rights (applicable for certain non‑Australian based Executives).
Cessation of employment
Unvested rights lapse on resignation or termination for cause. In other circumstances, being good leaver
events, a pro‑rata portion of rights (based on service period) is retained subject to the original vesting period
and holding lock.
Vested rights are retained on cessation, subject to the original holding lock.
The Board retains discretion to determine a different treatment on cessation if considered appropriate
in the circumstances.
Change of control
Board discretion to determine an appropriate treatment.
Access to dividends
Executives are not entitled to receive dividends on unvested performance rights during the three‑year
performance period. Once vested, Executives are entitled to receive dividends during the two‑year
holding lock.
(2) For LTI purposes, RONA is defined as EBIT/Net operating assets. Net operating assets is defined as rolling 12‑month average assets including net property,
plant and equipment; intangibles at NBV; current and non‑current investments in associates at current carrying value; trade working capital; non‑trade
working capital excluding environmental provisions; EBIT is defined as earnings from Continuing Operations before interest, tax and individually
significant items.
The Board has an overriding discretion to adjust final outcomes under the terms of both the STI and LTI plans to ensure executive
reward outcomes are reflective of our overall performance and aligned to shareholder expectations.
Orica Annual Report 2022 | 109
REMUNERATION REPORT (CONTINUED)
3.2 Short‑term incentive outcomes – link to performance
(a) Summary of FY2022 STI performance conditions and performance level achieved
Consistent with the prior year, performance is measured against a suite of Safety, Sustainability, Financial and Strategic metrics as
part of each Executive’s performance review. Key drivers of performance within each STI scorecard component are outlined below.
Safety continues to be our most important priority and while we saw an improvement in Group and Regional SICR throughout the
year. Tragically in FY2022, we are reporting two fatalities, one relating to an incident at a customer site in far‑east Russia and the
other, an event in 2021 at a site in Kazakhstan. Detailed investigations into both incidents have been conducted with learnings
implemented across the business including reinforcement of the critical safety measures in place to keep our people, customers and
communities safe. In determining overall STI outcomes, the Board considered the impact of these fatalities, and with the support of
management has exercised its discretion to reduce the STI outcomes for all Executives by 10%. This adjustment reflects Orica’s
long‑held view that all Executives have a responsibility to ensure our people return home safely.
In relation to Loss of Containment, we are pleased that both the number and time to resolve spills have improved, with the majority
of events attracting a Severity 0 classification (the lowest severity rating). Strong progress has also been made towards our stated
greenhouse gas emissions target of at least a 40% reduction in net Scope 1 and 2 operational emissions by 2030, with tertiary
abatement technology successfully operating at Carseland and installation of this technology expected to begin at Kooragang
Island early into FY2023. However, during FY2022, the Board endorsed decision to rapidly increase production at our Yarwun and
Bontang manufacturing sites to offset the impact of restrictions on the sale of Russian AN resulted in a below target Scope 1 and 2
emissions reduction metric outcome. Despite this outcome being the result of external factors and the Board endorsed production
decision, no adjustment has been made by the Board, reinforcing our strong commitment to our sustainability targets so early in
our journey.
Against a backdrop of global uncertainty, extensive supply chain disruption and high inflation, the business delivered improved
financial results across all regions, with Group EBIT and RONA well above stretch targets set by the Board. Our financial performance
reflects solid volume growth, a greater demand for premium products across the regions and improved commercial discipline in
both customer and supply contracts. In response to changing external conditions and in accordance with a Board endorsed decision
to maintain higher levels of inventory from December 2021 to ensure security of supply to our customers, trade working capital was
higher than originally planned. Given this, the Board considered it appropriate to exercise its discretion to calculate CGE after removing
the impact of higher AN inventory volumes that were held as a result of the disruption in Russian AN supply from December 2021.
The CEO’s FY2022 STI outcome was 82.9% of his maximum STI opportunity. Outcomes against each STI scorecard metric are
summarised below.
2022 performance
Measure
Target
Weighting
(at target)
Threshold
Target
Max
50%
100%
150%
Weighted
Outcome
(%)
Performance commentary
Safety and
Sustainability
Rewards a continuous focus on ensuring safe and reliable operations, and reducing the impact of our business
on the environment
SICR(1)
0.143
10%
Loss of
Containment(2)
29
5%
Global Scope
1 and 2 GHG
Emissions
Reduction(3)
14.7%
10%
110 | Orica Annual Report 2022
8.1%
7.1%
6.7%
While SICR outcomes significantly
improved from FY2021, we were
still disappointed with our overall
safety performance in FY2022.
Improving Group SICR will be a
major focus along with other key
controls over the coming year.
We again saw a strong focus on
minimising the impact of LOC
events, leading to a reduction in
total events compared to FY2021.
Net emissions reduced slightly
from the prior year (FY2021:
1,898; FY2022: 1,883) despite the
unexpected material production
uplift due to the Russia / Ukraine
conflict; however, with ambitious
targets set for FY2022 the
outcome fell short of target.
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
Financials
Rewards improvements to earnings, enhanced returns from invested capital, developing enabling technology
and adjacency growth, optimising capital allocation and reallocation
EBIT(4)
$501.4
30%
RONA(4)
10.1%
30%
CGE(4)
49.0%
15%
EBIT was above stretch,
underpinned by improved
commercial discipline and
solid volume growth.
45.0%
RONA was above stretch,
predominantly due to higher
EBIT, noting that net assets were
adjusted in the final calculations
to remove any benefit to
management from one‑off
significant items such as
FY2022 impairments.
Discretion was exercised by
the Board to assess CGE after
adjusting for the impact of higher
AN inventory volumes to ensure
security of supply following the
disruption in Russian supply.
45.0%
22.5%
Board
discretion
Overall
STI outcome
In acknowledgement of the two fatalities that occurred in our Russia and Kazakhstan businesses, a
downward adjustment of 10% has been applied to the final outcome. The CEO and management
team are committed to ensuring we learn from these tragic events and reinforce critical safety measures
in place to keep our people, customers and communities safe.
% of Target 124.4%
% of Maximum 82.9%
(1) SICR measures the total number of Severity 3 and Severity 4 injuries and illnesses per 200,000 hours worked by an employee/contractor. Excludes
non‑work‑related injury/illness and occupational disease or illness that are attributable to chronic exposure to harmful agents over an extended period.
(2) LOC measures the total number of uncontrolled releases of material from a primary containment that results in a Severity 1 or greater environmental
impact on water or soil. From FY2022, the targets exclude events occurring in transit, the focus being on events that are with Orica’s direct
operational control.
(3) Scope 1 and 2 refers to emissions under Orica’s operational control, measured in accordance with the GHG Protocol and National Greenhouse and
Energy Reporting (NGER) Measurement Determination.
(4) Refer section 3.1 for the definitions of EBIT, RONA and CGE for FY2022 STI purposes.
Strategic objectives relevant to each Executives’ accountabilities were determined and approved by the Board at the start of the
financial year with clear alignment to Orica’s refreshed corporate strategy. As applicable, FY2022 Executive STI scorecards included
metrics relating to the commercialisation of new technologies, growth within key focus areas, business efficiencies, operating
model improvements and sustainability. Achievement against these objectives was generally assessed as being between target and
stretch. Overall outcomes for Executive KMP (other than the CEO) ranged from 25.0% to 82.0% of their maximum opportunity.
Orica Annual Report 2022 | 111
REMUNERATION REPORT (CONTINUED)
(b) Short‑term incentive outcomes – FY2022
Details of the FY2022 outcomes for eligible Executive KMP are set out in the table below:
For the year ended
30 September 2022
Current Executive KMP
Sanjeev Gandhi
Christopher Davis(2)
Angus Melbourne
Leah Barlow(3)
Maximum STI
opportunity
$000
Actual STI paid
in cash
$000
Actual STI paid
in deferred
equity(1)
$000
Actual STI
payment as %
of maximum
% of maximum
STI forfeited
2,550.0
1,095.0
1,103.8
225.0
1,057.4
273.8
603.4
121.1
1,057.4
–
301.7
60.5
82.9%
25.0%
82.0%
80.7%
17.1%
75.0%
18.0%
19.3%
(1) Under AASB 2 Share‑based Payments, STI paid to Executives as deferred shares is accounted for as a share‑based payment and expensed over two years.
Accordingly, 50% of the value of the deferred equity is included in each Executive KMP’s share based payments expense in the relevant performance year
with the remainder included in the subsequent year. No deferred equity was awarded in respect of FY2021 performance.
(2)
In accordance with the terms of the STI plan, as Christopher Davis will cease to be employed with Orica at the end of December 2022, the FY2022 STI will
be paid in cash, with no deferred shares to be granted.
(3) Refers only to Leah Barlow’s KMP period (from 1 July 2022).
3.3 Long‑term incentive outcome
The table below summarises the LTI Plan awards tested in the current financial year together with awards that remain unvested.
The current face value (and the estimate of the maximum possible total value) of LTI Plan awards granted during FY2022 that
are yet to vest, can be determined by multiplying the number of awards shown in Section 6.2 by the current share price of the
Company. The minimum possible total value of the awards is nil. The actual value that may ultimately be received by Executives
cannot be determined as it is dependent on and therefore fluctuates with movements in the Company’s share price.
Plan
LTIP
LTIP
LTIP
LTIP
Grant
FY2019
FY2020
FY2021
FY2022
Performance period
Performance measures
applicable to award
FY2019 – FY2021
FY2020 – FY2022
FY2021 – FY2023
RONA (100%)
RONA (100%)
RONA (100%)
Outcome
No vesting
Not yet tested
Not yet tested
FY2022 – FY2024
RONA (50%), rTSR (50%)
Not yet tested
The FY2019 grant was tested in November 2021 but did not vest as the three‑year average RONA was below the required
threshold. In determining the average RONA outcome, the Board applied discretion to adjust EBIT and Net Operating Assets (being
the inputs used to calculate RONA) to remove the acquisition year impact of the Exsa (FY2020) transaction, and the impact of the
IRFS‑16 leasing standards and recent SaaS accounting changes. Net Operating Assets was also adjusted to ensure management
were not advantaged from impairments to IT and other assets, the write down of defective assets at Burrup and other business
impairments that occurred during FY2021. Overall, management were neither advantaged nor disadvantaged by the adjustments
made and they did not change the vesting outcome.
RONA (3‑year average)
10.7%
Below threshold of 13.7%
0%
Final outcome
Vesting position
% Rights vesting
112 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
3.4 Equity granted in FY2022
The table below presents the equity granted at face value to Executive KMP during FY2022.
Executives (KMP)
Sanjeev Gandhi
Christopher Davis
Angus Melbourne
Total
FY2022 LTI(1)
$000
FY2021 Deferred
shares(2)
$000
3,400.0
1,050.0
1,103.8
5,553.8
–
–
–
–
Other(3)
$000
300.0
–
–
300.0
Total
$000
3,700.0
1,050.0
1,103.8
5,853.8
(1) Due to vest in November 2024 subject to satisfaction of performance conditions and then subject to a two‑year holding lock.
(2) No FY2021 Executive STI payments were made and therefore no FY2021 deferred shares were granted.
(3) Relates to Sanjeev Gandhi’s FY2022 fixed equity grant which as part of his FAR vests in equal monthly tranches (refer Section 3.1 for details).
3.5 Overview of business performance – five‑year comparison
The table below summarises key indicators of the performance of the Company, relevant shareholder returns over the past five
financial years, and average Executive KMP STI vesting outcomes.
Financial year ended 30 September
Profit/(loss) from the consolidated group operations ($m)
Individually significant items ($m)(1)
EBIT ($m)(2)
Dividends per ordinary share (cents)
Closing share price ($ as at 30 September)
Three‑month average share price (1 July to 30 September) each year
EPS growth (%)(2)
NPAT ($m)(2)
External Sales ($m)
Cumulative TSR (%)(3)
Average STI received as % of maximum opportunity for Executives(4)
(1) This figure is before interest, tax and non‑controlling interest.
(2) Before individually significant items.
2018
242.8
375.3
618.1
51.5
17.03
17.31
(16.6)
324.2
2019
468.8
195.9
664.7
55.0
22.54
21.36
14.2
371.9
2020
320.6
293.1
613.7
33.0
15.43
17.05
(22.8)
299.1
2021
(27.3)
453.9
426.6
24.0
13.79
12.83
(32.3)
208.4
2022
304.5
274.0
578.5
35.0
13.22
15.41
49.2
317.0
5,373.8
5,878.0
5,611.3
5,682.2
7,327.5
(11.66)
23.0
11.56
53.3
(8.91)
29.2
(30.35)
0.0
(14.94)
67.7%
(3) Cumulative TSR has been calculated using the same start date for each period measured (1 October 2017). In calculating the cumulative TSR, three‑month
average share prices (1 July to 30 September for each year) have been used.
(4) Refers to awards received by Executive KMP under the Executive STI plan.
Orica Annual Report 2022 | 113
REMUNERATION REPORT (CONTINUED)
3.6 Service agreements
Remuneration and other terms of employment for Executives are formalised in service agreements. The terms and conditions of
employment of each Executive reflect market conditions at the time of their contract negotiation on appointment or subsequently.
The material terms of the employment contracts for the current Executive KMP are summarised in the table below and subject to
applicable law.
Contractual Term
Application
Conditions
Duration of contract
All Executive KMP
Permanent full‑time employment contract until notice given by
either party.
Notice period to be
provided by Executive
Notice period to be
provided by Orica
All Executive KMP
Six months.
MD & CEO
Six months. Orica may elect to make payment in lieu of notice. In the
event of Orica terminating the service agreement, the MD & CEO will be
entitled to receive a termination payment of six months’ salary (less any
payment in lieu of notice). Should the MD & CEO’s service agreement be
terminated by mutual agreement, six months’ salary is payable (in which
case no notice is required to be given).
Other Executive KMP
Executives have either a 13 week or 26 week notice period.
Post‑employment
restraints
All Executive KMP
Executives are entitled to be paid an amount equivalent to up to
26 weeks’ FAR on termination.
Each Executive has also agreed to restraints and non‑solicitation undertakings
as part of their service agreements, which will apply upon cessation of their
employment to protect the legitimate business interests of Orica.
114 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
SECTION 4. NON‑EXECUTIVE DIRECTOR ARRANGEMENTS
4.1 Overview
Fees for Non‑Executive Directors (Directors) are set by reference to:
– the individual’s responsibilities and time commitment attached to the role of Director and Committee membership;
– the Company’s existing remuneration policies and survey data sourced from external specialists; and
– fees paid by comparable companies and the level of remuneration required to attract and retain Directors of the
appropriate calibre.
To preserve their independence, Directors do not receive any form of performance‑based pay.
The current aggregate fee pool for Directors of $2,750,000 was approved by shareholders at our 2019 Annual General Meeting.
The Company pays both superannuation and Committee fees to the Directors from this pool. Committee fees are not paid to the
Chairman of the Board.
4.2 Fees and other benefits
The table below sets out the elements of Directors’ fees and other benefits applicable for the full FY2022.
Fees/benefits
Description
Board fees
Main Board
Chairman – Malcolm Broomhead
Members – all Non‑Executive Directors
Committee fees
Board Audit and Risk Committee
Chairman – Gene Tilbrook
Members – Maxine Brenner, Boon Swan Foo, Gordon Naylor
(from 1 September 2022)
Human Resources and Compensation Committee
Chairman – Maxine Brenner
Members – Denise Gibson, Karen Moses
Innovation and Technology Committee
Chairman – Denise Gibson
Members – John Beevers, Boon Swan Foo
Safety and Sustainability Committee
Chairman – Karen Moses
Members – John Beevers, Gene Tilbrook
Superannuation
Other fees/benefits
Superannuation contributions are made on behalf of the Directors at a rate
of 10.5% from 1 July 2022 (10.0% prior to 1 July 2022) being the current
superannuation guarantee contribution rate subject to a cap at the
Maximum Contributions Base.
Directors receive a travel allowance based on the hours travelled to a Board
meeting. The allowance paid is $3,000 per meeting for travel between
three and 10 hours, or $6,000 if travel time exceeds 10 hours. Directors are
also entitled to be paid additional fees for extra services or special exertions.
2022
$
Included in
shareholder
approved cap
510,000
177,000
45,000
22,500
45,000
22,500
45,000
22,500
45,000
22,500
Yes
Yes
Yes
No
Orica Annual Report 2022 | 115
REMUNERATION REPORT (CONTINUED)
SECTION 5. REMUNERATION GOVERNANCE
5.1 Responsibility for setting remuneration
The HR&CC (the Committee) is delegated responsibility by the Board for reviewing and making recommendations on our
remuneration policies, including policies governing the remuneration of Executives.
Activities of the Committee are governed by its Terms of Reference, which is available on our website at www.orica.com. Among
other responsibilities, the Committee assists the Board in its oversight of:
– remuneration policy for Executives
–
level and structure of remuneration for Senior Executives, including STI and LTI plans
– the Company’s compliance with applicable legal and regulatory requirements in respect of remuneration matters; and
– approval of the allocation of shares and awards under Orica’s equity programs.
5.2 Use of remuneration advisors during the year
No remuneration recommendations were received from remuneration advisors as defined under the Corporations Act 2001.
5.3 Securities dealing policy and Malus
Securities dealing
All Executives are required to comply with our Securities’ Dealing Policy at all times and in respect of all Orica shares held, including
any defined employee share plans. Trading is subject to pre‑clearance and is not permitted during designated blackout periods
unless there are exceptional circumstances. Executives are prohibited from using any Orica shares as collateral in any margin loan
or derivative arrangement.
Malus
Orica’s Malus Standard allows the Board to require any Executive to forfeit in full or in part, any unvested LTIP or deferred STI award
as a result of:
– a material misstatement in financial results
– behaviour that brings Orica into disrepute or has the potential to do so
– serious misconduct
– any other circumstance, which the Board has determined in good faith.
In considering whether any adjustment is necessary in respect of any or all participants, the Board may take into account the
individual’s level of responsibility, accountability or influence over the action or inaction, the quantum of the actual loss or damage,
any impact on our financial soundness or reputational standing, the extent to which any internal policies, external regulations and/
or risk management requirements were breached, and any other relevant matters.
116 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
5.4 Executive and Director share ownership
The Board considers that an important foundation of our Executive Remuneration Framework is that each Executive and Director
accumulate and hold a significant number of Orica shares to align their interests as long‑term investors.
Executives
The Executive Minimum Shareholding Guideline requires each Executive to accumulate a minimum vested equity holding in Orica
over a fixed time period from their appointment. The requirement is 150% of FAR over five years from appointment for the CEO
and 50% of FAR over six years from appointment (by 31 December 2022 for individuals in their Executive role prior to introduction
of the guideline) for other Executives.
Non‑Executive Directors
To create alignment between Directors and shareholders, Directors are required to hold (or have a benefit in) shares in the Company
equivalent in value to at least one year’s base fees. Such holdings must be acquired over a reasonable time using personal funds.
The table below sets out the number of shares held directly and indirectly by Directors and Executive KMP employed as at
30 September 2022:
Balance at
1 October
2021
Acquired(1)
Disposed
Balance at
30 September
2022
Minimum
Shareholding
Required(2)
Date Minimum
Shareholding
Required to be
met(3)
Executive KMP
Sanjeev Gandhi(4)
Christopher Davis
Angus Melbourne
Leah Barlow(5)
Directors
Malcolm Broomhead
John Beevers
Maxine Brenner
Boon Swan Foo
Denise Gibson
Karen Moses
Gordon Naylor(5)
Gene Tilbrook
40,735
44,506
55,896
3,810
37,984
14,800
9,539
–
13,000
11,000
–
14,070
36,836
11,695
6,395
–
1,963
–
–
16,000
–
3,348
11,500
1,963
–
–
–
–
–
–
–
–
–
–
–
–
77,571
56,201
62,291
3,810
39,847
14,800
9,539
16,000
13,000
14,348
11,500
16,033
192,890
31 March 2026
35,930
30 September 2024
34,788
31 December 2022
28,366
31 March 2027
38,578
13,389
13,389
13,389
13,389
13,389
13,389
13,389
(1) Shares acquired include FY2020 STI deferred shares that have vested but remain subject to holding locks and shares acquired through the Dividend
Reinvestment Plan (DRP).
(2) Calculated using base fees or FAR and the Orica closing share price as at 30 September 2022.
(3) Directors are required to acquire a shareholding of at least one year’s base fees over a reasonable time.
(4)
Includes 30,428 vested rights granted under the CEO’s fixed equity arrangement (relating to his FY2021 and FY2022 awards) as these are no longer
subject to forfeiture and can be converted into ordinary shares with nil consideration.
(5) Opening balance shown refers to their balance on commencement as KMP.
Orica Annual Report 2022 | 117
REMUNERATION REPORT (CONTINUED)
SECTION 6. KMP STATUTORY DISCLOSURES
6.1 Executive KMP remuneration
Details of the nature and amount of each element of remuneration for the Executive KMP are set out in the table below.
Remuneration outcomes presented in these tables are calculated with reference to the Corporations Act 2001 and relevant
Australian Accounting Standards for FY2022 rather than the basis of take‑home pay.
Short‑term employee benefits
Post‑
employ‑
ment
benefits
Base
(Fixed)
Pay
$000
Cash STI
Payment(1)
$000
Other
Benefits(2)
$000
Other
Long‑Term
Benefits(3)
$000
Super‑
annu ation
Benefits
$000
Termi‑
nation
Benefits
$000
Total
exclu ding
SBP*
Expense
$000
SBP
Expense
(4)(5)
$000
Total
$000
Current Executive KMP
Sanjeev Gandhi
2022
2021
Christopher Davis
2022
2021
Angus Melbourne
2022
2021
Leah Barlow(6)
2022
2021
1,400.0
1,057.4
1,200.0
–
133.3
96.6
888.5
852.8
895.8
897.6
273.8
–
603.4
–
181.2
121.1
–
–
4.6
48.2
15.3
46.2
11.0
–
–
–
25.0
14.0
–
–
–
–
Total Current Executive KMP
2022
2021
3,365.5
2,055.7
2,950.4
–
164.2
191.1
25.0
14.0
–
–
24.0
22.2
24.0
22.2
6.3
–
54.3
44.4
–
–
–
–
–
–
–
–
–
–
2,590.7
1,296.6
959.7
701.5
3,550.4
1,998.1
1,215.9
200.8
1,416.7
937.2
58.4
995.6
1,538.5
200.9
1,739.4
966.0
51.2
1,017.2
319.6
–
–
–
319.6
–
5,664.7
1,361.4
3,199.8
811.1
7,026.1
4,010.9
118 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
Short‑term employee benefits
Post‑
employ‑
ment
benefits
Base
(Fixed)
Pay
$000
Cash STI
Payment(1)
$000
Other
Benefits(2)
$000
Other
Long‑Term
Benefits(3)
$000
Super‑
annu ation
Benefits
$000
Termi‑
nation
Benefits
$000
Total
exclu ding
SBP*
Expense
$000
SBP
Expense
(4)(5)
$000
Total
$000
Former Executive KMP
James Bonnor(6)
2022
2021
Brian Gillespie(6)
2022
2021
Germán Morales(6)
2022
2021
Total
2022
2021
–
849.6
–
232.2
–
756.8
–
1,838.6
* Share‑based payment (SBP).
–
–
–
–
–
–
–
–
–
636.6
–
26.3
–
435.1
–
–
11.3
–
–
–
–
–
1,098.0
11.3
–
22.2
–
9.5
–
27.2
–
58.9
–
–
–
–
–
–
–
–
–
–
–
1,519.7
50.2
1,569.9
–
268.0
–
–
–
–
–
268.0
–
1,219.1
44.8
1,263.9
–
–
–
3,006.8
95.0
3,101.8
(1) Cash STI Payment includes payments relating to FY2022 performance accrued but not paid until FY2023.
(2) These benefits include car parking, medical and insurance costs, relocation or assignment related expenses including reimbursement of accommodation,
health insurance and taxation services, and movements in annual leave accrual (inclusive of any applicable fringe benefits tax). A negative balance may
appear where the leave accrual has decreased from the prior year.
(3) This benefit includes the movement in long service leave accrual.
(4) This includes the value calculated under AASB 2 Share‑based Payment of long‑term incentive allocations to Executives which vest over three years. Value
only accrues to the Executive when performance conditions have been met. The share‑based payment expense represents the amount required under
Accounting Standards to be expensed during the year in respect of current and past long‑term incentive allocations to Executives. These amounts are
therefore not amounts
received by Executives during the year nor may they be payable to the Executive at any other time if performance hurdles are not met. The mechanism
which determines whether long‑term incentives vest in the future is described in Section 3.1. Where a negative SBP Expense is shown, this represents
a write‑back of a previous share‑based payment accrual based on a revised estimate of performance conditions being met.
(5) Under AASB 2 Share‑based Payment, STI paid to Executives as deferred equity is accounted for as a share‑based payment and expensed over two years.
Accordingly, 50% of the value of deferred equity is included in the Executives share‑based payment expense in the relevant performance year with the
remainder included in the subsequent year. No deferred equity was awarded in respect of FY2021 performance.
(6) Remuneration for 2022 relates to the Executive KMP period only. Remuneration relating to former Executive KMP in 2021 is included for
comparative purposes.
Orica Annual Report 2022 | 119
REMUNERATION REPORT (CONTINUED)
6.2 Summary of awards held under Orica’s Executive equity arrangements
Details of LTIP performance rights, CEO fixed equity rights, sign‑on rights and deferred shares awarded under the STI plan are set
out in the table below.
Grant date
Granted
during
FY2022
Vested
Lapsed
Fair value of
instruments
at grant date
$
Balance at
year end
Value of
equity
instruments
included in
compensation
for the year
$
For the year ended
30 September 2022
Current Executive KMP
Sanjeev Gandhi
FY2022 Fixed Equity Rights(1)
3 Dec 21
19,828
19,828
FY2022 LTIP Performance rights
17 Jan 22
224,719
FY2021 LTIP Performance rights
3 Feb 21
Sign‑on rights(2)
Christopher Davis
20 July 20
–
–
FY2022 LTIP Performance rights
17 Jan 22
69,398
FY2021 LTIP Performance rights
3 Feb 21
FY2020 LTIP Performance rights
10 Jan 20
FY2019 LTIP Performance rights
11 Jan 19
FY2020 STI Deferred shares(3)
8 Dec 20
Angus Melbourne
–
–
–
–
FY2022 LTIP Performance rights
17 Jan 22
72,951
FY2021 LTIP Performance rights
3 Feb 21
FY2020 LTIP Performance rights
10 Jan 20
FY2019 LTIP Performance rights
11 Jan 19
FY2020 STI Deferred shares(3)
8 Dec 20
–
–
–
–
–
–
15,045
–
–
–
–
6,874
–
–
–
–
6,029
–
–
–
–
–
–
–
52,892
–
–
–
–
59,237
–
–
300,000
224,719
1,902,244
70,629
–
69,398
61,801
44,112
–
–
72,951
64,965
46,370
–
–
949,960
749,988
587,454
831,223
851,803
778,041
116,796
617,528
873,779
895,405
871,376
102,435
300,000
461,150
–
198,515
142,413
–
–
–
58,398
149,704
–
–
–
51,218
(1) A grant of restricted rights was made to Sanjeev Gandhi in relation to his FY2022 fixed equity component of remuneration. 11 of the 12 tranches vested
during FY2022 (in relation to service from 1 October to 31 August 2022) with the remaining tranche vesting on 1 October 2022 (in relation to service
from 1 September to 30 September 2022).
(2) A grant of sign‑on rights was made to Sanjeev Gandhi following commencement of employment with Orica in FY2020. Tranche 2 (33.33% of the rights)
vested on 31 December 2021.
(3) The FY2020 deferred shares vested on 7 December 2021. Per the terms and conditions of grant, the vested shares remain subject to disposal restrictions
via a holding lock for a further three years following vesting which prevents Executives from selling the vested shares during this period. In certain
situations where a tax charge to participants arose at vesting, Executives were permitted to sell sufficient shares to cover the tax liability with the
remaining shares.
120 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
The total number of rights and the fair value of rights issued under the LTI are:
Grant date
Vesting date
Number of
rights issued
Number
of rights
held at 30
September
2022
Number
of rights
held at 30
September
2021
Number of
participants
at 30
September
2022
Number of
participants
at 30
Sept ember
2021
29 Jul 22(1)
17 Jan 22
17 Jan 22(2)
30 Jul 21(1)
3 Feb 21
3 Feb 21(2)
10 Jan 20
10 Jan 20(2)
08 Aug 19(1)
11 Jan 19
11 Jan 19(2)
30 Nov 24
23,378
23,378
30 Nov 24
1,061,048
1,008,986
–
–
–
36,834
733,498
36,834
733,498
36,834
1,226,741
1,065,573
1,065,573
776,085
939,811
507,595
71,078
1,139,030
782,122
440,815
754,443
267,429
–
–
–
440,815
886,806
474,827
54,830
1,001,594
681,806
30 Nov 24
30 Nov 23
30 Nov 23
30 Nov 23
30 Nov 22
30 Nov 22
30 Nov 21
30 Nov 21
30 Nov 21
2
244
9
3
286
9
281
7
–
–
–
–
–
–
4
306
9
292
7
15
278
10
Fair value
of rights at
grant date
$
392,283
14,196,822
9,814,203
535,566
17,836,814
10,438,343
19,623,254
9,801,689
1,256,097
18,110,577
11,440,237
The assumptions underlying the rights valuations are:
Price of
Orica Shares
at grant date
$
Expected
volatility in
share price
%
Dividends
expected on
shares
%
Risk free
interest rate
%
Fair value
per right
RONA
$
Fair value
per right
RTSR
$
16.78
13.38
13.38
12.39
15.79
15.79
22.71
22.71
22.51
17.30
17.30
30.0
30.0
30.0
22.5
22.5
22.5
20.0
20.0
25.0
25.0
25.0
2.96
2.96
2.96
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
1.26
1.26
1.26
0.11
0.11
0.11
0.79
0.79
1.81
1.81
1.81
12.31
12.31
11.08
14.54
14.54
13.45
20.88
19.31
15.90
15.90
14.71
6.50
6.50
5.85
–
–
–
–
–
–
–
–
Grant date
29 Jul 22(1)
17 Jan 22
17 Jan 22(2)
30 Jul 21(1)
3 Feb 21
3 Feb 21(2)
10 Jan 20
10 Jan 20(2)
08 Aug 19(1)
11 Jan 19
11 Jan 19(2)
(1) A supplementary LTI offer was made in August 2019, July 2021 and July 2022 to selected senior management who joined Orica after the grant date
of the main offer in January 2019, February 2021 and January 2022. No supplementary offer was made in 2020. The terms and conditions of the
supplementary offer are the same as the main offer.
(2) Under the Executive LTI plan, performance rights granted are subject to a single performance condition, RONA with a two‑year holding lock applying
to shares acquired following vesting. A discount to the fair value has been made to reflect lack of marketability during this period.
Orica Annual Report 2022 | 121
REMUNERATION REPORT (CONTINUED)
6.3 Non‑Executive Director remuneration
Details of Non‑Executive Directors’ remuneration are set out in the following table:
Short‑term employee benefits
Directors fees
$000
Committee
fees
$000
Other
benefits(1)
$000
Post‑
employment
benefits
Super‑
annuation
$000
Current Directors
Malcolm Broomhead, Chairman(2)
2022
2021
John Beevers
2022
2021
Maxine Brenner
2022
2021
Boon Swan Foo
2022
2021
Denise Gibson
2022
2021
Karen Moses(3)
2022
2021
Gordon Naylor(4)
2022
2021
Gene Tilbrook
2022
2021
Total Directors
2022
2021
510.0
340.0
177.0
177.0
177.0
177.0
177.0
177.0
177.0
177.0
191.2
193.3
88.5
–
177.0
177.0
–
–
45.0
45.0
67.5
67.5
45.0
45.0
67.5
67.5
67.5
67.5
1.9
–
67.5
67.5
1,674.7
1,418.3
361.9
360.0
0.6
0.6
–
–
–
–
9.0
–
12.0
–
–
–
12.0
–
12.0
–
45.6
0.6
24.0
16.3
22.5
21.8
24.0
22.2
22.5
21.8
24.0
22.2
9.8
5.9
9.3
–
24.0
22.2
160.1
132.4
Total
$000
534.6
356.9
244.5
243.8
268.5
266.7
253.5
243.8
280.5
266.7
268.5
266.7
111.7
–
280.5
266.7
2,242.3
1,911.3
(1) These benefits include travel allowances and car parking benefits.
(2) Malcolm Broomhead forfeited his FY2021 Board Chairman fees from 1 June 2021 to 30 September 2021.
(3) Karen Moses elected not to receive superannuation contributions from Orica from 1 March 2022 to 30 September 2022. Superannuation contributions
were received in accordance with statutory requirements from 1 October 2021 to 28 February 2022.
(4) Gordon Naylor was appointed as a Non‑Executive Director on 1 April 2022.
122 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
REMUNERATION REPORT (CONTINUED)
Rounding
The amounts shown in this report and in the financial statements have been rounded off, except where otherwise stated, to the
nearest tenth of a million dollars, the Company being in a class specified in the ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191 dated 24 March 2016.
The Directors’ Report is signed on behalf of the Board in accordance with a resolution of the Directors of Orica Limited.
M W Broomhead
Chairman
Dated at Melbourne 8 November 2022
S Gandhi
Managing Director and Chief Executive Officer
Orica Annual Report 2022 | 123
LEAD AUDITOR’S
INDEPENDENCE
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Orica Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Orica Limited for the
financial year ended 30 September 2022 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Penny Stragalinos
Partner
Melbourne
8 November 2022
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights
reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
124 | Orica Annual Report 2022
FINANCIAL
REPORT
Orica Annual Report 2022 |
125
INCOME STATEMENT
For the year ended 30 September
Continuing operations
Sales revenue
Other income
Raw materials and inventories
Employee benefits expense
Depreciation and amortisation expense
Purchased services and other expenses
Outgoing freight
Repairs and maintenance
Impairment expense
Loss on sale of JSC “Orica CIS”
Gain on sale of Nitro Consult AB
Operating model restructuring
Significant environmental provision expense
Gain on sale of Botany site
Gain on sale of Villawood site
Share of net profit of equity accounted investees
Total
Profit/(loss) from operations
Net financing costs
Financial income
Financial expenses
Net financing costs
Profit/(loss) before income tax expense from continuing operations
Income tax expense
Profit/(loss) after tax from continuing operations
Discontinued operations
Net loss on sale of Minova after tax
Profit after tax from Minova
(Loss)/profit after tax from discontinued operations
Net profit/(loss) for the year
Net profit/(loss) for the year attributable to:
Shareholders of Orica Limited
Non‑controlling interests
Net profit/(loss) for the year
Earnings per share attributable to ordinary shareholders of Orica Limited:
From continuing operations:
Basic earnings per share
Diluted earnings per share
Total attributable to ordinary shareholders of Orica Limited
Basic earnings per share
Diluted earnings per share
Consolidated
2022
$m
7,096.4
31.8
(3,909.5)
(1,223.7)
(385.8)
(622.0)
(307.1)
(156.1)
(167.9)
(40.6)
19.5
–
–
–
–
39.8
(6,753.4)
374.8
2.1
(102.4)
(100.3)
274.5
(140.9)
133.6
(93.7)
9.1
(84.6)
49.0
60.1
(11.1)
49.0
2021
$m
5,207.9
45.7
(2,449.8)
(1,111.2)
(358.1)
(510.3)
(304.6)
(149.4)
(480.0)
–
–
(45.6)
(39.3)
71.6
40.8
34.4
(5,301.5)
(47.9)
1.0
(106.3)
(105.3)
(153.2)
(25.3)
(178.5)
–
14.6
14.6
(163.9)
(173.8)
9.9
(163.9)
cents
cents
35.1
35.0
14.5
14.4
(46.3)
(46.3)
(42.7)
(42.7)
Notes
(1b)
(1d)
(1b)
(1e)
(1e)
(1e)
(1e)
(1e)
(1e)
(1e)
(13)
(3b)
(3b)
(3b)
(11)
(1e)
(15)
(2)
(2)
(2)
(2)
The Income Statement is to be read in conjunction with the accompanying notes to the financial statements.
126 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
STATEMENT OF
COMPREHENSIVE INCOME
For the year ended 30 September
Net profit/(loss) for the year
Other comprehensive income
Items that may be reclassified subsequently to income statement:
Exchange differences on translation of foreign operations
Exchange gain on translation of foreign operations, net of tax
Net (loss)/gain on hedge of net investments in foreign subsidiaries, net of tax
Currency translation on companies disposed of, transferred to the income statement
Net exchange differences on translation of foreign operations
Sundry items:
Net gain on cash flow hedges, net of tax
Items that will not be reclassified subsequently to income statement:
Net actuarial gain on defined benefit obligations, net of tax
Other comprehensive income for the year
Total comprehensive income/(loss) for the year
Notes
(11c)
(11c)
(11c)
(11c)
Attributable to:
Shareholders of Orica Limited
Non‑controlling interests
Total comprehensive income/(loss) for the year
Consolidated
2022
$m
49.0
164.2
(64.5)
135.3
235.0
2021
$m
(163.9)
3.7
2.5
–
6.2
12.1
5.4
65.9
313.0
362.0
372.2
(10.2)
362.0
54.9
66.5
(97.4)
(105.1)
7.7
(97.4)
The Statement of Comprehensive Income is to be read in conjunction with the accompanying notes to the financial statements.
Orica Annual Report 2022 | 127
BALANCE SHEET
As at 30 September
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Assets held for sale
Other assets
Total current assets
Non‑current assets
Other receivables
Equity accounted investees
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Total non‑current assets
Total assets
Current liabilities
Trade payables
Other payables
Interest bearing liabilities
Provisions
Liabilities held for sale
Other liabilities
Total current liabilities
Non‑current liabilities
Other payables
Interest bearing liabilities
Provisions
Deferred tax liabilities
Other liabilities
Total non‑current liabilities
Total liabilities
Net assets
Equity
Ordinary shares
Reserves
Retained earnings
Notes
(5)
(5)
(15)
(13)
(7)
(8)
(11d)
(5)
(3a)
(6)
(15)
(3a)
(6)
(11d)
(4a)
Total equity attributable to ordinary shareholders of Orica Limited
Non‑controlling interests
Total equity
The Balance Sheet is to be read in conjunction with the accompanying notes to the financial statements.
128 | Orica Annual Report 2022
Consolidated
2022
$m
1,255.3
903.1
126.8
872.6
–
151.7
2021
$m
551.0
678.2
112.1
635.8
298.2
116.3
3,309.5
2,391.6
56.6
323.8
3,082.3
1,142.9
395.6
57.1
5,058.3
8,367.8
1,091.7
385.6
713.3
229.1
–
60.5
33.8
290.4
3,040.2
1,150.4
400.2
59.1
4,974.1
7,365.7
876.5
287.5
61.4
223.1
137.8
82.5
2,480.2
1,668.8
31.2
1,693.7
329.8
47.2
56.5
2,158.4
4,638.6
3,729.2
3,389.7
(397.0)
693.1
3,685.8
43.4
3,729.2
8.8
2,261.8
533.7
39.6
60.6
2,904.5
4,573.3
2,792.4
2,686.1
(647.2)
687.4
2,726.3
66.1
2,792.4
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 September
Ordinary
shares
$m
Retained
earnings
$m
Foreign
currency
translation
reserve
$m
Cash flow
hedge
reserve
$m
Other
reserves
$m
Non‑
controlling
interests
$m
Total
$m
Total
equity
$m
(527.7)
(22.0)
(120.6)
2,892.6
(173.8)
47.8
9.9
2,940.4
(163.9)
2021
Balance at 1 October 2020
2,659.1
Net (loss)/profit for the year
Other comprehensive
income/(loss)
Total comprehensive
(loss)/income for the year
Transactions with owners,
recorded directly in equity
Total changes in contributed
equity (note 4a)
Share‑based payments expense,
net of costs
Share‑based payments settlement
Acquisition of subsidiaries with
non‑controlling interests
Dividends/distributions (note 4c)
Dividends declared /paid to
non‑controlling interests
–
–
–
27.0
–
–
–
–
–
903.8
(173.8)
54.9
(118.9)
–
–
–
–
(97.5)
–
–
8.4
8.4
–
–
–
–
–
–
–
5.4
5.4
–
–
–
–
–
–
Balance at the end of the year
2,686.1
687.4
(519.3)
(16.6)
(111.3)
2,726.3
2022
Balance at 1 October 2021
2,686.1
687.4
(519.3)
60.1
65.9
–
234.1
(16.6)
–
12.1
(111.3)
2,726.3
60.1
312.1
Net profit/(loss) for the year
Other comprehensive income
Total comprehensive
income/(loss) for the year
Transactions with owners,
recorded directly in equity
Total changes in contributed
equity (note 4a)
Share‑based payments expense,
net of costs
Share‑based payments settlement
Dividends/distributions (note 4c)
Dividends declared /paid to
non‑controlling interests
–
–
–
703.6
–
–
–
–
126.0
234.1
12.1
372.2
(10.2)
362.0
–
–
–
(120.3)
–
–
–
–
–
–
–
–
–
–
–
(3.3)
700.3
(5.5)
694.8
8.0
(0.7)
–
–
8.0
(0.7)
(120.3)
–
–
–
8.0
(0.7)
(120.3)
–
(7.0)
(7.0)
Balance at the end of the year
3,389.7
693.1
(285.2)
(4.5)
(107.3)
3,685.8
43.4
3,729.2
The Statement of Changes in Equity is to be read in conjunction with the accompanying notes to the financial statements.
Orica Annual Report 2022 | 129
68.7
(2.2)
66.5
(105.1)
7.7
(97.4)
–
27.0
20.6
47.6
9.9
(0.6)
–
–
–
9.9
(0.6)
–
(97.5)
–
–
–
(2.8)
–
(7.2)
66.1
66.1
(11.1)
0.9
9.9
(0.6)
(2.8)
(97.5)
(7.2)
2,792.4
2,792.4
49.0
313.0
–
–
–
–
–
–
STATEMENT OF
CASH FLOWS
For the year ended 30 September
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Dividends received
Other operating income received
Net income taxes paid
Net cash flows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from sale of property, plant and equipment
Payments for purchase of businesses/controlled entities
Proceeds from sale of businesses, net of cash disposed and disposal costs
Proceeds from sale of business to non‑controlling interests
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid – Orica ordinary shares
Dividends paid – non‑controlling interests
Principal portion of lease payments
Proceeds from issue of ordinary shares, net of costs
Net cash flows from/(used in) financing activities
Net increase/(decrease) in cash held
Cash at the beginning of the period
Effects of exchange rate changes on cash
Cash at the end of the period
Consolidated
2022
$m
Inflows/
(Outflows)
2021
$m
Inflows/
(Outflows)
Notes
8,087.5
(7,565.8)
6,427.0
(5,596.2)
(3c)
(14)
(15)
(4c)
2.2
(113.0)
23.2
34.4
(106.2)
362.3
(319.1)
(30.2)
10.4
(14.4)
123.6
0.5
1.1
(114.2)
17.5
32.2
(148.5)
618.9
(305.4)
(17.8)
152.4
(25.1)
–
–
(229.2)
(195.9)
1,706.1
(1,706.3)
2,330.8
(2,939.7)
(90.6)
(7.0)
(60.6)
673.9
515.5
648.6
593.7
13.0
1,255.3
(72.4)
(7.2)
(60.8)
0.7
(748.6)
(325.6)
920.5
(1.2)
593.7
The Statement of Cash Flows is to be read in conjunction with the accompanying notes to the financial statements. The statement
above includes discontinued operations, refer to note 15 for further details.
130 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 September
Section A. Financial performance
1. Segment report
2. Earnings per share (EPS)
Section B. Capital management
3. Net debt and net financing costs
4. Contributed equity and reserves
Section C. Operating assets and liabilities
5. Working capital
6. Provisions
7. Property, plant and equipment
8. Intangible assets
9. Impairment testing of assets
Section D. Managing Financial Risks
10. Financial risk management
Section E. Taxation
11. Taxation
Section F. Group structure
12. Investments in controlled entities
13. Equity accounted investees and joint operations
14. Businesses and non‑controlling interests acquired
15. Businesses disposed and discontinued operations
16. Parent Company disclosure – Orica Limited
17. Deed of Cross Guarantee
Section G. Reward and recognition
18. Employee share plans and remuneration
19. Defined benefit obligations
Section H. Other
20. Contingent liabilities
21. Auditor’s remuneration
22. Events subsequent to balance date
23. List of controlled entities
24. New accounting policies and accounting standards
133
133
139
141
141
144
146
146
147
150
152
154
158
158
165
165
169
169
169
171
173
177
178
180
180
181
185
185
186
187
188
190
Orica Annual Report 2022 | 131
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
ABOUT THIS REPORT
Basis of preparation
This is a general purpose Financial Report which has been prepared by a for‑profit entity in accordance with the requirements
of applicable Australian Accounting Standards and the Corporations Act 2001 and complies with International Financial Reporting
Standards (IFRS) adopted by the International Accounting Standards Board.
It has been prepared on a historical cost basis, except for derivative financial instruments, superannuation commitments and
investments in financial assets which have been measured at fair value.
The financial statements are presented in Australian dollars with all amounts rounded off, except where otherwise stated,
to the nearest tenth of a million dollars, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 dated 24 March 2016.
Orica’s Directors have included information in this report that they deem to be material and relevant to the understanding of
the consolidated financial statements. Where appropriate, comparative information has been reclassified to conform to changes
in presentation and to enhance comparability.
Disclosure may be considered material and relevant if the dollar amount is significant due to size or nature, or the information
is important to understand the:
– Group’s current year results;
–
impact of significant changes in Orica’s business; or
– aspects of the Group’s operations that are important to future performance.
Except as described in note 24, the financial statements have been prepared using consistent accounting policies in line with
those of the previous financial year and corresponding interim reporting period.
Significant accounting policies that apply to the overall financial statements
Foreign currencies
Functional and Presentation Currency
The Company’s functional and presentation currency is Australian dollars. Each entity in the Group determines its own
functional currency and items included in the financial statements of each entity are measured using that functional currency.
Transactions and Balances
Transactions in currencies other than the functional currency of the Company or entity concerned are recorded using the
exchange rate on the date of the transaction. Monetary assets and liabilities that are denominated in foreign currencies at the
balance date are retranslated at closing exchange rates. Non‑monetary assets are not retranslated unless they are carried at
fair value. Gains and losses arising on the retranslation of monetary assets and liabilities are included in the income statement,
except where the application of hedge accounting requires inclusion in other comprehensive income (refer to note 10).
Consolidation of Group Entities
On consolidation, assets and liabilities of foreign operations are translated into Australian dollars at the closing rate at balance date.
The results of foreign operations are translated into Australian dollars at average exchange rates for the period where these do not
materially differ from rates applicable on the date of the transaction. Foreign exchange differences arising on the retranslation of
foreign operations are recognised directly in a separate component of equity.
Critical accounting judgements and estimates
Application of the Group accounting policies requires management to make judgements, and to apply estimates and
assumptions to future events. The areas involving a higher degree of judgement or complexity, and which are material
to the report, are highlighted in the following notes:
Note 3 Net debt and net financing costs
Note 9
Impairment testing of assets
Note 5 Working capital
Note 6
Provisions
Note 11 Taxation
Note 19 Defined benefit obligations
Note 7
Property, plant and equipment
Note 20 Contingent liabilities
Note 8
Intangible assets
132 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION A. FINANCIAL PERFORMANCE
A key element of the Group’s strategy is to create sustainable shareholder value. This section highlights the results and
performance of the Group for the year ended 30 September 2022.
1. SEGMENT REPORT
(a) Identification and description of segments
Orica’s reportable segments are based on the internal management structure as reported to the Group’s Chief Operating Decision
Maker (the Group’s Managing Director and Chief Executive Officer).
The Minova business was sold on 28 February 2022 and is presented as a discontinued operation. Refer to note 15 for
further details.
Orica Group
Manufacture and
supply of commerical
explosives and
blasting systems
Manufacture and
supply of advanced
hardware and software
solutions to the
mining industry
Corporate and
unallocated
support costs
Australia
Pacific & Asia
North
America
Latin
America
Europe,
Middle East
& Africa
Orica Monitor
Global Support
Orica Annual Report 2022 | 133
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
1. SEGMENT REPORT (CONTINUED)
(b) Reportable segments
2022
$m
Revenue
External sales
Inter‑segment sales
Total sales revenue
Other income
(refer to note 1d)(1)
Australia
Pacific
& Asia
North
America
Latin
America
Europe,
Middle
East &
Africa
Orica
Monitor
Global
Support
Elimin‑
ations
Total
Contin‑
uing
Opera‑
tions
Discont‑
inued
Opera‑
tions
2,723.6
1,570.9 1,656.5
1,027.0
118.4
153.4
103.1
34.9
25.9
0.7
2,877.0
1,674.0
1,691.4 1,052.9
119.1
–
–
–
– 7,096.4
231.1
(318.0)
–
–
(318.0) 7,096.4
231.1
Elimin‑
ations
Consoli‑
dated
–
–
–
–
7,327.5
–
7,327.5
31.0
17.6
8.3
1.2
(6.9)
0.2
–
31.8
(0.8)
11.4
11.4
Total revenue and other income
2,894.6 1,682.3 1,692.6 1,046.0
119.3
(318.0) 7,128.2
230.3
– 7,358.5
Results before individually
significant items
Profit/(loss) before financing
costs and income tax
Financial income
Financial expenses
Profit before income
tax expense
Income tax expense
Profit after income tax expense
Less: Profit attributable to
non‑controlling interests
Profit after income tax expense
before individually significant
items attributable to
shareholders of Orica Limited
Individually significant items
(refer to note 1e)
Gross individually significant items
Tax on individually significant items
Net individually significant
items attributable to
non‑controlling interests
Individually significant items
attributable to shareholders
of Orica Limited
Profit for the year
attributable to shareholders
of Orica Limited
Segment assets
Segment liabilities
Equity accounted investees
Acquisitions of PPE and intangibles
(excluding right of use assets)
Depreciation and amortisation
Share of net profit of equity
accounted investees
366.6
132.4
53.2
45.5
34.6
(68.5)
–
563.8
14.7
–
578.5
2.2
(102.5)
478.2
(154.0)
324.2
(7.2)
317.0
(274.0)
(1.2)
18.3
(256.9)
–
–
–
–
–
–
–
–
–
–
–
–
(208.5)
19.5
7.5
18.3
–
–
(182.7)
19.5
–
–
–
–
–
–
–
–
(189.0)
(85.0)
7.5
(8.7)
18.3
–
(163.2)
(93.7)
–
–
–
–
3,641.7 1,468.1 1,323.6
1,076.6
90.0
322.0
231.9
160.4
184.0
72.5
58.9
519.5
–
32.0
46.3
730.8
221.9
0.5
27.2
31.2
274.3
929.3
34.3 2,464.3
–
1.4
5.0
13.9
44.0
51.5
6.0
32.0
–
1.8
–
–
– 8,367.8
– 4,638.6
–
–
–
–
323.8
341.1
385.8
39.8
–
–
–
8.2
–
–
60.1
– 8,367.8
– 4,638.6
–
–
–
–
323.8
349.3
385.8
39.8
(1)
Includes foreign currency gains/(losses) in various reportable segments.
134 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
1. SEGMENT REPORT (CONTINUED)
Australia
Pacific
& Asia
North
America
Latin
America
Europe,
Middle
East &
Africa
Orica
Monitor
Global
Support
Elimin‑
ations
Total
Contin‑
uing
Opera‑
tions
Discont‑
inued
Opera‑
tions
Elimin‑
ations
Consoli‑
dated
2,105.9 1,229.6
956.5
801.4
114.5
131.5
104.0
31.8
2,237.4 1,333.6
988.3
25.8
827.2
1.8
116.3
21.6
8.9
13.3
3.8
1.0
–
–
–
(2.9)
(2.9)
–
5,207.9
474.3
– 5,682.2
(294.9)
–
0.1
(0.1)
–
(294.9) 5,207.9
474.4
(0.1) 5,682.2
–
45.7
0.7
–
46.4
(294.9) 5,253.6
475.1
(0.1) 5,728.6
Total revenue and other income
2,259.0 1,342.5
1,001.6
831.0
117.3
279.7
107.9
28.9
25.0
30.7
(67.6)
–
404.6
22.0
–
426.6
2021
$m
Revenue
External sales
Inter‑segment sales
Total sales revenue
Other income
(refer to note 1d)(1)
Results before individually
significant items
Profit/(loss) before financing
costs and income tax
Financial income
Financial expenses
Profit before income
tax expense
Income tax expense
Profit after income tax expense
Less: Profit attributable to
non‑controlling interests
Profit after income tax
expense before individually
significant items attributable
to shareholders of
Orica Limited
Individually significant
items (refer to note 1e)
Net individually significant
items attributable to
non‑controlling interests
Individually significant items
attributable to shareholders
of Orica Limited
Profit for the year
attributable to shareholders
of Orica Limited
Segment assets
Segment liabilities
Equity accounted investees
Acquisitions of PPE and intangibles
Depreciation and amortisation
Share of net profit of equity
accounted investees
Gross individually significant items
(330.9)
Tax on individually significant items
44.8
(9.4)
2.6
(4.3)
(165.6)
1.2
0.7
–
–
–
–
(286.1)
(6.8)
(3.1)
(164.9)
3,291.8
1,216.4
1,015.8
1,000.7
83.9
130.8
174.2
318.1
202.4
70.9
61.0
362.5
–
32.5
44.4
786.2
231.9
2.7
31.9
31.1
1.1
(106.7)
321.0
(102.7)
218.3
(9.9)
208.4
(453.9)
71.7
–
57.7
22.0
–
–
–
–
(452.5)
71.3
(1.4)
0.4
–
–
–
–
–
79.7
–
(381.2)
(1.0)
–
(382.2)
–
–
–
–
277.5
479.8
60.4
2,461.9
–
7,067.5
– 4,435.5
–
8.4
12.9
1.4
36.3
34.5
298.2
137.8
–
12.5
11.7
290.4
310.8
358.1
–
–
–
–
(173.8)
–
7,365.7
– 4,573.3
–
–
–
–
290.4
323.3
369.8
34.4
6.4
24.6
2.2
1.2
–
–
34.4
–
(1)
Includes foreign currency gains/(losses) in various reportable segments.
Orica Annual Report 2022 | 135
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
1. SEGMENT REPORT (CONTINUED)
(c) Disaggregation of revenue (by commodity/industry)
Gold
Copper
Thermal Coal
Quarry and Construction
Iron Ore
Coking Coal
Orica Monitor
Other
Minova (Discontinued operations)
Total disaggregated revenue
Consolidated
2022
$m
2021
$m
1,468.4
1,741.5
1,121.9
934.6
598.9
446.1
118.4
666.6
231.1
1,107.0
991.3
864.0
816.5
433.2
352.0
114.5
529.4
474.3
7,327.5
5,682.2
Consolidated
2022
2021
Continuing
$m
Discontinued
$m
Consolidated
$m
Continuing
$m
Discontinued
$m
Consolidated
$m
(d) Other income
Other income
Net foreign currency
(losses)/gains
Net gain on sale of property,
plant and equipment
Total other income
39.3
(15.2)
7.7
31.8
0.2
(1.1)
0.1
(0.8)
39.5
(16.3)
7.8
31.0
34.0
2.4
9.3
45.7
0.1
(0.8)
1.4
0.7
34.1
1.6
10.7
46.4
136 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
1. SEGMENT REPORT (CONTINUED)
Recognition and measurement
Significant items are those gains or losses where their nature and or impact is considered material to the Financial Statements.
Consolidated
2022
2021
Gross
$m
Tax
$m
Net
$m
Gross
$m
Tax
$m
Net
$m
(e) Individually
significant items
Profit after income tax
includes the following
individually significant
items of expense:
Significant items from
continuing operations
Impairment expense(1)
Loss on sale of JSC
“Orica CIS”(2)
Gain on sale of Nitro
Consult AB(2)
Operating model
restructuring expense
Significant environmental
provision expense
Gain on sale of Botany site
Gain on sale of
Villawood site
Individually significant items
from continuing operations
Non‑controlling interests in
individually significant items
Individually significant
items attributable to
shareholders of Orica
from continuing
operations
Loss on sale of Minova
Operating model
restructuring expense
Individually significant
items from discontinued
operations
Individually significant
items attributable to
shareholders of Orica
(167.9)
(40.6)
19.5
–
–
–
–
(189.0)
18.3
(170.7)
(85.0)
–
(1.8)
9.3
–
–
–
–
–
7.5
–
7.5
(8.7)
–
(169.7)
(480.0)
41.0
(439.0)
(31.3)
19.5
–
–
–
–
–
–
(45.6)
(39.3)
71.6
40.8
(181.5)
(452.5)
18.3
–
(163.2)
(93.7)
–
(452.5)
–
(1.4)
(1.4)
–
–
12.8
11.8
–
5.7
71.3
–
71.3
–
0.4
0.4
–
–
(32.8)
(27.5)
71.6
46.5
(381.2)
–
(381.2)
–
(1.0)
(1.0)
(85.0)
(8.7)
(93.7)
(255.7)
(1.2)
(256.9)
(453.9)
71.7
(382.2)
(1) The Group has recognised an impairment charge against the assets of the Turkey and Russia operations, as well as goodwill in the EMEA segment.
Refer to note 9.
(2) Refer to note 15.
Orica Annual Report 2022 | 137
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
1. SEGMENT REPORT (CONTINUED)
(f) Geographical segments
The presentation of geographical revenue is based on the geographical location of customers. Segment assets are based on the
geographical location of the assets.
Australia
Peru
United States of America
Other(2)
Consolidated
Consolidated
Revenue
Consolidated
Non‑current assets(1)
2022
$m
1,969.2
950.8
705.2
3,702.3
7,327.5
2021
$m
1,656.6
546.5
695.3
2,783.9
5,682.2
2022
$m
2,586.9
310.0
419.6
1,304.0
4,620.5
2021
$m
2,604.1
285.1
377.6
1,342.6
4,609.4
(1) Excluding: financial derivatives (included within other assets) and deferred tax assets.
(2) Other than Australia, Peru and the United States of America, sales to other countries are individually less than 10% of the Group’s total revenues.
Recognition and measurement
Revenue is recognised when, or as the Group transfers control of goods or services to a customer at the amount to which
the Group expects to be entitled. If the consideration includes a variable amount (net of trade discounts and volume rebates),
the Group estimates the amount of consideration to which it will be entitled. The majority of the Group’s operations are
conducted under Master Service Agreements which require customers to place orders for goods or services on a periodic basis.
The performance obligations are identified at the point that the customer places the order.
Supply of products and provision of services
Revenue is derived from contractual agreements for either:
– the supply of products; or
– the supply of products and the provision of services.
Contracts for the supply of products are one performance obligation; and contracts for the supply of products and services
include one or two separate performance obligations depending on whether the customer can benefit from the products
independently of the services.
Product revenue is recognised when the goods are delivered to the contracted point of delivery as this is the point at which
the customer gains control of the product and the performance obligation is satisfied by the Group.
Service revenue is recognised over time as the customer simultaneously receives and consumes the benefits of the Group’s
performance. Where products and services are combined into one single performance obligation, revenue is recognised over
time as the customer simultaneously receives and consumes the benefits provided by the Group’s performance.
Contracts to provide a designated output
The provision of goods and services in contracts that provide a designated quantity of output results in the identification of
a single performance obligation to deliver an integrated service to the customer. Revenue from this performance obligation
is recognised over time as the customer simultaneously receives and consumes the benefits of the Group’s performance.
138 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
2. EARNINGS PER SHARE (EPS)
(i) As reported in the income statement
Earnings used in the calculation of basic EPS attributable to ordinary shareholders
of Orica Limited
Profit/(loss) after tax from continuing operations
(Loss)/profit after tax for from discontinued operations
Less: Net (loss)/profit for the year attributable to non‑controlling interests
Total
Weighted average number of shares used in the calculation:
Number for basic earnings per share
Effect of dilutive share options and rights
Number for diluted earnings per share
Consolidated
2022
$m
2021
$m
133.6
(84.6)
(11.1)
60.1
(178.5)
14.6
9.9
(173.8)
Number of shares
414,802,433
406,755,512
2,569,554
–
417,371,987
406,755,512
The weighted average number of options and rights that have not been included in the calculation
of diluted earnings per share
1,511,936
4,199,023
From continuing operations attributable to ordinary shareholders of Orica Limited
Basic earnings per share
Diluted earnings per share
Total attributable to ordinary shareholders of Orica Limited
Basic earnings per share
Diluted earnings per share
Cents
per share
Cents
per share
35.1
35.0
14.5
14.4
(46.3)
(46.3)
(42.7)
(42.7)
Orica Annual Report 2022 | 139
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
2. EARNINGS PER SHARE (EPS) (CONTINUED)
(ii) Adjusted for individually significant items
Earnings used in the calculation of basic EPS adjusted for individually significant
items attributable to ordinary shareholders of Orica Limited
Profit/(loss) after tax from continuing operations
(Loss)/profit after tax for from discontinued operations
Less: Net (loss)/profit for the year attributable to non‑controlling interests
Adjusted for individually significant items from continuing operations (refer to note 1e)
Adjusted for individually significant items from discontinued operations (refer to note 1e)
Total adjusted
From continuing operations before individually significant items attributable to ordinary
shareholders of Orica Limited
Basic earnings per share
Diluted earnings per share
Total attributable to ordinary shareholders of Orica Limited before individually significant
items attributable to ordinary shareholders of Orica Limited
Basic earnings per share(1)
Diluted earnings per share(1)
Consolidated
2022
$m
2021
$m
133.6
(84.6)
(11.1)
163.2
93.7
317.0
(178.5)
14.6
9.9
381.2
1.0
208.4
Cents
per share
Cents
per share
74.4
74.0
76.4
76.0
47.4
47.3
51.2
51.1
(1) Earnings per share before individually significant items is a non‑IFRS measure. Management excludes individually significant items from the calculation
in order to enhance the comparability from year‑to‑year and provide investors with further clarity in order to assess the underlying performance
of operations.
140 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION B. CAPITAL MANAGEMENT
Orica’s objectives when managing capital (net debt and total equity) are to safeguard the Group’s ability to continue
as a going concern and to ensure that the capital structure enhances, protects and balances financial flexibility against
minimising the cost of capital. This section outlines the principal capital management initiatives that have been undertaken,
current year drivers of the Group’s cash flows, as well as the key operating assets used and liabilities incurred to support
financial performance.
3. NET DEBT AND NET FINANCING COSTS
In order to maintain an appropriate capital structure, the Group may adjust the amount of dividends paid to shareholders, utilise a
dividend reinvestment plan, return capital to shareholders such as a share buy‑back or issue new equity, in addition to incurring an
appropriate level of borrowings. Currently, Orica maintains a dividend payout ratio policy and expects the total payout ratio to be
in the range of 40%‑70% of underlying earnings. It is also expected that the total dividend paid each year will be weighted towards
the final dividend.
Orica monitors debt capacity against a number of key credit metrics aligned to debt covenants, principally the gearing ratio
(net debt excluding lease liabilities divided by net debt excluding lease liabilities plus equity) and the interest cover ratio (EBIT
excluding individually significant items, divided by net financing costs excluding lease interest). These ratios, together with
performance measure criteria determined by Standard & Poor’s, are targeted in support of the maintenance of an investment
grade credit rating, which enables access to borrowings from a range of sources. Standard & Poor’s key measures include
Funds from Operations (FFO)/Debt and Debt/EBITDA. Of note, Standard & Poor’s rating methodology adjusts Orica’s net
debt to incorporate post‑retirement benefit obligations, asset retirement obligations (i.e. environmental and decommissioning
provisions) and leases. Orica’s debt covenants are exclusive of these items.
The Group’s current target for gearing is 30%‑40% and interest cover is 5 times or greater. Ratios may move outside of these
target ranges for relatively short periods of time after major acquisitions or other significant transactions.
In addition, the gearing and interest cover ratios are monitored to ensure an adequate buffer against covenant levels applicable
to the various financing facilities.
The gearing ratio is calculated as follows:
Interest bearing liabilities excluding lease liabilities – continuing operations (refer to note 3a)
Interest bearing liabilities excluding lease liabilities – held‑for‑sale
less cash and cash equivalents – continuing operations
less cash and cash equivalents – held‑for‑sale
Total net debt
Total equity
Total net debt and equity
Gearing ratio (%)
The interest ratio is calculated as follows:
EBIT (excluding individually significant items – refer to note 1b)
Net financing costs excluding lease interest (note 3b)
Interest cover ratio (times)
Consolidated
2022
$m
2,167.5
–
(1,255.3)
–
912.2
3,729.2
4,641.4
19.7%
578.5
88.5
6.5
2021
$m
2,072.4
0.3
(551.0)
(42.7)
1,479.0
2,792.4
4,271.4
34.6%
426.6
93.3
4.6
Orica Annual Report 2022 | 141
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
3. NET DEBT AND NET FINANCING COSTS (CONTINUED)
(a) Interest bearing liabilities
Opening
Balance
$m
Non‑cash
movements
$m
Net cash
movements
$m
Closing
Balance
$m
Current
Unsecured
Private Placement debt(1)
Bank loans(1)
Bank overdraft
Other loans
Lease liabilities
Total
Non‑current
Unsecured
–
0.3
2.1
1.0
58.0
61.4
655.8
1.4
–
–
72.8
730.0
Private Placement debt(1)
2,068.8
(563.9)
Bank loans(1)
CEFC(1)
Other loans
Lease liabilities
Total
Total
–
–
0.2
192.8
2,261.8
2,323.2
1.7
–
–
(10.8)
(573.0)
157.0
(1) Orica Limited provides guarantees on certain facilities, refer to note 16 for further details.
During the current and prior year, there were no defaults or breaches of covenants on any loans.
(b) Net financing costs
Finance income
Interest income
Total finance income (note 15)
Finance costs
Interest expense
Lease interest expense from continuing operations
Lease interest expense from discontinued operations
Gain on discounting of provisions(1)
Total finance costs (note 15)
Net financing costs
Net financing costs excluding lease interest
(1) Primarily due to the change in the discount rate applied to measure the Botany groundwater provision.
142 | Orica Annual Report 2022
–
(1.7)
(2.1)
(1.0)
(73.3)
(78.1)
–
(1.7)
6.4
0.2
–
4.9
(73.2)
655.8
–
–
–
57.5
713.3
1,504.9
–
6.4
0.4
182.0
1,693.7
2,407.0
Consolidated
2022
$m
2021
$m
2.2
2.2
105.1
11.6
0.2
(14.4)
102.5
(100.3)
(88.5)
1.1
1.1
99.1
12.0
0.3
(4.7)
106.7
(105.6)
(93.3)
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
3. NET DEBT AND NET FINANCING COSTS (CONTINUED)
(c) Notes to the statement of cash flows
Reconciliation of profit/(loss) after income tax to net cash flows from
operating activities
Profit/(loss) after income tax expense
Adjusted for the following items:
Depreciation and amortisation
Net gain on sale of property, plant and equipment
Impairment expense
Net loss on disposal of controlled entities
Share based payments expense
Share of equity accounted investees net profit after adding back dividends received
Unwinding of discount on provisions
Other
Changes in working capital and provisions excluding the effects of acquisitions
and disposals of businesses/controlled entities
(increase)/decrease in trade and other receivables
increase in inventories
increase in net deferred taxes
increase in payables and provisions
increase/(decrease) in income taxes payable
Net cash flows from operating activities
Recognition and Measurement
Cash and cash equivalents
Cash includes cash at bank, cash on hand and deposits at call.
Interest bearing liabilities, excluding lease liabilities
Consolidated
Notes
2022
$m
2021
$m
49.0
(163.9)
(1b)
(1d) (1e)
385.8
(7.8)
169.7
105.5
8.0
(16.6)
(14.4)
3.9
(297.2)
(290.3)
(13.8)
239.1
41.4
362.3
369.8
(123.1)
480.0
–
9.9
(16.9)
(4.7)
(4.1)
112.5
(83.1)
(18.0)
126.9
(66.4)
618.9
Interest bearing liabilities are initially recognised net of transaction costs. Subsequent to initial recognition, interest bearing
liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the income
statement over the period of the liabilities on an effective interest basis, unless they are liabilities designated in a fair value
relationship in which case they continue to be measured at fair value (refer to note 10).
Financing costs
Borrowing costs are expensed as incurred unless they relate to qualifying assets where interest on funds are capitalised. Interest
income and interest expense relating to interest rate swaps and cross currency interest rate swaps are presented on a net basis.
Lease liabilities
The Group recognises all lease liabilities and corresponding right of use assets, with the exception of short‑term (12 months or
less) and low‑value leases, on the balance sheet. Lease liabilities are recorded at the present value of fixed payments, variable lease
payments that depend on an index or rate, amounts payable under residual value guarantees and extension options expected to
be exercised. Where a lease contains an extension option which the Group can exercise without negotiation, lease payments for
the extension period are included in the liability if the Group is reasonably certain that it will exercise the option. Variable lease
payments not dependent on an index or rate are excluded from the liability. Lease payments are discounted at the incremental
borrowing rate of the lessee unless the rate implicit in the lease can be readily determined.
Orica Annual Report 2022 | 143
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
3. NET DEBT AND NET FINANCING COSTS (CONTINUED)
Lease liabilities are remeasured when there is a change in future lease payments resulting from a change in an index or rate,
or a change in the assessed lease term. A corresponding adjustment is made to the carrying amount of the right of use asset,
or is recorded in profit or loss if the carrying amount has been reduced to zero.
The Group applied judgement to determine the incremental borrowing rates as well as the lease term for some lease contracts
that include extension or termination options. The assessment of whether the Group is reasonably certain to exercise such options
impacts the lease term, which significantly affects the amount of lease liabilities and right of use assets recognised.
The Group recognises depreciation of the right of use assets and interest on the lease liabilities in the income statement over the
lease term. Repayments of lease liabilities are separated into a principal portion (presented within financing activities) and interest
portion (presented within operating activities) in the cash flow statement.
Expenses relating to short‑term and low‑value leases of $53.8 million (2021 $38.2 million) and variable lease payments not included
in lease liabilities of $132.2 million (2021 $98.8 million) have been recognised in the income statement. Total cash outflow for leases
was $259.3 million (2021 $210.1 million).
Critical accounting judgements and estimates
– Determination of the discount rate to use; and
– Determination of whether it is reasonably certain that an extension or termination option will be exercised.
4. CONTRIBUTED EQUITY AND RESERVES
(a) Contributed equity
Movements in issued and fully paid shares of Orica since 1 October 2020 were as follows:
Details
Ordinary shares
Opening balance of shares issued
Shares issued under the Orica dividend reinvestment plan
Shares issued under the Orica dividend reinvestment plan
Deferred shares issued to settle Short‑Term Incentive
Shares issued under the Orica GEESP(1)
Balance at the end of the year
On market share repurchase
Shares issued under the Orica dividend reinvestment plan
Shares issued under the Orica dividend reinvestment plan
Shares issued under the Institutional Share Placement,
net of costs
Shares issued under Share Purchase Plan
Shares issued under the Orica GEESP(1)
Date
Number
of shares
Issue price
$
1‑Oct‑20
405,878,815
15‑Jan‑21
9‑Jul‑21
1,044,084
590,200
30‑Sep‑21
407,513,099
31‑Oct‑21
22‑Dec‑21
8‑Jul‑22
9‑Aug‑22
2‑Sep‑22
1,317,955
666,029
40,625,000
2,685,802
15.99
14.19
14.40
16.19
16.00
15.29
Balance at the end of the year
30‑Sep‑22
452,807,885
(1) General Employee Exempt Share Plan (GEESP).
$m
2,659.1
16.7
8.4
1.2
0.7
2,686.1
(8.4)
18.9
10.8
640.6
41.1
0.6
3,389.7
144 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
4. CONTRIBUTED EQUITY AND RESERVES (CONTINUED)
(b) Reserves
Recognition and Measurement
Foreign currency translation reserve
Records the foreign currency differences arising from the translation of foreign operations. The relevant portion of the reserve
is recognised in the income statement when the foreign operation is disposed of.
Cash flow hedge reserve
Represents the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that
have not yet occurred.
Other reserves
Other reserves represents share based payments reserves and equity reserves arising from the purchase of non‑controlling interests.
(c) Dividends
Dividends paid or declared in respect of the year ended 30 September were:
Ordinary shares
interim dividend of 7.5 cents per share, unfranked, paid 9 July 2021
interim dividend of 13.0 cents per share, unfranked, paid 8 July 2022
final dividend of 16.5 cents per share, unfranked, paid 15 January 2021
final dividend of 16.5 cents per share, unfranked, paid 22 December 2021
Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan (DRP)
during the year were as follows:
paid in cash
DRP – satisfied by issue of shares
Consolidated
2022
$m
2021
$m
53.1
67.2
90.6
29.7
30.6
66.9
72.4
25.1
Since the end of the financial year, the Directors declared the following dividend:
– final dividend on ordinary shares of 22.0 cents per share, unfranked, payable 22 December 2022.
The financial effect of the final dividend on ordinary shares has not been brought to account in the financial statements for the year
ended 30 September 2022 – however will be recognised in the 2023 financial statements.
Franking credits
Franking credits available at the 30% corporate tax rate after allowing for tax payable in respect of the current year’s profit or loss
and the payment of the final dividend for 2022 are nil (2021 nil).
Orica Annual Report 2022 | 145
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION C. OPERATING ASSETS AND LIABILITIES
This section highlights current year drivers of the Group’s operating and investing cash flows, as well as the key operating
assets used and liabilities incurred to support delivering financial performance.
5. WORKING CAPITAL
(a) Trade working capital
Trade working capital includes inventories, receivables and payables that arise from normal trading conditions. The Group
continuously looks to improve working capital efficiency in order to maximise operating cash flow.
Inventories(i)
Trade receivables(ii)
Trade payables(iii)
Trade working capital
(i) Inventories
The classification of inventories is detailed below:
Raw materials
Work in progress
Finished goods
Consolidated
2022
$m
872.6
903.1
(1,091.7)
684.0
Consolidated
2022
$m
337.0
0.7
534.9
872.6
2021
$m
635.8
678.2
(876.5)
437.5
2021
$m
223.2
0.1
412.5
635.8
Recognition and Measurement
Inventories are measured at the lower of cost and net realisable value. Cost is based on a first‑in first‑out or weighted average basis.
For manufactured goods, cost includes direct material and fixed overheads based on normal operating capacity. Inventories have
been shown net of provision for impairment of $51.1 million (2021 $38.3 million).
(ii) Trade receivables
The ageing of trade receivables and allowance for impairment is detailed below:
Consolidated
Consolidated
2022
Gross
$m
851.8
52.0
20.4
43.1
967.3
2022
Allowance
$m
–
(0.7)
(20.4)
(43.1)
(64.2)
2021
Gross
$m
611.9
65.6
20.6
48.7
746.8
2021
Allowance
$m
–
–
(19.9)
(48.7)
(68.6)
Not past due
Past due 0 – 30 days
Past due 31 – 120 days
Past 120 days
146 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
5. WORKING CAPITAL (CONTINUED)
Recognition and Measurement
The collectability of trade and other receivables is assessed continuously, specific allowances are made for any doubtful trade
and other receivables based on a review of all outstanding amounts at year end. The expected impairment loss calculation for
trade receivables considers both quantitative information from historic credit losses as well as qualitative information on different
customer/debtor profiles and segments. The net carrying amount of trade and other receivables approximates their fair values.
A risk assessment process is used for all accounts, with a stop credit process in place for most long overdue accounts.
(iii) Trade payables
Recognition and Measurement
Trade and other payables are recognised when the Group is required to make future payments as a result of the purchase of
goods or as services provided prior to the end of the reporting period. The carrying amount of trade payables approximates
their fair values due to their short‑term nature.
(b) Non‑trade working capital
Non‑trade working capital includes all other receivables and payables not related to the purchase of goods and is recognised net
of provisions for impairment of $18.5 million (2021 $28.0 million).
Critical accounting judgements and estimates
In the course of normal trading activities, management uses its judgement in establishing the carrying value of various
elements of working capital – principally inventory and accounts receivable. Provisions are established for obsolete or slow
moving inventories. Actual expenses in future periods may be different from the provisions established and any such
differences would impact future earnings of the Group.
6. PROVISIONS
Current
Employee entitlements
Environmental and decommissioning(1)(2)
Restructuring
Other
Non‑current
Employee entitlements
Retirement benefit obligations (see note 19b)
Environmental and decommissioning(1)(2)
Restructuring
Other
Consolidated
2022
$m
2021
$m
108.4
85.0
4.1
31.6
229.1
16.1
83.3
221.6
0.3
8.5
329.8
105.6
84.3
13.7
19.5
223.1
16.5
209.1
299.3
0.3
8.5
533.7
(1) Payments of $52.4 million (2021: $43.4 million) were made during the year in relation to environmental and decommissioning provisions.
(2) Net provision decreases of $5.9 million (2021: increases of $42.8 million) have been recognised in the income statement during the year. Net provision
decreases of $21.2 million (2021: increases of $8.5 million) have been capitalised as a part of the carrying value of Property, Plant & Equipment.
Orica Annual Report 2022 | 147
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
6. PROVISIONS (CONTINUED)
The total environmental and decommissioning provision comprises:
Botany Groundwater remediation
Botany (HCB) waste
Burrup decommissioning
Initiating systems network optimisation
Deer Park remediation
Yarraville remediation
Other provisions
Total
Recognition and Measurement
Employee Entitlements
Consolidated
2022
$m
182.8
24.0
14.9
23.3
13.7
11.6
36.3
2021
$m
211.9
29.4
44.2
27.0
12.2
15.7
43.2
306.6
383.6
A liability for employee entitlements is recognised for the amount expected to be paid where the Group has a present legal
or constructive obligation to pay this amount as a result of past service provided by the employee and that obligation can be
reliably measured.
Decommissioning
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 dismantling and removing the asset and restoring the site on which it is located
are recognised as a depreciable asset with a corresponding provision being raised where a legal or constructive obligation exists.
At each reporting date, the liability is remeasured in line with changes in discount rates, timing and estimated cash flows.
Any changes in the liability are added to or deducted from the related asset, other than the unwinding of the discount which
is recognised as a finance cost.
Environmental
As a result of historical and current operations, certain sites owned or used by the Group will require future remediation
activities to address environmental contamination. Estimated costs for the remediation of soil, groundwater and untreated
waste are recognised as a provision when:
– there is a present legal or constructive obligation to remediate;
– a probable outflow of economic resources will occur to undertake the remediation; and
– the associated costs can be reliably estimated.
Where future expenditure is expected to meet the recognition and measurement criteria of an asset (as described in Note 7),
a provision is recognised only to the extent of the performance of the obligation (i.e. when costs are incurred by the Group).
Where the cost relates to the enhancement of land which is expected to be sold (e.g. where the Group no longer has ongoing
operations), then the costs are assessed for recognition as an asset taking into consideration the nature and extent of the activities
and also the expected sales proceeds compared to the sum of the current book value of the land and the estimated total costs.
Any costs which result in the total carrying value exceeding the expected proceeds on sale are expensed.
The amount of each provision reflects the best estimate of the expenditure required to settle each respective obligation having
regard to a range of potential scenarios, input from subject matter experts on appropriate remediation techniques and relevant
technological advances.
148 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
6. PROVISIONS (CONTINUED)
Critical accounting judgements and estimates
Environmental provisions for other sites
Judgement is required in determining whether a constructive obligation to remediate environmental contamination exists.
The Group considers that a constructive obligation exists where there is a current risk to human health or the environment
arising from environmental contamination; or where an expectation has been established with a third party (including
regulators, employees, neighbours or other stakeholders) that remediation activities will be undertaken.
Where an obligation (legal or constructive) exists, further judgement is necessary to determine the future expenditure
required to settle the obligation. This is due to uncertainties in assumptions regarding the nature or extent of the
contamination, the nature of the remedial solution deployed and its effectiveness, the application of relevant laws or
regulations and the information available at certain locations where Orica no longer controls the site. Changes in these
assumptions may impact future reported provisions. Subject to those factors and taking into consideration experience
gained to date regarding environmental matters of a similar nature, Orica considers that the provision balances are
appropriate based on currently available information. Changes in the assumptions noted above may result in costs
incurred in future periods being greater than or less than amounts provided.
Environmental provisions are reviewed bi‑annually taking into account any material changes to facts or circumstances
which would be expected to impact the valuation of the provision.
Botany groundwater remediation
Orica’s historical operations at the Botany Industrial Park resulted in contamination of the soil and groundwater. Due to the
complex nature of the chemicals involved and its distribution e.g. Dense Non‑Aqueous Phase Liquid (DNAPL), the lack of
known practical remediation approaches and the unknown scale of the contamination, a practical solution to completely
remediate the contamination has not been found. Orica continues to work in close cooperation with the New South Wales
(NSW) Environmental Protection Authority (EPA) to address the contamination.
Orica has a current obligation to contain and mitigate the effects of the contamination on the groundwater at the site.
Orica and the NSW EPA entered into a Voluntary Management Proposal to contain groundwater contamination while an
effective remediation approach to the DNAPL source contamination is identified (refer to contingent environmental liabilities
section below).
The findings from the 2018 review of costs and operational duration of the Groundwater Treatment Plant (GTP) indicated
that the cessation of groundwater extraction using the GTP is possible within an 18‑year timeframe. After this period, Orica
anticipates that the contamination levels will be materially below current levels and will be able to be managed through
natural attenuation or less intensive technologies.
Contingent environmental liabilities
In addition to the obligations for which an environmental provision have been recognised, certain sites may require future
remediation activities to address environmental contamination.
Where the criteria for recognition of a provision are not met, a contingent liability may exist in the following circumstances:
– sites where known contamination exists but does not pose a current threat to human health or the environment and
there is no current legal or regulatory requirement to remediate. Orica has a possible obligation for remediation which
may be confirmed by future events and the likelihood of a future outflow of resources is not remote; or
– sites where contamination is known or likely to exist and it is probable that a future outflow of resources will occur,
however the impact cannot be reliably measured due to uncertainties related to the extent of Orica’s remediation
obligations or the remediation techniques that may be utilised.
Any costs associated with these matters are expensed as incurred. Information regarding each class of contingent liability
is set out below.
Botany – remediation of source contamination
Specifically related to the remediation of DNAPL source contamination a reliable estimate of the costs to complete
remediation is not possible given the lack of proven remediation techniques that can be effectively deployed at the site
and uncertainty of the scale of the DNAPL contamination.
Orica Annual Report 2022 | 149
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
6. PROVISIONS (CONTINUED)
Other sites
Contingent liabilities exist with respect to a number of other sites owned or used by Orica where future remediation may
be required and possible obligations exist. Orica’s obligations with respect to these sites will be confirmed by future events
and are subject to the following uncertainties regarding the amount and timing of future outflows:
– Orica’s future decisions regarding the use of the site including the timing of any changes to the current use;
– the requirements of laws and regulations at an unknown future point in time and the outcome of discussions with
regulators at that time;
– the nature and extent of environmental remediation required at a future point in time; and
– the availability and determination of solutions to address identified environmental issues and the cost and duration
of the method selected.
Depending on the outcome of these factors, Orica may be required to incur expenditure to prevent or remediate
environmental contamination. Due to the uncertainties described above, it is not practicable to estimate the financial
effect of the possible future outflows.
7. PROPERTY, PLANT AND EQUIPMENT
Owned assets
Leased assets
Land,
buildings and
improvements
$m
Machinery,
plant and
equipment
$m
Land,
buildings and
improvements
$m
Machinery,
plant and
equipment
$m
962.4
(57.7)
(386.7)
518.0
427.4
33.0
–
(7.3)
169.1
(29.1)
(57.7)
(16.4)
(1.0)
5,083.9
(296.7)
(2,498.7)
2,288.5
2,548.9
292.5
2.0
(13.6)
(169.1)
(231.9)
(101.9)
(39.6)
1.2
208.8
–
(77.2)
131.6
167.9
4.0
–
(6.8)
–
(29.2)
–
(4.0)
(0.3)
174.3
–
(72.2)
102.1
122.8
30.8
–
(0.2)
–
(42.3)
–
(6.9)
(2.1)
Total
$m
6,429.4
(354.4)
(3,034.8)
3,040.2
3,267.0
360.3
2.0
(27.9)
–
(332.5)
(159.6)
(66.9)
(2.2)
518.0
2,288.5
131.6
102.1
3,040.2
Consolidated
2021
Cost
Accumulated impairment losses
Accumulated depreciation
Total carrying value
Movement
Carrying amount at the beginning
of the year
Additions
Additions through acquisitions
of entities (see note 14)
Disposals
Transfers between property,
plant & equipment assets
Depreciation expense
Impairment expense (see note 9)
Transfer to assets held for sale
Foreign currency exchange differences
Carrying amount at the end
of the year
150 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
7. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Consolidated
2022
Cost
Accumulated impairment losses
Accumulated depreciation
Total carrying value
Movement
Carrying amount at the beginning
of the year
Additions
Additions through acquisitions
of entities (see note 14)
Disposals
Disposals through disposals of entities
(see note 15)
Transfers between property, plant &
equipment and intangible assets
Depreciation expense
Impairment expense
Revaluation of capitalised provisions
Foreign currency exchange differences
Carrying amount at the end
of the year
Owned assets
Leased assets
Land,
buildings and
improvements
$m
Machinery,
plant and
equipment
$m
Land,
buildings and
improvements
$m
Machinery,
plant and
equipment
$m
983.8
(71.3)
(397.4)
515.1
518.0
0.6
–
(4.1)
–
14.9
(27.8)
(13.6)
–
27.1
5,299.2
(336.7)
(2,609.7)
2,352.8
2,288.5
310.3
1.0
(20.5)
(2.5)
(22.7)
(240.9)
(40.0)
(21.2)
100.8
231.8
(0.6)
(102.4)
128.8
131.6
19.0
0.4
(2.3)
(0.6)
–
(23.6)
(0.6)
–
4.9
201.7
(0.3)
(115.8)
85.6
102.1
23.9
–
(0.3)
–
–
(40.2)
(0.3)
–
0.4
Total
$m
6,716.5
(408.9)
(3,225.3)
3,082.3
3,040.2
353.8
1.4
(27.2)
(3.1)
(7.8)
(332.5)
(54.5)
(21.2)
133.2
515.1
2,352.8
128.8
85.6
3,082.3
Capital expenditure commitments
Capital expenditure on property, plant and equipment and business acquisitions contracted for but not provided for and payable no later
than one year was $105.1 million (2021 $60.9 million) and later than one but less than five years was $13.0 million (2021 $14.6 million).
Recognition and Measurement
Property, plant and equipment is stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly
attributable to the acquisition of the item and includes capitalised interest. Subsequent costs are capitalised 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.
The right of use asset at initial recognition reflects the lease liability adjusted for any lease payments made before the commencement
date plus any make good obligations and initial direct costs incurred (refer to note 3). The leases recognised by the Group under AASB 16
predominantly relate to property leases including offices and storage as well as plant & equipment leases including vehicles and rail cars.
Orica Annual Report 2022 | 151
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
7. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Critical accounting judgements and estimates
Management reviews the appropriateness of useful lives of assets at least annually, any changes to useful lives may affect
prospective depreciation rates and asset carrying values. Depreciation is recorded on a straight line basis using the following
useful lives:
Owned
assets
Right of use
assets – leased
Indefinite
1 to 70 years
25 to 40 years
1 to 20 years
3 to 40 years
1 to 15 years
Goodwill
$m
Patents,
trademarks
and rights
$m
Software
$m
1,230.6
(333.9)
–
896.7
1,186.5
–
–
–
(320.4)
–
30.6
896.7
158.7
–
(94.4)
64.3
83.3
11.4
20.3
(16.6)
–
(17.0)
(17.1)
64.3
278.6
(114.4)
(64.9)
99.3
93.6
18.3
–
(19.8)
–
(0.6)
7.8
99.3
Other
$m
157.3
–
(67.2)
90.1
76.9
0.9
–
(0.9)
–
–
13.2
90.1
Total
$m
1,825.2
(448.3)
(226.5)
1,150.4
1,440.3
30.6
20.3
(37.3)
(320.4)
(17.6)
34.5
1,150.4
Land
Buildings and improvements
Machinery, plant and equipment
8. INTANGIBLE ASSETS
Consolidated
2021
Cost
Accumulated impairment losses
Accumulated amortisation
Net carrying amount
Movement
Carrying amount at the beginning
of the year
Additions
Additions through acquisitions
of entities (see note 14)
Amortisation expense
Impairment expense
Transfer to assets held for sale
Foreign currency exchange differences
Carrying amount at the end
of the year
152 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
8. INTANGIBLE ASSETS (CONTINUED)
Consolidated
2022
Cost
Accumulated impairment losses
Accumulated amortisation
Net carrying amount
Movement
Carrying amount at the beginning
of the year
Additions
Additions through acquisitions
of entities (see note 14)
Disposals
Disposals through disposal of entities
(see note 15)
Transfers between property, plant &
equipment and intangible assets
Amortisation expense
Impairment expense
Foreign currency exchange differences
Carrying amount at the end
of the year
Goodwill
$m
1,258.7
(381.7)
–
877.0
896.7
–
25.5
–
–
(6.8)
–
(45.3)
6.9
Patents,
trademarks
and rights
$m
Software
$m
216.7
–
(109.7)
107.0
64.3
–
6.7
(0.1)
–
41.1
(11.5)
–
6.5
314.7
(114.5)
(106.1)
94.1
99.3
30.1
–
(0.5)
(0.1)
(0.9)
(40.2)
(0.1)
6.5
94.1
Other
$m
131.7
–
(66.9)
64.8
90.1
0.1
–
–
(0.4)
(25.6)
(1.6)
–
2.2
64.8
Total
$m
1,921.8
(496.2)
(282.7)
1,142.9
1,150.4
30.2
32.2
(0.6)
(0.5)
7.8
(53.3)
(45.4)
22.1
1,142.9
877.0
107.0
Individually significant items
Impairment of goodwill relating to the EMEA segment of $45.3 million.
Recognition and Measurement
Unidentifiable intangibles – Goodwill
Where the fair value of the consideration paid for a business acquisition exceeds the fair value of the identifiable assets, liabilities
and contingent liabilities acquired, the difference is treated as goodwill. Goodwill is not amortised but the recoverable amount is
tested for impairment at least annually.
Identifiable intangibles
Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete
development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition,
development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses. Identifiable
intangible assets with a finite life are amortised on a straight line basis over their expected useful life to the Group, being up to
thirty years. Expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits of the
specific asset to which it relates and which the Group controls (therefore excluding Software as a Service). All other expenditure
is expensed as incurred.
Critical accounting judgements and estimates
Management reviews the appropriateness of useful lives of assets at least annually, any changes to useful lives may affect
prospective amortisation rates and asset carry values.
Orica Annual Report 2022 | 153
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
9. IMPAIRMENT TESTING OF ASSETS
Recognition and Measurement
Methodology
Formal impairment tests are carried out annually for goodwill. In addition, formal impairment tests for all assets are performed
when there is an indication of impairment. The Group conducts an internal review of asset values at each reporting period, which
is used as a source of information to assess for any indications of impairment. External factors, such as changes in expected future
prices, costs and other market factors, are also monitored to assess for indications of impairment. If any such indication exists,
an estimate of the asset’s recoverable amount is calculated.
If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired, and an impairment loss is charged to
the income statement to reduce the carrying amount in the balance sheet to its recoverable amount. The recoverable amount is
determined using the higher of value in use or fair value less costs to dispose. Value in use is the present value of the estimated
future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal. Value in
use is determined by applying assumptions specific to the Group’s continued use and does not consider future development.
The value in use calculations use cash flow projections which do not exceed 5 years based on actual operating results and the
operating budgets approved by the Board of Directors. Fair value less costs to dispose is the value that would be received in
exchange for an asset in an orderly transaction.
The discount rates applied to the post‑tax cash flows are derived using the weighted average cost of capital methodology.
Adjustments to the rates are made for any risks that are not reflected in the underlying cash flows, including country risk.
The terminal growth rate was determined based on management’s estimate of the long‑term compound annual EBIT growth rate.
In testing for indications of impairment and performing impairment calculations, assets are considered as collective groups and
referred to as cash‑generating units (CGU). Cash‑generating units are the smallest identifiable group of assets, liabilities and
associated goodwill that generate cash inflows that are largely independent of the cash inflows from other assets or groups of
assets with each CGU being no larger than a segment. CGUs to which goodwill has been allocated are aggregated so that the level
at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes.
The test of goodwill and its impairment is undertaken at the segment level, except for the Pilbara CGU which contains the joint
operation with Yara International ASA Group.
As part of the Group’s ongoing integration of climate risk considerations into financial analysis and forward planning, we again
incorporated the allocated capital to our decarbonisation activities into asset impairment testing, as forecasted capital expenditure
and costs. These are the capital outflows required to meet the Group’s commitment to reduce Scope 1 and 2 emissions by at
least 40% by 2030. Testing was informed by our strategic scenario analysis process but did not identify the requirement for
adjustments to future cash flows at this time. As the Group continues to strengthen the integration of climate risk considerations
into financial analysis and forward planning, financial implications stemming from climate change will continue to be considered
and built into future cash flow assumptions.
154 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
9. IMPAIRMENT TESTING OF ASSETS (CONTINUED)
Key assumptions
Post‑tax
discount
rates
2022
%
8.8‑15.5
8.8
8.3
8.3‑12.7
7.5‑22.5
8.8
Post‑tax
discount
rates
2021
%
8.4‑11.8
8.1
7.8
7.8‑13.3
8.3‑21.5
8.4
Weighted
average
post‑tax
discount rates
2022
%
9.8
8.8
8.3
9.9
12.3
8.8
Weighted
average
post‑tax
discount rates
2021
%
9.2
8.1
7.8
8.9
14.1
8.4
Terminal
growth
rates
2022
%
2.3‑6.5
2.6
1.7
1.5‑5.0
0.7‑13.1
2.6
Terminal
growth
rates
2021
%
2.3‑6.5
1.2
1.6
1.4‑5.0
1.1‑6.5
2.5
Weighted
average
terminal
growth rate
2022
%
3.2
2.6
1.7
3.0
4.2
2.6
Weighted
average
terminal
growth rate
2021
%
3.0
1.2
1.6
3.1
3.8
2.5
Goodwill
2022
$m
429.7
–
168.5
163.7
–
115.1
877.0
Goodwill
2021
$m
408.6
–
162.9
161.5
48.6
115.1
896.7
Australia Pacific & Asia
Pilbara
North America
Latin America
Europe, Middle East & Africa
Orica Monitor
Total
Australia Pacific & Asia
Pilbara
North America
Latin America
Europe, Middle East & Africa
Orica Monitor
Total
Critical accounting judgements and estimates
2022
Turkey
The significant decline in the local economy and the devaluation of the Lira has resulted in the impairment of our
investments in Orica Nitro Patlayici Maddeler Sanayi ve Ticaret Anonim Sirketi and GeoNitro Limited. The total impairment
charge is $32.7 million of which $18.3 million is attributable to non‑controlling interests.
As at 30 September 2022, there was a foreign currency translation reserve balance of $92.4 million debit (of which
$45.5 million is attributable to non‑controlling interests) which would be released on sale, liquidation, repayment of share
capital or abandonment of the entity.
Russia
The escalation of the Russia‑Ukraine conflict, and imposed sanctions and export restrictions, led to our decision to exit the
Russian operations.
On 9 September 2022, the Group executed a contract to sell JSC “Orica CIS” Joint‑Stock Company for cash consideration
of $13.1 million. Orica has risk adjusted the proceeds given the trade sanctions imposed on Russia.
The Group has recognised a gross impairment expense of $89.9 million ($1.8 million was booked as a debit to tax expense),
reducing the value of the Russian business to nil. In addition, there was a loss on disposal of $40.6 million ($9.3 million was
booked as a credit to tax expense), relating to the release of foreign currency translation reserve as required by Australian
Accounting Standards.
Orica Annual Report 2022 | 155
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
9. IMPAIRMENT TESTING OF ASSETS (CONTINUED)
EMEA
Due to the issues outlined above impairment testing was performed on the EMEA region. The key assumptions underlying
the value in use calculations are as follows:
– no future cashflows for the Turkey or Russian businesses;
– growth in post‑tax cashflows for the region of $17.5 million between FY23 and FY27;
– a weighted average terminal growth rate in line with local country economic forecasts of 4.2%; and
– a weighted average post‑tax discount rate of 12.3%.
The present value of cashflows in EMEA no longer support the carrying value of goodwill. Therefore, the remaining balance
of $45.3 million has been impaired.
Any variation in the key assumptions of the cash flows would result in a change in the assessed value in use. If the impact
of the change had a negative impact, it could, in the absence of other factors require a further impairment of other assets.
LATAM
Based on the latest projected cash flows of the Group, the carrying value of the Latin America segment is approximately
equal to its value in use. The value in use calculations are sensitive to earnings forecasts, changes in discount rates and
terminal growth rates.
Any variation in the key assumptions of the cash flows would result in a change in the assessed value in use. If the impact
of the change had a negative impact, it could, in the absence of other factors require an impairment of assets. The key
assumptions underlying the value in use calculations are as follows:
– growth in post‑tax cashflows for the region of $33.4 million between FY23 and FY27. This is reliant on achieving
future growth in earnings primarily due to securing new or expanded contracts and delivery of value‑added services;
– a weighted average terminal growth rate in line with local country economic forecasts of 3.0%; and
– a weighted average post‑tax rate of 9.9%.
Pilbara
Based on the latest projected cash flows of the Group, the carrying value Pilbara is approximately equal to its value in use.
The value in use calculations are sensitive to earnings forecasts, changes in discount rates and terminal growth rates.
Any variation in the key assumptions of the cash flows would result in a change in the assessed value in use. If the impact
of the change had a negative impact, it could, in the absence of other factors require a further impairment to property,
plant and equipment. The key assumptions underlying the value in use calculations are as follows:
– growth in post‑tax cashflows for the region of $16 million between FY23 and FY27;
– a weighted average terminal growth rate in line with local country economic forecasts of 2.6%; and
– a weighted average post‑tax rate of 8.8%.
156 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
9. IMPAIRMENT TESTING OF ASSETS (CONTINUED)
2021
Pilbara
The Group owns a 50% interest of Yara Pilbara Nitrates Pty Ltd (YPN), with the remaining shares being held by subsidiaries
in the Yara International ASA group. YPN owns and operates a 330,000 tonnes per annum industrial grade technical
ammonium nitrate plant on the Burrup Peninsula (Western Australia). For accounting purposes YPN is a joint operation
and Orica recognises its share of any jointly held or incurred assets, liabilities, revenues, and expenses in the consolidated
financial statements along with goodwill related to the establishment of the joint operation and capitalised interest.
The Group’s asset base in the Pilbara consists of the TAN plant, the equity accounted investee Orica Mining Services Pilbara
Pty Ltd and the Pippingarra emulsion plant. Following a review of product movement and cashflows post the commissioning
of the TAN plant on 1 October 2020, management have concluded that the Pilbara is a separate CGU. The recoverable
amount for the plant and other assets in the region is below their carrying value and therefore an impairment has been
recognised against goodwill of $158.0 million and property, plant and equipment of $159.6 million.
Any variation in the key assumptions of the cash flows would result in a change in the assessed value in use. If the impact
of the change had a negative impact, it could, in the absence of other factors, require a further impairment to property,
plant & equipment. The key assumptions underlying the value in use calculations are as follows:
– EBIT growth of $24 million within five years primarily due to volume and price growth;
– a terminal growth rate of 1.2%; and
– a post‑tax discount rate of 8.1%.
EMEA
EMEA has been severely impacted by COVID‑19, with numerous sites suspending operations and customer project delays
in the Nordics and Middle East. The latest forecasts project that recovery in the region will be slower than previously
anticipated, particularly in Europe. As a result, the goodwill in the segment has been impaired by $162.4 million.
Any variation in the key assumptions of the cash flows would result in a change in the assessed value in use. If the impact
of the change had a negative impact, it could, in the absence of other factors require a further impairment to goodwill.
The key assumptions underlying the value in use calculations are as follows:
– growth in EBIT to $79 million within five years primarily due to easing of COVID‑19 impacts, new technology and
growth in Africa and the CIS;
– a weighted average terminal growth rate in line with local country economic forecasts of 3.8%; and
– a weighted average post‑tax discount rate of 14.1%.
LATAM
Based on the latest projected cash flows of the Group, the carrying value of the Latin America segment is approximately
equal to its value in use. The value in use calculations are sensitive to earnings forecasts, changes in discount rates and
terminal growth rates.
Any variation in the key assumptions of the cash flows would result in a change in the assessed value in use. If the
impact of the change had a negative impact, it could, in the absence of other factors require an impairment to goodwill.
The key assumptions underlying the value in use calculations are as follows:
– growth in EBIT to $87 million within five years. This is reliant on achieving future growth in earnings primarily due
to easing of COVID‑19 impacts, securing new or expanded contracts and delivery of value added services;
– a weighted average terminal growth rate in line with local country economic forecasts of 3.1%; and
– a weighted average post‑tax discount rate of 8.9%.
Orica Annual Report 2022 | 157
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION D. MANAGING FINANCIAL RISKS
Orica’s Review of Operations and Financial Performance highlights funding and other treasury matters as material business
risks that could adversely affect the achievement of future business performance.
This section discusses the principal market and other financial risks that the Group is exposed to and the risk management
program, which seeks to mitigate these risks and reduce the volatility of Orica’s financial performance.
10. FINANCIAL RISK MANAGEMENT
Financial risk factors
Financial risk management is carried out centrally by the Group’s treasury function under policies approved by the Board.
The Group’s principal financial risks are associated with:
–
interest rate risk (note 10a);
– foreign exchange risk (note 10b);
– commodity price risk (note 10c);
– credit risk (note 10d); and
–
liquidity risk (note 10e).
(a) Interest rate risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate
due to changes in market interest rates.
The Group is primarily exposed to interest rate risk on outstanding interest bearing liabilities. Non‑derivative interest bearing assets
are predominantly short‑term liquid assets. Interest bearing liabilities issued at fixed rates expose the Group to a fair value interest
rate risk while borrowings issued at a variable rate give rise to a cash flow interest rate risk.
Interest rate risk on long‑term interest bearing liabilities is managed by adjusting the ratio of fixed interest debt to variable interest
debt. This is managed within policies determined by the Board via the use of interest rate swaps and cross currency interest rate
swaps. As at September 2022, fixed rate borrowings after the impact of interest rate swaps and cross currency swaps were
$1,413.9 million (2021 $1,268.5 million), representing a fixed/floating split of 65% and 35% respectively (2021 61% and 39%).
Interest rate sensitivity
A 10% movement in interest rates without management intervention would have a $4.6 million (2021 $4.1 million) impact on
profit before tax and a $3.2 million (2021 $2.9 million) impact on shareholders’ equity.
(b) Foreign exchange risk
(i) Foreign exchange risk – transactional
Foreign exchange risk refers to the risk that the value of a financial commitment, recognised asset, liability or cash flow will
fluctuate due to changes in foreign currency rates.
The Group is exposed to foreign exchange risk due to foreign currency borrowings and sales and/or purchases denominated,
either directly or indirectly, in currencies other than the functional currencies of the Group’s subsidiaries.
Foreign exchange risk on foreign currency borrowings is managed using cross currency swaps and forward foreign exchange
contracts. As at September 2022, the notional balance of derivative contracts hedging foreign currency debt was $1,106.8 million
(2021 $1,003.4 million).
In regard to foreign currency risk relating to sales and purchases, the Group may hedge up to 100% of committed exposures
utilising a declining percentage over time methodology. Only exposures that can be forecast to a high probability are hedged.
Transactions can be hedged for up to five years. The derivative instruments used for hedging purchase and sale exposures are
bought vanilla option contracts and forward exchange contracts. Forward exchange contracts may be used only under Board
policy for committed exposures and anticipated exposures expected to occur within 12 months. Bought vanilla option contracts
may be used for all exposures. These contracts are designated as cash flow hedges and are recognised at their fair value. At reporting
date, Orica held foreign exchange contracts with a fair value gain of $8.3 million (2021 fair value gain of $4.9 million).
158 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Foreign exchange sensitivity
The table below shows the Group’s main exposure to foreign currency transactional risk (Australian dollar equivalent) and the
effect on profit or loss and equity had exchange rates been 10% higher or lower than the year end rate with all other variables
held constant.
The analysis takes into account all underlying exposures and related hedges but not the impact of any management actions that
might take place if these events occurred.
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Interest bearing liabilities
Net derivatives
Net exposure
Effect on profit/(loss) before tax
If exchange rates were 10% lower
If exchange rates were 10% higher
Increase/(decrease) in equity
If exchange rates were 10% lower
If exchange rates were 10% higher
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Interest bearing liabilities
Net derivatives
Net exposure
Effect on profit/(loss) before tax
If exchange rates were 10% lower
If exchange rates were 10% higher
Increase/(decrease) in equity
If exchange rates were 10% lower
If exchange rates were 10% higher
USD
$m
261.9
289.4
(396.8)
(1,346.7)
1,299.9
107.7
7.8
(6.4)
8.4
(6.9)
USD
$m
182.4
232.0
(302.1)
(1,342.1)
1,390.6
160.8
5.5
(4.5)
12.5
(10.2)
2022
IDR
$m
77.4
54.6
(29.3)
(19.1)
–
83.6
9.3
(7.6)
6.5
(5.3)
2021
IDR
$m
33.7
17.9
(25.3)
(19.3)
–
7.0
0.8
(0.6)
0.6
(0.5)
CAD
$m
18.7
–
(3.6)
–
(37.8)
(22.7)
(2.5)
2.1
(1.8)
1.4
CAD
$m
1.4
0.1
(2.1)
(30.6)
29.7
(1.5)
–
–
(0.1)
0.1
EUR
$m
20.6
5.6
(14.1)
(16.0)
12.8
8.9
0.2
(0.2)
0.7
(0.6)
EUR
$m
13.4
17.7
(16.5)
(61.5)
66.8
19.9
1.0
(0.8)
1.5
(1.3)
(ii) Foreign currency risk – translational
Foreign currency earnings translation risk arises primarily as a result of earnings generated by foreign operations with functional
currencies of CAD, USD, PEN, MXN, and BRL being translated into AUD. Derivative contracts to hedge earnings exposures do not
qualify for hedge accounting under Australian Accounting Standards. Board approved policy allows hedging of this exposure in
order to reduce the volatility of full year earnings resulting from changes in exchange rates. At reporting date, Orica held no
derivative contracts to hedge earnings exposures (2021 nil).
Orica Annual Report 2022 | 159
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Net investment in foreign operations
Hedging of foreign investment exposures is undertaken primarily through originating debt in the functional currency of the
foreign operation, or by raising debt in a different currency and swapping the debt to the currency of the foreign operation using
derivative financial instruments. The remaining translation exposure is managed, where considered appropriate, using forward
foreign exchange contracts, or cross currency interest rate swaps. As at reporting date, 28.9% of the Group’s net investment in
foreign operations was hedged (2021 37.0%).
(c) Commodity price risk
Commodity price risk refers to the risk that Orica’s profit or loss or equity will fluctuate due to changes in commodity prices.
Natural gas or ammonia are the primary feedstocks in Orica’s production process. Orica manages its contract portfolio so that
on a mass balance basis it seeks to maintain a low risk position across the contract cycle such that material input cost variations
are passed through to customers in price variations through rise and fall adjustments contained in all significant contracts.
The Group may enter into derivative contracts to hedge commodity price risk that is not eliminated via contractual or other
commercial arrangements. At reporting date, the fair value of commodity derivative contracts was nil (2021 nil).
(d) Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to meet their obligations under a contract
or arrangement. The Group is exposed to credit risk from trade and other receivables and financial instrument contracts.
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 manages bank counterparty risk by ensuring that actual and potential exposure is monitored daily against
counterparty credit limits, which have been assigned based on counterparty credit ratings. The Group does not hold any
credit derivatives to offset its credit exposures.
Orica’s maximum exposure to credit risk as at 30 September is the carrying amount, net of impairment, of the financial assets
as detailed in the table below:
Financial assets
Cash and cash equivalents
Derivative assets
Trade and other receivables
Total
(e) Liquidity risk
2022
$m
1,255.3
74.7
1,086.5
2,416.5
2021
$m
593.7
56.9
894.1
1,544.7
Liquidity risk arises from the possibility that there will be insufficient funds available to make payment as and when required.
The Group manages this risk via:
– maintaining an adequate level of undrawn committed facilities in various currencies that can be drawn upon at short notice;
– using instruments that are readily tradeable in the financial markets;
– monitoring duration of long‑term debt;
– spreading, to the extent practicable, the maturity dates of long‑term debt facilities; and
– comprehensively analysing all forecast inflows and outflows that relate to financial assets and liabilities.
160 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Facilities available and the amounts drawn and undrawn are as follows:
Unsecured bank overdraft facilities
Unsecured bank overdraft facilities available
Amount of facilities undrawn
Committed standby and loan facilities
Committed standby and loan facilities available
Amount of facilities unused
2022
$m
57.1
57.1
2021
$m
58.4
56.3
3,596.6
1,422.8
3,561.1
1,486.3
The bank overdrafts are payable on demand and are subject to an annual review. The repayment dates of the committed standby
and loan facilities range from 25 October 2022(1) to 25 October 2030 (2021 25 October 2022 to 25 October 2030).
(1) $123 million US Private Placement bond maturity was repaid on 25 October 2022. The redemption was financed via committed bank debt facilities.
The contractual maturity of the Group’s financial liabilities including estimated interest payments as at 30 September are shown in
the table below. The amounts shown represent the future undiscounted principal and interest cash flows and therefore differ from
the carrying amount on the balance sheet:
2022
Non derivative financial liabilities
Interest bearing liabilities, excluding
lease liabilities
Lease liabilities
Trade and other payables
Derivative financial liabilities
Inflows
Outflows
Total
2021
Non derivative financial liabilities
Interest bearing liabilities, excluding
lease liabilities
Lease liabilities
Trade and other payables
Derivative financial liabilities
Inflows
Outflows
Total
Fair value measurement
1 year
or less
$m
1 to
2 years
$m
2 to
5 years
$m
Over
5 years
$m
Contractual
cash flows
$m
Carrying
amount
$m
754.9
69.1
1,477.3
(543.4)
562.4
2,320.3
1 year
or less
$m
90.3
67.6
1,254.2
(157.6)
162.7
1,417.2
69.7
54.2
31.2
(12.7)
27.2
169.6
871.4
79.5
–
(38.0)
78.7
991.6
1,013.6
120.2
–
(416.3)
427.0
1,144.5
2,709.6
323.0
1,508.5
(1,010.4)
1,095.3
4,626.0
2,167.5
239.5
1,508.5
–
64.3
3,979.8
1 to
2 years
$m
2 to
5 years
$m
Over
5 years
$m
Contractual
cash flows
$m
Carrying
amount
$m
692.8
56.3
8.8
(18.6)
21.4
760.7
383.9
87.4
–
(55.1)
75.4
491.6
1,396.5
120.4
–
2,563.5
331.7
1,263.0
(622.3)
676.0
(853.6)
935.5
2,072.7
260.4
1,263.0
–
65.7
1,570.6
4,240.1
3,661.8
The balance sheet includes financial assets and financial liabilities that are measured at fair value. These fair values are categorised
into hierarchy levels that are representative of the inputs used in measuring the fair value.
Orica Annual Report 2022 | 161
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Valuation method
Level 1 – uses quoted prices for identical instruments in active markets.
Level 2 – uses inputs for the asset or liability other than quoted prices that are observable either directly
or indirectly.
Level 3 – uses valuation techniques where one or more significant inputs are based on unobservable
market data.
At reporting date, other assets and other liabilities on the balance sheet included derivatives carried at fair value are categorised
as Level 2 as the inputs are observable. There has been no movement between levels since prior year.
Valuation techniques include, where applicable, reference to prices quoted in active markets, discounted cash flow analysis,
fair value of recent arm’s length transactions involving the same instruments or other instruments that are substantially the same,
and option pricing models. Changes in default probabilities are included in the valuation of derivatives using credit and debit
valuation adjustments.
The fair values of forward exchange contracts are calculated by reference to forward exchange market rates for contracts with
similar maturity profiles at the time of valuation.
The fair values of cross currency interest rate swaps and interest rate swaps and other financial liabilities measured at fair
value are determined using valuation techniques which utilise data from observable markets. Assumptions are based on market
conditions existing at each balance date. The fair value is calculated as the present value of the estimated future cash flows using
an appropriate market‑based yield curve, which is independently derived and representative of Orica’s cost of borrowings.
Derivative financial instruments
Derivative assets
Designated as a hedge of interest bearing liabilities
Other
Total
Derivative liabilities
Designated as a hedge of interest bearing liabilities
Other
Total
2022
2021
Current
$m
Non‑Current
$m
Current
$m
Non‑Current
$m
16.3
12.4
28.7
(3.6)
(4.2)
(7.8)
46.0
–
46.0
(56.5)
–
(56.5)
–
8.0
8.0
–
(5.1)
(5.1)
48.9
–
48.9
(60.6)
–
(60.6)
Financial assets and liabilities carried at amortised cost
The fair value of cash and cash equivalents, trade and other receivables (note 5), and trade and other payables (note 5)
approximates their carrying amount due to their short maturity.
Interest bearing liabilities excluding lease liabilities have a carrying amount of $2,167.5 million (2021 $2,072.7 million including
discontinued operations). The carrying amount of bank and other loans which are primarily short‑term in nature approximates
fair value. Private Placement debt which is primarily long‑term in nature has a carrying amount of $2,160.7 million (2021
$2,068.8 million) and a fair value of $2,068.0 million (2021 $2,122.2 million). Fair value of Private Placement debt is determined
as the present value of future contracted cash flows discounted using standard valuation techniques at applicable market yields
having regard to timing of cash flows.
Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet where Orica currently has a legally
enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously. No financial assets or liabilities are currently held under netting arrangements.
Orica has entered into derivative transactions under International Swaps and Derivatives Association (‘ISDA’) master agreements
that do not meet the criteria for offsetting but allow for the related amounts to be set‑off in certain circumstances, such as the
event of default. As Orica does not presently have a legally enforceable right of set‑off, derivatives are presented on a gross basis
on the balance sheet.
162 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Derivatives and hedge accounting
The Group uses derivatives and other financial instruments to hedge its exposure to currency, interest rate and commodity
price risk exposures arising from operational, financing and investing activities. Where applicable, these instruments are formally
designated in hedge relationships as defined by AASB 9. To qualify for hedge accounting the Group formally designates and
documents details of the hedge, risk management objective and strategy for entering into the arrangement and methodology
used for measuring effectiveness.
Hedge accounting relationships are categorised according to the nature of the risks being hedged:
Hedge type
Description
Fair value hedge
Cash flow hedge
Hedges the change in fair value of recognised assets and liabilities.
Hedges the exposure to variability in cash flows attributable to a particular risk associated with an asset,
liability or highly probable forecast transaction.
Net investment hedge
Hedges the foreign currency translation exposure of the net assets of foreign operations.
Critical terms of hedging instruments and hedged items are transacted to match on a 1:1 ratio by notional values. Matching critical
terms enables economic offset thereafter to be determined qualitatively.
Hedge ineffectiveness arises primarily from the counterparties’ and the Group’s own credit risk which is included in the fair value of
the derivative hedge instrument but not the hedge item. During the current and prior financial years, there was no material impact
on profit or loss resulting from hedge ineffectiveness.
AASB 9 also allows certain costs of hedging to be deferred in equity. Gains or losses associated with ‘currency basis’ cost of
hedging are deferred in the cash flow hedge reserve as they are not material for separate disclosure. The amounts are systematically
released to the income statement to align with the hedged exposure.
The London Interbank Offered Rate (LIBOR) is expected to be replaced by alternative risk‑free rates (ARR) as part of inter‑bank offer
rate (IBOR) reform. IBOR reform impacts Orica’s interest rate swaps, which reference 3‑month US LIBOR. At 30 September 2022,
the notional value of hedging instruments that reference 3‑month US LIBOR is US$150m and Orica has not transitioned any of its
existing interest rate swaps to ARR’s. Orica’s interest rate swaps will only transition to ARR once US LIBOR publication ceases, which
is anticipated to occur on 30 June 2023.
Effects of hedge accounting on financial position and performance
Fair value and cash flow hedges
The table below shows the carrying amounts of the Group’s Private Placement debt and the derivatives which are designated
in fair value and/or cash flow hedge relationships to hedge them:
– the carrying amount of the Private Placement debt includes foreign exchange remeasurements to year end rates and fair
value adjustments when included in a fair value hedge;
– the breakdown of the hedging derivatives includes remeasurement of foreign currency notional values at year end rates,
fair value movements due to interest rate risk, foreign currency cash flows designated into cash flow hedges, costs of hedging
recognised in other comprehensive income and ineffectiveness recognised in the income statement; and
– hedged value represents the carrying amount of the Private Placement debt adjusted for the carrying amount of the
designated derivatives.
Orica Annual Report 2022 | 163
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Fair value of derivatives(1)
Foreign
exchange
notional
@ spot
$m
Fair value
interest
rate risk
$m
Carrying
amount
$m
Balance in
cash flow
hedge
reserve
– gross
of tax(3)
$m
Recognised
in income
statement(2)
$m
Total
carrying
amount
(asset)/
liability
$m
Hedged
value
$m
2022
Private Placement
debt
2021
Private Placement
debt
2,160.7
(105.6)
97.1
6.5
(1.0)
(3.0)
2,157.7
2,068.8
(2.3)
(9.1)
23.4
(0.3)
11.7
2,080.5
(1)
Individual derivative transactions may be included in more than one hedge type designation.
(2) Amounts recognised in the income statement are presented within financing costs.
(3)
Includes cost of hedging as defined by AASB 9 of $1.2 million (2021 $5.8 million).
Net investment hedges
As at 30 September, hedging instruments designated in a net investment hedge consisted primarily of foreign currency debt
and had a carrying amount of $1,000.9 million (2021 $909.7 million). During the period movements in the hedging instruments
of $92.1 million loss (2021 $3.5 million loss) were recognised in the foreign currency translation reserve, with no ineffectiveness
(2021 nil) recognised in the income statement.
Derivatives and hedge accounting – significant accounting policies
Valuation: Derivatives are measured at fair value at inception, and subsequently remeasured to fair value at each reporting date.
Gains or losses
on fair value
movements of
the financial
instrument
Discontinuation of
hedge accounting
Fair value hedges
Cash flow hedges
Net investment hedges
Recognised in the income
statement, together with gains
or losses in relation to the
hedged item attributable to
the risk being hedged.
The effective portion is
recognised in other comprehensive
income. The ineffective portion
is recognised immediately in the
income statement.
The effective portion is recognised
in the foreign currency translation
reserve in equity. The ineffective
portion is recognised immediately
in the income statement.
The cumulative gain or loss that
has been recorded to the carrying
amount of the hedged item is
amortised to the income statement
using the effective interest method.
Amounts remain deferred in the
foreign currency translation reserve
and are subsequently recognised in
the income statement in the event
of disposal of the foreign operation.
When a hedging instrument expires
or is sold, terminated or exercised, or
the entity revokes designation of the
hedge relationship but the hedged
forecast transaction is still expected
to occur, the cumulative gain or loss
at that point remains in equity. If the
forecast transaction is no longer
forecast to occur, the cumulative gain
or loss is transferred immediately to
the income statement.
Derivatives not in a designated hedge arrangement
Financial instruments that do not qualify for hedge accounting but remain economically effective, are accounted for as trading
instruments. These instruments are classified as current and are stated at fair value, with any resultant gain or loss recognised
in the income statement. The Group policy is to not hold or issue financial instruments for speculative purposes.
164 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION E. TAXATION
This section outlines the taxes paid by Orica and the impact tax has on the financial statements.
Orica has operations in more than 45 countries, with customers in more than 100 countries. In 2022, Orica paid $188.7 million
(2021 $227.2 million) globally in corporate taxes and payroll taxes. Orica collected and remitted $200.1 million (2021 $127.1 million)
globally in GST/VAT.
As Orica operates in a number of countries around the world, it is subject to local tax rules in each of those countries.
Orica’s tax rate is sensitive to the geographic mix of profits earned in different countries with different tax rates, as tax
will be due in the country where the profits are earned. Many of the jurisdictions Orica has operations in have headline
tax rates lower than 30%.
11. TAXATION
(a) Income tax expense recognised in the income statement
Consolidated
2022
2021
Continuing
$m
Discontinued
$m
Consolidated
$m
Continuing
$m
Discontinued
$m
Consolidated
$m
Current tax expense
Current year
Deferred tax
Under provided in prior years
Total income tax expense in
income statement
(b) Reconciliation of income
tax expense to prima facie
tax payable
Income tax expense attributable
to profit before individually
significant items
Profit from operations before
individually significant items
Prima facie income tax expense
calculated at 30% on profit
Tax effect of items which (decrease)/
increase tax expense:
variations in tax rates of foreign
controlled entities
tax under provided in prior years
non‑allowable interest deductions
non‑creditable withholding taxes
recognition of previously unbooked
temporary differences
(recognition)/utilisation of unbooked
prior year tax losses
other
Income tax expense attributable
to profit before individually
significant items
141.3
(2.2)
1.8
7.4
6.9
–
140.9
14.3
148.7
4.7
1.8
155.2
68.9
(46.5)
2.9
25.3
463.5
139.1
7.7
1.8
3.4
5.7
(4.2)
(14.2)
9.1
148.4
14.7
4.4
–
–
–
–
–
–
1.2
5.6
478.2
143.5
299.3
89.8
7.7
1.8
3.4
5.7
(4.2)
(14.2)
10.3
(2.0)
2.9
13.2
7.1
(19.4)
(2.0)
7.0
5.5
–
0.2
5.7
21.7
6.5
(1.4)
0.2
2.1
–
–
0.1
(1.4)
74.4
(46.5)
3.1
31.0
321.0
96.3
(3.4)
3.1
15.3
7.1
(19.4)
(1.9)
5.6
154.0
96.6
6.1
102.7
Orica Annual Report 2022 | 165
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
11. TAXATION (CONTINUED)
Income tax (benefit)/expense
attributable to individually
significant items
Consolidated
2022
2021
Continuing
$m
Discontinued
$m
Consolidated
$m
Continuing
$m
Discontinued
$m
Consolidated
$m
Loss from individually significant items
(189.0)
(85.0)
(274.0)
(452.5)
(1.4)
(453.9)
Prima facie income tax expense
calculated at 30% on individually
significant items
Tax effect of items which
(decrease)/increase tax expense:
impairment expense
non‑taxable gain on sale of
Nitro Consult AB
non‑deductible loss on sale
of Minova
utilisation of capital losses for
gain on sale of land
non‑allowable operating model
restructuring expense
Income tax benefit attributable to
loss on individually significant items
Income tax expense reported
in the income statement
(c) Income tax recognised in Equity
Net gain/(loss) on hedge of net
investments in foreign subsidiaries
Cash flow hedges
– Effective portion of changes
in fair value
– Transferred to income statement
Exchange gain/(loss) on translation
of foreign operations
Net actuarial gain/(loss) on defined
benefit obligations
Recognised in comprehensive income
Deductible share issue costs
Total recognised in equity
166 | Orica Annual Report 2022
(56.7)
(25.5)
(82.2)
(135.8)
(0.4)
(136.2)
55.1
(5.9)
–
–
–
(7.5)
140.9
–
–
34.2
–
–
8.7
14.3
55.1
(5.9)
34.2
–
–
103.0
–
–
(39.5)
1.0
–
–
–
–
–
1.2
(71.3)
155.2
25.3
(0.4)
5.7
103.0
–
–
(39.5)
1.0
(71.7)
31.0
Consolidated
2022
2021
$m
$m
$m
$m
$m
$m
Before
tax
Tax
(expense)/
benefit
Net
of tax
Before
tax
Tax
(expense)/
benefit
Net
of tax
(92.1)
27.6
(64.5)
17.3
–
(5.2)
–
12.1
–
213.8
(49.6)
164.2
91.7
230.7
(11.2)
219.5
(25.8)
(53.0)
1.8
(51.2)
65.9
177.7
(9.4)
168.3
3.6
6.6
1.1
9.3
75.4
96.0
–
96.0
(1.1)
(2.0)
(0.3)
(5.6)
(20.5)
(29.5)
–
(29.5)
2.5
4.6
0.8
3.7
54.9
66.5
–
66.5
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
11. TAXATION (CONTINUED)
(d) Recognised deferred tax assets and liabilities
Balance Sheet
Income Statement
Consolidated
Deferred tax assets
Trade and other receivables
Inventories
Property plant and equipment
Intangible assets
Trade and other payables
Interest bearing liabilities
Provision for employee entitlements
Provision for retirement benefit obligations
Provision for environmental and decommissioning
Provision for other
Tax losses
Other items
Deferred tax assets
Less set‑off against deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Property plant and equipment
Intangible assets
Interest bearing liabilities
Other items
Deferred tax liabilities
Less set‑off against deferred tax assets
Net deferred tax liabilities
Deferred tax expense
Tax losses not booked
Capital losses not booked
Temporary differences not booked
Tax losses not booked expire between 2023 and 2038.
Recognition and Measurement
2022
$m
2021
$m
15.8
38.1
50.7
67.8
50.7
–
31.5
17.0
83.8
6.9
133.2
4.4
499.9
(104.3)
395.6
105.7
25.8
11.4
8.6
151.5
(104.3)
47.2
28.1
19.5
17.2
64.4
41.0
11.3
28.1
40.3
98.5
3.3
134.9
5.3
491.9
(91.7)
400.2
99.0
24.5
–
7.8
131.3
(91.7)
39.6
2022
$m
12.3
(19.2)
(33.6)
3.8
(9.2)
28.9
(3.8)
(3.1)
14.8
(3.6)
0.2
(2.5)
7.1
1.1
10.7
0.8
2021
$m
(12.5)
(6.1)
(14.6)
29.8
8.8
22.6
1.7
0.4
(11.1)
15.7
(17.5)
0.7
(57.1)
2.0
–
(9.3)
4.7
(46.5)
Consolidated
2022
$m
118.7
83.2
83.6
2021
$m
74.5
44.3
97.8
Income tax on the profit or loss for the year comprises current and deferred tax and is recognised in the income statement.
Current tax is the expected tax payable on the taxable income for the year using tax rates applicable at the reporting date, and any
adjustments to tax payable in respect of previous years.
Orica Annual Report 2022 | 167
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
11. TAXATION (CONTINUED)
Deferred tax balances are determined by calculating temporary differences based on the carrying amounts of assets and liabilities
for financial reporting purposes and their amounts for taxation purposes. Where amounts are recognised directly in equity the
corresponding tax impact is also recognised directly in equity.
The amount of deferred tax provided will be based on the expected manner of realisation of the asset or settlement of the liability,
using tax rates enacted or substantively enacted at reporting date.
A deferred tax asset will be recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets will be reduced to the extent it is no longer probable that the related tax benefit
will be realised.
Tax consolidation
Orica Limited is the parent entity in the tax consolidated group comprising all wholly‑owned Australian entities.
Due to the existence of a tax sharing agreement between the entities in the tax consolidated group, the parent entity recognises
the tax effects of its own transactions and the current tax liabilities and the deferred tax assets arising from unused tax losses and
unused tax credits assumed from the subsidiary entities.
Critical accounting judgements and estimates
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations and is subject to
periodic challenges by local tax authorities on a range of tax matters during the normal course of business. These include
transfer pricing, indirect taxes and transaction‑related issues. Significant judgement is required in determining the
worldwide provision for income taxes. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain.
The Group recognises liabilities for tax issues based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred tax provision in the period in which such determination is made.
In addition, deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable profits are available to utilise those temporary differences and losses, and the tax losses
continue to be available having regard to the nature and timing of their origination and compliance with the relevant
tax legislation associated with their recoupment.
Assumptions are also made about the application of income tax legislation. These assumptions are subject to risk and
uncertainty and there is a possibility that changes in circumstances or differences in opinions will alter outcomes which
may impact the amount of deferred tax assets and deferred tax liabilities recorded on the balance sheet and the amount
of tax losses and timing differences not yet recognised. In these circumstances, the carrying amount of deferred tax assets
and liabilities may change, resulting in an impact on the earnings of the Group.
Contingent tax liabilities
In the normal course of business, contingent liabilities may arise from tax investigations or legal proceedings.
Where management are of the view that potential liabilities have a low probability of crystallising or it is not possible
to quantify them reliably, they are not provided for and are disclosed as contingent liabilities.
Consistent with other companies of the size and diversity of Orica, the Group is the subject of ongoing information
requests, investigations and audit activities by tax and regulatory authorities in jurisdictions in which Orica operates.
Orica co‑operates fully with the tax and regulatory authorities. It is possible that Orica may incur fines and/or other
penalties as a consequence of these investigations and audits.
(i) Brazilian Tax Action
The Brazilian Taxation Authority (BTA) is claiming unpaid taxes, interest and penalties of approximately $29 million for the
1997 financial year relating to an alleged understatement of income based on an audit of production records. Orica believes
BTA has misinterpreted those production records and recently received a favourable decision from the Brazilian Civil Court
in relation to an excise dispute based on the same factual matter. This decision should support the income tax dispute.
ICI plc, the vendor of the business to Orica, has been notified to preserve Orica’s rights under the tax indemnity obtained
upon acquisition of the business which provides indemnity for amounts exceeding certain limits. The BTA has been granted
a bank guarantee of up to approximately $28 million.
168 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION F. GROUP STRUCTURE
Orica has a diverse spread of global operations, which includes controlled entities incorporated in over 45 countries,
as well as entering strategic partnering arrangements with certain third parties. This section highlights the Group structure
including Orica’s controlled entities, as well as those where Orica holds less than 100% interest.
12. INVESTMENTS IN CONTROLLED ENTITIES
Recognition and Measurement
The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the
Group, being the Company (the parent entity) and its subsidiaries as defined in AASB 10 Consolidated Financial Statements.
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition.
Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.
When the Group relinquishes control over a subsidiary, it derecognises its share of net assets. Any resulting gain or loss is
recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
The consolidated financial statements include the information and results of each subsidiary from the date on which the Company
obtains control until such time as the Company ceases to control such entity. In preparing the consolidated financial statements,
all intercompany balances, transactions and unrealised profits arising within the Group are eliminated in full.
Refer to note 23 for the list of investments in controlled entities.
13. EQUITY ACCOUNTED INVESTEES AND JOINT OPERATIONS
(a) Investments accounted for using the equity method
The table below shows material investments (based on carrying values). All other investments are included in “Individually immaterial”.
Name
Nelson Brothers, LLC(1)
Principal activity
Manufacture and
sale of explosives
Balance
date
30‑Sep
Nelson Brothers Mining
Services LLC(1)
Sale of explosives
30‑Sep
Poly Orica Management
Co., Ltd(2)
Manufacture and
sale of explosives
31‑Dec
Southwest Energy LLC(1)
Sale of explosives
30‑Sep
Individually immaterial
Various
Ownership
Profit/(loss)
for the year
Consolidated
Carrying value
2022
%
2021
%
2022
$m
2021
$m
2022
$m
2021
$m
50.0
50.0
49.0
50.0
50.0
50.0
49.0
50.0
9.0
8.9
3.8
14.1
4.0
39.8
8.3
7.0
4.2
9.3
5.6
34.4
43.2
40.7
37.2
34.3
78.3
151.0
14.1
323.8
74.5
126.8
14.1
290.4
(1) Entities are incorporated in USA.
(2) Entity is incorporated in China.
All equity accounted investees disclosed in the table above are classified as joint ventures.
Orica Annual Report 2022 | 169
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
13. EQUITY ACCOUNTED INVESTEES AND JOINT OPERATIONS (CONTINUED)
The following table summarises the financial information of significant equity accounted investees as included in their own
financial statements.
Equity Accounted Investees
2022
Name
Balance Sheet
Current assets
Non‑current assets
Current liabilities
Non‑current liabilities
Net assets (100%)
Group’s share of net assets
Income Statement
Revenue
Net profit
Total profit and comprehensive income (100%)
Group’s share of total comprehensive income
Translation and other adjustments
Included in the Group’s income statement
Dividends received by the Group
2021
Name
Balance Sheet
Current assets
Non‑current assets
Current liabilities
Non‑current liabilities
Net assets (100%)
Group’s share of net assets
Income Statement
Revenue
Net profit
Total profit and comprehensive income (100%)
Group’s share of total comprehensive income
Translation and other adjustments
Included in the Group’s income statement
Dividends received by the Group
170 | Orica Annual Report 2022
Nelson
Brothers, LLC
$m
Nelson
Brothers
Mining
Services LLC
$m
Poly Orica
Management
Co., Ltd
$m
Southwest
Energy LLC
$m
90.2
89.7
(85.8)
(32.7)
61.4
30.7
354.5
17.9
17.9
9.0
–
9.0
9.8
34.3
16.7
(27.1)
(10.4)
13.5
6.8
190.5
17.4
17.4
8.7
0.2
8.9
9.5
107.8
85.0
(24.9)
(2.2)
165.7
81.2
92.2
126.2
(37.6)
(7.1)
173.7
86.9
113.8
299.0
11.8
11.8
5.8
(2.0)
3.8
–
28.9
28.9
14.5
(0.4)
14.1
3.9
Nelson
Brothers, LLC
$m
Nelson
Brothers
Mining
Services LLC
$m
Poly Orica
Management
Co., Ltd
$m
Southwest
Energy LLC
$m
69.4
70.7
(64.1)
(19.7)
56.3
28.2
273.3
16.5
16.5
8.3
–
8.3
7.8
24.8
14.7
(25.8)
(1.2)
12.5
6.3
139.3
14.3
14.3
7.2
(0.2)
7.0
5.9
96.3
81.9
(18.4)
(3.1)
156.7
76.8
77.6
99.0
(26.9)
(10.9)
138.8
69.4
101.7
275.4
9.8
9.8
4.8
(0.6)
4.2
–
18.9
18.9
9.5
(0.2)
9.3
2.4
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
13. EQUITY ACCOUNTED INVESTEES AND JOINT OPERATIONS (CONTINUED)
(b) Joint operations
The Group owns 50% interest of Yara Pilbara Nitrates Pty Ltd, with the remaining shares held by subsidiaries in the Yara
International ASA Group.
(c) Transactions with equity accounted investees
Transactions during the year with equity accounted investees were:
Sales of goods to equity accounted investees
Purchase of goods from equity accounted investees
Dividend income received from equity accounted investees
(d) Transactions with related parties
2022
$m
397.2
118.1
23.2
2021
$m
316.3
107.2
17.5
All transactions with other related parties are made on normal commercial terms and conditions and in the ordinary course
of business.
Recognition and Measurement
Investments accounted for using the equity method
The Group’s interests in investments accounted for using the equity method comprise interests in associates and joint ventures.
An associate exists where Orica holds an interest in the equity of an entity, generally of between 20% and 50%, and is able
to significantly influence the decisions of the entity. A joint venture is an arrangement in which the Group has joint control.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets
and obligations for the liabilities relating to the arrangement. Orica recognises its share of any jointly held or incurred assets,
liabilities, revenue and expenses in the consolidated financial statements under applicable headings.
14. BUSINESSES AND NON‑CONTROLLING INTERESTS ACQUIRED
Business combinations are accounted for under the acquisition method when control is transferred to the Group, in accordance
with AASB 3 Business Combinations. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured
at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill. The transaction costs are expensed in the income statement.
Orica Annual Report 2022 | 171
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
14. BUSINESSES AND NON‑CONTROLLING INTERESTS ACQUIRED (CONTINUED)
Consolidated – 2022
Acquisitions of business and controlled entities
On 29 October 2021, the Group entered a contract to acquire 100% of the shares of RIG Technologies International Pty Ltd
and Resources Innovation Group Pty Ltd, based in Western Australia, who design and build downhole measurement technology.
The purchase price comprises $12.5 million paid on completion and potential earn out payments based on the achievement of
revenue targets over the next five years.
Consideration
cash paid
deferred settlement
Total consideration
Fair value of net assets of businesses acquired
property, plant and equipment
intangibles
other
Total fair value of net assets of businesses/controlled entities acquired
Goodwill on acquisition
RIG
Technology
$m
12.5
21.5
34.0
1.4
6.7
0.4
8.5
25.5
Goodwill on the purchase is attributable mainly to the skills and technical talent of the acquired business’ work forces and the
synergies expected to be achieved from integrating this business. None of the goodwill recognised is expected to be deductible
for income tax purposes.
Since 1 October 2021, the Group has acquired an additional 1.2% of Exsa, for the consideration of $1.9 million. The ownership
at 30 September 2022 is 99.9%.
Consolidated – 2021
As part of Orica’s technology development strategy, the Group acquired the shares of Hopper Industrial Group and assets from
OreControl Blasting Consultants LLC and OrePro Holdings LLC for total consideration of $22.3 million. No Goodwill was recognised
on these transactions.
Since 1 October 2020, the Group has acquired an additional 1.9% of Exsa, for the consideration of $2.8 million. The ownership
at 30 September 2021 is 98.7%.
172 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
15. BUSINESSES DISPOSED AND DISCONTINUED OPERATIONS
Businesses disposed – 2022
The Group disposed of the Minova business on 28 February 2022 and Nitro Consult AB on 7 March 2022.
Summary
Cash received
Cash disposed
Net cash received
Deferred cash consideration
Less disposal costs
Net consideration
Carrying value of net assets of businesses disposed
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Right of use assets
Intangibles
Deferred tax asset
Trade and other payables
Interest‑bearing liabilities
Provisions
Less: Non‑controlling interests at date of disposal
Profit on sale of businesses before release of foreign currency translation reserve (FCTR)
Release of FCTR
(Loss)/profit on sale of businesses before tax
Income tax expense
Net (loss)/profit on sale of businesses
Minova
2022
$m
Nitro Consult
AB
2022
$m
149.4
(26.6)
122.8
28.2
(12.0)
139.0
76.7
68.7
5.3
68.2
–
16.1
23.3
(76.9)
(10.4)
(34.9)
136.1
(7.8)
10.7
(95.7)
(85.0)
(8.7)
(93.7)
25.6
(11.1)
14.5
–
(1.7)
12.8
2.4
1.6
7.6
2.5
0.6
0.5
1.6
(1.2)
(0.7)
(20.6)
(5.7)
–
18.5
1.0
19.5
–
19.5
As outlined in note 9, Orica disposed of JSC “Orica CIS” on 9 September 2022. The entity was fully impaired and the proceeds
have been risk adjusted given the trade sanctions imposed on Russia. As required by Australian Accounting Standards, the foreign
currency translation reserve was released to the profit and loss statement on disposal. This resulted in a gross loss of $40.6 million
($31.3 million loss after tax).
Orica Annual Report 2022 | 173
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
15. BUSINESSES DISPOSED AND DISCONTINUED OPERATIONS (CONTINUED)
Businesses disposed – 2021
In September 2021 the Group disposed of Arboleda S.A. and its investment in the equity accounted investee Ulaex S.A.
Arboleda S.A.
Consideration
Disposal costs
Net consideration
Carrying value of net assets of businesses/controlled entities disposed
Equity accounted investee
Trade and other receivables
Profit on sale of business/controlled entities
Discontinued operations
The Minova business was considered a discontinued operation on 30 September 2021. The results of the business up until
completion date of the sale are presented below.
Assets held for sale
Property, plant and equipment
Intangibles
Cash and cash equivalents
Inventories
Trade receivables
Other receivables
Deferred tax asset
Other assets
Assets held for sale
Liabilities held for sale
Trade payables
Other payables
Interest‑bearing liabilities
Provisions
Other liabilities
Deferred tax liability
Liabilities held for sale
174 | Orica Annual Report 2022
$m
18.1
(0.5)
17.6
15.9
1.7
17.6
–
Minova
2021
$m
66.9
17.6
42.7
58.6
67.2
2.8
30.2
12.2
298.2
70.2
20.0
9.9
32.2
–
5.5
137.8
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
15. BUSINESSES DISPOSED AND DISCONTINUED OPERATIONS (CONTINUED)
Continuing
2022
$m
Discontinued
2022
$m
Consolidated
2022
$m
Continuing
2021
$m
Discontinued
2021
$m
Consolidated
2021
$m
Sales revenue
Other income(1)
Raw materials and inventories
Employee benefits expense
Depreciation and amortisation expense
Purchased services and other expenses
Outgoing freight
Repairs and maintenance
Impairment expense
Loss on sale of JSC “Orica CIS”
Gain on sale of Nitro Consult AB
Loss on sale of Minova
Operating model restructuring
Significant environmental provision
expense
Gain on sale of Botony site
Gain on sale of Villawood site
Share of net profit of equity
accounted investees
Total
Profit/(loss) from operations
Net financing costs
Financial income
Financial expenses
Net financing costs
Profit/(loss) before income
tax expense
Income tax expense
Profit/(loss) after tax
Net profit/(loss) for the year
attributable to:
Shareholders of Orica Limited
Non‑controlling interests
Net profit/(loss) for the year
7,096.4
31.8
(3,909.5)
(1,223.7)
(385.8)
(622.0)
(307.1)
(156.1)
(167.9)
(40.6)
19.5
–
–
–
–
–
39.8
(6,753.4)
374.8
2.1
(102.4)
(100.3)
274.5
(140.9)
133.6
145.5
(11.9)
133.6
231.1
(0.8)
(150.4)
(41.3)
–
(14.9)
(5.6)
(3.4)
–
–
–
(85.0)
–
–
–
–
–
(300.6)
(70.3)
0.1
(0.1)
–
(70.3)
(14.3)
(84.6)
(85.4)
0.8
(84.6)
7,327.5
31.0
(4,059.9)
(1,265.0)
(385.8)
(636.9)
(312.7)
(159.5)
(167.9)
(40.6)
19.5
(85.0)
–
–
–
–
39.8
(7,054.0)
304.5
2.2
(102.5)
(100.3)
204.2
(155.2)
49.0
60.1
(11.1)
49.0
5,207.9
45.7
(2,449.8)
(1,111.2)
(358.1)
(510.3)
(304.6)
(149.4)
(480.0)
–
–
–
(45.6)
(39.3)
71.6
40.8
34.4
(5,301.5)
(47.9)
1.0
(106.3)
(105.3)
(153.2)
(25.3)
(178.5)
(188.6)
10.1
(178.5)
474.3
0.7
(294.0)
(95.7)
(11.7)
(31.4)
(12.9)
(7.3)
–
–
–
–
(1.4)
–
–
–
–
(454.4)
20.6
0.1
(0.4)
(0.3)
20.3
(5.7)
14.6
14.8
(0.2)
14.6
5,682.2
46.4
(2,743.8)
(1,206.9)
(369.8)
(541.7)
(317.5)
(156.7)
(480.0)
–
–
–
(47.0)
(39.3)
71.6
40.8
34.4
(5,755.9)
(27.3)
1.1
(106.7)
(105.6)
(132.9)
(31.0)
(163.9)
(173.8)
9.9
(163.9)
(1) Discontinued operations other income includes foreign exchange loss of $1.1 million (2021 $0.8 million loss).
Continuing
2022
cents
Discontinued
2022
cents
Consolidated
2022
cents
Continuing
2021
cents
Discontinued
2021
cents
Consolidated
2021
cents
Earnings per share attributable
to ordinary shareholders of
Orica Limited:
Basic earnings per share
Diluted earnings per share
35.1
35.0
(20.6)
(20.6)
14.5
14.4
(46.3)
(46.3)
3.6
3.6
(42.7)
(42.7)
Orica Annual Report 2022 | 175
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
15. BUSINESSES DISPOSED AND DISCONTINUED OPERATIONS (CONTINUED)
Reconciliation of net profit for the year
Continuing
2022
$m
Discontinued
2022
$m
Consolidated
2022
$m
Continuing
2021
$m
Discontinued
2021
$m
Consolidated
2021
$m
Before individually significant items
Profit from operations
Net financing costs
Profit before income tax expense
Income tax expense
Profit after tax before
non‑controlling interests
Non‑controlling interests
Profit after tax before individually
significant items
Individually significant items
Loss before income tax expense
Income tax benefit/(expense)
Loss after tax before
non‑controlling interests
Non‑controlling interests
Loss after tax from individually
significant items
Net profit/(loss) after tax
Net profit/(loss) before income
tax expense
Income tax expense
Profit/(loss) after tax before
non‑controlling interests
Non‑controlling interests
Net profit/(loss) after tax
Net profit/(loss) for the year
attributable to:
Shareholders of Orica Limited
Non‑controlling interests
Net profit/(loss) for the year
563.8
(100.3)
463.5
(148.4)
315.1
(6.4)
308.7
(189.0)
7.5
(181.5)
18.3
14.7
–
14.7
(5.6)
9.1
(0.8)
8.3
(85.0)
(8.7)
(93.7)
–
578.5
(100.3)
478.2
(154.0)
324.2
(7.2)
404.6
(105.3)
299.3
(96.6)
202.7
(10.1)
317.0
192.6
(274.0)
(1.2)
(275.2)
18.3
(452.5)
71.3
(381.2)
–
(163.2)
(93.7)
(256.9)
(381.2)
274.5
(140.9)
133.6
11.9
145.5
145.5
(11.9)
133.6
(70.3)
(14.3)
(84.6)
(0.8)
(85.4)
(85.4)
0.8
(84.6)
204.2
(155.2)
49.0
11.1
60.1
60.1
(11.1)
49.0
(153.2)
(25.3)
(178.5)
(10.1)
(188.6)
(188.6)
10.1
(178.5)
22.0
(0.3)
21.7
(6.1)
15.6
0.2
15.8
(1.4)
0.4
(1.0)
–
(1.0)
20.3
(5.7)
14.6
0.2
14.8
14.8
(0.2)
14.6
426.6
(105.6)
321.0
(102.7)
218.3
(9.9)
208.4
(453.9)
71.7
(382.2)
–
(382.2)
(132.9)
(31.0)
(163.9)
(9.9)
(173.8)
(173.8)
9.9
(163.9)
176 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
15. BUSINESSES DISPOSED AND DISCONTINUED OPERATIONS (CONTINUED)
Cash flows from/(used in) discontinued operations
Net cash (used in)/from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net cash flows for the year
Recognition and Measurement
Minova
2022
$m
(4.7)
(8.2)
(3.2)
(16.1)
2021
$m
16.9
(9.6)
(2.7)
4.6
A discontinued operation is a component of the Group where the operations and cash flows can be clearly distinguished from the
rest of the Group. It represents a separate major line of operations and is part of a single co‑ordinated plan to dispose of a separate
major line of operation or business.
Classification as a discontinued operation occurs at the earlier of disposal date or when the operation meets the criteria to be
classified as held for sale.
When an operation is classified as a discontinued operation, the comparative income statement and statement of comprehensive
income is re‑presented as if the operation had been discontinued from the start of the comparative year.
Disposal groups comprising assets and liabilities are classified as held for sale if it is highly probable that they will be recovered
primarily through sale rather than through continuing use.
Such disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. Once classified as held
for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.
16. PARENT COMPANY DISCLOSURE – ORICA LIMITED
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Ordinary shares
Retained earnings
Total equity attributable to ordinary shareholders of Orica Limited
Net profit and total comprehensive income for the year
Company
2022
$m
2,384.0
3,946.2
159.0
168.8
3,389.7
387.7
3,777.4
2.6
2021
$m
1,805.6
3,367.8
174.7
176.1
2,686.1
505.6
3,191.7
387.9
The Company did not have any contractual commitments for the acquisition of property, plant or equipment in the current
or previous years.
Contingent liabilities and contingent assets
Under the terms of a Deed of Cross Guarantee entered into under ASIC Corporations (Wholly‑owned Companies) Instrument
2016/785, each wholly owned subsidiary which is a party to the Deed has covenanted with the Trustee of the Deed to guarantee
the payment of any debts of the other companies which are party to the Deed which might arise on the winding up of those
companies. A consolidated balance sheet and income statement for this closed group is shown in note 17.
Orica Limited guaranteed senior notes issued in the US Private Placement market in 2010, 2013, 2017 and 2020. The notes
have maturities between calendar years 2022 and 2030 (2021: 2022 and 2030). Orica Limited has also provided guarantees
for committed bank facilities.
Orica Annual Report 2022 | 177
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
17. DEED OF CROSS GUARANTEE
The parent entity, Orica Limited, and certain subsidiaries are subject to a Deed of Cross Guarantee (Deed) under which each
company guarantees the debts of the others.
The parties to the Deed are:
–
Initiating Explosives Systems Pty Ltd
– Orica Australia Pty Ltd
– Orica Investments Pty Ltd
– Orica Explosives Holdings Pty Ltd
– Orica Explosives Holdings No 2 Pty Ltd
– Orica Explosives Technology Pty Ltd
– Orica IC Assets Pty Ltd
By entering into the Deed, the wholly owned subsidiaries have been relieved from the requirement to prepare a financial report
and Directors’ report under ASIC Corporations (Wholly‑owned Companies) Instrument 2016/785.
A consolidated income statement and consolidated balance sheet are shown below:
Summarised Balance Sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets(1)
Total current assets
Non‑current assets
Trade and other receivables
Equity accounted investees
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non‑current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Current tax liabilities
Provisions
Total current liabilities
Non‑current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Total non‑current liabilities
Total liabilities
Net assets
Equity
Ordinary shares
Reserves
Retained earnings
Total equity
178 | Orica Annual Report 2022
2022
$m
9.6
342.7
199.4
19.7
571.4
2.5
13.3
7,357.8
1,265.8
174.1
185.5
8,999.0
9,570.4
404.9
20.8
137.8
41.0
604.5
21.9
4,659.0
207.9
4,888.8
5,493.3
4,077.1
3,398.1
827.0
(148.0)
4,077.1
2021
$m
9.9
298.3
151.8
17.4
477.4
2.0
11.1
7,015.6
1,272.7
168.5
188.9
8,658.8
9,136.2
280.0
16.6
28.9
128.4
453.9
1.8
4,540.9
322.4
4,865.1
5,319.0
3,817.2
2,686.1
681.6
449.5
3,817.2
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
17. DEED OF CROSS GUARANTEE (CONTINUED)
Summarised Income Statement and retained profit
Loss before income tax expense(2)
Income tax benefit
Loss from operations
Retained profit at the beginning of the year
Actuarial gains recognised directly in equity
Ordinary dividends – interim
Ordinary dividends – final
Retained (loss)/profit at the end of the year
2022
$m
(541.8)
19.5
(522.3)
449.5
45.1
(53.1)
(67.2)
(148.0)
2021
$m
(156.8)
12.4
(144.4)
672.3
19.1
(30.6)
(66.9)
449.5
(1) Other assets include net tax receivables with Group entities outside the Deed of Cross Guarantee.
(2) Loss before income tax primarily due to the impairment of the investment associated with Russia, Turkey and Minova.
Orica Annual Report 2022 | 179
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION G. REWARD AND RECOGNITION
Orica operates in more than 45 countries and has more than 12,000 employees. This section provides insights into the
reward and recognition of employees, in addition to the employee benefits expense and employee provisions disclosed
in the income statement and note 6 respectively.
This section should be read in conjunction with the Remuneration Report, contained within the Directors’ Report,
which provides specific details on the setting of remuneration for Key Management Personnel.
18. EMPLOYEE SHARE PLANS AND REMUNERATION
The following plans have options or rights (“instruments”) over Orica shares outstanding at 30 September 2021 and
30 September 2022:
The Long‑Term Incentive Plan (LTIP)
Refer to Remuneration Report.
Sign‑on Rights
For a select group of senior managers who join Orica post allocation of an LTIP grant (and who generally have forgone at‑risk
remuneration from their previous employer) rights may be allocated at the discretion of the Orica Board.
Recognition and Measurement
The issued instruments are measured at fair value based on valuations prepared by PwC. The fair value is recognised in the income
statement over the period that employees become entitled to the instruments.
Key Management Personnel compensation summary
As deemed under AASB 124 Related Parties Disclosures, Key Management Personnel (KMP) include each of the Directors, both
Executive and Non‑Executive, and those members of the Executive Committee who have authority and responsibility for planning,
directing and controlling the activities of Orica.
A summary of the KMP compensation is set out in the following table:
Short‑term employee benefits
Other long‑term benefits
Post employment benefits
Share based payments
Termination benefits
Consolidated
2022
$000
7,667.6
25.0
214.4
1,361.4
–
2021
$000
10,085.5
40.1
281.3
1,019.7
437.5
9,268.4
11,864.1
Information regarding individual Directors and Executives compensation and some equity instrument disclosures as permitted by
Corporation Regulations 2M.3.03 are provided in the Remuneration Report.
180 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
19. DEFINED BENEFIT OBLIGATIONS
Recognition and Measurement
Contributions to defined contribution superannuation funds are recognised in the income statement in the year in which the
expense is incurred.
For each defined benefit scheme, the cost of providing retirement benefits is expensed in the income statement so as to recognise
current and past service costs, interest cost on net liabilities, and the effect of any curtailments or settlements. Actuarial gains and
losses are recognised in other comprehensive income. The Group’s net liabilities in respect of defined benefit pension plans is the
present value of the future benefit employees have earned, less the fair value of any plan assets.
(a) Defined benefit pension plans
The Group participates in several Australian and overseas defined benefit post‑employment plans that provide benefits to
employees upon retirement. Plan funding is carried out in accordance with the requirements of trust deeds and the advice
of actuaries. Information within these financial statements has been prepared by the local plan external actuaries. Orica were
assisted by Willis Towers Watson to consolidate those results globally. During the year, the Group made employer contributions
of $27.0 million (2021 $30.7 million) to defined benefit plans. The Group’s external actuaries have forecast total employer
contributions and benefit payments to defined benefit plans of $25.4 million for 2023.
(b) (i) Balance Sheet amounts
The amounts recognised in the balance sheet are determined as follows:
Present value of the funded defined benefit obligations
Present value of unfunded defined benefit obligations
Fair value of defined benefit plan assets
Deficit
Restrictions on assets recognised
Net liability in the balance sheet
Amounts in the balance sheet:
Liabilities
Assets
Net liability recognised in balance sheet at end of the year
Comprised of:
Net liabilities of continuing operations
Net liabilities held for sale
Net liability recognised in balance sheet at end of the year
2022
$m
527.6
65.4
(512.8)
80.2
3.1
83.3
91.0
(7.7)
83.3
83.3
–
83.3
2021
$m
735.4
128.1
(631.4)
232.1
1.9
234.0
238.0
(4.0)
234.0
209.1
24.9
234.0
Orica Annual Report 2022 | 181
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
19. DEFINED BENEFIT OBLIGATIONS (CONTINUED)
(b) (ii) Amounts recognised in the Income Statement
The amounts recognised in the income statement are as follows:
Current service cost
Interest cost on net defined benefit liabilities
Losses from immediate recognition
Past service cost
Total included in employee benefits expense
Comprised of:
Continuing operations
Discontinued operations
Total included in employee benefits expense
(b) (iii) Amounts included in the Statement of Other Comprehensive Income
Actuarial gain on defined benefit obligations:
Due to changes in demographic assumptions
Due to changes in financial assumptions
Due to experience adjustments
Total
Return on plan assets (lesser than)/greater than discount rate
Change in irrecoverable surplus other than interest
Total gain recognised via the Statement of Other Comprehensive Income
Tax expense on total gain recognised via the Statement of Other Comprehensive Income
Total gain after tax recognised via the Statement of Other Comprehensive Income
Comprised of:
Continuing operations
Discontinued operations
Total gain after tax recognised via the Statement of Other Comprehensive Income
182 | Orica Annual Report 2022
2022
$m
14.1
4.5
(0.4)
0.8
19.0
19.0
–
19.0
2022
$m
(6.3)
186.1
(4.3)
175.5
(82.7)
(1.1)
91.7
(25.8)
65.9
65.9
–
65.9
2021
$m
16.5
6.3
(0.5)
1.0
23.3
22.6
0.7
23.3
2021
$m
(10.6)
45.8
(7.8)
27.4
49.8
(1.8)
75.4
(20.5)
54.9
53.0
1.9
54.9
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
19. DEFINED BENEFIT OBLIGATIONS (CONTINUED)
(b) (iv) Reconciliations
Reconciliation of present value of the defined benefit obligations:
Balance at the beginning of the year
Current service cost
Interest cost
Actuarial gains
Contributions by plan participants
Benefits paid
Settlements/curtailments
Business disposal
Exchange differences on foreign funds
Balance at the end of the year
Comprised of:
Continuing operations
Held for sale
Balance at the end of the year
Reconciliation of the fair value of the plan assets:
Balance at the beginning of the year
Interest income on plan asset
Return on plan assets greater than discount rate
Contributions by plan participants
Contributions by employer
Benefits paid
Exchange differences on foreign funds
Balance at the end of the year
Comprised of:
Continuing operations
Held for sale
Balance at the end of the year
2022
$m
810.6
14.1
21.6
(175.9)
0.8
(55.2)
0.8
(20.1)
(3.7)
593.0
593.0
–
593.0
2022
$m
603.4
17.1
(82.7)
0.8
27.0
(55.2)
2.4
512.8
512.8
–
512.8
2021
$m
882.7
16.5
20.3
(27.9)
0.9
(43.5)
1.0
–
13.5
863.5
810.6
52.9
863.5
2021
$m
569.2
14.0
49.8
0.9
30.7
(43.5)
10.3
631.4
603.4
28.0
631.4
The fair value of plan assets does not include any amounts relating to the Group’s own financial instruments, property occupied by,
or other assets used by, the Group.
Orica Annual Report 2022 | 183
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
19. DEFINED BENEFIT OBLIGATIONS (CONTINUED)
Comprising:
Quoted in active markets:
Equities
Debt securities
Property
Other quoted securities
Other:
Property
Insurance contracts
Cash and cash equivalents
2022
$m
2021
$m
172.4
204.4
3.2
69.4
34.2
4.4
24.8
512.8
227.5
242.2
9.4
92.3
30.1
4.9
25.0
631.4
The principal assumptions applied in determining the present value of defined benefit obligations and their bases were as follows:
– rates of increase in pensionable remuneration, pensions in payment and healthcare costs: historical experience and
management’s long‑term future expectations;
– discount rates: prevailing long‑term high quality bond yields, chosen to match the currency and duration of the relevant
obligation; and
– mortality rates: the local actuaries’ designated mortality rates for the individual plans concerned.
The weighted averages for those assumptions and related sensitivity information are presented below. Sensitivity information
indicates by how much the defined benefit obligations would increase or decrease if a given assumption were to increase or
decrease with no change in other assumptions.
Rate of increase in pensionable remuneration
Rate of increase in pension payments
Discount rate for pension plans
Weighted average of
assumptions used p.a.
Change in
assumptions
2022
3.32%
2.80%
5.07%
2021
2.99%
2.36%
2.74%
+1% p.a.
$m
–1% p.a.
$m
11.9
11.7
(60.9)
(10.5)
(10.6)
72.8
The expected age at death for persons aged 65 is 87.8 years for men and 90.2 years for women at 30 September 2022. A change
of one year in the expected age of death would result in an $12.3 million movement in the defined benefit obligation at
30 September 2022.
Critical accounting judgements and estimates
The defined benefit obligation costs are assessed in accordance with the advice of independent qualified actuaries but
require the exercise of judgement in relation to assumptions for future salary and superannuation increases, long‑term price
inflation and bond rates. While management believes the assumptions used are appropriate, a change in the assumptions
used may impact the earnings and equity of the Group.
184 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
SECTION H. OTHER
This section includes additional financial information that is required by Australian Accounting Standards and which
management considers to be relevant information for shareholders.
20. CONTINGENT LIABILITIES
Contingent liabilities relating to environmental uncertainties are disclosed in note 6 and those relating to taxation in note 11.
All others are disclosed below.
(a) Guarantees, indemnities and warranties
– The Group has entered into various long‑term supply contracts. For some contracts, minimum charges are payable regardless of
the level of operations, but the levels of operations are expected to remain above those that would trigger minimum payments.
– There are guarantees relating to certain leases of property, plant and equipment and other agreements arising in the ordinary
course of business.
– Contracts of sale covering companies and assets which were divested during the current and prior years include commercial
warranties and indemnities to the purchasers.
(b) Legal, claims and other
There are a number of legal claims and exposures which arise from the ordinary course of business. There is significant uncertainty
as to whether a future liability will arise in respect of these items. Management have concluded that any potential liabilities over
and above those already provided for in the financial statements would not have a material effect on the Group’s
financial performance.
Critical accounting judgements and estimates
Where management are of the view that potential liabilities that arise in the normal course of business have a low
probability of crystallising or it is not possible to quantify them reliably, they are not provided for and are disclosed
as contingent liabilities.
Legal proceedings
The outcome of currently pending and future legal, judicial, regulatory, administrative and other proceedings of a litigious
nature (“Proceedings”) cannot be predicted with certainty. Proceedings can raise complex legal issues and are subject to
many uncertainties including, but not limited to, the facts and circumstances of each particular case, issues regarding the
jurisdiction in which each Proceeding is brought and differences in applicable law. Thus, an adverse decision in Proceedings
could result in additional costs that are not covered, either wholly or partially, under insurance policies and that could
significantly impact the business and results of operations of the Group. Therefore, it is possible that the financial position,
results of operations or cash flows of the Group could be materially affected by an unfavourable outcome of those
Proceedings. Proceedings are evaluated on a case‑by‑case basis considering the available information, including that
from legal counsel, to assess potential outcomes.
Warranties and Indemnities
In the course of acquisitions and disposals of businesses and assets, Orica routinely negotiates warranties and indemnities
across a range of commercial issues and risks, including environmental risks associated with real property. Management
uses the information available and exercises judgement in the overall context of these transactions, in determining the scope
and extent of these warranties and indemnities. In assessing Orica’s financial position, management relies on warranties and
indemnities received, and considers potential exposures on warranties and indemnities provided. It is possible that the
financial position, results of operations and cash flows of the Group could be materially affected if circumstances arise
where warranties and indemnities received are not honoured, or for those provided, circumstances change adversely.
Orica Annual Report 2022 | 185
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
21. AUDITOR’S REMUNERATION
Total remuneration received, or due and receivable, by the auditors for:
Audit services
Auditor of the Company – KPMG Australia
– Audit and review of financial reports
Auditor of the Company – overseas KPMG firms
– Audit and review of financial reports (1)
Other services
Auditor of the Company – KPMG Australia
– advisory services in relation to integrated reporting and sustainability
– advisory services in relation to compliance reporting
– other services
Consolidated
2022
$000
2021
$000
4,220
3,967
1,776
5,996
28
29
87
144
6,140
1,915
5,882
351
306
118
775
6,657
(1) Fees paid or payable for overseas subsidiaries’ local statutory requirements.
From time to time, KPMG, the auditor of Orica, provides other services to the Group, which are subject to strict corporate
governance procedures adopted by the Company which encompass the selection of service providers and the setting of
their remuneration.
186 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
22. EVENTS SUBSEQUENT TO BALANCE DATE
Acquisition of business
On 3 October 2022, the Group acquired 100% of the shares of Axis Mining Technology Pty Ltd and DV8 Technology Ltd,
who design, develop and manufacture specialised geospatial tools and instruments for the mining industry. The purchase price
comprises $258 million paid on completion and potential earn out payments of up to $90 million based on the achievement of
cumulative EBITDA generated from 1 October 2022 to 31 December 2024, and contingent on certain key management remaining
employed by Orica during the earn‑out period. Any amounts relating to the earn out will be recognised in the profit and loss
as a Significant Item.
Based on the initial completion statement, Goodwill of $177 million will be recognised on this transaction. Accounting standards
permit a measurement period of up to one year to finalise acquisition accounting.
Consideration
Cash paid
Total consideration
Fair value of net assets of businesses acquired
Intangibles
Property, plant and equipment
Deferred tax liability
Others
Total fair value of net assets of businesses/controlled entities acquired
Goodwill on acquisition
AXIS Group
$m
258.0
258.0
100.0
2.4
(30.0)
8.6
81.0
177.0
Goodwill on the purchase is attributable mainly to the skills and technical talent of the acquired business’ work forces and the
synergies expected to be achieved from integrating this business. None of the goodwill recognised is expected to be deductible
for income tax purposes.
Acquisition‑related costs of $6.5 million that were not directly attributable to the issue of shares are included in the statement
of profit or loss and in operating cash flows in the statement of cash flows.
The financial effect of this transaction is not included in the financial statements for the year ended 30 September 2022 and will
be recognised in the 2023 financial statements.
Dividends
On 8 November 2022, the Directors declared a final dividend of 22.0 cents per ordinary share payable on 22 December 2022.
The financial effect of this dividend is not included in the financial statements for the year ended 30 September 2022 and will
be recognised in the FY2023 financial statements.
The Directors have not become aware of any other significant matter or circumstance that has arisen since 30 September 2022,
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 these financial statements.
Orica Annual Report 2022 | 187
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
23. LIST OF CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities held during
2021 and 2022 (non‑controlling interests shareholding disclosed if not 100% owned):
Place of
incorporation
if other than
Australia
Name of Entity
Company
Orica Limited
Controlled Entities
Alaska Pacific Powder Company(a)
USA
Altona Properties Pty Ltd(b) – 37.4%
Aminova International Limited
Ammonium Nitrate Development
and Production Limited – 9.3%
Anbao Insurance Pte Ltd
Arboleda S.A(c)
Hong Kong
Thailand
Singapore
Panama
Name of Entity
GroundProbe Technologies Pty Ltd(b)
GroundProbe (Nanjing) Mining
Technology Co. Ltd
Hallowell Manufacturing LLC(h)
Holding EXSA S.A.C. – 0.1%
Hopper Industrial Group Pty Ltd(b)
Indian Explosives Private Limited
Initiating Explosives Systems Pty Ltd
Place of
incorporation
if other than
Australia
China
USA
Peru
India
International Blasting Services Inc – 0.1%
Panama
JSC "Orica CIS"(g)
ASA Organizacion Industrial S.A. de C.V. Mexico
Minova Africa (Pty) Ltd(g) – 26%
Barbara Limited(g)
Beijing Ruichy Minova Synthetic
Material Company Limited
BST Manufacturing, Inc.
CJSC (ZAO) Carbo‑Zakk(g) – 6.25%
Controladora DNS de RL de CV
Dansel Business Corporation
UK
China
USA
Russia
Mexico
Panama
Dyno Nobel VH Company LLC – 49%
USA
Emirates Explosives LLC – 35%
Explosivos de Mexico S.A. de C.V.
Explosivos Mexicanos S.A. de C.V.
Exsa Chile SpA – 0.1%
Exsa Colombia S.A.S. – 0.1%
Exsa S.A. – 0.1%
Fortune Properties (Alrode) (Pty)
Limited(g)
United Arab
Emirates
Mexico
Mexico
Chile
Colombia
Peru
South Africa
GeoNitro Limited – 69.4%
Georgia
GP FinCo Pty Limited(b)
GP HoldCo Pty Limited
GroundProbe Australasia Pty Ltd(b)
GroundProbe Colombia S.A.S.
GroundProbe do Brasil
GroundProbe International Pty Ltd(b)
GroundProbe North America LLC
GroundProbe Peru S.A.C.
GroundProbe Pty Ltd(b)
GroundProbe South Africa
(Proprietary) Ltd
Colombia
Brazil
USA
Peru
South Africa
Minova Africa Holdings (Pty) Limited(g)
Minova Arnall Sp. z o.o.(g)
Minova Australia Pty Ltd(b)(g)
Minova Bohemia s.r.o.(g)
Minova CarboTech GmbH(g)
Minova Codiv S.L.(g)
Minova Ekochem S.A.(g)
Minova Holding GmbH(g)
Minova Holding Inc(g)
Minova International Limited(g)
Minova Kazakhstan Limited Liability
Partnership(g)
Minova Ksante Sp. z o.o.(g)
Minova MAI GmbH
Minova Mexico S.A. de C.V.
Minova MineTek Private Limited(g)
Minova Mining Services SA(g)
Minova Nordic AB(g)
Minova Runaya Private Limited(g) – 49%
Minova USA Inc(g)
Minova Weldgrip Limited
Mintun 1 Limited
Mintun 2 Limited
Mintun 3 Limited
Mintun 4 Limited
Russia
South Africa
South Africa
Poland
Czech Republic
Germany
Spain
Poland
Germany
USA
UK
Kazakhstan
Poland
Austria
Mexico
India
Chile
Sweden
India
USA
UK
UK
UK
UK
UK
Sweden
Norway
Mexico
Nitro Asia Company Inc. – 41.6%
Philippines
Nitro Consult AB(g)
Nitro Consult AS
GroundProbe South America SA
Chile
Nitroamonia de Mexico S.A de C.V.
188 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
23. LIST OF CONTROLLED ENTITIES (CONTINUED)
Name of Entity
NMR Services Australia Pty Ltd(b)(f)
Nobel Industrier AS
Nutnim 1 Limited
Nutnim 2 Limited
OOO Minova(g)
Place of
incorporation
if other than
Australia
Norway
UK
UK
Russia
Name of Entity
Orica Finance Trust(b)
Orica Finland OY
Orica Ghana Limited
Orica Grace US Holdings Inc.(h)
Orica Holdings Pty Ltd(b)
Orica‑CCM Energy Systems Sdn Bhd – 45% Malaysia
Orica Ibéria, S.A.
Place of
incorporation
if other than
Australia
Finland
Ghana
USA
Portugal
UK
UK
South Africa
Argentina
Belgium
UK
Bolivia
Brazil
Burkina Faso
New Caledonia
Canada
Canada
Panama
Costa Rica
Chile
Chile
Colombia
Ivory Coast
Denmark
Dominican
Republic
Democratic
Republic of
Congo
Estonia
Germany
Germany
Orica‑GM Holdings Limited – 49%
Orica Africa Holdings Limited
Orica Africa (Proprietary) Ltd
Orica Argentina S.A.I.C.
Orica Australia Pty Ltd
Orica Belgium S.A.
Orica Blast & Quarry Surveys Limited
– 25%
Orica Bolivia S.A.(i)
Orica Brasil Ltda
Orica Burkina Faso SARL
Orica Caledonie SAS(i)
Orica Canada Inc
Orica Canada Investments ULC(d)
Orica Caribe, S.A.
Orica Centroamerica S.A.
Orica Chile Distribution S.A.
Orica Chile S.A.
Orica Colombia S.A.S.
Orica Cote D'Ivoire
Orica Denmark A/S
Orica Dominicana S.A.
Orica DRC SARL
Orica Eesti OU – 35%
Orica Europe FT Pty Ltd(b)
Orica Europe GmbH & Co KG
Orica Europe Verwaltungs GmbH
Orica Explosives Holdings Pty Ltd
Orica Explosives Holdings No 2 Pty Ltd
Orica Explosives Holdings No 3 Pty Ltd(b)
Orica Explosives Research Pty Ltd(b)
Orica Explosives Technology Pty Ltd
Orica IC Assets Holdings Limited
Partnership(b)
Orica IC Assets Pty Ltd
Orica International IP Holdings Inc.(h)
USA
Orica International Pte Ltd
Singapore
Orica Investments (Indonesia)
Pty Limited(b)
Orica Investments (NZ) Limited
NZ
Orica Investments (Thailand)
Pty Limited(b)
Orica Investments Pty Ltd
Orica Japan Co. Ltd(e)
Japan
Orica Kazakhstan Joint Stock Company
Kazakhstan
Orica Logistics Canada Inc.(d)
Orica Logistics LLC
Orica Long Term Equity Incentive
Plan Trust(b)
Orica Malaysia Sdn Bhd
Orica Mali SARL
Orica Mauritania SARL
Orica Med Bulgaria AD – 40%
Orica Mining Services (Namibia)
(Proprietary) Limited
Canada
Russia
Malaysia
Republic of Mali
Mauritania
Bulgaria
Namibia
Orica Mining Services (Hong Kong) Ltd
Hong Kong
Orica Mining Services DRC SASU
Orica Mining Services Peru S.A.
Orica Mining Services Portugal S.A.
Democratic
Republic of
Congo
Peru
Portugal
Orica Mining Services (Thailand) Limited
Thailand
Orica Mongolia LLC – 51%
Orica Mountain West Inc.
Mongolia
USA
Orica Mozambique Limitada
Mozambique
Orica New Zealand Limited
Orica New Zealand Superfunds
Securities Limited
NZ
NZ
Orica Explosivos Industriales, S.A.
Spain
Orica Nitrates Philippines Inc – 4%
Philippines
Orica Finance Limited
Orica Annual Report 2022 | 189
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September
23. LIST OF CONTROLLED ENTITIES (CONTINUED)
Name of Entity
Orica Nitro Patlayici Maddeler Sanayi ve
Ticaret Anonim Sirketi – 49%
Orica Nitrogen LLC(h)
Orica Nominees Pty Ltd(b)
Orica Norway AS
Orica Panama S.A.
Orica Philippines Inc – 5.5%
Orica Portugal, S.G.P.S., S.A.
Orica Securities (UK) Limited
Orica Senegal SARL
Orica Share Plan Pty Limited(b)
Place of
incorporation
if other than
Australia
Turkey
USA
Norway
Panama
Philippines
Portugal
UK
Senegal
Orica Singapore Pte Ltd
Singapore
Orica Soluciones de Voladuras S.A.C.
Peru
Orica South Africa (Pty) Ltd – 26.5%
South Africa
Orica St. Petersburg LLC
Orica Sweden AB
Orica Sweden Holdings AB
Orica Tanzania Limited
Orica UK Limited
Orica US Finance LLC(i)
Orica US Holdings General Partnership
Russia
Sweden
Sweden
Tanzania
UK
USA
USA
Name of Entity
Orica USA Inc.
Orica U.S. Services Inc.
Place of
incorporation
if other than
Australia
USA
USA
Orica Venezuela C.A. – 49%
Venezuela
Orica Zambia Limited
OriCare Canada Inc.
Oricorp Comercial S.A. de C.V.
Oricorp Mexico S.A. de C.V.
Penlon Proprietary Limited(b)
Project Grace
Project Grace Holdings
Project Grace Incorporated(h)
Promec International Pty Ltd(b)(f)
PT GroundProbe Indonesia
PT Kalimantan Mining Services
PT Kaltim Nitrate Indonesia – 10%
PT Orica Mining Services
Zambia
Canada
Mexico
Mexico
UK
UK
USA
Indonesia
Indonesia
Indonesia
Indonesia
Resource Innovation Group Pty Ltd(b)(j)
RIG Technologies International Pty Ltd(b)(j)
Rui Jade International Limited
Hong Kong
Surtech Systems Pty Ltd(b)(f)
White Lightning Holdings, Inc
Philippines
(a) Merged in 2021.
(f) Acquired in 2021 as part of the Hopper Industrial Group acquisition;
(b) No separate statutory accounts are required to be prepared in Australia.
(c) Divested in 2021.
(d) Amalgamated in 2021.
(e) Liquidated in 2021.
refer to Note 14.
(g) Divested in 2022.
(h) Merged in 2022.
(i)
Liquidated in 2022.
(j) Acquired in 2022.
24. NEW ACCOUNTING POLICIES AND ACCOUNTING STANDARDS
Except as described below, the accounting policies applied by the Group in its financial statements are the same as those applied
by the Group in its consolidated financial report for the year ended 30 September 2021.
(i) New and amended accounting standards and interpretations adopted
AASB 2020‑8 Amendments – Interest Rate Benchmark Reform (Phase 2)
AASB 2020‑8 became effective for the Group from 1 October 2021. The standard provides relief from potential effects on the
valuation of financial instruments and hedge accounting requirements caused when an existing interest rate benchmark is replaced
with an alternative benchmark rate (the reform).
The adoption of this standard did not have a material impact on the Group. All relevant bank facility agreements will transition
to alternative reference rates prior to the cessation of LIBOR. A portion of Orica’s issued USD fixed rate debt is hedged using USD
fixed to USD LIBOR interest rate swaps. None of these swaps reference US LIBOR post the cessation date of June 2023.
(ii) New and amended accounting standards and interpretations issued but not yet effective
There are no new standards or interpretations that are not yet effective and that would be expected to have a material impact
on the Group in the current or future reporting periods and on foreseeable future transactions.
190 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
DIRECTORS’
DECLARATION
We, Malcolm William Broomhead and Sanjeev Gandhi, being Directors of Orica Limited, do hereby state in accordance with
a resolution of the Directors that in the opinion of the Directors,
(a) the consolidated financial statements and notes, set out on pages 125 to 190, and the Remuneration Report in the
Directors’ Report, set out on pages 99 to 123, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Group as at 30 September 2022 and of its performance
for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) 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 17 will be able to meet
any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the
Company and those controlled entities pursuant to ASIC Corporations (Wholly‑owned Companies) Instrument 2016/785.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director
and Chief Financial Officer for the financial year ended 30 September 2022.
The Directors draw attention to “About this report” on page 132 to the financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
M W Broomhead
Chairman
Dated at Melbourne 8 November 2022
S Gandhi
Managing Director and Chief Executive Officer
Orica Annual Report 2022 | 191
INDEPENDENT
AUDITOR’S REPORT
Independent Auditor’s Report
To the shareholders of Orica Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Orica Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
•
•
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 ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Balance Sheet as at 30 September 2022
•
Income Statement, Statement of Comprehensive
Income, Statement of Changes in Equity and
Statement of Cash Flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors’ Declaration.
The Group consists of Orica Limited (the Company) and
the entities it controlled at the year end or from time to
time during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 Corporations Act 2001 and the ethical
requirements of the Accounting Professional and 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 fulfilled our other ethical responsibilities in
accordance with these requirements.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo
are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a
scheme approved under Professional Standards Legislation.
192 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
For the year ended 30 September
Key Audit Matters
The Key Audit Matters we identified are:
• Recoverable amount of property, plant
and equipment and intangible assets
• Environmental and decommissioning
provisions and contingent liability
disclosures
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of 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.
Recoverable amount of property, plant and equipment ($3,082.3 million) and intangible assets
($1,142.9 million)
Refer to Notes 7, 8 and 9 of the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter was the Group’s testing of
property, plant and equipment and intangible
assets for impairment given the size of the
balances (being 50% of total assets), continued
global supply chain disruptions and uncertainty
around inflation expectations and forecast
commodity prices.
Certain conditions impacting the Group,
particularly with respect to the EMEA Cash
Generating Unit (CGU), increased the
judgement applied by us when evaluating the
evidence available.
We focused on the significant forward-looking
assumptions the Group applied in the value in
use model, including:
•
Forecast operating cash flows: the ongoing
economic uncertainty caused by
geopolitical issues, most notably the
Russia-Ukraine conflict, continued global
supply chain disruptions and uncertainty
around inflation expectations and forecast
commodity prices increases the possibility
of property, plant and equipment and
intangible assets being impaired and the
risk of inaccurate forecasts or a significantly
wider range of possible outcomes for us to
consider. We focused on both the forecast
growth for the Group and the impact of the
Group’s future business plans when
assessing the feasibility of the Group’s
forecast cashflows.
•
Terminal growth rates: in addition to the
uncertainties described above, the Group’s
model is highly sensitive to changes in
Our procedures included:
• We considered the appropriateness of the
value in use method applied by the Group to
perform the impairment test against the
requirements of the accounting standards.
• We assessed key controls in the Group’s
impairment process, such as Board approval of
budgets and review and approval of the
impairment assessment, including cash flow
forecasts, by examining the review and
approval of information by the Board.
• We assessed the integrity of the value in use
model used, including the accuracy of the
underlying calculation formulas.
• We compared the forecast cash flows
contained in the value in use model to the
future business plans approved by the Board.
We checked the Group’s forecast cash flows
for the EMEA CGU for consistency with our
understanding of the Group’s decision to exit
the Russian business.
• We compared the Group’s cumulative value in
use to the Group’s market capitalisation to
inform our evaluation of the current forecasts
incorporated in the model.
• We assessed the accuracy of previous Group
cash flow forecasts for the respective CGUs to
inform our evaluation of current forecasts
incorporated in the model.
• We assessed the scope, competence and
objectivity of the Group’s external expert
engaged to assist with the determination of
Orica Annual Report 2022 | 193
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
For the year ended 30 September
terminal growth rates. This drives
additional audit effort specific to their
feasibility and consistency of application
having regard to the Group’s strategy.
• Discount rates: these are complicated in
nature and vary according to the conditions
and environment the specific CGUs are
subject to from time to time, and the
approach to incorporating risks into the
cash flows or discount rates. Orica engaged
an external expert to assist with the
determination of the discount rate for the
respective CGUs.
EMEA CGU
In addition to the above, as set out in Note 9,
the Group recorded impairment charges in
relation to its Russian and Turkey businesses
and the goodwill in the EMEA region. This was
as a result of the impact of the Russia-Ukraine
conflict and the decision to exit the Russian
business, and the financial performance of the
Turkish business. This further increased our
audit effort in this key audit area.
We involved valuation specialists to supplement
our senior audit team members in assessing
this key audit matter.
the discount rate for the respective CGUs.
• Working with our valuation specialists, we
independently developed a discount rate range
for the key countries in each CGU, using
publicly available market data for comparable
entities, adjusted for risk factors specific to the
Group and the industry it operates in. We
compared the discount rates applied by the
Group to our developed range.
• Working with our valuation specialists, we
assessed the forecast cash flows by
comparing the implicit earnings and asset
multiples from the model to corresponding
multiples of comparable entities.
• We considered the sensitivity of the model by
varying key assumptions such as forecast
operating cash flows, terminal growth rates
and discount rates, within a reasonably
possible range, to identify those assumptions
at higher risk of bias or inconsistency in
application and to focus our further
procedures.
• Using our knowledge of the Group’s
operations, their past performance and our
industry experience, we challenged the
Group’s forecast cash flows, terminal growth
rate assumptions and the feasibility of future
plans. We also compared forecast growth
rates to authoritative published studies,
including those related to impact of global
supply chain disruptions, inflation expectations
and forecast commodity prices and considered
differences specific to the Group’s operations.
• We recalculated the impairment charge
relating to the Russian and Turkish businesses
and also the EMEA CGU against the recorded
amounts disclosed.
• We assessed the disclosures in the Financial
Report using our understanding of the matter
obtained from our testing and against the
requirements of the accounting standards.
194 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
For the year ended 30 September
Environmental and decommissioning provisions ($306.6 million) and contingent liability
disclosures
Refer to Note 6 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The estimation of environmental remediation
and decommissioning provisions and
contingent liability disclosures is considered a
key audit matter due to the:
•
•
Inherent complexity associated with the
Group’s estimation of remediation costs,
particularly for potential contamination of
ground beneath established structures and
long term legacy matters impacting the
Group, and in gathering persuasive audit
evidence thereon.
Internal restructuring activities undertaken
by the Group, including the scheduled
closure of certain manufacturing sites
which give rise to heightened audit focus
on the nature, timing and amount of
decommissioning costs expected to be
incurred by the Group.
The complexity in estimating the Group’s
environmental remediation and
decommissioning provisions and reporting of
contingent liability disclosures is influenced by:
•
The inherent challenges experienced by the
Group in precisely determining the size and
location of potential contamination beneath
established structures and associated costs
to be included in the provisions and/or
reporting of a contingent liability in
accordance with accounting standard
requirements.
• Current and probable environmental and
regulatory requirements and the impact on
completeness of remediation activities
within the provision estimate, including the
activities which will be acceptable to
regulators.
•
The expected environmental remediation
strategy of the Group and availability of any
known techniques to remediate source
contamination, in particular for treatment of
Dense Non-Aqueous Phase Liquid source
areas at Botany, New South Wales.
• Historical experience, and its use as a
Our procedures included:
• We assessed key controls relating to the
completeness, size and location of the Group’s
identification of areas which contain
contamination and the related recognition and
measurement of provisions, including the
Group’s review and authorisation of cost
estimates.
• We read regulatory requirements and
correspondence with regulatory authorities to
understand their views about acceptable
remediation techniques and compared this with
the assumptions made in the Group’s provision.
• We assessed the scope, competence and
objectivity of the Group’s internal and external
experts engaged to assist in the determination
of strategies to remediate contamination and the
costing of remediation activities.
• We tested the accuracy of historical remediation
provisions by comparing to actual expenditure.
We used this knowledge to challenge the
Group’s current cost estimates and to inform our
further procedures.
• We obtained a sample of the Group’s quotations
for remediation activities, as well as other
internal and external underlying documentation
for the Group’s determination of required future
activities, their timing and associated cost
estimates. We compared them to the nature,
timing and quantum of cost contained in the
provision balance. We compared the basis for
recognition of the provision with the criteria in
the accounting standards.
• We made enquiries of various personnel
regarding the Group’s strategy for remediating
certain source contamination and compared
these for consistency with our understanding of
their strategy and its impact to the provision.
• We challenged the Group where provisions were
unable to be made for source contamination, in
particular for treatment of Dense Non-Aqueous
Phase Liquid source areas at Botany, New South
Wales, in relation to the existence of information
Orica Annual Report 2022 | 195
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
For the year ended 30 September
reasonable predictor when evaluating
forecast costs.
•
The expected timing of the expenditure
given the long term nature of these
exposures to the Group.
The Group uses third party and internal experts
to assist in the determination of strategies to
remediate contamination and the costing of
remediation activities.
which would enable a reliable estimate of the
provision to be made. We compared this to our
understanding of the matter and the criteria in
the accounting standards for recording a
provision or contingent liability.
• We tested the mathematical accuracy of the
Group’s provision models.
• We assessed the Group’s disclosures using our
knowledge of the business and the
requirements of the accounting standards. In
particular, we focused on the disclosure of
uncertainties associated with the provision or
exposure.
Other Information
Other Information is financial and non-financial information in Orica Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and the Annual Integrated Report Contents Elements Index and our related
assurance opinions.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company’s ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
196 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
For the year ended 30 September
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
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 Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Orica Limited for the year ended 30 September
2022 complies with Section 300A of the
Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included
in the Directors’ Report for the year ended 30
September 2022.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
Penny Stragalinos
Penny Stragalinos
Partner
Melbourne
Chris Sargent
Partner
Melbourne
8 November 2022
8 November 2022
Orica Annual Report 2022 | 197
OTHER
INFORMATION
198 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
FIVE YEAR FINANCIAL
STATISTICS
For the year ended 30 September
Orica consolidated ($m)(1)
2022
2021
2020(2)
2019(2)
2018
Profit & Loss
Sales
Earnings before depreciation,
amortisation, net borrowing costs
and tax
Depreciation and amortisation
(excluding goodwill)
Earnings before net borrowing costs
and tax (EBIT) before individually
significant items
Net borrowing costs
Individually significant items before tax
Taxation expense
Non‑controlling interests
Profit/(loss) after tax and individually
significant items
Individually significant items after tax
attributable to members of Orica Limited
Profit after tax before individually
significant items net of tax
Dividends/distributions
Financial Position
Current assets
Property, plant and equipment
Equity accounted investees
Intangibles
Other non‑current assets
Total assets
Current borrowings and payables
Current provisions and other liabilities
Non‑current borrowings and payables
Non‑current provisions and
other liabilities
Total liabilities
Net assets
Equity attributable to ordinary
shareholders of Orica Limited
Equity attributable to
non‑controlling interests
Total shareholders’ equity
7,327.5
5,682.2
5,611.3
5,878.0
5,373.8
964.3
796.4
945.8
941.1
885.0
(385.8)
(369.8)
(332.1)
(276.4)
(266.9)
578.5
(100.3)
(274.0)
(155.2)
11.1
60.1
426.6
(105.6)
(453.9)
(31.0)
(9.9)
(173.8)
613.7
(159.0)
(293.1)
(70.1)
(9.2)
664.7
(109.7)
(195.9)
(108.6)
(5.4)
82.3
245.1
618.1
(121.3)
(375.3)
(156.0)
(13.6)
(48.1)
(256.9)
(382.2)
(216.8)
(126.8)
(372.3)
317.0
120.3
208.4
97.5
299.1
192.6
371.9
203.0
324.2
181.2
3,309.5
3,082.3
323.8
1,142.9
509.3
8,367.8
2,190.6
289.6
1,724.9
433.5
4,638.6
3,729.2
2,391.6
3,040.2
290.4
1,150.4
493.1
7,365.7
1,225.4
443.4
2,270.6
633.9
4,573.3
2,792.4
2,664.0
3,267.0
301.6
1,440.3
530.6
8,203.5
1,848.4
321.0
2,368.9
724.8
5,263.1
2,940.4
1,835.8
2,885.2
301.3
1,483.0
635.1
7,140.4
1,336.7
297.9
1,979.4
659.6
4,273.6
2,866.8
1,960.3
2,866.2
213.3
1,697.9
426.7
7,164.4
1,357.2
254.2
2,010.7
574.3
4,196.4
2,968.0
3,685.8
2,726.3
2,892.6
2,809.6
2,903.2
43.4
3,729.2
66.1
2,792.4
47.8
2,940.4
57.2
2,866.8
64.8
2,968.0
(1) Results include continuing and discontinued operations for the consolidated Group.
(2) The results for 2020 and the closing balance sheet for 2019 have been restated in 2021 Annual Report for the impact of IFRIC Interpretation
Configuration or Customisation Costs in a Cloud Computing Arrangement. Earlier periods have not been restated.
Orica Annual Report 2022 | 199
FIVE YEAR FINANCIAL STATISTICS (CONTINUED)
For the year ended 30 September
Orica consolidated(1)
Number of ordinary shares on issue
at year end (millions)
Weighted average number of ordinary
shares on issue (millions)
Basic earnings per ordinary share:
– before individually significant items
(cents)
– including individually significant
items (cents)
Dividends per ordinary share (cents)
Dividend franking (percent)
Dividend yield – based on year end
share price (percent)
Closing share price range:
– High
– Low
– Year end
Stockmarket capitalisation at year
end ($m)
Net tangible assets per share ($)
Ratios
Profit margin – earnings before net
borrowing costs and tax/sales (percent)
Net debt (excluding lease liabilities)
(millions)
Gearing (net debt/net debt plus equity
excluding lease liabilities) (percent)
Interest cover (EBIT/net borrowing
costs excluding lease interest) (times)
Net capital expenditure on plant and
equipment (Cash Flow) ($m)
Net cash flow from sale of businesses/
controlled/(acquisition) entities ($m)
Return on average shareholders’ funds:
– before individually significant
items (percent)
– including individually significant
items (percent)
2022
452.8
414.8
76.4
14.5
35.0
–
2.6
$17.22
$13.08
$13.22
5,986.1
5.62
2021
407.5
406.8
51.2
(42.7)
24.0
–
1.7
$17.61
$11.17
$13.79
5,619.6
3.82
2020(2)
2019(2)
405.9
395.6
75.6
20.8
33.0
–
2.1
$24.27
$13.25
$15.43
6,262.7
3.58
380.6
380.0
97.9
64.5
55.0
9.1
2.4
$22.97
$16.31
$22.54
8,578.2
3.49
2018
379.2
378.2
85.7
(12.7)
51.5
–
3.0
$21.37
$16.34
$17.03
6,548.0
3.18
7.9
7.5
10.9
11.3
11.5
912.2
1,479.0
1,820.5
1,620.6
1,648.3
19.7
6.5
34.6
4.6
38.2
4.2
36.1
6.1
35.7
5.1
(308.7)
(153.0)
(302.9)
(226.0)
(153.0)
109.7
(25.1)
(153.9)
(14.0)
(252.8)
9.9
1.9
7.4
(6.2)
10.5
2.9
13.0
8.6
11.1
(1.6)
(1) Results include continuing and discontinued operations for the consolidated Group.
(2) The results for 2020 and the closing balance sheet for 2019 have been restated in 2021 Annual Report for the impact of IFRIC Interpretation
Configuration or Customisation Costs in a Cloud Computing Arrangement. Earlier periods have not been restated.
200 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
SHAREHOLDERS’
STATISTICS
As at 19 October 2022
DISTRIBUTION OF ORDINARY SHAREHOLDERS 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 holders
Number of shares
21,925
11,269
1,311
575
37
62.43
32.09
3.73
1.64
0.11
100.00
8,598,196
24,234,173
8,998,687
11,076,126
399,900,703
1.9
5.35
1.99
2.45
88.32
100.00
Included in the above total are 917 shareholders holding less than a marketable parcel of 36 shares.
The holdings of the 20 largest holders of fully paid ordinary shares represent 88.31% 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
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
BNP PARIBAS NOMS PTY LTD
MUTUAL TRUST PTY LTD
BROADGATE INVESTMENTS PTY LTD
BNP PARIBAS NOMS (NZ) LTD
CARLTON HOTEL LIMITED
SANDHURST TRUSTEES LTD
AKAT INVESTMENTS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
SECURITY PORTMAN PTY LTD
MR KWOK CHING CHOW & MS PIK YUN PEGGY CHAN
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED‑GSCO ECA
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
Total
Shares
% of total
159,809,890
138,876,854
50,370,687
17,145,591
12,606,784
4,363,365
3,333,432
2,555,364
1,734,620
751,643
711,574
702,503
541,764
437,700
340,000
3,688,636
312,750
299,247
291,608
288,424
263,414
399,425,850
35.29
30.67
11.12
3.79
2.78
0.96
0.74
0.56
0.38
0.17
0.16
0.16
0.12
0.10
0.08
0.91
0.07
0.07
0.06
0.06
0.06
88.31
REGISTER OF SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders in the company, and the number of fully paid ordinary shares in which each has an interest,
as disclosed in substantial shareholder notices to the Company on the respective dates, are as follows:
30 September 2022
15 August 2022
31 July 2020
VOTING RIGHTS
Harris Associates L.P.
AustralianSuper Pty Ltd
BlackRock Group
23,993,993
69,485,563
25,052,218
5.30%
15.44%
6.17%
Voting rights as governed by the Constitution of the Company provide that each ordinary shareholder present in person or by proxy
at a meeting shall have:
(a) on a show of hands, one vote only; and
(b) on a poll, one vote for every fully paid ordinary share held.
Orica Annual Report 2022 | 201
DEFINITIONS AND
GLOSSARY OF TERMS
We endeavour to use simple, clear language in our reporting suite. However,
the nature of our operations means we do use a number of technical terms and
abbreviations. The main ones are described below, together with an explanation
of their meanings. The descriptions are not formal legal definitions.
1.5°C world
2D
3D
4D™
ACCU
Ambition
AN
Assets
ASIC
ASX
According to the Intergovernmental Panel on Climate Change, knowledge‑base and assessment approaches
used to understand the impacts of 1.5°C global warming above pre‑industrial levels and related global
greenhouse gas emission pathways, in the context of strengthening the global response to the threat of
climate change, sustainable development and efforts to eradicate poverty.
Two dimensional.
Three dimensional.
Bulk explosives technology.
Australian Carbon Credit Unit, the name of carbon credits generated in the Australian carbon market.
See ‘carbon credits’ below for more information.
Refers to a goal we are aiming to achieve, have an indicative pathway but intend to better understand the
delivery prior to committing to make it a target.
Ammonium nitrate (AN) is an industrial chemical commonly used in fertilisers and as a commercial
explosive for quarrying and mining. AN is typically produced as small porous pellets, or “prills”. It is one of
the world’s most widely used fertilisers and also the main component in many types of commercial explosives.
In explosives, its use is critical as an oxidising agent in the explosion reaction. Orica manufactures AN at our
four continuous manufacturing plants and where required sources it from third parties across our operating
regions, for use in our blasting and drilling services.
Assets are a set of one or more geographically proximate operations (including open‑cut mines, underground
mines, and onshore and offshore oil and gas production and production facilities). Assets include our operated
and non‑operated assets.
https://asic.gov.au/
Australian Securities and Investments Commission.
https://www.asx.com.au/
Australian Securities Exchange.
Avatel™
Avatel™ is a semi‑automated explosives delivery system.
Business as usual (BAU)
The projected impact under a baseline scenario in which no additional mitigation policies or measures
are implemented beyond those that are already in force, legislated or planned to be adopted.
BIP (Botany Industrial
Park)
BlastIQ™
Bulkmaster™ 7
Carbon
Carbon credit
CCUS
CDP
CRC ORE
CTC (Carbon
tetrachloride)
Cyclo™
The BIP is situated in Sydney, New South Wales (NSW), Australia. It is occupied by three companies,
Orica, Qenos and Huntsman, that have manufacturing facilities or operations onsite.
Digital blast optimisation suite of products.
Smart explosives delivery system.
At times used instead of greenhouse gases.
A carbon credit represents GHG abatement activities which have occurred from carbon credit projects –
that is specific projects with the aim to avoid or sequester GHG emissions from the atmosphere. Carbon credit
projects create eligible carbon credit units which have been measured, verified and assigned a certificate in
a registry for trading in carbon markets. One carbon credit unit represents one tonne of carbon dioxide
equivalent (tCO2‑e) stored or avoided by a carbon credit project. Carbon credits are commonly referred to
as ‘carbon offsets’ in markets.
Carbon capture, utilisation, and storage.
CDP is a not‑for‑profit charity that runs the global disclosure system for investors, companies, cities, states and
regions to manage their environmental impacts. Orica responds to the annual Climate Change Questionnaire.
Cooperative Research Centre for Optimising Resource Extraction.
Also known as tetrachloromethane. A chlorinated hydrocarbon manufactured at the former solvents plant
at the BIP until closure in 1991.
Cyclo™ is a containerised, automated used‑oil recycling service that enables the manufacture of quality ANE
directly at the customer’s site using oil recycled from mine equipment.
Design for outcome
An automated optimisation solution that sets a new benchmark for generating blast designs.
Environmental,
social, and corporate
governance (ESG)
ESG is a set of non‑financial standards and frameworks for a company’s operations that lead to corporate
responsibility and sustainability outcomes. Investors are growingly assessing their portfolios based on ESG
criteria, to identify material risks and/or growth opportunities.
202 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
DEFINITIONS AND GLOSSARY OF TERMS (CONTINUED)
EPA (Environmental
Protection Agency)
The EPA is a government regulator working to protect the environment through regulation of pollution,
waste, land and water contamination.
Financial year
FRAGTrack™
Future-facing
commodities
GHG (Greenhouse gases)
GHG Protocol
For Orica this is an accounting year ending on 30 September. Also known as a fiscal year.
FRAGTrack™ is a state‑of‑the‑art fragmentation measurement tool designed to provide rapid insights into
the outcome of the blasting process.
Includes copper, nickel, lithium, cobalt and other metals and minerals. As much of the world continues to
move towards an energy transition, demand for future‑facing commodities will grow. These commodities are
crucial to the manufacture of low emissions technologies that enable a transition such as batteries for electric
vehicles (e.g., nickel, lithium, cobalt), solar panels (e.g., copper, silicon) and wind turbines (e.g. rare earth
materials, copper) for renewable energy. To achieve the goals of the Paris Agreement, production and supply
of these commodities will need to scale and increase at pace.
Gases which absorb and re‑emit infrared radiation, thereby trapping heat in Earth’s atmosphere.
Includes carbon dioxide (CO2), water vapor, methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3). The GHG applicable to
Orica’s operations are CO2, CH4, and N2O.
The GHG Protocol supplies the world’s most widely used greenhouse gas accounting standards, which
inform multiple jurisdictional regulatory emissions accounting and reporting frameworks, voluntary corporate
reporting standards and product lifecycle greenhouse gas accounting. Orica uses the Corporate Accounting
and Reporting Standard as well as the Corporate Value Chain (Scope 3) Standard.
GJ
Gigajoule, a unit of measurement of energy consumption.
Grade or Quality
Any physical or chemical measurement of the characteristics of the material of interest in samples or product.
Green hydrogen
Green ammonia
Hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity
Green hydrogen and nitrogen are reacted together at high temperatures and pressures to produce ammonia
(Haber‑Bosch process)
GRI (Global Reporting
Initiative)
GRI is an international independent standards organisation that provides reporting frameworks for businesses
and governments to understand and communicate their impact on critical sustainability issues.
Gross GHG emissions
Reported GHG emissions in a reporting period (Orica financial year) prior to applying claimable emissions
reductions or surrenders from carbon credit units.
Groundwater
Groundwater is the general term for water in the ground. Underground water bodies are known as aquifers.
The Botany Sands Aquifer flows slowly from Centennial Park to Botany Bay.
GWP (global warming
potential)
Factors describing the radiative forcing impact (degree of harm to the atmosphere) of one unit of a given
greenhouse gases relative to one unit of CO2. The factors convert values into tCO2‑e, to allow comparison
between greenhouse gases inventories.
H2 (Hydrogen)
Manufactured at Orica Botany and used for production of hydrochloric acid (HCl).
HCB (Hexachlorobenzene)
A by‑product from manufacture of CTC and PCE at the former Solvents Plant. This waste is stored on BIP
in licensed storage depots whilst a destruction solution is identified.
Integrated Extraction
Simulator
A powerful whole‑of‑mine optimisation simulator for rapidly assessing both narrow and broad‑based
scenarios across the value chain.
IPCC (Intergovernmental
Panel on Climate Change)
The IPCC is an intergovernmental body of the United Nations responsible for advancing knowledge on
human‑induced climate change. It provides policymakers with regular scientific assessments on climate
change, its implications and potential future risks, as well as putting forward adaptation and mitigation
options. Through its assessments, the IPCC determines the state of knowledge on climate change.
kL
kt
ktCO2-e
KPI
M2
Material
MMU™
Mt
NAP
Kilolitres.
Kilotonnes.
Kilotonnes of carbon dioxide equivalent.
Key performance indicator.
Square meter.
In the context of the International Integrated Reporting Framework, a matter is material if it could substantively
affect the organization’s ability to create value in the short, medium and long term. The process of determining
materiality is entity specific and based on industry and other factors, as well as multi‑stakeholder perspectives.
Mobile Manufacturing Units.
Million tonnes.
Nitric Acid Plant.
Net GHG emissions
Reported GHG emissions in a reporting period (Orica financial year) after applying claimable emissions
reductions or surrenders from carbon credit units. Includes generated carbon credits which have not been
surrendered but sold on to a third party or banked in a carbon credit registry.
Orica Annual Report 2022 | 203
DEFINITIONS AND GLOSSARY OF TERMS (CONTINUED)
Net zero
OREPro™ 3D
ORETrack™
Paris Agreement
Paris Agreement goals
Net zero refers to achieving an overall balance between greenhouse gas (as defined in this Glossary) emissions
produced and greenhouse gas emissions taken out of the atmosphere.
OREPro™ 3D is a blast movement modelling and grade control optimiser.
ORETrack™ traces rock material from a blast right through to the plant.
Convened by the United Nations Framework Convention on Climate Change (UNFCCC), the Paris Agreement
is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris,
on 12 December 2015 and entered into force on 4 November 2016.
The central objective of the Paris Agreement is to avoid dangerous climate change by limiting global warming
to well below 2°C and pursuing efforts to limit it to 1.5°C above pre‑industrial levels. Additionally, the
agreement aims to increase the ability of countries to deal with the impacts of climate change, and at making
finance flows consistent with a low GHG emissions and climate‑resilient pathway.
Paris aligned
Aligned to the Paris Agreement goals.
PCE (Perchloroethylene)
Also known as tetrachloroethene – dry cleaning fluid. A chlorinated hydrocarbon manufactured at the former
Solvents Plant at the BIP until closure in 1991.
Power Purchase
Agreement (PPA)
RGR-Velox
RHINO™
Scope 1 greenhouse
gas emissions
Scope 2 greenhouse
gas emissions
Scope 3 greenhouse
gas emissions
SHOTPlus™
Social investment
STELR project
Supply chain
Surrenders
Target
tCO2-e
Value chain
WebGen™ 200
A type of contract that allows a consumer, typically large industrial or commercial entities, to form an
agreement with a specific energy generating unit. The contract itself specifies the commercial terms including
delivery, price, payment, etc. In many markets, these contracts secure a long‑term stream of revenue for an
energy project. In order for the consumer to say they are buying the electricity of the specific generator,
attributes shall be contractually transferred to the consumer with the electricity.
Doppler radar for reactive geohazard monitoring.
RHINO™ is an autonomous drillstring‑mounted geophysical sensor that measures unconfined compressive
strength while drilling.
Scope 1 greenhouse gas emissions are direct emissions from operations that are owned or controlled by
the reporting company. For Orica, these are primarily emissions from industrial manufacturing processes
and natural gas feedstocks.
Scope 2 greenhouse gas emissions are indirect emissions from the generation of purchased or acquired
electricity, steam, heat or cooling that is consumed by operations that are owned or controlled by the
reporting company.
Scope 3 greenhouse gas emissions are all other indirect emissions (not included in Scope 2) that occur in
the value chain. For Orica, these are primarily emissions resulting from purchased goods and services which
account for around two‑thirds of our global Scope 3 GHG emissions.
SHOTPlus™ range of blast design and modelling software enable users to design, visualise and analyse
blast initiation sequences across surface and underground mining, quarry and construction applications.
Social investment is our voluntary contribution towards projects or donations with the primary purpose of
contributing to the resilience of the communities where we operate and the environment, aligned with our
broader business priorities. Orica’s target is to contribute $15 million dollars to host communities by FY2025.
www.atse.org.au
Science and Technology Education Leveraging Relevance project – a longstanding Orica community project
delivered by the Academy of Technological Sciences and Engineering.
A sub‑set of our wider value chain, Orica operates a complex global supply chain that connects our privileged
asset footprint and preferred supply partnerships with our end customers globally. Regional supply chains are
connected through our global supply chain team.
The surrendering of carbon credit units in a registry (and/or delivery of generated units to government
through regulatory schemes) to make claimable emissions reductions in a GHG emissions inventory,
leading to a reported net GHG emissions figure.
Refers to a goal we are aiming to achieve where we have developed a delivery pathway.
Tonne of carbon dioxide equivalent.
A value chain describes the full chain of a business’s activities in a specific industry in order to create
and deliver a product or service to an end‑customer. A supply chain sits within the wider value chain.
Our value chain includes our suppliers (and potentially their suppliers), our operations, our distribution
channels, and our customers, who are the end users of our products.
WebGen™ 200 harnesses digital technology to allow advanced features including digital inventory management,
delay adjustments before blasting, an improved user interface and increased quality assurance.
Orica developed product.
204 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
INTEGRATED REPORTING
CONTENT ELEMENTS INDEX
KPMG has been engaged to provide limited assurance as to whether the Content Elements of the 2021 International
Framework have been addressed in this report as described in this Index.
The Content Elements are stated in the form of questions rather than as checklists of specific disclosures. We have compiled the
Index to reference those sections which best capture our address of those questions.
Content Element
Section reference
Page
Content Element
Section reference
Page
A. Organisational overview and external environment
E. Strategy and resource allocation (continued)
What does Orica do
and what are the
circumstances under
which it operates?
Our FY2022 reporting suite
Letter from our Chairman
and Managing Director
Our global footprint
How we create value
Our operating context
Our strategy
Risk
Our business model
Our stakeholders
External environment
Reporting what matters
Our operating context
Material risks and opportunities
B. Governance
How does the
organisation’s
governance structure
support
its ability to create
value in the short,
medium and
long term?
C. Business Model
An integrated report
should answer the
question: What is the
organisation’s business
model including key;
inputs, business
activities, outputs
and outcomes?
Letter from our Chairman
and Managing Director
Chief Financial Officer’s review
Risk – Our approach to risk management
Key performance indicators
Governance including skills and experience
Board FY2022 focus areas
Remuneration Report
Letter from our Chairman
and Managing Director
Chief Financial Officer’s review
How we create value
Our business model
Key performance indicators
Our Performance:
– Safe and responsible business
– Financial performance
– Technology and innovation
– People and capabilities
– Climate and the natural environment
– Community and relationships
D. Risks and opportunities
Reporting what matters
Our operating context
Material risks and opportunities
Our stakeholders
An integrated report
should answer the
question: What are
the specific risks and
opportunities that affect
the organisation’s ability
to create value over the
short, medium and long
term, and how is the
organisation dealing
with them?
E. Strategy and resource allocation
An integrated report
should answer the
question: Where does
the organisation want
to go and how does it
intend to get there?
Letter from our Chairman and
Managing Director (including Outlook)
Chief Financial Officer’s review
Our strategy
Progress against our strategy
02‑03
08‑11
18‑19
20‑21
22‑23
24‑25
28‑33
34
38‑39
14
22‑23
32‑33
08‑11
12‑13
28‑29
36‑37
89‑94
93‑94
99‑123
08‑11
12‑13
20‑21
34
36‑37
41‑47
48‑57
58‑63
64‑67
68‑80
81‑87
14
22‑23
32‑33
38‑39
08‑11
12‑13
24‑25
26‑27
An integrated report
should answer the
question: Where does
the organisation want
to go and how does it
intend to get there?
(continued)
F. Performance
An integrated report
should answer the
question: To what
extent has the
organisation achieved
its strategic objectives
for the period and
what are its outcomes
in terms of effects on
the capitals?
G. Outlook
An integrated report
should answer the
question: What
challenges and
uncertainties is the
organisation likely to
encounter in pursuing
its strategy, and what
are the potential
implications for its
business model and
future performance?
Our Performance
(including FY2023 priorities)
– Safe and responsible business
– Financial performance
– Technology and innovation
– People and capabilities
– Climate and the natural environment
– Community and relationships
FY2022 Year in review
Letter from our Chairman
and Managing Director
Chief Financial Officer’s review
Progress against our strategy
Key performance indicators
Our stakeholders
Our Performance:
– Safe and responsible business
– Financial performance
– Technology and innovation
– People and capabilities
– Climate and the natural environment
– Community and relationships
Letter from our Chairman
and Managing Director
Chief Financial Officer’s review
How we create value
Our operating context
Material risks and opportunities
Our Performance:
– Safe and responsible business
– Financial (including outlook discussion)
– Technology and innovation
– People and capabilities
– Climate and the natural environment
– Community and relationships
Our FY2022 reporting suite
Reporting what matters
How we create value
Our operating context
Material risks and opportunities
H. Basis of preparation and presentation
An integrated report
should answer the
question: How does
an organisation
determine what
matters to include in
the integrated report
and how are such
matters quantified
or evaluated?
Summary of materiality
determination process
Reporting boundary
Reporting what matters
Summary of
significant frameworks
and methods
Our FY2022 reporting suite
Notes to the Financial Statements
– About this report
Our FY2022 reporting suite
Risk – Our approach to risk management
Key performance indicators
Notes to the Financial Statements
– About this report
Definitions and glossary of terms
41‑47
48‑57
58‑63
64‑67
68‑80
81‑87
04‑05
08‑11
12‑13
26‑27
36‑37
38‑39
41‑47
48‑57
58‑63
64‑67
68‑80
81‑87
08‑11
12‑13
20‑21
22‑23
32‑33
41‑47
48‑57
58‑63
64‑67
68‑80
81‑87
02‑03
14
20‑21
22‑23
32‑33
14
02‑03
132
02‑03
28
36‑37
132
202‑204
Orica Annual Report 2022 | 205
INDEPENDENT LIMITED
ASSURANCE REPORT
Independent Limited Assurance Report to the Directors of Orica
Limited
Conclusion
Based on the evidence we obtained from the procedures performed, we are not
aware of any material misstatements in the Content Elements Index, which has been
prepared by Orica Limited, in accordance with the International Financial Reporting
Standards (IFRS) Foundation’s Integrated Reporting Framework, for the year ended
30 September 2022.
Annual Integrated Report Content Elements Index
We performed a limited assurance engagement over the Annual Integrated Report Content Elements Index (Content
Elements Index) on page 205 of Orica’s FY22 Annual Report (Annual Report) for the year ended 30 September 2022.
Criteria Used as the Basis of Reporting
The criteria used as the basis of reporting is the International Financial Reporting Standards (IFRS) Foundation's
Integrated Reporting Framework ( Framework).
Basis for Conclusion
We conducted our work in accordance with Australian Standard on Assurance Engagements ASAE 3000 (Standard)
Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. In accordance with the
Standard, we have:
• used our professional judgement to plan and perform the engagement to obtain limited assurance that we are not
aware of any material misstatements in the Content Elements Index whether due to fraud or error;
• considered relevant internal controls when designing our assurance procedures, however we do not express a
conclusion on their effectiveness; and
• ensured that the engagement team possess the appropriate knowledge, skills and professional competencies.
This assurance was focused on whether the Content Elements have been addressed in the Annual Report and did not
extend to assessing the accuracy or validity of any statement made throughout the Annual Report. KPMG has not
been engaged to provide an assurance conclusion on the appropriateness or the operating effectiveness of the Orica
strategy or how Orica creates value, including the governance, strategic management and other key business
processes.
Summary of Procedures Performed
Our limited assurance conclusion is based on the evidence obtained from performing the following procedures:
Interviews with management responsible for the preparation of the Content Elements Index and Annual Report
•
• Review of documentation
• Assessing the suitability of disclosures
• Agreeing the disclosures in the Content Elements Index to the Framework and the disclosures within the
Annual Report and wider Annual Reporting suite
2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
206 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
INDEPENDENT LIMITED ASSURANCE REPORT (CONTINUED)
• Reconciling the sections and page numbers included within the Annual Report
• Review of final draft Annual Report
How the Standard Defines Limited Assurance and Material Misstatement
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent
than for a reasonable assurance engagement. Consequently the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance
engagement been performed.
Misstatements, including omissions, are considered material if, individually or in the aggregate, they could reasonably
be expected to influence relevant decisions of the Directors of Orica Limited.
The Limitations of our Review
The Annual Report includes prospective information. Inherent to prospective information, the actual future results are
uncertain. We do not provide any assurance on the assumptions and achievability of prospective information in the
Annual Report.
Use of this Assurance Report
This report has been prepared for the Directors of Orica Limited for the purpose of providing an assurance conclusion
on the Content Elements Index and may not be suitable for another purpose. We disclaim any assumption of
responsibility for any reliance on this report, to any person other than the Directors of Orica Limited, or for any other
purpose than that for which it was prepared.
Management’s responsibility
Management are responsible for:
• determining that the criteria is appropriate to meet
their needs
• preparing and presenting the Content Elements Index
in accordance with the criteria; and
• establishing
internal controls
the
preparation and presentation of the Content Elements
Index that
is free from material misstatement,
whether due to fraud or error.
that enable
Our Responsibility
Our responsibility is to perform a limited assurance
engagement in relation to the Content Elements Index
for the 30 September 2022, and to issue an assurance
report that includes our conclusion.
Our Independence and Quality Control
We have complied with our independence and other
relevant ethical requirements of the Code of Ethics for
Independence
Professional Accountants
Standards) issued by the Australian Professional and
Ethical Standards Board, and complied with the
applicable requirements of Australian Standard on
Quality Control 1 to maintain a comprehensive system
of quality control.
(including
KPMG
Adrian King
Partner
Melbourne
10 November 2022
Sarah Newman
Director
Melbourne
10 November 2022
2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
2
Orica Annual Report 2022 | 207
CORPORATE DIRECTORY
INVESTOR INFORMATION
Registered and Head Office
Orica Limited
Level 3, 1 Nicholson Street
East Melbourne, Victoria
Australia 3002
Postal Address
PO Box 4311
Melbourne Victoria
Australia 3001
P +61 3 9665 7111
INVESTOR RELATIONS
P +61 3 9665 7774
E investorrelations@orica.com
STOCK EXCHANGE LISTINGS
Orica’s shares are listed on the Australian Securities
Exchange (ASX) and are traded under the listing code ORI.
SHARE REGISTRY
If you have queries relating to your shareholding or wish
to update your personal or payment details, please contact
the Share Registrar.
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW
Australia 2000
Locked Bag A14
Sydney South
NSW, Australia 1235
Toll Free 1300 301 253 (Australia only)
International +61 1300 301 253
E orica@linkmarketservices.com.au
W www.linkmarketservices.com.au
ANNUAL GENERAL MEETING
The 2022 Annual General Meeting of Orica Limited
will be held on Wednesday, 14 December 2022 at 10:30am
(Melbourne time).
WEBSITE
To view the 2022 Annual Reporting Suite, shareholder
information, news announcements, and further information
on Orica visit the company website at www.orica.com.
208 | Orica Annual Report 2022
Introduction and Overview
Our Business
Our Performance
Governance
Directors’ Report
Financial Report
Other Information
This page has been left blank intentionally.
www.colliercreative.com.au #ORC0047
Orica Annual Report 2022 | 209
Enquiries can be directed to companyinfo@orica.com
Continue reading text version or see original annual report in PDF
format above