First Half Performance Update; USPP Notes Successfully Refinanced; Change of Segment Reporting

21 Mar 2023

First Half Performance Update 

The strength of Orica’s performance in FY 2022 has continued into the first half of the 2023 financial year. This reflects continued commercial discipline, strong global commodities demand and increasing earnings from new technologies.

Orica’s Chief Executive Officer Sanjeev Gandhi said:

"Our focus on commercial discipline, the execution of our refreshed strategy, and on leveraging Orica’s competitive advantages has helped us mitigate external challenges during the half. These efforts will be reflected in our financial performance for the first half of 2023, and we expect to deliver better underlying earnings than the prior corresponding period.”

Expected Significant items in First Half 2023

The following items are expected to be disclosed as significant items in the 2023 half year results:

  • As disclosed as part of Orica’s recent acquisition of Axis Mining Technology, there is up to AUD90 million of earnout which is payable in early 2025. For the first half 2023, AUD13.3 million will be accrued for the earnout, after tax.
  • In November 2022, Orica completed the sale of its share in its Turkey businesses for proceeds of USD12.75 million (AUD19.0 million). As previously highlighted at the 2022 full year results, upon completion of an exit of the Turkey business the associated debit foreign currency translation reserve (‘FCTR’) balance of AUD91.7 million after tax (of which AUD45.1 million is attributable to non-controlling interests) would be released to the profit and loss. Both the sale proceeds and the release of the FCTR will be recognised in the first half 2023 financial results, resulting in a net loss after tax of AUD27.6 million attributable to shareholders of Orica.

Successful Refinance of US Private Placement Notes

Orica is pleased to announce that it has successfully completed the issuance of USD350 million (equivalent) of fixed rate unsecured notes (“Notes”) in the US Private Placement (USPP) market. Strong investor demand resulted in a final order book of over USD2 billion. 

Orica’s Chief Financial Officer Kim Kerr said:

“We are delighted to have received such strong interest from investors in a key capital market for Orica. We appreciate the ongoing support of existing investors, many of whom participated in this transaction, and we welcome the participation of a number of new investors.

The proceeds raised will be used to prepay USD350 million of USPP notes originally due to mature in September 2023. This transaction further strengthens our balance sheet and extends our drawn debt maturity profile to 6.1 years. We have no further financing requirements until May 2024.”

The Notes were issued by wholly owned subsidiary Orica Finance Limited and comprise a USD330 million tranche and an AUD30 million tranche, both maturing in 9.6 years. The Notes rank equally with Orica’s existing senior unsecured debt.

Change of segment reporting

Ahead of the release of the first half results for the 2023 financial year on Thursday 11 May 2023, Orica (ASX: ORI) today provides further details of changes to its segment reporting effective 1 October 2022, to provide transparency of the growing Digital Solutions vertical, in line with Orica’s refreshed strategy. 

The new Digital Solutions segment will include:

  • Orebody Intelligence (OBI) businesses (Axis Mining Technology, HIG and RIG);
  • Blast Design and Execution (BDE) solutions; and
  • GroundProbe (previously reported within the Monitor segment). 

HIG and RIG were previously reported in Australia, Pacific & Asia, while BDE was reported across Australia, Pacific & Asia, North America, Latin America, Europe, Middle East and Africa and Global Support.

The 2022 financial year segments have been restated to reflect the new segment reporting structure. Orebody Intelligence and BDE results prior to the 2022 financial year are considered to be immaterial and have not been restated within the Compendium for the 2018 to 2021 financial years.

There is no change to the Orica Group earnings and balance sheet as previously reported to the market.

The following attachments will assist the investment community during the transition to the new segment reporting structure:

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