Overview

We aim to deliver value to our shareholders and support local economies in a responsible manner.

As the global market leader in the provision of explosives to the mining sector and the Australian market leader in paint and chemical products, we understand that we have an important role in demonstrating responsible financial management.  Our strategy for sustainable profit growth and strong returns on investment is driven by:

• securing market leadership positions in selected ‘niche’ markets, which build on the businesses strengths and enables the Company better service customers, develop and retain technological advantage and achieve benefits of scale;
• growing only businesses that have ‘earned the right to grow’; and
• growing ‘close to the core’.

We adhere to strict financial and sustainability criteria when assessing our growth opportunities. We see our growth coming from four key areas:

• Industry and Organic Growth;
• Productivity Improvements;
• Expansion Capital Expenditure; and
• Mergers and Acquisitions.

Responsible Financial Management
Comprehensive practices have been adopted to monitor:

• That capital expenditure and revenue commitments above a certain size obtain prior Board approval;
• Financial exposures including the use of derivatives;
• Safety, health and environment standards and management systems to achieve high standards of performance and compliance; and
• That Business transactions are properly authorised and executed.

Our internal audit process is managed by the Chief Risk Officer and is co-sourced with an independent firm of accountants. Through this process, our controls, processes and procedures are reviewed and improvements recommended across our corporate and business activities.
 
The Company’s financial statements are subject to an annual audit by an independent, professional auditor who also reviews the Company’s half-yearly financial statements. The Board Audit and Risk Committee oversees this process on behalf of the Board.

Read more in our Corporate Governance Statement.

Our Financial Performance in 2008

Orica’s net profit after tax and significant items was $540 million for the full year ended 30 September 2008, an 11% increase on the previous full year. 
 
Excluding the loss on individually significant items of $33 million, net profit after tax was $572 million, up 15% on 2007.  Sales revenue increased 18% to $6.5 billion.  Cash flow from operating activities was up by 41% to $737 million. 
 
The Board has declared a final dividend of 55 cents per ordinary share, bringing the total ordinary dividend for 2008 to 94 cents per share, representing an increase of 5 cents or 6% on the 2007 final dividend. The 2008 dividend is franked at 20 cents per share. 

Earnings per share (EPS) before significant items increased 14%, over the 2007 full year, to $1.70.
 
The result demonstrates the strength across Orica’s business platforms despite some challenging market conditions during 2008, including unfavourable foreign exchange movements and rising input costs. 
 
The record results marks Orica’s seventh consecutive year of profit growth. It also highlights the continued strength in Orica’s underlying earnings with all business platforms achieving double digit growth.

In July, the board announced its in principle intention to demerge the Consumer Products business so that both Orica and Consumer Products can each pursue their respective strategic growth paths. Due to extreme volatility in equity and financial markets the Board decided in November to defer the demerger indefinitely. While the strategic rationale for the demerger remains undeniable, external circumstances have impacted the intended timing.

However, once the demerger of Consumer Products eventuates in a more stable financial market environment, Orica will be around 90 per cent focused on the mining and infrastructure sectors. This is a very deliberate strategy designed to expose ourselves to those sectors of the economy which we believe will achieve above average growth in the foreseeable future and – importantly – limit the level of volatility in our earnings.

Summary financial information for Orica Limited $ Million (Year ending 30 September 2008)

1 Pre significant items  
2 Productivity measured as total fixed costs as a percentage of gross margin
3 Net debt/(net debt + book equity)

Economic Value Generated and Distributed

We see our social responsibilities as being complementary to our financial performance and a critical component of both our licence to operate in all regions of the world and our ability to attract and retain the best employees.

Financial Impact of Climate Change