Orica Limited · ASX:ORI
Orica — Merger or Acquisition (October 2006)
25 slides from Orica's merger presentation, Oct 17, 2006
Slide 1: Acquisition of Minova
Acquisition of Minova Graeme Liebelt Managing Director & CEO Noel Meehan Executive Director Finance Sandy Arbuthnot CEO Minova 17 October 2006
Slide 2: Table of Contents
Table 1. of Contents Transaction Overview 1 Transaction Overview 2 Minova Business Overview 3 Financial Impact on Orica 4 Strategic Rationale 5 Transaction Summary 6 Supplementary Information 1
Slide 3: Transaction Overview
Transaction Overview view ♦ Orica has agreed to acquire mining services company Minova for A$870m (£348m)1,2 ♦ Purchase price 8.9 times CY2006F3 EBITDA ♦ EPS accretive immediately (after transaction costs) ♦ Minova is highly cashflow generative with relatively low capex and working capital requireme
Slide 4: Minova Business Overview
Minova Business Overview Snapshot Sales trend (2003A-2006F) ♦ Global leader in specialty chemicals for stabilisation and ventilation systems in underground mining and civil works 180 Sales CAGR: 18% ♦ Key end markets are underground coal mining, underground metals mining and tunnelling 135 ♦ Wide pr
Slide 5: Minova Business Overview
Minova Business Overview ♦Major end market is ♦Sales predominantly from ♦Resin capsules and underground coal mining, Europe, US and Australia injection chemicals make although increasing with increasing exposure to up the majority of Minova’s contribution from tunnelling high growth markets product
Slide 6: Minova Business Overview
Minova Business Overview Global, but serves customers’ needs with local manufacturing and customised solutions Major Mining Countries serviced Manufacturing sites Operations in all major mining regions (except Sth America) ♦ HQ in UK ♦ 17 manufacturing facilities in 10 countries ♦ Sells into more th
Slide 7: Minova Growth Drivers
Minova Growth Drivers ♦ The following drivers underpin Minova’s future growth: Growth Drivers 1. Continuing demand for coal underpinned by its use in coal-fired power generation and steel production, with over 150 years of proven coal reserves 9 2. Increased product penetration due to increased focu
Slide 8: Minova Management Structure
Minova Management Structure Graeme Liebelt Managing Director & CEO 7
Slide 9: Financial Impact on Orica
Financial Impact on Orica view ♦ Orica has acquired Minova for A$857m (£343m) plus A$13m (£5m) in transaction costs1 ♦ Minova EBITDA CY20062 A$98m (£39m) ♦ EBITDA multiple 8.9x ♦ EPS accretive immediately post transaction costs £M Treatment Purchase Price 343 Capitalised Transaction Costs 5 Capitali
Slide 10: Financial Impact on Orica
Financial Impact on Orica view ♦ Forecast sales growth of Minova business 8% per annum through 2011 ♦ Minova to be held separately for two years, then integrated into Orica Mining Services ♦ Synergies A$13m (£5m)1,2 per annum post integration ♦ Implementation costs A$23m (£9m) over 3 years to be exp
Slide 11: Financial Impact on Orica
Financial Impact on Orica view ♦ Purchase price of A$870m (£348m)1 including transaction costs acquired: – Net Tangible Assets A$80m (£32m) Trade working capital £23m Fixed Assets £14m Non-trade working capital (£5m) – Goodwill & Identifiable Intangible Assets2 A$790m (£316m) ♦ Depreciation & AIFRS
Slide 12: Financial Impact on Orica
Financial Impact on Orica view ♦ Minova acquisition cost will be funded by existing cash and debt facilities – Cash A$650m (£260m) – Debt A$220m (£88m) – Total A$870m (£348m) ♦ Post acquisition Orica’s gearing will remain below target gearing range of 35- 45% (net debt to net debt plus equity) ♦ Com
Slide 13: Strategic Rationale
Strategic 1. Rationale Transaction Overview Minova meets Orica’s strategic criteria for growth: Market leadership 9 Growing “close to the core” 9 Earning the “right to grow” - 18% RONA1 9 12 1. RONA target met in third full year post integration
Slide 14: Strategic Rationale
Strategic Rationale Entrenches Orica as the clear global leader in Mining Services 1 Strong link to both Orica Mining 4 Synergy Opportunities Services and Orica Chemicals ♦ Cost savings (insurance, IT, etc.) ♦ Significant industry overlap ♦ Global procurement opportunities ♦ Familiar chemical manufa
Slide 15: Transaction Summary
Transaction Summary view ♦ A strategically and financially compelling acquisition for Orica ♦ Purchase price A$870m1 including transaction costs - 8.9 times CY2006 EBITDA ♦ Immediately EPS accretive (after all costs) ♦ Achieves 18% RONA target in third full year post integration ♦ Funded by existing
Slide 16: Supplementary Information
SECTION 6 Supplementary Information
Slide 17: Minova Products
Minova Products Resin Capsules Powders ♦ Resin capsules along with steel ♦ Cementitious powders are used to support bolts are used as primary roof strata and in building ventilation seals, support or as secondary support primarily in the coal mining market in combination with steel arches ♦ Key bran
Slide 18: Minova Products
Minova Products Steel bolts Other ♦ A wide range of steel bolts ♦ A wide range of specialist products encompassing both standard steel such as coatings and dust masks is anchors and specialist bolts also offered Application Equipment ♦ Minova offers a wide range of application equipment including pu
Slide 19: Business Overview - Europe (excl Poland)
Business Overview - Europe (excl Poland) Locations Overview ♦ No 1 market position across all core products Drill machines Resin capsules, injection ♦ Present in Germany, Czech Republic, UK, Spain, materials, pumps Sweden and Switzerland Manufacturing sites ♦ Two key end markets are coal and undergr
Slide 20: Business Overview - Poland
Business Overview - Poland Locations Overview ♦ No 1 market position across all core products Resin capsules Resin capsules, injection ♦ ~80% of sales are to the coal mining industry materials, pumps, powders Manufacturing sites ♦ Demand for injection resins, cavity fillers and ventilation seals dri
Slide 21: Business Overview - Russia, FSU
Business Overview - Russia, FSU Locations Overview ♦ Operating since 1999 and has ~120 employees Resin capsules, powders Resin capsules, powders, bolts ♦ Minova has a 87.5% controlling stake in its Russian business ♦ No 1 market position across all core products ♦ Sole producer of resin capsules in
Slide 22: Business Overview - South Africa
Business Overview - South Africa Locations Overview ♦ Operating since early 1980’s ♦ No 1 in resin capsules and powders ♦ 75% of sales are to the metal mining industry ♦ 25% of sales to the coal industry ♦ Room and pillar extraction provides for a high level of resin capsule demand Resin capsules ♦
Slide 23: Business Overview - USA
Business Overview - USA Locations Overview Resin capsules ♦ Operating since early 1980’s ♦ No 1 in resin capsules and powders ♦ Acquired Sandvik’s Mining Chemicals Division in August 2003 Resin capsules, Powders ♦ 92% of sales are to the coal mining industry Resin capsules ♦ Demand for resin capsule
Slide 24: Business Overview - Australia
Business Overview - Australia Locations Overview ♦ Operating in Australia since 1987 PUR, Phenolic Resins ♦ No 1 market position across all core products & services – Minova has a strong service business in Australia ♦ Approximately 84% of Minova’s sales are to the coal mining industry Resin capsule
Slide 25: Business Overview - Asia
Business Overview - Asia Locations Injection resin, powders Overview ♦ Operations commenced in China in 2005 through 55% owned JV – Business is still in early stage of development – Production facility and supply chain fully operational ♦ Sales currently to 15 Chinese coal groups, which represents 2