Dyno Nobel Limited

Good morning and welcome to Dino Nobel Limited's 2025 full year results briefing. This is Tom Dixon speaking and I'm joined this morning by our CEO and MD, Mauro Neves, and our Group CFO, Nitesh Naidoo. The materials we'll be covering today have been lodged with the Australian Securities Exchange and can be found on the ASX and Dino Nobel websites. As usual, at the end of the presentation we'll have time for questions and an audio recording of this presentation will also be available on our website. I'll draw your attention to the disclaimers found on slide one and slide two of the presentation. And before we do move into the main presentation, I'd like to start with an acknowledgement of country. I'd like to acknowledge the traditional custodians of the land we are coming to you from today, the Wurundjeri peoples of the Eastern Kulin Nation. I pay my respects to elders past and present. Thank you, and I'd now like to hand over to Mauro.

Thanks, Tom. Good morning and welcome, everyone. It's my great pleasure to be here to present our 2025 full year results. You see, as we work through the presentation, the Dino Nobel team delivered excellent financial results and also made great progress towards separating from our fertilizers business and achieving our ambition of doubling our fiscal year 23 explosives EBIT. I'll say more on that later. As Tom mentioned, you'll also be hearing today from our new group CFO, Nitesh Naidoo. Nitesh joined us in July, and I'll quickly take this opportunity to welcome Nitesh to his first DinoNobel results presentation, and thank him for his enormous contribution since joining the team. I would also like to thank Damian Butler, who did an excellent job in the entering CFO seat, allowing a seamless transition to the CFO role as Nitesh joined us earlier this year. We also have Stuart Sneed joining us as our new DNAP president. Stuart brings a wealth of leadership experience in the international manufacturing, technology, and resources sectors to our team. I would like to welcome Stuart and also thank Anthony Ursa for so capably leading the NAP in recent months. I'll now move to our agenda. I'll spend the first part of the presentation taking you through the highlights of our financial year 25 performance, how we're thinking about the year ahead, and providing an update on our business strategy. At that point, I'll hand over to Nitesh, who will take you through our financial year 25 financial performance, and then close the presentation with a discussion of Dino Nobel's compelling investment proposition before opening up for Q&A. As these highlights show, we have an excellent year. We made great progress in our transformation agenda. At our half-year results, we talked about the agreements we negotiated with various parties for the sale of fertilizer distribution business, the per-demand offtake agreement, and the sale of Gibson Island. I'm pleased to say we have now reached financial closure on both the fertilizer distribution and Gibson Island, receiving upfront cash proceeds of $579 million. I would like to thank Scott Bauman and the team for their considerable efforts as we completed the distribution sale this year, and wish them every success moving forward with Ridley. The strategic review of our manufacturing operations has been completed, with the sale of St. Helens, closure of Geelong, and a clear pathway identified for a sale or orderly closure of Fawcett Hill. I'm very pleased with the progress we made on our transformation program. We set ourselves an ambition of doubling our financial year 23 exporters EBIT, and we are continuing to deliver to our plan. Despite various challenges, the market is placed in front of us. The DinoNobel in the Latin business, which we introduced early this year, grew earnings by 33%. and we continue to establish our capital light footprint in these key regions targeting future growth. As well as delivering our transformation agenda, we've also been able to deliver strong improvements in safety and manufacturing. We achieved that 19% reduction in TRIFA and successfully completed turnarounds at three of our major manufacturing plants in line with our expectations. Stable manufacturing in phosphate fuel has also allowed us to capitalize on strong debt prices in the second half. Finally, we see significant growth with the domestic production of energetics for broad industry use across the resources and defense sectors. I'll have more to say about that in a minute. I will now move on to an area that is of critical importance to me and every person in DinoNobel. Safety. Safety is always our number one priority. As I mentioned last year, we were seeing progress on some leading indicators, supported by extensive effort taken by the teams to improve our safety performance. I am pleased to say our injury severity is down 40% and our key performance indicators are now showing the efforts are having an impact. Significant improvement achieved in our recordable injury frequency rate and in the number of process safety incidents occurring. Safety is an area where we set high standards and although we have more work to do, I'm pleased our metrics are moving in the right direction. The turnaround at Murumba this year was one of the biggest we ever undertaken, and we completed this work without any recordable injuries. A key driver of our improved safety performance has been the continued priority we put on safety leadership, which focuses on creating and supporting a healthy risk management culture. We're extending this culture into our wider operations, ensuring we have clear risk ownership and responsibility, and that our people feel empowered to manage risk by having the right tools and training. Now, moving to our financial results. The statutory results after tax, including IMIs, was a loss of $53 million. These statutory results included IMIs of $477 million, which primarily related to the IPF distribution sale, non-cash impairments at Fossard Hill and St. Helens, and closure costs at Geelong. The decision to fully impair the Fossard Hill operations was a result of the sale process and ongoing uncertainty regarding the cost of gas. The gas supply interruption under our contract with Northern Territories Power and Water Corporation forced us to source gas in the east coast of Australia. At group level, excluding the IMIs, we grew EBIT by 23% during the year, with our ongoing transformation program contributing an additional $60 million in 2025, bringing the total earnings improvement delivered over the last two years to $134 million. The group EBIT results also benefited from stable production, particularly at Phosphate Hill, which allowed us to capture favorable movements in commodity prices and foreign exchange. DinoNobel's explosives business also performed very strongly. Underlying EBIT in the explosives business, excluding IMIs, grew 16%. with all three BUs achieving solid underlying earnings growth. And you can see by the chart on the slide, we're expecting further strong growth in fiscal year 26, which I'll cover later. The focus on quality earnings and capital discipline has contributed to improvements in our key performance indicator, return on invested capital. ROIC, including Goodwill, grew to 8.2%, up from 6.3% a year ago. Excluding Goodwill, ROC is now sitting at 11.5%. We have also announced today a final dividend of $0.095 per share, unframed, which represents a 51% payout ratio, consistent with our capital allocation framework. This takes out total ordinary dividends for 25 to 11.9 cents per share. We continue to make solid progress on our $1.4 billion capital return program. Having returned $930 million so far, it leaves us with a further $470 million to come. We remain committed to completing this program and expect to recommend buying shares tomorrow, once we've cleared our blackout period. Despite the large capital return program, our balance sheet remains in great shape, with net debt to EBITDA sitting at a comfortable 1.4 times ratio. Moving now to the progress we made on becoming a leading peer player global explosives business. This slide reconciles our statutory earnings to our underlying DinoNobel explosives earnings to clearly show that our program has delivered $134 million of benefits over the last two years. We have exited the fiscal year 25 year at a run rate equivalent to 47% of the total ambition of $300 million of benefits. Importantly, transformation is not purely driven by cost cutting. In line with the fundamental change we're making to our business structure, we're making important and enduring change to how we operate the business. This slide outlines the size of the benefits coming from pricing discipline, premium technology sales, and customer wins. It also shows the benefits we've been able to embed into our cost base through renegotiating key supply contracts and optimizing our manufacturing processes. We fully expect this momentum to continue in the next year. For fiscal year 26, we're forecasting additional benefits of between $30 and $70 million. Included in this forecast is an allowance for some items, such as additional depreciation and implementation costs that may offset the gross benefits accruing from initiatives implemented under the program. Once again, we'll be working across all parts of our business to achieve these benefits. The operating model changes, procurement savings, pricing discipline, and increased sales of technology products are expected to deliver the most benefit. The majority of the projects that will deliver these benefits have progressed well past the development phase and have either been approved for implementation or are already underway, leading to our confidence in the fiscal year 26 outlook, which I'll now move on to. For the DinoNobel business, we are forecasting further strong earnings growth in fiscal year 26. EBIT in the explosives business is expected to be in the range of full 60 to $500 million after corporate costs. We're finishing fiscal year 25 with a strong 47% exit run rate, which gives us confidence and momentum going into financial year 26. As is normal, we expect earnings to be positively skewed to the second half. We are expecting the de-bottlenecking activity at Moore & Barr in FY25 will lift capacity at the facility, helping offset the capacity decrease created by the loss of excess ammonia from Gibson Island. Although we are not conducting any major turnarounds at our core facilities, our ammonia supplies at DNA will be affected by the turnaround at Vola performed by CF Industries in March next year. Let me now touch on our strategy. Our strategy has been designed to help us achieve our ambition of becoming the world's leading global explosives player. Such ambition is supported by our people, our values, and will be achieved by building on our five strategic pillars. The five pillars outline how we differentiate ourselves in the market and what makes us a compelling partner for our customers, driving superior outcomes and improving overall performance across safety, reliability, efficiency, and bottom line financial returns. Our innovative technology allows us to offer a full suite of products that, when coupled with our experienced and talented dyno consult people, can be bundled in superior offerings, providing solutions tailored to each customer's specific needs. We are a trusted brand that has developed deep customer relationships over many decades across multiple geographies. This allows us to hold conversation as partners, not suppliers. Our long history in the industry has allowed us to build a network of privileged assets strategically located near high-quality customs and mining deposits. The last of our five pillars relates to smart capital deployment. We will be disciplined in how we deploy capital, prioritizing low capital growth that has superior risk-adjusted return. By focusing on these strategic pillars, we will leverage our differentiated product offering and privileged assets into continued growth to achieve our ambition. I would like to now talk to you about some of the growth we've seen in the sales of these high-margin products. Our proprietary technology suite has seen continued growth in adoption as customers realize the efficiency and safety benefits these products deliver. Electronic detonator sales were up 15% year-on-year, and our Delta E-enabled MPU fleet expanded by 24%. the DinoConsole team took on almost 60% more engagements in fiscal year 25 than they did in fiscal year 24, as we continue to optimize solutions and deliver value to our customers. AI is also increasingly being used across our business, adding greater efficiency and effectiveness. A prime example is the use of AI at our Sinsbury Initiation Systems facility, where it helped us increase capacity and reduce defects. We've added a slide in the appendix for the presentation, highlighting the AI-driven manufacturing improvements we've seen at this site. Another of our strategic pillars is our privileged assets and networks. Our strong partnerships and privileged assets are an important drive at our growth strategy. In North America, our team secured a deal with a U.S.-based industrial manufacturer, Replicon USA, supporting onshoring of TNT production in the U.S. for the first time in decades. The new TNT facility will be built by Replicon USA at Dino Nobel's Grohe Contact Facility, funded by a $435 million investment from the U.S. federal government and will be operated by Dyna Nobel. With limited capital outlay from Dyna Nobel, the offtake will secure a reliable domestic supply of TNT for commercial explosives production, materially reducing our overall exposure to U.S. tariffs. ensuring continuity and resilience for our customers across the mining, quarrying, and construction sectors. In October, we formed a 50-50 joint venture with Repcon USA called Nitrodyne, which will operate independently from DynoNobel Business. Building on the successful tender for the TNT project in the US, Nitrodyne will focus on developing, supplying energetics for broad industry use across the resources and defense sectors. As you can see, energetics have a broad range of applications and include chemical products such as TNT, PETN, RDX, and IMX. We have the sites, requisite infrastructure, and a highly capable team experience in manufacturing high explosives, which positions Nitrodyne JV very well for future success. This is just another clear example of how we can leverage our privileged assets, production technology, and operational expertise to expand our operations into a major new market segment and efficient capital deployment. I look forward to updating you on progress made by Nitrodyne as we move forward. This year has seen us take several transformational steps towards our ambition to become the leading global explosives player. As previously announced, we achieved a clean sale of our St. Helens Fertilizer Facility in the U.S., importantly, with no ongoing environmental liabilities or future remediation requirements to be incurred by Dino Nobel. We reached financial settlement on the sale of our fertilizer distribution business and completed the sale of land at Gibson Island. We finalized production at our Geelong SSP plant and reached an agreement with Macquarie CGM to sell our Perdaman offtake contract. We now have just one ongoing sale process, Phosphate Hill. As we announced in early October, we have a very clear pathway with respect to Phosphate Hill. Our priority remains to sell the asset as a going concern to a qualified buyer. However, if an agreement is not reached by 31st March, we will progress towards an orderly closure by 30 September 2026. Resolving issues relating to obtaining an economic gas supply is fundamental to the site's future viability, and we continue to engage with government stakeholders on this matter. Importantly, as we have reported today, the facility is self-funded at the current favorable debt prices. Subject to debt prices, it should remain cash positive while we continue to operate the plant in fiscal year 26. I would also note that if a sale does not eventuate, the cost of remediation and closure are expected to be offset by tax loss benefits and the release of working capital. During financial year 25, we also made great progress in our net zero pathway. meeting short-term absolute reduction target of 5% by 2025 against our 2020 baseline. We also completed the installation of tertiary abatement of nitrous oxide at our LOMO facility. Having now completed tertiary abatement at both Moromba and LOMO, we have been able to review and update our greenhouse gas reduction targets. Our previous medium-term target of 25% by 2030 has now been adopted as our new short-term target, and we have introduced a new medium-term target of 50% reduction by 2036. This new medium-term target is underpinned by a pipeline of identified projects. The net zero by 2050 ambition remains unchanged. I'll now hand over to Nitash, who will take you through our financial performance.

Thank you, Mauro. And good morning to everyone on the call today. We have some fantastic opportunities ahead of us as we pursue our strategy to deliver on our ambition. But firstly, let's look at what we've achieved from a financial perspective in FY25, which demonstrates solid progress. As Mauro mentioned earlier, We've achieved 16% underlying earnings growth across our explosives business units. Our transformation program has delivered benefits that, on an annualized basis, are halfway to Dino Nobel's earnings ambition. And I'm happy to say that things are well on track for FY26. Scaling with smart capital deployment is a key part of the strategy, of which ROIC is a key measure. We finished the year with ROIC at 8.2%, which is up from 6.3% a year ago. Finally, we delivered on the important milestone to exit the fertilizer assets with sales proceeds of 579 million received and a further 270 million in deferred settlement. If we now move to the next slide, which shows our P&L. As you can see, revenues on a statutory basis were flat, impacted by the December 2023 completion of the Wallace sale, and therefore FY24 comparators included two months earnings. Underlying revenue for the group grew 6% and explosives by 2% year on year, impacted by the Queensland market weather event in half one. Pleasingly, we saw these impacts recover in half too, and our JV partner income grew strongly at 29% year on year. The transformation program continues to deliver operating leverage for the group, with operating margin percentage increasing two percentage points at a group headline and underlying explosives level. Overhead's growth was restricted to 3%, demonstrating cost discipline to our growth. The reduction in other income reflects one-off benefits in the prior year related to a land sale in explosives and a legal settlement in fertilizers. Our headline EBIT grew 23%, driven by favorable commodity prices in our fertilizers business. Headline explosives earnings declined 10%, reflecting the aforementioned Wallah impact, and a significant turnaround year at manufacturing sites of Murumba, Lomo, and Cheyenne. This resulted in lower sales and higher third-party input costs while plants were being renewed, but sets us up for improved reliability and throughput going forward. The restructuring of Dynanobel to a pure-play explosives business has resulted in significant IMI's recorded in FY25 from the sale and full write down of fertilizer assets. A full breakdown is included in the OFR materials. We also acknowledge that the restructuring of the group has made visibility of the true business performance challenging. So we've increased disclosure and reconciliation from our headline results to the underlying performance to assist. These additional disclosures are included in the compendium and will be provided going forward. I'll take you to the next page on slide 20. Underlying earnings in Dyna Nobel explosives grew 16% to $434 million in FY25, reflecting the $134 million cumulative net transformation growth from the 2023 $300 million baseline. We've broken out the adjustments on this slide which relate to sale of fertilizer assets and one-off impacts from turnarounds. With the completion of the St. Helens sale in FY25, Ag and IC is not material going forward and will not be disclosed separately. Pleasingly, underlying earnings grew across all geographies with DNAL showing a 33% improvement although it's of a smaller base. JVs are a core part of the privileged assets in the DynaNobel strategy. They are cornerstone to the market leadership position of the US business and an important consideration in our growth markets. We've also called out the growing JV income line that reflects the after-tax income included in our EBIT, which is unique to DynaNobel. We will continue to disclose this additional information as we feel it's material to the valuation of the business in the future. If we could now move to the CAPEX slide 21. You can see we've maintained good discipline on our capital expenditure in FY25, meeting all CAPEX outlook ranges provided at the start of the year. Please note that we have adjusted the categories that we disclosed to provide more color on the nature of capital investment. Despite the significant FY25 turnaround schedule, we have been able to complete these successfully and on budget. Our capital deployment moves away from turnarounds in FY26 towards projects that are aligned with our growth ambition. We intend to increase spend in areas of digital and technology to ensure we maintain our technology advantage in market and enhance productivity for ourselves and customers. We also see increased capital spend in support of customer growth, particularly in EMEA and LATAM. This spend relates to investments in additional MPUs and emulsion plants, and is expected to provide returns well in excess of our cost of capital and in line with the capital allocation framework. The range on the capital outlook is influenced by this category of CapEx, given the binary nature of tenders, which can impact on timing of spend. Moving on to the balance sheet on slide 22. Our balance sheet strength, is demonstrated by marked improvement across the key metrics shown on the left-hand side of the page, noting the increase in the net debt was expected, driven by the tax commitments following the sale of WALA, and remains, as Mairo said, at the low end of our policy setting. This gives us an opportunity to pay dividends at the higher end of the capital allocation framework of 30% to 60%, a fully franked A full year unfranked dividend of 11.9 cents represents a 50% payout ratio. The 1.4 billion capital returns continues to progress well with on-market buybacks at an average price of 293. The buyback will recommence on the 11th of November. With that, I will conclude by saying that I'm delighted to join the incredible team of Diana Nobel, enjoying learning the business, and excited by the prospects I'm seeing. I'll now pass back to Mauro for some closing remarks before we move to Q&A.

Thanks, Nitesh. To close out the presentation, I want to quickly outline what we believe is a very compelling investment proposition. We are in the very fortunate position of being one of the world's leading suppliers to an industry sector driven by demand for critical resources. Our strategic move to become a peer-play explosives company is well-progressed and well-timed to benefit from the increasing sophistication of the mining industry. This is allowing us to better focus management attention on optimizing our operating model and to more efficiently deploy capital towards high return opportunities. We expect much lower volatility in our growing earnings as we move forward. We hold market-leading positions in two of the best mining markets in the world, underpinned by our superior product offering. These positions have allowed us to develop high-quality long-term relationships with the largest global mining houses. We are well-placed to leverage these relationships into new growth regions as these customers expand in search of the future-facing minerals. Finally, our end-market fundamentals are robust. Mining is becoming more technical, and customers are placing more and more value on products and services that improve their efficiency, safety, and sustainability outcomes. Thank you for listening. And with that, I'll hand over to questions. Darcy, can you please remind our guests how to raise a question?

Thank you. If you would like to ask a question, please press star 1 on your telephone and write your name to be announced. If you would like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from William Park from Citi. Please go ahead.

Thank you, Mauro and Nitesh, for taking my question. Just firstly, with respect to FY26 explosive Can you just step to how you're internally thinking about, I guess, the D&EL's contribution to FY26 and the growth trajectory that you're expecting here? And what are some of the key drivers with respect to D&EL? Please, thank you.

Thanks, William. I'll start answering with more of the qualitative approach we're having to D&EL. Let Nitesh comment on the breakdown of transformation for 26. Now, the NAL is a history, is a story about following our customers. We really like LATAM and EMEA as growth regions. for two reasons. One, those are the reasons of the world where mining is growing more strongly, and those are the reasons of the world that our own customers, the BHPs, the Anglo-Americans, the REAs, are expanding that portfolio. So it's very natural for us to just follow our customers in jurisdictions where they are already very successful. So we have really invested time in capital this year to set up that business for success. Appointed Richard Brown to lead that business with Ricardo in LATAM and Lucas in Africa. And we're seeing already some green shots of that. I'm not in a position to comment on any specific commercial outcomes, but I'm very confident that we'll see D&EL further grow in the next financial year. Natasha, do you want to comment on the variables, how we're seeing transformation for fiscal year 26?

Thanks, Mauro. Thanks, William, for the question. William, we will try to provide you some background. I know this is a question that many people have on DNEL and DNEL growth contribution. On slide 10 of the results presentation where we show our perspectives on FY26. We do have a category there which is growth in international markets and it gives you a range of 8 to 15 million in terms of how we see DNEL's contribution towards our EBIT targets or outlook for FY26.

Thank you. That's very clear. And just while we are talking about the transformation benefit, can I just ask about, you know, whether if anything's changed in terms of the exit run rate that you're thinking about for the business? I note that for FY26, it's the exit run rate that you're expecting has been revised down by five percentage point. And just wondering whether that's driven by what you've seen or whether if you expect sort of acceleration into 27 and beyond, I'm just curious to know what's effectively changed in the last six months or so.

Looks, William, fundamentally the program is unchanged. The way we're managing that remains unchanged. We made the decision, and something that Nitesh endorsed when he joined us, to keep reporting as cleanly and as directly to the bottom line as we possibly can to avoid too many reconciliations. And obviously, we're seeing this year quite challenging set of geopolitical environment, namely tariffs, for instance, which provide some headwinds. So as far as we can see sitting here, we still think that the range is still possible. It's a range that has been slightly downgraded to reflect some of the headwinds we're dealing with.

we're still confident that we can deliver to that 65 to 75 range and hence why for the first time we're providing a bit guidance for the business thank you and then just one last one from me um in terms of one of your explosive plant the minor turnaround that was originally scheduled for fy 26 has been pushed out to 27 just wondering whether if you could provide some insight as to why you decided to defer that minor turnaround.

Look, it's really minor to your point. And if I refer you to slide 28 on the appendices, that will give you a bit of a snapshot of how you're thinking about major and minor turnarounds moving forward. So we just have the opportunity to run these assets for a few more months safely. It's about really the engineering plans, and it's about mobilization of suppliers. So nothing really major, just a phasing from late 26 to early 27. So, we provided the full, as we normally do, the full turnaround schedule on slide 28 to give you some reference. Thank you. Thanks for taking my question.

Thank you. Your next question comes from Ramon Lazar from Jeffery. Please go ahead.

Good morning, Mauro. Good morning, Nitesh. Just a couple of questions for me. Just if you could comment on the situation in Indonesia, what you've observed in that marketplace over 25, and are you starting to see some stabilization returning into that market?

Yeah, it's a great question, Ramon. There's various moving parts. So the first one is we have some local production of EN that has been brought to market. the government has ceased to issue import licenses. So essentially, the market is predominantly domestic now or fully domestic now, which puts us in a position to be not anymore trading international ammonium nitrate in that market. So essentially, our price take is at the domestic market. The other main impact is the exchange rate. So the local currency has been severely depreciated last year, which impacted our business. But other than that, the trading levels, the work the team has done in the ground is quite exciting. I have to say they have become a bit of a springboard for growth in the region. that we have now a new contract in Malaysia, infrastructure. We're really using some of the technology that was developed in Indonesia with our Emotion mobile plan. So lots to like about that business, but 25 has been a particularly difficult year. Nothing that we see changing our strategic view moving forward, but I note that 25 has been a difficult year for those two factors that I mentioned. But we still trade strongly. with our with our customers we have a strong strong customer base strong partners so still still a business that we like but acknowledge that 25 has been a difficult year okay good thank you and the other one was just around moran bar um you've got the additional tons coming through in 26 can you maybe just comment on

how much extra production you expect from Morimba in 26. And then I note your new gas contract begins from about April next year. So maybe if you could help us square up any additional sort of gas costs that we should factor in to the second half from that new gas contract and then into 27 as well, please.

Great questions, Ramon. So you remember when we closed Gibson Island a few years ago, we lost about 30,000 tons of capacity of that surplus ammonia that we ceased to bring into the plant. With the bottlenecking we've done, we're now bringing back about 15. So we're up to roughly 365,000 tons per year. What was the second question, sorry? Gas. Yes, the gas research is happening to a point in April. This is factored in our numbers for the financial year. And as we mentioned before, our contracts typically, each contract is slightly different and I won't comment on any specific.

but it's fair to say that all of our contracts have gas formulas that will make it wash through our results maybe we could add it's not material okay yeah okay understood and so i'll leave with one final one if i if i can um maro just on capital allocation if possible you can you comment on how you're thinking about that now that you're you know maybe a couple of years into the transformation and it is going to track and reaffirm some of those longer term targets just in terms of capital allocation once the fertilizer businesses are done with um how do you think how you're thinking about that into into next year and perhaps long longer term

Ramon, I'll defer to our CFO. He's passionate about capital allocation and has been a big advocate for capital discipline in the business. So I'll let Nitesh answer the question.

Thank you. Look, I think the overall capital allocation framework still remains quite sound. So in terms of the returns we are seeking from the new ventures or projects we invest capital in, our previous capital allocation framework was looking to exceed 1.3 times our WACC. We're looking, and as you can see in our disclosures, around the nature of capital expenditure to provide that additional clarity to the market, you know, kind of exploring and understanding how our capital is linked to our long-term earnings and our five-year plan. So we will look to continue to improve on the capital efficiency and effectiveness of our spend. That's consistent. In terms of our dividend payout ratios, that remains consistent. I think the question is a good one because as we become a pure play explosives business, clearly our volatility in the business in terms of liquidity and cash is different. It does allow us to consider where our setting is from a debt perspective. Our current target is one and a half times. Our policy allows up to two times, but we are still making that assessment. I've been working with the team and will update in subsequent results presentations of where we think that would sit. Okay, great. I'll leave it there. Thanks. Thanks, Roman.

Thank you. Your next question comes from Brooke Campbell Crawford from Baron Joey. Please go ahead.

Yeah, good morning. Thanks for taking my question. First, just on the nitrogen joint venture that you've announced today, more broadly outside of the TNT plant, which you previously disclosed, can you just provide some more colour on how big you see that opportunity as being over time? And maybe things like how we should think about magnitude of capital investment, you know, potential EBIT or earnings from the JV, call it over the next three years or so, any sort of color will be super helpful. Thanks.

Hi, Brooke. Look, we're not in a position to go to that level of detail as yet. And as time goes by, we hope to clearly articulate what this new line of business could be. And that's what it is. It's a potential new line of business that is a very, very interesting adjacency, as we learned. for a business that we already do. In Graham, Kentucky, we already handle high explosives. We manufacture PETN, which is one of the inputs into booster manufacturing, and cord. And what we learned through the explorations we've done with Replicant is most of the capabilities chemicals that we need to handle, people training, even the military grade approvals we need to do in some of our processes we already have. So it's a natural synergy to explore what has been happening with the geopolitical circumstances of the world to really use some of our capabilities to help build some more domestic manufacturing capability for some of those materials that go both in the defense sector, but also in our traditional construction and mining markets. So it's early days for us. The Nitrodyne JV has the mandate to pursue what we call energetics more broadly. That includes things like propellants and RDX, IMX, TNT, PETN, all products that we use in small quantities in some of our formulations but that opens up a new a new world of possibilities in all other applications that those materials have we see that as capital light typically those investments in recent times especially in the united states have been supported by government investments we will be doing some moderate investments in our facilities to to upgrade things like utilities and access roads to be able to accommodate this new operation. So it's early days, but notwithstanding being early, we're pretty excited, and hence why we decided to not only pursue the TNT plant, but also associate with Repcon for broader and bigger opportunities in the future.

That's helpful, thanks. Just on Phosphate Hill, you know, the EBIT is skewed to the second half, I believe, given the comments and the presentation. So can you just sort of outline what's happening there? I presume it's a production phasing, but can you just provide some colour on what's driving that? And then I have one final question if you have time, thanks.

Yeah, you're right. Nothing unusual or different from history. We account for some weather disruption. I don't think we can talk about weathering that part of the world as being unusual. So we always give some allowance for that. And we also have some yearly maintenance happening. in the early part of the financial year, so nothing extraordinary, just the natural phasing of production for us. We provided both capital and earnings guidance for the full year so that you can get your heads around what the business could be, but also I remind you of the outcome of the strategic review where we clearly now said that by March we should have a new owner for the operations. If we don't, then we'll move into an orderly closure of the asset. This essentially puts in perspective what would be the full year earnings in a scenario of closure. Obviously, if a new owner would take over the asset from March, different story, and that would be communicated to the market when the time is right.

Great. And one last one. Just on the dinosaur project engagement, up 59% was highlighted in the materials, which is obviously a strong number. Just some commentary would be great on what's driving that increase. And, you know, is that a good gauge for sort of future new contracts or mix improvements? Just how should we sort of contextualize that really strong growth rate? Thanks.

Yeah, look, this is a remarkable outcome and really talks about the very capable men and women around the world doing trials. I think you can almost use that as a proxy for trials. So that means that we have technical people engaging with customers that are trialing all range of our high So it could be, you know, a trial of use of shock resistant electronic detonators. It could be a new mine trialing Delta E. It could be an implementation of Nobify. All of which move us into that going from selling commodities to selling a bundled high value add product. So you're right. This dyno consulting engagement typically is for us a leading indicator of what's coming in terms of the continuous improvement of our mix, if you want, going from selling a yen to selling more value-added products.

Thanks so much. Thanks, Brooke.

Thank you. Your next question comes from Mark Wilson from RBC. Please go ahead.

Thanks very much, Mauro and Nitesh. Just a couple of quick questions on Phosphate Hill. Just wondering what your assumptions are in relation to gas and met gas supply through the course of fiscal 26.

Thanks, Mark. It's Nitesh. We've tried to make the assumptions around Fosswood Hill clearer for you to kind of assess the EBIT potential from that asset. As you see, we have previously reported a cost per tonne as part of our We've now guided forward on a cost per tonne basis which includes met gas and gas. That guidance on cost per tonne is 720 to 780. At the low end of that guidance we see gas to be around $16 and at the high end around $19. We've provided that in our assumption sets to allow you to apply market DAP prices to calculate the earnings profile of Phosphate Hill. Hopefully that helps.

Yeah, thanks. And so you have assumed that you're not getting any... You're basically sourcing gas from the East Coast? Correct.

The wholesale markets on the East Coast.

OK, great, great. Thanks. And secondly, just on CapEx, I know you sort of spoke about the breakdown looking at customer growth, growth initiatives and digital and technology. Is it fair to assume, given the focus of the company on those elements, that we are seeing a step change and we should actually look for these three components to be relatively consistent going forward?

Well, I think, Mark, we've taken a bold step to provide you some outlooks for 26. I think longer-term outlooks we won't provide at this stage. However, I think it is fair to say that we will provide these categorizations so that you understand the CAPEX profile that we have. The growth initiatives as a category is obviously linked to the transformation program. Our transformation program has 26 and 27 still to go. So it gives you an indication of, to some degree, how some of these categories are spent may flex. Okay. Okay. That's good. Thanks very much for that.

Thank you. Your next question comes from Scott Ryle from Remore Equity Research. Please go ahead.

Hi, thanks very much. I just wanted to follow up on the earlier question on the US TNT opportunity. I get that you're not going to size it, and I understand all the production advantages and things like that, but just stepping back a little bit. So the US government is funding it. Repcon is building it. And so what's actually Dyno's role at the facility? And I guess if the US government is funding it, is that an equity contribution or is it debt? I'm just trying to get a sense of, I guess, who owns it? What are the economics? I'm not asking you to quantify anything, but how will Dyno make money out of this opportunity over the three to five years going forward, please?

Yeah, no, good question. I think I can share some of that with you, probably not as much detail as we'll be able to do in the future as DZ's award, a contract that has been awarded to Repica and us as a member of that consortia, but the details and what they call the contract details is yet to be negotiated. In high level, Scott, this is a £15 million facility, of which £5 million is essentially what we use for boosters. So this gives you a lot of magnitude. of how relevant we are as a customer. So we will have the sole offtake for the commercial market. So in other words, every time that goes out of that plant that is not directed to the military will be used for our own boosted production or even if we decided to on-sell TNT. So that's how you should think about it. We will run the plant for fee. and the equity is the U.S. Army. So, essentially, that will be a plant owned by the U.S. Army that will be the operator. I hope that helps you get your heads around it.

Yeah, that does. No, thank you. Thank you. I know you've got all sorts of disclosure requirements, et cetera. The second question, just you've given some really good colour around the... Thank you. It would seem that every smelting business, refining business, everything that looks pretty similar to Phosphate Hill from a high level is talking to government about support for the business. I wonder, you've given a pretty clear outline of if you can't sell by March, you start planning for closure by 30 September, a year away. Looking at the government as needing to support this facility in any way in order to get to that sale process closure, please?

Great question, Scott. I think the first step which we welcomed was the announced deal they made for Glencoe. As you know, Glencoe is a multi-mounted operation. intrinsically linked, and the fact that the government gave Glencore a two-year deal is definitely something that we welcome. It gives us a bit more certainty on the offtake of met gas from that smelter. The other area that we've been working very closely with every level of government is gas supply. We generally believe that East Coast gas And we are not alone in that. Through the Manufacturing Australia, we have prosecuted with many of my peers the very difficult circumstance that manufacturing the East Coast of anyone that is heavily reliant on gas is facing right now. So that's probably the piece of work that we need to do with government and whether it's the Northern Territory government where the contract has not been performing, nothing that you haven't heard me talking before. But now, whether it's a gas reservation policy similar to what WA have or something done at federal level, we've been talking constructively to every sphere of government in prosecuting our case. I find that the operation can be viable, but not without commercial and fair gas price and energy price. So this is what we're prosecuting with the stakeholders. we can come to an outcome. Our main goal remains to be finding a qualified buyer to take that operation forward. But obviously, we cannot guarantee that outcome, which is, at least for the energy price, is outside our control. I have to say, the people in Phosphatio have been amazing. They've been running that asset as safely and efficiently as ever. Dan Callaghan and his team couldn't be prouder of the work they've been doing. But there's things that are outside our control, and gas is the big one.

Yeah, understood. OK, and a really quick one, hopefully. Fiscal 26, as we look forward, what are we thinking on material items, please? They've obviously been quite large the last two years, so I'm just looking for some idea whether they drop back down to a, you know, certainly to double-digit level and hopefully close to the zero.

Yes, so I think, Scott, the IMI is effectively very large, as we've made some really large investments We've made some really large impairments, particularly phosphate here in all our fertilizers business this year. Next year, it does remarkably drop. We still have some ongoing costs as far as the transformation program that will continue to be incurred, but it's of a different, certainly a different scale.

Okay, thank you. That's all I have.

Thank you. Your next question comes from Lee Power from JP Morgan. Please go ahead.

Hi, Mauro and Tesh and Tom. Mauro, just on the net transformation guidance you've given for FY26, you got asked on this a little bit earlier, but I kind of came away a little bit confused. So the range of $30 million to $70 million, is that a business target outcome or is it just something around the the delivery in terms of a timing element. And the reason I ask is it seems a lot of them are around cost savings and also most of them are in kind of the very final stages in terms of actually being executed or realised now. So I'm just trying to work out why there is such a big range in 26.

Well, those projects, they have various natures. So you're right, when you talk about the bottlenecking a plant, it's more of the engineering delivery risk and then pricing the product competitively in the market. So fair to say lower risk. But when you talk about things like your supply of goods and even offsetting some of the pressures from tariffs, we will be self-sufficient in TNT eventually, but we're still importing heavily TNT in the U.S. And in this world of tariffs, there is, fair to say, some uncertainty. So as we present, and has been the case before and will be moving forward, we will be presenting the net impact of transformation we allow us some headroom for this variation. And it's fair to say, again, as we're presenting a range for earnings for the first time, this $30 million to $70 million range of transformation links directly to the $460 million to $500 million earnings guidance. So this is in-year cash that we expect to deliver. So there's a timing here. impact and there's also a likelihood of delivery of each of the projects. So I would say we're very confident that we will deliver those projects and then the 30 to 70 million have to do with uncertainty around the offsets and also uncertainty around timing. But we're very confident on that range that we provided given the things that we have control. Obviously, if there's anything outside our control, we'll come back to the market and communicate. But as far as we know, the things that we can anticipate, We believe that 30 to 70 million range is appropriate.

Okay. That's great, Kala. Thank you. And then just on your market commentary that's in your annual report, like you've done a very, very good job delivering the EBIT growth you have because when I look at Asia Pacific base of precious metal volumes are down eight for the year. America's down six, I think the first half was down seven. I note in there, you've got some stuff around coal that seems to be improving. So when we have that backdrop, like how important is it for you that you get that volume piece positive again? Like how important is the market to your 600 million ambition in 28?

That's a great question, Lee, and I hope to give more color as we're going the road in the next week. Nitesh has been passionate about this same question. I have to say, historically, our business has been a chemical company, and we measured volume on the basis of traded ammonia nitrate. So in summary, that volume commentary that you have in the documentation is all to do with an equivalent traded volumes. which more and more as we grow our share of high-end technology programs doesn't necessarily talk to the profitable volumes that we trade. So one of the things that in time we hope to be able to peel the onion a few layers down is the volumes that we trade of the technology products as well. So the profitability of selling a ton of ammonia nitrate is not the same profitability of selling a ton of emulsion, which is not the same profitability of selling services that include emulsions and detonators. So we have been very clear to our commercial teams that this game is not about volume. It's a game about profitability and returns on capital. So we have, as I said before, been very disciplined to only play on markets that we can win the games of return on capital. So volume hasn't been as much a priority probably as when we had that mindset of trading ammonia nitrate. Ammonia nitrate will be and is a very important part of our capability. But it's not the big game in town. The big game in town here is really deliver the best possible product suite to customers, customers generating value, and we're being rewarded to do that. So this is... a clear example of how the world is changing in front of us. The volumes of ammonium nitrate traded in the future will likely not be a direct proxy for our profitability. Now, growing our business will probably mean that over time we'll have more ammonium nitrate trade, especially in Latam and EMEA. I fully expect that the traded volumes of ammonium nitrate in Latam and EMEA will grow. But predominantly, those will be traded tons. So again, the profitability driver for those markets will be initiation systems, high explosives, boosters, services, digital. This is where our earnings profile will likely move into time.

Excellent. Thanks, Mara. Appreciate it.

Thank you. Your next question comes from Daniel Kang from CLSA. Please go ahead.

Good morning, Mario, Nitesh. Just a few questions and I'm conscious of time, so I'll just ask all of them now. So firstly, can you talk about current domestic market conditions? We had some oversupply on the East Coast earlier this year. Are we still in market surplus or have markets normalised? Secondly, can you provide some color on the competitive landscape? Have you seen a step up in competitive intensity, particularly in the domestic emulsion and initiating systems segments? And just a final one on fertilizer pricing. Where do you see current spot DAP prices? Wondering how that compares to the 690 that was realized last year. Thank you.

I'll start with the two on explosives, and I'll leave Nitesh to answer the fertilized pricing question, Daniel. So the domestic market has rebalanced in the East Coast, Daniel. After that weather event we seen in February last year, we finished up the year pretty strong on the basis of essentially having the plants sold out and really working very, very hard to keep up with demand. So as we expected, the dip we had was a perfect storm. We had two months interruption for the turnaround in the middle of that weather event, which wasn't too pleasant. But now the market is rebalancing and we're seeing quite a strong demand coming out of our core customers. In the West Coast, as you know, we trade volumes and we have had no problem at all to access competitive materials from our suppliers there. In terms of the competitive landscape, I wouldn't say it's any different from previous periods. I don't see increased or decreased competition. The competition is still... very hard. We don't mind competition. And I guess the two things that you heard me saying before that haven't changed will be disciplined. We want to be remunerated for what we bring to bear, which is the quality and the security of supply that we can offer to our customers, especially in domestic markets. And also, we really compete on technology, compete in value, compete in value delivered to customer. We don't think that just competing in price is where we win. We win when customers realize value on using our products and remunerate us for doing so. The strategy is really about having market discipline and taking competition at face value and winning with technology and winning with quality of service. Nitesh, do you want to comment on that price?

Thank you, Daniel, for the question. That price is obviously currently trading higher than the average that we had for last year, so the price increased over the second half of the year, which we were able to benefit from. However, going forward, based on the indexes that are published, it is expected to kind of alleviate to some degree, but those are public indexes that you'll be able to refer to.

Thanks, Josh. Thank you. Your next question comes from John Patel from Macquarie. Please go ahead.

Good day, Mauro and Nitesh. Hope you both well. Just had two questions, please. Look, first one on Dyno Americas. Just a broader question around what benefits you're seeing in the US from the Trump administration. Obviously, TNT is an example of that in terms of your expansion there. But interested in terms of broader perspectives for US mine restarts and expansions and reshoring, et cetera.

And the other question?

The other question was just around acquisition opportunities relating to expansion into markets like EMEA and LATAM. Can we assume that there's potential for bolt-on acquisitions but unlikely to be anything transformational?

Yeah, good question. Look, I think the hypotheses of administration that was looking to onshore and privilege domestic manufacturing is starting to play out. And to your point, TNT is a great example of that. We have nothing but lots of support from local stakeholders to double down on our existing footprint and support bringing back to the West. I think this is the first TNT plant in the West since the 80s. So it's a quite remarkable outcome, and this government put their money where their mouth is. We have been up and down with tariffs, as you know, and so far managed to mitigate most of those. those outcomes. In the positive range, Resolution, just to give you an example, seems to be closer to start as ever. And as you know, Resolution is one of those world-class corporate deposits that BHP and Rio have been chasing for at least a decade. So I have seen movements in the direction of accelerating that process. Also, the focus of that administration on critical minerals is something that we like. Copper, nickel, lithium, those are all materials that use lots of explosives, and we welcome the impetus to improve the participation of the American industry in that. If anything, inflation has been hard on our core and construction customers. So we had some very successful outcomes, which sort of offset that from our numbers in that market. But that market hasn't been great in the last 12 months or so. A combination of high interest rates, somewhat subdued construction and infrastructure spend. But it looks like, even if you look more recent market communications from the likes of Martin Marietta and Heidelberg, they seem to be looking at the skies clearing out. So we hope that that will pick up as volume for us. In terms of acquisitions, consistently to what we told the market before, we have now materially completed the first stage of our strategic intent, which was separating the fertilizers business. We have progressed halfway through our transformation. But as you know, the hard yards are to come. Fiscal year 26 is such a critical year for us because it's a clean year, no turnarounds. It's a year to really double down on transformation, and the team is 100% focused on doing that. And we keep an eye on any opportunities to keep growing the explosives business. As you said, we're probably more in the space of bolt-on or small opportunities to... to help Richard and their team create beachheads and leverage opportunities into these entry markets. Time will be right at some point in the future to go more strongly in consolidation, but the time is still not now. committed to doing transformation and keep growing our earnings. But we still believe that this industry is prone for consolidation. The logic, the strategy, the strategic rationale of consolidation for us still stands. We believe that this market will benefit from a different market structure. And we will have a role to play in that. Not now. Time will come. We really focus on delivering on this fiscal year 26 guidance that we provided to the market.

Thank you.

Thank you. There are no further questions at this time. I'll hand back over to Mr. Nevers for any closing remarks.

Thanks, Darcy, and thank you all for joining us today and your interest in Dinah Nobel. I look forward to meeting many of you in person in the next few weeks as we go on to a roadshow. Have a safe week, and thank you for listening.