Investment Capital Framework

Invest in growth options

Target a minimum 15 per cent internal rate of return required for investments

Maintain balance sheet flexibility

Maintain credit metrics that are broadly consistent with an investment grade credit profile, whilst balancing the impact of commodity pricing and investment factors through the cycle.

Return cash to shareholders

Pay at least 40 per cent of free cash flow not required for balance sheet and investment activity to shareholders in the form of dividends.

Balance Sheet

Iluka seeks to retain a robust balance sheet through business cycles, providing sufficient funding capacity for internal investment opportunities, as well as the willingness to act counter-cyclically where there is a strategic and financial merit.

The following chart displays Iluka's net debt, gearing and funding facilities as at 31 December 2016.

Net debt gearing and funding facilities as at 31 December 2016 alt

Capital Discipline - Sources and Uses of Cash

This chart illustrates Iluka's efficient capital management since 2007, with the following key characteristics:

  • debt reduced and balance sheet strengthened
  • cash surplus to investing and balance sheet activities returned to shareholders. (66% of free cash flow returned since 2010 - $727 million, or $1.74 per share).
Sources and uses of cash as at 31 Dec 2017

Dividend Payment Framework

Iluka has a framework to pay at least 40 per cent of free cash flow (cash flow after balance sheet and investment activity) to shareholders in the form of dividends.  

Distribution Metrics
Full year free cash flow pay out ratio (%)
2010 - 2016 cumulative dividend payout ratio (%)
2010 - 2016 cumulative free cash flow returned to shareholders ($m)
2010 - 2016 cumulative retained free cash flow ($m)

Dividend payment consistent with Iluka's stated framework:
  - pay a minimum 40 per cent of FCF not required for investing or balance sheet activity
  - distribute maximum practicable available franking credits