COMPANY NEWS & UPDATES
though no more so than competitors . It also handles materials which could impinge on local community safety , including " Major Hazard Facilities ." The production of explosives and industrial chemicals releases NOx and N2O gases and Orica ' s operations are subjected to multiple environmental regulations . Any accidental spill or environmental contamination could be followed by significant remediation costs and fines . NOx can cause chronically reduced lung function among other health effects while N2O is thought to play a critical role in ozone layer depletion .
The balance sheet is sound . Orica is in reasonable financial health . The company raised $ 517 million from an equity issuance late in first half FY20 . But $ 300 million was used to acquire EXSA so the balance sheet didn ' t receive full proceeds . Excluding lease liabilities , Orica finished FY20 with $ 1.8 billion net debt , leverage ND /( ND + E ) at 36 % and high FY20 net debt / EBITDA of 3.1 though in an admittedly challenging earnings period . We expect net debt / EBITDA to fall nearer 1.0 by FY24 . But in the meantime the leveraged balance sheet bears consideration in any investment decision and contributes to our high valuation uncertainty . Average debt maturity is 4.5 years though with almost 50 % due in three years .
On the investment side , we rate Orica ' s performance as fair . The company let itself down on the capital-allocation side by overinvesting during the Chinadriven resources boom . In the four years to 2014 , Orica added approximately $ 2.4 billion in capital expenditure and net acquisitions to an already substantial $ 7.6 billion asset base . This damaged the cost advantage , with average return on invested capital for the five years to FY20 , somewhat below our assessed 9.4 % WACC . A more recent focus on higher shareholder returns means Orica will no longer invest in new plants unless the investment makes sense economically and meets strict financial hurdles . It targets a return on net assets of 18 % for new projects and acquisitions . This disciplined approach should protect margins in future and help maintain a rational market structure . We forecast return on new invested capital to comfortably exceed the target .
Finally , we think distributions are appropriate . Orica should have sufficient cash flows to pay down debt and maintain its dividends . The company continued to pay a dividend during the COVID-19 pandemic but at a somewhat reduced 44 % payout . However , we anticipate return to circa 50 % payouts from FY21 in line with appropriate historical levels .
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