2007 Annual Report - Sappi

Chief financial officer’s report continued
Earnings per share
The group has not issued significant additional shares over the
past five years and as a result earnings per share have tracked
profit for the year closely. A listing requirement of the JSE
Limited in South Africa is to disclose “headline earnings per
share” which removes items of a capital nature from the
calculation – the computation of headline earnings per share is
disclosed in Note 7 to the financial statements. Earnings per
share and headline earnings per share over the past five years
are depicted in the bar chart below:
Working capital
Optimising the levels of our working capital is a key focus area for
management. We aim to minimise our investment in working
capital to the point where that does not negatively impact
profitability by more than the savings in finance costs from the
lower investment.
We regularly compare our ratio of net working capital to annual
sales to those of our peers. We believe that our working capital
management compares favourably in that regard, although we
have identified opportunities to improve this further. Managing
the average monthly level of net working capital is a large element
in the management incentive schemes of all businesses.
The composition of our working capital at the financial year end
for the past three years is shown in the table below. Also, below
the table is the net working capital to sales percentage.
US$ million 2007 2006 2005
Inventories 712 699 711
Receivables 653 573 562
Payables (970) (848) (853)
Net working capital 395 424 420
Net working capital
to sales 7,4% 8,6% 8,4%
As a percentage of annual sales, our working capital level
improved from 8,6% in 2006 to 7,4% in 2007.
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sappi limited | 07 | annual report