2007 Annual Report - Sappi
2007 Annual Report - Sappi
2007 Annual Report - Sappi
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Cash flow analysis<br />
In the table below we present the group’s cash flow in a summarised format.<br />
US$ million <strong>2007</strong> 2006 2005<br />
Cash generated by operations before post employment benefits 686 464 569<br />
Contributions to post employment benefits (101) (68) –<br />
Cash generated from operations 585 396 569<br />
Net movement in working capital 60 (17) (30)<br />
Cash generated from operating activities 645 379 539<br />
Capital expenditure to maintain and expand assets (442) (303) (294)<br />
Finance costs (162) (138) (127)<br />
Taxation (27) (13) (43)<br />
Other 78 16 (85)<br />
Dividends to shareholders (68) (68) (68)<br />
Net cash generated/(utilised) 24 (127) 78<br />
As mentioned in note 2.7 to our Financial Statements, in 2006<br />
we showed contributions to post employment benefits in our<br />
cash flow statement as an investing activity. This item has been<br />
re-classified to be part of operating activities and, as a result,<br />
cash generated from operations is reduced by US$101 million<br />
in <strong>2007</strong> and US$68 million in 2006. Approximately US$70 million<br />
in <strong>2007</strong> and US$60 million in 2006 of the contributions to post<br />
employment funding relate to “catching-up” on deficits in certain<br />
of our funds. We expect the “catch-up” element of our post<br />
retirement contribution payments to reduce substantially in fiscal<br />
2008 and thereafter to be closer to the income statement charge<br />
in respect of post employment benefits.<br />
The relationship between capital expenditure and depreciation<br />
over the past five years is as follows:<br />
Cash generated from operating activities increased by 70%<br />
to US$645 million in <strong>2007</strong>. This increase is largely attributable<br />
to improved operating profit performance and working<br />
capital management.<br />
The higher level of cash spent on maintaining and expanding our<br />
assets in <strong>2007</strong> (US$442 million compared to US$303 million) is<br />
due to expenditure on the Saiccor expansion project.<br />
In setting our financial targets, we relate our aim of generating<br />
cash flows in excess of our cost of capital to additional<br />
targets such as return on net assets and operating margins.<br />
Our performance against these targets is referred to on page 5.<br />
sappi limited | 07 | annual report 41
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