2007 Annual Report - Sappi

Chief financial officer’s report continued
Capital expenditure by region may be summarised as follows:
US$ million 2007 2006 2005
The development of net debt over the past three years is shown
in the bar chart below:
Fine Paper 156 203 208
North America 42 48 76
Europe 102 136 109
South Africa 12 19 23
Forest Products 285 99 83
Saiccor upgrade 247 32 –
Other 38 67 83
Corporate 1 1 3
Total 442 303 294
The above figures include both “maintenance” and “expansion”
capital expenditures.
Debt
General
Net debt is a major source of funding for the group.
Approximately 38% of our total assets (excluding cash) are
funded by net debt as is shown in the table below:
US$ million % 2007 % 2006 % 2005
Net interest
bearing liabilities 38 2,257 40 2,113 36 2,008
Shareholders’ equity 30 1,816 26 1,386 29 1,589
Other liabilities 32 1,907 34 1,794 35 1,925
Total assets
(excluding cash) 100 5,980 100 5,293 100 5,522
The movement in net debt over the past three years is
explained below.
US$ million 2007 2006 2005
Net debt
beginning of period 2,113 2,008 1,584
Cash (generated)/utilised
during the period (24) 127 78
Currency and fair
value impact 168 (22) 346
Net debt end of period 2,257 2,113 2,008
Since the beginning of fiscal 2005, net debt has increased
by US$673 million. US$492 million of this increase is due to
the impact of translating our European and South African debt
into the weakening US Dollar. During this period we utilised
US$181 million of cash.
We focus on managing the level of our debt. Indeed during
2006 we stated publicly that we aimed to finance the
US$500 million Saiccor expansion project without any material
increase in net debt. In fiscal 2007 we generated a small
amount of net cash of US$24 million despite incurring nearly
half of the project expenditure. We expect to expend a further
US$236 million in fiscal 2008 and 2009 to complete the
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