2007 Annual Report - Sappi

Not restated for IFRS*
September September September September September
2007 2006 2005 2004 2003
US$ million US$ million US$ million US$ million US$ million
Ratios
Net debt/total capitalisation 0.43 0.46 0.41 0.32 0.31
Net debt/equity ratio 1.24 1.52 1.26 0.73 0.75
Asset turnover (times) 0.84 0.90 0.85 0.77 0.73
Current asset ratio 0.91 0.90 0.94 1.04 1.16
Trade accounts receivable
days outstanding
(including receivables securitised) 49 44 45 56 52
Inventory turnover (times) 6.4 6.3 6.3 5.4 5.3
Cash interest cover (times) 3.8 2.9 4.6 5.7 5.4
Number of employees 15,081 15,200 15,618 16,010 16,939
Sales per employee (US$’000) 352 325 321 295 254
Exchange rates
US$ per one Euro exchange rate – closing 1.4272 1.2672 1.2030 1.2309 1.1475
US$ per one Euro exchange rate
– average (12 month) 1.3336 1.2315 1.2659 1.2152 1.0804
ZAR to one US$ exchange rate – closing 6.8713 7.7738 6.3656 6.4290 7.1288
ZAR to one US$ exchange rate
– average (12 month) 7.1741 6.6039 6.2418 6.6824 8.3300
Reconciliation of profit (loss) for the year to operating profit excluding special items and EBITDA excluding special items (1)
US$ million September 2007 September 2006 September 2005 September 2004 September 2003
Profit (loss) for the year 202 (4) (184) 95 143
Net finance costs 134 130 80 110 111
Taxation (benefit) charge 47 (1) (5) (17) 18
Special items (gains) losses (70) (34) 192 (42) 31
Operating profit excluding special items 313 91 83 146 303
Depreciation and amortisation 375 392 424 410 353
EBITDA excluding special items (1)(2) 688 483 507 556 656
(1) In compliance with the US Securities Exchange Commission (“SEC”) rules relating to “Conditions for Use of Non-GAAP Financial Measures”, we have reconciled EBITDA excluding
special items to net profit rather than operating profit. As a result our definition retains minority interest as part of EBITDA excluding special items.
Operating profit excluding special items represents earnings before interest (net finance costs), taxation and special items. Net finance costs includes: gross interest paid; interest
received; interest capitalised; net foreign exchange gains; and net fair value adjustments on interest rate financial instruments. See the group income statement for an explanation
of the computation of net finance costs. Special items cover those items which management believe are material by nature or amount to the year’s results and require separate
disclosure in accordance with IAS 1 paragraph 86. Such items would generally include profit and loss on disposal of property, investments and businesses, asset impairments,
restructuring charges, natural disasters and non-cash gains or losses on the price fair value adjustment of plantations.
EBITDA excluding special items represents operating profit before depreciation, amortisation and special items. We use both operating profit excluding special items and EBITDA
excluding special items as internal measures of performance to benchmark and compare performance, both between our own operations and as against other companies. Operating
profit excluding special items and EBITDA excluding special items are measures used by the group, together with measures of performance under IFRS and US GAAP, to compare
the relative performance of operations in planning, budgeting and reviewing the performances of various businesses. We believe they are useful and commonly used measures of
financial performance in addition to net profit, operating profit and other profitability measures under IFRS or US GAAP because they facilitate operating performance comparisons
from period to period and company to company. By eliminating potential differences in results of operations between periods or companies caused by factors such as depreciation
and amortisation methods, historic cost and age of assets, financing and capital structures and material items of the type requiring separate disclosure under IAS I paragraph 86
and taxation positions or regimes, we believe both operating profit excluding special items and EBITDA excluding special items can provide a useful additional basis for comparing
the current performance of the operations being evaluated. For these reasons, we believe operating profit excluding special items and EBITDA excluding special items and similar
measures are regularly used by the investment community as a means of comparison of companies in our industry. Different companies and analysts may calculate operating profit
excluding special items and EBITDA excluding special items differently, so making comparisons among companies on this basis should be done very carefully. Operating profit
excluding special items and EBITDA excluding special items are not measures of performance under IFRS or US GAAP and should not be considered in isolation or construed as a
substitute for operating profit or net profit as indicators of the company’s operations in accordance with IFRS or US GAAP.
(2) Operating profit excluding special items and EBITDA excluding special items have been presented for the first time this year. Previously EBITDA was presented. The change reflects
the current internal management emphasis on both operating profit excluding special items and EBITDA excluding special items.
(3) Net of treasury shares (refer note 18).
(4) The dividends for all the financial years were declared subsequent to year-end.
* The financial results of the group have from the beginning of the 2005 financial year been prepared in accordance with International Financial Reporting Standards. Figures prior to
2005 prepared in accordance with SA GAAP have not been restated to comply with International Financial Reporting Standards.
** Special items cover those items which management believe are material by nature or amount to the year’s results and require separate disclosure in accordance with IAS 1 paragraph 86.
Such items would generally include profit and loss on disposal of property, investments and businesses, asset impairments, restructuring charges, natural disasters and non-cash
gains or losses on the price fair value adjustment of plantations.
*** The year ended September 2005 included 53 weeks.
sappi limited | 07 | annual report 49