FINANCIAL
OVERVIEW
FINANCE
OVERVIEW
Financial position
Funding
At 30 June 2008, PaperlinX had net debt of $776 million (prior year $612 million), represented by interest bearing liabilities $1,017 million and cash assets $241 million.
In January 2008, PaperlinX renegotiated its syndicated multi-currency debt facility. The new syndicated facility of USD$589 million consists of a USD$251 million 1-Year Tranche, USD$263 million 3-Year Tranche and a USD$75 million 5-Year Tranche. This is a facility reduction of USD$111 million from the prior year. PaperlinX has an appropriate mix of long, medium and short-term debt.
PaperlinX’s financial indicators in relation to the group’s financial position as at 30 June 2008 are:
- gearing:
- net debt to net debt plus equity of 29 per cent
- net debt to equity of 40 per cent;
- interest cover of 2.0 times;
- funds employed are $2,701 million;
- stockholders equity is $1,925 million.
All of the ratios are in compliance with the Group’s debt covenants.
PaperlinX’s policy on interest rate risk management is to monitor and, where appropriate, hedge the Company’s exposure to movements in interest via a combination of interest rate swaps and fixed rate issuances.
Offshore debt is managed to minimise the translation impact on the Company’s Australian balance sheet while aiming to optimise the returns to the Company.
PaperlinX actively reviews funding options with the aim of achieving the lowest possible cost of funds.
Equity
As at 30 June 2008, PaperlinX had $285 million (prior year $285 million) of hybrid securities in the form of PaperlinX Step-up Preference Securities (SPS).
Cash Flow and Working Capital
For the year to 30 June 2008, PaperlinX had an operating cash flow of $113 million. Minimising working capital and achieving strong cash flow continues to be a key management focus. Net trade working capital for the Group at 30 June 2008 was $1,153 million which was 5 per cent lower than June 2007. The working capital to sales ratio continued to show improvement reducing to 15.4 per cent versus 15.5 per cent at June 2007.
Capital Expenditure
Capital expenditure for the year was $343.8 million ($76.4 million excluding the pulp mill project, 81 per cent of depreciation). PaperlinX’s target is for capital expenditure to be approximately equal to depreciation expense.