Financial Review

Balance sheet

The balance sheet was further strengthened during the period with strong operating cashflow used to reduce debt levels further.

Funding

The group had over $1.1 billion of unutilised debt facilities and $146 million of cash on hand as at 31 December 2009. Debt maturing within the next 12 months is approximately $112 million.

During the period, the maturity profile of the group’s syndicated bank loan was extended and now has an average duration of 2.8 years.

Back to topDebt maturity

The average maturity of the net debt of $1,135 million is 6 years and the currency split is 51 percent Australian dollar; 22 percent New Zealand dollar; 21 percent US dollar; 4 percent Euro; and 2 percent Pounds Sterling.

Back to topInterest rates

Following the equity raising in April 2009, approximately 89 percent of all borrowings have fixed interest rates with an average duration of 4.7 years and an average rate of 7.22 percent. Inclusive of the floating rate borrowings, the average rate on debt is currently 7.49 percent. All interest rates are inclusive of margins but not fees.

With strong operating cashflow, gearing¹ at 27.3 percent, and interest coverage² at 5.2 times, the group remains in a sound financial position.

Back to topCashflow

Cashflow from operations was $317 million compared with $208 million in the prior period. The strong improvement in cashflow was largely attributable to a continued emphasis on tight capital management.

Capital expenditure for the period was $77 million, down 53 percent compared with $164 million in the prior corresponding period. Of this total, $46 million related to stay-in-business capital projects, with $31 million in new growth initiatives. Significant projects included the new port cement facility in Auckland and the installation of additional capacity in the insulation plant in Victoria.

Back to topDividend

The dividend is partially tax credited with imputation credits for New Zealand purposes. Non-New Zealand shareholders benefit from the New Zealand supplementary dividend which has the effect of partly removing the cost of New Zealand non-resident withholding tax. The dividend summary under ‘Dividend information’ illustrates the effect of the New Zealand tax credits on the dividend and the supplementary dividend paid to non-New Zealand shareholders.

This dividend is unfranked for Australian tax purposes. Although the company has franking credits available, the level at which it is currently able to frank dividends is insufficient to provide any material benefit to Australian shareholders having regard to the supplementary dividend paid and the rules for calculating the franking tax offset in Australia. To maximise the value of available franking credits the company will continue its policy of accumulating them and attaching these to dividends only when the franking percentage is at, or near to, 100 percent rather than spreading them over every dividend.

Back to topDividend reinvestment plan

The Dividend Reinvestment Plan will be operative for this dividend payment. Documentation for participation is available from the share registry or the company’s website. Applications to participate must be received by the registry before the record date of 31 March 2010.

The price used to determine entitlements under the Plan is the volume weighted average share price of price-setting trades of the company’s shares sold on the NZX in the five business days following the record date of 31 March 2010. The new shares will be issued on the dividend payment date of 21 April 2010.

The shares will be quoted on an ex-dividend basis from 25 March 2010 on the ASX and 1 April 2010 on the NZX.

¹ Net debt to net debt plus equity

² EBIT before unusual items to total interest paid including capital notes interest