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Shareholder Review
    Contents
    Introduction
    About Salmat
    Chairmans Message
    Joint Managing Directors Report
    Review of Operations
    BusinessForce
    SalesForce
    MediaForce
    Corporate Responsibility Report
    Board of Directors
    Corporate Directory
Full Financial Report
    Financial Contents
    Corporate Governance
    Directors Report
    Auditors Independence Declaration
    Income Statements
    Balance Sheets
    Statements of Recognised Income and Expense
    Cash Flow Statements
    Notes to the Financial Statements
    Directors Declaration
    Independent Auditors Report
    Independent Auditors Report
    Shareholder Information

 

Our core business is strong. We’ve built on this foundation during the past year with investments that add new and diverse sources of future growth.
Overall, Salmat delivered a good underlying result in 2008. Revenue and EBITA before significant items both increased on the prior year. Net profit after tax was well within expectations considering the impact of significant one-off deductions and costs associated with the acquisition of HPA. Sales revenue of $812.0 million was up 34.9% on the previous year. The main contributor to this was the eight months of additional revenue from HPA, which significantly improved the BusinessForce revenue contribution of $306.0 million.
SalesForce and MediaForce revenues were also up on the previous year, contributing $275.2 million and $230.9 million respectively.
EBITA pre significant items increased 22.6% on the previous year to $57.6 million. Net profit after tax decreased by 71.0% on the previous year to $12.8 million, having been affected by the significant items as well as sizeable amortisation and interest costs associated with the HPA acquisition.
Significant items
Last year’s results were positively impacted by a significant one-off gain of approximately $25 million from the sale of the Philippines joint venture. In contrast, this year’s significant item costs substantially outweighed the gains.
This year, Salmat incurred significant development and launch costs of $7.4 million pre-tax and $5.2 million post-tax associated with the start-up of the Lasoo pre-shop website.
We also sustained significant restructure costs in both our MediaForce and BusinessForce divisions, totalling $8.2 million pre-tax and $5.8 million post-tax.
The sale of Salmat’s New Zealand catalogue distribution business, Deltarg, generated a profit of $1.1 million (pre-tax and post-tax).
Capital expenditure
During the year, the company spent $20.2 million on capital expenditure out of cash flow. This represented 2.5% of revenue, which is within our normal range of expenditure. The largest spends were in the BusinessForce and SalesForce divisions, with amounts of $9.4 million and $6.3 million respectively.
Capital management
Cash requirements for growth in the next three years will be funded by working capital management initiatives.
Salmat repaid the remainder of its subordinated debt facility of $29.5 million immediately prior to the end of the financial year.
In August 2008, Salmat renewed part of its borrowing facility for a further two years. The balance owing on Salmat’s secondary facility was repaid, and a $50 million working capital facility was established, expiring in August 2010.
Salmat’s net borrowing position improved from a maximum for the year in October 2007 to $219 million at year end. This included capital raising of $87 million.
As a result, Salmat’s facilities currently comprise a senior debt facility for $200 million, which expires in October 2010; as well as a secondary working capital facility for $50 million, which expires in August 2010.
To minimise interest rate exposure, we have taken out interest rate hedging with an amortising hedge profile for the term of the facility, in accordance with Salmat policy.
This restructure of our borrowing facilities provides the company with the necessary funding for at least the next two years.
Colin Wright
Chief Financial Officer

 

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