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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sappi | LSE:SAZ | London | Ordinary Share | ZAE000006284 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 224.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:8702R
Sappi Ld
10 November 2003
sappi limited
(Registration number 1936/008963/06)
Issuer Code: SAVVI
JSE Code: SAP
ISIN Code: ZAE 000006284
The word for fine paper
Results for the fourth quarter and year ended September 2003
* Headline EPS 11 US cents for the quarter; 71 US cents for the year
* EPS 4 US cents for the quarter; 65 US cents for the year
* After tax charge of 8 US cents for the quarter in respect of machine closure
* Dividend 29 US cents
* Difficult market conditions
summary
Quarter Quarter Quarter Year Year
ended ended ended ended ended
Sept June Sept Sept Sept
2003 2003 2002 2003 2002
Sales (US$ million) 1,123 1,062 1,052 4,299 3,729
Operating profit (US$ million) 46 46 122 286 389
EBITDA* (US$ million) ** 120 *** 149 221 654 724
Operating profit to sales (%) 4.1 4.3 11.6 6.7 10.4
EBITDA to sales (%) * 10.7 14.0 21.0 15.2 19.4
Operating profit to average
net assets (%) * 4.1 4.3 13.0 7.0 11.3
Headline EPS (US cents) * 11 12 32 71 101
EPS (US cents) 4 13 32 65 95
Return on average equity (%) * 2.0 6.1 18.6 8.4 14.2
Net debt (US$ million) * 1,491 1,571 1,419 1,491 1,419
Net debt to total 30.8 33.2 36.1 30.8 36.1
capitalisation (%) *
* Refer to Supplemental Information for the definition of the term.
** The comparative information has been restated to take into account the
changed EBITDA definition. Refer to Supplemental Information for further
details.
*** EBITDA for the quarter ended September 2003 reduced by US$31.5 million in
respect of machine closure.
comment
Markets for coated fine paper in the USA and Europe did not show the customary
strong seasonal pick up in the quarter. In particular the catalogue season in
America was weaker than last year. Apparent consumption for the quarter was down
6% in the USA compared to a year ago whereas there was some improvement in
Europe. Advertising pages in the US were down 2.9% for the quarter compared to a
year earlier.
The price increase announced in July for web products in the USA was not
implemented and prices remain weak. In Europe prices remained under pressure;
however the rapid decline in the previous quarter appears to have been
stabilised, as order intake improved in recent weeks.
The NBSK pulp price index has picked up in recent weeks to US$546 per ton from a
recent low of US$510 per ton.
Net profit for the quarter was US$10 million after a post-tax charge of
approximately US$19 million (US$31.5 million pre-tax) in respect of the planned
closure of Westbrook's paper machine 14 and associated inventory (see 'Closure
of operations'). Headline earnings were US$26 million. The charge in respect of
Westbrook inventory reduced Headline earnings by approximately US$2 million (1
US cent per share).
Headline earnings per share were 11 US cents, after the 1 US cent per share
charge for the Westbrook inventory, 8.3% below the prior quarter and 65.6% below
a year earlier. After the balance of the Westbrook charge earnings per share
were 4 US cents.
Operating profit for the quarter was US$46 million, 62% below last year,
reflecting the poor trading conditions.
Operating costs have generally been well controlled; however, higher employee
benefit, wood and energy costs have reduced our margins. Selling, General and
Administrative expenses for the quarter were US$45 million higher than last
year. Approximately US$35 million of the difference relates to reversals of
litigation and insurance costs last year and currency movements.
Net finance costs for the quarter were US$18 million compared to US$29 million a
year earlier reflecting lower interest rates and the benefit of swapping US$750
million of debt from fixed rate to floating.
The tax credit for the quarter was a result of the credit in respect of the
impairment charge and a reduction in the effective tax rate for the year.
We expect the effective tax rate for next year to be approximately 20%. However,
this will depend on profitability and regional performance.
For the full year sales were US$4.3 billion, 15.3% higher than last year. A
significant portion of this was related to currency translation. Operating
profit, however, was 26.5% lower at US$286 million, which reflects the
significant reduction of prices in our major markets. In Europe prices realised
in local currency declined approximately 9% compared to the prior year, the
Forest Products division's pulp and paper prices declined 4% and North America
prices declined 3% year on year.
Net profit for the full year was US$149 million (65 US cents) after the US$19
million charge in respect of the machine closure. Headline earnings were US$163
million (71 US cents).
cash flow and net debt
Cash generated by operations was US$159 million for the quarter, 28% higher than
the June quarter but 30% lower than a year earlier. Working capital declined by
US$104 million compared to the previous quarter due to reduced inventory and
increased payables.
We spent US$126 million on fixed assets in the quarter, which was significantly
higher than the previous quarter as a number of major projects were commissioned
in the period. As a result of market conditions we cut back our capital
expenditure for the full year to US$296 million, representing approximately 84%
of depreciation, from a planned level of approximately 100% of depreciation.
We repurchased 2.2 million shares in the quarter at a cost of approximately
US$29 million.
Net debt at the end of September was 5% lower than June at US$1,491 million. Net
debt to total capitalisation reduced from 33.2% to 30.8%. Over the full year net
debt increased by US$72 million as a result of currency translation. Total
interest bearing borrowings increased by US$403 million to US$2,075 million and
cash and cash equivalents increased by US$331 million to US$584 million.
operating review for the quarter
sappi fine paper
Quarter ended Quarter ended
Sept 2003 Sept 2002 %
US$ million US$ million change
Sales 917 905 1.3
Operating profit 31 78 (60.3)
Operating profit 3.4 8.6 -
to sales (%)
EBITDA* 81 157 (48.4)
EBITDA to sales (%) 8.8 17.3 -
RONOA pa (%) 3.8 10.4 -
* EBITDA for the quarter ended September 2003 reduced by US$31.5 million in
respect of machine closure
The performance of our fine paper businesses was unfavourably affected by weak
pricing in Europe, continued weak pricing and the lack of a significant seasonal
pick-up of demand for coated fine paper in North America this year and lower
prices in South Africa as the relatively stronger Rand made imports more
competitive and reduced margins on our exports.
Europe
Quarter ended Quarter ended
Sept 2003 Sept 2002 % change % change
US$ million US$ million (US$) (Euro)
Sales 485 459 5.7 (8.1)
Operating profit 20 53 (62.3) (67.2)
Operating profit to sales 4.1 11.5 - -
(%)
EBITDA 66 98 (32.7) (41.4)
EBITDA to sales (%) 13.6 21.4 - -
RONOA pa (%) 4.9 14.6 - -
Price pressure continued in the quarter particularly in Spain and Italy, and in
export markets where the weakness of the US Dollar compounded the effect on
average prices realised in Euros. Average prices realised in Euros for the
quarter were 10% lower than a year earlier.
Our sales volume increased 2% compared to a year earlier, much of which was to
offshore markets. We recovered our market share in the region in the quarter.
North America
Quarter ended Quarter ended
Sept 2003 Sept 2002 %
US$ million US$ million change
Sales 358 388 (7.7)
Operating profit 5 15 (66.7)
Operating profit 1.4 3.9 -
to sales (%)
EBITDA* 6 46 (87.0)
EBITDA to sales (%) 1.7 11.9 -
RONOA pa (%) 1.4 4.2 -
* EBITDA for the quarter ended September 2003 reduced by US$31.5 million in
respect of machine closure
Sales volumes improved significantly compared to the June quarter but were 7%
below the equivalent quarter last year in line with the decline in apparent
consumption. The catalogue season for coated fine paper web products was less
marked than last year.
Average prices realised declined in the quarter to marginally below a year
earlier reflecting weak markets and continued imports from Asia and Europe.
Operating costs continue to be influenced by increasing costs of employee
benefits and an increase in energy and wood costs in the quarter.
See the section 'Closure of operations'.
Fine Paper South Africa
Quarter ended Quarter ended
Sept 2003 Sept 2002 % change % change
US$ million US$ million (US$) (Rands)
Sales 74 58 27.6 (10.1)
Operating profit 6 10 (40.0) (57.7)
Operating profit to sales 8.1 17.2 - -
(%)
EBITDA 9 13 (30.8) (51.2)
EBITDA to sales (%) 12.2 22.4 - -
RONOA pa (%) 18.4 46.0 - -
Our South African business produced reasonable results considering the pressure
on margins resulting from the increased competition from imports. We continue to
find ways to minimise the margin squeeze, including finding alternative markets
and innovative product and service offerings.
Forest Products
Quarter ended Quarter ended
Sept 2003 Sept 2002 % change % change
US$ million US$ million (US$) (Rands)
Sales 206 147 40.1 (1.2)
Operating profit 22 38 (42.1) (59.2)
Operating profit to sales 10.7 25.8 - -
(%)
EBITDA 46 58 (20.7) (44.1)
EBITDA to sales (%) 22.3 39.5 - -
RONOA pa (%) 8.4 21.3 - -
We experienced firm demand in the South African market for our packaging paper,
however, average prices realised were lower as a result of pressure from imports
following the weakening of the US Dollar relative to the Rand.
Demand for dissolving pulp remained firm in the quarter and Saiccor mill ran at
full capacity for the third consecutive quarter. Dollar prices increased in line
with paper pulp prices. Unfortunately the improved Dollar price was more than
offset by the weaker Dollar relative to the Rand. We sold approximately 100,000
tons more dissolving pulp in the year ended September than in the prior year.
closure of operations
We have decided on a number of actions to offset rising costs, which include
taking out capacity to improve the supply demand balance in the US and a range
of other initiatives to reduce fixed costs in all regions.
At Westbrook (Maine, USA) we will close Number 14 paper line, which is our
highest cost paper machine. It has an annual capacity of 85,000 tons and will be
closed in the next few months. The brands produced on this machine will be
transferred to other Sappi mills and we will not only maintain service levels
but also improve the product characteristics by producing on more modern
facilities. We will be communicating with customers immediately about the
benefits of this change for them. Westbrook mill will in future focus on our
Ultracast(R) and casting release paper business.
We have written off the asset and related inventory in the quarter and taken a
charge of US$19 million after tax (US$31.5 million pre-tax). We will take a
further charge of US$15 million pre-tax next quarter in respect of the closure
costs.
We expect expense savings before tax of approximately US$18 million in a full
year once the paper line has been closed. The net impact on operating income is
expected to be favourable from the March quarter.
We stopped operations at Clan sawmill (South Africa) in the quarter and expect
to close the mill before December 2003. The mill, with a log intake of 80,000m3,
uses old technology and does not have a competitive log supply. The closure will
not have a material impact on Sappi's results.
Unfortunately, these closures will result in the loss of approximately 170 jobs
at Westbrook and 300 jobs at Clan.
restructuring
We are restructuring the Fine Paper division. Wolfgang Pfarl and Kathy Walters,
CEOs of Sappi Fine Paper Europe and North America respectively, will report
directly to Jonathan Leslie, CEO of Sappi Limited and as a consequence the Fine
Paper office in London will be closed.
As the position of CEO Sappi Fine Paper will no longer exist,
we have agreed that Bill Sheffield will leave the group on
14 November 2003.
In addition, in order to counteract the effect of rapidly increasing benefit
costs, we also expect to reduce our staffing levels by a further 100 people in
North America and 150 people in Europe during 2004.
We expect to take a pre-tax charge of US$13 million in the first quarter in
respect of this restructuring.
new accounting standard
Accounting standard Agriculture - AC137 (IAS41) becomes effective for Sappi from
the beginning of the 2004 financial year. The key requirement of the standard is
that agricultural assets (plantations) should be valued at fair value. This
requires changes to the way we account for our plantations. In future we will
not capitalise silvicultural expenses and finance costs to plantations nor will
we amortise plantations to the income statement. Movements in the fair value of
plantations will impact operating profit.
This change will lead to increased volatility in profit going forward.
dividend
The board has declared a dividend of 29 US cents for the year ended September
2003.
A dividend of 28 US cents was paid in the previous year.
outlook
As we start our new year under these difficult market conditions for coated fine
paper, we will continue to curtail production during the next quarter; in
addition to the permanent closure of the Westbrook paper machine we plan to
increase commercial downtime and schedule major maintenance shuts at all the
North American mills, including total mill shutdowns, which occur every 5 years,
at Somerset and Muskegon. We expect these shuts to reduce operating income by
approximately US$15 - 17 million in the December quarter compared to last year.
Our investment programme will be focused on maintaining the health of our
business and on improving our cost efficiency. We expect capital expenditure in
2004 to be similar to 2003.
It appears as if any pick up in markets will be delayed beyond our first
quarter. As a result of poor market conditions and low prices we expect
earnings in the first quarter to be weaker than the prior quarter, before the
charges related to closure and staff reduction and the impact of the maintenance
shuts. We are, however, seeing early signs of improvement in Europe. The order
intake of coated fine paper has improved and announcements of price increases
for coated groundwood paper (in Europe and the US) and coated fine paper reels
(in Europe) have been made. With this background we expect earnings to improve
for the balance of the year, resulting in an overall improvement, before the
closure and staff reduction charges, compared to 2003.
On behalf of the Board
J C A Leslie D G Wilson
Director Director 10 November 2003
dividend announcement
The directors have declared a dividend (number 80) of 29 US cents per share for
the year ended September 2003.
In compliance with the requirements of STRATE, the JSE Securities Exchange's
electronic settlement system which is applicable to Sappi, the salient dates in
respect of the dividend will be as follows:
Last day to trade to qualify for dividend Friday, 2 January 2004
Date on which shares commence trading ex-dividend Monday, 5 January 2004
Record date Friday, 9 January 2004
Payment date Monday, 12 January 2004
Dividends payable from the Johannesburg transfer office will be paid in South
African Rands except that dividends paid to nominee shareholders in respect of
shares which they hold on behalf of non-residents of the Republic of South
Africa will be paid in United States Dollars.
Dividends payable from the London transfer office will be paid in British Pounds
Sterling or in the case of shareholders with registered addresses in the USA, in
United States Dollars. Dividends payable other than in United States Dollars
will be calculated at the respective rates of exchange ruling on Tuesday, 23
December 2003.
There will not be any dematerialisation nor rematerialisation of Sappi Limited
share certificates from 5 January to 9 January 2004, both days inclusive.
Sappi Management Services (Pty) Limited
Secretaries
Per D J O'Connor
10 November 2003
forward-looking statements
Certain statements in this release that are neither reported financial results
nor other historical information, are forward-looking statements, including but
not limited to statements that are predictions of or indicate future earnings,
savings, synergies, events, trends, plans or objectives. Undue reliance should
not be placed on such statements because, by their nature, they are subject to
known and unknown risks and uncertainties and can be affected by other factors,
that could cause actual results and company plans and objectives to differ
materially from those expressed or implied in the forward-looking statements (or
from past results). Such risks, uncertainties and factors include, but are not
limited to the highly cyclical nature of the pulp and paper industry (and the
factors that contribute to such cyclicality, such as levels of demand,
production capacity, production and pricing), adverse changes in the markets for
the group's products, consequences of substantial leverage, changing regulatory
requirements, unanticipated production disruptions, economic and political
conditions in international markets, the impact of investments, acquisitions and
dispositions (including related financing), any delays, unexpected costs or
other problems experienced with integrating acquisitions and achieving expected
savings and synergies and currency fluctuations. The company undertakes no
obligation to publicly update or revise any of these forward-looking statements,
whether to reflect new information or future events or circumstances or
otherwise.
group income statement
Reviewed Reviewed Reviewed Audited
Quarter Quarter Year Year
ended ended ended ended
Sept 2003 Sept 2002 Sept 2003 Sept 2002
US$ million US$ million % change US$ million US$ million % change
Sales 1,123 1,052 6.7 4,299 3,729 15.3
Cost of 984 882 3,675 3,079
sales *
Gross profit 139 170 (18.2) 624 650 (4.0)
Selling, general & 93 48 338 261
administrative expenses*
Operating profit 46 122 (62.3) 286 389 (26.5)
Non-trading loss 31 (2) 27 17
(profit)
Net finance costs 18 29 90 74
Net paid 27 30 120 96
Capitalised (3) (6) (23) (29)
Net foreign exchange (3) 1 (1) (4)
(gains) losses
Change in fair value of (3) 4 (6) 11
financial instruments
Loss (profit) before tax (3) 95 - 169 298 (43.3)
Taxation (6) 28 30 52
- current
- deferred (7) (6) (10) 26
Net profit 10 73 (86.3) 149 220 (32.3)
Earnings per share 4 32 65 95
(US cents)
Headline earnings per 11 32 71 101
share (US cents) **
Weighted average number 227.7 230.2 229.1 230.2
of shares in issue
(millions)
Diluted earnings per 4 31 64 94
share
(US cents)
Diluted headline 11 31 70 100
earnings per share
(US cents) **
Weighted average number
of shares on fully
diluted
basis (millions) 230.0 233.4 231.5 233.4
Calculation of headline
earnings **
Net profit 10 73 149 220
Loss (profit) on 2 (1) (1) 1
disposal of business and
fixed assets
Mill closure costs and 14 1 15 6
asset impairments
Debt restructuring costs - - - 6
Headline earnings 26 73 163 233
* Reallocation of delivery charges. Refer to note 3 for further details.
** Headline earnings disclosure is required by the JSE Securities Exchange South
Africa.
group balance sheet
Reviewed Audited
Sept 2003 Sept 2002
US$ million US$ million
ASSETS
Non-current assets 4,260 3,639
Property, plant and equipment 3,554 3,189
Plantations 450 298
Deferred taxation 41 6
Other non-current assets 215 146
Current assets 1,575 1,094
Cash and cash equivalents 584 253
Trade and other receivables 289 282
Prepaid income taxes 1 38
Inventories 701 521
Total assets 5,835 4,733
EQUITY AND LIABILITIES
Shareholders' equity
Ordinary shareholders' interest 1,958 1,601
Minority interest - 2
Non-current liabilities 2,546 2,110
Interest-bearing borrowings 1,742 1,455
Deferred taxation 522 399
Other non-current liabilities 282 256
Current liabilities 1,331 1,020
Interest-bearing borrowings and
bank overdraft 333 217
Taxation payable 82 48
Other current liabilities 916 755
Total equity and liabilities 5,835 4,733
Number of shares in issue at
balance sheet date (millions) 226.9 230.2
group cash flow statement
Reviewed Reviewed Reviewed Audited
Quarter Quarter Year Year
ended ended ended ended
Sept 2003 Sept 2002 Sept 2003 Sept 2002
US$ million US$ million US$ million US$ million
Cash generated by
operations 159 226 675 744
Movement in working 104 50 (79) (42)
capital
Net finance costs (21) (35) (113) (103)
Taxation recovered 2 (26) 33 (89)
(paid)
Dividends paid - - (65) (60)
Cash retained from 244 215 451 450
operating activities
Cash effects of (140) (60) (340) (701)
investing activities
Normal investing (140) (65) (340) (218)
activities
Acquisition of net - 5 - (483)
assets
104 155 111 (251)
Cash effects of 6 (143) 147 13
financing activities
Net movement in cash 110 12 258 (238)
and cash equivalents
group statement of changes in shareholders' equity
Reviewed Audited
Year Year
ended ended
Sept 2003 Sept 2002
US$ million US$ million
Balance - beginning of year 1,601 1,503
Net profit 149 220
Foreign currency translation reserve 335 (62)
Revaluation of derivative instruments (14) 3
Dividends declared - US$0.28 (2002: US$0.26) per share (65) (60)
(Share buybacks) net of transfers to participants of the share (48) (3)
purchase trust
Balance - end of year 1,958 1,601
notes to the group results
1. Basis of preparation
The financial statements are prepared in conformity with South African
Statements of Generally Accepted Accounting Practice
(SA GAAP). The preliminary results have been prepared in compliance with AC 127
(Interim financial reporting) and are based on accounting policies which are
consistent with those used in the annual financial statements. Sappi has changed
its accounting policy with regard to the translation of equity categories to
conform with the requirements of AC 430 (Reporting currency - Translation from
measurement currency to presentation currency), the effects of which are
negligible. All of the other accounting policies are the same as those in the
September 2002 annual financial statements. The preliminary results for the
quarter have been reviewed by the group's auditors, Deloitte & Touche. Their
unqualified review report is available for inspection at the company's
registered offices.
2. Headline earnings per share
Headline earnings per share has been restated as required by the new JSE
Securities Exchange South Africa Listing Requirements. These require that all
companies comply with circular 7/2002 issued by the South African Institute of
Chartered Accountants.
For Sappi the only change in calculating headline earnings is that there are no
longer any adjustments for movements in restructuring provisions.
The impact on previously reported headline earnings was an increase of 2 US
cents to 32 US cents for the quarter ended September 2002 and an increase of 3
US cents to 101 US cents for the year ended September 2002.
Similarly the impact on previously reported diluted headline earnings per share
was an increase of 1 US cent to 31 US cents for the quarter ended September 2002
and an increase of 3 US cents to 100 US cents for the year ended September 2002.
3. Reallocation of costs
In prior years, a portion of delivery charges was included in selling, general
and administrative expenses. It is now considered more appropriate to reflect
all delivery charges under cost of sales. The effect is to increase cost of
sales and decrease selling, general and administrative expenses by US$24 million
for the quarter (June 2003: US$22 million; Sept 2002: US$21 million) and US$87
million for the year (Sept 2002: US$71 million).
4. Comparative figures
Comparative figures have been regrouped or reclassed where necessary to give a
more appropriate comparison. There has been no impact on previously reported net
income.
notes to the group results (continued)
Reviewed Reviewed Reviewed Audited
Quarter Quarter Year Year
ended ended ended ended
Sept 2003 Sept 2002 Sept 2003 Sept 2002
US$ million US$ million US$ million US$ million
5. Operating profit
Included in
operating profit
are:
Depreciation 93 85 352 310
Fellings 7 7 21 26
Amortisation 5 5 22 16
105 97 395 352
6. Capital
expenditure
Property, plant and
equipment 126 49 296 180
Plantations 10 6 31 25
136 55 327 205
Reviewed Audited
Sept 2003 Sept 2002
US$ million US$ million
7. Capital
commitments
Contracted but not 86 55
provided
Approved but not 193 173
contracted
279 228
8. Contingent
liabilities
Guarantees and 47 66
suretyships
Other contingent 24 14
liabilities
Supplemental Information
definitions
Average - averages are calculated as the sum of the opening and closing balances
for the relevant period divided by two
*EBITDA - earnings before interest, tax, depreciation and amortisation
(including fellings)
*EBITDA to sales - EBITDA divided by sales
Fellings - the amount charged against the income statement representing the
standing cost of plantations harvested
Headline earnings - as defined in circular 7/2002 issued by the South African
Institute of Chartered Accountants, separates from earnings all items of a
capital nature. It is not necessarily a measure of sustainable earnings. It is a
listing requirement of the JSE Securities Exchange South Africa to disclose
headline earnings per share
*Net assets - total assets less current liabilities
*Net asset value - shareholders' equity plus net deferred tax
*Net asset value per share - net asset value divided by the number of shares in
issue at balance sheet date
*Net debt - current and non-current interest-bearing borrowings, and bank
overdrafts (net of cash, cash equivalents and short-term deposits)
*Net debt to total capitalisation - net debt divided by shareholders' equity
plus minority interest, non-current liabilities, current interest-bearing
borrowings and overdraft
*ROE - return on average equity. Net profit divided by average shareholders'
equity
*RONA - operating profit divided by average net assets
*RONOA - operating profit divided by average net operating assets. Net operating
assets are total assets (excluding deferred taxation and cash) less current
liabilities (excluding interest-bearing borrowings and bank overdraft)
* The above financial measures, other than headline earnings per share, are
presented to assist our shareholders and the investment community in
interpreting our financial results. These financial measures are regularly used
and compared between companies in our industry.
Supplemental Information
additional information
Reviewed Reviewed Reviewed Audited
Quarter Quarter year year
ended ended ended ended
Sept 2003 Sept 2002 Sept 2003 Sept 2002
US$ million US$ million US$ million US$ million
Net profit to
EBITDA * reconciliation
Net profit per the
Group Income Statement 10 73 149 220
Net finance costs 18 29 90 74
Taxation - current (6) 28 30 52
- deferred (7) (6) (10) 26
Depreciation 93 85 352 310
Amortisation (including fellings) 12 12 43 42
EBITDA * 120 221 654 724
Reviewed Audited
Sept Sept 2002
2003
US$ million US$ million
Net debt 1,491 1,419
(US$ million) **
Net debt to total capitalisation (%) ** 30.8 36.1
Net asset value per share (US$) ** 10.75 8.66
* In connection with the U.S. Securities Exchange Commission ("SEC") rules
relating to "Conditions for Use of Non-GAAP Financial Measures", we have
reconciled EBITDA to net profit rather than operating profit and recalculated
EBITDA to exclude interest, taxes, depreciation and amortisation (including
fellings). As a result our definition has been amended to retain non-trading
profit/loss as part of EBITDA. The comparative information has been restated to
take this into account. The effect on EBITDA in the current quarter for the
amended definition was a decrease of EBITDA by US$31 million to US$120 million
(June 2003: increase of US$3 million to US$149 million; September 2002: increase
of US$2 million to US$221 million). The effect of the amended EBITDA definition
was a decrease of US$27 million for the year ended September 2003 to US$654
million (September 2002: decrease of US$17 million to US$724 million).
** Refer to Supplemental Information for the definition of the term.
Supplemental Information
regional information
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2003 Sept 2002
Metric tons Metric tons %
(000's) (000's) change
Sales
Fine Paper - North America 371 398 (6.8)
Europe 570 560 1.8
Southern Africa 79 76 3.9
Total 1,020 1,034 (1.4)
Forest Products - Pulp and paper operations 394 339 16.2
Forestry operations 355 266 33.5
Total 1,769 1,639 7.9
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2003 Sept 2002
US$ million US$ million % change
Sales
Fine Paper - North America 358 388 (7.7)
Europe 485 459 5.7
Southern Africa 74 58 27.6
Total 917 905 1.3
Forest Products - Pulp and paper operations 192 136 41.2
Forestry operations 14 11 27.3
Total 1,123 1,052 6.7
Operating profit
Fine Paper - North America 5 15 66.7
Europe 20 53 (62.3)
Southern Africa 6 10 (40.0)
Total 31 78 (60.3)
Forest Products 22 38 (42.1)
Corporate (7) 6 -
Total 46 122 (62.3)
Earnings before interest,
tax, depreciation and
amortisation charges
Fine Paper - North America* 6 46 (87.0)
Europe 66 98 (32.7)
Southern Africa 9 13 (30.8)
Total 81 157 (48.4)
Forest Products 46 58 (20.7)
Corporate (7) 6 -
Total 120 221 (45.7)
Net operating assets
Fine Paper - North America 1,438 1,483 (3.0)
Europe 1,617 1,420 13.9
Southern Africa 131 90 45.6
Total 3,186 2,993 6.4
Forest Products 1,066 714 49.3
Corporate (40) (36) 11.1
Total 4,212 3,671 14.7
Reviewed Audited
year year
ended ended
Sept 2003 Sept 2002
Metric tons Metric tons %
(000's) (000's) change
Sales
Fine Paper - North America 1,383 1,163 18.9
Europe 2,233 2,180 2.4
Southern Africa 300 310 (3.2)
Total 3,916 3,653 7.2
Forest Products - Pulp and paper operations 1,474 1,391 6.0
Forestry operations 1,285 1,043 23.2
Total 6,675 6,087 9.7
Reviewed Audited
year year
ended ended
Sept 2003 Sept 2002
US$ million US$ million % change
Sales
Fine Paper - North America 1,384 1,197 15.6
Europe 1,903 1,744 9.1
Southern Africa 270 215 25.6
Total 3,557 3,156 12.7
Forest Products - Pulp and paper operations 689 534 29.0
Forestry operations 53 39 35.9
Total 4,299 3,729 15.3
Operating profit
Fine Paper - North America 43 (21) -
Europe 112 217 (48.4)
Southern Africa 35 34 2.9
Total 190 230 (17.4)
Forest Products 101 141 (28.4)
Corporate (5) 18 -
Total 286 389 (26.5)
Earnings before interest,
tax, depreciation and
amortisation charges
Fine Paper - North America* 137 87 57.5
Europe 289 367 (21.3)
Southern Africa 45 42 7.1
Total 471 496 (5.0)
Forest Products 187 210 (11.0)
Corporate (4) 18 -
Total 654 724 (9.7)
Net operating assets
Fine Paper - North America 1,438 1,483 (3.0)
Europe 1,617 1,420 13.9
Southern Africa 131 90 45.6
Total 3,186 2,993 6.4
Forest Products 1,066 714 49.3
Corporate (40) (36) 11.1
Total 4,212 3,671 14.7
* EBITDA for the quarter ended September 2003 reduced by US$31.5 million in
respect of machine closure
Supplemental Information
summary rand convenience translation
Reviewed Reviewed Reviewed Reviewed
Quarter Quarter Year Year
ended ended ended ended
Sept 2003 Sept 2002 % change Sept 2003 Sept 2002 % change
Sales (ZAR 8,295 11,027 (24.8) 35,811 39,301 (8.9)
million)
Operating profit 340 1,279 (73.4) 2,382 4,100 (41.9)
(ZAR million)
Net profit (ZAR 74 765 (90.3) 1,241 2,319 (46.5)
million)
EBITDA* (ZAR 886 2,316 (61.7) 5,448 7,630 (28.6)
million) **
Operating profit 4.1 11.6 6.7 10.4
to sales (%)
EBITDA * to 10.7 21.0 15.2 19.4
sales (%)
Operating profit 4.2 13.1 6.7 12.2
to average net
assets (%)
EPS (SA cents) 30 335 (91.0) 541 1,001 (46.0)
Headline EPS (SA 81 335 (75.8) 591 1,064 (44.5)
cents) *
Net debt (ZAR 10,629 14,956 (28.9)
million) *
Net debt to 30.8 36.1
total
capitalisation
(%) *
Cash generated 1,174 2,369 (50.4) 5,623 7,841 (28.3)
by operations
(ZAR million)
Cash retained 1,802 2,254 3,757 4,743
from operating
activities (ZAR
million)
Net movement in 813 126 2,149 (2,508)
cash and cash
equivalents (ZAR
million)
* Refer to Supplemental Information for the definition of the term.
** The comparative information has been restated to take into account the
changed EBITDA definition. Refer to Supplemental Information for further
details.
exchange rates
Sept June March Dec Sept
2003 2003 2003 2002 2002
Exchange rates:
Period end rate: US$1 7.1288 7.4300 7.9550 8.7200 10.5400
= ZAR
Average rate for the
Quarter:
US$1 = ZAR 7.3866 7.6305 8.3550 9.7265 10.4818
Average rate for the
YTD:
US$1 = ZAR 8.3300 8.6173 9.0866 9.7265 10.5393
Period end rate: EUR1 1.1475 1.1417 1.0729 1.0387 0.9789
= US$
Average rate for the
Quarter:
EUR1 = US$ 1.1328 1.1236 1.0686 0.9995 0.9850
Average rate for the 1.0804 1.0655 1.0334 0.9995 0.9188
YTD: EUR1 = US$
The financial results of entities with reporting currencies other than the US
Dollar are translated into US Dollars as follows:
- Assets and liabilities at rates of exchange ruling at period end; and
- Income, expenditure and cash flow items at average exchange rates.
This report is available on the Sappi website - www.sappi.com
Other interested parties can obtain printed copies of this report from:
South Africa:
Computershare Limited
70 Marshall Street
Johannesburg 2001
PO Box 62053
Marshalltown 2107
Tel +27 (0)11 370-5000
United States
ADR Depositary:
Bank of New York
ADR Department
101 Barclay Street
New York, NY 10286
Tel +1 212 815-5800
United Kingdom:
Capita IRG plc
Bourne House
34 Beckenham Road
Beckenham, Kent
BR34TU,DX 91750 Beckenham West
Tel +44 (0)208 639-2157
This information is provided by RNS
The company news service from the London Stock Exchange
END
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