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SAPPI LIMITED
REPORT FOR THE QUARTER AND YEAR ENDED SEPTEMBER 2000
IN USDOLLARS
4TH
QUARTER
SUMMARY
QUARTER ENDED YEAR ENDED
SEPT. JUNE SEPT. SEPT. SEPT.
2000 2000 1999 2000 1999
SALES
(US$ MILLION) 1,246 1,170 1,268 4,718 4,422
OPERATING PROFIT
(US$ MILLION) 199 181 131 672 407
EBITDA
(US$ MILLION) 285 278 228 1,052 788
OPERATING PROFIT
TO SALES (%) 16.0 15.5 10.3 14.2 9.2
EBITDA TO
SALES (%) 22.9 23.8 18.0 22.3 17.8
OPERATING PROFIT
TO AVERAGE
NET ASSETS
RONA (%) 20.3 17.5 13.7 18.2 9.4
EPS BEFORE
EXCEPTIONAL
ITEMS
(HEADLINE)
(US CENTS) 48 39 27 146 76
EPS (US CENTS) 54 41 28 153 55
RETURN ON
EQUITY (%) 30.9 22.9 16.5 23.5 8.0
NET ASSETS
(US$ MILLION) 3,664 4,188 3,735 3,664 3,735
NET DEBT
(US$ MILLION) 1,205 1,495 2,038 1,205 2,038
TONS REFERRED TO IN THIS REPORT ARE METRIC TONS.
HIGHLIGHTS
* RECORD QUARTERLY EARNINGS
* ANNUAL RESULTS
* OPERATING PROFIT UP 65%
* EPS UP 92%
* RETURN ON EQUITY 23%
* DIVIDEND UP 32%
* POSITIVE OUTLOOK
COMMENT
OUR STRONG PERFORMANCE FOR THE YEAR DEMONSTRATES THE SUCCESS OF SAPPI'S GROWTH
STRATEGY OVER THE LAST DECADE. OUR MARGINS AND RETURNS ARE NOW AMONGST THE
HIGHEST IN THE INDUSTRY AND WE ARE WELL PLACED TO CONTINUE TO CREATE VALUE
THROUGH THE CYCLE.
OPERATING REVIEW FOR THE QUARTER
WE HAD ANOTHER STRONG QUARTER IN BOTH COATED FINE PAPER AND FOREST PRODUCT
BUSINESSES. THE GLOBAL SPREAD OF OUR MANUFACTURING ASSETS HELPED MODERATE THE
DISTORTIONS CAUSED BY THE STRENGTH OF THE US DOLLAR.
FURTHER EURO PRICE INCREASES FOR COATED WOODFREE PAPER WERE ACHIEVED IN EUROPE
IN JULY; BUT THE PROPOSED PRICE INCREASES IN THE USA WERE DEFERRED, PRIMARILY
AS A RESULT OF A CONTINUED GROWTH IN IMPORTS INTO THE USA.
SALES FOR THE QUARTER WERE 6% ABOVE THE JUNE QUARTER BUT 2% LOWER THAN THE SAME
QUARTER LAST YEAR, WHICH HAD STRONG SALES IN THE RUN UP TO Y2K.
FINE PAPER
OUR FINE PAPER BUSINESS HAS LEADING MARKET SHARES IN THE FAST GROWING COATED
WOODFREE PAPER SECTOR AND CONTINUES TO PERFORM WELL AND CONSOLIDATE ITS
POSITION.
QUARTER ENDED
SEPT. SEPT.
2000 1999 %
US$ MILLION US$ MILLION CHANGE
SALES 1,006 1,059 (5)
OPERATING PROFIT 122 88 39
OPERATING
MARGIN (%) 12 8 -
EBITDA 186 166 12
EBITDA
MARGIN (%) 18 16 -
RONOA P.A. (%) 19 12 -
EUROPE
DURING THE QUARTER DEMAND FOR OUR PAPER WAS SIGNIFICANTLY HIGHER THAN THE
EQUIVALENT QUARTER IN 1999 DUE TO PARTICULARLY STRONG DEMAND OF THE WEB
PRINTING SECTOR. THE FURTHER DECLINE OF THE EURO BOOSTED EXPORTS TO THE US.
ORDER INTAKE FOR THE EUROPEAN MARKETS WAS TYPICALLY LOWER BECAUSE OF THE
HOLIDAY SEASON BUT IN JULY SALES PRICES IN EUROS ROSE BY 5%. TOWARDS THE END OF
THE QUARTER SOME DOWNTIME WAS TAKEN TO MATCH OUTPUT TO DEMAND.
THE NEW WEB GRADE XPRESS PRODUCED IN LANAKEN (BELGIUM) HAS BEEN WELL RECEIVED
AND ROUNDS OUT OUR RANGE OF COATED PAPER FOR THE WEB OFFSET PRINTERS.
QUARTER ENDED
SEPT. SEPT. % %
2000 1999* CHANGE CHANGE
US$ MILLION US$ MILLION (US$) (EUROS)
SALES 535 552 (3) 11
OPERATING
PROFIT 66 40* 65 89
- ONCE-
OFF CHARGES - (10) - -
NET
OPERATING
PROFIT 66 30 120 148
OPERATING
MARGIN (%) 12 7* - -
EBITDA 97 84* 15 33
EBITDA
MARGIN (%) 18 15* - -
RONOA
P.A. (%) 20 10* - -
*ADJUSTED FOR ONCE-OFF CHARGES
WE INCREASED OPERATING PROFIT BY 65% TO US$66 MILLION AS A RESULT OF IMPROVED
PRODUCTIVITY, COST REDUCTIONS AND PRICE INCREASES IN EUROS, IN SPITE OF THE
SOARING COST OF PURCHASED PULP, WHICH REACHED RECORD LEVELS IN EUROS.
THE OPERATING MARGIN ROSE TO 12% AND THE RETURN ON NET OPERATING ASSETS REACHED
20% IN THE QUARTER.
NORTH AMERICA
THE 11% IMPROVEMENT IN OPERATING PROFIT TO US$51 MILLION WAS ACCOMPLISHED
DESPITE SIGNIFICANT PRESSURE FROM PULP AND ENERGY COSTS, LOW-PRICED IMPORTS AND
EXCESS PRODUCER INVENTORIES. PRICE REALIZATION, MIX IMPROVEMENT AND COST
CONTAINMENT WERE MAJOR FACTORS IN THE IMPROVEMENT. AS THE GROWTH OF THE US
ECONOMY BEGAN TO SLOW, PRODUCTION WAS CURTAILED TO MATCH OUTPUT TO DEMAND.
SALES IN THE LAST QUARTER WERE SLIGHTLY LOWER THAN THE SAME QUARTER LAST YEAR.
QUARTER ENDED
SEPT. SEPT.
2000 1999 %
US$ MILLION US$ MILLION CHANGE
SALES 419 429 (2)
OPERATING
PROFIT 51 46 11
OPERATING
MARGIN (%) 12 11 -
EBITDA 82 77 7
EBITDA
MARGIN (%) 20 17 -
RONOA
P.A. (%) 17 16 -
THE OPERATING MARGIN INCREASED FURTHER TO 12% AND THE RETURN ON NET OPERATING
ASSETS WAS 17%.
SOUTH AFRICA
THE SOUTH AFRICAN FINE PAPER BUSINESS, WHICH REPRESENTS 5% OF GROUP SALES
PERFORMED BETTER THAN THE PREVIOUS QUARTER. ITS RETURN ON NET OPERATING ASSETS
WAS ONLY 9%, BUT IT HAS A MUCH-IMPROVED OUTLOOK FOR THE FUTURE.
FOREST PRODUCTS
OUR FOREST PRODUCTS BUSINESS COMPRISES PRIMARILY MARKET PULP (INCLUDING
DISSOLVING PULP), WHICH PROVIDES US WITH AN ECONOMIC HEDGE FOR THE PULP
PURCHASES OF OUR PAPER BUSINESSES.
THE BUSINESS POSTED RECORD RESULTS IN THE QUARTER AND IN THE YEAR.
PRICES REMAINED STRONG AND DEMAND WAS FIRM. PULP (NBSK) PRICES INCREASED TO
US$710 PER TON. DISSOLVING PULP PRICES ROSE FURTHER, SUPPORTED BY STRONG DEMAND
FOR VISCOSE.
QUARTER ENDED
SEPT. SEPT. % %
2000 1999 CHANGE CHANGE
US$ US$ (US$) (RANDS)
MILLION MILLION
SALES 240 209 15 32
OPERATING
PROFIT 73 36 103 133
OPERATING
MARGIN (%) 30 17 - -
EBITDA 95 61 56 80
EBITDA
MARGIN (%) 40 29 - -
RONOA
P.A. (%) 30 12 - -
INTERNAL EFFICIENCIES AND THE WEAKER LOCAL CURRENCY COMBINED TO REDUCE THE COST
BASE IN DOLLARS. COST OF GOODS SOLD PER TON WAS 11% LOWER IN THE QUARTER
COMPARED WITH A YEAR EARLIER. AS A RESULT OF STRONG PRICES, WHICH WERE 9%
HIGHER IN DOLLARS THAN A YEAR EARLIER AND THE LOWER COSTS, THE BUSINESS IS NOW
GENERATING OPERATING MARGINS OF 30% AND A RETURN ON NET OPERATING ASSETS OF
30%. SALES ARE LARGELY DENOMINATED IN US DOLLARS WHICH RESULTS IN HIGHER DOLLAR
MARGINS WHEN THE RAND WEAKENS.
GROUP RESULTS FOR THE YEAR
THE GROUP'S EARNINGS REACHED A NEW HIGH OF US$363 MILLION, AN INCREASE OF 198%
ON THE PREVIOUS YEAR AND THE RETURN ON EQUITY INCREASED TO 23%. BASIC EARNINGS
PER SHARE WERE 153 CENTS AND EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS ROSE
TO 146 US CENTS, 92% ABOVE THE PREVIOUS YEAR.
COMMENT
OPERATING PROFIT INCREASED 65% TO US$672 MILLION, THE OPERATING MARGIN
INCREASED TO 14.2% AND RONA ROSE TO 18%, WELL AHEAD OF THE GROUP'S COST OF
CAPITAL.
INTERNAL EFFICIENCIES AND CONTAINMENT OF COSTS REDUCED COSTS OF SALES PER TON
BY 3.5% COMPARED TO LAST YEAR.
OUR SALES REACHED US$4.7 BILLION FOR THE YEAR, 6.7% BETTER THAN THE PREVIOUS
YEAR, AS A RESULT OF A 4.2% INCREASE IN VOLUME AND A 2.5% PRICE INCREASE IN US
DOLLARS.
FINANCE COSTS CONTINUED TO DECLINE AS A RESULT OF LOWER DEBT AND REFINANCING
HIGHER COST LOANS. NORMALISED FINANCE COSTS FOR THE LAST QUARTER, BEFORE
CAPITALISED INTEREST, WERE US$29 MILLION.
THE EFFECTIVE TAX RATE OF 34% WAS HIGHER THAN LAST YEAR MAINLY AS A RESULT OF
THE REDUCED DEFERRED TAX FOLLOWING THE REDUCTION IN THE SOUTH AFRICAN CORPORATE
TAX RATE LAST YEAR.
CASH FLOW AND DEBT REDUCTION
GROSS CASH FLOW (EBITDA) INCREASED TO US$1,052 MILLION, UP US$264 MILLION AND
NET DEBT REDUCED BY US$833 MILLION OVER THE YEAR. NET DEBT TO TOTAL
CAPITALISATION NOW STANDS AT 31%, WELL WITHIN OUR TARGET RANGE.
THE PROCEEDS FROM THE SALE OF NOVOBORD, APPROXIMATELY US$58 MILLION, WERE
RECEIVED DURING THE FOURTH QUARTER.
FOLLOWING THE ACQUISITION OF THE LEYKAM MRZTALER MINORITIES, WHICH WAS
COMPLETED IN JUNE 2000 AND THE ACQUISITION OF THE USUTU MINORITIES COMPLETED IN
OCTOBER 2000, SAPPI NOW CONTROLS THE CASH FLOW FROM ALL ITS OPERATIONS.
DIVIDENDS
THE DIRECTORS HAVE DECLARED A DIVIDEND OF 25 US CENTS FOR THE YEAR ENDED
SEPTEMBER 2000. A DIVIDEND OF 19 US CENTS WAS PAID THE PREVIOUS YEAR.
SHARE BUYBACKS
AT SAPPI'S LAST ANNUAL GENERAL MEETING SAPPI OBTAINED SHAREHOLDER APPROVAL FOR
A GENERAL BUY BACK BY SAPPI (BUT NOT BY A SAPPI SUBSIDIARY) OF SAPPI SHARES.
THE BOARD HAS DECIDED THAT, AT PREVAILING SHARE PRICES AND WITH THE
STRENGTHENING BALANCE SHEET, THE GROUP MAY PROCEED TO BUY BACK SHARES FROM TIME
TO TIME IN ACCORDANCE WITH THE LISTING REQUIREMENTS OF THE JOHANNESBURG STOCK
EXCHANGE. ACCORDINGLY IT IS INTENDED TO CALL A GENERAL MEETING OF SAPPI
SHAREHOLDERS TO CONSIDER AND IF DEEMED FIT TO PASS A SPECIAL RESOLUTION
AUTHORISING A SAPPI SUBSIDIARY TO PURCHASE SAPPI SHARES.
OUTLOOK
MOST COMMENTATORS AGREE THAT THE WORLD ECONOMY WILL GROW NEXT YEAR BY BETWEEN
3% AND 3.5% AND DEMAND FOR PAPER PRODUCTS SHOULD THEREFORE CONTINUE TO BE
STRONG.
THE FUNDAMENTAL MARKET CONDITIONS REMAIN FIRM AND PULP PRICES SEEM TO HAVE
STABILISED FOR NBSK AT AROUND US$710.
CAPACITY ADDITIONS FOR THE SECTOR REMAIN AT NEAR ALL TIME LOW LEVELS AND
ALTHOUGH SOME NEW CAPACITY OF COATED FREE SHEET WILL COME ON STREAM DURING 2001
THERE IS INCREASING EVIDENCE THAT THE INDUSTRY IS LEARNING TO MATCH OUTPUT TO
DEMAND. OVER THE NEXT FEW MONTHS WE EXPECT SOME FURTHER INVENTORY ADJUSTMENT
AND WE WILL TAKE SOME ADDITIONAL COMMERCIAL DOWNTIME TO MAINTAIN OUR INTERNAL
INVENTORIES AT NORMAL LEVELS.
OVER THE PAST DECADE THE PULP AND PAPER INDUSTRY HAS FAILED TO EARN ITS COST OF
CAPITAL, BUT THIS HAS CHANGED AND INCREASINGLY COMPANIES ARE NOW MAKING
ACCEPTABLE RETURNS.
FOR SAPPI, PRICES ARE IN GENERAL WELL ABOVE THE AVERAGE PRICES FOR THE YEAR
ENDED SEPTEMBER 2000 AND WE EXPECT TO AT LEAST MAINTAIN THESE PRICES IN THE
YEAR AHEAD. WE HAVE A POSITIVE OUTLOOK FOR 2001.
ON BEHALF OF THE BOARD
E VAN AS D G WILSON
DIRECTOR DIRECTOR
9 NOVEMBER 2000
DIVIDEND ANNOUNCEMENT
THE DIRECTORS HAVE DECLARED A DIVIDEND (NUMBER 77) OF 25 US CENTS PER SHARE FOR
THE YEAR ENDED SEPTEMBER 2000 TO SHAREHOLDERS REGISTERED IN THE BOOKS OF THE
COMPANY AT THE CLOSE OF BUSINESS ON FRIDAY, 1 DECEMBER 2000.
DIVIDENDS PAYABLE FROM THE JOHANNESBURG TRANSFER OFFICE WILL BE PAID IN SOUTH
AFRICAN RANDS (EXCEPT THAT NOMINEE SHAREHOLDERS, INCLUDING THE NOMINEES OF THE
US ADR DEPOSITARY BANK, WHO, ARE NOMINEES FOR SOUTH AFRICAN NON-RESIDENTS MAY
ELECT, ON OR BEFORE FRIDAY 5 JANUARY 2001, TO RECEIVE PAYMENT IN UNITED STATES
DOLLARS) AND 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 FRIDAY 5 JANUARY 2001.
PAYMENT WILL BE MADE ON OR ABOUT WEDNESDAY 10 JANUARY 2001.
THE FULL CONDITIONS RELATING TO THE PAYMENT OF THE DIVIDEND MAY BE INSPECTED AT
THE REGISTERED OFFICE OF THE COMPANY AND ALSO AT THE OFFICES OF THE SOUTH
AFRICAN AND UNITED KINGDOM REGISTRARS, AND THE ADR DEPOSITARY BANK RESPECTIVELY
SAPPI MANAGEMENT SERVICES (PTY) LIMITED
SECRETARIES
PER D J O'CONNOR 9 NOVEMBER 2000
SAPPI LIMITED
(REGISTRATION NO. 1936/008963/06)
FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS REPORT 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
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) 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 STATEMENTS
UNAUDITED AUDITED
QUARTER ENDED YEAR ENDED
SEPT. SEPT. SEPT. SEPT.
2000 1999 % 2000 1999 %
US$ MILLION US$ MILLION CHANGE US$ MILLION US$ MILLION CHANGE
SALES 1,246 1,268 (1.7) 4,718 4,422 6.7
COST OF SALES 941 1,018 3,650 3,627
GROSS PROFIT 305 250 22.0 1,068 795 34.3
SELLING,
GENERAL &
ADMINISTRATIVE
EXPENSES 106 119 396 388
OPERATING PROFIT 199 131 51.9 672 407 65.1
NON-TRADING
PROFIT (LOSS) 13 (2) 15 (74)
NET FINANCE COSTS 13 21 114 145
NET PAID 33 30 161 190
CAPITALISED (20) (9) (47) (45)
PROFIT BEFORE TAX 199 108 573 188
TAXATION - CURRENT 27 (13) 73 21
- DEFERRED 38 51 124 29
PROFIT AFTER TAX 134 70 91.4 376 138 172.5
INCOME
ATTRIBUTABLE
TO MINORITY
INTERESTS 5 8 13 16
NET PROFIT 129 62 108.1 363 122 197.5
EBITDA 285 228 24.8 1,052 788 33.6
BASIC EARNINGS
PER SHARE
(US CENTS) 54 28 153 55
BASIC EARNINGS
BEFORE
EXCEPTIONAL ITEMS
(HEADLINE EARNINGS)
PER SHARE
(US CENTS) 48 27 146 76
WEIGHTED AVERAGE
NUMBER OF SHARES
IN ISSUE
(MILLIONS) 239.1 224.1 236.9 223.8
DILUTED
EARNINGS PER
SHARE (US CENTS) 53 27 151 54
DILUTED
EARNINGS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE
EARNINGS) PER
SHARE (US CENTS) 47 26 144 75
WEIGHTED
AVERAGE NUMBER
OF SHARES ON FULLY
DILUTED BASIS
(MILLIONS) 256.9 229.8 242.6 230.0
CALCULATION OF
EARNINGS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE)
NET OF TAX
NET PROFIT 129 62 363 122
PROFIT ON
DISPOSAL OF
BUSINESS
AND FIXED ASSETS (21) (7) (22) (3)
MILL CLOSURE
COSTS AND ASSET
IMPAIRMENTS 8 6 8 50
ACCELERATED COST
OF EARLY BUY
BACK OF
LOAN NOTES - 6 11 6
DECREASE IN
OTHER PROVISIONS (1) (7) (15) (5)
EARNINGS BEFORE
EXCEPTIONAL
ITEMS (HEADLINE) 115 60 345 170
GROUP BALANCE SHEET
AUDITED AUDITED
SEPT. SEPT
2000 1999
US$ MILLION US$ MILLION
ASSETS
NON-CURRENT ASSETS 3,655 4,274
PROPERTY, PLANT AND EQUIPMENT 3,083 3,615
PLANTATIONS 372 406
DEFERRED TAXATION 37 69
OTHER NON-CURRENT ASSETS 163 184
CURRENT ASSETS 1,160 1,154
CASH AND CASH EQUIVALENTS 286 154
COLLATERAL DEPOSITS - 104
TRADE AND OTHER RECEIVABLES 319 363
INVENTORIES 555 533
TOTAL ASSETS 4,815 5,428
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 1,621 1,463
ORDINARY SHARE CAPITAL AND PREMIUM 1,937 1,823
NON-DISTRIBUTABLE RESERVES (911) (662)
DISTRIBUTABLE RESERVES 595 302
MINORITY INTEREST 54 171
NON-CURRENT LIABILITIES 1,989 2,101
LONG-TERM BORROWINGS 1,256 1,376
DEFERRED TAXATION 529 481
OTHER LONG-TERM LIABILITIES 204 244
CURRENT LIABILITIES 1,151 1,693
INTEREST BEARING LIABILITIES 159 698
BANK OVERDRAFT 76 118
OTHER CURRENT LIABILITIES 916 877
TOTAL EQUITY AND LIABILITIES 4,815 5,428
NUMBER OF SHARES IN ISSUE (MILLIONS) 239.1 224.6
NET DEBT (US$ MILLION) 1,205 2,038
NET DEBT TO TOTAL CAPITALISATION (%) 30.9 44.8
NET ASSET VALUE PER SHARE (US CENTS) 884 835
GROUP CASH FLOW STATEMENT
AUDITED AUDITED
YEAR ENDED YEAR ENDED
SEPT. 2000 SEPT. 1999
US$ MILLION US$ MILLION
CASH GENERATED BY OPERATIONS 1,065 790
MOVEMENT IN WORKING CAPITAL (61) 77
NET FINANCE COSTS (161) (190)
TAXATION PAID (12) (24)
DIVIDENDS PAID (42) (36)
CASH RETAINED FROM OPERATING ACTIVITIES 789 617
CASH EFFECTS OF INVESTING ACTIVITIES (68) (97)
721 520
CASH EFFECTS OF FINANCING ACTIVITIES (564) (868)
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 157 (348)
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
AUDITED AUDITED
YEAR ENDED YEAR ENDED
SEPT. 2000 SEPT. 1999
US$ MILLION US$ MILLION
BALANCE - BEGINNING OF YEAR 1,463 1,583
CHANGES IN ACCOUNTING POLICIES - (88)
BALANCE - BEGINNING OF YEAR RESTATED 1,463 1,495
NET PROFIT 363 122
FOREIGN CURRENCY TRANSLATION RESERVE (257) (100)
DIVIDENDS DECLARED - US$ 0.25
(1999: US$ 0.19) PER SHARE (60) (45)
ISSUANCE OF ORDINARY SHARES 114 4
GOODWILL WRITTEN OFF TO EQUITY (2) (13)
BALANCE - END OF YEAR 1,621 1,463
NOTES TO THE GROUP RESULTS
1. BASIS OF PREPARATION
THE GROUP RESULTS HAVE BEEN PREPARED IN CONFORMITY WITH SOUTH AFRICAN
STATEMENTS OF GENERALLY ACCEPTED ACCOUNTING PRACTICE. SAPPI HAS CHANGED ITS
ACCOUNTING POLICY WITH REGARD TO THE REVALUATION OF FIXED ASSETS. ALL FIXED
ASSETS ARE NOW STATED AT COST. THE REVALUATION RESERVES WERE REVERSED AND
COMPARATIVE FIGURES APPROPRIATELY RESTATED. ALL THE OTHER ACCOUNTING POLICIES
ARE THE SAME AS THOSE IN THE SEPTEMBER 1999 ANNUAL FINANCIAL STATEMENTS.
IN MAY THIS YEAR THE GROUP ANNOUNCED A CHANGE IN ITS REPORTING CURRENCY FROM
SOUTH AFRICAN RANDS TO US DOLLARS. THE NEGATIVE BALANCE IN NON-DISTRIBUTABLE
RESERVES IS CAUSED BY THE FOREIGN CURRENCY TRANSLATION RESERVE WHICH RESULTED
FROM THIS CHANGE IN REPORTING CURRENCY. THIS ITEM REPRESENTS THE CUMULATIVE
TRANSLATION EFFECT OF THE STRENGTH OF THE DOLLAR ON THE GROUP'S EQUITY IN RANDS
AND OTHER CURRENCIES. THE TRANSLATION EFFECT OF REPORTING IN US DOLLARS HAS NO
IMPACT ON THE UNDERLYING CASH FLOWS OF THE BUSINESS.
UNAUDITED AUDITED
QUARTER ENDED YEAR ENDED
SEPT. 2000 SEPT. 1999 SEPT. 2000 SEPT. 1999
US$ MILLION US$ MILLION US$ MILLION US$ MILLION
2. COST OF SALES
INCLUDED IN COST
OF SALES ARE:
DEPRECIATION 70 85 320 335
AMORTISATION
AND FELLINGS 16 12 60 46
86 97 380 381
3. CAPITAL EXPENDITURE
FIXED ASSETS 221 234
PLANTATIONS 32 32
253 266
4. CAPITAL COMMITMENTS
CONTRACTED BUT NOT PROVIDED 73 40
APPROVED BUT NOT CONTRACTED 150 62
223 102
5. CONTINGENT LIABILITIES
GUARANTEES AND SURETYSHIPS 80 83
BILLS DISCOUNTED - 6
OTHER CONTINGENT LIABILITIES 46 59
REGIONAL INFORMATION
UNAUDITED AUDITED
QUARTER ENDED YEAR ENDED
SEPT. SEPT. SEPT. SEPT.
2000 1999 % 2000 1999 %
US$ MILLION US$ MILLION CHANGE US$ MILLION US$ MILLION CHANGE
SALES -
METRIC TONS
FINE PAPER -
NORTH AMERICA 321 369 (13.0) 1,349 1,331 1.4
EUROPE 654 665 (1.7) 2,348 2,253 4.2
SOUTHERN AFRICA 67 85 (21.2) 273 280 (2.5)
TOTAL 1,042 1,119 (6.9) 3,970 3,864 2.7
FOREST PRODUCTS 740 702 5.4 2,770 2,603 6.4
TOTAL 1,782 1,821 (2.1) 6,740 6,467 4.2
SALES
FINE PAPER -
NORTH AMERICA 419 429 (2.3) 1,645 1,555 5.8
EUROPE 535 552 (3.1) 1,953 1,870 4.4
SOUTHERN AFRICA 52 78 (33.3) 230 250 (8.0)
TOTAL 1,006 1,059 (5.0) 3,828 3,675 4.2
FOREST PRODUCTS 240 209 14.8 890 747 19.1
TOTAL 1,246 1,268 (1.7) 4,718 4,422 6.7
OPERATING PROFIT
FINE PAPER -
NORTH AMERICA 51 46 10.9 176 141 24.8
EUROPE 66 30 120.0 248 120 106.7
SOUTHERN AFRICA 5 12 (58.3) 19 38 (50.0)
TOTAL 122 88 38.6 443 299 48.2
FOREST PRODUCTS 73 36 102.8 208 87 139.1
SAPPI TRADING
& CORPORATE 4 7 (42.9) 21 21 -
TOTAL 199 131 51.9 672 407 65.1
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION CHARGES **
FINE PAPER -
NORTH AMERICA 82 77 6.5 287 245 17.1
EUROPE 97 75 29.3 405 302 34.1
SOUTHERN AFRICA 7 14 (50.0) 27 46 (41.3)
TOTAL 186 166 12.0 719 593 21.2
FOREST PRODUCTS 95 61 55.7 311 179 73.7
SAPPI TRADING
& CORPORATE 4 1 300.0 22 16 37.5
TOTAL 285 228 25.0 1,052 788 33.5
NET OPERATING ASSETS
FINE PAPER -
NORTH AMERICA 1,198 1,183 1.3 1,198 1,183 1.3
EUROPE 1,305 1,668 (21.8) 1,305 1,668 (21.8)
SOUTHERN AFRICA 129 177 (27.1) 129 177 (27.1)
TOTAL 2,632 3,028 (13.1) 2,632 3,028 (13.1)
FOREST PRODUCTS 968 1,207 (19.8) 968 1,207 (19.8)
SAPPI TRADING
& CORPORATE (24) 93 (125.8) (24) 93 (125.8)
TOTAL 3,576 4,328 (17.4) 3,576 4,328 (17.4)
** BEFORE NON-TRADING PROFIT (LOSS)
SUMMARY RAND CONVENIENCE TRANSLATION
UNAUDITED UNAUDITED
QUARTER ENDED YEAR ENDED
SEPT. SEPT. % SEPT. SEPT. %
2000 1999 CHANGE 2000 1999 CHANGE
SALES (ZAR MILLION) 8,718 7,700 13.2 30,889 26,586 16.2
OPERATING PROFIT
(ZAR MILLION) 1,392 795 75.0 4,400 2,447 79.8
PROFIT AFTER
TAXATION
(ZAR MILLION) 938 425 120.7 2,462 830 196.7
EBITDA (ZAR MILLION) 1,994 1,387 43.8 6,888 4,736 45.4
OPERATING PROFIT
TO SALES (%) 16.0 10.3 14.2 9.2
EBITDA TO SALES (%) 22.9 18.0 22.3 17.8
OPERATING PROFIT
TO AVERAGE
NET ASSETS (%) 20.2 13.8 18.0 9.6
BASIC EPS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE)
(SA CENTS) 337 163 107.0 953 457 108.7
BASIC EPS (SA CENTS) 377 168 124.4 1,003 328 205.8
EBITDA PER SHARE
(SA CENTS) 834 619 34.8 2,907 2,117 37.3
NET DEBT
(ZAR MILLION) 8,705 12,228 (28.8) 8,705 12,228 (28.8)
NET DEBT TO
TOTAL
CAPITALISATION (%) 30.9 44.8 30.9 44.8
CASH GENERATED
BY OPERATIONS
(ZAR MILLION) 6,973 4,750 46.8
CASH RETAINED FROM
OPERATING ACTIVITIES
(ZAR MILLION) 5,166 3,710
NET MOVEMENT IN CASH
AND CASH EQUIVALENTS
(ZAR MILLION) 1,028 (2,092)
EXCHANGE RATES :
PERIOD END RATE:
US $1 = R 7.2240 6.0000 7.2240 6.0000
AVERAGE RATE:
US $1 = R 6.9966 6.0724 6.5472 6.0122
PERIOD END RATE:
US $1 = EURO 1.1393 0.9551 1.1393 0.9551
AVERAGE RATE:
US $1 = EURO 1.0940 0.9539 1.0288 0.9069
SAPPI
HTTP://WWW.SAPPI.COM
THIS REPORT IS AVAILABLE ON THE SAPPI WEBSITE.
OTHER INTERESTED PARTIES CAN OBTAIN PRINTED COPIES OF THIS REPORT FROM:
SOUTH AFRICA:
MERCANTILE REGISTARS LIMITED, 8TH FLOOR, 11 DIAGONAL STREET, JOHANNESBURG, 2001
PO BOX 1053, JOHANNESBURG, 2000. TEL: +27 (0) 11 370-5000
UNITED KINGDOM:
CAPITA IRG PLC, BOURNE HOUSE, 34 BECKENHAM ROAD, BECKENHAM, KENT, BR3 4TU, DX
91750, BECKENHAM WEST. TEL: +44 (0) 208 639-2000.
UNITED STATES ADR DEPOSITARY:
BANK OF NEW YORK, ADR DEPARTMENT, 101 BARCLAY STREET, NEW YORK, NY 10286. TEL:
+1 212 815-5800.
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