Wrap Text
INTERIM REPORT FOR THE FIRST QUARTER ENDED 31 DECEMBER 1999
1 ST QUARTER
SUMMARY STATISTICS
QUARTER ENDED
31 DEC. 30 SEPT. 31 DEC.
1999 1999 1998
SALES
- (R BILLION) 6.8 7.7 5.9
- (US$ BILLION) 1.1 1.3 1.0
OPERATING INCOME
- (R MILLION) 779 793 449
- (US$ MILLION) 128 131 78
EBITDA
- (R MILLION) 1,385 1,384 1,016
- (US$ MILLION) 227 228 176
OPERATING INCOME TO SALES (%) 11.5 10.3 7.6
EBITDA TO SALES (%) 20.4 18.0 17.2
OPERATING INCOME TO AVERAGE NET ASSETS (%) 12.7 13.6 6.3
EPS BEFORE EXCEPTIONAL ITEMS (HEADLINE)
- (SACENTS) 159 162 75
- (US CENTS) 26 27 13
EPS
- (SACENTS) 176 168 64
- (US CENTS) 29 28 11
COMPARATIVE FIGURES HAVE BEEN RESTATED FOR ACCOUNTING POLICY CHANGES TO ENSURE
CONSISTENCY.
BASIS OF PREPARATION
THIS INTERIM REPORT HAS BEEN PREPARED IN CONFORMITY WITH SOUTH AFRICAN
STATEMENTS OF GENERALLY ACCEPTED ACCOUNTING PRACTICE. THE SAME ACCOUNTING
POLICIES HAVE BEEN FOLLOWED IN THIS INTERIM REPORT, AS WERE USED IN THE
SEPTEMBER 1999 ANNUAL FINANCIAL STATEMENTS.
THE FINANCIAL RESULTS FOR THE CURRENT QUARTER HAVE BEEN REVIEWED BY THE GROUP'S
AUDITORS, DELOITTE & TOUCHE. THEIR REPORT IS AVAILABLE FOR INSPECTION AT THE
COMPANY'S REGISTERED OFFICES.
HIGHLIGHTS
- OPERATING INCOME UP 73%
- EPS MORE THAN DOUBLES
- STRONG DEMAND
- DEBT TO TOTAL CAPITALISATION BELOW 40%
COMMENT
MARKETS
CONDITIONS FOR MOST SECTORS OF THE PULP AND PAPER INDUSTRY IMPROVED FURTHER
DURING THE QUARTER ON THE BACK OF CONTINUED ECONOMIC GROWTH IN THE MAJOR
MARKETS AND STRONG FUNDAMENTALS FOR PULP AND PAPER.
PRICES FOR COATED WOODFREE PAPER INCREASED IN OCTOBER BY APPROXIMATELY 6% IN
EUROPE AND 6% FOR REELS IN NORTH AMERICA, THE FIRST SIGNIFICANT INCREASES IN
THE CYCLE. FURTHER INCREASES OF ABOUT 6% HAVE BEEN ANNOUNCED FOR JANUARY AND
FEBRUARY 2000.
THE TRANSITION TO Y2000 APPEARS TO HAVE GONE SMOOTHLY WITHOUT MATERIAL
INVENTORY BUILDS BY EITHER PRODUCERS OR CUSTOMERS.
OPERATING REVIEW FOR THE THREE MONTHS TO 31 DECEMBER 1999
THE GROUP'S EARNINGS PER SHARE FOR THE QUARTER IMPROVED SIGNIFICANTLY COMPARED
TO THE EQUIVALENT QUARTER LAST YEAR REFLECTING IMPROVED PRICES AND
EFFICIENCIES. SEASONAL FACTORS INCLUDING THE HOLIDAY PERIOD MEANT THAT SALES
VOLUME IN THE FIRST QUARTER OF 2000 DID NOT MATCH THOSE OF THE FOURTH QUARTER
OF 1999. THE FIRE AT MUSKEGON AND UNUSUAL WEATHER WHICH DELAYED SHIPMENTS AT
THE QUARTER END HAD A NEGATIVE EFFECT ON SALES.
A BRIEF REVIEW OF SAPPI'S BUSINESSES AND REGIONAL PERFORMANCE FOLLOWS:
FINE PAPER BUSINESS
EUROPE
QUARTER ENDED
31 DEC. 31 DEC. %
US$ MILLION 1999 1998 CHANGE
SALES 453.0 436.3 3.8
OPERATING INCOME 52.4 24.9 110.4
OPERATING MARGIN (%) 11.6 5.7
EBITDA 94.1 72.6 29.6
EBITDA MARGIN (%) 20.8 16.6
RONOA P.A. (%) 13.1 4.8
SALES VOLUMES INCREASED BY APPROXIMATELY 13% COMPARED TO THE EQUIVALENT PERIOD
LAST YEAR AND PRICES INCREASED BY APPROXIMATELY 3% IN EURO TERMS BUT AS A
RESULT OF THE 11% DECLINE IN THE VALUE OF THE EURO AGAINST THE DOLLAR, DOLLAR
PRICES DECLINED BY ABOUT 8%. TOGETHER WITH THE CONTINUING ACHIEVEMENT OF
ACQUISITION SYNERGIES AND IMPROVED OPERATING EFFICIENCIES THIS LED TO A 110%
IMPROVEMENT IN OPERATING INCOME AND AN IMPROVEMENT IN OPERATING MARGINS TO
11.6% FROM 5.7%. THE RETURN ON NET OPERATING ASSETS INCREASED TO 13.1% FROM
4.8%.
NORTH AMERICA
QUARTER ENDED
31 DEC. 31 DEC. %
US$ MILLION 1999 1998 CHANGE
SALES 399.8 367.9 8.7
OPERATING INCOME 37.5 39.1 (4.1)
OPERATING MARGIN (%) 9.4 10.6
EBITDA 63.7 56.4 12.9
EBITDA MARGIN (%) 15.9 15.3
RONOA P.A. (%) 12.5 11.4
PERFORMANCE FOR THE QUARTER WAS AFFECTED BY THE FIRE AT MUSKEGON WHICH RESULTED
IN PAPER MACHINE #4 BEING OUT OF OPERATION FOR ABOUT 4 WEEKS.
DESPITE THE FIRE, VOLUMES SOLD IMPROVED BY 11% COMPARED TO THE SAME QUARTER
LAST YEAR. PRICES INCREASED BY SOME $50 PER TON COMPARED TO THE PREVIOUS
QUARTER, HOWEVER, AS A RESULT OF THE POORER PRODUCT MIX FOLLOWING THE MUSKEGON
FIRE AVERAGE PRICES REALISED WERE LOWER THAN THE SAME PERIOD LAST YEAR.
ALTHOUGH THE OPERATING MARGIN DECLINED SLIGHTLY THE RETURN ON NET OPERATING
ASSETS INCREASED TO 12.5% FROM 11.4%.
FURTHER PRICE INCREASES HAVE BEEN IMPLEMENTED IN JANUARY OF $40 PER TON FOR
COATED WOODFREE SHEETS AND IN FEBRUARY OF $80 PER TON FOR REELS.
SOUTH AFRICA
QUARTER ENDED
31 DEC. 31 DEC. %
US$ MILLION 1999 1998 CHANGE
SALES 61.3 55.2 11.1
OPERATING INCOME 4.7 6.2 (24.2)
OPERATING MARGIN (%) 7.7 11.2
EBITDA 6.9 8.4 (17.9)
EBITDA MARGIN (%) 11.3 15.2
RONOA P.A. (%) 10.0 14.1
MARKETS WERE STRONG DURING THE QUARTER WITH FURTHER PRICE INCREASES ANNOUNCED
IN NOVEMBER AND DECEMBER. PERFORMANCE WAS HOWEVER AFFECTED BY A PROVISION OF
US$2 MILLION FOR BAD DEBTS FOLLOWING THE LIQUIDATION OF A CUSTOMER. THE RETURN
ON NET OPERATING ASSETS DECLINED TO 10.0% FROM 14.1%.
FOREST PRODUCTS BUSINESS
QUARTER ENDED
1 DEC. 31 DEC. %
US$ MILLION 1999 1998 CHANGE
SALES 202.2 162.5 24.4
OPERATING INCOME 29.7 8.9 233.7
OPERATING MARGIN (%) 14.7 5.5
EBITDA 58.7 36.1 62.6
EBITDA MARGIN (%) 29.0 22.2
RONOA P.A. (%) 9.4 2.7
MARKETS FOR COMMODITY PAPER AND PULP CONTINUED TO STRENGTHEN LEADING TO A
STRONG PERFORMANCE DURING THE QUARTER. PULP (NBSK) PRICES INCREASED TO $600 IN
THE QUARTER AND DISSOLVING PULP PRICES CONTINUED TO STRENGTHEN SUPPORTED BY
STRONGER MARKETS FOR VISCOSE.
PRODUCTIVITY ALSO IMPROVED AT THE MAJOR OPERATIONS HOWEVER USUTU MILL'S
PRODUCTION WAS BELOW EXPECTATIONS. OPERATING PROFIT MORE THAN DOUBLED AND
OPERATING MARGIN INCREASED TO 14.7% FROM 5.5% A YEAR EARLIER. THE RETURN ON
NET OPERATING ASSETS INCREASED SIGNIFICANTLY TO 9.4%.
GROUP RESULTS FOR THE QUARTER TO
31 DECEMBER 1999
CONSOLIDATED SALES FOR THE QUARTER WERE R6.8 BILLION (US$ 1.1 BILLION) (1998:
R5.9 BILLION) (US$ 1 BILLION). THE INCREASE REFLECTED IMPROVED VOLUMES WHICH
WERE UP 12.7% AND PRICES WHICH WERE UP 2.3%.
OPERATING INCOME INCREASED TO R779.1 MILLION (US$127.7 MILLION) FROM R449.4
MILLION (US$77.7 MILLION) A 73% INCREASE IN RAND TERMS.
NON-TRADING INCOME WAS R33.3 MILLION FOR THE QUARTER MAINLY AS A RESULT OF
GAINS ON THE SALE OF SURPLUS LAND AND BUILDINGS IN EUROPE COMPARED TO A LOSS OF
R44.4 MILLION IN THE COMPARATIVE PERIOD LAST YEAR.
NET FINANCE COSTS FOR THE QUARTER BEFORE CAPITALISATION OF INTEREST DECLINED BY
R107.9 MILLION TO R221.9 MILLION (US$36.4 MILLION) AS A RESULT OF REDUCED DEBT
AND LOWER INTEREST RATES. AFTER CAPITALISED INTEREST NET FINANCE COSTS WERE
DOWN R75.3 MILLION TO R164.4 MILLION (US$27 MILLION).
INCOME BEFORE TAX INCREASED SHARPLY TO R648.0 MILLION (US$106.2 MILLION), AN
INCREASE OF 292% IN RAND TERMS MAINLY AS A RESULT OF IMPROVED OPERATING PROFIT
AND REDUCED FINANCE COSTS.
DEFERRED TAXATION IN THE QUARTER WAS R151.3 MILLION (US$24.8 MILLION) A MAJOR
CHANGE FROM THE COMPARATIVE QUARTER LAST YEAR IN WHICH DEFERRED TAXATION WAS A
CREDIT OF R78.5 MILLION (US$13.6 MILLION), OF WHICH R40 MILLION WAS AS A RESULT
OF THE REDUCTION IN THE SOUTH AFRICAN CORPORATE TAX RATE FROM 35% TO 30% IN
FISCAL 1999.
EARNINGS BEFORE EXCEPTIONAL ITEMS (HEADLINE) AMOUNTED TO R366.6 MILLION
(US$60.1 MILLION) AN INCREASE OF R198.5 MILLION (US$32.5 MILLION) RELATIVE TO
THE FIRST QUARTER OF 1999.
EARNINGS BEFORE EXCEPTIONAL ITEMS (HEADLINE) PER SHARE WERE 159 SA CENTS (26 US
CENTS) A SIGNIFICANT IMPROVEMENT OVER THE COMPARATIVE FIGURE LAST YEAR OF 75 SA
CENTS (13 US CENTS). HEADLINE EPS WAS SLIGHTLY DOWN COMPARED TO THE FINAL
QUARTER OF 1999 DUE TO REGULAR SEASONAL PATTERNS IN EUROPE AND SOUTH AFRICA,
THE MUSKEGON FIRE IN NORTH AMERICA AND ADVERSE WEATHER WHICH IMPACTED PORT
SHIPMENTS OF DISSOLVING PULP.
THE ADJUSTMENTS TO NET INCOME TO ARRIVE AT EARNINGS BEFORE EXCEPTIONAL ITEMS
(HEADLINE) INCLUDE THE GAIN ON THE DISPOSAL OF ASSETS AND THE MOVEMENT IN
PROVISIONS.
CAPITAL STRUCTURE
THE GROUP'S NET DEBT DECLINED FURTHER DURING THE QUARTER TO R11.4 BILLION
(US$1.9 BILLION) FROM R12.2 BILLION (US$2.0 BILLION) AT SEPTEMBER 1999. THIS
HAS BEEN ACHIEVED THROUGH THE PROCEEDS FROM THE GLOBAL SHARE ISSUE AND STRONG
INTERNAL CASH GENERATION.
NET DEBT TO TOTAL CAPITALISATION WAS 38.9%, DOWN FROM 44.3% IN SEPTEMBER 1999.
IN DECEMBER 1999 THE GROUP REFINANCED THE ZERO COUPON NOTES OF R2.1 BILLION
(NLG755.5 MILLION) ISSUED IN CONNECTION WITH THE ACQUISITION OF KNP LEYKAM, BY
MEANS OF A EURO 350 MILLION SYNDICATED TERM LOAN FACILITY. AS A RESULT THE
GROUP'S DEBT MATURITY PROFILE HAS BEEN IMPROVED AND THE CURRENT PORTION OF DEBT
REDUCED.
THE GROUP ISSUED 14.5 MILLION NEW SAPPI SHARES ON 22 NOVEMBER INCREASING THE
TOTAL NUMBER OF SHARES IN ISSUE TO 239.1 MILLION. THE AVERAGE NUMBER OF SHARES
IN ISSUE FOR THE QUARTER WAS 230.6 MILLION.
YEAR 2000
THE TRANSITION TO THE YEAR 2000 WENT SMOOTHLY WITH NO DISRUPTIONS TO THE GROUP
BUSINESS.
OUTLOOK
THE RECOVERY IN OUR SECTOR IS NOW WELL UNDERWAY. PRICES INCREASED IN THE MAJOR
MARKETS IN THE FIRST FINANCIAL QUARTER AND FURTHER PRICE INCREASES HAVE BEEN
ANNOUNCED IN THE SECOND FINANCIAL QUARTER. COATED WOODFREE PRICES INCREASED BY
6% IN EUROPE IN JANUARY AND APPROXIMATELY 4% FOR SHEETS IN NORTH AMERICA.
PRICES FOR REELS WILL INCREASE IN NORTH AMERICA FROM FEBRUARY.
PULP PRICES (NBSK) INCREASED $30 PER TON IN JANUARY TO $630 PER TON. NORTH
AMERICAN AND SCANDINAVIAN INVENTORIES REMAINED LOW AT 1.14 MILLION TONS.
CONSUMER INVENTORIES MEASURED IN DAYS OF CONSUMPTION REMAINED STEADY.
ANALYSTS' ESTIMATES OF WORLD ECONOMIC GROWTH REMAIN ROBUST FOR THE COMING 2
YEARS AND THE SUPPLY/DEMAND BALANCE FOR COATED WOODFREE PAPER AND PULP IS
FAVOURABLE. IN THE USA THERE WILL BE A DROP IN CAPACITY BECAUSE OF MACHINE
CLOSURES - SAID TO BE THE FIRST DECLINE SINCE 1980. IN ADDITION THERE WILL BE
NO NEW CAPACITY IN EUROPE UNTIL AT LEAST LATE 2001.
SAPPI WILL RESPOND TO ITS CUSTOMERS' NEEDS FOR ADDITIONAL VOLUMES BY COST
EFFECTIVE DE-BOTTLENECKING OF ITS VARIOUS MILLS, AS DEMAND REQUIRES.
THE STRONG DEMAND, IMPROVED PRICING AND CONTINUED ACHIEVEMENT OF COST
REDUCTIONS AND OPERATING EFFICIENCIES ARE EXPECTED TO RESULT IN STRONG CASH
FLOWS, A SUBSTANTIAL INCREASE IN THE YEAR ON YEAR EARNINGS PER SHARE AND A
SIGNIFICANT REDUCTION OF DEBT.
ON BEHALF OF THE BOARD
E VAN AS D G WILSON
DIRECTOR DIRECTOR
26 JANUARY 2000
SAPPI LIMITED
REGISTRATION NO. 05/08963/06
CONSOLIDATED INCOME STATEMENT
UNAUDITED
QUARTER ENDED
31 DEC. 31 DEC
1999 1998
R MILLION R MILLION % CHANGE
SALES 6,812.2 5,908.4 15.3
COST OF GOODS SOLD 4,977.9 4,428.3
GROSS PROFIT 1,834.3 1,480.1 23.9
DEPRECIATION 510.8 488.5
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 544.4 542.2
OPERATING INCOME 779.1 449.4 73.4
NON-TRADING INCOME (LOSS) 33.3 (44.4)
NET FINANCE COSTS 164.4 239.7
PAID 221.9 329.8
CAPITALISED (57.5) (90.1)
INCOME BEFORE TAXATION 648.0 165.3 292.0
TAXATION - CURRENT 74.1 85.8
- DEFERRED 151.3 (78.5)
INCOME AFTER TAXATION 422.6 158.0 167.5
INCOME ATTRIBUTABLE TO
MINORITY INTERESTS 17.7 14.0
NET INCOME 404.9 144.0 181.2
EBITDA 1,385.1 1,015.7 36.4
BASIC EARNINGS PER SHARE
(CENTS) 176 64
EARNINGS BEFORE EXCEPTIONAL
ITEMS (HEADLINE EARNINGS)
PER SHARE (CENTS) 159 75
WEIGHTED AVERAGE NUMBER OF
SHARES IN ISSUE (MILLIONS) 230.6 223.8
DILUTED EARNINGS PER SHARE
(CENTS) 173 63
DILUTED EARNINGS BEFORE
EXCEPTIONAL ITEMS
(DILUTED HEADLINE EARNINGS)
PER SHARE (CENTS) 157 73
WEIGHTED AVERAGE NUMBER OF
SHARES ON FULLY DILUTED
BASIS (MILLIONS) 236.3 230.0
CALCULATION OF EARNINGS
BEFORE EXCEPTIONAL ITEMS
(HEADLINE) NET OF TAX
NET INCOME 404.9 144.0
(PROFIT) LOSS ON
DISPOSAL OF BUSINESS
AND FIXED ASSETS (21.2) 18.3
(DECREASE) INCREASE IN
PROVISIONS (17.1) 5.8
EARNINGS BEFORE EXCEPTIONAL
ITEMS (HEADLINE) 366.6 168.1
CONSOLIDATED INCOME STATEMENT
US DOLLAR AVERAGE RATE TRANSLATION*
UNAUDITED
QUARTER ENDED
31 DEC. 31 DEC.
1999 1998
US$ MILLION US$ MILLION % CHANGE
SALES 1,116.3 1,021.9 9.2
COST OF GOODS SOLD 815.7 765.9
GROSS PROFIT 300.6 256.0 17.4
DEPRECIATION 83.7 84.5
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 89.2 93.8
OPERATING INCOME 127.7 77.7 64.4
NON-TRADING INCOME (LOSS) 5.5 (7.7)
NET FINANCE COSTS 27.0 41.4
PAID 36.4 57.0
CAPITALISED (9.4) (15.6)
INCOME BEFORE TAXATION 106.2 28.6 271.3
TAXATION - CURRENT 12.1 14.8
- DEFERRED 24.8 (13.6)
INCOME AFTER TAXATION 69.3 27.4 152.9
INCOME ATTRIBUTABLE TO
MINORITY INTERESTS 2.9 2.4
NET INCOME 66.4 25.0 165.6
EBITDA 227.0 175.7 29.2
BASIC EARNINGS PER
SHARE (CENTS) 29 11
EARNINGS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE EARNINGS)
PER SHARE (CENTS) 26 13
WEIGHTED AVERAGE NUMBER
OF SHARES IN ISSUE
(MILLIONS) 230.6 223.8
DILUTED EARNINGS PER
SHARE (CENTS) 28 11
DILUTED EARNINGS BEFORE
EXCEPTIONAL ITEMS
(DILUTED HEADLINE EARNINGS)
PER SHARE (CENTS) 26 13
WEIGHTED AVERAGE NUMBER
OF SHARES ON FULLY
DILUTED BASIS (MILLIONS) 236.3 230.0
CALCULATION OF EARNINGS
BEFORE EXCEPTIONAL ITEMS
(HEADLINE) NET OF TAX
NET INCOME 66.4 25.0
(PROFIT) LOSS ON
DISPOSAL OF BUSINESS
AND FIXED ASSETS (3.5) 3.2
(DECREASE) INCREASE
IN PROVISIONS (2.8) 1.0
EARNINGS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE) 60.1 29.2
*EXCHANGE RATE
(AVERAGE)$ 1.00 = R 6.1024 5.7819
CONSOLIDATED BALANCE SHEET
UNAUDITED AUDITED
31 DEC. 30 SEPT.
1999 1999
R MILLION R MILLION
FUNDS EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 10,611.4 9,356.2
MINORITY INTERESTS 899.8 930.3
LONG-TERM BORROWINGS 10,224.9 8,256.8
OTHER LONG-TERM LIABILITIES 1,601.5 1,465.4
DEFERRED TAXATION 2,878.3 2,724.2
26,215.9 22,732.9
EMPLOYMENT OF FUNDS
FIXED ASSETS 21,760.1 21,991.3
PLANTATIONS AND TIMBERLANDS 2,471.2 2,437.2
DEFERRED TAXATION 403.5 411.5
OTHER NON-CURRENT ASSETS 1,410.1 1,102.7
CURRENT ASSETS 8,293.2 6,922.5
BANK BALANCES AND DEPOSITS 1,926.2 925.3
COLLATERAL DEPOSIT 639.0 624.0
OTHER CURRENT ASSETS 5,728.0 5,373.2
TOTAL ASSETS 34,338.1 32,865.2
CURRENT LIABILITIES 8,122.2 10,132.3
INTEREST BEARING LIABILITIES 1,991.6 4,186.8
BANK OVERDRAFT 1,111.6 709.8
OTHER CURRENT LIABILITIES 5,019.0 5,235.7
26,215.9 22,732.9
NUMBER OF SHARES IN ISSUE (MILLIONS) 239.1 224.6
NET DEBT (R MILLION) 11,401.9 12,228.1
NET DEBT TO TOTAL CAPITALISATION (%) 38.9 44.3
CONSOLIDATED BALANCE SHEET
US DOLLAR PERIOD END RATE TRANSLATION*
UNAUDITED AUDITED
31 DEC. 30 SEPT.
1999 1999
US$ MILLION US$ MILLION
FUNDS EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 1,727.1 1,559.4
MINORITY INTERESTS 146.4 155.1
LONG-TERM BORROWINGS 1,664.2 1,376.1
OTHER LONG-TERM LIABILITIES 260.7 244.2
DEFERRED TAXATION 468.5 454.0
4,266.9 3,788.8
EMPLOYMENT OF FUNDS
FIXED ASSETS 3,541.7 3,665.2
PLANTATIONS AND TIMBERLANDS 402.2 406.2
DEFERRED TAXATION 65.7 68.6
OTHER NON-CURRENT ASSETS 229.5 183.8
CURRENT ASSETS 1,349.8 1,153.7
BANK BALANCES AND DEPOSITS 313.5 154.2
COLLATERAL DEPOSIT 104.0 104.0
OTHER CURRENT ASSETS 932.3 895.5
TOTAL ASSETS 5,588.9 5,477.5
CURRENT LIABILITIES 1,322.0 1,688.7
INTEREST BEARING LIABILITIES 324.2 697.8
BANK OVERDRAFT 180.9 118.3
OTHER CURRENT LIABILITIES 816.9 872.6
4,266.9 3,788.8
NUMBER OF SHARES IN ISSUE (MILLIONS) 239.1 224.6
NET DEBT (US$ MILLION) 1,855.8 2,038.0
NET DEBT TO TOTAL CAPITALISATION (%) 38.9 44.3
*EXCHANGE RATE (PERIOD END) $1.00 = R 6.1440 6.0000
CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED UNAUDITED
QUARTER QUARTER
ENDED ENDED
31 DEC. 31 DEC.
1999 1998
R MILLION R MILLION
CASH GENERATED BY OPERATIONS 1,547.3 670.7
MOVEMENT IN WORKING CAPITAL (1,340.1) (1,557.8)
NET FINANCE COST (222.1) (329.8)
TAXATION 17.3 (22.7)
CASH RETAINED FROM (UTILISED IN) OPERATING
ACTIVITIES 2.4 (1,239.6)
CASH EFFECTS OF INVESTING ACTIVITIES 140.8 319.8
143.2 (919.8)
CASH EFFECTS OF FINANCING ACTIVITIES 862.3 (1,193.7)
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 1,005.5 (2,113.5)
CONSOLIDATED CASH FLOW STATEMENT
US DOLLAR AVERAGE RATE TRANSLATION*
UNAUDITED UNAUDITED
QUARTER QUARTER
ENDED ENDED
31 DEC. 31 DEC.
1999 1998
US$ MILLION US$ MILLION
CASH GENERATED BY OPERATIONS 253.6 116.0
MOVEMENT IN WORKING CAPITAL (219.6) (269.4)
NET FINANCE COST (36.4) (57.0)
TAXATION 2.8 (3.9)
CASH RETAINED FROM (UTILISED IN) OPERATING
ACTIVITIES 0.4 (214.3)
CASH EFFECTS OF INVESTING ACTIVITIES 23.1 55.3
23.5 (159.0)
CASH EFFECTS OF FINANCING ACTIVITIES 141.3 (206.5)
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 164.8 (365.5)
*EXCHANGE RATE (AVERAGE) $1.00 = R 6.1024 5.7819
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
UNAUDITED UNAUDITED
QUARTER ENDED QUARTER ENDED
31 DEC. 31 DEC.
1999 1998
ORDINARY SHARE ORDINARY SHARE
CAPITAL AND CAPITAL AND
ADDITIONAL ADDITIONAL
PAID PAID
IN CAPITAL RESERVES TOTAL IN CAPITAL RESERVES TOTAL
R R R R R R
MILLION MILLION MILLION MILLION MILLION MILLION
BALANCE AT 1 OCTOBER 5,964.5 3,391.7 9,356.2 5,943.9 3,343.1 9,287.0
INCOME BEFORE MINORITY
INTERESTS - 422.6 422.6 - 158.0 158.0
INCOME ATTRIBUTABLE TO
MINORITY INTERESTS - (17.7) (17.7) - (14.0) (14.0)
FOREIGN CURRENCY TRANSLATION
RESERVE - 137.7 137.7 - (86.2) (86.2)
ISSUANCE OF ORDINARY
SHARES 712.6 - 712.6 - - -
GOODWILL WRITTEN OFF
TO EQUITY - - - - (17.2) (17.2)
BALANCE AT 31
DECEMBER 6,677.1 3,934.3 10,611.4 5,943.9 3,383.7 9,327.6
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
US DOLLAR PERIOD END RATE TRANSLATION*
UNAUDITED UNAUDITED
QUARTER ENDED QUARTER ENDED
31 DEC. 31 DEC.
1999 1998
ORDINARY SHARE ORDINARY SHARE
CAPITAL AND CAPITAL AND
ADDITIONAL PAID ADDITIONAL PAID
IN CAPITAL RESERVES TOTAL IN CAPITAL RESERVES TOTAL
US$ US$ US$ US$ US$ US$
MILLION MILLION MILLION MILLION MILLION MILLION
BALANCE AT
1 OCTOBER 970.8 552.0 1,522.8 1,011.7 569.0 1,580.7
INCOME BEFORE
MINORITY
INTERESTS - 68.8 68.8 - 26.9 26.9
INCOME
ATTRIBUTABLE
TO MINORITY
INTERESTS - (2.9) (2.9) - (2.4) (2.4)
FOREIGN CURRENCY
TRANSLATION
RESERVE - 22.4 22.4 - (14.7) (14.7)
ISSUANCE OF
ORDINARY
SHARES 116.0 - 116.0 - - -
GOODWILL WRITTEN
OFF TO EQUITY - - - - (2.9) (2.9)
BALANCE AT
31 DECEMBER 1,086.8 640.3 1,727.1 1,011.7 575.9 1,587.6
*EXCHANGE RATE
(PERIOD END)
$1.00 = R 6.1440 6.1440 5.8750 5.8750
REGIONAL INFORMATION
UNAUDITED
QUARTER ENDED
31 DEC. 31 DEC.
1999 1998
R MILLION R MILLION % CHANGE
SALES - TONS
FINE PAPER -
NORTH AMERICA 342.4 307.8 11.2
EUROPE 547.4 481.8 13.6
SOUTHERN AFRICA 71.7 62.5 14.7
TOTAL 961.5 852.1 12.8
FOREST PRODUCTS 648.2 576.8 12.4
TOTAL 1,609.7 1,428.9 12.7
SALES
FINE PAPER -
NORTH AMERICA 2,439.7 2,127.2 14.7
EUROPE 2,764.6 2,522.4 9.6
SOUTHERN AFRICA 373.9 319.4 17.1
TOTAL 5,578.2 4,969.0 12.3
FOREST PRODUCTS 1,234.0 939.4 31.4
TOTAL 6,812.2 5,908.4 15.3
OPERATING INCOME
FINE PAPER -
NORTH AMERICA 228.9 226.1 1.3
EUROPE 319.5 144.2 121.6
SOUTHERN AFRICA 28.5 36.0 (20.8)
TOTAL 576.9 406.3 42.0
FOREST PRODUCTS 181.3 51.5 252.1
SAPPI TRADING
AND CORPORATE 20.9 (8.4)
TOTAL 779.1 449.4 73.4
EARNINGS BEFORE INTEREST,
TAX, DEPRECIATION AND
AMORTISATION CHARGES**
FINE PAPER -
NORTH AMERICA 388.6 326.1 19.2
EUROPE 574.4 419.7 36.9
SOUTHERN AFRICA 42.1 48.7 (13.6)
TOTAL 1,005.1 794.5 26.5
FOREST PRODUCTS 358.2 208.5 71.8
SAPPI TRADING
AND CORPORATE 21.8 12.7 71.7
TOTAL 1,385.1 1,015.7 36.4
NET OPERATING ASSETS
FINE PAPER -
NORTH AMERICA 7,388.4 8,052.5 (8.2)
EUROPE 9,852.5 12,090.3 (18.5)
SOUTHERN AFRICA 1,153.6 1,036.1 11.3
TOTAL 18,394.5 21,178.9 (13.1)
FOREST PRODUCTS 7,782.5 7,644.8 1.8
SAPPI TRADING
AND CORPORATE 173.5 633.5 (72.6)
TOTAL 26,350.5 29,457.2 (10.5)
** BEFORE NON TRADING INCOME (LOSS)
REGIONAL INFORMATION
US DOLLAR TRANSLATION*
UNAUDITED
QUARTER ENDED
31 DEC. 31 DEC.
1999 1998
US$ MILLION US$ MILLION % CHANGE
SALES - TONS
FINE PAPER -
NORTH AMERICA 342.4 307.8 11.2
EUROPE 547.4 481.8 13.6
SOUTHERN AFRICA 71.7 62.5 14.7
TOTAL 961.5 852.1 12.8
FOREST PRODUCTS 648.2 576.8 12.4
TOTAL 1,609.7 1,428.9 12.7
SALES
FINE PAPER -
NORTH AMERICA 399.8 367.9 8.7
EUROPE 453.0 436.3 3.8
SOUTHERN AFRICA 61.3 55.2 11.1
TOTAL 914.1 859.4 6.4
FOREST PRODUCTS 202.2 162.5 24.4
TOTAL 1,116.3 1,021.9 9.2
OPERATING INCOME
FINE PAPER -
NORTH AMERICA 37.5 39.1 (4.1)
EUROPE 52.4 25.0 109.6
SOUTHERN AFRICA 4.7 6.2 (24.2)
TOTAL 94.6 70.3 34.6
FOREST PRODUCTS 29.7 8.9 233.7
SAPPI TRADING
AND CORPORATE 3.4 (1.5)
TOTAL 127.7 77.7 64.4
EARNINGS BEFORE INTEREST,
TAX, DEPRECIATION AND
AMORTISATION CHARGES**
FINE PAPER -
NORTH AMERICA 63.7 56.4 12.9
EUROPE 94.1 72.6 29.6
SOUTHERN AFRICA 6.9 8.4 (17.9)
TOTAL 164.7 137.4 19.9
FOREST PRODUCTS 58.7 36.1 62.6
SAPPI TRADING
AND CORPORATE 3.6 2.2 63.6
TOTAL 227.0 175.7 29.2
NET OPERATING ASSETS
FINE PAPER -
NORTH AMERICA 1,202.5 1,370.6 (12.3)
EUROPE 1,603.6 2,057.9 (22.1)
SOUTHERN AFRICA 187.8 176.4 6.5
TOTAL 2,993.9 3,604.9 (16.9)
FOREST PRODUCTS 1,266.7 1,301.2 (2.7)
SAPPI TRADING
AND CORPORATE 28.2 107.8 (73.8)
TOTAL 4,288.8 5,013.9 (14.5)
* INCOME STATEMENT EXCHANGE
RATE (AVERAGE)
$ 1.00 = R 6.1024 5.7819
* BALANCE SHEET EXCHANGE
RATE (PERIOD END)
$ 1.00 = R 6.1440 5.8750
** BEFORE NON TRADING INCOME (LOSS)
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), CURRENCY FLUCTUATIONS AND THE
CONSEQUENCES OF YEAR 2000 NON-COMPLIANCE AND INTRODUCTION OF THE EURO. 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.
THIS REPORT IS AVAILABLE ON THE SAPPI WEBSITE. HTTP://WWW.SAPPI.COM
OTHER INTERESTED PARTIES CAN OBTAIN PRINTED COPIES OF THIS REPORT FROM:
SOUTH AFRICA:
MERCANTILE REGISTRARS LIMITED, 8TH FLOOR, 11 DIAGONAL STREET, JOHANNESBURG, 200
PO BOX 1053, JOHANNESBURG, 2000. TEL: +27 (0) 11 370-5000
UNITED KINGDOM:
IRG PLC, BOURNE HOUSE, 34 BECKENHAM ROAD, BECKENHAM, KENT, BR3 4TU, DX 91750,
BECKENHAM WEST.
TEL: +44 (0) 181 639-2000.
UNITED STATES ADR DEPOSITARY:
BANK OF NEW YORK, ADR DEPARTMENT, 101 BARCLAY STREET, NEW YORK, NY 10286. TEL:
+1 212 815-5800.
Sharenet Sites 
