Wrap Text
Sappi - Results for the third quarter ended June 2003
Sappi
The word for fine paper
Sappi Limited
(Registration number 1936/008963/06)
JSE Code: SAP
ISIN Code: ZAE000006284
Results for the third quarter ended June 2003
third quarter
2003
- EPS 13 US cents
- Weak markets
- Planned capital expenditure trimmed
- Costs well contained
summary
Quarter Quarter Nine Nine
Quarter months months
ended ended ended ended ended
June March June June June
2003 2003 2002 2003 2002
Sales (US$ 1,062 1,095 974 3,176 2,677
million)
Operating 46 102 97 240 267
profit (US$
million)
EBITDA* (US$ 149 195 188 534 503
million) **
Operating 4.3 9.3 10.0 7.6 10.0
profit to
sales (%)
EBITDA to 14.0 17.8 19.3 16.8 18.8
sales (%) *
Operating 4.3 10.3 11.8 7.8 10.3
profit to
average net
assets (%) *
Headline EPS 12 25 29 60 69
(US cents) *
EPS (US cents) 13 25 29 61 64
Return on 6.1 13.0 18.2 10.4 12.9
average equity
(%) *
Net debt (US$ 1,571 1,509 1,572 1,571 1,572
million) *
Net debt to 33.9 35.4 39.7 33.9 39.7
total
capitalisation
(%) *
* Refer to the Supplemental Information for the definition of the term.
** The comparative information has been restated to take into account the
changed EBITDA definition. Refer to the Supplemental Information for further
details.
Comment
Our markets deteriorated as the quarter progressed.
Pulp prices, which started the quarter on a rising note, ran out of steam and by
the end of June NBSK pulp prices dropped US$40 per ton from the peak of US$560
per ton in May.
Demand for coated fine paper remained weak and our markets have become
increasingly competitive. In Europe, industry orders excluding overseas exports
were down 3% compared to a year earlier and 11% compared to the March quarter.
Including overseas exports, industry order intake was down 8% compared to the
March quarter.
Although magazine advertising expenditure in the US in the quarter was up 9%
compared to a year earlier, magazine advertising pages were 1% lower. North
American prices for web products have increased approximately US$40 per ton
since the start of our fiscal year. Prices for domestically produced sheet
products have, however, continued to decline.
The group"s sales for the quarter reflected these difficult conditions and
although they increased 9% compared to a year earlier the currency effect on
translation into Dollars masked the decline in local currencies in South Africa
and Europe. The North American business" sales were flat compared to a year
earlier but included the Potlatch fine paper business for the full period this
year and only half the period last year. The group"s sales were down 3% compared
to the March quarter.
Net profit of US$29 million was approximately half of the prior quarter and
56.1% below the equivalent quarter last year. Headline earnings were US$2
million lower than net profit mainly as the result of profit on the sale of
fixed assets.
Earnings per share for the quarter were 13 US cents, 52% of the prior quarter
and 55.2% below a year earlier. Headline earnings per share were 12 US cents.
Group operating profit for the quarter decreased 52.6% to US$46 million compared
to a year earlier largely as a result of weak demand and price pressure on our
coated fine paper business and the pressure on prices in our Southern African
businesses as a result of the weak US Dollar relative to the Rand.
Operating costs were generally well managed; however, a concentration of mill
maintenance shuts in the quarter and higher inflation in South Africa led to
increased costs in the Forest Products business. The real cost performance is
distorted by translation to US Dollars.
Net interest paid included additional costs of US$10.5 million in respect of an
investment-linked financing agreement. The impact on net finance costs, after
related credits, was US$5.5 million. These costs result from the cumulative
under-performance of the investment component.
Net finance costs were US$21 million compared to US$27 million in the March
quarter.
The previous quarter"s report indicated our intention to swap a further US$500
million fixed rate debt to floating rates, having entered swaps for US$250
million in that quarter. In the intervening period margins widened; however, in
July we were able to conclude these swaps at targeted levels. The interest
benefit of the swaps based on current US$ Libor rates, amounts to US$25.1
million per annum. The expected interest benefit based on current short-term
interest rates, for the last quarter of this financial year, amounts to US$5.5
million. The group"s fixed to floating rate debt ratio is now 52:48.
Taxation for the quarter was a credit of US$1 million, which brings the year to
date rate into line with our estimate of the full year rate of 19.2%, which is
lower than our earlier estimate as a result of relatively lower profit
generation in higher tax jurisdictions.
Cash flow and debt
Cash generated by operations was US$124 million, 39.5% lower than a year earlier
and 36.1% lower than the March quarter.
Capital expenditure for the quarter was US$70 million, approximately 80% of
depreciation. In the light of the uncertain outlook capital expenditure for the
full year, which was planned at a level of 100% of depreciation, has been cut
back to approximately 80% of depreciation.
Net debt increased by US$62 million to US$1,571 million in the quarter largely
as a result of translation of our Euro and Rand debt into our reporting
currency, the US Dollar, which has weakened during the period. Inventories
increased by US$28 million excluding currency movement in the quarter, which is
traditionally a quarter in which we build inventory in North America for a
seasonal increase in demand.
Net debt to total capitalisation decreased to 33.9% from 35.4% as the value of
the group"s equity was enhanced when translated to US Dollars at stronger period
end rates.
Since our second quarter announcement we have re-purchased approximately 1.1
million shares at an average price of approximately US$12.60 per share.
Operating review for the quarter
Sappi fine paper
Quarter ended Quarter ended
June 2003 June 2002 %
US$ million US$ million change
Sales 874 820 6.6
Operating profit 30 54 (44.4)
Operating profit to 3.4 6.6 -
sales (%)
EBITDA 110 126 (12.7)
EBITDA to sales (%) 12.6 15.4 -
RONOA p.a. (%) 3.7 7.9 -
The coated fine paper business faced weakening markets in Europe and continued
difficult markets in North America, where low priced imports from Asia and
Europe continue to depress prices, in a quarter that is typically seasonally
weak. Our Southern African business performed well despite significant price
reductions in local currency in reaction to competitive pressure from imports
and to the stronger Rand.
Margins and returns deteriorated significantly in the quarter.
Europe
Quarter ended Quarter ended
June 2003 June 2002 % change % change
US$ million US$ million (US$) (Euro)
Sales 481 442 8.8 (10.9)
Operating 11 60 (81.7) (85.0)
profit
Operating 2.3 13.6 - -
profit to
sales (%)
EBITDA 58 103 (43.7) (53.9)
EBITDA to 12.1 23.3 - -
sales (%)
RONOA p.a. (%) 2.7 17.2 - -
Our sales volume increased slightly compared to a year ago as a result of
increased overseas exports but was approximately 8% lower than the March
quarter. We are concerned at the erosion of our market share in the quarter.
Average prices realised in Euros were down 11.4% compared to a year ago and 1.4%
compared to the March quarter, partly as a result of lower Euro price
realisations on exports resulting from the stronger Euro relative to the US
Dollar.
The combination of lower volumes and prices and higher pulp prices led to a
rapid deterioration in margins through the June quarter.
The market as a whole remains weak with no sign yet of a turnaround in economic
growth or advertising spending.
North America
Quarter ended Quarter ended
June 2003 June 2002 %
US$ million US$ million change
Sales 319 319 -
Operating profit (loss) 9 (16) * -
Operating profit to 2.8 - -
sales (%)
EBITDA 40 13 207.7
EBITDA to sales (%) 12.5 4.1 -
RONOA p.a. (%) 2.5 - -
* Includes US$13 million of integration costs relating to the Potlatch fine
paper business acquisition.
Our sales volume for the quarter declined 3.8% compared to a year earlier;
however, average prices realised were US$40 per metric ton higher.
Our manufacturing efficiency improved towards the end of the quarter
particularly at Somerset where throughput has now returned and on occasion
exceeded normal levels, following the rebuild of number 3 paper machine earlier
in the year.
Wood and natural gas prices remain high and high pension and medical costs
continue to impact results.
We have stabilised our market share in North America and believe that as the
economy improves we will see the benefits of the rationalisation of brands and
merchant distribution effected over the past year.
Margins and returns, although reflecting a turnaround from last year, remain
well short of potential.
Fine Paper South Africa
Quarter Quarter ended
ended
June 2003 June 2002 % change % change
US$ million US$ million (US$) (Rand)
Sales 74 59 25.4 (10.2)
Operating 10 10 - (28.4)
profit
Operating 13.5 16.9 - -
profit to
sales (%)
EBITDA 12 10 20.0 (14.1)
EBITDA to 16.2 16.9 - -
sales (%)
RONOA p.a. (%) 30.8 47.3 - -
Margins have been squeezed by increased competition from imports following the
strengthening of the Rand, but our product range, access to different markets
and manufacturing flexibility have helped us to achieve acceptable results.
Forest Products
Quarter Quarter ended
ended
June 2003 June 2002 % change % change
US$ million US$ million (US$) (Rand)
Sales 188 154 22.1 (12.6)
Operating 18 39 (53.8) (67.0)
profit
Operating 9.6 25.3 - -
profit to
sales (%)
EBITDA 40 58 (31.0) (50.6)
EBITDA to 21.3 37.7 - -
sales (%)
RONOA p.a. (%) 7.3 22.2 - -
Local demand for our pulp and paper products increased during the quarter, while
export demand was mixed. Average pulp prices were significantly higher in the
quarter; however, pulp prices peaked in May and have since dropped by US$40 per
ton. The impact of the stronger Rand on revenues more than offset the effect of
the higher pulp prices and resulted in severe margin pressure. Demand for
dissolving pulp remained steady with most regions experiencing good demand.
The exchange rate impacted prices realised for our exports and for our domestic
sales of containerboard as imported products became more competitive.
We had a concentration of mill maintenance shuts in the quarter, which increased
maintenance costs. This is not expected to recur in the final quarter.
The local cost base increased on the back of local inflation which has, however,
declined in recent months. This will help to contain costs going forward.
outlook
Market conditions have not improved since our trading update issued in June and
are still uncertain.
Economic growth in Europe remains elusive and the improvement in the US economy
is taking longer than anticipated. Although there are some encouraging signals,
a substantial improvement is not expected before the end of the calendar year.
The strength of the Euro has almost certainly lead to more difficult market
conditions in Europe as export markets become less attractive to manufacturers.
For our Southern African businesses, a continuing strong Rand will put pressure
on revenue and margins and the indications are that pulp prices are trending
downwards.
We increased inventories during the quarter in anticipation of the usual
seasonal increase in demand in our final quarter. It is already clear that we
are likely to increase curtailment of production to maintain our long-standing
policy of matching output to customer demand. We continue to focus on improving
our competitive position through driving costs down and enhancing our quality
and complete service package in order to regain our traditional market shares.
Under current conditions it is no longer clear that earnings for the fourth
quarter will be better than for the third quarter. Earnings per share for the
full year are likely to be well below last year.
On behalf of the Board
J C A Leslie
Director
D G Wilson
Director
30 July 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 Reviewed
Quarter Quarter Nine Nine
months months
ended ended ended ended
June June June June
2003 2002 2003 2002
US$ US$ % US$ US$ %
million million change million million change
Sales 1,062 974 9.0 3,176 2,677 18.6
Cost of sales * 933 787 2,691 2,197
Gross profit 129 187 485 480 1.0
(31.0)
Selling, general & 83 90 245 213
administrative
expenses *
Operating profit 46 97 240 267
(52.6) (10.1)
Non-trading (profit) (3) - (4) 19
loss
Net finance costs 21 7 72 45
Net interest paid 39 23 93 66
Capitalised (9) (6) (20) (23)
Net foreign exchange (6) (13) 2 (5)
(gains) losses
Change in fair value (3) 3 (3) 7
of financial
instruments
Profit before tax 28 90 172 203
(68.9) (15.3)
Taxation - current 5 8 36 24
- deferred (6) 16 (3) 32
Net profit 29 66 139 147 (5.4)
(56.1)
Earnings per share (US 13 29 61 64
cents)
Headline earnings per 12 29 60 69
share (US cents) **
Weighted average number 229.1 230.4 229.5 230.2
of shares in issue
(millions)
Diluted earnings per 13 28 60 63
share (US cents)
Diluted headline 12 29 59 69
earnings per share (US
cents) **
Weighted average number
of shares on fully
diluted
basis (millions) 231.5 233.9 232.1 233.5
Calculation of Headline
earnings**
Net profit 29 66 139 147
(Profit) loss on (2) 1 (3) 2
disposal of business
and fixed assets
Mill closure costs - - 1 5
Debt restructuring - - - 6
costs
Headline earnings 27 67 137 160
* 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
June 2003 Sept. 2002
US$ million US$ million
ASSETS
Non-current assets 4,163 3,639
Property, plant and equipment 3,503 3,189
Plantations 434 298
Deferred taxation 8 6
Other non-current assets 218 146
Current assets 1,343 1,002
Cash and cash equivalents 353 161
Trade and other receivables 267 282
Prepaid income taxes 3 38
Inventories 720 521
Total assets 5,506 4,641
EQUITY AND LIABILITIES
Shareholders" equity
Ordinary shareholders" interest 1,949 1,601
Minority interest 2 2
Non-current liabilities 2,526 2,110
Interest-bearing borrowings 1,768 1,455
Deferred taxation 483 399
Other non-current liabilities 275 256
Current liabilities 1,029 928
Interest-bearing borrowings and bank 156 125
overdraft
Taxation payable 89 48
Other current liabilities 784 755
Total equity and liabilities 5,506 4,641
Number of shares in issue at balance 228.9 230.2
sheet date (millions)
Group cash flow statement
Reviewed Reviewed Reviewed Reviewed
Quarter Quarter Nine months Nine months
ended ended ended ended
June 2003 June 2002 June 2003 June 2002
US$ million US$ million US$ million US$ million
Cash 124 205 494 518
generated by
operations
Movement in (18) 39 (183) (92)
working
capital
Net finance (31) (13) (92) (68)
costs
Taxation 6 (4) 31 (63)
recovered
(paid)
Dividends - - (65) (60)
paid
Cash 81 227 185 235
retained
from
operating
activities
Cash effects (95) (535) (200) (641)
of investing
activities
Normal (95) (47) (200) (153)
investing
activities
Acquisition - (488) - (488)
of net
assets
(14) (308) (15) (406)
Cash effects 150 365 184 160
of financing
activities
Net movement 136 57 169 (246)
in cash and
cash
equivalents
Group statement of changes in shareholders" equity
Reviewed Reviewed
Nine months Nine months
ended ended
June 2003 June 2002
US$ million US$ million
Balance - beginning of year 1,601 1,503
Net profit 139 147
Foreign currency translation reserve 312 (57)
Revaluation of movement in share 3 -
capital and share premium
Revaluation of derivative instruments (17) 6
Dividends declared - US$0.28 (2002: (65) (60)
US$0.26) per share
(Share buybacks) net of transfers to (24) 4
participants of the share purchase
trust
Balance - end of period 1,949 1,543
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 (SA GAAP). 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 financial results for the quarter have been reviewed by the group"s
auditors, Deloitte & Touche. Their report is available for inspection at the
company"s registered offices.
2. Headline Earnings per share
Headline earnings per share and diluted 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 headline earnings is that there are no longer any
adjustments for movements in restructuring provisions. The impact of this is
immaterial.
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$22 million
for the quarter (March 2003: US$21 million; June 2002: US$19 million) and US$63
million for the nine months ended (June 2002: US$50 million).
Reviewed Reviewed Reviewed Reviewed
Quarter Quarter Nine months Nine months
ended ended ended ended
June 2003 June 2002 June 2003 June 2002
US$ million US$ million US$ million US$ million
4. Operating
profit
Included in
operating
profit are:
Depreciation 89 81 259 225
Fellings 5 7 14 19
Amortisation 6 3 17 11
100 91 290 255
5. Capital
expenditure
Property, 70 32 170 131
plant and
equipment
Plantations 8 9 21 19
78 41 191 150
Reviewed Audited
June 2003 Sept. 2002
US$ million US$ million
6. Capital commitments
Contracted but not provided 157 55
Approved but not contracted 157 173
314 228
7. Contingent liabilities
Guarantees and suretyships 80 66
Other contingent liabilities 17 14
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 amortised in the income statement representing the
standing cost of the 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 with companies in our industry.
Supplemental Information
additional information
Reviewed Reviewed Reviewed Reviewed
Quarter Quarter Nine months Nine months
ended ended ended ended
June 2003 June 2002 June 2003 June 2002
US$ million US$ million US$ million US$ million
Net profit to
EBITDA *
reconciliation
Net profit
per the
Group Income 29 66 139 147
Statement
Net finance 21 7 72 45
costs
Taxation - 5 8 36 24
current
- deferred (6) 16 (3) 32
Depreciation 89 81 259 225
Amortisation 11 10 31 30
(including
fellings)
EBITDA * 149 188 534 503
Reviewed Audited
June 2003 Sept. 2002
Net debt (US$ million) ** 1,571 1,419
Net debt to total capitalisation (%) ** 33.9 37.0
Net asset value per share (US$) ** 10.59 8.66
* In connection with rules recently adopted by the U.S. Securities Exchange
Commission ("SEC") 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 only 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 of this is to increase
EBIDTA by US$3 million for the quarter to US$149 million (March 2003: increase
of US$1 million to US$195 million; June 2002: no impact) and by US$4 million for
the nine months ended June 2003 to US$534 million (June 2002: decrease of US$19
million to US$503 million).
** Refer to the Supplemental Information for the definition of the term.
Supplemental Information
regional information
Reviewed Reviewed
Quarter Quarter
ended ended
June 2003 June 2002
US$ million US$ million % change
Sales - Metric tons
(000"s)
Fine Paper - North America 301 313 (3.8)
Europe 546 543 0.6
Southern Africa 78 81 (3.7)
Total 925 937 (1.3)
Forest Products - Pulp and paper 348 380 (8.4)
operations
Forestry 323 268 20.5
operations
Total 1,596 1,585 0.7
Sales
Fine Paper - North America 319 319 -
Europe 481 442 8.8
Southern Africa 74 59 25.4
Total 874 820 6.6
Forest Products - Pulp and paper 174 143 21.7
operations
Forestry 14 11 27.3
operations
Total 1,062 974 9.0
Operating profit
Fine Paper - North America* 9 (16) -
Europe 11 60 (81.7)
Southern Africa 10 10 -
Total 30 54 (44.4)
Forest Products 18 39 (53.8)
Corporate (2) 4 -
Total 46 97 (52.6)
Earnings before
interest, tax,
depreciation and
amortisation
charges**
Fine Paper - North America* 40 13 207.7
Europe 58 103 (43.7)
Southern Africa 12 10 20.0
Total 110 126 (12.7)
Forest Products 40 58 (31.0)
Corporate (1) 4 -
Total 149 188 (20.7)
Net operating assets
Fine Paper - North America 1,472 1,464 0.5
Europe 1,665 1,476 12.8
Southern Africa 130 84 54.8
Total 3,267 3,024 8.0
Forest Products 1,026 715 43.5
Corporate (21) 28 -
Total 4,272 3,767 13.4
Reviewed Reviewed
Nine months Nine months
ended ended
June 2003 June 2002
US$ million US$ million % change
Sales - Metric tons
(000"s)
Fine Paper - North America 1,012 765 32.3
Europe 1,663 1,620 2.7
Southern Africa 221 234 (5.6)
Total 2,896 2,619 10.6
Forest Products - Pulp and paper 1,080 1,052 2.7
operations
Forestry 930 777 19.7
operations
Total 4,906 4,448 10.3
Sales
Fine Paper - North America 1,026 809 26.8
Europe 1,418 1,285 10.4
Southern Africa 196 157 24.8
Total 2,640 2,251 17.3
Forest Products - Pulp and paper 497 398 24.9
operations
Forestry 39 28 39.3
operations
Total 3,176 2,677 18.6
Operating profit
Fine Paper - North America* 38 (36) -
Europe 92 164 (43.9)
Southern Africa 29 24 20.8
Total 159 152 4.6
Forest Products 79 103 (23.3)
Corporate 2 12 (83.3)
Total 240 267 (10.1)
Earnings before
interest, tax,
depreciation and
amortisation
charges**
Fine Paper - North America* 131 41 219.5
Europe 223 269 (17.1)
Southern Africa 36 29 24.1
Total 390 339 15.0
Forest Products 141 152 (7.2)
Corporate 3 12 (75.0)
Total 534 503 6.2
Net operating assets
Fine Paper - North America 1,472 1,464 0.5
Europe 1,665 1,476 12.8
Southern Africa 130 84 54.8
Total 3,267 3,024 8.0
Forest Products 1,026 715 43.5
Corporate (21) 28 -
Total 4,272 3,767 13.4
* The comparative number includes US$13 million of integration costs relating to
the Potlatch fine paper business acquisition.
** The comparative information has been restated to take into account the
changed EBITDA definition. Refer to the Supplemental Information for further
details.
Supplemental Information
summary rand convenience translation
Reviewed Reviewed Reviewed Reviewed
Quarter Quarter Nine Nine
months months
ended ended ended ended
June June % change June June % change
2003 2002 2003 2002
Sales (ZAR 8,104 10,381 (21.9) 27,369 28,227 (3.0)
million)
Operating 351 1,034 (66.1) 2,068 2,815 (26.5)
profit (ZAR
million)
Net profit 221 703 (68.6) 1,198 1,550 (22.7)
(ZAR million)
EBITDA* (ZAR 1,137 2,004 (43.3) 4,602 5,304 (13.2)
million) **
Operating 4.3 10.0 7.6 10.0
profit to
sales (%)
EBITDA * to 14.0 19.3 16.8 18.8
sales (%)
Operating 4.3 11.4 7.6 11.2
profit to
average net
assets (%)
EPS (SA cents) 99 309 (68.0) 526 675 (22.1)
Headline EPS 92 309 (70.2) 517 728 (29.0)
(SA cents) *
Net debt (ZAR 11,673 16,286 (28.3)
million) *
Net debt to 33.9 39.7
total
capitalisation
(%) *
Cash generated 946 2,185 (56.7) 4,257 5,462 (22.1)
by operations
(ZAR million)
Cash retained 618 2,419 1,594 2,478
from operating
activities
(ZAR million)
Net movement 1,038 608 1,456 (2,594)
in cash and
cash
equivalents
(ZAR million)
* Refer to the Supplemental Information for the definition of the term.
** The comparative information has been restated to take into account the
changed EBITDA definition. Refer to the Supplemental Information for further
details.
Supplemental Information
exchange rates
June March December September June
2003 2003 2002 2002 2002
Exchange rates:
Period end rate: US$1 = ZAR 8.7200 10.5400
7.4300 7.9550 10.3600
Average rate for the Quarter: 9.7265 10.4818
US$1 = ZAR 7.6305 8.3550 10.6581
Average rate for the YTD: US$1 9.7265 10.5393
= ZAR 8.6173 9.0866 10.5443
Period end rate: EUR1 = US$ 1.0387 0.9789 0.9920
1.1417 1.0729
Average rate for the Quarter: 0.9995 0.9850 0.9196
EUR1 = US$ 1.1236 1.0686
Average rate for the YTD: EUR1 = 0.9995 0.9188 0.8997
US$ 1.0655 1.0334
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 Investor Services Limited 70 Marshall Street
Johannesburg 2001
P.O. Box 61051
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 BR3 4TU, DX 91750
Beckenham West Tel +44 (0)208 639-2157
Date: 31/07/2003 09:00:34 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
Sharenet Sites 
