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SAPPI LIMITED
(REGISTRATION NO. 1936/008963/06)
SAPPI REPORT FOR THE THIRD QUARTER ENDED 30 JUNE 2000 IN US DOLLARS
SUMMARY
QUARTER ENDED NINE MONTHS ENDED
30 JUNE 31 MARCH 30 JUNE 30 JUNE 30 JUNE
2000 2000 1999 2000 1999
SALES
(US$ MILLION) 1,170 1,187 1,042 3,472 3,157
OPERATING PROFIT
(US$ MILLION) 181 165 98 473 277
EBITDA
(US$ MILLION) 278 262 186 767 560
OPERATING PROFIT
TO SALES (%) 15,5 13,9 9,4 13,6 8,8
EBITDA TO
SALES (%) 23,7 22,1 17,9 22,1 17,7
OPERATING PROFIT
TO AVERAGE
NET ASSETS (%) 17,5 15,8 9,9 15,8 8,3
EPS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE)
(US CENTS) 39 32 19 97 49
EPS
(US CENTS) 41 29 4 99 27
NET ASSETS
(US$ MILLION) 4,188 4,091 3,931 4,188 3,931
NET DEBT
(US$ MILLION) 1,495 1,553 2,281 1,495 2,281
TONS REFERRED TO IN THIS REPORT ARE METRIC TONS.
HIGHLIGHTS
MARKETS REMAIN BUOYANT
QUARTERLY PERFORMANCE YEAR ON YEAR
* EARNINGS PER SHARE DOUBLED TO 39 US CENTS
* OPERATING PROFIT UP 85%
STRONG RETURNS
* ON NET ASSETS 17%
* ON EQUITY 23%
FURTHER DECLINE IN NET DEBT
COMMENT
OPERATING REVIEW
THE UPWARD MOMENTUM IN OUR MAJOR BUSINESS SECTORS CONTINUED THROUGH THE QUARTER
WITH FIRM TO STRONG DEMAND IN THE MAJOR MARKETS AND ACHIEVEMENT OF FURTHER
PRICE INCREASES.
THE MARGINS OF THE FINE PAPER BUSINESS GREW LESS RAPIDLY THAN THE FOREST
PRODUCTS BUSINESS AS A RESULT OF THE DIFFICULTY IN INCREASING PAPER PRICES AT
THE PACE OF PULP PRICES WHICH INCREASED TO US$670 PER TON IN APRIL, UP FROM
US$450 PER TON A YEAR EARLIER. THE GROUP AS A WHOLE IS CLOSE TO 90% PULP
INTEGRATED AND IS THEREFORE LARGELY INSULATED FROM THE RISING PULP COSTS.
FINE PAPER
THE FINE PAPER BUSINESS HAS LEADING MARKET SHARES IN THE FAST GROWING COATED
WOODFREE PAPER SECTOR.
EUROPE
THE EUROPEAN MARKET WAS STRONG WITH GOOD ORDER INFLOWS. THE EURO WEAKENED TO
RECORD LOW LEVELS AGAINST THE US DOLLAR DURING THE QUARTER BEFORE REGAINING
SOME GROUND. THIS BOOSTED COATED PAPER EXPORTS FROM EUROPE TO THE AMERICAS AND
ASIA. EUROPEAN COATED WOODFREE PAPER PRICES INCREASED BY APPROXIMATELY 5%
EFFECTIVE FROM APRIL. THESE INCREASES WERE FULLY IMPLEMENTED IN MAY FOR ALL
COATED PAPER GRADES AND FURTHER INCREASES OF AROUND 5% WERE IMPLEMENTED IN JULY
WE LAUNCHED TWO NEW PRODUCTS DURING THE QUARTER TO MEET THE FUTURE NEEDS OF OUR
CUSTOMERS. XPRESS IS A NEW COATED NEAR-WOODFREE PUBLICATIONS GRADE IN LIGHTER
WEIGHTS, AND MAGNO PEARL IS A NEW LUXURY-FINISH IN THE LEADING MAGNO RANGE.
GRATKORN MILL'S PAPER MACHINE 11 WHICH PRODUCES TRIPLE COATED PAPER IS NOW
CONSISTENTLY RUNNING AT ITS DESIGN CAPACITY, WELL AHEAD OF THE ORIGINAL
TIMETABLE.
QUARTER ENDED
30 JUNE 30 JUNE %
2000 1999 CHANGE
US$ MILLION US$ MILLION
SALES 489 423 16
OPERATING
PROFIT 65 34 91
OPERATING
MARGIN (%) 13 8 63
EBITDA 108 77 40
EBITDA
MARGIN (%) 22 18 22
RONOA P.A. (%) 18 8 125
THE 16% INCREASE IN SALES WAS MADE UP OF 5% SALES VOLUME GROWTH AND 11%
INCREASE IN PRICES IN DOLLARS. IN EURO TERMS PRICES WERE 21% HIGHER THAN THE
EQUIVALENT QUARTER LAST YEAR. PAPER PRICE INCREASES WERE ACCELERATED BY THE
RAPID INCREASE IN THE EURO COST OF PULP. TIGHT COST CONTROL AND CONTINUED
ACHIEVEMENT OF ACQUISITION SYNERGIES RESULTED IN SIGNIFICANT FIXED COST
SAVINGS. WE ARE ON TRACK TO ACHIEVE US$200 MILLION PER ANNUM OF SYNERGIES
ARISING FROM THE ACQUISITION BY THE END OF THIS FINANCIAL YEAR.
THE OPERATING MARGIN AT 13% AND THE RETURN ON NET OPERATING ASSETS IN THE THIRD
QUARTER OF 18% WERE BOTH SUBSTANTIALLY HIGHER THAN A YEAR AGO.
NORTH AMERICA
THE NORTH AMERICAN MARKET FOR COATED PAPER WAS HURT BY IMPORTS FROM ASIA AND
EUROPE AS A RESULT OF THE RELATIVELY STRONG DOLLAR. PRODUCER INVENTORIES HAVE
INCREASED SINCE OCTOBER 1999 AND ARE NOW AT A SIMILAR LEVEL TO LAST YEAR.
DEMAND TYPICALLY INCREASES IN OUR FOURTH FINANCIAL QUARTER, WHICH IS THE
CATALOGUE SEASON AND WE EXPECT OUR INVENTORIES OF FINISHED GOODS AND WORK IN
PROGRESS TO DECREASE TO NORMAL OVER THIS PERIOD. PRICE INCREASES FOR COATED
WOODFREE WEB PAPER WERE REALISED DURING THE QUARTER. A FURTHER PRICE INCREASE
OF US$36 PER TON HAS BEEN ANNOUNCED BY MANY PRODUCERS FOR JULY 2000 BUT THE
IMPLEMENTATION IS SLOW AND THE FULL BENEFIT IS UNLIKELY TO BE FELT UNTIL
OCTOBER.
QUARTER ENDED
30 JUNE 30 JUNE %
2000 1999 CHANGE
US$ MILLION US$ MILLION
SALES 400 368 9
OPERATING
PROFIT 45 29 55
OPERATING
MARGIN (%) 11 8 38
EBITDA 72 51 41
EBITDA
MARGIN (%) 18 14 29
RONOA P.A. (%) 15 9 67
SALES INCREASED BY 9% AS A RESULT OF VOLUME AND PRICE INCREASES. VOLUMES WERE,
HOWEVER, WEAKER THAN THE MARCH QUARTER PARTLY AS A RESULT OF SEASONAL FACTORS
AND PARTLY AS A RESULT OF STRONG IMPORTS. THE INCREASES IN VARIABLE COSTS
DRIVEN BY RISING PULP PRICES WERE PARTLY OFFSET BY TIGHT COST CONTROL. FIXED
COSTS PER TON DECLINED 8% AS A RESULT OF THE TEAM INITIATIVES DEVELOPED
THROUGHOUT THE BUSINESS AND IMPROVED PRODUCTIVITY COMPARED TO THE EQUIVALENT
QUARTER LAST YEAR.
OPERATING PROFIT INCREASED 55% COMPARED TO A YEAR EARLIER AS A RESULT OF THESE
FACTORS. THE OPERATING MARGIN FOR THE QUARTER OF 11% AND THE RETURN ON NET
OPERATING ASSETS OF 15% WERE RESPECTIVELY SUBSTANTIALLY HIGHER THAN A YEAR AGO.
SOUTH AFRICA
THE SOUTH AFRICAN FINE PAPER BUSINESS, WHICH REPRESENTS APPROXIMATELY 5% OF
GROUP SALES, SHOWED SOME IMPROVEMENT IN THE QUARTER BUT WAS STILL DOWN ON THE
EQUIVALENT QUARTER LAST YEAR.
QUARTER ENDED
30 JUNE 30 JUNE %
2000 1999 CHANGE
US$ MILLION US$ MILLION
SALES 59 60 (2)
OPERATING
PROFIT 5 10 (50)
OPERATING
MARGIN (%) 8 17 (53)
EBITDA 7 12 (42)
EBITDA
MARGIN (%) 12 20 (40)
RONOA P.A. (%) 11 24 (54)
SELLING PRICES STILL SUFFERED FROM STRONG COMPETITION FROM EUROPE AT LOWER
PRICES AS A RESULT OF THE WEAK EURO AND STRONG RAND EARLIER IN THE YEAR. THIS
HAS SINCE BEEN COUNTERACTED BY THE WEAKENING OF THE RAND. VARIABLE COSTS HAVE
BEEN INFLUENCED BY RISING PULP PRICES (SUPPLIED BY SAPPI FOREST PRODUCTS).
FIXED COSTS WERE HIGH AS A RESULT OF NON-ROUTINE MAINTENANCE IN THE PERIOD AND
INCREASED PROMOTIONAL SPENDING.
UNDERLYING PERFORMANCE HAS SHOWN AN IMPROVING TREND THROUGH THE QUARTER, AND WE
EXPECT THAT TO CONTINUE THROUGH THE FOURTH QUARTER.
FOREST PRODUCTS
THE FOREST PRODUCTS BUSINESS COMPRISES PRIMARILY MARKET PULP (INCLUDING
DISSOLVING PULP), PACKAGING PAPER AND SOLID WOOD PRODUCTS.
DEMAND HAS BEEN STRONG DURING THE QUARTER. NBSK PULP PRICES HAVE CONTINUED TO
RISE AS HAVE DISSOLVING PULP PRICES, INFLUENCED NOT ONLY BY PAPER PULP PRICES
BUT ALSO BY STRENGTHENING DEMAND FOR VISCOSE.
THE MARKET PULP INCOME STREAM PROVIDES THE SAPPI GROUP WITH AN ECONOMIC HEDGE
FOR THE PULP WHICH ITS FINE PAPER BUSINESS PURCHASES.
QUARTER ENDED
30 JUNE 30 JUNE %
2000 1999 CHANGE
US$ MILLION US$ MILLION
SALES 222 191 16
OPERATING
PROFIT 61 22 177
OPERATING
MARGIN (%) 27 12 125
EBITDA 86 43 100
EBITDA
MARGIN (%) 39 23 70
RONOA P.A. (%) 22 7 214
SALES INCREASED BY 16% AS A RESULT OF THE STRONG INCREASE IN PRICES. COSTS WERE
WELL CONTAINED AND PRODUCTIVITY CONTINUED TO IMPROVE.
USUTU MILL, WHICH HAD PERFORMED POORLY LAST YEAR, IMPROVED FURTHER AND THE MILL
REPORTED A SIGNIFICANT OPERATING PROFIT FOR THE QUARTER.
THE FOREST PRODUCTS' OPERATING PROFIT FOR THE QUARTER TREBLED COMPARED TO THE
SAME QUARTER LAST YEAR. THE BULK OF THE IMPROVEMENT WAS RELATED TO PRICE AND A
MORE FAVOURABLE PRODUCT MIX AND THE BALANCE CAME FROM IMPROVED COST CONTROL AND
PRODUCTIVITY.
THE OPERATING MARGIN REACHED 27% AND CAN BE EXPECTED TO IMPROVE FURTHER. RETURN
ON NET OPERATING ASSETS WAS A VERY PLEASING 22% AND REFLECTS THE BENEFIT OF
HAVING THIS LOW COST OPERATION IN THE GROUP.
GROUP RESULTS FOR THE QUARTER
CONSOLIDATED SALES WERE US$1170 MILLION FOR THE QUARTER, A 12% INCREASE ON THE
SAME PERIOD LAST YEAR, LARGELY AS A RESULT OF HIGHER PRICES.
EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS OF 39 US CENTS WERE 105% ABOVE THE
19 US CENTS IN THE EQUIVALENT PERIOD LAST YEAR AND 22% HIGHER THAN THE 32 US
CENTS IN THE PRECEDING QUARTER.
OPERATING PROFIT INCREASED 85% TO US$181 MILLION COMPARED TO THE EQUIVALENT
QUARTER LAST YEAR. AVERAGE SELLING PRICES INCREASED BY 12% BUT COST PER TON
INCREASES WERE CONTAINED TO ONLY 4% LARGELY AS A RESULT OF PULP PRICE INCREASES
PARTLY OFFSET BY OPERATING FIXED COSTS.
THE OPERATING MARGIN INCREASED TO 15.5% AND RONA ROSE TO 17.5%, WELL IN EXCESS
OF THE GROUP'S COST OF CAPITAL.
NET FINANCE COSTS CONTINUED TO DECLINE IN LINE WITH THE REDUCING DEBT AND
REFINANCING ACTION REPORTED LAST QUARTER AND WERE US$9 MILLION (22%) LOWER THAN
THE EQUIVALENT QUARTER LAST YEAR.
THE NET TAX RATE FOR THE QUARTER DECLINED COMPARED TO THE PREVIOUS QUARTER AS A
RESULT OF THE RESTRUCTURING FOLLOWING THE ACQUISITION OF THE LEYKAM MYRZTALER
MINORITIES. THE LOW DEFERRED TAX RATE IN THE COMPARATIVE QUARTER LAST YEAR WAS
MAINLY THE RESULT OF A DECREASE IN SOUTH AFRICAN TAX RATES.
THE ACQUISITION OF LEYKAM MYRZTALER SHARES, WHICH WAS COMPLETED DURING THE
QUARTER, WAS ACCOUNTED FOR WITH EFFECT FROM 1 APRIL 2000. AS A RESULT OF OWNING
100% OF THE BUSINESS AND THE RESULTING IMPACT ON TAXATION, THE ACQUISITION IS
EXPECTED TO HAVE AN ANNUAL IMPACT ON AFTER TAX PROFIT OF APPROXIMATELY US$25
MILLION.
THE IMPROVED OPERATING PERFORMANCE AND LOWER FINANCE COSTS AND HIGHER PULP
PRICES RESULTED IN A 119% INCREASE IN EARNINGS BEFORE EXCEPTIONAL ITEMS
COMPARED TO THE EQUIVALENT PERIOD LAST YEAR AND A 24% INCREASE COMPARED TO THE
MARCH QUARTER.
CASH FLOW AND DEBT REDUCTION
CASH FLOW WAS STRONG DURING THE QUARTER RESULTING IN A CONTINUED REDUCTION IN
THE NET DEBT, WHICH FELL A FURTHER US$58 MILLION AFTER PAYMENT OF APPROXIMATELY
US$90 MILLION TO ACQUIRE THE LEYKAM MYRZTALER MINORITIES AND A SEASONAL
INCREASE IN INVENTORIES.
DEBT TO TOTAL CAPITALISATION DECLINED TO 33.9% FROM 44.3% IN SEPTEMBER 1999 AND
35.3% THE PREVIOUS QUARTER.
NET DEBT HAS DECLINED BY US$786 MILLION OVER 12 MONTHS TO US$1495 MILLION.
SALE OF NOVOBORD
IN MAY WE ANNOUNCED THE SALE OF SAPPI NOVOBORD, WHICH MANUFACTURES
PARTICLEBOARD, TO SONAE INDUSTRIA, THE WORLD'S LARGEST PRODUCER OF
PARTICLEBOARD. THE SALE IS SUBJECT TO COMPETITION COMMISSION APPROVAL. THE
COMMISSION'S DECISION IS EXPECTED DURING AUGUST, IN TIME FOR THE COMPLETION OF
THE SALE IN THIS FINANCIAL YEAR. THE SALE WILL RESULT IN A SIGNIFICANT ONE-TIME
GAIN BUT IS NOT EXPECTED TO HAVE ANY MATERIAL IMPACT ON FUTURE EARNINGS.
OUTLOOK
CONTINUED STRONG GROWTH IN OUR MAJOR MARKETS HAS LED TO FURTHER PAPER AND PULP
DEMAND AND PRICE INCREASES IN JULY. THESE INCREASES ARE ALREADY BEING REALISED
IN EUROPE BUT WILL NOT BE FULLY REALISED IN THE UNITED STATES UNTIL OCTOBER.
PRODUCER INVENTORIES WERE SLIGHTLY ABOVE THE LEVEL OF A YEAR AGO IN THE UNITED
STATES. WE WILL MANAGE PRODUCTION TO MEET OUR CUSTOMERS' DEMAND AND AVOID ANY
UNNECESSARY BUILD UP IN OUR INVENTORIES. IN EUROPE WE CONTINUE TO SEE STRONG
DEMAND AND NO INDICATION OF THE TYPICAL SUMMER SLOW-DOWN.
OVERALL, THE MOMENTUM ACHIEVED IN THE FIRST THREE QUARTERS IS EXPECTED TO
CONTINUE AND WE THEREFORE EXPECT CONTINUED STRONG EARNINGS IN THE FINAL QUARTER
ON BEHALF OF THE BOARDON BEHALF OF THE BOARDE VAN AS
DIRECTOR
D G WILSON
DIRECTOR
28 JULY 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.
CONSOLIDATED INCOME STATEMENTS
UNAUDITED UNAUDITED
QUARTER ENDED NINE MONTHS ENDED
30 JUNE 30 JUNE 30 JUNE 30 JUNE
2000 1999 2000 1999
US$ MILLION US$ MILLION % CHANGE US$ MILLION US$ MILLION % CHANGE
SALES 1,170 1,042 12.3 3,472 3,157 10.0
COST OF SALES 889 847 2,709 2,611
GROSS PROFIT 281 195 44.1 763 546 39.7
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 100 97 290 269
OPERATING
PROFIT 181 98 84.7 473 277 70.8
NON-TRADING
INCOME (LOSS) (2) (50) 2 (73)
NET FINANCE
COSTS 31 40 101 125
NET PAID 39 50 128 161
CAPITALISED (8) (10) (27) (36)
PROFIT
BEFORE TAX 148 8 374 79
TAXATION
- CURRENT 10 3 46 34
- DEFERRED 39 (8) 86 (23)
PROFIT
AFTER TAX 99 13 661.5 242 68 255.9
INCOME
ATTRIBUTABLE TO
MINORITY
INTERESTS 1 3 8 8
NET PROFIT
FOR THE
PERIOD 98 10 880.0 234 60 290.0
EBITDA 278 186 49.0 767 560 36.9
BASIC EARNINGS
PER SHARE
(US CENTS) 41 4 99 27
BASIC EARNINGS
BEFORE EXCEPTIONAL
ITEMS
(HEADLINE EARNINGS)
PER SHARE
(US CENTS) 39 19 97 49
WEIGHTED
AVERAGE NUMBER
OF SHARES IN
ISSUE
(MILLIONS) 239.1 223.8 236.2 223.8
DILUTED EARNINGS
PER SHARE
(US CENTS) 40 4 98 27
DILUTED
EARNINGS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE EARNINGS)
PER SHARE
(US CENTS) 39 19 96 48
WEIGHTED AVERAGE
NUMBER OF SHARES
ON FULLY
DILUTED BASIS
(MILLIONS) 244.8 224.5 241.9 229.4
CALCULATION
OF EARNINGS
BEFORE EXCEPTIONAL
ITEMS (HEADLINE)
NET OF TAX
NET PROFIT 98 10 234 60
(PROFIT) LOSS ON
DISPOSAL OF
BUSINESS AND
FIXED ASSETS 1 - (1) 4
ACCELERATED
COST OF EARLY BUY
BACK OF
LOAN NOTES - - 11 -
(DECREASE)
INCREASE IN OTHER
PROVISIONS (5) 33 (14) 46
EARNINGS
BEFORE EXCEPTIONAL
ITEMS
(HEADLINE) 94 43 230 110
CONSOLIDATED BALANCE SHEET
UNAUDITED AT AUDITED AT
30 JUNE 30 SEPTEMBER
2000 1999
US$ MILLION US$ MILLION
ASSETS
NON-CURRENT ASSETS 3,890 4,324
PROPERTY, PLANT AND EQUIPMENT 3,256 3,665
PLANTATIONS 376 406
DEFERRED TAXATION 68 69
OTHER NON-CURRENT ASSETS 190 184
CURRENT ASSETS 1,322 1,154
BANK BALANCES AND DEPOSITS 394 154
COLLATERAL DEPOSITS - 104
OTHER CURRENT ASSETS 928 896
TOTAL ASSETS 5,212 5,478
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
ORDINARY SHAREHOLDERS'
INTEREST 1,719 1,559
MINORITY INTEREST 63 155
NON-CURRENT LIABILITIES 2,406 2,075
LONG-TERM BORROWINGS 1,661 1,376
DEFERRED TAXATION 503 454
OTHER LONG-TERM LIABILITIES 242 245
CURRENT LIABILITIES 1,024 1,689
INTEREST BEARING LIABILITIES 143 698
BANK OVERDRAFT 85 118
OTHER CURRENT LIABILITIES 796 873
TOTAL EQUITY AND LIABILITIES 5,212 5,478
NUMBER OF SHARES
IN ISSUE (MILLIONS) 239.1 224.6
NET DEBT (US$ MILLION) 1,495 2,038
NET DEBT TO TOTAL
CAPITALISATION (%) 33.9 44.3
NET ASSET VALUE
PER SHARE (US CENTS) 901 866
CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
30 JUNE 30 JUNE
2000 1999
US$ MILLION US$ MILLION
CASH GENERATED BY OPERATIONS 784 511
MOVEMENT IN WORKING CAPITAL (115) 23
NET FINANCE COST (128) (161)
TAXATION (16) (36)
DIVIDENDS PAID (45) (37)
CASH RETAINED FROM
OPERATING ACTIVITIES 480 300
CASH EFFECTS OF
INVESTING ACTIVITIES (54) (57)
426 243
CASH EFFECTS OF
FINANCING ACTIVITIES (168) (558)
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS 258 (315)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
UNAUDITED UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
30 JUNE 2000 30 JUNE 1999
US$ MILLION US$ MILLION
BALANCE AT 1 OCTOBER 1,559 1,597
NET PROFIT FOR THE PERIOD 234 60
FOREIGN CURRENCY
TRANSLATION RESERVE (179) (114)
ISSUANCE OF ORDINARY SHARES 116 -
GOODWILL WRITTEN OFF TO EQUITY (11) (9)
BALANCE AT 30 JUNE 1,719 1,534
NOTES TO THE INTERIM REPORT
1. 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 QUARTER HAVE BEEN REVIEWED BY THE GROUP'S
AUDITORS, DELOITTE & TOUCHE. THEIR REPORT IS AVAILABLE FOR INSPECTION AT THE
COMPANY'S REGISTERED OFFICES.
SAPPI HAS PREPARED THIS FINANCIAL REPORT IN US DOLLARS.
UNAUDITED UNAUDITED
QUARTER ENDED NINE MONTHS ENDED
30 JUNE 2000 30 JUNE 1999 30 JUNE 2000 30 JUNE 1999
US$ MILLION US$ MILLION US$ MILLION US$ MILLION
2. COST OF SALES
INCLUDED IN COST
OF SALES ARE:
DEPRECIATION 83 80 250 250
AMORTISATION AND FELLINGS 14 8 44 33
97 88 294 283
3. CAPITAL EXPENDITURE
FIXED ASSETS 122 149
PLANTATIONS 25 19
147 168
UNAUDITED AUDITED
30 JUNE 2000 30 SEPTEMBER 1999
US$ MILLION US$ MILLION
4. CAPITAL COMMITMENTS
CONTRACTED BUT NOT PROVIDED 57 39
APPROVED BUT NOT CONTRACTED 170 62
227 101
5. CONTINGENT LIABILITIES
GUARANTEES AND SURETYSHIPS 104 83
BILLS DISCOUNTED - 6
OTHER CONTINGENT LIABILITIES 56 59
REGIONAL INFORMATION
UNAUDITED UNAUDITED
QUARTER ENDED NINE MONTHS ENDED
30 JUNE 30 JUNE 30 JUNE 30 JUNE
2000 1999 2000 1999
US$ MILLION US$ MILLION % CHANGE US$ MILLION US$ MILLION % CHANG
SALES - METRIC TONS
FINE PAPER -
NORTH AMERICA 327 320 2.2 1,028 962 6.9
EUROPE 581 554 4.9 1,694 1,588 6.7
SOUTHERN AFRICA 71 69 2.9 206 195 5.6
TOTAL 979 943 3.8 2,928 2,745 6.7
FOREST PRODUCTS 669 694 (3.6) 2,030 1,902 6.7
TOTAL 1,648 1,637 0.7 4,958 4,647 6.7
SALES
FINE PAPER -
NORTH AMERICA 400 368 8.7 1,226 1,126 8.9
EUROPE 489 423 15.6 1,418 1,324 7.1
SOUTHERN AFRICA 59 60 (1.7) 178 171 4.1
TOTAL 948 851 11.4 2,822 2,621 7.7
FOREST PRODUCTS 222 191 16.2 650 536 21.3
TOTAL 1,170 1,042 12.3 3,472 3,157 10.0
OPERATING PROFIT
FINE PAPER -
NORTH AMERICA 45 29 55.2 125 95 31.6
EUROPE 65 34 91.2 182 91 100.0
SOUTHERN AFRICA 5 10 (50.0) 14 25 (44.0)
TOTAL 115 73 57.5 321 211 52.1
FOREST PRODUCTS 61 22 177.3 135 51 164.7
SAPPI TRADING
AND CORPORATE 5 3 66.7 17 15 13.3
TOTAL 181 98 84.7 473 277 70.8
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION CHARGES**
FINE PAPER -
NORTH AMERICA 72 51 41.2 205 168 22.0
EUROPE 108 77 40.3 308 228 35.1
SOUTHERN AFRICA 7 12 (41.7) 20 32 (37.5)
TOTAL 187 140 33.6 533 428 24.5
FOREST PRODUCTS 86 43 100.0 216 117 84.6
SAPPI TRADING
AND CORPORATE 5 3 66.7 18 15 20.0
TOTAL 278 186 49.5 767 560 37.0
NET OPERATING ASSETS
FINE PAPER -
NORTH AMERICA 1,200 1,279 (6.2) 1,200 1,279 (6.2)
EUROPE 1,455 1,701 (14.5) 1,455 1,701 (14.5)
SOUTHERN AFRICA 171 174 (1.7) 171 174 (1.7)
TOTAL 2,826 3,154 (10.4) 2,826 3,154 (10.4)
FOREST PRODUCTS 1,099 1,255 (12.4) 1,099 1,255 (12.4)
SAPPI TRADING
AND CORPORATE 29 160 (81.9) 29 160 (81.9)
TOTAL 3,954 4,569 (13.5) 3,954 4,569 (13.5)
** BEFORE NON-TRADING INCOME (LOSS)
SUMMARY RAND TRANSLATION
QUARTER ENDED NINE MONTHS ENDED
30 JUNE 30 JUNE % 30 JUNE 30 JUNE %
2000 1999 CHANGE 2000 1999 CHANGE
SALES
(ZAR MILLION) 7,927 6,404 23.8 22,207 18,918 17.4
OPERATING PROFIT
(ZAR MILLION) 1,226 604 103.0 3,025 1,657 82.6
PROFIT AFTER
TAXATION
(ZAR MILLION) 671 79 749.4 1,548 406 281.2
EBITDA
(ZAR MILLION) 1,881 1,144 64.4 4,903 3,354 46.2
OPERATING
PROFIT TO
SALES (%) 15.5 9.4 13.6 8.8
EBITDA TO
SALES (%) 23.7 17.9 22.1 17.7
OPERATING PROFIT
TO AVERAGE
NET ASSETS (%) 17.8 9.9 15.7 8.4
BASIC EPS BEFORE
EXCEPTIONAL ITEMS
(HEADLINE)
(SA CENTS) 266 118 125.5 623 293 112.6
BASIC EPS
(SA CENTS) 278 27 929.6 634 161 293.8
EBITDA PER
SHARE
(SA CENTS) 787 511 54.0 2,076 1,499 38.5
NET DEBT
(ZAR MILLION) 10,218 13,808 (26.0) 10,218 13,808 (26.0)
NET DEBT TO TOTAL
CAPITALISATION
(%) 33.9 48.0 33.9 48.0
CASH GENERATED BY
OPERATIONS
(ZAR MILLION) 5,015 3,062 63.8
CASH RETAINED FROM OPERATING
ACTIVITIES (ZAR MILLION) 3,070 1,798
NET MOVEMENT IN CASH AND CASH
EQUIVALENTS (ZAR MILLION) 1,650 (1,888)
EXCHANGE RATES:
PERIOD END
RATE:
US $1 = R 6.835 6.055 6.835 6.055
AVERAGE
RATE:
US $1 = R 6.775 6.145 6.396 5.992
PERIOD END
RATE: US
$1 = EURO 1.063 0.967 1.063 0.967
AVERAGE RATE:
US $1 = EURO 1.065 0.945 1.008 0.895
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:
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.
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