TIDMSAZ
RNS Number : 5913M
Sappi Ld
30 January 2009
sappi limited
(Registration number 1936/008963/06)
Issuer Code: SAVVI
JSE Code: SAP
ISIN: ZAE000006284
Results for the first quarter ended 28 December 2008
Financial summary
- European acquisition completed on 31 December (post quarter end)
- Declining global demand leads to weak operating profit
- Significant production curtailment in December
- Coated paper prices increased in Europe;
under pressure elsewhere
- Pulp prices declined more than US$200 per ton
- Basic EPS 6 US cents (favourably impacted by special items)
Quarter ended
+----------------------------------------------+-----------+------------+------------+
| | Dec 2008 | Dec 2007 | Sept 2008 |
+----------------------------------------------+-----------+------------+------------+
| Key figures: (US$ million) | | | |
+----------------------------------------------+-----------+------------+------------+
| Sales | 1,187 | 1,377 | 1,519 |
+----------------------------------------------+-----------+------------+------------+
| Operating profit | 57 | 91 | 25 |
+----------------------------------------------+-----------+------------+------------+
| Special items - (gains) losses * | (32) | 1 | 64 |
+----------------------------------------------+-----------+------------+------------+
| Operating profit excluding special items | 25 | 92 | 89 |
+----------------------------------------------+-----------+------------+------------+
| EBITDA excluding special items *** | 106 | 188 | 180 |
+----------------------------------------------+-----------+------------+------------+
| Basic EPS (US cents) **** | 6 | 12 | (9) |
+----------------------------------------------+-----------+------------+------------+
| Net debt ** including rights offer cash | 1,965 | 2,495 | 2,405 |
+----------------------------------------------+-----------+------------+------------+
| Net debt ** excluding rights offer cash | 2,497 | 2,495 | 2,405 |
+----------------------------------------------+-----------+------------+------------+
| Key ratios: (%) | | | |
+----------------------------------------------+-----------+------------+------------+
| Operating profit to sales | 4.8 | 6.6 | 1.6 |
+----------------------------------------------+-----------+------------+------------+
| Operating profit excluding special items to | 2.1 | 6.7 | 5.9 |
| sales | | | |
+----------------------------------------------+-----------+------------+------------+
| Operating profit excluding special items to | | | |
+----------------------------------------------+-----------+------------+------------+
| Capital Employed (ROCE) ** | 2.6 | 8.8 | 8.5 |
+----------------------------------------------+-----------+------------+------------+
| EBITDA excluding special items to sales | 8.9 | 13.7 | 11.8 |
+----------------------------------------------+-----------+------------+------------+
| Return on average equity (ROE) ** | 5.3 | 9.3 | (7.8) |
+----------------------------------------------+-----------+------------+------------+
| Net debt to total capitalisation ** | 51.3 | 58.3 | 60.0 |
| including rights offer cash | | | |
+----------------------------------------------+-----------+------------+------------+
| Net debt to total capitalisation ** | 57.3 | 58.3 | 60.0 |
| excluding rights offer cash | | | |
+----------------------------------------------+-----------+------------+------------+
* Refer to details on special items.
** Refer to Supplemental Information for the definition of the term.
*** Refer to Supplemental Information for the reconciliation of EBITDA excluding
special items to profit for the period.
**** Comparative figures have been revised in accordance with IAS 33 to reflect
the impact of the rights offer.
The table above has not been audited or reviewed.
Commentary
Sales volumes declined 8% in the quarter compared to a year earlier as a result
of the global market downturn. Prices for coated paper increased relative to the
prior quarter and a year earlier in Europe but were under pressure in the USA
and many other markets. Pulp prices, including prices for chemical cellulose,
fell sharply and by the end of the quarter NBSK prices were more than US$200 per
ton lower than at the end of the previous quarter.
Demand fell off sharply as the quarter progressed, resulting in lower sales in
all our businesses, particularly Saiccor. We took extensive production
curtailment in December to match output to demand in addition to major planned
maintenance outages during the quarter.
Although the prices of energy, wood and chemicals declined, the impact was
delayed as we worked through higher cost inventories. Reduced production levels
and stopping and starting our mills resulted in less efficient raw material
usage. Input costs therefore remained at a high level.
Operating profit for the quarter was US$57 million compared to US$91 million a
year earlier and US$25 million in the prior quarter. Special items for the
quarter of US$32 million comprised favourable plantation price fair value
adjustments which resulted from lower costs of harvesting and delivering to
market, as energy costs fell, and higher wood prices. This compared with
favourable special items of US$1 million a year ago and unfavourable special
items of US$64 million in the prior quarter. Operating profit excluding special
items was US$25 million for the quarter compared to US$92 million a year ago and
US$89 million in the prior quarter.
Net finance costs for the quarter were US$21 million, US$7 million lower than a
year ago as a result of lower interest rates, exchange gains and interest earned
on the cash proceeds of the rights offer for approximately 10 days, partly
offset by the effect of interest capitalised a year ago.
The effective tax rate for the quarter was 36%, similar to a year ago.
Taxation for the quarter includes Secondary Tax on Companies of US$4 million
relating to dividends declared in the quarter.
Basic EPS of 6 US cents per share for the quarter was favourably impacted by
special items of 6 US cents per share. Basic EPS a year ago was 12 US cents per
share (revised to reflect the rights offer in accordance with IAS 33).
Cash flow and debt
Cash generated from operations was US$95 million, down from US$155 million a
year ago, as a result of lower operating profit. Working capital increased US$96
million during the quarter compared to an increase of US$133 million a year ago.
Following the commissioning of the Saiccor expansion we have contained capital
expenditure to maintenance and short pay back items throughout the group. The
cash effect of investing activities reduced to US$40 million compared to US$89
million a year ago.
We paid a dividend of US$37 million during the quarter prior to the rights
offer. Historically dividends have been paid early in the second quarter.
The net proceeds of the rights offer conducted during the quarter of
approximately US$532 million were received during December and were on hand at
quarter end pending the completion of the acquisition of M-real's coated graphic
paper business (the "European Acquisition") on 31 December 2008. Net debt
reported at quarter-end was therefore reduced by the additional cash on hand to
US$2.0 billion from US$2.4 billion at September 2008. Excluding the proceeds of
the rights offer, net debt was US$2.5 billion.
Operating review quarter ended December 2008 compared to the quarter ended
December 2007
Sappi Fine Paper
+---------------------------------------+------------+-----------+--------+----------+
| | Quarter | Quarter | | Quarter |
+---------------------------------------+------------+-----------+--------+----------+
| | ended | ended | | ended |
+---------------------------------------+------------+-----------+--------+----------+
| | Dec 2008 | Sept 2007 | % | Sept |
| | | | | 2008 |
+---------------------------------------+------------+-----------+--------+----------+
| | US$ | US$ | change | US$ |
| | million | million | | million |
+---------------------------------------+------------+-----------+--------+----------+
| Sales | 998 | 1,109 | (10.0) | 1,222 |
+---------------------------------------+------------+-----------+--------+----------+
| Operating profit | 8 | 31 | (74.2) | (80) |
+---------------------------------------+------------+-----------+--------+----------+
| Operating profit to sales (%) | 0.8 | 2.8 | - | (6.5) |
+---------------------------------------+------------+-----------+--------+----------+
| Special items | - | - | - | 124 |
+---------------------------------------+------------+-----------+--------+----------+
| Operating profit excluding special | 8 | 31 | (74.2) | 44 |
| items | | | | |
+---------------------------------------+------------+-----------+--------+----------+
| Operating profit excluding special | | | | |
+---------------------------------------+------------+-----------+--------+----------+
| items to sales (%) | 0.8 | 2.8 | - | 3.6 |
+---------------------------------------+------------+-----------+--------+----------+
| EBITDA excluding special items | 74 | 106 | (30.2) | 118 |
+---------------------------------------+------------+-----------+--------+----------+
| EBITDA excluding special items | | | | |
+---------------------------------------+------------+-----------+--------+----------+
| to sales (%) | 7.4 | 9.6 | - | 9.7 |
+---------------------------------------+------------+-----------+--------+----------+
| RONOA pa (%) | 1.1 | 3.9 | - | 5.6 |
+---------------------------------------+------------+-----------+--------+----------+
Europe
+--------------------------------+------------+-----------+--------+--------+----------+
| | Quarter | Quarter | | | Quarter |
+--------------------------------+------------+-----------+--------+--------+----------+
| | ended | ended | % | % | ended |
+--------------------------------+------------+-----------+--------+--------+----------+
| | Dec 2008 | Dec 2007 | change | change | Sept |
| | | | | | 2008 |
+--------------------------------+------------+-----------+--------+--------+----------+
| | US$ | US$ | (US$) | (Euro) | US$ |
| | million | million | | | million |
+--------------------------------+------------+-----------+--------+--------+----------+
| Sales | 561 | 638 | (12.1) | (5.1) | 680 |
+--------------------------------+------------+-----------+--------+--------+----------+
| Operating profit | 13 | 19 | (31.6) | (23.4) | (111) |
+--------------------------------+------------+-----------+--------+--------+----------+
| Operating profit to sales (%) | 2.3 | 3.0 | - | - | (16.3) |
+--------------------------------+------------+-----------+--------+--------+----------+
| Special items | - | (2) | - | - | 123 |
+--------------------------------+------------+-----------+--------+--------+----------+
| Operating profit excluding | | | | | |
+--------------------------------+------------+-----------+--------+--------+----------+
| special items | 13 | 17 | (23.5) | (14.4) | 12 |
+--------------------------------+------------+-----------+--------+--------+----------+
| Operating profit excluding | | | | | |
+--------------------------------+------------+-----------+--------+--------+----------+
| special items to sales (%) | 2.3 | 2.7 | - | - | 1.8 |
+--------------------------------+------------+-----------+--------+--------+----------+
| EBITDA excluding special | 50 | 62 | (19.4) | (13.1) | 57 |
| items | | | | | |
+--------------------------------+------------+-----------+--------+--------+----------+
| EBITDA excluding special | | | | | |
+--------------------------------+------------+-----------+--------+--------+----------+
| items to sales (%) | 8.9 | 9.7 | - | - | 8.4 |
+--------------------------------+------------+-----------+--------+--------+----------+
| RONOA pa (%) | 3.1 | 3.5 | - | - | 2.5 |
+--------------------------------+------------+-----------+--------+--------+----------+
Volumes for the quarter were affected by deteriorating market conditions. The
latest available industry statistics for the quarter show an 11% year on year
decline in coated woodfree paper deliveries in Europe for the quarter. We took
significant downtime in December to match supply to demand, which had an
unfavourable impact on margins.
We realised higher prices in Euro terms during the quarter with the average up
7% compared to a year earlier.
Input prices are declining, particularly for pulp and energy; however, we will
only benefit once higher-priced raw material inventories have been utilised.
Blackburn Mill and Maastricht Mill's Paper Machine No. 5 ceased production
during the quarter, reducing our capacity of coated fine paper by 190,000 tons.
The charges related to these closures were reported in the quarter ended
September 2008.
North America
+----------------------------------------+-----------+-----------+---------+----------+
| | Quarter | Quarter | | Quarter |
+----------------------------------------+-----------+-----------+---------+----------+
| | ended | ended | | ended |
+----------------------------------------+-----------+-----------+---------+----------+
| | Dec 2008 | Sept 2007 | % | Sept |
| | | | | 2008 |
+----------------------------------------+-----------+-----------+---------+----------+
| | US$ | US$ | change | US$ |
| | million | million | | million |
+----------------------------------------+-----------+-----------+---------+----------+
| Sales | 363 | 384 | (5.5) | 433 |
+----------------------------------------+-----------+-----------+---------+----------+
| Operating profit | (7) | 11 | (163.6) | 30 |
+----------------------------------------+-----------+-----------+---------+----------+
| Operating profit to sales (%) | (1.9) | 2.9 | - | 6.9 |
+----------------------------------------+-----------+-----------+---------+----------+
| Special items | - | 2 | - | 1 |
+----------------------------------------+-----------+-----------+---------+----------+
| Operating profit excluding | | | | |
+----------------------------------------+-----------+-----------+---------+----------+
| special items | (7) | 13 | (153.8) | 31 |
+----------------------------------------+-----------+-----------+---------+----------+
| Operating profit excluding | | | | |
+----------------------------------------+-----------+-----------+---------+----------+
| special items to sales (%) | (1.9) | 3.4 | - | 7.2 |
+----------------------------------------+-----------+-----------+---------+----------+
| EBITDA excluding special items | 19 | 40 | (52.5) | 57 |
+----------------------------------------+-----------+-----------+---------+----------+
| EBITDA excluding special | | | | |
+----------------------------------------+-----------+-----------+---------+----------+
| items to sales (%) | 5.2 | 10.4 | - | 13.2 |
+----------------------------------------+-----------+-----------+---------+----------+
| RONOA pa (%) | (2.6) | 5.0 | - | 11.5 |
+----------------------------------------+-----------+-----------+---------+----------+
Demand declined sharply during the quarter for both paper and pulp and we
curtailed a significant amount of output to match the reduced demand.
Industry shipments of coated fine paper show a decline of 18% year on year for
the quarter.
Prices for coated paper came under pressure towards the end of the quarter.
Prices realised for pulp, however, collapsed in line with the NBSK prices.
Demand for pulp also declined sharply.
Major planned maintenance outages at the pulp mills, early in the quarter, had a
further unfavourable impact on operating profit in the quarter.
South Africa
+---------------------------------+-----------+-----------+--------+--------+----------+
| | Quarter | Quarter | | | Quarter |
+---------------------------------+-----------+-----------+--------+--------+----------+
| | ended | ended | % | % | ended |
+---------------------------------+-----------+-----------+--------+--------+----------+
| | Dec 2008 | Dec 2007 | change | change | Sept |
| | | | | | 2008 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| | US$ | US$ | (US$) | (Rand) | US$ |
| | million | million | | | million |
+---------------------------------+-----------+-----------+--------+--------+----------+
| Sales | 74 | 87 | (14.9) | 24.4 | 109 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit | 2 | 1 | 100 | 185.7 | 1 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit to sales (%) | 2.7 | 1.1 | - | - | 0.9 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| Special items | - | - | - | - | - |
+---------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit excluding | | | | | |
+---------------------------------+-----------+-----------+--------+--------+----------+
| special items | 2 | 1 | 100 | 185.7 | 1 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit excluding | | | | | |
+---------------------------------+-----------+-----------+--------+--------+----------+
| special items to sales (%) | 2.7 | 1.1 | - | - | 0.9 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| EBITDA excluding special | 5 | 4 | 25 | 81.5 | 4 |
| items | | | | | |
+---------------------------------+-----------+-----------+--------+--------+----------+
| EBITDA excluding special | | | | | |
+---------------------------------+-----------+-----------+--------+--------+----------+
| items to sales (%) | 6.8 | 4.6 | - | - | 3.7 |
+---------------------------------+-----------+-----------+--------+--------+----------+
| RONOA pa (%) | 5.7 | 2.6 | - | - | 3.4 |
+---------------------------------+-----------+-----------+--------+--------+----------+
Sales volumes for the quarter were similar to a year earlier despite signs of
weakening demand. In local currency, prices were above last year. High input
costs continued to put pressure on margins.
Forest Products
+--------------------------------+-----------+-----------+--------+--------+----------+
| | Quarter | Quarter | | | Quarter |
+--------------------------------+-----------+-----------+--------+--------+----------+
| | ended | ended | % | % | ended |
+--------------------------------+-----------+-----------+--------+--------+----------+
| | Dec 2008 | Dec 2007 | change | change | Sept |
| | | | | | 2008 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| | US$ | US$ | (US$) | (Rand) | US$ |
| | million | million | | | million |
+--------------------------------+-----------+-----------+--------+--------+----------+
| Sales | 189 | 268 | (29.5) | 3.0 | 297 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit | 49 | 55 | (10.9) | 30.1 | 106 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit to sales (%) | 25.9 | 20.5 | - | - | 35.7 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| Special items | (32) | 1 | - | - | (60) |
+--------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit excluding | | | | | |
+--------------------------------+-----------+-----------+--------+--------+----------+
| special items | 17 | 56 | (69.6) | (55.5) | 46 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| Operating profit excluding | | | | | |
+--------------------------------+-----------+-----------+--------+--------+----------+
| special items to sales (%) | 9.0 | 20.9 | - | - | 15.5 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| EBITDA excluding special | 32 | 77 | (58.4) | (55.5) | 63 |
| items | | | | | |
+--------------------------------+-----------+-----------+--------+--------+----------+
| EBITDA excluding special | | | | | |
+--------------------------------+-----------+-----------+--------+--------+----------+
| items to sales (%) | 16.9 | 28.7 | - | - | 21.2 |
+--------------------------------+-----------+-----------+--------+--------+----------+
| RONOA pa (%) | 4.3 | 12.9 | - | - | 10.7 |
+--------------------------------+-----------+-----------+--------+--------+----------+
Although the domestic sales of newsprint and packaging paper were lower than a
year ago, prices in Rand terms improved. The chemical cellulose business,
however, was impacted by a substantial reduction in demand as from December as a
result of reduced demand for textiles, particularly in Asia. Prices for chemical
cellulose also fell, in line with NBSK prices which fell more than US$200 per
ton during the quarter. The approximately 30% decline of the exchange rate of
the Rand relative to the US Dollar from the September to the December quarter
offset the US Dollar decline in NBSK prices. This, however, was not sufficient
to offset the combined effect of the sharp decline in pulp prices, lower demand
for chemical cellulose pulp and high input costs.
Production during the quarter was reduced by maintenance shuts at Ngodwana Mill
and Usutu Mill and as a result of a gas leak at Saiccor Mill.
European acquisition
The European acquisition for an enterprise value of Euro 750 million, was
completed on 31 December 2008, which was after our quarter end and is subject to
minor adjustments for working capital and assumed debt. Payment for the business
comprised cash of Euro 400 million from the proceeds of the rights offer
conducted during the quarter (see Note 1), vendor loan notes of Euro 220
million, with the balance made up of 11 million Sappi shares and assumed debt.
Action Plan and Outlook
The sharp decline in demand and the inventory reductions in the downstream
supply chains for our products in the latter part of the last quarter has
continued in January in most of our businesses. The impact on the sales of
chemical cellulose was particularly sudden and is continuing.
In Europe demand for coated graphic paper was particularly weak in the first
half of January. We curtailed output by about 25% in January and will continue
to match output to demand going forward. M-real has announced that it will cease
coated graphic paper production at Gohrsm�hle and Hallein mills, which have a
capacity of 640,000 tons, by the end of April, which is expected to improve the
industry supply/demand balance. Pricing for coated paper in Europe remains firm.
The integration of the European acquisition is proceeding well. The focus
remains on customer relations and service, engaging our new and existing
employees, integration of systems and delivery of synergies. The enlarged
business gives us greater flexibility to manage our output to match demand, to
negotiate improved input prices and to improve our service and product offering
to customers. Although current market conditions, and particularly a slow-down
in demand, will make it more difficult to realise the synergies in the short
term, we remain confident that we should deliver the targeted Euro 120 million
per annum of synergies within 3 years.
In North America demand for coated paper was very low in the first weeks of
January accompanied by downward pressure on pricing. We continue to curtail
production to match output to demand. In addition, the weakness of pulp demand
and the fall in pulp prices will impact the region's profitability as it is a
net seller of pulp. Release paper is also experiencing weak markets particularly
in China and to the US motor industry. The North American business has taken
steps to reduce its overhead costs and is exploring all means to further
streamline its operations to reduce its cost base.
We expect the Southern African fine paper and packaging paper businesses to
continue to perform moderately well. Demand in the local market has weakened
less than global markets generally. We have taken and will continue to take
commercial downtime when necessary. The viscose grade chemical cellulose and
other exports, however, continue to be significantly affected by the major fall
in demand and sharp fall in prices which has continued into the current quarter.
The additional capacity at Saiccor following the commissioning of the expansion
in September 2008 is not being utilised. We are therefore shutting certain
elements of the old plant to reduce output to match demand while utilising the
more efficient new plant as much as possible.
We expect input prices to continue to decline and for the reduction in our
variable costs to accelerate as our higher cost inventories are utilised. We
continue to focus on managing input price reductions and more efficient usage of
raw materials. Curtailing output is likely to result in less efficient usage of
raw materials, which will slow the expected reduction in input costs. The
European business, which is a major pulp buyer, should benefit from the sharp
fall in pulp prices. NBSK prices declined to US$610 per ton in January from an
average of US$739 for the quarter ended December 2008 and US$885 for the quarter
ended September 2008. The other regions will, however, be unfavourably impacted
by this. Following the European acquisition the group is a net buyer of pulp.
Our level of pulp integration is now approximately 92%.
Our short term outlook is for difficult global economic conditions to continue
and for these to be reflected in demand for our products and our operating
results. We do, however, expect some improvement in demand levels from the very
low levels experienced late last quarter and in the first part of January. The
operating profit excluding special items for the quarter ending March 2009 is
expected to remain weak.
We will continue to prioritise cash flow management including managing inventory
levels and reducing capital expenditure to the minimum level needed to keep our
assets in good condition.
We have implemented a number of actions which position the group well going
forward, and we will continue to act decisively to manage our business through
the current turmoil.
The greater flexibility to manage output following the European Acquisition, the
improved efficiency of the Saiccor mill combined with our actions to reduce
input costs and reduction of fixed costs will all help deal with current tough
market conditions.
When market conditions improve, both the European Acquisition and the Saiccor
expansion will help us to achieve the improvement in return on capital employed
which we target.
On behalf of the board
R J Bo�ttger M R Thompson
Director Director
02 February 2009
sappi limited
(Registration number 1936/008963/06)
Issuer Code: SAVVI
JSE Code: SAP
ISIN: ZAE000006284
Other information (This information has not been reviewed)
special items
Special items cover those items which management believe are material by nature
or amount to the operating results and require separate disclosure. Such items
would generally include profit or loss on disposal of property, investments and
businesses, asset impairments, restructuring charges, financial impacts of
natural disasters and non-cash gains or losses on the price fair value
adjustment of plantations.
Special items, excluding interest and tax effects, for the relevant periods are:
+-----------------------------------------------+----------------+----------------+
| | Quarter | Quarter |
+-----------------------------------------------+----------------+----------------+
| | ended | ended |
+-----------------------------------------------+----------------+----------------+
| | Dec 2008 | Dec 2007 |
+-----------------------------------------------+----------------+----------------+
| | US$ million | US$ million |
+-----------------------------------------------+----------------+----------------+
| Plantation price fair value adjustment | (34) | 1 |
+-----------------------------------------------+----------------+----------------+
| Restructuring provisions raised (released) | - | (1) |
+-----------------------------------------------+----------------+----------------+
| Profit on disposal of property, plant & | (1) | (1) |
| equipment | | |
+-----------------------------------------------+----------------+----------------+
| Asset impairments | 3 | 2 |
+-----------------------------------------------+----------------+----------------+
| | (32) | 1 |
+-----------------------------------------------+----------------+----------------+
key regional figures
+-----------------------------------------+---------------------+------------------+
| | Quarter | Quarter |
+-----------------------------------------+---------------------+------------------+
| | ended | ended |
+-----------------------------------------+---------------------+------------------+
| | Dec 2008 | Dec 2007 |
+-----------------------------------------+---------------------+------------------+
| | Metric tons | Metric tons |
+-----------------------------------------+---------------------+------------------+
| | (000's) | (000's) |
+-----------------------------------------+---------------------+------------------+
| Sales volume | | |
+-----------------------------------------+---------------------+------------------+
| Fine Paper - North America | 330 | 373 |
+-----------------------------------------+---------------------+------------------+
| Europe | 556 | 624 |
+-----------------------------------------+---------------------+------------------+
| Southern Africa | 77 | 76 |
+-----------------------------------------+---------------------+------------------+
| Total | 963 | 1,073 |
+-----------------------------------------+---------------------+------------------+
| Forest Products - Pulp and paper | 279 | 345 |
| operations | | |
+-----------------------------------------+---------------------+------------------+
| Forestry operations | 242 | 200 |
+-----------------------------------------+---------------------+------------------+
| Total | 1,484 | 1,618 |
+-----------------------------------------+---------------------+------------------+
| | US$ million | US$ million |
+-----------------------------------------+---------------------+------------------+
| Sales | | |
+-----------------------------------------+---------------------+------------------+
| Fine Paper - North America | 363 | 384 |
+-----------------------------------------+---------------------+------------------+
| Europe | 561 | 638 |
+-----------------------------------------+---------------------+------------------+
| Southern Africa | 74 | 87 |
+-----------------------------------------+---------------------+------------------+
| Total | 998 | 1,109 |
+-----------------------------------------+---------------------+------------------+
| Forest Products - Pulp and paper | 174 | 252 |
| operations | | |
+-----------------------------------------+---------------------+------------------+
| Forestry operations | 15 | 16 |
+-----------------------------------------+---------------------+------------------+
| Total | 1,187 | 1,377 |
+-----------------------------------------+---------------------+------------------+
Other information (this information has not been reviewed)
+---------------------------------------------+------------+--------------+
| Quarter | Quarter | |
+---------------------------------------------+------------+--------------+
| | ended | ended |
+---------------------------------------------+------------+--------------+
| | Dec 2008 | Dec 2007 |
+---------------------------------------------+------------+--------------+
| | US$ | US$ million |
| | million | |
+---------------------------------------------+------------+--------------+
| Operating profit | | |
+---------------------------------------------+------------+--------------+
| Fine Paper - North America | (7) | 11 |
+---------------------------------------------+------------+--------------+
| Europe | 13 | 19 |
+---------------------------------------------+------------+--------------+
| Southern Africa | 2 | 1 |
+---------------------------------------------+------------+--------------+
| Total | 8 | 31 |
+---------------------------------------------+------------+--------------+
| Forest Products | 49 | 55 |
+---------------------------------------------+------------+--------------+
| Corporate and other | - | 5 |
+---------------------------------------------+------------+--------------+
| Total | 57 | 91 |
+---------------------------------------------+------------+--------------+
| Special items - (gains) losses | | |
+---------------------------------------------+------------+--------------+
| Fine Paper - North America | - | 2 |
+---------------------------------------------+------------+--------------+
| Europe | - | (2) |
+---------------------------------------------+------------+--------------+
| Total | - | - |
+---------------------------------------------+------------+--------------+
| Forest Products | (32) | 1 |
+---------------------------------------------+------------+--------------+
| Total | (32) | 1 |
+---------------------------------------------+------------+--------------+
| Operating profit excluding special items | | |
+---------------------------------------------+------------+--------------+
| Fine Paper - North America | (7) | 13 |
+---------------------------------------------+------------+--------------+
| Europe | 13 | 17 |
+---------------------------------------------+------------+--------------+
| Southern Africa | 2 | 1 |
+---------------------------------------------+------------+--------------+
| Total | 8 | 31 |
+---------------------------------------------+------------+--------------+
| Forest Products | 17 | 56 |
+---------------------------------------------+------------+--------------+
| Corporate and other | - | 5 |
+---------------------------------------------+------------+--------------+
| Total | 25 | 92 |
+---------------------------------------------+------------+--------------+
| EBITDA excluding special items | | |
+---------------------------------------------+------------+--------------+
| Fine Paper - North America | 19 | 40 |
+---------------------------------------------+------------+--------------+
| Europe | 50 | 62 |
+---------------------------------------------+------------+--------------+
| Southern Africa | 5 | 4 |
+---------------------------------------------+------------+--------------+
| Total | 74 | 106 |
+---------------------------------------------+------------+--------------+
| Forest Products | 32 | 77 |
+---------------------------------------------+------------+--------------+
| Corporate and other | - | 5 |
+---------------------------------------------+------------+--------------+
| Total | 106 | 188 |
+---------------------------------------------+------------+--------------+
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 impact of the global economic downturn, the risk that the
European Acquisition will not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected, expected revenue
synergies and cost savings from the acquisition may not be fully realized or
realized within the expected time frame, revenues following the acquisition may
be lower than expected, any anticipated benefits from the consolidation of the
European paper business may not be achieved, 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, input costs including
raw material, energy and employee costs, and pricing), adverse changes in the
markets for the group's products, consequences of substantial leverage,
including as a result of adverse changes in credit markets that affect our
ability to raise capital when needed, changing regulatory requirements,
unanticipated production disruptions (including as a result of planned or
unexpected power outages), 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.
We have included in this announcement an estimate of total synergies from the
acquisition of M-real's coated graphic paper business and the integration of the
acquired business into our existing business. The estimate of synergies that we
expect to achieve following the completion of the acquisition is based on
assumptions which in the view of our management were prepared on a reasonable
basis, reflect the best currently available estimates and judgments, and
present, to the best of our management's knowledge and belief, the expected
course of action and the expected future financial impact on our performance due
to the acquisition. However, the assumptions about these expected synergies are
inherently uncertain and, though considered reasonable by management as of the
date of preparation, are subject to a wide variety of significant business,
economic and competitive risks and uncertainties that could cause actual results
to differ materially from those contained in this estimate of synergies. There
can be no assurance that we will be able to successfully implement the strategic
or operational initiatives that are intended, or realise the estimated
synergies. This synergy estimate is not a profit forecast or a profit estimate
and should not be treated as such or relied on by shareholders or prospective
investors to calculate the likely level of profits or losses for Sappi for
fiscal 2009 or beyond.
Group income statement
+---------------------------------------+----------+-----------+------------+---------+
| | | Reviewed | Reviewed | |
+---------------------------------------+----------+-----------+------------+---------+
| | | Quarter | Quarter | |
+---------------------------------------+----------+-----------+------------+---------+
| | | ended | ended | |
+---------------------------------------+----------+-----------+------------+---------+
| | | Dec 2008 | Dec 2007 | |
+---------------------------------------+----------+-----------+------------+---------+
| | Notes | US$ | US$ | % |
| | | million | million | change |
+---------------------------------------+----------+-----------+------------+---------+
| Sales | | 1,187 | 1,377 | (14) |
+---------------------------------------+----------+-----------+------------+---------+
| Cost of sales | | 1,042 | 1,197 | |
+---------------------------------------+----------+-----------+------------+---------+
| Gross profit | | 145 | 180 | (19) |
+---------------------------------------+----------+-----------+------------+---------+
| Selling, general & administrative | | 86 | 92 | |
| expenses | | | | |
+---------------------------------------+----------+-----------+------------+---------+
| Other operating expenses | | 3 | 1 | |
+---------------------------------------+----------+-----------+------------+---------+
| Share of profit from associates and | | (1) | (4) | |
| joint ventures | | | | |
+---------------------------------------+----------+-----------+------------+---------+
| Operating profit | 3 | 57 | 91 | (37) |
+---------------------------------------+----------+-----------+------------+---------+
| Net finance costs | | 21 | 28 | |
+---------------------------------------+----------+-----------+------------+---------+
| Net interest | | 31 | 37 | |
+---------------------------------------+----------+-----------+------------+---------+
| Finance cost capitalised | | - | (9) | |
+---------------------------------------+----------+-----------+------------+---------+
| Net foreign exchange gains | | (7) | (1) | |
+---------------------------------------+----------+-----------+------------+---------+
| Net fair value (gain) loss on | | (3) | 1 | |
| financial instruments | | | | |
+---------------------------------------+----------+-----------+------------+---------+
| Profit before taxation | | 36 | 63 | (43) |
+---------------------------------------+----------+-----------+------------+---------+
| Taxation | | 13 | 21 | |
+---------------------------------------+----------+-----------+------------+---------+
| Current | | 10 | 3 | |
+---------------------------------------+----------+-----------+------------+---------+
| Deferred | | 3 | 18 | |
+---------------------------------------+----------+-----------+------------+---------+
| Profit for the period | | 23 | 42 | (45) |
+---------------------------------------+----------+-----------+------------+---------+
| Basic earnings per share (US cents) | 1 | 6 | 12 | |
+---------------------------------------+----------+-----------+------------+---------+
| Weighted average number of shares in | 1 | 383.0 | 361.6 | |
| issue (millions) | | | | |
+---------------------------------------+----------+-----------+------------+---------+
| Diluted basic earnings per share (US | 1 | 6 | 12 | |
| cents) | | | | |
+---------------------------------------+----------+-----------+------------+---------+
| Weighted average number of shares on | | | | |
| fully | | | | |
+---------------------------------------+----------+-----------+------------+---------+
| diluted basis (millions) | 1 | 385.5 | 365.0 | |
+---------------------------------------+----------+-----------+------------+---------+
Group balance sheet
+--------------------------------------------------------+------------+------------+
| | Reviewed | Reviewed |
+--------------------------------------------------------+------------+------------+
| | Dec 2008 | Sept 2008 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
| | million | million |
+--------------------------------------------------------+------------+------------+
| ASSETS | | |
+--------------------------------------------------------+------------+------------+
| Non-current assets | 4,049 | 4,408 |
+--------------------------------------------------------+------------+------------+
| Property, plant and equipment | 3,081 | 3,361 |
+--------------------------------------------------------+------------+------------+
| Plantations | 558 | 631 |
+--------------------------------------------------------+------------+------------+
| Deferred taxation | 48 | 41 |
+--------------------------------------------------------+------------+------------+
| Other non-current assets | 362 | 375 |
+--------------------------------------------------------+------------+------------+
| Current assets | 2,275 | 1,701 |
+--------------------------------------------------------+------------+------------+
| Inventories | 766 | 725 |
+--------------------------------------------------------+------------+------------+
| Trade and other receivables | 568 | 702 |
+--------------------------------------------------------+------------+------------+
| Cash and cash equivalents | 941 | 274 |
+--------------------------------------------------------+------------+------------+
| Total assets | 6,324 | 6,109 |
+--------------------------------------------------------+------------+------------+
| EQUITY AND LIABILITIES | | |
+--------------------------------------------------------+------------+------------+
| Shareholders' equity | | |
+--------------------------------------------------------+------------+------------+
| Ordinary shareholders' interest | 1,863 | 1,605 |
+--------------------------------------------------------+------------+------------+
| Non-current liabilities | 2,503 | 2,578 |
+--------------------------------------------------------+------------+------------+
| Interest-bearing borrowings | 1,819 | 1,832 |
+--------------------------------------------------------+------------+------------+
| Deferred taxation | 354 | 399 |
+--------------------------------------------------------+------------+------------+
| Other non-current liabilities | 330 | 347 |
+--------------------------------------------------------+------------+------------+
| Current liabilities | 1,958 | 1,926 |
+--------------------------------------------------------+------------+------------+
| Interest-bearing borrowings | 1,058 | 821 |
+--------------------------------------------------------+------------+------------+
| Bank overdraft | 29 | 26 |
+--------------------------------------------------------+------------+------------+
| Other current liabilities | 801 | 1,025 |
+--------------------------------------------------------+------------+------------+
| Taxation payable | 70 | 54 |
+--------------------------------------------------------+------------+------------+
| Total equity and liabilities | 6,324 | 6,109 |
+--------------------------------------------------------+------------+------------+
| Number of shares in issue at balance sheet date | 504.8 | 229.2 |
| (millions) | | |
+--------------------------------------------------------+------------+------------+
Group cash flow statement
+--------------------------------------------------+---------------+--------------+
| | Reviewed | Reviewed |
+--------------------------------------------------+---------------+--------------+
| | Quarter | Quarter |
+--------------------------------------------------+---------------+--------------+
| | ended | ended |
+--------------------------------------------------+---------------+--------------+
| | Dec 2008 | Dec 2007 |
+--------------------------------------------------+---------------+--------------+
| | US$ million | US$ million |
+--------------------------------------------------+---------------+--------------+
| Profit for the period | 23 | 42 |
+--------------------------------------------------+---------------+--------------+
| Adjustment for: | | |
+--------------------------------------------------+---------------+--------------+
| Depreciation, fellings and amortisation | 97 | 117 |
+--------------------------------------------------+---------------+--------------+
| Taxation | 13 | 21 |
+--------------------------------------------------+---------------+--------------+
| Net finance costs | 21 | 28 |
+--------------------------------------------------+---------------+--------------+
| Post employment benefits | (8) | (14) |
+--------------------------------------------------+---------------+--------------+
| Other non-cash items | (51) | (39) |
+--------------------------------------------------+---------------+--------------+
| Cash generated from operations | 95 | 155 |
+--------------------------------------------------+---------------+--------------+
| Movement in working capital | (96) | (133) |
+--------------------------------------------------+---------------+--------------+
| Net finance costs | (44) | (59) |
+--------------------------------------------------+---------------+--------------+
| Taxation recovered (paid) | 1 | (7) |
+--------------------------------------------------+---------------+--------------+
| Dividends paid * | (37) | - |
+--------------------------------------------------+---------------+--------------+
| Cash utilised in operating activities | (81) | (44) |
+--------------------------------------------------+---------------+--------------+
| Cash utilised in investing activities | (40) | (89) |
+--------------------------------------------------+---------------+--------------+
| | (121) | (133) |
+--------------------------------------------------+---------------+--------------+
| Cash effects of financing activities | 793 | 223 |
+--------------------------------------------------+---------------+--------------+
| Net movement in cash and cash equivalents | 672 | 90 |
+--------------------------------------------------+---------------+--------------+
* Dividend no 85: 16 US cents per share paid on 28 November 2008
Group statement of recognised income and expense
+-------------------------------------------------+---------------+---------------+
| | Reviewed | Reviewed |
+-------------------------------------------------+---------------+---------------+
| | Quarter | Quarter |
+-------------------------------------------------+---------------+---------------+
| | ended | ended |
+-------------------------------------------------+---------------+---------------+
| | Dec 2008 | Dec 2007 |
+-------------------------------------------------+---------------+---------------+
| | US$ million | US$ million |
+-------------------------------------------------+---------------+---------------+
| Exchange differences on translation of foreign | (293) | (10) |
| operations | | |
+-------------------------------------------------+---------------+---------------+
| Unrealised gain on cash flow hedge | 32 | - |
+-------------------------------------------------+---------------+---------------+
| Tax effect of cash flow hedge | (9) | 2 |
+-------------------------------------------------+---------------+---------------+
| Net expense recorded directly in equity | (270) | (8) |
+-------------------------------------------------+---------------+---------------+
| Profit for the period | 23 | 42 |
+-------------------------------------------------+---------------+---------------+
| Total recognised (expense) income for the | (247) | 34 |
| period | | |
+-------------------------------------------------+---------------+---------------+
Notes to the group results
1. Basis of preparation
The condensed financial statements have been prepared in accordance with
International Accounting Standard 34, Interim Financial Reporting. The
accounting policies and methods of computation used in the preparation of the
results are consistent, in all material respects, with those used in the annual
financial statements for September 2008 which are compliant with International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
The preliminary results for the three month period ended December 2008 have been
reviewed in terms of the International Standard on Review Engagements 2410 by
the group's auditors, Deloitte & Touche. Their unmodified review report is
available for inspection at the company's registered offices.
In November and December 2008, Sappi conducted a renounceable rights offer of
286,886,270 new ordinary shares of ZAR1.00 each to qualifying Sappi shareholders
recorded in the shareholders register at the close of business on Friday 21
November 2008, at a subscription price of ZAR20.27 per rights offer share in the
ratio of 6 rights offer shares for every 5 Sappi shares held. The rights offer
was fully subscribed and the shareholders received their shares on 15 December
2008. The rights offer raised ZAR5,8 billion which was used to partly finance
the Acquisition of the coated graphic paper business of M-Real and the related
costs.
Following the rights offer, prior period Basic and Diluted earnings per share
have been restated for the bonus element of the rights offer in accordance with
IAS 33. Please refer to Supplemental Information for a summary of this
calculation.
2. Reconciliation of movement in shareholders' equity
+------------------------------------------------------+-------------+-------------+
| | Reviewed | Reviewed |
+------------------------------------------------------+-------------+-------------+
| | Quarter | Quarter |
+------------------------------------------------------+-------------+-------------+
| | ended | ended |
+------------------------------------------------------+-------------+-------------+
| | Dec 2008 | Dec 2007 |
+------------------------------------------------------+-------------+-------------+
| | US$ million | US$ million |
+------------------------------------------------------+-------------+-------------+
| Balance - beginning of period | 1,605 | 1,816 |
+------------------------------------------------------+-------------+-------------+
| Total recognised (expense) income for the period | (247) | 34 |
+------------------------------------------------------+-------------+-------------+
| Dividends declared | (37) | (73) |
+------------------------------------------------------+-------------+-------------+
| Rights issue net of directly attributable costs | 536 | - |
+------------------------------------------------------+-------------+-------------+
| Transfers to participants of the share purchase | 3 | 2 |
| trust | | |
+------------------------------------------------------+-------------+-------------+
| Share based payment reserve | 3 | 2 |
+------------------------------------------------------+-------------+-------------+
| Balance - end of period | 1,863 | 1,781 |
+------------------------------------------------------+-------------+-------------+
| 3. Operating profit | | |
+------------------------------------------------------+-------------+-------------+
| Included in operating profit are the following | | |
| non-cash items: | | |
+------------------------------------------------------+-------------+-------------+
| Depreciation and amortisation | 81 | 96 |
+------------------------------------------------------+-------------+-------------+
| Fair value adjustment on plantations (included in | | |
| cost of sales) | | |
+------------------------------------------------------+-------------+-------------+
| Changes in volume | | |
+------------------------------------------------------+-------------+-------------+
| Fellings | 16 | 21 |
+------------------------------------------------------+-------------+-------------+
| Growth | (16) | (18) |
+------------------------------------------------------+-------------+-------------+
| | - | 3 |
+------------------------------------------------------+-------------+-------------+
| Plantation price fair value adjustment | (34) | 1 |
+------------------------------------------------------+-------------+-------------+
| | (34) | 4 |
+------------------------------------------------------+-------------+-------------+
| Included in other operating expenses are the | | |
| following: | | |
+------------------------------------------------------+-------------+-------------+
| Asset impairments | 3 | 2 |
+------------------------------------------------------+-------------+-------------+
| Profit on disposal of property, plant & equipment | (1) | (1) |
+------------------------------------------------------+-------------+-------------+
| Restructuring provisions released | - | (1) |
+------------------------------------------------------+-------------+-------------+
Notes to the group results
+----------------------------------------------------+---------------+-------------+
| | Reviewed | Reviewed |
+----------------------------------------------------+---------------+-------------+
| | Quarter | Quarter |
+----------------------------------------------------+---------------+-------------+
| | ended | ended |
+----------------------------------------------------+---------------+-------------+
| | Dec 2008 | Dec 2007 |
+----------------------------------------------------+---------------+-------------+
| | US$ million | US$ million |
+----------------------------------------------------+---------------+-------------+
| 4. Headline earnings per share * | | |
+----------------------------------------------------+---------------+-------------+
| Headline earnings per share (US cents) ** | 7 | 12 |
+----------------------------------------------------+---------------+-------------+
| Weighted average number of shares in issue | 383.0 | 361.6 |
| (millions) ** | | |
+----------------------------------------------------+---------------+-------------+
| Diluted headline earnings per share (US cents) ** | 6 | 12 |
+----------------------------------------------------+---------------+-------------+
| Weighted average number of shares on fully diluted | 385.5 | 365.0 |
| basis (millions) ** | | |
+----------------------------------------------------+---------------+-------------+
| Calculation of Headline earnings * | | |
+----------------------------------------------------+---------------+-------------+
| Profit for the period | 23 | 42 |
+----------------------------------------------------+---------------+-------------+
| Asset impairments | 3 | 2 |
+----------------------------------------------------+---------------+-------------+
| Profit on disposal of property, plant & equipment | (1) | - |
+----------------------------------------------------+---------------+-------------+
| Tax effect of above items | - | - |
+----------------------------------------------------+---------------+-------------+
| Headline earnings | 25 | 44 |
+----------------------------------------------------+---------------+-------------+
| * Headline earnings disclosure is required by the | | |
| JSE Limited. | | |
+----------------------------------------------------+---------------+-------------+
| ** Prior period headline earnings per share has | | |
| been restated for the bonus element of the rights | | |
| offer in accordance with IAS 33. Please refer to | | |
| Supplemental Information for a summary of this | | |
| calculation. | | |
+----------------------------------------------------+---------------+-------------+
| 5. Capital expenditure | | |
+----------------------------------------------------+---------------+-------------+
| Property, plant and equipment | 47 | 109 |
+----------------------------------------------------+---------------+-------------+
| | Dec 2008 | Sept 2008 |
+----------------------------------------------------+---------------+-------------+
| | US$ million | US$ million |
+----------------------------------------------------+---------------+-------------+
| 6. Capital commitments | | |
+----------------------------------------------------+---------------+-------------+
| Contracted | 111 | 76 |
+----------------------------------------------------+---------------+-------------+
| Approved but not contracted | 178 | 130 |
+----------------------------------------------------+---------------+-------------+
| | 289 | 206 |
+----------------------------------------------------+---------------+-------------+
| 7. Contingent liabilities | | |
+----------------------------------------------------+---------------+-------------+
| Guarantees and suretyships | 44 | 38 |
+----------------------------------------------------+---------------+-------------+
| Other contingent liabilities | 7 | 7 |
+----------------------------------------------------+---------------+-------------+
| | 51 | 45 |
+----------------------------------------------------+---------------+-------------+
8. Material balance sheet movements
Plantations
The decrease in the value of plantations arises upon translation of the
plantations from Rands to US Dollars.
Trade and other receivables and other current liabilities.
The lower operating performance has resulted in a reduction of both trade
payables and trade receivables.
Interest-bearing borrowings and cash and cash equivalents
Included in cash and cash equivalents is US$532 million which is the net cash
proceeds from the rights issue (after directly attributable costs). During the
quarter, the group also drew down US$70 million of its committed facilities.
9. Subsequent events
The acquisition of M-Real's coated graphic paper business for an enterprise
value of Euro 750 million, was completed on 31 December 2008, which was after
our quarter end and is subject to minor adjustments for working capital and
assumed debt. Payment for the business comprised cash of Euro 400 million from
the proceeds of the rights offer conducted during the quarter (see Note 1),
vendor loan notes of Euro 220 million, with the balance made up of 11 million
Sappi shares and assumed debt.
Notes to the group results
+------------------------------------------+----------------+------------+---------+
| | Reviewed | Reviewed | |
+------------------------------------------+----------------+------------+---------+
| | Quarter | Quarter | |
+------------------------------------------+----------------+------------+---------+
| | ended | ended | |
+------------------------------------------+----------------+------------+---------+
| | Dec 2008 | Dec 2007 | |
+------------------------------------------+----------------+------------+---------+
| | US$ million | US$ | % |
| | | million | change |
+------------------------------------------+----------------+------------+---------+
| 10. Regional information | | | |
+------------------------------------------+----------------+------------+---------+
| Sales | | | |
+------------------------------------------+----------------+------------+---------+
| Fine Paper - North America | 363 | 384 | (5) |
+------------------------------------------+----------------+------------+---------+
| Europe | 561 | 638 | (12) |
+------------------------------------------+----------------+------------+---------+
| Southern Africa | 74 | 87 | (15) |
+------------------------------------------+----------------+------------+---------+
| Total | 998 | 1,109 | (10) |
+------------------------------------------+----------------+------------+---------+
| Forest Products - Pulp and paper | 174 | 252 | (31) |
| operations | | | |
+------------------------------------------+----------------+------------+---------+
| Forestry operations | 15 | 16 | (6) |
+------------------------------------------+----------------+------------+---------+
| Total | 1,187 | 1,377 | (14) |
+------------------------------------------+----------------+------------+---------+
| Operating profit | | | |
+------------------------------------------+----------------+------------+---------+
| Fine Paper - North America | (7) | 11 | - |
+------------------------------------------+----------------+------------+---------+
| Europe | 13 | 19 | (32) |
+------------------------------------------+----------------+------------+---------+
| Southern Africa | 2 | 1 | 100 |
+------------------------------------------+----------------+------------+---------+
| Total | 8 | 31 | (74) |
+------------------------------------------+----------------+------------+---------+
| Forest Products | 49 | 55 | (11) |
+------------------------------------------+----------------+------------+---------+
| Corporate and other | - | 5 | - |
+------------------------------------------+----------------+------------+---------+
| Total | 57 | 91 | (37) |
+------------------------------------------+----------------+------------+---------+
| Net operating assets | | | |
+------------------------------------------+----------------+------------+---------+
| Fine Paper - North America | 1,100 | 1,029 | 7 |
+------------------------------------------+----------------+------------+---------+
| Europe | 1,599 | 1,991 | (20) |
+------------------------------------------+----------------+------------+---------+
| Southern Africa | 170 | 153 | 11 |
+------------------------------------------+----------------+------------+---------+
| Total | 2,869 | 3,173 | (10) |
+------------------------------------------+----------------+------------+---------+
| Forest Products | 1,456 | 1,830 | (20) |
+------------------------------------------+----------------+------------+---------+
| Corporate and other | 139 | (38) | - |
+------------------------------------------+----------------+------------+---------+
| Total | 4,464 | 4,965 | (10) |
+------------------------------------------+----------------+------------+---------+
Supplemental Information (this information has not been reviewed)
general definitions
Average - averages are calculated as the sum of the opening and closing balances
for the relevant period divided by two
Fellings - the amount charged against the income statement representing the
standing value of the plantations harvested
NBSK - Northern Bleached Softwood Kraft pulp. One of the main varieties of
market pulp, mainly produced from spruce trees in Scandinavia, Canada and north
eastern USA. The NBSK is a benchmark widely used in the pulp and paper industry
for comparative purposes
SG&A - selling, general and administrative expenses
Non-GAAP measures
The group believes that it is useful to report certain non-GAAP measures for the
following reasons:
- these measures are used by the group for internal performance analysis;
- the presentation by the group's reported business segments of these measures
facilitates comparability with other companies in our industry, although the
group's measures may not be comparable with similarly titled profit measurements
reported by other companies; and
- it is useful in connection with discussion with the investment analyst
community and debt rating agencies.
These non-GAAP measures should not be considered in isolation or construed as a
substitute for
GAAP measures in accordance with IFRS
Capital employed - shareholders' equity plus net debt
EBITDA excluding special items - earnings before interest (net finance costs),
taxation, depreciation, amortisation and special items
European acquisition - the aquisition of M-real's coated graphic business on 31
December 2008
Headline earnings - as defined in circular 8/2007 issued by the South African
Institute of
Chartered Accountants, separates from earnings all separately identifiable
re-measurements. It is not necessarily a measure of sustainable earnings. It is
a listing requirement of the JSE Limited to disclose headline earnings per share
Net debt - current and non-current interest-bearing borrowings, and bank
overdraft (net of cash, cash equivalents and short-term deposits)
Net debt to total capitalisation - net debt divided by capital employed
Net operating assets - total assets (excluding deferred taxation and cash and
cash equivalents) less current liabilities (excluding interest-bearing
borrowings and bank overdraft)
Net assets - total assets less total liabilities
Net asset value per share - net assets divided by the number of shares in issue
at balance sheet date
ROCE - return on average capital employed. Operating profit excluding special
items divided by average capital employed
ROE - return on average equity. Profit for the period divided by average
shareholders' equity
RONOA - return on average net operating assets. Operating profit excluding
special items divided by average net operating assets
Special items - special items cover those items which management believe are
material by nature or amount to the operating results and require separate
disclosure. Such items would generally include profit or loss on disposal of
property, investments and businesses, asset impairments, restructuring charges,
financial impacts of natural disasters and non-cash gains or losses on the price
fair value adjustment of plantations
The above financial measures are presented to assist our shareholders and the
investment community in interpreting our financial results. These financial
measures are regularly used and compared between companies in our industry.
Restatement of earnings per share numbers for bonus element of rights issue
In accordance with IAS 33, prior period basic, headline and diluted earnings per
share have been restated to take into account the bonus element of the rights
offer. The prior period weighted average number of shares has been adjusted by a
factor of 1.58 (the adjustment factor) for the issuance of 286,886,270 new
ordinary shares of ZAR1.00 each, at a subscription price of ZAR20.27 per rights
offer share in the ratio of 6 rights offer shares for every 5 Sappi shares held.
The adjustment factor is calculated using the pre-announcement share price
divided by the theoretical ex-rights price (TERP). TERP is the [(Number of new
shares multiplied by the Subscription price) plus the (Number of shares held
multiplied by the Ex-dividend share price)] all divided by the (Number of new
shares plus the number of shares held prior to the rights offer).
Supplemental Information (this information has not been reviewed)
EBITDA excluding special items
+----------------------------------------------------+---------------+-------------+
| | Quarter | Quarter |
+----------------------------------------------------+---------------+-------------+
| | ended | ended |
+----------------------------------------------------+---------------+-------------+
| | Dec 2008 | Dec 2007 |
+----------------------------------------------------+---------------+-------------+
| | US$ million | US$ million |
+----------------------------------------------------+---------------+-------------+
| Reconciliation of profit for the period to EBITDA | | |
| excluding | | |
+----------------------------------------------------+---------------+-------------+
| special items (1) | | |
+----------------------------------------------------+---------------+-------------+
| Profit for the period | 23 | 42 |
+----------------------------------------------------+---------------+-------------+
| Net finance costs | 21 | 28 |
+----------------------------------------------------+---------------+-------------+
| Taxation | 13 | 21 |
+----------------------------------------------------+---------------+-------------+
| Special items - (gains) losses | (32) | 1 |
+----------------------------------------------------+---------------+-------------+
| Operating profit excluding special items | 25 | 92 |
+----------------------------------------------------+---------------+-------------+
| Depreciation and amortisation | 81 | 96 |
+----------------------------------------------------+---------------+-------------+
| EBITDA excluding special items (1) | 106 | 188 |
+----------------------------------------------------+---------------+-------------+
| | Dec 2008 | Sept 2008 |
+----------------------------------------------------+---------------+-------------+
| | US$ million | US$ million |
+----------------------------------------------------+---------------+-------------+
| Net debt including cash from rights offer (US$ | 1,965 | 2,405 |
| million) (2) | | |
+----------------------------------------------------+---------------+-------------+
| Net debt excluding cash from rights offer (US$ | 2,497 | 2,405 |
| million) (2) | | |
+----------------------------------------------------+---------------+-------------+
| Net debt to total capitalisation (2) including | 51.3 | 60.0 |
| rights offer cash | | |
+----------------------------------------------------+---------------+-------------+
| Net debt to total capitalisation (2) excluding | 57.3 | 60.0 |
| rights offer cash | | |
+----------------------------------------------------+---------------+-------------+
| Net asset value per share (US$) (2) | 3.69 | 7.00 |
+----------------------------------------------------+---------------+-------------+
(1) In connection with the U.S. Securities Exchange Commission ("SEC") rules
relating to "Conditions for Use of Non-GAAP Financial Measures", we have
reconciled EBITDA excluding special items to net profit rather than operating
profit. As a result our definition retains minority interest as part of EBITDA
excluding special items.
Operating profit excluding special items represents earnings before interest
(net finance costs), taxation and special items. Net finance costs includes:
gross interest paid; interest received; interest capitalised; net foreign
exchange gains; and net fair value adjustments on interest rate financial
instruments. See the group income statement for an explanation of the
computation of net finance costs. Special items cover those items which
management believe are material by nature or amount to the operating results and
require separate disclosure. Such items would generally include profit and loss
on disposal of property, investments and businesses, asset impairments,
restructuring charges, financial impacts of natural disasters and non-cash gains
or losses on the price fair value adjustment of plantations.
EBITDA excluding special items represents operating profit before depreciation,
amortisation and special items.
We use both operating profit excluding special items and EBITDA excluding
special items as internal measures of performance to benchmark and compare
performance, both between our own operations and as against other companies.
Operating profit excluding special items and EBITDA excluding special items are
measures used by the group, together with measures of performance under IFRS, to
compare the relative performance of operations in planning, budgeting and
reviewing the performances of various businesses. We believe they are useful and
commonly used measures of financial performance in addition to net profit,
operating profit and other profitability measures under IFRS because they
facilitate operating performance comparisons from period to period and company
to company. By eliminating potential differences in results of operations
between periods or companies caused by factors such as depreciation and
amortisation methods, historic cost and age of assets, financing and capital
structures and taxation positions or regimes, we believe both operating profit
excluding special items and EBITDA excluding special items can provide a useful
additional basis for comparing the current performance of the operations being
evaluated. For these reasons, we believe operating profit excluding special
items and EBITDA excluding special items and similar measures are regularly used
by the investment community as a means of comparison of companies in our
industry. Different companies and analysts may calculate operating profit
excluding special items and EBITDA excluding special items differently, so
making comparisons among companies on this basis should be done very carefully.
Operating profit excluding special items and EBITDA excluding special items are
not measures of performance under IFRS and should not be considered in isolation
or construed as a substitute for operating profit or net profit as indicators of
the company's operations in accordance with IFRS.
(2) Refer to Supplemental Information for the definition of the term.
Supplemental Information (this information has not been reviewed)
summary rand convenience translation
+---------------------------------------------+--------------+-----------+----------+
| | Quarter | Quarter | |
+---------------------------------------------+--------------+-----------+----------+
| | ended | ended | |
+---------------------------------------------+--------------+-----------+----------+
| | Dec 2008 | Dec 2007 | % change |
+---------------------------------------------+--------------+-----------+----------+
| Key figures: (ZAR million) | | | |
+---------------------------------------------+--------------+-----------+----------+
| Sales | 11,702 | 9,293 | 26 |
+---------------------------------------------+--------------+-----------+----------+
| Operating profit | 562 | 614 | (8) |
+---------------------------------------------+--------------+-----------+----------+
| Special items - (gains) losses * | (315) | 7 | - |
+---------------------------------------------+--------------+-----------+----------+
| Operating profit excluding special items | 246 | 621 | (60) |
+---------------------------------------------+--------------+-----------+----------+
| EBITDA excluding special items * | 1,045 | 1,269 | (18) |
+---------------------------------------------+--------------+-----------+----------+
| Basic EPS (SA cents) | 59 | 81 | (27) |
+---------------------------------------------+--------------+-----------+----------+
| Net debt * including rights offer cash | 19,090 | 16,983 | 12 |
+---------------------------------------------+--------------+-----------+----------+
| Net debt * excluding rights offer cash | 24,258 | 16,983 | 43 |
+---------------------------------------------+--------------+-----------+----------+
| Key ratios: (%) | | | |
+---------------------------------------------+--------------+-----------+----------+
| Operating profit to sales | 4.8 | 6.6 | |
+---------------------------------------------+--------------+-----------+----------+
| Operating profit excluding special items to | 2.1 | 6.7 | |
| sales | | | |
+---------------------------------------------+--------------+-----------+----------+
| Operating profit excluding special items | | | |
+---------------------------------------------+--------------+-----------+----------+
| to Capital Employed (ROCE) | 1.8 | 5.8 | |
+---------------------------------------------+--------------+-----------+----------+
| EBITDA excluding special items to sales | 8.9 | 13.7 | |
+---------------------------------------------+--------------+-----------+----------+
| Net debt to total capitalisation * | 51.3 | 58.3 | |
| including rights offer cash | | | |
+---------------------------------------------+--------------+-----------+----------+
| Net debt to total capitalisation * | 57.3 | 58.3 | |
| excluding rights offer cash | | | |
+---------------------------------------------+--------------+-----------+----------+
* Refer to Supplemental Information for the definition of the term.
The above financial results have been translated into ZAR from 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.
exchange rates
+--------------------------------------+-----------+--------+--------+--------+--------+
| | Dec | Sept | June | March | Dec |
+--------------------------------------+-----------+--------+--------+--------+--------+
| | 2008 | 2008 | 2008 | 2008 | 2007 |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Exchange rates: | | | | | |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Period end rate: US$1 = ZAR | 9.7148 | 8.0751 | 7.9145 | 8.1432 | 6.8068 |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Average rate for the Quarter: US$1 = | 9.8584 | 7.8150 | 7.8385 | 7.4593 | 6.7488 |
| ZAR | | | | | |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Average rate for the YTD: US$1 = ZAR | 9.8584 | 7.4294 | 7.3236 | 7.1465 | 6.7488 |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Period end rate: EUR 1 = US$ | 1.4064 | 1.4615 | 1.5795 | 1.5802 | 1.4717 |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Average rate for the Quarter: EUR 1 | 1.3471 | 1.5228 | 1.5747 | 1.5006 | 1.4556 |
| = US$ | | | | | |
+--------------------------------------+-----------+--------+--------+--------+--------+
| Average rate for the YTD: EUR 1 = | 1.3471 | 1.5064 | 1.5071 | 1.4790 | 1.4556 |
| US$ | | | | | |
+--------------------------------------+-----------+--------+--------+--------+--------+
The financial results of entities with reporting currencies other than the US
Dollar are translated into US Dollars as follows:
- Assets and liabilities at rates of exchange ruling at period end; and
- Income, expenditure and cash flow items at average exchange rates.
Other interested parties can obtain printed copies of this report from:
+---------------------------+-------------------------+--------------------+
| South Africa: | United States: | Channel Islands: |
+---------------------------+-------------------------+--------------------+
| Computershare Investor | ADR Depositary: | Capita Registrars |
+---------------------------+-------------------------+--------------------+
| Services (Proprietary) | The Bank of New York | (Jersey) Limited |
| Limited | Mellon | |
+---------------------------+-------------------------+--------------------+
| 70 Marshall Street | Investor Relations | 12 Castle Street |
+---------------------------+-------------------------+--------------------+
| Johannesburg 2001 | PO Box 11258 | St Helier, |
+---------------------------+-------------------------+--------------------+
| PO Box 61051 | Church Street Station | Jersey |
+---------------------------+-------------------------+--------------------+
| Marshalltown 2107 | New York, NY 10286-1258 | JE2 3RT |
+---------------------------+-------------------------+--------------------+
| Tel +27 (0)11 370 5000 | Tel +1 610 382 7836 | Tel +44 (0)208 639 |
| | | 3399 |
+---------------------------+-------------------------+--------------------+
this report is available on the Sappi website www.sappi.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFZGGFMNGDGLZM
Sappi (LSE:SAZ)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Sappi (LSE:SAZ)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
