| Thu 29 Jul 2004, 10:02 | | SAPPI LIMITED - RESULTS FOR THE QUARTER ENDED JUNE |
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SAPPI LIMITED - RESULTS FOR THE QUARTER ENDED JUNE 2004
RESULTS FOR THE QUARTER ENDED JUNE 2004 * EPS 18 US cents * Results enhanced by plantation fair value and taxation credits * Cash flow improves * Southern African businesses` margins squeezed by Rand strength * Global demand for coated paper recovering Summary Quarter ended June March June** 2004 2004 2003 Sales (US$ million) 1,188 1,185 1,062 Operating profit (US$ million) 60 56 52 EBITDA (US$ million) * 175 173 146 Operating profit to sales (%) 5.1 4.7 4.9 EBITDA to sales (%) * 14.7 14.6 13.7 Operating profit to average net assets (%) * 5.3 4.9 4.9 Headline EPS (US cents) * 18 10 11 EPS (US cents) 18 10 11 Return on average equity (ROE) (%) * 7.9 4.7 5.3 Net debt (US$ million) * 1,649 1,753 1,571 Net debt to total capitalisation (%) * 33.0 35.6 33.3 Nine months ended June June** 2004 2003 Sales (US$ million) 3,493 3,176 Operating profit (US$ million) 116 255 EBITDA (US$ million) * 462 529 Operating profit to sales (%) 3.3 8.0 EBITDA to sales (%) * 13.2 16.7 Operating profit to average net assets (%) * 3.4 8.3 Headline EPS (US cents) * 19 58 EPS (US cents) 19 58 Return on average equity (ROE) (%) * 2.8 10.1 Net debt (US$ million) * 1,649 1,571 Net debt to total capitalisation (%) * 33.0 33.3 * Refer to Supplemental Information for the definition of the term **Restated for AC 137 Comment During the quarter we have seen continued demand growth in our major markets. Coated fine paper demand in North America and Europe grew strongly with apparentconsumption up approximately 12% and 11% respectively compared to the equivalentquarter last year. Prices for coated paper, however, remained low. In Europe the price increases announced for April were largely unrealised although the Euro price of our graphics paper did increase slightly compared to the prior quarter. The June price increases for coated paper in North America have been successful for non- contract business and are being phased in as price agreements expire. Demand for pulp, particularly chemical cellulose pulp (dissolving pulp), was strong and NBSK pulp prices strengthened in the quarter to US$655 per ton. The average US dollar price for the quarter was approximately 17% above the equivalent quarter last year and 10% above the March quarter. Sappi`s earnings and headline earnings per share for the quarter were 18 US cents compared to 11 US cents for the equivalent quarter last year. The quarter`s results were enhanced by the favourable impact of applying the Agriculture Accounting Standard - AC 137 (IAS41) to our plantations, which addedapproximately US$21 million to net profit compared to applying our previous accounting standard. Although costs were generally well managed, we continue to experience input costinflation. In particular, higher prices of wood and energy in North America had an unfavourable impact on operating income of approximately US$9 million compared to the equivalent quarter last year. Selling, General and Administrative costs were US$8 million below the prior quarter but US$14 millionabove the equivalent quarter last year. Net finance costs of US$30 million were slightly above the equivalent quarter last year; net interest paid was US$13 million lower but was offset by a swing from a foreign exchange gain to a small loss and a change in the fair value of financial instruments. Taxation in the quarter reflects net tax credits of US$8 million resulting mainly from the net release of provisions as the result of the finalisation of tax audits and the reduction in Austrian deferred tax liabilities following the announced reduction in the Austrian tax rate from 34% to 25%. Cash flow and debt Strong cash generation was again a feature of our results. Cash generated by operations increased to US$154 million in the quarter compared to US$122 millionin the equivalent quarter last year. There was a US$15 million reduction in working capital mainly as a result of increased payables. Capital expenditure for the quarter was US$57 million and for the nine months was US$224 million, approximately 73% of depreciation. Net debt decreased by US$104 million in the quarter to US$1,649 million as a result of positive cash flow and the effect of marking our bonds to market. Operating Review for the quarter Sappi Fine Paper Quarter ended June 2004 June 2003 % US$ million US$ million change Sales 957 874 9.5 Operating profit 4 33 (87.9) Operating profit to sales (%) 0.4 3.8 - EBITDA 90 110 (18.2) EBITDA to sales (%) 9.4 12.6 - RONOA p.a. (%) 0.5 4.1 - Although there has been a strong improvement in demand, price levels in the quarter remained at cyclical lows. The results of our fine paper division continued to be unfavourably impacted by our North American operations, which reported a loss for the quarter. The North American operating results returned to break-even in June. Europe Quarter ended June 2004 June 2003 % change % change US$ million US$ million (US$) (Euro) Sales 512 481 6.4 (0.8) Operating profit 18 14 28.6 19.9 Operating profit to sales (%) 3.5 2.9 - - EBITDA 67 58 15.5 7.7 EBITDA to sales (%) 13.1 12.1 - - RONOA p.a. (%) 4.2 3.5 - - Our total sales volume was 6% above the equivalent quarter last year. For coatedfine paper our sales volume in Europe was approximately 14% higher, reflecting the strong apparent consumption growth but it was lower than the March quarter due to seasonal effects. Although average prices for graphics paper showed some increase in the quarter we did not achieve the price increase which we announced for April. Compared to the equivalent quarter last year average prices realised in Euros were down 7%. North America Quarter ended June 2004 June 2003 % US$ million US$ million change Sales 363 319 13.8 Operating (loss) profit (17) 9 - Operating profit to sales (%) - 2.8 - EBITDA 16 40 (60.0) EBITDA to sales (%) 4.4 12.5 - RONOA p.a. (%) - 2.5 - The performance of our North American business was disappointing for the quarter, but operating results reached break-even in June supported by strong shipments and increasing prices. Our North American inventories declined by approximately 13% compared to March. Our sales volumes were 27% higher than the equivalent quarter last year comparedto a growth in US coated fine paper producers` shipments of approximately 19% but average prices realised were 10% lower notwithstanding the June price increase. Higher wood and energy prices had unfavourable impacts of US$7 million and US$2 million respectively on operating profit compared to the equivalent quarter lastyear. However, compared to the March quarter the unfavourable impacts on operating profit were approximately US$3 million and US$1 million respectively. Wood costs have now largely stabilised. We expect demand for our web products to remain strong in the final quarter and prices to improve further as the effect of the June increase is phased in. On 28July 2004 we announced a further increase of US$60 per ton on web products effective immediately on new orders. South Africa Quarter ended June 2004 June 2003 % change % change US$ million US$ million (US$) (Rand) Sales 82 74 10.8 (4.2) Operating profit 3 10 (70.0) (74.1) Operating profit to sales (%) 3.7 13.5 - - EBITDA 7 12 (41.7) (49.6) EBITDA to sales (%) 8.5 16.2 - - RONOA p.a. (%) 7.0 30.8 - - Our sales volume remained strong in the quarter. The Rand prices in the domesticmarket and Rand realisations from exports have, however, reduced as a result of the strong currency. This has resulted in a sharp reduction in margins and returns. Sappi Forest Products Quarter ended June 2004 June 2003 % change % change US$ million US$ million (US$) (Rand) Sales 231 188 22.9 (6.2) Operating profit 62 21 195.2 155.2 Operating profit to sales (%) 26.8 11.2 - - EBITDA 90 37 143.2 110.2 EBITDA to sales (%) 39.0 19.7 - - RONOA p.a. (%) 18.7 8.6 - - We experienced strong domestic demand for our packaging paper and newsprint in the quarter. Pulp prices continued to increase in Dollar terms, reflecting strong demand growth. Our chemical cellulose pulp (dissolving pulp) business continued to perform strongly. The strong Rand has continued to squeeze our margins, particularly by reducing the rand realisation from exports. The fair value adjustment to the value of our plantations in terms of accountingstandard AC 137 had a significant impact on operating results in the quarter as a result of increased pulpwood prices. Group Outlook We are experiencing increased demand for coated paper worldwide and particularlyin our major markets of Europe and North America. As price levels for coated paper remain at low levels, achieving higher prices remains key to improving our profitability. We will realise further increases from the June announcement in North America during the fourth financial quarter.We have announced further price increases in North America and Europe. Demand for chemical cellulose pulp (dissolving pulp) is also strong and prices have increased in line with NBSK pulp prices. Along with our other Southern African businesses the margins of this business continue to be squeezed by the strength of the Rand relative to the US Dollar. We are clearly seeing an overall improvement in our business environment and expect some improvement in earnings per share in the fourth financial quarter; however, we will not achieve the full effect of the turnaround in our North American business until next year. On behalf of the Board J C A Leslie D G Wilson Director Director 29 July 2004 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 (orfrom 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 forthe 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 anddispositions (including related financing), any delays, unexpected costs or other problems experienced with integrating acquisitions and achieving expected savings and synergies and currency fluctuations. The company undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise. GROUP INCOME STATEMENT Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 US$ million US$ million % change Sales 1,188 1,062 11.9 Cost of sales 1,037 936 Gross profit 151 126 19.8 Selling, general & administrative expenses 91 77 60 49 Other income - 3 Operating profit 60 52 15.4 Net finance costs 30 29 Net paid 26 39 Capitalised (1) (1) Net foreign exchange losses (gains) 1 (6) Change in fair value of financial instruments 4 (3) Profit before tax 30 23 30.4 Taxation - current 2 5 - deferred (12) (7) Net profit 40 25 60.0 Earnings per share (US cents) 18 11 Headline earnings per share (US cents) * 18 11 Weighted average number of shares in issue (millions) 226.3 229.1 Diluted earnings per share (US cents) 17 11 Diluted headline earnings per share (US cents) * 17 10 Weighted average number of shares on fully diluted basis (millions) 228.3 231.5 Calculation of Headline earnings * Net profit 40 25 Profit on disposal of business and property, plant & equipment - (2) Mill closure costs - - Headline earnings 40 23 * Headline earnings disclosure is required by the JSE Securities Exchange South Africa. Reviewed Reviewed Nine Nine months months ended ended June 2004 June 2003 US$ million US$ million % change Sales 3,493 3,176 10.0 Cost of sales 3,062 2,696 Gross profit 431 480 (10.2) Selling, general & administrative expenses 315 229 116 251 Other income - 4 Operating profit 116 255 (54.5) Net finance costs 84 90 Net paid 78 93 Capitalised (2) (2) Net foreign exchange losses (gains) (5) 2 Change in fair value of financial instruments 13 (3) Profit before tax 32 165 (80.6) Taxation - current 20 36 - deferred (30) (5) Net profit 42 134 (68.7) Earnings per share (US cents) 19 58 Headline earnings per share (US cents) * 19 58 Weighted average number of shares in issue (millions) 226.3 229.5 Diluted earnings per share (US cents) 18 58 Diluted headline earnings per share (US cents) * 18 57 Weighted average number of shares on fully diluted basis (millions) 228.3 232.1 Calculation of Headline earnings * Net profit 42 134 Profit on disposal of business and property, plant & equipment - (3) Mill closure costs - 1 Headline earnings 42 132 * Headline earnings disclosure is required by the JSE Securities Exchange South Africa. GROUP BALANCE SHEET Reviewed Audited June 2004 Sept 2003 US$ million US$ million ASSETS Non-current assets 4,516 4,242 Property, plant and equipment 3,666 3,554 Plantations 544 432 Deferred taxation 36 41 Other non-current assets 270 215 Current assets 1,441 1,575 Cash and cash equivalents 387 584 Trade and other receivables 274 290 Inventories 780 701 Total assets 5,957 5,817 EQUITY AND LIABILITIES Shareholders` equity Ordinary shareholders` interest 2,083 1,945 Non-current liabilities 2,469 2,541 Interest-bearing borrowings 1,590 1,742 Deferred taxation 522 517 Other non-current liabilities 357 282 Current liabilities 1,405 1,331 Interest-bearing borrowings 382 170 Bank overdraft 64 163 Taxation payable 74 82 Other current liabilities 885 916 Total equity and liabilities 5,957 5,817 Number of shares in issue at balance sheet date (millions) 226.4 226.9 GROUP CASH FLOW STATEMENT Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 US$ million US$ million Cash generated by operations 154 122 Movement in working capital 15 (18) Net finance costs (29) (31) Taxation (paid) recovered (11) 6 Dividend paid - - Cash retained from operating activities 129 79 Cash effects of investing activities (62) (87) 67 (8) Cash effects of financing activities (13) 138 Net movement in cash and cash equivalents 54 130 Reviewed Reviewed Nine months Nine months ended ended June 2004 June 2003 US$ million US$ million Cash generated by operations 444 495 Movement in working capital (129) (183) Net finance costs (81) (92) Taxation (paid) recovered (30) 31 Dividend paid (66) (65) Cash retained from operating activities 138 186 Cash effects of investing activities (247) (179) (109) 7 Cash effects of financing activities (112) 141 Net movement in cash and cash equivalents (221) 148 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY Reviewed Reviewed Nine months Nine months ended ended June 2004 June 2003 US$ million US$ million Balance - beginning of year as reported 1,958 1,601 Change in accounting policy (13) (4) Balance - beginning of year restated 1,945 1,597 Net profit 42 134 Foreign currency translation reserve 169 313 Revaluation of derivative instruments 3 (17) Dividends declared - US$ 0.29 (2003: US$ 0.28) per share (66) (65) Share buybacks net of transfers to participants of the share purchase trust (10) (24) Balance - end of period 2,083 1,938 NOTES TO THE GROUP RESULT 1. Basis of preparation The annual financial statements are prepared in conformity with South African Statements of Generally Accepted Accounting Practice (SA GAAP). These quarterly results have been prepared in compliance with AC 127 (Interim financial reporting) and are based on accounting policies which are consistent with those used in the annual financial statements. The same accounting policies have been followed as in the annual financial statements for September 2003, except for the new agriculture accounting standard - Agriculture - AC 137 (IAS 41) which became effective from the beginning of the current financial year. The effect on equity for the above change is reflected in the Group statement ofchanges in shareholders` equity. The effect on net profit for the current quarter is an increase of US$21 million, net of US$11 million tax (March 2003 quarter: minimal impact; June 2003 quarter: decrease of US$4 million, net of US$1 million tax) and an increase of US$35 million, net of US$17 million tax forthe nine months ended (June 2003: a decrease of US$5 million, net of US$2 million tax). Where appropriate, comparative figures have been restated. The restatement has decreased the basic and headline earnings per share by 2 US cents and 1 US cent for the June 2003 quarter, respectively and 3 US cents and 2US cents for the nine months ended June 2003, respectively. The preliminary results for the quarter have been reviewed by the group`s auditors, Deloitte & Touche. Their unqualified review report is available for inspection at the company`s registered offices. 2. Comparative figures Comparative figures have been restated to take into account the effects of the new agriculture accounting standard which became effective from the beginning ofthe current financial year. The effect on operating profit is the inclusion of the fair value changes in the value of plantations and the expensing of the costs incurred to establish and maintain plantations (silviculture costs) and the amortisation of interest which had been previously capitalised. Net finance costs have increased. In terms of the new accounting standard, interest is no longer capitalised to the carrying value of plantations. The effect on the cash flow statement is a reclassification of investments in plantations from cash utilised in investing activities to cash generated by operations. Net cash flows remain the same. Operating profit has been restated to take into account the requirements of circular 3/2004 issued by the South African Institute of Chartered Accountants. Previously non-trading (profit) loss items were excluded from operating profit. The impact of the inclusion is an increase in operating profit of US$3 million for the quarter and US$4 million for the nine months ended June 2003. In September 2003, cash and overdraft were restated to gross up amounts previously set-off. The June 2003 cash flow statement has been restated to take the effects of this into account. Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 US$ million US$ million 3. Operating profit Included in operating profit are the following non-cash items: Depreciation and amortisation Depreciation of property, plant and equipment 102 89 Fellings 12 5 Other amortisation 1 - 115 94 Fair value adjustment (gains) on plantations (included in cost of sales) Changes in volume (16) (12) Changes in fair value (29) 1 (45) (11) The above fair value adjustment (gains) have been partially offset by planting costs relating to plantations replenished 10 8 4. Capital expenditure Property, plant and equipment 57 70 Reviewed Reviewed Nine Nine months months ended ended June 2004 June 2003 US$ million US$ million 3. Operating profit Included in operating profit are the following non-cash items: Depreciation and amortisation Depreciation of property, plant and equipment 305 259 Fellings 39 14 Other amortisation 2 1 346 274 Fair value adjustment (gains) on plantations (included in cost of sales) Changes in volume (44) (32) Changes in fair value (53) - (97) (32) The above fair value adjustment (gains) have been partially offset by planting costs relating to plantations replenished 28 21 4. Capital expenditure Property, plant and equipment 224 170 Reviewed Audited June 2004 Sept 2003 US$ million US$ million 5. Capital commitments Contracted but not provided 94 86 Approved but not contracted 130 193 224 279 6. Contingent liabilities Guarantees and suretyships 49 47 Other contingent liabilities 3 24 The reduction in other contingent liabilities reflects management`s revised estimate of reasonably possible losses which could arise from taxation queries to which certain group companies are subject. These could give rise to additional taxation costs. However, management currently believes, based on legal counsel opinion, that no further material costs will arise. SUPPLEMENTAL INFORMATION definitions Average - averages are calculated as the sum of the opening and closing balancesfor the relevant period divided by two * EBITDA - earnings before interest (net finance costs), tax, depreciation and amortisation * EBITDA to sales - EBITDA divided by sales Fellings - the amount charged against the income statement representing the standing value of the plantations harvested Headline earnings - as defined in circular 7/2002 issued by the South African Institute of Chartered Accountants, separates from earnings all items of a capital nature. It is not necessarily a measure of sustainable earnings. It is a listing requirement of the JSE Securities Exchange South Africa to disclose headline earnings per share. * Net assets - total assets less current liabilities * Net asset value - shareholders` equity plus net deferred tax * Net asset value per share - net asset value divided by the number of shares inissue at balance sheet date. * Net debt - current and non-current interest-bearing borrowings, and bank overdrafts (net of cash, cash equivalents and short-term deposits) * Net debt to total capitalisation - Net debt divided by shareholders` equity plus minority interest, non-current liabilities, current interest-bearing borrowings and overdraft * ROE - return on average equity. Net profit divided by average shareholders` equity * RONA - operating profit divided by average net assets * RONOA - operating profit divided by average net operating assets. Net operating assets are total assets (excluding deferred taxation and cash) less current liabilities (excluding interest-bearing borrowings and bank overdraft) *The above financial measures, other than headline earnings per share, are presented to assist our shareholders and the investment community in interpreting our financial results. These financial measures are regularly used and compared between companies in our industry. SUPPLEMENTAL INFORMATION ADDITIONAL INFORMATION Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 US$ million US$ million Net profit to EBITDA * reconciliation Net profit 40 25 Net finance costs 30 29 Taxation - current 2 5 - deferred (12) (7) Depreciation 102 89 Amortisation (including fellings) 13 5 EBITDA * 175 146 Reviewed Reviewed Nine Nine months months ended ended June 2004 June 2003 US$ million US$ million Net profit to EBITDA * reconciliation Net profit 42 134 Net finance costs 84 90 Taxation - current 20 36 - deferred (30) (5) Depreciation 305 259 Amortisation (including fellings) 41 15 EBITDA * 462 529 Reviewed Audited June 2004 Sept 2003 US$ million US$ million Net debt (US$ million) ** 1,649 1,491 Net debt to total capitalisation (%) ** 33.0 30.9 Net asset value per share (US$) ** 11.35 10.67 * 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 to net profit rather than operating profit and recalculated EBITDA to exclude interest (net finance costs), taxes, depreciation and amortisation (including fellings). As a result our definition has been amended to retain other income/expenses (previously non-trading profit/loss) as part of EBITDA. The comparative information has been restated to take this into account.The effect on EBITDA for the amended definition is an increase of US$3 million for the quarter and US$4 million for the nine months ended June 2003. There was no impact on the current quarter and nine months ended June 2004. We use EBITDA as an internal measure of performance and believe it is a useful and commonly used measure of financial performance in addition to operating profit and other profitability measures under SA GAAP. EBITDA is not a measure of performance under SA GAAP. EBITDA should not be construed as an alternative to operating profit as an indicator of the company`s operations in accordance with SA GAAP. EBITDA is also presented to assist our shareholders and the investment community in interpreting our financial results. This financial measure is regularly used as a means of comparison of companies in our industry by removing certain differences between companies such as depreciation methods, financing structures and taxation regimes. Different companies and analysts may calculate EBITDA differently, so making comparisons among companies on this basis should be done very carefully. ** Refer to supplemental information for the definition of the term. SUPPLEMENTAL INFORMATION REGIONAL INFORMATION Quarter Quarter ended ended June 2004 June 2003 Metric tons Metric tons (000`s) (000`s) % change Sales Fine Paper - North America 381 301 26.6 Europe 580 546 6.2 Southern Africa 85 78 9.0 Total 1,046 925 13.1 Forest Products - Pulp and paper operations 369 348 6.0 Forestry operations 416 323 28.8 Total 1,831 1,596 14.7 Nine Nine months months ended ended June 2004 June 2003 Metric tons Metric tons (000`s) (000`s) % change Sales Fine Paper - North America 1,080 1,012 6.7 Europe 1,779 1,663 7.0 Southern Africa 231 221 4.5 Total 3,090 2,896 6.7 Forest Products - Pulp and paper operations 1,126 1,080 4.3 Forestry operations 1,074 930 15.5 Total 5,290 4,906 7.8 Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 US$ million US$ million % change Sales Fine Paper - North America 363 319 13.8 Europe 512 481 6.4 Southern Africa 82 74 10.8 Total 957 874 9.5 Forest Products - Pulp and paper operations 212 174 21.8 Forestry operations 19 14 35.7 Total 1,188 1,062 11.9 Operating profit Fine Paper - North America (17) 9 - Europe 18 14 28.6 Southern Africa 3 10 (70.0) Total 4 33 (87.9) Forest Products 62 21 195.2 Corporate (6) (2) 200.0 Total 60 52 15.4 Reviewed Reviewed Nine Nine months months ended ended June 2004 June 2003 US$ million US$ million % change Sales Fine Paper - North America 1,018 1,026 (0.8) Europe 1,586 1,418 11.8 Southern Africa 225 196 14.8 Total 2,829 2,640 7.2 Forest Products - Pulp and paper operations 616 497 23.9 Forestry operations 48 39 23.1 Total 3,493 3,176 10.0 Operating profit Fine Paper - North America (91) 38 - Europe 60 95 (36.8) Southern Africa 11 29 (62.1) Total (20) 162 - Forest Products 145 91 59.3 Corporate (9) 2 - Total 116 255 (54.5) Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 US$ million US$ million % change Earnings before interest, tax, depreciation and amortisation charges Fine Paper - North America 16 40 (60.0) Europe 67 58 15.5 Southern Africa 7 12 (41.7) Total 90 110 (18.2) Forest Products 90 37 143.2 Corporate (5) (1) 400.0 Total 175 146 19.9 Net operating assets Fine Paper - North America 1,343 1,472 (8.8) Europe 1,724 1,665 3.5 Southern Africa 178 130 36.9 Total 3,245 3,267 (0.7) Forest Products 1,374 1,010 36.0 Corporate (44) (21) (109.5) Total 4,575 4,256 7.5 Reviewed Reviewed Nine Nine months months ended ended June 2004 June 2003 US$ million US$ million % change Earnings before interest, tax, depreciation and amortisation charges Fine Paper - North America 11 131 (91.6) Europe 207 223 (7.2) Southern Africa 21 36 (41.7) Total 239 390 (38.7) Forest Products 231 136 69.9 Corporate (8) 3 - Total 462 529 (12.7) Net operating assets Fine Paper - North America 1,343 1,472 (8.8) Europe 1,724 1,665 3.5 Southern Africa 178 130 36.9 Total 3,245 3,267 (0.7) Forest Products 1,374 1,010 36.0 Corporate (44) (21) (109.5) Total 4,575 4,256 7.5 SUPPLEMENTAL INFORMATION SUMMARY RAND CONVENIENCE TRANSLATION Reviewed Reviewed Quarter Quarter ended ended June 2004 June 2003 % change Sales (ZAR million) 7,835 8,104 (3.3) Operating profit (ZAR million) 396 397 (0.3) Net profit (ZAR million) 264 191 38.2 EBITDA * (ZAR million) 1,154 1,114 3.6 Operating profit to sales (%) 5.1 4.9 EBITDA * to sales (%) 14.7 13.7 Operating profit to average net assets (%) 5.4 4.9 EPS (SA cents) 119 84 41.7 Headline EPS (SA cents) * 119 84 41.7 Net debt (ZAR million) * Net debt to total capitalisation (%) * Cash generated by operations (ZAR million) 1,016 931 9.1 Cash retained from operating activities (ZAR million) 851 603 41.1 Net movement in cash and cash equivalents (ZAR million) 356 992 (64.1) * Refer to Supplemental Information for the definition of the term. Reviewed Reviewed Nine Nine months months ended ended June 2004 June 2003 % change Sales (ZAR million) 23,634 27,369 (13.6) Operating profit (ZAR million) 785 2,197 (64.3) Net profit (ZAR million) 284 1,155 (75.4) EBITDA * (ZAR million) 3,126 4,559 (31.4) Operating profit to sales (%) 3.3 8.0 EBITDA * to sales (%) 13.2 16.7 Operating profit to average net assets (%) 3.4 8.1 EPS (SA cents) 129 500 (74.2) Headline EPS (SA cents) * 129 500 (74.2) Net debt (ZAR million) * 10,426 11,673 (10.7) Net debt to total capitalisation (%) * 33.0 33.3 Cash generated by operations (ZAR million) 3,004 4,266 (29.6) Cash retained from operating activities (ZAR million) 934 1,603 (41.7) Net movement in cash and cash equivalents (ZAR million) (1,495) 1,275 - * Refer to Supplemental Information for the definition of the term. EXCHANGE RATES
