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Sappi Limited - Results For The Quarter And Year Ended September 2004
Release Date: 08/11/2004 09:19:06 Code(s): SAP
SAPPI LIMITED - RESULTS FOR THE QUARTER AND YEAR ENDED SEPTEMBER 2004
SAPPI LIMITED
(Registration number 1936/008963/06)
Issuer Code: SAVVI
JSE Code: SAP
ISIN Code: ZAE 000006284
RESULTS FOR THE QUARTER AND YEAR ENDED SEPTEMBER 2004
* Headline EPS 26 US cents for the quarter; 45 US cents for the year
* Demand strong
* US coated paper prices improving
* Raw material cost pressure
* Dividend 30 US cents
Summary
Quarter ended
September June September **
2004 2004 2003
Sales (US$ million) 1,235 1,188 1,123
Operating profit (US$ million) 72 60 17
EBITDA (US$ million) * 191 175 122
Operating profit to sales (%) 5.8 5.1 1.5
EBITDA to sales (%) * 15.5 14.7 10.9
Operating profit to average net
assets (%) * 6.3 5.4 1.5
Headline EPS (US cents) * 26 18 11
EPS (US cents) 25 18 4
Return on average equity (ROE) (%) * 10.7 7.9 1.9
Net debt (US$ million) * 1,584 1,649 1,491
Net debt to total capitalisation (%) * 32.0 33.3 31.1
Year ended
September September**
2004 2003
Sales (US$ million) 4,728 4,299
Operating profit (US$ million) 188 272
EBITDA (US$ million) * 653 667
Operating profit to sales (%) 4.0 6.3
EBITDA to sales (%) * 13.8 15.5
Operating profit to average net
assets (%) * 4.2 6.7
Headline EPS (US cents) * 45 69
EPS (US cents) 43 62
Return on average equity (ROE) (%) * 4.8 8.1
Net debt (US$ million) * 1,584 1,491
Net debt to total capitalisation (%) * 32.0 31.1
* Refer to Supplemental Information for the definition of the term.
** Restated for AC 137
Comment
We have seen a further improvement in the market for coated paper across all
our regions during the quarter. Demand for coated fine paper grew strongly,
with apparent consumption up 12% in North America and 8% in Europe compared to
the same quarter last year.
Prices for coated paper started to improve in North America. In Europe, prices
remained stable ahead of the increase announced for implementation at the end
of the quarter.
Pulp prices softened during the quarter and the average hardwood pulp price was
below the previous quarter but still well up on a year earlier. The average NBSK
benchmark price was similar to the prior quarter.
A number of other factors had a notable impact on Sappi`s performance in the
quarter. The continued strength of the Rand relative to the US dollar, up
16% compared to the equivalent quarter last year, further squeezed the
margins of our South African businesses. Our North American mills faced
continued high wood costs and all regions faced higher energy costs and
higher costs of other raw materials related to changes in the price of oil.
Sappi`s earnings and headline earnings per share for the quarter were 25 US
cents and 26 US cents respectively, compared to 4 US cents and 11 US cents for
the equivalent quarter last year.
The gain at the operating income level from the fair value adjustment on
plantations, net after fellings was US$12 million for the quarter, down from
US$33 million in the June 2004 quarter.
Finance costs for the quarter were US$5 million higher than a year ago, largely
as a result of slightly higher interest paid and a foreign exchange gain last
year, which was not repeated in the quarter.
Taxation in the quarter included credits of US$13 million related to the
conclusion of the Austrian tax audit and the reversal of certain other tax
provisions previously raised. The effective rate was also reduced by the
geographic split of profits and losses.
For the full year, sales were US$4.7 billion, 10.0% higher than last year.
Operating profit was 30.9% lower at US$188 million mainly as a result of low
prices in operating currencies, the effect of the strong Rand on our South
African margins and higher wood and energy costs. The margin of operating
profit to sales declined to 4.0% compared to 6.3% last year. The operating
margin in the quarter, however, recovered to 5.8%.
Headline earnings per share for the full year was 45 US cents compared to 69
US cents in the prior year.
Cash flow and net debt
Cash generated by operations strengthened to US$157 million for the quarter,
5.4% higher than a year earlier. Cash generated by operations for the full year
fell from US$644 million last year to US$601 million.
Working capital decreased by US$79 million in the quarter, mainly as a result
of increased payables and lower inventories partly offset by higher receivables.
Capital expenditure was US$110 million for the quarter, and for the full year
was US$334 million. Capital expenditure to depreciation for the year was 82%,
which was in line with our target.
Net debt decreased by US$65 million in the quarter to US$1,584 million. The
increase of net debt for the full year of US$93 million is almost entirely due
to currency translation.
Operating Review for the Quarter
Sappi Fine Paper
Quarter ended
Sept. 2004 Sept. 2003 %
US$ million US$ million change
Sales 982 917 7.1
Operating profit * 26 2 -
Operating profit to sales (%) 2.6 0.2 -
EBITDA * 112 81 38.3
EBITDA to sales (%) 11.4 8.8 -
RONOA p.a. (%) 3.2 0.2 -
Quarter ended
June 2004
US$ million
Sales 957
Operating profit * 4
Operating profit to sales (%) 0.4
EBITDA * 90
EBITDA to sales (%) 9.4
RONOA p.a. (%) 0.5
* EBITDA and operating profit for the quarter ended September 2003 reduced by
US$31.5 million in respect of machine closure
We continued to see strong order inflow in the quarter in our major markets.
Our average prices realised increased in North America but there was little
movement in average prices realised in Europe.
The operating result from our North American business improved by US$16 million
compared to the June 2004 quarter, aided by lower maintenance costs and higher
selling prices.
Europe
Quarter ended
Sept. 2004 Sept. 2003 % change
US$ million US$ million (US$)
Sales 541 485 11.5
Operating profit 23 23 -
Operating profit to sales (%) 4.3 4.7 -
EBITDA 70 66 6.1
EBITDA to sales (%) 12.9 13.6 -
RONOA p.a. (%) 5.4 5.6 -
Quarter ended
% change June 2004
(Euro) US$ million
Sales 3.3 512
Operating profit (7.4) 18
Operating profit to sales (%) - 3.5
EBITDA (1.8) 67
EBITDA to sales (%) - 13.1
RONOA p.a. (%) - 4.2
Our European business had good volume growth in the quarter with total sales
volume increasing 6.8% compared to the equivalent quarter last year.
Average prices realised remained low and were at similar levels to the prior
quarter in Dollar and Euro terms. Compared to a year earlier, prices were
approximately 3% lower in Euros and 4% higher in Dollar terms.
North America
Quarter ended
Sept. 2004 Sept. 2003 %
US$ million US$ million change
Sales 355 358 (0.8)
Operating (loss) profit * (1) (27) -
Operating profit to sales (%) (0.3) (7.5) -
EBITDA * 35 6 483.3
EBITDA to sales (%) 9.9 1.7 -
RONOA p.a. (%) (0.3) (7.4) -
Quarter ended
June 2004
US$ million
Sales 363
Operating (loss) profit * (17)
Operating profit to sales (%) -
EBITDA * 16
EBITDA to sales (%) 4.4
RONOA p.a. (%) -
* EBITDA and operating profit for the quarter ended September 2003 reduced by
US$31.5 million in respect of machine closure
Market conditions continued to improve in the quarter. Shipments of coated paper
from our North American business for the fiscal year grew ahead of industry
shipments. Pulp sales volumes for the quarter fell both sequentially and on last
year as a result of higher internal consumption. Paper orders and production
were strong; however, sales volumes were down on both periods. This shortfall
was due factors that affected the timing of sales between quarters including
reduced transport availability.
Price increases were realised during the quarter. However, the price protection
afforded to contract customers during the earlier weak market conditions has
limited the pace at which we could implement new prices, despite current strong
market conditions.
Our costs have been impacted by higher raw material prices. The largest
increases compared to the same quarter last year were in wood and energy which
were up US$5 million and US$3 million respectively. Higher oil prices started to
have a knock-on impact on other purchased chemicals and also on transport costs
which are already inflated due to tightness in transport markets.
Fine Paper South Africa
Quarter ended
Sept. 2004 Sept. 2003 % change
US$ million US$ million (US$)
Sales 86 74 16.2
Operating profit 4 6 (33.3)
Operating profit to sales (%) 4.7 8.1 -
EBITDA 7 9 (22.2)
EBITDA to sales (%) 8.1 12.2 -
RONOA p.a. (%) 9.7 18.4 -
Quarter ended
% change June 2004
(Rand) US$ million
Sales 0.4 82
Operating profit (42.4) 3
Operating profit to sales (%) - 3.7
EBITDA (32.8) 7
EBITDA to sales (%) - 8.5
RONOA p.a. (%) - 7.0
Demand for fine paper in South Africa was firm in the quarter and volumes sold
were 10% up compared to a year earlier. Margins, however, were further squeezed
by price pressure resulting from the strong Rand.
Forest Products
Quarter ended
Sept. 2004 Sept. 2003 % change
US$ million US$ million (US$)
Sales 253 206 22.8
Operating profit * 46 22 109.1
Operating profit to sales (%) * 18.2 10.7 -
EBITDA * 80 48 66.7
EBITDA to sales (%) * 31.6 23.3 -
RONOA p.a. (%) * 13.8 8.7 -
Quarter ended
% change June 2004
(Rand) US$ million
Sales 6.1 231
Operating profit * 80.7 62
Operating profit to sales (%) * - 26.8
EBITDA * 44.0 90
EBITDA to sales (%) * - 39.0
RONOA p.a. (%) * - 18.7
* Restated for AC 137
The Forest Products business had strong demand in the South African market in
the quarter but further Rand appreciation depressed prices as a result of
greater competition from importers. Demand for our chemical cellulose
(dissolving) pulp has been strong and prices increased slightly compared to the
June 2004 quarter. The chemical cellulose pulp business continued to perform
well.
Costs continued to be well managed and our fixed expenses were flat in Rand
terms compared to the equivalent quarter last year.
Dividend
The board has declared a dividend of 30 US cents for the year ended
September 2004. A dividend of 29 US cents was paid in the previous year.
Outlook
Many of the factors which affect demand for our products, including economic
growth in our major markets and advertising spending, are favourable and are
expected to sustain strong demand.
After an extended period of weak prices and overcapacity, demand improvement
and higher operating rates support price increases in our major markets.
These benefits are likely to be more than offset in the near term by increased
input costs, many of which are related to high energy prices.
The strength of the Rand against the US Dollar continues to place pressure on
the price realisations of our South African business despite good demand for
its products. The Rand has strengthened further since the end of the reporting
period and if sustained at this level will have a detrimental effect on future
earnings.
We are nonetheless positive about the outlook for our business. Operating rates
are high and we expect significant price improvement in the beginning of the new
calendar year. However, the result in our first financial quarter will reflect
scheduled maintenance downtime across the group and repair work at Somerset with
a direct cost of approximately US$20 million. These costs, coupled with rising
energy and raw materials prices and a charge from the implementation of a new
South African accounting standard relating to secondary tax on companies (STC),
will make it difficult for us to achieve positive earnings in the first
financial quarter.
On behalf of the Board
J C A Leslie
Director
D G Wilson
Director
8 November 2004
Dividend Announcement
The directors have declared a dividend (number 81) of 30 US cents per share for
the year ended September 2004.
In compliance with the requirements of STRATE, the JSE Securities Exchange`s
electronic settlement system which is applicable to Sappi, the Salient dates in
respect of the dividend will be as follows:
Last day to trade to qualify for dividend Friday 31 December 2004
Date on which shares commence trading ex-dividend Monday 3 January 2005
Record date Friday 7 January 2005
Payment date Monday 10 January 2005
Dividends payable from the Johannesburg transfer office will be paid in South
African Rands except that dividends paid to nominee shareholders in respect of
shares which they hold on behalf of non-residents of the Republic of South
Africa will, without exception, be paid in United States Dollars.
Dividends payable from the London transfer office will be paid in British
pounds sterling or in the case of shareholders with registered addresses in the
USA, in United States Dollars.
Dividends payable other than in United States Dollars will be calculated at the
respective rates of exchange ruling on Tuesday, 21 December 2004.
There will not be any de-materialisation nor re-materialisation of Sappi
Limited share certificates from 3 January to 7 January 2005, both days
inclusive.
Sappi Management Services (Pty) Limited
Secretaries
Per D J O`Connor
8 November 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 (or
from past results). Such risks, uncertainties and factors include, but are not
limited to the highly cyclical nature of the pulp and paper industry (and the
factors that contribute to such cyclicality, such as levels of demand,
production capacity, production and pricing), adverse changes in the markets for
the group`s products, consequences of substantial leverage, changing regulatory
requirements, unanticipated production disruptions, economic and political
conditions in international markets, the impact of investments, acquisitions and
dispositions (including related financing), any delays, unexpected costs or
other problems experienced with integrating acquisitions and achieving expected
savings and synergies and currency fluctuations. The company undertakes no
obligation to publicly update or revise any of these forward-looking statements,
whether to reflect new information or future events or circumstances or
otherwise.
GROUP INCOME STATEMENT
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2004 Sept 2003
US$ million US$ million % change
Sales 1,235 1,123 10.0
Cost of sales 1,071 988
Gross profit 164 135 21.5
Selling, general &
administrative expenses 88 87
76 48
Other expenses 4 31
Operating profit 72 17 323.5
Net finance costs 26 21
Net paid 28 27
Capitalised - -
Net foreign exchange
gains - (3)
Change in fair value of
financial instruments (2) (3)
Profit (loss) before tax 46 (4) -
Taxation - current 15 (12)
- deferred (25) (1)
Net profit 56 9 522.2
Earnings per share
(US cents) 25 4
Headline earnings per
share (US cents) * 26 11
Weighted average
number of shares in
issue (millions) 226.5 227.7
Diluted earnings per
share (US cents) 25 4
Diluted headline earnings
per share (US cents) * 26 11
Weighted average
number of shares on
fully diluted basis
(millions) 228.3 230.0
Calculation of Headline
earnings *
Net profit 56 9
Profit on disposal of
business and property,
plant & equipment - -
Write-off of assets 3 2
Mill closure costs - 14
Headline earnings 59 25
Reviewed Reviewed
Year Year
ended ended
Sept 2004 Sept 2003
US$ million US$ million % change
Sales 4,728 4,299 10.0
Cost of sales 4,133 3,684
Gross profit 595 615 (3.3)
Selling, general &
administrative expenses 403 316
192 299
Other expenses 4 27
Operating profit 188 272 (30.9)
Net finance costs 110 111
Net paid 106 120
Capitalised (2) (2)
Net foreign exchange
gains (5) (1)
Change in fair value of
financial instruments 11 (6)
Profit (loss) before tax 78 161 (51.6)
Taxation - current 48 18
- deferred (68) -
Net profit 98 143 (31.5)
Earnings per share
(US cents) 43 62
Headline earnings per
share (US cents) * 45 69
Weighted average
number of shares in
issue (millions) 226.3 229.1
Diluted earnings per
share (US cents) 43 62
Diluted headline earnings
per share (US cents) * 44 68
Weighted average
number of shares on
fully diluted basis
(millions) 228.2 231.5
Calculation of Headline
earnings *
Net profit 98 143
Profit on disposal of
business and property,
plant & equipment - (4)
Write-off of assets 3 3
Mill closure costs - 15
Headline earnings 101 157
* Headline earnings disclosure is required by the JSE Securities Exchange
South Africa.
GROUP BALANCE SHEET
Reviewed Reviewed
Sept 2004 Sept 2003
US$ million US$ million
ASSETS
Non-current assets 4,526 4,242
Property, plant and equipment 3,670 3,554
Plantations 548 432
Deferred taxation 46 41
Other non-current assets 262 215
Current assets 1,580 1,575
Cash and cash equivalents 484 584
Trade and other receivables 331 290
Inventories 765 701
Total assets 6,106 5,817
EQUITY AND LIABILITIES
Shareholders` equity
Ordinary shareholders` interest 2,119 1,945
Non-current liabilities 2,463 2,511
Interest-bearing borrowings 1,693 1,742
Deferred taxation 453 487
Other non-current liabilities 317 282
Current liabilities 1,524 1,361
Interest-bearing borrowings 364 170
Bank overdraft 11 163
Taxation payable 137 112
Other current liabilities 1,012 916
Total equity and liabilities 6,106 5,817
Number of shares in issue at
balance sheet date (millions) 226.5 226.9
GROUP CASH FLOW STATEMENT
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2004 Sept 2003
US$ million US$ million
Cash generated by
operations 157 149
Movement in working
capital 79 104
Net finance costs (28) (21)
Taxation (paid) recovered (1) 2
Dividends paid - -
Cash retained from
operating activities 207 234
Cash effects of investing
activities (109) (130)
98 104
Cash effects of financing
activities (9) 6
Net movement in cash
and cash equivalents 89 110
Reviewed Reviewed
Year Year
ended ended
Sept 2004 Sept 2003
US$ million US$ million
Cash generated by
operations 601 644
Movement in working
capital (50) (79)
Net finance costs (109) (113)
Taxation (paid) recovered (31) 33
Dividends paid (66) (65)
Cash retained from
operating activities 345 420
Cash effects of investing
activities (356) (309)
(11) 111
Cash effects of financing
activities (121) 147
Net movement in cash
and cash equivalents (132) 258
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Reviewed Reviewed
Year Year
ended ended
Sept 2004 Sept 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 98 143
Foreign currency translation reserve 150 332
Revaluation of derivative instruments 1 (14)
Dividends paid - US$ 0.29
(2003: US$ 0.28) per share (66) (65)
Share buybacks net of transfers to participants
of the share purchase trust (9) (48)
Balance - end of year 2,119 1,945
NOTES TO THE GROUP RESULTS
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
of changes in shareholders` equity. The effect on net profit for the current
quarter is an increase of US$11 million, net of US$3 million tax (June 2004
quarter: increase of US$21 million, net of US$11 million tax; September 2003
quarter: decrease of US$1 million, minimal tax) and an increase of US$47
million, net of US$19 million tax for the year ended September 2004 (September
2003: a decrease of US$6 million, net of US$2 million tax). Where appropriate,
comparative figures have been restated. The restatement has had minimal effect
upon the basic and headline earnings per share for the September 2003 quarter,
but decreased the basic and headline earnings per share by 3 US cents and 2 US
cents for the year ended September 2003, respectively.
The preliminary results for the quarter have been reviewed in terms of South
African Auditing Standards 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
of the 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 a decrease in operating profit of US$31 million
for the quarter and US$27 million for the year ended September 2003.
Certain comparative amounts have been reclassified between deferred tax and
current tax. This had no effect on reported net income or shareholders` equity.
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2004 Sept 2003
US$ 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 103 93
Other amortisation - -
103 93
Fair value adjustment
(gains) on plantations
(included in cost of sales)
Changes in volume
Fellings 16 12
Growth (10) (14)
6 (2)
Changes in fair value (18) 4
(12) 2
The above fair value
adjustment gains have
been partially offset by
silviculture costs 11 9
4. Capital expenditure
Property, plant and
equipment 110 126
Reviewed Reviewed
Year Year
ended ended
Sept 2004 Sept 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 408 352
Other amortisation 2 1
410 353
Fair value adjustment
(gains) on plantations
(included in cost of sales)
Changes in volume
Fellings 55 42
Growth (54) (46)
1 (4)
Changes in fair value (71) 4
(70) -
The above fair value
adjustment gains have
been partially offset by
silviculture costs 39 30
4. Capital expenditure
Property, plant and
equipment 334 296
notes to the group results (continued)
Reviewed Reviewed
Sept 2004 Sept 2003
US$ million US$ million
5. Capital commitments
Contracted but not provided 76 86
Approved but not contracted 198 193
274 279
6. Contingent liabilities
Guarantees and suretyships 68 47
Other contingent liabilities 15 24
supplemental information
DEFINITIONS
Average - averages are calculated as the sum of the opening and closing balances
for the relevant period divided by two
* EBITDA - earnings before interest (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.
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 price of NBSK is a benchmark widely used in the pulp and paper
industry for comparative purposes.
* Net assets - total assets less current liabilities
* Net asset value - shareholders` equity plus net deferred tax
* Net asset value per share - net asset value divided by the number of shares
in issue at balance sheet date.
* Net debt - current and non-current interest-bearing borrowings, and bank
overdrafts (net of cash, cash equivalents and short-term deposits)
* Net debt to total capitalisation - Net debt divided by shareholders` equity
plus minority interest, non-current liabilities, current interest-bearing
borrowings and overdraft
* ROE - return on average equity. Net profit divided by average shareholders`
equity
* RONA - operating profit divided by average net assets
* RONOA - operating profit divided by average net operating assets. Net
operating assets are total assets (excluding deferred taxation and cash) less
current liabilities (excluding interest-bearing borrowings and bank overdraft)
* The above financial measures, other than headline earnings per share, are
presented to assist our shareholders and the investment community in
interpreting our financial results. These financial measures are regularly used
and compared between companies in our industry.
SUPPLEMENTAL INFORMATION
additional information
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2004 Sept 2003
US$ million US$ million
Net profit to EBITDA *
reconciliation
Net profit 56 9
Net finance costs 26 21
Taxation - current 15 (12)
- deferred (25) (1)
Depreciation 103 93
Amortisation (including
fellings) 16 12
EBITDA * 191 122
Reviewed Reviewed
Year Year
ended ended
Sept 2004 Sept 2003
US$ million US$ million
Net profit to EBITDA *
reconciliation
Net profit 98 143
Net finance costs 110 111
Taxation - current 48 18
- deferred (68) -
Depreciation 408 352
Amortisation (including
fellings) 57 43
EBITDA * 653 667
Reviewed Reviewed
Sept 2004 Sept 2003
US$ million US$ million
Net debt (US$ million) ** 1,584 1,491
Net debt to total capitalisation (%) ** 32.0 31.1
Net asset value per share (US$) ** 11.15 10.54
* In connection with the US 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 effect on EBITDA for the amended definition is a decrease of US$31
million for the quarter and US$27 million for the year ended September 2003 and
a decrease of US$4 million for the quarter and US$4 million for the year ended
September 2004.
We use EBITDA as an internal measure of performance and believe it is a useful
and commonly used measure of financial performance in addition to operating
profit and other profitability measures under SA GAAP. EBITDA is not a measure
of performance under SA GAAP. EBITDA should not be construed as an alternative
to operating profit as an indicator of the company`s operations in accordance
with SA GAAP. EBITDA is also presented to assist our shareholders and the
investment community in interpreting our financial results. This financial
measure is regularly used as a means of comparison of companies in our industry
by removing certain differences between companies such as depreciation methods,
financing structures and taxation regimes. Different companies and analysts may
calculate EBITDA differently, so making comparisons among companies on this
basis should be done very carefully.
** Refer to supplemental information for the definition of the term.
SUPPLEMENTAL INFORMATION
regional information
Quarter Quarter
ended ended
Sept 2004 Sept 2003
Metric tons Metric tons
(000`s) (000`s) % change
Sales
Fine Paper - North America 364 371 (1.9)
Europe 609 570 6.8
Southern Africa 87 79 10.1
Total 1,060 1,020 3.9
Forest Products - Pulp and
paper operations 390 394 (1.0)
Forestry operations 453 355 27.6
Total 1,903 1,769 7.6
Year Year
ended ended
Sept 2004 Sept 2003
Metric tons Metric tons
(000`s) (000`s) % change
Sales
Fine Paper - North America 1,444 1,383 4.4
Europe 2,388 2,233 6.9
Southern Africa 318 300 6.0
Total 4,150 3,916 6.0
Forest Products - Pulp and
paper operations 1,516 1,474 2.8
Forestry operations 1,527 1,285 18.8
Total 7,193 6,675 7.8
Reviewed Reviewed
Quarter Quarter
ended ended
Sept 2004 Sept 2003
US$ million US$ million % change
Sales
Fine Paper - North America 355 358 (0.8)
Europe 541 485 11.5
Southern Africa 86 74 16.2
Total 982 917 7.1
Forest Products - Pulp and
paper operations 231 192 20.3
Forestry operations 22 14 57.1
Total 1,235 1,123 10.0
Operating profit
Fine Paper - North America (1) (27) (96.3)
Europe 23 23 -
Southern Africa 4 6 (33.3)
Total 26 2 1,200.0
Forest Products 46 22 109.1
Corporate - (7) (100.0)
Total 72 17 323.5
Reviewed Reviewed
Year Year
ended ended
Sept 2004 Sept 2003
US$ million US$ million % change
Sales
Fine Paper - North America 1,373 1,384 (0.8)
Europe 2,127 1,903 11.8
Southern Africa 311 270 15.2
Total 3,811 3,557 7.1
Forest Products - Pulp and
paper operations 847 689 22.9
Forestry operations 70 53 32.1
Total 4,728 4,299 10.0
Operating profit
Fine Paper - North America (92) 11 -
Europe 83 118 (29.7)
Southern Africa 15 35 (57.1)
Total 6 164 (96.3)
Forest Products 191 113 69.0
Corporate (9) (5) 80.0
Total 188 272 (30.9)
SUPPLEMENTAL INFORMATION
regional information (continued)
Quarter Quarter
ended ended
Sept 2004 Sept 2003
US$ million US$ million % change
Earnings before interest,
tax, depreciation and
amortisation charges
Fine Paper - North America 35 6 483.3
Europe 70 66 6.1
Southern Africa 7 9 (22.2)
Total 112 81 38.3
Forest Products 80 48 66.7
Corporate (1) (7) (85.7)
Total 191 122 56.6
Net operating assets
Fine Paper - North America 1,351 1,438 (6.1)
Europe 1,673 1,607 4.1
Southern Africa 153 131 16.8
Total 3,177 3,176 -
Forest Products 1,296 1,007 28.7
Corporate (46) (19) (142.1)
Total 4,427 4,164 6.3
Year Year
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