Supplemental information (this information has not been audited or reviewed)

General definitions

Average – averages are calculated as the sum of the opening and closing balances for the relevant period divided by two

Broad-based Black Economic Empowerment (BBBEE) charge – represents the IFRS 2 non-cash charge associated with the BBBEE transaction implemented in fiscal 2010 in terms of BBBEE legislation in South Africa

Capital employed – shareholders' equity plus net debt

EBITDA excluding special items – earnings before interest (net finance costs), taxation, depreciation, amortisation and special items

EPS excluding special items – earnings per share excluding special items and certain once-off finance and tax items

Fellings – the amount charged against the income statement representing the standing value of the plantations harvested

Headline earnings – as defined in circular 4/2018, issued by the South African Institute of Chartered Accountants in April 2018, which separates from earnings all separately identifiable remeasurements. It is not necessarily a measure of sustainable earnings. It is a Listings Requirement of the JSE Limited to disclose headline earnings per share

Interest cover – last 12 months EBITDA excluding special items to net interest adjusted for refinancing costs

NBSK – Northern Bleached Softwood Kraft pulp. One of the main varieties of market pulp, produced from coniferous trees (ie spruce, pine) in Scandinavia, Canada and northern USA. The price of NBSK is a benchmark widely used in the pulp and paper industry for comparative purposes

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

Net debt – current and non-current interest-bearing borrowings, bank overdrafts less cash and cash equivalents

Net debt to EBITDA excluding special items – net debt divided by the last 12 months EBITDA excluding special items

Net operating assets – total assets (excluding deferred tax assets and cash) less current liabilities (excluding interest-bearing borrowings and overdraft). Net operating assets equate to segment assets

Operating profit – A profit from business operations before deduction of net finance costs and taxes

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

ROCE – annualised return on average capital employed. Operating profit excluding special items divided by average capital employed

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 believes 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, non-recurring integration costs related to acquisitions, financial impacts of natural disasters, non-cash gains or losses on the price fair value adjustment of plantations and alternative fuel tax credits receivable in cash

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.

Summary Rand convenience translation

  Quarter ended   Nine months ended  
Jun 2019     Jun 2018   Jun 2019     Jun 2018   
Key figures: (ZAR million)                    
Sales 19,711     18,252   61,102     54,351  
Operating profit excluding special items(1) 690     1,074   4,171     4,225   
Special items – (gains) losses(1) 29     13   100     (280)  
EBITDA excluding special items(1) 1,697     1,958   7,147     6,846   
Profit for the period 115     644   2,292     2,749   
Basic earnings per share (SA cents) 21     120   423     511   
Net debt(1) 24,332     22,005   24,332     22,005   
Key ratios: (%)                    
Operating profit excluding special items to sales 3.5     5.9   6.8     7.8   
Operating profit excluding special items to capital employed (ROCE)(1) 5.2     9.6   10.8     12.7   
EBITDA excluding special items to sales 8.6     10.7   11.7     12.6   
(1)  Refer to supplemental information for the definition of the term.
The above financial results have been translated into Rand from US Dollar 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

  Jun
2019
    Mar
2019
Dec
2018
Sept
2018
Jun
2018
 
Exchange rates:                
Period end rate: US$1 = ZAR 14.0808     14.4975 14.4361 14.1473 13.7275  
Average rate for the quarter: US$1 = ZAR 14.3772     14.0203 14.3127 14.0615 12.6312  
Average rate for the year to date: US$1 = ZAR 14.2363     14.1668 14.3127 13.0518 12.7255  
Period end rate: €1 = US$ 1.1370     1.1218 1.1438 1.1609 1.1685  
Average rate for the quarter: €1 = US$ 1.1236     1.1360 1.1409 1.1626 1.1920  
Average rate for the year to date: €1 = US$ 1.1335     1.1385 1.1409 1.1902 1.1995  

Sappi share price – June 2016 to June 2019

(ZAR)