AGI
    LITYEXPAND

Group overview

Hummingbirds are the trapeze artists of the avian world. They can fly forwards, backwards, even upside down and are also the only vertebrae capable of hovering in place. In addition to being agile, hummingbirds are extraordinarily fast. They have been observed at speeds of nearly 48 kilometres per hour (km/h) in direct flight and over 72 km/h during courtship dives.

Adaptability is another hummingbird characteristic. These tiny birds have fewer feathers than other birds, because they need to have an efficient body that is as lightweight as possible in order for the flight aerobics they perform. As the insulation that they get from their feathers is insufficient, at night they go into torpor, a hibernation-like state that allows them to conserve energy by slowing down their metabolism, heartbeat and respiration rate. Furthermore, hummingbirds remember migration routes and every flower they’ve ever visited. They can also figure out how long to wait between visits so the flowers have time to generate more nectar.

Inherent in our approach is being agile to stay ahead of market changes, preferences, customer needs and expectations.

ON
    WARDSEXPAND

Creating value by responding strategically

When presented with a dandelion, few people can resist the urge to hold the flower and blow at it to see how far the seeds will travel. It’s the same when presented with a beautiful coffee table book or an impactful piece of print – there is an almost irresistible urge to pick it up, examine it and touch it. Studies have shown that even the simple act of touching objects, like premium packages, brochures and direct mail, can subconsciously increase the perceived value of a brand and its products in the eyes of customers.

Touch can make a stronger impact than sight or sound alone. That’s because touch has the power to shift the brain into a deeper level of engagement, one more conducive to building lasting knowledge. In fact, a number of studies have found that communication through physical media, particularly paper, is more likely to lead to knowledge than communication via digital media.

The haptics of paper and board, together with our need to touch and feel, have created high-growth, cash-generative niche opportunities for Sappi.

We continue to move onwards in terms of paper and paper packaging: Our paperboard packaging product lines are some of the most renowned and valued brands with high-finish premium solutions for cosmetics and perfume, health and beauty care, consumer electronics, confectionery, luxury drinks, food packaging and more. Our packaging brands constitute a great portion of the food packing and labels on shop shelves today. And our graphic papers are used to grab the attention of consumers all over the world.

BLO
    SSOMEXPAND

Our performance review

In mythology, the beautiful, delicate dragonfly symbolises change, transformation and adaptability. This change is said to be about understanding the deeper meaning of life, with the dragonfly’s scurrying flight across water representing an act of going beyond what’s on the surface to look into the deeper implications of life.

Looking beyond – and deeper – is reflected in our Thrive25 sustainability strategy which incorporates our belief that to continue thriving as a global business, we must create long-term value for all stakeholders by supporting a low-carbon circular economy through relevant products from sustainable woodfibre.

Our strategy also recognises that we must understand the forces that heavily impact our lives and work.

Dragonflies have huge compound eyes with thousands of lenses and photoreceptors sensitive to different wavelengths of light, each bringing in information about the insect's surroundings. In other words, they have near-360- degree vision. Which is why they’re able to go after their prey – butterflies, moths, bees and flies – with such accuracy.

At Sappi, we understand that by widening our scope to the broader ecosystem and a wide range of stakeholders, we can identify uncertainty and opportunity beyond our periphery of vision. We leverage insights into our operating context and patterns from our data, stay ahead of nascent technologies and draw on the acumen of our people, to embrace change and create innovative solutions that are relevant to all our stakeholders.

VELO
    CITYEXPAND

Governance and compensation

The cheetah’s light, streamlined body makes it well-suited to short, explosive bursts of speed, rapid acceleration and executing extreme changes in direction while moving at high speed. Contrary to the common belief that cheetahs – known to be the fastest land animal – hunt by simply chasing their prey at high speeds, they are in fact extremely strategic. They don’t randomly sprint towards anything, but wait until the timing is right, varying their speed during the chase. Speed and smartness are attributes that resonate with us at Sappi, given that ‘making smart decisions which we execute with speed’ are among our core values.

Under our Thrive25 strategy, we foster a safety-first culture, using collaboration and the power of partnerships to respond to changes in our environment, moving Sappi forward and deliver value to our customers.

AMP
    LIFYEXPAND

Governance and compensation

In a continuous flow of energy and life, water always finds the lowest level in an incredibly efficient manner. It penetrates any crevice or path that will facilitate its downward flow, steadily meandering and descending in search of lower planes.

In a similar fashion, our focus is on amplifying value creation for all our stakeholders. The landscape around us is changing rapidly. Stakeholders’ needs and expectations have shifted, in particular as regards the environment and social equity.

We are responding to natural resource constraints by seeking responsible alternatives to non-renewables and solutions that are truly sustainable from seed to final product. We strictly monitor and control our use of energy, water and other raw materials and are investing in reducing our reliance on fossil fuels.

We work to amplify value creation through innovation and R&D. Innovation is the way we operate that provides competitive advantages and ensures we grow, flourish and progress. R&D is focused on realising our ambitious but achievable strategy of extracting more value from each tree. Our strategy is supported by technology centres in each region which cover every section of the value chain. We deliver value by optimising our production processes, maximising existing capacity and work to constantly improve our best overall machine efficiency levels.

In the communities where we operate, we prioritise projects that support education, entrepreneurship and environment, as well as health and welfare, while working to break the cycle of poverty through stable, safe employment.

By amplifying value creation in this way, we accelerate and advance meaningful change.

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Five year review

for the year ended September 2021
US$ million   2021 2020 2019 2018 2017
Income statement            
Sales   5,265 4,609 5,746 5,806 5,296
Variable manufacturing and delivery costs   3,238 2,838 3,530 3,521 3,147
Fixed costs   1,777 1,673 1,771 1,767 1,601
Sundry expenses (income)(1)   47 41 43 38 22
Operating profit excluding special items   203 57 402 480 526
Special items – (gains) losses   57 95 19 (9) -
Operating profit (loss)   146 (38) 383 489 526
Net finance costs   134 88 85 68 80
Profit (loss) before taxation   12 (126) 298 421 446
Taxation charge   (1) 9 87 98 108
Profit (loss) for the year   13 (135) 211 323 338
EBITDA excluding special items   532 378 687 762 785
Balance sheet            
Total assets   6,186 5,455 5,623 5,670 5,247
Non-current assets   4,255 3,891 3,789 3,766 3,378
Current assets   1,931 1,564 1,834 1,904 1,869
Current liabilities   1,309 1,123 1,214 1,173 1,043
Shareholders' equity   1,970 1,632 1,948 1,947 1,747
Net debt   1,946 1,957 1,501 1,568 1,322
   Gross interest-bearing debt   2,312 2,236 1,894 1,931 1,872
   Cash   (366) (279) (393) (363) (550)
Capital employed   3,916 3,589 3,449 3,515 3,069
Cash flow            
   Cash generated from operations   472 323 673 709 748
   Decrease (increase) in working capital   39 65 (15) (79) (27)
   Finance costs paid   (110) (108) (51) (84) (96)
   Finance income received   8 6 9 18 15
   Taxation paid   (2) (26) (51) (73) (100)
   Dividends paid   (92) (81) (59)
Cash generated from operating activities   407 260 473 410 481
Net cash generated (utilised)   29 (257) 1 (254) 108
Cash effects of financing activities   33 138 56 68 (279)
Capital expenditure (gross)   374 351 471 541 357
   To maintain operations   176 126 148 167 140
   To expand operations   198 225 323 374 217
Exchange rates            
US$ per one Euro exchange rate – closing   1,172 1,163 1,094 1,161 1,181
US$ per one Euro exchange rate – average (financial year)   1,196 1,120 1,128 1,190 1,106
ZAR to one US$ exchange rate – closing   14,966 17,131 15,156 14,147 13,556
ZAR to one US$ exchange rate – average (financial year)   14,851 16,226 14,346 13,052 13,381
(1) Sundry items include all income and costs not directly related to manufacturing operations such as debtor securitisation costs, commissions paid and received and results of equity-accounted investments.
US$ million   2021 2020 2019 2018 2017
Statistics            
Number of ordinary shares (millions)(1)            
In issue at year end   561.5
546.1
542.8
539.3
535.0
Basic weighted average number of shares in issue during the year   549.7 545.5 542.0 538.1 533,9
Per share information (US cents)            
Basic earnings (loss)   2 (25) 39 60 63
Diluted earnings (loss)   2 (25) 39 59 62
Headline earnings (loss)   5 (19) 42 59 64
Diluted headline earnings (loss)   5 (19) 42 58 63
EPS excluding special items (US cents)   15 (5) 44 60 64
Net asset value   351 299 359 361 327
Profitability ratios (%)            
Operating profit (loss) to sales   2.8 (0.8) 6.7 8.4 9.9
Operating profit excluding special items to sales   3.9 1.2 7.0 8.3 9.9
EBITDA excluding special items to sales   10.1 8.2 12.0 13.1 14.8
Operating profit excluding special items to capital employed (ROCE)   5.4 1.6 11.0 14.6 18.0
Net debt to EBITDA excluding special items   3.7 5.2 2.2 2.1 1.7
Interest cover   5.5 4.7 9.3 11.0 9.1
Return on average equity (ROE)   0.7 (7.5) 10.0 17.5 21.6
Debt ratios (%)            
Net debt to total capitalisation   49.7 54.5 43.5 44.6 43.1
Efficiency ratios            
Asset turnover (times)   0.9 0.8 1.0 1.0 1.0
Inventory turnover ratio   5.6 6.3 7.0 6.7 7.0
Liquidity ratios            
Current asset ratio   1.5 1.4 1.5 1.6 1.8
Trade accounts receivable days outstanding (including receivables securitised)   47 44 46 45 45
Cash interest cover (times)   4.5 3.7 7.6 9.3 8.1
Other non-financial information(2)            
Sales volumes   7,339 6,788 7,622 7,591 7,410
Number of full-time equivalent employees   12,492 12,805 12,821 12,645 12,158
Lost time injury frequency rate (including contract employees)   0.38 0.35 0.54 0.43 0.44
Energy            
   Energy intensity (GJ/adt)   22.35 23.70 22.12 22.56 22.82
   Renewable energy to total energy(%)   52.44 53.06 51.65 50.33 52.33
Water            
   Specific process water extracted (m3/adt)   34.86 37.09 34.51 34.49 34.18
Waste            
   Specific total landfill (tonne/adt)   0.053 0.061 0.066 0.064 0.079
Emissions            
   Specific scope 1 emissions (ton CO2eq/adt)   0.68 0.71 0.66 0.69 0.68
   Absolute Scope 1 (ton CO2e)   4,273,189 4,082,708 4,425,323 4,451,642 4,327,137
   Specific scope 2 emissions (ton CO2 eq/adt)   0.16 0.20 0.22 0.23 0.24
   Absolute Scope 2 (ton CO2e)   1,022,586 1,152,771 1,482,328 1,483,552 1,545,343

Refer to share statistics section for other market and share-related information.

(1) Net of treasury shares (refer to note 19 to the group financial statements).
(2) Certain energy, water, waste and emissions data for the comparative years have been restated using the latest reporting standards and measurement methodology.

Note: Definitions for various terms and ratios used above are included in the glossary section.