Condensed group income statement


  Quarter ended
US$ million Note     Dec 2023 Dec 2022
Sales       1,272 1,660
Cost of sales       1,084 1,332
Gross profit       188 328
Selling, general and administrative expenses       100 96
Other operating (income) expenses       179
Share of (profit) loss from equity accounted investees       2 1
Operating profit (loss) 3     (93) 231
Net finance costs       14
Finance costs       26 25
Finance income       (10) (23)
Net foreign exchange gain       (2) (2)
Profit (loss) before taxation       (107) 231
Taxation       19 41
Profit (loss) for the period       (126) 190
Basic earnings per share (US cents) 4     (23) 34
Weighted average number of shares in issue (millions)       559.3 566.2
Diluted earnings per share (US cents) 4     (23) 32
Weighted average number of shares on fully diluted basis (millions)       605.7 602.7

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Condensed group statement of other comprehensive income

  Quarter ended
US$ million     Dec 2023 Dec 2022
Profit (Loss) for the period     (126) 190
Other comprehensive income, net of tax        
Items that will not be reclassified subsequently to profit or loss    
Actuarial gains (losses) on post-employment benefit funds    
Tax effect    
Items that may be reclassified subsequently to profit or loss     25 70
Exchange differences on translation of foreign operations     16 39
Movements in hedging reserves     10 35
Tax effect     (1) (4)
Total comprehensive income for the period     (101) 260

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Condensed group balance sheet

  Reviewed
US$ million Note     Dec 2023 Sept 2023
ASSETS          
Non-current assets       3,907 3,742
Property, plant and equipment       2,985 2,886
Right-of-use assets       68 69
Plantations       535 488
Deferred tax assets       79 75
Goodwill and intangible assets       101 88
Equity accounted investees       10 9
Other non-current assets       129 127
Current assets       2,000 2,054
Inventories       823 777
Trade and other receivables       634 658
Derivative financial assets       6 14
Taxation receivable       4 4
Cash and cash equivalents       533 601
Total assets       5,907 5,796
EQUITY AND LIABILITIES          
Shareholders’ equity          
Ordinary shareholders’ interest       2,261 2,445
Non-current liabilities       2,074 2,035
Interest-bearing borrowings       1,341 1,329
Lease liabilities       60 61
Deferred tax liabilities       411 394
Defined benefit and other liabilities       262 251
Current liabilities       1,572 1,316
Interest-bearing borrowings       317 266
Lease liabilities       31 30
Trade and other payables       910 908
Provisions 8     185 80
Derivative financial liabilities       8 3
Taxation payable       36 29
Shareholders for dividend       85
Total equity and liabilities       5,907 5,796
Number of shares in issue at balance sheet date (millions)       559.9 558.8

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Condensed group statement of cash flows

Quarter ended
US$ million Dec 2023 Dec 2022
Profit (Loss) for the period (126) 190
Adjustment for:    
Depreciation, fellings and amortisation 87 80
Taxation 19 41
Net finance costs 14
Defined post-employment benefits paid 4 (5)
Plantation fair value adjustments (48) (24)
Asset impairments 2
(Profit) Loss on disposal of held-for-sale assets 1
Net restructuring provisions 136
(Profit) Loss on disposal and written-off assets (1)
Other non-cash items 34 11
Cash generated from operations 121 294
Movement in working capital (43) (174)
Closure and restructuring costs paid (43)
Finance costs paid (13) (39)
Finance income received 9 7
Taxation (paid) refund (10) (3)
Cash generated from operating activities 21 85
Cash utilised in investing activities (90) (62)
Capital expenditure (75) (58)
Proceeds on disposal of assets 1
Proceeds on held-for-sale assets 10
Other non-current and intangible asset movements (16) (14)
Net cash (utilised) (69) 23
Cash effects of financing activities (1) (243)
Proceeds from interest-bearing borrowings 40
Repayment of interest-bearing borrowings (35) (238)
Capital lease repayments (6) (5)
Net movement in cash and cash equivalents (70) (220)
Cash and cash equivalents at beginning of period 601 780
Translation effects 2 33
Cash and cash equivalents at end of period 533 593

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Condensed group statement of changes in equity

Quarter ended
US$ million Dec 2023 Dec 2022
Balance – beginning of period 2,445 2,358
Profit (Loss) for the period (126) 190
Other comprehensive income for the period 25 70
Issue of shares 3
Dividend –15 US cents (84) (85)
Share-based payment reserve 1 2
Balance – end of period 2,261 2,538
Comprising    
Ordinary share capital and premium 702 780
Non-distributable reserves 115 115
Foreign currency translation reserves (248) (191)
Hedging reserves (47) (51)
Retained earnings 1,739 1,885
Total equity 2,261 2,538

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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

Capital employed – shareholders’ equity plus net debt

Covenant leverage ratio – net debt divided by last 12 months' EBITDA excluding special items as defined by our bank covenants

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 1/2021, issued by the South African Institute of Chartered Accountants in March 2021, 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 and lease liabilities, 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, lease liabilities and overdraft)

Operating profit – 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
  • 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 and settlement gains or losses on defined benefit obligations

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
    Dec 2023 Dec 2022
Key figures (ZAR million)      
Sales   23,821 29,226
Operating profit excluding special items(1)   1,611 3,961
Special items – (gains) losses(1)   3,352 (106)
EBITDA excluding special items(1)   2,921 5,106
Profit for the period   (2,360) 3,345
Basic earnings per share (SA cents)   (422) 591
Net debt(1)   22,249 21,112
Key ratios (%)      
Operating profit excluding special items to sales   6.8 13.6
Operating profit excluding special items to capital employed (ROCE)(1)   9.9 24.7
EBITDA excluding special items to sales   12.3 17.5
(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

  Dec
2023
Sept
2023
Jun
2023
Mar
2023
Dec
2022
Exchange rates:          
Period-end rate: US$1 = ZAR 18.2969 18.9299 18.8338 17.7927 17.0119
Average rate for the quarter: US$1 = ZAR 18.7269 18.6387 18.6817 17.7489 17.6063
Average rate for the year to date: US$1 = ZAR 18.7269 18.1791 18.0221 17.6792 17.6063
Period-end rate: €1 = US$ 1.1037 1.0572 1.0912 1.0841 1.0704
Average rate for the quarter: €1 = US$ 1.0763 1.0881 1.0887 1.0729 1.0220
Average rate for the year to date: €1 = US$ 1.0763 1.0679 1.0612 1.0475 1.0220

Sappi share price - September 2021 to September 2023

Share price 2023