Edgar Filing: SAPPI LTD

Page 1

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of November, 2010

Commission file number: 1-14872

SAPPI LIMITED

(Translation of registrant’s name into English)

48 Ameshoff Street

Braamfontein

Johannesburg 2001

REPUBLIC OF SOUTH AFRICA

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or
Form 40-F.

Form 20-F

-------

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted

by Regulation S-T Rule 101(b) (1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted

by Regulation S-T Rule 101(b) (7):

Indicate by check mark whether by furnishing the information contained in this Form, the

registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes

-------

If “Yes” is marked, indicate below the file number assigned to the registrant in

connection with Rule 12g3-2(b): 82-

INCORPORATION BY REFERENCE

Sappi Limited’s report for the conformed fourth quarter results ended September 2010, furnished by the
Registrant under this Form 6-K, is incorporated by reference into (i) the Registration Statements on
Form S-8 of the Registrant filed December 23, 1999, December 15, 2004 and February 2, 2010 in
connection with The Sappi Limited Share Incentive Scheme, (ii) the Section 10(a) Prospectus relating to
the offer and sale of the Registrant’s shares to Participants under The Sappi Limited Share Incentive
Scheme, (iii) the Registration Statements on Form S-8 of the Registrant filed December 15, 2004 and
December 21, 2005 in connection with The Sappi Limited 2004 Performance Share Incentive Plan and
(iv) the Section 10(a) Prospectus relating to the offer and sale of the Registrant’s shares to Participants
under The Sappi Limited 2004 Performance Share Incentive Plan. This Form 6-K includes a conformed
version of the earnings announcement sent by the Registrant to its shareholders. This conformed
version was prepared solely for purposes of supplementing the documents referred to in clauses (i) - (iv)
above.

FORWARD-LOOKING STATEMENTS

In order to utilize the “Safe Harbor” provisions of the United States Private Securities Litigation Reform
Act of 1995 (the “Reform Act”), Sappi Limited (the “Company”) is providing the following cautionary
statement. Except for historical information contained herein, statements contained in this Report on
Form 6-K may constitute “forward-looking statements” within the meaning of the Reform Act. The words
“believe”, “anticipate”, “expect”, “intend”, “estimate “, “plan”, “assume”, “positioned”, “will”, “may”,
“should”, “risk” and other similar expressions, which are predictions of or indicate future events and
future trends, which do not relate to historical matters, identify forward-looking statements. In addition,
this Report on Form 6-K may include forward-looking statements relating to the Company’s potential
exposure to various types of market risks, such as interest rate risk, foreign exchange rate risk and
commodity price risk. Reliance should not be placed on forward-looking statements because they
involve known and unknown risks, uncertainties and other factors which are in some cases beyond the
control of the Company, together with its subsidiaries (the “Group”), and may cause the actual results,
performance or achievements of the Group to differ materially from anticipated future results,
performance or achievements expressed or implied by such forward-looking statements (and from past
results, performance or achievements). Certain factors that may cause such differences include but are
not limited to: the impact of the global economic downturn, 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, input costs including raw material, energy and employee costs, and pricing),
adverse changes in the markets for the group’s products, consequences of substantial leverage,
including as a result of adverse changes in credit markets that affect our ability to raise capital when
needed, changing regulatory requirements, unanticipated production disruptions (including as a result
of planned or unexpected power outages), 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. These and other risks, uncertainties
and factors are discussed in the Company’s Annual Report on Form 20-F and other filings with and
submissions to the Securities and Exchange Commission, including this Report on Form 6-K.
Shareholders and prospective investors are cautioned not to place undue reliance on these
forward-looking statements. These forward-looking statements are made as of the date of the
submission of this Report on Form 6-K and are not intended to give any assurance as to future results.
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.

4th Quarter

results for the 4

quarter and

year ended September 2010

Form S-8 Version

sappi

For the period ended September 2010

Coated fine paper

64%

Uncoated fine paper

Coated specialities

Commodity paper

Pulp

14%

Other

North America

21%

Europe

55%

Southern Africa

24%

Sales by product group*

Sales by source*

North America

22%

Europe

48%

Southern Africa

13%

Asia and other

17%

Sales by destination*

fourth quarter

fourth quarter results

Financial summary for the quarter

4th Quarter results

➪

Operating profit US$158 million; Q4 2009 loss of US$129 million

➪

EPS 16 US cents; Q4 2009 loss per share of 20 US cents

➪

Cash generated from operating and investing activities

US$238 million; Q4 2009 US$225 million

➪

Coated paper prices increasing; pulp prices high

➪

Strong Demand

➪

Strong Liquidity

Quarter ended

Year ended

Sept 2010

Jun 2010

Sept 2009

Sept 2010 Sept 2009

Key figures: (US$ million)
Sales

1,774

1,602 1,553

6,572

5,369

Operating profit (loss)

158

154

(129)

341

(73)

Basic earnings (loss) per share
(US cents)

(20)

(37)

Key ratios: (%)
Operating profit (loss) to sales

8.9

9.6

(8.3)

5.2

(1.4)

Commentary on the quarter

The group had a much improved performance for the quarter, achieving the highest quarterly operating

profit excluding the plantation price fair value adjustment for a number of years and cash generated from

operating and investing activities of US$238 million. The performance of each of the businesses improved,

particularly those of North America and Southern Africa which are net sellers of pulp and therefore

benefited from high pulp prices.

Demand conditions continued to improve gradually and almost all our mills ran at full capacity for the

quarter. In Europe, we implemented a price increase during September (the third since March) which has

started to offset the effect of the substantial increase in pulp input costs experienced over the past year

and to restore reasonable margins.

Sales increased to US$1.8 billion, a 14% increase on sales in the equivalent quarter last year as a result

of increased sales volumes and prices.

Average prices realised by the group were 3% higher than a year ago in US Dollar terms. In local currency,

average prices increased by 11% in Europe, 8% in North America and, largely as a result of high pulp

prices, 25% in South Africa.

Raw material input costs were up approximately US$100 million compared to the equivalent quarter last

year, mainly as a result of higher pulp prices.

The plantation price fair value adjustment was a gain of US$29 million for the quarter.

Operating profit was US$158 million for the quarter, a substantial improvement compared to a loss of

US$129 million in the equivalent quarter last year.

Earnings per share for the quarter were 16 US cents, compared to a loss of 20 US cents in the equivalent

quarter last year.

Year ended September 2010 compared to year ended
September 2009

2010 was a much improved year for Sappi. Sales for the year were 22% higher than the prior year as

a result of improving demand, favourable currency movements and the inclusion of the coated paper

businesses acquired from M-real for the full year in 2010 compared to 9 months in 2009.

Operating profit was US$341 million compared to a loss of US$73 million in the prior year.

The group generated a net profit of US$66 million for the year and earnings per share of 13 US cents

compared to a net loss of US$177 million and a loss per share of 37 US cents last year.

fourth quarter

fourth quarter results

Cash flow and debt

Quarter

Cash generated from operating and investing activities was US$238 million for the quarter reflecting

improved cash generated by operations, and cash released from working capital of US$181 million.

Year

Over the financial year, cash generated from operating and investing activities was US$341 million.

At year end we had cash on hand of US$792 million and had additional liquidity in the form of a

209 million (US$282 million) committed revolving credit facility. During the year, we used approximately

US$250 million of our cash to repay debt early. Capital expenditure of US$188 million for the year was in

line with our target of US$200 million.

Operating Review for the Quarter

Sappi Fine Paper

Quarter

ended

ended ended

Sept 2010

Sept 2009

June 2010

US$ million

change

US$ million

Sales

1,327

1,208

10 1,220

Operating profit

–* 36

Operating profit to sales (%)

6.6

0.1

– 3.0

* Comparative not meaningful.

The Fine Paper business achieved an operating profit of US$87 million for the quarter, a substantial

improvement compared to the equivalent quarter last year as a result of improved demand levels in our

major markets and improving prices.

Europe

Quarter

ended

ended % %

ended

Sept 2010

Sept 2009 change

change

June 2010

US$ million

(US$)

(Euro)

US$ million

Sales

963

868

873

Operating profit (loss)

(59)

–*

Operating profit (loss) to sales (%)

4.2

(6.8)

– –

1.3

* Comparative not meaningful.

While the business performed significantly better during the quarter, it is not yet achieving an acceptable

return which remains the top priority for the Sappi group.

The European business’ coated paper shipments continued to grow in the quarter. Industry coated

woodfree paper shipments increased by 7%, compared to the equivalent quarter last year including a

significant increase in exports. Shipments of coated mechanical paper increased 13%, almost returning to

the shipment volumes of the equivalent quarter in 2008 which was prior to the global crash.

A third coated woodfree price increase was implemented in September which, together with increases

in April and June, is helping offset the effect of rapidly increasing pulp prices. There was a modest price

increase for coated mechanical paper in July but the margins for our coated mechanical paper remain well

below acceptable levels.

Our average price realised in Europe for the quarter was 11% above the equivalent quarter last year and

5% above those realised in the June 2010 quarter.

fourth quarter

fourth quarter results

North America

Quarter

ended

ended ended

Sept 2010

Sept 2009

June 2010

US$ million

change

US$ million

Sales

364

340

7 347

Operating profit

(22) 25

Operating profit to sales (%)

12.9

17.6

–

7.2

The North American business performed well, benefiting from its market positioning, competitive cost

base, good performance from the specialities products and surplus pulp position with higher pulp pricing.

Operating profit was lower than the equivalent quarter last year due to alternative fuel tax credits received

in the quarter ended September 2009.

Demand levels improved further, with US industry shipments of coated woodfree paper increasing 9%

compared to the equivalent quarter last year.

While price increases were implemented on selected coated paper grades during the quarter, the average

price increase of 8% compared to the equivalent quarter last year was largely a result of pulp price

increases.

During the quarter, we built our pulp inventory at Somerset mill in preparation for a pulp mill outage which

commenced in October 2010. During the outage we upgraded the chemical recovery complex at the mill

which is expected to significantly reduce energy costs and increase the proportion of renewable energy

used at the Somerset mill to 89%.

During October, the U.S. International Trade Commission ruled to impose anti-dumping and countervailing

duties on imported coated sheet paper from Indonesia and China. The duties which range from 25.2% to

313.8% are expected to re-establish a level playing field in the US.

Sappi Southern Africa

Quarter

ended

ended % %

ended

Sept 2010

Sept 2009 change

change

June 2010

US$ million

(US$)

(Rand)

US$ million

Sales

447

345

382

Operating profit (loss)

(125) –* –*

118

Operating profit (loss)

to sales (%)

18.8

(36.2) – –

30.9

* Comparative not meaningful.

The performance of the Southern African business improved significantly during the quarter. We

reorganised the paper and packaging paper business during the quarter to provide a more effective

customer interface and to share best operating practices among the mills.

The chemical cellulose business continued to achieve higher output from the expanded Saiccor Mill.

Demand was very strong and prices increased further. The majority of our sales are linked to long-term

contracts and we therefore did not realise the full benefit of the record spot prices in certain markets for

chemical cellulose. These spot markets represent a small proportion of the total chemical cellulose market.

Demand for packaging and fine paper products has improved in the domestic market but competition from

imports has continued as a result of the strength of the Rand relative to the US dollar.

Directorate

During the quarter, it was announced that Mr H C Mamsch would be retiring from the board of directors

at the end of December 2010, having served for seven years.

fourth quarter

fourth quarter results

Outlook

We expect continued gradual improvement in global economic conditions during the year ahead; however

we remain cautious as a result of factors such as the volatility of exchange rates which could dampen

growth.

Against that background, we expect demand for coated paper in our major markets to recover further

during the year. We believe that input costs are likely to rise. We intend to reduce our costs where possible

and to grow revenue through sales volume, mix and higher price levels to achieve acceptable margins

across the businesses.

We expect continued strong demand and good price levels for chemical cellulose in the year ahead. The

reorganisation of the paper business in Southern Africa is expected to help improve margins; however,

the Rand is currently strong relative to the US dollar and remains volatile. A strengthening Rand would be

unfavourable for the performance of the Southern African business.

The extended outage at Somerset pulp mill in October 2010 will reduce the potential profitability of our

North American business for the quarter but we expect the pulp mill to start ramping up production in

early November and for energy costs to be reduced once the rebuilt energy complex reaches optimum

efficiencies.

With the expected improvement in the performance of our businesses and reduced uncertainty in financial

markets we will gradually reduce our cash on hand with further repayment of debt. This, together with our

targeted continued reduction in debt, will help reduce finance costs in the year ahead.

In our first financial quarter, we expect the group’s operating profit, excluding asset impairments,

impairment reversals, restructuring costs, costs associated with fire, flood, storm and related events as

well as plantation price fair value adjustments, to continue the improving trend relative to the equivalent

quarter last year.

On behalf of the board

R J Boëttger

M R Thompson

Director

08 November 2010

sappi limited

(Registration number 1936/008963/06)

Issuer Code: SAVVI

JSE Code: SAP

ISIN: ZAE000006284

NYSE Code: SPP

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. The words ‘believe’, ‘anticipate’,

‘expect’, ‘intend’, ‘estimate’, ‘plan’, ‘assume’, ‘positioned’, ‘will’, ‘may’, ‘should’, ‘risk’ and other similar

expressions, which are predictions of or indicate future events and future trends, which do not relate to

historical matters, identify forward-looking statements. 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 impact of the global economic downturn,

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, input costs including raw material, energy and

employee costs, and pricing), adverse changes in the markets for the group’s products, consequences

of substantial leverage, including as a result of adverse changes in credit markets that affect our ability to

raise capital when needed, changing regulatory requirements, possible early termination of alternative fuel

tax credits, unanticipated production disruptions (including as a result of planned or unexpected power

outages), 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. We

undertake 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.

fourth quarter

fourth quarter results

Group income statement

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

Note

US$ million

Sales

1,774

1,553

6,572

5,369

Cost of sales

1,498

1,519

5,786

5,029

Gross profit

276

786

340

Selling, general and administrative
expenses

119

112

448

385

Other operating expenses

Share of profit from
associates and joint ventures

(2)

(5)

(13)

(11)

Operating profit (loss)

158

(129)

341

(73)

Net finance costs

255

145

Net interest

293

137

Net foreign exchange gains

(1)

(5)

(17)

Net fair value (gains) losses on
financial instruments

(3)

(2)

(21)

Profit (loss) before taxation

(143)

(218)

Taxation

(40)

(41)

Current

(7)

(3)

(6)

Deferred

(37)

(45)

Profit (loss) for the period

(103)

(177)

Basic earnings (loss) per share
(US cents)

(20)

(37)

Weighted average number of
shares in issue (millions)

519.5

515.8

516.7

482.6

Diluted basic earnings (loss)
per share (US cents)

(20)

(37)

Weighted average number
of shares on fully
diluted basis (millions)

524.0

515.8

520.8

482.6

Group statement of comprehensive income

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

US$ million

Profit (loss) for the period

(103)

(177)

Other comprehensive income (loss),
net of tax

(154)

(197)

Exchange differences on translation
of foreign operations

121

Actuarial losses in post-
employment benefits

(71)

(229)

(71)

(229)

Movements in hedging reserves

(14)

Movement on available for
sale financial assets

–

Deferred tax effects on above

Total comprehensive income (loss)
for the period

170

(257)

(374)

Group balance sheet

Sept 2010 Sept 2009

US$ million US$ million

ASSETS
Non-current assets

4,653

4,867

Property, plant and equipment

3,660

3,934

Plantations

687

611

Deferred taxation

Other non-current assets

253

266

Current assets

2,531

2,430

Inventories

836

792

Trade and other receivables

903

868

Cash and cash equivalents

792

770

Total assets

7,184

7,297

EQUITY AND LIABILITIES
Shareholders’ equity

Ordinary shareholders’ interest

1,896

1,794

Non-current liabilities

3,249

3,662

Interest-bearing borrowings

2,317

2,726

Deferred taxation

386

355

Other non-current liabilities

546

581

Current liabilities

2,039

1,841

Interest-bearing borrowings

691

601

Bank overdraft

Other current liabilities

1,307

1,165

Taxation payable

Total equity and liabilities

7,184

7,297

Number of shares in issue at balance sheet date (millions)

519.5

515.7

fourth quarter

fourth quarter results

Group cash flow statement

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

US$ million US$ million US$ million US$ million

Profit (loss) for the period

(103)

(177)

Adjustment for:

Depreciation, fellings and amortisation

119

131

484

467

Taxation

(40)

(41)

Net finance costs

255

145

Post-employment benefits

(25)

(30)

(73)

(62)

Plantation price fair value adjustment

(29)

111

(31)

Other non-cash items

(41)

Cash generated from operations

182

161

737

432

Movement in working capital

181

127

(5)

152

Net finance costs

(66

) (27)

(194)

(81)

Taxation paid

(1)

(9)

(5)

Dividends paid

(37)

Cash retained from operating activities

296

261

529

461

Cash utilised in investing activities

(58)

(36)

(188)

(762)

Capital expenditure and other
non-current assets

(58)

(34)

(188)

(172)

Acquisition

–

(2)

–

(590)

238

225

341

(301)

Cash effects of financing activities

(12)

(272)

(256)

707

Net movement in cash and cash
equivalents

226

(47)

406

Group statement of changes in equity

Year

ended

Sept 2010

Sept 2009

US$ million

Balance – beginning of period

1,794

1,605

Total comprehensive income (loss) for the period

(374)

Dividends paid

–

(37)

Rights offer

–

575

Costs directly attributable to the rights offer

–

(31)

Issue of new shares

Transfers (to) from the share purchase trust

(6)

Share-based payment reserve

Balance – end of period

1,896

1,794

Notes to the group results

1. Basis of preparation

The condensed financial information has been prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (IFRS) issued
by the International Accounting Standards Board, the AC 500 standards issued by the Accounting Practices
Board and the information required by IAS 34 “Interim Financial Reporting”. The report has been prepared
using accounting policies that comply with IFRS which are consistent with those applied in the financial
statements for the year ended September 2009, except for the adoption of IFRS 8 “Operating Segments”.

The results are unaudited.

2. Adoption of IFRS 8 “Operating Segments”

The adoption of IFRS 8 “Operating Segments” did not have an impact on the group’s reported results or
financial position.

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments.
Reportable segments are components of an entity for which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing
performance. Prior year segment disclosure has been restated as reflected in note 8.

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

US$ million US$ million US$ million US$ million

3. Operating profit (loss)

Included in operating profit (loss) are
the following non-cash items:

Depreciation and amortisation

112

413

398

Fair value adjustment on plantations
(included in cost of sales)
Changes in volume

Fellings

Growth

(19)

(21)

(67)

(73)

(2)

(4)

Plantation price fair value
adjustment

(1)

(29)

111

(31)

(27)

109

(27)

Included in other operating expenses
are the following:

Asset impairments (impairment reversals)

(10)

Profit on disposal of property,
plant and equipment

(6)

–

(5)

(1)

Loss on disposal of investment

–

Restructuring provisions raised

–

Integration costs

–

Black Economic Empowerment
transactions charge

(2)

–

Fuel tax credit

–

(50)

(51)

(87)

(1)

In the third quarter of fiscal 2010 the group changed the estimates used to derive the prices of timber that are used to calculate the
fair value of its plantations. The change impacts the estimate of the expected future cash flows that are used in calculating the present
value of mature and immature timber except for the timber that is expected to be felled in the next twelve months from balance sheet
date. Before the change, Sappi used period end spot prices to estimate the fair value of the above timber; the group now uses a
twelve quarter rolling average price, as this reflects the fair value of the plantations more accurately.

(2)

IFRS 2 non-cash charges associated with Black Economic Empowerment transactions, the majority of which relates to the unwinding
of the 2006 Black Economic Empowerment deal with the remaining charge relating to the issue of shares to employees and local
communities.

fourth quarter

fourth quarter results

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

US$ million

4. Capital expenditure

Property, plant and equipment

201

184

Sept 2010

Sept 2009

US$ million

5. Capital commitments

Contracted

Approved but not contracted

109

126

171

188

6. Contingent liabilities

Guarantees and suretyships

Other contingent liabilities

7. Material balance sheet movements

Early repayment of interest-bearing borrowings

The North American Municipal Bonds of US$106 million were repaid in March 2010 at par value.

An amount of US$29 million of our 7.5% Guaranteed Notes due 2032 was repurchased in the open market
early in the third quarter for US$24 million.

An early repayment of the first instalment on a syndicated loan with Österreichische Kontrollbank of m80 million
(US$99 million), due in December 2010, was made in June 2010.

Transfers from assets held for sale and liabilities associated with assets held for sale

The Usutu pulp mill was permanently closed at the end of January 2010. The future of the site and
plantations was discussed with potential investors and the Government of Swaziland. The disposal group
consisting mainly of plantations had been classified as held for sale since December 2009. The Sappi board
subsequently took a decision to continue with its forestry operations in Swaziland, and is investigating the
establishment of various timber processing operations at the Usutu mill site. As a result, the assets are no
longer classified as held for sale.

8. Segment Information

Restatement of prior year disclosures

Fine Paper Southern Africa is now reported as part of the Southern African segment (previously referred to
as “Forest Products”) in accordance with the geographical management of our business. The table below
shows the effect of this change for the quarter and year ended September 2009:

Restated

Quarter ended

Sept 2009

US$ million

As previously

reported

Adjustment

Restated

Fine Paper
Sales 1,300

(92)

1,208

Operating (loss) profit

(1)

Net operating assets

3,526

(205)

3,321

Southern Africa
Sales 253

345

Operating loss

(123)

(2)

(125)

Net operating assets

1,686

205

1,891

Restated

Year ended

Sept 2009

US$ million

As previously

reported

Adjustment

Restated

Fine Paper
Sales 4,508

(318)

4,190

Operating loss

(17)

(14)

Net operating assets

3,526

(205)

3,321

Southern Africa
Sales 861

318

1,179

Operating loss

(52)

(3)

(55)

Net operating assets

1,686

205

1,891

fourth quarter

fourth quarter results

The information below is presented in the way that it is reviewed by the chief operating decision maker as
required by IFRS 8 “Operating Segments”.

Restated

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

Metric tons

(000’s)

Sales volume
Fine Paper –

North America

352

355

1,354

1,274

Europe

994

895

3,796

2,956

Total

1,346

1,250

5,150

4,230

Southern Africa –

Pulp and paper

460

470

1,751

1,660

Forestry

289

168

993

817

Total

2,095

1,888

7,894

6,707

US$ million

Sales
Fine Paper –

North America

364

340

1,373

1,295

Europe

963

868

3,638

2,895

Total

1,327

1,208

5,011

4,190

Southern Africa –

Pulp and paper

426

331

1,488

1,124

Forestry

Total

1,774

1,553

6,572

5,369

Operating profit excluding special items
Fine Paper –

North America

124

(2)

Europe

Total

200

Southern Africa

(10)

134

Corporate and other

(5)

(2)

Total

129

339

Special items – (gains) losses
Fine Paper –

North America

(5)

(26)

(56)

(55)

Europe

(6)

Total

(11)

(52)

Southern Africa

(26)

115

Corporate and other

Total

(29)

167

(2)

106

Operating profit (loss)
Fine Paper –

North America

180

Europe

(59)

(67)

Total

252

(14)

Southern Africa

(125)

112

(55)

Corporate and other

(13)

(5)

(23)

(4)

Total

158

(129)

341

(73)

EBITDA excluding special items
Fine Paper –

North America

201

Europe

310

226

Total

151

138

511

324

Southern Africa

236

101

Corporate and other

(6)

(3)

Total

227

150

752

431

Restated

Quarter

Year

ended

Sept 2010

Sept

2009

Sept 2010

Sept

2009

US$ million

US$

million

US$ million

US$

million

Net operating assets
Fine Paper –

North America

935

981

935

981

Europe

2,109

2,340

2,109

2,340

Total

3,044

3,321

3,044

3,321

Southern Africa

1,887

1,891

1,887

1,891

Corporate and other

Total

4,996

5,250

4,996

5,250

Reconciliation of operating profit excluding special items to operating profit (loss)

Special items cover those items which management believe 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.

Operating profit excluding special items

129

339

Special items

(167)

(106)

Plantation price fair value adjustment

(111)

(67)

Restructuring provisions raised

–

(24)

(46)

(34)

Profit on disposal of property, plant and equipment

–

Loss on disposal of investment

(1)

–

Asset (impairments) impairment reversals

(2)

(73)

(79)

Fuel tax credit

–

Integration costs

–

(3)

Black Economic Empowerment transactions charge

–

(23)

–

Fire, flood, storm and related events

(3)

(9)

(26)

(11)

Operating profit (loss)

158

(129)

341

(73)

Reconciliation of EBITDA excluding special items and operating profit excluding special items to
profit (loss) before taxation

EBITDA excluding special items

227

150

752

431

Depreciation and amortisation

(98)

(112)

(413)

(398)

Operating profit excluding special items

129

339

Special items – gains (losses)

(167)

(106)

Net finance costs

(63)

(14)

(255)

(145)

Profit (loss) before taxation

(143)

(218)

Reconciliation of net operating assets to total assets

Net operating assets

4,996

5,250

4,996

5,250

Deferred tax

Cash and cash equivalents

792

770

792

770

Other current liabilities

1,307

1,165

1,307

1,165

Taxation payable

Total assets

7,184

7,297

7,184

7,297

fourth quarter

fourth quarter results

Supplemental Information

Quarter

Year

ended

Sept 2010

Sept 2009

Sept 2010

Sept 2009

US$ million

1. Headline earnings (loss) per share *

Headline earnings (loss) per share (US cents)

(6)

(21)

Weighted average number of shares in issue
(millions)

519.5

515.8

516.7

482.6

Diluted headline earnings (loss) per share
(US cents)

(6)

(21)

Weighted average number of shares
on fully diluted basis (millions)

524.0

515.8

520.8

482.6

Calculation of headline earnings (loss) *
Profit (loss) for the period

(103)

(177)

Asset impairments (impairment reversals)

(10)

Profit on disposal of property,
plant and equipment

(5)

–

(4)

(1)

Loss on disposal of investment

–

Tax effect of above items

–

Headline earnings (loss)

(30)

(99)

*Headline earnings disclosure is required by the JSE Limited.

2. Exchange rates

Sept

Jun Mar

Dec

Sept

2010

2010 2010 2009

2009

Exchange rates:
Period end rate: US$1 = ZAR

7.0190

7.6250 7.4298 7.5315

7.4112

Average rate for the Quarter: US$1 = ZAR

7.3517

7.5821 7.5597 7.5009

7.7174

Average rate for the YTD: US$1 = ZAR

7.4917

7.5610 7.5302 7.5009

9.0135

Period end rate: EUR 1 = US$

1.3491

1.2377 1.3413 1.4397

1.4688

Average rate for the Quarter: EUR 1 = US$

1.2871

1.2937 1.3891 1.4737

1.4317

Average rate for the YTD: EUR 1 = US$

1.3658

1.3845 1.4302 1.4737

1.3657

The financial results of entities with reporting currencies other than the US Dollar are translated into US Dollars as follows:
– Assets and liabilities at rates of exchange ruling at period end; and
– Income, expenditure and cash flow items at average exchange rates.

Sappi ordinary shares* (JSE: SAP)

100

Oct 04

Dec 04

Mar 05

Jun 05

Sep 05

Dec 05

Mar 06

Jun 06

Sep 06

Dec 06

Mar 07

Jun 07

Sep 07

Dec 07

Mar 08

Jun 08

Sep 08

Dec 08

Mar 09

Jun 09

Sep 09

Dec 09

Jun 10

Mar 10

Oct 10

ZAR

US Dollar share price conversion*

Oct 04

Dec 04

Mar 05

US$

Jun 05

Sep 05

Dec 05

Mar 06

Jun 06

Sep 06

Dec 06

Mar 07

Jun 07

Sep 07

Dec 07

Mar 08

Jun 08

Sep 08

Dec 08

Mar 09

Jun 09

Sep 09

Dec 09

Jun 10

Mar 10

Oct 10

* Historic share prices revised to reflect rights offer

fourth quarter

fourth quarter results

Other interested parties can obtain printed copies of this report from:

South Africa:

United States:

Computershare Investor

ADR Depositary:

Services (Proprietary) Limited

The Bank of New York Mellon

70 Marshall Street

Investor Relations

Johannesburg 2001

PO Box 11258

PO Box 61051

Church Street Station

Marshalltown 2107

New York, NY 10286-1258

Tel +27 (0)11 370 5000

Tel +1 610 382 7836

Sappi has a primary listing on the JSE Limited and a secondary listing on

the New York Stock Exchange

this report is available on the Sappi website

www.sappi.com

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date: November 10, 2010

SAPPI LIMITED,

Name:

M. R. Thompson

Title:

Chief Financial Officer

M. R. Thompson

By:

/s/