Definitions of terms in investor content from Sappi, the world’s largest manufacturer of dissolving wood pulp and a leader in paper and adjacent markets.

A terms


acquisition date - The date on which control in respect of subsidiaries, joint control in respect of joint arrangements and significant influence in associates commences.

AF&PA - American Forest and Paper Association.

air dry tons (ADT) - Meaning dry solids content of 90% and moisture content of 10%.

asset turnover (times) - Sales divided by total assets.

associate - An entity over which the investor has significant influence.

average - Averages are calculated as the sum of the opening and closing balances for the relevant period divided by two.

B terms


basic earnings per share - Net profit for the year divided by the weighted average number of shares in issue during the year.

biochemicals - Enzymes, hormones, pheromones etc, which either occur naturally or are manufactured to be identical to naturally occurring substances. Biochemicals have many environment-friendly applications, such as natural pesticides that work in non-lethal ways as repellents or by disrupting the mating patterns of the pests.

biofuels - Organic material such as wood, waste and alcohol fuels, as well as gaseous and liquid fuels produced from these feedstocks when they are burned to produce energy.

biomaterials - New developments in wood processing supports the move to a biobased economy that utilises materials that are renewable and biodegradable and that do not compete with food sources.

Black Economic Empowerment (BEE) charge - Represents the IFRS 2 non-cash charge associated with the BEE transaction implemented in 2010 in terms of BEE legislation in South Africa.

black liquor - The spent cooking liquor from the pulping process which arises when pulpwood is cooked in a digester thereby removing lignin, hemicellulose and other extractives from the wood to free the cellulose fibres. The resulting black liquor is an aqueous solution of lignin residues, hemicellulose, and the inorganic chemicals used in the pulping process. Black liquor contains slightly more than half of the energy content of the wood fed into the digester.

bleached pulp - Pulp that has been bleached by means of chemical additives to make it suitable for fine paper production.

C terms


capital employed - Shareholders' equity plus net debt.

cash interest cover - Cash generated by operations divided by finance costs less finance revenue.

casting and release paper - Embossed paper used to impart design in polyurethane or polyvinyl chloride plastic films for the production of synthetic leather and other textured surfaces.

CEPI - Confederation of European Paper Industries.

chemical oxygen demand (COD) - The amount of oxygen required to break down the organic compounds in effluent.

chemical pulp - A generic term for pulp made from woodfibre that has been produced in a chemical process.

CHP - Combined heat and power.

coated mechanical - Coated paper made from groundwood pulp which has been produced in a mechanical process, primarily used for magazines, catalogues and advertising material.

coated papers - Papers that contain a layer of coating material on one or both sides. The coating materials, consisting of pigments and binders, act as a filler to improve the printing surface of the paper.

coated woodfree - Coated paper made from chemical pulp which is made from woodfibre that has been produced in a chemical process, primarily used for high-end publications and advertising material.

commissioning date - The date that an item of property, plant and equipment, whether acquired or constructed, is brought into use.

compound annual growth rate - Is the mean annual growth rate of an investment over a specified period of time longer than one year.

control - An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

corrugating medium - Paperboard made from chemical and semi-chemical pulp, or waste paper, that is to be converted to a corrugated board by passing it through corrugating cylinders. Corrugating medium between layers of linerboard form the board from which corrugated boxes are produced.

COSO – the Committee of Sponsoring Organisations of the Treadway Commission

CSI and CSR - Corporate social investment and corporate social responsibility.

CSV - Corporate shared value involves developing profitable business strategies that deliver tangible social benefits.

current asset radio - Current assets divided by current liabilities.

D terms


diluted earnings per share - Is calculated by assuming conversion or exercise of all potentially dilutive shares, share options and share awards unless these are anti-dilutive.

discount rate - This is the pre-tax interest rate that reflects the current market assessment of the time value of money for the purposes of determining discounted cash flows. In determining the cash flows the risks specific to the asset or liability are taken into account in determining those cash flows and are not included in determining the discount rate.

disposal date - The date on which control in respect of subsidiaries, joint arrangements and significant influence in associates ceases.

dissolving pulp - Highly purified chemical pulp derived primarily from wood, but also from cotton linters intended primarily for conversion into chemical derivatives of cellulose and used mainly in the manufacture of viscose staple fibre, solvent spin fibre and filament.

dissolving wood pulp - Highly purified chemical pulp derived from wood intended primarily for conversion into chemical derivatives of cellulose and used mainly in the manufacture of viscose staple fibre, solvent spin fibre and filament.

dividend yield - Dividends per share, which were declared after year-end, in US cents divided by the financial year-end closing prices on the JSE Limited converted to US cents using the closing financial year-end exchange rate.

E terms


earnings yield - Earnings per share divided by the financial year-end closing prices on the JSE Limited converted to US cents using the closing financial year-end exchange rate.

EBITDA excluding special items - Earnings before interest (net finance costs), taxation, depreciation, amortisation and special items.

energy - Is present in many forms such as solar, mechanical, thermal, electrical and chemical. Any source of energy can be tapped to perform work. In power plants, coal is burned and its chemical energy is converted into electrical energy. To generate steam, coal and other fossil fuels are burned, thus converting stored chemical energy into thermal energy.

EPS excluding special items - Earnings per share excluding special items and certain once-off finance and tax items.

F terms


fair value - The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

fellings - The amount charged against the income statement representing the standing value of the plantations harvested.

fibre - Fibre is generally referred to as pulp in the paper industry. Wood is treated chemically or mechanically to separate the fibres during the pulping process.

financial results - Comprise the financial position (assets, liabilities and equity), results of operations (revenue and expenses) and cash flows of an entity and of the group.

fine paper - Paper usually produced from chemical pulp for printing and writing purposes and consisting of coated and uncoated paper.

fmcg - Fast-moving consumer goods. Examples include non-durable goods such as packaged foods, beverages, toiletries, over-the-counter medicines and many other consumables.

foreign operation - An entity whose activities are based or conducted in a country or currency other than that of the reporting entity.

Forestry SA - Largest forestry organisation representing growers of timber in South Africa.

FSC® – Is an independent, non-governmental, not for profit organisation established to promote the responsible management of the world's forests. Over 190 million hectares of forest are FSC®-certified, in over 80 countries worldwide. https://ic.fsc.org/en

full-time equivalent employee - The number of total hours worked divided by the maximum number of compensable hours in a full-time schedule as defined by law.

functional currency - The currency of the primary economic environment in which the entity operates.

G terms


greenhouse gases (GHG) - The GHGs included in the Kyoto Protocol are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

group - The group comprises Sappi Limited, its subsidiaries and its interest in joint ventures and associates.

H terms


headline earnings - As defined in Circular 2/2015, reissued by the South African Institute of Chartered Accountants in October 2015, 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.

I terms


inventory turnover (times) - Cost of sales divided by inventory on hand at balance sheet date.

ISO - Developed by the International Standardisation Organisation (ISO), ISO 9000 is a series of standards focused on quality management systems, while the ISO 14001 series is focused on environmental performance and management.

J terms


joint arrangement - Is an arrangement of which two or more parties have joint control.

joint venture - Is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

JSE Limited - The main securities exchange in South Africa.

K terms


kraft paper - Packaging paper (bleached or unbleached) made from kraft pulp.

kraft pulp - Chemical wood pulp produced by digesting wood by means of the sulphate pulping process.

Kyoto Protocol - A document signed by over 160 countries at Kyoto, Japan in December 1997 which commits signatories to reducing their emission of greenhouse gases relative to levels emitted in 1990.

L terms


lignosulphonate - Lignosulphonate is a highly soluble lignin derivative and a product of the sulphite pulping process.

linerboard - The grade of paperboard used for the exterior facings of corrugated board. Linerboard is combined with corrugating medium by converters to produce corrugated board used in boxes.

liquor - White liquor is the aqueous solution of sodium hydroxide and sodium sulphide used to extract lignin during kraft pulping. Black liquor is the resultant combination of lignin, water and chemicals.

Lost-Time Injury Frequency Rate (LTIFR) - Number of lost time injuries x 200,000 divided by man hours.

M terms


managed forest - Naturally occurring forests that are harvested commercially.

market pulp - Pulp produced for sale on the open market, as opposed to that produced for own consumption in an integrated mill.

mechanical pulp - Pulp produced by means of the mechanical grinding or refining of wood or woodchips.

N terms


nanocellulose - Cellulose is the main component of plant stems, leaves and roots. Traditionally, its main commercial use was in producing paper and textiles. Nanocellulose opens up opportunities for advanced, planet-friendly solutions in place of environmentally harmful products.

natural/indigenous forest - A forest of naturally regenerating native trees.

NBHK - Northern Bleached Hardwood Kraft pulp. One of the varieties of market pulp, produced from hardwood trees (ie birch or aspen) in Scandinavia, Canada and northern USA.

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 bank overdraft (net of cash, cash equivalents and short-term deposits).

net debt to total capitalisation - Net debt divided by capital employed.

net operating assets - Total assets (excluding deferred taxation and cash and cash equivalents) less current liabilities (excluding interest-bearing borrowings and overdraft).

newsprint - Paper produced for the printing of newspapers mainly from mechanical pulp and/or recycled waste paper.

NGO - Non-government organisation.

non-GAAP financial definitions - 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.

NPO - Non-profit organisation.

O terms


OHSAS - Is an international health and safety standard aimed at minimising occupational health and safety risks firstly, by conducting a variety of analyses and secondly, by setting standards.

operation - A component of the group:

  • That represents a separate major line of business or geographical area of operation, or
  • Is distinguished separately for financial and operating purposes.

operating profit - A profit from business operations before deduction of net finance costs and taxes.

ordinary dividend cover - Profit for the period divided by the ordinary dividend declared, multiplied by the actual number of shares in issue at year-end.

ordinary shareholders' interest per share - Shareholders' equity divided by the actual number of shares in issue at year-end.

OTC - Over-the-counter trading of shares.

P terms


packaging paper - Paper used for packaging purposes.

PAMSA - Paper Manufacturers' Association of South Africa.

PEFC - The Programme for the Endorsement of Forest Certification (PEFC) is an international non-profit, non-governmental organisation dedicated to promoting Sustainable Forest Management (SFM) through independent third-party certification. PEFC™ is the world's largest forest certification system with over 300 million hectares of forest area under PEFC™ standards. PEFC™ is represented in 49 countries through national organisations such as SFI in North America. https://www.pefc.org/

plantation - Large scale planted forests, intensively managed, highly productive and grown primarily for wood and fibre production.

PM - Paper machine.

power - The rate at which energy is used or produced.

presentation currency - The currency in which the financial results of an entity are presented.

price/earnings ratio - The financial year-end closing prices on the JSE Limited converted to US cents using the closing financial year-end exchange rate divided by earnings per share.

pulpwood - Wood suitable for producing pulp - usually not of sufficient standard for saw milling.

Q terms


qualifying asset - An asset that necessarily takes a substantial period (normally in excess of six months) to get ready for its intended use.

R terms


recoverable amount - The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs of disposal and its value in use. In determining the value in use, expected future cash flows are discounted to their net present values using the discount rate.

related party - Parties are considered to be related if one party directly or indirectly has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions or is a member of the key management of Sappi Limited.

release paper - Based paper used in the production of making release liners, the backing paper for self-adhesive labels.

ROCE - Return on average capital employed. Operating profit excluding special items divided by average capital employed.

ROE - Return on average equity. Profit for the period divided by average shareholders' equity.

RONOA - Return on average net operating assets. Operating profit excluding special items divided by average net operating assets.

S terms


sackkraft - Kraft paper used to produce multi-wall paper sacks.

Scope 1 and 2 GHG emissions - The Greenhouse Gas Protocol defines Scope 1 (direct) and Scope 2 (indirect) emissions as follows:

  • Direct GHG emissions are emissions from sources that are owned or controlled by the reporting entity, and
  • Indirect GHG emissions are emissions from purchased electricity, steam, heat or cooling.

segment assets - Total assets (excluding deferred taxation and cash) less current liabilities (excluding interest-bearing borrowings and overdraft).

SFI® (Sustainable Forestry Initiative) - Is a solutions-oriented sustainability organisation that collaborates on forest-based conservation and community initiatives. The SFI® forest management standard is the largest forestry certification standard within the PEFC programme with over a hundred million hectares under management. http://www.sfiprogram.org/

SG&A - Selling, general and administrative expenses.

share-based payment - A transaction in which Sappi Limited issues shares or share options to group employees as compensation for services rendered.

significant influence - Is the power to participate in the financial and operating policy decisions of an entity but is not control or joint control of those policies.

silviculture costs - Growing and tending costs of trees in forestry operations.

solid waste - Dry organic and inorganic waste materials.

specialised cellulose - The business within Sappi which oversees the production and marketing of dissolving wood pulp (DWP).

special items - 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.

specialities - A generic term for a group of papers intended for commercial and industrial use such as flexible packaging, metallised base paper, coated bag paper, etc.

specific - When data is expressed in specific form, this means that the actual quantity consumed during the year indicated, whether energy, water, emissions or solid waste, is expressed in terms of a production parameter. For Sappi, as with other pulp and paper companies, this parameter is air dry tons of saleable product.

specific purchased energy - The term 'specific' indicates that the actual quantity during the year indicated, is expressed in terms of a production parameter. For Sappi, as with other pulp and paper companies, the parameter is air dry tons of product.

Sustainable Forestry Initiative (SFI®) - The SFI® programme is a comprehensive system of objectives and performance measures which integrate the sustained growing and harvesting of trees and the protection of plants and animals.

T terms


thermo-mechanical pulp - Pulp produced by processing woodfibres using heat and mechanical grinding or refining wood or woodchips.

ton - Term used in this report to denote a metric ton of 1,000kg.

total market capitalisation - Ordinary number of shares in issue (excluding treasury shares held by the group) multiplied by the financial year-end closing prices on the JSE Limited converted to US cents using the closing financial year-end exchange rate.

total suspended solids (TSS) - Refers to matter suspended or dissolved in effluent.

trade receivables days outstanding (including securitised balances) - Gross trade receivables, including receivables securitised, divided by sales multiplied by the number of days in the year.

U terms


uncoated woodfree paper - Printing and writing paper made from bleached chemical pulp used for general printing, photocopying and stationery, etc. Referred to as uncoated as it does not contain a layer of pigment to give it a coated surface.

V terms


viscose staple fibre (VSF) - A natural fibre made from purified cellulose, primarily from dissolving wood pulp (DWP) that can be twisted to form yarn.

W terms


woodfree paper - Paper made from chemical pulp.

World Wildlife Fund (WWF) - The world's largest conservation organisation, focused on supporting biological diversity.

Robert V Rosenthal
Investor Relations Manager
255 State Street
Boston, Massachusetts 02109
United States of America
+1 617 423 5413
+1 617 423 5494