Leadership message - Steve Binnie

Steve Binnie Our clear focus and drive to operate as One Sappi continues to pay dividends.

Dear stakeholders,

The past year focused on investing for the future. Investing to secure more benefits for our stakeholders, investing in our people and investing in reducing our environmental footprint. Significant projects at our Maastricht and Somerset Mills expanded our capacity of specialities and packaging papers in response to sustained strong demand and market growth. At our Ngodwana and Saiccor Mills, debottlenecking projects ensured that we increased the amount of dissolving wood pulp (DWP) we could deliver to an equally buoyant market. Such projects were disruptive and despite the required downtime and loss of saleable tons, we managed to deliver results for the full year which were on par with the previous year. A testimony to the hard work and dedication of everyone across the group to maintain our positive forward momentum towards our 2020Vision goals.

We spent over US$500 per employee on training and skills development, and continued our focused safety awareness and training programmes for employees and contractors. Unfortunately, we cannot be satisfied with our safety performance. Despite very good improvements across the regions in reducing the frequency and seriousness of work- related injuries, we started the year badly with two fatalities.

As I have stated on many occasions, safety at Sappi comes before everything else. If we are not a safe company for our people, we cannot claim to be a top performing company. We do not accept that injuries and accidents are inevitable.

At the end of the reporting period we received permission to commence with a significant five-year upgrade of our Saiccor (DWP) Mill, which will not only increase capacity by 110,000 tons, but will significantly improve and reduce our environmental footprint with the introduction of new technology and utilising the benefits of increased scale.

The strong market demand for DWP and specialities and packaging papers throughout the year ensured our production capacity in these grades was fully utilised, supporting our decision to invest further in these segments. In the graphic paper market, a series of successful selling price increases throughout the year enabled margins to be maintained notwithstanding significantly higher raw material costs, mainly from paper pulp and various process chemicals. Our confidence in the DWP market was confirmed when we launched Verve, our first brand range bolstering our leadership in this market. We also launched a number of new specialities and packaging paper grades and brands as we moved to provide our existing and new customers with an ever wider choice of quality products. Progress in our Sappi Biotech division has also been positive, with strong market interest in our biocomposites, biomaterials and Valida (nanocellulose).

Our demonstration plant for sugars extraction is also under construction.

The hard work of Sappi’s employees was rewarded when Sappi was announced as the second best performing company on the Johannesburg Stock Exchange over the past five years with a compound annual growth rate of 33.5%. Our clear focus and drive to operate as One Sappi continues to pay dividends.

With the world economy under pressure, we are confident that our strategy and 2020Vision plan will deliver on our Prosperity, People and Planet goals. Our value statement―At Sappi we do business with integrity and courage; making smart decisions which we execute with speed, underpinned by an unrelenting focus on and commitment to safety―remains as our guide towards the right behaviour.

Steve Binnie
Chief Executive Officer
Sappi Limited