Sappi InTouch 19_10

Sappi Head Office Internal Newsletter
Tough quarter, but strategy keeps us resilient
After numerous strong quarters, the past second quarter for FY2019 has been a tough one for Sappi, amid a tough year so far. Nevertheless, our strategy to reposition the business, focus on growth in high margin areas and reduce our dependency on graphic paper, continue to steer us in the right direction. So said Sappi CEO Steve Binnie during his recent results presentation to Head Office staff in Rosebank.
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22 May 2019
“We faced a bit of a perfect storm,” said Steve as he explained how economic factors, the weakening of graphic paper markets in Europe, pressure from imports due to high selling prices in the USA and forced production downtime caused by
the slow demand, all contributed to lower group profits in Q2.
“Graphic paper still represents the biggest chunk of our business in Europe and North America, and challenges in this
sector have impacted the bottom line.” On the other hand, it is a sector that is still generating significant amounts of cash
for Sappi; money that we are investing in higher profit areas.
Steve also noted that markets have reacted negatively to the results, which in turn affected the share price – “and not just for Sappi, but across the industry. However, prospects in the dissolving
pulp market, packaging, specialities and bioproducts remain exciting and filled with opportunities for growth.
He added, “We are in a cyclical business where downswings are followed by recoveries. Therefore, we will manage these challenges and see them through, just like we have done in the past.”
Excellent production performances in SSA
Overall, Sappi Southern Africa had
an excellent quarter marked by good pricing achieved in all product segments. Dissolving pulp and printing paper
made budget with good volumes, and
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01.
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Tough quarter, but strategy keeps us resilient
(continue)
production records were broken at four mills – Saiccor and Ngodwana Mills (dissolving pulp), Tugela Mill (pulp and paper) and Stanger Mill (paper).
Packaging and specialities were slightly under business plan due to what seems like a seasonal shift. “Traditionally, packaging demand is stronger in the second quarter, but this year (perhaps due to weather conditions and their impact
on citrus harvesting), demand in the first quarter was stronger,” said CEO of Sappi Southern Africa, Alex Thiel.
Safety also remains a key concern and focus, following the unfortunate death of
a contractor chainsaw operator at our Sutton plantation in KZN, Mr Mduduzi Phoswa. “Although it seems to have been a freak accident, this loss of a precious life is a grim reminder to keep our minds and actions focused on safety in all we do,” said Alex. To assist in this quest, the rollout of the DuPont safety programme will start at Ngodwana Mill’s pulp section in June.
Looking ahead, Alex said that SSA will make and beat budget with profitable full-year results. “Thank you for a good quarter, but we need to continue to work hard, save costs where we can and constantly ask ourselves: what can I do better to help improve and grow the business?”.
22 May 2019
Staff questions raised during the results presentation:
01. What are the biggest challenges facing the SSA region?
Two of the top concerns are: 1) our dependency on coal and the urgent need to address it. Several projects are being pursued, but more work is needed to make our business even ‘greener’ – a sought-after competitive edge in industry today, and one for which Sappi – with our core diversified woodfibre-based business – is well suited. 2) We are also still quite dependent on Eskom for our electricity (30%). The need to become more energy self-sufficient, which in turn will save costs, is a key priority.
02. Having liaised with the SA president on investments to boost the economy, what has this experience been like?
Sappi’s engagement with government on provincial and national level are much more positive than in the past, and this makes the landscape for industry growth and collaboration between government and business a far more optimistic prospect. “We don’t feel like the enemy anymore,” said Steve.
03. When will Sappi’s strategy for 2025 be launched?
A lot of work has already been done to formulate and finetune the strategy, including discussions during the board meeting last week. The 2025 strategy will be rolled out after January next year.
04. Why do we need to pay taxes on Sefate shares once they vest in August 2019 should a benefit be due to unitholders?
Paying tax on income is compulsory for all tax paying citizens in South Africa. It can be anything between 18-45%, depending on your salary bracket. Therefore, by law, tax on share income needs to be paid. However, note that MSOP and ESOP A units are linked to the Sappi share price reaching the Sefate hurdle rate of R73.50. ESOP B units are not subject to the share price reaching the hurdle rate.
05. Some employees have requested additional facilities at HO, including a prayer room, gym, crèche, snooker table etc. What is being done about these requests?
A steering committee considers all building-related requests. As for the prayer room, it was decided that there are ample private spaces in the building to serve this purpose. Queries and suggestions can be raised through the EWB team. Or even better, directly with Deon van Aarde or Karen van Heerden.
HAPPY
To You
Congratulations to the following colleagues who celebrate their birthdays in June:
03 Jacques Rossouw
03 Matshediso Moshoeshoe
05 Karen van Heerden
06 Melanie Jacobs
12 Keshia Palmer 16 Danie Rossouw 18 Tony Pires
18 Surprise Maluwa
19 Steve Binnie
19 Fumani Nkuna
20 David Wood
20 Lazarus Machini
21 Beverly Lawson
22 Glen Pearce
23 Theresa Mariuzzi 24 Mpho McNamee 26 Nat Maelane
27 Koosh Panday
28 Natasha Milton
28 Maarten van Hoven
02.
BIRTHDAY!


22 May 2019
Want to apply
for a Sappi study assistance grant?
Here are seven facts about the study assistance approval process:
Sappi
supports skills
development
through on-the-job learning, coaching, mentoring and formal learning.
Study assistance may be granted to attain certificates, diplomas and degrees through accredited institutions by the Department of Higher Education.
Full-time permanent employees, part-time permanent employees and apprentices may apply.
First discuss your study aspirations with your manager as part of the annual development plan conversation.
Before deciding if study assistance will be approved or declined, your manager will take into consideration competency assessment against the requirements of your current or future role.
Sappi Learning is responsible for reviewing requests that have been approved by line managers against job criteria and available budget.
As an applicant employee, you need to complete an online study assistance application motivation form from the Sappi Learning Management System (with further assessment or processing by Sappi Learning).
For more information, contact Fumani.Nkuna@sappi.com or Sone.Heyneke@sappi.com.
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2019 Employee Engagement Survey results
Thank you for strong participation
The rollout of the 2019 survey was a resounding success, with the highest number of employees participating in the survey ever.
The participation rates for the survey for all the regions were as follows:
The global participation rate was 90%, which is 5% above high performing organisations and 7% more than other global manufacturing companies.
The 2019 survey saw a number of changes. These included:
• The survey rollout, which changed from September to March. This was done to align the survey to the overall business cycle
• The inclusion of additional items on safety to ensure that the correct items are measured.
• A new category was introduced relating to organisational change, seeing that the speed and rate at which change occurs globally is set to increase. We want to ensure that the correct items are measured and monitored.
What’s next?
Detailed results will be communicated to all employees within the next few weeks. We anticipate that business unit-specific results will be made available to all staff by the end of June 2019.
Thank you for having your say and participating in the survey.
Europe
95%
South Africa
93%
North America
68%
Trading
100%
Welcome to the Sappi family
Laura Pillay has joined the Corporate Affairs department as a Digital Communications Consultant, reporting to Liza Koen. Following Samantha Johns’ temporary absence during her maternity leave, Laura will be with us for the next five months. She has relocated to Johannesburg since her previous role in Corporate Communications at The Unlimited in Hillcrest, KwaZulu Natal.
Mandisa Mhlongo has joined the Sappi Southern African Treasury department as Regional Treasury Controller, reporting to Natalie Stevens. Mandisa joined Sappi in June 2017 and has now relocated to Johannesburg from her previous position at the Shared Services Centre (SSC) in KZN.
03.


22 May 2019
Sappi computer users...
please be careful
The amount of security breaches has increased over the past few weeks. Hackers are logging into Sappi accounts and are sending emails on behalf of Sappi users.
There have been far too many incidents to date where users’ credentials have been leaked. Those credentials are sold, and hackers use them to log into our network. There have been an alarming number of incidents where hackers send emails from Sappi user accounts. These emails trap other users in that they think the mail comes from a Sappi account and is therefore a trusted source. People click on the links and leak their credentials. In addition, it is also very stressful and embarrassing for the user whose account was hacked.
How are we making you safe?
Our IT team is currently deploying Multi Factor Authentication (MFA) on all user accounts. MFA checks if a user is logging in from a known Sappi network. If, for example, you log in from home and the network is not known to Sappi, MFA will send a verification code via your cell or land line. You can enter the code on
the system for access. Users can also download the Authenticator App.
If you have MFA configured on your account, neither a hacker for example in Nigeria or California will be able
to log on with your leaked credentials, as they will not have the verification code. IT is busy rolling out MFA, but it is a time-consuming process as people need to setup
their preferences before IT can add them to the MFA group.
If you want to be proactive and protect your logon credentials before IT reaches you, setup your MFA preferences by following the links on Sappi Net. Go to the regional home page, click on Regional System Links and choose Multi-Factor Authentication:
http://sappinet.za.sappi.com/resourcecentre/sa/IT/MFA/Pages/ default.aspx?Location=Rosebank%20-%20Head%20office
Once done, log a call with the help desk and they will complete the process.
Long Service Award
Carol Heine (30 years) and Norma Brown (25 years), joined by Alex Thiel (CEO Sappi Southern Africa) during the handover of their long service awards
04.


The Sappi Karkloof
Sefate: Check it out ClasosnicSaTprpai iNleFt estival
Dont miss out on being part of this
22 May 2019
adrenaline-filled weekend of cycling and trail-running!
Have you heard? Sappi Net is the place to go for all the
latest information on Sefate. This secure, online site offers
information, tips, support and even a way to calculate your
potential benefits.
2. Get support: Discover the full list of Sefate champions to contact
you an idea of the value. It is NOT the
Diarise the date for your annual
Three good reasons to visit Sefate on type of shares you have before you start. are interested in receiving the bi-monthly Sappi Karkloof MTB Trail Festival
Sappi Net: Contact the call centre to find out. messages. Email sappi@investec.co.za if
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final benefit. The final value will depend 3. Work out potential benefits: Use on the Sappi share price in August.
Saturday 18km Karkloof Trail Run
the Benefits Calculator to work out
Saturday 9km Karkloof Trail Run
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To find out how many Sefate
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units you have or what type they are:
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Call (Investec) on Tel 0861 255 525/555 07:30
Email sappi@investec.co.za 0L8og:3in0online at www.sappishares.co.za
Dial *120*1138# from your mobile 09:20
phone and follow the prompts.
09:30
potential benefits. There are just two months to go before the
Saturday STIHL Karkloof ENDURO
What is the Benefits Calculator? So, make sure you visit Sappi Net today
The Benefits CalcSulautonr ids avyery6c0ookl tmool SaptopgietKallathrekinlformoaftioCn laandssupicport you
that lets you work out the estimated value need to help you make the right decision.
of your Sefate units. It even subtracts
expenses like income tax and approximate More information is also shared on the
Sunday 9km Karkloof Trail Run
trust expenses. To use the calculator, make Sefate WhatsApp broadcast group.
Sefate election period starts in July 2019.
Sunday 40km aQuelle Half Marathon
Sunday 20km aQuelle Family Ride
sure you know how many shares and what Make sure you save the number if you
10:00
Sunday 10km aQuelle Kids Ride
the
If you, your spouse or children want to participate in any of
The Sappi Karkloof Classic
above events, diarise the date now.
Trail Festival
We will be doing a call for entries soon, watch this space
Don’t miss out on being part of this adrenaline-filled weekend of cycling and trail-running! 01-02 June 2019
Diarise the date for your annual Sappi Karkloof MTB Trail Festival experience, held in the beautiful Karkloof Valley.
Saturday Saturday Saturday Sunday Sunday Sunday Sunday Sunday
18km Karkloof Trail Run 09km Karkloof Trail Run
STIHL Karkloof ENDURO 60km Sappi Karkloof Classic 40km aQuelle Half Marathon
09km Karkloof Trail Run 20km aQuelle Family Ride 10km aQuelle Kids Ride
07:00 07:30 12:00 07:30 08:30 09:20 09:30 10:30
If you, your spouse or children want to participate in any of the above events, diarise the date now. We will be doing a call for entries soon, watch this space!
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Line dancing rhythm and fun
The line dancing classes, which took place at Sappi Rosebank last week, proved to be a great deal of fun. The classes were instructed by Alison Booysen from the Rhythm and Beat School of Dance and she gave staff some guidelines on how to perform the perfect steps. This year was our second fitness week at the Rosebank Head Office.
Sandra Nair, Hemantha Naidoo, Sibongile Nkala and Alison Booysen (dance instructor, kneeling).
22 May 2019
Employees participating in the line dancing.
The group learning their steps.
Staff having a good time on the dance floor.
The line dancing group on the patio outside Deon van Aarde’s office.
06.


22 May 2019
Sappi retirement funding: What you need to know
Retirement planning is a key employee benefit at Sappi, allowing you to save for retirement and be covered for unplanned events.
All full-time Sappi employees belong to one of three funds:
 Sappi Pension Fund (privately administered; only Sappi employees)
 Sappi Provident Fund (privately administered; only Sappi employees)
 PPWAWU National Provident Fund (an umbrella fund open to employers/employees belonging to PPWAWU).
All funds are managed by a board of trustees.
Sappi Provident Fund moves to Sanlam Umbrella Fund
Umbrella funds provide employers with a cost-efficient retirement funding option. To this end, as of 01 March 2019, new Sappi employees must either join the Sanlam Umbrella Fund or the PPWAWU National Provident Fund.
Sappi Provident Fund members will also be offered an option to join the Sanlam Umbrella fund later this year.
Benefits of the Sanlam Umbrella Fund:
 A competitive cost structure. Staff moving from Sappi Provident Fund benefit from lower admin costs.
 Insured benefits are better than what the current fund can offer.
 Investment strategy is cost effective and appropriate. Continuous information and education for members
throughout their retirement planning journey with Sappi.  Benefit options can be extended in the future.
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07.


22 May 2019
Sappi retirement funding continued
 The Sanlam Umbrella Fund will be the retirement fund arrangement for new employees that join on or
after 01 March 2019.
 The Sappi Provident Fund is closed to new members, effective 01 March 2019.
 The intention is to transfer all members of the Sappi Provident Fund to the Sanlam Umbrella Fund towards the end of 2019. (Subject to approval from the regulatory authority. Transfer can take up to 18 months to complete.)
 A roadshow will be held in July/August to explain in more detail. The dates will be communicated in June.
 Once transfer is completed, employees on the PPWAWU National Fund will have the option of joining the Sanlam Umbrella Fund (possibly by early 2020).
 The Sappi Pension Fund will be unaffected for now − but members will be kept updated.
 The transition to the Sanlam Umbrella Fund will not impact any benefits of staff in the Sappi Pension Fund.
 The Sappi Pension Fund is a Defined Benefit Fund. Any possible transition to the Sanlam Umbrella Fund will see a complete change in the benefit structure, together with a significant negative tax implication.
For questions or queries, please contact Etienne Steenkamp at Etienne.Steenkamp@sappi.com.
Important to know:
Decision about retirement age
Following the announcement that the current Sappi Provident Fund members will be moved to the Sanlam Umbrella Fund, Sappi management have
had further extensive discussions, investigations and feedback regarding the retirement age for the benefit funds. A decision was reached that the retirement age should remain at 63 years of age.
Sappi is committed to review all retirement benefits from time to time, including retirement age, by benchmarking the market and other employer groups.
How will this affect Sappi Pension Fund members?
08.