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This comparison includes the closure of the Usutu Mill in January 2010 and the resulting loss of sales<br />
volume. Excluding the fiscal 2009 sales volumes of the Usutu mill, sales volumes of the Sappi Paper and<br />
Paper Packaging business increased by 6% in fiscal 2010 compared to fiscal 2009.<br />
A major determinant of sales pricing in the chemical cellulose business is the NBSK pulp market<br />
price. During fiscal 2010, the average NBSK pulp price increased by 36% from an average of US$ 650 /<br />
tonne in fiscal 2009 to an average of US$ 885 / tonne in fiscal 2010. During fiscal 2010, our average<br />
chemical cellulose selling prices in US dollar terms increased by 26% compared to fiscal 2009, but<br />
increased by only 11% in Rand terms due to the strengthening of the Rand to the US dollar during fiscal<br />
2010.<br />
Average selling prices realized in the Sappi Paper and Paper Packaging business increased by 20%<br />
in US dollar terms and by 4% in Rand terms compared to fiscal 2009.<br />
Sales of our Sappi Forests business increased by 33% in US dollar terms or 10% in Rand terms in<br />
fiscal 2010 (US$ 73 million; ZAR 547 million) compared to fiscal 2009 (US$ 55 million; ZAR 496 million).<br />
The sales volumes of the Sappi Forests business increased by 18% in fiscal 2010 compared to fiscal<br />
2009. Average selling prices of timber, in Rand terms, decreased by 9% in fiscal 2010 compared to fiscal<br />
2009 due to increased timber availability.<br />
Comparing fiscal 2009 with fiscal 2008<br />
Sales, in US dollar terms, from the southern African pulp and paper operations (Sappi Chemical<br />
Cellulose and Sappi Paper and Paper Packaging) declined by 20% in fiscal 2009 compared to fiscal<br />
2008 due to a 5% reduction in sales volume and a significant reduction in chemical cellulose selling<br />
prices which are denominated in US dollars. We experienced a strong decline in demand for chemical<br />
cellulose products as market conditions were significantly worse than during fiscal 2008, due to the<br />
global economic slow down. A major determinant of sales and sales pricing in the southern African pulp<br />
and paper operations is the NBSK market price. During fiscal 2009, the average NBSK price declined by<br />
26% from an average of US$ 876 per tonne for fiscal 2008 to an average of US$ 650 per tonne for fiscal<br />
2009.<br />
Sales in South Africa of the Sappi Paper and Paper Packaging business benefited from the weaker<br />
Rand to the US dollar during the first half of fiscal 2009, which reduced import substitution and improved<br />
local pricing. The Rand strengthened against the US dollar towards the end of the year, increasing<br />
competition from imports and placing pressure on local product prices.<br />
Timber sales volumes in our Sappi Forests business declined as the business reduced external<br />
sales in order to supply the increased timber requirement of the Saiccor mill after the expansion.<br />
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