London. Sappi, one of the world`s leading producers of fine paper, today announced year-end and fourth quarter results for the period to September 2000. Commenting on the results, Sappi Executive Chairman, Eugene van As, said: "Our strong performance for the year demonstrates the success of Sappi`s growth strategy over the last decade. Our margins and returns are now amongst the highest in the industry and we are well placed to continue to create value through the cycle. Our earnings per share have grown in US dollar terms at a compound annual rate of 33% from 1996 to 2000." "We had another strong quarter in both coated fine paper and forest product businesses. The global spread of our manufacturing assets helped moderate the distortions caused by the strength of the US dollar." Results for the Year The group`s earnings reached a new high of US$363 million, an increase of 198% on the previous year. Operating profit increased 65% to US$672 million and earnings per share (before exceptional items) rose to 146 US cents, 92% above the previous year. Basic earnings per share were 153 cents. Internal efficiencies and containment of costs reduced cost of sales per ton by 3.5% compared to last year. Sales reached US$4.7 billion for the year, 6.7% better than the previous year, as a result of a 4.2% increase in volume and a 2.5% price increase in US dollars. Return on equity increased to 23%, well ahead of the group's estimated cost of equity of 13%. Finance costs continued to decline as a result of lower debt and refinancing higher cost loans. Normalised finance costs for the last quarter, before capitalised interest, were down to US$29 million which should lead to a substantial reduction of finance costs next year. (2000 US$ 161 million before capitalised interest). Gross cash flow (EBITDA) increased to US$1 052 million, up US$264 million and net debt reduced by US$833 million over the year. Net debt to total capitalisation now stands at 31%. Prospects Looking forward Sappi`s fundamental market conditions remain firm. The world economy is expected to grow in the coming year by between 3% and 3.5% and demand for paper products is expected to continue to remain strong. Capacity additions remain at very low levels and although some new capacity is anticipated to come on stream during 2001, the industry is increasingly matching output to demand. Over the next few months Sappi expects some further inventory adjustment and will take some additional commercial downtime to maintain internal inventories at normal levels. Commenting on group prospects van As said that Sappi was very well positioned for the coming year. "We anticipate driving good organic growth out of our existing asset base as we continue to extract integration benefits and focus on ever improving internal efficiencies, cost control and product innovation. In addition, the prices for most of our products are, in general, well above the average prices for the year ended September 2000 and we expect to maintain these prices in the year ahead". "The group is conscious that the industry has failed to earn its cost of capital over the past decade, ourselves included, however we believe that the group`s performance proves our strategy was the right one. Going forward we expect to continue to create value not only in good years but over the cycle". "We have a positive outlook for 2001"