SAPPI LTD (SAP) 6-K

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Sales of goods to related parties decreased in six month period ended 30 June 2008 as compared to the prior period due to the Parent’s divestment of its paper merchant Map Merchant Group in October 2007. Other operating expenses include allocated corporate costs of EUR 4,000 and EUR 4,800 for the six months period ended 30 June 2008 and 2007, respectively and other operating expenses. These costs are primarily related to corporate level administrative services (executive personnel costs, human resources, legal services, IT services, insurance and other administrative services), and are generally allocated based on the ratio of the Company’s annual net sales or other specific allocation keys, to the Parent’s comparable amounts. Corporate expense allocations are in addition to business level expenses which are invoiced to the individual the Company businesses on at least a quarterly basis. Management considers that such allocations have been made on a reasonable basis, but may not necessarily be indicative of the costs incurred had the Company operated as a separate entity during the periods presented. Certain corporate costs incurred by M-real that did not directly or indirectly benefit the Company entities were not allocated to the interim financial statements as such expenses could not be reasonably allocated. As of 30 June 2008 and 31 December 2007 cash and cash equivalents include receivables due from M-real from cash pooling amounting to EUR 1,058 and EUR 24,538, respectively. Interest income on these balances due from M-real has been recognised in other financial income. As of 30 June 2008 and 31 December 2007, current accounts receivable and non-interest bearing receivables include amounts due from related parties in the amount of EUR 14,846 and EUR 33,267, respectively, and accounts payable and other non-interest bearing liabilities include amounts due to related parties in the amount of EUR 33,625 and EUR 21,693, respectively. As of 30 June 2008 and 31 December 2007, non-current borrowings include non-current loans due to related parties in the amount of EUR 55,585 and EUR 55,661, respectively, and current borrowings include current loans due to related parties in the amount of EUR 32,869 and EUR 12,000, respectively. Interest expenses on these balances due to related parties have been recognised in other financial expenses. During the six months ended 30 June 2007, M-real converted EUR 166,819 of the Company’s related party interest bearing liabilities to invested equity. During the same period the Company paid a dividend to M-real in the amount of EUR 45,000. The net effect of the recapitalisation, all of which related to the Company's business in Finland, was a decrease in invested equity of EUR 121,819. Stockstadt and CWZ participate in a profit and loss transfer arrangement (“PLTA”) interim with its holding company M-real Deutsche Holding GmbH for all periods presented in the interim financial statements. Under the PLTA, Stockstadt and CWZ are obligated to transfer their entire profits, as determined under the German Commercial Code (HGB), to Deutsche Holding GmbH during the term of the agreement. Conversely, Deutsche Holding GmbH is obliged to compensate any net loss generated by Stockstadt and CWZ as determined under HGB. The Company recognised the right to be compensated for net loss generated by recognizing EUR 15,791 in current accounts receivable as of 31 December 2007 offset with a corresponding increase in invested equity. As both the right to transfer profits and the claim to be compensated for any net losses arises at the end of the financial year, the Company did not recognise a receivable for net loss, as determined under HGB, generated at Stockstadt and CWZ in the amount of EUR 19,639 as of 30 June 2008. In the regular course of business, the Company is exposed to certain financial risks which are hedged by either the local business or by Metsä Finance on positions held by the Company. These risks are typically commodity (energy) prices, foreign currency exposure and translation risk of net investments in foreign entities. The Company has elected not to allocate hedging positions of the Company specific risk, held by Metsä Finance, to the interim financial statements. 107
Note 6 - Commitments and contingencies Commitments Operating and finance lease commitments The Company holds operating leases for certain vehicles and equipment. Leasing liabilities for contracts exceeding 12 months and for non-cancellable operating leasing contracts were EUR 1,879 for the six months ended 30 June 2008, EUR 1,657 and EUR 1,839 for the year ended 31 December 2007. The Company recognised finance lease assets in the amount of EUR 51,600 and EUR 58,242 and corresponding obligations in the amount of EUR 51,754 and EUR 57,004 as of 30 June 2008 and 31 December 2007, respectively. Financial expenses recognised in relation to the finance lease arrangements amounted to EUR 1,555, EUR 1,706 and EUR 3,173 for the six months ended 30 June 2008 and 2007 and year ended 31 December 2007, respectively. Non-cancellable purchase commitments The Company has no non-cancellable purchase agreements as of 30 June 2008. Guarantees and indemnifications The Company has not entered into any agreements that would require it, as a guarantor, to recognise a liability for the fair value of obligations it has undertaken in issuing the guarantee. All assets of the Company have been pledged by the Parent. Warranties The Company does not make express warranties on its products other than that such products comply with the Company’s specifications. Based on historical experience, product quality claims are not material, and are charged against net sales when incurred. Contingent liabilities Customer claims and other litigation In addition to the environmental related matters discussed above, the Company may be subject to various product liabilities, commercial and employment litigation, and other legal matters that are considered to be in the ordinary course of business. The Company has no legal reserve as of 30 June 2008, pertaining to customer claims and other litigation. As of 30 June 2008, there are no open legal matters, and management of the Company cannot reasonably estimate the outcome of potential legal proceedings, claims, or litigation. Management believes that any such potential matters will not materially affect the Company’s financial position, results of operations, or cash flows. Note 7 - Material Changes in the Business There have been no shares and convertible securities issued. No material fact or circumstance has occurred between the end of the latest financial year of the Company and the date of the prospectus, in so far as not already dealt with in the interim financial statements included in the report of historical financial information. 108
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SAPPI LTD (SAP) 6-K Current report
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INCORPORATION BY REFERENCE Sappi Li
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CERTAIN FORWARD-LOOKING STATEMENTS
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South African legal advisor to Sapp
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TABLE OF CONTENTS Page CORPORATE IN
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ACTION REQUIRED BY SAPPI SHAREHOLDE
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IMPORTANT DATES/TIMES SALIENT DATES
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“CSDP” “CWF” “Deloitte So
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“Sappi Papier Holding” “Sappi
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CURRENCY TRANSLATION This Circular
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The tables below highlight certain
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Reconciliation from profit for the
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3. PRINCIPAL TERMS AND CONDITIONS O
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• dispose of any of the Settlemen
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There is no accrued taxation, which
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(d) all of the know-how, brands, or
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The map below sets out the location
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Name Age Position Experience Martti
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5. FINANCIAL INFORMATION ON THE ACQ
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The registered address of Metsälii
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Pro forma financial effects for the
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G. Financial information for Sappi
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13.3. Major Shareholders prior to t
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Dr D.C Cronje was appointed in Janu
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Executive Directors RJ Boëttger (3
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14.2.2. Changes in executive direct
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2007 2006 Direct Interests Indirect
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Other than described above, there a
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21. DIRECTORS’ RESPONSIBILITY STA
Page 60 and 61: 25. EXCHANGE CONTROL AUTHORITY Subj
Page 62 and 63: • Audited Annual Financial Statem
Page 64 and 65: HISTORIC FINANCIAL INFORMATION RELA
Page 66 and 67: COMBINED STATEMENTS OF CASH FLOWS F
Page 68 and 69: Note 1• Background and basis of p
Page 70 and 71: The translation of foreign currency
Page 72 and 73: Goodwill that arose prior to 1 Janu
Page 74 and 75: Revenue recognition Revenue compris
Page 76 and 77: Application of new and amended IFRS
Page 78 and 79: Liquidity risk is defined as the ri
Page 80 and 81: Other operating expenses include al
Page 82 and 83: Note 7•Personnel data The Company
Page 84 and 85: Note 9•Financial income and expen
Page 86 and 87: The Company has offset deferred tax
Page 88 and 89: Note 12•Property, plant and equip
Page 90 and 91: Property, plant and equipment inclu
Page 92 and 93: Note 16•Cash and cash equivalents
Page 94 and 95: The Company expects to contribute E
Page 96 and 97: Note 20•Maturity of repayment and
Page 98 and 99: Maturity of repayment and interest
Page 100 and 101: Note 22•Other non-current liabili
Page 102 and 103: 2. Interim Condensed Combined Finan
Page 104 and 105: INTERIM CONDENSED COMBINED CASH FLO
Page 106 and 107: NOTES TO THE INTERIM CONDENSED COMB
Page 108 and 109: A reconciliation of income tax expe
Page 112 and 113: 3. Interim condensed combined finan
Page 114 and 115: INTERIM CONDENSED COMBINED CASH FLO
Page 116 and 117: NOTES TO THE INTERIM CONDENSED COMB
Page 118 and 119: Depreciation of buildings and machi
Page 120 and 121: As of 31 December 2007 and 2006, cu
Page 122 and 123: ANNEXURE 2 INDEPENDENT REPORTING AC
Page 124 and 125: Opinion In our opinion, the combine
Page 126 and 127: Yours sincerely PRICEWATERHOUSECOOP
Page 128 and 129: The pro forma adjustments reflect t
Page 130 and 131: • anticipated synergies and effic
Page 132 and 133: (A) (B) Financial information for t
Page 134 and 135: (2) Adjustments to the equity balan
Page 136 and 137: ASSETS EUR’000 US$’000 Acquired
Page 138 and 139: UNAUDITED PRO FORMA INCOME STATEMEN
Page 140 and 141: Pro forma notes (1) Reflects the el
Page 142 and 143: * The number of shares in issue at
Page 144 and 145: Notes to the unaudited pro forma co
Page 150 and 151: (2) (EUR54,970) has been reallocate
Page 152 and 153: We do not accept any responsibility
Page 154 and 155: ANNEXURE 5 MATERIAL LOANS RELATING
Page 156 and 157: (4) The financial covenant relates
Page 158 and 159: The fair value of non-current borro
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ADDITIONAL MATERIAL LOANS OF THE GR
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Directorships in the last five year
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David Charles Brink Age 69 Business
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Directorships in last five years Cu
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Directorships in last five years Fo
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Directorships in last five years Cu
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Experience Jan joined Sappi in 1992
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Experience Berry Wiersum joined Sap
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ANNEXURE 7 DETAILS ON THE SAPPI SHA
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SPECIAL RESOLUTION NUMBER 1 Increas
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Explanatory Note to Ordinary Resolu
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This Page Printed On Pink Paper Sap
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FORM OF DIRECTION FOR HOLDERS OF DE
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(Incorporated in the Republic of So
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TABLE OF CONTENTS Page REVISED LIST
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2.2 Background Sappi Limited was fo
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Where shareholders are required to
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6. INFORMATION RELATING TO THE DIRE
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6.4 Additional information pertaini
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No commissions are payable or have
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15. MATERIAL VENDORS There have not
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ANNEXURE A TRADING HISTORY OF SAPPI
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ANNEXURE B PRINCIPAL IMMOVABLE PROP
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ANNEXURE C APPOINTMENT, QUALIFICATI
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If any question arises at any meeti
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As at the termination of each annua
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At every annual general meeting of
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Human Resources committee The respo
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Risk management The Sappi Board rec
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Interest in contracts The Sappi Gro
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ANNEXURE E CAPITAL COMMITMENTS AND
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Westbrook Cogeneration Agreement: I
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SIGNATURE Pursuant to the requireme
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