SAPPI LTD (SAP) 6-K

(C)
The Acquired Business financial information has been extracted from the Acquired Business reviewed condensed Carve-out Financials for the six
month period ended June 2008. The Acquired Business income statement was converted from Euros into US Dollars using the average exchange rate
for the six months ended June 2008 of EUR1 : US$1.5315. Refer to note 1 in the notes to the income statement for the six month period ended June
2008 for a reconciliation of the Acquired Business income statement information as presented in the carve-out accounts for the six month period ended
June 2008 to the Acquired Business carve-out information presented above.
Pro forma notes
(1) Reflects the elimination of estimated historical depreciation charges associated with the decrease in property, plant and equipment in connection with
purchase price allocation.
(2) The pro forma adjustment related to finance costs represents the incremental interest expense associated with the financing used to partially fund the
acquisition of the Acquired Business. The adjustment is calculated as follows:
EUR’m
US$’m
Vendor loan note 23 35
Less: historical interest on debt not acquired (3) (5)
Pro forma adjustment 20 30
The finance costs on the note payable of EUR212 million (US$335 million) has been determined based on fixed interest rates established in the vendor
note agreement and calculated at 9% for the first 6 months, 12% for the next 6 months, 14% for the next 6 months and 15% thereafter.
(3) Represents the tax effect of the pro forma adjustments described above at an estimated statutory tax rate for the combined group of 28.3%. We have
applied this rate to all periods presented as we believe it is a rate indicative of our future tax rate. We have assumed that tax benefits created will be
utilised to offset tax liabilities in these periods. However, our ability to utilise such assets is dependent on our taxable income and actual deferred tax
liabilities. Accordingly, our future effective tax rate may differ significantly from the rate presented in these unaudited pro forma condensed combined
financial statements.
(4) Headline Earning Per Share
US$’m
Sappi
Group
Acquired
Business
Acquired
Business
Three Six
month month
Nine month period period
period ended ended
ended June December June
2008 2007 2008
(A) (B) (C)
Acquired
Business
Combined
nine
month
period
ended
June 2008
Pro forma
adjustments Notes
Pro
forma
Headline earnings per share (US cents) 58 18
Calculation of Headline earnings **
Profit for the year 134 186
Profit on disposal of property, plant and equipment (5) (5)
Asset impairments (reversals) 3 (160)
Tax effect of above items 1 28
Headline earnings 133 49
** Headline earnings disclosure is required by the JSE Limited.
140