SAPPI LTD (SAP) 6-K

Restructuring
A restructuring provision is recorded for the financial period when the Company has incurred a legal or constructive obligation to make a payment.
Termination payments are recorded when a detailed plan has been made of the restructuring and the main points of the plan have been communicated to the
employees who are affected by the arrangement.
Environmental obligations
Costs arising from environmental remediation which do not increase present or future revenue are recorded as annual expenses. Environmental liabilities are
recorded in accordance with present environmental protection laws and regulations when it is probable that there is an obligation and its amount can be
estimated reasonably.
Government grants
Government grants received for the purpose of purchasing property, plant and equipment and similar are entered as deferred income in the combined balance
sheet liabilities and recognised in other operating income during the actual useful life of the asset straight-line basis. Other grants are recorded as other
operating income in the combined income statement for the financial periods during which they are matched with the corresponding expenses.
Borrowing costs
Borrowing costs are generally recognised as an expense in the period in which they are incurred. When an item of property, plant and equipment is involved
in a major and long-term investment project, the borrowing costs directly due to the acquisition and construction of the asset are included in the asset’s cost.
Transaction expenses directly due to obtaining loans are deducted from the original cost of said loan and periodised as interest expense using the effective
interest rate method.
Income taxes
During the periods presented, the Company did not file separate tax returns for the Finnish mills (Kangas and Kirkniemi) and Stockstadt and CWZ as these
entities were included in the tax grouping of other M-real entities within the respective entities tax jurisdictions. Biberist and CN have historically not been
part of any M-real tax grouping and have filed separate, respective local jurisdictional tax returns on an annual basis. The income tax provision included in
these combined financial statements was calculated using a method consistent with a separate return basis, as if each of the Company’s companies were a
separate taxpayer in the jurisdiction of primary operation. Tax expense in the income statement is comprised of the current tax and deferred taxes. Any
current taxes are deemed settled through invested equity. Income taxes are recorded on an accrual basis for the taxable income of the Company applying the
tax rate in force in each country at that time.
Deferred taxes and tax assets are calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The largest temporary differences arise from the impairment on long lived assets and depreciation on property
plant and equipment. Temporary differences arise also from unused tax losses. Deferred income tax is not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss.
Deferred taxes have been calculated by applying the tax rates in force by the balance sheet date at that time and are expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered and settled. Tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which a deductible temporary difference can be utilised.
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