SAPPI LTD (SAP) 6-K

Application of new and amended IFRS standards and IFRIC interpretations
The IASB has published the following standards and interpretations whose application will be mandatory in 2008 or later. The Company has not early
adopted these standards, but will adopt them in later periods:
Changes in – ‘IAS 27 – Consolidated Separate Financial Statements‘,‘IAS 39 – Financial Instruments: Recognition and Measurement‘.
The following changes are not relevant to the Company’s operations:
‘IFRS 1– First-time Adoption of International Financial Reporting Standards‘, ‘IFRS 2–Share-based Payment‘ and ‘IFRS –3 Business Combination‘.
The following new standards and interpretations effective in 2008 are not relevant to the Company’s operations:
IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, provides guidance on whether share-based transactions involving treasury shares or involving
group entities should be accounted for as equity settled or cash-settled share-based payment transactions in the stand-alone accounts of the company’s
combined financial statements.
IFRIC 12, ‘Service Concession Arrangements’, applies to contractual arrangements whereby a private sector operator participates in the development,
financing, operation and maintenance of infrastructure for public sector services.
IFRIC 14, ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’, is applied to post-employment defined
benefit plans and other long-term defined benefit plans under IAS 19, if the plan includes minimum funding requirements. The interpretation also clarifies the
criteria for recognition of an asset on future refunds or reductions in future contributions.
Standards published by IASB that will be effective in 2009 or later:
IAS 1 (Revised) ‘Presentation of Financial Statements’, is aimed at improving users’ ability to analyse and compare the information given in financial
statements by separating changes in equity of an entity arising from transactions with owners from other changes in equity. The standard will have effect on
presentation but not on accounting policy.
Amendment to IAS 23, ‘Borrowing Costs’, requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production
of qualifying asset as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The amendment does not
change the accounting policy applied by the Company and therefore, does not have any impact on the Company’s combined financial statements.
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements – Financial Instruments Puttable at Fair Value and
Obligations Arising on Liquidation. The management is currently assessing the impact of the amendment on the financial statements.
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements –
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate. The management is currently assessing the impact of the amendment on the
financial statements.
Amendment to IAS 39 Financial instruments: Recognition and measurement – Eligible Hedged Items. The amendment does not have an effect on the
Company’s accounts, as the hedging activities and hedge accounting are centralised to the M-real Group’s internal bank.
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