2012 Integrated report - Sappi

Notes to the group annual financial statements
for the year ended September 2012
US$ million 2012 2011
9. Property, plant and equipment
Land and buildings (1)
At cost 1,494 1,542
Accumulated depreciation and impairments (841) (840)
653 702
Plant and equipment (2)
At cost 7,323 7,408
Accumulated depreciation and impairments (4,864) (4,932)
2,459 2,476
Capitalised leased assets (3)
At cost 558 581
Accumulated depreciation and impairments (513) (524)
45 57
Aggregate cost 9,375 9,531
Aggregate accumulated depreciation and impairments (6,218) (6,296)
Aggregate book value 3,157 3,235
The movement of property, plant and equipment is reconciled as follows:
US$ million
Land and
buildings
Plant and
equipment
Capitalised
leased assets
Net book value at September 2010 753 2,750 157 3,660
Additions 26 241 1 268
Disposals – (5) – (5)
Transfers – 88 (88) –
Depreciation (46) (356) (12) (414)
Impairments (4) – (122) – (122)
Translation differences (31) (120) (1) (152)
Net book value at September 2011 702 2,476 57 3,235
Additions 21 376 1 398
Finance costs capitalised – 6 – 6
Disposals (15) (4) – (19)
Transfers 1 (1) – –
Depreciation (37) (319) (11) (367)
Impairments – (20) – (20)
Reversal of impairments – 10 – 10
Translation differences (19) (65) (2) (86)
Net book value at September 2012 653 2,459 45 3,157
(1) Details of land and buildings are available at the registered offices of the respective companies who own the assets.
(2) Plant and equipment includes vehicles and furniture, the book value of which does not warrant disclosure as a separate class of assets.
(3) Capitalised leased assets consist primarily of plant and equipment.
(4) Pursuant to the group’s strategy review, the group implemented a number of initiatives during the year which resulted in asset impairment charges being recorded
during fiscal 2011.
Refer to note 24 for details of encumbrances.
Asset impairments and impairment reversals
September 2012
Sappi Southern Africa
Sappi Paper and Paper Packaging operations. Certain fixed assets that were impaired in fiscal 2011 were transferred to other cash
generating units during the year resulting in an impairment reversal of US$10 million.
Ngodwana Mill. Some of the equipment at Ngodwana Mill with a book value of US$8 million will be taken out of production as part of the
conversion project to produce dissolving wood pulp resulting in an impairment charge of US$8 million to profit or loss.
Tugela Mill. At the end of fiscal 2012, there were indicators of impairment at Tugela Mill in Sappi Southern Africa. Difficult market
conditions as well as the cost structure of a paper machine (‘PM4’) at the mill did not allow the paper machine to operate profitably.
As a result, PM4 (a sackkraft and containerboard machine) was tested for impairment in accordance with IAS 36 by comparing the
recoverable amount with the carrying amount.
As a result, an impairment charge of US$9 million has been recorded in other operating expenses in profit or loss for the period.
The recoverable amount was calculated on a value in use basis, using a real pre-tax discount rate of 7.77%. On 12 October 2012,
Sappi announced the decision to mothball PM4 from 01 January 2013 with the intention to restart the machine when the market
conditions improve.
Total
124