2012 Integrated report - Sappi

Notes to the group annual financial statements
for the year ended September 2012
US$ million 2012 2011
13. Joint ventures and associates
Cost of joint ventures and associates (1) 34 96
Share of post-acquisition (loss) profit, net of distributions received (19) 1
Accumulated impairments – (45)
Foreign currency translation effect 3 24
18 76
Summarised financial information in respect of the group’s joint ventures and associates
is set out below:
Total assets 139 679
Total liabilities 97 327
Net assets 42 352
Group’s share of joint ventures and associates net assets after accumulated impairments (1) 18 76
US$ million 2012 2011 2010
Sales 881 942 691
Profit for the period 2 17 35
Group’s share of joint ventures and associates profit for the period (1) 2 6 13
(1) Jiangxi Chenming
In August 2012, the group entered into a sale agreement for its equity accounted 34% shareholding in Jiangxi Chenming Paper Company
Limited (‘Jiangxi Chenming’) with the majority shareholder and co-founding joint venture partner for US$42 million resulting in a profit of
US$11 million which includes the realisation of a foreign currency translation reserve of US$26 million that was previously accounted for in
other comprehensive income and which has been realised using the step-by-step consolidation method. The proceeds were received on
06 November 2012. The income statement information includes the results for Jiangxi Chenming up to August 2012.
Umkomaas Lignin (Pty) Limited
A 50% joint venture agreement with Borregaard Industries Limited for the construction and operation of a lignin plant at Umkomaas and
the development, production and sale of products based on lignosulphates in order to build a sustainable lignin business. The financial
statements of Umkomaas Lignin (Pty) Limited are to 31 December of each year which is the year-end of Borregaard. The most recent
audited financials were to 31 December 2011.
Sapin SA
A 50% joint venture with Sapin SA located in Belgium for the buying and selling of wood and wood chips to Sappi and other paper
manufacturers. The financial statements of Sapin SA are to 31 December of each year which is the year-end of Sapin SA. The most
recent audited financials were to 31 December 2011.
Papierholz Austria GmbH
A 43% joint venture agreement for the buying and selling of wood and wood chips to Sappi and other paper and pulp manufacturers.
The financial statements of Papierholz Austria GmbH are to 31 December of each year which is the year-end of Papierholz Austria GmbH.
The most recent audited financials were to 31 December 2011.
Timber IV
A special-purpose entity (‘SPE’) into which Sappi contributed promissory notes (relating to certain Timberlands, equipment and machinery
sold by Sappi to a third party timber company) which were pledged as collateral for the SPE to issue bonds. The SPE is not consolidated
because the group has taken the position that it is controlled by an unrelated investor which has sufficient equity capital at risk. The
group’s investment in the SPE was nil as at the end of fiscal 2012 and 2011 as the underlying promissory notes and bonds have been
repaid. The financial statements of Timber IV are to 30 September of each year. The results are unaudited.
Energie Biberist AG
In July 2012, Sappi disposed of Sappi Schweiz AG together with its 10% investment in Energie Biberist AG (‘EBAG’). Sappi exercised
significant influence by virtue of the fact that Sappi had the power to appoint one of the five directors. EBAG is an energy company that
supplied Biberist Mill with steam and 100% of its electricity requirements. On the cessation of production at Biberist Mill in August 2011,
the investment in the associate was impaired by the group resulting in a charge to other operating expenses in profit or loss for the
period. The financial statements of EBAG are to 31 December each year which is the year-end of EBAG. The most recent audited
financials of EBAG were to 31 December 2011.
Where the year-ends of joint ventures and associates are different to Sappi’s, the unaudited management accounts of the joint ventures and associates are used for the
periods to Sappi’s year-end.
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