2012 Integrated report - Sappi

16. Trade and other receivables continued
16.4 Off-balance sheet structures continued
Sappi Southern Africa securitisation facility
Sappi sells the majority of its ZAR receivables to Rand Merchant Bank Limited, which issues commercial paper to finance the purchase of
the receivables. Sappi does not guarantee the recoverability of any amounts, but shares proportionately with Rand Merchant Bank Limited
the credit risk of each underlying receivable, after all recoveries, including insurance recoveries, with Sappi bearing 15% of such risk (and
Rand Merchant Bank Limited the remainder). Sappi administers the collection of all amounts processed on behalf of the bank that are due
from the customer. The purchase price of these receivables is adjusted dependent on the timing of the payment received from the client.
The rate of discounting that is charged on the receivables is the Johannesburg Inter-bank Agreed Rate (‘JIBAR’) plus a spread. This
structure is treated as an off-balance sheet arrangement.
If this securitisation facility were to be terminated, we would discontinue further sales of trade receivables and would not incur any losses
in respect of receivables previously sold in excess of the 15% mentioned above. There are a number of events which may trigger
termination of the facility, among others, an amount of defaults above a specified level; terms and conditions of the agreement not being
met; or breaches of various credit insurance ratios. The impact on liquidity varies according to the terms of the agreement; generally,
however, future trade receivables would be recorded on balance sheet until a replacement agreement is entered into.
The total amount of trade receivables sold at the end of September 2012 amounted to US$126 million (2011: US$121 million).
Details of the securitisation programme at the end of fiscal 2012 and 2011 are disclosed in the table below:
Bank Currency Value Facility Discount charges
2012
Rand Merchant Bank Limited ZAR ZAR1,044 million Unlimited (1) Linked to 3-month JIBAR
2011
Rand Merchant Bank Limited ZAR ZAR979 million Unlimited (1) Linked to 3-month JIBAR
(1) The facility in respect of the securitisation facility is unlimited, but subject to the sale of qualifying receivables to the bank.
Details of the on-balance sheet securitisation facilities are described in note 20.
16.5 Concentration of credit risk
A significant portion of the group’s sales and accounts receivable are from a small number of customers. None of the group’s significant
customers represented more than 10% of our sales during the years ended September 2012 and September 2011. Where appropriate,
credit insurance has been taken out over the group’s trade receivables.
None of the group’s other receivables represent a high concentration of credit risk because the group has dealings with a variety of major
banks and customers worldwide.
At balance sheet date, the carrying amount of US$807 million (2011: US$831 million) represents the group’s maximum credit risk
exposure from trade and other receivables.
The group has the following amounts due from single customers:
2012 2011
Number of
customers US$ million Percentage
Number of
customers US$ million Percentage
Greater than US$10 million 8 135 21% 9 170 24%
Between US$5 million
and US$10 million 9 61 10% 8 51 7%
Less than US$5 million 1,970 432 69% 2,423 479 69%
1,987 628 100% 2,440 700 100%
At balance sheet date, none of the group’s customers with balances equal to or greater than US$5 million had breached their contractual
maturity terms and thus, no impairment charges have been recognised in respect of such customers.
Refer to note 29.2 for further details on credit risk.
sappi Integrated Report 2012 131