2012 Integrated report - Sappi

17. Ordinary share capital and share premium continued
Capital risk management
The capital structure of the group consists of:
• issued share capital and share premium and accumulated profits disclosed above and in the statement of changes in equity respectively;
• debt, which includes interest-bearing borrowings and obligations due under finance leases disclosed under note 20; and
• cash and cash equivalents.
The objectives of the group in managing capital are:
• to safeguard the group’s ability to continue as a going concern, to be flexible and to take advantage of opportunities that are expected to
provide an adequate return to shareholders;
• to ensure sufficient resilience against economic turmoil;
• to optimise the weighted average cost of capital, given inherent constraints; and
• to ensure appropriate access to equity and debt.
The group monitors its gearing through a ratio of net debt (interest-bearing borrowings and overdraft less cash and cash equivalents) to total
capitalisation (shareholders’ equity plus net debt).
The group has entered into a number of debt facilities which contain certain terms and conditions in respect of capital management.
During fiscal 2012 and 2011, the group was in compliance with the financial covenants relating to the loans payable.
The group manages its capital and makes adjustments to it in light of changes in economic conditions. No changes were made in the
objectives, policies or processes during the current period.
US$ million 2012 2011 2010
18. Other comprehensive income (loss) (1)
Exchange differences on translation to presentation currency (60) (151) 52
Exchange differences on translation of share capital and share premium (36) (219) 86
Translation of foreign operations 12 81 (31)
Exchange differences arising on non-distributable reserves (5) (13) (3)
Reclassification adjustments to profit or loss on disposal of foreign operations (31) – –
Tax – – –
Actuarial gains (losses) on post-employment benefit funds 34 (60) (60)
Gross amount (88) (59) (71)
Tax (2) 122 (1) 11
Fair value adjustment on available-for-sale financial instruments 1 2 2
Gross amount 1 2 2
Tax – – –
Hedging reserves (44) 4 14
Movements during the year (37) 6 14
Reclassified to profit or loss (7) – –
Reclassified to property, plant and equipment (3) – –
Tax 3 (2) –
Other comprehensive (loss) income recorded directly in equity (69) (205) 8
Profit (loss) for the year 104 (232) 66
Total comprehensive income (loss) for the year 35 (437) 74
(1) The tax effect has been allocated to each individual category.
(2) The 2012 financial year includes US$101 million that relates to temporary differences recognised within other comprehensive income in previous financial years.
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