2007 Annual Report - Sappi
2007 Annual Report - Sappi
2007 Annual Report - Sappi
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Notes to the group annual financial statements continued<br />
for the year ended September <strong>2007</strong><br />
10. Property, plant and equipment continued<br />
September 2006<br />
Usutu mill<br />
Economic conditions pertaining to the Usutu mill changed significantly during the 2006 reporting period. The demand for<br />
bleached pulpincreased, based on the increased price differential between bleached and unbleached pulp, resulting in a<br />
decrease in unbleached capacity.Further, higher pulp prices were prevalent over the period. This resulted in an impairment<br />
loss reversal of US$40 million. The recoverable amount of the relevant assets was determined on the basis of their value in<br />
use. The pre-tax discount rate used in measuring value in use was 5.8%.<br />
US$ million <strong>2007</strong> 2006<br />
11. Plantations<br />
Fair value of plantations at beginning of year 520 604<br />
Gains arising from growth* 76 70<br />
Fire, hazardous weather and other damages (13) –<br />
Gains arising from fair value changes 54 34<br />
Harvesting – agriculture produce (fellings) (70) (74)<br />
Translation difference 69 (114)<br />
Fair value of plantations at end of year 636 520<br />
* Includes transfers to inventory.<br />
<strong>Sappi</strong> manages the establishment, maintenance and harvesting of its plantations on a compartmentalised basis. These<br />
comprise pulpwood and sawlogs and are managed in such a way so as to ensure that the optimum fibre balance is supplied<br />
to its paper and pulping operations in Southern Africa.<br />
<strong>Sappi</strong> owns approximately 369,000 (2006: 372,000) hectares of plantation and directly and indirectly manages a further<br />
184,000 (2006: 173,000) hectares. 409,000 (2006: 398,000) hectares of this land is forested with approximately 37,311,000<br />
(2006: 38,248,000) standing tons of timber.<br />
As <strong>Sappi</strong> manages its plantations on a rotational basis and by implication, the respective increases by means of growth are,<br />
over the rotation period, negated by depletions for the groups own production or sales. Estimated volume changes, on a<br />
rotational basis, amount to approximately six million tons per annum.<br />
104<br />
sappi limited | 07 | annual report
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