2007 Annual Report - Sappi

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Notes to the group annual financial statements continued for the year ended September 2007 21. Interest-bearing borrowings continued Principal Balance Interest amount sheet Security/ Financial Currency rate (10) outstanding value Cession Expiry covenants Unsecured bank term loans Societe Generale EUR Fixed EUR25 million EUR25 million October 2007 No financial covenants Commerzbank EUR Fixed EUR25 million EUR25 million October 2007 No financial covenants EBITDA to net interest Österreichische Revolving and net debt to Kontrollbank EUR Fixed EUR35 million EUR35 million (1,2,8) facility capitalistion (5) Österreichische Kontrollbank EUR Variable EUR58 million EUR58 million (1, 8) December 2007 No financial covenants EBITDA to net interest Österreichische and net debt to Kontrollbank EUR Fixed EUR400 million EUR398 million (2,6,8) December 2010 capitalistion (5) ABN AMRO US$ Fixed US$18 million US$18 million May 2008 No financial covenants EBITDA to net interest Österreichische and net debt to Kontrollbank US$ Fixed US$38 million US$38 million (2,6,8) June 2010 capitalistion (5) Syndicated loan: EBITDA to net interest agent is and net debt to BNP Paribas CHF Variable CHF165 million CHF165 million (2,8) June 2010 capitalistion (5) Nedbank ZAR Fixed ZAR348 million ZAR348 million (1) January 2011 No financial covenants Commerzbank ZAR Fixed ZAR145 million ZAR145 million (1) March 2010 No financial covenants EBITDA to net interest and net debt to Calyon ZAR Variable ZAR99 million ZAR99 million (1,4) October 2009 capitalistion (5) RZB Bank EUR Fixed EUR10 million EUR10 million December 2009 No financial covenants 120 sappi limited | 07 | annual report
21. Interest-bearing borrowings continued The analysis of the currency per debt is: Local currency US$ million million US$ 1,015 1,015 Swiss Franc 165 142 Euro 700 999 ZAR 3,044 443 (1) The value outstanding equals the total facility available. (2) In terms of the agreement, limitations exist on liens, sale and leaseback transactions and mergers and consolidation. Sappi Limited must maintain a majority holding in Sappi Papier Holding GmbH Group. (3) Sappi Papier Holding GmbH, Sappi Limited or Sappi International SA may at any time redeem the June 2012 and 2032 public bonds (the “Securities”) in whole or in part at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities to be redeemed and (ii) a make-whole amount based upon the present values of remaining payments at a rate based upon yields of specified US treasury securities plus 25 basis points, with respect to the 2012 Securities, and 30 basis points, with respect to the 2032 Securities, together with, in each case, accrued interest on the principal amount of the securities to be redeemed to the date of redemption. (4) The financial covenant relates to the financial position of Sappi Manufacturing, a wholly owned subsidiary of Sappi Limited. (5) Financial covenants relate to the Sappi Limited Group. (6) The principal value of the loans/bonds corresponds to the amount of the facility, however, the outstanding amount has been adjusted by the discounts paid upfront and the fair value adjustments relating to hedge accounting. (7) Fixed rates have been swapped into variable rates. These swaps are subject to hedge accounting in order to reduce as far as possible the fair value exposure. Changes in fair value of the underlying debt which are attributable to changes in credit spread have been excluded from the hedging relationship. (8) A limitation exists on the disposal of assets. Sappi Limited must maintain a majority in Sappi Papier Holding GmbH Group. (9) The programme limit of this unsecured facility is ZAR1 billion. (10) The nature of the variable rates for the group bonds is explained in note 31 to the financial statements. The nature of the interest rates is determined with reference to the underlying economic hedging instrument. (11) Trade receivables have been securitised for the amounts outstanding. (12) A detailed reconciliation of total interest bearing borrowings has been performed in note 31. Sappi Limited’s borrowings are raised through four group entities, namely, Sappi Papier Holding GmbH, Sappi International SA, Sappi Trading Pulp AG and Sappi Manufacturing (Pty) Limited. Other restrictions As is the norm for bank loan debts, a portion of Sappi Limited’s financial indebtedness is subject to cross default provisions. Breaches in bank covenants in certain subsidiaries, if not corrected in time, might result in a default in group debt, and in this case, a portion of Sappi Limited consolidated liabilities might eventually become payable on demand. During fiscal 2007 and 2006 we were in compliance with the financial covenants relating to the material loans payable as well as all revelant test dates. Regular monitoring of compliance with applicable covenants occurs. If there is a possible breach of a financial covenant in the future, negotiations are commenced with the applicable institutions before such breach occurs. In this respect the following waivers have been obtained related to reporting of the secured securitisation borrowing: During fiscal 2006, SDW (S D Warren), part of Sappi Fine Paper North America, became aware of an issue relating to its accounts receivable securitisation programme. Since September 2002, the sale of intercompany receivables from SDW to S D Warren Finance Company (Finco) had not been reflected in the Finco financial statements. The sale of intercompany receivables is required under the first step agreement between SDW, Cloquet and Finco. (In September 2002, SDW amended its securitisation agreement with State Street Bank to eliminate the securitisation of intercompany receivables). Though the issues had no financial or negative impact on external parties to the securitisation programme, it was determined that breaches of various covenants under both the first step agreement and the securitisation agreement with State Street Bank existed. SDW and Cloquet received a waiver dated 15 August 2006 to address the breaches. It was determined that the omission of the sale of intercompany receivables in Finco’s financial statements equired a restatement of Finco’s financial statements for fiscals 2003, 2004 and 2005. 2,599 sappi limited | 07 | annual report 121
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annual report 2007
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Our business Sappi is a global pape
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Our top risks These risks are furth
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Financial targets and performance*
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Our Charter commitments Examples of
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Business structure Johannesburg Asi
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Our brands and products Coated pape
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Non-executive directors continued D
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Divisional and corporate management
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In Europe we face major challenges.
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We expect to continue our improving
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Q: How will you improve delivery on
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Overview Description The main produ
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A major feature of the year has bee
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In the year ahead, we will continue
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Overview The Forest Products busine
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Value added statement for the year
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Sappi has a global insurance struct
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Sales Sales volume (in metric tons)
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Divisional contributions to operati
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The impact of these changes on oper
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Cash flow analysis In the table bel
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project and again aim to fund this,
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In 2006, both Standard & Poor’s (
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y certain of the individual direct
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Not restated for IFRS* September Se
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September September September Septe
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Element/Best practice Sappi applica
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The board of directors The basis fo
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Our compensation philosophy is base
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stakeholders with whom they interac
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Auditor’s report Independent audi
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Directors’ report for the year en
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Directors and secretaries The names
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Group balance sheet at September 20
Page 71 and 72: Group statement of recognised incom
Page 73 and 74: Group balance sheet in Rands conven
Page 75 and 76: Notes to the group annual financial
Page 77 and 78: Fair value hedge A hedge of the exp
Page 79 and 80: (ii) Associates The results and ass
Page 81 and 82: • it transfers (or it assumes an
Page 83 and 84: 2.3.8 Inventories Inventories are a
Page 85 and 86: 2.3.13 Plantations Plantations are
Page 87 and 88: the year that are declared after th
Page 89 and 90: Owner-occupied investment propertie
Page 91 and 92: into account, unadjusted current ma
Page 93 and 94: The group is required to record pro
Page 95 and 96: second where a share-based payment
Page 97 and 98: 3. Segment information continued Sa
Page 99 and 100: US$ million 2007 2006 4.1 Operating
Page 101 and 102: US$ million 2007 2006 6. Taxation c
Page 103 and 104: 7. Earnings per share and headline
Page 105 and 106: US$ million 2007 2006 10. Property,
Page 107 and 108: 2007 2006 US$ million Assets Liabil
Page 109 and 110: US$ million 2007 2006 12. Deferred
Page 111 and 112: 14. Joint ventures and associates c
Page 113 and 114: US$ million 2007 2006 17. Trade and
Page 115 and 116: 17. Trade and other receivables con
Page 117 and 118: 19. Reconciliation of changes in eq
Page 119 and 120: US$ million 2007 2006 21. Interest-
Page 121: 21. Interest-bearing borrowings con
Page 125 and 126: 21. Interest-bearing borrowings con
Page 127 and 128: 23. Provisions continued September
Page 129 and 130: US$ million 2007 2006 24. Notes to
Page 131 and 132: US$ million 2007 2006 27. Contingen
Page 133 and 134: 28. Post-employment benefits - pens
Page 135 and 136: Europe US$ million Southern Africa
Page 137 and 138: 29. Post-employment benefits other
Page 139 and 140: 30. Share-based payment The Sappi L
Page 141 and 142: 30. Share-based payment continued T
Page 143 and 144: 30. Share-based payment continued T
Page 145 and 146: 31. Financial Instruments The group
Page 147 and 148: 31. Financial Instruments continued
Page 161 and 162: 33. Events after Balance Sheet date
Page 163 and 164: 35. Summary of differences between
Page 171 and 172: 36. New United States accounting st
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37. Directors’ remuneration conti
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38. Directors’ interests The foll
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M R Thompson (1) E van As Total 200
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M R Thompson (1) E van As Total 200
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Company auditor’s report Independ
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Condensed company balance sheet at
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Notes to the condensed company fina
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Investments at September 2007 Share
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Non-GAAP financial definitions The
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- the general authority shall only
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corporate governance requirements.
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Franklin Abraham Sonn (68) BA Hons,
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Proxy form for annual general meeti
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Forward looking statements Certain
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2007 Annual Report - Sappi

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