2007 Annual Report - Sappi

US$ million 2007 2006
27. Contingent liabilities
Guarantees and suretyships 43 52
Other contingent liabilities 26 11
Included under guarantees are bills of exchange where Sappi has guaranteed third party funding of payments to Sappi for
certain German accounts receivables.
Other contingent liabilities mainly relate to taxation queries to which certain group companies are subject. The increase in
other contingent liabilities reflects management’s revised estimate of reasonably possible losses which could arise from
taxation queries to which certain group companies are subject (this includes an amount of US$16 million relating to the tax
status of Sappi’s Belgian coordination centre – refer note 33 for details). These could give rise to additional taxation costs.
Management does not currently expect further material costs to arise.
The group is involved in various lawsuits and administrative proceedings. The relief sought in such lawsuits and proceedings
includes injunctions, damages and penalties. Although the final results in these suits and proceedings cannot be predicted
with certainty, it is the present opinion of management, after consulting with legal counsel, that they are not expected to have
a material effect on the group’s consolidated financial position, results of operations or cash flows.
28. Post-employment benefits – pensions
Defined contribution plans
The group operates eleven defined contribution retirement benefit schemes covering all qualifying employees. The assets of
the schemes are held separately from those of the group in funds under the control of trustees. In addition the group
participates in a country-wide union scheme open to eligible employees in South Africa.
The total cost charged to the income statement of US$18 million (September 2006: US$10 million) represents contributions
payable to these schemes by the group based on the rates specified in the rules of these schemes. As at September 2007
and September 2006 no contributions were due in respect of the current reporting period that had not yet been paid over
to the schemes.
Defined benefit plans
The group operates eight large defined benefit pension plans plus a number of smaller plans. This includes plans closed to
new entrants as well as plans closed for future accrual for existing members. Those plans open to new entrants or future
accrual cover all qualifying employees. Such plans have been established in accordance with applicable legal requirements,
customs and existing circumstances in each country. Benefits are generally based upon compensation and years of service.
With the exception of our German and Austrian operations, the assets of these schemes are held in separate trustee
administered funds which are subject to varying statutory requirements in the particular countries concerned. In terms of these
requirements, periodic actuarial valuations of these funds are performed by independent actuaries. The number of active
members in schemes is approximately 8,000.
Actuarial valuations of the European and North American funds are performed annually. An actuarial review is performed
annually for the South African and United Kingdom funds, with an actuarial valuation being performed on a tri-annual basis.
Group companies have no other significant post-employment benefit liabilities except for the health care benefits provided
to persons in the United States and in South Africa (refer note 29).
All obligations and assets were measured at the end of September for this financial year.
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