2007 Annual Report - Sappi

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Notes to the group annual financial statements continued for the year ended September 2007 35. Summary of differences between International Financial Reporting Standards and United States Generally Accepted Accounting Principles continued International Financial Reporting Standards (IFRS) United States GAAP (US GAAP) 2. Value of assets and Prior to the adoption of IFRS, either fair All assets and liabilities acquired are liabilities acquired value or book value could be assigned required to be recorded at fair value. to the assets and liabilities recorded in the accounting records of the entity that was acquired. As a result, the depreciation under IFRS is higher than under US GAAP as Property, plant and equipment under IFRS include the amounts that were capitalised to the cost of the assets. This capitalisation was not done under US GAAP. 3. Provisions raised at acquisition Prior to the adoption of IFRS, Only recognise the costs of a plan to SA GAAP allowed provisions to be (1) exit an activity of an acquired raised for restructuring, rationalisation company, (2) involuntarily terminate and other incidental costs, if they employees of an acquired company, related to the acquired company. or (3) relocate employees of an acquired company as liabilities assumed in a purchase business combination. 4. Treatment of goodwill Treatment of goodwill varied under SA Goodwill is capitalised, but from GAAP prior to the adoption of IFRS. 01 October 2002, is no longer The following summary provides an amortised and is subject to an overview of the followed different impairment test at least annually. accounting principles: (a) goodwill Negative goodwill was deducted originating at acquisition was allocated from the fair value of the non-current to the fair values of the assets acquired assets. Goodwill included under and the excess of fair value of net US GAAP amounts to US$174 million assets acquired over the cost of the (Sept 2006: US$174 million). acquired entity (commonly referred to as negative goodwill) was recognised directly in reserves, than (b) goodwill originating at acquisition was capitalised and amortised over its useful life and (c) at the adoption of IFRS on October 1, 2004 cessation of goodwill amortisation became effective and subject to annual impairment evaluation. 162 sappi limited | 07 | annual report
35. Summary of differences between International Financial Reporting Standards and United States Generally Accepted Accounting Principles continued International Financial Reporting Standards (IFRS) United States GAAP (US GAAP) c. Pre-commissioning expenses IAS 16 allows for the capitalisation of a Pre-commissioning costs are generally capitalised on capital projects number of directly attributable costs in expensed under US GAAP. determining the cost of an item of property, plant and equipment. In the past a number of costs have been capitalised in terms of this guidance. While US GAAP guidance is more prescriptive on which costs cannot be capitalised, the nature of costs that can be capitalised is not an established GAAP difference with IFRS. Management, therefore, elected to expense all remaining precommissioning costs for IFRS purposes during the 2006 financial year. d. Loans to participants of Amounts loaned to participants to Amounts loaned to participants to Sappi Limited Share purchase the company’s shares are purchase the company’s shares where Incentive Trust included in other non-current assets. the shares are held as security for the repayment of the loan are reported as a reduction to shareholders’ equity. The weighted average number of shares used in the calculation of earnings per share in terms of IFRS differs to that of US GAAP because of the application of EITF 85-1: Receivable from sale of stock, and Staff Accounting Bulletin Topic 4: Equity Accounts, the opinion reached by these publications, which is consistent with Rule 5-02.30 of Regulation S-X, requires that amounts loaned to participants to purchase the company’s shares where the shares are held as security for the repayment of the loan should be reported as a reduction to shareholders’ equity. e. Sale and leaseback Profit is recognised immediately on the Profit on such sale of assets is deferred transactions – operating leases sale of assets subject to operating and recognised in income over the leaseback agreements. lease term. sappi limited | 07 | annual report 163
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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
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Group statement of recognised incom
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Group balance sheet in Rands conven
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Notes to the group annual financial
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Fair value hedge A hedge of the exp
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(ii) Associates The results and ass
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• it transfers (or it assumes an
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2.3.8 Inventories Inventories are a
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2.3.13 Plantations Plantations are
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the year that are declared after th
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Owner-occupied investment propertie
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into account, unadjusted current ma
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The group is required to record pro
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second where a share-based payment
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3. Segment information continued Sa
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US$ million 2007 2006 4.1 Operating
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US$ million 2007 2006 6. Taxation c
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7. Earnings per share and headline
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US$ million 2007 2006 10. Property,
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2007 2006 US$ million Assets Liabil
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US$ million 2007 2006 12. Deferred
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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 and 122: 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: 35. Summary of differences between
Page 167 and 168: 35. Summary of differences between
Page 169 and 170: 35. Summary of differences between
Page 171 and 172: 36. New United States accounting st
Page 173 and 174: 37. Directors’ remuneration conti
Page 175 and 176: 38. Directors’ interests The foll
Page 177 and 178: M R Thompson (1) E van As Total 200
Page 179 and 180: M R Thompson (1) E van As Total 200
Page 181 and 182: Company auditor’s report Independ
Page 183 and 184: Condensed company balance sheet at
Page 185 and 186: Notes to the condensed company fina
Page 187 and 188: Investments at September 2007 Share
Page 189 and 190: Non-GAAP financial definitions The
Page 191 and 192: - the general authority shall only
Page 193 and 194: corporate governance requirements.
Page 195 and 196: Franklin Abraham Sonn (68) BA Hons,
Page 197 and 198: Proxy form for annual general meeti
Page 199 and 200: Forward looking statements Certain
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2007 Annual Report - Sappi

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