2007 Annual Report - Sappi

Chief financial officer’s report continued
Share price performance
Sappi share price is shown in the graph below.
restructuring plan were refined. No material adjustments to the
provision are expected in the forthcoming year.
Pension fund asset recognition (South Africa)
In the current year, based on an approval regarding the company’s
position in regard to surpluses from the Financial Services board
in South Africa an amount of US$40 million was recognised
through the Statement of Recognised Income and Expenditure.
Impairment of assets
The group reviewed the carrying value of all its non current
assets and determined that no impairment provision was
require against the carrying value of any of the assets in 2007.
Dividends
In November 2007 a dividend of 32 US cents per share was
declared in respect of fiscal 2007. The 2006 dividend was
30 US cents per share.
Total shareholders return (TSR)
We believe that a good measure of our success or otherwise in
managing the company will ultimately be reflected in the total
return to our shareholders. We measure TSR on the basis of
average daily share price plus cash returned to shareholders.
TSR is an important ingredient in our Performance Share Incentive
Plan and which compares our TSR to that of 14 global peers.
Other matters
Implementation of Lereko Property Consortium
(Lereko) deal
The group is in the process of obtaining the final approval from
the Minister of Land Affairs with regard to a Black Economic
Empowerment transaction with Lereko. There will be an income
statement charge in the year of implementation of this transaction
but we do not expect this amount to be material.
European restructuring
The restructuring of our European business has been largely
completed in the current year and has resulted in a credit to
the income statement of US$10 million as certain details of the
The group aims to declare annual dividends which, over time,
incorporate real growth for shareholders. To this end, dividend
cover in each year will vary in line with changes in the business
cycle, but the current intention is to maintain a long-term average
earnings/dividend ratio of three to one. The 2007 dividend was
covered 2,8 times by basic earnings per share.
Litigation
The group becomes involved, from time to time, in various claims
and lawsuits incidental to the ordinary course of business. The
group is not currently involved in legal proceedings which, either
individually or in the aggregate, are expected to have a material
adverse effect on our business, assets or properties. The following
covers the more significant items:
North America
Since May 2004, a number of class and individual actions were
filed in the United States of America federal and state courts
alleging that Sappi Limited and Sappi Fine Paper North America
participated in a price fixing conspiracy with other manufacturers
of publication paper. The cases asserted violations of US federal
and state antitrust laws and state unfair competition statutes.
These lawsuits sought treble damages and injunctive relief, as well
as other costs associated with the litigation. In November 2006,
the plaintiffs in the class action cases brought on behalf of direct
purchasers dismissed Sappi Limited and Sappi Fine Paper North
America from the case without prejudice. The cases brought
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sappi limited | 07 | annual report