2007 Annual Report - Sappi

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Directors’ approval The directors and officers of the company are responsible to the extent respectively indicated for the annual financial statements which are submitted to shareholders in the general meeting. The directors are principally responsible for the overall co-ordination of the preparation and for the final approval of such submission. The initial preparation is the responsibility of the company’s officers. The auditors are responsible for auditing the annual financial statements in the course of executing their statutory duties. 68 Group cash flow statement 69 Group statement of recognised income and expense 70 Group income statement in Rands 71 Group balance sheet in Rands 73 Notes to the group annual financial statements 179 Condensed company financial statements 185 Investments The above statements were approved by the board of directors on 07 December 2007 and were signed on its behalf by: The report and annual financial statements of the group and the company appear on the following pages: 63 Directors’ report 66 Group income statement 67 Group balance sheet R J Boëttger Chief Executive Officer Sappi Limited M R Thompson Chief Financial Officer Secretary’s certificate In terms of Section 268G(d) of the Companies Act, 1973, as amended, I certify that the company has lodged with the Registrar all such returns as are required by the Companies Act. Further, that such returns are true, correct and up to date. Sappi Management Services (Pty) Limited D J O’Connor Group Secretary 07 December 2007 62 sappi limited | 07 | annual report
Directors’ report for the year ended September 2007 Your directors submit their report for the year ended September 2007. Business of Sappi Limited (Sappi or the company) and its operating companies mentioned below (the group) The group manufactures and sells a wide range of pulp, paper and wood products for use in almost every sphere of economic activity. The group conducts its business through two business units, namely: • Sappi Fine Paper; and • Sappi Forest Products. Sappi Fine Paper has manufacturing and marketing facilities in Europe, North America and South Africa and produces mainly high quality branded coated fine paper. It also manufactures uncoated graphic and business paper, coated and uncoated specialities papers, and casting release paper used in the manufacture of artificial leather and textured polyurethane applications. Sappi Forest Products, based in South Africa, produces packaging paper and newsprint, pulp, chemical cellulose, and forest and timber products for Southern Africa and export markets. Sappi Trading operates a trading network for the marketing and distribution of chemical cellulose and market pulp throughout the world and of the group’s other products in areas outside our core operating regions of North America, Europe and Southern Africa. A review of the business and operations of the operating companies appears on pages 22 to 30. Reporting period The group’s financial period ends on the Sunday closest to the year-end date and results are reported as if at the year end date. International Financial Reporting Standards (IFRS) As a South African company and in terms of the requirements of the JSE Limited (JSE), Sappi’s financial reporting is based on IFRS as issued by the International Accounting Standards Board. In addition Sappi reconciles its reporting annually from IFRS to US GAAP and incorporates this reconciliation in its Annual Report on Form 20-F submission to the Securities and Exchange Commission (SEC) in the United States. The differences are included in note 35 of the group financial statements. Following a decision taken by the SEC on 15 November 2007, such reconciliation will not be necessary in fiscal 2008. As the majority of the group’s sales are in US Dollars and the US Dollar is the major trading currency of the pulp and paper industry, the group reports its results in US Dollars in order to facilitate the understanding of the results. Share capital There were no changes to either the authorised or the issued share capital of Sappi. At 30 September 2007 the authorised and issued share capital of Sappi were as follows: Authorised: 325,000,000 ordinary shares of ZAR1 each ZAR325 million Issued: 239,071,892 ordinary shares of ZAR1 each US$34 million Share premium US$791 million Purchase of shares by a subsidiary Through a wholly-owned subsidiary, the Sappi group has to date acquired approximately 19.4 million Sappi shares – (treasury shares) on the open market of the JSE Limited for approximately US$186.7 million. This accords with Sappi’s stated intention, announced on 9 November 2000, and the approval given at all subsequent annual general meetings of the company’s shareholders, for a wholly owned Sappi subsidiary to acquire Sappi shares, if prevailing circumstances (including market conditions) so warrant. None of these shares were acquired during the 2007 financial year. Some of the treasury shares, have been, and will continue to be, utilised to meet the requirements of the Sappi Limited Share Incentive Trust and the Sappi Limited Performance Share Incentive Trust from time to time. During the year, approximately 1.5 million treasury shares were issued to participants of the Sappi Limited Share Incentive Trust for a consideration of approximately US$13.7 million. Refer to note 18 of the group annual financial statements for additional details relating to these treasury shares. sappi limited | 07 | annual report 63
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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
Page 13 and 14: Our brands and products Coated pape
Page 15 and 16: Non-executive directors continued D
Page 17 and 18: Divisional and corporate management
Page 19 and 20: In Europe we face major challenges.
Page 21 and 22: We expect to continue our improving
Page 23 and 24: Q: How will you improve delivery on
Page 25 and 26: Overview Description The main produ
Page 27 and 28: A major feature of the year has bee
Page 29 and 30: In the year ahead, we will continue
Page 31 and 32: Overview The Forest Products busine
Page 33 and 34: Value added statement for the year
Page 35 and 36: Sappi has a global insurance struct
Page 37 and 38: Sales Sales volume (in metric tons)
Page 39 and 40: Divisional contributions to operati
Page 41 and 42: The impact of these changes on oper
Page 43 and 44: Cash flow analysis In the table bel
Page 45 and 46: project and again aim to fund this,
Page 47 and 48: In 2006, both Standard & Poor’s (
Page 49 and 50: y certain of the individual direct
Page 51 and 52: Not restated for IFRS* September Se
Page 53 and 54: September September September Septe
Page 55 and 56: Element/Best practice Sappi applica
Page 57 and 58: The board of directors The basis fo
Page 59 and 60: Our compensation philosophy is base
Page 61 and 62: stakeholders with whom they interac
Page 63: Auditor’s report Independent audi
Page 67 and 68: Directors and secretaries The names
Page 69 and 70: 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
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17. Trade and other receivables con
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19. Reconciliation of changes in eq
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US$ million 2007 2006 21. Interest-
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21. Interest-bearing borrowings con
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23. Provisions continued September
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US$ million 2007 2006 24. Notes to
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US$ million 2007 2006 27. Contingen
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28. Post-employment benefits - pens
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Europe US$ million Southern Africa
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29. Post-employment benefits other
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30. Share-based payment The Sappi L
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30. Share-based payment continued T
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30. Share-based payment continued T
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31. Financial Instruments The group
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31. Financial Instruments continued
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33. Events after Balance Sheet date
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35. Summary of differences between
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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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