2007 Annual Report - Sappi

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.
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