2007 Annual Report - Sappi

Notes to the group annual financial statements continued
for the year ended September 2007
2. Accounting policies continued Weighted average number of shares in issue The weighted
average number of ordinary shares outstanding during the
Fair value The value for which an asset could be exchanged
period is the number of ordinary shares outstanding at the
or a liability settled in a market related transaction.
beginning of the period, adjusted by the number of ordinary
Financial results Comprise the financial position (assets,
liabilities and equity), results of operations (revenue and
shares bought back or issued during the period multiplied by a
time-weighting factor.
expenses) and cash flows of an entity and of the group.
Financial instrument terms
Functional currency The currency of the primary economic
environment in which the entity operates.
Amortised cost Financial assets and liabilities measured at
amortised cost are measured at fair value on initial recognition,
plus or minus the cumulative amortisation using the effective
Long-term A period longer than twelve months from balance
sheet date.
interest rate method of any difference between that initial
amount and the maturity amount, less any cumulative
impairment losses.
Presentation currency The currency in which financial results
of an entity are presented.
Available-for-sale financial asset A financial asset that has
been designated as available for sale or a financial asset other
Qualifying asset An asset that necessarily takes a substantial
period (normally in excess of six months) of time to get ready for
than those classified as loans and receivables, held-to-maturity
investments or derivative instruments.
its intended use.
An investment intended to be held for an indefinite period of
Recoverable amount The amount that reflects the greater of
the net selling price and the value in use that can be attributed
to an asset as a result of its ongoing use by the entity. In
time, which may be sold in response to needs for liquidity
or changes in interest rates, is classified as a non-current
available-for-sale financial asset.
determining the value in use, expected future cash flows are
discounted to their present values using the discount rate. Cash and cash equivalents The company considers all highly
liquid investments with less than three months maturity from
Related party Parties are considered to be related if one party
directly or indirectly has the ability to control the other party or
the date of acquisition to be cash equivalents. Cash and cash
equivalents are measured at cost.
exercise significant influence over the other party in making
financial and operating decisions or is a member of the key
management of Sappi Limited.
Cash flow hedge A hedge of the exposure to variability in cash
flows, that is attributable to a particular risk associated with a
recognised asset or liability (such as all or some future interest
Share-based payment A transaction in which Sappi Limited
issues shares or share options to group employees as
payments on variable rate debt) or a forecasted transaction that
could affect profit or loss.
compensation for services rendered.
Derivative instrument A financial instrument:
Significant influence The ability, directly or indirectly, to
participate in, but not exercise control over, the financial and
operating policy decisions of an entity so as to obtain economic
benefit from its activities.
• whose value changes in response to movements in a
specified interest rate, commodity price, foreign exchange
rate or similar variable;
• that requires minimal initial net investment; and
Special items Special items are not defined by IFRS. Therefore • whose terms require or permit net settlement at a future date.
this term is subject to management judgement and interpretation.
Special items cover those items which management believe are
material by nature or amount to the results and require separate
disclosure in accordance with IAS 1 paragraph 86. Such items
Effective interest rate The derived rate that discounts the
expected future cash flows to the current net carrying amount
of the financial asset or financial liability.
would generally include profit or loss on disposal of property,
investments and businesses, asset impairments, restructuring
charges, natural disasters and non-cash gains or losses on the
price fair value adjustment of plantations.
Equity instrument Any financial instrument (including
investments) that evidences a residual interest in the assets of
an enterprise after deducting all of its liabilities.
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sappi limited | 07 | annual report