2007 Annual Report - Sappi

Fair value hedge A hedge of the exposure to changes in fair
value of a recognised asset or liability or an unrecognised firm
commitment, or an identified portion of such an asset, liability
or firm commitment, that is attributable to a particular risk and
could affect profit or loss.
Financial asset Cash or cash equivalents, a right to receive
cash, an equity instrument or a right to exchange a financial
instrument under favourable conditions.
Financial instrument Financial instruments are any contracts
that give rise to a financial asset of one enterprise and a financial
liability or equity instrument of another enterprise.
Financial liability A contractual obligation to pay cash or
transfer other benefits or an obligation to exchange a financial
instrument under unfavourable conditions. This includes debt.
Held-to-maturity financial asset A financial asset with a
fixed maturity and fixed or determinable future payments, that
management has the positive intent and ability to hold to maturity.
The financial asset is classified as a non-current asset, except
when it has a maturity within twelve months from the balance
sheet date, in which case it is classified as a current asset.
Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) of the IASB, and the
requirements of the South African Companies Act of 1973.
The financial statements are presented in United States Dollars
(US$) and are rounded to the nearest million dollars. US$ is the
presentation currency of the group because the majority of the
group’s revenue is denominated in US$ and it is the currency in
which the pulp and paper industry is commonly measured.
The financial statements are prepared on the historical cost
basis, except for certain financial assets and liabilities and
plantations (refer 2.3.13) that are stated at their fair value.
Non-current assets and disposal groups held for sale are stated
at the lower of carrying amount and fair value less costs to sell.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements by all the group entities.
(i) Fiscal year
The group’s financial year end is on the Sunday closest to the
last day of September.
Loans and receivables A financial asset with fixed or
determinable repayment terms that are not quoted in an active
market, other than:
• a derivative instrument; or
• a financial asset classified as available-for-sale.
Monetary asset An asset which will be settled in a fixed or
determinable amount of money.
Monetary liability A liability which will be settled in a fixed
or determinable amount of money.
Non-monetary asset An asset which is not a monetary asset.
Non-monetary liability A liability which is not a monetary liability.
Transaction date The date an entity commits itself to purchase
or sell a financial instrument.
2.2 Basis of preparation
The group’s consolidated financial statements have been
prepared in accordance with the English language version of
International Financial Reporting Standards (IFRS) issued by
the International Accounting Standards Board (IASB) and
Accordingly the last three financial years ended as follows:
• 30 September 2007 (“year ended September 2007”) (52 weeks)
• 01 October 2006 (“year ended September 2006”) (52 weeks)
• 02 October 2006 (“year ended September 2005”) (53 weeks)
The financial years commenced as follows:
• 02 October 2006 (“October 2006”)
• 03 October 2005 (“October 2005”)
• 27 September 2005 (“October 2004”)
(ii) Underlying concepts
The financial statements are prepared on the going
concern basis.
Assets and liabilities and income and expenses are not offset in
the income statement or balance sheet unless specifically
permitted by an accounting standard or interpretation.
Financial assets and financial liabilities are offset and the net
amount reported only when a legally enforceable right to set off
the amounts exists and the intention is either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
sappi limited | 07 | annual report 75