2007 Annual Report - Sappi

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Notes to the group annual financial statements continued for the year ended September <strong>2007</strong> 2. Accounting policies continued disclosure reconciling the headline earnings to the earnings applied in the earnings per share calculation. Specific departures from the old formula are as follows: • Not all gains or losses on the closure, sale or termination of a business will automatically be excluded from headline earnings. • A new approach is required for the recognition of a deferred tax asset of the acquiree, following a business combination. • Additional adjustments for any linked unit (where a share and debenture trade as a linked unit). • reclassification adjustments relating to components of other comprehensive income. This revised standard is effective for our September 2010 year end. IFRS 7 – Financial instruments: disclosures The IFRS essentially combines IAS 30 – Disclosure in the Financial Statements of Banks and similar Financial Institutions and IAS 32 – Financial Instruments: Presentation. The disclosure requirements under IAS 32 have been expanded to include sensitivity analyses as well as disclosure of classes of financial assets and liabilities. This circular has not had a material impact on our reported headline earnings per share. 2.6 Potential impact of future changes in accounting policies The following standards and interpretations, which have been issued but which are not yet effective and which are applicable to <strong>Sappi</strong>, have not been applied in these financial statements: IAS 1 – Amendment to International Accounting Standard 1 – Presentation of financial statements: capital disclosures The amendment requires the group to disclose information that will enable users of its financial statements to evaluate the entity’s objectives, policies and processes of managing capital. The amendment first becomes applicable to the group for the financial year ending September 2008. Revised IAS 1 – Presentation of financial statements The main changes from the previous standard require that an entity must present: • all non-owner changes in equity (that is, ‘comprehensive income’) either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income); • a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement; • income tax relating to each component of other comprehensive income; and The standard first becomes applicable to the group for the financial year ending September 2008, and we are currently assessing the impact of this on the group. IFRS 8 – Operating segments This IFRS introduces the concept of an operating segment; it expands the identification criteria for segments of an entity and the measurement of segment result. This statement will allow an entity to align its operating segment reporting with the internal identification and reporting structure. The standard first becomes applicable to the group for the financial year ending September 2010, and we are currently assessing the impact of this on the group. IFRIC 10 – Interim financial reporting The interpretation addresses an apparent conflict between the requirements of IAS 34 – Interim financial reporting and those in other standards on the recognition and reversal in financial statements of impairment losses on goodwill and certain financial assets. The interpretation concludes that an entity shall not reverse an impairment loss recognised in a previous interim period in respect of goodwill, or an investment in either an equity instrument or a financial asset carried at cost. The interpretation first becomes applicable to the group for the financial year ending September 2008, and we are currently assessing the impact of this on the group. IFRIC 11 – Group and treasury share transactions This interpretation addresses two issues. The first is whether the transactions should be accounted for as equity settled or as cash-settled share-based payment arrangements, and the 92 sappi limited | 07 | annual report
second where a share-based payment transaction involves two or more entities within the same group. The interpretation first becomes applicable to the group for the financial year ending September 2008, and we are currently assessing the impact of this on the group. IFRIC 12 – Service concession arrangements The interpretation serves to clarify the treatment of arrangements whereby a government or other body grants contracts for the supply of public services – such as roads, energy distribution, prisons or hospitals – to private operators. The objective of this IFRIC is to clarify aspects of accounting for service concession arrangements. The interpretation first becomes applicable to the group for the financial year ending September 2009, and we are currently assessing the impact of this on the group. The table below summarises the impact of this reclassification. The reclassification has no impact on the group's income statement, balance sheet or the change in cash and cash equivalents for the year ended 2006. US$ million 2006 Cash retained from operating activtities 228 Adjustment for reclassification of post employment benefits (68) Revised cash retained from operating activities 160 Cash utilised in investing activities (previously reported) (355) Adjustment for reclassification of post employment benefits 68 Revised cash utilised in investing activities (287) IFRIC 13 – Customer loyalty programmes This interpretation addresses accounting by entities that grant loyalty awards to customers who buy other goods or services. The interpretation deals with the accounting treatment of the obligations to provide free or discounted goods or services granted under such a programme. The interpretation first becomes applicable to the group for the financial year ending September 2009, and we are currently assessing the impact of this on the group. 2.7 Reclassification of cash flow statement The group has reclassified an item in its previously reported consolidated cash flow statement for prior periods. Contributions to post employment benefit funds, previously disclosed in cash utilised in investing activities have now been disclosed in cash retained from operating activities. Although the treatment of the amount paid for post employment benefits was specifically identified in the consolidated cash flow statement, management believes, in the absence of definitive IFRS guidance, presentation of this amount as part of cash retained from operating activities is preferable. In addition, it will make it easier for investors to compare our results with those of other companies and this would be in line with US generally accepted accounting practices. sappi limited | 07 | annual report 93
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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
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Our brands and products Coated pape
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Non-executive directors continued D
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Divisional and corporate management
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In Europe we face major challenges.
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We expect to continue our improving
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Q: How will you improve delivery on
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Overview Description The main produ
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A major feature of the year has bee
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In the year ahead, we will continue
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Overview The Forest Products busine
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Value added statement for the year
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Sappi has a global insurance struct
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Sales Sales volume (in metric tons)
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Divisional contributions to operati
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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 and 64: Auditor’s report Independent audi
Page 65 and 66: Directors’ report for the year en
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: The group is required to record pro
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
Page 115 and 116: 17. Trade and other receivables con
Page 117 and 118: 19. Reconciliation of changes in eq
Page 119 and 120: US$ million 2007 2006 21. Interest-
Page 121 and 122: 21. Interest-bearing borrowings con
Page 127 and 128: 23. Provisions continued September
Page 129 and 130: US$ million 2007 2006 24. Notes to
Page 131 and 132: US$ million 2007 2006 27. Contingen
Page 133 and 134: 28. Post-employment benefits - pens
Page 135 and 136: Europe US$ million Southern Africa
Page 137 and 138: 29. Post-employment benefits other
Page 139 and 140: 30. Share-based payment The Sappi L
Page 141 and 142: 30. Share-based payment continued T
Page 143 and 144: 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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