2007 Annual Report - Sappi

Notes to the group annual financial statements continued
for the year ended September 2007
3. Segment information
For management purposes, the group has two reporting segments which operate as separate business units: Sappi Fine
Paper and Sappi Forest Products. These divisions are the basis on which the group reports its primary segment information.
Sappi Fine Paper produces coated and uncoated fine paper and speciality paper grades. Sappi Forest Products produces
commodity paper products, pulp and forest and timber products. The secondary segments have been determined by the
geographical location of the production facilities: North America, Europe and Southern Africa.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies
(refer note 2.3).
The group accounts for intragroup sales and transfers as if the sales or transfers were to third parties, that is, at current
market prices. All such sales and transfers are eliminated on consolidation.
Sappi Fine Sappi Forest Corporate
Paper Products and eliminations Group
US$ million 2007 2006 2007 2006 2007 2006 2007 2006
External sales (1) 4,256 3,958 1,048 983 – – 5,304 4,941
Inter-segment sales 602 504 658 517 (1,260) (1,021) – –
Total sales 4,858 4,462 1,706 1,500 (1,260) (1,021) 5,304 4,941
Segment result (2) 119 (49) 264 175 – (1) 383 125
Special items (gains) losses (32) 26 (40) (60) 2 – (70) (34)
Segment result excluding special items 87 (23) 224 115 2 (1) 313 91
Share of profit (loss) of
equity investments 3 1 3 (1) 4 (1) 10 (1)
Depreciation 298 321 75 68 1 1 374 390
Amortisation and fellings 1 2 70 74 – – 71 76
Asset impairments 2 6 – 3 – – 2 9
Asset impairment reversals – – – (40) – – – (40)
Other non-cash expenses
(including fair value adjustment
on plantations) (11) 62 (117) (131) (14) (58) (142) (127)
Capital expenditures 158 203 299 99 1 1 458 303
Total assets (6) 3,931 3,810 2,096 1,419 317 288 6,344 5,517
Operating assets (3)(6) 3,836 3,726 1,984 1,407 99 86 5,919 5,219
Operating liabilities (4) 682 639 251 178 66 45 999 862
Net operating assets (5)(6) 3,121 3,049 1,654 1,188 21 19 4,796 4,256
Property, plant and equipment 2,503 2,478 988 669 – 2 3,491 3,149
(1) Sales where the product is manufactured.
(2) Segment result is operating profit (loss).
(3) Operating assets consist of property, plant and equipment, non-current assets (excluding deferred taxation) and current assets (excluding cash).
(4) Operating liabilities consist of trade payables, other payables, provisions and derivative financial instruments.
(5) Net operating assets consist of operating assets less operating liabilities, adjusted for taxation payable and dividends payable.
(6) Corporate region includes investment in joint venture in China.
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sappi limited | 07 | annual report