2008 Annual report - Sappi

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Notes to the group annual financial statements // continued for the year ended September 2008 30. Financial instruments (continued) Currency risk Sappi is exposed to economic, transaction and translation currency risks. The objective of the group in managing currency risk is to ensure that foreign exchange exposures are identified as early as possible and actively managed. – Economic exposure consists of planned net foreign currency trade in goods and services not yet manifested in the form of actual invoices and orders; – Transaction exposure arises due to transactions entered into, which result in a flow of cash in foreign currency, such as payments under foreign currency long and short term loan liabilities, purchases and sales of goods and services, capital expenditure purchases and dividends. Where possible, commercial transactions are only entered into in currencies that are readily convertible by means of formal external forward exchange contracts; and – Translation exposure arises when translating the groups assets, liabilities, income and expenditure into the group's presentation currency. Borrowings are taken out in a range of currencies which are based on the group's preferred ratios of gearing and interest cover based on a judgement of the best financial structure for the group. On consolidation this gives rise to translation exposure which is not hedged. In managing currency risk, the group first makes use of internal hedging techniques, with external hedging being applied thereafter. External hedging techniques consist primarily of foreign currency forward exchange contracts and currency options. Foreign currency capital expenditure on projects must be covered as soon as practical (subject to regulatory approval). Currency risk analysis In the preparation of the currency risk analysis the derivative instrument has been allocated to the currency which the underlying instrument has been hedging. Other Total in (converted Total scope USD EUR ZAR GBP into USD) 2008 Financial assets Other non-current assets 168 44 2 5 37 – – Long term derivative financial instruments* 76 76 (223) – – 299 – Trade and other receivables 698 626 287 275 22 32 10 Current derivative financial instruments* 4 4 1 – – 3 – Cash and cash equivalents 274 274 82 101 91 – – 1,024 149 381 150 334 10 Financial liabilities Non-current interestbearing borrowings 1,832 1,832 875 597 360 – – Derivative financial instruments* 1 1 – – 1 – – Current interestbearing borrowings 821 821 164 494 12 – 151 Overdraft 26 26 – 10 2 4 10 Current: derivative financial instruments* 24 24 24 – – – – Trade and other payables 959 756 196 297 239 8 16 3,460 1,259 1,398 614 12 177 Foreign exchange gap (2,436) (1,110) (1,017) (464) 322 (167) 156
sappi // 30. Financial instruments (continued) Currency risk (continued) Other Total in (converted Total scope USD EUR ZAR GBP into USD) 2007 Financial assets Other non-current assets 165 36 1 6 29 – – Long term derivative financial instruments* 137 137 (356) – – 493 – Trade and other receivables 653 600 295 201 27 32 45 Current derivative financial instruments* 7 7 7 – – – – Cash and cash equivalents 364 364 79 108 174 – 3 1,144 26 315 230 525 48 Financial liabilities Non-current interestbearing borrowings 1,828 1,828 851 576 401 – – Derivative financial instruments* 15 15 12 3 – – – Current interestbearing borrowings 771 771 162 425 42 – 142 Overdraft 22 22 7 8 1 2 4 Current: derivative financial instruments* 28 28 26 – 2 – – Trade and other payables 952 816 214 341 252 6 3 3,480 1,272 1,353 698 8 149 Foreign exchange gap (2,336) (1,246) (1,038) (468) 517 (101) * The amount disclosed with respect to derivative instruments, reflects the currency which the derivative instrument is covering. The above table does not indicate the group’s foreign exchange exposure, it only shows the financial instruments assets and liabilities classified per underlying currency. // 2008 Annual report 157
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annual report 2008
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sappi Our report in overview In pro
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sappi Our performance The group’s
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sappi Target Target Net debt to tot
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sappi Our score on the DJSI World D
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sappi People continued Our commitme
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sappi Our business structure Johann
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sappi Pulp Paper pulp is the main r
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sappi Ideas that matter Print remai
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sappi Objectives for 2009 Meaningf
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sappi Deenadayalen (Len) Konar // (
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sappi Divisional and corporate mana
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sappi We are of the opinion that su
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sappi input cost reductions across
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sappi Q // Will the integration of
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sappi Sappi Fine Paper Mills/ Capac
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sappi deliver excellent service and
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sappi Transaction funding overview
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sappi Sappi Forest Products Mills/
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sappi Demand and prices in the inte
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Risk management Our top risks These
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Risk management // continued Risk m
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Chief financial officer’s report
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Five year review Not restated for I
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Share statistics at September 2008
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Corporate governance We are committ
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Corporate governance // continued E
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Corporate governance // continued A
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Corporate governance // continued r
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Compensation report Compensation co
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Annual financial statements for the
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Directors’ approval The directors
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Directors’ report // continued fo
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Group income statement for the year
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Group cash flow statement for the y
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Group income statement in Rands con
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Group cash flow statement in Rands
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Notes to the group annual financial
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Page 108 and 109: Notes to the group annual financial
Page 184 and 185: Condensed Sappi Limited company inc
Page 186 and 187: Condensed Sappi Limited company cas
Page 188 and 189: Notes to the condensed Sappi Limite
Page 190 and 191: Glossary General definitions bleach
Page 192 and 193: Glossary // continued Non-GAAP fina
Page 194 and 195: Notice to shareholders // continued
Page 196 and 197: Notice to shareholders // continued
Page 198 and 199: Shareholder’s diary Annual genera
Page 200 and 201: Notes to proxy The form of proxy mu
Page 202 and 203: Notes 1. To be effective, this form
Page 204 and 205: Notes 1. To be effective, this form
Page 206: www.sappi.com
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2008 Annual report - Sappi

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