2008 Annual report - Sappi

More documents

Recommendations

Info

Risk management Our top risks These risks are further discussed in Sappi’s annual report on Form 20-F filed with the US Securities and Exchange Commission which is available on our website www.sappi.com or in hard copy on request. Systemic risks We operate in a highly cyclical industry that may cause substantial fluctuations in our results. The markets for our pulp and paper products are significantly affected by changes in industry capacity and output levels and by cyclical changes in the world economy such as the current global economic downturn. We maintain a high level of economic pulp integration on a group-wide basis which minimises the impact of pulp price fluctuations on our results. A significant increase in the prices for our major inputs, cannot always be sufficiently addressed by increasing our selling prices to offset the effects of increased costs and we therefore pursue improved efficiencies in all aspects of our business. The markets for pulp and paper products are competitive. We will continue to strengthen our leadership position in our core businesses through organic growth, as well as through acquisitions, to ensure our global competitiveness. The cost of complying with environmental regulation may be significant to our business. We strive to ensure that we comply with applicable environmental laws and co-operate across regions to help us apply best practices in a sustainable manner. The availability and cost of insurance cover can vary considerably from year to year as a result of events beyond our control, and this can result in our paying higher premiums and periodically being unable to maintain the levels or types of insurance carried. We continue working on improved enterprise risk management to lower the risk of incurring losses from uncontrolled incidents. New technologies or changes in consumer preferences may affect our ability to compete successfully. We regularly assess changing consumer preferences and new technologies, which could impact consumption of our products or their competitiveness. We design and implement appropriate responses to these changes in the form of new or improved products, enhanced product features, or improvements in the level and quality of product servicing. 40
sappi Business risks We may not be able to successfully or timeously integrate the M-real coated graphic paper business (see description on pages 32 and 33) into our existing business, and may not realise the full extent of the anticipated benefits. We have a good track record with the integration of acquired businesses. The due diligence process was very comprehensive. We have put in place an experienced integration team that will support line management and drive the achievement of synergies. Our indebtedness may impair our financial and operating flexibility. Cash generation and improving our balance sheet structure, including a reduction in borrowings, are priorities for management. Fluctuations in the value of currencies, particularly the Rand and the Euro, in relation to the US Dollar have in the past had and could in the future have a significant impact on our earnings. We manage our economic and transactional currency exposures on a group basis. However, we do not manage translation exposure which arises from translating the group’s assets, liabilities, income and expenditure into the US Dollar, our reporting currency. There are risks relating to the countries in which we operate that could affect your investment in our company. We manage these risks in each country. We do, however, operate in a broad spread of countries which helps mitigate the risk in any individual country. We face certain risks in dealing with HIV/Aids which may have an adverse effect on our southern African operations. We have comprehensive programmes designed to mitigate the impact of the disease on our people and our business. A limited number of customers account for a significant amount of our revenues. We understand that the success of our business depends on working closely with our customers, providing a high level of service and reliability. We manage and regularly review credit and other exposures. We also purchase credit insurance to cover a major part of our outstanding receivables. Because of the nature of our business and workforce, we are facing challenges in the retention and succession planning of management that could adversely affect our business. We have put in place a number of initiatives [including engagement management, performance management and incentives] to mitigate this risk. The inability to recover increasing input costs through increased prices We approach this in several ways including a focus on improving procurement methods, finding alternative lower-cost fuels and raw materials, minimising waste, improving manufacturing and logistics efficiencies and implementing energy reduction initiatives. Catastrophic events, such as fires, affecting our plantations may adversely impact our ability to supply our southern African mills with timber. We have implemented a number of risk and fire control measures and are re-evaluating our processes after two years of extensive damage. // 2008 Annual report 41
Page 1 and 2: annual report 2008
Page 3 and 4: sappi Our report in overview In pro
Page 5 and 6: sappi Our performance The group’s
Page 7 and 8: sappi Target Target Net debt to tot
Page 9 and 10: sappi Our score on the DJSI World D
Page 11 and 12: sappi People continued Our commitme
Page 13 and 14: sappi Our business structure Johann
Page 15 and 16: sappi Pulp Paper pulp is the main r
Page 17 and 18: sappi Ideas that matter Print remai
Page 19 and 20: sappi Objectives for 2009 Meaningf
Page 21 and 22: sappi Deenadayalen (Len) Konar // (
Page 23 and 24: sappi Divisional and corporate mana
Page 25 and 26: sappi We are of the opinion that su
Page 27 and 28: sappi input cost reductions across
Page 29 and 30: sappi Q // Will the integration of
Page 31 and 32: sappi Sappi Fine Paper Mills/ Capac
Page 33 and 34: sappi deliver excellent service and
Page 35 and 36: sappi Transaction funding overview
Page 37 and 38: sappi Sappi Forest Products Mills/
Page 39: sappi Demand and prices in the inte
Page 44 and 45: Risk management // continued Risk m
Page 46 and 47: Chief financial officer’s report
Page 60 and 61: Five year review Not restated for I
Page 62 and 63: Share statistics at September 2008
Page 64 and 65: Corporate governance We are committ
Page 66 and 67: Corporate governance // continued E
Page 68 and 69: Corporate governance // continued A
Page 70 and 71: Corporate governance // continued r
Page 72 and 73: Compensation report Compensation co
Page 74 and 75: Annual financial statements for the
Page 76 and 77: Directors’ approval The directors
Page 78 and 79: Directors’ report // continued fo
Page 80 and 81: Group income statement for the year
Page 82 and 83: Group cash flow statement for the y
Page 84 and 85: Group income statement in Rands con
Page 86 and 87: Group cash flow statement in Rands
Page 88 and 89: Notes to the group annual financial
Page 90 and 91: Notes to the group annual financial
Page 92 and 93:
Notes to the group annual financial
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158 and 159:
Page 160 and 161:
Page 162 and 163:
Page 164 and 165:
Page 166 and 167:
Page 168 and 169:
Page 170 and 171:
Page 172 and 173:
Page 174 and 175:
Page 176 and 177:
Page 178 and 179:
Page 180 and 181:
Page 182 and 183:
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
show all

2008 Annual report - Sappi

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?