2008 Annual report - Sappi

sappi //
Directors’ report
for the year ended September 2008
Your directors submit their report for the year ended
September 2008.
Business of Sappi Limited (Sappi or the
company) and its operating companies
mentioned below (the group)
The group manufactures and sells a wide range of pulp, paper
and wood products for use in almost every sphere of economic
activity. The group conducts its business through two business
units, namely:
• Sappi Fine Paper; and
• Sappi Forest Products.
Sappi Fine Paper has manufacturing and marketing facilities
in Europe, North America, Southern Africa and Asia and
produces mainly high quality branded coated fine paper. It also
manufactures uncoated graphic and business paper, coated
and uncoated specialities papers, and casting release paper
used in the manufacture of artificial leather and textured
polyurethane applications. Sappi Forest Products, based in
South Africa, produces packaging paper and newsprint, pulp,
chemical cellulose, and forest and timber products for
Southern Africa and export markets. Sappi Trading operates a
trading network for the marketing and distribution of chemical
cellulose and market pulp throughout the world and of the
group’s other products in areas outside our core operating
regions of North America, Europe and Southern Africa.
Reporting period
The group’s financial period ends on the Sunday closest to
the year end date and results are reported as if at the year
end date.
International Financial Reporting Standards
(IFRS)
As a South African company and in terms of the requirements
of the JSE Limited (JSE), Sappi’s financial reporting is based
on IFRS as published by the International Accounting Standards
Board (IASB).
Sappi no longer reconciles its reporting annually from IFRS to
US GAAP. This follows a release by the US Securities Exchange
Commission (SEC) on 21 December 2007 which allows Foreign
Private Issuers to file Annual Financial Statements prepared under
IFRS as issued by the IASB, without reconciliation to US GAAP.
The US Dollar is the major trading currency of the pulp and
paper industry. The group reports its results in US Dollars in
order to facilitate the understanding of the results.
Share capital
As at September 2008 the authorised and issued share capital
of Sappi were as follows:
Authorised:
325,000,000 ordinary shares of ZAR1 each ZAR325 million
Issued:
239,071,892 ordinary shares of ZAR1 each US$28 million
Share premium
US$679 million
The authorised and issued share capital have been increased
substantially subsequent to year end for purposes of funding the
acquisition of M-real’s coated graphic paper business announced
on 29 September 2008. Further comprehensive details can be
found in the Rights Offering Circular approved by the directors
on 10 November 2008 and posted to qualifying shareholders on
24 November 2008.
Purchase of shares by a subsidiary
Through a wholly-owned subsidiary the Sappi group has
to date acquired approximately 19.4 million Sappi shares –
(treasury shares) on the open market of the JSE Limited for
approximately US$186.7 million. This accords with Sappi’s
stated intention, announced on 9 November 2000, and the
approval given at all subsequent annual general meetings of
the company’s shareholders, for a wholly owned Sappi subsidiary
to acquire Sappi shares, if prevailing circumstances (including
market conditions) so warrant. None of these shares were
acquired during the 2008 financial year. Some of the treasury
shares, have been, and will continue to be, utilised to meet the
requirements of the Sappi Limited Share Incentive Trust and the
Sappi Limited Performance Share Incentive Trust from time to
time. During the year, approximately 725,950 treasury shares
were issued to participants of the Sappi Limited Share Incentive
Trust for a consideration of approximately US$6.2 million. Refer to
note 29 of the group annual financial statements for additional
details relating to these treasury shares.
As the company is currently conducting a rights issue, it is unlikely
that the company will seek approval for the purchase of Sappi
shares in the foreseeable future.
Significant announcements during the year
under review and subsequent to year end
During August 2008, Sappi announced the planned closures
of the Blackburn mill and the Maastricht Mill’s Paper Machine
No 5. Further details can be found in note 9 of the group annual
financial statements.
// 2008 Annual report
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