2008 Annual report - Sappi

sappi //
Notes to the group annual financial statements
for the year ended September 2008
1. Business
Sappi Limited, a corporation organised under the laws of the
Republic of South Africa (the “company” and, together with its
consolidated subsidiaries, “Sappi” or the “group”), was formed
in 1936 and is a major, vertically integrated international pulp
and paper producer. Sappi is a leading global producer of
coated fine paper and chemical cellulose. The group has
manufacturing facilities in nine countries, on four continents,
and customers in over 100 countries across the globe.
The group is composed of its Sappi Fine Paper and Sappi Forest
Products business units. Sappi Fine Paper has manufacturing
and marketing facilities in North America, Europe, Southern
Africa and Asia and produces mainly high quality branded
coated fine paper. It also manufactures uncoated graphic and
business paper, coated and uncoated speciality paper, and
casting release paper used in the manufacture of artificial
leather and textured polyurethane applications. Sappi Forest
Products, based in Southern Africa, produces commodity
paper products, pulp, chemical cellulose and forest and timber
products for Southern Africa and export markets. The group
operates a trading network called Sappi Trading for the
international 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. All sales
and costs associated with Sappi Trading are allocated to our
two reporting segments.
2. Accounting policies
The following principal accounting policies have been
consistently applied in dealing with items that are considered
material in relation to the Sappi Limited group financial
statements.
2.1 Basis of preparation
The group’s consolidated financial statements have been
prepared in accordance with:
– International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB);
– Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) of the IASB; and
– the requirements of the South African Companies Act
of 1973.
The financial statements are presented in United States Dollars
(US$), as it is the major trading currency of the pulp and paper
industry, and are rounded to the nearest million.
The financial statements are prepared on the historical-cost
basis, except for certain financial assets and liabilities and
plantations that are stated at their fair value.
Non-current assets and disposal groups held for sale are stated
at the lower of carrying amount and fair value less costs to sell.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements by all the group entities.
(i) Fiscal year
The group’s financial year end is on the Sunday closest to the
last day of September.
Accordingly the last three financial years ended as follows:
• 28 September 2008 (year ended September 2008)
(52 weeks)
• 30 September 2007 (year ended September 2007)
(52 weeks)
• 01 October 2006 (year ended September 2006)
(52 weeks)
The financial years commenced as follows:
• 01 October 2007 (October 2007)
• 02 October 2006 (October 2006)
• 03 October 2005 (October 2005)
(ii) Underlying concepts
The financial statements are prepared on the going concern
basis.
Assets and liabilities and income and expenses are not offset
in the income statement or balance sheet unless specifically
permitted by an accounting standard or interpretation.
Changes in accounting estimates are recognised prospectively
in profit or loss, except to the extent that they give rise to changes
in the carrying amount of recognised assets and liabilities where
the change in estimate is recognised immediately.
Prior period errors are retrospectively restated if material.
2.2 Accounting policies
2.2.1 Foreign currencies
(i) Foreign currency transactions
Transactions in foreign currencies are converted into the functional
currency of the group’s individual operations at the rate of
exchange ruling at the date of such transactions.
// 2008 Annual report
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