Our performance in 2009 - Sappi

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6. Taxation (benefit) charge continued Reconciliation of the tax rate 2009 annual report 2009 2008 2007 (Loss) profit before taxation (218) 188 249 Profit-making regions 133 560 424 Loss-making regions (351) (372) (175) Taxation at the average statutory tax rate (60) 72 68 Profit-making regions at 28% (2008: 30%; 2007: 28%) 38 167 119 Loss-making regions at 28% (2008: 26%; 2007: 29%) (98) (95) (51) Net exempt income and non-tax deductible expenditure (32) (51) (34) Effect of tax rate changes (3) (9) (19) Deferred tax asset not recognised 72 103 49 Utilisation of previously unrecognised tax assets (22) (19) (11) Secondary Tax on Companies (STC) 4 7 8 Prior year adjustments (4) (19) (15) Other taxes 4 2 1 Taxation (benefit) charge (41) 86 47 Effective tax rate for the year 19% 46% 19% Our effective tax rate reflects the benefits from reduced tax rates in South Africa (2009: nil; 2008: US$9 million; 2007: nil), Germany (2009: US$3 million; 2008: nil; 2007: US$19 million ) and the Netherlands (2009: nil; 2008: nil; 2007: US$2 million). The corporate tax rate in South Africa was reduced from 29% in 2007 to 28% in 2008. The corporate tax rate (including trade tax) in Germany was reduced from 38% in 2006 to 30% in 2007 and 28.6% in 2009. In the Netherlands, the corporate tax rate was reduced from 29.6% in 2006 to 25.5% in 2007. In addition, a taxation charge of US$2 million was recognised in 2007 as a result of the substantively enacted STC rate adjustment from 12.5% to 10% (effective date: 01 October 2007). On 09 November 2009, the directors decided not to declare a dividend in respect of the 2009 financial year (refer to note 8). (1) The imposition of Secondary Tax on Companies (STC) effectively means that a dual corporate taxation system exists in South Africa comprising a normal income taxation and STC. Liability for STC is determined independently from normal income taxation and is paid by South African companies at the flat rate of 10% in respect of the amount of dividends declared less all dividends which accrued to them (but subject to certain exclusions) during the relevant ‘dividend cycle’. ‘Dividend cycle’ means the period commencing on the day following the date of accrual to a company’s shareholders of the last dividend declared by that company and ending on the date on which the dividend in question accrues to the shareholder concerned. An excess of dividends accruing to a company over dividends paid may be carried forward to subsequent dividend cycles as an STC credit. 123 financials
124 Notes to the group annual financial statements continued 7. Earnings per share and headline earnings per share Earnings per share In November and December 2008, Sappi conducted a renounceable rights offer of 286,886,270 new ordinary shares of ZAR1.00 each to qualifying Sappi shareholders recorded in the shareholders’ register at the close of business on Friday 21 November 2008, at a subscription price of ZAR20.27 per rights offer share in the ratio of six rights offer shares for every five Sappi shares held. The rights offer was fully subscribed and the shareholders received their shares on 15 December 2008. The rights offer raised ZAR5.8 billion (US$575 million) which was used to partly finance the acquisition of the coated graphic paper business of M-real and the related costs. In accordance with IAS 33, prior period basic, headline and diluted earnings per share have been restated to take into account the bonus element of the rights offer. The prior period weighted average number of shares has been adjusted by a factor of 1.58 (the adjustment factor). The adjustment factor is calculated using the pre-announcement share price divided by the theoretical ex-rights price (TERP). TERP is the (number of new shares multiplied by the subscription price) plus the (number of shares held multiplied by the ex-dividend share price) all divided by the (number of new shares plus the number of shares held prior to the rights offer). Basic earnings per share (EPS) EPS is based on the group’s (loss) profit for the year divided by the weighted average number of shares in issue during the year under review. Basic EPS Loss US$ million 2009 2008 2007 Shares millions Loss per share US cents Profit US$ million Shares millions Earnings per share US cents Profit US$ million Shares millions Earnings calculation (177) 482.6 (37) 102 362.2 28 202 360.6 56 Share options and performance shares under Sappi Limited Share Trust – – – – 3.6 – – 4.3 – Diluted EPS calculation (177) 482.6 (37) 102 365.8 28 202 364.9 55 The diluted EPS calculations are based on Sappi Limited’s daily average share price of ZAR30.12 (2008: ZAR94.08; 2007: ZAR114.42) and exclude the effect of certain share options granted under the Sappi Share Incentive Scheme as they would be anti-dilutive. The number of share options not included in the weighted average number of shares (as they would have been anti-dilutive) are 2.3 million (September 2008: 2.3 million; September 2007: 0.8 million). per share US cents
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SAPPI GROUP (Sappi Limited) ANNUAL
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• the impact of future investment
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Our reporting strategy As a leading
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1 2 North America 2 4 1 San Francis
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4 Our performance in 2009 Financial
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6 Our performance against financial
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8 Our performance against sustainab
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10 Our performance against sustaina
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12 Our performance against sustaina
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14 Our sustainable business cycle T
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16 Our products 1 2 3 Coated paper
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Our objectives for 2010 Improve pro
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20 Letter to shareholders continued
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22 Letter to shareholders continued
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24 Interview with Ralph Boëttger,
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26 Our leadership Independent non-e
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28 Our leadership continued Indepen
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30 Review of operations Sappi Fine
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32 Review of operations | Sappi Fin
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34 Review of operations | Sappi Fin
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36 Review of operations Sappi Fores
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38 Review of operations | Sappi For
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40 Value added statement for the ye
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42 Chief financial officer’s repo
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62 Five-year review for the year en
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64 Share statistics at September 20
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Risk management Global economic con
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Risk philosophy The Sappi Limited b
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Independence Accountability Given t
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Page 84 and 85: 2009 annual report 79 board to esta
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Page 88 and 89: Compensation report In 2009, the co
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2009 annual report 30. Financial in
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30. Financial instruments continued
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2009 annual report 31. Related-part
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2009 annual report 33. Environmenta
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Company auditor’s report for the
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Condensed Sappi Limited company bal
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2009 annual report Notes to the con
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Glossary General definitions bleach
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not be comparable with similarly ti
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No issue and/or sale of these share
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Notes Confirmation of appointment o
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Proxy form for annual general meeti
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forward-looking statements Certain
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