Our performance in 2009 - Sappi

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13. Joint ventures and associates* Jiangxi Chenming 2009 annual report Sappi owns 34% of Jiangxi Chenming Paper Company Limited (Jiangxi Chenming) under a joint venture arrangement. Jiangxi Chenming is established in the People’s Republic of China and is principally engaged in the manufacturing and sales of paper and paper products. The financial statements of Jiangxi Chenming are to 31 December of each year which was the reporting date when the company was established. The last audited financials were to 31 December 2008. Umkomaas Lignin (Pty) Ltd A joint venture agreement with Borregaard Industries Limited for the construction and operation of a lignin plant at Umkomaas and the development, production and sale of products based on lignosulphates in order to build a sustainable lignin business. The financial statements of Umkomaas Lignin (Pty) Ltd are to 31 December of each year which is the year end of Borregaard. The last audited financials were to 31 December 2008. Sapin SA A joint venture with Sapin SA located in Belgium for the buying and selling of wood and wood chips to Sappi and other paper manufacturers. The financial statements of Sapin SA are to 31 December of each year which is the year end of Sapin SA. The last audited financials were to 31 December 2008. Papierholz Austria GmbH A joint venture agreement for the buying and selling of wood and wood chips to Sappi and other paper and pulp manufacturers. The financial statements of Papierholz Austria GmbH are to 31 December of each year which is the year end of Papierholz Austria GmbH. The last audited financials were to 31 December 2008. VOF Warmtekracht A joint venture in the Netherlands between Sappi and Essent for a co-generation electricity and steam producing plant. The financial statements of VOF Warmtekracht are to 31 December of each year which is the year end of VOF Warmtekracht. The last audited financials were to 31 December 2008. Timber IV A special purpose entity (SPE) into which Sappi contributed promissory notes (relating to certain Timberlands, equipment and machinery sold by Sappi to a third-party timber company) which were pledged as collateral for the SPE to issue bonds. The SPE is not consolidated in our financial statements because we have taken the position that it is controlled by an unrelated investor which has sufficient equity capital at risk. Sappi’s investment in the SPE is US$6 million as of September 2009 (2008: US$11 million). The financial statements of Timber IV are to 30 September of each year. The results are unaudited. The directors believe that the book values of the joint ventures and associates equates to the market values. * Where the year ends of joint ventures and associates are different to Sappi’s, the unaudited management accounts of the joint ventures and associates are used for the periods to Sappi’s year end. 133 financials
134 Notes to the group annual financial statements continued US$ million 2009 2008 14. Other non-current assets Loans to the Sappi Limited Share Incentive Trust participants 6 6 Financial assets* 33 22 Post-employment benefits – pension asset (refer to note 27) 52 117 Acquisition costs** – 10 Other loans 10 13 101 168 ** Details of investments are available at the registered offices of the respective companies. ** Acquisition costs relate to the acquisition of M-real’s coated graphic paper business. These costs were recorded as non-current assets in 2008 pending the successful completion of the Acquisition. In 2009, the costs were recorded as part of the purchase consideration of the Acquisition (refer to note 34). US$ million 2009 2008 15. Inventories Raw materials 155 163 Work in progress 83 62 Finished goods 347 324 Consumable stores and spares 207 176 792 725 The charge to the group income statement relating to the write down of inventories to net realisable value amounted to US$10 million (2008: US$11 million and 2007: US$12 million). The cost of inventories recognised as an expense and included in cost of sales amounted to US$4,467 million (September 2008: US$4,552 million and September 2007: US$4,150 million). US$ million 2009 2008 16. Trade and other receivables Trade accounts receivable, gross 682 579 Allowance for credit losses (15) (5) Trade accounts receivable, net 667 574 Prepayments and other receivables 191 124 Management rate the quality of the trade and other receivables, which are neither past due nor impaired, periodically against its internal credit rating parameters. The quality of these trade receivables is such that management believe no impairment provision is necessary, except in situations where they are part of individually impaired trade receivables. The carrying amount of US$858 million (2008: US$698 million) represents the group’s maximum credit risk exposure from trade and other receivables. Prepayments and other receivables primarily represent prepaid insurance and other sundry receivables. 858 698 Trade receivables (including securitised trade receivables) to turnover (%) 16% 13%
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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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Fairness Social responsibility Lege
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2009 annual report 75 Induction and
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2009 annual report 77 employment of
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2009 annual report 79 board to esta
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As part of continuous improvement t
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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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Our performance in 2009 - Sappi

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