Our performance in 2009 - Sappi

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2009 annual report 31. Related-party transactions Transactions between Sappi Limited and its subsidiaries, which are related parties of the group, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the group and related parties are disclosed below: US$ million Sale of goods Purchases of goods Amounts owed by related parties 189 Amounts owed to related parties Joint ventures 2009 2008 2007 2009 2008 2007 2009 2008 2009 2008 Jiangxi Chenming 2.0 4.0 3.8 1.5 2.6 2.2 – – 3.7 7.6 Sapin SA 0.4 0.3 – 21.3 30.9 28.2 – – 0.9 1.1 VOF Warmtekracht 38.1 44.2 41.4 25.0 32.8 30.5 – – – – Umkomaas Lignin (Pty) Ltd 0.9 1.1 0.9 – – – 0.9 0.7 – – Papierholz Austria GmbH – – – 68.5 92.7 90.4 – – 6.1 5.3 41.4 49.6 46.1 116.3 159.0 151.3 0.9 0.7 10.7 14.0 Sales of goods and purchases to and from related parties were made on an arm’s length basis. The amounts outstanding at balance sheet date are unsecured and will be settled in cash. Guarantees given by the group are disclosed in note 26. No expense has been recognised in the period for bad or doubtful debts in respect of the amounts owed by related parties. Directors Details relating to executive and non-executive directors’ emoluments, interests and participation in the Scheme and Plan are disclosed in the compensation report. Interest of directors in contracts None of the directors have a material interest in any transaction with the company or any of its subsidiaries, other than those on a normal employment basis. Professor Meyer Feldberg, a non-executive director of the company, disclosed his role as senior advisor of Morgan Stanley & Co Limited, a financial advisor to Sappi, and Morgan Stanley South Africa (Pty) Ltd, a transaction sponsor to Sappi Limited. Key management personnel Compensation for key management was as follows: US$ million Total excluding directors Total including directors 2009 2008 2007 2009 2008 2007 Short-term benefits 2.9 2.9 2.5 4.3 4.3 4.1 Post employment benefits 0.7 0.4 0.3 0.9 0.7 0.8 Share-based payments – – 0.2 – – 0.2 The number of key management personnel included above for 2009 was nine (2008: ten). 3.6 3.3 3.0 5.2 5.0 5.1 financials
190 Notes to the group annual financial statements continued 32. Events after balance sheet date On 22 October 2009, Sappi announced that it will enter into a consultation process with the employee representatives at its Kangas Mill in Finland. The aim of this process is to identify the best way of improving company profitability, which may include a full closure of the mill. Kangas Mill has the capacity to produce 210,000 tons of coated magazine paper annually. On 30 October 2009, Sappi announced that it will begin the process of consulting with staff and all other relevant stakeholders regarding its intention to close the Usutu Pulp Mill in the Kingdom of Swaziland on 31 January 2010. With the closure of the mill, Sappi would exit the unbleached softwood flash-dried pulp market served by Usutu Pulp Mill. The mill has a capacity of 190,000 tons annually. Sappi will continue to seek future beneficiation opportunities for the profitable utilisation of the Usutu forests. This could include the introduction of new investors. At the end of September 2009, no provision had been raised in respect of the proposed restructuring above. 33. Environmental matters We are subject to a wide range of environmental laws and regulations in the various jurisdictions in which we operate, and these laws and regulations have tended to become more stringent over time. Violations of environmental laws could lead to substantial costs and liabilities, including civil and criminal fines and penalties. Environmental compliance is an increasingly important consideration in our businesses, and we expect to continue to incur significant capital expenditures and operational and maintenance costs for environmental compliance, including costs related to reductions in air emissions including carbon dioxide and other greenhouse gases (GHG), wastewater discharges and waste management. We closely monitor the potential for changes in pollution control laws and take actions with respect to our operations accordingly. Sappi spent approximately US$5 million in the financial year ended September 2009 (September 2008: US$15 million) on capital projects that control air or water emissions or otherwise create an environmental benefit. Sappi Fine Paper North America is subject to stringent environmental laws in the United States. These laws include the Federal Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and their respective state counterparts and implementing regulations. On 29 June 2009, the State of Maine, Department of Inland Fisheries and Wildlife, issued a decision requiring Sappi Fine Paper North America to install a fish passage at its Cumberland mills dam on the Presumpscot River. A second hearing that began on 18 November 2009 to determine further fishway requirements, including design and operation, has been continued until January 2010, and a decision is expected during the second quarter of 2010. The installation of a fishway on the Cumberland Mills dam will trigger the obligation to install fishways at Sappi Fine Paper North America’s dams upstream of the Cumberland Mills dam as well, to allow natural fish migration and thus promote the restoration of native species to the river. The total cost of all these projects is estimated to be in the range of approximately US$18 million to US$28 million, part of which is expected to be incurred in the near future and part of which will be incurred over a number of years. Because the proceedings regarding fishway design and operation are still pending, we do not know when the construction phase at the Cumberland Mills dam will begin, or the precise timing for incurring related costs. We closely monitor state, regional and Federal GHG initiatives in anticipation of any potential effects on our operations. Although the United States has not ratified the Kyoto Protocol, and has not yet adopted a Federal programme for controlling GHG emissions, Congress is considering comprehensive Federal legislation regarding climate change. In addition, the US Environmental Protection Agency has proposed several rules relating to emissions reporting and reductions, and various regional initiatives regarding climate change are in effect or proposed. The nature, scope and timing of such climate change legislation is highly uncertain and, currently, we do not know what effect, if any, such legislation will have on our financial condition and operations.
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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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Compensation report In 2009, the co
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Balance between fixed and variable
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Executive directors (1) Details of
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2009 annual report 89 R J Boëttger
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2009 annual report 91 Board Committ
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Auditor’s report Independent audi
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Audit committee report The legal re
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Directors’ report for the year en
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Litigation We become involved from
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Group balance sheet at September 20
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Group statement of changes in equit
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Group balance sheet in Rands conven
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Notes to the group annual financial
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• Financial assets and financial
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2.2.10 Non-current assets held for
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(iii) Dividends Dividends are recog
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uyer and seller) multiple used in o
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2.4 Adoption of accounting standard
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Corporate and eliminations Group 20
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2009 annual report US$ million 2009
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6. Taxation (benefit) charge contin
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7. Earnings per share and headline
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2009 annual report 9. Property, pla
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US$ million 2009 annual report 2009
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13. Joint ventures and associates*
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16. Trade and other receivables con
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Our performance in 2009 - Sappi

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