Our performance in 2009 - Sappi

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Europe 2009 annual report 31 Mills/ Capacity factories/ (’000 tons) Divisions plantations Products produced Paper Pulp Employees* North America South Africa Cloquet Mill Bleached chemical pulp for own consumption and market pulp 455 Coated woodfree paper 330 Somerset Mill Bleached chemical pulp for own consumption and market pulp 490 Coated woodfree paper 795 Westbrook Mill Coated speciality paper 35 Total North America 1,160 945 2,340 Alfeld Mill Bleached chemical pulp for own consumption 125 Coated woodfree paper, coated and uncoated speciality paper 330 Biberist Mill*** Coated woodfree paper, uncoated woodfree paper 500 Ehingen Mill Bleached chemical pulp for own consumption and market pulp 135 Coated woodfree paper 250 Gratkorn Mill Bleached chemical pulp for own consumption 255 Coated woodfree paper 950 Kangas Mill*** † Coated mechanical paper 210 Kirkniemi Mill*** Bleached Mechanical pulp for own consumption 330 Coated mechanical paper 730 Lanaken Mill Bleached chemi-thermo mechanical pulp for own consumption 180 Coated mechanical paper 500 Maastricht Mill** Coated woodfree paper, coated speciality paper 280 Nijmegen Mill Coated woodfree paper 240 Stockstadt Mill*** Bleached chemical pulp for own consumption and market pulp 150 Coated woodfree paper, uncoated woodfree paper 430 Total Europe 4,420 1,175 6,680 Adamas Mill Uncoated woodfree paper (specialities) 40 Enstra Mill Bleached chemical pulp for own consumption 105 Uncoated woodfree and business paper 200 Stanger Mill Bleached bagasse pulp for own consumption 60 *** Rounded to nearest 10. *** Production on Paper Machine No 5 at Maastricht Mill ceased in December 2008. *** Mills acquired from M-real in January 2009. † Kangas Mill announced in October 2009 possible closure. Coated woodfree paper and tissue paper 110 Total South Africa 350 165 1,720 Total Sappi Fine Paper 5,930 2,285 10,740 our performance
32 Review of operations | Sappi Fine Paper continued Sappi Fine Paper’s main product line, coated graphic paper, contributes 67% of group sales by value, and is used in producing calendars, catalogues, brochures, books, premium magazines, direct mailings and annual reports. Sappi Fine Paper also produces a range of uncoated graphic and business paper, coated and uncoated speciality paper, like that used in flexible packaging, and casting release paper, used in the manufacture of synthetic leather and decorative laminate products. Total paper sales represent 84% of group sales. The geographic spread of our operations allows us to optimise our global knowledge of market developments, operating best practices and technology. Sappi Fine Paper is approximately 63% integrated in pulp, with Europe a major net buyer of pulp and North America a net seller of pulp. Europe As we completed the acquisition at the end of December 2008 demand across Europe began falling as a result of the global economic downturn. We acted quickly to curtail output to match demand and took account of the unprecedented market conditions as we integrated the new business. The European team was well prepared for the integration, which went smoothly. We placed particular emphasis on customer relations and service and our market shares for coated fine paper and coated magazine paper, at year end, were in line with the theoretical market shares of the two businesses combined. It is pleasing that our people came together enthusiastically and our team in Europe is highly motivated and focused on further optimising our business. We achieved synergy benefits in excess of the r60 million target for the nine months to September 2009, and we expect to achieve the full target of r120 million a year ahead of the three-year timeframe. The team is currently working with customers to find ways to improve their profitability and ours, based on improving our understanding of their needs and serving them better while reducing complexity and cost throughout the supply chain. We expect these initiatives to deliver significant benefits over the next few years. Acquisition synergies: Synergy achievement Sources of synergies Nine months to September 2009 EUR million Procurement (excluding market effects) 30 Asset optimisation (including benefits of acquired order books) 23 SG&A reduction 22 Other (including recipe changes and manufacturing efficiency) 11 Transitional and once-off costs (13) Total 73* * Annualised – r97 million. – Nine-month target – r60 million. – Full target – r120 million per annum within three years. Our lower production levels resulted in a reduced environmental impact in terms of lower water consumption (11%) and reduced carbon dioxide emissions (18%). However, the frequent stops and starts necessitated by market conditions reduced our efficiencies resulting in higher emissions per ton produced. During the year, we launched a revolutionary coated fine paper, Tempo, which was named as the innovation of the year by Pulp & Paper International (PPI). The product markedly reduces ink drying time, providing major efficiencies for printers, and allowing them to reduce the use of dusting powder resulting in cost and environmental benefits.
Page 1 and 2: SAPPI GROUP (Sappi Limited) ANNUAL
Page 3 and 4: • the impact of future investment
Page 5 and 6: Our reporting strategy As a leading
Page 7 and 8: 1 2 North America 2 4 1 San Francis
Page 9 and 10: 4 Our performance in 2009 Financial
Page 11 and 12: 6 Our performance against financial
Page 13 and 14: 8 Our performance against sustainab
Page 15 and 16: 10 Our performance against sustaina
Page 17 and 18: 12 Our performance against sustaina
Page 19 and 20: 14 Our sustainable business cycle T
Page 21 and 22: 16 Our products 1 2 3 Coated paper
Page 23 and 24: Our objectives for 2010 Improve pro
Page 25 and 26: 20 Letter to shareholders continued
Page 27 and 28: 22 Letter to shareholders continued
Page 29 and 30: 24 Interview with Ralph Boëttger,
Page 31 and 32: 26 Our leadership Independent non-e
Page 33 and 34: 28 Our leadership continued Indepen
Page 35: 30 Review of operations Sappi Fine
Page 39 and 40: 34 Review of operations | Sappi Fin
Page 41 and 42: 36 Review of operations Sappi Fores
Page 43 and 44: 38 Review of operations | Sappi For
Page 45 and 46: 40 Value added statement for the ye
Page 47 and 48: 42 Chief financial officer’s repo
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Page 72 and 73: Risk management Global economic con
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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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2009 annual report 17. Ordinary sha
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20. Interest-bearing borrowings con
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2009 annual report 20. Interest-bea
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22. Provisions continued September
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27. Post-employment benefits - pens
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27. Post-employment benefits - pens
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2009 annual report 2009 2008 27. Po
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2009 annual report 28. Post-employm
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28. Post-employment benefits - othe
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29. Share-based payments continued
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2009 annual report 29. Share-based
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2009 annual report 29. Share-based
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30. Financial instruments continued
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2009 annual report 30. Financial in
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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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