Our performance in 2009 - Sappi

Share price performance
2009 annual report 61
During the year, we increased our authorised share capital as a result of the rights issue and the
issuance of shares to M-real in part payment for the acquisition. We issued 286.9 million shares
in terms of the rights offer and 11.2 million shares to M-real. Please refer to the Directors’ report
for further detail on the changes in share capital during the year.
The share prices in the graph above have been revised by an adjustment factor of 1.58 to reflect
the impact of the rights offer. Please refer to earnings per share above and also note 7 to the
annual financial statements for further details on this adjustment factor.
The group’s equity increased by US$189 million during 2009 from US$1,605 million at the end
of September 2008 to US$1,794 million at the end of September 2009. This increase arose
as follows:
Equity – September 2008
US$ million
1,605
Rights offer – net proceeds 544
Shares issued to M-real (in part payment of the acquisition) 45
Dividend in respect of fiscal 2008 (37)
Loss for the year (177)
Actuarial loss on pension funds (net of tax) (197)
Other 11
Equity – September 2009 1,794
The actuarial loss on pension funds arose mainly as a result of an unusually large drop in discount
rates, which caused pension fund liabilities to increase by more than the growth in the underlying
asset portfolio. We do not expect this to result in a significant increase in the group’s contributions
to its pension funds for the next few years as the contribution rates are set using a funding basis
as opposed to a (more conservative) accounting basis, minimum statutory recovery rates (pace of
funding) in certain countries have recently been eased and the returns of the underlying equity asset
portfolios are expected to improve on the 2009 performance, thereby helping to close deficits.
Conclusion
On the operating front, we have taken a number of actions to improve our business. Although
our finance costs have increased, we have a strong liquidity position.
We expect improved operating results in 2010 and will continue to focus on generating cash and
reducing our debt.
M R Thompson
chief financial officer
04 December 2009
our performance