2006 20-F - Sappi

on Restitution of Land Rights and adjudicated upon by the Land Court. This process is expected to
continue for many years. As one of the largest land owners in South Africa, we anticipate that a substantial
number of claims may affect land we own. The process of determining the extent of claims filed in respect
of our land and the potential impact of these claims on our South African operations continues. To date,
we have been notified of twenty-four formal Land Claims made in respect of portions of Sappi plantations
in the Mpumalanga area, and twenty-eight others made in respect of portions of Sappi plantations in
KwaZulu Natal. These claims have not been finalized and are still under investigation by the Regional
Land Claims Commissioner.
Dividend Policy
Our current policy is to consider dividends on an annual basis and to declare cash dividends in
US dollars. We declared a dividend number 83 of 30 US cents for fiscal 2006. South African shareholders
will be paid the Rand equivalent of the US dollar denominated declaration.
We aim to declare annual dividends, which, over time, incorporate real growth for shareholders. To
this end, dividend cover in each year will vary in line with changes in the business cycle, but our current
intention is to maintain a long-term average of three times net profit. Notwithstanding our inability to
meet this target in recent years, we remain committed to this policy in the longer term. See “Item 5—
Operating and Financial Review and Prospects—Dividends” for the dividend cover in recent years.
In accordance with South African common law, dividends may be declared only out of distributable
profits. Holders of American Depositary Receipts (ADRs) on the relevant record date will be entitled to
receive any dividends payable in respect of the shares underlying the ADSs, subject to the terms of the
Deposit Agreement among us, The Bank of New York and the ADR holders (the “Deposit Agreement”).
There is no restriction under South African exchange control regulations on the free transferability of cash
dividends to non-resident shareholders or ADS holders. See “Item 10—Additional Information—
Exchange Controls”.
South African companies pay Secondary Tax on Companies at the flat rate of 12.5% in respect of the
amount of dividends declared by the company less certain dividends which accrue to the company during
its relevant “dividend cycle”. See “Item 10—Additional Information—Taxation”.
Significant Changes
Except as otherwise disclosed in this Annual Report, no significant change has occurred in our
financial position since October 1, 2006.
104