2006 20-F - Sappi

(“the Depositary”) with respect to the ADSs. Prior to the commencement of trading of the ADSs on the
NYSE, our ordinary shares were traded in the United States in the over-the-counter market pursuant to a
sponsored unrestricted American Depositary Receipt facility established in 1994. Price data relating to that
trading is not considered meaningful and has not been included in this Annual Report.
On October 26, 1999, Sappi and The Bank of New York amended the Deposit Agreement to change,
with effect from October 27, 1999, the number of ordinary shares represented by each ADS from
10 ordinary shares per ADS to 1 ordinary share per ADS. The prices for ADSs set forth in the following
paragraphs and the table above reflect this change.
Prior to our global equity offering, which was completed on November 22, 1999, trading of the ADSs
on the NYSE had been sporadic with the volumes traded varying between zero and 231,000 ADSs per day.
Since that offering, trading of the ADSs has increased substantially. The ADS price has reached a high of
$16.45 and a low of $3.22 since trading commenced. On some days, trading volume in ADSs on the NYSE
has exceeded the volume traded on the JSE.
The JSE Limited
The JSE Limited (JSE) was formed in 1887 and provides facilities for the buying and selling of a wide
range of securities, including equity, corporate debt securities, warrants in respect of securities, as well as
Krugerrands. The JSE is a self-regulatory organisation operating under the supervision of the South
African Ministry of Finance, through the Financial Services Board and its representative, the Registrar of
Stock Exchanges.
The market capitalisation of South African equity securities was approximately $412 billion as at
September 30, 2006. The actual float available for public trading is significantly smaller than the aggregate
market capitalisation because of the large number of long-term holdings by listed holding companies in
listed subsidiaries and associates, the existence of listed pyramid companies and cross holdings between
listed companies. Liquidity on the JSE (measured by reference to the total market value of securities
traded as a percentage of the total market capitalisation at the end of the period) was 58% for the
12 months ended September 30, 2006. Trading is concentrated in a growing, but small, number of
companies. As of the end of September 2006, there were 268 listed companies on the JSE.
Following the introduction of the FTSE/JSE free float indices, the FTSE/JSE All Share Index only
includes those companies that constitute the top 99% of the market capitalisation of the JSE. The three
main sectors in the market are Resources, Financials and Industrials. As of September 30, 2006, the All
Share Index included 162 companies. The Financial and Industrial Index and the Resources Index
included 31 and 20 companies, respectively, and accounted for approximately 45% and 43%, respectively,
of the total market capitalisation of the JSE.
The JSE settles securities trades electronically through STRATE—(Share Transactions Totally
Electronic). All trades are downloaded from the JSE SETS automated trading system to the JSE’s Broker
Deal Accounting (BDA) system, which manages the settlement status of every trade. The BDA system
interfaces with STRATE’s system which in turn interfaces with those of the custodian banks. The JSE’s
Settlement Authority monitors all trades from time of execution to settlement to ensure performance.
Shares may not be traded on the JSE unless they have been dematerialized through STRATE.
Contractual, rolling settlement has been introduced by the JSE in order to increase the speed, certainty
and efficiency of the settlement mechanism and to fall into line with international practices. While
settlement on the JSE is currently made five days after each trade (T + 5), the JSE in conjunction with
STRATE is exploring with the industry how best to reduce the settlement period further to (T+3) without
introducing undue risk.
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