2006 20-F - Sappi

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SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 2. ACCOUNTING POLICIES (Continued) recommendations of legal counsel. Litigation is however unpredictable and actual costs incurred could differ materially from those estimated at the balance sheet date. 2.4 Potential impact of future changes in accounting policies The following standards and interpretations, which have been issued but which are not yet effective, have not been applied in these financial statements: Amendment to IAS 1: Presentation of Financial Statements (added disclosure about an entity’s capital) The revised IAS 1 requires an entity to disclose qualitative information about its objectives, policies and processes for managing capital and a summary of quantitative data about what it manages as capital. It also requires disclosure of whether during the period it complied with any externally imposed capital requirements to which it is subject and when the entity has not complied with such externally imposed capital requirements, the consequences of such non-compliance. This standard has no impact on the figures presented in the income statement and balance sheet. IAS 21: Amendment to International Accounting Standard 21: The Effects of Changes in Foreign Exchange Rates: Net Investment in a Foreign Operation The amendment clarifies the requirements of IAS 21 regarding an entity’s investment in foreign operations. The amendment does not have an impact on the group, and first becomes applicable for the financial year ending September 2007. IAS 39: Financial Instruments: Recognition and Measurement Amendments The amendment clarifies embedded derivatives (paragraph 11A) and fair value considerations (paragraph 48A). The application of the amendments is not expected to have a significant impact on the group’s reported results, financial position and cash flows. The amendment first becomes applicable for the financial year ending September 2007. IFRS 7: Financial Instruments: Disclosures This standard prescribes the level of disclosure required for financial instruments, both in terms of quantitative data and qualitative data. The implementation of this standard will not have a material impact on the financial position or results of operations. IFRS 8: Operating Segments IFRS 8 requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. The effective date of IFRS 8 for the group is for the financial year ending September 2009 and the impact is currently being assessed by management. F-34
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 2. ACCOUNTING POLICIES (Continued) IFRIC 4: Determining whether an Arrangement contains a Lease The interpretation states that an arrangement that grants the right to control the use of an underlying specific asset is, or contains, a lease that should be accounted for in accordance with IAS 17—Leases. The implementation of this interpretation is not expected to have a material impact on the results of operations. IFRIC 8: Scope of IFRS 2 This interpretation clarifies that IFRS 2 Share-based Payment applies to arrangements where an entity makes share-based payments for apparently nil or inadequate consideration. IFRIC 8 states that, if the identifiable consideration given appears to be less than the fair value of the equity instruments granted or liability incurred, this situation typically indicates that other consideration has been or will be received. IFRS 2 therefore applies. IFRIC 8 is effective for the Group for the year ending September 2007. Management is of the opinion that the adoption of this statement will not have a material impact on the financial position of the Group. IFRIC 9: Reassessment of Embedded Derivatives This interpretation states that management is only required to re-examine an embedded derivative when it enters into a new contract or modifies an existing contract. The implementation of this interpretation is not expected to have a material impact on the Group. IFRIC 10: Interim Financial Reporting The interpretation addresses an apparent conflict between the requirements of IAS 34—Interim Financial Reporting and those in other standards on the recognition and reversal in financial statements of impairment losses on goodwill and certain financial assets. The interpretation concludes that an entity shall not reverse an impairment loss recognised in a previous interim period in respect of goodwill, or an investment in either an equity instrument or a financial asset carried at cost. The interpretation will have no impact on the group’s results, and first becomes applicable for the financial year ending September 2008. IFRIC 11, IFRS 2: Group and Treasury Share Transactions This interpretation provides guidance on applying IFRS 2 in three circumstances: Share-based payments involving an entity’s own equity instruments in which the entity chooses or is required to buy its own equity instruments (treasury shares) to settle the share-based payment obligation— is this an equity-settled or cash-settled transaction? A parent grants rights to its equity instruments to employees of its subsidiary—how to account in the individual entities’ financial statements? A subsidiary grants rights to equity instruments of its parent to its employees—how to account in the individual entities’ financial statements? F-35
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As filed with the Securities and Ex
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OUR USE OF TERMS AND CONVENTIONS IN
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FORWARD-LOOKING STATEMENTS In order
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2 Year Ended September 2006 2005 (U
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Risk Factors In addition to other i
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New technologies or changes in cons
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Several customers account for a sig
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Maintain a global presence. One of
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Major Product Categories Descriptio
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market share was negatively affecte
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The chart below represents the oper
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The following table sets forth appr
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Paper North America’s on-line fin
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of 860,000 metric tonnes of triple-
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a capacity of 60,000 metric tonnes
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customers use our products in the p
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(1) The following table sets forth
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The mill markets paper and excess p
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Pulp Sappi Fine Paper North America
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equired for its operations. Sappi F
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• The National Environmental Mana
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PROPERTY, PLANT AND EQUIPMENT For a
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ITEM 5. OPERATING AND FINANCIAL REV
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) Movement in market prices for our
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The recent price history for benchm
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Demand from all of the market segme
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Raw Material and Other Input Costs
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The exchange rate impact on raw mat
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Our South African businesses have f
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• Any debtors or creditors not in
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Year Ended September 2006 Compared
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US$28 million. Decreased selling pr
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enefit of the reversal of the Usutu
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accounting mismatch, as a result of
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South African residents, who are na
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The increase of US$11 million in fi
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June 2010. The OeKB A tranche and t
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impact on liquidity varies accordin
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Contractual Obligations We have var
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mill is located in Nanchang, the ca
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product pricing, raw material costs
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flows of the related underlying exp
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increases, health care cost trends,
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alance sheet date. Risks, uncertain
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If the Group had applied IFRS 3 ret
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IFRS. The Group did not apply the e
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Where BEE equity credentials are ob
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Environmental Matters We operate in
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Klaas de Kluis (70) (independent).
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Mark Richard Thompson (54) BCom, BA
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Audit Committee An Audit Committee
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estructuring initiatives that occur
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Levies Act, was paid via Internal R
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Pursuant to the Companies Amendment
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on Restitution of Land Rights and a
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(“the Depositary”) with respect
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• any proposal concerning the ado
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Voting Rights Subject to any rights
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equest not less than one-twentieth
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Financial Assistance The Bill enhan
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SAPPI NOTES TO THE GROUP ANNUAL FIN
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SAPPI CONDENSED COMPANY BALANCE SHE
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SAPPI CONDENSED COMPANY STATEMENT O
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5. OTHER INCOME 2006 2005 ZAR milli
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2006 20-F - Sappi

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