2006 20-F - Sappi

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SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) 3. SEGMENT INFORMATION for the year ended September 2006 For management purposes, the group has two reporting segments which operate as separate business units: Sappi Fine Paper and Sappi Forest Products. These divisions are the basis on which the group reports its primary segment information. Sappi Fine Paper produces coated and uncoated fine paper and speciality paper grades. Sappi Forest Products produces commodity paper products, pulp and forest and timber products. The secondary segments have been determined by the geographical location of the production facilities: North America, Europe and southern Africa. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (refer note 2.2). The group accounts for intragroup sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. All such sales and transfers are eliminated on consolidation. Sappi Fine Paper Sappi Forest Products Corporate & eliminations Group 2006 2005* 2006 2005* 2006 2005* 2006 2005* US$ million External sales (1) .......... 3,958 4,020 983 998 — — 4,941 5,018 Inter-segment sales . . . . . . 504 498 517 514 (1,021) (1,012 ) — — Total sales.............. 4,462 4,518 1,500 1,512 (1,021) (1,012 ) — — Segment result (2) ......... (49 ) (186) 175 83 (1) (6 ) 125 (109) Share of (loss) profit of equity investments..... 1 1 (1) 1 (1) — (1) 2 Depreciation............ 321 350 68 71 1 1 390 422 Amortisation and fellings . 2 2 74 66 — — 76 68 Asset impairments....... 6 186 3 50 — — 9 236 Asset impairment reversals.............. — (4) (40) — — — (40) (4) Other non-cash expenses (including fair value adjustment gains and growth on plantations) . 62 76 (131) (107) (58) (2 ) (127 ) (33) Capital expenditures . . . . . 203 241 99 101 1 3 303 345 Total assets (6) ............ 3,810 3,825 1,419 1,609 288 455 5,517 5,889 Operating assets (3)(6) ...... 3,726 3,748 1,407 1,597 86 107 5,219 5,452 Operating liabilities (4) .... 639 613 178 215 45 30 862 858 Net operating assets (5)(6) .. 3,049 3,094 1,188 1,325 19 55 4,256 4,474 Property, plant and equipment............ 2,478 2,578 669 754 2 1 3,149 3,333 F-44
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) 3. SEGMENT INFORMATION (Continued) for the year ended September 2006 Sappi Fine Paper Sappi Forest Products North America Europe Southern Africa Southern Africa Corporate & other Group 2006 2005* 2006 2005* 2006 2005* 2006 2005* 2006 2005* 2006 2005* Sales (1) ............... 1,439 1,458 2,194 2,239 325 323 983 998 — — 4,941 5,018 Segment result (2) ........ (16 ) (259 ) (27) 84 (6) (11) 175 83 (1) (6 ) 125 (109) Capital expenditures . . . . . 48 90 136 124 19 27 99 101 1 3 303 345 Operating assets (3) ....... 1,334 1,437 2,196 2,092 196 219 1,407 1,597 86 107 5,219 5,452 Net operating assets (5) .... 1,108 1,199 1,796 1,735 145 160 1,188 1,325 19 55 4,256 4,474 Property, plant and equipment .......... 926 1,001 1,428 1,429 124 148 669 754 2 1 3,149 3,333 Sales by geographical location of customers 2006 2005 US$ million North America................................................................. 1,502 1,485 Europe........................................................................ 1,972 2,031 Southern Africa ................................................................ 750 770 Asia and other.................................................................. 717 732 4,941 5,018 * Restated for IFRS (1) (2) Sales where the product is manufactured. Segment result is operating (loss) profit. (3) Operating assets consist of property, plant and equipment, non-current assets (excluding deferred taxation) and current assets (excluding cash). (4) Operating liabilities consist of trade payables, other payables, provisions and derivative financial instruments. (5) (6) Net operating assets consist of operating assets less operating liabilities, adjusted for taxation payable and dividends payable. Corporate region includes investment in joint venture in China. F-45
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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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At the Annual General Meeting of Sh
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African shareholders will be paid t
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purpose of Capital Gains Tax in Sou
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Distributions. The gross amount of
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US Federal Income Tax Consequences
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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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