2006 20-F - Sappi

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SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 21. INTEREST-BEARING BORROWINGS (Continued) Borrowing facilities secured by trade receivables Sappi Fine Paper North America Sappi sells the majority of its US$ receivables to Galleon Capital LLC on a non-recourse basis. Credit enhancement is calculated by adding up the maximum exposure of 3 % of the top four obligors, ie. 12 % (plus dilution reserve plus interest cost reserve). In addition, excess concentrations are covered with a letter of credit in favour of Galleon Capital LLC. Sappi is responsible for the collection of all amounts that are due from the customer. The rate of discounting that is charged on the receivables is LIBOR (London Inter Bank Offer Rate) plus 34 basis points. Sappi Fine Paper Europe Sappi sells the majority of its EUR denominated receivables to a SPE that is managed by State Street Bank. State Street then on sells these receivables to Galleon Capital LLC on a non-recourse basis. A letter of credit has been issued by Sappi to Galleon Capital LLC which guarantees in the event of default by a customer. The discounting fee payable to State Street is 14%. Sappi is responsible for the collection of all amounts that are due from the customer. The rate of discounting that is charged on the receivables is EURIBOR (European Inter Bank Offer Rate) plus 36 basis points. Sappi Trading Sappi sells the majority of its US$ denominated receivables to a SPE that is managed by State Street Bank. State Street then on sells these receivables to Galleon Capital LLC on a non-recourse basis. A letter of credit has been issued by Sappi to Galleon Capital LLC which guarantees in the event of default by a customer. The discounting fee payable to State Street is 14%. Sappi is responsible for the collection of all amounts that are due from the customer. The rate of discounting that is charged on the receivables is LIBOR (London Inter Bank Offer Rate) plus 42 basis points. Committed facilities Currency Interest rate 2006 2005 US$ million Commercial Paper*............................. ZAR Variable (JIBAR) 26 31 Syndicated loan** .............................. EUR Variable (EURIBOR) 628 722 654 753 * Commercial paper program sponsered by Investec for a committed liquidity facility of ZAR200 million for each further issue. The remainder of the unutilised portion of the total ZAR1 billion facility has been included under uncommitted facilities disclosed below. ** Syndicated loan with a consortium of banks with BNP Paribas as agent with a total revolving facility available of EUR600 million, which are subject to net finance cost cover and debt to total capitalisation ratio financial covenants which relate to the Sappi Limited Group. F-68
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 21. INTEREST-BEARING BORROWINGS (Continued) Uncommitted facilities Geographic region Currency Interest rate 2006 2005 Southern Africa .................................. ZAR Variable (JIBAR) 108 319 Europe.......................................... EUR Variable (EURIBOR) 187 72 Europe.......................................... USD Variable (LIBOR) 120 85 415 476 Fair value The fair value of all interest bearing borrowing has been disclosed in note 31 on financial instruments. 22. OTHER NON-CURRENT LIABILITIES 2006 2005 US$ million Post-employment benefits—pension liability (refer note 28)............................ 246 343 Post-employment benefits other than pension liability (refer note 29).................... 166 174 Long-term employee benefits ...................................................... 9 8 Workmen’s compensation ......................................................... 6 1 Long service awards............................................................... 17 15 Land restoration obligation........................................................ 15 16 Deferred income ................................................................. 2 11 Other ........................................................................... 11 9 472 577 F-69
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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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PART II ITEM 13. DEFAULTS, DIVIDEND
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the controls may become inadequate
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ITEM 16E. PURCHASES OF EQUITY SECUR
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4.10 Credit Facility, dated May 7,
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SAPPI Group Annual Financial Statem
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SAPPI GROUP INCOME STATEMENT for th
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SAPPI GROUP CASH FLOW STATEMENT for
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1. BUSINESS SAPPI NOTES TO THE GROU
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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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