2006 20-F - Sappi

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23. PROVISIONS SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) Summary of provisions: for the year ended September 2006 2006 2005 US$ million Restructuring provisions ............................................................. 41 15 Purchase accounting provisions ....................................................... — — Other provisions Balance at beginning of year ........................................................ 5 18 Increase in provisions .............................................................. 1 — Released during the year ........................................................... (1 ) (7) Transfer to accruals................................................................ (1 ) (4) Translation effect.................................................................. — (2) Balance at end of year.............................................................. 4 5 Balance at September 2006* ........................................................ 45 20 * These are all current liabilities The following is an analysis of other provisions: Environmental costs ............................................................... — 1 General liability................................................................... 1 — Claims relating to minority buy-out .................................................. — 1 Disputes.......................................................................... 1 1 Sundry ........................................................................... 2 2 4 5 Severance, retrenchment & Lease cancellation & Other Total related costs penalty costs restructuring restructuring US$ million Restructuring provisions Balance at September 2004 ............ 4 1 5 10 Increase in provisions ................. 14 2 — 16 Utilised.............................. (5) (2) — (7) Released during the year .............. (1) — — (1) Translation effect..................... 1 — (4 ) (3) Balance at September 2005* ........... 13 1 1 15 Increase in provisions ................. 43 — 2 45 Utilised.............................. (13) (1) (2 ) (16) Released during the year .............. (4) — — (4) Translation effect..................... 1 — — 1 Balance at September 2006* ........... 40 — 1 41 * These are all current liabilities F-70
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) 23. PROVISIONS (Continued) September 2006 Restructuring Plans for the year ended September 2006 Sappi Fine Paper North America Muskegon Mill: During the financial year ended September 2005, Sappi Fine Paper North America announced the shutdown of one its coated paper machines and closure and mothball of the pulp mill. The restructuring plan was expected to affect 362 Muskegon mill employees and the remaining severance and other exist costs at September 2005 amounted to approximately US$12 million. During fiscal year 2006, the total number of people expected to be impacted by this plan was reduced to 345 of which 322 had been impacted by the end of the year. An amount of US$8 million was utilized to provide for severance and other exit and mothball activities and US$3 million was reversed for provisions no longer required for these obligations. As a result, the balance remaining in respect of these severance and related costs amounted to approximately US$1 million. Regional head office: During the financial year ended September 2005, in conjunction with the announced closure of a paper machine and the pulp mill at Muskegon Mill Sappi Fine Paper North America announced the restructuring of certain regional head office activities. This plan was expected to impact 41 employees and the remaining severance and other related costs at September 2005 amounted to US$1 million. During fiscal year 2006, the total number of people expected to be impacted by this plan was reduced to 32 of which 31 had been impacted by the end of the year (1 individual expected to retire under the plan). The remaining balance for severance and other costs was fully utilized. In conjunction with the announced closure of coated assets at the Westbrook Mill during the fiscal year ended September 2004, Sappi Fine Paper North America announced the restructuring of certain regional head office activities. The total number of people impacted by this plan at September 2006 was reduced from 85 to 72. At September 2006, all 72 employees have been separated from Sappi Fine Paper North America and the remaining amounts for severance and related costs utilized. Sappi Fine Paper Europe Sappi Fine Paper Europe: During the financial year ended September 2006, Sappi Fine Paper Europe announced a major restructuring of its European operations. The restructuring plan was expected to affect approximately 650 Sappi Fine Paper Europe employees and the remaining severance and other exit costs at September 2006 amounted to approximately US$40 million. The major part of the restructuring is expected to be completed within a period of a year. September 2005 Restructuring Plans Sappi Fine Paper North America Muskegon Mill: In July 2005, Sappi Fine Paper North America announced the shutdown of one its coated paper machines and closure and mothball of the pulp mill. This restructuring plan was expected to affect 362 Muskegon mill employees of which 160 people have been affected by this plan by year end. A provision of US$15 million was made for severance and other related exit and mothball activities of which US$3 million was utilised during the year. As a result, the balance remaining in respect of the severance and related exit and closure provisions amounted to US$12 million at September 2005. F-71
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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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