2006 20-F - Sappi

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SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) 23. PROVISIONS (Continued) for the year ended September 2006 Westbrook Mill: During the financial year ended September 2003, Sappi Fine Paper North America announced the shutdown of one of its coated paper machines at Westbrook Mill. Whilst the plan impacted 145 people during fiscal year 2004, the remaining severance and other exit costs at September 2004 amounted to approximately US$1 million. During fiscal year 2005, the remaining balance for severance and other costs was fully utilised. Regional head office: In conjunction with the announced closure of a paper machine and the pulp mill at Muskegon Mill in July 2005, Sappi Fine Paper North America announced the restructuring of certain regional head office activities. This plan was expected to impact 41 employees of which 10 had been impacted by the end of the year. A provision of US$1 million was made for severance related costs and remains outstanding at September 2005. 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 expected to be impacted by this plan was reduced from 85 to 73, of which 71 had been impacted by the end of September 2005. Sappi Fine Paper North America utilised and reversed approximately US$1 million provisions no longer required as a result of a change in the number of employees for severance and related costs. As at September 2005, the balance remaining on this provision amounted to US$1 million. Sappi Fine Paper Europe Netherlands: The plan introduced during the previous year for the reduction in fixed costs in the Netherlands continued in the current year. This plan was introduced to merge certain departments that could benefit from shared services. The total number of people expected to be affected by this plan has been reduced to 26. By September 2005 24 people had already been affected. A provision of US$2 million was initially made of which US$1 million has been utilised for severance payments. At September 2005, the balance remaining on this provision amounted to US$1 million. The estimated completion date for the plan is December 2008. Belgium: Belgium had two restructuring plans in place from previous years: the retirement of employees according to a collective labour agreement and a plan to reduce fixed costs. The balance remaining on the provision of these plans US$3 million has been reclassified to long-term employee benefit provisions. This reclassification relates to amounts on supplementary employee benefits until normal retirement age. F-72
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) 24.1 CASH GENERATED FROM OPERATIONS for the year ended September 2006 2006 2005 US$ million Loss after taxation per income statement ........................................... (4 ) (184) Adjustment for: - Depreciation................................................................... 390 422 - Fellings ....................................................................... 74 66 - Amortisation................................................................... 2 2 - Taxation benefit................................................................ (1 ) (5) - Net finance costs............................................................... 130 80 - Other asset impairments and machine and mill closure costs......................... (14 ) 232 - Fair value adjustment gains and growth on plantations .............................. (104 ) (118) - Other non-cash items ........................................................... (9 ) 74 464 569 24.2 INCREASE IN WORKING CAPITAL 2006 2005 US$ million (Increase) decrease in inventories................................................. (3 ) 3 (Increase) decrease in receivables................................................. (3 ) 62 Decrease in payables............................................................ (11 ) (95) (17 ) (30) 24.3 FINANCE COST PAID 2006 2005 US$ million Gross interest and other finance costs.............................................. (162 ) (161) Net foreign exchange gains........................................................ 7 5 Net (loss) gain on marking to market of financial instruments ......................... (3 ) 39 Non-cash movements included in items above....................................... (6 ) (45) (164 ) (162) 24.4 TAXATION PAID 2006 2005 US$ million Amounts unpaid at beginning of year............................................... (120 ) (136) Translation effects............................................................... 9 (1) Amounts charged to the income statement.......................................... (5 ) (45) Reversal of non-cash movements .................................................. 2 19 Amounts unpaid at end of year.................................................... 101 120 Cash amounts paid............................................................... (13 ) (43) F-73
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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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