2006 20-F - Sappi

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SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 28. POST-EMPLOYMENT BENEFITS—PENSIONS (Continued) rate by 1% would increase the projected benefit obligation by US$256 million and US$46 million respectively. F-80 2006 2005 US$ million Pension plan liability is presented on the balance sheet as follows: Pension liability (refer note 22)..................................................... 246 343 Pension fund asset (refer note 15)................................................... (18 ) — Pension liability (included in other payables)......................................... 39 34 267 377 In determining the expected long term return assumption on plan assets, Sappi considers the relative weighting of plan assets to various asset classes, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. Peer data and historical returns are reviewed to check for reasonableness and appropriateness. In addition, Sappi may consult with and consider the opinions of financial and other professionals in developing appropriate return benchmarks. Plan fiduciaries set investment policies and strategies for the local trusts. Long-term strategic investment objectives include preserving the funded status of the trust and balancing risk and return while keeping in mind the regulatory environment in each region. The plan fiduciaries oversee the investment allocation process, which includes selecting investment managers, setting long-term strategic targets and rebalancing assets periodically. Target vs. actual weighted average allocations (by region) below: 2006 2005 Southern United North Southern United North Africa Kingdom Europe America Africa Kingdom Europe America % % % % % % % % Target asset allocation by region Equity........................... 40-55 35.0 20.0 48.0 40-55 35.0 20.0 56.3 Debt Securities.................... 15-30 60.0 75.0 22.0 15-30 60.0 75.0 26.3 Real Estate....................... — 5.0 — — — 5.0 — — Other ........................... 5-20 — 5.0 30.0 5-20 — 5.0 17.4 Actual asset allocation by region Equity 49.0 35.0 19.0 47.6 52.2 35.0 19.0 59.2 Debt Securities 33.0 59.0 77.0 23.5 16.1 59.0 76.0 25.2 Real Estate — 6.0 — — — 6.0 — — Other 18.0 — 4.0 28.9 31.7 — 5.0 15.6 The expected company contributions for 2007 are US$86 million.
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 28. POST-EMPLOYMENT BENEFITS—PENSIONS (Continued) Expected benefit payments for pension benefits are as follows: F-81 Southern Africa United Kingdom Europe North America US$ million Payable in the year ending September: 2007 ......................................................... 9 7 30 22 2008 ......................................................... 10 8 31 22 2009 ......................................................... 10 8 31 22 2010 ......................................................... 11 8 32 22 2011 ......................................................... 11 8 33 23 Years 2012 - 2015.............................................. 60 45 179 132 29.� POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS The group sponsors defined benefit post-employment plans that provide certain health care and life insurance benefits to eligible retired employees of the North American and South African operations. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of service. Actuarial valuations of all the plans are performed annually. The North American post-employment obligation was measured at the end of September 2006. The South African post-employment obligation was measured at the end of June 2006; no material movements occurred between this date and September in the assumptions used to determine the liability. The following schedule provides the plans’ funded status and obligations for the group. 2006 2005 South Africa North America South Africa North America US$ million Change in present value of defined benefit obligation Defined benefit obligations at beginning of year.................. 69 109 61 103 Current service cost........................................... 1 3 1 3 Past service cost.............................................. — (4 ) — — Interest cost.................................................. 5 6 6 6 Actuarial loss (gain) experience ................................ 3 (3 ) 3 3 Actuarial loss assumptions..................................... — 1 1 — Loss on curtailment and settlements............................. — (3 ) — 1 Benefits paid................................................. (4) (6 ) (4 ) (7) Translation difference......................................... (13) — 1 — Defined benefit obligation at end of year ........................ 61 103 69 109 Present value of wholly unfunded obligations Deficit....................................................... (61) (103 ) (69 ) (109) Unrecognised past service cost ................................. — (6 ) — (3) Recognised post-employment benefit liability .................... (61) (109 ) (69 ) (112) Net recognised post employment benefit liability ................. (170 ) (181)
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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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Page 167 and 168: SAPPI NOTES TO THE GROUP ANNUAL FIN
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Page 263 and 264: SAPPI CONDENSED COMPANY BALANCE SHE
Page 265 and 266: SAPPI CONDENSED COMPANY STATEMENT O
Page 267 and 268: 5. OTHER INCOME 2006 2005 ZAR milli
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2006 20-F - Sappi

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