2006 20-F - Sappi

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SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) for the year ended September 2006 35. SUMMARY OF DIFFERENCES BETWEEN INTERNATIONAL FINANCIAL REPORTING STANDARDS AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) The future minimum obligation under the lease for the cogeneration facility at our Westbrook Mill is US$13 million at September 2006 (September 2005: US$23 million). The net rental payments for 2006 was US$9 million (2005: US$9 million). 36. NEW US GAAP STATEMENTS In July 2006, the FASB issued a new interpretation, FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 addresses the accounting and disclosure of uncertain tax positions. We will adopt FIN 48 in our 2008 financial year. We are evaluating the impact that FIN 48 will have on our financial statements. In May 2005, the FASB issued Statement No. 154, “Accounting Changes and Error Corrections”, (FASB 154) which replaces Accounting Principles Board (APB) opinion No. 20 Accounting Changes and SFAS No. 3 Reporting Accounting Changes in Interim Financial Statements. This statement requires retrospective application, unless impractible for changes in accounting principles in the absence of transition requirements specific to newly adopted accounting principles. The statement 154 will be effective for us beginning October 2006. We are currently evaluating the impact, if any, of this statement on our financial position and results of operations. In 2005, the FASB issued Statement No. 156 “Accounting for Servicing of Financial Assets—an amendment of FASB Statement No. 140” (FASB 156) which deals with the requirement to recognize an asset or liability in respect of servicing rights or obligations in financial assets and liabilities. The statement will be effective for us beginning October 2006. We are currently evaluating the impact, if any, of this statement on our financial position and results of operations. In September 2006, the FASB issued Statement No.157, “Fair Value Measurements” (FASB 157), is effective for Sappi for the financial year commencing October 2008. This statement prescribes a framework for developing fair value measurements, and expands disclosures about fair value measurements. We are currently evaluating the impact of this standard on the business. In September 2006, the FASB issued Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post-retirement Plans” (FASB 158). This statement is effective for our 2007 financial year and requires an employer to recognize the over funded or under funded status of a single-employer defined benefit post-retirement plan as an asset or liability in its statement of financial position, and to recognize changes in that funded status in comprehensive income in the year in which the changes occur. The standard also requires an employer to measure the funded status of a plan as of the date of its yearend statement of financial position with limited exceptions. The standard will significantly impact our US GAAP balance sheet which will be more closely aligned with our IFRS disclosure in this area. The Securities and Exchange Commission issued their staff accounting bulletin No. 108 which provides guidance on the quantification of financial statement misstatements. The guidance clarifies the evaluation of prior period errors. While this bulletin is only effective for Sappi’s 2007 financial year its guidance was already considered in the 2006 financial year. F-114
SAPPI NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued) 37. DIRECTORS’ REMUNERATION for the year ended September 2006 Non-executive Directors Directors are normally remunerated in the currency of the country in which they live or work from. The remuneration is translated into US dollars (the group’s reporting currency) at the average exchange rates prevailing during the reporting year. Directors’ fees are established in local currencies to reflect market conditions in those countries. Non-executive directors’ fees reflect their services as directors and services on various sub-committees on which they serve, and the quantum of committee fees depends on whether the director is an ordinary member or a chairman of the committee. The extreme volatility of currencies, in particular the Rand/US Dollar exchange rate in the past few years, caused severe distortion of the relative fees paid to individual directors. F-115
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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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4.2 Employee cost SAPPI NOTES TO TH
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Page 267 and 268: 5. OTHER INCOME 2006 2005 ZAR milli
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2006 20-F - Sappi

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