2006 20-F - Sappi

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SAPPI NOTES TO THE CONDENSED COMPANY FINANCIAL STATEMENTS for the year ended September 2006 1. ADOPTION OF IFRS DURING THE YEAR The company has adopted International Financial Reporting Standards (IFRS) in preparing the annual financial statements for the year ending September, 2006. The transition to IFRS is accounted for in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards with October 2004 as the date of transition. The changes in accounting policies as a consequence of the transition to IFRS are described below as well as reconciliations of the effects of the transition to IFRS. • Share-based Payment—IFRS 2 The company has applied the share-based payment exemption. IFRS 2 is therefore only applicable to equity instruments granted after November 7, 2002 that were not vested by January 1, 2005. For instruments vesting on or after January 1, 2005, Sappi Limited has recognised a charge of ZAR 8.3 million (2005: ZAR 13.3 million) in the income statement and set up a separate category in shareholders’ equity amounting to ZAR 38.4 million (2005: ZAR 30.0 million) for all share options and awards, based on the fair value of the awards as calculated at the grant date. September 2005 ZAR million Reconciliation of previous SA GAAP to IFRS profit for the year Profit under SA GAAP .................................................. 5,993 Share-based payment expense—IFRS 2 ................................... (13 ) Profit under IFRS ...................................................... 5,980 This restatement had no impact on shareholders’ equity. 2. OPERATING LOSS S-5 2006 2005 ZAR million The operating loss is arrived at after taking into account the items detailed below: Depreciation............................................................. 3 3 Technical and administrative services paid other than to bona fide employees of the company........................................................... 35 32 Auditors’ remuneration ................................................... 18 20 – fees for audit and related services......................................... 14 15 – fees for other services.................................................... 4 5 3. NET FINANCE INCOME 2006 2005 ZAR million Interest paid............................................................ — (1 ) Interest received......................................................... 8 7 Net foreign exchange gains ............................................... 13 16 21 22 4. INCOME FROM SUBSIDIARIES 2006 2005 ZAR million Dividends received from subsidaries ...................................... 223 1,464 Dividends received on liquidation of subsidiary............................. — 2,233 223 3,697
5. OTHER INCOME 2006 2005 ZAR million Profit on sale of investment to other subsidiary.............................. — 2,184 Reversal of write down of investment ...................................... — 306 Investments written off................................................... — (113) — 2,377 During the year, Sappi restructured its treasury operations which resulted in the liquidation of one intermediary holding company and the transfer of directly held subsidiaries to indirectly held subsidiaries. 6. RECONCILIATION OF CHANGES IN EQUITY S-6 Ordinary share capital and share Non-distributable Distributable Ordinary Number of share Share ordinary shares capital premium premium ZAR million reserves reserves Total Balance—September 2004—as reported .... 239.1 239 6,427 6,666 7 2,760 9,433 IFRS adoption—Share based payments . . . . . — — — — 17 (17 ) — Balance—September 2004 ............... 239.1 239 6,427 6,666 24 2,743 9,433 Profit for the year. . . . . . — — — — — 5,980 5,980 Dividends. . . . . . . . . . . . . — — — — — (444 ) (444) Share-based payments. . — — — 13 — 13 Balance—September 2005 ............... 239.1 239 6,427 6,666 37 8,279 14,982 Profit for the year. . . . . . — — — — — 154 154 Dividends. . . . . . . . . . . . . — — — — — (484 ) (484) Share-based payments. . — — — — 8 — 8 Balance—September 2006 239.1 239 6,427 6,666 45 7,949 14,660 7. COMMITMENTS 2006 2005 ZAR million Revenue commitments Operating leases and rentals Payable within one year ................................................... 1 1 Payable in two to five years ................................................ 2 2 3 3 8. CONTINGENT LIABILITIES 2006 2005 ZAR million Guarantees and suretyships............................................ 17,777 10,113
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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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2006 20-F - Sappi

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