2006 20-F - Sappi

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Overview SAPPI FOREST PRODUCTS Sappi Forest Products, headquartered in Johannesburg, South Africa, is an integrated pulp, packaging paper and timber products producer. Sappi Forest Products operates five pulp and paper mills and one sawmill and is managed in three operating divisions: Sappi Saiccor, Sappi Kraft and Sappi Forests. Sappi Forest Products is a major pulp and paper producer in Africa with a production capacity of 830,000 metric tonnes of paper, 600,000 metric tonnes of chemical cellulose and 1,090,000 metric tonnes of paper pulp per annum. It is also a major timber grower and manages approximately 546,000 hectares of forestland, of which, approximately 398,000 hectares is planted with primarily pine and eucalyptus. Approximately 70% of our southern African pulpwood and sawlog requirements are from our own plantations. The following chart sets forth certain information with respect to the mills and principal products of Sappi Forest Products as of November 2006. Sappi Saiccor Chemical cellulose Sappi Forest Products Sappi Kraft Sappi Forests Ngodwana Kraft linerboard White top linerboard Newsprint Bleached kraft pulp Tugela Kraft linerboard Corrugating medium Sackkraft Industrial kraft Cape Kraft Linerboard Corrugating medium Coated packaging products Usutu Pulp Company Unbleached kraft pulp Waste Paper Waste paper recycling 27 Sappi Forests Pulpwood Sawlogs Sawmill Structural timber Industrial timber
(1) The following table sets forth sales by product for Sappi Forest Products’ operations: 28 Year Ended September 2006 2005 Sales (US$million): Commodity paper products (1) .................................. 410 430 Chemical cellulose ........................................... 384 360 Paper pulp (2) ................................................. 102 118 Timber and timber products................................... 87 90 Total ..................................................... 983 998 Includes newsprint and packaging products. (2) Excludes sales related to paper pulp produced by Sappi Fine Paper facilities. Sappi Forest Products sold approximately 2,995,000 metric tonnes of paper, pulp and forest products during the year ended September 2006. The following table sets forth annual production capacity with respect to Sappi Forest Products’ products: Production capacity (000s metric tonnes): Paper products Packaging paper.......................................................... 690 Newsprint............................................................... 140 Total ................................................................. 830 Pulp Chemical cellulose........................................................ 600 Paper pulp (1) ............................................................. 1,090 Total ................................................................. 1,690 Timber products............................................................ 41 (2) Percentage paper pulp integration.............................................. 142% (3) (1) Excludes production capacity related to paper pulp produced by Sappi Fine Paper facilities. (2) Represents 78,000 cubic metres. (3) Excludes pulp produced by Sappi Saiccor. Our southern African operations are net sellers of pulp. Facilities and Operations Sappi Saiccor Sappi Saiccor was established in 1951 and acquired by us in 1988. It is a low-cost producer and the world’s largest single producer of chemical cellulose. In 1995, we completed an approximately $221 million expansion project to increase capacity by one third to approximately 600,000 metric tonnes per annum. Capital expenditures during the period from October 2004 to September 2006 were approximately $86 million. During 2006 most of the equipment for the modernisation project to de-bottleneck production at Sappi Saiccor was commissioned ,at an approximate cost of $40 million. In August 2006 Sappi announced a $460 million expansion project to increase Sappi Saiccor’s chemical cellulose capacity by a net 225,000 metric tonnes per annum. Construction commenced in the same month with commissioning scheduled for the first half of 2008. Capital expenditure for the project during fiscal 2006 amounted to approximately $32 million.
Page 1 and 2: As filed with the Securities and Ex
Page 3 and 4: OUR USE OF TERMS AND CONVENTIONS IN
Page 5 and 6: FORWARD-LOOKING STATEMENTS In order
Page 7 and 8: 2 Year Ended September 2006 2005 (U
Page 9 and 10: Risk Factors In addition to other i
Page 11 and 12: New technologies or changes in cons
Page 13 and 14: Several customers account for a sig
Page 15 and 16: Maintain a global presence. One of
Page 17 and 18: Major Product Categories Descriptio
Page 19 and 20: market share was negatively affecte
Page 21 and 22: The chart below represents the oper
Page 23 and 24: The following table sets forth appr
Page 25 and 26: Paper North America’s on-line fin
Page 27 and 28: of 860,000 metric tonnes of triple-
Page 29 and 30: a capacity of 60,000 metric tonnes
Page 31: customers use our products in the p
Page 35 and 36: The mill markets paper and excess p
Page 37 and 38: Pulp Sappi Fine Paper North America
Page 39 and 40: equired for its operations. Sappi F
Page 41 and 42: • The National Environmental Mana
Page 43 and 44: PROPERTY, PLANT AND EQUIPMENT For a
Page 45 and 46: ITEM 5. OPERATING AND FINANCIAL REV
Page 47 and 48: ) Movement in market prices for our
Page 49 and 50: The recent price history for benchm
Page 51 and 52: Demand from all of the market segme
Page 53 and 54: Raw Material and Other Input Costs
Page 55 and 56: The exchange rate impact on raw mat
Page 57 and 58: Our South African businesses have f
Page 59 and 60: • Any debtors or creditors not in
Page 61 and 62: Year Ended September 2006 Compared
Page 63 and 64: US$28 million. Decreased selling pr
Page 65 and 66: enefit of the reversal of the Usutu
Page 67 and 68: accounting mismatch, as a result of
Page 69 and 70: South African residents, who are na
Page 71 and 72: The increase of US$11 million in fi
Page 73 and 74: June 2010. The OeKB A tranche and t
Page 75 and 76: impact on liquidity varies accordin
Page 77 and 78: Contractual Obligations We have var
Page 79 and 80: mill is located in Nanchang, the ca
Page 81 and 82: 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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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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