2006 20-F - Sappi

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c Financial Instruments—IAS 39 The amendments to IAS 39 include a change in emphasis whereby a transfer of risks and rewards associated with financial assets becomes the primary test in determining whether a financial asset should be derecognised. A secondary test is then whether the entity has control over the related special purpose entity. A significant portion of our securitised receivables has now been reflected on our balance sheet, increasing trade and other receivables by US$268 million and short-term debt by US$346 million and decreasing other payables by US$78 million at September 2005. The related expense is no longer reflected in SG&A but is included under finance costs. This caused an increase in finance costs and decrease in SG&A of US$15 million for the year ended September 2005. Cash flow hedges on inter-company loans, previously accounted for in equity as a Hedging reserve, no longer qualify for hedge accounting under IAS 39. As a result these instruments are now recognised at fair value through profit and loss. A profit of US$22 million was recognised for the year ended September 2005. This amendment had no impact on total shareholders’ equity as the Hedging reserve disclosed in last year’s financial statements of US$14 million is now included in retained earnings. d Employee Benefits—IAS 19 In December 2004, the IASB (International Accounting Standards Board) published an amended version of IAS 19 which introduced an option to recognise actuarial gains and losses in the period in which they occur outside profit or loss in a statement of recognised income and expense. Sappi has elected to adopt this amendment at the date of transition (October 2004). Previously unrecognised actuarial employee benefit losses were recognised at October 2004, resulting in an increase in pension and other post employment benefits liabilities (September 2005: US$249 million, October 2004: US$227 million), a decease in pension and other post employment benefit assets (September 2005: US$86 million, October 2004: US$74 million) and a corresponding reduction in equity and deferred tax liability. At October 2004 the deferred tax assets increased by US$56 million and deferred tax liabilities decreased by US$37 million. At September 2005 deferred tax liabilities decreased by US$44 million and deferred tax asset by US$2 million. This amendment also led to a reduction in employee benefit expense for the year of US$23 million. The actuarial gains and losses are recognised outside of profit for the period in the statement of recognised income and expense (SORIE). Items processed through SORIE are tax effected through SORIE. Part of the first time adoption of this method of accounting included a historic analysis of all pension fund movements to determine the portion of our deferred tax balances that relate to SORIE. During 2005 the deferred tax asset for Sappi Fine Paper North America was derecognised therefore the deferred tax asset raised at October 2004 of US$57 million was released. This valuation allowance raised against the deferred tax asset resulted in a credit to deferred tax in profit and loss of US$5 million and a debit to SORIE of US$62 million. The option of setting the corridor to zero was not applicable because the group elected to apply SORIE accounting to actuarial gains and losses. e Property, Plant and Equipment—IAS 16 Changes to IAS 16 Property, Plant and Equipment include the requirement that the useful lives of fixed assets are re-evaluated on an annual basis, changed capitalisation criteria and more explicit guidance on the capitalisation of fixed assets. These changes have led to the revision of the relevant accounting policies. In addition a detailed review of the Group’s assets including a benchmarking exercise against peer-group companies was completed. Management concluded that no adjustment to the carrying value of property, plant and equipment was necessary with the first-time adoption of 85
IFRS. The Group did not apply the exemption to deem the fair value or re-valued amounts of property, plant and equipment as deemed cost due to the previous accounting standard being consistently applied. Changes in Accounting Policies and Practices The following standards and interpretations, which have been issued but which are not yet effective, have not been applied in these financial statements: Amendment to IAS 1: Presentation of Financial Statements (added disclosure about an entity’s capital) The revised IAS 1 requires an entity to disclose qualitative information about its objectives, policies and processes for managing capital and a summary of quantitative data about what it manages as capital. It also requires disclosure of whether during the period it complied with any externally imposed capital requirements to which it is subject and when the entity has not complied with such externally imposed capital requirements, the consequences of such non-compliance. This standard has no impact on the figures presented in the income statement and balance sheet. IAS 21: Amendment to International Accounting Standard 21—The Effects of Changes in Foreign Exchange Rates: Net Investment in a Foreign Operation The amendment clarifies the requirements of IAS 21 regarding an entity’s investment in foreign operations. The amendment does not have an impact on the group, and first becomes applicable for the financial year ending September 2007. IAS 39: Financial Instruments: Recognition and Measurement Amendments The amendment clarifies embedded derivatives (paragraph 11A) and fair value considerations (paragraph 48A). The application of the amendments is not expected to have a significant impact on the group’s reported results, financial position and cash flows. The amendment first becomes applicable for the financial year ending September 2007. IFRS 7: Financial Instruments: Disclosures This standard prescribes the level of disclosure required for financial instruments, both in terms of quantitative data and qualitative data. The implementation of this standard will not have a material impact on the presented financial position or results of operations. IFRS 8: Operating Segments IFRS 8 requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. The effective date of IFRS 8 for the group is for the financial year ending September 2009 and the impact is currently being assessed by management. IFRIC 4: Determining whether an Arrangement contains a Lease The Interpretation states that an arrangement that grants the right to control the use of an underlying specific asset is, or contains, a lease that should be accounted for in accordance with IAS 17 Leases. The implementation of this interpretation is not expected to have a material impact on the results of operations. 86
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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
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
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Page 55 and 56: The exchange rate impact on raw mat
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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
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Page 83 and 84: flows of the related underlying exp
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Page 93 and 94: Where BEE equity credentials are ob
Page 95 and 96: Environmental Matters We operate in
Page 97 and 98: Klaas de Kluis (70) (independent).
Page 99 and 100: Mark Richard Thompson (54) BCom, BA
Page 101 and 102: Audit Committee An Audit Committee
Page 103 and 104: estructuring initiatives that occur
Page 105 and 106: Levies Act, was paid via Internal R
Page 107 and 108: Pursuant to the Companies Amendment
Page 109 and 110: on Restitution of Land Rights and a
Page 111 and 112: (“the Depositary”) with respect
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Page 115 and 116: Voting Rights Subject to any rights
Page 117 and 118: equest not less than one-twentieth
Page 119 and 120: Financial Assistance The Bill enhan
Page 121 and 122: At the Annual General Meeting of Sh
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Page 127 and 128: Distributions. The gross amount of
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Page 131 and 132: PART II ITEM 13. DEFAULTS, DIVIDEND
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Page 135 and 136: ITEM 16E. PURCHASES OF EQUITY SECUR
Page 137 and 138: 4.10 Credit Facility, dated May 7,
Page 139 and 140: 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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