SAPPI LIMITED

SAPPI
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
for the year ended September 2010
1. BUSINESS
Sappi Limited, a corporation organized under the laws of the Republic of South Africa (the
‘‘company’’ and, together with its consolidated subsidiaries, ‘‘Sappi’’ or the ‘‘group’’), was formed in
1936 and is a major, vertically integrated international pulp and paper producer. Sappi is a leading global
producer of coated fine paper and chemical cellulose. The group has manufacturing facilities in nine
countries, on four continents, and customers in over 100 countries across the globe.
The group is comprised of Sappi Fine Paper North America, Sappi Fine Paper Europe and Sappi
Southern Africa reportable segments. Sappi Fine Paper which comprises Sappi Fine Paper Europe and
Sappi Fine Paper North America, has manufacturing and marketing facilities in North America, Europe
and Asia and produces mainly high quality branded coated fine paper. It also manufactures uncoated
graphic and business paper, coated and uncoated speciality paper, and casting release paper used in
the manufacture of artificial leather and textured polyurethane applications. Sappi Southern Africa
(Sappi Paper and Paper Packaging, Sappi Forests and Sappi Chemical Cellulose) based in southern
Africa, produces commodity paper products, pulp, chemical cellulose, uncoated fine paper and forest
and timber products for southern Africa and export markets. The group operates a trading network
called Sappi Trading for the international marketing and distribution of chemical cellulose and market
pulp throughout the world and of the group’s other products in areas outside its core operating regions
of North America, Europe and southern Africa. The financial results and position associated with Sappi
Trading are allocated to our reportable segments.
2. ACCOUNTING POLICIES
The following principal accounting policies have been consistently applied in dealing with items that
are considered material in relation to the Sappi Limited group financial statements.
2.1 Basis of preparation
The group’s consolidated financial statements have been prepared in accordance with:
– International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB);
– Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC)
of the IASB;
– the AC 500 Standards issued by the Accounting Practices Board in South Africa; and
– the requirements of the South African Companies Act of 1973.
The financial statements are presented in United States Dollars (US$), as it is the major trading
currency of the pulp and paper industry, and are rounded to the nearest million except as otherwise
indicated.
The financial statements are prepared on the historical-cost basis, except as set out in the
accounting policies below. Certain items, including derivatives are stated at their fair value while
plantations and non-current assets held for sale are stated at fair value less cost to sell.
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