SAPPI LIMITED

SAPPI
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued)
for the year ended September 2010
16. TRADE AND OTHER RECEIVABLES
2010 2009
(US$ million)
Trade accounts receivable, gross .......................... 754 682
Allowance for credit losses .............................. (14) (15)
Trade accounts receivable, net ............................ 740 667
Prepayments and other receivables ........................ 148 191
888 858
Management rate the quality of the trade and other receivables, which are neither past due nor
impaired, periodically against its internal credit rating parameters. The quality of these trade receivables
is such that management believe no impairment provision is necessary, except in situations where they
are part of individually impaired trade receivables.
The carrying amount of US$888 million (2009: US$858 million) represents the group’s maximum
credit risk exposure from trade and other receivables.
Prepayments and other receivables primarily represent prepaid insurance and other sundry
receivables.
2010 2009
Trade receivables (including securitized trade receivables) to
turnover (%) ........................................ 15% 16%
16.1 Reconciliation of the allowance for credit losses
2010 2009
Balance at beginning of year ............................. 15 5
Raised during the year .................................. 9 16
Released during the year ................................ (9) (6)
Foreign exchange currency translation effect .................. (1) —
Balance at end of year .................................. 14 15
An allowance has been made for estimated irrecoverable amounts from the sale of goods of
US$14 million (2009: US$15 million). This allowance has been determined by reference to specific
customer delinquencies.
F-43