SAPPI LIMITED

SAPPI
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued)
for the year ended September 2010
29. FINANCIAL INSTRUMENTS (Continued)
The best evidence of the fair value of a financial asset or financial liability at initial recognition is the
transaction price, unless the fair value of the instrument is evidenced by comparison with other current
observable market transactions. Where market prices or rates are available, such market data is used to
determine the fair value of financial assets and financial liabilities.
If quoted market prices are unavailable, the fair value of financial assets and financial liabilities is
calculated using pricing models or discounted cash flow techniques. Where discounted cash flow
techniques are used, estimated future cash flows are based on management’s best estimates and the
discount rate used is a market-related rate at the balance sheet date for an instrument with similar terms
and conditions. Where pricing models are used, market-related inputs are used to measure fair value at
the balance sheet date.
Investments in equity instruments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured, are measured at cost.
Fair values of foreign exchange and interest rate derivatives are calculated by using recognised
treasury tools which use discounted cash flow techniques based on effective market data valid at closing
date.
The fair value of loan commitments are based on the commitment fees effectively paid.
Out of
Categories according to IAS 39
Total
Total scope Held for Loans and Held to Available in Fair
Classes of financial instruments
September 2010
Non-current assets
balance IAS 39* trading receivables maturity for sale scope value
Other non-current assets .......
Loans to associates (minority
105 67 — 15 — 23 38 38
interests) .................. — — 4 — — 4 4
AFS—Club debentures .......... — — — — 2 2 2
AFS—Investment funds ......... — — 2 — 19 21 21
Other assets ................. 67 — 9 — 2 11 11
Derivative financial instruments ..
Current assets
19 — 19 — — — 19 19
Trade and other receivables ..... 888 111 — 773 — 4 777 777
Trade receivables .............. — — 740 — — 740 740
Other accounts receivable—current . 111 — 33 — 4 37 37
Derivative financial instruments .. 15 — 15 — — — 15 15
Cash and cash equivalents ......
Overnight deposits and current
792 — — 792 — — 792 792
accounts (including petty cash) . . — — 115 — — 115 115
Time deposits (< 3 months) ...... — — 676 — — 676 676
Money market funds ........... — — 1 — — 1 1
F-103