SAPPI LIMITED

The representation of Black people, particularly Black women, in management and all levels of
employment within the company is a focus within the organization, driven by employment equity targets
set in each occupational category. Skills development initiatives, particularly programs aimed at
improving management and leadership skills, are geared to meet these targets. Where practical, we
purchase goods and services from Black-owned businesses and seek opportunities to develop future
Black vendors. We are committed to the support of our Project Grow, which is an initiative with local
communities using their land for plantations while training them in the core principles of forestry
management. This is achieved through financial and technical input, as well as by providing a secure
market during the start-up phase of these small tree farming enterprises. This initiative has been
extended to encourage aspirant tree farmers who wish to undertake forestry activities on a larger scale
consistent with the government’s strategy of promoting forestry as a means of sustainable livelihood in
rural areas. We have a number of enterprise development initiatives and have established programs to
train new entrepreneurs. These initiatives involve the transfer of business skills, technical assistance,
financial support and preferential payment terms to assist new enterprises to enter the market. We have
a history of investment in the communities in which we operate. Initiatives to promote education, health
and welfare, arts and culture, and rural and community development, amongst others, are regularly
undertaken.
The South African constitution guarantees ownership rights of assets, and it is the stated intent of
the constitution that transfer of ownership will occur at market prices. It should be noted that BEE equity
participation need not necessarily occur at the corporate level, and can be effected at divisional,
business unit or lower levels. Because the BEE Act sets forth a framework for plans rather than specific
requirements or goals, it is not possible to predict whether or how our business or assets may be
impacted.
For further information, see ‘‘Item 4—Information on the Company—History and Development of
the Company’’ and ‘‘Item 3—Key Information—Risk Factors’’.
Environmental Matters
We operate in an industry subject to extensive environmental regulations. Typically, we do not
separately account for environmental operating expenses but do not anticipate any material
expenditures related to such matters. We do separately account for environmental capital expenditures.
See note 32 to our Group Annual Financial Statements included elsewhere in this Annual Report for a
discussion of these matters.
For further information, see ‘‘Item 4—Information on the Company—Environmental and Safety
Matters’’.
Operating Results
Financial Condition and Results of Operations
The operations of the Group are organized into the following three reportable segments: (for a more
detailed description of the operations of the Group, see ‘‘Item 4—Information on the Company—
Business Overview’’):
Sappi Fine Paper North America
Sappi Fine Paper Europe
Sappi Southern Africa
The Sappi Fine Paper business comprises the two reportable segments, Sappi Fine Paper North
America and Sappi Fine Paper Europe.
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