SAPPI LIMITED

(3) In the third quarter of fiscal 2010 the Group revised its methodology for all immature timber and mature timber resulting in
US$ 28 million positive increase in profit. See note 2 of the Group Annual Financial Statements included elsewhere in this
Annual Report. In fiscal 2010 the Group entered into a BEE transaction resulting in a US$ 23 million charge to profit. See
note 28 of the Group Annual Financial Statements included elsewhere in this Annual Report for further details.
(4) During the fiscal years 2010 to 2008, the Group recorded a (US$ 10 million), US$ 79 million, US$ 119 million asset
(impairment reversals) impairments. See note 4 and note 9 of the Group Annual Financial Statements included elsewhere in
this Annual Report for further details.
(5) In compliance with the U.S. Securities Exchange Commission (‘‘SEC’’) rules relating to ‘‘Conditions for Use of Non-GAAP
Financial Measures’’, we have reconciled operating profit (loss) excluding special items to net profit (loss) rather than
operating profit. Operating profit (loss) excluding special items represents earnings before taxation, interest (net finance
costs), and special items. Net finance costs include: gross interest paid; interest received (including discounts on early
redemption of loans); interest capitalized; net foreign exchange gains; and net fair value adjustments on interest rate financial
instruments. See the Group Income Statement, included elsewhere in this Annual Report, for an explanation of the
computation of net finance costs. Special items cover those items which management believe are material by nature or
amount to the operating results and require separate disclosure. Such items would generally include profit or loss on
disposal of property, investments and businesses, asset impairments, restructuring charges, non-recurring integration costs
related to acquisitions, financial impacts of natural disasters, non-cash gains or losses on the price fair value adjustment of
plantations and alternative fuel mixture tax credits receivable in cash. We use operating profit (loss) excluding special items
as an internal measure of performance to benchmark and compare performance, both between our own operations and as
against other companies. Operating profit (loss) excluding special items is a measure used by the Group, together with
measures of performance under IFRS, to compare the relative performance of operations in planning, budgeting and
reviewing the performances of various businesses. We believe operating profit (loss) excluding special items is a useful
measure of financial performance in addition to net profit, operating profit and other profitability measures under IFRS
because it facilitates operating performance comparisons from period to period and company to company. For these
reasons, we believe operating profit (loss) excluding special items and similar measures are regularly used by the investment
community as a means of comparison of companies in our industry. Different companies and analysts may calculate
operating profit (loss) excluding special items differently, so making comparisons among companies on this basis should be
done very carefully. Operating profit (loss) excluding special items is not a measure of performance under IFRS and should
not be considered in isolation or construed as a substitute for operating profit or net profit as an indicator of the company’s
operations in accordance with IFRS.
The following table reconciles operating profit (loss) excluding special items to net profit (loss).
Year Ended September
2010 2009 2008 2007 2006
(US$ million)
Net profit (loss) ......................................... 66 (177) 102 202 (4)
Taxation charge (benefit) .................................... 20 (41) 86 47 (1)
Net finance costs ......................................... 255 145 126 134 130
Operating profit (loss) ..................................... 341 (73) 314 383 125
Special items—(gains) losses ................................. (2) 106 52 (70) (34)
Operating profit (loss) excluding special items .................... 339 33 366 313 91
Plantation price fair value adjustment ............................ (31) 67 (120) 54 34
Restructuring provisions raised (released) ......................... 46 34 41 7 (50)
(Profit) loss on disposal of property, plant & equipment ................. (5) (1) (5) 26 —
Pension restructuring gain ................................... — — — — 28
Asset (impairment reversals) impairments ......................... (10) 79 119 — 31
Alternative fuel mixture tax credits .............................. (51) (87) — — —
Integration costs (2) ........................................ — 3 — — —
BEE transaction charge ..................................... 23 — — — —
Fire, flood, storm and related events ............................. 26 11 17 (17) (9)
Total Special items ....................................... (2) 106 52 (70) (34)
(6) Net of Treasury shares, which include ‘‘A’’ ordinary shares, as described in note 17 to our Group Annual Financial Statements
included elsewhere in this Annual Report.
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