Audited
financial statements
STATEMENT OF FINANCIAL PERFORMANCE
CONSOLIDATED PA R E N T
FOR THE YEAR ENDED 30 JUNE: 2002 2002 2001 2002 2002 2001
BUDGET BUDGET
NOTE $000s $000s $000s $000s $000s $000s
Total Revenue 1 42,742 41,957 42,754 40,610 39,690 40,586
Operating Surplus [EBIT] 2,838 2,688 3,551 2,344 2,073 2,930
Interest and Net Non-Operating Income 384 202 656 640 440 854
Investment Project Expenditures ( 3,573) (4,882) ( 829 ) ( 3,573) (4,882) (829 )
Net Surplus / (Deficit) before Taxation 2 ( 351) (1,992) 3,378 (589) (2,369) 2,955
Taxation (Credit) / Expense 3 ( 282) ( 658) 1,133 (456) (864) 914
Net Surplus / (Deficit) after Taxation 4 (69) (1,334) 2,245 (133) (1,505) 2,041
S TAT E M E N T O F M O V E M E N T S I N E Q U I T Y
CONSOLIDATED PA R E N T
FOR THE YEAR ENDED 30 JUNE: 2002 2002 2001 2002 2002 2001
BUDGET BUDGET
NOTE $000s $000s $000s $000s $000s $000s
Equity at beginning of year 21,676 20,731 22,931 21,022 20,150 22,482
Net (Deficit) / Surplus after Taxation (69) (1,334) 2,245 (133) (1,505) 2,041
Recognition of Library Assets 5 262 262
Total Recognised Revenue and Expenses 193 (1,334) 2,245 129 (1,505) 2,041
Special Dividend Paid - - (3,500) - - ( 3,500)
Distributions to Shareholders 0 0 (3,500) 0 0 ( 3,500)
Equity at end of year 21,869 19,397 21,676 21,151 18,645 21,022
The accompanying Accounting Policies and Notes form part of these Financial Statements
80
Harley Betts
STATEMENT OF FINANCIAL POSITION
CONSOLIDATED PA R E N T
A S AT 3 0 J U N E : 2002 2002 2001 2002 2002 2001
BUDGET BUDGET
NOTE $000s $000s $000s $000s $000s $000s
Total Equity 6 21,869 19,397 21,676 21,151 18,645 21,022
Assets
Bank Balances and Deposits 6,381 1,652 7,449 6,109 1,265 7,258
Debtors and Prepayments 7 4,603 3,100 4,145 4,162 2,700 3,695
Stocks and Work in Progress 711 500 535 84 100 86
Total Current Assets 11,695 5,252 12,129 10,355 4,065 11,039
Deferred Tax Benefits 3 930 1,329 727 1,098 1,329 727
Fixed Assets 8 19,029 19,194 19,057 18,896 18,991 18,902
Library Asset 5 262 - - 262 - -
Investments in Associates & Subsidiaries - 1,520 - 250 1,770 250
Total Non-Current Assets 20,221 22,043 19,784 20,506 22,090 19,879
Total Assets 31,916 27,295 31,913 30,861 26,155 30,918
Liabilities
Creditors and Accruals 9 3,688 2,640 3,739 3,588 2,500 3,682
Provision - Staff liabilities 3,889 3,186 3,573 3,762 3,063 3,391
Revenue in Advance 10 2,043 1,500 2,126 1,933 1,375 2,062
Tax Payable - - 226 0 - 188
Total Current Liabilities 9,620 7,326 9,664 9,283 6,938 9,323
Term Payment Facilities 11 177 177 11 177 177
Term Provision - Staff liabilities 416 395 396 416 395 396
Total Non-Current Liabilities 427 572 573 427 572 573
Total Liabilities 10,047 7,898 10,237 9,710 7,510 9,896
Net Assets 21,869 19,397 21,676 21,151 18,645 21,022
The accompanying Accounting Policies and Notes
form part of these Financial Statements
Signed, for and on behalf of the Board
Director Director
Date: 28 August 2002 Date: 28 August 2002
81
S TAT E M E N T O F C A S H F L O W S
CONSOLIDATED PA R E N T
FOR THE YEAR ENDED 30 JUNE: 2002 2002 2001 2002 2002 2001
BUDGET BUDGET
NOTE $000s $000s $000s $000s $000s $000s
Cashflows from / used in Operating Activities
Received from Customers 42,117 41,827 41,838 39,929 39,560 39,981
Interest Received 540 182 608 540 170 601
Dividend Received - - - 250 250 200
Disbursed to Suppliers & Employees ( 41,095) ( 41,582) ( 36,486) ( 39,288) ( 39,886) ( 34,905 )
Interest Paid ( 27) (15) ( 22) (11)
Tax Paid (147) 0 ( 1,059) (103) 207 ( 861)
Net Cash Flows from Operating Activities 4 1,388 427 4,886 1,306 301 5,005
Cashflows from / used in Investing Activities
Purchase of Fixed Assets ( 2,456) (2,710) (1,925) (2,455) (2,660) (1,895 )
Investment in Associates - (1,500) 0 - (1,500) 0
Net Cash Flows used in Investing Activities (2,456) (4,210) (1,925) (2,455) (4,160) (1,895)
Cashflows from / used in Financing Activities
Dividend Paid - - ( 3,500) - - (3,500 )
Net Cash Flows used in Financing Activities 0 0 (3,500) 0 0 (3,500)
Net Increase/(Decrease) in Cash (1,068) (3,783) ( 539 ) (1,149) ( 3,859) ( 390 )
Opening Bank Balances and Deposits 7,449 5,435 7,988 7,258 5,124 7,648
Closing Bank Balances and Deposits 6,381 1,652 7,449 6,109 1,265 7,258
The accompanying Accounting Policies and Notes form part of these Financial Statements
82
Statement of
accounting policies
BUSINESS ENTITY
The financial statements of Landcare Research New Zealand Limited have been prepared in accordance with the Financial Reporting Act 1993, the
Companies Act 1993, the Crown Research Institutes Act 1992, and the Public Finance Act 1989.
The consolidated financial statements are those of Landcare Research New Zealand Limited, including its fully-owned subsidiaries, Sirtrack Limited and
Landcare Research International Limited, which also have a balance date of 30 June.
MEASUREMENT BASE
The measurement and reporting of profit and financial position is based on historical cost.
ACCOUNTING POLICIES
The following specific accounting policies which materially affect the measurement of profit and financial position have been consistently applied.
1) P R I N C I P L E O F C O N S O L I D AT I O N
The consolidated financial statements include those of the parent company and its subsidiaries, accounted for using the purchase method. All
intercompany transactions, balances and unrealised profits and losses on transactions between group members have been eliminated.
2) CURRENT ASSETS
i) A C C O U N T S R E C E I VA B L E
Accounts receivable are valued at expected net realisable value.
ii) STOCK
Stocks are valued at the lower of cost on a weighted average price of stock on hand, and net realisable value.
iii) WORK IN PROGRESS
Work in Progress is valued at the lower of cost and net realisable value
3) FIXED ASSETS
Completed buildings, plant, motor vehicles, furniture and tools are recorded at cost, less accumulated depreciation. Land and buildings under
construction are recorded at cost. General use library assets have been introduced at depreciated replacement cost which is treated as deemed cost.
4) D E P R E C I AT I O N
After taking into account likely residual values, all depreciable assets are depreciated on a straight line basis over their estimated economic lives.
D E P R E C I AT I O N R AT E S Buildings 2-10%
Plant and Equipment 5-20%
EDP Equipment 25%
Motor Vehicles 25%
Furniture and Fittings 10%
Office Equipment 20%
Library books and periodicals 20-50%
83
Harley Betts
5) REVENUE
Revenue shown in the Statement of Financial Performance comprises amounts earned by the Company for goods and services supplied to customers
in the ordinary course of business during the year.
Income received for goods and services which have not yet been supplied to customers has been recognised as Revenue in Advance.
6) TA X AT I O N
Taxation is provided in the financial statements on the basis of the estimated taxation payable on the taxable income after available deductions and
concessions.
Deferred taxation resulting from timing differences is recognised using the liability method on a comprehensive basis. A deferred tax benefit arising
from timing differences is only recognised if there is a virtual certainty of realisation.
G O O D S A N D S E R V I C E S TA X
The statement of financial performance and statement of cash flows have been prepared so that all components are stated exclusive of GST. All
items in the statement of financial position are stated net of GST with the exception of receivables and payables which are stated with GST included.
7) F O R E I G N C U R R E N C Y T R A N S L AT I O N
Transactions denominated in a foreign currency are recorded using the exchange rate at the settlement date. Realised and unrealised gains or losses
on foreign currency transactions are dealt with in the Statement of Financial Performance. Foreign currency balances are converted at the mid point
TT rate applying at balance date.
8) INTELLECTUAL PROPERTY
No value is ascribed in the Statement of Financial Position to intellectual property assets. Revenue received from the use of intellectual property
assets is recognised when earned, and the costs incurred in the maintenance of intellectual property assets are expensed when incurred.
9) FINANCIAL INSTRUMENTS
Revenue and expenses in relation to all financial instruments are recognised in the Statement of Financial Performance. Financial instruments
carried on the Statement of Financial Position include cash and bank balances, investments, receivables, trade creditors, and borrowings. These
instruments are carried at their estimated fair value.
10) L E A S E S
The company leases certain plant & equipment, motor vehicles, and land & buildings. Operating lease payments, where the lessors effectively retain
substantially all the risks and benefits of ownership of the lease items, are included in the determination of the net surplus in equal instalments over
the lease term.
11) E M P L O Y E E E N T I T L E M E N T S
Liabilities for annual leave, time in lieu, long service leave and retirement leave are accrued and recognised in the Statement of Financial Position.
The provisions are accrued in annual instalments adequate to meet such liabilities as they fall due.
CHANGES IN ACCOUNTING POLICIES
In order to comply with the requirements of Financial Reporting Standard-3, the company has recognised library assets for the first time. In accordance
with the provisions of FRS-3, the revenues associated with this change in accounting policy have been recognised in the Statement of Movements in Equity.
All other policies have been applied on bases consistent with those used in the previous year.
84
Notes to, and forming part
of, the financial statements
FOR THE YEAR ENDED 30 JUNE 2002
1) REVENUE CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
Crown Contracts 25,590 24,879 25,590 24,879
Commercial Revenue: NZ 12,551 12,226 11,908 11,673
Commercial Revenue: International 4,601 5,649 3,112 4,034
Total Revenue 42,742 42,754 40,610 40,586
2) NET SURPLUS BEFORE TAXATION CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
has been derived after crediting:
Interest Earned 441 668 440 661
Dividend Received 250 200
and after deducting:
Audit Fees 46 48 40 43
Bad Debts Written Off/(Recovered) 1 4 1 4
Capital Write-down/(Gains) 43 (0) 43 ( 0)
Depreciation – Buildings 338 317 335 314
– Other 2,090 1,990 2,071 1,972
Donations 11 8 11 8
Directors’ Fees 131 108 131 108
Interest Paid 13 12 8 7
Provisions for Doubtful Debts (written back) 1 (2) 1 ( 2)
Provision for Fixed Asset writedown 45 45
Rentals and Lease Costs 911 881 904 874
Staff Costs 21,113 20,299 20,836 19,995
and after deducting Investment Project Expenditures:
Total 3,573 829 3,573 829
including:
Depreciation 25 - 25 -
Rentals and Lease Costs 1 - 1 -
Staff Costs 2,361 522 2,361 522
Revenue (Credit) (19) ( 19)
85
3) TA X AT I O N CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
Reported Net Surplus/(Deficit) before Taxation ( 351) 3,378 (589) 2,955
Prima facie taxation @ 33% (116 ) 1,115 (194) 975
Plus/(less) tax effect of:
Permanent differences – non-assessable items (122 ) (5) (205) ( 71)
– non-deductible items 32 20 24 8
– Prior year adjustment (76 ) 3 ( 81) 2
Taxation expense/(credit) in Statement of Financial Performance (282) 1,133 (456) 914
Taxation expense/(credit) is represented by:
Current tax (76 ) 1,195 ( 81) 976
Deferred tax benefit ( 206) (62) (375) ( 62)
(282) 1,133 (456) 914
Deferred Taxation Benefit:
Opening Balance 727 672 727 672
Under/(over) provision ( 3) ( 7) (4) (7)
Plus current year’s movement 206 62 375 62
930 727 1,098 727
Tax losses of $713,200 (2001 - nil) with a tax effect of $235,356 (2001 - nil) have been recognized prior to realisation, subsequent realisation is subject to the requirements
of income tax legislation being met.
4) R E C O N C I L I AT I O N O F N E T S U R P L U S A F T E R CONSOLIDATED PA R E N T
T A X AT I O N W I T H N E T C A S H F L O W S F R O M 2002 2001 2002 2001
O P E R AT I N G A C T I V I T I E S $000s $000s $000s $000s
Net Surplus/(Deficit) after Tax (69) 2,245 (133) 2,041
add back Depreciation 2,453 2,307 2,431 2,286
Provision for Fixed Asset writedown - 45 - 45
R&D Asset writedown - 32 - -
(Increase)/Decrease in Deferred Taxation ( 203) (56) (371) ( 56)
Movement in Working Capital Items
Interest Payable (14) - ( 14) -
Interest Receivable 99 (60) 99 ( 60)
Debtors and Prepayments ( 542) (1,196) (552) (771)
Taxation ( 226) 124 (188) 103
Stock and Work in Progress ( 176) (120) 2 42
Creditors and Accruals ( 187) 791 (230) 763
Provision for Staff liabilities 336 488 391 442
Revenue in Advance (83 ) 286 (129) 170
Net Cash Flows from Operating Activities 1,388 4,886 1,306 5,005
86
Harley Betts
5) L I B R A R Y A S S E T S , N AT I O N A L D ATA B A S E S A N D R E F E R E N C E C O L L E C T I O N S
Library assets have been introduced under the transitional provisions of Financial Reporting Standard-3 Accounting for Property, Plant and
Equipment.
The Crown, when establishing Crown Research Institutes in 1992, transferred various national databases and reference collections to individual
Institutes at nil value. Many of these databases and collections were specifically identified by the Foundation for Research, Science and Technology
as being of significant national importance, and they have covenants attaching to them restricting an Institute’s ability to deal with them.
The National Databases and Reference Collections which transferred to Landcare Research New Zealand Limited are listed in Appendix II to the
company’s Statement of Corporate Intent.
Issues in respect of the future ownership and valuation of these National Databases and Reference Collections are being addressed by the Crown
and will be resolved during the 2002/3 financial year. For the purposes of these 2001/2 financial statements the assets are recorded at their nil
transfer value.
6) EQUITY COMPRISES CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
Share Capital 8,015 8,015 8,015 8,015
Retained Earnings 13,854 13,661 13,136 13,007
21,869 21,676 21,151 21,022
The Issued Capital of the company is 8,015,000 shares, fully paid up, and ranking equally.
7) D E B T O R S A N D P R E PAY M E N T S CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
Trade Debtors 3,595 3,453 3,078 2,917
less Provision for Doubtful Debts (4) (3) (4) (3)
3,591 3,450 3,074 2,914
Accrued Income and Sundry Debtors 543 306 543 306
Intercompany debtors - - 92 93
Prepayments 469 389 453 382
4,603 4,145 4,162 3,695
87
8) FIXED ASSETS LAND BUILDINGS OTHER TOTAL
$000s $000s $000s $000s
CONSOLIDATED
2002
Cost 688 13,191 22,679 36,558
Accumulated Depreciation - (2,066) ( 15,463) (17,529 )
Net Book Value 688 11,125 7,216 19,029
2001
Cost 688 12,792 20,670 34,150
Accumulated Depreciation - (1,719) (13,374) (15,093 )
Net Book Value 688 11,073 7,296 19,057
PARENT
2002
Cost 688 13,077 22,484 36,249
Accumulated Depreciation - (2,041) (15,312) (17,353 )
Net Book Value 688 11,036 7,172 18,896
2001
Cost 688 12,679 20,480 33,847
Accumulated Depreciation - (1,697) ( 13,248) (14,945 )
Net Book Value 688 10,982 7,232 18,902
The Directors are of the opinion that Net Book Value of Land and Buildings represents the fair value of those assets. Land and Buildings may not be sold
without receiving permission from the Crown.
9) CREDITORS AND ACCRUALS CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
Trade creditors 2,102 2,147 2,059 2,118
GST & PAYE 539 502 543 501
Intercompany creditors - - 11 -
Sundry creditors and accruals 1,047 1,090 975 1,063
3,688 3,739 3,588 3,682
88
Ian Whitehouse
10) R E V E N U E I N A D V A N C E CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
FRST Public Good Science Funding 558 802 558 802
MoRST Non Specific Output Funding 362 315 362 315
Commercial Contracts 1,123 1,009 1,013 945
2,043 2,126 1,933 2,062
11) F I N A N C I A L I N S T R U M E N T S
CREDIT RISK
Financial instruments which potentially subject Landcare Research to credit risk principally consist of bank balances, short term deposits, and accounts
receivable.
The maximum exposure to credit risk at balance date is the fair value of the financial instrument as stated in the Statement of Financial Position.
Significant concentrations of credit risk apply principally in respect of cash. Landcare Research reduces this risk by investing with high credit rating institutions.
FA I R VA L U E S
The fair value of financial instruments is equivalent to the carrying amount as stated in the Statement of Financial Position.
CURRENCY RISK
Landcare Research has minimal currency risk given that financial instruments are transacted principally in New Zealand dollars.
12) C O M M I T M E N T S CONSOLIDATED PA R E N T
2002 2001 2002 2001
$000s $000s $000s $000s
C A P I TA L C O M M I T M E N T S
Estimated capital expenditure contracted for at balance date
but not paid or provided for 388 239 233 239
The company is intending to commit to the construction of a new building in Auckland within the next six months after balance date.
O P E R AT I N G L E A S E C O M M I T M E N T S
Lease commitments under non-cancellable
operating leases within 1 year 657 738 657 735
later than 1 year and not later than 2 years 362 370 362 370
later than 2 years and not later than 5 years 191 377 191 377
later than five years 1,688 1,732 1,688 1,732
OTHER COMMITMENTS
Landcare Research has a commitment to make a cash contribution to Marsupial CRC of AUD 75,000 for one more year.
89
13) CONTINGENT LIABILITIES
The company is not aware of any significant contingent liabilities as at balance date. (2001: $130,000)
14) R E L AT E D PA R T Y T R A N S A C T I O N S
The ultimate shareholder of the company is the Crown. The company undertakes many transactions with other CRIs, Government Departments and
Crown Agencies. These transactions are carried out on a commercial and arms length basis.
Inter-company transactions between Landcare Research NZ Limited and its subsidiaries are transacted on a commercial and arms length basis.
Landcare Research Limited provides management and administration support to Sirtrack Limited the value of which amounted to $28,000 during the
current financial year ($28,000 in 2000/2001) and purchased Sirtrack products to the value of $71,000 during the year ($56,000 in the previous year).
Landcare Research NZ Limited revenue includes $318,000 ($383,000 in 2000/2001) billed to Landcare Research International Limited.
No related party debts were written off or forgiven, and no transaction took place at nil or nominal value.
15) S E G M E N T I N F O R M AT I O N
Landcare Research New Zealand Limited operates predominately in one industry sector - the provision of scientific services focusing on the sustainable
management of land based natural resources. Its business is conducted predominately in New Zealand and is therefore in one geographical area for
reporting purposes.
S TAT E M E N T O F R E S P O N S I B I L I T Y
In terms of Section 42 of the Public Finance Act 1989, we hereby certify that:
1. We have been responsible for the preparation of these financial statements and the judgements used therein.
2. We have been responsible for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity
and reliability of financial reporting.
3. We are of the opinion that the financial statements of Landcare Research New Zealand Limited fairly reflect the financial position and operations
for the year ended 30 June 2002
J Raine AJ Pearce
Director Chief Executive
90
REPORT OF THE AUDITOR-GENERAL
TO THE READERS OF THE FINANCIAL STATEMENTS OF
LANDCARE RESEARCH NEW ZEALAND LIMITED AND GROUP
FOR THE YEAR ENDED 30 JUNE 2002
We have audited the financial statements on pages 80 to 90. The financial statements provide information about the past financial
performance and financial position of Landcare Research New Zealand Limited and group as at 30 June 2002. This information
is stated in accordance with the accounting policies set out on pages 83 to 84.
Responsibilities of the Board of Directors
The Crown Research Institutes Act 1992, the Public Finance Act 1989 and the Financial Reporting Act 1993 require the Board
of Directors (the Board) to prepare financial statements which comply with generally accepted accounting practice and give a
true and fair view of the financial position of Landcare Research New Zealand Limited and group as at 30 June 2002 and the
results of its operations and cash flows for the year ended on that date.
Auditors Responsibilities
Section 15 of the Public Audit Act 2001, section 43(1) of the Public Finance Act1989 and section 21(1) of the Crown Research
Institutes Act 1992 require the Auditor-General to audit the financial statements presented by the Board. It is the responsibility
of the Auditor-General to express an independent opinion on the financial statements and report that opinion to you.
The Auditor-General has appointed K J Boddy, of Audit New Zealand, to undertake the audit.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It
also includes assessing:
the significant estimates and judgements made by the Board in the preparation of the financial statements; and
whether the accounting policies are appropriate to Landcare Research New Zealand Limited and groups circumstances,
consistently applied and adequately disclosed.
We conducted our audit in accordance with the Auditing Standards published by the Auditor-General, which incorporate the
Auditing Standards issued by the Institute of Chartered Accountants of New Zealand. We planned and performed our audit so
as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence
to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error.
In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.
We have no other relationship with or interests in Landcare Research New Zealand Limited or any of its subsidiaries.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
proper accounting records have been kept by Landcare Research New Zealand Limited and group as far as appears from
our examination of those records; and
the financial statements of Landcare Research New Zealand Limited and group on pages 80 to 90.
comply with generally accepted accounting practice in New Zealand; and
give a true and fair view of:
Landcare Research New Zealand Limited and groups financial position as at 30 June 2002; and
the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 28 August 2002 and our unqualified opinion is expressed as at that date.
K J Boddy
Audit New Zealand
On behalf of the Auditor-General
Christchurch, New Zealand
91