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 Group, which also have a balance date of 30 June. Landcare Research International Limited is a majority shareholder in Fertility Control Pty Ltd.
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) Principle of consolidation
- 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.
- Goodwill arising on consolidation will be amortised over a 10-year period.
2) Current assets
- Accounts receivable are valued at expected net realisable value.
- Stocks are valued at the lower of cost on a weighted average price of stock on hand, and net realisable value.
- 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 were introduced in 2002/3 at depreciated replacement cost that is treated as deemed cost.
4) Depreciation
After taking into account likely residual values, all depreciable assets are depreciated on a straight line basis over their estimated economic lives.
Depreciation Rates:Buildings 1.67–10% Plant and equipment 5–20% EDP equipment 25% Motor vehicles 25% Furniture and fittings 10% Office equipment 20% Library books and periodicals 20–50% Rare books collection 1%
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) Taxation
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.
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) Foreign currency translation
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) Leases
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) Employee entitlements
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
All policies have been applied on bases consistent with those used in the previous year.
Statement of responsibility
In terms of Section 42 of the Public Finance Act 1989, we hereby certify that:
- We have been responsible for the preparation of these financial statements and the judgements used therein.
- 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.
- 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 2004.
RGM Fenwick |
AJ Pearce |
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