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, Landcare Research International Limited, Landcare Research US Limited and Fertility Control Limited (81.5% owned), 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. Principles of consolidation

    1. The consolidated financial statements include those of the parent company and its subsidiaries, accounted for using the line-by-line consolidation method. All intercompany transactions, balances and unrealised profits and losses on transactions between group members have been eliminated.

    2. Goodwill arising on consolidation will be amortised over a 10-year period.

  2. Current assets

    1. Accounts receivable
      Accounts receivable are valued at expected net realisable value.

    2. Stock
      Stocks are valued at the lower of cost on a weighted average price of stock on hand, and net realisable value.

    3. 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 were introduced in 2002/03 at depreciated replacement cost which is treated as deemed cost.

  1. Depreciation
    After taking into account likely residual values, all parent company depreciable assets are depreciated on a straight-line basis over their estimated economic lives. Sirtrack Limited depreciable assets are depreciated at Inland Revenue Department rates on a diminishing value basis.

    2. Depreciation rates Parent (SL) Sirtrack (DV)
    Buildings 1.67–10% 4–12%
    Plant and equipment 5–20% 14–48%
    IT equipment 25% 26–48%
    Motor vehicles 25% 31%
    Furniture and fittings 10% 9–27%
    Office equipment 20% 18–40%
    Library books and periodicals 20–50% -
    Rare books collections 1% -
    Intellectual property - 20–33%

  2. 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 that have not yet been supplied to customers has been recognised as Revenue in Advance.

  3. 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.

Goods and Services Tax

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.

  1. 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.

  2. Intellectual property
     Development costs are deferred where future benefits are expected to exceed those costs. Deferred development costs are amortised over future periods in relation to expected future revenue.

Value is ascribed in the Statement of Financial Position to unimpaired 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.

  1. 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.

  2. Leases
    The company leases certain plant and equipment, motor vehicles, and land and 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.

  3. 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

There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in the previous year.


Annual Report 2005/06