REPORTING AND FINANCIAL STATEMENTS
Transcript of REPORTING AND FINANCIAL STATEMENTS
REPORTING AND FINANCIAL STATEMENTS
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BOARD MEMBER PROFILES 34
DECLARATION OF DIRECTORS’ INTERESTS 35
CORPORATE GOvERNANCE 36 CRI CAPABILITY FUND REPORT 38
PERFORMANCE INDICATORS 40
REPORT OF ThE DIRECTORS 42 STATEMENT OF FINANCIAL PERFORMANCE 43 STATEMENT OF MOvEMENTS IN EqUITY 43 STATEMENT OF FINANCIAL POSITION 44 STATEMENT OF CASh FLOwS 45 NOTES TO ThE FINANCIAL STATEMENTS 46
STATEMENT OF RESPONSIBILITY 54 REPORT OF ThE AUDITOR-GENERAL 55
DIRECTORY 56
GNS SCIENCE ANNUAL REPORT 2006
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GNS SCIENCE ANNUAL REPORT 2006
BOARD MEMBER PROFILES
ALLAN FREEThPhD, MBA (Dist), BSc (Hons) Wellington AllanisChiefExecutiveofTelstraClearLtd,andamemberoftheNewZealandTreasuryAdvisoryBoard.PreviouspositionsincludedManagingDirectorandChiefExecutiveofWrightsonLtdandSeniorManagementroleswithTrustBank.AllanwasalsoaDirectorofGenesisResearchandDevelopmentCorporationLtd.HehasaPhDinpopulationgeneticsfromAustralianNationalUniversityandanMBAfromCanterburyUniversity.
SARAh SChIESSMSc, Civil Engineering (Colorado State University) WellingtonSarahisEnvironmentalManagerwithBPOilNewZealandLtd.Herportfolioincludessoilandgroundwaterremediation,climatechange,emissionsreporting,andindustrystandards.ShehasextensiveexperienceworkingforenvironmentalandengineeringfirmsintheUSandNewZealandspecialisinginquantitativegroundwaterflowanalysis,minedewatering,andenvironmentalprojects.SarahhasalsoworkedfortheUSGeologicalSurveyWaterResourcesDivisiondoingnumericalanalysisofaquifersystems.
BRENDA TAhIBSocSc, MBA (Henley) RuatahunaBrendaisDirectorofBrendaTahiandAssociates,herownconsultancyinstrategicmanage-mentandresearch.BrendaisNga-tiPorouandformerlyheldsenioradvisoryandmanagementpositionsinthepublicservice.SheisDeputyChairoftheAccidentCompensationCorporation,andalsoservesontheboardsforNgaPaeoTeMaramatanga(TheNationalCentreofMa-oriResearchExcellence),HuiaNewZealand,andtheTuhoeTuawhenuaTrust.
CON ANASTASIOUChairmanBA, LLB (Hons) WellingtonConisprincipalofhisownlawfirminWellington.Hespecialisesincorporatecommerciallaw,intellectualproperty,andresourcemanagement.HeisamemberoftheNewZealandLawSociety,aFellowoftheNewZealandInstituteofManagement,amemberoftheNewZealandInstituteofDirectors,andanAssociateoftheArbitratorsandMediatorsInstituteofNewZealand.ConisalsoChairmanofAirwaysCorporationofNewZealandLimited.
RIChARD wESTLAkEDeputy ChairmanMA (Oxon), F Inst D, FNZIMWellington (Retired 30 June 2006)RichardisChairmanoftheStandardsCouncilofNewZealandandaDirectorofKiwibankLimitedandtheCentreforAdvancedEngineering.HeisalsoChairofTextilesNewZealandandBetterBorderBiosecurity(“B3”).After20yearsinexecutiveroles,mainlyinbankingandmerchantbanking,henowoperateshisownconsultancy,advisingonstrategyandorganisationalgovernance.
ELLEN FO..
RChPhDAucklandEllenisDirectorofResearchDevelopmentatAucklandUniversityofTechnology.Heractivityisfocusedonbuildingresearchculturesanddevelopingresearchfundingstrategies.PreviouspositionsincludebeingDirectorofResearchAdvancementintheVC’sOfficeattheUniversityofAuckland,ManagerofEnvironmentalMonitoringatHawke’sBayRegionalCouncil,ResearchManagerattheOpenPolytechnicofNewZealand,andaProgrammeManagerattheFoundationforResearch,ScienceandTechnology.SheisalsoaDirectoroftheCawthronInstitute,Nelson.
THEBOARDANDCHIEFEXECUTIVE
Fromleft:MikeWilliams,EllenForch,
ConAnastasiou(Chairman),AllanFreeth,BrendaTahi,
AlexanderMalahoff(ChiefExecutive),RossButler,SarahSchiess.
MIkE wILLIAMSMA (Hons) Auckland MikeisPresidentoftheNewZealandLabourParty,andaDirectorofGenesisEnergy,TransitNewZealand,andNewZealandRailwaysCorporation.HeisalsoaTrusteeofEnterpriseWaitakereandamemberoftheAucklandRegionalTransportAuthority.
ROSS BUTLERBA (Economics), Graduate Diploma in Applied Finance and InvestmentsNelson (Appointed 1 July 2006)RossisChairmanofMortgageLink(NZ)Limited,WilkinsonInsuranceBrokersLimited,andDeputyChairofYHANZ.DirectorshipsincludeSwimmingNZ.HeisaMinisterialAppointeeontheCouncilofNelsonMarlboroughInstituteofTechnology.RossisDeputyChairofthetrustboardsoftheNelsonSchoolofMusicandtheNelsonBaysEducationBusinessPartnership,andisontheNelsonCounciloftheInstituteofDirectors(NewZealand).MerlotLimited,hisownconsultinggroup,providesinterimchiefexecutive,governance,andprojectservices.
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GNS SCIENCE ANNUAL REPORT 2006
SPECIFIC DISCLOSURES
CON ANASTASIOU
AirwaysCorporationofNewZealandLimitedChair
AirwaysConsultingLimitedDirector
AirwaysInternationalLimitedDirector
IsoscanLimitedDirector
IsoscanFoodLimitedDirector
GeologicalSurveys(NZ)LimitedDirector
GeologicalRiskLimitedDirector
MIkE wILLIAMS
TheLabourPartyofNewZealandPresident
TransitNewZealandBoard member
GenesisEnergyDirector
EnterpriseWaitakereTrustee
AucklandRegionalTransportAuthorityAuthority Member
NewZealandFilmFundDirector
NZRailwaysCorporationDirector
TransportBoardReferenceGroupChairman
DECLARATION OF DIRECTORS’ INTERESTS
BRENDA TAhI
Nga-tiPorouIwi
ACCBoardDeputy Chair
NgaPaeoteMaramatangaBoardMember
TuawhenuaTrustBoardTrustee
PaehinahinaMoureaShareholder
Rotoitoi15IncorporationShareholder
OnukuTrustShareholder
Huia(NZ)Limited Director
SARAh SChIESS
BPOilNewZealandLimitedEmployee
PropertyInsight Board member
ELLEN FO..
RCh
AucklandUniversityofTechnology(AUT) Employee
CawthronInstitute Director
ALLAN FREETh
StillwellAssociatesLimitedManaging Director
QueenMargaretCollegeChairman
NewZealandTreasury Member, Advisory Board
TelstraClearLimitedChief Executive
MasseyUniversityAgriculturalResearch Trustee
SytecLimited Chair
ROSS BUTLER
MortgageLink(NZ)LimitedChairman
WilkinsonInsuranceBrokers(Wgtn)LimitedIndependent Chairman
NelsonMarlboroughInstituteofTechnologyMinisterial Appointee to Council
MerlotLimitedChairman
InstituteofFinancialAdvisers(until30September2006)Acting CEO
YHANZIndependent Deputy Chairman
SwimmingNewZealandIndependent Director
NelsonSchoolofMusicDeputy Chair
InstituteofDirectorsofNewZealand–NelsonBranchCommittee member
NelsonBaysEducationBusinessPartnershipTrustChair
GENERAL DISCLOSURES
1. InsurancehasbeeneffectedforDirectorsinrespectofanyactoromissionintheircapacityasaDirectoroftheCompany.
2.DeedofIndemnityasdefinedinDirectors’resolutions17October1996.
APPROvAL OF DISCLOSURE OF INFORMATION
Approvalsoughtandgivenfordisclosureofinformationtooutsideparties–Nil
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GNS SCIENCE ANNUAL REPORT 2006
Overview
TheBoardandGNSSciencemanagementarecommittedto
ensuringthattheCompanymaintainsbestpracticegovernance
andadherestothehighestethicalstandards.Thebasisfor
theseissetoutinaBoardCharter,adoptedinJune2002,
andinpoliciesandproceduresmaintainedbytheCompany.
Role of the Board
TheBoardisresponsibletotheshareholdingministersfor
directingandsupervisingthemanagementofthebusiness
andaffairsofGNSScience,including:
• appointingtheChiefExecutive,agreeingontheobjectives
heisrequiredtoachieve,andmonitoringandevaluating
hisperformance
• ensuringthattheCompany’sgoalsareclearlyestablished
andthatstrategiesareinplacetoachievethem
• approvingtheCompany’sStrategicPlanandStatement
ofCorporateIntentincludingoperatingandcapital
expenditurebudgets
• monitoringtheperformanceofmanagementagainst
establishedgoalsandbusinessplans
• approvingmajortransactions,jointventuresand
collaborations
• approvingthedelegationsofauthoritiespolicy
• ensuringthatGNSSciencehasappropriateriskmanage-
mentandregulatorycompliancepoliciesinplaceand
reviewingtheCompany’sperformanceinthoseareas
• monitoringandapprovingtheCompany’sfinancialreporting
anddividendpolicies
• ensuringthatGNSScienceisagoodemployer,demonstrating
socialresponsibility,andmaintainingitsfinancialviability
asrequiredundertheCrownResearchInstitutesAct1992.
Appointment of Directors and composition
of the Board
TheBoardcancompriseuptoninenon-executiveDirectors.
ItcurrentlyconsistsofaChairmanandsixindependent
Directors.Directorsareappointedbytheshareholdingministers
–theMinisterofFinanceandtheMinisterofCrownResearch
Institutes.Thetermisgenerallythreeyearswithreappointment
forasecondthree-yeartermatthediscretionofthe
shareholdingministers.TheChairmanandDeputyChairman
areappointedbytheshareholdingministers.
ProfilesofcurrentmembersoftheBoardaresetoutonpage34.
CORPORATE GOvERNANCE
Operation of the Board
TheBoardChartersetsoutpoliciesandproceduresforthe
operationoftheBoard.TheChairmanprovidesleadershipto
theBoardandisinregulardialoguewiththeChiefExecutive.
TheChairman,inconsultationwiththeChiefExecutive,
establishestheagendaforeachBoardmeetingensuring
adequatecoverageofkeyissuesthroughouttheyear.Each
Boardmembercan,throughtheChairman,suggestitemsfor
theagenda.TheChairmanensuresthatalldiscussionsresult
inlogicalandunderstandableoutcomes.Boardmembers
areentitledtohaveaccesstoallrelevantCompanyinformation
andtomanagement.
Directors’ meetings
ThefullBoardhad11formalmeetingsduringtheyearended
30June2006.Telephoneconferencecallswerealsoheld
duringtheyeartodiscussparticularissues.Thereisanongoing
programmeofsitevisitsandpresentationstotheBoard
bymanagementandstafftokeepDirectorsabreastofthe
Company’sactivities.
Meetings in the year to 30 June 2006
Board Meetings Held Attended
ConAnastasiou 11 10
RichardWestlake 11 9
EllenFo..
rch 11 10
AllanFreeth 11 11
SarahSchiess 11 10
BrendaTahi 11 10
MikeWilliams 11 11
Audit Committee Held Attended
ConAnastasiou 2 2
RichardWestlake 2 2
AllanFreeth 2*
SarahSchiess 2 2
* All Directors are entitled to attend Audit and Risk Committee meetings
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Accountability of the Chief Executive
TheChiefExecutiveisaccountabletotheBoardforachieve-
mentoftheCompanygoals.TheBoardandtheChief
Executiveagreeonaperformancecontractunderwhich
theChiefExecutiveisauthorisedtomakedecisionsand
takeactionswithinagreedguidelines,toachieveCompany
goals.TheChairmanmeetsregularlywiththeChiefExecutive
todiscussbusinessissues.TheBoardevaluatestheChief
Executiveformallyeachyear.Theevaluationisbased
onbusinessperformance,achievementofstrategicand
operationalobjectives,andothernon-quantitativeobjectives
setoutintheperformancecontract.
Audit and Risk Committee
TheBoardhasonestandingcommittee–theAuditand
RiskCommittee.ItassiststheBoardincarryingoutits
responsibilitiesunderthevariousActsincludingtheCompanies
Act1993,PublicFinanceAct1989,CrownResearchInstitutes
Act1992,theFinancialReportingAct1993andtheCrown
EntitiesAct2004.Membersofthecommitteeinthelast
financialyearwereRichardWestlake(Chair),ConAnastasiou,
andSarahSchiess.AllDirectorsareentitledtoattendthe
meetings.Thecommitteeoperatesinaccordancewitha
TermsofReferencewhichisapprovedbytheBoard.TheChief
Executive,theChiefFinancialOfficer,theInternalAuditorand
representativesofDeloitte,theexternalauditors,arenormally
inattendance.
Thecommitteemettwiceduringthepastfinancialyear.
ThecommitteereviewedanddiscussedtheExternalAuditplan
andtheExternalAuditreport,theRiskAssessmentdocument,
theInternalAuditplanandInternalAuditreports,andstatutory
compliancereportingbymanagement.Italsoreviewedand
recommendedtothefullBoard,theapprovalofthehalf-yearly
andannualfinancialstatements,amendmentstothedelegated
authoritiesandcapitalexpenditurepoliciesandamendments
totheAuditandRiskCommitteeTermsofReferenceandthe
InternalAuditCharter.Thecommitteealwaysmeetsseparately
withtheexternalauditorforapartofthemeeting,without
managementpresent.Minutesofthecommitteemeetingswere
tabledatthesubsequentBoardmeetingsandkeyitemswere
discussedbythefullBoard.
Conflicts of interest
EachDirectormakesafulldeclarationoftheirinterests.Thisis
updatedateachBoardmeeting.Whereaconflictofinterest
exists,Directorsexcusethemselvesfromdiscussionanddonot
receivetherelevantpaperinrespectofthoseinterests.
Provision of professional services
Exceptinexceptionalcircumstances,Boardmemberswillnot
provideprofessionalservicestotheCompany.Thisistoavoid
aconflictofinterest,actualorperceived.
NoDirectorsprovidedprofessionalservicestotheCompany
duringtheyear.
Independent professional advice
Directorsareentitled,withapprovalfromtheChairman,
toobtainindependentprofessionaladvicerelatingtotheaffairs
oftheCompanyortotheirduties,attheCompany’sexpense.
Noindependentprofessionaladvicewassoughtorobtained
duringtheyear.
Board evaluation
EachyeartheBoardevaluatesitsownperformanceand
providestheresultstotheCrownCompanyMonitoring
AdvisoryUnit.
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GNS SCIENCE ANNUAL REPORT 2006
CRI CAPABILITY FUND REPORT
WereportachievementsfromactivitiesthatreceivedCRI
CapabilityFundingasspecifiedinPartCoftheGovernment’s
EstimatesofAppropriations.AsrequiredbyAgreement
withtheMinisterofResearch,ScienceandTechnology,we
elaborateupontheseachievementswithshortillustrations,and
providecommentaryonoverallcapabilityandorganisational
performance.Substantialachievementwasmadeineachofthe
11plannedareasofdevelopmentasindicatedintheStatement
ofCorporateIntent2005-06,with42ofthe46indicatorsbeing
achievedorover-achieved.Thefundingcoveredstaffsalaries,
associatedoverheads,andminordisbursements.
1. Information access systems & databases
(4 of 5 indicators achieved)
Ourgroundwaterdatabasehasbeenenhancedbyextensive
redesignofthearchitecturetoprotectsensitivedata,
constructionofawebinterfacethatpermitsdatadownloads
basedoncustomisablequeries,andimplementationoftwo
automateddatainterpretationtoolstopermitextractionofmore
thanjusttherawdata.OurPETLABpetrologicaldatabase
hasbeenenhancedbyadding3,36214Crecords,aroutineto
exportwholerockanalysesinasimplifiedformat,andAntarctic
1:250,000topography.Ouractivefaultsdatabasehasbeen
enhancedbyupdatingmappingofactivefaultsinthecentral
andnorthernSouthIsland,incorporatingrecentlypublished
faultdataandthelocationsofallknownfaulttrenches,and
beginningtodevelopatrenchdatabase.Nosignificant
additionsweremadetotheresistivitydatabase.Inallcases
onlineaccesshasimproved.
2. Groundwater (3 of 4 indicators achieved)
Wehavemaintainedandenhancedourthreatened
groundwaterage-dating,quantityandqualityassessment,
andsystem-modellingcapabilitiesbycontinuingthe3H,
CFC,andSF6methodsinournichewater-datinglaboratory,
developingasystemforremotemonitoringofnitrate
concentrations,andcommencingresearchongroundwater-
lakeinteractions.Interviewsforanisotopehydrologist
positionfailedtoidentifyasuitablecandidate.
3. Geological hazards (5 of 6 indicators achieved)
Wehavemaintainedthreatenednationalcapabilitiesin
(a)volcanoseismologybycommencingfrequency-magnitude
researchforAucklandvolcanoesfromtheirpasteruptive
history,andvolcanoforecastingresearchforimprovederuption
prediction;and(b)inearthquake,volcano,landslideand
tsunamihazardsbyresumingquantitativenationalhazards
modelling,continuingtestsofearthquakeforecastingmethods,
andcontinuingdevelopmentofquantitativetsunamihazard
models.Wehaveinthesewaysalsobeenabletoenhanceour
capabilitiestouseGeoNetdata.Wewillcontinueoureffortto
recruitastrong-motionseismologist.
4. Isotope sciences underpinning earth systems
research (7 of 8 indicators achieved)
Wehaveenhancedanddevelopednewresearchcapabilitiesin
acceleratormass-spectrometry(AMS)ofcosmogenicisotopes
byrefining14Cmeasurementsystems(but26Alsystemsremain
tobeimplemented),establishingcarbon-dynamicsresearch,
re-scopingpaleoclimateresearchinpreparationfor
implementingcomponent-specificradiocarbonmeasurements,
andrecruitinganAMSsoilscientist.Wehavemaintainedand
enhancedresearchcapabilityinstableisotopegeochemistry
byrecruitinganewteammember,commissioninganewmass
spectrometerforonline18OandD/Hmeasurementofwater
andiceisotopes,testingandcommissioninganewcompound-
specificgaschromatographformeasuring13Cinliquid
hydrocarbonmixtures,andcreatinganoilsdatabaseof
geochemicalandisotopicanalysisofNewZealandpetroleum
productsasthefirststageinestablishinganewresearch
programme.
5. Technology transfer (6 of 6 indicators achieved)
Wehaveenhancedourcapabilityfortechnologytransfer
bysupporting15pre-seedcommercialisationprojectsin
theareasofsoftwaredevelopment,non-invasivetechnology,
andwastewaterremediation.Wehaveenhancedour
capabilitytoassesspetroleumprospectivityinNewZealand
bydeterminingthesoftware,databasestructureandquality
controlfordigitalatlases,discoveringpotentialreservoirfacies
intheEastCoastbasintocomplementtheworkoftheMinistry
ofEconomicDevelopment,andgaininggreaterunderstanding
ofthebiostratigraphyandage-datingfortheanalogue
GippslandBasin.Wehaveenhancedourcapabilitytotransfer
hazardinformationtolocalgovernmentbyimprovingaccess
tosoftwareanddatabaseinformationforfaultruptureand
slopestabilityhazards.
6. Geo-energy (4 of 4 indicators achieved)
WehavemadeprogressinenhancingfacilitiesforNewZealand
geo-energyresearchbyassessingandsecuringpartial
stakeholdersupportforanationalPetroleumResearchCentre,
negotiatingwithpotentialpartnersingeothermalresearch,and
encouragingAucklandUniversitytorevitaliseitsGeothermal
Institute.WehavedevelopedgeologicalCO2sequestration
capabilitybycontributingtotheAustralian-basedCO2CRC
partnershipwithstaffexchangeandbycommencingworkon
theWesternAustraliaGorganprojectwithInnovativeCarbon
TechnologiesPtyLtd.
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GNS SCIENCE ANNUAL REPORT 2006
7. Deep ocean continental shelf exploration
(3 of 3 indicators achieved)
WehavemaintainedanddevelopedcapabilitiesforOcean
Survey20/20ingeochemistry,geophysics,benthichabitats
andswath-mappingdatamanagementandinterpretationby
recruitingamarinegeochemist,developinginversionalgorithms
toinferseafloorpropertiesfromacousticmulti-beamswath-
reflectiondata,collectingandassessinggeochemicalsamples
ofmethanederivedfromgashydratesalongtheeastcoast
oftheNorthIsland,andextendingourknowledgeabout
hydrothermalsystemsfromtheanalysisofvolcanicmassive
sulphidesamplesfromLauBasinandMarianaback-arc.
8. Climate change (2 of 2 indicators achieved)
Wehavedevelopedice-coreanalysiscapabilityby
commissioninganewmassspectrometerforonline18O
andD/Hmeasurements,securingtemporarycommercialice-
corestorageareas,preparingthe$1.3millioncaseforcapital
expenditureonafullydevelopedfacility,andformingthe
JointAntarcticResearchInstituteasajointventurewith
VictoriaUniversityofWellington.
9. Geomicrobiology (3 of 3 indicators achieved)
Wehavedevelopedextremophilegeomicrobiology
capabilitybyaddingabioreactortoourWairakeilaboratory,
designinganextremophiledatabase,andrecruitingajunior
staffmember.
10. Intelligent Measurement Systems for Industry
(1 of 1 indicator achieved)
Wehavemaintainedandenhancedourradiation-based
capabilitybyidentifyingadditionalindustrialneedsinthe
radiationdetection,meat,timber,andfruitindustrysectors.
11. Nanotechnology and Ion Beam Analysis
(4 of 4 indicators achieved)
Wehavemaintainedandenhancedionimplantation,
electron-beamannealing,andion-beamanalysisbyproducing,
understanding,andtestingnanowhiskerdiodeandtriode
structuresaselectronsourcesforX-rayemissionandlight
generation,discoveringthattheelectronemissionprocess
fromnanowhiskersisresonantelectrontunnelling,assessing
andpublishingpropertiesofSiCnanoboulders,buildingahigh
vacuumchamberforthe3MVaccelerator,anddevelopingand
testingaHallprobetoquicklycharacterisedopedthinfilms.
Commentary on overall capability and
organisational performance
Weconsiderthatalloftheforegoingcapabilitiespresent
opportunitiesforfurtherdevelopment.Together,theseareas
ofcapabilitydevelopmentaredirectlyalignedwithour
CoreGoalsandBoldChallengesasdiscussedinthe
StatementofCorporateIntent2005-06.Asnotedabove,
theat-riskcapabilitieswerethoseingeologicalhazards
andgroundwater.Moreover,untilagreementwasreached
withtheFoundationforResearch,ScienceandTechnology,
isotopesciencesandnanotechnologycapabilitieswerealso
atrisk.CRICapabilityFundinghasallowedustoimprove
performanceinareasofunderpinningscience(e.g.data
management,theearthquake-generationprocess,pastclimate
change,andisotopemethods),applicationsofscience
(e.g.hazardsassessment,energyandgroundwaterresource
assessment,industrialmeasurementsystems,andtechnology
transfer),andsciencediscovery(e.g.deep-oceanexploration,
geomicrobiology,andnanotechnology).
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GNS SCIENCE ANNUAL REPORT 2006
PERFORMANCE INDICATORS
Group Group Group
Actual Budget Actual
2006 2006 2005
FINANCIAl PERFORMANCE MEASuRES
Revenue (excluding interest received) ($000) 45,904 47,133 42,892
EBITmargin(Operating surplus before interest/Total revenue) 4.0% 5.4% 4.5%
Returnonequity(Surplus after taxation/Average equity) 6.1% 8.2% 7.5%
Returnonassets (Operating surplus before interest/Average total assets) 5.8% 8.0% 6.6%
Equityratio(Equity/Total assets) 50.5% 52.9% 56.9%
Currentratio(Total current assets/Total current liabilities) 0.8:1 1.1:1 1.0:1
Gearing(refernote7)(Term loan/Equity plus term loan) 22.7% 29.7% 15.8%
Interestcover(Operating surplus before interest/Interest expense) 5 times 5times 8times
Dividendproposed ($000) 300 300 –
OTHER PERFORMANCE MEASuRES
Revenue From
PublicGoodScience&Technology(PGST) ($000) 19,969 19,880 19,292
CapabilityFund ($000) 3,052 3,052 2,364
Marsden ($000) 1,519 1,804 1,050
Pre-SeedAcceleratorFund ($000) 451 510 232Publications
Papers–externallyrefereedjournals/books 189 150 159
Otherpapers 68 55 107
Conferencepapersandabstracts 210 150 104
Researchmonographsandmaps 8 3 5
Consultancyreports 203 100 158Full Time Equivalents
Researchers 207 218 198
Researchsupport 37 38 35
Generalsupportandmanagement 41 37 42Productivity Measures
RevenueperFTE ($000) 161 161 157
OperatingmarginperFTE ($000) 5.6 7.3 6.8
TotalassetsperFTE ($000) 122 117 107
Revenueearnedper$investedinassets 1.3 1.4 1.5
Health and Safety
Numberofworkdaysmissedduetoinjury 14 days 10days 1day
ACCworkplacesafetymanagementprogramme Yes Yes YesCommercial Activities
RevenuefromcommercialactivitiesfromNewZealand ($000) 11,159 11,670 11,271
Revenuefromcommercialactivitiesfromoverseas ($000) 2,257 2,500 1,702
RevenuefromGeoNet ($000) 7,026 7,316 5,945
Numberofclientsinexcessof$150,000revenueperannum 21 16 18
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GNS SCIENCE ANNUAL REPORT 2006
Group Group Group
Actual Budget Actual
2006 2006 2005
OTHER PERFORMANCE MEASuRES CONTINuED
Tertiary Education
Graduatescholarshipsfunded 18 20 18
Graduatestudentssupervised 61 62 61
Valueofcontractsin ($000) 581 100 537
Valueofcontractsout ($000) 1,483 450 932Other Non Financial Measures
InternationalforarepresentingNewZealand 11 15 23
OverseaspartnersinPGSTprojects 104 80 95
Overseasvisitreports 23 45 *PGSTprogrammeobjectivesmet 98.8% 98.0% 99.3%
MarsdenFundproposalssubmitted 16 15-20 *MarsdenFundbidsaccepted 1 3 4
*Measurechange
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GNS SCIENCE ANNUAL REPORT 2006
REPORT OF ThE DIRECTORS
The Directors have pleasure in presenting the Annual
Report and audited accounts of GNS Science for the year
ended 30 June 2006. TheFinancialStatementshavebeen
preparedinconformitywithgenerallyacceptedaccounting
principlestogiveatrueandfairviewoftheGroup’sfinancial
positionanditsoperationsandcashflows.
TheAuditor-Generalisthestatutoryauditorpursuantto
section21oftheCrownResearchInstitutesAct1992.
TheAuditor-GeneralhasappointedDeloittetoauditthe
FinancialStatementsandtoexpressanopiniononthem.
Theirreportissetoutonpage55.
Principal activity
GNSScience’sprincipalactivityistoconductscientific
research,consultancyservicesandproductdevelopment
inearthsciencesandisotopetechnologiesinaccordancewith
theprinciplesfortheoperationofCrownResearchInstitutes
setoutinsections4and5oftheCrownResearchInstitutes
Act1992.
Accounting policies
Therehavebeennochangesinaccountingpoliciesduring
theyear.
Dividend
Adividendof$300,000wasdeclaredfortheyearended
30June2006(2005:$NIL).
Remuneration of Directors
Directors’feespaidduringtheyearwereasfollows:
2006 ($) 2005 ($)
ConAnastasiou(Chairman) 40,000 38,000RichardWestlake(Deputy-Chairman) 25,000 23,750EllenFo
..rch 20,000 19,000
SarahSchiess 20,000 19,000BrendaTahi 20,000 19,000MikeWilliams 20,000 19,000AllanFreeth 20,000 –
Board composition
AllanFreethwasappointedtotheBoardon1July2005
andRichardWestlakeretiredfromtheBoardon30June2006.
On1July2006,RossButlerwasappointedtotheBoard.
Subsidiaries
TheCompanyhasfoursubsidiarycompanies:
IsoscanLimited
GeologicalSurveys(NZ)Limited
IsoscanFoodLimited
GeologicalRiskLimited
ConAnastasiouandAlexanderMalahoffaretheDirectors
ofeachofthesubsidiarycompanies.
Employee remuneration
Inaccordancewithsection211(1)(g)oftheCompaniesAct
1993,thenumbersofemployeeswhoreceivedremuneration
andotherbenefitstotalling$100,000ormore,in$10,000
bands,duringtheyearto30June2006were:
$000 2006 2005
100–109 4 9110–119 9 4120–129 3 6130–139 2 –150–159 – 4160–169 4 –170–179 – 1180–189 1 1190–199 1 –250–259 – 1*300–310 1* –
* Chief Executive
Inaccordancewithsection152(1)(d)oftheCrownEntitiesAct
2004,compensationtotalling$37,400waspaidtotwostaff
memberswholefttheCompanyduringtheyearended
30June2006.
Donations
GNSSciencedonated$1,000totheLifeFlightTrustduring
theyear(2005:$1,000).
Indemnity for Directors and employees
InsurancehasbeeneffectedforDirectorsandemployees
inrespectofanyactoromissionintheircapacityasaDirector
oremployeeoftheCompany.Directorshavedeclaredtheir
interestsinaDeedofIndemnitydated17October1996,
wherebytheCompanyindemnifiesDirectorsagainstanyliability
foranyactoromissionsincurredintheircapacityasaDirector.
Events subsequent to balance date
TheDirectorsarenotawareofanymatterorcircumstance
sincetheendofthefinancialyearnototherwisedealtwithin
thisreportthathas,ormayhave,asignificanteffectonthe
operationoftheCompany.
Certification
TheDirectorsconfirmthattheCompanyhasoperatedin
accordancewiththeCrownResearchInstitutesAct1992
andtheCompaniesAct1993duringtheyear.
Note: Directors’ disclosures can be found on page 35.
OnbehalfoftheDirectors
CON ANASTASIOUChairman23August2006
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GNS SCIENCE ANNUAL REPORT 2006
The accompanying notes form part of these Financial Statements.
STATEMENT OF MOvEMENTS IN EqUITY
FoR The YeAR enDeD 30 June 2006
Group Group Group Company Company Company
Actual Budget Actual Actual Budget Actual
2006 2006 2005 2006 2006 2005
Note $000 $000 $000 $000 $000 $000
Revenue
Crown 8 24,991 25,246 22,938 24,991 25,246 22,938
Commercial–NewZealand 11,159 11,670 11,271 10,971 11,670 10,974
Commercial–Overseas 2,257 2,500 1,702 2,257 2,500 1,702
GeoNet 8 7,026 7,316 5,945 7,026 7,316 5,945
Interestreceived 90 100 152 84 100 147
Other 471 401 1,036 263 401 873
Total revenue 45,994 47,233 43,044 45,592 47,233 42,579
Expenses
Personnel 22,277 22,482 20,394 22,277 22,482 20,394
Materials,supplies&services 2 15,255 15,057 14,677 14,928 15,057 14,256
GeoNetdirectexpenses 8 3,440 3,800 3,018 3,440 3,800 3,018
Depreciation 5 3,079 3,250 2,883 3,033 3,250 2,849
Interest 360 510 236 359 510 236
Total expenses 44,411 45,099 41,208 44,037 45,099 40,753
Operating surplus before taxation 1,583 2,134 1,836 1,555 2,134 1,826
Taxation 3 (538) (704) (628) (528) (704) (625)
Surplus after taxation 1,045 1,430 1,208 1,027 1,430 1,201
Group Group Group Company Company Company
Actual Budget Actual Actual Budget Actual
2006 2006 2005 2006 2006 2005
$000 $000 $000 $000 $000 $000
Equity at start of year 16,779 17,012 15,571 16,707 17,012 15,506
Surplusaftertaxation 1,045 1,430 1,208 1,027 1,430 1,201
Lessdividendproposed (300) (300) – (300) (300) –
Equity at end of year 17,524 18,142 16,779 17,434 18,142 16,707
STATEMENT OF FINANCIAL PERFORMANCE
FoR The YeAR enDeD 30 June 2006
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GNS SCIENCE ANNUAL REPORT 2006
STATEMENT OF FINANCIAL POSITION
AS AT 30 June 2006
Group Group Group Company Company Company
Actual Budget Actual Actual Budget Actual
2006 2006 2005 2006 2006 2005
Note $000 $000 $000 $000 $000 $000
Equity 4 17,524 18,142 16,779 17,434 18,142 16,707
Represented by:
Non current assets
Property,plantandequipment 5 25,479 26,183 20,682 25,413 26,183 20,618
Investments 10 – – – 258 – 273
25,479 26,183 20,682 25,671 26,183 20,891
Current assets
Cashandbank 1,504 563 536 1,281 563 226
Shortterminvestments – 2,950 1,990 – 2,950 1,990
Accountsreceivableandprepayments 4,670 3,440 3,808 4,677 3,440 3,827
Taxationrefund 811 – 319 773 – 272
Developmentprojects 536 500 351 330 500 245
Workinprogress 1,712 660 1,794 1,628 660 1,756
9,233 8,113 8,798 8,689 8,113 8,316
Total assets 34,712 34,296 29,480 34,360 34,296 29,207
Non current liabilities
Termloan 7 5,150 7,650 3,150 5,150 7,650 3,150
Futureincometaxliability 6 222 (96) 34 175 (96) 34
Retirementleaveprovision 13 425 443 445 425 443 445
Futurelongserviceleaveentitlements 13 479 457 443 479 457 443
6,276 8,454 4,072 6,229 8,454 4,072
Current liabilities
Accountspayableandaccruals 3,691 2,860 2,748 3,476 2,860 2,547
Employeeentitlements 2,228 2,240 1,770 2,228 2,240 1,770
Revenueinadvance 4,693 2,300 4,111 4,693 2,300 4,111
Provisionfordividend 300 300 – 300 300 –
10,912 7,700 8,629 10,697 7,700 8,428
Total liabilities 17,188 16,154 12,701 16,926 16,154 12,500
Net assets employed 17,524 18,142 16,779 17,434 18,142 16,707
ForandonbehalfoftheBoard
CON ANASTASIOU BRENDA TAhI
23August2006 23August2006
The accompanying notes form part of these Financial Statements.
45
GNS SCIENCE ANNUAL REPORT 2006
STATEMENT OF CASh FLOwS
FoR The YeAR enDeD 30 June 2006
Group Group Group Company Company Company
Actual Budget Actual Actual Budget Actual
2006 2006 2005 2006 2006 2005
Note $000 $000 $000 $000 $000 $000
Cash flows from operating activities
Cash was provided from:
Receiptsfromcustomers 45,174 46,754 41,219 44,914 46,754 40,957
GST(net) 170 – 14 171 – 14
Interestreceived 90 100 152 84 100 147
45,434 46,854 41,385 45,169 46,854 41,118
Cash was applied to:
Paymentstosuppliers&employees (39,117) (41,103) (38,634) (38,784) (41,103) (38,442)
Interestpaid (360) (510) (227) (359) (510) (236)
Incometaxpaid (858) (704) (470) (903) (704) (465)
(40,335) (42,317) (39,331) (40,046) (42,317) (39,143)
Net cash flow from operating activities 11 5,099 4,537 2,054 5,123 4,537 1,975
Cash flows from investing activities
Cash was provided from:
Saleofproperty,plantandequipment 19 – 2 19 – 2
Repaymentofloantosubsidiaries – – – 15 – –
19 – 2 34 – 2
Cash was applied to:
Loantosubsidiaries – – – – – (131)
Purchaseofproperty,plantandequipment (8,140) (7,800) (2,695) (8,092) (7,800) (2,669)
(8,140) (7,800) (2,695) (8,092) (7,800) (2,800)
Net cash applied to investing activities (8,121) (7,800) (2,693) (8,058) (7,800) (2,798)
Cash flows from financing activities
Cash was provided from:
Bankborrowings 2,000 4,500 – 2,000 4,500 –
Net cash provided from financing activities 2,000 4,500 – 2,000 4,500 –
Net increase/(decrease) in cash held (1,022) 1,237 (639) (935) 1,237 (823)
Add cash brought forward 2,526 2,276 3,165 2,216 2,276 3,039
Ending cash carried forward 1,504 3,513 2,526 1,281 3,513 2,216
Represented by:
Cash and bank 1,504 563 536 1,281 563 226
Short term investments – 2,950 1,990 – 2,950 1,990
1,504 3,513 2,526 1,281 3,513 2,216
The accompanying notes form part of these Financial Statements.
46
GNS SCIENCE ANNUAL REPORT 2006
1. STATEMENT OF ACCOuNTING POlICIES
REPORTING ENTITy AND ACTIvITIES
TheInstituteofGeologicalandNuclearSciencesLimitedis
establishedundertheCrownResearchInstitutesAct1992
andtheCompaniesAct1993.IsoscanLimited,IsoscanFood
Limited,GeologicalSurveys(NZ)LimitedandGeologicalRisk
LimitedareestablishedundertheCompaniesAct1993.The
financialstatementshavebeenpreparedinaccordancewith
section17oftheCrownResearchInstitutesAct1992,the
PublicFinanceAct1989,theCompaniesAct1993andthe
CrownEntitiesAct2004.
FinancialstatementsfortheInstituteofGeologicalandNuclear
SciencesLimited(the“Company”)andconsolidatedfinancial
statements(the“Group”)arepresented.Theconsolidated
financialstatementscomprisetheCompanyanditssubsidiaries
(setoutinnote10).
TheprincipalactivityoftheCompanyistoundertake
geoscienceandisotopescienceresearch,development
andconsultancy,predominantlyinNewZealand.
MEASuREMENT BASIS
Themeasurementandreportingoffinancialperformance
andfinancialpositionisbasedonhistoricalcost,exceptfor
therevaluationofcertainassets.
NOTES TO AND FORMING PART OF ThE FINANCIAL STATEMENTS
FoR The YeAR enDeD 30 June 2006
BASIS OF PREPARING CONSOlIDATED FINANCIAl
STATEMENTS
Subsidiaries
Subsidiariesarethoseentitiescontrolleddirectlyorindirectly
bytheCompany.Thefinancialstatementsofsubsidiariesare
includedintheconsolidatedfinancialstatementsusingthe
purchasemethodofconsolidation.
Joint ventures
Jointventuresarejointarrangementswiththeotherparties
inwhichtheCompanyhasjointandseveralliabilityinrespect
ofcostsandliabilitiesandsharesinanyresultingoutput.
TheCompany’sshareoftheassets,liabilities,revenuesand
expensesofjointventuresisincorporatedintotheCompany
andconsolidatedfinancialstatementsonaline-by-linebasis
usingtheproportionatemethod.
Transactions eliminated on consolidation
Theeffectsofintra-grouptransactionsareeliminatedin
preparingtheconsolidatedfinancialstatements.
PARTICulAR ACCOuNTING POlICIES
Revenue
Revenueisrecordedwhenearned,basedonthepercentage
ofworkcompleted.Anyamountsreceivedinrelationtowork
notyetcommencedisrecordedasrevenueinadvance.
Receivables
Receivablesarestatedattheirestimatedrealisablevalueafter
providingforbadanddoubtfuldebts.
Work in progress
Workinprogressisvaluedatthelowerofcostorthe
percentageofworkcompleted,lessamountsinvoiced.Cost
includeslabour,directcostsandanallocationofoverhead.
Property, plant and equipment
Property,plantandequipmentareincludedatcostandhave
beendepreciatedonastraightlinebasisatratescalculated
toallocatetheassets’costovertheirestimatedremaining
usefullives.
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GNS SCIENCE ANNUAL REPORT 2006
Usefullivesofassetsare:
Buildings
–woodenconstruction 40years
–concreteconstruction 50years
Plant,machineryandequipment 3–15years
Furniture,fittingsandofficeequipment 3–15years
ITequipmentandsoftware 4–8years
Vehicles 5years
Leaseholdimprovements 9–10years
Patents 4–17years
Income tax
TheincometaxexpensechargedtotheStatementofFinancial
Performanceincludesboththecurrentyearliabilityandthe
incometaxeffectoftimingdifferencescalculatedusingthe
liabilitymethod.
Taxeffectaccountingisappliedonacomprehensivebasisto
alltimingdifferences.Futureincometaxbenefitsarisingfrom
timingdifferencesareonlyrecognisedwhenthereisvirtual
certaintyofrealisation.
Foreign currencies
Transactionsinforeigncurrenciesareconvertedatthe
NewZealandrateofexchangerulingonthedateofthe
transaction.Monetaryassetsandliabilitiesatyearend
areconvertedtoNewZealanddollarsattheexchangerate
rulingatbalancedate.Allexchangedifferencesarerecorded
intheStatementofFinancialPerformance.
Investments
Investmentsarestatedatcost.
Research and development costs
ResearchcostsareexpensedintheStatementofFinancial
Performanceintheperiodincurred.Developmentcostsare
deferredwherefutureidentifiablebenefitscanreasonably
beexpectedtoexceedthesecosts.Deferreddevelopment
costsareamortisedoverfutureperiodsonabasisrelatedto
expectedfuturebenefits.
Library, databases and collections
Libraryresources,databasesandcollectionsownedbythe
Companyarenotvaluedforfinancialreportingpurposes.
Patents and trademarks
Patentsandtrademarksarerecordedatcostandamortised
overthetermoftheirestimatedusefullives.
Statement of Cash Flows
Investingactivitiescomprisethepurchaseanddisposalof
property,plantandequipment.Financingactivitiesinclude
changesinequityandborrowings.Operatingactivities
comprisetheprovisionofresearchandrelatedservicesand
allothertransactionsnotincludedundereitherinvestingor
financingactivities.
Financial instruments
TheCompanyisapartytofinancialinstrumentsaspartofits
normaloperations.Thesefinancialinstrumentsincludebank
accounts,shortterminvestments,accountsreceivableand
payableandbankloan.Revenueandexpensesinrelation
tofinancialinstrumentsarerecognisedintheStatementof
FinancialPerformance.
Provision for employee entitlements
Annualandlongserviceleavearerecognisedastheyaccrue
toemployees.Thefutureentitlementstolongserviceleave
arealsorecognised.Retirementleaveaccruestoemployees
inaccordancewiththeprovisionsofthecurrentcollective
employmentagreement.
Comparative information
Comparativeinformationhasbeenreclassified,where
necessary,toachieveconsistencyindisclosurewiththe
currentyear.
Changes in accounting policies
Therehavebeennootherchangesinaccountingpolicies.
Allpolicieshavebeenappliedonbasesconsistentwiththe
prioryear.
48
GNS SCIENCE ANNUAL REPORT 2006
2. MATERIAlS, SuPPlIES & SERvICES Group Group Company Company 2006 2005 2006 2005 $000 $000 $000 $000
Auditfees 44 43 40 37Baddebts 15 – 15 –Directors’fees 165 138 165 138(Gain)/lossonforeignexchange (89) 28 (84) 17Rent 369 423 369 423Otherexpenses 14,751 14,045 14,423 13,641 15,255 14,677 14,928 14,256
3. TAxATION
Operatingsurplusbeforetaxation 1,583 1,836 1,555 1,826
Taxat33% 523 606 513 603Taxationeffectofpermanentdifferences 23 22 23 22Adjustmentinrespectofprioryears (8) – (8) –Totaltaxationchargereported 538 628 528 625
The taxation charge is represented by:Currenttaxation 350 531 387 528Futureincometaxliability 188 97 141 97 538 628 528 625
UndersectionME1oftheIncomeTaxAct1994,theCompanyisnotrequiredtomaintainanImputationCreditAccount.
4. EquITy
AuthorisedandIssuedCapital:6,167,000ordinaryshares 6,167 6,167 6,167 6,167Retainedearnings 11,657 10,612 11,567 10,540Dividendproposed (300) – (300) – 17,524 16,779 17,434 16,707
Allordinarysharesrankequallywithrespecttodividendandrepaymentofcapitalandeachcarrytherighttoonevoteatanyannualgeneralmeeting.
5. PROPERTy, PlANT AND EquIPMENT
GROuP Cost Dep’n Accum Book Book 2006 Dep’n Value Value 2006 2005 $000 $000 $000 $000 $000
Land 2,420 – – 2,420 2,420Buildings 8,333 162 1,467 6,866 5,588Leaseholdimprovements 380 88 194 186 341Plant&machinery 1,139 59 741 398 300Laboratoryequipment 16,943 1,204 9,288 7,655 7,262ITequipment 8,434 792 6,740 1,694 1,560Furniture&fittings 5,576 290 1,191 4,385 1,591Vehicles 655 19 513 142 27Officeequipment 479 54 260 219 164Software 3,986 397 2,674 1,312 1,290Patents 265 14 63 202 139 48,610 3,079 23,131 25,479 20,682
ThemostrecentrateablevaluationsasatFebruary2006,September2004andJuly2004oflandandbuildingstotalled$18,570,000(2005:$15,620,000).
NOTES TO AND FORMING PART OF ThE FINANCIAL STATEMENTS CONTINUED
49
GNS SCIENCE ANNUAL REPORT 2006
5. PROPERTy, PlANT AND EquIPMENT CONTINuED
COMPANy Cost Dep’n Accum Book Book 2006 Dep’n Value Value 2006 2005 $000 $000 $000 $000 $000
Land 2,420 – – 2,420 2,420
Buildings 8,333 162 1,467 6,866 5,588
Leaseholdimprovements 380 88 194 186 341
Plant&machinery 1,139 59 741 398 300
Laboratoryequipment 16,943 1,204 9,288 7,655 7,262
ITequipment 8,434 792 6,740 1,694 1,564
Furniture&fittings 5,576 290 1,191 4,385 1,591
Vehicles 655 19 513 142 27
Officeequipment 479 54 260 219 164
Software 3,826 351 2,580 1,246 1,222
Patents 265 14 63 202 139
48,450 3,033 23,037 25,413 20,618
6. FuTuRE INCOME TAx BENEFIT/(lIABIlITy) Group Group Company Company 2006 2005 2006 2005 $000 $000 $000 $000
Openingbalance (34) 43 (34) 43
Currentyearmovement (188) (97) (141) (97)
Transferfromprovisionfortax – 20 – 20
(222) (34) (175) (34)
7. TERM lOAN
GROuP AND COMPANy 2006 2005
$000 $000
LoanfromTheNationalBankofNewZealandLimited 5,150 3,150
Facility:
Ofthe$7,650,000facilityinplace,$5,150,000hasbeendrawndown.
Interest:
Bankbillratecomputedonthefirstdayofthatinterestperiodplus0.80%perannum.
Repayment terms:
Principalrepayableon31July2007orearlierifmutuallyagreed.
Security:
Negativepledge.
50
GNS SCIENCE ANNUAL REPORT 2006
8. RElATED PARTy TRANSACTIONS
TheultimateshareholderoftheCompanyistheCrown.
RevenuederivedfromtheCrownassetoutintheStatement
ofFinancialPerformanceincludesPublicGoodScienceand
Technologyfundingof$19,969,000(2005:$19,292,000),
andPre-SeedAcceleratorfunding$451,000(2005:$232,000)
fromtheFoundationforResearch,ScienceandTechnology,
Capabilityfundingof$3,052,000(2005:$2,364,000)fromthe
MinistryofResearch,ScienceandTechnology,andMarsden
fundingof$1,519,000(2005:$1,050,000)fromtheRoyal
SocietyofNewZealand.
TheCompanyenteredintoanagreementwiththeEarthquake
Commission(EQC)inJune2001wherebyGNSSciencewill
implementandoperateaseismicnetworkthroughoutNew
Zealandontheirbehalf,for$5millionperyearfor10years.
In2006theannualamountwasincreasedto$8million.
In2006,$7,026,000(2005:$5,945,000)wasrecognisedin
revenuewith$3,440,000(exclusiveofpersonnelandoverhead
recoveries)spentinrelationtodirectcostsincludingequipment
purchases(2005:$3,018,000).At30June2006,therewas
$18,000inrevenueinadvance(2005:$992,000).
TheGrouphasajointventurewithCarterHoltHarveyLimited.
Alltransactionswerecarriedoutonacommercialandarm’s
lengthbasis.Thevalueofsalestothispartywas$404,000
(2005:$361,000).At30June2006,thereisareceivabletothe
Companyfromthejointventureof$174,000(2005:$27,000).
TheGrouphasajointventurewithQuotableValueLimited
andNiuPacificLimited.Alltransactionswerecarriedoutona
commercialandarm’slengthbasis.Thevalueofsalestothis
partywas$19,000(2005:$20,000).At30June2006,there
isareceivabletotheCompanyfromthejointventureof
$22,000(2005:$22,000).
TheGrouphasajointventurewithMeatVisionLimited.All
transactionswerecarriedoutonacommercialandarm’s
lengthbasis.Thevalueofsalestothispartywas$297,000
(2005:$315,000).At30June2006,thereisareceivabletothe
Companyfromthejointventureof$114,000(2005:$231,000).
TheGrouphasajointventurewithNationalInstituteofWater
andAtmosphericResearchLimited.Alltransactionswere
carriedoutonacommercialandarm’slengthbasis.Thevalue
ofsalestothispartywas$888,000(2005:$444,000).
TheGroupundertakesmanytransactionswithstate-owned
enterprises,governmentdepartments,otherCrownentities
andotherCrownResearchInstitutes.Thesetransactions
arecarriedoutonacommercialandarm’slengthbasisand
itisnotconsideredthattheserequirerelatedpartydisclosure.
9. FINANCIAl INSTRuMENTS
Credit risk
ThefinancialinstrumentswhichexposetheCompanytocredit
riskareprincipallybankbalances,shortterminvestmentsand
accountsreceivable.TheCompanymonitorscreditriskon
anongoingbasis.Bankbalancesandshortterminvestments
areheldwithNewZealandregisteredbanksinaccordance
withtheCompany’streasurypolicy.Aprovisionfordoubtful
debtsismaintainedinrespectofaccountsreceivableandthis
isreassessedonaregularbasis.Nocollateralisheldbythe
Companyinrespectofbankbalances,shortterminvestments
oraccountsreceivable.TheCompanyisnotexposedto
anyconcentrationsofcreditriskotherthanfromtheCrown
andEQC.
Currency risk
TheCompanyreducesitsexposuretocurrencyriskthrough
theuseofforwardexchangecontracts.Therewerenoforward
exchangecontractsat30June2006(2005:NIL).
Interest rate risk
ItisCompanypolicytoensureinterestrateexposureis
maintainedonafloatingratebasis.Inadditiontothis,
managementmonitorsthelevelofinterestratesonanongoing
basisand,fromtimetotime,willlockinfixedratesonthenext
floatingresetwhentheyconsiderthatinterestratesmayrise.
Theinterestrateonthetermloanissetoutinnote7.
Fair values
Therewerenomaterialdifferencesbetweenthefairvalue
andcarryingamountsoffinancialinstrumentsat30June2006
and30June2005.
NOTES TO AND FORMING PART OF ThE FINANCIAL STATEMENTS CONTINUED
51
GNS SCIENCE ANNUAL REPORT 2006
10. INvESTMENTS
Subsidiary Balancedate Principalactivity
IsoscanLimited 30June 50%interestinTrueViewunincorporatedjointventure
developingandsellingnon-invasivescanningtechnology
IsoscanFoodLimited 30June 50%interestinMeatVisionLimitedjointventuredeveloping
andsellingnon-invasivescanningtechnology
GeologicalSurveys(NZ)Limited 30June 45%interestinPropertyInsightunincorporatedjointventure
sellingpropertydata
GeologicalRiskLimited 30June 50%interestinRiskscapeNZunincorporatedjointventure
undertakinghazardassessmentresearch
IncludedintheGroupaccountsistheGroup’sshareofthejointventuresasfollows:
2006 2005
$000 $000
Operatingprofitaftertaxation 18 7
Totalassets 352 273
Totalliabilities 215 201
Therearenocontingentliabilitiesinanyoftheabovejointventures.
11. RECONCIlIATION OF SuRPluS AFTER TAxATION TO STATEMENT OF CASH FlOwS
Group Group Company Company 2006 2005 2006 2005 $000 $000 $000 $000
Surplusaftertaxation 1,045 1,208 1,027 1,201
Adjust non cash items:
Depreciation 3,079 2,883 3,033 2,849
Futureincometaxliability 188 77 141 77
Lossonsaleofassets 245 20 245 20
Noncurrentprovision 16 52 16 52
4,573 4,240 4,462 4,199
Add/(less) movements in working capital items:
Accountsreceivableandprepayments (862) (158) (850) (189)
Currentliabilities 2,283 (766) 2,269 (872)
Workinprogressanddevelopmentprojects (103) (943) 43 (837)
Taxationrefund (492) 90 (501) 83
826 (1,777) 961 (1,815)
Lessmovementincurrentliabilitiesclassifiedasinvestingorfinancingactivities (300) (409) (300) (409)
Netcashflowfromoperatingactivities 5,099 2,054 5,123 1,975
52
GNS SCIENCE ANNUAL REPORT 2006
12. COMMITMENTS AND CONTINGENCIES
GROuP AND COMPANy
COMMITMENTS
2006 2005
Operatingleasecommitments: $000 $000
Withinoneyear 124 187
Betweenoneandtwoyears 35 41
Betweentwoandthreeyears 26 35
Betweenthreeandfouryears 2 26
Fiveyearsandover 1 3
188 292
Contractedcapitalcommitments 1,281 5,094
CONTINGENT lIABIlITIES
TheCompanyhasnocontingentliabilitiesinrelationtopotentiallegalclaimsthatmaybemadeagainsttheCompany(2005:$52,500).
13. PROvISION FOR EMPlOyEE ENTITlEMENTS
RETIREMENT lEAvE Group Group Company Company 2006 2005 2006 2005 $000 $000 $000 $000
Balanceatbeginningofyear 445 443 445 443
Additionalprovisionrecognised 11 13 11 13
Amountutilised (31) (11) (31) (11)
425 445 425 445
FuTuRE lONG SERvICE lEAvE
Balanceatbeginningofyear 443 393 443 393
Effectofdiscounting (5) 16 (5) 16
Chargefortheyear 41 34 41 34
479 443 479 443
Theaboveprovisionsareaffectedbyanumberofestimates,includingtheexpectedemploymentperiodofemployeesandthetiming
ofemployeesutilisingthebenefits.
NOTES TO AND FORMING PART OF ThE FINANCIAL STATEMENTS CONTINUED
53
GNS SCIENCE ANNUAL REPORT 2006
14. COllECTIONS
TheCompanyownsvariouscollectionsthatareanintegral
partoftheresearchworkundertakenbytheCompany.
Thesecollectionsarehighlyspecialisedandthereisnoreliable
basisforestablishingavaluation.Theyhavethereforenot
beenvaluedforfinancialreportingpurposes.Thetwomajor
collectionsare:
• theNationalPaleontologicalCollection
• theNationalPetrologyReferenceCollection.
15. SuBSEquENT EvENTS TO BAlANCE DATE
SubsequenttobalancedateIsoscanLimited,asubsidiary
ofGNSScience,enteredintoanagreementwithitsjoint
venturepartnertoendtheTrueViewjointventure.Theactivities
previouslyundertakenbythejointventurewillbeassumed
byIsoscanLimitedwhichwillacquiretheinventoryheldby
thejointventure.
16. ADOPTION OF INTERNATIONAl FINANCIAl
REPORTING STANDARDS
InDecember2002theNewZealandAccountingStandards
ReviewBoard(ASRB)announcedthatInternationalFinancial
ReportingStandards(IFRS)wouldapplytoallNewZealand
entitiesforfinancialperiodscommencingonorafter1January
2007.Entitiesalsohavetheoptionofvoluntaryearlyadoption
from1January2005.On24November2004theASRB
approvedthestableplatformofNewZealandEquivalentsto
InternationalFinancialReportingStandards(NZIFRS),which
includescertainadaptationstoIFRStoreflectNewZealand
circumstances.
TheGrouphasbegunreviewingitsaccountingpoliciesand
financialreportingtocomplywithNZIFRS,commencingwith
animpactassessmenttoisolatekeyareasthatwillbeimpacted
bythetransitiontoNZIFRS.
AstheGrouphasyettofinaliseitsaccountingpoliciesunder
NZIFRS,theadjustmentsthatwillberequiredtothefinancial
statementsonadoptionofNZIFRSareyettobequantified
withanydegreeofcertainty.TheGrouphasdeterminedthatit
willpublishitsfirstsetofannualfinancialstatementsprepared
underNZIFRSfortheyearending30June2008.
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GNS SCIENCE ANNUAL REPORT 2006
TheBoardandmanagementareresponsibleforthepreparation
oftheannualfinancialstatementsandthejudgementsused
therein.
TheBoardandmanagementareresponsibleforestablishing
andmaintainingasystemofinternalcontroldesignedtoprovide
reasonableassurancesastotheintegrityandreliabilityofthe
financialreporting.
IntheopinionoftheBoardandmanagement,theannual
financialstatementsforthefinancialyearfairlyreflectthe
financialpositionandoperationsoftheGroup.
CON ANASTASIOU Chairman
ALEXANDER MALAhOFF ChiefExecutive
23August2006
STATEMENT OF RESPONSIBILITY
55
GNS SCIENCE ANNUAL REPORT 2006
To the readers of the Institute of Geological and Nuclear
Sciences limited and Group’s Financial Statements for
the year ended 30 June 2006.
TheAuditor-GeneralistheauditoroftheInstituteofGeological
andNuclearSciencesLimited(the“Company”)andGroup.
TheAuditor-Generalhasappointedme,GRMitchell,using
thestaffandresourcesofDeloitte,tocarryouttheauditofthe
financialstatementsoftheCompanyandGroup,onhisbehalf,
fortheyearended30June2006.
unqualified Opinion
Inouropinion:
• ThefinancialstatementsoftheCompanyandGrouponpages43to53:
– complywithgenerallyacceptedaccountingpractice inNewZealand;and
– giveatrueandfairviewof: – theCompanyandGroup’sfinancialpositionasat
30June2006;and – theresultsofoperationsandcashflowsfortheyear
endedonthatdate.• BasedonourexaminationtheCompanyandGroupkept
properaccountingrecords.
Theauditwascompletedon23August2006,andisthedate
atwhichouropinionisexpressed.
Thebasisofouropinionisexplainedbelow.Inaddition,
weoutlinetheresponsibilitiesoftheBoardofDirectorsand
theAuditor,andexplainourindependence.
Basis of Opinion
WecarriedouttheauditinaccordancewiththeAuditor-General’s
AuditingStandards,whichincorporatetheNewZealandAuditing
Standards.
Weplannedandperformedtheaudittoobtainalltheinformation
andexplanationsweconsiderednecessaryinordertoobtain
reasonableassurancethatthefinancialstatementsdidnothave
materialmisstatements,whethercausedbyfraudorerror.
Materialmisstatementsaredifferencesoromissionsofamounts
anddisclosuresthatwouldaffectareader’soverallunderstanding
ofthefinancialstatements.Ifwehadfoundmaterialmisstate-
mentsthatwerenotcorrected,wewouldhavereferredtothem
inouropinion.
Theauditinvolvedperformingprocedurestotesttheinformation
presentedinthefinancialstatements.Weassessedtheresults
ofthoseproceduresinformingouropinion.
Auditproceduresgenerallyinclude:
• determiningwhethersignificantfinancialandmanagement
controlsareworkingandcanbereliedontoproduce
completeandaccuratedata;
• verifyingsamplesoftransactionsandaccountbalances;
• performinganalysestoidentifyanomaliesinthereporteddata;
• reviewingsignificantestimatesandjudgementsmade
bytheBoardofDirectors;
• confirmingyear-endbalances;
• determiningwhetheraccountingpoliciesareappropriate
andconsistentlyapplied;and
• determiningwhetherallfinancialstatementdisclosures
areadequate.
Wedidnotexamineeverytransaction,nordoweguarantee
completeaccuracyofthefinancialstatements.
Weevaluatedtheoveralladequacyofthepresentationof
informationinthefinancialstatements.Weobtainedallthe
informationandexplanationswerequiredtosupportour
opinionabove.
Responsibilities of the Board of Directors and the Auditor
TheBoardofDirectorsisresponsibleforpreparingfinancial
statementsinaccordancewithgenerallyacceptedaccounting
practiceinNewZealand.Thosefinancialstatementsmustgive
atrueandfairviewofthefinancialpositionoftheCompanyand
Groupasat30June2006.Theymustalsogiveatrueandfair
viewoftheresultsofoperationsandcashflowsfortheyear
endedonthatdate.TheBoardofDirectors’responsibilities
arisefromtheCrownResearchInstitutesAct1992,thePublic
FinanceAct1989andtheFinancialReportingAct1993.
Weareresponsibleforexpressinganindependentopinionon
thefinancialstatementsandreportingthatopiniontoyou.
Thisresponsibilityarisesfromsection15ofthePublicAuditAct
2001,section21(1)oftheCrownResearchInstitutesAct1992
andthePublicFinanceAct1989.
Independence
Whencarryingouttheauditwefollowedtheindependence
requirementsoftheAuditor-General,whichincorporatethe
independencerequirementsoftheNewZealandInstituteof
CharteredAccountants.
Inadditiontotheauditwehavecarriedoutanimpactanalysis
regardingtheCompanyandGroup’simplementationof
NewZealandEquivalentstoInternationalFinancialReporting
Standards.Otherthantheauditandthisassignment,wehave
norelationshipwithorinterestsintheCompanyoranyofits
subsidiaries.
G R MITChELL
Partner, Deloitte
on behalf of the Auditor-General, Wellington, new Zealand
REPORT OF ThE AUDITOR-GENERAL
GNS SCIENCE ANNUAL REPORT 2006
PRINCIPAl lOCATION AND REGISTERED OFFICE
1FairwayDriveAvalonPOBox30-368LowerHutt5010NewZealandTel:+6445701444Fax:+6445704600Email:[email protected]
OTHER lOCATIONS
wairakei Research Centre114KaretotoRoadWairakeiPrivateBag2000Taupo3352NewZealandTel:+6473748211Fax:+6473748199Email:[email protected]
National Isotope Centre30GracefieldRoadPOBox31312LowerHutt5040NewZealandTel:+6445701444Fax:+6445704657
Dunedin Research Centre764CumberlandStreetPrivateBag1930Dunedin9054NewZealandTel:+6434774050Fax:+6434775232Email:[email protected]
GNS SCIENCE OFFICE lOCATIONS
DIRECTORS
Con Anastasiou(Chairman)
Richard westlake(DeputyChairman)(Retired30June2006)
Ross Butler(Appointed1July2006)
Ellen Förch
Allan Freeth
Sarah Schiess
Brenda Tahi
Mike williams
ExECuTIvE
Chief ExecutiveDrAlexanderMalahoff
General ManagerNatural Hazards GroupDrTerryWebb
General ManagerNatural Resources GroupDrMichaelIsaac
General Manager National Isotope CentreDrFrankBruhn
Chief Financial OfficerGrahamClarke
General Manager Business Development & Information ServicesRobJohnston
General Manager Human ResourcesJennifervanHunen
General Manager ResearchDrRobinFalconer
General Manager StrategyDrDesmondDarby
Manager Ma-ori StrategyMurrayHemi
MARKETING MANAGERS
GeohazardsDrNoelTrustrumEmail:[email protected]:[email protected]
HydrocarbonsDrDavidDarbyEmail:[email protected]
Non-invasive Scanning TechnologiesJoeManningEmail:[email protected]
Groundwater and GeothermalMelissaClimoEmail:[email protected]
COMMuNICATIONS MANAGER
John CallanTel:+6445704732Mob:+64274402571Email:[email protected]
BANKERS
The National Bank of New Zealand limited
AuDITOR
Graeme Mitchell DeloitteOnbehalfoftheAuditor-General
SOlICITORS
Minter Ellison Rudd watts
56 DIRECTORY
GNS Science on the web:www.gns.cri.nz
PrincipallocationandNationalIsotopeCentre
DunedinResearchCentre
WairakeiResearchCentre