The NZDF’s Financial Statements for the year ending 30 June 2008 are the first financial statements that comply with NZ IFRS. The NZDF has applied NZ IFRS 1 First–time Adoption of NZ IFRS in preparing these financial statements. The NZDF‘s transition date is 1 July 2006 for the opening balance sheet and the NZDF adopted NZ IFRS from 1 July 2007.
Statement of Financial Performance Changes to Comparatives
The following Statement of Financial Performance shows the changes in the NZDF’s net surplus, resulting from the transition from previous NZ GAAP to NZ IFRS for the year ended 30 June 2007.
| |
Notes |
30 Jun 07
Previous GAAP
($000) |
30 Jun 07
Change
($000) |
30 Jun 07
NZ IFRS
($000) |
| Income |
| Crown |
|
1,806,812 |
– |
1,806,812 |
| Departmental |
|
9,490 |
– |
9,490 |
| Other |
|
6,586 |
– |
6,586 |
| Gains |
|
1,765 |
– |
1,765 |
| Interest |
|
1,263 |
– |
1,263 |
| Total Income |
|
1,825,916 |
– |
1,825,916 |
| Expenditure |
| Personnel cost |
a. |
649,744 |
(22) |
649,722 |
| Operating costs |
b. |
532,538 |
18,164 |
550,702 |
| Depreciation and amortisation |
|
290,608 |
– |
290,608 |
| Capital charge |
|
346,845 |
– |
346,845 |
| Other operating expenses |
|
92,149 |
– |
92,149 |
| Total Expenses |
|
1,911,884 |
18,142 |
1,930,026 |
| Net Surplus / (Deficit) |
|
(85,968) |
18,142 |
(104,110) |
Statement of Financial Position Changes to Comparatives
The following Statement of Financial Position shows the changes in equity, resulting from the transition from previous NZ GAAP to NZ IFRS as at 30 June 2007.
| |
Notes |
30 Jun 07
Previous GAAP
($000) |
30 Jun 07
Change
($000) |
30 Jun 07
NZ IFRS
($000) |
| Assets |
| Current Assets |
| Cash and cash equivalents |
|
129,829 |
(768) |
129,061 |
| Debtors and other receivables |
c. |
15,723 |
(175) |
15,548 |
| Debtor – Crown |
|
137,788 |
– |
137,788 |
| Prepayments |
d. |
35,997 |
(5,917) |
30,080 |
| Inventories |
e. |
242,533 |
(158,916) |
83,617 |
| Total Current Assets |
|
561,870 |
(165,776) |
396,094 |
| Non – Current Assets |
| Property, Plant and Equipment |
f. |
4,394,785 |
(15,801) |
4,378,984 |
| Intangible Assets |
f. |
– |
15,808 |
15,808 |
| Inventories |
e. |
– |
157,183 |
157,183 |
| Total Non – Current Assets |
|
4,394,785 |
157,190 |
4,551,975 |
| Total Assets |
|
4,956,655 |
(8,586) |
4,948,069 |
| Liabilities |
| Current Liabilities |
| Creditors and other payables |
g. |
158,057 |
4,501 |
162,558 |
| Repayment of surplus |
|
6,182 |
– |
6,182 |
| Provisions |
|
5,753 |
– |
5,753 |
| Employee entitlements |
|
21,611 |
– |
21,611 |
| Total Current Liabilities |
|
191,603 |
4,501 |
196,104 |
| Non – Current Liabilities |
| Employee entitlements |
h. |
47,953 |
1,491 |
49,444 |
| Total Non – Current Liabilities |
|
47,953 |
1,491 |
49,444 |
| Total Liabilities |
|
239,556 |
5,992 |
245,548 |
| Net Assets |
|
4,717,099 |
(14,578) |
4,702,521 |
| Taxpayers’ funds |
| General funds |
b. & h. |
3,584,961 |
(14,578) |
3,570,383 |
| Property, Plant and Equipment revaluation reserves |
|
1,132,138 |
– |
1,132,138 |
| Total Taxpayers’ funds |
|
4,717,099 |
(14,578) |
4,702,521 |
| Total Liabilities and Taxpayers’ funds |
4,956,655 |
(8,586) |
4,948,069 |
Explanatory notes for transition to NZ IFRS
Foreign Currency Transactions
The major reasons for changes to the accounting treatment of transactions are that, previously under NZ GAAP, the NZDF used the weighted average exchange rates of all unexpired forward exchange contracts for a currency to value transactions and, only foreign exchange bank account balances in the Statement of Financial Position were revalued using the mid point exchange rate ruling at balance date.
NZ IFRS require foreign currency transactions to be valued at the mid point exchange rate on the date of the transaction and all balances in foreign exchange in the Statement of Financial Position to be valued at the mid point exchange rate ruling at balance date.
NZ IFRS also require foreign exchange gains and losses to be separated into realised and unrealised.
a. Personnel Cost
Personnel costs have decreased by $0.022 million due to the change in valuation of foreign currency personnel payments.
b. Operating Costs
Realised foreign exchange losses increased by $2.854 million for the year ending 30 June 2007 due to the revaluation of foreign exchange transactions to the mid point exchange rate applying on the date of the transaction and foreign exchange contracts to the mid point exchange rate applying on the day of maturity.
Unrealised foreign exchange variances increased by $16.742 million due to the initial revaluation of forward exchange contracts and, Foreign Military Sales through the Federal Reserve Bank account in the United States of America, using the mid point exchange rate at balance date.
In addition operating costs decreased by $1.432 million due to the change in valuation of foreign currency purchases of goods and services.
The total changes to operating costs shown in the Statement of Financial Performance are $18.164 million.
c. Debtors and Other Receivables
Debtors and Receivables have been decreased by $0.175 million due to the change in valuation of foreign currency sales of goods and services.
d. Prepayments
NZDF procures military supplies through the United States Department of Defence Foreign Military Sales programme. The Federal Reserve Bank account holds deposits on account of these procurements. The prepayment has decreased by $5.917 million due to the calculation of the unrealised foreign exchange loss at balance date.
e. Inventories
All inventory was previously classified as a current asset as at 1 July 2006. NZ IFRS requires that inventory which will be used over the next 12 months is reported as a current asset and the balance as a non – current asset. Historical analysis of inventory holdings shows that 65% or $157.183 million of the total inventory value is non current.
The current inventory value has decreased by $2.199 million due to the change in valuation of foreign currency transactions.
f. Property, Plant and Equipment and Intangible Assets
Previously computer software was included as Property, Plant and Equipment. NZ IFRS require computer software to be disclosed separately as an intangible asset. Computer software had a Net Book Value of $15.808 million at 30 June 2007.
g. Creditors and Other Payables
Creditors and other payables are increased by $4.501m due to the change in valuation of foreign currency purchases of goods and services.
h. Employee Entitlements
New requirements under NZ IFRS relating to the measurement of the ACC Accredited Employer Programme and sick leave liabilities for civilian personnel have resulted in a $1.491 million increase in the provision for employee entitlements.
The ACC Accredited Employer Programme was not recognised under previous NZ GAAP. This programme is accounted for as an insurance contract under NZ IFRS 4 Insurance Contracts. The NZDF is required to recognise the present value of expected future payments. The initial recognised liability for this was $1.100 million based on an actuarial calculation.
Sick leave was not recognised as a liability under previous NZ GAAP. The NZ IFRS 19 Employee Benefits requires NZDF to recognise a liability for civilian sick leave. The NZDF has calculated the liability, based on an actuarial calculation, for civilian personnel that would use in excess of one year’s sick leave entitlement to cover future absences. The liability for civilian sick leave is $0.391 million.
Statement of Cash Flows
There have been no material adjustments to the Statement of Cash Flows on transition to NZ IFRS.
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