Notes to the Financial Statements for the Year Ended 30 June 2003
1 Revenue Crown
Revenue Crown represents services provided to the Crown by the Ministry of Economic Development.
2 Revenue Other
| 2003 | 2002 |
| $000 | $000 |
| | |
| Fees and fines | 43,133 | 44,601 |
| Electrical levies | 3,757 | 3,783 |
| Inter-departmental revenue | 997 | 1,337 |
| Petroleum fuels monitoring levy | 1,311 | 1,196 |
| Rental from sub-let of office space | 257 | 405 |
| Gas levies | 796 | 827 |
| Sale of publications | 44 | 69 |
| Miscellaneous | 325 | 288 |
| Total Other Revenue | 50,620 | 52,506 |
For further breakdown of fees and fines, see information under each output class.
3 Interest Revenue
Until October 2001 the Ministry invested surplus cash on term deposit with the New Zealand Debt Management Office (NZDMO) and earned interest at variable rates. From November 2001 this facility has ceased to operate and no investments have been made.
4 Personnel
| 2003 | 2002 |
| $000 | $000 |
| | |
| Salaries and wages | 41,251 | 40,558 |
| ACC levy | 308 | 298 |
| Pension expenses - GSF | 558 | 562 |
| Recruitment costs | 837 | 763 |
| Fringe benefit tax | 25 | 40 |
| Total Personnel | 42,979 | 42,221 |
5 Operating
| 2003 | 2002 |
| $000 | $000 |
| | |
| Rental and operating lease costs | 6,360 | 7,397 |
| Professional services | 6,445 | 4,548 |
| Technical services | 3,655 | 3,966 |
| Travel - domestic and overseas | 2,527 | 2,770 |
| Premises costs6 | 1,802 | 1,809 |
| Staff training | 773 | 711 |
| Maintenance and repairs of fixed assets | 1,337 | 1,382 |
| Audit fees to auditors for audit of the financial statements | | |
| Audit New Zealand | 158 | 160 |
| Other services provided by auditors | | |
| Audit New Zealand | 8 | -- |
| Fixed asset write-offs | 14 | -- |
| Entertainment expenses | 164 | 163 |
| Bad debts written off | 45 | 41 |
| Doubtful debts provisions adjustments | (161) | -- |
| Other operating costs | 17,390 | 18,720 |
| Total Operating | 40,517 | 41,667 |
6 Restructuring
| 2003 | 2002 |
| $000 | $000 |
| | |
| Review of Radio Spectrum Management Group | 2,326 | 267 |
| Review of Insolvency Group | 347 | -- |
| Review of Electrical Workers Licensing Group | 76 | 250 |
| Review of Corporate IM&T Group | 30 | -- |
| Review of Corporate Finance Accounts Group | -- | 44 |
| Review of Companies Office Services | -- | 31 |
| Transition of Government Superannuation Fund to Crown entity | -- | (25) |
| Total Restructuring | 2,779 | 567 |
7 Depreciation
| 2003 | 2002 |
| $000 | $000 |
| | |
| Buildings | 2 | 2 |
| Leasehold improvements | 547 | 562 |
| Computer equipment | 3,357 | 3,017 |
| Furniture | 412 | 463 |
| Office equipment | 227 | 270 |
| Test equipment | 245 | 244 |
| Motor vehicles | 161 | 245 |
| Total Depreciation | 4,951 | 4,803 |
8 Capital Charge
The Ministry pays a capital charge to the Crown on its taxpayers’ funds as at 31 December and 30 June each year. The capital charge rate for the year ended 30 June 2003 was 8.5 percent (30 June 2002, 9 percent).
9 Taxpayers’ Funds
Taxpayers’ funds comprises two components:
| 2003 | 2002 |
| $000 | $000 |
| General Funds | | |
| General funds as at 1 July | 2,871 | 2,399 |
| Net operating surplus | 2,774 | 4,249 |
| 5,645 | 6,648 |
| Provision for repayment of surplus to the Crown | (2,774) | (4,249) |
| Capital contribution from the Crown for the upgrade of the Companies Office Electronic Register (REGIS) to a web browser based system | 586 | -- |
| Capital contribution from the Crown for the development of a Personal Property Securities Register | -- | 627 |
| Capital withdrawal associated with establishment of the Government Superannuation Fund Authority as a stand-alone Crown entity from 1 October 2001 | -- | (155) |
| Total Taxpayers’ Funds as at 30 June | 3,457 | 2,871 |
10 Debtors and Receivables
| 2003 | 2002 |
| $000 | $000 |
| | |
| Third party debtors | 4,166 | 4,140 |
| Less: Provision for doubtful debts | (151) | (312) |
| Net | 4,015 | 3,828 |
| Inter-departmental debtors | 100 | 1 |
| Total Debtors and Receivables | 4,115 | 3,829 |
11 Fixed Assets
(All figures in $000s)
| Cost or | Accumulated | Net Carrying | Cost or | Accumulated | Net Carrying |
| Valuation | Depreciation | Amount | Valuation | Depreciation | Amount |
| as at | as at | as at | as at | as at | as at |
| 30 June 2003 | 30 June 2003 | 30 June 2003 | 30 June 2002 | 30 June 2002 | 30 June 2002 |
| | | | | | |
| Buildings | 38 | 31 | 7 | 38 | 29 | 9 |
| Leasehold improvements | 2,836 | 1,120 | 1,716 | 2,151 | 630 | 1,521 |
| Computer equipment | 18,019 | 12,821 | 5,198 | 17,920 | 11,451 | 6,469 |
| Furniture | 3,515 | 2,730 | 785 | 3,461 | 2,617 | 844 |
| Office equipment | 2,236 | 1,672 | 564 | 2,137 | 1,612 | 525 |
| Test equipment | 3,166 | 2,016 | 1,150 | 3,240 | 1,927 | 1,313 |
| Motor vehicles | 1,470 | 895 | 575 | 1,672 | 1,028 | 644 |
| Work in progress | 1,606 | - | 1,606 | 1,127 | - | 1,127 |
| Total Fixed Assets | 32,886 | 21,285 | 11,601 | 31,746 | 19,294 | 12,452 |
Leasehold improvements are stated at net current values determined by an independent registered valuer. A revaluation of all leasehold improvements was completed by Lockwood & Associates on 30 June 2001. Leasehold improvements are revalued every three years.
All other fixed assets costing $1,000 (excluding GST) or more are capitalised and recorded at historical cost.
12 Creditors and Payables
| Note | 2003 | 2002 |
| | $000 | $000 |
| Trade creditors | | 3,540 | 3,200 |
| Levies refundable | | 476 | 553 |
| Accrued operating expenses | | 7,752 | 6,677 |
| Provisions | 13 | 126 | 685 |
| GST payable | | 338 | 405 |
| | 12,232 | 11,520 |
| Accruals for fixed assets | | 198 | 131 |
| Total Creditors and Payables | | 12,430 | 11,651 |
13 Provisions
| 2003 | 2002 |
| $000 | $000 |
| Restructuring provision | | |
| Opening balance | 685 | 941 |
| Additional provisions made during the year | -- | 560 |
| Charged against the provision in the year | (559) | (816) |
| Unused amounts reversed during the year | -- | -- |
| Total Provisions | 126 | 685 |
The restructuring provision arises from various organisational reviews being conducted within the Ministry.
14 Unearned Income
| 2003 | 2002 |
| $000 | $000 |
| | |
| Radio operations | 5,824 | 6,153 |
| Energy inspection | 725 | 527 |
| Crown Minerals | 164 | -- |
| Other unearned income | 1 | 22 |
| Total Unearned income | 6,714 | 6,702 |
Unearned income for Radio Operations relates to annual licence fees invoiced at the beginning of the period to which they relate and are received in advance of being recognised as income. Energy Inspection unearned income includes income received in advance for electrical workers’ practising licences. Crown Minerals unearned income relates to income received in advance for annual licences and permits.
15 Provision for Employee Entitlements
| 2003 | 2002 |
| $000 | $000 |
| | |
| Non-current liabilities | | |
| Retirement and long service leave | 2,070 | 2,071 |
| Total non-current portion | 2,070 | 2,071 |
| Current liabilities | | |
| Retirement and long service leave | 414 | 648 |
| Annual leave | 1,990 | 2,254 |
| Total current portion | 2,404 | 2,902 |
| Total Provision for employee entitlements | 4,474 | 4,973 |
The current liability represents the amount due for potential settlement within the next 12 months.
16 Provision for Payment of Net Surplus
| 2003 | 2002 |
| $000 | $000 |
| | |
| Net surplus/(deficit) | 2,774 | 4,249 |
| Add: Other expenses (not for production of outputs) | -- | -- |
| Total Provision for payment of net surplus | 2,774 | 4,249 |
17 Related Parties
The Ministry is a wholly owned entity of the Crown. The Government significantly influences the roles of the Ministry as well as being a major source of its revenue.
The Ministry enters into numerous transactions with other government departments, Crown agencies and state-owned enterprises on an arm’s-length basis. These transactions are not considered to be related party transactions.
Apart from those transactions described above, the Ministry has not entered into any related party transactions.
18 Financial Instruments
The Ministry is party to financial instrument arrangements as part of its everyday operations. These include instruments such as bank balances, investments, accounts receivable, trade creditors and foreign currency forward contracts.
Credit Risk
Credit risk is the risk that a third party will default on its obligations to the Ministry, causing the Ministry to incur a loss. In the normal course of its business, the Ministry incurs credit risk from trade debtors, and transactions with financial institutions.
The Ministry does not require any collateral or security to support financial instruments with financial institutions that the Ministry deals with as these entities have high credit ratings. For its other financial instruments, the Ministry does not have significant concentrations of credit risk.
Fair Value
The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.
Currency Risk
Currency risk is the risk that debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates.
The Ministry uses foreign currency forward contracts to manage foreign exchange exposures. All individual payments above the equivalent of NZ$50,000 must be made via foreign currency forward contracts. The maximum exposure for all other foreign exchange transactions that the Ministry may have at any one time is NZ$250,000.
Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. This could impact on the return on investments or the cost of borrowing. The Ministry has no significant exposure to interest rate risk on its financial instruments.
Under section 46 of the Public Finance Act the Ministry cannot raise a loan without Minister of Finance approval and no such loans have been raised. Accordingly, there is no interest rate exposure for funds borrowed.
19 Discontinued Activities
There were no discontinued activities for the 2002/2003 financial year.
20 Events after Balance Date
No events have occurred between the balance date and date of signing these financial statements that materially affect the financial statements.
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