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Financial Statements

Statement of Financial Performance

For the year ended 30 June 2007

Actual June 2006 $(000)		Notes	Main Estimates June 2007 $(000)	Supp Estimates June 2007 $(000)	Continuing activities actual June 2007 $(000)	Discontinued activities actual June 2007 $(000)	Total Actual June 2007 $(000)
	Revenue
156,355	Crown		148,101	183,775	153,706	25,624	179,330
80,157	Other	1	84,379	95,987	30,180	55,586	85,766
236,512	Total operating revenue		232,480	279,762	183,886	81,210	265,096
	Expenditure
119,834	Personnel costs	2	121,943	129,462	85,998	43,816	129,814
108,134	Operating costs	3	97,066	137,010	84,133	35,435	119,568
8,704	Depreciation	4	11,560	11,480	8,660	2,192	10,852
1,241	Capital charge	5	1,911	1,810	1,639	168	1,807
36	Other expenses	6	60	60	2	-	2
-	Revaluation losses	7	-	-	176	-	176
237,949	Total expenses		232,540	279,822	180,608	81,611	262,219
(1,437)	Net surplus/(deficit)		(60)	(60)	3,278	(401)	2,877

Discontinued Activities

On 28 May 2007, Cabinet announced the separation of the New Zealand Food Safety Authority (NZFSA) from MAF and its establishment as a new Public Service department on 1 July 2007 (see note 22 on page 83 for further details).

The accompanying accounting policies and notes form part of these financial statements.

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Statement of Movement in Taxpayers' Funds

For the year ended 30 June 2007

Actual June 2006 $(000)		Notes	Main Estimates June 2007 $(000)	Supp Estimates June 2007 $(000)	Actual June 2007 $(000)
15,512	Taxpayers’ funds as at 1 July		25,513	24,092	24,092
(1,437)	Net surplus/(deficit)		(60)	(60)	2,877
-	Increase/(decrease) in revaluation reserves	7	-	1,400	(111)
(1,437)	Total recognised revenues and expenses for the year		(60)	1,340	2,766
(14)	Provision for repayment of surplus to the Crown	18	-	-	(2,879)
10,626	Capital injections	7	2,970	2,970	2,970
(595)	Capital withdrawal		(595)	(595)	(595)
24,092	Taxpayers’ funds as at 30 June		27,828	27,807	26,354

The accompanying accounting policies and notes form part of these financial statements.

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Statement of Financial Position

As at 30 June 2007

Actual June 2006 $(000)		Notes	Main Estimates June 2007 $(000)	Supp Estimates June 2007 $(000)	Actual June 2007 $(000)
	TAXPAYERS’ FUNDS
23,730	General funds	7	27,510	26,045	26,103
362	Revaluation reserve	7	318	1,762	251
24,092	Total taxpayers’ funds		27,828	27,807	26,354
	Represented by:
	CURRENT ASSETS
10,908	Cash		11,247	9,243	11,601
15,041	Debtors and receivables	8	11,436	11,200	12,160
3,397	Inventory	9	3,400	3,400	3,778
852	Prepayments		400	750	1,392
-	Property intended for sale	10	-	-	700
30,198	Total current assets		26,483	24,593	29,631
	NON-CURRENT ASSETS
2,792	Debtors and receivables	8	-	-	3,580
47,530	Property, plant and equipment	11	50,553	56,767	54,169
50,322	Total non-current assets		50,553	56,767	57,749
80,520	Total assets		77,036	81,360	87,380
	CURRENT LIABILITIES
22,529	Creditors and payables	12	20,281	20,103	18,678
8,817	Employee entitlements	13	8,800	9,000	9,798
11,060	Unearned revenue	14	7,940	9,500	11,878
405	Provisions	15	650	300	2,536
1,921	Finance lease liability	16	2,095	2,200	2,953
14	Provision for repayment of surplus to the Crown	18	-	-	2,879
44,746	Total current liabilities		39,766	41,103	48,722
	NON-CURRENT LIABILITIES
7,681	Employee entitlements	13	7,500	7,750	7,836
300	Provisions	15	300	300	300
3,701	Finance lease liability	16	1,642	4,400	4,168
11,682	Total non-current liabilities		9,442	12,450	12,304
56,428	Total liabilities		49,208	53,553	61,026
24,092	Net assets		27,828	27,807	26,354

The accompanying accounting policies and notes form part of these financial statements.

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Statement of Cashflows

For the year ended 30 June 2007

Actual June 2006 $(000)		Notes	Main Estimates June 2007 $(000)	Supp Estimates June 2007 $(000)	Actual June 2007 $(000)
	OPERATING ACTIVITIES
	Cash was provided from:
	Supply of outputs to
153,430	Crown		148,101	188,903	182,450
78,808	Customers		84,429	95,979	85,154
	Cash was applied to:
	Produce outputs
(118,526)	Personnel		(121,493)	(129,210)	(128,678)
(112,249)	Operating		(97,506)	(139,602)	(122,651)
(306)	Net GST received/(paid)		-	113	878
(1,241)	Capital charge		(1,911)	(1,810)	(1,807)
(36)	Other expenses		(60)	(60)	(2)
(120)	Net cash inflow/(outflow) from operating activities	17	11,560	14,313	15,344
	INVESTING ACTIVITIES
	Cash was provided from:
677	Sale of property, plant and equipment		600	650	412
	Cash was disbursed for:
(29,485)	Purchase of property, plant and equipment		(18,086)	(18,989)	(17,424)
(28,808)	Net cash inflow/(outflow) from investing activities		(17,486)	(18,339)	(17,012)
	FINANCING ACTIVITIES
	Cash was provided from:
10,626	Capital injections from the Crown		2,970	2,970	2,970
	Cash was disbursed to:
(3,278)	Payment of surplus to the Crown		(1,230)	(14)	(14)
(595)	Repayment of capital to the Crown		(595)	(595)	(595)
6,753	Net cash inflow/(outflow) from financing activities		1,145	2,361	2,361
(22,175)	Net increase (decrease) in cash held		(4,781)	(1,665)	693
33,083	Add opening cash		16,028	10,908	10,908
10,908	Closing cash		11,247	9,243	11,601

The accompanying accounting policies and notes form part of these financial statements.

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Statement of Commitments

As at 30 June 2007

The Ministry has long-term leases on premises throughout New Zealand. The amounts disclosed below as future commitments are based on the current rental rates. Other operating leases include lease payments for computer hardware, facsimile machines and photocopiers.

Actual June 2006 $(000)		Actual June 2007 $(000)
	Operating Commitments
	Accommodation leases:
7,020	Not later than one year	7,327
6,361	Later than one year and not later than two years	5,794
14,547	Later than two years and not later than five years	16,272
29,653	Later than five years	25,915
57,581	Total accommodation leases	55,308
	Other operating leases:
649	Not later than one year	508
398	Later than one year and not later than two years	254
271	Later than two years and not later than five years	-
1,318	Total other operating leases	762
	Capital commitments
629	Not later than one year	989
-	Later than one year and not later than two years	612
-	Later than two years and not later than five years	611
629	Total capital commitments	2,212
59,528	Total commitments	58,282

The Ministry has also entered into non-cancellable contracts for computer maintenance and support. These non-cancellable contracts totalled $0.800 million as at 30 June 2007 (2006: $3.198 million).

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Statement of Contingent Liabilities

As at 30 June 2007

Actual June 2006 $(000)		Actual June 2007 $(000)
1,462	Legal proceedings	-

The Ministry has a non-quantifiable contingent liability relating to an indemnity given against the remote possibility that the effects of Btk spray may be proven harmful.

The accompanying accounting policies and notes form part of these financial statements.

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Statement of Unappropriated Expenses and Capital Expenditure

For the year ended 30 June 2007

Unappropriated Expenditure June 2006 $(000)		Annual Appropriation June 2007 $(000)	Actual Expenditure June 2007 $(000)	Unappropriated Expenditure June 2007 $(000)
	Vote Biosecurity
	Departmental output expense
812	Quarantine Services	-	-	-

No unappropriated expenditure was incurred in the year ended 30 June 2007.

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Statement of Trust Monies

For the year ended 30 June 2007

Meat Levies Trust Account

The Meat Levies Trust Account holds levy funds received from meat works for the killing of animals that are payable to the Animal Health Board, Meat and Wool New Zealand Ltd and the Pork Industry Board.

June 2006 $(000)	Contribution $(000)	Distribution $(000)	Revenue $(000)	Expenses $(000)	June 2007 $(000)
0	55,925	(55,938)	13	-	-

The accompanying accounting policies and notes form part of these financial statements.

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Statement of Departmental Expenditure and Capital Expenditure

For the year ended 30 June 2007

	Main Estimates June 2007 $(000)	Supp Estimates June 2007 $(000)	Actual Expenditure June 2007 $(000)
VOTE AGRICULTURE AND FORESTRY
Appropriations for output expenses
Agriculture and forestry policy advice	24,808	24,131	22,220
Animal welfare	2,556	2,912	2,908
Administration of indigenous forestry provisions	2,756	2,057	1,855
Climate change	-	3,131	2,124
Contract, grant and asset management	3,452	3,708	3,383
Contestable services	2,000	2,200	2,140
Sub-total	35,572	38,139	34,630
Appropriations for other expenses
Restructuring expenses	60	60	2
Total Vote Agriculture and Forestry	35,632	38,199	34,632
VOTE BIOSECURITY
Appropriations for output expenses
Biosecurity policy	11,484	9,557	9,481
Biosecurity approvals and assurance	2,022	2,121	1,883
Biosecurity enforcement	3,651	4,217	4,053
Biosecurity standards	23,523	24,390	23,945
Biosecurity surveillance and incursion response	24,545	57,207	51,729
Quarantine services	52,766	58,179	55,241
Total Vote Biosecurity	117,991	155,671	146,332
VOTE FOOD SAFETY
Appropriations for output expenses
Food safety policy advice	2,444	2,476	2,456
Regulatory standards	33,969	38,366	33,747
Response to “food safety” emergencies	236	364	364
Systems audit and enforcement	3,866	4,154	3,976
Consultation and food safety information	2,375	2,833	2,821
Regulatory programmes	36,027	37,759	37,715
Total Vote Food Safety	78,917	85,952	81,079
Total all Votes	232,540	279,822	262,043
Permanent Legislative Authority
Capital Expenditure	-	-	21,626

The accompanying accounting policies and notes form part of these financial statements.

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Notes to the Financial Statements

For the year ended 30 June 2007

Note 1: Revenue Other

Actual June 2006 $(000)		Actual June 2007 $(000)
	Statutory fees and charges
17,438	NZFSA regulatory standards	18,354
33,303	Verification services to the animal products industries	35,195
18,134	Quarantine services	20,742
1,787	Other statutory fees and charges	1,591
70,662	Total statutory fees and charges	75,882
	Sale of goods and services
1,615	Discretionary monitoring and inspection services carried out at the border	1,266
2,232	State sector retirement savings scheme recovery from SSC	2,503
738	Laboratory tests	503
879	Facilitation of market access	649
1,978	Administrative services and rental of surplus property	2,235
14	Gain on sale of fixed assets	4
2,039	Other miscellaneous sales	2,724
9,495	Total sale of goods and services	9,884
80,157	Total revenue other	85,766

Note 2: Personnel Costs

Actual June 2006 $(000)		Actual June 2007 $(000)
108,414	Salaries and wages	117,298
2,929	Employer superannuation contributions	2,962
2,081	Annual, retirement and long service leave	1,665
6,410	Other personnel costs	7,889
119,834	Total personnel costs	129,814

Note 3: Operating Costs

Actual June 2006 $(000)		Actual June 2007 $(000)
146	Audit fees for audit of financial statements	153
40	Audit fees for other services provided	22
2,254	Advertising and publicity	1,555
2,698	Consultancy	3,195
64,352	Contracts	74,718
194	Finance lease interest costs	384
8,227	Operating lease rentals	7,454
10,738	Travel	10,862
209	Bad debt write-off	137
-	Fixed asset write-off	37
-	Inventory write-off	275
(54)	Increase/(decrease) in provision for doubtful debts	(222)
19,330	Other operating costs	20,998
108,134	Total operating costs	119,568

Note 4: Depreciation

Actual June 2006 $(000)		Actual June 2007 $(000)
53	Buildings	449
789	Leasehold improvements	1,067
4,412	Plant, equipment and software	5,476
2,279	Leased plant and equipment	2,694
1,171	Motor vehicles	1,166
8,704	Total depreciation	10,852

Note 5: Capital Charge

The Ministry pays a capital charge to the Crown on its taxpayers’ funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2007 was 7.5% (2006: 8%).

Note 6: Other Expenses

Actual June 2006 $(000)		Actual June 2007 $(000)
36	Restructuring expenses	2
36	Total other expenses	2

Note 7: Taxpayers’ Funds

Taxpayers’ funds comprise two components:

Actual June 2006 $(000)		Actual June 2007 $(000)
	General funds
15,194	General funds as at 1 July	23,730
(1,437)	Net operating surplus/(deficit)	2,877
	Capital injections from the Crown for:
2,191	Integrated document management system	1,250
-	Emergency incursion response information systems	1,145
575	Software to map public access rights along water courses	575
7,691	Part acquisition of AgResearch’s Wallaceville campus	-
169	Vessel compliance information system	-
(595)	Capital withdrawal	(595)
(44)	Revaluation reserve reversal on disposal	-
23,744		28,982
(14)	Provision for repayment of surplus to the Crown	(2,879)
23,730	General funds as at 30 June	26,103
	Revaluation Reserve
318	Balance 1 July	362
-	Revaluation losses	(287)
-	Revaluation losses transferred to Statement of Financial Performance	176
44	Revaluation reserve reversal on disposal	-
362	Balance at 30 June	251
	Asset revaluation reserves consist of:
175	Land	100
-	Property intended for sale	151
187	Buildings	-
362	Balance at 30 June	251

Note 8: Debtors and Receivables

Actual June 2006 $(000)		Actual June 2007 $(000)
	Current debtors and receivables
6,132	Trade debtors	6,041
(360)	Less provision for doubtful debts	(138)
5,772	Net trade debtors	5,903
5,128	Crown debtor	1,618
4,028	Accrued revenue	4,639
113	GST owing from Inland Revenue Department	-
15,041	Total current debtors and receivables	12,160
	Non-current debtors and receivables
2,792	Accrued revenue	3,580
17,833	Total debtors and receivables	15,740

Note 9: Inventory

Actual June 2006 $(000)		Actual June 2007 $(000)
	Inventory held for distribution
3,008	Foot-and-mouth vaccine	3,638
44	Tamiflu	44
275	BTK spray	-
3,327	Total inventory held for distribution	3,682
	Inventory held for use
70	Inventory held for use in the provision of goods and services	96
3,397	Total inventory	3,778

Note 10: Property Intended for Sale

Property intended for sale relates to land and buildings at Lincoln which the Ministry plans to sell within the next 12 months.

Note 11: Property, Plant and Equipment

Actual June 2006 $(000)		Actual June 2007 $(000)
	Land
1,561	At valuation – 31 March 2007	1,523
	Buildings
10,067	At valuation – 31 March 2007	9,865
(430)	Accumulated depreciation	(103)
9,637	Buildings – net current value	9,762
	Leasehold improvements
9,251	At cost	9,539
(972)	Accumulated depreciation	(1,988)
8,279	Leasehold improvements – net book value	7,551
	Plant, equipment and software
31,432	At cost	39,269
(13,470)	Accumulated depreciation	(15,141)
17,962	Plant and equipment – net book value	24,128
	Leased plant and equipment
6,186	At capitalised amount	9,224
(515)	Accumulated depreciation	(2,127)
5,671	Leased plant and equipment – net book value	7,097
	Motor vehicles
6,886	At cost	7,088
(2,466)	Accumulated depreciation	(2,980)
4,420	Motor vehicles – net book value	4,108
	Total property, plant and equipment
65,383	At cost, valuation and capitalised amount	76,508
(17,853)	Accumulated depreciation	(22,339)
47,530	Total carrying amount of property, plant and equipment	54,169

Freehold land and buildings have been valued at fair value during March 2007 by an independent registered valuer, DTZ New Zealand Ltd.

Legal ownership of leased plant and equipment remains with the lessor.

Note 12: Creditors and Payables

Actual June 2006 $(000)		Actual June 2007 $(000)
5,669	Trade creditors	3,037
16,860	Accrued expenses	14,876
-	GST payable to Inland Revenue Department	765
22,529	Total creditors and payables	18,678

Note 13: Employee Entitlements

Actual June 2006 $(000)		Actual June 2007 $(000)
	Current
625	Salaries and wages	625
7,779	Annual leave	8,659
353	Long service leave	337
60	Retiring leave	177
8,817	Total current portion	9,798
	Non-current
827	Long service leave	834
6,854	Retiring leave	7,002
7,681	Total non-current portion	7,836
16,498	Total employee entitlements	17,634

Note 14: Unearned Revenue

Actual June 2006 $(000)		Actual June 2007 $(000)
4,123	NZFSA regulatory standards	4,608
2,369	Verification services to the animal products industries	2,059
2,756	Industry funding of electronic certification	3,171
1,467	Contribution towards Pastoral House fit-out costs	1,377
345	Other miscellaneous revenue	663
11,060	Total unearned revenue	11,878

Note 15: Provisions

Actual June 2006 $(000)		Actual June 2007 $(000)
	Current
14	Restructurings	1,533
67	Onerous accommodation contracts	-
265	Compensation under the Biosecurity Act 1993	901
59	NZFSA executive director awards	102
405	Total current portion	2,536
	Non-current
300	Site restoration	300
705	Total provisions	2,836
	Provision for Restructuring
Provision for Restructuring
Actual June 2006 $(000)		Actual June 2007 $(000)
771	Opening balance	14
-	Additional provision made during the year	1,533
(716)	Charged against provision for the year	(14)
(41)	Unused amounts reversed during year	-
14	Closing balance	1,533
14	Current	1,533
-	Non-current	-

The restructuring provision arises from the integration of Biosecurity New Zealand and the MAF Quarantine Service (MAFQS) and changes to the MAFQS remuneration structure. The provision represents the Ministry’s best estimate of the cost of the restructurings. It is anticipated all costs associated with the restructurings will be incurred over the next year.

Provision for Onerous Accommodation Contracts

Actual June 2006 $(000)		Actual June 2007 $(000)
1,336	Opening balance	67
(1,269)	Charged against provision for the year	(67)
67	Closing balance	-
67	Current	-
-	Non-current	-

This provision relates to non-cancellable contracts for surplus accommodation at Palmerston North and Wellington.

Provision for NZFSA Executive Director Awards

Actual June 2006 $(000)		Actual June 2007 $(000)
-	Opening balance	59
82	Additional provisions made during the year	102
(23)	Charged against provision for the year	(59)
59	Closing balance	102
59	Current	102
-	Non-current	-

This provision relates to awards being established to improve NZFSA’s leadership capability and its ability to deliver a world-leading food regulatory programme. The liability will be incurred over the next year.

Provision for Site Restoration

Actual June 2006 $(000)		Actual June 2007 $(000)
300	Opening balance	300
-	Additional provisions made during the year	-
300	Closing balance	300
-	Current	-
300	Non-current	300

The provision for site restoration relates to requirements to restore leased accommodation to its original condition at the end of the lease. The restoration work is expected to be carried out by 2011.

Provision for Compensation under the Biosecurity Act 1993

Actual June 2006 $(000)		Actual June 2007 $(000)
497	Opening balance	265
-	Additional provisions made during the year	795
(232)	Charged against provision for the year	(159)
265	Closing balance	901
265	Current	901
-	Non-current	-

This provision provides for compensation payable under section 162A of the Biosecurity Act 1993, as a result of the exercise of powers to manage or eradicate organisms. Compensation is payable where the exercise of these powers causes verifiable losses as a result of the damage or destruction of a person’s property or restrictions on the movement of a person’s goods. The provision represents the Ministry’s best estimate of the cost of settling current compensation claims. The compensation payments are expected to be settled by the end of 2008.

Note 16: Finance Lease Liability

Actual June 2006 $(000)		Actual June 2007 $(000)
	Finance leases
1,921	Current	2,953
3,701	Non-current	4,168
5,622	Total	7,121
	Repayable as follows:
2,256	Not later than one year	3,373
2,256	Later than one year but not later than two years	3,102
1,693	Later than two years but not later than five years	1,307
6,205		7,782
(583)	Future finance charges	(661)
5,622	Net finance lease liability	7,121

The effective interest rate on the leases ranges from 5.65 percent to 5.92 percent. Ownership of the assets remains with the lessor.

Note 17: Reconciliation of Net Surplus to Net Cash Flows from Operating Activities

Actual June 2006 $(000)		Actual June 2007 $(000)
(1,437)	Net surplus/(deficit)	2,877
	Add/(less) non-cash items
8,704	Depreciation	10,852
-	Property, plant and equipment revaluations and write-downs	213
8,704	Total non-cash items	11,065
	Add/(less) working capital movements
(3,093)	(Increase)/decrease in inventories	(381)
(5,142)	(Increase)/decrease in accounts receivable	2,093
(99)	(Increase)/decrease in prepayments	(540)
1,344	Increase/(decrease) in accounts payable	(3,851)
508	Increase/(decrease) in unearned revenue	818
1,308	Increase/(decrease) in employee entitlements	1,136
(2,199)	Increase/(decrease) in other provisions	2,131
(7,373)	Working capital movements – net	1,406
	Add/(less) investing activities items:
(14)	Net (gain)/loss on sale of fixed assets	(4)
(120)	Net cash flow from operating activities	15,344

Note 18: Provision for Repayment of Surplus to the Crown

Actual June 2006 $(000)		Actual June 2007 $(000)
-	Operating surplus	2,877
-	Plus other expenses not for the production of outputs (note 6)	2
14	Gain on sale of property, plant and equipment	-
14	Total provision for repayment of surplus to the Crown	2,879

Note 19: 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 revenue.

The Ministry enters into numerous transactions with other government departments, Crown agencies and state-owned enterprises on an arm’s length basis. Where those parties are acting in the course of their normal dealings with the department, related party disclosures have not been made for transactions of this nature.

Apart from those transactions described above, the Ministry has not entered into any related party transactions.

Note 20: Financial Instruments

The Ministry is party to financial instrument arrangements as part of its everyday operations. These include instruments such as bank balances, accounts receivable, trade creditors and foreign currency forward contracts.

Credit Risk

Credit risk is the risk 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 and the New Zealand Debt Management Office.

The Ministry does not require any collateral or security to support financial instruments with financial institutions it deals with, or with the NZDMO, as these entities have high credit ratings. For its other financial instruments, the Ministry does not have significant concentration 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 debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates. The Ministry uses foreign exchange forward contracts to manage foreign exchange exposures.

Interest Rate Risk

Interest rate risk is the risk 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.

Note 21: Major Budget Variances

The following significant movements between the initial Budget Day Estimates and the actual results for 2006/07 are explained below.

	Main Estimates June 2007 $(000)	Actual June 2007 $(000)	Variance $(000)
Statement of Financial Performance
Revenue Crown	148,101	179,330	31,229
Personnel costs	121,943	129,814	7,871
Operating costs	97,066	119,568	22,502
Statement of Financial Position
Debtors and receivables	11,436	15,740	4,304
Property, plant and equipment	50,553	54,169	3,616
Employee entitlements	16,300	17,634	1,334
Unearned revenue	7,940	11,878	3,938
Finance lease liability	3,737	7,121	3,384

Revenue Crown was $31.229 million higher than budget due mainly to additional funding for:

• Continued response to the incursion of the freshwater alga didymosphenia geminata in the South Island $6.556 million.
• Transfer of responsibility for the southern saltmarsh mosquito programme from the Ministry of Health $12.281 million.
• Continued response to the marine pest styela clava $1.330 million.
• Implementation of a control programme to slow the spread of varroa in the South Island $2.150 million.
• Continued monitoring of painted apple moth in west Auckland $1.947 million.
• Wine export certification and testing $1.191 million.
• Continued surveillance for red imported fire ant at risk sites around Napier $4.769 million.
• Policy options and research to manage deforestation, encourage afforestation and reduce greenhouse gas emissions $1.469 million.
• Expense transfers from 2005/06 $1.177 million.

Personnel and operating costs were $7.871 million and $22.502 million respectively higher than the Budget Day forecast. The main factor contributing to the increases was the additional activity listed under revenue Crown above.

Debtors and receivables were higher mainly due to Verification Agency fees under recovering costs.

Property, plant and equipment increased due to changes to the 2006/07 capital programme since the original budget was set.

Employment entitlements increased due to remuneration increases and an increase in employee numbers during the year.

Unearned revenue increased by $3.938 million due to NZFSA fees over recovering costs.

Finance lease liability was higher due to the renegotiation of information management leases during 2007/08 for an extended period.

Note 22: Discontinued Activities

On 28 May 2007, Cabinet announced the separation of the New Zealand Food Safety Authority (NZFSA) from MAF and its establishment as a new Public Service department on 1 July 2007. The functions that will transfer from MAF to NZFSA are those functions that are currently performed by NZFSA that relate to the administration of the Food Act 1981; the Animal Products Act 1999 (except in relation to live animals and germplasm); the Agricultural Compounds and Veterinary Medicines Act 1977 and the Wine Act 2004.

Note 23: International Financial Reporting Standards

The New Zealand Accounting Standards Review Board

announced in December 2002 that New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) will apply to all New Zealand reporting entities for periods commencing on or after 1 January 2007. Entities have the option to adopt NZ IFRS for periods on or after 1 January 2005. The Minister of Finance announced in 2003 that government departments will first adopt NZ IFRS for the year beginning 1 July 2007.

Transition to NZ IFRS

To ensure preparedness for NZ IFRS MAF has completed a process which:

• Assessed the key differences in accounting policies under NZ IFRS and current accounting policies.
• Reviewed the financial statements to ascertain differences between current GAAP and NZ IFRS.
• Reviewed NZ IFRS to ascertain what new disclosures are required.
• Determined and implemented processes to deal with any related business impact.
• Prepared a Statement of Financial Position as at 30 June 2006 under both current NZ GAAP and NZ IFRS.
• Collated information required for NZ IFRS on an ongoing monthly basis from 1 July 2006.
• Prepared financial statements as at 30 June 2007 under both NZ GAAP and NZ IFRS.

Impact of adopting NZ IFRS

Sick leave and ACC self-insurance are the main areas that will impact on MAF’s financial statements. The financial impacts of adopting NZ IFRS will be a reduction in taxpayer’s funds as at 30 June 2007 of $770,000.

Contact for Enquiries

Strategy and Performance Group
Ministry of Agriculture and Forestry
Pastoral House
25 The Terrace
PO Box 2526, Wellington

Tel: +64 4 894 0100
Fax: +64 4 894 0738 Contact this person