Annual Report

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1    STATEMENT OF ACCOUNTING POLICIES

(A)   REPORTING ENTITY

The financial statements presented here for the reporting entity, the Securities Commission, are prepared pursuant to section 30 of the Securities Act 1978 and section 41 of the Public Finance Act 1989.

(B)   MEASUREMENT SYSTEM

The accounting principles recognised as appropriate for the measurement and reporting of results and financial position on an historical cost basis have been applied with the exception that the library is periodically revalued.

(C)   ACCOUNTING POLICIES

(i)		Budget Figures:The budget figures are those approved by Commission Members on 17 August 2000. The budget figures are prepared in accordance with generally accepted accounting practice and are consistent with the accounting policies adopted by Commission Members for the preparation of the financial statements.
(ii)		Depreciation: Fixed assets, other than the library, are shown at historical cost and have been depreciated on the following bases: office furniture - 20 percent of diminishing value, office equipment - straight line over five years, leasehold improvements - straight line over nine years.
(iii)		Library: All library acquisitions are recorded at cost. The library is depreciated on a straight line basis over 10 years. The library is revalued to current market value every three years by an independent valuer. In the year that the periodic revaluation of the library is undertaken any difference between the depreciated value of the library and the current market value is recognised in the Asset Revaluation Reserve. If this results in a debit balance in the Asset Revaluation Reserve, the balance is expensed in the Statement of Financial Performance.
(iv)		Short Term Deposits: Short term deposits are shown at cost.
(v)		Employee Annual Leave: Provision is made in respect of the Commission's liability for employee annual leave entitlement, which has been calculated on an actual entitlement basis at current remuneration rates.
(vi)		GST: GST is accounted for by the net method.
(vii)		Financial Instruments: All financial instruments are recognised in the Statement of Financial Position.
(viii)		Income Tax: The Commission is exempt from income tax under the Income Tax Act 1994.
(ix)		Revenue Recognition: Government Grant is recognised as revenue when it becomes due. Revenue from Application Fees and Costs Recoverable and from Administrative Services to the Takeovers Panel is recognised when the relevant services are provided.

(D)   CHANGES IN ACCOUNTING POLICIES

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

NOTE 2    ADMINISTRATIVE SERVICES TO THE TAKEOVERS PANEL

The Commission provides administrative services to the Takeovers Panel. For each financial year the Commission and the Panel agree on the level of services required and on the fees to be paid to the Commission for these services. The costs involved in providing these services are part of total expenditure.

NOTE 3    ALLOCATION OF RECEIPT FOR USE OF ASSETS

This represents amounts received from the Takeovers Panel to finance the purchase of assets required by the Commission to service the requirements of the Panel. The prepayment is being amortised, having regard to the expected life of the assets over the following periods:

	Furniture, Fittings and Library	5 years
	Office Equipment	3 years

NOTE 4    REMUNERATION OF MEMBERS OF THE COMMISSION

	2001 $	2000 $
Members' Fees	213,382	139,058
Chairman's Remuneration (salary, superannuation and allowance)	241,550	230,050
Total Remuneration paid to Members of the Commission	$454,932	$369,108

C.A.N. Beyer	8,568
F.R.S. Clouston	42,052
I.F. Farrant	22,829
A.N. Frankham	23,292
E.M. Hickey	22,900
L.A.J. Kavanagh	23,279
J.M.G. Perry	16,204
C.A. Quinn	8,284
R.M. Spiller	8,757
M.R.H.Webb	37,217
	$213,382

NOTE 5    EMPLOYEE REMUNERATION

During the year, the number of employees of the Commission, not being Members, who received remuneration and other benefits in excess of $100,000 were:

Remuneration $	Number of Employees
210,000 to 220,000	1 (Chief Executive)
120,000 to 130,000	2

NOTE 6    RECONCILIATION OF STATEMENT OF FINANCIAL PERFORMANCE WITH STATEMENT OF CASH FLOWS

	2001 $	2000 $
Reported Surplus (Deficit)	(7,689)	285,293
Add non-cash item:
- Allocation of Receipt for Use of Assets	(3,002)	-
- Depreciation	106,091	101,236
	103,089	101,236
Add item classified as investing activity:
- Loss on Asset Disposals	-	1,753
Movement in working capital:
- Increase (Decrease) in Creditors	50,273	20,205
- Increase in Receivables	(54,422)	(21,697)
	(4,149)	(1,492)
Net Cash Flows from Operating Activities	$91,251	$386,790

NOTE 7    FIXED ASSETS

	2001 Cost/Valuation $	Depreciation $	Net Book Value $
Assets at Cost
Office Equipment	432,214	293,984	138,230
Office Furniture	86,533	62,008	24,525
Leasehold Improvements	189,863	126,442	63,421
Assets at Valuation
Library	173,520	-	173,520
	$882,130	$482,434	$399,696

	2000 Cost/Valuation $	Depreciation $	Net Book Value $
Assets at Cost
Office Equipment	400,588	243,387	157,201
Office Furniture	76,103	57,120	18,983
Leasehold Improvements	173,318	106,137	67,181
Assets at Valuation
Library	220,794	41,345	179,449
	$870,803	$447,989	$422,814

In accordance with the Statement of Accounting Policies Note 1 (c)(iii), the library has been revalued at 30 June 2001 to a current value of $173,520 on the basis of a valuation report compiled by Mrs S Lambert of Lambert's Library Services. After charging $25,073 depreciation during the year $10,792 was debited to the Asset Revaluation Reserve at 30 June 2001.

NOTE 8    EMPLOYEE ENTITLEMENTS

Creditors and accruals include employee annual leave entitlements amounting to $30,327 (2000 - $28,232).

NOTE 9    CASH FLOWS

The cash flows relating to the Commission's investing activities are reported on a net basis in the Statement of Cash Flows. The amounts involved are held in short term deposits which are rolled over frequently through the year.

NOTE 8    FINANCIAL INSTRUMENTS

(I)   CREDIT RISK

Financial instruments which may subject the Commission to credit risk consist of bank balances, bank short term deposits and accounts receivable.

The Commission's investments are deposited with a registered bank in New Zealand.

The Commission does not require collateral or security to support financial instruments.

There is no significant concentration of credit risk pertaining to accounts receivable.

(II)   FAIR VALUES

All financial instruments are recognised in the Statement of Financial Position and are stated at fair values.

NOTE 11    LEASE COMMITMENTS

The Commission has the following operating lease commitments, which are subject to review under the terms of the leases, with terms of more than one year:

	2001 $	2000 $
- Not later than one year	210,000	205,000
- Later than one year and not later than two years	210,000	205,000
- Later than two years and not later than five years	35,000	239,000

NOTE 12    CAPITAL COMMITMENTS

Estimated capital expenditure contracted for at balance date but not provided for: $28,823 (2000 - $18,500).

NOTE 13    CONTINGENT LIABILITIES

The Commission is engaged in litigation with an entity. On the basis of legal advice received the Commission does not acknowledge any liability. The claim was unquantified at balance date (2000 - NIL).

NOTE 14    TRANSACTIONS WITH RELATED PARTIES

During the year there were no transactions with related parties (2000 - $5,880).

No related party debts have been written off or forgiven during the year.

NOTE 15    BUDGET VARIANCES

(A)   INCOME

Income for the year was $85,000 above budget, mainly arising from additional services provided to the Takeovers Panel.

(B)   EXPENDITURE

Significant variances from budget were:

1. The Commission incurred additional costs arising from additional services provided to the Takeovers Panel.
2. Matters pertaining to litigation were more than budgeted.
3. Fees paid to Members were higher than budgeted arising from an increased amount of time spent by Members on enforcement matters.