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New Zealand Cricket Inc - 108th Annual Report - 2001/02

F I N A N C I A L   R E V I E W
Notes to Financial Statements
for the year ended 31 May 2002

  1. Statement of Accounting Policies

    Reporting Entity
    New Zealand Cricket Inc. is an incorporated society under the Incorporated Societies Act 1908. The financial statements of New Zealand Cricket Inc. have been prepared in accordance with generally accepted accounting practices.

    Measurement Base
    The Accounting principles recognised as appropriate for the measurement and reporting of Financial Performance and Financial Position on a historical costs basis are followed by New Zealand Cricket.

    Specific Accounting Policies
    The following specific accounting policies which materially affect the measurement of financial performance and financial position have been applied:

    1. Accounts Receivable
      Accounts Receivable are stated at their estimated realisable value.

    2. Inventories
      Inventories are stated at cost, determined on a first-in first-out basis. These include resources, clothing and promotional product for the development initiatives not utilised at balance date.

    3. Foreign Currencies
      Overseas transactions are converted at the New Zealand rate of exchange ruling at the date of the transaction. At balance date foreign monetary assets and liabilities are translated at the closing rate, and exchange variations arising from these are included in the Statement of Financial Performance.

      The exchange differences on hedging transactions undertaken to establish the price of particular revenues or expenses, together with any costs associated with the hedged transactions, are deferred and included in the measurement of the revenue or expense transaction.

    4. Trade Creditors and Accruals
      Trade Creditors and Accruals are stated at the estimated amounts payable.

    5. Leases
      New Zealand Cricket leases certain Office Equipment and Buildings.

      Operating Lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of the net surplus in equal instalments over the lease term.

    6. Financial Instruments
      Financial instruments recognised in the statement of financial position include cash balances, receivables, payables, deposits and loans to others. In addition New Zealand Cricket Inc is party to financial instruments with off balance sheet risk to reduce exposure to fluctuations in foreign currency exchange rates. These financial instruments are foreign currency forward exchange contracts.

      New Zealand Cricket enters into foreign currency forward exchange contracts to hedge trading transactions, including anticipated transactions, denominated in foreign currencies. Gains and losses on contracts which hedge specific short-term foreign currency denominated transactions are recognised as a component of the related transaction in the period in which the transaction was completed.

      Where the hedge of an anticipated transaction is terminated early, but the anticipated transaction is still expected to occur, the gain or loss that arose prior to termination of the hedge continues to be deferred and is recognised as a component of the transaction when it is completed. If the trading transaction is no longer expected to occur, the gain or loss on the terminated hedge is recognised in the statement of financial performance immediately.

    7. Property, Plant and Equipment
      Property, Plant and Equipment are stated at cost less aggregate depreciation. Depreciation is provided for on a straight line basis on all tangible property, plant and equipment, at depreciation rates calculated to allocate the assets' costs over their estimated useful lives.

      Depreciation has been calculated on the basis of the following depreciation periods:

      Motor Vehicles 5 years
      Office Furniture/Equipment 2 - 10 years
      Computer Equipment 2 - 4 years
      Cricket Equipment 4 - 12 years
      Furniture & Fittings 5 - 20 years
      Grounds 20 years
      Grounds Plant & Equipment 5 - 20 years
      Buildings 5 - 20 years

      Trade Marks are ammortised over a 10 year period.

    Changes in Accounting Policies
    There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.


  2. Operating Revenue

      2002 2001
      $ $
    Revenue 22,702,087 19,023,399
    Interest Revenue 75,128 154,370
      $22,777,215 $19,177,769


  3. Operating Surplus

      2002 2001
      $ $
    After Charging:    
    Depreciation:    
    - Motor Vehicles 16,283 13,968
    - Furniture & Fittings 38,724 28,656
    - Office Furniture 13,170 13,140
    - Computer Equipment 18,915 24,931
    - Cricket Equipment 17,162 15,494
    - Grounds 20,202 8,010
    - Grounds Equipment 49,260 47,652
    - Buildings 74,186 65,771
    - Trade Marks 1,491 1,301
    Doubtful Debts written off 15,051 3,110
    Interest Expense & Bank Fees 45,861 7,317
    Foreign Exchange Losses 3,740 9,785
    Rental and Operating Lease costs 220,734 202,292
    Auditing Fees 12,750 12,000
    Other Fees paid to Auditors 5,128 2,635


  4. Inventories

      2002 2001
      $ $
    Cricket Balls 25,716 14,358
    Clothing 36,956 39,536
    Development Resources 76,779 -
    Gear Bags & Suitcases 14,591 18,289
      $154,042 $72,183



  5. Property, Plant and Equipment

    2002 At Cost Accum Depn Net Book Value
      $ $ $
    Motor Vehicles 114,412 54,615 59,797
    Office Furniture & Equipment 153,890 100,890 53,000
    Computer Equipment 162,193 135,720 26,473
    Cricket Equipment 108,396 78,885 29,511
    Furniture & Fittings 252,015 124,414 127,601
    Land & Buildings 1,703,311 323,653 1,379,658
    Grounds 468,372 45,793 422,579
    Grounds Plant & Equipment 596,901 194,840 402,061
    Trade Marks 19,391 5,005 14,386
      $3,578,881 $1,063,815 $2,515,066



     
    2001 At Cost Accum Depn Net Book Value
      $ $ $
    Motor Vehicles 108,237 46,563 61,674
    Office Furniture & Equipment 139,180 87,721 51,459
    Computer Equipment 152,473 116,805 35,668
    Cricket Equipment 97,199 62,461 34,738
    Furniture & Fittings 247,800 85,689 162,111
    Land & Buildings 1,703,311 249,467 1,453,844
    Grounds 183,996 24,853 159,143
    Grounds Plant & Equipment 461,650 145,580 316,070
    Trade Marks 14,524 3,515 11,009
    Fixed Assets Work in Progress 67,189 - 67,189
      $3,175,559 $822,654 $2,352,905




  6. Trade Creditors and Accruals

      2002 2001
      $ $
    Trade Creditors 388,956 439,246
    Other Accruals 366,868 467,695
    Grants to Associations 104,200 21,250
      $860,024 $928,191



  7. Equity

      2002 2001
      $ $
    Opening Accumulated Operating Funds 1,099,178 2,840,149
     
    Net Surplus (Deficit) for the year 1,347,265 (1,740,971)
     
    Closing Accumulated Operating Funds $2,446,443 $1,099,178
     
    Capital Reserve 1,050,000 1,050,000
     
    Total Equity 31 May 2002 $3,496,443 $2,149,178


    The Capital Reserve was created to recognise funds received for the development of the High Performance Centre and Hadlee Watt Pavilions.


  8. Employee Entitlements

      2002 2001
      $ $
    Balance at beginning of the year 137,323 118,229
     
    Additional provision 131,677 107,554
    Amount utilised (126,941) (88,460)
     
    Balance at end of the year $142,059 $137,323


  9. Lease Commitments

    Future Lease Commitments for New Zealand Cricket are:

      2002 2001
      $ $
    Not later than 1 year 231,917 243,368
    Between 1-2 years 204,291 208,193
    Between 2-5 years 560,153 529,956
    Over 5 years 555,675 702,334


  10. Reconciliation of Net Operating surplus (deficit) with Net Cash inflow (outflow) from operations

      2002 2001
      $ $
    Net Operating Surplus (Deficit) 1,347,265 (1,740,971)
     
    Add non-cash items:    
    Depreciation 249,393 218,924
     
    Loss on Disposal Fixed Assets 1,911 -
      251,304 218,924
    Movements in Working Capital:    
    (Increase) Decrease in Accounts Receivable (984,869) 1,020,976
    (Increase) Decrease in Sundry Loans (245,000) (157,640)
    (Increase) Decrease in Prepayments 119,823 (37,153)
    Increase (Decrease) in Accounts Payable (235,651) (232,993)
    (Increase) Decrease in Stock (81,859) (11,814)
    (Increase) Decrease in Tour WIP (189,193) 77,622
      (1,616,749) 658,998
     
    Effect of exchange rate change on foreign balance. 848 (2,483)
     
    Net cash inflow (outflow) from operating activities $(17,332) $(865,532)



  11. Financial Instruments

    Credit Risk
    Financial instruments which potentially subject New Zealand Cricket to credit risk principally consist of bank balances, accounts receivable, and sundry loans.

    Maximum exposures to the credit risk as at balance date are:

      2002 2001
      $ $
     
    Bank Balances 1,065,463 1,497,109
    Receivables 1,942,880 958,011
    Sundry Loans 514,999 269,999

    New Zealand Cricket Inc. has given a guarantee to ASB Bank Ltd in respect of a Term Loan of $500,000 drawn by the Eden Park Trust Board for improvements at Eden Park. The guarantee reduced at 31 March, 2002 to $300,000 and thereafter reduces annually by $100,000 until New Zealand Cricket's obligations are extinguished by 31 March, 2005.

    Sundry Loans include Loans to Major Associations of $425,000. These Loans are subject to interest based on the 90-day Bill rate, and are secured by future grants payable to those associations.

    The above maximum exposures are net of any recognised provision for losses on these financial instruments. No collateral is held on the above amounts.

    Concentrations of Credit Risk
    All money on deposit is with the National Bank of New Zealand Ltd.

    Currency Risk
    New Zealand Cricket has exposure to foreign exchange risk as a result of transactions denominated in foreign currency, arising from normal trading activities. The NZD equivalent of unhedged currency risk at balance date is Nil (2001, $136,213).

    During the current year, where exposures were certain, New Zealand Cricket hedged most of its new season offshore exposure. New Zealand Cricket used forward foreign exchange contracts to manage these exposures. The notional contract amounts of forward foreign exchange instruments outstanding at balance date were $29,032,740 (2001, $33,585,785), covering the period 4th June 2002 to 1st October, 2003.

    Interest Rate Risk
    Interest earned on bank balances and deposits are based on the current interest rate. At balance date this was 5.5%.

    Credit Facilities
    New Zealand Cricket has a Bank overdraft facility of $1,000,000 with the National Bank of New Zealand Ltd. Apart from this facility which was not being utilised at balance date there are no other credit facilities.

    Fair Values
    The following methods and assumptions were used to estimate the fair value of each class of financial instrument.

    Bank Accounts and Deposits, Receivables and Trade Creditors
    The carrying amount is the fair value for each of these classes of financial instruments noted above. Bank Deposits are recorded at market value, and are subject to market forces. Market value is subject to changes in interest rates.

    Forward Foreign Exchange Contracts
    The estimated fair value of off balance sheet forward foreign exchange contracts at balance date was $27,486,182 (2001, $38,088,632). The estimated fair value of forward foreign exchange contracts is based on market rates at balance date.


  12. Segment Information

    New Zealand Cricket Inc. operates in one industry and geographical location, this being the promotion and administration of cricket in New Zealand. Domestic cricket and development programmes are coordinated through Major Associations who in addition assist with hosting arrangements of International Teams. New Zealand Cricket Inc. is responsible for operating the High Performance Centre at Lincoln University and for managing New Zealand teams touring offshore.


  13. Transactions with related parties

    Major/District Associations
    During the year New Zealand Cricket made payments of $4,901,708 (2001, $4,158,489) and special grants of $450,000 (2001, Nil) to Major Associations, and $288,900 (2001, $181,000) to District Associations.

    Major and District Associations are the members of New Zealand Cricket as provided for in the Constitution of New Zealand Cricket Inc.

    The balances outstanding on Receivables at the end of the year were $66,955 (2001, $67,806), while the balances outstanding on Payables at the end of the year were $43,316 (2001, $55,297). No amounts were written off or forgiven during the year.


  14. Contingent Liabilities

    There are no contingent liabilities at 31 May 2002 (2001, Nil).


  15. Capital commitments

    There were no capital commitments at 31 May, 2002 (2001, $120,000).


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