Analysis of CRI 2006/07 Financial Performance

This page summarises the financial performance of the CRIs during 2006/07.  Separate information on the CRIs’ non-financial performance, based on the research application indicators, will be posted onto this site shortly.  The non-financial indicators seek to measure the wider impact of the CRIs on New Zealand’s society, economy and environment, beyond pure financial results.

The table below summarises the key financial and personnel data for each CRI for 2006/07.  Summary figures for 2005/06 are shown for comparison purposes.

 

Summary of CRI financial performance

	Total assets ($m)	Equity ($m)	Revenue ($m)	Net surplus ($m)	Return on equity (%)	Net gearing (%)	FTEs
AgResearch	150.7	100.7	135.7	5.1	5.2	14.1	990
Crop & Food Research	40.1	23.1	55.6	0.9	3.8	21.6	325
ESR	36.7	27.6	51.0	3.7	14.4	0.0	382
GNS Science	36.3	18.6	51.0	1.4	7.8	19.8	307
HortResearch	64.6	52.6	65.2	1.0	1.9	0.0	491
IRL	40.1	19.3	55.0	(5.7)	(25.8)	37.8	305
Landcare Research	42.3	23.7	52.8	0.8	3.4	14.6	402
NIWA	78.0	51.5	113.9	10.5	22.6	0.0	648
Scion	31.1	22.6	21.5	(0.5)	(2.1)	4.5	350
Total	519.9	339.6	601.7	17.2	5.2	7.1	4,200
2005/06	483.5	323.3	580.0	23.7	7.4	0.3	4,141

Source: CRI 2006/07 annual reports

 

Revenue

Total revenue for the CRI portfolio rose by 3.7% compared with 2005/06, which is the average annual increase across the portfolio since 1999. All CRIs, with the exception of IRL, saw an increase in revenue over 2005/06. IRL had a significant fall in revenue ($18.8 million), largely as revenue in 2005/06 was bolstered by the receipt of almost $7 million in overseas royalty income and a one-off gain on the sale of its Auckland property.

AgResearch, GNS Science and ESR experienced significant increases in revenue over 2005/06. AgResearch benefited from an increase in funding for the Pastoral 21 initiative and revenue from Canesis Network Ltd which it acquired during the year. Both GNS Science and ESR saw an increase in revenue of around 12% or $5 million from 2005/06, mainly related to a lift in their commercial work.

Although growth occurred in revenue from both the Foundation for Research, Science & Technology (FRST) and other sources, FRST revenue grew faster in 2006/07 than non-FRST revenue. Approximately 47% (2005/06: 45%) of CRI revenue was sourced from contracts with FRST or the CRI Capability Fund, which represents an increase of approximately 7% from 2005/06. All of the CRIs, with the exception of a small reduction for Scion, increased their revenue from FRST compared with the previous year. Of particular note, AgResearch received an additional $7 million in FRST revenue, a growth of 14% from 2005/06, and Landcare Research received an additional $2.5 million, a growth of 9%.
 

Profitability

In 2006/07, seven of the nine CRIs reported net profits after tax (NPAT), while two reported net losses. NIWA recorded the highest NPAT of $10.5 million. IRL recorded the largest net loss of $5.7 million, with Scion recording a net loss of $0.5 million.

The return on equity (RoE) across the CRI sector for 2006/07 was 5.2%, which represents a decline from the 2005/06 result of 7.4%. IRL’s loss of $5.7 million was the major contributor to a fall in the average RoE. By excluding IRL from the 2006/07 results, the CRIs made an average RoE of 7.1%.
 

Financial position

In general, CRI balance sheets remained strong at 30 June 2007, reflecting the dividend policy adopted by the companies and a slow response to increasing net gearing. Net gearing, in general, increased in 2006/07, from an average net gearing of 0.3% in 2005/06 to 7.1%. The main driver of the increase was AgResearch’s $20 million loan drawn in 2006/07 to fund the acquisition of Canesis Networks Ltd. The average net gearing across the CRI sector, excluding AgResearch, was 3.9% as at 30 June 2007.

Several CRIs have firm plans to increase net gearing during the coming two to three years, mostly for capital expenditure programmes including buildings and scientific equipment. Making provision for these programmes has, in turn, influenced the amounts available for CRI dividends to the Crown.
 

Shareholder returns

During 2006/07, GNS Science paid a dividend of $350,000 to the Crown. In total, the CRIs recognised $12.5 million in tax expense in 2006/07, compared with $8.7 million recognised in 2005/06.