Reconciliation of prior years' equity

The following table shows the reconciliation of equity, resulting from the transition from NZ FRS to NZ IFRS as at 1 July 2006 and 30 June 2007
	Notes	1 July 2006 NZ FRS $000	1 July 2006 Effect on transition to NZ IFRS $000	1 July 2006 NZ IFRS $000	30 June 2007 NZ FRS $000	30 June 2007 Effect on transition to NZ IFRS $000	30 June 2007 NZ IFRS $000
Taxpayers' funds
Taxpayers' funds	a,e,f,g	130,831	(7,494)	123,337	166,568	(11,373)	155,195
Total taxpayers' funds		130,831	(7,494)	123,337	166,568	(11,373)	155,195
Represented by:
Current assets
Cash and cash equivalents		4,995	-	4,995	13,534	-	13,534
Debtor crown		84,223	-	84,223	85,389	-	85,389
Other debtors and prepayments		7,325	-	7,325	10,384	-	10,384
Inventories held for distribution	a	-	-	-	-	1,372	1,372
Total current assets		96,543	-	96,543	109,307	1,372	110,679
Non-current assets
Property, plant and equipment	b	122,162	(81,703)	40,459	156,707	(117,637)	39,070
Intangible assets	b	-	81,703	81,703	-	117,637	117,637
Total non-current assets		122,162	-	122,162	156,707	-	156,707
Total assets		218,705	-	218,705	266,014	1,372	267,386
Current liabilities
Creditors and other payables	c	36,233	(3,713)	35,520	48,329	(8,243)	40,086
Surplus payable to the Crown		6,815	-	6,815	3,260	-	3,260
Derivative financial instruments	d	-	(137)	(137)	-	49	49
Provision for employee benefits	c,e	16,107	5,736	21,843	17,492	10,268	27,760
Provision for other liabilities	f	650	-	650	443	122	565
Other financial liabilities	g	-	216	216	-	216	216
Total current liabilities		59,805	2,102	61,907	69,524	2,412	71,936
Non-current liabilities
Provision for employee benefits	e	27,069	5,025	32,094	29,660	5,025	34,685
Provision for other liabilities	f	1,000	-	1,000	262	5,170	5,432
Other financial liabilities	g	-	367	367	-	138	138
Total non-current liabilities		28,069	5,392	33,461	29,922	10,333	40,255
Total liabilities		87,874	7,494	95,368	99,446	12,745	112,191
Net assets		130,831	(7,494)	123,337	166,568	(11,373)	155,195

Explanatory notes - Reconciliation of equity

a. Inventories held for distribution

Under NZ FRS, all inventories held for external distribution were expensed. Under NZ IFRS $1,372,000 worth of inventories held for external distribution were recognised in the Statement of Financial Position as part of inventories as at 30 June 2007.

b. Intangible assets

Software was classified as part of property, plant and equipment under NZ FRS. The net book value of software reclassified as an intangible asset on transition to NZ IFRS was $81,703,000 as at 1 July 2006 and $117,637,000 as at 30 June 2007.

c. Accrued staff salaries

Accrued staff salaries were classified as part of creditors and other payables under NZ FRS. On transition to NZ IFRS as at 1 July 2006, accrued staff salaries of $3,713,000 were transferred to the provision for employee benefits-current and as at 30 June 2007 $8,243,000 were transferred to provision for employee benefits-current.

d. Derivative financial instrument liabilities

Financial derivatives were not recognised in the Statement of Financial Position under NZ FRS. NZ IFRS requires financial derivatives to be recognised in the Statement of Financial Position at their fair value. On transition to NZ IFRS, gains on derivatives of $137,000 were recognised as at 1 July 2006 and losses on derivatives of $49,000 were recognised as at 30 June 2007.

e. Sick leave provision

Sick leave was not recognised as a liability under NZ FRS. NZ IAS 19 requires Inland Revenue to recognise employees' unused sick leave entitlement that can be carried forward at balance date, to the extent that Inland Revenue anticipates it will be used by staff to cover future absences. On transition to NZ IFRS as at 1 July 2006 and as at 30 June 2007, short-term sick leave liability of $2,024,000 and long-term sick leave liability of $5,025,000 were recognised respectively.

f. Lease make-good

Lease make-good was not recognised as a liability under NZ FRS. On transition to NZ IFRS as at 30 June 2007, provision for lease make-good short-term of $122,000 and provision for lease make-good long-term of $5,170,000 were recognised.

g. Leasing incentive liability

Under NZ FRS, rent free periods were recognised upfront and not recognised as a liability. On transition to NZ IFRS as at 1 July 2006, a short-term rent holiday liability of $216,000 and long-term rent holiday liability of $367,000 were recognised. As at 30 June 2007, a short-term rent holiday liability of $216,000 and long-term rent holiday liability of $138,000 were recognised.