gns science annual report 2007 · marine geology paleontology paleoclimate climate change...

ANNUAL REPORT 2007

WWW.GNS.CRI.NZ© INSTITUTE OF GEOLOGICAL AND NUCLEAR SCIENCES LIMITEDSEPTEMBER 2007

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Chief exeCutive

Alexander Malahoff

NAtuRAL hAZARDS

terry Webb

NAtuRAL ReSOuRCeS

Michael isaac

NAtiONAL iSOtOPe CeNtRe

frank Bruhn

BuSiNeSS DeveLOPMeNt

& iNfORMAtiON SeRviCeS

Rob Johnston

ReSeARCh

Robin falconer

StRAtegy

Desmond Darby

fiNANCe

graham Clarke

MA–ORi StRAtegy

Murray hemi

huMAN ReSOuRCeS

Jennifer van hunen

ORigiN Of NeW ZeALAND’S CRuSt

geOLOgiCAL StRuCtuRe

MAPPiNg & SPAtiAL DAtA

teCtONiC iNfORMAtiON

QuAteRNARy PROCeSSeS

geOhAZARD MONitORiNg

eARthQuAKe PROCeSSeS

eARthQuAKe eNgiNeeRiNg

vOLCANOeS

LANDSLiDeS

tSuNAMiS

hAZARD ASSeSSMeNt

hAZARD MitigAtiON

geOLOgiCAL tiMe

PALeOCLiMAte

PALeODiveRSity

hyDROCARBONS

CO2 SeQueStRAtiON

geOtheRMAL

MiNeRALS

gROuNDWAteR

geOMiCROBiOLOgy

OCeAN exPLORAtiON

RAfteR RADiOCARBON

RAfteR StABLe iSOtOPe

WAteR DAtiNg

ACCeLeRAtOR MASS SPeCtROMetRy

iON BeAM ANALySiS

NANOteChNOLOgy

NON-iNvASive SCANNiNg

COMMeRCiAL SeRviCeS

CLieNt ReLAtiONShiPS

MARKetiNg

iNteLLeCtuAL PROPeRty

iNfORMAtiON teChNOLOgy

gRAPhiCS

PuBLiCAtiONS

LiBRARy

Chief exeCutive

Alexander Malahoff

NAtuRAL hAZARDS

terry Webb

NAtuRAL ReSOuRCeS

Michael isaac


frank Bruhn



Rob Johnston

ReSeARCh

Robin falconer

StRAtegy

Desmond Darby

fiNANCe

graham Clarke

MA–ORi StRAtegy

Rawiri faulkner

huMAN ReSOuRCeS

tony Stone









vOLCANOeS

LANDSLiDeS

tSuNAMiS

hAZARD ASSeSSMeNt

hAZARD MitigAtiON

geOLOgiCAL tiMe

PALeOCLiMAte

PALeODiveRSity

hyDROCARBONS

CO2 SeQueStRAtiON

geOtheRMAL eNeRgy

MiNeRALS

gROuNDWAteR

geOMiCROBiOLOgy

OCeAN exPLORAtiON

RADiOCARBON DAtiNg

StABLe iSOtOPe ANALySiS

WAteR DAtiNg


iON BeAM ANALySiS

NANOteChNOLOgy


COMMeRCiAL SeRviCeS


MARKetiNg



gRAPhiCS

PuBLiCAtiONS

LiBRARy

GNS SCIENCE BUSINESS GROUPS AND CAPABILITIES

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GNS SCIENCE ANNUAL REPORT 2007

RadiocaRbon dating

tRitium dating

isotopic tRacing and mateRial analysis

aiR paRticulate analysis

nanotechnology

ion beam analysis

non-invasive scanning

mapping

eaRth stRuctuRe

maRine geology

paleontology

paleoclimate

climate change

hydRocaRbons

gas hydRates

geological stoRage oF co2

gRoundwateR

mineRals

geotheRmal eneRgy

eXtRemophile geobiology

FoRensic palynology

Risk modelling

eaRthquake hazaRd studies

volcanic Risk assessment

slope stability

tsunami modelling

social and economic impacts

you could say we leave no stone untuRned

02 CONTENTS

03 GNS SCIENCE AT A GLANCE

04 HIGHLIGHTS FOR THE YEAR TO 30 JUNE 2007 05 FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE 08 STRATEGIC OVERVIEW – DIRECTIONS AND CHALLENGES

�0 OUR RESEARCH ENVIRONMENT – FUNDING OUR SCIENCE

�2 OUR COMMERCIAL ACTIVITIES – APPLYING OUR SCIENCE

�4 STUDENT SUPPORT

�5 MANAGEMENT TEAM

�6 HUMAN RESOURCES – PEOPLE, LEADERSHIP, TEAMWORK

�8 GNS SCIENCE: WORKING FOR THE BENEFIT OF ALL NEW ZEALANDERS

26 COLLABORATIONS AND PARTNERSHIPS 28 INTERNATIONAL LINKAGES 29 REPORTING AND FINANCIAL STATEMENTS

30 BOARD MEMBER PROFILES

3� CORPORATE GOVERNANCE

34 CRI CAPABILITY FUND REPORT

36 REPORT OF THE DIRECTORS

37 STATEMENT OF FINANCIAL PERFORMANCE

37 STATEMENT OF MOVEMENTS IN EQUITY

38 STATEMENT OF FINANCIAL POSITION

39 STATEMENT OF CASH FLOWS

40 NOTES TO THE FINANCIAL STATEMENTS

48 PERFORMANCE INDICATORS

50 REPORT OF THE AUDITOR-GENERAL

5� STATEMENT OF RESPONSIBILITY 52 DIRECTORY



GNS SCIENCE AT A GLANCE

Our activities

GNS Science is an internationally respected research and consultancy company owned by the New Zealand government. Our purpose is to understand earth systems and associated technologies and to transform this knowledge into economic, environmental, and social benefits for New Zealand.

The benefits we deliver for New Zealand include:

• wealth from energy, mineral, and water resources• mitigation of the economic and social effects

of geological hazards• development of new physics-based technologies

such as nano-scale devices and non-invasive scanning.

These benefits arise directly from our research into processes within the Earth’s crust which involve:

• rocks, minerals, and groundwater• earthquakes, volcanoes, landslides and tsunamis• hydrocarbons and geothermal energy• geobiology and climate history • gravitational and electromagnetic fields• natural isotopes and radiation.

Established as a Crown Research Institute with our own Board of Directors in 1992, we operate as a stand-alone company, with shares held by the New Zealand government. In our establishment year, we had total assets of $14 million and annual revenue of $25 million. Today these measures have more than doubled. Our Ma-ori name, Te Pu- Ao, means the foundation, origin and source of the world in its entirety, from the atomic through to planetary scales.

Our clients

• New Zealand central government agencies• regional and local government• overseas governments• oil and gas exploration companies• geothermal exploration and operating companies• hydroelectricity operating companies• minerals exploration industry• meat, dairy, wool, timber, and horticulture processing

industries• insurance and reinsurance companies• engineers, developers, and infrastructure companies• museums• universities• other research organisations in New Zealand and

overseas.

Our statistics

We have:

• 315 staff located in Lower Hutt (245), Taupo (55), and Dunedin (15)

• research equipment and facilities valued at $26 million• annual revenue of $51 million comprising: – 43% as contracts for public-good research,

but not for capital equipment – 16% from the Earthquake Commission

for monitoring geological hazards – 34% from consultancy, products,

and laboratory services – 7% as direct government funding to maintain

and enhance our capabilities• annual operational surpluses typically of $1-2 million,

used mainly for re-investing in new scientific equipment and facilities.

Our website

www.gns.cri.nz

03


HIGHLIGHTS FOR THE YEAR TO 30 JUNE 200704

Science highlights • led the successful ANDRILL climate-study project in Antarctica• built a $�.4 million world-class ice-core research laboratory• presented evidence at the UN for legal extension of New Zealand’s continental shelf• partnered with Land Information New Zealand to install and operate �8 tsunami gauges• won bid to provide earthquake and tsunami risk assessment advice to Vietnam• captured world-class lahar database from dam collapse at Mt Ruapehu Crater Lake• won ‘Excellence in IT Award’ for the GeoNet website, providing information to end-users • played a key role in boosting NZ’s geothermal energy development• provided underpinning science to attract petroleum exploration in the Great South Basin • completed trailblazing survey of gas hydrates off the North Island’s east coast • published �59 research papers in refereed scientific journals• prepared 3�8 consultancy reports Financial highlights • achieved record revenue of $5� million• increased revenue by ��%• earned revenue per FTE of $�66,000• realised after-tax profit of $�.4 million• employed total assets of $36 million• increased shareholder equity to $�8.6 million• earned 7.8% return on equity• served 24 clients with value in excess of $�50,000


05FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE

This has been a good year for GNS Science, and we are now seeing the benefits of our past investment decisions. These benefits are evident in our science, as well as in our financial performance.

Science

Our science is key to satisfying many important needs for New Zealand. These include:

• energy, through research that supports hydrocarbon and geothermal exploration

• climate-change and environmental policy and mitigation, through research in biodiversity, carbon-dynamics, and carbon dioxide sequestration

• groundwater, through aquifer flow-modelling and quality assessment

• natural hazards management, through hazard assessment, reduction and readiness for civil defence and emergency management, and loss-estimation advice to the insurance industry

• mineral exploration, through research of on-shore and off-shore mineralisation

• oceans exploration, through resource assessment and input to policy, to secure national benefit from the exclusive economic zone

• non-invasive scanning and nanotechnology, by commercialising intellectual property

• earth and isotope science capability, through underpinning research (e.g. plate tectonics, mapping, geobiology, isotope chemistry, ion-beam physics) and graduate education.

Financial performance

Our after-tax profit for the year to 30 June 2007 was $1.4 million (2006: $1.0 million). This represents an after-tax return on equity of 7.8% (2006: 6.1%).

Total revenue from research, consulting and other operations was $51.0 million (2006: $46.0 million). Expenses were $48.9 million (2006: $44.4 million). Shareholder equity at 30 June 2007 stood at $18.6 million (2006: $17.5 million). The Board was pleased to declare a dividend payment to shareholders of $350,000.

Total revenue has increased by 106% since 1997. While our non-Crown revenue increased by 273% over this period (averaging 10.5% per year), our revenue from Crown contracts increased by only 43% (3.7% per year). The consequence of this slow rate of increase in Crown investment in R&D is that our Crown and non-Crown revenues are now equal. This is a milestone in the changing structure of our client-base.

Our Natural Hazards Group did well, largely on the basis of a very good commercial result. This shows significant and ongoing uptake of the Group’s research work.

The Geological Resources Group also had a successful year. As we noted in our last Annual Report, the Group’s revenue capability has been affected by difficulties in recruiting specialist staff to provide research services to the energy industry. The international market for such staff is exceptionally strong.

The National Isotope Centre (NIC) made significant improvements on last year’s performance. There has been strong growth in its analytical work. New research capabilities based on the role of soils in carbon capture, and the newly commissioned ice-core research facility, provide for a promising future.

Public-good and commercial science

Our mandate under the Crown Research Institutes Act 1992 is to undertake research and to facilitate the application of its results for the benefit of New Zealand. In this year’s Annual Report we provide detailed examples where the public-good and commercial applications of our work merge seamlessly. Recognising the different cultures of these two domains will see us go from strength to strength in fulfilling our role in conducting research and in its application. This path ensures our work remains relevant for New Zealand’s future.

Natural Hazards

In the popular mind, a major potential natural disaster in New Zealand this year was the Ruapehu lahar. With our research underpinning prudent management by the Department of Conservation, this predicted event happened dramatically, but without any loss to either life or property. In a world context, this was a major achievement in hazards research and mitigation and, compared to the Tangiwai disaster of 1952, represents a major advance in our nation’s ability to cope with such natural events.

In contrast, well out of public sight, our hazards advice to Meridian Energy has supported the decision, with full engineering prudence, that the Aviemore hydro dam on the Waitaki River does not need to be rebuilt.

We won the opportunity to provide tsunami surveillance for New Zealand, involving the installation and operation of 18 tsunami gauges around the coastline. This is in addition to the ongoing development of the GeoNet earthquake surveillance system, both in the installation of new sites, and in the provision of near real-time shaking information for response agencies.


FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE CONTINUED06

In addition, we have developed automated methods of using radar imagery to determine areas of flooding for the information of emergency management services while catastrophic events are in progress.

We have secured NZAID support to transfer our skills in hazard assessment and mitigation, and disaster recovery to other parts of the world such as southeast Asia and the Pacific. Tsunami hazard is a serious concern and a particularly important component of this work.

Geological Resources

We have continued to make significant contributions to the development of geothermal energy. This carbon-friendly and indigenous energy source is under-explored and under-utilised. In this endeavour we are supported both by FRST funding and the major developers of this resource in New Zealand, namely, Contact Energy and Mighty River Power.

We work closely with industry to promote New Zealand’s prospectivity for hydrocarbons, especially in the deepwater Taranaki Basin and the Great South Basin. Our Claritas™ seismic processing software is now ranked competitively with products from the world’s largest players. Hydro-carbon energy will remain part of New Zealand’s energy mix for many decades, despite concerns about its impact on climate change. We are addressing these concerns in being a founding member of the Australian CO2CRC consortium to advance the geological sequestration of carbon dioxide as a genuine option for mitigating the greenhouse impacts of carbon dioxide.

For the geothermal and hydrocarbon sectors, the key economic driver is that new discoveries and extraction will cushion New Zealand against imported energy price increases. In addition, we have done ground-breaking research on the vast gas-hydrate deposits (frozen methane) off our east coast, to understand their impact on ocean biodiversity, climate change and as a potential future source of energy. This work involves eleven organisations from six countries.

Our presentation to the United Nations Commission on the Limits of the Continental Shelf, given orally and accompanied by 72 maps, 90 seismic sections, and 2,700 pages of text delineating our continental shelf-area, was a first-class performance on the global stage. The work was conducted jointly with NIWA, and was commissioned by Land Information New Zealand. The first outcome is that New Zealand is setting a global precedent for the legal definition of a continental shelf.

The second outcome will be the assertion of New Zealand’s interests over an additional 1.68 million square kilometres of sub-aquatic territory. In comparison, New Zealand’s ‘dry’ land area is 0.27 million square kilometres. In view of this success it is important that funding for Ocean Survey 2020, which we see as an essential follow-up to explore this vast new territory, is achieved.

National Isotope Centre

The release this year of the assessment reports of the Intergovernmental Panel on Climate Change has galvanised governments and populations world-wide to address climate-change mitigation issues. This year we commissioned our $1.4 million ice-core analytical facility within our Joint Antarctic Research Institute with Victoria University of Wellington. This facility will allow us to use our stable isotope and x-ray scanning techniques to retro-monitor past climate and thereby predict the effects of climate change in the future.

The Antarctic drilling project ANDRILL recovered an unprecedented length of sediment core for constraining factors that led to past ice-shelf collapses and ice-sheet retreats. This represents essential information for under-standing climate change. In addition, our paleontologists have established a new method for determining past ocean temperatures, finding for example, that they were 30°C to 35°C warmer 55 million years ago. This is far warmer than any of the present climate models are able to account for. This type of calibration is crucial for the improvement and ultimate validation of climate models.

Upgrades to our Accelerator Mass Spectrometry system for radiocarbon dating have improved throughput, reliability, and precision. This laboratory is operating in a financially viable manner, a remarkable achievement since its counterparts and competitors elsewhere in the world receive financial subsidies. Our water-dating and quality assessment work has expanded greatly, with new contracts in Marlborough, Taupo, and internationally.

Other successful applications of our x-ray scanning technologies are supporting primary-produce industries. Our measurement of air particulates and identification of their sources has proceeded well in Auckland, Hawke’s Bay, Canterbury, and overseas. We are providing evidence for the biofuels industry, through C14 measurements, on the proportion and origin of biofuels in any blend.

GNS SCIENCE ANNUAL REPORT 2007GNS SCIENCE ANNUAL REPORT 2007

Overview

We are pleased to report on these achievements over the past financial year. We have fulfilled our mission of pursuing scientific research, and ensuring its results are of major benefit to New Zealand. Taken together, the message we deliver to our stakeholders is that we have succeeded in our endeavours, and that we have done this with their support. We need this ongoing support to continue to deliver these benefits to New Zealand.

As a successful research organisation, we are well-placed to assist government, and agencies such as MoRST and MED, with evidence that is essential for policy-makers to achieve their goals.

We thank our departing Board Member, Brenda Tahi, who made a significant contribution to the business over the last six years. We extend a warm welcome to our new Board Member, John Walters.

We again thank our staff for their hard work and their determination to succeed, our clients for their continued loyalty, and our shareholders for their support and commitment to science for the benefit of New Zealand.

Con Anastasiou Chairman

Dr Alexander Malahoff Chief Executive

07


STRATEGIC OVERVIEW – DIRECTIONS AND CHALLENGES08

Our purpose

Planet Earth is a mass of 6 billion trillion tonnes. It is held together by gravity, and is heated internally by radioactive elements, and externally by solar radiation. Gravity and heat drive all of the Earth’s fundamental processes, such as the generation of the magnetic field, plate tectonics, and climate patterns. All of these processes support the creation and survival of life. They also enhance and threaten our social and economic development. Our purpose is to undertake research into these Earth processes, and to thereby discover, understand, and apply new knowledge for the benefit of New Zealand.

Our strategic advantages

Two strategic advantages help us to achieve our purpose. We have at GNS Science a unique set of scientific capabilities, which cover the entire spectrum of earth sciences, including geology, geophysics, geochemistry, and geobiology. And we have in New Zealand a unique location, which stems from our geological setting on the boundary of two of the planet’s tectonic plates.

This science capability is underpinned by the fundamental disciplines of mathematics, chemistry, microbiology, and physics, including the physics of isotopes, radiation, and ion beams. Our strength is our ability to integrate these disciplines, largely through teamwork, and to support the wide variety of their applications. These applications include risk management, resource assessment, environmental monitoring, nanotechnology, behavioural science, and policy development. Our being in a politically stable, English-speaking country gives us the added advantage of attracting international partners who provide us with essential material support.

Our core goals

As a Crown Research Institute, we will be successful only if we achieve our core goals. These are to:

• sustain and enhance nationally important research capabilities for energy, water, minerals, geological hazards, environmental sustainability, geosphere-biosphere interactions, and isotope and x-ray technologies

• enhance both our public-good science outputs and our commercial applications

• integrate Ma-ori interests into our activities • be an employer of choice, recognising and

rewarding staff fairly.

The importance of our first core goal is now recognised by Government through the CRI Capability Fund. GNS Science supplements the monies it receives from the Capability Fund through its own resources. We are pleased that the importance of the other three goals is readily appreciated by all our stakeholders.

An issue of particular focus for management is how we can maintain the vibrant research culture we presently enjoy, when foreseeable revenue increases are principally in the commercial sector. The commercial environment tends to drive us toward a consultancy culture which, if not well managed, could be at variance with the culture we need to fulfil our statutory purpose – to undertake research.

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Building for the future

In addition to these core goals, in 2003 we initiated a portfolio of “bold challenges” to extend ourselves beyond business-as-usual. We did not expect to achieve them all, but those we achieve will set new paths for our future, and will be catalysts for step-growth.

During 2006, we achieved the first two of the challenges. We secured the support of the Earthquake Commission, at the level of $8 million per year, to complete the GeoNet hazards monitoring network, and we relocated to our new facilities at Avalon, Lower Hutt.

During this last year we have made significant progress with two other challenges. We expanded our capability in climate research by building a $1.4 million facility for the storage and analysis of ice cores. Ice cores record how the world was when the climate was similar to that currently forecast as a consequence of climate change. The next step is to participate in setting up a multi-disciplinary research consortium to reduce uncertainties in the forecasts and impacts, and to develop mitigation and adaptation measures. We have secured funding for the Its Our Fault project to identify the potential for losses from a Wellington earthquake, the region of New Zealand exposed to the greatest hazard and vulnerability. Our earthquake science, economic risk modelling and behavioural-science skills are essential for meeting this challenge.

For the other challenges, some adopted more recently, our progress is at earlier stages. We need to advance geo-energy research, for both geothermal and hydro-carbon exploration, as these energy sources will for many decades remain in the energy mix New Zealand needs. Our carbon dioxide sequestration research with Australian colleagues is an essential contribution to environmental protection. Understanding the quantity and quality of groundwater is important, not only because it accounts for 40% of extractive water-use, but also to understand how nitrates are transported into our lakes. The exploration of our off-shore exclusive economic zone and its continental shelf extension, the fourth largest in the world, will bring significant rewards for New Zealand. Our geomicrobiology team is already half-way to establishing the extremophile collection required to attract external support for commercialisation. We are continuing to commercialise our non-invasive scanning products with enhanced opportunities overseas, and our ion-beam team is developing new devices such as FED (field emission display) technology based on new nano-structures. We are filling an international role in disaster risk reduction, using our capabilities to protect people from geological hazards especially, but not exclusively, in developing countries.

The longer term

Finally, we wish to continue to work with universities to protect the future of earth science in New Zealand, and to ensure their students’ education is appropriate to address the strategic earth science needs of the country, especially in the quantitative disciplines. With greater cooperation and larger teams, we believe we can together produce better educational and research outcomes for New Zealand.

While we celebrate each achievement among the bold challenges, none can be achieved if the underpinning capabilities are not robust. Our first core goal, of maintaining research capabilities, therefore remains of paramount importance. It is the origin of our first strategic advantage. The second strategic advantage, our country’s global location, simply provides us with the opportunity.


OUR RESEARCH ENVIRONMENT – FUNDING OUR SCIENCE

Government research investment

Most of our research funding comes from competitive government contracts administered by the Foundation for Research, Science and Technology (FRST).

These contracts total $20.4 million per year and account for 43% of revenue. The contracts cover 18 programmes, varying in size from $130,000 to $4.6 million per year. The duration of contracts ranges from two to six years, after which a new proposal is needed for continued funding for each programme.

We welcome the changes in the contract funding regime that have been introduced this year. The main change is that funding for some of our larger research programmes, that have been in existence for at least six years, is now determined through negotiation rather than competitive bidding. We acknowledge the stability that this negotiated approach has brought.

We secured eight years of funding this year for two major research programmes that were assessed through this process. The review process is exhaustive with a panel of international specialists evaluating all aspects of our proposed programmes of research.

Funding for smaller research programmes remains under the competitive bidding system, where portfolios are invariably heavily over-bid and success is always uncertain. Other changes introduced this year include a stronger focus on outcomes in research contracts and quarterly reporting of progress to FRST. We see these changes as positive. The focus on who will use our research and how they will benefit has prompted more emphasis on value-chain development.

It is pleasing to note that our interaction with key FRST personnel has increased in the past year. Meetings of senior management from both organisations have been more frequent than in previous years. This change has been largely initiated by FRST and, as a result, the mutual understanding between our organisations has increased significantly.

Meeting the challenge of living on an active plate boundary

This year we finalised a contract with FRST for the funding of a major research programme aimed at understanding the impact of plate tectonics in New Zealand. Called Impacts of Global Plate Tectonics in and around New Zealand, it provides knowledge for mitigation strategies and environmental adaptation that are uniquely appropriate to New Zealand’s location on an active plate boundary.

This programme secured annual funding of $2.6 million for eight years. A measure of the importance of this research is that rates of environmental change due to plate tectonics are much greater in New Zealand than in most other countries.

This research programme undertakes measurements and calculations that enable New Zealand to minimise the risk and maximise the opportunities of sitting astride a plate boundary. Over time, gradual surface movements of New Zealand caused by plate tectonics distort survey networks, cause earthquakes and volcanic eruptions, create geothermal fields, result in subsidence or uplift, and make exploring for oil and gas difficult. Outputs from this research provide underpinning knowledge and understanding for all these areas.

Four areas that particularly benefit from this research are land surveying, mitigation of geological hazards, the Building Code, and the insurance sector. We work closely with Land Information New Zealand to define an improved geodetic datum to take account of our distorting landscape. Accurate land surveying is the basis of property ownership and is fundamental to a stable economy. It is also critical for navigation, civil engineering, agriculture, horticulture, and forestry.

The programme provides data, analysis, and understanding for emergency managers so that the social and economic impacts of geological hazards can be reduced. We also provide the insurance industry with robust information for economic loss models. The research continuously improves our active faults database and hazard models, which are used by the Department of Building and Housing to update the Building Code. The leader of the programme is Dr Rupert Sutherland.

Improving our ability to deal with climate change

Another major research programme that successfully negotiated funding this year is aimed at providing New Zealand policy agencies with scientifically robust knowledge to help reduce societal and environmental risks from significant climate change. Called the Global Change Through Time Programme, it has received annual funding of $1.8 million for eight years.

This research will be crucial for New Zealand policy agencies and also for climate modellers working to understand global climate dynamics. To achieve this, our researchers collaborate widely to generate new knowledge about the timing, rate, size, impacts, and drivers of major environmental events that impacted on the southwest Pacific region in the past. The research is also developing scientific methods that link past and present environmental change.

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This programme has well developed links with the Intergovernmental Panel on Climate Change (IPCC), which uses our outputs to develop climatic, environmental, and socio-economic models for New Zealand. An outcome of this research will be more accurate forecasts on the rate of climate change. Greenhouse warming is closely linked with the carbon cycle, which will be better understood as a result of this research. This will be crucial to post-Kyoto agreements and in applying carbon accounting rules that will come into effect after 2012. Scientific capabilities specific to this programme include development of geological time scales, reconstruction of ancient environments, geological mapping, exploration for economic resources, biological taxonomy, and evolutionary and biodiversity research. The leader of this programme is Dr James Crampton.

Funded collaborative project on CO2 storage

With major partners The University of Auckland and CRL Energy, we are conducting a study of carbon capture and storage. This 17-month FRST-funded programme is aimed at reducing New Zealand’s green-house gas emissions. It will pave the way for pilot-scale projects to capture carbon dioxide and store it in deep geological formations.

This collaborative project takes advantage of the skills of the organisations involved. We provide expertise in petroleum and coal geology, reservoir architecture, and geological risk. CRL Energy provides expertise in coal science and advanced technologies, and The University of Auckland provides expertise in numerical reservoir modelling.

The programme will determine the feasibility of subsurface storage of CO2 in the Waikato and Taranaki regions. It will evaluate potential storage sites including coal seams, deep aquifers, depleted oil and gas fields, and enhanced oil and gas recovery projects. The project will rank potential storage sites and ultimately lead to a proof-of-concept CO2 storage site.

Boost for geothermal energy research

Our partnership with The University of Auckland has been awarded $1.9 million per year by FRST for the next six years to work on ways to increase geothermal energy production in New Zealand. It will focus on new and under-developed geothermal resources, making geothermal technology more efficient, and reducing the environmental impact of geothermal development.

A feature of this joint project is a significant level of co-funding from the geothermal energy industry. We are confident that geothermal energy can be lifted from 7% of New Zealand’s electrical energy generation to 12% in the next eight years. By 2020, it could account for up to 20% of New Zealand’s electricity generation.

Increased geothermal energy development will improve the security of energy supply from a resource that has low emission of greenhouse gases.

The new programme is expanding existing research in three main areas. It is investigating geothermal resources that are deeper and hotter than those currently tapped, it is working on methods to reduce environmental impacts, and it is addressing technical issues that are currently a barrier to improved efficiency and output.

Most existing developments tap into geothermal fluids of up to 320°C at depths of up to 3km. However, fluids at depths of 4km to 5km could be up to 400°C. The geology and hydrology at these depths are not well understood and the technology of handling high temperatures needs further development. The research is aimed at improving the understanding of these deeper environments. Research will also be aimed at reducing the impact of development, through better understanding of fluid injection, land deformation, and the effects on surface ecosystems.

Energy alliance

With NIWA and CRL Energy, we are working on a 15-month FRST contract to assess New Zealand’s energy needs until 2030. The three-member consortium is evaluating the sources of energy in New Zealand, the future demands, and the infrastructure for delivering energy. The programme will quantify the uncertainties in each of these spheres. The output in 2008 will be a report to the government recommending research priorities that will help ensure New Zealand’s future energy needs are met. This is one of the growing number of large collaborative projects we are involved in.

Changing attitudes to research

There is acknowledgment through the entire research and development sector that there is a significant gap between New Zealand and northern hemisphere countries in the culture of valuing science and its outputs. A barrier to lifting the performance of this sector is overall funding, which is low compared to the OECD average. Research providers are increasingly working together to increase the awareness of the benefits of research and development, and to garner increased support for the sector.

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Our commercial work at a glance

Revenue from commercial work, in New Zealand and overseas, is growing much faster than revenue from public-good research contracts. Commercial work is crucial to sustain our operation and for growth. Commercial revenue in the year to 30 June 2007 was $16.9 million, a 26% increase on 2006. Growth came from work in New Zealand and overseas, particularly in the Asia-Pacific region. All Groups within our organisation contributed to the growth.

Our commercial revenue comes from three sources – consultancy, products, and laboratory services. Fee-for-service consultancy is the largest component. Laboratory services and product sales help an ever-growing number of sectors. Product sales consist mainly of database products, software and non-invasive scanning technology for industry.

Commercial work stimulates our research staff who want to see their work used, and is also a key input into future research directions. A good deal of our commercial work focuses on securing energy resources and in helping mitigate geological hazards. In doing so, we make New Zealand, and other countries, safer and more sustainable.

The role of our Business Development Group

Our Business Development Group coordinates the commercial applications of our science. The nine members of the group, who have business and marketing skills, are embedded in the science teams to identify and develop revenue opportunities. They also assist in managing intellectual property, licensing agreements, contracts, partnerships, and joint ventures.

Partnerships

Partnerships are central to our commercial strategy. They are an effective way for us to access overseas opportunities. We form partnerships on a case-by-case basis with the main factors being the compatibility of a partner’s capabilities in research, manufacturing, commercialisation, marketing, and distribution.

Geological hazards

Our focus in geological hazards is on reducing the physical, economic, and social cost of these events for New Zealand and international communities. We offer a wide range of expertise from designing real-time monitoring networks to seismic engineering advice for large structures. We offer risk assessment and risk modelling services and undertake preparedness audits. Our expertise in social science enables us to help in reducing community vulnerability and improve public awareness of hazards. This includes advice on policy and planning, education and training, and public warning systems. A goal in our hazards work is to help New Zealand become more resilient to the impacts of earthquakes, eruptions, tsunamis and landslides.

Oil and gas exploration

Our hydrocarbons exploration consulting group is the largest in New Zealand. This group contributes to the discovery and development of oil and gas fields in New Zealand and in the Pacific region. Our main focus is on improving the understanding of petroleum systems in New Zealand’s sedimentary basins. Our reputation in this area means that we are the first port-of-call for companies arriving in New Zealand to undertake exploration. A goal of our work in this area is to help New Zealand become self-reliant in oil to avoid the risks and costs of heavy dependence on overseas sources.

Geothermal energy

We strongly support increased development of New Zealand’s world-class geothermal resources as the only non-weather-dependent renewable energy source capable of making a significant contribution to base-load electricity generation. Geothermal also produces low carbon dioxide emissions. While above ground technology is relatively mature, potential resources below ground are yet to be fully explored. We offer scientific expertise at all stages, from exploration to development and production. Our aim is to help New Zealand double the output of electricity from geothermal energy over the next 10 years.

OUR COMMERCIAL ACTIVITIES – APPLYING OUR SCIENCE�2


Energy efficiency diagnostic software

An example of one of our products that contributes to the energy sector is software to diagnose efficiency problems in thermal power stations. Called EXERGY, the software has been purchased by power station operators in New Zealand and overseas. As well as cutting carbon dioxide emissions and reducing fuel use, it can reduce station operating costs. It pinpoints efficiency losses and recommends remedial actions. It also ranks problems based on estimated hourly drain on running costs. This enables operators to prioritise changes.

EXERGY reports in real time against original plant specifications so operators can tune a plant to run optimally. The software analyses data from the station’s instrumentation according to the laws of thermodynamics. The software has its own website: www.powerstationefficiency.com

Recent successes

A significant number of our commercial activities in the past year carry potential that will lead to even greater financial and scientific returns in the future. They include:

• work for Opus International to help with geotechnical investigations of the proposed Transmission Gully motorway route north of Wellington

• increased involvement in New Zealand and overseas geothermal energy developments including geothermal projects in Chile, Indonesia, the Philippines, and Japan worth over $480,000 in revenue

• a $600,000 Asian Development Assistance Fund (ADAF) project for NZAID to help reduce the impact of tsunamis in Vietnam by working with Vietnamese scientists to strengthen their capability to develop a monitoring network

• an expansion of the network of distributors in Scandinavia and South America for our Isoscan LDS 200 green density timber measurement system to extend our market beyond Australasia and North America

• a NZAID-funded project in Vanuatu to advise on the development of a modern volcano-monitoring system

• work with multiple oil exploration companies helping with their programmes in onshore Taranaki, with significant forward orders for our oil and gas consultancy services

• work with US-based company, Global Resources, to determine oil exploration prospects in the Deepwater Taranaki Basin, culminating in presentations to potential joint venture partners worldwide

• a doubling of commercial groundwater consultancy revenue in the past four years, including projects for many territorial authorities, as well as the Ministry for the Environment, private sector organisations, research organisations, and Ma-ori trusts.

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STUDENT SUPPORT�4

We support many postgraduate students with scholarships and through co-supervision. In the past year we co-supervised about 65 such students. Of these, �2 held GNS Science Scholarships, details of which we provide below. We also contributed funds to the Frank Evision Memorial Scholarship and for two scholarships at Te Whare Wa-nanga o Awanuia-rangi in Whakatane.

Sarah Beanland Memorial Scholarships

Student University Degree Supervisors Topic

Rosemary Cody Victoria University of Wellington

PhD Dr James Crampton and Dr Tim Naish of GNS Science and Dr Lionel Carter of Victoria University

The stability of the Antarctic ice sheet over the past 4.5 million years

Elizabeth Robertson Victoria University of Wellington

MSc Dr Russell Robinson of GNS Science and Prof Euan Smith of Victoria University

Towards a local magnitude scale for earthquakes in New Zealand

Alex Winter-Billington Victoria University of Wellington

MSc Dr Andrew MacIntosh of Victoria University The hydrological system and surface motion of the Brewster Glacier, Southern Alps, New Zealand

Other GNS Science Scholarships

Student University Degree Supervisors Topic

Jan Baur Victoria University of Wellington

PhD Dr Beate Leitner of GNS Science and Dr Tim Stern of Victoria University

A study of the depositional systems and tectonics of the offshore Taranaki Basin using 2D and 3D seismic data

Peta-Gaye Burnett University of Saskatchewan, Canada

MSc Dr Chris Daughney of GNS Science and Dr Derek Peak and Dr Steven Siciliano of the University of Saskatchewan

Quantifying the way different environments affect the ability of heat-loving micro-organisms to absorb dissolved metals in the environment

Hannah Heinrich University of Otago PhD Dr Chris Daughney of GNS Science and Dr Jim MacQuillam and Dr Phil Bremer of Otago University

Investigation of the cation adsorption properties of two thermophilic bacteria

Adrian Hetzer University of Waikato PhD Dr Chris Daughney of GNS Science and Dr Hugh Morgan of Waikato University

Investigation of the methods by which thremophilic bacteria sequester metal and metaloids

Ake Fagereng University of Otago PhD Dr Martin Reyners and Dr Susan Ellis of GNS Science and Prof Rick Sibson of Otago University

A study of subduction-related fault processes under New Zealand

Grant Kaye University of Canterbury PhD Dr Andrew King of GNS Science and Prof Jim Cole of Canterbury University

An assessment of the volcanic hazards of the Rotorua region

Simon Hills Massey University PhD Dr James Crampton of GNS Science and Dr Mary Morgan-Richards of Massey University

The genetic evolution of marine molluscs

Vanessa Lueer University of Bremen, Germany

PhD Dr Chris Hollis of GNS Science and Prof Helmut Willems of Bremen University

A study of marine micro-fossils (radiolarians) as guides to oceanic changes off the east coast of New Zealand over the past one million years

James Scott University of Otago PhD Dr Andy Tulloch of GNS Science and Prof Alan Cooper of Otago University

A study of the geological evolution of the eastern Fiordland region

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MANAGEMENT TEAM

alexander malahoffchief executivePhD, University of HawaiiDSc (Hon), Victoria University of Wellington Alex leads the management team and oversees the day-to-day management of the Company. He directs the team in strategy, policy, investment, and science programmes. Alex is a geophysicist and, before taking up his present role in July 2002, he was Professor of Oceanography and Chair of the Ocean Engineering Department at the University of Hawaii. He is also a director of the Hawaii Undersea Research Laboratory. Before that he was a Program Director at the Office of Naval Research and Chief Scientist of the National Ocean Survey, in the National Oceanic and Atmospheric Administration in the US.

desmond darbygeneral manager, strategyPhD, State University of New York at Stony BrookDesmond leads the strategy formation for research and consultancy across both the government and the private sectors, and advises the Chief Executive in these areas. He also manages the public relations and outreach staff. He previously managed our crustal dynamics team, and led the major research programme on The Effects of Plate Tectonics on New Zealand.

His scientific speciality is the mathematical modelling of geodetic observations of crustal deformation. Desmond is also a Director of New Zealand Synchrotron Group Ltd.

Robin Falconergeneral manager, Research PhD, Victoria University of WellingtonRobin coordinates and monitors the Company’s publicly funded research programmes. Before coming to GNS Science in 1995, Robin was a private sector geoscience consultant in New Zealand and internationally. He has also held research and management positions with the Geological Survey of Canada.

terry webbgeneral manager, natural hazards groupPhD, University of CanterburyTerry is responsible for leading the Natural Hazards Group which undertakes research and consultancy in earthquakes, volcanoes, landslides, tsunamis, and geological mapping. He has been with GNS Science since 1992. A seismologist by training, Terry specialises in seismic and tsunami hazard and risk assessment.

graham clarkechief Financial officerCA, BCA, Victoria University of WellingtonGraham leads the Company’s finance operations ensuring appropriate policies, procedures and practices are developed and maintained. His team provides the full range of financial services to support the Company’s operations, including financial reporting and advice to management and to the Board to allow them to effectively undertake their respective roles. His team also takes responsibility for various operational aspects including procurement, property, insurance, and internal audit.

Rob Johnstongeneral manager, business development and information servicesBSc, Dip ORS, Dip TchngRob’s portfolio includes managing the Company’s commercial operations and intellectual property issues. He also manages our extensive IT platforms, as well as leading the library and graphics teams, and looking after publications, collections, and the Company website. Rob joined GNS Science in early 2004. He has extensive experience in managing information systems in New Zealand companies. This includes senior positions with Tasman Forestry in Rotorua and with Public Trust.

michael isaacgeneral manager, natural Resources groupPhD, The University of AucklandMike is responsible for the Hydrocarbons, Geothermal and Groundwater, Ocean Exploration, and Paleontology and Environmental Change sections. He is a geologist, with expertise in coal geology, sedimentary basin analysis, and geological mapping.

Frank bruhngeneral manager, national isotope centre PhD, Bochum University, GermanyFrank is the Director of GNS Science’s National Isotope Centre (NIC). The NIC is New Zealand’s premier source of applied isotope science capability, comprising research teams and commercial service units in the Isoscan and Environmental Isotopes sections. Frank is a geochemist, specialising in the use of isotopes as tracers in biogeochemical cycles. Frank is the New Zealand coordinator for the NZ-Germany Scientific & Technological Co-operation Agreement. He joined GNS Science in 2002 after having worked for the CSIRO in Australia and a radiocarbon dating laboratory in Germany.

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The management team from top left, clockwise: Alexander Malahoff (Chief Executive), Desmond Darby, Robin Falconer, Terry Webb, Michael Isaac, Frank Bruhn, Graham Clarke, Rob Johnston.


HUMAN RESOURCES – PEOPLE, LEADERSHIP, TEAMWORK

Our people

Like many organisations, our key strength lies in our staff. We have highly skilled science staff and support teams working from three locations in New Zealand. Our staff enjoy working at GNS Science because of our supportive environment, our leading-edge science, and the opportunities we provide for professional development. At the end of June 2007, we employed 315 permanent staff (2006: 295).

Ages for permanent staff range from 17 to 68, with the average age being 45 years. The gender balance is 30% female and 70% male. The average length of service as at 30 June 2007 was 12 years.

Our culture

Our staff are highly qualified, with 34% holding PhDs. Much of our work is done in teams and we encourage collaboration both inside and outside the organisation.

We have an expanding range of nationalities, reflecting the international market from which we recruit. Among the languages spoken by staff are Afrikaans, Arabic, Cantonese, Danish, Dutch, Filipino, French, German, Greek, Hindi, Italian, Korean, Mandarin, Ma-ori, Polish, Portuguese, Russian, Serbian, Spanish, Tamil, Turkish and Ukrainian.

Staff recruitment and turnover

Turnover has remained stable at 8.3% (2006: 8.7%). Of the 26 staff who left in the last year, nearly half did so for lifestyle reasons such as family, retirement, returning overseas, or relocating within New Zealand. We recruit widely to get the skills and experience we need. Of the 18 scientists appointed in the past year, nine were recruited from overseas.

Staff development

Our commitment to staff in terms of training and professional development has continued with the appointment of a Training Advisor in the Human Resources team. In addition to training in areas such as facilitation, project management, and performance management, we have started a formal management development programme.

Employment policies

We have a wide range of employment-related policies that are readily available to staff via the intranet. These are regularly reviewed and, where appropriate, staff input is sought as part of the review process.

Employee relations

We continue to have a positive relationship with the Public Service Association and the local delegates. The PSA represents 52% of staff. Our Collective Employment Agreement expired on 30 June 2006 and was renegotiated in December 2006. The new Collective Agreement expires in 2009.

Health and safety

We contract Workplace Support, and Seed, to ensure independent on-site support is available for staff. We continue to provide a range of health and safety training which is reviewed regularly to ensure it is appropriate.

As in previous years, we have made medical checks, flu vaccinations, hearing tests, and workplace assessments available to staff. We continue to be part of the ACC Workplace Safety Management Programme where we have primary status.

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Personal and family security

Through our insurer, we provide financial assistance for employees’ families in the event of death or injury by way of life insurance policy and income protection insurance.

We assist staff with retirement planning by facilitating employee deductions and paying administration costs for the Government Superannuation Fund and the Individual Retirement Plan. As at 30 June 2007, 27% of staff participated in these retirement savings plans. KiwiSaver will lead to an increase in this percentage. We also offer group discount arrangements for medical insurance and this is used by 25% of staff.

Source of appointments to permanent positions

2007 2006 2005Private sector – New Zealand �9 23 6Private sector – overseas �� 6 6Government 2 5 1New Zealand university 6 9 3Total 38 43 16

Staff departures for the following opportunities

2007 2006 2005Private sector � 3 3Working overseas 3 1 0Government/university 5 7 3Full-time study 0 1 1 Career change 2 0 0Lifestyle (includes family, retirement, returning overseas, or relocating within New Zealand) �2 12 8Other 3 3 0Total 26 27 15

Workplace accidents requiring medical treatment

2007 2006 2005Cases 3 7 9

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GNS SCIENCE: WORKING FOR THE BENEFIT OF ALL NEW ZEALANDERS

Keeping people safe

GeoNet – national network to monitor earthquakes and volcanoes

Forecasting potential volcanic eruptions and lahar events

Volcano and earthquake hazard and risk assessment

Tsunami modelling and hazard assessment

Slope stability assessment

Underpinning data for the Building Code

GNS Science is an organisation dedicated to helping New Zealand benefit from our earth and ocean environments. It is a unique country and it has resulted in a highly specialised group of world-recognised people. Here are just 50 ways we benefit New Zealand.

Energy resources

Geothermal resource exploration, assessment and management

Assessments of New Zealand’s oil and gas prospects

Seismic surveys, data processing and modelling

Drill core analysis and interpretation

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Infrastructure development

Hydro dam safety assessments

Earthquake hazard assessment

Modelling potential earthquake damage to highlight areas of greatest risk

Designing structures to survive earthquake shaking

Slope failure studies

Slope stability assessment

Highway, transmission and pipeline route surveys

Hazards information for property owners

Mineral wealth

Regional geology

Geological mapping

Hydrothermal mineral surveys

Protecting the environment

ANDRILL – analysis of sedimentary record of climate history

Past environment estimation from both fossils and ice cores

Air particulate studies and air quality monitoring

Tritium dating of water and ice

Groundwater research and water quality assessment

Carbon dioxide sequestration

Software for optimising power station efficiency

Environmental analysis using isotope techniques

Managing the environmental impacts of geothermal development

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Enhancing New Zealand’s competitive advantage

Development of nanotechnologies

Non-invasive scanning of meat for export

Non-invasive scanning of timber products

Development of novel non-invasive scanning methods

Development of indigenous energy resources

Extremophile research

Maintaining New Zealand’s place at the forefront of earth sciences

Software development for commercial application

Community responsiveness

Linking GNS Science capabilities with Ma-ori end-users

Geological history and landform studies

Dating of natural and man-made artifacts

Providing expertise to Te Papa Museum of New Zealand

Supervision and support of graduate students

Societal perception of hazards

Pollen analysis for forensic investigations

New Zealand’s international obligations

International Atomic Energy Authority representation

Technical expertise for UN Convention on the Law of the Sea

Hazards advice and training in the Pacific and southeast Asia region

Climate change advice for Kyoto negotiations

Representing New Zealand on numerous international committees and bodies

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SEISMIC SAFETY

At a glance

Working with consultant URS New Zealand Ltd, we undertook a detailed study of the geological faults at and near the Aviemore hydro-electric dam for owner, Meridian Energy. Our investigation confirmed that the Waitangi Fault, which underlies the dam, is active. We characterised the fault so dam safety could be properly assessed in the event of a rupture.

Aviemore dam

Over a 10-year period, we have been working with dam engineering consultants URS New Zealand to assess geological faulting in the Waitaki Valley, in the South Island. This project provides client Meridian Energy with the seismic loads needed to assess the performance of its hydro dams against current dam safety criteria. It is best practice to periodically review the safety and operating procedures of large engineered structures, to take into account advances in geology and in structure performance.

Dam safety is important to hydro electricity generators. Meridian Energy came to GNS Science for the best earthquake geology expertise to apply to a potential seismic risk at their Aviemore hydro dam.


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The Aviemore hydro-electric dam was built across the Waitangi Fault in the 1960s, when the fault was considered inactive. With the realisation that the fault could be active, we undertook state-of-the-art geological investigations to understand the rupture threat from the geological faults at and near the dam.

Our brief was to determine when the Waitangi Fault last ruptured, how often it ruptures, and the size of these ruptures. We concluded that the Waitangi Fault has moved at least twice in the past 25,000 years. The last rupture was 11,000 to 14,000 years ago. Surface displacement during ruptures was between 1.2m and 1.6m. We also found that smaller, less active faults to the west of the dam have moved in the last 30,000 years.

Our investigation made use of a range of techniques including luminescence and radiocarbon dating to determine timings of past ruptures of the Waitangi Fault.

URS used the findings of our investigations to evaluate the safety of the dam for fault displacement and earthquake-shaking loads, as well as seiche waves generated in the retained reservoir. The high quality of the information we provided enabled URS to conclude that Aviemore dam could safely withstand the loads expected in the event of a rupture of the Waitangi Fault with no uncontrolled release of the reservoir. Meridian appointed an International Review Board, which reviewed all aspects of the investigation and evaluation. The Review Board expressed confidence in our work and endorsed our conclusions.

To assure safe management of reservoir outflow after a surface rupture event, Meridian Energy has upgraded the spillway and sluice gates as well as their operating systems. They have also built a concrete bund across the fault on top of the dam. The project illustrates the increasing recognition of the value of geological science in supporting engineering work.

Meridian Energy commentary:

“Throughout the project, GNS Science has consistently delivered scientific information which is first-class. This has included introducing and evaluating luminescence-dating techniques that allow the age of faulting in the Waitaki gravels to be determined.”

“Areas where GNS Science has made the greatest contribution include:

• understanding of regional seismicity and seismotectonics

• active fault characterisation studies• development of fault models for specific dam sites• determination of single event displacements and

recurrence intervals.”

Jim Walker Engineer – Dam Safety & Civil Meridian Energy Ltd, Christchurch

Project started: Wide-area fault studies started mid-90s. Specific fault studies started 1998.

Project duration: Over 10 years

Researchers involved: Up to 12 at any one time

Funding: Commercially funded throughout. Sub-contracted to URS New Zealand for client Meridian Energy.

Progress communicated by: Regular reports and meetings with client.

Direct beneficiaries: Meridian Energy and URS New Zealand

Long-term beneficiaries: All New Zealanders

At a glance

A GNS Science-led team of scientists recovered 12 million years of sediment core from under the Ross Ice Shelf in Antarctica last summer. The ambitious project, called ANDRILL, shows Antarctica has warmed a number of times in the past 12 million years, with the ice retreating rapidly and leaving open ocean. The observations from times when the planet was warmer than today will help to improve our understanding of what will happen to the Earth as it gets warmer.

Abrupt and dramatic climate changes in Antarctic sediment core

In the past 12 months we learned important clues about how Antarctica and the world’s oceans might change if the Earth’s climate warms signifi cantly in the next 70 years. The NZ$43 million ANDRILL (Antarctic geological drilling) programme used a state-of-the-art drill rig to pierce the Ross Ice Shelf and retrieve a 1.3km-long core of sediment and rock from beneath the seabed.

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By drilling �300m into the seabed and collecting sediment cores dating back millions of years, scientists have found that the Ross Ice Shelf has advanced and retreated more than 60 times in the past �2 million years. The speed and extent of these changes is helping in understanding the way Antarctic ice sheets behave in relation to climate change.

CLIMATE RESEARCH


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Project started: Planning started 1997. Summer field surveys 1999-2005.First drilling season 2006-2007.

Project duration: Seven years.

Number of researchers involved: More than 70 from four countries, including 10 from GNS Science.

Funding: $US35 million. Over the seven-year duration of the project,

the US is paying half the cost, the New Zealand government is contributing 25%, Italy 18.5%, and Germany 6.5%. New Zealand’s science funding is provided by the Foundation for Research, Science and Technology, and the Royal Society’s Marsden Fund to GNS Science and its partners at Victoria University of Wellington, the University of Otago, and the University of Canterbury.

MFAT, through Antarctica NZ, provided 25% of the logistics and operational costs.

Progress communicated by: Mainstream and specialist media, conferences, public presentations, website: www.andrill.org

Direct beneficiaries: Climate scientists, policy developers.

Long-term beneficiaries: The human race.

Analysis of the 12 million years of core has given scientists new insights into behaviour of the Antarctic ice sheet. During the first and last million years of the core, the ice sheet was relatively stable. However, the middle 10-million- year period of the core shows clear signs of instability where the ice sheet reacted strongly to changes in global temperature. It shows Antarctica moving abruptly from full glacial conditions to open ocean and back again.

When the ice melted away, scientists saw a strong biological presence in the sediment resulting from abundant marine life in warm oceans. During cold periods, stony glacial sediments dominate, with only minor biological content.

From the findings, scientists can reconstruct past polar temperatures which can be used to ‘ground truth’ climate models. Melting of the ice sheets would result in a substantial rise in the height of sea level.

The drilling took place on the Ross Ice Shelf, 15km west of Scott Base. The drill passed through 85m of floating ice in McMurdo Sound, then through 850m of water, and into 1300m of sediment and rock. The drill recovered 98% of the core. A second drill site, 25km east of Scott Base, is planned for the summer season of 2007-2008.

The ANDRILL core represents the longest and most complete geological record recovered from Antarctica. This technical success is due to the team of world-leading polar drilling specialists including Alex Pyne of Victoria University of Wellington and Webster Drilling of Porirua, New Zealand.

Co-Chief Scientist of the project, Tim Naish of GNS Science, says most scientific models predict that the Earth will warm between two and four degrees during the next 100 years.

Given the uncertainties associated with predicting future dynamic behaviour of the Antarctic ice sheets, ancient analogues such as the ANDRILL cores are crucial in building a picture of how Antarctica has responded in times of past global warmth.

Ministry of Foreign Affairs and Trade commentary:

“The achievement of the ANDRILL science consortium in drilling through 80 metres of ice shelf and 850 metres of sea to extract a core well over a kilometre long is a highly successful example of international scientific cooperation in Antarctica.

“GNS Science are to be congratulated for their role in ensuring the success of the project through their leadership and management of the science, along with the significant contributions made by Victoria and Otago universities and Antarctica New Zealand.”

Trevor Hughes Head, Antarctic Policy Unit MFAT, Wellington

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Our National Isotope Centre has a long tradition of scientific excellence and innovative thinking. Its team is well known for expanding the horizon of radiocarbon dating. The radiocarbon laboratory leads research into terrestrial carbon dynamics which investigates the fate of carbon in soils and how it is affected by climate change and human management. This provides the understanding needed to estimate New Zealand’s carbon accounts.

The formidable reputation of Rafter Radiocarbon for precision dating and superb client service has resulted in invitations to take part in a wide range of collaborative assignments, both nationally and internationally. Below are examples from among the the thousands of samples the laboratory has analysed recently.

Our staff are associates in a Marsden-funded project led by Christchurch-based Palaeocol Research. The study examines the dynamics of moa populations before human settlement, and employs radiocarbon to date changes in moa bone stable isotope signatures.

In association with the University of Sydney, we are working on a unique investigation of changes in diet and migration patterns of ancient Khmer populations in Cambodia. As part of this programme, we have achieved perhaps the first radiocarbon dates on bone from Cambodian sites.

We are also working with St Andrews University, Scotland, dating insect remains from cave deposits in the Grand Canyon in Arizona. Radiocarbon dating provides ages for stable isotope measurements also derived from these insect bodies. These measurements could provide a rare inland-continental record of regional climate driven by changes 8200 years ago in the North American Monsoon at the end of the Younger Dryas, a cold-climate period.

We recently provided radiocarbon dating for a University of Auckland project investigating the evidence for a pre-Columbian introduction of chicken in a Chilean archaeological site. DNA analysis indicated the Chilean chickens had sequences associated with Polynesian-region chickens from Tonga, and radiocarbon analysis gave the bones calibrated ages between 1304 and 1424. These ages suggest the introduction of chicken to coastal Chile from Polynesia occurred before European contact with the Americas.

IMAGING DEEP MAGMA FOR THE FIRST TIME

MANY BRANCHES OF SCIENCE DEPEND ON RADIOCARBON DATING

We have broken new ground by producing an image of the magma layer beneath the Taupo Volcanic Zone (TVZ) in the central North Island. The new findings show that, below about �0km, the rocks contain filaments of interconnected magma across a zone 50km wide and �60km long extending northeast of Taupo. Although scientists have put forward conceptual models of the origins of geothermal heat and eruptions from the TVZ, until now there has been little hard evidence about the extent of the magma system that underlies the central North Island.

Previously it was thought that magma occurred as un-connected blobs under the TVZ. Our finding represents a significant change in our understanding of the TVZ magma system. It provides the link between the geothermal system of the TVZ and its violent volcanic history. In its benign state, the magma layer provides the heat necessary to fuel more than 20 geothermal systems. However, instability in the heat and magma system can lead to a shallowing of the magma layers, which can be the forerunner of a caldera eruption.

The TVZ is a broad belt of volcanism and geothermal activity that extends 300km northeast from Mt Ruapehu to White Island. Finding a way to successfully identify and image magma bodies in this region has eluded scientists until now. Our scientists use a highly specialised technique called magnetotellurics, which uses the natural fluctuations of the Earth’s magnetic field and the induced currents in the earth that these changes produce. The technique can produce images of rock layers down to depths of about 50km.

Methods that enable scientists to identify magma systems will open the door to new research that will lead to a greatly improved understanding about the way magmatic systems work. One of the outcomes will be improved monitoring of the TVZ for volcanic and geothermal unrest. This will result in greater levels of community confidence in hazard monitoring and it will help to strengthen New Zealand’s resilience to volcanic eruptions.

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THE GREAT SOUTHERN OIL HUNT NEW FACILITY FOR UNDERSTANDING CLIMATE

We have played a vital role in attracting major oil companies to explore in the Great South Basin, New Zealand’s biggest and most prospective sedimentary basin. This culminated in two major consortia and a New Zealand company being granted exploration licences for �8% of this 360,000sqkm frontier basin this year.

Our involvement with this basin goes back many years. In 1999 we published a definitive basin study, GNS Science Monograph 20, which synthesises three decades of government and industry research. In 2002 we produced a comprehensive review that provides workstation-ready data and analysis needed by the petroleum exploration industry to evaluate prospectivity. Called the Great South Basin Regional Review, it covers all exploration to date, petroleum geology, geochemistry, analysis of the well failures from the 1970s and 1980s, estimated oil and gas volumes, and discussion of the main exploration risk factors. We have marketed this product extensively overseas where it has been well received. A number of exploration companies have described it as the most useful and best-produced prospectivity product they have seen.

In 2006 we processed and interpreted 3100km of seismic data acquired by the Ministry of Economic Development. They show sediments up to 8km thick in the deeper parts of the basin and a number of geological structures capable of holding giant oil and gas fields. Because the region is some distance from the tectonic plate boundary and has been seismically quiet for the past 50 million years, there is a good chance that petroleum has remained within the trap structures. Any accumulations have the potential to be larger than the Maui gas field. The breadth of our knowledge and expertise means that we are the first port-of-call for companies assessing the Great South Basin. In the past two years we have run workshops and fieldtrips for companies looking at exploring in this area.

The outcome in 2007 of a commitment from the Great South Basin licence holders to invest over $1 billion in exploring for oil and gas will benefit all New Zealanders. As well as helping us to reduce our dependence on imported oil, it will generate cash that can be used to research and develop other energy alternatives for New Zealand.

The edges of Antarctica are among the fastest-warming parts of the planet. The need to improve the understanding of the climate history of our region has never been greater and collecting and analysing ice cores is a key method for achieving that.

In the past year we took the lead by building a state-of-the-art ice-core research laboratory for studying the climate history of the southern hemisphere. The $1.4 million facility at our National Isotope Centre in Lower Hutt comprises laboratories and refrigerated rooms for the safe long-term storage of ice cores from Antarctica and from New Zealand glaciers. Because of its design and level of equipment, it is already regarded as one of the top ice-core facilities in the world.

Ice cores are extracted from Antarctica and from glaciers in New Zealand by special drilling equipment. They store dust, and chemical and isotope signatures in chronological sequence that reveal vital information about past climates. This includes air temperatures, rainfall, and wind speed and direction going back many thousands of years. About 400m of ice cores are currently held at the facility for processing and analysis. Fresh cores will be added after each Antarctic field season.

Ice cores provide a robust forensic tool for climate researchers. They represent one of the most continuous and detailed records of past climate that we have. The research findings produced from the laboratory will play an important part in showing how New Zealand will respond to changes in climate. It will help to clarify the impact on New Zealand’s infrastructure and economy, particularly on sectors such as agriculture, horticulture, forestry, and tourism.

The facility and its associated analytical capabilities will help put New Zealand on the international stage in climate research. It comes at a time of increasing soul-searching about the impact of humans on the planet. The facility includes an ultra-clean laboratory at room temperature, another laboratory at minus 18°C, and a storage area held at minus 35°C. This makes it the coldest walk-in space in New Zealand.

The facility is the cornerstone in a joint initiative between GNS Science and Victoria University of Wellington, called the Joint Antarctic Research Institute. It is materially supported by Antarctica New Zealand and the National Institute of Water and Atmospheric Research.

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COLLABORATIONS AND PARTNERSHIPS

We are a highly collaborative organisation that works with a wide range of organisations in New Zealand and internationally. The following list is not exhaustive, but it reflects the diversity of our activities and the breadth of our relationships.

Natural Hazards Centre

GNS Science and the National Institute of Water and Atmospheric Research (NIWA) have combined to form the Natural Hazards Centre. It provides New Zealanders with a single point of contact for the latest research, resources, and scientific expertise in natural hazards. The Centre delivers world-class information and research to emergency and resource managers, the science community, and other stakeholders.

Earthquake Engineering Business Cluster

GNS Science is a member of Earthquake Engineering New Zealand, a network of 34 consultants, researchers, manufacturers, and educators specialising in international work in earthquake engineering, seismology, and related services.

Joint Centre for Disaster Research

Massey University and GNS Science have set up a Joint Centre for Disaster Research. Based at Massey’s Wellington campus, the centre teaches at postgraduate level, conducts research, and undertakes commercial work for clients in New Zealand.

Earthquake Commission and GNS Science

GNS Science has a long-term partnership with the Earthquake Commission – the funder of our GeoNet Project, which is building and operating a world-class geological hazards monitoring system for New Zealand.

Hazards information service for property owners

In partnership with Quotable Value New Zealand and Niu Pacific, GNS Science operates PropertyInsight, a joint venture that has developed an on-line hazard information service for one million urban properties in New Zealand. PropertyInsight services are available to councils, property professionals, the insurance industry, and the public.

Advanced degree in petroleum geosciences

GNS Science and Victoria University of Wellington have joined forces to offer a postgraduate degree in petroleum geosciences. The two-year Masters degree is open to all earth science students with the aim of addressing the worldwide shortage of geoscientists in the petroleum exploration industry.

New Zealand’s seafloor resources

Gaining new knowledge and improved understanding of New Zealand’s vast offshore territory is a major programme within GNS Science. To achieve this, GNS Science collaborates with NIWA, the National Ocean and Atmospheric Administration (NOAA), Woods Hole Oceanographic Institution, IFM-Geomar of Germany, the University of Hawaii, and other international science agencies.

Dealing with carbon dioxide emissions

GNS Science has formed a consortium with electricity generator Genesis Energy to investigate ways of burying carbon dioxide produced from the use of fossil fuels. The New Zealand consortium has joined the Australian Cooperative Research Centre for Greenhouse Gas Technologies for a four-year research programme. Capture and storage of this major greenhouse gas in deep geological formations will significantly reduce emissions from coal and gas fired power stations.

Novel scanners for the food industry

With ANZCO Foods Ltd, GNS Science is a shareholder in MeatVision, a joint venture company that develops and commercialises innovative scanning technology for the food industry.

Australian Synchrotron

GNS Science is a shareholder in the New Zealand Synchrotron Company, which is a foundation partner of the Australian Synchrotron. The stadium-sized scientific tool, based in Melbourne, was commissioned in mid- 2007. It creates beams of radiation, a million times brighter than the sun, to investigate molecular structures. Synchrotrons are an increasingly important tool for research in almost all areas of science. As a foundation partner, New Zealand scientists will have access to the facility and the opportunity to be at the forefront of scientific development.

Nanotechnology and advanced materials

GNS Science is a member of the MacDiarmid Institute for Advanced Materials and Nanotechnology, one of the New Zealand government’s centres of excellence.

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27


Antarctic climate research

GNS Science is a leading coordinator of the multi- national ANDRILL project which is drilling two deep sediment cores through the Ross Ice Shelf in Antarctica to find out more about polar climate and ice sheet behaviour over the past 15 million years. The project involves New Zealand, Germany, Italy, and the United States (see pages 22-23).

Reconstructing past southern hemisphere climate

In collaboration with Victoria University, GNS Science has built an ice-core storage and analytical facility in Lower Hutt. The initiative recognises the importance of Antarctica as a driver of global climate, and New Zealand’s location at the boundary between northern and southern hemisphere climate systems (see page 25).

Keeping track of groundwater quality

GNS Science works with all the regional councils and territorial authorities in New Zealand to manage the National Groundwater Monitoring Programme (NGMP). This partnership aims to foster sustainable use of New Zealand’s groundwater resources and provides a national perspective on groundwater quality.

Ma-ori participation in industry

GNS Science is part of an inter-agency project aimed at identifying opportunities to advance Ma-ori participation in the oil, gas, mining and natural resources sectors. Other collaborators are Te Puni Ko-kiri, the Petroleum Exploration Production Association of New Zealand, Department of Labour, Tertiary Education Commission, New Plymouth City Council, Ngati Tu, Ngati Ruahine, Venture Taranaki, Western Institute of Technology, and Greymouth Drilling School.

Working with Ngai Tahu on pounamu

GNS Science collaborates with Ngai Tahu to assess the distribution of pounamu (greenstone or jade) in the South Island. Knowledge gained from this project will enable informed management of pounamu.

Life in the extremes

GNS Science and our collaborators have made significant advances in understanding the diversity of microbial life in New Zealand’s volcanic and geothermal areas. Our main collaborators are the University of Hawaii and Nankai University in China. The project team has identified new species, genera, classes, and kingdoms of heat-loving bacteria in New Zealand.

Biodiversity research

Understanding past biodiversity patterns is fundamental to understanding all aspects of biological and ecological evolution. GNS Science is collaborating with Chicago University and the Allan Wilson Centre for Molecular Ecology and Evolution at Massey University to characterise and explain New Zealand’s marine bio-diversity history over the past 50 million years. This will be achieved using a novel integration of deep-time, paleontological information together with modern molecular information. The study, using the best-documented regional fossil record in the world, is challenging internationally long-held views about how diversity has changed through time and about the way species occupy and vacate their ecological space.

Long-term relationship with Te Papa

GNS Science is a foundation corporate associate of Te Papa Museum of New Zealand. We provide the museum with scholarship, collections, and staff time. In return we receive the opportunity to promulgate our science to Te Papa’s large audience. For example, among other projects, we helped build Awesome Forces, the museum’s most popular permanent attraction. This year we were pleased to renew our agreement for another five years.

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28


28 inteRnational linkages

GNS Science officially represents New Zealand on the following committees or international groups:

• Australia New Zealand Minerals and Energy Council Chief Government Geologists Conference (ANZMEC CGGC)

• Australian Institute of Nuclear Science and Engineering (AINSE)

• International Atomic Energy Agency Regional Co-operative Agreement (IAEA RCA)

• Incorporated Research Institutions in Seismology (IRIS)• International Energy Association (IEA) Geothermal

Experts’ Group• International Consultative Group on Food Irradiation.

GNS Science has formal Memoranda of Understanding (MOU) with the following organisations:

• Chilean National Commission for Scientific and Technical Research (CONICYT)

• China Geological Survey (CGS)• China Seismological Bureau• China Earthquake Administration• GeoForschungsZentrum (GFZ Potsdam)• Geological Survey of Japan• GeoScience Australia • Hebei Bureau of Prospecting and Development

of Geology (China)• Institute of Geology and Institute of Mineral Resources

(China)• International Atomic Energy Agency• Japan Marine Science & Technology Centre

(JAMSTEC)• Jeonnam Regional Environmental Technology

Development Centre (JETeC) in South Korea• Korean Institute of Geology, Mining and Minerals

(KIGAM)• Korean National University• Massey University• Ministry of Geology and Mineral Resources,

China (MGMR)• Nankai University (China) • New Energy and Technology Development

Organisation, Japan (NEDO)• Ocean Technology Foundation (USA)• Oxford University• Seoul National University• University of Hawaii • University of La Reunion (France)• US Geological Survey.

These MOUs provide for the exchange of staff involved in collaborative projects as well as partial funding for research initiatives.

GNS Science also represents New Zealand on unions and associations of the International Council of Scientific Unions (ICSU), and other international scientific committees, specifically:

• ANDRILL • International Association of Seismology and Physics

of the Earth’s Interior (IASPEI)• International Association of Volcanology and Chemistry

of the Earth’s Interior (IAVCEI)• International Union of Geological Sciences (IGUA)• International Union of Geodesy and Geophysics (IUGG)• National Association of Geochemistry and

Cosmochemistry• Scientific Committee of Antarctic Research (SCAR)• United Nations Convention on the Law of the Sea

(UNCLOS).

GNS Science also has strong research and collaborative links with many New Zealand and overseas universities.

REPORTINGANDFINANCIALSTATEMENTS 29

BOARDMEMBERPROFILES 30

CORPORATEGOvERNANCE 31

CRICAPABILITYFUNDREPORT 34

REPORTOFThEDIRECTORS 36 STATEMENTOFFINANCIALPERFORMANCE 37 STATEMENTOFMOvEMENTSINEqUITY 37 STATEMENTOFFINANCIALPOSITION 38 STATEMENTOFCAShFLOwS 39 NOTESTOThEFINANCIALSTATEMENTS 40 PERFORMANCEINDICATORS 48

REPORTOFThEAUDITOR-GENERAL 50

STATEMENTOFRESPONSIBILITY 51 DIRECTORY 52

GNSSCIENCEANNUALREPORT2007

30


ThEBOARD:MEMBERPROFILES

JohnwaltersBA, LLBAuckland(Appointed 1 July 2007)John is managing partner of Walters Law Barristers & Solicitors in Auckland. He acts for a wide range of private and corporate clients and specialises in commercial and property law. He is chairman of Aotearoa Credit Union, a director of Te Rau Matatini Ltd, and is a member of the Institute of Directors.

MikewilliamsMA (Hons)AucklandMike is President of the New Zealand Labour Party, a Director of Genesis Energy, and of Transit New Zealand, and New Zealand Railways Corporation. He is also a Trustee of Enterprise Waitakere and a member of the Auckland Regional Transport Authority.

EllenFörchPhD AucklandEllen is Director of Research Development at Auckland University of Technology. Her activity is focused on building research cultures and developing research funding strategies. Previous positions include being Director of Research Advancement in the VC’s Office at the University of Auckland, Manager of Environmental Monitoring at Hawke’s Bay Regional Council, Research Manager at the Open Polytechnic of New Zealand, and a Programme Manager at the Foundation for Research Science & Technology. She is also a Director of the Cawthron Institute, Nelson.

AllanFreethPhD, MBA (Dist), BSc (Hons)WellingtonAllan is Chief Executive of TelstraClear Ltd, and a member of the New Zealand Treasury Advisory Board. Previous positions included managing director and chief executive of Wrightson Ltd and senior management roles with Trust Bank. He has a PhD in population genetics from Australian National University and an MBA from Canterbury University.

ConAnastasiouChairmanBA, LLB (Hons)WellingtonCon is principal of his own law firm in Wellington. He specialises in corporate commercial law, intellectual property, and resource management. He is a member of the New Zealand Law Society, a Fellow of the New Zealand Institute of Management, a member of the New Zealand Institute of Directors, and an Associate of the Arbitrators and Mediators Institute of New Zealand. Con is also Chairman of Airways Corporation of New Zealand Limited.

RossButlerDeputyChairBA (Economics), Graduate Diploma in Applied Finance and InvestmentsNelson(Appointed 1 July 2006)Ross is Chairman of Mortgage Link (NZ) Limited, Wilkinson Insurance Brokers Limited, and Deputy Chair of YHA NZ. Directorships include Swimming NZ. He is a Ministerial Appointee on the Council of Nelson Marlborough Institute of Technology. Ross is Deputy Chair of the trust boards of the Nelson School of Music and the Nelson Bays Education Business Partnership. Merlot Limited, his own consulting group, provides interim chief executive, governance, and project services.

SarahSchiessMSc, Civil Engineering, (Colorado State University)WellingtonSarah is Environmental Manager with BP Oil New Zealand Ltd. Her portfolio includes soil and groundwater remediation, climate change, emissions reporting, and industry standards. She has 11 years’ experience working for environmental and engineering firms in the US and New Zealand specialising in quantitative groundwater flow analysis, mine dewatering, and environmental projects. Sarah has also worked for the US Geological Survey Water Resources Division doing numerical analysis of aquifer systems.

BrendaTahiBSocSc, MBA (Henley)Ruatahuna(Retired 30 June 2007)Brenda is Director of Brenda Tahi and Associates, her own consultancy in strategic management and research. Brenda is Ngati Porou and formerly held senior advisory and management positions in the public service. She is Deputy Chair of the Accident Compensation Corporation, and also serves on the boards for Nga Pae o Te Maramatanga (The National Centre of Maori Research Excellence), Huia New Zealand, and the Tuhoe Tuawhenua Trust.

The Board: from left, clockwise: Con Anastasiou (Chairman), Ross Butler, Allan Freeth, Sarah Schiess, Brenda Tahi, Mike Williams, Ellen Förch, John Walters.

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CORPORATEGOvERNANCE

Overview

GNS Science is a Company, established under the Crown Research Institutes Act 1992, with its shares held by the Minister of Finance and the Minister for Crown Research Institutes (the shareholding Ministers) on behalf of the Crown.

An independent Board of Directors is appointed by the shareholding Ministers to govern the business of the Company. Day-to-day management of the Company is delegated to the appointed Chief Executive and his executive team. The delegated authorities policy provides the basis under which the Chief Executive and management are authorised to make decisions and take actions to achieve Company goals.

The shareholding Ministers provide to the Board an operating framework letter which sets out their expectations of the Company. The Company produces a Statement of Corporate Intent (SCI) which sets out the Company’s strategic objectives, key goals and performance targets. This document together with the company’s detailed Strategic Plan is submitted to the shareholding Ministers for approval. The approved SCI is tabled in Parliament.

The Company reports quarterly on its performance to shareholding Ministers through the Crown Company Monitoring Advisory Unit. The Company prepares six monthly and annual reports that detail its performance against the agreed SCI objectives and targets and these are tabled in Parliament.

The Board and management are committed to ensuring that the Company maintains best practice governance and adheres to the highest ethical standards. The basis for these is set out in a Board Charter, adopted in June 2002, and in policies and procedures maintained by the Company.

Appointment of directors and composition of the Board

Under the Company’s constitution, the Board can comprise up to nine non-executive directors. The Board currently consists of a Chairman and six other independent directors. The term of appointment is generally three years with reappointment for a second three-year term at the discretion of the shareholding Ministers. The Chairman and Deputy Chairman are appointed by the shareholding Ministers.

Profiles of current members of the Board are set out on page 30.

Role of the Board

The Board is responsible to the shareholding Ministers for directing and supervising the management of the business and affairs of GNS Science, including:

• appointing the Chief Executive, agreeing on the objectives he is required to achieve, and monitoring and evaluating his performance

• ensuring that the Company’s goals are clearly established and that strategies are in place to achieve them

• approving the Company’s Strategic Plan and SCI including operating and capital expenditure budgets

• monitoring the performance of company against established goals and business plans

• approving major transactions, and any joint ventures and major collaborations

• approving the delegated authorities policy and other significant policies

• ensuring that GNS Science has appropriate risk management and regulatory compliance policies in place and reviewing the Company’s performance in those areas

• recommending the payment of dividends• ensuring that GNS Science is a good employer,

demonstrating social responsibility, and maintaining its financial viability as required under the Crown Research Institutes Act 1992.

Operation of the Board

The policies and procedures for the operation of the Board are set out in the Board Charter. The Chairman provides leadership to the Board and is in regular dialogue with the Chief Executive. The Chairman, in consultation with the Chief Executive, establishes the agenda for each Board meeting ensuring adequate coverage of key issues throughout the year. Each Board member can, through the Chairman, suggest items for the agenda. The Chairman ensures that all discussions result in logical and understand-able outcomes. Board members are entitled to have access to all relevant Company information and to management.

Board meetings

The full Board had 11 formal meetings during the year ended 30 June 2007. An additional meeting was held during the year with senior management to discuss the Company’s strategic direction and long term goals. Telephone conference calls were also held during the year to discuss particular issues. There is an ongoing programme of site visits and presentations to the Board by management and staff to keep Directors abreast of the Company’s activities.

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CORPORATEGOvERNANCECONTINUED

Board committees

The Audit and Risk Committee and the Remuneration Committee are the standing committees of the Board.

The Audit and Risk Committee assists the Board in carrying out its responsibilities under relevant Acts including the Crown Research Institutes Act 1992, Companies Act 1993, Public Finance Act 1989, Financial Reporting Act 1993 and the Crown Entities Act 2004. Members of the committee in the last year were Brenda Tahi (Chair), Con Anastasiou, and Sarah Schiess. All Directors are entitled to attend the meetings. The committee operates in accordance with a Terms of Reference which is approved by the Board. The Chief Executive, the Chief Financial Officer, the Internal Auditor and representatives of Deloitte, the external auditors, attend all meetings.

The committee met three times during the past financial year. The committee reviewed and discussed the external audit plan and audit reports, the internal audit plan and audit reports, and statutory compliance reporting by management. It also reviewed and recommended to the full Board, the approval of the half-yearly and annual financial statements, amendments to the delegated authorities and capital expenditure policies and amendments to the Audit and Risk Committee Terms of Reference and the Internal Audit Charter. The Company’s Risk Assessment document was reviewed and discussed at each meeting and recommendations for its enhancement were incorporated. The committee also considered the implementation of International Financial Reporting Standards for the Company and changes required to accounting policies. The committee met separately with the external auditor at the end of each meeting, without management present.

Minutes of the committee meetings were tabled at the subsequent Board meetings and key items were discussed by the full Board.

The Remuneration Committee assists the Board to set and review the Chief Executive’s remuneration and performance. It also considers the framework for the remuneration of the Executive Managers and the review of their performance. Members of the Committee in the last year were Con Anastasiou (Chair), Sarah Schiess and Brenda Tahi. The Committee operates in accordance with Terms of Reference that have been agreed by the Board. The Committee met once during the year and its recommendations were discussed and agreed by the full Board.

Board remuneration

Directors’ fees are set by the shareholding Ministers annually. Fees paid to directors during the year are set out below:

2007 ($) 2006 ($)

Con Anastasiou (Chairman) 42,000 40,000

Ellen Förch 21,000 20,000

Sarah Schiess 21,000 20,000

Brenda Tahi 21,000 20,000

Mike Williams 21,000 20,000

Allan Freeth 21,000 20,000

Ross Butler 21,000 –

Directors’ insurance and indemnity

Insurance has been effected for Directors in respect of any act or omission in their capacity as a Director of the company. Directors have declared their interests in a Deed of Indemnity dated 17 October 1996, whereby the company indemnifies Directors against any liability for any act or omissions incurred in their capacity as a Director.

Conflicts of interest

Each Director makes a full declaration of their interests. This is updated at each Board meeting. Where a conflict of interest exists, Directors excuse themselves from discussion and do not receive the relevant paper in respect of those interests.

Meetings in the year to 30 June 2007

Board Meetings Audit and Risk Committee Remuneration Committee

Held Attended Held Attended* Held Attended

Con Anastasiou 11 11 3 3 1 1

Ross Butler 11 11

Ellen Förch 11 11 2

Allan Freeth 11 11 1

Sarah Schiess 11 11 3 3 1 1

Brenda Tahi 11 11 3 3 1 1

Mike Williams 11 9

* All directors are entitled to attend Audit and Risk Committee meetings

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Specific Disclosures

ConAnastasiou Airways Corporation of New Zealand Limited, ChairAirways Consulting Limited, DirectorAirways International Limited, DirectorIsoscan Limited, DirectorIsoscan Food Limited, DirectorGeological Surveys (NZ) Limited, DirectorGeological Risk Limited, Director GNS Science International Limited, DirectorChaffers Marina Holdings Limited, DirectorChaffers Marina Limited , Director

MikewilliamsLabour Party, PresidentTransit New Zealand, Board memberGenesis Energy, Deputy ChairWaitakere Enterprise, TrusteeAuckland Regional Transport Authority, Authority MemberNew Zealand Film Fund , DirectorNZ Railways Corporation, DirectorTransport Board Reference Group, Chairman

SarahSchiess BP Oil New Zealand Limited, EmployeePropertyInsight Joint Venture, Chair

EllenFörch Auckland University of Technology (AUT), EmployeeCawthron Institute, Director RSNZ ISAT Committee, Member

AllanFreeth Stillwell Associates Limited, Managing DirectorQueen Margaret College, Chairman, Board of TrusteesTrustee, Queen Margaret College FoundationNew Zealand Treasury, Member, Advisory BoardTelstraClear Limited, Chief ExecutiveMassey University Agricultural Research, TrusteeSytec Limited, Chair

RossButler Mortgage Link(NZ) Limited, ChairmanWilkinson Insurance Brokers (Wgtn) Limited, ChairmanNelson Marlborough Institute of Technology, Ministerial Appointee to CouncilMerlot Limited, ChairmanInstitute of Financial Advisers, Independent DirectorYHA NZ, ChairmanSwimming New Zealand, Independent DirectorNelson School of Music , Deputy ChairInstitute of Directors of NZ – Nelson Branch, Committee memberNelson Bays Education Business Partnership Trust, ChairNelson Bays Enterprise Cluster, ChairTriplejump Limited, Member, National Life Insurance Advisory GroupDueno Limited (Occupational health and safety solutions), Director

Johnwalters Aotearoa Credit Union, ChairTe Rau Matatini Limited, DirectorIwi affiliations: Te Aupouri, Te Rarawa, Ngapuhi

BrendaTahi Ngati Porou, Iwi ACC Board, Interim ChairNga Pae o te Maramatanga Board, MemberTuwhenua Trust Board, TrusteePaehinahina Mourea, ShareholderRotoitoi 15 Incorporation, ShareholderOnuku Trust, ShareholderHuia (NZ) Limited, DirectorCouncil of Te Whare Wa-nanga o Awanuia-rangi, MemberBoard of Trustees for Huiarau School, Member

Approval of Disclosure of Information

Approval sought and given for disclosure of information to outside parties – Nil

Provision of professional services

Except in exceptional circumstances, Board members will not provide professional services to the Company. This is to avoid a conflict of interest – actual or perceived.

No Directors provided professional services to the Company during the year.

Independent professional advice

Directors are entitled, with approval from the Chairman, to obtain independent professional advice relating to the affairs of the Company or to their duties, at the Company’s expense.

No independent professional advice was sought or obtained during the year.

Board evaluation

Each year the Board evaluates its own performance and provides the results to the Crown Company Monitoring Advisory Unit.

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CRICAPABILITYFUNDREPORTfoR the yeAR ended 30 June 2007

We report achievements from activities that received CRI Capability Funding as specified in Part C of the Government’s Estimates of Appropriations. As required by Agreement with the Minister of Research, Science, and Technology, we elaborate upon these achievements with short illustrations, and provide commentary on overall capability and organisational performance. The funding covered staff salaries, associated over- heads, and minor disbursements.

1. Databases and information systems (4 of 8 indicators achieved)

Our petroleum systems, geothermal and volcano chemistry, groundwater chemistry and dating databases, and the associated on-line access systems, have all been enhanced. Limited progress was made with our hydro-carbon exploration seismic database, and no significant improvements were made to our magnetotelluric, extremophile and stable isotope databases. Progress was restricted by the availability of new recruits.

2. Geological hazards (8 of 9 indicators achieved)

We have continued to maintain threatened national capabilities by making progress in re-establishing volcano crisis response capability, and developing frequency magnitude relationships for Auckland volcanoes. There has been limited progress in developing a national all-hazards model. We have enhanced capabilities for using GeoNet data by recruiting a waveform modeller, testing earthquake-forecasting methodologies, and developing quantitative tsunami hazard models. We have assessed new technologies for remote sensing of hazard events to the point of determining that recruitment is necessary. We have also made good progress with volcano-forecasting research and further developing our active fault database.

3. Environmental sustainablility (2 of 2 indicators achieved)

We have explored over-the-horizon possibilities in the new area of geological CO2 sequestration by assessing potential sites in New Zealand, and by lodging a funding proposal with FRST, which has been awarded funding.

4. National Isotope Centre facilities (6 of 7 indicators achieved)

We have enhanced research capabilities in accelerator mass-spectrometry of cosmogenic isotopes by recruiting new staff. We made progress on a new vacuum line for ultra-small samples, and developing capabilities for measuring Be10, C14, and Al26. Development of stepped combustion capability is taking longer than anticipated.

We have enhanced research capability in stable isotope geochemistry by commissioning a new mass spectrometer for water isotope (ice-core) analyses, and initiated database development. We explored over-the-horizon possibilities by reviewing all existing and upcoming techniques to produce PET isotopes for medical use.

5. Isotope technology development to underpin other science areas (2 of 5 indicators achieved)

We developed component-specific radiocarbon capability for research on soil-carbon cycling, and have evaluated the feasibility of compound-specific radiocarbon analysis. The GC-IRMS analysis of hydrocarbon gases could not be improved due to failure of old equipment which has now been decommissioned. A new mass spectrometer has been ordered and the project will resume after the new unit is commissioned. The determination of production-rate scaling for surface exposure age, and the preparation of a funding proposal, were both displaced by facility development work described under (4) above.

6. Technology transfer (1 of 2 indicators achieved)

We enhanced applications of our technological developments by supporting 14 pre-seed projects in the areas of non-invasive scanning, software development, wastewater remediation and nano-technology. We enhanced the processes for uptake of our hazards information by local government by developing a tsunami model, but the uptake of flood- hazard and landslide-susceptibility information was limited by difficulties in accessing data from third parties.

7. Geo-energy – petroleum (6 of 7 indicators achieved)

We have enhanced our capability to establish a national seismic interpretation centre through detailed consultation with over 20 significant stakeholders. We have also identified and held a workshop with major potential sponsors but contracts, generally requiring consent of their Boards, have yet to be finalised. We have commenced graduate teaching of petroleum geosciences. We have enhanced our capability to assess hydrocarbon prospectivity of New Zealand’s offshore frontier basins by developing, in association with MED, systematic exploration plans for the Raukumara and Great South Basins, and integrating new seismic data into interpretation of Great South Basin and Canterbury Basin. Some desirable external collaborations are still being fully established. We have partly enhanced our seismic interpretation techniques to improve success rates in petroleum exploration via a post-mortem analysis of Miocene-target Taranaki wells (6 of 10 wells completed).

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8. Geo-energy – geothermal (3 of 3 indicators achieved)

We have developed our capability in geothermal remote sensing by devising a technique for quantification of natural feature changes and hazard assessment using large-scale thermal infra-red methods. We have developed our capability in 3D visualisation methods to model geothermal systems through assessing digital stratigraphy, structure, rock properties data, by commencing corresponding work for well temperature, permeability and geochemistry data, by training more staff in these techniques, and by upgrading the software systems.

9. Deep-ocean continental shelf-exploration (4 of 5 indicators achieved)

We maintained and developed national capabilities for Ocean Survey 20/20 in geochemistry, geophysics, benthic habitats, and swath-mapping data management and interpretation, by assessing and reviewing the UNCLOS continental-shelf data and developing a plan for data management, and a method for inverting potential fields. A proposed new model for New Zealand crustal structure is still in progress.

10. Geobiology (2 of 3 indicators achieved)

We explored over-the-horizon possibilities in extremophile geomicrobiology by building the organism collection to over 1000 species, and by establishing sampling agreements with landowners. We were successful in being awarded a Marsden-funded proposal, but we have deferred submitting an overseas research funding proposal until our work is in a more advanced state.

11. Groundwater (4 of 7 indicators achieved)

We continued progress in maintaining the threatened national capabilities in groundwater age-dating, quantity and quality assessment, and groundwater-lake interactions and nitrate pollution, by completing work on the calibration of water-dating. However, the identification of nitrogen sources by using natural isotope tracers has been delayed due to the failure of old equipment which has now been decommissioned. Unfortunately recruitment to enhance our niche isotope dating capability has been delayed by immigration processes, and this has also delayed the training of junior staff. We developed new capability in system modelling by implementing visualisation and interpretation software, by applying our experience with Lake Rotorua’s nitrate pollution to Lake Rotoiti, Lake Rerewhakaaitu, and Lake Brunner. We also secured research funding of $0.5 million per year for six years for the National Groundwater Monitoring Database.

12. Climate change (2 of 4 indicators achieved)

We have developed capability in ice-core analysis by building and commissioning an ice-core storage and analysis facility. The pilot shallow ice core was not processed, awaiting the supply of equipment from a collaborating partner. Weather conditions precluded the radar survey for selecting a new West Coast glacier ice-core drilling site. However, we enhanced our capability in glacial geomorphology by acquiring skills from overseas partners in using climate-related landforms to understand the forces that drive climate change, and by extending our glacial landform GIS map by a further 10,000 km2 in the eastern Southern Alps.

13. Intelligent measurement systems for industry (2 of 2 indicators achieved)

We maintained and enhanced our gamma-ray and x-ray radiation-based capability by developing further links with major stakeholders, and by developing techniques to address needs in the meat, timber, power, and horticultural industries. Relevant patents were filed.

Commentary on overall capability and organisational performance

We consider that all of the foregoing capabilities present opportunities for further development of GNS Science. Substantial achievement was made in each of the 13 planned areas. Together, these areas of capability development are directly aligned with our core goals and bold challenges, as described in our Statement of Corporate Intent. As noted above, the at-risk capabilities were those in geological hazards and in groundwater. The remaining work was for enhancement of existing capabilities and for exploration of over-the-horizon opportunities. Taken overall, Capability Funding has allowed us to improve our performance in areas of underpinning science (e.g. data management, the earthquake-generation process, past climate-change, and isotope methods), applications of science (e.g. hazards assessment, energy and groundwater resource assessment, industrial measurement systems, and technology transfer), and science discovery (e.g. deep ocean exploration, geomicrobiology, and nanotechnology).

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REPORTOFThEDIRECTORS

The Directors have pleasure in presenting the Annual Report and audited accounts of GNS Science for the year ended 30 June 2007. The Financial Statements have been prepared in conformity with generally accepted accounting principles to give a true and fair view of the Group’s fi nancial position and its operations and cash fl ows.

The Auditor-General is the statutory auditor pursuant to section 21 of the Crown Research Institutes Act 1992. The Auditor-General has appointed Deloitte to audit the Financial Statements and to express an opinion on them. Their report is set out on page 50.

Principal activity

GNS Science’s principal activity is to conduct scientifi c research, consultancy services and product development in earth sciences and isotope technologies in accordance with the principles for the operation set out in sections 4 and 5 of the Crown Research Institutes Act 1992.

Accounting policies

There have been no changes in accounting policies during the year.

Dividend

A dividend of $350,000 was declared for the year ended 30 June 2007 (2006: $300,000).

Board composition

Brenda Tahi retired from the Board on 30 June 2007 after a six year term. John Walters was appointed to the Board on 1 July 2007.

Subsidiaries

The Company has the following 100% owned subsidiary companies:

Isoscan LimitedGeological Surveys (NZ) LimitedIsoscan Food LimitedGeological Risk LimitedGNS Science International Limited

Con Anastasiou and Alexander Malahoff are the directors of each of the subsidiary companies.

Employee remuneration

In accordance with section 211 (1) (g) of the Companies Act 1993, the numbers of employees who received remuneration and other benefi ts totalling $100,000 or more, in $10,000 bands, during the year to 30 June 2007 were:

$’000 2007 2006

100 - 109 15 4

110 - 119 10 9

120 - 129 5 3

130 - 139 – 2

140 - 149 1 –

160 - 170 – 4

170 - 179 4 –

180 - 189 – 1

190 - 199 1 1

200 - 210 2 –

300 - 310 – 1*

320 - 330 1*

* Chief Executive

Donations

GNS Science donated $2000 to the Life Flight Trust during the year. (2006: $1000).

Events subsequent to balance date

The Directors are not aware of any matter or circumstance since the end of the fi nancial year not otherwise dealt with in this report that has, or may have, a signifi cant effect on the operation of the company.

Certifi cation

The Directors confi rm that the company has operated in accordance with the Crown Research Institutes Act 1992 and the Companies Act 1993 during the year.

On behalf of the Directors

ConAnastasiouChairman 22 August 2007

37


the accompanying notes form part of these financial statements.

STATEMENTOFMOvEMENTSINEqUITYfoR the yeAR ended 30 June 2007

Group Group Group Company Company Company

Actual Budget Actual Actual Budget Actual

2007 2007 2006 2007 2007 2006

Note $000 $000 $000 $000 $000 $000

RevenueResearch contracts 2 25,586 26,745 24,991 25,586 26,745 24,991

Commercial contracts 16,874 15,804 13,416 16,369 15,804 13,228

GeoNet 2 8,328 8,132 7,026 8,328 8,132 7,026

Interest received 94 60 90 91 60 84

Other 164 149 471 164 149 263

Total revenue 51,046 50,890 45,994 50,538 50,890 45,592

ExpensesPersonnel 24,525 24,799 22,277 24,470 24,799 22,277

Materials, supplies & services 3 16,445 15,778 15,255 16,196 15,778 14,928

GeoNet direct expenses 2 4,210 4,018 3,440 4,210 4,018 3,440

Depreciation 6 3,275 3,400 3,079 3,236 3,400 3,033

Interest 458 450 360 457 450 359

Total expenses 48,913 48,445 44,411 48,569 48,445 44,037

Operating surplus before taxation 2,133 2,445 1,583 1,969 2,445 1,555

Taxation 4 (729) (806) (538) (672) (806) (528)

Surplus after taxation 1,404 1,639 1,045 1,297 1,639 1,027



2007 2007 2006 2007 2007 2006

$000 $000 $000 $000 $000 $000

Equity at start of year 17,524 17,523 16,779 17,434 17,523 16,707

Surplus after taxation 1,404 1,639 1,045 1,297 1,639 1,027

Less dividend proposed (350) (350) (300) (350) (350) (300)

Equity at end of year 18,578 18,812 17,524 18,381 18,812 17,434

STATEMENTOFFINANCIALPERFORMANCEfoR the yeAR ended 30 June 2007

38


STATEMENTOFFINANCIALPOSITIONAS At 30 June 2007



2007 2007 2006 2007 2007 2006

Note $000 $000 $000 $000 $000 $000

Equity 5 18,578 18,812 17,524 18,381 18,812 17,434

Represented by:

Non current assets

Property, plant and equipment 6 26,357 27,194 25,479 26,330 27,194 25,413

Investments 7 – – – 413 – 258

26,357 27,194 25,479 26,743 27,194 25,671

Current assets

Cash and bank 550 1,352 1,504 327 1,352 1,281

Accounts receivable and prepayments 4,785 3,440 4,670 4,748 3,440 4,677

Taxation refund 232 – 811 290 – 773

Development projects 1,163 330 605 869 330 399

Work in progress 3,237 830 1,643 3,077 830 1,559

9,967 5,952 9,233 9,311 5,952 8,689

Total assets 36,324 33,146 34,712 36,054 33,146 34,360

Non current liabilities

Term loan 8 5,150 5,150 5,150 5,150 5,150 5,150

Future income tax liability 9 319 34 222 282 34 175

Retirement leave provision 10 429 443 425 429 443 425

Future long service leave entitlements 10 478 457 479 478 457 479

6,376 6,084 6,276 6,339 6,084 6,229

Current liabilities

Accounts payable and accruals 3,419 2,860 3,691 3,383 2,860 3,476

Employee entitlements 2,186 2,240 2,228 2,186 2,240 2,228

Revenue in advance 5,415 2,800 4,693 5,415 2,800 4,693

Provision for dividend 350 350 300 350 350 300

11,370 8,250 10,912 11,334 8,250 10,697

Total liabilities 17,746 14,334 17,188 17,673 14,334 16,926

Net assets employed 18,578 18,812 17,524 18,381 18,812 17,434

For and on behalf of the Board

ConAnastasiou RossButler22 August 2007 22 August 2007

the accompanying notes form part of these fi nancial statements.

39


STATEMENTOFCAShFLOwSfoR the yeAR ended 30 June 2007



2007 2007 2006 2007 2007 2006

Note $000 $000 $000 $000 $000 $000

Cash flows from operating activities

Cash was provided from:

Receipts from customers 49,357 50,942 45,174 49,103 50,942 44,914

Interest received 93 60 90 91 60 84

49,450 51,002 45,264 49,194 51,002 44,998

Cash was applied to:

Payments to suppliers & employees (45,288) (44,440) (39,117) (44,839) (44,440) (38,784)

GST (net) (153) – 170 (158) – 171

Interest paid (458) (450) (360) (457) (450) (359)

Income tax paid (48) (807) (858) (82) (807) (903)

(45,947) (45,697) (40,165) (45,536) (45,697) (39,875)

Net cash flow from operating activities 11 3,503 5,305 5,099 3,658 5,305 5,123

Cash flows from investing activities


Sale of property, plant and equipment 22 – 19 22 – 19

Repayment of loan to subsidiaries – – – – – 15

22 – 19 22 – 34


Loan to subsidiaries – – – (155) – –

Purchase of property, plant and equipment (4,179) (4,000) (8,140) (4,179) (4,000) (8,092)

(4,179) (4,000) (8,140) (4,334) (4,000) (8,092)

Net cash applied to investing activities (4,157) (4,000) (8,121) (4,312) (4,000) (8,058)

Cash flows from financing activities


Bank borrowings – – 2,000 – – 2,000


Dividends paid (300) (300) – (300) (300) –

Net cash provided from/(applied to) financing activities (300) (300) 2,000 (300) (300) 2,000

Net increase/(decrease) in cash held (954) 1,005 (1,022) (954) 1,005 (935)

Add cash brought forward 1,504 347 2,526 1,281 347 2,216

Ending cash carried forward 550 1,352 1,504 327 1,352 1,281

the accompanying notes form part of these financial statements.

40


1. STATEMENT Of ACCOuNTING POlICIES

Reporting Entity and Activities

The Institute of Geological and Nuclear Sciences Limited is established under the Companies Act 1993 and the Crown Research Institutes Act 1992. Isoscan Limited, Isoscan Food Limited, Geological Surveys (NZ) Limited, Geological Risk Limited and GNS Science International Limited are established under the Companies Act 1993. The financial statements have been prepared in accordance with Section 17 of the Crown Research Institutes Act 1992, the Public Finance Act 1989, the Companies Act 1993 and the Crown Entities Act 2004.

Financial statements for the Institute of Geological and Nuclear Sciences Limited (the “Company”) and consolidated financial statements (the “Group”) are presented. The consolidated financial statements comprise the Company and its subsidiaries (set out in note 7).

The principal activity of the Company is to undertake geoscience and isotope science research, development and consultancy, predominantly in New Zealand.

Measurement Basis

The measurement and reporting of financial performance and financial position is based on historical cost, except for the revaluation of certain assets.

Basis of Preparing Consolidated financial Statements

SubsidiariesSubsidiaries are those entities controlled directly or indirectly by the Company. The financial statements of subsidiaries are included in the consolidated financial statements using the purchase method of consolidation.

Joint venturesJoint ventures are joint arrangements with the other parties in which the Group has joint and several liability in respect of costs and liabilities and shares in any resulting output. The Group’s share of the assets, liabilities, revenues and expenses of joint ventures is incorporated into the consolidated financial statements on a line-by-line basis using the proportionate method.

Transactions eliminated on consolidationThe effects of intra-group transactions are eliminated in preparing the consolidated financial statements.

NOTESTOANDFORMINGPARTOFThEFINANCIALSTATEMENTSfoR the yeAR ended 30 June 2007

Particular Accounting Policies

RevenueRevenue is recorded when earned, based on the percentage of work completed. Any amounts received in relation to work not yet commenced is recorded as revenue in advance.

ReceivablesReceivables are stated at their estimated realisable value after providing for bad and doubtful debts.

Work in progress Work in progress is valued at the lower of cost or the percentage of work complete, less amounts invoiced. Cost includes labour, direct costs and an allocation of overhead.

Property, plant and equipmentProperty, plant and equipment are included at cost and have been depreciated on a straight line basis at rates calculated to allocate the assets’ cost over their estimated remaining useful lives.

Useful lives of assets are:

Buildings

– wooden construction 40 years

– concrete construction 50 years

Plant, machinery, and laboratory equipment 3 – 15 years

Furniture, fittings and office equipment 3 – 15 years

IT equipment and software 4 – 8 years

Vehicles 5 years

Leasehold improvements 9 – 10 years

Patents 4 – 17 years

Income taxThe income tax expense charged to the Statement of Financial Performance includes both the current year liability and the income tax effect of timing differences calculated using the liability method.

Tax effect accounting is applied on a comprehensive basis to all timing differences. Future income tax benefits arising from timing differences are only recognised when there is virtual certainty of realisation.

Foreign currenciesTransactions in foreign currencies are converted at the New Zealand rate of exchange ruling on the date of the transaction. Monetary assets and liabilities at balance date are converted to New Zealand dollars at the exchange rate ruling at balance date. All exchange differences are recorded in the Statement of Financial Performance.

InvestmentsInvestments are stated at cost.

41


Research and development costsResearch costs are expensed in the Statement of Financial Performance in the period incurred. Development costs are deferred where future identifiable benefits can reasonably be expected to exceed these costs. Deferred development costs are amortised over future periods on a basis related to expected future benefits.

Library, databases and collections Library resources, databases and collections owned by the Company are not valued for financial reporting purposes.

Patents and trademarksPatents and trademarks are recorded at cost and amortised over the term of their estimated useful lives.

Statement of Cash FlowsInvesting activities comprise the purchase and disposal of property, plant and equipment. Financing activities include changes in equity and borrowings. Operating activities comprise the provision of research and related services and all other transactions not included under either investing or financing activities.

Financial instrumentsThe Company is a party to financial instruments as part of its normal operations. These financial instruments include bank accounts, short term investments, accounts receivable and payable and bank loan. Revenue and expenses in relation to financial instruments are recognised in the Statement of Financial Performance.

Provision for employee entitlementsAnnual and long service leave are recognised as they accrue to employees. The future entitlements to long service leave are also recognised. Retirement leave accrues to employees in accordance with the provisions of the current collective employment agreement.

Comparative informationComparative information has been reclassified, where necessary, to achieve consistency in disclosure with the current year.

Changes in accounting policiesThere have been no other changes in accounting policies. All policies have been applied on bases consistent with the prior year.

2. RElATED PARTy TRANSACTIONS

The ultimate shareholder of the Company is the Crown. All transactions with the Crown are undertaken at an arm’s length basis. Revenue derived from the Crown as set out in the Statement of Financial Performance includes contracted research funding of $20,881,000 (2006: $20,420,000), from the Foundation for Research, Science and Technology, contracted capability funding of $3,687,000 (2006: $3,052,000) from the Ministry for Research, Science and Technology, and contracted Marsden Funding of $1,018,000 (2006: $1,519,000) from the Royal Society of New Zealand.

The Company has an agreement with the Earthquake Commission (EQC) to implement and operate a seismic network throughout New Zealand on their behalf (GeoNet). In 2007, $8,328,000 (2006: $7,026,000) was recognised in revenue with $4,210,000 (exclusive of personnel and overhead recoveries) spent in relation to direct costs including equipment purchases (2006: $3,440,000). As at 30 June 2007, there was $140,000 in work in progress (2006: $18,000 revenue in advance).

The Group had a joint venture with Carter Holt Harvey Limited which dissolved in November 2006. All transactions were carried out on a commercial and arm’s length basis. The value of sales to this party was $Nil (2006: $404,000).

The Group has a joint venture with Quotable Value Limited and Niu Pacific Limited. All transactions were carried out on a commercial and arm’s length basis. The value of sales to this party was $90,000 (2006: $19,000). At 30 June, there is a receivable to the Company from the joint venture of $102,000 (2006: $22,000).

The Group has a 50% interest in Meatvision Limited. All transactions were carried out on a commercial and arm’s length basis. The value of sales to this party was $204,000 (2006: $297,000). At 30 June, there is a receivable to the Company from the joint venture of $20,000 (2006: $114,000).

The Group has a joint venture with National Institute for Water and Atmospheric Research Limited. All transactions were carried out on a commercial and arm’s length basis. The value of sales to this party was $888,000 (2006: $888,000).

The Group undertakes many transactions with State-Owned Enterprises, Government Departments, other Crown Entities and other Crown Research Institutes. These transactions are carried out on a commercial and arm’s length basis and it is not considered that these require related party disclosure.

42


NOTESTOANDFORMINGPARTOFThEFINANCIALSTATEMENTSCONTINUED

3. MATERIAlS, SuPPlIES & SERVICES Group Group Company Company

2007 2006 2007 2006

$000 $000 $000 $000

Audit fees 63 44 58 40

Other services – IFRS fees 6 – 6 –

Bad debts 4 15 4 15

Directors’ fees 168 165 168 165

Loss/(gain) on foreign exchange 138 (89) 134 (84)

Rent 159 369 159 369

Other expenses 15,907 14,751 15,667 14,423

16,445 15,255 16,196 14,928

4. TAxATION

Operating surplus before taxation 2,133 1,583 1,969 1,555

Tax at 33% 704 523 650 513

Taxation effect of permanent differences 27 23 27 23

Adjustment in respect of prior years (2) (8) (5) (8)

Total taxation charge reported 729 538 672 528

The taxation charge is represented by:

Current taxation 607 350 545 387

Future income tax liability 122 188 127 141

729 538 672 528

Under Section ME1 of the Income Tax Act 2004, the Company is not required to maintain an Imputation Credit Account.

5. EquITy

Authorised and Issued Capital: 6,167,000 ordinary shares 6,167 6,167 6,167 6,167

Retained earnings 12,761 11,657 12,564 11,567

Dividend proposed (350) (300) (350) (300)

18,578 17,524 18,381 17,434

All ordinary shares rank equally with respect to dividend and repayment of capital and each carry the right to one vote at any annual

general meeting.

43


6. PROPERTy, PlANT AND EquIPMENT

Group Cost dep’n Accum Book Book

2007 dep’n Value Value

2007 2006

$000 $000 $000 $000 $000

Land 2,420 – – 2,420 2,420

Buildings 8,797 184 1,746 7,051 7,021

Leasehold improvements 112 2 102 10 31

Plant & machinery 1,359 71 797 562 398

Laboratory equipment 18,453 1,310 10,298 8,155 7,655

IT equipment 9,026 750 7,410 1,616 1,694

Furniture & fittings 6,157 401 1,591 4,566 4,385

Vehicles 772 66 391 381 142

Office equipment 507 68 326 181 219

Software 4,270 405 3,079 1,191 1,312

Patents 302 18 78 224 202

52,175 3,275 25,818 26,357 25,479

The most recent rateable valuations of land and buildings totalled $18,570,000. These valuations date from 2004 to 2006.

(2006: $18,570,000).

Company Cost dep’n Accum Book Book

2007 dep’n Value Value

2007 2006

$000 $000 $000 $000 $000

Land 2,420 – – 2,420 2,420

Buildings 8,797 184 1,746 7,051 7,021

Leasehold improvements 112 2 102 10 31

Plant & machinery 1,359 71 797 562 398

Laboratory equipment 18,453 1,310 10,298 8,155 7,655

IT equipment 9,026 750 7,410 1,616 1,694

Furniture & fittings 6,157 401 1,591 4,566 4,385

Vehicles 772 66 391 381 142

Office equipment 507 68 326 181 219

Software 4,110 366 2,946 1,164 1,246

Patents 302 18 78 224 202

52,015 3,236 25,685 26,330 25,413

44



7. INVESTMENTS

Subsidiary Balancedate Principalactivity

Isoscan Limited 30 June 100% owned company for developing and selling non-invasive technology

Isoscan Food Limited 30 June 50% interest in Meatvision Limited developing and selling non-invasive technology

Geological Surveys (NZ) Limited 30 June 45% interest in PropertyInsight unincorporated joint venture selling property data

Geological Risk Limited 30 June 50% interest in Riskscape NZ unincorporated joint venture

undertaking hazard assessment research

GNS Science International Limited 30 June 100% owned company for international research consultancy work

Included in the Group accounts is the Group’s share of the joint ventures as follows:

2007 2006

$000 $000

Operating profit after taxation 107 18

Total assets 270 352

Total liabilities 73 215

Investments as stated in the Company accounts for 2007 and 2006 are inter-company loans.

There are no contingent liabilities in any of the above joint ventures.

OtherInvestments Balancedate Principalactivity

New Zealand Synchrotron 30 June 7% interest in company to gain rights to beamtime on the

Group Limited Australian Synchrotron (light and X-ray source)

8. TERM lOAN

Group and Company 2007 2006

$000 $000

Loan from The National Bank of New Zealand Limited 5,150 5,150

Facility:

Of the $6,150,000 facility in place, $5,150,000 has been drawn down.

Interest:

Bank bill rate computed on the first day of that interest period plus 0.80% per annum.

Repayment terms:

Principal repayable on 31 July 2008 or earlier if mutually agreed.

Security:

Negative pledge.

9. fuTuRE INCOME TAx lIABIlITy

Group Group Company Company

2007 2006 2007 2006

$000 $000 $000 $000

Opening balance 222 34 175 34

Current year movement 122 188 127 141

Transfer from provision for tax (25) – (20) –

319 222 282 175

45


10. PROVISION fOR EMPlOyEE ENTITlEMENTS


2007 2006 2007 2006

$000 $000 $000 $000

Retirement leave

Balance at beginning of year 425 445 425 445

Additional provision recognised 7 11 7 11

Amount utilised (3) (31) (3) (31)

429 425 429 425

future long service leave

Balance at beginning of year 479 443 479 443

Effect of discounting (27) (5) (27) (5)

Charge for the year 26 41 26 41

478 479 478 479

The above provisions are affected by a number of estimates, including the expected employment period of employees and the timing

of employees utilising the benefits.

11. RECONCIlIATION Of SuRPluS AfTER TAxATION TO STATEMENT Of CASH flOwS


2007 2006 2007 2006

$000 $000 $000 $000

Surplus after taxation 1,404 1,045 1,297 1,027

Adjust non cash items:

Depreciation 3,275 3,079 3,236 3,033

Future income tax liability 97 188 107 141

Loss on sale of assets 4 245 4 245

Non current provision 3 16 3 16

4,783 4,573 4,647 4,462

Add/(less) movements in working capital items:

Accounts receivable and prepayments (115) (862) (71) (850)

Current liabilities 458 2,283 637 2,269

Work in progress and development projects (2,152) (103) (1,988) 43

Taxation refund 579 (492) 483 (501)

(1,230) 826 (939) 961

Less movement in current liabilities classified as investing or financing activities (50) (300) (50) (300)

Net cash flow from operating activities 3,503 5,099 3,658 5,123

46


12. fINANCIAl INSTRuMENTS

Credit riskThe financial instruments which expose the Company to credit risk are principally bank balances, short term investments and accounts receivable. The Company monitors credit risk on an ongoing basis. Bank balances and short term investments are held with New Zealand registered banks in accordance with the Company’s treasury policy. A provision for doubtful debts is maintained in respect of accounts receivable and this is reassessed on a regular basis. No collateral is held by the Company in respect of bank balances, short term investments or accounts receivable. The Company is not exposed to any concentrations of credit risk other than from the Crown and the EQC.

Currency riskThe Company reduces its exposure to currency risk through the use of forward exchange contracts. At 30 June 2007 there was one forward exchange contract for $204,000 for the purchase of equipment related to the GeoNet project (2006: Nil).

Interest rate riskIt is Company policy to ensure interest rate exposure is maintained on a floating rate basis. In addition to this, management monitors the level of interest rates on an ongoing basis, and from time to time, will lock in fixed rates on the next floating reset when they consider that interest rates may rise. The interest rate on the term loan is set out in note 7.

Fair valuesThere were no material differences between the fair value and carrying amounts of financial instruments at 30 June 2007 and June 2006.

13. COMMITMENTS AND CONTINGENCIES

Group and Company

Commitments

2007 2006

Operating lease commitments: $000 $000

Within one year 121 124

Between one and two years 29 35

Between two and three years 4 26

Between three and four years 2 2

Five years and over – 1

156 188

Contracted capital commitments 1,093 1,281

Contingent liabilities

The Company has no contingent liabilities (2006: Nil).


47


14. COllECTIONS

The Company owns various collections that are an integral part of the research work undertaken by the Company. These collections are highly specialised and there is no reliable basis for establishing a valuation. They have therefore not been valued for financial reporting purposes. The two major collections are:

• The National Paleontological Collection• The National Petrology Reference Collection

15. SuBSEquENT EVENTS TO BAlANCE DATE

There were no subsequent events to balance date.

16. ADOPTION Of INTERNATIONAl fINANCIAl

REPORTING STANDARDS

In December 2002 the New Zealand Accounting Standards Review Board (ASRB) announced that International Financial Reporting Standards (IFRS) would apply to all New Zealand entities for financial periods commencing on or after 1 January 2007. Entities also have the option of voluntary early adoption from 1 January 2005. On 24 November 2004 the ASRB approved the stable platform of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS), which includes certain adaptations to IFRS to reflect New Zealand circumstances.

The Group has reviewed its accounting policies and financial reporting to comply with NZ IFRS, including an impact assessment to isolate key areas that will be impacted by the transition to NZ IFRS.

The Group has established its accounting policies under NZ IFRS and estimated the adjustments that will be required to the financial statements on adoption of NZ IFRS. The Group has determined that it will publish its first set of annual financial statements prepared under NZ IFRS for the year ending 30 June 2008. Accordingly, the first report using NZ IFRS will be for the half year ended 31 December 2007.

The Group has compiled an opening balance sheet based on the current version of NZ IFRS as at 1 July 2006. Based on the results of the information gathered in this process and the review of policies, the Group does not expect its financial results or financial position to be materially different under NZ IFRS from that currently reported, other than in the format and level of disclosure as presented in this report.

Set out below are the key areas where accounting policies will change and have an impact on the financial reports of the Group.

(i) Employee benefits

NZ IAS requires the actuarial valuation of employee benefits to be accrued as a liability. The underlying principle is that the cost of providing employee benefits should be recognised in the period in which the service is provided by the employee, rather than when it is paid or payable.

The Group has calculated the impact of the adoption of |NZ IFRS as it relates to employee leave entitlements. There will be an increase in liabilities and a corresponding decrease in equity.

(ii) Income taxes

A ‘balance sheet’ approach will be adopted, replacing the ‘income statement’ approach under NZ GAAP. This method recognises deferred tax on most temporary differences between the carrying value of an asset or liability and its tax base.

Adoption of NZ IFRS is not expected to impact significantly on the tax expense reported.

(iii) Intangible assets

NZ IFRS requires computer software and databases that are not an integral part of the related computer hardware to be treated as an intangible asset, provided certain criteria are met. Likewise, patents are to be treated as an intangible asset.

On conversion to NZ IFRS, such items will be reclassified from property, plant and equipment to intangible assets. There will be no net impact on equity.

(iv) Financial instruments: recognition and measurement

NZ IFRS requires the Group to recognise the derivatives held by the Group to hedge exposures to foreign currencies and interest rates on the balance sheet at fair value.

The Group has a policy to hedge all significant cash-flow transactions for the purchase of property, plant and equipment or major foreign currency denominated expense transactions associated with particular contracts.

At balance date, the Group held a forward exchange contract to hedge the settlement of the GeoNet rollout. Given this transaction meets the definition of a cash- flow hedge, recognition of the derivative at fair value at 30 June 2007 will increase liabilities and decrease equity by the same amount.

48


PERFORMANCEINDICATORS

Group Group Group

Actual Budget Actual

2007 2007 2006

financial Performance Measures

Revenue (excluding interest received) ($000) 50,952 50,830 45,904

EBIT Margin (operating surplus before interest/total revenue) 4.9% 5.6% 4.0%

Return on Equity (surplus after taxation/average equity) 7.8% 9.0% 6.1%

Return on Assets (operating surplus before interest/average total assets) 7.0% 8.7% 5.8%

Equity Ratio (equity/total assets) 51.1% 56.8% 50.5%

Current Ratio (total current assets/total current liabilities) 0.9:1 0.7:1 0.8:1

Gearing (refer note 7) (term loan/equity plus term loan) 21.7% 21.5% 22.7%

Interest Cover (operating surplus before interest/interest expense) 5 times 6 Times 5 Times

Dividend Proposed ($000) 350 350 300

Other Performance Measures

Research Contracts:

FRST ($000) 20,443 21,218 19,969

Capability Funding ($000) 3,687 3,687 3,052

Marsden ($000) 1,018 1,407 1,519

PSAF ($000) 438 433 451

Revenue from GeoNet ($000) 8,328 8,132 7,026

Commercial Contracts:

Revenue from commercial activities from NZ ($000) 12,976 10,960 11,159

Revenue from commercial activities from overseas ($000) 3,898 4,844 2,257

Clients providing over $150k p.a. 24 18 21

Research Indicators:

Peer-reviewed scientific papers 159 150 189

Research monographs & maps 3 3 8

Other journal papers 97 55 68

Keynote and plenary presentations 12 10 *

Conference papers and abstracts 104 150 210

PGSF contracted objectives met 98.3% 98.0% 98.8%

Marsden proposals submitted 21 15-20 16

New Marsden projects 1 3 1

Graduate scholarships funded 15 22 18

Graduate students supervised 64 64 61

Contracts from TEOs ($000) 846 400 581

Contracts to TEOs ($000) 1,351 650 1,483

Projects involving Maori 8 10 *

External Advisory Panel Meetings 3 9 *

Overseas partners in PGST projects 151 100 104

Overseas visit reports 14 45 23

Research application indicators:

Client feedback average score 7.3 >7 *

Commissioned reports to users 318 105 203

Presentations to users 179 15 *

User-sector/industry articles 23 12 *

New and improved products/processes/services 39 12 *

Joint ventures/formal associations 5 3 3

Patents granted – New Zealand nil 1 *

Patents granted – Overseas 1 1 *

Licensing agreements entered into 14 2 *

Funded Pre-seed projects 14 6 15

International fora representing NZ 14 15 11

49


Group Group Group

Actual Budget Actual

2007 2007 2006

Human Resources:

Full-time equivalents (FTEs): 307 295 285

– researchers 225 218 207

– research support 39 39 37

– general support & management 43 38 41

Average salary increase 5% 5% *

Training & development (% salary budget) 4% 3% 3%

Work days missed due to injury nil 10 days 14 days

ACC workplace safety accreditation Primary Primary Primary

Productivity Measures

Revenue per FTE ($000) 166 172 161

Operating margin per FTE ($000) 8.1 9.6 5.6

Total assets per FTE ($000) 118 111 122

Revenue earned per $ Invested in Assets 1.4 1.5 1.3

Access to databases by internal and external users:

Active geological faults of NZ 1:250 000 220 55 *

Bibliography of NZ Geology:

– direct external use 1,725 1,500 *

– licences 0 2 *

Cretaceous-Cenozoic/Sedflux geology of NZ <5 <5 *

Digital geology (QMAP):

– hard copy maps and texts 745 900 *

– raster data CDs 174 150 *

– GIS vector data CDs 45 80 *

Geophysical properties of NZ 15 15 *

Groundwater database 80 20 *

Landscape photograph collection 6,000# 220 *

Large landslides of NZ 20 10 *

Marine geophysical database daily daily *

Mineral resources of NZ:

– direct use weekly weekly *

– licences 12 10 *

– website (new 2006) daily weekly *

NZ stratigraphic lexicon weekly weekly *

NZ fossil record file daily daily *

NZ stratigraphic column file 150 150 *

NZ volcano database daily daily *

National petrology reference collection and PET database 1,200# 370 *

National coal geology database 22 20 *

NZ glacier inventory <5 <5 *

NZ geomagnetic database 507 400 *

National earthquake information database 1,500# 150 *

NZ strong-motion earthquake recordings 8 10 *

Paleontological collections:

– visitors 20 25 *

– loans 18 10 *

Petroleum systems database:

– direct use 2,200 1,900 *

– licences 13 25 *

Regional geology map and data file 20 20 *

Rock strength and classification <5 <5 *

* new measure # Includes access to website

50


To the readers of the Institute of Geological and Nuclear Sciences limited and Group’s financial Statements for the year ended 30 June 2007.

The Auditor-General is the auditor of the Institute of Geological and Nuclear Sciences Limited (the “Company”) and Group. The Auditor-General has appointed me, G R Mitchell, using the staff and resources of Deloitte, to carry out the audit of the fi nancial statements of the Company and Group, on his behalf, for the year ended 30 June 2007.

unqualifi ed Opinion

In our opinion:

• The fi nancial statements of the Company and Group on pages 37 to 47:– comply with generally accepted accounting practice

in New Zealand; and– give a true and fair view of:

– the Company and Group’s fi nancial position as at 30 June 2007; and

– the results of operations and cash fl ows for theyear ended on that date.

• Based on our examination the Company and Group kept proper accounting records.

The audit was completed on 22 August 2007, and is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and the Auditor, and explain our independence.

Basis of Opinion

We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards.

We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the fi nancial statements did not have material misstatements, whether caused by fraud or error.

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the fi nancial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

The audit involved performing procedures to test the inform-ation presented in the fi nancial statements. We assessed the results of those procedures in forming our opinion.

Audit procedures generally include:

• determining whether signifi cant fi nancial and management controls are working and can be relied on to produce complete and accurate data;

REPORTOFThEAUDITOR-GENERAL

• verifying samples of transactions and account balances;• performing analyses to identify anomalies in the

reported data;• reviewing signifi cant estimates and judgements made

by the Board of Directors;• confi rming year-end balances;• determining whether accounting policies are appropriate

and consistently applied; and• determining whether all fi nancial statement disclosures

are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the fi nancial statements.

We evaluated the overall adequacy of the presentation of information in the fi nancial statements. We obtained all the information and explanations we required to support our opinion above.

Responsibilities of the Board of Directors and the Auditor

The Board of Directors is responsible for preparing fi nancial statements in accordance with generally accepted accounting practice in New Zealand. Those fi nancial statements must give a true and fair view of the fi nancial position of the Company and Group as at 30 June 2007. They must also give a true and fair view of the results of operations and cash fl ows for the year ended on that date. The Board of Directors’ responsibilities arise from the Crown Research Institutes Act 1992, the Public Finance Act 1989 and the Financial Reporting Act 1993.

We are responsible for expressing an independent opinion on the fi nancial statements and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001, section 21(1) of the Crown Research Institutes Act 1992 and the Public Finance Act 1989.

Independence

When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand.

In addition to the audit we have carried out an impact analysis regarding the Company and Group’s implementation of New Zealand Equivalents to International Financial Reporting Standards. Other than the audit and this assignment, we have no relationship with or interests in the Company or any of its subsidiaries.

GRMitchellPartner, deloitte on behalf of the Auditor-General, Wellington, new Zealand

51


STATEMENTOFRESPONSIBILITY

The Board and management are responsible for the preparation of the annual fi nancial statements and the judgements used therein.

The Board and management are responsible for establishing and maintaining a system of internal control designed to provide reasonable assurances as to the integrity and reliability of the fi nancial reporting.

In the opinion of the Board and management, the annual fi nancial statements for the fi nancial year, fairly refl ect the fi nancial position and operations of the Group.

ConAnastasiouChairman

AlexanderMalahoff Chief Executive

22 August 2007Date of Approval

52


Principal location and Registered Office

1 Fairway Drive Avalon PO Box 30-368 Lower Hutt 5010 New Zealand Tel: +64 4 570 1444 Fax: +64 4 570 4600 Email: [email protected]

Other locations

wairakei Research Centre 114 Karetoto Road Wairakei Private Bag 2000 Taupo 3352 New Zealand Tel: +64 7 374 8211 Fax: +64 7 374 8199 Email: [email protected]

National Isotope Centre 30 Gracefield Road PO Box 31 312 Lower Hutt 5040 New Zealand Tel: +64 4 570 1444 Fax: +64 4 570 4657

Dunedin Research Centre 764 Cumberland Street Private Bag 1930 Dunedin 9054 New Zealand Tel: +64 3 477 4050 Fax: +64 3 477 5232 Email: [email protected]

GNS Science Office locations

Directors

Con Anastasiou (Chairman)

Ross Butler (Deputy Chairman)

Ellen förch

Allan freeth

Sarah Schiess

Brenda Tahi (retired 30 June 2007)

Mike williams

John walters (appointed 1 July 2007)

Executive

Chief Executive Dr Alexander Malahoff

General Manager Natural Hazards Group Dr Terry Webb

General Manager Natural Resources Group Dr Michael Isaac

General Manager National Isotope Centre Dr Frank Bruhn

Chief financial Officer Graham Clarke

General Manager Business Development & Information Services Rob Johnston

General Manager Human Resources Tony Stone

General Manager Research Dr Robin Falconer

General Manager Strategy Dr Desmond Darby

Manager Ma-ori Strategy Rawiri Faulkner

Marketing Managers

Geohazards Dr Noel Trustrum Email: [email protected] Dr Hannah Brackley Email: [email protected]

Hydrocarbons Dr David Darby Email: [email protected]

Non-invasive Scanning Technologies Joe Manning Email: [email protected]

Groundwater and Geothermal Melissa Climo Email: [email protected]

Radiocarbon Dating Dr Nancy Beavan Email: [email protected]

Communications Manager

John Callan Tel: +64 4 570 4732 Mob: +64 27 440 2571 Email: [email protected]

Bankers

The National Bank of New Zealand limited

Auditor

Graeme Mitchell Deloitte On behalf of the Auditor-General

Solicitors

Minter Ellison Rudd watts

DIRECTORY

GNS Science on the web: www.gns.cri.nz

Principal location and National Isotope Centre

Dunedin Research Centre

Wairakei Research Centre

2

Chief exeCutive

Alexander Malahoff

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ANNUAL REPORT 2007

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