Contact To Adopt Internationl Reporting Stds Early
17 August 2005
FOR IMMEDIATE RELEASE
Contact Moves To Adopt International Financial Report Standards Early
Contact Energy is moving to early adoption of the New Zealand equivalents to International Financial Reporting Standards (NZIFRS) from 1 July 2005, as permitted by the New Zealand Accounting Standards Review Board.
Contact’s chief executive, Steve Barrett, said that the company was taking advantage of the opportunity to adopt the new standards early, and in the process confirmed this is also in line with the reporting of its majority shareholder Origin Energy.
“Contact will commence reporting under NZIFRS in the financial year ending 30 June 2006. However, in order to assist the market to understand the implications of the move to IFRS we have disclosed a summary of the key impacts early.”
He noted that the adoption from 1 July 2005 of NZIFRS has no impact on today’s release of the company’s result for the period ended 30 June 2005 as the result has been prepared on the basis of existing accounting policies in accordance with New Zealand Generally Accepted Accounting Practice, consistent with prior years.
Full details of the impacts of the change in financial reporting standards will be included as a note to the company’s financial statements, included in Contact Energy’s Annual Report, due for release in September. These details will include NZIFRS transition adjustments to the opening balance sheet and a restatement of comparative earnings for the period ended 30 June 2005.
In the main, the changes resulting from these new financial reporting standards are the rules by which certain assets and liabilities are recognised.
The most significant changes relate to the non-amortisation of goodwill, a change to the calculation of deferred taxation, and the recognition at fair value of financial derivatives.
“The adoption of NZIFRS results in a reduction in shareholders’ equity of $661 million reported as at 30 June 2005 and therefore an increase in reported gearing ratios. We do not, however, anticipate any change to capital management policies.
“These are changes in accounting definitions and will not change our business strategy nor the way in which we manage the business on a day-to-day to basis. Importantly, the cash flows generated by the Company are unchanged as is the economic value behind our business.” Mr Barrett said.
A presentation summarising the implications of moving to International Financial Reporting Standards is available on Contact Energy’s website.