ANNUAL REPORT 08/09 Our advanced Metra’s media and probability forecasts energy products provide US energy support a wide range traders with market- of clients in the UK leading tools to and Europe, from the manage their risk BBC to the trading and opportunity. desks of major energy companies.

The latest en route information helps to keep Air New Zealand’s international MetService plays operations running a key role in safely and smoothly. improvements to weather and climate services in Africa’s poorer regions by providing technical assistance and telecommunications support.

Our aviation services team provides mission-critical support to the US Air Force and Air National Guard for their Antarctic operations. A global leader in local weather

Weatherscape XT Phoenix TV delivers and Clip enable a comprehensive television broadcasters weather graphics across the Middle East presentation in and in Pakistan to Mandarin using deliver weather shows Weatherscape XT uniquely customised to some 180 million for each station’s viewers across look and feel. Greater China.

Global Observing Network weather stations in Kiribati are being restored and upgraded by MetService’s Observations and Engineering team.

MetService expertise 24/7 backup service in services to to the Nadi Tropical international Warning aviation supports Service is provided RNZAF activities as part of our in East Timor. weather services contract for public good with the New Zealand Minister of Transport.

MetService Our extensive local dominates market forecasting operation share for TV weather now provides graphics across New Zealanders Australia and New with world-class Zealand, meaning severe thunderstrom millions of viewers forecasting and downunder enjoy warning service cutting-edge weather to support protection presentations of life and property. every day. Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning and focused effort. Paul J Meyer 1 Lying deep within the southern oceans, New Zealand’s three islands experience some of the world’s most changeable weather. Glacial southerly , subtropical downpours, temperate zephyrs, swelteringsun – New Zealand encounters it all. Little wonder then, that such a dynamic weather environment has shaped a body of expertise and knowledge second to none that is now sought the world whether over, for business-critical risk management decisions or for the daily commute. MetService,Today, along with its international commercial subsidiary Metra, is a global leader in providing relevant, timely and accurate weather services to millions of people. doWe this bringing by together the expertise of our dedicated professionals and our passion for innovation to make a difference for people and businesses – whether in Lyttelton or London, Hokianga or Hong Kong. * 2 YEAR INREVIEW Corporate Strategy, Strategy, Corporate General Manager – Manager General Finance Manager. Finance Top: Norm Henry, Top: Henry, Norm and Jodi Taylor, Jodi and

Chinese news broadcaster. broadcaster. news Chinese amajor with acontract signing Asia, in foothold afirmer we’ve established now contracts, key international of several renewal the with to grow. Along continues business graphics media our Worldwide, plan. investment capital our support to waived was 2007/08 for payment dividend final year. the The during of$500,000 2008/09 for payment dividend interim an We made systems. IT of our resilience the strengthening as well as capabilities, forecasting weather and collection data our enhancing on investment this We’ve focused business. of our sustainability long-term the to build infrastructure IT and meteorological in investment ongoing significant our wecontinued 2008/09 During costs. depreciation in increase asubstantial offsetting revenue, domestic and international both in growth continued reflects result This million. to $8.8 12.4%by year-on-year grew (EBITDA) amortisation and depreciation taxes, interest, before Earnings increase. a7.4% year-on-year represents which million, $4.7 of tax before profit anet We achieved 2008/09. in performance strong its continued Group MetService The performance of Overview of ourof business. sustainability building is long-term the infrastructure IT O ur significant, ongoing investment in meteorological and and meteorological in ongoing investment ur significant, $6,619

EBITDA ($000) EBITDA 2006/07 $7,812

(CAA) Part 174 Part Certification. (CAA) Authority Aviation Civil and Certification Quality 9001 ISO our weretained year the during and performance, to our foundation akey is management quality on A focus improvement. further to drive targets performance forecasting ofour ‘stretching’ incremental an begin wewill year coming the In Zealanders. to New weprovide service weather the to improve strive we continually results, these with pleased weare While less. or 25% were (FAR) Ratios Alarm False while 91%, exceeded heavy or severe , heavy for (POD) of Detection Probability timeliness. and accuracy for monitor wecontinuously which warnings, weather severe for levels target exceeded also performance Forecast business. online our and ofTransport Minister to the services our in growth significant we’ve achieved Locally, Europe. in business our grow to substantially clients US for wedeveloped technology forecasting the we’ve leveraged market, energy American North the in business our affected has downturn economic global the While 2007/08 $8,778

2008/09 Before($000) Tax Profit $3,528

2006/07 $4,415

2007/08 $4,742

2008/09 3

management ifference d a

emergency aking M in researchdevelopmentand establishprogramme to climatology a convectionsevere of developand forecasting techniques tailored to New Zealand’s uniqueenvironment. Advances weather in modellingDopplerand weather interpretationenabled deliverythe three-day a of outlook in 2004, followed day- by aheadthunderstorm watches finally, 2008,and in implementationservicewarningfullthe of this provideemergency Warnings managers year. with hours’two advanceto up notice specific of events, publicthe available emailare via andandto notification on .com. serviceculminationthe isseven-year journey a of increasingthe sparkedby country’sneedthe of emergencymanagement services detailed for information on intense downpours. MetService meteorologistslong-term embarkeda on The Severe Thunderstorm Severe The (STW) Warning * 4 YEAR INREVIEW Right: Radome installation installation Radome Right: Top left: Tom Sutherland, TomTop Sutherland, left: Metra Australia and Asia. Asia. and Australia Metra Bottom left: Will Owen, Owen, Will left: Bottom for the Mahia radar. radar. Mahia the for General Manager – Manager General – Manager General and Middle East. Middle and Metra Europe Europe Metra

1 July 2009. 1 July commenced which service, (STW) Warning Thunderstorm Severe new the to include services good’ ‘public for contract our extended Minister the year This information. weather to accurate access have Zealanders New all that to ensuring we’re committed Transport, of Minister to the contract under service meteorological national Zealand’s of New provider the As economically. and socially toll aheavy take can and Zealanders New of lives the in akey role plays Weather resilience and accuracy in Investing our ability to observe and predict . severe predict and to observe our ability T he expansion of our radar network is dramatically improving dramatically is network our of radar expansion he to observe and predict severe weather. severe predict and to observe ability our improving dramatically country, the of 80% ofaround coverage radar provide will sites new five ofthese addition the 2008, May in commissioned radar Plymouth New the with Along Coast. West Island South the and ofPlenty Bay North, Far the in sites installation radar potential We’re investigating now 2009. October from regions Gisborne Hawke’s and Bay ofthe coverage provide will which project, radar Mahia the completed year, the welargely During ahead. years the in weather local-scale on focus increased an underpinning as well as service, STW the for needed forecasting short-range the support will which network, radar weather ofour expansion the with tandem in service STW the We’re implementing 5 MetService’s forecasting operations rely on cutting-edge modelling and technology IT to support its team of skilled .

in September. Information technology is vital to the delivery of deliveryof the to vital is technology Information lifted significantly we’ve and enhancements these our investment in IT infrastructure. This year focusedwe’ve on migrating legacy IT systems – modern to – old 30years over are which of some hardware platforms and coding languages. alsoWe’ve begun an 18-month disaster recovery will completed, when that, work of programme offsite, systems our replicate fully to us allow thereby substantially improving the resilience total a is stage first The capabilities. core our of re-designof our aviationkey product delivery commission to plan we which system, – Human Resources, and From left: Russell Turner, Chief Information Officer, Colin Baruch, General Manager Marketing and Communications. Mark Ottaway, General Manager –

Another enhancement that will improve the accuracy our of forecasting is the development of an advanced numerical weather prediction capability using the Weather Research and Forecasting (WRF) modellingsystem. begunWe’ve live trialling of a WRF model that incorporates and a coupled land-surface model. Validation studies of the results indicate we canachieve a significant improvement in accuracy. While our domestic forecasting service will benefit firstfrom this capability, we plan extend to themodelling application further to develop our international energy and media graphics products. 6 YEAR INREVIEW and sensors installed at at installed sensors cloud and Taupo as part of our our of part as Taupo Airport aviation network upgrade. network aviation Right: Advanced visibility Advanced Right:

forecasting for aviation safety. aviation for forecasting the short-range challenge of local-scale, is invaluable to our forecasters as they face information about current conditions at in increase dramatic The observations. one-minute enables that technology new 14 aerodromes around the country, incorporating at stations weather automated upgraded system, during the past 12 months we’ve In addition to of theour re-design IT delivery capability. weather observation to our surface of improvements major programme ongoing an have and industry this for information and forecasting in excellence to delivering committed to safety. weather areaviation critical We’re and en-route of airport predictions Accurate New Zealand’s air safety Underpinning excellence to the aviation industry. to aviation the excellence to delivering our of commitment part as capability observation W e’re undertaking major improvements to our surface weather weather to our major surface improvements e’re undertaking

to the Minister ofTransport. Minister to the provision service core our to extend us allow also will improvements infrastructure These Kidnappers. Cape and Pier Brighton New at installations new on progress significant made have and Turnagain Cape and Fairlie at stations new commissioned we year past the In public. Zealand New to the services to enhance technology observing weather our We’re applying also 7 ifference d a aking M ds ealand’s roa on New Z We beganWe working with the NZ Transport Agency in2007 to make driving the Central North Island highways safer during winter. The project involved establishing a real-time road weather observing and forecasting system to support the Agency’s winter road management programme. This we installed year, automated mSTAR 12 weather stations equipped with road temperature sensors and introduced localised forecasts at these sites. The Agency andits contractors access this information online through MetConnect, our commercial website, which allows them to respond quickly to changing conditions. * 8 YEAR INREVIEW 264,920 Technical innovation combined combined innovation Technical New Zealand businesses make make businesses Zealand New New Zealand Visitors Visitors New Zealand (average per month) per (average to metservice.com to metservice.com top 10 most visited websites. top 10websites. visited most Metservice.com consistently consistently Metservice.com ranks New Zealand’s among weather-related decisions. weather-related New Zealanders (identified (identified New Zealanders 2006/07 with expert interpretation interpretation expert with On average, over 560,000 On average, over 560,000 accessed information on accessed Source: Nielsen Market Intelligence, Intelligence, Market Nielsen Source: by unique web bybrowser)web unique 388,522 is improving the way way the improving is our site each month. each site our 2007/08 560,183 Domestic Traffic 2008/09

and a weather blog. aweather and section news arural observations, one-minute introducing year this site’s value, the user to maintain working continually is team web Our 2009. to June year-on-year 33% by grew visitors Zealand ofNew number the popularity: increasing site’s the is rapidly we’re successful that evidence The decisions. weather-dependent to make need they information the have Zealanders New ensures that content responsive and relevant to is deliver challenge Our information through metservice.com. access to an increasing range of weather-related We’re providing all New Zealanders with ready decisions everyday Zealanders’ New Helping W valuable services that assist their decision-making. assist that valuable services e’re working closely with N with e’re closely working ew Zealand businesses to deliver businesses Zealand ew

safety network. safety road ofawinter development further on Agency Transport NZ the with closely working are and Zealand New in companies energy with forecasts energy probabilistic new our we’re trialling example, For decision-making. their assist that services valuable to deliver businesses with closely We’re working also demand. future to meet capability the provides and performance increased significantly has innovation technical This architecture. data scalable, advanced, an with ofdata serving and storage conventional We’ve replaced oftraffic. volume growing the to handle continue wecan ensuring is systems management data underpinning site’s ofthe re-design A comprehensive 9 energy traders quickly to get a handle on emerging patterns andtrends. extending We’re this product’s capability predict to the behaviour of model forecasts for the European market, with a prototype system now demonstrating excellent performance. also We’re working on a suite of unique verification services that will allow clients continually to monitor forecast performance. Our stronger focus on the European market follows a challenging year in the US, where the economic downturn has had a noticeable effect onthe energy trading our However, sector. successful marketing of Forecast the Forecast in Europe has offset the North American downturn. have We also begun live trials of our ePD product in Australia and New Zealand, which we’ll extend our to UK and European clients early in the new financialyear.

Client Management, and National Weather Services. General Manager – Sales and Top: From left,Top: Stephen Harris, Rod Stainer, General Manager – The excellence of our energy research and development is reflected in the commercial success of our Forecast the Forecast product in the US and Europe. This product enables This year marked the completion of an intensive three-year research and development programme in multi-model probability forecasts (‘Ensemble Probability Distributions’, or ePD). Using innovative mathematical techniques createdwe’ve a high-value product that combines diverse sources of forecast information deliver to a very accurate picture of likelyfuture weather outcomes. in risk management risk in The innovations achieving we’re in the building industryare energy international accurate delivering for reputation global our Increasingly, products. forecasting reliable and as products these view companies energy risks. business their hedging in tools invaluable Lessening the ‘risk’ Lessening the ‘risk’ 10 YEAR INREVIEW Our Weatherscape television television Weatherscape Our weather graphics system system graphics weather supports broadcasters broadcasters supports around the world. the around

leading Chinese-language news broadcaster. news Chinese-language leading world’s the Television, Phoenix with signed in and, an East exciting development, the Middle and in Europe business new significant secured We’ve 9. also Channel Australia’s as such clients keywith thiscontracts year, renewing long-term We’ve market our media position strengthened clips. video XT 3D pre-rendered delivering broadcasters, medium-sized solution for to small- Clip offers a ready-to-air of difference with their audience. Weatherscape point and identity station aunique to create It allows them to totally customise presentations broadcasters. larger to flexibility immense delivers XT solution, Acutting-edge graphics. weather 3D and offers constantly updated (real-time) each broadcaster’s environmentproduction is fully integrated XT Weatherscape with presentations. striking and visually oftimely,through millions of people accurate more relevantforecasts to lives the daily weather online and television making are graphics overAll our the Weatherscape world picture of weather Providing aclearer to their audiences. around the world to deliver more relevant daily forecasts M etra’s cutting-edge presentation products enable broadcasters broadcasters enable products presentation etra’s cutting-edge

video games. video cutting-edge in applied conventionally more techniques processing graphics advanced using and temperature. Westrength created the feature direction, ofwind representation animated – an feature particle this year is the wind-blown market to the wereleased innovation such One innovations. product core on to focus developers our allowing also while data, ofintegration meteorological the to streamline developers third-party allow that interfaces programming application We’veaudiences. a implemented set of open areto seeking todeliver broadcasters their and relevance ofthat forecasts the accuracy to achieving vital is This data. meteorological ofintegration timely islocally-supplied achieving business Weatherscape our international of growth the in challenge emerging An

11 ifference d a aking M Chinese to 180 million On June 16 2009, some 180 million people inChina tuned in to a clearer picture of their weather, courtesy of Phoenix Television’s new Weatherscape XT-based weather show. TheHong Kong-based company broadcasts throughoutChina and across the Asia-Pacific region, Europe and the Americas. Phoenix’s launch with such a highly visible demonstration of Weatherscape XT’scapability is a major step forwardin our effort to gain further traction in the Asian markets. * 12 YEAR INREVIEW Peter Smith and Tina Donaldson. Tina and Smith Peter Graduates of the 2008 forecaster forecaster 2008 the of Graduates Tristan Oakley, Stephen Glassey Glassey Stephen Tristan Oakley, from photo – Michael O’Connor, O’Connor, –Michael photo from Jonathan Tunster, Robert Kerr, Tunster, Robert Jonathan Nicole Ranger, Carole Duncan, Duncan, Carole Ranger, Nicole and Thea Turkington. Missing Missing Turkington. Thea and training course. From left: left: From course. training

projects over the past year, including: past the over projects development ofkey international anumber in part We’ve taken Pacific. the within services climate for weather and support regional and provide community international to the contribution we make a strong (WMO) Organization theMeteorological with World association our community. Through meteorological international ofthe expertise and skills the tohas a strong commitment building MetService leadership Providing * community global the in * * * * * * * the Tonga Early Warning project that, with with that, project Warning Tongathe Early a restoration programme for Kiribati Global Global Kiribati for programme a restoration communications; emergency and weather Tonga to enable throughout systems internet radio high-frequency five installed Re-Insurance, Munich from support funding a joint MetService/NIWA initiative to guide to guide initiative MetService/NIWA a joint stations; observing weather Network Surface an upgrade of the computer network network computer ofthe upgrade an and Pacific; the in change ofclimate to impacts adaptation effective supporting meteorological services in Niue. in services meteorological supporting R projects M projects development international the of one just was in Kiribati estoring G estoring et lobal S lobal S ervice undertook during year. the undertook ervice urface N urface

etwork weather observing stations stations observing weather etwork * * * * * * including: meetings, and conferences ofWMO number alarge in participated also employees MetService * * * * * * held in Geneva from 3-12 June 2009. 3-12 June from Geneva in held Session Council Executive 61stthe WMO and April; March-2 25 from Croatia, Dubrovnik, in 14th session Systems Basic for Commission the Myanmar; and Philippines, the Malaysia, Singapore, Vietnam, Laos, Brunei, from forecasters participating with Seoul, in 2008 10-14 November held and WMO the by organised , Aviation on Training Workshop ofKorea Republic and ASEAN the at oflectures delivery 2008; October 20-24 Germany, Langen, in Services Hydrological and Meteorological ofNational Institutions ofTraining ofHeads Conference Standing ofthe Committee Co-ordinating of the meeting 16th the at ofapaper presentation 2008; 6 -10 October Vanuatu, Vila, Port in Asia-Pacific, in Countries Developed Least of the Services Hydrological and Meteorological National for Workshop Building Capacity WMO the at ofapaper presentation 11-18 Niue, in held 2008; July Committee, Cyclone VTropical Association Regional WMO ofthe 12th Session the 13 Our forecasting research team supports domestic and international operations with advanced weather modelling and product innovation. This year’s survey Gallup of employee Q12 engagement once again demonstrated a high participation rate amongst staff, and results for this second survey showed significant advances over last year. continueWe build to future forecaster resources through our in-house training programme, which provides science graduates with meteorological training WMOto standards. The 2008 intake of trainees successfully completed their course, followed quickly by the start of the 2009 course in January. Our team of WMO graduate meteorologists provides essential skills that support our core business. In April we farewelled outgoing Chairman Francis Small, who stood down after leading the MetService Board for the past six years. thankWe Francis for his contribution the to success of the company. Sarah Astor takes over the Chairmanship with Polly Schaverien as Deputy the Chair, role Sarah previously held.

During the year we implemented a robust human human robust a implemented we year the During resources framework along with a new job all to applied we which methodology, evaluation 2009. February from company the across roles market-based a by complemented now is This behavioural of set a and structure remuneration competencies that reflect the culture described As a Board and management team we’re committedproviding to a work environment that both acknowledges and fosters the immense contribution of our people. While the currency of our work is the and information of domains changing rapidly meteorological technology, our competitiveness and scientific credibility ultimatelyrest with our people. proud of the We’re professionalism work. their to bring they commitment and and – year MetService this of success The in the years ahead – is driven by these attributes. role-by- a on Values, and Mission Vision, our by role basis. Recognising our asset important most 14 YEAR INREVIEW Elcho Flat, Upper Waitaki Waitaki Upper Elcho Flat, Top: Paul Reid, Chief Executive. Executive. Chief Top: Reid, Paul Basin during May 2009 2009 Basin during May Research and Development. and Research General Manager – Science –Science Manager General MetService forecast MetService vs actual rainfallvs actual at Bottom: Neil Gordon, Gordon, Neil Bottom: flooding eventflooding

its growing traffic and associated revenue. associated and traffic growing its to support website ofour re-design amajor see also will year coming The facilities. back-up our of robustness the strengthening on focus we’ll which after systems, legacy IT ofour migration the to complete expect We also programme. modernisation network aviation our advance further and radar new athird install radar, weather Mahia the commission wewill Locally, overseas. capability sales our to extend arrangements partnership more explore also We’ll activities. online and media energy, our in growth to support programmes development and research in investment our maintain we’ll internationally, and locally both investment on return our grow and To deliver wecan ensure services. weather-related for demand dampen to continue will conditions economic global that we’re anticipating because least the – not one challenging another be will year coming The forward Looking

HOURLY RAINFALL AT ELCHO FLAT (MM/HOUR) 20 10 12/05/09 15 -5 0 5 service they expect from M from theyexpect service N of people the –and clients W e’re in a strong position to provide our local and international international and our to local e’re provide position in astrong

13/05/09

14/05/09

15/05/09

16/05/09

17/05/09 et ew Zealand – with the outstanding outstanding the –with Zealand ew S ervice.

18/05/09 Paul Reid, Chief Executive Chief Reid, Paul Astor, Chairman Sarah one. successful another be will year coming the that we’re confident contribution, dedicated and professional continued their With commitment. and work hard their for employees ofour all thank We also you. with relationships working productive our on to building forward look and support their for customers our and suppliers our ofmany. We thank efforts of the aresult as MetService from expect they service outstanding the –with Zealand ofNew people the –and clients international and local our to provide position astrong in 2009/10 We face

19/05/09

20/05/09 total =409mm total actual Six-day =497mm total forecast Six-day Flat Elcho at Rainfall Actual Forecast

15

ifference d a aking M in energy reliability As far as I am concerned this forecast was spot on.” …huge thanks to the MetService team for providing such a valuable and accurate warning, for your help on the phone, and for not flinching when I asked ‘you are predicting how much rain!?’” of rainfall between May provided 14-19 vital supportriskMeridian’smanagement for decisionmaking. Eddie Stead Generation Hydrologist | Meridian Energy “ WinterbackdropWith 2009.three a of weeks heavysignificantand of rain themelt in snow upper Waitaki basin, Meridian Energyfaced a growingchallenge lakesmanaging itsin hydro with the immediate prospect of further heavy rainfalls. However, MetService’s expert guidance and advance warnings of the more than 400 mm “ * DIRECTORS’ REPORT

Directors from left: Sarah Astor (Chairman), James Koh and Joanne Keestra.

Corporate Governance Statement Meteorological Service of New Zealand Ltd

The Directors are pleased to present the ROLE OF THE BOARD OF DIRECTORS

corporate governance statement which Under the Companies Act 1993, the Board provides an overview of the Company’s is responsible for managing, by or under its main governance practices. direction or supervision, the business and affairs of the Company. This includes responsibility for BUSINESS ACTIVITIES the Company’s strategic direction and oversight The Company engages in the provision of its management, with the ultimate aim of weather services in New Zealand and of increasing shareholder value. The primary internationally, including data acquisition, responsibility of the Directors is to exercise forecasts and warnings, dissemination their business judgement to act, in good faith, and consultation. in what they believe to be the best interests of the Company and its shareholders. In meeting Its core business activities include: its responsibilities, the Board: ** the provision of New Zealand’s National Meteorological Service under contract ** provides leadership and vision to the to the Minister of Transport; Company in a way that will enhance ** the provision of weather services to domestic shareholder value; and international aviation; and ** ensures that appropriate systems and ** other domestic services. processes are in place so that the business of the Company is conducted in an honest, Its related business activities include: ethical, responsible and safe manner; ** the provision of specialised weather services ** appoints, manages and monitors the to the energy sector, both domestic and performance of the Chief Executive Officer;

international; ** oversees the overall conduct of the business ** the provision of television weather graphics and ensures that it is being properly managed;

services and supporting data, both domestic ** ensures that effective audit, risk management and international; and compliance systems are in place to ** the sale of advertising space on its protect the Company’s assets and to minimise metservice.com website; and the possibility of the Company operating

** other overseas weather forecasting services. beyond legal requirements or beyond acceptable risk parameters; SHAREHOLDERS ** actively engages in directing and approving

As a State-Owned Enterprise (SOE), MetService the strategic planning of the Company is wholly-owned by the Crown. Two Shareholding and monitoring the implementation of the Ministers act on behalf of the Crown – the strategies by Company management; Minister of Finance and the Minister for State- ** reviews and approves the Company’s Owned Enterprises. budgets, business plans and Statement of Corporate Intent, and ensures they meet shareholder requirements; 16 17

effective policies and procedures to achieve achieve to procedures and policies effective of the Company. CONFLICTS OF INTEREST The Board expects its members, both individually and collectively, act to ethically and in a manner consistent with the values of the business and the requirements of the Companies Act 1993. generally a week in advance meetings. of Executive managers are regularly involved in Board discussions and Directors have other opportunities gain to information and advice in relation the to Company and its operations. BOARD COMMITTEES The Board currently maintains three standing committees: the Audit Committee, the Risk and Compliance Committee and the Human Resources Committee. Other committees are formed forspecific purposes and disbanded as required. The purposes of the standing committees are as follows: AUDIT COMMITTEE The objective of the Audit Committee is to assist the Board in discharging its responsibilities relative financial to reporting andregulatory conformance. Its main responsibilities are the oversight of the financial audit process, including the appointment of independent auditors, assessment of the performance of the Company’s financial management and ensuring compliance with statutory requirements related finance.to RISK AND COMPLIANCE COMMITTEE The objectives of the Risk and Compliance Committee ensure are to that the Company complies with all relevant legislation and maintains a sustainable Risk Management Programme, incorporating robust processes for identifying and assessing material risks theto Company and establishing risk mitigation strategies. HUMAN RESOURCES COMMITTEE Resources Human the of objective The achieves Company the ensure to is Committee required as employer good a of role the fulfils and State-Owned the of 4 Enterprises section by Act 1986, through the establishment of workforce engaged and motivated skilled, a operation successful the to contribute will that an annual Business Plan and Statement of Corporate Intent outlining the Company’s strategic direction and financial projections for the coming three years; an annual report including audited financial statements; a half-yearly report including unaudited financial statements; and quarterly reports outlining financial performance, major achievements and issues of concern. sets delegated financial authority levels for the Chief Executive Officer; reviews and approves all material acquisitions and divestments, and all capital expenditure exceeding the Chief Executive Officer’s delegated financial authority; monitors the financial and non-financial performance of the Company against its goals and targets, and ensures the integrity of reporting; fosters constructive relationships with the Company’s shareholders, and gives due consideration in all of its activities the to Company’s stakeholders; and conducts itself in such a way that Board meetings and discussion promote focused, open debate within a supportive team atmosphere. * * * * * * * * * The annual programmeis set by the Board prior the to start of each calendar year. enable theTo Board function to effectively, management provides formal Board papers BOARD MEETINGS The Board meets approximately times per 11 Additionalyear. meetings are held as required. * * * * COMPOSITION OF THE BOARD In accordance with the Constitution of the Company, the Board must comprise not less than two, and not more than nine, Directors, who are appointed by the Shareholding Ministers. Under the State-Owned Enterprises Act 1986 the Company is required provide to Shareholding Ministers with: * * * * * COMMUNICATION WITH SHAREHOLDERS The Board is committed the surprises’ to ‘no policy adopted by Shareholding Ministers, and proactively advises its shareholders on significant issues on an on going basis. DIRECTORS’ REPORT

The Company Constitution specifies rules During the year, amounts received or due and regarding the activities of a Director in relation receivable by PricewaterhouseCoopers were: to any transaction in which they have an interest ** Meteorological Service of New Zealand Ltd outside of their Board responsibilities. – Audit $40,000 (2008: $49,765) and Other In particular, interested Directors are prohibited Services $nil (2008: $nil) from voting on the relevant transaction. ** Metra Information Ltd – Audit $35,000 Where conflicts of interest do arise, Directors (2008: $12,000) and Other Services $nil are required to advise the Chair and excuse (2008: $nil). themselves from the relevant discussions. REMUNERATION OF EMPLOYEES The Board maintains a register of interests that is reviewed and updated at each regular Board The number of employees (not including meeting to ensure that Directors are aware directors) whose remuneration and benefits of the existence and nature of all disclosures during the accounting period were within of interest. the specified band is as follows:

BOARD PERFORMANCE REVIEW $000s Number AND DEVELOPMENT 100-109 11 The Board regularly reviews its own 110-119 6 performance. Individual Directors’ views and 120-129 4 the collated views of members of the executive management team are sought on Board process, 130-139 1

efficiency and effectiveness, and discussed 140-149 1 by the Board as a whole. 150-159 3

160-169 1 RESULTS OF OPERATIONS 180-189 2 2009 2008 190-199 1 $000s $000s 220-229 1 Net Surplus attributable to Shareholders 3,248 2,893 400-410 1

Interim Dividends Paid 500 _ Directors’ Remuneration _ _ Special Dividends Paid Directors’ remuneration and benefits received, or due and receivable during the accounting Final Dividend Paid _ _ period, are as follows (no remuneration was Retained Earnings paid to Directors in their capacity as Directors at beginning of the year 3,609 716 of Metra Information Limited). Retained Earnings at end of the year 6,357 3,609 A F Small (Chairman) $42,167.00 Resigned 30 Apr 09 CHANGES OF CAPITAL S Astor (Chairman) $31,145.81 There were no changes in capital during the year P Shaverien (Deputy Chair) $23,958.35 under review. J Keestra $23,000.00

AUDITOR D Houldsworth $23,000.00 G Whitau $23,000.00 In accordance with section 19 of the State- J Koh $23,000.00 Owned Enterprises Act 1986, the Office of the Auditor-General is the Auditor for Total Directors' Remuneration $189,271.16 the Company. Karen Shires with support of PricewaterhouseCoopers audit Meteorological Service of New Zealand Ltd on behalf of the Auditor-General. 18 19 Directors from left: Gregory Whitau, Polly Schaverien (Deputy Chair) and David Houldsworth. OANS nsurance

’ L ’ I irectors irectors J Koh Director Ltd Eyredale Farming Company Director Koh Holdings Ltd D The Company has arranged policies for Director’s Liability Insurance, which ensures that generally Directors will incur no monetary loss as a result of actions undertaken by them as Directors. Certain actions are specificallyexcluded; for example, the incurring of penalties and fines which may be imposed in respect of breaches of the law. DONATIONS The Company made donations of $5,264 theto Leukaemia Foundation and Wellington Free Ambulance. CHANGES IN ACCOUNTING POLICIES There have been no material changes in accounting policies in the latest financialyear. the authorised which Board, the of behalf on and For, issue of the financialreport on 1 September 2009. S Astor Chairman D Houldsworth Director There were no loans by the Company Directors. to D egister nterests R ’ I irectors rustee rustee rustee rustee G Whitau Shareholder/Director Logistics Ltd Team T Enterprise Waitaha D Houldsworth Director Services Intl Ltd NZ Wool Director Lounge Ltd Tea Shareholder/Director Midas New Zealand Ltd Shareholder/Director Door New Zealand Ltd Won Shareholder/Director Bentwood Investments Ltd Director Asset Finance Ltd P Schaverien J Keestra Shareholder/Director Keestra Consulting Shareholder/Director Consulting Partners Aviation S Astor Director Novo Strategic Brand Management Director Christchurch City Holdings Ltd Director Selwyn Plantation Board Ltd Director Sasco Holdings Ltd T Church Property Trustees T AdFund T Architectural Trust Warren A F Small Shareholder/Director Small Consultancy Murray King & Francis Councillor WelTec D FINANCIAL STATEMENTS

Income Statements Meteorological Service of New Zealand Ltd

Group 2009 Group 2008 Parent 2009 Parent 2008

FOR THE YEAR ENDED 30 JUNE 2009 Note $000s $000s $000s $000s

Operating Revenue 36,842 34,983 18,781 24,954 Total Operating Revenue 2 36,842 34,983 18,781 24,954

Operating Expenses Employee Benefits Expense 3 18,014 16,696 14,060 12,187 Communication Costs 819 829 699 672 Data Acquisition Costs 3,042 3,878 2,307 3,680 EDP Costs 770 766 734 727 Marketing Costs 950 834 176 98 Occupancy Costs 489 491 470 476 Operating Lease Expenses 24 748 591 609 513 Office Expense Costs 210 246 159 182 Professional Expense Costs 1,420 1,634 701 628 Other Costs 1,562 1,213 1,269 701 Depreciation and Amortisation Expense 3,667 3,046 2,812 2,240 Total Operating Expenses 2 31,691 30,224 23,996 22,104

Operating Profit / (Loss) 5,151 4,759 (5,215) 2,850

Financial Costs 4 369 351 326 334 Change in Value of Option 50 - - - Share of Profits of Jointly Controlled Entity 14 (10) (7) - -

Profit / (Loss) before Taxation 4,742 4,415 (5,541) 2,516 Taxation (Expense) / Credit 5 (1,494) (1,522) 1,847 (843)

Net Profit / (Loss) Attributable to Equity Holders 3,248 2,893 (3,694) 1,673 20

The accompanying Notes to the Financial Statements form part of these Financial Statements. 21 ------7 30 53 17 (48) 333 800 227 931 659 1,359 $000s 5,000 6,359 1,000 3,696 1,616 7,475 4,000 4,227 3,078 1,478 6,151 1,601 18,061 10,285 11,910 18,061 Parent 2008 ------6 67 43 441 190 250 536 439 $000s 5,000 8,407 2,165 2,223 1,518 6,000 6,190 2,338 3,183 6,417 1,446 (2,835) 12,595 20,950 12,648 14,533 20,950 Parent 2009 ------30 53 800 333 227 127 804 659 409 787 113 $000s 5,000 3,609 1,000 8,609 4,869 1,616 8,648 4,000 4,227 4,831 6,474 2,625 21,484 11,076 15,010 21,484 Group 2008 ------6 43 56 309 441 190 818 250 536 409 747 $000s 5,000 6,357 3,923 1,564 6,243 6,000 6,190 5,329 6,976 2,401 11,357 23,790 13,201 16,814 23,790 Group 2009 6 7 9 8 5 21 12 12 10 11 10 11 25 12 12 20 13 19 14 20 18 Note D Houldsworth td L ealand Z ew N of

ervice S Director eteorological 30 JUNE 2009 As at Losses) Retained Earnings / (Accumulated Equity Issued Capital Liabilities Bank Advance Other Payables and Trade Directors’ Fees Payable Amounts Owing to Related Parties Employee Benefits Payable Income Taxation Provisions Borrowings Provisions Borrowings Assets Cash and Bank Balances and Other Receivables Trade Amounts Owing from Related Parties Bank Deposits Derivative Instruments Inventories Receivable Income Taxation Deferred Taxation Property, Plant and Equipment Property, Investments in Jointly Controlled Entities Derivative Instruments Other Intangible Assets The accompanying Notes the to Financial Statements form part of these Financial Statements. Equity Total Current Liabilities Total Non-Current LiabilIties Total Liabilities and Equity Total Current Assets Total Non-Current Assets Total Assets Total S Astor The Board of Directors of Meteorological Service of New Zealand Ltd authorised these financial statementsfor issue on 1 September 2009. Chairman Balance Sheets M FINANCIAL STATEMENTS

Statements of Changes in Equity Meteorological Service of New Zealand Ltd

Retained Fully Paid Earnings/ FOR THE YEAR ENDED 30 JUNE 2009 Ordinary (Accumulated Shares Losses) Total GROUP 2009 Note $000s $000s $000s

Equity as at 1 July 2008 6, 21 5,000 3,609 8,609

Net Profit - 3,248 3,248 Total Recognised Income and Expenses - 3,248 3,248

Payment of Dividends Interim Dividend 22 - (500) (500) Total Dividends - (500) (500)

Equity as at 30 June 2009 5,000 6,357 11,357

GROUP 2008

Equity as at 1 July 2007 6, 21 5,000 716 5,716

Net Profit - 2,893 2,893 Total Recognised Income and Expenses - 2,893 2,893

Equity as at 30 June 2008 5,000 3,609 8,609

PARENT 2009

Equity as at 1 July 2008 6, 21 5,000 1,359 6,359

Net Profit - (3,694) (3,694) Total Recognised Income and Expenses - (3,694) (3,694)

Payment of Dividends Interim Dividend 22 - (500) (500) Total Dividends - (500) (500)

Equity as at 30 June 2009 5,000 (2,835) 2,165

PARENT 2008

Equity as at 1 July 2007 6, 21 5,000 (314) 4,686

Net Profit 1,673 1,673 Total Recognised Income and Expenses - 1,673 1,673

Equity as at 30 June 2008 5,000 1,359 6,359 22

The accompanying Notes to the Financial Statements form part of these Financial Statements. 23 ------28 (332) 1,434 $000s 1,644 (1,708) (2,476) (1,650) (1,650) (2,692) (2,476) (1,048) 25,986 (22,540) Parent 2008 - - - - - 77 317 (279) (371) (500) 1,500 1,365 2,602 $000s 2,000 (1,048) (2,737) (2,737) 26,992 (23,817) Parent 2009 - - - 31 800 (345) (847) (850) (873) 3,197 $000s 1,837 (1,812) (4,210) (1,650) (2,710) (5,057) 36,342 (31,019) Group 2008 - - - - 78 47 700 (873) (417) (381) (500) 1,941 4,475 1,200 1,068 $000s (3,281) (3,234) 35,349 (30,154) Group 2009 23 25 Note td L

ealand Z ew N

of

ervice S uivalents Eq ash C and

eteorological ash Cash Flow from Operating Activities Cash Flow from Operating FOR THE YEAR ENDED 30 JUNE 2009 FOR THE YEAR ENDED Net (Decrease)/Increase in Cash and Cash Equivalents Net (Decrease)/Increase in Cash and Cash Add Cash and Cash Equivalents at the Beginning of the Year The accompanying Notes the to Financial Statements form part of these Financial Statements. Cash was Provided from: Interest Received Receipts from Customers Cash was Applied to: Payments to Suppliers and Employees Payments to Suppliers Interest Paid Paid Income Taxation Activities by Operating Net Cash generated Proceeds from Disposal of Property, Plant and Equipment Plant Proceeds from Disposal of Property, Cash was Provided from: Dividend Received Purchase of Property, Plant and Equipment Purchase of Property, Cash was Applied to: Investments in Jointly Controlled Entities Net Cash used by Investing Activities Cash Flow from Financing Activities Cash Flow from Investing Activities Cash was Applied to: Increased Borrowings Dividends Net Cash used in Investing Activities C of the year the end at Statements of Cash Flows Cash of Statements M FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

1 STATEMENT OF ACCOUNTING Statement of Compliance The results of any subsidiary acquired POLICIES The financial statements have been or disposed of during the year are included The financial statements presented prepared in accordance with New Zealand in the Income Statement from the effective here are for the reporting entity of generally accepted accounting practice date of acquisition or disposal. All significant Meteorological Service of New Zealand (NZ GAAP). They comply with transactions between Group companies are Ltd (‘Parent’) and consolidated financial New Zealand equivalents to International eliminated on consolidation. Investments statements comprising Meteorological Financial Reporting Standards (NZ IFRS) in subsidiaries are recorded at cost in the Service of New Zealand Ltd and its and International Financial Reporting Parent company’s financial statements. subsidiaries (‘Group’). Standards (‘IFRS’) as appropriate for Jointly controlled entities profit-oriented entities. The financial The Group’s interest in jointly controlled These financial statements were authorised statements are prepared in accordance entities is accounted for using the equity for issue by the Board with the Companies Act 1993, the method of accounting. Investments of Directors on 1 September 2009. Financial Reporting Act 1993 and in jointly controlled entities are initially Standards that are not yet effective the State-Owned Enterprises Act 1986. recognised at cost. The Group’s and have not been early adopted Meteorological Service of New Zealand investment in jointly controlled entities by the Group Ltd is incorporated and domiciled in includes goodwill identified on acquisition, The following standards and amendments New Zealand. The address of its registered net of any accumulated impairment loss. to existing standards have been published office is 30 Salamanca Road, Wellington. The Group’s share of post-acquisition and are mandatory for the Group’s Its primary service is to provide weather profits or losses of jointly controlled entities accounting periods beginning 1 July 2009: and presentation services to customers is recognised in the Income Statement. around the globe. (i) NZ IFRS 8: NZ IFRS 8 Operating All signficant transactions between Segments (effective for periods A.Summary of Significant Group companies and the Group’s jointly beginning on or after 1 January 2009) Accounting Policies controlled entities are eliminated to the NZ IFRS 8 replaces NZ IAS 14 Segment The principal accounting policies extent of the Group’s interest in the jointly Reporting. The new standard requires applied in the preparation of these financial controlled entities. a ‘management approach’, under which statements are set out below. These policies segment information is presented on have been consistently applied to all Revenue the same basis as that used for internal years presented unless otherwise stated. Revenue is measured at the fair value for reporting purposes. Adoption has been the sale of goods and services. Revenue delayed until the Exposure Draft has Basis of Preparation is reduced for estimated customer returns, been finalised. NZIAS 14 does not The general accounting policies recognised rebates and other similar allowances. apply to the Group on the basis as appropriate for the measurement and that the Parent’s debt and equity Sale of goods reporting of results, cash flows and the instruments are not publicly traded. Revenue from the sale of goods is financial position under the historical cost The expected impact is currently being recognised when all the following convention, as modified by the revaluation assessed in detail by management. conditions are satisfied: of financial assets and financial liabilities (ii) NZ IAS 1: Presentation of Financial at fair value through profit or loss, are ** the Group has transferred to the buyer Statements (effective for periods followed in the preparation of the the significant risks and rewards beginning on or after 1 January financial statements. of ownership of the goods; 2009) NZ IAS 1 incorporates Principles of Consolidation ** the Group retains neither continuing a number of amendments to disclosure Subsidiaries managerial involvement to the degree requirements for financial statements, usually associated with ownership nor including introducing the Statement The consolidated financial statements effective control over the goods sold; of Comprehensive Income. It is not are prepared from the financial statements anticipated that NZ IAS 1 will have of the Parent and its subsidiaries as at ** the amount of revenue can be measured a significant impact on the Group’s 30 June 2009 using the purchase method. reliably; financial statements. Subsidiaries are all entities over which ** it is probable that the economic benefits the Group has control. Control is achieved associated with the transaction will flow where the Parent has the power to govern to the Group; and the financial and operating policies of an entity so as to obtain benefits from 24 its activities. 25

2.5%-10.0% 20.0%-33.3% 20.0%-33.3% 3.1% -5.0% 10.0%-33.0% 15.0%-20.0% 20.0%-33.0% 10.0%-33.0% ngible Assets eorological a oodwill Buildings Computer Equipment Furniture & Fittings Leasehold Property Met Equipment Motor Vehicles Office Equipment Plant & Equipment nt I G Goodwill represents the excess of the cost of an acquisition over the fair value of the share Group’s of the net identifiable assets of the acquired jointly controlled entity at the date of acquisition. Goodwill on acquisition of jointly controlled entities is included in ‘Investments in Jointly Controlled Entities’. Goodwill is allocated cash-generating to units for the purpose of impairment testing. The allocation is made those to cash- generating units (‘CGUs’) or groups of cash-generating units that are expected benefitto from the business combination in which the goodwil arose identfied according operating to segment. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill recognised in the Income Statement are not reversed. Gains and losses on the disposal of a CGU or portion of a CGU include the carrying amount of goodwill relating the to CGU or portion of a CGU sold. The annual depreciation rates are shown below for each classification of asset: The remaining useful lives of assets are reviewed periodically, and the annual depreciation charge is adjusted where necessary. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset and are recognised in the Income Statement.

ment

p qui nd E nt a a

erty, Pl p epreciation nventories Pro The cost of purchased property, plant and equipment is valued at the consideration given acquire to the assets and the value of other directly attributable costs which have been incurred in bringing the assets the to location and condition necessary for the intended service. Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. The costs of assets constructed by the Parent and Group include the costs of all materials used in construction and direct labour on the project. Costs are capitalised as soon as the asset is capable of productive use. the in included are costs Subsequent recognised or carrying amount asset’s only appropriate, as asset, separate a as economic future that probable is it when flow will item the with associated benefits of cost the and Group and Parent the to other All reliably. measured be can item the repairs and maintenance are charged to financial the during Statement Income the period in which they are incurred. D and plant property, of Depreciation land, freehold than other equipment, I Inventories are valued at the lower of cost, on a weighted average cost basis of inventory on hand calculated at the time of the last purchase, and net realisable value. Net realisable value represents the estimated selling price for inventories less costs necessary make the to sale. straight-line the using calculated is cost historical the allocate to method over the estimated useful life of the asset, after due allowance has been has allowance due after asset, made for the expected residual value. The cost of improvements leasehold to property capitalised, disclosed as leasehold property and amortised over the unexpired period of the lease, or the estimated useful life of the improvements, whichever is shorter.

nts a r the costs incurred or be to incurred in respect of the transaction can be measured reliably. installation fees are recognised by reference the to stage of completion of the installation, determined as the proportion of the total time expected installto that has elapsed at the balance sheet date; servicing fees included in the price of products sold arerecognised by reference the to proportion of the total cost of providing the servicing for theproduct sold, taking into account historical trends in the number of services actually provided on past goods sold; and contracts material and time from revenue is recognised at the contractual rates as labour hours are delivered and direct direct and delivered are hours labour as expenses are incurred. overnment G endering of services * * * * nterest income * R Revenue from a contract provide to services is recognised by reference theto stage of completion of the contract. The stage completion of of the contract is determined as follows: * * * Interest income is accounted for using the effective interest rate method. I

G Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching them to and that the grants will be received. Government grants relating assetsto are treated as deferred income and recognised in the Income Statement over the expected useful lives of the assets concerned. FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Intangible assets acquired separately ** the availability of adequate technical, Provisions Intangible assets acquired separately financial and other resources to complete Provisions are recognised when the are reported at cost less accumulated the development and to use or sell Group has a present obligation (legal amortisation and accumulated impairment the intangible asset; and or constructive) as a result of a past losses. Amortisation is charged on ** the ability to measure reliably the event, and it is probable that the Group a straight-line basis over their estimated expenditure attributable to the intangible will be required to settle the obligation, useful lives. The estimated useful life asset during its development. and a reliable estimate can be made and amortisation method are reviewed of the amount of the obligation. at the end of each annual reporting period, The amount initially recognised for The amount recognised as a provision with the effect of any changes in estimate internally-generated intangible assets is the best estimate of the consideration being accounted for on a prospective basis. is the sum of the expenditure incurred required to settle the present obligation at Intangible assets acquired in a business from the date when the intangible asset the balance sheet date, taking into account combination first meets the recognition criteria listed the risks and uncertainties surrounding the Intangible assets acquired in a business above. Where no internally-generated obligation. Where a provision is measured combination are identified and recognised intangible asset can be recognised, using the cash flows estimated to settle separately from goodwill where they development expenditure is charged the present obligation, its carrying amount satisfy the definition of an intangible asset to the Income Statement in the period is the present value of those cash flows. and their fair values can be measured in which it is incurred. reliably. The cost of such intangible assets When some or all of the economic benefits Subsequent to initial recognition, internally- is their fair value at the acquisition date. required to settle a provision are expected generated intangible assets are reported to be recovered from a third party, the Subsequent to initial recognition, intangible at cost less accumulated amortisation receivable is recognised as an asset assets acquired in a business combination and accumulated impairment losses, if it is virtually certain that reimbursement are reported at cost less accumulated on the same basis as intangible assets will be received and the amount of the amortisation and accumulated impairment acquired separately. receivable can be measured reliably. losses, on the same basis as intangible The annual amortisation rate shown assets acquired separately. Restoration provision below is considered appropriate for Restoration costs include the Internally-generated intangible assets each classification of intangible asset: dismantling and demolition of infrastructure – computer software and the removal of residual materials Costs associated with maintaining computer Internally Generated Software 33.0% and remediation of disturbed areas. software programs are recognised The restoration costs are based on as an expense as incurred. An internally- Leases management’s best estimate of the generated intangible asset arising from Operating lease payments, where lessors amount required to settle the obligation. development (or from the development retain substantially all the risk or benefit Movements in the restoration provision phase of an internal project) is recognised of ownership of the leased items, are are recognised in the Income Statement. if, and only if, all of the following have recognised as an expense in the Income been demonstrated: Statement on a straight-line basis over the period of the lease. Employee Benefits ** the technical feasibility of completing In the event that lease incentives are i) Wages and salaries and annual leave the intangible asset so that it will received to enter into operating leases, liabilities for wages and salaries, be available for use or sale; such incentives are recognised as including non-monetary benefits, annual ** the intention to complete the intangible a liability. The aggregate benefit of leave, long service leave and alternative asset and use or sell it; incentives is recognised as a reduction days leave expected to be settled within of rental expense on a straight-line basis, 12 months of the reporting date are ** the ability to use or sell the intangible except where another systematic basis recognised in payables in respect of asset; is more representative of the time pattern employees’ service up to the reporting ** how the intangible asset will generate in which economic benefits from the date and are measured at the amounts probable future economic benefits; leased asset are consumed. expected to be paid when it is probable that the liabilities will be settled. 26 27

Statement. urrencies urrentand deferred tax for the period oreign C inancial instruments unctional and presentation currency ransactions and balances F F statements financial the in included Items of each of the Group’s entities are measured measured are entities Group’s the of each of primary economic the of currency the using operates entity the which in environment (‘thecurrency’). functional financial These Zealand New in presented are statements dollars, which is the Parent’s functional and presentation currency. T Transactions denominated in foreign currency are converted New to Zealand dollars using the exchange rate at the date of the transaction. At balance date, foreign monetary assets and liabilities are recorded at the closing exchange rate. Gains or losses due currency to fluctuations, bothrealised and unrealised, are recognised in the Income F Financial instruments carried on the Balance Sheet include cash and cash equivalents, trade and other receivables, amounts owing or to from subsidiaries, other financial assets, trade and other payables, Directors’ fees payable, employee entitlements,provision for dividend, derivative instruments and borrowings. C Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate items to credited ordebited directly equity, to in which case the tax is also recognised directly in equity, orwhere they arise from theinitial accounting for a business combination. In the case of a business combination, the tax effect is taken account into in calculating goodwill or in determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the business combination.

affects neither the taxable profit nor the accounting profit. for recognised are liabilities tax Deferred associated temporarytaxabledifferences and subsidiaries in investments with ventures, joint in interests and associates, control to able is Group the where except temporarydifference the of reversal the and it is probable that the temporary difference will not reverse in the foreseeable from arising assets tax Deferred future. associated temporarydifferences deductible with such investments and interests canbe utilised. Such assets and liabilities are not recognised if thetemporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that are only recognised the to extentthat sufficient be will there that probable is it the utilise to which against profits taxable and temporary differences the of benefits the in reverse to expected are they foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced the to extent that it is no longer probable that sufficient taxable profits will be available allow to all or part of the asset beto recovered. Deferred tax assets and liabilities are expected are that rates tax the at measured liability the which in period the in apply to is settled or the asset realised, based on tax enacted been have (and laws)taxthat rates balance the by enacted substantively or deferred of measurement The date. sheet tax the reflects assets and liabilities tax from follow would that consequences the manner in which the Group expects, current against assets tax current off set to tax liabilities and when they relate income to authority taxation same the by levied taxes current its settle to intends Group the and tax assets and liabilities on a net basis. at the reporting date, to recover or settle the the settle or recover to reportingdate, the at carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset right enforceable legally a is there when

ation as closely as possible, the estimated future cash outflows. and measured as the present value value present the as measured and be to payments future expected of services provided of respect in made reportingdate the to up employees by method. credit unit projected the using expected to given is Consideration salary levels, and wage future experience of employee departures service.Expected future of periods and market using discounted are payments national on date reporting the at yields to terms with bonds government match, that currency and maturity Termination leave leave termination for liability The within settled be to expected not is date reporting the of months 12 non-current in liabilities recognised x eferred tax urrent tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences the to extent that it is probable that taxable profits will be available against which those deductible temporary differences D The tax currently payable is based on taxableTaxable profit for theyear. profit differs from profit as reported in the IncomeStatement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability Group’s for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. C Income tax expense represents the sum tax. deferred and payable currently tax the of Ta ii) FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Financial assets Financial assets at FVTPL are stated For financial assets carried at amortised Financial assets are recognised and at fair value, with any resultant gain cost, the amount of the impairment is the derecognised on trade date where or loss recognised in the Income difference between the asset’s carrying the purchase or sale of an asset is under Statement. The net gain or loss recognised amount and the present value of estimated a contract whose terms require delivery incorporates any dividend or interest future cash flows, discounted at the of the investment within the timeframe earned on the financial asset. financial asset’s original effective interest established by the market concerned. rate. The carrying amount of the financial The only financial assets at FVTPL Financial assets are initially measured asset is reduced by the impairment loss are derivatives held for trading (note 20). at fair value, plus transaction costs, directly for all financial assets with the All other financial assets are classified except for those financial assets classified exception of trade receivables, where the as loans and receivables. as at fair value through profit or loss, carrying amount is reduced through the use which are initially measured at fair value. Loans and receivables of an allowance account. When a trade Financial assets are classified into the Trade receivables, other receivables receivable is considered uncollectible, it is following categories: financial assets that have fixed or determinable payments written off against the allowance account. at fair value through profit or loss (FVTPL), that are not quoted in an active market Subsequent recoveries of amounts held-to-maturity investments, available-for- are classified as loans and receivables. previously written off are credited against sale (AFS) financial assets and loans and Loans and receivables are measured the allowance account. Changes in the receivables. The classification depends at amortised cost using the effective carrying amount of the allowance account on the nature and purpose of the financial interest method, less any impairment. are recognised in the Income Statement. assets and is determined at the time Interest income is recognised by If, in a subsequent period, the amount of initial recognition. The Group only holds applying the effective interest method. of the impairment loss decreases and financial assets categorised as financial the decrease can be related objectively asset at FVTPL or as loans and receivables Impairment of financial assets to an event occurring after the impairment Financial assets, other than those Effective interest method was recognised, the previously recognised at FVTPL, are assessed for indicators The effective interest method is impairment loss is reversed through profit of impairment at each balance sheet a method of calculating the amortised or loss to the extent that the carrying date. Financial assets are impaired where cost of a financial asset or liability and amount of the investment at the date the there is objective evidence that, as a result of allocating interest income or expense impairment is reversed does not exceed of one or more events that occurred after over the relevant period. The effective what the amortised cost would have been the initial recognition of the financial asset, interest rate is the rate that exactly had the impairment not been recognised. the estimated future cash flows of the discounts estimated future cash receipts investment have been reduced. Derecognition of financial assets or payments (including all fees on points The Group derecognises a financial paid or received that form an integral part For certain categories of financial assets, asset only when the contractual rights of the effective interest rate, transaction such as trade receivables, assets that to the cash flows from the asset expire costs and other premiums or discounts) are assessed not to be impaired individually or it transfers the financial asset and through the expected life of the financial are subsequently assessed for impairment substantially all the risks and rewards asset or liability, or, where appropriate, on a collective basis. Objective evidence of ownership of the asset to another a shorter period to the net carrying amount of impairment for a portfolio of receivables entity. If the Group neither transfers of the financial asset or liability. could include the Group’s past experience nor retains substantially all the risks of collecting payments, an increase in the Financial assets at FVTPl and rewards of ownership and continues number of delayed payments in the Financial assets are classified as at FVTPL to control the transferred asset, the Group portfolio past the average credit period, where the financial asset is either held for recognises its retained interest in the asset as well as observable changes in national trading or it is designated as at FVTPL. and an associated liability for amounts or local economic conditions that correlate A financial asset is classified in this category it may have to pay. If the Group retains with default on receivables. if acquired principally for selling in the short substantially all the risks and rewards term. Derivatives are also classified as held of ownership of a transferred financial for trading. asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

28 29

nd nd xcluding ngible a market assessments irment of Ta ngible Assets E a pa m nt a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not available yet for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs sell to and value in use. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current of the time value of money and the risks specificto the assetfor which the estimates of future cash flows have not beenadjusted. I each GroupbalanceAt the date, sheet carrying the reviews itstangible amounts of intangibleand whetherdetermine assetsto indication any is thosethatassets there have suffered an impairment loss. If any suchindication recoverableexists, the order estimatedin is asset the amountof of an individual asset, the Group estimates cash-generating of which unitsfor I impairment the of extent the determine to loss(if any). possible not Where is it recoverable the estimate amount to the recoverable amount of the cash- generating unit which to the asset belongs. Wherereasonable a basis consistent and allocation of can beidentified, corporate allocatedalsoindividual assetsare to cash-generating units, or otherwise they are allocated the to smallest group Goodwill x lows sh F ervices Ta nd S tement of Ca a oods a erivatives t G All items included in the financial statements are reported exclusive of Goods and Services except Tax, for accounts payable and accounts receivable, which include GST invoiced. The net amount of GST recoverable from, or payable the to, taxation authority is included as part of receivables orpayables. S For the purpose of the Cash Flow Statement, cash and cash equivalents include cash on hand and in banks and investments in money market instruments with original maturities of three months or less, net of outstanding bank overdrafts. The following terms are used in the Statement of Cash Flows: Operating activities: are the principal revenue producing activities of the Group and other activities that are not investing or financing activities. Investing activities: are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Financing activities: are activities that result in changes in the and size composition of the contributed equity and borrowings of the entity. D Derivatives are initially recognised at fair value at the date a derivative contract is entered and into are subsequently remeasured their to fair value at each balance sheet date. The resulting gain or loss is recognised in the Income Statement immediately. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more months than and 12 it is not expected be to realised or settled within months.12 Other derivatives are presented as current assets or current liabilities.

l P bilities a i L l l a ther financial liabilities erecognition of financial liabilities lassfication anci in inancial liabilities at FVT The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. D Otherfinancial liabilities subsequentlyare measured at amortised cost using the effective interest method, with interest expense recognised by applying the effective interest method. O Otherfinancial liabilities, including trade and other payables, and borrowings, are initially measured at fair value, net of transaction costs. The only financial liabilities at FVTPL are derivatives (note 20). All other financial liabilities are at amortised cost. A financial liability is classified in this category if it has been incurred principally for the purpose of repurchasing in the short term. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the Income Statement. The net gain or loss recognised incorporates any interest paid on the financial liability. F at FVTPLclassifiedas are liabilities Financial held either is liability financial the where FVTPL. at as designated is it or trading for Derivatives are also classified as held trading. for Financial liabilities are classified as either financial liabilities at FVTPL otheror financial liabilities. C Financial liabilities are recognised and derecognised on trade date where the purchase or sale liablity of a is under a contract whose terms required delivery within the timeframe established by the market concerned. F FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

If the recoverable amount of an asset (or Critical Accounting JudgEments In particular, information about significant cash-generating unit) is estimated to be and Key Sources of Estimation areas of estimation uncertainty and critical less than its carrying amount, the carrying Uncertainty judgements in applying accounting policies amount of the asset (or cash-generating In the application of the Group’s accounting that have the most significant effect on the unit) is reduced to its recoverable amount. policies, the Directors are required to make amounts recognised in the financial An impairment loss is recognised judgements, estimates and assumptions statements are described in the immediately in the Income Statement. about the carrying amounts of assets following notes: and liabilities that are not readily apparent Where an impairment loss subsequently (i) Note 9: Employee Benefits – from other sources. reverses, the carrying amount of the asset measurement of amounts recognised (or cash-generating unit) is increased The estimates and associated assumptions in respect of termination leave to the revised estimate of its recoverable are based on historical experience and (ii) Note 10: Provisions – measurement amount, but so that the increased carrying other factors that are considered to be of restoration provisions amount does not exceed the carrying relevant. Actual results may differ from amount that would have been determined these estimates. The estimates and (iii) Note 14: Investment in Jointly had no impairment loss been recognised underlying assumptions are reviewed Controlled Entities – measurement for the asset (or cash-generating unit) on an ongoing basis. Revisions to of the recoverable amount of the in prior years. A reversal of an impairment accounting estimates are recognised investment in jointly controlled entities loss is recognised immediately in the period in which the estimate is (iv) Note 26: Financial Instruments in the Income Statement. revised if the revision affects only that – valuation of financial instruments period, or in the period of the revision Share Capital and future periods if the revision affects (v) Note 5: Deferred Tax – deferred Ordinary shares are classified as equity. both current and future periods. tax asset recognition Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Group 2009 Group 2008 Parent 2009 Parent 2008

2 OPERATING REVENUE / EXPENDITURE $000s $000s $000s $000s

Profit / (Loss) for the year has been arrived after charging/(crediting) Audit Fees 75 62 40 50 Loss on Disposal of Property, Plant and Equipment 7 - 7 - Directors’ Fees 185 197 185 197 Bad Debts Recovered (17) - - - Software Development Expenditure 105 141 83 119 Donations 5 - 5 - FX (gains)/losses (72) (40) - - Fair Value (gains)/losses on Forward Exchange Contracts 17 (60) 17 (60) Fair Value (gains)/losses on option 50 - - -

On 1 July 2008, the revenue and expenses related to Aviation Services were transferred to Metra Information Ltd from the Parent. 30 31 ------2 8 3 28 28 58 362 362 334 152 691 843 843 418 213 830 2,516 $000s (2,339) 12,187 13,837 Parent 2008 - 8 7 22 95 11 77 66 326 403 403 441 325 145 (222) (222) $000s (2,291) (1,720) (1,662) (5,541) (1,847) (1,847) 14,060 15,440 Parent 2009 ------31 42 10 58 13 31 156 351 382 382 553 380 1,366 1,522 1,522 $000s 1,457 4,415 (2,339) 16,696 18,044 Group 2008 - 8 8 33 95 11 78 22 33 67 369 447 447 477 580 145 1,366 1,494 1,494 $000s 1,423 4,742 (2,291) 18,014 19,103 Group 2009 EMPLOYEE BENEFITS EXPENSE TAXATION FINANCE COSTS - NET

xpense / (BENEFIT) E axation xpense / (BENEFIT) E axation Effect of Changes in Tax Rates Effect of Changes in Tax Prior Period Adjustment Other Employee Benefits Government Grant Labour Capitalised Contractors / Temporary Staff Contractors / Temporary Non-deductible Entertainment Termination Benefits & Defined Contribution Expense Termination Deferred Taxation Deferred Taxation Non-deductible Legal Fees Wages and Salaries Wages Current Taxation Prima Facie Taxation Thereon at 30% (2008: 33%) Thereon Prima Facie Taxation 3 Prior Period Adjustment In May 2007 the New Zealand Government announced a reduction in the corporate tax rate from 33% 30% to effective from the 2008/09 income tax year. T T Net Profit / (Loss) Before Taxation Net Profit / (Loss) Before 5 Finance Costs Total Finance Costs – Net Finance Income Total Interest Revenue Bank Deposits 4 Benefits Employee Total IRD – Use of Money Interest Interest on Bank Overdrafts and Loans FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Group 2009 Group 2008 Parent 2009 Parent 2008

5 TAXATION (continued) $000s $000s $000s $000s

Deferred Tax Deferred Tax Assets Arise from the Following: Temporary Differences Property, Plant and Equipment (137) (174) (135) (596) Intangible Assets (145) (46) (95) (11) Provisions and Other Liabilities 669 624 669 624 Doubtful Debts 22 5 - - 409 409 439 17

Deferred Taxation Opening Balance 409 657 17 703 On Profit / (Loss) for the year (95) (156) (95) (152) Prior Period Adjustment 95 (50) 517 (532) Effect of Changes in Tax Rates - (42) - (2) Closing Balance 409 409 439 17

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. The Parent recognised a loss for the year ended 31 March 2009, however the Parent and its subsidiaries form part of a consolidated tax group and the Directors believe that it is probable that the Group will generate future taxable profits against which the temporary differences will be utilised.

Imputation Credit Account Imputation Credit Account 1 July 3,585 1,885 1,017 1,017 Income Taxation Paid during the Year (net of tax refunds) 243 1,700 - - Imputation Credits attached to Dividends Paid during the Year (246) - - - IMPUTATION CREDIT ACCOUNT 30 JUNE 3,582 3,585 1,017 1,017

Imputation Credits Available Directly and Indirectly to Shareholders of the Parent Company, through: Parent Company 1,017 1,017 Subsidiaries 2,565 2,568 Total 3,582 3,585

6 ISSUED CAPITAL

Authorised, Issued and Fully Paid Capital Consists of 5,000,000 5,000 5,000 5,000 5,000 Ordinary Shares

Issued shares have no par value. Fully paid ordinary shares carry one vote per share and carry a right to dividends. 32 33 - - - - - 2 2 4 20 (20) 366 530 129 597 505 $000s 1,119 1,084 2,444 2,444 3,078 3,696 Parent 2008 ------41 34 248 694 739 501 412 $000s 1,892 1,892 2,338 2,223 Parent 2009 4 - - 26 19 45 (16) (20) (16) 366 488 625 567 $000s 1,080 1,735 1,063 3,776 3,792 4,831 4,869 Group 2008 16 37 85 (74) (74) (16) (74) 248 643 830 544 801 476 122 $000s 1,401 4,309 4,383 5,329 3,923 Group 2009 ayables TRADE AND OTHER PAYABLES TRADE AND OTHER RECEIVABLES (i) Income in Advance – Government Grant (i) Income in Advance Income in Advance Accruals Other Payables Other Trade Payables Trade 90-120 days Allowance for Impairment Prepayments 7 Movement in the Allowance for Impairment Impairment Losses Recognised on Receivables Impairment Losses Reversed Balance at the Beginning of the Year Total Ageing Past Due Trade Receivables Ageing Past Due Trade 60-90 days The average credit period on sales of goods and services is 30 days. No interest is charged on the trade receivables overdue. Overdue debts are reviewed on a case by case basis and provided for if the receivable is considered not recoverable. Historical experience is such that international customers pay on a 60-90-day term and default is minimal. Before accepting a new customer, the Group requires a credit application be to completed and referees are contacted. Included in the Group’s trade receivable balance are debtors with a carrying amount of $122,209 (2008: $29,019) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances. The average age of receivables is 40 days (2008: 37 days). Included inthe Parent’s trade receivable balance are debtors with a carrying amount of $nil (2008: $3,870) which are past due at the reportingdate for which the Parent has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Parent does not hold any collateral over these balances. The average age of receivables is 33 days (2008: 32 days). Trade and Other Receivables Total Trade Receivables Trade 8 The average credit period on purchases is seven 30 to days. The Group has financial risk management policies in placeto ensure that all payables are paid within the credit timeframe. (i) Government Grant TBG (Technology for Business Growth) is a government-funded initiative (through Foundation for Research & Technology) assist to businesses to develop ideas for business growth. The Parent received a grant in 2006 work to on forecasting tools for Energy customers. The project was 50% funded and under NZ IAS 20 Government Grants, this revenue is recognised over the life of the asset. and Other P Trade Total THE end of the year Balance at In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up the to reporting date. The concentration of credit risk is limited due the to customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts. FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

8 TRADE AND OTHER RECEIVABLES (continued)

Included in the allowance for doubtful debts are individually impaired trade receivables with a balance of $73,587 (2008: $16,141) for the Group and $nil (2008: $nil) for the Parent, relating to entities which have been considered doubtful.

The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected proceeds. The Group does not hold any collateral over these balances. The net carrying amount is considered to approximate their fair value.

Group 2009 Group 2008 Parent 2009 Parent 2008

9 EMPLOYEE BENEFITS $000s $000s $000s $000s

Annual Leave Entitlement 1,309 1,339 1,263 1,339 Termination Leave (i) 255 277 255 277 Total Employee Benefits 1,564 1,616 1,518 1,616

(i) Termination Leave Opening Balance as at 1 July 2008 277 259 277 259 Additional Amounts Recognised - 18 - 18 Reductions Arising from Payments/Other Sacrifices (22) - (22) - of Future Economic Benefits CLOSING BALANCE AS AT 30 JUNE 2009 255 277 255 277

The liability for employee benefits represents annual leave and termination leave entitlements accrued. The termination leave accrual is an actuarial assessment of the accrued termination leave liabilities for current employees of the Parent. Only those employees with 10 year’s service when the scheme closed are eligible for the benefit. Profit share was available to all employees up until December 2007; it was then included in employee salaries.

Termination leave has been calculated by the actuarial firm Aon NZ Ltd and has been calculated based on inter alia: Contractual Employee Entitlements, Projected Employee Salary Increases, Expected Resignation and Retirement Rates and Forecasted Market Discount Rates.

10 PROVISIONS

Current Restoration Provision 441 333 441 333 Total Current Provisions 441 333 441 333

Non-Current Restoration Provision 190 227 190 227 Total Non-Current Provisions 190 227 190 227

Restoration Provision Opening Balance as at 1 July 2008 560 537 560 537 Additional Provisions Recognised - - - - Change for Passage of Time 70 23 70 23 Closing Balance as at 30 June 2009 630 560 630 560

Total Provisions 630 560 630 560

Restoration Provision The Parent has a number of sites leased around the country for the purpose of housing weather stations or related equipment. A restoration provision has been calculated for those sites that contractually require the site to be restored to its original state on expiry of the licence to occupy. The restoration provision is an estimate of the cost (in today’s dollars) of restoring current leased sites to their original state on termination of the lease agreement. This provision includes an estimaton for restoring Campbell Island. The Parent has used the 5-year government bond rate (4.61%) as the discount rate and assumed a 3% CPI increase on costs.

Contingent Liability Several lease agreements are held that do not mention the requirement to restore the site on termination of the lease. Because we are not

34 contractually obligated to remove the equipment and restore the site, we cannot be certain that a liability would arise therefore the estimated cost of restoring these sites has been excluded from the provision. 2009: $111,755 (2008: $108,500) 35 - - 8

931 800 659 800 659 800 123 4,800 4,800 $000s 4,000 4,000 (1,000) (1,000)

Parent 2008 ------250

536 536 333 250 6,000 6,000 $000s 6,000 6,000 (8,740) (8,407) charge of 0.05% per month Parent 2009 ------800 659 800 659

4,800

4,800 $000s 4,000 4,000 (1,000) (1,000) Group 2008 ------250 536 536 250 6000 6000 6,000 6,000 $000s

Group 2009 (i) (ii) 17

(i) Westpac Money Market Facility (i) Westpac Metra Information Ltd – loan Metra Information (Australia) Ltd – intercompany Loans to Subsidiaries Loans to Subsidiaries Metra Information Ltd – intercompany Summary of Borrowing Arrangements: Unsecured Non-current Borrowings Money Market – On Call Advance 11 BORROWINGS11 Disclosed in the Financial Statement as: Disclosed in the Financial Current Borrowings Inventories Total The cost of inventories recognised as an expense during the year was $765,561 (2008: $708,785). The cost of inventories recognised as an expense includes $nil (2008: $nil) in respect of write-downs of inventory net to realisable value, and has been reduced by $nil (2008: $nil) in respect of the reversal of such write-downs.

Finished Goods at Cost 13 INVENTORIES13 Meteorological Service of New Zealand Ltd provides funding Metra to Information (Australia) Ltd via an intercompany account. This is used (ii) Loans to/from Subsidiaries The Parent has a multi-option credit line facility with Westpac the to value of $2,000,000. The term of this facility is December 31 to 2010 and the balance is on call. Interest is charged at the cash rate plus a corporate margin of 30 basis points with a line of credit on the commitment during that month. fundto monthly expenses and is reimbursed periodically throughout the Meteorological year. Service of New Zealand Ltd receives funding from Westpac Money Market Facility Westpac 12 FINANCING12 FACILITIES Money Market – On Call Deposits On 30 June 1998, the Parent entered into a term loan agreement with the Westpac Banking Corporation. This agreement was extended on 30 June 2009 through June to The 2012. interest rates are fixed and duefor renewal between 19 August 2009 Theand 1 ParentJune intends 2011. extending the loans on maturity. The average interest rate for the loans as at 30 June 2009 (2008: is 6.19% 8.58%). These loans are subject covenant to clauses whereby the Parent is required maintain to a specified level of interest leveragecover, ratio and debt/ equity ratio. As at 30 June 2009, all banking covenants had been complied with. its New Zealand subsidiary via an intercompany account. This is used fund to monthly expenses and is reimbursed periodcially throughout the year. Bank Loan Borrowings Total Bank Loan Non-Current Current FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Group 2009 Group 2008

14 INVESTMENT IN JOINTLY CONTROLLED ENTITIES $000s $000s

Details of the Group’s jointly controlled entities are as follows: Name of Jointly Controlled Entity Weather Commerce Ltd (i) Principal Activity Tailor made on-line weather packages Place of Incorporation and Operation England and Wales Ownership Interest 2009 50% 2008 50%

(i) Weather Commerce Ltd Pursuant to a shareholder agreement, the Group has the right to cast 50% of the votes at shareholder meetings of Weather Commerce Ltd, and all decisions require unanimous shareholder consent. The Group exercises joint control by virtue of its contractual right to equally govern the financial and operating policies of Weather Commerce Ltd so as to obtain equal benefits from its activities. The balance date for Weather Commerce Ltd is 30 June.

The Parent has provided no funding support to Weather Commerce Ltd during the year and all related party transactions are at arm’s length.

The Group has the option to purchase the remaining 50% of the company in March 2011. Refer note 20 for valuation of the option.

Group 2009 Group 2008 12mths 3mths

$000s $000s

Summarised financial information of the Group’s jointly controlled entity is set out below: Total Assets 247 364 Total Liabilities 5 184 Net Assets 242 180 GROUP’S SHARE OF NET ASSETS 121 90

Total Revenue 824 196 Total Profit for the Period 19 13 GROUP’S SHARE OF PROFITS OF JOINTLY CONTROLLED ENTITY 10 7

Movement in the carrying amount of the Group’s investment in jointly controlled entity: Balance at Beginning of Year 787 - New Investments (net of call option) - 780 Disposals - - Share of Profits of Jointly Controlled Entity 10 7 Dividends Received (50) - Balance at THE End of THE Year 747 787 36 37 - - 700 700 $000s Group 2008 - - 700 700 $000s Group 2009 Metra Information (Australia) Ltd (MIAL) MIAL – Australia MIAL – 100% (2008: 100%) MIAL – Marketing and Promotion of Weather and Information Presentation Services ) continued

in New Zealand with a 30 June balance date. Metra Information Ltd has an Metra Information Ltd (MIL) MIL – New Zealand MIL – 100% (2008: 100%) and Information MIL – Weather Presentation Services Metra Information Ltd Branch (MILB) MILB – UK and Information Presentation Services MILB – Sales and Marketing of Weather Goodwill included in the carrying amount of the Group's investment in jointly controlled entity: the carrying amount of the Group's investment Goodwill included in 14 INVESTMENT14 IN JOINTLY CONTROLLED ENTITIES ( Impairment tests for goodwill Impairment tests for Details of the Group’s branches at 30 June 2009 and 30 June 2008 are as follows: branches at 30 June 2009 and 30 June Details of the Group’s Metra Information Ltd has a branch in the UK. 16 BRANCHES16 Place of Incorporation and Operation Rights Ownership Interests and Voting Principal Activity Names Place of Incorporation and Operation Principal Activity Names Details of the Group’s subsidiaries at 30 June 2009 and 30 June 2008 are as follows: Details of the Group’s Meteorological Service of New Zealand Ltd is incorporated in New Zealand and is the Parent entity of the Group. The Parent’s investment in Metra Information Ltd comprises shares at cost. Metra Information Ltd, a company involved with the provision of weather and information presentation services, is a wholly-owned subsidiary incorporated 15 SUBSIDIARIES15 investment in Metra Information (Australia) Ltd which comprises shares at cost. Metra Information (Australia) Ltd, a company involved in the sales and marketing of weather and information presentation services, is a wholly-owned subsidiary incorporated in Australia with a 30 June balance date. Goodwill is allocated the to Metra UK cash-generating unit (CGUs). The recoverable amount of the Metra UK CGU has been determined based on a value-in-use calculation. This calculation used forecast cash flows and 2013 to a discount rate of 23%. The recoverable amount of the Metra UK CGU exceeds its carrying amount therefore no impairment loss has been recognised. Additional Amounts Recognised from Business Combinations Additional Amounts Recognised year THE end of the Balance at Cost of the Year Balance at the Beginning FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

17 RELATED PARTY TRANSACTIONS

The ultimate controlling party of the Group is the Crown. Equity Interests in Related Parties Details of interests in subsidiaries and jointly controlled entities are disclosed in notes 14 and 15.

Group 2009 Group 2008 Parent 2009 Parent 2008

$000s $000s $000s $000s

Transfers of Software Development Metra Information Ltd 478 679 478 679 Metra Information (Australia) Ltd 21 17 21 17 499 696 499 696

The Parent develops computer software products, some of which were acquired by its subsidiaries, Metra Information Ltd and Metra Information (Australia) Ltd. These acquisitions were made on normal commercial terms.

Settlement of Liabilities Metra Information Ltd - - (4,549) 4,300 Metra Information (Australia) Ltd - - 115 86 Weather Commerce Ltd 73 - - - 73 - (4,434) 4,386

During the year the Parent was reimbursed for expenses it incurred on behalf of Metra Information (Australia) Ltd. Due to internal restructuring in the previous two years, Metra Information Ltd now provides regular funding assistance to its parent company which is reimbursed on a regular basis.

Outstanding Receivable/(Payable) at Year End Metra Information Ltd - - (8,740) (13) Metra Information (Australia) Ltd - - 333 144 Weather Commerce Ltd ------(8,407) 131

A dividend was paid by Weather Commerce Ltd to Metra Information Ltd in June 2009. Cash paid GBP 20,000 – $50,488.

Compensation of Key Management Personnel Details of remuneration paid to Directors is shown in note 2. Key management personnel are paid in their capacity as employees and receive salary and bonus.

Total Salaries 1,935 1,516 1,547 1,516 Total Profit Share 123 65 102 65

Other Related Parties Relationship with the Crown Meteorological Service of New Zealand Ltd is a limited liability company incorporated in New Zealand, under the Companies Act 1993. The shares are held equally by the Minister for State-Owned Enterprises and the Minister of Finance on behalf of the Crown. The Crown does not guarantee the liabilities of Meteorological Service of New Zealand Ltd.

Meteorological Service of New Zealand Ltd also undertakes transactions with other State-Owned Enterprises and government departments. All the foregoing were carried out on a commercial and arm’s length basis in the normal course of business.

No amounts owed by related parties have been written off or forgiven during the year. 38 39 ------92 92 58 (57) (23) (21) 113 118 118 118 447 661 118 (195) (880) (814) (355) 1,601 $000s 6,732 6,796 1,002 (4,947) (5,131) Parent 2008 ------71 10 71 92 (21) 118 118 118 447 870 118 (376) 1,446 $000s 6,547 1,033 6,732 (1,013) (1,055) (5,131) (5,101) Parent 2009 ------92 92 58 24 (57) (21) 113 118 118 118 447 118 (247) (355) 2,625 $000s 8,830 1,779 (1,499) (6,263) (7,680) 10,305 Group 2008 ------71 71 92 (33) (43) (21) 118 118 118 447 118 (376) 2,401 $000s 1,543 (1,691) (7,680) (9,404) 11,805 10,305 Group 2009 (i) (i) UIPMENT Q Accumulated Amortisation and Impairment Losses BALANCE AT THE END OF THE YEAR THE BALANCE AT BALANCE AT THE END OF THE YEAR THE BALANCE AT Disposals CLOSING CARRYING AMOUNT CLOSING CARRYING Disposals Intercompany Transfer Transfers from Computer Hardware & Software Equipment from Computer Hardware Transfers Transfers from Computer Hardware & Software Equipment Transfers CARRYING AMOUNT CARRYING Opening Carrying Amount Additions Disposals Impairment Losses Depreciation Amortisation Expense – External Software Amortisation Expense – Internal Software Development Balance at the Beginning of the Year Balance at the Beginning of the Year Balance at the Beginning Cost Additions – External Software Purchases Additions – External Software Additions – Internal Software Development Additions – Internal Software Intercompany Transfer Amount Carrying 19 PROPERTY,19 PLANT & E The amortisation expense has been included in the line item ‘depreciation and amortisation expense’ in the Income Statement. (i) On 1 July 2008, Aviation Services was transferred Metra to Information Ltd. Assets held in this area were transferred from Meteorological Service of New Zealand Metra Ltd to Information Services Ltd at net book value. Land Cost 18 OTHER18 INTANGIBLE ASSETS AMOUNT CARRYING Opening Carrying Amount Additions Disposals Impairment Losses AMOUNT CLOSING CARRYING Land – Leasehold Cost Accumulated Depreciation and Impairment Internally Developed Software Internally Developed FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Group 2009 Group 2008 Parent 2009 Parent 2008

19 PROPERTY, PLANT & EQUIPMENT (continued) $000s $000s $000s $000s

Buildings Cost 682 844 682 844 Accumulated Depreciation and Impairment (176) (160) (176) (160) CARRYING AMOUNT 506 684 506 684

Opening Carrying Amount 684 528 684 528 Additions 12 174 12 174 Disposals - - - - Reclass Between Asset Category (173) - (173) - Impairment Losses - - - - Depreciation (17) (18) (17) (18) CLOSING CARRYING AMOUNT 506 684 506 684

Buildings on Leasehold Land Cost 3,264 1,822 3,213 1,804 Accumulated Depreciation and Impairment (1,347) (648) (1,322) (643) CARRYING AMOUNT 1,917 1,174 1,891 1,161

Opening Carrying Amount 1,174 981 1,161 981 Additions 16 235 - 235 Disposals - - - - Impairment Losses - - - - Reclass Between Asset Category 907 - 907 - Intercompany Transfer (i) - - - (13) Depreciation (180) (42) (177) (42) CLOSING CARRYING VALUE 1,917 1,174 1,891 1,161

Computer Hardware & Software Equipment Cost 11,846 12,549 10,788 11,057 Accumulated Depreciation and Impairment (9,620) (10,098) (8,716) (8,941) CARRYING VALUE 2,226 2,451 2,072 2,116

Opening Carrying Value 2,451 1,411 2,116 1,282 Additions 1,158 1,888 1,137 1,654 Disposals (5) (10) (5) (4) Reclass Between Asset Category (66) - 21 - Intercompany Transfer (i) - - (32) (127) Transferred to Intangibles - 223 - 213 Depreciation (1,312) (1,061) (1,165) (902) CLOSING CARRYING VALUE 2,226 2,451 2,072 2,116 40 41 ------80 80 57 57 80 80 87 33 (20) (40) (30) (14) 216 250 421 (136) (170) (244) 1,677 1,677 1,530 8,536 $000s (6,859) Parent 2008 9 3 - - - 6 - - (3) 43 80 43 81 81 37 80 (20) (26) (36) (91) 383 260 (340) (179) (286) 3,040 1,734 3,040 1,677 9,911 $000s (6,871) Parent 2009 ------69 57 80 80 87 33 (26) (40) 100 100 276 250 553 (176) (170) (248) 1,835 1,835 1,530 8,702 $000s (6,867) Group 2008 - - 9 ------(3) 51 51 81 81 80 37 (25) (30) (36) (91) 100 415 260 (364) (179) (303) 3,175 3,175 1,835 1,734 $000s (6,895) 10,070 Group 2009 (i) (i) ) continued UIPMENT ( Q CLOSING CARRYING VALUE CLOSING CARRYING Opening Book Value Additions Disposals Reclass Between Asset Category Intercompany Transfer Depreciation CARRYING VALUE CARRYING CLOSING CARRYING VALUE CLOSING CARRYING Office Equipment Cost Accumulated Depreciation and Impairment CARRYING VALUE CARRYING Opening Carrying Value Additions Disposals Impairment Losses Depreciation CLOSING CARRYING VALUE CLOSING CARRYING Motor Vehicles Cost Accumulated Depreciation and Impairment Depreciation CARRYING VALUE CARRYING Opening Carrying Value Additions Disposals Reclass Between Asset Category Intercompany Transfer 19 PROPERTY,19 PLANT & E and Impairment Accumulated Depreciation Meteorological Equipment Cost FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Group 2009 Group 2008 Parent 2009 Parent 2008

19 PROPERTY, PLANT & EQUIPMENT (continued) $000s $000s $000s $000s

Furniture and Fittings Cost 690 783 617 680 Accumulated Depreciation and Impairment (623) (663) (569) (591) CARRYING VALUE 67 120 48 89

Opening Carrying Value 120 138 89 128 Additions 5 30 1 19 Disposals - - - - Reclass Between Asset Category (20) - (21) - Intercompany Transfer (i) - - 10 (20) Depreciation (38) (48) (31) (38) CLOSING CARRYING VALUE 67 120 48 89

Plant and Equipment Cost 717 1,466 670 1,446 Accumulated Depreciation and Impairment (279) (391) (254) (378) CARRYING VALUE 438 1,075 416 1,068

Opening Carrying Amount 1,075 146 1,068 145 Additions 39 968 15 968 Disposals - - - - Reclass Between Asset Category (636) - (628) - Intercompany Transfer (i) - - - (4) Depreciation (40) (39) (39) (41) CLOSING CARRYING AMOUNT 438 1,075 416 1,068

Capital Work in Progress Internally Developed Software 1,347 1,190 1,347 1,190 External Purchased Software and Equipment 3,204 2,157 3,015 1,930 TOTAL CARRYING AMOUNT 13,201 11,076 12,648 10,285

(i) On 1 July 2008, Aviation Services was transferred to Metra Information Ltd. Assets held in this area were transferred from Meteorological Service of New Zealand Ltd to Metra Information Services Ltd at net book value.

Capital work in progress relates to ongoing projects that were not completed and capitalised at year end. No impairment issues have been identified.

20 DERIVATIVE INSTRUMENTS

Current Financial Assets Carried at FVTPL Forward Foreign Exchange Contracts 43 53 43 53

Non-current Financial Assets Carried at FVTPL Forward Foreign Exchange Contracts - 7 - 7 Call Option – Weather Commerce Ltd (i) 56 106 - - 56 113 - 7

(i) Refer valuation assumptions in note 26. 42 43 ------689 590 340 578 (202) (314) (829) 1,673 1,673 2,240 1,359 1,434 $000s (2,339) (1,545) Parent 2008 7 - - 123 757 107 500 500 (500) (421) 1,359 2,812 8,538 2,602 6,189 $000s (3,694) (2,291) (1,524) (1,705) (2,835) (3,694) Parent 2009 - - - - - 7 - - - - - 196 716 909 (202) (484) (605) 2,893 2,893 3,046 3,609 1,140 3,197 $000s (2,340) (1,059) Group 2008

- - - 7 50 (10) 123 500 500 (500) (481) (951) (196) 3,248 3,248 3,667 3,609 6,357 1,423 1,113 4,475 $000s (2,291) Group 2009 22 Net Profit / (Loss) for the Year the Net Profit / (Loss) for Payment of Dividends Increase/(Decrease) in Deferred Tax (Increase)/Decrease in Inventories Year the End of the Balance at Interim Dividends Paid Interim Dividends Relating to Current Year 22 DIVIDENDS 22 Non-Cash Items Total Net Surplus for the Year 23 RECONCILIATION OF NET SURPLUS WITH CASH FLOW FROM OPERATING ACTIVITIES As atbalance date, there has been no provision made for a final dividend. 21 RETAINED21 EARNINGS / ACCUMULATED LOSSES The Group’s dividend policy is 60% of net profit after tax. Non-cash / Non-operating Items Depreciation and Amortisation Loss on Sale of Fixed Assets of Option Change in Value Share of Profits of Associates Labour Capitalised Balance at the Beginning of the Year Balance at the Beginning Activities by Operating Net Cash Generated A change was made the to cash flow calculation thisyear. Labour capitalised is now deducted from the Purchase of Property Plant and Equipment as this is a non-cash addition. The actual cash spent is now included in Payments Employees. to Prior year comparatives have been updated to reflect this. Movement in Working Capital Total Movements in Working Capital Movements in Working (Increase)/Decrease in Receivables (Increase)/Decrease in Intercompany (Decrease)/Increase in Accounts Payable and Accruals Receivable Decrease/(Increase) in Income Taxation FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

24 OPERATING LEASE EXPENSES

The Group as lessee: Leasing Arrangements: The Group leases land: operating leases over these properties give the Group the right to renew the lease subject to a redetermination of the lease by the lessor. There are no renewal options or options to purchase in respect of plant and equipment held under operating leases.

Group 2009 Group 2008 Parent 2009 Parent 2008

$000s $000s $000s $000s

Non-cancellable Operating Lease Commitments: Not later than one year 165 149 165 149 Later than one year and not later than five years 328 307 328 307 Later than five years 297 291 297 291 790 747 790 747

Current year expense 748 591 609 513

25 CASH AND CASH EQUIVALENTS

For the purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand and in banks, bank deposits on call, net of outstanding bank overdrafts and advances. Cash and cash equivalents at the end of the year as shown in the Cash Flow Statement can be reconciled to the related items in the Balance Sheet as follows:

Cash and Bank Balances 818 127 67 - Bank Overdraft / Advance - (1,000) - (1,048) Bank Deposits 250 - 250 - 1,068 (873) 317 (1,048)

The Parent has an overdraft facility with Westpac to the value of $50,000. The Parent provides support for meteorological services in the Pacific Islands and Africa. In this role, the Parent acts as an intermediary between the ‘Funder’ and the ‘Recipient or Client’. The role encompasses the provision of project management expertise, sourcing equipment, calibration and testing and site installation. Funding is received from international sources to fund these projects. The cash held at balance date is recorded as a liability.

Funds held at balance date 541 942 541 942

26 FINANCIAL INSTRUMENTS

Capital Risk Management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2008.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 11, cash and cash equivalents and equity attributable to equity holders of the Parent, comprising issued capital and retained earnings as disclosed in notes 6 and 21 respectively. Debt covenants are reviewed by management and reported to the Board on a monthly basis. 44 45 - - - - - 30 60 (48) 931 9,526 3,516

$000s 3,696 2,573 1,000 4,800 Parent 2008 ------6 67 43 250 2,286 $000s 2,223 8,407 1,926 6,000 16,636 Parent 2009 - - - - - 30 60 127 106 4,557 $000s 4,869 4,264 1,000 4,800 10,699 Group 2008 ------6 43 56 818 250 9,929 6,020 $000s 3,923 4,853 6,000 Group 2009 ) continued alue through Profit or Loss alue through Profit Foreign Currency Risk Management The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures exchange to rate fluctuation arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. Market Risk There has been no change during the year the to Group’s exposure market to risks or the manner in which it manages and measures The Group seeks minimise to the effects of foreign currency exchange risks by using derivative financial instrumentsto hedge these risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles on foreign currency exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by management on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. Financial Liabilities Total Financial Risk Management Objectives the risk. Liabilities Financial Liabilities at Amortised Cost and Other Payables Trade Financial Assets Total Loans and Receivables Cash and Bank Balances Assets Directors’ Fees Payable Amounts Owing to Subsidiary Trade and Other Receivables and Trade On-call Advance Amounts Owing from Subsidiary Amounts Owing from Borrowings Bank Deposits V Financial Assets at Fair Forward Foreign Exchange Contracts Call Option – Weather Commerce Ltd Call Option – Weather 26 FINANCIAL INSTRUMENTS ( Categories of Financial Instruments Categories of Financial FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

Liabilities Assets

2009 2008 2009 2008

26 FINANCIAL INSTRUMENTS (continued) $000s $000s $000s $000s

Foreign Currency Risk Management (continued) The carrying amounts of the foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Group US Dollars 66 - 166 60 British Pounds 70 75 178 258 Euro - - 48 119 Australian Dollars 13 22 375 191

Parent US Dollars - - - - British Pounds - - - - Euro - - - - Australian Dollars - - - -

Foreign Currency Sensitivity Analysis The sensitivity analysis below has been determined based on the exposure to exchange rate at the balance sheet date. This analysis is based on the closing foreign currency denominated monetary assets and monetary liabilities at the reporting date.

If exchange rates had been 10% higher and all other variables were held constant, the Group’s position would have been:

Group US Dollars 60 - 151 55 British Pounds 63 79 162 235 Euro - - 44 108 Australian Dollars 12 20 341 174 Profit for the year ended 30 June 2009 would decrease by $55,000 (2008: $58,000).

If exchange rates had been 10% lower and all other variables were held constant, the Group’s position would have been: Group US Dollars 73 - 184 66 British Pounds 77 83 198 284 Euro - - 54 131 Australian Dollars 14 24 417 211 Profit for the year ended 30 June 2009 would increase by $71,000 (2008: $55,000). 46 47 0.8502 0.8115 0.4715 0.4778 Parent 882,805 $272,933 $915,969 $272,532 $939,295 1,299,750 A$219,766 A$742,736 $1,871,318 $2,723,871 $1,914,539 $2,769,142 Group 0.8115 0.4778 0.8052 0.4715 882,805 $272,933 $915,969 $272,532 $939,295 1,299,750 A$219,766 A$742,736 $1,871,318 $2,723,871 $1,914,539 $2,769,142 2008 2009 2008 2009 2009 2008 2009 2008 2009 2008 2009 2009 2009 2008 2008 2008 . ) continued If exchange rates had been 50 basis points higher and all other variables were held constant, the Group’s: * profitfor theyear ended 30 June 2009 would increase by $21,312 (2008: $33,868). If exchange rates had been 50 basis points lower and all other variables were held constant, the Group’s: * profitfor theyear ended 30 June 2009 would decrease by $21,753 (2008:$34,536). Equity is impacted the to same extent as profit. If exchange rates had been 50 basis points higher and all other variables were held constant, the Parent’s: * profitfor theyear ended 30 June 2009 would increase by $21,312 (2008: $33,868) Foreign Currency (FC ‘000) Foreign Currency (FC ‘000) If exchange rates had been 50 basis points lower and all other variables were held constant, the Parent’s: * profitfor theyear ended 30 June 2009 would decrease by $21,753 (2008: $34,536). Equity is impacted the to same extent as profit. Contract Value (NZD ‘000) Contract Value Fair Value Buy/Sell EUR Exchange Rate Average Average Exchange Rate Exchange Average Forward Foreign ExchangeOutstanding Contracts Contracts Buy/Sell AUD 26 FINANCIAL INSTRUMENTS ( Contract Value (NZD ‘000) Contract Value Fair Value FINANCIAL STATEMENTS

Notes to the Financial Statements Meteorological Service of New Zealand Ltd | FOR THE YEAR ENDED 30 JUNE 2009

26 FINANCIAL INSTRUMENTS (continued)

Interest Rate Risk Management The Parent and Group are exposed to interest rate risk as entities in the Group borrow funds at fixed interest rates. The risk is managed by the Group by maintaining an appropriate level of debt.

The Parent and Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest Rate Sensitivity Analysis The sensitivity analysis below has been determined based on the exposure to interest rates at the balance sheet date. The Company’s sensitivity to debt interest rates has remained consistent with the previous year given borrowings have fixed interest rates.

This analysis is assuming the amount of deposits held at the balance sheet date was outstanding for the whole year.

If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s: * profit for the year ended 30 June 2009 would increase by $1,250 (2008: nil).

If interest rates had been 50 basis points lower and all other variables were held constant, the Group’s: * profit for the year ended 30 June 2009 would decrease by $1,250 (2008: nil).

Equity is impacted to the same extent as profit.

If interest rates had been 50 basis points higher and all other variables were held constant, the Parent’s: * profit for the year ended 30 June 2009 would increase by $1,250 (2008: nil).

If interest rates had been 50 basis points lower and all other variables were held constant, the Parent’s: * profit for the year ended 30 June 2009 would decrease by $1,250 (2008: nil).

Equity is impacted to the same extent as profit.

Credit Risk Management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

Financial instruments which potentially subject the Group to credit risk principally consist of bank transactions and deposits, accounts receivable and sundry accounts receivable. The Group has a credit policy which is used to manage its exposure to credit risk. As part of this policy, limits on exposures have been set and are monitored on a regular basis.

In the normal course of business amounts due from the Ministry of Transport represent a significant account receivable, however, it is not regarded as a significant concentration of credit risk.

The Group does not require collateral or security to support financial instruments due to the quality of financial institutions and trade debtors dealt with.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk.

Liquidity Risk Management Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 12 is a listing of additional undrawn facilities that the Group has at is disposal to further reduce liquidity risk.

Liquditity and Interest Risk Tables The following tables detail the Parent and Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes principal cash flows. 48 49 902

$000s 7.48% option pricing Parent 2008

$000s 2,006 6.18% Parent 2009 902

$000s 8.58% at amortised cost in the financial statements Group 2008 $000s 2,006 1,000 1,000 1,000 1,000 1,000 1,000 6,000 6.18%

Group 2009

) continued

with reference quoted to market prices; accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; flow analysis using the applicable yield curvefor the duration of the instrumentsfor non-optional derivatives, and option pricing modelsfor optional derivatives; and of default by the specified counterpartyextrapolated from market-based credit information and the amount of loss, given the default. 26 FINANCIAL INSTRUMENTS ( The option value of GBP 21,490 has been translated at value date New to Zealand dollars using a foreign currency exchange rate of NZD:GBP 0.3871. Risk free rate: 2.92% Volatility range: 25 - 35% Dividend yield: 25% Expiry date: March 31 2011 Value date: 30 June 2009 Grant date: March 31 2008 approximate their fair values. Commitments for the acquisition of property, plant and equipment Commitments for the acquisition of property, 27 CAPITAL COMMITMENTS Other Items The Directors consider that the carrying amounts of financial assets and financial liabilities recorded Valuation of Weather Commerce Ltd Option of Weather Valuation The option purchase to the remaining 50% of the share of Weather Commerce Ltd has been valued using the Black Scholes Merton model with the following input assumptions: Derivatives Forward foreign exchange contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. * the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined * the fair value of other financial assets and financial liabilities(excluding derivative instruments) is determinedin accordance with generally * the fair value of derivative instruments is calculated using quoted prices. Where such prices are not available, use is made ofdiscounted cash * the fair value of financial guarantee contracts is determined using option pricing models where the main assumptions are the probability Fair Value of Financial Instruments of Financial Fair Value liabilities are determined as follows: The fair values of financial assets and financial The Group has access financing to facilities, thetotal unused amount of which is nil at the balance sheet date. The Group expects meet to its other obligations from operating cash flows and proceeds of maturing financial assets. The Group expects maintain to the current debt equity to ratio, within the Group’s covenant requirement of greater than 30%. 19 August 2009 All loans are interest only and are due to mature on 30 June 2012. All loans are interest only expiry dates are as follows: Current fixed interest 29 September 2009 21 December 2009 30 June 2010 29 December 2010 1 June 2011 Fixed Interest Rate Effective Interest Rate Average Weighted Instruments

FINANCIAL STATEMENTS

Auditor’s Report to the readers of Meteorological Service of New Zealand Ltd and Group’s financial statements for the year ended 30 June 2009

The Auditor-General is the auditor of We planned and performed the audit to Meteorological Service of New Zealand obtain all the information and explanations Ltd (the Company) and the Group we considered necessary in order to obtain comprising the Company and its reasonable assurance that the financial subsidiaries. The Auditor-General has statements did not have material appointed me, Karen Shires, using the staff misstatements, whether caused by and resources of PricewaterhouseCoopers, fraud or error. to carry out the audit of the financial Material misstatements are differences or statements of the Company and Group, omissions of amounts and disclosures that for the year ended 30 June 2009. would affect a reader’s overall understanding Unqualified Opinion of the financial statements. If we had found

In our opinion: material misstatements that were not corrected, we would have referred to them ** The financial statements of the Company in our opinion. and Group on pages 20 to 49: The audit involved performing procedures to ** comply with generally accepted test the information presented in the accounting practice in New Zealand; financial statements. We assessed the and results of those procedures in forming ** comply with International Financial our opinion. Reporting Standards; and Audit procedures generally include: ** give a true and fair view of: ** determining whether significant financial ** the Company and Group’s financial and management controls are working position as at 30 June 2009; and and can be relied on to produce complete ** the results of operations and and accurate data;

cash flows for the year ended on ** verifying samples of transactions and that date. account balances;

** Based on our examination the Company ** performing analyses to identify anomalies kept proper accounting records. in the reported data;

The audit was completed on 2 September ** reviewing significant estimates 2009, and is the date at which our opinion and judgements made by the Board is expressed. of Directors;

** confirming year-end balances; The basis of our opinion is explained below. In addition, we outline the responsibilities of ** determining whether accounting policies the Board of Directors and the Auditor, and are appropriate and consistently applied; explain our independence. and

Basis of Opinion ** determining whether all financial statement disclosures are adequate. We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing

50 Standards. 51

ndependence We areWe responsible forexpressing an independent opinion on the financial statements and reporting that opinion to you. This responsibility arises from section of the Public15 Audit Act 2001 and section 19(1) of the State-Owned Enterprises Act 1986. I 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. Other than the audit we have no relationship with, or interests in, the Company or Group. Karen Shires On behalf of the Auditor-General Wellington, New Zealand PricewaterhouseCoopers

oard uditor to the published hard copy of the audited financial statements and related audit report dated 2 September 2009 confirmSeptember 2 to report dated audit related and statements financial audited the of copy hard published the to Legislationwebsite. this in on New Zealand presented governingstatements financial audited the in included information the the preparation and dissemination of financial statements may differ from legislation otherin jurisdictions. Matters Relating to the Electronic Presentation of the Audited Financial included 2009 StatementsJune 30 ended year the for Group and Company the of statements financial the to relates report audit website. This MetService the of integrity and maintenance the for responsible is Directors of Board The website. Company’s the on changes any for responsibility no accept We website. Company’s the of integrity the reporton to engaged been not have We reportrefers audit The website. the on presented initially were they since statements financial the to occurred have may that only the to financial statements named above. It does not provide an opinion on other any information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer irectors and the A esponsibilities of the B R We obtainedWe all the information and explanations we required support to our opinion above. We evaluatedWe the overall adequacy of the presentation of information in the financial statements. of D We didWe not examine every transaction, nor do we guarantee complete accuracy of the financial statements. The Board of Directors is responsible for preparing financial statements in accordance with generally accepted accounting practice in New Zealand. The financial statements must give a true and fair view of the financial position of the Company and Group as at 30 June 2009 and the results of its operations and cash flowsfor the year ended on that date. The Board of Directors’ responsibilities arise from the State-Owned Enterprises Act 1986 and the Financial Reporting Act 1993. 52 Key Performance Indicators Indicators M Performance Key sustained winds are expected to exceed 47kt or gusts exceed 60kt, over land. over 60kt, exceed gusts or 47kt to exceed expected are winds sustained Warnings ofseveregalesareissuedwhen: hours. 24 in 25cm or hours, six in 10cm to exceed expected is snow and Island; South the in 500m below areas to affect expected is snow and Island; North the in 1000m below areas to affect expected is snow Warnings ofheavysnowareissuedwhen: hours. 24 in 100mm to exceed expected is rain or hours; six in 50mm to exceed expected is rain Warnings ofheavyrainareissuedwhen: Warnings. Weather Severe of form the in media, the and organisations of to avariety issued are Warnings land. on property or life threaten could that conditions cause may which weather, hazardous widespread of warnings to issue required is MetService Warning Criteria criteria. warning the reach not did event actual the where forecasts of proportion the measures Ratio Alarm False FAR: events. actual against events forecast of proportion the measures Detection of Probability POD: criteria. measurement the against standard high a with re-certification receiving again 174 Part certification Rule Aviation Civil our retained also We compliant. fully us found auditors system quality the that to record happy are and re-certification 2000 9001: ISO full retained We FINANCIAL STATEMENTS Net SurplusAttributabletoShareholders Return onEquity(NPAT /Average Equity) EBIT: Total Tangible Assets Current Ratio Equity Ratio Net SurplusAttributabletoShareholders:Total Sales Accounting Value ofCrown'sInvestment Heavy Rain Probability ofDetection(POD) Heavy Snow Severe Gales Heavy Rain False AlarmRatio(FAR) Heavy Snow Severe Gales Quality Certification S eteorological N of ervice Z ew L ealand

FOR THE YEAR ENDED 30 JUNE 2009 JUNE 30 ENDED YEAR THE |FOR td Statement ofCorporateIntentTarget

$3,279,000 $9,939,000 Maximum Minimum 35.9% 22.2% 40.9% 8.8% 75% 75% 75% 40% 40% 40% 79:1 Actual 2009 $11,357,000 $3,248,000 32.5% 23.9% 47.7% 1.12:1 8.8% 92% 91% 97% 12% 25% 20% Actual 2008 $2,893,000 $8,609,026 45.3% 22.6% 40.1% 8.3% 95% 87% 94% 27% 29% 20% 80:1 Company Directory

DIRECTORS GM, Marketing DESIGN

Dr Francis Small (Chairman) and Communications Moxie Design Group Ltd Resigned 30 Apr 09 Mark Ottaway Sarah Astor (Chairman) [email protected] PHOTOGRAPHY Polly Schaverien (Deputy Chair) Finance Manager MetService Board of Directors, David Houldsworth Jodi Taylor Wellington Executive Team Gregory Whitau [email protected] and office location images Joanne Keestra by Nicole Freeman James Koh Chief, Information Services Russell Turner REGISTERED OFFICE [email protected] PRINT Service Printers Ltd Level 2 GM, National Weather Service Printed on Splendorgel Digital, 30 Salamanca Road Rod Stainer an FSC Mixed Source Certified PO Box 722 [email protected] Wellington 6140 paper, which ensures that all GM, Corporate Strategy New Zealand virgin pulp is derived from Norm Henry Telephone +64-4-470 0700 well-managed forests. It is [email protected] Facismile +64-4-473 5231 elemental chlorine-free bleached and is manufactured GM, Australia & Asia EXECUTIVE by an ISO 14001-certified mill. Tom Sutherland Chief Executive [email protected] Paul Reid [email protected] BANKER Westpac Banking Corporation GM, Science R&D 318 Lambton Quay Neil Gordon PO Box 1298 [email protected] Wellington 6140 GM, Europe & Middle East New Zealand Will Owen [email protected] AUDITOR Karen Shires with the GM, Sales and assistance of: Client Management PricewaterhouseCoopers Stephen Harris 113 - 119 The Terrace [email protected] PO Box 243 GM, Human Resources Wellington 6140 Colin Baruch New Zealand [email protected] On behalf of: Office of the Auditor-General 48 Mulgrave Street PO Box 3928 Wellington 6140 New Zealand Corporate Office 30 Salamanca Road, Wellington 6012 PO Box 722, Wellington 6140 New Zealand Phone +64-4-4700 700 www.metservice.com www.metra-info.com