RIRDC 1999-2000 Annual Report - Financial Position

Rural Industries Research & Development Corporation

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2000 ANNUAL REPORT - Contents Page
Financial Position
RIRDC’s operations can be broadly categorised into its ‘Core’ or appropriation funded activities and those of its industry sub-programs (or sub accounts).
These sub accounts are essentially funded by a statutory levy and Commonwealth matching funds. Further, the operations of the Corporation include the activities of the Dried Fruits R&D Council, as required by the PIERD Act 1989.
In accordance with the Corporation’s legislative basis, the overwhelming majority of its operating revenues are derived from Commonwealth appropriation, statutory industry levies and Commonwealth dollar for dollar matching payments on those levies.
These revenues from government and industry levies amounted to approximately $19.6 million or about 81% of operating revenues in 1999/2000.
Over time, the Corporation has secured more and more external funding to facilitate collaborative research projects and programs. In 1999/2000, this external funding amounted to $3.1 million and was derived primarily from government programs (Natural Heritage Trust, AFFA and other R&D Corporations) in respect of RIRDC’s Agroforestry sub-program.
Apart from a component of interest earned, all other sources of revenues are minor in nature.
Figure 1 gives a breakdown of the Corporation’s sources of revenue during 1999/2000.

Over 80 per cent of the Corporation’s operating expenses are attributable to the funding of contracted research projects.
These projects are funded within four research and development programs and are disclosed in Figure 2, which gives a sense of the proportion of funds invested in each program over 5 years.

Employee expenses (which includes salaries, on-costs, fringe benefits tax, payroll tax) to facilitate the Corporation’s business rose by 14% compared to 1998/99 and this was attributable to 1.7 full-time equivalents being added to the human resource base, maternity leave obligations and the performance based movements of staff salaries.
Payment for goods and services of around $2.3 million during 1999/2000 was about the same as 1998/99. Figure 3 gives a breakdown of the Corporation’s operating expenses during 1999/2000.
In terms of financial position at 30 June 2000, the Corporation’s financial assets predominantly comprise cash and investments. Only a very small proportion of cash and investment relates to RIRDC Core activities.
Almost all of this cash and investments belongs to RIRDC’s industry sub accounts (eg Chicken Meat, Egg, Rice etc) for which RIRDC must, under the PIERD Act 1989, account for on a segregated basis for each industry.
Figure 4 illustrates the proportion of cash held by RIRDC at 30 June over a five year period.

In the RIRDC Balance Sheet there exists a payable amount of $2.1 million for research projects.
This is primarily because RIRDC does not make research payments until research contractors have forwarded specified reporting deliverables within contracted time-frames.
This highlights the Corporation’s expectation that research is conducted on a commercial ‘fee for service’ basis in accordance with the ‘purchaser-provider’ model for undertaking research.
At 30 June 2000, RIRDC equity is dominated by the large accumulated surpluses of RIRDC’s industry sub accounts.
In contrast to this, the RIRDC Core operation has traditionally run an accumulated deficit attempting to extract maximum value from its R&D program whilst keeping cash reserves at a minimum in line with Board policy. Figure 5 illustrates the equity position of RIRDC over the last 5 years.
In a 1999/2000 operating budget context, RIRDC’s total operating income finished marginally above budgeted Annual Operational Plan (AOP) projections.
Generally, deficiencies in relation to receipt of projected external contributions were more than offset by a greater than expected receipt of industry levies and related Commonwealth contributions during the year.
On the expenditure side, there were offsets within the program support outlays that resulted in actual expenditure only slightly exceeding their aggregated budget outlays. There was a ten per cent underspend for budgeted R and D projects.
In summary, RIRDC total operating income was slightly favourable to budget and total actual expenditure was 8% below the government approved AOP budget framework.

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