Prospectus - Fonterra

65FONTERRA GROUP SUMMARY FINANCIAL INFORMATIONThis summary of financial information for Fonterra Co-operative Group Limited and its subsidiaries (the “FonterraGroup”) has been provided as additional information.NZ IFRS/NZ GAAPNZ IFRS/NZ GAAPPreviousNZ GAAPPreviousNZ GAAPPreviousNZ GAAPPreviousNZ GAAP31/7/2008 31/5/2007 31/5/2007 31/5/2006 31/5/2005 31/5/200414 months 12 months 12 months 12 months 12 months 12 months$ million $ million $ million $ million $ million $ millionRevenue 19,512 13,687 13,882 13,001 12,323 11,830Cost of goods sold (16,820) (10,853) (10,943) (10,511) (9,640) (9,183)Cost of goods sold – Value Return - - (728) (300) (522) (576)Gross profit 2,692 2,834 2,211 2,190 2,161 2,071Net operating expenses (2,094) (1,616) (1,715) (1,774) (1,648) (1,779)Finance income 76 24Finance expense (443) (358) (398) (364) (269) (250)Share of profit/ (loss)of equity accounted investees 158 73Impairment of equity accounted investees (142) (25)Profit/ (loss) before tax 247 932 98 52 244 42Tax credit/ (expense) 47 (279) (67) (40) (25) (26)Profit/ (loss) after tax 294 653 31 12 219 16Total assets 14,439 13,494 12,631 13,080 11,812 11,112Total liabilities (10,170) (8,516) (7,615) (7,935) (6,901) (6,317)Equity (4,269) (4,978) (5,016) (5,145) (4,911) (4,795)No information has been provided in respect of dividends and dividends per share information as Fonterra Group does not pay ‘dividends’.The summary financial information presented above has been extracted or derived from audited financial statements.On 1 June 2007 the Fonterra Group adopted New Zealand equivalents to International Financial Reporting Standards(“NZ GAAP“ or “NZ IFRS”). The financial information for the years ended 31 May 2004 to 31 May 2006 has beenprepared under previous New Zealand Financial Reporting Standards (“Previous NZ GAAP”). The financial informationfor the year ended 31 May 2007 and the 14 month period ended 31 July 2008 has been prepared under NZ IFRS. Thefinancial information for the year ended 31 May 2007 has also been reported under Previous NZ GAAP. Note 26 of theFonterra Group financial statements (which may be obtained from www.fonterra.com) explains the main differencesbetween the Previous NZ GAAP and NZ IFRS.During the periods to which the information above relate, there have been no extraordinary items or material changes inthe activities of the Fonterra Group. Except for the transition from Previous NZ GAAP to NZ IFRS, there have been nomaterial changes in accounting policies. The following items, by their incidence or size, impacted the performance of theFonterra Group:2008 • Fonterra Group changed its balance date from 31 May to 31 July. The results for 31 July are for a 14month period, while prior periods are for a 12 month period and are therefore not directly comparable.• Higher revenues were achieved as a result of the significant increase in commodity prices. The increasein commodity prices resulted in a significantly higher Milk Price, and therefore cost of goods sold. Thehigher Milk Price also increased receivables and borrowings.• Included within the impairment of equity accounted investees is a $139m write-down of the investment inShijiazhuang San Lu Group Company Limited (“San Lu”).• Key classification differences from Previous NZ GAAP to NZ IFRS that can be seen in this summary offinancial information are:• Previous NZ GAAP classified finance income and amounts in relation to equity accounted investeesin revenue.• Previous NZ GAAP classified Value Return in cost of goods sold. Value Return is now recogniseddirectly in equity.• Previous NZ GAAP classified the tax credit arising on Value Return paid to shareholders in the taxcredit. This is now recognised, with the Value Return, directly in equity.2007 • The key differences between Previous NZ GAAP and NZ IFRS discussed for 2008 are also relevant for2007.• The transition from Previous NZ GAAP to NZ IFRS resulted in an adjustment to the value of financialinstruments, and other adjustments. The overall increase in the net surplus (excluding the value returnadjustment) was $134m.2006 • Fonterra Group acquired the business of New Zealand Dairy Foods and sold its 100% investment inMainland Products Limited. This resulted in an increase in net assets (including goodwill) of $413m and again of $51m.2005 • Fonterra Group sold its investment in National Foods resulting in a gain of $195m.2004 • Fonterra Group acquired an additional 25% of Bonlac Foods Ltd, to take a controlling total ownershipinterest to 50%. The transaction also incorporated the purchase of the remaining 75% of NZMP(Australia) Pty Ltd. This transaction resulted in an increase in the net surplus of $21m, total assets of$586m, and total liabilities of $390m.