Guidelines: Evidencing Eligible R&D and RDI for Growth Grants

Transcription

1 Guidelines: Evidencing Eligible R&D and RDI for Growth Grants

2 Contents 1. Growth Grants and Eligible Expenditure Guidelines Application, Approval and Funding Process Overview Growth Grant Guidance Eligible R&D Expenditure Ministerial Direction / New Zealand Gazette, No Evidence R&D Application and / or Annual Review Certificate Template... 16

3 1. Growth Grants and Eligible Expenditure Guidelines The Growth Grant policy objective is to increase New Zealand businesses investment in research and development ( R&D ) to support long-term economic growth and to provide a rule-based, market-led incentive for increasing R&D investment in businesses that are experienced in investing in R&D. To be eligible to receive funding a business must satisfy the following 4 points; Have had at least $300, in eligible R&D expenditure sourced from non-government funds in each of the two most financial recent years; Have had eligible R&D expenditure of at least 1.5 percent of revenue in each of the two most recent years; Meet financial and management due diligence requirements sufficient to justify three years of funding; and Provide Callaghan Innovation with a R&D plan including an estimate of R&D expenditure over the next three years. Businesses must compile the R&D plan to a level of detail and clarity sufficient to assess progress in the businesses R&D programme over time. For information on Growth Grants - refer Purpose of Guidelines This document provides guidance on the calculation of the R&D intensity ratio and eligible R&D expenditure for a Callaghan Innovation Growth Grant. This document also identifies ineligible R&D expenditure. The document is intended to be used by Grant Applicants, Grant Recipients, their Accountants, Auditors, Customer Managers, Business Innovation Advisors, Grants Advisors and Financial Risk Advisors ( users ). These guidelines have been developed to clarify, eligible and ineligible R&D expenditure and evidential requirements, in conjunction with specifying the relevant Accounting Standards, for; Calculating a Research & Development Intensity Ratio ( RDI ); Defining eligible R&D expenditure; and Providing a sample template for completing the Application and Annual Review Certificates. Users should be aware that the guidelines are not intended to be exhaustive, however they provide users with clarification of Callaghan Innovation s intentions and principles to apply when accounting for and reporting on Growth Grant R&D expenditure. Owner of Guidelines Grants Risk and Assurance Team is the owner of these guidelines and is responsible for ensuring its ongoing relevance. The responsibility for applying the guidelines rests with all users.

4 2. Application, Approval and Funding Process Overview An overview of the Growth Grants application, approval and funding process is set out below and further information is set out in section 3: Page 4

5 Applicant Callaghan Innovation Growth Grant Approval Application Complete all sections in the Growth Grants Application including supporting documentation and requested financial information; and Financial forecasts for three years; and Compliant audited accounts/application Review Certificate. Eligibility assessment of the Ministerial Directions requirements for Growth Grant Funding. Recommendation for approval or decline of application. Formal notification to applicant and announcement. Callaghan Innovation funding agreement drawn up and entered into with approved applicant. Quarterly Funding and Monitoring Applicant Callaghan Innovation Growth Grant Approval Prepare and submit prior quarters invoice for reimbursement of 20% (includes retention) R&D milestone achieved for the period; and Report on R&D milestone achieved for the period; and Report on any leadership, R&D and financial changes that could affect delivery. Assess invoice and quarterly R&D milestone report against application intentions and expenditure criteria (refer section 6). Recommendation for invoice to be paid or funding put on hold pending further information. Funding released for invoiced amount less retention. Applicant Callaghan Innovation Growth Grant Approval Annual Assessment At applicant s financial year end prepare and submit prior quarter as per above; Organise and submit unaudited financial statements supported by Annual Review Certificate and/or compliant audited financial statements, prepared by an independent auditor.. Prepare invoice for retention payment. If second anniversary prepare application for extension Assess final quarter s invoice and quarterly R&D milestone report against application intentions and expenditure criteria refer section 6. Recalculate R&D spend and assess RDI forecast against application information. Recommendation for invoice and retentions to be paid or funding put on hold pending further investigations. Funding released for invoiced with/without retention. Page 5

6 Roles and Responsibilities Stakeholder Responsible Applicant To ensure the business continues to invest and grow its eligible investment in R&D; Provide Callaghan Innovation with accurate and timely information on achieving R&D milestones, changes to the R&D programme or changes in the strategic and/or operational direction of the business that may impact on the eligibility of the business to remain within the Growth Grant programme; and Account and claim for R&D expenditure in accordance with the principles set out in these guidelines which align with the Ministerial Direction intentions. Callaghan Innovation Provide support and guidance to Applicants with the interpretation of the funding agreement terms and conditions; Assess quarterly reports and accompanying R&D expenditure claims to recommend funding be released or withheld pending further information; Undertake an annual/bi-annual assessment of R&D growth achieved within the year and business; Assess the Applicant s ability to continue in the programme; Approves and terminates Growth Grants; and Releases funding payments. Independent Auditor Perform an annual review of the Research and Development Intensity and Research and Development Expenditure Schedule as required by these guidelines and in-line with accounting standards. Page 6

7 3. Growth Grant Guidance The guidance below is not intended to be exhaustive, however it has been developed to provide users with clarification of Callaghan Innovation s intentions that apply when accounting for and reporting on Growth Grant R&D expenditure. Annual Review/Wash-up Callaghan Innovation requires Growth Grant recipients to provide evidence of eligible R&D expenditure and RDI at the end of each year. This information allows Callaghan to understand a recipient s annual R&D expenditure. The purpose of the Annual Review/Wash-up is to: Release the retention; Determine actual eligible R&D expenditure and claims; and Ensure that the recipient continues to meet on-going RDI and Eligible R&D Expenditure criteria. The Growth Grant contract period anniversary may not coincide with a recipient s financial year end. In this instance and to align the part-year to a recipient s financial year end, Growth Grant Recipients may elect to provide an Annual Review Certificate and/or compliant audited interim financial statements that cover a part year only, to financial year end. Future reviews can then be undertaken at the recipient s financial year end, using Annual Review Certificate and/or compliant audited financial statements. Any extension to a recipient s Growth Grant starts from the contract end date. Application Review Certificate and Annual Review Certificates (Review Certificate) Callaghan Innovation requires a Review Certificate when a business provides: Unaudited financial statements; or Audited financial statements that have applied: o Differential Reporting (not consistent with the definitions in NZ IAS 38); o Reduced Disclosure Regime (not consistent with the definitions in NZ IAS 38); o Differential Reporting concessions to expense all R&D under NZ IAS 38 (para 7.1) i.e. expensed any development costs as defined by para 57 of NZ IAS 38; or o Another accounting framework that does not comply with the full provisions of NZ IAS 38 or does not separately identify R&D costs. Businesses must obtain and submit an application review certificate with the Growth Grant application, and then for each contract or financial year after a grant has been approved, obtain an annual review certificate as set out in section 6. An annual review certificate may also be required if there are general and specific exclusions as listed in the Ministerial Direction (refer section 5), for example a business: Makes payments to a company outside the Group that undertakes R&D on its behalf; or Undertakes R&D outside of New Zealand. The review must be undertaken: In accordance with the Review Engagement Standards issued in New Zealand, specifically Statement of Review Engagement stipulated for ISRE (NZ) 2400 or NZ SRE 2410) engagements; By an appropriately qualified Public Practicing Chartered Accountant, who is independent of the applicant but can be the applicant s or recipient s appointed auditor. Callaghan Innovation has provided Review Certificate templates in section 7 to be provided by the auditor of the company or registered practicing chartered accountant to: Evidence eligibility criteria; and Determine actual eligible R&D expenditure and claim for retention release. Page 7

8 Operating Revenue Operating revenue is all income that a company receives from its normal business activities, usually from the sale of goods and services to customers. For the purpose of calculating the RDI, this should include income from dividends or royalties paid to them by other companies. However operating revenue for the purpose of calculating the RDI should exclude: Calculated profit from fair value gains on financial instruments (such as calculated profits derived from shares, bonds, swaps and foreign exchange transactions); Revenue derived from the sale of company property including fixed assets ( plant and equipment ); and Interest revenue derived from company money invested in bank deposit accounts such as call accounts, term deposits or investment portfolios. Through discussions with the Callaghan Innovation Grants Advisors there may be some circumstances, where revenue derived overseas by subsidiaries of the Group may be excluded from operating revenue. In these cases, Callaghan Innovation will provide written confirmation of the exclusions. Operating Expense, Depreciation and other Costs Operating expenses included in the claim must be directly attributable (related) to R&D activities and/or can be allocated on a reasonable basis to R&D activities and are not required to be capitalised under NZ IAS 38 paragraph 57. A general principle for the allocation of Growth grant expenses is that expenses should be estimated as accurately as practical and identified explicitly. Expenses that vary with the level of activity of an organisation and are applicable to a particular R&D activity should be charged directly to the activity. An example of this would be in a software related R&D: if the R&D uses a specific amount of hardware and software resources, the depreciation on these resources should be charged directly to the R&D, either on the basis of an estimated % of use, or % of employees in the project to total employees. Depreciation on furniture and fittings is a fixed overhead and should be included in the overhead calculation. Examples of expenses (operating expenses) which should be included in an overhead calculation are as follows; Depreciation Insurance Rent Repairs and Maintenance Utilities Telephone Expenses Printing and Stationery ACC Levies Lease Expenses Rates and Taxes Accounting Fees Office Cleaning. Examples of expenses (operating expenses) which should not be included in the overhead calculation are as follows: Advertising and Marketing Expenses Bad Debts Entertainment Expenses Interest Expense Travel Expenses Legal Expenses Directors Fees Recruitment Expenses Freight and Delivery Expenses Motor Vehicle Expenses. As a general rule if an expense can be identified to R&D it should be charged directly rather than including it in an overhead rate. Page 8

9 RDI Ratio The RDI ratio is the eligible R&D expenditure expressed as a percentage of operating revenue (refer above definition) and is calculated using table 2 in section 6. R&D Planned Outcomes At the time of application, Callaghan Innovation requires a business to submit a three year R&D plan demonstrating the R&D activities intended to be undertaken. This plan will be used as a tool to assist Callaghan Innovation in assessing its investment and the validity of quarterly progress reports and accompanying R&D expense invoices. The plan can be adjusted as required and must be advised to Callaghan Innovation as part of the quarterly reporting. Specific Exclusions The below definitions are additional guidance to assist applicants and recipients to determine what is and is not considered to be eligible R&D expenditure as defined in the Ministerial Direction (refer section 5). Market Research R&D research activities differ from market research activities, as R&D research activities primary purpose is to inform the development of the product and/or hypothesis rather than identify a customer need. Therefore Callaghan Innovation funding conditions exclude any expenditure or costs relating to activities that are associated with the gathering of information used for identifying customer needs, target market, pricing, or positioning of a product under development to place in the market. Such as costs or expenditure associated with: o Market research and surveys o General purpose data collection including social media data mining (unless primarily for research) o Market testing to identify customer preferences and needs o Market development or sales promotion o Management or efficiency studies o Marketing for new products, including market tests, adaptation of the product for different markets, o Product launch advertising o The building of distribution networks. Modification of Computer Software Callaghan Innovation will consider any expenditure related to R&D associated with the modification of software where the business can demonstrate: o o The R&D has resulted in developing a new system, architecture or new code; and There is no probability of revenue certainty to be derived from the R&D activity. Off-Shore R&D Callaghan Innovation will not fund any R&D activities undertaken outside of New Zealand. An exception could be a New Zealand employee is required for a short period of time to do work overseas and this work is directly related to the R&D programme or project. Pre-purchase and third party investment of R&D Callaghan Innovation excludes any R&D that is pre-purchased and / or third party funding of R&D where the Intellectual Property ( IP ) is developed exclusively for the third party investor. Pre-purchase by a third party investor is allowable where the IP is able to be commercialised (generate revenue) and is not for the sole benefit of the investor. R&D Enforceable Levies Payment of an industry-body s enforceable levy, that is used to fund R&D for the industry, must not be included in any R&D expenditure invoice or cash flow forecasts provided to Callaghan Innovation. Page 9

10 Other activities expenditure not eligible Literature searches that relate to the scoping of issues before R&D is undertaken. Costs directly associated with administrative/legal activities relating to the filing of patents or the development of technology licenses Purchase of capital items is not supported. Depreciation (or leasing costs) of special equipment is an acceptable R&D cost. The rate of depreciation claimed must be stated and justified: it may be higher than the IRD rate of depreciation. Page 10

11 4. Eligible R&D Expenditure For the purposes of determining eligible R&D expenditure, recipients are guided by the relevant areas of: These guidelines; and The Ministerial Direction (refer section 5). R&D activity is differentiated from non-research based (business as usual) activity by the presence or absence of an appreciable element of innovation. If the activity departs from routine and breaks new ground (leading edge) it is normally to be included as R&D activity. If it follows an established pattern of production it is normally to be excluded from R&D activity. Research activity is defined as original and planned studies or investigations that are undertaken with the view of gaining new scientific or technical knowledge and understanding. Development activity is defined as the application of research findings or other knowledge to a plan or, design for the production of new, or substantially improved, through the utilisation of leading edge or ground breaking materials, devices, products, processes, systems or services prior to the commencement of commercial production or use. Eligible R&D expenditure is defined as all costs that are directly attributable (related) to R&D activities and/or can be allocated on a reasonable 1 basis to R&D activities and is not required to be capitalised under NZ IAS 38 paragraph 57. In essence an R&D activity resulting in an asset ready for sale or revenue generation will be required to be capitalised under NZ IAS 38. That is, where the research output will be or is available for use or sale, or is able to generate probable future economic benefits it should be capitalized and any further work associated to fitting that product to a client s environment is not considered to be eligible R&D expenditure. The table below provides guidance for the determination of eligible R&D expenditure. If the guidance does not fit a grant recipient s situation, they should contact their Callaghan Innovation Relationship Manager in the first instance: Examples of activities that would typically be included in R&D Research activities for which the primary purpose is to inform the technical development of the product; Research aimed at discovery of new knowledge; Searching for applications of new research findings or other knowledge; Formulation and design of possible new or improved product or process alternatives; Testing in search of product or process alternatives; Evaluation of product or process alternatives; Design, construction and testing of pre-production prototypes and models; Development of a software system / platform, architecture and new code; Design of tools, jigs, moulds, and dies involving new technology; and Design build and operation of a pilot plant that is not of a scale economically feasible for commercial production. Examples of activities that typically would be excluded from R&D Engineering follow-through in an early phase of commercial production; quality control during commercial production, including routine testing of products; Trouble-shooting in connection with commercial production; Routine, ongoing efforts to refine, enrich or otherwise improve on the qualities of an existing product or process or to make cosmetic or stylistic changes to it; Adaptation of an existing capability to a particular requirement or customer s need as part of a continuing commercial activity; Seasonal or other periodic design changes to existing products; Routine design of tools, jigs, moulds and dies; Activities, including design and construction engineering, related to the construction, relocation, rearrangement, or start-up of facilities or equipment other than facilities or equipment whose sole use is for a particular R&D project; and Research activities which relate to positioning in the market place or pricing of the developed product. 1 Such as, the apportionment of utilities (rent, power and office equipment) and depreciation expenses for the period that is directly related assets used in supporting R&D activities. Page 11

12 Costs that can be allocated on a reasonable basis Grant recipients should analyse their expenses at a general ledger line level to determine which costs can be allocated on a reasonable basis to R&D expenditure; Costs which may be eligible to be allocated to R&D expenditure include personnel, cleaning, utilities, depreciation for assets used in R&D activities and administration costs; Costs which would be avoided if there was no R&D program are generally considered eligible; and Costs should be allocated on a basis relevant to the nature of the entity and expense. Page 12

13 5. Ministerial Direction / New Zealand Gazette, No 146 The Ministerial Direction specifies the following general and specific types of expenditure are not eligible for the Growth Grants initiative: General exclusions The following types of expenditure are not eligible: Any expenditure that is capitalised as a intangible asset under NZ IAS 38 R&D undertaken outside of New Zealand; R&D funded through an enforceable levy; Enforceable levies for R&D; and Any R&D funded by a grant or other payment provided by a business that is not part of the same consolidated group of companies as the applicant. However, expensed funding for R&D contracted out by the applicant to another business is eligible (another business undertakes the R&D). Specific exclusions To provide further clarification on the definition, some specific activities are excluded. This list is not exhaustive. Activities not specifically excluded are only eligible provided they meet all other features of the definition. Specific activities excluded are 2 : Engineering follow-through in an early phase of commercial production; Activities related to the construction, relocation, rearrangement or start-up of facilities or equipment other than facilities or equipment whose sole use is for the business R&D; Routine, ongoing efforts to refine, enrich or otherwise improve on the qualities of an existing product or process, or to make cosmetic or stylistic changes to it; Routine design of tools, jigs, moulds and dies or seasonal or the periodic design changes to existing products. However expensed design activities involved in development a new product or process is eligible; Activities involved in ensuring that existing products or processes comply with statutory requirements or standard, and quality control, routine testing or trouble shooting during commercial production. However, testing in search of significant product or process improvement is eligible; Adapting any existing product or process to a particular customer s needs or site; Supporting, de-bugging or modifying computer software; Market research or surveys, market testing, market development or sales promotion, management studies, efficiency surveys or the routine collection of information; Any costs involved in protecting, licensing, selling or defending intellectual property or of acquiring or using external intangible assets (e.g. patent license); Interest expenses or lease payments of any kind, and any overheads that are not closely linked to R&D activities. Eligible overheads include finance, personnel, training, travel, administration and library activities associated with R&D, and reasonable R&D related transportation, storage, cleaning, repair, maintenance and security activities; Prospecting or exploring for minerals, petroleum, natural gas or geothermal energy; and Research in the social sciences, arts or humanities. Entities that conduct or commission R&D activities mainly for other persons or businesses are unlikely to be eligible. 2 For clarification of General or Specific exclusion, refer to section 3 of these guidelines. If your query is unable to be answered contact your Customer Manager or Business Innovation Advisor. Page 13

14 6. Evidence To support an application or annual reporting for a Growth Grant, the applicant / recipient must support their financial information and calculations with either: Compliant audited financial statements which specify R&D expenses; or Review Certificates which are authorised by an appropriately qualified Public Practicing Chartered Accountant, who is independent of the applicant but can be the applicant s or recipient s appointed auditor. Compliant audited financial statements The audited financial statements are required to be consistent with: Ministerial Direction/New Zealand Gazette, No 146 ( Ministerial ); and New Zealand Equivalent to International Account Standard 38 ( NZ IAS 38 ), excluding differential reporting exemptions. Review certificate A review certificate is required when an applicant or recipient provides: Unaudited financial statements; or Audited financial statements that do not comply with the full provisions of NZ IAS 38 or do not separately identify R&D costs. A review certificate may also be required when adjustments are made to the audited R&D costs figure in the financial statements to determine eligible R&D expenditure. These adjustments may be necessary as a result of: Payments made to a company outside the Group that undertakes R&D on its behalf; The applicant or recipient undertaking R&D outside of New Zealand; or Other adjustments necessary in respect of general or specific exclusions in the Ministerial Direction. The review must be undertaken in accordance with the Review Engagement Standards issued in New Zealand by the External Reporting Board, specifically, either ISRE (NZ) 2400 where the assurance practitioner is not the auditor of the entity or NZ SRE 2410 where the assurance practitioner is the auditor of the entity. Examples of review certificates are set out in Section 7 Table 1 Application Schedule: Research and Development Intensity and Research and Development Expenditure $000 FY1 FY2 Operating revenue [0,000] [0,000] Eligible research and development expenditure [0,000] [0,000] RDI% [0.0%] [0.0%] $000 FY1 FY2 R&D Expenditure [0,000] [0,000] Less General Exclusions [0,000] [0,000] Less Specific Exclusions [0,000] [0,000] Eligible R&D Expenditure [0,000] [0,000] $000 FY1 FY2 R&D spend capitalised as an intangible asset [0,000] [0,000] R&D undertaken outside of New Zealand [0,000] [0,000] [Other Detail] General Exclusions [0,000] [0,000] $000 FY1 FY2 Page 14

15 [Detail] [0,000] [0,000] [Detail] [0,000] [0,000] Specific Exclusions [0,000] [0,000] [To continue to be eligible for Growth Grant, a recipient must continue to exceed: the defined RDI threshold ratio of 1.5%; and demonstrate eligible R&D Expenditure of $300,000] Accounting policies: [Please include policies here which are required to be consistent with the definition in these guidelines. The accounting policy is required to be sufficiently detailed to enable Callaghan Innovation to understand the key judgements and assumptions made in determining the eligible R&D and Operating revenue balances] Table 2 Operating Revenue Research and Development Expenses Annual Schedule: Research and Development Intensity and Research and Development Expenditure $000 Period or Year Operating revenue [0,000] Eligible research and development expenditure [0,000] RDI% [0.0%] $000 Total R&D Expenditure [0,000] Less General Exclusions [0,000] Less Special Exclusions [0,000] Eligible R&D Expenditure [0,000] $000 Total R&D spend capitalised as an intangible asset [0,000] R&D undertaken outside of New Zealand [0,000] [Other Detail] General Exclusions [0,000] $000 Total Detail] [0,000] [Detail] [0,000] Special Exclusions [0,000] [To continue to be eligible for Growth Grant, a recipient must continue to exceed: the defined RDI threshold ratio of 1.5%; and eligible R&D Expenditure of $300,000.] Accounting policies: [Please include policies here which are required to be consistent with the definition in these guidelines. The accounting policy is required to be sufficiently detailed to enable Callaghan Innovation to understand the key judgements and assumptions made in determining the eligible R&D and Operating revenue balances] Page 15

16 7. Review Certificate Template An example of an application and / or annual review certificate required to be provided by a registered practicing charted accountant is set out below. REVIEW REPORT TO THE DIRECTORS OF [XXX] LIMITED We have reviewed the Research and Development Intensity and Research and Development Expenditure Schedule (the Schedule ) for [XXX] Limited (the Company ) and its subsidiaries (the Group ) which outline the operating revenue and research and development expenditure of the Group for the year/s ended [date/s]. The information presented on page X of the Schedule is stated in accordance with the accounting policies set out on page X of the Schedule. This report has been prepared solely for your exclusive use and solely for the purpose of assisting you with your grant application. We understand that this report has been requested by you solely for this purpose. We agree that a copy of this report may be provided to Callaghan Innovation for their information in connection with this purpose but, we do not accept any duty, liability or responsibility to Callaghan Innovation in relation to this report. This report is not to be used for any other purpose, recited or referred to in any document, copied or made available (in whole or in part) to any other person without our prior written consent. We accept or assume no duty, responsibility or liability to any party, other than you, in connection with this report, including without limitation, liability for negligence. Board of Directors Responsibilities The Board of Directors are responsible for the preparation of the Schedule in accordance with the accounting policies as set out on page X of the Schedule for the year/s ended [date/s] and for such internal control as the Board of Directors determine is necessary to enable the preparation and fair presentation the Schedule that is free from material misstatement, whether due to fraud or error. Our Responsibilities [Alternative 1 where the assurance practitioner is not the auditor of the Company] Our responsibility is to express a conclusion on the Schedule based on our review. We conducted our review in accordance with ISRE (NZ) 2400 Review of Historical Financial Statements Performed by an Assurance Practitioner who is not the Auditor of the Entity (ISRE (NZ) 2400). ISRE (NZ) 2400 requires us to conclude whether anything has come to our attention that causes us to believe that the Schedule is not prepared, in all material respects, in accordance with the accounting policies as set out on page X of the Schedule. ISRE (NZ) 2400 also requires us to comply with relevant ethical requirements. A review of the Schedule in accordance with ISRE (NZ) 2400 is a limited assurance engagement. The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on the Schedule. Other than the provision of [detail other services provided] services, we have no relationship with or interests in the Company or its subsidiaries. [Alternative 2 where the auditor of the Company performs the review] Our responsibility is to express a conclusion on the Schedule based on our review. We conducted our review in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the Schedule is not prepared, in all material respects, in accordance with the accounting policies as set out on page X of the Schedule. As the auditor of the Company, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial statements. A review of the Schedule in accordance with NZ SRE 2410 is a limited assurance engagement. The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. Page 16

17 The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on the Schedule. Other than the provision of [detail other services provided] services, we have no relationship with or interests in the Company or its subsidiaries. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the Schedule does not present fairly, in all material respects, the operating revenue and research and development expenditure of the Group for the year/s ended [date/s] in accordance with the accounting policies as set out on page X of the Schedule. [date] CHARTERED ACCOUNTANTS [REGION] Page 17