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Notes to the Financial StatementsGROUPPARENT2012 Actual$0002012 Budget$0002011 Actual$0002012 Actual$0002012 Budget$0002011 Actual$000Cash and cash equivalents:Operating Funds 8,711 1,716 722 8,495 1,681 689Designated Funds:Campus Development - 6,355 15,492 - 6,355 15,4928,711 8,071 16,214 8,495 8,036 16,181(b) Reconciliation of profit for the period to net cash flows from operating activities(Loss)Profit for the period (315) 299 2,765 780 926 3,192Add/(less) non-cash items:Depreciation and amortisation of non currentassets5,065 5,485 5,248 5,063 5,485 5,248Doubtful debts (write-back)/expense (241) - 454 (243) - 454Bad debts expense 5 - - 5 - -Loss on sale or disposal of non current assets 46 151 1 51 151 1Loss/(gain) on revaluation of non current assets 104 - (262) 104 - (262)Rent holiday expense 236 - - 236 - -Gain on provision write-back - - - - - (985)Share of associate loss 692 777 312 - - -Add/(less) movements in working capital items:Decrease/(increase) in receivables 49 110 (661) 1,744 (223) (791)Decrease/(increase) in inventories 289 215 (274) 289 215 (274)Decrease/(increase) in prepayments 4 12 4 4 12 4(Decrease)/increase in payables (101) (366) (711) (886) 128 (660)Increase/(decrease) in employee entitlements 332 58 158 335 45 101(Decrease)/increase in income in advance (532) 241 (192) (532) 241 (215)Net cash from operating activities 5,633 6,982 6,842 6,950 6,980 5,81326 EXPLANATION OF MAJOR VARIANCES AGAINST BUDGETStatement of comprehensive incomeThe WelTec Parent operating profit of $1.6m was a favourable variance to budget of $0.1m - a satisfying result given the testing tertiary educationenvironment during 2012. Key variances to budget are discussed below:• Government funding and Tuition Funding $1.3m unfavourable - WelTec delivered 100% of its “core” Investment Plan SAC funded EFTS in 2012 whichcontinued the trend of strong demand for WelTec’s programmes experienced in 2011. The budget for 2012 included growth targets for the School ofHospitality (as it assumed the new Regent Centre building in Cuba Street, Wellington would be available for Trimester 2) and the School of Construction(increased demand for trades training following the “Skills for Canterbury” funding initiative following the Christchurch earthquakes in 2011).Unfortunately the School of Hospitality did not achieve its targets with a number of students waiting until the programmes transitioned to Wellington inOctober 2012. Similarly while the School of Construction made significant progress in delivering additional trades training (133 additionalEFTS delivered over and above our 2011 baseline figure) the full year budget was not achieved, owing in no small measure to timing uncertainties ofthe Christchurch rebuild.• Other Income $1.1m favourable – this variance is principally the result of favourable interest income generated on higher than budgeted cashholdings. This variance was supplemented by unplanned SSC Employer Kiwisaver contribution reimbursements received up to 30 June, unplannedfacilities revenue streams generated during the year and Te Whare Ako generating similar income to 2011 (please refer to note 28).• Depreciation & Amortisation $0.4m favourable – generated through lower than budgeted spend on campus development and IT infrastructurereplacement in 2012.• Non Operating Items $0.3m unfavourable – This unfavourable variance was generated by incurring unplanned restructuring costs and a loss onthe revaluation of assets. Offsetting this unbudgeted expenditure were favourable variances within Students First projects and campusdevelopment - we did not progress with re-developing the main Petone campus in 2012 when a fit-out loss on disposal was budgeted.76 | WELLINGTON INSTITUTE OF TECHNOLOGY