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The financial performance of WelTec’s subsidiary WelTec Connect Limited did not meet budgeted levels. Substantial progress was made in 2012 particularly inthe second half of the year on pipeline research revenue growth and revenue diversification. These developments position WelTec Connect for higher revenuegeneration in 2013 and beyond.WelTec in collaboration with Whitireia Community Polytechnic acquired Computer Power Plus during 2012. Given the transitionary nature of this operation it waspleasing to see a positive contribution being generated in 2012. This helped offset the unfavourable variance to budget experienced by the Le Cordon Bleu NewZealand Institute Limited Partnership. This variance was generated due to a different accounting treatment being used within the budget for lease incentivescompared to what has been recognised in the actual results for 2012.Balance sheetWelTec Group’s Current assets have finished 2012 $3.4m favourable to budget. This is principally due to higher cash holdings allowing the group to invest interm deposits ($3.5m). Trade and other receivables have finished the year behind budget reflecting a change in the student enrolment process for 2013 deliverywith a 8 February enrolment due date being implemented. Inventory in 2012 reflects Hospitality finished goods on hand whereas the budget provided for partlyconstructed houses to be treated as Work in Progress. All relocatable houses constructed or under construction in 2012 were sold in 2012.Current liabilities have finished 2012 unfavourable to budget principally within Income in Advance. This reflects the lower volume of 2013 invoicing that wascompleted before 31 December than was budgeted.Statement of cash flowsWelTec Group’s final cash holdings for 2012 are a favourable $0.6m to budget. Of this variance the Group’s Operating activities new cashflow was $1.4munfavourable to budget. This reflects the negative cash impact of WelTec’s support of WelTec Connect and the Computer Power Plus joint venture. Thisunfavourable operating cashflow variance was offset by a $2.0m favourable Investing cashflow variance to budget. This reflects (as was the case in 2011) lowercampus development expenditure with Petone campus developments limited to seismic strengthening work in 2012. The new Regent Centre (Hospitality School)development in Cuba Street, Wellington was completed during the year with WelTec starting delivery from these new-state-of-the-art premises in October 2012.27 STUDENT SERVICES FEE SUMMARYIn 2011 an amendment to the Education Act waspassed that provided a framework for how compulsoryfees for student services were to be administeredin 2012 and beyond. The following statementof income and expenditure reflects the activityWelTec in consultation and partnership with studentrepresentatives has completed in 2012. Given 2012 wasthe first year of operating in this manner no comparativeinformation is available.2012 Actual$0002012 Budget$000Income 405 555ExpensesGROUP AND PARENTAdvocacy and legal advice 29 60Careers information 2 20Counselling services & pastoral care 293 330Employment information - 5Financial support and advice 64 65Health services - 15Media 1 35Clubs and societies 3 8Sports, recreation & cultural activities 13 17405 555Trading contribution - -28 TE WHARE AKO FINANCIAL SUMMARYTe Whare Ako is a Business Unit within WelTec providingearly childhood education services. WelTec holds aseparate licence from the Ministry of Education for theprovision of these services. This financial summary doesnot reflect occupancy costs or depreciation on buildingsand equipment used by the unit.Income2012 Actual$0002012 Budget$0002011 Actual$000Government grants 454 351 455ISS subsidy 91 79 93Childcare fees 90 80 93Other fees 1 - 1ExpensesGROUP AND PARENT636 510 642Employee benefits 492 492 503Other direct costs 22 33 22514 525 525Trading contribution 122 (15) 1172012 ANNUAL REPORT | 77