Annual Report 2009 (PDF 2 MB) - Wellington Institute of Technology

New Strategic Alliance with Metro GroupCapital Intensive Trade TrainingIn mid 2009 we participated in the creation of a new strategicalliance with five other ITPs to form the Metro Group. The grouphad a combined turnover of $462m in 2008 representing 49% ofthe total turnover for the 20 ITPs in New Zealand. The focus of thegroup is on working together to deliver common qualifications,rationalise the number of qualifications offered, and achieveeconomies of scale through shared services.The testing of the collaborative waters was done through theBachelor of Engineering Technology, a degree programmethat was jointly developed by the Metro Group, with the first yearof students starting in 2010. Joining the group was a major andpositive move for us, and it will enable WelTec to act quickly withlike minded ITPs. The Metro Group continues to look aggressivelyfor opportunities to grow both domestic and international incomethrough collaboration.WelTec is one of the largest ITPs delivering trade training in NewZealand. We opened our newest trades facility in May. In thefirst stage of a major redevelopment to consolidate trade trainingat the Petone Campus, we invested close to one million dollarsin a state-of-the-art new plumbing and gasfitting workshopdesigned by Opus Architects and supported by local industryand the Plumbing, Gasfitting, Drainlaying & Roofing (ITO). Theinvestment demonstrates WelTec’s continuing commitmentto being the major provider of trades and technology trainingthroughout the greater Wellington region.In September, WelTec was confirmed as the base for the newlyestablished Wellington Regional Trades Academy, one of fiveto be opened in 2011 throughout New Zealand. Designed toensure the engagement of young New Zealanders in education,the scheme focuses on delivering trade and technologyprogrammes in partnership with secondary schools, tertiaryinstitutions, ITOs and employers.CHAIRPERSON’S REPORTWelTec engineering graduate, Tristan Thomas in the mechatronics production and automation laboratory.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT05

CHAIRPERSON’S REPORTThe Trades Academy will allow students to choose from a rangeof subject areas such as Construction Trades, Technology,Engineering, Automotive, Business Retail Services, Hairdressing/Makeup, and Hospitality/Culinary Arts.An expected reduction of some $2.4m in Government fundingfor capital intensive trade training will take effect from 2011 andthis is a major strategic risk for WelTec. Our Chief Executive, DrLinda Sissons, has established a management team to reviewour options – these include growing revenue domestically andinternationally, more intensive and extensive collaboration andrebalancing our programme portfolio with a strong focus ondelivery methods.Flexible Programme DeliveryIn 2009, WelTec achieved an efficiency target whereby 10% of our160 programmes offer students more than one way of accessingtheir learning material. We intend to have 50% of programmesflexibly delivered in 2010. The delivery modes are on site, on lineand at the workplace. Flexible delivery is important educationallyby ensuring the student is effectively connected via the moststrategic delivery modes relevant to the nature of the programmeand the needs of the student.Campus DevelopmentThe Buildings and Finance Committees provided very goodsupport to campus development. Four major projects werebudgeted for 2009 and two projects were delayed by unavoidableplanning issues.The first project, involving the purchase in April of the previouslyleased N Block at Petone for $5.8m, marked the first step inthe consolidation of all trades training on one site. The secondproject involving the planned extension of N Block was held upby consent issues around car parking and work is continuing onnew initiatives to resolve these issues. The third project – theopening of a new plumbing and gasfitting workshop in May isnoted above.Substantial resources and time were committed to planningthe fourth project involving the development of a three way jointventure business in Wellington City with a New Zealand partnerand an international partner. Work on this project, which hascomplex interdependencies, is continuing.Late in the year, the Government announced their asset disposalpolicy, which will enable tertiary education providers to recover atleast 80% of the proceeds from asset sales. This is a very welcomemove and will now enable WelTec to include in our planning thereceipt of sale proceeds from the disposal of three redundant sitesonce all trade training is consolidated on the Petone site.International BusinessThe challenging economic environment meant our internationalenrolments were below the targeted level. Despite this, WelTecenrolled over 430 students (330 EFTS) from over 35 differentcountries. We have commenced work on a strategic review ofour approach to capitalising on the international market.GovernanceThe Council increased its focus on the management of riskfollowing a presentation early in the year by a senior director ofa major New Zealand public company. The International RiskManagement Standard (ISO31000:2009) was used, with externalexpertise, to update existing policies and practices that provide aframework for documenting, assessing, mitigating and monitoringstrategic and operational risks.These changes have led to an improved understanding of riskand risk management by Council and senior management andalso improved reporting. The Council is continuing to refinethe new approach and early in 2010 will formally assess anddocument its risk appetite and communicate this to management.The Council approved amendments to the terms of reference ofthe Chief Executive’s (CE) Review Committee. The amendmentswere based on best practice and input from the State ServicesCommission which approves the CE’s employment conditionsand annual remuneration recommended by the Council.Images from left to right:WelTec Visiting Internship Programme engineering students: Elizabeth Davis (Oregon State University) and Makenna Coe-Smith (Seattle University);Students enjoying activities during WelTec Orientation Week;WelTec international students perform a traditional dance during ‘International Week’ at the Student Hub, Petone Campus06WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

In August, the Government introduced the Education(Polytechnics) Amendment Bill into Parliament. Key features ofthe Bill were a reduction in the size of councils to eight membersand changes in council composition. The Minister for TertiaryEducation stated the objectives of the Bill were to: improve the governance capability and effectiveness ofpolytechnic councils; and allow the Crown to more effectively respond to risks posed bypolytechnics with educational or financial performance risks.In September, the Council formed a Governance EstablishmentCommittee of three councillors and the CE to oversee and ensurean effective transition by the Council to the new governancestructure.In October, along with other polytechnics, we made written andoral submissions on the Bill to the Education and Science SelectCommittee. We supported the need for improved governanceand a reduction in council size. The Committee recommendedsome changes to the Bill and the resulting Education(Polytechnics) Amendment Act 2009 was passed into law in midDecember. The Act provides for four council members to beappointed by the Minister and four members to be appointed bythe council.Councillors’ fees were last reviewed by the Government inNovember 2006. The fees, when benchmarked againstcomparable organisations, are inadequate to attract and retainthe skills required to do the business. The opportunity cost ofbeing a councillor often leads to suitable candidates not beingavailable and there is increasing difficulty in getting appropriatepeople who are able to devote the necessary time to the role.An appropriate fees level is an important factor in contributing toimproved governance. The Council has voluntarily capped itsfees in 2008 and 2009 at below permissible levels. The $75K feespaid in 2009 for the 14 member Council, represents 0.15% of totalincome.Work with governmentThroughout 2009, WelTec worked proactively with the Ministryof Education, the Minister for Tertiary Education and the TECto comment on the implications of and solutions for proposedchanges to funding and policy. We also engaged withthese Government representatives in regard to our campusdevelopment plans in Wellington City.AcknowledgementsI wish to thank my Council colleagues for their professionalsupport during yet another demanding year. Despite theuncertainties arising from the pending governance changes tothe composition of polytechnic councils, our members remainedfocused on the job in hand.Our Chief Executive, Dr Linda Sissons, demonstrated a very highlevel of leadership and commitment which has been reflectedin WelTec’s excellent performance in 2009. Linda’s abilitiesare also reflected in her election as the first chair of the MetroGroup. I have supported Linda taking up director-level positionsin both New Zealand and overseas and this has enhanced thevery material contribution she makes to WelTec and the widereducation community.WelTec staff worked with dedication and good teamwork tomeet the challenges in 2009, following significant organisationalchanges at the end of 2008.OutlookThe new Tertiary Education Strategy (TES) 2010-2015, releasedin December, outlines the Government’s strategy and prioritiesfor the next three yearly investment cycle starting in 2011. Thetertiary education system will play a key role in ensuring NewZealand has the skills it needs to improve economic performanceand support more sustainable growth in the future. WelTec’sresponse to the TES will be a major focus of work in 2010.The Education (Polytechnics) Amendment Act 2009 cameinto effect on 1 March 2010 and the reconstituted ITP councilstake office from 1 May 2010. I am sure the Act will significantlyimprove governance and, in turn, performance across the sectorand also bring new skills to the reconstituted councils to meet arapidly changing domestic and international environment.Our overall objective is to develop an institution that performs toa very high level both educationally and financially, is sustainableover the long term, thereby meeting the high expectations of theGovernment shareholder and all our stakeholders, particularly ourstudents.I am confident of WelTec’s capability to meet future challengesand take advantage of the opportunities.CHAIRPERSON’S REPORTPeter PrestonBE Civil (Cant.) FIPENZ, F Inst. DWelTec Council ChairpersonWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT07

CHIEF EXECUTIVE’S REPORTWelTec has had a successful year in 2009, both financially andeducationally. One theme that comes across strongly from theyear’s performance is collaboration, both with business and withother education providers.At WelTec, a strong focus on industry collaboration is a wayby which we create courses better targeted to the needs ofemployers.Our achievements through a tough year are many, but what weare most proud of is the contribution we have made to business.As we are beginning to see, growth through recession wasreserved for the small percentage of organisations that thought ofinnovative ways to utilise their resources.Chief Executive’sReportA ground-breaking new degree, the Bachelor of EngineeringTechnology, is the product of collaboration between WelTec, theInstitute of Professional Engineers New Zealand and five otherNew Zealand Polytechnics: Wintec, Unitec, Manukau Institute ofTechnology, Christchurch Polytechnic Institute of Technology, andOtago Polytechnic.The structure of the degree plays to the strength of individualinstitutions in the civil, mechanical, and electrical majors andsub majors, rather than every polytechnic replicating every majorwithin their own institution. This new qualification forms the basisfor a career as an Engineering Technologist – an area in demandacross the country and around the world.Industry directed projects numbered 59 in 2009, up from 34 onlya year earlier.WELTEC 2009 AT A GLANCE:Net surplus $3.7m against budget of $1.5mGovernment loan convertedInternational EFTS same as 2008, but a $700K increase in international fee revenueOperating cost/EFTS down $600 on last yearAll key financial ratios for WelTec improved46.5% students enrolled in advanced trade/technical/professional qualifications72% (vs. 71%) now in Levels 4-71216 EFTS were under 25 and enrolled in Level 4 and up (vs. 1003 in 2008)Industry directed projects went from 34 (2008) to 5908WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

STUDENT SUCCESSThe Tertiary Education Commission (TEC) introduced a newfocus on successful course completions and qualifications, andparticularly focussed on young students studying at higher levels.We were pleased to record strong improvements in thesecategories from 2008 – 2009. The smallest improvement was alift of five percentage points in qualification completion rates forLevel 4 and above qualifications; the largest a lift of 19 percentagepoints in successful qualification completions at Level 4 andabove for young people under 25.We were able to raise the percentage of successful completionsfor our most at risk student groups (those with no formalsecondary qualifications, Pasifika, Maori) by between 6 and 9percentage points over the 2008 year.The trend to providing more opportunities at levels 4-7 on theNational Qualifications Framework continued, with 72% of allstudents enrolled in programmes at those levels.In 2009 WelTec achieved 4465 Equivalent Full Time Students(EFTS) and focused on building staff capability through astructured professional development programme. Excellentfinancial management and strong controls on expenditure wererewarded by a “Low” risk rating issued by the Tertiary EducationCommission, and culminated in the conversion to equity of thefinal Crown loan tranche. These are both significant achievementsfor WelTec.Return on investment/assets (net surplus/total assets) was 4.8%with a net surplus of $3.7m (representing 7.6% of total revenue).Our operating expenses per EFTS fell as we had strong controlson expenditure in place. Other efficiencies included improvingour academic staff to EFTS ratio.All key performance targets articulated in the SustainabilityBusiness Case were met. These financial disciplines havebecome part of our approach to business as usual.To facilitate containing personnel costs, Human Resourcesfocused on improving management reports on: personnel costs;staff leave liability; and FTE numbers. This greatly assistedmanagers in the overall result of personnel costs being kept withinbudget and accurate recording of staff leave.Through sound financial management in 2009 we haveestablished a strong platform on which we can build to targetimproved performance in key areas such as student completions,achieving a greater share of the international market by buildingour graduate diploma market particularly for internationalstudents, and building capability within our organisation.2009 was the kind of year that for many organisations, threwup more questions than answers. But through it all WelTec hasthrived.This is true testament to the dedication of the Council,management, staff and students at WelTec who are focused onproducing graduates who will participate in the transformation ofNew Zealand to a knowledge-based economy.Thank you all for thinking outside the box.Dr Linda SissonsChief ExecutiveWelTecCHIEF EXECUTIVE’S REPORTRichard Taylor, Oscar winner and co-creator of enterprising New Zealanddigital-effects company WETA, spoke of opportunity and innovationwhen he was presented with a WelTec Honorary Bachelor of CreativeTechnologies at the 2009 graduation ceremony.Taylor is a man symbolic of the successes of cutting-edge technologyand forward thinking. With regard to the route WelTec is taking, his wordsseemed particularly apt.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT11

ResponsibilitiesRESPONSIBILITIESIn the financial year ended 31 December 2009, the Council and management of Wellington Institute ofTechnology were responsible for: and the judgments used therein. reasonable assurance, as to the integrity and reliability of financial reporting.In the opinion of Council and management of Wellington Institute of Technology, the financial statements andstatement of service performance for the year ended 31 December 2009 fairly reflect the financial positionand operations of Wellington Institute of Technology.P PRESTONCHAIRPERSON7 APRIL 2010L SISSONS (DR)CHIEF EXECUTIVE7 APRIL 201012WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Advisory Committees 2009ADVISORY COMMITTEES 2009ALCOHOL & DRUGClarissa Broderick, Community Alcohol & Drug Service (CADS), CCDHBMary Anne Cooke, ABACUS Counselling, Training & Supervision LtdJulie Crosland, ABACUS Counselling, Training & Supervision LtdColleen Flux-Hollings, Hine-titama Alcohol & Drug ServiceTim Harding, Care NZ (Chair)Major Don Hutson, Salvation Army BridgeJanette Katene, Rangataua MaurioraLynette Knox, Care NZChristine McCarrison, Hine-titama Alcohol & Drug ServiceIan McEwan, DAPAANZDenise Nassenstein, Community Alcohol & Drug Service (CADS)Murray Trenberth, WellTrustJude West, Problem Gambling Foundation of New ZealandAUTOMOTIVE TECHNOLOGYMichael Alsford, NZ Motor Industry Training OrganisationWendy ArnoldNeil Butterfield, Porirua Autocrash RepairsRichard Eyles, (Chair)Steve Gaskin, Rolrich Panel & Spray 1988 LtdBridie Hewison, Lees Auto Bodies (2007) LtdJames Hill, NZ Motor Industry Training OrganisationRob Gibbs, AJ Auto Electric CentreHus Kala, Hutt City Auto ElectricalDean McMillian, D E McMillan LtdKeith Millar, NZ Army Trade Training SchoolGeorge RobinsonRoss Wallace, Cable Price (NZ) LtdOwen Woodman, Woodman AutomotiveBUSINESSLeo Austin, Austin Associates LtdNeville Baker, Te Runanganui o Taranaki whanui ki Te Upokoo te ika a MauiDiana Garrett, NZIMCharles Gilmore, IndeServe Ltd (Chair)Robyn Horton, McDonalds’ Family RestaurantScott Horton, McDonalds’ Family RestaurantKara Puketapu, Te Runanganui o Taranaki whanui ki Te Upokoo te ika a MauiTeri Puketapu, Te Runanganui o Taranaki whanui ki Te Upokoo te ika a MauiCARPENTRYScott Feasey, Scotty’s Construction (Chair)Jim Juno, Juno CivilMike King, Naylor LoveBrian Ludlow, Ludlow BuildersPeter McGuinness, LT McGuinness LtdDave O’Donovan, Mainzeal ConstructionGraeme Paton, Building & Construction ITOBill Peryer, Peryer Construction LtdRay Watkins, Ray Watkins Building Contractors LtdPhil Wootten, Maycroft ConstructionCOMMUNITY SUPPORT SERVICES AND CVLSRachael Cronin, Age ConcernMonika Divis, Spectrum CareLinda Fisher, Emerge Supported Employment TrustRosanne Johnson, Te Korowai-Whariki/CCDHB (Chair)Jo Mason, Community ConnectionsMark Pearce, CareerforceMaurice Priestley, Inclusion/Disability CCDHBVicki Wall, Dawn TrustCOUNSELLING & TRAUMA STUDIESBice Awan, Mental Health CommissionerHelen Bowbyes, Wellington Girls CollegeJane Brook, Professional Development and TrainingMari Cribb, Naenae CollegeKate Frater, Welfare Services Wellness and SafetyPeter Head, Wellness and SafetyJane Henson, CounsellorDr Chris Lane, Medical DirectorSally Latham, CounsellorJudy McCormack, The Counselling GroupLuana Murray, Relationship ServicesWhakawhanaungatangaGae Neil, YouthlineJenny Packard, Counsellor, Psychotherapist, SupervisorMatewawa Pouwhare, Mana CollegeGay Puketapu-Andrews, Counsellor/SupervisorDavid Waters14WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

CREATIVE TECHNOLOGIESRosamond Connelly, Hutt City CouncilTe Taite Cooper, Victoria UniversitySimon Croft, Wainuiomata High SchoolChris Doherty-McGregor, Expressions Art & Entertainment CentrePaul Feenstra, Paul Feenstra & AssociatesLaurence Greig, Grow Wellington (Chair)Jan Kruse, Sauce Post LtdGareth McGhie, Weta WorkshopEXERCISE SCIENCESue Fitzmaurice, SFRITO/Skills ActiveTracy Heron, Lifestyle GymBarry Hislop, Sport WellingtonDavid Lomax, Te Runanganui o Taranaki whanui ki Te Upokoo te ika a MauiBen Montague, Lifestyle GymRodney Moore, Wellington Rugby LeagueMark O’Connor, Swim NZTony Roddan, SFRITO/Skills ActiveSandro Roth, Nordic AcademyMike Ryan, Great Wellington YMCA (Chair)Gerry Salmon, Les Mills GymFUNERAL SERVICESStephen Dil, Dil’s Funeral Services LtdTony Garing, John Rhind Funeral DirectorsDr Mike Marfell-Jones, Funeral Services Training Trust (Chair)Anne McGuireSimon Manning, Harbour City Funeral HomeJohn Peryer, Tong & Peryer (2007) LtdJohn Schipper, Davis Funeral Services LtdHOSPITALITYMark Angus, Bolton HotelRachel Burt, City Life Wellington-A Heritage HotelJoanne Craughwell, Accor HospitalityAnthony Dey, Brentwood HotelMike Egan, Monsoon PoonFrancois Fèbvre, La ClocheGregory Keating, Duxton Hotel (Chair)Harsh Khanna, Quest on The TerraceHina Luke, Waiwhetu MaraeDavid Marr, Hospitality Standards InstituteAdrian Mattinson, Clubs Consultancy LtdJenna McIntyre-Royal, James Cook Hotel-Grand ChancellorGeorgina Noon, Holiday Inn WellingtonJohn Pepper, Lower Hutt City CouncilTracy Scott, HANZ (Southern North Island Region)Andrew Smith, James Cook Hotel-Grand ChancellorSonia Tiatia, Hospitality Standards InstituteHeather Todd, Mercure HotelEddie Wairau, Petone Working Men’s ClubCENTRE FOR SMART PRODUCTPeter Steel, Ontrack (Chair)Graeme Carroll, Global Reach AssociatesGeoff Todd, Trinity Bioactives LtdINFORMATION TECHNOLOGYLester Abbey, Abbey SystemsMary Campbell-Cree, MCC People Ltd (Chair)Mark Carroll, ConsultantRussell Kean, Opus Central LaboratoriesDr Donald KohAlisdair McKenzie, IS Assurance ServicesStu McKinlay, Inland RevenueBrian Rowe, KPMGDr Elozor Shneider, The Open Polytechnic of NZMECHANICAL TRADESMark Fifield, Agmar Tools 2000 Ltd (Chair)Malcolm Hammond, M J H EngineeringStewart Homan, F V Evans & SonsPaul Jessup, Metco Engineering 2002 LtdJason Lockley, United Group Rail, Hutt Valley WorkshopJames McLennan, J & D McLennan Ltd / Airport EquipmentDaryl Peters, A E Tilley LtdNathan Reynolds, Contherm Scientific LtdMartin Simpson, Fraser Engineering GroupPASIFIKATupu Araiti, Cook Islands RepresentativeVei Lotaki, Tongan RepresentativeFilipo Lui, Tokelauan RepresentativeKerese Manueli, Fijian RepresentativeAiono Mino Cleverley, Samoan RepresentativePLUMBINGMalcolm Andrew, Duncan McGregor LtdCraig Cochrane, Plumbing, Gasfitting, Drainlaying & Roofing ITOIan Elliott, Plumbing, Gasfitting, Drainlaying & Roofing ITOFiona Gavriel, Master Plumbers LtdJohn Leen, John Leen Plumbing Ltd (Chair)Sue McGarry, Plumbing, Gasfitting, Drainlaying & Roofing ITODerek Plimmer, Plimmer Plumbing LtdBrent Slobbe, Masterlink LtdRoss Tait, K J Tait LtdColleen Upton, Hutt Gas & Plumbing Systems LtdDave Walker, Aquaheat Industries LtdStewart Weddell, Plumber 1REGIONAL TRADE TRAININGJohn Bush, Wairarapa Workforce Development Trust (Chair)Ron Daly, Hutt City CouncilRichard EylesLyn House, Hutt Valley High SchoolLeighton Karawana, Te Puni KorkiriPrue Kelly, Wellington High SchoolLorraine Levens, Ministry of Social DevelopmentAnania Randall, Wainuiomata Training CentreMartin Sterling, He Toa SportRobbie Sutherland, The Open Polytechnic of NZ LtdNeville Wagstaff, Stones ElectricalStephen Wickens, Whitireia Community PolytechnicJosh Williams, Industry Training FederationHata Wilson, Te Puni KorkiriADVISORY COMMITEES 2009WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT15

STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEStatement of Objectivesand Service PerformanceCONTENTSStrategic Goal 1Strategic Goal 2Strategic Goal 3Strategic Goal 4Strategic Goal 5Strategic Goal 6Excellence in the Provision of Vocational EducationCollaboration and PartnershipResearch, Innovation and Evidence-based TechnologyDevelopment and TransferMaori DevelopmentSupporting Pacific Peoples DevelopmentInstitutional Sustainability and Capability Development16WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

KEY STRATEGIES AND OBJECTIVESStrategic Goal One – Excellence in the Provision of Vocational EducationCentres of ExcellencePLANNED ACTIONOrganise and run 3 significant events or activities that enhancethe perception of Wellington Institute of Technology as anorganisation of vocational excellence.Measures: Centres of ExcellenceACHIEVEMENTAchieved.Significant events in 2009 included: The opening of the new plumbing workshop in May Hosting the national hair and beauty conference in October Organising and hosting a 2 day Innovation and Technology Expoin SeptemberPerformance Targets 2008 Actual 2009 AchievementsCentre of Excellence (CoE)endorsement achieved.Centre of Excellenceendorsement was achievedfor Hospitality.A new Self Assessment and External Evaluation and Review (SAEER)process that included Centre of Excellence concepts was introducedacross the whole organisation.STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCE1.1 Programme and Qualification PortfolioPLANNED ACTIONAnnually review programme portfolioACHIEVEMENTAchievedThe annual portfolio review was completed.Plan withdrawal from programmes that are not strategic and/ordo not make a financial contributionDevelop programmes as approved in the three-year portfoliodevelopment planAchievedThe annual review of our programme portfolio resulted in fourprogrammes being formally withdrawn from the portfolio during 2009.AchievedFollowing the annual portfolio review, the rolling three year ProgrammeDevelopment plan was updated. A new three-year programmeportfolio was approved by Council for the period 2010 – 2012.Redevelop programmes, where possible to ensure they arecustomised interdisciplinary programmes that: Enable clear staircasing and pathway opportunities Contribute to an integrated WelTec approach Support the development of “new professionals”New programmes added to the portfolio plan included: Graduate Diploma In Event Management Bachelor of Engineering Technology National Degrees in Social Work and Youth Work National Certificate in Community Support (Core Competencies)Fifteen programmes were redeveloped.Ensure all local qualifications are developed with input fromindustry and are endorsed by industryStakeholder consultation is an integral component of programmedevelopment documentation considered by Academic Board duringprogramme approval process.Review current portfolio to maximise opportunities to embednational qualifications within existing qualificationsAchievedThe inclusion of national qualifications in programmes in the portfoliowas considered in the annual portfolio review. Academic Boardrequires National Qualifications to be offered as priority.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT17

STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEPerformance Targets 2008 Actual 2009 Target 2009 AchievementsProportion of portfolio being ofhigh strategic relevanceMaintain General AcademicAudit100% - Portfolio analysisoutcomeQuality Assured StatusmaintainedMeasures of performance against TES Priorities 1100%Quality Assured StatusmaintainedAchievedThe portfolio review indicated allprogrammes offered werestrategically relevantAchievedPerformance Targets 2008 Actual 2009 AchievementsIncrease the proportion of EFTS for students enrolled inadvanced trade, technical and professional qualificationsIncrease the proportion of EFTS for students in level 4certificates and 5 to 7 diplomas and degreesIncrease the number of EFTS for students aged under 25enrolled in qualifications at level 4 and above43% 46.5%71% 72%1003 12161.2 Learning Environments to Support Flexible DeliveryPLANNED ACTIONFurther develop workplace learning deliveryACHIEVEMENTThe focus in 2009 was the further development of flexible learningdelivery activities.A project commenced which reviewed current models of workplacedelivery to develop sustainable models of “cadetship” forimplementation in 2010.Performance Targets 2008 Actual 2009 Target 2009 AchievementStudent Satisfaction (OverallQuality).96% >80% 96%1.4 LearnersPLANNED ACTIONImplement strategies that support student retention and2success.ACHIEVEMENTDuring 2009, strategies that were implemented to support studentretention and success included: the development of the Tamaiti Whangai student support process a systematic review of entry criteria the development of a streamlined approach to support studentsto formally incorporate workplace learning into studyprogrammes. This includes mechanisms such as cadetships,internships and workplace projects. trialing a new Personal Education Plan (PEP) process thatincorporated literacy and numeracy testing an enhancement of LearnZone (WelTec's online learning space)support and offerings.1Note: these measures measure performance against the SAC portion of our business only2WelTec definitions used in this section:Retention = number of students completed or still studying ÷ number of students enrolledSuccess = number of students successfully completing course ÷ number of students retained and eligible to complete18WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

EFTSPerformance Targets2008Actual2009Target2009ActualTEC Funded 2,801 2,941 2,983ITO funded 870 843 731International 330 378 328STAR 358 305 392Other 58 35 31TOTAL 4,417 4,502 4,465Proportion of target groups in studentpopulationMaori 12.4% >10% 12.6%Pasifika 6.8% >5% 7%Women 31% >30% 34%Overall retention and success ratiosRetention 88% >70% 84%Success 77% >70% 82%Measures of performance against TES Priorities(TEC Completion Definition used in this section:Successful completion = number of students successfully completing ÷ number of students enrolled)STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEPerformance Targets 2008 Actual 2009 ActualIncrease completion rates for advanced trade, technical andprofessional qualificationsSuccessful course completion rates for level 4 certificates andlevel 5 - 7 diplomas, degrees and graduate diplomasSuccessful course completion rates for level 4 certificates andlevel 5 - 7 diplomas, degrees and graduate diplomas forstudents aged under 25Qualification-level completion rates in one EFTS and under level4 certificates and level 5 - 7 diplomas, degrees, and graduatediplomas (over a 2 year period)Qualification-level completion rates in one EFTS and under level4 and above qualifications for students aged under 25 (over a 2year period)Qualification-level completion rates for all level 4 certificates andlevel 5 - 7 diplomas, degrees and graduate diplomas (over a 5year period)Qualification-level completion rates for all level 4 and abovequalifications for students aged under 25 (over a 5 year period)71% 69%70% 69%67% 65%31% (2007 intake) 43% (2008 intake)40% (2007 intake) 55% (2008 intake)25% (2004 intake) 30% (2005 intake)30% (2004 intake) 39% (2005 intake)First year qualification-level attrition for level 4 certificates andlevel 5 - 7 diplomas, degrees and graduate diplomasResults available after 2010enrolments confirmedFirst year qualification-level attrition for level 4 and above3qualifications for students aged under 25Results available after 2010enrolments confirmed3Relates to students first year of study at WelTec onlyWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT19

STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCE1.5 Foundation SkillsPerformance Targets 2008 Actual 2009 Target 2009 AchievementsIncrease retention rate of students with no secondary schoolqualification in their first year of enrolmentIncrease completion rate of students with no secondaryqualification in their first year of enrolmentCommunity and Vocational Learning Skills86% > 86% 70%69% > 69% 75%Performance Targets 2008 Actual 2009 Target 2009 AchievementsResponsiveness to special needs studentsNumber of special needs students 15 16 15Retention rate 98% 95% 100%Success rate 98% > 98% 80%Measures of performance against TES PrioritiesPerformance Targets 2008 Actual 2009 Target 2009 AchievementsParticipation by tutors and providers in professionaldevelopment programmes supporting effective teachingpractice for lifting literacy, language and numeracy skills.25 people trained>25 peopletrained43 people trained1.6 InternationalPLANNED ACTIONACHIEVEMENTDevelop further international relationships to support our moveto internationalisationContinue to offer learning opportunities to internationalstudentsNew offshore relationships developed in 2009 included: An agreement of intent with the University of Hertfordshire (UK) Agreements of intent with two institutions in India to facilitate thearticulation of Indian students to WelTec, particularly in theareas of addictions studies, engineering and communitysupport programmes. A memorandum of agreement with Saito College, Malaysia forIT students to articulate into the second year of the Bachelor ofInformation Technology.Wellington Institute of Technology also entered into agreements withPolytechnics International New Zealand (PINZ) and Education NetworkIndonesia (ENI) to provide professional development programmes forIndonesian and Saudi Arabian teachers.During 2009, the Middle East and the Philippines were entered as newinternational markets.Wellington Institute of Technology worked closely with Grow Wellingtonand the Wellington ITPs to develop joint health programmes that helpto promote the Wellington region.A project group was established to develop targeted graduate diplomaprogrammes for international students.20WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Performance Targets 2008 Actual 2009 Target 2009 AchievementsProportion of international students 4.5% 87% 92% Success rate 85% > 83% 86%Satisfaction level of international students 98% > 98% 100%Number of international relationships developed or maintained 22 > 18 20Number of Memoranda of Understanding and bilateralagreements with overseas tertiary education institutionsStrategic Goal Two – Collaboration and Partnership2.1 Regional FacilitationPLANNED ACTIONDevelop understanding of needs of Pacifika people to supportsocial and economic development for the Wellington region18 > 18 18ACHIEVEMENTA fono was held with members of the Pacific Island community toidentify Pasifika people needs in relation to tertiary education needs,gaps and priorities. The findings of this consultation were published on4the Regional Facilitation wiki site.STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEA report containing recommendations for Wellington Institute ofTechnology implementation was considered by Academic Board forimplementation in 2010.Contribute to the development of Wellington Regional Strategy Three Regional Facilitation reports were produced during 2009: An updated Regional Facilitation Report, A reviewed Mana Whenua view of Tertiary Education Needs,Gaps and Priorities, and Regional Facilitation: Pasifika peoples viewLinda Sissons continued to chair the Wellington Regional LabourMarket Strategy Tertiary Sector working group.Measures of performance against TES PrioritiesPerformance Targets 2008 Actual 2009 Target 2009 AchievementsRegional Facilitation report updated Completed Updated An update was completed and published.Number of meetings held with stakeholders12 meetingsheld/attended6 A wiki was used during 2009 as the key consultativeprocess. In addition to the wiki process, twosignificant meetings were held with stakeholdergroups.A letter was received from the TEC in Octoberindicating that from 2010, ITPs will not be expected tolead the Regional Facilitation process or completeupdated regional statements of tertiary educationneeds, priorities and gaps.4http://wellingtoneducationneeds.wikispaces.com/2009+Regional+Facilitation+UpdateWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT21

STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCE2.2 Relationships with Industry and ITOs to Support Economic TransformationPLANNED ACTIONDevelop a workplace delivery strategy in conjunction withindustry and ITOsStrengthen our relationships with key ITOs so they are equal,respectful and long-termResearch drivers of productivity in SMEsACHIEVEMENTOur Industry Advisory Group/Committee structures were reviewed anda new model of industry engagement was developed and trialled toachieve greater strategic input into programme development anddelivery.A forum of Council and advisory committee chairs was held to improvecommunication between stakeholders and governance.ITOs were represented on relevant Advisory Committees.During 2009, the Centre for Smart Product along with teaching schoolsprovided a resource to key industries and communities of interestwithin the Wellington region as well as supporting the development ofinnovation centres and incubators. Work in this area resulted in Design and development projects undertaken in partnershipwith industry or community:- 17 major projects for industry progressed and/or completed- 30 projects for industry completed- 4 projects for the community completed Technology development and transfer projects- 2 projects completed Consultancies- 23 consultancies completed including 4 internationalconsultancies Production of commercialisable outputs- 6 outputs completedDevelop our internal structures and systems to supportproductivity developmentThe future operation of the Centre for Smart Product was determinedand new structure established. A new Advisory Board was formed andmet for first time in the fourth quarter.Institutional Measures: Industry engagementPerformance Targets 2008 Actual 2009 Target 2009 AchievementsNumber of needs assessments undertaken 15 > 15 22Number of SME Strategic Capability Development Reportscompleted0 > 0 05Number of r&d “jumpstart” projects completed 19 > 19 37Number of technology development and transfer activitiesundertaken30 > 30 312.3 Relationships with other providersPLANNED ACTIONDevelop and implement a plan of Wellington RegionalPolytechnic Federation projectsWork with Whitireia to develop Regional Facilitation roleACHIEVEMENT A project examining the shared provision of creativeprogrammes in 2 Federation members’ portfolios wasundertaken. A Certificate in Preparation for Tertiary Study (Level 3)programme was jointly developed (with Victoria University ofWellington). A Human Resource Management tool was developed by the 3members. A joint records management project was worked on by the 3members.AchievedRefer 2.1 Regional Facilitation5WelTec term to define our innovative approach with industry22WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Measures of Performance against TES PrioritiesPerformance Targets 2008 Actual 2009 Target2009AchievementsNumber of partnership relationships maintained 60 > 60 66Number of articulation agreements in place 20 > 20 22Strategic Goal Three - Research, Innovation and Evidence-based Technology Development and TransferPLANNED ACTIONPrepare the institution to enter the PBRFContinue to implement the Research PlanACHIEVEMENTFollowing self-assessment, the Research Committeerecommended that Wellington Institute of Technology enter thePBRF in 2012.The Research Plan was revised to prepare for entry into thePBRF.A research development week was planned as part of ourprofessional development month in February 2010.STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEPerformance Targets 2008 Actual 2009 Target2009AchievementsResearchNumber of refereed or esteemed peer reviewed researchoutputs (creative works and publications)Number of non-refereed/ esteemed peer reviewed researchoutputs (creative works and publications)68 69 6482 83 86Measures of Performance against TES Priorities: ResearchPerformance Targets 2008 Actual 2009 Target 2009 AchievementsNumber of joint projects with industry24 major projects19 minor projects>200817 major projects21 minor projectsStrategic Goal Four – Maori Development4.1 Supporting Maori Development StrategyPLANNED ACTIONACHIEVEMENTProvide specific mentoring and role modelling for Maori toincrease/improve completion ratesUse Rangatahi Maia funding to support 15 students to achievein trades programmesDuring 2009, a Steering Group comprising Runanga, Wellington Instituteof Technology, community and Te Puni Kkiri representatives oversawthe development of a sustainable supported education model forsupporting Maori students - Tamaiti Whangai. 39 students weresupported during 2009, and planning was completed to expand thismodel of supported education to support 60 students in 2010.Throughout 2009, targeted mentoring support, using TEC SkillEnhancement funding along with other monies from the ETITO and TePuni Kkiri, was provided for 15 Rangatahi Maia students 10 scholarship students undertaking electrical trades 12 Tamaiti Whangai Sports Academy scholarship winnersWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT23

STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEPerformance Targets 2008 Actual 2009 Target 2009 AchievementsResponsiveness to Maori students Proportion of Maori students 12.4% >10% 12.6% Proportion of satisfied Maori students 98% 96% 98% Retention rate of Maori students 80% 84% 72% Success rate of Maori students 69% 82% 78%% of staff identifying as Maori: Total staff 5.5% > 5.5% 4.7% Teaching staff 8.1% > 8.1% 6.1% Administration staff 3% > 3% 3.5%Number of Maori at Policy Level 1 > 1 1Number of active MoUs in place 3 2 2Strategic Goal Five – Supporting Pasifika Peoples Development5.1 Pacific Peoples DevelopmentPLANNED ACTIONDevelop in partnership with Pasifika people an understandingof needs to support economic and social developmentRefer 2.1 Regional FacilitationACHIEVEMENTPerformance Targets 2008 Actual 2009 Target 2009 AchievementsResponsiveness to Pasifika students Proportion of Pasifika students 6.8% >6.8% 7% Proportion satisfied Pasifika students 98% 96% 95% Retention rate of Pasifika students 85% 84% 72% Completion rate of Pasifika students 66% 82% 74%Strategic Goal Six – Institutional Sustainability and Capability Development6.1 Financial SustainabilityPLANNED ACTIONImplement the agreed Sustainability Business CaseMonitor the performance of each programme to ensurecontribution to the Institution is maintainedACHIEVEMENTThe Sustainability Business Case implementation was successfullycompleted and the Tertiary Education Commission’s formal sign offobtainedAchievedThe Activity Based Management system (ABM) was used to monitor thefinancial contribution of all teaching programmes. ABM results were usedin the portfolio analysis process to identify actions to improve portfolioperformance.24WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Performance Targets 2008 Actual 2009 Target 2009 AchievementsTotal EFTS 4,417 4,502 4,465Total Students 10,928 10,747Student/EFTS ratio 2.47:1 2.41:1EFTS:FTE Academic Staff 21:1 21:1 24:1Total Revenue ($,000s) 49,286 47,848 49,291Operating Surplus ($,000s) 2,400 2,393 4,555Net Surplus ($,000s) 621 1,543 3,747International EFTS 330 378 328International Funding ($,000s) 3,504 4,672 4,245Total Revenue/Total Assets (%) 68.6% 65.5% 63.7%Net Surplus/Total Assets (%) 0.9% 2.1% 4.8%Operating Surplus/Total Revenue (%) 4.9% 5.0% 9.2%STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCENet Profit/Total Revenue (%) 1.3% 3.2% 7.6%Income/EFTS ($) 11,158 10,628 11,039Operating Expenses/EFTS ($) 10,615 10,097 10,019Total Assets/Total EFTS ($) 16,270 16,229 17,329Net Surplus/Total Revenue (%) 1.3% 3.2% 7.6%Net Surplus/Total Assets (%) 0.9% 2.1% 4.8%Net Surplus/Total Equity (%) 1.0% 2.6% 5.8%Working Capital % 143.2% 68.8% 147.8%Operating Cashflow in/out (%) 110.6% 121.9% 125.5%6.2 Capability Development – Developing an Achievement CulturePLANNED ACTIONACHIEVEMENTAchieve the agreed 2007 SBC capability and efficiency relatedoutcomesAchievedWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT25

STATEMENT OF OBJECTIVES AND SERVICE PERFORMANCEPerformance Targets 2008 Actual 2009 Target2009AchievementsProportion of teaching staff with relevant teaching qualification 70% 80% 76%Proportion of teaching staff with relevant disciplinaryqualification at appropriate levelProportion of teaching staff undertaking professional/industryexperienceEEO IndicatorsStaff gender:88% 100% 100%74% 70% 83%Performance Targets 2008 Actual 2009 Target2009Achievements Proportion of staff who are female 53% 50% 52% Proportion of academic staff who are female 36% 50% 35% Proportion of administration staff who are female 68% 50% 68%Ethnicity of staff: Maori 5.5% 8% 4.7% Pasifika 4.6% 5% 3.5%Proportion of staff who are disabled 1.1% >1.1% 1.1%Capability IndicatorsPerformance Targets 2008 Actual 2009 Target2009AchievementsQRP agreed outputs achievedAgreed outcomesachievedAchieve agreedoutcomesAgreed outcomesachievedSustainable Business Case agreed outputs achievedAgreed outcomesachievedAchieve agreedoutcomesAgreed outcomesachieved26WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Financial StatementsCONTENTSSummary of Accounting PoliciesIncome StatementFINANCIAL STATEMENTSStatement of Comprehensive IncomeStatement of Changes in EquityBalance SheetStatement of Cash FlowsNotes to the Financial StatementsWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT27

Wellington Institute of TechnologySummary of Accounting PoliciesREPORTING ENTITYThe financial statements of Wellington Institute of Technology for the year ended 31 December 2009 were authorisedfor issue in accordance with a resolution of the councillors on 7 April 2010.FINANCIAL STATEMENTSWellington Institute of Technology is a Crown Entity and is established under the Education Act 1989 as a publictertiary institution. It provides full-time and part-time tertiary education in New Zealand.STATEMENT OF COMPLIANCEThe financial statements comply with New Zealand Generally Accepted Accounting Practice (NZ GAAP), whichincludes New Zealand equivalents to International Financial Reporting Standards (‘NZ IFRS’).BASIS OF PREPARATIONThe financial statements have been prepared in accordance with generally accepted accounting practice in NewZealand, and the requirements of the Crown Entities Act 2004 and the Education Act 1989. Wellington Institute ofTechnology is a public benefit entity for the purpose of complying with generally accepted accounting practice inNew Zealand.The financial statements have been prepared on a historical cost basis, except for land, buildings and equipment,which have been measured at fair value.The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousanddollars ($’000), except where indicated. Nil values are reflected as a ‘-‘within these financial statements.SIGNIFICANT ACCOUNTING POLICIESThe following significant accounting policies have been adopted in the preparation and presentation of the financialreport:Budget FiguresThe budget figures are those approved by the Council at the beginning of the financial year. The budget figures havebeen prepared in accordance with NZ GAAP and are consistent with the accounting policies adopted by the Councilfor the preparation of the financial statements.Cost of ServicesWellington Institute of Technology has presented an analysis of its cost of services on the face of the income statementutilising a classification based on the expenditure’s function. Detailed analysis of expenditure based on the underlyingnature of the expenses has been provided within the notes to the accounts.Wellington Institute of Technology has five functional divisions:- Education Outcomes – representing all activities associated with the delivery of education and training whichhas been generated via the enrolling of students.- Self-Supporting - representing specific deliverables funded by the Crown or 3rd parties which are an aside tothe Educational Outcomes delivered by the organisation.- Transformation – representing all activities associated with the delivery of specific outcomes required by theCrown. These include the delivery of SBC efficiencies, QRP deliverables and Business Links outcomes.- Significant assets - reflecting the impact our asset management and replacement framework has on theorganisations financial performance.- Financing - reflecting the impact cash management activities have on the organisations financial performance.28WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Cash and Cash EquivalentsCash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments,net of any outstanding bank overdrafts.Comparative FiguresWhen the presentation or classification of items in the financial statements has been amended, comparative amountshave been reclassified.Employee BenefitsProvision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long-serviceleave, and sick leave when it is probable that settlement will be required and they are capable of being measuredreliably.Provisions made in respect of employee benefits expected to be settled within 12 months are measured at theirnominal values, using the remuneration rate expected to apply at the time of settlement.Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measuredat the present value of the estimated future cash flows to be made in respect of services provided by employees up toreporting date.EquityEquity, being the difference between total assets and total liabilities reflects the Crown’s interest in WellingtonInstitute of Technology. This public equity is disaggregated and classified into a number of reserves to enable cleareridentification of the specific uses/sources of accumulated funds. The components of equity are:FINANCIAL STATEMENTS- Notional equity- Retained earnings- ReservesFinancial InstrumentsFinancial instruments arise as a result of the daily operation of Wellington Institute of Technology and include: cashand cash equivalents, receivables, payables, investments and non-current liabilities, all recognised in the balancesheet using the concepts of accrual accounting. Revenues and expenses in relation to all financial instruments arerecognised in the income statement.Foreign Currency TranslationBoth the functional and presentational currency of Wellington Institute of Technology is in New Zealand dollars ($).All foreign exchange currency transactions during the financial year are brought to account using the exchange rate ineffect at the day of the transaction. Exchange rate differences are recognised in the income statement in the period inwhich they arise.Goods and Services TaxThe financial statements are prepared on a GST-exclusive basis, except for receivables and payables that arerecognised inclusive of GST.Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arisingfrom the investing and financing activities, which is recoverable from, or payable to, the taxation authority, areclassified as operating cash flows.Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, thetaxation authority.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT29

Impairment of AssetsAt each reporting date, Wellington Institute of Technology reviews the carrying amounts of its tangible and intangibleassets to determine whether there is any indication that those assets have suffered an impairment loss. If any suchindication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairmentloss (if any). Where the asset does not generate cash flows that are independent from other assets, the recoverableamount from the cash-generating unit to which the asset belongs is estimated.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, theestimated future cash flows are discounted to their present value, using a discount rate that reflects current marketassessments of the time value of money.FINANCIAL STATEMENTSAn impairment loss is recognised in the income statement, unless the relevant asset has a revaluation reservebalance, in which case the revaluation reserve is decreased by the appropriate amount.Intangible AssetsCourse development costsDevelopment costs for new courses internally developed or acquired which have a benefit of more than 1 year havebeen capitalised. Such costs are expected to be recovered, and are amortised on a straight-line basis over theperiod of their expected useful lives, being 3 years.SoftwareAll software purchased or created by Wellington Institute of Technology which have a benefit of more than 1 yearhave been capitalised. Such costs are expected to be recovered, and are amortised on a straight-line basis over theperiod of their expected useful lives, being 3 years.Assets under constructionCourse development and software assets under construction are treated as an intangible asset until completion.Upon completion of a project, the total cost is transferred to the appropriate asset class, at which point amortisationbegins.Interest-Bearing Loans and BorrowingAll loans and borrowings are initially recognised at cost, being the fair value of the consideration received net oftransaction costs associated with the borrowing.After initial recognition, interest-bearing loans and borrowings are measured at amortised cost using the effectiveinterest method. Amortised cost is calculated taking into account any transaction costs, and any discount orpremium on settlement.Gains and losses are recognised in the income statement when the liabilities are de-recognised, as well as throughthe amortisation process.InventoriesInventories available for resale are valued at the lower of cost and net realisable value. Consumables are recorded atcost.InvestmentsInvestments are initially recognised at cost, being the fair value of the consideration given. After the initial recognition,investments which are classified as available-for-sale are measured at fair value. Investments that are intended to beheld-to-maturity are subsequently measured at amortised cost using the effective interest method. Amortised cost iscalculated by taking into account any discount or premium on acquisition, over the period to maturity. Any changesin fair value throughout the term of the investment are recognised within the Income Statement.30WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Leased AssetsInitial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset.Operating lease payments, where the lessor effectively retains substantially all the risks and rewards of ownership ofthe leased items, are recognised as an expense on a straight-line basis over the lease term.PayablesTrade payables and other accounts payable are recognised when Wellington Institute of Technology becomesobliged to make future payments resulting from the purchase of goods and services.Property, Plant and EquipmentLand and buildingsCrown-owned land and buildings are included as part of Wellington Institute of Technology’s property,plant andequipment. Although legal title has not been transferred, the Crown has vested all the normal risks and rewards ofownership to Wellington Institute of Technology. Restrictions on disposal of these Crown owned land and buildingsare in place, as per section 192 of the Education Act 1989.Land and buildings are measured at fair value. Fair value is determined on the basis of an annual independentvaluation prepared by registered valuers. Land values are based on discounted cash flows or capitalisation of netincome (as appropriate). Buildings are valued based on depreciated replacement cost. This methodology is anacceptable estimate of fair value due to the lack of market-based evidence for education delivery purposes.FINANCIAL STATEMENTSAny revaluation increase arising on the revaluation of land and buildings is credited to the appropriate revaluationreserve, except to the extent that it reverses a revaluation decrease for the same asset previously recorded as anexpense in the income statement, in which case the increase is credited to the income statement to the extent ofthe decrease previously charged. A decrease in carrying amount arising on the revaluation of land and buildings ischarged as an expense in the income statement to the extent that it exceeds the balance, if any, held in the assetrevaluation reserve.EquipmentEquipment is measured at fair value. Fair value is determined on the basis of a 3 yearly independent valuationprepared by registered valuers based on discounted cash flows every three years.Any revaluation increase arising on the revaluation of equipment is credited to the appropriate revaluation reserve,except to the extent that it reverses a revaluation decrease for the same asset previously recorded as an expense inthe income statement, in which case the increase is credited to the income statement to the extent of the decreasepreviously charged. A decrease in carrying amount arising on the revaluation of equipment is charged as an expensein the income statement to the extent that it exceeds the balance, if any, held in the asset revaluation reserve.Other property, plant and equipmentAll other property, plant and equipment is stated at cost less accumulated depreciation and impairment. Costincludes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or partof the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future totheir present value as at the date of the acquisition.Assets under constructionAssets under construction are disclosed separately. Upon completion, the asset’s total cost is transferred to theappropriate asset class, at which point depreciation begins.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT31

DepreciationDepreciation has been provided on all property, plant and equipment, excluding land. Depreciation is calculated ona straight-line basis, at rates that expense the assets’ cost (or valuation) to their estimated residual values over theiruseful life.The useful life of each class of asset is as follows:FINANCIAL STATEMENTSBuildings- Shell 10 - 50 years- Services 10 - 25 years- Fit-out 10 - 15 yearsLeasehold improvements 2 - 15 years, based on lease renewal datesEquipment3 - 30 yearsMotor vehicles5 yearsFurniture and fittings 5 yearsLibrary collection5 yearsHardware3 yearsProvisionsProvisions are recognised when: a present obligation (legal or constructive) arises as a result of a past event; it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation; and areliable estimate can be made of the amount of the obligation.If the effect of the time value of money is material, provisions are determined by discounting the expected future cashflows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate,the risks specific to the liability.Provisions are reviewed at each balance date, and adjusted to reflect the current best estimate. When it is no longerprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, theprovision shall be reversed.Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.ReceivablesTrade receivables, student receivables and other receivables are recorded at cost less provision made foruncollectible balances.ReservesWellington Institute of Technology has asset revaluation reserves which have been generated by the revaluation ofequipment, land and buildings, as outlined in Property, Plant and Equipment above.RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to Wellington Instituteof Technology and the revenue can be reliably measured. The following specific criteria must also be met beforerevenue is recognised:Government grantsGovernment grants are recognised when eligibility to receive the grant has been established. For StudentComponent Funding, entitlement is established upon the withdrawal period for an individual’s course of study havingpassed. For project-based grants, entitlement is established upon the completion of agreed milestones. Where fundshave been received but not earned at balance date, an Income in Advance liability is recognised.Student tuition feesRevenue from student tuition fees is recognised in the income statement on entitlement.32WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Rendering of servicesRevenue from a contract to provide services is recognised by reference to the stage of completion of the contract atthe balance sheet date.Interest revenueInterest revenue is recognised on a time-proportionate basis that takes into account the effective yield on thefinancial asset.TaxationTertiary institutions are exempt from payment of income tax, as they are treated by the Inland Revenue Department ascharitable organisations. Accordingly, no income tax is provided for.CHANGES IN ACCOUNTING POLICIESThere have been no changes in accounting policies in 2009. (2008, no changes.)ACCOUNTING STANDARDS IN ISSUEThe following Standard was in issue but not yet effective as at 31 December 2009:FINANCIAL STATEMENTSSTANDARD/INTERPRETATIONEFFECTIVE DATENZ IAS 24 Amendment - Related Party Disclosures Annual periods commencing onor after 1 January 2011The amendments to NZ IAS 24 will be adopted by Wellington Institute of Technology for the first time for its financialreporting period ending 31 December 2011. The amendment to NZ IAS 24 simplifies the definition of a related party,clarifying its intended meaning and eliminating inconsistencies from the definition. The amendment is not expectedto have any impact on the Wellington Institute of Technology’s accounting policies.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT33

Income StatementFor the year ended 31 December 2009Note 2009 2009 2008Actual Budget Actual$000 $000 $000Operating IncomeGovernment Grants 1 28,292 27,954 25,457FINANCIAL STATEMENTSTertiary Fees 2 13,501 12,979 11,638Contract Income 3 4,285 4,538 7,557Trading Income 4 3,213 2,377 4,634Total Operating Income 49,291 47,848 49,286Cost of ServicesEducation Outcomes 34,164 34,643 35,089Self Supporting 506 539 696Transformation 2,615 2,430 4,033Significant Assets 8,259 8,644 8,847Finance - 49 -Total Cost of Services 5 45,544 46,305 48,665Profit 3,747 1,543 621Statement of Comprehensive IncomeFor the year ended 31 December 2009Note 2009 2009 2008Actual Budget Actual$000 $000 $000Profit 3,747 1,543 621Gain/(loss) on equipment revaluation - - (136)Gain/(loss) on property revaluation 386 - 4,219Total comprehensive income 4,133 1,543 4,70434WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Statement of Changes in EquityFor the year ended 31 December 2009Note 2009 2009 2008Actual Budget Actual$000 $000 $000Balance at 1 January 59,966 57,744 54,877Total comprehensive income 4,133 1,543 4,704Crown Equity Injection 15 - - 385Balance at 31 December 64,099 59,287 59,966FINANCIAL STATEMENTSWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT35

Balance SheetAs at 31 December 2009Note 2009 2009 2008Actual Budget Actual$000 $000 $000Current assetsCash and cash equivalents 11,992 4,730 6,077Trade and other receivables 6 5,705 4,054 5,181FINANCIAL STATEMENTSInvestments 8 - - 4,150Inventory 7 177 8 33Prepayments 11 11 33Total current assets 17,885 8,803 15,474Non-current assetsProperty, plant and equipment 9 58,820 62,777 55,353Intangible assets 10 673 1,485 1,040Total non-current assets 59,493 64,262 56,393Total assets 77,378 73,065 71,867Current liabilitiesTrade and other payables 11 3,787 3,568 4,243Borrowings - 3,650 -Provisions 13 2,081 2,040 2,046Other financial liabilities 12 6,234 3,538 4,515Total current liabilities 12,102 12,796 10,804Non-current liabilitiesProvisions 14 1,166 976 1,087Other 11 6 10Total non-current liabilities 1,177 982 1,097Total liabilities 13,279 13,778 11,901Net assets 64,099 59,287 59,966EquityCrown equity 15 38,832 38,862 38,832Retained earnings 16 3,816 2,886 69Reserves 17 21,451 17,539 21,065Total equity 64,099 59,287 59,96636WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Statement of Cash FlowsFor the year ended 31 December 2009Note 2009 2009 2008Actual Budget Actual$000 $000 $000Cash flows from operating activitiesReceipts from customers 50,120 47,238 46,150Interest received 863 361 614Payments to suppliers and employees (40,423) (39,014) (42,264)GST paid (214) (49) (5)Net cash provided by/(used in) operating activities 18 10,346 8,536 4,495Cash flows from investing activitiesMaturity of term investment 4,150 - -Proceeds from sale of property, plant and equipment 7 50 86Payment for property, plant and equipment (8,457) (17,426) (7,996)Payment for intangible assets (131) (307) (280)FINANCIAL STATEMENTSNet cash provided by/(used in) investing activities (4,431) (17,683) (8,190)Cash flows from financing activitiesProceeds from equity injection - - 385Proceeds from borrowings - 3,650 -Net cash provided by financing activities - 3,650 385Net increase (decrease) in cash and cash equivalents 5,915 (5,497) (3,310)Cash and cash equivalents at the beginning of the financial year 6,077 10,227 9,387Cash and cash equivalents at the end of the financial year 18 11,992 4,730 6,077Represented by:Cash at bank and in hand 1,842 580 1,077Term deposits - ASB Bank 8,150 - 2,000Term deposits - BNZ 2,000 4,150 -Term deposits - Citibank - - 2,000Term deposits - National Bank - - 1,00011,992 4,730 6,077WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT37

Notes to the Financial Statements2009 2009 2008Actual Budget Actual$000 $000 $0001.GOVERNMENT GRANTSStudent Component Funding 18,609 18,495 17,317FINANCIAL STATEMENTSBase Funding 7,987 7,866 5,202Grants 1,696 1,593 2,93828,292 27,954 25,4572.TERTIARY FEESDomestic Students 9,256 8,307 8,134International Students 4,245 4,672 3,50413,501 12,979 11,6383.CONTRACT INCOMEContract Students 3,734 4,288 4,312Contract Income 551 250 3,2454,285 4,538 7,557Contract Income for 2008 includes $0.9M of QRP capital funding received under an agreement negotiated in 2006 with the TEC. In April2009 the TEC advised all ITP's that QRP payments in relation to 2008 capital funding were sourced from a Capital Appropriation as opposedto an Expenditure Appropriation as had been the case in 2007. The TEC requested that ITP's reflect the funding as a capital contributionrather than as revenue due to this fact. Wellington Institute of Technology did not adopt this accounting treatment for the 2008 annual reportand as a result a qualified audit report was issued.4.TRADING INCOMERecovery Income 1,026 1,004 1,137Trading Sales 197 240 423Early Childhood 564 552 587Gifted Assets 63 - -Other Income 813 220 1,449Interest on Bank deposits 550 361 1,0383,213 2,377 4,63438WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

5.COST OF SERVICES (BY NATURE OF EXPENDITURE)2009 2009 2008Actual Budget Actual$000 $000 $000Employee Benefit ExpensesKey Management Compensation:Short term employee benefits 1,484 1,495 1,684Council fees 75 85 85Staff Compensation:Short term employee benefits 23,815 24,092 24,228Associated Personnel Expenses 653 940 1,03226,027 26,612 27,029Operating ExpensesAdministrative Expenditure 8,777 8,409 9,860Class Materials 2,524 2,483 2,396Operating Leases 1,592 1,598 1,975Interest on Loans - 49 -FINANCIAL STATEMENTSBad Debts written off 45 60 50Provision for Doubtful Debts Expense 31 - 68Remuneration of External Auditors 97 71 76Loss on Disposal of Assets 3 - 10Depreciation 5,143 5,575 5,010Amortisation 497 599 412Non Operating Items18,709 18,844 19,856Loss on revaluation 513 - -Non-current asset write down - 650 597Restructuring 92 - 681Efficiencies project 183 200 472Other 20 - 29808 850 1,779Cost of Services 45,544 46,305 48,6656.TRADE AND OTHER RECEIVABLESTrade receivables 511 346 726Student receivables 5,357 3,771 3,824Tertiary Education Commission receivable - - 763Provision for doubtful debt (163) (64) (132)5,705 4,054 5,181The average credit period on all receivables is 60 days. A provision has been made for estimated irrecoverable amounts based on the statusof individual receivable balances as at 31 December 2009. Bad debts are written off when identified.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT39

2009 2009 2008Actual Budget Actual$000 $000 $0007.CURRENT INVENTORIESWork in progress - at cost 164 - 28Finished goods - at cost 13 8 5177 8 338.FINANCIAL ASSETS IN THE NATURE OF INVESTMENTSDeposits with banks:FINANCIAL STATEMENTS- ASB (interest rate 8.95%, matured 09/03/09) - - 2,150- Citibank (interest rate 8.85%, matured 09/03/09) - - 2,0009.PROPERTY, PLANT AND EQUIPMENT2009 Actual $000Gross Carrying AmountLand &BuildingsLeaseholdImprovements Equipment HardwareFurniture &FittingsLibraryCollection- - 4,150Assets underConstructionTotalBalance as at 1 January 42,840 8,141 6,911 5,232 1,726 1,105 154 66,109Additions 6,981 77 364 640 202 226 256 8,746Disposals - - (44) (150) - - - (194)Reclassifications 5,087 (4,967) (7) 9 29 3 (154 ) -Net revaluation decrement (5,212) - - - - - - (5,212)Balance as at 31 December 49,696 3,251 7,224 5,731 1,957 1,334 256 69,449Accumulated DepreciationBalance as at 1 January - 4,943 1,573 2,543 1,142 555 - 10,756Depreciation Expense 1,411 790 1,082 1,464 184 212 - 5,143Disposals - - (34) (150) - - - (184)Reclassifications 3,675 (3,675) - - - - - -Net revaluation decrement (5,086) - - - - - - (5,086)Balance as at 31 December - 2,058 2,621 3,857 1,326 767 - 10,629Net Book Value 49,696 1,193 4,603 1,874 631 567 256 58,8202008 Actual $000Land &BuildingsLeaseholdImprovements Equipment HardwareFurniture &FittingsLibraryCollectionAssets underConstructionTotalGross Carrying AmountBalance as at 1 January 35,995 7,609 6,275 3,536 1,170 888 1,133 56,606Additions 3,353 1,374 868 1,772 557 217 154 8,295Disposals - (1,082) (232) (76) (1) - - (1,391)Reclassifications 893 240 - - - - (1,133) -Net revaluation increments 2,599 - - - - - - 2,599Balance as at 31 December 42,840 8,141 6,911 5,232 1,726 1,105 154 66,10940WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

2008 Actual $000Accumulated DepreciationLand &BuildingsLeaseholdImprovements Equipment HardwareFurniture &FittingsLibraryCollectionAssets underConstructionTotalBalance as at 1 January - 4,690 614 1,250 1,015 375 7,944Depreciation expense 1,293 1,109 1,003 1,298 127 180 - 5,010Disposals - (856) (44) (5) - - - (905)Reclassifications - - - - - - - -Net revaluation decrements (1,293) - - - - - - (1,293)Balance as at 31 December - 4,943 1,573 2,543 1,142 555 - 10,756Net Book Value 42,840 3,198 5,338 2,689 584 550 154 55,353Land and buildings carried at fair valueAn independent valuation of the land and buildings was performed by Darroch Limited, registered independent valuers as at 31 December2009. This valuation of campus buildings was completed using the depreciation replacement cost methodology. This methodology is anacceptable estimate of fair value due to the lack of market-based evidence for education delivery purposes.10. INTANGIBLE ASSETS$000 SoftwareGross Carrying AmountCourseDevelopment2009 2008Assets underConstruction Total SoftwareCourseDevelopmentAssets underConstructionTotalFINANCIAL STATEMENTSBalance as at 1 January 1,577 973 - 2,550 1,379 851 12 2,242Additions 3 - 127 130 199 122 - 321Disposals - - - - (1) - (12) (13)Reclassifications - - - - - - - -Net revaluation increments - - - - - - - -Balance as at 31 December 1,580 973 127 2,680 1,577 973 - 2,550Accumulated AmortisationBalance as at 1 January 1,254 256 - 1,510 1,085 13 - 1,098Amortisation Expense 176 321 - 497 169 243 - 412Disposals - - - - - - - -Reclassifications - - - - - - - -Net revaluation increments - - - - - - - -Balance as at 31 December 1,430 577 - 2,007 1,254 256 - 1,510Net Book Value 150 396 127 673 323 717 - 1,0402009 2009 2008Actual Budget Actual$000 $000 $00011. TRADE AND OTHER PAYABLESTrade payables 2,901 3,060 3,383Student component funding payable 35 - -Goods and services tax (GST) payable 851 508 8603,787 3,568 4,243WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT41

2009 2009 2008Actual Budget Actual$000 $000 $00012. OTHER FINANCIAL LIABILITIESStudent income in advance 5,855 3,519 4,469Other income in advance 379 19 466,234 3,538 4,51513. CURRENT PROVISIONSFINANCIAL STATEMENTSEmployee benefits 2,081 2,040 2,0462,081 2,040 2,04614. NON CURRENT PROVISIONSEmployee benefits 181 164 164Leased premises fit-out reinstatement:Opening balance 923 812 818Capitalised during the period 62 - 105Leased premises fit-out reinstatement balance at end of financial year 985 812 9231,166 976 1,08715. CROWN EQUITYNotional Equity 19,712 19,712 19,712Received EquityOpening balance 14,970 15,000 14,585Crown loan Tranche B transferred from Suspensory Equity 4,150 4,150 -ITP Distinctive Contribution Equity Injection - - 385Received Equity closing balance 19,120 19,150 14,970Suspensory EquityOpening balance 4,150 4,150 4,150Crown loan Tranche B transfer to Received Equity (4,150) (4,150) -Suspensory Equity closing balance - - 4,150Crown Equity at end of financial year 38,832 38,862 38,832Notional EquityNotional Equity represents the carrying value of Crown-owned land and buildings at the date the Crown vested all the normal risks andrewards of ownership to Wellington Institute of Technology.Received and Suspensory EquityWellington Institute of Technology entered into a new loan agreement with the Crown on 27 July 2007. Under this agreement previous loansfrom the Crown were restructured into two Tranches. Tranche A totalling $8.6M was converted to equity in 2007. Tranche B totalling $4.15M,treated as suspensory equity in 2008 has been capitalised in 2009 with Wellington Institute of Technology achieving the agreed conversioncriteria, including the delivery of efficiency savings totalling in excess of $4.15M at the end of 2009.42WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

2009 2009 2008Actual Budget Actual$000 $000 $00016. RETAINED EARNINGSOpening balance 69 1,343 (552)Net Profit 3,747 1,543 621Balance at end of financial year 3,816 2,886 6917. RESERVESOpening balance 21,065 17,539 16,982Revaluation increments 386 - 4,083Balance at end of financial year 21,451 17,539 21,065These reserves have been generated by the revaluation of equipment, land and buildings undertaken by Darroch Limited (see note 9).18. NOTES TO THE CASH FLOW STATEMENTFINANCIAL STATEMENTS(a) Reconciliation of cash and cash equivalentsFor the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in moneymarket instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the cash flowstatement is reconciled to the related items in the balance sheet as follows:Operating Funds: 1,717 1,080 (1,889)Designated Funds:- Campus development 9,150 3,650 7,966- Fit-out reinstatement 1,125 - -11,992 4,730 6,077(b) Reconciliation of profit for the period to net cash flows from operating activitiesProfit for the period 2,997 1,543 621Add/(less) non-cash items:Depreciation and amortisation of non-current assets 5,640 6,174 5,422Income recognised from gifted non-current assets (63) - -(Gain)/loss on sale or disposal of non-current assets 3 - 10Loss on write off of non-current assets 513 650 596Doubtful debts expense 31 - 68Add/(less) movements in working capital items:(increase)/decrease in receivables (521) 1,128 (1,702)(Increase)/decrease in inventories (144) 25 (25)(increase)/decrease in prepayments 22 22 227Increase/(decrease) in payables 422 (675) (106)Increase/(decrease) in provisions (281) (6) 614Increase/(decrease) in other current liabilities 1,727 (324) (1,230)Net cash flow from operating activities 10,346 8,536 4,49519. ACTIVITY-BASED MANAGEMENT INFORMATIONThe information in this note has been sourced from the Activity Based Management (ABM) model Wellington Institute of Technologyimplemented in 2007.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT43

Section (a) reconciles the reported profit to the ABM loss, while section (b) provides insight into the performance of the business by deliverymethod. Section (b) also highlights the level of cross-subsidisation that is required in an institute of technology to generate a profit while alsodelivering the programmes required to meet the demands of industry and the local community. Wellington Institute of Technology use theABM model information as part of its portfolio management framework to ensure the programmes delivered in future periods maintain a solidbalance of profitable programmes and delivery methods, while also allowing for the delivery of high-cost programmes, the need for which areconsistent with the government’s STEP objectives.2009 2009 2008Actual Budget Actual$000 $000 $000(a)Financial performance to ABM reconciliationFINANCIAL STATEMENTSProfit/(loss) 3,747 1,543 621less ABM adjustmentsQRP 3 operating grant - - (2,222)TEOC discretionary funding (2,471) (2,471) -Interest (550) (312) (1,038)Rent received (50) (20) (45)Course development 524 - -Transformation projects 1,446 1,947 466Asset base adjustment (1,549) (1,162) (1,139)ABM profit/(loss) 1,097 (475) (3,357)(b)ABM Performance by Delivery MethodDelivery Method 2009 Actual 2009 BudgetTotalTotalIncome Costs Profit/(Loss) Income Costs Profit/(Loss)Trades & Technicians - Capital intensive 22,772 23,474 (702) 23,687 24,150 (463)Other Offerings 20,924 19,125 1,799 19,528 19,540 (12)Total 43,696 42,599 1,097 43,215 43,690 (475)Delivery MethodIncome2008 ActualTotalCostsProfit/(Loss)Trades & Technicians - Capital intensive 17,656 21,302 (3,646)Other Offerings 22,767 22,478 289Total 40,423 43,780 (3,357)20. EXPLANATION OF MAJOR VARIANCES AGAINST BUDGETExplanations for major variances against the Council approved budget are as follows:Income statementTertiary fees produced a $522,000 positive variance to budget. This reflects the higher than budgeted domestic student numbers achievedin 2009, and a change in the mix of programmes being studied compared to budget. This positive domestic student variance was offset bylower than budgeted income and associated EFTS achieved from international students.Trading income produced a $836,000 positive variance to budget. This result was generated with a number of unplanned income streamsbeing obtained in 2009, including such things as the State Services Commission reimbursement of Kiwisaver Employer contributions,reimbursement of staff time spent on 3rd party developments, the sale of completed houses and the receipt of gifted assets.Employee benefit expenses finished 2009 $585,000 behind budget, and $1.002m behind the 2008 position. This positive result reflected theoutcomes of the 2008 restructuring programme, and the organisation's ability the meet the increased demand for education with a morefocused staffing compliment.Depreciation and amortisation finished 2009 $534,000 behind budget. This was the result of a reduced capital expenditure programme, withcampus development activities being limited to the purchase and partial redevelopment of previously leased premises in Petone.44WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Balance sheetCash and cash equivalents balance of $11.992m represents an improvement of $10.912m to budget (net of the budgeted borrowings). Thissubstantial favourable variance is the result of additional revenue generated by domestic students through the year, savings in personnel,and reduced campus development activities in the 2009 year.Trade and other receivables finished 2009 $1.651m ahead of budget. Of the $5.705m total $5.321m relates to 2010 enrolments.Property, plant and equipment as outlined above finished 2009 behind budgeted levels. Campus development activities not completed in2009 will roll forward into 2010, with designated cash funds in place (refer note 18).Statement of cash flowsOperating activities finished the year at $10.346m, $1.81m ahead of budget. As outlined in the income statement commentary, this reflectsthe higher than budget domestic student income stream, and less paid out to employee’s as the overall number of staff within theorganisation was less than budget and the 2008 comparative.Investing activities finished the year $13.252m ahead of budget as a result of the reduced campus development activities, and the maturityof the term investment of $4.15m made in 2007 to ensure the organisation was able to re-pay the full amount of suspensory loan from theCrown if required (refer notes 15 and 18).21. TE WHARE AKO FINANCIAL SUMMARYTe Whare Ako is Wellington Institute of Technology’s early childhood education services business unit. Wellington Institute of Technologyholds a separate licence from the Ministry of Education for the provision of these services. The accounts presented below are required to bepresented separately for Ministry of Education purposes to support the funding provided. The accounts represent the trading contribution ofthe business unit, and do not reflect occupancy costs or depreciation on buildings and equipment used by the unit.FINANCIAL STATEMENTS2009 2009 2008Actual Budget Actual$000 $000 $000IncomeGovernment grants 384 347 404ISS subsidy 86 92 77Childcare fees 94 113 110Other fees 2 - -566 552 591ExpensesEmployee benefits 439 437 434Other direct costs 24 30 21463 467 455Trading contribution 103 85 13622. COMMITMENTS(a) Capital expenditure commitmentsLand and buildings - - 6,534Equipment 32 - 74Hardware 100 - -Furniture & fittings - - 55132 - 6,663(b) Lease commitmentsNon-cancellable operating lease commitments are disclosed in note 23 to the financial statements.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT45

23. LEASES(a) Leasing arrangementsWellington Institute of Technology enters into operating leases for buildings, computers and vehicles:- Building premises are leased for satellite delivery offices in Auckland and Christchurch, and for the Wellington Campus at Church Street.A number of premises are also leased around the central Petone campus. The length of terms of these leases varies from under 12 monthsto 5 years, with rights of renewal on a number of contracts.- Vehicles are also leased over 3 - 5 year terms, depending on the type of vehicle concerned, under this informal asset-managementprogramme.FINANCIAL STATEMENTS2009 2009 2008Actual Budget Actual$000 $000 $000(b) Non-cancellable operating lease paymentsNot longer than 1 year 1,406 - 1,509Between 1 and 5 years 1,643 - 2,148Longer than 5 years - - -3,049 - 3,65724. CONTINGENT LIABILITIESWellington Institute of Technology has no contingent liabilities at balance date (2008, $6.35M).25. FINANCIAL INSTRUMENTSRisk managementStrategic risk management is undertaken by Council through the monitoring of regular risk reports provided by management. These reportshighlight potential areas of risk and the steps being following to ensure the risks are appropriately managed.The Finance Department provides treasury management services for Wellington Institute of Technology, co-ordinating access to domesticand international financial markets and managing the financial risks relating to the operations of the business.Wellington Institute of Technology does not enter into, or trade financial instruments for speculative purposes.Details of significant accounting policies and methods adopted, including the criteria for recognition, and the basis of measurement appliedin respect of each class of financial asset, financial liability and equity instrument are disclosed in the Accounting Policies section of thesefinancial statements.Currency riskWellington Institute of Technology has no material exposure to movements in foreign exchange rates. Income sourced from overseas isreceived in New Zealand dollar equivalents, while trading supplies sourced from international providers are not a material portion ofWellington Institute of Technology's annual expenditure. Council policy on foreign exchange states that, should an international purchase of$20,000 or more be required, investigation is to be made into forward cover. At balance date, no forward contracts or any other form ofhedging exist.Interest rate riskWellington Institute of Technology has exposure to interest rate risk to the extent that it has investments at fixed rates.Borrowing rates are set by the Ministry of Education on an annual basis. Wellington Institute of Technology has no ability to influence oralter these rates. The interest rate risk on investments is managed through the use of short-term investments, in accordance with CouncilPolicy.No significant exposure to interest rate risk exists on the remaining financial assets and liabilities.Credit riskCredit risk exposure for Wellington Institute of Technology exists principally within cash and cash equivalents, and trade and otherreceivables balances.Credit risk in respect of cash holdings is managed by spreading short-term investment deposits with the major trading banks within NewZealand while ensuring Wellington Institute of Technology receives the best return on the funds invested, as specified by Council policy.Receivable balances are unsecured. They are stated at their estimated realisable value after providing for amounts not consideredrecoverable.There are no significant concentrations of credit risk within receivables.46WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

Fair valueThe fair value of financial instruments approximates their carrying amount recorded in the Balance Sheet.Liquidity riskWellington Institute of Technology manages liquidity risk by maintaining adequate reserves to ensure the provision of educational servicesfor the foreseeable future. This is achieved through continuously monitoring and forecasting cash flows for the medium term. Themaximisation of operational inflows and efficient management of operational and investing outflows ensures sufficient cash reserves aremaintained.26. RELATED PARTY DISCLOSURESDetails of key management personnel remuneration are disclosed in note 5 to the financial statements.27. CHANGES IN ACCOUNTING ESTIMATESThere have been no changes in accounting estimates during the period.FINANCIAL STATEMENTS28. EVENTS AFTER BALANCE DATENo events have occurred since 31 December 2009 that would materially affect Wellington Institute of Technology’s financial statements.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT47

AUDIT REPORT48WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

AUDIT REPORTWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT49

AUDIT REPORT50WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT

AcronymsABM Activity Based ManagementCVLS Community and Vocational Learning SkillsEEO Equal Employment OpportunityEFTS Equivalent Full-Time StudentETITO Electrotechnology Industry Training OrganisationFTE Full-Time EquivalentITO Industry Training OrganisationITP Institutes of Technology & PolytechnicsITPNZ Institutes of Technology & Polytechnics of New ZealandITPQ Institutes of Technology & Polytechnics QualityMoU Memorandum of UnderstandingPBRF Performance-Based Research FundPEP Personal Education PlanQRP Quality Reinvestment ProgrammeRPL Recognition of Prior LearningSAC Student Achievement ComponentSAEER Self Assessment and External and ReportingSBC Sustainability Business CaseSME Small and Medium EnterprisesSTAR Secondary/Tertiary Alignment ResourcesTEC Tertiary Education CommissionTES Tertiary Education StrategyACRONYMSWELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT51