<strong>2009</strong> <strong>2009</strong> 2008Actual Budget Actual$000 $000 $00016. RETAINED EARNINGSOpening balance 69 1,343 (552)Net Pr<strong>of</strong>it 3,747 1,543 621Balance at end <strong>of</strong> financial year 3,816 2,886 6917. RESERVESOpening balance 21,065 17,539 16,982Revaluation increments 386 - 4,083Balance at end <strong>of</strong> financial year 21,451 17,539 21,065These reserves have been generated by the revaluation <strong>of</strong> equipment, land and buildings undertaken by Darroch Limited (see note 9).18. NOTES TO THE CASH FLOW STATEMENTFINANCIAL STATEMENTS(a) Reconciliation <strong>of</strong> cash and cash equivalentsFor the purposes <strong>of</strong> the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in moneymarket instruments, net <strong>of</strong> outstanding bank overdrafts. Cash and cash equivalents at the end <strong>of</strong> 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 <strong>of</strong> pr<strong>of</strong>it for the period to net cash flows from operating activitiesPr<strong>of</strong>it for the period 2,997 1,543 621Add/(less) non-cash items:Depreciation and amortisation <strong>of</strong> non-current assets 5,640 6,174 5,422Income recognised from gifted non-current assets (63) - -(Gain)/loss on sale or disposal <strong>of</strong> non-current assets 3 - 10Loss on write <strong>of</strong>f <strong>of</strong> 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 <strong>Wellington</strong> <strong>Institute</strong> <strong>of</strong> <strong>Technology</strong>implemented in 2007.WELLINGTON INSTITUTE OF TECHNOLOGY | <strong>2009</strong> ANNUAL REPORT43
Section (a) reconciles the reported pr<strong>of</strong>it to the ABM loss, while section (b) provides insight into the performance <strong>of</strong> the business by deliverymethod. Section (b) also highlights the level <strong>of</strong> cross-subsidisation that is required in an institute <strong>of</strong> technology to generate a pr<strong>of</strong>it while alsodelivering the programmes required to meet the demands <strong>of</strong> industry and the local community. <strong>Wellington</strong> <strong>Institute</strong> <strong>of</strong> <strong>Technology</strong> use theABM model information as part <strong>of</strong> its portfolio management framework to ensure the programmes delivered in future periods maintain a solidbalance <strong>of</strong> pr<strong>of</strong>itable programmes and delivery methods, while also allowing for the delivery <strong>of</strong> high-cost programmes, the need for which areconsistent with the government’s STEP objectives.<strong>2009</strong> <strong>2009</strong> 2008Actual Budget Actual$000 $000 $000(a)Financial performance to ABM reconciliationFINANCIAL STATEMENTSPr<strong>of</strong>it/(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 pr<strong>of</strong>it/(loss) 1,097 (475) (3,357)(b)ABM Performance by Delivery MethodDelivery Method <strong>2009</strong> Actual <strong>2009</strong> BudgetTotalTotalIncome Costs Pr<strong>of</strong>it/(Loss) Income Costs Pr<strong>of</strong>it/(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 ActualTotalCostsPr<strong>of</strong>it/(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 <strong>2009</strong>, and a change in the mix <strong>of</strong> programmes being studied compared to budget. This positive domestic student variance was <strong>of</strong>fset 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 <strong>of</strong> unplanned income streamsbeing obtained in <strong>2009</strong>, including such things as the State Services Commission reimbursement <strong>of</strong> Kiwisaver Employer contributions,reimbursement <strong>of</strong> staff time spent on 3rd party developments, the sale <strong>of</strong> completed houses and the receipt <strong>of</strong> gifted assets.Employee benefit expenses finished <strong>2009</strong> $585,000 behind budget, and $1.002m behind the 2008 position. This positive result reflected theoutcomes <strong>of</strong> 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 <strong>2009</strong> $534,000 behind budget. This was the result <strong>of</strong> a reduced capital expenditure programme, withcampus development activities being limited to the purchase and partial redevelopment <strong>of</strong> previously leased premises in Petone.44WELLINGTON INSTITUTE OF TECHNOLOGY | <strong>2009</strong> ANNUAL REPORT