2006 ETITO ANNUAL REPORT

Transcription

1 2006 ETITO ANNUAL REPORT

2 LIST OF CONTENTS INTRODUCTION 3 CHAIRMAN S REPORT 4 CHIEF EXECUTIVE S REPORT 8 SOME OF THE HIGHLIGHTS FOR ETITO IN GOVERNANCE 20 INTRODUCTION TO ETITO CONSULTING LIMITED ETITO CONSOLIDATED FINANCIAL STATEMENTS 22

3 INTRODUCTION ETITO [ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION] WAS FORMED IN 1993 AS THE INDUSTRY TRAINING ORGANISATION FOR THE ELECTROTECHNOLOGY INDUSTRY. IN 1996, THE TELECOMMUNICATIONS AND SECURITY INDUSTRIES WERE ADDED TO ETITO S COVERAGE. IN 2004, ETITO WAS JOINED BY THE AMBULANCE ITO. The primary stakeholders of ETITO are the four industries that it serves. It is primarily funded by the New Zealand government through the Tertiary Education Commission [TEC]. Other income sources include the sale of goods and services both related to, and independent of, industry training. ETITO is mandated by the Industry Training Act and its Amendment to do the following for the industries in its coverage: Provide leadership on matters relating to skill and training needs. Set national skill standards and develop national qualifications for its industries. Arrange the delivery of training. In addition, ETITO acts on behalf of its industries to: Promote ETITO industries as career choices. Provide consulting services through ETITO Consulting Limited. Support government programmes such as Modern Apprenticeships and Gateway. 3

4 CHAIRMAN S REPORT IT IS MY PLEASURE TO PRESENT THE CHAIRMAN S REPORT FOR 2006 WHICH WAS A POSITIVE YEAR THAT SAW SIGNIFICANT CHANGE AND PROGRESS. TRAINING As at 31 December 2006 there were 8,633 trainees registered with ETITO from 1,451 participating companies. This represented an 11.6% increase in trainees and a 3.5% increase in participating companies over the previous year. ETITO, while funded by government to deliver 3,757 STMs [Standard Training Measures] actually delivered 3,860, an over-achievement of 3%. The trainees came from a wide range of industry sectors including ambulance, electrical and electronic, security and telecommunications. The efforts of the management team in order to fulfil industries needs for training, in those areas that our funding restrictions permit, is much appreciated. Moving forward, the 2007 contract with the Tertiary Education Commission provides for a 14% increase in STM [training] funding, with an STM rate increase of 1.9%, resulting in an overall funding increase of 15.9%. Progress towards becoming the standards setting body for the financial services industry is ongoing. Negotiation with a myriad of bodies to enable a whole industry to be brought into the industry training regime is proving to be arduous, complicated and slow despite the industry wanting it to happen. The process required has taken in excess of twelve months, and ought not be as difficult as it is proving to be. GOVERNMENT Two years ago I acknowledged the high priority given to industry training by government. Now with the Tertiary Reforms well under way, I am beginning to question my interpretation of those prior events. The new system is intended to shift away from demand to need. That is, it moves Tertiary Education Organisations [TEOs], including ITOs, away from being focused on maximising student enrolments and towards achieving strong outcomes for students, business and communities, which is essential if New Zealand is to get value from its investment in tertiary training. Unfortunately the path being signalled has the potential not only to place training providers Institutes of Technology and Polytechnics [ITPs] in direct 4

5 competition with ITOs, but to encourage even greater competition by ITPs. Having charged ITOs with leading their industries on skill and training matters, they have now made polytechnics responsible for undertaking a regional facilitation role in this respect. As most industry training is required nationally or at least across a number of geographic regions, this decision logically requires ITOs to invest resources to ensure that this planning complements their own. Given that ITPs are funded at a level approaching three times that of ITOs, the path chosen by government has the potential to undermine industry s investment in and control over industry training. This move compounds the effects of officials unwillingness to address overlapping provision which is already undermining ownership by industry at large, of industry training. Members of the ITO are encouraged to give serious consideration to what can be done to protect the very valuable asset and key contributor to our future prosperity that is ETITO. The lack of detail relating to the role, and published consideration of the probable impact upon ITOs, of the proposed reforms is, in my opinion, unacceptable. BUILDING FOR THE FUTURE As signalled in last year s report, the Board authorised the formation of a wholly owned subsidiary as a means of meeting the demand for training across all of our industry sectors when a large proportion of our income is capped. The concept of generating additional revenue streams, separate from the TEC Industry Training Fund and our industry partners, was a key 5

6 driver in taking this decision. ETITO Consulting Limited won its first contract in November 2006 and is now close to completing it. The first strategic plan has now been completed and the subsidiary is now looking for further opportunities. STAKEHOLDER RELATIONSHIPS As for all member based organisations, this is an area of key importance. Balancing the needs of all members is an ongoing priority for the Board. This year saw Ambulance New Zealand accepted as a member. The active role that they have chosen to play is welcome and makes the ITO stronger. It also saw the start of discussions with New Zealand Security Association that will more clearly define and strengthen the relationship between the two organisations. I acknowledge the input and support from our industry owners which must never be under estimated as it is a vital component, without which, the ITO could not function. BOARD At the end of the year we farewelled Bob Campbell. On behalf of you all, I wish to acknowledge Bob s contribution to the ITO. It was valuable and much appreciated. I also wish to acknowledge the input and effort of the other members of the Board which made the year s achievements possible. As required by the Constitution, my term as Chairman has come to an end and I would like to thank everyone with whom I came into contact over the three years for their generous support. Murray Hobson 6

7 I acknowledge the input and support from our industry owners which must never be under estimated as it is a vital component, without which, the ITO could not function. 7

8 CHIEF EXECUTIVE S REPORT We approached the 2006 year with determination determination that training places would be available to all comers, and there would be an end to the queues that had formed in the previous year. It is mostly with relief that we report success in achieving that aim. We attracted from government a larger subsidy. We completed reviews of several of our most popular training programmes and we enhanced our systems. Industry training services were delivered into 1500 New Zealand workplaces for 11,650 apprentices and trainees in the electrotechnology, telecommunications, contact centre and security industries, and ambulance sector. To secure our ability to offer service to all comers into the future we paid particular heed to the sustainability of ETITO s business. We chose more beneficial investment instruments, planned more systematic accumulation of cash reserves and established a limited liability company, ETITO Consulting Limited [ECL], to generate revenue from sources other than government funds. ECL s first major contract will be completed by mid ETITO is due for re-recognition as an ITO in the 2007 year. The direct engagement with stakeholders through research activities, regional forums, standards and qualification advisory groups has netted us rich information to inform the strategic direction of the organisation. Endorsement of the new strategy will be sought mid This period [ ] is one of significant change in the tertiary education sector. The current reform process is requiring considerable shifts in how we work. Government is now putting greater emphasis on ITOs role as leaders for industry and tertiary providers. The primacy of national qualifications for vocational training is confirmed but allowance is made for Institutes of Technology and Polytechnics [ITPs] to provide industry training services. These overlaps and inconsistencies are not yet resolved and ETITO is contributing to the lobby mounted by the Industry Training Federation. In the meantime, ETITO finds itself in a competitive market with ITPs who are funded by government at much higher levels. Market share has been lost in the security staff services sector. A major focus for the year has been the improvement of quality assurance practices in teaching, assessment and moderation, both in training provider and workplace environments. This programme of review will continue into 2007 when it will touch the full range of assessors, their practice, their training and their moderation in the workplace. 8

9 There is always the need to enhance the capability of the organisation through its people. ETITO s operation has grown in steps, year on year, and heads into 2007 with ten new staff roles in quality management, research, qualifications development, communications, administration and service delivery. The phenomena of worker mobility and longer recruitment times are experiences for ETITO in recent times as they are for most organisations in this tight labour market. I want to take this opportunity to make it known that ETITO is only as good as its people, and its people are pretty good. As well as doing their own work, ETITO staff have covered for vacancies, invested in inducting new staff and generally journeyed the extra mile to maintain service levels. ETITO directors have been supportive of organisational initiatives. In particular, because they are the intelligence that keeps the ITO relevant, I want to acknowledge formally the voluntary contributions of time and expertise we receive through client feedback, consultation forum participation, and research and industry advisory group activity. To my mind, this is industry s investment in your national training systems and in your agent, ETITO. Thank you for your contribution to a successful year of industry training. A positive Audit New Zealand audit report of ETITO carried out in December 2006 augurs well for the organisation as it heads into The tertiary reform process will result in some changes through the year, but I am confident that they will not distract us unduly from our responsibility to advance industry training on behalf of our industries in alignment with government s goals. 9

10 I want to acknowledge formally the voluntary contributions of time and expertise we receive through client feedback, consultation forum participation, and research and industry advisory group activity. [L to R] Marilyn Brady, Charlene Beinart, Michael Frampton, Patsy Stewart, Heather Lees. 10

11 SOME OF THE HIGHLIGHTS FOR ETITO IN 2006 WERE: WORKPLACE ACHIEVEMENTS Our training workplaces performed very well in The numbers of apprentices and trainees participating in industry training exceeded the targets set with the Tertiary Education Commission [TEC] and so too did their achievement of credits and qualifications. This is a good result considering STM [training volume] targets were increased by 14% from CRITERIA TEC TARGET ACHIEVEMENT Standard Training Measures [STMs] 3,757 3,860 Qualifications Completed 2, Credits Achieved 260, ,859 Industry Contribution 28% 27% Note that these figures include Modern Apprenticeships. More information about our industries apprentices, trainees and Modern Apprentices is shown overleaf. 11

12 Qualifications reported by year ACTUAL CONTRACTED Credits reported by year ACTUAL CONTRACTED STMs by year ACTUAL CONTRACTED Qualifications achieved by industry by year Ambulance Contact Centre Electrotechnology Offender Management Security Telecommunications Credits achieved by industry reported by year Ambulance Contact Centre Electrotechnology Offender Management Security Telecommunications Trainees By Industry reported by year Ambulance Contact Centre Electrotechnology Offender Management Security Telecommunications

13 ethnic group by industry European/pakeha ethnic group by industry Pacific Islander Ambulance Contact Centre Electrotechnology Offender Management Security Telecommunications Ambulance Contact Centre Electrotechnology Offender Management Security ethnic group by industry New Zealand Māori ethnic group by industry Other Ambulance Contact Centre Electrotechnology Offender Management Security Telecommunications Ambulance Contact Centre Electrotechnology Offender Management Security Trainees & Modern apprentices by region Auckland Bay of Plenty Canterbury Hawkes Bay Manawatu/Wanganui Nelson/Marlborough Northland Southland Taranaki Waikato Wellington West Coast 13

14 2006 HIGHLIGHTS CONTINUED... QUALIFICATION DEVELOPMENT In 2006, the decision was made to interrupt the planned cycle of qualification development so that the results of the research into future skill needs could be used in the review process. We note, therefore, a backlog of the less well used qualifications requiring review. THE QUALIFICATIONS REVIEWED OR DEVELOPED IN THE PERIOD INCLUDE: The National Certificate in Offender Management [Level 3] The National Certificate in Offender Management [Level 4] The National Certificate in Security with strands in Court Security, Event Security, Mobile Patrol, Noise Control, Retail Security, Secure Transport and Site Security The National Certificate in Telecommunications [Level 3] with strands in Bearer and Switch, Building and Data Cabling The National Certificate in Electrical Engineering [Electrical Appliance and Electronic Servicing] [Level 3] The National Certificate in Electrical Engineering [Electrical Appliance and Electronic Servicing] [Level 4] with strands in Commercial Electrical Appliances, Domestic Electrical Appliances, Electronic Consumer Goods, Office Equipment and Portable Electrical Appliances and Power Tools. PROJECTS CONTINUING INTO 2007 ARE: The National Diploma in Engineering [Level 6] with strands in Computer Engineering, Electrical Engineering, Electronics, Industrial Measurement and Control and Telecommunications The National Certificate in Financial Services [Banking] [Level 5] The National Certificate in Financial Services [Level 3] The National Certificate in Financial Services [Level 4] The National Certificate in Financial Services [Level 5] The National Certificate in [Advanced] Financial Services [Level 6] The National Certificate in Financial Services [Financial Services Broking Management] [Level 5] 14

15 The National Certificate in Financial Services [Financial Planning] [Level 5] The National Certificate in [Advanced] Financial Services [Financial Advice] [Level 6] The National Certificate in Financial Services [FMB] [Level 4] The National Certificate in Insurance Services [Level 3] The National Certificate in Insurance Services [Level 4] The National Certificate in Financial Services [Insurance Assessment Services] [Level 4] The National Certificate in Insurance Services [Level 5] The National Certificate in Financial Services [Insurance Broking] [Level 5] The National Certificate in Electrical Equipment [Level 2] The National Certificate in Industrial Measurement and Control [Level 4] New qualifications are in development for the finance and insurance industry for whom ETITO will gain industry coverage in The suite of qualifications for the electrotechnology industry has been expanded to include a new programme for employees involved in the wholesaling of electrical and similar equipment. This national certificate will also come into use in

16 QUALITY SYSTEMS In 2006, ETITO embarked on a review of moderation and assessment systems, both internal and external, in preparation for an audit by NZQA in Activities included a systematic upgrade of the quality of assessment materials to produce more easily auditable, valid and sufficient assessment evidence. A national moderator training manual was introduced and reinforced at two moderator workshops. Collaborative processes for external moderation of industrial measurement and control qualifications and the National Diploma in Engineering were introduced. Good practice standards for internal moderation were identified for future use, along with enhanced processes for continuous improvement. These and planned future quality improvements mean that employers, trainees and training providers can have greater confidence in the consistency and quality of training. FUTURE SKILLS LEADERSHIP ETITO s research effort into the future skill needs of our industries continued in earnest during the period. Investigation was made into the industrial measurement and control sector and the findings fed into qualification reviews. The Bright Sparks programme was evaluated against its aim of attracting young people into hi-tech careers. Research reports are now published alongside those into the electrical, telecommunications and security industries on ETITO s website at In the second phase of the research programme, industry and training provider workgroups in telecommunications and security reviewed recommendations from the reports, identifying and prioritising the action to be taken to address skill needs in future years. EQUITY PROJECTS The Tertiary Education Strategy identifies ways in which industry training can contribute to government goals relating to youth transition to work or further training, participation in education and training by Māori and Pasifika peoples, and lifting foundation skill levels of people at work. ETITO has made significant responses across all dimensions of the Strategy. As well as the flagship school-to-work transition programme, Bright Sparks, ETITO has supported 600 Modern Apprenticeships in electrotechnology and many secondary school students through the Gateway scheme. Strategies to enhance the participation of both Māori and Pasifika are designed and pilot projects with WelTec and Unitec confirmed for A fruitful partnership with Workbase, the adult literacy provider, is progressing with a first initiative focusing on the literacy needs of trainees in the security staff services sector. Collaboration with expert partner organisations underpins each of these activities. 16

17 BRIGHT SPARKS This three pronged strategy to increase the pool of young people drawn into electrotechnology and other hi-tech careers continued to bed into the fabric of technology education in New Zealand secondary schools. All aspects of the programme the two National Certificates in Electronics Technology, the teacher training and support activities and resources, the Bright Sparks own internet club, and competition are continually enhanced so that in 2006, 2,764 students in 117 schools participated in the programme. Bright Sparks themselves advised on the redesign of the brand and website, completed during the year. They also excelled at the Bright Sparks HiTech Competition Awards evening held in November at the Sky City Convention Centre in conjunction with the annual industry event. In July, the Convergence Conference was hosted by ETITO s Bright Sparks managers in Christchurch. Technology teachers from around the country took part in week long activities, exploring the teaching of electronics and the alignment of the industry qualifications with NCEA. These developments were positively received by the conference delegates and Ministry of Education officials, and will be continued. STAKEHOLDER RELATIONS Further to the research projects, consultation and communication with industry and training stakeholders occurred in 12 regional forums for those in the electrotechnology, contact centre and security industries. Presentations 17

18 were made at the annual conferences of the Electrical Contractors Association of New Zealand [ECANZ], the Appliance and Electronics Industry Association [A&EIA], the New Zealand Security Association [NZSA], the Telecommunications Users Association of New Zealand [TUANZ] and the hi-tech industry. As well as reviewing and recasting ETITO newsletters into on-line or print media, according to industry preference, we reinstated the practice of advertising training in the trade magazines ElectroLink, TUANZ Topics and New Zealand Security magazine. 17 advertorials appeared in these publications in the year. The year s programme to disseminate key messages about the benefits of industry training was completed with a re-design of the ETITO website. It is now the primary repository of information about the national training systems we manage. These forums, conference attendances and publication programmes are manifestations of the new Stakeholder Relations Management Plan introduced in The delivery of the plan highlighted areas for further development and better connections. The year ended with commitments to recast relationships, communications and services to the ambulance sector and the security advisory body. For the most part, stakeholders have advised us that our communications should encompass all of ETITO s activities, not just those in the industry with which they identify. In three particular instances, close collaborations with stakeholders are codified in Memoranda of Understanding [MoU] or similar. The Institution of Professional Engineers of New Zealand [IPENZ], the Institutes of Technology and Polytechnics of New Zealand [ITPNZ], National Electrotechnology Educators Consortium [NETEC] and ETITO have teamed up to promote, deliver and quality assure the National Diploma in Engineering [Electrotechnology] as the New Zealand standard for technician training under the international Dublin Accord. A new MoU was signed with the Electrical Workers Registration Board [EWRB] recording the alignment, and mechanisms for maintaining alignment, of regulatory requirements for electrical workers, the licensing regime and the obligations of trainees and supervisors under the Act, with the national industry training system in electrotechnology. Our partner, as we pursue better literacy services, is Workbase. The memorandum between us delivered ETITO a literacy strategy and an extension of the agreement to work together as we begin to implement that strategy. 18

19 THE ICT IN CANTERBURY GROWTH PILOT PROJECT Begun in 2004, this $1.76M project, involving all the tertiary institutions, and the Canterbury ICT Cluster of electronics and software manufacturing companies in the region, is a collaborative initiative led by ETITO and funded by the Tertiary Education Commission. The 2006 phase of the project focused on the development of a public promotional strategy and media campaign to attract young people in the region to careers in the ICT industry. The ICT THE SMART FUTURE brand was launched to the community in November at the Connectivity 06 trade show at the Christchurch Convention Centre. The brand, its key messages and call to action, supported by a comprehensive website, will roll out in The year also saw the further development of tertiary courses and a second research report on the skill needs of Canterbury companies in the ICT sector. 19

20 [L to R] Jim Anderson, Ross Beal, David Waters, Brian Nowell, Murray Hobson, David Grant. GOVERNANCE Ray Barbara resigned from the Board after ten years of service to ETITO as director, and from , as Chairman of the Board. Ray, on behalf of the Electrical Contracting sector, was there from the beginning, guiding the development of competency based apprenticeships for electrical workers, as well as building ETITO, the organisation. The year also saw both Bob Campbell s term as director and Murray Hobson s three year term as Chairman draw to an end. AFTER THE 2006 ELECTIONS, THE BOARD COMPOSITION IS: Brian Nowell Chairman David Grant Deputy Chairman Murray Hobson Ross Beal Jim Anderson David Waters 20

21 INTRODUCTION TO ETITO CONSULTING LIMITED ETITO Consulting Limited [ECL], a subsidiary of ETITO Incorporated, was established in 2006 to leverage ETITO s intellectual property and experience in the design and implementation of industry-led education and training systems. ECL will provide niche consulting services to government agencies, industries, and enterprises for commercial gain, both in New Zealand and abroad. The sole objective of ETITO Consulting Limited is to produce profit that can be applied to the objects of ETITO for the benefit of ETITO s industries in New Zealand. In 2006, ETITO Consulting Limited secured a contract in British Columbia - Canada, to design a competency based qualification and supporting training system for industrial electricians working in heavy industrial [solid wood, mining and smelting, pulp and paper and oil and gas] workplaces. This work will be completed in Also in 2006, ETITO Consulting Limited engaged in a business planning process that identified the organisation s target markets, product and service offering and strategic initiatives out to This process identified the following key differentiators of the services to be offered by ETITO Consulting Limited: Leading market experience and technical expertise in designing and developing industry training systems. Recognised reputation in New Zealand that has already attracted international interest. Unrivalled knowledge base of qualifications, competency assessment frameworks and training systems. Valuable experience in stakeholder consultation and integration. Highly qualified and experienced team with kiwi styled can do approach. This plan will be implemented in the second half of

22 2006 ETITO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER

23 DIRECTORY FOR THE YEAR ENDED 31 DECEMBER 2006 Trading Name Head Office ETITO Level 3, Building B 65 Main Highway Ellerslie Auckland Postal Address Freepost 5164 PO Box Royal Oak Auckland Telephone/Fax Ph. [09] Fax. [09] Chief Executive Auditors Bankers Marilyn Brady Deloitte Chartered Accountants Auckland ASB Bank Ltd North Harbour Business Banking Albany 23

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26 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED STATEMENT OF FINANCIAL performance for the year ended 31 DECEMBER 2006 ETITO CONSOLIDATED ETITO INCORPORATED Operating Revenue Notes $ $ $ $ TEC Training Subsidies 11,583,044 9,406,160 11,583,044 9,406,160 Moderation Income 100, , , ,647 Industry Contribution 995, , , ,757 Ventures Income 358, , , ,141 Interest Income 200, , , ,059 Expense Recoveries from Subsidiary ,090 0 Other Income 7 27,780 28,492 27,780 28,492 Total Operating Revenue 13,264,815 10,713,256 13,156,457 10,713,256 Operating Expenses 8 Training Subsidies 5,348,324 3,880,184 5,348,324 3,880,184 Training Support Services 2,883,363 2,498,856 2,883,363 2,498,856 Research & Curriculum Development 479, , , ,716 Quality Assurance 227, , , ,398 Stakeholder Relations 539, , , ,887 Ventures 478, , , ,496 Administration Costs 2,649,417 1,864,728 2,649,417 1,864,728 Governance 32,440 43,933 32,440 43,933 Total Operating Expenses 12,638,362 9,511,498 12,525,770 9,511,498 Net Surplus For The Year $626,453 $ 1,196,058 $630,687 $ 1,196,058 STATEMENT OF MOVEMENTS IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2006 ETITO CONSOLIDATED ETITO INCORPORATED $ $ $ $ Equity at Start of Year 2,387,281 1,191,223 2,387,281 1,191,223 Net Surplus for the Year 626,453 1,196, ,687 1,196,058 Total Recognised Revenue and Expenses 626,453 1,196, ,687 1,196,058 Equity At End Of The Year $3,013,734 $2,387,281 $ 3,017,968 $2,387, The notes on pages form part of and should be read in conjunction with these financial statements

27 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2006 ETITO CONSOLIDATED ETITO INCORPORATED Notes $ $ $ $ Accumulated Funds $3,013,734 $2,387,281 $3,017,968 $2,387,281 Represented by: Current Assets Accounts Receivable 6 232,714 52, ,224 52,934 Accrued Income 9 1,805,418 1,426,675 1,772,928 1,426,675 Bank ETITO 1,968,209 1,675,241 1,863,399 1,675,241 Bank Bright Sparks Scholarships 28,989 42,710 28,989 42,710 Bank Growth Pilot 137, , , ,622 GST Receivable 241, , , ,004 Prepayments 42,636 33,396 37,110 33,396 Inventory 12 11,793 3,825 11,793 3,825 Total Current Assets 4,468,418 3,570,407 4,457,955 3,570,407 Current Liabilities Accounts Payable , , , ,439 Accrued Expenses ETITO 1,090, ,707 1,076, ,707 Accrued Expenses Growth Pilot 173, , , ,472 Income in Advance 15 41,250 38,333 41,250 38,333 Employee Entitlements 208, , , ,284 Scholarship Fund 9,000 20,000 9,000 20,000 Current Portion of Deferred Income 10 27,780 27,780 27,780 27,780 Total Current Liabilities 2,021,190 1,591,015 2,016,493 1,591,015 Net Current Assets 2,447,228 1,979,392 2,441,462 1,979,392 Non Current Assets Plant and Equipment 3 700, , , ,939 Investment in Subsidiary Shares in ETITO Consulting Limited ,000 0 Total Non Current Assets 700, , , ,939 Non Current Liabilities Deferred Income , , , ,050 Net Assets $3,013,734 $2,387,281 $3,017,968 $2,387,281 On behalf of the board Chairman Date Chief Executive Date The notes on pages form part of and should be read in conjunction with these financial statements 27

28 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED STATEMENT OF cash flows FOR THE YEAR ENDED 31 DECEMBER 2006 ETITO CONSOLIDATED ETITO INCORPORATED Notes $ $ $ $ Cash flows from Operating Activities Cash was provided from: Government Grants 11,634,340 9,845,796 11,634,340 9,845,796 Receipts from Customers 1,390,413 1,017,561 1,310,797 1,017,561 Interest Received 194, , , ,682 Cash was applied to: Payments to Suppliers and Employees [12,651,077] [9,615,921] [12,676,261] [9,615,921] Net Inflow from Operating Activities ,780 1,361, ,970 1,361,118 Cash flows from Investing Activities Cash was provided from: Sale of Plant and Equipment Cash was applied to: Purchase of Plant and Equipment [340,542] [89,408] [340,542] [89,408] Net Outflow from Investing Activities [340,542] [89,117] [340,542] [89,117] Net Increase/[Decrease] in Cash Held 227,238 1,272, ,428 1,272,001 Add Cash at Start of Year 1,907, ,572 1,907, ,572 Balance at End of Year $2,134,811 $1,907,573 $2,030,001 $1,907, The notes on pages form part of and should be read in conjunction with these financial statements

29 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS 1. STATEMENT OF ACCOUNTING POLICIES The entity reporting is Electrotechnology Industry Training Organisation Incorporated. The accounts have been prepared in accordance with generally accepted accounting practices. General Accounting Policies The following general accounting policies have been adopted in the preparation of the financial statements. The measurement basis adopted is that of historical cost. The reporting currency is New Zealand dollars. Particular Accounting Policies The following are the particular accounting policies which have a material effect on the measurement of results and financial position: Consolidated Financial Statements The consolidated financial statements comprise ETITO Incorporated, its subsidiary, and the subsidiary s interest in joint ventures. Subsidiaries are those entities that are controlled by ETITO Incorporated. The group financial statements incorporate the financial statements of ETITO Incorporated and its subsidiaries which have been consolidated using the purchase method. The results of any subsidiaries that become or cease to be part of the group during the year are consolidated from the date that control commenced or until the date that control ceased. All inter-company transactions, balances and unrealised profits are eliminated on consolidation. Joint Ventures Joint ventures are joint arrangements between the group and another party in which there is a contractual agreement to undertake a specific business project in which the venturers share several liability in respect of the costs and liabilities of the project and share in any resulting output. The group s share of the assets, liabilities, revenues and expenses of joint ventures are incorporated into the group financial statements on a line by line basis using the proportionate method. 29

30 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS Plant and Equipment a) Plant and Equipment are stated at cost less accumulated depreciation. b) Plant and Equipment have been depreciated at the following rates: Computer Software 40% SL Computer Hardware 25% SL Furniture & Fittings 25% SL Motor Vehicles 25% SL Office Equipment 25% SL CRM Database 20% SL Leasehold Fitout Term of Lease Inventories All inventories are valued at the lower of cost and net realisable value. Industry Contribution Training Management Fees received, included in Industry Contributions, are recognised and taken to income in the period in which they are billed. TEC Training Subsidies TEC Training Subsidies are received under a performance contract with the Tertiary Education Commission and outstanding subsidies are accrued and recognised as income in the period to which they relate. Operating Leases Operating lease rentals are recognised evenly over the expected period of benefit to the organisation. Taxation The reporting entity has been approved as a charitable organisation and has exemption from Income Tax under Income Tax Legislation. Goods and Services Tax The financial statements have been prepared stating all income and expenditure items exclusive of GST. Statement of Cash Flows The Statement of Cash flows is prepared exclusive of GST, which is consistent with the method used in the Statement of Financial Performance. Definitions of the terms used in the statement of cash flows: Cash includes coins and notes, demand deposits and other highly liquid investments readily convertible into cash and includes at call borrowings 30

31 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS such as bank overdrafts, used by ETITO Incorporated and the group as part of their day-to-day cash management. Operating activities include all transactions and other events that are not investing or financing activities. Investing activities are those activities relating to the acquisition and disposal of current and non-current investments and other non current assets. Financing activities are those activities relating to changes in the equity and debt capital structure of ETITO Incorporated and the group and those activities relating to the cost of servicing ETITO Incorporated and the group s equity capital. Foreign Currency Transactions denominated in foreign currencies are translated into the reporting currency using the exchange rate in effect at the transaction date. Monetary items receivable or payable in a foreign currency are translated at balance date at the closing rate. Exchange differences on foreign currency are recognised in the statement of financial performance. Interest Income Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable. Differential Reporting ETITO Incorporated is eligible to apply differential reporting exemptions in accordance with the Institute of Chartered Accountants of New Zealand Framework on the grounds that it is not large. The following exemptions in respect of the Statement of Standard Accounting Practices [ SSAP ] have been applied: SSAP 23 Financial Reporting for Segments. Changes in Accounting Policies There have been no changes in accounting policies. All policies have been applied on a basis consistent with last year. 2. PRINCIPAL ACTIVITY A multi-industry Industry Training Organisation [ITO], ETITO has gazetted industry coverage for the electrotechnology [including electrical engineering, electronic engineering, electronic security, motor rewinding and repair, switchgear fitting, appliance servicing, and industrial measurement and control], security [including offender management] and telecommunications 31

32 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS [including contact centre] industries as well as the ambulance sector. Recognised as a Tertiary Education Organisation [TEO], ETITO is enabled by statute to: develop skill standards and qualifications, manage national training systems and provide skills leadership to the industry constituencies for whom it has gazetted industry coverage. ETITO Consulting Limited [ECL], a subsidiary of ETITO Incorporated, was established in 2006 to leverage ETITO s intellectual property and experience in the design and implementation of industry-led education and training systems to provide niche consulting services for commercial gain, both in New Zealand and abroad. 3. PLANT AND EQUIPMENT ETITO CONSOLIDATED and ETITO INCORPORATED As at 31 December 2006 Cost Accum Book Depn Value $ $ $ Furniture & Fixtures 145, ,630 30,079 Office Equipment 79,247 68,311 10,936 Motor Vehicles Computer Hardware 468, , ,252 Computer Software CRM Database 239, ,791 26,051 Other 173,779 85,329 88,450 Leasehold Fitout Head Office 448, , ,446 Leasehold Fitout Wellington 143,978 10, ,562 1,699, , ,776 As at 31 December 2005 Cost Accum Book Depn Value $ $ $ Furniture & Fixtures 127,343 96,545 30,798 Office Equipment 70,654 60,254 10,400 Motor Vehicles Computer Hardware 384, , ,369 Computer Software CRM Database 239, ,175 46,667 Other 93,135 56,681 36,454 Leasehold Fitout 448, , ,251 1,363, , ,939 32

33 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS 4. CAPITAL COMMITMENTS & CONTINGENT LIABILITIES The Organisation has a contingent liability in respect of the Accident Compensation Commission s residual claims levy. The levy will be payable annually from May 1999 for up to fifteen years. The Organisation s future liability is a function of ACC s unfunded liability for past claims and future payments to employees by the Organisation. There are no other contingent liabilities or capital commitments [2005 Nil]. 5. OPERATING LEASE COMMITMENTS Commitments for operating leases are as follows: ETITO CONSOLIDATED and ETITO INCORPORATED $ $ 0-1 year 651, , years 617, , years 1,194, ,693 Over 5 years 330, ,702 2,793,768 2,482, ACCOUNTS RECEIVABLE Accounts Receivable includes a provision of $11,735 for doubtful debts [2005 $12,781]. Accounts Receivable for ETITO Incorporated includes $232,586 intercompany balance owing from ETITO Consulting Limited. 7. OTHER INCOME Other Income includes $27,780 of previously deferred income [2005 $27,780]. 33

34 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS 8. OPERATING EXPENSES Operating expenses includes the following costs: ETITO CONSOLIDATED and ETITO INCORPORATED $ $ Audit Fee 11,770 9,604 Bad Debts 2,350 6,530 Change in Provision for Doubtful Debts [1,046] 11,220 Depreciation Furniture & fixtures 19,088 20,099 - Office Equipment 8,057 10,791 - Motor Vehicles Computer Hardware 68,306 66,197 - Software CRM Database 20,615 47,968 - Software Other 28,649 11,357 - Leasehold Fitout-HO 49,806 49,802 - Leasehold Fitout-Wellington 10,416 0 Directors Fees 20,100 31,400 Less reversal of fees not claimed in prior years [18,500] 0 Net Director Fees 1,600 31,400 Donations Loss/[gain] on Sale of Assets 0 2,036 ETITO CONSOLIDATED Foreign Exchange Losses 8, ACCRUED INCOME Accrued Income is government subsidies relating to the reporting period but not yet received from the Tertiary Education Commission. 10. DEFERRED INCOME The deferred income is a contribution from the lessor to fitout the new premises and will be recognised over the term of the lease of the premises. 11. INDUSTRY PAYMENTS NOT INCLUDED IN ETITO BOOKS Industry payments made direct to providers for off job training and other employer/trainee related payments incurred amounted to $3,136,237 excluding GST [2005 $1,671,548]. 12. INVENTORY Inventory consists of finished goods for resale. 34

35 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS 13. NET CASH FLOW FROM OPERATING ACTIVITIES Reconciliation of Statement of Financial Performance surplus with net cash flow from operating activities: ETITO CONSOLIDATED ETITO INCORPORATED $ $ $ $ Surplus for the Year 626,453 1,196, ,687 1,196,058 Add/[Subtract]: non cash items - Depreciation 204, , , ,215 - Deferred Income [27,780] [27,780] [27,780] [27,780] Operating Surplus 803,610 1,374, ,844 1,374,493 Movements in Funds Net Decrease/[Increase] in Receivables and Prepayments [662,805] [215,255] [757,152] [215,255] Net Decrease/[Increase] in Inventory [7,968] [11,895] [7,968] [11,895] Net Increase/[Decrease] in Payables 430, , , ,598 Items classified as investing activities: Investment in ETITO Consulting Ltd 0 0 [10,000] 0 Loss/[gain] on Sale of Plant and Equipment 0 2, ,036 Plant & Equipment Purchases in Payables [3,881] [8,649] [3,881] [8,649] Plant and Equipment Purchases prior year payables 8, ,649 0 Net Cash Inflow from Operating Activities 567,780 1,361, ,970 1,361, FINANCIAL INSTRUMENTS In the normal course of business, the organisation incurs credit risk from trade debtors and transactions with financial institutions. The organisation does not have any significant concentrations of credit risk. It does not require any collateral or security to support financial instruments as it only deposits with, or loans to, banks and other financial institutions with high credit ratings. The carrying value of cash, receivables, trade creditors and payables is equivalent to their fair value. The group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies arising from normal trading activities. The currency in which the group primarily deals with is the Canadian dollar. 35

36 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS 15. INCOME IN ADVANCE Income in Advance represents sponsorship income for the period to December ACCOUNTS PAYABLE Accounts Payable for ETITO Incorporated includes $10,000 inter-company balance owing to ETITO Consulting Limited. 17. INVESTMENTS IN SUBSIDIARIES ETITO Consulting Limited was incorporated on 13 June 2006 and is 100% owned by ETITO Incorporated. The results of ETITO Consulting Limited s operations for the year were a loss of $4,233 and are included in the consolidated statement of financial performance as from the date of incorporation. Subsidiary Owned at 31 December 06: Name Principal Activities Ownership and Voting Interest ETITO Consulting Limited Consulting Services The Subsidiary has a balance date of 31 December. ETITO Consulting Limited is incorporated in New Zealand. 18. JOINT VENTURE 100% 0% The group has an interest in a joint venture between ETITO Consulting Limited and Fulford Harbour Consulting Limited to perform consulting services in Canada. Under the joint venture, the costs are shared equally and the revenue is shared 69% ETITO Consulting Limited and 31% Fulford Harbour Consulting Limited. The group s share of revenues, costs, assets and liabilities relating to the joint venture have been included in the consolidated financial statements. 19. FOREIGN CURRENCY DENOMINATED MONETARY ASSETS AND LIABILITIES ETITO CONSOLIDATED ETITO INCORPORATED $ $ $ $ Current assets and current liabilities not hedged Current asset Canadian dollars 210, Current liability Canadian dollars 23,

37 ELECTROTECHNOLOGY INDUSTRY TRAINING ORGANISATION INCORPORATED NOTES TO THE FINANCIAL STATEMENTS 20. RELATED PARTIES Transactions ETITO Incorporated incurred expenditure of $215,632 [2005 nil] on behalf of its subsidiary ETITO Consulting Limited and charged this expenditure to the subsidiary. No related party balances have been written off or forgiven during the year. 37