Annual report - Institute of Directors in New Zealand reports/Annual... · Datacom Group Ltd. He is Chairman of ... HiGrowth Project Trust, ... 4 Institute of Directors Annual Report

Annual report 2007

Contents

President and Chief Executive’s

Review for 2007 1

Institute of Directors’ Council 4

Corporate Governance 5

A Programme of Reinvestment 6

Chief Executive Officer 6

Auditors’ Report 7

Income Statement 8

Statement of Changes in Equity 8

Balance Sheet 9

Notes to the Financial Statements 10

PRESIDENT AND

Chief Executive’s

REVIEW FOR 2007

2007 was another busy, productive and successful year for

the Institute of Directors (IoD) in terms of financial gain,

increased member services and member satisfaction levels.

The IoD recorded an excellent financial result, continued strong growth

in membership and solid revenue growth from all major business

activities. Most importantly, the IoD’s core objectives of promoting

good governance, expanding and promoting directors’ interests and

assisting them by providing training, development and networking

opportunities, were faithfully and robustly maintained at the same

time as making significant reinvestment in services to members.

The net operating surplus for the year of $75,217 was above budget

and $21,518 greater than the 2006 year. Income increased by

17.5% against last year, while expenditure increased at 17.2%. The

major increases in income can be attributed to a greater number of

professional development courses together with higher membership

numbers and a small increase in subscriptions from 1 October 2007.

The total membership has increased by a net 250 to just fewer than

4,200 members and revenue from services to members including professional

development courses and board advisory services totalled $4,037,838,

an increase of $624,103 over last year. Accumulated funds now stand

at $829,230 having more than doubled in the last four years.

These results continue to demonstrate that the IoD is successfully meeting

the needs of its members and the wider directing community and is at the

vanguard of setting and achieving excellent standards of governance.

The last two years have seen further significant reinvestment in services

for members with development costs exceeding $750,000. Projects

included the website redevelopment, allowing members more immediate

and satisfactory access to IoD services; a redesign of the professional

development programme, delivering more robust and relevant training;

a new director appraisal system, BetterBoards; and the publication of the

Principles of Best Practice in an easily useable and portable format.

2,000

3,000

4,000

5,000

1,0002003 2004 2005 2006 2007

MeMbership nuMbers

2,000

3,000

4,000

5,000

1,000

2003 2004 2005 2006 20070

Total Assets Total Income Net Surplus

Financial results(000s)

Institute of Directors Annual Report 2007 1

Paul Hargreaves ONZM

Dr Nicki Crauford

The new website is up and running with significantly improved

online functionality including membership applications,

training registrations, branch function registrations,

individual member log on and the ability for members to

update their own details online. Member feedback on

the professionalism of the website, its online functionality

and overall ease of operation has been excellent.

An essential ingredient of the improved services to

members has been the redevelopment of the IoD’s

professional development programme which began in

2006. It has included the introduction of a Governance

for Rapid Growth Companies course, a recognition that

many high growth New Zealand companies face particular

yet avoidable pitfalls. We have also redesigned our

flagship five day Company Directors’ Course (CDC).

It is pleasing to note an improvement in the satisfaction levels

of CDC participants during the second half of the year following

changes introduced in June. In addition, the Chairing the

Board course has been redesigned and implemented, and

a new Governance for Listed Companies course has been

researched and designed ready for implementation in 2008.

The remaining curriculum redesign and implementation

will take place over the next two years beginning

with the Governance Essentials course in 2008.

A further innovation during the year was the publication

of Principles of Best Practice for New Zealand Directors – a

comprehensive update of the full set of best practice statements

produced by the IoD over the last 20 years. 42 separate best

practice statements on specific topics have been reformulated

into a consolidated and easily referenced document under

the IoD’s ‘Four Pillars of Effective Board Governance’.

All members received a copy of the new publication

in September and many members have sent messages

of thanks and support as well as requests to use the

material in external presentations. This is encouraging

feedback and testament to the high value that

members place on this vitally important material.

Options for developing the online director evaluation system,

first launched in 2003 as part of a joint venture with The

Executive Coaching Centre Ltd, were investigated during the

year. Following an analysis of the market, it was determined

that a fresh approach was required. Subsequently the IoD has

developed it own proprietary online system, BetterBoards,

which was launched in January 2008. The new system is an

easy to use online questionnaire which helps boards to identify

their strengths and weaknesses and therefore determine

opportunities to become even better at what they do.

Institute of Directors Annual Report 20072

PRESIDENT AND

Chief Executive’s

REVIEW FOR 2007 Continued

In its second full year of operation, accreditation has continued

to gain acceptance amongst members. The purpose of

accreditation is to enhance corporate governance standards

in New Zealand by providing a register of directors who

can provide evidence of their professional status in terms of

their knowledge and experience and have also committed

themselves to continuing professional development,

irrespective of the stage of their career. It allows members

of the IoD to demonstrate a commitment to professional

standards and provides shareholders and stakeholders with

reassurance that accredited and provisionally accredited

directors have an appropriate level of experience and

understanding of the role, as well as a commitment to

continue to upgrade their knowledge of their profession.

By the end of the year, 199 applications had been received,

with 171 successfully accredited members – either fully

or provisionally. A further 14 applications were in process.

Our thanks to the Accreditation Board for their hard work

this year, especially to the Chairman, Sam Maling.

The year saw branch activities nationwide continue to flourish in

support of the growth in membership. 81 functions were held

over the year in 13 locations – including regional functions in

Tauranga, New Plymouth, Napier, Taupo, Greymouth, Timaru

and Queenstown. These were in addition to functions in the

major centres - Auckland, Hamilton, Wellington, Nelson,

Christchurch and Dunedin. The wide variety of activities

included breakfast or lunch functions with a broad selection of

interesting speakers, gala dinners, aspiring directors’ lunches

and dinners, host visits, seminars and cocktail functions.

The IoD has continued to make appropriate comment

in the media – through regular columns in both the

widely read Dominion Post newspaper and the weekly

Independent Financial Review. We envisage taking our

message even wider in 2008 with a proposed fortnightly

“briefing” in the National Business Review.

The IoD continues to work closely with its counterparts

in other jurisdictions, notably through the Global Director

Development Circle (GDDC), formed in 2004 by director

institutes from Australia, Canada, New Zealand, South Africa,

the United Kingdom and the United States. Along with our

counterparts, our members benefit greatly from the sharing

of information and experience which this forum provides, as

common ground in governance issues increases internationally.

We wish to thank both Council and staff for their contribution

to what has been a tough but highly successful year. We

would also like to acknowledge the continued support

of our members and their commitment to raising the

standard of corporate governance in New Zealand.


Paul Hargreaves ONZM Dr Nicki Crauford

President Chief Executive Officer

President

Paul Hargreaves ONZM

B.Com, CA, FNZIM, AFInstD

Paul Hargreaves is an accredited fellow of the IoD and is a founder and long time director of Datacom Group Ltd.

He is Chairman of Antarctica New Zealand having been appointed to the board in 2001. He is a director of the Hamilton based electronics company Gallagher Holdings Ltd and until December last, listed company Software of Excellence Ltd. He is also chairman of the HiGrowth Project Trust, a government sponsored initiative to grow New Zealand’s ICT sector.

In 1992 he was appointed an inaugural board member of NIWA, the National Institute of Water and Atmospheric Research Ltd and in 1994, Chief Executive, retiring in 2002. He has also been a director of Radio New Zealand. He is a trustee of the Antarctic Heritage Trust.

Paul was made an Officer of the New Zealand Order of Merit in the 2007 New Year Honours.

Vice President

Kerry McDonaldBCom, MCom (Hons), DCom (hc), AFInstD

Kerry is an accredited fellow of the IoD and Chairman of the Bank of New Zealand and OceanaGold New Zealand Ltd, Vice Chairman of OceanaGold Corporation and a director of National Australia Bank, Opus International Consultants Ltd and Leighton Contractors Pty Ltd. Amongst his many current directorships he is also Deputy Chairman of the NZ Institute of Economic Research and a member of the New Zealand Antarctic Institute Governing Board.

His past directorships include Carter Holt Harvey Ltd, Ports of Auckland Ltd, Gough Gough & Hamer Ltd and Owens Group Ltd.

Auckland

Jan Dawson BCom, CA, MInstD

Jan is Chairman of KPMG New Zealand and has been a partner in the New Zealand firm for 21 years. She is lead partner for a number of financial services clients and also provides specialist advice in corporate governance, treasury and due diligence engagements.

Jan is President of Yachting New Zealand and a member of the Supporters Council of Enterprise New Zealand Trust. Jan also serves on the Disciplinary Tribunal for NZICA.

Wellington

Bryan Gundersen LLM (Hons), AMInstD

Bryan Gundersen, an accredited member of the IoD, is a partner of the national law firm Kensington Swan. He is currently Deputy Chairman of Kensington Swan and a member of the Executive Board of Trustees of the Enterprise New Zealand Trust.

He has been a director of the Wellington Rugby Football Union Inc and served as Chairman of the Audit and Financial and Commerce subcommittees and has also been an advisory board member of the VIP Transport Services and Quality Service Enterprises.

Wellington

Carol Stigley FNZIM, MInstD

Carol Stigley is a company director whose current appointments include Chair of the Hospitality Standards Institute, Deputy Chair of St James Theatre Ltd, Chair of the Audit and Risk Committees at Standards New Zealand and NZ Domain Name Registry Ltd (which she has formerly chaired). She also serves on various panels, such as NZTE’s regional economic development grants scheme. Former appointments include the health, education and export sectors.

Nelson

Brian Rhoades BE (Hons), PhD, FIPENZ, FInstD

Dr Brian Rhoades is a fellow of the IoD and Chairman of Industrial Research Ltd, the Nelson Marlborough Institute of Technology Council, and Nelson Electricity Ltd. He is a Tertiary Education Commissioner and a Nelson Millennium Centre Trustee. His widespread governance experience includes chairing the New Zealand Food and Beverage Exporters’ Council, and directorships with a number of listed and unlisted companies and not-for-profit organisations.


Institute of Directors’ Council

Auckland

Denham Shale LLB, AFInstD

Denham is an accredited fellow of the IoD and has been a member of boards of listed companies for 20 years. At present he is Chairman of The Farmers Trading Company Ltd Group and director of listed companies OceanaGold Corporation, Turners Auctions Ltd and Eastern Hi-Fi Group Ltd, unlisted Munich Holdings of Australasia Pty Ltd and a number of other private companies.

He is also Chairman of the Japan New Zealand Business Council and Mercy Hospice Auckland Foundation and a practising lawyer.

Waikato/Bay of Plenty

Shelley Thomas BCom, MHRINZ, MInstD

Shelley Thomas is the Managing Director of Right Click Employment Solutions Ltd.

She has ten years’ governance experience, including as Deputy Chairman of Quotable Value Ltd, inaugural Chairman of RPNZ Ltd, Chairman of PropertyInsight, Council Member of the Bay of Plenty Polytechnic, and Board Member of Priority One Western Bay of Plenty Inc.

Canterbury

John Barr BSc, FNZIM, MInstD

John is the managing director of Ayrshire e.b.a. Ltd which specialises in providing governance and business holistic and operational advice at managing director/owner level, primarily for SMEs.

John has chief executive and directorship level experience across a range of industry environments together with involvement in the NZ Trade & Enterprise Beachhead programme and the GlobalScots network.

Otago/Southland

Stuart McLauchlan BCom (Otago), CA, AFInstD

Stuart McLauchlan, an accredited fellow of the IoD, is a partner of G S McLauchlan & Co Chartered Accountants, Dunedin. He is currently Chairman of Scott Technology Ltd and a director of Scenic Circle Hotels, Highlanders Rugby Trust, Dunedin Casinos Ltd, Dunedin International Airport, Cargill Hotel 2002 Ltd, A D Instruments Pty Ltd, University of Otago Foundation Studies Ltd, Dunedin City Holdings Ltd, City Forests Ltd, Citibus Ltd, Delta Ltd and Aurora Energy Ltd

His other positions include Councillor at the University of Otago and Governor of the NZ Sports Hall of Fame.


CORPORATE GOVERNANCEThe Council is responsible for the overall corporate

governance of the Institute of Directors. ‘Corporate

governance’ is understood as the direction and

control of the business by the Council, and the

accountability of the Council to the members

and others, for the performance of the IoD and

compliance by the IoD with laws and standards.

ROLE OF THE COUNCILThe Council is responsible for the overall direction

of the Institute of Directors’ business and affairs

on behalf of the members. The principal objectives

of the IoD are to promote excellence in corporate

governance, represent directors’ interests and

facilitate their professional development.

The Council establishes the IoD’s objectives, approves

major strategies for achieving those objectives, sets

in place a policy framework within which the IoD

operates and monitors management’s performance

against these. The Council has delegated the day to

day leadership and management of the IoD to the

Chief Executive Officer.

COUNCIL MEMBERSHIPThe Council consists of a non-executive president, a

non-executive vice-president and eight non-executive

members. All members of the Council are members

of the IoD and do not receive any remuneration as

councillors of the IoD. Some councillors received

remuneration in their capacity as training course

presenters, and for their involvement in accreditation

and board advisory services. The President carries out

a leadership role in the conduct of the Council and its

relations with members and other stakeholders. He

maintains a close professional relationship with the

Chief Executive Officer and the management team.

Procedures for the operation of the Council,

including the election of councillors, are governed by

the IoD’s Constitution.

COMMITTEESTo assist in the execution of its responsibilities,

the Council maintains an Audit Committee and

Remuneration Committee. Ad hoc committees are

also established to carry out specific tasks from time

to time.

The Audit Committee reviews and monitors the

internal control and financial systems operating in the

IoD and provides a direct link between the Council

and the external auditors. The Audit Committee

ensures there are procedures in place to safeguard

the IoD’s assets and interests. These include

accounting, financial reporting, internal control and

investment policies and procedures.

Members of the Audit Committee during the year

were Jan Dawson (Chairman), Paul Hargreaves

and Denham Shale. Those invited to attend the

Committee’s meetings include the Chief Executive

Officer and the external auditors.

The Remuneration Committee sets, reviews and

recommends to Council for approval the remuneration

policies and practices of the IoD, including setting and

reviewing the remuneration of the CEO and other

senior managers. Members of the Remuneration

Committee during the year were Kerry McDonald

(Chairman), Paul Hargreaves and John Barr.

PROFESSIONAL STANDARDSThe IoD’s Council abides by the principles contained

in the Code of Practice for Directors (published

2005). The IoD recognises the need for directors

to observe the highest standards of behaviour and

business ethics when engaging in corporate activity,

and the IoD maintains and encourages the highest

standards of integrity.

A snapshot of this year’s projects

The IoD recognises that as a membership organisation its

fundamental purpose is to deliver value to members. Late in

2006 the IoD embarked on a research programme to explore how

members perceive the value of their membership and how the

IoD is delivering against these expectations.

In many ways the results of this research were to be expected

and they have confirmed the IoD’s direction, performance and

programme of reinvestment. The research has also been very useful

in prioritising our activities and it indicated to us some areas where

we can improve.

Two services which have benefited from significant effort

placed on them in 2007 are the professional development

programme and principles of best practice.

Professional development

The IoD has long been a respected provider of corporate

governance training. The current review however, takes it to the

forefront of governance development globally.

The curriculum is aligned with a competency framework

established in 2006 with the premise that development should

be undertaken at all stages of a director’s career. Based on

four experience levels of ‘threshold’, ‘acquisition’, ‘experience’

and ‘mastery’, the courses have been designed to develop

competence in a wide number of performance areas at a level

appropriate to each experience level.

All courses are practical and based on actual director experience

using a model of ‘for directors, by directors’. Most presenters

are high calibre practising directors in their own right. Moving

through the experience levels, courses become increasingly

interactive and create an opportunity for experienced directors to

debate current issues and learn from peers as well as presenters.

As part of the review and development process the IoD has

consulted widely with experienced directors of specific entities

and disciplines to ensure that the most relevant and topical

issues are covered in detail. The design and delivery of individual

courses have been mapped to quality standards in objectives,

content, materials and assessment and benchmarked to best

practice. The criticality of boardroom behaviour and the role of

the board in adding value have been emphasised throughout.

Principles of best practice for New Zealand directors

2007 has seen a major review of the extensive body of knowledge

that constitutes the IoD’s principles of best practice. 42 discrete

best practice statements on specific topics have been reformulated

into a single document in order to reflect both legislative and

cultural changes in corporate governance over the last few years.

The IoD’s ‘Four Pillars of Effective Board Governance’ which form

the foundation of best practice are: determination of purpose,

governance culture, holding to account and compliance.

The new Principles of Best Practice reflect the approach that

a board’s role is to add value to an organisation and as such

the preoccupation to create value must underpin all notions

of governance as they relate to the practices, structures and

behaviours of boards and directors. The principles are practical to

use and current in their thinking while preserving the integrity of a

body of learning established over time.


A Programme of

Reinvestment

Chief Executive OfficerNicki Crauford BSc (Hons), PhD, FIPENZ, FAICD, MInstD

Nicki has been Chief Executive of the Institute of Directors for four years. Previously she held senior executive positions in the oil, gas, electricity and banking sectors in the UK and in New Zealand.

Before joining the IoD, Nicki was with Transpower New Zealand for a period of nine years where she held several positions including General Manager Strategy.

Nicki is a director of Genesis Energy, one of the country’s largest electricity generators and a director of the Centre for Advanced Engineering, a trust formed by the University of Canterbury to promote engineering. She has a Bachelor of Science in Chemical Engineering and a Doctorate in Engineering.


Auditors’ Report

Auditors’ Report to the Members of the

Institute of Directors in New Zealand (Incorporated)

We have audited the financial statements on pages 8 to 13. The financial statements provide information about the past financial performance of the Institute for the year ended 31 December 2007 and its financial position as at that date. This information is stated in accordance with the accounting policies set out on pages 10 and 11.

Councillors’ responsibilities

The Institute’s Councillors are responsible for the preparation and presentation of the financial statements which present fairly the financial position of the Institute as at 31 December 2007 and its financial performance for the year ended on that date.

Auditors’ responsibilities

We are responsible for expressing an independent opinion on the financial statements presented by the Councillors and reporting our opinion to you.

Basis of opinion

An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:

(a) the significant estimates and judgements made by the Councillors in the preparation of the financial statements; and

(b) whether the accounting policies are appropriate to the circumstances of the Institute, consistently applied and adequately disclosed.

We conducted our audit in accordance with generally accepted auditing standards in New Zealand.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

We have no relationship with or interests in the Institute other than in our capacity as auditors.

Unqualified opinion

We have obtained all the information and explanations we have required.

In our opinion the financial statements:

(a) comply with the New Zealand Equivalents to the International Financial Reporting Standards; and

(b) present fairly the financial position of the Institute as at 31 December 2007 and its financial performance flows for the year ended on that date.

Our audit was completed on 22 February 2008 and our unqualified opinion is expressed as at that date.

Chartered Accountants Wellington

INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007

Note

2007

$

2006

$

Revenue from services 4,037,838 3,413,735

Cost of services 2,907,190 2,271,867

Gross profit 1,130,648 1,141,868

Interest income 93,031 101,355

Total income 1,223,679 1,243,223

Administration expenses 1,148,462 1,189,524

Total expenses 1,148,462 1,189,524

Operating surplus before income tax 3 75,217 53,699

Income tax expense 9 0 0

NET SURPLUS ATTRIBUTABLE TO MEMBERS 75,217 53,699

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2007

2007

$

2006

$

Net surplus attributable to members 75,217 53,699

Total recognised income 75,217 53,699

Accumulated funds 1 January 754,013 700,314

ACCUMULATED FUNDS 31 DECEMBER 829,230 754,013

The attached notes form part of and should be read in conjunction with these financial statements.


BALANCE SHEETAS AT 31 DECEMBER 2007

Note

2007

$

2006

$

CURRENT ASSETS

Cash and cash equivalents 1,160,409 1,194,650

Trade and other receivables 7 438,870 529,962

Interest receivable 10,165 9,793

TOTAL CURRENT ASSETS 1,609,444 1,734,405

NON CURRENT ASSETS

Property, plant and equipment 4 113,727 135,916

Intangible assets 5 516,629 237,514

TOTAL NON CURRENT ASSETS 630,356 373,430

TOTAL ASSETS 2,239,800 2,107,835

CURRENT LIABILITIES

Trade and other payables 1,410,570 1,353,822

TOTAL CURRENT LIABILITIES 1,410,570 1,353,822

TOTAL LIABILITIES 1,410,570 1,353,822

NET ASSETS 829,230 754,013

REPRESENTED BY:

Accumulated funds 829,230 754,013

The Council of the Institute of Directors in New Zealand (Inc) authorised these financial statements presented on pages 8 to 13 for issue 22 February 2008.

PRESIDENT CHIEF EXECUTIVE OFFICER 22 February 2008 22 February 2008

The attached notes form part of and should be read in conjunction with these financial statements.


NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2007

1. GENERAL INFORMATIONThe Institute of Directors in New Zealand (Incorporated) (IoD) provides support and education to directors and potential directors. The IoD is an incorporated society under the Incorporated Societies Act 1908 and is domiciled in New Zealand. The registered office is located at Level 2, 88 The Terrace, Wellington.

These financial statements have been adopted by the Council 22 February 2008.

2. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

(a) Statement of compliance and basis of preparationThese financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand. They comply with the New Zealand Equivalents to International Financial Reporting Standards (NZIFRS) and other applicable Financial Reporting Standards, as appropriate for not-for-profit entities that qualify for and apply differential reporting exemptions. These are the first financial statements under NZIFRS.

The IoD is a qualifying entity within the Framework of Differential Reporting, as it has no public accountability and is not a large entity. The IoD has taken advantage of all differential reporting exemptions available to it.

These statements are prepared on the historical cost basis.

The presentation currency is New Zealand dollars.

The accounting policies set out below have been applied consistently to all periods in these financial statements and in preparing an opening balance sheet at 1 January 2006 for the purposes of transition to NZIFRS.

There have been no changes to disclosures and certain balances have been reclassified as a result of the adoption of NZIFRS. There have been no changes to net surplus or equity.

(b) Cash and cash equivalentsCash and cash equivalents include cash on hand, deposits held at call with financial institutions with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(c) Goods and services taxThe financial report has been prepared on a goods and services tax exclusive basis, except for accounts receivable and payable which include GST as invoiced.

(d) Trade receivables Trade receivables are valued at expected realisable value and provision has been made for any specific doubtful accounts. Receivables are reviewed on an ongoing basis and debts which are known to be uncollectible are written off. Trade receivables and cash and cash equivalents are the only financial assets of the IoD and are categorised as loans and receivables.

(e) Property, plant and equipmentAssets are valued at the aggregate of cost less accumulated depreciation and impairment losses, if any.

Depreciation is calculated on a diminishing value basis or straight line basis according to the assets useful life as follows:

Computers and cabling 48% and 20% DV

Furniture and fixtures 20% DV

Office equipment 48% and 20% DV

Fittings to leasehold premises 17% SL

(f) Intangible assetsIntangible assets consist of software and development costs.

Development costs represent the cost incurred in the development of new or substantially improved programmes and services. These costs are capitalised only if development costs can be measured reliably, the future economic benefits are probable and the IoD intends to complete the development and use or sell the service.

The expenditure capitalised includes the cost of personnel and overheads that are directly attributable to the preparation of the service for its intended use.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any.

Amortisation is recognised in the income statement over the estimated useful lives which are as follows:

Software 48% DV

Other intangibles 20% SL

Research costs are recognised in the income statement in the period in which they are incurred.

(g) Revenue recognition Annual subscriptions are recognised as income in advance when invoiced and recognised as income over the period of membership. Other income is recognised on an accruals basis.


(h) Interest incomeInterest income is recognised on time-proportion basis using the effective interest method.

The interest rate risk due to possible fluctuations in rates and credit risk is managed by investing with a number of registered banks, for variable terms not exceeding six months.

(i) TaxationTax recognised in the income statement is the estimated income tax payable in the current year, adjusted for any differences from prior years.

(j) Leased assetsOperating leasesPayments made under operating leases are recognised in the income statement on a straight line basis over the term of the lease.

(k) Employee entitlementsEmployee entitlements to salaries and wages, annual leave, sick leave and other benefits are recognised when they accrue to employees. The liability for salaries, sick leave and annual leave is carried at the amount earned for service in the current and past periods.

A number of employees have joined the KiwiSaver scheme during 2007. The IoD obligations as an employer are limited to any agreed contribution levels and these obligations and contributions will cease if the employee leaves the organisation. There were no employer contributions made during the year ended 31 December 2007.

(l) Trade and other accounts payableThese amounts represent liabilities for goods and services provided to IoD prior to year-end which are unpaid. The amounts are unsecured and are generally paid within 30 days.

Trade payables are the only financial liabilities of the IoD.

(m) Deferred revenueDeferred revenue includes subscriptions, training and sponsorship income received in advance. This revenue is recognised as the IoD provides the related services.

(n) Joint ventures The IoD was a participant in a joint venture arrangement with The Executive Coaching Centre Ltd for the provision of director evaluation services. In accordance with NZIAS 31, the proportionate accounting method was used for the financial transactions relating to the joint venture whereby each participant of the arrangement accounts for its proportionate share of each asset and liability and of the expenses and revenues.

There are no contingencies or commitments arising from participation in the joint venture arrangement, which ended 31 December 2007. The joint venture results and assets and liabilities are immaterial. Financial statements relating to the joint venture are prepared by the IoD and are unaudited.

3 OTHER SIGNIFICANT ITEMS2007

$

2006

$

The following specific items are included within the operating surplus:

Income from subscriptions 1,109,724 1,011,156

Remuneration 1,293,959 1,081,338

Rental and operating leases 124,866 120,316

Audit fee 10,000 9,925

Fees paid to auditors for other assurance services 3,500 -

Research and development 68,680 17,701

Bad debts written off 2,000 -

Doubtful debts - change in provision (7,663) 5,882

Depreciation

computers and cabling 22,054 21,967

furniture and fixtures 15,649 15,786

office equipment 4,183 3,364

Amortisation

intangibles 71,197 44,688


4 PROPERTY, PLANT AND EqUIPMENT2007

$

2006

$

Computers and cabling Cost 192,498 184,120

Accumulated depreciation (158,583) (143,791)

Book value 33,915 40,329

Furniture and fixtures Cost 201,929 201,051


Book value 62,815 77,585

Office equipment Cost 33,933 31,361


Book value 16,997 18,002

TOTALS Cost 428,360 416,532


TOTAL BOOK VALUE 113,727 135,916

5 INTANGIBLE ASSETS2007

$

2006

$

Website Cost - internally generated 170,695 65,700

Accumulated amortisation (2,845) -

Book value 167,850 65,700

Professional development Cost - internally generated 259,982 108,152

Accumulated amortisation (37,557) -

Book value 222,425 108,152

Director evaluation service Cost - internally generated 92,605 -

Computer software Cost 242,479 241,598

Accumulated amortisation (208,730) (177,936)

Book value 33,749 63,662

TOTAL BOOK VALUE 516,629 237,514

6. OPERATING LEASESThe aggregate operating lease commitments are as follows:

2007

$

2006

$

Current 121,941 120,316

1 – 5 years 110,561 208,376

TOTAL 232,502 328,692

The IoD leases premises and equipment. Operating leases for properties give the IoD the right to renew the lease subject to a redetermination of the lease rental by the lessor. There are no renewal options or options to purchase in respect of equipment held under operating leases.

7. TRADE AND OTHER RECEIVABLES2007

$

2006

$

Trade receivables 356,721 357,076

Other accounts receivable 82,149 172,886

TOTAL 438,870 529,962

NOTES TO THE FINANCIAL STATEMENTS Continued

FOR THE YEAR ENDED 31 DECEMBER 2007


8. PROFESSIONAL INDEMNITY INSURANCEThe IoD has paid a professional indemnity insurance premium on behalf of its councillors of $5,050 (2006 $7,300).

9. TAXATIONThe IoD has a carry-forward loss of $151,191 (2006 loss of $189,888). It is not expected that the losses will be utilised and no tax asset has been recognised in the accounts.

10. CONTINGENT LIABILITIESThe IoD had no contingent liabilities at 31 December 2007 (2006 Nil).

11. RELATED PARTIES DISCLOSURES All members, senior management and branch managers are considered to be related parties of the IoD.

During the year various members received remuneration in their capacity as professional development presenters and for their involvement in accreditation and board advisory services. Details are as follows:

Professional development $441,896 (2006 $344,815)

Accreditation $43,695 (2006 $ 28,782)

Board advisory services $9,845 (2006 $ 46,007)

The following council members are included in the above totals:

P M Hargreaves• B L Rhoades • J D Shale• S A Thomas•

The total amount paid for services provided by council members was $84,958 (2006 $67,543).

There was $1,200 outstanding at year-end for accreditation services provided. All transactions have been undertaken at arms-length under normal commercial arrangements.

12. CAPITAL COMMITMENTSAmounts were committed for capital expenditure:

Director evaluation system (BetterBoards) $57,550 (2006 Nil)

COUNCIL

Mr P M Hargreaves ONZM (President)Mr T K McDonald (Vice President)Mrs J A Dawson Mr J D ShaleMrs S A ThomasMr B N GundersenMs C B T StigleyDr B L RhoadesMr R J BarrMr S J McLauchlan

MANAGEMENT TEAM

Dr N L Crauford Chief Executive Officer

Mr R P Baker Research and Policy Manager

Mr P A Robertson Board Services Manager

Mr R S Croad Professional Development Manager

Mr L F McCarthy Accounting Manager

Ms A M den Boer Membership and Branch Services Manager

Ms S J Scott Editor boardroom and Media Manager


Institute of Directors in New Zealand (Inc)

PO Box 8017Level 2, 88 The TerraceWellington 6143New Zealandtel: 04 499 0076fax: 04 499 9488email: [email protected]

www.iod.org.nz

Documents

Annual report - Institute of Directors in New Zealand reports/Annual... · Datacom Group Ltd. He is Chairman of ... HiGrowth Project Trust, ... 4 Institute of Directors Annual Report