7 Oct, 2016
Upon looking at them more closely i see this:
Increase in Profit:
The increase in actual "profit" is questionable, as the increase in revenues is not from any changed or improved operations at the Trust.
Increases in revenue came from:
1. "Capital Grant" - $339,022. A capital grant is one off increase in cash which comes with it conditions as to how to money is to be used.
A one-off capital grant of this nature, is not part of the operational revenue of the Trust and should not be used when looking at the Trusts profitability or financial health as a whole. For example, if you have a $75,000 pa job and win the lotto worth $1 Million - you would record your income for that year as $1,075,000. But the next year your income goes back to $75,000 pa (unless you continually win the lotto!). So this "Capital Grant" influx should not then be portrayed by the trust as, "hey look we have turned this ship around and are making money!"
2. "Other Income" - this category is showing a increase of $138,720 from last year.
Now, between 2015 to 2016 the Project Management Fees received DECREASED by $127,280 ($177,252 - $49,972). So the Trust must be either managing less property due to having sold it, or lowering their management fees?
However, to counteract the decrease in Project Management fees, the Trust received $255,000 in "Nomination Fees".
3. "Interest Income" - now this category of Income has also diminished from $234,448 in 2015.....to $68,456 in 2016.
One reason for this is the removal of the $145,578 "Interest on Loans - Redwood Group Limited" from this years Interest Income. The amount owed to the Trust from Redwood group was recorded in the 2015 Financial statements as as asset, with a provision for doubtful debt. It was recorded as such because the Trust paid the a deposit for 83 Waterloo Quay (a deposit is an Asset). But, Uh-oh, the Trust got into bed with the girl who never calls you back. As it turns out, Redwood Group has no intention on paying that money back, nor fronting on any interest.
In 2014, it was recorded as an Asset of $600,000 then less a provision for doubtful debts of $600,000. Hence coming out as $0.
In 2015, the deposit was recorded as $731,357. Now don't go thinking they put down more money on the deposit. No, my thinking is, this is a trick that finance companies (such as collapsed firm Nathan's Finance) do, where interest payments which have not been received, are capitalized and added onto the existing loan receivable.
So, the reason why I think "interest income" has decreased is because they (possibly) are no longer allowed to record it in this manner under the new Public Benefit Entities (PEB) Standards. My speculation but I may be wrong, it has been known to happen.
4. So if we are focusing on looking at REAL PROFIT and not some misrepresented or inflated figure that looks good in the media.
You need to look to the "Statement of Cash Flows".
I always remember my lecturer for my masters paper in financial statement analysis, telling us to look to the Statement of Cash Flows because that presents the reality of the business.
The statement of cash flows presents how much actual CASH you took in and paid out. Not money that Uncle Bob has promised to give you next year which you have just decided to add to your income for this year, knowing full well that Uncle Bob is broke.
So the Trust brought in actual CASH of: $2,798,742
With that money, they PAID:
i) Suppliers $3,014,059
ii) Interest $29,788
iii) Property, plant and equipment $39,113
Resulting in a ACTUAL CASH LOSS of: $284,218
Another tell tale sign is to compare what is being recorded in the Income Statement as "Total Revenues" and what is being recorded in the statement of Cash Received.
"The Income Statement" (where they calculate their Profit and what figure is preached to the media and beneficiaries etc) shows a REVENUE of: $3,142,367
Whereas the "Cash Flow Statement" shows the Trust only received CASH of: $2,798,742
So the Trust LOST money this 2016 financial year. They did NOT make a real profit in cash terms.
This is further illustrated by the decrease in the Kiwibank Bank Account from $221,579 to $115,383 and a decrease in the investment account from $1,800,000 to $1,737,361. Therefore, using their cash savings to fund their loss of $284,218.
Expenses:
The total expenses for the year only decreased by $112,526. And yet the Trust is preaching better management and cost efficiencies.. hmmm hold the phone (and the phone bill there mate!)
Now the Trust DID lower its expenses by $112,526. So even though it is a microscopic decrease, it is somewhat good.
Let's look at what expenses got cut:
DECREASED EXPENSES
- By decreasing Bad Debts from $135,145 (2015) to $2,215 (2016)
- By not paying any accounting or tax consultancy fees (2015 it was $38,920)
- By lowering employment costs
- By lowering its Photocopying, Printing and Stationary costs by $4724 (sounds right huh, less members, less voting papers to print, who needs pens when they can sign in their own blood)
- By lowering the Valuation Fees from $10,188 to 0.
Now let's look at what expenses increased this year:
INCREASED EXPENSES
- "Hui and Special General Resolution Meeting" Cost:
$56,913 (2016)
$0 (2015)
I guess coming to all those Hui and not listening to all the members was worth that $56,913 for member's "feedback".
- "Director's Fees"
$33,458 (2016)
$0 (2015)
These Director's Fees are paid to the 4 people sitting on the Taranaki Whanui Limited commercial company.
- "Entertainment Costs"
$6,653 (2016)
$778 (2015)
A $6,000 increase in unspecified Entertainment Costs.
- "Travel and Accommodation"
$39,098 (2016)
$19,892 (2015)
An increase in $20,000 to travel to all those Hui to hear everyone yell "NO Sale" at them must have left them a little depressed and in need of some "Entertainment Costs" of $6,653 to feel better again!
- "Trustees Fees"
$113,507 (2016)
$91,500 (2015)
Another $22,007 increase from last year to this year
And the drum roll please:
"Wages, Salaries and Project Management Fees"
$504,510 (2016)
$341,546 (2015)
In 2015, the Trust paid a Change Manager $211,000 (Being Tom and Ben Jamison).
This year they paid $0 to a Change Manager BUT Wages and Salaries increased this year by $162,964.
I presume this increase in "Wages and Salaries" is due to Ben Jamison now having a permanent role as "Business Services Manager".
So after all that moving of money around and re-allocating, they managed to record a decrease in expenses of $112,526.
Now as you can see, they managed this by decreasing spending in things that ACTUALLY assist the trust and INCREASING spending on trustees, directors and employees activities.
This year, the year they actually held a voting process, the "Postage" costs reduced from $6,851 (2015) to $3,309 (2016).
This year they spent NOTHING on the Wainuiomata Housing Project and NOTHING on their Right of First Refusal.
Oh, let's not forget the they reduced their Koha spending from $500 (2015) to $128 (2016)..that says a lot.
Let's put it all into context..for the $6,653 of "Entertainment Costs"..that could have funded 1 of our beneficiary students at University for a whole year. Or awarded two $3,000 scholarships.
Mahina Puketapu
Analyst, NZ Stock Exchange
Increase in Profit:
The increase in actual "profit" is questionable, as the increase in revenues is not from any changed or improved operations at the Trust.
Increases in revenue came from:
1. "Capital Grant" - $339,022. A capital grant is one off increase in cash which comes with it conditions as to how to money is to be used.
A one-off capital grant of this nature, is not part of the operational revenue of the Trust and should not be used when looking at the Trusts profitability or financial health as a whole. For example, if you have a $75,000 pa job and win the lotto worth $1 Million - you would record your income for that year as $1,075,000. But the next year your income goes back to $75,000 pa (unless you continually win the lotto!). So this "Capital Grant" influx should not then be portrayed by the trust as, "hey look we have turned this ship around and are making money!"
2. "Other Income" - this category is showing a increase of $138,720 from last year.
Now, between 2015 to 2016 the Project Management Fees received DECREASED by $127,280 ($177,252 - $49,972). So the Trust must be either managing less property due to having sold it, or lowering their management fees?
However, to counteract the decrease in Project Management fees, the Trust received $255,000 in "Nomination Fees".
3. "Interest Income" - now this category of Income has also diminished from $234,448 in 2015.....to $68,456 in 2016.
One reason for this is the removal of the $145,578 "Interest on Loans - Redwood Group Limited" from this years Interest Income. The amount owed to the Trust from Redwood group was recorded in the 2015 Financial statements as as asset, with a provision for doubtful debt. It was recorded as such because the Trust paid the a deposit for 83 Waterloo Quay (a deposit is an Asset). But, Uh-oh, the Trust got into bed with the girl who never calls you back. As it turns out, Redwood Group has no intention on paying that money back, nor fronting on any interest.
In 2014, it was recorded as an Asset of $600,000 then less a provision for doubtful debts of $600,000. Hence coming out as $0.
In 2015, the deposit was recorded as $731,357. Now don't go thinking they put down more money on the deposit. No, my thinking is, this is a trick that finance companies (such as collapsed firm Nathan's Finance) do, where interest payments which have not been received, are capitalized and added onto the existing loan receivable.
So, the reason why I think "interest income" has decreased is because they (possibly) are no longer allowed to record it in this manner under the new Public Benefit Entities (PEB) Standards. My speculation but I may be wrong, it has been known to happen.
4. So if we are focusing on looking at REAL PROFIT and not some misrepresented or inflated figure that looks good in the media.
You need to look to the "Statement of Cash Flows".
I always remember my lecturer for my masters paper in financial statement analysis, telling us to look to the Statement of Cash Flows because that presents the reality of the business.
The statement of cash flows presents how much actual CASH you took in and paid out. Not money that Uncle Bob has promised to give you next year which you have just decided to add to your income for this year, knowing full well that Uncle Bob is broke.
So the Trust brought in actual CASH of: $2,798,742
With that money, they PAID:
i) Suppliers $3,014,059
ii) Interest $29,788
iii) Property, plant and equipment $39,113
Resulting in a ACTUAL CASH LOSS of: $284,218
Another tell tale sign is to compare what is being recorded in the Income Statement as "Total Revenues" and what is being recorded in the statement of Cash Received.
"The Income Statement" (where they calculate their Profit and what figure is preached to the media and beneficiaries etc) shows a REVENUE of: $3,142,367
Whereas the "Cash Flow Statement" shows the Trust only received CASH of: $2,798,742
So the Trust LOST money this 2016 financial year. They did NOT make a real profit in cash terms.
This is further illustrated by the decrease in the Kiwibank Bank Account from $221,579 to $115,383 and a decrease in the investment account from $1,800,000 to $1,737,361. Therefore, using their cash savings to fund their loss of $284,218.
Expenses:
The total expenses for the year only decreased by $112,526. And yet the Trust is preaching better management and cost efficiencies.. hmmm hold the phone (and the phone bill there mate!)
Now the Trust DID lower its expenses by $112,526. So even though it is a microscopic decrease, it is somewhat good.
Let's look at what expenses got cut:
DECREASED EXPENSES
- By decreasing Bad Debts from $135,145 (2015) to $2,215 (2016)
- By not paying any accounting or tax consultancy fees (2015 it was $38,920)
- By lowering employment costs
- By lowering its Photocopying, Printing and Stationary costs by $4724 (sounds right huh, less members, less voting papers to print, who needs pens when they can sign in their own blood)
- By lowering the Valuation Fees from $10,188 to 0.
Now let's look at what expenses increased this year:
INCREASED EXPENSES
- "Hui and Special General Resolution Meeting" Cost:
$56,913 (2016)
$0 (2015)
I guess coming to all those Hui and not listening to all the members was worth that $56,913 for member's "feedback".
- "Director's Fees"
$33,458 (2016)
$0 (2015)
These Director's Fees are paid to the 4 people sitting on the Taranaki Whanui Limited commercial company.
- "Entertainment Costs"
$6,653 (2016)
$778 (2015)
A $6,000 increase in unspecified Entertainment Costs.
- "Travel and Accommodation"
$39,098 (2016)
$19,892 (2015)
An increase in $20,000 to travel to all those Hui to hear everyone yell "NO Sale" at them must have left them a little depressed and in need of some "Entertainment Costs" of $6,653 to feel better again!
- "Trustees Fees"
$113,507 (2016)
$91,500 (2015)
Another $22,007 increase from last year to this year
And the drum roll please:
"Wages, Salaries and Project Management Fees"
$504,510 (2016)
$341,546 (2015)
In 2015, the Trust paid a Change Manager $211,000 (Being Tom and Ben Jamison).
This year they paid $0 to a Change Manager BUT Wages and Salaries increased this year by $162,964.
I presume this increase in "Wages and Salaries" is due to Ben Jamison now having a permanent role as "Business Services Manager".
So after all that moving of money around and re-allocating, they managed to record a decrease in expenses of $112,526.
Now as you can see, they managed this by decreasing spending in things that ACTUALLY assist the trust and INCREASING spending on trustees, directors and employees activities.
This year, the year they actually held a voting process, the "Postage" costs reduced from $6,851 (2015) to $3,309 (2016).
This year they spent NOTHING on the Wainuiomata Housing Project and NOTHING on their Right of First Refusal.
Oh, let's not forget the they reduced their Koha spending from $500 (2015) to $128 (2016)..that says a lot.
Let's put it all into context..for the $6,653 of "Entertainment Costs"..that could have funded 1 of our beneficiary students at University for a whole year. Or awarded two $3,000 scholarships.
Mahina Puketapu
Analyst, NZ Stock Exchange
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