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No 33 AUTUMN 2015



MOVING & SHAKING Staples Rodway Christchurch moves in more ways than one

INVESTMENT NEWS A new strategic alliance


a w d o r k fran



KEEPING IT IN THE FAMILY Employing family members

Staples Rodway is an independent member of Baker Tilly International

NUMBERS Autumn 2015 • 1


David Searle

(09) 373 1128


Rosanna Baird

(07) 834 6800


Chris Downey

(07) 578 2989


Stuart Signal

(06) 878 7004


Chris Lynch

(06) 757 3155


Robert Elms

(04) 472 7219


Ross Erskine

(03) 343 0599

DISCLAIMER No liability is assumed by Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this document. It is recommended that you 2consult • NUMBERS your advisor Autumn before acting 2015 on this information.

No 33 AUTUMN 2015


Staples Rodway celebrates 70 year anniversary


An exciting development for investors


Have you got your .nz domain?


Staples Rodway launches Women in Business


Taranaki conquers South Island


Associate Investments


Buying a business? Do your homework!

10 Parent company made to pay its subsidiaries debts 12 Keeping it in the family: Employing family members 14 Spotting cold-calling investment offers and 'big win' scams 15 Business mentoring 16 Moving and shaking: The Christchurch offices moves in more ways than one 18 Start up success: Finding the way 20 The great interest rate compression 22 Under the spotlight: Companies' financial reporting 24 Exploring and diving in Central America



Today Staples Rodway is one of New Zealand’s largest chartered accounting networks with a team of 420 partners and staff working in seven offices around the country. However our beginnings were much more modest. We trace our history back to October 1945 when Charles (“Charlie”) Staples leased a small office in Auckland’s Queen Street and began practising as a taxation consultant. Frank Rodway joined Charlie shortly afterwards and the firm became Staples & Rodway.


HE FOUNDATIONS OF OUR BUSINESS were laid when Frank Rodway and Charlie Staples first met in 1931 while they both worked at the Land and Income Tax Department – the predecessor of today’s Inland Revenue Department. During lunch hours Charlie would practise his banjo skills and, on one such occasion, someone suggested he ask the ‘musical bloke’, Frank Rodway, for chord advice. It marked the beginning of a lifelong friendship. Not only did the pair share a passion for music and a background in accounting, their aspirations to establish their own practice, too, were similarly aligned. In 1945 Charlie left his job to establish his own practice in a modest office on the 6th floor of the old Colonial Mutual Life Assurance building on Queen Street. He was joined by Frank and, over the ensuing years, their practice went from

strength to strength. The Staples name became synonymous with tax expertise through publication of the Staples Tax Guide. Originally written by Charlie in 1940, it soon became the ‘tax bible’ for generations of Kiwi business people, students of taxation and other professionals. The Staples name today remains synonymous with taxation, with the 75th edition of the Staples Tax Guide to be published by Thomson Reuters this year. In 1970 John Wadams joined the firm. As well as significantly building up the business, John made a number of important changes, including the introduction of hourly rates for staff time. John oversees the firm’s relationship with many of our longest standing clients, who remain a valued part of our business today. In February 1986, in keeping with the trend of the day for simple, uncomplicated names, the name of the practice changed from Staples Rodway & Co to



Charlie establishes the firm.

John Wadams joins the firm.



Name changed to Staples Frank retires. Rodway. Charlie passes away.

The men behind the name - Charlie

Staples & Frank Rodway

LEFT: One of the first editions of the Staples Tax Guide RIGHT: Music and tax were the catalysts for the friendship between the men

Staples Rodway Auckland Directors in 1986 (left) & 1993

Staples Rodway. Sadly, 1986 also marked the year in which Charlie became ill and passed away; Frank retired the following year. The firm’s evolution continued in 1989 when Staples Rodway joined Summit International, which later became the Baker Tilly International group – the eighth largest accounting network in the world. 1999 saw the beginnings of today’s national network, with the Auckland firm linking up with others in Hamilton, New Plymouth and Hawkes Bay. When Tauranga, Christchurch and Wellington joined the group over the following years, a true national brand was established and that’s reflected in the broad range of services offered. Clients now have access to business advisory, tax, audit, information

technology and many more specialist services across a wide range of sectors. Technology plays a key part in delivering services to clients anywhere, any time and from any device. Peter Guise, Chairperson of Staples Rodway New Zealand, notes the significance of this special 70 year achievement: "This is a milestone in the long and proud history of Staples Rodway, and a strong testament to the long standing relationships with our clients and the wider business community, along with our commitment to continuous innovation, and our talented team of individuals throughout the country." If the last 70 years are anything to go by, the future certainly looks bright for Staples Rodway.





Staples Rodway joins Summit International (now Baker Tilly).

National network established with Hamilton, New Pymouth & Hawkes Bay firms.

Christchurch & Tauranga join the network.

Wellington joins the group.

AN EXCITING DEVELOPMENT FOR INVESTORS Staples Rodway Asset Management announces a new strategic alliance.


HE STAPLES RODWAY GROUP AND SBS Bank have announced a strategic alliance to work together in the Investment Advisory & Management sector. The strategic alliance will leverage the core competencies and strengths of banking and accountancy while at the same time enhance the offering from SRAM and FANZ by positioning each business in a market segment where it can grow strongly. Under the agreement: ƒƒ SBS Bank’s Managed Funds and Investment Advisory business, Funds Administration New Zealand Limited (FANZ) will take a 50% shareholding in Staples Rodway Asset Management (SRAM) and SR Investment Management (SRIM), effective 31 March 2015. ƒƒ FANZ will become the manager of Staples Rodway’s KiwiSaver Scheme from 31 March 2015. ƒƒ The SRAM business will continue to run independently with its own Board. SBS Group Chief Executive Wayne Evans said the alliance represented an exciting time for the future of both businesses and their respective investors. “We will be looking to build on the strong platform and reputation that Staples Rodway Asset Management has built in the investment and advisory

4 • NUMBERS Autumn 2015

space. We believe FANZ can add value and lower costs for investors through our existing size capability and scale. The strong SRAM proposition offered to investors with portfolios over $1 million in assets, complements our existing capabilities and will be marketed to our New Zealand wide member base.” Staples Rodway New Zealand Chairman, Peter Guise welcomed the alliance noting SRAM’s current regional office coverage, coupled with FANZ’s resources, would allow growth in both businesses. “Both SRAM and FANZ are long standing, New Zealand businesses which are committed to providing customers with innovative products and exceptional service. These common values are a great foundation and we are extremely optimistic about the future success of the relationship.” “The teams at each business have known each other professionally for over 20 years and there is a level of mutual respect between the two that augers well for the strategic alliance.” The new strategic alliance will be focusing on adding value to all present and future client relationships. For additional information contact Peter Guise on 09 3090463 or your SRAM adviser.

HAVE YOU GOT YOUR .NZ DOMAIN? TIME IS RUNNING OUT! Following on from our article in the Spring 2014 issue of Numbers we wanted to remind you of a key date coming up in relation to the .nz domain suffix.


OU SHOULD BE AWARE THAT any person or business can now get shorter .nz domain names – for example, - in addition to all existing registration options like ‘’, ‘’ and ‘’. You should already have heard from your internet services provider about this change and what it means. You will not want to miss out on any options which will expire on 30 March 2015, so you should read on for a reminder.

You could have preferential eligibility If you already have a website or email address ending with .nz, you could be able to register or reserve the shorter .nz version of your domain name before anyone else. To see if you have preferential eligibility, talk to your .nz provider or visit the Domain Name Commission’s site, which also explains how you can go about registering or reserving the new kinds of domain names.

Preferential eligibility expires 30 March 2015

If you don’t, then the shorter version of your domain name will become available for someone else to register. Even if this happens, though, your existing domain name will still be yours as long as it remains registered to you.

‘Conflicted’ names dealt with at Some .nz domain names are ‘conflicted’, which means they’ve been registered in at least two different second levels. For example, you might hold the version, while another person might hold the or version. If your name is conflicted you’re able to go to the Domain Name Commission’s site and lodge a preference for who might get the new, shorter .nz version of the name. There’s no date or time limit for lodging a conflict preference. For more information about this change to .nz domain names and what it means for you, contact your provider or visit

If you are eligible to register or reserve the shorter version of your name, you need to decide if you want to do so by 1pm, 30 March 2015.

REMEMBER ƒƒ C heck your eligibility at or by contacting your provider. ƒƒ If you’re eligible to register or reserve the short version of your name, you’ve only got until 1pm, 30 March 2015 to take action. ƒƒ Registering is done through any .nz provider. Reserving is done on the site. ƒƒ is also where you can lodge a conflict preference if the short version of your name is conflicted.


ITH A KEEN APPRECIATION OF the impact of women on today’s economy, Staples Rodway Auckland has launched a new specialist group directly focussed on helping women improve the success of their businesses. Our team involves women from all sectors of Staples Rodway, including Business Advisory, Corporate Advisory, Audit, Tax and Human Resources. The aim of the group is to provide great service, mentoring and key introductions for business women in a range of areas from fashion and food to information technology and charities. “As successful women we understand the challenges of being a female in business, and we have ourselves overcome many of the hurdles that you are facing” said Annette Azuma, founder of Women in Business. The dedicated web page on the Staples Rodway website includes pertinent articles and monthly profiles of globally successful business women who are also giving back to society.

The attendees heard from two guest speakers, Donna Vieir, Executive Stylist for Trelise Cooper and Hayley King, artist and owner of Flox Design. Donna offered valuable and practical tips for fashion through the seasons and had everyone enthralled with her stunning outfit and advice (key tip: remember to cull!). Hayley is an inspirational young entrepreneur who started her own business with the aim of making beautiful artwork available to the general public.

Donna Vieira (Trelise Cooper) with prize winner Michelle Malone (NZTE) Raffle prizes included a $250 Trelise Cooper voucher. Guests left the evening with goodie bags with treats from our client Tasti Products and also Devonport Chocolates. All in all the evening was a success with very positive feedback from guests.

“FASHION AT FIVE” EVENT This new service line was introduced with an elegant evening inviting a diverse range of women from different industries. The party kicked off at 5pm with champagne and canapés, allowing guests to mingle and introduce themselves. There was a wonderful atmosphere with a string duet, beautiful flowers and delicious catering.

ƒƒ N  ext decade: Impact of women on global economy estimated to equal that of China’s and India’s 1 billion+ populations ƒƒ Next 5 years: The total income of women globally will increase from US$13 trillion to US$18 trillion (twice the increase expected from China & India combined) ƒƒ By 2028 women will control approximately 75% of discretionary spending worldwide

TARANAKI CONQUERS SOUTH ISLAND ON THE 17TH OF FEBRUARY, 41 Taranaki cyclists, many from farming or rural backgrounds, rode triumphantly into Bluff at the end of an 1100-kilometre journey from Picton. The Central Finance South Island Charity Ride raised more than $160,000 for the Taranaki Rural Support Trust and New Plymouth's Mellowpuff Charitable Trust in a bid to increase awareness around mental health and depression in the rural sector. The money raised by the riders will support rural families and their communities when circumstances beyond their control lead to a climatic, financial, environmental or personal crisis. Event convenor, Darrell Nicholas says the benefits are “real and tangible” in that the funds raised will go directly towards providing more support personnel throughout rural Taranaki. Every 20-kilometres biked has raised enough funding for one additional facilitator for the Rural Support Trust. He says the increased awareness has also encouraged more farmers to ‘open realise thatAutumn what they’re 6up’• and NUMBERS 2015experiencing is not a weakness, but an illness.

Nicholas says the idea was sparked over a couple of beers and a lengthy conversation. “A group of us had been riding for charity in the Round the Mountain Relay for a few years, and had come to the conclusion that we wanted to tackle something bigger. With the majority of us being rural, it was natural for us to agree that the money needed to be put to practical use and to not just sit in a bank account. I then did some research and found that more men die through suicide than are killed in road accidents or prostate cancer per annum”. He says since the decision was made, the support for the cause has “snowballed”. For Staples Rodway Taranaki Director Marise James and her partners, the decision to support the team was a no brainer. “The cause is dear to my heart and fits well with our philosophy of supporting our clients in rural communities”. She says “When we think about farming we think of a great outdoor lifestyle, but in reality it can be an isolated, tough place to be. Your nearest neighbour can be several kilometres away. The price of land is not cheap, mortgages are huge and income can be erratic and seasonal. Add to that the uncertainty of things beyond


HUMAN RESOURCES AND ORGANISATION DEVELOPMENT, NEW PLYMOUTH Julie joined Staples Rodway in 2012 after 20 years of operating her own successful consultancy business, Rowlands and Associates, where she specialised in business improvement and organisation development. She has worked with a diverse range of organisations including the Civil Aviation Authority, Fonterra, Cavalier Bremworth, Dairy Fresh and Carter Holt Harvey. Julie has significant skill in leadership development and coaching and has assisted many organisations through extensive change. As an extremely experienced facilitator Julie is well recognised for her ability to work alongside people with respect and integrity. Julie pinpoints working on a significant change management process with Fonterra, as well as facilitating a leadership development programme for Cavalier Bremworth, as career highlights. However, Julie says the most important aspect of her career is building long term relationships with key clients that still exist today. In her spare time, Julie loves to spend time with her two children and partner outdoors in the surf or relaxing at their beach house in Mokau. Julie is also an avid traveller and has undertaken many trips abroad. She says that her passion for people fuels her love for travel, and there are still many more countries that she would like to explore.


BUSINESS ADVISORY SERVICES, NEW PLYMOUTH Kylie joined Staples Rodway (then called Ernst and Young) as a graduate Accountant in 1994. In 1999 Kylie decided to venture into the commercial sector to gain different accounting skills and progressed to becoming a Financial Accountant at McKechnie Metals. After starting a family in 2003 she returned to Staples Rodway. With 21 years experience Kylie enjoys dealing with a range of business types and in essence says the process for all of them stem from the same principles, but are adapted to the industry and size of the operation. Client contact is important to Kylie and she uses her commercial experience to help clients look at the processes within their businesses, their accounting software and the information that it can generate and how it can add value to the business. Kylie’s specialist services include small business software solutions including Accomplish Cashmanager, Xero, Accredo and Plusfactor, Solvent and Insolvent Liquidations, Budgeting and Business Planning. Kylie has industry experience in Oil and Gas, Manufacturing, Building and Trades, Retail and Wholesaling Operations. Kylie is married to Eddie and has 3 young children, Jessie (11), Luke (9) and Ethan (6). Most of Kylie’s free time is spent being involved in the kids' school and sporting activities and helping out with the marketing of her family’s gardening business.

their control like the weather and market forces and many rural people can feel overwhelmed and alone”. Collectively, the group has ridden more than 30,000-kilometres since leaving Picton. Nicholas said the jubilant riders celebrated an emotional end to the ride with tears, hugs, kisses, and high fives. Ninety percent of the participants had been personally impacted by suicide or depression in some way. As a result of their commitment to increasing awareness of these issues, not only have they raised a significant sum of money but they have created memories and forged firm friendships, and for many it was life-changing, he said. Staples Rodway Taranaki Director Marise James hands over a cheque for $3,500 to the Central Finance Charity Ride team before their 1,100-kilometre journey.

Our Taranaki Rural Specialists have developed a number of tools and services designed specifically to assist farmers through difficult times. Get in touch with us on 06 757 3155 if you need financial guidance and support.

NUMBERS Autumn 2015 • 7

Buying a business? do your homework!

Article by Tracy Hickman STAPLES RODWAY AUCKLAND

It’s easy to be swept along by the momentum when you are buying a business. You’ve agreed terms, it appears to be a great deal, and now you just want it to happen! We highlight here a couple of examples where our assistance with the due diligence process helped our clients to make the right decision.



before committing yourself, and you should be prepared to renegotiate or walk away if the findings are less than ideal.

ate a lower price and make the changes to the business themselves. However, given our client’s inexperience in the sector, walking away at this time was the best option for her.



BACKGROUND: We were recently approached by a client who was looking at a lifestyle change, moving from a corporate environment to being her own boss. Having found a ‘solid business’, and after months of negotiations on price, her lawyer recommended that she approach us to help with due diligence before going unconditional on the deal.

BACKGROUND: Our client had been a customer of the business being sold for many years, and had agreed a deal with the vendor to buy the assets of his business, with the final price payable being subject to adjustment following our due diligence.

PROCESS: We explained that what constitutes a ‘due diligence’ exercise can vary depending on the structure of the deal. In this instance, the agreement was to purchase shares in the business, so our client would have been liable for any pre-existing liabilities, including tax, so a detailed check on all tax types was required. Our due diligence would also have involved reviewing the historical financial statements, and any forecasts, a thorough check on the inventory, reviewing the fixed asset register, employee contracts and lease details. Also we would have reviewed customer contracts, borrowings, and the lists of aged debtors and creditors. However, we didn’t get that far! Early conversations with our client revealed that significant bank lending would be required to fund the purchase, and if it wasn’t feasible for the banks to lend, given her circumstances, then there would be no point incurring the extra cost of the due diligence. So as a starting point we obtained the financial statements for the business, and worked with our client on preparing a financial model to forecast the cash flows in the business over the next three years, and calculate the funding requirements. Our forecast quickly demonstrated that the expected free cash flows were considerably less than the latest financial statements provided by the vendor. We advised our client to go through our assumptions with the vendor, upon which it transpired that a number of ‘adjustments’ had been made to the financial statements, that the business had recently experienced a downturn and some changes would need to be made to achieve historical earnings. OUTCOME: The vendor did not want to reduce the asking price for the business, and he believed that he could turn the business around in a few months, so both parties agreed to put the deal on hold and review again in six months. It could have been a good opportunity for an experienced operator to negoti-

PROCESS: Given the longstanding relationship between the vendor and purchaser, it was important to obtain an independent perspective on the business, removing emotion from the deal. Staples Rodway undertook a detailed due diligence, checking the inventory, assets, historical and forecast financial statements, aging of the debtors and review of forward contracts. We also reviewed employee contracts and property leases. We dealt directly with the vendor’s financial controller, with both the vendor and purchaser stepping back from the transaction. A report summarising our findings recommended a number of amendments to the purchase price, for obsolete stock and doubtful debts. We also highlighted a number of issues with pending lease renewals. OUTCOME: The purchase price was considerably reduced on the basis of our findings, with our client negotiating a better deal. Given our detailed understanding of the target business, we were also able to provide advice on the tax treatment of the transaction and make amendments to the Sale and Purchase Agreement which allowed both parties to make savings. Due diligence is not simply a ‘tick the box’ exercise. It involves working with the purchaser to understand how the transaction is going to affect them, and looking at the detail with that in mind. We may be helping to determine if a business is viable, or looking for areas to support a reduction in purchase price. Our overriding intention is to procure the best outcome for our clients, even if that means not going ahead with the deal. If you need any help with due diligence, whether as a potential purchaser, or as a vendor preparing for a sale, feel free to contact Tracy Hickman on 09 373 1133 or, or contact your usual advisor.

NUMBERS Autumn 2015 • 9

PARENT COMPANY MADE TO PAY ITS SUBSIDIARY’S DEBTS Directors beware – unless you are careful to maintain a subsidiary’s independence, the parent company may be liable for the debts of its subsidiary. That is the effect of a recent High Court decision invoking a rarely used provision in the Companies Act. Chapman Tripp in Auckland analyses the judgment and draws some practical advice from it.


ECTION 271 (1)(A) OF THE Companies Act 1993 (the Act) has been used only rarely and is unique to New Zealand law, although Ireland has a similar provision. It creates an exception to the principle that a company is a legal entity in its own right and that its shareholders are only liable for the company’s debts to the extent of their shareholding. Section 271 allows the Court to order the parent company of a company in liquidation to pay to the liquidators the whole or a part of all or any claims made against the subsidiary.

THE CASE In Lewis Holdings Ltd v Steel & Tube Holdings Ltd the liquidators successfully obtained an order under Section 271 where: ƒƒ Lewis Holdings leased a property to Stube Industries Ltd (Stube), a wholly owned subsidiary of Steel & Tube Holdings Ltd (Steel & Tube) ƒƒ the rent and rates under the lease were invoiced to and paid by Steel & Tube, and ƒƒ decisions for Stube, including a decision to renew the lease for a further 21 year term, were made on the advice of Steel & Tube’s legal counsel, without Stube obtaining independent legal advice. When Stube was put into liquidation, Lewis Holdings filed a proof of debt as the unpaid landlord. The liquidators then sought an order under section 271(1) (a) that Steel & Tube be required to pay the whole of the claim (it being the only claim in the liquidation).

THE DECISION Several factors led the Court to hold that the separate legal entity which was Stube was “devoid of any capacity to conduct its own affairs”: ƒƒ the subsidiary was being run essentially as a “division” of the parent company ƒƒ decision-making considered the group as a “single unit” rather than identifying the subsidiary’s interests as distinct ƒƒ the evidence of the CEO and CFO of the parent company, both of whom were directors of the subsidiary company, was that “they treated the [leased] property both as to its benefits and liabilities as something that lay with [the parent company]” ƒƒ the subsidiary company did not, where it ought to have, obtain independent legal advice before entering into major transactions ƒƒ the subsidiary had no employees of its own, and used the parent company’s employees and letterhead to conduct business ƒƒ the subsidiary company was treated for accounting purposes as a division of

10 • NUMBERS Autumn 2015

the parent company, it had no separate bank account, and invoices for rates and rent were addressed to and paid by the parent company ƒƒ although the constitution allowed the directors to take into account the interests of the parent company (as provided for in section 131(2) of the Act), the Court found that the directors were still required to make a distinction between the interests of the company and of the subsidiary when making decisions. The Court acknowledged that it is common practice for a parent company to be involved in the management of its subsidiary, including appointing high-level managers to the subsidiary’s board. However, in this case, the level of involvement had been so large as to compromise the subsidiary’s independence. The circumstances that gave rise to the subsidiary’s liquidation were entirely attributable to the parent company because, having created a 21 year obligation on Stube by renewing the lease, it then withdrew the funding it had previously provided to pay the rent and rates. The Court also gave some weight to the argument that as the parent company was publicly listed and had a company solicitor, it should have conducted the group’s affairs in a way that gave effect to each entity’s separate legal personality, rather than treating the group “as a single economic enterprise”.

CHAPMAN TRIPP COMMENTS Directors must be careful to ensure that a subsidiary’s interests are kept distinct and that appropriate legal and financial arrangements are made if there is to be a sharing of liabilities between companies within a group. This includes: ƒƒ ensuring that the subsidiary’s interests are regarded as distinct from the interests of the parent company or other companies within the group during decision making ƒƒ running the subsidiary as a separate company rather than as a division of the parent company, with its assets and liabilities treated as its own rather than as the assets and liabilities of the parent company ƒƒ maintaining appropriate separation of company records and resolutions ƒƒ ensuring that liabilities are being invoiced to and paid by the appropriate company ƒƒ ensuring the subsidiary company receives independent legal advice to protect its own interests and that formal legal agreements exist for the provision of financial support from the parent company to the subsidiary. Failure to take these steps will create a risk that a Court will hold the parent company liable for the debts of its wholly owned subsidiary.


Employing a family member can be a rewarding experience and prove to be a worthwhile arrangement. However, it can also be very challenging – after all, you still need to sit across from this person at Christmas Dinner. Like any other recruitment decision, you should give the prospect of bringing on board a family member a lot of thought


POSITIVE FAMILY RELATIONSHIP DOESN’T NECESSARILY translate to being a productive working one. It is often our family members who know how to push our buttons and family relationships can complicate workplace dynamics.

EMPLOYING YOUR OWN FAMILY MEMBERS If you are employing a family member, it is wise to consider your decision carefully both in light of your personal relationship and in the best interests of the business. Firstly, ensure that you are considering the right person for the role. Don’t compromise with a lower skill level. If the role requires specific skills or experience, then a family member may not always be the best candidate for the job. To counteract this, consider undertaking a complete recruitment process that involves an independent person. Secondly, the more clarity you establish around the employment relationship the better - and remember, it is an employment relationship. It is not about being pessimistic, but being prepared for a worst case scenario and having a “back door” strategy in place just in case things don’t work out.

TOP TIPS The following are essential considerations in a family employment arrangement: ƒƒ Understand that it is still an employment relationship so the same obligations and legal requirements apply and it is essential that correct documentation is in place and correct procedures are followed. Have clear parameters in place at the outset and check the procedural correctness on any action you may take. ƒƒ An employment agreement is a legal requirement for all employees including family members. This also applies to family members who work casually. ƒƒ Have clear policies in place for things like overtime, paid holidays, school holidays and time off. These should be comprehensive and in writing. Know what the minimum employment rights are and essential holidays, entitlements and other requirements. Your friendly HR person can help prepare an employee handbook specific to your requirements. ƒƒ Be clear regarding disciplinary guidelines. Involve a third party if you do need to undertake a disciplinary process with a family member. ƒƒ Ensure clarity in expectations and appraise consistently. ƒƒ Have a clear reporting structure in place. ƒƒ Be aware of favouritism. Anything can be construed as favouritism – especially favouritism. ƒƒ Remuneration is also an area that trips people up. There is often a tendency to either pay higher or lower than the market rate. Ensure transparency in what you are paying the family member. The best way to do this is to benchmark against market rates based on position. ƒƒ If you are employing a spouse in the business you hold as an individual, you must get approval from Inland Revenue to pay their wages. Regardless of your structure, you still need to complete certain documents including the Employer Monthly Schedule (IR348), tax code declaration and KiwiSaver documents.

A CASE EXAMPLE To highlight the above points it is useful to look at a recent case that was before the Employment Relations Authority. Mr N worked for his father Mr C as a labourer and digger driver in his earth moving company, working up to 65 hours a week. The son received a call at home on a Sunday, his day off, from his father asking him to come to his house immediately for a meeting. No reason was given (and no advice to bring a support person). When the son arrived, several people were present including some of his acquaintances, his father’s partner, a contractor and his wife and an additional woman.

The father proceeded to accuse the son of “telling everyone our business”. The son took this to mean a conversation where he had told a colleague not to speak badly about another contractor in the area. The meeting became quite heated, and ended with the father telling the son that he was sacked. At the Authority, the father argued that the meeting was purely a personal matter and that it was called to sort out an allegation that the son had been gossiping with clients about his father’s personal relationship with his partner. The father claimed that when it became heated it ended with the son saying “F*** this s***, I’m out of here”. The father responded, by telling his son to return a company vehicle and mobile phone. The Authority held that the son had been unjustifiably dismissed. There were a plethora of problems for the “employer” (the father) in question: ƒƒ No explanation for the reason of the meeting was given ƒƒ He was not advised of his right to bring a support person ƒƒ There was no evidence of the alleged “gossiping” to other clients about his father’s personal life So while the father argued that it was a personal matter, the authority didn’t see it that way – because the son was alleged to have “gossiped” with clients, the allegations fell within the employee relationship. The Authority ruled that the onus was on the employer to behave as a fair and reasonable employer, and it failed to do so. Furthermore, The Authority stated that even if Mr N had resigned, it was after an ‘emotional scene’ and a fair and reasonable employer would have allowed a ‘cooling down period’. Of interest in this case, the son received over $7,000 in lost wages, $6,000 for hurt and humiliation, $1,300 for notice entitlement that he had not received, $550 for hours worked, but not paid, and $1,500 for outstanding holiday pay. The case highlights the need for the correct procedure to be followed at all times even during a family dispute that has become intertwined with employment issues.

EMPLOYING TWO MEMBERS OF THE SAME FAMILY A second scenario to consider is whether to employ two members of the same family. We have encountered situations with clients where this has worked extremely well but there can be a flipside. It can become particularly tricky in situations where disciplinary action needs to taken against one family member and even more challenging if the other family member is an outstanding performer. As an employer it is easy to assume that one high performing individual suggests that other family members will follow suit, often leading to the employment of the second family member. Where disciplinary action needs to be taken, it can put significant strain on the employment relationship with the high performing staff member and create strain in the family relationship. Hence, there can be a risk of losing both staff members. Likewise, employing members of the same family can be challenging if the family members fall out away from work. This strained relationship can overflow into the workplace causing a host of new problems. Interestingly, some of the supermarkets actually have policies in place for not employing two members of the same family. While this policy may not be right for everyone, it reinforces the need for robust recruitment practices with additional family members.

SUMMARY While it is not our intention to put employers off employing family members, it is a reminder to be fully aware of the potential pitfalls and to ensure you have all the correct documentation and parameters in place and are diligent in following correct procedure with those family members. If you are impacted by any of these issues, please contact one of our HR Consultants.

NUMBERS Autumn 2015 • 13


What should you do if somebody contacts you with what seems like a great opportunity to make money? It could be an investment opportunity or a share market tip based on ‘secret’ information. It could be expert advice on how to unlock superannuation funds early. It could even be special gambling software that promises to pick winners every time.


TAY CALM, BREATHE AND DON’T commit to anything. It is important that you give yourself time to research the details and seek advice. You may have discovered the perfect broker (is there such a thing?) but, if your first contact about this fantastic opportunity came via a call out of the blue from someone you have never heard of, you may also be the victim of an international scam that could cost you a lot of money. The Financial Markets Authority (FMA) recently announced that it is receiving an increasing number of complaints about dubious offers that involve transferring funds overseas. FMA’s Director of Compliance Elaine Campbell is warning consumers to stay away from cold call “big win” scams where investors are asked to transfer funds to overseas or unknown locations. Look out for the following signs to avoid becoming a victim of cold call investment scammers: ƒƒ Requests to transfer funds overseas quickly to the account of a firm or person ƒƒ Claims you must act now or miss out on a big pay-out ƒƒ Discouraging or prohibiting you from seeking independent professional advice ƒƒ Offers involving software or a “trading system” where consumers must buy a licence or software to participate And then take these four steps to protect yourself from the potential scam: 1. Check the company out on the website. Many will have authentic looking sites, but you should delve deeper. Does it provide a New Zealand web address? Look for the names of individuals connected to the company and conduct a Google search on them. 2. Visit the Financial Service Providers website ( or the FMA website ( to see whether the offer is made by a

14 • NUMBERS Autumn 2015

legitimate financial services provider. You can also phone the FMA Helpline on 0800 434 567. 3. Check the FMA’s list of unauthorised firms also available on their website. The FMA publishes names of firms and people it has identified as operating without registration or authorisation in New Zealand, or who are not complying with New Zealand’s financial services laws. There is also a similar international list on the FMA’s website, provided by the International Organisation of Securities Commissions (IOSCO). 4. Seek independent financial advice before making any investment decisions. Most importantly, don’t rely on the advice of the person trying to sell you the investment. Unfortunately, should you fall victim to one of these scams, Mrs Campbell says that the FMA generally can’t help consumers recover funds once they’ve been transferred offshore. It is also very unlikely that the police will be able to help either. Examples we have seen include hot tips to invest in oil, mineral and futures options that promise returns within six months and then ask for more money due to unexpected funding problems; share trading schemes in offshore markets with significant unauthorised trades initially in blue chip shares, but then venturing into high risk speculative trades, resulting in total loss of capital. Our advice is that if it seems too good to be true, it probably is too good to be true. Use your instinct and common sense and if you come across an offer that you’d like a second opinion on, have a chat with your usual Staples Rodway contact to assist you with your decision.


USINESS MENTORING CAN BE A valuable way of assisting Boards of Directors and chief executives to improve performance, ignite new ideas and illuminate the way forward. The New Zealand marketplace is highly competitive and few industries have escaped the impact of new technologies, new and vigorous competitors and changing market conditions. To remain relevant, businesses need to adapt and manage their product offer, pricing and strategy in the face of an open economy. Businesses have practical issues to manage to best advantage that includes managing their existing opportunities and how their business can be positioned for the future. Many CEOs and Managing Directors find themselves in a lonely position managing responsibilities and stakeholder expectation with, at times, limited support from their Board of Directors or senior executive teams. From personal experience, the Board culture or entrenched positions may not be conducive to fresh thinking and accepting the potential consequences of change. Change can be threatening and senior management may resist much needed reforms needed to address marketplace disruption, new competitors or other challenges, because those senior management may be personally impacted by those changes. We have seen instances of an executive delaying making tough decisions holding to deal with a changing landscape in the hope that some unlikely ‘magic event’ would make the future all right. Successful companies have the courage to carefully evaluate opportunities and the associated risk in a structured manner. For the Board or CEO, having someone to talk to, to objectively discuss these challenges is almost always helpful, especially if that person is constructive and not judgmental. A business mentor can assist the debate in a variety of ways by considering the real or fundamental issues that the business is facing rather than grappling with people matters. Coming from outside with no predetermined view or any knowledge of the internal people dynamics should

Article by Colin Theyers STAPLES RODWAY AUCKLAND

allow a free thinking debate on what is the best course for the business and how to best deal with new or existing challenges. Mentoring done well should provide a non-confrontational forum to discuss the position of the business, future prospects and longer term goals. We have completed many projects supporting Boards of Directors and the CEO in helping to define and address the future. These projects drive from a structured process including determining what is important to the business, what are the opportunities, the key performance indicators (KPI), and measuring and improving the alignment between executive performance and stakeholder expectations. Outputs have included an updated business plan and strategy, restructuring options, more relevant performance measurement criteria, identifying the most pressing risks and assessing the sensitivity of various opportunities. Financial models can be very useful in assessing various options and using the model to integrate and measure actual performance. Some clients have requested that the mentoring assistance be reinforced and continued through a more formal governance-based relationship by the appointment as a Director. Governance may be seen by some clients as an academic term for ticking the boxes that may satisfy process but not achieve any business gains. Business mentoring can be a more hands on process of assisting business owners and executives to use an external objective resource to debate opportunities and develop practical solutions.



By mid-May 2015, Staples Rodway’s Christchurch office expects to be located in its new office building in the new CBD. Directors and staff are looking forward to the move, after living in temporary premises for the past 2 years. In this first part of the story we cover some of our trials and tribulations on the road to getting to our new premises.


E THOUGHT WE’D DODGED THE bullet. Until April 2013, Staples Rodway’s Christchurch office was located at 116 Riccarton Road, well away from the CBD that was so severely damaged by the February 2011 earthquake. While our office was left shaken and cracked, it was not a candidate for demolition, or at least that’s what we thought. Our engineers assured us the building was still structurally sound, and consequently we were able to re-open our doors a few days after the February 2011 earthquake. Still, I don’t think we ever felt complacent about our situation. We had frequent reminders in the form of aftershocks throughout 2011. During 2012 we had workmen opening up internal walls inside our offices to inspect the building. Our staff became familiar with a whole raft of new engineering terms used to assess buildings, not only in relation to our own situation, but also our clients’. Over time we could see our staff and clients becoming increasingly wary about the capacity of Christchurch buildings to cope with the stresses of successive aftershocks, some of them disturbingly strong. It was clear that they needed the assurance that could only come if we occupied a new building that delivered 100%+ of the New Building Standards. Still, the rebuild was only just starting, so there was not much we could do for the time being.

HURRICANE WIRE AND CONTAINERS Through 2011 and 2012 we counted ourselves lucky that we were able to stay put. Our displaced friends in other firms around town were usually in less than ideal situations, occupying anything they could find. However, our settled situation changed abruptly early in 2013, when we were advised by the building’s landlord that they considered our building unsuitable for continued occupation. This news came as a shock to us, given the assurances we had received from our own structural engineers. While we still have no doubt that our engineers were correct, we quickly realised it was an argument that we were never going to win, particularly when the landlord erected certain safety measures. First hurricane wire fencing was

installed at the front and rear of our building. Then shipping containers were arranged through which we had to access the building entrances. The previous concerns of our staff and clients quickly changed from mildly wary to being completely spooked. We knew we had to move, and fast. The words ‘building closure’ were being bandied around. The question was where to move to in a city that was already squeezed tight for office space?

GUN SHOPS AND MEDICAL CENTRES Our desperate search narrowed down to two options. One was an almost windowless 900 m2 box in a strip mall, next to a gun store, miles from any amenities. The other was a former medical centre that had recently been occupied by Mainzeal, and which had been abandoned after Mainzeal had gone into liquidation in March 2013. We chose the medical premises. At least it had natural light. And it was not too far from the building we had called our home for almost 25 years. The medical centre was considerably smaller than the space we enjoyed at 116 Riccarton Road. But by removing some of the interior walls in the medical centre, our architects Unispace were able to cleverly accommodate 45 desks, while leaving space for a narrow board room and three meeting rooms. It was going to be tight, but we knew we could make it work…just. We had tradesmen working literally 24/7 on our temporary premises removing walls, painting and preparing the building for our occupation. We got emergency temporary dispensation from the Christchurch City Council to use the premises as an office, and consequently the plugs for hand basins used in the medical consulting rooms are still visible on the walls, waiting for subsequent conversion back into being a medical centre.

A CRASH-COURSE DIET We also knew we would have to slim down before squeezing into our temporary offices, and that was probably our greatest challenge. So we ordered in bins - lots of big blue bins. We sent hundreds of files off to storage and filled those blue bins with literally tonnes of extraneous written material accumulated over many years. Every day a truck would arrive and take away blue bins and give us more which we would quickly fill. By the time moving day arrived, we were considerably lighter, but still overweight. We still had to find room in our temporary offices for hundreds of lineal metres of shelf space on every available wall for our files.


Chain link fencing decorates the exterior of Staples Rodway Christchurch earthquake-damaged premises

Our staff and clients have been very understanding. It will suffice to say there have been a few issues in this ex-medical centre such as water leaks, rodents, and getting the air conditioning system to cope. Morning tea and afternoon tea has had to run in shifts, given that we have a tea room that can only comfortably cater for a few people at a time. I suppose everyone’s acceptance of our situation has been partially due to the fact that many people in this city, including our professional colleagues around town, are similarly making do while they sort out their lives and businesses. In the next issue of Numbers: Christchurch’s new office and lessons learnt…

NUMBERS Autumn 2015 • 17


FINDING THE WAY The journey from start up to a thriving commercial business is fraught with twists and turns so it’s vital to have a trusted, expert consultant you can call on for sound business advice. Find Recruitment turned to Staples Rodway to navigate the myriad of challenges it faced along the way.


HE YEAR OF THE GOAT is shaping up to be an auspicious one for Find Recruitment. Established in Wellington, this year Find Recruitment will celebrate its seventh anniversary, its sister company Find IT will celebrate its second and, pivotally, the firm has just opened an Auckland office. “It’s a big year for us, and it’s extremely exciting for us to expand into Auckland,” says director Julian Greaves. Until now, he says, Auckland has been an untapped source of business for the firm. “Many of our Wellington clients have offices in Auckland. We’ve worked up there remotely to some degree for a number of years, but it’s not the same as having an on-the-ground presence. For us to deliver to our clients, we’ve got to be in Auckland and we’ve finally found the right person to lead that team for us.” The business has come a long way since its fledgling days serving the recruitment needs of the capital’s private sector accounting and finance industry. Julian and fellow directors Mike McKay and Rob Woodward joined forces to set up Find Recruitment in 2008.

“We’ve been through the toughest years of recruitment; during the recession in 2009 and 2010 it was a quiet market where you had to work very hard to get work in the door,” says Julian. “But we’ve come out the other side and this year we’re committed to growth.” In 2013 Julian, Mike and Rob founded Find IT with managing director Nick Calavrias. As per the name, its focus is the ICT, digital and creative fields. The team aims to launch Find IT in Auckland later this year. Having been through a global recession, Julian says 2014 was a turning point for the supply and demand of candidates. “The job supply increased dramatically, driven mainly by the increase in permanent jobs on offer – the contract side is still steady, but the market is dominated by permanent recruitment now. “The difference is that three or four years ago there was no confidence from employers; the permanent recruitment market was very quiet because they were hiring temporary and contract staff, they were reluctant to commit in the recession. “Now the confidence is back, most employers want to hire perma-

Staples Rodway partner Robert Elms

nent staff because they are more bullish about the future, and that’s a really good thing.” Today, Find boasts over 100 clients, ranging from small six-person start-ups to multi-nationals. Julian expects their 12-strong team – up from a modest three just two and a half years ago – to grow to around 15 by the end of the year. Julian attributes their success to their high standards and the deep relationships they’ve established with clients. “We are working in a market where relationships and quality are valued – as a group, the three of us have been recruiters for 15 years each, and so a lot of our relationships go back that far.” Indeed, Julian’s relationship with Staples Rodway goes back 15 years to when he was enlisted by partner Robert Elms to help secure new talent for the accounting practice. Then, when Julian needed an accounting and finance specialist to set up Find with partners Mike and Rob, he looked no further than Staples Rodway. “Staples Rodway, led by Robert, assisted with everything from the

The Find Recruitment team

capitalisation and ownership model to budgets, business plan and compliance. They’ve guided us each step of the way – from raw start up, through the recession to where we are today. The success of our journey to date is, in large part, thanks to the skill and attention of Robert and his team,” says Julian. “Day to day, we’re flat out running our business. Staples Rodway monitors our key business metrics and manages our balance sheet, financial reporting, compliance and auditing so we can get on with our job. If we didn’t outsource, we simply wouldn’t be profitable as we are, so nine to five, we can recruit. “Crucially, Staples Rodway is our trusted business advisor; we can rely on Robert to provide professional, independent advice; it’s been a constant throughout.”

THE GREAT INTEREST RATE COMPRESSION Interest rates have been falling, globally and in New Zealand. This may not have been evident to all savers but it has certainly been apparent to borrowers.



VER THE COURSE OF THE last year interest rates for terms greater than 1 year have reduced. At the same time short term rates as measured by the Official Cash Rate (OCR) were increased from 2.5% in March 2014 to 3.5% in July 2014. This compression in interest rate yields is clearly evident in the following graph.



4.50 4.00

10 Year Govt. Bond


90 Day Bank Bill

3.00 2.50 2.00 1.50 March 2014

March 2015

Source: RBNZ

The spread of interest rates for differing maturities is known as the yield curve. Normally the yield curve has a positive shape; that is higher interest rates are offered for longer term investments/loans than short term investments/loans. At the time of writing the yield curve is effectively flat. That is, an investor will receive the same rate of return from a fixed interest security regardless of whether the capital is lent for a short or long term. A risk exists that the yield curve may become inverted over the course of 2015, resulting in a curve that has a negative slope. A higher interest rate is received for a short term investment than for a long term investment. Arguably from the graph above this is already the case with the 10 year government bond trading at a yield of 3.12% (Feb.2) and 90 day Bank Bill rates at 3.64%. However the nature of the securities differs and the interbank swap rate provides a better guide as to the yield curve’s shape. An inverted yield curve is not without precedent in New Zealand. The government bond curve across various maturities was flat in August 2004 and inverted in June 2007.

The cost of longer term borrowing (i.e. primarily house mortgages) has fallen as banks have reduced rates to remain competitive. In the absence of further intervention, low or lower interest rates will add fuel to house price appreciation. For investors there is no or little reward from investing for the longer term. Unless an investor believes that interest rates will fall further it is more prudent to stay at the near end of the curve to protect against possible eventual interest rises and capital losses. While interest rates remain low investment yields on equities are likely to remain attractive. At least until such point in time when the price of equities moves up to a point where dividend yield is not sufficient to compensate for greater risk of capital loss and the uncertainty of dividend payment. A lower prevailing interest rate environment, particularly low longer term interest rates reduces the threshold for new investment projects to proceed. This in turn is likely to add stimulus to economic growth. For individual companies the cost of debt funded acquisitions is low. Although NZ fixed interest yields are still high and attractive by international standards the degree of allure has diminished. The RBNZ has moved from a tightening bias to a neutral position. Initially the Reserve Bank Governor stated that the next move in interest rates may be up or down. Now that has been revised to ‘on hold for some time’ with the knock-on implication for the New Zealand exchange rate being a fall against the US dollar.

CATALYSTS FOR CHANGE If inflation expectations are a key factor in longer term interest rates then rising inflation expectations will result in investors demanding higher rates to compensate for risk. Falling oil prices have resulted in overall inflation remaining subdued. The United States Federal Reserve has indicated that US interest rates are likely to rise at some point in 2015 although the Federal Reserve will be patient in timing such an increase. If and when such an increase is implemented it is likely to place upward pressure on New Zealand interest rates as a higher yield will be required for New Zealand fixed interest securities to remain attractive. The prospect of increasing long term rates in what has been a benign interest cost environment for borrowers could in itself increase the impetus for interest rate rises.



The reduction in interest rates and the compression of yields across the yield curve can be attributed to a variety of reasons. Expectations as to inflation have fallen globally and locally. With a lower level of inflation prevailing currently and expected in the future investors do not require a higher rate of return to compensate for the reduced purchasing power of their capital on maturity. Expectations as to the future rate of economic growth have also diminished. With the fall in growth rates alternative investments that provide a lower rate of return and fixed interest investments at lower levels become more attractive. Recalibration of the likelihood of default on debt securities (excluding Russian and Greek bonds) has also reduced interest rates overall. From a supply and demand perspective the supply of long dated fixed interest securities has been muted. While the supply of fixed interest securities in New Zealand has been subdued demand from offshore investors is likely to have been strong given the relatively high yields available from New Zealand dollar denominated debt. The OCR is the RBNZ’s primary monetary policy tool and is focussed on the short end of the yield curve. The fact that the RBNZ has increased the OCR and kept it at a higher rate as a measure to combat house price inflation has also contributed to compression of the curve.

Fixed interest market conditions have changed significantly over the course of 2014 and the 2015 interest rate environment and outlook is markedly different from that of 2014. In order for investors to optimise their portfolios and maximise yield a differing set of assumptions will need to be adopted. The world has changed dramatically over the past few decades with central banks now playing a more visible role in determining interest rates. This makes it extremely difficult to predict interest rate movements. Investors looking for income can no longer rely on a portfolio made up primarily of bank deposits and fixed interest (bonds) to generate all of their income requirements. Diversification across a broad range of financial assets is required if investors are seeking a return in excess of bank deposits plus the opportunity for some inflation protection. In many countries, government bonds, the original corner stone of an income portfolio, are currently providing negative returns i.e. investors are paying for the privilege of holding government bonds.

IMPLICATIONS The flat or negative yield curve indicates that investors expect interest rates to remain low or fall further through time. If correct the current low investment returns from fixed interest securities are likely to prevail for some time. We would suggest this circumstance is likely at least for the bulk of 2015.

A no obligation discussion with one of the advisers from Staples Rodway Asset Management (SRAM) will enable you to understand what income level you can reasonably expect from your investments. They can also construct, implement and manage a bespoke portfolio that matches your requirements. Alternatively, you may prefer a DIY approach in which case visiting will provide you with information on two diversified and tax effective investment portfolio options. To contact a SRAM advisor, email or phone 09 309 0491.

NUMBERS Autumn 2015 • 21


Article by Jackie Russell-Green NATIONAL TECHNICAL MANAGER

Significant changes to New Zealand’s financial reporting requirements are coming into effect for balance dates from 31 March 2015 onwards. Staples Rodway’s National Technical Manager, Jackie Russell-Green, looks at what this means for New Zealand companies.


F YOU’RE THE DIRECTOR OF a company, two of your fundamental duties are to manage the business effectively, for which you need high quality financial information, and to ensure that the company meets its statutory financial reporting obligations. As we reported in the autumn 2014 edition of Numbers, the financial reporting requirements for companies are changing. Many of these changes come into effect for the first time for 31 March 2015 balance dates. It’s important that company directors are aware of what this means for their company.

The decision tree on the right, and its accompanying notes, is designed to allow directors of for-profit companies to determine what their financial reporting requirements will be going forward. In the coming months, Staples Rodway will be working with all clients to make sure that their financial reporting meets all statutory requirements, enables them to get the financial information needed by shareholders, lenders and other key stakeholders and assists them to manage the business effectively.

Is the company an FMC reporting entity?1

GPFS: General purpose financial statements (i.e. financial statements prepared in accordance with generally accepted accounting practice). For FMC reporting entities, GPFS must be prepared under the requirements of New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”); all other for-profit companies that must prepare GPFS can do so under the requirements of the NZ IFRS Reduced Disclosure Regime (“NZ IFRS RDR”). NZ IFRS RDR has the same recognition and measurement requirements as full NZ IFRS, but provides considerably reduced disclosure requirements. GPFS of an overseas company may be the financial statements of that company that comply with the laws of the country in which it is incorporated (subject to the Registrar’s satisfaction).


Within 4 months of balance date prepare GPFS, have them audited and file them.


What is the ownership of the company?

Overseas company with a branch in NZ

Subsidiary of an overseas company2

25% or more overseas owned3

Less than 25% overseas ownership4

Is the overseas company large (i.e. revenue > $10m or assets > $20m)?5

Is the company large (i.e. revenue > $10m or assets > $20m)?6

Is the company large (i.e. revenue > $30m or assets > $60m)?7

Is the company large (i.e. revenue > $30m or assets > $60m)?8








Within 5 months of balance date prepare GPFS have them audited and file them.9


Within 5 months of balance date, prepare GPFS, have them audited and file them.10

How many shareholders does the company have?

10 or more

Within 5 months of balance date prepare GPFS and have them audited (unless opt out). No requirement to file.12

Within 5 months of balance date prepare GPFS and have them audited (unless opt out). No requirement to file.11

9 or less

No requirement to prepare GPFS, be audited or file. Must prepare GPFS and be audited within 5 months of balance date if required by 5% or more of shareholders. Must meet Inland Revenue requirements.13

NOTES 1. T he term “FMC reporting entity” is defined in the Financial Markets Conduct Act 2013. FMC reporting entities include issuers of regulated products under the Financial Markets Conduct Act 2013, listed issuers, operators of licensed markets, recipients of money from a conduit issuer, registered banks, licensed insurers, credit unions and building societies. 2. A company is a subsidiary of an overseas company if it is more than 50% owned by an overseas company (including a subsidiary of an ultimate overseas company). 3. 25% or more overseas ownership means 25% to 50% owned by an overseas company or a subsidiary of an overseas company, or 25% or more owned by overseas individuals. 4. Less than 25% overseas ownership means that at least 75% of shareholders are based in NZ. 5. For an overseas company trading in NZ, size is based on the overseas company (and its subsidiaries), not just on the NZ operation. An overseas company is large if it and its subsidiaries have revenue in excess of $10 million or assets in excess of $20 million.† 6. For a NZ registered company that is a subsidiary of an overseas company, size is based on the NZ registered company (and its subsidiaries). A NZ registered company that is a subsidiary of an overseas company is large if it and its subsidiaries have revenue in excess of $10 million or assets in excess of $20 million.† 7. A company with 25% or more overseas ownership (but that is not a subsidiary of an overseas company) is large if it and its subsidiaries have revenue in excess of $30 million or assets in excess of $60 million.† 8. A company with less than 25% overseas ownership (i.e. 75% or more NZ ownership) is large if it and

its subsidiaries have revenue in excess of $30 million or assets in excess of $60 million.† 9. If the NZ business of an overseas company is large, the financial statements must include, in addition to the financial statements of the overseas company, financial statements for its NZ business. 10. A company is not required to audit and file if it has more than 25% overseas ownership and is a subsidiary of a NZ company which files audited group financial statements, or is a wholly-owned subsidiary of a NZ company (or a large overseas company) which files audited group financial statements. 11. A large company with less than 25% overseas ownership must prepare GPFS and have them audited, but can opt out of the requirement for audit with 95% shareholder approval (which means that 95% of voting shares must be cast in favour of the proposal to opt out). If GPFS are audited, they must be filed. 12. Non-large companies with 10 or more shareholders must prepare GPFS and have them audited, but can opt out of both requirements with 95% shareholder approval (which means that 95% of voting shares must be cast in favour of the proposal to opt out). If the company opts out of preparing GPFS, it must meet Inland Revenue’s minimum financial reporting requirements. 13. Non-large companies with fewer than 10 shareholders are not required to prepare GPFS or have them audited, but must do so if at least 5% of shareholders require them to. Where GPFS are not prepared, Inland Revenue’s minimum financial reporting requirements must be met. † As at the balance date of each of the two preceding accounting periods.

NUMBERS Autumn 2015 • 23

Claire gets f r colourful lo iendly with some cals in Copa n, Honduras

marimba leon, N players in icaragu a

nd of e a l s i llic in beliz y d i e th lker u a C e cay



At the end of last year, Claire Hardman, a member of our admin team in Auckland, spent 2 months traveling and scuba diving around Mexico and Central America. These are not standard holiday destinations for most Kiwis, and Claire’s trip provides an interesting insight into what is on offer in that part of the world.


LANDED IN CANCUN, MEXICO, AFTER a 30 hour flight, followed by another 3 hours of waiting time for my best friend Kylie to arrive after me. After her having lived abroad for the last 2 years, I knew it would be a good reunion. Oh the fun we were going to have! When she finally arrived, we decided that first things first, since we were in Mexico – time for a Corona! We ventured to our first destination – Cozumel Island off the Yucatan Peninsula in Mexico, a scuba diver's paradise. After a couple of days of soaking up the sunshine and enjoying cocktails, it was finally time to sample the diving, which was some of the best I have ever experienced. All diving in Cozumel is known as drift diving, where you jump off the boat and are gently carried by the current with no effort required. This is a real treat, as it just allows you to lie back and enjoy the scenery: beautiful coral formations teeming with fish life, great swim- throughs and even turtles, much to my delight! After enjoying our time sunning, relaxing, and eating our body weight in Mexican food we continued on to our next destination – Belize. We boarded what is affectionately known by the locals as a “chicken bus”. This one, however, had everything on board jammed into a small space like battery hens, but unfortunately no actual chickens, much to my disappointment. After a very long and very interesting 12-hour journey we finally arrived at what can only be described as paradise, Caye Caulker island: pristine white sand, aqua-blue waters and palm trees aplenty. We were soon living the local lifestyle of “no shirt, no shoes, no problems!” The Island was so small that we hired bikes to explore and knew it completely within 15 minutes. Again we decided to indulge in some ocean adventures with a day spent on a private yacht. We covered all the best places, including a wellknown area called “shark and ray alley” where we spent time swimming with more sharks and rays than we could count, as well as more turtles and amazing corals. Another beauty of a day on the water. We continued our journey from Belize into Guatemala where we spent some time enjoying the cultural and historical sights of this friendly and fascinating part of the world. We went to the ruins of Tikal located in the jungles of Guatemala. Dating as far back as 1,000 BC, Tikal is one of the oldest and the most important sites in Mayan history. It was fascinating to learn about, especially since the Mayan history is relatively unknown to many in New Zealand. Spending a day in the jungle with monkeys, tarantulas and macaws all around was a noisy and enjoyable experience.

Honduras and Nicaragua were breathtakingly beautiful, both raw and untouched, and with the friendliest of the locals. In Nicaragua we hiked an active volcano, Telica in Leon where at the top we watched the sun setting over the mountains; then as it got dark, we were able to peer over the side of the crater’s edge to look down at the glowing magma, a magnificent sight to behold. We spent some time on the coast as well, dabbling in learning to surf with some locals during the day and releasing turtles into the ocean by dusk. Continuing on to Costa Rica we were met by a wonderfully rich and protected natural tourism dream. Costa Rica is much wealthier in comparison with other Central American countries that have all suffered civil wars and slower economic progress. The Costa Ricans are proud of their comparative high standard of living which is evident everywhere although, from the tourist’s point of view, it is the most expensive of all the Central American countries. The natural beauty, however, is overwhelming and they have taken important steps to protect their natural assets. Spending two weeks exploring this wonderful country was the best possible way to end our holiday. We spent time within the National Parks’ forests sighting sloths lazing about in the trees; at the cloud forests walking above the forest canopy on suspension bridges within the clouds; and at the coast surrounded by wildlife including howler monkeys making themselves heard each day. It was certainly a memorable trip and one that I would recommend to anyone if they wanted to visit somewhere out of the ordinary.

AUCKLAND Level 9, 45 Queen St PO Box 3899 Auckland 1140, New Zealand Phone 64 9 309 0463 Fax 64 9 309 4544

WAIKATO 4th Floor, BNZ Building 354 Victoria Street PO Box 9159 Hamilton 3240, New Zealand Phone 64 7 834 6800 Fax 64 7 838 2881

TAURANGA Level 1, 247 Cameron Road PO Box 743 Tauranga 3140, New Zealand Phone 64 7 578 2989 Fax 64 7 577 6030

HAWKES BAY Cnr. Hastings and Eastbourne Streets PO Box 46 Hastings 4156, New Zealand Phone 64 6 878 7004 Fax 64 6 876 0078

NEW PLYMOUTH 109-113 Powderham Street PO Box 146 New Plymouth 4340, New Zealand Phone 64 6 757 3155 Fax 64 6 757 5081

STRATFORD 78 Miranda Street PO Box 82 Stratford 4352, New Zealand Phone 64 6 765 6949 Fax 64 6 765 8342

WELLINGTON Level 6, 95 Customhouse Quay PO Box 1208 Wellington 6140, New Zealand Phone 64 4 472 7919 Fax 64 4 473 4720

CHRISTCHURCH 314 Riccarton Road, PO Box 8039 Christchurch 8440, New Zealand Phone 64 3 343 0599 Fax 64 3 348 0186

26 • NUMBERS Autumn 2015

Numbers mag autumn 2015 issuu  

Hawkins Profile | IRD Investigations | NZIPOs | Tax Issues for Trustees | Employing Seasonal & Casual Labour | Improving Workplace Health &...

Numbers mag autumn 2015 issuu  

Hawkins Profile | IRD Investigations | NZIPOs | Tax Issues for Trustees | Employing Seasonal & Casual Labour | Improving Workplace Health &...