No 34 WINTER 2015
INTELLECTUAL PROPERTY Making the most of your innovations
THE TIMES THEY ARE A-CHANGIN' Business improvement tactics and tips Staples Rodway is an independent www.staplesrodway.co.nz member of Baker Tilly International
CLOUD COMPUTING Everything you need to know
EMPLOYMENT LAW UPDATE How the changes affect you
www.staplesrodway.co.nz NUMBERS Winter 2015 • 1
DIRECTORS AUCKLAND
David Searle
(09) 373 1128
HAMILTON
Rosanna Baird
(07) 834 6800
TAURANGA
Chris Downey
(07) 578 2989
HAWKES BAY
Stuart Signal
(06) 878 7004
TARANAKI
Chris Lynch
(06) 757 3155
WELLINGTON
Robert Elms
(04) 472 7219
CHRISTCHURCH
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 Winter before acting 2015on this information.
No 34 WINTER 2015
IN THIS ISSUE 2
The times they are a-changin': Business improvement tactics and tips
4
Making the most of your innovations
6
Business governance: Where are the women?
8
Employment law update
10 Dad's Pies: The Humble Pie's Journey from NZ to Japan 12 Cloud Computing: What you need to know 14 Risk management & data recovery: Time to plan? 16 Volatility, the VIX and you! 18 Investor briefing: Exchange Traded Funds 20 Tax Chat 21 Company directorships, governance & administration 22 Staples Rodway Taranaki takes KiwiSaver to the next level 23 Associate Appointments 24 Christchurch office: Lessons learnt for a new home
The Times They Are A-Changin' BUSINESS IMPROVEMENT TACTICS & TIPS
Article by Mark Kingsford STAPLES RODWAY AUCKLAND mark.kingsford@staplesrodway.com
In 1963 Bob Dylan penned the lyrics to his influential song “Times They Are A-Changin”.The song was written as an anthem of change but could apply to the fast changing business environment of the 21st century. With such rapid change comes the need for response – sometimes rapid, sometimes measured and deliberate.
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HE FINANCIAL DRIVERS ARE OBVIOUS but often significant. At a recent Staples Rodway Business Improvement seminar co-hosted with Attaché Software, Attaché indicated that an estimated 12% or more of the turnover of a business is locked in inefficient systems. Unlocking the inefficiencies can free up cash-flow but more importantly it can provide time-savings and greater focus on what is important and what drives the business forward - as opposed to what is annoying and holds the business back. Following are 10 tactics and tips you could apply in your business in order to reap improvements which save you time and money:
1. HAVE A PLAN, ACTION THE PLAN! Identify where you want your business to go and how you will get there. I’m not talking about a 100 page business plan that is never referred to again because you are too busy but rather a strategic vision of where your business needs to be and the key actions that will take you there. Then work on the actions, and complete the actions.
2. FORECAST YOUR FUTURE
6. COST MANAGEMENT Manage costs by way of a defined process to identify opportunities for minimisation of spend and putting appropriate controls and delegations in place. Choose three expense lines, provide responsibility and incentive to a member of staff to assess these lines and report back with suggested actions. Cost savings or better value for the same spend is certain to arise. Picking only a few significant lines at a time ensures that the task doesn’t overwhelm. Document and detail the savings.
7. BUSINESS PROCESS IMPROVEMENT As businesses grow in size and complexity their processes often need to be reviewed and refined to cater for the increased scale and breadth of operations. Small start-ups can no longer rely on informal, intuitive processes. Larger businesses can realise greater efficiencies and better client delivery through streamlining and automation. Review existing business processes and identify opportunities for operational improvement and internal control enhancement.
With any change you make you need to know if it is working. The only way to know, and quantify the effect of the change, is to forecast what would happen under the status quo and how any action you take changes the financial outcome. The forecast should be an integrated Balance Sheet, P&L and Cashflow and able to accommodate multiple scenarios and variables.
8. SYSTEM SELECTION
3. DEBTOR MANAGEMENT
9. LEGAL CONTRACTS
Cash is the lifeblood of any business. Getting paid quickly, therefore, is essential. Try the following to speed up receipts from debtors: Get invoices out promptly Send them automatically by email - or to an online vault, which then provides the benefit of knowing who has opened the invoice and when. No more customers stalling for time on the pretence that the invoice was never received Mark the invoices as “due” or “overdue” only Include specific due dates Have a system which sends automatic reminders – escalating in tone depending on lateness
4. SELL MORE Empower your sales staff by putting customer buying patterns and other information at their fingertips. Applications can analyse sales trends and work out what customers typically buy, what they bundle, what they used to buy but now don’t and, most powerfully, what their peers are buying that they are not currently. Know the buying habits of your customers before someone else does and sells them what you should have.
5. INVENTORY MANAGEMENT Turn stock around quicker and more often with the following techniques: Know your margins by stock line / SKU. Analyse margins and volumes Get rid of low margin, non strategic stock Get rid of obsolete stock Identify inventory bundles and price accordingly Have re-order triggers so that you reduce out of stock incidences Be able to easily back order or substitute an order www.staplesrodway.co.nz
A good financial system can make accounting and operational tasks much simpler and less time consuming. They can provide transparency to performance and assist you with running your business effectively from wherever you may be.
Take some time to catalogue the contracts you hold and identify any gaps. These contracts are like life insurance, with their importance only becoming obvious after a specific event and you will definitely wish you had them then. They are also critical if you are looking to divest or seek investment.
10. MAKE TIME Finally, make time for Business Improvement. Use a mechanism to make you do it whether it is as simple as a diary note or more formal such as a monthly advisory board. The times they are a-changing. Either you and your business are changing with the times or you risk being consigned to history. If you would like to discuss any of the above Business Improvement tactics please contact the writer or your usual Staples Rodway advisor.
The Attaché Scorecard, whilst a little Australian, is a good way of identifying possible business improvement opportunities. To complete the Attaché Scorecard email nzscorecard@attachesoftware.com with “SR Attaché Scorecard” in the subject line for your free invitation. For more information visit scorecard.attache.com.au
NUMBERS Winter 2015 • 3
MAKING THE MOST OF YOUR INNOVATIONS At the core of every technical and knowledge-based business is intellectual property (IP). It is one of the most important assets a business has, yet many businesses do not know what IP they own, or how to recognise and protect it to leverage the opportunities and advantages IP gives you.
Article by Corinne Cole & Michael Brown AJ PARK corinne.cole@ajpark.com | michael.brown@ajpark.com
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OUR IP CAN COME IN many forms. It's an umbrella term that describes 'the innovative idea behind new technologies, products, processes, designs or plant varieties, a brand, a trade secret, or the goodwill associated with a business, product or service'. In some cases, you automatically have IP rights, and in others, you need to apply for and register the right.
TYPES OF IP
PATENT
REGISTERED DESIGNS
TRADE MARKS
COPYRIGHT
WHAT?
Ideas and concepts embodied in products, formulations, & processes
The 3D shape of the product
Words, logos, name, slogans, sound, colour, smell
Expression of an idea but not the idea itself
EXAMPLES
2. Check to make sure your product is not protected Launching your product without checking whether others own rights in aspects of your product is risky and could open you up to legal action. Even if you do not want to protect what you have created, carrying out clearance or 'freedom to operate' searches to make sure you can sell your product in a particular market is important.
Products, processes, computerimplemented inventions
Packaging, shape of product
Product and service identifiers
Drawings and prototypes, written material, photographs
LENGTH
Each right can protect distinct aspects of a new product or innovation and rights vary in length of protection. The main kinds of IP rights are patents, registered designs, trade marks, and copyright.
do not show the product to anyone unless you have a non-disclosure agreement in place. Disclosure or commercialisation of your product to a third party could destroy any novelty in the product and may prevent you from securing valid patent or design protection in most markets.
Registered right, can last 20 years
Registered right, can last 15 years
Registered or unregistered right, can last forever
Unregistered right, automatic, duration varies
A single product or innovation is capable of holding more than one of the above IP rights. Other IP rights include trade secrets, confidential information, domain names, and plant variety rights.
PUTTING IP INTO PRACTICE
3. Choose a trade mark that you can protect and enforce While it’s easy to choose a trade mark that tells you exactly what the product or service is you are offering, these trade marks are difficult to protect and enforce against others. Choosing a unique and unusual trade mark will provide you with a strong defensible position.
Let's say you have designed a chair. The legs of the chair have been designed to fold back into the base of the chair for ease of movement between locations. Research has told you that moving chairs from one office to another for meetings is a bugbear for many. You want to call the chair bLEGGS. What IP rights could apply to your chair? Patent - for the fold back legs of the chair Registered design - for the shape of the chair Copyright - for the drawings and prototypes of the chair Trade mark - for the name bLEGGS.
4. Copyright protection is free Copyright is a form of IP protection that comes into existence upon creation of a work and does not need to be applied for. Protection is best achieved if you ensure you include the © symbol, date, and author of the work when the work is created. Copyright does not provide protection against the copying of three dimensional products. Make the most of your innovations by being aware of the IP rights you own so that you can create maximum commercial benefit and be alert to any issues with using IP owned by others.
WAYS TO LEVERAGE YOUR IP
AJ Park is a leading provider of intellectual property services in New Zealand, Australia and the Pacific region. We help a diverse range of businesses and individuals to protect their innovations, and enforce their valuable IP rights.
1. A key to patent or design protection is secrecy If you think you have a new product that could be protected by a patent or design, www.staplesrodway.co.nz
NUMBERS Winter 2015 • 5
BUSINESS GOVERNANCE WHERE ARE THE WOMEN? When it comes to increasing diversity on the boards of directors, we often hear that the best person for the job should be chosen. Habits and familiarity mean that the best candidate may not even be considered. For the future of many businesses, there are good reasons to promote gender diversity on boards, and to acknowledge that there are recognised obstacles as to why more women are not considered for board roles.
Article by Tracy Hickman STAPLES RODWAY AUCKLAND tracy.hickman@staplesrodway.com
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HE KEY TO SUCCESS FOR any company is the ability to attract, develop and retain the best people. At a board level, there is a significant body of recent research to support the argument that businesses with board members from diverse backgrounds perform better than businesses with a homogenous board. Credit Suisse research undertaken in 2012 shows that “companies with one or more women on the board have delivered higher average returns on equity, lower gearing, better average growth and higher price/book value multiples” over the six years considered in the study. How does that greater diversity make a difference? Mixed groups are more likely to consider a wider range of issues and influences when making decisions, and as a consequence may generate more innovative solutions. As a general statement, women tend to be more risk averse than men, so businesses with female board members experienced less volatility in earnings. A significant proportion of consumers responsible for making household purchasing decisions are women, so understanding how to market and sell to women is vital for consumer businesses. Boards practicing good governance should reflect stakeholder interests in how and who they recruit into their ranks as a given. Failing to include female candidates reduces the pool of available talent for consideration when making board appointments. Given New Zealand’s already limited resources, this should be a significant motivator for boards to look beyond the usual networks. Further, it will become increasingly important with New Zealand’s aging population, and taking into account that around two-thirds of recent university graduates are female.
WHAT’S THE CURRENT SITUATION IN NEW ZEALAND?
HOW TO ADDRESS THE LACK OF DIVERSITY The key obstacles to achieving greater gender diversity start at an individual level, with regard to educational and sector choices. Educational choices can be influenced by teaching science, technology, engineering and maths subjects in a practical manner that suits female learning styles, encouraging more female graduates into those sectors. In addition, women in the workplace may be subject to cultural bias, with the perception that women are less committed, double standards in how ambitious men and women are viewed, spousal role and support. They may also encounter workplace-related bias, in the form of gender pay gaps, flexibility, and promotion rates. Regulation for disclosure of diversity targets (and progress), gender pay gaps and diversity initiatives may encourage boards and CEO’s to tackle the workplace related issues. On a national level, there are structural issues including childcare assistance and shared parental leave. These barriers may be overcome through legislation, such as the introduction of longer term shared parental leave and further provision of childcare assistance. There are also initiatives such as the Institute of Directors Mentoring for Diversity Programme, which aims to reflect New Zealand’s diverse population at board level, addressing gender, age and ethnic gaps. Many New Zealand businesses have very small boards, so achieving diversity can be challenging. However, with an increasing proportion of women moving through the ranks in accounting and legal firms, it makes sense to find ways to improve the representation of women at partner level. If you are interested in improving the gender leadership balance in your organisation, what can you do? Next time you are making an appointment, whether at board level or for a senior leadership position, look outside your usual networks. Consider sponsoring women by making them visible to leaders within and outside the organisation and connecting them with concrete opportunities. Think about women you have come across during your career who might be suitable, chat to your contacts about candidates in their radar, or check out websites such as www.appointbetterboards.co.nz. There is clear empirical evidence to support the idea that a board with gender balance should make more informed decisions, reduce volatility in earnings and improve performance in your organization.
Every company listed on the NZX's main platform is required to include a gender breakdown of its directors and officers in the annual report, with the percentage of female directors reported at 14% for the 2014 calendar year. According to the Ministry for Women, that figure increases to 41% for state sector boards and committees. New Zealand's ranking out of 142 countries in the Global Gender Gap Report 2014 is 13th, with a score of 0.7772 (where the highest possible score is 1, representing equal representation). Whilst that is a respectable result, our placing has fallen from 7th in 2013 and 5th in 2010. The good news for gender equality is that our educaIf you are interested in further guidance and advice on tional attainment score is excellent and political empow14% of NZX 100 Directors are female good governance, please contact Tracy Hickman from our erment is also good, as a reflection of our relatively high Auckland Corporate Advisory team, or your usual advisor. number of women in ministerial positions and having had a female prime minister. However we don’t rank as highly on economic participation, with a position of 33rd in the world for wage equality for similar work and 40th for labour force participation. With an ageing workforce, increasing women’s labour force parRESEARCH REPORTS ticipation becomes increasingly important. The New Zealand labour force parCredit Suisse 2012 Gender Diversity and Corporate Performance ticipation rate for women is currently at 64% and nearly 75% for men. However, Credit Suisse 2014 women in New Zealand are doing far more unpaid work than men, with about The CS Gender 3000: Women in Senior Management 63% of women's work unpaid compared to 35% of men's work. Both available for free download from www.credit-suisse.com
64% 75%
NZ LABOUR FORCE PARTICPATION
63% 35% NZ UNPAID WORK
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Ministry for Women listing of various reports See www.women.govt.nz for more information Women on Boards recommended reading See www.wob.org.nz for more information World Economic Forum: The Global Gender Gap Report 2014 See www.weforum.org for more information
NUMBERS Winter 2015 • 7
EMPLOYMENT LAW UPDATE Significant changes are taking place to employment law in New Zealand and employees and employers need to know how those changes will affect them.
Article by Kearin Pollard, HR Consultant STAPLES RODWAY TARANAKI kearin.pollard@staplestaranaki.co.nz www.staplesrodwayhr.co.nz
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HE EMPLOYMENT RELATIONS AMENDMENT ACT 2014 came into effect on 6 March 2015. The changes target the following areas: rest and meal break rules good faith flexible working arrangements Employment Relations Authority (the ERA) the collective bargaining framework (including strikes and lockouts)
REST AND MEAL BREAKS There are changes to the rest and meal break provisions that seek to balance the importance of rest and meal breaks with the need for breaks to be practical for each workplace. The changes replace the current strict rules with a more general right for employees to have rest and meal breaks to give them a reasonable opportunity to rest, eat, drink and deal with personal matters. The new provisions encourage employers and employees to negotiate, in good faith, rest and meal breaks that meet the legislative requirements, without compromising business continuity and flexibility. The changes say: when employers can make reasonable restrictions on rest and meal breaks employers can specify when breaks are taken, if employees and employers cannot agree on when and how long breaks should be that an employer is exempt from giving breaks – when employees agree to reasonable compensation or where the employer cannot reasonably give the employee rest and meal breaks that reasonable compensatory measures are to be provided when an employer is exempt from the requirements to provide breaks rest breaks must be paid any other law that requires an employee to take rest and meal breaks takes priority over the rules in the Act Employees and employers cannot contract out of the right to rest and meal breaks - an employee either gets a break or a compensatory measure; the employer cannot fail to give either.
GOOD FAITH This change amends the good faith provisions that require an employer to give an employee relevant information when decisions could be made that will, or are likely to, have an adverse effect on a person’s continued employment. It aims to clarify what information employees are entitled to during restructures or other situations where their continued employment is at risk. An employer must give the affected employee relevant confidential information about themselves. An employer does not have to give confidential information that legally must stay confidential, or where there is a good reason to keep the information confidential.
FLEXIBLE WORKING ARRANGEMENTS The changes to flexible working arrangements aim to improve people’s participation in the labour market and to better reflect modern lifestyles. Flexible working arrangements help employees find the right work-life balance for them and their employer. The key changes are: extending the statutory right that caregivers currently have, to request flexible working arrangements, to all employees removing the requirement of six months’ prior employment with the employer, so employees can ask for flexibility from their first day on the job removing the limit on the number of requests an employee can make in a year reducing the timeframe within which an employer must respond to a request from 3 months to 1 (and requiring that the response be made in writing and include an explanation of any refusal)
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EMPLOYMENT RELATIONS AUTHORITY The changes introduce requirements for when and how the Authority must give determinations. At an investigation meeting’s conclusion, the Authority must (where practical) give an oral determination, and a written record of that determination within 1 month. The only exception is if there are good reasons why it is not practical to give either an oral determination or indication of preliminary findings. In that case a determination must be delivered within 3 months of either the investigation meeting or any extra evidence being provided, whichever is later. The Authority can also decide matters without holding an investigation meeting, and must give a written determination within 3 months of receiving evidence from the parties.
COLLECTIVE BARGAINING FRAMEWORK The changes to collective bargaining aim to increase choice and flexibility in the collective bargaining framework, reduce ineffective bargaining, and improve fairness and balance in bargaining requirements. The key changes are: providing that the duty of good faith does not require parties to reach a collective agreement. Parties will be able to ask the Authority to declare that bargaining has ended allowing employers to opt out of multi-employer bargaining from the start removing the 30-day rule that gives non-union members, who are new employees, the terms and conditions from the collective agreement allowing proportionate pay reductions as a response to partial strikes requiring advanced written notice of any proposed strikes and lockouts in all sectors
ANOTHER CHANGE FOR EMPLOYERS TO NOTE Currently, the Parental Leave and Employment Protection Act 1987 provides for a maximum period of 14 weeks parental leave payments for employees. From 1 April 2015, this period has increased to 16 weeks, to be followed by a further increase to 18 weeks from 1 April 2016.
ODD SPOT – BEWARE! A recent Employment Relations Authority determination found “Testing out a worker for a day was held to be employment…” An employee was found to have been unjustly dismissed under a 90 day trial provision because he had already “worked” for a day before signing the Individual Employment Agreement. The recruitment interview process took the form of having the employee meet with the boss and then spend the day doing tasks at the workplace. He was then offered a job and given an Individual Employment Agreement to sign. The ERA held that the day spent doing tasks was employment (even though unpaid) and so the 90 day trial period (signed after that one day doing tasks) could not be relied upon. The employee was awarded $4,500 compensation plus lost wages for being unjustly dismissed. Conducting skills testing should not take the form of work or else it can be held to be employment. Even if no job had been offered after the day’s work in this case the worker would still have been “employed” and therefore unjustifiably dismissed. Skills testing is common but should not be actual work, rather a simulated test only. The concerning fact here is that it seems apparent that in certain industries anyway, this practice of “try before you buy” is very common. Our advice is to cease this practice immediately. Staples Rodway Human Resource Consultant Kearin Pollard specialises in compliance with Employment Law and can provide you with advice and assistance on all employment issues raised.
NUMBERS Winter 2015 • 9
THE HUMBLE PIE'S JOURNEY FROM NEW ZEALAND TO JAPAN Staples Rodway’s client Dad’s Pies has been on a journey over the past 34 years, growing sales both in New Zealand and overseas through the development of a healthier pie, and breaking into the market in Japan.
I
T WAS 1981 AND EVERYONE was wearing stubbies when Dad’s Pies began in a pint-sized pie shop at Red Beach, Auckland. The task at hand was feeding peckish beach goers on pies and ice creams.
ALL AROUND THE WORLD In the last 34 years, the talented family behind Dad’s Pies has grown to include sons Tom and Ben and honorary family member and business partner Michael Welch. Expanding from their humble beginnings to a purpose built pie factory and bakery, they now send their pies all around the world. So if you’re munching on a pie in Japan or whilst flying with Emirates or Air New Zealand, chances are that delicious pastry creation came from Dad’s Pies.
DEVELOPING THE HEALTHIER PIE The team are extremely dedicated when it comes to their craft and they believe pies should be good for you as well as tasting great. To that end, making them healthier has been a key goal, using real ingredients, with prime NZ beef, fully trimmed NZ chicken, fresh NZ grown lamb and GM free vegetables. All this home grown goodness is processed in their own butchery system where they can precisely control the quality, size and fat content of every last piece. Dad’s Pies contain no genetically modified ingredients, no trans fatty acids, no artificial colours and no preservatives.
MAKE PIES TO THE JAPANESE LIKE SUSHI IS TO KIWIS The journey to Japan began when musician Grant Humphrey ventured from NZ to Japan where he married a Japanese woman named Yayoi. Grant started to sell some Dad’s Pies out of a little restaurant he’d bought on the outskirts of Tokyo. The response from the locals was better than expected so Grant started to order pies by the pallet load and before long other businesses started showing interest in stocking them. The goal for both Grant and the team at Dad’s Pies is to make pies to the Japanese like sushi is to Kiwis. The team has been helped by New Zealand Trade and Enterprise (NZTE), both with Market Development Funding and introductions on the ground in Japan. NZTE Customer Director Craig Armstrong said NZTE’s relationship spans more than a decade: “Our relationship with Dad’s Pies goes back as far as 2003. They are very ambitious to grow their markets in the Middle East and Japan, but they never lose sight of the need to keep their customer as their priority.” www.staplesrodway.co.nz
Staples Rodway advisors have also helped by providing the Dad’s Pies team with cultural training for dealing with Japanese businesses, taxation advice and by liaising with NZTE to provide financial information to support funding applications. Dad's Pies is continually developing perfect flavours to suit the diverse and culturally different palates around the globe. For Japan there was chicken teriyaki and Bulgogi, but they can’t seem to resist the old classic of Dad’s ‘Beef Mince and Cheese’, which proves to always be a crowd favourite around the world. A four pack was designed with its own colours to be more appealing to the Japanese market and to suit the retail distribution model used by Costco, the world’s largest warehouse wholesaler. The Japanese place a high regard on trust and Dad’s Pies is successful because it has gained consumers’ trust that the product is safe and nutritious. Two key factors learnt when dealing in Japan are that: 1) Reliable representation on the ground is vital, and the team at Dad’s Pies has achieved this through their relationship with Grant; and 2) The key stakeholders appreciate the owners’ genuine commitment, whether that is literally going the extra mile with frequent visits, airfreighting product to meet urgent requests or developing flavours to suit the local palate. Japan is a pleasant place to do business but it can take a few years to get traction, so Dad’s advice? Don’t give up when the going gets tough!
WHAT’S NEXT? The all new Junior Range made its first 'OE' to Japan at the start of April 2015, where it flew onto shelves of five stores as a test to see how the little ones go. The potential for the Junior pie to spread its wings is phenomenal, with 25 sites in Japan waiting with their order forms if they move as expected. Away from Japan there is a lot of opportunity opening up with the UAE and Singapore. The hardest task is being able to focus on all markets. Back home, you’ll find Dad’s Pies products in Wild Bean Cafes and BP2GO outlets, leading supermarkets, the Mad Butcher and many more food outlets. Staples Rodway Auckland Associate Director Tracy Hickman has been working with the Dad’s Pies team since 2010 on governance and strategy, and is pleased to see their ongoing success. If you would like advice on growing your business, feel free to contact Tracy at tracy.hickman@staplesrodway.com or get in touch with your usual advisor.
NUMBERS Winter 2015 • 11
CLOUD COMPUTING WHAT YOU NEED TO KNOW We are seeing a rapid change in the computing landscape that supports all of our businesses, in some cases appearing to go full circle.
Article by Robert McEwan & Chris Fuller BUSINESS COMPUTING SERVICES, STAPLES RODWAY TARANAKI rob.mcewan@staplestaranaki.co.nz | chris.fuller@staplestaranaki.co.nz
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HIRTY-PLUS YEARS AGO MOST BUSINESSES used mainframes and terminals. These were centralised, highly controlled and expensive computing environments where we often paid a fee for the amount of computer resources we used. Since that time we have had the evolution of the personal computer. This is known as distributed computing where we typically own and maintained our own computing equipment. Businesses are now moving back to a form of centralised subscription computing, except this time based in “the cloud” and reliant on internet connectivity. This move is for a variety of reasons, including: Good connectivity allowing us to connect to services from wherever we are – ideal for our mobile workforces We have very capable end point devices – many are personal and mobile, and can be combined with mobile phones
12 • NUMBERS Winter 2015
It is often cheaper to subscribe to these services than our own local infrastructure Subscription services are often more reliable and secure than our own traditional solutions
FUNCTIONALITY Any good business computing solution has defined functionality, performance, security and reliability requirements. These requirements are balanced against the costs of providing the services. Due to economies of scale, Cloud based computing can now often change this cost capability balance. Once basic requirements are determined, the following need to be considered: What services do we need Where is our data going to be and who need access to it Can the users get reliable fast connections to the data from wherever they are
Can the data be adequately secured Can the users get the desired functionality on their preferred end point device In some cases hybrid solutions with some local infrastructure and some cloud services can meet the needs.
END POINT DEVICES End point devices to access local infrastructure and cloud services need: Good connectivity Touch input – keyboard or other devices when required Good size and low weight Good battery life Good functionality and accessories Apps that support our needs Good security and reliability Unfortunately, today we often still require more than one device to meet our needs.
MOBILE WORKFORCE Our workforce often needs to be able to work across devices, work from anywhere, and have a consistent, easy, and fast experience doing it. Whatever device you're working on, cloud computing can give you access to everything you need - documents, email, calendars, contacts, and team information all come with you. Your settings roam with you too, so your files are up to date and ready for you to pick up right where you left off, no matter what device you're using. Cloud computing makes it easy to more securely share files with co-workers, customers, and partners. Teams can work together on documents that are always current and accessible from virtually anywhere.
EMAIL AND CALENDARS Email and calendaring are often the core functions of our business interaction between our staff and clients. Whilst email should not be considered a secure or guaranteed delivery mechanism it is the most used service and often the first one moved to cloudbased services. Cloud hosted business-class email and shared calendars that you can access from virtually anywhere means people in our organisations stay in sync, and on schedule.
VIDEO CONFERENCING Mobile devices and cloud services now make it much easier to contact people and use full video conferencing capabilities. As we embrace this technology it will reduce the need for travel to some meetings.
BUSINESS APPLICATIONS Cloud providers like Microsoft have recently developed their traditional product sets into cloud hosted solutions that provide basic business applications. Microsoft Office 365 is a good example of this type of evolution. Some companies have also developed their standard products such as CRM and document management into highly functional cloud based subscription products. These type of solutions allow small businesses to leverage enterprise solutions at a fraction of the cost of traditional locally-owned infrastructure. Unfortunately many of the accounting application suites have not evolved as rapidly. This is often due to the need to support historic resources as well as embrace the new cloud-based environments. Companies like Xero who have written their product for the cloud from the start have a clear advantage at this point. However, accounting solutions that do not have a cloud based solution strategy are unlikely to survive in this new computing landscape. Businesses who rely on legacy non cloud-based applications may have to deploy solutions such as thin client remote desktops to be able to operate those applications through local infrastructure or cloud services. This can add considerably to cost.
RELIABILITY Cloud computing does not suit every type of business. It relies on always being connected to the cloud services. This means a connection from your desktop or mobile device all the way back to the data centre needs to be reliable. Companies with manufacturing plants or who provide essential services need to carefully evaluate the risks if they want to move to the cloud. Large data centres are built with high levels of redundancy and often provide better, more economic service levels than most businesses can achieve with their own local infrastructure.
SECURITY, COMPLIANCE, PRIVACY Data should be protected, especially when it can be accessed from multiple mobile devices and stored in the cloud. The data should be encrypted when it passes across public networks. Your devices and data should be protected from: Physical loss or hardware failure Unauthorised access to the device, local applications and data Unauthorised access to cloud data through the device Malware attack The services you subscribe to should have built in security to deflect malware, spam, phishing attacks and other threats.
NZ DATACENTRES AND DATA SOVEREIGNTY There are a number of statute requirements around the storage and retrieval of business and private data in New Zealand. New Zealand located datacentres and providers of cloud services can store data within New Zealand to meet these statutory requirements. Some of the well known cloud providers like Microsoft and Xero do not have NZ based datacentres. If you subscribe to these services then your data will be hosted overseas and may violate the NZ statute requirements. We understand, for example, that if measures are put in place that will allow the IRD access to your business and financial data from within New Zealand then the requirements can be deemed to be met. Some companies like Xero have negotiated exemptions with the IRD to cover their products. The requirements and solutions vary depending on your business type and should be reviewed as part of the evaluation process.
RETURN ON INVESTMENT Value matters. Cloud computing minimizes upfront costs, and enterprise-grade IT is available at a fraction of what it would cost to run it yourself. Cloud computing services are evolving at a rapid pace. Companies that have large datacentres and many subscribers are able to drive down costs as they grow but they must still be able to provide the necessary performance, functionality and reliable service levels.
HOW TO MAKE THE CHANGE TO CLOUD COMPUTING We recommend a structured approach to decide whether to move your IT infrastructure to the cloud, by taking the following steps: Identify a knowledgeable IT partner to help you Evaluate your business needs and future direction including any new technologies that may be beneficial to your business Review your current environment and applications to ensure there are no areas that could be problematic if it is moved to the cloud Identify your worksite and mobile user device requirements Evaluate cloud service provider(s) to ensure that they are viable businesses able to provide you with reliable services for the foreseeable future Assess the economic effects, business benefits and risks of a cloud solution If this process concludes that cloud computing is a viable option and identifies the best approach then ensure you engage the right service providers to assist you through the transition. Contact the authors who will be happy to discuss your cloud computing needs.
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NUMBERS Winter 2015 • 13
RISK MANAGEMENT & DISASTER RECOVERY
TIME TO PLAN?
Article by Robert Elms STAPLES RODWAY WELLINGTON robert.elms@stapleswellington.co.nz
Events, such as the catastrophic earthquakes and natural disasters of the past few years, continue to focus a lot of attention on risk management and the need for disaster recovery.
T
HE STANDARD RISK MANAGEMENT FRAMEWORK treats risk events in terms of scoring them based on their likelihood of occurrence and their possible impact. There is, however, a danger that likelihood and impact are bundled together in assessing risk. For example, the likelihood of a significant earthquake occurring in Christchurch prior to September 2010 would have been regarded as low by most people, and this may have led to a superficial consideration of any possible impact which meant that this, too, was assessed as being lower than it actually turned out to be. It is important, therefore, to apply these two criteria independently – to think of the impact of an event as being the possible range of effects assuming the likelihood of the event was 100%. This means that if you have identified an event which could seriously damage your business, it needs to be managed no matter how unlikely it may seem. It is an exercise that requires some imagination as to what a worst case scenario might be, and we all continue to be surprised by the enormous unforeseen consequences of even trivial events. Often this is because the greatest damage is done, not by the initial events themselves but by the knock-on effects, so it is important to also consider what these might be. Whatever the event, if you fail to provide for the worst case scenario, and it happens, your business may not survive. Some of the key questions you need to ask are: What types of risk events can occur and could they occur in our business? How rare are they truly? How good is the information we are using to assess these risks? What is the nature of potential losses, including loss of business-critical information? What is the worst case scenario, and can our business withstand it? How reliable is our existing risk mitigation? What risk management actions do we need to take? The management of risk may include a mix of actions such as: a) Avoiding or eliminating the risk (where practical); b) Accepting or controlling the risk (i.e. by reducing the probability or impact of the risk);
IMPACT
c) Transferring the risk to another individual or organisation (outsourcing the activity, arranging insurance cover, not accepting liability); and d) Retaining the risk (where it cannot be transferred or avoided) but putting a plan in place that manages the impacts of these risks if they should occur. The grid below indicates the degree of management that is typically applied. Where the impact is significant and / or the likelihood high, the risks could lead to serious consequences for your business, hence the need to consider them in your disaster plan - not being able to complete existing contracts or being unable to tender for new ones in a changed environment - perhaps resulting in loss of business. A loss in business would in turn lead to lost revenue, the effects of which may be an inability to pay your staff, suppliers or financiers as payments fall due and last but not least, an inability to pay yourself. Even a loss of business records can have a damaging effect on your business – knowing who your debtors are, what orders are left to be filled, etc. To minimise these effects, you should have a disaster recovery plan that covers: STAFF ISSUES - have a clear policy for staff to follow, make sure they understand what is expected of them. DATA - ensure that you have usable backups stored securely offsite, at a minimum, this should include all your accounting and customer records but also any key data that as a business you rely on. IT SYSTEMS - ensure that you can access that key data - have a plan with your IT supplier to ensure that your systems can be replaced quickly and efficiently. COMMUNICATIONS - provide for alternative communication systems to ensure that you can stay in touch with your staff, customers and suppliers don’t have a black hole that communications fall into. INSURANCE - comprehensive insurance may be essential to your business to cover the loss of premises and equipment, to cover loss of income to allow you to meet your ongoing overhead costs, such as wages as well as your own personal commitments. Insurance may also be required to cover such things as reconstruction of records. BUSINESS PREMISES - if you can’t operate from your existing premises, plan for an alternative, including all the logistical elements of communications, etc. Clearly a disaster of any magnitude could have a devastating effect on your business, therefore you need to review your plans and actions, or develop them.
RISK MANAGEMENT ACTIONS
Significant
Considerable management required
Must manage and monitor risks
Extensive management essential
Moderate
Risks may be worth accepting with monitoring
Management effort worthwhile
Management effort required
Accept risks
Accept, but monitor risks
Manage and monitor risks
Low
Medium
High
Minor
LIKELIHOOD
www.staplesrodway.co.nz
NUMBERS Winter 2015 • 15
VOLATILITY, THE VIX, AND YOU! Article by Tony Sagami MAULDIN ECONOMICS www.mauldineconomics.com
There is a lot of discussion about the need to improve the general level of financial literacy but unfortunately the finance sector is littered with jargon. The following article by Tony Sagami from Mauldin Economics is one of those rare articles that explains a piece of the financial jigsaw puzzle very well. This article is reproduced with permission.
I
F YOU’VE EVER WALKED A dog, you know about the zigzag path that dogs take down a footpath. After all, there are great odors to sniff on both sides of the footpath so your dog will veer far to the left, take a few deep sniffs before veering off to the right to see what olfactory surprises the other side holds. About the only thing that’s certain is that once your dog reaches the far end of his leash, it will swing back to the middle of the footpath before taking off for another trip to the extreme ends of the leash. Human psychology, when it comes to investing, isn’t so different. Investor sentiment swings from extreme readings of euphoria and anxiety and extremes of fear and greed. Like our friendly dogs on a walk, we investors swing from the far left to the far right of the Wall Street footpath. There is a way to profit from the human emotions: the VIX, or CBOE Volatility Index. Some of you already know plenty about the VIX, but for those that don’t, here is a quickie tutorial. The VIX, often referred to as the “fear index,” is calculated by the Chicago Board Options Exchange (CBOE) and measures market expectations of short-term volatility. The VIX is derived from prices investors are paying for options on the S&P 500 Index and measures the market’s expectation for stock market volatility over the next 30-day period. NOTE: There are three volatility indices: the VIX, which tracks the S&P 500; the VXN, which tracks the Nasdaq 100; and the VXD, which tracks the Dow Jones Industrial Average. The VIX was created in 1993 and investors have been using it to hedge against severe market movements ever since; it’s one of the most closely watched indicators in the market. MONTHLY VIX VALUES
50
ASIAN FINANCIAL CRISIS
1991 RECESSION
2008 BANKING CRISIS LTCM COLLAPSE
TECH BUBBLE COLLAPSE (2000 - 2003)
25
0 1995
1990
2000
2005
2010
2015
The VIX has been very useful in helping spot major stock market turning points. As the above chart shows, the VIX has historically spiked after major investment calamities, such as the 2008 financial crisis and the dot-com bubble. Conversely, the VIX has plunged to extreme low readings (in the “teens” as measured by the VIX) at stock market tops. When the stock market is rocking and rolling, investors lose all their fear and dogpile into the stock market. AVERAGE PEAK 6 MONTH VIX FRONT MONTH RETURN STANDING BY STARTING VIX RANGE
PEAK AVERAGE 6 MONTH RETURN
100%
80%
60%
40%
20%
0 10-12
12-14
14-16
16-18
18-20
20-22
22-24
24-26
26-28
28-30
VIX RANGE
As the above chart shows, whenever the VIX falls into the teens, it’s one of the most dangerous times to be in the market and one of the most rewarding to invest in the VIX. Where is the VIX today? The VIX is well below the levels seen at the time of the 2008 crash, when the index jumped as high as 80, and is now in the 15 range. www.staplesrodway.co.nz
NUMBERS Winter 2015 • 17
INVESTOR BRIEFING
EXCHANGE TRADED FUNDS In the era of the text message and the tweet, the acronym ETF has approximately 165 meanings. These meanings range from Early Termination Fee to Emergency Task Force. In this article we're talking about ‘Exchange Traded Funds’.
Article by Simon Reichenbach STAPLES RODWAY ASSET MANAGEMENT simon.reichenbach@staplesrodway.com
18 • NUMBERS Winter 2015
A
N ETF IS A FINANCIAL instrument created to reflect a basket of
assets or an index. ETFs can be built to reflect a particular geographical market, a particular investment sector or a specific commodity or a themed basket based on all of the above. For example, the WisdomTree Europe Hedged Equity Fund invests in a basket of major Eurozone companies that derive significant revenue from exports. The fund is hedged back into US dollars. As the name implies an ETF is traded on a securities exchange and as a result the price of an ETF can fluctuate daily depending on the supply and demand for the security. An ETF differs from a mutual fund where the price is set daily (or less frequently) and investors can redeem their investment at the prevailing net asset value. To ensure that the spread between the traded price and net asset value of an ETF does not become too wide the supply of an ETF is managed by the ETF creator which acquires or sells the underlying assets.
DEVELOPMENT ETFs were developed in the United States with the first ETF being the S&P 500 Depository Receipt (SPDR or, more colloquially, “Spider”) trading in January 1993. Interest in the new instruments built quickly with other providers State Street and Vanguard offering the product. Together with
returns if a particular theme has currency in the market. The products internally are essentially passive in nature reflecting an index or specified asset weighting over time. This passive approach has the advantage of minimising costs. As ETFs have gained in popularity so have they gained in size. This has brought the added benefit of liquidity. Generally an ETF will have greater transparency than a managed fund in terms of price and more frequent disclosure of the composition of the ETF.
DISADVANTAGES Although ETFs provide diversification benefits within a sector or theme and therefore do not require investors to become expert on the value drivers of a particular company or commodity they are not without risk. For example if a sector is confronted with an industry disruptor or a commodity with a dramatic change in supply and demand conditions then this will be reflected in the ETF’s value. An ETF based on a stock index will have been adversely affected by the global financial crisis and subsequently benefited from the recovery in stock markets. Some criticism has been levelled at certain ETFs as being overly complex when the ETF creator adds a twist to enhance its attractiveness to investors. In some cases this can lead to an ETF being “at the tip of the spear” in terms of investment risk and returns. However an investor’s use of ETF products is completely discretionary and the majority of ETFs are plain vanilla in construction. Investors should only invest in those ETFs for which they have a clear comprehension of the nature of the underlying investment.
STRATEGIES As ETFs are designed to represent a particular theme or investment strategy it is likely that it will take time to determine its success or otherwise. As a consequence ETF investment should be regarded as having a longer duration than some investment strategies and products. ETFs enable an investor to take control of the implementation of an investment strategy as opposed to becoming stock pickers. Strategies can range from the complicated to the simple. An investor can use an ETF to establish a core holding for a portfolio in, say, major capitalisation stocks or a diversified bond portfolio. Implementation of an asset allocation strategy can be undertaken on a relatively frictionless basis and reweighting without needing to determine which individual security needs to be sold and in what quantity, without distorting the remainder of the allocation.
CONCLUSION Blackrock’s iShare range, WisdomTree and PowerShares these companies provide a massive range of ETF’s today. The New Zealand Stock Exchange has also entered the market. The NZX currently offers ten ETFs based on the New Zealand and Australian share markets. The past year has seen a major global shift with US$267 billion in ETF assets sold compared to US$255 billion of investment in mutual funds.
ADVANTAGES ETFs are gaining popularity for a variety of reasons. ETFs allow investors to achieve a diversified risk exposure within a defined market space. An investor in a single trade can achieve broad representation to a basket of securities or an investment theme. This combines the benefit of diversification with the ability to invest based on preferred themes. Despite being diversified across a basket or index there is still the opportunity for strong
The increased availability of ETFs and the myriad of types are a significant addition to the tools available to investors to achieve investment objectives. In order to gain the benefits and to avoid pitfalls investors should carefully evaluate individual ETFs to ensure that they coincide with the strategy the investor is seeking to implement. 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 www.srim.co.nz will provide you with information on two diversified and tax effective investment portfolio options. To contact a SRAM advisor, email investments@staplesrodway.com or phone 09 309 0491.
TAX CHAT GST Inland Revenue are undertaking reconciliations between annual turnover and GST reported sales to identify differences and establish whether there may be an issue with the GST outputs returned. Where there is a variance taxpayers are being asked to provide an explanation. Given this, we recommend that a reconciliation between sales in the trial balance/management accounts and the total sales and income in the GST returns filed for the financial year is undertaken. We also recommend taking the basic step of reconciling the GST balance sheet account to the GST return position each time a GST return is filed. If your GST returns are reviewed by Inland Revenue, as well as establishing whether GST is calculated and returned correctly, Inland Revenue may also review the processes and procedures for preparing the GST returns. Clients are routinely asked for the documentation setting out the GST return process, including work-papers. Inland Revenue are particularly looking for assurance that the process is robust and subject to the appropriate level of review before the returns are filed. In the absence of proper checks, Inland Revenue have shown greater willingness to consider charging penalties when discrepancies are found. We can assist by conducting a GST review that addresses the same areas as an Inland Revenue GST review or audit to enable you to get on top of any issues before Inland Revenue become aware of them.
FBT ON MOTOR VEHICLES We are aware of increased Inland Revenue scrutiny of Fringe Benefit Taxation (FBT), particularly with regards to the FBT treatment of motor vehicles. This has been identified as an area of focus simply due to it being a common tax type where employers are filing incorrect returns. A fringe benefit arises when a motor vehicle is provided by an employer to an employee and is available for the employee’s private use. However, there are some situations where the use of a motor vehicle may not be treated as subject to FBT. These exclusions have limited application and we often see examples of employers relying on exclusions that are simply not available to them. Common examples include: 1) Treating a vehicle as ‘work-related’ and exempt from FBT, when the vehicle is designed to carry passengers and does not qualify to be a ‘work-related’ vehicle. 2) Treating a ‘work-related’ vehicle as not subject to FBT, even on the days the vehicle is available to employees to be used privately (even if it is not actually
20 • NUMBERS Winter 2015
Article by Phil Hampson STAPLES RODWAY AUCKLAND philip.hampson@staplesrodway.com
We take a look at three areas where Inland Revenue have announced they are identifying errors made by taxpayers. We recommend you think about how happy you are that your business is fully compliant and whether there may be matters to address before the tax man comes knocking. used privately). Inland Revenue expect to see a policy in place that the employee is not permitted to use the vehicle privately, other than for home to work travel, and the employer carrying out regular checks to ensure this condition is met. 3) Treating days an employee was ‘on-call’ as days the vehicle was unavailable for private use, when a call out was not of an emergency or essential nature, or the employee wasn’t called out at all. We also commonly encounter examples where employers are paying FBT on motor vehicles which are used primarily for business purposes. In these situations there could be a real opportunity to save money by providing employees with a tax-free reimbursing allowance for an employee to utilise their own vehicle. If you provide motor vehicles to employees, we suggest a review of FBT and motor vehicle structuring. We are able to assist with a review that focusses on key risk areas and identify any potential opportunities to reduce tax paid.
NON-RESIDENT WITHHOLDING TAX Non-resident withholding tax (NRWT) is payable on any non-resident passive income (defined as dividends, interest or royalties) paid to non-residents. The payer of the non-resident passive income is required to deduct NRWT at the appropriate rate and return this to Inland Revenue. Whilst this would appear to be straightforward, errors can arise when payments made to non-residents are not clearly defined as dividends, interest or royalties but contain an element of one or more of these things. For example, management fees paid to an overseas parent can include a royalty element for the use of a brand name. The management fee in relation to the royalty may therefore be subject to NRWT. In addition, most double tax agreements between New Zealand and overseas territories contain concessionary rates of NRWT that should be applied to payments to those territories instead of the rates set out in our domestic legislation. Inland Revenue are aware of non-compliance in this area and are increasingly asking taxpayers queries in relation to it, particularly because any discrepancies result in cash payable to Inland Revenue. We recommend that all overseas payments are reviewed to ensure compliance with the NRWT rules, especially when management or other support type fees are involved. Please contact your usual Staples Rodway advisor to discuss any of the above tax matters.
COMPANY DIRECTORSHIPS, GOVERNANCE & ADMINISTRATION Staples Rodway provide a full suite of services to assist with company governance and administration. THE ROLE OF COMPANY DIRECTOR
NEW ZEALAND RESIDENT DIRECTORS
The role of external Company Directors is to: offer fresh thinking and provide additional skills and knowledge encourage accountability and transparency reduce risk for the company and other Directors consider the strategic vision for the company have extensive networks to help the company grow Despite not being involved in the day to day management of the company, Directors can still be subject to prosecution, fines and even imprisonment if there are accidents or financial issues. Because of this, being a Director means that there should be active engagement and commitment of time to ensure that the Director’s duties are properly carried out, matters are fully considered and risks are properly managed. Staples Rodway can provide independent Directors that can take a formal appointment to Boards of Directors. These appointments are valuable where stakeholders see value in a professional and independent Board member that can provide specialist skills in all of the above areas.
From 1 May 2015 all newly incorporated New Zealand companies have been required to have at least one Director who is either: living in New Zealand; or living in Australia and is also a Director of an Australian company. From 28 October 2015 these requirements will also apply to New Zealand companies incorporated before 1 May. If you represent a New Zealand company that requires a New Zealand resident Director we would be happy to discuss taking on the role. In that case, one of our Directors would become a Director of the company, enabling it to comply with this requirement. Because of the potential legal exposures, being a Director is not a “nominee” role, and we would need sufficient information to confirm that our qualified individuals would be prepared to accept the position. The type and amount of information needed will depend on the activities of the company, and we would be happy to discuss what might be required.
IMPROVE GOVERNANCE TO ACCELERATE PERFORMANCE Company Directors are just one part of company governance. As companies grow in size, demands increase from stakeholders, financiers and regulators. The design of appropriate governance structures to support business owners and operational management is therefore vital. Key points to be decided when reviewing governance matters include: Composition of the Board of Directors Reviews of Board Performance Advisory Board memberships Audit committee members Strategic reviews of business activities Reviews of Management performance and alignment to strategic objectives Advisory board members generally operate as mentors, and may attend Board meetings as an independent advisor to a Board. Staples Rodway has been providing governance services for decades and has Directors with a wealth of business and governance experience across businesses of all sizes and industries who are qualified to assist with developing governance strategies, willing to undertake appointments to advisory boards and take on formal board appointments.
COMPANY ADMINISTRATION It’s not just the Annual return! Any time there are changes in ownership, directorship or many other matters, Companies Act requirements must be met. The administration requirements for New Zealand incorporated companies have increased over recent years, as have Companies Office policing of those requirements and their willingness to penalise Company Directors for non-compliance. Staples Rodway is a safe pair of hands who currently handle company administration requirements for hundreds of companies. We can provide a registered office address, prepare and file Annual Returns, and hold and maintain the statutory minute books and resolutions of Directors and shareholders, and maintain PPSR security registers.
LIMITED PARTNERSHIPS Many of the above requirements are identical for Limited Partnerships, and we are happy to provide the services set out above, modified as appropriate, for Limited Partnerships. For further information on any of the above matters, please contact any of the Staples Rodway Directors below.
Colin Theyers 09 373 1124
Sharon Norman 09 968 9198
Peter Guise 09 373 1109
colin.theyers@staplesrodway.com
sharon.norman@staplesrodway.com
peter.guise@staplesrodway.com
www.staplesrodway.co.nz
NUMBERS Winter 2015 • 21
STAPLES RODWAY TARANAKI TAKES KIWISAVER TO THE NEXT LEVEL Article by Tara Shaskey STUFF www.stuff.co.nz
Amy Sutherland never expected to incubate a kiwi egg in her bedroom when she signed up as a volunteer at the Taranaki Kiwi Trust nine months ago.
I
N HER FIRST EXPEDITION WITH the trust, the New Plymouth woman carried out a routine check on a burrow in the banks of the Waitara River where she discovered a chick and an egg. The trust had been monitoring the development of two nest eggs by way of a transmitter device attached to an adult kiwi but expected the chicks to have already hatched and left home. Sutherland took both the chick and the egg home for the night before driving them to Rotorua's Kiwi Encounter the following day. The egg was set up in an incubator which Sutherland closely monitored, while the chick rested in a kiwi-friendly box filled with ferns. The Staples Rodway human resources adviser said the experience was an overwhelming one. "When I went out with the trust I really only had the expectations of seeing an adult kiwi, but now I'm partly responsible for two lives." Sutherland said she had put her hand up to help with the trust because she thought it "was a really cool thing to do."
Staples Rodway HR Advisor Amy Sutherland with Staples, her foster kiwi
PHOTO: Fairfax NZ
"It's our national icon and I just wanted to get involved." Once hatched the female brown kiwi returned to Taranaki and was named Staples in honour of Staples Rodway accountancy firm. The company provided account and audit support to the trust and on Wednesday Sutherland organised for the 1200gm kiwi to pay the staff a visit as a thank you for their ongoing support. About 40 people, including the children of staff, gathered to catch a glimpse of the endangered bird. Staples Rodway managing director Chris Lynch had never before seen a kiwi up close, nor was he too keen on holding one. However, he was grateful the trust had given the children and staff an opportunity to meet Staples. He said it was the first time his clients had said thank you by way of bringing something alive into the office. "That we know of," he said.
ASSOCIATE APPOINTMENTS CATRIONA KNAPP
BAS ASSOCIATE DIRECTOR IN AUCKLAND Catriona has had 19 years business advisory and chartered accountancy experience. Her most recent role was as a Director of her own practice and prior to that she was a Principal in the Business Services division of another mid-tier accounting firm in Auckland. Catriona provides business advisory and accounting services to clients in a wide range of industries, focussing primarily on the creative, property and agriculture sectors. She is passionate about helping businesses grow to their full potential and has helped many of her clients transition from small operations through to larger organisations that need more formalised management systems and structures in place. She sits on the Advisory Board of some of her clients and is the Treasurer for the Designers Institute of New Zealand. Catriona pursues her strong interest in training and developing business owners through providing training workshops on a range of finance and strategy related topics. She was a specialist financial workshop presenter for the New Zealand Government’s Enterprise Training Programme for 5 years, has facilitated training workshops for Chartered Accountants Australia and New Zealand (CAANZ) for the last 16 years and also had several years experience as a lecturer of Accounting courses for the University of Auckland, most recently for the Graduate School of Management Masters Programme.
Certified staff providing knowledge and expertise to over 1,000 clients nationwide “Congratulations Staples Rodway. Excited to see you reach Platinum Partner and can’t wait to work together to help small businesses across New Zealand thrive.” VICTORIA CRONE, XERO NZ MANAGING DIRECTOR
Thinking about moving to the cloud? Hundreds of our clients are now realising the benefits of cloud accounting, accessing their information from anywhere and at anytime. With one of the highest levels of Xero-certified staff, Staples Rodway can offer you superior support and assistance. Using Xero we can provide more timely, relevant and proactive advice to help you run your business more efficiently and effectively, even acting as your virtual CFO.
www.staplesrodway.co.nz
CHRISTCHURCH OFFICE
LESSONS LEARNT FOR A NEW HOME Article by Spencer Smith STAPLES RODWAY CHRISTCHURCH ssmith@srchch.co.nz
Following on from Spencer Smith’s article in the last issue of Numbers, Spencer considers some of the lessons learned for the Christchurch team as a result of adapting to temporary accommodation and where and how to set themselves up for the future.
O
N FRIDAY 15 MAY 2015, Staples Rodway left their offices in suburban Riccarton and on Monday 18 May, opened their brand new offices in the city’s rapidly revitalising new commercial centre, west of the Avon River. Staples Rodway is one of the first of the larger accounting firms re-committing to the city centre and is settling in for the long haul. My previous article in Numbers recounted the trials and tribulations of our forced move into temporary offices due to earthquake safety concerns with our building in Riccarton. We have learned a lot from living in temporary offices in the past 2 years, and I thought some of those lessons might be useful for other businesses around the country who are contemplating changes to their office accommodation.
LESSON 1: NOISE AND AIRCON Our experience made us determined that our new offices must have good noise reduction systems and air conditioning that is fit for purpose. We insisted on noise reducing ceiling tiles with a high NRC and we had the HVAC plan independently reviewed. We also separated the Aircon sensors from the controllers, so that our people wouldn’t be tempted to tweak the heat up or down. The controls are under lock and key!
LESSON 2: PLANNING AND CONSULTING Our designer asked extensive questions about the way we work and interact, among ourselves and with our clients. There’s a new language that is used for offices in this decade. Terms like ‘collaboration’, ‘breakout’ and ‘hot-desking’ did cause a fair amount of eye-rolling for typical accountants. But, in truth, these concepts can provide more space efficiency and higher productivity for any business when used in the right context. One example for us is that we don’t have a dedicated staff tea room. That would have been a waste of precious space. We do have a large multi-purpose ‘hub’ in the office centre that can be used for other purposes such as training and breakout team meetings, as well as morning tea and lunches. It has no doors, instead having openings in the glass walls on two sides, so that people in the hub are still connected with the rest of the office. The hub has a breakfast bar and comfy armchairs, as well as work tables. One architect visiting for an inspection described the hub as a ‘living room inside a workspace’. It has already been a huge success, being used exactly as we had hoped.
Another example is the seating arrangements. In our temporary offices, our directors chose to be seated next to their teams. In our old offices, the directors were cloistered away in a suite of offices. As a consequence of being much more visible and accessible to staff in the temporary accommodation, there were immediate benefits in terms of team communication and work coordination. We have taken that lesson with us. In the new office plan, the directors have offices again, but the offices are positioned in groups of 3 or 4, next to their teams. Everyone is by or near a window. Clever design has allowed wider corridors and plenty of space around desks, which is so refreshing compared with our previously cramped conditions.
LESSON 3: COST CONTROL We wouldn’t be good accountants if we didn’t cover this issue. We’ve seen many other firms pay small fortunes to fit-out their offices. Some costs are unavoidable, but there are also avoidable excesses. Designers and architects have some wonderful ideas and creative ways to spend your money, which is okay if you spend it on something you will enjoy. But take care around the things you won’t notice. One example for us is that we changed the brand of our LED lights to a Chinese brand. No difference in performance as far as we are concerned, but when you have literally dozens of these lights, the overall cost saving was enormous. So, it pays to get someone involved in the project who is very much on your side in regard to cost control, and can find and eliminate the avoidable excess.
LESSON 4: ELECTRONIC STORAGE Another benefit from our forced change has been the move to a digital file storage environment. The technology for digital storage has become increasingly capable and convenient. We still get and use paper, but we don’t have nearly as much paper around, and consequently we have saved valuable space with much reduced paper file storage (see the Article in Numbers No 31, Spring 2014, for further discussion).
LESSON 5: AND MOST IMPORTANTLY - TAKING CARE OF CLIENTS In our previous building, the directors used to bring clients through our work areas and into their offices. This changed when we moved to our temporary premises, and we started using dedicated meeting rooms equipped with large computerconnected screens, whiteboards and conference calling facilities. The advantages of this arrangement over previous ways of doing things don’t need explaining. Client parking has also been a priority. Our clients have always enjoyed ample on-site parking. Consequently, we were concerned about their possible reaction if they had to find a park on the street or in a parking building. We did worry that some would find those options just too irritating. Of the many responses from developers, surprisingly few offered any substantial parking solution, possibly because building carparks does not provide an ideal rate of return for developers. Fortunately, we have not had to compromise on this issue, as our new offices will replicate the convenience of on-site outdoor parking. We count ourselves lucky that we’ve been able to keep something that we didn’t want to change.
IN FOR THE LONG HAUL - TOGETHER
The new multi-purpose hub does double duty as a staff room and space for informal team meetings
www.staplesrodway.co.nz
For our staff and clients, we hope the new offices will be a rewarding change, after putting up with the cramped and sometimes uncomfortable conditions in our temporary offices. We expect that the new premises will be a comfortable and convenient location for many years to come. We also look forward to being part of a thriving professional services hub in the new CBD and the business relationships that will come from being in such good company. The move will mark a new chapter in the firm’s history in Christchurch, and the lessons learned along the way have actually helped this transition.
NUMBERS Winter 2015 • 25
AUCKLAND Level 9, 45 Queen St PO Box 3899 Auckland 1140, New Zealand Phone 64 9 309 0463 Fax 64 9 309 4544 enquiries@staplesrodway.com
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 staples@srw.co.nz
DIRECTOR OF a company, two of your fundamental duties the business effectively, for which you need high quality and to ensure that the company meets its statutory finanons. the autumn 2014 edition of Numbers, the financial reportompanies are changing. Many of these changes come into me for 31 March 2015 balance dates. It’s important that e aware of what this means for their company. on the right, and its accompanying notes, is designed to profit companies to determine what their financial reportbe going forward. onths, Staples Rodway will be working with all clients eir financial reporting meets all statutory requirements, he financial information needed by shareholders, lenders lders and assists them to manage the business effectively.
TAURANGA Level 1, 247 Cameron Road PO Box 743 Tauranga 3140, New Zealand Phone 64 7 578 2989 Fax 64 7 577 6030 info@staplestga.co.nz
HAWKES BAY Cnr. Hastings and Eastbourne Streets PO Box 46 Hastings 4156, New Zealand Phone 64 6 878 7004 Fax 64 6 876 0078 info@stapleshb.co.nz
NEW PLYMOUTH 109-113 Powderham Street PO Box 146 New Plymouth 4340, New Zealand Phone 64 6 757 3155 Fax 64 6 757 5081 newp@staplestaranaki.co.nz
STRATFORD 78 Miranda Street PO Box 82 Stratford 4352, New Zealand Phone 64 6 765 6949 Fax 64 6 765 8342 stfd@staplestaranaki.co.nz
WELLINGTON Level 6, 95 Customhouse Quay PO Box 1208 Wellington 6140, New Zealand Phone 64 4 472 7919 Fax 64 4 473 4720 info@stapleswellington.co.nz
CHRISTCHURCH Level 2, Tavendale Centre 329 Durham Street North, PO Box 8039 Phone 64 3 343 0599 Fax 64 3 348 0186 info@srchch.co.nz
26 • NUMBERS Winter 2015
www.staplesrodway.co.nz
Published on Aug 19, 2015
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