Page 1

The Pathway to Great 2011 Annual Report


Contents 2 4 6 8 16 20 24 28 29 37

Governance and management

Report from the Chair and Chief Executive DNA : Direction, needs and action towards sustainable practice Achieving educational excellence Making a difference to our environment and society Securing the confidence of our communities Being financially sustainable

Financial performance summary Financial statements

Notes to the financial statements


WHAT WE DO

Achieve educational excellence

Achieving educational excellence

Se

e cu nc r of oing the confides ur communitie

Otago Polytechnic is committed to inspiring learning as we develop capable practitioners for Otago and New Zealand. In doing so, we recognise that we are not only an important provider of core and specialised education and applied research in New Zealand, but also one of the largest employers, service providers and consumers in the Otago region. What we teach, how we behave as an organisation and how we extend our influence into the community has an impact socially, environmentally and economically.

Making a difference to our environment and society

HOW WE DO THIS SUSTAINABLY

Making a d environme iffer nt en an

Strategic Directions

Bein gf ina n tainable sus lly cia

OUR PATHWAYS TO GREAT

our to ciety e c so d

Securing the confidence of our communities Particularly Kai Tahu, by anticipating and exceeding expectations

We address our responsibilities both through the education that we offer and our business operations. Our commitment to all our stakeholders is long term. To uphold this responsibility we need to operate in a way that is sustainable, successful and reflects our core organisation value to “do the right thing”. Drawing upon these principles, Otago Polytechnic has developed four strategic priorities that guide our activities and operations. Achieving academic excellence is at the heart of what we do, and is our reason for being. How we deliver this depends on our sustainable operations – financially, socially and environmentally – and the reputation we earn within our communities. While each of these priorities inspires distinct programmes of work, none of these priorities stands alone. Rather, they are both mutually dependent and reinforcing. It is their synthesis that ensures Otago Polytechnic is continually moving towards our vision of “greatness”. Otago Polytechnic has: > More than 6,900 full- and part-time students > More than 700 staff

Being financially sustainable

> Campuses in Dunedin, Central Otago and Auckland > Students based nationwide, making use of blended learning opportunities > Over 100 programmes, from foundation certificates to postgraduate degrees > A history dating back to 1870, with New Zealand’s first art school > Revenue of $56 million.

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Otago Polytechnic Te Kura Matatini ki Otago


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Council

Leadership Team

Kathy Grant (Chair) Susie Johnstone (Deputy Chair) John Christie Dr Peter Coolbear (to July) Dr Malcolm Macpherson Rebecca Williams Chris Staynes Gillian Bremner Professor Tom Prebble (from October)

Dr Robin Day Professor Khyla Russell Mike Collins Philip Cullen Mike Waddell Sue Thompson Professor Sally Pairman Alistair Regan Chris Morland Jean Tilleyshort Matt Carter


Governance & Management Governance and management at Otago Polytechnic are complementary teams that support one another to promote excellence and accountability. Council is advised by student and staff sub-committees, and delegates some of its work to standing committees. It has developed a business-wide risk management framework which considers all critical business issues and strategic and operational risks. The operational management is carried out by the Leadership Team.

Kōmiti Kawanataka This committee operates within the Memorandum of Understanding established by the Rūnaka of Moeraki, Kāti Huirapa ki Puketeraki, Ōtākou, Hokonui and Otago Polytechnic Council. It provides a meaningful mechanism for Māori participation in governance and decision making in relation to the Polytechnic’s responsiveness to the Treaty of Waitangi and Kai Tahu’s education plan. In particular, attention is given to effective communication, developing and monitoring the Polytechnic’s Māori Strategic Framework, and ensuring that Kai Tahutaka, as practised by Kā Rūnaka, is the basis for all Māori activities within the Polytechnic.

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Otago Polytechnic Te Kura Matatini ki Otago

Finance and Audit Committee This committee monitors financial performance and forecast outcomes and makes appropriate enquiries into internal control systems and mechanisms. It has direct involvement in key strategic decisions that affect the financial position of the Polytechnic and has a delegated responsibility to oversee the external audit process.

Executive Committee This committee is convened by the Council at its discretion and includes the Chair and Deputy Chair, Chair of Kōmiti Kawanataka and a Council member.

Leadership Team The Leadership Team guides the Polytechnic in pursuit of our strategic goals: leading the development of an appropriate culture, setting priorities and monitoring organisational performance. Whilst strategically focused, the team is comprised of members who are all operationally grounded through their management of academic and service activities.


REPORT FROM THE

Chair and Chief Executive In last year’s Annual Report, we were pleased to share a good year for Otago Polytechnic – just reward for the considerable efforts over several years to strengthen our financial position and to deliver high quality education, not only for our region but also for our learners who are increasingly drawn from throughout New Zealand and overseas. Now, reflecting on 2011, we are delighted to report an even better set of results and accomplishments. These are in large part due to the momentum already attained, but also the consequence of a focused programme of activity to take our performance from good to great over the next few years. In 2011, we experienced over-enrolment, contrary to the trend in the rest of the polytechnic sector. Enrolments increased in almost every area, and particularly so in our degree programmes. While we worked hard to manage enrolments down towards our cap we also made the case to TEC to lift that cap. We are pleased to report the allocation of an additional 136 EFTS for 2012, which once again is shaping up well, with high enrolment numbers.

Otago Polytechnic has placed a high emphasis on applied research, not only to inform our teaching but also to serve our business and industry communities. Our expertise in relation to applied research has been recognised by the Polytechnic being included in the Ministry of Science and Innovation’s technology transfer voucher scheme, only the second polytechnic to be recognised in this way. The first voucher-funded project has now been approved (off to a pleasing $343k start) and we look forward to building this business in 2012 as our new “Centres of Research Expertise” come on stream. Otago Polytechnic also has a high reputation for educational innovation, and significant achievements were made on three fronts:

To what do we attribute this popularity? Dunedin’s reputation as an education destination undoubtedly plays a role, as does our strong reputation for quality. In the context of quality:

> Our best year yet for the assessment of prior learning

> We received from the NZQA External Evaluation and Review

> The successful launch of the Open Education Resource

(EER) the highest possible ranking of “highly confident” for both performance and self assessment > Two of our teaching staff won national Tertiary Teaching

Excellence Awards, bringing the total number of these awards to six in the last five years > Our very good educational performance indicators

further improved. Financially, we set a more ambitious expenditure budget to accelerate the development of the Polytechnic, as well as targeting a five per cent surplus. We are very pleased with the $3.4m, six per cent surplus we have achieved – the best financial result ever.

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Otago Polytechnic Te Kura Matatini ki Otago

> Successful implementation of a work-based learning model

for degree level education University initiative, with our international partners in the OER Foundation which we host. We believe our work in the OER arena will transform tertiary education as we know it over the next decade. No annual report for Otago Polytechnic would be complete without mention of our social and environmental contributions, given sustainability is a key strategy for us. Our sustainability initiatives were taken to another level, particularly through sustainable supply-chain management and improved measurement of our environmental impact. The living campus was further developed; we raised another $80,000 for local charities through our house auction and ran another successful


Statement of Responsibility Annual financial report for the year ended 31 December 2011 We hereby certify that: 1. The Council and Management of Otago Polytechnic accept responsibility for the preparation of the financial statements and statement of service performance and the judgements used therein; and 2. The Council and Management of Otago Polytechnic accept responsibility for establishing and maintaining a system of internal controls designed to provide reasonable assurances as to the integrity and reliability of financial reporting and

“SpringIn2it” programme fostering staff well-being. We further improved the work environment, achieving our best-ever staff satisfaction feedback. Another important milestone for the Polytechnic was the completion of our “Cultural Audit” – a comprehensive evaluation of our progress in implementing our Māori Strategic Framework. The external auditors Dr Lyn Carter and Philip Broughton commended the significant progress made to date, and provided excellent recommendations for accelerating Māori development at the Polytechnic. These will be implemented in 2012. The Council accepted with regret the resignation of one of its members, Dr Peter Coolbear, during the course of the year following his appointment as Senior Advisor at TEC. His successor, Professor Tom Prebble, brings to the Council a lifetime of experience in the tertiary sector and the Council is delighted that he was willing to accept this appointment.

3. In the opinion of the Council and Management of Otago Polytechnic, the financial statements and the statement of service performance fairly reflect the financial position and operations of this institution for the year ended 31 December 2011. The financial statements were authorised for issue by Council on 27 April 2012.

K Grant

P Ker P Cullen

COUNCIL CHAIR CHIEF EXECUTIVE

CHIEF OPERATING OFFICER

We sincerely thank all who have supported us throughout 2011. Once again we are very pleased with the performance of Otago Polytechnic, which has charted a clear course to take its performance from the very good results achieved to date, to great results. We are proud to have leadership roles for this journey.

Kathy Grant

Phil Ker

COUNCIL CHAIR

CHIEF EXECUTIVE

The Leadership Team also farewelled one of Otago Polytechnic’s longest-serving staff members, Deputy Chief Executive Dr Robin Day, who contributed in many academic and management roles. Of course, none of this could have been achieved without the dedication and commitment of many people: > Our staff, who are passionate in their pursuit of excellence > Our new Council, now fully up to speed and working superbly

as a team > The many employers who contribute to our PEACs and who

provide our students with essential work and workplace learning experiences.

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Otago Polytechnic Te Kura Matatini ki Otago

OTAGO POLYTECHNIC COUNCIL 2011

Back row (left to right): Professor Tom Prebble, Chris Staynes, John Christie, Dr Malcolm Macpherson. Front row: Rebecca Williams, Susie Johnstone, Kathy Grant and Gillian Bremner.


DNA

Direction, Needs and Action towards sustainable practice Sustainable practice is interwoven throughout Otago Polytechnic’s strategic goals and range of activities. It is not an additional process, nor simply “a nice thing to do”.

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Otago Polytechnic Te Kura Matatini ki Otago


It is part of the Directions, Needs and Actions (DNA) that underpin the organisational, operational, teaching and learning, community engagement and site management practices that determine the wellness of our institution. It is an interconnected approach that enables innovation, supports capability and is focused on the future.

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Otago Polytechnic Te Kura Matatini ki Otago


ACHIEVING

Educational excellence This goal means: a. All learners enjoy an outstanding experience b. All learners succeed in their studies c. Graduates are capable, work-ready and employable d. Graduates can practise sustainably and make a difference to society.

Aspirations > All

programmes perform educationally in the upper quartile of the sector

>

Our graduates achieve employment using the capabilities they have developed

> The

experiences our learners enjoy is truly outstanding, in all modes of delivery

>

Learning at Otago Polytechnic is experiential and genuinely builds learner capability

>

Learning opportunities are accessible to more students, unbound by time and place

> Capable,

qualified and experienced staff are recruited, retained and developed

>

FOR 2012 >

Develop a new educational excellence framework for measuring success qualitatively as well as quantitatively

>

Refocus Heads of School as educational leaders, to champion innovation and improvements in quality in all areas

> Focus

on programmes not meeting Otago Polytechnic targets, and bring a whole of Polytechnic approach to improvement

> Set

higher expectations for staff capability and introduce a higher level teaching qualification and a continuing education system – to further professionalise our teaching workforce

Education for sustainability is embedded in our programmes

> Literacy

courses

and numeracy is embedded in all Level 1–3

> Our

learning environment is conducive to Māori participation and success.

Highlights > Gained

“highly confident” ratings from NZQA for both service performance and self-assessment capability, the best possible result

> Excellent

rankings in the Australasian Survey of Student Engagement

> Award-winning staff, in both academic and service areas > Innovations > Ongoing

success.

8

Pathway to great

in delivering education to new audiences

improvements in student retention and

Otago Polytechnic Te Kura Matatini ki Otago

>

Establish baseline measures for employer satisfaction with our graduates

> Introduce

measures of work readiness in our graduates

> Launch

Centres of Research Expertise, serving industry needs in research and development and productivity, in the following areas:

> Design, Engineering, Information Technology > Sustainability > Business Improvement > Health and Well-being. BY 2014

> All

of our education metrics improve by three per cent

> All

of our schools and programmes achieve excellence under our excellence framework.

BY 2016 > Improve

all of our education metrics by a further two per cent.


ACHIEVING EDUCATIONAL EXCELLENCE

THE TRANSFORMATION TO WORK-READY GRADUATES

Connecting Learning, Teaching & Capability Our Inspiring Capability framework takes the key strategic values that have been developed by staff and links these to an experiential learning framework for action. The teaching and learning processes we use to inspire capability, unlock student potential and develop action competence are interconnected. It is their combination that ensures graduates are “work ready�, with both the generic and discipline-specific competencies needed to contribute effectively in a workplace environment. Emergent Learning Cooperative and supported

Self-Discovery Student autonomy

> Action experiences > A safe place to be yourself > Unlocking student potential > Exciting new discoveries

> Learning together > Breaking new ground

> Skilful communicators > Creatively capable > Doing the right thing

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Otago Polytechnic Te Kura Matatini ki Otago

k

F

Planned Learning Initially directed and guided


ACHIEVING EDUCATIONAL EXCELLENCE

Educational Participation and Achievement Outcomes (% of total EFTS) Overall student success and retention continues to track upwards. Gains were made in the overall rates for the Polytechnic with a six per cent increase for Māori enrolled in programmes Level 4 and above, and a 4.5 per cent increase for under-25 year olds enrolled in programmes Level 4 and above. Course completion

1. ACHIEVE PARTICIPATION RATES

Overall %

2010

2011

Target

Levels 1-3 Levels 4 and above

18.24 81.76

14.48 85.52

25 75

2.15 8.51

1.9 8.74

2 6

M ori % Levels 1-3 Levels 4 and above Pacific % Levels 1-3 Levels 4 and above

0.53 2.32

0.63 2.33

0.5 2

Under 25 % Levels 1-3 Levels 4 and above

8.99 55.17

9.11 55.49

9 54

The successful course completion indicator (measured by the EFTS-weighted successful course completion rate) takes into account the workload of the course when calculating the successful course completion rate. TEC measure the workload factor using EFTS (equivalent full-time student) delivered. This is a unit that reflects the total student time necessary to complete the course. The indicator is the sum of the EFTS delivered for successfully completed enrolments as a proportion of the EFTS delivered for the total course enrolments ending in a given year. Formula = EFTS delivered for the total number of successfully completed course enrolments ending in year N EFTS delivered for the total number of course enrolments ending in year N

Participation The participation indicators are the proportion of EFTS delivered for groups of interest. They are used to monitor the extent to which specific groups of New Zealanders, such as Māori, Pacific, and young people are engaged in tertiary education. Formula =

Total EFTS delivered in year N

2011

Target

63.50 77.93

69.18 82.03

65 78

52.53 68.82

51.22 74.76

52 70

57.12 65.64

54.16 65.78

52 57

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Target 35 73

41.68 53.49

27.51 49.17

30 55

39.56 60.24

30.35 42.39

30 55

Levels 1-3 Levels 4 and above

52.17 61.25

30.40 47.05

35 68

Qualification completion The qualification completion rate is EFTS-based – allowing for comparisons across tertiary education organisations (TEOs), and to take into account the relative size of different qualifications. It is the number of qualifications completed at each TEO (weighted by the “size” of the qualification) divided by the total number of EFTS delivered for the total course enrolments ending in a given year. Formula =

Under 25 % Levels 1-3 Levels 4 and above

2011 36.67 52.02

Under 25 %

2010

Pacific % Levels 1-3 Levels 4 and above

2010 46.44 67.22

M ori %

Levels 1-3 Levels 4 and above

M ori % Levels 1-3 Levels 4 and above

Levels 1-3 Levels 4 and above

Pacific %

2. ACHIEVE SUCCESSFUL COURSE COMPLETION RATES

Levels 1-3 Levels 4 and above

Overall %

Levels 1-3 Levels 4 and above

Total EFTS delivered for a specific group of interest in year N

Overall %

3. ACHIEVE QUALIFICATION COMPLETION RATES

65.09 78.11

69.17 82.65

Otago Polytechnic Te Kura Matatini ki Otago

65 78

Sum of qualification completions in year N x the EFTS value of the qualification EFTS delivered for the total number of course enrolments ending in year N


ACHIEVING EDUCATIONAL EXCELLENCE

4. ACHIEVE STUDENT RETENTION RATE

Overall % Levels 1-3 Levels 4 and above

5. ACHIEVE STUDENT PROGRESSION RATE

2010

2011

Target

29.86 68.12

35.40 67.72

30 72

M ori % Levels 1-3 Levels 4 and above

30.94 64.12

23.91 67.65

37.63 65.36

33.92 75.28

2011

Target

41.05 14.14

44.89 16.25

28 35

Levels 1-3 Levels 4 and above

58.33 26.03

52.63 25.88

Pacific % 38.64 66.00

Under 25 % Levels 1-3 Levels 4 and above

2010

Levels 1-3 Levels 4 and above

M ori %

Pacific % Levels 1-3 Levels 4 and above

Overall %

Levels 1-3 Levels 4 and above

40.00 7.14

50.00 19.23

Under 25 % 45.74 82.65

Levels 1-3 Levels 4 and above

18.78 7.99

21.02 7.14

Qualification retention

Qualification progression

The retention rate indicator measures student continuation or completion at a TEO (and is also known as the student continuation or completion rate). This is the proportion of distinct students (not EFTS) enrolled in one year that re-enrol in any course at the same TEO in the following year, or successfully complete their qualification.

Student progression is measured by the completion progression rate. This gives the percentage of students who complete a qualification at one TEO and move on within 12 months to pursue a qualification at a higher level at the same or another TEO within New Zealand.

Formula =

Formula =

Students re-enrolled in year N+1 or completed in year n or year N+1

Number of students enrolled at a higher qualification level within 12 months following the completion

Students with some portion of an enrolment in year N

Number of students completing a qualification at each level in year N

Course retention This is the measure of students retained, i.e. who complete their courses, out of those who are valid enrolments. It excludes only those students who did not actually commence study. This is more a measure of pastoral care and right choice of programme, but is clearly affected by the learning experience which the student has. Course retention is measured by the following formula: Formula = Completion Code 2 (successful) + Completion Code 3 (not successful) + Completion Code 2, 3 and 4 (did not complete course)

6. INCREASE LEVEL 1-3 COURSES WITH EMBEDDED LITERACY AND NUMERACY

Overall %

2010

2011

Target

Levels 1-3

53.3

76.07

63

7. IMPROVE LITERACY AND NUMERACY SKILLS

Overall %

2010

2011

Target

Levels 1-3 (1) For reading n/a For numeracy

(2) 12.5 19.3

60

(1) Proportion of EFTS assessed and improving, as per literacy and numeracy assessment tool. (2) TEC are still developing the reporting measures for this KPI, therefore these are interim results. The KPI was set as the proportion of EFTS enrolled in Levels 1-3 courses making gains in literacy and numeracy as measured by the newly introduced national literacy and numeracy assessment tool. It was an unrealistic measure which TEC is addressing.

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ACHIEVING EDUCATIONAL EXCELLENCE

Highly confident

GRADUATE DESTINATION

We could not have done better. In their 2011 External Evaluation and Review, NZQA evaluators declared themselves “highly confident” in both our educational performance and our self-assessment capabilities, the best possible rating we could have achieved. Particular recognition was given to learner achievement, the value of our education to graduates and employers and the ways in which governance and management support excellence in education. This double “highly confident” appraisal is the strongest possible endorsement of the quality of educational delivery at Otago Polytechnic and is a tribute to all of our staff.

Goal Implement new graduate destination survey (AUSSE), with a focus on work readiness

Comments from the EER include: > “It is very clear that a commitment to enhancing educational

achievement is a priority throughout the organisation” > “Self-assessment is clearly well embedded in the culture of the organisation” > “Students highly valued the gaining of knowledge of their

chosen industry, citing the currency of staff knowledge, the experiential learning in work placements and the commercial facilities on campus, and the use of assessors from industry in formative assessments” > “The modelling of sustainable behaviours within the Polytechnic

and included in programme design is a forward-thinking aspect of the Polytechnic’s strategy that can be reasonably expected to have longer term community benefits”.

Graduates in employment Creating work-ready graduates is a core goal for Otago Polytechnic. Therefore we were pleased by the results of the 2011 Graduate Destination Survey, in which 94.4 per cent of respondents have progressed into work, study or both. This is slightly higher than the average employment rates over the past seven years, at 92 per cent. The survey was sent to all of our 2010 graduates, and yielded responses from 38 per cent. Of these:

Achieved

Teaching excellence See story on the opposite page. Goal Permanent staff holding or working towards approved teaching qualifications Target 90% Achieved 84.9%

The success of Otago Polytechnic as an educational institution rests not only with our academic staff. In 2011 we also celebrated: > Matt Carter, Human Resources Group Manager, Young

Executive of the Year finalist > Mike Collins, Chief Information Officer of the Year finalist > Philip Cullen, Chief Operating Officer, Fellow of the Institute

of Chartered Accountants > Terry Buckingham, Senior Advisor – Health, Safety and

Wellness, HRINZ HR Specialist of the Year. As well, our annual report 2010 was a finalist in the Institute of Chartered Accountants best annual reports awards for sustainable reporting.

Student feedback STUDENT SATISFACTION RESULTS

220 (49.5%) are in full-time work 90 (20.3%) are in part-time work 33 (7.4%) are self employed 60 (35%) are studying full-time 47 (15.7%) are studying part-time 42 (9.5%) are working full-time and studying 25 (5.6%) graduates are neither working nor studying

Overall Services Target 90% Target 90% Achieved 96% Achieved 97% Teaching Programmes Target 90% Target 90% Achieved 95% Achieved 90% Learning environment Target 90% Achieved 98%

The Investment Plan covers 2011-2013 therefore a number of targets do not relate to previous years and have not been included in this report.

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Otago Polytechnic Te Kura Matatini ki Otago


ACHIEVING EDUCATIONAL EXCELLENCE

PROFILE : OUTSTANDING TEACHING RECOGNISED AND WORKING WITH LOCAL COMMUNITIES

Professor Leoni Schmidt

Excellence in teaching The calibre of educators at Otago Polytechnic was further recognised in 2011 with two of the sector’s most prestigious teaching awards.

Peter Bilous

Academic Leader at the Dunedin School of Art, Professor Leoni Schmidt, and Senior Lecturer and Programme Manager of the Avalanche Safety and Snowsport Instruction programme, Peter Bilous, were both rewarded for sustained excellence in teaching by Ako Aotearoa – the National Centre for Tertiary Teaching Excellence. Bilous was praised for the enthusiasm he ignites in learners, while building their competence and imparting respect for the alpine environment. Professor Schmidt’s contagious enthusiasm was also acknowledged, along with her professionalism, sincerity and ability to adapt to the learning styles of individual learners. Schmidt’s and Bilous’ achievements bring the Tertiary Teaching Awards bestowed on Otago Polytechnic staff in the past five years to six, unprecedented within the ITP sector.

Trades in Central Secondary school students in Central Otago can now prepare for careers in the trades, as a result of a partnership between Otago Polytechnic and local secondary schools. The Central Lakes Trades Academy will deliver trades and technology programmes to secondary students in the Queenstown Lakes and Central Otago district. The government-funded academy provides wider career options to Central Otago students while also supporting the local economy, by helping address the shortage of tradespeople in the developing region.

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Otago Polytechnic Te Kura Matatini ki Otago


ACHIEVING EDUCATIONAL EXCELLENCE

The most important accolades we can receive come from the students themselves. As well as our internal student satisfaction surveys which Otago Polytechnic participated in, the Australasian Survey of Student Engagement (AUSSE) provides further opportunities to compare our students’ feedback with that of 41 universities and ITPs across Australasia. The consistently positive results paint a compelling picture that students appreciate not only what they learn at Otago Polytechnic, but how they learn it. Otago Polytechnic led the benchmark groups (comparing all universities and ITPs) in Active Learning, Student and Staff Interactions, Enriching Educational Experiences, Supportive Learning Environments and Work Integrated Learning. We match the New Zealand ITP benchmark for Academic Challenge among first-year students, and exceed it for subsequent-year students. Otago Polytechnic achieved “Above Average” ratings for: > Relationships with teaching staff > Relationships with administrative staff and services > Relationships with other students > Seeking advice from academic staff > Discussing career plans > Combining academic learning with work experience > Exploring how to apply learning in the workplace > Discussing grades with teaching staff > Acquiring job-related knowledge and skills > Being tutored with other students > Working with other students in class.

It is notable also that the response rate of Otago Polytechnic students in this survey (46 per cent) was more than double the average of all the institutions that participated in 2011 (21 per cent), and is itself an indication of student engagement. This response rate gives us confidence that the feedback truly represents the views of our students.

Learning at work Since its launch in 2010, Otago Polytechnic’s revolutionary approach to learning in the workplace – Capable Workplaces – has captured imaginations across New Zealand. Otago Polytechnic has long bridged the gaps between study and work by taking learning out of the classroom and into real-life settings – a training restaurant for chefs, clinical placements for nurses or internships for management students. Capable Workplaces brings this concept to its fullest realisation, enabling those in employment to use their daily tasks and challenges as the curriculum for higher qualifications.

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Otago Polytechnic Te Kura Matatini ki Otago

New Zealand companies have quickly recognised the potential for this innovative approach to support organisational goals. The New Zealand Police College is among the organisations using Capable Workplaces for professional development, with staff completing papers from the Bachelor of Social Services through this process. 2011 also saw our first students from our Capable Teachers programme graduate with degrees in Culinary Arts and Design. This programme was developed to help address a shortage of fully-qualified technology teachers. It enables those with industry experience to complete degrees in their area of expertise, and carry on to gain teaching qualifications.

Widening the reach of education Otago Polytechnic is proud to be a foundation member of the OER University (OERu). Among the most significant developments taking place within the tertiary education sector, OERu aims to widen access and reduce the cost of tertiary study for learners who are excluded from the formal education sector. As a leader in this innovation, Otago Polytechnic hosts the OER Foundation, an independent, not-for-profit organisation that provides leadership, international networking and support for educators and educational institutions to achieve their objectives through Open Education. Our goal is to make our educational resources available free through wiki sites, along with those from other universities, colleges and polytechnics participating in this partnership. We then support students to have their knowledge assessed through our well-established Assessment of Prior Learning processes.

Good to Great As part of Otago Polytechnic’s ethos of pursuing continuous improvement in results and quality, in 2011 we introduced the “Good to Great” project framework, encompassing: > Good to Great People > Good to Great Working Environments > Good to Great Systems and Processes > Good to Great Technology > Good to Great Educational Outcomes.

Each involved project teams from across the organisation, looking at how performance could be enhanced in these critical areas. In total, 27 projects were established, ranging from internationalisation to developing an advanced leadership programme, maximising PBRF outcomes, creating a master plan for an improved campus environment, supporting more flexible learning options and improving digital literacy among students.


ACHIEVING EDUCATIONAL EXCELLENCE

PROFILE : FASHION GRADUATE’S FLYING HIGH AND ENCOURAGING INNOVATION

World of fashion A suspected spam email led an Otago Polytechnic fashion design graduate to one of the world’s most prestigious fashion events. Amelia Boland almost discounted the email inviting her to show her graduate collection at Nolcha Fashion Week: New York during New York Fashion Week, thinking it was a joke. And two of her classmates were similarly overwhelmed when their graduate collections were published in the fashion bible, Vogue Italia. Sara Dooley and Faye Ma feature in the September 2011 issue of the iconic magazine, as part of a showcase of impressive new talent from the world’s top fashion schools.

Power tool A multimedia app that teaches the safe use of power tools has received industry acclaim, winning two national innovation awards in 2011. Sara Dooley

iTools was developed by Otago Polytechnic students Nolan Ratu, Taua Piri, Anton Smith and Matt Norrish with the guidance of staff. “If you are studying carpentry, iTools can tell you what each tool is used for and how it works,” says Information Systems and Support Project Manager, Peter Sinclair. “A tool’s components are named and highlighted, and videos demonstrate safe techniques for use.” This technology won its developers the coveted NZ Microsoft Innovation Award and the 3M Award for Innovation in Health and Safety.

Faye Ma

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Otago Polytechnic Te Kura Matatini ki Otago


MAKING A DIFFERENCE TO OUR

Environment and society This goal means: a. Lowering Otago Polytechnic’s environmental footprint b. Enhancing our environment c. Supporting individuals and communities to make a difference.

Aspirations >

Education for sustainability is embedded in our programmes

>

Improved operational sustainability

> Our

actions and deployment of resources wherever possible benefit our communities

>

Staff are supported to make healthy lifestyle choices that consider the environment

>

A research focus that supports sustainable practice is developed

>

Otago Polytechnic’s environmental impact is reduced.

Environmental and sustainability results Otago Polytechnic has been developing measurements to help us better understand the impact we make on our environment. This enables us to identify several areas where progress has been made, in comparison with 2010. New and more inclusive data-sets have resulted in improved accuracy of figures presented, and further improvement is planned in this developing area. We are pleased to note several areas where Otago Polytechnic has succeeded in reducing its environmental footprint. > An increase in materials being recycled and a decrease in

waste to landfill is the result of a continued focus on improving recycling systems. > A decrease in fuel use for vehicles is supported by Otago

Polytechnic’s replacing ageing vehicles with more fuel efficient vehicles.

Highlights >

Reduction in energy use

> Less

waste to landfill

> Research >

projects benefiting environment and society

A further $80,000 raised for local charities

> Staff

wellness programme expanded.

Pathway to great > Establish >

> Further >

a staff and student volunteering scheme

Introduce a carbon offset scheme in relation to Otago Polytechnic carbon use, especially travel improvement in sustainability metrics

Another charity auction

> Establish a Centre of Research Expertise – Sustainability,

to increase applied research in this area.

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Otago Polytechnic Te Kura Matatini ki Otago

> A decrease in paper usage reflects an ongoing focus to move

away from printed material where possible. > A decrease in the use of coal for heating and the use of

electricity may be partially a result of upgrading radiator control systems throughout 2011, and use of more efficient light fittings has also reduced electricity use. > An increase in travel and water use will inform the focus

for 2012.


MAKING A DIFFERENCE TO OUR ENVIRONMENT AND SOCIETY

PROFILE : WORKING WITH THE COMMUNITY FOR A SUSTAINABLE FUTURE

A case study in sustainability Queenstown adventure flying fox operator, Ziptrek Ecotours, is a company that prides itself on being sustainable. “We live and breathe sustainability, and our staff members explain this and actively educate our customers as part of the tour experience,” says Director Trent Yeo. Ziptrek staff enrolled in the Sustainability Company’s 360° Programme facilitated by Otago Polytechnic. “It was part of our continuing journey to improve Ziptrek’s economic, social and environmental performance,” Yeo explains, “and we found it to be really worthwhile. It was thorough and strategic, and helped us to formulate a structure around our goals of greater efficiency and sustainable growth.”

A kiwi discovery Eighty vehicles from 26 different businesses are currently being fuelled by the Queenstown biodiesel scheme established by Otago Polytechnic’s Centre for Sustainable Practice. Each month, these vehicles use an average of 18,000 litres of biodiesel, reducing carbon dioxide emissions by more than seven tonnes. A total of 236,000 litres of biodiesel was sold between January and December 2011, cutting C02 emissions by more than 90 tonnes. Terry Jones from Cookwright (above left) cleans and collects cooking oil from The Skyline in Queenstown and over 60 other restaurants in the Lakes District, to be sent to Christchurch where it’s processed into biodiesel. Outdoor Adventure company Kiwi Discovery was one of the first businesses to jump on board with the initiative. “I got talking to the CSP and made the commitment to test and prove that biodiesel was a viable option,” says Kiwi Discovery General Manager, Tim Barke (left).

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Otago Polytechnic Te Kura Matatini ki Otago


MAKING A DIFFERENCE TO OUR ENVIRONMENT AND SOCIETY

Paper (A4 reams) Paper (A3 reams incl A2)

2011

2010

4,966 190

5,565 107

Air KM’s

3,004,883 2,469,429

Coal (tonnes) Electricity (kwh)

843.5 991 3,887,267 4,010,395

health checks, while personal training students carried out fitness tests and earned a Fletcher Trust Award for their work. Indeed, SpringIn2It is regarded as such a good idea, it has attracted the attention of other organisations interested in implementing it within their workplaces. This has led to a partnership to deliver the programme at Otago Museum, and options are being explored for offering the programme further afield.

Breaking the cycle The 26-week Altitude programme encourages young people to break the unemployment cycle and increase their skill levels. It is a joint initiative of Otago Polytechnic, Malcam Charitable Trust and 4 Trades, and is funded by the Dunedin City Council. Participants complete study while undertaking paid work experience, with the aim of becoming genuinely employable. Eleven students have been inducted into the Altitude programme to date.

Projects that make a difference Each year, student projects contribute thousands of hours towards community needs. In 2011, 138 community projects were identified across the Polytechnic, involving input from staff and students. Examples range from marking sports fields lines at Goldfields School, helping revegetate conservation areas on the Lindis Pass, promoting safety awareness for users of mobility scooters and creating IT tools to help alleviate administration needs for non-profit organisations – among many more.

Community benefits from charity house Community collaboration remains key to the successful Otago Polytechnic charity house project, which is now in its fifth year. Since its inception, the scheme has raised more than $440,000 for Otago charities – including $80,000 in 2011 – a record the Polytechnic and its partners are, understandably, incredibly proud of. This year, 20 companies donated time, materials, craftsmanship and advertising to the initiative, with the funds raised distributed by the nationally coordinated fundraising effort, United Way. Recipients in Otago have included Stopping Violence Dunedin; Carers’ Society Otago; ME Information, Systems and Support and Clutha Enterprise Trust’s Making a Difference Youth Development programme.

Another successful The 10-week staff wellness programme, SpringIn2It, has continued its popularity, attracting 140 participants – around 20 per cent of all staff. The programme invites staff to form teams and motivate one other to commit to fitness and nutrition goals. This year, the programme also enabled students to gain important experience in organisational wellness. Nursing students performed

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Otago Polytechnic Te Kura Matatini ki Otago

Research benefits Research activity at Otago Polytechnic continues to make a practical contribution to our environment and society – ranging from researching the ecological footprint of New Zealand lifestyles to developing clothing for those with sensory disorders and providing insights into the safety of bedsharing with infants. Research outputs have been steadily increasing since 2008, with areas of strength remaining in fine arts, health and well-being, and teaching and learning. To further showcase the research carried out at Otago Polytechnic, a Research Annual Report is produced.

Research Goal Quality assured research outputs (PBRF) increase annually Outcome Achieved

Research Goal External research funding increases annually Outcome Achieved


MAKING A DIFFERENCE TO OUR ENVIRONMENT AND SOCIETY

PROFILE : RIDING HIGH AMONGST THE TREE TOPS

A very special Olympics The Special Olympics’ Healthy Athlete Programme made its national debut in Dunedin, with the assistance of 25 of our Nursing and Human Services students. This international scheme promotes exercise and good health among people who have intellectual disabilities. The students ran a series of health clinics, where they carried out medical checks and promoted active and healthy lifestyles. Special Olympics New Zealand’s Jan Aitken says it helps students learn how to interact with patients who have disabilities. “It is an invaluable part of their training, and it’s a valuable collaboration for us, too. The relationship we have established is just awesome.”

Hopeful thinking When nursing gravely ill patients, says Senior Lecturer in Nursing Dr Kate Richardson, the theme of “hope” is highly pervasive. Much is made, she says, of whether a patient has, or has lost, hope. And hope can mean different things to different people: “Patients may know they are going to die, but just want to stay a bit longer, even if it’s just a week. That may be enough to hope for.” Now, Richardson’s PhD and a 2011 publication in the Journal of Advanced Nursing has explored both doctors’ and terminally ill patients’ attitudes towards hope. “I came to understand just how challenging caring for dying patients is for doctors, but they are often not well trained for this.” Among patients, Richardson found complicated attitudes towards hope, including a sense of duty to maintain a positive mindset, “for the sake of their families”. Richardson calls for nurses and other clinicians to avoid using “hope” prescriptively – as though it were something it is possible to demand of patients. Far more important, she suggests, is to give patients space to express and validate their own feelings.

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Otago Polytechnic Te Kura Matatini ki Otago


SECURING THE

Confidence of our communities Particularly of Kai Tahu, anticipating and exceeding expectations

This goal means a. Genuine engagement with stakeholders b. Understanding stakeholder needs and expectations, and exceeding these c.Valuing feedback d. Communicating our successes effectively.

Aspirations > Government

has confidence in Otago Polytechnic

> Processes

for engaging with employers, students, staff and secondary schools are strengthened

>

Robust quality processes are adopted throughout the Polytechnic

> The

work environment is further improved and staff and student well-being initiatives enhanced

>

Effective consultation processes are maintained

> Māori

COMMUNITY CONFIDENCE

Annual feedback from Kai Tahu – combined Rūnaka Target Arai te Uru Rūnaka are satisfied overall with consultation and decision making processes, and progress towards implementing our Māori Strategic Framework (MSF) Outcome 2011 Arai te Uru Rūnaka are satisfied overall with consultation; and with the present implementation of the MSF

educational needs are met.

Securing the confidence of government

Highlights > Strong

vote of confidence from government

> Improved

reporting to, and confidence of, Arai Te Uru Rūnaka

> Best-ever > Support

staff satisfaction results

services helping students achieve.

We have achieved the confidence of critical stakeholders, with the double “Highly Confident” rating from NZQA and a low-risk rating from TEC. In the 2010 Tertiary Education Performance report, published in December 2011, it is commented that Otago Polytechnic’s “strong educational performance and improved financial performance has placed it in a good position to advance the TES priorities in 2012”.

Supporting aspirations for Māori

Pathway to great > Implement

new process to obtain employer feedback on graduates

> Develop

the Māori Strategic Framework for 2012–15

> Prepare

annual report to Kai Tahu

> Establish

kaupapa Māori programmes in trades areas

> Develop

young achievers’ programme to recognise Pacific Islands youth achievement academically, or in sport or community leadership

> Further improvement to the work environment, to meet

higher targets: up from 80 per cent to 90 per cent.

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Otago Polytechnic Te Kura Matatini ki Otago

2011 was a critical year for taking stock of our progress in supporting Māori to fulfil their educational aspirations. It marked the conclusion of the first stage of the implementation of the Māori Strategic Framework, adopted in 2007 following the 2004 Memorandum of Understanding with Otago Polytechnic’s four Arai te Uru Papatipu Rūnaka. A team of internal and external participants carried out a Cultural Audit, evaluating Otago Polytechnic’s performance against the objectives set out in the MSF and making recommendations. This has led to initiatives being adopted, including providing greater resourcing to both the Kaitohutohu Office and the Treaty Education and Training Unit, and finding ways to further support Māori learners’ needs.


SECURING THE CONFIDENCE OF OUR COMMUNITIES

PROFILE : WORKING WITH OUR STRATEGIC PARTNERS

Whakakaha te Hoataka Strengthening the Partnership The Cultural Audit formed the basis of Whakakaha te Hoataka – Strengthening the Partnership, a report to the four Arai te Uru Papatipu Rūnaka with which Otago Polytechnic has a Memorandum of Understanding. Reports to the rūnaka will now be presented annually. The report highlighted areas of considerable success, especially around governance and processes for ensuring Māori perspectives and priorities are integrated in planning at all levels. Staff training and student support services are well embedded, and te reo and tikaka Māori are more visible across the organisation. Peter Murphy’s sculpture “Infinity Loop” was featured on the cover.

Carving an identity Peter Murphy always wanted to learn to carve Oamaru stone. “My Waitaha ancestors painted Oamaru stone bluffs and sheltered under them. My Pakeha ancestors also used Oamaru stone for shelter and art, which is evident in many buildings that survive today. I’ve always been fascinated by these similar – yet different – uses of the stone.” After receiving an Otākou Rūnaka scholarship in 2007, Murphy spent four years studying for a Bachelor of Fine Arts at the Dunedin School of Art. “From the very early stages, my theoretical research focused on Māori art. It has endured much the same treatment as the rest of Māori culture – everyone seemed to be the authority on our art except us.” But Murphy believes that is changing. “There are many successful Māori artists now, and that is a great inspiration to me.”

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Otago Polytechnic Te Kura Matatini ki Otago


SECURING THE CONFIDENCE OF OUR COMMUNITIES

A great place to work More and more staff at Otago Polytechnic love working here. This is the message from our Work Environment Survey, recording our best-ever results, both in participation (91 per cent) and satisfaction levels. In 2011 we won the 3M award for Health and Safety Innovation. Staff are proud to work at Otago Polytechnic Target 95% Achieved 97% Staff are satisfied with the overall work environment Target 85% Achieved 89% Organisation overall supports staff well-being Target 85% Achieved 89% Staff are supported in their professional development Target 85% Achieved 92% Otago Polytechnic is a safe and healthy place to work Target 85% Achieved 91%

The Counselling service was accessed by 343 students. Lunch-time meetings to work alongside target groups at risk proved very successful. We repeated an initiative trialled last year, providing Youth Trade Students the opportunity for “real-life job interviews”. Students found the experience a huge benefit to them and the feedback was very positive. Pacific Islands students use Facebook to keep in touch and receive information about activities, and the Facebook page now set up for international students is proving a valuable connection for them all. Kanazawa Technical College students undertook their annual ski trip and visit to Central Otago – and loved it!

Supporting parents

Recognition and reward systems encourage and support high performance Target 80% Achieved 83.5%

Exciting things have been happening for the childcare centre with expansions taking place, enabling more placements for children under two years of age. The year has been a very successful one with ERO providing an excellent report for the centre.

Competitive employment terms and conditions are maintained Target 80% Achieved 79%

Supporting those returning to study

Otago Polytechnic is an equal opportunity employer with a diverse workforce representing the population we serve. Staff appointed to advertised positions

Advisory Team provided 1695 contacts throughout the year. Māori students are well supported by their Kaiarahi during the year with 348 student contacts.

2008

2009

2010

2011

56

82

45

80

Gender Male Female

25% 27% 27% 36% 75% 73% 73% 64%

Ethnicity Māori NZ European European Pacific peoples Asian Not specified Other ethnicity

2% 7% 9% 6% 68% 60% – 70% 9% 29% – 10% – 3% – – 9% – – 5% 2% – – 4% 10% 1% – 4%

An opportunity for learners returning to education was provided through Personal Effectiveness Skills. This is a week-long course prior to classes beginning. From the feedback, the chance to take part in these classes is highly valued by the participants. Skills learned in the week-long programme provide a confident start to their learning. The Learning Centre supported many students with 809 contact hours. A strong focus of support in literacy and numeracy skills helped equip students to be successful. Connection to distance students through IT/ Elluminate sessions through the Learning Centre has been effective this year for many groups.

EMPLOYER SATISFACTION

Goal Implement new employer satisfaction survey, with a focus on the work-readiness of our graduates.

Supporting students to succeed

Target 100%

Otago Polytechnic offers a comprehensive student support service, from the moment students prepare to enter study until they get ready to enter the workforce. In 2011, the Student

Achieved Under development for implementation in 2012

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Otago Polytechnic Te Kura Matatini ki Otago


SECURING THE CONFIDENCE OF OUR COMMUNITIES

PROFILE : PROVIDING COMMUNICATION AND SUPPORT

Sharing our stories Part of securing the confidence of our communities is making sure our stakeholders know about our successes. As of 2011, strengthening our online presence was viewed as a strategic priority for Otago Polytechnic. Integrating social media tools including Facebook and Twitter into the overarching communications plan enabled us to further share our successes via online posting, networking and video marketing. Schools began establishing their own Facebook pages to better connect with students and other networks, while other online communication platforms include e-newletters and regular updates on the Otago Polytechnic website. The Communications team also implemented a graduate ambassador initiative in 2011, whereby Otago Polytechnic graduates were invited to share their study experiences and success stories through the 2011 enrolment campaign.

Supporting students with disabilities In 2011, 58 students with disabilities achieved certificates, six diplomas, 16 bachelors’ degrees and two masters’ degrees – we are thrilled for them all.

Ra Smith, who is blind, graduated with a Diploma in Marketing in 2011. Photo courtesy of the Otago Daily Times

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Otago Polytechnic Te Kura Matatini ki Otago

Otago Polytechnic ensures that all students with disabilities are well supported with their learning. In 2011, 427 students declared a disability on enrolment, and 88 students accessed support for their learning. Many students do not disclose their disabilities on enrolment but do so through the year – when seeking help and support. 1,967 hours of support were provided both in the class and outside of classroom hours. Students with disabilities had an overall pass rate of 74.04 per cent.


BEING

Financially sustainable

This goal means: a. Not being vulnerable to periodic market or government funding policy shifts b. Having adequate resources for capital and operational development, i.e. a consistent annual surplus c. Having a sound balance sheet and cash flow.

Aspirations > Mix

of provision EFTS and revenue per Investment Plan is achieved > Budgeted surplus of five per cent is consistently achieved > An innovation and project fund of five per cent of budget is established > Reduced dependence on TEC EFTS funding – more revenue from other sources > Collaborative relationships that benefit us financially as well as strategically and educationally > Performance excellence framework and a culture of innovation and continuous improvement is established > Our supply chain is managed more sustainably.

Highlights > Exceeded

budget, achieved six per cent surplus

> Environmental and financial savings made in supply chain >

International partnerships and research consultancy support diverse revenue streams > Investment in infrastructure and systems.

Pathway to great >

A further assessment against the Baldrige excellence criteria, with improved results expected > Launch of our four Centres of Research Expertise which will pursue fee-for-service research and development, and consultancies > Revenue diversification, with bold targets to increase nonEFTS income by 10 per cent over the next three years > Complete sustainable supply-chain analysis, reviewing several further processes and developing strategies for minimising energy and waste to landfill, especially through better recovery of building materials > Commission new Tribal Student Management System and restructure student administration, introducing internal shared services.

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Otago Polytechnic Te Kura Matatini ki Otago

FINANCIAL SUSTAINABILITY

Monthly reporting of all financial metrics which contribute to the TEC risk analysis Target Budgeted surplus is achieved Target Low risk status is achieved for 2011 Not yet compiled for 2011 (Achieved 2010)

Financial health and investment Having once again exceeded our budgeted EFTS and achieved a six per cent surplus, Otago Polytechnic is enjoying the benefits of high student demand and sustained financial discipline. As well as delivering on our Investment Plan, we have been able to establish a special projects fund, to support activities that will enable even greater performance in the future. In 2011 we completed the first draft of our Strategic Asset Management Plan, paving a vision for our built and virtual learning environments. Otago Polytechnic’s commitment to financial and organisational health was endorsed through an external assessment against the Baldrige criteria and our participation in the Performance Excellence Study Awards (PESA). We submitted our first application, enabling us to benchmark ourselves against the rating criteria. Otago Polytechnic representatives also visited the US, to experience first-hand 10 performance excellence businesses who achieved Baldridge quality awards. Our financial performance has also earned us the confidence of our government stakeholders, with TEC rating us as “Low risk”, based on 2010 results and 2011 forecasts.

Better systems A major project to create efficiencies and improve students’ experiences as customers of Otago Polytechnic was launched in 2011, with the selection of a new student management system. Called EBS4, the system is being developed by UK specialists Tribal in conjunction with our TANZ partners – our history of positive collaboration with other ITPs leading to important cost-saving and knowledge-sharing opportunities. EBS4 is to replace Jasper, and promises a more streamlined, functional and user-friendly student management process. It is due to go live in July 2012.


BEING FINANCIALLY SUSTAINABLE

PROFILE : MAKING CONNECTIONS WITH THE WORLD

Studying abroad An innovative study abroad programme has brought more than 45 students from Hochschule Harz University of Applied Sciences in Weinergerode, Germany to study at our School of Applied Business. This valued partnership provides significant scope for future collaboration, and discussions are underway to expand the scheme into other schools within the Polytechnic. Applied Business Principal Lecturer Dr Sharleen Howison will deliver a guest lecture at Hochschule Harz later in 2012, and joint research possibilities are being investigated.

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Otago Polytechnic Te Kura Matatini ki Otago


BEING FINANCIALLY SUSTAINABLE

Savings in our supply chain The ongoing review of Otago Polytechnic’s supply chain continued during 2011, using the Sustainable Practice 360° process developed by The Sustainability Company, and is now around 40 per cent complete. The emphasis changed from identifying and addressing “low hanging fruit” to larger supply chain issues and long-term supplier contracts. Contract suppliers of both products and services are now more aware of Otago Polytechnic’s sustainability aspirations and requests for proposals (RFPs) now better enable suppliers to address how they can assist the Polytechnic to pursue our sustainability goals. 2012 will see greater focus on better understanding our suppliers’ wider business practices to achieve a better fit with our sustainability ambitions. Further efforts will be made ranging from reducing power consumption and landfill waste to minimising the administrative requirements of managing our supply chain.

SAVING PER ANNUM

12.4%

SUSTAINABLE SUPPLY CHAIN FOCUS

Supply of library services Review of services, more online use of knowledge acquisition – $128k saving per annum

19%

Advertising spend Reduced production of marketing materials and travel – $149k saving per annum

18.4%

Paper & office consumables Reduced supply (more online) using green office supply for consumables – $77k off 2010 spend

(1.0)% 2%

Cleaning contracts across all facilities Meeting green product specifications and 80% of facilities cleaned by single cleaning contractor – $5k above 2010 spend Electricity supply Collaborative supply chain purchase with Otago University – 8 1,116kwh less consumption

6%

Telecommunications Internal review of all telecommunication across OP – $36k off 2010 spend

9%

Health and hygiene products I nternal review, pilot of new products with full implementation part year – $ 6k off 2010 spend

13.8%

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Class materials I nitial review of all class materials – $108k off 2010 spend

Otago Polytechnic Te Kura Matatini ki Otago

Chair & table repairs – local furniture suppliers Broken chair recovery and refurbishment with local supplier – 50% saving in replacement costs Vehicle fleet purchase Car purchases meet Greener Choice awards for 2010

International viewpoints “Our Connectedness”, the strategy for internationalisation, is a priority for Otago Polytechnic. Developments in 2011 focused on ensuring supportive environments for our international students, creating innovative growth through marketing and liaison, and extending our institutional partnerships. Otago Polytechnic actively promotes our range of study options throughout Asia, South America and Europe. Our efforts have seen international student numbers grow by three per cent as compared to 2010, with 177 international students studying here in 2011. The opportunity to offer international students the quality of education available from Otago Polytechnic in a city environment has led to a partnership with Future Skills Academy in Auckland. This will see our uniquely industry-based Bachelor of Applied Management taught from a new Auckland International Campus in Queen Street.

Enabling enterprise Businesses are now better able to make use of the expertise of our staff, with Otago Polytechnic becoming an accredited Technology Transfer partner of the Ministry of Science and Innovation. Vouchers are available to businesses requiring external expertise to explore their research and development opportunities and can be “cashed in” at accredited providers. Typically, these research and development areas will be in high-value manufacturing services as prioritised by the Government for economic growth. This recognition supports Otago Polytechnic to build an income stream based on industry-relevant initiatives. We have identified speciality areas in: design-led product and service development; information and communication technology; sustainable practices and systems; engineering (mechanical and production); natural resources; business strategy and development and sport-based product and service development. These will become the basis of the Polytechnic’s Centres of Research Expertise. This commitment to enterprise-based research has seen our income generated by external research funding grow from $1,112,234 in 2010 to $1,129,559 in 2011.


BEING FINANCIALLY SUSTAINABLE

PROFILE : REDUCING OUR IMPACT ON THE ENVIRONMENT

Waste lines A more targeted waste collection system has led to an increase in recycling and a decrease in the production of general waste at Otago Polytechnic. Although Envirowaste’s changes have not yet been in force for a full year, the revamp has already seen a 10 per cent drop in the amount of general rubbish produced – from 2050.46 cubic metres in 2010 to 1853.24 cubic metres in 2011. Over the same period, cardboard recycling jumped 13.5 per cent, from 288 cubic metres to 327 cubic metres. And glass recycling improved a staggering 82 per cent, up to 29.28 cubic metres.

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Otago Polytechnic Te Kura Matatini ki Otago


Financial Performance Summary

Actual 2011

Net Surplus / (Deficit) (000s)

$3,343

$2,877

$2,264

Proportion of Government Grants to Total Income (%)

55.8%

55.4%

59.3%

Total Cost per EFTS (excluding redundancies)

$14,073

$13,970

$13,932

Total Cost per EFTS (including redundancies)

$14,624

$14,825

$14,761

Average Government Grant per EFTS

$8,636

$8,650

$9,085

Debt (as a percentage of Total Assets)

0.0%

0.0%

0.1%

Debt per EFTS

$0

$0

$27

Working Capital Ratio

0.5

0.6

0.2

Student Staff Ratio

18.1

17.6

18.3

Total Assets (000s)

$92,400

$95,467

$90,476

EFTS

3,613

3,588

3,681

Academic FTE

199.8

204.4

201.2

Total FTE

437.0

439.9

447.0

Budget Actual 2011 2010

Financial Sustainability IMPROVE PRODUCTIVITY AND FINANCIAL PERFORMANCE (measures improve over prior year) Surplus as % of income Actual 2011 6.0% Actual 2010 4.0%

Teaching costs : Teaching revenue Actual 2011 50.3% Actual 2010 50.7%

Working capital Actual 2011 49.3% Actual 2010 18.9%

Research costs : Research revenue Actual 2011 136.4% Actual 2010 167.0%

Debt equity ratio Actual 2011 0.0% Actual 2010 0.1%

Total revenue : Total FTEs Actual 2011 $128,564 Actual 2010 $126,618

Cash in/Cash out Actual 2011 117.3% Actual 2010 117.2%

Teaching revenue : Teaching FTEs Actual 2011 $176,021 Actual 2010 $172,042

Total costs : Total revenue Actual 2011 94.1% Actual 2010 96.0%

Research revenue : Research FTEs Actual 2011 $70,993 Actual 2010 $52,976

Personnel costs : Total revenue Actual 2011 59.5% Actual 2010 59.6%

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Otago Polytechnic Te Kura Matatini ki Otago


Financial Statements For the year ended 31 December 2011

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Otago Polytechnic Te Kura Matatini ki Otago


Independent Audit Report To the readers of Otago Polytechnic and group’s financial statements and statement of service performance for the year ended 31 December 2011 >

Basis of opinion

The Auditor General is the auditor of Otago Polytechnic (the Polytechnic) and group. The Auditor General has appointed me, Ian Lothian, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements and statement of service performance of the Polytechnic and group on her behalf. We have audited: >

>

the financial statements of the Polytechnic and group on pages 32 to 55, that comprise the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information; and the statement of service performance of the Polytechnic and group on pages 6 to 28.

Opinion In our opinion: >

the financial statements of the Polytechnic and group on pages 32 to 55:

>

comply with generally accepted accounting practice in New Zealand; and

> fairly reflect the Polytechnic and group’s: > financial position as at 31 December 2011; and > financial performance and cash flows for the year ended

We carried out our audit in accordance with the Auditor General’s Auditing Standards, which incorporate the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial statements and statement of service performance are free from material misstatement. Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements and statement of service performance. If we had found material misstatements that were not corrected, we would have referred to them in our opinion. An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements and statement of service performance. The procedures selected depend on our judgement, including our assessment of risks of material misstatement of the financial statements and statement of service performance, whether due to fraud or error. In making those risk assessments; we consider internal control relevant to the Polytechnic and group’s preparation of the financial statements and statement of service performance that fairly reflect the matters to which they relate. We consider internal control in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Polytechnic and group’s internal control. An audit also involves evaluating: >

the appropriateness of accounting policies used and whether they have been consistently applied;

>

the reasonableness of the significant accounting estimates and judgements made by the Council;

>

the adequacy of all disclosures in the financial statements and statement of service performance; and

>

the overall presentation of the financial statements and statement of service performance.

on that date; >

the statement of service performance of the Polytechnic and group on pages 6 to 28 fairly reflects the Polytechnic and group’s service performance achievements measured against the performance targets adopted for the year ended 31 December 2011.

Our audit was completed on 27 April 2012. This is the date at which our opinion is expressed. The basis of our opinion is explained below. In addition, we outline the responsibilities of the Council and our responsibilities, and we explain our independence.

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Otago Polytechnic Te Kura Matatini ki Otago

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements and statement of service performance. We have obtained all the information and explanations we have required and we believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.


>

Responsibilities of the Council The Council is responsible for preparing financial statements that: >

comply with generally accepted accounting practice in New Zealand; and

>

fairly reflect the Polytechnic and group’s financial position, financial performance and cash flows.

The Council is also responsible for preparing a statement of service performance that fairly reflects the Polytechnic and group’s service performance achievements. The Council is responsible for such internal control as it determines is necessary to enable the preparation of financial statements and a statement of service performance that are free from material misstatement, whether due to fraud or error. The Council’s responsibilities arise from the Education Act 1989 and the Crown Entities Act 2004.

Responsibilities of the Auditor We are responsible for expressing an independent opinion on the financial statements and statement of service performance and reporting that opinion to you based on our audit. Our responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.

Independence When carrying out the audit, we followed the independence requirements of the Auditor General, which incorporate the independence requirements of the New Zealand Institute of Chartered Accountants. Other than the audit, we have no relationship with or interests in the Polytechnic or any of its subsidiaries.

Ian Lothian Audit New Zealand On behalf of the Auditor-General Christchurch, New Zealand

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Otago Polytechnic Te Kura Matatini ki Otago

Matters relating to the electronic presentation of the audited financial statements and statement of service performance This audit report relates to the financial statements and statement of service performance of Otago Polytechnic (the Polytechnic) and group for the year ended 31 December 2011 included on the Polytechnic and group’s website. The Polytechnic’s Council is responsible for the maintenance and integrity of the Polytechnic’s website. We have not been engaged to report on the integrity of the Polytechnic’s website. We accept no responsibility for any changes that may have occurred to the financial statements and statement of service performance since they were initially presented on the website. The audit report refers only to the financial statements and statement of service performance named above. It does not provide an opinion on any other information which may have been hyperlinked to or from the financial statements and statement of service performance. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements and statement of service performance as well as the related audit report dated 27 April 2012 to confirm the information included in the audited financial statements and statement of service performance presented on this website. Legislation in New Zealand governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.


Financial Statements Statement of Financial Performance

for the year ended 31 December 2011 POLYTECHNIC

GROUP

Actual Budget Actual Actual Budget Actual 2011 2011 2010 2011 2011 2010 Notes $000 $000 $000 $000 $000 $000 Revenue Government Grants 3 (a) Student Tuition Fees Other Income 3 (b) Interest Received 3 (c)

31,204 17,573 6,683 233

31,036 18,716 5,803 100

33,440 16,512 6,081 130

31,204 17,573 6,928 233

31,036 18,716 6,039 100

33,440 16,512 6,276 130

Total Revenue

55,693

55,655

56,163

55,938

55,891

56,358

Expenditure Employment Expenses 3 (d) 33,179 32,683 33,511 33,403 32,905 33,753 Consumable Expenses 3 (e) 5,384 5,906 5,733 5,391 5,912 5,739 Operating Expenses 3 (e) 5,122 5,188 5,288 5,148 5,195 5,321 Occupancy Expenses 3 (e) 3,772 3,705 3,793 3,773 3,706 3,793 Interest Expense 3 (c) 0 5 6 0 5 6 Depreciation & Amortisation Expense 8 & 9 4,889 5,470 5,253 4,889 5,470 5,253 Loss on Disposal/Impairment of assets 236 0 469 236 0 469 Total Expenditure S urplus/(Deficit) from Operations Share of Associate’s surplus/deficit N et Surplus/(Deficit)

52,582

52,957

54,053

52,840

53,193

54,334

7

3,111 0

2,698 0

2,110 0

3,098 244

2,698 180

2,024 240

3,111

2,698

2,110

3,342

2,878

2,264

E xplanations of significant variances against budget are detailed in note 21.

The Notes to the Financial Statements and Summary of Significant Accounting Policies form part of and are to be read in conjunction with these Statements.

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Otago Polytechnic Te Kura Matatini ki Otago


Financial Statements Statement of Comprehensive Income

for the year ended 31 December 2011 POLYTECHNIC

GROUP

Actual Budget Actual Actual Budget Actual 2011 2011 2010 2011 2011 2010 Notes $000 $000 $000 $000 $000 $000 Net Surplus/(Deficit) for the year 3,111 2,698 2,110 3,342 2,878 Other Comprehensive Income Increase/(Decrease) in Asset Revaluation Reserves (1,958) 0 (95) (1,958) 0

2,264 (95)

Total Other Comprehensive Income

(1,958)

0

(95)

(1,958)

0

(95)

Total Comprehensive Income

1,153

2,698

2,015

1,384

2,878

2,169

Statement of Changes in Equity

for the year ended 31 December 2011 POLYTECHNIC

GROUP

Actual Budget Actual Actual Budget Actual 2011 2011 2010 2011 2011 2010 Notes $000 $000 $000 $000 $000 $000 Public Equity at the start of the year R eceipt of Distinctive Contribution Funding

82,142 0

77,887 0

80,057 70

82,677 0

77,887 0

80,438 70

Total Comprehensive Income

1,153

2,698

2,015

1,384

2,878

2,169

Public Equity at the end of the year

83,295

80,585

82,142

84,061

80,765

82,677

The Notes to the Financial Statements and Summary of Significant Accounting Policies form part of and are to be read in conjunction with these Statements.

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Otago Polytechnic Te Kura Matatini ki Otago


Financial Statements Statement of Financial Position

for the year ended 31 December 2011 POLYTECHNIC

GROUP

Actual Budget Actual Actual Budget Actual 2011 2011 2010 2011 2011 2010 Notes $000 $000 $000 $000 $000 $000 ASSETS Current Assets Cash and Cash Equivalents 4 1,638 1,490 90 1,658 1,497 107 Trade and Other Receivables 5 1,829 2,100 960 1,878 2,100 960 Prepayments 275 200 153 275 200 153 Inventories 6 218 200 206 218 200 206 Total Current Assets

3,960

3,990

1,409

4,029

3,997

1,426

7 8 9

4,829 78,505 4,340

4,781 83,238 3,383

4,909 80,039 3,584

5,526 78,505 4,340

4,847 83,240 3,383

5,425 80,041 3,584

87,674

91,402

88,532

88,371

91,470

89,050

Total Assets

91,634

95,392

89,941

92,400

95,467

90,476

Non Current Assets Other Financial Assets Property, Plant and Equipment Intangible Assets Total Non Current Assets

LIABILITIES Current Liabilities Trade and Other Payables Employee Entitlements Loans and Borrowings Total Current Liabilities

10 5,607 4,700 5,484 5,607 4,700 5,484 11 2,563 2,493 2,060 2,563 2,493 2,060 12 0 0 0 0 0 0

8,170

7,193

7,544

8,170

7,193

7,544

N on Current Liabilities Employee Entitlements 11 169 209 155 169 209 155 Loans and Borrowings 12 0 0 100 0 0 100 Total Non Current Liabilities

169

209

255

169

209

255

Total Liabilities 8,339 7,402 7,799 8,239 7,402 7,799

NET ASSETS 83,295 87,990 82,142 84,061 88,065 EQUITY Retained Earnings 13 49,243 49,241 45,143 50,009 49,316 Suspensory Loan 13 4,185 3,985 5,185 4,185 3,985 Asset Revaluation Reserves 13 29,375 34,314 31,333 29,375 34,314 Other Reserves 13 492 450 481 492 450

45,678 5,185 31,333 481

Total Equity

82,677

83,295

87,990

82,142

84,061

88,065

82,677

The Notes to the Financial Statements and Summary of Significant Accounting Policies form part of and are to be read in conjunction with these Statements.

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Otago Polytechnic Te Kura Matatini ki Otago


Financial Statements Statement of Cash Flows

for the year ended 31 December 2011 POLYTECHNIC

GROUP

Actual Budget Actual Actual Budget Actual 2011 2011 2010 2011 2011 2010 Notes $000 $000 $000 $000 $000 $000 CASH FLOWS FROM OPERATING ACTIVITIES Cash was provided from: Receipts from Government Grants 31,180 30,986 33,618 31,180 30,986 33,618 Receipts from Student Tuition Fees 17,760 19,166 17,224 17,760 19,166 17,224 Receipts from Other Revenue 5,577 5,583 7,127 5,837 5,819 7,349 Interest Received 233 100 130 233 100 130 54,750 55,835 58,099 55,010 56,071 58,321 Cash was applied to: Payments to Employees Payments for Consumables Payments for Operating Expenses Payments for Occupancy Interest Expense Goods & Services Tax (net)

32,663 5,482 5,349 3,858 0 (731)

31,957 5,889 5,173 3,688 5 376

33,437 5,987 5,539 4,043 6 461

32,887 5,490 5,375 3,858 0 (731)

32,179 5,895 5,180 3,689 5 376

33,679 5,993 5,571 4,043 6 461

46,621 47,088 49,473 46,879 47,324 49,753 Net Cash Flow from Operating Activities

4 8,129 8,747 8,626 8,131 8,747 8,568

The Notes to the Financial Statements and Summary of Significant Accounting Policies form part of and are to be read in conjunction with these Statements.

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Otago Polytechnic Te Kura Matatini ki Otago


Financial Statements Statement of Cash Flows (continued)

for the year ended 31 December 2011 POLYTECHNIC GROUP POLYTECHNIC GROUP Actual Budget Actual Actual Budget Actual 2011 2011 2010 2011 2011 2010 Notes $000 $000 $000 $000 $000 $000 CASH FLOWS FROM INVESTING ACTIVITIES Cash was provided from: Proceeds from Sale of Property, Plant & Equipment 0 0 0 0 0 0 Repayment of Advance by Associate 150 150 150 150 150 150 150 150 150 150 150 150 Cash was applied to: Purchase of Property, Plant & Equipment 4,915 5,391 4,364 4,914 5,391 4,295 Purchase of Intangible Assets 1,716 810 1,162 1,716 810 1,162 6,631 6,201 5,526 6,630 6,201 5,457 Net Cash Flow from Investing Activities (6,481) (6,051) (5,376) (6,480) (6,051) (5,307) CASH FLOWS FROM FINANCING ACTIVITIES Cash was provided from: Loan Finance Received 1,100 1,700 4,600 1,100 1,700 4,600 1,100 1,700 4,600 1,100 1,700 4,600 Cash was applied to: Loan Finance Repaid 1,200 3,000 7,856 1,200 3,000 7,856 1,200 3,000 7,856 1,200 3,000 7,856 Net Cash Flow from Financing Activities (100) (1,300) (3,256) (100) (1,300) Cash Increase/(Decrease) 1,548 1,396 (6) 1,551 1,396 Opening Cash Balance 90 94 96 107 100

(3,256) 5 102

Closing Balance 1,638 1,490 90 1,658 1,496 107 Represented by: Bank deposits and current account 1,638 1,490 90 1,658 1,497 107 1,638 1,490

90 1,658 1,497 107

The Notes to the Financial Statements and Summary of Significant Accounting Policies form part of and are to be read in conjunction with these Statements.

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Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements For the year ended 31 December 2011

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Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011 1. REPORTING ENTITY Otago Polytechnic is a Crown Entity and was established in 1966 as a Polytechnic under the Education Act 1955. It provides full-time and part-time tertiary education in New Zealand. The Polytechnic and group consists of Otago Polytechnic and its subsidiary, Open Education Resource Foundation Limited (100% owned). The 33% equity share of its associate Dunedin City Tertiary Accommodation Trust is equity accounted. The primary objective of the Polytechnic and group is to provide education services for community or social benefit, rather than making a financial return. Accordingly the Polytechnic has designated itself and the group as public benefit entities for the purposes of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).

(d) Changes in accounting policy

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The Polytechnic and group has not adopted the revisions to accounting standards during the financial year which have only had a presentational or disclosure effect.

Standards, amendments and interpretations issued but not yet effective that have not been early adopted, and are relevant to the Polytechnic and group are:

> NZ IFRS 9 Financial Instruments will eventually replace NZ

IAS 39 Financial Instruments: Recognition and Measurement. NZ IAS 39 is being replaced through the following three main phases: Phase 1 Classification and Measurement, Phase 2 Impairment Methodology and Phase 3 Hedge Accounting. Phase 1 on the classification and measurement of financial assets has been completed and has been published in the new financial instrument standard NZ IFRS 9. NZ IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in NZ IAS 39.

The financial statements of the Polytechnic and group for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of Council on 27 April 2012. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation

The financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand and the requirements of the Crown Entities Act 2004 and the Education Act 1989.

The financial statements have been prepared on a historical cost basis modified by the revaluation of certain assets.

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($’000). The functional and presentation currency of the Polytechnic and its subsidiaries is New Zealand dollars ($).

The approach in NZ IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the many different impairment methods in NZ IAS 39. The new standard is required to be adopted for the year ended 31 December 2013. The Polytechnic and group has not yet assessed the impact of the new standard and expects that it will not be early adopted. (e) Revenue

(b) Basis of consolidation

The purchase method is used to prepare the group financial statements, which involves adding together like items of assets, liabilities, equity, income, expenditure and cash flows on a line-by-line basis. All significant intra-group balances and transactions are eliminated on consolidation. Associate entities are consolidated on an equity accounting basis, which shows the share of the surpluses/deficits in the group’s statement of financial performance and the share of post-acquisition increases/decreases in net assets in the group’s statement of financial performance and the share of post-acquisition increases/decreases in net assets in the group’s statement of financial position.

(c) Statement of compliance

The financial statements have been prepared in accordance with New Zealand generally accepted accounting practice (NZ GAAP). They comply with NZ IFRS and other applicable Financial Reporting Standards, as appropriate for public benefit entities.

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Otago Polytechnic Te Kura Matatini ki Otago

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Government grants

Government grants are recognised when eligibility to receive them is established. Operational Bulk Grants are recognised over the period in which courses are taught by reference to the stage of completion of the course as at the statement of financial position date. Stage of completion is measured by reference to the days of courses completed as a percentage of total days for each course. Where funds have been received but not earned at balance date an Income in Advance liability is recognised.

Student tuition fees

Revenue from student tuition fees is recognised over the period in which the course is taught by reference to the stage of completion of the course as at the statement of financial position date. Stage of completion is measured by reference to the days of courses completed as a percentage of total days for each course.


Notes to the Financial Statements for the year ended 31 December 2011 Other Income

Other Income is recognised when earned. For the sale of materials this is when the significant risk and rewards of ownership have passed to the buyer and can be measured reliably.

Inventories held for use in the production of goods and services on a commercial basis are valued at the lower of cost (using the FIFO method) and net realisable value.

The amount of any write-down for the loss of service potential or from cost to net realisable value is recognised in the surplus or deficit in the period of the write-down.

Interest

Interest revenue is recognised using the effective interest method.

(f) Borrowing costs

Borrowing costs are recognised as an expense in the year in which they are incurred, except that borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalised as part of the cost of that asset until substantially all activities necessary to prepare the qualifying asset for its intended use are complete.

All items in the financial statements are stated exclusive of GST, except for trade receivables and payables, which are stated on a GST inclusive basis. Where GST is not recoverable as input tax then it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the statement of financial position.

The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cashflow in the statement of cashflows.

(h) Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand and short-term deposits or highly liquid assets with an original maturity of three months or less.

For the purposes of the statement of cashflows, cash and cash equivalents consist of cash and cash equivalents as defined above.

(i) Trade and other receivables

Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

(j) Inventories

Financial instruments are contracts that give rise to financial assets and liabilities or an equity instrument in another enterprise. A financial instrument is recognised when the group becomes party to its contractual provisions.

A financial asset is cash, a contractual right to receive cash or another financial instrument from another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial instrument to another enterprise. An equity instrument is any contract that evidences a residual interest in the assets of another enterprise after deducting all of its liabilities.

An asset that takes a substantial period of time to get ready for its intended use is considered as a qualifying asset.

(g) Goods and Services Tax (GST)

(k) Financial instruments

Inventories held for distribution or consumption in the provision of services that are not supplied on a commercial basis are measured at cost (using the FIFO method), adjusted where applicable, for any loss of service potential. Where inventories are acquired at no cost or for minimal consideration, the cost is the current replacement cost at the date of acquisition.

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Otago Polytechnic Te Kura Matatini ki Otago

Categories of investment and financial assets held by the group:

> Loans and receivables (including cash and cash equivalents,

trade and other receivables and other financial assets) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method less any provision for impairment. Gains or losses are recognised in the surplus or deficit when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with maturities greater than 12 months after balance date, which are classified as non-current.

> Available for sale securities

Available for sale investments are those non-derivative financial assets, principally equity securities, that are designated as available for sale or not otherwise classified in previous categories. After initial recognition available for sale securities are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in the statement of financial performance. The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the statement of financial position date. For investments with no active market, fair values are determined using valuation methods. Investments whose fair values cannot be reliably measured are accounted for at cost and amortised where necessary.


Notes to the Financial Statements for the year ended 31 December 2011

Impairment of financial assets

Subsequent costs

At each balance date, the Polytechnic and group assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Any impairment losses are recognised in the surplus or deficit.

Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the group and the cost of the item can be measured reliably.

> Loans and receivables (including cash and cash equivalents,

Depreciation

trade and other receivables and other financial assets) Impairment of a loan or receivable is established when there is objective evidence that the Polytechnic and group will not be able to collect amounts due according to the original terms of the debt. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy and default in payments are considered indicators that the asset is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. For debtors and other receivables, the carrying amount of the asset is reduced through the use of a provision account and the amount of the loss is recognised in the surplus or deficit. When the receivable is uncollectable, it is written off against the provision account. Overdue receivables that have been renegotiated are reclassified as current (i.e. not past due). For other financial assets, impairment losses are recognised directly against the instrument’s carrying amount. (l) Property, plant and equipment

Property, plant and equipment consists of land, buildings, plant and equipment, motor vehicles, computer hardware, art works and library collections.

The measurement bases used for determining the gross carrying amount for each class of assets is as follows:

> Land and buildings are measured at fair value less

The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to the group and the cost of the item can be measured reliably.

In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported net in the surplus or deficit. When revalued assets are disposed, the amounts included in the asset revaluation reserves in respect of those assets are transferred to retained earnings.

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Otago Polytechnic Te Kura Matatini ki Otago

Rate

Buildings

20-80 years

1.25% - 5% per annum

Plant and equipment

2-30 years

3.33% - 50% per annum

Motor vehicles

5 years

20% per annum

Computer hardware

2-9 years

11% - 50% per annum

Library collection

10 years

10% per annum

Land and buildings are revalued with sufficient regularity to ensure that the carrying amount does not differ materially from fair value and at least every three years on the basis described below. All other asset classes are carried at depreciated historical cost. Additions between revaluations are recorded at cost.

The fair values of land and buildings are derived from market-based evidence or depreciated replacement cost as determined by an independent valuer. For example, where buildings have been designed specifically for educational purposes they are valued at depreciated replacement cost which is considered to reflect fair value for such assets. The group accounts for such revaluations on a class of asset basis.

The results of revaluing are credited or debited to an asset revaluation reserve for that class of asset. Where this results in a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive income but is recognised in the surplus or deficit. Any subsequent increase on revaluation that off-sets a previous decrease in value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed and then recognised in other comprehensive income.

accumulated depreciation and impairment losses.

Useful lives

> Other property, plant and equipment is stated at cost less

Additions

Class of assets

Revaluations

subsequent accumulated depreciation and impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

(m) Intangible assets

Computer software

Computer software is separately acquired and capitalised at its cost as at the date of acquisition. After initial recognition, separately acquired computer software is carried at cost less accumulated amortisation and impairment losses.


Notes to the Financial Statements for the year ended 31 December 2011

Course development costs

Course development costs relate to development of educational programmes and courses and are capitalised when it is probable that future economic benefits arising from use of the intangible asset will flow to the group.

Following the initial recognition of the course development expenditure, the asset is carried at cost less accumulated amortisation and impairment losses.

Amortisation

A summary of the amortisation policies applied to the group’s intangible assets is as follows:

For assets not carried at a revalued amount, the total impairment loss is recognised in the statement of financial performance.

(o) Employee entitlements Short-term employee entitlements

Employee entitlements that are due to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay.

These include salaries and wages accrued to balance date, annual leave earned but not yet taken at balance date, retiring and long service leave entitlements expected to be settled within 12 months and sick leave.

A liability for sick leave is recognised to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent it will be used by staff to cover those future absences.

Long-term employee entitlements

Entitlements that are payable beyond 12 months, such as long service leave and retiring leave, have been calculated on the following basis:

The carrying value of each class of intangible asset is reviewed for indicators of impairment annually. Intangible assets are tested for impairment where an indicator of impairment exists.

> likely future entitlements based on years of service, years to

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the surplus or deficit when the asset is derecognised.

Course Development Costs

Computer Software

Useful lives

3 - 5 years

5 - 7 years

Amortisation method used

Straight line method from the commencement of the course

Straight line method

Internally generated

Separately acquired

The amortisation period and amortisation method for each class of intangible asset having a finite life is reviewed at each financial year-end. If the expected useful life or expected pattern of consumption is different from the previous assessment, changes are made accordingly.

If an asset’s carrying amount exceeds its recoverable amount the asset is impaired and the carrying amount is written down to the recoverable amount. For revalued assets the impairment loss is recognised against the revaluation reserve for that class of asset. Where that results in a debit balance in the revaluation reserve, the balance is recognised in the statement of financial performance.

Internally generated/ acquired

entitlement, the likelihood that staff will reach the point of entitlement and contractual entitlements information; and A discount rate of 3.9% (2010: 5.8%) and a salary inflation factor of 2.1% (2010: 2.0%) were used. The discount rate is based on government bonds with terms to maturity similar to those of the relevant liabilities. The inflation factor is based on the current CPI rate.

(n) Impairment of non-financial assets

Non-financial assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.

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Otago Polytechnic Te Kura Matatini ki Otago

> the present value of the estimated future cash flows.

(p) Superannuation schemes

Defined contribution schemes

Employer contributions to Kiwisaver and other defined contribution superannuation schemes are accounted for as defined contribution schemes and are recognised as an expense in the surplus or deficit as incurred.

Defined benefit schemes

The Polytechnic and group belong to two Defined Benefit Plan Contributors Schemes (the schemes). The schemes are multi-employer-defined benefit schemes.

Insufficient information is available to use defined benefit accounting, as it is not possible to determine from the terms of the schemes the extent to which the surplus/deficit will affect future contributions by individual employers, as there is no


Notes to the Financial Statements for the year ended 31 December 2011 prescribed basis for allocation. The scheme is therefore accounted for as a defined contribution scheme. Further information on these schemes is disclosed in note 15.

received from the Crown under the authority of a capital appropriation, the Polytechnic and group accounts for the funding as a capital contribution directly in equity. Information about capital contributions recognised in equity is disclosed in note 13.

(q) Loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of transaction costs associated with the borrowing. After initial recognition, loans and borrowings are measured at amortised cost using the effective interest rate method.

Suspensory loans with equity conversion features

The Polytechnic and group has received a suspensory loan from the Crown whereby the loan converts to equity when the conversion conditions of the loan agreement are satisfied.

Gains and losses are recognised in the statement of financial performance when the liabilities are derecognised.

Because the Polytechnic and group is committed to meeting the equity conversion conditions, it considers the loan is an in-substance equity contribution from the Crown and therefore has recognised the amount drawn down directly in the statement of changes in equity. Further information about the suspensory loan is disclosed in notes 13 and 15.

(r) Leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the statement of financial performance on a straight-line basis over the lease term.

(s) Budget figures

The budget figures are those approved by the Polytechnic Council and have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted by Otago Polytechnic for the preparation of the financial statements.

(t) Critical accounting estimates and assumptions

In preparing these financial statements the Polytechnic and group has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. There are no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities.

(u) Critical judgements in applying accounting policies

The Polytechnic and group has exercised the following critical judgements in applying accounting policies for the year ended 31 December 2011:

Crown-owned land and buildings

Property in the legal name of the Crown that is occupied by the Polytechnic and group is recognised as an asset in the statement of financial position. The Polytechnic and group consider it has assumed all the normal risks and rewards of ownership of this property despite legal ownership not being transferred and accordingly it would be misleading to exclude these assets from the financial statements.

Distinction between revenue and capital contributions

Most Crown funding received is operational in nature and is provided by the Crown under the authority of an expense appropriation and is recognised as revenue. Where funding is

42

Otago Polytechnic Te Kura Matatini ki Otago

(v) Changes in Accounting Estimates

There have been no changes in accounting estimates during the year.

(w) Taxation

The Polytechnic and group is exempt from the payment of income tax as it is classified by the Inland Revenue Department as a charitable organisation. Accordingly, no charge for income tax applies or has been provided for. 3. REVENUES AND EXPENSES

POLYTECHNIC

GROUP

2011 2010 2011 2010 $’000 $’000 $’000 $’000 (a) Government Grants Student Achievement Component 28,473 21,944 28,473 21,944 Public Provider Base Grant 0 6,662 0 6,662 Equity Funding 141 129 141 129 Early Childhood Education 318 368 318 368 Regional Network Supplementary Grant 0 1,107 0 1,107 Performance Based Research Fund 695 614 695 614 Encouraging and Supporting Innovation 0 509 0 509 Business Links 0 356 0 356 Modern Apprentices 375 402 375 402 Youth Guarantee 591 424 591 424 Other Government Grants 611 925 611 925 31,204

33,440

31,204

33,440


Notes to the Financial Statements for the year ended 31 December 2011 (b) Other income Revenue from other operating activities 6,683

6,081

6,928

6,276

6,683

6,081

6,928

6,276

4. CASH AND CASH EQUIVALENTS

(c) Finance income/costs Interest earned on bank deposits 233 130 233 130 Total finance income 233 130 233 130 Interest paid on bank loan facilities 0 6 0 6 0

6

0

6

(d) Employment expenses Wages and salaries 30,443 Post-employment benefits 459 Other employment expenses 2,277

30,824 418

30,655 461

31,032 420

2,269

2,287

2,301

33,179

33,511

33,403

33,753

(e) Consumable, Operating and Occupancy expenses Audit fees – annual audit 87 Bad debts written-off 57 Donations 83 Minimum lease payments – operating leases 1,157 Administrative and other expenses 12,894 14,278

84 104 90

92 57 83

86 104 90

1,165

1,157

1,165

13,371

12,923

13,408

14,814

14,312

14,853

POLYTECHNIC

2011 2010 2011 2010 $’000 $’000 $’000 $’000

Cash at bank and in hand 40 Short term deposits 1,598

79 11

60 1,598

96 11

1,638

90

1,658

107

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The carrying values of cash at bank and in hand and short term deposits with maturities less than three months approximate their fair values. econciliation of cash for the R purpose of the cash flow statement For the purpose of the cash flow statement, cash and cash equivalents comprise the following as at 31 December: Cash at bank and in hand 1,638

90

1,658

107

1,638

90

1,658

107

Reconciliation from the net surplus/(deficit) to the net cash flows from operations Net surplus / (deficit) for the year 3,110

2,110

3,343

2,264

Adjustments for: Depreciation and amortisation 4,889 5,253 4,889 5,253 Net (gain) / loss on disposal of property, plant and equipment 236 469 236 469 Movement in Trust & Special Funds 11 0 11 0 Changes in assets and liabilities (Increase) / decrease in trade and other receivables (810) 1,240 (859) 1,239 (Increase) / decrease in prepayments (122) (24) (121) (24) (Increase) / decrease in inventories (13) (4) (13) (4) (Increase) /  decrease in financial assets (91) (40) (271) (253) Increase / (decrease) in trade and other payables 403 (452) 399 (450) Increase / (decrease) in employee entitlements 516 74 516 74 Net cash from operating activities 8,129

43

Otago Polytechnic Te Kura Matatini ki Otago

GROUP

8,626

8,130

8,568


Notes to the Financial Statements for the year ended 31 December 2011 5. TRADE AND OTHER RECEIVABLES

7. OTHER FINANCIAL ASSETS

POLYTECHNIC Student fees receivables Other receivables Other related parties (note 16) Provision for doubtful debts

GROUP

POLYTECHNIC

2011 2010 2011 2010 $’000 $’000 $’000 $’000 1,176 814

712 247

1,176 863

712 247

9

140

9

140

(170)

(139)

(170)

(139)

1,829

960

1,878

960

As at 31 December the age of receivables is as follows: Current 1,083 30-60 days 134 60-90 days 359 90 days + 253

442 148 32 338

1,132 134 359 253

442 148 32 338

1,829

960

1,878

960

As at 31 December, all overdue receivables have been assessed for impairment and appropriate provisions applied. Movements in the provision for doubtful debts are as follows: At 1 January Additional provisions made during the year Receivables written-off during the year

139

62

139

62

52

102

52

102

(21)

(25)

(21)

(25)

At 31 December

170

139

170

139

POLYTECHNIC

218

218

GROUP

206

218

206

206

218

206

The writedown of inventories held for distribution amounted to nil (2010: nil) and there have been no reversals of writedowns. No inventories are pledged as security for liabilities.

44

2011 2010 2011 2010 $’000 $’000 $’000 $’000 1,300

1,450

1,300

1,450

3,332 197 4,829

3,332 127 4,909

4,178 48 5,526

3,934 41 5,425

In 2008 Otago Polytechnic associate accounted for its one third share of Dunedin City Tertiary Accommodation Trust for the first time, the change being taken to equity. The change in the investment value represents the Group’s share of the Trust’s surplus for 2011. The advance to Dunedin City Tertiary Accommodation Trust is unsecured, non-interest-bearing and repayable on demand when certain conditions are satisfied. The fair value of on-demand loans cannot be less than the amount repayable on demand, therefore the carrying value of loans on demand reflects their fair value. There are no impairment provisions for other financial assets. None of the other financial assets are either past due or impaired. 2011 2010 $’000 $’000 Investment in Dunedin City Tertiary Accommodation Trust ovements in the carrying amount of the M investment in associate: Balance at 1 January 3,934 3,694 New investments during the year 0 0 Disposal of investments during the year 0 0 Share of total comprehensive income 244 240 Dividend 0 0

6. INVENTORIES

Materials and consumables held for distribution

Advance to Dunedin City Tertiary Accommodation Trust Investment in associate – Dunedin City Tertiary Accommodation Trust Other

GROUP

Otago Polytechnic Te Kura Matatini ki Otago

Balance at 31 December

4,178

3,934

ummarised financial information of associate S presented on a gross basis: Assets 9,176 9,223 Liabilities 4,647 5,422 Revenues 2,613 2,349 Surplus / (Deficit) 733 720 Group’s interest 33.33% 33.33% Share of associate’s c ontingent liabilities incurred jointly with other investors 0 0 Contingent liabilities that arise because of several liabilities 0 0


Notes to the Financial Statements for the year ended 31 December 2011 8. PROPERTY, PLANT AND EQUIPMENT POLYTECHNIC At 1 January 2011 Cost or fair value Accumulated depreciation and impairment Net carrying amount

Land Buildings Plant and Motor Computer Library Art Works Total Equipment Vehicles Hardware Collection $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 19,210

54,270

8,375

709

15,342

5,495

69

103,470

0

(2,848)

(4,228)

(523)

(11,695)

19,210

51,422

4,147

186

3,647

(4,137)

0

(23,431)

1,358

69

80,039

Year ended 31 December 2011 Balance at 1 January 19,210 51,422 4,147 186 3,647 1,358 69 80,039 Additions 0 2,646 578 106 850 248 2 4,430 Revaluations (1,120) (838) 0 0 0 0 0 (1,958) Disposals 0 0 (3) (38) (36) 0 0 (77) Depreciation expense 0 (1,646) (667) (73) (1,284) (259) 0 (3,929) Balance at 31 December At 31 December 2011 Cost or fair value Accumulated depreciation and impairment Net carrying amount At 1 January 2010 Cost or fair value Accumulated depreciation and impairment Net carrying amount

18,090

51,584

4,055

181

3,177

1,347

71

78,505

18,090

51,627

8,948

720

14,401

5,743

71

99,600

0

(43)

(4,893)

(539)

(11,224)

(4,396)

0

(21,095)

18,090

51,584

4,055

181

3,177

1,347

71

78,505

19,210

51,855

7,791

647

14,688

5,262

65

99,518

0

(1,542)

(3,608)

(445)

(10,554)

(3,872)

0

(20,021)

19,210

50,313

4,183

202

4,134

1,390

65

79,497

Year ended 31 December 2010 Balance at 1 January 19,210 50,313 4,183 202 4,134 1,390 65 79,497 Additions 0 3,056 657 62 1,032 233 4 5,044 Revaluations 0 0 0 0 0 0 0 0 Disposals 0 (379) (14) 0 0 0 0 (393) Depreciation charge for the year 0 (1,568) (679) (78) (1,519) (265) 0 (4,109) Balance at 31 December At 31 December 2010 Cost or fair value Accumulated depreciation and impairment Net carrying amount

45

19,210

51,422

4,147

186

3,647

1,358

69

80,039

19,210

54,270

8,375

709

15,342

5,495

69

103,470

0

(2,848)

(4,228)

(523)

(11,695)

(4,137)

0

(23,431)

19,210

51,422

4,147

186

3,647

1,358

69

80,039

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011

Land Buildings Plant and Motor Computer Library Art Works Total Equipment Vehicles Hardware Collection $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

GROUP At 1 January 2011 Cost or fair value Accumulated depreciation and impairment Net carrying amount

19,210

54,270

8,375

709

15,344

5,495

69

103,472

0

(2,848)

(4,228)

(523)

(11,695)

19,210

51,422

4,147

186

3,649

(4,137)

0

(23,431)

1,358

69

80,041

Year ended 31 December 2011 Balance at 1 January 19,210 51,422 4,147 186 3,649 1,358 69 80,041 Additions 0 2,646 578 106 848 248 2 4,428 Revaluations (1,120) (838) 0 0 0 0 0 (1,958) Disposals 0 0 (3) (38) (36) 0 0 (77) Depreciation expense 0 (1,646) (667) (73) (1,284) (259) 0 (3,929) Balance at 31 December At 31 December 2011 Cost or fair value Accumulated depreciation and impairment Net carrying amount At 1 January 2010 Cost or fair value Accumulated depreciation and impairment Net carrying amount

18,090

51,584

4,055

181

3,177

1,347

71

78,505

18,090

51,627

8,948

720

14,401

5,743

71

99,600

0

(43)

(4,893)

(539)

(11,224)

(4,396)

0

(21,095)

18,090

51,584

4,055

181

3,177

1,347

71

78,505

19,210

51,855

7,791

647

14,742

5,262

65

99,572

0

(1,542)

(3,608)

(445)

(10,537)

(3,872)

0

(20,004)

19,210

50,313

4,183

202

4,205

1,390

65

79,568

Year ended 31 December 2010 Balance at 1 January 19,210 50,313 4,183 202 4,205 1,388 65 79,566 Additions 0 3,056 657 62 963 235 4 4,977 Revaluations 0 0 0 0 0 0 0 0 Disposals 0 (379) (14) 0 0 0 0 (393) Depreciation charge for the year 0 (1,568) (679) (78) (1,519) (265) 0 (4,109) Balance at 31 December At 31 December 2010 Cost or fair value Accumulated depreciation and impairment Net carrying amount

19,210

51,422

4,147

186

3,649

1,358

69

80,041

19,210

54,270

8,375

709

15,344

5,495

69

103,472

0

(2,848)

(4,228)

(523)

(11,695)

(4,137)

0

(23,431)

19,210

51,422

4,147

186

3,649

1,358

69

80,041

Revaluations Land and buildings have been valued by J Dunckley FPINZ, an independent registered valuer, of DTZ New Zealand Ltd with an effective date of 31 December 2011. Land and buildings with a carrying amount of $54,713,000 (2010: $59,271,000) are owned by the Crown. These were first recognised on 1 January 1995. Although legal title has not been transferred, Otago Polytechnic has assumed all normal risks and rewards of ownership.

46

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011 9. INTANGIBLE ASSETS

POLYTECHNIC

GROUP

Course Course Development Computer Development Computer costs Software Total costs Software Total $’000 $’000 $’000 $’000 $’000 $’000 At 1 January 2011 Cost (gross carrying amount) 3,764 5,658 9,422 3,764 5,658 9,422 Accumulated amortisation (2,208) (3,630) (5,838) (2,208) (3,630) (5,838) Net carrying amount

1,556

2,028

3,584

1,556

2,028

3,584

ear ended 31 December 2011 Y Balance at 1 January Additions Impairments A mortisation expense

1,556 624 (126) (457)

2,028 1,248 (30) (503)

3,584 1,872 (156) (960)

1,556 624 (126) (457)

2,028 1,248 (30) (503)

3,584 1,872 (156) (960)

Balance at 31 December

1,597

2,743

4,340

1,597

2,743

4,340

t 31 December 2011 A Cost (gross carrying amount) Accumulated amortisation

4,388 (2,791)

6,875 (4,132)

11,263 (6,923)

4,388 (2,791)

6,875 (4,132)

11,263 (6,923)

Net carrying amount

1,597

2,743

4,340

1,597

2,743

4,340

At 1 January 2010 Cost (gross carrying amount) Accumulated amortisation

4,386 (2,638)

5,221 (3,309)

9,606 (5,947)

4,386 (2,638)

5,221 (3,309)

9,606 (5,947)

Net carrying amount

1,748

1,912

3,659

1,748

1,912

3,659

ear ended 31 December 2010 Y Balance at 1 January Additions Impairments A mortisation expense

1,748 543 (83) (652)

1,912 628 (19) (493)

3,659 1,172 (102) (1,145)

1,748 543 (83) (652)

1,912 628 (19) (493)

3,659 1,172 (102) (1,145)

Balance at 31 December

1,556

2,028

3,584

1,556

2,028

3,584

t 31 December 2010 A Cost (gross carrying amount) Accumulated amortisation

3,764 (2,208)

5,658 (3,630)

9,422 (5,838)

3,764 (2,208)

5,658 (3,630)

9,422 (5,838)

Net carrying amount

1,556

2,028

3,584

1,556

2,028

3,584

47

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011

12. LOANS AND BORROWINGS

10. TRADE AND OTHER PAYABLES POLYTECHNIC

GROUP

2011 2010 2011 2010 $’000 $’000 $’000 $’000

Trade payables 3,848 Income in advance 1,480 Other related parties (note 16) 179 Interest payable 0

3,530 1,543 411 0

3,848 1,480 179 0

3,530 1,543 411 0

5,507

5,484

5,507

5,484

Trade payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of trade and other payables approximates their fair value. Income in advance relates to student fees for programmes that continue into the following financial year. For terms and conditions relating to related parties refer to note 16.

POLYTECHNIC

2011 2010 2011 2010 $’000 $’000 $’000 $’000 Current Westpac Bank Loan 0 0 0 0 0 Non-current Westpac Bank Loan

0

0 100

POLYTECHNIC

GROUP

2011 2010 2011 2010 $’000 $’000 $’000 $’000 Employee Entitlements Annual and discretionary leave 1,543 1,462 1,543 1,462 Long service leave 159 140 159 140 Retirement leave 123 122 123 122 Sick leave 90 93 90 93 Other entitlements 817 398 817 398 2,732

2,215

2,732

2,215

Current portion 2,563 Non-current portion 169

2,060 155

2,563 169

2,060 155

2,732

2,215

2,732

2,215

48

Otago Polytechnic Te Kura Matatini ki Otago

0 0

0 100

0 100

0 100

0 100

0 100

The Westpac Bank loan is secured with a negative pledge and operates as a multi-option credit line facility. POLYTECHNIC

11. EMPLOYEE ENTITLEMENTS

GROUP

GROUP

2011 2010 2011 2010 $’000 $’000 Maturity analysis and effective interest rates Less than one year 0.00% 0.00% 0 0 Later than one year but not more than five years 3.75% 3.75% 0 100 Secured loan covenants

0 100

The Polytechnic is required to ensure that the following financial covenant ratios for the secured Westpac loan is achieved during the year: > Cash operating ratio (cash inflows from operations/cash outflows from operations) not to be less than 1.11 > Gearing ratio (gross debt/gross debt + equity) not to be greater than 9% In the event that these covenants are breached, indicating that the operation or long-term viability of the Polytechnic is at risk, the Secretary for Education will seek satisfactory explanations of the breach from the Polytechnic’s Council.


Notes to the Financial Statements for the year ended 31 December 2011 13. EQUITY

14. FINANCIAL INSTRUMENT RISKS POLYTECHNIC

GROUP

2011 2010 2011 2010 $’000 $’000 $’000 $’000 Retained Earnings At 1 January 45,143 42,163 45,678 42,544 Net Surplus/(Deficit) 3,111 2,110 3,342 2,264 Net change in Trust and Special Funds (11) 0 (11) 0 Conversion of Suspensory Loan (refer note 15 below) 1,000 800 1,000 800 Receipt of Distinctive Contribution Funding 0 70 0 70 At 31 December 49,243 Suspensory Loan At 1 January 5,185 Conversion of Suspensory Loan (refer note 15 below) (1,000)

45,143

50,009

45,678

5,985

5,185

5,985

(800)

(1,000)

(800)

4,185

5,185

31,428 (95)

31,333 (1,958)

31,428 (95)

0

0

0

At 31 December 29,375

31,333

29,375

31,333

Trust Funds At 1 January 397 Receipts to funds 117 Payments from funds (104)

398 73 (74)

397 117 (104)

398 73 (74)

At 31 December

410

397

410

397

Special Funds At 1 January Receipts to funds Payments from funds At 31 December

84 3 (5) 82

83 5 (4) 84

84 3 (5) 82

83 5 (4) 84

Total Equity 83,294

82,142

84,061

82,677

Asset Revaluation Reserve At 1 January 31,333 Revaluation gains/(losses) (1,958) Reduction in reserve on disposal/transfer 0

Market risk Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Polytechnic has transactional currency exposures arising from purchases of capital equipment by the Polytechnic’s academic departments and from book purchases by its library in currencies other than the Polytechnic’s functional currency. The Polytechnic’s exposure to foreign currency risk is minimal.

5,185

At 31 December 4,185

The Polytechnic’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Polytechnic has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature to be entered into.

Trust funds comprise scholarship and other funds held on behalf of students and staff. Special funds comprise student-related equity and support funds. The use of some of these funds is restricted.

Interest rate risk Interest rate risk is the risk that the fair value of a financial instrument will fluctuate, or the cash flows from a financial instrument will fluctuate, due to changes in market interest rates. The Polytechnic’s exposure to market risk for changes in interest rates relates primarily to the Polytechnic’s long-term debt obligations, refer to note 12 for interest rates on Otago Polytechnic borrowings. If interest rates on borrowings at 31 December 2011 had fluctuated by plus or minus 0.5%, the effect would have been to decrease/ increase the surplus by $0 (2010: $1,000) as a result of higher/lower interest expense on floating rate borrowings. Credit risk Credit risk is the risk that a third party will default on its obligation to the Polytechnic, causing the Polytechnic to incur a loss. The Polytechnic has no significant concentrations of credit risk, as it has a large number of credit customers, mainly students. The Polytechnic invests funds only with registered banks and its investment policy limits the amount of exposure to any one institution. There is no collateral held as security against these financial instruments. The advance to the Dunedin City Tertiary Accommodation Trust is for strategic purposes and considered to be low risk. Liquidity risk Liquidity risk is the risk that the Polytechnic will encounter difficulty raising liquid funds to meet commitments as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through committed credit facilities. The Polytechnic aims to maintain flexibility in funding by keeping committed credit lines available. The Polytechnic has a maximum amount that can be drawn down against its multi-option credit line facility of $3.38m. There are no restrictions on the use of this facility.

49

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011 Maturity analysis of financial assets and liabilities

arrying C amount

Current

1-3 months

3-12 months

More than 12 months

1,638 1,083

0 493

0 253

0 0

Total financial assets 3,467

2,721

493

253

0

rade and other payables 5,508 T Loans and borrowings (current) 0 Loans and borrowings (non-current) 0

5,508 0 0

olytechnic 2011 P Cash and cash equivalents 1,638 Trade and other receivables 1,829

Total financial liabilities 5,508 5,508

0 0 0

0 0 0

0 0 0

0

0

0

roup 2011 G Cash and cash equivalents 1,658 Trade and other receivables 1,878

1,658 1,132

0 493

0 253

0 0

Total financial assets

2,790

493

253

0

3,536

rade and other payables 5,508 T Loans and borrowings (current) 0 Loans and borrowings (non-current) 0 Total financial liabilities

5,508 0 0

5,508 5,508

0 0 0

0 0 0

0 0 0

0

0

0

olytechnic 2010 P Cash and cash equivalents Trade and other receivables

90 960

90 442

0 180

0 339

0 0

Total financial assets

1,050

532

180

339

0

rade and other payables 5,530 T Loans and borrowings (current) 0 Loans and borrowings (non-current) 100 Total financial liabilities

5,530 0 0

5,630 5,530

0 0 0

0 0 0

0 0 100

0

0 100

roup 2010 G Cash and cash equivalents Trade and other receivables

107 960

107 442

0 180

0 339

0 0

Total financial assets

1,067

549

180

339

0

rade and other payables 5,530 T Loans and borrowings (current) 0 Loans and borrowings (non-current) 100 Total financial liabilities

50

5,530 0 0

5,630 5,530

Otago Polytechnic Te Kura Matatini ki Otago

0 0 0

0 0 0

0 0 100

0

0 100


Notes to the Financial Statements for the year ended 31 December 2011 15. COMMITMENTS AND CONTINGENCIES Operating lease commitments The Polytechnic has entered into commercial leases on certain items of property, plant and equipment where it is not in the best interest of the Polytechnic to purchase these assets. These leases have an average life of three years with renewal terms included in the contracts. Renewals are at the option of the specific entity that holds the lease. There are no restrictions placed upon the lessee by entering into these leases. Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows: POLYTECHNIC

GROUP

2011 2010 2011 2010 $’000 $’000 $’000 $’000

Within one year 505 After one year but not more than five years 1,371 More than five years 586

468

505

468

1,177 788

1,371 586

1,177 788

2,462 2,433 2,462

2,433

Capital commitments At 31 December 2011 the Polytechnic had total commitments of $1,360,000 for major building upgrades at the Forth Street campus and the new Student Management System (2010: $2,076,000 relating to the Creative Precinct and other major building upgrades at the Forth Street campus). Legal claim Otago Polytechnic has no unresolved contingent matters as at balance date. Contingent Liability In 2008 Otago Polytechnic received a suspensory loan amount of $5.985m from the Crown for capital projects for property rationalisation. The first $1.3m of the loan was converted to equity in two tranches in 2010 and 2011 and the remaining balance will be converted between 2012 and 2014 providing the Polytechnic can demonstrate it has met the required objectives of the loan. Any objectives not met will result in certain amounts being recognised as loan liabilities to the Crown. As it was deemed likely that all objectives will be met, the full loan was recognised as equity in 2008.

51

Otago Polytechnic Te Kura Matatini ki Otago

Unquantifiable Contingencies The Polytechnic and group is a participating employer in two Defined Benefit Plan Contributors Schemes (the Schemes), which are multi-employer defined benefit schemes. If the other participating employers ceased to participate in the scheme the Polytechnic and group could be responsible for any deficit of the Schemes. Similarly, if a number of employers ceased to participate in the schemes the Polytechnic and group could be responsible for an increased share of the deficit. For the year ended 30th June 2011, the Government Superannuation Fund had an after tax surplus of $335.6m. As this is a multi-employer scheme the Polytechnic is unable to calculate its share of the surplus. The Polytechnic also has one employee contributing to the National Provident Fund defined benefit scheme.


Notes to the Financial Statements for the year ended 31 December 2011 16. RELATED PARTY DISCLOSURE Crown Otago Polytechnic is a wholly owned entity of the Crown. The Government influences the role of the Polytechnic and group as well as being a major source of revenue. The Polytechnic and group enters into numerous transactions with government departments and other Crown agencies on an arm’s length basis and where those parties are only acting in the course of their normal dealings with the Polytechnic and group. These transactions are not considered to be related party transactions.

Inter-group During the year the Polytechnic entered into transactions with The Open Education Resource Foundation Ltd (OER) on normal commercial terms and conditions. OER also has a current account with the Polytechnic ($150,000 in 2011, $48,000 in 2010) which is interest free. During the year, Otago Polytechnic had representation on the board of trustees of the Dunedin City Tertiary Accommodation Trust. Otago Polytechnic receives no remuneration for these services.

Councillors The following transactions were carried out with related parties: 2011

Purchased by Purchased from Owed by Owed to Polytechnic Polytechnic Polytechnic at Polytechnic at during year during year balance date balance date

Value of transactions $’000

2010

Purchased by Purchased from Owed by Owed to Polytechnic Polytechnic Polytechnic at Polytechnic at during year during year balance date balance date Value of transactions $’000

Ako Aotearoa 0 5 0 1 0 11 0 0 Peter Coolbear (D) Tom Prebble (D) Central Otago District Council 25 0 0 0 Malcolm McPherson (M)

29 0 0

0

Delta Utility Services Ltd 0 0 0 0 7 33 0 32 Rachel Walker (SM) (2010 only) Dunedin City Council 244 86 10 1 Rebecca Williams (SM) Chris Staynes (CM)

225 183

0

49

Gallaway Cook Allan 0 2 0 0 1 0 1 0 Kathy Grant (A) Human Resources Institute of NZ 0 0 0 0 5 0 0 0 Rachel Walker (BM) (2010 only) Otago Chamber of Commerce 16 7 0 0 John Christie (CE) Chris Staynes (D)

19 13

5

1

Presybterian Support Otago 18 0 0 0 6 0 0 0 Gillian Bremner (CE)

Polson Higgs Ltd 0 0 0 0 3 2 0 0 Graham Crombie (D) (2010 only)

52

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011

2011 Purchased by

Purchased from Polytechnic during year

Owed by Owed to Purchased by Purchased from Polytechnic Polytechnic at Polytechnic at Polytechnic during year balance date balance date during year

Value of transactions $’000

0

Research and Education 55 Advanced Network New Zealand Ltd Susie Johnstone (BM)

0

2010

Owed by Owed to Polytechnic Polytechnic at Polytechnic at during year balance date balance date Value of transactions $’000

0

Scott Technology Ltd 0 0 0 0 2 0 0 0 Chris Staynes (D) Southern District Health Board 195 Michael Hammond (SM) (2010 only) Susie Johnstone (BM & DC) Malcolm McPherson (BM)

13

67

1

94

5

5

0

Tertiary Accord of New Zealand 78 0 0 0 78 0 0 0 Phil Ker (D) Te Tapuae O Rehua Ltd Phil Ker (D) University of Otago Kathy Grant (CM)

50 0 0 0 50 0 0 0 0

0

0

0

1,793

308

400

58

681

113

77

3

2,312

555

411

140

A = Associate, BM = Board Member, CE = Chief Executive, CM = Council Member, D = Director, DC = Deputy Chair, M = Mayor, SM = Staff Member Outstanding balances at year-end are included in notes 5 and 10. No provision has been required, nor any expense recognised, for impairment of receivables from related parties. No amounts were forgiven to related parties. POLYTECHNIC AND GROUP 2011 2010 $’000 $’000 Key management personnel compensation Salaries and other short-term employee benefits 2,193 1,929 Post-employment benefits 56 46

2,249

1,975

Key management personnel includes all members of Council, 12 members of Leadership Team and the Director of Open Education Resource Foundation Ltd. Councillor fees are disclosed separately in Note 18. There are close family members of key management personnel employed by the Polytechnic. The terms and conditions of those arrangements are no more favourable than the Polytechnic would have adopted if there were no relationship to key management personnel.

53

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011 17. EVENTS AFTER THE BALANCE SHEET DATE There were no post-balance date events. (None as at 31 December 2010)

18. COUNCILLOR FEES The following fees were earned by members of the Council during the year:

POLYTECHNIC AND GROUP

2011 2010 $ $

Gillian Bremner 9,998 John Christie 9,998 Meegan Cloughley 0 Mike Collins 0 Peter Coolbear 5,582 Graham Crombie 0 Kathy Grant 28,500 Mike Hammond 0 Susie Johnstone 18,160 Malcolm Macpherson 9,998 Jane Mitchell 0 Rebecca Williams 14,400 Dale Parsons 0 Tom Prebble 2,750 Mark Ryan 0 David Salter 0 Chris Staynes 9,998 Nicola Taylor 0 Rachel Walker 0

6,667 6,667 1,280 1,920 5,000 8,450 19,500 2,240 14,080 7,947 1,600 13,120 640 0 3,600 2,240 8,587 2,240 960

19. CHILDCARE CENTRE

POLYTECHNIC AND GROUP

Actual Budget Actual 2011 2011 2010 $000 $000 $000 Revenue Ministry grants 318 349 368 Guardians and student income 154 182 165 Total Revenue 472

531

533

Expenditure Employment costs 440 Other operating costs 67

461 70

467 69

Total Expenditure 507

531

536

Surplus/(Deficit) (35)

0

(3)

The Childcare Centre is part of the provision of student and staff services. No capital charge has been applied by the Polytechnic to the Centre. The Statement of Financial Performance for the Childcare Centre has been extracted from the Statement of Financial Performance for Otago Polytechnic. POLYTECHNIC AND GROUP 2011 2010 hours hours Statistics Under two year olds 8,041 13,047 Over two year olds 18,475 10,475 Free funded 3 years and over 12,439 13,913

20. CAPITAL MANAGEMENT

109,384 106,738 The Polytechnic’s capital is its equity which is comprised of retained earnings and reserves. Equity is represented by net assets. The Polytechnic manages its revenues, expenses, assets, liabilities and general financial dealings prudently. The Polytechnic’s equity is largely managed as a by-product of managing income, expenses, assets, liabilities and general financial dealings. The objective of managing the Polytechnic’s equity is to ensure that the Polytechnic effectively achieves its goals and objectives contained within its Investment Plan, whilst remaining a going concern.

54

Otago Polytechnic Te Kura Matatini ki Otago


Notes to the Financial Statements for the year ended 31 December 2011 21. EXPLANATION OF MAJOR VARIANCES AGAINST BUDGET Group Statement of Financial Performance Student tuition fees Student tuition fees were lower than budgeted by $1,143k due to several programmes not delivering expected volumes, plus a classification change to Modern Apprentices revenue (now correctly treated as government funding). Other income Other income was greater than budgeted by $889k as a result of increased research, consultancy and student services revenue streams, as well as additional commercial activities. Employment expenses Employment expenses are $498k higher than budgeted due to greater than expected redundancy and collective contract settlement values, plus additional staffing for commercial activities. Depreciation and amortisation expense Depreciation and amortisation expense is $581k lower than budgeted due to a lower spend on course development capex plus an overstatement of the rates used to model the budgeted expense on building additions. Group Statement of Financial Position Other Financial Assets Other Financial Assets are $679k higher than budgeted due to a prior year catch up of values for the associate entity Dunedin City Tertiary Accommodation Trust and for a good result for both 2010 and 2011.

55

Otago Polytechnic Te Kura Matatini ki Otago

Property, plant and equipment Property, plant and equipment is $4,735k lower than budgeted with lower spends in building, computers and library books (partially substituted to intangibles as below). In addition, the December 2011 revaluation reduced the values from both land and buildings (contrary to the expectation of an increase). Intangible assets Intangible assets are $957k higher than budgeted with expenditure on software for the new Student Management System (SMS) project. This was partially budgeted for under PPE categories (incorrectly) and increased in scope. Trade and other payables Trade and other payables was $808k higher than budgeted due to the new SMS project in progress at year-end plus accruals made for contracted clinical and external delivery costs not settled. Group Statement of Cash Flows Net cash flows Working capital changes resulted from lower student fee receipts and higher employment costs, greater expenditure on investment activities, especially intangible assets and consequently less was available to increase cash balances.


56

Otago Polytechnic Te Kura Matatini ki Otago


Keeping it green For this annual report we’ve changed the paper we use to Evolve Recycled from BJBall Papers, which is produced using 100% recycled, FSC certified, PCF pulp, and is manufactured using a strict ISO 14001 environmental management system. Doesn’t mean much to you? To us it means it’s better for the environment and as the end user, you’re a part of our effort to be as sustainable as we can, in everything we create. We’d also like to say a big thanks to Southern Colour Print, Isabella Harrex for the majority of our photography, Dr Barry Law from The Sustainability Company for his consultation on the reporting framework, and all Otago Polytechnic staff who contributed to this report.


N E W

Z E A L A N D

Forth Street, Private Bag 1910 Dunedin 9016, New Zealand Telephone + 64 3 477 3014 Facsimile + 64 3 471 6870 Freephone 0800 762 786

www.op.ac.nz

2012 Annual Report  

2012 Otago Polytechnic Annual Report

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