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2008 Annual Report

NOTE 14 RENT HOLIDAY LIABILITY

This represents amounts received from the landlord for a rent holiday. The accrual is being released having regard to the expected life of the lease of 9 years.

NOTE 15 RECONCILIATION OF THE NET SURPLUS FROM OPERATIONS WITH
THE NET CASH FLOWS FROM OPERATING ACTIVITIES

		2008 $000's	2007 $000's


Reported surplus		1,551	457


Add (less) non-cash items:
-	Allocation of receipt of rent free period	(13)	(13)
-	Depreciation/amortisation	336	364

		323	351


Add (less) movement in working capital:
-	Increase (decrease) in creditors	153	(9)
-	Decrease (increase) in receivables	(1,940)	42

		(1,787)	33

Net cash flows from operating activities		87	841

NOTE 16 LEASE COMMITMENTS

The Commission has the following operating lease commitments. These amounts are the total of minimum future lease payments under the Commission’s non-cancellable operating leases.

	2008 $000's	2007 $000's


- Not later than 1 year	655	573
- Later than 1 year and not later than 5 years	2,347	2,619
- Later than 5 years	-	382

The Commission rents its premises under an operating lease that ends on 1 February 2013. This lease gives the Commission the right to renew the lease for 3 years subject to a mutually agreed re-determination of the lease rental. The lease specifies that the Commission is required to make good the premises to the original condition on termination of the lease. The make good amount is estimated at $20,000.

NOTE 17 CAPITAL COMMITMENTS

Estimated capital expenditure contracted for at balance date but not provided for: Nil (2007 – $30,238).

NOTE 18 CONTINGENT LIABILITIES AND CONTINGENT ASSETS CONTINGENT LIABILITIES

CONTINGENT LIABILITIES

There are no contingent liabilities at balance date. (2007 – Nil).

CONTINGENT ASSETS

For the Tranz Rail insider trading matter, the Commission expects to receive approval for further costs, already incurred and likely to be incurred, pending the final distribution decision of the High Court. The final amount of any such distribution to the Commission under section 19 of the Securities Markets Act 1988 is contingent on a decision of the High Court.

NOTE 19 PROFESSIONAL INDEMNITY INSURANCE

The Commission has effected a professional indemnity insurance policy to provide cover for Members and employees of the Commission as the Commission performs its duties and statutory functions.

NOTE 20 SUBSEQUENT EVENTS

There were no material events subsequent to balance date that would affect the interpretation of the financial statements or the performance of the Commission. (2007 – Nil)

NOTE 21 TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH OTHER ENTITIES WITHIN THE CROWN

The Commission is an independent Crown entity under the Crown Entities Act 2004. The Commission is wholly owned by the Crown and the Government is its major source of revenue.

The Commission has entered into a number of transactions with other entities within the Crown on an arm's length basis. Where those parties are acting in the course of their normal dealings with the Commission, related party disclosures have not been made for transactions of this nature. NZ IFRS provides an exemption for public entities from having to make disclosures in respect of transactions between related parties subject to common control or significant influence by the Crown for transactions that would occur within a normal supplier or client/recipient relationship on terms and conditions no more or less favourable than those which it is reasonable to expect the entity would have adopted if dealing with that entity at arm's length in the same circumstances. Therefore, in accordance with NZ IFRS such transactions are not disclosed in these financial statements.

As indicated in the statement of financial performance, income is received from a Government grant and from administrative services provided to the Takeovers Panel.

TRANSACTIONS WITH SUPPLIERS

During the year the Commission incurred expenses of:

		Transaction value Year ended 30 June		Balance outstanding Year ended 30 June
	Transaction	2008	2007	2008	2007

A.M. Cotton and J.M.G. Perry	Genesis Energy	57,612	55,623	6,044	6,149
D.A. Jackson	New Zealand Institute of Charted Accountants	4,584	6,734	-	-
M. Chen	Chen Palmer Barristers and Solicitors	-	1,021	-	-
J.M.G. Perry	Kiwi Income Property Trust Limited	504,511	524,866	-	-
Phillip Meyer	Enterprise New Zealand Trust	55,000	85,000	-	-

Genesis Energy, a firm of which A.M. Cotton, Member of the Commission is a director and J.M.G. Perry, Member of the Commission until April 2008, is a director. The expenses related to office electricity charges which were charged on normal commercial terms.
New Zealand Institute of Chartered Accountants, of which D.A. Jackson, Member of the Commission, was a member of the Executive Board until September 2007. The expenses relating to membership fees, course fees and publications which were charged on normal commercial terms.
Chen Palmer Barristers and Solicitors, of which M. Chen, Member of the Commission, is a partner. Prior year expenses related to legal advice were charged on normal commercial terms.
Kiwi Income Property Trust Limited, of which J.M.G. Perry, Member of the Commission until April 2008, is a director. The expenses related to office rent and maintenance which were charged on normal commercial terms.
Enterprise New Zealand Trust, of which Phillip Meyer, the husband of the Chairman is a trustee on a voluntary basis. Expenses relate to sponsorships of investment education in schools.

These transactions are on normal commercial terms and there are no other material transactions between Members and the Commission in any capacity other than that to which they were appointed.

No related party debts have been written off or forgiven during the year.

COMPENSATION OF KEY PERSONNEL

Key personnel comprise the Chairman, Members of the Commission and the senior management team.

	2008 $000's	2007 $000's


Short term employee benefits:
- Members' fees	318	323
- Chairman's salary	384	331
- Chairman's motor vehicle benefit	34	34
- Senior management team remuneration	1,070	1,098

	1,806	1,786

COMPOSITION OF MEMBERS' FEES

Members fees are paid on the basis of time spent on the work of the Commission and were:.

	2008 $000's	2007 $000's


C.A.N. Beyer	43	33
M. Chen	21	17
A.M. Cotton	54	64
K.D. Dunstan	49	61
J.L. Holland	29	8
D.A. Jackson	14	21
L.A.J. Kavanagh	—	21
J.M.G. Perry	30	43
C.A. Quinn	46	14
N.O. Todd	32	41

	318	323

EMPLOYEE REMUNERATION

During the year, the number of employees of the Commission, not being Members, who received remuneration and other benefits in excess of $100,000, were:

Renumeration $	Number of Employees 2008	Number of Employees 2007


260,001 to 270,000	1	—
250,001 to 260,000	—	—
240,001 to 250,000	—	1
230,001 to 240,000	1	—
220,001 to 230,000	—	—
210,001 to 220,000	1	1
200,001 to 210,000	—	—
190,001 to 200,000	—	1
180,001 to 190,000	—	—
170,001 to 180,000	2	1
160,001 to 170,000	—	1
150,001 to 160,000	—	1
140,001 to 150,000	1	—
130,001 to 140,000	1	1
120,001 to 130,000	3	2
110,001 to 120,000	1	—
100,001 to 110,000	4	5

No compensation or other benefits were paid to persons who ceased to be Members or employees during the year in relation to that cessation.

NOTE 22 BUDGET VARIANCES

Operating Income
Significant variances from budget were:
1. reduced income from services to Takeovers Panel due to renegotiated arrangements where Panel has started taking direct responsibility for employing its staff
2. reduced exemptions and authorisation fees due to market activity impacts.
Operating Expense
Significant variances from budget were the increased personnel expenses due to higher than expected recruitment of new and replacement staff for the Commission's increasing workloads.
Litigation income and expenditure
Significant variances from budget were the reduced litigation expenses, and hence income, due to lower than expected litigation activity.