numbers mag autumn 2015 issuu

NUMBERS Autumn 2015 bull 1 wwwstaplesrodwayconz

Charlie Staplesfrank r

odway

A STAPLES RODWAY PUBLICATIONNo 33 AUTUMN 2015

wwwstaplesrodwayconz

Staples Rodway is an independent member of Baker Tilly International

KEEPING IT IN THE FAMILYEmploying family members

MOVING amp SHAKINGStaples Rodway Christchurch moves in more ways than one

INVESTMENT NEWSA new strategic alliance

HAPPY ANNIVERSARYSTAPLES RODWAY TURNS 70

2 bull NUMBERS Autumn 2015

No 33 AUTUMN 2015

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

DIRECTORSAUCKLAND David Searle (09) 373 1128

HAMILTON Rosanna Baird (07) 834 6800

TAURANGA Chris Downey (07) 578 2989

HAWKES BAY Stuart Signal (06) 878 7004

TARANAKI Chris Lynch (06) 757 3155

WELLINGTON Robert Elms (04) 472 7219

CHRISTCHURCH Ross Erskine (03) 343 0599

IN THIS ISSUE2 Staples Rodway celebrates 70 year anniversary

4 An exciting development for investors

5 Have you got your nz domain

6 Staples Rodway launches Women in Business

6 Taranaki conquers South Island

7 Associate Investments

8 Buying a business Do your homework

10 Parent company made to pay its subsidiaries debts

12 Keeping it in the family Employing family members

14 Spotting cold-calling investment offers and big win scams

15 Business mentoring

16 Moving and shaking The Christchurch offices moves in more ways than one

18 Start up success Finding the way

20 The great interest rate compression

22 Under the spotlight Companies financial reporting

24 Exploring and diving in Central America

T HE FOUNDATIONS OF OUR BUSINESS were laid when Frank Rodway and Charlie Staples first met in 1931 while they both worked at

the Land and Income Tax Department ndash the predecessor of todayrsquos Inland Revenue Department

During lunch hours Charlie would practise his banjo skills and on one such occasion someone suggested he ask the lsquomusical blokersquo Frank Rodway for chord advice It marked the beginning of a lifelong friendship Not only did the pair share a passion for music and a background in accounting their aspirations to establish their own practice too were similarly aligned

In 1945 Charlie left his job to establish his own practice in a modest office on the 6th floor of the old Colonial Mutual Life Assurance building on Queen Street He was joined by Frank and over the ensuing years their practice went from

strength to strength The Staples name became synonymous with tax expertise through publication of the Staples Tax Guide Originally written by Charlie in 1940 it soon became the lsquotax biblersquo for generations of Kiwi business people students of taxation and other professionals The Staples name today remains synonymous with taxation with the 75th edition of the Staples Tax Guide to be published by Thomson Reuters this year

In 1970 John Wadams joined the firm As well as significantly building up the business John made a number of important changes including the introduction of hourly rates for staff time John oversees the firmrsquos relationship with many of our longest standing clients who remain a valued part of our business today

In February 1986 in keeping with the trend of the day for simple uncompli-cated names the name of the practice changed from Staples Rodway amp Co to

STAPLES RODWAY CELEBRATES

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

70 YEARANNIVERSARY

1945 Charlie establishes

the firm

1986 Name changed to Staples

Rodway Charlie passes away

1987 Frank retires

1970 John Wadams joins the firm

A BRIEF HISTORY OF STAPLES RODWAY

Staples Rodway Auckland Directors in 1986 (left) amp 1993

1987 Frank retires

1989 Staples Rodway joins Summit International (now Baker Tilly)

Staples Rodway Sadly 1986 also marked the year in which Charlie became ill and passed away Frank retired the following year

The firmrsquos evolution continued in 1989 when Staples Rodway joined Summit International which later became the Baker Tilly International group ndash the eighth largest accounting network in the world

1999 saw the beginnings of todayrsquos national network with the Auckland firm linking up with others in Hamilton New Plymouth and Hawkes Bay When Tauranga Christchurch and Wellington joined the group over the following years a true national brand was established and thatrsquos reflected in the broad range of services offered

Clients now have access to business advisory tax audit information

technology and many more specialist services across a wide range of sectors Technology plays a key part in delivering services to clients anywhere any time and from any device

Peter Guise Chairperson of Staples Rodway New Zealand notes the signifi-cance of this special 70 year achievement This is a milestone in the long and proud history of Staples Rodway and a strong testament to the long standing relationships with our clients and the wider business community along with our commitment to continuous innovation and our talented team of individuals throughout the country

If the last 70 years are anything to go by the future certainly looks bright for Staples Rodway

The men behind the name - Charlie Staples amp Frank Rodway

LEFT One of the first editions of the Staples Tax GuideRIGHT Music and tax were the catalysts for the

friendship between the men

1999 National network established with Hamilton

New Pymouth amp Hawkes Bay firms

2013 Wellington joins

the group

2003 Christchurch amp Tauranga

join the network


Staples Rodway Asset Management announces a new strategic alliance

T HE STAPLES RODWAY GROUP AND SBS Bank have announced a stra-tegic alliance to work together in the Investment Advisory amp

Management sector The strategic alliance will leverage the core competencies and strengths of banking and accountancy while at the same time enhance the offering from SRAM and FANZ by positioning each business in a market segment where it can grow strongly

Under the agreement SBS Bankrsquos Managed Funds and Investment Advisory business Funds Ad-

ministration New Zealand Limited (FANZ) will take a 50 shareholding in Staples Rodway Asset Management (SRAM) and SR Investment Man-agement (SRIM) effective 31 March 2015

FANZ will become the manager of Staples Rodwayrsquos KiwiSaver Scheme from 31 March 2015

The SRAM business will continue to run independently with its own Board

SBS Group Chief Executive Wayne Evans said the alliance represented an excit-ing time for the future of both businesses and their respective investors

ldquoWe will be looking to build on the strong platform and reputation that Staples Rodway Asset Management has built in the investment and advisory

space We believe FANZ can add value and lower costs for investors through our existing size capability and scale The strong SRAM proposition offered to investors with portfolios over $1 million in assets complements our existing capabilities and will be marketed to our New Zealand wide member baserdquo

Staples Rodway New Zealand Chairman Peter Guise welcomed the alliance noting SRAMrsquos current regional office coverage coupled with FANZrsquos resources would allow growth in both businesses

ldquoBoth SRAM and FANZ are long standing New Zealand businesses which are committed to providing customers with innovative products and exceptional service These common values are a great foundation and we are extremely optimistic about the future success of the relationshiprdquo

ldquoThe teams at each business have known each other professionally for over 20 years and there is a level of mutual respect between the two that augers well for the strategic alliancerdquo

The new strategic alliance will be focusing on adding value to all present and future client relationships

For additional information contact Peter Guise on 09 3090463 or your SRAM adviser

AN EXCITING DEVELOPMENT FOR INVESTORS

AN EXCITING DEVELOPMENT FOR INVESTORS Y OU SHOULD BE AWARE THAT any person or business can now get

shorter nz domain names ndash for example anynamenz - in addition to all existing registration options like lsquoconzrsquo lsquoorgnzrsquo and lsquonetnzrsquo

You should already have heard from your internet services provider about this change and what it means You will not want to miss out on any options which will expire on 30 March 2015 so you should read on for a reminder

You could have preferential eligibilityIf you already have a website or email address ending with nz you could be able to register or reserve the shorter nz version of your domain name before anyone else

To see if you have preferential eligibility talk to your nz provider or visit the Domain Name Commissionrsquos anynamenz site which also explains how you can go about registering or reserving the new kinds of domain names

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

If you donrsquot then the shorter version of your domain name will become available for someone else to register Even if this happens though your exist-ing domain name will still be yours as long as it remains registered to you

lsquoConflictedrsquo names dealt with at anynamenzSome nz domain names are lsquoconflictedrsquo which means theyrsquove been registered in at least two different second levels For example you might hold the conz version while another person might hold the netnz or orgnz version

If your name is conflicted yoursquore able to go to the Domain Name Commissionrsquos anynamenz site and lodge a preference for who might get the new shorter nz version of the name Therersquos no date or time limit for lodging a conflict preference

For more information about this change to nz domain names and what it means for you contact your provider or visit anynamenz

Following on from our article in the Spring 2014 issue of Numbers we wanted to remind you of a key date coming up in relation to the nz domain suffix

TIME IS RUNNING OUT

HAVE YOU GOT YOUR NZ DOMAIN

REMEMBER

Check your eligibility at anynamenz or by contacting your provider

If yoursquore eligible to register or reserve the short version of your name yoursquove only got until 1pm 30 March 2015 to take action

Registering is done through any nz provider Reserving is done on the anynamenz site

Anynamenz is also where you can lodge a conflict pref-erence if the short version of your name is conflicted


W ITH A KEEN APPRECIATION OF the impact of women on todayrsquos economy Staples Rodway Auckland has launched a new specialist

group directly focussed on helping women improve the success of their busi-nesses Our team involves women from all sectors of Staples Rodway including Business Advisory Corporate Advisory Audit Tax and Human Resources

The aim of the group is to provide great service mentoring and key introduc-tions for business women in a range of areas from fashion and food to information technology and charities

ldquoAs successful women we understand the challenges of being a female in business and we have ourselves overcome many of the hurdles that you are facingrdquo said Annette Azuma founder of Women in Business

The dedicated web page on the Staples Rodway website includes pertinent articles and monthly profiles of globally successful business women who are also giving back to society

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

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

Raffle prizes included a $250 Trelise Cooper voucher Guests left the evening with goodie bags with treats from our client Tasti Products and also Devonport Chocolates

All in all the evening was a success with very positive feedback from guests

STAPLES RODWAY LAUNCHES WOMEN IN BUSINESS

Next decade Impact of women on global economy estimated to equal that of Chinarsquos and Indiarsquos 1 billion+ populations

Next 5 years The total income of women globally will increase from US$13 trillion to US$18 trillion (twice the increase expected from China amp India combined)

By 2028 women will control approximately 75 of discretionary spending worldwide

Donna Vieira (Trelise Cooper) with prize winner Michelle Malone (NZTE)

ON THE 17TH OF FEBRUARY 41 Taranaki cyclists many from farming or rural backgrounds rode triumphantly into Bluff at the end of an 1100-kilometre journey from Picton

The Central Finance South Island Charity Ride raised more than $160000 for the Taranaki Rural Support Trust and New Plymouths Mellowpuff Charitable Trust in a bid to increase awareness around mental health and depression in the rural sector

The money raised by the riders will support rural families and their commu-nities when circumstances beyond their control lead to a climatic financial envi-ronmental or personal crisis Event convenor Darrell Nicholas says the benefits are ldquoreal and tangiblerdquo in that the funds raised will go directly towards providing more support personnel throughout rural Taranaki Every 20-kilometres biked has raised enough funding for one additional facilitator for the Rural Support Trust He says the increased awareness has also encouraged more farmers to lsquoopen uprsquo and realise that what theyrsquore experiencing is not a weakness but an illness

Nicholas says the idea was sparked over a couple of beers and a lengthy conversation ldquoA group of us had been riding for charity in the Round the Mountain Relay for a few years and had come to the conclusion that we wanted to tackle something bigger With the majority of us being rural it was natural for us to agree that the money needed to be put to practical use and to not just sit in a bank account I then did some research and found that more men die through suicide than are killed in road accidents or prostate cancer per annumrdquo He says since the decision was made the support for the cause has ldquosnowballedrdquo

For Staples Rodway Taranaki Director Marise James and her partners the decision to support the team was a no brainer ldquoThe cause is dear to my heart and fits well with our philosophy of supporting our clients in rural communitiesrdquo She says ldquoWhen we think about farming we think of a great outdoor lifestyle but in reality it can be an isolated tough place to be Your nearest neighbour can be several kilometres away The price of land is not cheap mortgages are huge and income can be erratic and seasonal Add to that the uncertainty of things beyond

TARANAKI CONQUERS SOUTH ISLAND


ASSOCIATE APPOINTMENTS

KYLIE HOLLARDBUSINESS ADVISORY SERVICES NEW PLYMOUTH

Kylie joined Staples Rodway (then called Ernst and Young) as a graduate Accountant in 1994 In 1999 Kylie decided to venture into the commercial sector to gain different accounting skills and progressed to becoming a Financial Accountant at McKechnie Metals After starting a family in 2003 she returned to Staples Rodway

With 21 years experience Kylie enjoys dealing with a range of business types and in essence says the process for all of them stem from the same principles but are adapted to the industry and size of the operation

Client contact is important to Kylie and she uses her commercial experience to help clients look at the processes within their businesses their accounting software and the information that it can generate and how it can add value to the business

Kyliersquos specialist services include small business software solutions including Accomplish Cashmanager Xero Accredo and Plusfactor Solvent and Insolvent Liquidations Budgeting and Business Planning Kylie has industry experience in Oil and Gas Manufacturing Building and Trades Retail and Wholesaling Operations

Kylie is married to Eddie and has 3 young children Jessie (11) Luke (9) and Ethan (6) Most of Kyliersquos free time is spent being involved in the kids school and sporting activities and helping out with the marketing of her familyrsquos gardening business

JULIE ROWLANDS HUMAN RESOURCES AND ORGANISATION DEVELOPMENT NEW PLYMOUTH

Julie joined Staples Rodway in 2012 after 20 years of operating her own successful consultancy business Rowlands and Associates where she specialised in business improvement and organisation development She has worked with a diverse range of organisations including the Civil Aviation Authority Fonterra Cavalier Bremworth Dairy Fresh and Carter Holt Harvey

Julie has significant skill in leadership development and coaching and has assisted many organisations through extensive change As an extremely experienced facilitator Julie is well recognised for her ability to work alongside people with respect and integrity

Julie pinpoints working on a significant change management process with Fonterra as well as facilitating a leadership development programme for Cavalier Bremworth as career highlights However Julie says the most important aspect of her career is building long term relationships with key clients that still exist today

In her spare time Julie loves to spend time with her two children and partner outdoors in the surf or relaxing at their beach house in Mokau Julie is also an avid traveller and has undertaken many trips abroad She says that her passion for people fuels her love for travel and there are still many more countries that she would like to explore

their control like the weather and market forces and many rural people can feel overwhelmed and alonerdquo

Collectively the group has ridden more than 30000-kilometres since leaving Picton Nicholas said the jubilant riders celebrated an emotional end to the ride with tears hugs kisses and high fives

Ninety percent of the participants had been personally impacted by suicide or depression in some way As a result of their commitment to increasing aware-ness of these issues not only have they raised a significant sum of money but they have created memories and forged firm friendships and for many it was life-changing he said

Staples Rodway Taranaki Director Marise James hands over a cheque for $3500 to the Central Finance Charity Ride team before their 1100-kilometre journey

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

Buying a business

do your homework


U NDERTAKING THOROUGH DUE DILIGENCE IS an important step before committing yourself and you should be prepared to renegotiate

or walk away if the findings are less than ideal

CASE STUDY ONE STEP BY STEPBACKGROUND We were recently approached by a client who was looking at a lifestyle change moving from a corporate environment to being her own boss Having found a lsquosolid businessrsquo and after months of negotiations on price her lawyer recommended that she approach us to help with due diligence before going unconditional on the deal

PROCESS We explained that what constitutes a lsquodue diligencersquo exercise can vary depending on the structure of the deal In this instance the agreement was to purchase shares in the business so our client would have been liable for any pre-existing liabilities including tax so a detailed check on all tax types was required Our due diligence would also have involved reviewing the histori-cal financial statements and any forecasts a thorough check on the inventory reviewing the fixed asset register employee contracts and lease details Also we would have reviewed customer contracts borrowings and the lists of aged debtors and creditors However we didnrsquot get that far

Early conversations with our client revealed that significant bank lending would be required to fund the purchase and if it wasnrsquot feasible for the banks to lend given her circumstances then there would be no point incurring the extra cost of the due diligence So as a starting point we obtained the financial state-ments for the business and worked with our client on preparing a financial model to forecast the cash flows in the business over the next three years and calculate the funding requirements Our forecast quickly demonstrated that the expected free cash flows were considerably less than the latest financial statements pro-vided by the vendor We advised our client to go through our assumptions with the vendor upon which it transpired that a number of lsquoadjustmentsrsquo had been made to the financial statements that the business had recently experienced a downturn and some changes would need to be made to achieve historical earnings

OUTCOME The vendor did not want to reduce the asking price for the busi-ness and he believed that he could turn the business around in a few months so both parties agreed to put the deal on hold and review again in six months It could have been a good opportunity for an experienced operator to negoti-

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

CASE STUDY TWO INSIDE KNOWLEDGEhellipBACKGROUND Our client had been a customer of the business being sold for many years and had agreed a deal with the vendor to buy the assets of his business with the final price payable being subject to adjustment following our due diligence

PROCESS Given the longstanding relationship between the vendor and pur-chaser it was important to obtain an independent perspective on the busi-ness removing emotion from the deal Staples Rodway undertook a detailed due diligence checking the inventory assets historical and forecast financial statements aging of the debtors and review of forward contracts We also reviewed employee contracts and property leases We dealt directly with the vendorrsquos financial controller with both the vendor and purchaser stepping back from the transaction A report summarising our findings recommended a number of amendments to the purchase price for obsolete stock and doubtful debts We also highlighted a number of issues with pending lease renewals

OUTCOME The purchase price was considerably reduced on the basis of our find-ings with our client negotiating a better deal Given our detailed understanding of the target business we were also able to provide advice on the tax treatment of the transaction and make amendments to the Sale and Purchase Agreement which allowed both parties to make savings

Due diligence is not simply a lsquotick the boxrsquo exercise It involves working with the purchaser to understand how the transaction is going to affect them and looking at the detail with that in mind We may be helping to determine if a busi-ness is viable or looking for areas to support a reduction in purchase price Our overriding intention is to procure the best outcome for our clients even if that means not going ahead with the deal

If you need any help with due diligence whether as a potential purchaser or as a vendor preparing for a sale feel free to contact Tracy Hickman on 09 373 1133 or tracyhickmanstaplesrodwaycom or contact your usual advisor

Article by Tracy HickmanSTAPLES RODWAY AUCKLANDtracyhickmanstaplesrodwaycom

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


Directors beware ndash unless you are careful to maintain a subsidiaryrsquos independence the parent company may be liable for the debts of its subsidiary That is the effect of a recent High Court decision invoking a rarely used provision in the Companies Act

Chapman Tripp in Auckland analyses the judgment and draws some practical advice from it

S ECTION 271 (1)(A) OF THE Companies Act 1993 (the Act) has been used only rarely and is unique to New Zealand law although Ireland

has a similar provisionIt creates an exception to the principle that a company is a legal entity in its

own right and that its shareholders are only liable for the companyrsquos debts to the extent of their shareholding Section 271 allows the Court to order the parent company of a company in liquidation to pay to the liquidators the whole or a part of all or any claims made against the subsidiary

THE CASEIn Lewis Holdings Ltd v Steel amp Tube Holdings Ltd the liquidators successfully obtained an order under Section 271 where

Lewis Holdings leased a property to Stube Industries Ltd (Stube) a wholly owned subsidiary of Steel amp Tube Holdings Ltd (Steel amp Tube)

the rent and rates under the lease were invoiced to and paid by Steel amp Tube and

decisions for Stube including a decision to renew the lease for a further 21 year term were made on the advice of Steel amp Tubersquos legal counsel without Stube obtaining independent legal advice When Stube was put into liquidation Lewis Holdings filed a proof of debt

as the unpaid landlord The liquidators then sought an order under section 271(1) (a) that Steel amp Tube be required to pay the whole of the claim (it being the only claim in the liquidation)

THE DECISIONSeveral factors led the Court to hold that the separate legal entity which was Stube was ldquodevoid of any capacity to conduct its own affairsrdquo

the subsidiary was being run essentially as a ldquodivisionrdquo of the parent company

decision-making considered the group as a ldquosingle unitrdquo rather than identi-fying the subsidiaryrsquos interests as distinct

the evidence of the CEO and CFO of the parent company both of whom were directors of the subsidiary company was that ldquothey treated the [leased] property both as to its benefits and liabilities as something that lay with [the parent company]rdquo

the subsidiary company did not where it ought to have obtain independent legal advice before entering into major transactions

the subsidiary had no employees of its own and used the parent companyrsquos employees and letterhead to conduct business

the subsidiary company was treated for accounting purposes as a division of

the parent company it had no separate bank account and invoices for rates and rent were addressed to and paid by the parent company

although the constitution allowed the directors to take into account the interests of the parent company (as provided for in section 131(2) of the Act) the Court found that the directors were still required to make a dis-tinction between the interests of the company and of the subsidiary when making decisions The Court acknowledged that it is common practice for a parent company to

be involved in the management of its subsidiary including appointing high-level managers to the subsidiaryrsquos board However in this case the level of involve-ment had been so large as to compromise the subsidiaryrsquos independence

The circumstances that gave rise to the subsidiaryrsquos liquidation were entirely attributable to the parent company because having created a 21 year obligation on Stube by renewing the lease it then withdrew the funding it had previously provided to pay the rent and rates

The Court also gave some weight to the argument that as the parent company was publicly listed and had a company solicitor it should have con-ducted the grouprsquos affairs in a way that gave effect to each entityrsquos separate legal personality rather than treating the group ldquoas a single economic enterpriserdquo

CHAPMAN TRIPP COMMENTSDirectors must be careful to ensure that a subsidiaryrsquos interests are kept distinct and that appropriate legal and financial arrangements are made if there is to be a sharing of liabilities between companies within a group

This includes ensuring that the subsidiaryrsquos interests are regarded as distinct from the

interests of the parent company or other companies within the group during decision making

running the subsidiary as a separate company rather than as a division of the parent company with its assets and liabilities treated as its own rather than as the assets and liabilities of the parent company

maintaining appropriate separation of company records and resolutions ensuring that liabilities are being invoiced to and paid by the appropriate

company ensuring the subsidiary company receives independent legal advice to

protect its own interests and that formal legal agreements exist for the pro-vision of financial support from the parent company to the subsidiaryFailure to take these steps will create a risk that a Court will hold the parent

company liable for the debts of its wholly owned subsidiary

PARENT COMPANY MADE TO PAY ITS SUBSIDIARYrsquoS DEBTS

EMPLOYING FAMILY MEMBERS

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

Article by Andrea Stevenson HR ConsultantSTAPLES RODWAY HAWKES BAYastevensonstapleshbconz

KEEPING IT IN THE FAMILY


A POSITIVE FAMILY RELATIONSHIP DOESNrsquoT NECESSARILY translate to being a productive working one It is often our family members

who know how to push our buttons and family relationships can complicate workplace dynamics

EMPLOYING YOUR OWN FAMILY MEMBERSIf you are employing a family member it is wise to consider your decision care-fully both in light of your personal relationship and in the best interests of the business Firstly ensure that you are considering the right person for the role Donrsquot compromise with a lower skill level If the role requires specific skills or experience then a family member may not always be the best candidate for the job To counteract this consider undertaking a complete recruitment process that involves an independent person

Secondly the more clarity you establish around the employment relation-ship the better - and remember it is an employment relationship It is not about being pessimistic but being prepared for a worst case scenario and having a ldquoback doorrdquo strategy in place just in case things donrsquot work out

TOP TIPSThe following are essential considerations in a family employment arrangement

Understand that it is still an employment relationship so the same obliga-tions and legal requirements apply and it is essential that correct documen-tation is in place and correct procedures are followed Have clear param-eters in place at the outset and check the procedural correctness on any action you may take

An employment agreement is a legal requirement for all employees including family members This also applies to family members who work casually

Have clear policies in place for things like overtime paid holidays school holidays and time off These should be comprehensive and in writing Know what the minimum employment rights are and essential holidays entitle-ments and other requirements Your friendly HR person can help prepare an employee handbook specific to your requirements

Be clear regarding disciplinary guidelines Involve a third party if you do need to undertake a disciplinary process with a family member

Ensure clarity in expectations and appraise consistently Have a clear reporting structure in place Be aware of favouritism Anything can be construed as favouritism ndash espe-

cially favouritism Remuneration is also an area that trips people up There is often a tendency

to either pay higher or lower than the market rate Ensure transparency in what you are paying the family member The best way to do this is to benchmark against market rates based on position

If you are employing a spouse in the business you hold as an individual you must get approval from Inland Revenue to pay their wages Re-gardless of your structure you still need to complete certain documents including the Employer Monthly Schedule (IR348) tax code declaration and KiwiSaver documents

A CASE EXAMPLETo highlight the above points it is useful to look at a recent case that was before the Employment Relations Authority

Mr N worked for his father Mr C as a labourer and digger driver in his earth moving company working up to 65 hours a week The son received a call at home on a Sunday his day off from his father asking him to come to his house immediately for a meeting No reason was given (and no advice to bring a support person) When the son arrived several people were present including some of his acquaintances his fatherrsquos partner a contractor and his wife and an additional woman

The father proceeded to accuse the son of ldquotelling everyone our businessrdquo The son took this to mean a conversation where he had told a colleague not to speak badly about another contractor in the area The meeting became quite heated and ended with the father telling the son that he was sacked

At the Authority the father argued that the meeting was purely a personal matter and that it was called to sort out an allegation that the son had been gos-siping with clients about his fatherrsquos personal relationship with his partner The father claimed that when it became heated it ended with the son saying ldquoF this s Irsquom out of hererdquo The father responded by telling his son to return a company vehicle and mobile phone

The Authority held that the son had been unjustifiably dismissed There were a plethora of problems for the ldquoemployerrdquo (the father) in question

No explanation for the reason of the meeting was given He was not advised of his right to bring a support person There was no evidence of the alleged ldquogossipingrdquo to other clients about his

fatherrsquos personal life So while the father argued that it was a personal matter the authority didnrsquot

see it that way ndash because the son was alleged to have ldquogossipedrdquo with clients the allegations fell within the employee relationship The Authority ruled that the onus was on the employer to behave as a fair and reasonable employer and it failed to do so

Furthermore The Authority stated that even if Mr N had resigned it was after an lsquoemotional scenersquo and a fair and reasonable employer would have allowed a lsquocooling down periodrsquo

Of interest in this case the son received over $7000 in lost wages $6000 for hurt and humiliation $1300 for notice entitlement that he had not received $550 for hours worked but not paid and $1500 for outstanding holiday pay

The case highlights the need for the correct procedure to be followed at all times even during a family dispute that has become intertwined with employment issues

EMPLOYING TWO MEMBERS OF THE SAME FAMILYA second scenario to consider is whether to employ two members of the same family We have encountered situations with clients where this has worked extremely well but there can be a flipside It can become particularly tricky in sit-uations where disciplinary action needs to taken against one family member and even more challenging if the other family member is an outstanding performer As an employer it is easy to assume that one high performing individual suggests that other family members will follow suit often leading to the employment of the second family member Where disciplinary action needs to be taken it can put significant strain on the employment relationship with the high performing staff member and create strain in the family relationship Hence there can be a risk of losing both staff members

Likewise employing members of the same family can be challenging if the family members fall out away from work This strained relationship can overflow into the workplace causing a host of new problems Interestingly some of the supermarkets actually have policies in place for not employing two members of the same family While this policy may not be right for every-one it reinforces the need for robust recruitment practices with additional family members

SUMMARYWhile it is not our intention to put employers off employing family members it is a reminder to be fully aware of the potential pitfalls and to ensure you have all the correct documentation and parameters in place and are diligent in following correct procedure with those family members

If you are impacted by any of these issues please contact one of our HR Consultants


SPOTTING COLD-CALLING INVESTMENT OFFERS AND lsquoBIG-WINrsquo SCAMS

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

Article by Marise JamesSTAPLES RODWAY TARANAKImarisejamesstaplestaranakiconz

S TAY CALM BREATHE AND DONrsquoT commit to anything It is important that you give yourself time to research the details and seek advice You

may have discovered the perfect broker (is there such a thing) but if your first contact about this fantastic opportunity came via a call out of the blue from someone you have never heard of you may also be the victim of an international scam that could cost you a lot of money

The Financial Markets Authority (FMA) recently announced that it is receiv-ing an increasing number of complaints about dubious offers that involve transferring funds overseas FMArsquos Director of Compliance Elaine Campbell is warning consumers to stay away from cold call ldquobig winrdquo scams where investors are asked to transfer funds to overseas or unknown locations

Look out for the following signs to avoid becoming a victim of cold call investment scammers

Requests to transfer funds overseas quickly to the account of a firm or person Claims you must act now or miss out on a big pay-out Discouraging or prohibiting you from seeking independent professional advice Offers involving software or a ldquotrading systemrdquo where consumers must buy

a licence or software to participateAnd then take these four steps to protect yourself from the potential scam1 Check the company out on the website Many will have authentic looking

sites but you should delve deeper Does it provide a New Zealand web address Look for the names of individuals connected to the company and conduct a Google search on them

2 Visit the Financial Service Providers website (wwwbusinessgovtnzfsp) or the FMA website (fmagovtnz) to see whether the offer is made by a

legitimate financial services provider You can also phone the FMA Helpline on 0800 434 567

3 Check the FMArsquos list of unauthorised firms also available on their website The FMA publishes names of firms and people it has identified as operat-ing without registration or authorisation in New Zealand or who are not complying with New Zealandrsquos financial services laws There is also a similar international list on the FMArsquos website provided by the International Organisation of Securities Commissions (IOSCO)

4 Seek independent financial advice before making any investment deci-sions Most importantly donrsquot rely on the advice of the person trying to sell you the investmentUnfortunately should you fall victim to one of these scams Mrs Campbell

says that the FMA generally canrsquot help consumers recover funds once theyrsquove been transferred offshore It is also very unlikely that the police will be able to help either

Examples we have seen include hot tips to invest in oil mineral and futures options that promise returns within six months and then ask for more money due to unexpected funding problems share trading schemes in offshore markets with significant unauthorised trades initially in blue chip shares but then ventur-ing into high risk speculative trades resulting in total loss of capital Our advice is that if it seems too good to be true it probably is too good to be true Use your instinct and common sense and if you come across an offer that yoursquod like a second opinion on have a chat with your usual Staples Rodway contact to assist you with your decision

BUSINESS MENTORING

B USINESS MENTORING CAN BE A valuable way of assisting Boards of Directors and chief executives to improve perfor-

mance ignite new ideas and illuminate the way forwardThe New Zealand marketplace is highly competitive and few indus-

tries have escaped the impact of new technologies new and vigorous competitors and changing market conditions To remain relevant busi-nesses need to adapt and manage their product offer pricing and strat-egy in the face of an open economy Businesses have practical issues to manage to best advantage that includes managing their existing opportunities and how their business can be positioned for the future

Many CEOs and Managing Directors find themselves in a lonely position managing responsibilities and stakeholder expectation with at times limited support from their Board of Directors or senior execu-tive teams From personal experience the Board culture or entrenched positions may not be conducive to fresh thinking and accepting the potential consequences of change

Change can be threatening and senior management may resist much needed reforms needed to address marketplace disruption new competitors or other challenges because those senior manage-ment may be personally impacted by those changes We have seen instances of an executive delaying making tough decisions holding to deal with a changing landscape in the hope that some unlikely lsquomagic eventrsquo would make the future all right Successful companies have the courage to carefully evaluate opportunities and the associated risk in a structured manner For the Board or CEO having someone to talk to to objectively discuss these challenges is almost always helpful especially if that person is constructive and not judgmental

A business mentor can assist the debate in a variety of ways by con-sidering the real or fundamental issues that the business is facing rather than grappling with people matters Coming from outside with no pre-determined view or any knowledge of the internal people dynamics should

allow a free thinking debate on what is the best course for the business and how to best deal with new or existing challenges Mentoring done well should provide a non-confrontational forum to discuss the position of the business future prospects and longer term goals

We have completed many projects supporting Boards of Directors and the CEO in helping to define and address the future These proj-ects drive from a structured process including determining what is important to the business what are the opportunities the key perfor-mance indicators (KPI) and measuring and improving the alignment between executive performance and stakeholder expectations

Outputs have included an updated business plan and strategy restructuring options more relevant performance measurement crite-ria identifying the most pressing risks and assessing the sensitivity of various opportunities

Financial models can be very useful in assessing various options and using the model to integrate and measure actual performance

Some clients have requested that the mentoring assistance be reinforced and continued through a more formal governance-based relationship by the appointment as a Director Governance may be seen by some clients as an aca-demic term for ticking the boxes that may satisfy process but not achieve any business gains Business mentoring can be a more hands on process of assisting business owners and executives to use an external objective resource to debate opportunities and develop practical solutions

TAPPING INTO EXPERIENCE amp OBJECTIVITY

Article by Colin TheyersSTAPLES RODWAY AUCKLANDcolintheyersstaplesrodwaycom

MOVING SHAKING

Article by Spencer SmithSTAPLES RODWAY CHRISTCHURCHssmithsrchchconz

amp


W E THOUGHT WErsquoD DODGED THE bullet Until April 2013 Staples Rodwayrsquos Christchurch office was located at 116 Riccarton Road

well away from the CBD that was so severely damaged by the February 2011 earthquake While our office was left shaken and cracked it was not a candidate for demolition or at least thatrsquos what we thought Our engineers assured us the building was still structurally sound and consequently we were able to re-open our doors a few days after the February 2011 earthquake

Still I donrsquot think we ever felt complacent about our situation We had fre-quent reminders in the form of aftershocks throughout 2011 During 2012 we had workmen opening up internal walls inside our offices to inspect the building Our staff became familiar with a whole raft of new engineering terms used to assess buildings not only in relation to our own situation but also our clientsrsquo Over time we could see our staff and clients becoming increasingly wary about the capacity of Christchurch buildings to cope with the stresses of successive aftershocks some of them disturbingly strong It was clear that they needed the assurance that could only come if we occupied a new building that delivered 100+ of the New Building Standards Still the rebuild was only just starting so there was not much we could do for the time being

HURRICANE WIRE AND CONTAINERSThrough 2011 and 2012 we counted ourselves lucky that we were able to stay put Our displaced friends in other firms around town were usually in less than ideal situations occupying anything they could find

However our settled situation changed abruptly early in 2013 when we were advised by the buildingrsquos landlord that they considered our building unsuit-able for continued occupation This news came as a shock to us given the assur-ances we had received from our own structural engineers

While we still have no doubt that our engineers were correct we quickly realised it was an argument that we were never going to win particularly when the landlord erected certain safety measures First hurricane wire fencing was

installed at the front and rear of our building Then shipping containers were arranged through which we had to access the building entrances The previ-ous concerns of our staff and clients quickly changed from mildly wary to being completely spooked

We knew we had to move and fast The words lsquobuilding closurersquo were being bandied around The question was where to move to in a city that was already squeezed tight for office space

GUN SHOPS AND MEDICAL CENTRESOur desperate search narrowed down to two options One was an almost win-dowless 900 m2 box in a strip mall next to a gun store miles from any ameni-ties The other was a former medical centre that had recently been occupied by Mainzeal and which had been abandoned after Mainzeal had gone into liquidation in March 2013 We chose the medical premises At least it had natural light And it was not too far from the building we had called our home for almost 25 years

The medical centre was considerably smaller than the space we enjoyed at 116 Riccarton Road But by removing some of the interior walls in the medical centre our architects Unispace were able to cleverly accommodate 45 desks while leaving space for a narrow board room and three meeting rooms It was going to be tight but we knew we could make it workhellipjust

We had tradesmen working literally 247 on our temporary premises remov-ing walls painting and preparing the building for our occupation We got emer-gency temporary dispensation from the Christchurch City Council to use the premises as an office and consequently the plugs for hand basins used in the medical consulting rooms are still visible on the walls waiting for subsequent conversion back into being a medical centre

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

LIFE IN OPEN PLAN ndash ADJUSTING TO NEW SURROUNDINGSOur staff and clients have been very understanding It will suffice to say there have been a few issues in this ex-medical centre such as water leaks rodents and getting the air conditioning system to cope Morning tea and afternoon tea has had to run in shifts given that we have a tea room that can only comfortably cater for a few people at a time

I suppose everyonersquos acceptance of our situation has been partially due to the fact that many people in this city including our professional colleagues around town are similarly making do while they sort out their lives and businesses

In the next issue of Numbers Christchurchrsquos new office and lessons learnthellip

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

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

T HE YEAR OF THE GOAT is shaping up to be an auspicious one for Find Recruitment Established in Wellington this year Find

Recruitment will celebrate its seventh anniversary its sister company Find IT will celebrate its second and pivotally the firm has just opened an Auckland office

ldquoItrsquos a big year for us and itrsquos extremely exciting for us to expand into Aucklandrdquo says director Julian Greaves

Until now he says Auckland has been an untapped source of busi-ness for the firm ldquoMany of our Wellington clients have offices in Auckland Wersquove worked up there remotely to some degree for a number of years but itrsquos not the same as having an on-the-ground presence For us to deliver to our clients wersquove got to be in Auckland and wersquove finally found the right person to lead that team for usrdquo

The business has come a long way since its fledgling days serving the recruitment needs of the capitalrsquos private sector accounting and finance industry Julian and fellow directors Mike McKay and Rob Woodward joined forces to set up Find Recruitment in 2008

ldquoWersquove been through the toughest years of recruitment during the recession in 2009 and 2010 it was a quiet market where you had to work very hard to get work in the doorrdquo says Julian ldquoBut wersquove come out the other side and this year wersquore committed to growthrdquo

In 2013 Julian Mike and Rob founded Find IT with managing director Nick Calavrias As per the name its focus is the ICT digital and creative fields The team aims to launch Find IT in Auckland later this year

Having been through a global recession Julian says 2014 was a turning point for the supply and demand of candidates

ldquoThe job supply increased dramatically driven mainly by the increase in permanent jobs on offer ndash the contract side is still steady but the market is dominated by permanent recruitment now

ldquoThe difference is that three or four years ago there was no confi-dence from employers the permanent recruitment market was very quiet because they were hiring temporary and contract staff they were reluctant to commit in the recession

ldquoNow the confidence is back most employers want to hire perma-

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

START UP SUCCESSFINDING THE WAY

nent staff because they are more bullish about the future and thatrsquos a really good thingrdquo

Today Find boasts over 100 clients ranging from small six-person start-ups to multi-nationals Julian expects their 12-strong team ndash up from a modest three just two and a half years ago ndash to grow to around 15 by the end of the year

Julian attributes their success to their high standards and the deep relationships theyrsquove established with clients

ldquoWe are working in a market where relationships and quality are valued ndash as a group the three of us have been recruiters for 15 years each and so a lot of our relationships go back that farrdquo

Indeed Julianrsquos relationship with Staples Rodway goes back 15 years to when he was enlisted by partner Robert Elms to help secure new talent for the accounting practice Then when Julian needed an accounting and finance specialist to set up Find with partners Mike and Rob he looked no further than Staples Rodway

ldquoStaples Rodway led by Robert assisted with everything from the

capitalisation and ownership model to budgets business plan and com-pliance Theyrsquove guided us each step of the way ndash from raw start up through the recession to where we are today The success of our journey to date is in large part thanks to the skill and attention of Robert and his teamrdquo says Julian

ldquoDay to day wersquore flat out running our business Staples Rodway monitors our key business metrics and manages our balance sheet finan-cial reporting compliance and auditing so we can get on with our job If we didnrsquot outsource we simply wouldnrsquot be profitable as we are so nine to five we can recruit

ldquoCrucially Staples Rodway is our trusted business advisor we can rely on Robert to provide professional independent advice itrsquos been a constant throughoutrdquo

The Find Recruitment team

Staples Rodway partner Robert Elms

Interest rates have been falling globally and in New Zealand This may not have been evident to all savers but it has certainly been apparent to borrowers

THE GREAT INTEREST RATE COMPRESSION

Article by Simon ReichenbachSTAPLES RODWAY ASSET MANAGEMENTsimonreichenbachstaplesrodwaycom


O VER THE COURSE OF THE last year interest rates for terms greater than 1 year have reduced At the same time short term rates as mea-

sured by the Official Cash Rate (OCR) were increased from 25 in March 2014 to 35 in July 2014 This compression in interest rate yields is clearly evident in the following graph

The spread of interest rates for differing maturities is known as the yield curve Normally the yield curve has a positive shape that is higher interest rates are offered for longer term investmentsloans than short term investmentsloans At the time of writing the yield curve is effectively flat That is an investor will receive the same rate of return from a fixed interest security regardless of whether the capital is lent for a short or long term A risk exists that the yield curve may become inverted over the course of 2015 resulting in a curve that has a negative slope A higher interest rate is received for a short term investment than for a long term investment Arguably from the graph above this is already the case with the 10 year government bond trading at a yield of 312 (Feb2) and 90 day Bank Bill rates at 364 However the nature of the securities differs and the interbank swap rate provides a better guide as to the yield curversquos shape An inverted yield curve is not without precedent in New Zealand The government bond curve across various maturities was flat in August 2004 and inverted in June 2007

CAUSESThe reduction in interest rates and the compression of yields across the yield curve can be attributed to a variety of reasons

Expectations as to inflation have fallen globally and locally With a lower level of inflation prevailing currently and expected in the future investors do not require a higher rate of return to compensate for the reduced purchasing power of their capital on maturity Expectations as to the future rate of economic growth have also diminished With the fall in growth rates alternative investments that provide a lower rate of return and fixed interest investments at lower levels become more attractive Recalibration of the likelihood of default on debt securi-ties (excluding Russian and Greek bonds) has also reduced interest rates overall

From a supply and demand perspective the supply of long dated fixed inter-est securities has been muted While the supply of fixed interest securities in New Zealand has been subdued demand from offshore investors is likely to have been strong given the relatively high yields available from New Zealand dollar denominated debt

The OCR is the RBNZrsquos primary monetary policy tool and is focussed on the short end of the yield curve The fact that the RBNZ has increased the OCR and kept it at a higher rate as a measure to combat house price inflation has also contributed to compression of the curve

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

The cost of longer term borrowing (ie primarily house mortgages) has fallen as banks have reduced rates to remain competitive In the absence of further intervention low or lower interest rates will add fuel to house price appreciation

For investors there is no or little reward from investing for the longer term Unless an investor believes that interest rates will fall further it is more prudent to stay at the near end of the curve to protect against possible eventual interest rises and capital losses

While interest rates remain low investment yields on equities are likely to remain attractive At least until such point in time when the price of equities moves up to a point where dividend yield is not sufficient to compensate for greater risk of capital loss and the uncertainty of dividend payment A lower prevailing interest rate environment particularly low longer term interest rates reduces the threshold for new investment projects to proceed This in turn is likely to add stimulus to economic growth For individual companies the cost of debt funded acquisitions is low

Although NZ fixed interest yields are still high and attractive by international standards the degree of allure has diminished The RBNZ has moved from a tightening bias to a neutral position Initially the Reserve Bank Governor stated that the next move in interest rates may be up or down Now that has been revised to lsquoon hold for some timersquo with the knock-on implication for the New Zealand exchange rate being a fall against the US dollar

CATALYSTS FOR CHANGEIf inflation expectations are a key factor in longer term interest rates then rising inflation expectations will result in investors demanding higher rates to compen-sate for risk Falling oil prices have resulted in overall inflation remaining subdued

The United States Federal Reserve has indicated that US interest rates are likely to rise at some point in 2015 although the Federal Reserve will be patient in timing such an increase If and when such an increase is implemented it is likely to place upward pressure on New Zealand interest rates as a higher yield will be required for New Zealand fixed interest securities to remain attractive

The prospect of increasing long term rates in what has been a benign interest cost environment for borrowers could in itself increase the impetus for interest rate rises

CONCLUSIONFixed interest market conditions have changed significantly over the course of 2014 and the 2015 interest rate environment and outlook is markedly different from that of 2014 In order for investors to optimise their portfolios and maximise yield a differing set of assumptions will need to be adopted

The world has changed dramatically over the past few decades with central banks now playing a more visible role in determining interest rates This makes it extremely difficult to predict interest rate movements Investors looking for income can no longer rely on a portfolio made up primarily of bank deposits and fixed interest (bonds) to generate all of their income requirements Diversification across a broad range of financial assets is required if investors are seeking a return in excess of bank deposits plus the opportunity for some inflation protection In many countries government bonds the original corner stone of an income portfolio are currently providing negative returns ie inves-tors are paying for the privilege of holding government bonds

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

To contact a SRAM advisor email investmentsstaplesrodwaycom or phone 09 309 0491

500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES

I F YOUrsquoRE THE DIRECTOR OF a company two of your fundamen-tal duties are to manage the business effectively for which

you need high quality financial information and to ensure that the company meets its statutory financial reporting obligations

As we reported in the autumn 2014 edition of Numbers the financial reporting requirements for companies are changing Many of these changes come into effect for the first time for 31 March 2015 balance dates Itrsquos important that company directors are aware of what this means for their company

The decision tree on the right and its accompanying notes is designed to allow directors of for-profit companies to determine what their financial reporting requirements will be going forward

In the coming months Staples Rodway will be working with all clients to make sure that their financial reporting meets all statutory requirements enables them to get the financial information needed by shareholders lenders and other key stakeholders and assists them to manage the business effectively

COMPANIESrsquo FINANCIAL REPORTING

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

Article by Jackie Russell-GreenNATIONAL TECHNICAL MANAGERjackierussell-greenstaplesrodwaycom

UNDER THE SPOTLIGHT


GPFS General purpose financial statements (ie financial state-ments prepared in accordance with generally accepted accounting practice) For FMC reporting entities GPFS must be prepared under the requirements of New Zealand equivalents to International Financial Reporting Standards (ldquoNZ IFRSrdquo) all other for-profit com-panies that must prepare GPFS can do so under the requirements of the NZ IFRS Reduced Disclosure Regime (ldquoNZ IFRS RDRrdquo) NZ IFRS RDR has the same recognition and measurement requirements as full NZ IFRS but provides considerably reduced disclosure require-ments GPFS of an overseas company may be the financial state-ments of that company that comply with the laws of the country in which it is incorporated (subject to the Registrarrsquos satisfaction)

Is the company an FMC reporting entity1

Within 4 months of balance date prepare GPFS have

them audited and file them

NO

YES

What is the ownership of the company

Overseas company

with a branch in NZ

Subsidiary of an overseas

company2

25 or more overseas

owned3

Less than 25 overseas

ownership4

Is the overseas company large (ie revenue gt $10m

or assets gt $20m)5

Is the company large (ie revenue gt $10m or assets gt $20m)6



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

(unless opt out) No requirement to file12

Within 5 months of balance date prepare GPFS and have them

audited (unless opt out) No requirement to file11

How many shareholders does the company have

YESYES YES NO

NONO

10 or more

No requirement to prepare GPFS be audited or file Must prepare GPFS and be audited within 5 months of

balance date if required by 5 or more of shareholders Must meet Inland Revenue requirements13

Within 5 months of balance date prepare

GPFS have them audited and file them9

1 The term ldquoFMC reporting entityrdquo is defined in the Financial Markets Conduct Act 2013 FMC reporting entities include issuers of regulated products under the Financial Markets Conduct Act 2013 listed issuers operators of licensed markets recipients of money from a conduit issuer registered banks licensed insurers credit unions and building societies

2 A company is a subsidiary of an overseas company if it is more than 50 owned by an overseas company (including a subsidiary of an ultimate overseas company)

3 25 or more overseas ownership means 25 to 50 owned by an overseas company or a subsid-iary of an overseas company or 25 or more owned by overseas individuals

4 Less than 25 overseas ownership means that at least 75 of shareholders are based in NZ 5 For an overseas company trading in NZ size is based on the overseas company (and its subsidiaries)

not just on the NZ operation An overseas company is large if it and its subsidiaries have revenue in excess of $10 million or assets in excess of $20 milliondagger

6 For a NZ registered company that is a subsidiary of an overseas company size is based on the NZ regis-tered company (and its subsidiaries) A NZ registered company that is a subsidiary of an overseas company is large if it and its subsidiaries have revenue in excess of $10 million or assets in excess of $20 milliondagger

7 A company with 25 or more overseas ownership (but that is not a subsidiary of an overseas company) is large if it and its subsidiaries have revenue in excess of $30 million or assets in excess of $60 milliondagger

8 A company with less than 25 overseas ownership (ie 75 or more NZ ownership) is large if it and

its subsidiaries have revenue in excess of $30 million or assets in excess of $60 milliondagger 9 If the NZ business of an overseas company is large the financial statements must include in addi-

tion to the financial statements of the overseas company financial statements for its NZ business10 A company is not required to audit and file if it has more than 25 overseas ownership and is a sub-

sidiary of a NZ company which files audited group financial statements or is a wholly-owned subsid-iary of a NZ company (or a large overseas company) which files audited group financial statements

11 A large company with less than 25 overseas ownership must prepare GPFS and have them audited but can opt out of the requirement for audit with 95 shareholder approval (which means that 95 of voting shares must be cast in favour of the proposal to opt out) If GPFS are audited they must be filed

12 Non-large companies with 10 or more shareholders must prepare GPFS and have them audited but can opt out of both requirements with 95 shareholder approval (which means that 95 of voting shares must be cast in favour of the proposal to opt out) If the company opts out of preparing GPFS it must meet Inland Revenuersquos minimum financial reporting requirements

13 Non-large companies with fewer than 10 shareholders are not required to prepare GPFS or have them audited but must do so if at least 5 of shareholders require them to Where GPFS are not prepared Inland Revenuersquos minimum financial reporting requirements must be met

daggerAs at the balance date of each of the two preceding accounting periods

NOTES

9 or less


them audited and file them10

YES

NO

Claire gets friendly with some colourful locals in Copan Honduras

the idyllic is

land of

caye Caulker

in belize

marimba players in leon Nicaragua


EXPLORING amp DIVING IN

Article by Claire HardmanSTAPLES RODWAY AUCKLANDclairehardmanstaplesrodwaycom

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

CENTRAL AMERICA

I LANDED IN CANCUN MEXICO AFTER a 30 hour flight followed by another 3 hours of waiting time for my best friend Kylie to arrive after

me After her having lived abroad for the last 2 years I knew it would be a good reunion Oh the fun we were going to have When she finally arrived we decided that first things first since we were in Mexico ndash time for a Corona

We ventured to our first destination ndash Cozumel Island off the Yucatan Peninsula in Mexico a scuba divers paradise After a couple of days of soaking up the sunshine and enjoying cocktails it was finally time to sample the diving which was some of the best I have ever experienced All diving in Cozumel is known as drift diving where you jump off the boat and are gently carried by the current with no effort required This is a real treat as it just allows you to lie back and enjoy the scenery beautiful coral formations teeming with fish life great swim- throughs and even turtles much to my delight

After enjoying our time sunning relaxing and eating our body weight in Mexican food we continued on to our next destination ndash Belize We boarded what is affectionately known by the locals as a ldquochicken busrdquo This one however had everything on board jammed into a small space like battery hens but unfortunately no actual chickens much to my disappointment After a very long and very interesting 12-hour journey we finally arrived at what can only be described as paradise Caye Caulker island pristine white sand aqua-blue waters and palm trees aplenty

We were soon living the local lifestyle of ldquono shirt no shoes no problemsrdquo The Island was so small that we hired bikes to explore and knew it completely within 15 minutes Again we decided to indulge in some ocean adventures with a day spent on a private yacht We covered all the best places including a well-known area called ldquoshark and ray alleyrdquo where we spent time swimming with more sharks and rays than we could count as well as more turtles and amazing corals Another beauty of a day on the water

We continued our journey from Belize into Guatemala where we spent some time enjoying the cultural and historical sights of this friendly and fas-cinating part of the world We went to the ruins of Tikal located in the jungles of Guatemala Dating as far back as 1000 BC Tikal is one of the oldest and the most important sites in Mayan history It was fascinating to learn about espe-cially since the Mayan history is relatively unknown to many in New Zealand Spending a day in the jungle with monkeys tarantulas and macaws all around was a noisy and enjoyable experience

Honduras and Nicaragua were breathtakingly beautiful both raw and untouched and with the friendliest of the locals In Nicaragua we hiked an active volcano Telica in Leon where at the top we watched the sun setting over the mountains then as it got dark we were able to peer over the side of the craterrsquos edge to look down at the glowing magma a magnificent sight to behold We spent some time on the coast as well dabbling in learning to surf with some locals during the day and releasing turtles into the ocean by dusk

Continuing on to Costa Rica we were met by a wonderfully rich and pro-tected natural tourism dream Costa Rica is much wealthier in comparison with other Central American countries that have all suffered civil wars and slower economic progress

The Costa Ricans are proud of their comparative high standard of living which is evident everywhere although from the touristrsquos point of view it is the most expensive of all the Central American countries The natural beauty however is overwhelming and they have taken important steps to protect their natural assets Spending two weeks exploring this wonderful country was the best possible way to end our holiday We spent time within the National Parksrsquo forests sighting sloths lazing about in the trees at the cloud forests walking above the forest canopy on suspension bridges within the clouds and at the coast surrounded by wildlife including howler monkeys making themselves heard each day

It was certainly a memorable trip and one that I would recommend to anyone if they wanted to visit some-where out of the ordinary


AUCKLANDLevel 9 45 Queen St PO Box 3899 Auckland 1140 New Zealand Phone 64 9 309 0463 Fax 64 9 309 4544 enquiriesstaplesrodwaycom

WAIKATO4th Floor BNZ Building 354 Victoria Street PO Box 9159 Hamilton 3240 New Zealand Phone 64 7 834 6800 Fax 64 7 838 2881 staplessrwconz

TAURANGALevel 1 247 Cameron Road PO Box 743 Tauranga 3140 New Zealand Phone 64 7 578 2989 Fax 64 7 577 6030 infostaplestgaconz

HAWKES BAYCnr Hastings and Eastbourne Streets PO Box 46 Hastings 4156 New Zealand Phone 64 6 878 7004 Fax 64 6 876 0078 infostapleshbconz

NEW PLYMOUTH109-113 Powderham Street PO Box 146 New Plymouth 4340 New Zealand Phone 64 6 757 3155 Fax 64 6 757 5081 newpstaplestaranakiconz

STRATFORD78 Miranda Street PO Box 82 Stratford 4352 New Zealand Phone 64 6 765 6949 Fax 64 6 765 8342 stfdstaplestaranakiconz

WELLINGTON

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

CHRISTCHURCH314 Riccarton Road PO Box 8039 Christchurch 8440 New Zealand Phone 64 3 343 0599 Fax 64 3 348 0186 enquiriessrchchconz



No 33 AUTUMN 2015

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

DIRECTORSAUCKLAND David Searle (09) 373 1128

HAMILTON Rosanna Baird (07) 834 6800

TAURANGA Chris Downey (07) 578 2989

HAWKES BAY Stuart Signal (06) 878 7004

TARANAKI Chris Lynch (06) 757 3155

WELLINGTON Robert Elms (04) 472 7219

CHRISTCHURCH Ross Erskine (03) 343 0599


























70 YEARANNIVERSARY


the firm



1987 Frank retires




1987 Frank retires















the group


join the network





























TIME IS RUNNING OUT


REMEMBER












































Buying a business

do your homework


































































































BUSINESS MENTORING














MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON





























70 YEARANNIVERSARY


the firm



1987 Frank retires




1987 Frank retires















the group


join the network





























TIME IS RUNNING OUT


REMEMBER












































Buying a business

do your homework


































































































BUSINESS MENTORING














MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON





1987 Frank retires















the group


join the network





























TIME IS RUNNING OUT


REMEMBER












































Buying a business

do your homework


































































































BUSINESS MENTORING














MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON
































TIME IS RUNNING OUT


REMEMBER












































Buying a business

do your homework


































































































BUSINESS MENTORING














MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON











































Buying a business

do your homework


































































































BUSINESS MENTORING














MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON





































































































BUSINESS MENTORING














MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON




MOVING SHAKING


amp


































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON





































































500

450

400

350

300

250

200

150

March 2014

March 2015

INTE

REST

RAT

E

Source RBNZ

90 Day Bank Bill

10 Year Govt Bond

NZ INTEREST RATES









UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON












UNDER THE SPOTLIGHT






NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON









NO

YES


Overseas company

with a branch in NZ


company2

25 or more overseas

owned3


ownership4


or assets gt $20m)5









YESYES YES NO

NONO

10 or more




















NOTES

9 or less



YES

NO


the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON





the idyllic is

land of

caye Caulker

in belize






CENTRAL AMERICA


















WELLINGTON








CENTRAL AMERICA


















WELLINGTON











WELLINGTON




numbers mag autumn 2015 issuu

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