The upside is not what was announced but what wasn't. Many of the previously announced small business initiatives and the more generous of the existing concessions - such as the small business CGT concessions - have been preserved. 

So, the Budget offers nothing that will significantly change the shape of business in Australia.

What will be felt on the ground however is the drive to collect every tax dollar owing. In the Budget speech, Treasurer Wayne Swan pointed out that tax receipts are down $150bn since the GFC. What this is likely to mean, emphasized by the $378m in direct ATO compliance activity funding, is a more aggressive compliance focus.

Australia's 2013 Budget Hightlights: 

• Scrapping of planned company tax rate reduction
• Introduction of a loss carry-back for companies
• Further restrictions on LAFHAs
• Tightening of employment termination payment tax offset
• Deferral of higher concessional contribution caps for super
• Doubling of tax on super contributions for very high income earners
• Non-residents locked out of CGT discount
• Tripling of the tax free threshold
• Scrapping of planned 50% discount on interest
• First stage of a national disability insurance scheme
• Increase to the rate of Family Tax Benefit A (but changes to age of eligibility)
• Scrapping of standard deduction for work related expenses
• Tightening of Net Medical Expenses Tax Offset

Read the full Hayes Knight Group update. If you have business interests in Australia and need assistance with any of the issues raised or interpretation of the information contained in this budget summary, please give your Hayes Knight adviser a call or contact us

As we have flagged in earlier articles; after a period of many years of relative stability there are number of changes on the horizon for NFP entities and their financial reporting in New Zealand.  Many of these changes will be locked into legislation and will progressively take affect over the next few years.

As a final piece in this legislative overhaul jigsaw the Ministry of Economic Development (MED) has now released their thoughts regarding auditing and assurance.  Late April saw the release of the MED's discussion paper Auditing and Assurance for Larger Registered Charities.  Responses to this will help inform the MED's suggestions to Cabinet for proposed legislation.

While this proposed legislation is just directed towards registered charities its impact is likely to be felt wider.  In our view it is likely to set a "best practice" precedent within the wider NFP sector regarding the requirements for assurance over NFP entity annual financial statements.  Therefore we are anticipating that many NFP entities that are not registered charities will use the registered charity requirements for things such as audit and assurance as a benchmark for their organisations.

Accountability, transparency and comparability

Audit and assurance requirements are being proposed by the MED due to the perceived need for higher levels of transparency and accountability from the large charities. This is sound logic.

Fundamentally, accounting is about accountability. Charities are accountable to their stakeholders for the funds they raise and how they use these.  Accordingly if they wish to continue to enjoy the support of their stakeholders it is in their best interests to account clearly and well.  Linked to accountability are the important concepts of transparency and comparability.  Having standardised requirements such as common accounting standards that must be followed and a requirement for an independent audit, or other form of assurance, help achieve transparency and comparability in regards to the financial affairs of charities.

There is a lovely quote from a U.S. Supreme Court Justice Louis Brandeis that "Sunlight is the best disinfectant".  To me this neatly encapsulates the concept of openness and transparency.  People who feel uncomfortable under the bright light of scrutiny and criticism often (usually?) have something to hide.   This is where the benefits of professional independent assurance comes in. 

Audit and Assurance

Registered charities are currently obligated to include financial statements in their annual return, which they must then lodge with the Charities Commission.  However, at present there is no requirement for those financial statements to be audited or reviewed.  The primary reason for this is that there has been no mandatory requirement in the past to do so.  From a requirement perspective it is only the result of either provisions in entity constitutions or requirements of funding bodies that has led to entities in the sector being audited.

Instead of looking at this from a forced requirement perspective many enlightened charities, and in fact many in the wider NFP sector that are not charities but also raise funds from the public, have voluntarily had their financial statements audited.  They have chosen to do this for two key reasons: best practice governance and because it demonstrates a high level of credibility to stakeholders in regards to their financial statements.  Having professional auditors form an independent opinion over an entity's financial statements helps assure readers that the financial information presented is fairly stated and therefore more reliable. 

What has been proposed?

• Most charities are small.  Hence the costs may outweigh the benefits for many.  However, in the case of the larger charities an audit requirement is proposed.  It is noted that the largest 4% of charities have annual operating expenditure of $2m or more.
• There should be minimum qualifications of auditors and assurance providers to ensure robust quality.
• To ensure the cost benefit equation is in balance there should be a lesser level of assurance required for some smaller entities.  A review engagement, which is not as detailed as an audit and therefore provides a lesser level of assurance at a lower cost, is proposed.  Suggested are:
  • Charities with annual operating expenditure of $200,000 or more would be required to have an audit or a review engagement completed
  • Carities with annual operating expenditure of $300,000 or more would be required to have an audit completed
  • Charities with annual operating expenditure under $200,000 should be able to choose what they wish to do, if anything.

Submissions from interested parties are due to the MED by 20 July 2012.  Read the discussion paper.

The reason for the point is that in most schools the Executive Officers or equivalent usually have full access to the accounting systems, as well as cash receipts and other aspects of the administration function, including posting of journals. 

This is common in small organisations, such as a school, because of the limited number of staff and resources available.  We also appreciate that your accounting service providers often can access your information and act as a supervisory control.  However, they do not restrict processing or in many cases serve to provide a segregation of roles within the accounting system. 

Therefore, we are just making the Board aware that this scenario heightens the potential risks.  Therefore the management team and Board should continue to be diligent as regards monitoring of the financial affairs of the school.

Having an alternative person to undertake the Executive Officer role serves as an opportunity for another pair of eyes to review and possibly question, where necessary, any unusual items.   It is also a useful form of operational insurance to have someone else able to perform parts of your Executive Officer's role should they be unexpectedly absent. 

We reiterate the point made in the audit findings letter that this is in no way a reflection on your team members and we are not bringing into question the integrity of individuals.  Rather our aim is to highlight the situation given the constraints, and encourage the continued diligent approach of all concerned.  

As Board members can change three yearly by rotation, it is important that they are aware of the need to monitor closely the financial operations of the school and the inherent weaknesses that exist in internal controls. Our management letter is the way in which we communicate these issues to them.

What do you need to do?

Nothing as yet.  The Office of the Auditor General will be communicating with all schools in the near future regarding the process and what is required.

As your Appointed Auditor we are not allowed to give any indicative estimates of likely fees for the new tender round.  So please don't ask.  That process happens later.

"You got to know when to hold 'em, know when to fold 'em.  Know when to walk away, know when to run.  You never count your money when you're sittin' at the table; there'll be time enough for countin' when the dealin's done."

So what's this got to do with business, or indeed life?  Knowing the right time to exit your business is a more important decision than deciding to go into business in the first place.  The same holds true for your job, a relationship, your position on a local board, club or school committee or as a trustee of a not for profit organisation.

We'll focus on business, but the reality is that these lessons apply to all of the positions and situations listed above and more.

Businesses often start with an idea, a limited amount of capital and loads of enthusiasm. Through careful planning and investment they grow and develop eventually becoming worth far more than they originally were. However, a lot of owners make the wrong exit decision and pay a price for it.

A relatively small number of businesses continue through multiple generations. The majority (as high as 67%) either fail or are sold by the original owners.

Timing your exit is about understanding:

• The best time to realise that value.
• Whether your business has outgrown you.
• Whether the business model is changing (for the worse).
• Whether you have outgrown the business.

Ideally you want to exit your business before its value has peaked.  A strong business with a good number of prospects is always going to be easier to sell. Buyers are likely to pay a premium for their expectation of the future value to be created.  Smart owners monitor not only the value of their business but also the expectations for the future. It's important to know where you sit on the value curve.

Organisations can also outgrow their owners, directors, trustees or committee members. Some people are great at getting things up and running from an idea (the entrepreneurs) whereas others are great implementers and excellent at growing a sustainable business or organisation.

Success at one level is not an automatic guarantee of success at the next. Each level requires distinct and very different skill sets. The smaller the organisation the more important it normally is for you to be skilled at what the organisation does.  The larger the organisation the more important it is that you are a good manager - strong in finance, strategy and business planning.

This is why you see so many "founders" moving on to let the next wave of people through so that the organisation can realise its potential.

Don't believe that your business model will be forever constant. Business models must change to survive. It seems no matter where we look we are reminded how challenging the last few years have been, here in New Zealand and also globally. However, challenges spark change, which in turn ignites reinvention and new beginnings. It's a choice that opens new doors, offers the promise of new opportunities and increases our chances of success.

This change can be driven by the owners or it may be driven by changes in the industry (technology comes to mind) or emergence of alternate models to what have evolved, but for most people the danger is that their business or organisation model is changing and they do not realise it.

And in the same way that your business can outgrow you, you may be outgrowing it. This does not apply to everyone, but over time people can lose their enthusiasm for an organisation. This is when 'fresh blood' needs to introduced to ensure on-going success.  As Kenny Rogers always says, "the secret to survivin' is knowing what to throw away, and knowing what to keep."

Do we have an appropriate definition of "charitable purpose" in New Zealand? Does it need updating?  Put this question to those entities that have been refused charitable registration and they will tell you that our legal definition of "charitable purpose" is out-dated and not well suited to New Zealand society in 2012.  To protect the country's income tax base the IRD is reluctant to widen the definition (a valid point).  However, as with many difficult situations, progress is often shaped by the exploration of a good question.

Firstly some context; why was I invited to present at the forum?  I am a Chartered Accountant with an interest in not-for-profit (NFP) organisations. Hayes Knight's client base represents a good snap-shot of New Zealand with an ideal mix of for-profit, NFP and state sector organisations; ranging from small to large.  A significant portion of our team, myself included, specialise in working with NFP organisations, from tiny incorporated societies to large service providers and philanthropists.  While I did not attend the forum to represent any individual clients, this breadth and depth of client base provides me the luxury of forming and sharing personal observations.

Secondly; accounting with regards to the NFP sector is all about accountability.  This may sound like common sense but sadly it is not always common place.  Accordingly I have a considerable interest in ensuring transparency and accountability.

This leads me to three bouquets to be given to the Charities Commission:

1. For helping to promote increased transparency in the charitable sector in New Zealand
2. For holding this forum to explore the important question whether our current legal definition of charitable purpose is appropriate for New Zealand society in 2012 and beyond. This demonstrates bigger picture and longer term thinking.
3. For being a useful coordinator/educator in the sector, despite the relatively short time the Commission has been in existence.

The Charities Commission has certainly not pleased everyone. I, like some others, have provided my share of both brickbats and bouquets over time.  A regulatory body that is able to please everyone is probably unrealistic, but it has created some useful debates.  On balance I believe it has had a net positive impact on the New Zealand charitable sector, as well as on the wider NFP sector, and as a result by extrapolation, a net positive result on New Zealand society.

Personal observations

1. Charities are a subset of the wider NFP sector.  We roughly have just over 26,000 charities in New Zealand and best estimates suggest approximately another 75,000 NFP entities in the wider sector. Having charitable status is different to just being a NFP entity.  Many don't seem to be aware of, or appreciate this distinction.  Many incorrectly use the terms interchangeably.  This can lead to fuzzy thinking and suboptimal outcomes.
2. So, what are the benefits of charitable status?  As far as I can see there are 3 main ones, two in relation to tax favours and one about brand:
   • An income tax exemption - beneficial if an entity creates a trading profit. Yet, interestingly, many in the charitable sector do not create consistent trading profits anyway.
   • Donation deductibility - beneficial to promote donations to the entity from the public; both individuals and businesses.
   • The brand/status/positive image perception of being seen as a charity.  I believe this "badge" of being a registered charity is increasingly seen as a competitive branding and marketing benefit for entities within the wider NFP sector.
3. The sector has traditionally been disjointed with regards to information sharing.  While there are some great examples of coordination and information sharing within the sector this has not traditionally been the case across the sector as a whole.  In my opinion the Charities Commission has helped dramatically improve this.  There is still evidence of this disjointed nature in the wider NFP sector.  This is a tragedy because it creates inefficiency and costs the sector wasted time and money, valuable resources that could be directed to providing more services to end users in need.

An unscientific but interesting poll

In preparation of attending the forum I polled our client and contact base for input. One of the questions was; Why are you a charity?  The main answers were:

1. Funding and competitive pressure.  This is the number one challenge faced by most entities in the NFP sector in New Zealand.  If an entity can establish itself as a charity then it gains a potential competitive advantage when it comes to funding applications.  Many funding providers use registered charitable status as means to cull or limit applications to them.  Furthermore it is suspected that some funders use charitable status as a defacto or lazy quality check because these entities are required to follow certain procedures to get and remain registered.  This perceived competitive advantage by being branded a charity is also the reason that some entities that don't otherwise need charitable status, such as sporting organisations that already have their own income tax exemption in the Tax Act, also seek to become registered charities.  As one sporting client said to me; why would we cut off a possible funding stream if we can avoid it?
2. Tax favours.  Income tax exemption and donation deductibility.
3. "Because we should be".  Entities that have always considered themselves charitable.

What we see in our practice as Auditors and Assurance providers for charities.

• As a generalisation, we see relatively few charitable service organisations that have significant trading profits requiring an income tax exemption.  However, there is an increasing trend towards charities looking to create sustainable income streams. Many are considering business activities in order to achieve this to help fund their charitable works and reduce their reliance on grants and donors.
• Philanthropists do require charitable income tax exemptions given that their earnings tend to be dividend and interest income.
• On the subject of donation deductibility, donee status is important. Donation deductibility is a key tool for encouraging donations, even if the rebates are not always actually claimed. The recent study by BERL; Giving New Zealand Philanthropic Funding 2011 is a fascinating report and shows how generous New Zealand individuals are.   This essential reading report commissioned by Philanthropy New Zealand is available from their website:  www.philanthropy.org.nz.   The report shows amongst other things how New Zealanders have doubled their donations in the last 6 years to charitable causes.  Another point worth noting: giving by individuals is by far the greatest source at 58% and equating to $1.54 billion in 2011.  Interestingly, only 40% of those who donate claim their rebates.  This supports what we see anecdotally i.e. relatively low levels of awareness of the rebates and people not bothering to keep the paperwork or complete the necessary administration to claim a rebate.
• We are glad to report that we see relatively limited abuse of charitable status.  Unfortunately we do see a frustratingly high level of ignorance across the whole NFP sector, including charities, regarding many of their legal and accountability responsibilities.  Greater education around responsibilities, accounting and accountability is needed.

The elephant in the room

The elephant in the room regarding the charitable purpose definition is taxation.

Taxation at its boiled down essence is simply the Government collection of money from the public for distribution to public causes that the Government makes on the public's behalf.  Hence if the Government is allowed to decide tax favours via something like the charitable purpose definition in legislation then it is making charitable choices on the public's behalf.

Broadening the definition of charitable purpose comes with the risk of widening the loss to the New Zealand tax base. However, is the Government best placed to decide (on behalf of the public) what is charitable in New Zealand society in 2012?  Reflecting on the BERL study; as individuals we in New Zealand society want to support charitable causes and individual philanthropy allows individual choice.

Does the Government lose that much from widening the charitable purpose definition in taxation?  I suspect not greatly via the income tax definition.  Possibly via the donation deductibility - but offsetting this is the fact that a successful and well funded charitable sector to a certain extent removes the need for direct Government funding of various issues that are addressed by various charities in New Zealand society.  In addition, a successful and vibrant charitable sector is also still generating a substantial GST flow for the Government coffers.

The definition of Charitable Purpose

It currently is over 400 years old and consists of the four heads of charity being the advancement of religion, advancement of education, the relief of poverty, and the tricky one which has largely been determined by case law over the years; "and any other purposes beneficial to the community."

It is still relevant today?  The paternalistic concept of charity in Elizabethan society in the 1600's when the definition was created, is very different to today when we have a much more sophisticated society with a variety of Government and other support systems in place.  As well as pure charities in the traditional sense, many would argue that there are also many other things in our society today that deserve supporting.  Therefore, does the definition need widening to encompass more of the NFP sector which currently provides community good but is not considered charitable under the statutory definition?

An individual's definition of charity will be influenced by many things and be highly variable.  That's OK and is surely just a reflection of the diversity within our society.  There will be as many definitions as there are individuals.  This makes it difficult to exact a definition that we can all agree on. 

Taking a very broad view of charitable purpose one could equate this with: Things good for New Zealand Society as a whole.  Or "NZ Inc" as it is sometimes referred to.

Perhaps the answer is to consider other support mechanisms for current non-charitable entities in the wider NFP sector that provide community good.  This probably means tax favours for them, although I suspect donation deductibility is far more important than income tax exemption for many in the sector. Perhaps it is also the branding credibility that comes with being part of a regulated NFP population, just as charities have benefited from being regulated by the Charities Commission.

Can business aims be charitable?

This point relates directly to a number of our current and past clients, including Business Mentors in the Community and the New Zealand Institute of Management.  These two NFP organisations essentially exist to improve the general level of business skill and acumen in New Zealand.  By providing these services their aim is to improve the overall business community resulting in more jobs, more income and a better society.

However they fail the current charities definition as they provide services to business individuals which can lead to individual gain. 

My view is that these NFP organisations are doing public good and deserve supporting.  The question is: should this be done via charitable status or via another channel of support?

Interestingly tax favours affect them differently.  One is largely membership based, receives little in the way of grants or donations and lives very much within its annual membership funding means i.e. it has limited trading surpluses.  For them the charitable tax favours have limited significant impact.  The other receives a considerable amount of funding support from organisations providing donations.  Therefore donation deductibility makes a potentially significant impact to their level of available funding and hence the level of services they can provide.

Looking at these examples I am attracted to the concept of defining charitable purpose by looking at altruism and volunteerism for the public benefit i.e. looking at the spirit in which the funds are given and for what intent.  This would mean considering the good that is achieved and the purpose for which support is provided, with no expectation of personal gain as the appropriate "lens" with which to determine if charitable status and tax favours should be granted.

Maybe we don't need to throw the baby out with the bathwater.  What if we kept the long standing definition of charitable purpose, but progressively extended it to remain relevant to our society via a body like the Charities Commission which could in its decisions consider other important factors such as altruism and volunteerism for the public benefit.   

Such a change would require a balanced and flexible consideration of direct and indirect community benefits.  To do this we need an independent, innovative and inclusive body such as the Charities Commission.  I'm not sure whether all these factors could be consistently applied if it was under the direct control of the Government of the day.

The issue of advocacy

This has been the source of much contentious, and sometimes what appears to be sensational and erroneous, media regarding decisions of the Charities Commission arising from the legal cases taken. 

Political advocacy as a primary purpose is not currently considered charitable.  This is especially the case when it comes to political parties which are not and should not be considered charitable.  This is sound logic.

However like the business related examples already mentioned, many forms of advocacy can be for the public good.  I act for a number of similar organisations which involve advocacy some of which are considered charitable and some not, so I don't believe that the Charities Commission have necessarily made all correct decisions so far. That said, I suspect this will change as the Charities Commission evolves and becomes more sophisticated.

Among our client base is Greenpeace and I have often asked people if they think of Greenpeace as charitable?   The majority say something along the lines of: while we may not always support their methods they do seem to be trying to save the planet, so yes.  In fact the ratio used to be about 9/10 would consider them to be charitable.  Interestingly that number has dropped back a bit in recent times as Greenpeace has stepped up their activity levels within New Zealand, particularly in areas that perhaps butt up more directly against New Zealand business vs. more remote issues such as saving the whales.  Yet the majority still see them as being charitable.  So have we got it wrong regarding advocacy?

In summary, advocacy, and the freedom of speech, is an essential ingredient in a democratic society.   Advocacy is how positive change occurs in a democratic society.  It is based on value judgments, but these change over time.  Advocacy helps promote good public debate.  Hence I believe it is important that we somehow work out how to accommodate and support an environment that allows advocacy and healthy debate to thrive in New Zealand even if it is not considered a charitable purpose.

About the Author

Craig Fisher FCA is Chairman and Audit Director at Hayes Knight Chartered Accountants, and a specialist regarding NFP and charitable entity issues.
Craig can be contacted on:
T (09) 367 1654
E craig.fisher@hayesknight.co.nz  

If adopted, this proposal could see charities effectively losing their current tax advantage of not having to pay FBT.

This IRD proposal appears to have eventuated, in part, as consequence of the recent salary packaging tax schemes that have been aggressively marketed in New Zealand (interestingly by an Australian company).  The scheme widely promoted to large charities involves providing staff with vouchers for food and fuel and other living expenses.  The problem however is that the scheme considerably extends the scope of the FBT exemption.  This has obviously, and not too surprisingly, caused the IRD to review this area of tax exemptions.

In our humble opinion, Blind Freddy (or at least Blind Freddy the accountant, lawyer, or senior management person) could see this proposed scheme was too good be true - and we all know what grandma used to say about something that looks too good to be true!

Sadly if the paper's proposals are accepted the removal of FBT exemption, a tax favour that has been granted to charities, could have far reaching implications! Charities in New Zealand have enjoyed this tax favour from the Government for a while now and some would argue that this tax favour gives them a competitive edge when attracting and remunerating people they would otherwise be unable to recruit from the corporate sector.

Looking at the situation objectively, other than being a direct tax favour granted to charities, there is not a great deal of logic to the current exemption. FBT is designed to stop payroll tax abuse.  Charities are subject to payroll tax and hence being subject to FBT also seems logical. 

If you are a charity that may be impacted by this proposed change we strongly urge you to read and submit on the paper.

The issues paper can be found at www.taxpolicy.ird.govt.nz . Submissions close on 31 May 2012.

Overseas, particularly in the UK, Joe Public won't settle for substandard service and is typically very vocal when it comes to dishing out feedback. Whilst being on the receiving end of this is never a pleasant experience it comes with two extra life lines. Firstly a second chance to do right by that one customer, and secondly the opportunity spare future customers from a similar experience.

In New Zealand we behave differently. Rather than voicing issues with our suppliers when they arise we choose to operate a secret system of black marks - and once their numbers up we're out of there. Suppliers are left dumb-founded and a customer down. Realistically you've taken two steps back as you try and bring a new supplier up to speed. So surely then it's in everyone's best interest to change this behaviour and offer a chance for redemption?

On the flip-side as a supplier we do little to circumvent this behaviour. Very few businesses in New Zealand actively ask their customers for feedback. They assume (incorrectly) that their customers would speak up if there was a problem; the reality is only 8%* ever will. 

Feedback mechanisms serve to release any mounting pressure as those black marks build up. Don't release the pressure and you'll have a very upset customer on your hands who will take their opinion to the market. With only 2 degrees of separation in New Zealand this can spell bad news for your business and disaster if the opinion is amplified via social media.

That said, taking action should come with a big warning label: If you ask your customers for their feedback you must act on it. The damage to your brand by failing to act will be huge, leaving you worse off than if you'd kept with the status quo of maintaining radio silence. My advice for any organisation thinking about introducing a customer feedback channel - lobby and secure internal support - without this you don't stand a chance.

Going with a single annual client survey is so 2005. The biggest gripe I have with them is that they don't allow you to keep your finger on the pulse of what is really going on. There is also a tendency for businesses to compensate on the low frequency by asking more questions - the process therefore becomes intrusive and laborious, which penalizes engagement rates. I'm an advocate of short, sharp, regular polling (less chance of that pressure building up!). 

If you are like me you'll want to be able to measure the success. Make sure you include a measure that allows you to track and compare performance, so you can see the impact of your changes but also set future performance targets.

The Net Promoter® Score gets my vote. Some would argue this, but I believe as long as it used in conjunction with a qualifying open-ended question then it does the job well.

There is no shortage of software companies pushing customer feedback tools. The problem is that many of them are using market research tools incorrectly. I came across one that had incorporated the Net Promoter® Score (a good thing) but had the scale incorrectly going from 1-10 (the scale should start from 0). They also tend to rely on a series of algorithms to calculate the results, but don't allow for the human science necessary to factor in qualitative data. So how do you decide?

In my opinion your best bet is a software company partnered with a market research company - or alternatively a market research company that has invested in developing their own proprietary software. Having the backing of a reputable market research company provides assurance that that the right information is captured and then accurately interpreted. There's also the security that comes with knowing that they are governed by a professional code of ethics. As far as I'm aware there is only one company in New Zealand that ticks all the boxes.

Competition is increasing and your customers are somebody else's prospects. Retention has never been more important. Fact.

* Perceptive Insight Ltd.

Damian Bennett is marketing manager at Hayes Knight and has held key customer-centric roles at Barclays Bank, WHK, and Fisher & Paykel Finance. 

When news of the kiwifruit vine disease broke in New Zealand, Greg Roberts and his team at Ethical Agents immediately knew of a product that would help.

The company now holds the sole agency in New Zealand for Trigene, a disinfectant that kills all viruses, protozoa and bacteria, but is safe for humans and 100 percent biodegradable.

Ethical Agents had its name long before sustainable, eco-friendly and green were buzzwords. For Roberts' parents, who started the business 44 years ago, being ethical meant caring for Kiwi farmers, vets and their animals.

Today many orchards in New Zealand use Trigene to sterilise their plant loppers and farm bikes to prevent spreading the disease, while almost every vet clinic relies on the product for sterilisation. Ethical Agents has sourced a superhero of sorts, a disinfectant used nationwide to protect our beloved fruit.

Helping Kiwis care for their flocks and crops is what it's all about for Roberts. Our farmers were suffering, and he knew how to source what would solve the problem.

To New Zealand veterinarians, Ethical Agents is the source of specialist veterinary pharmaceuticals and other vet products, holding 35 sole agencies from leading manufacturers around the world.

Ethical Agents began sourcing new R&D from overseas in 1968, operating from under the family home in Auckland's Pakuranga. It was while Roberts' parents still ran the business that accountancy firm Hayes Knight first became involved. Roberts bought the business from his parents in 2002. Surprisingly the success rate of generational succession is not high, with only a third of family businesses successfully transferred to the next generation.

"Succession is about the journey and our role was to help guide the Roberts through the process to achieve the best outcome for all parties," says Hayes Knight associate Yuline Little. "From implementing crucial shareholder agreements to ensuring all funding issues and sources were covered - we were with them every step of the way. The result was a strong foundation for future growth."

Today Ethical Agents supplies unique products like Trigene, Calol and Propalin to the veterinary market. If you're a vet, you've probably heard of these, but if you're not then it's worth noting that Ethical Agents were one of the first companies to introduce insect growth regulator for flea control to New Zealand, and several of their products are the only ones of their kind available here.

"We stock the only antihistamine left on the market," says Roberts. "If a dog has a reaction and goes into anaphylactic shock, Antimine is vital."

Roberts says the company may only order small quantities of these drugs each year, but without them the vets - and the animals - would be in real difficulty.

"We're not a wholesaler and we're not a multinational." The company doesn't just bring R&D from overseas - Roberts and his team have worked on a few of their own products, tackling New Zealand-specific issues like facial eczema. "We're the source, that's what we do."

When it comes to number crunching, being an importer first and foremost means depending on what's happening overseas.

But working with Hayes Knight has made this all quite manageable, in a relationship that's lasted 25 years.

Little says what makes her client particularly interesting is its unique seasonal cash flow, and this can leave the company vulnerable.

"Yes, seasonal cash flow can make things a little tricky," says Roberts. But having the support to recognise patterns in the market has enabled them to keep things running smoothly. Every year Ethical Agents has a higher turnover in the first three days of July than in the whole month of June. Only a seasoned professional would attribute this to farmers beginning their preparation for calving season.

The company's point of difference, says Little, is that it remains a family business focused on innovation, while similar-sized competitors have been bought by multinationals.

Roberts says relationships have remained a focus of the business since the beginning. "Over the years we've formed quite special relationships with all our suppliers," he says. "We've tended to focus on developing strong partnerships with family businesses. We like to support those."

Little shares the Roberts' passion. Monitoring foreign exchange variations, planning for the future, forecasting, attending the monthly management meetings and giving advice "daily, or weekly, or just whenever they need it" makes for a comfortable, dependable relationship. "Greg is open to advice, driven and a real pleasure to work with. By innovating, pushing development and capitalising on R&D the business has grown to become a vanguard of New Zealand's agricultural sector."

For more information on how Hayes Knight can assist your business, contact: 

Yuline Little
Associate
E yuline.little@hayesknight.co.nz
T +64 9 379 1585

Look out for the campaign on  NBR Online, Stuff.co.nz, Seek.co.nz, Trade Me and NZ Herald Online in the coming weeks.