Is the EPMU in Financial difficulties?

I wrote a while back predicting that the EPMU would report a huge loss in their 2011 Financial accounts (PDF, 438k)and I was correct. It wasn’t based on any rummaging around rubbish bins or receiving tips, it was based on following their balance sheet and profit and loss trends as reported on the MED website since 2005.

Their 2011 loss is $540k (Group) before tax and revaluations.

This takes their combined losses since 2005 to nearly $4m.

In 2005 the EPMU spent $352,840.00 on restructuring. Since 2005 their books have been full of revaluations, losses, transferring of debts to the EPMU Training and Education Foundation Trust and “prior period errors”. In the 2011 Statement of Changes in Equity there is a “prior period error” of $1.4M (note 25).

The EPMU payroll is nearly $7M – an average $60,000 gives them a payroll staff of approx. 116 people. (This is an estimate) – that’s a lot of staff and is 60% of their costs.

The erosion of equity is the members issue and for them to discuss.

The general public though is allowed to view the financial performance of an incorporated society as the incorporated societies listed receive special tax treatment. This is fair and equitable and the New Zealanders as a whole should be rewarded for effectively donating time and money to charitable causes by having transparency.

However any incorporated society still has an obligation for good financial management. The EPMU paid donations of $45,000.00 of which we know $40,000.00 was paid to the Labour Party according to the Party Donation lists.

Is it wise to make donations when a business is struggling cashflow wise?

Then again these accounts are for the period that Andrew Little was the boss and he was desperate for a good list ranking. Hopefully now he is gone the red ink can stop flowing.

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  • ZeroThreeCallingCode

    Always laugh when I see all the EPMU jackets in the Koru Lounge reading magazines like they are on holiday. Mind you they are usually in good company with mgmt of most other gravy train organisations who take mid-morning flights to chew up their day. Never see them on the red eye flights as they would then need to work out how to fill in their day somehow

    • gazzaw

      They also get to spend the night in a 5 star pub if they avoid a same day return trip using early morning and late evening red-eyes. I’ll bet they aren’t on ‘use it or lose it’ air tickets either – there is no airpoints accrual on those.

    • Neil

       And the fleet of new model cars they drive around in…..

    • Oldaccountant

       A quick look on their balance sheet accounts shows Employee entitlements accrued nearly $1M – that is around 15% of their payroll

    • Oldaccountant

       A further look shows that they have liquidity problems based on historical cash burn within the next 3 years – this looks likes it has been slightly offset by amalgamating a Building Union cash and assets of around $1m as well.

       

  • Callum

    Once again they have failed to file the full finacial statements. The registrar needs to get tough on this, they are NOT the accounts approved by the members as they are incomplete. Their auditor should be a bit upset about their name appearing on accounts that are incomplete and lack the audit report too.

    • Rodknew

      If I was a union member who do I talk too Callum?

      • Neil

        Read their constitution and find out what they say about when they have to file their returns, how and when the membership get to approve the accounts and if the accounts approved by members have to already have been auditted before the members approve them, or if a draft to be auditted is sufficient (in which case do the auditted accounts have to be approved the following year), even how often the accounts have to be auditted. Any of these are total variables but: –

        All of these items are required to be in covered any Incorporated Society’s constitution.

      • Callum

        Ask your union rep for a copy of the audited accounts, you are entitled to it under the constitution.

      • Rodknew

         thanks Cullum – will do

  • Guest

    Bloody he’ll

  • Dave

    Unions, represent themselves only, no responsibility, out for their own benefit only, screw the members, and rape the employers and the country.     Its just a shame so many members and innocent people are taken for the ride as well.    

  • Sarrs

    $3m in cash and cash equivalents – double 2011.
    They liquidated $1m of securities and still managed to double the amount of interest earned – $308k up from $147k. Must have a kick arse investment strategy.

    They also took $406k in for Pike River but don’t seem to have distributed any payments. Maybe that would show up in the notes to the accounts – too bad right now it looks like they are sitting on $406k cash – half of which was earmarked for the Grey District Council and the other half  “will go to a dedicated fund for the education of the killed miners’ families”
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10689980 

    • Sarrs

      Anyone else reading this – do you think the Pike River Miners’ Family Support Trust would be better run as a charitable trust separate from the EPMU?
      With the way the EPMU are burning through cash (the only reason they have a positive cash flow is because of the $1m liquidation of securities and $406k for Pike River) it would be my concern that, while the Pike River money may still be there in paper in years to come, the actual cash may not be readily available. 

      They are already pillaging their investments to fund their short term cash flow needs – how long do they expect that situation to last? As Old Accountant stated earlier – at this rate they have three, maybe four years left before they have completely stripped the liquidity out of the entity. With Union membership falling – what are their plans to halt the spiral into liquidation? 

      • Oldaccountant

        Sarrs thank you. Yes my prediction was 3. Years as well. I didn’t mention the pike river fund as it is too sensitive but I totally agree. I can’t see where it was expensed and only helps the balance sheet. Brave person to bring this point up. The building union helped their balance sheet. However as the Owl has pointed out before the selling of Trust money to fund EMPU cash-flow is extremely worrying.
        Members of the building union better wise up that their $1m transfer of assets has only funded a cash drain…

      • Guest2

        Are you telling me the union is sitting on cash from the Pike river disaster donations!!!! What is the go there. Is it. In a Separate account Sarrs! Because if the used it in cash-flow and paid donations to the labour party..hell … Please advise

      • Callum

        Guest2, impossible to tell without the notes to the accounts. They disclose the cash coming in through the cash flow statement, I presume it must be in a separate account or at least shown as a liability but they haven’t publicised that detail. I doubt they have done anything questionable with the funds but the partial accounts provided certainly raise that question.

      • Guest2

        Cullum I understand that but Sarrs is saying the cash is propping up their balance sheet. Am I miss reading her comment.

      • Sarrs

        Guest2 – the information provided is insufficient to allow anyone outside the Union to answer your questions. From media accounts, it would appear that the Pike River money is made up of funds donated by Union members and the general public. The general public has a right to know what is happening with their donations. 

        Without the notes to the accounts we can’t see a. if it is kept in a separate bank account from the slush fund, b. if any distributions have been made from it, c. if the interest earned is being reinvested in the fund or being used to prop up the EPMU profit and loss statement, d. how the fund is being governed or managed and, e. the criteria surrounding to whom the funds are distributed and what educational pursuits will be funded. 

        I personally expected that this fund would be set up separately and administered through the Charitable Trust regime. Taking money off your members via subscriptions and mucking around with that is one thing, asking for donations in a national media story (see the link in my first comment) and then not being entirely transparent in your accounting policies is totally different. 
        Old Accountant – I was surprised that no one else commented as this is one big thing that non members can take issue with.

      • Callum

        It will definitely be helping their cash position, difficult to assess though as we don’t know the make up of the investments. Term deposits for example will be sitting in investments if over a 3 month term, a change in the term invested for can cause significant swing between cash and investments.

      • Sarrs

        Yes – at present the cash is propping up their balance sheet to the tune of $406k. Not in itself dodgy as they could have an equal liability on the other side that takes care of the distribution. My issues are with how this money was collected and the transparency (or lack thereof) under which it is being administered. 

        Like Callum said – probably nothing dodgy but not the best course of action to follow on such a sensitive subject. Those families lost a lot – for an organisation to be taking money from the public in their name and then not accounting for it in the most open, honest and transparent way is insulting. The EMPU have experience with charitable trusts – they are not difficult to set up or administer, why haven’t they done so? When, and to whom, will these funds be distributed? A charitable trust deed would give us the answers to these questions. 

      • Oldaccountant

        I agree with SARS comments Guest2. there is a possibility that the donation interest is used within the EMPU accounts. There needs to be some transparency here. I will consider writing to my local MP.

  • Imback

    Hey Whale Oil. Where is your stoogie Owl on this? Did you shoot on one of your hunting trips?

    • Sarrs

      You haven’t met the Owl’s apprentice have you?

      • Imback

        Who is the Owls apprentice?

  • Owl

    The Owl is here – The Whale and I had a cuppa tea in the woods together lol.

    Nice article – I must of been asleep – good analysis Sarrs and Cullum.

  • Oldaccountant

    I have been peeling back some numbers and some guess work but probably fairly accurate.
    If you take the 2010 current assets less current liabilities (incl investments in securites) you end the year on positive working capital of $600k. If you take the same formula for 2011 less also from cashflow statement presented – Pike River Fund and NZBTU amalgation cash and sale of investments ($1M) – you have a negative working capital of $800k.
    Notes to the accounts would help.
    Sarrs I agree with your thought process on the Pike Fund – but we should give the EMPU some congratulations on raising so much money for the families – God Bless them all

  • Owl

     excuse me for using the wrong thread and story to impose a thought. Just
    read Labours new selection policy for leader. The Unions have just
    taken over – here me out – junior members and poor can join by koha
    (basically it means a price of a hot dog). Now Unions get their 200,000
    members to donate a hot dog (40% of vote) and Union affiliates get 20% –
    Total 60% – the Labour Party has just created the first Union Labour
    Leader selection on the price of a Hot Dog. Caucus now reports to the
    UNION – oh dear!

    • gazzaw

      All we are missing is Spink to add his expert comments & analysis.

      • Owl

        On the pike river fund…it’s a very interesting inwards number in the financials. I like SARS analysis. Where is the outwards in the accounts. WO maybe one to ask the question of EMPU

  • RodKnew

    Yep the inwards cash-flow includes pike fund donations, sale of assets (1M) that’s funny alright…and the building union cash…they can write that off. Well analyzed everybody

  • RodKnew

    Hey and that net advances from subsidiaries of $600k is from the trust which according to this blog was selling investments that is for education and training. God this confusing…someone please help!

    • Callum

      Need the fully detailed accounts to analyse more, if someone happened to get a copy and pass it to Whale through the tip line there would be some serious digging done.

      • Rodknew

        Yes that would be great to get a full copy

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