G25
ANNUAL REPORT Tourism New Zealand 2013/2014
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A walk on the wild side — Miles Holden 2.4 574 million referrals to trade reps hosted in tourism businesses from NZ on familiarisation newzealand.com trips
$7.1 billion injected into the nation’s economy by international 39 visitors conference bids supported through the Conference Assistance Programme
39 major trade events attended by TNZ 21,781 NZ online travel modules completed 2 new international offices 18.2 million visits to newzealand.com
2 200 2.78 million international media total visitor attend Book of arrivals New Zealand event in LA
130 international media hosted in NZ for the Royal visit
792 fully qualified NZ Specialists
35% 20 increase in editions of Government funding newzealand.com in nine languages
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Sara Orme Contents
02/ Tourism New Zealand – Who We Are
04/ Chair and Chief Executive Report
10/ Governance
12/ Board Members
13/ Core Leadership Team
14/ Tourism Outcomes
22/ Statement of Service Performance
34/ Equal Employment Opportunities
37/ Financial Statements
71/ Audit Report
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Miles Holden JAKARTA
Tourism New Zealand is a Crown Agent governed by the Crown Entities Act CEA 2004. We were established by the New Zealand Tourism Board Act 1991, to market our country as an international visitor destination for the long-term benefit of New Zealand.
We aim to improve tourism’s contribution to economic growth by growing the value of international visitors to New Zealand. Our statutory functions under the CEA Act include to:
• Develop, implement and promote strategies for tourism. • Advise the Government and the New Zealand tourism industry on matters relating to the development, implementation and promotion of those strategies.
22 Tourism New Zealand has fourteen offices, two in New Zealand, and approximately 157 full time staff
SAO PAULO
As New Zealand’s National Tourism Organisation, we are the only entity within our country with the mandate and resources to promote ‘destination New Zealand’ to potential visitors. Our work has been carried out under the umbrella of the ‘100% Pure New Zealand’ campaign for over a decade. The campaign was originally conceived in 1999 and has evolved over the years to tell the story of how the people, landscapes and activities combine to deliver a uniquely New Zealand experience.
While advertising and promotion activity is where we focus many of our resources, our marketing also extends to partnering with international travel sellers and airlines, engaging with New Zealand tourism operators, providing information for visitors, and providing assurance of the quality of New Zealand’s tourism product and experiences.
Tourism New Zealand is governed by a Board of Directors, which delegates day-to-day management of the organisation to the Chief Executive.
Tourism New Zealand has 12 off-shore offices, two in New Zealand, and 157 staff.
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KERRY PRENDERGAST KEVIN BOWLER Tourism New Zealand Chair Tourism New Zealand Chief Executive
On behalf of the Board and the Executive team A number of factors have contributed to this overall of Tourism New Zealand, we are pleased to present picture of growth, including improving economic the Annual Report for the 2013/14 year. conditions and changes in air capacity. However, it is clear that Tourism New Zealand has also played Tourism New Zealand began the period with a significant role. a new three-year marketing strategy providing clear strategic direction for the organisation, and an Research commissioned from the New Zealand additional $123 million in Government funding Institute of Economic Research (NZIER) found that across four years. This enabled significant marketing factors had a significant and quantifiable expansion of our activity to market New Zealand impact on visitor arrivals, with the strongest of these as a visitor destination. factors being the impact of New Zealand’s association with Middle-earth and the Hobbit films. Connecting The period concluded with international arrivals New Zealand with Middle-earth has been the main growing at a level not seen in a decade. For the priority of Tourism New Zealand’s marketing since year ending June, total arrivals were up 5.7 per late 2012. The research showed that the increase cent, driven by the growth in holiday arrivals, up 8.1 in arrivals had outstripped key markets’ economic per cent. The result was increased value to the recovery and growth in outbound tourism, and that industry, with total holiday stay days up 12.9 per cent New Zealand attracted more international visitors and expenditure from holiday visitors up 23.0 per than economic factors alone could account for. cent. In short, they are staying longer and spending more, despite a relatively strong New Zealand dollar. It is rare to have such clear verification of the impact of Tourism New Zealand’s work. The findings were Importantly, the long-staying Western markets further backed up by the International Visitor Survey, of the UK, Germany and USA returned to growth, showing that 13 per cent of holiday arrivals for the accompanied by a continued steady increase from year ending June said The Hobbit Trilogy was a factor our largest visitor market Australia. in influencing their decision to choose New Zealand.
There were ongoing positive shifts towards a higher- The ‘100% Middle-earth, 100% Pure New Zealand’ quality visitor from China, helped significantly by the campaign was once again award winning, introduction of the China Travel Law in October 2013. acknowledged as the Grand Award winner at the While growth in numbers slowed, average length of Pacific Asia Travel Association Gold Awards 2014. stay was up by 16.9 per cent year-on-year, increasing from 6.5 days to 7.6 days for the year ending June 2014.
44 100% Middle-earth will continue to be a core element of our activity in FY15 as we fully leverage the powerful hook it offers to influence the decision to choose New Zealand as a destination. This provides effective cut-through in all markets but is particularly powerful in the US, Germany and the UK. This year the leverage campaign will start to make a subtle shift, with a focus on journeying through New Zealand, as we prepare for the next evolution of the campaign post Middle-earth in FY16.
Core business progress
Working in partnership with others continues to deliver significant benefit, extending the reach and effectiveness of Tourism New Zealand’s marketing efforts. During the year the Memorandum of Understanding (MOU) with Air New Zealand was renewed, with a $20 million extension to the marketing partnership. A three-year agreement with China Southern Airlines and a three-year agreement with Singapore Airlines were also signed, both critical to sustaining strong air connectivity to New Zealand.
Other partnerships were formalised with America’s largest incentive travel management company MARITZ Travel, and US premium travel consortium Virtuoso, supporting work to target high-value travellers through the lucrative conference and events sector.
Activity to ensure travel sellers are knowledgeable about New Zealand and able to sell it effectively as a holiday destination is critical in realising the potential of target markets. In March a revised trade website was released which, together with our 100% Pure New Zealand Specialist programme, is a core element of Tourism New Zealand’s work with travel professionals to build in-depth destination knowledge, get the latest product updates, and in turn, grow their New Zealand sales.
Also in March, more than 50 agents from South and South East Asia (SSEA) were welcomed on the first SSEA mega-famil, coinciding with the completion of their 100% Pure New Zealand Specialist training. A total of 427 travel professionals became fully qualified 100% Pure New Zealand Specialists during the year.
The year was another significant one for international media exposure, which provides much greater reach than can be achieved through paid campaign activity alone.
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Fraser Clements A total of 298 media files were secured delivering the growing importance of mobile-digital in engaging approximately $197 million in equivalent advertising with target audiences. value. This included large-scale broadcasts; among them were: Australia’s top-rating breakfast show The release of Tourism New Zealand’s first mobile Sunrise, America’s The Bachelor, Korea’s Dad! Where app, Essential New Zealand, also proved to be are we going?, and the UK’s action reality show RV very popular. With 90,000 downloads and 60,000 Rampage plus James Nesbitt’s River Deep, Mountain referrals generated to industry, the app is effectively High Christmas Day broadcast. All delivered extensive capitalising on the increased use of mobile devices coverage and exposure of New Zealand to excite and by visitors while in the country. motivate potential travellers to visit. Developing people Leveraging off the 130 media here to follow the Royal visit resulted in significant media coverage showing Tourism New Zealand’s people have continued to be New Zealand as a welcoming, hospitable visitor developed through a number of new initiatives. destination. It coincided with the country becoming the UK’s top dream destination in TripAdvisor’s Over the year successful regional forums were biannual trip barometer study. Combining this event rolled-out to bring our people together for business with the media coverage achieved through the planning, learning and development. New Business interactive display ‘The Book of New Zealand’, in Leaders and Emerging Leaders programmes were place for the Los Angeles premiere of the second introduced, and an online learning channel and Hobbit movie, and the articles published by Share and Learn programme were implemented attendees at the US Travel Classics writers’ to support the global development needs of the association conference in May, an additional organisation and encourage knowledge sharing. $112 million of coverage was delivered. Courses were provided in the areas of presentation skills, Māori tikanga and te reo, career development Significant progress was made with the organisation’s and performance management. The annual employee digital presence. Over the last year work has made engagement survey saw the organisation surpass the newzealand.com more accessible in priority markets, state service benchmark once again, with the 78.2 per with new language editions developed for Indonesia, cent engagement score positioning the organisation Argentina and Brazil. There are now 20 editions of strongly among the ‘best places to work’. newzealand.com in nine languages. With the increase in funding received for the financial Travellers are increasingly engaging with digital media year, from 1 July Tourism New Zealand dedicated itself throughout their planning and travel process. In FY14 to quickly getting the people and infrastructure in we saw more traffic to newzealand.com than ever place to deliver on the expectations of stakeholders. before, with 18.2 million visits, up 30 per cent year- Since then the organisation has grown from 110 to on-year. As well as growing visits, 2.4 million referrals 157 Full Time Equivalents with the expansion of the were driven to industry and international travel sellers Business Events and India teams, the establishment of to convert. More than 5.1 million visits originated from offices and teams in Indonesia and Latin America, and mobile, tablet and smartphone devices, reinforcing a new team established to focus on the premium sector.
6 Delivering on strategic priorities ‘100% Pure New Zealand - Beyond Convention’ was launched alongside a dedicated website and industry The significant increase in investment received from resource toolbox. Government led to a review of Tourism New Zealand’s strategic priorities, with funding allocated to four In May, 43 international buyers were brought to key areas of the business: scaling up activity in core New Zealand for the industry’s key annual trade event, markets, emerging markets, international business MEETINGS; a three-fold increase on the previous year. events, and high-value premium travel. Success has been seen in partnering with industry throughout New Zealand and with key incentive Emerging markets bodies offshore. Formal MOUs are now in place with the Australian Society of Association Executives, Tourism New Zealand’s new, stronger presence in US incentive house ITA Group and Conventions and the priority ‘emerging markets’ of India, Indonesia and Incentives New Zealand to support activity. Latin America, has allowed the organisation to rapidly gear-up and maximise the potential they show as a With new infrastructure set to be opened in Auckland, source of visitors. Building strong trade relationships Wellington, Christchurch and Queenstown in coming has been central to in-market activity, with more than years, the sector will be well placed to attract bigger 1,000 of the trade completing training modules and 40 events and grow its value even further. key trade attending New Zealand’s annual travel expo TRENZ, New Zealand famils and new trade shows. High-value premium travel
Focus has been placed on building New Zealand’s Since January a dedicated global premium team has image, launching 100% Pure New Zealand campaign been in place. Establishing a Premium Strategy to activity in each market, translating newzealand.com guide activity and work with premium operators and and engaging with key media through the international product providers, has seen strong partnerships form media programme. Over the year 15 files from with luxury associations, including NZ Lodges, and Latin America, 12 from Indonesia and a further Virtuoso in the USA. 16 from India were hosted. Across the year 28 premium media files and 40 International business events premium travel trade famils were hosted and ten international trade shows were attended including the Strong momentum has been achieved in the International Luxury Travel Mart (ILTM in both Cannes convention and incentive market, with activity helping and Asia), Pure Life in Marrakesh and Luxperience in to secure 39 bids under the Conference Assistance Australia. Additionally, the team has developed new Programme and a further 50 incentive groups. imagery, marketing assets and launched premium campaign activity targeting high-value sectors. This has been achieved through a market-by- market approach to activity in prioritised regions. In September the business events-specific campaign
7 7 The establishment of the Destination New Zealand Its theme ‘targeting for value’ is perfectly aligned with Superyacht Attraction Initiative formalised a Tourism New Zealand’s strategic priority to ‘focus partnership with New Zealand Trade and Enterprise, on higher-value visitors’. The objective is supported Auckland Tourism Events and Economic Development directly by the increased investment in international and New Zealand Marine, to promote and grow the business events, premium visitor segments and superyacht offering - a sector that is currently worth special interest travel sectors, as outlined above. more than $39 million to the New Zealand economy each year. Via the strategic priority to ‘partner to extend reach’ Tourism New Zealand will continue to work closely Work to target high-value visitors was complemented with airlines and airports to encourage growth in by a new focus on special interest travel sectors, airline services and ‘grow sustainable air connectivity’. including youth travellers, walking and hiking, golf and, of course, people wanting to see the country by Activity to identify and attract people that visit New bike using the new New Zealand Cycle Trail. Research Zealand in the shoulder and off seasons, particularly confirms that these visitors tend to stay longer and from emerging markets like India and Indonesia, travel more widely, in turn spreading economic value. assists the industry improve ‘productivity for profit’. The strategic priorities to ‘drive preference to visit Updated content hubs on newzealand.com, as well New Zealand’ and to ‘grow a portfolio of markets and as digital and print campaigns and new imagery and segments’ underline Tourism New Zealand’s activities video content, are successfully driving awareness of supporting these themes. the country’s unique product offering, inspiring high- value special interest travellers to put New Zealand The organisations’ involvement with the i-SITE network, at the top of their holiday list. Qualmark and the China market through the Approved Destination Status (ADS) and Premier Kiwi Partnership The establishment of Golf Tourism New Zealand in programmes, contributes to the theme ‘drive value May, made up of key players from the golf industry through outstanding visitor experience’ under the who first came together as part of the Golf Working strategic priority to ‘optimise delivery capability’. Group in 2013, confirmed the advisory group’s ongoing role to support the growth of high-value Also under this strategic focus, the framework’s visitor arrivals. The group now provides business final theme of ‘insight’ is supported by development support to the New Zealand golf tourism distribution of research analysis to the industry on industry which in turn is supporting Tourism tourismnewzealand.com, through webinars, the New Zealand’s activity to lift the current estimated regular engagement via regional Roadshows, and annual expenditure by international golf tourists attendance at industry events and conferences. to $223 million by 2017. The year ahead Supporting Tourism 2025 With the knowledge that the association of New Tourism New Zealand welcomed the release of Zealand and Middle-earth is such a powerful driver ‘Tourism 2025 - Growing Value Together/Whakatipu of demand for travel to New Zealand, Tourism New Uara Ngatahi’ by the Tourism Industry Association Zealand will maximise the opportunity to amplify the in March 2014, with its aspirational goal to reach association across the release period of the third and $41 billion value by 2025. The framework sees the final film from December 2014. This will see increased industry come together with a shared vision for where investment in the Western long-haul markets, we want to get to and how, with a collective focus, while investment in the emerging markets of India, we can get there. Indonesia and Latin America will work to broaden the organisations geographical portfolio. Tourism New Zealand’s current three-year marketing strategy fits closely with the framework, supporting the Activity in the international business events, premium core focus of Tourism 2025 for the industry to move and special interest sectors will create new value in in the same direction and target the same areas to selected segments to drive disproportionate value deliver the greatest economic returns for the country. to the wider industry. Leverage of up-coming major events including the ICC Cricket World Cup and FIFA
88 U-20 World Cup, both being held in 2015, will drive additional visitors to New Zealand and increase New Zealand’s profile.
Two significant projects that touch on all our activity and will impact the industry will also be delivered. The refresh of the 100% Pure New Zealand campaign will provide greater differentiation of New Zealand in an increasingly competitive market, while work to consider the need for a more sustainable tourism sector, and a potential action plan for how to achieve this, is something that will feature heavily in Tourism New Zealand’s work with industry.
Thanks and acknowledgements
The last year has seen a number of changes to the New Zealand Tourism Board. On behalf of everyone at Tourism New Zealand we farewelled Board members Jennie Langley, Henry van Ash and Malcom Johns and thanked them for their contribution and commitment throughout their tenures. We welcomed Norm Thompson, Mike O’Donnell (MOD), Jacqui Spice and Chris Parkin, whose respective insight and industry knowledge will provide significant value to the organisation in the coming years. We also welcomed the reappointment of Kerry Prendergast as Chair of the New Zealand Tourism Board for a further one-year term.
Our thanks go to the entire board, the executive, and to the global whanau at Tourism New Zealand for their dedication and commitment. We believe we have strong foundations in place to deliver another record year of results to the tourism industry and the wider New Zealand economy.
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Fraser Clements Governance
The Board Conduct
The New Zealand Tourism Board (trading as Tourism New Zealand expects all its employees Tourism New Zealand) is a Crown entity established and board members to maintain the highest ethical under the New Zealand Tourism Board Act 1991 and standards. Tourism New Zealand has in place an is a Crown agency for the purposes of the Crown employee code of conduct which all staff sign on Entities Act 2004. joining the organisation. Tourism New Zealand also has a formal code of conduct for its board members, Tourism New Zealand is governed by a Board which is consistent with the code released by the appointed by the Minister of Tourism. All decisions State Services Commission. relating to the operation of Tourism New Zealand are made by, or under the authority of, the Board Disclosure of Interests in accordance with the New Zealand Tourism Board Act 1991, and the Crown Entities Act 2004. The Board is conscious of its obligations to ensure that board members avoid any conflicts of interest in In accordance with the New Zealand Tourism Board their decision-making process. The Board ensures Act 1991, the Board must have no fewer than five, that proper process is followed and that members’ and no more than nine, members. interests are formally recorded, with any changes or additions being disclosed at the start of each meeting. The Minister’s formal line of accountability with Members excuse themselves from any discussions in Tourism New Zealand is through the Board’s Chair. which their duty as a member could be compromised. Board appointments are generally for two or three years, with reappointment possible. The composition Risk Management of the Board reflects a balance of tourism industry and commercial expertise. Tourism New Zealand manages its risks through a risk management framework; a process that requires it to The Board meets at least six times a year, including identify legislative and business risks arising from its a two-day meeting to review the organisation’s strategic direction and operating environment. ongoing strategic direction. This strategy meeting initiates the business planning process and informs Tourism New Zealand’s risk management policy is the preparation of the Statement of Intent 2013-2016. reviewed annually by the Audit Committee. The Chief Executive reports to the Board on the matter of new or Delegation escalated risks and the processes in place to manage these appropriately. The Board delegates day-to-day management of Tourism New Zealand to the Chief Executive who is Tourism New Zealand conducts its own internal audits, directly accountable to the Board through the Chair. often with the involvement of its external auditors. Tourism New Zealand’s Delegated Authorities Policy Audits are agreed by the Audit Committee and is set by the Board and reviewed annually. programmes of work are developed with input by the external auditors. The results are reported back to the Appropriate formal processes are in place for Audit Committee. reporting back to the Board. Board Committees Induction and Development Committees of the Board are convened to deal Tourism New Zealand introduces each new board with specific matters and currently include the Audit member to the organisation through an induction Committee and Remuneration Committee. process which includes time spent with senior executives and their teams. Members are also The Audit Committee meets at least twice a year. encouraged, where appropriate, to attend tourism- It reviews Tourism New Zealand’s internal control related events such as TRENZ and other framework, external audit relationships and industry events. engagements, health and safety, risk management and financial reporting, including International Financial Reporting Standards (IFRS).
1010 The Remuneration Committee meets on an adhoc basis. It reviews the performance and remuneration of the Chief Executive and senior management. The committee also approves proposed organisation-wide remuneration policies.
Subsidiary Companies
Tourism New Zealand has a controlling interest in two subsidiary companies: a 60 per cent shareholding in Qualmark New Zealand Limited, and, (through the terms and conditions of a relationship agreement that meets the criteria determined in NZ IAS 27 for consolidating investments in subsidiaries), the Visitor Information Network Incorporated, trading as i-SITE New Zealand.
Three of Tourism New Zealand’s Executive Team, including the Chief Executive, are directors of Qualmark. Tourism New Zealand appoints three members to the i-SITE New Zealand Board, including one Tourism New Zealand executive member.
The Board of Tourism New Zealand is provided with financial information from each organisation at each board meeting, as well as commentary on performance and significant issues.
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Chris Sisarich Board Members
KERRY PRENDERGAST Chair JOHN THORBURN Following a three-year term, Kerry Prendergast was re-appointed as John is Chief Executive of InterCity and was most recently the Chair of the New Zealand Tourism Board on 26 June 2014 for a one- Chief Executive of Ngai Tahu Tourism. He has previously held senior year term. She is the former Mayor of Wellington and former Vice- positions in a range of industries, including manufacturing, marketing President of Local Government New Zealand. She holds an MBA and telecommunications. John has also held recent Board positions from Victoria University where she is also a Distinguished Alumni. with the New Zealand Tourism Industry Association and the She received a CNZM in 2011 for services to local government. New Zealand Conservation Authority. John was appointed to the Kerry is currently Chair of the Environmental Protection Authority, New Zealand Tourism Board on 7 August 2012 for a three-year term. the New Zealand Festival and the Wellington Jazz Music Festival Trust. She is also a Director of WorkSafe New Zealand, Kirkcaldie & Stains, Phoenix Football Club and is a Trustee of the New Zealand Community Trust, Victoria University and Motu Foundation. CHRIS PARKIN Chris Parkin, is the owner of New Zealand’s only boutique art hotel, Museum Art Hotel in Wellington. Formerly an investment banker, Chris was a Wellington City Councillor for nine years before retiring in 2004. RICHARD LEGGAT Deputy Chair Chris is Chairman of Wellington Venues Ltd and Chairman of Te Whaia Richard has a varied background across business, marketing and Services. In the 2011 Queen’s Birthday honours list he was awarded a e-commerce. He is now a full time director. Companion of the New Zealand Order of Merit for services to the arts Richard is the chairman of NZ Cycle Trail Inc, the entity charged and business. with ensuring the success and sustainability of the government’s Chris was appointed to the New Zealand Tourism Board in December national cycle trail initiative. He is also on the Board Snow Sports NZ, 2013, with his three year term commencing in April 2014. New Zealand Post and Education NZ. He is a founding committee member of the Eating Disorder Association of New Zealand. Richard, who was first appointed to the New Zealand Tourism Board on 1 February 2010, was reappointed for a second term that expires JACQUI SPICE in February 2016 and appointed Deputy Chair in December 2013. Jacqui Spice is the founder and CEO of Touch of Spice and has over two decades of experience in luxury travel and tourism both in New Zealand and internationally. JENN BESTWICK Touch of Spice has offices in both Queenstown and Auckland Jenn Bestwick’s professional career has been largely in strategy and specialising in luxury travel and destination management services business development having worked extensively in both the public throughout New Zealand. and private sectors. Jenn has recently been working with Local Jacqui was appointed to the New Zealand Tourism Board on Authorities, Iwi and the primary and hydro-generation sectors on 17 December 2013, with her three year term commencing on fresh water management in the Canterbury region. 27 January 2014. Jenn is the current Chair of Christchurch Polytechnic Institute of Technology and board member of New Zealand Qualifications Authority. Jenn was appointed to the New Zealand Tourism Board on 7 August NORM THOMPSON 2012 for a three-year term. Norm Thompson had a long career at Air New Zealand and held the role of deputy CEO prior to his retirement at the end of 2013. He is the current deputy Chair of ATEED (Auckland Tourism, Events and Economic Development), Director of Dot Kiwi Ltd and a Trustee MIKE O’DONNELL on the Young Enterprise Trust Board. Norm Chairs Golf Tourism New Mike, “MOD”, O’Donnell is Chief Operating Officer of Trade Me, Zealand and is a Committee Member of the 2015 New Zealand Golf New Zealand’s largest online marketplace. MOD is a Director of Hope. In 2013 Norm was made an Officer of the New Zealand Order online global music company Serato, Director of Raygun, Member of Merit for services to business and tourism. of the MBIE Business Insight Board and a business columnist for Fairfax Media. Norm was appointed to the New Zealand Tourism Board in December 2013, with his three year term commencing in April 2014. He was previously the chairman of Positively Wellington Tourism and has managed several online travel businesses. MOD was appointed to the New Zealand Tourism Board on 15 October 2013 for a three year term. JAMIE TUUTA Jamie is currently the Maori Trustee and CEO of Te Tumu Paeroa. He is Ngāti Mutunga, Ngati Tama, Ngati Maru, Te Ati Awa and Taranaki Iwi. He has held a range of governance positions in the health, iwi development, fishing, agribusiness and investment sectors. He is currently a director of Aotearoa Fisheries Ltd, Te Ohu Kaimoana Trustee Ltd and Wools of New Zealand. Jamie is a recipient of the Sir Peter Blake Emerging Leadership Award. Jamie was appointed to the New Zealand Tourism Board in March 2013 for a three-year term.
NB: Malcom Johns was Deputy Chair of the New Zealand Tourism Board until his term expired in October 2013. He was replaced by Richard Leggat. Henry Van Asch and Jennie Langley were members of the New Zealand Tourism Board until their terms expired in April 2014. 12 Core Leadership Team
KEVIN BOWLER Chief Executive Kevin Bowler joined Tourism New Zealand as Chief Executive in January 2010. He has marketing and business leadership experience spanning consumer packaged goods, technology and media brands in New Zealand and internationally. Before joining Tourism New Zealand, Kevin was inaugural CEO for start-up Yahoo!Xtra, a joint venture between Yahoo!7 and Telecom New Zealand. Prior to that Kevin held a number of leadership roles with Telecom New Zealand including heading marketing across all products for the consumer business. He also has extensive packaged goods marketing experience in New Zealand and the United Kingdom. Kevin is also on the Board of the Tourism Industry Association and the New Zealand Story.
JUSTIN WATSON Director of Trade, PR and Major Events Justin Watson manages Tourism New Zealand’s global trade and PR activity including leading the offshore trade teams, the business events and premium sectors, trade marketing and aviation along with international PR and major events. Justin joined Tourism New Zealand in 2010 as General Manager - Marketing Communications. With an extensive and successful marketing career spanning the last 16 years, Justin has sound strategic marketing and management experience and a demonstrated track record of successfully achieving marketing and business outcomes.
ANDREW FRASER Director of Marketing Andrew Fraser manages the most visible aspect of the 100% Pure New Zealand marketing campaign: consumer marketing and advertising activity. This includes overseeing the communication strategy, creative development, planning, researching and implementation of campaign and digital advertising activity across Tourism New Zealand’s key international markets. Andrew is a seasoned senior executive and marketing leader with over 20 years experience. He has developed and launched one of New Zealand’s most successful drink and youth brands in recent years, V Energy drink. Prior to joining Tourism New Zealand, Andrew ran his own strategic consultancy business in Auckland. He has held senior marketing and executive roles, gaining international experience with Cadbury/Kraft and Frucor Beverages/Danone.
SUE PARCELL General Manager Finance and IT Sue Parcell is responsible for managing and leading the financial and accounting functions of Tourism New Zealand, while also managing our IT infrastructure. She also oversees the strategic planning and reporting function. Sue has had considerable experience in the tourism industry including senior finance and general management roles. Prior to this she worked in finance roles in business services in New Zealand and overseas.
CHRIS ROBERTS General Manager Corporate Affairs Chris Roberts joined Tourism New Zealand in July 2012 with responsibility for overseeing the relationships with key New Zealand stakeholders, including Ministers, government agencies, media and the New Zealand tourism industry. Chris began his career as a broadcast journalist before working at Parliament - including three years with the Minister of Tourism - which was followed by management roles in the energy sector before joining Tourism New Zealand.
ROSE TUA General Manager People Rose Tua is responsible for developing and implementing Tourism New Zealand’s human resources management strategy to ensure that the leadership and management of all elements of the employee lifecycle is aligned to our organisation’s direction. This includes recruitment, capability development and talent management, performance management and remuneration and reward initiatives for staff. Rose joined Tourism New Zealand from senior HR and leadership roles at AXA New Zealand. Rose has an extensive and successful human resources management career which has included a variety of HR leadership roles across financial services, telecommunications, higher education, and health services in New Zealand and the UK.
13 Tourism Outcomes
This section describes the performance of tourism outcomes that outputs delivered by Tourism New Zealand contribute to. Tourism New Zealand’s outputs are described later in the Statement of Service Performance starting page 22 in this report.
International tourism is New Zealand’s second largest export
International tourism is New Zealand’s second largest export (behind dairy), a comparison showing how international tourism compares with other major export sectors is shown below.
International tourism compared with New Zealand’s other key exports
$14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 YE March YE March YE March YE March YE March YE March YE March YE March 2006 2007 2008 2009 2010 2011 2012 2013*
International tourism Dairy products, including casein Meat and meat products
Wood and wood products Seafood
*Note: YE March 2013 results are provisional
New Zealand level outcome: The value of international visitors to New Zealand is sustainably increased
Tourism New Zealand works closely with the wider New Zealand tourism industry to ensure strong economic outcomes for New Zealand. In particular, Tourism New Zealand seeks to contribute to the New Zealand level outcome which is ‘the value of international visitors to New Zealand is sustainably increased’. The outputs delivered by Tourism New Zealand contribute to the high-level outcome; success is also influenced by variables that are outside both Tourism New Zealand and the wider tourism industry’s control.
The number of visitors to New Zealand and the amount they spend depends on a range of variables, these include:
• Tourism New Zealand’s marketing activities • The marketing activities of competing destinations and the efforts of other National Tourism Offices • The relative strength of the New Zealand brand • The impact of significant natural events both in New Zealand and in target markets • Exchange rates and the general economic conditions in countries of origin • Airline scheduling decisions, seat capacity on air routes and ticket pricing • Major events
High-level indicators describing the key economic contributions that international visitors made to the New Zealand economy are contained in the Tourism Satellite Account. The most recent results for year ended March 20139 are described in the table on the next page.
9 Source: Tourism Satellite Account 2013, Statistics New Zealand (Produced annually for YE March) 14 MEASURE YE MARCH 2011 YE MARCH 2012 YE MARCH 2013 TREND
International tourism expenditure in NZ $9,428m $9,565m $9.778m Tourism direct contribution to GDP 3.6% 3.6% 3.7% International tourism as a % of 15.9% 15.2% 16.1% total exports Tourism full-time employees - direct 104,900 (5.4%) 108,800 (5.6%) 110,800 (5.7%) Tourism full-time employees - direct 163,400 (8.5%) 169,500 (8.7%) 172,100 (8.8%) & indirect Total tourism expenditure $22,878m $23,402m $23,943m (incl. domestic) Tourism’s contribution to GST earnings $1,292m $1,318m $1,343m
*Note YE March 2013 results are provisional
The table above shows key indicators for year ended March 2013 all moving in a positive direction. Strong growth in visitor arrivals and spend for the 2013/14 period (highlighted in the following sections) provide confidence that a positive result will be reflected in the next Tourism Satellite Account, due to be published towards the end of 2014.
STRONG PERFORMANCE RECORDED IN INTERNATIONAL VISITOR ARRIVALS ACROSS TOURISM NEW ZEALAND’S PRIORITY MARKETS.
2013/14 delivered significant growth in international arrivals with total arrivals up 5.7 per cent, driven by holiday arrivals which were up 8.1 per cent.
Importantly, the long-staying Western markets of the UK, Germany and USA returned to strong growth, accompanied by a continued steady increase from New Zealand’s largest visitor market, Australia.
Significant changes occurred in the China market with positive shifts towards a higher-quality visitor from China, helped significantly by the introduction of the China Travel Law in October 2013. This law change slowed visitor growth rates for the year but also contributed to positive increases in the average length of stay, up by 16.9 per cent year-on-year, increasing from 6.5 days to 7.6 days for the year ended June 2014.
Total and holiday arrivals from Tourism New Zealand’s priority markets are set out in the tables below:
TOTAL INTERNATIONAL VISITOR ARRIVALS BY MARKET
Target market YE 30 June 2012 YE 30 June 2013 YE 30 June 2014 Change 2013/2014 (%) Priority 1 core markets Australia 1,175,296 1,183,856 1,235,808 4.39% China 175,488 222,720 240,496 7.98% USA 182,816 189,456 211,712 11.75% Priority 2 core markets UK 214,448 189,008 194,384 2.84% Germany 62,992 65,040 75,808 16.56% Japan 67,072 74,960 75,520 0.75% Priority emergigng markets LATAM* 29,360 24,144 25,008 3.58% Indonesia 11,824 12,464 14,576 16.94% India 29,648 29,936 33,904 13.25%
15 Target market YE 30 June 2012 YE 30 June 2013 YE 30 June 2014 Change 2013/2014 (%) Priority 3 markets France 37,136 25,216 29,264 16.05% Canada 49,296 46,960 48,432 3.13% Singapore 38,736 37,696 44,704 18.59% Malaysia 36,416 25,152 30,032 19.40% Thailand 16,336 18,688 21,728 16.27% Rest of world 501,536 480,496 501,248 4.32% Total - All markets 2,628,400 2,625,792 2,782,624 5.97%
HOLIDAY INTERNATIONAL VISITOR ARRIVALS BY MARKET
Target market YE 30 June 2012 YE 30 June 2013 YE 30 June 2014 Change 2013/2014 (%) Priority 1 core markets Australia 459,984 451,088 477,568 5.87% China 123,408 162,912 177,936 9.22% USA 101,936 110,688 127,632 15.31% Priority 2 core markets UK 91,200 73,392 76,448 4.16% Germany 42,736 44,224 53,760 21.56% Japan 43,712 49,392 47,776 -3.27% Priority emerging markets LATAM* 16,400 13,104 14,080 7.45% Indonesia 7,152 7,888 9,360 18.66% India 14,080 14,192 16,224 14.32% Priority 3 markets France 24,688 15,872 18,736 18.04% Canada 27,040 25,456 26,352 3.52% Singapore 22,944 21,824 26,816 22.87% Malaysia 24,960 15,392 18,640 21.10% Thailand 7,568 8,848 10,704 20.98% Rest of world 222,032 210,016 221,264 5.36% Total - All markets 1,229,840 1,224,288 1,323,296 8.09%
*LATAM includes: Brazil, Mexico, Argentina and Chile
Strong growth in international expenditure reflects improved visitor arrival performance
International visitor expenditure10 for the year ended 30 June 2014 was $7.150 billion, an increase of 11.2 pecent on 2012/13. This significant increase in spend follows on from the strong performance in visitor arrivals and with total holiday stay days up 12.9 per cent and expenditure from holiday visitors up 23.0 per cent, shows that international visitors are staying longer and spending more, despite a relatively strong New Zealand dollar. Note: International visitor expenditure excludes international airfares and international student expenditure.
10 Source: International Visitor Survey (IVS), Ministry of Business Innovation and Employment. Note: In 2012/13 the Ministry of Business Innovation and Employment redeveloped the International Visitor Survey (IVS) as part of the Tourism Data Improvement Programme. As a result of this change, IVS expenditure methodology changed which resulted in international visitor expenditure lifting. The IVS was back cast revising previous results in line with the new methodology. 16 International visitor expenditure for 2012/13 is set out by market/region in the table below11:
TOTAL INTERNATIONAL VISITOR EXPENDITURE BY MARKET
Market YE 30 June 2012 YE 30 June 2013 YE 30 June 2014 Change 2013/2014 (NZ$m) (NZ$m) (NZ$m) (%) Australia 2,222 2,195 2,110 -3.9% China 579 721 912 26.5% UK 790 601 673 12.0% USA 481 505 773 53.1% Germany 215 229 375 63.8% Japan 232 218 202 -7.3% Korea 128 129 143 10.9% Canada 150 136 283 108.1% Rest of Asia 478 609 571 -6.2% Rest of Europe 698 537 759 41.3% Rest of Americas 61 83 70 -15.7% Other 612 468 279 -40.4% Total 6,646 6,431 7,150 11.2%
11 France and Malaysia results not available due to sample size too small to be representative. 17 Tourism New Zealand Outcomes
Tourism New Zealand’s output classes in 2013/2014 were carefully selected for the contribution they would make to the achievement of the following organisation-specific outcomes:
Tourism New Zealand Outcome 1 – Preference: Tourism New Zealand’s marketing activity increases potential visitor preference for New Zealand.
Tourism New Zealand Outcome 2 – Conversion: Tourism New Zealand’s activity converts international visitors’ preference for New Zealand into travel.
Tourism New Zealand Outcome 3 - Visitor Experience: Tourism New Zealand’s activity enhances visitor experience through access to information and encouraging quality product that meets specific visitor needs.
These outcomes, which are described in detail in Tourism New Zealand’s Statement of Intent 2013-2016, have been developed to support the New Zealand Level Outcome.
Measures used to monitor the effect of Tourism New Zealand outputs on the outcomes are described below.
Tourism New Zealand Outcome 1 – Preference: Tourism New Zealand’s marketing activity increases potential visitor preference for New Zealand.
There are many destinations competing to attract visitors. To achieve the government’s economic priorities and contribute to achieving tourism industry outcomes, visitors need to choose New Zealand over other destinations. This means they must have a preference for New Zealand as a destination and must be given an easy path to purchase.
Active Considerers’ preference for New Zealand as a holiday destination
Tourism New Zealand uses resources to target a group of consumers called ‘Active Considerers’. By definition an Active Considerer considers New Zealand an appealing destination to visit, is seriously considering New Zealand for their next destination, names New Zealand within their top five most preferred destinations and would be willing to spend above a set threshold on their trip (differing by market). Research indicates over 60 million Active Considerers exist across the six markets of Australia, China, USA, UK, Germany and Japan.
Tourism New Zealand’s focus is on increasing the number of Active Considerers who consider New Zealand their first or second most preferred destination and to grow the incidence of Active Considerers in emerging markets where New Zealand does not have such a strong presence.
To help gauge the impact marketing spend is having on the level of preference Active Considerers have for New Zealand over other competing destinations, Tourism New Zealand undertakes regular campaign tracking within key and emerging markets and for certain special interest categories.
A summary of preference results for FY14 is provided in the tables below:
PROPORTION OF ACTIVE CONSIDERERS IN KEY MARKETS WHO CONSIDER NZ THEIR FIRST OR SECOND PREFERRED DESTINATION (95% CONFIDENCE).
Market 2013/14 target 2013/14 Actual 2012/2013 Actual Australia 53% 58% 52% China 77% 80% 75% USA 50% 60% 48% UK 61% 67% 54% Germany 53% 63% 53% Japan 57% 58% 51%
Preference for New Zealand grew significantly across all of Tourism New Zealand’s key markets with record highs in several markets and all targets for the year exceeded. This strong performance was reflected in the positive visitor arrivals results from these markets.
18 PROPORTION OF ACTIVE CONSIDERERS IN EMERGING MARKETS WHO CONSIDER NZ THEIR FIRST OR SECOND PREFERRED DESTINATION
Market 2013/14 target 2013/14 Actual 2012/2013 Actual India 62% 66% New measure Indonesia 31% n/a New measure Latin America (Brazil) 34% 52% New measure
INCIDENCE OF ACTIVE CONSIDERERS IN EMERGING MARKETS INCREASES
Market 2013/14 target 2013/14 Actual 2012/2013 Actual India 34% 32% New measure Indonesia 44% n/a New measure Latin America (Brazil) 45% n/a New measure
With the implementation of Tourism New Zealand’s new three year marketing strategy, 2013/14 saw Tourism New Zealand invest in emerging markets India, Indonesia and Latin America (Brazil). With the exception of India, these were new markets for Tourism New Zealand to invest in and it has taken time to develop appropriate research practices consistent with other markets that Tourism New Zealand monitors. As a result it has not been possible to obtain all information for all markets. This has been particularly difficult when measuring the incidence of Active Considerers.
Where information has been obtained, it has been encouraging to see positive results, in particular the strong levels of preference for New Zealand amongst Active Considerers.
PROPORTION OF ACTIVE CONSIDERERS WHO CONSIDER NZ THEIR FIRST OR SECOND PREFERRED DESTINATION FOR SPECIAL INTEREST ACTIVITY IN SPECIFIED MARKETS
Market 2013/14 target 2013/14 Actual* 2012/2013 Actual Walking/Hiking 33% 83% New measure Cycling 33% 77% New measure Golf 36% 69% New measure
*Please note the targets stated in Tourism New Zealand’s Statement of Intent 2013-2016 reflected the proportion of Active Considerers that consider NZ their ‘first’ preferred destination, not their ‘first and second’. The results reflect the wording of the KPI.
Digital channels remain pivotal to driving preference for New Zealand as a destination
Digital channels including newzealand.com, digital brand campaigns and social media platforms all play a key role in driving preference for New Zealand amongst Active Considerers. Tourism New Zealand monitors the levels of connection with target audiences through a range of measures focused on engagement and interaction with Active Considerers.
19 Tourism New Zealand tracks progress towards digital outcomes through the following measures.
Result / Measure 2013/14 target 2013/14 Actual 2012/2013 Actual Average number of total visits to 1,177,000 1,448,210 1,172,607 newzealand.com per month Average monthly ‘active visits’ to 516,000 623,292 486,640 newzealand.com12 Website visits where intent to visit 75% 84% 72% New Zealand was maintained or increased (%) Impressions generated from owned social 14,750,000 575,700,000 New measure platforms (Facebook and Weibo) Size of TNZ social media fan base 1,350,000 1,680,315 1,099,089 Active considerers associate NZ with key 65% message pull Not Measured 86% brand attributes through in key markets Campaign Effectiveness - proportion of those seeing the ad that are more motivated to visit NZ as a result USA At least 60% 60% New measure UK At least 60% 75% New measure Germany At least 55% 71% New measure China At least 65% 66% New measure Japan At least 55% 73% New measure
Tourism New Zealand’s online channels continued to perform strongly in 2013/2014, building on the previous year’s strong performance. Most targets were exceeded at both a global and local market level. Tourism New Zealand’s approach to social media evolved throughout the year with an increased investment in using paid media to drive focus visitors to social media platforms resulting in an exponential growth in impressions generated from Tourism New Zealand owned social media platforms (an impression occurs when a visitor interacts with a social media platform).
Tourism New Zealand Outcome 2 – Conversion: Tourism New Zealand’s activity converts international visitors preference for New Zealand into travel.
To achieve the government’s economic priorities and contribute to achieving the industry’s outcomes of increasing the value of visitors to New Zealand, high-value visitors need to be identified and persuaded to choose New Zealand over other destinations.
Tourism New Zealand’s level of understanding of Active Considerers in key markets has increased over time through experience and on-going investment in market research. This has allowed distinct target segments and special interest sectors to be more readily identified and enables marketing activity to be more accurately directed towards higher-value special interest segments of the markets. Special interests can be a strong incentive to attract visitors to New Zealand for a variety of interests such as business events, golf, ski, walking, cycling, backpacking etc. Likewise the younger 18-29 year old traveller presents significant opportunity.
Using this improved targeting within markets, Tourism New Zealand focuses on converting the pool of people ‘actively considering’ a trip to New Zealand into actual visitors. This is achieved by drawing Active Considerers to newzealand.com, inspiring them with engaging content, then drawing them down the path of purchase by referring onto partners’ sites where a purchase (e.g. an airline ticket or experience) can be made. In some cases, engagement is more direct by sending Active Considerers directly to campaign pages or partner sites where they may be able to make a purchase (e.g. an airline fare-finder).
Joint venture partnerships provide the opportunity to deliver co-ordinated marketing activity in market and provide the opportunity to package Tourism New Zealand’s activity with a product that potential visitors can buy, thereby activating opportunities for conversion. Partnerships also extend Tourism New Zealand’s marketing reach through pooling funding with partners and leveraging each other’s expertise and support systems, increasing their efficiency and effectiveness.
12Active visits: A visit where the visitor interacts with the site’s content or functionality 20 Tourism New Zealand tracks progress towards this outcome through the following measures.
Result / Measure 2013/14 target 2013/14 Actual 2012/2013 Actual Average monthly referrals to industry via 149,000 182,699 174,930 newzealand.com13 ROI of partner campaigns14 1:5 1:20 New measure (Average across key markets) Value of partnership contributions Total: $22.00m $20.4m New measure Annual referrals to industry via TNZ Launch of app by end Essential New Zealand New measure mobile application quarter one 2013/14 mobile app launched on 26 June 2013 36,000 56,011 New measure
Performance against measures for this outcome was generally positive through the year. Particularly strong results were seen for referrals to industry from newzealand.com and the high return on investment from joint venture partnership campaigns. Launching the Essential New Zealand mobile app was an important milestone and the referrals generated from the app exceeded expectations.
The overall contribution from partners was $20.4m, this is below the target of $22m set for FY14. This result is influenced by factors including; an aspirational target being set for FY14, some partnered campaigns being delayed or rescheduled at the request of partners during the year, and the suspected under reporting of non-financial contributions for some projects. The final result of $20.4m remains a substantial figure that considerably extends the reach and effectiveness of Tourism New Zealand’s activity. Tourism New Zealand previously reported on this measure in FY12, when $16m in partnership contributions were recorded.
Tourism New Zealand Outcome 3 - Visitor Experience: Tourism New Zealand’s activity enhances visitor experience through access to information and encouraging quality product that meets specific visitor needs.
To maintain and grow value from visitors it is essential that they have a great experience while in New Zealand and as a result, enhance New Zealand’s reputation as a visitor destination. Providing good information about the destination and the experiences available prior to and during a visit is a vital part of ensuring this happens.
To facilitate a positive experience, visitors need to have access to quality information on the things they can do. newzealand.com and the i-SITE network are both essential sources of information for Active Considerers and help visitors make informed choices about the products and experiences they are purchasing.
Tourism New Zealand is also active in ensuring quality standards are evident in the market for visitors through Qualmark (a joint venture with AA) and the activities delivered by the China Market Development Unit, including monitoring of the Approved Destination Status (ADS) programme for Chinese tour operators and the Premier Kiwi Partnership (PKP) programme.
Tourism New Zealand tracks progress towards this outcome through the following measures.
Result / Measure 2013/14 target 2013/14 Actual 2012/2013 Actual Satisfaction of overall tourism experience Maintain at or above i-SITE users: 9.0/10 i-SITE users: 9.1/10 for all i-SITE visitors compared to those 9.0/10 and above Non-i-SITE users: 9.1/10 Non-i-SITE users: who did not use an i-SITE satisfaction levels of 9.0/10 non i-SITE users Number of Qualmark licenses held 2,200 2,088 2,157 Average number of total visits to 1,177,000 1,448,210 1,294,000 newzealand.com per month Level of satisfaction of Chinese visitors Increase from 2012/13 8.9 8.4/10 Chinese visitors increases15 30% 28.8% New measure (baseline 24%)
The decrease in i-SITE user satisfaction relative to non i-SITE users may be attributed to the changing role of i-SITEs in regards to bookings and information, and the wider options that are available to tourists through the use of internet and smartphone applications. Tourism New Zealand will continue to monitor this shift in customer satisfaction carefully.
13 Referral rates from paid traffic measure the number of people who, once drawn to newzealand.com from paid search or display digital activity, are then delivered to an operator or partner site where travel/experiences can be purchased. 14 ROI is calculated by: (passengers booked) x (average visitor spend for market)/campaign spend. This generates a ratio that shows for every dollar we spent we generated ‘x’ amount of value. Note: ROI relates to campaign spend only and is not intended to represent a ROI for overall Tourism New Zealand activity. 15 Includes ADS: mono, dual south island, dual long stay, General group, General Visitor visa: independent holiday, conference delegate visa, PRC Other Tourist Group. 21 Statement of Service Performance
Overview
This report covers the New Zealand Tourism Board’s (trading as Tourism New Zealand) service performance for the year ending 30 June 2014 against the forecast statement of activities, performance measures and standards set out in Tourism New Zealand’s Statement of Intent 2013-2016.
Tourism New Zealand’s resource allocation decisions were based on the extent to which each proposed activity would contribute towards the delivery of outputs and outcomes described in the 2013-2016 Statement of Intent.
In 2013/2014, Tourism New Zealand’s activities were funded primarily from one appropriation from within Vote Tourism.
STATEMENT OF SERVICE PERFORMANCE
2014 2014 2013 Actual Budget Actual $000s $000s $000s Appropriation 1: Marketing of New Zealand as a Visitor Destination Crown revenue $113,350 $113,351 $83,851 Other revenue1 $8,424 $5,870 $5,745 Total expenses2 $121,987 $119,221 $89,607 Other Crown revenue: Conference Assistance Fund Crown revenue $380 $0 $316 Expenses $380 $0 $316 Total revenue $122,154 $119,221 $89,912 Total expenses $122,367 $119,221 $89,923
OUTPUT CLASS PERFORMANCE
In 2013/2014, Tourism New Zealand delivered the following six categories of output classes:
1. Deliver key visitor messages through the 100% Pure New Zealand campaign activity 2. Deliver key visitor messages through third parties such as media, opinion leaders and broadcast production 3. Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach 4. Inform and inspire global travel sellers to assist them to market New Zealand 5. Deliver inspiring and informative information for potential visitors 6. Communicate and engage with New Zealand’s tourism industry to align industry investment with Tourism New Zealand areas of focus
These output classes were funded primarily through Appropriation 1: Marketing of New Zealand as a Visitor Destination.
1 Other revenue includes bank interest, partner revenue, excludes foreign exchange gains. 2 Total expenses include offset from foreign exchange reserve to protect the funding lines from adverse movements in foreign exchange during the year on offshore expenditure. Total expended exclude other foreign exchange losses. 22 OUTPUT CLASS PERFORMANCE
2014 2014 Actual Budget $000s $000s Appropriation 1: Marketing of New Zealand as a Visitor Destination Output Class 1: Deliver key visitor messages through the 100% Pure New Zealand $51,3941 $54,428 campaign activity Output Class 2: Deliver key messages through third parties such as media, opinion $9,909 $9,227 leaders and broadcast production Output Class 3: Partner with the travel industry to convert interest in New Zealand $19,925 $16,882 into travel and to extend marketing reach Output Class 4: Inform and inspire global travel sellers to assist them to market New Zealand $9,655 $10,329 Output Class 5: Deliver inspiring and informative information for potential visitors $4,551 $4,596 Output Class 6: Communicate and engage with New Zealand’s tourism industry to align $593 $824 industry investment with Tourism New Zealand areas of focus Other Crown revenue: Conference Assistance Fund — CAP Crown Output Class 4: Inform and inspire global travel sellers to assist them to market New Zealand $380 $0 New Zealand and offshore support costs2 $25,960 $22,935 Total $122,367 $119,221
OUTPUT CLASS 1: DELIVER KEY VISITOR MESSAGES THROUGH THE 100% PURE NEW ZEALAND CAMPAIGN ACTIVITY
Marketing is Tourism New Zealand’s largest output expenditure. Tourism New Zealand delivers a range of marketing outputs, which broadly fit into the categories of campaign and market research.
Campaign
New Zealand’s 100% Pure New Zealand campaign is held in high regard and consistent messaging of this proposition has made it one of the most recognised and respected destination campaigns globally. Tourism New Zealand continues to drive improvements in balancing the localisation of work with global insights and shared learning from previous work.
Tourism New Zealand’s target audiences are those that are already actively considering a visit to New Zealand. As Tourism New Zealand’s understanding of Active Considerer markets has increased, it has become possible to more accurately target activity towards higher-value segments, including Business Events and Premium campaign activity, visitors from emerging markets, special interest sectors (walking/hiking, cycling, golf, fishing), backpacker and working holiday visitors, and China mono/FIT (free, independent travellers) visitors.
Tourism New Zealand activity focuses on reaching Active Considerers primarily via the use of digital marketing tools, such as search engine marketing (SEM) and developing online display advertising campaigns using a combination of standard and rich media (video). The use of digital marketing tools enables Tourism New Zealand to minimise media wastage by targeting more precisely and having up to-the-moment feedback on campaign performance.
Tourism New Zealand also invests significantly in joint venture marketing activity with industry partners. Joint venture marketing enables Tourism New Zealand’s messaging to be packaged with something potential visitors can buy, extending marketing reach through matched funding while expanding and filling available air capacity from key tourism markets.
Campaign activity has close alignment with the Tourism 2025 framework, in particular the themes of:
• Productivity for profit: through driving demand for shoulder travel periods and regional dispersal. • Growing sustainable air connectivity: through joint venture partnership campaigns. • Targeting for value: through our campaign work in China, Australia and emerging markets in particular as well as special interest campaign activity.
1 Differences between Actual and Budget spend in Output Class 1: Deliver key visitor messages through the 100% Pure New Zealand campaign activity and output Class 3: Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach, is largely due to the treatment of the budgeted partnership revenue. Through the FY14 budget, $5.2m out of $5.9m partnership revenue was allocated primarily to Output Class 1, however this should have been applied to Output Class 3 as it related primarily to partnership campaign activity.
2 New Zealand and offshore support costs support the delivery of all six outputs. 23 Market insights
Market research activities focus on providing core intelligence and evaluation input into the development of marketing campaigns and to provide information and insights to the industry.
Market insights activity is aligned with the Tourism 2025 framework, in particular the themes of:
• Insight through developing market insight and formulating models for better industry access to information. • Drive value through outstanding visitor experience: through sharing market insight with industry.
OUTPUT CLASS 1: DELIVER KEY VISITOR MESSAGES THROUGH THE 100% PURE NEW ZEALAND CAMPAIGN ACTIVITY
BRAND CAMPAIGN ACTIVITY DELIVERED – KEY MARKETS
Quantity measures Performance Status Australia Full year result: Achieved Target: 4 brand campaigns 7 delivered (see comment 1 below) China Full year result: Achieved Target: 2 brand campaigns 2 delivered USA Full year result: Achieved Target: 2 brand campaigns 10 delivered (see comment 2 (Includes 2 x Youth and 3 x below) Premium campaigns) UK Full year result: Achieved Target: 2 brand campaigns 4 delivered Germaniy Full year result: Achieved Target: 2 brand campaigns 4 delivered Japan Full year result: Achieved Target: 2 brand campaigns 2 delivered Business events Full year result: Achieved Target: Implemented quarter three in: Australia, USA, China, 4 delivered Peninsular South East Asia Brand campaign activity delivered – emerging markets India Full year result: Achieved Target: 1 brand campaigns 2 delivered Indonesia Full year result: Achieved Target: 1 brand campaigns 2 delivered Latin America Full year result: Achieved Target: 1 brand campaigns 1 delivered Cost effectiveness measures Performance Status Cost per engagement1: display Full year result: Achieved Target: Australia $2.00-$2.50 Australia: $2.02 (see comment 3) China $1.20-$1.80 China $0.46 USA $1.20-$1.80 USA: $0.18 UK $1.50-$2.20 UK: $1.53 Germany $1.50-$2.20 Germany: $0.47 Japan $2.50-$3.00 Japan: $0.91 Cost per acquisition2: search Full year result: Achieved Target: Australia: $1.50-$2.00 Australia: $1.87 China $0.50-$1.00 China: $0.64 USA $2.50-$3.50 USA: $2.08 UK $1.00-$1.50 UK: $1.05 Germany $1.00-$1.50 Germany: $1.22 Japan $2.00-$3.00 Japan: $1.94
1 Engagement: when an action is taken on an ad, i.e. a click, a play of a TV commercial; some form of interaction. 2 Acquisition: refers to someone who has been drawn to newzealand.com as a result of seeing and acting on advertising/search initiatives delivered by Tourism New Zealand. 24 OUTPUT CLASS 2: DELIVER KEY MESSAGES THROUGH THIRD PARTIES SUCH AS MEDIA, OPINION LEADERS AND BROADCAST PRODUCTION
Public Relations / International Media Programme
Tourism New Zealand leverages communication channels, such as international public relations (PR), to deliver brand messages through third parties (e.g. opinion leaders, independent media). This activity contributes to building New Zealand’s popularity and accessibility as a destination and strengthens conversion. During 2013/14, activity focused on high-value segments and sectors, delivering a programme of integrated campaign, PR and trade activity to maximise effectiveness.
Public relations activity is aligned with the Tourism 2025 framework, in particular the themes of:
• Targeting for value: through our PR work focused on growing preference for New Zealand amongst Active Considerers in key and emerging markets in particular as well as special interest sectors. • Productivity for profit: through driving regional dispersal and shoulder season travel including through support for and promotion of events.
OUTPUT CLASS 2: DELIVER KEY MESSAGES THROUGH THIRD PARTIES SUCH AS MEDIA, OPINION LEADERS AND BROADCAST PRODUCTION
PUBLIC RELATIONS/INTERNATIONAL MEDIA PROGRAMME
Quality measures Performance Status International media hosted from key Tourism New Zealand markets Full year result: Achieved Target: 295 media visits Media visits: 245 443 media outlets Media outlets: 300
Contributing to total: 45 visits from emerging markets • Media from emerging markets: 20 visits, 25 outlets 45 outlets from emerging markets • Media hosted from premium travel sector: 25 outlets 35 visits from premium outlets
Hosted media visits that feature a cultural element Full year result: Achieved Target: 50% 60% Equivalent advertising value (EAV) of print, online and broadcast in Tourism New Zealand markets3 Total EAV all markets Achieved Target: $70,000,000 Full year result: $194,275,000 (see comment 4 below) Contributing to total EAV: EAV premium sector international media programme Full year result: $3,675,000
(4) The International Media Programme delivered particularly strong performance during 2013/14. This was due in part to several projects delivering well beyond expectations including the Korean reality TV show ‘Dad! Where Are We Going?’ which follows five celebrity fathers and their children on an adventure trip to a mystery destination. The show went to air in November 2013 following six days filming throughout New Zealand in October, supported by Tourism New Zealand, and key partners Auckland International Airport and Korean Air. This project alone generated $31.8m in equivalent advertising value for New Zealand.
OUTPUT CLASS 3: PARTNER WITH THE TRAVEL INDUSTRY TO CONVERT INTEREST IN NEW ZEALAND INTO TRAVEL AND TO EXTEND MARKETING REACH
Joint venture activity
Joint venture partnerships provide the opportunity to deliver coordinated marketing activity and package Tourism New Zealand’s activity with a product that potential visitors can buy, activating opportunities for conversion. Partnerships help to attract funding by way of cash and in-kind support and assist tourism industry partners to leverage Tourism New Zealand’s 100% Pure New Zealand campaign. Partnerships range from high impact campaigns in Australia to TV production, International Media Programme and visiting trade programmes.
3 Equivalent advertising value (EAV) results are not always available for all activity, so results will underestimate the actual value. 25 Partnership activity with Regional Tourism Organisations
Partnerships with Regional Tourism Organisations (RTOs), predominantly in Australia, focus on building regional stories (e.g. North Island touring, and Ski NZ) and delivering conversion activity to maximise visitor value outcomes for New Zealand.
Joint venture and partnership activity aligns with the Tourism 2025 strategy, in particular the themes of:
• Targeting for value: through our partnership campaigns that drive conversion of higher-value visitors across our markets and sectors. • Productivity for profit: through driving regional dispersal and shoulder and off-season (ski) travel.
Working with the aviation sector
Partnerships with airlines and airports provide essential foundations for building and sustaining supply-side capacity.
• Tourism New Zealand partnerships will deliver fully integrated joint venture campaign activity to support filling existing capacity both in long-haul and trans-Tasman routes. • Tourism New Zealand will continue to work closely with airlines to support and build in-bound seat capacity to New Zealand. • Tourism New Zealand will maintain agreements that have been formed with aviation and airline partners, and seek out new agreements where they are in accordance with Tourism New Zealand’s international aviation strategy. Under these agreements partnered marketing campaigns will be carried out that support the aviation routes critical to developing tourism.
Working with aviation sector activity aligns with the Tourism 2025 framework, in particular the theme of:
• Growing sustainable air connectivity: through establishing MOUs with Air NZ and other airlines, partnering with airports and facilitating top-level meetings connecting other parts of Government, Ministers and the aviation sector. In addition, delivering fully integrated joint venture campaigns encourages flexible timing of activity to build non-peak travel to assist with airline load factors and encourage sustainable airline economics.
OUTPUT CLASS 3: PARTNER WITH THE TRAVEL INDUSTRY TO CONVERT INTEREST IN NEW ZEALAND INTO TRAVEL AND TO EXTEND MARKETING REACH
JOINT VENTURE ACTIVITY / RTO PARTNERSHIPS / WORKING WITH AVIATION INTEREST
Quantity measures Performance Status Key markets partnership4 campaign activity Australia Full year result: Achieved Target: 20 partnered campaigns (see comment 5) 8 partnered, search engine marketing (SEM) always on SEM always on China Full year result: Achieved Target: 6 partnered campaigns 6 partnered, SEM always on SEM always on USA Full year result: Achieved Target: 14 partnered campaigns 6 partnered, SEM always on SEM always on UK Full year result: Achieved Target: 11 partnered campaigns 4 partnered, SEM always on SEM always on
(1, 2) During 2013/2014 Tourism New Zealand exceeded the target for Brand campaigns in most markets and in particular the USA and Australia. In the USA this was in part due to the inclusion of youth and new premium focused brand campaign activity. (3) Cost per engagement: display was lower (performed better) than the target for most markets, in particular the USA and Germany. This KPI measures the cost effectiveness of engagement in the digital media space (as opposed to through newzealand.com). An engagement can take different forms depending on the advertising in question, e.g. it could be a click on advertising or watching a video. The low result for North America and Germany may be influenced by some ‘auto play’ activity in the engagement result. Auto play is where a consumer has to watch advertising before being able to proceed with their original task, e.g. advertising on Pandora in the US, due to the nature of this advertising the cost of engagement is brought down. A second factor influencing these targets is that this KPI was a new measure for FY14, as such less information was available to allow challenging targets to be set for the year.
4 Partnered campaigns link Tourism New Zealand activity with an offer through a partner, brand campaigns are not directly linked with a partner and typically 26 drive activity to newzealand.com. Quantity measures Performance Status Germany Full year result: Achieved Target: 8 partnered campaigns 4 partnered, SEM always on SEM always on Japan Full year result: Achieved Target: 5 partnered campaigns 4 partnered, SEM always on SEM always on Emerging markets partnership campaign activity delivered India Full year result: Achieved Target: 2 partnered campaigns 2 partnered, SEM always on SEM always on Indonesia Full year result: Achieved Target: 2 partnered campaigns 2 partnered, SEM always on SEM always on Latin America Full year result: Not achieved Target: 1 partnered campaign (see comment 6 2 partnered, SEM always on SEM always on below) MOUs in place with airlines and travel sellers Full year result: Achieved Target: 6 airlines, 3 travel retailers and (see comment 7 7 airlines, 2 travel retailers, 3 incentive houses 3 incentive houses below) Cost effectiveness Campaign return on investment (ROI)5 ($Spend: $Value Full year result: Achieved generated) Australia: No results available from (see comment 8 Target: partners for 2013/14. below) Australia: 1:5 China: 1:26 China 1:5 USA: 1:20 USA 1:5 UK: 1:15 UK 1:5 Germany: 1:11 Germany 1:5 Japan: 1:29 Japan 1:5 Partnership funds committed to coordinated marketing activity RTO partnerships Full year result: $0.50:$1 Not achieved Target: $1:$1 (see comment 9 over) Aviation partnerships Full year result: $1.08:$1 Not achieved Target: $1:$1 Value of partnership contributions Full year result: $20.4m Not achieved Target: $22m (see comment 10 over)
(5) During 2013/2014 Tourism New Zealand delivered a large number of joint venture campaign activity with industry partners. This resulted in the number of partnered campaigns targeted for the year either being met or exceeded in the key markets of Australia, China, USA, UK, Germanic Europe and Japan.
This was particularly evident in Australia, the US and the UK, with 20, 14 and 11 partnered campaigns delivered respectively. In Australia the increased partnership activity was driven in part by Memorandum of Understandings established in 2012/13 with Air New Zealand and major Australian travel providers, including Flight Centre Group, Qantas and Jetstar.
(6) The result for Latin American partnered campaigns was impacted by a delay in getting resource in place to deliver activity.
(7) MOUs in place with airlines and travel sellers - Tourism New Zealand secured one less airline MOU than forecast and achieved an agreement with an additional travel retailer.
(8) Calculation of ROI is dependent on receiving booking information from partners. This information was not able to be obtained from partners in Australia for 2013/14.
5 ROI is calculated by: (passengers booked) x (average visitor spend for market)/campaign spend. This generates a ratio that shows for every dollar we spent we generated ‘x’ amount of value. ROI can only be provided on partnered campaigns where Tourism New Zealand has a line of sight through to bookings. ROI relates to campaign spend only and is not a measure for Tourism New Zealand activity at an outcome level. 27 (9) The ratio for partnered RTO campaign activity is below the 1:$1 ratio set for FY14. The starting position for Tourism New Zealand is to match partnership campaign contributions from the partners we work with, however in some cases Tourism New Zealand will invest a greater proportion of funds where the opportunity to deliver stronger campaign outcomes is identified. In addition, in Australia, we have been able to more closely align Tourism New Zealand’s overall brand campaign work with partnered campaign activity. This has shifted some brand campaign spend into the partnership space and has enabled RTO campaigns to be brought in line with Tourism New Zealand’s brand work to ensure consistent messaging in Australia and thereby creating a stronger presence. (10) The overall contribution from partners was $20.4m, this is below target of $22m set for FY14, this result is influenced by a range of factors including; an aspirational target being set for FY14, some partnered campaigns being delayed or rescheduled at the request of partners during the year, and the suspected under reporting of non-financial contributions for some projects. The total of $20.4m remains a substantial figure that considerably extends the reach and effectiveness of Tourism New Zealand’s activity. Tourism New Zealand previously reported on this measure in FY12, when $16m in partnership contributions were reported.
OUTPUT CLASS 4: INFORM AND INSPIRE GLOBAL TRAVEL SELLERS TO ASSIST THEM TO MARKET NEW ZEALAND
Working with the travel trade
The overseas travel trade is an essential step for many people between considering a trip to New Zealand and deciding to make a booking. Active Considerers use a multi-channel approach for researching and booking travel and the travel trade is active in many of these channels.
Tourism New Zealand delivers a range of training outputs aimed at enabling overseas travel sellers to more effectively sell ‘destination New Zealand’ to potential visitors in their market. Training is provided using a variety of approaches, including: providing face-to-face and online training to the travel trade through newzealand.com/travel/trade; providing familiarisation experiences to overseas travel sellers; undertaking joint marketing and promotion initiatives; and maintaining and updating Tourism New Zealand’s travel trade website.
Tourism New Zealand also organises travel trade events and coordinates participation by the New Zealand tourism sector at international trade shows.
Growing the business events sector
The business events sector is a high-value market segment for New Zealand. In addition to delivering a direct contribution to New Zealand’s export earnings through international delegate spend, holding international business events in New Zealand acts as an economic development tool by facilitating new international business-to-business relationships, encouraging knowledge transfer to New Zealand and creating new investment opportunities. Business events are also an attractive way to bring visitors in the shoulder and low seasons to address the seasonality of visitor streams.
With significant new conference facilities being planned and expected to become available in 2017 to 2018, Tourism New Zealand is focused on promoting New Zealand as an international business events destination and growing the value of this important international visitor sector.
In the trade space this includes: • Increasing Tourism New Zealand’s presence at global trade shows and events. • Delivery of a business events familiarisation programme.
Business events activity aligns closely with the Tourism 2025 framework, in particular the themes of: • Targeting for value: through a focus on growing the volume and value from a higher spending visitor sector. • Productivity for profit: promoting regional dispersal and shoulder season travel though considering timing of events when deciding on support for and promotion of events.
OUTPUT CLASS 4: INFORM AND INSPIRE GLOBAL TRAVEL SELLERS TO ASSIST THEM TO MARKET NEW ZEALAND
TRAVEL TRADE
Quantity measures Performance Status Successful travel module completions Full year result: Core target Target: 20,000 travel modules completed 21,781 travel modules achieved Contributing to total: completed Component Emerging market – India: 4,500 Including: 4,122 travel target partially modules completed achieved (see comment 11 28 Pg 30) Trade on Tourism New Zealand hosted famils Full year result: Target: 400 574 hosted Achieved Contributing to total: Including: Emerging (See comment 12 Emerging markets: 80 markets 49, Business Pg 30) Business events: 80 events 72, Premium Premium sector: 508 sector 57 Trade famils that feature a cultural element Full year result: Achieved Target: 60% 77% Major trade events attended by Tourism New Zealand Full year result: Achieved Target: Minimum of 25 39 attended Contributing to total: Including: 9 from Business Business events: 8 events, 6 from Premium Premium sector: 15 sector Major trade events organised and facilitated by Tourism New Zealand Full year result: Achieved Target: Minimum of 8 8 organised/facilitated Number of NZ advocates6 Full year result: Achieved Target: 140 219 Grow the number of travel agents who are ‘100% Pure New Zealand Full year result: Achieved Specialists’ 792 Target: 550 Including 77 from India Contributing to total: Emerging market – India: 60 Bids supported through the Conference Assistance Programme (CAP) Full year result: Achieved Fund (excluding. Australia) 39 Target: 35 bids supported through the CAP. Success rate for bids supported through CAP fund Full year result: Achieved Target: 60% 66% Estimated value of bids 7 supported through CAP fund Full year result: Not Achieved Target: $87.5m $68.0m (See comment 13 Pg 30) Incentive bids supported (Tourism New Zealand only tracks incentive bids for 50 pax or higher with an estimated value of more than 200,000 NZD excluding. air fare). Australia (through CINZ) Full year result: N/A Target: 20 0 Note: Tourism New Zealand’s focus in Australia has shifted from incentive to conference and the target and results now refer to number of conferences supported. China Full year result: Achieved Target: 30 30 USA Full year result: Not Target: 50 42 achieved (see comment 14 below) Peninsular South east Asia (Note: includes India) Full year result: Achieved Target: 30 41 Incentive bids conversion rate Full year result: Achieved Target: 25% 86.6% Value of incentive bids converted Full year result: Achieved Target: Benchmark data collection $ 30,8m
6 NZ Advocates are travel companies that have been assessed against a specific set of criteria and then prioritised as to the level of activity undertaken. This allows for a tiered approach by market with a sliding scale of account management service that focuses both budgets and resource. Once identified, the company must have a formal partnership agreement in place that outlines the key objectives of the partnership, KPIs and agreed activity that will take place in the 12 month period.
7 Estimated value: Average bid value is $2.5m (based on average bid value over the last 2 years). Estimate will differ to the actual result, which is likely to be realised several years later e.g. less/more delegates turn up.
8 The premium sector target in Tourism New Zealand’s Statement of Intent 2013-2016, the number 15 was a typing error, the target should have read 5. 29 (11, 12) Emerging markets famils – The overall target for travel trade famils was exceeded, however the sub target for emerging markets was not met. This was largely due to the time required to establish new offices in emerging markets with the resources able to deliver required activity.
(13) The estimated value of bids converted was lower than the target set. While the number of bids supported exceeded the target, the value of bids was impacted by the inability to guarantee the availability of large-scale infrastructure to support conference bids over 1200-1500 persons. With new large-scale conference facilities confirmed, it is anticipated that higher- value bids will be able to be supported in future years.
(14) Strong results in the incentives bids supported were achieved across most markets, the exception was the USA where the result was impacted by a delay in getting resources in place to deliver activity.
OUTPUT CLASS 5: DELIVER INSPIRING AND INFORMATIVE INFORMATION FOR POTENTIAL VISITORS
Tourism New Zealand’s activities within this output class include utilising newzealand.com, Tourism New Zealand’s consumer website, to connect and engage with potential visitors to New Zealand and ensuring that i-SITEs meet the quality standards that are a membership requirement.
newzealand.com
Tourism New Zealand’s consumer website, newzealand.com performs a dual role. As a marketing tool the website is used to convert Active Considerers preference for New Zealand into actual travel and secondly, the site has a role to enable visitors to engage with one another and with travel sellers to source information and advice.
i-SITE New Zealand
Tourism New Zealand also supports the provision of information to visitors through the i-SITE network. i-SITE New Zealand Visitor Centres (80 across New Zealand) provide an information and booking service for attractions, transport, accommodation and events to international and domestic visitors.
i-SITE New Zealand is a subsidiary of Tourism New Zealand, governed by a Board of Directors. The subsidiary is the owner of the i-SITE brand and livery. Tourism New Zealand provides staff, support services, business systems and marketing, primarily via digital channels, to raise the profile of the i-SITE network. i-SITE New Zealand has established the membership standards that individual centres must achieve to use the i-SITE brand, and become a part of the network of centres. These standards are enforced by site inspections of the centres by Qualmark assessors.
newzealand.com and i-SITE New Zealand activity aligns with the Tourism 2025 framework, in particular the strategic theme:
• Drive value through outstanding visitor experience: through providing high-quality and timely information for international visitors to New Zealand
OUTPUT CLASS 5: DELIVER INSPIRING AND INFORMATIVE INFORMATION FOR POTENTIAL VISITORS
NEWZEALAND.COM / I-SITE
Quality measures Performance Status Average number of total visits to newzealand.com per month9 Full year result: Achieved Target: 1,177,000 1,448,210 average (see comment monthly visits 15 over) TNZ mobile app deployed Full year result: Achieved Target: Launch of app by end quarter one 2013/14 Achieved – Tourism New Zealand ‘Essential New Zealand mobile app launched on 26 June 2013 Referrals from app for FY14: 56,011 (FY14 target: 36,000) i-SITE annual Business Plan and audited Annual Report Full year result: Not approved by i-SITE Board Business Plan approved by i-SITE Achieved Target: 2013/14 Business Plan in place 1 July 2013, 2013/14 Board on 20 June 2013. Annual Annual Report approved by 31 of August 2014 report adopted 8 September 2014 Level of user satisfaction with i-SITE maintained or increases Full year result: Achieved Target: At or above 9.0/10 i-SITE user satisfaction: 9.0/10 i-SITE members satisfaction with VIN Inc. service Full year result: Achieved Target: Minimum 80% 79.4% (see comment 16)
9 Tourism New Zealand campaign activity seeks to drive visits to newzealand.com, which generates visits, active visits and referrals. Quarterly targets are set 30 to reflect the level of campaign activity in each quarter. Achieving the quarterly targets ensures that the annual target will be achieved. (15) newzealand.com, Tourism New Zealand’s consumer website exceeded the target set for average monthly visits during 2013/14 and recorded an all-time record volume for a single year. This is a direct result of increased levels of preference for New Zealand in Tourism New Zealand’s priority markets, a sustained search engine optimisation programme which has increased the site’s visibility on Google, and more effective digital marketing initiatives to acquire traffic.
(16) The i-Site member staisfaction rate was 0.6% below target, the result is so close that the target was achieved in substance.
OUTPUT CLASS 6: COMMUNICATE AND ENGAGE WITH NEW ZEALAND’S TOURISM INDUSTRY TO ALIGN INDUSTRY INVESTMENT WITH TOURISM NEW ZEALAND AREAS OF FOCUS
Industry communication, engagement and relationship building
It is important that Tourism New Zealand is completely connected with New Zealand’s tourism operators. This is achieved by informing, engaging with and listening to the New Zealand tourism industry. The main goal of this engagement is to ensure alignment between market needs, Tourism New Zealand’s marketing programmes, and what is offered in New Zealand.
Tourism New Zealand achieves this by the frequent distribution of e-bulletins, webinars, Tourism New Zealand’s corporate website and speaking engagements. These communication channels enable Tourism New Zealand to keep the industry well informed on key topics such as how markets are changing, what higher-value visitors are looking for, Tourism New Zealand’s strategy, and key opportunities around selling the New Zealand tourism product and brand effectively.
Tourism New Zealand also works with other parts of Government to streamline processes that facilitate travel for international visitors and identify opportunities to work together in areas where interests overlap including working with Education New Zealand to identify and leverage international education opportunities.
Industry communication, engagement and relationship building activity aligns with the Tourism 2025 framework, in particular the themes:
• Drive value through outstanding visitor experience: through working with government to improve visitor facilitation e.g. visa and border processes. • Insight through providing channels to distribute and receive market insight with and from the wider industry.
Qualmark
Qualmark is the New Zealand tourism industry’s official quality assurance agency. It is a Government-backed initiative supported by Tourism New Zealand (60% share) and the New Zealand Automobile Association (40% share), and endorsed by other leading tourism industry organisations. The role of Qualmark is to help achieve the tourism industry’s overall goal to enhance New Zealand’s reputation as a world-class visitor destination.
Qualmark currently provides approximately 2,100 quality licences annually, by offering a star grading system for accommodation facilities and an endorsement programme for activities, transport and services. To obtain a Qualmark quality licence, Qualmark undertakes onsite assessments with trained assessors in order to measure the quality of operators’ facilities and business practices. This includes health and safety systems and service systems relating to guest care. Qualmark also gives recognition for excellence in environmental business practice through Enviro accreditation.
China Market Development Unit
China has rapidly grown to become New Zealand’s second largest visitor market. However, the Chinese visitor market is subject to a number of constraints in terms of realising its potential value to New Zealand with particular quality issues that require attention. The China Market Development Unit (the Unit) operated by Tourism New Zealand licenses, through the Approved Destination Status (ADS) scheme, New Zealand-based inbound tour operators and tour guides that cater for the Chinese market, and monitors their conduct, performance and quality standards. The Unit assesses new applicants, completes regular compliance monitoring and assessments, and handles complaints and feedback from Chinese group tour visitors.
The Unit administers the Premier Kiwi Partnership (PKP) programme which seeks to increase the proportion of quality visitors from the China market through providing product development and marketing promotion support to selected Chinese Travel Sellers and New Zealand inbound tour operators in order to reduce the barriers for higher-value mono New Zealand product.
The Unit also produces Chinese language visitor information designed to increase China visitor knowledge, including the rights and protections they have if visiting on an ADS tour.
31 The Unit aligns with the Tourism 2025 framework, in particular through the themes of:
• Targeting for value: through the PKP programme which is focused on growing the proportion of quality visitors from the China market. • Drive value through outstanding visitor experience: through ensuring minimum quality standards for visitors from the China market visiting on an ADS approved tour.
OUTPUT CLASS 6: COMMUNICATE AND ENGAGE WITH NEW ZEALAND’S TOURISM INDUSTRY TO ALIGN INDUSTRY INVESTMENT WITH TOURISM NEW ZEALAND AREAS OF FOCUS
NZ INDUSTRY / QUALMARK / CHINA MARKET DEVELOPMENT UNIT
Quality measures Performance Status Tourism New Zealand corporate website maintains or grows Full year result: Achieved repeat visits to site 125, 643 repeat visits Target: At least 110,000 repeat visits in 2013/14 Registrations for New Zealand industry webinars Full year result: Not achieved Target: 720 people registered for at least 1 webinar 677 (See comment 16 below) Industry road shows by CE and Chair Full year result: Achieved Target: 2 per annum 1 roadshow Note: 2nd roadshow delivered in July 2014 (2014/15 year) to avoid conflicts. Tourism New Zealand communications (website/e-newsletter/ Full year result: Achieved webinars etc.) add value to Tourism industry stakeholders’ activities Average rating 4.0/5.0 Target: Surveyed stakeholders rate the value of TNZ communications an average of 4.0 or greater on a 5 point scale. Number of ADS ‘spot checks’ and assessments of Inbound Full year result: Achieved Tour Operators 192 spot checks Target: 100 spot checks 4 assessment visits to ADS Inbound Tour Operators 6 assessment visits Grow number of Premier Kiwi Partnership (PKP) tours delivered Full year result: N/A by ITO partners 1019 PKP tours delivered (benchmarking Target: Benchmarking year by ITO partners year) Qualmark licensees’ satisfaction with Qualmark service/ Full year result: N/A programme Measure is no longer monitored. (see comment 17 Target: Qualmark licensees’ satisfaction: 55% below) Satisfaction of visitors who used Qualmark services compared Full year result: Not achieved to non-Qualmark services Satisfaction of International tourists (see comment 18 Target: Maintain at or above 9.0/10 and above satisfaction levels that did use Qualmark: 8.9/10 below) of non-Qualmark users Satisfaction of international tourists that did not use Qualmark: 9.1/10 Compliance assessment of PKP Inbound Tour Operators (ITOs) Full year result: Achieved Target: Assessment of 4 PKP ITOs 4 ITOs assessed New ADS applications and applications for ADS renewals Full year result: Achieved processed within timeframes (within 90 working days for new 100% of new applications and ADS applications and 30 working days for applications for ADS renewals processed within renewals) timeframes. Target: 100% of new applications and renewals processed within timeframes (on receipt of all necessary information)
(17) While the target for webinars was not met, the number of total registrations for the year (1135) demonstrated that a significant number of people attended multiple webinars. During 2014/15 Tourism New Zealand is intending to extend the reach of the webinars to a wider audience of stakeholders. (18) Licensee’s satisfaction with Qualmark programme – this measure is no longer reported on and has been replaced with ‘Likelihood to recommend Qualmark’. The result from the 2014 annual survey was: 78% of licensee’s likely to recommend Qualmark.
32 (19) Satisfaction for visitors that used Qualmark services was recorded as lower than for non-Qualmark users through the International Visitor Survey. This is a reverse of previous results and coincides with a change in survey provider and methodology. Qualmark and Tourism New Zealand will monitor this to see if it’s a consistent change. Limitations with the current survey question have also been identified. At present, visitors who use Qualmark rated services during their visit are included in the Qualmark satisfaction score, even if a visitor only stays one night in Qualmark rated accommodation over a multi week visit. This means that visitor satisfaction is not solely based on Qualmark services. Options to better compare Qualmark rated services with non-Qualmark services will be considered in 2014/15.
Fraser Clements
33 Equal Employment Opportunities
Under Section 151 (1)(g) of the Crown Entities Act, Tourism New Zealand is required to provide information about compliance with obligations to be a good employer, including our Equal Employment Opportunities (EEO) Programme.
Set out below is a work place profile for Tourism New Zealand as at 30 June 2014.
Executive Direct Reports to Other Managers with Professional and Management Executive Managers Staff Responsibility Support Staff or Staff with (4th Tier) Responsibility for Specific Output Areas % of Group % of Group % of Group % of Group NZ European Male 50% 23% 17% 8% Female 50% 33% 50% 44% Māori Male 0% 5% 0% 1% Female 0% 3% 0% 3% Pacific Peoples Male 0% 0% 0% 0% Female 0% 3% 0% 1% Asian (incl. South Asian) Male 0% 18% 17% 4% Female 0% 5% 0% 23% Other nationalities Male 0% 3% 0% 1% Female 0% 8% 17% 16% Organisation 7% 24% 4% 65%
Women and people of Asian descent continue to be well represented at all levels of the organisation. People with disabilities, aged people, and people of Māori and Pacific descent are represented in the organisation. Tourism New Zealand operates in 12 offshore markets and employs people of different nationalities, race and ethnicity. Tourism New Zealand continues to support the development and growth of all of our people and in order to facilitate this, has undertaken the following:
• Providing on-going training for our people on communicating effectively with Māori and understanding tikanga and Te Reo. • Tools and information on Māori culture and language are made available on the intranet and form part of the induction. • The continuation of our global community initiative ‘Global Whanau’ which has helped celebrate the diversity of our employees, improve communication and connectedness between onshore and offshore offices.
Culture and Accountability
Tourism New Zealand remains committed to being a good employer and as such, to managing and leading all employees fairly and properly in all aspects of their employment. This includes people in our offshore offices where there are different jurisdictional requirements and statutory minima in the areas of Equal Employment Opportunities (EEO).
Tourism New Zealand has a strong mission, vision and values. The vision and values are part of our induction and have been integrated into the reward and recognition programmes.
Tourism New Zealand has for the fourth year sought employees’ feedback and input through an annual engagement survey to assist in maintaining an environment where employees are motivated and supported.
Our Core Leadership Team and broader management group is committed to demonstrating leadership and accountability 34 in all areas of EEO and this means a commitment to the following areas. 1. Recruitment, Selection and Induction
Our recruitment and selection procedure has been developed to ensure that all prospective employees are given the opportunity to participate equally in the recruitment process. Our selection process typically involves a structured competency and behaviourally based interview, reference checking, a screening tool, and for senior positions, psychometric assessment, all of which are validated and support EEO principles. Tourism New Zealand also provides appropriate support for Māori and Pacific peoples and people with English as a second language during the recruitment and selection process.
2. Leadership, Learning and Development
Tourism New Zealand has leadership development programmes for emerging and business leaders which includes facilitated learning, online learning, mentoring, coaching, 360º development and on the job learning. In terms of organisational capability, effective leadership including understanding and knowledge of kaupapa and tikanga Māori continue to be areas of focus. Te Wiki o Te Reo Māori and Matariki are also actively supported by Tourism New Zealand through a programme to provide additional skills training and learning opportunities.
Tourism New Zealand measures leadership and management effectiveness as part of its annual engagement survey. These measures are integrated with the performance management framework.
We also have a talent management programme, focussing on developing a depth and breadth of talent in the organisation. Other training and development needs are identified on an individual basis through the development planning process, and are agreed between the manager and employee. Development needs are aligned with agreed key performance indicators.
3. Flexibility and Work Design
Tourism New Zealand has an active organisational wide programme of supporting flexible working arrangements and job design to assist employees to manage different aspects of work life balance. Where it is possible to accommodate we continue to:
• Support employees with disabilities or special requirements through work place design changes and accommodating individual needs in the work place. • Support parents in their return to work by offering part-time and gradual return to full-time arrangements and flexitime to accommodate child care needs. • Support expectant parents by granting additional paid time away from work to attend appointments associated with the pregnancy. • Support employees with responsibilities for child and eldercare by offering flexible working arrangements.
4. Remuneration, Recognition and Rewards
Tourism New Zealand differentiates remuneration based on performance and is committed to compensating employees competitively and equitably with attention to affordability and within the scope of available resources. The Tourism New Zealand remuneration practice is supported by use of independent job evaluation and market remuneration information to set salary ranges.
Individuals identified as not meeting the requirements of their role are provided with support, training and development where required to assist them to achieve role objectives.
5. Harassment and Bullying Prevention
Tourism New Zealand adheres to its policy and procedures for addressing work place harassment and bullying. During the year the Human Resources team have attended legislative updates and workshops discussing best practice on adhering to the new WorkSafe New Zealand guidelines on preventing and responding to Workplace Bullying.
6. Safety, Health and Wellbeing
Tourism New Zealand is committed to maintaining a healthy, and safe work environment for its employees and contractors in undertaking its activities. Tourism New Zealand has established a Health, Safety and Wellness Committee, which represents the employees. The Committee is progressively working to identify and address initiatives which support maintaining employee health, safety and wellness.
Over the last 12 months, additional support for people has included specialist work place assessments and the provision of special equipment to ensure that employees are able to contribute effectively in all aspects of their working life. 35 36 36
Mike Heydon FINANCIAL STATEMENTS
Statement of Responsibility
In terms of the Crown Entities Act 2004, the Board is responsible for the preparation of the New Zealand Tourism Board’s financial statements and statement of service performance, and for the judgments made in them.
The Board of New Zealand Tourism Board has the responsibility for establishing, and has established, a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting.
In the Board’s opinion, these financial statements and statement of service performance give a true and fair view of the financial position and operation of the New Zealand Tourism Board Group for the year ended 30 June 2014.
The Members of the New Zealand Tourism Board and Group authorised these financial statements for issue on 6 October 2014.
Signed on behalf of the Board:
K. Prendergast R. Leggat Chairman Deputy Chair 6 October 2014 6 October 2014
37 STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2014
GROUP PARENT
Notes 2014 2014 2013 2014 2014 2013 Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Income Revenue from Crown 2 113,730 113,862 84,167 113,730 113,862 84,167 Interest income 46 103 115 46 100 114 Other revenue 3 9,916 7,274 7,420 8,349 5,259 5,631 Share of associate's surplus 8 - - 10 - - - Total Income 123,692 121,239 91,712 122,125 119,221 89,912
Expenditure Other expenses 4 123,740 120,355 90,860 122,190 118,355 89,124 Depreciation and amortisation 12,13 1,028 884 823 1,012 866 799 Share of associate's deficit 8 11 - - - - - Total Expenditure 5 124,779 121,239 91,683 123,202 119,221 89,923 Net Operating Surplus/(Deficit) before (1,087) - 29 (1,077) - (11) Foreign Exchange and Taxation
Foreign Exchange Unrealised Foreign exchange gains/ 6 (1,909) - 295 (1,909) - 295 (losses) on derivative financial instruments held at year end Income tax expense 21 ------
Net Surplus/(Deficit) for the year (2,996) - 324 (2,986) - 284 Other comprehensive income/(expense) ------
Total comprehensive income/(expense) (2,996) - 324 (2,986) - 284 for the year Benefit of foreign exchange reserve 6 890 - 394 890 - 394 transfer Total comprehensive income/(expense) (2,106) - 718 (2,096) - 678 after foreign exchange transfer Net Surplus/(Deficit) for the year is attributable to: Non-controlling interest 7 21 - 27 - - - Owners of the parent (3,017) - 691 (2,986) - 678 (2,996) - 718 (2,986) - 678 Total comprehensive income/(expense) for the year is attributable to: Non-controlling interest 7 21 - 27 - - - Owners of the parent (3,017) - 691 (2,986) - 678 (2,996) - 718 (2,986) - 678
38 The notes and accounting policies on pages 42 to 68 form part of and are to be read in conjunction with these financial statements STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2014
PARENT
Notes Shareholders Foreign Exchange Retained Total Equity $000s Reserve $000s Earnings $000s $000s Balance at 1 July 1,805 5,007 688 7,500 Net surplus for the year - - (2,986) (2,986) Transfer from Retained Earnings to Foreign 18 - (890) 890 - Exchange Reserve Total comprehensive income for the year - (890) (2,096) (2,986) Balance at 30 June 1,805 4,117 (1,408) 4,514
GROUP
Notes Shareholders Foreign Retained Non- Total Equity $000s Exchange Earnings Controlling $000s Reserve $000s Interest $000s $000s Balance at 1 July 1,805 5,007 742 206 7,760 Net surplus/(deficit) for the year - - (3,017) 21 (2,996) Transfer to Retained Earnings from Foreign 18 - (890) 890 - - Exchange Reserve Total comprehensive income for the year - (890) (2,127) 21 (2,996) Balance at 30 June 1,805 4,117 (1,385) 227 4,764
STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2013 PARENT
Notes Shareholders Foreign Exchange Retained Total Equity $000s Reserve $000s Earnings $000s $000s Balance at 1 July 1,805 4,613 404 6,822 Net surplus for the year - - 678 678 Transfer from Retained Earnings to Foreign 18 - 394 (394) - Exchange Reserve Total comprehensive income/(expense) for - 394 284 678 the year Balance at 30 June 1,805 5,007 688 7,500
GROUP
Notes Shareholders Foreign Retained Non- Total Equity Exchange Earnings Controlling $000s $000s Reserve $000s Interest $000s $000s Balance at 1 July 1,805 4,613 445 179 7,042 Net surplus for the year - - 691 27 718 Transfer from Retained Earnings to Foreign 18 - 394 (394) - - Exchange Reserve Total comprehensive income/(expense) - 394 297 27 718 for the year Balance at 30 June 1,805 5,007 742 206 7,760
The notes and accounting policies on pages 42 to 68 form part of and are to be read in conjunction with these financial statements 39 STATEMENT OF FINANCIAL POSITION as at 30 June 2014
GROUP PARENT
Notes 2014 2014 2013 2014 2014 2013 Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Current Assets Cash 9 4,213 6,242 5,851 3,970 6,000 5,768 Receivables 10 2,075 1,509 1,976 1,868 1,299 1,439 Prepayments and other current assets 936 1,188 928 934 1,188 921 Derivative financial instruments 11 - - 143 - - 143 7,224 8,939 8,898 6,772 8,487 8,271 Non-current Assets Property, plant and equipment 12 1,943 1,727 2,037 1,929 1,707 2,020 Intangible assets 13 1,371 11 1,120 1,264 - 1,054 Investment in associate 8 - 1 11 - - - Accommodation bonds 14 257 342 292 257 342 292 3,571 2,081 3,460 3,450 2,049 3,366 Total Assets 10,795 11,020 12,358 10,222 10,536 11,637
Current Liabilities Creditors and other payables 15 3,177 3,046 3,274 3,001 2,910 3,171 Employee entitlements 16 683 522 563 655 472 534 Invoiced in advance 139 150 488 20 - 159 Provisions 17 20 - 24 20 - 24 Derivative financial instruments 11 1,520 152 - 1,520 152 - 5,539 3,870 4,349 5,216 3,534 3,888 Non-current Liabilities Provisions 17 246 288 249 246 288 249 Derivative financial instruments 11 246 - - 246 - - 492 288 249 492 288 249 Total Liabilities 6,031 4,158 4,598 5,708 3,822 4,137 Net Assets 4,764 6,862 7,760 4,514 6,714 7,500
Equity Equity attributable to equity holders of the parent Shareholder's Equity 1,805 1,805 1,805 1,805 1,805 1,805 Retained Earnings (1,385) 347 742 (1,408) 296 688 Foreign Exchange Reserve 18 4,117 4,613 5,007 4,117 4,613 5,007 Parent interests 4,537 6,765 7,554 4,514 6,714 7,500 Non-controlling interests 7 227 97 206 - - - Total Equity 4,764 6,862 7,760 4,514 6,714 7,500
The notes and accounting policies on pages 42 to 68 form part of and are to be read in conjunction with these financial statements 40 STATEMENT OF CASH FLOWS for the year ended 30 June 2014
GROUP PARENT
Notes 2014 2014 2013 2014 2014 2013 Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Cash flows from operating activities Crown revenue 113,730 113,351 84,167 113,730 113,351 84,167 Interest received 46 103 132 46 100 132 Other revenue 10,090 7,785 6,983 8,403 5,770 5,193 Payments to suppliers and employees (122,822) (120,360) (91,657) (121,392) (118,342) (89,760) Goods and services tax (net) (1,024) - 95 (1,000) - 47 Net cash outflow from operating 19 20 879 (280) (213) 879 (221) activities
Cash flows from investing activities Sale of property, plant and equipment - - 3 - - 3 Repayment of accommodation bonds 8 - - 8 - - Purchase of property, plant and (706) (879) (555) (702) (879) (545) equipment Purchase of intangible assets (691) - (797) (622) - (797) Payments for accommodation bonds (13) - (8) (13) - (8) Net cash outflow from investing (1,402) (879) (1,357) (1,329) (879) (1,347) activities
Net decrease in cash held (1,382) - (1,637) (1,542) - (1,568) Effect of exchange rates on foreign (256) - 183 (256) - 183 currency balances Opening cash brought forward 5,851 6,242 7,305 5,768 6,000 7,153
Cash at end of year 9 4,213 6,242 5,851 3,970 6,000 5,768
The notes and accounting policies on pages 42 to 68 form part of and are to be read in conjunction with these financial statements 41 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2014
NOTE 1 STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2014
(A) Basis of preparation
Tourism New Zealand is a Crown entity as defined by the Crown Entities Act 2004 and is domiciled in New Zealand.
Tourism New Zealand’s financial statements have been prepared in accordance with New Zealand generally accepted accounting practice and the requirements of the Crown Entities Act 2004. The financial statements have been prepared on a historical cost basis modified by the revaluation of certain assets and liabilities as identified in this statement of accounting policies.
For the purposes of financial reporting, Tourism New Zealand is classified as a Public Benefit Entity.
(B) Statement of compliance
The financial statements have been prepared in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate for public benefit entities.
The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency is New Zealand dollars.
(C) New accounting standards and interpretations
i) Changes in accounting policy and disclosure
The accounting standards and policies are consistent with those of the previous financial year.
(ii) Accounting standards and interpretations issued but not yet effective
Standards and interpretations that have recently been issued or amended but are not yet effective have not been adopted by Tourism New Zealand for the annual reporting period ending 30 June 2014. These are outlined below.
PBE Standards for Tier 1 and Tier 2 Public Sector Entities
In March 2011, the Accounting Standards Review Board (the predecessor body to the External Reporting Board) announced its decision to adopt a multi-standards approach to financial reporting in New Zealand. As a consequence, a package of PBE Standards issued, applicable for Tier 1 and Tier 2 public sector PBEs and consists of the following standards:
• Standard XRB A1 Accounting Standards Framework, which is the overarching standard that sets out the accounting standards framework; • A suite of 39 PBE Standards; and • The Public Benefit Entities (conceptual) Framework.
The new PBE Standards are based on International Public Sector Accounting Standards, which are themselves based on IFRS. Therefore major changes to accounting policies are not expected.
Nevertheless, there are some potentially significant differences and also a range of smaller differences between the PBE Standards and NZ IFRS. Examples of potential significant differences could include:
• PBE Standards with no equivalent NZ IFRS • PBE IPSAS 23 Revenue from Non-Exchange Transactions, which prescribes requirements for accounting for revenue from non-exchange transactions; • PBE IPSAS 32 Service Concession Arrangements: Grantor, which prescribes the accounting for service concession arrangements by the grantor • Differences between equivalent standards • PBE IPSAS 20 Related Party Disclosures, exempts all transactions between related parties (except key management personnel remuneration) that occur on arm’s length terms and conditions from disclosure, and provides a potentially wider definition of key management personnel compared to NZ IFRS 24 Related Party Disclosures. 42 Early adoption of PBE Standards by Tier 1 and Tier 2 public sector PBEs is not permitted.
Application date of standard: 1 July 2014
Impact on Group financial statements:The application of this standard will have an impact on certain disclosures in the Group financial statements.
Application date for Group: 1 July 2014
NZ IFRS 9 (2010) Financial Instruments
NZ IFRS 9 (2010) supersedes NZ IFRS 9 (2009). The requirements for classifying and measuring financial liabilities were added to NZ IFRS 9 as issued in 2009. The existing NZ IAS 39 Financial Instruments:
Recognition and Measurement requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities, the change in fair value is accounted for as follows:
The change attributable to changes in credit risk are presented in other comprehensive income (OCI) The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.
Application date of standard: 1 January 2015
Impact on Group financial statements:The initial application of this standard is not expected to have any impact on the financial position or performance of the Group.
Application date for Group: 1 July 2015
NZ IFRS 9 (2009) Financial Instruments
NZ IFRS 9 (2009) includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace NZ IAS 39.
These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of NZ IAS 39. The revised Standard introduces a number of changes to the accounting for financial assets, the most significant of which includes:
• Two categories for financial assets being amortised cost or fair value • Removal of the requirement to separate embedded derivatives in financial assets • Strict requirements to determine which financial assets can be classified as amortised cost or fair value. Financial assets can only be classified as amortised cost if (a) the contractual cash flows from the instrument represent principal and interest and (b) the entity’s purpose for holding the instrument is to collect the contractual cash flows • An option for investments in equity instruments which are not held for trading to recognise fair value changes through other comprehensive income with no impairment testing and no recycling through profit or loss on derecognition • Reclassifications between amortised cost and fair value no longer permitted unless the entity’s business model for holding the asset changes • Changes to the accounting and additional disclosures for equity instruments classified as fair value through other comprehensive income.
Application date of standard: 1 January 2015
Impact on Group financial statements: The initial application of this standard is not expected to have any impact on the financial position or performance of the Group.
Application date for Group: 1 July 2015
43 (D) Basis of consolidation Exchange gains and losses are recognised in the Statement of Comprehensive Income. The consolidated financial statements comprise the financial statements of New Zealand Tourism Board trading Non-monetary items that are measured in terms of historical as Tourism New Zealand and its subsidiaries as at 30 June cost in a foreign currency are translated using the exchange each year (the Group). rate as at the date of the initial transaction.
Subsidiaries are combined using the purchase method of (G) Property, plant and equipment combination. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, Plant and equipment is stated at cost less accumulated using consistent accounting policies. depreciation and any impairment in value.
Adjustments are made to bring into line any dissimilar Depreciation is calculated on a straight-line basis over the accounting policies that may exist. estimated useful life of the asset as follows:
All intercompany balances and transactions, including Office equipment 5 years unrealised profits arising from intra-group transactions, have Motor vehicles 4 – 5 years been eliminated in full. Furniture and fittings 5 – 8 years Computer equipment 3 years Subsidiaries are consolidated from the date on which Leasehold improvements Up to term of the lease control is transferred to the Group and cease to be consolidated from the date on which control is transferred Realised gains and losses arising from the disposal of out of the Group. property, plant and equipment are recognised in the Statement Where there is loss of control of a subsidiary, the of Comprehensive Income in the period in which the consolidated financial statements include the results for transaction occurs. the part of the reporting period during which Tourism New Zealand has control. Impairment
Business combinations that occurred prior to the The carrying values of plant and equipment are reviewed date of transition to NZ IFRS have not been restated for impairment when events or changes in circumstances retrospectively. indicate the carrying value may not be recoverable.
(E) Investment in associate If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets The Group’s investment in associate is accounted for under are written down to their recoverable amount. Losses the equity method of accounting in the consolidated resulting from impairment are reported in the Statement of financial statements. Comprehensive Income.
An associate is an entity in which the Group has significant (H) Intangible assets influence and which is not a subsidiary nor a joint venture. Intangible assets are recorded at cost at acquisition. Where The annual financial statements of the associate are used there is no active market for these assets, or they are by the Group to apply the equity method. The reporting determined to hold no future economic benefit, they are dates of the associate and the Group are identical and both written off in the year of acquisition. Tourism New Zealand use consistent accounting policies. has no intangible assets with an infinite life.
The investment in the associate is carried in the balance The useful life of Intangible assets are estimated at between sheet at cost plus post-acquisition changes in the Group’s 3 and 8 years. share of net assets of the associate, less any impairment in value. The consolidated income statement reflects the Research and development costs are expensed as incurred. Group’s share of the results of operations of the associate.
Where there has been a change recognised directly in (I) Inventories the associate’s equity, the Group recognises its share of any changes and discloses this, when applicable in the Inventories are valued at the lower of cost and net consolidated statement of changes in equity. realisable value.
(F) Foreign currency (J) Trade and other receivables
Transactions denominated in foreign currency are recorded Trade receivables are recognised and carried at original in NZ Dollar/s by applying exchange rates that approximate invoice amount less an allowance for any uncollectible rates prevailing at the date of the transaction. amounts.
Monetary assets and liabilities denominated in foreign An estimate for doubtful debts is made when collection of currencies are translated at the rate of exchange ruling at the full amount is no longer probable. Bad debts are written off when identified. 44 the balance sheet date. (K) Cash and cash equivalents Sale of goods and services
Cash and short-term deposits in the Statement of Financial Revenue from the supply of goods and services is Position comprise cash at bank and in hand and short-term recognised when the significant risks and rewards of deposits with an original maturity of three months or less. ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered For the purposes of the Statement of Cash Flows, cash and passed to the buyer at the time of delivery of the goods to cash equivalents consist of cash and cash equivalents as the customer. defined above. Revenue from the supply of services is recognised on a (L) Provisions straight line basis over the specified period for the service unless an alternative method better represents the stage of Provisions are recognised when the Group has a present completion of the transaction. obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying Interest economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the Interest revenue is recognised as interest accrues using the obligation. effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the Where the Group expects some or all of a provision to be interest income over the relevant period using the effective reimbursed, for example under an insurance contract, the interest rate, which is the rate that exactly discounts reimbursement is recognised as a separate asset but only estimated future cash receipts through the expected life when the reimbursement is virtually certain. The expense of the financial asset to the net carrying amount of the relating to any provision is presented in the Statement of financial asset. Comprehensive Income net of any reimbursement. (O) Income tax If the effect of the time value of money is material, provisions are determined by discounting the expected Tourism New Zealand is exempt from income tax under future cash flows at a rate that reflects current market the New Zealand Tourism Board Act 1991. Tourism New assessments of the time value of money and, where Zealand’s subsidiaries are subject to income tax. appropriate, the risks specific to the liability. Current tax assets and liabilities for the current and prior Where discounting is used, the increase in the provision periods are measured at the amount expected to be due to the passage of time is recognised as a finance cost. recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and (M) Leases tax laws used to compute the amount are those that are enacted or substantively enacted by the Statement of The determination of whether an arrangement is or Financial Position date. contains a lease is based on the substance of the arrangement and requires an assessment of whether the Deferred income tax is provided on all temporary fulfilment of the arrangement is dependent on the use of differences at the Statement of Financial Position date a specific asset or assets and the arrangement conveys a between the tax bases of assets and liabilities and their right to use the asset. carrying amounts for financial reporting purposes.
Leases where the lessor retains substantially all the risks Deferred income tax liabilities are recognised for all taxable and benefits of ownership of the asset are classified as temporary differences except: operating leases. Operating lease payments are recognised as an expense in the Statement of Comprehensive Income • when the deferred income tax liability arises from on a straight-line basis over the lease term. the initial recognition of goodwill or of an asset The Group does not enter into finance leases. or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit (N) Revenue or loss nor taxable profit or loss; or Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the • when the taxable temporary difference is revenue can be reliably measured. The following specific associated with investments in subsidiaries, recognition criteria must also be met before revenue is associates or interests in joint ventures, and the recognised: timing of the reversal of the temporary difference can be controlled and it is probable that the Grants received from the Crown temporary difference will not reverse in the foreseeable future. Grants received from the Crown are recognised as revenue on receipt.
45 Deferred income tax assets are recognised for all Cash flows are included in the Statement of Cash Flows deductible temporary differences, carry-forward of unused on a gross basis and the GST component of cash flows tax credits and unused tax losses, to the extent that it is arising from investing and financing activities, which is probable that taxable profit will be available against which recoverable from, or payable to, the taxation authority are the deductible temporary differences and the carry-forward classified as operating cash flows. of unused tax credits and unused tax losses can be utilised, except: Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the • when the deferred income tax asset relating to taxation authority. the deductible temporary difference arises from the initial recognition of an asset or liability in a (Q) Financial instruments transaction that is not a business combination and, at the time of the transaction, affects neither Tourism New Zealand uses derivative financial the accounting profit or loss nor taxable profit instruments such as foreign currency contracts to manage or loss; or its exposure to foreign exchange risk arising from its operational activities. Tourism New Zealand does not hold • when the deductible temporary difference is or issue these financial instruments for trading purposes. associated with investments in subsidiaries, Tourism New Zealand has not adopted hedge accounting. associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the Derivatives are initially recognised at fair value on extent that it is probable that the temporary the date a derivative contract is entered into and are difference will reverse in the foreseeable future subsequently remeasured to their fair value at each and taxable profit will be available against which balance date. Movements in the fair value of derivative the temporary difference can be utilised. financial instruments are recognised in the Statement of Comprehensive Income. The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and Foreign exchange gains and losses resulting from the reduced to the extent that it is no longer probable that settlement of derivative financial instruments and from the sufficient taxable profit will be available to allow all or part translation at year end exchange rates of monetary assets of the deferred income tax asset to be utilised. and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income. Unrecognised deferred income tax assets are reassessed at each Statement of Financial Position date and are Cash and cash equivalents include cash on hand, cash in recognised to the extent that it has become probable that transit, bank accounts and deposits with a maturity of no future taxable profit will allow the deferred tax asset to be more than three months from date of acquisition. recovered. The fair value of forward exchange contracts is calculated Deferred income tax assets and liabilities are measured at by reference to current forward exchange rates for the tax rates that are expected to apply to the year when contracts with similar maturity profiles. the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively (R) Employee benefits enacted at the Statement of Financial Position date. Other Employee Entitlements: Employee entitlements Deferred tax assets and deferred tax liabilities are offset for salaries and wages, annual leave, long service leave, only if a legally enforceable right exists to set off current retiring leave and other similar benefits are recognised tax assets against current tax liabilities and the deferred tax in the Statement of Comprehensive Income when they assets and liabilities relate to the same taxable entity and accrue to employees. Employee entitlements to be the same taxation authority. settled within 12 months are reported at the amount expected to be paid. The liability for long-term employee (P) Other taxes entitlements is reported as the present value of the estimated future cash flows. Revenues, expenses and assets are recognised net of the amount of GST except: Termination Benefits: Termination benefits are recognised in the Statement of Comprehensive Income • where the GST incurred on a purchase of goods only where there is a demonstrable commitment to and services is not recoverable from the taxation either terminate employment prior to normal retirement authority, in which case the GST is recognised as date or to provide such benefits as a result of an offer to part of the cost of acquisition of the asset or as encourage voluntary redundancy. Termination benefits part of the expense item as applicable; and settled within 12 months are reported at the amount expected to be paid, otherwise they are reported as the • receivables and payables are stated with the present value of the estimated future cash flows. amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.
46 NOTE 2
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Revenue from Crown Baseline Funding 115,900 85,738 115,900 85,738 During the year, additional funding was provided by the Crown for the following: Additional Crown Funding 437 365 437 365 Qualmark New Zealand Ltd - - - - Total revenue received from the Crown 116,337 86,103 116,337 86,103 Less GST 2,607 1,936 2,607 1,936 Net revenue received from the Crown 113,730 84,167 113,730 84,167
NOTE 3
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Other revenue Sales and Partnership income 9,916 7,419 8,349 5,630 Sale of property, plant and equipment - 1 - 1 Total other revenue 9,916 7,420 8,349 5,631
NOTE 4
Other expenses include: GROUP PARENT
2014 2013 2014 2013 Personnel expenses Number of permanent and fixed term staff 163 127 156 120 2014 2013 2014 2013 $000s $000s $000s $000s Salaries and wages 15,187 12,437 14,508 11,765 Employer superannuation contributions 396 289 378 277 Increase/(decrease) in employee entitlements (note 16) 120 95 121 95 Other personnel expenses 929 1,115 906 1,109 16,632 13,936 15,913 13,246
47 NOTE 4 CONTINUED
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Personnel costs for New Zealand and offshore staff were: New Zealand Personnel Expenses - Tourism New Zealand 9,608 7,508 9,608 7,508 New Zealand Personnel Expenses - Subsidiaries 719 690 - - Offshore Personnel Expenses 6,305 5,738 6,305 5,738 16,632 13,936 15,913 13,246
2014 2013 2014 2013 Number of ceased staff paid compensation or other benefits - 1 - 1 2014 2013 2014 2013 $000s $000s $000s $000s Compensation or other benefits paid to ceased staff - 4 - 4
Auditor’s remuneration Amounts received or due and receivable by Ernst & Young for: The audit of the financial report 88 86 79 72 Other services - - - - 86 86 72 72 Amounts received or due and receivable by auditors other than Ernst & Young New Zealand for: The audit of the financial report of subsidiary entities 8 5 - - Other services 19 17 18 17 113 108 90 89
Other expenses Loss on disposal of property, plant and equipment - 3 - 4 Lease expense 2,182 1,844 2,177 1,844 Remuneration of Board members of Parent (See also note 31) 190 181 190 181
48 NOTE 5
PARENT
2014 2013 $000s $000s
Total expenditure of parent Total expenditure by geographic region: Australia 20,360 17,884 North America 14,501 10,969 United Kingdom and Europe 10,884 10,530 Japan 6,836 4,169 Asia 23,898 17,016 Other markets 1,869 44 New Zealand (a) 44,880 29,311 Total Expenditure of Parent 123,228 89,923
(a) New Zealand expenditure includes costs that apply to all markets and across a number of campaigns including the New Zealand Story, Hobbit event leverage and continued development of the newzealand.com website.
NOTE 6
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Foreign exchange gains/(losses) Unrealised gains/(losses) on derivative financial instruments (1,909) 295 (1,909) 295 Realised gains /(losses) on derivative financial instruments - - - - Foreign exchange gains/(losses) on derivative financial instruments (1,909) 295 (1,909) 295 Other foreign exchange gains/(losses) 890 394 890 394 Total foreign exchange gains/(losses) (1,019) 689 (1,019) 689
NOTE 7
GROUP PARENT
Interest Held Interest Held
2014 2013 2014 2013 Subsidiary companies Qualmark New Zealand Limited 60% 60% 60% 60% Visitor Information Network Incorporated (trading as i-SITE NZ) 0% 0% 0% 0%
49 NOTE 7 CONTINUED
The financial year-end of both subsidiaries is 30 June.
Tourism New Zealand has a 60% shareholding in Qualmark New Zealand Limited with the other 40% held by the New Zealand Automobile Association. Tourism New Zealand has control of Visitor Information Network Incorporated (VIN Inc), trading as i-SITE New Zealand, effective 21 August 2002.
Qualmark New Zealand Limited is New Zealand tourism’s official quality agency. It is a government - private sector partnership between Tourism New Zealand and New Zealand Automobile Association. Qualmark licenses professional and trustworthy New Zealand tourism businesses to use the Qualmark® - tourism’s official quality mark - to help international and domestic travellers select places to stay, things to do and ways to get around.
Qualmark’s core activities are based around determining the eligibility of businesses to enter the licensing system. This is achieved by way of assessment, promoting and working with Qualmark® licensees and working closely with other organisations and sectors within the tourism industry. By doing so, quality standards are raised and New Zealand tourism businesses improved based on best-practice.
Tourism New Zealand and i-SITE New Zealand have a relationship agreement that recognises the importance of having an effective and high-quality network of visitor information centres, dedicated to delivering free, comprehensive and objective information. The terms and conditions of the relationship agreement mean that Tourism New Zealand m e e t s t h e c r i t e r i a d e t e r m i n e d i n NZ IAS 2 7 f o r consolidating investments i n subsidiaries.
The i-SITE brand creates a distinctive look, which distinguishes the official network from other information centres. The i-SITE Visitor Centres provide on-the-ground information to ensure the visitor experience is as enjoyable as possible.
NOTE 8
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Associate company The New Zealand Way Limited - 11 - -
The financial year-end of The New Zealand Way Limited is 30 June.
Tourism New Zealand has a 50% shareholding in The New Zealand Way Limited. This Company is the operating entity of a joint venture between Tourism New Zealand and New Zealand Trade & Enterprise.
The New Zealand Way Brand provides marketing opportunities to those companies which meet quality and environmental standards. The Brand is promoted as a mark of outstanding quality, superior service and unique New Zealand characteristics.
There were no impairment losses relating to the investment in associate and no capital commitments or other commitments relating to the associate.
The following table illustrates summarised information of the investment in The New Zealand Way Limited:
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Share of associate’s balance sheet: Current assets 16 24 - - Current liabilities 16 13 - - Net assets - 11 - -
50 NOTE 8 CONTINUED
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Share of associate's revenue and (deficit)/surplus: Revenue 31 90 - - Net (deficit)/surplus (11) 10 - -
Carrying amount at beginning of year 11 1 - -
Carrying amount at end of year - 11 - -
NOTE 9
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Cash Cash Holdings: Cash at bank and in hand 2,387 1,702 2,160 1,635 Call accounts - foreign currencies 1,808 983 1,808 983 Call accounts - New Zealand dollar 18 3,166 2 3,150 4,213 5,851 3,970 5,768
Cash at bank and in hand generally earns interest at floating rates based on daily bank deposit rates.
Call account deposits are made depending on the immediate cash requirements of the Group, and earn interest at the respective money market call rates.
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Cash Holdings by Currency: New Zealand Dollar 348 3,549 105 3,466 United States Dollar 533 186 533 186 British Pound 282 152 282 152 Australian Dollar 113 168 113 168 European Euro 831 508 831 508 Japanese Yen 244 107 244 107 Singapore Dollar 378 79 378 79
51 NOTE 9 CONTINUED
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Canadian Dollar 161 355 161 355 Indian Rupee 413 463 413 463 Other Asian Currencies 910 284 910 284 4,213 5,851 3,970 5,768 Cash Holdings by Bank: HSBC Bank 3,766 2,288 3,523 2,205 National Bank of New Zealand 299 504 299 504 ASB Bank 17 19 17 19 Bank of New Zealand 3 2,940 3 2,940 Tokyo Mitsubishi 128 101 128 101 4,213 5,851 3,970 5,768
The fair value of cash and cash equivalents is $4,213,000 (2013: $5,851,000).
Tourism New Zealand holds a stand by Letter of Credit with HSBC bank for an amount of $360,000 to serve as security against any non-payment of payroll. This letter of credit has no expiry date. HSBC bank has also provided a financial guarantee for an amount of AUD $97,000 for Sydney office rent until 26 August 2016.
NOTE 10
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Receivables Receivables 2,077 1,980 1,868 1,439 Less: Provision for impairment (2) (4) - - 2,075 1,976 1,868 1,439
Trade receivables are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2014 and 2013, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below:
PARENT
2014 2013 Parent Gross Impairment Net Gross Impairment Net $000s $000s $000s $000s $000s $000s Not past due 1,605 - 1,605 1,015 - 1,015 Past due 1 - 30 days 54 - 54 53 - 53 Past due 31 - 60 days 13 - 13 58 - 58 Past due 61 - 90 days 123 - 123 12 - 12 Past due > 91 days 73 - 73 300 - 300 1,868 - 1,868 1,439 - 1,439 52 NOTE 10 CONTINUED
GROUP
2014 2013 Group Gross Impairment Net Gross Impairment Net $000s $000s $000s $000s $000s $000s Not past due 1,651 - 1,651 1,404 - 1,404 Past due 1 - 30 days 60 - 60 125 - 125 Past due 31 - 60 days 33 - 33 109 - 109 Past due 61 - 90 days 139 - 139 20 (1) 19 Past due > 91 days 194 (2) 192 323 (3) 320 2,077 (2) 2,075 1,980 (4) 1,976
The provision for impairment has been calculated based on expected losses determined by an analysis of losses in previous periods and a review of specific debtors.
Receivables for the Group include GST/VAT refunds comprising 65% (29% in 2013) of total receivables as follows:
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
GST Refund due from NZ Inland Revenue Department 622 428 622 428 GST Refund due from Australian Taxation Office 617 89 617 89 Consumption Tax Refund from Japan Tax Office 55 26 55 26 VAT Refund due from UK Revenue & Customs 53 36 53 36 1,347 579 1,347 579
NOTE 11
Derivative financial instruments
Tourism New Zealand uses foreign exchange instruments in order to manage its exposure to fluctuations in foreign currency exchange rates on normal operating activities. The instruments are matched with anticipated future cash flows in foreign currencies. Tourism New Zealand does not use financial instruments for speculative purposes. At balance date Tourism New Zealand had 112 (2013: 96) foreign exchange contracts maturing at various dates over the next 24 months. The contracts are financial assets at fair value through profit or loss and designated as held for trading financial instruments with fair value gains or losses recognised in the Statement of Comprehensive Income.
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Foreign currency forward exchange contracts: Foreign exchange contracts at 30 June - Sell Value 105,830 63,012 105,830 63,012 Fair value Derivatives in Gain/(Loss) (1,766) 143 (1,766) 143 Foreign exchange contracts at 30 June - Buy Value 104,064 63,155 104,064 63,155
53 NOTE 11 CONTINUED
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Foreign exchange contracts by currency: United States Dollar 50,840 28,795 50,840 28,795 British Pound 6,168 4,116 6,168 4,116 Australian Dollar 31,978 14,840 31,978 14,840 European Euro 6,680 5,472 6,680 5,472 Japanese Yen 5,107 5,431 5,107 5,431 Thai Baht - 298 - 298 Singapore Dollar 2,629 2,511 2,629 2,511 Hong Kong Dollar 662 1,692 662 1,692 104,064 63,155 104,064 63,155
NOTE 12
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Property, plant and equipment All property, plant and equipment At cost 8,990 8,222 8,929 8,165 Accumulated depreciation (7,047) (6,185) (7,000) (6,145) Net carrying amount 1,943 2,037 1,929 2,020
Property, plant and equipment for each class: Furniture and fittings At cost 1,209 1,177 1,174 1,145 Accumulated depreciation (1,010) (898) (985) (877) Net carrying amount of furniture and fittings 199 279 189 268
Leasehold improvements At cost 2,595 2,378 2,595 2,378 Accumulated depreciation (1,813) (1,665) (1,813) (1,665) Net carrying amount of leasehold improvements 782 713 782 713
Office equipment At cost 707 697 707 697 Accumulated depreciation (677) (651) (677) (651) Net carrying amount of office equipment 30 46 30 46
54 NOTE 12 CONTINUED
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Motor vehicles At cost 61 61 61 61 Accumulated depreciation (61) (61) (61) (61) Net carrying amount of motor vehicles - - - -
Computer equipment At cost 4,418 3,909 4,392 3,884 Accumulated depreciation (3,486) (2,910) (3,464) (2,891) Net carrying amount of computer equipment 932 999 928 993 Total property, plant and equipment 1,943 2,037 1,929 2,020
All property, plant and equipment reconciliation At 1 July, net of accumulated depreciation 2,038 2,330 2,020 2,311 Additions 769 582 766 573 Disposals and write back of depreciation - (66) - (65) Depreciation charge for the year (864) (809) (857) (799) At 30 June, net of accumulated depreciation 1,943 2,037 1,929 2,020
Depreciation by asset class: Furniture and fittings 112 120 109 114 Leasehold improvements 148 158 148 158 Office equipment 27 26 27 26 Motor vehicles - - - - Computer equipment 577 505 573 501 Total Depreciation 864 809 857 799
NOTE 13
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Intangible assets At cost 1,818 1,184 1,419 1,054 Accumulated amortisation (447) (64) (155) - Net carrying amount 1,371 1,120 1,264 1,054
55 NOTE 13 CONTINUED
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s Intangible assets reconciliation At 1 July, net of accumulated amortisation 1,119 33 1,054 - Additions 434 1,101 365 1,054 Impairment of Intangible assets (18) - Amortisation charge for the year (164) (14) (155) - At 30 June, net of accumulated amortisation 1,371 1,120 1,264 1,054
Intangible asset additions during the year relate to further enhancements made to Tourism New Zealand’s and Qualmark’s new finance (AX) and HR systems, implemented on 1 July 2013.
Visitor Information Network Incorporated’s extranet software was assessed to be obsolete as of 31 August 2013 and an investment was made into BookIt Software. This software was implemented on 1 July 2014. Its remaining assets relate to the Public campaign website.
NOTE 14
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Accommodation bonds Accommodation bonds are refundable deposits or key money paid for the lease of office and housing premises. Japan 137 185 137 185 Asia 120 107 120 107 257 292 257 292
NOTE 15
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Creditors and other payables Payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value. Creditors 941 970 875 1,042 Accrued expenses 2,236 2,304 2,126 2,129 3,177 3,274 3,001 3,171
56 NOTE 16
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Employee entitlements Annual Leave 683 563 655 534 Sick Leave - - - - 683 563 655 534
NOTE 17
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Provisions Tourism New Zealand has a number of potential future restoration costs relating to make good clauses on office rental leases. The provision recognises the present value of expected future payments for amounts in relation to make good. The provision relates to five Tourism New Zealand offices and is expected to be incurred over the next eight years. Provisions are represented by: Lease make-good 266 273 266 273 Total Provisions 266 273 266 273
Current provision 20 24 20 24 Non-current provision 246 249 246 249 266 273 266 273
Movements in provisions are as follows: Balance at 1 July 273 273 273 273 Additional provisions made - - - - Amounts used (7) - (7) - Unused amounts reversed - - - - Balance at 30 June 266 273 266 273
57 NOTE 18
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s Foreign Exchange Reserve Tourism New Zealand funds its overseas offices and operations in the local currency of that office or operation. Some of the surplus/(deficit) arising from foreign currency movements are held in reserve to finance changes in the New Zealand dollar cost of maintaining a consistent level of funding to those overseas offices or operations. Only the realised gains or losses on foreign currency transactions during the year are transferred to reserves, and the unrealised gains or losses on mark to market revaluation of derivatives held at year end are not transferred to reserves. Movements in reserve is as follows: Balance at 1 July 5,007 4,613 5,007 4,613 Transfer from Retained Earnings to Foreign Exchange Reserve (890) 394 (890) 394 Balance at 30 June 4,117 5,007 4,117 5,007
NOTE 19
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Reconciliation of surplus to net cash from operating activities Net surplus/(deficit) (2,106) 718 (2,096) 678 Add/(less) non-cash items Depreciation and amortisation 1,028 823 1,012 799 Provisions (7) - (7) - Share of associate's surplus 11 (10) - - Net (gains)/losses on derivative financial instruments 1,909 (295) 1,909 (295) Net foreign exchange (gains)/losses (916) (394) (916) (394) Total non-cash items 2,025 124 1,998 110
Add/(less) items classified as investing or financing activities Net Loss/(gain) on disposal of assets 18 3 - 4 Movement in foreign currency accommodation bonds 30 20 30 20 Total items classified as investing or financing activities 48 23 30 24
Add/(less) movements in working capital items Debtors and other receivables 194 (560) (136) (341) Prepayments (8) (122) (13) (123) Payables and accruals 99 (838) 22 (701) Invoiced in advance (352) 280 (139) 37 Employee entitlements 120 95 121 95 Net movements in working capital items 53 (1,145) (145) (1,033) Net cash out flow from operating activities 20 (280) (213) (221) 58 NOTE 20
Contingencies
Uncalled Share Capital - Tourism New Zealand has provided a written undertaking to the Board of Qualmark New Zealand Ltd to provide ongoing financial support sufficient to enable Qualmark to meet its obligations when they fall due. Tourism New Zealand has assessed the likelihood of being required to significantly increase the level of funding to Qualmark as low. Additionally Tourism New Zealand’s shareholding in Qualmark is uncalled. If called, Tourism New Zealand would be liable to contribute $60,000.
NOTE 21
Income tax
Tourism New Zealand is exempt from income tax under the New Zealand Tourism Board Act 1991. Tourism New Zealand’s subsidiaries are subject to income tax. The Group has tax losses unrecognised that can be used to offset future assessable income of $338,208 (2013: $247,702).
NOTE 22
Management of risk
Tourism New Zealand has developed a risk management framework and has undertaken a full risk assessment of its business. Management is required to sign off on a half yearly basis that no new exposures have arisen and that existing risks are being properly managed. Written policies and procedures exist covering those aspects of business which have the potential to generate risk for Tourism New Zealand. Adherence to these policies minimises potential risk to Tourism New Zealand. Employees are required as part of employment contracts to adhere to Tourism New Zealand policies and procedures.
Tourism New Zealand carries comprehensive insurance covering all normal business risks including Public Liability. Tourism New Zealand has purchased insurance to provide Board members and Officers Liability, Employers Liability and Professional Indemnity cover for Board members and employees. Tourism New Zealand also provides cover for its staff for offshore travel. Insured values are reviewed annually and adjusted to reflect changes in business operations.
NOTE 23
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. These judgements and estimates are based on historical experience and other factors that are reasonable under the circumstances and form the basis for the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and conditions. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions have been made.
Make-good provision
A provision has been made for a number of potential future restoration costs relating to make-good clauses on seven office rental leases. The calculation of this provision requires assumptions such as the extent, if any, that Landlords will enforce the make good clauses in the leases and building and demolition cost estimates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised for each lease is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for make-good are recognised in the balance sheet by adjusting both the expense or asset and provision. The related carrying amounts are disclosed in note 17.
59 NOTE 24
Capital management
Tourism New Zealand’s capital is its equity, which comprises accumulated funds and other reserves. Equity is represented by net assets.
Tourism New Zealand is subject to the financial management and accountability provisions of the Crown Entities Act 2004, which imposes restrictions in relation to borrowings, acquisition of securities, issuing guarantees and indemnities and the use of derivatives.
Tourism New Zealand manages its equity as a by-product of prudently managing revenues, expenses, assets, liabilities, investments and general financial dealings to ensure that Tourism New Zealand effectively achieves its objectives and purpose, whilst remaining a going concern.
Tourism New Zealand purchases a variety of foreign currencies to fund promotional activity offshore. As this is funded in NZ Dollar/s, there is an exposure to foreign exchange risk through the movement of NZ Dollar/s against those foreign currencies. To manage this risk and improve operational flexibility, a foreign exchange reserve was set up in 2009/10 that comprised of the realised gains from that year to be used solely to offset future realised foreign exchange gains and losses.
NOTE 25
Categories of financial assets and liabilities
The carrying amounts of financial assets and liabilities in each of the NZ IAS 39 categories are as follows:
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s Financial assets:
Cash and cash equivalents 4,213 5,851 3,970 5,768 Debtors 728 1,397 521 860 Total loans and receivables 4,941 7,248 4,491 6,628
Fair value through profit and loss held for trading: Derivative financial instrument (assets)/liabilities 1,766 (143) 1,766 (143)
Other financial liabilities: Creditors 941 970 875 1,042 Invoiced in advance 139 488 20 159 Total other financial liabilities 1,080 1,458 895 1,201
NOTE 26
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s Capital commitments Total capital expenditure contracted for at balance date but not provided for in the financial statements - 160 - 160
The above commitment in the prior year was in relation to office fit out for the Tourism New Zealand office in Singapore. 60 NOTE 27
Operating commitments
Operating commitments include non-cancellable lease payments for premises, motor vehicles and office equipment and non-cancellable contracts for services like equipment maintenance and public relations.
GROUP PARENT
2014 2013 2014 2013 $000s $000s $000s $000s
Operating commitments payable after balance date on: Non-Cancellable Accommodation Leases Up to One Year 1,604 1,790 1,604 1,790 One to Two Years 1,261 1,424 1,261 1,424 Two to Five Years 2,004 2,460 2,004 2,460 Over Five Years 319 797 319 797 5,188 6,471 5,188 6,471 Non-Cancellable Motor Vehicle and Equipment Leases Up to One Year 92 92 91 87 One to Two Years 64 153 64 152 Two to Five Years 96 103 96 103 Over Five Years - - - - 252 348 251 342 Non-Cancellable Contracts for Goods and Services Up to One Year 923 812 923 812 One to Two Years - 27 - 27 Two to Five Years - - - - Over Five Years - - - - 923 839 923 839 Total operating commitments 6,363 7,658 6,362 7,652
NOTE 28
Related party transactions
Tourism New Zealand is a wholly owned entity of the Crown which has the ability to significantly influence its role. The Crown is Tourism New Zealand’s major source of revenue.
Tourism New Zealand enters into transactions with government departments, state-owned enterprises and other Crown entities. Those transactions that occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm’s length in the same circumstances have not been disclosed as related party transactions.
Tourism New Zealand also enters into transactions with its subsidiaries and associate. These transactions occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm’s length. The following table provides the total amount of transactions that were entered into with these related parties.
61 NOTE 28 CONTINUED
Transaction value YE Balance outstanding YE 30 June 30 June
2014 2013 2014 2013 $000s $000s $000s $000s Related Party and Transaction Subsidiary - Qualmark New Zealand Limited: Shareholder income provided by Tourism New Zealand - - - - Purchases from Tourism New Zealand 180 103 17 1 Sales to Tourism New Zealand 3 - - - Sales to Visitor Information Network Inc 32 - - - Subsidiary - Visitor Information Network Inc: Shareholder income provided by Tourism New Zealand 250 250 - 145 Sales to Tourism New Zealand - - - - Recharges from Tourism New Zealand 10 - - - Purchases from Tourism New Zealand 32 - - - Associate - The New Zealand Way Limited: Shareholder income provided by Tourism New Zealand 31 90 13 - Recharges from Tourism New Zealand 5 - 6 -
Tourism New Zealand also enters into transactions with board members and entities over which they have control or significant influence. These transactions occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm’s length. The following table provides the total amount of transactions that were entered into with these related parties.
Transaction value YE Balance outstanding YE 30 June 30 June
2014 2013 2014 2013 $000s $000s $000s $000s Related Party and Transaction Income has been received by Tourism New Zealand from: R Leggat (Director): Education NZ - Income received by TNZ 10 40 - - for tourism related services. J Thorburn (Director): Agrodome Rotorua, Ngai Tahu Tourism 25 27 - - Limited, Dart River Safaris Limited, Franz Josef Glacier Guides Limited, Rainbow Springs Limited, Shotover Jet Limited, Hukafalls Jet Limited - Income received by TNZ for tourism related services. M O'Donnell (Director): Ministry of Business, Innovation, and 46 - 11 - Employment - Income received by TNZ for employee secondment. N Thompson (Director): Auckland Tourism, Events & Economic 18 - 14 - Development - Income received by TNZ for tourism related services. M Johns (Chief Executive): Intercity Group (NZ) Limited - Income 8 7 - - received by TNZ for tourism related services.
62 NOTE 28 CONTINUED
Payments have been made by Tourism New Zealand to: K Pendergast (25% owner (with husband)): Quality Hotel and 1 2 - - Comfort Hotel - Provision of services to TNZ. R Leggat (Director): New Zealand Post Limited - Provision of 3 11 - - postal services to TNZ J Thorburn (Director): Agrodome Rotorua, Ngai Tahu Tourism 50 14 - - Limited, Dart River Safaris Limited, Franz Josef Galcier Guides Limited, Rainbow Springs Limited, Shotover Jet Limited, Hukafalls Jet Limited - Provision of tourism related services to TNZ. J Spice (Director): Touch of Spice Ltd - Provision of tourism 4 - - - related services to TNZ C Parkin (Director): Museum Hotel - Provision of tourism related 7 - - - services to TNZ N Thompson (Director): Auckland Tourism, Events & Economic 11 - - - Development - Provision of tourism related services to TNZ M Johns (Chief Executive): Intercity Group (NZ) Limited - Provision - 15 - - of travel services to TNZ. K Bowler (Director): Pacific Asia Travel Association - Provision of 10 29 - - membership fees. J Barrett (Managing Director): Kapiti Island Alive & Kapiti Nature - - - - Lodge. (Director): Aviation/Tourism/Travel Training Organisation (ATTTO) - Provision of tourism related services to TNZ
GROUP PARENT
2014 2013 Key management personnel compensation $000s $000s Salaries and other short-term employee benefits 2,677 2,612 Other long-term benefits - - Termination benefits - - Total key management personnel compensation 2,677 2,612
Key management personnel includes all board members, the Chief Executive and 10 (2013: 8) members of the Executive Team.
NOTE 29
Financial instrument risks
Tourism New Zealand’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. Tourism New Zealand has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature.
Market Risk
Interest rate risk - Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in interest rates. Tourism New Zealand is exposed to interest rate risk on its cash balances. Refer to note 9 for cash balances exposed to interest rate risk.
Interest rate risk sensitivity analysis - As at 30 June 2014, if interest rates on cash balances had increased/decreased by 0.5% (50 basis points) with all other variables held constant, the deficit/surplus and equity would have changed as follows:
63 NOTE 29 CONTINUED
Surplus/(deficit) Equity higher/(lower) higher/(lower)
2014 2013 2014 2013 Group $000s $000s $000s $000s + 0.5% (50 basis points) 2 19 2 19 - 0.5% (50 basis points) (2) (19) (2) (19) Parent + 0.5% (50 basis points) 1 19 1 19 - 0.5% (50 basis points) (1) (19) (1) (19)
Currency risk - Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates.
As a result of significant operations around the world, Tourism New Zealand is required to enter into transactions denominated in foreign currencies. As a result of these activities, Tourism New Zealand is exposed to foreign currency risk on its foreign denominated cash balances, receivables, creditors and other payables, and derivative instruments.
It is Tourism New Zealand’s policy to manage foreign currency risks arising from contractual commitments and liabilities by entering into foreign exchange forward contracts to cover the foreign currency exposure.
Currency risk sensitivity analysis - Tourism New Zealand is subject to volatility in financial performance associated with foreign currency rates. As at 30 June 2014, if the NZ Dollar/s had increased/decreased by 5 per cent against various foreign currencies used by Tourism New Zealand with all other variables held constant, the deficit/surplus and equity would have changed as follows:
Surplus/(deficit) Equity higher/(lower) higher/(lower)
2014 2013 2014 2013 $000s $000s $000s $000s Group NZD to various currencies +5% 4,981 3,265 - - NZD to various currencies -5% (5,505) (3,604) - -
Parent NZD to basket of currencies +5% 4,981 3,265 - - NZD to basket of currencies -5% (5,505) (3,604) - -
This movement is attributable to foreign exchange gains/losses on translation of forward foreign exchange contracts and other foreign currency denominated assets and liabilities.
Credit risk
Credit risk is the risk that a third party will default on its obligations to Tourism New Zealand, causing Tourism New Zealand to incur a loss.
Tourism New Zealand has no significant concentrations of credit risk, as it has a small number of credit customers and only places funds with registered banks. With respect to foreign exchange instruments, Tourism New Zealand reduces its risk by limiting the counter parties to major trading banks and does not expect to incur any significant losses as a result of non performance by these counter parties.
Tourism New Zealand’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash (note 9), net debtors (note 10) and derivative financial instruments (note 11). There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired. 64 NOTE 29 CONTINUED
Liquidity risk
Liquidity risk is the risk that Tourism New Zealand will encounter difficulty raising liquid funds to meet commitments as they fall due.
Tourism New Zealand has no significant concentrations of liquidity risk. Tourism New Zealand annually agrees a funding schedule with the Crown which matches the estimated timing of its commitments and close out of market positions.
The following liquidity risk disclosures reflect all contractually fixed pay-offs, repayments and interest resulting from recognised financial and derivative financial instrument liabilities as of 30 June 2014. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract.
< 6months 6-12 months < 1 year Total $000s $000s $000s $000s
Group - Year end 30 June 2014 Financial liabilities Creditors (941) - - (941)
Derivative financial instrument liabilities - gross settled Inflows 35,491 29,391 35,882 100,764 Outflows (36,213) (30,189) (36,128) (102,530) (722) (798) (246) (1,766)
Net outflow (1,663) (798) (246) (2,707)
< 6months 6-12 months < 1 year Total $000s $000s $000s $000s
Parent - Year end 30 June 2014 Financial liabilities Creditors (875) - - (875)
Derivative financial instrument liabilities - gross settled Inflows 35,491 29,391 35,882 100,764 Outflows (36,213) (30,189) (36,128) (102,530) (722) (798) (246) (1,766)
Net outflow (1,597) (798) (246) (2,641)
65 NOTE 29 CONTINUED
< 6months 6-12 months < 1 year Total $000s $000s $000s $000s
Group - Year end 30 June 2013 Financial liabilities Creditors (970) - - (970)
Derivative financial instrument liabilities - gross settled Inflows 24,971 38,184 - 63,155 Outflows (24,890) (38,122) - (63,012) 81 62 - 143
Net outflow (889) 62 - (827)
< 6months 6-12 months < 1 year Total $000s $000s $000s $000s
Parent - Year end 30 June 2013 Financial liabilities Creditors (1,042) - - (1,042)
Derivative financial instrument liabilities - gross settled Inflows 24,971 38,184 - 63,155 Outflows (24,890) (38,122) - (63,012) 81 62 - 143
Net outflow (961) 62 - (899)
Fair value risk
The Group can apply various methods in estimating the fair value of a financial instrument. The methods comprise: a) Level 1 - the fair value is calculated using quoted prices in active markets: b) Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and c) Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Derivative financial instruments are classified as Level 2 and are valued using observable market inputs.
There were no transfers between Level 1 and Level 2 during the year.
66 NOTE 30
Remuneration of employees
During 2013/2014 44 (2013: 24) employees received remuneration and benefits which exceeded $100,000 per annum as follows:
GROUP PARENT
$ 2014 2013 100,000 - 109,999 4 1 110,000 - 119,999 12 5 120,000 - 129,999 5 4 130,000 - 139,999 1 3 140,000 - 149,999 3 1 150,000 - 159,999 5 2 160,000 - 169,999 6 - 170,000 - 179,999 - 1
180,000 - 189,999 - - 190,000 - 199,999 2 1 200,000 - 209,999 2 1
210,000 - 219,999 - 2 240,000 - 249,999 1 - 250,000 - 259,999 - 1 260,000 - 269,999 1 1 280,000 - 289,999 1 - 470,000 - 479,999 1 1 44 24
In 2013/2014 Tourism New Zealand expanded operations in the emerging markets of South America, Indonesia, and India. Additionally, Tourism New Zealand increased its commitment to the development of the Business Events and Premium market segments. Development in these market areas, coupled with investing in higher levels of capability to meet expectations in delivering on the Strategic Plan, has seen an increase in the number of employees remunerated above NZD 100,000.
67 NOTE 31
Remuneration of Board members
Board members earned the following fees during the year: GROUP PARENT
2014 2013 $000s $000s
K Prendergast (Chair) 42 42 R Leggat (Deputy Chair) 25 20 J Thorburn 18 16 J Bestwick 22 16 J Tuuta 20 5 M O’Donnell 5 - J Spice 10 - C Parkin 3 - N Thompson 3 - M Johns 10 25 H van Asch 16 20 J Langley 16 20 J Barrett - 17 190 181
Changes in Board members:
M O’Donnell was appointed to the Board in December 2013, J Spice in January 2014, and C Parkin and N Thompson in April 2014. M John’s term came to an end in November 2013 and H van Asch and J Langley’s in April 2014.
68 FIVE YEAR FINANCIAL SUMMARY FOR PARENT
2010 Actual 2011 Actual 2012 Actual 2013 Actual 2014 Actual $000s $000s $000s $000s $000s Statement of Financial Position Current Assets Cash 6,254 10,473 7,153 5,768 3,970 Receivables 3,278 2,062 1,098 1,439 1,868 Prepayments and other current assets 1,378 729 798 921 934 Derivative financial instruments - - - 143 - 10,910 13,264 9,049 8,271 6,772 Non-current Assets Property, plant and equipment 1,683 2,404 2,311 2,020 1,929 Intangible Assets - - - 1,054 1,264 Accommodation bonds 482 390 320 292 257 2,165 2,794 2,631 3,366 3,450 Total Assets 13,075 16,058 11,680 11,637 10,222
Current Liabilities Creditors and other payables 4,998 8,120 3,872 3,171 3,001 Employee entitlements 577 450 439 534 655 Income in advance 168 108 122 159 20 Provisions 303 80 50 24 20 Derivative financial instruments 498 1,122 152 - 1,520 6,544 9,880 4,635 3,888 5,216
Non-current Liabilities Provisions - 223 223 249 246 Derivative financial instruments - - - - 246 - 223 223 249 492
Total Liabilities 6,544 10,103 4,858 4,137 5,708
Net Assets 6,531 5,955 6,822 7,500 4,514
Equity Shareholder's equity 1,805 1,805 1,805 1,805 1,805 Retained earnings (74) (464) 404 688 (1,408) Foreign Exchange Reserve 4,800 4,614 4,613 5,007 4,117 Total Equity 6,531 5,955 6,822 7,500 4,514
69 FIVE YEAR FINANCIAL SUMMARY FOR PARENT CONTINUED
2010 Actual 2011 Actual 2012 Actual 2013 Actual 2014 Actual $000s $000s $000s $000s $000s Statement of Comprehensive Income Income Revenue from Crown 89,431 99,361 84,215 84,167 113,730 Interest 219 252 139 114 46 Other revenue 8,791 6,467 5,530 5,631 8,349 98,441 106,080 89,884 89,912 122,125 Expenditure Other expenses 93,156 105,397 89,205 89,124 122,190 Depreciation, Amortisation and 632 563 782 799 1,012 Impairment 93,788 105,960 89,987 89,923 123,202
Unrealised Foreign exchange gains/ 1,469 (510) 970 295 (1,909) (losses) on derivative financial instruments held at year end
Total comprehensive income/ 6,122 (390) 867 284 (2,986) (expense)
Transfer from/(to) Foreign exchange (643) (186) - 394 890 reserve
Total comprehensive income/(expense) 5,479 (576) 867 678 (2,096) after foreign exchange transfer
70 INDEPENDENT AUDITOR’S REPORT
TO THE READERS OF NEW ZEALAND TOURISM BOARD AND GROUP’S FINANCIAL STATEMENTS AND NON-FINANCIAL PERFORMANCE INFORMATION FOR THE YEAR ENDED 30 JUNE 2014
The Auditor-General is the auditor of the New Zealand Basis of opinion Tourism Board (the “Board”) and group. The Auditor- General has appointed me, Stuart Mutch, using the staff We carried out our audit in accordance with the Auditor- and resources of Ernst & Young, to carry out the audit of General’s Auditing Standards, which incorporate the the financial statements and non-financial performance International Standards on Auditing (New Zealand). information of the Board and group on her behalf. Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain We have audited: reasonable assurance about whether the financial statements and non-financial performance information are - the financial statements of the Board and group free from material misstatement. on pages 38 to 68, that comprise the statement of financial position as at 30 June 2014, the statement of Material misstatements are differences or omissions of comprehensive income, statement of changes in equity amounts and disclosures that, in our judgment, are likely and statement of cash flows for the year ended on that to influence readers’ overall understanding of the financial date and notes to the financial statements that include statements and non-financial performance information. accounting policies and other explanatory information; If we had found material misstatements that were not and corrected, we would have referred to them in our opinion. - the non-financial performance information of the Board and group that comprises the statement of service An audit involves carrying out procedures to obtain performance on pages 22 to 33 and the report about audit evidence about the amounts and disclosures in outcomes on pages 14 to 21. the financial statements and non-financial performance information. The procedures selected depend on our Opinion judgment, including our assessment of risks of material misstatement of the financial statements and non-financial In our opinion: performance information, whether due to fraud or error. In making those risk assessments, we consider internal - the financial statements of the Board and group on control relevant to the preparation of the Board and pages 38 to 68: group’s financial statements and non-financial performance - comply with generally accepted accounting information that fairly reflect the matters to which they practice in New Zealand; and relate. We consider internal control in order to design - fairly reflect the Board and group’s: audit procedures that are appropriate in the circumstances - financial position as at 30 June 2014; and but not for the purpose of expressing an opinion on the - financial performance and cash flows for the effectiveness of the Board and group’s internal control. year ended on that date. - the non-financial performance information of the Board and group on pages 14 to 33: An audit also involves evaluating: - complies with generally accepted accounting practice in New Zealand; and - the appropriateness of accounting policies used and - airly reflects the Board’s and group’s service whether they have been consistently applied; performance and outcomes for the year ended 30 - the reasonableness of the significant accounting June 2014, including for each class of outputs: estimates and judgments made by the Board members; - the service performance compared with - the appropriateness of the reported non-financial forecasts in the statement of forecast service performance information within the Board and group’s performance at the start of the financial year; framework for reporting performance; and - the adequacy of all disclosures in the financial - the actual revenue and output expenses statements and non-financial performance information; compared with the forecasts in the statement and of forecast service performance at the start of - the overall presentation of the financial statements and the financial year. non-financial performance information.
Our audit was completed on 6 October 2014. This is the We did not examine every transaction, nor do we date at which our opinion is expressed. guarantee complete accuracy of the financial statements and non-financial performance information. Also we did The basis of our opinion is explained below. In addition, we not evaluate the security and controls over the electronic outline the responsibilities of the Board members and our publication of the financial statements and non-financial responsibilities, and we explain our independence. performance information.
71 INDEPENDENT AUDITOR’S REPORT CONTINUED
We have obtained all the information and explanations we have required and we believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.
Responsibilities of the Board members
The Board members are responsible for preparing financial statements and non-financial performance information that:
- comply with generally accepted accounting practice in New Zealand; - fairly reflect the Board and group’s financial position, financial performance and cash flows; and - fairly reflect the Board and group’s service performance and outcomes.
The Board members are also responsible for such internal control as is determined is necessary to enable the preparation of financial statements and non-financial performance information that are free from material misstatement, whether due to fraud or error. The Board members are also responsible for the publication of the financial statements and non-financial performance information, whether in printed or electronic form.
The Board member’s responsibilities arise from the Crown Entities Act 2004, the Financial Reporting Act 1993 and the New Zealand Tourism Board Act 1991.
Responsibilities of the Auditor
We are responsible for expressing an independent opinion on the financial statements and non-financial performance information and reporting that opinion to you based on our audit. Our responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.
Independence
When carrying out the audit, we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the External Reporting Board.
Other than the audit, we have no relationship with or interests in the Board or any of its subsidiaries.
Stuart Mutch Ernst & Young On behalf of the Auditor-General Wellington, New Zealand
72 73
Fraser Clements 74