Annual Report - Tourism New Zealand · partnering with international travel sellers and airlines, engaging with New Zealand tourism operators, providing ... the Tourism 2025 industry

Tourism New Zealand 2014/2015

G25

Annual Report

Miles Holden

$10.3 billioninjected into the nation’s economy by international

visitors

24.4 millionvisits to newzealand.com

– up 34 per cent

25,936

online travel modules completed

1,240 trade reps hosted in NZ on familiarisation

trips

Record year for International Media

Programme with

22,000 stories generated about

New Zealand as a destination

23 international events won

– valued at over

$27 million

Visitor spend up

28 per cent

2.99 millionvisitor arrivals

– up 7.4 per cent*

* This figure was reported incorrectly in the print version of this document and has been amended for the digital version.

150Hobbit fans hosted on Fan Fellowship

Competition

58

conference bids supported through the Conference Assistance Programme

48

major trade events attended by TNZ

Chinese reality show ‘Dad, Where are we

going?’ results in

$178 million in coverage value

$25.9 million of incentive travel to

New Zealand secured

1,023 fully qualified NZ

specialists

Miles Holden

Contents

2. Tourism New Zealand – Who We Are

4. Chair and Chief Executive Report

10. Governance

12. Board Members

13. Core Leadership Team

14. Strategic Priorities and Outcomes

24. Statement of Performance

40. Equal Employment Opportunities

43. Financial Statements

48. Notes to the Financial Statements

74. Independent Auditor’s Report

Julian Apse

1

Tourism New Zealand – Who We AreTourism New Zealand is a Crown agency governed by the Crown Entities Act 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 visitors to New Zealand. Our statutory functions under the CEA Act include:

▪ 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.

London

Seoul

GuangzhouMumbai

Jakarta

Sydney

Tokyo

Shanghai

Bangkok

Singapore

2

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 15 years. The campaign was conceived in 1999 and has evolved over the years to communicate the unique experiences available to people who visit New Zealand.

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 experience.

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 13 offshore offices, two in New Zealand, and 157 full-time staff members.

São Paulo

Los Angeles

Auckland

Wellington

Tourism New Zealand has fifteen

offices, two in New Zealand, and approximately 157

full time staff

3

On behalf of the Board and Leadership Team, it gives us great pleasure to present Tourism New Zealand’s Annual Report for the financial year ending June 2015.

Executive summary It has been an absolutely stunning year — one that ended on a high of 28 per cent growth in visitor spend; 7.4 per cent growth in total arrivals and 10.4 per cent growth in holiday arrivals. As a result, the industry is well on track to surpass the international targets for growth set out in the Tourism 2025 industry strategy. The past summer was our busiest yet with some regions experiencing significant capacity constraints at the peak of the high season.

Tourism New Zealand has developed, and now launched, a new 100% Pure New Zealand campaign. The new edition of the sixteen-year-old campaign is a departure from the Middle-earth theme of the past three years that has been exceptionally successful in connecting New Zealand with Middle-earth. The new campaign has two main features – firstly the message focuses on the abundant and diverse activities that are available for visitors in New Zealand and how easy it is to get from one activity to another. The tagline ‘Every day a different journey’ brings this message to life. The second main feature is a new design system that introduces a new typeface and 100% Pure New Zealand logo design, carved from native timber, using traditional Māori techniques. The new design system is distinctive and uniquely New Zealand.

Over the past year, significant progress has been made across the organisation’s digital platforms, that saw more traffic to newzealand.com than ever before, with 24.4

million visits, up 34 per cent year-on-year. Our digital marketing activity has also delivered 5.4 million referrals that industry and international travel sellers can convert into bookings, a 64 per cent year-on-year increase.

Our international media programme hosted some 450 media outlets, achieving around $490 million in equivalent advertising value while our trade team hosted more than 1,000 international travel trade over the year. All in all, it has been a significant and successful 12 months.

Partnership work across major activitiesTourism New Zealand delivers its activity from 15 offices internationally and they target specific sectors and markets that offer the greatest potential for growth in visitor value. However, it is by working in partnership that we are able to deliver to the level we do. It also aligns our work with the Tourism 2025 strategic framework.

Over the past year an additional $23.2 million was invested alongside our marketing activity through joint venture campaigns and other mutually agreed activity. We signed a second Memorandum of Understanding (MOU) with Air New Zealand, jointly indicating a desire to invest $20 million a year together, a three-year MOU with Auckland International Airport for joint marketing in India and a new two-year MOU with New Zealand Winegrowers Association. We also delivered our second year of activity under two, three-year MOUs, one with Singapore Airlines and the other with China Southern Airlines.

Successful partnerships do not come any better than the collaboration shown between Tourism New Zealand and

Chair and Chief Executive Report

Kerry Prendergast Tourism New Zealand Chair

Kevin Bowler Tourism New Zealand Chief Executive

4

Air New Zealand in our work to leverage the country’s connection to Middle-earth. It was our final year of the Hobbit movie trilogy and we saved the best for last. We jointly hosted 150 of the world’s biggest Hobbit fans on the journey of a lifetime to New Zealand in November. Then we built a full-sized Hobbit hole and garden in a hotel room at Claridge’s in London as a key attraction for international media covering the world-wide première of the final film.

The resulting media coverage from these two activities was some $35 million, generated from the 40 media outlets that journeyed with the Hobbit Fan Fellowship and the 100 media that chose our Hobbit room as the backdrop to their broadcasts during the première.

We also worked in partnerships with NZ Inc agencies and the country’s network of Regional Tourism Organisations (RTOs) to leverage major events hosted here. The ICC Cricket World Cup created a unique opportunity to promote New Zealand as a visitor destination to an estimated cumulative one billion people who watched the event, particularly those in India, the UK and Australia, generating $4.3 million estimated advertising value. Hard on its heels came the FIFA U-20 Football World Cup providing a useful entry into the Latin American market. In both instances, Tourism New Zealand worked closely with the RTOs to deliver a diverse programme of activities and an exceptional media hosting programme, generating $2.1 million equivalent advertising value.

Tier one markets: Australia, China and USA A key strategic outcome for the organisation is to grow a portfolio of markets that drives current opportunities and creates future market positions. Our tier one markets have all delivered exceptional growth over the past year.

Whilst Australia is undoubtedly a mature travel market for New Zealand, we achieved a 4.0 per cent increase in total arrivals, and holiday arrivals up 3.3 per cent. We continued and extended the use of the highly successful joint venture ‘touring’ campaigns, teaming up with key operators and RTOs the length of the country to encourage visitors to explore the regions and thereby distribute their time and spending more widely.

As part of our annual Australian ski marketing activity we took the ‘selfie’ phenomenon to a whole new level with the #NZDronie campaign where visitors were able to share a unique eight-second video captured by the drone. The #NZDronie hit the slopes for the 2014 ski season and was promoted across Australia. It was so successful that we brought it back for the 2015 ski season.

We hosted more than 220 travel agents for six days and were chosen as host of the Qantas Holidays and Viva! Holidays Global Achievers Event, bringing a further 100 of Australia’s top selling travel agents to the country.

Tourism New Zealand’s goal in China is to grow the higher-value Free Independent Traveller (FIT) sector. Average length of holiday stay has moved from 7.6 days to 8.1 and we have achieved 41 per cent growth in the number of general visitor visas being issued, representing the more independent, longer staying, higher value traveller segment. We are achieving this with a 30.3 per cent increase in total arrivals.

Julian Apse

5

This was helped no doubt by our hosting of the world’s most watched reality TV show when ‘Dad, where are we going?’ selected New Zealand as its first ever international destination. Season two was watched by around 400 million Chinese and the 16-part season ended with two episodes filmed in New Zealand. Integrated marketing, PR and trade activity were used to drive significant results.

The show screened 200 minutes of New Zealand destination footage, resulting in 70 million New Zealand impressions on Chinese social media and more than $178 million in coverage value. In addition, Air New Zealand recorded a significant increase in web traffic and online sales in the month following the New Zealand episodes going to air.

In the trade space, we held our largest ever 10-day travel agent training and operator networking event in China, with a record 44 New Zealand operators meeting a total of 315 agents. This was followed by a ‘mega famil’ to New Zealand for 120 agents.

The third of our tier one markets, the USA, also ended the year on a high with 10.2 per cent growth in total arrivals and 12.2 per cent growth in holiday arrivals. Our leverage of The Hobbit Trilogy has been particularly focused in this market. Air New Zealand’s announcement of a new Houston-Auckland route is an extremely positive sign and provides significant growth potential that Tourism New Zealand will be working hard to maximise in the year ahead.

Of particular success over the past year has been our use of influencers, including the engagement of New Zealander, Phil Keoghan, well-known as host of hit TV show The Amazing Race, as the face of Tourism New Zealand’s cycling campaign in the USA.

Tier two markets: Germany, the UK and JapanTourism New Zealand’s tier two markets, Germany, the UK and Japan, saw significant sport, Hobbit and youth focused activity over the year. Growth out of these markets is positive, with Germany showing 7.0 per cent growth in total arrivals; the UK showing 1.9 per cent growth in total arrivals and Japan delivering 11.8 per cent growth in total arrivals.

In Germany and the UK we worked alongside global travel seller STA travel to deliver youth-targeted activity aimed at backpackers. We also hosted the STA Global Famil bringing 53 STA travel agents to New Zealand in support of campaign activity.

Tourism New Zealand also supported the filming of an episode of Germany’s Next Top Model that featured Auckland’s Skytower Jump, Māori Waka Experience, Eco Zip Waiheke, and lunch at Mudbrick Winery on Waiheke Island.

For potential travellers from the UK, it was a year of sport with both the Cricket World Cup and FIFA U-20 World Cup providing motivation to consider travelling to New Zealand. Tourism New Zealand is already planning how it will leverage the British and Irish Lions Tour in 2017. Then there was the visit by Britain’s Prince Harry and the 19 international media that documented his every move. Some $14 million in international media coverage was achieved during the Prince’s week-long stay thanks to our media team delivering compelling stories and images of the Prince’s trip to visiting and other international media outlets.

While not exactly royalty, one of Japan’s most well-known athletes, figure-skater Mao Asada, visited with her sister Mai and their trip aired as a storytelling-type documentary, viewed by an audience of 4.4 million. The use of influencers has been highly successful in Japan and Tourism New Zealand also worked alongside

6

Auckland Tourism, Events and Economic Development to leverage Japanese celebrity Naoyuki Shimizu, in his role as an Auckland Ambassador. Naoyuki Shimizu is a Japanese baseball star who retired last month to Auckland.

Emerging markets: Indonesia, Latin America and IndiaIt is now two years since the establishment of Tourism New Zealand’s emerging markets’ investment. Offices and teams have been established in India, Indonesia and Brazil, with activity now underway across the trade, PR and marketing streams. The ICC Cricket World Cup provided significant opportunity to raise New Zealand’s profile in India, while the appointment of Indonesian actor Joe Taslim as Tourism Ambassador has provided positive inroads into Indonesia. The team in Brazil has been given a significant boost for the year ahead with Air New Zealand’s announcement of direct flights between Buenos Aires and Auckland from December 2015. We are working closely with Air New Zealand to maximise this new opportunity.

By the end of the year, total arrivals from India were up 25.9 per cent, Indonesia up 5.7 per cent and Brazil up 11.9 per cent.

Sectors Using the 100% Pure New Zealand – Naturally Beyond Convention campaign, efforts to promote New Zealand as an international business events destination have gone from strength to strength. We have supported 58 international conference bids for FY15, valued at $91.7 million to the economy. In addition, Tourism New Zealand has supported 150 major incentive bids and secured $25.6 million in incentive travel to New Zealand.

Data from the New Zealand Luxury Lodges Association provides evidence of the progress made to attract high-

value premium visitors with spend up 20 per cent. Tourism New Zealand also became the first national tourism organisation to partner with the luxury travel network Traveller Made which brings together 120 premium travel agencies. Partnership activity includes online marketing, webinars, and a famil to New Zealand led by the Traveller Made president.

Having upped our game in the premium sector, it was rewarding to hear that New Zealand topped leading US luxury travel agency Virtuoso’s annual ‘Hot List’, winning the honour for the biggest year-on-year growth in luxury travel.

A significant volume of new assets has been created to support the promotion of special interest sectors with new photography and video assets of the New Zealand cycle trails, great walks and marquee golf courses. The Golf Tourism New Zealand (GTNZ) advisory group, formally established in July 2014, has significantly increased our engagement with golf tour operators, courses and RTOs. Our work to promote New Zealand as a cycling destination was enhanced when international mountain bike event “Crankworx” was held in Rotorua (the first of three years for the event) and attracted 750 of the world’s elite mountain bikers. Tourism New Zealand’s activity focused on showcasing New Zealand as a world class mountain bike destination.

Organisational capability and cultureTourism New Zealand has continued to support the development of its people and culture through a number of initiatives. Having cemented the organisation’s mission, vision and values into the everyday language of the business over the past three years, we have completed this piece with the identification of behaviours that represent how we act when we are ‘at our best’. This work involved input from all staff and was developed during the three regional

Miles Holden

7

staff forums held around the world aimed at bringing our people together for business planning, learning and development.

A new internal communications platform has been launched that will support how we collaborate and engage globally and we have held two induction programmes, bringing all new starters together in New Zealand for an intensive period of learning and development.

The annual employee engagement survey saw the organisation surpass the state service benchmark once again, with the 78.2 per cent engagement score positioning the organisation strongly among the ‘best places to work’ as identified by the survey owner IBM, assessed against all participating New Zealand businesses.

OutlookAs we look forward to the new year, confidence is high across the industry; the weakening of the New Zealand dollar should help boost visitor expenditure further and the three million annual arrivals milestone was achieved in July 2015. With Tourism New Zealand’s current funding and focus confirmed for another two years, we will continue to deliver activity under our existing marketing strategy.

One of the biggest challenges we face is the significant peak seen over the summer months and resulting capacity constraints. In response, Tourism New Zealand has set itself a new objective to disproportionately drive shoulder season arrivals. As well as moving most of our media investment to drive shoulder season travel, we have also increased our focus on those sectors and markets that are well aligned with shoulder season travel including cycling, ski, international business events and incentive travel, backpackers, premium, golf and the India market.

Alongside capacity constraints comes the question of how many international visitors the country is able to host before the impact on New Zealanders, our infrastructure and our environment turns negative. Tourism New Zealand is acutely aware of the need to sustain what is unique about our offer while growing the value of tourism to the economy.

We will continue to play an active role alongside the industry to manage impacts as we have this past year, particularly around the issue of visiting drivers and sustainability. We have initiated a programme of activity aimed at up-skilling travel sellers about the unique conditions faced when driving in New Zealand, and will be delivering more comprehensive content to consumers, urging them to learn more about driving here before committing to self-drive. We are also investigating the option for revising the existing Qualmark programme to target business sustainability.

Thanks and acknowledgementsThis past year Tourism New Zealand bid farewell one of its longest serving staff members Gregg Anderson who, after 22 years, has taken a well-deserved sabbatical and is experiencing what it means to be a tourist himself.

There has been no change to the Board this past year and we welcome the re-appointment of Chair Kerry Prendergast for a further three-year term.

On behalf of the Board and Leadership Team we would like to thank all of our people for their exceptional work over the past year and their ongoing commitment to excellence. The year ahead holds great promise.

8

Chris McLennan9

The BoardThe New Zealand Tourism Board (trading as Tourism New Zealand) is a Crown entity established under the New Zealand Tourism Board Act 1991 and is a Crown agency for the purposes of the Crown Entities Act 2004.

Tourism New Zealand is governed by a Board appointed by the Minister of Tourism. All decisions relating to the operation of Tourism New Zealand are made by, or under the authority of, the Board in accordance with the New Zealand Tourism Board Act 1991, and the Crown Entities Act 2004.

In accordance with the New Zealand Tourism Board Act 1991, the Board must have no fewer than five, and no more than nine, members.

The Minister’s formal line of accountability with Tourism New Zealand is through the Board’s Chair. Board appointments are generally for two or three years, with reappointment possible. The composition of the Board reflects a balance of tourism industry and commercial expertise.

The Board meets at least six times a year, including a two-day meeting to review the organisation’s ongoing strategic direction. This strategy meeting initiates the business planning process and informs the preparation of the annual Statement of Intent.

DelegationThe Board delegates day-to-day management of Tourism New Zealand to the Chief Executive who is directly accountable to the Board through the Chair. Tourism New Zealand’s Delegated Authorities Policy is set by the Board and reviewed annually.

Appropriate formal processes are in place for reporting back to the Board.

Induction and developmentTourism New Zealand introduces each new board member to the organisation through an induction process which includes time spent with senior executives and their teams. Members are also encouraged, where appropriate, to attend tourism-related events such as TRENZ and other industry events.

ConductTourism New Zealand expects all its employees and board members to maintain the highest ethical standards. Tourism New Zealand has in place an employee code of conduct which all staff sign on joining

the organisation. Tourism New Zealand also has a formal code of conduct for its board members, which is consistent with the code released by the State Services Commission.

Disclosure of interestsThe Board is conscious of its obligations to ensure that board members avoid any conflicts of interest in their decision-making process. The Board ensures that proper process is followed and that members’ interests are formally recorded, with any changes or additions being disclosed at the start of each meeting. Members excuse themselves from any discussions in which their duty as a member could be compromised.

Risk managementTourism New Zealand manages its risks through a risk management framework; a process that requires it to identify legislative and business risks arising from its strategic direction and operating environment.

Tourism New Zealand’s risk management policy is reviewed annually by the Audit Committee. The Chief Executive reports to the Board on the matter of new or escalated risks and the processes in place to manage these appropriately.

Tourism New Zealand conducts its own internal audits, often with the involvement of its external auditors. Audits are agreed by the Audit Committee and programmes of work are developed with input by the external auditors. The results are reported back to the Audit Committee.

Board committeesCommittees of the Board are convened to deal with specific matters and currently include the Audit Committee and Remuneration Committee.

The Audit Committee meets at least three times a year. It reviews Tourism New Zealand’s internal control framework, external audit relationships and engagements, risk management and financial reporting, including International Financial Reporting Standards (IFRS).

The Remuneration Committee meets on an ad-hoc basis. It reviews the performance and remuneration of the Chief Executive and senior management. The committee also approves proposed organisation-wide remuneration policies.

Governance

10

Subsidiary companiesTourism 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 PBE IPSAS 6 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.

Chris Sisarich

11

Board Members Kerry Prendergast, ChairFollowing a four-year term, Kerry Prendergast was re-appointed as Chair of the New Zealand Tourism Board on 15 August 2014 for a one-year term. She is the former Mayor of Wellington and former Vice-President of Local Government New Zealand. She holds an MBA from Victoria University where she is also a Distinguished Alumni. She received a CNZM in 2011 for services to local Government.

Kerry is currently Chair of the Environmental Protection Authority, the New Zealand Festival and the Wellington Jazz Music Festival Trust.

Richard Leggat, Deputy ChairRichard has a varied background across business, marketing and e-commerce. He is now a full-time director.

Richard is the Chairman of NZ Cycle Trail Inc, the entity charged with ensuring the success and sustainability of the Government’s national cycle trail initiative. He is also on the boards of Cycling NZ, Snow Sports New Zealand, New Zealand Post and Education New Zealand and is chairman of Waterfront Auckland.

Richard, who was first appointed to the New Zealand Tourism Board on 1 February 2010, was reappointed for a second term that expires in February 2016 and appointed Deputy Chair in December 2013.

Jenn BestwickJenn Bestwick’s professional career has been largely in strategy and business development having worked extensively in both the public and private sectors. Jenn has recently been working with local authorities, Iwi and the primary and hydro-generation sectors on fresh water management in the Canterbury region.

Jenn is the current Chair of Christchurch Polytechnic Institute of Technology and board member of New Zealand Qualifications Authority, Southern Response Earthquake Services Limited.

Jenn was appointed to the New Zealand Tourism Board on 7 August 2012 for a three-year term.

Mike O’DonnellMike “MOD” O’Donnell is Executive Director of G2G Knowhow.

He is also a director of online global music company Serato, software company Raygun, and online booking company Timely. MOD is a weekly business columnist for Fairfax Media. 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.

Chris ParkinWellington businessman and patron of the arts, 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.

Chris is Chairman of Wellington Venues Ltd and Chairman of Te Whaia Services. In the 2011 Queen’s Birthday honours list he was awarded a Companion of the New Zealand Order of Merit for services to the arts and business.

Chris was appointed to the New Zealand Tourism Board in December 2013, with his three-year term commencing in April 2014.

Jacqui SpiceJacqui Spice is the founder and CEO of Touch of Spice, Curators of New Zealand’s Finest Experiences – a luxury travel and destination management company. Jacqui has over two decades of experience working in the luxury market, both in New Zealand and offshore catering to the most discerning clients in the world. The Touch of Spice head office is located in Queenstown and the team curates experiences, events and itineraries throughout New Zealand. They have amassed an extensive network of suppliers, products, transport and accommodation providers and customised a number of supremely unique experiences.

Jacqui was appointed to the New Zealand Tourism Board on 17 December 2013, with her three-year term commencing on 27 January 2014.

Norm Thompson (ONZOM) (CFIntD)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, Queenstown Airport Corporation and Preno Limited, as well a trustee of the Young Enterprise Trust Board. Norm is also a Committee Member of the 2016 New Zealand Golf Open.

Norm was appointed to the New Zealand Tourism Board in December 2013, with his three-year term commencing in April 2014.

John ThorburnJohn is Chief Executive of InterCity Group and was previously the Chief Executive of Ngai Tahu Tourism. He has held senior positions in a range of industries, including manufacturing, marketing and telecommunications. John has also held recent board positions with the New Zealand Tourism Industry Association and the New Zealand Conservation Authority.

John was appointed to the New Zealand Tourism Board on 7 August 2012 for a three-year term.

Jamie TuutaJamie is currently the Māori 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, education, Māori development and investment sectors. He is currently a director of Aotearoa Fisheries Ltd, Te Ohu Kaimoana Trustee Ltd, Taranaki Investment Management Ltd and Wools of New Zealand. He is the former chairman of both Te Runanga o Ngāti Mutunga and Parininihi ki Waitotara Incorporation — a Taranaki-based Māori agribusiness organisation.

Jamie was appointed to the New Zealand Tourism Board in March 2013 for a three-year term.

12

Core Leadership Team Kevin Bowler, Chief ExecutiveKevin 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 Qualmark, the Tourism Industry Association, a member of the New Zealand Screen Production Grant Significant Economic Benefits Verification Panel, a member of the NZ Major Events Investment Panel, and a member of the Tourism Growth Partnership Panel (as of mid 2015).

Andrew Fraser, Director of MarketingAndrew Fraser manages the most visible aspect of the 100% Pure New Zealand marketing campaign: the 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.

Deborah Gray, General Manager Corporate AffairsDeborah Gray joined Tourism New Zealand in October 2011 and oversees the relationships with key New Zealand stakeholders, including Ministers, Government agencies, media and the New Zealand tourism industry. Reporting to Deborah are two teams covering communications and industry relations.

Deborah has spent a number of years working in primary sector communications, including for the Ministry of Agriculture and Forestry and the crown research institute Scion.

Brighid Kelly, General Manager PeopleBrighid Kelly 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 are aligned to our organisation’s direction. This includes recruitment, capability development, performance management, remuneration and reward initiatives for employees based in New Zealand and our international offices.

Brighid brings a breadth of experience in human resource management, organisation development, change leadership and project management which she has gained working across a number of industry sectors including ICT, forestry, and banking.*

Sue Parcell, General Manager Finance, IT and StrategySue Parcell is responsible for managing and leading the financial and accounting functions of Tourism New Zealand, while also managing the 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.

Sue is a member of the Qualmark Board.

Justin Watson, Director of Trade, PR and Major EventsJustin Watson managed** 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 16 years, Justin has sound strategic marketing and management experience and a demonstrated track record of successfully achieving marketing and business outcomes.

* Brighid was Acting General Manager People from May 2014 to May 2015 following which time she was appointed to the role on a permanent basis.

** Justin resigned from his role as Director of Trade, PR and Major events and left Tourism New Zealand in February 2015 to take up the role of Chief Commercial Officer — Aeronautical at Christchurch International Airport.

13

Strategic Priorities and OutcomesThis section describes Tourism New Zealand’s strategic priorities that contribute to the Government’s broader economic priorities and the performance of tourism outcomes that Tourism New Zealand contributes to. Tourism Zealand’s outputs and activities are described in detail in the Statement of Performance starting on page 24 of this report.

Tourism New Zealand supports the objectives of the Business Growth Agenda (BGA) and plays an important role contributing to the ‘building export markets’ work stream, working closely with other NZ Inc agencies to help achieve the goal to increase the ratio of exports to GDP to 40 per cent by 2025.

Tourism New Zealand’s high level objective

Tourism New Zealand’s strategy and activities seek to contribute to the following high level goal:

► To increase the value of international visitors to New Zealand

The activities delivered by Tourism New Zealand, as a key industry organisation, play a critical role in helping New Zealand reach its goal to maximise the value from international visitors and contribute to the aspirational Tourism 2025 growth target of six per cent average value growth per annum through until 2025.

Tourism New Zealand strategic priorities

The overarching objective of improving the value derived from the international tourism sector is an industry wide goal. However, Tourism New Zealand contributes strongly to this objective through its five strategic priorities. All decisions on resource allocation (money, people and time), market and sector prioritisation, and activities and channels are made with the intention of delivering on these priorities.

Tourism New Zealand’s strategic priorities are summarised below.

▪ Strategic priority one: Grow a portfolio of markets that drives current opportunities and creates future market positions — Tourism New Zealand will deliver activity to grow the value of international visitors to New Zealand from a prioritised portfolio of visitor markets. A future-focused position will be adopted by investing in selected emerging markets to assist these countries to realise potential value in the medium to long term.

▪ Strategic priority two: Drive preference for visiting New Zealand — Tourism New Zealand will deliver strong, positive, emotive and inspiring messaging to drive greater preference for visiting New Zealand.

▪ Strategic priority three: Focus marketing activity on clearly defined higher value visitors — ensure campaign messages match the needs of the segments and sectors targeted to drive increasing value from visitors by encouraging them to stay longer and do more while in New Zealand.

▪ Strategic priority four: Partner widely to activate conversion and extend marketing reach — focus on commercial partnerships with aviation and overseas travel sellers and continue our partnership activity with Regional Tourism Organisations (RTOs) to drive preference and conversion-oriented activity. Tourism New Zealand will engage with the New Zealand tourism industry and overseas travel sellers to enhance their ability to market New Zealand and drive greater conversion.

▪ Strategic priority five: Optimise delivery capability — optimising the internal delivery capability of Tourism New Zealand through employing the right staff and systems, and assisting with the capability of the industry in delivering a superior experience through Qualmark, i-SITE and Tourism New Zealand’s China Market Development Unit.

Tourism New Zealand key activity

The following activity groupings illustrate how Tourism New Zealand’s services are delivered to collectively achieve the strategic priorities.

▪ Activity one: Deliver key visitor messages through the 100% Pure New Zealand campaign activity.

▪ Activity two: Deliver key visitor messages through third parties such as media, opinion leaders, and broadcast production.

▪ Activity three: Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach.

▪ Activity four: Inform and inspire global travel sellers to assist them to market New Zealand.

14

▪ Activity five: Deliver inspiring and informative information for potential visitors.

▪ Activity six: Communicate and engage with New Zealand’s tourism industry to align industry investment with Tourism New Zealand areas of focus.

Tourism New Zealand’s performance against these activities is described in more detail in the Statement of Service Performance section.

Strategic Priority Primary related activities

1. Grow a portfolio of markets that drives current opportunities and creates future market positions

Activities 1,2, 3, 4, 5

2. Drive preference for visiting New Zealand Activities 1, 2, 5

3. Focus marketing activity on clearly defined higher value visitors Activities 1, 2, 4

4. Partner widely to activate conversion and extend marketing reach Activities 1, 2, 3, 4

5. Optimise delivery capability Activity 6

Figure 1: Tourism New Zealand’s strategic objectives framework

High level objective — Tourism New Zealand’s end goal

To increase the value of international visitors to New Zealand

▼Tourism New Zealand’s strategic priorities

How Tourism New Zealand will achieve their end goal

Grow a portfolio of markets that drives

current opportunities and creates future market positions

Drive preference for visiting New Zealand

Focus marketing activity on clearly

defined higher value visitors

Partner widely to activate conversion and

extended marketing reach

Optimise delivery capability

▼

Tourism New Zealand’s activity

Deliver key visitor messages through

the 100% Pure New Zealand

campaign activity

Deliver key visitor messages through

third parties such as media, opinion leaders and broadcast

production

Partner with the travel industry to convert interest in New Zealand

into travel and to extend marketing

reach

Inform and inspire global travel

sellers to assist them to market

New Zealand

Deliver inspiring and informative information for

potential visitors

Communicate and engage with NZ’s tourism industry to align industry investment with

TNZ areas of focus

15

International tourism is New Zealand’s second largest export

International tourism is currently New Zealand’s second largest export, behind dairy. A comparison showing how international tourism compares with other major export sectors is shown below.

Data is sourced from the annual Tourism Satellite Account (TSA) published by Statistics New Zealand. The TSA for the year-end March 2015 is due to be published by Statistics New Zealand on 27 October 2015.

Increasing the value of international visitors to New Zealand

Tourism New Zealand works closely with the wider New Zealand tourism industry to ensure strong economic outcomes for New Zealand. The outputs delivered by Tourism New Zealand contribute to this high level outcome; success is also influenced by variables that are outside both Tourism New Zealand’s 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 (TSA). The most recent results for year ending March 2014 are described in the following table which shows key indicators for the year to March 2014 moving in a positive direction. Data from this table is sourced from the annual TSA published by Statistics New Zealand. The TSA for the year end March 2015 is due to be published by Statistics New Zealand on 27 October 2015.

International tourism compared with New Zealand’s other key exports ($billion)

$b

$18

$16

$14

$12

$10

$8

$6

$4

$2

$0

YE March 2011 YE March 2012 YE March 2013 YE March 2014

International tourism Dairy products, including casein Meat and meat products Wood and wood products Seafood

16

Measure YE March 2014 YE March 2013 YE March 2012 Trend

International tourism expenditure in NZ $10.311m $9.602m $9.781m ▲

Tourism direct contribution to GDP 4.1% 4.0% 4.1% ▲

International tourism as a per cent of total exports

15.3% 15.3% 15.1% ―

Tourism full-time employees — direct 94,100 (4.7%) 92,400 (4.7%) 92,500 (4.7%) ▲

Tourism full-time employees — direct and indirect

166,800 (8.3%) 161,400 (8.3%) 159,300 (8.2%) ▲

Total tourism expenditure (incl. domestic) $23,753m $22,625m $22,559m ▲

Tourism's contribution to GST earnings $1,756m $1,668m $1,663m ▲

Strong growth in visitor arrivals and spend for the FY15 period (highlighted in the following sections) provide confidence that a positive result will be reflected in the next TSA.

Strategic priority one: Grow a portfolio of markets that drives current opportunities and creates future market positionsTo ensure that international visitors deliver the maximum possible value for New Zealand, Tourism New Zealand takes a market and segment portfolio approach that considers a number of global trends. As such, sustainably growing tourism over time means targeting both mature and emerging markets, and establishing new higher value segments within the traveller market.

Tourism New Zealand delivers activity to grow the value to New Zealand from a prioritised portfolio of visitor markets. A future-focused position is taken by investing in selected emerging markets to assist these countries to realise potential value in the medium- to long-term.

Tourism New Zealand’s market prioritisation is outlined below and reflects the value of current opportunities and, in the case of emerging markets, future opportunities. The portfolio developed seeks to maintain strong outcomes in the present while preparing a long term position for New Zealand that reduces New Zealand’s reliance on Australia and China.

Priority 1 core markets:

Australia, China and the USA

Priority emerging markets:

India, Indonesia, Latin America

Priority 2 core markets:

UK, Germany and Japan

Priority 3 markets:

Peninsular South East Asia, France, Rest of Europe, Korea, Canada

Strong performance recorded in international visitor arrivals across Tourism New Zealand’s priority markets.

Total international arrivals reached 2,991,854 for the year ending June 2015, an increase of 7.4 per cent compared to the previous year. Growth was driven by holiday arrivals, which were up 10.4 per cent.

17

Importantly there was strong visitor arrival growth in Tourism New Zealand’s priority one core markets, particularly China, with 30.3 per cent growth and the USA with 10.2 per cent growth. In China a focus on the free independent traveller is not only increasing visitor numbers but also leading to a significant increase in Chinese visitor spend which reached $1.3 billion in the year to June 20151. Priority emerging markets also grew strongly, particularly India which grew visitor numbers by 25.9 per cent. The Cricket World Cup and associated marketing activity contributed to this accelerated growth.

Total international visitor arrivals from Tourism New Zealand’s priority markets are set out in the table below:

Total international visitor arrivals by market

Target market YE 30 June 2015 YE 30 June 2014 YE 30 June 2013Change 2014/2015

(%)

Priority 1 core markets

Australia 1,285,632 1,235,808 1,183,856 4.0%

China 313,376 240,496 222,720 30.3%

USA 233,344 211,712 189,456 10.2%


UK 198,080 194,384 189,008 1.9%

Germany 81,088 75,808 65,040 7.0%

Japan 84,432 75,520 74,960 11.8%

Priority emerging markets

LATAM* 26,096 25,008 24,144 4.4%

Indonesia 15,408 14,576 12,464 5.7%

India 42,672 33,904 29,936 25.9%

Priority 3 markets

France 31,792 29,264 25,216 8.6%

Canada 50,512 48,432 46,960 4.3%

Singapore 47,280 44,704 37,696 5.8%

Malaysia 32,240 30,032 25,152 7.4%

Thailand 21,616 21,728 18,688 -0.5%

Korea 60,608 53,072 50,704 14.2%

Rest of world 467,678 452,378 440,896 3.4%

Total — All markets 2,991,854 2,786,826 2,636,896 7.4%

* LATAM includes: Brazil, Mexico, Argentina and Chile

Holiday international visitor arrivals reached 1,460,608 for the year ending June 2015, an increase of 10.4 per cent. This growth has been solid across all of Tourism New Zealand’s priority markets. There has been particularly strong growth in two of Tourism New Zealand’s core priority markets, with China increasing by 31.9 per cent and the USA by 12.2 per cent. North-East Asia has performed well with Japan increasing by 14.1 per cent and Korea by 22.6 per cent. Growth in the emerging markets portfolio has also been strong, with two of these markets achieving double digit growth. India increased by 24.1 per cent, Indonesia by 11.5 per cent and Latin America 6.7 per cent.

The total number of holiday stay days for the year ending June 2015 was 23.16 million, an increase of 9.14 per cent compared to the previous year.

1 International Visitor Survey, YE June 2015 MBIE.

18

Total international holiday arrivals from Tourism New Zealand’s priority markets are set out in the table below:

Holiday international arrivals by market

Target market YE 30 June 2015 YE 30 June 2014 YE 30 June 2013Change 2014/2015

(%)


Australia 493,488 477,568 541,088 3.3%

China 234,720 177,936 162,912 31.9%

USA 143,248 127,632 110,688 12.2%


UK 82,368 76,448 73,392 7.7%

Germany 58,256 53,760 44,224 8.4%

Japan 54,528 47,776 49,392 14.1%

Priority emerging markets

LATAM* 15,024 14,080 14,0802 6.7%

Indonesia 10,432 9,360 7,888 11.5%

India 20,128 16,224 14,192 24.1%

Priority 3 markets

France 20,288 18,736 15,872 8.3%

Canada 26,944 26,352 25,456 2.2%

Singapore 29,184 26,816 21,824 8.8%

Malaysia 20,608 18,640 15,392 10.6%

Thailand 11,520 10,704 8,848 7.6%

Korea 41,408 33,776 33,616 22.6%

Rest of world 176,400 187,488 198,464 5.9%

Total — All markets 1,460,608 1,323,296 1,224,288 10.4%

* LATAM includes: Brazil, Mexico, Argentina and Chile

Strategic priority two: Driving preference for visiting New Zealand

Active considerers’ preference for New Zealand as a holiday destination

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.

Tourism New Zealand utilises resources to target a group of consumers called ‘active considerers (of New Zealand)’. By definition an active considerer thinks New Zealand is an appealing destination to visit, is seriously considering New Zealand for their next holiday, 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).

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. Research indicates over 60 million active considerers exist across the six tier one and two markets of Australia, China, USA, UK, Germany and Japan, 20 times the number who visit, which supports the proposition that converting existing interest is a rational priority over growing the ‘pool’ of considerers.

19

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 FY15 is provided in the tables below:

Proportion of active considerers in key markets who consider NZ their first or second preferred destination

Market FY15 actual FY15 target FY14 actual

Australia 58% 59% 58%

China 83% 81% 80%

USA 63% 63% 60%

UK 71% 68% 67%

Germany 70% 64% 63%

Japan 65% 59% 58%

Preference for New Zealand grew significantly across all of Tourism New Zealand’s key markets except for Australia which was stable. Record highs were achieved in several markets with targets for the year exceeded in all markets except Australia. This strong performance was reflected in the positive visitor arrivals results from these markets.

Proportion of active considerers in emerging markets who consider NZ their first or second preferred destination

Market FY15 actual FY15 target FY14 actual

India 72% Apr FY15 62% 66%

Indonesia 83% May FY15 31% n/a

Latin America (Brazil) 47% Feb FY15 34% n/a

The Indian market exceeded target, with performance enhanced by an integrated Cricket World Cup campaign featuring Stephen Fleming. This was a new measure for FY15 for Indonesia and Latin America, with both exceeding target.

Digital channels remain important 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.

Tourism New Zealand’s online channels continued to perform strongly in FY15, building on the previous year’s strong performance. Most targets were exceeded at both a global and local market level. Continued strong preference for New Zealand in priority markets has supported the effective acquisition of traffic to newzealand.com, both paid (search engine marketing, on-line display advertising, etc.) and organic (natural or algorithm driven results).

Result/measure FY15 actual FY15 target FY14 actual

Average number of total visits to newzealand.com per month

2,035,194 1,700,000 1,448,210

Average monthly ‘active visits’ to newzealand.com2 839,792 754,000 623,292

2 Active visits: A visit where the visitor interacts with the site’s content or functionality.

20

Strategic priority three: Focus marketing activity on clearly defined high value visitorsTourism New Zealand’s mandate is to increase value from international visitors for the economic benefit of New Zealand. It achieves this through strategies to specifically target high value visitors, and by ensuring campaign messages match the needs of the segments and sectors targeted by encouraging them to stay longer and do more while in New Zealand.

Visitor value can take several forms. For example, staying in New Zealand for a long time, travelling widely through New Zealand dispersing the economic benefit, spending strongly on a per night or per trip basis, travelling to New Zealand in low seasons, or if they are likely to return to New Zealand in subsequent trips.

Research carried out by Tourism New Zealand has identified high value segments within New Zealand’s prioritised markets and these segments are the basis of Tourism New Zealand’s targeted strategies.

As well as focusing on valuable segments within key markets, higher value visitors are also targeted through the business events sector. Increasing market development, partnership and campaign activity has accelerated outcomes within this sector. The importance of this sector will continue to increase as New Zealand’s convention infrastructure improves with the confirmed New Zealand International Convention Centre in Auckland, and the facilities proposed for Christchurch and Queenstown.

There has been a focus on targeting premium visitors as high value visitor spend injects significant revenue into the economy. Through dedicated resources and focus, high net worth individuals have been targeted in North America, Europe/UK, and Asia leveraging New Zealand’s best accommodation and attractions that appeal to this small but very valuable segment of the market. Data from 31 Luxury Lodges of New Zealand member properties shows that in the 2014/15 season $50 million was spent by overseas visitors in luxury accommodation in these member properties. This figure shows an increase in luxury lodges revenue of 19.7% from the 2013/14 season3. Total high value visitor spend in the broader economy from those travellers staying in luxury lodges in the 2014/15 season is estimated to be $100 million.

Research has also shown that promoting special interest travel can attract visitors who spend more and stay longer on average. Tourism New Zealand has identified special interests that present opportunities in key markets. Prioritised special interests include ski/snow, golf, hiking/walking and cycling.

The Chinese market is important in regards to value, and it has delivered exceptional arrivals growth to become New Zealand’s second most important market in terms of visitors and visitor expenditure. A key driver has been longer lengths of stay, in particular more Chinese tourists visiting New Zealand on exclusive rather than dual New Zealand and Australian itineraries.

Strong growth in international visitor spend and average spend per arrival

Total international visitor expenditure for the year end June 2015 was $8.7 billion, an increase of 28 per cent compared to the previous year4. Holiday expenditure was $5.3 billion, an increase of 28 per cent on the previous year. Total median spend per international visitor increased by 15 per cent and by 15 per cent for holiday international visitors, reflecting both a volume and value improvement across the sector. Two of Tourism New Zealand’s top three priority markets, Australia and China, contributed well over one billion dollars annual spend and the UK and USA also contributed nearly one billion dollars annual spend, all growing very strongly.

3 Aggregated LLNZ revenue data, provided to Tourism New Zealand and LLNZ members.4 International Visitor Survey results April – June 2015, Ministry of Business Innovation and Employment. 21

Total visitor expenditure for FY15 is set out by market/region in the table below5:

Total international visitor expenditure by market

Market YE June 2015 ($m) YE June 2014 ($m) YE June 2013 ($m) Change 2014/2015

Australia 2,295 2,096 2,195 9%

China 1,344 834 721 61%

UK 989 678 601 46%

USA 967 698 505 39%

Germany 482 364 229 32%

Japan 183 202 217 -9%

Korea 153 139 129 10%

Canada 223 168 136 33%

Rest of Asia 804 564 609 42%

Rest of Europe 807 727 537 11%

Rest of Americas 146 70 83 108%

Other 342 282 468 20%

Total $8,735 $6,823 $6,431 28%

Total international visitor expenditure summary

YE June 2015

Total (NZ$m) Median

Australia 2,295 1,400

China 1,344 3,500

UK 989 2,700

USA 967 1,400

Germany 482 1,700

Japan 183 3,800

Korea 153 4,800

Canada 223 3,400

Rest of Asia 804 3,000

Rest of Europe 807 3,300

Rest of Americas 146 3,600

Rest of Oceania 213 1,100

Africa and Middle East 129 2,300

Total $8,735 $2,010

The number of targeted business events that specifically support the Government’s high priority sectors as defined by the Business Growth Agenda grew from 20 in FY14 to 39 in FY15. This was achieved through a focus on conference and incentive groups in the high priority sectors of marine, aviation, agri-business, health science, high value foods and earth science. Other sector bids supported included tourism, indigenous culture, creative and digital, biosecurity and conservation. Conference or incentive opportunities along with the New Zealand expertise in the sector combined to result in growth in the number of relevant business events supported.

5 France and Malaysia results not available due to sample size issues.

22

Strategic priority 4: Partner widely to activate conversion and marketing reachTourism New Zealand has continued to focus on commercial partnerships with aviation, overseas travel sellers, and with Regional Tourism Organisations (RTOs) to drive preference and conversion oriented activity. This includes engaging with the New Zealand tourism industry and overseas travel sellers to enhance their ability to market New Zealand and drive greater conversion.

Partnerships play an essential role within Tourism New Zealand’s activities. They provide opportunities to deliver coordinated marketing activity packaged with a product that potential visitors can buy, thereby activating opportunities for conversion. Partnerships also extend Tourism New Zealand’s marketing reach through attracting additional funding by way of cash and in-kind support, and assist tourism industry partners by allowing them to leverage Tourism New Zealand’s 100% Pure New Zealand marketing campaign, increasing their marketing effectiveness.

Partnerships with airlines and airports have provided essential foundations for building and sustaining supply-side capacity. Tourism New Zealand partnerships deliver fully integrated joint venture campaign activity to support filling air capacity both in long haul and trans-Tasman routes.

Partnerships with RTOs remain important with a view to promoting regional differentiation and maximising visitor value outcomes for New Zealand. Partnerships range from high impact campaigns in Australia through to working together on broadcast television production, the international media programme and visiting trade programmes.

Tourism New Zealand has developed a trade strategy that enables it to cater for the differences by market and has helped identify the best partners to work with. Tourism New Zealand has integrated Māori culture and messages within the trade activity in a way that demonstrates to visitors the diversity and availability of contemporary Māori tourism experiences in New Zealand.

Growth in the number of trade advocates to 1,345 in FY15 came from both the number of travel company advocates and also the number of travel agents who are ‘100% Pure New Zealand Specialists’. The total value of partnership contributions has grown in FY15 to $23.2m from $20.55m the previous year. Global agreements with airlines have contributed heavily, as well as partnerships with travel sellers across the globe (e.g. Flight Centre, STA travel, Auckland International Airport).


Growth in the number of trade advocates 1,345 1,160 1,011

Growth in the value of partnership contributions $23.2m $21.0m $20.55m

Strategic priority 5: Optimise delivery capabilityTourism New Zealand optimises internal delivery capability by ensuring that it has the right staff and systems, and assisting with the capability of the industry in delivering a superior experience for visitors through Qualmark, i-SITE and Tourism New Zealand’s China Market Development Unit.

Internally Tourism New Zealand has focused on building staff capability and adoption of technology to deliver productivity and efficiency improvements.

Over the past twelve months the organisation has focused on developing its operational management capability, health and safety management, and account management. A customer relationship management system has been implemented to advance stakeholder relationship management.

The employee engagement survey result in FY15 was 78 per cent engaged, which is a very positive result. Ensuring that the organisation has a work environment which supports employee engagement remains a priority for management.

Quality information was delivered through the 79-strong i-SITE visitor information network. Visitors who used the network had a higher overall satisfaction rating of their holiday experience in New Zealand. New technology introduced through the year improved productivity and allowed visitors to provide real time customer satisfaction feedback. The system uses the recognised Net Promoter Score as a measurement — across 13 centres it is currently being used in, this sits at 81.9 after five months.


Improve employee engagement 78% 79% 78%

Satisfaction of overall tourism experience for i-SITE visitors exceeds that of non-i-SITE users

9.0/10 for i-SITE users

8.9/10 for non-i-SITE users

Maintain i-SITE users at or above 9/10 and

above satisfaction levels of non-i-SITE users

i-SITE users: 9.0/10 non-i-SITE users:

9.1/10

23

Statement of Performance Overview

This report covers the New Zealand Tourism Board’s (trading as Tourism New Zealand) performance for the year ending 30 June 2015 against the forecast statement of activities, performance measures and standards set out in Tourism New Zealand’s Statement of Performance Expectations FY15.

Tourism New Zealand’s resource allocation decisions were based on the extent to which each proposed activity would contribute towards the delivery of activities and outcomes described in the 2015-2018 Statement of Intent and Statement of Performance Expectations FY15.

In FY15, Tourism New Zealand’s activities were funded primarily from one appropriation from within Vote Tourism.

Statement of Performance

FY15 Actual $000s FY15 Budget $000s FY14 Actual $000s

Appropriation 1: Marketing of New Zealand as a visitor destination

Crown Revenue $113,350 $113,350 $113,350

Other Revenue6 $6,431 $2,264 $8,424

Total Expenses7 $120,214 $115,614 $121,987

Total Revenue $119,781 $115,614 $122,154

Total Expenses $120,214 $115,614 $122,367

Activity performance

In FY15 Tourism New Zealand delivered the following six activities:

1. Key visitor messages through the 100% Pure New Zealand campaign activity.

2. Key visitor messages through third parties such as media, opinion leaders and broadcast production.

3. Partnered with the travel industry to convert interest in New Zealand into travel and to extend marketing reach.

4. Informed and inspired global travel sellers to assist them to market New Zealand.

5. Inspiring and informative information for potential visitors.

6. Communicating and engaging with New Zealand’s tourism industry to align industry investment with Tourism New Zealand areas of focus.

These activities were funded primarily through Appropriation 1: Marketing of New Zealand as a visitor destination.

6 Other revenue includes bank interest, partner revenue, excludes foreign exchange gains.7 Total expense includes offset from foreign exchange reserve to protect the funding lines from adverse movements in foreign exchange during the year on offshore expenditure. The total expense excludes other foreign exchange losses.

24

8 New Zealand and offshore support costs support the delivery of all six outputs.

Activity Performance

FY15 Actual $000s FY15 Budget $000s

Appropriation 1: Marketing of New Zealand as a visitor destination

Activity 1: Deliver key visitor messages through the 100% Pure New Zealand campaign activity

$45,322 $44,220

Activity 2: Deliver key visitor messages through third parties such as media, opinion leaders and broadcast production

$9,031 $11,738

Activity 3: Partner with travel industry to convert interest in New Zealand into travel and to extend marketing reach

$21,054 $18,784

Activity 4: Inform and inspire global travel sellers to assist them to market New Zealand

$11,947 $10,090

Activity 5: Deliver inspiring and informative information to potential visitors

$4,040 $3,874

Activity 6: Communicate and engage with New Zealand’s tourism industry to align industry investment with Tourism New Zealand areas of focus

$553 $604

New Zealand and offshore support costs8 $28,267 $26,304

Total $120,214 $115,614

Activity 1: Deliver key visitor messages through the 100% Pure New Zealand campaign activityNew 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.

Campaign

Tourism New Zealand’s target audiences are those who are already actively considering a visit to New Zealand. As Tourism New Zealand’s understanding of active considerer markets has increased (a result of in-market experience and investment in market research), it has become possible to more accurately target activity towards higher value segments and special interest sectors within key visitor markets.

Tourism New Zealand activity focuses on reaching active considerers primarily via the use of advanced digital marketing tools. Digital marketing allows more accurate audience selection and minimises media wastage. During FY15, activity has focused on high value segments and delivering a programme of fully integrated campaign, PR and trade activity to maximise the effectiveness of delivery. Key campaign activities included:

▪ ‘100% Pure New Zealand and 100% Middle-earth’; FY15 has seen the continuation of ‘Hobbit’ activity, to ensure opportunities from the third and final Hobbit film were capitalised on.

▪ Through the delivery of Tourism New Zealand’s Māori culture and capability strategy, deeper integration of Māori culture was built into marketing activity to leverage New Zealand’s unique cultural position through typography and design elements.

25

▪ Digital marketing — highly targeted and measurable activity included;

▫ Investing in paid search engine marketing, i.e. purchasing travel search terms utilised by active considerers to draw them to newzealand.com.

▫ Investing in paid online digital display advertising, i.e. purchasing banner and rich media (video) advertisement space on websites that reach active considerers.

▫ Search engine optimisation; optimising newzealand.com so that potential visitors are exposed to marketing channels and content (and New Zealand content more generally) more often when they are researching travel online.

▪ Promoting New Zealand as a compelling business events destination through campaigns in Australia, China, South East Asia, North America, plus a global campaign targeting association decision makers.

▪ Specific sector campaign activity targeting special interest activities (walking/hiking, cycling, golf and fishing), backpacker and working holiday visitors, and China mono-destination/FIT visitors.

▪ Highly targeted premium segment campaign activity.

▪ Using new teams in emerging markets to build promotional activity to grow New Zealand’s profile and desirability as a destination.

Campaign activity has close alignment with the industry’s shared framework for growth, Tourism 2025, 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 higher value visitors through our investments in prioritised markets and segments.

Market insights

Tourism New Zealand supports the drive for increasing the value of international visitors by carrying out market research to provide core intelligence and evaluation input into the development of marketing campaigns, providing insights on growth in visitor numbers and value, and carrying out research into high value segments.

In line with the insights theme of the ‘Tourism 2025 industry framework – growing value together’, a focus for Tourism New Zealand has been to share information and insights with the travel industry.

Key activity included:

▪ Increased industry stakeholder engagement/communication of insights through provision of market snapshots, industry insight presentations and webinars.

▪ Active considerer research – regular surveying of target audiences across key and emerging markets to monitor brand and campaign performance along with specific market issues. Bringing the active considerer segmentation to life through reviewing and updating active considerer segment profiles.

▪ Analysis of core tourism datasets including international visitor arrivals and the International Visitor Survey for market trends, intelligence and strategic insight.

▪ Digital analytics – active optimisation of newzealand.com and digital campaign through measurement and analysis of digital activity around campaigns and newzealand.com.

Market insights activity is aligned with the Tourism 2025 framework, in particular the themes of:

▪ Develop market insight and formulating models for better industry access to information.

▪ Drive value through outstanding visitor experience through sharing market insight with industry.

26

Link to Tourism New Zealand’s strategic priorities

Tourism New Zealand’s campaign and market insights activity is a key vehicle for delivering the brand message in its off-shore markets and delivers against four of the five strategic priorities from the three year marketing strategy:

▪ Grow a portfolio of markets that drives current opportunities and creates future market positions.

▪ Driving preference for New Zealand.

▪ Focusing marketing activity on clearly defined higher value visitors.

▪ Partnering widely to activate conversion and extend marketing reach.

Activity 1: Deliver key visitor messages through the 100% New Zealand campaign activity

Performance Status

Quantity

Brand campaign activity delivered — key markets

Australia Target: 4 brand campaigns, SEM always on

4 brand campaigns, SEM always on

Achieved

China Target: 2 brand campaigns, SEM always on

1 brand campaign, SEM not always on

Not achieved10

USA Target: 4 brand campaigns, SEM always on


Achieved

UKTarget: 2 brand campaigns, SEM always on


Achieved

Germany Target: 2 brand campaigns, SEM always on


Achieved

JapanTarget: 2 brand campaigns, SEM always on


Achieved

Business events campaign activity Target: 5 brand campaigns

7 brand campaigns Achieved

Brand campaign activity delivered — emerging markets

India Target: 1 brand campaign, SEM always on

2 brand campaigns, SEM not always on

Not achieved11

IndonesiaTarget: 1 brand campaign, SEM always on

2 brand campaigns, SEM not always on

Not achieved12

Latin America Target: 1 brand campaign, SEM always on


Achieved

10 One large campaign was run in the first half of the year to capitalise on the opportunities provided by ‘Dad, Where Are We Going?’, rather than two smaller campaigns as per the original plan. An unplanned hosting opportunity in June with a key opinion leader, Huang Lei, meant that Tourism New Zealand reapportioned funds from paid SEM activity to pay for the costs of hosting Huang Lei in New Zealand. SEM was inactive for one month.11 Search always on for India didn’t start until September 2014 as Tourism New Zealand needed to overhaul the search account structure to follow the global direction as the previous account structure wasn’t optimised or aligned to Tourism New Zealand’s global setting.12 Search always on for Indonesia didn’t start until September 2014 as Tourism New Zealand needed to overhaul the search account structure to follow the global direction as the previous account structure wasn’t optimised or aligned to Tourism New Zealand’s global setting.

27

Activity 1: Deliver key visitor messages through the 100% New Zealand campaign activity

Performance Status

Cost effectiveness

Cost per engagement from display13

Australia Target: $2.00-$2.50

$1.37 Achieved

China Target: $1.20-$1.80

$0.12 Achieved

USA Target: $1.20-$1.80

$0.09 Achieved

UK Target: $1.50-$2.20

$0.32 Achieved

Germany Target: $1.50-$2.20

$0.21 Achieved

Japan Target: $2.50 – $3.00

$0.85 Achieved

Cost per acquisition from search14

Australia:Target: $1.50-$2.00

$2.03 Not achieved

China: Target: $0.50-$1.00

$0.62 Achieved

USA:Target: $2.00-$2.50

$2.01 Achieved

UK Target: $1.00-$1.50

$1.26 Achieved

Germany Target: $1.00-$1.50

$1.33 Achieved

Japan Target: $2.50-$3.00

$1.25 Achieved

13 Engagement: when an action is taken on an ad i.e. a click, a play of a TV commercial; some form of an interaction.14 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.

28

Activity 2: Deliver key messages through third parties such as media, opinion leaders and broadcast production

Public relations

Communication channels such as PR deliver brand messages through third parties (e.g. opinion leaders, independent media), drive preference for visiting New Zealand and assist in strengthening conversion of potential visitors into actual visitors.

During FY15, activity focused on high value segments and sectors and delivered a programme of integrated campaign, PR and trade activity to maximise effectiveness. Activity included:

▪ Public relations activity to build preference levels with target audiences and support conversion of visitors.

▫ Hosting of international media, bloggers and opinion leaders.

▫ Providing support to targeted broadcast production projects that enabled Tourism New Zealand to communicate its destination messages through existing broadcasters with good reach.

▫ Leveraging off the Hobbit through visiting media and opportunities associated with the film première of the third movie.

▫ Proactively and reactively capitalised on the demand for high quality content and generated content to widen the range of assets available to publishers.

▪ Developing and implementing media programmes to leverage the media opportunities associated with the ICC Cricket World Cup 2015 and FIFA U-20 World Cup.

▪ Supporting and leveraging events both on and offshore that provided a vehicle to communicate Tourism New Zealand’s destination messages.

▪ Seeking out and creating opportunities through third party channels to deliver activity that supports the Christchurch recovery.

▪ Targeting, evaluating and securing key opinion leaders for use in PR and campaign activity to deliver the 100% Pure New Zealand message and deliver marketing reach.

▪ Social media — growing engagement and reach with social media platforms (e.g. Facebook) that assist us to build, engage and inspire active considerers.

Public relations activity is aligned with the Tourism 2025 framework, in particular the themes of:

▪ Targeting for value through 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.

Link with Tourism New Zealand strategic priorities

Tourism New Zealand’s PR activity is primarily aimed at achieving:

▪ Driving preference for New Zealand.

Due to Tourism New Zealand’s desire to integrate messages across multiple platforms this output was frequently part of the following priorities as well:


▪ Partnering widely to activate conversion and extend marketing reach.

29

Activity 2: Deliver key messages through third parties such as media, opinion leaders and broadcast production

Result/measure Performance Status

Quantity

International media hosted from key Tourism New Zealand markets

Total media hostedTarget: 220 media visits Target: 250 media outlets

261451

AchievedAchieved

Media from emerging marketsTarget: 30 media visitsTarget: 35 media outlets

4284

AchievedAchieved

Media from premium sectorTarget: 25 media outlets 53 Achieved

Hosted media visits that feature a cultural elementTarget: (at least) 50% 59% Achieved

Quality

Equivalent advertising value (EAV) of print, online and broadcast in Tourism New Zealand markets15

Total EAV all markets.Target: $90.0m $157.2m Achieved

EAV premium sector international media programmeTarget: $2.5m $4.7m Achieved

Activity 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 play an essential role within Tourism New Zealand’s activities. They provide an opportunity to deliver Tourism New Zealand marketing activity co-ordinated with products that potential visitors can buy, thereby activating opportunities for conversion. Partnerships extend Tourism New Zealand’s marketing reach through attracting additional funding by way of cash and in-kind support as well as assisting tourism industry partners by allowing them to leverage off Tourism New Zealand’s 100% Pure New Zealand campaign, thereby increasing their effectiveness in market. Partnerships in FY15 included high impact campaigns in Australia, promoting New Zealand through significant television broadcast productions, and visiting media and trade programmes.

Key activities included:

▪ Partnered campaigns; partnering with public and private organisations to deliver campaigns that enabled Tourism New Zealand to pair advertising with a travel conversion partner’s offer.

Partnership activity with Regional Tourism Organisations

Partnerships with Regional Tourism Organisations (RTOs), predominantly in Australia for campaign work, remain important, focusing on building regional stories (e.g. North Island touring, and ski holidays) 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.

15 Equivalent advertising value (EAV) results are not always available for all activity; so results will underestimate the actual value.

30

16 Partnered campaigns link Tourism New Zealand activity with an offer through a partner. Brand campaigns are not directly linked with a partner and typically drive activity to newzealand.com.

▪ 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 delivered fully integrated joint venture campaign activity to support filling capacity both in long haul and trans-Tasman routes.

▪ Tourism New Zealand continued to work closely with airlines to support and increase in-bound seat capacity to New Zealand.

Tourism New Zealand maintains agreements with aviation and airline partners, for example Air New Zealand, where they are aligned with Tourism New Zealand’s international aviation strategy. Under these agreements partnered marketing campaigns are carried out that support the aviation routes that are critical to developing tourism.

Working with the aviation sector activity aligns with the Tourism 2025 framework, in particular the theme of:

▪ Growing sustainable air connectivity through memorandums of understanding with Air New Zealand and other airlines, cooperation with airports and with connection to other parts of Government and Ministers. Delivering fully integrated joint venture campaigns allows flexible timing of activity to build non-peak travel to assist with airline load factors with the long term aim of building sustainable airline connections to New Zealand.


Tourism New Zealand’s joint venture and aviation activity is primarily aimed at achieving partnerships to activate conversion and extend marketing reach.



Quantity

Key markets partnership campaign activity16

Australia Target: 8 partnered campaigns

23 Achieved

ChinaTarget: 6 partnered campaigns

9 Achieved

USATarget: 6 partnered campaigns

16 Achieved

UKTarget: 4 partnered campaigns

13 Achieved

GermanyTarget: 4 partnered campaigns

8 Achieved

JapanTarget: 4 partnered campaigns

5 Achieved

Emerging markets partnership campaign activity delivered

IndiaTarget: 2 partnered campaigns

5 Achieved

IndonesiaTarget: 2 partnered campaigns

3 Achieved

31



Latin AmericaTarget: 2 partnered campaigns

2 Achieved

MOUs in place with airlines and travel sellersTarget: 7 airlines, 3 travel retailers, 3 incentive houses

4 airlines, 3 travel retailers, 15 incentive houses

Achieved17

Quality

Campaign return on investment. (ROI)18

AustraliaTarget 5:1

12:1 Achieved

ChinaTarget 5:1

39:1 Achieved

USATarget 5:1

24:1 Achieved

UKTarget 5:1

14:1 Achieved

GermanyTarget 5:1

6:1 Achieved

JapanTarget 5:1

70:1 Achieved

Quality

Partnership funds committed to coordinated marketing activity Target: $1:$1

$1 : $1 Achieved

Value of partnership contributionsTarget: $21.0m

$23.2m Achieved19

17 Tourism New Zealand secured three fewer MOUs with airlines than forecast and achieved twelve more MOUs with incentive houses. 18 ROI is calculated by: (passengers booked) x (average visitor spend in NZ for market)/campaign spend. This generates a ratio that shows for every dollar we spent we generated ‘x’ amount of visitor value. Note: ROI relates to campaign spend only and is not intended to represent a ROI for overall Tourism New Zealand activity. It also does not attempt to calculate substitution or to estimate the level of incremental value.19 The $23.2m of partnership contributions includes $5.4m of non-financial contributions from partners. These are contributions of a non-cash nature made by partners to joint activity with Tourism New Zealand such as discounted airfares, accommodation and activity admission fees for a trade or media familiarisation and inclusion of Tourism New Zealand provided content in partner distributed e-mail newsletters and on partner websites. The equivalent dollar value of these contributions is estimated by Tourism New Zealand and Regional Tourism Organisation staff using their experience and knowledge of the market, often with reference to external sources such as websites, pricelists published and communications with the partners themselves.

32


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 has delivered activity to educate, connect and familiarise global travel sellers to enable them to sell more high value New Zealand holidays. Activity was delivered to:

▪ Generate and convert consumer interest by fully integrating trade offers into partnered marketing campaigns.

▪ Educate trade to improve product knowledge and increase volume and value of conversions.

▪ Connect the New Zealand industry with the right trade partners.

▪ Lead product development (itineraries) in market and facilitate information flow with New Zealand industry.


▪ Trade familiarisations, e.g. familiarisation visits to New Zealand for travel company product managers and decision makers.

▪ Online resources (primarily the 100% Pure New Zealand Specialist Programme) to increase the knowledge and sales of travel sellers, including through region and product specific online training modules and product updates.

▪ Training the trade through such mediums as face to face trainings and virtual channels like webinars.

▪ Trade Events; organising trade events and co-ordinate participation by the New Zealand tourism sector at international trade shows.

▪ Tourism New Zealand also attended international trade shows and facilitated New Zealand operator attendance.

Working with the travel trade aligns with the Tourism 2025 framework, in particular the theme of:

▪ Targeting for value through activity focused on growing ability of trade offshore and in New Zealand to sell destination New Zealand.

Growing the business events sector

The business events sector is a high value market segment for New Zealand. In addition to delivering an incremental direct contribution through international delegates spend, holding international business events in New Zealand acts as an economic development tool by facilitating new 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 season 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.


Tourism New Zealand’s activity in working with the travel trade area is primarily aimed at achieving priority 4:

▪ Partner widely to activate conversion and extend marketing reach.

Tourism New Zealand’s activity in the business events space is primarily aimed at achieving priority 3:

▪ Focusing marketing activity on clearly defined higher value visitors.33



Quantity

Successful travel module completions

Total all marketsTarget: 20,000 travel modules completed

25,936 Achieved

Emerging marketsTarget: 5,000 travel modules completed

4,275 Not achieved

Trade on TNZ hosted famils

Total all marketsTarget: 600

1,240 Achieved

Total emerging marketsTarget: 80

85 Achieved

Business eventsTarget: 80

127 Achieved

Premium sectorTarget: 50

82 Achieved

Trade famils that feature a cultural elementTarget: at least 75%

69% Not achieved20

Major trade events attended by Tourism New Zealand

Total all MarketsTarget: Minimum of 25

48 Achieved

Business eventsTarget: 8

11 Achieved

Premium sector eventsTarget: 7

14 Achieved

Major trade events organised and facilitated by Tourism New ZealandTarget: Minimum of 8

11 Achieved

Quality

Number of travel company advocatesTarget: 160

224 Achieved21

Grow the number of travel agents who are ‘100% Pure New Zealand Specialists’

Total all MarketsTarget: 1,000

1,023 Achieved

Emerging marketsTarget: 120

98 Not achieved22

20 Regions of New Zealand that are commonly included in travel agent familiarisations (e.g. Wellington, Nelson, the West Coast and Queenstown) having fewer products that feature Māori culture.21 Two types of ‘advocates’ exist; travel agent advocates and travel company advocates. To qualify as a travel agent advocate they must have successfully completed the 100% Pure New Zealand Specialist Programme. To qualify as a travel company advocate the company must have a formal partnership agreement and a regular contact plan must be place and fulfil a set of criteria such as key staff on familiarisation, attendance at TRENZ or have a certain amount of 100% Pure NZ Specialist in their company.22 Thirty four 100% Pure New Zealand Travel specialists expired in the Indian market in June impacting on the FY15 result.

34

23 Tourism New Zealand anticipate at least 15 (of 50) conferences supported to come from the Australasian region in FY15.24 Estimated value: Estimate will differ to the actual result, which is likely to be realised several years later e.g. less/more delegates arrive.



Quantity

Bids supported through the Conference Assistance Programme (CAP) Fund Target: 50

58 Achieved23

Quality

Success rate for bids supported through CAP fundTarget: 60%

73% Achieved

Estimated value of bids supported through CAP fundTarget: $85m

$97m Achieved24


Quantity

Incentive bids supported (Tourism New Zealand only tracks incentive bids for 50 pax or higher or with an estimated value of more than 200,000 NZD (excl. air fare))

ChinaTarget: 40

42 bids supported Achieved

USA (North America)Target: 50


Peninsular South East AsiaTarget: 50


Quality

Value of incentive bids convertedTarget: $25.0m

$25.9m Achieved

Activity 5: Deliver inspiring and informative information for potential visitors

newzealand.com

Tourism New Zealand’s consumer website performs a dual role. One is as a marketing tool to convert active considerers’ preference for New Zealand into actual travel. The second is to enable visitors to engage with one another and with travel sellers to source information and advice.


▪ Creation and delivery of an integrated content programme to ensure active considerers are reached and engaged.

▪ Review and enhancement of Essential New Zealand (mobile application).

newzealand.com activity aligns with the Tourism 2025 framework, in particular the strategic theme:

▪ Driving value through outstanding visitor experience through providing high quality and timely information for international visitors to New Zealand.

35

i-SITE New Zealand

Tourism New Zealand also supports the provision of information to visitors through our role with the i-SITE network. i-SITE New Zealand visitor centres (79 across New Zealand) provide information and a booking service for attractions, transport, accommodation and events to international and domestic visitors in New Zealand.

Tourism New Zealand has no ownership stake in any i-SITE centres. 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 to raise the profile of the i-SITE network among visitors.

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.

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 information and service for international visitors to New Zealand.


Tourism New Zealand’s newzealand.com activity is primarily aimed at achieving priority 2:

▪ Drive preference for visiting New Zealand.

Activity associated with i-SITE is primarily aimed at achieving priority 5:

▪ Optimise delivery capability.

Activity 5: Inspiring and informative information for potential visitors


Quantity

Average number of total visits to newzealand.com per monthTarget: 1,700,000

2,035,194 Achieved

Average monthly ‘active visits’ to newzealand.comTarget: 754,000

839,792 Achieved25

Annual referrals via Essential New Zealand AppTarget: 61,000

64,552 Achieved

Average monthly referrals to industry via newzealand.comTarget: 236,000

174,889 Not achieved26

Quality

Level of user satisfaction with i-SITE maintained or increasedTarget: at or above 9.0/10

8.4/10 Not achieved27

25 Active visits: A visit where the visitor interacts with the site’s content or functionality.26 Referrals: 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.27 i-SITE user satisfaction is relatively high although below the aspirational target of 9.0. The introduction of a Net Promoter Score to measure user advocacy will provide new insights and specific verbatim user feedback.

36

Tourism New Zealand’s consumer website, newzealand.com, achieved record volumes for a single year. This record digital channel performance in FY15 was a result of increased digital marketing activity in Tourism New Zealand’s priority markets, strong organic search performance and targeted user experience improvements.

Referrals (industry leads) from newzealand.com did not achieve the target due to two factors. Firstly, a change in strategy which saw a greater proportion of paid digital advertising directing consumers to travel partner websites instead of newzealand.com. Secondly, the increased proportion of mobile newzealand.com traffic which delivers a lower rate of referral. The overall number of referrals to industry from Tourism New Zealand marketing activity (newzealand.com plus direct-to-partner) has increased by 64% year on year and if combined, outperformed the referral target.


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 has been to ensure alignment between market needs, Tourism New Zealand’s marketing programmes, and what is offered in New Zealand. Key activities include:

▪ Publications, including the regular delivery of e-bulletins, webinars and the annual report.

▪ Tourism New Zealand’s corporate website (tourismnewzealand.com) which provides the industry with timely information on recent activity, information on events as well as providing access to research and market analysis.

▪ Speaking engagements, including industry presentations at conferences and seminars that update industry members on changes within the global industry and the specific consequences this will have within the New Zealand tourism market. These speaking engagements also allow Tourism New Zealand to hear from the industry including any challenges they are facing or opportunities they have identified.

▪ Working 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.

The tourism industry gained insight into changing market dynamics through a number of forums including workshops, seminars and webinars, providing the industry with opportunities to identify new ways to improve the quality of the visitor experience.

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

Tourism New Zealand owns 60 per cent of Qualmark New Zealand Ltd. The Automobile Association of New Zealand owns the remaining 40 per cent. Tourism New Zealand provides funding, governance and some marketing and administration support for Qualmark.

Qualmark currently issues 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, an assessment is undertaken by a trained assessor who measures the quality of operators’ facilities and business practices. This includes health and safety systems and service systems relating to guest care. Businesses can also be recognised for excellence in environmental business practices through Enviro accreditation.

Qualmark aligns with the Tourism 2025 framework through the theme:

▪ Drive value through outstanding visitor experience: through providing quality assurance for accommodation facilities and an endorsement programme for activities, transport and services for international visitors.

37

China Market Development Unit

China continues to grow rapidly and has 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 have required attention. Tourism New Zealand, largely through its China Market Development Unit, delivers the following activities to support Tourism New Zealand’s goal to grow the proportion of high quality visitors from China:

▪ Administering the Approved Destination Status (ADS) programme. This programme licenses 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 also assesses new applicants, completes regular compliance monitoring and assessments, and handles complaints and feedback from Chinese group tour visitors.

▪ Administering the Premier Kiwi Partnership (PKP) programme, which aims 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 to reduce the barriers for higher value mono New Zealand product.

▪ Producing Chinese language visitor information designed to increase China visitor knowledge, including the rights and protections they have if visiting on an ADS tour.

▪ Engagement with relevant regulatory bodies.

The China Market Development 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 high value 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.


Tourism New Zealand’s activity in this area is primarily aimed at achieving priority 5:

▪ Optimise delivery capability.

Due to Tourism New Zealand’s specific work in addressing the quality issues faced by the China market in the attempt to attract a higher value visitor, the activity also contributes to the achievement of priority 3:




Quantity

Tourism New Zealand corporate website maintains or grows repeat visits to siteTarget: 30,000

30,628 Achieved

Registrations for New Zealand tourism industry webinarsTarget: 720 people registered for at least 1 webinar

630 people registered Not achieved

Stakeholder engagement through presentations at both industry and TNZ organised eventsTarget: Minimum of 30 presentations to New Zealand tourism industry

34 Achieved28

28 Includes roadshows delivered by the Chief Executive and/or Chair of Tourism New Zealand, presentations given by Executive Leadership Team to New Zealand industry e.g. conferences.

38



Quality

Tourism New Zealand communications (website/e-newsletter/webinars etc.) add value to Tourism industry stakeholders’ activitiesTarget: 75% of surveyed stakeholders rate Tourism New Zealand’s communications as very good or excellent

85.75% Achieved

Qualmark and China Market Development Unit (administering the ADS programme and administering the PKP programme)


Quantity

Number of ADS ‘spot checks’ and assessments of ADS Inbound Tour Operators (ITOs) Target: 100 spot checks4 assessment visits to ADS Inbound Tour Operators

260 spot checks Achieved

3 assessment visits Not achieved29

Increase the proportion of guest nights provided by Qualmark commercial accommodationTarget: Increase from base of 55%

Decrease to 52% Not achieved

Quality

Compliance assessment of PKP Inbound Tour Operators (ITOs)Target: Assessment of 4 PKP ITOS

Nil assessments Not achieved

Additional monitoring of the China ADS Code of Conduct that governs ADS group tour was conducted during the year with the aim of ensuring tour guides and operators delivered the best possible satisfaction levels to Chinese visitors. More Chinese visitors chose longer staying premium style ADS tours during the year and an increasing proportion of visitors chose free, independent travel style options.

The number of licensed Qualmark businesses remained steady with over 52 per cent of all nights spent in commercial accommodation spent in Qualmark rated properties. At the beginning of FY15 Qualmark had 2067 licences, and over the year experienced 192 acquisitions and 189 withdrawals to end FY15 with 2070 licences, less than the target of 2,200.

29 Resources to undertake the final check were reallocated to conduct additional spot checks as this was deemed to be of a higher priority.

39

Equal Employment OpportunitiesUnder 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 its Equal Employment Opportunities (EEO) Programme.

Set out below is a work place profile for Tourism New Zealand as at 30 June 2015.

Senior Management

Direct Reports to Senior Managers

or Staff with Responsibility for

Specific Output Areas

Other Managers with Staff Responsibility

(4th Tier)

Professional and Support Staff

% of Group % of Group % of Group % of Group

NZ EuropeanMale 44% 17% 15% 3%Female 44% 45% 31% 40%MāoriMale 4% 2%Female 2% 3%Pacific Peoples Male Female 2%Asian (inc. South Asian)Male 15% 5%Female 15% 24% 29%OtherMale 12% 4% 5%Female 11% 15% 13%% of Group of Total Organisation

5.5% 32.9% 8.0% 53.6%

Tourism New Zealand operates in 12 offshore markets and employs people of different nationalities, race and ethnicity. The organisation recognises the value of a diverse workforce and the importance of working together to deliver on outcomes. This is illustrated through its core organisational values namely; actions speak louder, global whānau and unwavering belief in New Zealand.

Women and people of Asian descent continue to be well represented at all levels of the organisation. Aged people, individuals with disabilities and people of Māori and Pacific descent are represented in the organisation. Tourism New Zealand continues to support the development and growth of all of its people and in order to facilitate this, has undertaken the following:

▪ Provided tools and information on Māori culture and language via Kōhanga, the intranet, and as part of the induction workshop.

▪ The continuation of the Global Community initiative ‘Global Whānau’ which celebrates the diversity of the cultures represented at Tourism New Zealand and improves communication and connectedness between offices.

▪ Provided a forum for discussing cultural differences and expectations with the purpose of improving communication.

▪ Celebrated the achievements of its people through the Whētu (Star) recognition programme.

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-market, where there are different jurisdictional requirements and statutory minima in the areas of Equal Employment Opportunities (EEO). Tourism New Zealand has an Equal Employment Opportunity Policy.

Tourism New Zealand has a well-defined mission, vision and set of values. The vision and values are part of the induction programme and have been integrated into the reward and recognition programmes. The organisation has recently defined the ‘actions’ which are demonstrated when employees are working at their best or most successfully together. The suite of actions will be integrated into people practices in 2015.

Tourism New Zealand has for the fifth year sought employee feedback and input through an annual engagement survey to assist in maintaining an environment where employees are motivated and supported. Development initiatives have been undertaken to ensure employees maintain their high level of engagement in the organisation.

40

The leadership team and broader management group are committed to demonstrating leadership and accountability in all areas of EEO and, from an EEO perspective, this means a commitment to, and activity in, the following areas.

1. Recruitment, selection and induction

The recruitment and selection procedure has been developed to ensure that all prospective employees are given the opportunity to participate equally in the recruitment process. The 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 the principles of EEO. 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. Learning and development

Tourism New Zealand has an accelerated development programme and organisation management programme which includes facilitated learning, online learning, mentoring, coaching, 360 development and on the job learning. Appreciation and management of diversity is integrated into the agenda for each programme to ensure participates further develop capability in this area.

Tourism New Zealand measures leadership and management effectiveness as part of its annual engagement survey. These measures are integrated with the performance management framework and people managers are accountable for these two areas of capability.

The organisation also has a succession and progression management programme for the purpose of ensuring there is the required depth and breadth of capabilities in the organisation in order to deliver on organisational outcomes. Learning and development needs are identified through this and on an individual basis through the development planning process. Development needs are aligned with and agreed as part of the annual performance management process.

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. The organisation continues to:

▪ Support employees with disabilities or special requirements through work place assessments, 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 establish salary ranges.

Individuals identified as not meeting the requirements of their role are provided with support, learning 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 which adhere to the WorkSafe New Zealand guidelines on preventing and responding to workplace bullying.

6. Safety 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 revised and refined the suite of related guidelines and policy to support safety and wellbeing. The Safety and Wellness Committee, which represents the employees is progressively working to identify and address initiatives which support maintaining employee health, safety and wellness. A learning programme has been established for committee members. Aspects of the programme have been used more widely across the organisation in support of the risk management programme. The risk management programme has focused on ensuring that the two key risks of driving and hosting are appropriately managed. Measures indicate this programme has been very successful and our employees feel increasingly that safety and wellness are well managed.

Work place assessments and the provision of special equipment continue to be undertaken and provided to ensure that employees are able to contribute effectively in all aspects of their working life.

41

Chris Sisarich

42

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 2015.

The Members of the New Zealand Tourism Board and Group

authorised these financial statements for issue on 6 October 2015.

Signed on behalf of the Board:

K. Prendergast

Chairman

6 October 2015

Financial Statements

R. Leggat

Deputy Chair

6 October 2015

43

Statement of Comprehensive Revenue And Expensefor the year ended 30 June 2015

Group Parent

Notes2015

Actual $000s

2015 Budget $000s

2014 Actual $000s

2015 Actual $000s

2015 Budget $000s

2014 Actual $000s

Revenue from non-exchange transactions

Revenue from Crown 2 113,350 113,350 113,730 113,350 113,350 113,730

Other revenue 3 1,102 - 852 1,102 - 852

Revenue from exchange transactions

Interest income 49 103 46 48 100 46

Other revenue 3 6,870 4,179 9,064 5,276 2,164 7,497

Share of associate's surplus 8 - - - - - -

Total Revenue 121,371 117,632 123,692 119,776 115,614 122,125

Expenditure

Other expenses 4 120,778 116,981 123,740 119,114 114,979 122,190

Depreciation and amortisation 12,13 994 651 1,028 968 635 1,012

Share of associate's deficit 8 - - 11 - - -

Total Expenditure 5 121,772 117,632 124,779 120,082 115,614 123,202

Net Operating Surplus/(Deficit) before Foreign Exchange and Taxation

(401) - (1,087) (306) - (1,077)

Foreign Exchange

Unrealised Foreign exchange gains/(losses) on derivative financial instruments held at year end

6 8,536 - (1,909) 8,536 - (1,909)

Income tax expense 21 - - - - - -

Net Surplus/(Deficit) for the year 8,135 - (2,996) 8,230 - (2,986)

Total comprehensive revenue/(expense) for the year

8,135 - (2,996) 8,230 - (2,986)

Benefit of foreign exchange reserve transfer 6 (527) - 890 (527) - 890

Net Operating Surplus/(Deficit) after Foreign Exchange transfer

7,608 - (2,106) 7,703 - (2,096)

Net Surplus/(Deficit) for the year is attributable to:

Non-controlling interest 7 (46) - 21 - - -

Owners of the parent 8,181 - (3,017) 8,230 - (2,986)

8,135 - (2,996) 8,230 - (2,986)

Total comprehensive revenue/(expense) for the year is attributable to:

Non-controlling interest 7 (46) - 21 - - -

Owners of the parent 8,181 - (3,017) 8,230 - (2,986)

8,135 - (2,996) 8,230 - (2,986)

The notes and accounting policies on pages 48 to 71 form part of and are to be read in conjunction with these financial statements.

44

Statement of Changes In Equityfor the year ended 30 June 2015

Parent

NotesShareholders Equity $000s

Foreign Exchange Reserve $000s

Retained Earnings $000s Total $000s

Balance at 1 July 1,805 4,117 (1,408) 4,514

Net surplus for the year - - 8,230 8,230

Transfer from Retained Earnings to Foreign Exchange Reserve

18 - 527 (527) -

Total comprehensive revenue for the year - 527 7,703 8,230

Balance at 30 June 1,805 4,644 6,295 12,744

Group


Foreign Exchange

Reserve $000s

Retained Earnings

$000s

Non- Controlling

Interest $000s

Total $000s

Balance at 1 July 1,805 4,117 (1,385) 227 4,764

Net surplus / (deficit) for the year - - 8,181 (46) 8,135

Transfer from Retained Earnings to Foreign Exchange Reserve

18 - 527 (527) - -

Total comprehensive revenue / (deficit) for the year - 527 7,654 (46) 8,135

Balance at 30 June 1,805 4,644 6,269 181 12,899

Statement of Changes in Equityfor the year ended 30 June 2014

Parent


Foreign Exchange Reserve $000s

Retained Earnings $000s Total $000s

Balance at 1 July 1,805 5,007 688 7,500

Net deficit for the year - - (2,986) (2,986)

Transfer to Retained Earnings from Foreign Exchange Reserve

18 - (890) 890 -

Total comprehensive expense for the year - (890) (2,096) (2,986)

Balance at 30 June 1,805 4,117 (1,408) 4,514

Group


Foreign Exchange

Reserve $000s

Retained Earnings

$000s

Non- Controlling

Interest $000s

Total $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 Exchange Reserve

18 - (890) 890 - -

Total comprehensive revenue / (deficit) for the year - (890) (2,127) 21 (2,996)

Balance at 30 June 1,805 4,117 (1,385) 227 4,764


45

Statement of Financial Positionfor the year ended 30 June 2015

Group Parent

Notes2015

Actual $000s

2015 Budget $000s

2014 Actual $000s

2015 Actual $000s

2015 Budget $000s

2014 Actual $000s

Current Assets

Cash 9 6,365 6,242 4,213 6,206 6,000 3,970

Receivables from non-exchange transactions 10 62 - 155 62 - 155

Receivables from exchange transactions 10 2,008 1,509 1,920 1,873 1,299 1,713

Prepayments and other current assets 1,547 1,188 936 1,545 1,188 934

Derivative financial instruments 11 5,716 - - 5,716 - -

15,698 8,939 7,224 15,402 8,487 6,772

Non-current Assets

Property, plant and equipment 12 1,706 1,227 1,943 1,699 1,222 1,929

Intangible assets 13 1,653 4 1,371 1,554 - 1,264

Investment in associate 8 - 1 - - - -

Accommodation bonds 14 280 342 257 280 342 257

Derivative financial instruments 11 1,054 - - 1,054 - -

4,693 1,574 3,571 4,587 1,564 3,450

Total Assets 20,391 10,513 10,795 19,989 10,051 10,222

Current Liabilities

Creditors and other payables 15 5,808 2,539 3,177 5,705 2,425 3,001

Employee entitlements 16 801 522 683 772 472 655

Invoiced in advance 617 150 139 502 - 20

Provisions 17 96 20 20 96 20 20

Derivative financial instruments 11 - 152 1,520 - 152 1,520

7,322 3,383 5,539 7,075 3,069 5,216

Non-current Liabilities

Provisions 17 170 268 246 170 268 246

Derivative financial instruments 11 - - 246 - - 246

170 268 492 170 268 492

Total Liabilities 7,492 3,651 6,031 7,245 3,337 5,708

Net Assets 12,899 6,862 4,764 12,744 6,714 4,514

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 6,269 347 (1,385) 6,295 296 (1,408)

Foreign Exchange Reserve 18 4,644 4,613 4,117 4,644 4,613 4,117

Parent interests 12,718 6,765 4,537 12,744 6,714 4,514

Non-controlling interests 7 181 97 227 - - -

Total Equity 12,899 6,862 4,764 12,744 6,714 4,514

The notes and accounting policies on pages 48 to 71 form part of and are to be read in conjunction with these financial statements.46

Statement of Cash Flowsfor the year ended 30 June 2015

Group Parent

Notes2015

Actual $000s

2015 Budget $000s

2014 Actual $000s

2015 Actual $000s

2015 Budget $000s

2014 Actual $000s

Cash flows from operating activities

Crown revenue 113,350 113,350 113,730 113,350 113,350 113,730

Interest received 49 103 46 48 100 46

Other revenue from non-exchange transactions 1,196 - 686 1,196 - 686

Other revenue from exchange transactions 6,818 4,179 9,404 5,211 2,164 7,717

Payments to suppliers and employees (119,169) (117,482) (122,822) (117,511) (115,464) (121,392)

Goods and services tax (net) 148 - (1,024) 170 - (1,000)

Net cash outflow from operating activities 19 2,392 150 20 2,464 150 (213)

Cash flows from investing activities

Repayment of accommodation bonds 32 - 8 32 - 8

Purchase of property, plant and equipment (444) (150) (706) (501) (150) (702)

Purchase of intangible assets (691) - (691) (622) - (622)

Payments for accommodation bonds (25) - (13) (25) - (13)

Net cash outflow from investing activities (1,128) (150) (1,402) (1,116) (150) (1,329)

Net decrease in cash held 1,264 - (1,382) 1,348 - (1,542)

Effect of exchange rates on foreign currency balances

888 - (256) 888 - (256)

Opening cash brought forward 4,213 6,242 5,851 3,970 6,000 5,768

Cash at end of year 9 6,365 6,242 4,213 6,206 6,000 3,970


47

Notes to the Financial Statementsfor the year ended 30 June 2015

Note 1Statement of accounting policies for the year ended 30 June 2015

(a) Reporting Entity

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 primary objective is to improve tourism’s contribution to economic growth by increasing the value of international visitors to New Zealand.

Tourism New Zealand does not operate to make a financial return.

For the purposes of financial reporting, Tourism New Zealand is classified as a Public Benefit Entity.

The financial statements for Tourism New Zealand are for the year ended 30 June 2015, and were approved by the Board on 6 October 2015.

(b) Basis of preparation

The financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period.

Statement of compliance

The financial statements have been prepared in accordance with the requirements of the Crown Entities Act 2004, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP). The financial statements have been prepared in accordance with Tier 1 PBE accounting standards.

Measurement base

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.

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) Accounting standards and interpretations issued but not yet effective

In May 2013, the External Reporting Board issued a new suite of PBE accounting standards for application by public sector entities for reporting periods beginning on or after 1 July 2014. Tourism New Zealand has applied these standards in preparing the 30 June 2015 financial statements.

In October 2014, the PBE suite of accounting standards was updated to incorporate requirements and guidance for the not-for-profit sector. These updated standards apply to PBEs with reporting periods beginning on or after 1 April 2015. Tourism New Zealand will apply these standards in preparing its 30 June 2016 financial statements. Tourism New Zealand expects there will be minimal or no change in applying these updated accounting standards.

(d) Basis of consolidation

The consolidated financial statements comprise the financial statements of New Zealand Tourism Board trading as Tourism New Zealand and its subsidiaries as at 30 June each year (the Group).

Subsidiaries are combined using the acquisition method of combination. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies.

Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Tourism New Zealand has control.

(e) Investment in associate

The Group’s investment in associate is accounted for under the equity method of accounting in the consolidated financial statements.

An associate is an entity in which the Group has significant influence and which is not a subsidiary nor a joint venture.

The annual financial statements of the associate are used by the Group to apply the equity method. The reporting dates of the associate and the Group are identical and both use consistent accounting policies.

The investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate, less any impairment in value. The consolidated income statement reflects the Group’s share of the results of operations of the associate.

Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any changes and discloses this, when applicable in the consolidated statement of changes in equity.

(f) Foreign currency

Transactions denominated in foreign currency are recorded in NZ Dollars by applying exchange rates that approximate rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.

Exchange gains and losses are recognised in the Statement of comprehensive revenue and expense.

48

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

(g) Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Office equipment 5 years

Motor vehicles 4 – 5 years

Furniture and fittings 5 – 8 years

Computer equipment 3 years

Leasehold improvements Up to term of the lease

Realised gains and losses arising from the disposal of property, plant and equipment are recognised in the Statement of comprehensive revenue and expense in the period in which the transaction occurs.

Impairment

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Losses resulting from impairment are reported in the Statement of comprehensive revenue and expense.

(h) Intangible assets

Intangible assets are recorded at cost at acquisition. Where there is no active market for these assets, or they are determined to hold no future economic benefit, they are written off in the year of acquisition. Tourism New Zealand has no intangible assets with an infinite life.

The useful life of Intangible assets are estimated at between 3 and 8 years.

Research costs are expensed as incurred.

(i) Inventories

Inventories are valued at the lower of cost and net realisable value.

( j) Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

(k) Cash and cash equivalents

Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

(l) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of comprehensive revenue and expense net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(m) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of comprehensive revenue and expense on a straight-line basis over the lease term.

The Group does not enter into finance leases.

(n) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The specific recognition criteria described below must also be met before revenue is recognised.

Revenue from non-exchange transactions

Grants received from the Crown

Grants received from the Crown are recognised as revenue on receipt.

Sales and other revenue

Revenue includes fees received to attend offshore trade events and familiarisations in New Zealand, and fees received to become part of an Approved Destination Status programme. The revenue from such transactions does not approximately equal the value of goods provided by Tourism New Zealand and are therefore considered as non-exchange transactions.

Revenue is recognised at fair value of cash received or receivable when the risks and rewards of ownership are transferred to the buyer at the time of delivery of goods to the customer.

49

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

▪ when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; or

▪ when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each Statement of Financial Position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Statement of Financial Position date.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(p) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

▪ where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

▪ receivables and payables are stated with the 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.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

The services provided have a return obligation and therefore the revenue from supply of services is recognised on a straight line basis over the specified period for the service unless an alternative method better represents the stage of completion of the transaction.

Revenue from exchange transactions

Sales and partnership revenue

Revenue includes contributions from partners and recharges to customers to recover full cost of expenses incurred on their behalf. The revenue from the such supply of goods and services is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.

Revenue from the supply of services is recognised on a straight line basis over the specified period for the service unless an alternative method better represents the stage of completion of the transaction.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

(o) 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.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Statement of Financial Position date.

Deferred income tax is provided on all temporary differences at the Statement of Financial Position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

▪ when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; or

▪ when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

50

(q) Financial instruments

Tourism New Zealand uses derivative financial instruments such as foreign currency contracts to manage its exposure to foreign exchange risk arising from its operational activities. Tourism New Zealand does not hold or issue these financial instruments for trading purposes. Tourism New Zealand has not adopted hedge accounting.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each balance date. Movements in the fair value of derivative financial instruments are recognised in the Statement of comprehensive revenue and expense.

Foreign exchange gains and losses resulting from the settlement of derivative financial instruments and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of comprehensive revenue and expense.

Cash and cash equivalents include cash on hand, cash in transit, bank accounts and deposits with a maturity of no more than three months from date of acquisition.

The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

(r) Employee Benefits

Other Employee Entitlements: Employee entitlements for salaries and wages, annual leave, long service leave, retiring leave and other similar benefits are recognised in the Statement of comprehensive revenue and expense when they accrue to employees. Employee entitlements to be settled within 12 months are reported at the amount expected to be paid. The liability for long-term employee entitlements is reported as the present value of the estimated future cash flows.

Termination Benefits: Termination benefits are recognised in the Statement of comprehensive revenue and expense only where there is a demonstrable commitment to either terminate employment prior to normal retirement date or to provide such benefits as a result of an offer to encourage voluntary redundancy. Termination benefits settled within 12 months are reported at the amount expected to be paid, otherwise they are reported as the present value of the estimated future cash flows.

51

Note 2

Revenue from Crown Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Baseline Funding 115,900 115,900 115,900 115,900

Additional Crown Funding - 437 - 437

Total revenue received from the Crown 115,900 116,337 115,900 116,337

Less GST 2,550 2,607 2,550 2,607

Net revenue received from the Crown 113,350 113,730 113,350 113,730

Note 3

Other revenue Group Parent

Sales and Partnership revenue from exchange transactions 6,870 9,064 5,276 7,497

Sales and other revenue from non-exchange transactions 1,102 852 1,102 852

Total Other revenue 7,972 9,916 6,378 8,349

Note 4

Other expenses include: Group Parent

Personnel expenses 2015 2014 2015 2014

Number of permanent and fixed term staff 168 163 161 156

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Salaries and wages 16,269 15,187 15,584 14,508

Employer superannuation contributions 674 396 656 378

Increase/(decrease) in employee entitlements (note 16) 118 120 117 121

Other personnel expenses 1,399 929 1,383 906

18,459 16,632 17,740 15,913

Personnel costs for New Zealand and offshore staff were:2015

$000s2014

$000s2015

$000s2014

$000s

New Zealand Personnel Expenses — Tourism New Zealand 10,413 9,608 10,413 9,608

New Zealand Personnel Expenses — Subsidiaries 719 719 - -

Offshore Personnel Expenses 7,327 6,305 7,327 6,305

18,459 16,632 17,740 15,913

2015 2014 2015 2014

Number of ceased staff paid compensation or other benefits 2 - 1 -

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Compensation or other benefits paid to ceased staff 31 - 25 -

52

Other expenses include: Group Parent

Auditor's remuneration2015

$000s2014

$000s2015

$000s2014

$000s

Amounts received or due and receivable by Ernst & Young for:

The audit of the financial report 81 88 72 79

81 88 72 79

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 8 - -

Other assurance services 18 19 17 18

107 115 89 97

Other expenses2015

$000s2014

$000s2015

$000s2014

$000s

Lease expense 2,076 2,182 2,069 2,177

Remuneration of board members of Parent (See also note 31) 209 190 209 190

Note 5

Total expenditure of parent Parent

2015 $000s

2014 $000s

Total expenditure by geographic region:

Australia 18,078 20,360

North America 14,517 14,501

United Kingdom and Europe 13,027 10,884

Japan 5,131 6,836

Asia 23,629 23,898

Other markets 2,822 1,869

New Zealand (a) 42,878 44,854

Total Expenditure of Parent 120,082 123,202

(a) New Zealand expenditure includes costs that apply to all markets and across a number of campaigns including the spend on the new 100% Pure New Zealand Campaign video and brand development, Hobbit event leverage and continued development of the newzealand.com website.

Note 6

Foreign exchange gains/(losses) Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Foreign exchange gains/(losses) on derivative financial instruments 8,536 (1,909) 8,536 (1,909)

Other foreign exchange gains/(losses) (527) 890 (527) 890

Total foreign exchange gains/(losses) 8,009 (1,019) 8,009 (1,019)

Note 4 continued

53

Note 7

Subsidiary companies Group Parent

2015 2014 2015 2014

Qualmark New Zealand Limited 60% 60% 60% 60%

Visitor Information Network Incorporated (trading as i-SITE NZ) 0% 0% 0% 0%

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 meets the criteria determined in PBE IPSAS 6 for consolidating investments in 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

Associate company Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

The New Zealand Way Limited - - - -

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.

54

Note 8 continued

The following table illustrates summarised information of the investment in The New Zealand Way Limited:

Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Share of associate’s balance sheet:

Current assets 1 16 - -

Current liabilities 1 16 - -

Net assets - - - -

Share of associate's revenue and (deficit)/surplus:

Revenue - 31 - -

Net (deficit)/surplus - (11) - -

Carrying amount at beginning of year - 11 - -

Carrying amount at end of year - - - -

Note 9

Cash Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Cash Holdings:

Cash at bank and in hand 1,892 2,387 1,869 2,160

Call accounts — foreign currencies 4,336 1,808 4,336 1,808

Call accounts — New Zealand dollar 138 18 2 2

6,366 4,213 6,207 3,970

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

Cash Holdings by Currency:2015

$000s2014

$000s2015

$000s2014

$000s

New Zealand Dollar 423 348 264 105

United States Dollar 263 533 263 533

British Pound 300 282 300 282

Australian Dollar 102 113 102 113

European Euro 2,269 831 2,269 831

Japanese Yen 791 244 791 244

Singapore Dollar 624 378 624 378

Canadian Dollar 25 161 25 161

Indian Rupee 498 413 498 413

55

Group Parent

Other Asian Currencies 1,070 910 1,070 910

6,365 4,213 6,206 3,970

Cash Holdings by Bank:

HSBC Bank 5,902 3,766 5,743 3,523

National Bank of New Zealand 319 299 319 299

ASB Bank 20 17 20 17

Bank of New Zealand 3 3 3 3

Tokyo Mitsubishi 121 128 121 128

6,365 4,213 6,206 3,970

The fair value of cash and cash equivalents is $6,366,000 (2014: $4,213,000).

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. The bank also provides a financial guarantee to Datacom Business Services, Tourism New Zealand’s payroll processor for Australian payroll an amount of AUD 42,000. Further, a financial guarantee for an amount of AUD 97,000 is also provided by HSBC bank for Sydney office rent until 26 August 2016.

Qualmark holds a stand by Letter of Credit with the bank for an amount of $26,000 to serve as security against any non-payment of payroll. This letter of credit has no expiry date. A cheque encashment facility for $1000 also exists with the bank.

Note 10

Receivables Group Parent

Receivables from non-exchange transactions2015

$000s2014

$000s2015

$000s2014

$000s

Receivables 62 155 62 155

Less: Provision for impairment - - - -

62 155 62 155

Receivables from non-exchange transactions are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2015 and 2014, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below:

Parent

2015 2014

Gross $000s

Impairment $000s

Net $000s

Gross $000s

Impairment $000s

Net $000sParent

Not past due 57 - 57 119 - 119

Past due 1 – 30 days - - - - - -

Past due 31 – 60 days - - - 13 - 13

Past due 61 – 90 days - - - - - -

Past due > 91 days 5 - 5 23 - 23

62 - 62 155 - 155

Note 9 continued

56

Group

2015 2014

Gross $000s

Impairment $000s

Net $000s

Gross $000s

Impairment $000s

Net $000sGroup

Not past due 57 - 57 119 - 119

Past due 1 – 30 days - - - - - -

Past due 31 – 60 days - - - 13 - 13

Past due 61 – 90 days - - - - - -

Past due > 91 days 5 - 5 23 - 23

62 - 62 155 - 155

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.

Group Parent

Receivables from exchange transactions2015

$000s2014

$000s2015

$000s2014

$000s

Receivables 2,011 1,922 1,873 1,713

Less: Provision for impairment (3) (2) - -

2,008 1,920 1,873 1,713

Receivables from exchange transactions are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2015 and 2014, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below:

Parent

2015 2014

Gross $000s

Impairment $000s

Net $000s

Gross $000s

Impairment $000s

Net $000sParent

Not past due 1,835 - 1,835 1,502 - 1,502

Past due 1 – 30 days 38 - 38 50 - 50

Past due 31 – 60 days - - - - - -

Past due 61 – 90 days - - - 111 - 111

Past due > 91 days - - - 50 - 50

1,873 - 1,873 1,713 - 1,713

Group

2015 2014

Gross $000s

Impairment $000s

Net $000s

Gross $000s

Impairment $000s

Net $000sGroup

Not past due 1,883 - 1,883 1,548 - 1,548

Past due 1 – 30 days 113 - 113 56 - 56

Past due 31 – 60 days 9 (1) 8 20 - 20

Past due 61 – 90 days - - - 127 - 127

Past due > 91 days 6 (2) 4 171 (2) 169

2,011 (3) 2,008 1,922 (2) 1,920

Note 10 continued

57

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 from exchange transactions for the Group include GST/VAT refunds comprising 70% (65% in 2014) of total receivables as follows:

Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

GST Refund due from NZ Inland Revenue Department 781 622 781 622

GST Refund due from Australian Taxation Office 232 617 232 617

Consumption Tax Refund from Japan Tax Office 155 55 155 55

VAT Refund due from UK Revenue & Customs 275 53 275 53

1,443 1,347 1,443 1,347

Note 11

Derivative financial instrument

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 78 (2014: 112) 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.

Foreign currency forward exchange contracts: Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Foreign exchange contracts at 30 June — Sell Value 70,470 105,830 70,470 105,830

Fair value Derivatives in Gain / (Loss) 6,770 (1,766) 6,770 (1,766)

Foreign exchange contracts at 30 June — Buy Value 77,240 104,064 77,240 104,064

Foreign exchange contracts by currency:

United States Dollar 31,306 50,840 31,306 50,840

British Pound 4,680 6,168 4,680 6,168

Australian Dollar 33,441 31,978 33,441 31,978

European Euro - 6,680 - 6,680

Japanese Yen 4,746 5,107 4,746 5,107

Thai Baht 404 - 404 -

Singapore Dollar 2,664 2,629 2,664 2,629

Hong Kong Dollar - 662 - 662

77,241 104,064 77,241 104,064

Note 10 continued

58

Note 12

Property, plant and equipment Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

All property, plant and equipment

At cost 9,475 8,990 9,422 8,929

Accumulated depreciation (7,769) (7,047) (7,723) (7,000)

Net carrying amount 1,706 1,943 1,699 1,929

Property, plant and equipment for each class:

Furniture and fittings

At cost 1,266 1,209 1,233 1,174

Accumulated depreciation (1,109) (1,010) (1,082) (985)

Net carrying amount of furniture and fittings 157 199 151 189

Leasehold improvements

At cost 2,643 2,595 2,643 2,595


Net carrying amount of leasehold improvements 700 782 700 782

Office equipment

At cost 741 707 741 707

Accumulated depreciation (704) (677) (704) (677)

Net carrying amount of office equipment 37 30 37 30

Motor vehicles

At cost 61 61 61 61

Accumulated depreciation (61) (61) (61) (61)

Net carrying amount of motor vehicles - - - -

Computer equipment

At cost 4,764 4,418 4,744 4,392


Net carrying amount of computer equipment 812 932 811 928

Total property, plant and equipment 1,706 1,943 1,699 1,929

All property, plant and equipment reconciliation

At 1 July, net of accumulated depreciation 1,943 2,038 1,929 2,020

Additions 492 769 492 766

Disposals and write back of depreciation - - - -

Depreciation charge for the year (729) (864) (722) (857)

At 30 June, net of accumulated depreciation 1,706 1,943 1,699 1,929

Depreciation by asset class:

Furniture and fittings 108 112 104 109

Leasehold improvements 130 148 130 148

Office equipment 20 27 20 27

Computer equipment 471 577 468 573

Total Depreciation 729 864 722 857

59

Note 13

Intangible assets Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Intangible assets

At cost 2,082 1,818 1,955 1,419

Accumulated amortisation (429) (447) (401) (155)

Net carrying amount 1,653 1,371 1,554 1,264

Intangible assets reconciliation

At 1 July, net of accumulated amortisation 1,371 1,119 1,264 1,054

Additions 546 434 535 365

Impairment of Intangible assets - (18) - -

Amortisation charge for the year (264) (164) (245) (155)

At 30 June, net of accumulated amortisation 1,653 1,371 1,554 1,264

Intangible asset additions during the year include investment into redevelopment of Tourism New Zealand’s corporate website and intranet, and further enhancements made to Tourism New Zealand’s and Qualmark’s new finance and HR system implemented on 1 July 2013. The corporate website went online in June 2015 and the intranet went live in July 2015.

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. It’s remaining assets relate to the Public campaign website.

Note 14

Accommodation bonds

Accommodation bonds are refundable deposits or key money paid for the lease of office and housing premises.

Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Japan 146 137 146 137

North America 18 - 18 -

Asia 116 120 116 120

280 257 280 257

Note 15

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.

Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Creditors 1,387 941 1,358 875

Accrued expenses 4,421 2,236 4,347 2,126

5,808 3,177 5,705 3,001

60

Note 16

Employee entitlements Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Annual Leave 801 683 772 655

801 683 772 655

Note 17

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 four Tourism New Zealand offices and is expected to be incurred over the next eight years.

Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Provisions are represented by:

Lease make-good 266 266 266 266

Total Provisions 266 266 266 266

Current provision 96 20 96 20

Non-current provision 170 246 170 246

266 266 266 266

Movements in provisions are as follows:

Balance at 1 July 266 273 266 273

Additional provisions made - - - -

Amounts used - (7) - (7)

Unused amounts reversed - - - -

Balance at 30 June 266 266 266 266

Note 18

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.

Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Movements in reserve is as follows:

Balance at 1 July 4,117 5,007 4,117 5,007

Transfer to Retained Earnings from Foreign Exchange Reserve 527 (890) 527 (890)

Balance at 30 June 4,644 4,117 4,644 4,117

61

Note 19

Reconciliation of surplus to net cash from operating activities Group Parent

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Net surplus/(deficit) 8,135 (2,106) 8,230 (2,096)

Add/(less) non-cash items

Depreciation and amortisation 995 1,028 968 1,012

Provisions - (7) - (7)

Share of associate's surplus - 11 - -

Net (gains)/losses on derivative financial instruments (8,536) 1,909 (8,536) 1,909

Net foreign exchange (gains)/losses (527) (916) (527) (916)

Total non-cash items (8,068) 2,025 (8,095) 1,998

Add/(less) items classified as investing or financing activities

Net Loss/(Gain) on disposal of assets - 18 - -

Movement in foreign currency accommodation bonds (30) 30 (30) 30

Total items classified as investing or financing activities (30) 48 (30) 30

Add/(less) movements in working capital items

Debtors and other receivables 5 194 (67) (136)

Prepayments (611) (8) (611) (13)

Payables and accruals 2,365 99 2,438 22

Invoiced in advance 478 (352) 482 (139)

Employee entitlements 118 120 117 121

Net movements in working capital items 2,355 53 2,359 (145)

Net cash from operating activities 2,392 20 2,464 (213)

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’s shareholding in Qualmark however was fully called at the end of July 2015 with Tourism New Zealand’s contribution being $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 $471,226 (2014: $338,208).

62

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 four 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.

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 impose 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 Dollars, there is an exposure to foreign exchange risk through the movement of NZ Dollars 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.

63

Note 25

Categories of financial assets and liabilities Group Parent

The carrying amounts of financial assets and liabilities in each of the PBE IPSAS 29 categories are as follows:

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Financial assets:

Cash and cash equivalents 6,366 4,213 6,207 3,970

Debtors 565 728 430 521

Total loans and receivables 6,931 4,941 6,637 4,491

Fair value through profit and loss held for trading:

Derivative financial instrument assets / (liabilities) 6,770 (1,766) 6,770 (1,766)

Other financial liabilities:

Creditors 1,387 941 1,358 875

Invoiced in advance 617 139 502 20

Total other financial liabilities 2,004 1,080 1,860 895

Note 26

Capital commitments

There is no capital expenditure contracted for at balance date but not provided for in the financial statements. (2014:Nil)

64

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

Operating commitments payable after balance date on:2015

$000s2014

$000s2015

$000s2014

$000s

Non-Cancellable Accommodation Leases:

Up to One Year 1,307 1,604 1,307 1,604

One to Two Years 1,060 1,261 1,060 1,261

Two to Five Years 1,632 2,004 1,632 2,004

Over Five Years - 319 - 319

3,999 5,188 3,999 5,188

Non-Cancellable Motor Vehicle and Equipment Leases

Up to One Year 94 92 88 91

One to Two Years 77 64 76 64

Two to Five Years 49 96 49 96

Over Five Years - - - -

220 252 213 251

Non-Cancellable Contracts for Goods and Services

Up to One Year 774 923 774 923

One to Two Years 7 - 7 -

Two to Five Years - - - -

Over Five Years - - - -

781 923 781 923

Total operating commitments 5,000 6,363 4,993 6,362

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.

65

Note 28 continued

Transaction value year ended 30 June

Balance outstanding year ended 30 June

Related Party and Transaction2015

$000s2014

$000s2015

$000s2014

$000s

Subsidiary — Qualmark New Zealand Limited:

Purchases from Tourism New Zealand 226 180 71 17

Sales to Tourism New Zealand 3 3 - -

Sales to Visitor Information Network Inc 34 32 - -

Subsidiary — Visitor Information Network Inc:

Shareholder income provided by Tourism New Zealand 250 250 - -

Recharges from Tourism New Zealand 16 10 - -

Purchases from Qualmark New Zealand Limited 34 32 - -

Associate — The New Zealand Way Limited:

Shareholder income provided by Tourism New Zealand - 31 - 13

Recharges from Tourism New Zealand 5 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.




$000s2014

$000s2015

$000s2014

$000s

Income has been received by Tourism New Zealand from:

R Leggat (Director): Education NZ — Income received by TNZ for tourism related services. - 10 - -

J Thorburn (Director): Intercity Group Limited — Income received by TNZ for tourism related services.

The income received in 2014 financial year were from Agrodome Rotorua, Ngai Tahu Tourism Limited, Dart River Safaris Limited, Franz Josef Glacier Guides Limited, Rainbow Springs Limited, Shotover Jet Limited and Hukafalls Jet Limited. 8 25 2 -

M O'Donnell (Director): Ministry of Business, Innovation, and Employment — Income received by TNZ for employee secondment. - 46 - 11

N Thompson (Director): Auckland Tourism, Events & Economic Development — Income received by TNZ for tourism related services. 888 18 249 14

M Johns (Chief Executive): Intercity Group (NZ) Limited — Income received by TNZ for tourism related services. - 8 - -

J Spice (Director): Touch of Spice Ltd — Income received by TNZ for tourism related services. 7 - - -

Payments have been made by Tourism New Zealand to:

K Pendergast (25% owner (with husband)): Quality Hotel and Comfort Hotel — Provision of services to TNZ. 3 1 - -

R Leggat (Director): New Zealand Post Limited — Provision of postal services to TNZ. 3 3 - -

66




$000s2014

$000s2015

$000s2014

$000s

J Thorburn (Director): Intercity Group Limited — Provision of tourism related services to TNZ. 6 50 - -

J Spice (Director): Touch of Spice Ltd — Provision of tourism related services to TNZ. 25 4 - -

C Parkin (Director): Museum Hotel — Provision of tourism related services to TNZ. 29 7 - -

N Thompson (Director): Auckland Tourism, Events & Economic Development — Provision of tourism related services to TNZ. 10 11 - -

K Bowler (Director): Pacific Asia Travel Association — Provision of membership fees. 3 10 - -

Key management personnel compensation Parent

Key management personnel includes all board members, the Chief Executive and 10 (2014:10) members of the Executive Team.

2015 $000s

2014 $000s

Remuneration of the Board of Directors:

Salaries and other short-term benefits 209 190

Remuneration of the Executive Team:

Salaries and other short-term benefits 2,617 2,487

Total key management personnel compensation 2,826 2,677

Note 29

Financial instrument risksTourism 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 2015, 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:

Surplus/(deficit) higher/(lower) Equity higher/(lower)

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Group

+ 0.5% (50 basis points) 3 2 3 2

- 0.5% (50 basis points) (3) (2) (3) (2)

Parent

+ 0.5% (50 basis points) 2 1 2 1

- 0.5% (50 basis points) (2) (1) (2) (1)

Note 28 continued

67

Note 29 continued

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 significantly reduce the foreign currency exposure. These forward exchange contracts are entered into prior to the commencement of the financial year to cover the exposure on budgeted NZD spend in targeted markets based on the market’s economic outlook and other factors that might have an impact on their currency. Refer to Note 11 Derivative financial Instruments for details on the forward currency contracts held. Further exposures to foreign exchange risk through the movement of NZ Dollars against those foreign currencies are also managed through the foreign exchange reserve as explained in Note 18.

The basket of currencies that Tourism New Zealand holds also reduces the risk from any single currency as all currencies are not expected to move adversely against the NZD. Refer to Note 5 and 9 for currency exposures.

Currency risk sensitivity analysis — Tourism New Zealand is subject to volatility in financial performance associated with foreign currency rates. As at 30 June 2015, if the NZ Dollar had increased/decreased by 5% 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) higher/(lower) Equity higher/(lower)

2015 $000s

2014 $000s

2015 $000s

2014 $000s

Group

NZD to various currencies +5% 10,096 4,981 - -

NZD to various currencies -5% (17,347) (5,505) - -

Parent

NZD to basket of currencies +5% 10,096 4,981 - -

NZD to basket of currencies -5% (17,347) (5,505) - -

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.

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 2015. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract.

68

Note 29 continued

< 6months $000s

6-12 months $000s

> 1 year $000s

Total $000s

Group — Year end 30 June 2015Financial liabilities

Creditors (1,387) - - (1,387)

Derivative financial instrument liabilities — gross settled Inflows 35,165 25,304 15,395 75,864

Outflows (32,082) (22,671) (14,341) (69,094)

3,083 2,633 1,054 6,770

Net outflow 1,696 2,633 1,054 5,383

< 6months $000s

6-12 months $000s

> 1 year $000s

Total $000s

Parent — Year end 30 June 2015Financial liabilities

Creditors (1,358) - - (1,358)


Outflows (32,082) (22,671) (14,341) (69,094)

3,083 2,633 1,054 6,770

Net outflow 1,725 2,633 1,054 5,412

< 6months $000s

6-12 months $000s

> 1 year $000s

Total $000s

Group — Year end 30 June 2014Financial liabilities

Creditors (941) - - (941)


Outflows (36,213) (30,189) (36,128) (102,530)

(722) (798) (246) (1,766)

Net outflow (1,663) (798) (246) (2,707)

< 6months $000s

6-12 months $000s

> 1 year $000s

Total $000s

Parent — Year end 30 June 2014Financial liabilities

Creditors (875) - - (875)


Outflows (36,213) (30,189) (36,128) (102,530)

(722) (798) (246) (1,766)

Net outflow (1,597) (798) (246) (2,641)

69

Note 29 continued

Fair value

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 mid values of the forward contracts as determined by the New Zealand Debt Management Office based on inputs that are observable.

There were no transfers between Level 1 and Level 2 during the year.

Note 30

Remuneration of employees

During 2014/2015 55 (2014: 44) employees received remuneration and benefits which exceeded $100,000 per annum as follows:

Parent

$ 2015 2014

100,000 – 109,999 11 4

110,000 – 119,999 7 12

120,000 – 129,999 9 5

130,000 – 139,999 5 1

140,000 – 149,999 3 3

150,000 – 159,999 2 5

160,000 – 169,999 4 6

170,000 – 179,999 1 -

180,000 – 189,999 2 -

190,000 – 199,999 2 2

200,000 – 209,999 1 2

210,000 – 219,999 2 -

220,000 – 229,999 1 -

240,000 – 249,999 - 1

250,000 – 259,999 1 -

260,000 – 269,999 - 1

270,000 – 279,999 2 -

280,000 – 289,999 - 1

310,000 – 319,999 1 -

470,000 – 479,999 1 1

55 44

In 2014/2015 Tourism New Zealand invested in higher levels of capability to meet expectations in delivering on the Strategic Plan. This, coupled with the expansion of offshore Business Events and Premium capability has resulted in an increase in the number of employees remunerated above NZ$100,000.

70

Note 31

Remuneration of board members Parent

Board members earned the following fees during the year:2015

$000s2014

$000s

K Prendergast (Chair) 42 42

R Leggat (Deputy Chair) 25 25

J Thorburn 20 18

J Bestwick 20 22

J Tuuta 20 20

M O’Donnell 22 5

J Spice 20 10

C Parkin 20 3

N Thompson 20 3

M Johns - 10

H van Asch - 16

J Langley - 16

209 190

There were no changes to the board members during 2014/2015.

Note 32

Subsequent Events

On 7 September 2015, Qualmark New Zealand became a wholly owned subsidiary of the New Zealand Tourism Board when New Zealand Tourism Board acquired the remaining 40% shareholding from the New Zealand Automobile Association Inc.

71

Five Year Financial Summary for Parent

Statement of Financial Position2011 Actual

$000s2012 Actual

$000s2013 Actual

$000s2014 Actual

$000s2015 Actual

$000s

Current Assets

Cash 10,473 7,153 5,768 3,970 6,206

Receivables 2,062 1,098 1,439 1,868 1,935

Prepayments and other current assets 729 798 921 934 1,545

Derivative financial instruments - - 143 - 5,716

13,264 9,049 8,271 6,772 15,402

Non-current Assets

Property, plant and equipment 2,404 2,311 2,020 1,929 1,699

Intangible Assets - - 1,054 1,264 1,554

Accommodation bonds 390 320 292 257 280

Derivative financial instruments - - - - 1,054

2,794 2,631 3,366 3,450 4,587

Total Assets 16,058 11,680 11,637 10,222 19,989

Current Liabilities

Creditors and other payables 8,120 3,872 3,171 3,001 5,705

Employee entitlements 450 439 534 655 772

Income in advance 108 122 159 20 502

Provisions 80 50 24 20 96

Derivative financial instruments 1,122 152 - 1,520 -

9,880 4,635 3,888 5,216 7,075

Non-current Liabilities

Provisions 223 223 249 246 170

Derivative financial instruments - - - 246 -

223 223 249 492 170

Total Liabilities 10,103 4,858 4,137 5,708 7,245

Net Assets 5,955 6,822 7,500 4,514 12,744

Equity

Shareholder's equity 1,805 1,805 1,805 1,805 1,805

Retained earnings (464) 404 688 (1,408) 6,295

Foreign Exchange Reserve 4,614 4,613 5,007 4,117 4,644

Total Equity 5,955 6,822 7,500 4,514 12,744

72

Five Year Financial Summary for Parent Continued

Statement of Comprehensive Income2011 Actual

$000s2012 Actual

$000s2013 Actual

$000s2014 Actual

$000s2015 Actual

$000s

Income

Revenue from Crown 99,361 84,215 84,167 113,730 113,350

Interest 252 139 114 46 48

Other revenue 6,467 5,530 5,631 8,349 6,378

106,080 89,884 89,912 122,125 119,776

Expenditure

Other expenses 105,397 89,205 89,124 122,190 119,114

Depreciation, Amortisation and Impairment 563 782 799 1,012 968

105,960 89,987 89,923 123,202 120,082

Unrealised Foreign exchange gains/(losses) on derivative financial instruments held at year end

(510) 970 295 (1,909) 8,536

Total comprehensive income / (expense) (390) 867 284 (2,986) 8,230

Transfer from / (to) Foreign exchange reserve (186) - 394 890 (527)

Total comprehensive income/(expense) after foreign exchange transfer

(576) 867 678 (2,096) 7,703

73

Independent Auditor’s ReportTo the readers of New Zealand Tourism Board Group’s financial statements and performance information for the year ended 30 June 2015.

The Auditor-General is the auditor of the New Zealand Tourism Board (the “Board”) and group. The Auditor-General has appointed me, Stuart Mutch, using the staff and resources of Ernst & Young, to carry out the audit of the financial statements and the performance information of the Board and group (collectively referred to as “the Group”) on her behalf.

Opinion on the financial statements and the performance information

We have audited:

▪ the financial statements of the Group on pages 44 to 71, that comprise the statement of financial position as at 30 June 2015, the statement of comprehensive revenue and expense, statement of changes in equity and statement of cash flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information; and

▪ the performance information of the Group on pages 14 to 39.

In our opinion:

▪ the financial statements of the Group:

▫ present fairly, in all material respects:

- its financial position as at 30 June 2015; and

- its financial performance and cash flows for the year then ended; and

▫ comply with generally accepted accounting practice in New Zealand and have been prepared in accordance with Tier 1 PBE accounting standards.

▪ the performance information of the Group:

▫ present fairly, in all material respects, the Group’s performance for the year ended 30 June 2015, including for each class of reportable outputs:

- its standards of performance achieved as compared with forecasts included in the statement of performance expectations for the financial year; and

- its actual revenue and output expenses as compared with the forecasts included in the statement of performance expectations for the financial year.

▫ complies with generally accepted accounting practice in New Zealand.

Our audit was completed on 6 October 2015. This is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board members and our responsibilities, and we explain our independence.

Basis of opinion

We carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial statements and the performance information are free from material misstatement.

Material misstatements are differences or omissions of amounts and disclosures that, in our judgment, are likely to influence readers’ overall understanding of the financial statements and the performance information. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the performance information. The procedures selected depend on our judgment, including our assessment of risks of material misstatement of the financial statements and the performance information, whether due to fraud or error. In making those risk assessments; we consider internal control relevant to the preparation of the Group’s financial statements and performance information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

An audit also involves evaluating:

▪ the appropriateness of accounting policies used and whether they have been consistently applied;

▪ the reasonableness of the significant accounting estimates and judgments made by the Board members;

▪ the appropriateness of the reported performance information within the Group’s framework for reporting performance;

▪ the adequacy of all disclosures in the financial statements and the performance information; and

▪ the overall presentation of the financial statements and the performance information.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements and the performance information. Also we did not evaluate the security and controls over the electronic publication of the financial statements and the performance information.

We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

74

Responsibilities of the Board members

The Board members are responsible for preparing financial statements and performance information that:

▪ comply with generally accepted accounting practice in New Zealand;

▪ present fairly the Group’s financial position, financial performance and cash flows; and

▪ present fairly the Group’s performance.

The Board member’s responsibilities arise from the Crown Entities Act 2004 and the New Zealand Tourism Board Act 1991.

The Board members are also responsible for such internal control as is determined is necessary to enable the preparation of financial statements and 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 the performance information, whether in printed or electronic form.

Responsibilities of the Auditor

We are responsible for expressing an independent opinion on the financial statements and the performance information and reporting that opinion to you based on our audit. Our responsibility arises from the Public Audit Act 2001.

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 Group.

Stuart Mutch Ernst & Young On behalf of the Auditor-General Wellington, New Zealand

Sara Orme

75

76

Mike Heydon

77

Documents

Annual Report - Tourism New Zealand · partnering with international travel sellers and airlines, engaging with New Zealand tourism operators, providing ... the Tourism 2025 industry