Annual Report 2011 2012

Tourism New Zealand 2011/2012

annual report

Amos Chapple

11 million visits to newzealand.com from

244 countries

133,200 international fans and

media came for the 2011 Rugby World Cup

160,000 pass through the Tourism New Zealand Giant

Rugby Ball

Glacier Southern Lakes

2,635,726 international visitor arrivals

Additional partnership marketing spend of $25 million

485

participants on familiarisation trips

to New Zealand

Fraser Clements

Contents01/ Tourism New Zealand – Who We Are02/ Chair’s Report04/ Chief Executive’s Report 07/ Governance

09/ Board Members 10/ Executive Leadership Team12/ Statement of Service Performance23/ Tourism Outcomes

31/ Equal Employment Opportunities33/ Financial Statements66/ Audit Report

Rob Suisted

Tourism New Zealand is a Crown Agent governed by the Crown Entities Act (CEA) 2004. We were established by the New Zealand Tourism Board Act 1991, to market our country as an international visitor destination for the long term benefit of New Zealand.

We aim to improve tourism’s contribution to economic prosperity by growing the value of visitors to New Zealand. Our statutory functions under the CEA Act include:

• Develop,implementandpromotestrategiesfortourism.• AdvisetheGovernmentandtheNewZealandtourismindustryon

matters relating to the development, implementation and promotion of those strategies.

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 is carried out under the umbrella of the ‘100% Pure New Zealand’ campaign. The campaign was originally 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.

TourismNewZealandisgovernedbyaBoardofDirectors,whichdelegatesday-to-daymanagement of the organisation to the Chief Executive.

Tourism New Zealand has nine offices off-shore, two in New Zealand and

110 staff.

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I am delighted to present Tourism New Zealand’s Annual Report for the 2011/12 financial year. This past year was my first as Chair and it has been an extremely rewarding experience to play a role in such a significant sector.

When I started in August 2011 my main objective was to meet our key stakeholders and industry partners; totalkdirectlywithpeopleandhearfirst-handofourstrengths and weaknesses, and what challenges and opportunities were ahead.

Board-to-boardmeetingswereheldwithAirNewZealand, Auckland Tourism, Events and Economic Development(ATEED),andAucklandInternationalAirport. In April 2012, I joined Chief Executive Kevin Bowler in visiting six New Zealand cities and hosting ‘roadshow’ updates for the industry before attending my first TRENZ conference – New Zealand’s biggest annual international tourism event. It was a pleasure to meet with many of you and hear of what you seek from your national tourism organisation.

Having listened to your feedback, the Board and I are confident that the strategy in place at Tourism New Zealand will continue to deliver benefit to the industry and the wider economy.

There can be no argument that tourism is vitally important to New Zealand – it is our second biggest export earner contributing some $6.9 billion pa to ourGDP.Buttheindustryhasfacedsomesignificantchallenges this past year. For many of you, it has been more a matter of maintaining the status quo rather than achieving growth.

NewZealand-wide,wewereconfrontedwithcontinued economic challenges in Europe and the USA, and their impact on global travel trends. We markedtheone-yearanniversariesofChristchurch’sFebruary earthquake and the tsunami that struck the north-eastcoastofJapaninMarch.Bothcontinuetoinfluence visitor arrivals negatively. We have also witnessed the rise of new markets, with significantgrowthfromAsialookingsettoout-stripother markets but presenting yield issues, and with most arrivals tending to be short stay visitors. We also have some big competitors working hard to gain an edge.

Chair’s Report

KERRy PRENdERGASTTourism New Zealand Chair

That said, we have some incredible advantages and the strategic approach to leveraging these saw tourism arrivalsandstay-daysendtheyearingrowth.Wehavea strong brand and campaign that continues to deliver results. Used for over 12 years, our consistent promotion of 100% Pure New Zealand makes us well understood, recognisable and attractive to our target markets. We have maintained a very high level of visitor satisfaction with visitors to New Zealand rating their holiday experience on average 8.9 out of 10.

Havingcompletedtwoyearsofitscurrentthree-yearmarketing plan, Tourism New Zealand remains firmly focused on its primary objective: increasing the value of international visitors to New Zealand. Its strategy for the past year was centred on the following priorities.

Prioritising markets and sectors for growth

A tight focus on those areas that show the greatest potential for return has the organisation prioritising its efforts accordingly. Top tier markets of Australia, our largest source of arrivals, and China, the market showing the most impressive growth figures, received

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ChAiR’s RepoRT

the greatest attention. Our second tier markets of theUSA,UKandGermanyreflectthecontinuedimportanceoftraditionallong-haulwesternmarketstoNew Zealand. Attention has also been directed toward identified growth sectors of business events, youth and special interest travel.

Focus on preference and conversion

Our primary objective is to build preference for a New Zealand visit and convert that preference into actual travel. We have increased our understanding of our targetmarket-the‘activeconsiderer’ofNewZealand-andmuchofouractivitynowcontainsastrongdigitalcomponent enabling us to reach them in an effective and efficient manner.

Partnering to improve reach and effectiveness

Working in partnership with both private sector and local government was a key focus for the past year and has delivered strong results with an additional $25 million successfully leveraged to invest on marketing destination New Zealand in addition to Tourism New Zealand’s government appropriation.

WecontinuetoworkalongsideNewZealandMaoriTourism to ensure all our marketing activity is inclusive of that one element that makes New Zealand truly unique in the world. A closer working relationship with ImmigrationNewZealand,includingtwonewco-locations, has seen improvements to the visa process for a number of visitor markets. We are also working more closely with Education New Zealand and New Zealand Trade & Enterprise to ensure a more unified approach to attracting new investment and new arrivals into the country.

Leveraging events

2011 was the year we again proved our ability to maximise the attention received from great events. The success of the Rugby World Cup 2011 is the perfect example of what can be delivered when everyone works together for a common goal. Actual visitor arrivals at 133,200 significantly exceeded forecasts and Tourism New Zealand’s leadership of the visiting international media programme was held in high regard.

Supporting the recovery of Christchurch

Withtheone-yearanniversaryoftheFebruaryearthquake, we put a lot of effort into getting the message out that Christchurch and Canterbury can offer all visitors a wide range of unique experiences, and that people should continue to build the region into their travel plans.

Building organisational capability

Over the past year programmes were delivered that continue to support the development of our people. A keydevelopmentwasthecompletionoftheMission,Vision and Values work that will serve to galvanise the organisation around shared goals and aspirations.

I would like to extend my thanks to Kevin Bowler, his Executive Leadership Team and all the staff at Tourism New Zealand for their work over the past year.

I would also like to thank my Board for their continued supportandinparticular,ourout-goingBoardmembersGlenysCoughlanandPaulRichardsonforthe invaluable contributions they have made.

James Heremaia

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Chief Executive’s Report

KEviN BOWLER Tourism New Zealand Chief Executive

Ending the 2011/12 financial year with total visitor arrivals up 5.4 per cent on the previous year is a strong achievement in light of the challenges the industry has faced. Visitor numbers of 2.66 million over 12 months were achieved. Total stay days were also up, although not as significantly, by 1.4 per cent for the year. Visitor spend however has remained flat overall despite a 27 per cent increase in expenditure from the Chinese market. The high New Zealand dollar and unfavourable exchange rate has played a significant role in this result.

The industry has proven itself resilient over the past 12 months. However, it is also clear that if not for the Rugby World Cup 2011, a far weaker picture could have been painted.

ThefiscalyearendinginJune2012wascharacterisedby some very significant events and the continued impact of events from the year previous. We had the effects of the Christchurch earthquakes in 2010 and 2011toovercome.ThentherewastheJapaneseearthquake and tsunami. And if that was not enough,

we had a Chilean volcanic ash cloud that disrupted travel and poor snow to start our 2011 ski season. Nature has not been kind.

Thechallengescontinuedwiththeon-goingeffectsofthe European financial crisis and the unprecedented value being offered to Australian travellers by weaker currencies in Europe and the United States.

At a regional level, the grounding of the cargo ship Rena was an unexpected challenge for operators in the Bay of Plenty. Tourism New Zealand worked hard to convey the context of the event to its international audiences, reaffirming that although a significant issue for the local community, travellers to New Zealand would be largely unaffected. As with the earthquakes before, we put a lot of effort into getting the message out that only a small part of the country was impacted, and that visitors should still come.

Itwasalsoayearofpositiveevents-themostsignificant of course being the Rugby World Cup 2011, an occasion some five years in the making. We put a lot of emphasis on promoting New Zealand as both a host and destination, particularly through the use of

the giant rugby ball. Around 160,000 people viewed theball,acrossfouroff-shorecitiesandincludingalmost 96,000 people during its installation on the Auckland waterfront.

Duringthesix-weekCupevent,TourismNewZealand’s primary responsibilities were around making sure the media reported on more than just the rugby. Overall success came in the form of 59 media outlets hosted and some 180 print and television items appearing around the world on destination New Zealand – to pay for such publicity could have cost around $28 million.

Another event of significance was the visit of the Society of American Travel Writers (SATW) who held their annual convention in Wellington in November 2011. The visit of around 450 travel writers, publicists and associates generated a large volume of print, online and broadcast media coverage of the country. This was a terrific opportunity to showcase the New Zealand visitor experience to such a varied potential visitor audience. The convention was supported jointly by Positively Wellington Tourism, Tourism New Zealand and Air New Zealand. 04

05.06

In New Zealand’s markets we had Asia going from strength to strength and showing few signs of abating. The Asian economies performed extremely well this past year, with a 33 per cent arrivals increase from China,35percentfromMalaysia,20percentfromSingaporeand16percentfromIndonesia.Demandand interest in New Zealand is growing and our focus has been on ensuring we can meet the demand with quality product, adjusted to the needs of source markets. However challenges remain around growing themorevaluablemono-destinationandFreeandIndependent Traveller (FIT) sectors from China and ensuring a quality holiday experience is delivered once they are here.

Focusing on high growth sectors

Over the past year, Tourism New Zealand increased its strategic focus on specific sector marketing – looking beyond the country markets that deliver opportunities for growth, and focusing on targeted sector groups as well. In particular, attention was turned to Business Events. We assumed responsibility for the Conference AssistanceProgramme(CAP)onbehalfoftheMinistryofBusiness,InnovationandEmployment(MBIE)andconverted five successful conference bids, a promising start. We introduced a new campaign for business events and are working more closely with the industry to achieve growth in the number of international meetings, incentives, conferences and events hosted in New Zealand.

The youth market became another key focus. Travellersaged15-29makeupaquarterofallarrivalsinto New Zealand and tend to be high value. As a group they stay longer than the average visitor, travel and spend across the regions and are more likely to returnbringingotherswiththem.Theroll-outofour“StoriesbeatStuff”on-linecampaignisbasedonthe

idea that personalised recounts of a New Zealand holiday will motivate others to travel here. The entirely digital and social media campaign has exceeded all expectations and is providing a significant base of shared stories that can be used to promote unique experiences to a wider audience of potential young travellers.

Partnerships are critical to our success

Strong and effective partnerships are essential to our strategy, and remain vital to meeting our goals. Our experience has shown that a partnership approach in campaign investment can increase our performance and reach.

In particular, our key strategic partnership with Air New Zealand continued to deliver results over the year for each of us. Our joint venture campaigns in China and the USA in particular and complementary use of ‘Opinion Leaders’ has helped maximise advertising investment, increase trade and consumer engagement for both partners, and drive referrals through social media. In 2012 our conversations have been heavily focused on how we are partnering around The Hobbit to maximise visitor outcomes for New Zealand.

This past year has provided solid evidence of the success that can be achieved in growing air capacity when a partnership approach is taken. China Southern Airlines have gone from strength to strength, moving toadailyservicebetweenGuangzhouandAucklandin November 2011, just six months after entering the market in April 2011. The huge increase in visitor numberswesawoutofMalaysiawiththearrivalofAir Asia X direct from Kuala Lumpur to Christchurch demonstrates there is demand in the region to be tapped into. Sadly, matters beyond our control continue to have a great influence on the future of

some routes and the Air Asia X service could not be sustained. We look forward to the coming year and workingalongsideHawaiianAirlinesandGarudaInternational both of whom have indicated plans to enter the New Zealand market.

At a regional level, we have been working more closely with the Regional Tourism Organisations, having taken the approach of supporting fewer but larger, more synchronised and consumer driven campaigns with multiple partners. The first of these – The South Island RoadTrips-wasoneofthemostsignificanttrans-Tasman promotions of 2011 and was born out of a need to ensure the South Island remained a popular tourist destination for Australians, post the earthquakes. It was undertaken in association with Christchurch and CanterburyTourism,DestinationQueenstown,LakeWanakaTourism,TourismDunedinandChristchurchInternational Airport along with a number of New Zealand and Australian based travel trade.

The campaign surpassed all online targets generating over160,000visitstonewzealand.comandover43,000referrals to travel sellers. The success of this campaign will see more of this style replicated in other markets.

Digital marketing remains a core focus

DigitalmediachannelsarevitallyimportanttoTNZ’sstrategy: they enable us to reach a large and targeted international audience and engage with people consideringavisittoNewZealand.newzealand.comisstill the centrepiece of our marketing and all campaigns send visitors to the website. It is a key place for people to be informed and inspired about our country.

June2011sawthelaunchofthelatestevolutionofnewzealand.comcreatingamarketplacewherepeopleseeking a tourism product could link directly to those

Chief exeCuTive’s RepoRT

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selling one – with the site serving to convert the “potential” into “actual”. There are 16 editions of the site in five languages. Over the past year we listened to what users and the industry told us about the site, conducted significant user testing on improvements and continued to make changes.

We ended the 2011/12 year with site visitor numbers remaining steady but those who do visit being more engaged, viewing more pages and returning more often. Referrals direct to our partners are up 13 per cent on the year before – a key success for the site. newzealand.comwillcontinuetoevolveoverthecoming year as we seek to continually improve its performance.

For many of our active considerers, people already considering New Zealand for a holiday, social media is a key channel for reaching them. The ability for visitors to share their personal stories over social media also presents a huge new opportunity that we leverage in our digital marketing activity. The use of Facebook and Twitter is significant for us and it is about driving trafficbacktonewzealand.comwherethereismoreexposure to operators and travel sellers. Over the past year, through targeted fan acquisition, the 100% Pure New Zealand social channels have acquired 250,000 new fans to reach a total fan base of 713,065. This increased fan base now allows our content to fuel nearly 500,000 social media stories in Facebook alone with top posts reaching 300,000 unique people.

Operations

Atanoperationallevel,afocusonback-officecostreductions saw us achieve a 15 per cent saving. We reconfigured the layout of the Wellington office, reducingthespacerequiredandsub-lettingtherest.We also closed smaller outposts in Christchurch and

Hong Kong. In other locations we have sought to share office space with other NZ Inc. agencies where appropriate.

We completed a thorough audit of our global IT systems and providers, with subsequent changes resulting in a $1 million saving in IT and telecommunications expenses and delivering improved servicestostaff.Moredevelopmentisplannedthatwillno doubt improve efficiencies further. We have moved to an enhanced IT product suite that includes instant messaging, desk top video over IP, a new application for global document management and in the year ahead, a new customer relationship management system.

Acknowledgements

I would like to add my thanks to all the team at Tourism New Zealand for their hard work over the year and commitment to excellence. Our people consistently demonstrate an unwavering belief in New Zealand, an innovative approach to their work, a drive for results and a global sense of community in a manner that defines this organisation.

I would also like to thank Board members both past andpresentfortheiron-goingsupportandinparticularour new Chair Kerry Prendergast.

The coming year is already shaping up to be an exciting one for the industry with the first of the highly anticipated Hobbit films being released and Wellington the host for the global premiere. Our 100% Pure New Zealand campaign is still going strong and I am confident that with a collaborative and targeted approach to marketing New Zealand tourism, we will continue to see positive results for the industry.

Chris Sisarich

Chief exeCuTive’s RepoRT

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The Board

The 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 appointedbytheMinisterofTourism.Alldecisionsrelating 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.

TheMinister’sformallineofaccountabilitywithTourism 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-daymeetingtoreviewtheorganisation’songoingstrategic direction. This strategy meeting initiates the business planning process and informs the preparation of the annual Statement of Intent.

Delegation

TheBoarddelegatesday-to-daymanagementofTourism New Zealand to the Chief Executive who is directly accountable to the Board through the Chair. TourismNewZealand’sDelegatedAuthoritiesPolicyis set by the Board and reviewed annually.

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

Induction and Development

Tourism New Zealand introduces each new board member to the organisation through an induction process which includes time spent with senior executivesandtheirteams.Membersarealsoencouraged,whereappropriate,toattendtourism-related events such as TRENZ.

Conduct

Tourism 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.

Governance

Disclosure of Interests

The Board is conscious of its obligations to ensure that board members avoid any conflicts of interest in theirdecision-makingprocess.TheBoardensuresthat proper process is followed and that members’ interests are formally recorded, with any changes or additions being disclosed at the start of each meeting. Membersexcusethemselvesfromanydiscussionsinwhich their duty as a member could be compromised.

Risk Management

Tourism 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.

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Board Committees

Committees 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 the New Zealand equivalent to International Financial Reporting Standards (IFRS).

The Remuneration Committee meets on a quarterly basis or more as required. It reviews the performance and remuneration of the Chief Executive and senior management. The committee also approves proposedorganisation-wideremunerationpolicies.

Subsidiary Companies

Tourism New Zealand has a controlling interest in two subsidiary companies: a 60 per cent shareholding inQualmarkNewZealandLimited,and,(throughtheterms and conditions of a relationship agreement that meets the criteria determined in NZ IAS 27 for consolidating investments in subsidiaries), the Visitor InformationNetworkIncorporated,tradingasi-SITENew Zealand.

Three of Tourism New Zealand’s Executive Team, including the Chief Executive, are directors of Qualmark.TourismNewZealandappointsthreememberstothei-SITENewZealandBoard,includingone 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.

The Board would like to thank immediate past membersGregMuir,GlenysCoughlanandPaulRichardson who retired this past year.

GoveRNANCe

Fraser Clements

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JOhN BARRETT

JohnisManagingDirectorofKapiti Island Alive and Kapiti NatureLodge,afamilyeco-tourism operation based on Kapiti Island.

He is currently Chairman of theWellingtonRegionalMaori

Tourism organisation, Te Ara a Maui.HealsositsontheBoardsoftheAviation,Tourism and Travel Training Organisation (ATTTO) andanumberofnon-tourismrelatedorganisations.

JohnwasreappointedtotheNewZealand Tourism Board on 1 February 2010 for a second three-yearterm.

JENNiE LANGLEy

JenniewasappointedIndependent Chair of the New Zealand Hotel Council (NZHC) in 2007, after four years as Chief Executive Officer. She is a director of her consultancy company,JLAssociatesLtd,

and a member of the Biosecurity MinisterialAdvisoryCommittee.

JenniehaspreviouslyheldrolesasadirectorofPositively Wellington Tourism, the New Zealand Wool Board, Opus International Consultants and has served as a local government councillor in Hawke’s Bay.

JenniewasappointedtotheNewZealandTourismBoardin2009forathree-yearterm.InAugust2012she was appointed to a further term which expires in April 2014.

RiChARd LEGGAT

Richard has a varied background across business, marketingande-commerce.He is currently employed in a sales and marketing role for a leading provider of e-commercesolutions.

Richard is the chairman at BikeNZ, the organisation that supports the development of cycling in New Zealand and is on the Board of New Zealand Post. He is also a founding committee memberoftheEatingDisorderAssociationofNewZealandandchairedtheParnellDistrictSchoolBoardofTrusteesuntilDecmber2011.

Richard was appointed to the New Zealand Tourism Boardon1February2010forathree-yearterm.

KERRy PRENdERGAST Chair

Kerry was appointed as Chair of the New Zealand Tourism Board on 15 August 2011 for athree-yearterm.

SheistheformerMayor of Wellington and former

Vice-PresidentofLocalGovernmentNewZealand.

SheholdsanMBAspecialisinginMarketingand Strategy.

Kerry is currently Chair of the Environmental Protection Authority, the New Zealand International Arts Festival Trust,andtheWellingtonJazzMusicFestivalTrust.SheisalsoaDirectorofKirkcaldie&StainsandisaTrusteeof the New Zealand Community Trust.

MALCOLM JOhNS deputy Chair

MalcolmisChiefExecutiveofIntercityGroup(NZ)Limited,parent company of InterCity and Newmans Coach Lines, GreatSights,FullersBayofIslands,KingsDolphinCruises

and Eco Tours.

MalcolmhasextensivecommercialexperiencehavingheldseniorroleswithDiscoverCanadaHolidays,JasonsTravelMedia,TourismHoldings and Hyatt International Hotels and Resorts.

MalcolmwasreappointedtotheNewZealandTourism Board on 8 October 2010 for a second three-yearterm.

hENRy vAN ASCh

Henryco-foundedAJHackettBungy with business partner AJHackettbeforefoundingBungy New Zealand in 1997, where he remains a director.

Henry oversees ownership and operation of the Bungy

NewZealandGroup(whichincludesAJHackettBungyand

Auckland Bungy & Bridge Climb) along with his latest ventures: the High Plains Wine Co and The Winehouse & Kitchen Restaurant.

Henry was appointed to the New Zealand Tourism Board on 1 September 2008. In August 2012 he was appointed to a further term which expires in April 2014.

Board Members

NB:GregMuirwasChairmanof the New Zealand Tourism Board until August 2011. He was replaced by Kerry Prendergast. GlenysCoughlanwasamemberof the New Zealand Tourism Board until her second term expired in April 2012. Paul Richardson was a member of the New Zealand Tourism Board until resigning to take up anoffshoreroleinJune2012.In August 2012 the pair were replaced on the New Zealand TourismBoardbyJohnThorburnandJennBestwick.

BoARd memBeRs

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As Chief Executive Kevin has responsibility for the delivery of

the organisation’s strategy.

His marketing and business leadership experience spans fast moving consumer goods,

technology, and media brands in New Zealand and overseas.

Prior to joining Tourism New Zealand in early 2010, KevinwasCEOforstart-upYahoo!Xtra.

GreggoverseesTourismNew Zealand’s strategy and activities in the markets of North America and Europe.

His teams, based in London and Los Angeles, deliver trade

marketing, consumer marketing and international PR activities.

Gregghasspentover17yearsinregionalmanagement and marketing roles in Tourism New Zealand offices.

Catherine is responsible for the integration of Tourism New Zealand’s brand, international PR and marketing insights.

She also leads www.newzealand.com,Tourism

New Zealand’s consumer travel website.

Catherine has worked for Tourism New Zealand for 17 years.

exeCuTive leAdeRship TeAm

Rose joined in April 2012 and is responsible for developing

and implementing the organisation’s human resources management strategy.

Her team delivers recruitment, capability development and talent

management, remuneration and reward initiatives and performance management.

Rose joined Tourism New Zealand from AXA and her career has included senior HR and leadership roles in New Zealand and the United Kingdom.

ROSE FORd General Manager human Resources

KEviN BOWLER Chief Executive

GREGG ANdERSON General Manager Western Long haul Markets

CAThERiNE BATES General Manager Brand and international PR

Tim oversees Tourism New Zealand’s strategy and activities in Australia.

His team delivers trade marketing, consumer

marketing and international PR activities in this market.

Tim joined Tourism New Zealand from TourismBayofPlentywherehewasGeneralManager.TimpreviouslyworkedwithTourismNewZealandasitsMediaPlanningManagerfrom2000to 2005.

TiM BuRGESS General Manager Australia

Tony rejoined Tourism New Zealand in April 2012, and is

responsible for the leadership and management of Tourism New Zealand’s Asian operations.

His team delivers trade marketing, consumer marketing

and international PR activities in these markets.

Tony has had an extensive career in tourism most recentlyastheChiefExecutiveofDestinationQueenstown.

TONy EvERiTT General Manager Asian Markets

Executive Leadership Team

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BoARd memBeRs / exeCuTive leAdeRship TeAm

Executive Leadership Team

PAuL yEO General Manager Tourism Operations

Paul oversees the organisation’s industry and trade relationships, infrastructure and quality covering Qualmark,i-SITEsandtheChinaMarketDevelopment

Unit, which monitors the quality of services provided to the

ChineseGroupTourmarket.

SuE PARCELL General Manager Finance and iT

Sue 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.

JuSTiN WATSON General Manager Marketing Communications

JustinmanagesTourism New Zealand’s consumer marketing and advertising activity.

He also oversees Tourism New Zealand’s business

development activities which include trade marketing,

conferences and incentives, cruise and airline partnerships.

ReportingtoJustinarespecialistteamsworkingfrom New Zealand and offshore offices.

exeCuTive leAdeRship TeAm

Fraser Clements

NB: Tourism New Zealand’s GeneralManagerPublicAffairsleftinMarch2012.Thisrole,andthatofGeneralManagerTourismOperationswerecombinedandChrisRobertswasappointedtothenewpositionofGeneralManagerCorporateAffairs,inJuly2012.

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Statement of Service Performance - 2011/2012

Overview

ThisreportcoversTheNewZealandTourismBoard’s(tradingasTourismNewZealand)serviceperformancefortheyearending30June2012againsttheforecaststatementofactivities,performancemeasuresandstandardssetoutinTourismNewZealand’sStatementofIntent2011-14.

Tourism New Zealand’s resource allocation decisions were based on the extent to which each proposed activity would contribute towards the delivery of outputs and outcomes describedintheStatementofIntent2011-14.

In 2011/12, Tourism New Zealand’s activities were funded primarily from one appropriation within Vote Tourism.

1 Other revenue includes bank interest, partner revenue, excludes foreign exchange gains.2 Total expenses include use of retained earnings, excludes foreign exchange losses.3ResponsibilityandfundingforthedeliveryoftheConferenceAssistanceProgrammefund(CAP)wastransferredtoTourismNewZealandin2011/12bytheMinistryofEconomicDevelopment(nowtheMinistryofBusiness,InnovationandEmployment)4 The difference between Budget and Actual revenue and expenditure is due to higher than budgeted revenue from joint venture partnerships.

Appropriation 1: Marketing of New Zealand as a Visitor Destination

Crown Revenue $93,931 $83,861 $83,861

Other Revenue1 $6,719 $3,089 $5,669

Total Expenses2 $100,547 $86,950 $89,632

Appropriation 2: Marketing of New Zealand as a Visitor Destination through Joint Ventures

Crown Revenue $5,000 $0 $0

Expenses $4,983 $0 $0

Appropriation 3: Implementation of the Tourism Strategy

Crown Revenue $430 $0 $0

Expenses $430 $0 $0

Other Crown Revenue: Conference Assistance Fund3

Crown Revenue $0 $0 $354

Expenses $0 $0 $354

Total Revenue4 $106,080 $86,950 $89,884

Total Expenses $105,960 $86,950 $89,986

2011Actual$000s

2012Budget $000s

2012Actual$000s

TOuRISM NEw ZEALAND FuNDINg

STATEMENT OF SERviCE PERFORMANCE

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Output Class Performance

In 2011/12, Tourism New Zealand delivered the following five output classes: 1. Marketing2. Working with overseas travel trade and airlines3. Informing, and engaging with, New Zealand’s tourism industry4. Information for visitors, and5. Qualityassurance

TheseoutputclasseswerefundedprimarilythroughAppropriation1:MarketingofNewZealandasaVisitorDestination.

1 New Zealand and Offshore Support Costs support the delivery of all five outputs.

Appropriation 1: Marketing of New Zealand as a Visitor Destination

OutputClass1:Marketing $56,157 $58,965

Output Class 2: Working with overseas travel trade and airlines $6,362 $5,793

Output Class 3: Informing, and engaging with, the NZ tourism Industry $739 $809

Output Class 4: Information for visitors $3,059 $3,500

OutputClass5:Qualityassurance $505 $365

Other Crown Revenue: Conference Assistance Fund

Output Class 3: Informing, and engaging with, the NZ tourism Industry $0 $234

New Zealand and Offshore Support Costs1 $20,128 $20,320

Total $86,950 $89,986

2012Budget $000s

2012Actual$000s


OuTPuT CLASS FuNDINg

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OuTPuT CLASS 1: MARKETiNG

MarketingisTourismNewZealand’slargestoutputexpenditure.TourismNewZealanddeliversarangeofmarketingoutputswhichbroadlyfitintothecategoriesofcampaignandmarketresearch.

Campaign

TheimplementationofTourismNewZealand’sthree-yearmarketingstrategyin2009/10,shiftedfocusawayfromraisingawarenessofNewZealandthroughpredominatelymassmediaadvertising campaigns, towards reaching people actively considering New Zealand as their next holiday destination and converting them into actual visitors.

Activity primarily uses advanced digital marketing tools such as; investing in paid search engine advertising, optimising online search results, and developing and running online display campaigns. Tourism New Zealand has an increased focus on joint venture activity with industry partners.

JointventuremarketingenablesTourismNewZealand’smessagingtobepackagedwithsomethingpotentialvisitorscanbuy,extendingmarketingreachthroughmatchedfunding,andexpanding and maintaining air capacity from key tourism markets.

Communication channels such as international public relations (PR) deliver brand messages through third parties (e.g. opinion leaders, media) to contribute to New Zealand’s popularity and accessibilityasadestinationandtostrengthenconversion.Digital,PRandtradeactivityisintegratedtoimprovethesynergyandeffectivenessofourcampaigndelivery.

Market research

Marketresearchactivitiesfocusedonprovidingcoreintelligenceandevaluationinputintothedevelopmentofmarketingcampaigns.


14

OuTPuT CLASS 1: MARkETINg

CAMPAIgN

Quantity measures Performance Status

Australia campaign activityTarget: 8partnered,4digital,SearchEngineMarketingalwayson

22 partnered, 15 digital campaigns deliveredSearchEngineMarketing:Alwayson

Achieved

China campaign activityTarget: 6partnered,2digital,SearchEngineMarketingalwayson

6 partnered, 3 digital campaigns delivered SearchEngineMarketing:Alwayson

Achieved

USA campaign activityTarget: 5partnered,2digital,SearchEngineMarketingalwayson


Achieved

UK campaign activityTarget: 4partnered,2digital,SearchEngineMarketingalwayson


Achieved

GermanicEuropecampaignactivityTarget: 4partnered,2digital,SearchEngineMarketingalwayson


Achieved

JapancampaignactivityTarget: 6partnered,2digital,SearchEngineMarketingalwayson


Achieved

Partnership funds committed to coordinated marketing activityTarget: Regional Tourism Organisation (RTO) partnerships $1:$1 Aviation partnerships $1:$1

Ratio:RTOs: $1:$0.5

Aviation: $1:$1 Financial contributions received from partners: $13.97m

Non-financialcontributionsreceivedfrompartners: $2.18m

Partially achieved

(see comment below)

PR impressions in print and broadcast in TNZ marketsTarget: Amount of quarterly coverage received; broadcast (minutes), print (number of pages). BaselinedatatobecollectedinFY12

Broadcast: 1045 minutesPrint: 1220 pages

Benchmarking data collected

Active Considerers associate NZ with key brand attributes of popularity, fun and making NZ seem more accessibleTarget: 60% key messages included in print and broadcast outputs

89% of print and broadcast outputs included key messages

Achieved

Equivalent advertising value (EAV) of print and broadcast in TNZ marketsTarget: AmountofquarterlyEAVreceived;broadcastandprintcoverage($NZD). BaselinedatatobecollectedinFY12

Broadcast and Print: $74m1 Benchmarking data collected

1 DoesnotcaptureEAVfromUSbroadcastprojects

Comment: A campaign targeting Australian visitors was delivered in partnership with a number of Regional Tourism Organisations (RTO). The ‘South Island Road Trip’ campaign was particularly successful and led Tourism New Zealand to increase its level of funding. This led to the RTO partnership funding ratio not being maintained.


15

OuTPuT CLASS 1: MARkETINg

CAMPAIgN

Cost effectiveness measures Performance Status

Cost Per Acquisition: online displayTarget: Australia$3-$3.50 China$1.00-$1.50 NorthAmerica$8.00-$10.00 UK$3.00-$3.50 Germany$5.00-$5.50 Japan$5.50-$6.00

Australia: $5.10China: $1.25

North America: $11.10UK: $9.05

Germany:$6.75Japan:$3.62

Partially achieved

(see comment below)

Cost Per Acquisition: online searchTarget: Australia:$1.50-$2.00 China$0.50-$1.00 NorthAmerica$3.50-$4.50 UK$0.50-$1.00 Germany$1.50-$2.50 Japan$2.00-$3.00

Australia: $1.88China: $0.68

North America: $2.32UK: $1.35

Germany:$1.38Japan:$1.85

Achieved

Campaign Return on Investment (ROI)2 ($Spend: $Value generated)Target: BaselinedatatobecollectedinFY12

Australia: 1:20 ROI from 1 campaign China:ChinaJVandPartnership

development 1: 32.8North America: 1:14.5 average ROI from 4

campaignsJapan:1:6.7averageROIfrom5campaigns

Benchmarking Datacollected

2 ROI is calculated by: (passengers booked) x (average visitor spend for market) / campaign spend. This generates a ratio that shows for every dollar we spent we generated ‘x’ amount of value. ROI can only be provided on partnered campaigns where Tourism New Zealand has a line of sight through to bookings. ROI relates to campaign spend only and is not a measure for Tourism New Zealand activity at an outcome level.

Comment: A number of factors attributed to the Cost Per Acquisition targets for online display advertising not being met in some markets. These include:

- UK,increasedcostsassociatedwithsponsoringapopulartravelwebsite.Whiletheactivitywasmoreexpensiveitdeliveredamoretargeteduserandamoreengagingformatforourbrand message.

- Australia,TourismNewZealandpurchasedhigh-reachplacementstoraiseawarenesssuchasthefrontpageoftheonlineSydneyMorningHerald,whichgeneratedmassawarenessand impressions at a higher overall Cost Per Acquisition.

- Germany,theuseofrichmediaplacementstoprovideamoreinteractiveformatforbrandcommunicationswiththegoalofdrivinginteractionratherthanastraightclicktonewzealand.com, which it delivered above target.

- NorthAmerica,Costofacquisitionfromdisplaywasabovetargetduetotheheavyuseofrichmediaplacements,primarilyduringQ2,whichwereusedtosupportthelaunchofthreevideoadsanddeliveredaninteractiveexperiencewithintherichmediaplacement.Aclicktonewzealand.comwasnottheprimarysuccessmetricfortheseplacements.


16

OuTPuT CLASS 2: WORKiNG WiTh ThE OvERSEAS TRAvEL TRAdE ANd AiRLiNES

Travel trade training and trade events

DeepeningtravelsellercapabilitytosellNewZealandasadestinationisanimportantwayofdrivingmoreconversionofvisitorstoNewZealand.TourismNewZealanddeliverarangeoftraining outputs aimed at enabling overseas travel sellers to more effectively sell ‘destination New Zealand’ to potential visitors in their market.

Trainingisprovidedusingavarietyofapproaches,including:facetofaceandonlinetrainingtothetraveltradethroughnewzealand.com/travel/trade,familiarisationexperiencestooverseas travel sellers, and maintaining and updating Tourism New Zealand’s travel trade website.

TourismNewZealandalsoorganisestraveltradeeventsandco-ordinatesparticipationbytheNewZealandtourismsectoratinternationaltradeshows.

Comment:DuetoanoveruseofwebinarsinEurope,TourismNewZealanddecidedtoshiftfocusawayfromwebinarsandincreasetheemphasisonfacetofacetraining.InNorthAmerica,technical difficulties delivering webinars led to a review of how webinars are delivered. Following the review, an increase in the number of participants trained was observed in the second half of the year, however, the annual target was not achieved.

OuTPuT CLASS 2: wORkINg wITh OVERSEAS TRAVEL TRADE AND AIRLINES

TRAVEL TRADE TRAININg AND TRADE EVENTS


Successful travel module completions Target: 12,500

14,272 travel modules completed Achieved

Face to face trainings delivered and number of participants trainedTarget: 200 delivered 6,500 participants

137 delivered6891 participants

Substantially Achieved

Webinars delivered and number of participants trainedTarget: 50 delivered 2,000 participants

17 delivered1147 participants

Not achieved (see comment

below)

Trade on TNZ hosted familsTarget: 160

486 hosted Achieved

Famils that feature a cultural elementTarget: Benchmarking year

26familsoutof42includedMaoritourismproduct

Benchmarking data collected

Trade events attended by TNZTarget: Minimumof10

33 attended Achieved

Trade events organised and facilitated by TNZTarget: Minimumof5

11 organised/facilitated Achieved

People ‘confident’ or ‘very confident’ in selling destination NZ after TNZ trade trainingTarget: 90%

97.8% confident or very confident Achieved

People ‘confident’ or ‘very confident’ in selling destination NZ after TNZ trade eventTarget: 85%

99.5%confidentorveryconfidentYTD Achieved


17

OuTPuT CLASS 3: iNFORMiNG, ANd ENGAGiNG WiTh, NEW ZEALANd’S TOuRiSM iNduSTRy

Publications, websites and engagements

Tourism New Zealand informs and engages with the New Zealand tourism industry, by helping the industry maintain a good understanding of changing markets, Tourism New Zealand’s strategy, and key opportunities around selling the New Zealand tourism product and brand effectively. Tourism New Zealand promotes a collaborative industry approach to achieving industry outcomes. Key outputs include:

- Publications,includingtheregulardeliveryofTourismNewse-bulletins,andtheAnnualReport.- Thecorporatewebsite(tourismnewzealand.com)whichprovidestheindustrytimelyinformationonrecentactivitythroughmediareleases,informationonevents,tourismsourcemarkets,

Tourism New Zealand campaigns and objectives. - Speakingengagements,includingpresentationsatconferencesandseminarsthatupdatemembersonchangeswithintheglobalindustryandthespecificconsequencesthiswill

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 the aviation sector

Tourism New Zealand maintains agreements with aviation and airline partners, and also seeks out new agreements where they are in accordance with Tourism New Zealand’s aviation strategy. Under these agreements, partnered marketing campaigns are delivered that support aviation routes critical to maintaining and developing tourism.

*Note:Financialandnon-financialcontributionsincludepartnercontributionsfromnon-aviationpartners.

OuTPuT CLASS 2: wORkINg wITh OVERSEAS TRAVEL TRADE AND AIRLINES

wORkINg wITh ThE AVIATION SECTOR


Partnership funds committed to coordinated marketing activityTarget ratio: Aviation partnerships $1:$1

Ratio: Aviation: $1:$1 Financial* contributions received from

partners: $13.97mNon-financial*contributionsreceivedfrom

partners: $2.18m

Achieved


18

Comment:DuringQ1,TourismNewZealanddecidedtoreducethefrequencyofe-bulletinsfromfortnightlytomonthlywhileareviewofthiscommunicationwasundertaken.Followingthereview,thedecisionwastakentoreducethenumberofe-bulletinstomonthlyonapermanentbasis.

OuTPuT CLASS 3: INFORMINg, AND ENgAgINg wITh, NZ TOuRISM INDuSTRy

PuBLICATIONS, wEBSITES AND ENgAgEMENTS


E-bulletinspublishedquarterlyTarget: 6 per quarter

14 published Not achieved(see comment

below)

Averagenumberoftotalvisitstotourismnewzealand.compermonthTarget: Maintainmonthlyaverageof24,000

Monthlyaverage:26,652 Achieved

Averagetimespentperpersonontourismnewzealand.comTarget: Maintainover2minsand30secs

Average time spent on site: 2mins and 35 seconds

Achieved

Openrateofe-bulletinsTarget: Maintainover30%

34% open rate Achieved

Stakeholders consider engagement valuable Information for visitorsTarget: 95% rate engagement as ‘3’ or higher on a 5 point scale

96% of stakeholders who responded to surveys rate engagement as valuable

Achieved


OuTPuT CLASS 4: iNFORMATiON FOR viSiTORS

TourismNewZealand’sactivitieswithinthisoutputclassincludeutilisingnewzealand.com,TourismNewZealand’sconsumerwebsite,toconnectandengagewithpotentialvisitorstoNZandensuringthati-SITESmeetthequalitystandardsthatareamembershiprequirement.

websites (newzealand.com)

TourismNewZealand’sconsumerwebsite,newzealand.comperformsadualrole.AsamarketingtoolthewebsiteisusedtoconvertActiveConsiderers’preferenceforNewZealandintoactual travel and secondly, the site has a role to enable visitors to engage with one another and with travel sellers to source information and advice.

19

i-SITE

i-SITENewZealandisasubsidiaryofTourismNewZealand,governedbyaBoardofDirectors(threeofwhomareappointedbyTourismNewZealand).Thesubsidiaryistheownerofthei-SITEbrandandlivery.TourismNewZealandprovidesstaff,supportservices,businesssystems,trainingtolocali-SITEnetworkstaffandmarketingforthei-SITEnetwork.TourismNewZealanddoesnotholdanownershipstakeinanyi-SITEcentre.

i-SITENewZealandhasestablishedthemembershipstandardsthatindividualcentresmustachievetousethei-SITEbrand,andbecomeapartofthenetworkofcentres.Thesestandardsareenforcedbysiteinspectionsofthecentresbyi-SITEstaff.

Comment:Visitstonewzealand.comweredownagainsttargetsasTourismNewZealandmarketingactivity,primarilyinChina,drovemorepaiddigitaltrafficdirecttopartnersitesratherthannewzealand.com.Overtheyear,directingtrafficdirecttopartnersiteswasaconsciousdecisionbyTNZinpartwhilenewzealand.comwasupgradedandalsototakeadvantageofpartnership opportunities.

3 Ascampaignactivityseekstodrivevisitstonewzealand.com,itisexpectedmorevisitswillbeachievedwhenTNZisheavilyactiveinmarket.ToreflectwhenTNZ’speriodsofhighcampaignactivityare,quarterlytargetsforvisitationtonewzealand.comhavebeendevelopedtoshowhowthefullyearvisitstargetwillbeachievedacrossthequarters.

OuTPuT CLASS 4: INFORMATION FOR VISITORS

OuTPuT CLASS 4: INFORMATION FOR VISITORS

wEBSITES (NEwZEALAND.COM)

I-SITES


Averagenumberoftotalvisitstonewzealand.compermonth3

Target: FY12monthlyaverage:1.35mQ1target:2.59m(monthlyaverageof:864,000);Q2target:4.86m(monthlyaverageof:1.62m);Q3target:5.18m(monthlyaverageof:1.73m);Q4target:3.56m(monthlyaverageof:1.19m)

906,064 average monthly visits Not achieved(see comment

below)


i-SITESassessedagainstnetworkmembershipstandardsTarget: 100%(all91i-SITESareassessed)

59(65%)i-SITESassessedNote:AgreementreachedwithQualmarktoassess100%ofi-SITEsduringthe2012calendar year as this is the period of the QualmarkLicenceHolderAgreement

On track

Levelofusersatisfactionwithi-SITETarget: At or above 9.0/10

i-SITEusersatisfaction:8.7/10 Not achieved(see comment

on pg21)


20

Comment:Currently,useofi-SITEScollectivelyisdeclining,partlyduetoadropinarrivalnumbersfromlonghaulWesternmarketswhohavehistoricallybeenhighusersofi-SITES.Inaddition,touristsarenotusingi-SITEStobookasoften,possiblyduetoimprovedonlinebookingaccessincludingsmartphones,andareincreasinglyusingthemtosimplycollectinformationbeforemakingbookingsdirect.Thesetrendsarepredominantlyoutsidetheabilityofi-SITEtoinfluenceandmaybeimpactingonthelevelofsatisfactionofthei-SITEproduct.

Overallsatisfactionwithi-SITEsin2011/12was8.7/10.Thiscomparestoascoreof8.6/10forthesameperiodinFY11.These results confirm that the goal of 9.0/10 is a challenging target.

OuTPuT CLASS 5: QuALiTy ASSuRANCE

Qualmark

QualmarkNewZealandLtdisajointlyownedsubsidiaryofTourismNewZealand(60percent)andtheAutomobileAssociationofNewZealand(40percent).TourismNewZealandprovidesfunding,governanceandsomemarketingsupportforQualmark.

Qualmarkprovidesqualityassuranceservicestoaround2,300NewZealandtourismbusinessesbyprovidingastargradingsystemforarangeofdifferentcategoriesincludingaccommodation and venues, and an endorsement system applied across five categories including activities, transport, tour operators, visitor information centres and services. QualmarkalsogivesrecognitionforexcellenceinenvironmentalbusinesspracticethroughEnviroaccreditation.

OuTPuT CLASS 5: QuALITy ASSuRANCE

QuALMARk


AnnualnumberofQualmarklicencesheld4

Target: Average over 2,300

Average: 2260 licences held Partially achieved

(see comment below)

Qualmarklicensees’satisfactionwithQualmarkservice/programmeTarget: Qualmarklicensees’satisfaction:65%

Qualmarklicensees’satisfaction:48% Not achieved(see comment

below)

SatisfactionofvisitorswhousedQualmarkservicescomparedtonon-QualmarkservicesTarget:Maintainatorabove9.0/10andabovesatisfactionlevelsofnon-Qualmarkusers

Qualmarkuserssatisfaction:9.0/10non-Qualmarkuserssatisfaction:8.9/10

Achieved

Comment:AverageQualmarklicencestrendeddownslightlythroughout2011/12,adirectresultofQualmarkinitiatedlicencecancellationsduetostandardiseddebtorcollectionpractices.ThereisalsoanunderlyinglackofperceivedvalueandreturnoninvestmentbysomelicenseesthatisakeyobjectiveforQualmarktoovercome.Theresultwasalsoimpactedbytheon-going effects of the earthquakes in Christchurch in 2010 and 2011.

ThislackofperceivedvalueislikelyreflectedintheQualmarklicensees’satisfactionwiththeQualmarkprogramme.Howeveritisworthnotingthatwhilethetargetwasnotmet,only15percentoflicenseesweredissatisfiedwiththeprogrammewithafurther37percentnothavingafirmopinion.Positively,74percentoflicensee’sconsideredthatQualmarkwasimportanttotheir business.


4 KPIwordingamendedfromannualnumberofQualmarklicenceholderstolicencesheld,toclarifythatTourismNewZealandarecountingnumberoflicencesheldnotlicenceholders.21

OuTPuT CLASS 5: QuALITy ASSuRANCE

APPROVED DESTINATION STATuS (ADS)


NumberofADS‘spotchecks’and‘mysteryshoppedoperators’Target: 150 spot checks20 mystery shops

71 spot checks5MysteryShops

Not achieved (see comment

below)

Timeliness measures Performance Status

NewADSapplicationsprocessedwithintimeframesTarget: 100% of new applications processed within 90 working days (on receipt of all necessary information)

100% of new applications processed within 90 working days

Achieved

ApplicationsforADSrenewalsprocessedwithintimeframesTarget: 100% of renewals processed within 30 working days (on receipt of all necessary information)

100% of renewals processed within 30 working days

Achieved

Comment:ADStouroperatorspotcheckswerereducedmidwaythroughthefinancialyearandthemysteryshopperprogrammesuspendedduetoashiftinfocustowardsreviewing/amendingtheADSCodeofConductrequirementsandsettingupaninboundtouroperatorincentiveprogramme.TherevisedCodewilltakeeffectinSeptember2012.

Approved Destination Status (ADS)

TheChinesetouristmarkethasparticularqualityissuesthatrequireattention.TheChinaMarketDevelopmentUnit(previouslytheApprovedDestinationStatusMonitoringUnit),operatedbyTourismNewZealand,licensesNewZealand-basedInboundTourOperatorsthatcaterfortheChinesemarket,andmonitorstheirconduct,performanceandqualitystandards.TheChinaMarketDevelopmentUnitassessesnewapplicants,completesregularcompliancemonitoringandassessments,andhandlescomplaintsandfeedbackfromChineseGroupTourvisitors.


22

Tourism Outcomes – 2011/2012This section describes the performance of tourism outcomes that the outputs described in the Statement of Service Performance contribute to.

hiGh LEvEL OuTCOME: ThE vALuE AddEd TO ThE NEW ZEALANd ECONOMy FROM iNTERNATiONAL viSiTORS iS iNCREASEd

Tourism New Zealand activities along with activities of the tourism industry contribute to the success of this outcome. Success is also influenced by variables that are outside of the control of either party.

Duringthe2011/12financialyear,severalfactorscontributedtoachallengingenvironmentforthetourismsector.Environmentalevents,includingthe2010and2011earthquakesinChristchurchandJapan,theChileanvolcanicashcloudthatdisruptedairtravelandtheslowstarttothe2011skiseasonwerecompoundedwitheconomicchallengesintheformofastrongNew Zealand dollar resulting in a poor exchange rate for visitors from key visitor markets, the ongoing effects of the European financial crisis and the value being offered to Australian travelers by weaker currencies in Europe and the United States. Collectively, all provided downward pressure on the value of international visitors to the New Zealand economy.

Balancing these downward pressures was the success of Rugby World Cup 2011 and strong growth in visitor arrivals from the China and South East Asia markets.

ThetablebelowprovidesasummaryofsomeofthekeyeconomiccontributionsthatinternationalvisitorsmadetotheNewZealandeconomyduringthe2011calendaryear(CY)5.

5 Source: Tourism Satellite Account, Statistics New Zealand

Measure 2011 Cy 2010 Cy Trend

International tourism expenditure in NZ $9.75b $9.60b Increase

TourismdirectcontributiontoGDP 3.8% 3.9% Decrease

Tourismfull-timeemployees-direct 91,900 (4.8%) 91,300 (4.8%) Hold

Tourismfull-timeemployees-directandindirect 179,800 (9.3%) 179,000 (9.4%) Hold

Tourism'scontributiontoGSTearnings $1.71b $1.66b Increase

ECONOMIC CONTRIBuTION OF TOuRISM

TOuRiSM OuTCOMES

23

TOuRiSM iNduSTRy OuTCOME 1: iNTERNATiONAL viSiTOR ExPENdiTuRE iN NEW ZEALANd, FROM TOuRiSM NEW ZEALANd’S MARKETS, iNCREASES duE TO ChANGES iN iNTERNATiONAL viSiTOR ARRivALS, LENGTh OF STAy ANd SPENd PER dAy

The number of visitors to New Zealand and the amount they spend depends on a range of variables, including (but not limited to):

• TourismNewZealand’smarketingactivities;• theimpactofsignificantnaturaleventsbothinNewZealandandintargetmarkets;• exchangeratesandthegeneraleconomicconditionsincountriesoforigin;• themarketingactivitiesofcompetingdestinationsandtheeffortsofotherNationalTourismOffices,and• airlineschedulingdecisions,seatcapacityonairroutesandticketpricing.

In2011/12,excellentgrowthintotalvisitornumbersfromChina(+33.3percent)andSouthEastAsia(+15.8percent),wasbalancedbythedeclineinvisitorsfromJapan(-14.6percent),Korea(-9.9percent)andmodestdeclinesfromtheUK(-2.5percent),USA(-2.8percent)andGermany(-3.4percent).Overall, total international holiday visitors increased by 5 per cent over the previous year, and total visitor arrivals increased by 5.4 per cent to 2.635 million6.

Visitor arrivals from Tourism New Zealand’s top target markets are set out below:

6 Country visitor arrival figures are derived from samples, the total arrival number may differ slightly from total actual arrivals. Source: International Visitor Arrivals (IVA), Statistics New Zealand7 Includes:Thailand,Singapore,MalaysiaandIndonesia

INTERNATIONAL VISITOR ARRIVALS

TOuRiSM OuTCOMES

Target Market year Ended 30 June 2010

year Ended 30 June 2011


growth Rate 2011/12 (%)

Australia 1,119,437 1,111,192 1,175,296 5.8%

China 105,190 131,648 175,488 33.3%

UK 248,930 220,043 214,448 -2.5%

USA 194,008 188,150 182,816 -2.8%

Germany 65,021 65,237 62,992 -3.4%

Japan 83,587 78,559 67,072 -14.6%

South East Asia7 80,273 89,252 103,312 15.8%

Other 593,125 605,741 654,302 8.0%

Total - All markets 2,501,264 2,501,303 2,635,726 5.4%

24

TOTAL INTERNATIONAL VISITOR STAy DAyS

International visitor expenditure8fortheyearended30June2012was$5.566billion,almostthesameasthepreviousyear.

Total stay days9 grew by 1.4 per cent in the 2011/12 financial year led by a strong increase from China (22.7 per cent). Other markets remained relatively flat or declined. One notable exceptionwasGermanywhichdespitehavingareductioninoverallvisitorarrivals(down3.4percent),sawanincreaseintotalvisitorstaydays.

Total stay days by Tourism New Zealand’s top target markets are set out below:

8 Source:InternationalVisitorArrivals(IVA),StatisticsNewZealand;InternationalVisitorSurvey(IVS),MinistryofBusiness,InnovationandEmployment.9TotalStayDaysprovidethetotalnumberofdaysvisitorsfromeachmarketstayinNewZealandandaresourcedfromtheIVAsurvey(StatisticsNewZealand).

Target Market year Ended 30 June 2010




Australia 12,513,166 12,381,137 12,269,552 -0.9%

China 2,208,221 2,439,108 2,993,088 22.7%

UK 7,362,364 6,347,532 6,291,760 -0.9%

USA 3,600,185 3,502,526 3,394,048 -3.1%

Germany 2,960,900 3,020,626 3,171,408 5.0%

Japan 1,422,663 1,403,748 1,212,240 -13.6%

South East Asia 1,803,558 2,010,788 2,038,672 1.4%

Other 18,621,962 19,053,030 19,492,176 2.3%

Total - All markets 50,493,019 50,158,495 50,862,944 1.4%

China experienced strong growth in visitor expenditure for the year, with other key Tourism New Zealand markets remaining flat or declining. The rising New Zealand dollar, resulting in New Zealand being relatively more expensive to visit for many markets, is believed to have contributed to a reduction in visitor spend while RWC 2011 is likely to have arrested the decline seen in previous years for the Australian and UK markets.

TOuRiSM OuTCOMES

25

Visitor expenditure from Tourism New Zealand’s top target markets is set out below:

Target Market year Ended 30 June 2010 (NZ $m)

year Ended 30 June 2011 (NZ $m)

year Ended 30 June 2012 (NZ $m)


Australia $1,743 $1,642 $1,638 -0.2%

China $365 $410 $522 27.3%

UK $706 $576 $568 -1.4%

USA $514 $443 $448 1.1%

Germany $276 $236 $194 -17.8%

Japan $355 $268 $238 -11.2%

South East Asia $222 $240 $216 -10.0%

Other $1,995 $1,989 $1,742 -12.4%

Total - All markets $5,953 $5,564 $5,566 0.0%

Visitor Market Overall international visitor satisfaction Positive feedback to others about New Zealand

2011/12 Actualyear on year

change % 2011/12 Actualyear on year

change %

Australia 8.9/10 no change 96% -1%

China 8.8/10 no change 99% +2%

UK 9.1/10 -0.1 96% -2%

USA 9.2/10 -0.1 97% -1%

Germany 9.2/10 -0.1 98% +1%

Japan 8.9/10 +0.3 96% +2%

All markets 8.9/10 no change 96% -1%

TOuRiSM iNduSTRy OuTCOME 2: viSiTORS hAvE A hiGh QuALiTy ExPERiENCE iN NEW ZEALANd ThAT MEETS OR ExCEEdS ThEiR ExPECTATiONS

Visitors to New Zealand during 2011/12 remained very satisfied with their New Zealand holiday, rating their experience on average 8.9 out of 10.

Almost all visitors (96 per cent) also provide positive feedback to others once they return home10.

10Source:VisitorExperienceMonitor,TourismNewZealand

TOTAL INTERNATIONAL VISITOR ExPENDITuRE

INTERNATIONAL VISITOR SATISFACTION

TOuRiSM OuTCOMES

26

TOuRiSM NEW ZEALANd OuTCOMES

TourismNewZealand’soutputclassesin2011/12werecarefullyselectedforthecontributiontheywouldmaketotheachievementofthefollowingorganisation-specificoutcomes:

Tourism New Zealand Outcome 1: Conversion: Tourism New Zealand’s target audiences’ desire to visit New Zealand and rate of conversion to travel is increased.

Tourism New Zealand Outcome 2: Information and satisfaction: Visitor spending and satisfaction is increased through access to information that encourages activity and use of quality assured tourism services.

Theseoutcomes,whichareoutlinedinmoredetailinTourismNewZealand’sStatementofIntent2011-14,havebeendevelopedtosupporttheHighLeveloutcomeandwidertourismindustry outcomes.

MeasuresusedtomonitortheeffectofTourismNewZealandoutputsontheoutcomesaredescribedbelow.

TOuRiSM NEW ZEALANd OuTCOME 1: CONvERSiON

There are many destinations competing to attract visitors. To achieve the government’s economic priorities and contribute to achieving tourism industry outcomes, visitors need to choose New Zealand over other destinations. This means they must have a preference for New Zealand as a destination and must be given an easy path to purchase.

Tourism New Zealand monitors the levels of connection and engagement with target audiences by measuring how many people are drawn into the ‘path to purchase’ via digital media, and the depth of engagement with these people.

ThenumberofvisitorswhoaredrawntoTourismNewZealand’sconsumersite(newzealand.com)andreferredtopartnersitesaretrackedasisthesizeandactivityofTourismNewZealand’s social media fan base (e.g. Facebook).

Significantdirect-to-partneractivityoccurredduringtheyearwheretrafficwassentdirectfrompaidadvertisingtopartnersitesratherthanthroughnewzealand.com,thisisreflectedintheaveragemonthlyreferrals.Thisalsoimpactedonthenumberofprospectorsasduetotheincreaseddirecttopartneractivity,traffictonewzealand.comwaslowerresultinginasmallerpoolof potential prospect traffic.

Measures 2010/11 Actual 2011/12 Target 2011/12 Actual

newzealand.comaveragemonthlyreferralstopartnersites New measure 202,500 Site only: 114,535 incl. direct to partner: 469,585

Numberofprospectsgeneratedonnewzealand.com(averagepermonth) New measure 650,000 396,892

SizeofTNZsocialmediafanbase New measure 700,000 713,065

Active monthly users of TNZ's Facebook fan base New measure 302,000 665,05311

11 Active monthly users of Facebook result is to the end of February 2012, as the measure was removed from Facebook at this time.

DIgITAL MEDIA MEASuRES

TOuRiSM OuTCOMES

27

Active Considerers’ preference for New Zealand as a holiday destination

Tourism New Zealand utilises resources to target a group of consumers called ‘Active Considerers’ (ACs). ACs are aware of New Zealand, and they are already actively considering New Zealand as a destination for their next overseas trip. To help gauge the impact marketing spend is having on the level of preference ACs have for New Zealand over other competing destinations, Tourism New Zealand undertakes monthly campaign tracking within key markets.

Tourism New Zealand’s focus is on increasing the number of ACs who consider New Zealand their first or second most preferred destination.

Note:resultsfor2010/11areforQ4only,2011/12resultisforfullyear.

PreferenceforNewZealandremainedrelativelystableacrossmostkeymarketsthatTourismNewZealandmonitors.ExceptionsareChinawhichshowedstrongyear-on-yearimprovementwithNewZealandgrowinginpopularityasavisitordestinationandGermanywhichiswelldowninpreference.ForGermanActiveConsidererstheexpenseoftravellingtoNewZealandcomparedwithotherdestinationsisakeybarrierandwhileGermanActiveConsiderersappeartohaveagoodlevelofknowledgeofNewZealandandwhatithastooffer,costandaccessibility appear to be preventing conversion.

Referral rates from search engine marketing (SEM) and digital display advertising

Referralratesfromsearchenginemarketinganddigitaldisplayadvertisingmeasurethepercentageofpeoplewhooncedrawntonewzealand.comarethendeliveredtoanoperatororpartner where an actual purchase can be made.

Market 2010/11 (Q4) Actual 2011/12 Target 2011/12 Actual

Australia 48% 53% 51%

China 68% 73% 76%

USA 46% 49% 47%

UK 57% 60% 61%

Germany 57% 58% 49%

PROPORTION OF ACTIVE CONSIDERERS whO CONSIDER NZ ThEIR FIRST OR SECOND PREFERRED DESTINATION (95% CONFIDENCE)

TOuRiSM OuTCOMES

28

Referral rates from search engine marketing (SEM) and digital display advertising

Referralratesfromsearchenginemarketinganddigitaldisplayadvertisingmeasurethepercentageofpeoplewhooncedrawntonewzealand.comarethendeliveredtoanoperatororpartner where an actual purchase can be made.

Referralrateshavegenerallyperformedaheadorinlinewithtargets,anexceptionbeingtheJapanesemarket.Referralratetargetsfor2011/12werebasedoffasmallsampleofdata,whilemosttargetswereproventobeappropriate,itbecameapparentthroughtheyearthatthetargetsforJapanweretoochallenging.Referraltargetsfor2012/13havebeenrefinedtoenableimproved monitoring of outcomes of the implementation of Tourism New Zealand’s digital marketing strategy.

Market 2010/11 Actual 2011/12 Target 2011/12 Actual

Australia New measure 12-15% 17.0%

China New measure 2-3% 6.0%

North America New measure 12-14% 15.0%

UK New measure 14-16% 15.7%

Germany New measure 2-3% 8.8%

Japan New measure 10-12% 6.3%

Market 2010/11 Actual 2011/12 Target 2011/12 Actual

Australia New measure 7-10% 18.1%

China New measure 3-5% 5.0%

North America New measure 7-10% 13.8%

UK New measure 15-17% 15.0%

Germany New measure 2-3% 11.7%

Japan New measure 7-10% 6.9%

DIgITAL DISPLAy SEM

REFERRAL RATES FROM SEM AND DIgITAL DISPLAy ADVERTISINg

TOuRiSM OuTCOMES

29

TOuRiSM NEW ZEALANd OuTCOME 2: iNFORMATiON ANd SATiSFACTiON

TourismNewZealandmonitorstheuseofi-SITESaswellasthesatisfactionandspendofi-SITEusers.Variancesbetweenthesatisfactionofi-SITEandqualityassuredproductsandservices(Qualmark)usersarealsomonitoredtohelpassesstheimpactthatTourismNewZealand’sfocusoninformationservicesandqualityassurancehasonmaximisingvisitorspendand improving overall levels of satisfaction to be evaluated. The level of satisfaction of Chinese visitors is also monitored as historically this has been significantly lower than overall visitor satisfaction.

Arangeoffactorshavecontributedtoadecreaseintheuseofi-SITESoverthepastcoupleofyears.Theincreaseduseofmobiletechnology,shorteraveragelengthofstayandincreasedprevalenceofChineseorganisedtourgroupvisitors(whohavealowlevelofvisitationtoi-SITES)haveallcontributedtothereductioninvisitorstoi-SITES.Inaddition,therelativestrengthoftheNZdollarhaslikelyinfluencedthereductioninaveragetransactionvalueandaveragetotalexpenditure.Whiletheaverageexpenditurefori-SITEusershasreduced slightly, at $3,142 it remains higher than the average spend for international visitors overall of $2,312. Although this difference is likely to be due to a number of factors e.g. the typeofvisitorthatgoestoani-SITE,itisstillworthnoting.

SatisfactionofusersofQualmarkservicesremainedhigherthannon-userswhilethesatisfactionofChinesevisitors(8.8/10),hasclosedthegapwithoverallvisitorsatisfaction(8.9/10).

Result/measure 2010/11 Actual 2011/12 Target 2011/12 Actual

Numberofi-SITEvisitorsasapercentageofholidayvisitors 56.90% Maintainorimprovefrom56.9%

49.90%

Averagetransactionvalueofai-SITEvisitor $126 $135 $115

Averagetotalexpenditureattributabletoalli-SITEvisitorsincreases $3,277 $3,343 $3,142

Satisfactionofoveralltourismexperienceforalli-SITEvisitorscomparedtothosewhodidnotuseani-SITE

i-SITEusers:9.1/10noni-SITEusers:8.9/10

Maintainatorabove9.0/10and above satisfaction levels

ofnoni-SITEusers

i-SITEusers:9.0/10noni-SITEusers:8.8/10

SatisfactionofvisitorswhousedQualmarkservicescomparedtothosewhodidnotuseQualmarkservices

Qualmark:9.1/10Non-Qualmark:9.0/10

Maintainatorabove9.0/10and above satisfaction levels

ofnon-Qualmarkusers

Qualmark:9.0/10Non-Qualmark:8.9/10

Level of satisfaction of Chinese visitors 8.8/10 Maintainatorabove8.7/10 8.8/10

QuALMARk AND I-SITE uSE AND SATISFACTION

TOuRiSM OuTCOMES

30

Under Section 151 (1)(g) of the Crown Entities Act, Tourism New Zealand is required to provide information about compliance with obligations to be a good employer, including our Equal EmploymentOpportunities(EEO)Programme.SetoutbelowisaworkplaceprofileforTourismNewZealandasat30June2012.

Women and people of Asian descent continue to be well represented at all levels of the organisation. Tourism New Zealand continues to support the development and growth of all of our people and in order to facilitate this, has undertaken the following:

• StartedaprojecttoreviewanddeveloptoolsforourpeopleoncommunicatingeffectivelywithMaori,Maorietiquetteandculture.• ProvidedtrainingtoourpeoplearoundcommunicatingeffectivelywithMaori.• Implementedaglobalcommunityinitiativetohelpcelebrateculturaldiversityofouremployees,improvecommunicationandglobalconnectednessbetweenonshoreandoffshoreoffices.

Culture and Accountability

Tourism New Zealand remains committed to being a good employer and as such, to managing and leading all employees fairly and properly in all aspects of their employment. This includes people in our offshore offices where there are different jurisdictional requirements and statutory minima in the areas of Equal Employment Opportunities (EEO).Our Executive Leadership Team and broader management group is 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.

Executive Management Direct Reports to Executive Managers or Staff with Responsibility for Specific Output Areas

Other Managers with Staff Responsibility (4th Tier)

Professional and Support Staff

%ofGroupofTotalOrg 9.6% 24.0% 5.8% 60.6%

% of group % of group % of group % of group

NZ European

Men 60% 36% 5%

Female 40% 44% 33% 41%

Maori

Male 8% 2%

Female 3%

Asian (inc South Asian)

Male 4% 17% 3%

Female 4% 33% 25%

Other

Female 4% 17% 21%

Equal Employment Opportunities

EQuAL EMPLOyMENT OPPORTuNITIES SuMMARy

31

Recruitment, Selection and Induction

Our recruitment and selection procedure has been developed to ensure that all prospective employees are given the opportunity to participate equally in the recruitment process. Our selection process typically involves a structured competency and behaviourally based interview, detailed reference checking, a screening tool, and for senior positions, a psychometric assessmenttool,allofwhicharevalidatedandsupportEEOprinciples.TourismNewZealandalsoprovidesappropriatesupportforMāoriandPacificpeoplesandpeoplewithEnglishasasecond language during the recruitment and selection process.

Leadership, Learning and Development

Tourism New Zealand has a leadership development programme. In terms of organisational capability, effective leadership including understanding and knowledge of kaupapa and tikanga Māoricontinuetobeareasoffocus.TeWikioTeReoMāoriandMatarikiarealsoactivelysupportedbyTourismNewZealandthroughaprogrammetoprovideadditionalskillstrainingandlearning opportunities.

We also have a talent management programme in place, focussing on nurturing and growing key talent within the organisation regardless of gender, ethnicity or any other demographic factor.

Othertraininganddevelopmentneedsareidentifiedonanindividualbasisandareagreedbetweenthemanagerandemployee.Developmentprogrammesareselectedbasedonbothorganisationalrequirementsandindividualdevelopmentneeds.Developmentneedsmustbealignedtoagreedkeyperformanceindicators.

Flexibility and work Design

Tourism New Zealand has an active programme of supporting flexible working arrangements and job design to assist employees to manage different aspects of work life balance. We continue to:

• Supportstaffwithdisabilitiesthroughworkplacedesignchanges,andaccommodateindividualneedsintheworkplace.• Supportparentsintheirreturntoworkbyofferingpart-timeandgradualreturntofull-timearrangements,andflexitimetoaccommodatechildcareneeds.• Supportexpectantparentsbygrantingadditionalpaidtimeawayfromworktoattendappointmentsassociatedwiththepregnancy.• Supportstaffwithresponsibilitiesforchildandeldercarebyofferingflexibleworkingarrangements.

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, regardless of ethnicity, gender or physical ability.

Individuals identified as not meeting the requirements of their role are provided with support, training and development where required to assist them to achieve success.

harassment and Bullying Prevention

Tourism New Zealand has a very strictly adhered to policy and procedures for dealing with work place harassment and bullying. Over the past twelve months, there have been no reported allegations relating to harassment and/or bullying.

Safe and healthy Environment

Tourism New Zealand has a good and safe working environment, and we have published and well understood policies with regard to this, which have actively encouraged staff involvement. Over the last twelve months, additional support for people has included specialist work place assessments and the provision of special equipment to ensure that employees are able to contribute effectively in all aspects of their working life.

EQuAL EMPLOyMENT OPPORTuNiTiES

32

statement of Responsibility

In terms of the Crown Entities Act 2004, the Board is responsible for the preparation of the New Zealand

Tourism Board’s financial statements and statement of service performance, and for the judgments made in them.

The Board of New Zealand Tourism Board has the responsibility for establishing, and has established, a

system of internal control designed to provide reasonable assurance as to the integrity and reliability of

financial reporting.

In the Board’s opinion, these financial statements and statement of service performance give a true and fair

viewofthefinancialpositionandoperationoftheNewZealandTourismBoardGroupfortheyearended30

June2012.

TheMembersoftheNewZealandTourismBoardandGroupauthorisedthesefinancialstatementsforissue

on 1 September 2012.

Signed on behalf of the Board:

k. Prendergast M. Johns

Chairman DeputyChair

1 September 2012 1 September 2012

fiNANCiAl sTATemeNTs

financial statements

Chris Sisarich

33

34

Statement of ComprehenSive inComefor the year ended 30 June 2012

The notes and accounting policies on pages 35 to 60 form part of and are to be read in conjunction with these financial statements

Income

Revenue from Crown 2 84,215 83,861 99,361 84,215 83,861 99,361

Interest income 139 103 252 139 100 252

Other revenue 3 7,693 4,955 8,186 5,530 2,989 6,467

Total Income 92,047 88,919 107,799 89,884 86,950 106,080

Expenditure

Other expenses 4 91,050 88,512 107,104 89,205 86,550 105,397

Depreciation and amortisation 12,13 813 407 650 782 400 563

Share of associate’s deficit 8 - - - - - -

Total Expenditure 5 91,863 88,919 107,754 89,987 86,950 105,960

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

184 - 45 (103) - 120

Foreign Exchange

Foreign exchange gains/(losses) on derivative financial instruments

6 970 - (510) 970 - (510)

Other foreign exchange gains/(losses) 6 - - (186) - - (186)

Total foreign exchange gains/(losses) 970 - (696) 970 - (696)

Income tax expense 21 - - - - - -

Net Surplus/(Deficit) for the year 1,154 - (651) 867 - (576)

Other comprehensive income/(expense) - - - - - -

Total comprehensive income/(expense) for the year

1,154 - (651) 867 - (576)

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

Non-controlling interest 7 82 - 46 - - -

Owners of the parent 1,072 - (697) 867 - (576)

1,154 - (651) 867 - (576)

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

Non-controlling interest 7 82 - 46 - - -

Owners of the parent 1,072 - (697) 867 - (576)

1,154 - (651) 867 - (576)

Notes 2012Actual$000s

2012Budget$000s

2011Actual$000s

2012Actual$000s

2012Budget$000s

2011Actual$000s

GrOup pArENT

35

Statement of ChangeS in equity

Statement of ChangeS in equity

for the year ended 30 June 2012

for the year ended 30 June 2011


Notes Shareholders Equity $000s

Foreign Exchange reserve $000s

retained Earnings $000s

Total$000s

Balance at 1 July 1,805 4,614 (464) 5,955 Net surplus for the year - - 867 867 Transfer to Retained Earnings from Foreign Exchange Reserve

18 - (1) 1 -


- (1) 868 867

Balance at 30 June 1,805 4,613 404 6,822


Foreign Exchange reserve $000s

retained Earnings $000s

Total$000s

Balance at 1 July 1,805 4,800 (74) 6,531 Net surplus/(deficit) for the year - - (576) (576)Transfer to Retained Earnings from Foreign Exchange Reserve

18 - (186) 186 -


- (186) (390) (576)

Balance at 30 June 1,805 4,614 (464) 5,955


Foreign Exchange

reserve$000s

retained Earnings

$000s

Non- Controlling

Interest$000s

Total$000s

Balance at 1 July 1,805 4,614 (628) 97 5,888 Net surplus for the year - - 1,072 82 1,154 Transfer to Retained Earnings from Foreign Exchange Reserve

18 - (1) 1 - -


- (1) 1,073 82 1,154

Balance at 30 June 1,805 4,613 445 179 7,042

Notes Shareholders Equity$000s

Foreign Exchange

reserve$000s

retained Earnings

$000s

Non- Controlling

Interest$000s

Total$000s

Balance at 1 July 1,805 4,800 (117) 51 6,539 Net surplus/(deficit) for the year - - (697) 46 (651)Transfer to Retained Earnings from Foreign Exchange Reserve

18 - (186) 186 - -


- (186) (511) 46 (651)

Balance at 30 June 1,805 4,614 (628) 97 5,888

pArENT

pArENT

GrOup

GrOup


36

Statement of finanCial poSitionas at 30 June 2012

Current Assets

Cash 9 7,305 6,120 10,608 7,153 6,000 10,473

Receivables 10 1,390 630 2,430 1,098 600 2,062

Prepayments and other current assets 806 800 744 798 800 729

9,501 7,550 13,782 9,049 7,400 13,264

Non-current Assets

Property, plant and equipment 12 2,330 1,504 2,430 2,311 1,505 2,404

Intangible assets 13 33 - 57 - - -

Investment in associate 8 1 5 1 - - -

Accommodation bonds 14 320 500 390 320 500 390

2,684 2,009 2,878 2,631 2,005 2,794

Total Assets 12,185 9,559 16,660 11,680 9,405 16,058

Current Liabilities

Creditors and other payables 15 4,042 1,829 8,389 3,872 1,700 8,120

Employee entitlements 16 468 610 496 439 550 450

Invoiced in advance 208 - 462 122 - 108

Provisions 17 50 303 80 50 303 80

Derivative financial instruments 11 152 - 1,122 152 - 1,122

4,920 2,742 10,549 4,635 2,553 9,880

Non-current Liabilities

Provisions 17 223 - 223 223 - 223

223 - 223 223 - 223

Total Liabilities 5,143 2,742 10,772 4,858 2,553 10,103

Net Assets 7,042 6,817 5,888 6,822 6,852 5,955

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 445 212 (628) 404 247 (464)

Foreign Exchange Reserve 18 4,613 4,800 4,614 4,613 4,800 4,614

parent interests 6,863 6,817 5,791 6,822 6,852 5,955

Non-controlling interests 7 179 - 97 - - -

Total Equity 7,042 6,817 5,888 6,822 6,852 5,955


2012Budget$000s

2011Actual$000s

2012Actual$000s

2012Budget$000s

2011Actual$000s

GrOup pArENT


37

Statement of CaSh flowSfor the year ended 30 June 2012

Cash flows from operating activities

Crown revenue 83,861 83,861 99,361 83,861 83,861 99,361

Interest received 135 103 244 135 100 244

Other revenue 9,181 4,955 9,616 7,216 2,989 7,864

Payments to suppliers and employees (96,240) (88,674) (104,193) (94,326) (86,705) (102,450)

Goods and services tax (net) 305 - (333) 339 - (374)

Net cash inflow/(outflow) from operating activities

19 (2,758) 245 4,695 (2,775) 245 4,645

Cash flows from investing activities

Sale of property, plant and equipment 6 - 7 6 - 5

Repayment of accommodation bonds 82 - 169 82 - 169

Purchase of property, plant and equipment

(705) (245) (1,397) (705) (245) (1,369)

Purchase of intangible assets - - (33) - - -

Payments for accommodation bonds (10) - (119) (10) - (119)

Net cash outflow from investing activities

(627) (245) (1,373) (627) (245) (1,314)

Net increase/(decrease) in cash held (3,385) - 3,322 (3,402) - 3,331

Effect of exchange rates on foreign currency balances

82 - 888 82 - 888

Opening cash brought forward 10,608 6,120 6,398 10,473 6,000 6,254

Cash at end of year 9 7,305 6,120 10,608 7,153 6,000 10,473


2012Budget$000s

2011Actual$000s

2012Actual$000s

2012Budget$000s

2011Actual$000s

GrOup pArENT



38

noteS to the finanCial StatementSfor the year ended 30 June 2012

(a) Basis of preparation

Tourism New Zealand is a Crown entity as defined by the Crown Entities Act 2004 and is domiciled in New Zealand.

Tourism New Zealand’s financial statements have been prepared in accordance with New Zealand generally accepted accounting practice and the requirements of the Crown Entities Act 2004. The financial statements have been prepared on a historical cost basis modified by the revaluation of certain assets and liabilities as identified in this statement of accounting policies.

For the purposes of financial reporting, Tourism New Zealand is classified as a Public Benefit Entity. (b) Statement of compliance The financial statements have been prepared in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate for public benefit entities.

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency is New Zealand dollars.

(c) New accounting standards and interpretations

(i) Changes in accounting policy and disclosure

The accounting policies adopted are consistent with those of the previous financial year except as follows. Tourism New Zealand has adopted the following new and amended New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and Interpretations as of 1 July 2011:

Improvements to NZ IFrSs – Amendments to NZ IFrSs arising from the Annual Improvements project (2010)

Emphasises the interaction between quantitative and qualitative NZ FRS 7 disclosures and the nature and extent of risks associated with financial instruments.

Clarifies that an entity will present an analysis of other comprehensive income for each component of equity either in the statement of changes in equity or in the notes to the financial statements.

NZ IAS 24 – related party disclosures (revised 2009)

The revised NZ IAS 24 simplifies the definition of a related party clarifying its intended meaning and eliminating inconsistencies from the definition. The amendment explicitly adds disclosure requirements for commitments (including executor contracts) with related parties.

NZ IFrS 7 – Amendments to NZ IFrS 7 Financial Instruments: Disclosures

The amendments enhance the transparency of disclosure requirements for the transfer of financial assets. For transferred financial assets that are derecognised in their entirety but where the entity has a continuing involvement in them, the amendments require disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognised assets.

For transferred financial assets that are not derecognised in their entirety, the amendments require disclosure of information that enables users of financial statements to understand the relationship between those assets which are not derecognised and their associated liabilities.

note 1Statement of aCCounting poliCieS for the year ended 30 June 2012

39

All the information will need to be presented in a single note in an entity’s financial statements.

FrS-44 - New Zealand Additional Disclosures

This standard is a consequence of the joint Trans-Tasman Convergence project of the Australian Accounting Standards (AASB) and Financial Reporting Standards Board (FRSB).

This standard relocates New Zealand specific disclosures from other standards to one place and revises disclosures in the following areas:

(a) Compliance with NZ IFRS;(b) The statutory basis or reporting framework for financial statements;(c) Audit fees;(d) Imputation credits;(e) Reconciliation of operating cash flow to profit or loss; and(f) Elements in the statement of service performance.

Harmonisation Amendments

Amendments to NZ IFRS to harmonise with IFRS and Australian Accounting Standards:

(a) Remove the disclosures which have been relocated to FRS 44(b) Harmonise audit fee disclosure requirements in NZ IAS 1 with AASB 101(c) Harmonise imputation/franking credits’ disclosure requirements in NZ IAS 12 with AASB 101(d) Introduction of the option to use the indirect method of report5ing cash flows in NZ IAS 7(e) Remove the requirement to use an independent valuer and the related disclosure requirements current in NZ IAS 16

and NZ IAS 40(f) Remove some NZ-specific disclosures.

The adoption of the above amendments resulted in changes to accounting policies but had no significant impact on the financial position or performance of Tourism New Zealand.

(ii) Accounting standards issued but not yet effective

NZ IFrS 9 (2009) Financial Instruments

NZ IFRS 9 (2009) includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace NZ IAS 39.

These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of NZ IAS 39. The revised Standard introduces a number of changes to the accounting for financial assets, the most significant includes:

(a) Two categories for financial assets being amortised cost or fair value(b) Strict requirements to determine which financial assets can be classified as amortised cost or fair value. Financial

assets can only be classified as amortised cost if (i) the contractual cash flows from the instrument represent principal and interest and (ii) the entity’s purpose for holding the instrument is to collect the contractual cash flows

(c) Reclassifications between amortised costs and fair value no longer permitted unless the entity’s business model for holding the asset changes.

This standard will not significantly impact Tourism New Zealand’s financial position or performance. Any changes will be of a presentation nature only.

The application date of the standard is 1 January 2015. The application date for Tourism New Zealand is 1 July 2015.

note 1 (Continued)

notes to the financial statements

40

(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 purchase 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.

Business combinations that occurred prior to the date of transition to NZ IFRS have not been restated retrospectively.

(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 Income.

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 yearsMotor vehicles 4 – 5 yearsFurniture and fittings 5 – 8 yearsComputer equipment 3 yearsLeasehold 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 Income 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 Income.

(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.

Research and development 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.

note 1 (Continued)

41


(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 Income 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 Income 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 following specific recognition criteria must also be met before revenue is recognised: Grants received from the Crown

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

Sale of goods and services Revenue from the 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:

• whenthedeferredincometaxliabilityarisesfromtheinitial 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

• whenthetaxabletemporarydifferenceisassociated 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.

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

note 1 (Continued)

42

the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• whenthedeferredincometaxassetrelatingtothedeductible 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: • wheretheGSTincurredonapurchaseofgoodsand

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

• receivablesandpayablesarestatedwiththeamountofGST 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. (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 Income.

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 Income. 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

Pension Liabilities: Obligations for contributions to defined contribution retirement plans are recognised in the Statement of Comprehensive Income as they fall due.

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 Income 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 Income 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.

(s) Comparative

Certain comparatives have been adjusted to align with current year disclosure.

note 1 (Continued)

43


note 2

note 3

note 4

revenue from Crown

Baseline Funding 85,748 70,379 85,748 70,379

During the year, additional funding was provided by the Crown for the following:

Additional Crown Funding 376 30,675 376 30,675

Qualmark New Zealand Ltd - 484 - 484

Total revenue received from the Crown 86,124 101,538 86,124 101,538

Less GST 1,909 2,177 1,909 2,177

Net revenue received from the Crown 84,215 99,361 84,215 99,361

Other revenue

Sales and Partnership income 7,692 8,181 5,529 6,465

Sale of property, plant and equipment 1 5 1 2

Total other revenue 7,693 8,186 5,530 6,467

personnel expenses

Number of permanent and fixed term staff 118 130 111 123

2012$000s

2011$000s

2012$000s

2011$000s

Salaries and wages 12,067 13,155 11,319 12,392

Employer superannuation contributions 257 222 246 208 Decrease in employee entitlements (note 16) (28) (71) (11) (76)

Other personnel expenses 1,198 1,224 1,169 1,188

13,494 14,530 12,723 13,712

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012 2011 2012 2011

GrOup pArENT

GrOup pArENT

GrOup pArENT

44

note 4 Continued

personnel costs for New Zealand and offshore staff were:

New Zealand Personnel Expenses - Tourism New Zealand 7,404 8,101 7,404 8,101

New Zealand Personnel Expenses - Subsidiaries 771 818 - -

Offshore Personnel Expenses 5,319 5,611 5,319 5,611

13,494 14,530 12,723 13,712

2012 2011 2012 2011

Number of ceased staff paid compensation or other benefits 2 15 2 14

2012$000s

2011$000s

2012$000s

2011$000s

Compensation or other benefits paid to ceased staff 71 499 71 480

Auditor’s remuneration Amounts received or due and receivable by Ernst & Young New Zealand for:

The audit of the financial report of the Tourism New Zealand Group 81 86 67 73

Other services - 1 - -

81 87 67 73

Amounts received or due and receivable by auditors other than Ernst & Young New Zealand for:

The audit of the financial report of subsidiary entities 5 5 - -

Other services 16 - 16 -

102 92 83 73

Other expenses

Loss on disposal of property, plant and equipment 10 1 10 -

Lease expense 2,147 2,210 2,147 2,135

Remuneration of board members of Parent (See also note 31) 187 208 187 208

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

45


note 5

note 6

note 7

Total expenditure of parent

Total expenditure by geographic region:

Australia 16,820 20,176

North America 11,028 16,769

United Kingdom and Europe 10,644 14,697

Japan 3,991 4,684

Asia 17,339 18,488

Other markets 49 106

New Zealand (a) 30,116 31,040

Total Expenditure of Parent 89,987 105,960

2012$000s

2011$000s

(a) New Zealand expenditure includes costs that apply to all markets and across a number of campaigns including the Hobbit Shoot Phase One, the newzealand.com website and the Youth Material Production.

Foreign exchange gains/(losses)

Unrealised gains/(losses) on derivative financial instruments 970 (1,122) 970 (1,122)

Realised gains/(losses) on derivative financial instruments - 612 - 612

Foreign exchange gains/(losses) on derivative financial instruments 970 (510) 970 (510)

Other foreign exchange gains/(losses) - (186) - (186)

Total foreign exchange gains/(losses) 970 (696) 970 (696)

2012 2011 2012 2011

Subsidiary companies

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

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

2012$000s

2011$000s

2012$000s

2011$000s

Interest Held Interest Held

GrOup pArENT

pArENT

GrOup pArENT

46

note 8

note 7 Continued

The financial year-end of both subsidiaries is 30 June.

Tourism New Zealand has a 60% shareholding in Qualmark New Zealand Limited with the other 40% held by the New Zealand Automobile Association. Tourism New Zealand has control of Visitor Information Network Incorporated (VIN Inc), trading as i-SITE New Zealand, effective 21 August 2002.

Qualmark New Zealand Limited is New Zealand tourism’s official quality agency. It is a government - private sector partnership between Tourism New Zealand and New Zealand Automobile Association. Qualmark licenses professional and trustworthy New Zealand tourism businesses to use the Qualmark® - tourism’s official quality mark - to help international and domestic travellers select places to stay, things to do and ways to get around. Qualmark’s core activities are based around determining the eligibility of businesses to enter the licensing system. This is achieved by way of assessment, promoting and working with Qualmark® licensees and working closely with other organisations and sectors within the tourism industry. By doing so, quality standards are raised and New Zealand tourism businesses improved based on best-practice.

Tourism New Zealand and i-SITE New Zealand have a relationship agreement that recognises the importance of having an effective and high quality network of visitor information centres, dedicated to delivering free, comprehensive and objective information. The terms and conditions of the relationship agreement mean that Tourism New Zealand meets the criteria determined in NZ IAS 27 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.

The financial year-end of The New Zealand Way Limited is 30 June.

Tourism New Zealand has a 50% shareholding in The New Zealand Way Limited. This Company is the operating entity of a joint venture between Tourism New Zealand and New Zealand Trade & Enterprise.

The New Zealand Way Brand provides marketing opportunities to those companies which meet quality and environmental standards. The Brand is promoted as a mark of outstanding quality, superior service and unique New Zealand characteristics. There were no impairment losses relating to the investment in associate and no capital commitments or other commitments relating to the associate. The following table illustrates summarised information of the investment in The New Zealand Way Limited:

Associate company

The New Zealand Way Limited 1 1 - -

Share of associate’s balance sheet:

Current assets 6 1 - -

Current liabilities 5 - - - Net assets 1 1 - -

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

47


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

Revenue 70 - - - (Deficit)/surplus - - - -

Carrying amount at beginning of year 1 1 - -

Carrying amount at end of year 1 1 - -

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

note 8 Continued

note 9

Cash

Cash Holdings:

Cash at bank and in hand 2,183 2,089 2,036 1,974

Call accounts - foreign currencies 5,103 4,151 5,103 4,151

Call accounts - New Zealand dollar 19 4,368 14 4,348

7,305 10,608 7,153 10,473

Cash Holdings by Currency:

New Zealand Dollar 329 4,946 177 4,811

United States Dollar 1,110 425 1,110 425

British Pound 565 619 565 619

Australian Dollar 479 1,117 479 1,117

European Euro 1,568 1,494 1,568 1,494

Japanese Yen 454 242 454 242

Singapore Dollar 1,421 411 1,421 411

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

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.

48

note 9 Continued

note 10

Canadian Dollar 540 713 540 713

Indian Rupee 485 238 485 238

Other Asian Currencies 354 403 354 403

7,305 10,608 7,153 10,473

Cash Holdings by Bank:

HSBC Bank 6,590 5,221 6,438 5,086

National Bank of New Zealand 198 2,675 198 2,675

ASB Bank 19 141 19 141

Bank of New Zealand 47 2,470 47 2,470

Tokyo Mitsubishi 451 101 451 101

7,305 10,608 7,153 10,473

receivables

Receivables 1,399 2,432 1,098 2,062

Less: Provision for impairment (9) (2) - -

1,390 2,430 1,098 2,062

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

The fair value of cash and cash equivalents is $7,305,000 (2011: $10,608,000).

Trade receivables are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2012 and 30 June 2011, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below:

parent Gross $000s

Impairment $000s

Net $000s

Gross $000s

Impairment $000s

Net $000s

Not past due 547 - 547 1,509 - 1,509

Past due 1 - 30 days 374 - 374 311 - 311

Past due 31 - 60 days 139 - 139 242 - 242

Past due 61 - 90 days 5 - 5 - - -

Past due > 91 days 33 - 33 - - -

1,098 - 1,098 2,062 - 2,062

2012 2011

pArENT

49


note 10 Continued

note 11

Group Gross $000s

Impairment $000s

Net $000s

Gross $000s

Impairment $000s

Net $000s

Past due 1 - 30 days 690 - 690 1,871 - 1,871

Past due 31 - 60 days 492 - 492 312 - 312

Past due 61 - 90 days 158 (4) 154 242 - 242

Past due > 91 days 13 (1) 12 7 (2) 5

Past due > 91 days 46 (4) 42 - - -

1,399 (9) 1,390 2,432 (2) 2,430

2012 2011

GrOup

The provision for impairment has been calculated based on expected losses determined by an analysis of losses in previous periods and a review of specific debtors.

Receivables for the Group include GST/VAT refunds comprising 55% (38% in 2011) of total receivables as follows:

Derivative financial instruments Tourism New Zealand uses foreign exchange instruments in order to manage its exposure to fluctuations in foreign currency exchange rates on normal operating activities. The instruments are matched with anticipated future cash flows in foreign currencies. Tourism New Zealand does not use financial instruments for speculative purposes. At balance date Tourism New Zealand had 28 (2011: 59) foreign exchange contracts maturing at various dates over the next 12 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.

GST Refund due from NZ Inland Revenue Department 511 684 511 679

GST Refund due from Australian Taxation Office 189 116 189 116

Consumption Tax Refund from Japan Tax Office 67 97 67 97

VAT Refund due from UK Revenue & Customs 2 25 2 25

769 922 769 917

Foreign currency forward exchange contracts:

Foreign exchange contracts at 30 June - Sell Value 30,910 52,718 30,910 52,718

Fair value Derivatives in Loss (152) (1,122) (152) (1,122)

Foreign exchange contracts at 30 June - Buy Value 30,758 51,596 30,758 51,596

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

50

note 11 Continued

note 12

Foreign exchange contracts by currency:

United States Dollar 20,905 21,763 20,905 21,763

British Pound 4,979 4,439 4,979 4,439

Australian Dollar - 14,690 - 14,690

European Euro 3,569 4,984 3,569 4,984

Japanese Yen - 3,723 - 3,723

Thai Baht 345 - 345 -

Singapore Dollar 802 1,997 802 1,997

Hong Kong Dollar 158 - 158 -

30,758 51,596 30,758 51,596

property, plant and equipment

All property, plant and equipment

At cost 7,967 7,302 7,680 7,016

Accumulated depreciation (5,637) (4,872) (5,369) (4,612)

Net carrying amount 2,330 2,430 2,311 2,404

property, plant and equipment for each class:

Furniture and fittings

At cost 1,192 1,228 1,159 1,196

Accumulated depreciation (788) (681) (772) (671)

Net carrying amount of furniture and fittings 404 547 387 525

Leasehold improvements

At cost 2,405 1,956 2,405 1,956


Net carrying amount of leasehold improvements 898 592 898 592

Office equipment

At cost 683 662 683 662


Net carrying amount of office equipment 59 81 59 81

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

51


note 12 Continued

note 13

Motor vehicles

At cost 61 61 61 61


Net carrying amount of motor vehicles - 7 - 7

Computer equipment

At cost 3,626 3,395 3,372 3,141


Net carrying amount of computer equipment 969 1,203 967 1,199

Total property, plant and equipment 2,330 2,430 2,311 2,404

All property, plant and equipment reconciliation

At 1 July, net of accumulated depreciation 2,430 1,750 2,404 1,683

Additions 705 1,314 705 1,286

Disposals and write back of depreciation (16) (2) (16) (2)

Depreciation charge for the year (789) (632) (782) (563)

At 30 June, net of accumulated depreciation 2,330 2,430 2,311 2,404

Depreciation by asset class:

Furniture and fittings 127 131 121 126

Leasehold improvements 143 145 143 145

Office equipment 43 52 43 52

Motor vehicles 7 12 7 12

Computer equipment 469 292 468 228

Total Depreciation 789 632 782 563

Intangible assets

At cost 84 84 - -

Accumulated amortisation (51) (27) - -

Net carrying amount 33 57 - -

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

52

note 13 Continued

note 14

note 15

Intangible assets reconciliation

At 1 July, net of accumulated amortisation 57 42 - -

Additions - 33 - -

Amortisation charge for the year (24) (18) - -

At 30 June, net of accumulated amortisation 33 57 - -

Accommodation bonds

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

Japan 195 193 195 193

Asia 125 197 125 197

320 390 320 390

Creditors and other payables

Payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value.

Creditors 895 4,651 875 4,566

Accrued expenses 3,147 3,738 2,997 3,554

4,042 8,389 3,872 8,120

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

GrOup pArENT

Intangible assets are the Visitor Information Network Incorporated’s Public Campaign and Extranet websites.

53


note 16

Employee entitlements

Annual Leave 468 495 439 449

Sick Leave - 1 - 1

468 496 439 450

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

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

provisions are represented by:

Lease make-good 273 303 273 303

Total Provisions 273 303 273 303

Current provision 50 80 50 80

Non-current provision 223 223 223 223

273 303 273 303

Movements in provisions are as follows:

Balance at 1 July 303 333 303 303

Amounts used (30) (26) (30) -

Unused amounts reversed - (4) - -

Balance at 30 June 273 303 273 303

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

54

note 18

note 19

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.

Movements in reserve is as follows:

Balance at 1 July 4,614 4,800 4,614 4,800

Transfer to Retained Earnings from Foreign Exchange Reserve (1) (186) (1) (186)

Balance at 30 June 4,613 4,614 4,613 4,614

reconciliation of surplus/(deficit) to net cash from operating activities

Net surplus/(deficit) 1,154 (651) 867 (576)

Add/(less) non-cash items

Depreciation and amortisation 813 650 782 563

Net (gains)/losses on derivative financial instruments (970) 510 (970) 510

Net foreign exchange losses - (775) - (775)

Total non-cash items (157) 385 (188) 298

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

Net Loss/(Gain) on disposal of assets 10 (4) 10 (2)

Movement in foreign currency accommodation bonds 65 43 65 43

Total items classified as investing or financing activities 75 39 75 41

Add/(less) movements in working capital items

Debtors and other receivables 1,040 947 990 1,216

Prepayments (62) 651 (69) 649

Payables and accruals (4,347) 3,233 (4,274) 3,204

Provisions (180) (30) (180) -

Invoiced in advance (253) 241 15 (60)

Employee entitlements (28) (120) (11) (127)

Net movements in working capital items (3,830) 4,922 (3,529) 4,882

Net cash from operating activities (2,758) 4,695 (2,775) 4,645

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

55


note 20

note 21

note 22

note 23

Contingencies

uncalled Share Capital - Tourism New Zealand has provided a written undertaking to the Board of Qualmark New Zealand Ltd to provide ongoing financial support sufficient to enable Qualmark to meet its obligations when they fall due. Tourism New Zealand has assessed the likelihood of being required to significantly increase the level of funding to Qualmark as low. Additionally Tourism New Zealand’s shareholding in Qualmark is uncalled. If called, Tourism New Zealand would be liable to contribute $60,000.

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 $189,203 (2011: $305,695)

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.

Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. These judgements and estimates are based on historical experience and other factors that are reasonable under the circumstances and form the basis for the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and conditions.Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions have been made. Make good provision

A provision has been made for a number of potential future restoration costs relating to make good clauses on seven office rental leases. The calculation of this provision requires assumptions such as the extent, if any, that Landlords will enforce the make good clauses in the leases and building and demolition cost estimates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised for each lease is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for make good are recognised in the balance sheet by adjusting both the expense or asset and provision. The related carrying amounts are disclosed in note 17.

56

note 24

note 25

note 26

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.

Categories of financial assets and liabilities

The carrying amounts of financial assets and liabilities in each of the NZ IAS 39 categories are as follows:

Financial assets:

Cash and cash equivalents 7,305 10,608 7,153 10,473

Debtors 438 1,508 160 1,145

Total loans and receivables 7,743 12,116 7,313 11,618

Fair value through profit and loss held for trading:

Derivative financial instrument liabilities 152 1,122 152 1,122

Other financial liabilities:

Creditors 895 4,651 875 4,566

Invoiced in advance 208 462 122 108

Total other financial liabilities 1,103 5,113 997 4,674

Capital commitments

Total capital expenditure contracted for at balance

date but not provided for in the financial statements - 191 - 191

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

57


note 27

note 28

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.

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.

Operating commitments payable after balance date on:

Non-Cancellable Accommodation Leases

Up to One Year 2,172 1,775 2,172 1,775

One to Two Years 1,412 1,550 1,412 1,550

Two to Five Years 2,962 2,649 2,962 2,649

Over Five Years 1,275 2,244 1,275 2,244

7,821 8,218 7,821 8,218

Non-Cancellable Motor Vehicle and Equipment Leases

Up to One Year 59 102 54 97

One to Two Years 39 38 39 34

Two to Five Years 93 25 93 25

Over Five Years - - - -

191 165 186 156

Non-Cancellable Contracts for Goods and Services

Up to One Year 2,984 2,622 2,984 2,622

One to Two Years 520 503 520 503

Two to Five Years - - - -

Over Five Years - - - -

3,504 3,125 3,504 3,125

Total operating commitments 11,516 11,508 11,511 11,499

2012$000s

2011$000s

2012$000s

2011$000s

GrOup pArENT

58

note 28 Continued

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.

related party and Transaction

Subsidiary - Qualmark New Zealand Limited

Shareholder income provided by Tourism New Zealand 105 509 - -

Purchases from Tourism New Zealand 242 117 - -

Sales to Tourism New Zealand 2 2 - -

Subsidiary - Visitor Information Network Inc

Shareholder income provided by Tourism New Zealand 250 250 - -

Sales to Tourism New Zealand - 2 - -

Purchases from Tourism New Zealand 8 - - -

Associate - The New Zealand Way Limited

Shareholder income provided by Tourism New Zealand 70 - - -

Related Party and Transaction

Income has been received by Tourism New Zealand from:

G Coughlan (Director): Positively Wellington Tourism - Income received by TNZ for joint advertising campaigns and other tourism related services.

588 43 - -

P Richardson (Director): Tourism Industry Association - Income received by TNZ for tourism related services.

29 11 17 -

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

3 5 - -

Payments have been made by Tourism New Zealand to:

P Richardson (Director): Tourism Industry Association & (Director): Tainui Auckland Airport Hotel - Provision of tourism related services to TNZ.

199 279 2 -

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

43 - - -

G Coughlan (Director): Positively Wellington Tourism, and (CE): Wellington Venues Ltd - Provision of tourism related service to TNZ and joint advertising campaigns.

12 1,312 - -

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

3 - - -

M Johns (Chief Executive): Intercity Group (NZ) Limited - Provision of travel services to TNZ.

3 - - -

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

2012$000s

2011$000s

Transaction value year ended 30 June

Balance outstanding year ended 30 June

Transaction value year ended 30 June

Balance outstanding year ended 30 June

59


Key management personnel compensation

Salaries and other short-term employee benefits 2,419 2,199

Other long-term benefits - 9

Termination benefits - 89 Total key management personnel compensation 2,419 2,297

2012$000s

2011$000s

note 28 Continued

note 29

Key management personnel includes all board members, the Chief Executive and 9 (2011: 8) members of the Executive Team.

Financial instrument risks Tourism New Zealand’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. Tourism New Zealand has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature. Market risk Interest rate risk - this 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 2012, 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:

Currency risk - Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. As a result of significant operations around the world, Tourism New Zealand is required to enter into transactions denominated in foreign currencies. As a result of these activities, Tourism New Zealand is exposed to foreign currency risk on its foreign denominated cash balances, receivables, creditors and other payables, and derivative instruments. It is Tourism New Zealand’s policy to manage foreign currency risks arising from contractual commitments and liabilities by entering into foreign exchange forward contracts to cover the foreign currency exposure.

Group

+ 0.5% (50 basis points) (2011: +0.5%) 6 23 - -

- 0.5% (50 basis points) (2011: -0.5%) (6) (23) - -

parent

+ 0.5% (50 basis points) (2011: +0.5%) 5 22 - -

- 0.5% (50 basis points) (2011: -0.5%) (5) (22) - -

2012$000s

2011$000s

2012$000s

2011$000s

Surplus/(deficit) higher/(lower)

Equity higher/(lower)

GrOup pArENT

60

note 29 Continued

Currency risk sensitivity analysis - Tourism New Zealand is subject to volatility in financial performance associated with foreign currency rates. As at 30 June 2012, 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:

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 2012. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract.

Group

NZD to various currencies +5% (2011: + 5%) (2,010) (3,030) - -

NZD to various currencies -5% (2011: - 5%) 2,234 3,593 - -

parent

NZD to basket of currencies +5% (2011: + 5%) (2,010) (3,030) - -

NZD to basket of currencies -5% (2011: - 5%) 2,234 3,593 - -

2012$000s

2011$000s

2012$000s

2011$000s

Surplus/(deficit) higher/(lower)

Equity higher/(lower)

61


Group - Year end 30 June 2012

Financial liabilities

Creditors (895) - (895)

Derivative financial instrument liabilities - gross settled

Inflows 17,833 12,925 30,758

Outflows (17,910) (13,000) (30,910)

(77) (75) (152)

Net outflow (972) (75) (1,047)

parent - Year end 30 June 2012


Creditors (875) - (875)


Inflows 17,833 12,925 30,758

Outflows (17,910) (13,000) (30,910)

(77) (75) (152)

Net outflow (952) (75) (1,027)



Creditors (4,651) - (4,651)


Inflows 30,993 20,012 51,005

Outflows (31,599) (20,528) (52,127)

(606) (516) (1,122)

Net outflow (5,257) (516) (5,773)

< 6months $000s

6-12 months $000s

Total $000s

< 6months $000s

6-12 months $000s

Total $000s

< 6months $000s

6-12 months $000s

Total $000s

note 29 Continued

62



Creditors (4,651) - (4,651)


Inflows 30,993 20,012 51,005

Outflows (31,599) (20,528) (52,127)

(606) (516) (1,122)

Net outflow (5,257) (516) (5,773)

< 6months $000s

6-12 months $000s

Total $000s

note 29 Continued

note 30

Fair value risk The Group can apply various methods in estimating the fair value of a financial instrument. The methods comprise: a) Level 1 - the fair value is calculated using quoted prices in active markets: b) Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and c) Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

Derivative financial instruments are classified as Level 2 and are valued using observable market inputs.

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

remuneration of employees During 2011/2012 26 (2011: 33) employees received remuneration and benefits which exceeded $100,000 per annum as follows:

100,000 - 109,999 5 6

110,000 - 119,999 3 3

120,000 - 129,999 2 4

130,000 - 139,999 - 4

140,000 - 149,999 1 1

150,000 - 159,999 2 3

160,000 - 169,999 1 2

170,000 - 179,999 2 1

180,000 - 189,999 1 1

190,000 - 199,999 - -

200,000 - 209,999 3 1

$ 2012 2011

GrOup pArENT

63


210,000 - 219,999 1 -

220,000 - 229,999 - 1

230,000 - 239,999 1 2

250,000 - 259,999 - 1

280,000 - 289,999 - 1

290,000 - 299,999 1 -

300,000 - 309,999 1 -

330,000 - 339,999 - 1

350,000 - 359,999 1 -

410,000 - 419,999 - -

460,000 - 469,999 - 1

470,000 - 479,999 1 -

26 33

$ 2012 2011

note 30 Continued

note 31

Note: A number of Tourism New Zealand employees are based offshore and are paid in local currency at appropriate remuneration levels within the respective countries. This remuneration has been translated at the exchange rates of forward exchange contracts used to cover this expenditure. Termination payments, where applicable, have also been included in the remuneration totals above - refer to note 4 for more details of these payments. The main reason for the decrease in employees earning over $100,000 between 2011 and 2012 was the movement in exchange rates and some employees have not been employed for the full period.

Changes in board members: K Prendergast commenced 15 August 2011. The term of G Coughlan expired 10 April 2012. P Richardson resigned on 15 June 2012. The term of G Muir expired 15 August 2011.

remuneration of board members Board members earned the following fees during the year:

K Prendergast (Chair) 40 -

M Johns (Deputy Chair) 25 25

J Barrett 20 20

H van Asch 20 20

J Langley 20 20

R Leggat 20 20

G Coughlan 16 20

P Richardson 20 20

G Muir 6 60

S Morgan - 3

187 208

2012$000s

2011$000s

GrOup pArENT

GrOup pArENT

64

2012 Actual $000s

2011 Actual $000s

2010 Actual $000s

2009 Actual $000s

2008 Actual $000s

Statement of Financial position

Current Assets

Cash 7,153 10,473 6,254 3,646 5,077

Receivables 1,098 2,062 3,278 517 1,286

Prepayments and other current assets 798 729 1,378 603 1,018

Derivative financial instruments - - - - 1,514

9,049 13,264 10,910 4,766 8,895

Non-current Assets

Property, plant and equipment 2,311 2,404 1,683 2,096 1,943

Accommodation bonds 320 390 482 494 343

2,631 2,794 2,165 2,590 2,286

Total Assets 11,680 16,058 13,075 7,356 11,181

Current Liabilities

Creditors and other payables 3,872 8,120 4,998 3,325 3,893

Income in advance 439 450 168 107 310

Provisions 122 108 303 303 303

Employee entitlements 50 80 577 1,100 891

Derivative financial instruments 152 1,122 498 1,469 20

4,635 9,880 6,544 6,304 5,417

Non-current Liabilities

Provisions 223 223 - - -

223 223 - - -

Total Liabilities 4,858 10,103 6,544 6,304 5,417

Net Assets 6,822 5,955 6,531 1,052 5,764

Equity

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

Retained earnings 404 (464) (74) (753) 3,959

Foreign Exchange Reserve 4,613 4,614 4,800 - -

Total Equity 6,822 5,955 6,531 1,052 5,764

five year finanCial Summary for parent

65


2012 Actual $000s

2011 Actual $000s

2010 Actual $000s

2009 Actual $000s

2008 Actual $000s

Statement of Comprehensive Income

Income

Revenue from Crown 84,215 99,361 89,431 76,251 75,071

Interest 139 252 219 382 707

Other revenue 5,530 6,467 8,791 2,996 4,630

89,884 106,080 98,441 79,629 80,408

Expenditure

Other expenses 89,205 105,397 93,156 80,898 81,285

Depreciation, Amortisation and Impairment

782 563 632 680 602

89,987 105,960 93,788 81,578 81,887

Net foreign exchange gains/(losses) 970 (696) 826 (2,763) 5,522

Net Surplus (Deficit) & total comprehensive income

867 (576) 5,479 (4,712) 4,043

five year finanCial Summary for parent Continued

66

independent auditor’S report

TO THE READERS OF NEW ZEALAND TOURISM BOARD AND GROUP’S FINANCIAL STATEMENTS AND NON-FINANCIAL PERFORMANCE INFORMATION FOR THE YEAR ENDED 30 JUNE 2012.

The Auditor-General is the auditor of New Zealand Tourism Board (the Board) and Group. The Auditor-General has appointed me, Grant Taylor using the staff and resources of Ernst & Young, to carry out theaudit of the financial statements and non-financial performance information of the Board on her behalf.We have audited:- the financial statements of the Board on pages 31 to 60,

that comprise the statement of financial position as at 30 June 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date and notes to the financial statements that include accounting policies and other explanatory information; and

- the non-financial performance information of the Board that comprises the statement of service performance on pages 13 to 21 and the report about outcomes on pages 21 to 28.

Opinion

In our opinion:- the financial statements of the Board on pages 31 to 60: - comply with generally accepted accounting

practice in New Zealand; and - fairly reflect the Board’s: - financial position as at 30 June 2012; and - financial performance and cash flows for the

year ended on that date.- the non-financial performance information of the Board

on pages 13 to 21 and 21 to 28: - complies with generally accepted accounting

practice in New Zealand; and - fairly reflects the Board’s service performance and

outcomes for the year ended 30 June 2012, including for each class of outputs: - its service performance compared with forecasts in the statement of forecast

service performance at the start of the financial year; and - its actual revenue and output expenses

compared with the forecasts in the statement of forecast service performance at the start of

the financial year.

Our audit was completed on 1 September 2012. 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 non-financial performance information are free from material misstatement.

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements and non-financial 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 non-financial performance information. The procedures selected depend on our judgement, including our assessment of risks of material misstatement of the financial statements and non-financial performance information, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation of the Board’s financial statements and nonfinancial performance information that fairly reflect the matters to which they relate. We consider internal control 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 Board’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 judgements made by the Board’s

members;- the appropriateness of the reported non-financial

performance information within the Board’s framework for reporting performance;

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

- the overall presentation of the financial statements and non-financial performance information.

67

independent auditor’S report Continued

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements and non-financial performance information. We have obtained all the information and explanations we have required and we believe we have obtained sufficient and appropriate auditevidence to provide a basis for our audit opinion.

responsibilities of the Board members

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

- comply with generally accepted accounting practice in New Zealand;

- fairly reflect the Board’s financial position, financial performance and cash flows; and

- fairly reflect its service performance and outcomes.

The Board members are also responsible for such internal control as is determined necessary to enable the preparation of financial statements and non-financial performance information that are free from material misstatement, whether due to fraud or error.

The Board members’ responsibilities arise from the Crown Entities Act 2004, the Financial Reporting Act 1993 and the New Zealand Tourism Board Act 1991.

responsibilities of the Auditor

We are responsible for expressing an independent opinion on the financial statements and non-financial performance information and reporting that opinion to you based on our audit. Our responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.

Independence

When carrying out the audit, we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the New Zealand Institute of Chartered Accountants.

Grant TaylorErnst & YoungOn behalf of the Auditor-GeneralWellington, New Zealand

audit report

Annual Report 2011 2012

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