G25 Tourism new zealand annual rePorT 2008–2009 new zealand Has manaGed To world s CaPTure THe world’s ina inaTion imaGinaTion onsisTenT wiTH iTs ConsisTenT randinG BrandinG — uniTed naTions world Tourism orGanizaTion a CHelse w sHo Flower ruGBY B al saY in londo l disCoverY You Your n do Have sTudio 2008 THe roYal T moBil e CHannel wHa aY uK? Tour s THe row Box rld wo is BY r ameriCa’s CuP new zealand Mäori ar ruG uP Pa 7 in valenCia liFe BaCK T C 200 meeTs Promise ameriCa uK r Helo BaC THe euroPe us PURE AS This year the 100% Pure New Zealand Accolades for its clarity, flexibility and campaign is 10 years young. It is one of authenticity have flooded in from the the longest-running global campaigns international tourism industry, branding and has been seen all over the world experts and potential visitors alike. by millions of people. Here are a few highlights of the campaign over the last decade. G25 E PUR 8 KIWI WALK 0% ED 200 10 H NC LAU MAURI ORA E AICH xPO, I JAP AN INDIAN CRICKET T EAM vISIT NZ 0 JAPAN 9 CHINA E PUR 100% CHED LAUN 08 NEW ZEALAND FEB WEEK SINGAPORE THANKS A MILLION OZ W WHAT’S ON INDIA SHO DAY OM NZ TO R F 100% PURE 100% LIvE NEW ZEALAND ASSU PURE RANC EvENT E MAKE YOURSELF 100% AT HOME GREAT KIWI (LIONS TOUR) INvITE 1 N 00% AUSTRALIA WI EW Z PU NT EA RE ER LA GA ND ME S HOME 2 CoNTeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 CONTENTS ABOUT TOURISM NEW ZEALAND 3 CHAIRMAN’S REPORT 4 CHIEF ExECUTIvE’S REPORT 6 BOARD MEMBERS 10 GOvERNANCE AT TOURISM NEW ZEALAND 11 MANAGEMENT AT TOURISM NEW ZEALAND 13 STATEMENT OF SERvICE PERFORMANCE 15 NOTES TO THE FINANCIAL STATEMENTS 29 Note 1 StatemeNt of accouNtiNg policieS 29 campaigN 17 Note 2 crowN reveNue 33 chaNNel 21 Note 3 other reveNue 33 capability 22 Note 4 foreigN exchaNge gaiNS 34 Note 5 other expeNSeS 34 MANAGEMENT STATEMENTS 23 Note 6 foreigN exchaNge loSSeS 35 Note 7 total expeNditure of pareNt 35 Note 8 SubSidiary compaNieS 35 FINANCIAL STATEMENTS 26 Note 9 aSSociate compaNy 37 StatemeNt of reSpoNSibility 26 Note 10 caSh 37 StatemeNt of fiNaNcial performaNce 27 Note 11 receivableS 38 Note 12 derivative fiNaNcial iNStrumeNtS 39 StatemeNt of fiNaNcial poSitioN 28 Note 13 property plaNt aNd equipmeNt 40 StatemeNt of chaNgeS iN equity 28 Note 14 accommodatioN boNdS 41 StatemeNt of caSh flowS 29 Note 15 creditorS aNd other payableS 41 Note 16 employee eNtitlemeNtS 41 Note 17 proviSioNS 41 Note 18 recoNciliatioN of SurpluS (deficit) to Net caSh from operatiNg activitieS 42 Note 19 coNtiNgeNt liabilitieS aNd coNtiNgeNt aSSetS 42 Note 20 iNcome tax 42 Note 21 maNagemeNt of riSk 43 Note 22 SigNificaNt accouNtiNg judgemeNtS, eStimateS aNd aSSumptioNS 43 Note 23 capital maNagemeNt 43 Note 24 categorieS of fiNaNcial aSSetS aNd liabilitieS 44 Note 25 capital commitmeNtS 44 Note 26 operatiNg commitmeNtS 45 Note 27 related party traNSactioNS 45 Note 28 fiNaNcial iNStrumeNt riSkS 47 Note 29 remuNeratioN of employeeS 48 Note 30 remuNeratioN of board memberS 49 FIvE-YEAR FINANCIAL SUMMARY OF PARENT 50 AUDIT REPORT 51 // TourIsm ANNuAl rePorT // 2008 – 2009 AbouT TourIsm New ZeAlANd 3 IT IS AN ExCITING AND CHALLENGING ROLE IN A FAST-MOvING INDUSTRY WHICH IS INCREASINGLY COMPETITIvE, QUICK TO ADOPT CHANGE AND REGULARLY FACES MAJOR CHALLENGES. ABOUT TOURISM NEW ZEALAND awareness and preference for New Zealand To ensure visitors go home happy and tell as a holiday destination among our target others to visit is one of the most important Tourism New Zealand was established to market of potential visitors. we also work marketing tools New Zealand has. The market New Zealand as a visitor destination with the industry to convert that preference organisation works with its subsidiaries, overseas for the long-term benefit of into a visit. Qualmark and i-sITe New Zealand, to ensure New Zealand. that once here, visitors have access to good The most easily recognisable area of our It is an exciting and challenging role in a information and local knowledge, quality work is with the 100% Pure New Zealand fast-moving industry which is increasingly accommodation, activities and transport. campaign that appears in print, on competitive, quick to adopt change and television, the internet, in cinemas and on To find out what visitors think about their regularly faces major challenges. outdoor advertising. Tourism New Zealand’s time here and their satisfaction levels, In 2008, 922 million tourists travelled International Public relations and Tourism New Zealand has an ongoing, worldwide up 2 per cent on 2007. International media Programmes work in in-depth research programme. However, growth in the first half of the tandem with the campaign to promote Tourism New Zealand also takes a year was clearly impacted by the global New Zealand through events, public leadership stance in areas like economic downturn which took worldwide relations activity and international environmental best practice and Mäori international travel into negative growth media relations. cultural awareness. Through its Qualmark territory in the second half of the year. much of the work to convert a potential subsidiary, Tourism New Zealand has New Zealand sees just a tiny proportion visitor’s desire to travel to New Zealand introduced more rigorous environmental of that huge international tourism market. into actually making the trip is done requirements for accredited businesses. In the year to June 2009, 2.4 million through Tourism New Zealand’s nine Tourism New Zealand also works with international visitors arrived in New Zealand offshore offices. staff work with the tourism businesses and regions to help and spent $6 billion dollars excluding travel trade to help develop new ideas develop Mäori capability and awareness. airfare receipts. for itineraries, promote new products Tourism New Zealand is committed and train front line sales staff so they To keep New Zealand in the spotlight to improving its own environmental know more about New Zealand and among our potential visitors, Tourism performance and this year earned can sell it more effectively. New Zealand’s work offshore aims to build a Qualmark enviro-bronze rating. 4 CHAIrmAN’s rePorT // TourIsm ANNuAl rePorT // 2008 – 2009 “ WE MUST CONTINUE TO INCREASE AWARENESS OF NEW ZEALAND BY MAKING OUR ADvERTISING COMPELLING BY REACHING PEOPLE AND THROUGH vARIED CHANNELS.” CHAIRMAN’S REPORT GreG muIr, CHAIrmAN, TourIsm New ZeAlANd THE YEAR IN REvIEW specific awareness of the 100% Pure in may and June 2009. As a result of the New Zealand campaign has increased campaign, Air New Zealand reported 2008/9 has been a challenge for Tourism in the majority of our key markets and trans-Tasman bookings for may and June New Zealand and the tourism industry as remains strong despite increased and travel were up 50 per cent, while domestic the global financial crisis and Influenza intense competition from other destinations. flight booking add-ons increased by A (H1N1) (Swine Flu) took their toll on 132 per cent. worldwide visitor numbers from the latter Tourism New Zealand has used the half of 2008/2009. downturn as an opportunity to look at where over 15,000 additional visitors arrived in it operates, how it operates and how it can New Zealand from Australia in may and worldwide international visitor arrivals to operate faster and more effectively in an June, compared with the same months december 2008 were up 2 per cent, but in increasingly volatile environment. last year, a major contribution to a the first four months of 2009 that picture better-than-expected performance changed rapidly with international arrivals An example of this was Tourism over the winter season. down 8 per cent on the previous year. New Zealand’s increased focus on the important Australian market to sustain the The additional funds meant Tourism by comparison New Zealand’s arrivals held industry through this slower arrivals period. New Zealand was also able to work with up well, with 2.4 million international Australia’s Today breakfast news show, visitors in the year to June, a 2.8 per cent A successful bid for an additional $2.5 which broadcast live from New Zealand drop on the previous year. Visitor spend million of Government funding enabled for seven days in June. The programme has also been maintained, overall visitor Tourism New Zealand to maintain its achieved its highest ratings in seven years spending was down 2.6 per cent in the Australian campaign over summer and and contributed to a 56 per cent increase June 2009 year compared with 2008. spring. It also resulted in a successful joint in traffic to Tourism New Zealand’s venture project with Air New Zealand, Awareness levels of New Zealand as a consumer website, www.newzealand.com. aligning Tourism New Zealand’s marketing travel destination have, on average, efforts with an Air New Zealand promotion been maintained at 2007/08 levels. // TourIsm ANNuAl rePorT // 2008 – 2009 CHAIrmAN’s rePorT 5 In May 2009, New Zealand welcomed one million Australian visitors in a calander year for the first time ever. We celebrated with the ‘Thanks a Million Oz’ promotion. It is also important that New Zealand successful and at the 10 year mark it is the delivers a high-class visitor experience to envy of many tourism marketing bodies ensure that visitors go home satisfied and worldwide. It regularly wins awards and in recommend New Zealand to their friends, the last year our new global campaign won families and colleagues. the PATA gold award for the 100% Pure “Youngest Country” campaign launched To do this, we want to want to increase in 2007. the profile of the Qualmark quality rating system and i-sITe visitor information George has led Tourism New Zealand network. A focus on quality will help ensure with a clear and steady focus, embracing a high-level of economic return from innovation, creativity and teamwork. tourism to the New Zealand economy. I wish him well in the future. Tourism New Zealand ran ‘What’s On’ over summer THANKS in Australia for the first time. I would like to thank Tourism New Zealand’s Chief executive George Hickton for his FUTURE FOCUS contribution to the organisation over Tourism New Zealand’s priorities for the last decade. the coming year remain focused on George arrived at Tourism New Zealand Greg Muir encouraging more visitors to come now, when it required strong leadership and Chairman, Tourism New Zealand stay longer and spend more. To do that we a clear vision to unite the Government, need to stimulate peak arrivals through industry and staff behind the organisation carefully timed, appealing marketing. and a single country brand. we must continue to increase awareness of He has overseen the introduction and New Zealand by making our advertising development of the 100% Pure compelling and by reaching people through New Zealand brand and evolution of that varied channels. we will also continue to work brand to suit individual markets, including with the industry to make sure that a trip to Australia, the us and uK. The 100% Pure New Zealand is easy to plan and book. New Zealand brand has been extremely 6 CHIef exeCuTIVe’s rePorT // TourIsm ANNuAl rePorT // 2008 – 2009 “THE ORGANISATION IS E, INNOvATIvE, MOvES QUICKLY AND MAKES THINGS HAPPEN IN A WAY THAT CONTINUES TO SURPRISE ME” CHIEF ExECUTIvE’S REPORT GeorGe HICKToN, CHIef exeCuTIVe, TourIsm New ZeAlANd 100% PURE NEW ZEALAND OvERvIEW 2008/9 This year New Zealand’s 100% Pure New Zealand brand during the year, Tourism New Zealand and the tourism industry celebrated its 10th anniversary, giving the tourism industry faced two major shocks. In late 2008, the global financial crisis an opportunity to look back at some of the major milestones took its toll on visitor numbers. Influenza A (H1N1) (swine flu) achieved over the last decade. then impacted on arrivals, particularly from Asia. In may and June 2009, strict quarantine requirements in China caused over that time, New Zealand has seen international visitor arrivals cancellations and postponements of total outbound travel to rise rise by over two-thirds to 2.4 million and spending increase by by 30-50 per cent and many Japanese schools cancelled trips 50 per cent to $6 billion. If you include airfare sales that figure planned for August. rises to $8.8 billion and accounts for 18 per cent of New Zealand’s The year also saw a major shift in consumer behaviour. Tourists are total export earnings. booking later, making it harder for businesses to plan ahead. many factors have contributed to that growth, but having Travellers are also more focused on finding the best deals and a single, strong global brand – 100% Pure New Zealand – increasing their use of the internet to find them. has certainly helped. with the added incentive of cheap online ticket deals, I believe It has allowed Tourism New Zealand to focus its attention on a tipping point has now been reached where travellers are raising awareness of New Zealand as a visitor destination. It more likely than ever to use the internet to research and book has allowed us to put our energy and time into exploring new international travel. This is something the industry as a whole opportunities and into finding creative and innovative ways to build will have to adapt to. New Zealand’s profile. That single focus has also helped the However, the year also provided a number of positives. industry to work with us to support the brand, both through their Airlines entered a heavy discounting period resulting in record own marketing and by delivering a high-quality experience which low ticket prices, stronger foreign currency exchange rates made sends 90 per cent of visitors home highly satisfied with their New Zealand more affordable for visitors from some markets and New Zealand experience. jet fuel prices reduced. // TourIsm ANNuAl rePorT // 2008 – 2009 CHIef exeCuTIVe’s rePorT 7 for Tourism New Zealand these combined HOLIDAY ARRIvALS 1999–2009 factors meant a review of our markets and 1,300,000 some quick, but tough, decisions about budget allocation; decisions that helped 1,200,000 deliver a smaller than expected decline in arrivals over the key summer months holiday arrivalS between November and April. 1,000,000 CONSUMER MARKETING 900,000 AND ONLINE The diversity of work undertaken by the 750,000 0 1 2 3 4 5 6 7 8 9 00 00 00 00 00 00 00 00 00 00 consumer marketing team continued this -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 99 00 01 02 03 04 05 06 07 08 19 20 20 20 20 20 20 20 20 20 year, with traditional and online marketing initiatives. In August 2008, we launched the “what do You say uK?” campaign, INTERNATIONAL vISITOR ExPENDITURE 1999–2009 allowing british travellers to talk directly 7.0 to each other about their time in New Zealand. In february, we launched 6.0 the “lifeback Promise” campaign in the expeNditure NZ$billioNS us. This campaign was linked closely with 5.5 the us travel trade and to a media partnership with the discovery Channel. In January, we became the first tourism board 4.5 to take a mobile film recording studio on the road to capture people’s own holiday 3.75 0 1 2 3 4 5 6 7 8 9 00 00 00 00 00 00 00 00 00 00 stories, which were then sent straight to -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 99 00 01 02 03 04 05 06 07 08 19 20 20 20 20 20 20 20 20 20 their friends and family at home. we then used our Australian “what’s on” campaign to partner with Air New Zealand to promote NEWZEALAND.COM USER SESSIONS 1999–2009 travel to New Zealand in may and June. 15,000,000 This helped New Zealand reach the major milestone of welcoming a million 11,250,000 Australians in a calendar year, something we celebrated with the “Thanks a million” uSer SeSSioNS 7,500,000 promotion in may. Tourism New Zealand’s consumer website 3,750,000 continued to show great results, with user sessions up 44 per cent on the previous 0 year. The power of the Chinese market 0 1 2 3 4 5 6 7 8 9 00 00 00 00 00 00 00 00 00 00 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 99 00 01 02 03 04 05 06 07 08 could be seen directly through our website 19 20 20 20 20 20 20 20 20 20 traffic. directly after the final phase of Note: figures pre: 2001/2 relate to user sessions on purenz.com brand campaign on 9 february 2009, weekly user sessions rose by over 2000 per cent from the week before, and seeds story ideas and images for use by work with the Indian cricket team and reached a record high of 418,772 weekly international media – is an invaluable tool high-profile Indian guests during the 2009 user sessions in any one week. for gaining exposure for New Zealand and Indian cricket tour resulted in footage and user sessions increased by more than INTERNATIONAL PUBLIC images of New Zealand reaching an 130,000 over the year. RELATIONS estimated 160 million people in one of Two big media projects this financial New Zealand’s most important developing This year has seen Tourism New Zealand year involved working with the us reality markets. increase our focus on using public relations (Pr) to promote New Zealand in a dating show The Bachelor and Australia’s other projects included working with uK cost-effective way. Coverage reached Today show. broadcaster, actor and comedian stephen millions of potential visitors through events, The Bachelor was watched by almost fry, television celebrity Jack osbourne, our International media and opinion 93 million across seven episodes aired American footballer dhani Jones, and leaders’ programmes and the Global in the usA and Canada, with another Japanese actress beverley maeda. Newsroom, which allows staff from around 26 million reading associated online stories. the world to share story ideas. we have The Today show had not broadcast from In total, 585 media and opinion leaders broadened our Pr activity to include the outside Australia since 2005 and were hosted this year, with the results creation of our own video content. The New Zealand coverage reached an reaching an estimated audience of around team’s international media website – which audience of 3.5 million. 1.5 billion. 8 CHIef exeCuTIVe’s rePorT // TourIsm ANNuAl rePorT // 2008 – 2009 Far left: Australia’s Today show broadcast live from New Zealand reaching 3.5 million viewers over seven days. Left: Almost 93 million viewers in the US and Canada tuned in to watch the Bachelor in New Zealand. EvENTS between New Zealand’s giant kauri tree TRADE MARKETING Tane mahuta and Jōmon sugi, a similar forest events offer the opportunity to profile Trade marketing provides the link chief on Japan’s Yakushima Island. Three New Zealand and the 100% Pure between the brand and the travel industry. Japanese newspapers and one television New Zealand brand overseas, they also An educated and effective travel trade is crew attended the ceremony in the waipoua create news and provide opportunities invaluable in helping promote New Zealand forest, reaching an audience of 15.5 million. to host key media in New Zealand. and encouraging people to translate their desire to travel here to actually booking The biggest event project for the year was CORPORATE COMMUNICATIONS a trip. the installation of the Giant Inflatable rugby Prime minister John Key’s decision to take ball in london in November 2008. The ball up the tourism portfolio; the rapid approach To help link Tourism New Zealand with was officially opened by mayor of london of the rugby world Cup in 2011 and more travel sellers around the world, the team boris Johnson and visited by Queen challenging times facing New Zealand’s has redeveloped its trade website. The elizabeth II. most national daily newspapers tourism industry has required Tourism new site has allowed us to reach a wider carried coverage of the ball, including the New Zealand’s corporate communications audience. Along with offering award- Telegraph, Observer and The Times, as team to increase the frequency and speed winning trade training modules, the site well as international television channels of its communications. A redevelopment of also has guidebooks, regional product including Sky News and the BBC World. the corporate site, www.tourismnewzealand. information, marketing tools, news and com, was begun during the year. The team events. online webinar training has been when Tourism New Zealand invited also started regular news updates which rolled out in the uK and europe after a broadcaster michael Peschardt to are sent directly to the inboxes of about successful start in the us and Canada. New Zealand as an international judge for the 20th montana world of wearableArt 6,700 online subscribers. A slimmed-down during the year, the team hosted 150 travel Awards, his profile of creator suzie hard copy of Tourism News is still produced sellers on familiarisation trips around moncrieff reached a potential audience of and sent to 4,500 people a quarter, but it New Zealand, organised Kiwilink North 78 million people on bbC world. The team pushes people to ‘read more’ online. America and the second Tourism also hosted 12 media outlets during the during the year over 5,300 face-to-face New Zealand Asia Awards, recognising louis Vuitton Pacific series and seven engagements were arranged and facilitated outstanding product development in Asia. international media to the michael Hill through the communications team. members of the team are also meeting The team also partnered with travel trade Golf tournament in march 2009. regularly with both national and local to attend the International luxury Travel one of the most interesting events of the year government in the build up to the market in Cannes and the world Travel was the ceremony to formalise a relationship rugby world Cup. market in london to promote New Zealand // TourIsm ANNuAl rePorT // 2008 – 2009 CHIef exeCuTIVe’s rePorT 9 Tourism New Zealand installed its Giant Rugby Ball Venue next to London’s iconic Tower Bridge in November 2008. as a visitor destination and New Zealand 87 members. There are currently 8000 The organisation is innovative, moves tourism products. operators listed on the site, which will quickly and makes things happen help the network deal with over 10 million in a way that continues to surprise me. recognising the importance of the cruise visitor contacts each year. market, a Cruise market development The team’s dedication to doing an excellent manager was appointed during the year Tourism New Zealand’s China monitoring job delivers results that may look effortless, to work with the cruise industry to develop unit continues to audit, monitor and but take huge energy, determination and that sector. regulate New Zealand’s Approved commitment. I would also like to thank both destination status (Ads) Chinese tour my current and past boards and Chairs for DELIvERING QUALITY group operators. This system applies to their support. Through our subsidiary interests in the all New Zealand inbound tour operators quality ranking system Qualmark and the responsible for managing Chinese Ads i-sITe visitor information network, Tourism visitor groups in New Zealand. This year New Zealand works to influence the quality the group worked with ATTTo (the Aviation, of the New Zealand visitor experience. Tourism and Travel Training organisation) to develop and train the first cohort of over 2000 businesses now have Qualmark Ads-approved guides. The Ads team has accreditation and during the year a George Hickton also undertaken numerous audits, mystery campaign was launched to bring together Chief executive, Tourism New Zealand shopper sessions and spot checks of the 100% Pure brand and Qualmark tour groups. through the 100% Pure Assurance message. THANKS successfully launched in June 2008, over This is my last report as Chief executive of 240 businesses have now gained a Qualmark Tourism New Zealand and I would like to enviro-ranking. Tourism New Zealand has thank both my past and current staff for the gained an enviro-bronze rating this year. energy and commitment they have brought to the organisation. without a doubt it has meanwhile, the i-sITe team has overseen been the most enjoyable and interesting the redevelopment of the i-sITe extranet position I have held. and the development of a national database to improve information sharing and best practice among the i-sITe network’s 10 boArd members // TourIsm ANNuAl rePorT // 2008 – 2009 BOARD MEMBERS GREG MUIR JOHN BARRETT MALCOLM JOHNS Chair BoarD MeMBer BoarD MeMBer Greg is currently Managing John is Managing Director Malcolm is Chief Director of Tru-Test Ltd of Kapiti Island Alive & Executive of Intercity and was appointed as Kapiti Nature Lodge, Group (NZ) Limited, Chairman of the a family eco-tourism parent company of New Zealand Tourism operation based on InterCity and Newmans Board in July 2008. Kapiti Island. Coach Lines, Great Sights, Fullers Bay of Prior to joining Tru-Test, Greg was Executive He is currently Chairman of the Islands, Kings Dolphin Cruises and Eco Chairman of Pumpkin Patch Ltd, Chief New Zealand Mäori Tourism Council Tours. Malcolm has extensive commercial Executive Officer of The Warehouse Group Ltd and the Wellington Regional Mäori experience having held senior roles with and held senior management roles with TNT Tourism Organisation, Te Ara a Maui. Discover Canada Holidays, Jasons Travel Australia Pty Ltd and Lion Nathan Ltd. He is He also sits on the Board of Aviation Media, Tourism Holdings and Hyatt also a non-executive chairman of Pumpkin Tourism & Travel Training Organisation International Hotels and Resorts. Patch Limited, Pioneer Capital Management (ATTTO) and a number of non-tourism Ltd, the Blues S14 Franchise and a director related organisations. of the Auckland Rugby Union. PAUL RICHARDSON GLENYS COUGHLAN BoarD MeMBer SUSIE JOHNSTONE BoarD MeMBer Paul is Vice President Deputy Chair New Zealand & Fiji Glenys is a Director of Accor Hospitality and Susie is a director and The Republic of Acumen has over 25 years principal of the Chartered and has over 20 years experience in Accountancy firm Shand experience in the tourism the hospitality and Thomson. She is currently industry, including four travel industry. After the Deputy Chair of Otago years as Chief Executive 10 years working with Starwood Hotels District Health Board and of the Tourism Industry throughout the Asia Pacific region, Paul Southland District Health Association, eight years in senior joined Accor in 2005 before being Board, and a council member of Otago management with Air New Zealand and promoted to his current role in 2007. Polytechnic. Susie has also held governance nine years on the board of Te Papa. He is a Director of the New Zealand roles on the boards of the New Zealand Glenys is currently the Chair of Positively Hotel Council and the Tourism Industry Hockey Federation, the New Zealand Blood Wellington Tourism and a trustee of the Association. Service and the Institute of Chartered PATA New Zealand Trust. Accountants. HENRY vAN ASCH JENNIE LANGLEY PAUL BINGHAM BoarD MeMBer BoarD MeMBer BoarD MeMBer Jennie was appointed Henry was a co-founder Independent Chair of Paul is Managing Director of AJ Hackett Bungy the New Zealand Hotel of Black Cat Group. He is with business partner Council in 2007, after Chairman of Christchurch AJ Hackett before four years as Chief and Canterbury Tourism founding Bungy Executive Officer. and sits on the Air New Zealand in 1997, She is a director of her New Zealand board. In the where he remains a consultancy company, J L Associates Ltd, past he has been a member director. Henry oversees ownership and and a member of the Biosecurity of the Tourism Research Council New Zealand operation of the Bungy New Zealand Group Ministerial Advisory Committee. She has and the Banks Peninsula Tourism and (which includes AJ Hackett Bungy, and previously held board roles at Positively Economic Development Board as well as Auckland Bungy & Bridge Climb) along Wellington Tourism, the New Zealand Wool holding positions with Tourism Holdings Ltd with his latest ventures: the High Plains Board, Opus International Consultants and and Air New Zealand. Wine Co and The Winehouse & Kitchen has acted as a local government councillor Restaurant. in the Hawke’s Bay. Note: Changes in board members: G Muir was appointed Chairman on 15 July 2008. K Guy resigned as a board member on 14 August 2008 and S Murray and K McKelvie’s terms expired 30 March 2009. Henry van Asch was appointed as a board member on 1 September 2008 and P Richardson and J Langley were appointed as board members on 10 April 2009. // TourIsm ANNuAl rePorT // 2008 – 2009 GoVerNANCe AT TourIsm New ZeAlANd 11 GOvERNANCE AT TOURISM NEW ZEALAND Above: The ‘What Do You Say UK?’ camaign launched in the UK in September 2008 allowing Brits to talk to Brits about their New Zealand experiences. The New Zealand Tourism Board (trading as where appropriate, to attend tourism- There is a direct relationship between Tourism New Zealand) was established on related events such as TreNZ, the the minister of Tourism and the 1 November 1991, as a Crown Entity under Inbound Tour operators Council Chairman of the board. The Chairman the provisions of the New Zealand Tourism Conference and other trade and has regular meetings with the minister Board Act 1991. As a Crown Entity, Tourism industry events. to discuss progress and issues facing New Zealand is expected to comply with the the tourism industry. The board has at least six scheduled appropriate provisions of the Crown Entities meetings a year including a two-day As well as this regular communication and Act 2004. meeting to review the organisation’s engagement with its shareholding minister, The board of Tourism New Zealand, ongoing strategic direction. As a result of Tourism New Zealand is aware of the need including the position of Chairman, is that meeting, the organisation’s goals are to engage with the wider community to appointed by the minister of Tourism. set and the formal business planning promote an understanding of tourism A profile of the current members of process commenced. Additional board development and associated issues. Tourism New Zealand’s board is shown meetings are scheduled as required. Tourism New Zealand achieves this through on page 10. All board members receive formal letters of appointment from the under section 92 of the Crown entities regular meetings with various industry minister of Tourism setting out their duties, Act 2004, the board must ensure that groups, presentations and regional terms and conditions of appointment the organisation acts in a manner meetings as well as through a number and the expectations of their role. consistent with the statement of Intent of external publications, such as and output Agreement it has negotiated Tourism News. The board has a wide range of skills with the Crown. in the tourism industry and wider The board is conscious of its obligations to commercial environment, which enable Tourism New Zealand reports quarterly ensure that board members avoid any it to deal with the issues arising from the on its performance against its output conflicts of interest in their decision-making role it plays in marketing New Zealand Agreement. The reports form the basis process. The board ensures that proper as a visitor destination. of discussion and review by the board process is followed and that members’ at regular meetings timed to coincide interests are formally recorded, with any Tourism New Zealand introduces each with the required reporting deadlines. new board member to the organisation changes or additions being disclosed at the through an induction process that unless specifically directed by the minister start of each meeting. members excuse includes spending time with each member of Tourism, the board is the overall and themselves from any discussions in which of the executive and his or her respective final body responsible for all decision- their duty as a member could be teams. members are also encouraged, making within Tourism New Zealand. compromised. 12 GoVerNANCe AT TourIsm New ZeAlANd // TourIsm ANNuAl rePorT // 2008 – 2009 Above: Entertainer Hinewehi Mohi performed at the 2008 Tourism New Zealand Asia Awards in Shanghai. Left: Tourism New Zealand’s mobile recording studio was launched by Prime Minister and Tourism Minister John Key, and visited 55 New Zealand towns collecting 1500 visitors’ stories. day-to-day management of the organisation external audit relationships and terms and conditions of a relationship has been delegated to the Chief executive engagements, risk management and agreement that meets the criteria who is directly accountable to the financial reporting, including adoption of determined in frs-37 for consolidating board through the Chairman. Tourism Ifrs reporting standards. following each investments in subsidiaries) the Visitor New Zealand’s delegated Authorities meeting the chair of the Audit Committee Information Network Incorporated (VIN Policy is set by the board and reviewed reports back, either verbally or through Inc), trading as i-sITe New Zealand. annually. Appropriate formal processes are written papers, to the board together with Three of Tourism New Zealand’s executive in place for reporting back to the board. appropriate recommendations. Team, including the Chief executive, are The remuneration Committee meets Tourism New Zealand manages its risks directors of Qualmark and one executive annually with the Chief executive to review through a risk management framework; a member represents Tourism New Zealand performance and to establish performance process that requires it to identify legislative on the i-sITe New Zealand board. The targets for the following year. and business risks arising from its strategic board is provided with financial information direction and operating environment. risks from each organisation at each board Tourism New Zealand has an audit identified are reviewed annually by the meeting, as well as commentary on committee which is comprised of three Audit Committee. The Chief executive performance and significant issues. board members who are appointed by regularly reports formally to the board on the board. The committee is chaired by Tourism New Zealand expects all of its the matter of new or escalated risks and susie Johnstone, a chartered accountant; employees and board members to maintain the processes in place to manage these other members are malcolm Johns and the highest ethical standards. Tourism appropriately. Paul richardson. New Zealand has in place an employee sean murray retired as a board member Tourism New Zealand conducts its own code of conduct and a formal code of and member of the Audit Committee internal audits, often with the involvement conduct for its board members. during the financial year being reported of its external auditors. Audits are agreed on. In addition, the board has appointed by the Audit Committee and programmes an external member, Gill Cox, a chartered of work are developed with input by the accountant and past president of the external auditors. The results are reported New Zealand Institute of Chartered back to the Audit Committee. Accountants. Tourism New Zealand has a controlling The Audit Committee meets at least four interest in two subsidiary companies; a times a year. It reviews Tourism 60 per cent shareholding in Qualmark New Zealand’s internal control framework, New Zealand limited; and (through the // TourIsm ANNuAl rePorT // 2008 – 2009 mANAGemeNT AT TourIsm New ZeAlANd 13 MANAGEMENT AT TOURISM NEW ZEALAND Tourism New Zealand continually reviews CATHERINE BATES TIM HUNTER the markets in which it operates and the General ManaGer General ManaGer operations extent to which it is involved in those ConsuMer MarketinG markets. As noted on page 3, Tourism Tim manages Tourism New Zealand’s New Zealand currently has nine offshore Catherine is responsible for leading Tourism international operations. This involves offices. New Zealand’s consumer marketing campaign overseeing nine offshore offices, coordinating through the global 100% Pure New Zealand project planning for international markets, management of offshore activity is achieved campaign and its merchandising brands in supporting international trade development through a regional structure whereby six Australia, the UK and the US. She also work, managing the overseas travel industry regional managers report directly to the oversees the organisation’s online team, and online training programmes and which manages the newzealand.com website, coordinating trade networking events and General manager operations, Tim Hunter. and its research team. consumer shows. Currently regional managers are located in london, los Angeles, shanghai, Tokyo, sydney and mumbai. CAS CARTER KEITH THOMAS General ManaGer General ManaGer exposure to fluctuations in foreign CoMMuniCations Corporate serviCes currency exchange rates in these countries is achieved through the use Cas is responsible for Tourism New Zealand’s Keith is responsible for information of foreign exchange instruments. The internal and external communication. technology, business planning and instruments are matched with anticipated This role includes liaising with the tourism accountability documentation and the industry, government, media and other finance and human resources aspects future cash flows in foreign currencies. stakeholders on tourism industry activities of the organisation. Tourism New Zealand does not use and issues. Cas is also the GM in charge of financial instruments for speculative Tourism New Zealand’s Rugby World Cup purposes. activities. DAvID WILKS General ManGer The board is kept appraised of offshore tourisM DevelopMent activity at each board meeting through a JANE DENT report by the General manager operations General ManaGer David is responsible for the organisation’s detailing activity by market. international puBliC relations subsidiary commitments; i-SITE New Zealand and Qualmark. Both help Jane’s role is to guide the organisation’s deliver on the promise that New Zealand is a overall public relations efforts to maximise the high-quality destination. David is Executive global brand campaign. Tourism New Zealand Manager of i-SITE New Zealand and Chair uses international media, opinion leaders and of Qualmark. He also oversees the Mäori events both on and offshore to reach its target Development team which delivers activities market with compelling reasons to travel to and training to promote New Zealand’s New Zealand. unique Mäori cultural identity, both within the organisation and wider industry. SIMON DOUGLAS ManaGer Corporate strateGy anD planninG Simon is responsible for government liaison and the preparation of strategic documents, including Tourism New Zealand’s Statement of Intent, Output Agreements and business plan with the Minister of Tourism. He also manages funding relationships with government, which includes evaluating the effectiveness of the Government’s investment in tourism. 14 // TourIsm ANNuAl rePorT // 2008 – 2009 // TourIsm ANNuAl rePorT // 2008 – 2009 sTATemeNT of serVICe PerformANCe 15 STATEMENT OF SERvICE PERFORMANCE OvERvIEW This report covers The New Zealand Tourism board’s (trading as Tourism New Zealand) service performance for the year ending 30 June 2009 against the objectives set out in the 2008/09 statement of Intent. Tourism New Zealand’s resource allocation decisions were based on the extent to which each proposed activity would contribute towards its objectives and the delivery of outputs contained in the 2008/09 statement of Intent. 16 sTATemeNT of serVICe PerformANCe HeAdING To Go Here // TourIsm ANNuAl rePorT // 2008 – 2009 In 2008/09 Tourism New Zealand’s activities were funded through two output Classes within Vote Tourism: MARKETING OF NEW ZEALAND AS A vISITOR DESTINATION Actual Statement of Intent Actual 2008/09 2008/09 2007/08 $000 $000 $000 VOTE TOURISM – MARKETING OF NEw ZEAlANd AS A VISITOR dESTINATION Crown revenue 1 $75,501 $73,001 $74,851 other revenue 2 $9,306 $1,950 $13,336 Total revenue $84,807 $74,951 $88,187 Total expenses 3 $89,519 $76,451 $84,144 This output Class involves the promotion of New Zealand as a visitor destination in key international markets. This includes consumer advertising, promotion through media and events, training for international travel sellers and communication strategies. These activities are supported by product marketing, market research, tourism development and stakeholder communications; and are developed in consultation and partnership with the tourism industry. IMPLEMENTATION OF THE TOURISM STRATEGY Actual Statement of Intent Actual 2008/09 2008/09 2007/08 $000 $000 $000 VOTE TOURISM – IMPlEMENTATION OF THE TOURISM STRATEGY Crown revenue 4 $750 $430 $220 Total expenses $750 $430 $220 This output Class includes various initiatives to implement the New Zealand Tourism strategy. In 2008/09 Tourism New Zealand was allocated funding from within this appropriation to support the ongoing implementation of the Qualmark New Zealand environmental accreditation scheme for tourism operators and to run a Qualmark consumer awareness campaign “100% Pure Assurance”. Tourism New Zealand incorporated these initiatives into its capability activities. Left: British actor and comedian Stephen Fry visited New Zealand to film the BBC series Last Chance to See which screened to around two million British viewers. 1. Crown revenue for the year includes $4 million for strategic tourism marketing of New Zealand in China, and a one-off government grant of $2.5 million for a marketing campaign in Australia. 2. Other revenue includes foreign exchange gains, bank interest and partner revenue. 3. Total expenditure reflects the utilisation of the increase in partner revenue received, foreign exchange gains made and additional funding received during the year, which were primarily directed to campaign activity. 4. Crown revenue for the year includes additional funding of $0.320 million for a Qualmark consumer awareness campaign. // TourIsm ANNuAl rePorT // 2008 – 2009 HeAdING To Go Here CAmPAIGN 17 MARKETING OF NEW ZEALAND AS A vISITOR DESTINATION: CAMPAIGN The Tourism New Zealand global marketing campaign, 100% Pure New Zealand, seeks to establish New Zealand as a ‘top of mind’ destination for travellers seeking authentic experiences that connect directly with our land and our people. The campaign promotes the core essence of the New Zealand experience, showing visitors how they can interact with our culture and natural environment. The campaign is targeted at potential travellers whose expectations match what New Zealand has to offer. These people travel regularly, participate in a wide range of tourism experiences, actively participate in a natural environment, are environmentally and culturally aware, seek authentic and new experiences and want to share them with others. Tourism New Zealand refers to these visitors as the ‘Interactive Traveller®’. AWARENESS OF NEW ZEALAND AS A TRAvEL DESTINATION 1. maintain existing awareness levels for New Zealand as a travel destination in the following key markets: 2007/08 2008/09 2008/09 Average Q1 Q2 Q3 Q4 Average Interactive Travellers Australia 55% 52% 41% 53% 51% 49% uK 29% 24% 31% 33% 33% 30% usA 18% 17% 14% 15% 20% 17% Japan 19% 18% 15% 21% 19% 18% China 35% 44% 47% 42% 55% 47% south Korea 23% 26% 21% 22% 30% 25% Germany 19% 19% 20% 20% 18% 19% Non Interactive Travellers Australia 51% 50% 36% 47% 44% 44% long Haul Travel Intenders uK 26% 21% 25% 29% 29% 26% usA 15% 13% 11% 12% 15% 13% Japan 17% 16% 13% 15% 15% 15% China 32% 36% 39% 37% 43% 38% south Korea 20% 22% 17% 18% 27% 21% Germany 17% 17% 17% 18% 15% 17% status Achieved A result shown in green indicates a statistically significantly higher result than the previous time period at the 95% confidence level. A result shown in red represents a statistically significantly lower result than the previous time period at the 95% confidence level. 18 CAmPAIGN // TourIsm ANNuAl rePorT // 2008 – 2009 Commentary A number of markets have experienced an increase in unprompted awareness compared to 2007/08 levels, the most significant being for Interactive Travellers in China (+12%); whilst other markets have experienced a decline in unprompted awareness, the most significant being for Interactive Travellers in Australia (-7%). unprompted awareness levels for New Zealand are highest in Australia and China and lowest in the usA and Japan. over the past year, Interactive Traveller awareness levels have remained higher than that of non-Interactive travellers in Australia and long Haul Travel Intenders in all other markets. 2. report on prompted awareness levels for the 100% Pure New Zealand campaign in the following key markets: 2007/08 2008/09 2008/09 Average Q1 Q2 Q3 Q4 Average Interactive Travellers Australia 52% 54% 52% 55% 56% 54% uK 29% 36% 37% 38% 35% 37% usA 16% 8% 10% 12% 10% 10% Japan 15% 15% 14% 17% 18% 16% China 32% 26% 38% 38% 42% 36% south Korea 17% 15% 11% 13% 21% 15% Germany 17% 23% 22% 27% 26% 25% Non Interactive Travellers Australia 43% 47% 43% 47% 46% 46% long Haul Travel Intenders uK 27% 27% 31% 33% 32% 31% usA 13% 8% 9% 9% 8% 8% Japan 11% 11% 12% 14% 14% 13% China 26% 22% 30% 33% 34% 30% south Korea 14% 13% 11% 13% 19% 14% Germany 16% 18% 20% 27% 23% 22% status Achieved Commentary Awareness of the 100% Pure New Zealand brand has remained high throughout the year with significant increases in the key markets of the uK, China and Germany. Awareness is at its highest in Australia, the uK and China and at its lowest in the usA, south Korea and Japan. A result shown in green indicates a statistically significantly higher result than the previous time period at the 95% confidence level. A result shown in red represents a statistically significantly lower result than the previous time period at the 95% confidence level. // TourIsm ANNuAl rePorT // 2008 – 2009 CAmPAIGN 19 RANKING OF NEW ZEALAND AS A PREFERRED HOLIDAY DESTINATION 3. maintain New Zealand’s ranking as a preferred holiday destination in Australia. Preferred Australia destination Q1 Q2 Q3 Q4 % Ranking % Ranking % Ranking % Ranking 2007/08 29% 1st 27% 2nd 27% 2nd 29% 1st 2008/09 27% 1st 29% 1st 31% 1st 30% 1st status Achieved Commentary Throughout 2008/09 New Zealand consistently achieved the highest ranking of the top 5 preferred destinations to visit for holiday or leisure purposes in the next three years by Australians. 4. Improve New Zealand’s ranking as a preferred holiday destination in the uK, usA and Japan. New Zealand Identified as a Preferred destination Q1 Q2 Q3 Q4 Average Country Year % Ranking % Ranking % Ranking % Ranking % 6th = 2007/08 21% 3rd 17% with 20% 6th 21% 5th 20% Canada uK 5th = 7th = 5th = 8th = with Italy with 2008/09 21% 18% with 18% 18% with 19% and south france Thailand egypt Africa 11th = with 10th = 12th = brazil, 2007/08 12% with 11% 18% 6th 11% with 13% Greece Japan Germany usA and egypt 8th = 11th = 11th = 2008/09 12% 12th 14% with 12% with 13% with 13% Greece Japan egypt 4th = 5th = 2007/08 18% 7th 23% with 17% 6th 21% with 19% Canada Canada Japan 3rd = with Italy 5th = 2008/09 22% 21% 4th 20% 20% 5th 21% and with usA Canada status Partially Achieved Commentary Throughout 2008/09 New Zealand’s ranking as one of the top 5 preferred destinations to visit for holiday or leisure purposes in the next three years has shown some improvement in absolute figures in each market although these improvements are not statistically significant. The percentage indicates the number of Interactive Travellers surveyed who named New Zealand in their top 5 preferred destinations. 20 CAmPAIGN // TourIsm ANNuAl rePorT // 2008 – 2009 CONvERSION RATIO 5. Improve the 2007/08 conversion ratio between awareness, preference, intention and holiday arrivals for key markets of Australia, the uK, usA and Japan. Measure 2007/08 2008/09 Australia Conversion ratio Awareness to Preference 38% 34% Conversion ratio Preference to Intention 30% 33% Arrivals 382,880 401,712 USA Conversion ratio Awareness to Preference 34% 31% Conversion ratio Preference to Intention 24% 22% Arrivals 132,972 119,132 UK Conversion ratio Awareness to Preference 34% 34% Conversion ratio Preference to Intention 26% 36% Arrivals 146,737 128,908 Japan Conversion ratio Awareness to Preference 44% 40% Conversion ratio Preference to Intention 30% 32% Arrivals 88,714 64,723 Status Partially Achieved Commentary The conversion ratio between unprompted awareness, top 5 preference to visit in the next three years and most preferred destination to visit next remained consistent in all markets apart from the uK, which experienced a significant improvement for the conversion ratio of preference to intention. SHOULDER SEASON ARRIvALS 6. Achieve a volume target of 69,262 (september-october 2008) and 68,102 (march-April 2009) for Australian shoulder season holiday visitors. Shoulder Season Target Australian Holiday Actual Australian Variance visitors Holiday visitors Sep – Oct 2008 69,262 62,490 -6,772 Mar – Apr 2009 68,102 71,126 +3,024 Status Partially Achieved Commentary As a result of the global economic downturn arrival figures have fallen in many of Tourism New Zealand’s key markets. Holiday arrivals from Australia for the september to october 2008 shoulder season were below target. A one-off government grant of $2.5 million enabled Tourism New Zealand to undertake additional campaign activity in Australia in autumn 2009. Holiday arrivals from Australia were above target for the march – April 2009 shoulder season. The total cost of delivering Campaign outputs in 2008/09 was $49.09 million. A result shown in green indicates a statistically significantly higher result than the previous time period at the 95% confidence level. A result shown in red represents a statistically significantly lower result than the previous time period at the 95% confidence level. // TourIsm ANNuAl rePorT // 2008 – 2009 CHANNel 21 MARKETING OF NEW ZEALAND AS A vISITOR DESTINATION: CHANNEL The channel component of Tourism New Zealand’s strategy aims to convert travellers’ intention to travel to New Zealand into actual arrivals, using both internet technology and the travel distribution system to assist in the conversion process. Tourism New Zealand’s consumer and trade marketing activities also provide a local presence in key overseas markets that reinforce the messages in the 100% Pure New Zealand campaign. These activities are complemented by online marketing, using Tourism New Zealand’s consumer website www.newzealand.com as a tool for providing information about New Zealand and systems to facilitate planning and booking travel to New Zealand. HOLIDAY ARRIvALS 7. maintain holiday arrivals at 2007/08 levels. YE Jun 06 YE Jun 07 YE Jun 08 YE Jun 09 Holiday arrivals 1,171,730 1,213,288 1,209,241 1,153,702 % change over previous year -4% 4% 0% -5% Status Not achieved Commentary As a result of the global economic downturn and a fall in consumer confidence holiday arrival figures have fallen in many of Tourism New Zealand’s key markets. This is reflected in an overall decrease in holiday arrivals for 2008/09. 8. maintain the proportion of Interactive Travellers® at 65%. YE June 08 YE June 09 Holiday Arrivals 1,209,241 1,153,702 Proportion of Interactive Travellers 62.8% 65.6% Status Achieved Commentary despite an overall decrease in holiday arrivals for 2008/09, the proportion of Interactive Travellers (Tourism New Zealand’s key target market) has increased during 2008/09. TRADE TRAINING 9. satisfaction levels of international travel sellers with Tourism New Zealand’s trade training activities are above 90% for extremely satisfied and very satisfied. Trade Training Activities Percentage extremely or very satisfied Trade Training 100% Trade Training Modules 97% Trade Famils 100% Status Achieved The total cost of delivering Channel outputs in 2008/09 was $16.337 million. 22 CAPAbIlITY // TourIsm ANNuAl rePorT // 2008 – 2009 MARKETING OF NEW ZEALAND AS A vISITOR DESTINATION: CAPABILITY New Zealand will always be a niche player in world tourism given our geographic distance from most main markets and the comparatively high cost to travel here. for this reason, Tourism New Zealand’s goal behind its capability strategy is to focus on ensuring New Zealand provides a quality experience for visitors. This ensures visitor satisfaction levels and word-of-mouth promotion of New Zealand as a destination remains high. Key activities within this output are market research, communication with the industry and other key stakeholders, promoting and providing support for the Qualmark quality assurance and environmental accreditation schemes and visitor information services provided by i-sITe New Zealand. NEW ZEALAND AS A HOLIDAY DESTINATION 10. 80% of Interactive Travellers are ‘very likely’ to recommend New Zealand as a holiday destination as reported in the Annual Visitor experience monitor Measure 2008/09 Target 2008/09 Actual Proportion of Interactive Travellers who were very likely to 80% 84% recommend New Zealand Status Achieved IMPLEMENTATION OF THE TOURISM STRATEGY 11. maintain the number of Qualmark licence holders above 2,200. Measure 2008/09 Target 2008/09 Actual Number of Qualmark licence Holders 2,200 2,206 Status Achieved 12. Align the statement of Intent with the New Zealand Tourism strategy 2015 Result Tourism New Zealand’s outcomes framework and output structure were reviewed and revised during 2008/09, ensuring alignment of the 2009/10 and future statements of Intent with the New Zealand Tourism strategy 2015. Status Achieved The total cost of delivering Capability outputs in 2008/09 was $24.842 million. // TourIsm ANNuAl rePorT // 2008 – 2009 mANAGemeNT sTATemeNTs 23 MANAGEMENT STATEMENTS IMPACT OF TOURISM NEW ZEALAND OUTPUTS ON INTERNATIONAL vISITOR ARRIvALS AND ExPENDITURE The number of visitors to New Zealand and the amount they spend is dependent on many variables. These include: • the marketing activities of competing destinations and the efforts of other National Tourism offices; • changes in consumer behaviour and expectations affecting travel and expenditure decisions; • private sector spend and pricing strategies employed; • airline scheduling decisions, seat capacity on air routes and ticket pricing; • exchange rates and the general economic conditions in countries of origin. International visitor arrivals for the year ending 30 June 2009 Above: Tourism New Zealand continued to support the TRENZ industry expo, which saw 260 international travel sellers visit Auckland to find out more about New Zealand were 2.41 million, a 2.8 per cent decrease over the previous year. tourism products. International visitor expenditure (sourced from the revised International Visitor survey) for the year ended 30 June 2009 was $6.016 billion, representing a 2.6 per cent decrease over the previous year. while it is not possible to determine the extent to which Tourism New Zealand’s outputs directly impacted on visitor numbers and spend for the year given the range and complexity of externalities involved, Tourism New Zealand’s delivery of outputs in 2008/09, and in previous years, will have contributed to the year’s total visitor arrivals and expenditure through: • raising the profile of New Zealand as a visitor destination through continued delivery of the 100% Pure New Zealand global and targeted campaigns in key international markets; • deepening consumer understanding and enthusiasm for New Zealand as a holiday destination and making it easy for them to plan and book their travel through online tools; • working with the travel trade to effectively sell destination New Zealand in order to convert visitor interest into actual travel; • providing the industry with market intelligence, including insights into the needs and preferences of international consumers, to better inform their activities; • providing leadership to the industry (through Tourism New Zealand’s commitments to Qualmark limited and i-sITe New Zealand) to support the delivery of a quality system which maintains visitor satisfaction at a high level and encourages positive word-of-mouth about the New Zealand experience. 24 mANAGemeNT sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 EQUAL EMPLOYMENT OPPORTUNITIES under section 151 (1)(g) of the Crown entities Act 2004, Tourism New Zealand is required to provide information about compliance with obligations to be a good employer (including our equal employment opportunities (eeo) Programme). workplace profile for Tourism New Zealand as at 30 June 2009. direct Reports to Executive Managers or Other Managers with Staff Professional and Executive Management Staff with Responsibility Responsibility (4th Tier) Support Staff for Specific Output Areas NZ European men 44% 48% 6% 8% female 44% 29% 44% 41% Mäori male 3% female 10% 1% Pacific Peoples male female 1% Asian (inc South Asian) male 5% 6% 7% female 31% 26% Other male 11% 6% female 10% 6% 14% Percentage of Group of Total Organisation 8% 18% 13% 62% Note: Totals do not add up to 100% due to roundings. WORKPLACE PROFILE BY AGE WORKPLACE PROFILE BY ETHNICITY Not kNowN other 60-69 aSiaN (iNc South aSiaN) 50-59 male pacific people female 40-49 30-39 maori 20-29 NZ europeaN 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% women are well represented at all levels in the organisation. Tourism New Zealand recognises the need for the greater involvement of mäori, and continues to promote this through the mäori development strategy and mäori Graduate development Programme, which is now in its 8th year. // TourIsm ANNuAl rePorT // 2008 – 2009 mANAGemeNT sTATemeNTs 25 LEADERSHIP, ACCOUNTABILITY AND CULTURE FLExIBILITY AND WORK DESIGN Tourism New Zealand is committed to being a good employer. Tourism New Zealand has an active programme of supporting This is reflected in our approach to the management and flexible working arrangements and job design. we continue to: leadership of all employees, which works to ensure their fair and proper treatment in all aspects of their employment. • support parents in their return to work by offering part time and gradual return to full time arrangements and flexitime our executive Team and broader management group is committed to accommodate child care needs; to demonstrating leadership and accountability in all areas of eeo. from an eeo perspective, this means a commitment to and activity • support expectant parents by granting additional time away in the following areas: from work to attend appointments associated with the pregnancy; RECRUITMENT, SELECTION AND INDUCTION • support staff with responsibilities for child and eldercare our recruitment and selection procedures ensure that all by offering on-going flexible working arrangements; prospective employees are given the opportunity to participate • support staff members with disabilities with flexitime and equally in the recruitment process. Interview questions are drawn part time working arrangements. from a carefully developed question bank designed to ensure that the selected applicant’s skills and abilities are the best fit for the position and the organisation. This includes providing appropriate REMUNERATION, RECOGNITION AND CONDITIONS support for Mäori and Pacific peoples and people with english as Internal promotions are based on individual skills and experience, a second language during the recruitment and selection process. and recognise performance regardless of ethnicity, gender or physical ability. our three-day ‘welcome to Tourism New Zealand’ programme is run as required and led by a member of our executive Team. Individuals identified as not meeting the requirements of their role each programme includes a significant cultural component which are provided with support, training and development where explores the significance of aspects of tikanga Mäori for our required to assist them to achieve success in their role. organisation and includes mihi and waiata training. HARASSMENT AND BULLYING PREvENTION Tourism New Zealand has an active Mäori graduate programme, Tourism New Zealand has a very strictly adhered to policy and which has to date recruited a total of six Mäori graduates. five of procedure for dealing with work place harassment and bullying. these continue to be employed by Tourism New Zealand in a In the 12 months being reported on, there have been no reported variety of roles, and one left soon after the completion of their allegations relating to harassment and/or bullying. graduate programme to join a regional Tourism organisation (rTo). In late 2009 we will be seconding a second former graduate to an rTo. SAFE AND HEALTHY ENvIRONMENT Tourism New Zealand works to maintain a good and safe working EMPLOYEE DEvELOPMENT, PROMOTION AND ExIT environment for all employees. we have published and well understood health and safety policies, which have been developed Tourism New Zealand has an active management and leadership to actively encourage staff involvement. Additional support for development programme for those identified with leadership and people, particularly those with disabilities, has over the last management potential. Participants for this programme are 12 months included specialist work place assessments and the nominated by their managers on the basis of performance. provision of special equipment to ensure that employees are able other training and development needs are identified on an to contribute effectively in all aspects of their working life. individual basis and are agreed between the manager and employee with development programmes being selected to meet individual identified needs. developmental activities provided to employees include coaching and mentoring, external training, tertiary study and on the job training. Te wiki o Te reo Mäori and matariki are also actively supported by Tourism New Zealand with a planned programme to provide additional skills training and learning opportunities. Tourism New Zealand has also continued to build on our earlier programme of work designed to develop and grow our organisational capability in tikanga Mäori. This is now a main stream activity within our organisation. As a result our staff has an understanding of tikanga Mäori, which is infused throughout the organisation. 26 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 FINANCIAL STATEMENTS STATEMENT OF RESPONSIBILITY In terms of the Crown entities Act 2004, the board is responsible for the preparation of the New Zealand Tourism board’s financial statements and statement of service performance, and for the judgements 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 fairly reflect the financial position and operation of the New Zealand Tourism board Group for the year ended 30 June 2009. The members of the New Zealand Tourism board and Group authorised these financial statements for issue on 29 october 2009. signed on behalf of the board: G. muir s. Johnstone Chair deputy Chair 29 october 2009 29 october 2009 // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 27 Statement of Financial Performance for the year ended 30 June 2009 GROUP PARENT 2009 2009 2008 2009 2009 2008 Notes Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Income revenue from Crown 2 76,251 73,431 75,071 76,251 73,431 75,071 Interest income 384 707 711 382 700 707 other revenue 3 5,478 3,715 6,906 2,996 1,250 4,630 foreign exchange gains 4 5,928 0 7,999 5,928 0 7,999 Total Income 88,041 77,853 90,687 85,557 75,381 88,407 Expenditure other expenses 5 83,317 78,625 83,556 80,898 76,251 81,285 depreciation & Impairment 761 718 625 680 630 602 foreign exchange losses 6 8,691 0 2,477 8,691 0 2,477 Total Expenditure 7 92,769 79,343 86,658 90,269 76,881 84,364 Net Operating Surplus/(deficit) before (4,728) (1,490) 4,029 (4,712) (1,500) 4,043 Taxation Income tax expense 20 0 0 0 0 0 0 minority interests in profits/(losses) of subsidiaries 8 13 0 (61) 0 0 0 share of loss/(gain) of associate company 9 3 0 3 0 0 0 Net Surplus/(deficit) for the year (4,744) (1,490) 4,087 (4,712) (1,500) 4,043 The notes and accounting policies on pages 29 to 49 form part of and are to be read in conjunction with these financial statements 28 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Statement of Financial Position as at 30 June 2009 GROUP PARENT 2009 2009 2008 2009 2009 2008 Notes Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Current Assets Cash 10 3,817 3,530 5,200 3,646 3,500 5,077 receivables 11 559 1,070 1,324 517 1,000 1,286 Prepayments & other current assets 612 305 1,029 603 300 1,018 derivative financial instruments 12 0 0 1,514 0 0 1,514 4,988 4,905 9,067 4,766 4,800 8,895 Non-current Assets Property plant and equipment 13 2,240 2,280 2,165 2,096 2,012 1,943 Investment in associate 9 4 5 7 0 0 0 Accommodation bonds 14 494 275 343 494 275 343 2,738 2,560 2,515 2,590 2,287 2,286 Total Assets 7,726 7,465 11,582 7,356 7,087 11,181 Current liabilities Creditors and other payables 15 3,666 4,459 4,278 3,325 3,998 3,893 employee entitlements 16 1,140 810 927 1,100 780 891 Income in advance 160 110 335 107 100 310 Provisions 17 303 0 303 303 0 303 derivative financial instruments 12 1,469 0 20 1,469 0 20 6,738 5,379 5,863 6,304 4,878 5,417 Total liabilities 6,738 5,379 5,863 6,304 4,878 5,417 Net Assets 988 2,086 5,719 1,052 2,209 5,764 Equity shareholder's equity 1,805 1,805 1,805 1,805 1,805 1,805 retained earnings (880) 281 3,864 (753) 404 3,959 minority interests 8 63 0 50 0 0 0 Total Equity 988 2,086 5,719 1,052 2,209 5,764 Statement of Changes in Equity for the year ended 30 June 2009 GROUP PARENT 2009 2009 2008 2009 2009 2008 Notes Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Balance at 1 July 5,719 3,576 1,693 5,764 3,709 1,721 movement in minority interest 13 0 (61) 0 0 0 Net surplus/(deficit) for the year (4,744) (1,490) 4,087 (4,712) (1,500) 4,043 Balance at 30 June 988 2,086 5,719 1,052 2,209 5,764 The notes and accounting policies on pages 29 to 49 form part of and are to be read in conjunction with these financial statements // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 29 Statement of Cash Flows for the year ended 30 June 2009 GROUP PARENT 2009 2009 2008 2009 2009 2008 Notes Actual Budget Actual Actual Budget Actual $000s $000s $000s $000s $000s $000s Cash flows from operating activities Crown revenue 76,251 73,431 75,071 76,251 73,431 75,071 Interest received 413 707 687 411 700 683 other revenue 5,897 3,635 6,695 3,473 1,200 4,392 Payments to suppliers and employees (82,700) (76,663) (79,545) (80,302) (74,381) (77,468) Goods and services tax (net) 21 0 274 (1) 0 306 Net cash from operating activities 18 (118) 1,110 3,182 (168) 950 2,984 Cash flows from investing activities sale of property plant and equipment 0 0 30 0 0 30 repayment of accommodation bonds 113 0 10 113 0 10 Purchase of property plant and equipment (817) (850) (1,551) (815) (700) (1,313) Payments for accommodation bonds (244) 0 (55) (244) 0 (55) Net cash outflow from investing activities (948) (850) (1,566) (946) (700) (1,328) Net increase/(decrease) in cash held (1,066) 260 1,616 (1,114) 250 1,656 effect of exchange rates on foreign currency balances (317) 0 149 (317) 0 149 opening cash brought forward 5,200 3,270 3,435 5,077 3,250 3,272 Cash at end of year 10 3,817 3,530 5,200 3,646 3,500 5,077 The notes and accounting policies on pages 29 to 49 form part of and are to be read in conjunction with these financial statements Notes to the Financial Statements for the year ended 30 June 2009 Note 1 Statement of accounting policies for the year ended 30 June 2009 (a) basis of preparation (b) statement of compliance Tourism New Zealand is a Crown entity as defined by the Crown The financial statements have been prepared in accordance with entities Act 2004 and is domiciled in New Zealand. As such, New Zealand equivalents to International financial reporting Tourism New Zealand’s ultimate parent is the New Zealand Crown. standards (NZ Ifrs) and other applicable financial reporting standards as appropriate for Public benefit entities. Tourism New Zealand’s financial statements have been prepared in accordance with New Zealand generally accepted accounting The financial statements are presented in New Zealand dollars practice and the requirements of the Crown entities Act 2004. and all values are rounded to the nearest thousand dollars ($000). The financial statements have been prepared on a historical cost The functional currency is New Zealand dollars. basis modified by the revaluation of certain assets and liabilities as identified in this statement of accounting policies. (c) New accounting standards and interpretations standards and interpretations that have recently been issued for the purposes of financial reporting, Tourism New Zealand or amended but are not yet effective have not been adopted by is classified as a Public benefit entity. Tourism New Zealand for the annual reporting period ending 30 June 2009. These are outlined in the following table. 30 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Reference Title Summary Application Impact on Application date of Group date for standard financial Group report NZ IAs 1 Presentation Introduces a statement of comprehensive income. 1 January Presentation 1 July 2009 (revised) of financial other revisions include impacts on the presentation 2009 changes only statements of items in the statement of changes in equity, new with no and presentation requirements for restatements or impact on the consequential reclassifications of items in the financial statements, financial amendments changes in the presentation requirements for statements. to other dividends and changes to the titles of the financial New Zealand statements. Accounting standards NZ Ifrs 3 business The revised standard introduces a number of 1 July The initial 1 July 2009 (revised) Combinations changes to the accounting for business 2009 application of combinations, the most significant of which allows this Ifrs is entities a choice for each business combination not expected entered into, to measure a non-controlling interest to have an (formerly a minority interest) in the acquiree either at impact on the its fair value or at its proportionate interest in the financial acquiree’s net assets. This choice will effectively statements. result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively. NZ IAs 27 Consolidated under the revised standard, a change in the 1 July The initial 1 July 2009 (revised) and separate ownership interest of a subsidiary (that does not 2009 application of financial result in loss of control) will be accounted for as an this NZ IAs is statements equity transaction. not expected (revised) to have an impact on the financial statements. Amendments Amendments The improvements project is an annual project that 1 January The 1 July 2009 to NZ Ifrs to NZ Ifrs provides a mechanism for making non-urgent, but 2009 except application of arising from necessary, amendments to Ifrss. The IAsb has for Amendments the Annual separated the amendments into two parts: Part 1 amendments to NZ Ifrs Improvements deals with changes the IAsb identified resulting in to NZ Ifrs 5 are not Project accounting changes; Part II deals with either which are expected to terminology or editorial amendments that the IAsb effective from have an believes will have minimal impact. 1 July 2009 impact on the financial statements. Amendments Amendments The amended Ifrs 7 requires fair value 1 January disclosure 1 July 2009 to to Ifrs 7 measurements to be disclosed by the source of 2009 change only International inputs, using the following three-level hierarchy: with no financial impact on the • Quoted prices in active markets for identical reporting financial assets or liabilities (level 1); standards statements. • 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) (level 2); and • Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 31 (d) basis of consolidation depreciation is calculated on a straight-line basis over the The consolidated financial statements comprise the financial estimated useful life of the asset as follows: statements of New Zealand Tourism board trading as Tourism office equipment 5 years New Zealand and its subsidiaries as at 30 June each year motor vehicles 4 – 5 years (the Group). furniture and fittings 5 – 8 years subsidiaries are combined using the purchase method of Computer equipment 3 years combination. The financial statements of subsidiaries are prepared leasehold improvements up to term of the lease for the same reporting period as the parent company, using realised gains and losses arising from the disposal of property, consistent accounting policies. plant and equipment are recognised in the statement of financial Adjustments are made to bring into line any dissimilar accounting Performance in the period in which the transaction occurs. policies that may exist. Impairment All intercompany balances and transactions, including unrealised The carrying values of plant and equipment are reviewed for profits arising from intra-group transactions, have been eliminated impairment when events or changes in circumstances indicate the in full. unrealised losses are eliminated unless costs cannot be carrying value may not be recoverable. recovered. If any such indication exists and where the carrying values exceed subsidiaries are consolidated from the date on which control is the estimated recoverable amount, the assets are written down to transferred to the Group and cease to be consolidated from the their recoverable amount. losses resulting from impairment are date on which control is transferred out of the Group. reported in the statement of financial Performance. where there is loss of control of a subsidiary, the consolidated (h) Intangible assets financial statements include the results for the part of the reporting Intangible assets are recorded at cost at acquisition. where there period during which Tourism New Zealand has control. is no active market for these assets, or they are determined to business combinations that occurred prior to the date of transition hold no future economic benefit, they are written off in the year to NZ Ifrs have not been restated retrospectively. of acquisition. Tourism New Zealand has no intangible assets with a finite life. (e) Investment in associate The Group’s investment in associates is accounted for under research and development costs are expensed as incurred. the equity method of accounting in the consolidated financial (i) Inventories statements. Inventories are valued at the lower of cost and net realisable value. An associate is an entity in which the Group has significant (j) Trade and other receivables influence and which is not a subsidiary nor a joint venture. Trade receivables are recognised and carried at original invoice The annual financial statements of the associate are used by the amount less an allowance for any uncollectible amounts. Group to apply the equity method. The reporting dates of the An estimate for doubtful debts is made when collection of the associate and the Group are identical and both use consistent full amount is no longer probable. bad debts are written off when accounting policies. identified. The investment in the associate is carried in the balance sheet (k) Cash and cash equivalents at cost plus post-acquisition changes in the Group’s share of Cash and short-term deposits in the statement of financial net assets of the associate, less any impairment in value. The Position comprise cash at bank and in hand and short-term consolidated income statement reflects the Group’s share of the deposits with an original maturity of three months or less. results of operations of the associate. for the purposes of the statement of Cash flows, cash and cash where there has been a change recognised directly in the equivalents consist of cash and cash equivalents as defined above. associate’s equity, the Group recognises its share of any changes and discloses this, when applicable in the consolidated statement (l) Provisions of changes in equity. Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable (f) foreign currency that an outflow of resources embodying economic benefits will Transactions denominated in foreign currency are recorded in be required to settle the obligation and a reliable estimate can be NZ dollars by applying exchange rates that approximate rates made of the amount of the obligation. prevailing at the date of the transaction. where the Group expects some or all of a provision to be monetary assets and liabilities denominated in foreign currencies are reimbursed, for example under an insurance contract, the translated at the rate of exchange ruling at the balance sheet date. reimbursement is recognised as a separate asset but only when exchange gains and losses are recognised in the statement of the reimbursement is virtually certain. The expense relating to any financial Performance. provision is presented in the statement of financial Performance net of any reimbursement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at If the effect of the time value of money is material, provisions are the date of the initial transaction. determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of (g) Property, plant and equipment money and, where appropriate, the risks specific to the liability. Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 32 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 (m) leases ventures, and the timing of the reversal of the temporary The determination of whether an arrangement is or contains a difference can be controlled and it is probable that the lease is based on the substance of the arrangement and requires temporary difference will not reverse in the foreseeable an assessment of whether the fulfilment of the arrangement future. is dependent on the use of a specific asset or assets and the deferred income tax assets are recognised for all deductible arrangement conveys a right to use the asset. temporary differences, carry-forward of unused tax credits and leases where the lessor retains substantially all the risks and benefits unused tax losses, to the extent that it is probable that taxable profit of ownership of the asset are classified as operating leases. operating will be available against which the deductible temporary differences lease payments are recognised as an expense in the statement of and the carry-forward of unused tax credits and unused tax losses financial Performance on a straight-line basis over the lease term. can be utilised, except: The Group does not enter into finance leases. • when the deferred income tax asset relating to the deductible (n) revenue temporary difference arises from the initial recognition of an revenue is recognised to the extent that it is probable that the asset or liability in a transaction that is not a business economic benefits will flow to the Group and the revenue can be combination and, at the time of the transaction, affects neither reliably measured. The following specific recognition criteria must the accounting profit nor taxable profit or loss; or also be met before revenue is recognised: • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint Grants received from the Crown Grants received from the Crown are recognised as revenue on receipt. ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference Sale of goods and service will reverse in the foreseeable future and taxable profit will be revenue from the supply of goods and services is recognised available against which the temporary difference can be utilised. when the significant risks and rewards of ownership of the goods The carrying amount of deferred income tax assets is reviewed have passed to the buyer and can be measured reliably. risks and at each statement of financial Position date and reduced to the rewards are considered passed to the buyer at the time of delivery extent that it is no longer probable that sufficient taxable profit will of the goods to the customer. be available to allow all or part of the deferred income tax asset to revenue from the supply of services is recognised on a straight line be utilised. basis over the specified period for the service unless an alternative unrecognised deferred income tax assets are reassessed at each method better represents the stage of completion of the transaction. statement of financial Position date and are recognised to the Interest extent that it has become probable that future taxable profit will Interest revenue is recognised as interest accrues using the allow the deferred tax asset to be recovered. effective interest method. This is a method of calculating the deferred income tax assets and liabilities are measured at the amortised cost of a financial asset and allocating the interest tax rates that are expected to apply to the year when the asset is income over the relevant period using the effective interest rate, realised or the liability is settled, based on tax rates (and tax laws) which is the rate that exactly discounts estimated future cash that have been enacted or substantively enacted at the statement receipts through the expected life of the financial asset to the net of financial Position date. carrying amount of the financial asset. deferred tax assets and deferred tax liabilities are offset only if a (o) Income tax legally enforceable right exists to set off current tax assets against Tourism New Zealand is exempt from income tax under the current tax liabilities and the deferred tax assets and liabilities New Zealand Tourism board Act 1991. Tourism New Zealand’s relate to the same taxable entity and the same taxation authority. subsidiaries are subject to income tax. (p) other taxes Current tax assets and liabilities for the current and prior periods revenues, expenses and assets are recognised net of the amount are measured at the amount expected to be recovered from or of GsT except: paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the where the GsT incurred on a purchase of goods and services is not amount are those that are enacted or substantively enacted by the recoverable from the taxation authority, in which case the GsT is statement of financial Position date. recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and deferred income tax is provided on all temporary differences at the statement of financial Position date between the tax bases receivables and payables are stated with the amount of GsT of assets and liabilities and their carrying amounts for financial included. reporting purposes. The net amount of GsT recoverable from, or payable to, the deferred income tax liabilities are recognised for all taxable taxation authority is included as part of receivables or payables in temporary differences except: the statement of financial Position. • when the deferred income tax liability arises from the initial Cash flows are included in the statement of Cash flows on a gross recognition of goodwill or of an asset or liability in a transaction basis and the GsT component of cash flows arising from investing that is not a business combination and that, at the time of the and financing activities, which is recoverable from, or payable to, transaction, affects neither the accounting profit nor taxable the taxation authority are classified as operating cash flows. profit or loss; or Commitments and contingencies are disclosed net of the amount • when the taxable temporary difference is associated with of GsT recoverable from, or payable to, the taxation authority. investments in subsidiaries, associates or interests in joint // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 33 (q) financial instruments other employee entitlements. employee entitlements to salaries and wages, annual leave, long service leave, retiring leave Tourism New Zealand uses derivative financial instruments such as and other similar benefits are recognised in the statement of foreign currency contracts to manage its exposure to foreign exchange financial Performance when they accrue to employees. employee risk arising from its operational activities. Tourism New Zealand does entitlements to be settled within 12 months are reported at the not hold or issue these financial instruments for trading purposes. amount expected to be paid. The liability for long-term employee Tourism New Zealand has not adopted hedge accounting. entitlements is reported as the present value of the estimated derivatives are initially recognised at fair value on the date future cash flows. a derivative contract is entered into and are subsequently Termination benefits. Termination benefits are recognised in remeasured to their fair value at each balance date. movements in the statement of financial Performance only where there is a the fair value of derivative financial instruments are recognised in demonstrable commitment to either terminate employment prior the statement of financial Performance. to normal retirement date or to provide such benefits as a result of foreign exchange gains and losses resulting from the settlement an offer to encourage voluntary redundancy. Termination benefits of derivative financial instruments and from the translation at year settled within 12 months are reported at the amount expected to end exchange rates of monetary assets and liabilities denominated be paid, otherwise they are reported as the present value of the in foreign currencies are recognised in the statement of financial estimated future cash flows. Performance. (s) Contingent Assets and Contingent liabilities Cash and cash equivalents include cash on hand, cash in transit, Contingent assets and contingent liabilities are recorded in bank accounts and deposits with a maturity of no more than three the Notes to the financial statements at the point at which the months from date of acquisition contingency is evident. Contingent liabilities are disclosed if the possibility that they will crystallise is not remote. Contingent assets The fair value of forward exchange contracts is calculated by are disclosed if it is probable that the benefits will be realised. reference to current forward exchange rates for contracts with similar maturity profiles. (t) segment reporting Tourism New Zealand’s primary function is to market New Zealand (r) employee benefits as a tourism destination. To achieve this, Tourism New Zealand Pension liabilities. obligations for contributions to defined maintains offices in a number of overseas countries. However, contribution retirement plans are recognised in the statement of all Tourism New Zealand’s activities are co-ordinated from financial Performance as they fall due. New Zealand. GROUP PARENT Note 2 Crown revenue 2009 2008 2009 2008 $000s $000s $000s $000s Crown revenue 70,301 70,301 70,301 70,301 During the year, additional funding was provided by the Crown for the following: China 4,025 3,025 4,025 3,025 Australia 2,812 0 2,812 0 Qualmark New Zealand ltd 844 529 844 529 rugby world Cup 0 2,925 0 2,925 Total revenue received from the Crown 77,982 76,780 77,982 76,780 less GsT 1,731 1,709 1,731 1,709 Net revenue received from the Crown 76,251 75,071 76,251 75,071 Note 3 Other revenue 2009 2008 2009 2008 $000s $000s $000s $000s sales 2,483 2,283 1 7 Partnership income 2,992 4,610 2,992 4,610 Gain on sale of property, plant and equipment 3 13 3 13 Total other revenue 5,478 6,906 2,996 4,630 34 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 GROUP PARENT Note 4 Foreign exchange gains 2009 2008 2009 2008 $000s $000s $000s $000s Gains on derivative financial instruments 20 4,040 20 4,040 foreign exchange gains 5,908 3,959 5,908 3,959 Total foreign exchange gains 5,928 7,999 5,928 7,999 Note 5 Other expenses include: 2009 2008 2009 2008 Personnel expenses Number of permanent and fixed term staff 139 138 126 124 2009 2008 2009 2008 $000s $000s $000s $000s salaries and wages 12,332 12,062 11,342 11,081 employer superannuation contributions 229 213 212 203 Increase/(decrease) in employee entitlements (note 16) 213 150 209 137 other personnel expenses 905 1,490 905 1,432 13,679 13,915 12,668 12,853 2009 2008 2009 2008 $000s $000s $000s $000s Personnel costs for New Zealand and offshore staff were: New Zealand Personnel expenses – Tourism New Zealand 6,924 7,130 6,924 7,130 New Zealand Personnel expenses – subsidiaries 1,011 1,062 0 0 offshore Personnel expenses 5,744 5,723 5,744 5,723 13,679 13,915 12,668 12,853 2009 2008 2009 2008 Number of ceased staff paid compensation or other benefits 3 4 2 4 2009 2008 2009 2008 $000s $000s $000s $000s Compensation or other benefits paid to ceased staff 232 46 205 46 2009 2008 2009 2008 $000s $000s $000s $000s 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 80 81 71 70 other services 35 39 35 39 115 120 106 109 Amounts received or due and receivable by auditors other than Ernst & Young New Zealand for: The audit of the financial report of subsidiary entities 4 5 0 0 119 125 106 109 // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 35 Note 5 continued GROUP PARENT 2009 2008 2009 2008 $000s $000s $000s $000s Other expenses loss on disposal of property, plant and equipment 11 156 11 156 lease expense 2,335 2,360 2,165 2,206 remuneration of board members of Parent (see also note 30) – – 221 204 Note 6 Foreign exchange losses 2009 2008 2009 2008 $000s $000s $000s $000s Foreign exchange losses losses on derivative financial instruments 2,982 20 2,982 20 foreign exchange losses 5,709 2,457 5,709 2,457 Total foreign exchange losses 8,691 2,477 8,691 2,477 Note 7 Total expenditure of parent 2009 2008 $000s $000s Total expenditure by geographic region: Australia 12,882 10,199 North America 9,328 9,674 uK & europe 13,960 14,614 Japan 3,021 5,849 Asia 9,736 8,599 other markets 26 112 New Zealand (a) 32,625 32,840 81,578 81,887 foreign exchange losses 8,691 2,477 Total expenditure of Parent 90,269 84,364 (a) New Zealand expenditure includes costs that apply to all markets and across a number of campaigns including the 100% Pure New Zealand Campaign, the International media Programme and the newzealand.com website. 2009 2008 $000s $000s Total expenditure by the three strategic categories outlined in the Statement of Service Performance: Campaign 49,090 48,228 Channel 16,337 16,622 Capability 24,842 19,514 Total expenditure of Parent 90,269 84,364 Note 8 Subsidiary companies Interest Held Interest Held 2009 2008 2009 2008 Qualmark New Zealand limited 60% 60% 60% 60% Visitor Information Network Incorporated (trading as i-sITe NZ) 0% 0% 0% 0% 36 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Note 8 continued GROUP PARENT 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. The assets, liabilities, revenue and deficit/surplus of Qualmark New Zealand which are included in the financial statements are as follows: 2009 2008 2009 2008 $000s $000s $000s $000s Current assets 63 80 - - Non-current assets 144 222 - - 207 302 - - Current liabilities 338 404 - - Non-current liabilities 0 0 - - 338 404 - - Net assets (131) (102) - - revenue 3,261 2,990 - - surplus/(deficit) (29) 47 - - 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 Ifrs 3 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 assets, liabilities, revenue and deficit/surplus of Visitor Information Network Incorporated which are included in the financial statements are as follows: 2009 2008 2009 2008 $000s $000s $000s $000s Current assets 202 120 - - Non-current assets 0 0 - - 202 120 - - Current liabilities 138 70 - - Non-current liabilities 0 0 - - 138 70 - - Net assets 64 50 - - revenue 838 841 - - (deficit)/surplus 13 (61) - - // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 37 GROUP PARENT Note 9 Associate company 2009 2008 2009 2008 $000s $000s $000s $000s The New Zealand way limited 4 7 - - 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: 2009 2008 2009 2008 $000s $000s $000s $000s Share of associate's balance sheet: Current assets 6 10 - - Current liabilities 3 3 - - Net assets 3 7 - - Share of associate's revenue and (deficit)/surplus: revenue 0 0 - - (deficit)/surplus (3) (3) - - Carrying amount at beginning of year 7 10 - - Carrying amount at end of year 4 7 - - Note 10 Cash 2009 2008 2009 2008 $000s $000s $000s $000s Cash Holdings: Cash at bank and in hand 1,156 1,488 1,065 1,365 Call accounts – foreign currencies 1,879 2,265 1,879 2,265 Call accounts – New Zealand dollar 782 1,447 702 1,447 3,817 5,200 3,646 5,077 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. 38 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Note 10 continued GROUP PARENT 2009 2008 2009 2008 $000s $000s $000s $000s Cash Holdings by Currency: New Zealand dollar 1,138 2,181 967 2,058 united states dollar 214 336 214 336 british Pound 94 677 94 677 Australian dollar 909 287 909 287 european euro 412 359 412 359 Japanese Yen 78 210 78 210 singapore dollar 403 707 403 707 Canadian dollar 349 203 349 203 Indian rupee 107 171 107 171 other Asian Currencies 113 69 113 69 3,817 5,200 3,646 5,077 Cash Holdings by Bank: HsbC bank 2,971 3,020 2,821 2,986 National bank of New Zealand 48 736 48 736 bank of New Zealand 730 1,253 709 1,164 deutsche bank 0 91 0 91 Tokyo mitsubishi 68 100 68 100 3,817 5,200 3,646 5,077 The fair value of cash and cash equivalents is $3,817,000 (2008: $5,200,000). Note 11 Receivables 2009 2008 2009 2008 $000s $000s $000s $000s receivables 575 1,331 528 1,289 less: Provision for impairment (16) (7) (11) (3) 559 1,324 517 1,286 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 2009 and 2008, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below: PARENT 2009 2008 Gross Impairment Net Gross Impairment Net Parent $000s $000s $000s $000s $000s $000s Not past due 425 0 425 1,219 0 1,219 Past due 1 – 30 days 47 0 47 1 0 1 Past due 31 – 60 days 34 0 34 55 0 55 Past due 61 – 90 days 0 0 0 2 0 2 Past due > 91 days 22 (11) 11 12 (3) 9 528 (11) 517 1,289 (3) 1,286 // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 39 Note 11 continued GROUP 2009 2008 Gross Impairment Net Gross Impairment Net Group $000s $000s $000s $000s $000s $000s Not past due 482 0 482 1,215 0 1,215 Past due 1 – 30 days 44 0 44 27 0 27 Past due 31 – 60 days 27 0 27 56 0 56 Past due 61 – 90 days 3 0 3 19 0 19 Past due > 91 days 19 (16) 3 14 (7) 7 575 (16) 559 1,331 (7) 1,324 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 61% (46% in 2008) of total receivables as follows: GROUP PARENT 2009 2008 2009 2008 $000s $000s $000s $000s GsT refund due from NZ Inland revenue department 298 536 298 523 GsT refund due from Australian Taxation office 29 32 29 32 VAT refund due from uK Customs & excise 21 38 21 38 348 606 348 593 Note 12 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 (2008: 36) foreign exchange contracts maturing at various dates over the next 12 months. The contracts are designated as held for trading financial instruments with fair value gains or losses recognised in the statement of financial Performance. Foreign currency forward exchange contracts: 2009 2008 2009 2008 $000s $000s $000s $000s foreign exchange contracts at 30 June – sell Value 37,550 35,800 37,550 35,800 fair value derivatives in Gain 0 1,514 0 1,514 fair value derivatives in loss (1,469) (20) (1,469) (20) foreign exchange contracts at 30 June 36,081 37,294 36,081 37,294 Foreign exchange contracts by currency: united states dollar 10,178 12,303 10,178 12,303 british Pound 5,921 8,044 5,921 8,044 Australian dollar 11,013 9,959 11,013 9,959 european euro 4,706 2,156 4,706 2,156 Japanese Yen 3,162 2,842 3,162 2,842 Canadian dollar 1,101 1,990 1,101 1,990 36,081 37,294 36,081 37,294 40 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 GROUP PARENT Note 13 Property plant and equipment 2009 2008 2009 2008 $000s $000s $000s $000s All property plant and equipment At cost 6,085 5,843 5,669 5,419 Accumulated depreciation (3,845) (3,678) (3,573) (3,476) Net carrying amount of furniture and fittings 2,240 2,165 2,096 1,943 Property plant and equipment for each class: furniture and fittings At cost 1,173 997 1,132 959 Accumulated depreciation (458) (327) (421) (292) Net carrying amount of furniture and fittings 715 670 711 667 leasehold improvements At cost 1,961 1,654 1,851 1,544 Accumulated depreciation (1,088) (882) (978) (772) Net carrying amount of leasehold improvements 873 772 873 772 office equipment At cost 624 609 624 609 Accumulated depreciation (498) (447) (498) (447) Net carrying amount of office equipment 126 162 126 162 motor vehicles At cost 61 112 61 112 Accumulated depreciation (30) (61) (30) (61) Net carrying amount of motor vehicles 31 51 31 51 Computer equipment At cost 2,266 2,471 2,001 2,195 Accumulated depreciation (1,771) (1,961) (1,646) (1,904) Net carrying amount of computer equipment 495 510 355 291 Total property plant and equipment 2,240 2,165 2,096 1,943 All property plant and equipment reconciliation At 1 July, net of accumulated depreciation 2,165 1,616 1,943 1,609 Additions 854 1,348 851 1,110 disposals (18) (174) (18) (174) depreciation charge for the year (761) (625) (680) (602) At 30 June, net of accumulated depreciation 2,240 2,165 2,096 1,943 depreciation by asset class: furniture and fittings 140 108 138 106 leasehold improvements 254 173 254 173 office equipment 56 89 56 89 motor vehicles 12 12 12 12 Computer equipment 299 243 220 222 Total depreciation 761 625 680 602 // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 41 GROUP PARENT Note 14 Accommodation bonds Accommodation bonds are refundable deposits or key money paid for the lease of office and housing premises. 2009 2008 2009 2008 $000s $000s $000s $000s uK & europe 0 9 0 9 Japan 177 155 177 155 Asia 317 179 317 179 494 343 494 343 Note 15 Creditors and other payables Payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value. 2009 2008 2009 2008 $000s $000s $000s $000s Creditors 595 1,426 478 1,301 Accrued expenses 3,071 2,852 2,847 2,592 3,666 4,278 3,325 3,893 Note 16 Employee entitlements 2009 2008 2009 2008 $000s $000s $000s $000s Annual leave 551 430 511 394 retirement leave 575 437 575 437 long service leave 2 58 2 58 sick leave 12 2 12 2 1,140 927 1,100 891 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 seven Tourism New Zealand offices and is expected to be incurred over the next 12 years. 2009 2008 2009 2008 $000s $000s $000s $000s Provisions are represented by: lease make-good 303 303 303 303 Total Provisions 303 303 303 303 Movements in the lease make-good is as follows: balance at 1 July 303 220 303 220 Additional provisions made 20 165 20 165 Amounts used (12) (82) (12) (82) unused amounts reversed (8) 0 (8) 0 balance at 30 June 303 303 303 303 42 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 GROUP PARENT Note 18 Reconciliation of surplus/(deficit) to net cash from operating activities 2009 2008 2009 2008 $000s $000s $000s $000s Net operating surplus/(deficit) (4,728) 4,029 (4,712) 4,043 Add/(less) non-cash items depreciation and impairment 761 624 680 602 Net (gains) on derivative financial instruments (20) (4,040) (20) (4,040) Net losses on derivative financial instruments 2,982 20 2,982 20 Net foreign exchange (gains)/losses 317 (149) 317 (149) Total non-cash items 4,040 (3,545) 3,959 (3,567) Add/(less) items classified as investing or financing activities Net loss/(Gain) on disposal of assets 8 143 8 143 Net loss/(Gain) on foreign currency accomodation bonds (18) (23) (18) (23) Total items classified as investing or financing activities (10) 120 (10) 120 Add/(less) movements in working capital items debtors and other receivables 752 (150) 769 (151) Prepayments 413 1,869 415 1,866 Payables & accruals (621) 626 (595) 453 Provisions 0 83 0 83 Income in advance (176) 0 (203) 0 employee entitlements 212 150 209 137 Net movements in working capital items 580 2,578 595 2,388 Net cash from operating activities (118) 3,182 (168) 2,984 Note 19 Contingent liabilities and contingent assets 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. other than this undertaking, and uncalled capital in Qualmark, there are no known contingencies for the Group or Parent as at 30 June 2009 (2008: Nil). Note 20 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 $312,447 (2008: $220,854) // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 43 Note 21 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 off shore travel. Insured values are reviewed annually and adjusted to reflect changes in business operations. Note 22 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. Retirement and long service leave The present value of the retirement and long service leave obligations (Note 16) depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. In determining the appropriate discount rate Tourism New Zealand considered the interest rates on NZ government bonds which have terms to maturity that match, as closely as possible, the estimated future cash outflows. The salary inflation factors have been determined after considering historical salary inflation patterns and long term inflation assumptions in the countries concerned. Any changes in these assumptions will impact on the carrying amount of the liability. Note 23 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. 44 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 GROUP PARENT Note 24 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: 2009 2008 2009 2008 $000s $000s $000s $000s Financial assets: Cash and cash equivalents 3,817 5,200 3,646 5,077 debtors and other receivables 559 1,324 517 1,286 Total loans and receivables 4,376 6,524 4,163 6,363 Fair value through profit and loss: derivative financial instrument assets 0 1,514 0 1,514 derivative financial instrument liabilities 1,469 20 1,469 20 Other liabilities: Creditors and other payables 3,666 4,278 3,325 3,893 Income in advance 160 335 107 310 Total other liabilities 3,826 4,613 3,432 4,203 Note 25 Capital commitments 2009 2008 2009 2008 $000s $000s $000s $000s Total capital expenditure contracted for at balance date but not provided for in the financial statements 24 0 24 0 // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 45 GROUP PARENT Note 26 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. 2009 2008 2009 2008 $000s $000s $000s $000s operating Commitments payable after balance date on: Non-Cancellable Accommodation Leases: up to one Year 2,159 2,095 2,085 2,020 one to Two Years 1,340 1,698 1,340 1,698 Two to five Years 2,282 2,866 2,282 2,866 over five Years 3,409 4,108 3,409 4,108 9,190 10,767 9,116 10,692 Non-Cancellable Motor Vehicle & Equipment Leases up to one Year 246 286 170 210 one to Two Years 135 230 105 154 Two to five Years 92 159 82 131 over five Years 0 0 0 0 473 675 357 495 Non-Cancellable Contracts for Goods & Services up to one Year 227 107 227 107 one to Two Years 13 0 13 0 Two to five Years 0 0 0 0 over five Years 0 0 0 0 240 107 240 107 Total Commitments 9,903 11,549 9,713 11,294 Note 27 Related party transactions Tourism New Zealand is a wholly owned entity of the Crown which has the abiity 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. 46 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Note 27 continued Transaction value Balance outstanding year ended 30 June year ended 30 June 2009 2008 2009 2008 $000s $000s $000s $000s Related Party and Transaction subsidiary – Qualmark New Zealand limited: shareholder income provided by Tourism New Zealand 1,141 1,046 0 0 Purchases from Tourism New Zealand 100 52 42 28 sales to Tourism New Zealand 2 0 0 0 subsidiary – Visitor Information Network Inc: shareholder income provided by Tourism New Zealand 500 500 0 0 sales to Tourism New Zealand 0 0 0 0 Purchases from Tourism New Zealand 0 5 0 0 Associate – The New Zealand way limited: shareholder income provided by Tourism New Zealand 0 0 0 0 Tourism New Zealand also enters into transactions with board members and entities over which they have control or significant influence. These transactions occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm’s length. The following table provides the total amount of transactions that were entered into with these related parties. Transaction value Balance outstanding year ended 30 June year ended 30 June 2009 2008 2009 2008 $000s $000s $000s $000s Related Party and Transaction Income has been received by Tourism New Zealand from: G Coughlan (Chair): Positively wellington Tourism – Income received by TNZ for joint advertising campaigns and other tourism related services. 102 441 0 0 P bingham (director): Air New Zealand limited and Christchurch & Canterbury Convention bureau ltd. (Chair): Christchurch & Canterbury marketing ltd – Income received by TNZ for joint advertising campaigns and other tourism related services. 44 767 5 0 m Johns (Chief executive): Intercity Group (NZ) limited – Income received by TNZ for tourism related services. 11 0 0 0 P richardson (Vice President): Accor Hospitality NZ and fiji – Income received by TNZ for tourism related services. 7 0 0 0 J barrett (director): Aviation/Tourism/Travel Training organisation (ATTTo) – Income received by TNZ for tourism related services. 5 0 0 0 Payments have been made by Tourism New Zealand to: P bingham (director): Air New Zealand ltd. (Chair): Christchurch & Canterbury marketing ltd – Provision of travel and tourism related services to TNZ. 1,301 3 23 0 P richardson (director): Tourism Industry Association – Provision of tourism related services to TNZ. 157 0 0 0 G muir (Non-executive Chairman): Pumpkin Patch ltd – reimbursement of travel. 12 0 0 0 J barrett (managing director): Kapiti Island Alive & Kapiti Nature lodge. (director): Aviation/Tourism/Travel Training organisation (ATTTo) – Provision of tourism related services to TNZ 6 3 0 0 G Coughlan (Chair): Positively wellington Tourism – Provision of tourism related service to TNZ. 1 21 0 0 // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 47 Note 27 continued H van Asch (managing director): High Plains wine Co ltd. (director): Auckland bungy ltd – Provision of tourism related services to TNZ 1 0 0 0 K Guy (director): bayview International Group of Hotels and resorts – Provision of conference and accomodation services to TNZ 0 76 0 0 PARENT 2009 2008 $000s $000s Key management personnel compensation salaries and other short-term employee benefits 2,219 1,877 Post-employment benefits 0 0 other long-term benefits 61 60 Termination benefits 0 0 Total key management personnel compensation 2,280 1,937 Key management personnel includes all board members, the Chief executive and the 7 (2008: 6) members of the executive Team. Note 28 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 Fair value interest rate risk – fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market rates. Tourism New Zealand has no exposure to fair value interest rate risk as all bank deposits are held at call rates. Interest rate risk sensitivity analysis – As at 30 June 2009, if interest rates on bank deposits had increased/decreased by 0.5% (50 basis ponts) with all other variables held constant, the deficit would have changed as follows: 2009 2008 2009 2008 $000s $000s $000s $000s If the interest rate had increased by 0.5% the deficit would have been lower by: 10 19 9 19 If the interest rate had decreased by 0.5% the deficit would have been higher by: 10 19 9 19 Currency risk – Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. As a result of significant operations around the world, Tourism New Zealand is required to enter into transactions denominated in foreign currencies. As a result of these activities, exposure to currency risk arises. It is Tourism New Zealand’s policy to manage foreign currency risks arising from contractual commitments and liabilities by entering into foreign exchange forward contracts to cover the foreign currency exposure. Currency risk sensitivity analysis – Tourism New Zealand is subject to volatility in financial performance associated with foreign currency rates, especially when recognising fair value movements associated with forward foreign exchange contracts. As at 30 June 2009, if the NZ dollar had increased/decreased by 5% against the basket of foreign currencies used by Tourism New Zealand with all other variables held constant, the deficit would have changed as follows: 2009 2008 2009 2008 $000s $000s $000s $000s If the NZ dollar had decreased by 5% the deficit would have been lower by: 1,895 2,056 1,895 2,056 If the NZ dollar had increased by 5% the deficit would have been higher by: 1,715 1,860 1,715 1,860 This movement is attributable to foreign exchange gains/losses on translation of forward foreign exchange contracts and other foreign currency denominated assets and liabilities. 48 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Note 28 continued 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 10), net debtors (note 11) and derivative financial instruments (note 12). 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. Note 29 Remuneration of employees during 2008/2009 34 (2008: 32) employees received remuneration and benefits which exceeded $100,000 per annum as follows: PARENT $ 2009 2008 100,000 – 109,999 6 7 110,000 – 119,999 6 5 120,000 – 129,999 4 3 130,000 – 139,999 2 2 140,000 – 149,999 2 2 150,000 – 159,999 2 1 160,000 – 169,999 0 1 170,000 – 179,999 1 0 180,000 – 189,999 0 1 200,000 – 209,999 2 2 210,000 – 219,999 1 0 240,000 – 249,999 1 2 250,000 – 259,999 1 1 260,000 – 269,999 1 1 270,000 – 279,999 1 0 280,000 – 289,999 1 1 290,000 – 299,999 1 0 300,000 – 309,999 0 2 310,000 – 319,999 1 0 390,000 – 399,999 0 1 430,000 – 439,999 1 0 34 32 Average remuneration of above employees $171,478 $170,514 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. // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 49 PARENT Note 30 Remuneration of board members 2009 2008 $000s $000s board members earned the following fees during the year: G muir (Chair) 58 0 s Johnstone (deputy Chair) 25 25 P bingham 20 20 G Coughlan 20 20 J barrett 20 20 m Johns 20 20 H van Asch 17 0 J langley 4 0 P richardson 4 0 s murray 15 20 K mcKelvie 15 20 K Guy 3 20 w stone 0 39 221 204 Changes in board members: G muir was appointed Chairman on 15 July 2008. K Guy resigned as a board member on 14 August 2008 and s murray and K mcKelvie’s terms expired 30 march 2009. Henry van Asch was appointed as a board member on 1 september 2008 and P richardson and J langley were appointed as board members on 10 April 2009. 50 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 Five Year Financial Summary for Parent statement of financial Position 2005 2006 2007 2008 2009 Actual Actual Actual Actual Actual $000s $000s $000s $000s $000s Current Assets Cash 6,673 6,086 3,272 5,077 3,646 receivables 1,133 882 1,135 1,286 517 Prepayments & other current assets 600 275 2,884 1,018 603 derivative financial instruments - - 0 1,514 0 8,406 7,243 7,291 8,895 4,766 Non-current Assets Property plant and equipment 1,223 1,469 1,609 1,943 2,096 Accommodation bonds 228 340 275 343 494 1,451 1,809 1,884 2,286 2,590 Total Assets 9,857 9,052 9,175 11,181 7,356 Current liabilities Creditors and other payables 4,614 4,389 3,954 4,203 3,432 Provisions 0 0 220 303 303 employee entitlements 333 357 754 891 1,100 derivative financial instruments - - 2,526 20 1,469 4,947 4,746 7,454 5,417 6,304 Total liabilities 4,947 4,746 7,454 5,417 6,304 Net Assets 4,910 4,306 1,721 5,764 1,052 Equity shareholder's equity 1,805 1,805 1,805 1,805 1,805 retained earnings 3,105 2,501 (84) 3,959 (753) Total Equity 4,910 4,306 1,721 5,764 1,052 statement of financial Performance 2005 2006 2007 2008 2009 Actual Actual Actual Actual Actual $000s $000s $000s $000s $000s Revenue Government grants 69,754 79,358 74,246 75,071 76,251 Interest 627 745 859 707 382 other revenue 289 474 4,243 4,630 2,996 foreign exchange gains - - 2,617 7,999 5,928 70,670 80,577 81,965 88,407 85,557 Expenditure other expenses 69,021 80,629 78,653 81,285 80,898 depreciation & Impairment 667 552 738 602 680 foreign exchange losses - - 7,128 2,477 8,691 69,688 81,181 86,519 84,364 90,269 Net Operating Surplus/(deficit) 982 (604) (4,554) 4,043 (4,712) The 2008 financial year was Tourism New Zealands first set of financial statements to be prepared in accordance with New Zealand International Financial Reporting Standards (NZ IFRS.) The comparative figures for 2007 have been restated accordingly to NZ IFRS. Note however that the comparatives figures from 2005 to 2006 in the above table have not been restated to NZ IFRS. // TourIsm ANNuAl rePorT // 2008 – 2009 fINANCIAl sTATemeNTs 51 AUdIT REPORT To THe reAders of New ZeAlANd TourIsm boArd ANd GrouP’s fINANCIAl sTATemeNTs ANd sTATemeNT of serVICe PerformANCe for THe YeAr eNded 30 JuNe 2009 The Auditor-General is the auditor of the New Zealand Tourism board performance. we assessed the results of those procedures in forming (the board) and group. The Auditor-General has appointed me, Grant our opinion. Taylor, using the staff and resources of ernst and Young, to carry out Audit procedures generally include: the audit on his behalf. The audit covers the financial statements and statement of service performance included in the annual report of the - determining whether significant financial and management controls board and group for the year ended 30 June 2009. are working and can be relied on to produce complete and accurate data; Unqualified Opinion In our opinion: - verifying samples of transactions and account balances; - The financial statements of the board and group on pages - performing analyses to identify anomalies in the reported data; 27 to 49: - reviewing significant estimates and judgements made by members - comply with generally accepted accounting practice in of the board; New Zealand; - confirming year-end balances; - give a true and fair view of: - determining whether accounting policies are appropriate and - the board and group’s financial position as at consistently applied; and 30 June 2009; and - determining whether all financial statement and statement of - the results of operations and cash flows for the service performance disclosures are adequate. year ended on that date. we did not examine every transaction, nor do we guarantee complete - The statement of service performance of the board and accuracy of the financial statements and statement of service group on pages 16 to 22: performance. - complies with generally accepted accounting practice in we evaluated the overall adequacy of the presentation of information in New Zealand; and the financial statements and statement of service performance. we - gives a true and fair view of, for each class of outputs: obtained all the information and explanations we required to support our opinion above. - standards of delivery performance achieved, as compared with the forecast standards outlined in the statement of Responsibilities of the Board members and the Auditor forecast service performance adopted at the start of the The board members are responsible for preparing the financial financial year; and statements and statement of service performance in accordance with - actual revenue earned and output expenses incurred, as generally accepted accounting practice in New Zealand. The financial compared with the forecast revenues and output expenses statements must give a true and fair view of the financial position of the outlined in the statement of forecast service performance board and group as at 30 June 2009 and the results of operations and cash flows for the year ended on that date. The statement of service adopted at the start of the financial year. performance must give a true and fair view of, for each class of outputs, - based on our examination the board and group kept proper the board and group’s standards of delivery performance achieved and accounting records. revenue earned and expenses incurred, as compared with the forecast standards, revenue and expenses adopted at the start of the financial The audit was completed on 29 october 2009, and is the date at year. The board member’s responsibilities arise from the financial which our opinion is expressed. reporting Act 1993, the Crown entities Act 2004 and the New Zealand The basis of our opinion is explained below. In addition, we outline the Tourism board Act 1991. responsibilities of the board members and the Auditor, and explain our we are responsible for expressing an independent opinion on the independence. financial statements and statement of service performance and Basis of Opinion reporting that opinion to you. This responsibility arises from section we carried out the audit in accordance with the Auditor-General’s 15 of the Public Audit Act 2001 and the Crown entities Act 2004. Auditing standards, which incorporate the New Zealand Auditing Independence standards. when carrying out the audit we followed the independence we planned and performed the audit to obtain all the information and requirements of the Auditor-General, which incorporate the explanations we considered necessary in order to obtain reasonable independence requirements of the Institute of Chartered assurance that the financial statements and statement of service Accountants of New Zealand. performance did not have material misstatements, whether caused other than the audit, we have no relationship with or interests ther by fraud or error. in the board or any of its subsidiaries. material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements and statement of service performance. If we had found material misstatements that were not corrected, we would have referred to them in our opinion. Grant Taylor ernst & Young The audit involved performing procedures to test the information on behalf of the Auditor-General presented in the financial statements and statement of service wellington, New Zealand 52 fINANCIAl sTATemeNTs // TourIsm ANNuAl rePorT // 2008 – 2009 G25 visit: www.tourismnewzealand.com Tourism new zealand manaakitanga aotearoa, Po Box 95, level 22, 157 lambton Quay, wellington, new zealand Tel : +64 4 462 8000 www.tourismnewzealand.com www.newzealand.com This Annual Report has been printed on 100% recycled paper, made up of 30% pre-consumer printer and converting waste and 70% post-consumer waste from old milk cartons. The recycled pulp is processed chlorine free (PCF) and has been sourced from an ISO14001 certified mill.