G25. Kia ora, Welcome. Annual Report Tourism New Zealand 2017/2018

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1 G25 Kia ora, Welcome. Annual Report Tourism New Zealand 2017/2018

2 Highlights Highlights 5.6 % $11.1 BILLION 96 % of Kiwis agree or strongly agree that international tourism is good for New Zealand Mood of the Nation survey, March 2018 shoulder season holiday arrival growth International visitor spend with an average of $ million active visits to newzealand.com 3 million followers on Facebook spent per holiday arrival % increase in regional spend Leading to 8.8 million referrals to tourism businesses 25:1 return on investment in markets on partnership campaigns $287.7m value generated from international media about New Zealand % Pure New Zealand Specialists 3.79 MILLION Arrivals into New Zealand 1.99 MILLION of which were holiday arrivals 86 bids to bring conferences to New Zealand supported through TNZ s Conference Assistance Programme with an estimated value of $124.9m With a further 20,000 registered in the 100% Pure New Zealand Specialist Programme 747 agents attended 100% Pure New Zealand Specialist Programme famil 2 3

Tourism New Zealand Annual Report 2017/2018 Contents 2017/2018 at a glance...6 Chair and Chief Executive report... 6-8 Performance overview... 9 Who we are and what we do... 10 Our offices.

3 Tourism New Zealand Annual Report 2017/2018 Contents 2017/2018 at a glance...6 Chair and Chief Executive report Performance overview... 9 Who we are and what we do Our offices Our markets The power of collaboration: Amway China The 2017/2018 year FY18 activities: measures, targets and results Regional spotlight: Northland Awards Meet the Team The Board Our Executive Team Our Whānau Governance Equal Employment Opportunities Financials Financial statements Statement of accounting policies Five year financial summary for parent Independent auditor s report

2017/2018 at a glance 2017/2018 at a glance Chair and Chief Executive report On behalf of Tourism New Zealand s Board and Leadership team, we are pleased to present Tourism New Zealand s Annual

Kerry Prendergast, Tourism New Zealand Chair Stephen England-Hall, Tourism New Zealand s Chief Executive Kerry Prendergast, Tourism New Zealand Chair Tourism has seen amazing growth over the last few

4 2017/2018 at a glance 2017/2018 at a glance Chair and Chief Executive report On behalf of Tourism New Zealand s Board and Leadership team, we are pleased to present Tourism New Zealand s Annual Report for the financial year ending 30 June Kerry Prendergast, Tourism New Zealand Chair Stephen England-Hall, Tourism New Zealand s Chief Executive Kerry Prendergast, Tourism New Zealand Chair Tourism has seen amazing growth over the last few years, and our work has contributed significantly to this, with New Zealand continuing to be one of the world s preferred destinations. During FY18 Tourism New Zealand began work to position and refresh our brand to ensure we keep ahead of global tourism trends and continue our success sustainably. Total arrivals for FY million 3.8 % Total regional spend $471 million 13.2 % Stephen England-Hall, Tourism New Zealand Chief Executive As a nation, New Zealand welcomed 3.79m visitors (+3.8% on FY17). This figure is expected to continue to grow steadily over the coming years, reaching 5.1m visitors annually by We know some regions need support to accommodate this growth. Pressure on infrastructure remains the top concern for New Zealanders regarding international tourism, alongside accommodation shortages, environmental damage, freedom camping, traffic congestion and road safety. Tourism New Zealand has a pivotal role in seeking solutions to these challenges and during FY18 we worked closely with a range of agencies and industry to support this. The visitor economy conversation is changing sustainability, social license, community engagement and destination management are now common topics of conversation. As a destination marketing organisation we have evolved our approach to play an increasing role in supporting sustainable growth in the sector. This work has focussed on regional and seasonal dispersal. Encouraging visitors to travel in our shoulder seasons (September-November, March-May) has a flow-on effect of increased visitor investment, greater employment stability and more consistent income streams for New Zealand tourism operators, as well as taking pressure off hotspots in the peak season. Promoting less-visited regions ensures the economic benefits from the visitor economy are felt across New Zealand, not just in main centres (gateways). Despite seasonal and regional dispersal being a challenge felt by destination marketers globally, we set ambitious strategic targets for FY18 across regional dispersal, shoulder season versus peak travel, referrals, and high-value visitors. As a result, all marketing spend was invested in promoting shoulder season travel and the theme of our FY18 100% Pure New Zealand campaign, Where one journey leads to another, encouraged visitors to include regional travel into their itineraries and to travel during shoulder seasons. During the year we saw an increase in spend in the regions compared to the gateways (+13.2% versus +9.9% a +3.4% differential) and for the year to June 2018 an estimated additional $471m had been contributed to our regions. While it was encouraging to see gains in regional dispersal, we did not hit our target to grow shoulder season arrivals faster than peak arrivals. Driving shoulder season arrivals has been the focus of the Government and industry for many years and shifting consumer preferences continues to be challenging, particularly as high-value travellers tend to travel when a destination is perceived to be at its best. In FY18 we continued our successful approach of investing in a portfolio of markets and this was reinforced with some of our priority one core markets showing impressive growth, offsetting significant reductions in other markets, notably: Australia, which saw air connectivity changes, the UK, which returned to more realistic arrival figures after the boom of last year s British & Irish Lions Rugby Tour, and Japan, which saw a rise in domestic tourism. The variations in some markets highlighted the importance of a balanced portfolio and for Tourism New Zealand to not become overly dependent upon one source market. We work across a range of established and emerging markets to ensure fluctuations are managed well and new markets are grown and explored. 6 7

5 2017/2018 at a glance Chair and Chief Executive report Performance Overview It s pleasing to see that our emerging markets have grown exponentially in recent years, in particular Argentina, Brazil, and the Philippines. Together with markets such as India, whose visitors tend to travel in our shoulder seasons have the potential to bolster arrival numbers and spend beyond the seasonality profile. It s pleasing to see that our emerging markets have grown exponentially in recent years, in particular Argentina (+45.9% on FY17), Brazil (+35.7% on FY17), and the Philippines (+34.4%). Together with markets such as India, whose visitors tend to travel in our shoulder seasons have the potential to bolster arrival numbers and spend beyond the seasonality profile. Another area of significant growth is the business and major events space. Our investment in this area proved very successful in FY18 with strong and steady growth across the Australian, North American, and Chinese markets. The business events market is hugely competitive globally, but New Zealand has established itself as a strong contender in the knowledge travel economy and as an attractive business events host. Business events also support our strategy to grow shoulder visitation with many of these events being held in spring or autumn. In FY18 Tourism New Zealand supported 86 bids to host international conferences in New Zealand and secured $124.9m worth of business. Our incentive programme secured a further $46.8m worth of incentive business. This is a particularly lucrative market with the average value for programmes won equalling $707k. The Amway China incentive event was a stellar example of Tourism New Zealand s successful incentive bid programme. Three years of preparation alongside key New Zealand partners resulted in 8000 top sellers of Amway China arriving in New Zealand in the shoulder season and injecting around $50m into the economy during their stay. Of course, to be truly productive, inclusive and sustainable we must consider the visitor economy as more than just arrival numbers and spend. To this end, Tourism New Zealand has evolved our approach to look more closely at the voice of the visitor, monitoring visitors experience and satisfaction, and those of New Zealanders. Again, this is something that the organisation will be increasingly focussed on in FY19. Future proofing the industry was a key component of our work in FY18. We worked collaboratively with several organisations and companies on initiatives to help ensure New Zealand is destination ready for tourism growth, that the growth is sustainable (economically, socially, and environmentally), and that our efforts improve experiences for visitors and Kiwis alike. Tourism should enrich New Zealand and it is vital that New Zealanders value the role of tourism in their local communities. Our continued investment in Qualmark New Zealand and the i-site visitor information network provides on-the-ground feedback from visitors and locals. We continue to share this information to the industry and domestic partners to support New Zealand to provide a world-class tourism experience. FY18 has been a strong year for Tourism New Zealand and for tourism in New Zealand, and we continue to support the sector to ensure tourism enriches New Zealand now and into the future. Kerry Prendergast & Stephen England-Hall OUTCOMES Visitor Spend (Grow international visitor spend) Socially inclusive growth (Grow regional spend) Productivity growth (Grow shoulder holiday arrivals) Social License (Mood of the Nation) (Kiwis agree tourism is good for NZ) Visitor experience (VX) (Exceeds expectation) Brand Preference (% ACs who rate NZ in top two) IMPACT EAV (Grow regional spend) FY18 9% ($11.1b) 13.2% ($471m) 5.6% ($1.4m) 96% 94% Australia: 64% China: 85% Germany: 70% FY18 $287.7m Japan: 62% UK: 69% USA: 59% There were 86 bids to host international conferences in New Zealand which secured $124.9 million worth of business 8000 top sellers of Amway China arrived into New Zealand injecting close to $50m into the economy Our incentive programme secured $46.9 million worth of business Referrals (newzealand.com + Third party) Trade impact (IATA share lift in Tier 1 & 2 accounts) Business Events (Conference bids supported & incentive bids won) Partnership ROI (exceeds expectation) Stakeholder survey (% stakeholders rate TNZ s performance - very good/excellent) 8.8M 2% $124.9m (+$46.4m) 25:1 84% 8 9

6 Who we are and what we do Who we are and what we do Our offices London Mumbai Singapore Guangzhou Jakarta Seoul Shanghai Tokyo Sydney Auckland Wellington Los Angeles São Paulo Tourism New Zealand is the Crown entity responsible for promoting New Zealand to the world. Tourism New Zealand was established in 1991 as a Crown entity by the New Zealand Tourism Board Act, and since then our staff have worked tirelessly to create award winning campaigns marketing New Zealand as an international visitor destination. The heart of our promotions is the 100% Pure New Zealand campaign, first launched in 1999 and continually evolving to tell the story of the unique experiences available to people who visit New Zealand. A key part of Tourism New Zealand s successful strategy has been our enduring partnerships with global media partners, influential travel sellers and airlines, high profile celebrities and opinion leaders and New Zealand tourism operators. We provide relevant and up-to-date information for visitors, embracing social media and technology, and ensuring New Zealand s tourism product and experience is of the highest quality. In addition to attracting high value visitors, we also take a leadership role in the industry, providing insights and information about the visitor economy to operators and regional tourism organisations. Tourism New Zealand also owns and operates the quality assurance organisation Qualmark New Zealand, and supports the Visitor Information Network Inc, overseeing more than 80 i-site visitor information centres around New Zealand. Tourism New Zealand has 13 offices around the world, and we co-locate staff in a further three locations. In total we have around 160 full-time staff members. We take a portfolio management approach to promoting New Zealand on the worldstage, targeting 15 specific countries. Our markets Priority one core markets Priority emerging markets AUSTRALIA FY18 HOLIDAY ARRIVALS 579k ( 1.8%) OVERALL SPEND $2.6b ( 4%) $2000 per person ( 3%) AC PREFERENCE SCORE 64% ( 1%) Priority two core markets CHINA FY18 HOLIDAY ARRIVALS 343k ( 15.9%) OVERALL SPEND $1.7b ( 11%) $4000 per person ( 1%) AC PREFERENCE SCORE 84% ( 2%) UNITED STATES OF AMERICA FY18 HOLIDAY ARRIVALS 225k ( 6.3%) OVERALL SPEND $1.3b ( 11%) $4200 per person ( 7%) AC PREFERENCE SCORE 61% ( 3%) INDIA FY18 HOLIDAY ARRIVALS 31K ( 19.2%) BRAZIL FY18 HOLIDAY ARRIVALS 11K ( 35.7%) INDONESIA FY18 HOLIDAY ARRIVALS 19K ( 6.8%) PHILIPPINES FY18 HOLIDAY ARRIVALS 10K ( 34.4%) ARGENTINA FY18 HOLIDAY ARRIVALS 17K ( 45.9%) UNITED KINGDOM FY18 HOLIDAY ARRIVALS 105k ( 5.9%) OVERALL SPEND $1b ( 10%) $4500 per person ( 3%) AC PREFERENCE SCORE 72% ( 4%) GERMANY FY18 HOLIDAY ARRIVALS 76k ( 2.6%) OVERALL SPEND $563m ( 9%) $5900 per person ( 11%) AC PREFERENCE SCORE 69% ( 1%) JAPAN FY18 HOLIDAY ARRIVALS 68k ( 0.3%) OVERALL SPEND $253m ( 12%) $2800 per person ( 11%) AC PREFERENCE SCORE 63% ( 3%) Priority three markets SOUTH KOREA FY18 HOLIDAY ARRIVALS 68K ( 12.7%) SINGAPORE FY18 HOLIDAY ARRIVALS 40K ( 1.6%) CANADA FY18 HOLIDAY ARRIVALS 39K ( 0.3%) MALAYSIA FY18 HOLIDAY ARRIVALS 37K ( 9.3%) 10 11

7 You can only see the beauty of the land through the eyes of someone who loves the land 12 13

Who we are and what we do Who we are and what we do Overall satisfaction of Amway Leadership Seminar The power of collaboration: Amway China 2018 96 % Estimated value to New Zealand $ 50 million

In April 2018, Amway China brought 8000 of its elite sales people to New Zealand for five days as a reward for top sales.

create an incentive travel package with the difference. Amway China s business owners rated the leadership seminar programme as one of the best ever, scoring an overall satisfaction rating of 96%.

outside the traditional peak summer season.

8 Who we are and what we do Who we are and what we do Overall satisfaction of Amway Leadership Seminar The power of collaboration: Amway China % Estimated value to New Zealand $ 50 million Length of stay 5 NIGHTS New Zealand now has more than 8000 advocates in China thanks to the manaakitanga shown by New Zealanders and the Queenstown community. In April 2018, Amway China brought 8000 of its elite sales people to New Zealand for five days as a reward for top sales. The trip was a coup for New Zealand and showcased the power of collaboration, with Tourism New Zealand joining forces with Destination Queenstown, Air New Zealand, and Immigration New Zealand to create an incentive travel package with the difference. Amway China s business owners rated the leadership seminar programme as one of the best ever, scoring an overall satisfaction rating of 96%. Tourism New Zealand s Chief Executive, Stephen England-Hall, says the success of the programme puts New Zealand in an excellent position to host other large incentive trips in the future, especially outside the traditional peak summer season. Having Amway China, a globally recognised brand, rate the Queenstown programme as one of the best is a huge accolade that will no doubt further raise New Zealand s profile as a fantastic year-round destination. The people of Queenstown did an amazing job hosting the Amway group and the Kiwi hospitality and warm welcome they showed these visitors contributed significantly to them rating New Zealand so highly. Advocates for New Zealand in China 8000 Stephen England-Hall, Tourism New Zealand s Chief Executive 14 15

9 The 2017/2018 year The 2017/2018 year The past year has seen some phenomenal successes for Tourism New Zealand and the visitor economy. The sector presents significant opportunities for New Zealand over the next five years. New Zealand s visitor economy is healthy. In the year to June 2018 we welcomed 3.79m international visitors (+3.8% on FY17) and holiday arrivals grew 4.5% to 1.99m. While still well below peak visitation numbers, we are seeing increases in the number of visitors travelling in the shoulder seasons particularly in autumn and spring. Spend is up over the $11b mark for the past year. The regions are increasingly benefitting from growing international visitor numbers. Over the past 12 months, our regions have seen an additional $471m from the international economy all signs that Tourism New Zealand s strategy to date to focus on regional and shoulder season growth is making a difference. Tourism remained New Zealand s top earner for foreign exchange in FY18 and as a nation we are tracking well to exceed the industry s goal of $41b total revenue by Tourism New Zealand s mission is to boost New Zealand s economy by growing the value of international visitors. Our four-year strategy ( ) supports this mission and sets out an overarching framework for initiatives and activities focused on: the sustainability of the sector, strategic management of our portfolio of markets, and further integration with government and industry partners to improve the experience of visitors and host communities. Collaboration with industry partners is critical to ensure strong economic outcomes for New Zealand. Success is often influenced by variables that are outside both Tourism New Zealand s and the wider tourism industry s control. Arrival numbers and visitor spend depends on a range of factors including: Tourism New Zealand s activities and those of competing destinations, the relative strength of the New Zealand brand, the impact of significant natural events both in New Zealand and in target markets, exchange rates and the general economic conditions in countries of origin, airline scheduling decisions, seat capacity on air routes and ticket pricing, and major sporting or cultural events (exemplified by the British & Irish Lions Rugby Tour boosting UK arrival numbers & visitor spend in FY17). To ensure that international visitors deliver the maximum possible value for New Zealand, Tourism New Zealand s FY18 business activities followed our successful approach of investing in a portfolio of markets. This approach balances near-term and future opportunity and targeting high-value visitor segments and sectors in those markets through our 100% Pure New Zealand campaign. Over the past year we continued to build on the momentum achieved in FY17 with seasonal dispersal (100% of our activity focused on shoulder conversion), converting US airline and East Coast opportunities, and investing in the emerging markets of India, Indonesia, and Brazil and Argentina. Overall International arrivals 3.79 million 3.8 % Overall holiday arrivals 1.99 million 4.5 % Overall spend $11.1 billion 9 % ($3800 per person, 2%) Overall holiday spend >$7 billion 8 % Our overall objective Tourism New Zealand s strategy and activities support our overall mission: Mission: To boost New Zealand s economy by growing the value of international visitors Objective: An increase in the value of visitors, contributing to an increase in GDP. Measure Target Performance Status An increase in the value of visitors to New Zealand, contributing to an increase in the tourism sector's contribution to New Zealand's GDP Growth of international visitor arrivals in the shoulder seasons Expressed as a differential between shoulder and peak growth (Shoulder holiday arrival growth was +5.6%) An increase on 2016/17 figures. An increase on 2016/17 figures. $11.1b Achieved -0.8% Not Achieved Growth of spend by international visitors in regions Expressed as a differential between regions and gateway growth on a year-on-year basis. An increase on 2016/17 figures. 3.3% Achieved

10 The 2017/2018 year The 2017/2018 year Strategic priorities and outcomes framework Tourism New Zealand s strategy is supported by outcomes and measures set out in the Statement of Intent (SOI) FY18-FY21. Statement of Performance: Tourism New Zealand s activity Tourism New Zealand s activities in FY18 were funded through the Budget 2017/18 Estimates of Appropriations for Vote Tourism. MISSION: Boost New Zealand s economy by growing the value of international visitors FY17 ACTUAL $000 S FY18 ACTUAL $000 S FY18 BUDGET $000 S Crown Revenue $117,350 $117,350 $117,350 ACTIVITY 1: Deliver key visitor messages through the 100% Pure New Zealand campaign activity STRATEGIC PRIORITIES: 1. Broaden our measure of value from near-term growth to long-term sustainability 2. Manage our portfolio of markets and sectors as a strategic investor 3. Work with Government and partners to sustain and improve the experience of visitors and host communities OUTCOME 1 Value Intermediate Outcomes: Arrivals Stay days Spend ACTIVITY 2: Deliver key visitor messages through third parties such as media, opinion leaders, and broadcast production ACTIVITY 3: Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach OUTCOME 2 Dispersal Intermediate Outcomes: Seasonal dispersal Regional dispersal Market portfolio ACTIVITY 4: Inform and inspire global travel sellers to assist them to market New Zealand ACTIVITY 5: Deliver inspiring and informative information for potential visitors OUTCOME 3 Experience Intermediate Outcomes: Visitor Experience Mood of the nation Add value to industry ACTIVITY 6: Communicate and engage with NZ s tourism industry to align industry investment with TNZ s areas of focus Other Revenue 1 $6,263 $5,683 $3,073 Total Revenue $123,613 $123,033 $120,423 Total Expenses 2 $122,595 $126,496 $120,423 In FY18 our strategic priorities were to: Drive Australian and Chinese markets to regional and seasonal dispersal. Launch 100% Pure New Zealand campaign highlighting regional experiences. Amplify Business Events and Special Interest to fill product capacity. Advance agile planning and delivery to respond to market conditions and target for impact. Maximise global partnerships to achieve integrated projects and digital leadership. Evolve digital platform enabling agile site and content delivery. Develop visitor insights and 100% Pure New Zealand Experiences to shape industry future. These were achieved through various activities grouped into six areas described in our Statement of Performance Expectations (as follows): Activity one: Deliver key visitor messages through the 100% Pure New Zealand campaign activity. Campaign Activity two: Deliver key visitor messages through third parties such as media, opinion leaders, and broadcast production. Public Relations (PR), International Media Programme (IMP), and Major Events Activity three: Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach. Joint Venture (JV) activity and partnership activity with Regional Tourism Organisations and aviation Activity four: Inform and inspire global travel sellers to assist them to market New Zealand. Working with the travel trade International business events, including conferences and incentives Activity five: Deliver inspiring and informative information for potential visitors newzealand.com Activity six: Communicate and engage with New Zealand s tourism industry to align industry investment with Tourism New Zealand areas of focus. Industry communication, engagement and relationship building Visitor insights SPE KPIs: CPE (cost per engagement) from display CPA (cost per acquisition) from search SPE KPIs: # of media visits EAV from high impact influencer and international media programme (IMP) Content EAV SPE KPIs: Value of partner contributions Campaign return on investment (min 5:1) SPE KPIs: NZSP agents Travel company advocates Major trade events hosted or supported Volume, value & win rate of CAP conference and incentives bids SPE KPIs: Total visits and Active visits to newzealand.com Referrals to industry via newzealand.com % more likely to visit NZ as a result of visiting newzealand.com SPE KPIs: # of industry engagements TNZ adds value to industry stakeholders APPROPRIATION ONE: MARKETING OF NEW ZEALAND AS A VISITOR DESTINATION FY18 ACTUAL $000 S FY18 BUDGET $000 S Activity One: Deliver key visitor messages through the 100% Pure New Zealand campaign activity $47,367 $44,408 Activity Two: Deliver key visitor messages through third parties such as media, opinion leaders and broadcast production Activity Three: Partner with travel industry to convert interest in New Zealand into travel and to extend marketing reach $6,980 $8,536 $23,344 $21,644 Activity Four: Inform and inspire global travel sellers to assist them to market New Zealand $10,700 $10,657 Activity Five: Deliver inspiring and informative information for potential visitors $6,380 $6,050 Activity Six: Communicate and engage with New Zealand's tourism industry to align industry investment with Tourism New Zealand areas of focus $914 $836 New Zealand and off-shore support costs 3 $30,144 $28,265 Total $125,830 4 $120,432 1 Other revenue includes bank interest and partner revenue. It excludes foreign exchange gains. 2 Total expenses include offsets from foreign exchange reserves to protect the funding lines from adverse movements in foreign exchange during the year with offshore expenditure. The total expense excludes other foreign exchange losses. 3 New Zealand and off-shore support costs support the delivery of all six activities. 4 Additional revenue received has enabled Tourism New Zealand to increase the level of expenditure on marketing New Zealand as a visitor destination

The 2017/2018 year FY18 activities: measures, targets and results Activity one: Deliver key visitor messages through the 100% Pure New Zealand campaign activity.

11 The 2017/2018 year FY18 activities: measures, targets and results Activity one: Deliver key visitor messages through the 100% Pure New Zealand campaign activity. In FY18 we focused on further improving the effectiveness of targeting, quality and delivery of the new FY18 campaign message where one journey leads to another. Link with Tourism New Zealand strategic priorities Our campaign and market insights activity is a key vehicle for delivering the brand message in our off-shore markets and delivers against all our three overarching strategic priorities, and the following FY18 strategic priorities: Broaden our measure of value from nearterm growth to long-term sustainability. Manage our portfolio of markets and sectors as a strategic investor. Work with government and partners to sustain and improve the experience of visitors and host communities. Drive Australia and China for regional and seasonal dispersal. Launch 100% Pure New Zealand campaign highlighting regional experiences. How did we do? As our largest market Australia offers the benefit of scale, some of our most successful initiatives in FY18 involved this market. We ran regional road-trip campaigns strategically throughout FY18, aimed at the Australian market that offered self-drive itineraries through our regions. These campaigns were produced in collaboration with various regional tourism organisations and operators and promoted package deals only available in shoulder season periods. Encouragingly, Monthly Regional Tourism Estimates sourced from card spend, showed that for the year ending December 2017, regional spend was up 13.2%, growing at a faster rate than gateway spend (+9.9%) 7. Furthermore, arrival figures in March 2018 showed regional visitor levels exceeded gateway visitor levels with Australian visitors leading the increases; exemplifying marketing can shift consumer travel behaviour. Click to view the road trip videos During the year we ran several significant in-market campaigns across Australia, China, North America, UK, and Germany, designed to move travellers down the path from dreaming of a New Zealand holiday to booking the trip. For China, these campaigns capitalised on the increasing trend towards self-drive holidays by this market. Immigration New Zealand figures for the year to June 2018 showed a 26.4% increase in the granting of General Visitor visas against a 2.1% increase in the granting of the, generally lower value, Approved Destination Status visas. This shift in the mix of visitors from China is seen as a positive change in light of the wider tourism strategy to grow value ahead of volume. Our China Market Development Unit works closely with the Chinese market both inmarket and within New Zealand providing information that is designed to increase China visitor knowledge, including the rights and protections they have if visiting on an Approved Destination Status tour. All campaigns encouraged shoulder season travel through our regions. In the latter half of FY18 we introduced new video content illustrating the ease of getting around the country and showing the range of experiences on offer in the regions. The content featured Rotorua, Whakatane, Coromandel, Kaikoura, Marlborough, Dunedin and Invercargill and showcased New Zealanders interacting with visitors reflecting our warm Kiwi welcome. Initial results illustrate that the inclusion of New Zealand s unique people and culture has further lifted the effectiveness of our work with potential visitors. Thank you for including the beautiful Bay of Plenty in so many opportunities. We love working with the team at Tourism New Zealand! Kristin Dunne, Tourism Bay of Plenty 5 Engagement: when an action is taken on an ad, i.e. a click, a play of a video, some form of interaction 6 Acquisition: refers to someone who has been drawn to newzealand.com as a result of seeing and acting on advertising/search initiatives delivered by Tourism New Zealand. 7 Please note: It is not possible to use the International Visitor Survey to assess regional spend but the IVS is used to report on total and holiday visitor spend. COST PER ENGAGEMENT 5 FROM DISPLAY ALL MARKETS Target: $0.50-$1.50 Performance: $0.06 COST PER ACQUISITION 6 FROM SEARCH: Australia Target: $2.50-$3.00 Performance: $1.56 China Target: $1.50-$2.00 Performance: $0.78 USA Target: $3.00-$3.50 Performance: $3.06 UK Target: $2.00-$2.50 Performance: $1.17 Germany Target: $2.00-$2.50 Performance: $0.96 Japan Target: $3.50-$4.00 Performance: $1.82 AWARENESS OF 100% PURE NEW ZEALAND LOGO AS MEASURED BY IVS Target: At least 65% Performance: 66% We love working with Tourism New Zealand and appreciate the work they do to help us promote this region Gizelle Regan, Lake Wanaka Tourism 20 21

The 2017/2018 year FY18 activities: measures, targets and results Activity two: Deliver key visitor messages through third parties such as media, opinion leaders, and broadcast production.

12 The 2017/2018 year FY18 activities: measures, targets and results Activity two: Deliver key visitor messages through third parties such as media, opinion leaders, and broadcast production. We have continued our successful approach of using influencers, international media, key opinion leaders, and major events to promote Destination New Zealand to the world and convert potential visitors into actual visitors. The focus in FY18 was the International Media Programme (IMP), content development and syndication, and maximising new and existing opportunities for major events and film tourism. Link with Tourism New Zealand strategic priorities Tourism New Zealand s PR activity is primarily aimed at achieving driving preference for New Zealand and integrating messages across multiple platforms that: Advance agile planning and delivery to respond to market conditions and target for impact. Maximise global partnerships to achieve integrated projects and digital leadership Manage our portfolio of markets and sectors as a strategic investor Work with government and partners to sustain and improve the experience of visitors and host communities. How did we do? An agile approach to PR activity saw Tourism New Zealand score major wins on the international stage in FY18 with more than 10k stories globally featuring New Zealand and almost $290m in estimated advertising value (EAV). The team worked with a range of international media outlets and influencers to showcase the country as the destination of choice. The year kicked off with the long-awaited North American influencer campaign featuring actress Bryce Dallas Howard and National Geographic Travel s six-part video series and online content hub. Within 24 hours of The Ultimate New Zealand Experience launch, an Associated Press story had been syndicated in over 300 titles globally (equivalent to $5.5m advertising value and reaching over 575m unique viewers), while the videos on Tourism New Zealand and National Geographic s sites had been viewed more than 400k times and prompted an additional 1700 followers on Instagram account. The influencer programme continued in our markets with Indonesian celebrity and contracted tourism advocate Nadine Chandrawinata sharing her experience with media, trade, NZ Inc contacts, and her 1.1m social media followers. Tourism ambassador and Bollywood star Sidharth Malhotra also shared his New Zealand experiences with media in India, and in July, 37m Brazilians tuned into an hour-long episode of Camera Record focused on New Zealand s regions (EAV $13m). Chinese superstar Nicholas Tse s Chef Nic New Zealand (showcasing the Hawke s Bay and Taupō) reached an audience of more than 47m through television, 81m people on social media, and generated $45m in EAV; while social media coverage of lifestyle influencers Sean and Poppy s tour of New Zealand generated more than $1.05m EAV and raised New Zealand s profile as a destination among the backpacker and young independent traveller market in the UK. The unexpected hit of FY18 was undoubtedly the #GetNZontheMap campaign, which involved Prime Minister Jacinda Adern and comedian Rhys Darby. After 10m video views on social media and significant global media coverage the EAV of the campaign came in at over $10m, delivering a return on marketing investment of more than 600%. INTERNATIONAL MEDIA HOSTED ALL MARKETS Target: 195 media visits Performance: 172 media visits Status: Not achieved EQUIVALENT ADVERTISING VALUE (EAV) OF PRINT, ONLINE AND BROADCAST IN ALL TNZ MARKETS 8 EAV from IMP and high impact projects Target: $120m Performance: $172m Content EAV Target: $80m Performance: $115.7m Total EAV Target: $200m Performance: $287.7m The #GetNZontheMap campaign exceeded our expectations and showed us that we can turn a quirky idea into a viral video Stephen England-Hall, Tourism New Zealand s Chief Executive Profile: #GetNZOnTheMap A chance encounter in a San Francisco Starbucks led to one of Tourism New Zealand s most successful media campaigns. Tourism New Zealand s Chief Executive, Stephen England-Hall, was getting a coffee in Starbucks when he noticed that New Zealand wasn t included on the world map on its wall. He sent a jovial call out to the team in New Zealand to investigate, and it emerged that there was a growing collection of maps throughout the world that had one obvious omission New Zealand. From maps in online photo libraries, to coffee shops, famous attractions and board games, New Zealand was often nowhere to be seen. A Reddit Maps Without NZ discussion board had a following of more than 40k. A campaign was developed to rectify the issue, involving a light-hearted video featuring Prime Minister Jacinda Ardern and comedian Rhys Darby to encourage the addition of New Zealand to all world maps. Within days the video had gone viral on social media and featured in hundreds of media articles. This campaign showed how we can use our marketing budget wisely to achieve impressive returns on investments. The #GetNZontheMap campaign exceeded our expectations and showed us that we can turn a quirky idea into a viral video, says Mr England-Hall. Click to view the #GetNZOnTheMap video 8 EAV results are not always available for all activity, so results will underestimate the actual value

The 2017/2018 year FY18 activities: measures, targets and results Activity three: Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach.

13 The 2017/2018 year FY18 activities: measures, targets and results Activity three: Partner with the travel industry to convert interest in New Zealand into travel and to extend marketing reach. Tourism New Zealand partners with travel trade, Regional Tourism Organisations (RTOs), and aviation partners in joint ventures that enable us to combine marketing messages with a product that potential visitors can buy. This approach accelerates conversion and increases the pool of funding. In FY18 we ran several high-impact JV campaigns that included TV and digital production, trade and aviation programmes. Link with Tourism New Zealand strategic priorities Tourism New Zealand s joint venture and aviation activity is primarily aimed at achieving partnerships to activate conversion and extend marketing reach and encompasses the following FY18 strategic priorities: Advance agile planning and delivery to respond to market conditions and target for impact. Maximise global partnerships to achieve integrated projects and digital leadership. Manage our portfolio of markets and sectors as a strategic investor. Work with government and partners to sustain and improve the experience of visitors and host communities. How did we do? Tourism New Zealand solidified its relationship with several Regional Tourism Organisations during FY18 and ran a number of sole campaigns and joint TNZ-RTO promotions. Regions highlighted included Northland (market focus: Australia), Bay of Plenty (Korea), Rotorua (Australia, Korea), Taupō (Australia), Ruapehu (Australia), Wellington (Australia, China), Marlborough (Australia, China), Canterbury (Australia, China), the West Coast of the South Island (Australia), and Southern Lakes (Australia). We continued to take an active role in New Zealand Trade and Enterprise s Tourism Attractions Project, which aims to help accelerate investment into tourism attractions and to support regions to develop robust destination management plans including Auckland Tourism, Events & Economic Development (ATEED) s Destination AKL 2025 plan. We also partnered with Māori Tourism to conduct a workshop investigating and defining areas of work that will inform future campaign work. We continued our partnership with the Department of Conservation (DOC), providing insights and content for the launch of its network of 19 short walks and day hikes. Strategic discussions also began between i-site NZ (a subsidiary of Tourism New Zealand) and DOC to work together more consistently for the benefit of visitors. In recent years, four of these centres in Auckland, Christchurch, Dunedin and Ruapehu have co-located to present a single customer experience for visitors. The China market provided several joint venture opportunities. Our annual China Market Update was well attended by more than 80 industry delegates; we extended our strategic partnership with leading Chinese travel service provider, Ctrip, to simplify joint activities by integrating plans and budgets into a single body of work; and we partnered with Chinese rental car trade partner Zuzuche to better understand if our driver education toolkit and content is helping to make the experience of driving in New Zealand better for Chinese visitors. The findings were shared with the cross-agency Visiting Drivers governance group. During FY18 Tourism New Zealand re-committed to its six-year partnership with Air New Zealand to promote New Zealand offshore, with an MOU outlining investment of up to $10m each for joint activity in Australia, China, North and South America, Japan, Singapore, the United Kingdom and Europe. Prime Minister Jacinda Ardern was on hand to witness Tourism New Zealand sign a three-year MOU with Philippine Airlines in November for joint activity that supports a direct route between Manila and Auckland. Our bid for consistency of routes serviced continued and we worked alongside companies to discuss future opportunities, in particular, American Airlines, which turned its Los Angeles-Auckland route to a seasonal service at the start of FY18 (off the back of weak performance over the New Zealand winter and difficult sales). Tourism New Zealand maintains joint venture partnerships with American Airlines, United Airlines, Air New Zealand, Emirates, a co-marketing agreement with Holiday Tours Malaysia, and other memoranda of understanding with International Marketing Alliance, and offshore training organisations. During FY18 we also extended the Tourism Industry Partnership Programme with Immigration New Zealand and six travel agents in India. This programme makes it easier for Indian nationals to come to New Zealand for international business events and capitalise on the substantial growth in conference facilities in Auckland, Christchurch and Queenstown. Rounding off FY18 Tourism New Zealand had a significant presence at TRENZ 2018 in Dunedin, where our teams met with a range of industry and we launched our infographic resource Understanding our Visitors, providing industry with insights into Australia, China, USA, UK, Germany and Japan. We also attended MEETINGS, New Zealand s only national trade show for the business events sector, where we launched the Naturally beyond convention campaign. VALUE OF PARTNERSHIP CONTRIBUTIONS 9 Target: $22m Performance: $23m CAMPAIGN RETURN ON INVESTMENT (ROI) 10 ALL MARKETS Target: 5:1 Performance: 25:1 9 The $23.0m of partnership contributions includes $3.9m of non-financial contributions from partners. These are non-cash contributions made by partners to joint activity with Tourism New Zealand such as discounted airfares, accommodation and activity admission fees for a trade or media familiarisation and inclusion of Tourism New Zealand content in partner s newsletters or websites. The equivalent dollar value of these contributions is estimated by Tourism New Zealand and RTO staff based on market knowledge, external sources such as websites, published pricelists and communications with the partners themselves. 10 ROI is calculated by: (passengers booked) x (average visitor spend for market) / campaign spend. This generates a ratio that shows for every dollar we spent we generated x amount of value. Note: ROI relates to campaign spend only and is not intended to represent a ROI for overall Tourism New Zealand activity

The 2017/2018 year FY18 activities: measures, targets and results Activity four: Inform and inspire global travel sellers to assist them to market New Zealand.

14 The 2017/2018 year FY18 activities: measures, targets and results Activity four: Inform and inspire global travel sellers to assist them to market New Zealand. Tourism New Zealand s work with global travel sellers is two-fold with our Trade team liaising with travel agents in-market, providing education, running famil, and joint venture campaigns; and our Business Events team liaising with conference and events managers, and the luxury/premium market. Working with the travel trade In FY18 our Trade team focused on increasing the impact of activity and coverage targeting highest-value Tier 1 accounts, extending the reach of the 100% Pure New Zealand Specialist Programme (NZSP), and investing further in analytics and sales capability to drive partnership ROI and conversion. Link with Tourism New Zealand strategic priorities Tourism New Zealand s activity in working with the travel trade area supported the following FY18 and overarching strategic priorities: Amplify Business Events and Special Interest to fill product capacity. Advance agile planning and delivery to respond to market conditions and target for impact. Broaden our measure of value from nearterm growth to long-term sustainability. Work with government and partners to sustain and improve the experience of visitors and host communities. How did we do? Education formed a major part of the Trade team s activity in FY18 across all markets with the number of travel agents completing the 100% Pure New Zealand Specialist Programme booming. Other work in the education space included online videos, in-market presentations on the 100% Pure New Zealand campaigns in the UK, USA, and South America; networking opportunities involving 500 travel agents from Brazil, Argentina, and Chile at Tourism New Zealand s Kiwi Link; a live-stream show organised by China South Airlines for Alibaba s Double 11 Shopping Festival (in which all New Zealand products sold out in the first two hours); and a roadshow in the US entitled Treasures of New Zealand that coincided with the Washington DC Tuku Iho exhibition. The team also hosted several famil in New Zealand including 30 members of Tourism New Zealand s top three Indian travel trade accounts, American Airlines and trade partner Travel2, and a tour of 98 Australian travel agents exploring 22 regional locations. These agents became travel company advocates for New Zealand upon their return to their countries of origin. Tourism New Zealand held several industry training events, webinars and workshops (including our annual Regional Tourism Organisation Workshop in Australia), and attended several trade fairs including the Asia-Pacific Incentives & Meetings Expo (AIME the largest business events tradeshow in the Southern Hemisphere), ITB in Berlin (the world s largest travel trade fair), Unite Pacific in London, and Seatrade Cruise Global in Miami (the world s largest cruise trade show). At each of these events Tourism New Zealand staff met with hundreds of influential travel advisors and buyers who, each in turn, went on to share the New Zealand story among their networks. SUCCESSFUL TRAVEL MODULE COMPLETIONS 11 ALL MARKETS Target: 2500 Performance: 55,724 TRADE ON TNZ HOSTED FAMILS ALL MARKETS Target: 650 Performance: 747 TRADE FAMILS THAT FEATURE A CULTURAL ELEMENT Target: At least 75% Performance: 67% Status: Not achieved MAJOR TRADE EVENTS ATTENDED BY TNZ Target: Minimum of 30 Performance: 36 MAJOR TRADE EVENTS ORGANISED & FACILITATED BY TNZ Target: Minimum of 10 Performance: 18 NUMBER OF TRAVEL COMPANY ADVOCATES 12 Target: 185 Performance: 172 Status: Not achieved 11 The online training platform for travel training on the 100% Pure New Zealand Specialist Programme. 12 Two types of Advocates exist; Travel Agent Advocates and Travel Company Advocates. To qualify as a Travel Agent Advocate they must have successfully completed the 100% Pure New Zealand Specialist Programme. To qualify as a Travel Company Advocate the company must have a formal partnership agreement and a regular contact plan must be place and fulfil a set of criteria such as key staff on familiarisation, attendance at TRENZ or have a certain amount of 100% Pure New Zealand Specialists in the company. MAINTAIN THE NUMBER OF TRAVEL AGENTS WHO ARE CERTIFIED AS 100% PURE NEW ZEALAND SPECIALISTS ALL MARKETS Target: 1,500 Performance:

The 2017/2018 year FY18 activities: measures, targets and results International Business Events, including Conferences and Incentives and Premium New Zealand continues to be an attractive location

15 The 2017/2018 year FY18 activities: measures, targets and results International Business Events, including Conferences and Incentives and Premium New Zealand continues to be an attractive location for business events. Business events visitors typically spend more than holiday visitors, travel to New Zealand in shoulder seasons and explore multiple regions. The focus for FY18 included securing business and generating forward demand for new conference centres, and attracting larger conferences that offer higher-value. Link with Tourism New Zealand strategic priorities Tourism New Zealand s activity in international business events and the premium market supported the following FY18 and overarching strategic priorities: Amplify Business Events and Special Interest to fill product capacity. Advance agile planning and delivery to respond to market conditions and target for impact. Broaden our measure of value from nearterm growth to long-term sustainability. Work with government and partners to sustain and improve the experience of visitors and host communities. Kōrero and Kai Tourism New Zealand debuted a world-first hospitality experience at IMEX Frankfurt during FY18 Kōrero and Kai. Convention planners enjoyed a kōrero (conversation) and kai (food) at a dining table intricately designed and carved from ancient reclaimed swamp kauri by the New Zealand Māori Arts and Crafts Institute (NZMACI) to reflect Māori hospitality traditions that have shaped contemporary New Zealand culture. Carved by former NZMACI head of school and Master Carver, Albert Te Pou, the table incorporates two main designs kōwhaiwhai and taratara ā kai (or kae). The table has been made in two pieces. One part will remain in New Zealand and the other will travel around the world. How did we do? Tourism New Zealand achieved all its business targets securing 44 high-profile conferences across the medical, commercial, security, administrative, legal, education, sport and leisure, and science sectors. The team also secured $46.4m worth of incentive events, which tend to bring high value delegates to the country. The most popular incentive locations requested were Auckland, Queenstown, and Rotorua, with delegates expected to stay 6.5 days on average and each programme worth on average $707k. In addition to securing business events, Tourism New Zealand continued to partner with Luxury Lodges of New Zealand to promote New Zealand as a premium destination among ultra-high and high net-worth individuals. We hosted 13 international luxury travel agents on famil around the North and South Islands, held a series of high-end agent training events across the UK and Europe attracting more than 90 luxury travel designers, and attended PURE Marrakesh, one of the world s headline luxury trade shows. During FY18 we released the Premium Insights Report, highlighting results achieved (for the year to March 2017). This provided valuable insights for industry attracting the high end of the market and showed that a third of premium travellers are making return visits to New Zealand and spending on Luxury Lodge New Zealand premium accommodation increased 44% (for the year ended September 2017). In Frankfurt the two pieces came together separated only by a high definition screen. At one end the convention planners enjoyed New Zealand produce at IMEX and at the other end Kiwis dined at Rotowhio marae in Rotorua and Harbourside in Auckland, giving the illusion everyone was seated at the same table. The kōrero and kai table is a powerful symbol of how New Zealand welcomes strangers and makes them feel at home. It also acts as an invitation to the world to come and experience New Zealand s beauty and our warm hospitality for themselves, says Lisa Gardiner, Tourism New Zealand s Manager of Business Events. Tourism New Zealand has extended the Korero and Kai concept in FY19 at major trade shows. BIDS SUPPORTED THROUGH THE CONFERENCE ASSISTANCE PROGRAMME (CAP) FUND Target: 85 Performance: 86 INCENTIVE BIDS SUPPORTED 13 Target: 150 Performance: 162 VALUE OF INCENTIVE BIDS CONVERTED Target: $27m Performance: $46.4m SUCCESS RATE FOR BIDS SUPPORTED THROUGH CAP FUND Target: 60% Performance: 71% ESTIMATED VALUE OF BIDS SUPPORTED THROUGH CAP FUND Target: $124m Performance: $124.9m The kōrero and kai table is a powerful symbol of how New Zealand welcomes strangers and makes them feel at home. It also acts as an invitation to the world to come and experience New Zealand s beauty and our warm hospitality for themselves. Lisa Gardiner, Tourism New Zealand s Manager of Business Events 13 Tourism New Zealand only tracks incentive bids for 50 people or higher, or with an estimated value of more than $200k NZD (excl. airfare). value

The 2017/2018 year FY18 activities: measures, targets and results Activity five: Deliver inspiring and informative information for potential visitors.

16 The 2017/2018 year FY18 activities: measures, targets and results Activity five: Deliver inspiring and informative information for potential visitors. Tourism New Zealand s consumer website, newzealand.com, continues to evolve with regular updates to both content and functionality to convert people dreaming about New Zealand into planning; and provides current information about travel sellers and products to book. Our focus for FY18 was to continue to grow total visits, active visits and conversion to referrals to the travel industry from both paid marketing campaigns, and organic search and social media; and to begin the process to update the website s content management system. Link with Tourism New Zealand strategic priorities Tourism New Zealand s newzealand.com activity is primarily aimed at driving preference for New Zealand, optimising delivery capability and the supporting the following FY18 and overarching strategic priorities: Advance agile planning and delivery to respond to market conditions and target for impact. Maximise global partnerships to achieve integrated projects and digital leadership. Evolve digital platform enabling agile site and content delivery. Broaden our measure of value from near-term growth to long-term sustainability Manage our portfolio of markets and sectors as a strategic investor Work with government and partners to sustain and improve the experience of visitors and host communities. Profile: Kia Ora In October 2017, Tourism New Zealand launched a social media campaign on Facebook and Instagram designed to highlight the positive tourism experience in New Zealand. The #KiaOraNZ campaign tells real-life stories of the connections made between visitors and Kiwis. The #KiaOraNZ campaign complemented our Tourism Today information hub, which highlights the value of international tourism for New Zealand. Former Director of Marketing, Andrew Fraser says the first phase of the campaign uses video content and images to set the scene for the hashtag #KiaOraNZ, which is about stories of New Zealand people and culture. Click to view the Kia Ora video How did we do? As in previous years, all Tourism New Zealand s major campaigns in FY18 led potential visitors to newzealand.com and/or partner websites, leading to increases in the number of active visits to Tourism New Zealand s consumer site overall. We saw a dramatic increase in the number of referrals to industry resulting from partnerships and targeted campaign approaches. In the social media space, Tourism New Zealand took a concerted approach to establish a forum for interaction between New Zealanders and international visitors. The hashtag #KiaOraNZ was introduced across Tourism New Zealand s social channels in October as part of a visitor experience social media campaign aimed at encouraging travellers and New Zealanders to share stories of the positive experiences tourism brings all people. The results were positive with videos viewed 2.4m times globally, 1.5m New Zealanders reached, and more than 43k interactions from New Zealanders. A second phase of the campaign ran in late FY18. Behind the scenes, Tourism New Zealand contracted New Zealand-based Silverstripe Ltd to replace the content management system of newzealand.com. This is part of wider re-platform project that will continue into FY20 and will ultimately improve and futureproof newzealand.com s functionality, speed, scalability, usability, and development. The look and feel of the website will not change. The campaign was well received and prompted a second phase of activity with social media community use of the #KiaOraNZ hashtag to generate other positive tourism stories: When I first arrived in NZ for the first time Kia Ora was written on a welcome card for me...i can honestly say I ve never felt more welcome in any land than I have there, even in my own home country and state. We can learn so much from other cultures. 100% Pure New Zealand Facebook follower. Coming to NZ was the best decision, we were greeted with warm Kia Ora the whole way. Kiwis are such a friendly bunch. Never want to leave. 100% Pure New Zealand Facebook follower. NUMBER OF TOTAL VISITS TO NEWZEALAND.COM Target: 46.4m Performance: 51.1m NUMBER OF ACTIVE VISITS 14 TO NEWZEALAND.COM Target: 21.8m Performance: 22.5m NUMBER OF REFERRALS 15 TO INDUSTRY VIA NEWZEALAND. COM OR VIA DIRECT THIRD- PARTY REFERRALS (TPRS) Target: 5.5m Performance: 8.8m PERCENTAGE OF PEOPLE WHO ARE MORE LIKELY TO VISIT NEW ZEALAND AS A RESULT OF THEIR VISIT TO NEWZEALAND.COM Target: 75% Performance: 77% 14 Active visits: a visit where the visitor interacts with the site s content or functionality. 15 Referrals: The number of people, who, once drawn to newzealand.com from paid search or display digital activity, are then delivered to an operator or partner site where travel/experiences can be purchased. Kia Ora: Hē iti te kupu. Hē nui te korero. Although the word is only small, the meaning is great. Arekatera Maihi, Ngāti Whanua Orākei in 100% Pure New Zealand presents Kia Ora

The 2017/2018 year FY18 activities: measures, targets and results Activity six: Communicate and engage with New Zealand s tourism industry to align industry investment with Tourism New Zealand areas

17 The 2017/2018 year FY18 activities: measures, targets and results Activity six: Communicate and engage with New Zealand s tourism industry to align industry investment with Tourism New Zealand areas of focus. Tourism New Zealand places considerable importance on its relationship with tourism operators. We regularly engage with industry, informing them of our activity, learning about theirs, and gathering feedback to ensure alignment between programmes of work. In FY18 we focused on delivering voice of the visitor insights in support of strategic priority three (to work with government and partners to sustain and improve the experience of visitors and host communities), as well as ongoing partnership work to sustain and enhance the visitor experience in targeted areas. Link with Tourism New Zealand strategic priorities Tourism New Zealand s activity in this area aims to optimise delivery capability, focus marketing activity on clearly defined higher value visitors, and the following FY18 and overarching strategic priorities. Develop visitor insights and 100% Pure New Zealand Experiences to shape industry future. Broaden our measure of value from nearterm growth to long-term sustainability. Manage our portfolio of markets and sectors as a strategic investor. Work with government and partners to sustain and improve the experience of visitors and host communities. How did we do? Tourism New Zealand has an increasingly important role to play in sustaining growth, both in attracting the best visitors for New Zealandand in preparing New Zealand to benefit socially, environmentally and economically from that growth. To this end, voice of the visitor insights permeated all work conducted and targets achieved in FY18, marking the evolution of our work from solely destination marketing to destination readiness and management. Our Executive Team and other team members represented Tourism New Zealand on several industry boards and working groups, including destination management work, visitor driving, responsible camping, and conservation initiatives. Throughout November, Tourism New Zealand s Chief Executive and leadership team hosted industry road shows in Auckland, Rotorua, Wellington, Christchurch and Queenstown, engaging with regional tourism operators and tourism representatives, discussing key issues impacting on them, and updating the industry on TNZ activities. In total, 554 industry representatives attended the road show sessions. Discussions showed the industry remained positive; however concerns about the sustainability of growth and the sentiment of the wider New Zealand community were top of mind for many. This sentiment also emerged from our bi-annual Mood of the Nation survey. This research, completed by Kantar TNS and funded jointly by Tourism New Zealand and Tourism Industry Aotearoa, has been undertaken every six months since 2015 to track public understanding and views on tourism. Respondents to the March 2018 survey appeared well aware of the benefits and opportunities that tourism brings to the New Zealand economy, however pressure on infrastructure remains the top concern New Zealanders have with international tourism, alongside accommodation shortages, environmental damage, and freedom camping challenges in which the private and public tourism sectors are collaborating to resolve. STAKEHOLDER ENGAGEMENT THROUGH PRESENTATIONS AT BOTH INDUSTRY AND TOURISM NEW ZEALAND ORGANISED EVENTS Target: Minimum of 40 Performance: 40 TOURISM NEW ZEALAND COMMUNICATIONS (WEBSITE/ E-NEWSLETTER/ WEBINARS ETC.) ADD VALUE TO TOURISM INDUSTRY STAKEHOLDERS ACTIVITIES Target: 85% Performance: 91% TOURISM NEW ZEALAND PERFORMANCE AS A NATIONAL TOURISM ORGANISATION ADDS VALUE TO TOURISM INDUSTRY STAKEHOLDER ACTIVITIES Target: 80% Performance: 84% It s so inherently part of who we are, it s reflected in our name Manaakitanga Aotearoa. Personal recommendation is the number one reason visitors choose a destination, so it s incredibly encouraging to see the majority of Kiwis embracing manaakitanga and helping to create a positive experience for our visitors. Stephen England-Hall, Tourism New Zealand s Chief Executive The power of manaakitanga Almost all New Zealanders surveyed in March in the Mood of the Nation survey strongly agreed or agreed that international tourism is good for New Zealand (96%). Respondents identified economic and employment opportunities as key benefits of international tourism, including economic growth for the regions (60%), growth opportunities for businesses (59%) and employment opportunities for residents (52%). Additionally, 88% of New Zealanders take pride in making visitors feel welcome in New Zealand. While our landscapes capture the imagination of prospective visitors to Aotearoa, it is manaakitanga, the very Kiwi act of hospitality and sharing, that sets New Zealand apart on the world stage as a highly desirable visitor destination and brings visitors back time and time again, Stephen England-Hall, Tourism New Zealand s Chief Executive. 14 Active visits: a visit where the visitor interacts with the site s content or functionality. 15 Referrals: The number of people, who, once drawn to newzealand.com from paid search or display digital activity, are then delivered to an operator or partner site where travel/experiences can be purchased

The 2017/2018 year The 2017/2018 year Regional Spotlight: Northland Spend from Victorian-based Australians in Northland increased The pilot was the first Tourism New Zealand campaign focused on a

Stephen England-Hall, Tourism New Zealand s Chief Executive 18 % Total arrivals to Northland grew 18 % Our media programme secured $ 24 million EAV of global media coverage featuring Northland and

New Zealand s first regional dispersal pilot campaign focused on a single region Everyday a different journey in Northland.

5m Australians in the state of Victoria and promoting travel in FY18 s shoulder periods.

18 The 2017/2018 year The 2017/2018 year Regional Spotlight: Northland Spend from Victorian-based Australians in Northland increased The pilot was the first Tourism New Zealand campaign focused on a single region to test whether we can influence a shift in travel patterns toward our less visited regions. Stephen England-Hall, Tourism New Zealand s Chief Executive 18 % Total arrivals to Northland grew 18 % Our media programme secured $ 24 million EAV of global media coverage featuring Northland and 787 stories Te Tai Tokerau / Northland the winterless north, home to ancient living forests, incredible marine life, cultural experiences, the incomparable Bay of Islands; and the location of Tourism New Zealand s first regional dispersal pilot campaign focused on a single region Everyday a different journey in Northland. Together with Northland Inc, Facebook, Flight Centre and Air New Zealand, a pilot campaign ran in 2017 reaching 1.5m Australians in the state of Victoria and promoting travel in FY18 s shoulder periods. During the travel period promoted in the single region Northland campaign, credit card spend from Victorian-based Australians in Northland increased 18.2%, compared to the rest of Australian cards (+3.6%). Interestingly, total arrivals from the State of Victoria across New Zealand grew +18%, showing that the regional campaign benefitted not just Northland but all of New Zealand. Results are being used to inform future campaign work. The pilot was the first Tourism New Zealand campaign focused on a single region to test whether we can influence a shift in travel patterns toward our less visited regions. We are focused on encouraging more international visitors to the regions to share the economic benefits tourism delivers. The results of this test proved that yes we can, however visitor spend is limited by what products are available in the region, says Tourism New Zealand s Chief Executive, Stephen England-Hall. Collaborative efforts between Northland Inc and Tourism New Zealand have yielded positive results to date. The International Media Programme, for example secured $24.85m worth of global media coverage featuring Northland (787 stories)

Awards Awards New Zealand s achievements and awards Partner of the Year Best Tourism Office in Australia Gold award at the 2017 Prevue Visionary Awards Virtuoso s Tourism Board (for a third year in a

19 Awards Awards New Zealand s achievements and awards Partner of the Year Best Tourism Office in Australia Gold award at the 2017 Prevue Visionary Awards Virtuoso s Tourism Board (for a third year in a row). At the 2017 Australia Federation of Travel Agents, National Travel Industry Awards. (IMEX America) for offering the best incentive experience. Most Preferred Destination Best Asian Destination Best Country on Earth Awarded to New Zealand at the annual Traveller Made, Essence of Luxury Forum in France. Awarded to New Zealand voted by Asia Tourism in Shanghai Voted as New Zealand for the fifth year in a row at the 2017 Telegraph Readers Travel Awards. 5th for Best in Travel list 2nd for Outbound Destination Satisfaction Best International Adventure Destination 2018 award New Zealand s ranking in Lonely Planet s top 10 countries to visit in New Zealand s ranking in the China Tourism Academy s China Outbound Tourism Development 2017 report. At the Outlook Traveller Awards in New Delhi 36 37

20 Once you have visited our place you are part of the whānau, you are welcome forever 38 39

Meet the Team Meet the Team The Board From top left to right Kerry Prendergast Richard Leggat Raewyn Idoine Mike O Donnell Chris Parkin John Thorburn Jamie Tuuta Jan Hunt Kerry Prendergast (CNZM)

The former Mayor of Wellington (2001-2010) and Vice-President of Local Government New Zealand holds an MBA from Victoria University of Wellington (where she is a Distinguished Alumnus) and was made a

In addition to her Tourism New Zealand role, Kerry is also Chair of the Environmental Protection Authority and the New Zealand Film Commission.

for the Victoria University Foundation. She also serves on the Board of the New Zealand China Council.

On 18 August 2015 Kerry was reappointed for a second term ending on 17 August 2018. Kerry will continue as chair until 31 March 2019.

He assumed the role of Deputy Chair of Tourism New Zealand in December 2013. A keen sportsman and recreational cyclist, Richard chairs the board of Nga Haerenga The New Zealand Cycle Trail Inc.

He is also a director of Auckland Council s regeneration organisation, Panuku Development Auckland, and sits on the Boards of Snow Sports New Zealand, Cycling NZ, Warren and Mahoney Ltd, and

Raewyn Idoine The founder of New Zealand s largest private tourism education provider, the New Zealand School of Tourism (formerly the Sir George Seymour National College of Tourism), Raewyn Idoine

21 Meet the Team Meet the Team The Board From top left to right Kerry Prendergast Richard Leggat Raewyn Idoine Mike O Donnell Chris Parkin John Thorburn Jamie Tuuta Jan Hunt Kerry Prendergast (CNZM) Chair Kerry Prendergast has chaired Tourism New Zealand since August The former Mayor of Wellington ( ) and Vice-President of Local Government New Zealand holds an MBA from Victoria University of Wellington (where she is a Distinguished Alumnus) and was made a Companion of the New Zealand Order of Merit in 2011 for her services to local government. In addition to her Tourism New Zealand role, Kerry is also Chair of the Environmental Protection Authority and the New Zealand Film Commission. She is Deputy Chair of Wellington Free Ambulance, a Trustee for New Zealand Community Trust, a Director for Oceania Healthcare, Compass Health, and Wellington Phoenix Football Club and Board member for the Victoria University Foundation. She also serves on the Board of the New Zealand China Council. Kerry is also a patron and trustee of several New Zealand community organisations including SPCA, Skylight Trust, and Motu Foundation, and is an ambassador for Alzheimer s New Zealand. On 18 August 2015 Kerry was reappointed for a second term ending on 17 August Kerry will continue as chair until 31 March Richard Leggat Deputy Chair Richard Leggat has a varied background across business, marketing, and e-commerce and has been a full-time director for the last six years. He assumed the role of Deputy Chair of Tourism New Zealand in December A keen sportsman and recreational cyclist, Richard chairs the board of Nga Haerenga The New Zealand Cycle Trail Inc., the entity charged with ensuring the success and sustainability of the Government s national cycle trail initiative. He is also a director of Auckland Council s regeneration organisation, Panuku Development Auckland, and sits on the Boards of Snow Sports New Zealand, Cycling NZ, Warren and Mahoney Ltd, and Education New Zealand. Richard was first appointed to the New Zealand Tourism Board on 1 February 2010 and completes his third term on 5 September Raewyn Idoine The founder of New Zealand s largest private tourism education provider, the New Zealand School of Tourism (formerly the Sir George Seymour National College of Tourism), Raewyn Idoine has been at the forefront of many tourism and business ventures around the country. Raewyn has significant experience at a senior level in the education, tourism and health sectors, having been Independent Chair of the Local Government Industry Training Organisation, Stakeholder Engagement Manager for the Tertiary Education Commission and a Board member of Learning State (the state sector industry training organisation). Raewyn now chairs the Southern Health and Disability Ethics Committee, and is a director of Christchurch City Council s subsidiary Transition Holdings Limited, and Canterbury Development Corporation. Raewyn was appointed to the New Zealand Tourism Board in August 2015 for a three-year term, ending 5 September Mike O Donnell Mike MOD O Donnell is a full-time director with a background in ecommerce, technology, tourism and funds management. Mike is chairman of cloud-based booking platform Timely, and is a director of Kiwibank, Kiwiwealth, G2G Knowhow, Serato Music, Raygun Performance Software and Radio New Zealand. He also writes a national business column for Fairfax Media/Stuff. The former Chief Operating Officer of Trade Me and vwork, MOD previously chaired Positively Wellington Tourism and has managed several online travel businesses. MOD is active in motorsport and chairs the NZ Motorcycle Safety Summit. MOD was appointed to the New Zealand Tourism Board on 15 October His second term ends 15 December Chris Parkin (CNZM) Chris Parkin is a prominent arts patron and entrepreneur owned the Museum Art Hotel in Wellington for 22 years. Chris was made a Companion of the New Zealand Order of Merit for services to the arts and business in 2011, and continues to support budding artists through the Parkin Drawing Prize, valued at $20,000. A former investment banker Chris was a Wellington City Councillor for nine years before retiring in 2004, and now owns several buildings and properties in the greater Wellington area. Chris is a director of a number of New Zealand property companies including Strada NZ Ltd (incorporating Museum Hotel Properties Ltd), Coalmyne Ltd, Museum Apartments, Form Apartments, Sloe Hand Ltd, Raglan Forestry Limited, Gilmer Tower, and Dimension Holdings. Chris was appointed to the New Zealand Tourism Board in December His second term ends on 5 September John Thorburn John Thorburn is Chief Executive of InterCity Group, which operates New Zealand s largest bus and coach transport network and is a significant operator of tourism activities, both in New Zealand and Australia. He has held senior positions in a range of industries, including manufacturing, marketing and telecommunications, and was the former Chief Executive of Ngai Tahu Tourism. He has held board positions with the New Zealand Tourism Industry Aotearoa and the New Zealand Conservation Authority. John was first appointed to the New Zealand Tourism Board in August 2012, and was reappointed for a third term that ends 30 June Jamie Tuuta Award winning Māori business leader, Jamie Tuuta chairs Te Ohu Kaimoana, the body set up to oversee Māori fisheries assets throughout New Zealand, conservation project Taranaki Mounga, and Māori Television. Jamie is the Māori Trustee and Chief Executive of Te Tumu Paeroa, an organisation responsible for managing nearly 100,000 hectares of land and more than $100m worth of assets and investments. Jamie has held a range of governance positions in iwi development, agribusiness, fishing, investment, health, Māori development, tourism and education. He is currently a director of Moana New Zealand, an export fishing company, and Taranaki Whānui Ltd, an iwi investment entity. In 2015 Jamie received the Young Māori Business Leader Award at the Aotearoa New Zealand Māori Business Leaders Awards, and was awarded the Sir Peter Blake Emerging Leadership Award in Jamie was first appointed to the New Zealand Tourism Board in March 2013 and was reappointed for a third term that ends on 30 June Jan Hunt Jan Hunt joined the New Zealand Tourism Board on 27 June Jan is also Deputy Chair of Skyline Enterprises and a board member of Jumping New Zealand, chairing the Performance Committee. She has previously sat on the board of the Queenstown Chamber of Commerce. Based in Queenstown, Jan has a strong background in the tourism sector, having worked as General Manager at Millbrook Resort, Sky City Hotel & Convention Centre, and Millennium Queenstown. Jan was reappointed for a second term that ends on 30 June

Meet the Team Meet the Team Our Executive Team From top left to right Stephen England-Hall Andrew Fraser René de Monchy Sue Parcell Rebecca Ingram Natalie Haines Stephen England-Hall, Chief Executive

Stephen has worked extensively in management consulting in the digital marketing, data, and technology sectors across New Zealand, the United Kingdom, and North America.

for social media marketing company Syncapse Corporation, global media agency Razorfish LLC (part of Publicis Groupe), DNA, EDS, BT Global Services, and CA Technologies.

He sits on the New Zealand Screen Production Grant Panel, and Significant Economic Benefits Verification Panel.

marketing campaign: consumer marketing and advertising activity.

22 Meet the Team Meet the Team Our Executive Team From top left to right Stephen England-Hall Andrew Fraser René de Monchy Sue Parcell Rebecca Ingram Natalie Haines Stephen England-Hall, Chief Executive Stephen England-Hall joined Tourism New Zealand as Chief Executive on 3 April Stephen has worked extensively in management consulting in the digital marketing, data, and technology sectors across New Zealand, the United Kingdom, and North America. Prior to joining Tourism New Zealand Stephen was Chief Executive Officer of Loyalty New Zealand, the company behind New Zealand s customer loyalty and data coalition, Fly Buys, and the analytics business LAB360. He has a strong background in organisational leadership having held managerial positions including Chief Executive Officer, Managing Director, Growth and Innovation Director, and Chief Client Officer for social media marketing company Syncapse Corporation, global media agency Razorfish LLC (part of Publicis Groupe), DNA, EDS, BT Global Services, and CA Technologies. As the Tourism New Zealand Chief Executive Stephen is also a Board member of the New Zealand China Council Board, the Tourism Industry Association, and The New Zealand Story. He sits on the New Zealand Screen Production Grant Panel, and Significant Economic Benefits Verification Panel. Andrew Fraser, Director of Marketing Andrew Fraser joined Tourism New Zealand in 2013 and, up until his departure on 15 June 2018; he managed the most visible aspect of the 100% Pure New Zealand marketing campaign: consumer marketing and advertising activity. This included overseeing the creative development, planning, researching and implementation of the campaign and advertising activity across Tourism New Zealand s key markets. Andrew is a seasoned senior marketing leader with more than 20 years experience. Prior to joining Tourism New Zealand, Andrew ran his own strategic consultancy business in Auckland. He has held senior marketing and executive roles with Cadbury/Kraft and Frucor Beverages/Danone, and developed and launched V Energy drink. René de Monchy, Director of Trade, PR and Major Events René de Monchy joined Tourism New Zealand in August René brings 15 years global experience in consumer-led businesses including local and international marketing roles for Fonterra, Heineken, and Asia Pacific Breweries in Singapore. René manages Tourism New Zealand s global trade and public relations (PR) activity including leading offshore trade teams, the business and premium sectors, and trade marketing, along with international PR, and major events. Sue Parcell, General Manager Finance and Operations Sue Parcell joined Tourism New Zealand in August 2010 and is responsible for managing and leading the financial, property, procurement, legal and risk management functions of Tourism New Zealand, while also managing our IT infrastructure. Sue has had considerable experience in the tourism industry, and has held senior finance and general management roles in New Zealand and overseas. Rebecca Ingram, General Manager Corporate Affairs Rebecca joined Tourism New Zealand in July 2014 as General Manager, PR and Major Events and in June 2018 took up the position of General Manager Corporate Affairs. In this role she is responsible for overseeing relationships with our key New Zealand stakeholders, including government ministers and NZ Inc, and manages Tourism New Zealand s internal and external communications, information management, and industry relations. Rebecca has a strong background in public relations, marketing and communications having held senior management roles for the Chartered Accountants Australia and New Zealand, New Zealand Institute of Chartered Accountants, and Telecom New Zealand. Natalie Haines, General Manager People & Culture Natalie joined Tourism New Zealand in May and leads people, culture and safety & wellness for our organisation. She brings with her more than 16 years experience in the fields of organisational change, developing capability, culture and recruitment. Prior to joining Tourism New Zealand Natalie held senior people and culture roles at Contact Energy, and Oranga Tamariki Ministry for Children. During this time both organisations were undergoing significant change. Executive changes during FY18: Tourism New Zealand farewelled the following Executive Team members during FY18: Deborah Gray, General Manager Corporate Affairs, Bridgid Kelly, General Manager People, and Andrew Fraser, Director of Marketing

Meet the Team Meet the Team Leonie has incredible connections, is hugely knowledgeable about what she is doing and is a true ambassador for New Zealand Candice is goal oriented and focused and

Our Whānau By international standards Tourism New Zealand s whānau is relatively small with 160 staff working across our 13 locations globally.

bi-annual internal Whetū awards recognising outstanding work and success across our whānau.

the big picture, friendly and focused, and inclusive and decisive.

23 Meet the Team Meet the Team Leonie has incredible connections, is hugely knowledgeable about what she is doing and is a true ambassador for New Zealand Candice is goal oriented and focused and delivers great work for the whole organisation. The team s relationship with Bryce laid the groundwork for some of the most genuine destination videos we have seen. Our Whānau By international standards Tourism New Zealand s whānau is relatively small with 160 staff working across our 13 locations globally. Despite our geographical spread we are a close-knit team, aided by our intranet, Kōhanga, annual global community challenges, daily video conferences across business groups, weekly updates, and bi-annual internal Whetū awards recognising outstanding work and success across our whānau. To be successful, nominees have to have displayed one or more of our values in their work, and their actions must have had a positive impact on achieving our strategic objectives: composed and sees the big picture, friendly and focused, and inclusive and decisive. Winners from the bi-annual awards are automatically nominated for our annual Whetū Nui Awards, which are chosen by our executive team at the end of the calendar year. Winners receive our Whānau pendant and trophy. Whetū Wheriko (glistening star) presented each year to an individual member of the whānau who has made an outstanding contribution to the organisation. Whetū Mātaiata (morning star) recognising the achievement of someone who is new to the Tourism New Zealand whānau. Whetū Nui (Super Star) selected from the list of nominees from the previous two Whetū rounds. Review During FY18 Tourism New Zealand commissioned global professional services firm Price Waterhouse Coopers to independently assess if Tourism New Zealand had the right capabilities and resource to deliver against our four-year strategy. Towards the end of Q3 we sought input and ideas from all Tourism New Zealand whānau and these were considered and helped inform the proposed changes. As a result of the review, changes to our operating model were confirmed and put place in FY19. Whetū Wheriko (Whetū Nui Awards October 2017) Leonie Ashford As International Events Bid Manager, Leonie spends much of her time in planes and hotels overseas but always maintains a passion for her work. Leonie has incredible connections, is hugely knowledgeable about what she is doing and is a true ambassador for New Zealand. She is engaging and friendly and has natural warmth that makes her a winner. She s also a lot of fun to be with which just adds to her dynamic nature. We are very lucky to have Leonie as part of our whānau. She lives the Tourism New Zealand values, says Stephen England-Hall, Tourism New Zealand s Chief Executive. Whetū Mātaiata (Whetū Nui Awards October 2017) Candice Johanson Since joining Tourism New Zealand in 2016, Senior Communications Advisor Candice has proved herself as one always willing to go above and beyond to help other people engaging and friendly and great fun to be around. When presenting her Whetū award, Stephen England-Hall said: Candice is goal oriented and focused and delivers great work for the organisation. Whetū Nui winners (Whetū Nui Awards October 2017) Vanessa Farquharson, Brittany Hodill and Mark Burt The work of this dynamic trio on the Bryce Dallas Howard campaign led to their recognition as Tourism New Zealand s Whetū Nui. As well as being focused on the big picture, they were inclusive, well-organised and had a keen eye for detail. The team were passionate about the project, exploring new options to reach good solutions and achieve great results. Throughout the project, they maintained clear communications across the wider team, never losing their energy and acknowledging the wider team. reported, I was lucky to spend time with Bryce Dallas Howard in the States and it was clear that our team had done a terrific job of building a relationship with Bryce that laid the groundwork for some of the most genuine destination material we have seen

Meet the Team Meet the Team Governance The Board The New Zealand Tourism Board (trading as Tourism New Zealand) is a Crown entity established under the New Zealand Tourism Board Act 1991 and is a

24 Meet the Team Meet the Team Governance The Board The New Zealand Tourism Board (trading as Tourism New Zealand) is a Crown entity established under the New Zealand Tourism Board Act 1991 and is a Crown agency for the purposes of the Crown Entities Act Tourism New Zealand is governed by a Board appointed by the Minister of Tourism. All decisions relating to the operation of Tourism New Zealand are made by, or under the authority of, the Board in accordance with the New Zealand Tourism Board Act 1991, and the Crown Entities Act In accordance with the New Zealand Tourism Board Act 1991, the Board must have no fewer than five, and no more than nine, members. The Minister s formal line of accountability with Tourism New Zealand is through the Board s Chair. Board appointments are generally for two or three years, with reappointment possible. The composition of the Board reflects a balance of tourism industry and commercial expertise. The Board meets at least six times a year, including a two-day meeting to review the organisation s ongoing strategic direction. This strategy meeting initiates the business planning process and informs the preparation of the annual Statement of Intent. Delegation The Board delegates day-to-day management of Tourism New Zealand to the Chief Executive who is directly accountable to the Board through the Chair. Tourism New Zealand s Delegated Authorities Policy is set by the Board and reviewed annually. Appropriate formal processes are in place for reporting back to the Board. Induction and Development Tourism New Zealand introduces each new board member to the organisation through an induction process, which includes time spent with senior executives and their teams. Members are also encouraged, where appropriate, to attend tourism-related events such as TRENZ and other industry events. Conduct Tourism New Zealand expects all its employees and board members to maintain the highest ethical standards. Tourism New Zealand has in place an employee code of conduct, which all staff sign on joining the organisation. Tourism New Zealand also has a formal code of conduct for its board members, which is consistent with the code released by the State Services Commission. Disclosure of Interests The Board is conscious of its obligations to ensure that board members avoid any conflicts of interest in their decision-making process. The Board ensures that a proper process is followed and that members interests are formally recorded, with any changes or additions being disclosed at the start of each meeting. Members excuse themselves from any discussions in which their duty as a member could be compromised. Risk Management Tourism New Zealand manages its risks through a risk management framework; a process that requires it to identify legislative and business risks arising from its strategic direction and operating environment. Tourism New Zealand s Risk Management Policy is reviewed annually by the Audit Committee. The Chief Executive reports to the Board on the matter of new or escalated risks and the processes in place to manage these appropriately. Tourism New Zealand conducts its own internal audits. Audits are agreed by the Audit Committee and programmes of work are developed with input by Tourism New Zealand s external auditors. The results are reported back to the Audit Committee. Board Committees Committees of the Board are convened to deal with specific matters and include the Audit Committee and Remuneration Committee. The Audit Committee meets at least three times a year. It reviews Tourism New Zealand s internal control framework, external audit relationships and engagements, risk management, health and safety management, and financial reporting, including International Financial Reporting Standards (IFRS). The Remuneration Committee meets on an ad-hoc basis. It reviews the performance and remuneration of the Chief Executive and senior management. The committee also approves proposed organisation-wide remuneration policies. Subsidiary companies Tourism New Zealand has two subsidiary companies: Qualmark New Zealand (wholly owned), and the Visitor Information Network Incorporated, trading as i-site New Zealand. Legally Tourism New Zealand owns the Visitor Information Network, however, each of the 80-plus i-sites in New Zealand are individually owned and operated. A member of Tourism New Zealand s Executive Team chairs the i-site Board and the i-site executive comprises two Tourism New Zealand staff members. Qualmark New Zealand is chaired by Tourism New Zealand s General Manager Finance and Operations

25 Meet the Team Meet the Team Equal Employment Opportunities Under Section 151 (1)(g) of the Crown Entities Act, Tourism New Zealand is required to provide information about compliance with obligations to be a good employer, including its Equal Employment Opportunities (EEO) Programme. Set out below is a work place profile for Tourism New Zealand as at 30 June NZ European Executive Management Direct Reports to Executive Managers or Staff with Responsibility for Specific Output Areas Other Managers with Staff Responsibility (4th Tier) Professional and Support Staff % of Group % of Group % of Group % of Group Men 33% 18% 6% 12% Female 50% 54% 39% 31% Māori Male 1% Female Pacific Peoples Male Female 9% Asian (inc South Asian) Male 6% 4% Female 15% 19% Other Male 16% 9% 5% Female 9% 33% 27% % of Group of Total Org 4% 7% 22% 67% Tourism New Zealand operates in 12 offshore markets and employs people of different nationalities, race and ethnicity. We recognise the value of a diverse workforce and the importance of working together to deliver on outcomes. This is illustrated through its core organisational values, namely actions speak louder, global whānau, and an unwavering belief in New Zealand. Women and people of Asian descent continue to be well represented at all levels of our organisation. Tourism New Zealand continues to support the development and growth of our people and in order to facilitate this, has undertaken the following: Provided tools and information on Māori culture and language via Kōhanga and as part of on-boarding. Continuation of the global community initiative Global Whānau, which celebrates the diversity of the cultures represented at Tourism New Zealand and improves communication and connectedness between offices. Celebrated the achievements of our people through the Whētu recognition programme. 1. Culture and accountability Tourism New Zealand remains committed to being a good employer and as such, to managing and leading all employees fairly and properly in all aspects of their employment. This includes people in-market, where there are different jurisdictional requirements and statutory minima in the areas of Equal Employment Opportunities (EEO). Tourism New Zealand has an Equal Employment Opportunity Policy. Tourism New Zealand has a well-defined mission, vision, set of values and behaviour expectations. This framework provides our story which has been fully integrated into our recruitment and selection, performance management and the reward and recognition programmes. Tourism New Zealand has sought employee feedback and input through a pulse engagement survey to assist in maintaining an environment where employees are motivated and supported. The leadership team and broader management group are committed to demonstrating leadership and accountability in all areas of EEO and, from an EEO perspective, this means a commitment to, and activity in, the following areas. 2. Recruitment, selection and on-boarding Our recruitment and selection procedure has been developed to ensure that all prospective employees are given the opportunity to participate equally in the recruitment process. The selection process typically involves a structured competency and behaviourally-based interview, reference checking, a screening tool, and for senior positions, psychometric assessment, all of which are validated and support EEO principles. 3. Learning and development Tourism New Zealand has a management development and an accelerated development programme, which includes facilitated and online learning, mentoring, coaching, 360 development and on-the-job learning. Appreciation and management of diversity is integrated into the agenda for each programme to ensure participants further develop capability in this area. The organisation also has a succession and progression management programme for the purpose of ensuring there is the required depth and breadth of capabilities in the organisation to deliver on organisational outcomes. Learning and development needs are identified through this and on an individual basis through the development planning process. 4. Flexibility and work design Tourism New Zealand has an active organisational-wide programme of supporting flexible working arrangements and job design to assist employees to manage different aspects of work life balance. The organisation continues to: Support employees with flexible working arrangements. Support employees with disabilities or special requirements through work place assessments, design changes and accommodating individual needs in the work place. Support parents in their return to work by offering part-time and gradual return to full-time arrangements, and flexitime to accommodate child care needs. Support expectant parents by granting additional paid time away from work to attend appointments associated with the pregnancy. 5. Remuneration, recognition and rewards Tourism New Zealand differentiates remuneration based on performance and is committed to compensating employees competitively and equitably with attention to affordability and within the scope of available resources. The Tourism New Zealand remuneration practice is supported by the use of independent job evaluation and market remuneration information to establish salary ranges. Individuals identified as not meeting the requirements of their role are provided with support and development where required. 6. Safety and wellbeing Tourism New Zealand is committed to maintaining a healthy and safe work environment for our employees and contractors in undertaking our activities. Following a safety and wellness audit in FY17, we have refreshed our focus from the development of safety and wellness processes and practices to the maintenance of the programmes in place, and providing assurance through reporting, which has been the focus in FY18. Two Safety and Wellness Committees help ensure employee participation in safety and wellness across the time-zones in the 12 countries in which Tourism New Zealand operates. Tourism New Zealand has continued to provide a great hosting and driver training programme to ensure that all staff who host and drive are skilled to do so safely and to a high standard. Measures indicate these programmes continue to be very successful and our employees feel increasingly that safety and wellness is well managed. Workplace assessments and the provision of special equipment continue to be undertaken and provided to ensure that employees are able to contribute effectively in all aspects of their working life. Tourism New Zealand has an Anti-Harassment & Discrimination Prevention Policy in place to ensure that employees, contractors and managers work in an environment where they feel comfortable and respected. The policy is supported by workshops for our employees across the globe to ensure they have the skills, knowledge and confidence to respond and take action should they experience or witness unprofessional behaviour. Tourism New Zealand has subsequently shared this work and resources with Regional Tourism New Zealand, which represents Regional Tourism Organisations across New Zealand, to support its antiharassment efforts and to further strengthen good practice across the wider tourism industry

26 Sometimes it can feel like your trip flashes by in a second, but the friendships you make and the stories you share, last

Financials Financials Financial statements 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

27 Financials Financials Financial statements In terms of the Crown Entities Act 2004, the Board is responsible for the preparation of the New Zealand Tourism Board s financial statements and statement of service performance, and for the judgments made in them. The Board of New Zealand Tourism Board has the responsibility for establishing, and has established, a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting. In the Board s opinion, these financial statements and statement of service performance give a true and fair view of the financial position and operation of the New Zealand Tourism Board Group for the year ended 30 June The Members of the New Zealand Tourism Board and Group authorised these financial statements for issue on 5 September Signed on behalf of the Board: Kerry Prendergast Chair 5 September 2018 R. Leggat Deputy Chair 5 September

28 Financials Financial statements Statement of comprehensive revenue and expense for the year ended 30 June 2018 Statement of changes in equity for the year ended 30 June 2018 Group Parent Parent Revenue from non-exchange transactions Notes 2018 Actual $000s 2018 Budget $000s 2017 Actual $000s 2018 Actual $000s 2018 Budget $000s 2017 Actual $000s Revenue from Crown 2 117, , , , , ,350 Other revenue 3 1,171 1, ,171 1, Revenue from exchange transactions Interest income Other revenue 3 5,940 3,723 6,819 4,452 1,878 5,258 Total revenue 124, , , , , ,613 Expenditure Other expenses 4 127, , , , , ,644 Depreciation and amortisation 11, Total expenditure 5 128, , , , , ,595 Net operating surplus/(deficit) before foreign exchange and taxation Fair value gain (losses) on derivative financial instruments (3,585) (19) 672 (3,463) - 1, , , Income tax expense Net surplus/(deficit) for the year 664 (19) 1, ,372 Notes Shareholders Equity $000s Foreign Exchange Reserve $000s Accumulated Comprehensive Revenue and Expense $000s Total $000s Balance at 1 July ,805 6,924 (3,261) 5,468 Total comprehensive revenue and expense for the year Transfer from / (to) retained earnings to foreign exchange reserve 17 - (1,066) 1,066 - Net total after foreign exchange transfer - (1,066) 1, Balance at 30 June ,805 5,858 (1,409) 6,253 Statement of changes in equity for the year ended 30 June 2017 Notes Shareholders Equity $000s Foreign Exchange Reserve $000s Parent Accumulated Comprehensive Revenue and Expense $000s Total $000s Balance at 1 July ,805 4,121 (1,830) 4,096 Total comprehensive revenue and expense for the year - - 1,372 1,372 Transfer from / (to) retained earnings to foreign exchange reserve 17-2,803 (2,803) - Net total after foreign exchange transfer - 2,803 (1,431) 1,372 Balance at 30 June ,805 6,924 (3,261) 5,468 Statement of changes in equity for the year ended 30 June 2018 Total comprehensive revenue and (expense) for the year 664 (19) 1, ,372 Group Transfer from / (to) foreign exchange reserves 17 1,066 - (2,803) 1,066 - (2,803) Net operating surplus/(deficit) after foreign exchange transfer Net surplus/(deficit) for the year is attributable to: 1,730 (19) (1,776) 1,852 - (1,431) Non-controlling interest 6 97 (19) (35) Owners of the parent 567-1, ,372 Total comprehensive revenue and (expense) for the year is attributable to: 664 (19) 1, ,372 Non-controlling interest 6 97 (19) (35) Owners of the parent 567-1, , (19) 1, ,372 Notes Shareholders Equity $000s Foreign Exchange Reserve $000s Accumulated Comprehensive Revenue and Expense $000s Non- Controlling Interest $000s Total $000s Balance at 1 July ,805 6,924 (3,601) 183 5,311 Total comprehensive revenue and expense for the year Transfer from / (to) retained earnings to foreign exchange reserve 17 - (1,066) 1, Net total after foreign exchange transfer - (1,066) 1, Balance at 30 June ,805 5,858 (1,967) 280 5,980 Statement of changes in equity for the year ended 30 June 2017 Notes Shareholders Equity $000s Foreign Exchange Reserve $000s Group Accumulated Comprehensive Revenue and Expense $000s Non- Controlling Interest $000s Total $000s Balance at 1 July ,805 4,121 (1,859) 218 4,285 Total comprehensive revenue and expense for the year - - 1,061 (35) 1,026 Transfer from / (to) retained earnings to foreign exchange reserve 17-2,803 (2,803) - - Net total after foreign exchange transfer - 2,803 (1,742) (35) 1,026 Balance at 30 June ,805 6,924 (3,601) 183 5,311 The notes and accounting policies on pages 58 to 77 form part of and are to be read in conjunction with these financial statements. The notes and accounting policies on pages 58 to 77 form part of and are to be read in conjunction with these financial statements

29 Financials Financial statements Statement of financial position for the year ended 30 June 2018 Statement of cash flows for the year ended 30 June 2018 Group Parent Group Parent Current Assets Notes 2018 Actual $000s 2018 Budget $000s 2017 Actual $000s 2018 Actual $000s 2018 Budget $000s 2017 Actual $000s Cash and cash equivalents 8 5,305 5,355 4,927 4,978 5,000 4,770 Receivables from non-exchange transactions Receivables from exchange transactions 9 1,474 2,388 2,241 1,453 2,200 2,198 Prepayments and other current assets 1,645 1,400 2,094 1,645 1,400 2,094 Derivative financial instruments 10 2,969 1,456-2,969 1,456 - Non-current Assets 11,544 10,776 9,367 11,196 10,216 9,167 Property, plant and equipment 11 1,841 1,407 2,032 1,836 1,404 2,023 Intangible assets ,009 1, ,014 Accommodation bonds Investment in subsidiary Derivative financial instruments ,200 2,943 3,563 3,387 2,945 3,505 Total Assets 14,744 13,719 12,930 14,583 13,161 12,672 Current Liabilities Creditors and other payables 14 6,750 4,688 4,632 6,539 4,600 4,468 Employee entitlements Invoiced in advance Provisions Current Lease Incentive Liability Derivative financial instruments , ,103 Non-current Liabilities 8,466 6,358 7,041 8,032 6,020 6,630 Provisions Derivative financial instruments Long Term Lease Incentive Liability Total Liabilities 8,764 6,508 7,617 8,330 6,170 7,206 Net Assets 5,980 7,211 5,313 6,253 6,991 5,466 Cash flows from operating activities Notes 2018 Actual $000s 2018 Budget $000s 2017 Actual $000s 2018 Actual $000s 2018 Budget $000s 2017 Actual $000s Crown revenue 117, , , , , ,350 Interest received Other revenue from non-exchange transactions 1, ,131 1, Other revenue from exchange transactions 6,503 3,355 6,872 5,100 1,478 5,294 Payments to suppliers and employees (124,368) (122,368) (123,690) (122,954) (120,623) (122,000) Goods and services tax (net) (82) (60) Net cash inflow/(outflow) from operating activities 18 1,117 (585) 1,508 1,145 (700) 1,642 Cash flows from investing activities Purchase of property, plant and equipment (613) (300) (1,346) (494) (300) (1,233) Purchase of intangible assets (118) - (46) Payments for accommodation bonds (24) - (76) (24) - (76) Net cash inflow/(outflow) from investing activities (637) (300) (1,422) (636) (300) (1,355) Cash flows from financing activities Capital contribution (200) - - Non controlling interest capital contribution Net cash inflow/(outflow) from financing activities (200) - - Net decrease in cash held 480 (885) Effect of exchange rates on foreign currency balances (103) - (420) (103) - (420) Opening cash brought forward 4,927 6,240 5,261 4,770 6,000 4,903 Cash at end of year 8 5,304 5,355 4,927 4,976 6,000 4,770 Equity Equity attributable to equity holders of the parent Shareholder's Equity 1,805 1,805 1,805 1,805 1,805 1,805 Accumulated Comprehensive Revenue and Expense (1,967) 1,083 (3,601) (1,409) 1,065 (3,261) Foreign Exchange Reserve 17 5,858 4,121 6,924 5,858 4,121 6,924 Parent interests 5,696 7,009 5,128 6,253 6,991 5,468 Non-controlling interests Total Equity 5,980 7,211 5,313 6,253 6,991 5,466 The notes and accounting policies on pages 58 to 77 form part of and are to be read in conjunction with these financial statements. The notes and accounting policies on pages 58 to 77 form part of and are to be read in conjunction with these financial statements

30 Financials Notes to the financial statements Note 1 (a) Reporting Entity Tourism New Zealand is a Crown entity as defined by the Crown Entities Act 2004 and is domiciled in New Zealand. Tourism New Zealand s primary objective is to improve tourism s contribution to economic growth by increasing the value of international visitors to New Zealand. For the purposes of financial reporting, Tourism New Zealand is classified as a Public Benefit Entity. The financial statements for Tourism New Zealand are for the year ended 30 June (b) Basis of preparation The financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period. Statement of compliance The financial statements have been prepared in accordance with the requirements of the Crown Entities Act 2004, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP). The financial statements have been prepared in accordance with Public Benefit Entity (PBE) standards. Measurement base The financial statements have been prepared on a historical cost basis modified by the revaluation of certain assets and liabilities as identified in this statement of accounting policies. The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency is New Zealand dollars. (c) Accounting standards and interpretations issued but not yet effective In 2016, the External Reporting Board issued 2016 Omnibus amendments to PBE Standards. These amendments apply to PBEs with reporting periods beginning on or after 1 January Tourism New Zealand has applied these amendments (PBE IAS 12 and PBE IFRS 5) in preparing its 30 June 2018 financial statements. The External Reporting Board has also issued amendments to the PBE suite to incorporate requirements and guidance for the not-for-profit sector. These amendments apply to PBEs with reporting periods beginning on or after 1 July Tourism New Zealand expects there will be minimal or no change in applying these updated accounting standards. Standard Title Application date PBE IPSAS 12, PBE IPSAS Omnibus Amendments to PBE Standards 1 July 2018 PBE IPSAS 1 Approved Budget (Amendments to PBE IPSAS 1) 1 July 2018 PBE IPSAS 34, PBE IPSAS 35, PBE IPSAS 36, PBE IPSAS 37, PBE IPSAS 38 PBE IPSAS 21, PBE IPSAS 26 PBE Standards on interests in other entities: PBE IPSAS 34 Separate Financial Statements PBE IPSAS 35 Consolidated Financial Statements PBE IPSAS 36 Investments in Associates and Joint Ventures PBE IPSAS 37 Joint Arrangements PBE IPSAS 38 Disclosure of Interests in Other Entities Impairment of Revalued Assets (Amendments to PBE IPSASs 21 and 26) 1 July July 2019 PBE IPSAS 39 Employee Benefits 1 July 2019 PBE IFRS 9 Financial Instruments 1 July 2018 PBE FRS 48 Service Performance Reporting 1 July 2021 (d) Basis of consolidation The consolidated financial statements comprise the financial statements of New Zealand Tourism Board trading as Tourism New Zealand and its subsidiaries as at 30 June each year (the Group). Subsidiaries are combined using the acquisition method of combination. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from intragroup transactions, have been eliminated in full. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Tourism New Zealand has control. (e) Investment in joint venture (JV) The Group s investment in JV is accounted for under the equity method of accounting in the consolidated financial statements. The investment in the JV is carried in the considated statement of financial position at cost plus postacquisition changes in the Group s share of net assets of the JV, less any impairment in value. The consolidated statement of comprehensive revenue and expense reflects the Group s share of the results of operations of the JV. Where there has been a change recognised directly in the JV s equity, the Group recognises its share of any changes and discloses this, when applicable in the consolidated statement of changes in equity. (f) Foreign currency Transactions denominated in foreign currency are recorded in NZ Dollars by applying exchange rates that approximate rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Exchange gains and losses are recognised in the Statement of comprehensive revenue and expense. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. (g) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Office equipment 5 years Motor vehicles 4 5 years Furniture and fittings 5 8 years Computer equipment 3 years Leasehold improvements Up to term of the lease Realised gains and losses arising from the disposal of property, plant and equipment are recognised in the Statement of Comprehensive Income in the period in which the transaction occurs. Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Losses resulting from impairment are reported in the Statement of comprehensive revenue and expense. (h) Intangible assets Intangible assets are recorded at cost at acquisition. Where there is no active market for these assets, or they are determined to hold no future economic benefit, they are written off in the year of acquisition. Tourism New Zealand has no intangible assets with an infinite life. The useful life of intangible assets are estimated at between 3 and 8 years. Research and development costs are expensed as incurred. (i) Inventories Inventories are valued at the lower of cost and net realisable value. (j) Trade and other receivables Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. (k) Cash and cash equivalents Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above. (l) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of comprehensive revenue and expense net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (m) Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of comprehensive revenue and expense on a straight-line basis over the lease term. The Group does not enter into finance leases. (n) Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The specific recognition criteria described below must also be met before revenue is recognised. Revenue from non-exchange transactions Grants received from the Crown: Grants received from the Crown are recognised as revenue on receipt. Sales and other revenue: Revenue includes fees received to attend offshore trade events and familiarisations in New Zealand, and fees received to become part of an Approved Destination Status programme. The revenue from such transactions does not approximately equal the value of goods provided by Tourism New Zealand and are therefore considered as non-exchange transactions. Revenue is recognised at fair value of cash received or receivable when the risks and rewards of ownership are transferred to the buyer at the time of delivery of goods to the customer. The services provided have a return obligation and therefore the revenue from supply of services is recognised on a straight line basis over the specified period for the service unless an alternative method better represents the stage of completion of the transaction. Revenue from exchange transactions Sales and partnership revenue: Revenue includes contributions from partners and recharges to customers to recover full cost of expenses incurred on their behalf. The revenue from the such supply of goods and services is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer. Revenue from the supply of services is recognised on a straight line basis over the specified period for the service unless an alternative method better represents the stage of completion of the transaction. Interest: Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. (o) Income tax Tourism New Zealand is exempt from income tax under the New Zealand Tourism Board Act Tourism New Zealand s subsidiaries are subject to income tax. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Statement of Financial Position date. Deferred income tax is provided on all temporary differences at the Statement of Financial Position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; or 58 59

31 Financials when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each Statement of Financial Position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Statement of Financial Position date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (p) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated with the amount of GST included. Note 2 The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from or payable to the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (q) Financial instruments Tourism New Zealand uses derivative financial instruments such as foreign currency contracts to manage its exposure to foreign exchange risk arising from its operational activities. Tourism New Zealand does not hold or issue these financial instruments for trading purposes. Tourism New Zealand has not adopted hedge accounting. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each balance date. Movements in the fair value of derivative financial instruments are recognised in the Statement of comprehensive revenue and expense. Foreign exchange gains and losses resulting from the settlement of derivative financial instruments and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of comprehensive revenue and expense. Cash and cash equivalents include cash on hand, cash in transit, bank accounts and deposits with a maturity of no more than three months from date of acquisition. The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. (r) Employee Benefits Other Employee Entitlements: Employee entitlements for salaries and wages, annual leave, long service leave, retiring leave and other similar benefits are recognised in the Statement of comprehensive revenue and expense when they accrue to employees. Employee entitlements to be settled within 12 months are reported at the amount expected to be paid. The liability for longterm employee entitlements is reported as the present value of the estimated future cash flows. Termination Benefits: Termination benefits are recognised in the Statement of comprehensive revenue and expense only where there is a demonstrable commitment to either terminate employment prior to normal retirement date or to provide such benefits as a result of an offer to encourage voluntary redundancy. Termination benefits settled within 12 months are reported at the amount expected to be paid, otherwise they are reported as the present value of the estimated future cash flows. Statement of significant assumptions Assumptions underlying the financial statements include: Crown funding is assured at least at the levels stated for the period of this Statement. No amount has been included for gains or losses on foreign exchange derivatives as these cannot be estimated because of uncertainty surrounding exchange rates over the three year period. There is a risk that movements in exchange rates can result in volatility in financial performance as fair value movements on derivatives are recognised. There is a risk that movements in exchange rates can have a significant effect on the spending power of Tourism New Zealand. To mitigate this risk as far as possible a Foreign Exchange Reserve is included in the Forecast Statement of Financial Position. The Reserve is designed to preserve the spending power of Tourism New Zealand during periods of adverse movements in exchange rates. The net asset position of subsidiaries will not change significantly over the three years. Revenue from Crown Group Parent Baseline Funding 121, , , ,535 During the year, additional funding was provided by the Crown for the following: Additional Crown Funding Total revenue received from the Crown 121, , , ,535 Less GST 4,110 4,185 4,110 4,185 Net revenue received from the Crown 117, , , ,350 Note 3 Other revenue Group Parent Sales and Partnership revenue from exchange transactions 5,940 6,819 4,452 5,258 Sales and other revenue from non-exchange transactions 1, , Total Other revenue 7,111 7,765 5,623 6,204 Note 4 Other expenses include: Group Parent Personnel expenses Number of permanent and fixed term staff Salaries and wages 18,053 19,209 17,474 18,617 Employer superannuation contributions Increase/(decrease) in employee entitlements (note 15) (37) (27) (23) (30) Other personnel expenses 1,669 1,003 1, Personnel costs for New Zealand and offshore staff were: 20,130 20,640 19,515 19,979 New Zealand Personnel Expenses - Tourism New Zealand 11,277 10,576 11,277 10,576 New Zealand Personnel Expenses - Subsidiaries Offshore Personnel Expenses 8,238 9,403 8,238 9,403 20,130 20,640 19,515 19,979 Compensation or other benefits paid to ceased staff Number of ceased staff Auditor's remuneration Amounts received or due and receivable by Ernst & Young for: The audit of the financial statements Amounts received or due and receivable by auditors other than Ernst & Young New Zealand for: The audit of the financial statements of subsidiary entities Other assurance services Other expenses Loss on disposal of property, plant and equipment Lease expense 2,560 2,553 2,556 2,548 Remuneration of board members of Parent (See also note 30)

32 Financials Note 5 Total expenditure of parent Parent 2018 $000s 2017 $000s Note 8 Cash and cash equivalents Group Parent Total expenditure by geographic region: Australia 20,823 19,027 North America 19,889 19,646 China 14,854 12,455 United Kingdom and Europe 11,229 11,005 Japan 4,512 4,085 Asia 10,649 14,504 Other markets 2,997 2,916 New Zealand (a) 41,543 38,957 Total Expenditure of Parent 126, ,595 (a) New Zealand expenditure includes costs that apply to all markets and across a number of campaigns including spend on the 100% Pure New Zealand Campaign, brand development and the continued development of the newzealand.com website. Note 6 Subsidiary companies Interest Held Interest Held Qualmark New Zealand Limited 100% 100% 100% 100% Visitor Information Network Incorporated (trading as i-site NZ) The financial year-end of both subsidiaries is 30 June. 0% 0% 0% 0% Qualmark New Zealand Limited Qualmark New Zealand Limited is New Zealand tourism s official quality agency. 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. Visitor Information Network Incorporated (trading as i-site NZ) Tourism New Zealand has control of Visitor Information Network Incorporated (VIN Inc), trading as i-site New Zealand, effective 21 August Tourism New Zealand and i-site New Zealand have a relationship agreement that recognises the importance of having an effective and high quality network of visitor information centres, dedicated to delivering free, comprehensive and objective information. The terms and conditions of the relationship agreement mean that Tourism New Zealand meets the criteria determined in PBE IPSAS 6 for consolidating investments in subsidiaries. The i-site brand creates a distinctive look, which distinguishes the official network from other information centres. The i-site Visitor Centres provide on-the-ground information to ensure the visitor experience is as enjoyable as possible. Note 7 Joint Venture company Group Parent Cash Holdings: Cash at bank and in hand 3,550 2,865 3,223 2,707 Call accounts - foreign currencies 1,754 1,591 1,754 1,591 Call accounts - New Zealand dollar ,305 4,927 4,978 4,770 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. Cash Holdings by Currency: New Zealand Dollar 1,886 1,611 1,559 1,453 United States Dollar British Pound Australian Dollar European Euro Japanese Yen Singapore Dollar Canadian Dollar Indian Rupee Other Asian Currencies Cash Holdings by Bank: 5,305 4,927 4,978 4,770 HSBC Bank 4,799 3,913 4,472 3,755 National Bank of New Zealand ASB Bank Bank of New Zealand Tokyo Mitsubishi ,305 4,927 4,978 4,770 The fair value of cash and cash equivalents for the Group is $5,305,000 (2017: $4,927,000) and $4,978,000 (2017: $4,770,000) for the Parent. Tourism New Zealand holds a stand by Letter of Credit with HSBC bank for an amount of $360,000 to serve as security against any non-payment of payroll. This letter of credit has no expiry date. HSBC also provides a financial guarantee to Datacom Business Services, Tourism New Zealand s payroll processor for Australian payroll an amount of AUD 42,000. Further, a financial guarantee for an amount of AUD 77,512 is also provided by HSBC bank for Sydney office rent until 26 May A cheque encashment facility for $1000 also exists with HSBC. Qualmark holds a stand by Letter of Credit with HSBC for an amount of $26,000 to serve as security against any non-payment of payroll. This letter of credit has no expiry date. The New Zealand Way Limited The financial year-end of The New Zealand Way Limited is 30 June. Tourism New Zealand has a 50% shareholding in The New Zealand Way Limited. This Company is the operating entity of a joint venture between Tourism New Zealand and New Zealand Trade & Enterprise. The activities of the joint venture is limited to the marketing and promotion of Brand New Zealand (both within New Zealand and offshore), the licensing and control of the use of Intellectual Property, and such other activities as may be unanimously agreed in writing by the parties. 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 Joint Venture. There were also no capital commitments or other commitments relating to the Joint Venture. During the year, there were no transactions in The New Zealand Way Limited (2017: Nil). Therefore the share of Joint Venture s revenue and (deficit)/surplus for the year is Nil (2017: Nil). At year end, The New Zealand Way Limited s Net Assets were Nil (2017: Nil). Therefore the carrying amount in the Joint Venture at year end is Nil (2017: Nil)

33 Financials Note 9 Receivables Group Parent Receivables Less: Provision for impairment Receivables from non-exchange transactions are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2018 and 2017, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below: Parent Gross $000s Impairment $000s Net $000s Gross $000s Impairment $000s Net $000s Not past due Past due 1-30 days Past due days Past due days Past due > 91 days Group Gross $000s Impairment $000s Net $000s Gross $000s Impairment $000s Net $000s Not past due Past due 1-30 days Past due days Past due days Past due > 91 days Receivables from non-exchange transactions are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2018 and 2017, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below: Receivables from exchange transactions Receivables 1,474 2,243 1,453 2,198 Less: Provision for impairment - (2) - - 1,474 2,241 1,453 2,198 Receivables from exchange transactions are non-interest bearing and are generally on 30-day terms. The carrying value of receivables approximates their fair value. As at 30 June 2018 and 2017, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below: Group Gross $000s Impairment $000s Net $000s Gross $000s Impairment $000s Net $000s Not past due 1,313-1,313 1,958-1,958 Past due 1-30 days Past due days (2) 156 Past due days Past due > 91 days ,474-1,474 2,243 (2) 2,241 The provision for impairment has been calculated based on expected losses determined by an analysis of losses in previous periods and a review of specific debtors. Receivables from exchange transactions for the Group include GST/VAT refunds comprising 61% (2017: 60%) of total receivables as follows: GST Refund due from NZ Inland Revenue Department GST Refund due from Australian Taxation Office 526 1, ,004 Consumption Tax Refund from Japan Tax Office VAT Refund due from UK Revenue & Customs Note , ,385 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 70 (2017: 92) foreign exchange contracts maturing at various dates over the next 12 months. The contracts are financial assets at fair value through profit or loss and designated as held for trading financial instruments with fair value gains or losses recognised in the Statement of Comprehensive Revenue and Expense. Foreign currency forward exchange contracts: Foreign exchange contracts at 30 June - Sell Value 58,203 75,180 58,203 75,180 Fair value Derivatives in Gain / (Loss) 2,969 (1,280) 2,969 (1,280) Foreign exchange contracts at 30 June - Buy Value 61,171 73,900 61,171 73,900 Foreign exchange contracts by currency (In NZD): United States Dollar 28,764 35,466 28,764 35,466 British Pound 5,579 5,516 5,579 5,516 Australian Dollar 14,579 22,000 14,579 22,000 European Euro 4,077 4,228 4,077 4,228 Japanese Yen 4,347 4,168 4,347 4,168 Singapore Dollar 3,825 2,523 3,825 2,523 Group Parent 61,171 73,900 61,171 73,900 Parent Gross $000s Impairment $000s Net $000s Gross $000s Impairment $000s Net $000s Not past due 1,130-1,130 1,925-1,925 Past due 1-30 days Past due days Past due days Past due > 91 days ,453-1,453 2,198-2,

34 Financials Note 11 Property, plant and equipment Group Parent All property, plant and equipment At cost 9,400 8,974 9,359 8,933 Accumulated depreciation (7,559) (6,943) (7,523) (6,910) Net carrying amount 1,841 2,031 1,836 2,023 Property, plant and equipment for each class: Furniture and fittings At cost 1,214 1,250 1,186 1,223 Accumulated depreciation (1,145) (1,148) (1,118) (1,121) Net carrying amount of furniture and fittings Leasehold improvements At cost 3,278 3,198 3,278 3,198 Accumulated depreciation (2,172) (1,847) (2,172) (1,847) Net carrying amount of leasehold improvements 1,106 1,350 1,106 1,350 Office equipment At cost Accumulated depreciation (664) (628) (664) (628) Net carrying amount of office equipment Motor vehicles At cost Accumulated depreciation (61) (61) (61) (61) Net carrying amount of motor vehicles Computer equipment At cost 4,079 3,732 4,065 3,718 Accumulated depreciation (3,518) (3,259) (3,508) (3,253) Net carrying amount of computer equipment Total property, plant and equipment 1,841 2,031 1,836 2,023 All property, plant and equipment reconciliation At 1 July, net of accumulated depreciation 2,032 1,480 2,023 1,477 Additions 490 1, ,229 Disposals and write back of depreciation (21) (22) (21) (22) Depreciation charge for the year (659) (667) (655) (661) At 30 June, net of accumulated depreciation 1,841 2,031 1,836 2,023 Depreciation by asset class: Furniture and fittings Leasehold improvements Office equipment Computer equipment Total Depreciation Note 12 Intangible assets Group Parent Intangible assets At cost 2,322 2,200 2,133 2,015 Accumulated amortisation (1,351) (1,078) (1,230) (1,002) Net carrying amount 971 1, ,013 Intangible assets reconciliation At 1 July, net of accumulated amortisation 1,123 1,336 1,014 1,257 Additions Impairment of Intangible assets Amortisation charge for the year (273) (319) (228) (290) At 30 June, net of accumulated amortisation 971 1, ,013 Intangible assets include investment into redevelopment of Tourism New Zealand s corporate website and intranet, Tourism New Zealand s and Qualmark s finance and HR system, and Visitor Information Network Incorporated s BookIt software. Note 13 Accommodation bonds Accommodation bonds are refundable deposits or key money paid for the lease of office and housing premises. Group Parent Japan North America Asia New Zealand Note Creditors and other payables Payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value. Group Parent Creditors 1, , Accrued expenses 5,557 3,655 5,521 3,582 6,750 4,632 6,539 4,

35 Financials Note 15 Employee entitlements Group Parent Annual Leave Note Provisions Tourism New Zealand has a number of potential future restoration costs relating to make good clauses on office rental leases. The provision recognises the present value of expected future payments for amounts in relation to make good. The provision relates to four Tourism New Zealand offices and is expected to be incurred over the next eight years. Provisions are represented by: Group Parent Lease make-good Total Provisions Current provision Non-current provision Movements in provisions are as follows: Balance at 1 July Additional provisions made Amounts used Unused amounts reversed (125) - (125) - Balance at 30 June Note 17 Foreign Exchange Reserve Tourism New Zealand funds its overseas offices and operations in the local currency of that office or operation. Some of the surplus/(deficit) arising from foreign currency movements are held in reserve to finance changes in the New Zealand dollar cost of maintaining a consistent level of funding to those overseas offices or operations. Only the realised gains or losses on foreign currency transactions during the year are transferred to reserves, and the unrealised gains or losses on mark to market revaluation of derivatives held at year end are not transferred to reserves. Movements in reserve is as follows: Group Parent Balance at 1 July 6,924 4,121 6,924 4,121 Transfer to Retained Earnings from Foreign Exchange Reserve (1,066) 2,803 (1,066) 2,803 Balance at 30 June 5,858 6,924 5,858 6,924 Note 18 Reconciliation of surplus to net cash from operating activities Group Parent Net surplus/(deficit) 664 1, ,373 Add/(less) non-cash items Depreciation and amortisation Provisions (1) - (1) - Share of associate's surplus Net (gains)/losses on derivative financial instruments (4,249) (355) (4,249) (355) Net foreign exchange (gains)/losses Total non-cash items (3,215) 1,051 (3,264) 1,016 Add/(less) items classified as investing or financing activities Net Loss/(Gain) on disposal of assets Movement in foreign currency accommodation bonds Lease Incentive Liability (45) 301 (45) 301 Total items classified as investing or financing activities Add/(less) movements in working capital items Debtors and other receivables Prepayments 449 (692) 449 (692) Payables and accruals 2,117 (74) 2,071 (110) Invoiced in advance 399 (366) 408 (358) Employee entitlements (38) (26) (23) (30) Net movements in working capital items 3,649 (913) 3,604 (1,090) Net cash from operating activities 1,117 1,508 1,145 1,642 Note 19 Contingencies Tourism New Zealand has no contingent assets or liabilities as at 30 June In 2017/2018, Tourism New Zealand has provided a written undertaking to the Board of Qualmark New Zealand to provide ongoing support sufficient to enable Qualmark to meet its obligations when they were due. Note 20 Income tax Tourism New Zealand is exempt from income tax under the New Zealand Tourism Board Act Tourism New Zealand s subsidiaries are subject to income tax. The Group has tax losses that can be used to offset future taxable profits of $705,321 (2017: $401,254). A deferred tax asset has not been recognised in respect of these losses as they may not be used future taxable profits

36 Financials 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 offshore 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. 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 manages its equity as a by-product of prudently managing revenues, expenses, assets, liabilities, investments and general financial dealings to ensure that Tourism New Zealand effectively achieves its objectives and purpose, whilst remaining a going concern. Tourism New Zealand 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 purchases a variety of foreign currencies to fund promotional activity offshore. As this is funded in NZ Dollars, there is an exposure to foreign exchange risk through the movement of NZ Dollars against those foreign currencies. To manage this risk and improve operational flexibility, a foreign exchange reserve was set up in 2009/10 that comprised of the realised gains from that year to be used solely to offset future realised foreign exchange gains and losses. Refer to Note 17 for more information. Note 24 Categories of financial assets and liabilities The carrying amounts of financial assets and liabilities in each of the PBE IPSAS 29 categories are as follows: Financial assets: Group Parent Cash and cash equivalents 5,305 4,927 4,978 4,770 Receivables Total loans and receivables 5,942 5,888 5,594 5,688 Note 25 Capital commitments There is no capital expenditure contracted for at balance date but not provided for in the financial statements. (2017:Nil) 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. Operating commitments payable after balance date on: Non-cancellable accommodation leases: Group Parent Up to One Year 2,132 1,656 2,132 1,656 One to Two Years 1,409 1,447 1,409 1,447 Two to Five Years 2,200 2,191 2,200 2,191 Over Five Years Non-cancellable motor vehicle and equipment Leases 5,741 5,294 5,741 5,294 Up to One Year One to Two Years Two to Five Years Over Five Years Non-cancellable contracts for goods and services Up to One Year 2,373 3,324 2,373 3,324 One to Two Years 25 1, ,748 Two to Five Years Over Five Years ,399 5,077 2,399 5,077 Total operating commitments 8,347 10,640 8,347 10,635 Fair value through Surplus or Deficit held for trading: Derivative financial instrument assets / (liabilities) 2,969 (1,280) 2,969 (1,280) Other financial liabilities: Creditors 6,750 4,632 6,539 4,

37 Financials Note 27 Related party transactions Tourism New Zealand is a wholly owned entity of the Crown which has the ability to significantly influence its role. The Crown is Tourism New Zealand s major source of revenue. Tourism New Zealand enters into transactions with government departments, state-owned enterprises and other Crown entities. Those transactions that occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm s length in the same circumstances have not been disclosed as related party transactions. Tourism New Zealand also enters into transactions with its subsidiaries and associate. These transactions occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm s length as well. Tourism New Zealand also enters into transactions with board members and entities over which they have control or significant influence. These transactions occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect Tourism New Zealand would have adopted if dealing with that entity at arm s length. The following table provides the total amount of transactions that were entered into with these related parties. Related Party and Transaction Transaction value year ended 30 June Balance outstanding year ended 30 June Income has been received by Tourism New Zealand from: Key management personnel compensation Key management personnel includes all board members, the Chief Executive and 12 (2017:12) members of the Executive Team. Related Party and Transaction Remuneration of the Board of Directors: Balance outstanding year ended 30 June 2018 $000s 2017 $000s Salaries and other short-term benefits Remuneration of the Chief Executive and Executive Team: Salaries and other short-term benefits, FTE: 13 (2017: 12.67) 3,644 3,609 Termination benefits Total key management personnel compensation 4,014 3,800 J Thorburn (Director): Intercity Group Limited - Income received by TNZ for tourism-related services N Thompson (Director): Auckland Tourism, Events & Economic Development - Income received by TNZ for tourism-related services S England-Hall (Director): Tourism Industry Association - Income received by TNZ for tourism-related services M O'Donnell (Director): Ruapehu Alpine Lifts Limited - Income received by TNZ for tourism-related services J Hunt (Director): Skyline Enterprises - Income received by TNZ for tourism-related services Payments have been made by Tourism New Zealand to: J Thorburn (Director): Intercity Group Limited - Provision of tourism-related services to TNZ J Spice (Director): Touch of Spice Ltd - Provision of tourismrelated services to TNZ N Thompson (Director): Auckland Tourism, Events & Economic Development - Provision of tourism-related services to TNZ K Bowler (Director): Tourism Industry Association - Provision of tourism-related services to TNZ J Tuuta (Director): Venture Taranaki Trust - Provision of tourism-related services to TNZ S England-Hall (Director): Tourism Industry Association - provision of tourism-related services K Pendergast: New Zealand US & China Council Subscription Fees 2017/2018, and prepayments for 2018/2019 M O'Donnell (Director): Kiwibank - Provision of tourism-related services to TNZ J Hunt (Director): Skyline Enterprises - Provision of tourismrelated services to TNZ

38 Financials 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 Interest rate risk - Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in interest rates. Tourism New Zealand is exposed to interest rate risk on its cash balances. Refer to note 8 for cash balances exposed to interest rate risk. Interest rate risk sensitivity analysis - As at 30 June 2018, if interest rates on cash balances had increased/decreased by 0.5% (50 basis points) with all other variables held constant, the deficit/surplus and equity would have changed as follows: Group Surplus/(deficit) higher/(lower) Equity higher/(lower) + 0.5% (50 basis points) % (50 basis points) (3) (4) (3) - Parent + 0.5% (50 basis points) % (50 basis points) (2) (4) (2) - Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. As a result of significant operations around the world, Tourism New Zealand is required to enter into transactions denominated in foreign currencies. As a result of these activities, Tourism New Zealand is exposed to foreign currency risk on its foreign denominated cash balances, receivables, creditors and other payables, and derivative instruments. It is Tourism New Zealand s policy to manage foreign currency risks arising from contractual commitments and liabilities by entering into foreign exchange forward contracts to significantly reduce the foreign currency exposure. These forward exchange contracts are entered into prior to the commencement of the financial year to cover the exposure on budgeted NZD spend in targeted markets based on the market s economic outlook and other factors that might have an impact on their currency. Refer to Derivative financial Instruments (note 10) for details on the forward currency contracts held. Further exposures to foreign exchange risk through the movement of NZ Dollars against those foreign currencies are also managed through the foreign exchange reserve as explained in Note 17. The basket of currencies that Tourism New Zealand holds also reduces the risk from any single currency as all currencies are not expected to move adversely against the NZD. Refer to the total expenditure of the Parent by geographic region (note 5) and Cash and cash equivalents (note 8) for currency exposures. Currency risk sensitivity analysis - Tourism New Zealand is subject to volatility in financial performance associated with foreign currency rates. As at 30 June 2018, if the NZ Dollar had increased/decreased by 5% against various foreign currencies used by Tourism New Zealand with all other variables held constant, the deficit/surplus and equity would have changed as follows: Group Surplus/(deficit) higher/(lower) Equity higher/(lower) NZD to various currencies +5% (3,026) 3, NZD to various currencies -5% (9,114) (21,394) - - Parent NZD to basket of currencies +5% (3,026) 3, NZD to basket of currencies -5% (9,114) (21,394) - - This movement is attributable to foreign exchange gains/losses on translation of forward foreign exchange contracts and other foreign currency denominated assets and liabilities. Credit risk Credit risk is the risk that a third party will default on its obligations to Tourism New Zealand, causing Tourism New Zealand to incur a loss. Tourism New Zealand has no significant concentrations of credit risk, as it has a small number of credit customers and only places funds with registered banks. With respect to foreign exchange instruments, Tourism New Zealand reduces its risk by limiting the counter parties to major trading banks and does not expect to incur any significant losses as a result of non performance by these counter parties. Tourism New Zealand s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash (note 8), net debtors (note 9) and derivative financial instruments (note 10). There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired. Liquidity risk Liquidity risk is the risk that Tourism New Zealand will encounter difficulty raising liquid funds to meet commitments as they fall due. Tourism New Zealand has no significant concentrations of liquidity risk. Tourism New Zealand annually agrees a funding schedule with the Crown which matches the estimated timing of its commitments and close out of market positions. The following liquidity risk disclosures reflect all contractually fixed pay-offs, repayments and interest resulting from recognised financial and derivative financial instrument liabilities as of 30 June The timing of cash flows for liabilities is based on the contractual terms of the underlying contract. Group - Year end 30 June 2018 Financial liabilities < 6months $000s 6-12 months $000s > 1 year $000s Total $000s Creditors (1,193) - - (1,193) Derivative financial instrument liabilities - gross settled Inflows 28,300 32,229-60,529 Outflows (26,802) (30,758) - (57,560) 1,498 1,471-2,969 Net outflow 305 1,471-1,776 Parent - Year end 30 June 2018 Financial liabilities Creditors (1,018) - - (1,018) Derivative financial instrument liabilities - gross settled Inflows 28,300 32,229-60,529 Outflows (26,802) (30,758) - (57,560) 1,498 1,471-2,969 Net outflow 480 1,471-1,951 Group - Year end 30 June 2017 Financial liabilities Creditors (977) - - (977) Derivative financial instrument liabilities - gross settled Inflows 38,636 34,576-73,212 Outflows (39,390) (35,102) - (74,492) (754) (526) - (1,280) Net outflow (1,731) (526) - (2,257) Parent - Year end 30 June 2017 Financial liabilities Creditors (886) - - (886) Derivative financial instrument liabilities - gross settled Inflows 38,636 34,576-73,212 Outflows (39,390) (35,102) - (74,492) (754) (526) - (1,280) Net outflow (1,640) (526) - (2,166) Fair value The Group can apply various methods in estimating the fair value of a financial instrument. The methods comprise: a) Level 1 - the fair value is calculated using quoted prices in active markets: b) Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and c) Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market data. Derivative financial instruments are classified as Level 2 and are valued using mid values of the forward contracts as determined by the New Zealand Debt Management Office based on inputs that are observable. There were no transfers between Level 1 and Level 2 during the year

39 Financials Note 29 Remuneration of employees During 2017/ (2017: 65) employees received remuneration and benefits which exceeded $100,000 per annum as follows: Note 30 Remuneration of board members Board members earned the following fees during the year: $ , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , $ K Prendergast (Chair) R Leggat (Deputy Chair) John Thorburn Jamie Tuuta Michael O Donnell Jacqui Spice - 2 Christopher Parkin Norm Thompson - 19 Raewyn Idoine Jan Hunt Change in board members: Jan Hunt was appointed to the board on 1 July 2017 and Christopher Parkin was also reappointed in July Norm Thompson resigned on 14 April Note 31 Events after the balance date There were no significant events after the balance date. Note 32 Explanations of major variance against budget There are no major variations to budget other than those explained in the notes above. Employee numbers who have earned $100,000 or more in FY18 has remained consistent with FY17 despite a small decrease in the offshore markets due to roles not being filled for a full year

40 Financials Five year financial summary for parent Statement of Financial Position 2014 Actual $000s 2015 Budget $000s 2016 Actual $000s 2017 Actual $000s 2018 Budget $000s Current Assets Cash 3,970 6,206 4,903 4,770 4,978 Receivables 1,868 1,935 2,403 2,303 1,604 Prepayments and other current assets 934 1,545 1,402 2,094 1,645 Derivative financial instruments - 5, ,969 6,772 15,402 8,708 9,167 11,196 Non-current Assets Property, plant and equipment 1,929 1,699 1,477 2,023 1,836 Intangible Assets 1,264 1,554 1,257 1, Accommodation bonds Investment in subsidiary Derivative financial instruments - 1, ,450 4,587 3,144 3,505 3,387 Total Assets 10,222 19,989 11,852 12,672 14,583 Income Statement of Comprehensive Income 2014 Actual $000s 2015 Budget $000s 2016 Actual $000s 2017 Actual $000s 2018 Budget $000s Revenue from Crown 113, , , , ,350 Interest Other revenue 8,349 6,378 5,416 6,204 5,623 Expenditure 122, , , , ,033 Other expenses 122, , , , ,613 Depreciation, amortisation and impairment 1, , Fair value gain (losses) on derivative financial instruments 123, , , , ,496 (1,909) 8,536 (8,403) 355 4,249 Total comprehensive income / (expense) (2,986) 8,230 (8,648) 1, Transfer from / (to) foreign exchange reserves 890 (527) 523 (2,803) 1,066 Current Liabilities Creditors and other payables 3,001 5,705 4,578 4,468 6,539 Employee entitlements Income in advance Provisions Current Lease Incentive Liability Derivative financial instruments 1,520-1,456 1,103-5,216 7,075 7,429 6,630 8,032 Non-current Liabilities Provisions Long Term Lease Incentive Liability Derivative financial instruments Total Liabilities 5,708 7,245 7,756 7,206 8,330 Net Assets 4,514 12,744 4,096 5,466 6,253 Net operating surplus/(deficit) after foreign exchange transfer (2,096) 7,703 (8,125) (1,431) 1,852 Equity Shareholder's equity 1,805 1,805 1,805 1,805 1,805 Accumulated Comprehensive Revenue and Expense (1,408) 6,295 (1,830) (3,261) (1,409) Foreign Exchange Reserve 4,117 4,644 4,121 6,924 5,858 Total Equity 4,514 12,744 4,096 5,466 6,

Financials Financials Independent Auditor s Report To the readers of New Zealand Tourism Board and Group s financial statements and performance information for the year ended 30 June 2018 The

41 Financials Financials Independent Auditor s Report To the readers of New Zealand Tourism Board and Group s financial statements and performance information for the year ended 30 June 2018 The Auditor-General is the auditor of New Zealand Tourism Board (the Board ) and group (the Group). The Auditor-General has appointed me, Emma Winsloe, using the staff and resources of Ernst & Young, to carry out the audit of the financial statements and the performance information, of the Board and Group on his behalf. Opinion We have audited: the financial statements of the Board and Group on pages 54 to 77, that comprise the statement of financial position as at 30 June 2018, the statement of comprehensive revenue and expenses, statement of changes in equity and statement of cash flows for the year ended on that date and the notes to the financial statements including a summary of significant accounting policies; and the performance information of the Board and Group on pages 16 to 33. In our opinion: the financial statements of the Board and Group 54 to 77: present fairly, in all material respects: its financial position as at 30 June 2018; and its financial performance and cash flows for the year then ended; and comply with generally accepted accounting practice in New Zealand in accordance with Public Benefit Entity Reporting Standards. the performance information on pages 16 to 33: presents fairly, in all material respects, the Board s performance for the year ended 30 June 2018, including: for each class of reportable outputs: its standards of delivery performance achieved as compared with forecasts included in the statement of performance expectations for the financial year; and its actual revenue and output expenses as compared with the forecasts included in the statement of performance expectations for the financial year; and complies with generally accepted accounting practice in New Zealand. Our audit was completed on 5 September This is the date at which our opinion is expressed. The basis for our opinion is explained below. In addition, we outline the responsibilities of the Board members and our responsibilities relating to the financial statements and the performance information, we comment on other information, and we explain our independence. Basis for our opinion We carried out our audit in accordance with the Auditor-General s Auditing Standards, which incorporate the Professional and Ethical Standards and the International Standards on Auditing (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Responsibilities of the auditor section of our report. We have fulfilled our responsibilities in accordance with the Auditor-General s Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Board members for the financial statements and the performance information The Board members are responsible on behalf of the Board and the Group for preparing financial statements and performance information that are fairly presented and comply with generally accepted accounting practice in New Zealand. The Board members are responsible for such internal control as they determine is necessary to enable them to prepare financial statements and performance information that are free from material misstatement, whether due to fraud or error. In preparing the financial statements and the performance information, the Board members are responsible on behalf of the Board and the Group for assessing the Board s and Group s ability to continue as a going concern. The Board members are also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to merge or to terminate the activities of the Board and Group, or there is no realistic alternative but to do so. The Board members responsibilities arise from the Crown Entities Act Responsibilities of the auditor for the audit of the financial statements and the performance information Our objectives are to obtain reasonable assurance about whether the financial statements and the performance information, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit carried out in accordance with the Auditor- General s Auditing Standards will always detect a material misstatement when it exists. Misstatements are differences or omissions of amounts or disclosures, and can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of readers, taken on the basis of these financial statements and the performance information. For the budget information reported in the financial statements and the performance information, our procedures were limited to checking that the information agreed to the Board s statement of performance expectations. We did not evaluate the security and controls over the electronic publication of the financial statements and the performance information. As part of an audit in accordance with the Auditor-General s Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. Also: We identify and assess the risks of material misstatement of the financial statements and the performance information, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board s and Group s internal control. We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board members. We evaluate the appropriateness of the reported performance information within the Board s and Group s framework for reporting its performance. We conclude on the appropriateness of the use of the going concern basis of accounting by the Board members and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Board s and Group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements and the performance information or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Board and Group to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the financial statements and the performance information, including the disclosures, and whether the financial statements and the performance information represent the underlying transactions and events in a manner that achieves fair presentation. We obtain sufficient appropriate audit evidence regarding the financial statements and the performance information of the entities or business activities within the Board and Group to express an opinion on the consolidated financial statements and the consolidated performance information. We are responsible for the direction, supervision and performance of the Board and Group audit. We remain solely responsible for our audit opinion. We communicate with the Board members regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Our responsibilities arise from the Public Audit Act Other information The Board members are responsible for the other information. The other information comprises the information included on pages 1 to 15, 34 to 53, and 78 to 79, but does not include the financial statements and the performance information, and our auditor s report thereon. Our opinion on the financial statements and the performance information does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon. In connection with our audit of the financial statements and the performance information, our responsibility is to read the other information. In doing so, we consider whether the other information is materially inconsistent with the financial statements and the performance information or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Independence We are independent of the Board and Group in accordance with the independence requirements of the Auditor-General s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board. Other than the audit, we have no relationship with or interests in the Board and Group. Emma Winsloe Ernst & Young On behalf of the Auditor-General Auckland, New Zealand 80 81

42 We see New Zealand as a gift from the gods, and we are simply the guardians of this land for the next generation

Tourism New Zealand. Statement of Performance Expectations 2015/2016

Tourism New Zealand. Statement of Performance Expectations 2015/2016 Tourism New Zealand Statement of Performance Expectations 2015/2016 Presented to the House of Representatives Pursuant to Section 149 of the Crown Entities Act 2004 1 2 Contents Purpose of this document...5